Country baulks at UN climate conference, concerned about cooling its red-hot economy
Michael McCarthy
Durban
Monday 05 December 2011
India is now the leading opponent of a new comprehensive global-warming treaty, it became clear at the weekend after the first week of negotiations at the UN Climate Conference in Durban, South Africa.
The world's second most populous country has resolutely set its face against a fresh climate deal that at some stage would involve every country in the world cutting its carbon emissions in an effort to bring climate change under control.
The Indians are refusing to approve anything that might put a brake on their economy, now expanding with growth in 2010 estimated at 10.4 per cent. Its carbon emissions are growing at more than 9 per cent a year, the fastest of any major nation, and the country has shot up to become the world's third biggest carbon emitter, after China and the US.
But the Indians are relying on this growth to take hundreds of millions of their nearly 1.2 billion people out of poverty and they want nothing to do with curbing these emissions.
Instead, along with some other emerging economies, India is seeking a renewal of the Kyoto Protocol, the 1997 climate agreement due to run out next year under which Western industrialised countries agreed to make reductions in their emissions of greenhouse gases, while developing countries such as China and India had no obligations to make cuts at all.
The conference and the whole 20-year UN climate negotiating process are threatened with stalemate over the Kyoto issue, as three nations – Japan, Russia and Canada – have stated that they will not renew the protocol under any circumstances, considering it wholly unfair. Britain and the EU are trying to break the deadlock, offering to renew the protocol as long as agreement can also be reached on a way forward, a "road map", towards a new all-embracing climate treaty, to be signed by 2015 – a legally binding framework by which each country would be committed to take action over its CO2 emissions, although not necessarily to the same degree or at the same time.
Without such a treaty, there is no chance of the world halting the rising temperature of the atmosphere.
Even the United States, which withdrew from Kyoto under President George Bush in 2001, has indicated in the talks here that it is not opposed to a new legally binding climate treaty, as long as it provides for "symmetry of obligations" – meaning that the Chinese and the Indians would abide by it as well.
The Chinese, formerly major opponents of a new climate deal, have been sending out some signals of flexibility, according to negotiators. But the Indians have been most resolute in their opposition, which was made public at the weekend.
Monday, 5 December 2011
Towns hope to cash in by preparing students for renewable-energy jobs
A Green Course
By STEPHANIE SIMON
The dusty ranching town of Tucumcari, N.M., measures the promise of renewable energy by the number of chicken-fried steaks sold at the Rockin' Y's Roadhouse and rooms booked at the Blue Swallow Motel.
These days, both those numbers are growing.
The town of 5,000 sits on historic Route 66, but that doesn't bring in many visitors anymore. What keeps the place humming is a 250-foot-tall wind turbine and the classrooms and laboratories nearby, at the North American Wind Research and Training Center.
Students from across the nation and overseas come for two-year degrees that prepare them for jobs as turbine technicians. Researchers come to investigate questions such as how turbines affect bat migration. Tourists stop by, too, curious about the huge spinning blades. In an off-the-beaten-track town with a poverty rate of 22%, that economic activity is a big deal.
"They do help fill up the motels and they do eat in our restaurants," says Pat Vanderpool, executive director of the Greater Tucumcari Economic Development Corp. "It's created a little energy."
Communities across the nation are looking to renewable energy to do the same for them. So they're investing in training centers to prepare workers for careers designing, manufacturing, installing and repairing solar panels, wind turbines and other green-energy systems.
The outlook for those careers is uncertain, but that hasn't stopped a huge boom in training programs. The goal: Bring in students for a short-term economic boost, and brand the community as a hot spot for renewable energy, in hopes of luring companies that can create jobs and spur long-term growth.
The programs run the gamut. A grant from the state of California helped a consortium of colleges and research institutes in San Diego launch a program in algae biotechnology, the business of turning algae into fuel. In Reno, Nev., Truckee Meadows Community College used state grants and private investment to launch classes in solar technology and energy-efficiency auditing. The college will soon open the first degree program in the nation to train geothermal-plant operators. And in Aurora, Colo., a former Sam's Club has been converted into the Ecotech Institute, billed as the first and only college in the U.S. dedicated exclusively to preparing students for careers in renewable energy.
Scores of other degree programs in various aspects of renewable energy have sprung up across the nation, as well—so many, in fact, that competition for students "is getting fierce," says Jim Morgan, director of the wind center at Mesalands Community College in Tucumcari.
Many of the programs are too new to have firm data on employment rates for their graduates. The jobs they train students for range from wind-turbine technician and solar installer, paying $30,000 to $40,000 a year, to research analyst positions that pay twice that. The training can cost anywhere from $3,500 to $35,000, depending on whether it's at a community college or a for-profit institution like Ecotech.
Uneven Prospects
Skeptics wonder whether there will be enough green jobs for all these green graduates.
"We have had patchy to nonexistent information about what occupations will be important and what type of jobs there will be," says Mark Muro, a senior fellow at the Brookings Institution and co-author of a new report on green jobs, "Sizing the Clean Economy."
The report concludes that certain segments, including wind, solar and smart grid, "added jobs at a torrid pace" in recent years, but Mr. Muro cautions that even those industries are developing unevenly and unpredictably, leading to mismatches between available jobs and skilled labor. "There's too much training in some areas and not enough in others," he says.
The difficulties come across in a federal audit of the Labor Department released last month. The agency received $500 million from the 2009 stimulus act for a "Green Jobs" program, which aimed to train at least 115,000 workers. As of June 30, just 26,000 had completed training—and just 8,000 had found work, according to Elliot Lewis, an auditor with the department's Office of Inspector General.
A similar audit this fall of the Department of Energy found that itstruggled to create green jobs despite a huge influx of stimulus funds—and that some of the jobs created didn't work out well. There was a push, for instance, to train workers to weatherize homes to make them more energy-efficient, but the audit found that "substandard workmanship" plagued the program.
Fred Lucero, who runs a green-job training program in Richmond, Calif., says he has had trouble placing some of his graduates in stable jobs. "The market is glutted with people with solar certification and energy-efficiency certification," he says. His biggest success: Training workers to clean up asbestos, lead and other hazardous materials from abandoned factories and polluted land. "That's the original green job," Mr. Lucero says, "but it's not sexy like solar."
Employers say they're not necessarily looking for workers with newly minted degrees in green energy. Jeff Metts, president of Astraeus Wind Energy Inc., a growing firm in Eaton Rapids, Mich., that makes wind-turbine components, says he hired laid-off auto workers for his best-paying jobs because they had experience handling massive machinery. Wind-power company RES Americas generally looks for workers with engineering experience and trains them in-house on skills specific to turbines, says Doug Nieb, vice president of human resources.
Anecdotal Success
Despite the challenges—and despite headline-grabbing failures like the bankruptcy of solar-panel maker Solyndra LLC—boosters say there are and will be plenty of opportunities for workers trained in renewable-energy industries.
The Danish company Vestas Wind Systems A/S prefers to fill its manufacturing plant in Pueblo, Colo., with employees trained at a local community college, in a program it helped design. As for jobs installing and maintaining turbines, applicants with degrees in that field "have a head start over other potential employees because they have the fundamental skills and knowledge," says Vestas spokeswoman Aili Jokela. "It's crucial." Vestas currently has 500 jobs open across the U.S.
The Natural Resources Defense Council, an environmental advocacy group, recently launched a website that tracks green-energy job announcements. Many are small: a wind farm in Illinois that will create up to 10 full-time jobs; expansion of a solar-panel component factory in California that will add 30 positions. But there have been a few big announcements lately, including General Electric Co.'s plan to build a $300 million solar thin-film plant in Aurora, which is expected to create about 350 jobs, each paying at least $50,000 a year.
The numbers fall far short of President Obama's 2008 campaign pledge to create five million green jobs. "But things are happening," says Cai Steger, an energy-policy analyst for the Natural Resources Defense Council. Tales of growth so far are just "little anecdotes," he says, "but they're anecdotes around the country."
Adam Chrisman offers up one such anecdote. The 23-year-old was studying biology at a small college in Pennsylvania when he heard about the wind training program in New Mexico. He enrolled, drawn by the chance to do hands-on work in a brand-new industry. The first time he climbed the turbine was "a little spooky," he says. But he came to love it.
Mr. Chrisman got an internship last summer at a wind farm in Illinois and has a standing offer for a full-time job there when he graduates next spring, he says. For now, he's living and spending money in Tucumcari and bringing his parents and girlfriend to New Mexico for visits. "It seems like a good thing for the community," he says.
Ms. Simon is a staff reporter for The Wall Street Journal's Dallas bureau. She can be reached at stephanie.simon@wsj.com.
By STEPHANIE SIMON
The dusty ranching town of Tucumcari, N.M., measures the promise of renewable energy by the number of chicken-fried steaks sold at the Rockin' Y's Roadhouse and rooms booked at the Blue Swallow Motel.
These days, both those numbers are growing.
The town of 5,000 sits on historic Route 66, but that doesn't bring in many visitors anymore. What keeps the place humming is a 250-foot-tall wind turbine and the classrooms and laboratories nearby, at the North American Wind Research and Training Center.
Students from across the nation and overseas come for two-year degrees that prepare them for jobs as turbine technicians. Researchers come to investigate questions such as how turbines affect bat migration. Tourists stop by, too, curious about the huge spinning blades. In an off-the-beaten-track town with a poverty rate of 22%, that economic activity is a big deal.
"They do help fill up the motels and they do eat in our restaurants," says Pat Vanderpool, executive director of the Greater Tucumcari Economic Development Corp. "It's created a little energy."
Communities across the nation are looking to renewable energy to do the same for them. So they're investing in training centers to prepare workers for careers designing, manufacturing, installing and repairing solar panels, wind turbines and other green-energy systems.
The outlook for those careers is uncertain, but that hasn't stopped a huge boom in training programs. The goal: Bring in students for a short-term economic boost, and brand the community as a hot spot for renewable energy, in hopes of luring companies that can create jobs and spur long-term growth.
The programs run the gamut. A grant from the state of California helped a consortium of colleges and research institutes in San Diego launch a program in algae biotechnology, the business of turning algae into fuel. In Reno, Nev., Truckee Meadows Community College used state grants and private investment to launch classes in solar technology and energy-efficiency auditing. The college will soon open the first degree program in the nation to train geothermal-plant operators. And in Aurora, Colo., a former Sam's Club has been converted into the Ecotech Institute, billed as the first and only college in the U.S. dedicated exclusively to preparing students for careers in renewable energy.
Scores of other degree programs in various aspects of renewable energy have sprung up across the nation, as well—so many, in fact, that competition for students "is getting fierce," says Jim Morgan, director of the wind center at Mesalands Community College in Tucumcari.
Many of the programs are too new to have firm data on employment rates for their graduates. The jobs they train students for range from wind-turbine technician and solar installer, paying $30,000 to $40,000 a year, to research analyst positions that pay twice that. The training can cost anywhere from $3,500 to $35,000, depending on whether it's at a community college or a for-profit institution like Ecotech.
Uneven Prospects
Skeptics wonder whether there will be enough green jobs for all these green graduates.
"We have had patchy to nonexistent information about what occupations will be important and what type of jobs there will be," says Mark Muro, a senior fellow at the Brookings Institution and co-author of a new report on green jobs, "Sizing the Clean Economy."
The report concludes that certain segments, including wind, solar and smart grid, "added jobs at a torrid pace" in recent years, but Mr. Muro cautions that even those industries are developing unevenly and unpredictably, leading to mismatches between available jobs and skilled labor. "There's too much training in some areas and not enough in others," he says.
The difficulties come across in a federal audit of the Labor Department released last month. The agency received $500 million from the 2009 stimulus act for a "Green Jobs" program, which aimed to train at least 115,000 workers. As of June 30, just 26,000 had completed training—and just 8,000 had found work, according to Elliot Lewis, an auditor with the department's Office of Inspector General.
A similar audit this fall of the Department of Energy found that itstruggled to create green jobs despite a huge influx of stimulus funds—and that some of the jobs created didn't work out well. There was a push, for instance, to train workers to weatherize homes to make them more energy-efficient, but the audit found that "substandard workmanship" plagued the program.
Fred Lucero, who runs a green-job training program in Richmond, Calif., says he has had trouble placing some of his graduates in stable jobs. "The market is glutted with people with solar certification and energy-efficiency certification," he says. His biggest success: Training workers to clean up asbestos, lead and other hazardous materials from abandoned factories and polluted land. "That's the original green job," Mr. Lucero says, "but it's not sexy like solar."
Employers say they're not necessarily looking for workers with newly minted degrees in green energy. Jeff Metts, president of Astraeus Wind Energy Inc., a growing firm in Eaton Rapids, Mich., that makes wind-turbine components, says he hired laid-off auto workers for his best-paying jobs because they had experience handling massive machinery. Wind-power company RES Americas generally looks for workers with engineering experience and trains them in-house on skills specific to turbines, says Doug Nieb, vice president of human resources.
Anecdotal Success
Despite the challenges—and despite headline-grabbing failures like the bankruptcy of solar-panel maker Solyndra LLC—boosters say there are and will be plenty of opportunities for workers trained in renewable-energy industries.
The Danish company Vestas Wind Systems A/S prefers to fill its manufacturing plant in Pueblo, Colo., with employees trained at a local community college, in a program it helped design. As for jobs installing and maintaining turbines, applicants with degrees in that field "have a head start over other potential employees because they have the fundamental skills and knowledge," says Vestas spokeswoman Aili Jokela. "It's crucial." Vestas currently has 500 jobs open across the U.S.
The Natural Resources Defense Council, an environmental advocacy group, recently launched a website that tracks green-energy job announcements. Many are small: a wind farm in Illinois that will create up to 10 full-time jobs; expansion of a solar-panel component factory in California that will add 30 positions. But there have been a few big announcements lately, including General Electric Co.'s plan to build a $300 million solar thin-film plant in Aurora, which is expected to create about 350 jobs, each paying at least $50,000 a year.
The numbers fall far short of President Obama's 2008 campaign pledge to create five million green jobs. "But things are happening," says Cai Steger, an energy-policy analyst for the Natural Resources Defense Council. Tales of growth so far are just "little anecdotes," he says, "but they're anecdotes around the country."
Adam Chrisman offers up one such anecdote. The 23-year-old was studying biology at a small college in Pennsylvania when he heard about the wind training program in New Mexico. He enrolled, drawn by the chance to do hands-on work in a brand-new industry. The first time he climbed the turbine was "a little spooky," he says. But he came to love it.
Mr. Chrisman got an internship last summer at a wind farm in Illinois and has a standing offer for a full-time job there when he graduates next spring, he says. For now, he's living and spending money in Tucumcari and bringing his parents and girlfriend to New Mexico for visits. "It seems like a good thing for the community," he says.
Ms. Simon is a staff reporter for The Wall Street Journal's Dallas bureau. She can be reached at stephanie.simon@wsj.com.
Clean-Coal Rules Are a Boon for Some
By KRIS MAHER
Stricter federal emissions rules, intended to make exhaust from the nation's smokestacks cleaner, are putting pressure on utilities but are expected to be a boon to providers of pollution-reduction technology for coal-fired power plants.
Companies that make systems for filtering out pollutants such as mercury, sulfur dioxide and nitrogen oxide say they are seeing a surge in demand for their equipment ahead of several new standards proposed by the Environmental Protection Agency earlier this year and expected to start being phased in as early as January 2012.
The proposed rules include a requirement that power plants using coal reduce emissions of mercury by as much as 90% over the next three years, with the goal of preventing tens of thousands of premature deaths from pollution. As utilities rush to comply with the stricter standards and keep their older plants online longer, the market for pollution control and monitoring technology could more than double, to $10 billion in 2014 from $4 billion now, according to the Institute of Clean Air Companies, a trade group.
Mike Durham, chief executive of ADA Environmental Solutions, of Littleton, Colo., predicts the creation of a $700 million market for mercury-reduction technologies over the next three years as a result of the new Mercury and Air Toxics Standards rule proposed in March and set to be finalized on Dec. 16. Utilities spent $160 million on such equipment from 2005 to 2010 related to rules some states put in place, Mr. Durham says.
"It's going to be a huge boon for us," he says of the rule, a draft of which called on power plants to cut mercury emissions 80% to 90% within three years.
Fuel Tech Inc. of Warrenville, Ill., which sells technology for reducing nitrogen-oxide emissions, had $21 million in new orders in the third quarter, up from $8.8 million in the year-earlier quarter, according to Dave Collins, chief financial officer.
The main driver: the Cross-State Air Pollution Rule, which the EPA finalized in July. The rule requires 27 states in the eastern half of the U.S. to reduce power-plant emissions that contribute to ozone, including nitrogen oxide. The reductions must begin in January 2012 with targets achieved by 2014
Analysts say emissions-control technologies like those sold by ADA and Fuel Tech could be vital for utilities by enabling them to keep older plants operating longer, as well as for the coal industry, which faces growing competition from cleaner-burning natural gas being unearthed from deep shale deposits. Indeed, coal-fired net electricity generation fell 4% this year through August from a year earlier, while natural-gas generation rose 1.6%, according to the Energy Information Administration.
"When you couple the environmental regulations with low natural-gas prices, it's going to decrease the economic competitiveness of coal-fired power generation," says Mark Levin, an energy analyst with BB&T Capital Markets, a subsidiary of BB&T Corp. "Utilities are going to have to do a number of things, including using their scrubbers more efficiently or burning less coal."
Mr. Maher is a staff reporter in The Wall Street Journal's Pittsburgh bureau. He can be reached at kris.maher@wsj.com.
Stricter federal emissions rules, intended to make exhaust from the nation's smokestacks cleaner, are putting pressure on utilities but are expected to be a boon to providers of pollution-reduction technology for coal-fired power plants.
Companies that make systems for filtering out pollutants such as mercury, sulfur dioxide and nitrogen oxide say they are seeing a surge in demand for their equipment ahead of several new standards proposed by the Environmental Protection Agency earlier this year and expected to start being phased in as early as January 2012.
The proposed rules include a requirement that power plants using coal reduce emissions of mercury by as much as 90% over the next three years, with the goal of preventing tens of thousands of premature deaths from pollution. As utilities rush to comply with the stricter standards and keep their older plants online longer, the market for pollution control and monitoring technology could more than double, to $10 billion in 2014 from $4 billion now, according to the Institute of Clean Air Companies, a trade group.
Mike Durham, chief executive of ADA Environmental Solutions, of Littleton, Colo., predicts the creation of a $700 million market for mercury-reduction technologies over the next three years as a result of the new Mercury and Air Toxics Standards rule proposed in March and set to be finalized on Dec. 16. Utilities spent $160 million on such equipment from 2005 to 2010 related to rules some states put in place, Mr. Durham says.
"It's going to be a huge boon for us," he says of the rule, a draft of which called on power plants to cut mercury emissions 80% to 90% within three years.
Fuel Tech Inc. of Warrenville, Ill., which sells technology for reducing nitrogen-oxide emissions, had $21 million in new orders in the third quarter, up from $8.8 million in the year-earlier quarter, according to Dave Collins, chief financial officer.
The main driver: the Cross-State Air Pollution Rule, which the EPA finalized in July. The rule requires 27 states in the eastern half of the U.S. to reduce power-plant emissions that contribute to ozone, including nitrogen oxide. The reductions must begin in January 2012 with targets achieved by 2014
Analysts say emissions-control technologies like those sold by ADA and Fuel Tech could be vital for utilities by enabling them to keep older plants operating longer, as well as for the coal industry, which faces growing competition from cleaner-burning natural gas being unearthed from deep shale deposits. Indeed, coal-fired net electricity generation fell 4% this year through August from a year earlier, while natural-gas generation rose 1.6%, according to the Energy Information Administration.
"When you couple the environmental regulations with low natural-gas prices, it's going to decrease the economic competitiveness of coal-fired power generation," says Mark Levin, an energy analyst with BB&T Capital Markets, a subsidiary of BB&T Corp. "Utilities are going to have to do a number of things, including using their scrubbers more efficiently or burning less coal."
Mr. Maher is a staff reporter in The Wall Street Journal's Pittsburgh bureau. He can be reached at kris.maher@wsj.com.
Concerns over Green Investment Bank
Environmental centrepiece of government policy risks 'pork-barrel politics' and financial ineffectiveness, critics fear
Juliette Jowit
guardian.co.uk, Sunday 4 December 2011 19.21 GMT
The government's Green Investment Bank (GIB) has had its actions so limited that it will not be able to support the coalition's much-vaunted Green Deal to refurbish millions of homes to save energy.
The details have emerged in a draft document drawn up by the Treasury and the Department for Business, Innovation and Skills (BIS), and presented to the advisory board at their most recent meeting.
The proposals, seen by the Guardian, have also caused consternation because the government is proposing to help set strategic priorities, a move one critic said opened up the risk of "pork-barrel politics" if ministers insisted on pushing ahead with certain schemes to curry favour with voters ahead of an election.
At worst, some people close to the talks fear the government could fail to get state aid approval from the European commission to provide funding for the bank because it will be seen as too close to ministers.
There is also concern about the increasingly "negative" language, including a downgrading of the funds being offered by the Treasury from £3bn to "up to £3bn".
Another recommendation that is likely to cause controversy is that the bank would be instructed to invest on commercial terms, and to make a profit every year, raising questions about whether it will be able to invest in important areas that are currently too risky for private lenders.
Ben Caldecott, head of European policy at the low-carbon investment advisers Climate Change Capital, said: "If it's only ever going to act as an investor of last-resort investing on market terms, and if it's going to avoid passing-through its lower cost of capital [from government], that could undermine its ability to deliver its objectives."
The draft paper, intended for the European commission, which must approve the bank's public funding, has emerged following a torrid week for the environmental movement and businesses after the chancellor used his autumn statement on Tuesday to announce green regulations would be reviewed to clear the way for development and economic growth.
In answer to criticism of the coalition's apparent U-turn on its early promise to be the "greenest government ever", George Osborne later defended his record, telling MPs: "I am the chancellor who funded the first ever Green Investment Bank."
The same week, Chris Huhne, the climate secretary, admitted to MPs in departmental questions that the date at which the bank might start borrowing money had been delayed from 2015 to 2016 at the earliest. There is also growing concern about the indebted government's willingness to guarantee any bonds or loans, which private investors say will make it much harder for the GIB to offer the low-cost finance needed by some industries and new technologies.
Caroline Flint, Labour's shadow energy and climate secretary, said: "The Green Investment Bank – a plan Labour set out in government – is vital for creating jobs and supporting growth in the green economy. But, for all of George Osborne's empty boasts, we [have] found out that because the government is set to borrow a staggering £158bn more than they planned a year ago, we won't have a proper Green Investment Bank, with full borrowing powers, until 2016 at the earliest. Day by day, David Cameron's promise to run the greenest government ever is falling apart."
Other details in the draft proposals, discussed by the government's advisory panel at their November meeting, include the expected cost of setting up the bank is £82m. Assuming the full £3bn is paid, the document suggests the bank will get £865m in 2012-13, £1bn in 2013-14, and £1.225bn in 2014-15.
The bank will initially be asked to spend at least 80% of its funds on four sectors: offshore wind (which could take approximately half the funds available), waste processing and recycling, energy from waste generation, and non-domestic energy efficiency. In future it could also fund home energy efficiency schemes such as the Green Deal.
Ministers would appoint the bank's chairman and chief executive, who would then help appoint of the rest of the board. The bank would be expected to make a 3.5% average return on investment over five years – below what is currently the most risk-proof returns – and make a profit every year, though this last point could be negotiated with the Treasury, it says.
Another proposal that has caused concern is that the bank cannot invest more than 5% of its funds in one scheme, leading to concerns it cannot take a major lead in developing offshore windfarms and other expensive schemes in the early days to give private investors more confidence in the sector.
A Department for Business spokeswoman said she would not comment on a leaked document. But she said the Green Bank would "drive growth and keep the UK ahead of the game in the transition to a low carbon economy".
She added: "Government investment will mobilise significant private finance, providing in the region of £18bn of additional investment in green infrastructure."
Juliette Jowit
guardian.co.uk, Sunday 4 December 2011 19.21 GMT
The government's Green Investment Bank (GIB) has had its actions so limited that it will not be able to support the coalition's much-vaunted Green Deal to refurbish millions of homes to save energy.
The details have emerged in a draft document drawn up by the Treasury and the Department for Business, Innovation and Skills (BIS), and presented to the advisory board at their most recent meeting.
The proposals, seen by the Guardian, have also caused consternation because the government is proposing to help set strategic priorities, a move one critic said opened up the risk of "pork-barrel politics" if ministers insisted on pushing ahead with certain schemes to curry favour with voters ahead of an election.
At worst, some people close to the talks fear the government could fail to get state aid approval from the European commission to provide funding for the bank because it will be seen as too close to ministers.
There is also concern about the increasingly "negative" language, including a downgrading of the funds being offered by the Treasury from £3bn to "up to £3bn".
Another recommendation that is likely to cause controversy is that the bank would be instructed to invest on commercial terms, and to make a profit every year, raising questions about whether it will be able to invest in important areas that are currently too risky for private lenders.
Ben Caldecott, head of European policy at the low-carbon investment advisers Climate Change Capital, said: "If it's only ever going to act as an investor of last-resort investing on market terms, and if it's going to avoid passing-through its lower cost of capital [from government], that could undermine its ability to deliver its objectives."
The draft paper, intended for the European commission, which must approve the bank's public funding, has emerged following a torrid week for the environmental movement and businesses after the chancellor used his autumn statement on Tuesday to announce green regulations would be reviewed to clear the way for development and economic growth.
In answer to criticism of the coalition's apparent U-turn on its early promise to be the "greenest government ever", George Osborne later defended his record, telling MPs: "I am the chancellor who funded the first ever Green Investment Bank."
The same week, Chris Huhne, the climate secretary, admitted to MPs in departmental questions that the date at which the bank might start borrowing money had been delayed from 2015 to 2016 at the earliest. There is also growing concern about the indebted government's willingness to guarantee any bonds or loans, which private investors say will make it much harder for the GIB to offer the low-cost finance needed by some industries and new technologies.
Caroline Flint, Labour's shadow energy and climate secretary, said: "The Green Investment Bank – a plan Labour set out in government – is vital for creating jobs and supporting growth in the green economy. But, for all of George Osborne's empty boasts, we [have] found out that because the government is set to borrow a staggering £158bn more than they planned a year ago, we won't have a proper Green Investment Bank, with full borrowing powers, until 2016 at the earliest. Day by day, David Cameron's promise to run the greenest government ever is falling apart."
Other details in the draft proposals, discussed by the government's advisory panel at their November meeting, include the expected cost of setting up the bank is £82m. Assuming the full £3bn is paid, the document suggests the bank will get £865m in 2012-13, £1bn in 2013-14, and £1.225bn in 2014-15.
The bank will initially be asked to spend at least 80% of its funds on four sectors: offshore wind (which could take approximately half the funds available), waste processing and recycling, energy from waste generation, and non-domestic energy efficiency. In future it could also fund home energy efficiency schemes such as the Green Deal.
Ministers would appoint the bank's chairman and chief executive, who would then help appoint of the rest of the board. The bank would be expected to make a 3.5% average return on investment over five years – below what is currently the most risk-proof returns – and make a profit every year, though this last point could be negotiated with the Treasury, it says.
Another proposal that has caused concern is that the bank cannot invest more than 5% of its funds in one scheme, leading to concerns it cannot take a major lead in developing offshore windfarms and other expensive schemes in the early days to give private investors more confidence in the sector.
A Department for Business spokeswoman said she would not comment on a leaked document. But she said the Green Bank would "drive growth and keep the UK ahead of the game in the transition to a low carbon economy".
She added: "Government investment will mobilise significant private finance, providing in the region of £18bn of additional investment in green infrastructure."
Aviation could switch to low-carbon fuel 'sooner than thought'
Richard Branson says aeroplanes have few 'filling stations' compared with other transport, making it easier to supply them
John Vidal, environment editor
guardian.co.uk, Monday 5 December 2011 07.26 GMT
The world's 7,000 airlines could switch to low-carbon jet fuels much faster than other transport because aeroplanes have very few "filling stations", says Richard Branson.
"Unlike cars where there are millions of filling stations, there are only about 1,700 aviation stations in the world. So if you can get the right fuel, like mass-produced algae, then getting it to 1,700 outlets is not so difficult," Branson said in an interview with the Guardian from the British Virgin islands.
Branson, who announced last month he hoped Virgin would soon be able to use waste gases from industrial steel and aluminium plants as a fuel, said the industry should aim for 50% sustainable fuels by 2020.
"I would be very disapointed if not. Once the breakthrough takles place, getting to 50-100% is not unrealistic. Aviation fuel is 25-40% of the running costs of airlines so the industry is open to new fuels."
Branson, whose Virgin group owns 51% of Virgin Atlantic Airways, was speaking in advance of the launch in Durban of RenewableJetFuels.org, an open access website that assesses and updates the progress of companies planning to produce commercial-scale renewable fuel for aviation.
It suggests that of the 40 companies claiming to have the potential to deliver large-scale amounts – about one third of them are "credible" from an economic, scalable and sustainability perspective in their current state.
In the next five years, according to the website published by business NGO Carbon War Room and academic publisher Elsevier, some renewable jet fuel companies "could be producing enough renewable fuel to replace 10-20% of the fuel of a typical mid-sized airline".
The data, said Branson, should allow airlines to accelerate linkups with fuel companies.
"Producers can continually update and re-submit data. This is then reviewed by experts, enabling RenewableJetFuels.org to be the independent, gold standard for investors and airlines in the market," said Suzanne Hunt, head of operations at Carbon War Room.
"Trying to address climate change makes business sense", said Branson, whose Virgin airline spends around $3bn a year on jet fuel.
"The jet fuel industry can charge what they like at present. New fuels will compete. You could finds the price of aviation fuel comes down."
Three years ago Virgin flew a plane to Holland on coconut fuel and no one took it seriously, said Branson. "The industry thought it was PR. BA was pretty dismissive, saying planes will never fly on bio-fuels. But it actually kickstarted thinking. Since then, even BA has started investing in new biofuels.
"We're heading in the right direction. The industry could go from one of the dirtiest to one of the cleanest in 10 years. We are investing in different companies and really beginning to see traction".
The five leading alternative jet fuel companies identified by Carbon War Room are Lanzatech, SG biofuels, AltAir, Solazyme and Sapphire.
John Vidal, environment editor
guardian.co.uk, Monday 5 December 2011 07.26 GMT
The world's 7,000 airlines could switch to low-carbon jet fuels much faster than other transport because aeroplanes have very few "filling stations", says Richard Branson.
"Unlike cars where there are millions of filling stations, there are only about 1,700 aviation stations in the world. So if you can get the right fuel, like mass-produced algae, then getting it to 1,700 outlets is not so difficult," Branson said in an interview with the Guardian from the British Virgin islands.
Branson, who announced last month he hoped Virgin would soon be able to use waste gases from industrial steel and aluminium plants as a fuel, said the industry should aim for 50% sustainable fuels by 2020.
"I would be very disapointed if not. Once the breakthrough takles place, getting to 50-100% is not unrealistic. Aviation fuel is 25-40% of the running costs of airlines so the industry is open to new fuels."
Branson, whose Virgin group owns 51% of Virgin Atlantic Airways, was speaking in advance of the launch in Durban of RenewableJetFuels.org, an open access website that assesses and updates the progress of companies planning to produce commercial-scale renewable fuel for aviation.
It suggests that of the 40 companies claiming to have the potential to deliver large-scale amounts – about one third of them are "credible" from an economic, scalable and sustainability perspective in their current state.
In the next five years, according to the website published by business NGO Carbon War Room and academic publisher Elsevier, some renewable jet fuel companies "could be producing enough renewable fuel to replace 10-20% of the fuel of a typical mid-sized airline".
The data, said Branson, should allow airlines to accelerate linkups with fuel companies.
"Producers can continually update and re-submit data. This is then reviewed by experts, enabling RenewableJetFuels.org to be the independent, gold standard for investors and airlines in the market," said Suzanne Hunt, head of operations at Carbon War Room.
"Trying to address climate change makes business sense", said Branson, whose Virgin airline spends around $3bn a year on jet fuel.
"The jet fuel industry can charge what they like at present. New fuels will compete. You could finds the price of aviation fuel comes down."
Three years ago Virgin flew a plane to Holland on coconut fuel and no one took it seriously, said Branson. "The industry thought it was PR. BA was pretty dismissive, saying planes will never fly on bio-fuels. But it actually kickstarted thinking. Since then, even BA has started investing in new biofuels.
"We're heading in the right direction. The industry could go from one of the dirtiest to one of the cleanest in 10 years. We are investing in different companies and really beginning to see traction".
The five leading alternative jet fuel companies identified by Carbon War Room are Lanzatech, SG biofuels, AltAir, Solazyme and Sapphire.
UK green energy projects fall by wayside in dash for gas
• Wind turbine construction down by half on last year
• Rising energy bills result of higher fuel import costs
Fiona Harvey environment correspondent
guardian.co.uk, Sunday 4 December 2011 19.41 GMT
The construction of new renewable energy generation capacity has fallen dramatically, as the big six energy suppliers pursue a "dash for gas" policy that could put the UK's climate change targets out of reach and leave households with higher bills.
The number of new wind turbines built this year is down by half on last year. To date, 540MW worth of new turbines, on land and offshore, have been built this year – the equivalent of about 400 onshore turbines. Across the UK last year, 1,192MW of wind capacity was added.
The pipeline of new projects has also stagnated – this year, 2,058MW of wind farms were submitted for planning permission, compared with 2,080MW in 2010, and the number approved dropped markedly, from 1,366MW in 2010 to 920MW.
This contrasts with the 30GW of new gas-fired power stations that are at planning stage. These will require tens of billions of pounds of investment, coming mostly from the big six energy suppliers.
Although gas is cheaper than renewables at present, the cost of renewables is steadily coming down, and over-reliance on gas is one of the key factors behind high energy bills, according to the government. About 60% of rises in the past year have been the result of the higher cost of fuel imports.
In 2010, the total investment in renewable energy in the UK fell dramatically, from $11bn (£7bn) to less than $3bn – a drop of about 70%, according to Roland Berger, the consultancy. This year, the investment has recovered somewhat, after about $6bn was invested in offshore wind, but this is still well down on 2009 figures – despite the government's pledges to expand the renewable energy sector, with a target of 18GW of generating capacity to come from offshore wind by 2020. At least £200bn will be needed this decade to transform the UK's energy sector to a low-carbon footing, but there is little sign yet of investment on that scale.
Last week construction group Carillion said 4,500 jobs are at risk as a result of a government decision to cut solar energy subsidies. There are 39,000 jobs dependent on the solar energy sector and thousands more are also at risk.
Manfred Hader, a partner at Roland Berger, said: "More regulatory clarity and the making available of large amounts of capital are necessary to drive government targets for offshore wind. There will be a need to bridge the gap between funding via traditional sources such as utilities and banks and the total investment required – it is a moot point as to whether institutional investors would be interested and whether the green investment bank would make a real difference to this issue."
Wind represents the biggest share of the UK's renewable energy mix, but other forms of renewable energy have also been set back. Solar power companies are set to cut thousands of jobs, as the government abruptly halved the subsidies available for solar panels. The biomass sector has suffered, too, as several proposed new biomass power stations, burning waste, energy crops or straw, have been delayed. Drax, which operates the biggest UK coal-fired power station, has put on hold plans for two new straw-burning biomass plants.
While renewables struggle, gas has seen a flurry of interest from the big six suppliers. Over the past few years, plans for at least 30GW of gas-fired power have been brought forward, which would lead to a rash of new power stations across the country, with some now in construction but most still in the planning stages.
Gas businesses have also been lobbying heavily to be seen as a "green" fuel, because burning gas produces about half the carbon dioxide of burning coal. However, gas lobbyists also have the renewables industry in their sights, as the Guardian has revealed, with behind-the-scenes meetings with key political figures across Europe and the publication of a report which took McKinsey research showing renewables could power a low-carbon Europe and re-interpreted it as an argument that opting for gas would be cheaper than pushing renewable energy.
Chris Huhne, secretary of state for energy and climate change, invited the construction of new gas-fired power stations with a promise that a new "emissions performance standard" would be set at a rate that favoured gas but blocked new coal-fired power. He promised this new regulation would not be reviewed until 2015, and any revision would not be retroactive, giving gas companies a clear window for investment.
Huhne's comments made clear one of the reasons behind the government's encouragement of new gas-fired power – that new gas power stations take only about 18 months to build. Ministers are concerned that as many of the older coal-fired power stations are taken out of service in the next few years, there could be an "energy gap" between demand for electricity and supply. As putting up new gas-fired power stations is quick compared with wind turbines or nuclear reactors, gas is now the favoured option if ministers fear there is any likelihood of suppliers failing to "keep the lights on".
Burning gas produces about half the carbon dioxide of coal so switching from coal to gas has helped the UK to one of the most impressive emissions-cutting records of any country over the past 20 years. There were no gas-fired power stations in 1990, but the rapid expansion of the sector driven by the Conservative government, under Margaret Thatcher, was the biggest single factor behind the 25% cut in the UK's greenhouse gas emissions between 1990 and 2010.
The government's new carbon plan - published on December 1 - showed a further switch away from the UK's remaining coal-fired power stations, many of which will be taken out of service in the next few years, is a major factor in enabling the government to promised 34% emissions cuts compared with 1990 levels by 2022. Between 40 and 70GW of new capacity will be needed to meet the UK's carbon targets. Huhne said: "The energy mix will depend on what happens in the world gas markets. If there is a low gas price in the UK, then you will see more gas and carbon capture and storage and less renewable energy and nuclear [power]."
There are risks to a dependence on gas, however. High prices in world markets have been the main cause of energy bill rises and as demand increases this is likely to continue. Huhne has said the UK needs to give up its "addiction to fossil fuels" but on current plans gas looks a clear winner from government energy policies, with the outlook for renewables less certain.
David Nickols, managing girector at the consultancy WSP Future Energy said project finance for major renewables projects looked difficult, and planning restrictions were also "major obstacle".
Paul Sloman, a partner at Roland Berger Strategy Consultants, warned: "The UK cannot afford to be reliant mainly on gas-fired generation as energy security is also a very pertinent issue and increasing reliance on gas is not the solution, particularly as the UK's own gas production from the North Sea declines."
• Rising energy bills result of higher fuel import costs
Fiona Harvey environment correspondent
guardian.co.uk, Sunday 4 December 2011 19.41 GMT
The construction of new renewable energy generation capacity has fallen dramatically, as the big six energy suppliers pursue a "dash for gas" policy that could put the UK's climate change targets out of reach and leave households with higher bills.
The number of new wind turbines built this year is down by half on last year. To date, 540MW worth of new turbines, on land and offshore, have been built this year – the equivalent of about 400 onshore turbines. Across the UK last year, 1,192MW of wind capacity was added.
The pipeline of new projects has also stagnated – this year, 2,058MW of wind farms were submitted for planning permission, compared with 2,080MW in 2010, and the number approved dropped markedly, from 1,366MW in 2010 to 920MW.
This contrasts with the 30GW of new gas-fired power stations that are at planning stage. These will require tens of billions of pounds of investment, coming mostly from the big six energy suppliers.
Although gas is cheaper than renewables at present, the cost of renewables is steadily coming down, and over-reliance on gas is one of the key factors behind high energy bills, according to the government. About 60% of rises in the past year have been the result of the higher cost of fuel imports.
In 2010, the total investment in renewable energy in the UK fell dramatically, from $11bn (£7bn) to less than $3bn – a drop of about 70%, according to Roland Berger, the consultancy. This year, the investment has recovered somewhat, after about $6bn was invested in offshore wind, but this is still well down on 2009 figures – despite the government's pledges to expand the renewable energy sector, with a target of 18GW of generating capacity to come from offshore wind by 2020. At least £200bn will be needed this decade to transform the UK's energy sector to a low-carbon footing, but there is little sign yet of investment on that scale.
Last week construction group Carillion said 4,500 jobs are at risk as a result of a government decision to cut solar energy subsidies. There are 39,000 jobs dependent on the solar energy sector and thousands more are also at risk.
Manfred Hader, a partner at Roland Berger, said: "More regulatory clarity and the making available of large amounts of capital are necessary to drive government targets for offshore wind. There will be a need to bridge the gap between funding via traditional sources such as utilities and banks and the total investment required – it is a moot point as to whether institutional investors would be interested and whether the green investment bank would make a real difference to this issue."
Wind represents the biggest share of the UK's renewable energy mix, but other forms of renewable energy have also been set back. Solar power companies are set to cut thousands of jobs, as the government abruptly halved the subsidies available for solar panels. The biomass sector has suffered, too, as several proposed new biomass power stations, burning waste, energy crops or straw, have been delayed. Drax, which operates the biggest UK coal-fired power station, has put on hold plans for two new straw-burning biomass plants.
While renewables struggle, gas has seen a flurry of interest from the big six suppliers. Over the past few years, plans for at least 30GW of gas-fired power have been brought forward, which would lead to a rash of new power stations across the country, with some now in construction but most still in the planning stages.
Gas businesses have also been lobbying heavily to be seen as a "green" fuel, because burning gas produces about half the carbon dioxide of burning coal. However, gas lobbyists also have the renewables industry in their sights, as the Guardian has revealed, with behind-the-scenes meetings with key political figures across Europe and the publication of a report which took McKinsey research showing renewables could power a low-carbon Europe and re-interpreted it as an argument that opting for gas would be cheaper than pushing renewable energy.
Chris Huhne, secretary of state for energy and climate change, invited the construction of new gas-fired power stations with a promise that a new "emissions performance standard" would be set at a rate that favoured gas but blocked new coal-fired power. He promised this new regulation would not be reviewed until 2015, and any revision would not be retroactive, giving gas companies a clear window for investment.
Huhne's comments made clear one of the reasons behind the government's encouragement of new gas-fired power – that new gas power stations take only about 18 months to build. Ministers are concerned that as many of the older coal-fired power stations are taken out of service in the next few years, there could be an "energy gap" between demand for electricity and supply. As putting up new gas-fired power stations is quick compared with wind turbines or nuclear reactors, gas is now the favoured option if ministers fear there is any likelihood of suppliers failing to "keep the lights on".
Burning gas produces about half the carbon dioxide of coal so switching from coal to gas has helped the UK to one of the most impressive emissions-cutting records of any country over the past 20 years. There were no gas-fired power stations in 1990, but the rapid expansion of the sector driven by the Conservative government, under Margaret Thatcher, was the biggest single factor behind the 25% cut in the UK's greenhouse gas emissions between 1990 and 2010.
The government's new carbon plan - published on December 1 - showed a further switch away from the UK's remaining coal-fired power stations, many of which will be taken out of service in the next few years, is a major factor in enabling the government to promised 34% emissions cuts compared with 1990 levels by 2022. Between 40 and 70GW of new capacity will be needed to meet the UK's carbon targets. Huhne said: "The energy mix will depend on what happens in the world gas markets. If there is a low gas price in the UK, then you will see more gas and carbon capture and storage and less renewable energy and nuclear [power]."
There are risks to a dependence on gas, however. High prices in world markets have been the main cause of energy bill rises and as demand increases this is likely to continue. Huhne has said the UK needs to give up its "addiction to fossil fuels" but on current plans gas looks a clear winner from government energy policies, with the outlook for renewables less certain.
David Nickols, managing girector at the consultancy WSP Future Energy said project finance for major renewables projects looked difficult, and planning restrictions were also "major obstacle".
Paul Sloman, a partner at Roland Berger Strategy Consultants, warned: "The UK cannot afford to be reliant mainly on gas-fired generation as energy security is also a very pertinent issue and increasing reliance on gas is not the solution, particularly as the UK's own gas production from the North Sea declines."
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