Friday, December 23, 2011

How I make children happy using 100% renewable energy, by Father Christmas

Santa Claus
Wow! We are so honoured! Renowned philanthropist Santa Claus has agreed to post his annual message to the world on the Low Carbon Kid blog. 

Over to you, St Nick...

Hello everyone.

Up here, near the North Pole, we are very aware of global warming.

In the summer, I have water from melting ice dripping through the grotto roof like a tent in Wales.

I've got polar bears knocking at my front door for sanctuary, because the icebergs have melted.

It's not right.

'Course I do everything you'd expect.

All the wrapping paper is recycled from post-consumer waste and everything gets used again, composted or recycled.

I used to be green anyway in the days of old. That's before those people at Coca-Cola got hold of me and turned my costume red.

In those days, the grotto was heated with a wood fire.

Nowadays we heat the workshops with a geothermal system that runs on hot water from underground. Much less polluting and totally renewable!

All of my elves are on a vegetarian diet, which is far better for the planet.

I mean, if a veggie diet is good enough for Rudolph and the other reindeer, it's good enough for us.

The problem is the methane from the reindeer. They don't half make a lot of it!

Not much I can do about that, but I do take the reindeer poo and compost it in a biodigester, collect the gas and use it for the cooking on the old range.

Okay, so far so good.

But now, you know those folk in Brussels are spouting some new nonsense: they're going to make me pay for my flight emissions over Europe, bringing me into something called the EU Emissions Trading Scheme.

While I've got a present for them. I'm going to run my sleigh on biofuel!

I've got a deal going with the Brazilians. They've been making bioethanol out of sugarcane since the 1970s, and that's all I need to run my eco-sleigh on.

Well, it doesn't power the sleigh itself. No, that wouldn't be powerful enough to go around every child's bedroom in the world in just one night, would it?

Don't be daft.

Together with electric power from the geothermal plants, I run a special particle accelerator in my underground grotto.

CERN aren't the only people with a particle accelerator, you know. It was my present to myself back in 1951. I've been extending it ever since.

Being immortal gives me plenty of time to do this research. I have to - to keep up with your population growth.

So, there, I accelerate protons to close to the speed of light, smash them into some carborundum atoms and create a few trillion neutrinos, which, as you know, can travel faster than light.

Using these, I can cancel the influence of the Higgs bosons in my grotto in order to create particles you lot haven't discovered yet.

(Hmm, perhaps I should give CERN a Higgs particle in their Christmas stocking...)

These new particles are called anti-gravitons.

What do they do? They cancel out the effect of gravity, of course.

What did you think they would do with a name like that?

So, using advanced entanglement techniques, these particles are then linked to all the particles in my fleet of sleighs (you didn't think there was only one did you?).

Then, powered by the faster-than-light neutrinos, and floating in the air as a result of the anti-gravitons, I control the sleighs remotely from my grotto near the north pole.

And that's how I can deliver presents to every child in the world in just one night.

Did you think it was magic? Hah! How little faith in science you have.

All to make the children of the world happy.

Jeremy Clarkson, eat your heart out. You are like a paralysed snail compared to me.

And I am running exclusively on 100% renewable energy.

Happy Christmas, and pass the brandy!

Thursday, December 22, 2011

Chaos envelops Coalition's green policies

Campaigners against feed-in tariff cuts outside the High Court yesterday

The High Court has ordered a judicial review of the Government's proposals to cut feed-in tariff payments for solar photovoltaic installations.

With the Committee on Climate Change also saying this week that there is no way the Green Deal will work, as presently designed, Government plans to reduce UK carbon emissions are falling into disarray.

FiTs cut challenge success

Following a legal challenge by Friends of the Earth and two solar firms, Solarcentury and HomeSun, the High Court agreed yesterday afternoon that proposals to cut feed-in tariff payments for any solar scheme completed after 12 December, eleven days before the current consultation closes tomorrow, were unlawful.

Friends of the Earth’s Executive Director Andy Atkins said the "botched" proposals were "jeopardising thousands of jobs".

“Ministers must now come up with a sensible plan that protects the UK's solar industry and allows cash-strapped homes and businesses to free themselves from expensive fossil fuels by plugging into clean energy,” he said.

He agreed with the Government that "solar payments should fall in line with falling installation costs", which have almost halved in the last two years, "but the speed of the Government's proposals threatened to devastate the entire industry".

Jeremy Leggett, Chairman of Solarcentury, also welcomed the decision, saying: "We encourage the Secretary of State to accept the judges' very clear ruling, not plunge the industry into a further period of uncertainty by considering going to appeal".

There seemed to be no sign of that happening last night. Climate Change Minister Greg Barker said the Government would be seeking an appeal, and hoped to secure a hearing as soon as possible.

"Regardless of today’s outcome, the current high tariffs for solar PV are not sustainable and changes need to be made in order to protect the budget which is funded by consumers through their energy bills,” he added.

FoE is also calling for more money to encourage solar installations, to be paid for by the revenue the industry raises for the Treasury, the removal of planned restrictions that would prevent poorer households from installing solar panels and more support for community-owned schemes.

Green Deal "will fail"

On Monday, Lord Adair Turner, who announced this week that he is resigning as Chair of the Committee on Climate Change in order to focus on his role as Chair of the Financial Services Authority (FSA), wrote to Greg Barker and the Secretary of State Chris Huhne, expressing concern about the detail of the Green Deal and Energy Company Obligation (ECO).

He slammed the current proposals as being "an inefficient way of spending ECO funding", which would not cut energy bills for householders or enable the Government to meet its carbon budgets.

He pointed out that DECC’s own draft Impact Assessment projects show that between 2013 and 2020, six million lofts and 6.3 million cavity walls must be insulated.

But the Government itself estimates that just 700,000 lofts and 1.7 million cavity walls will be insulated under the ECO.

Yet this policy is supposed to account for much of the cost-effective potential to improve energy efficiency in the residential sector.

Lord Turner therefore proposes that the current Carbon Emissions Reduction Target (CERT)'s targets for insulating lofts and cavity walls be included in its proposed replacement, the ECO.

This would make it much more likely that target emission reductions would be achieved (e.g. 4-5 MtCO2 in 2020, rather than 2 MtCO2 as currently projected).

Lord Turner adds, "a less energy efficient housing stock would raise costs and risks of investing in renewable heat" (under the Renewable Heat Incentive), because electric heat pumps work less efficiently in poorly insulated homes.

He rejected DECC's argument in the impact assessment that including loft and cavity wall insulation in the ECO would crowd out the Green Deal finance, saying that there is enough money to achieve this if the energy companies and Green Deal providers have appropriate incentives, which he describes, to keep costs down.

Lord Turner's replacement as chair of the CCC is expected to be appointed by the end of March.

No one is policing EPCs

Further doubt on the ability of the Green Deal to meet its targets is cast by Mike Ockenden of the Property and Energy Professionals Association, writing in the current print edition of Energy and Environmental Management magazine.

He points out that there is only one local authority in the country, East Sussex, which is still monitoring the adequacy of Energy Performance Certificates (EPCs). These are the documents which will be used to estimate the energy efficiency of homes and buildings under the Green Deal.

A similar situation applies to Display Energy Certificates (DECs), which are meant to be displayed by public buildings over 1000 ft.². Many of these do not have a DEC, and yet not one has been prosecuted for this omission.

Trading Standards Offices are supposed to police the situation, and yet their departments have had their funding cut and enforcement activity has ceased completely, says Mr. Ockenden.

Without a monitoring system in place, and certification available to purchasers of homes to show how energy efficient they are, the nation's energy consumers are being forced to consume more energy and have higher bills.

At the root of all of these troubles for the Government's energy policies can be found the spending cuts and the dispute between the Treasury and the Department for Energy and Climate Change over budget allocations.

This dispute looks set to continue in 2012, with the low carbon industry sectors looking anxiously for the reassurance they need that their future is secure.

Wednesday, December 21, 2011

Could this solar power breakthrough kill off nuclear power?

Tata Steel and Dyesol team with the worlds largest dye sensitised PV module

New breakthroughs in solar technology have been announced which could mean a complete game changer in the way electricity is generated.

The technology involves printing a new type of solar cell onto building materials, such as steel and glass, and allowing them to generate electricity.

The chief announcement is the result of joint ventures between Australian company Dyesol and, in Wales, Tata Steel, and in America Pilkington Glass.

Researchers are being cautious as to the timescale, but it is estimated that in about five years time industrial production on a large scale could begin.

Speaking at a recent conference on solar power, James Durrant of the Department of Chemistry and Energy Futures Lab at Imperial College London, said “If just 10% of Tata's annual steel output were coated with DSSC, this would represent the output capacity equivalent to a 1GW nuclear power station per year".

Dye-sensitised solar cells (DSSC)

These 'dye-sensitised solar cells' (DSSC) employ a photoelectrochemical system similar to that employed by plants to capture solar energy.

In the manufacturing process, a nanocrystalline titanium oxide film plus a sensitiser dye are printed onto glass, polymer or steel and covered with glass or plastic.

Modules made from the cells currently have efficiencies up to 8% depending upon a compromise between stability and cost, but cells in the lab have reached 13% efficiency, and Dyesol is confident they can reach 10% under mass-production conditions in five years time.

DSSC has the following advantages over conventional silicon photovoltaic modules:

  • it can output a constant operating voltage in all light conditions, including low light and dappled conditions typical of urban and city environments, making it an ideal renewable resource for closely packed buildings
  • it has an optimum working temperature of 40o-50oC, unlike silicon PV, which becomes less efficient at higher temperatures
  • it uses little energy in manufacture due to the low temperature processes and absence of high vacuum technology needed for second generation technologies (thin film PV)
  • due to the nanoparticulate nature of the titanium dioxide, modules can generate electricity from light from any direction, removing the need for them to be pointed directly at the sun
  • it can be produced in a range of natural colours and light transmission effects including transparent, translucent or opaque
  • it uses no polluting dopant
  • the ability to produce a constant operating voltage in all light conditions
  • it is ideal for integrating into building cladding.

The race to mass production

Many companies are racing to produce this type of cell at an industrial scale.

Notable organic and dye-sensitized solar cell (DSSC) developers include, beside Dyesol: Eight19, EPFL, G24i, Heliotek, Konarka (printing large molecule polymers), Mitsubishi, Peccell, Plextronics, Solarmer, SolarPress and SolarPrint.

SolarPrint is also developing nanomaterials and processes to print the cells onto polymer substrates. Other researchers are experimenting with printing on fibreglass.

Eight19 Limited has raised $5 million from the Carbon Trust and Rhodia to develop plastic organic solar cells. The name "Eight19" refers to the time it takes sunlight to reach the earth.

The reason why Dyesol is a front-runner is because of its teamwork with Pilkington and Tata Steel. These joint ventures are already ahead of the game in terms of applying coatings on a continuous roll, as opposed to a batch process, output.

Existing coatings applied to steel include galvanising layers to prevent rust, colours, anti-static, and self cleaning layers, all of which are guaranteed for 40 years.

Tata's Rodney Rice, speaking from their DSSC Demonstration Roof at the PV Accelerator in Shotton, North Wales, where the process is being tested, told Energy and Environmental Management, "we use high speed large scale coating, on steel rolls 1.5m wide, put through at a speed of 200 metres per minute.

"This adds up to 200 million square metres of steel per annum, of which half ends up on buildings. If we assume 10 to 20% of this is on a roof or wall and the PV is operating at between 8 and 10% efficiency, then this will easily equate to 1 GW per year.

“We are developing our knowledge of printing coatings to printing the ability to generate electricity and to steel. It uses reasonably straightforward materials which are reliable, simple to apply and easy to scale up as there is no vacuum and fewer people involved.

"This means it has the perfect attributes for the mass-market and the technology will work well in northern Europe where there are large surface areas of roof tops."

The Dyesol-Tata partnership has obtained considerable support from the Welsh Government, and over the last four years has spent £11 million on R&D.

“Lowering the price is the objective and we are now developing processes that will allow us to do this in manufacture," continued Rodney.

"Initially steel rolls will be one metre wide with 10% efficiency leading to a production of 400 MW per year," he said.

Tata use coated steel and coated polymer electrodes, whereas Pilkington are using coated glass electrodes.

In America, the Pilkington-Tata joint venture has won $1 million from the Ohio Third Frontier Fund, and intends to complete its proof of concept project for large glass substrate panels by the summer of 2012.

Its chief competitor, American company Konarka’s technology, is a photo-reactive polymer material invented by Konarka co-founder and Nobel Prize winner, Dr. Alan Heeger.

This can be printed or coated inexpensively onto flexible substrates, again using roll-to-roll manufacturing.

It can work indoors too, capturing ambient light.

Like Dyesol, Konarka has recently entered a partnership agreement with a steel producer, ThyssenKrupp Steel Europe to develop solar steel roof, facades and other construction elements for building-integrated photovoltaics (BIPV) in Germany.

Dr. Lars Pfeiffer, head of quality and development at the Color/Construction unit. "Unlike conventional silicon-based photovoltaic systems, the joint solar solution will not need to be mounted on a raised structure but will integrate smoothly into the building envelope. We look forward to providing the valuable, added benefits of solar to our customers at a low cost."


Some problems remain to be solved. For example, could it survive 25 years?

Rodney Rice says at the moment Tata can produce several square metres, and has installed a 15 m² demonstration roof can be used to test the output and performance.

“We are now developing our abilities in the process, durability, assembly and manufacturing," he said.

It is the dye which is crucial for the generation of the electricity from light. Different dyes are being researched all over the world.

“We are looking for the perfect dye," said Rodney. “The ability to capture light energy from a wide range of wavelengths is required in order to maximise efficiency. More than half research in world is looking at new dyes, extending wavelengths, including into the infrared," he said.

Dyesol is now ramping up more aggressive performance targets under a revised Technology Road Map, to achieve grid parity at an earlier date.

Whichever company is the first to successfully produce cladding for buildings which can cheaply produce electricity, will find themselves at the head of a multibillion dollar market.

Even supposing half of what these companies are claiming is hyperbole, then we are perhaps looking at a ten year timescale rather than five years before the technology reaches mass production.

Even so, this would be before the anticipated timescale for new nuclear power stations to come online. So, the big question is: would it obviate the need for new nuclear power by rendering it uncompetitive?

Thinking about the ease and convenience of producing, installing and using this technology at the point of use, it is clearly going to be a massive game changer.

The missing part of the jigsaw is still electricity storage, since, although this technology can produce energy at night time from indoor lighting, this will not meet peak demands.

This topic will be the subject of another special Low Carbon Kid technology report in 2012.

Monday, December 19, 2011

Why is this sustainable biodiesel illegal in the UK?

used vegetable oil ready to be used as biodiesel

The Government is currently considering the Renewable Transport Fuel Obligations (Amendment) Order 2011.

I have seen a copy, and I can tell you that there is plenty to be concerned about in terms of its inadequacy.

But in this column I'm going to concentrate on one particular aspect: an appalling oversight which involves a potentially valuable renewable resource going unused in huge quantities, while existing biodiesel is not as sustainable as it seems.

Up against the law

John Nicholson runs an international business turning waste products, including some from the paper industry and used vegetable oil, into diesel fuels which can be burnt both in generators to produce heat and power, and in diesel vehicles. He also deals in fuel line heat exchangers and related technology.

Recently, he was raided by representatives of Her Majesty's Revenue and Customs who confiscated thousands of pounds worth of fuel, without compensation, and issued him with a tax bill for the fuel at the highest rate. It's a wonder he is still in business.

As part of the biopower network, his experience is not unique, but if you talk to anyone else in the mainstream biodiesel or biofuel network, say in the National Centre for Biorenewable Energy, Fuels and Materials, in DECC, or in the Department for Transport, they are completely unaware that this sort of thing goes on.

Now, you and I know that it is both common sense and environmentally sound to reduce both carbon emissions and waste by collecting used vegetable oils and chemically related liquids from cafes and other outlets and reusing it as biodiesel.

So why is it that what John Nicholson and those in his network do, is currently illegal in this country?

Current legislation requires that any conventional biodiesel:
  1. must contain biomass or waste cooking oil
  2. must not contain hydrocarbons
  3. must have a total ester content not less than 96.5% by weight
  4. and a sulphur content not exceeding 0.005% by weight.

It is the third point which John fell foul of.

Yet there is nothing about the chemistry of esters that makes them uniquely suited for the manufacture of biofuels.

There is, in fact, a wide range of non-fossil derived materials (much of which is currently regarded as waste) that could most beneficially be used to make biofuels, but at present these materials cannot be used in the UK because they are not esters.

In Ethiopia, China, Germany, Croatia, Italy, Spain, and many other nations these materials can be used without obstruction.

The EU Renewable Energy Directive (RED), (amendments to which are currently out to consultation), which is the 'parent’ of the Renewable Transport Fuels Obligation and other UK legislation specifying the use of biodiesel, makes no restriction on the proportion of esters which can be used in biodiesel.

The current draft defines it as "methyl-ester produced from vegetable or animal oil, of diesel quality, to be used as biofuel", without specifying any proportion.

Why is Britain adopting this unsustainable position?

John has a sneaky feeling, which he cannot prove, that it is because of pressure from the UK petrochemical industry, which uses a petrochemical byproduct to make legal biodiesel.

In the UK, the only currently legal biodiesels involve in their manufacture the chemical process of transesterification, by which biodiesels are manufactured as a Fatty Acid Methyl Ester (FAME), using these byproducts (and others, such as rape seed oil, which uses agricultural land).

This is an inefficient process, causing the production of waste glycerol.

By comparison, a more sustainable process is available, which does not create waste.

Instead, it recycles a waste, used vegetable oil, and creates a larger volume of fuel from the source material than is provided by transesterification.

Britain produces more used cooking oil waste than any other EU nation. Yet most of this is collected and then sold to the biofuels makers in France, Germany and Austria because they can afford to pay better prices for our UCO, because they have lower biofuel taxes.

Many sustainable biofuel resources are available but are currently discarded as waste, such as terpentine from the pulp and paper making industry, and terpenes (non-esters) from the essential oils of many types of plants and flowers.

Unless reused, such materials will otherwise biodegrade to form methane, a greenhouse gas far more damaging than carbon dioxide.

Although these materials can be refined and used for many applications, low grade material can be used in dilution with vegetable oil to make a biofuel that can be run in most vehicles at 100%.

It is a simple mixing process, in which used cooking oil is blended with a solvent. The solvent can be made from these essential oils, alcohol and water.

This lowers the viscosity of the fuel slightly, and raises its cetane value (an indicator of its ease of combustion). Further additives can also improve the power-to-heat output from engines, thereby improving tractive performance.

This wide range of non-fossil derived materials, that could be used in the manufacture of better biofuels, is not available in the UK because of the barrier created by the ester content requirement, and the unhelpful position being taken by HMRC on this issue that led to John Nicholson's stock being confiscated and destroyed.

The non-renewable renewable fuel

There is a further problem with conventional and legal biodiesel: it can contain fossil fuels.

Surprised? This is because methanol is required to make traditional biodiesel as a Fatty Acid Methyl Ester, by the chemical process of transesterification with methanol, using caustic soda as a catalyst.

Commercially available methanol is made from the methane that exudes from oil and gas wells, and is a waste by-product from the petrochemical industry.

It therefore contains fossil derived carbon atoms, and burning methanol or a methyl ester continues to exacerbate climate change, turning what is supposed to be a renewable fuel into one that is less so.

The further incomprehensible and inconsistent fact is that while biofuels are taxed, methanol made from methane is not!

Taxing methanol, and removing the ester condition from biodiesel, would therefore help the UK to meet the Fuel Quality Directive, which requires suppliers to reduce the lifecycle greenhouse gas intensity of transport fuels.

In fact, from the sustainability angle, the whole format of the legal provision in the Hydrocarbon Oil Duties Act 1979 (HODA) is now so complicated and ambiguous that it is totally unfit for purpose.

HMRC is now interpreting this law in such a way that is putting many people off setting up biofuel projects that could operate as community businesses collecting local waste cooking oil and encouraging local farmers to grow energy crops which can be processed to make fuel to meet local needs.

My request to the Department for Transport

So, in summary, here are four things that need to be changed to make biofuels more sustainable in the UK:
  1. remove the criteria applied to biodiesel that it must be not less than 96.5% ester content by weight
  2. increase the present tax break on biofuel to at least 60p per litre, or remove tax completely
  3. remove tax from any biofuel used to produce electricity, or for off road purposes
  4. remove biofuels from the scope of the Tied Oils Act under HODA. HMRC claim that any non-fossil derived plant oil is subject to the Tied Oils Act, even though the act itself refers to mineral oil. This creates an ambiguous situation that is open to interpretation.
I have talked to people in WRAP, which I would have thought would be interested in the resource efficiency aspect of reusing used vegetable oil. They have not considered it, and it is not in their work programme.

I have talked to people in the Environment Agency, and while they are interested in the waste aspect, though not concerned with the taxation issue.

HMRC says it is a matter for government to decide.

Whenever John Nicholson has written to the Treasury or DECC, he has received no answer.

The new Renewable Transport Fuel Obligations (Amendment) Order 2011 makes no mention of this problem.

The Renewable Energy Association, which represents the biofuel and energy from waste lobby, does not comment on this specific issue, but does say that the new RTFO "gives no encouragement for the supply of biofuels that do more than reach the minimum sustainability requirements of the RED" and gives "no incentive to produce 'better' biofuels ( i.e. those that deliver high GHG savings)".

The UK Carbon Plan is to increase biofuel use to 5% by energy to 2015 followed by further biofuels contribution to 2020 renewable targets with an assessment of road biofuel potential up to then and a decision taken on biofuel use by 2020.

The RED renewable transport target is 10% by 2020. But the RTFO specifies no route to achieve this.

If the Government seeks to meet this target, it really ought to urgently attend to this problem, and make it possible to produce more sustainable biodiesel without breaking the law.

Friday, December 16, 2011

Low carbon electricity suppliers to get guaranteed fixed payments

Dinorwig pumped storage generator in north Wales

The Government's proposed reforms to the electricity market include guaranteed fixed payments to suppliers to ensure revenue continuity.

Measures were outlined yesterday by the Government to secure future low carbon electricity supplies.

They set out how new generating capacity (such as renewables, carbon capture and storage (CCS) and nuclear) and non-generation capacity (such as demand-side response and storage), could reduce the impact on customer bills, and create a secure mix of electricity sources to meet projected increased demand.

Energy and Climate Change Secretary Chris Huhne said: “The UK faces a huge energy investment challenge over the coming years, with a fifth of our generating capacity coming to the end of its working life and electricity demand set to double. We want to give certainty to investors to develop the mix of clean energy sources that will power the UK in the years to come.”

Measures outlined include:
  • next steps for the Electricity Market Reform programme;
  • a Capacity Market, designed to ensure reliable electricity supplies and avoid the higher prices that could result from tight capacity margins;
  • a proposal for a System Operator who would work with the National Grid to manage the Feed-in Tariff with Contracts for Difference (FiT CfD) and the capacity mechanism;
  • detail on work to enable investment decisions for early projects;
  • detail on how Renewable Obligation Certificates will work after 2027.
Reform of the electricity market will begin around May 2013, with the first low carbon projects resulting from it beginning the following year.
The New Year will see more information about how Emissions Performance Standards and FiT CfD will work.

The job of the System Operator, sitting within National Grid, will be to advise the Government on key rules and parameters and administer the FiT CfD and Capacity Market. A settlement agent will manage payments. Ofgem will continue to regulate the new system.

What is a Capacity Market?

The proposed Capacity Market is intended to ensure that sufficient reliable capacity is available by providing incentives to invest not only in generation but also non-generation approaches such as demand side response, or, interestingly, for existing capacity to remain operational beyond its previously estimated life.

Approaches that do not involve generation, such as storage and demand management, are, significantly, acknowledged as potentially being cheaper and helping to cut carbon emissions.

The technological options for electricity storage are increasing, with a number of interesting solutions coming forward such as chemical and flywheel storage as well as pumped storage (pictured above at Dinorwig, North Wales).

The government is also looking at further ways to incentivise efficiency in the use of electricity, including the smart grid.

The detailed design of the Capacity Market, including the payment model, will continue throughout 2012 and into 2013 leading to secondary legislation, with the first delivery plan published in 2013.

It represents a state intervention in the market that begins by estimating the total volume of reliable capacity required a number of years ahead, contracting for the required volume of reliable capacity from providers through a central auction process; and then placing incentives on those providers to ensure they are available when needed.

The additional capacity that results from the Capacity Market is expected to have a dampening effect on electricity market prices.

The 'availability payment'

Responding to criticism that there have been too many changes in government policy on feed-in tariffs and other support measures, which have affected revenue flows in the industry, the Government says that it will establish a “robust legal framework to protect investors against unilateral changes to the FiT CfD" to ensure the predictability of revenue flows.

This will include an 'availability payment', which would compensate providers of capacity for lower electricity market revenues. The level of this guaranteed regular payment is yet to be decided.

Capacity Market have been implemented elsewhere, for example in the United States and Colombia. France and Italy, are in the process of introducing similar mechanisms.

The theory is that a Capacity Market provides an ‘insurance policy’ against a tight future electricity generation market resulting in higher levels of blackouts. Of all the models looked at, it is expected to have the least impact on average electricity bills.

It could lead to new entrants in the market in the form of Energy Service Companies and will also provide further incentives to roll out the smart grid.

More detail on the functions of the System Operator and the role of Devolved Administrations will be set out in the Electricity Market Reform policy document that will be published alongside the introduction of primary legislation next year.

Bridging the investment gap

The government has also outlined measures to ensure there is no gap in investment until the new system is established.

DECC is inviting discussions with developers about significant projects which can benefit from the proposed FiT CfD. Such projects might not be eligible for the Renewables Obligation or able to receive ROCs before the end of March 2017.

In order to supply this “comfort", as the technical note quaintly describes grant aid for any projects selected, legislation will have to be passed by Spring 2013; this is not guaranteed.


Renewable Energy Association (REA), chief executive Gaynor Hartnell welcomed the announcements, but said that developers of energy-from-waste plants still lacked clarity on whether the proposed Emissions Performance Standards would affect them. "We're at a loss to know why this can't be settled straightaway," she said. Details are, however, promised early in the New Year.

Richard Lloyd, executive director at Which?, commented that since National Grid "will now have a vital role to play in dictating consumers’ future energy bills, the Government must guarantee it will be held accountable.

“With new analysis from the Committee on Climate Change predicting that investment in low-carbon power will add £100 a year to bills by 2020, it’s more important than ever that the Government does everything possible to help people manage their energy use and save money,” he added.

Steve Radley, Director of Policy at EEF, the manufacturers’ organisation, cautioned that the government reforms should "not damage the competitiveness of energy-intensive industries".

Monday, December 12, 2011

Durban: it could have been worse. It should have been far better

Tired delegates on the final day of negotiations of the COP17 Climate Change Conference in Durban.

This is the second of two posts about Durban. The first gives a run-down of the accords agreed, this gives an assessment.

It was never going to be easy.

Anyone watching or following, as I was, the high drama of the last three days of the climate negotiations in Durban must have thought it more gripping than any Hollywood political thriller.

There was the massive invasion of the conference hall by the protesters, welcomed by some delegates.

There was the issuance of a fake draft text agreement by someone in the South African delegation, widely seen as an attempt to subvert and delay the proceedings.

There were the delaying tactics employed not just by the organisers but by some developed countries in the hope that no agreement would be reached.

There were bleary eyed, desperate negotiators, knowing that the future of the planet was at stake, running on adrenaline after the coffee machines had been taken away because the conference was supposed to have finished.

There was the final, last-ditch huddle of the rich countries, with Russia objecting that it was left out, which patched together a final statement, in an echo of the final moments at Copenhagen.

But away from the conference hall and its echoes in the Twitter and blogosphere, the events there have struggled to gain space in national headlines.

The world seems more concerned with short-term but still vitally important issues, such as the protests in Russia and the future of the U.K.'s relationship with Europe.

Ultimately, however, the decisions taken, or deferred, in Durban are of far greater importance to far more people.

If they fail to capture the popular imagination it can only be because they are so mindbogglingly complex that it is too much to ask most of us, let alone reporters, to find an easy way to get our heads around them.

It's all about trust

At the very root of the discussions and decisions, as with all international negotiations, is trust.

People trust their representatives to come up with the solution that's best for all.

But nations have to be able to trust each other, and so must be able to verify what each other is doing.

Even trying to think about how the emissions inventories of every country on the planet can be quantified, reported on and, crucially, verified to everyone's satisfaction, to globally agreed standards, makes you realise how great is the scale of effort required.

And that's just a small part of it.

There's also the crucial question of how all the required measures are to be financed in a cash-strapped world; a world where every nation is now trying to look after its own economic survival.

The arguments that are going on within the UK government, about the cost of short-term spending on renewable energy versus the benefit of long-term energy cost reductions, are being mirrored in every developed country.

And every developing country is demanding that developed countries pay for similar emission-reducing measures on their territories.

Developed countries say that their institutions and corporations must financially benefit from these actions for them to have the motivation to invest.

Developing nations and their supporters say that this means that only actions which benefit already rich countries and corporations will happen, and the poor will miss out.

There is very little trust to be found here.

"A spectacular failure"?

The World Development Movement calls the outcome of the UN climate talks a "spectacular failure" since, by only agreeing to produce yet another report on financing with no guarantees that anything will come of it, after years of reports, promises and negotiations, "it will condemn the world’s poorest people to hunger, poverty and ultimately, death".

It predicts that the world is now on course for devastating temperature rises because of "the failure of developed countries to commit to action to curb their emissions".

"It is feasible that developed countries could actually increase their emissions between now and 2020, and still meet their pledged emission reduction targets" under the new Protocol, they said.

Their attitude was echoed by every major civil group observing the proceedings.

It is telling that one American report I read on the outcome said it was a victory for George W Bush's attitude that every polluter must pay. This was his reason for not signing up to the Kyoto Protocol.

If commentators are saying that George W Bush was right, then the planet is surely in trouble.

The least bad outcome

But the fact remains that the big emitters, besides America, are now developing countries, the so-called BASIC ones: Brazil, India, South Africa, Indonesia and China.

They have agreed to reduce their emissions.

Countries at Durban made determined efforts not to let the summit break up in disarray, but to come out with some kind of agreement, however imperfect.

Before this conference, it was predicted that Kyoto II would not happen, since Japan and Canada would prevent it.

It was also predicted that a global carbon trading system could not be set up and the best that we could hope for would be a loose network of local trading systems.

Notwithstanding the fact that it is highly imperfect as instituted so far, and criticised by civil groups, carbon trading as a way of raising funds for investment is still the mechanism by which forests will be saved and technology transfer is happening.

The EU has now said that it is determined to make sure that a single set of rules governs carbon trading throughout the planet.

What we have is probably the least bad outcome the summit could have had. It is very far from being the best.

The bottom line is, as I reported last week, that a handful of industrialists, the richest people on the planet, buy and bend the ears and opinions of members of the public and politicians with their extraordinary wealth, gained from profiteering out of fossil fuels.

Their negotiators come to these summits determined to minimise the harm to the fossil fuel and energy-intensive industries.

But the science is irrefutable. The moral force generated by the victims of climate change is undeniable.

As the effects of climate chaos become more and more apparent, and as the science of climate change becomes more undeniable, the ratcheting up of the ambitions stated at Durban, albeit in ambiguous terms, must and will continue.

But only if and because popular pressure will impel it.

The only questions are: will the measures taken be fast enough to avert catastrophe? And for whom: the rich or the poor?

″Historic″ or ″hollow″? These are the Durban outcomes

UNFCCC Executive Director Christiana Figueres hugs South African Foreign Affairs Minister Maite Nkoana-Mashabane (right) at the close of negotiations at the COP17 Climate Change Conference in Durban on December 11, 2011,
This is the first of two posts on COP17, the Durban-based UN climate change talks: this summarises the accords reached and others' reactions; the next post following immediately is the Low Carbon Kid's assessment of the accords.
After the longest conference in the history of UN climate summits, a "historic" agreement was reached, that was also described as “hollow" by civil observers.

The Durban Package set up by the conference will, for the first time, bring all greenhouse-gas emitting countries in the world into a common legal regime under UN jurisdiction in 2015, that would force them to cut emissions no later than 2020.

Defying expectations, the Kyoto Protocol has also been extended until 2017, which will "bear in mind different circumstances of developed and developing countries".

The new global legal framework will be decided by 2015 and come into force by 2020. Called the Durban Platform for Enhanced Action, it will "raise levels of ambition" in reducing greenhouse gas emissions.

But the world's most poor and low-lying states say that the accords still leave them vulnerable and the targets agreed are not sufficiently aggressive to slow the pace of global warming, which threatens them most.

The phrasing of the agreement came at the last moment from huddled discussions between the European Union, India, China and the United States that left other nations, especially Russia, feeling left out.

Britain's Energy and Climate Change Secretary Chris Huhne hailed the result as "a great success for European diplomacy".

U.S. climate envoy Todd Stern said he was was satisfied with the outcome, saying it had "all the elements that we were looking for".

But the U.N. climate chief Christiana Figueres expressed regret that "What [the agreement] means has yet to be decided" because of the ambiguity of the language.

The EU's Climate Commissioner Connie Hedegaard said that the EU will lead by example now on tackling climate change. She admitted that the phrase "outcome with legal force" is weak wording, but insists it is at least an improvement on the Bali Roadmap, where there was no legal element.

The view of campaigners representing civil society was less enthusiastic.

A WWF spokesperson commented, "The job of governments is to protect their people. They failed to do that here in Durban today. The bottom line is that governments got practically nothing done here COP17 and that’s unacceptable".

Closing the gap

The agreement does, however, importantly acknowledge that "there is a gap between the aggregate level of reduction in emissions of greenhouse gases to be achieved through global mitigation efforts" and what is needed to avert dangerous climate change.

To reach this 2oC target, emissions, which are currently rocketing, must begin to fall by 8.5% by 2020 compared with 2010.

At the request of the EU and the Alliance of Small Island States (AOSIS), the delegates agreed to launch a work plan to identify options for closing this gap.

"It's certainly not the deal the planet needs - such a deal would have delivered much greater ambition on both emissions reductions and finance," said Alden Meyer of the Union of Concerned Scientists.

"Negotiating the details will be extremely tough," said Elliot Diringer of the Center for Climate and Energy Solutions, a Washington think-tank.

Many side issues could easily flare up and disturb the highly delicate negotiations.

Although the final documents are not yet publicly available, here is a summary of what was agreed or not agreed:


Following criticism, developed countries were urged to improve the transparency of their reporting on the fulfilment of their fast-start finance commitments ($30 billion for the period 2010–2012).

How to finance the Green Climate Fund that, in principle, will help channel up to 100 billion dollars a year by 2020 to poor countries, was not agreed, but a group was set up to put forward proposals.

An earlier proposal to do raise finance by charging international shipping for the carbon emissions it generates faced such opposition it did not make it to the final text.

The finance group will have two co-chairs, one from a developing country and one from a developed country and prepare a report for next year's summit.

"We cannot allow the Green Climate Fund to wither on the vine," said Celine Charveriat of Oxfam. "Governments must identify significant and predictable sources of money for the Fund without delay."

Carbon capture and storage

After years of debate it was decided whether and how to allocate carbon offsets under the Clean Development Mechanism to carbon capture and storage projects.

Because of the considerable uncertainty about their yet unproven efficacy, developers will have to put 5% of the credits earned in reserve so they will be awarded only after 20 years, provided that no carbon dioxide has leaked from the underground store.

Joint Implementation (JI) mechanism

This is the means whereby developed countries earn emissions credits under the Kyoto Protocol from low carbon projects financed in their countries by other developed countries.

A decision on whether to extend it after 2012 was again deferred until next year, raising the possibility that those countries with emissions credits may flood the market with them before the scheme ends.

Reporting and verification

Developed countries must prepare biennial reports on their emissions and on their projects to reduce emissions, in accordance with their national circumstances.

The first of these must be submitted by 1 January 2014, along with an even more detailed report; the latter must be submitted every four years.

A common format for these to be reported, through a website, is to be agreed.

Developing countries will go through a similar parallel process, with their first biennial update report submitted by December 2014; by 5 March next year they must also submit information about their nationally appropriate mitigation actions and low-emission development strategies, in order to obtain financial and technical support by developed countries.

Developed countries, the Global Environment Facility and the Green Climate Fund, must submit information on the financial, technological and capacity-building support they can give to support these actions and strategies by the end of 2014, and the first rounds of international consultation and analysis in distributing the support will then be conducted by summer 2015.


Countries will submit by 5 March 2012, their views on how to finance results-based actions under REDD (Reducing Emissions from Deforestation and Forest Degradation in Developing Countries). These will be discussed before COP18.

Agriculture, aviation and shipping

No proposals were made on reducing emissions from agriculture, and the conference only agreed to continue to consider the issues related to addressing emissions from international aviation and maritime transport.

Sustainable development

Crucially, it was underlined that "any help given to developing countries must also help their social and economic development and poverty eradication" and "promote a just transition of the workforce, the creation of decent work and quality jobs in accordance with nationally defined development priorities and strategies".

Adaptation to climate change

The Adaptation Committee, agreed to last year, had its role is more clearly defined and was instructed to develop a three-year plan for its work.

Capacity building and technology transfer

To facilitate technology development and transfer from developed to developing countries, a new Climate Technology Centre and Network is being set up as soon as possible, once it's decided where it is to be hosted.

It will prepare project proposals for the deployment, utilisation and financing of existing technologies for mitigation and adaptation and R&D of new climate-friendly technologies for sustainable development.

There will also be an annual 'Durban Forum' held to discuss progress on capacity-building. Its first meeting will be during the thirty-sixth session of the Subsidiary Body for Implementation (14–25 May 2012).

Reviews of progress

A review of the adequacy of the long-term global goal for reducing emissions and the overall progress made towards achieving it should run from 2013-2015.

Subsequent reviews should take place following the adoption of an assessment report of the Intergovernmental Panel on Climate Change, or at least every seven years.

Thursday, December 08, 2011

Defra tackles water shortages but ignores carbon

drought conditions

Defra's new vision for water management ignores the industry's carbon emissions.

Defra has set out its plans to protect the future water supplies of the country, and how water companies should become more efficient, but has failed to link water use to measures to tackle climate change.

The new White Paper, 'Water for Life', also explains how river water quality will be improved with the help of local organisations, and pledges to reform the water industry with further deregulation “to drive economic growth".

Business and public sector customers will be able to negotiate better services from their suppliers in order to cut their costs, the Paper says.

Market reform will also remove barriers that have discouraged new companies from entering the water market, which is currently supplied by 23 firms.

The Paper incorporates nearly all of the recommendations from the Environment Agency on industry governance, with one notable exception: whereas the Agency dedicates many recommendations to reducing the carbon emissions associated with water use, the White Paper completely ignores this.

The White Paper does take on board the EA's recommendations for more national management of water supply, by developing the concept of water trading and interconnecting pipelines.

Water companies will also be able to set new social tariffs for people who struggle to pay their bills, and there will be measures to tackle bad debt, which results in householders carrying the can for those who can't or won't pay, to the cost of £15 per year each.

Measures are also outlined to compensate those in the South West for the “historic unfairness" of water infrastructure in the region, by pledging to reduce their bills by £50.

Tackling water shortage

Launching the Paper, Environment Secretary Caroline Spelman said: “Currently we enjoy clean water at the turn of a tap, and watch it drain away without a thought. But parts of England actually have less rainfall per person than many Mediterranean countries."

Unprecedented dry weather conditions this year, and low water levels, led Anglian Water last week to ask the Environment Agency for a drought permit, in December.

The Agency says that if the dry winter continues, more drought permits are likely to be sought because river and reservoir levels across south east England are well below average.

“Making sure we’ve got enough water for everyone is going to be one of the major challenges this country will have to deal with in the years ahead. With water expected to be less predictable as time goes on we all have to play our part in ensuring our water supply remains secure,” said Caroline Spelman.

As Aecom Water regional director Peter Robinson has observed, household water use has to be rethought as the population of the south east of England is projected to grow over the next 25 years.

Not tackling carbon emissions

The White Paper contains much about how the water regime needs to change drastically in order to reduce the risks associated with climate change, such as water scarcity and environmental damage.

However, one glaring omission from the Water White Paper is that there is no mention of the carbon content of water, a matter of deep concern that has been raised by both the Energy Saving Trust and the Environment Agency.

The last available annual figures show that the UK water industry as a whole emitted five million tonnes of greenhouse gases through treating and supplying clean water, and dealing with wastewater and sewerage. This is 0.8% of the U.K.'s greenhouse gas emissions.

The Environment Agency has calculated that when household and water company emissions are considered together, 89% of emissions in the water system can be attributed to ‘water in the home’, which includes energy for heating water but excludes space/central heating.

The remaining 11% of emissions originate from abstracting, treating and supplying water, and subsequent wastewater treatment.

The Agency recommends, in its last bulletin on the subject, that any proposed supply options, such as a new reservoir or desalination plant, must be evaluated on a scheme by scheme assessment basis so to select the lowest carbon solution.

But the White Paper fails to address these concerns, except to say that some domestic water conservation measures, such as paying for water butts, will be covered by the Green Deal.

Catchment area management

Many of the policies in the White Paper also stem from the EU Water Framework Directive, which represents a long-term, sensible and radical overhaul of Europe's water management systems.

The White Paper takes credit for fostering a change to the way our water resources are managed to a catchment area-based system. This is actually the system that has been developed for the last twelve years in the Water Framework Directive (the Framework documents call it a River Basin Management Plan).

The reason for this approach is that water does not respect administrative boundaries, whether local authority or national ones, so only a catchment-based management system makes sense.

It means that neighbouring local authorities sharing the same catchment area must cooperate over its management.

According to the timetable of the Water Framework Directive, pricing policies at a national level should have been set in 2010 and operational programmes of measures are due to be introduced next year, with environmental objectives having been met by 2015.

Defra's White Paper acknowledges that the Environment Agency is already carrying out ten pilot schemes to test catchment-based management and is pressurising water companies to meet their obligations to produce River Basin Management Plans.

Farmers are being encouraged to change their land management processes to reduce contamination of waterways, particularly from nitrate pollution, and Defra is looking into simplifying the red tape regulating this area.

The government is also trying to get reforms made to the Common Agricultural Policy to help farmers adopt more of a custodial role for the natural environment.

More deferred action

Urban diffuse pollution of water courses is also a problem. Unfortunately its solution is being deferred; this is not tackled in today's paper but will be subject to a different national strategy to be published next year.

The Paper also outlines methods to improve bathing water standards around the U.K.'s coast; but they won't come in until 2015.

Water companies will have more pressure put on them to restore abstraction from their waterways to more sustainable levels in the price review process, but again this will be subject to a separate consultation next year, along with one on national standards for SuDS (Sustainable urban drainage systems) and a new approval system for sustainable drainage.

A National Policy Statement for Waste Water is also expected imminently. This will look at how planning for new sewage treatment facilities should be managed.

At the same time, Defra will look at using its powers to remove permission given to water companies to abstract water, without having to give them compensation for doing so. Barriers to trading in abstraction licences will also be reduced.

Water meters?

There has been much talk about whether water meters should be compulsorily introduced everywhere, for example in the Walker Review, of the water industry, and whether smart meters could be used which would benefit consumers through reduced costs.

The White Paper argues that it should be up to water companies themselves to decide whether to install meters in people's homes.

The draft Water Bill will be published in early 2012.

Wednesday, December 07, 2011

Exposed: world's top 50 anti-climate oligarchs

Carlos Slim Helú, world's richest man and climate criminal

The world's top fifty wealthiest individuals who benefit from climate change by being involved in fossil fuel industries, and who use their wealth and influence to block climate-friendly legislation, are exposed in a new report today.

Coincidently, the latest British Social Attitudes (BSA) report, also released today, reveals a decline in public concern for climate change.

Taken together, it seems that the oligarchs' influence is having some effect on public attitudes, along with the recession.

Billionaires benefiting from climate chaos

The top 50 'Who's-Who' list of businesspeople who make money from financing climate change includes oligarchs from Brazil, Mexico, India and China; new elites who are recasting the global corporate power balance.

This is happening as heavy industry is accelerating its presence in developing countries, whose carbon footprints are correspondingly increasing; the so-called 'BASIC' countries who are this week resisting pressure for a global legally binding agreement on climate change at the UN talks in Durban.

"They are exposed in the IFG report for their get-rich-quick gambles to grab more land and resources, which, in turn, concentrates even more political power in fewer hands,” says the report's co-author and IFG board member from India, Dr. Vandana Shiva.

The International Forum on Globalization (IFG)'s report, Outing the Oligarchy: Billionaires Who Benefit From Today’s Climate Crisis is compiled from a great deal of often obscure research.

It profiles individuals chosen for their ranking on Forbes' list of the World's Billionaires, their investments and holdings in fossil fuels, and influence networks that block the transition from fossil fuels to more sustainable alternatives.

Among them are the already well-known Koch Brothers and the world's richest man known as “Uncle Slim".

The top three

1. Carlos Slim Helú and his family, from Mexico, worth $63.3 billion. President of Carso Infraestructura y Construcción, his company installs pipelines, erects chemical and petroleum facilities (through its subsidiary Swecomex), undertakes infrastructure and civil construction contracts, as well as owning his own media, including the New York Times, Rand Corporation and newspapers in Australia, Ireland, New Zealand, Northern Ireland and South Africa.

2. David and Charles Koch, from USA, worth $50 billion. Their political contributions to defeat climate legislation are believed to have exceeded those of the American Petroleum Institute (Big Oil’s own lobbying group) and Exxon (the country's largest oil company).

3. Eike Batista, from Brazil, worth $30 billion. He made his money from mining gold in the Amazon and now owns OGX and EBX Group which is involved in oil and natural gas, coal mining, electricity production and shipbuilding. Batista was an ally and large campaign donor to Brazil’s ex-President Lula. Batista current enjoys a similar relationship with Brazil’s new leader, President Dilma Roussef. Both leaders vigorously pursue industrial growth policies that make Brazil one of the world’s biggest emitters.

47 more industrialists are listed in the report.

Its authors say that climate negotiations will not have "meaningful progress until we address today’s extreme concentrations of wealth and power that have corrupted any prospect of democratic decision-making.

"Climate negotiators know that they are not calling the shots; rather, they are all restrained by political pressure from the very people who profit most from polluting our planet," says the introduction.

Sceptical, belt-tightening Britons

In this context, the new results from the annual BSA study of the British public’s attitudes and values would probably provide encouraging reading for these wealthy individuals.

The report, from the National Centre for Social Research and widely reported in today's media, also finds that many Britons believe unemployment benefits are too high and that people should stand on their own two feet rather than rely on the state.

It pinpoints economic hardship and climate change scepticism as key factors contributing to the decline in Britain’s collective environmental conscience.

Since 2000 the number of people prepared to pay higher prices to safeguard the environment has fallen, from 43 to 26%.

So too has the proportion willing to pay much higher taxes to protect the environment: from 31% to 22%.

Alison Park, lead editor of the report at NatCen Social Research, said that “if government wants to do more to promote green behaviour, it needs to tackle scepticism about the causes of climate change and convince people that it represents a real threat”.

Support for the environment has fallen among all income groups. Just over a third (36%) of those in the highest earning households (defined as those with household income of over £44,000 in 2010) would be willing to pay higher prices to protect the environment, down from 52% in 2000.

The report also finds that people are slightly more sceptical about the credibility of scientific research on global warming, with 43% now considering rising temperatures caused by climate change to be very dangerous for the environment, 50% down from 2000.

There are some encouraging signs however. Recycling now appears to be mainstream, with 86% of people saying they ‘always’ or ‘often’ make the effort to recycle.

In addition, 39% say that they take steps to reduce their home energy use and 32% choose to save or reuse water.

Activities which require more of a lifestyle change, such as cutting personal car use, have yet to reach comparable levels; despite higher fuel prices, only 19% of respondents said they have reduced the amount of driving they do.

However, of those who think climate change is dangerous for the environmentally-friendly behaviour is more common with 52% saying that they make an effort to reduce their energy use at home, double the rate (21%) found among those who do not share this conviction.

The survey also found that 54% believed unemployment benefits were too high, up from 35% in 1983 when the annual study was first carried out.

UK gives big business millions in climate aid meant for world's poorest

The Mexican windfarm at Tehuantepec which services Walmart not the poor
£385 million of UK funding intended to help poor people get access to electricity instead is going to EDF and Walmart.

The UK is today announcing proudly that it has allocated more than two thirds of its Fast Start Finance, to help the world's poorest people combat climate change and adapt to the effects of global warming, and that it is well on track to meet its £1.5bn commitment by the end of 2012.

However, some of the projects financed under the initiative have come under severe criticism for not actually helping the people for whom they are intended.

The World Development Movement also says that far from being new funding, as claimed, one third of this money was already allocated before 2008, all of it comes out of the existing Official Development Assistance budget, and at least 86% is in the form of loans to countries that can least afford to repay them instead of grants.

Fast Start Finance amounts globally to $30 billion, that was pledged between 2010-12, by developed countries to vulnerable developing ones, at the Copenhagen climate talks in 2009.

The UK, contributing £1.5bn, is, alongside Germany, the third largest contributor after the USA and Japan.

The UK’s money is channelled through the government’s £2.9bn International Climate Fund (ICF), a programme jointly managed by the Department of Energy and Climate Change (DECC) and the Department for International Development (DfID).

The Government announced today that £1,056 million has been approved or spent so far, on specific multilateral and bilateral programmes (£569 million in 2010 and £487 million in 2011).

The World Development Movement (WDM) has produced several reports analysing the way these projects are funded; amongst them is Climate Loan Sharks.

A WDM spokesperson said the WDM “is not criticising the projects per se, but the way in which the funding is channelled".

She continued, “many of the projects being funded do not generate a return on investment in the capital sales, such as flood defence barriers. Therefore, how can these poor countries be expected to repay the loans?"

WDM has found that, for instance, a windfarm in Mexico for which the UK government provided £385 million channelled through the Clean Technology Fund, will produce electricity not for homes but for Walmart, the world's largest company and owner of Asda in the UK.

This is achieved through a loophole in Mexican law allowing the company to claim it has produced the power itself, whereas in fact it just owns a nominal stake.

In fact, the 65MW windfarm is owned by EDF, the French company which is the world's largest electricity utility.

Local activists are demanding and deserve cheap electricity, but were not consulted at all over the development of the windfarm which, says activist Bettina Cruz Velazquez, form part of an attempt “to grab indigenous lands and convert them into resources for the market.”

A WDM spokesperson told me, “indigenous people there have been forced to sell their land have suffered human rights abuses, and sign contracts in languages which they did not understand".

The project financing is managed by the World Bank, which, according to WDM, hopes will encourage up to 2,000MW of further private sector wind projects in the Isthmus of Tehuantepec, where the wind park is located, but which are resisted by local people.

The involvement of the World Bank in channelling these funds has been criticised by many, including the House of Commons Environmental Audit Commission, which advised in a report published this summer that the DFID should encourage the World Bank to develop a "new strategy [to] prioritise low-carbon strategies, affordable energy access for the poor and improve energy efficiency".

It said "DFID should use its position as a major shareholder to ensure that the World Bank’s portfolio is ‘climate smart’".

A windfarm is undoubtably in this category, but the World Development Movement is now arguing that its projects lack social and other environmental safeguards such as access to affordable energy and the protection of ecosystems.

UK Energy and Climate Change Secretary Chris Huhne meetings did his best to talk up the advantages of the projects, saying: “Africa is one of the areas which will feel the impacts of climate change first which is why we’re helping its people adapt to a warmer world and not become reliant on dirty fossil fuels.

“We have a moral responsibility to help the poorest countries. This not only benefits the most vulnerable but also helps all of us move towards a safer and cleaner future.”

Chris Huhne was announcing several new allocations under the fund this morning:
  • £150m to fund the Clean Technology Fund, which will make it possible to support projects such as low carbon public transport systems and promote energy efficiency in Nigeria and save 47 million tonnes of carbon dioxide
  • £38m to unlock $300m to help 250,000 farmers in Eastern and Southern Africa adapt farming methods to get 10% more farmed land and produce 20% more food
  • £27.6m to bring electricity to 7,200 rural households in Eastern and Southern Africa
  • £15m to help Ethiopia respond to climate change
  • £6.7m to stimulate further investment in climate adaptation programmes in Kenya
  • £10m for the UN Adaptation Fund
  • £30m for the Least Developed Countries Fund
  • £85m for the Pilot Programme for Climate Resilience (PPCR)

DECC has made available a video showing some examples of UK climate funding.

Will Britain exceed its carbon reduction targets? Post 2

fossil fuel processing

This is the second of two posts that examine the UK's claims and efforts to reduce its carbon emissions.

Its conclusion: the UK must stop burning coal to win the battle to cut carbon emissions.

The Government claimed last week in its Carbon Plan that it is on track to meet its carbon reduction target, but this is contradicted by other independent evidence.

Emissions and carbon intensity are increasing

This evidence shows that the UK's greenhouse gas emissions actually increased last year by 3.5%; more than double the 1.3% growth in the economy, according to the PwC Low Carbon Economy Index published two weeks ago.

And this is a trend. The previous years' statistics from the UK government also show an increase in net carbon dioxide emissions of 3.8%.

If we carry on in this trend, the UK will undoubtedly miss its 34% reduction target.

Worse, the PWc report shows how, globally, national economies' carbon intensities are increasing everywhere.

Carbon intensity is a measure of how much Gross Domestic Product is produced per unit of energy generated from fossil fuels.

PWc's modelling shows that globally, the annual reduction in carbon intensity required to meet the 2° reduction target in carbon emissions by 2050, required to avoid climate chaos, has increased in the last year from 4.7% to 4.8%.

The UK's requirement is higher than this global average. The carbon intensity of its economy is actually increasing by 2.2% a year, and the annual decarbonisation rate now required to meet the 2° reduction target is 5.6%.

Much of the cause of the previous decarbonisation of the UK economy is actually due to the “dash for gas" which happened in the 1990s and resulted in a decarbonisation rate of 3%.

Its recent rise, correspondingly, is due to an increase in coal burning. The latest energy statistics show that in the last financial year, instead of renewables generating 10%, as is commonly believed, they provided 6.5% of our needs.

We are burning more coal

Coal provided 35.7% and natural gas 48.9%, with the shrinking contribution of nuclear power contributing 5.2%.

(The global warming potential of coal is nearly three times that of natural gas: 910gCO2/kWh compared to 360gCO2/kWh.)

This increase in the burning of fossil fuels to generate our electricity underscores how unfortunate it is that the U.K.'s carbon capture and storage programme is suffering delays.

PWc observe that “the longer the delay in significant action to tackle emissions growth, the steeper the path becomes to stay on track with a 2° reduction target," and the more it will cost us.

In industrialised countries, meeting this target will require massive emissions reductions in the order of 80-95% according to another annual report, the EU Climate Policy Tracker, out today from ECOFYS and WWF.

On the other hand, energy intensive industries have been complaining loudly about the cost to them of carbon reduction policies, and in his Autumn Statement, the Chancellor George Osborne promised to reduce this cost, which has the effect of reducing their incentives to save carbon.

PWc warn that there could be a large funding gap in the amount of investment which the UK needs not just to decarbonise the power sector (£89 billion) but to meet energy needs with coal and gas (hundred and £10 billion).

The big 6 utilities in the UK would have to triple their investment to meet the government's target, and in the current economic climate this does not seem likely.

The government suggested last week that pension and insurance funds could contribute to the sums required.

But for this to happen there must be a stable return with limited downsides risk.

Matthew Brown, the CBI's head of energy and climate change policy, has said that although the government's Carbon Plan gives investors a "clearer" picture of how the nation can transition to a low-carbon economy, "we now need this to be backed by consistent, long-term policies, avoiding any sudden changes of direction which put investors off."

What is the solution?

In an ideal world there would be plenty of funding available for low carbon technology, shale gas would not have been discovered, the Fukshima nuclear disaster would not have happened, and the European Emissions Trading Scheme would be operating perfectly to give a high price for carbon that would allow the necessary investments to take place.

Instead, we have to live with what we've got. Either you believe that there is an almost 100% certainty that we have to reduce emissions very fast in order to his avoid global disaster, or you believe that we should have other priorities, namely, our short-term national economies.

The Chancellor clearly believes the latter. The U.K.'s Energy and Climate Change Department believes the former.

The Chancellor believes that European legislation is holding back British business.

But half of the environmental performance of the average European member state is directly related to European legislation. Without it, the European natural environment and carbon emissions would be in a much worse state.

While the UK is one of the better performers in the European Union in legislation to fight climate change, we must not forget that under the Spending Review the Warm Front Scheme was cut, and the aspirations or funding for the Renewable Heat Incentive, Zero Carbon Homes and Carbon Trust were scaled back.

The Carbon Reduction Commitment Energy Efficiency Scheme has now been transformed into essentially a carbon tax with revenues going to the Treasury instead of scheme participants.

Back in June 2011, the UK Committee on Climate Change warned that UK policies are failing to achieve the needed step change.

Since then there have been many delays in policy decisions and changes of tack, which all impact on investor confidence.

In just one snapshot of the challenge ahead, The Centre for Low Carbon Futures and the Energy Saving Trust warned on Monday that "one building every minute must be retrofitted with carbon cutting solutions to meet 2050 energy targets".

Their report argues that the Government must invest in interdisciplinary research which brings together technical, social and economic expertise.

This is both a huge challenge and a huge opportunity, both for job creation and to save energy costs.

I firmly believe that the nation is hungry for this kind of action, for the sake of jobs, the economy and reduction of energy bills.

But the most important thing we can do is to stop burning coal.

Will UK will exceed its carbon reduction targets? Post 1

offshore wind turbine

This is the first of two posts about the UK's climate emissions and its plans to reduce them.

This first one represents the Government's current view:

David Cameron and Nick Clegg last week launched a Carbon Plan setting out the Coalition Government's policies to meet its long term commitments to cut carbon emissions.

These must, by law, be cut by at least 80% of 1990 levels by 2050. They have already been cut by more than 25%.

The Carbon Plan states that with the policies already in place the economy will significantly exceed the 34% target set for the first 15 years under the Climate Change Act, and would have done so even if the recession had not occurred.

The plan looks to the future in the light of the carbon budgets set by the Committee for Climate Change running from 2008-2012, 2013-2017 and 2018-2022.

However, the Environmental Audit Committee has warned that any loosening of the budget following the 2014 review urged by the Treasury could jeopardise the 2050 goal.

And an independent assessment says that the UK's greenhouse gas emissions are actually increasing by 3.5%; more than double the 1.3% growth in the economy, according to a recent report from PricewaterhouseCoopers' Low Carbon Economy Index.

Decade by decade

The Carbon Plan says that in the next decade the focus will be on energy efficiency, utilising the Green Deal, EU ETS, Climate Change Agreements and the CRC Energy Efficiency Scheme, as well as the benefits of the smart grid, which will help to reduce and manage peak and overall demands.
The average emissions of motor vehicles are expected to fall by a third, mostly due to more efficient combustion engines and sustainable biofuels.

Emerging low carbon technologies will be piloted, examined and deployed as they reach commercial levels.

During the 2020s, the successful technologies will move towards mass rollout, and this will include cheaper electric cars. The plan hopes that this will help the UK to "gain a long-term competitive advantage" in these technologies.

In the following decade, after the quick wins have been achieved, then emissions from the “hard to treat sectors, such as industry, shipping and agriculture will have to be tackled", Energy Secretary Chris Huhne says in his ministerial statement accompanying the plan.

Negotiating advantage

He says that its publication is timed to coincide with the United Nations climate negotiations taking place in Durban, “to show that the UK is walking the walk, demonstrating that even in tough times it can be done".

Mr. Huhne is on his way to attend the talks next week.

The UK's 2020 target to reduce emissions by 34% is much less than the EU's 20% below 1990 levels by 2020 (rising to 30% if other nations commit to comparable efforts under a broader climate pact).

"Our national economic interest is to be found in a cost-effective transition to low carbon, to an economy that is more resilient, innovative and efficient,” Mr. Huhne added.

The picture in 2050

The plan envisages that by 2050, emissions from heating and powering buildings will be virtually zero, and the roads will be filled with ultra-low emission vehicles.

In a closed-loop society, waste will be a thing of the past, and materials will either be reused or become an energy source.

However, we will need much more electricity, perhaps as much as twice the amount, to deal with peak demand and power vehicles and provide heating, despite a projected reduction in demand per head of population due to energy efficiency measures by up to 50%.

The government says it does not wish to pick particular technology winners, instead helping academia, industry and the market to work together to do this.

But the plan does outline different possible scenarios: a “higher renewables, more energy efficiency" scenario; “higher carbon capture and storage, more bioenergy" scenario; and a “higher nuclear, less energy efficiency" scenario.

Nuclear power

Nuclear power is currently projected to be the cheapest low carbon technology in the future, and the most cost-effective power mix using traditional cost analysis (based on the 'MARKAL' model, which has certain disadvantages that work against renewable energy) is anticipated to be 33 gigawatts (GW) of nuclear, 45GW of renewables and 29GW of fossil fuels with CCS.

The Government says that this would result in energy costs to consumers being reduced by £84/person/year.

This would involve tripling the amount of nuclear power currently installed. But this week, EDF Energy, currently expected to build the U.K.'s first new plant in three decades, at Hinckley, Somerset, said that its schedule was being put backwards due to extra safety checks.

Energy Minister Charles Hendry also revealed yesterday that the Government wants to build a new plant for processing nuclear waste, four months after a similar plant costing the taxpayer £1.4 billion was closed.

It will convert the UK’s giant stockpile of used plutonium into a form of nuclear fuel.

He said: “converting the plutonium into mixed oxide fuel is the most credible and technologically mature option,” and “any remaining plutonium whose condition is such that it cannot be converted into MOX, will be immobilised and treated as a waste for disposal".

Investment shortfall

In the next 10 years decisions have to be taken which will affect the picture 30 years later: switching from coal to gas powered generation and renewable electricity, which will also help reduce exposure to volatile fossil fuel prices.

In the following decade, carbon capture and storage and nuclear power are expected to be deployed alongside more renewables. Around 60 to 80 GW of new capacity will need to be built by 2030.

The main barrier to this is lack of investment. The current electricity prices driven mainly by gas power stations. The reform of the electricity market is partly designed to address this problem.

The Green Investment Bank is expected to be lending money from 2015, when most funding for the construction of Round 3 offshore wind is required.

A calculator, based on the 'MARKAL' model, has been made available on DECC's website which attempts to explain the total costs associated with powering the entire economy, averaged over the four decades up to 2050.

It includes the costs of the infrastructure and technologies required across all sectors (everything from family cars, to gas boilers to power stations), the costs of financing that infrastructure investment over time, and the costs of fuel and maintenance to keep those infrastructure and technologies running.

A revised online 2050 calculator also allows users to compare the cost of their chosen future energy system compared to doing nothing, or to other low carbon pathways.

Tuesday, November 29, 2011

UK Government calls for more investment in offshore wind

The Ormonde Offshore Wind Farm under construction in the Irish Sea, 10km off Barrow-in-Furness, with 30 REpower 5M wind turbines.
David Cameron is backing a call to investment funds, pension funds and sovereign wealth funds to invest in large offshore wind projects.

But potential investors will need more confidence that the government is not going to keep shifting the regulatory goalposts.

At a conference in London today, Ministers are meeting potential investors in offshore wind projects to establish what can be done to increase investment in this area.

Prime Minister David Cameron, said: “I see offshore wind as a significant energy and industrial opportunity for the UK, and one that I am determined to seize.

He said he believes "the UK will remain the world’s most attractive offshore wind market for many years to come," citing "abundant natural advantages and a world-leading marine engineering base".

He underscored the Coalition Government's "strong support for the growth of renewable energy in order to help diversify and decarbonise our long term energy mix."

The UK needs around £200bn of investment in new energy infrastructure to help reduce dependence on imported fossil fuels and boost our energy security, and the Government is looking to the banks and pension funds to fund it, as well as the UK’s current major energy suppliers.

Charles Hendry, Minister of State for Energy, said: “We have invited potential investors to London today to make the case for offshore wind as a stable, long-term and lucrative investment opportunity."

Risk management

Hendry added that "if people are not seriously considering investing here then I want to know why.”

Some of the answers can be found in a survey of 284 senior-level renewable energy executives, by the Economist Intelligence Unit (EIU), sponsored by Swiss Re, and published today.

It finds that operators are nervous about putting their money into renewables, and wind especially, because they need to feel confident about the security of the regulatory landscape, cost-effective insurance and protection from the vagaries of the weather.

In particular, investors will be wanting to know today that any government support on offer will be guaranteed for a long period of time in order to provide the security their business plans require.

Recent sudden changes to levels of support such as tax breaks and subsidies have not given them confidence.

Overcoming financial risks is another challenge perceived by the executives, affecting 76% of the survey's respondents. Renewable energy projects are often capital-intensive and highly leveraged, and up to 70-80% financed through loans.

A change in the weather

62% of respondents also place political and regulatory risk as important, while weather related risk is even more important for wind power producers (66%).

The impact of weather is more pronounced on wind than any other renewable energy. Returns may deviate by 25% from expected in any given year, whereas solar radiation levels typically deviate by no more than 4% from normal levels.

Of course, the deviation may be up or down, and it is a feature of climate change itself that weather is becoming more unpredictable.

Hans Bünting, CFO of German firm RWE Innogy, says that although weather variations might smooth out over the long term, “the main risks coming from instability are on the shorter-term weather risks. It creates volatility of earnings year to year.”

The need for insurance

Most operators therefore turn to insurance to manage this risk, according to Agostino Galvagni, Chief Executive Officer Swiss Re Corporate Solutions. "Risk management measures such as insurance will be key to encourage further private sector investment," he emphasises.

The Economist survey says that at present only 60% of respondents regard themselves as being successful at transferring risks this way, indicating that learning is still taking place.

Insurance company Swiss Re regards this as crucial to managing the world's safe transition to a post-carbon, climate-friendly future. "New technologies and innovation in renewable energy will be the only possibilities left should a global policy regime to reduce carbon emission not materialise" at Durban, says Andreas Spiegel, Swiss Re's Senior Climate Change Adviser.

"This is why Swiss Re is investing a great deal of research to better understand how insurance can mobilise financing for renewable energy projects and identify the most cost-effective ways to reduce risks, such as construction and operational risks as well as risks related to the intermittent nature of renewable energy production."

Only 4% of wind power producers use weather-based financial derivatives to protect themselves, due to their expense and complexity, but this is slowly increasing. One obstacle is that many offerings are currently not appropriate for small-scale projects.

This highlights a need in the insurance industry for more underwriters and risk engineers with specialised insight into the renewable energy industry, who can reassure investors that their cash will be safe and provide cheaper policies.

This is particularly true if the UK Government wishes to interest the big pension fundholders in this non-traditional type of investment.

Spreading the risk

One general way to spread business risk for developers is to take a portfolio of equity investors into a project, or to enter a project as part of a consortium or joint venture with other renewable energy developers or financial partners.

A recent example is the joint venture between DONG Energy and Siemens Project Ventures to acquire a 50% stake of Lincs, a 270MW wind farm project situated five miles off the UK coast.

Another way for investors and operators to reduce business risk is to buy into renewable energy developments at a later stage, once the riskier early stages of development are complete, and the renewable power assets are fully permitted or operational.

Potential investors can seek expert advice on potential investments from either government agencies, like the Carbon Trust, or external consultants, as do just over one-half of developers.

There is no shortage of these consultants, who, in the words of one of them, are there to "deliver the insurance and risk management services our clients require to capitalise on the opportunities the flourishing renewable/cleantech power sector presents”.

In the Economist survey, most operators feel they are successful in managing the various aspects of risk management: 70% say their companies are either “highly successful” or “somewhat successful” in identifying risks.

61% say they are similarly competent in assessing the scale and scope of risk.

However, investors might worry that they could end up with some of the 39% who aren't, and Charles Hendry could finish today wondering how he can help them to improve their confidence.