19 May 2010
A group of 35 biotechnology and biofuel companies and trade associations are urging the leaders of the House Ways and Means Committee to extend tax credits for cellulosic biofuels for four years, to allow algae biofuels to qualify for those tax credits, and to create an option for monetizing the tax credits as tax refunds. Similar mechanisms exist for other renewable energy industries, including wind, solar, geothermal, and biomass for electricity under the tax code (26 USC § 48).
Specifically, the group sent a letter to Committee Chairman Rep. Sander Levin (D-MI) and Ranking Member Rep. Dave Camp (R-MI)urging the inclusion of the language of H.R. 5142, the Grow a Renewable Energy Economy Now – Jumpstart Other Biofuels (GREEN JOB) Act of 2010, in the next appropriate revenue vehicle considered by the House.
In addition to extending the cellulosic production tax credit, currently set to expire at the end of 2012, by four years and allowing algae biofuels to qualify, the GREEN JOB Act would also close the IRS loophole that allows black liquor to qualify for the cellulosic tax credit, which would help to pay for the extension of the credit to algae biofuels.
Rapidly increasing US production of advanced biofuels can reduce reliance on petroleum, contribute to economic revitalization, and create truly green jobs. Enduring federal commitment to increasing alternative energy production is vital for producers seeking the investment needed to build biorefineries and infrastructure. In the current economic environment, small companies are finding it especially challenging to raise financing for first-of-a-kind commercial-scale facilities.
—Jim Greenwood, president and CEO of BIO, the Biotechnology Industry Organization
The GREEN JOB Act, introduced by Representatives Allyson Schwartz (D-PA), Mark Schauer (D-MI) and Brian Bilbray (R-CA), is intended to support industry efforts to secure project financing by strengthening and expanding federal tax incentives for next generation biofuels, thus accelerating the development of biorefineries.
The proposed legislation would also provide cellulosic and algae-based biorefineries an option to choose a refundable 30% investment tax credit in lieu of production incentives. Businesses would not be allowed to claim both the production and investment incentives but would be granted the flexibility to choose the incentive best suited to their business condition.
Signatories to the letter include:
25x’25 Alliance
Algal Biomass Organization
Algenol Biofuels
BayBio
BioEnergy International
BioForward
Biotechnology Industry Organization
Ceres
CMEA Capital
Coskata
Culturing Solutions
DuPont
DuPont Danisco Cellulosic Ethanol
Edenspace Systems
Genencor, A Danisco Division
HA International
Hexion Specialty Chemicals
HR BioPetroleum Life Technologies Corporation
Lignol Innovations
Maryland Biotechnology Center
Mendel Biotechnology
MichBio
Myriant Technologies
Novozymes
Plum Creek Timber Company
PPG Industries
Sapphire Energy
Solazyme
Targeted Growth
Terrabon
The Dow Chemical Company
Verenium
ZeaChem
Zymetis
Two other proposals—one from Sen Bill Nelson (D-FL), and another by Rep. Stephanie Herseth Sandlin (D-SD) that she has not yet introduced—would also create investment tax credits for advanced biofuels.
Thursday, 20 May 2010
Matthew helps launch new Pelamis machine
Robert Leslie 19/05/2010 12:18:00
A STROMNESS schoolboy has attended the launch of the next generation of Pelamis wave energy converters, after winning a competition to name it.
Matthew Rendall of Stromness Primary School chose the name Vagr Atferd (Norse for wave power).
Matthew and his family joined Scotland's First Minister Alex Salmond at Leith, where Mr Salmond officially launched and named the first P2 device on Tuesday.
The machine, designed and constructed by Pelamis, is capable of generating 750kW of renewable energy and will be installed and tested at the European Marine Energy Centre (EMEC) in Orkney.
At the launch ceremony at Leith Port in Edinburgh, Dr Paul Golby, chief executive of E.ON UK, said: "We're delighted to be a part of such an innovative project. The event marks a milestone in marine technology and the next exciting step for renewable energy in the UK.
"It's essential that we continue to invest in new technologies, like the Vagr Atferd, to harness the power of nature and to accelerate our transition to a low carbon economy."
The installation of the Pelamis wave energy converter at EMEC will be the first time that the P2 machine has been tested anywhere in the world and also represents the UK's first commercial supply contract within the marine energy sector.
Mr Salmond said: "Scotland is well-placed to become the clean, green energy powerhouse of Europe, with as much as 10% of its wave power potential, as well as an estimated one quarter of the continent's offshore wind and tidal energy capacity."
"Today is another significant step in that journey. It is also testament to E.ON's strong global commitment to renewable energy generation and to the ambition and innovation of Pelamis in pioneering its internationally-renowned wave energy technology.
"I'm delighted that the completed P2 wave energy converter is now ready for deployment at the European Marine Energy Centre and pleased to officially name the device Vagr Atferd."
A STROMNESS schoolboy has attended the launch of the next generation of Pelamis wave energy converters, after winning a competition to name it.
Matthew Rendall of Stromness Primary School chose the name Vagr Atferd (Norse for wave power).
Matthew and his family joined Scotland's First Minister Alex Salmond at Leith, where Mr Salmond officially launched and named the first P2 device on Tuesday.
The machine, designed and constructed by Pelamis, is capable of generating 750kW of renewable energy and will be installed and tested at the European Marine Energy Centre (EMEC) in Orkney.
At the launch ceremony at Leith Port in Edinburgh, Dr Paul Golby, chief executive of E.ON UK, said: "We're delighted to be a part of such an innovative project. The event marks a milestone in marine technology and the next exciting step for renewable energy in the UK.
"It's essential that we continue to invest in new technologies, like the Vagr Atferd, to harness the power of nature and to accelerate our transition to a low carbon economy."
The installation of the Pelamis wave energy converter at EMEC will be the first time that the P2 machine has been tested anywhere in the world and also represents the UK's first commercial supply contract within the marine energy sector.
Mr Salmond said: "Scotland is well-placed to become the clean, green energy powerhouse of Europe, with as much as 10% of its wave power potential, as well as an estimated one quarter of the continent's offshore wind and tidal energy capacity."
"Today is another significant step in that journey. It is also testament to E.ON's strong global commitment to renewable energy generation and to the ambition and innovation of Pelamis in pioneering its internationally-renowned wave energy technology.
"I'm delighted that the completed P2 wave energy converter is now ready for deployment at the European Marine Energy Centre and pleased to officially name the device Vagr Atferd."
Cornwall's 'Silicon Vineyards' aim to triple solar capacity in UK
Public consultation on £40m network of solar farms begins
Leo Hickman guardian.co.uk, Tuesday 18 May 2010 15.55 BST
Cornwall's reputation for sun, sand and surf could soon be challenged by silicon if a proposed £40m network of solar farms gets the go ahead.
Next week, public consultation will begin for a 15-acre "energy farm" on a green-field site at St Kew, three miles east of Wadebridge, the market town which acts as the gateway to north Cornwall's popular tourist heartlands. A local farmer has raised £4.5m of private investment to construct the first of what could be 10 similar sites across Cornwall and the Isles of Scilly, which, if all built, would triple the UK's current solar generating capacity.
But such investment doesn't automatically guarantee a hi-tech approach: the solar panels will be tilted towards the sun each day by hand and a roaming gaggle of geese will be used to keep the surrounding grass at a manageable length.
A consortium of local companies calling itself "Silicon Vineyards" says the proposed 2MW facility at Benbole Farm – which would be the first utility-scale solar farm in the UK - would generate enough electricity to power 600 homes. It will also grow biomass crops and house an anaerobic digester as an alternative source of power generation. The consortium, which includes the commercial arm of the University of Exeter and a Penzance-based renewables specialist called Renewable Energy Cooperative (R-ECO), says construction could begin in October if planning is approved. The solar farm could start generating electricity commercially by April 2011.
The new coalition government has pledged to "seek to increase the target for renewable energy subject to the advice of the Climate Change Committee". In 2008, 2.25% of energy was produced from renewable sources in the UK, according the Department of Energy and Climate Change. The previous government had set a target of producing 15% of energy from renewables by 2020.
The Benbole Farm business plan estimates that by utilising the recently introduced feed-in tariff which pays generators on this scale 29.3p/kWh, the farm could have an annual turnover of £700,000 within seven years. By year 25, the business plan says the farm will have generated a total revenue of £13m. The consortium says it is now speaking to the National Union of Farmers in the hope it will urge its members to consider this technology as a lucrative source of income.
Solar farms are increasingly popular in dry and sunny regions in the US and southern Spain, but the consortium is confident that rain-blessed Cornwall is the logical next frontier for solar technology. "The panels will still be generating, albeit reduced, when there is cloud cover," said Abraham Cambridge, R-ECO's technical and commercial manager. "The optimum months will be May, June, September and October, which are Cornwall's best months for sun."
To reduce costs, R-ECO says it is cheaper to employ five staff to manually adjust the panels so they face towards the sun as it moves across the sky than install automated tilting mechanisms.
If all 10 farms get the go-ahead, the scheme is expected to create 300 jobs. All the components, such as the steel cradles, would be made in Cornwall. Only the silicon PV cells themselves would be sourced from outside the county, in this case Taiwan.
Cornwall has been at the vanguard of the renewable energy industry in the UK since the country's first wind farm was built in the early 1990s. This summer, a £42m electrical "socket" will be laid on the seabed 10 miles off St Ives in anticipation of the installation of four wave energy machines. Earlier this month, Cornwall council signalled its intention to build its own £15m "solar park" on council-owned land next to Newquay airport.
The Silicon Vineyards consortium is confident its proposed solar farms will face far less public resistance than compared to wind turbine applications. "The visual interference will be negligible. It's very low to the ground and the surface of the panels are matt rather than reflective. No planning concerns have been raised by the local planning authority after initial inspections," said Cambridge.
But the solar farm at Benbole Farm could still face some local resistance. Richard Gooden, vice-chair of St Kew Parish Council, said parishioners were only informed of the proposal last week. "I can see there being some objections as the proposed site is adjacent to an area of outstanding beauty. You've got to be careful you don't destroy the one thing that brings people to Cornwall – its natural beauty." The Campaign to Protect Rural England, which has opposed the construction of many wind farms, says it "awaits to see the plans with interest", but adds it would prefer that "car parks and factory roofs" were considered first when siting these sorts of projects.
Leo Hickman guardian.co.uk, Tuesday 18 May 2010 15.55 BST
Cornwall's reputation for sun, sand and surf could soon be challenged by silicon if a proposed £40m network of solar farms gets the go ahead.
Next week, public consultation will begin for a 15-acre "energy farm" on a green-field site at St Kew, three miles east of Wadebridge, the market town which acts as the gateway to north Cornwall's popular tourist heartlands. A local farmer has raised £4.5m of private investment to construct the first of what could be 10 similar sites across Cornwall and the Isles of Scilly, which, if all built, would triple the UK's current solar generating capacity.
But such investment doesn't automatically guarantee a hi-tech approach: the solar panels will be tilted towards the sun each day by hand and a roaming gaggle of geese will be used to keep the surrounding grass at a manageable length.
A consortium of local companies calling itself "Silicon Vineyards" says the proposed 2MW facility at Benbole Farm – which would be the first utility-scale solar farm in the UK - would generate enough electricity to power 600 homes. It will also grow biomass crops and house an anaerobic digester as an alternative source of power generation. The consortium, which includes the commercial arm of the University of Exeter and a Penzance-based renewables specialist called Renewable Energy Cooperative (R-ECO), says construction could begin in October if planning is approved. The solar farm could start generating electricity commercially by April 2011.
The new coalition government has pledged to "seek to increase the target for renewable energy subject to the advice of the Climate Change Committee". In 2008, 2.25% of energy was produced from renewable sources in the UK, according the Department of Energy and Climate Change. The previous government had set a target of producing 15% of energy from renewables by 2020.
The Benbole Farm business plan estimates that by utilising the recently introduced feed-in tariff which pays generators on this scale 29.3p/kWh, the farm could have an annual turnover of £700,000 within seven years. By year 25, the business plan says the farm will have generated a total revenue of £13m. The consortium says it is now speaking to the National Union of Farmers in the hope it will urge its members to consider this technology as a lucrative source of income.
Solar farms are increasingly popular in dry and sunny regions in the US and southern Spain, but the consortium is confident that rain-blessed Cornwall is the logical next frontier for solar technology. "The panels will still be generating, albeit reduced, when there is cloud cover," said Abraham Cambridge, R-ECO's technical and commercial manager. "The optimum months will be May, June, September and October, which are Cornwall's best months for sun."
To reduce costs, R-ECO says it is cheaper to employ five staff to manually adjust the panels so they face towards the sun as it moves across the sky than install automated tilting mechanisms.
If all 10 farms get the go-ahead, the scheme is expected to create 300 jobs. All the components, such as the steel cradles, would be made in Cornwall. Only the silicon PV cells themselves would be sourced from outside the county, in this case Taiwan.
Cornwall has been at the vanguard of the renewable energy industry in the UK since the country's first wind farm was built in the early 1990s. This summer, a £42m electrical "socket" will be laid on the seabed 10 miles off St Ives in anticipation of the installation of four wave energy machines. Earlier this month, Cornwall council signalled its intention to build its own £15m "solar park" on council-owned land next to Newquay airport.
The Silicon Vineyards consortium is confident its proposed solar farms will face far less public resistance than compared to wind turbine applications. "The visual interference will be negligible. It's very low to the ground and the surface of the panels are matt rather than reflective. No planning concerns have been raised by the local planning authority after initial inspections," said Cambridge.
But the solar farm at Benbole Farm could still face some local resistance. Richard Gooden, vice-chair of St Kew Parish Council, said parishioners were only informed of the proposal last week. "I can see there being some objections as the proposed site is adjacent to an area of outstanding beauty. You've got to be careful you don't destroy the one thing that brings people to Cornwall – its natural beauty." The Campaign to Protect Rural England, which has opposed the construction of many wind farms, says it "awaits to see the plans with interest", but adds it would prefer that "car parks and factory roofs" were considered first when siting these sorts of projects.
Google-funded hot rock 'water' drill could reduce cost of geothermal energy
Enhanced geothermal systems 'could be the killer app of energy world' says Dan Reicher, Google's climate and energy chief
Alok Jha guardian.co.uk, Wednesday 19 May 2010 16.08 BST
A novel drill that is inspired by a jet engine and uses super-heated water to carve through rock could help harness to make clean energy from underground rocks more economically viable, according to its backers at Google.
Potter Drilling is part-funded by Google.org - the internet search giant's philanthropic arm - and wants to use its technology to develop geothermal energy, which involves tapping the energy from hot rocks deep in the Earth.
Geothermal energy is seen by environmentalists as a vast potential source of clean, carbon-free energy if it can be tapped efficiently. Traditional methods drill into the Earth and use naturally occurring underground pockets of steam or hot water in order to make clean electricity.
A report (pdf) by the Massachusetts Institute of Technology estimated that tapping just 2% of the potential resource from so-called enhanced geothermal systems between 3km and 10km below the surface of continental USA could supply more than 2,500 times the country's total annual energy use.
Geothermal projects in countries from Australia to Iceland and Germany already generate thousands of megawatts of electricity. Geothermal power plants can be used as baseload electricity because they are usually productive for more than 90% of the time, compared with 65%-75% for fossil-fuel power plants. They also produce virtually no greenhouse gas emissions.
Enhanced geothermal systems (EGS) allow the traditional techniques to be applied almost anywhere. By drilling deep into the Earth (where rock temperatures can reach more than 200C) and pumping water into the hole, the underground hot rocks fracture, thus allowing the water to circulate and heat up. The hot water comes back to the surface and is then used to drive turbines and produce electricity.
"EGS could be the killer app of the energy world," said Dan Reicher, director of climate and energy initiatives for Google.org, when its funding was first announced for Potter Drilling. "One of the attractive aspects is that it's baseload, it's 24-hour power and that's a nice complement to solar and wind, which are intermittent sources. If you can put all three of these technologies together, we're going to have a much more attractive green electricity mix."
Potter's technology aims to make EGS more economical because it can make drilling the holes more simple and cheaper. It will test its radical water-based design in the field for the first time in August.
The technology uses heat instead of mechanical abrasion to break rock apart. It works because certain types of hard rock, such as quartz and feldspar, do not expand uniformly when they get hot. This creates stress between the grains of the mineral sand that causes them to break apart. "The key is to heat it very quickly," said Jared Potter, chief executive of Potter Drilling.
In the past 18 months, the company has drilled holes of 1 and 4 inches in diameter through hard rocks, to prove that their idea works. In August this year, the company will for the first time drill a 4-inch hole to 1,000 feet deep. "A realistic target for this type of intermediate development would be 5km," said Potter. "Eventually our goal is to be able to drill to 10km."
So-called "spallation" drilling has been used before but with air, rather than superheated water, fired out at supersonic speeds into a hole. The original designs for spallation drills in the 1950s effectively used jet engines to fire hot air at rocks. But they were restricted to use very close to the surface, in applications such as rock quarrying.
Jared's father, Bob Potter, came up with the water-drill design after working on geothermal technologies for the Los Alamos National Laboratory, the government installation where the nuclear bomb was invented and tested in the 1940s.
The Potter drill initially requires fossil fuels to heat the water, but the company claims the process is still far more environmentally friendly than using a regular drill. "What you need is very concentrated energy and it's hard to do that without using combustion," said Potter. "It's a trade-off, it might create a little CO2 in the drilling process but it's going to be less than what they do in the conventional process with conventional drill rigs."
In a traditional drilling rig, most of the fuel's energy never reaches the underground drill-bit because as it is wasted in friction and other inefficiencies in the system. The drill bits also wear out frequently and, in certain types of rock, it may only be possible to drill for 100 feet before you need a new bit. "Every time you take the bit in and out, if it's a deep hole, you may lose a day of time - that has to be factored into the cost as well," said Potter. "Our technology doesn't have a bit, can drill continuously and we can drill 3-5 faster than they can. We can drill 30ft an hour and they're drilling 5-10ft an hour. And we're not taking the bit in and out of the hole. Our energy is right at the rock face."
That trial will be funded by the US Department of Energy but the company has also received money from Google.org, as part of the web search gaint's larger $10m (£5.4m) investment into renewable energy sources that could replace coal in the future.
Alok Jha guardian.co.uk, Wednesday 19 May 2010 16.08 BST
A novel drill that is inspired by a jet engine and uses super-heated water to carve through rock could help harness to make clean energy from underground rocks more economically viable, according to its backers at Google.
Potter Drilling is part-funded by Google.org - the internet search giant's philanthropic arm - and wants to use its technology to develop geothermal energy, which involves tapping the energy from hot rocks deep in the Earth.
Geothermal energy is seen by environmentalists as a vast potential source of clean, carbon-free energy if it can be tapped efficiently. Traditional methods drill into the Earth and use naturally occurring underground pockets of steam or hot water in order to make clean electricity.
A report (pdf) by the Massachusetts Institute of Technology estimated that tapping just 2% of the potential resource from so-called enhanced geothermal systems between 3km and 10km below the surface of continental USA could supply more than 2,500 times the country's total annual energy use.
Geothermal projects in countries from Australia to Iceland and Germany already generate thousands of megawatts of electricity. Geothermal power plants can be used as baseload electricity because they are usually productive for more than 90% of the time, compared with 65%-75% for fossil-fuel power plants. They also produce virtually no greenhouse gas emissions.
Enhanced geothermal systems (EGS) allow the traditional techniques to be applied almost anywhere. By drilling deep into the Earth (where rock temperatures can reach more than 200C) and pumping water into the hole, the underground hot rocks fracture, thus allowing the water to circulate and heat up. The hot water comes back to the surface and is then used to drive turbines and produce electricity.
"EGS could be the killer app of the energy world," said Dan Reicher, director of climate and energy initiatives for Google.org, when its funding was first announced for Potter Drilling. "One of the attractive aspects is that it's baseload, it's 24-hour power and that's a nice complement to solar and wind, which are intermittent sources. If you can put all three of these technologies together, we're going to have a much more attractive green electricity mix."
Potter's technology aims to make EGS more economical because it can make drilling the holes more simple and cheaper. It will test its radical water-based design in the field for the first time in August.
The technology uses heat instead of mechanical abrasion to break rock apart. It works because certain types of hard rock, such as quartz and feldspar, do not expand uniformly when they get hot. This creates stress between the grains of the mineral sand that causes them to break apart. "The key is to heat it very quickly," said Jared Potter, chief executive of Potter Drilling.
In the past 18 months, the company has drilled holes of 1 and 4 inches in diameter through hard rocks, to prove that their idea works. In August this year, the company will for the first time drill a 4-inch hole to 1,000 feet deep. "A realistic target for this type of intermediate development would be 5km," said Potter. "Eventually our goal is to be able to drill to 10km."
So-called "spallation" drilling has been used before but with air, rather than superheated water, fired out at supersonic speeds into a hole. The original designs for spallation drills in the 1950s effectively used jet engines to fire hot air at rocks. But they were restricted to use very close to the surface, in applications such as rock quarrying.
Jared's father, Bob Potter, came up with the water-drill design after working on geothermal technologies for the Los Alamos National Laboratory, the government installation where the nuclear bomb was invented and tested in the 1940s.
The Potter drill initially requires fossil fuels to heat the water, but the company claims the process is still far more environmentally friendly than using a regular drill. "What you need is very concentrated energy and it's hard to do that without using combustion," said Potter. "It's a trade-off, it might create a little CO2 in the drilling process but it's going to be less than what they do in the conventional process with conventional drill rigs."
In a traditional drilling rig, most of the fuel's energy never reaches the underground drill-bit because as it is wasted in friction and other inefficiencies in the system. The drill bits also wear out frequently and, in certain types of rock, it may only be possible to drill for 100 feet before you need a new bit. "Every time you take the bit in and out, if it's a deep hole, you may lose a day of time - that has to be factored into the cost as well," said Potter. "Our technology doesn't have a bit, can drill continuously and we can drill 3-5 faster than they can. We can drill 30ft an hour and they're drilling 5-10ft an hour. And we're not taking the bit in and out of the hole. Our energy is right at the rock face."
That trial will be funded by the US Department of Energy but the company has also received money from Google.org, as part of the web search gaint's larger $10m (£5.4m) investment into renewable energy sources that could replace coal in the future.
UK on course to reap massive renewable energy harvest
Independent study says North Sea wind and wave power could make Britain the 'Saudi Arabia of renewable energy'
Macalister guardian.co.uk, Wednesday 19 May 2010 18.10 BST
Britain could become the "Saudi Arabia of the renewables world" on the back of North Sea wind and wave resources, according to a study carried out by government and industry.
The review by independent consultants for the Offshore Valuation Group estimates that by 2050 the UK could generate the equivalent in electricity to the 1bn barrels of oil and gas being produced annually offshore.
Green energy experts in the City are sceptical claiming it would require herculean efforts to put the infrastructure in place to hit even the most modest targets.
The study, undertaken by the Boston Consulting Group, suggests that Britain could not only keep the lights on but would produce a surplus, suggesting the need for connections to a "super grid" to enable electricity to be exported via subsea cables. It predicts that using even 29% of the available resources, Britain could save 1.1bn tonnes of carbon dioxide between now and the middle the century.
"The UK is now most of the way through its first great offshore energy asset, our stock of hydrocarbon reserves. The central finding of this report is that our second offshore asset, of renewable energy, could be just as valuable. Britain's extensive offshore experience could now unlock an energy flow that will never run out," the report concludes.
It looks at different likely scenarios for growth of the industry with even the most conservative – 13% resource utilisation, producing 78 gigawatts of power at a capital cost of £170bn – which would provide half of the UK's electricity demand. A more ambitious scenario, using 29% of resources would see 169GW installed at a cost of nearly £433bn and would make Britain a net exporter of electricity.
The report was sponsored by the Department of Energy and Climate Change, the Scottish government and the Crown Estate as well as companies including Scottish and Southern Energy, E.ON and turbine manufacturer, Vestas.
David MacKay, the chief scientific adviser at DECC, said the "helpful" study underlined the need for major investments in innovation to bring down the cost of turbines, tidal schemes and novel energy storage systems.
But industry was much more upbeat saying it was very helpful to have a first really authoritative study of the enormous economic benefits waiting to be exploited.
"This is a hugely exciting piece of research which sets out compelling factual evidence of the huge potential of the UK's offshore renewable energy resource," said Peter Madigan, head of offshore renewables at trade body, RenewableUK.
"As an association we have long been saying that the North Sea will become the Saudi Arabia of wind energy, and today's tonne of oil and employment comparisons amply bear this out. Just as 30 years ago, the North Sea could be our ticket for economic growth. We are looking forward to the new government putting in place the policy framework to make this happen," he said.
There was caution among financial analysts such as Dean Cooper, head of clean tech at Ambrian Resources. He said: "We see the report as providing compelling sizing information to value the offshore resource, but equally it highlights the herculean scale of efforts needed to achieve the numbers outlined. To reach 78GW will require a build rate of 2.8GW per annum by 2050, which is equivalent to more than two 5MW turbines every day. This compares to the equivalent of one 5MW turbine installed every two weeks for the installed stock of offshore wind in the UK today.
"Offshore wind will be an important element in the UK's energy mix to keep the lights on, yet the gaps in supply chain, grid and planning to achieve this are monumental. There is money to be made in offshore wind as a structural growth trend, but when?"
Macalister guardian.co.uk, Wednesday 19 May 2010 18.10 BST
Britain could become the "Saudi Arabia of the renewables world" on the back of North Sea wind and wave resources, according to a study carried out by government and industry.
The review by independent consultants for the Offshore Valuation Group estimates that by 2050 the UK could generate the equivalent in electricity to the 1bn barrels of oil and gas being produced annually offshore.
Green energy experts in the City are sceptical claiming it would require herculean efforts to put the infrastructure in place to hit even the most modest targets.
The study, undertaken by the Boston Consulting Group, suggests that Britain could not only keep the lights on but would produce a surplus, suggesting the need for connections to a "super grid" to enable electricity to be exported via subsea cables. It predicts that using even 29% of the available resources, Britain could save 1.1bn tonnes of carbon dioxide between now and the middle the century.
"The UK is now most of the way through its first great offshore energy asset, our stock of hydrocarbon reserves. The central finding of this report is that our second offshore asset, of renewable energy, could be just as valuable. Britain's extensive offshore experience could now unlock an energy flow that will never run out," the report concludes.
It looks at different likely scenarios for growth of the industry with even the most conservative – 13% resource utilisation, producing 78 gigawatts of power at a capital cost of £170bn – which would provide half of the UK's electricity demand. A more ambitious scenario, using 29% of resources would see 169GW installed at a cost of nearly £433bn and would make Britain a net exporter of electricity.
The report was sponsored by the Department of Energy and Climate Change, the Scottish government and the Crown Estate as well as companies including Scottish and Southern Energy, E.ON and turbine manufacturer, Vestas.
David MacKay, the chief scientific adviser at DECC, said the "helpful" study underlined the need for major investments in innovation to bring down the cost of turbines, tidal schemes and novel energy storage systems.
But industry was much more upbeat saying it was very helpful to have a first really authoritative study of the enormous economic benefits waiting to be exploited.
"This is a hugely exciting piece of research which sets out compelling factual evidence of the huge potential of the UK's offshore renewable energy resource," said Peter Madigan, head of offshore renewables at trade body, RenewableUK.
"As an association we have long been saying that the North Sea will become the Saudi Arabia of wind energy, and today's tonne of oil and employment comparisons amply bear this out. Just as 30 years ago, the North Sea could be our ticket for economic growth. We are looking forward to the new government putting in place the policy framework to make this happen," he said.
There was caution among financial analysts such as Dean Cooper, head of clean tech at Ambrian Resources. He said: "We see the report as providing compelling sizing information to value the offshore resource, but equally it highlights the herculean scale of efforts needed to achieve the numbers outlined. To reach 78GW will require a build rate of 2.8GW per annum by 2050, which is equivalent to more than two 5MW turbines every day. This compares to the equivalent of one 5MW turbine installed every two weeks for the installed stock of offshore wind in the UK today.
"Offshore wind will be an important element in the UK's energy mix to keep the lights on, yet the gaps in supply chain, grid and planning to achieve this are monumental. There is money to be made in offshore wind as a structural growth trend, but when?"
Bonuses can be a good thing - if they're linked to carbon emissions
Growing numbers of firms are linking executive remuneration to environmental performance – Andrew Williams investigates those companies pioneering the concept of carbon bonuses
Andrew Williams for BusinessGreen, part of the Guardian Environment Network guardian.co.uk, Tuesday 18 May 2010 10.14 BST
When it's time for salary reviews at Minnesota-based utility Xcel Energy, earnings per share are not the only metric that matters.
In its 2009 corporate proxy statement, Xcel explains how a range of sustainability indicators fit into annual incentive objectives for all executives so that it can weigh greenhouse gas reductions and safety performance alongside earnings per share when deciding how to divide up bonuses.
Company spokeswoman Patti Nystuen recently told sustainable investment lobby group Ceres that the bonus policy underlined the company's commitment to environmental issues. "Xcel believes strongly in providing long-term incentive opportunities that deliver awards on the achievement of specific performance goals linked to the success of the company and its long-term strategy in the core utility business," she said. "These include financial and environmental goals."
Seventy-five per cent of Xcel's award incentives are still based on earnings per share growth, but the remaining quarter are based on other metrics, including aspects of the company's environmental strategy, such as decreases in emissions.
"In 2007, payouts of annual incentive awards for the NEOs (named executive officers) and all executive officers, including those reporting to the chief executive, were determined entirely by attainment of corporate goals, which included targeted earnings per share, an environmental metric related to carbon dioxide emissions, and safety," Nystuen explained.
Across the Pond
Xcel is one of a small but growing group of companies, increasingly aware of the power that executive pay policies can exert on environmental behaviour.
In Europe, the Netherlands seems to be ahead of other nations in tying remuneration to environmental objectives. For example, Dutch banking and insurance giant ING said recently that social, ethical and environmental objectives are to form a component part of its top management executive pay structure.
"ING has formulated corporate responsibility ambitions and priorities, combined with a long-term plan and concrete targets," the company says in its 2009 corporate responsibility report. "These targets are also part of the performance objectives of our Executive and Management Boards."
At least three other Dutch firms – chemical company Akzo Nobel, life sciences group DSM, and mail operator TNT – have similarly tied executive compensation to environmental improvement and other objectives, including employee and customer satisfaction.
And in one case, the linkage of pay to sustainability has been introduced to justify potentially controversial management decisions. The oil giant Royal Dutch Shell, in a disclosure regarding its development of Canadian oil sands resources, makes the point that the company is "actively managing environmental and social impacts", specifically noting that "performance on sustainable development is a key feature of management targets and remuneration".
On the Boardroom Agenda?
These initiatives come in the wake of two reports from organisations, based on opposite sides of the Atlantic, that have outlined how the integration of environmental objectives into executive pay structures represents one of the best ways for businesses to marry the twin objectives of sustainability and profitability.
The first, published last month by Ceres, the Boston-based coalition of institutional investors and environmental organisations, explains how an increased focus on corporate governance following the financial crisis of the past few years has now forced environmental sustainability onto boardroom agendas.
"Corporate scandals and the current economic crisis have heightened demands for new approaches to governance, particularly in relation to executive compensation and risk management," say the authors of the report, The 21st Century Corporation: The Ceres Roadmap to Sustainability.
"As sustainability has risen up the corporate, investor and public policy agendas, it has become more fully integrated into these governance expectations, " they add.
The report calls on boards to undertake a root-and-branch reorganisation of remuneration structures to ensure that they are linked to environmental targets and recommends that pay is at least partly based on executive's ability to integrate sustainable practices into day-to-day operations.
It also highlights the fact that many regulators and shareholders are putting pressure on boards to do a better job of aligning executive pay and performance standards tied to more than short-term profits.
Critical Challenges
Meanwhile, in its third Remuneration Theme Report, the European Sustainable Investment Forum (Eurosif) has revealed that most European companies fail to link executive pay to environmental, social, and governance (ESG) performance.
The report found that 29 per cent of FTSE Eurofirst300-listed companies have some commitment to linking remuneration to ESG performance, but it also noted that concerns exist around the extent to which performance targets are set as " soft targets", thereby guaranteeing a minimum level of bonus.
Those financial firms that can drive significant reductions in carbon emissions through their investment activity were found to be particularly slack at linking remuneration to environmental performance with the report revealing that while financial institutions account for 23 per cent of the FTSE Eurofirst300 index, only 16 per cent of financial institutions have an ESG-linked remuneration system.
Eurosif recommended that shareholders should engage take a more pro-active stance in promoting environmental bonuses by voting against unacceptable remuneration packages and taking part in negotiations that determine remuneration policy.
Much Work Still to Do
Although steadily increasing, examples of carbon bonus strategies remain fairly thin on the ground and it is clear that much work remains to be done in strengthening their influence.
For example, a 2009 research paper written by academics at IESE Business School and Arizona State University found that in general, firms with an explicit environmental pay policy and an environmental committee do not reward environmental strategies any more than those without such structures, suggesting that these mechanisms often play a merely symbolic role.
Many companies also find it difficult to link today's compensation packages to policies and practices whose impact may not be felt for years, if not decades.
One means of improving the situation, as outlined in a recent report by a group of advocacy organisations, including PLATFORM and Friends of the Earth, could be to link executive pay to a firm's long-term financial, environmental and social performance, for example through company bonds and equity held in escrow accounts for directors, which are released after 10 to 20 years.
Debates over corporate governance and accountability in the wake of the recent global financial crisis have already highlighted the crucial role executive pay policy has as a means of influencing business behaviour.
The reports and initiatives to promote rewards based on environmental performance extend this debate and reveal that management remuneration packages are an increasingly important weapon in the armoury of businesses seeking to drive improved levels of sustainability.
• Andrew Williams is a freelance journalist specialising in environmental issues. He can be reached at TheGreenExpert@btinternet.com
Andrew Williams for BusinessGreen, part of the Guardian Environment Network guardian.co.uk, Tuesday 18 May 2010 10.14 BST
When it's time for salary reviews at Minnesota-based utility Xcel Energy, earnings per share are not the only metric that matters.
In its 2009 corporate proxy statement, Xcel explains how a range of sustainability indicators fit into annual incentive objectives for all executives so that it can weigh greenhouse gas reductions and safety performance alongside earnings per share when deciding how to divide up bonuses.
Company spokeswoman Patti Nystuen recently told sustainable investment lobby group Ceres that the bonus policy underlined the company's commitment to environmental issues. "Xcel believes strongly in providing long-term incentive opportunities that deliver awards on the achievement of specific performance goals linked to the success of the company and its long-term strategy in the core utility business," she said. "These include financial and environmental goals."
Seventy-five per cent of Xcel's award incentives are still based on earnings per share growth, but the remaining quarter are based on other metrics, including aspects of the company's environmental strategy, such as decreases in emissions.
"In 2007, payouts of annual incentive awards for the NEOs (named executive officers) and all executive officers, including those reporting to the chief executive, were determined entirely by attainment of corporate goals, which included targeted earnings per share, an environmental metric related to carbon dioxide emissions, and safety," Nystuen explained.
Across the Pond
Xcel is one of a small but growing group of companies, increasingly aware of the power that executive pay policies can exert on environmental behaviour.
In Europe, the Netherlands seems to be ahead of other nations in tying remuneration to environmental objectives. For example, Dutch banking and insurance giant ING said recently that social, ethical and environmental objectives are to form a component part of its top management executive pay structure.
"ING has formulated corporate responsibility ambitions and priorities, combined with a long-term plan and concrete targets," the company says in its 2009 corporate responsibility report. "These targets are also part of the performance objectives of our Executive and Management Boards."
At least three other Dutch firms – chemical company Akzo Nobel, life sciences group DSM, and mail operator TNT – have similarly tied executive compensation to environmental improvement and other objectives, including employee and customer satisfaction.
And in one case, the linkage of pay to sustainability has been introduced to justify potentially controversial management decisions. The oil giant Royal Dutch Shell, in a disclosure regarding its development of Canadian oil sands resources, makes the point that the company is "actively managing environmental and social impacts", specifically noting that "performance on sustainable development is a key feature of management targets and remuneration".
On the Boardroom Agenda?
These initiatives come in the wake of two reports from organisations, based on opposite sides of the Atlantic, that have outlined how the integration of environmental objectives into executive pay structures represents one of the best ways for businesses to marry the twin objectives of sustainability and profitability.
The first, published last month by Ceres, the Boston-based coalition of institutional investors and environmental organisations, explains how an increased focus on corporate governance following the financial crisis of the past few years has now forced environmental sustainability onto boardroom agendas.
"Corporate scandals and the current economic crisis have heightened demands for new approaches to governance, particularly in relation to executive compensation and risk management," say the authors of the report, The 21st Century Corporation: The Ceres Roadmap to Sustainability.
"As sustainability has risen up the corporate, investor and public policy agendas, it has become more fully integrated into these governance expectations, " they add.
The report calls on boards to undertake a root-and-branch reorganisation of remuneration structures to ensure that they are linked to environmental targets and recommends that pay is at least partly based on executive's ability to integrate sustainable practices into day-to-day operations.
It also highlights the fact that many regulators and shareholders are putting pressure on boards to do a better job of aligning executive pay and performance standards tied to more than short-term profits.
Critical Challenges
Meanwhile, in its third Remuneration Theme Report, the European Sustainable Investment Forum (Eurosif) has revealed that most European companies fail to link executive pay to environmental, social, and governance (ESG) performance.
The report found that 29 per cent of FTSE Eurofirst300-listed companies have some commitment to linking remuneration to ESG performance, but it also noted that concerns exist around the extent to which performance targets are set as " soft targets", thereby guaranteeing a minimum level of bonus.
Those financial firms that can drive significant reductions in carbon emissions through their investment activity were found to be particularly slack at linking remuneration to environmental performance with the report revealing that while financial institutions account for 23 per cent of the FTSE Eurofirst300 index, only 16 per cent of financial institutions have an ESG-linked remuneration system.
Eurosif recommended that shareholders should engage take a more pro-active stance in promoting environmental bonuses by voting against unacceptable remuneration packages and taking part in negotiations that determine remuneration policy.
Much Work Still to Do
Although steadily increasing, examples of carbon bonus strategies remain fairly thin on the ground and it is clear that much work remains to be done in strengthening their influence.
For example, a 2009 research paper written by academics at IESE Business School and Arizona State University found that in general, firms with an explicit environmental pay policy and an environmental committee do not reward environmental strategies any more than those without such structures, suggesting that these mechanisms often play a merely symbolic role.
Many companies also find it difficult to link today's compensation packages to policies and practices whose impact may not be felt for years, if not decades.
One means of improving the situation, as outlined in a recent report by a group of advocacy organisations, including PLATFORM and Friends of the Earth, could be to link executive pay to a firm's long-term financial, environmental and social performance, for example through company bonds and equity held in escrow accounts for directors, which are released after 10 to 20 years.
Debates over corporate governance and accountability in the wake of the recent global financial crisis have already highlighted the crucial role executive pay policy has as a means of influencing business behaviour.
The reports and initiatives to promote rewards based on environmental performance extend this debate and reveal that management remuneration packages are an increasingly important weapon in the armoury of businesses seeking to drive improved levels of sustainability.
• Andrew Williams is a freelance journalist specialising in environmental issues. He can be reached at TheGreenExpert@btinternet.com
Huhne 'sceptical' on nuclear power in talks with utility boss
Climate change minister described as enthusiastic towards wind power, according to UK's largest renewable generator
• Liberal Democrats abandon pledge to oppose new nuclear power stations
Terry Macalister guardian.co.uk, Wednesday 19 May 2010 15.54 BST
Chris Huhne, the new energy and climate change minister, is sceptical about nuclear power but wanted to support the development of renewable energy, according to the UK's largest renewable generator.
Scottish and Southern Energy (SSE) said it had "good discussions" with Huhne on Tuesday. The company said he was very well-informed and fully supportive of its projects, including the huge Greater Gabbard wind farm off the coast of Suffolk which, when built, will be the largest offshore wind farm of its kind in the world.
"He [Huhne] was well aware of SSE's credentials and he was keen to see us continuing with what we are doing and to ensure there is continuing inward investment in this [wind] sector," said SSE's chief executive, Ian Marchant.
But the utility boss, whose company is considering whether to build a new nuclear plant near Sellafield in Cumbria with Iberdrola of Spain and GDF of France, said the energy secretary was more downbeat about atomic power.
"He was sceptical on the economics of nuclear but made it clear he would allow people to make their own decisions on this and would not stand in their way if they can do it without subsidies," said Marchant.
"Personally, I think being sceptical is no bad thing. The worst thing you can have is a situation where the state bends over backwards to [financially] support nuclear. Look where that got us?" he added.
Huhne's party, the Liberal Democrats, orchestrated a mechanism for maintaining their opposition to nuclear power even though allowing nuclear to progress is government policy. The coalition has pledged to allow nuclear stations to be built so long as they do not involve public subsidies.
SSE said it would do a lot of preparatory work on whether to go ahead with a new atomic plant before deciding in around two years' time whether such a move made commercial sense. "We would have to be able to justify a decision whether for or against to both customers and shareholders," said Marchant.
In the meantime, the utility company is spending £660m this year pressing ahead with wind farms and other renewable schemes. SSE is the biggest renewable generator largely because of its hydro-electric plants but has also moved into tidal and wave power.
The company also runs coal-fired power stations such as Ferrybridge in West Yorkshire but said it was putting back by two years plans to start operating the Abernedd gas-fired power station in Baglan Bay, South Wales.
This is partly because industrial customers have reduced demand due to the recession, while homeowners are continuing to cut their own consumption by taking energy-efficiency measures such as insulating their houses. Domestic gas use has gone down by 3% to 5% for the last three years in a row but SSE still ran up pre-tax profits of £1.29bn for the year to end March.
• Liberal Democrats abandon pledge to oppose new nuclear power stations
Terry Macalister guardian.co.uk, Wednesday 19 May 2010 15.54 BST
Chris Huhne, the new energy and climate change minister, is sceptical about nuclear power but wanted to support the development of renewable energy, according to the UK's largest renewable generator.
Scottish and Southern Energy (SSE) said it had "good discussions" with Huhne on Tuesday. The company said he was very well-informed and fully supportive of its projects, including the huge Greater Gabbard wind farm off the coast of Suffolk which, when built, will be the largest offshore wind farm of its kind in the world.
"He [Huhne] was well aware of SSE's credentials and he was keen to see us continuing with what we are doing and to ensure there is continuing inward investment in this [wind] sector," said SSE's chief executive, Ian Marchant.
But the utility boss, whose company is considering whether to build a new nuclear plant near Sellafield in Cumbria with Iberdrola of Spain and GDF of France, said the energy secretary was more downbeat about atomic power.
"He was sceptical on the economics of nuclear but made it clear he would allow people to make their own decisions on this and would not stand in their way if they can do it without subsidies," said Marchant.
"Personally, I think being sceptical is no bad thing. The worst thing you can have is a situation where the state bends over backwards to [financially] support nuclear. Look where that got us?" he added.
Huhne's party, the Liberal Democrats, orchestrated a mechanism for maintaining their opposition to nuclear power even though allowing nuclear to progress is government policy. The coalition has pledged to allow nuclear stations to be built so long as they do not involve public subsidies.
SSE said it would do a lot of preparatory work on whether to go ahead with a new atomic plant before deciding in around two years' time whether such a move made commercial sense. "We would have to be able to justify a decision whether for or against to both customers and shareholders," said Marchant.
In the meantime, the utility company is spending £660m this year pressing ahead with wind farms and other renewable schemes. SSE is the biggest renewable generator largely because of its hydro-electric plants but has also moved into tidal and wave power.
The company also runs coal-fired power stations such as Ferrybridge in West Yorkshire but said it was putting back by two years plans to start operating the Abernedd gas-fired power station in Baglan Bay, South Wales.
This is partly because industrial customers have reduced demand due to the recession, while homeowners are continuing to cut their own consumption by taking energy-efficiency measures such as insulating their houses. Domestic gas use has gone down by 3% to 5% for the last three years in a row but SSE still ran up pre-tax profits of £1.29bn for the year to end March.
Offshore green energy could make UK net exporter by 2050
Study claims UK offshore wind, wave and tidal energy could turn the country into a net exporter of energy once more
Jessica Shankleman for BusinessGreen, part of the Guardian Environment Network guardian.co.uk, Wednesday 19 May 2010 17.00 BST
The first study to put a financial value on the UK's offshore renewable energy resource has concluded that the nascent sector could transform the country from a net energy importer to a net energy exporter by 2050.
The report, which was commissioned by a coalition of government and industry organisations known as the Offshore Valuation Group, argues that the creation of a North Sea supergrid would allow the UK to export energy generated by offshore wind farms and marine energy systems to the rest of Northern Europe.
The study sets out three scenarios for the next 40 years, with the most ambitious course of action resulting in an average of 13.1GW of wind, wave or tidal energy being installed each year up to 2050.
It argues that such a rapid build out of renewable energy capacity would create profit of £24bn for the UK supply chain and create direct employment for about 340,000 people. It also predicts that the resulting wind and marine energy farms would produce energy equivalent to 2.6 billion barrels of oil a year by 2050 – more than double the output from North Sea oil fields during the peak year of production.
"While ambitious, this scenario is not without precedent; between 1994 and 2004 the UK was a net producer of fossil fuel energy," says the study, entitled The Offshore Valuation.
In another highly ambitious move, the report argues offshore renewables could generate electricity equivalent to one billion barrels of oil annually by 2050 through the installation of 169GW of capacity. That scenario would create 145,000 new jobs in the UK and provide the Treasury with £28bn in tax revenue annually, according to the report.
The scenarios set out in the report are hugely ambitious given that current plans for a new generation of offshore wind farms represent the largest build out of offshore wind farms anywhere in the world, but would still only add about 30GW of new capacity by 2020.
However, the report's authors said the study highlights the huge potential for the UK's offshore wind industry if a North Sea super grid is developed, adding that the new government should move to ensure that the next wave of offshore wind farms is compatible with a European supergrid.
"This study is not designed as a predictor of the future. Our vision, while exciting, is not the only way forward," said Offshore Valuation Group chairman Tim Helweg-Larsen. "We have set out to describe the potential value of the UK's offshore renewable resource without trying to predict the future, nor to propose prescriptive recommendations."
Jessica Shankleman for BusinessGreen, part of the Guardian Environment Network guardian.co.uk, Wednesday 19 May 2010 17.00 BST
The first study to put a financial value on the UK's offshore renewable energy resource has concluded that the nascent sector could transform the country from a net energy importer to a net energy exporter by 2050.
The report, which was commissioned by a coalition of government and industry organisations known as the Offshore Valuation Group, argues that the creation of a North Sea supergrid would allow the UK to export energy generated by offshore wind farms and marine energy systems to the rest of Northern Europe.
The study sets out three scenarios for the next 40 years, with the most ambitious course of action resulting in an average of 13.1GW of wind, wave or tidal energy being installed each year up to 2050.
It argues that such a rapid build out of renewable energy capacity would create profit of £24bn for the UK supply chain and create direct employment for about 340,000 people. It also predicts that the resulting wind and marine energy farms would produce energy equivalent to 2.6 billion barrels of oil a year by 2050 – more than double the output from North Sea oil fields during the peak year of production.
"While ambitious, this scenario is not without precedent; between 1994 and 2004 the UK was a net producer of fossil fuel energy," says the study, entitled The Offshore Valuation.
In another highly ambitious move, the report argues offshore renewables could generate electricity equivalent to one billion barrels of oil annually by 2050 through the installation of 169GW of capacity. That scenario would create 145,000 new jobs in the UK and provide the Treasury with £28bn in tax revenue annually, according to the report.
The scenarios set out in the report are hugely ambitious given that current plans for a new generation of offshore wind farms represent the largest build out of offshore wind farms anywhere in the world, but would still only add about 30GW of new capacity by 2020.
However, the report's authors said the study highlights the huge potential for the UK's offshore wind industry if a North Sea super grid is developed, adding that the new government should move to ensure that the next wave of offshore wind farms is compatible with a European supergrid.
"This study is not designed as a predictor of the future. Our vision, while exciting, is not the only way forward," said Offshore Valuation Group chairman Tim Helweg-Larsen. "We have set out to describe the potential value of the UK's offshore renewable resource without trying to predict the future, nor to propose prescriptive recommendations."
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