Tag Archives: development
MEPs Approve Proposals To Reduce Biofuels Emissions
Influential Environment Committee backs cap on crop-based fuels and moves to include indirect emissions in EU directives By Will Nichols 11 Jul 2013 EU parliamentarians have approved proposals to limit the contribution of conventional biofuels toward its green transport targets, in a move producers labelled “complex and ineffective”. MEPs in the influential Environment Committee (ENVI) voted 43-26 – with one abstention – to set a cap for fuels made from food crops at 5.5 per cent and include emissions arising from indirect land use change (ILUC) factors such as clearing of forests, wetlands or grasslands in the Renewable Energy Directive and the Fuel Quality Directive when calculating official emissions impacts. The commission had already proposed a five per cent cap, roughly equating to current levels, but the EU Industry, Research and Energy Committee (ITRE) said last month this should be raised to 6.5 per cent and recommended ILUC factors not be included until the methodology for measuring indirect emissions is more reliable . The cap is designed to accelerate the development of so-called second-generation biofuels, which derive from materials such as waste, agricultural residues or algae, which in theory do not compete with food production but have yet to reach industrial levels of production. The Committee approved proposals that such advanced biofuels should account for at least two per cent of overall consumption by 2020 and, to boost the market share of electric vehicles , electricity produced from renewable sources should also account for two per cent. Green groups have blamed biofuel production for rising food prices and point to a number of research papers that suggest ILUC emissions mean that some forms of biofuel, particular biodiesel made from palm or soybean oil, are worse for the environment than the petrol and diesel fuels they are designed to replace. However, producers argue the science around ILUC calculations is still in its infancy and that the EU should not undermine a £14bn industry on such a premise. Moreover, they argue there is a real threat the EU will not be able to meet its goal of using 10 per cent green energy in transport by 2020 by effectively ruling out 80 per cent of EU biofuels, and warn that by changing the goal posts the move could deter investors in next-generation fuels. Kåre Riis Nielsen, director of European affairs at Danish company Novozymes, which manufacturers enzymes for both first- and second-generation producers, branded the proposals “a complex and ineffective package”. He said the proposals in the ITRE report would be a better way of promoting the best performing biofuels while addressing ILUC issues in a “practical manner”. “Limiting the share of conventional biofuels to 5.5 per cent prevents further growth of the industry and ignores the strong contribution conventional ethanol makes to decarbonise the transport sector even when ILUC is accounted for,” Nielsen said in a statement. “The ENVI Committee has ignored the opinions provided by other Parliamentary Committees… that recommended a more balanced approach allowing conventional biofuels to develop sustainably while incentivising further innovative advanced biofuels. “Today’s vote fails to provide the needed long-term and stable policy framework for industry and investors and would jeopardise the future of best performing biofuels including advanced biofuels industry.” Kenneth Richter, biofuels campaigner at Friends of the Earth, gave the measures a cautious welcome, but argued that they represented a “timid step” when bolder action was required. “The introduction of ILUC factors is an important decision to ensure that only biofuels that benefit the climate are being supported,” he said. “But it’s disappointing that the committee has not set a trajectory for phasing out the use of food for fuel, but instead chose to cap it at a level that is even higher than current use. “It’s crucial that when the parliament’s plenary votes in September, it must not further water down the current proposal.” Giuseppe Nastasi of ClientEarth, was equally circumspect, arguing a five per cent cap is still too high to prevent ILUC emissions, “Moreover, MEPs voted to subsidise some advanced biofuels made from environmentally dangerous materials such as industrial and municipal waste (with the exception of a few waste streams), plus forestry and agricultural residues whose use endangers biodiversity and soil fertility,” he added. “This will have to be corrected by Parliament on 10th September.” However, Nusa Urbancic, clean fuels manager at campaign group Transport & Environment, said the proposals would promote the production of “genuinely emissions reducing transport fuels” including advanced biofuels and renewable electricity for electric vehicles. “It is encouraging to see that MEPs in charge of protecting our environment finally addressed the elephant in the room by fully accounting for indirect emissions in the EU biofuels policy. This vote will pave the way for truly sustainable transport fuels, which actually reduce emissions , as of 2020,” she said. “The full European Parliament now needs to uphold in September the science-based decision made by the Environment Committee. Otherwise, public support worth at least €10bn a year will continue to be wasted on harmful biofuels that in many cases pollute twice as much as conventional fuels.” Continue reading
This Gamble On Carbon And The Climate Could Trigger A New Financial Crisis
There is little evidence that institutional investors have recognised that they are sitting on a carbon-asset timebomb Kevin Watkins theguardian.com , Friday 2 August 2013 Summer 2013: eastern Europe is facing one of the heaviest floodings in the last 50 years (Photograph: Ruben Neugebauer/Corbis If you want to see market irrationality in action, look no further than current stock market valuations for the world’s major oil, gas and coal companies. At a time when governments are supposedly preparing for a global climate change deal that will cut carbon emissions , energy multinationals are investing in carbon assets like there’s no tomorrow. Put bluntly, either we’re heading for a climate catastrophe, or the carbon asset bubble will go the way of sub-prime mortgage stock. Yesterday’s disappointing second-quarter results for Royal Dutch Shell provided a useful guide to the future. Over the past couple of years the company has invested heavily in exploration. It has pumped billions of pounds into fracking for natural gas in Ukraine and Turkey; the development of tar sands in Canada, and drilling in the Arctic. The market verdict, prompted by a dip in prices, reduced profits, and concern over costs: a drop in share prices. You can’t help wondering what will happen when carbon prices are aligned with climate imperatives. We are now just two years away from the crucial 2015 UN climate negotiations. If successful, they will put a price on carbon, driving down returns on fossil-fuel investments by capping carbon emissions. Market reactions will make Shell’s results look positively healthy. Yet there is little evidence that institutional investors have recognised that they are sitting on a carbon asset timebomb. You don’t have to dig too hard to find the gap between market valuation and real world ecology. Avoiding dangerous climate change, defined as a temperature rise of 2C, will require the global community to operate within a constrained carbon budget. That budget has a ceiling of 545 gigatons in carbon dioxide (GTCO2) emissions to 2050. Today, state energy firms and private companies are sitting on reserves amounting to three times that level. Carbon arithmetic points in only one direction. If governments are serious about reaching a 2015 multilateral agreement that avoids dangerous climate change, fossil fuel reserves need to left where they are. The Grantham Research Institute on Climate Change at the London School of Economics estimates that only 20-40% of oil, gas and coal reserves held by the 200 largest energy companies can be exploited if we are to avoid dangerous climate change. Yet the market valuation of these “unburnable carbon” reserves is over $4tn, to which can be added $1.5tn in company debt. The misalignment between our planet’s ecological boundaries and energy markets is set to worsen. High energy prices and concerns over power shortages in emerging markets are fuelling a global scramble for carbon assets. Collectively, the 200 largest energy companies invested $674bn (£441.4m) on the development of new fossil fuel reserves in 2012. If financial markets are mispricing risk, governments around the world have yet to recognise some basic cost-benefits realities. Companies investing in Arctic oil and gas exploration stand to gain revenue streams that will be counted in billions of dollars. But as highlighted in a recent Cambridge University study, the rapid melting of Arctic sea ice and permafrost threatens to unlock methane emissions that will generate costs of up to $60tn, much of it associated with the impact of floods, droughts and storms in developing countries. In effect these companies are taking what they see as a one-way bet on governments failing to tackle climate change. It’s a dangerous play. If governments fail to act on their climate change commitments, financial exposure to fossil fuel assets could become a systemically destabilising liability. Five of the 10 top companies listed on London’s FTSE 100, accounting for a quarter of the indexes’ capitalisation, are almost exclusively high carbon. The Australian Securities Exchange has a recklessly high exposure to coal. The New York exchange is also sitting on a large carbon bubble. Energy companies are exposing institutional investors, mutual funds and banks to dangerously mispriced assets, yet current regulatory frameworks are failing to address the systemic threat. Unfortunately, governments are actively encouraging energy companies to bet on dangerous climate change. The European Union has driven the world’s largest carbon market into freefall by oversupplying permits, undercutting incentives for investment in renewable energy in the process. As a group, rich countries spend over $800bn annually actively subsiding fossil fuels , creating markets for oil, gas and coal companies. Britain’s recent decision to grant tax concessions to companies involved in fracking is a recent example of a wider failure to align fiscal policy with climate commitments. For every $1 invested in renewable energy support in the OECD another $7 is spent on carbon-intensive fuels. From a climate change perspective, this is the policy equivalent of a government running an antismoking campaign while removing the tax on tobacco and subsidising cigarette consumption. Developing countries are also trapped in a cycle of policy-induced carbon-intensive growth. Currently, they are spending over $1tn annually to subsidise fossil fuel use, according to the IMF. These transfers often dwarf budgets for health and education. As research at the Overseas Development Institute has highlighted, most of the benefits go to industry, large-scale agriculture and middle-class consumers. Eliminating subsidies for fossil fuels could open the door to a win-win scenario. It would cut energy-related CO2 emissions by 13%, slowing the drift towards the dangerous climate-change cliff. Coupled with signals to indicate that carbon prices will rise and early investment in renewables, it would unlock the private investment and spur the technological breakthroughs needed to drive a low-carbon transition. Diverting fossil fuel subsidies into low-carbon energy cooperation would also generate wider benefits. Developing countries such as India and China are already investing heavily in wind and solar power. But if emerging markets are to break their dangerous addiction to coal and other fossil fuels, they need financial support to phase out their carbon-intensive stock. Providing that support through the reallocation of fossil fuel subsidies would help create markets for low-carbon investors – and it would go a long way towards building trust in international climate negotiations that are too important to fail. •Kevin Watkins is executive director of the Overseas Development Institute, a UK development think tank. Continue reading
Ed Davey Dismisses Fracking With Pledge To ‘Expand Renewables’
Last updated on 2 August 2013, 9:28 am UK energy and climate chief says government committed to clean energy, promising more support in energy bill By Nilima Choudhury UK government plans to invest in renewable energy will not be pushed off course by supporters of shale gas exploration, also known as fracking, Ed Davey has told RTCC. Britain’s energy and climate chief was talking after announcing a £66 million package to boost offshore wind in the UK, which the government says could “unlock £7 billion in the economy by 2020”. In the past 10 days the Sun Newspaper, former BP chief Tony Hayward and influential conservative columnist Tim Montgomerie have all called for Davey to scrap support for renewables in favour of shale gas, but he told RTCC the opposite was likely to happen. “We’re not changing our strategy except to even augment it so there’ll be more pro renewables. We have got the most ambitious renewable and low carbon energy strategy the country’s ever had,” he said. “And coupled with the energy bill to create the world’s first ever low carbon electricity market we couldn’t be clearer about our determination to expand renewables and low carbon.” Last month Prime Minister David Cameron opened the world’s largest offshore power generation project off the Kent coast, but generation remains small compared to the UK’s overall capacity of 80GW . Yesterday’s opening of the Lincs Offshore Wind farm saw UK onshore and offshore wind capacity pass the 10GW mark, according to trade body RenewableUK . The UK currently has an installed offshore wind capacity of over 3.3GW, with a further 1.3GW under construction. Costs Davey reiterated his ambition for the UK to be a “world leader” in the development of offshore wind, but acknowledges that the costs of offshore – currently higher than onshore or nuclear – have to be addressed. “We’ve been working with the industry to map out the potential for cost reductions and when we published the stuff on the strike prices [subsidies] recently we showed that if we get the cost reductions that we believe we can we could see 16GW of offshore wind by the end of this decade,” said Davey. “The potential for our industry is huge and actually being the leader gives a potential for exports and potential to learn how to innovate and how to get the cost benefits from large scale deployment. “I think it’s right that we are leading – the problems we’ve seen in the past has been that Britain has been a follower and as a result we’ve had to actually end up paying more because we’re depending on other suppliers and we’ve not had the industrial base development with the jobs that come to that.” “I think it’s great that under the coalition government we are making sure that we are not just a leader but remain a leader in the years ahead.” – See more at: http://www.rtcc.org/…h.LpDc9xun.dpuf Continue reading
