By Alessandro Torello
In the draft of a document looking at how Europe’s energy picture could develop from now to 2050, the European Commission’s energy department is clearly hints that if other major economies worldwide don’t get serious in limiting greenhouse gas emissions, the European Union might have to consider whether it makes sense to go ahead with its own long-term climate change plans.
The document will likely change before being published later this year because the climate department of the commission, and possibly its President José Manuel Barroso are unlikely to accept such a wording.
However, the draft is the first hint of a possibly upcoming debate.
Environment ministers from almost 200 nations will gather in December in Durban, South Africa, to figure out how to advance a stall United Nations process to get a global deal on fighting global warming.
Expectations are low, as momentum for a legally binding agreement has faded since the failure of a similar conference in Copenhagen in 2009. The top EU negotiator considers that a commitment by governments to getting a binding deal in the next five years would already be a success.
However, it is not clear whether countries would be able to commit to that at the meeting in less than two months. If they aren’t, the EU will likely have to face the tough debate of how to go ahead with its own climate policy.
There is no question about its target of cutting CO2 emissions by 20% by 2020, as that is now binding law. But the EU has been developing its long-term policy options around the assumption that it would reduce emissions by at least 80% by 2050, in line with what industrialized countries as a group should do–according to the Intergovernmental Panel on Climate Change–to keep the global temperature rise within two degrees Celsius.
The draft suggests that this might have to be reconsidered, if there is no progress on a global deal, because otherwise the EU would be left alone in pursuing this goal and possibly end up penalizing its industry.
This is the view of the Commission’s energy department, traditionally close to industry. However, if EU countries consider that Durban doesn’t deliver enough progress, some governments will likely start raising questions on how sensible it is to promote big cuts in CO2 emissions in Europe.
Such cuts do impose additional costs on traditional industries and power producers –even as they also encourage investment in new, modern technologies– and the EU only accounts for 11% of global CO2 emissions.
Countries with big industrial bases such as Germany, France, Italy or Poland might raise concerns on whether it really makes sense to push forward if it is clear that international interest and ambition in fighting climate change is weakening.
Wednesday, 19 October 2011
Thousands of jobs will be lost without carbon capture funding, unions warn
UK will miss out on 'opportunity for global leadership' unless government steps up investment
BusinessGreen, part of the Guardian Environment Network
guardian.co.uk, Tuesday 18 October 2011 12.46 BST
Development of carbon capture technology has proved expensive. Photograph: Murdo MacLeod
The UK will become increasing reliant on volatile gas supplies and potentially forfeit thousands of jobs if the government fails to up its investment in carbon capture and storage (CCS).
That is the view of campaign group the Clean Coal Task Group (CCTG), of which the Trades Union Congress (TUC) and seven of its affiliated unions are members.
The UK is in danger of losing out to competitor nations in the race to develop low-cost, effective CCS technology without a substantial investment in carbon capture technology and a major reform of the UK's electricity market, the CCTG said in a submission to MPs yesterday.
EU emissions standards will force five of the country's 19 coal fired plants to close in the next four years, but even if the government's £1bn CCS competition goes to schedule, the UK will only have four fully operational plants by 2018
TUC general secretary Brendan Barber said this "isn't soon enough" to protect the coal industry's 10,000 jobs.
"If coal mining and coal power, and the thousands of people directly employed in these industries are to have a future in the UK's low-carbon economy, then we need to invest in carbon capture and storage technology, and quickly," he said. "Our coal power industries are too important, as is the need to reduce our greenhouse gas emissions, for this not to be the government's number one energy priority right now."
The group's Roadmap for Coal calls for negotiations to be concluded to build the UK's first demonstration plant, which was widely predicted to be at Longannet in Fife, before rumours suggested ScottishPower may pull out of the project.
The next three CCS projects in the competition should also be fast-tracked to come online before 2018 and infrastructure should be linked to heavy industry, such as steelworks, cement and chemical plants.
"Actions taken now to invest in carbon capture technology and reform our electricity market can secure this core industry in a low carbon economy for the long term," said Dr Mike Farley, director of technology policy liaison at Doosan Power Systems and chairman of the CCTG.
"Delays will mean losing a once-only opportunity for global leadership in the vital CCS industry."
Five reasons the 'green deal' policy on energy saving won't work
Lending households money for energy-saving improvements isn't the right way to cut costs and emissions
Sam Arie
guardian.co.uk, Tuesday 18 October 2011 18.29 BST
Sometimes government does all the wrong things, for all the right reasons. This is the case with the coalition's energy bill, which officially becomes law on Tuesday. The bill – now indeed an act – has been championed by Liberal Democrat Chris Huhne. It introduces a new policy called the green deal, under which households will be able to borrow funds for energy-saving home improvements. Repayments will be collected through gas and electric bills, and if you move house, the new occupier takes over the debt.
These are interesting ideas, and household CO2 emissions are certainly a problem. But the green deal is the not the right solution. Here are the five reasons why:
1. It does not address the problem of waste
In general, a culture of waste is encouraged both by energy prices that get cheaper the more you consume, and by a massive tax break for households – VAT for domestic energy is charged at the 5% rate, no matter how much you use. We should address these simple issues and get a grip on waste before we introduce more complex schemes.
2. It targets the wrong households
Because the central idea is that you don't have to keep up repayments after you move house, the scheme will be most attractive for people in properties that change hands frequently, including for example rental properties. Yet it is the largest properties that have the largest carbon footprints, and 90% of larger properties are owner-occupied. Owner occupiers move house on average every 12 years, so there is that much less incentive for them to take part.
3. It does nothing to improve the underlying economics of saving energy
If double glazing takes 50 years to pay back, it still takes 50 years under the green deal. All the deal does is reorganise the cashflows, and whether that leaves you better off in the end depends on how much you pay for the loan.
Since households with a mortgage can currently borrow at rates of between 2% and 5%, the green deal would have to be as good as interest free to offer a significant improvement. And if the loans come in at 6% to 9%, as the Green Deal Finance Company anticipates, the effect will be to make energy-saving investments even less attractive than they already are for most people.
In this scenario, Green Deal finance will only be attractive to households that cannot borrow at normal mortgage rates, for example because they have bad credit or no collateral. While it may be socially desirable to introduce green schemes for these households, it is not a good strategy for carbon reduction – quite simply because it is the richest households, not the poorest, which have the highest carbon emissions.
4. Many green deal plans will never be paid back
Payments will be collected via energy bills, but many energy bills go mysteriously unpaid, especially when people move house or change supplier. As of today, 3.2% of energy bills are in arrears, compared with 2.2% of mortgages. In the Commons debate, the minister for energy and climate change, Greg Barker, said the default rate for Green Deal loans "will be the same as the standard default rate for electricity bills generally", which he explained, "is a very low percentage".
But this is a catastrophic error of calculation: what he is overlooking is that everybody has an electricity bill, so the "very low" default rate he is talking about is an average including millions of households with excellent credit. But not everybody will take out a Green Deal loan. What the default rate turns out to be for the loans depends entirely on who signs up for them, and that in turn will depend on how much they cost.
5. Green deal loans may be expensive in their own right
According to the Bank of England, a conventional, unsecured personal loan currently costs between 11% and 16%. It is hard to see how a Green Deal loan, which is neither secured against collateral (like a mortgage) or credit checked against the individual (like a personal loan) could possibly be cheaper. The Green Deal will also have to cover the cost of a certified home survey and of administrating payments through the energy company. So the effective cost at market rates could easily reach 19% or 20% – in other words, about the same as a credit card or personal overdraft.
Taken together, the implication of these points is that the Green Deal will fail if it is offered at commercial lending rates. Take up will be limited to a segment of households that are less affluent, already economical in their energy usage, and which may well have difficulty repaying the loans in full. Meanwhile, the larger, more affluent households – which have the greatest potential to make carbon savings – will not participate, because they can already borrow the money elsewhere and at a cheaper rate.
On the other hand, if the green deal is subsidised by the government and offered at 0%, affluent households will be much more likely to take part. "Free" money would certainly boost the marketing of the green deal. But the cost to the taxpayer will be counted in the billions, while the beneficiaries, by definition, will be households who already have money.
This may make sense to politicians, offering as it does the prospect of a large handout to the middle classes just before the next election. But for the taxpayers who will foot the bill, it is a much less appealing prospect. Far better to forget about the green deal and focus instead on a simple rethink of energy pricing for high and wasteful users – which is, after all, what the Liberal Democrats promised us before the last election.
Sam Arie
guardian.co.uk, Tuesday 18 October 2011 18.29 BST
Sometimes government does all the wrong things, for all the right reasons. This is the case with the coalition's energy bill, which officially becomes law on Tuesday. The bill – now indeed an act – has been championed by Liberal Democrat Chris Huhne. It introduces a new policy called the green deal, under which households will be able to borrow funds for energy-saving home improvements. Repayments will be collected through gas and electric bills, and if you move house, the new occupier takes over the debt.
These are interesting ideas, and household CO2 emissions are certainly a problem. But the green deal is the not the right solution. Here are the five reasons why:
1. It does not address the problem of waste
In general, a culture of waste is encouraged both by energy prices that get cheaper the more you consume, and by a massive tax break for households – VAT for domestic energy is charged at the 5% rate, no matter how much you use. We should address these simple issues and get a grip on waste before we introduce more complex schemes.
2. It targets the wrong households
Because the central idea is that you don't have to keep up repayments after you move house, the scheme will be most attractive for people in properties that change hands frequently, including for example rental properties. Yet it is the largest properties that have the largest carbon footprints, and 90% of larger properties are owner-occupied. Owner occupiers move house on average every 12 years, so there is that much less incentive for them to take part.
3. It does nothing to improve the underlying economics of saving energy
If double glazing takes 50 years to pay back, it still takes 50 years under the green deal. All the deal does is reorganise the cashflows, and whether that leaves you better off in the end depends on how much you pay for the loan.
Since households with a mortgage can currently borrow at rates of between 2% and 5%, the green deal would have to be as good as interest free to offer a significant improvement. And if the loans come in at 6% to 9%, as the Green Deal Finance Company anticipates, the effect will be to make energy-saving investments even less attractive than they already are for most people.
In this scenario, Green Deal finance will only be attractive to households that cannot borrow at normal mortgage rates, for example because they have bad credit or no collateral. While it may be socially desirable to introduce green schemes for these households, it is not a good strategy for carbon reduction – quite simply because it is the richest households, not the poorest, which have the highest carbon emissions.
4. Many green deal plans will never be paid back
Payments will be collected via energy bills, but many energy bills go mysteriously unpaid, especially when people move house or change supplier. As of today, 3.2% of energy bills are in arrears, compared with 2.2% of mortgages. In the Commons debate, the minister for energy and climate change, Greg Barker, said the default rate for Green Deal loans "will be the same as the standard default rate for electricity bills generally", which he explained, "is a very low percentage".
But this is a catastrophic error of calculation: what he is overlooking is that everybody has an electricity bill, so the "very low" default rate he is talking about is an average including millions of households with excellent credit. But not everybody will take out a Green Deal loan. What the default rate turns out to be for the loans depends entirely on who signs up for them, and that in turn will depend on how much they cost.
5. Green deal loans may be expensive in their own right
According to the Bank of England, a conventional, unsecured personal loan currently costs between 11% and 16%. It is hard to see how a Green Deal loan, which is neither secured against collateral (like a mortgage) or credit checked against the individual (like a personal loan) could possibly be cheaper. The Green Deal will also have to cover the cost of a certified home survey and of administrating payments through the energy company. So the effective cost at market rates could easily reach 19% or 20% – in other words, about the same as a credit card or personal overdraft.
Taken together, the implication of these points is that the Green Deal will fail if it is offered at commercial lending rates. Take up will be limited to a segment of households that are less affluent, already economical in their energy usage, and which may well have difficulty repaying the loans in full. Meanwhile, the larger, more affluent households – which have the greatest potential to make carbon savings – will not participate, because they can already borrow the money elsewhere and at a cheaper rate.
On the other hand, if the green deal is subsidised by the government and offered at 0%, affluent households will be much more likely to take part. "Free" money would certainly boost the marketing of the green deal. But the cost to the taxpayer will be counted in the billions, while the beneficiaries, by definition, will be households who already have money.
This may make sense to politicians, offering as it does the prospect of a large handout to the middle classes just before the next election. But for the taxpayers who will foot the bill, it is a much less appealing prospect. Far better to forget about the green deal and focus instead on a simple rethink of energy pricing for high and wasteful users – which is, after all, what the Liberal Democrats promised us before the last election.
Subscribe to:
Posts (Atom)
Posts
