Petrofac takes stake in Gateway Gas Storage

Petrofac, the international oil & gas facilities service provider, has acquired a 20% interest in Gateway, a client of Taylor Keogh since 2005. Petrofac has joined Gateway as the technical project operator and will be jointly responsible for developing the project ahead of a Final Investment Decision later this year. The front end engineering and design phase of the project has been completed and the focus is now turning towards finalising the consortium of storage capacity holders and investors. Gateway Storage is targeting 2016 for the commencement of storage services to the UK energy market.

When built, Gateway Storage will be one of the UK’s largest salt cavern storage facilities and will add nearly 30% to the current gas storage capacity in the UK market, sufficient to meet five days of Britain’s average gas demand. 

Investment in new storage capacity as a means to bolster the UK’s long-term energy security has been a recurring issue within Parliament for some time. The Government’s Energy Bill, currently proceeding through Parliament, proposes to give additional powers to OFGEM to ensure that this capacity enters the market, but a number of politicians in both Houses have expressed the view that an enhanced Public Service Obligation on gas suppliers would be a better way to incentivise the investment that needs to be made if Gateway and other storage projects are to be built in good time.

For additional information on Gateway, please visit www.gatewaystorage.co.uk

Industry News- Advice on IPC preapplication consultation published

The government has fleshed out key elements of the planning regime for nationally significant infrastructure projects by publishing guidance on the new requirements for pre-application consultation.
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Political News-Policy decisions on waste management need to support Ireland’s competitiveness

The 2009 update of the Forfás waste benchmarking report published today (Wednesday, 19 August 2009) confirms that Ireland continues to perform poorly relative to a selection of competitor countries and regions in meeting the waste management needs of enterprise. Waste management charges are higher in Ireland than in comparator countries, progress on developing new facilities is slow and we have a heavy reliance on landfill.

Declan Hughes, Competitiveness Division Manager, Forfás said, “In the context of the unprecedented challenges facing the Irish economy and the need to ensure that businesses operating in Ireland are competitive to support sustainable, export-led growth, policy decisions in relation to waste management infrastructures and costs need to support national competitiveness as well as environmental sustainability policy objectives”.

“To improve Ireland’s waste management performance and to ensure the provision of cost competitive, environmentally friendly waste management services to business, we need to address the barriers to infrastructure investment, such as reducing planning delays, joining up regional waste plans and ending the high level of uncertainty about the future direction of waste policy,” he continued.

The Forfás report advocates that a decision on the future regulatory structure for the waste sector should be taken that clarifies the roles and responsibilities of the State in the regulation and provision of waste management services at national, regional, and local level.

Other policy priorities identified by the report include the need to coordinate multiple regional waste management plans, to reduce planning lead times and to ensure that waste services are competitively priced.

Due to cost implications for business, the report recommends against further significant increases in the landfill levy and the introduction of an incineration levy, or a cap on incineration, until such time as adequate new alternative waste treatment facilities are operational. The report recommends the need for policy to focus on how favoured waste treatment solutions can be made more competitive.

The report also recognises the need for the State support agencies and enterprise to continue to work together to ensure that Ireland matches comparator countries in reducing the amount of waste generated.

Key Findings and Conclusions

* Ireland continues to have a relatively high reliance on landfill for waste treatment and Irish companies continue to have a limited choice of waste treatment solutions compared to their competitors. In 2007, almost two thirds of municipal and industrial waste was landfilled, putting Ireland in the bottom three of the ten countries/regions benchmarked. Despite significant gains in the past decade in improving Ireland’s recycling level, the levels of recycled municipal waste remained unchanged over the two year period 2006 and 2007.

* The cost of waste management in Ireland remains high when compared to competitors. While the market price for landfill gate fees has dropped more recently, landfill costs remain among the most expensive of the benchmarked countries/regions. Biological waste treatment fees in Ireland are the most expensive of the benchmarked countries/regions.

* Waste management infrastructure rollout in Ireland remains slow. A range of infrastructures necessary to meet Ireland’s waste management requirements need to be accelerated including: thermal treatment capacity to recover energy from municipal and industrial waste; thermal treatment or landfill capacity for hazardous waste; biological treatment (composting, anaerobic digestion) and reprocessing capacity for recovered materials (e.g. paper, glass, plastic, metal recycled materials).

Policy priorities from the report

Ireland’s comparatively poor performance in the cost and availability of waste management highlights the key policy challenges that need to be addressed to ensure waste is managed in an environmentally effective and cost efficient way. The international waste review by the Department of Environment, Heritage and Local Government, which has been ongoing since July 2008 is vital to creating this policy certainty and addressing the barriers to infrastructure delivery but will need to take into account national competitiveness concerns.

The policy priorities which the Forfás report sets out are:

* Addressing the current high level of uncertainty about the future direction of waste policy which is leading to further delays in progressing infrastructure rollout (particularly private investment in waste infrastructure).

* Coordinating regional waste management plans to maximise economies of scale and enable the market to offer more competitive pricing to businesses and households. Ireland’s regionally based waste planning framework is hindering the delivery of cost effective, commercially viable waste treatment options as it tends to result in smaller scale, less commercially viable facilities than would be the case if infrastructure planning were done at a national level.

* Due to the already high cost of landfill in Ireland it is critical from a cost competitiveness perspective that further increases in the landfill levy are not introduced until adequate alternative waste treatment facilities are operational and that any incineration levy or cap on incineration should not be introduced until such time as adequate new alternative waste treatment facilities are well established and the use of landfill is reduced significantly. Consideration should instead be given to how favoured waste treatment solutions can be made more competitive
(for example, through the use of planning laws, development of relevant skills, research and development, etc.), rather than reducing the cost competitiveness of already high cost landfill.

* Continuing to fast track decisions on strategic infrastructure projects, including those in the waste management sector is of key importance. Delays in the planning process have had a negative impact on the timely delivery of key waste management infrastructure. While the introduction of the Strategic Infrastructure Act, 2006 has been a welcome step in addressing this issue, it is too early to determine if it has led to an improvement in planning timelines. The introduction of a specialist "Infrastructure Court", to deal with medium to large-scale planning and
construction cases, modelled on the successful Commercial Court (a list of the High Court that handles commercial cases of high value), could assist in cutting time and costs of delivery of our much-needed infrastructure.

* Continued and enhanced efforts will be required by Government Departments, agencies and business representative associations to ensure that businesses are fully aware of how best to exploit waste management reduction processes and technologies. Given that many organisations are already working with companies on a range of energy efficiencies, pollution prevention or resource conservation initiatives, continued efforts should also be made to develop a more integrated approach across a range of related issues.

Politics News-Bonn climate talks ‘augur badly’ for Copenhagen summit

The latest round of international climate talks in Bonn last week ended with disappointing results, raising concerns that a lack of progress is now effectively making a comprehensive climate deal in Copenhagen in December unrealistic.

Background:

The global community is currently engaged in negotiations to agree a successor to the Kyoto Protocol, which expires in 2012.

The first United Nations Framework Convention on Climate Change (UNFCCC) talks in Bonn (29 March–8 April) launched negotiations for a draft agreement in view of the final conference in Copenhagen later this year.

The draft negotiating text, prepared ahead of June's second round of climate talks, revealed a divide between rich and poor countries. Developing nations are asking their industrialised counterparts to commit to sizeable CO2 reductions and to offer financial aid to help poor nations in their efforts. But developed countries have not made any firm commitments on funding, and only the EU has taken on a firm CO2 reduction target, which nevertheless fails to meet the developing world's demands.

In the meantime, the negotiating text has ballooned to hundreds of pages as all parties have reacted with amendments. No agreement was reached at the June talks on financing for developing countries to mitigate and adapt to global warming.

At the sidelines of a G8 meeting in Italy on 9 July, the Major Economies Forum, comprising 17 countries that are accountable for 75% of global emissions, agreed for the first time to limit global warming to two degrees Celsius but failed to come up with targets.

The informal talks under the UN Framework Convention on Climate Change (UNFCCC) on 10-14 August were intended to cut down the negotiating text, which swelled to over 200 pages after the last talks in Bonn in June.

Only "selective" progress was made to consolidate the huge text, according to UNFCCC Executive Secretary Yvo de Boer stated. "If we continue at this rate, we are not going to make it," he warned.

Anders Turesson, climate negotiator for Sweden, which holds the EU's rotating presidency, agreed that progress is too slow. He argued that a dramatic change of gear will have to happen at the next round of talks in Bangkok in late September if a deal in Copenhagen is still in the cards.

Disagreement over who picks up the bill

Funding for climate change mitigation and adaptation in developing countries remains the main stumbling bloc.

Poor countries that are just going through with industrialisation insist that rich nations have a historical responsibility for climate change and should assist them in acquiring technologies needed to halt greenhouse gas emissions. But the EU and other industrialised countries want the developing countries to chip in, at the very least, by compiling national emission reduction strategies, before they put any money on the table.

Another central disagreement remains the scale of each party contribution to emissions reductions in the spirit of the principle of common but differentiated responsibility. Little progress was made however last week to define the respective responsibilities.

Figures released by the UNFCCC on 11 August showed that the emission reduction pledges so far tabled by industrialised countries would result in a 15-21% cut from 1990 levels. But this falls far short of the 25-40% that the UN scientific body Intergovernmental Panel on Climate Change (IPCC) says is necessary to halt global warming below the critical 2°C threshold.

Crucially, these numbers exclude the US, which did not ratify the Kyoto Protocol. Including the world's second largest greenhouse gas emitter after China would water down the overall goal as it only plans a return to 1990 emission levels by 2020 in its draft climate bill that pledges to cut emissions by 17% from 2005 levels.

Developing countries have called for the developed countries to shoulder their full responsibility by committing to at least 40% cuts in the midterm. The EU has so far made the most ambitious offer by pledging to raise its 20% goal to 30% in case other industrialised countries, notably the US, take on comparable targets.

The US has, however, clearly indicated that it will not budge from its 2020 targets, preferring to focus on the long-term instead.

"There has been a general feeling of unhappiness about the level of efforts that [developed nations] say they will take," China's climate ambassador Yu Qingtai told Reuters on the sidelines in Bonn. He accused the rich nations of trying to shift the burden to developing countries instead by demanding them to take action that might jeopardise their economic growth.

Industrialised countries, however, insist that developing countries make their contribution to the fight against climate change.

"We also need to see the cards of the developing countries," the EU's climate negotiator Artur Runge-Metzger argued. He said it is still not clear what these nations are prepared to contribute while developed countries have by and large already put their cards on the table.

Observers are now toning down their expectations for Copenhagen, as a complete agreement seems to be slipping out of sight in favour of a basic framework that could then be filled with substance in the course of 2010.

The next meeting carrying real political weight will be the Bangkok meeting at the end of September. Between now and the December climate conference in Copenhagen, only fifteen negotiating days remain, with the last meeting taking place in Barcelona in November.

Industry News-Review of UK policy annoucements on the future of energy and transport

Through out the week there was a blizzard of announcements focusing on the future of UK energy and decarbonising transport.

On Wednesday 15th of July the UK government published a white paper called the UK Low Carbon Transition Plan which has three elements; Renewable Energy Strategy, Low Carbon Industry Strategy and the Low Carbon Transport Plan. The paper sets out the government’s plans to meet its target of cutting carbon dioxide emissions by 34 per cent from 1990 levels by 2020.

In general the announcement focused on the renewable sector which is expected to increase its production of electricity from 6 per cent to 31 per cent over the next eleven years to 2020. The government wants to encourage all forms of low-carbon energy, Marine, Biomass, Onshore & offshore wind, nuclear power and clean coal (CCS) power stations that capture and store their emissions.

At the heart of the government's plans are giant offshore wind parks. The renewable energy industry will be given £120m to develop offshore wind technologies. The Government is allocating up to an additional £60 million for a suite of measures which will help accelerate the development and deployment of wave and tidal energy

The government reiterated their support for clean coal power generation and the progress being made in the area but were not forthcoming with any more statements. The June 2009 CCS consultation document along with the four site trials that are being funded will determine the future of the industry in the UK. In a new move the government are to open an Office of Carbon Capture and Storage to support the delivery of CCS. Full details will be announced in the autumn of this year.

Nuclear energy received little mention in the announcement apart from the government saying that it still had a part to play in the energy mix. The government are looking at streamlining the planning and regulatory approvals processes for new nuclear power stations. A national policy statement and a consultation document is due to be launched later in 2009.

The Government will provide capital investment to establish a Nuclear Advanced Manufacturing Research Centre that combines the knowledge, practices and expertise of manufacturing companies with the capability of universities. This will complement the existing Advanced Manufacturing Centres in Sheffield and Glasgow and the Nuclear Laboratory in Sellafield.

Low Carbon Transport Plan

The Low Carbon Transport Plan focussed on decarbonising transport by moving to an integrated transport system with cycling, cars, rail, public transport and aviation all playing their part.

Lord Adonis, the Transport Secretary pledged to reducing CO2 emissions from transport by 14 per cent by 2020. Under the new proposals the government will offer consumers grants of up to £5,000 if they purchase low polluting cars such as electric and plug in hybrids. Under the new proposals only cars that emit 75g per km of C02 or below will be eligible for these grants. The best-performing hybrid in the market in of 2009 is the Toyota Prius emitting 89g/km per KM of CO2.

The transport white paper has been welcomed environmentalists and business groups and is expected to become law by the end of the year. An overall a package of £250m of consumer incentives is being invested by the government to stimulate the take up of electric and plug-in-hybrid vehicles (This £250m figure is not new this announcement was made by Lord Mandelson the spring 2009).

One area where the move to more electric vehicles and hybrids has been falling down is in the area of charging points. There are very few in London and even less per square mile across the UK. This is significant. The move to electric vehicles will be slow if the consumer has the hassle of having no charging points outside their home. There is a serious need for charging points to be rolled out across the UK transport infrastructure quickly.

Recognising this as an issue the government have launched a new Alternative Fuel Infrastructure Grant Programme. The government will also unite Whitehall interests through the new Office for Low Emission Vehicles.

But this will not be the end of the debate. The government are working closely with industry and key stakeholders to develop a roadmap to 2050 by spring 2010. In autumn, the Committee on Climate Change will provide further analysis of the pathway through 2030 to 2050. The Government will work with the Committee, taking its analysis and recommendations into account when developing the roadmap to 2050. So there are several more negotiations and steps to go in the UK energy debate.

Jonny Mulligan

Industry News-Commission tables EU winter gas storage plan

The European Commission yesterday (16 July) proposed a new regulation on the security of gas supplies, obliging member states to take pre-emptive measures to avoid disruptions in the wake of a January dispute between Russia and Ukraine.

Background:
In November 2008, the European Commission presented a revised version of a 2004 directive on the security of gas supplies as part of the Second Strategic Review, aiming to reduce Europe's reliance on foreign energy imports.

The January gas dispute between Russia and Europe's main transit country Ukraine made the revision of the existing 2004 directive on gas supply security imperative, as it revealed the EU's inability to respond to emergencies. The row led to widespread supply disruptions for a fortnight in Eastern Europe, reducing the EU's gas supply by 20%.


"We have known for some time that the existing arrangements to deal with gas emergencies are insufficient […] All member states recognise that we need common standards for security of gas supply for the whole EU," said the bloc's energy commissioner, Andris Piebalgs.

The proposal authorises the Commission to declare a Community emergency at the request of a single member state, or when the Union loses more than 10% of its daily gas import from third countries. It also entitles the EU executive to coordinate member-state actions between one another and towards third countries.

EU states have a three-year transitional period until the end of March 2014 to ensure that they have either enough gas storage capacity or diversified energy supplies to handle a 60-day supply disruption in extreme winter weather.

But unlike the proposal for a revised directive on oil stocks approved by ministers last month (EurActiv 15/06/09), the gas regulation does not require compulsory strategic stocks as it is replaceable in most uses, the Commission said.

Instead, the document sets common standards for member states to define "serious gas supply disruptions", called 'N-1'. This refers to the preparedness of a country to satisfy its total gas demand during 60 days of exceptionally high gas demand if there is a disruption in the largest gas supply infrastructure.

In order to meet the N-1 standard, member states have to designate a competent authority to assess risks and establish both preventive and emergency plans.

The Commission reserves the right to require that plans be revised if they do not comply with the regulation.

To meet the infrastructure requirements, the regulation obliges transmission system operators to ensure reverse flow capacity on all interconnections within two years after the entry into force of the directive, if it would enhance the security of supply of a member state.

Piebalgs said Baltic nations would face the biggest challenges in meeting the standards, with the largest investments needed in Lithuania and Slovenia,where gas consumption is significant. Denmark, on the other hand, is best placed with its own production, while Germany and Belgium have "decent storage capacity" and are doing fine, he added.

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