By Sarah Arnott
Wednesday, 15 December 2010
The first green cars to qualify for a subsidy of up to £5,000 were unveiled by the Government yesterday.
Under £400m plans to boost take-up of expensive electric and ultra-low carbon vehicles, buyers will be able to claim up to a quarter of the price of nine models of car: the Mitsubishi i-MiEV, the Smart fortwo electric drive, the Peugeot iON, the Citroën CZero, the Nissan Leaf, the Tata Vista EV, the Toyota Prius Plug-in, the Vauxhall Ampera and the Chevrolet Volt.
The scheme starts in the new year, but only the Mitsubishi, the Smart and the Peugeot will be immediately available. The launches of the other models are spread over the rest of 2011 and into 2012. And more low-carbon vehicles are expected to join the scheme over its four-year life.
At a launch event in London yesterday, Philip Hammond, the Secretary of State for Transport, also announced infrastructure grants for the Midlands, Greater Manchester, East of England, Scotland and Northern Ireland. The money will pay for charging infrastructure to support electric cars. London, Milton Keynes and the North East – which have already won similar grants – will also receive more money from a central fund worth a total of £20m.
"Government action to supportaffordable vehicles and more local charging points means we are on the threshold of a green revolution," Mr Hammond said. "2011 could be remembered as the year the electric car took off."
However, industry experts said that the subsidy – which translates as around 15,000 cars per year – is unlikely to have a major impact on Britain's car fleet.
But it will send a signal about British industry. The UK has already won the competition to build the European version of the Nissan Leaf at the Japanese giant's Sunderland factory. And there are high hopes that Europe's Vauxhall/ Opel Ampera will be built at the US group's Ellesmere Port plant. Any overt government commitment to green cars will boost the chances of success, according to Hilton Holloway, the associate editor of Autocar magazine.
"These subsidies have more of an eye on Britain's manufacturing than on its car drivers," Mr Holloway said. "The ides is to show that we are open to low-carbon business."
Wednesday, 15 December 2010
Australian Firms Tap Iconic Waters for Natural Gas
By DAVID WINNING
SYDNEY—Australia's New South Wales state will soon have another claim to fame joining Bondi beach and Sydney's panoramic harbor: the world's latest prospect for offshore natural gas.
Drilling will begin this week to tap what is projected to be as much as seven trillion cubic feet of natural gas off the state's pristine coast, as demand for energy to fuel Australia's economic boom outweighs environmental concerns. Bounty Oil & Gas NL, an Australian oil and gas producer, and closely held peer Advent Energy Ltd. say a successful drilling campaign—the first off New South Wales's shore—could help the state's capital, Sydney, ease its dependence on burning coal for power. But the two companies must weather environmental concerns and financial risk along the way.
New South Wales relies on coal for 90% for its power needs, but generators are looking to switch to cleaner-burning natural gas in the future as worries over greenhouse-gas emissions intensify. The discovery of vast quantities of gas off its coastline could provide the state with a cheap energy alternative at a time when Australia's strong economic growth is attracting more immigrants to settle here.
"If we happen to hit commercial volumes of gas that are not far offshore then it will be game on for our stock and game on for gas coming into the New South Wales market," said Philip Kelso, chief executive of Bounty.
But the start of drilling offshore has alarmed environmentalists in New South Wales, after major oil spills in the Timor Sea and the U.S. Gulf of Mexico over the past two years. The state counts tourism hot spots such as Bondi beach, known for its surfing culture, among its prized assets.
"Many local communities rely on the pristine nature of this coastline for income and recreation," said David Shoebridge, a state representative for the Greens, who oppose the drilling.
Bounty and Advent say they have all the approvals and permits needed to begin drilling the New Seaclem-1 well about 95 miles northeast of Sydney. The companies hold rights to explore an area the size of 5,125 square miles, bigger than U.S. state of Delaware. Success could also encourage a rush of new drilling in the area after a recovery in energy prices has spurred small explorers to restart wildcat drilling, after two years of striving to conserve cash when the financial crisis shuttered credit markets.
Exploring for oil and gas offshore can be an expensive business, particularly for companies the size of Bounty and Advent Energy.
David Breeze, executive director of Advent Energy, said it will cost around $20 million to drill one well offshore New South Wales in water depths of 460 feet. The biggest outlay is hiring the Ocean Patriot semi-submersible rig for around $400,000 a day.
Underscoring the big risks involved to smaller companies, MEO Australia Ltd.'s shares plummeted more than 50% Monday after it said an exploration well drilled offshore Western Australia state—one of the country's most prolific areas for discoveries—hadn't led to any oil or gas discoveries.
Mr. Kelso shrugs off these concerns along with environmental worries and is "a lot more than bullish" about the exploration campaign's chances of success, partly because there is evidence of gas bubbling naturally from the seabed.
Write to David Winning at david.winning@dowjones.com
SYDNEY—Australia's New South Wales state will soon have another claim to fame joining Bondi beach and Sydney's panoramic harbor: the world's latest prospect for offshore natural gas.
Drilling will begin this week to tap what is projected to be as much as seven trillion cubic feet of natural gas off the state's pristine coast, as demand for energy to fuel Australia's economic boom outweighs environmental concerns. Bounty Oil & Gas NL, an Australian oil and gas producer, and closely held peer Advent Energy Ltd. say a successful drilling campaign—the first off New South Wales's shore—could help the state's capital, Sydney, ease its dependence on burning coal for power. But the two companies must weather environmental concerns and financial risk along the way.
New South Wales relies on coal for 90% for its power needs, but generators are looking to switch to cleaner-burning natural gas in the future as worries over greenhouse-gas emissions intensify. The discovery of vast quantities of gas off its coastline could provide the state with a cheap energy alternative at a time when Australia's strong economic growth is attracting more immigrants to settle here.
"If we happen to hit commercial volumes of gas that are not far offshore then it will be game on for our stock and game on for gas coming into the New South Wales market," said Philip Kelso, chief executive of Bounty.
But the start of drilling offshore has alarmed environmentalists in New South Wales, after major oil spills in the Timor Sea and the U.S. Gulf of Mexico over the past two years. The state counts tourism hot spots such as Bondi beach, known for its surfing culture, among its prized assets.
"Many local communities rely on the pristine nature of this coastline for income and recreation," said David Shoebridge, a state representative for the Greens, who oppose the drilling.
Bounty and Advent say they have all the approvals and permits needed to begin drilling the New Seaclem-1 well about 95 miles northeast of Sydney. The companies hold rights to explore an area the size of 5,125 square miles, bigger than U.S. state of Delaware. Success could also encourage a rush of new drilling in the area after a recovery in energy prices has spurred small explorers to restart wildcat drilling, after two years of striving to conserve cash when the financial crisis shuttered credit markets.
Exploring for oil and gas offshore can be an expensive business, particularly for companies the size of Bounty and Advent Energy.
David Breeze, executive director of Advent Energy, said it will cost around $20 million to drill one well offshore New South Wales in water depths of 460 feet. The biggest outlay is hiring the Ocean Patriot semi-submersible rig for around $400,000 a day.
Underscoring the big risks involved to smaller companies, MEO Australia Ltd.'s shares plummeted more than 50% Monday after it said an exploration well drilled offshore Western Australia state—one of the country's most prolific areas for discoveries—hadn't led to any oil or gas discoveries.
Mr. Kelso shrugs off these concerns along with environmental worries and is "a lot more than bullish" about the exploration campaign's chances of success, partly because there is evidence of gas bubbling naturally from the seabed.
Write to David Winning at david.winning@dowjones.com
'I am very happy to be the Tesco of the energy industry,' says Chris Huhne
Energy and climate change secretary to unveil plans to overhaul UK power generation and reduce carbon emissions
Tim Webb and Allegra Stratton The Guardian, Wednesday 15 December 2010
Tesco is an unusual role model for politicians to aspire to. But tomorrow Chris Huhne, the energy and climate change secretary, will – albeit with tongue firmly in cheek - use a supermarket-style price promise when he vows to make Britain "greener for less". With the coalition government committed both to slashing the deficit and being the "greenest ever", it's a fitting slogan.
Huhne is unveiling what he believes is the biggest overhaul of power generation in this country for 30 years. He will promise that his plan will result in lower consumer electricity bills as well as power plants that are twice as green as would be the case under existing policy. "[It will be] greener for less, more for less," he said in an exclusive interview with the Guardian. Told that it sounded a bit like a Tesco promotion, he said: "I am very happy to be the Tesco of the energy industry."
The power sector accounts for about one third of the UK's carbon emissions, so cleaning it up is crucial if the country is to meet its climate change targets. The task is huge – and it won't come cheap, even if it's done with Tesco-style efficiency and economies of scale. Old coal and nuclear plants are being closed and must be replaced. The UK's electricity grids will have to be extensively upgraded to cope with more intermittent supplies of electricity from wind farms. New flexible gas plants are needed as a reserve force for when the wind does not blow. Overall electricity demand is also set to increase as electric vehicles become more common.
In total, energy regulator Ofgem estimates that £200bn of investment is required in new energy equipment over the next decade alone: about double the normal rate of investment. But the existing market regime will not do the job. Conventional coal and gas plants, which used to provide most of Britain's power, were relatively cheap to build. The low carbon forms of generation which will replace them, such as nuclear, marine energy and wind farms, require huge up-front investment to build. A nuclear reactor, for example, costs at least seven times as much to build as a slightly smaller modern gas plant, but has much lower running costs. Renewables, which do not use fuel, have virtually zero running costs. But electricity prices are volatile and very hard to predict, which means that the return on such huge initial investments is uncertain. Some of the technologies are also relatively new and untested on a large scale, making them risky for investors.
Energy companies, government and environmentalists agree that current regulation will not deliver the huge amount of investment required. The most radical proposal already floated by the energy regulator would see electricity bought and sold by a central government-run body similar to the days before the industry was privatised. One energy executive referred to the plan as "Stalinist". But the industry's worst nightmare of quasi-nationalisation is unlikely to come about. The plan put forward by Huhne, a former City entrepreneur and business journalist, is aimed instead at incentivising investment in cleaner ways of generating electricity. For example, a carbon floor price – effectively a tax on carbon emissions – will be introduced, making coal and gas plants more expensive to operate and renewables therefore more competitive. Giant offshore wind farms will earn a guaranteed premium above the market rate for some or all of the electricity they sell. Standby gas plants will also receive fixed payments in return for being available.
Huhne hopes the reforms will attract outside investors to the energy market, for the simple reason that the dominant 'Big Six' energy suppliers – EDF, RWE npower, E.ON, Scottish Power, Scottish and Southern Energy and Centrica – aren't able to put in all the investment needed. "If the 'Big Six' wants to do it I would be delighted. I hope they do. But the reality is if you look at the amount of investment we need they probably don't have the balance sheet to do it [alone]. Even if I didn't want to encourage competition in the market which I fully do, they couldn't deliver. We want a framework which provides investors with certainty, whether they are Big Six investors or from outside."
The cost will ultimately be borne by consumers through higher energy bills. Huhne will claim that his reforms will make electricity bills slightly cheaper than they would be under the current system. He may be right, but energy bills are still expected to increase by about a quarter over the next decade, and that assumes homes have been properly insulated. Ofgem's worst case scenario sees prices rocketing by 60% by 2015.
Gas and electricity prices are already close to record levels after a recent round of increases, which coincide with the coldest December for decades. Huhne argues that over the long run, bills would be substantially higher if the UK relied on fossil fuels, whose cost is rising.
"The name of the game is not adding to any British consumer's cost but is actually making sure that British consumers over the long term have an energy policy less vulnerable to the variability of what is going to be a pretty rough and tumble oil and gas market ... And if we have a relatively high fossil fuel price [consumers] are going to be quids in."
Promising higher bills in the short term to head off even higher bills 20 years from now is a tough sell at the best of times, let alone during an age of austerity. Huhne insists he can pull off the trick of both greening the UK and keeping the costs down for George Osborne and the British consumer. "Fiscal credibility is key. But we also have to decarbonise the economy. Governments by definition do not have one objective. We are able to walk and chew gum at the same time. Therefore we are able to have low carbon investment and fiscal credibility. That's what we have to combine and that's what we're going to do."
Asked about the powerful civil servants in Osborne's department who are obstructing his plan of setting up a fully functioning Green Investment Bank, Huhne, the consummate coalition politician, grins: "Treasury officials' job is to be tricky."
Tim Webb and Allegra Stratton The Guardian, Wednesday 15 December 2010
Tesco is an unusual role model for politicians to aspire to. But tomorrow Chris Huhne, the energy and climate change secretary, will – albeit with tongue firmly in cheek - use a supermarket-style price promise when he vows to make Britain "greener for less". With the coalition government committed both to slashing the deficit and being the "greenest ever", it's a fitting slogan.
Huhne is unveiling what he believes is the biggest overhaul of power generation in this country for 30 years. He will promise that his plan will result in lower consumer electricity bills as well as power plants that are twice as green as would be the case under existing policy. "[It will be] greener for less, more for less," he said in an exclusive interview with the Guardian. Told that it sounded a bit like a Tesco promotion, he said: "I am very happy to be the Tesco of the energy industry."
The power sector accounts for about one third of the UK's carbon emissions, so cleaning it up is crucial if the country is to meet its climate change targets. The task is huge – and it won't come cheap, even if it's done with Tesco-style efficiency and economies of scale. Old coal and nuclear plants are being closed and must be replaced. The UK's electricity grids will have to be extensively upgraded to cope with more intermittent supplies of electricity from wind farms. New flexible gas plants are needed as a reserve force for when the wind does not blow. Overall electricity demand is also set to increase as electric vehicles become more common.
In total, energy regulator Ofgem estimates that £200bn of investment is required in new energy equipment over the next decade alone: about double the normal rate of investment. But the existing market regime will not do the job. Conventional coal and gas plants, which used to provide most of Britain's power, were relatively cheap to build. The low carbon forms of generation which will replace them, such as nuclear, marine energy and wind farms, require huge up-front investment to build. A nuclear reactor, for example, costs at least seven times as much to build as a slightly smaller modern gas plant, but has much lower running costs. Renewables, which do not use fuel, have virtually zero running costs. But electricity prices are volatile and very hard to predict, which means that the return on such huge initial investments is uncertain. Some of the technologies are also relatively new and untested on a large scale, making them risky for investors.
Energy companies, government and environmentalists agree that current regulation will not deliver the huge amount of investment required. The most radical proposal already floated by the energy regulator would see electricity bought and sold by a central government-run body similar to the days before the industry was privatised. One energy executive referred to the plan as "Stalinist". But the industry's worst nightmare of quasi-nationalisation is unlikely to come about. The plan put forward by Huhne, a former City entrepreneur and business journalist, is aimed instead at incentivising investment in cleaner ways of generating electricity. For example, a carbon floor price – effectively a tax on carbon emissions – will be introduced, making coal and gas plants more expensive to operate and renewables therefore more competitive. Giant offshore wind farms will earn a guaranteed premium above the market rate for some or all of the electricity they sell. Standby gas plants will also receive fixed payments in return for being available.
Huhne hopes the reforms will attract outside investors to the energy market, for the simple reason that the dominant 'Big Six' energy suppliers – EDF, RWE npower, E.ON, Scottish Power, Scottish and Southern Energy and Centrica – aren't able to put in all the investment needed. "If the 'Big Six' wants to do it I would be delighted. I hope they do. But the reality is if you look at the amount of investment we need they probably don't have the balance sheet to do it [alone]. Even if I didn't want to encourage competition in the market which I fully do, they couldn't deliver. We want a framework which provides investors with certainty, whether they are Big Six investors or from outside."
The cost will ultimately be borne by consumers through higher energy bills. Huhne will claim that his reforms will make electricity bills slightly cheaper than they would be under the current system. He may be right, but energy bills are still expected to increase by about a quarter over the next decade, and that assumes homes have been properly insulated. Ofgem's worst case scenario sees prices rocketing by 60% by 2015.
Gas and electricity prices are already close to record levels after a recent round of increases, which coincide with the coldest December for decades. Huhne argues that over the long run, bills would be substantially higher if the UK relied on fossil fuels, whose cost is rising.
"The name of the game is not adding to any British consumer's cost but is actually making sure that British consumers over the long term have an energy policy less vulnerable to the variability of what is going to be a pretty rough and tumble oil and gas market ... And if we have a relatively high fossil fuel price [consumers] are going to be quids in."
Promising higher bills in the short term to head off even higher bills 20 years from now is a tough sell at the best of times, let alone during an age of austerity. Huhne insists he can pull off the trick of both greening the UK and keeping the costs down for George Osborne and the British consumer. "Fiscal credibility is key. But we also have to decarbonise the economy. Governments by definition do not have one objective. We are able to walk and chew gum at the same time. Therefore we are able to have low carbon investment and fiscal credibility. That's what we have to combine and that's what we're going to do."
Asked about the powerful civil servants in Osborne's department who are obstructing his plan of setting up a fully functioning Green Investment Bank, Huhne, the consummate coalition politician, grins: "Treasury officials' job is to be tricky."
Why is the Tesla Roadster not on the government's electric car grant list?
Is the car-maker's absence an innocent administrative error in the application process, or a more deliberate ploy?
Despite being the world's most famous electric car, there's no sign of the Tesla Roadster today on a government list of nine fully electric and plug-in hybrid vehicles that will be eligible for a £5,000 grant from 1 January. Why? A paperwork error – or so it seems.
The Department for Transport (DfT) and Tesla told me this morning that although the company has applied for the scheme, Tesla hasn't completed its application yet (certainly not in time for the handy PR opportunity today, with coverage of the other cars on the BBC, Telegraph and elsewhere). But what's not clear is whether this was an innocent administrative error in the application process, or a more deliberate delay to avoid headlines along the lines of Taxpayers subsidise sports car". Neither the DfT nor the car-maker would shed any light on it.
The unfortunate thing is the Roadster is the only EV on the market now that meets all the technical criteria for the grant – all the others named today won't be on sale until 2011 or, in several cases, until 2012. Here's the list of anticipated on-sale dates and, crucially, the pre-grant prices:
• Mitsubishi i-MiEV – to buy from January 2011. £28,990
• smart fortwo electric drive – on lease in January 2011 (but you won't be able to buy it until 2012. Lease and on-sale price tbc
• Peugeot iOn – to lease from January 2011. £415 per month
• Nissan Leaf – to buy from March 2011. £28,350
• Tata Vista – available from March 2011, though I was unable to reach Tata to clarify if it'll be for sale or lease. Price tbc
• Citroen CZero – lease from early 2011. £415 per month
• Vauxhall Ampera – to buy from early 2012. £33,995
• Toyota Prius Plug-in Hybrid – to buy from early 2012. No price yet, but latest Prius is £21,929, so expect around the £27,000 mark
• Chevrolet Volt – to buy from early 2012. Price tbc
There's another interesting, if pedantic, thing about the prices. The government this morning claimed it was cutting 25% off the price of the cars:
The grant will be available to motorists across the UK from 1 January 2011, reducing the cost of eligible cars by a quarter, up to a maximum of £5,000.
But none of these cars costs £20,000 – the price they'd need to be if David Cameron were giving you a quarter off the price.
In fact, the cheapest EV under the scheme, so far as I can see, is the Leaf at £28,350. Knocking £5,000 off that is a 17.6% saving, not 25%. Admittedly, a 7.4% slip might seem like small beer, but not when you're talking about tens of thousands of pounds in a highly competitively priced market.
These oddities and niggles aside, 2011's looking pretty bright for electric cars, thanks to the grant and number of new models landing in the UK. The only way is up, after all – just 55 EVs were sold in 2009.
Despite being the world's most famous electric car, there's no sign of the Tesla Roadster today on a government list of nine fully electric and plug-in hybrid vehicles that will be eligible for a £5,000 grant from 1 January. Why? A paperwork error – or so it seems.
The Department for Transport (DfT) and Tesla told me this morning that although the company has applied for the scheme, Tesla hasn't completed its application yet (certainly not in time for the handy PR opportunity today, with coverage of the other cars on the BBC, Telegraph and elsewhere). But what's not clear is whether this was an innocent administrative error in the application process, or a more deliberate delay to avoid headlines along the lines of Taxpayers subsidise sports car". Neither the DfT nor the car-maker would shed any light on it.
The unfortunate thing is the Roadster is the only EV on the market now that meets all the technical criteria for the grant – all the others named today won't be on sale until 2011 or, in several cases, until 2012. Here's the list of anticipated on-sale dates and, crucially, the pre-grant prices:
• Mitsubishi i-MiEV – to buy from January 2011. £28,990
• smart fortwo electric drive – on lease in January 2011 (but you won't be able to buy it until 2012. Lease and on-sale price tbc
• Peugeot iOn – to lease from January 2011. £415 per month
• Nissan Leaf – to buy from March 2011. £28,350
• Tata Vista – available from March 2011, though I was unable to reach Tata to clarify if it'll be for sale or lease. Price tbc
• Citroen CZero – lease from early 2011. £415 per month
• Vauxhall Ampera – to buy from early 2012. £33,995
• Toyota Prius Plug-in Hybrid – to buy from early 2012. No price yet, but latest Prius is £21,929, so expect around the £27,000 mark
• Chevrolet Volt – to buy from early 2012. Price tbc
There's another interesting, if pedantic, thing about the prices. The government this morning claimed it was cutting 25% off the price of the cars:
The grant will be available to motorists across the UK from 1 January 2011, reducing the cost of eligible cars by a quarter, up to a maximum of £5,000.
But none of these cars costs £20,000 – the price they'd need to be if David Cameron were giving you a quarter off the price.
In fact, the cheapest EV under the scheme, so far as I can see, is the Leaf at £28,350. Knocking £5,000 off that is a 17.6% saving, not 25%. Admittedly, a 7.4% slip might seem like small beer, but not when you're talking about tens of thousands of pounds in a highly competitively priced market.
These oddities and niggles aside, 2011's looking pretty bright for electric cars, thanks to the grant and number of new models landing in the UK. The only way is up, after all – just 55 EVs were sold in 2009.
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