Thursday, 16 July 2009

Industry News-European Industry chiefs call for sectoral approach to climate change

A fair, new international climate regime should include sector-based agreements, leading to binding targets for emissions cuts in developing countries, the European Round Table of Industrialists (ERT), an influential group of CEOs, said in a paper published yesterday (15 July).

Background:

International negotiations are proceeding at full speed in order to agree a replacement for 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.

The EU will be able to upgrade its 2020 objective of slashing emissions of global warming gases from 20% to 30% only if an international agreement is struck to spread obligations evenly among the global community in order to avoid competitive distortions, the group said in the paper.

"Seen from a European perspective, an effective international framework is one that allows the EU to continue competing in the global market by ensuring that the gap is minimised between those leading on the implementation of emission constraints and those following as their economies build capacity to
manage emissions," said Jeroen van der Veer, former CEO of Shell and chair of the ERT's Energy & Climate Change Working Group.

The ERT is a forum of around 45 chief executives and chairmen of major national companies, including E.ON, GDF Suez, Siemens, Nokia, BT and Fiat.

The business leaders see a global greenhouse gas emissions market as the principal tool to deliver emission cuts. Industrialised countries with binding targets should link national cap-and-trade systems together to finance clean technology programmes in developing countries, the group said.

"This will establish a widespread market price for emitting CO2 (and other GHGs) into the atmosphere and deliver the reductions at lowest cost to the global economy," the paper reads.

UN projects to go large-scale

The UN's Clean Development Mechanism (CDM), which allows industrialised countries to earn offset credits by financing mitigation efforts in the developing world, should be redesigned to support large-scale projects - notably in the electricity sector - that are driven by a carbon price, the ERT argues. Lower-cost measures such as energy efficiency would largely be financed by developing countries themselves, it says.

More advanced developing countries, on the other hand, should "stabilise their absolute emissions in the medium term through nationally appropriate actions and thereafter, make a firm commitment to reduce absolute emissions," the report states.

This could be done via sectoral agreements with industrialised countries, the paper argues. The agreements would enable developing countries to adopt emissions reduction programmes in specific sectors like cement or steel to tap into funding and build capacity.

"Each agreement should include the eventual implementation of a long-term binding target for the sector or sectors in question," the ERT says. It adds that the approach could be extended to areas such as deforestation and afforestation. This has been envisaged under the UN's REDD mechanism, which is likely to feature as part of the deal in Copenhagen (EurActiv 20/04/09).

In order to reduce the need for protection for EU sectors that have the price of carbon added to their production costs, each agreement would have to involve at least 80% of world production of products in each particular sector and lead to CO2 reductions comparable to what the EU has set, the paper states.

One of the technologies that the business group would like to see transferred to the developing world through revamped CDM projects is carbon capture and storage (CCS). It calls for an international carbon storage certification, which would deliver a certificate for each tonne of carbon buried underground.

For the original and full news article click here

Client News-MGT Power coverage in the Financial Times

Green light for £500m biomass plant

England’s biggest biomass power station, a £500m plant at Teesport, near Middlesbrough, was given the go-ahead on Wednesday .The 295-megawatt capacity renewable energy plant, capable of generating enough electricity to meet the needs of 600,000 homes, will be one of the world’s biggest biomass plants.

Announced on Wednesday to coincide with the unveiling of the government’s low-carbon strategies, the plant is expected to save 1.2m tonnes of CO2 per year and account for 5.5 per cent of the UK’s renewable electricity target.

David Kidney, the energy minister, said: “In just over 10 years’ time, 40 per cent of the country’s electricity will come from low-carbon sources, like biomass.”

The British company developing the wood-fuelled power station is MGT Power, established 18 months ago to develop biomass-generation projects in the UK and continental Europe. Main shareholders include Trafalgar Asset Managers and MKM Longboat. An as yet unnamed international group of four banks, including a UK high-street name, will provide debt finance for the project, MGT’s first.

The Teesport power station, to be built on the South Dock area, owned by PD Ports, won local authority planning approval last November and hasnow received final approval from the Department of Energy and Climate Change. The plant will use 2.4m tonnes of woodchips each year, sourced from North and South America and the Baltic states, and is expected to produce the same amount of renewable electricity over a year as a 1,000MW wind farm.

Chris Moore, director of MGT, said the plant had secured an early connection date to National Grid, to which it would export power from 2012.

“Other, similarly sized biomass plants are proposed in other parts of the country but our Teesport project is currently two years ahead of the pack and likely to be one of the first to be operational,” he said.

This article was published in the Financial Times and can be seen here

Wednesday, 15 July 2009

Political News-Summary of UK Governments Renewable Energy Low Carbon Transition Plan

Ed Miliband has today announced its strategy for meeting carbon emissions targets and to a massive increase in renewable energy.

The announcements today are to demonstrate the government is committed to fighting climate change and reducing carbon emissions.

In a wide ranging announcement Ed Miliband covered all of the main issues including the focus on the technologies needed, infrastructure, feed in tariffs and the need to have skilled work force that can fuel the ‘green economy’.

Summary of the key points

General Notes
•Regional Development Agencies will play a crucial role in partnership with the Government to promote the development of market-led technology clusters for low carbon energy developers.

•South-West will be developed into the worlds first Low Carbon Economic Area.

•The Government and the Technology Strategy Board will work to improve collaboration and knowledge sharing within and beyond the UK through the launch of the Energy Knowledge Transfer Network as a one stop shop for investors and developers in energy generation.

•The Intellectual Property Office will consider how the Government can support small- and medium-sized businesses developing low carbon technologies to license them in developing countries.

•Renewable Energy Industry will be supported with an additional £4billion from the EU Investment Bank. In the short term the government thinks it will be able to bring forward £1 billion for small and medium sized renewable projects.

Marine
•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 in the UK and will cement our current position as a global leader in the sector.

•The Government will double its financial support to Wave Hub – the development of a significant demonstration and testing facility off the Cornish coast – with up to £9.5 million of investment. The Government is also proposing to invest up to £10 million at NaREC, the New and Renewable Energy Centre, in the North East to build on and utilise existing infrastructure to provide an open access facility for marine developers to test and prove designs/components onshore.

•The Government will also provide up to £10 million to support the South West’s significant potential for wave and tidal energy deployment, research, demonstration and engineering and up to an additional £8 million from the UK Environmental Transformation Fund to expand the in-sea stage testing facilities at EMEC, the European Marine Energy Centre, in the Orkneys.

•In addition the Government will launch a Marine Renewables Proving Fund which will provide up to £22 million of grant funding for the testing and demonstration of pre-commercial wave and tidal stream devices. This will accelerate wave and tidal technologies’ move towards commercial demonstration and assist the development of successful projects under the Marine Renewable Deployment Fund. Taken together, these investments will provide the UK with unparalleled testing and demonstration facilities.

Emmissions and Trading Cap
•Emissions in the traded sector, for the purposes of accounting under the Climate Change Act, are fixed at the level of the UK’s share of the declining EU Emissions Trading System cap.

This will be equal to the level of auctioning rights the UK receives plus the number of EU allowances that are freely allocated to UK installations. Combined with the emissions reductions that measures in the non-traded sector are expected to deliver shows how the UK, on central projections, will meet the first three carbon budgets.

Wind
•The Renewable Energy Strategy recommits the Government to a massive increase in renewables generation going up from 5% today to 30% by 2020. Based on the figures in last year’s draft strategy this implies 22% of all electricity will come from offshore and onshore wind and another 2% from marine technologies.

Carbon Capture and Storage

•The Department of Energy and Climate Change will also establish an Office of Carbon Capture and Storage to support the delivery of this work. Full details will be announced in the autumn of 2009.

•In 2007 the Government launched a competition to build one of the first commercial scale projects in the world. In April 2009 the Government announced that new fossil fuel power stations would have to be designed and built so that they could fit CCS in the future.

•In a consultation launched in June 2009, the Government proposed a new financial and regulatory framework to drive the development of CCS. These proposals included plans to fund up to four CCS demonstrations in the UK and a requirement for any new coal power station to demonstrate CCS.

•The Government is considering how to encourage clusters of CCS infrastructure and expertise, in key areas, such as Yorkshire and Humber, the Thames Estuary, the Firth of Forth, Tyne/ Tees and Merseyside, bringing major employment and regeneration benefits.

Local Generation and Feed in Tariffs
•The Government working with the energy Saving Trust, energy companies, Local Authorities, the Distribution Network Operators (DNOs) and others to test the uptake in the interest of the ‘whole house’ approach. The government are going to put up to £4m to support these initiatives.

•The Government is putting in place financial rewards for small-scale low carbon electricity generation, with Feed-in Tariffs from April 2010. Payment for the electricity produced by small-scale generators, will be provided through the electricity supply companies and encourage the uptake of renewables by schools, homeowners, hospitals, businesses and communities.

Job Creation and Training
•Renewable energy also requires specialist skills. The Office for Renewable Energy Deployment is working with industry on a strategy for skills in wind, wave and tidal energy and is also establishing the National Skills Academy for Power. Full plans will be published towards the end of 2009.

Planning and enabling timely investment:
•The government is committed to delivering sufficient financial investment, and ensuring the attractiveness of the UK as a place to invest.

•Ensuring planning policies support the development and installation of low carbon technologies. The focus here is around the IPC and the statutory legislation related to planning matters.

•Taking advantage of the replacement/ refurbishment schedules of existing plants and infrastructure

Delivering the engineering challenges of building a low carbon energy system of this scale:

The government understands that meeting the physical and supply chain challenges of building new, reliable electrical generating capacity and other energy infrastructure at this scale, particularly in the face of likely international competition for these capabilities will be challenging.

The focus going forward will need to be on developing or upgrading infrastructure as it becomes necessary. As well as the electricity grid (transmission and distribution networks), this could include networks for transporting and storing captured carbon, systems for managing nuclear waste, hydrogen or electric vehicle fuelling/charging networks and community heat systems.

The Energy Mix
The government understands that the transition in matching evolving sources of demand for energy with new sources of supply in an efficient and practical mannerDeveloping technologies that will be needed to close the energy gap and meet the government commitments to reducing carbon emissions.

Future Consultations
• Government will develop a strategic roadmap to 2050 by spring 2010, working closely with industry and wider stakeholders.

•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.

•The Government is consulting on the detailed design and proposed tariff levels for ‘Feedin Tariffs’ alongside this Transition Plan.10 A household with a well-sited photovoltaic installation could receive over £800 plus bill savings of around £140 a year.


Click here to review and see all of the four documents released by the government today