The Government continues to claim that it is delivering certainty to potential investors in low carbon technology, while these selfsame investors continue to say they don't have it.
The new Energy Bill and the Finance Bill 2013 all contain reams of assurances or regulations intended to balance the competing requirements of the two wings of the Coalition. This is represented in Westminster shorthand by Osborne, Energy Minister John Hayes and Environment Secretary Owen Patersen and 100 or so back-bench MPs on the one hand, and Greg Barker plus many Lib-Dem MPs on the other hand. Energy Secretary Ed Davey leans towards the latter rather than the former grouping, but manages to defend DECC's turf at least some of the time against the parsimonious tendency of the Treasury.
I'm sorry, I'll rephrase that: the above two documents are intended to balance the competing requirements of keeping the lights on for the UK, improving energy security and combating climate change.
Like the resolution called The Doha Gateway Package, which came out of the latest UNFCCC climate talks (vague ideas to do little until 2015), they represent both a victory for business-as-usual and a beanfest for legions of accountants and consultants who will be needed to interpret them for everyone else. In failing to tackle the dangers revealed by the latest evidence of the rate of climate change, they will satisfy no one but these players.
As the world races to increasingly certain climate disaster later this century, governments' payoffs to the bankers to compensate them for the mistakes they themselves made five years ago, mean that they have a plausible excuse not to cough up the mere 1% of global GDP required to ameliorate and mitigate the worst excesses of climate change.
Even as Chancellor George Osborne simplifies the Carbon Reduction Commitment, for the benefit of businesses affected by it, he introduces even more complex rules, governing the Carbon Price Support (CPS), Climate Change Levy (CCL), Carbon Price Floor (CPF), Capacity Payments and Feed-in Tariffs with Contracts for Difference, terms only civil servants could have dreamed up.
And this is after business complained that an earlier version of the Bill was too complicated.
The Gas Strategy promises support for gas extraction but gives no support for a new gas power station.
As I prophesised at the beginning of this year, the prognosis for concrete action on the construction of a new nuclear power station is still unclear, a year later, despite approval being granted by the Health and Safety Executive for NNB GenCo's European Pressurised Water Reactor design, because no one knows from where the money to pay for it will come.
Offshore wind power remains a reasonably safe bet, but only for turbines erected before 2018, when the Renewables Obligation gives way to the carbon price floor. And no one knows yet how that will work, because the price of carbon insists on staying frustratingly low.
All of which means that at the end of 2012, hopes are pinned on the one set of actions that is easier and cheaper to attain than any of the above. This has been a dark horse, largely ignored by government for decades, but now racing up on the outside with a chance to clinch a win, if the imaginative proposals in a recent consultation document are implemented.
I'm talking about energy efficiency of course. Demand reduction is already included in the Energy Bill's Capacity Market, but the suggestion of businesses and individuals being given premium payments for each kilowatt–hour saved by installing energy-efficient equipment are the centrepoint of last November's proposals for reducing energy demand, published by DECC.
The payments would work in a similar way to feed-in tariffs, but instead of being paid for generating renewable electricity, bill-payers would be paid for not consuming electricity, a solution that is, paradoxically, cheaper for energy companies than building new generators. It was first pioneered by Californian utility Pacific Gas and Electric in the 1970s.
The consultation contains other exciting ideas: an energy supplier obligation for the non-domestic sector to encourage energy companies to insulate business premises, similar to the Energy Company Obligation in the domestic sector, and financial incentives to encourage the replacement of out of date equipment like motors, boilers and fridges with new, more efficient versions.
Financiers say they are seeking certainty from Government. The CBI complains at the length of time it is taking for policies to become law. The Federation of Small Businesses and the manufacturers’ organisation, the EEF, complain about carbon taxes.
But investing in energy efficiency has always been able to provide certainty. Marginal abatement cost curves of energy measures, like those provided by DECC, McKinsey, Mott MacDonald or the Committee on Climate Change, consistently put it up front, on the left, below the line. Sure, different measures have different the internal rates of return, and they are dependent on future energy prices and inflation rates. Yet this is familiar territory for business.
It's just that energy management has not so far attracted the attention of senior executives. But from now on it must and will increasingly do so, especially if these proposals, which we should all back, are made law.
The absolute conclusion is: we can wait forever for government to act, and when it does it will never satisfy each and every one of us. But the logic of energy management, correctly applied, will always yield investor certainty. It will save carbon, save money, and create jobs.
Monday, December 17, 2012
Sunday, December 09, 2012
Doha wins 'damage aid' for poor countries
For the first time, developing countries have won recognition of the danger they face from climate change, securing a promise from developing countries that they will receive funding to repair the "loss and damage" incurred.
US negotiators fought hard against this proposal and made sure no term implying legal liability was used, to avoid the possibility of litigation; the money will instead be described as aid. It is already being called 'damage aid'.
But “climate finance is not charity or foreign aid,” said Brandon Wu, Senior Policy Advisor, ActionAid. "The Doha outcome completely fails to provide clarity. Lacking concrete numbers and dates, it lets rich countries off the hook. Developing countries have no idea whether climate finance will go up or down, or even whether it will reliably flow."
Ronald Jumeau, the Seychelles negotiator, told his American counterpart: "If we had had more ambition [on emissions cuts from rich countries], we would not have to ask for so much [money] for adaptation. If there had been more money for adaptation [to climate change], we would not be looking for money for loss and damage. What's next? Loss of our islands?"
Observers now expect armies of consultancies to spring up, which will debate from both sides the scientific basis of attributing specific extreme events and weather effects to climate change
The Doha Gateway Package
“What we have on the table is extremely weak. I think it worse than people expected,” concluded Hoda Baraka, Arab World Project, Greenpeace at the end of the final 36-hour session of the fortnight-long UN climate change talks among 195 nations in Qatar.
The other headline results from what is called the Doha Gateway Package, are:
negotiators resolved the Second Commitment Period of the Kyoto Protocol by adopting amendments;
concluded the long-term cooperative action (LCA) track, including rules around finance, accounting and review;
and agreed to move forward with the Durban Agreement, with a workplan for 2013. This will begin negotiating the global legally binding agreement, which is scheduled to be signed in 2015 and will come into force five years later.
The final Doha Gateway text was rushed through the last plenary by the Qatari host over objections. "Saving the process; killing the planet", as the Sierra Student Coalition's International Committee put it.
Two activists, Libyan Raied Gheblawi, 22, and Algerian Mohamed Anis Amirouche, 19, were deported from Qatar on Thursday after holding up a banner in the central meeting point reading "Qatar, why host not lead?"
Kyoto Protocol
The Doha outcome confirmed the second commitment period of the Kyoto Protocol starting on 1 January 2013. Its participants, however, account only for around 14% of world emissions.
It will run for eight years, up to the entry into force of a promised new global legal agreement in 2020.
The adopted target by the EU and Croatia and Iceland, of cutting emissions by 20% of 1990 levels by 2020, is open to being increased to 30%. The targets of all participating countries will be revisited by 2014 with a view to considering raising ambitions.
The EU and other countries taking on targets will have a limit on the number of purchases they can make of surplus emission allowances ('AAUs') left over from the first commitment period.
The EU Member States, and all other potential buyers (Australia, Japan, Liechtenstein, Monaco, New Zealand, Norway and Switzerland) have declared anyway that they will not purchase AAUs carried over from the first period.
EU finance
The agreement leaves the EU as the world's leading provider of official development assistance and climate finance to developing countries.
The bloc had pledged €7.2 billion in 'fast start' finance for the period 2010-12 and has assured its developing country partners that climate finance will continue after this year.
Several EU Member States and other developed countries such as the UK announced specific finance pledges for 2013, and in some cases up to 2015.
The decisions also extend a work programme on long-term finance for a year, with the aim of helping developed countries identify pathways for scaling up climate finance to $100 billion per year by 2020 from public, private and alternative sources.
Greg Barker, UK Energy and Climate Change Minister, and Dr. Sultan Al Jaber, CEO of UAE’s renewable energy company Masdar, announced they will launch a new roundtable for the world’s largest public and private sector investors in low carbon industries during Abu Dhabi Sustainability Week, in January. This aims to scale up investment to combat climate change in developing economies.
Barker said: “Alongside the formal negotiations taking place here in Doha, there’s a formidable amount of informal discussion around how to mobilise at scale the private finance needed to tackle climate change".
The winners at Doha
“Any government walking out here saying it is a success is suffering from a terrible case of cognitive dissonance,” said Kumi Naidoo, executive director, Greenpeace, articulating the feelings of most leaving the conference.
"They have to align the political reality of these conversations with what the science says. This failure is a betrayal of the people in the Philippines and all the other people who face climate impacts now."
Who was to blame for this failure? “It was only a handful of countries, such as Poland, Russia, Canada, the US and Japan, who held the negotiations to ransom,” thought Samantha Smith, leader of WWF’s Global Climate and Energy Initiative.
Asad Rehman, Friends of the Earth International spokesperson in Qatar, added: "most notably the US”. Sophia McNab, UK Youth Climate Coalition delegate, went even further: “This text is a win for the USA, developed countries and fossil fuel interests. It’s a betrayal of all vulnerable nations, and our future.”
“The coal industry won here, the oil industry won here,” agreed Alden Meyer, director of strategy and policy, Union of Concerned Scientists. "You saw on display the power of these industries and their short term profit to influence the governments of the world."
Wael Hmaidan, director of Climate Action Network International, said: “The path forward is actually quite clear: we have the technology and know-how. But we also need people in all regions of the world to demand leadership from their governments”.
Why Doha failed, and what to do about it
The blame for the failure at Doha to deliver a significant breakthrough to save the future world from devastating consequences of climate change once again lies with the lobbying power of the fossil fuel industry and the failure of politicians to act responsibly, in line with the scientific evidence.
In America in particular, but also in Britain, this industry is allowed to lobby and fund politicians and political parties, and in return they are expected to deliver political decisions in their favour. This is a far cry from responsible, participative democracy that citizens expect and need.
The website opensecrets.org documents the amount of money spent by oil and gas companies lobbying American politicians and financing their election campaigns. The top five companies spent the huge total of $42,470,000 on lobbying in 2012. They are: Royal Dutch Shell, Exxon Mobil, Koch Industries, Chevron and BP.
20 oil companies donated a massive $25,429,233 in political contributions during the last American election. The majority of it went to the Republicans, but enough went to the Democrats to secure the required response, given the make-up of Congress.
The result in Doha reveals what they got in exchange for this cash. For them, it represents a bargain.
For Alden Meyer, director of strategy and policy, Union of Concerned Scientists, COP18 wasn't an environmental conference. It was "a trade fair" on behalf of the oil and gas industry which was there to protect its short-term profits.
Hence, the local paper's headline at the weekend: "Qatar is victory for the climate". This is sheer Orwellian spin, as in 1984's Ministry of Peace being actually responsible for war.
Qatar was widely criticised during the talks for failing to set clear targets for reducing its own emissions. Instead it argues that its liquefied natural gas exports mean it is helping other nations move away from using more polluting coal. This is like saying heroin dealing is okay because it's not as addictive as crack cocaine.
The fact that coal-dependent Poland is to host next year's talks means the takeover of the UN negotiation process by the fossil fuel industry is complete.
So if we can expect nothing of these talks, what can we do? Environmentalists and activists must realise that instead change has to come at a local and regional level.
I am just reading an excellent book, The Leaderless Revolution, by Carne Ross, a former diplomat who was Britain's Foreign Office representative at the United Nations in the run-up to the Iraq war.
His analysis of these types of international negotiations is spot on, and it comes from real life experience.
Entrenched positions and irresponsible decisions are the direct result of decision-makers being both far removed from the impact of their actions and being completely unaccountable for their decisions.
He quotes research showing that even when people with dramatically opposed opinions in a given community come together to make a decision affecting all of them, they will reach a reasonable and appropriate solution only if they know that they have genuine responsibility for the result.
That is to say, if the consequences of their decision affects them or others close to them directly.
Time and again, Ross cites examples where his own reports to ministers resulted in the deaths of innocent civilians in countries that he had never visited, and he himself was completely unaccountable for these deaths, just as they were.
He talks of his undying shame that he took such decisions so lightly. It took him a long time to come to his senses and realise that none of his reports for Whitehall, or the policies adopted by politicians based on his and many similar reports, went anywhere near to solving the problems that they were intended to address, such as making the world a safer place.
In fact, they had the exact opposite effect.
Politicians, he says, are incapable of doing the right thing because they cannot comprehend and arbitrate the forces that we assume, and which they persuade us, they are able to deal with.
Reality is too complex, they are preoccupied with many other concerns, including whether they will win the next election, and their hands are often tied.
An argument in a community today in Britain, over whether a windfarm should be sited nearby, frequently results in acrimonious and polarised debate, because the members of the community are not themselves responsible for the windfarm, or indeed for any form of energy supply to their community.
If they had to decide how to provide all the heat and power their community needed, if they had secured the finance themselves, if they had decided or been given a set of conditions, such as that whatever generation plant they chose should be as low carbon as possible, and if they could manage the plant afterwards, and received the rewards of their investment themselves, then the likelihood is that they would reach a reasonable solution.
In the debate, they would be prepared to listen to each other's point of view and take them into account in the process.
But communities are rarely given that responsibility.
Ross says that as a result we ourselves must take such responsibility, as, for example, citizens are doing with the Isle of Wight's Ecoisland project.
We give political power away at our peril, and when we do there is no guarantee it will result in a better situation than the one we can make on our own.
This would be true Localism, but far from what David Cameron intended when he made it a plank of his election manifesto.
His form of localism was a hollow promise. No politician will ever, in reality, give power away to the people. Why on earth would they ask you to vote for them if so?
Instead, they make promises that they know we want to believe, like “Yes we can” and ‘the greenest government ever”, and we do vote for them.
We are always let down.
Ross decries internet activism also, saying that the technology it uses is too easily appropriated by commerce and politicians.
Instead, he proposes, simply, talking to others in your community, and moving on from there.
It’s where the power revolution has to start. After Doha, it’s the only place to start.
Why Doha failed, and what to do about it
The blame for the failure at Doha to deliver a significant breakthrough to save the future world from devastating consequences of climate change once again lies with the lobbying power of the fossil fuel industry and the failure of politicians to act responsibly, in line with the scientific evidence.
In America in particular, but also in Britain, this industry is allowed to lobby and fund politicians and political parties, and in return they are expected to deliver political decisions in their favour. This is a far cry from responsible, participative democracy that citizens expect and need.
The website opensecrets.org documents the amount of money spent by oil and gas companies lobbying American politicians and financing their election campaigns. The top five companies spent the huge total of $42,470,000 on lobbying in 2012. They are: Royal Dutch Shell, Exxon Mobil, Koch Industries, Chevron and BP.
20 oil companies donated a massive $25,429,233 in political contributions during the last American election. The majority of it went to the Republicans, but enough went to the Democrats to secure the required response, given the make-up of Congress.
The result in Doha reveals what they got in exchange for this cash. For them, it represents a bargain.
For Alden Meyer, director of strategy and policy, Union of Concerned Scientists, COP18 wasn't an environmental conference. It was "a trade fair" on behalf of the oil and gas industry which was there to protect its short-term profits.
Hence, the local paper's headline at the weekend: "Qatar is victory for the climate". This is sheer Orwellian spin, as in 1984's Ministry of Peace being actually responsible for war.
Qatar was widely criticised during the talks for failing to set clear targets for reducing its own emissions. Instead it argues that its liquefied natural gas exports mean it is helping other nations move away from using more polluting coal. This is like saying heroin dealing is okay because it's not as addictive as crack cocaine.
The fact that coal-dependent Poland is to host next year's talks means the takeover of the UN negotiation process by the fossil fuel industry is complete.
So if we can expect nothing of these talks, what can we do? Environmentalists and activists must realise that instead change has to come at a local and regional level.
I am just reading an excellent book, The Leaderless Revolution, by Carne Ross, a former diplomat who was Britain's Foreign Office representative at the United Nations in the run-up to the Iraq war.
His analysis of these types of international negotiations is spot on, and it comes from real life experience.
Entrenched positions and irresponsible decisions are the direct result of decision-makers being both far removed from the impact of their actions and being completely unaccountable for their decisions.
He quotes research showing that even when people with dramatically opposed opinions in a given community come together to make a decision affecting all of them, they will reach a reasonable and appropriate solution only if they know that they have genuine responsibility for the result.
That is to say, if the consequences of their decision affects them or others close to them directly.
Time and again, Ross cites examples where his own reports to ministers resulted in the deaths of innocent civilians in countries that he had never visited, and he himself was completely unaccountable for these deaths just as they were.
He talks of his undying shame that he took such decisions so lightly. It took him a long time to come to his senses and realise that none of his reports for Whitehall, or the policies adopted by politicians based on his and many similar reports, went anywhere near to solving the problems that they were intended to address, such as making the world a safer place.
In fact, they had the exact opposite effect.
Politicians, he says, are incapable of doing the right thing because they cannot comprehend and arbitrate the forces that we assume, and which they persuade us, they are able to deal with.
Reality is too complex, they are preoccupied with many other concerns, including whether they will win the next election, and their hands are often tied.
An argument in a community today in Britain, over whether a windfarm should be sited nearby, frequently results in acrimonious and polarised debate, because the members of the community are not themselves responsible for the windfarm, or indeed for any form of energy supply to their community.
If they had to decide how to provide all the heat and power their community needed, if they had secured the finance themselves, if they had decided or been given a set of conditions, such as that whatever generation plant they chose should be as a low carbon as possible, and if they could manage the plant afterwards, and received the rewards of their investment themselves, then the likelihood is that they would reach a reasonable solution.
In the debate, they would be prepared to listen to each other's point of view and take them into account in the process.
But communities are rarely given that responsibility.
Ross says that as a result we ourselves must take such responsibility, as, for example, citizens are doing with the Isle of Wight's Ecoisland project.
We give political power away at our peril, and when we do there is no guarantee it will result in a better situation than the one we can make on our own.
This would be true Localism, but far from what David Cameron intended when he made it a plank of his election manifesto.
His form of localism was a hollow promise. No politician will ever, in reality, give power away to the people. Why on earth would they ask you to vote for them if so?
Instead, they make promises that they know we want to believe, like “Yes we can” and ‘the greenest government ever”, and we do vote for them.
We are always let down.
Ross decries internet activism also, saying that the technology it uses is too easily appropriated by commerce and politicians.
Instead, he proposes, simply, talking to others in your community, and moving on from there.
It’s where the power revolution has to start. After Doha, it’s the only place to start.
Saturday, December 08, 2012
Doha: Climate negotiators fail to meet the scientific challenge
 |
| Young UNICEF UK campaigners asking Ed Davey to speak up for children before he left for the UN climate change talks in Doha. Photo: Rosie Reed Gold/UNICEF. |
On the last day, talks at Doha aimed at securing a global agreement to tackle climate change are providing scant hope, although individual announcements from nations on the sidelines provide some progress.
The central issue, as always, is fairness over who pays.
US lead negotiator, Todd Stern, told the plenary assembly that he wanted to see “the principle of equity and common but differentiated responsibilities and respective capabilities" provide the basis of agreement, but that "unless we can find common ground on that principle and the way in which it should apply in the world of the 2020s, we won’t succeed in producing a new Durban Platform agreement”.
The U.S. has a target of reducing emissions by 17% by 2020 compared to 2005 emissions (equal to just 4% below 1990 levels). Its negotiators said that this is unlikely to change. They say they cannot see a way of getting a global agreement for seven years; until 2020.
Like 85% of nations, the U.S. has spurned extending the Kyoto Protocol, leaving a group led by the European Union and Australia to take this forward. They believe Kyoto is no longer relevant because emerging nations led by China and India will have no targets to curb their soaring emissions from 2013.
Delegates have been repeatedly told how dire prospects are. "If anything, the science is telling us it's now getting warmer quicker than we had previously expected," said UK Energy Secretary Ed Davey, who is in Doha. "Our actions as a world are going slower than we had previously hoped."
"The question of climate management is extremely serious," Laurent Fabius, France's foreign minister, agreed. "It appears we have already exceeded the 2-degree limit. If that is the case, there are absolutely catastrophic consequences. We must react." Tackling climate change is "the new challenge in world diplomacy".
But so far, too few countries are making the kind of commitments to cut emissions that scientists agree would keep global warming below the 2 degrees Celsius limit that is estimated to prevent the most devastating effects of climate change.
Many attending the Doha talks are saying that 4 degrees Celsius of global warming by 2100 looks almost inevitable.
Meanwhile, countries debate who will pay to save the planet.
Qatar has offered no money. National pledges by Germany, Britain, France, the Netherlands, Sweden, Denmark and the EU Commission in Doha total over 6.85 billion euros for the next two years, more than in 2011-12.
The UK will be allocating around £1.8 billion aid money to climate finance up to 2015. Ed Davey, speaking at Doha, reiterated the UK’s support for contributing to the $100 billion a year by 2020 commitment of new and additional funds.
Germany and Britain this week launched the NAMA (Nationally Appropriate Mitigating Actions) Facility, to support countries to implement action against climate change. Ed Davey, pledging £25 million from the International Climate Fund (ICF), said it will “help support those developing countries that are taking ambitious action to close the gap to 2°C". Countries will compete for the funding to support their own projects. One in Mexico will go towards sustainable new housing by establishing the necessary framework conditions.
Hosts Qatar did say they will develop a 1,800 megawatt (MW) solar energy plant in 2014 costing up to $20 billion, mainly to power its desalination plants. The country has no naturally-occurring pure water. It will increase the proportion of its renewable electricity generation to 16% from zero. "We need to diversify our energy mix," said Fahad Bin Mohammed al-Attiya, chairman of the Qatari organizers of climate talks in Doha. Qatar supplies Britain with much of its liquefied natural gas (LNG) and is the world's top exporter. But it has not set any targets for reducing its greenhouse gas emissions.
A senior Saudi Arabia official said his country was taking the climate change issue "seriously. It is implementing carbon capture storage in the world's biggest oilfield, Ghawar, where injecting carbon dioxide back into the field helps to raise pressure and increase oil output, as well as trapping planet-warming gas".
Indonesia announced it has approved a U.N.-led rainforest conservation scheme under Reducing Emissions from Deforestation and Degradation (REDD), that sets aside nearly 80,000 hectares (200,000 acres), much of it carbon-rich peat swamp forest at risk of being felled for palm oil plantations, and rewards its investors, Russian energy giant Gazprom and German insurance firm Allianz, with 104 million tradable carbon offset credits. Each credit represents a metric ton of carbon, worth almost 500 million euros based on current market rates. It is the first scheme of its kind to win formal backing in the country, and the world's first on protecting 'deep peat'.
Back in the U.S., the Obama administration said it is to invest $120 million in developing cheaper batteries for electric vehicles and grid storage. The five year project will establish a research hub with Dow Chemical Co, Applied Materials Inc, Johnson Controls Inc and the Clean Energy Trust.
Still in the U.S., the Federal Energy Regulatory Commission reported that from January to October, 46.2% of new electricity-generating capacity installed was renewable. Wind accounted for 77% of this.
But the reality is that all of these announcements are nothing like what is required; they are like using a bucket to bale out the rising oceans.
"Some sort of agreement will be achieved – it always is," writes observer Giles Parkinson. However, he concludes, "the more that the UN talks fall short of expectations, the more that domestic politics plays into the hands of vested interests".
Next year, coal-dependent Poland will host the talks. Environmentalists expect little progress there either. They are now looking to Paris, which will host the 2015 talks, for realistic progress.
Monday, December 03, 2012
Energy Bill means a new sunrise for renewable energy
A new Energy Bill, two years in the making, will triple investment in renewable energy and mean the end for coal-powered generation.
The Bill commits the Government to supporting low carbon electricity to the tune of £7.6 billion by 2020, over three times the current level of £2.3 billion for 2012-13.
The Carbon Capture and Storage Association, the Nuclear Industry Association and RenewableUK welcomed the introduction of the Bill, saying it "would help to unlock billions in investment in low carbon generation, enable the UK to meet its energy security and climate change targets, and create thousands of jobs".
Solar Trade Association's PV specialist, Ray Noble, said the Bill means that "solar power will be massive" and called for a dedicated strategy for PV, "like gas".
Announcing the Bill in Parliament, Energy and Climate Change Secretary, Ed Davey, said: "The Bill will support the construction of a diverse mix of renewables, new nuclear, gas and CCS, protecting our economy from energy shortfalls. It will stimulate supply chains and support jobs in every part of the country, capitalising on our engineering prowess and our natural resources, cementing the UK’s place at the forefront of clean energy development."
The push for low carbon electricity will add £95 a year to the average household bill by 2020, an increase of 7%.
Much of the support will be delivered through long-term contracts for difference (CfD), designed to guarantee stable revenues for investors in low-carbon energy. They will provide cash for generators of nuclear power and renewables if the market price of electricity drops below a specified strike price. A new Government owned company will act as a single counterparty to the CfDs.
A ‘capacity market’ will encourage investors to build gas-fired power plants to provide back-up for when wind farms are not generating. The System Operator (National Grid) will decide the level of generation capacity it judges is appropriate and then contract for it through an auction four years in advance.
Carbon emissions
An Emissions Performance Standard (EPS) set at a maximum of 450g CO2/kilowatt hour (kWh) will curb the most polluting coal-powered stations; any new coal-fired power station would have to be fitted with carbon emission capturing technology. "This law will mark the end of any plans for new, highly polluting coal-fired power stations in this country," commented Greenpeace political director Joss Garman.
Gas-fired power plants would remain unabated at this level, however, prompting Green Party MP Caroline Lucas to call for amendments to the Bill to rule out a new "dash for gas".
The Bill pushes the date for setting a 2030 decarbonisation range for the power sector, to 2016, once the Climate Change Committee has provided advice on the fifth Carbon Budget, which covers the period 2028 – 2033.
This has prompted calls, led by Conservative Chairman of the Energy and Climate Change Committee, Tim Yeo, for amendments to the Bill that would introduce a decarbonisation target for 2030 straight away, a move supported by Alistair Smith, Chair of the Institution of Mechanical Engineers’ Power Division. He said: “The lack of an emissions target for 2030 leads to longer term uncertainty on clean energy investments."
The central modeling for the Bill assumes a scenario where the carbon intensity of electricity generation is 100g/kWh by 2030. Two further scenarios modelled for comparison are either side of this figure: 200 and 50g/kWh. The latter is the level recommended by the Committee on Climate Change.
Wind farm builder Alstom UK, one of seven companies who wrote to the Government arguing that a decarbonisation target was vital to permit them to locate factories in the UK, issued a statement saying: "We will continue to invest, but the pace is likely to be slower without a decarbonisation target."
Nuclear power
Oversight of the nuclear industry will be enhanced through creating an independent statutory nuclear regulator, the Office for Nuclear Regulation.Richard George, Greenpeace nuclear campaigner, said: “The coalition agreement pledged not to subsidise new nuclear reactors. Yet the energy bill offers massive public subsidies to anyone willing to build new nuclear reactors."
Energy efficiency
During the passage of the Bill, proposals will be added to ensure energy companies help consumers to get on the best energy tariff, and to promote energy efficiency through electricity demand reduction.Andrew Kuyk, Director of Sustainability for The Food and Drink Federation (FDF), welcomed the certainty, but wanted to see more detail. "We look forward to engaging in further discussions on how to enable ours and other UK industries to maximise... their energy efficiency in increasingly competitive world markets.”
The emphasis on energy efficiency was also welcomed by the UK Green Building Council, and Brian Smithers, director of Rexel UK, who, however, issued cautions: "Firstly, unless monitoring energy use becomes standard, it will be impossible for homeowners and businesses to understand where the biggest wins can be made.
"Secondly, the British public is relatively unaware of energy saving technologies. An energy efficiency information "hub" will be key to educating consumers and businesses alike about the benefits of measures including LED lighting, automation and efficient heating. However, we can’t just leave this to the energy suppliers."
Further reactions
John Cridland, CBI director-general, said: “Energy-intensive manufacturing is finally getting its place in the sun today, by the exemption from necessary new energy costs. Equally important is the welcome boost the bill gives to investor certainty."Pöyry’s Richard Slark thought less certainty was given than is present in the Renewables Obligation, which will be phased put in 2018.
The Bill was welcomed by the electricity generation industry. Angela Knight, head of Energy UK, called it: “a big and positive step forward. This means that the huge investment will now start being made in our energy infrastructure and this will create jobs and help economic recovery."
Ernst and Young’s Power & Utilities Partner, Tony Ward, cautioned: "It may not be until autumn 2013 before this Bill reaches the statute book, so maintaining confidence in its safe passage will be vital."
The view from Doha is uninspiring
What we need from our leaders is: inspiration. In Doha, it seems sadly lacking.
If you fly to Doha in Qatar on he Gulf, you pass 35,000 feet over the oilfields of Iran and Iraq.
In the oily blackness of night, hundreds of orange gas flares outshine city lights by a factor of fifty, visible from space.
Kuwait is sparkly island, as is Doha itself, yet another reminder of the power fossil fuel reserves have over the Middle East.
The tiny desert isthmus of Qatar holds not a drop of natural potable water. It makes £106 billion a year from selling oil and gas that hapnes to be under its barren sands. Its residents have the highest per capita income on earth.
They get all their electricity for free. It is used profligately. The urinals in Doha airport are constantly flushed with hot water. All of the country's water has to be desalinated using oil-fired electricity.
It is here, in the Qatar National Conference Centre, where the representatives of most countries in the world have gathered for yet another round of painfully slow, and apparently almost inconsequential, negotiations to curb global levels of greenhouse gas emissions.
The grandfathers of the oil rich elite that runs this state were bedoin, wandering the desert with their tents and camels. Now they own fleets of Lexus 4x4s and Porsches.
I met a senior account manager for a Fortune 400 listed company that supplies process machinery to the oil industry in Kuwait. He held a Jordanian passport and said he believes in climate change. "But what can I do? It's not up to people like me to change the system. Our machinery will work just as well on renewable energy. But here is where the market is".
A wealthy manager of a pipeline maintenance company, in his spotless white schumagg and thoub, told me that he was aware of the talks going on in the conference centre down the road, but for him it was "just another conference". He won't be going.
Next week is one to promote trade, held by the World Chambers Federation, where 12,000 chambers will be represented. He will attend that. Good for business. The following week is a film festival, peddling dreams and escape stories.
All of this is part of the wish of Emir Sheikh Hamad bin Khalifa al Thani, Qatar's ruler, to be a big player on the world stage, to convince the world that Qatar is not just about oil, but culture.
Maybe he does think, like Masdar's leaders, that the game will one day be up for oil. The country is currently spending £20 million, with Chevron and GreenGulf, on a Solar Test Facility, to investigate what technology can best convert the copious amount of solar radiation that falls on this desert land to electricity. It includes a solar desalination plant.
By hosting COP-18, the Emir is hedging his bets. COP-18 means that these annual horse-trading, long-grass-kicking stand-offs have been doing the rounds of nations for eighteen years.
Knowledge of the threat of climate change is not new.
Twenty three years ago, I was asked by Greenpeace Book's John May to write a comic book explaining global warming to young people.
Three years before that, Margaret Thatcher, in the only act for which I unreservedly admire her, alerted world leaders, especially Ronald Reagan, to it.
If only today's world leaders had Maggie's conviction.
At the heart of the story I wrote for John was a conflict between a greedy industrialist and his brother, an enlightened environmentalist. It was based on the Goldsmith brothers, James, the financier and corporate raider, and Ed, the Ecologist magazine's former publisher.
James' son, Zac, is now Conservative MP for Richmond Park, and as good an example of a Green Tory as you will find.
I suppose what I'm saying is, that at the Doha talks, being held in the context of the most dire warnings yet about global temperature rises, it is political leadership that is needed more than ever.
The talks give the impression of being complicated, and they are, but the principles are simple: the developed nations need to cough up and everyone needs to commit.
Politicians need to talk with conviction, echoing President Kennedy with "ask not what the planet can do for you but what you can do for the planet".
Or echoing Churchill, with "We will fight climate change in the factories, in the fields and in the streets. We will never surrender!"
In a word, what we need from our leaders is: inspiration.
In Doha, it seems sadly lacking.
If you fly to Doha in Qatar on he Gulf, you pass 35,000 feet over the oilfields of Iran and Iraq.
In the oily blackness of night, hundreds of orange gas flares outshine city lights by a factor of fifty, visible from space.
Kuwait is sparkly island, as is Doha itself, yet another reminder of the power fossil fuel reserves have over the Middle East.
The tiny desert isthmus of Qatar holds not a drop of natural potable water. It makes £106 billion a year from selling oil and gas that hapnes to be under its barren sands. Its residents have the highest per capita income on earth.
They get all their electricity for free. It is used profligately. The urinals in Doha airport are constantly flushed with hot water. All of the country's water has to be desalinated using oil-fired electricity.
It is here, in the Qatar National Conference Centre, where the representatives of most countries in the world have gathered for yet another round of painfully slow, and apparently almost inconsequential, negotiations to curb global levels of greenhouse gas emissions.
The grandfathers of the oil rich elite that runs this state were bedoin, wandering the desert with their tents and camels. Now they own fleets of Lexus 4x4s and Porsches.
I met a senior account manager for a Fortune 400 listed company that supplies process machinery to the oil industry in Kuwait. He held a Jordanian passport and said he believes in climate change. "But what can I do? It's not up to people like me to change the system. Our machinery will work just as well on renewable energy. But here is where the market is".
A wealthy manager of a pipeline maintenance company, in his spotless white schumagg and thoub, told me that he was aware of the talks going on in the conference centre down the road, but for him it was "just another conference". He won't be going.
Next week is one to promote trade, held by the World Chambers Federation, where 12,000 chambers will be represented. He will attend that. Good for business. The following week is a film festival, peddling dreams and escape stories.
All of this is part of the wish of Emir Sheikh Hamad bin Khalifa al Thani, Qatar's ruler, to be a big player on the world stage, to convince the world that Qatar is not just about oil, but culture.
Maybe he does think, like Masdar's leaders, that the game will one day be up for oil. The country is currently spending £20 million, with Chevron and GreenGulf, on a Solar Test Facility, to investigate what technology can best convert the copious amount of solar radiation that falls on this desert land to electricity. It includes a solar desalination plant.
By hosting COP-18, the Emir is hedging his bets. COP-18 means that these annual horse-trading, long-grass-kicking stand-offs have been doing the rounds of nations for eighteen years.
Knowledge of the threat of climate change is not new.
Twenty three years ago, I was asked by Greenpeace Book's John May to write a comic book explaining global warming to young people.
Three years before that, Margaret Thatcher, in the only act for which I unreservedly admire her, alerted world leaders, especially Ronald Reagan, to it.
If only today's world leaders had Maggie's conviction.
At the heart of the story I wrote for John was a conflict between a greedy industrialist and his brother, an enlightened environmentalist. It was based on the Goldsmith brothers, James, the financier and corporate raider, and Ed, the Ecologist magazine's former publisher.
James' son, Zac, is now Conservative MP for Richmond Park, and as good an example of a Green Tory as you will find.
I suppose what I'm saying is, that at the Doha talks, being held in the context of the most dire warnings yet about global temperature rises, it is political leadership that is needed more than ever.
The talks give the impression of being complicated, and they are, but the principles are simple: the developed nations need to cough up and everyone needs to commit.
Politicians need to talk with conviction, echoing President Kennedy with "ask not what the planet can do for you but what you can do for the planet".
Or echoing Churchill, with "We will fight climate change in the factories, in the fields and in the streets. We will never surrender!"
In a word, what we need from our leaders is: inspiration.
In Doha, it seems sadly lacking.
Friday, November 23, 2012
This Energy Bill is all about tax revenues from North Sea gas
The Energy Bill compromise is about revenues to the Treasury to help pay off the budget deficit before the next election.
The position on renewables in Britain stands in stark contrast to that north of the border.
The Scottish Government is hoping for independence after 2014. 90% of Britain's oil and gas is in Scottish territory. The Institute of Fiscal Studies is arguing that revenues after the possible independence would be split between the two nations proportionately on the basis of population.
But oil and gas production dropped 18% last year. It will continue this inexorable decline in years to come.
The Scots know this. That's why they are aiming for 100% renewable electricity by the end of this decade. They reckon they will even have more to spare. Perhaps to sell to England and Wales. At this rate, England and Wales are going to need it.
Perversely, George Osborne, David Cameron and the rest of the Conservatives are determined to hitch the UK's wagon to Qatar, from which most of our gas flows: there was a moment two weeks ago when almost 100% of Britain's gas fired power stations were running on gas imported from that Arab country.
But why would they do that?
Many authorities have commented on the volatility of gas prices. They are only likely to rise, affecting each and every one of us and the economy as a whole.
The Committee on Climate Change, in its report, Household energy bills – impacts of meeting carbon budgets, said "Of the total £455 increase [in typical household energy bills between 2004 and 2010] (i.e. 75%, compared to general price inflation of 16% over the same period), by far the largest contributor was the increase in the wholesale price of gas, which added around £290 to bills.”
And Ofgem agrees. In Why are energy prices rising?, we read: “Higher gas prices have been the main driver of increasing energy bills over the last eight years”.
But, forget this. Forget, even, Qatar. This decision is directly related to what the Exchequer receives from North Sea gas extraction.
A dash for gas means a market for Scottish-English gas as well. High gas prices mean higher revenues for the Treasury.
I have prepared this chart of Government revenues from UK oil and gas production, available from figures published here.
Most of this revenue comes from the Ring Fence Corporation Tax, rated at 30% and separate from other corporation tax, which was introduced under New Labour. This prevents taxable profits from oil and gas extraction in the UK and UKCS being reduced by losses from other activities or by excessive interest payments.
It explains why George Osborne gave away £500 million towards further gas and oil offshore exploration in September. As he said at the time, it's because he will get it back in spades from revenue to come: “It will give companies the incentive to get the most out of older fields, creating jobs and delivering more revenue for taxpayers.“
The revealing thing is what happens if you plot oil and gas revenues against total tax revenues.
Then we find, that in the crunch tax year, 2008-2009, oil and gas revenues were at their highest as a proportion of all tax revenue: 2.56%.
As the recession hit, it fell again. The following two years it was at 1.37% and 1.67%, but it has begun to rise again to 2.04% in the current financial year. There have only been three years in the last 20 when it is gone above 2%.
Here are the full figures:
| Year | % of revenue from oil and gas | Total revenue (£bn) |
|---|---|---|
| 00/01 | 1.24 | 359.3 |
| 01/02 | 1.47 | 369.1 |
| 02/03 | 1.37 | 375 |
| 03/04 | 1.08 | 397 |
| 04/05 | 1.21 | 427.1 |
| 05/06 | 2.05 | 456.8 |
| 06/07 | 1.84 | 486 |
| 07/08 | 1.45 | 516 |
| 08/09 | 2.56 | 508 |
| 09/10 | 1.37 | 477.8 |
| 10/11 | 1.67 | 528.9 |
| 11/12 | 2.04 | 550.6 |
| 12/13 | 1.7 | 569 |
| 13/14 | 1.34 | 599 |
| 14/15 | 1.19 | 633 |
| 15/16 | 0.92 | 664 |
| 16/17 | 0.85 | 704 |
Treasury predictions for the next four years show this percentage to fall dramatically, but this is only because there are wildly optimistic expectations for tax revenue to increase in this period, to £70.4 billion in 2016/17, compared to £55 billion in this financial year.
Now consider this: renewable energy does not provide such an income. In fact it’s a cost, because of the subsidies.
Conclusion: the Energy Bill compromise is not about what happens after 2020. That couldn’t be further from Osborne’s mind. It's about revenues to the Treasury to help pay off the budget deficit before then.
To put it bluntly, it's about who wins the next election, since it will most likely be determined by how well Osborne has managed the economy.
Monday, November 12, 2012
Britain's carbon capture dream is over after EU cash refused
 |
| ""That's nearly £500 million of investment in northern England and Scotland that George Osborne just threw away," tweeted Chris Davies, the Liberal Democrat MEP who led discussion of the funding in the European Parliament. |
A failure by the British Government to provide details of funding guarantees means that none of the carbon capture and storage (CCS) projects it put forward will receive funding from the European Union.
According to Chris Davies, the Liberal Democrat MEP who led discussion of the funding in the European Parliament, an EU official speaking on condition of anonymity said the reason for the decision was “a lack of funding detail".
A spokesman for the Department of Energy and Climate Change (DECC) said it had not been informed of the decision and refused to comment.
Under the NER300 competition, governments of Member States propose CCS and renewable energy projects for financial support from sale of greenhouse gas emission allowances from the EU European Emissions Trading Scheme by the European Investment Bank.
Chris Davies said the failure was "a devastating blow" to British hopes of becoming a world leader in CCS technology.
"The government has no excuse,” he said. “The EU funding mechanism was only introduced as a result of British pressure and for us not to take advantage of it is simply woeful."
CCS, which captures carbon emitted from the generation of electricity by burning fossil fuels and places it underground, is supposed to play a key part in the British Government's plans to meet its carbon emission reduction targets, especially under the Energy Bill.
Funding details may have been omitted from the application to the EIB pending finalisation of the contents of this Bill, which is due at the end of this month, and which is the subject of continued conflict between the Treasury and DECC.
"That's nearly £500 million of investment in northern England and Scotland that George Osborne just threw away," tweeted Chris Davies on hearing the news.
The Government submitted two projects at the end of October: Progressive Energy consortium's pre-combustion coal gasification project on Teesside and Alstom's 'White Rose' oxyfuel capture system at Drax's proposed new 304 MW coal-fired power station in North Yorkshire.
It is not clear if the same decision applies to the Sound of Islay tidal renewable energy project that was put forward for funding by the Government.
Britain's attempts to become a world leader in this currently unproven technology is now in a complete shambles.
Firstly, a previous competition which it held to fund pilot schemes fell apart over a year ago, as it proved too expensive and had to be relaunched.
There was no shortage of applicants in the second round, but, to much astonishment, the favourite project was not selected by the Government last month. This was the Don Valley Power Project, which had already earned first place among all NER300 CCS proposals.
DECC might have taken this unexpected decision because it wanted to maximise the UK’s overall financial return from NER300. NER300 support for Don Valley would have amounted to €130 million only, while the project replacing it, UK Oxy CCS Demo, would have got funding of €337 million.
Now it looks like DECC won't get any funding at all.
Europe must adopt a 30% emissions reduction target
With any luck we are about to see a shift in action on curbing carbon emissions.
It's not just that the annual United Nations climate change talks, COP-18, begin at the end of this month at Doha in Qatar. Nor is it that with the re-election of Barack Obama there will be a renewed impetus in the American Senate to get a climate change bill passed.
Over on the other side of the world, Australia's Climate Change Minister Greg Combet has said his country will sign up to a second round of the Kyoto Protocol, joining the European Union and just a handful of other major greenhouse gas emitters in recommitting to the world's only climate treaty.
The Kyoto Protocol, negotiated in 1997, required wealthy nations to limit their emission of greenhouse gases by 5.2% on average for the period 2008-2012 from 1990 levels. It is due to expire at the end of this year.
Through the UN climate change negotiations, countries are attempting to thrash out a replacement treaty. If successful, it would be agreed by 2015 and take effect in 2020, and it would include emissions targets for developing nations such as China and India as well as developed countries.
To date, only the European Union and a handful of other small developed nations have signed up to Kyoto 2, which is intended to start in 2013 and continue until such time as when a new agreement comes into effect.
Japan, Russia, Canada and, currently, the US are among the countries refusing to sign up to Kyoto 2. They want a non-binding agreement.
New Zealand has already said it will not follow Australia.
But Kyoto 1 and 2 has been widely criticised. The main candidates for alternative action are a carbon tax activated at national levels, and a network of regional emission trading schemes.
Already, a carbon tax is back on the agenda in the US and the UK.
Republicans are not expected to be enthusiastic; they dislike taxes. The main American proponent of a carbon tax is prominent NASA climate scientist James Hansen. His proposal is to tax carbon at source, whether oil, gas or coal, with a 100% dividend returned to citizens in equal shares, under the principle of the “commons", that every citizen has an equal right to a portion of the sky.
It is estimated that citizens would each get $3,000 to spend as compensation for the tax.
A similar tax has been in place in Canada's British Columbia for four years and is currently under review. The income from the tax is spent on public works.
But how high would a carbon tax need to be to make a significant difference in the consumption of fossil fuels? Consider the amount of tax (60%) already on a litre of petrol. Does it deter us from driving?
Would it make a difference if the price of a barrel of oil was doubled with a $100 tax? That would put up the cost of a litre of petrol to almost £2.
You can imagine the public reaction, even with a cash dividend. The thing is, it’s a blunt instrument. It affects some people more than others.
British Columbia's tax has been introduced gradually and reaches about 5% of the price of fuel. The review will tell us whether or not it has made any difference at all to consumption levels. The jury is yet out.
Hansen distrusts "cap and trade" agreements such as the Kyoto Protocol, and says why in chapter 9 of his book Storms of My Grandchildren.
But that isn't stopping Korea and China from going ahead with their own local schemes emissions trading schemes. On November 15 a presidential decree in Korea will see a mandatory ETS introduced from 2015 for 60% of South Korea’s total greenhouse gas emissions.
The purpose of an ETS is to minimise the cost of meeting a set emissions target. The Korean ETS and most of the Chinese pilot schemes have watched the European Union's ETS become swamped with excess credits and the price of carbon bomb to an ineffectual level.
To prevent this happening in their schemes, they plan to include the use of market stabilising checks and balances to enable them to adjust to external factors such as significant and sustained changes in gross domestic product. These are said to include: a strategic reserve, limitations on banking and borrowing and a ceiling and/or floor price.
Japan has its own scheme, as do Switzerland, New Zealand, California and a number of other American and Canadian states linked together in the Regional Greenhouse Gas Initiative and the Western Climate Initiative.
If such schemes become more common and the European scheme can overcome its current problems, international trading in permits is an attractive way of achieving reductions at the lowest possible cost. This is because it is cheaper to abate or eliminate a ton of carbon dioxide in some countries than in others, and the market automatically gravitates towards the cheapest solution.
In other words, is not such a blunt instrument. On the other hand, a huge amount of money gets wasted and goes into the wrong pockets.
The question is, whether any of these proposals will get us where we want to be fast enough. The answer depends upon the level of political ambition for the level at which an overall target for, or cap on carbon emissions is set, which in turn depends on the amount of public concern.
European environment ministers met at the end of October to discuss the European Union negotiating position at Doha, and what to do about the EU ETS' glut of allowances.
It emerged from their talks that Europe has already beaten its target of 20% emission reductions by 2020 with eight years to spare.
A leaked draft of the Commission's report on the EU ETS says that there will be a surplus of at least two billion allowances next year, rising in the following years. Removing just 1.4 billion of these would be sufficient to let Europe reach a 30% target by 2020.
This would align the scheme with Europe's 2050 climate goal of reducing emissions up to 95% below 1990 levels.
It's this kind of ambition, at least, which is necessary.
The British government supports a 30% target. It should do, it is already ahead of the game. Officials have been arguing for it for some time.
Europe should immediately adopt such a position and, in three weeks time, take it to Doha and challenge the world to follow suit.
Monday, November 05, 2012
Obama must win for the world to have a chance of beating climate change
Here's the logic of this post:
Following Hurricane Sandy, and more bad news on climate change today , there has never been so much at stake in an American election for the rest of the world.
If this is not a wake-up call, I don't know what is.
Hurricane Sandy was the worst storm to hit the eastern seaboard of the United States in living memory.
In one dramatic moment, that will end up costing American taxpayers billions of dollars, it has succeeded in doing something by powerful demonstration that no other amount of evidence or eloquence has succeeded in doing: it has brought climate change, at the last moment, into the presidential election agenda.
In its wake, the mayor of New York, Michael Bloomberg, has thrown his support behind Barack Obama. The latest issue of Bloomberg BusinessWeek carries on its cover the slogan: “It's climate change, stupid!"
In an editorial, it says: "Climate deniers exploit scientific complexity to avoid any discussion at all. Clarity, however, is not beyond reach. Hurricane Sandy demands it: At least 40 U.S. deaths. Economic losses expected to climb as high as $50 billion. Eight million homes without power. Hundreds of thousands of people evacuated. More than 15,000 flights grounded. Factories, stores, and hospitals shut. Lower Manhattan dark, silent, and underwater."
The latest scientific climate change research, arriving with chilling timing in my e-mail box today, points to disaster for the planet unless something drastic is done. Current rates of decarbonisation mean that global average temperatures are heading to a disastrous 6oC of warming. This would render much of the planet uninhabitable.
The news comes from fresh analysis by financial consultants PwC. Their Low Carbon Economy Index measures the progress of developed and emerging economies towards reducing emissions linked to economic output. Its latest issue says "To limit global warming to 2oC would now mean reducing global carbon intensity by an average of 5.1% a year – a performance never achieved since 1950, when these records began". [For a copy of the report contact Rowena Mearley, Tel: +44 207 213 4247 or e-mail rowena.mearley@uk.pwc.com.]
It adds that any investments in long term assets or infrastructure, particularly in coastal or low-lying regions need to address far more pessimistic scenarios.
This message seems almost pointedly directed at the East Coast of the United States this week.
On October 31, the New York Times published an article which explicitly linked Hurricane Sandy to climate change.
It said “the storm surge along the Atlantic coast was almost certainly intensified by decades of sea-level rise linked to human emissions of greenhouse gases. And [scientists have] emphasized that Hurricane Sandy, whatever its causes, should be seen as a foretaste of trouble to come as the seas rise faster, the risks of climate change accumulate and the political system fails to respond". It quotes in support Thomas R. Knutson, a research meteorologist with the government’s Geophysical Fluid Dynamics Laboratory in Princeton, N.J.
Hurricane Sandy came hot on the heels of the intense summer drought, which also powerfully affected much of the United States.
Americans now know first-hand some of the effects of climate chaos. It's not happening in some remote atoll of the Pacific Ocean, or in the estuarine delta of a poor, developing country. It's happening right in their homes. It is affecting their power supply, the price of their food, their livelihoods. It's costing lives. It's going to put up insurance premiums.
Most Europeans have not been subject to the same ideologically-driven debate over climate change as Americans have in the last decade. They have not been deprived of the true facts of the situation, or misled by compromised politicians.
Facts have a great way of cutting through ideology. During the Cultural Revolution in China, millions died as a result of ideologically-driven policies on agriculture. The authorities responded with denial and cover-up, because the alternative was to admit that their leaders were wrong. But now we know the truth, sadly too late for those peasants who suffered death by starvation.
Americans need to know that their leaders have been wrong, before it is too late.
There is no doubt that Obama's policies on climate change are better than Romney's, who said in his acceptance speech for the GOP nomination: “President Obama promised to slow the rise of the oceans and to heal the planet. My promise ... is to help you and your family”. That phrase should return to haunt him now.
But for Obama to have spoken out loudly on climate change before now would have, paradoxically, worked against his best interests. Instead, he has during his campaign repeatedly shown support for oil, natural gas, shale gas and coal as well as renewables.
That has not been an obstacle for Bill Clinton, who is on the campaign trail himself. On Tuesday he said: “All up and down the East Coast, there are mayors, many of them Republicans, who are being told, ‘You’ve got to move these houses back away from the ocean. You’ve got to lift them up. Climate change is going to raise the water levels on a permanent basis. If you want your town insured, you have to do this.’ In the real world, Barack Obama’s policies work better”.
The president of the World Resources Institute, a former special envoy for climate change at the World Bank, who also happens to be British, has commented on the fact that both presidential candidates have largely avoided mention of climate change by saying: “Political discourse here is massively out of step with the rest of the world, but also with the citizens of this country. Polls show very clearly that two-thirds of Americans think this is a real problem and needs to be addressed.”
We have to hope that Obama wins the poll this week. Romney has opposed Democratic initiatives to regulate emissions from power plants and vehicles. He has promised to reverse Obama’s air quality regulations. He has said he will renegotiate the auto efficiency standard of 54.5 miles per gallon by 2025 that automakers agreed to this year.
Obama, speaking last week in Iowa, has promised to continue support for wind power projects and federal tax breaks for them, which Romney wants to end. “My plan will keep these investments, and we’ll keep reducing the carbon pollution that’s also heating the planet, because climate change isn’t a hoax. The droughts we’ve seen, the floods, the wildfires, those aren’t a joke. They’re a threat to our children’s future. And we can do something about it.”
He is right. Romney is wrong. It's as simple as that.
Obama must not just win a second term. He must then lead the world in the COP 18 climate change negotiations this December in Doha to a proper, legally binding agreement.
America, the world's greatest polluter, has avoided this responsibility for over a decade, and the PwC report reveals the consequence of this.
There has never been so much at stake for the rest of the world in an American election.
- The latest science says we're heading for over 6 degrees C warming.
- Romney will do nothing but make this worse
- Obama must win
- Then go to Doha and help broker a global pact on limiting emissions.
Following Hurricane Sandy, and more bad news on climate change today , there has never been so much at stake in an American election for the rest of the world.
If this is not a wake-up call, I don't know what is.
Hurricane Sandy was the worst storm to hit the eastern seaboard of the United States in living memory.
In one dramatic moment, that will end up costing American taxpayers billions of dollars, it has succeeded in doing something by powerful demonstration that no other amount of evidence or eloquence has succeeded in doing: it has brought climate change, at the last moment, into the presidential election agenda.
In its wake, the mayor of New York, Michael Bloomberg, has thrown his support behind Barack Obama. The latest issue of Bloomberg BusinessWeek carries on its cover the slogan: “It's climate change, stupid!"
In an editorial, it says: "Climate deniers exploit scientific complexity to avoid any discussion at all. Clarity, however, is not beyond reach. Hurricane Sandy demands it: At least 40 U.S. deaths. Economic losses expected to climb as high as $50 billion. Eight million homes without power. Hundreds of thousands of people evacuated. More than 15,000 flights grounded. Factories, stores, and hospitals shut. Lower Manhattan dark, silent, and underwater."
The latest scientific climate change research, arriving with chilling timing in my e-mail box today, points to disaster for the planet unless something drastic is done. Current rates of decarbonisation mean that global average temperatures are heading to a disastrous 6oC of warming. This would render much of the planet uninhabitable.
The news comes from fresh analysis by financial consultants PwC. Their Low Carbon Economy Index measures the progress of developed and emerging economies towards reducing emissions linked to economic output. Its latest issue says "To limit global warming to 2oC would now mean reducing global carbon intensity by an average of 5.1% a year – a performance never achieved since 1950, when these records began". [For a copy of the report contact Rowena Mearley, Tel: +44 207 213 4247 or e-mail rowena.mearley@uk.pwc.com.]
It adds that any investments in long term assets or infrastructure, particularly in coastal or low-lying regions need to address far more pessimistic scenarios.
This message seems almost pointedly directed at the East Coast of the United States this week.
On October 31, the New York Times published an article which explicitly linked Hurricane Sandy to climate change.
It said “the storm surge along the Atlantic coast was almost certainly intensified by decades of sea-level rise linked to human emissions of greenhouse gases. And [scientists have] emphasized that Hurricane Sandy, whatever its causes, should be seen as a foretaste of trouble to come as the seas rise faster, the risks of climate change accumulate and the political system fails to respond". It quotes in support Thomas R. Knutson, a research meteorologist with the government’s Geophysical Fluid Dynamics Laboratory in Princeton, N.J.
Hurricane Sandy came hot on the heels of the intense summer drought, which also powerfully affected much of the United States.
Americans now know first-hand some of the effects of climate chaos. It's not happening in some remote atoll of the Pacific Ocean, or in the estuarine delta of a poor, developing country. It's happening right in their homes. It is affecting their power supply, the price of their food, their livelihoods. It's costing lives. It's going to put up insurance premiums.
Most Europeans have not been subject to the same ideologically-driven debate over climate change as Americans have in the last decade. They have not been deprived of the true facts of the situation, or misled by compromised politicians.
Facts have a great way of cutting through ideology. During the Cultural Revolution in China, millions died as a result of ideologically-driven policies on agriculture. The authorities responded with denial and cover-up, because the alternative was to admit that their leaders were wrong. But now we know the truth, sadly too late for those peasants who suffered death by starvation.
Americans need to know that their leaders have been wrong, before it is too late.
There is no doubt that Obama's policies on climate change are better than Romney's, who said in his acceptance speech for the GOP nomination: “President Obama promised to slow the rise of the oceans and to heal the planet. My promise ... is to help you and your family”. That phrase should return to haunt him now.
But for Obama to have spoken out loudly on climate change before now would have, paradoxically, worked against his best interests. Instead, he has during his campaign repeatedly shown support for oil, natural gas, shale gas and coal as well as renewables.
That has not been an obstacle for Bill Clinton, who is on the campaign trail himself. On Tuesday he said: “All up and down the East Coast, there are mayors, many of them Republicans, who are being told, ‘You’ve got to move these houses back away from the ocean. You’ve got to lift them up. Climate change is going to raise the water levels on a permanent basis. If you want your town insured, you have to do this.’ In the real world, Barack Obama’s policies work better”.
The president of the World Resources Institute, a former special envoy for climate change at the World Bank, who also happens to be British, has commented on the fact that both presidential candidates have largely avoided mention of climate change by saying: “Political discourse here is massively out of step with the rest of the world, but also with the citizens of this country. Polls show very clearly that two-thirds of Americans think this is a real problem and needs to be addressed.”
We have to hope that Obama wins the poll this week. Romney has opposed Democratic initiatives to regulate emissions from power plants and vehicles. He has promised to reverse Obama’s air quality regulations. He has said he will renegotiate the auto efficiency standard of 54.5 miles per gallon by 2025 that automakers agreed to this year.
Obama, speaking last week in Iowa, has promised to continue support for wind power projects and federal tax breaks for them, which Romney wants to end. “My plan will keep these investments, and we’ll keep reducing the carbon pollution that’s also heating the planet, because climate change isn’t a hoax. The droughts we’ve seen, the floods, the wildfires, those aren’t a joke. They’re a threat to our children’s future. And we can do something about it.”
He is right. Romney is wrong. It's as simple as that.
Obama must not just win a second term. He must then lead the world in the COP 18 climate change negotiations this December in Doha to a proper, legally binding agreement.
America, the world's greatest polluter, has avoided this responsibility for over a decade, and the PwC report reveals the consequence of this.
There has never been so much at stake for the rest of the world in an American election.
The world is heading for a ”carbon cliff” - PwC
 |
| PwC's Jonathan Grant says "we are heading for a carbon cliff" unless habits are changed. |
The annual rate of reduction of carbon emissions per unit of GDP needed to limit global warming to 2°C has passed a critical threshold according to new analysis in the PwC Low Carbon Economy Index, published today. This measures developed and emerging economies' progress towards reducing emissions linked to economic output.
It demonstrates that at current rates of emissions growth, at least 6°C degrees of warming could be possible by the end of the century, which would result in large parts of the world becoming uninhabitable.
While last month, Britain topped a European league table for reduction of greenhouse gas emissions, it is by no means clear that this reversal will continue, as Government policy is to maximise oil, gas and coal extraction, and to build a new generation of gas-fired power plants.
The PwC report
The PwC report shows that to limit global warming to 2oC would now mean reducing global carbon intensity by an average of 5.1% a year, a performance never achieved since 1950, when these records began.PwC's director of sustainability and climate change, Jonathan Grant, says that "we are heading for a carbon cliff" unless habits are changed. "Even doubling our current annual rates of decarbonisation globally every year to 2050, would still lead to 6oC, making governments’ ambitions to limit warming to 2oC appear highly unrealistic.”
Andrew Sentance, PwC's senior economic advisor, says that "Government policies must radically change", and that for business this "represents an opportunity as well as a risk".
“The challenge now is to implement gigatonne scale reductions across the economy, in power generation, energy efficiency, transport and industry, as well as REDD+ in forested nations,” added Grant.
With less than four weeks to the UN Climate Summit in Doha, the analysis illustrates the scale of the challenge facing negotiations. The issue is further complicated by a slow market recovery in developed nations, but sustained growth in E7 economies which could lock economic growth into high carbon assets.
Emerging markets’ previous trends on carbon emissions reductions linked to growth and productivity have stalled, and their total emissions grew by 7.4%.
By contrast, the UK, France and Germany achieved record levels of annual carbon emissions intensity reductions, but were helped on by milder winters.
Examining the role of shale gas, PwC’s report suggests that at current rates of consumption, replacing 10% of global oil and coal consumption with gas could deliver emissions savings of around 3% a year (1gt C02e per annum).
However the report warns that while it may “buy some time”, it reduces the incentive for investment in lower carbon technologies such as nuclear and renewables, and could lock in emerging economies with high energy demand to a dependence on fossil fuels.
America has been exporting the coal it would have burnt had shale gas not displaced its domestic use, so, globally, a shift to shale gas in one country alone makes little difference to overall emissions.
This underlines the importance of reaching a global deal at Doha, PwC says.
UK oil, gas and coal extraction
At home, British policy on reducing carbon emissions no longer appears as consistent as it did until recently.On 25 October, Energy Minister John Hayes announced 167 new North Sea oil and gas licences, saying that every last economic drop of oil and gas from the North Sea will be extracted.
In answer to a question from Green MP Caroline Lucas last Friday, about whether the effect of this on achievement of the UK's domestic carbon budgets had been calculated, he gave no indication that it had, instead repeating that the Government “aims to secure over time the maximum economic recovery" of the "20 billion barrels of oil equivalent left on the Continental Shelf".
If all this were to be burnt, it would lead to the emission of 872 trillion kgCO2.
Meanwhile, despite a decline in the demand for coal caused by six British power stations having to close by 2016, the coal industry, through CoalPro, their producer’s association, hopes that the industry will be able to maintain a total of approximately 36 working surface mines across the UK, according to the Loose Anti Opencast Network (LAON).
LAON’s latest review of the stage at which 22 current and possible opencast planning applications across the UK have reached, has just come out.
LAON is calling on the Government to align its planning policy with its energy policy. Steve Leary, its coordinator, says: “It is the Government's intention to phase out the use of coal for power generation purposes, leading to a 75% decline in the use of coal for such a purpose over the next 10 years, whilst at the same time, through provisions in the Growth and Infrastructure Bill, it is possibly making it easier to dig the coal out".
He says this coal would probably be exported if not burnt at home.
This morning, activists from the No Dash for Gas campaign who have been protesting at the Government's policy to build a new generation of 20 gas-fired power stations, are ending a seven day occupation of the 300 foot high chimneys of EDF's West Burton 1,300MW Combined Cycle Gas Turbine (CCGT) plant, currently under construction in Nottinghamshire.
Energy and Climate Change Secretary, Ed Davey, has guaranteed that if built, these stations will be exempted from emissions regulations and can continue emitting CO2 unabated until 2045.
Call to decarbonise
-->
In a timely move, the Carbon Capture and
Storage Association, the Nuclear Industry Association and RenewableUK have
today issued a joint call to Energy Secretary Ed Davey to largely decarbonise
the power sector by 2030.
The three associations, representing over
1,000 corporate members, make the request
in a letter copied to the
Chancellor, Prime Minister, Business Secretary and Deputy Prime Minister and
Minister of State at the Cabinet Office.
The letter states that including a
reference to the objective to largely decarbonise the power sector by 2030 in
the Bill would reassure potential investors by lowering political risk and
bring the cost of capital down for lower carbon generation.
Tuesday, October 30, 2012
Hitachi's ABWR reactor, intended for Britain, has terrible operational record
 |
| The Longmen ABWR plant in Taiwan, built by GE-Hitachi, nearing completion, |
Hitachi has agreed to buy the Horizon nuclear company for around £700 million from RWE and E.ON, and begin a programme of building new ABWR reactors in Britain. But the four operational ABWR plants in Japan have a history of being off-line over 40% of the time.
The Japanese company, leading a consortium which contains Canadian engineering and construction group SNC-Lavalin, is to work with two leading British engineering companies, Rolls-Royce and Babcock International, intending to build two or three 1.3GW plants at each of the two sites owned by Horizon: Wylfa on Anglesey and Oldbury in Gloucestershire.
Hiroaki Nakanishi, president of Hitachi, said: “Today starts our 100-year commitment to the UK and its vision to achieve a long-term, secure, low-carbon, and affordable energy supply”.
Between 5,000 and 6,000 jobs are hoped to be created at each site during construction, with 1,000 permanent jobs per side following.
Government ministers welcomed the announcement, which comes after a series of talks at Whitehall with the potential buyers. The other contender was Westinghouse, but Hitachi beat them on price, offering twice what the owners of Horizon were expecting.
Hitachi is to use the Advanced Boiling Water Reactor (ABWR) design, which it has employed on four plants in Japan. Other plants based on this design are being constructed in Taiwan. All have been delivered on time and on budget.
The design has not yet been submitted to the Health and Safety Executive for approval, a process which can take up to four years. The first plant is therefore not expected to be operational until the middle of the 2020s.
However, the four Japanese ABWRs in operation have often shut down due to technical problems. According to the International Atomic Energy Agency, they have an operating factor below 60%, meaning that on average, 41.2% of the time they have not been producing electricity.
The Shika 2 ABWR reactor was unavailable 57.5% of the time; the 46.8 %">Hamaoka-5 reactor 46.8% of the time, the Kashiwazaki Kariwa-7 plant was unavailable 32.4% of the time; and the the Kashiwazaki Kariwa-6 plant 28.1% of the time.
Another ABWR planned to be built in Texas was cancelled in March 2011, and earlier this month almost two-thirds of Lithuanians voted against such a plant being built in their country.
Energy and Climate Change Secretary Edward Davey said: “Hitachi bring with them decades of expertise, and are responsible for building some of the most advanced nuclear reactors on time and on budget, so I welcome their commitment to helping build a low carbon secure energy future for the UK. I particularly welcome Hitachi’s firm commitment to involve the UK supply chain and local workforce."
Around 60% of the value of the first plant is expected to be sourced from within the UK, with more from subsequent plants.
Speaking on Radio 4 this morning, Ed Davey repeatedly denied that there had been any discussion of the price that might be paid for the electricity any of the plans might produce. He insisted that it was purely a commercial arrangement.
EDF Energy is negotiating with the government over the strike price for the electricity it is hoping to generate at Hinkley.
Mr Davey also announced the setting up of a new arms-length body, the Nuclear Industry Council. It will attempt to promote the UK's commitment to new nuclear power abroad and will be chaired jointly by government and industry representatives: Edward Davey (or Energy Minister John Hayes) and Business Minister Michael Fallon, and Lord Hutton, Chairman of the Nuclear Industry Association.
John Hutton said that the council “symbolises the long-term strategic partnership developing between the UK nuclear industry and the Government".
Also today, the Department for Business, Innovation and Skills announced that Sheffield University has been selected to go forward to final contracting and due diligence for a £37 million project involving continuing support for the Nuclear Advanced Manufacturing Research Centre.
This will be responsible for improving the skills base in the nuclear industry in the UK.
ABWRs have a design life of around 60 years, and take four years to construct. Unlike Areva's EPR design, they have a single not a double containment shell. They do not use steam generators.
Greenpeace Energy Campaigner Leila Deen commented on the news that: "It speaks volumes about the UK’s struggling nuclear programme that the Government is promoting a reactor that's years from being granted UK safety approval and is designed by the company that helped build Fukushima.
"Instead of waiting years to find out how much bill payers will end up subsidising this project, the Government should join Japan and Germany, abandon nuclear, and invest instead in clean, renewable energy."
Friday, October 26, 2012
British coal plants are converting to biomass with no certain climate benefit
A British Government policy change is causing coal plants to convert to burning biomass, fueling a huge increase in wood pellet exports from North America. But a new review of biofuels' impact has cast doubt on their ability to tackle climate change.
Around one-third of the EU bioenergy share in 2020 is projected to come from wood biomass from forests and woods, according to EU states’ National Renewable Energy Action Plans.
But there is a significant time lag between the carbon debt created when trees are cut down to be burned for energy, and the carbon reductions that fully grown replacement trees will bring, according to a report from the Institute for European Environmental Policy (IEEP).
“It is not currently possible to define the emissions profile and savings associated with Europe’s expanding use of biomass for energy, nor is there any policy process currently in place to secure this,” the IEEP report says.
“As a consequence, at present there is only the certainty of commitment to bioenergy use up to 2020, but no associated guarantee of emission reduction.”
The IEEP paper cites several studies to show that boosting bioenergy supplies with increased forest management would only achieve around 20% of the anticipated greenhouse gas savings in a 50-year period.
American imports rise
The European policy is boosting exports of wood pellets from North America. American export volumes are forecast to increase from an estimated 1.5 million tons in 2012 to 5.7 million tons in 2015, according to the North American Wood Fiber Review.Total Canadian exports to Europe in the second quarter of this year rose 14% from the first quarter, with reports of British Colombian pellet plants running at full capacity thanks to European demand.
Biomass-burning plants in the UK import most of their fuel, mostly from North America, which increases their carbon impact from transportation.
While in 2010-11, 13% of biomass burnt in British power stations was home-grown, this fell to 8.6% in the last financial year.
Meanwhile the amount imported grew, from 840,250 tonnes in 2010-11 to 1,086,880 in 2011-12, an increase of 23%.
Drax, based in Selby, North Yorkshire, is the main importer of biomass for this purpose, and is about to become a much bigger customer.
It has just raised £190 million to convert three of its six generating units exclusively to burning biomass instead of coal. The cost of this conversion is staggering: up to £700 million. It is being additionally financed by £230 million of cash, a £100 million loan and bank credit of £400 million.
Half of this money will not be spent in this country. It will be spent in upgrading port facilities and new wood pellet plants in North America.
Several new Canadian pellet facilities, such as Holbrook Forest Products in Roddickton, Newfoundland, have expressed their intentions to export pellets via these new port facilities.
Drax has used a financial technique called hedging to presell its power output to 2014. It issued an interim statement yesterday saying: "We have taken advantage of better dark green spreads since [2012] to strengthen our contracted position, including additional power sales of 3.5TWh and 2.9TWh for 2013 and 2014 respectively".
DECC's preference for conversion
Its incentive to make the conversion is the decision, announced in September in the banding review for the Renewables Obligation Certificates, that the more biomass is consumed in a given plant, the more support it is given. Electricity generated by a unit using 100% biomass will receive 1 ROC.In addition, DECC's review came down on explicitly supporting co-firing and coal conversion to biomass, as opposed to new biomass plants, and a consultation on a cap on dedicated biomass ROCs.
It is also likely that dedicated biomass projects will be excluded from the new capacity mechanism in the Energy Bill.
This decision caused Centrica Energy, to announce on Wednesday that it will not be proceeding with planning applications to develop dedicated biomass power stations at Roosecote in Barrow-in-Furness and at Glanford Brigg in North Lincolnshire.
Centrica Energy had proposed to build a new 80MW biomass power station on the site of its existing Roosecote gas-fired power station, and a 137MW biomass power station adjacent to its existing gas-fired power station at Brigg.
Others are not deterred, however. MGT Power announced this week that it will build a new 300 MW biomass power station at Teespor, at an estimated cost of £500 million.
Eggborough Power aims to convert all four units at its 2GW coal-fired plant to biomass. These would consume over 15 million tonnes per year of wood pellets if all units underwent conversion. The vast majority of these will be imported.
One port through which biomass imports come from North America is Immingham. It said on 15 October that it expects to handle 8 million tonnes of biomass in 2020, up from 62,000 tonnes in 2011.
The port discharged a 46,000 tonne wood pellet cargo in August, which was delivered to a large Aire Valley coal station. It expects to see further deliveries this year.
Several developers are deciding whether to build biomass plants close to the port.
Attempts are being made to address the lag in the intended greenhouse gas emission-curbing benefit of burning trees for electricity.
In August, the American state of Massachusetts implemented a regulation that biomass can only now be sourced from residues and thinning trees, taking into account soil productivity and protection of biodiversity and natural habitats.
Biomass units must also show that they emit at least 50% less greenhouse gases than fossil fuels, while efficiency requirements, operating certificates, and verification procedures are also imposed.
A DECC spokesman said that it will be consulting soon on setting caps on the carbon impact of biomass plants.
Monday, October 22, 2012
Energy storage must be supported in the Energy Bill
There have been many calls for energy efficiency to be supported in the Energy Bill as it is being reformulated, before it is presented again to Parliament next month.
I totally support these, but I would like to add that there must also be support for energy storage.
Energy storage is the next big thing alongside the smart grid. But there is only a passing mention of it in the current draft of the Energy Bill.
Energy storage systems enable electricity generated at a time of low demand to be stored and used at a later time when electricity demand is high. They go hand-in-hand with the development of the smart grid.
Energy storage significantly increases the effectiveness of wind, solar and tidal generated electricity because the energy is time-shifted to peak demand, which strengthens the business case for investment in a renewable generation scheme and means fewer generation plants need to be constructed.
There is another advantage: if storage is located near the point of use, this reduces the need to invest in power delivery infrastructure and reduces transmission losses.
According to a recent Frost and Sullivan report, some energy storage technologies under development also increase the efficiency of the CHP, waste-to-energy plants and distributed gas-based smaller power plants by utilising excess electricity (and heat) to make it available when it is needed.
Finally, storage can be deployed in tandem with virtual power stations and demand-service response. This gives a national grid the ability to tap into backup power and storage owned by any company of any type connected to the grid. This will considerably open up the market for distributed energy supply, with the potential for huge business opportunities.
The UK Government is supporting innovation in this area with a freshly announced £20 million fund for feasibility and demonstration competitions.
This is fine, but we need regulatory change too. The inability of the market to support energy storage at present needs addressing.
There are many competing storage technologies, all of them interesting:
The UK’s Low Carbon Innovation Coordination Group estimates that, combined with the smart grid, storage solutions could save the UK £4 - 19 billion in deployment costs up to 2050.
Furthermore, innovation can help create UK based business opportunities that could contribute an estimated £6 - 34 billion to the economy from exporting our know-how abroad up to 2050.
Around the world, new energy storage deployment totaled 121MW in 2011. A forecast from Pike Research projects that this will rise to 2,353MW in 2021. In China, the world’s largest market for renewable energy, which also has the world’s largest electricity grid, GTM Research anticipates that the market for energy storage will grow to a $500 million per year market by 2016.
All of this means that there are great prizes ahead for the companies that deliver the winning solutions.
In America, energy storage is already being supported. Various projects have been funded by the American Recovery and Reinvestment Act (ARRA), with $185 million of public money, which attracted $585 million of private investment.
We risk losing out in this huge global market if we do not back our own companies to the extent that America is doing.
Steven Berberich, the President and CEO of the California Independent System Operator, is of the opinion that "storage plus renewables is a marriage made in heaven".
California has a 33% renewable energy mandate and a cap and trade system starting next year. 12GW of distributed wind and solar power is expected to enter the market. Storage has the ability to cover for when there is no wind or at night time.
"It's the economics of storage we need to sort out," Berberich says.
That’s exactly what the Energy Bill should address. But Berberich believes that frequency regulation is the first market opportunity for energy storage, because it is already economic.
A ruling in the States by the Federal Energy Regulatory Commission (FERC) that forces Independent System Operators to take into account the benefit of storage is making them see its cost-effectiveness when used for this purpose.
Two pilot projects are establishing this near New York: one, run by Beacon Power, uses 20 MW of flywheel power, the other, by AES, uses 8MW of lithium batteries.
Another frequency regulation energy storage project in EastPenn, Pennsylvania, uses 3MW of innovative batteries that look like lead acid but with one electrode containing carbon; a cross between ultracapacitors and lead acid batteries with ten times the cycle life of other batteries.
Ian Ellerington, Head of Innovation Delivery at DECC, said earlier this year that if it was possible to fit energy storage support into the Energy Bill it would be a real boost to the industry.
“The energy system has to make sure it’s cost competitive and if storage can be part of that then it would be good to have the commercial mechanism in place to take advantage of the benefits that can be realised through that,” he said.
The Institution of Mechanical Engineers has also called upon the Government to support electricity storage through market reform. It criticises the “lack of understanding about the flexibility of electrical storage and the wider financial benefits it can deliver”.
The way to do this in the Energy Bill is to introduce a separate market category from generation, transmission, distribution and supply.
This will mean that a market support mechanism can be targeted specifically at storage.
The proposed Capacity Mechanism, whose details require fleshing out, should be used for this purpose.
Last week, Tim Yeo, the head of the select committee on energy and climate change, called for a feed-in tariff to support energy efficiency. A similar scheme could also be an option for energy storage.
The rule change in America that made it possible for energy storage to enter the market was to force suppliers to consider energy storage on an equal basis alongside generation before making a decision on investment. This is another option that could go in the Bill.
Energy storage is an exciting and fast-moving field with huge potential, and an essential part of tomorrow’s electricity supply system.
Not to support it in the Energy Bill would be another missed opportunity.
I totally support these, but I would like to add that there must also be support for energy storage.
Energy storage is the next big thing alongside the smart grid. But there is only a passing mention of it in the current draft of the Energy Bill.
Energy storage systems enable electricity generated at a time of low demand to be stored and used at a later time when electricity demand is high. They go hand-in-hand with the development of the smart grid.
Energy storage significantly increases the effectiveness of wind, solar and tidal generated electricity because the energy is time-shifted to peak demand, which strengthens the business case for investment in a renewable generation scheme and means fewer generation plants need to be constructed.
There is another advantage: if storage is located near the point of use, this reduces the need to invest in power delivery infrastructure and reduces transmission losses.
According to a recent Frost and Sullivan report, some energy storage technologies under development also increase the efficiency of the CHP, waste-to-energy plants and distributed gas-based smaller power plants by utilising excess electricity (and heat) to make it available when it is needed.
Finally, storage can be deployed in tandem with virtual power stations and demand-service response. This gives a national grid the ability to tap into backup power and storage owned by any company of any type connected to the grid. This will considerably open up the market for distributed energy supply, with the potential for huge business opportunities.
The UK Government is supporting innovation in this area with a freshly announced £20 million fund for feasibility and demonstration competitions.
This is fine, but we need regulatory change too. The inability of the market to support energy storage at present needs addressing.
There are many competing storage technologies, all of them interesting:
- Pumped hydro: at present there is only one example in this country
- Ceramic bipolar batteries, being supported already by the Technology Strategy Board for use with PVs
- Compressed air energy storage (CAES) and liquid air, where the main challenge is to develop adiabatic (zero-heat loss) compression to improve efficiency
- Flywheels, which are achieving ever higher speed rotation (e.g. hubless design)
- Hydrogen, generated from renewable energy, and used in conjunction with fuel cells
- Liquid metal batteries, a bizarre but fascinating innovation
- Lithium-based batteries, where developers are improving solid-state conductors, and lifetime
- Sodium-based batteries, where the challenges to improve durability and electrolytes (including solid-state)
- Redox and hydrid flow batteries, where the need is to develop low-cost membranes and real-time impurity sensing
- Supercapacitors, where the challenge is to improve high voltage electrolytes
- Thermal-to-electric storage, where the energy needs to be quicker to access and convert when required.
The UK’s Low Carbon Innovation Coordination Group estimates that, combined with the smart grid, storage solutions could save the UK £4 - 19 billion in deployment costs up to 2050.
Furthermore, innovation can help create UK based business opportunities that could contribute an estimated £6 - 34 billion to the economy from exporting our know-how abroad up to 2050.
Around the world, new energy storage deployment totaled 121MW in 2011. A forecast from Pike Research projects that this will rise to 2,353MW in 2021. In China, the world’s largest market for renewable energy, which also has the world’s largest electricity grid, GTM Research anticipates that the market for energy storage will grow to a $500 million per year market by 2016.
All of this means that there are great prizes ahead for the companies that deliver the winning solutions.
In America, energy storage is already being supported. Various projects have been funded by the American Recovery and Reinvestment Act (ARRA), with $185 million of public money, which attracted $585 million of private investment.
We risk losing out in this huge global market if we do not back our own companies to the extent that America is doing.
Steven Berberich, the President and CEO of the California Independent System Operator, is of the opinion that "storage plus renewables is a marriage made in heaven".
California has a 33% renewable energy mandate and a cap and trade system starting next year. 12GW of distributed wind and solar power is expected to enter the market. Storage has the ability to cover for when there is no wind or at night time.
"It's the economics of storage we need to sort out," Berberich says.
That’s exactly what the Energy Bill should address. But Berberich believes that frequency regulation is the first market opportunity for energy storage, because it is already economic.
A ruling in the States by the Federal Energy Regulatory Commission (FERC) that forces Independent System Operators to take into account the benefit of storage is making them see its cost-effectiveness when used for this purpose.
Two pilot projects are establishing this near New York: one, run by Beacon Power, uses 20 MW of flywheel power, the other, by AES, uses 8MW of lithium batteries.
Another frequency regulation energy storage project in EastPenn, Pennsylvania, uses 3MW of innovative batteries that look like lead acid but with one electrode containing carbon; a cross between ultracapacitors and lead acid batteries with ten times the cycle life of other batteries.
Ian Ellerington, Head of Innovation Delivery at DECC, said earlier this year that if it was possible to fit energy storage support into the Energy Bill it would be a real boost to the industry.
“The energy system has to make sure it’s cost competitive and if storage can be part of that then it would be good to have the commercial mechanism in place to take advantage of the benefits that can be realised through that,” he said.
The Institution of Mechanical Engineers has also called upon the Government to support electricity storage through market reform. It criticises the “lack of understanding about the flexibility of electrical storage and the wider financial benefits it can deliver”.
The way to do this in the Energy Bill is to introduce a separate market category from generation, transmission, distribution and supply.
This will mean that a market support mechanism can be targeted specifically at storage.
The proposed Capacity Mechanism, whose details require fleshing out, should be used for this purpose.
Last week, Tim Yeo, the head of the select committee on energy and climate change, called for a feed-in tariff to support energy efficiency. A similar scheme could also be an option for energy storage.
The rule change in America that made it possible for energy storage to enter the market was to force suppliers to consider energy storage on an equal basis alongside generation before making a decision on investment. This is another option that could go in the Bill.
Energy storage is an exciting and fast-moving field with huge potential, and an essential part of tomorrow’s electricity supply system.
Not to support it in the Energy Bill would be another missed opportunity.