Large scale carbon capture and storage gets closer with new appointments

Schematic diagram of how the CCS set-up will work which is based upon the former BP Peterhead concept.

A crucial step has been taken in the development of what may be the U.K.'s first large scale Carbon Capture and Storage (CCS) project, with the appointment of Foster Wheeler Energy Limited (FWEL) as project management consultants of a ￡3 billion, 650MW (net) project at Hatfield.

The Don Valley Power Project, at Stainforth in South Yorkshire, expects to combine a coal gasification plant, with CO2 capture on all of the plant, with an integrated gas-fuelled combined cycle power station that is fired by a hydrogen-rich fuel.

It will potentially capture up to 97% of the carbon dioxide from its operation and its principal emission will be water vapour.

Planning permission for the power plant has already been granted, and main construction activities would start in 2013, provided the project wins financial support from the EU and UK government, for which it is currently competing. The plant would be commissioned in 2016.

This was the only UK project to win funding (€180 million) under the European Energy Programme for Recovery (EEPR) and is being assessed by the European Investment Bank (EIB) for further EU funding under the New Entrants Reserve (NER300) programme, which is itself to be financed by the European Commission's satisfactory sale of 300 million EU allowances (EUAs) by the end of this year.

The appointment of Swiss company Foster Wheeler, a global engineering and construction contractor and power equipment supplier, has been made by 2Co Power (Yorkshire) Ltd. which is to design and construct the power station with pre-combustion carbon capture facilities.

Foster Wheeler's role will last until the plant comes into operation in 2016 and begin by helping 2Co Power (Yorkshire) to prepare an Engineering, Procurement and Construction (EPC) contract for the project build over the next six months.

Jonathan Briggs, Managing Director, 2Co Power (Yorkshire) Ltd said: “I firmly believe that the Don Valley Power Project is the UK’s most advanced and economic carbon capture and storage project.

"Foster Wheeler’s appointment will ensure we deliver this ground-breaking project on time to help create jobs, supply low carbon electricity to the region and help the UK meet its ambitious energy security and national carbon reduction commitments."

2Co Energy has also boosted its management team to take on the project with the addition of two leading carbon capture and storage experts, Jonathan Briggs and Graeme Miller.

Jonathan led the Hydrogen Energy joint venture between BP and Rio Tinto in California, and was responsible for managing the $2.5 billion carbon capture and storage project that is now under development by SCS Energy.

Graeme also worked on the Hydrogen Energy CCS project and previously worked on BP’s original Peterhead CCS project, which provides the technical blueprint for this one.

It is reckoned that the power station will employ over 2,000 people during the peak of construction and about 200 during operation.

The offshore part of the project is the responsibility of National Grid Carbon (NGC), an independent subsidiary of National Grid created to develop carbon dioxide transportation infrastructure in the UK, who are designing, building and operating the carbon transportation system and identifying potential offshore carbon storage sites in Southern North Sea.

This part should employ 800 workers during construction and 300 during operation.

Enhanced oil recovery

The Don Valley Power Project's unique business model centres on the vast CO2 storage and additional oil recovery potential under the North Sea, known as Enhanced Oil Recovery (EOR).

2Co proposes to inject the CO2 into proven secure oil fields where it can tap reserves of oil that would otherwise be unrecoverable, and then store the CO2 permanently in the oil fields.

Three quarters of CCS projects throughout the world in operation or under construction are currently linked to EOR.

A major feasibility study is nearly completed on two North Sea oil fields that might be used for this purpose.

It is hoped that sale of the oil will not only substantially offset the costs of carbon capture but generate several billion pounds in Treasury revenue as well as extending the life of North Sea oil fields by up to 20 years and deferring substantial costs to UK government from its shared responsibility for decommissioning oil fields.

The Humber cluster effect

One of the key elements of why this project at Hatfield was selected by the EU for the EEPR funding is the potential for developing a pipeline to support a cluster of CCS plants in the Humber.

Such a cluster could potentially capture about 60 million tonnes of CO2 per year from this region.

The Humber area is one of five identified by National Grid Carbon for CCS because they contain the UK's highest CO2 emitting facilities. NGC thinks the Humber could become the largest CO2 capture volume region in Europe.

This is now the only project being taken forward by National Grid Carbon after the decision by the Department of Energy and Climate Change not to go ahead to the construction stage of the Longannet CCS demonstration project.

The Humber cluster includes a further 426MW oxy-fired carbon capture and storage project currently under development at the Drax power station in North Yorkshire with partners BOC and Alstom.

Both are applying for part of the ￡1bn funding from DECC's CCS Delivery Programme.

DECC held its first CCS Industry Day on 16 December 2011, which was attended by over 130 delegates; the next is to be on 22nd February, and the CCS Delivery Programme competition will launch in Spring 2012.

Shale gas in Europe at the crossroads: are the existing legal protections sufficient?

A matrix of close surface wells for the production of 'tight' shale gas in the USA.

Opinions differ about whether existing environmental legislation is sufficient to regulate the current level of exploration of shale gas in the EU, with a new report prepared for the European Commission arguing that it is.

But this is at variance with another report submitted last summer to the EC, which called for "consideration to be given to developing a new directive at European level regulating all issues in this area comprehensively".

That report, Impacts of shale gas and shale oil extraction on the environment and human health also recommended that for fracking, "all chemicals to be used should be disclosed publicly, the number of allowed chemicals should be restricted and its use should be monitored.

"Statistics about the injected quantities and number of projects should be collected at European level," it added.

But, as there is no large-scale commercial exploitation of shale gas reserves in Europe there have, as yet, been no cases that suggest a requirement for new legislation, according to the new 'Final Report On Unconventional Gas In Europe' by law firm Philippe and Partners.

“It is a new technology and we do not have a specific legislation on shale gas, because it is so new," Maureen Holzner, the European Commission spokesperson on energy was quoted as saying.

She said that the new report confirms that, so far, Europe's existing laws can be satisfactorily applied. This may change if commercial exploitation takes off.

The current laws include the Water Framework Directive and the Groundwater Directive which would cover water protection issues. The Mining Waste Directive covers other pollution issues, and the use of chemicals is covered by REACH legislation, which applies to the use of chemical substances in any industrial process.

Shale gas in Europe

Exploitation of shale gas reserves in Europe is currently limited, partly because the economics of shale gas in the European Union are still highly uncertain, particularly in the current context of significantly depressed prices as a result of the gas glut.

Furthermore, Europe is more densely populated than the United States, which makes local opposition more likely. At the beginning of the year, thousands of Bulgarians protested against exploration for shale gas because of concerns that it could poison underground water, cause earthquakes and create serious health hazards.

The new study only applies to four countries: Poland, France, Sweden and Germany, and did not examine climate change legislation.

In Sweden, the Swedish Mining Inspectorate has granted one exploitation concession, but this has not led to any exploitation activities.

In France, there is a legal ban on hydraulic fracturing on the basis of the Prohibition Act.

In England, hydraulic fracturing was held responsible for earthquakes registering 2.3 on the Richter Scale in Blackpool last year.

In Germany, at least one company has performed hydraulic fracturing tests, and in North Rhine Westphalia, shale gas activities are suspended until the completion of environmental studies and analysis of their results.

Poland is the country most interested in exploiting shale gas because it wishes to free itself from dependence on Russian gas.

Hydraulic fracturing has taken place there already, and the country plans to begin commercial production in 2014.

A US Department of Energy survey last year said that the amount of gas trapped in shale in Poland could provide it with enough fuel to last for 300 years.

In all Member States, general mining or hydrocarbons legislation covers licensing/authorisation procedures for shale gas projects.

Other legislation related to property, spatial planning or commercial activities can also play a role.

Commercial secrecy and public confidence

Commercial secrecy prevents knowing exactly the constituent chemicals used in franking. This is the area of greatest concern.

It is known that toxic salts, mineral oil, ethylene glycol and glutaraldehyde, volatile organic compounds like benzene, xylene and phenols may be employed and could cause pollution.

In Europe, under REACH legislation, if operators prefer to keep their chemical use confidential, they are required to conduct their own assessment of chemicals used in hydraulic fracturing and report this to the European Chemicals Agency.

The Agency can then review the report and verify the suggested risk management.

But since the onus is on the mining company to do this accurately, it is open to accusations that it is not being transparent or completely honest. This severely impacts on public confidence.

Chemical accidents are also covered by the Seveso II Directive, under which operators need to notify and report on the substances at their disposal and being stored on their premises.

These obligations differ according to the quantity and characteristics of the chemicals.

The new report to the EC also acknowledges that in countries where different authorities regulate different aspects of the mining process, expertise levels and communication between them can be inadequate.

In particular, it can mean in some countries that the core permitting authority can give the go-ahead for a project where some environmental aspects of the operation may not be up to scratch.

Sweden is held up as an example where this is not the case, as applications are dealt with under the overall assessment of environmentally hazardous activities.

Ultimately, public confidence is seen as key to the future expansion of the industry in Europe.

This is certainly the case in the United States. “If action is not taken to reduce the environmental impact, there is real risk of serious environmental consequences causing a loss of public confidence that could delay or stop this activity," US energy secretary Steven Chu was told by advisers late last year.

There, environmental scientists are worried about illegal discharges. “You just know there's going to be still spillage and contamination," said Walter Schlesinger, President of New York's Cary Institute of Ecosystem Studies.

Last summer's EC report was firm about the need for more legislation to protect the environment. "The threshold for Environmental Impact Assessments to be carried out on hydraulic fracturing activities in hydrocarbon extraction is set far above any potential industrial activities of this kind, and thus should be lowered substantially," it concluded.

What is shale gas?

Shale gas is extracted from sedimentary rock formations that act as both the source and the reservoir for the natural gas.

For this reason it is characterised as a “diffuse” source of gas, i.e. stretching beneath a large area. Numerous wells therefore need to be drilled and analysed in order to sufficiently determine the potential of the shale formation.

If sufficient gas is determined to be present, many horizontal wells from a single pad are drilled.

At this pilot stage there will be hydraulic fracturing and micro-seismic surveys.

If sufficient reserves are found, then commercial exploitation may begin.

According to Mike Stephenson, head of energy science at the British Geological Survey in Keyworth, there is, as yet, no peer-reviewed evidence that frack fluid can leak into groundwater.

Much fracking occurs at depths below other layers of impermeable rock which would prevent contamination of groundwater, he says.

Badly managed fracking has been shown to be the cause of contamination in Wells in Wyoming, USA. This, however, involved a shallow sandstone reservoir rather than deeper shale reserves.

Never mind steel producers squealing. This is the real carbon leakage.

The price of carbon permits continues to hover only slightly above its all time low point of seven euros, and there seems to be little interest from the EU to intervene in any way that would cause it to rise.

A good price for EU carbon allowances on the trading market is required in order to boost investment in the low carbon economy.

A leaked draft resolution on the subject that is to be put before the European Parliament merely concurs that "a robust allowance price" is required and that "the present ETS allowance prices provide substantially lower incentives than anticipated".

It does not recommend taking any action.

A cross-party EU environment committee last month argued for withholding carbon permits from an oversupplied market on order to stimulate the price, but this looks unlikely in the foreseeable future.

The UK Treasury, overriding Department of Energy and Climate Change policy, decided in 2011 that a carbon price floor of £16 per tonne of carbon should be introduced unilaterally by the UK in just over a year's time.

(And, as an aside, it is a carbon price floor not a carbon floor price, as many insist on calling it. We are not talking about the cost of linoleum. Even George Osborne gets it wrong - sometimes in the same speech as getting it right.)

This means it would be up to companies registered under the Climate Change Levy to stump up the difference between the price of carbon at the time and £16 in order to provide certainty and motivation for investors in low carbon infrastructure. At the current rate the difference would be over £8 per tonne.

Existing CCL exemptions relating to fossil fuels used in UK electricity generation would be removed, and the amount of fuel duty that can be reclaimed when oil is used to generate electricity would be reduced.

Fossil fuels supplied to all types of electricity generator, including CHP stations and auto-generators, would be subject to increased taxation. This tax would allegedly (according to the big carbon emitters) be passed on to consumers.

This is not an electorally popular suggestion. Desperate mandarins at the Treasury are looking for a way out.

They are supported by manufacturers. EEF, the Manufacturers' Organisation has repeated its call for the carbon price floor plan to be scrapped, arguing that a unilateral move such as this would harm the competitiveness of UK industry.

It warns darkly of “carbon leakage" caused by manufacturing and heavy energy using companies fleeing the country to climes where such onerous burdens are not faced.

However, a different picture is offered by MPs on the Energy and Climate Change Committee, who say in a report published this week: "we believe that the threat of leakage to countries outside the EU has sometimes been exaggerated in lobbying conducted by vested interests".

Having heard evidence from all quarters, they conclude: "We do not accept that it poses an imminent threat to EU industry, except in a small number of sub-sectors.

"The problem should be addressed rationally and compensation should not be hijacked by emotive special pleading."

The MPs point out that the Chancellor has already promised a package of support for emissions intensive industries.

High emitters should come clean

They charge that the large carbon emitting companies that want this compensation must give something in return; namely, complete disclosure of the volume of free EU Allowances from the Emissions Trading Scheme they will receive, as well as the benefits to them, and of the value of support measures, so that all these subsidies for are transparent and can be weighed against the real risks of carbon leakage.

This will either expose or guard against the huge profits some firms have been a le to make from being given free allowances, but passing their costs onto consumers.

They are absolutely right. These big polluters cannot be allowed to have their cake and eat it.

For the same reason, the MPs support the inclusion of aviation within the EU-ETS but say that the EU should move towards 100% auctioning of permits to pollute by 2013 at the very latest; the target of auctioning just 15% of permits by 2020 is “disappointingly unambitious".

The real carbon leakage

But there is another sort of carbon leakage going on, that is much more damaging to the climate than that posed by polluting companies potentially relocating to a more laxly regulated nation.

Where this genuine leakage occurs is in the outsourcing of goods and services consumed in the UK and Europe as a whole to companies outside Europe.

If these emissions are taken into account, then total UK emissions have not dropped by around 14% since 1990, as the official figures ostensibly show; they have actually risen by 20% according to official figures.

These emissions are called, in the jargon, 'consumption emissions'.

In the Scottish version of the Climate Change Act, there is an obligation on the Scottish Government at least to account for consumption emissions.

Would it not be properly ethical and honest for this be applied to the UK as a whole?

A consumption-based approach to the country's carbon emissions would give a better picture of the U.K.'s impact, as Sir Robert Smith, the Scottish Liberal Democrat Member of Parliament for West Aberdeenshire, said during an Energy and Climate Change Committee hearing recently.

Defra expects to be providing regular estimates of consumption emissions, with the first results (for 1990 to 2009) expected in March this year.

The Carbon Trust already use a model for calculating consumption emissions developed by the Norwegian Center for International Climate and Environmental Research (CICERO).

The CICERO model uses two methods: Emissions embodied in bilateral trade (EEBT) and the Multi-Region Input-Output (MRIO) model.

It is the latter that Defra is using for its reports.

The rising level of consumption emissions is a direct function of the increasing balance of trade deficit, and reflects the fact that the U.K.'s imports have more or less continuously risen compared to exports since the mid-'90s except for a brief lull during the 2009 recession when we couldn't afford to buy much.

On this reasoning, one of the best ways to improve the true carbon emission figures of the country as a whole is to consume more products that are produced at home, whether they be food and drink or manufactured goods.

Improving our balance of trade will also increase our resilience to external price volatility and the economy as a whole by providing greater employment.

Amongst the other recommendations of the MPs on the ECC Committee is for the EU to pursue sectoral agreements with important emitting countries like China, from whom we import many goods, in order to target emissions reduction efforts in key industries and deal with competitiveness concerns such as carbon leakage.

But as these countries, like China, take more action to reduce their own carbon emissions by investing in low carbon generation and energy efficiency, which the UK can certainly help them with, the prices of their imports to this country will correspondingly rise.

This gives the UK another reason to produce more of the goods it consumes “in-house".

Improving our balance of trade at the same time as extending carbon taxation to cover all carbon emissions, including consumption emissions based on imports, would be of lasting benefit to the whole economy; and certainly have a better impact on overall emission levels than the sick dog that is the European Emissions Trading Scheme.

Next stop: the Supreme Court. Isn't this a waste of taxpayers' money?

DECC's decision to ask the Supreme Court to overrule yesterday's unsuccessful High Court appeal against its recent ruling on solar PV feed-in tariffs means continued uncertainty for the industry.

Lord Justice Moses at the Court of Appeal ruled that on the question of whether the Secretary of State "has power" to apply a tariff cut before a consultation period is over: "In my view, he plainly has no such power".

As campaigners celebrated their victory, Energy and Climate Change Secretary Chris Huhne said: “The Court of Appeal has upheld the High Court ruling on FITs, albeit on different grounds. We disagree and are seeking permission to appeal.

“We have already put before Parliament changes to the regulations that will bring a 21p rate into effect from April for solar PV installations from 3 March to help reduce the pressure on the budget and provide as much certainty as we can for consumers and industry.

“We want to maximise the number of installations that are possible within the available budget rather than use available money to pay a higher tariff to half the number of installations. Solar PV can have strong and vibrant future in UK and we want a lasting FITs scheme to support that future and jobs in the industry,” he said.

Industry reaction to the High Court decision is relief mixed with apprehension. Chris Hopkins – Managing Director of Ploughcroft and successful contestant on the BBC’s Dragons Den, called it "excellent news for homeowners".

But the Electrical Contractors’ Association (ECA) warned of a "wild ride" ahead for an industry that is "already reeling from Government announcements in the last few months".

Paul Reeve, its Head of Environment, cautioned: “Before anyone celebrates, we should remember that future funding for FITs is not unlimited. "Some of the available cash could now be used up in a second ‘rush to install’ before 3 March, when FITs will be halved to 21p/kWh,″ he said.

The first ‘rush to install’ took place up to 12 December to beat the Government’s initial deadline for halving FITs and resulted in far more PV installations than DECC had planned. These will now be receiving the high rate for 25 years.

"A second rush now could put even more pressure on future FITs,” observed Reeve.

Nathan Goode, Head of Energy, Environment and Sustainability at tax auditors Grant Thornton, agreed that the "judgement is prolonging the agony. Whatever the theoretical rights and wrongs of the case we need to get to a position of stability as quickly as possible to provide the solar industry and investors with the certainty needed to allow them to move forward".

The Renewable Energy Association (REA) called for an end to the "fiasco" so that "the UK solar industry can get back to business".

The Solar Trade Association and Friends of the Earth continue to warn ministers of risks to 29,000 jobs as a result of subsidy losses, arguing that the tariffs could be paid for from tax payments which the industry generates.

They put this figure at ￡330m per year minimum, from income taxes, corporation tax, and VAT.

But Energy and Climate Change Minister Greg Barker said in the Government's defence that the higher tariff will cost consumers ￡1.5bn over 25 years and sought to blame Ed Miliband for the chaos, as he introduced the system.

Howard Johns, of the Solar Trade Association, countered that it wasn't the cut, but the way Greg Barker's department had managed it which was the problem.

The coalition of campaigners also wants the Government to look again at what FoE calls "over-strict energy efficiency rules that will prevent 90 per cent of houses from claiming solar subsidies".

This refers to a new rule that, from April 1st 2012, properties must have an Energy Performance Certificate (EPC) rating of C or above, to be eligible for the feed-in tariff.

This will penalise many old, solid-walled properties which, even with double-glazing, low-energy lights, a condensing boiler, thermostatic radiator controls and loft insulation, can only score D or E on the EPC due to a lack of wall insulation.

Green electricity supplier Good Energy commented that, "it looks as if rather than encouraging greater energy efficiency, the EPC standard is just another way of discouraging FIT take-up".

Campaigners also want the Government to keep housing associations, schools, councils and other community projects on the higher tariff rate.

"Helping more people to plug into clean British energy will help protect cash-strapped households from soaring fuel bills," said Friends of the Earth’s Executive Director Andy Atkins.

Much of the industry laments the chaotic way the Government has managed the situation. Andy Boroughs, CEO of Organic Energy says he "understands that solar payments must be cut in line with falling costs, but the Government must now accept that its illegal actions were putting the industry and thousands of jobs at risk.

“The industry needs stability," he said, adding that "if the Government is serious about its commitment to the renewables, it should accept this ruling and get back down to the business of supporting a sector which is helping to grow the UK economy as well as creating sustainable jobs”.

DECC's consultation on feed-in tariffs closed on 23 December with over 2,000 responses.

Greg Barker has promised that the outcome will be announced by 9 February 2012, in time for any resulting legislative changes to come into effect from 1 April 2012.

"Our aim is that this announcement will be accompanied by a set of reform proposals for the next phase of the comprehensive review of the FITs scheme, which will be the subject of a further consultation," he added.

All of which means that the solar industry will soldier on through a fog of insecurity for some time yet.

Afterthought: Germany currently has the highest power prices within the EU (24.4 cents per kilowatt-hour), but a recent survey by Forse for the German Association of Municipal Utilities found that an overwhelming majority of Germans are willing to pay the price as long as they get green power in return.

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Personal carbon trading "could fill the Green Deal gap"

Personal carbon trading is at the heart of a new proposal from academics to reducing energy use in buildings and help meet the aims of the Green Deal.

It comes in the form of a strategy document, Achieving Zero, being launched today by Dr. Brenda Boardman of Oxford University's Environmental Change Institute, which she hopes will help transform the UK’s built environment in a fair and equitable way.

Clinching the Green Deal

Dr. Boardman claims her recommendations will "lift millions of people out of fuel poverty, and improve the UK’s energy security" in a way that is "considerably cheaper than providing new energy supply".

The report comes at a critical time, as DECC's mandarins are now mulling the responses to questions about the Energy Company Obligation (ECO) and Green Deal's implementation in the recent consultation process.

The Environmental Industries Commission’s Executive Chair, Adrian Wilkes, has pointed out that "its successful implementation will be no easy feat" since it must "have widespread appeal and take-up from all sectors and demographics if it is to be successful".

Not only does it need the "required skills for Green Deal Assessors", but a broad "list of qualifying measures, products and systems" to cope with "the disparate number of building sizes and uses".

Most importantly, "it is vital that the scheme is felt to be financially viable in the eyes of both the suppliers and the consumers," he said.

Dr. Boardman's low carbon diet plan

Dr Boardman, who has long been a passionate advocate of domestic energy efficiency as a way of curbing fuel poverty, takes the view that the Green Deal must be seen strategically as part of the move towards the 2050 zero carbon use target.

“The change in perspective is substantial," she said, launching her report at Salford University, "as in future the value of our homes and offices will be linked to their energy efficiency.

"Reducing our demand for energy becomes an investment for every property owner.”

Achieving zero describes a triple-win situation through jobs, improvements to infrastructure, and energy security.

“We already spend ￡35bn a year on improving and maintaining our buildings," she says. "We need to refocus 40% of this into energy-efficiency and spend less on expensive kitchens and conservatories.”

Her key recommendations include:

• progressively more challenging, legally-binding standards of energy efficiency for properties, based on Energy Performance Certificates in homes and display energy certificates (DECs) for business properties
• a network of Low Carbon Zones set up by local councils that target the worst performing homes, especially those occupied by the fuel poor, using the legal obligation to eradicate fuel poverty (where reasonably practicable) by 2016 under the Warm Homes and Energy Conservation Act 2000
• remaining emissions in households being mopped up "through some other policy that covers all energy use, such as personal carbon allowances (PCA)".
•  

Personal carbon allowances

PCAs have been promoted by Dr. Boardman before. They give individuals an annually reducing carbon budget and they are rewarded if they live within their budget by being able to trade surplus allowances.

DECC has previously rejected them as unnecessary, given the existence of the Emissions Trading Scheme.

However, the failure of this scheme to provide sufficient incentive to invest in large low carbon infrastructure due to the oversupply of credits and their consequent low price, has led to scepticism and the Treasury's crestfallen contemplation of the cost implications of its commitment to introducing a carbon price floor.

PCAs, because they promote fairness and personal lifestyle change, remain attractive and for this reason are the explored by a new book, "Sharing for Survival: Restoring the Climate, the Commons and Society" to be published next month, co-authored by a group of campaigners that includes the late Richard Douthwaite.

PCAs are being used in practice now by one pioneering firm to reward employees and stakeholders for making energy efficiency improvements.

Green consultancy WSP Environment and Energy's scheme has 2,200 individuals taking part on a voluntary basis from 15 different organisations, including National Grid, Ecclesiastical Insurance and the London Borough of Haringey.

Its director, David Symons, says the scheme helps "staff understand that sustainability is relevant to them".

One of the scheme's members, Inga Doak, Head of Environment at Invensys Rail praises the scheme, as it "demonstrates pro-active leadership... It was fascinating to see people's perceptions of their carbon footprint and it helped to blow some carbon myths out of the water."

The home refurbishment mountain

Dr. Boardman sees PCAs as complementary to actions which reduce the carbon emissions burden of things that are outside individuals' control, like the state of the buildings they use.

The rate of activity required to meet the Green Deal targets is staggering: for every hour over the next 39 years, 82 existing buildings should be retrofitted to the level of band A on the energy performance certificate, Dr. Boardman calculates.

This is a 25% faster than has been achieved over the last 40 years.

If this were to be done, by 2050, all of the UK’s 28 million properties would be so well-insulated that they would require no external energy for space heating.

Electricity use, per property, would be halved and supplied solely from renewable electricity on the grid as a result of policies on lights and appliances, the report says.

How would this be financed? The report envisages that building improvements will continue to be the responsibility of the property owner, with Government providing zero-interest loans to low-income owner occupiers.

Once minimum standards are attained, properties would become more valuable, and be an asset in which lenders may have an equity stake.

Other financial inducements could come in the form of reduced tax liability (stamp duty, council tax, VAT), but at a scale required to ensure popular support in conjunction with the regulatory framework.

The size of financial incentives is inversely proportional to the certainty of the regulatory environment, particularly on minimum standards, Dr. Boardman says.

Value for money

An emphasis on reducing energy demand would result in the most cost-effective cuts in the UK's carbon emissions, with the benefit of lower bills and greater comfort for consumers.

The alternative, being touted by some in the Coalition Government, of a higher level of new, expensive electricity-generating capacity, implies considerably higher bills for users, thus pushing more households into fuel poverty, without providing any improvement in the level of energy services or spreading wealth by improving building value, or raising public awareness of energy use.

It therefore represents greater value for money.

Crucially, it all rests on the level of the interest rate at which capital is lent to finance the work and the period over which it is to be repaid.

Dr. Boardman concludes, "The UK cannot meet its legal obligations on eradicating fuel poverty by 2016 and 80% reduction in greenhouse gases by 2050 without most, if not all, of the proposed initiatives".

Doubts over Green Investment Bank's future borrowing power

Serious doubts have arisen over whether the Treasury will allow the Green Investment Bank to begin borrowing money, as scheduled, in 2015/16.

The Department for Business, Investment and Skills, which is driving the setting up of the GIB, has told EaEM that the bank "will be given borrowing powers at this time subject to the targets for reduction in national debt being met and further state aid approval being granted".

The BIS spokesperson added that "GIB borrowing will score against the national debt".

The Aldersgate group, which represents big companies like BT, M&S and Microsoft, has been secretly lobbying for the government to remove this condition, which it says will curtail their ambitions.

She said: "We will need to ensure that the necessary controls are in place so that borrowing is transparent and liabilities can be managed effectively. The decision on the level of borrowing cannot be taken now.

"When considering it in the future, both investment requirements and wider fiscal affordability will be taken into account."

The question is: will the fiscal targets will be met, since the Chancellor George Osborne admitted last Autumn that it would take two years longer to pay off the country's debts than he had originally estimated when he set up the Bank?

The Treasury's target was, before the Autumn Statement, that by 2015-16, public sector net debt as a percentage of GDP must be falling.

The chances of this were then estimated by the independent Office of Budget Responsibility as only "greater than 50%".

Then, the Treasury said that by 2014-15 there would be additional reductions in current spending totals of ￡30 billion a year (these were fixed in the Chancellor's June 2010 Budget).

80% of the further reduction in the deficit at this time was already supposed to come from reductions in public spending.

Autumn Statement

But then came the Autumn Statement, and the OBR revised its fiscal portrait of the UK.

They said Britain has the highest structural budget deficit of any major economy in the world.

They forecast that the current structural deficit will fall from 4.6% of GDP this year to a current structural surplus of 0.5% in five years' time - not three years as previously thought.

The debt-to-GDP ratio – which is forecast to stand at 67% this year – would peak at 78% in 2014-15 and be falling by the end of the Parliament.

As a result, the Chancellor set revised expenditure totals for the two years following the end of the Spending Review period: 2015-16 and 2016-17, i.e., the point at which the Green Investment Bank is supposed to be able to borrow.

He said that Total Managed Expenditure would now fall during that period by 0.9% a year in real terms, but with a baseline that excludes all the additional investments in infrastructure he announced at the time; expenditure which excludes that of the GIB.

The consequence must be that there is now less than a 50% chance of the Treasury's target being met, of public sector net debt as a percentage of GDP falling by 2015-16.

In the same speech George Osborne infamously uttered the words "I am worried about the combined impact of the green policies adopted not just in Britain, but also by the European Union".

To borrow or not to borrow?

When the Green Investment Bank was set up, it was strongly advised that it be constituted as a proper bank, and there was even a call to permit anyone to invest in it, with ordinary people being able to buy Green Bonds in order to finance the green industrial revolution.

The Treasury decided this was too risky and unwieldy, and that it could not be seen to borrow more money at a time when the rest of Government borrowing was being cut.

Chris Huhne, the Secretary of State for Energy and Climate Change, fought, and lost, the battle for the Bank to be able to borrow from Day One and therefore to have more funds at its disposal.

Instead, the Treasury set the date at 2015/16, subject to the above target being met, which now seems increasingly unlikely.

￡100 billion by 2020 is a conservative estimate of the cost of the required upgrading of the National Grid, new renewable energy generation like energy-from-waste, the Green Deal, FITs, the Renewable Heat Incentive, ECO, and other measures to decarbonise and future-proof the UK economy and energy sector from the risks of fossil fuel price volatility and climate change.

The Green Investment Bank and the carbon price floor are the Treasury's key means of meeting this bill.

BIS' spokesperson told EaEM that "Our key priority at present is to ensure the establishment of the bank for 2013 and we are on target to achieve this. The GIB is being capitalised to an extent that it will not need to borrow before 2015/16."

The capitalisation is coming partly from the sale of government assets.

￡1 billion stems from standard departmental allocations, and ￡775 million has already been received from the net proceeds from the sale of the high speed rail link.

"The remaining ￡1.225 billion is expected to come from future asset sales," the spokesperson said, adding that "The Chancellor has said if these sales are not completed in time, this sum will be underwritten by the Treasury".

CBI slams Treasury interference

The Confederation of British Industry has long called for the Bank to be made effective, and today criticised the way the Green Deal and ECO are being set up, saying the Green Deal won't meet its targets as it is currently designed.

John Cridland, its Director-General, has warned that the Bank "certainly won't work if it needs the Treasury's permission to blow its nose.

"The bank needs to be able to get into the markets itself and do what it's intended to do."

If the date by which the Treasury is to permit it to do this is put off even further this will severely curtail its already reduced effectiveness.

Yet Mr Cridland has said it is crucial that the "Green Investment Bank deliver certainty for investors if it is to generate the scale and pace of investment needed to shift the UK to a low-carbon economy.

"I want it delivering growth - large-scale, mainstream economic growth. I want it delivering the low-carbon infrastructure, leveraging the ￡450bn we need by 2025, that'll bring jobs and opportunities to the UK," Mr Cridland added.

But unless it is released from the Treasury's tether, this can only happen later rather than sooner.

Community energy schemes receive funding but mixed messages from Government

The first 82 local energy projects run by communities throughout England have won funding from the Government's ￡10m Local Energy Assessment Fund (LEAF).

But at the same time, many community-led solar PV projects are still waiting to hear if they will receive enhanced support from feed-in-tariffs.

LEAF is managed by a consortium of community networks administered by the Energy Saving Trust.

The money given is intended to be used for understanding energy efficiency and renewable energy generation issues at a local level and to help communities to prepare for new opportunities in sustainable energy and climate change arising from the Green Deal, Renewable Heat Incentive and feed-in-tariffs.

There was a high volume of applications for the first round of awards. The second round is open until 20 January and the website above contains full details of how to apply.

Many of the winners are part of the Energyshare network.

￡50,000 is the average size of the award for each successful bid, but it depends on the proposals put forward. Any work needs to be completed by end of March 2012.

Peter Lipman, Chair of Communities and Climate Action Alliance said: “Hundreds of communities responded fantastically to the opportunity afforded by LEAF with imaginative and innovative schemes. It’s wonderful to see that many of them will be funded and so will have a chance to show just what those communities can deliver.”

Feed-in-tariffs confusion

Government support for communities wanting to engage with the low carbon agenda has come under renewed criticised lately over the removal of their ability to claim high returning feed-in-tariffs for solar electricity.

"Why on earth have [the Government] not excluded housing associations, schools, council and other community projects from the damaging proposal to give multibuilding projects ever lower financial support?" asked Lord Judd during last Thursday's Lords debate on the Government's green record.

Lord Marland, speaking for the Government in reply, gave no sign that it would give way on the matter and revise its position on the tariffs.

On Friday, the judges at the Court of Appeals postponed their decision on the Government’s appeal against the High Court’s recent finding that its cuts to the photovoltaic feed-in tariff (FIT) rates were unlawful. A decision is expected later this week.

The Renewable Energy Association’s Gaynor Hartnell commented that no one has liked how the government has carried out the FIT review process, and that the judges should "ensure that the Government thinks twice about acting in such a cavalier manner again".

However, she added that "the majority of our members want to draw a line under this affair, look forwards, and get on with installing systems at the new tariff rates".

The Department of Energy and Climate Change has issued a statement saying that once the court arrives at a decision "we will consider our options and make an announcement on the way forward to provide clarity to consumers and industry".

Amongst the clarity required by communities is whether a much lower tariff will now be applied to schemes where an organisation receives payments from multiple installations on different sites, as happens in some cases (the proposed cut is of 80%), or, whether genuine community renewable energy projects will be given special levels of support in recognition of their enhanced efficiency and the spin-off benefits.

The benefits of community energy

These benefits include social cohesion, reduced crime, a better local environment and spreading awareness of renewable energy and energy efficiency, all aims of the LEAF scheme.

Many projects have been cancelled or put on hold as a result of the confusion over FITs.

The situation means that the community-scale schemes that are now proceeding are more likely to be privately owned.

E.ON is one utility giant that is pushing into this market. Its Sustainable Energy division specialises in district-level or 'distributed' energy, employs 500 people with a turnover of ￡100m, and is rapidly expanding.

The UK situation is in stark contrast to that in Germany, where most of its $100 billion of private investment in renewable energy is not owned by companies but by communities and individuals; a total of 51% according to Paul Gipe.

40% of this 51% of renewable energy generation is owned by individuals, and 11% is owned by farmers. Just 13% is owned by power utilities. The rest is owned by a combination of developers (14%), investment funds (11%), industrial ownership (9%), and “others” (1%).

"German farmers, community leaders and entrepreneurs are not only democratising electricity generation and renewable heat, but are also setting their sights on an equally ambitious prize, the transmission system itself," comments Gipe, an advocate of community wind power since the 1970s.

Though Britain has a long and proud history of community and co-operative ownership, it is perhaps hard for us to imagine how, if this pattern were to be repeated here, it would affect our attitude towards energy supply.

Communities everywhere clearly want to have more engagement with renewable energy, but for decades the Renewables Obligation financing system has unfortunately inhibited this natural inclination and meant that there is only a handful of community-owned windfarms.

One example of such a community is Sustainable Wallingford, established in 2003 by residents of this Oxfordshire town, and which is one of the LEAF winners announced today, for a project to use thermal imaging to show where energy is leaking from homes, and provide advice on energy efficiency and solar power.

The Government continues to send out mixed messages on community energy, but the message from LEAF is that communities do want to be empowered.

The case of the missing carbon emissions

Little did I realise when I wrote last September that an "opencast mine could come to your back yard - and there is little you can do about it", that it would happen in my own back yard!

I have moved recently to a village in Carmarthenshire, where my fiancée lives, and discovered last December that a planning application for an open cast mine in this very village was going through the planning department.

The first we heard about it was on the day of the planning committee meeting at which the application was to be determined, and we had no time to put in an objection. So much for public consultation.

The application is for 330,000 tonnes of material to be removed over 5.4 years from a greenfield site, very near to peoples' homes, by Bryn Bach Coal Ltd. of nearby Ammanford, from which 92,500 tonnes of anthracite will be sold to a brick maker.

The planning officer had already recommended it for approval.

I do not believe the decision has been made correctly and I am continuing to object to it, on several grounds, which are discussed briefly below.

But the most serious issue I've come to realise is that there exists a gap in climate change policy that allows certain emissions to escape anyone's responsibility.

The orphan carbon emissions

The Climate Change Strategy for Wales stipulates the following targets:

1. To reduce greenhouse gas emissions by 3% per year from 2011 in areas of devolved competence, against a baseline of average emissions between 2006-10
2. To achieve at least a 40% reduction in greenhouse gas emissions in Wales by 2020 against a 1990 baseline
3. The 3% target will include all ‘direct’ greenhouse gas emissions in Wales except those from heavy industry and power generation, but including emissions from electricity use in Wales by end-user.

It is unclear whether or not open cast coal mining is included under "emissions from heavy industry and power generation".

Emissions from "heavy industry and power generation" are excluded because their emissions are already catered for by the Climate Change Levy (CCL).

The applicants for this proposal have explicitly said that the customers for the anthracite they will extract, a brick-making kiln, are not covered by the CCL.

The Planning Officer actually misunderstood this to mean that he did not have to address the climate change aspects of the application's objectors!

This last ludicrous incident aside, this raises the wider question of who, in planning law, has responsibility for the emissions that will result from the extraction of fossil fuels if they are not burnt by end users covered by the CCL?

The answer appears to be: no one.

As I wrote last month, the UK's greenhouse gas emissions are increasing as a result of burning more coal.

Wales is supposed to have put sustainable development at the heart of every planning decision taken in the principality. This should mean, accounting for climate change.

The emissions resulting from open cast mining like this must be taken into account in Wales by planners, since they certainly won't be in any England-based planning decision but affect total UK emissions.

Carmarthenshire Council would be taking a brave stance if it were to do so and refuse the application. Unfortunately, this is unlikely since it has been voted the runner up in the 2011 Private Eye rotten borough awards (unless it wanted to redeem itself)!

Be that as it may, Welsh and UK legal advice certainly needs to be clearer on the matter of the extraction of hydrocarbons, a tough call in a nation emotionally still wedded to coal mining.

Planners need to be able to take into account the end use of the material to be extracted when deciding whether to grant permission for a coal-mining proposal to proceed, i.e., whether the emissions resulting will be accounted for so that attempts will be made to reduce them.

The 500 metre buffer zone

Moving on briefly to other objections, in Wales, unlike England, there is allegedly a stipulation that there should be a 500 metre buffer zone around such workings.

I say allegedly, because the Minerals Technical Advice Note 2: Coal (known as MTAN2) is controversial and open to interpretation.

Some authorities do uphold the 500m rule, others, particularly in former coal mining areas of Wales, too frequently find an excuse to ignore it, because several exceptions are allowable.

The closest properties to the mine are approximately 140m to the east of the site boundary and 250m from the limit of excavation.

In this case, the specific exception criteria noted by the planning officer is "where topography, natural features such as woodland, or existing development, would significantly and demonstrably mitigate impacts".

Yet a casual visit to the site shows that it is fairly flat, open, and relatively high, exposed to the prevailing wind, that would cause dust and noise easily to travel over this terrain to the nearby properties.

Planners have presented no evidence in support of their allowed exception.

Carbon neutralising open cast mining

Para 225 of MTAN2 also says that the planners must require the developer to make their operations carbon neutral.

Again, Carmarthenshire County Council planners have not presented any evidence that they have calculated the carbon impact of the operation and what should be done to neutralise it.

Instead, they have assumed that planting 1.8ha of trees, after the mine is closed, will be sufficient, a calculation based on the unsubstantiated evidence in MTAN2's paragraph 225 itself, a figure very different from that obtained using Forestry Commission figures of 5.4 tonnes of carbon dioxide absorbed by forests per hectare per year and assuming the trees are harvested and stored at their peak growth to sequester this CO2 after 30 years.

Notwithstanding the widespread criticism of using tree-planting to carbon-neutralise emissions in the first place, a widely deprecated practice.

Open cast mining is responsible for more than half of all coal extracted in the UK.

An attempt to include provisions to limit it in the Localism Act were over-ruled.

MP Andrew Bridgen's Private Members' Bill Planning (Opencast Mining Separation Zones) still has had no time allocated to it for its Second Reading.

Will any MP or Assembly Member take this up?

Vestas lays off 10% of workforce, restructures management

The world's biggest wind turbine manufacturer, Vestas, has announced plans to lose 2,335 employees worldwide, stop production at one of its 26 plants, and has warned that further cuts are likely, in order to save €150m by the end of the year.

This is the third time the company has cut its workforce in as many years; 3,000 were sacked in 2010, and there was the closure of its Isle of Wight factory in 2009 despite massive opposition.

The Danish firm had recently issued its second profits warning in three months and its share price has fallen to its 2003 level.

Its CEO, Ditlev Engel, blamed the fall on €125m of cost overruns and €400m of lost or deferred revenues that removed €130m from the year's profits.

Ironically, it has suffered from high winds at the end of last year, which hindered the installation of turbines in the North Sea, causing €210m of the deferred revenues, although they are expected to be recouped soon, when weather permits.

Vestas does have a full order book, including an order announced at the end of 2011 for 54 MW of turbines from a UK customer.

U.S. subsidy end

Behind the redundancies lie unrealistically high expectations of demand for its products from China, and the likelihood of a loss of demand in the USA caused by the removal of the Production Tax Credit subsidy at the end of this year, which pays wind producers 2.2 cents per kilowatt-hour generated.

Vestas has told the U.S. Congress that if it fails to extend the credit, the company will have to close U.S. facilities, at a cost of 1,600 more jobs.

“2012 will become a very challenging year for the wind turbine industry due to a significantly reduced US market”, said Engel.

“In 2011 in particular, the Chinese market has not developed at a speed anticipated when the year started,” he also admitted.

The company has invested $1bn in factories in America, after President Obama said when taking office that he wanted to support the wind and solar industries to promote energy security.

More than Vestas' jobs are at stake: the American wind industry employs over 75,000 people.

The American Wind Energy Association argues that a consistent level of tax credit is essential in order to avoid the boom and bust cycles that have plagued the industry in the States in the past, and are the reason why Denmark and Germany are now world leaders in wind power, and not the U.S.

Management shake-up

Some have blamed Vestas' troubles on poor management, which, Engel admitted, has given it a "not undeserved" "credibility problem".

For example, it had severely underestimated the costs of increasing the manufacturing of its V112-3.0 MW turbine. Analysts fear that this might not be a unique error and that other cost overruns may be hidden in the balance sheets.

”I can certainly understand if employees as well as people outside Vestas consider us to be in a state of crisis,” admitted Engel in a statement.

"We have to work our way out of this situation and the only way we can do that is by proving that we with our global presence, high customer satisfaction and the industry’s best performing wind power systems will come out stronger after the elimination race which is currently taking place within the renewable energy sector,” he said.

There had been speculation that Engel could be forced of the post he has occupied for six years as president and CEO.

Management is being shaken up; however, Engel will stay.

Ander Søe-Jensen, Bjarne Ravn Sørensen, Finn Strøm Madsen and Peter Wenzel Kruse are all to leave the company.

Henrik Norremark, the former Chief Financial Oficer, is to become the new manufacturing COO, and a new deputy CEO, sales CSO and turbines CTO have all been appointed.

The company is seeking a new finance CFO and global services and solutions CSSO.

A company statement said that "Executive Management is extended to six members to allow greater functional focus on all key parts of the value chain and to drive a stronger performance management.

"And a Global Solution and Services unit will contribute to improving the performance of both existing and upcoming wind power plants and accelerate the development of the services and solution business."

The company is also being reorganised in accordance with the five main elements of its value chain, including the separation of Technology R&D into research and development.

1,600 of the redundancies are to be administrators and 735 are hourly-paid employees.

After the layoffs, Vestas will employ 20,400, a quarter of whom are in Denmark.

General crisis

The turmoil is part of a general situation in the wind and solar industries which, having grown on the back of pubic subsidies, are achieving maturity and now having these subsidies removed, perhaps more prematurely than they should be, due to the ongoing economic downturn.

Vestas does, however, have a record backlog of orders, and Engel reported this morning that "We have seen quite positive interest from some major pension funds into doing investment in this sector".

He said Vestas' treasury function, which has been relocated to Switzerland, was looking into opportunities that could be provided by such financing for wind projects.

"There are some new major funds that are interested in participating in major infrastructure project development," Engel said optimistically.

Electric racer unveiled that's as fast as Formula 1

A demonstration all-electric car that's as fast as a Formula 1 racer was showcased at yesterday's MIA Low Carbon Racing Conference at Birmingham’s National Exhibition Centre (NEC).

The Lola-Drayson B12/69EV project pioneer was shown to Minister for Trade and Investment, Lord Green by its co-developer Lord Paul Drayson, the former Minister of Science and Innovation, both of whom were speaking at the conference.

Lord Drayson hopes the car will enter the first FIA Formula E contest for EVs, which begins in 2013.

He said, "It uses the latest battery technology and aerodynamics to maximise power to 850 peak horsepower.

″We've been working with Lola on the aerodynamics. The surface of the car changes as you approach higher speeds," he explained. "You reduce or lower the wings when going down the straights for example."

Motorsport is being used more and more as a way of trialing and developing low carbon vehicle technologies, such as hybrids, alternative fuels, batteries, sustainable and intelligent materials.

"Electric racing cars change perceptions and make people want a road car," continued Lord Drayson. "They also develop the technology later used in road cars, such as better batteries.

"This car uses wireless charging. That's something which is sure to come to road cars in the not-too-distant future.

"We want to encourage the mainstream manufacturers to participate in this. These cars will have torque-steer, and torque-steer is very relevant to road-car technology," he said.

Revolutionary flywheels

Also on show at the event, which continues all week, is the Flybrid flywheel, which won the Low Carbon Vehicle Partnership 2011 Award for Low Carbon Innovation by an SME last November, given to the company providing "the most promising technology that can reduce vehicle carbon emissions by any means".

The revolutionary flywheel is connected to a vehicle's transmission so that when the ratio is changed to speed up, the flywheel stores energy, and when the ratio is changed to slow down that energy is then recovered.

This is another technology, already used in Formula 1, which will spin off into road use.

Although not new in principle, Flybrid's innovations, for which it has several patents, let the flywheel rotate at over 60,000rpm, making it much smaller and lighter than has previously been possible, and with insignificant gyroscopic forces.

With a design life of 250,000km, the technology greatly extends battery life.

Also involved is the Sustainable Vehicle Engineering Centre (SVEC) at Oxford Brookes University, which is researching lighter materials, design issues and drivetrain concepts.

The Lola-Drayson partnership

Lord Drayson and Lola’s Executive Chairman, Martin Birrane, first dreamed up their project at the Autosport show two years ago.

Lola specialise in lightweight structures for the aerospace, defense, renewable and automotive sectors, and Drayson Racing has been involved in green racing since 2007, experimenting with biofuels and carbon capture.

Their car is an electric ultra high-performance vehicle based upon the current Lola LMP1 chassis.

Lola is responsible for all aspects of the chassis and aerodynamics of the car and Drayson Racing Technologies is responsible for all aspects of the drive-train and systems integration.

It functions as a technology demonstration platform for the novel technologies being developed by the project consortium, and is designed to break the lap records for electric vehicles at street, circuit and hill climb tracks around the world and show the speed potential of an EV, lapping circuits faster than a current LMP1 diesel.

High-performance electric motor cooling is another issue being tackled.

"The shape of the car is very different," Lord Drayson said. "That's because the regulations in Formula E are completely open on aerodynamics, so therefore you start with a clean sheet of paper.

"It's going to be central cockpit, a cross between a single-seater and a Le Mans car, a real emphasis on reducing drag because of the importance of low-drag - not so much downforce as you'd see on a single-seater car, but active aerodynamic surfaces to give you sufficient downforce.

"It looks great, but it looks like nothing else."

How the car works

The Lola LMP is designed and engineered by a team from Lola, Drayson, BAE Systems, Halo IPT, A123, Mavizen, YASA Motors, Rhinehart, Cosworth and Multimatic.

It will be powered by electricity stored in a new generation of highly advanced Lithium Nanophosphate® battery cells made by A123 Systems, used for the first time on the Lola-Drayson racing car.

The battery cells are housed in a pack manufactured by Mavizen and drive the four axial flux Oxford YASA motors via inverters supplied by Rhinehart.

Battery charging will happen through a HaloIPT wireless induction system which will utilise coils within the floor of the car which will enable recharging by the car parking over a recharging pad.

The motors generating over 850 peak horsepower will power the rear wheels only, producing more power than the petrol equivalent.

The actual motors will be mounted in a similar place to where there the existing powerplant is located. These will be fitted to the driveshafts and the wheels will be driven in a very similar way to how they are now.

The car will not change gears, but has a single reduction gear linking the drive from the electric motors to the driveshafts.

It will weigh in at about 1000 kg, slightly over the regular 900kgs in LMP1 presently.

The control system is supplied by Drayson Racing Technologies with Cosworth, who supplied the original system for the 2010 LMP1 car.

In addition to the completely new electric drivetrain, the car will benefit from new aerodynamic features being developed by Lola in conjunction with BAE Systems and a new recycled carbon fibre technology.

The Formula E championship

The deadline for expressions of interest in Formula E is in five days' time.

Formula E has an almost open rulebook, with the main stipulation being a maximum battery weight of 300kg.

Given that electric cars are silent, in great contrast to the rip-roaring noises everyone associates with Formula 1, the FIA say that they will give "particular attention" to "the sound signature and design of the cars" proposed by those tendering.

A decision will be made at the World Motorsport Council meeting on March 9 and, in the event of a favourable decision, the Lola-Drayson car will be ready for testing soon after, with Formula E starting in 2013.

Drayson believes EVs have the potential to revolutionise racing. "It's natural when a new technology comes that people think it isn't going to be as good as what they know, and that's why we're doing this. When people see it, they will be amazed," he said.

The cars will be on show at Autosport International 2012, from Thursday 12th to Sunday, 15th January.

Scotland to sign renewable energy deal with Masdar at World Summit

First Minister of Scotland Alex Salmond at a Round Table discussion on the shift from a hydrocarbon to a low carbon economy in Qatar last November.

Scotland is to sign a renewable energy deal with renewables giant Masdar, based in Abu Dhabi, in the first agreement of its kind between Masdar and an individual nation.

The arrangement will see Scotland's Energy Technology Partnership, a union of 12 Scottish universities, partner with The Masdar Institute to develop new technologies in wind, solar, wave and tidal power.

First Minister Alex Salmond is visiting the capital of the United Arab Emirates next week to sign the “ground-breaking” partnership at the 5th annual World Future Energy Summit (WFES).

He will be there alongside other world leaders, such as UN Secretary General Ban Ki-Moon and Premier Wen Jiabao of China.

Westminster is only sending Lord Howell of Guildford, the Foreign Office Minister responsible for International Energy Policy.

Masdar, an Abu Dhabi state-owned company, was set up five years ago to wean the oil-rich state away from its dependence on fossil fuels and invest in renewable energy projects.

It has a multi-billion pound capital fund for investment in projects across the world, some of which Salmond hopes will end up in Scotland. He was in the country two months ago, negotiating the deal.

After all, according to Fortune magazine, Abu Dhabi is the richest city in the world.

The First Minister said: “This is the first agreement of its kind between Masdar and an individual nation and will work towards developing further university research into renewable energy.

"This landmark deal rightly puts Scotland firmly at the forefront of the green energy revolution and I look forward to this relationship between Scotland and Masdar growing and delivering for all our global futures."

Masdar has several major projects, the most astonishing of which is Masdar City. Situated 17km from downtown Abu Dhabi, this high-density, pedestrian-friendly development is being constructed to be self-sufficient in renewable energy, to test and showcase clean technologies.

It hosts The Masdar Institute, developed in cooperation with the Massachusetts Institute of Technology, and its students are the city’s first residents.

The deal is part of a growing relationship between the regions. In November, Alex Salmond opened the Dubai International Academic City (DIAC), Heriot-Watt University’s new ￡35m (ED200m) purpose-built campus and visited the Masdar Institute.

He said at the time that “this 21st century campus will quite rightly help establish the high quality reputation of Heriot-Watt University in the United Arab Emirates and will pave the way for the University’s expansion in the region and further afield".

Illustrating the strategic nature of the relationship, Lena Wilson, Chief Executive of Scottish Enterprise, added that “by collaborating with Dubai we can proactively make it easier for Scottish companies to trade within the UAE, ultimately boosting the Scottish economy”.

World Future Energy Summit

On show at the World Future Energy Summit will be:

• a 200-megawatt wind farm under development on the Gulf of Suez
• a 160-megawatt solar power plant in Morocco
• the US$400 million Shams Ma’an photovoltaic power plant underway in Jordan
• and 25 other key renewable energy projects with a combined value of US$4 billion.

French oil company Total, a sponsor of the WFES, is demonstrating Shams 1, another large-scale solar power facility being developed by Masdar in the United Arab Emirates.
Total says it views solar power as helping the Middle East economies to diversify and gain long-term energy security.

“Some renewable energies are already competitive with fossil fuels, like onshore wind and certain types of solar. That’s a fact,” said Jean-Marc Otero Del Val, Senior Vice President for Power at Total Gas & Power.

“Through solar power Gulf countries can displace their domestic oil and gas consumption and supply conventional energy to other parts of the world that need it.

“In the solar industry you have a lot of small companies lacking the expertise in putting together large projects. As a major partner of Abu Dhabi in oil and gas and other energy projects, we have significant capabilities in this area.”

Scotland also has experience of managing major oil and gas projects, and is seeking to secure its own renewable energy-based and nuclear-free future, as oil and gas fields in the North Sea wind down.

Whereas Abu Dhabi has a target of producing 7% of its electricity needs from renewable sources by 2020, Scotland is expected to exceed its renewable electricity target, set in 2007, of 31% by 2011, and has raised its 2020 target from 50% to 80%.

The knowledge-sharing between Scotland and UAE will obviously be going both ways.

Exposed: airlines to make windfall profits from the EU-ETS

Four US airlines didn't hesitate to say they would immediately add $3 to a European flight - each way.

Contrary to complaints that the European carbon tax on flights will harm them, analysis shows that many air carriers could well end up with large profits.

Two studies bear out this claim. The first, from the Journal of Air Transport Management, part-funded by the US government itself, has calculated that if airlines were to pass all costs of the emission certificates on to passengers, then they will make up to $2.6 billion profit over the next eight years because most of the permits will be given away for free.

The authors conclude: "Windfall gains from free allowances may be substantial because, under current allocation rules, airlines would only have to purchase about a third of the required allowances."

American companies have not hesitated to impose costs on passengers due to the EU-ETS, which came into force on January 1st, ahead of all other carriers in the world, while at the same time calling for trade sanctions against Europe.

The US Congress is considering measures that would prohibit US airlines from taking part in the EU-ETS. Secretary of State Hillary Clinton has written to the Commission warning the US will "be compelled to take appropriate action" if the charges are not postponed.

Delta Air Lines, American Airlines, United Continental and US Airways Group and US Airways say they  have already added a $3 surcharge each way on tickets for flights between the United States and Europe.

But actually, in practice, it is impossible to tell what proportion of a ticket price is a result of the EU-ETS, says Rick Searney of the website farecompare.com, which monitors pricing of air travel, since many factors affect ticket pricing and operators won't reveal commercially-sensitive information.

The academic paper's conclusions are backed up by number-crunching from an aviation analyst at UK-based RDC Aviation, Peter Hind.

He has calculated that if Delta were forced to buy every permit in the open market it would cost them around 3 euros ($3.80) per passenger, based on current EU carbon permit prices equivalent to a tonne of CO2 of around $8.55.

“That would, of course, cover all of their CO2 emissions and therefore you could work on the basis that their free permit allocations were a windfall – assuming that it doesn’t damage demand, of course,” comments Hind.

This contrasts wildly with airline industry claims that the scheme will cost it about €1 billion this year, rising to €2.8 billion by 2020.

Many airlines. such as Thai Airways. have already been buying carbon permits in the EU ETS, taking advantage of the current record low prices of around €7.9 per ton of carbon.

The notion that airlines could make windfall profits was predicted by WWF in 2006.

Free credits

The actual figures airlines pay will depend on the fuel efficiency of each aircraft and how many passengers are on board each flight.

Airlines will receive 85% of the permits they need in the first year for free. The EU intends them to use such profits to invest in more efficient aircraft.

The percentage of free credits will then fall to 82% from 2013 to 2020.

The free allocation is based on figures submitted to the EU detailing airlines' share of passengers and cargo transported in 2010 that is expressed using a revenue-tonne-kilometre metric.

"If you look at the impact on the ETS, that only starts kicking in at the end of the year. It's very clear that they're (airlines) looking for excuses in more or less the same way as the power companies did when the ETS started," said Dutch Green member of the European Parliament Bas Eickhout.

The situation looks like becoming reminiscent of that for the European energy intensive industries.

Analysis by Sandbag and others has shown that the top ten "Carbon Fat Cats" in these industries share between them 240 million surplus allowances with a value of around €4.1bn.

Their report concludes that "the fact that the ETS has provided substantial windfalls to some participants and a money making opportunity for many others has not prevented industry from attacking it whenever it can and from successfully lobbying to keep it in its current state".

Many airline operators are now following the example given by these existing participants.

The International Air Transport Association (IATA), has asserted that the ETS will cost airlines $1.15 billion in 2012, forecasting a 49% fall in 2012 industry-wide profit to $3.5 billion.

However, the weak global economy and high fuel prices are more likely to be behind this drop.

EU position

The EU position says that it is only right that airlines, like other industries, should pay for the carbon they emit.

They have had since 1997 to come up with their own solution, when the Kyoto Protocol on tackling climate change asked developed countries and the UN's International Civil Aviation Organisation (ICAO) to find a way to reduce aviation greenhouse gas emissions, and have not done so on their own.

The EU will impose financial penalties of up to €100 per tonne of CO2 on non-compliant carriers, or even ground them.

"From our point of view it is quite simple," a spokeswoman for EU climate commissioner Connie Hedegaard has said, "there is a law and we expect people to follow it."

The measure is hoped to save around 183 million tonnes of CO2 each year by 2020. But this may be counteracted by growth in air travel: the Commission expects traffic to rise more than double from 2005 levels.

The Commission's own figures state that complying would add between €2 and €12 per passenger, depending on how much airlines decide to pass on to their customers.

Thomson Reuters Point Carbon data calculates that the impact will only begin to happen from 2013 to 2020, when airlines are expected to buy about 700 million permits.

This could help to drive up the carbon price, which is necessary to finance low carbon infrastructure.

Jean Leston, head of transport policy at WWF-UK, said more credits needed to be auctioned, with the receipts funnelled towards efforts to combat climate change, such as the UN's $100bn Green Climate Fund.

Other airlines' responses

Lufthansa is amongst European airlines that has said it will raise ticket prices as a result of the EU-ETS, but it will not do so yet. It says it will need to buy 35% of the permits it needs for 2012 on the open carbon market.

The world's second largest long-haul carrier after Dubai's Emirates claims that the cost of the credits will be €130 million this year, but will not disclose how this is calculated.

Singapore Airlines Ltd. (SIA), the world's second-most valuable airline, is adopting a more progressive stance, saying it would try to offset the impact of the ETS by improving fuel efficiency and reducing its carbon emissions, which would lower the carbon charges.

This is exactly the response hoped for by the European Commission. In practice it is likely that most airlines will follow suit, though they will not shout about it.

Cathay Pacific has said the ETS would add about $6.44 to a ticket between Hong Kong and Europe.

“The airlines will never admit to the reason for a surcharge because they will say they don’t discuss pricing decisions,” he said.

"Fares are dynamic. They are going up and down all the time according to market conditions. Carbon is just another cost," adds Bill Hemmings, manager of environmental lobby group Transport & Environment.

China's position

The China Air Transport Association (CATA) is also mulling whether to take legal action against the EU on the tax and has declared a policy of non-compliance.

The EC says that a 17,000-kilometre flight from Frankfurt to Shanghai would generate about 678 kilograms of carbon, using the UN's ICAO carbon calculator.

Assuming a price of €17 per tonne (around double the current level) and the full value of emissions being passed to fares, that would increase a ticket price by €11.50.

China, the world’s biggest emitter, has a target to reduce greenhouse gas emissions per unit of output by 40-45 percent from 2005 levels by 2020.

Its policies to achieve this include implementing energy efficiency and energy intensity measures, but poor inter-ministerial coordination is hindering development of a carbon trading scheme.

The National Development and Reform Commission (NDRC), which has overall responsibility for carbon emissions, hopes to launch pilot schemes in seven cities and provinces next year.