Tag Archives: power
Women And Power: Hellen Anyango, the female mechanic
http://www.ntv.co.ke For most people, the word mechanic is synonymous with men…And for others, it would even feel weird to take their car to have a woman f… Continue reading
South Korea May Launch World’s Most Ambitious Cap And Trade Market
With roughly 18 months until launch, South Korea appears ready to create the world’s most ambitious cap and trade market, with the highest global price on carbon. South Korea historical and forecast emissions image via BNEF These findings jump from a Bloomberg New Energy Finance (BNEF) white paper analyzing how potential market designs could affect the nation’s carbon price and market efficiency, and are a reminder that global cap and trade could still be integral to combating climate change. South Korea’s government is finalizing system design, set to launch in January 2015 , but BNEF predicts it could ultimately cover 70% of national emissions and reach $90 per ton of carbon. Ambitious Goals Would Force Tough Cuts Criticism of the EU emissions trading scheme (ETS) centers on if it actually forces industry to cut pollution, but that won’t be the case in South Korea. “If the government implements the scheme without any changes, it will have major implications for Korean companies,” said Richard Chatterton of BNEF. Over 450 entities participate in the country’s existing greenhouse gas inventory, covering more than 60% of South Korea’s emissions. These entities are all large-scale emitters, and submit annual emissions and energy consumption data to the government, which then sets reduction targets for the subsequent year. BNEF’s projections assume the same entities would be covered by the ETS, and are based on South Korea’s emissions reductions target of 30% below current trends by 2020. This goal will require a 19% reduction from 2010 levels, and compared to Australia’s 14% and the EU’s 5% reduction target, make the Korean system without equal. South Korea emissions abatement forecast image via BNEF In order to meet its goal, BNEF predicts South Korea would need to cut its emissions by 836 million tons (Mt) of carbon relative to business-as-usual between 2015 and 2020. Demand for emission reductions would thus rise to 200 million metric tons per year (Mt/yr) by 2020 – almost double demand projected for the EU ETS, even though South Korea’s program is only 20% its size. But Reducing Those Emissions Won’t Be Easy However, BNEF expects South Korea will face challenges meeting these goals. The proposed system design restricts the use of carbon offsets to 28% of reduction requirements up to 2020, and starting in 2021 only offsets from domestic projects would be eligible for polluters. South Korea emissions abatement demand forecast image via BNEF This tight offset market means South Korea’s ETS could be painful for the country’s industrial sector as they’re forced to buy permits or cut emissions. 598Mt of emissions reductions – nearly 75% of total cuts – will need to come from the industrial and power sector, meaning the cost of electricity and manufactured goods would rise. Further complicating matters, South Korea’s industrial sector is already fairly energy efficient as a result of historically high energy prices, exposure to international fuel price shocks, and national investment in energy efficiency programs. Clean Energy Is A Clear Solution…But Not Short-Term So if offsets are going to be at a premium, and much of the country’s energy efficiency potential has already been realized, where will South Korea’s emissions reductions come from? The clearest solution, as in most cases, is cutting coal-fired electricity generation. BNEF sees the power sector offering the most abatement opportunities both short and long term. Short-term, the white paper estimates South Korea could reduce emissions in 2020 by up to 64Mt/yr by substituting natural gas for coal-fired power. This assumes natural gas generation utilization capacity rises from current projections of 27% in 2020 to 70% South Korea has traditionally relied upon imported liquefied natural gas (LNG), but tight supply and volatile price swings lead BNEF to predict electricity generation will shift toward higher-efficiency fossil fuel or renewable generation , and overall energy efficiency measures will rise outside of the industrial sector. In fact, BNEF predicts the ETS will feed into South Korea’s renewable portfolio standard to expand demand and boost renewable generation to 55 gigawatt-hours (GWh) in 2020 – a 700% increase from 2010. Toward A Global Carbon Market Via South Korea But the best way for South Korean polluters to comply with the ambitious reduction goals may not be within its borders – BNEF recommends linking to other functional carbon markets with an abundance of low-cost abatement options. Two other mature markets will be operating in 2015 when South Korea’s system launches: the EU-Australian, and California-Quebec linked programs. BNEF predicts EU-Australian allowance prices will be below $40 per ton, and California-Quebec around $50 per ton in 2020. Global cap and trade allocation demand forecast image via BNEF Linking to these two systems would benefit all parties. South Korea’s ETS will create demand four times greater than California’s system , and 60% higher than the EU-Australia scheme. Thus, South Korea reduces abatement prices by accessing cheaper permits from other systems, while boosting demand and whittling away surplus permit supply in other carbon markets. Perhaps most promising in this equation, BNEF’s estimates don’t even consider China’s fledgling market. Seven regional pilot programs began rolling out this year, and they will cover up to 1 billion tons of emissions by 2015 before the country launches its own national system in 2020. Remember China is by far the planet’s biggest emitter of carbon. Oh Wait, Industry May Have Its Day Of course, these rosy scenarios hinge on the ETS unfolding as originally proposed, and that’s far from a certainty. South Korea’s government is consulting with large emitters this month, and they have called for many revisions to loosen the strict allowance, offset, and reduction policies. South Korea cap and trade timeline image via BNEF The ETS “Master Plan” is due to be published in December 2013, and it will provide the legal basis for emissions reductions until 2018. So South Korea, it’s decision time. Stay on your ambitious path, and cut emissions 30% while helping create a truly global carbon market . Or, water down the system proposal, and watch your national emissions climb 28% by 2020, according to BNEF – no pressure. Continue reading
EU Urges Energy Market as U.S. Shale Gas Widens Price Gap (1)
European Union leaders are set to urge faster integration of the bloc’s power and natural-gas markets to lower energy prices as the U.S. shale-gas revolution widens the EU’s cost gap with its largest trading partner. The 27-nation EU must accelerate efforts to implement energy legislation aimed at breaking down national barriers by 2014 and develop interconnections to end the isolation of some member states from networks by 2015, according to a new draft of conclusions for a leaders’ summit in Brussels today. The summit initiative comes after a record drop in private investment in Europe and the biggest-ever slump in the EU carbon market, designed to cut pollution and stimulate a shift to cleaner fuels. “The EU’s energy policy must ensure security of supply for households and companies at affordable and competitive prices and costs, in a safe and sustainable manner,” according to the conclusions obtained by Bloomberg News. “This is particularly important for Europe’s competitiveness in the light of increasing energy demand from major economies and high energy prices and costs.” At stake is an EU campaign to win energy-policy authority from national officials that compares with existing European powers over monetary, antitrust, trade and agriculture matters. Some governments, including the U.K., are lagging behind in introducing rules in line with EU legislation more than two years after a deadline passed. Price Gap If the EU becomes a fully integrated market, it could save as much as 35 billion euros ($45 billion) a year in electricity costs in 2015 compared with 2012, according to the European Commission, the bloc’s regulatory arm. Shale-gas production has contributed to a widening gap between U.S. and EU industrial prices for energy, according to a commission report prepared for the summit. “In 2012, industry gas prices were more than four times lower in the U.S. than in Europe,” the report said. As the EU’s oil and gas import dependency is set to increase to more than 80 percent until 2035, the U.S. is on its way to become a net exporter, according to the International Energy Agency. The increase in European energy prices is linked to the inconsistency of EU policies to boost the share of renewable energy, increase energy efficiency and cut greenhouse gases, as well as to national policies that distort the internal market, according to a study commissioned by BusinessEurope, a Brussels-based employers’ federation. ‘Cost Burdens’ “The U.S. industry already has a head start on global markets — this means that any additional cost burdens on European industry should be avoided if competitiveness is to be ensured,” Frontier Economics Ltd. said in the study. While companies such as Chevron Corp. (CVX) have begun drilling exploration wells in countries including Poland, shale-gas production in Europe won’t make the region self-sufficient in natural gas, according to a 2012 study by the EU Joint Research Centre. Under the best-case scenario declining conventional production could be replaced and import dependence maintained at a level around 60 percent, it said. Indigenous Resources As some member states and environmental groups are seeking stricter controls on shale gas exploration, EU leaders will say it’s crucial to “further intensify the diversification of Europe’s energy supply and develop indigenous energy resources,” according to the draft conclusions. Poland’s Prime Minister Donald Tusktold reporters today he was satisfied with the proposed wording as it treats shale gas as an opportunity and lets countries explore it as an option in national energy mixes. Europe needs to diversify its energy sources, boost efficiency, modernize infrastructure and complete the internal market, although shale gas development in Europe may not be a “silver bullet,” according to lobby group Shale Gas Europe, which is supported by companies including Royal Dutch Shell Plc. (RDSA), Halliburton and Statoil. Energy costs in the EU will remain above the U.S. because of differences related to infrastructure, rock structure and legislation, Iain Conn, head of BP Plc (BP/)’s refining and marketing unit, said March 16. ‘Cheap Coal’ “Europe is more dependent on imported energy and although Europe is benefiting — if I can call it that — from cheap coal coming from the U.S. as a result of this, Europe’s cost of energy for the economy is going to be higher than in the U.S. for the foreseeable future,” he said. As a net importer, Europe can boost energy efficiency, create a market based on smart infrastructure, exploit conventional and unconventional energy sources and bet on innovation in order to ensure secure and competitive prices, according to the commission. By 2020, the region needs to invest 1 trillion euros to reach its goal, the commission said. Financing investment in “new and intelligent infrastructure” should primarily come from the market, according to the draft summit conclusions. Private investment in Europe tumbled by a record 350 billion euros in 2007-2011, 20 times the drop in private consumption and four times the decline in real gross domestic product, according to a report by the McKinsey Global Institute published last year. Carbon Market “This makes it all more important to have a well-functioning carbon market and a predictable climate and energy policy framework post-2020 which is conducive to mobilizing private capital and to bringing down costs for energy investment,” according to the draft conclusions. EU leaders will return to the issue of 2030 energy and climate rules in March 2014, after the commission comes forward with a “more concrete proposals,” they said in the draft document. By then ministers will have discussed policy options in that regard, taking into account objectives set for a global climate deal sought in 2015, the document showed. Prices in the European emissions trading system tumbled to a record low of 2.46 euros a metric ton last month amid a surplus of allowances and concerns that lawmakers may fail to reduce the glut. That compares with 25-30 euros expected by policy makers when the cap-and-trade system was created in 2005. EU leaders will call on the commission to study how energy prices are affecting Europe’s competitiveness and what response is needed. The EU will need to look at innovative financing methods, improved liquidity in the energy market and the issue of the contractual linkage of gas and oil prices, they said in the draft statement. To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Continue reading
