New data shows worldwide funding of green energy projects rose by 5% last year
Suzanne Goldenberg in New York
guardian.co.uk, Thursday 12 January 2012 20.10 GMT
Global investment in clean energy reached a new high of $260bn (£169bn) last year – despite the financial crisis and the anti-environment agenda of Republicans in the US Congress, a United Nations investors' summit was told on Thursday.
Data from Bloomberg New Energy Finance, which tracks clean energy investment, showed a 5% increase compared with 2010, driven largely by a surge of money going to the solar industry.
Investment in solar power rose 36% last year to $136.6bn. And while the US domestic political scene was riven by the furore over a $535m government loan to the now bankrupt solar-panel manufacturer Solyndra, there was apparently little immediate direct fallout for industry.
The US made $56bn in clean energy investment last year, overtaking China, which invested $47.4bn. It is the first time since 2008 that the US has invested more. The surge reflected the phasing out of Barack Obama's economic recovery plan, which set aside as much as $80bn for the green economy, once investment in high-speed railways is factored in.
"The stimulus went out with a bang," said Ethan Zindler, head of policy analysis for Bloomberg New Energy Finance.
The analysis was presented to 500 global investors meeting at the UN to try to mobilise the large-scale funds needed to address climate change. The $260bn figure includes investment in renewables, biofuels and smart technologies. It does not include natural gas, nuclear energy or clean coal.
The summit, organised by the Ceres sustainable business group, was also aimed at giving momentum to the Rio sustainability summit, to be held in June.
A separate analysis by Deutsche Bank's climate change advisors' group, which used a narrower definition of global investment in clean energy and energy efficiency, found an even more striking rise to $140bn in the first nine months of last year from $103bn over the equivalent period in 2010.
Kevin Parker, global head of Deutsche Asset Management, said: "Investors really have no excuse any longer for dealing with climate risk because it's going mainstream."
But there were also big losers in the clean energy world last year. Investment in wind fell 17% to $74.9bn. Meanwhile, manufacturers of wind turbines and solar panels are being squeezed by a drop in the price of raw materials and oversupply. The same pressures led to the downfall of Solyndra, which collapsed after receiving half a billion dollars under Barack Obama's recovery plan.
Republicans used the company's collapse to try to discredit Obama's entire clean energy agenda. But while those at the meeting dismissed the Republican charges as "smoke and mirrors", they acknowledged the difficulties for clean energy manufacturing.
In an another such example, Vesta Wind Systems, the world's biggest turbine maker, said on Thursday that it was halting production at one factory and cutting 2,335 jobs, or about 10% of its staff, to try to compete with Chinese manufacturers.
The company said another 1,600 jobs in the US were at risk as tax credits supporting the industry expire at the year's end.
That phasing out of economic recovery plans around the world could also affect prospects for 2012, Zindler said.
"Most of those dollars have now been spent," he said. "What that means is that next year industry will have to be more competitive and more cost-effective without government support."
But he said the "vast majority" of the $260bn figure was private funds. And – despite the political climate — there remained growing demand in America for renewable power, with 29 states in the US requiring utilities to generate a share of their electricity form wind, solar, geothermal, and biomass.
Analysts believe those mandates will create a demand for as much as $400bn in new construction of renewable power plants – a process under way despite the harsh Republican rhetoric against the shift to clean energy.
"This is about building stuff. This is about infrastructure," said one analyst.
There is also strong interest in clean energy from developing countries, with emerging economies such as India and Brazil needing more power.
"They need more power generation and they don't necessarily want that to be coal," said Zindler.
Friday, 13 January 2012
Biofuels become a victim of own success - but not for long
For the first time in a decade, the vast biofuel industry has stalled. But with crude prices still high, charting a course towards biofuels that do more good than harm is more vital than ever
Biofuels have become a victim of own success, it appears: for the first time in a decade global production has dropped. Production in 2011 dropped a touch from 1.822m barrels a day in 2010 to 1.819m in 2011, according to IEA statistics (p30) highlighted by the Financial Times.
The key reason has been the rising cost of the feedstock for most biofuels, corn, sugar and vegetable oil. And the main reason for the rising food prices is, many argue, the huge quantity consumed by biofuels. It's a big business. The global biofuels business would, if a nation, rank 16th in the world for oil production, just above the UK and Libya and a bit below Norway and Nigeria, all major oil producers. In the US, 40% of the corn crop now gets diverted into fuel tanks, giving the US 50% of global biofuel production.
On top of the peaking of production, the US has just phased out some fat subsidies and tariffs protecting the domestic biofuel industry from international competition. So is the biofuels boom over?
In a word, no. The key driving factor is the price of ordinary oil. In the medium and long term, crude prices seem very likely to remain high and vulnerable to shocks, such as the current Iranian situation. "Once oil is over $70 a barrel, conventional and new generation biofuels become cost competitive, certainly with tar sands and shale, and with oil from much of the Middle East and Brazil's new offshore fields," said Jeremy Woods, at Imperial College, when I spoke to him in March. Today, Brent crude is at $113. The IEA predicts a 20% rise in biofuel production to 2.2m b/d by 2015, although that is a slower rise than in the past.
This brings us to the environmental crux. "The less biofuel you have the more gasoline you need," Amrita Sen, oil analyst at Barclays Capital in London, told the FT. With petrol and its emissions known to be harmful to the atmosphere, and frequently the land and oceans, surely environmentalists would campaign for more biofuels?
As we know, that has not been the case and with good reason. Rising food prices, destruction of forests and other habitats and poor treatment of workers - which I have seen with my own eyes - has brought opposition from greens. Better public transport and electrified private transport are the answer, they say, and in any case many biofuels do not even lead to cuts in climate-warming carbon emissions.
However, there's one very striking line in the IEA statistics I linked to above. There is virtually no biofuel production in Africa, a continent where energy is frequently in desperate demand. The like-for-like replacement that biofuels offer means cheap, existing vehicles could be run on them. And Africa has land, lots of land. In the best of worlds, sustainable and equitable biofuels produced in African countries for domestic use would solve many problems.
The economic pressure on Brazil's biofuels industry - from poor sugar crops and underinvestment - is relevant here. Brazil will not let its biofuel industry wane: it has ambitions to be the "world's environmental first superpower". A grand phrase, you might think, but it's backed up by some hard facts too. Brazil has more patents related to biofuels than any other nation and it is working hard to export that know-how to Africa.
Producing biofuels that do more good than harm is not easy and the hard graft of standards and regulation must be ground out. But with crude prices showing no prospect of falling, biofuels certainly have a future, especially in the developing world. So we'd better make it a good one.
Biofuels have become a victim of own success, it appears: for the first time in a decade global production has dropped. Production in 2011 dropped a touch from 1.822m barrels a day in 2010 to 1.819m in 2011, according to IEA statistics (p30) highlighted by the Financial Times.
The key reason has been the rising cost of the feedstock for most biofuels, corn, sugar and vegetable oil. And the main reason for the rising food prices is, many argue, the huge quantity consumed by biofuels. It's a big business. The global biofuels business would, if a nation, rank 16th in the world for oil production, just above the UK and Libya and a bit below Norway and Nigeria, all major oil producers. In the US, 40% of the corn crop now gets diverted into fuel tanks, giving the US 50% of global biofuel production.
On top of the peaking of production, the US has just phased out some fat subsidies and tariffs protecting the domestic biofuel industry from international competition. So is the biofuels boom over?
In a word, no. The key driving factor is the price of ordinary oil. In the medium and long term, crude prices seem very likely to remain high and vulnerable to shocks, such as the current Iranian situation. "Once oil is over $70 a barrel, conventional and new generation biofuels become cost competitive, certainly with tar sands and shale, and with oil from much of the Middle East and Brazil's new offshore fields," said Jeremy Woods, at Imperial College, when I spoke to him in March. Today, Brent crude is at $113. The IEA predicts a 20% rise in biofuel production to 2.2m b/d by 2015, although that is a slower rise than in the past.
This brings us to the environmental crux. "The less biofuel you have the more gasoline you need," Amrita Sen, oil analyst at Barclays Capital in London, told the FT. With petrol and its emissions known to be harmful to the atmosphere, and frequently the land and oceans, surely environmentalists would campaign for more biofuels?
As we know, that has not been the case and with good reason. Rising food prices, destruction of forests and other habitats and poor treatment of workers - which I have seen with my own eyes - has brought opposition from greens. Better public transport and electrified private transport are the answer, they say, and in any case many biofuels do not even lead to cuts in climate-warming carbon emissions.
However, there's one very striking line in the IEA statistics I linked to above. There is virtually no biofuel production in Africa, a continent where energy is frequently in desperate demand. The like-for-like replacement that biofuels offer means cheap, existing vehicles could be run on them. And Africa has land, lots of land. In the best of worlds, sustainable and equitable biofuels produced in African countries for domestic use would solve many problems.
The economic pressure on Brazil's biofuels industry - from poor sugar crops and underinvestment - is relevant here. Brazil will not let its biofuel industry wane: it has ambitions to be the "world's environmental first superpower". A grand phrase, you might think, but it's backed up by some hard facts too. Brazil has more patents related to biofuels than any other nation and it is working hard to export that know-how to Africa.
Producing biofuels that do more good than harm is not easy and the hard graft of standards and regulation must be ground out. But with crude prices showing no prospect of falling, biofuels certainly have a future, especially in the developing world. So we'd better make it a good one.
'Green Deal' suffers setback as number of lofts being lagged plummets
Government's flagship energy policy appears doomed after figures show 93% decline in efficiency measure
Damian Carrington
The Guardian, Friday 13 January 2012
The government's flagship green policy to transform the energy efficiency of 14m homes and create 65,000 jobs appears doomed to fail, with the revelation of its own figures showing the number of lofts being lagged is set to plummet by 93%.
The Green Deal is at the heart of the government's ambition to be the "greenest ever" as it will deliver large cuts in climate-warming carbon emissions, as well as curbing high energy bills by making houses warmer and less expensive to heat.
The disclosure is the most startling yet about the Green Deal programme, which starts in October and has been billed by ministers as the most ambitious national refurbishment scheme in the world.
Britain's homes are old and leaky by international standards and millions of lofts and cavity walls remain poorly insulated. These home energy efficiency measures are seen as the cheapest way to cut bills and carbon emissions.
But the new data, obtained by Building magazine and from Department of energy and climate change's own impact assessment, throws the government's grand ambition into serious doubt. Current government schemes that subsidise insulation have resulted in just over 1m lofts a year being lagged in recent years, yet this will plunge to just 70,000 a year under the Green Deal, according to Decc figures. This is also far below the 2m per year required to meet climate targets. For cavity walls, the current 510,000 a year being filled will fall to 170,000, a drop of 67%, and again far below the 1.4m a year required.
Home insulation installations Photograph: guardian.co.uk
"These stunning figures show that the government's Green deal is in danger of becoming a car crash," said Luciana Berger, Labour's shadow climate change minister. "At a time when millions of families are struggling with their energy bills, it beggars belief that this government will cut the number of people getting help to insulate their homes by as much as 90%, scrapping successful schemes introduced by Labour."
"The most effective way people can save money on their bills is by improving their home's energy efficiency, but this government is so out of touch it is making it harder to do," she said.
Existing insulation schemes subsidise the cost of insulation with, for example, energy company E.on this week offering free loft and cavity wall insulation plus a £100 incentive. The funding comes from a levy of £25 a year on all bills and from government coffers. The Green Deal, by contrast, offers no subsidy for these measures and instead provides a loan enabling the up-front costs to be paid back using the savings made on heating bills.
However, the new Decc figures show that the take-up of the Green Deal is expected to be very low. In December, in an unprecedented intervention, the government's official independent advisers warned in an open letter that the Green deal was set to fail, reaching just 2-3m households of the 14m targeted. "The paradox is that the government's own impact assessment suggests the policy will not deliver its objective," said David Kennedy, chief executive of the Committee on Climate Change. "There is a difference between the rhetoric and their own assessment."
He said the Green Deal removed the existing obligations on energy companies to deliver installations and left it to the open market to deliver. "We think there is a significant risk in leaving it to the market, as that has never worked anywhere in the world and is unlikely to happen in the UK."
The government's plans, currently undergoing a public consultation, do include an Energy company obligation, funded by a levy on all bills. But as it stands that will only be available to so-called "hard-to-treat" homes, in effect those with no cavity wall and hence needing solid wall insulation. The Decc figures show solid wall insulation rising by 10-fold to 153,000 a year.
But Decc signalled to the Guardian on Friday that the ECO might be used for some cavity walls. "One of the things we are considering is whether four million harder to treat cavity wall jobs that still need to be done could be covered under ECO," said a spokeswoman. "The ECO will provide extra financial support for very expensive jobs that don't pay for themselves over their lifetime. But the reality is that loft and cavity wall insulation is something that millions have already taken up meaning there's a finite number of jobs left to do."
In the UK, Decc statistics show that 10m (43%) of all lofts remain unlagged and 8m houses with cavity walls (42%) have yet to be insulated.
"Decc has been staring a big question in the face for a long time: why would people take out a loan to pay for something they can currently get cheap or for free?" said Dave Timms, energy campaigner at Friends of the Earth. "These figures show they won't and that installation rates of loft and cavity wall insulation are going to drop off a cliff. It needs to turn around a come up with a comprehensive strategy to tackle fuel poverty and energy efficiency. The Green Deal is a finance plan, not a strategy, and as it stands, the results will be disastrous. You need to surround the Green Deal with a much more potent mix of tax breaks, compulsory improvements and other incentives."
The government has already announced a £200m fund to help incentivise take-up and other measures that have been discussed include cashback offers, council tax or stamp duty rebates, and changing building regulations so that people who renovate their homes improve its energy efficiency at the same time.