Extracts from NATTA's journal
Renew, issue 145Sept-Oct 2003

16 World Developments EU Carbon Market

The new EU carbon trade market, which it is planned will be launched in 2005, could be worth as much as 1.8 bn euros a year by 2012, according to a report ‘Corporate Carbon Strategies Outlook to 2012’, by Reuters Business Insight, based on estimates of the annual value of the market on CO2 prices of around five euros a tonne in 2005, rising to more than 20 euros/tonne in 2012. It estimates the emissions market could be as large as 90 million tonnes a year. Prices and volumes could be higher if early links are established by the Japanese and Canadian carbon trading markets. However, the report warns that prices and volumes could be lower if companies invest mainly in in-house pollution reduction rather than in emissions trading.

Meanwhile the UK has its own internal voluntary carbon emissions trading scheme running (see p.8). Its first year was evidently relatively quiet, although, Reuter reported, some of those companies that did get involved made ‘easy money’. The scheme was kick started with £215 m. ‘A lot of people will be kicking themselves for not getting involved- it was a handout,’ TFS emissions broker John Molloy told Reuters. Prices had risen steadily from £5/tonne of carbon dioxide equivalent to a high of £12.50 in the first six months, before slumping as a result of oversupply in the second six months, to around £3. Reuters noted that in some cases much larger gains were made by companies trading their carbon allowances via an auction process. Moreover, some allegedly received money for easily achievable emission reductions- and that has become a bone of contention for those who are not happy with carbon trading schemes.

EU Biofuels Directive

The European Union’s new measures to promote the use of ‘green’ transport fuels lays down targets for the progressive introduction of biofuels fuels derived from agricultural, forestry and organic waste products between now and 2010. Member States now have until 31st Dec. 2004 to transpose the Directive into national law. For the first time, each Member State will have to set targets for the market share of biofuels. These targets will have to be based on challenging benchmarks set by the Directive: 2% market share by Dec. 2005; 5.75% market share by Dec. 2010. Any country setting lower targets will have to justify them using objective criteria. Member States must announce by July 2004 the first biofuel targets to be achieved by December 2005.Europe is increasingly reliant on unsecured overseas energy according to EU Commissioner Loyola de Palacio, addressing a meeting of the World Energy Council. Europe already imports half its energy, and could be buying nine tenths of its oil and gas from overseas by 2020, with energy consumption rising around 2% a year. But a new report from Platts suggests that renewables could help hedge against these trends: see the Technology section in Renew 145.

India: more renewables

India is planning to have an additional 450 MW of renewable power generation capacity this year with wind energy providing most of the new capacity. The current renewables capacity is around 4,000 MW of which around 1,870 MW is from wind energy. Of the total renewable power, around 3,878 MW, is being transmitted through the national grid, while about 120 MW is distributed in local grids. Indias target is for an additional capacity of 10,000 MW by renewable sources of energy by 2012, including wind, solar energy, biomass, industrial and municipal waste and small hydro projects. But by then it will need an extra 100 GW to keep pace with demand....

Eire not Green

Ireland and Spain, have both increased greenhouse gas emissions by 24% since 1990, according to figures from the European Environment Agency- which show that Ireland is already exceeding the targets set for 2008-2012. The Irish Green Party has called for a root and branch reform of the Climate Change Programme in order to attain the targets set under the Kyoto Protocol- Ireland and Spain are only supposed to increase emissions by 13 percent and 15 percent respectively.

But Ireland and Spain are not alone. According to the EU, several EU countries needed to take urgent action to reduce emissions. The latest figures from the European Environment Agency indicate that although the EU’s emissions were still 2.3% below 1990 levels, this was a rise from 1999 when they were 3.6% lower.

The EEA said 10 of the 15 EU countries were way off reaching their Kyoto targets, with only Germany, Britain, France, Sweden and Luxembourg looking safely on track.

But then US emissions have risen 14.2% from 1990 by 2000, according to the U.S. Environmental Protection Agency.

Further details at: http://www.eea.eu.int/

US stays with Fossil Fuel

A new Energy Bill passed by the U.S. House of Representatives provides financial incentives for oil and gas development as well as tax breaks for the nuclear industry. The Bush administration backed it and Tom DeLay, a Texas Republican, said it would ‘help free our nation from its dependence on foreign sources of energy, a step which will improve national security’.

The bill provides $19 billion over 10 years in tax breaks and incentives, with more than two thirds of this being earmarked for the development of oil, gas, coal and also nuclear power. More positively, it also calls for a doubling of the use of corn based ethanol as a fuel additive to five billion gallons a year by 2015 and earmarks $1.8 billion to promote hydrogen fuel development. It also includes tax credits for new energy efficient homes and for upgrading energy efficiency in existing homes. So, although the commitments to fossil and fissile energy options dominate, the Bush energy programme is not entirely without merit- there are some commitments to renewables and energy efficiency. And the USA’s growing paranoia about relying on imported oil, means that work continues on looking at a wide range of alternatives. For example, as part of President Bush’s national energy policy, the Interior Department’s Bureau of Land Management (BLM) and the U.S. Department of Energy’s National Renewable Energy Laboratory, have produced a report which identifies 35 potential sites for near term development of geothermal energy in the Western United States.

Sources: Environmental News Service/ElectricNet

It doesn’t have to be this way...

60% cut in US CO2 emissions?

A new report from WWF claims that the U.S. power sector could cut carbon dioxide emissions nearly 60% by 2020 and reduce its dependency on fossil fuels by using available energy technologies and supporting innovative polices. The report is being used to launch a WWF initiative, called "PowerSwitch!", designed to challenge electric utilities to make specific policy and performance commitments that begin the transition to a CO2 free power sector. The report, entitled "The Path Towards Carbon Dioxide-Free Power: Switching to Clean Energy," notes that electricity production is responsible for 40% of U.S. CO2 emissions. WWF contends that its analysis outlines opportunities for the U.S. electricity sector to cost-effectively cut its CO2 emissions by increasing energy efficiency and using renewable energy. The report is available from:

http://www.worldwildlife.org/news/headline.cfm?newsid=503

• According to a report by the US Energy Information Administration released in February, a total of 228 U.S. companies had voluntarily undertaken more than 1,700 projects to reduce or sequester greenhouse gases in 2001. The emission reductions equaled about 300 million metric tons of carbon dioxide equivalent, which represents more than 4% of total U.S. greenhouse gas emissions. Company emission reductions increased by about 20% compared to 2000 levels.

San Fransico goes for Tidal power

The San Francisco Board of Supervisors has agreed to test a novel UK developed Venturi tidal currentdevice in San Fransico bay- near the Golden gate Bridge. The prototype project will cost $2m. The projects supporters have claimed that ultimately the system could produce up to 2,000 megawatts- twice the power needed by the city on a peak day. Peter O’Donnell, a senior energy specialist with the city, told Associated Press ‘San Francisco has the best tidal resource in the western United States. There’s a potential to meet all the power needs of San Francisco over the next 10 to 15 years. There’s a potential to meet the needs of every coastal community in California.’

The Venturi device is a spin off from work at Imperial College London and is being promoted around the world by RVCogen under the name HydroVenturi. It works by exploiting the pressure drop that occurs at a constriction when water flowing in a pipe accelerates This can provide a pumping action which can be used to drive a turbine on the surface- so there are no moving parts underwater. As the RVCogen web site points out, the suction effect from several venturi could be used in parallel to drive one large turbine, so the concept is very flexible. Venturis could, they say, be incorporated into existing and planned offshore windturbine bases. They have even come up with a proposal for several small units on the Thames Barrier. Their early estimate for a 1000m wide partial barrier of Venturi devices 50m below the surface in San Fransico Bay was that it could generate 452GWh per year, assuming only 10% energy conversion efficiency- well tuned test systems have attained 24%. However they say, given that there is a lot of power available in the water flow, efficiency isn’t the key issue and the total energy extracted would be kept smaller than the natural fluctuations in the energy flux in the water, so that the environmental impact would be small. More on www.RVcogen.com

WEC versus WCRE

In a statement on ‘Renewable Energy Targets’ in Feb. this year the World Energy Council (WEC) argued against fixed targets and selective support for renewables. It noted that ‘the number one objective of energy market reform has been to foster competition and customer choice. If the total costs of energy are not reflected in the price paid by the final customer, there is a risk that the goals of market reform could be jeopardised. This applies to all energy sources. Political decisions to introduce renewable energy targets, or Renewable Portfolio Standards (RPS), to phase out nuclear power or to prioritise natural gas have, in some countries, led to a situation in which government regulations cover more than 50% of otherwise "competitive" markets, thereby undermining the most basic market principles. In Germany, for example, renewable energy and co-generation are supported by Euro 2.5 bn per year, with another Euro 5 bn collected through the electricity tax. Government interference in energy markets can be costly’.

WEC goes on ‘It can be argued that certain government support for renewables RD&D, in particular within the framework of international cooperation, can be justified to accelerate their development. However, shielding renewables from competition can also, in some cases, have a completely opposite effect. Removing competitive pressures can slow down further development of renewable technologies. There is also a danger that arbitrary decisions by governments to support specific renewable technologies can impede the development of other technologies, which could be more sustainable in the long run.’

They conclude ‘Targets can work effectively in certain clearly defined cases, where it is easy to monitor their implementation. However, the process can quickly become complicated, costly and finally unfeasible, as the targets’ nature and coverage expand. Compulsory targets tend to disrupt markets, and would increase costs and bureaucracy.’

This led to a strong reaction from the World Council on Renewable Energy (WCRE), the new international lobbying group headed by the German politician Hermann Scheer, who also heads the Eurosolar campaign group. In a statement in April the WCRE defended Targets: ‘it is a question of political will, political frameworks and cultural change to introduce Renewable Energies rapidly. It is not a matter of predictions that are based on today’s share and growth rate of renewable energy. The unexpected annual growth rate of 30% in the wind energy sector is just one example out of many for the fast development of Renewable Energy Technologies. Studies show that already today’s stage of technology development is able to provide sufficient energy from renewable sources. Hence, targets are of utmost importance. They reflect what is theoretically possible already today and give realistic objectives for political actors, consumers and entrepreneurs to change framework conditions and consumer and producer pattern.’

WCRE added ‘Political actions promoting Renewable Energy world wide include the strengthening of existing governmental and non-governmental activities, the creation of new institutions, such as an International Agency for Renewable Energy (IRENA), and new international agreements. WEC calls for a fully transparent pricing system. However, this must include all traditional energy subsidies in the field of nuclear and fossil energy, too. Since decades fossil and nuclear energy- in particular during their introduction- have been subsidised. In this respect, it is a fair political decision to favour Renewable Energies at least during their market introduction, too. The demand of WEC to include price aids for Renewable Energy into the total costs of energy is an argument which should have come up already decades ago when subsidising of fossil and nuclear energy began. However, it is even more important to include all external costs into the price of fossil and nuclear energy which are caused by producing and consuming fossil and nuclear energy. If all environmental damage, scarcity costs, long transportation systems etc. are included into the final price, Renewable Energy would be highly competitive already today.’

WCRE concluded ‘Again, it is not the immaturity of Renewable Energy Technologies that hinder their global breakthrough. It is the lack of political will to change national and international framework conditions to promote Renewable Energies and to eliminate market distortion in favour of fossil and nuclear energy.’

WCRE contact : http://www.wcre.org The full WEC statement is at :

http://www.worldenergy.org/wec-geis/publications/statements/stat2003.asp

For more from both organisations on this issue see the Groups section in Renew 145.