Andrew Grice
Monday 06 February 2012
Nick Clegg will today rebuff more than 100 Conservative MPs by declaring the Government will reject their demands to cut subsidies for onshore wind farms.
Ed Davey, the Energy and Climate Secretary, will also make clear he is a firm supporter of "green energy" and will not bow to Tory pressure. The demand, in a letter to David Cameron, is seen as a test of Mr Davey's environmental credentials after he succeeded Chris Huhne, who quit on Friday. In a joint appearance today, Mr Clegg and Mr Davey will seek to reassure green groups that Mr Huhne's departure will not dilute the Coalition's commitment to their cause. Visiting a test site for green homes in Watford, the Deputy Prime Minister will say: "The choice for the UK is simple: wake up, or end up playing catch up. In today's world the savviest states understand that going for growth means going green. Low-carbon markets are the next frontier in the battle for global pre-eminence.
Mr Davey will say: "There may have been a change at the helm, but there'll be no change in direction or ambition." He will add: "I have long believed in the need to marry our economic and environmental agendas. Greening the economy isn't just good for the planet – it's good for the wallets, purses and pockets... My priorities are very simple: green jobs, green growth and getting the best deal for energy bill payers."
Tory MPs want a "dramatic cut" in the £400m a year subsidy to an "inefficient" onshore wind turbine industry. They want planning laws changed so local people have more chance of stopping new wind farms. Mr Cameron is unlikely to back them, not least because subsidies have already been cut.
Chris Heaton-Harris, the Tory MP who organised the letter, said many more MPs would have signed it had they been allowed to – suggesting significant support among ministers and their aides. Two Liberal Democrats, two Labour members and one Democratic Unionist also backed it, he said.
A Conservative MP said: "In the on-going review of renewable energy subsidies, we ask the Government to dramatically cut the subsidy for on-shore wind and spread the savings made between other types of reliable renewable energy production and energy efficiency measures."
Monday, 6 February 2012
As EU Ramps Up Biofuels, Climate Debate Intensifies
By ALESSANDRO TORELLO
ROTTERDAM, Netherlands—At the tip of the 30-mile-long peninsula that hosts one of the busiest ports in the world, Finland's Neste Oil has just finished converting a plot of land reclaimed from the sea into the biggest biodiesel refinery in Europe.
The €670 million ($850 million) investment by the state-controlled company in the plant, which is already transforming vegetable oil and waste animal fat into diesel, aims at benefiting from European Union policies that seek to cut greenhouse-gas emissions from cars and trucks.
But this plant, with a capacity of 800,000 metric tons a year, and others built by different companies around Europe face a new challenge: a possible shift in EU policy that could undermine their profitability.
"Europe. Europe is the key" in terms of markets, in important part because of EU regulation, said Matti Lievonen, Neste Oil's chief executive, in an interview on the day the company announced the start-up of production here in September.
However, less than three years after adopting a key law—which mandates that by 2020, 10% of the total energy used in transport will have to come from renewable sources such as biofuels—a tough debate has begun in the EU on whether biofuels really are better for the climate than conventional fuels.
On Thursday, the environmental organization Friends of the Earth Europe urged the EU to scrap its 2020 target, saying it would cost consumers as much as €126 billion without helping the climate.
"Europe's squeezed consumers and taxpayers are paying the price for a flawed green policy that delivers no environmental benefits," said Robbie Blake, a campaigner with the group.
If policy makers judge biofuels' touted benefits to the climate to be illusory, officials say changes in regulation could result. That would likely cause the demand for biofuels to drop, consequently calling into question many investments.
The majority of European cars run on diesel engines, and companies like Cargill, Sofiprotéol in France or Abengoa in Spain have all together invested billions of euros in building up biodiesel production capacity. But current capacity would already almost be enough to cover the EU 2020 targets, while regulatory uncertainty is doing its part in lowering interest in new investments, experts say.
Biofuels are usually more expensive than regular gasoline or diesel. Europe diesel prices have been around $1,000 per ton, while biodiesel prices range from $1,200 to $1,400 per ton, said Matti Lehmus, responsible for oil products and renewable business at Neste Oil. The company's biofuel product, NExTBL, costs slightly more than that, he explained.
A liter of biofuel emits roughly the same carbon dioxide as a liter of fossil fuel when used in a car engine. But biofuels made from refining vegetable oils have been considered virtually carbon neutral because the plants from which the fuel is made has previously absorbed the carbon dioxide that is emitted by burning it.
By setting a target for 2020, the EU is effectively encouraging farmers to grow biofuel crops. But that potentially incentivizes farmers to cut down forests and move into peat lands, both of which absorb high levels of carbon dioxide in their natural states. Even if these lands aren't claimed directly to grow crops for biofuels, biofuel crops could displace food crops that would then be forced to move there. This process is called indirect land use change, or ILUC.
The debate has intensified since a panel of scientists from the European Environmental Agency, a body that provides scientific background to the EU for its policy decisions, began to question whether biofuels are really carbon neutral.
If you didn't grow a crop used to produce bioenergy on a given piece of land, they argue in a report published in September, some other crop would grow there, offsetting at least some of the carbon dioxide emitted by burning fossil fuels.
"If bioenergy production replaces forests, reduces forest stocks or reduces forest growth, which would otherwise sequester more carbon, it can increase the atmospheric carbon concentration. If bioenergy crops displace food crops, this may lead to more hunger if crops are not replaced and lead to emissions from land-use change if they are," the 19 scientists said in their report.
"The potential consequences of this bioenergy accounting error are immense," they said.
In 2008, EU governments and the European Parliament left for later the highly controversial issue of how to account for the full impact of higher demand for biofuels on the global use of land. The issue is so controversial that the European Commission, the EU's executive body, is already a year late in coming up with a way to account for ILUC in certifying biofuels.
Including an ILUC factor in certifying biofuels allowed in the EU would threaten Europe's ability to reach its 10% target, because it would reduce the amount of biofuels that could be used.
The commission itself is divided on the issue: Its energy department wants to stick with the target, but its climate branch is inclined to change it if it doesn't actually help the environment, officials said.
Neste Oil says it isn't worried about policy change. In Rotterdam, the company mainly produces NExTBL—a transparent, alcohol-like, odorless liquid, 40% of whose ingredients are waste products, like animal fat from the food industry. NExTBL has the potential to replace other biodiesels because it can be used in higher percentages when mixed with regular fuel, has a higher energy content and can stand lower temperatures, Mr. Lievonen said.
Write to Alessandro Torello at alessandro.torello@dowjones.com
What are the key green policies in Ed Davey's in-tray?
He must get to grips with energy suppliers and green campaigners – but the toughest challenge for the new climate and energy secretary is likely to come from cabinet colleagues
Fiona Harvey, environment correspondent
guardian.co.uk, Friday 3 February 2012 17.10 GMT
Ed Davey, the new secretary of state for energy and climate change, faces a daunting in-tray of policies that will create battles with industry, electricity consumers, anxious renewable energy investors and green campaigners – but the toughest challenge of all is likely to come from his cabinet colleagues.
Chris Huhne was one of the few heavyweight champions of the green agenda within the coalition government. His departure sparked immediate fears that without him, the voices within cabinet - and among the Tory rank-and-file - that have been calling ever more loudly for a watering down of environmental policies will prevail. Those calls have been led by George Osborne, the chancellor, who vowed the UK would do no more than the minimum to meet environmental goals, and could revise current targets downwards.
Andrew Simms, fellow at the New Economics Foundation, urged: "Davey must face down the economic and environmental self-defeating destructiveness of the Treasury, which is preventing the UK from becoming a world leader [in green industries]."
Matthew Spencer, director of the Green Alliance, said it was time for David Cameron and Nick Clegg to speak up: "This creates a moment for the prime minister and deputy prime minister to assert their ownership of the green economy, and for the new secretary of state to build a broader coalition for action across government. It's important that the top tier of government speak publicly to correct the misunderstanding that the leadership are giving up on this agenda."
Speaking in Westminster today, Davey said: "I've now got to take up the challenges, the challenge of climate change, of energy security and I'm particularly conscious of the impact on consumer households across the country of high energy bills."
He added: "I want us to have a green economy where there's lots of green jobs to help grow our economy."
Here are the key policies in Davey's in-tray:
Energy bills
The government's ability to influence bills, which have soared on the back of international fossil fuel prices, relies mainly on attempts to bully and shame the big six suppliers. Its answer has been to bring forward a new flagship policy, the "green deal", for cutting consumer charges by encouraging insulation and other low-carbon home improvements. The bad news is the green deal is in trouble, as several analyses show its appeal is likely to be limited when it launches this autumn.
Renewable energy
Subsidies for renewable energy are under fierce attack, from free-market thinktanks and sections of the rightwing media. The government was humiliated when it tried to cut feed-in tariffs for small-scale renewables, in a hasty move that judges ruled unlawful, and that stirred up turmoil and job losses among solar companies. But the promise of hundreds of thousands of green jobs, billions of pounds in investment, and meeting our EU obligations on renewable generation all hang on a strong showing of government support for the sector.
New nuclear power
For Liberal Democrats, nuclear power is always a tricky issue. Huhne tried to finesse his party's long-standing opposition to new reactors with Tory enthusiasm for them by pledging that they would receive no public subsidy. Critics pointed out that policies to aid "low-carbon" generation would also provide financial support to nuclear. As nuclear projects inch forward, Davey will have to walk a similar tightrope.
Fourth carbon budget
Under pressure on his green credentials, Cameron agreed last summer to carbon-cutting targets for the UK that will be some of the most stringent in the world when they take effect in the 2020s. Osborne wants to review them within two years. This will be a key test for Davey - if he is still around by then.
International
The next two years will see some of the toughest negotiations over climate change within the European Union and globally in the long-running United Nations talks. In Brussels, member states must thrash out the next set of renewable energy and carbon targets by the end of 2014. Under the UN, countries have committed to forge a new global climate change treaty by the end of 2015. Both these punishing forums require a combination of high statesmanship and low guile. Huhne was widely praised for his skilful performances - Davey will have a tough act to follow.
Fiona Harvey, environment correspondent
guardian.co.uk, Friday 3 February 2012 17.10 GMT
Ed Davey, the new secretary of state for energy and climate change, faces a daunting in-tray of policies that will create battles with industry, electricity consumers, anxious renewable energy investors and green campaigners – but the toughest challenge of all is likely to come from his cabinet colleagues.
Chris Huhne was one of the few heavyweight champions of the green agenda within the coalition government. His departure sparked immediate fears that without him, the voices within cabinet - and among the Tory rank-and-file - that have been calling ever more loudly for a watering down of environmental policies will prevail. Those calls have been led by George Osborne, the chancellor, who vowed the UK would do no more than the minimum to meet environmental goals, and could revise current targets downwards.
Andrew Simms, fellow at the New Economics Foundation, urged: "Davey must face down the economic and environmental self-defeating destructiveness of the Treasury, which is preventing the UK from becoming a world leader [in green industries]."
Matthew Spencer, director of the Green Alliance, said it was time for David Cameron and Nick Clegg to speak up: "This creates a moment for the prime minister and deputy prime minister to assert their ownership of the green economy, and for the new secretary of state to build a broader coalition for action across government. It's important that the top tier of government speak publicly to correct the misunderstanding that the leadership are giving up on this agenda."
Speaking in Westminster today, Davey said: "I've now got to take up the challenges, the challenge of climate change, of energy security and I'm particularly conscious of the impact on consumer households across the country of high energy bills."
He added: "I want us to have a green economy where there's lots of green jobs to help grow our economy."
Here are the key policies in Davey's in-tray:
Energy bills
The government's ability to influence bills, which have soared on the back of international fossil fuel prices, relies mainly on attempts to bully and shame the big six suppliers. Its answer has been to bring forward a new flagship policy, the "green deal", for cutting consumer charges by encouraging insulation and other low-carbon home improvements. The bad news is the green deal is in trouble, as several analyses show its appeal is likely to be limited when it launches this autumn.
Renewable energy
Subsidies for renewable energy are under fierce attack, from free-market thinktanks and sections of the rightwing media. The government was humiliated when it tried to cut feed-in tariffs for small-scale renewables, in a hasty move that judges ruled unlawful, and that stirred up turmoil and job losses among solar companies. But the promise of hundreds of thousands of green jobs, billions of pounds in investment, and meeting our EU obligations on renewable generation all hang on a strong showing of government support for the sector.
New nuclear power
For Liberal Democrats, nuclear power is always a tricky issue. Huhne tried to finesse his party's long-standing opposition to new reactors with Tory enthusiasm for them by pledging that they would receive no public subsidy. Critics pointed out that policies to aid "low-carbon" generation would also provide financial support to nuclear. As nuclear projects inch forward, Davey will have to walk a similar tightrope.
Fourth carbon budget
Under pressure on his green credentials, Cameron agreed last summer to carbon-cutting targets for the UK that will be some of the most stringent in the world when they take effect in the 2020s. Osborne wants to review them within two years. This will be a key test for Davey - if he is still around by then.
International
The next two years will see some of the toughest negotiations over climate change within the European Union and globally in the long-running United Nations talks. In Brussels, member states must thrash out the next set of renewable energy and carbon targets by the end of 2014. Under the UN, countries have committed to forge a new global climate change treaty by the end of 2015. Both these punishing forums require a combination of high statesmanship and low guile. Huhne was widely praised for his skilful performances - Davey will have a tough act to follow.
India records world-beating green energy growth
Increase of 52% to $10.3bn in 2011 was based on strong solar performance
BusinessGreen, part of the Guardian Environment Network
guardian.co.uk, Friday 3 February 2012 14.07 GMT
India's transformation into a cleantech powerhouse moved up a gear in 2011 when it racked up investments of $10.3bn in the sector, a growth rate of 52 per cent year on year that dwarfed the rest of the world's significant economies.
Solar investments led the growth with a seven-fold increase in funding, from $0.6bn in 2010 to $4.2bn in 2011, just below the $4.6bn invested in wind during the year, according to figures released yesterday by analysts Bloomberg New Energy Finance (BNEF).
A record 2,827MW of wind energy capacity was added in 2011, which kept India third behind China and the US in terms of new installations. BNEF said a further 2,500MW to 3,200MW could be added in 2012.
Grid-connected solar also saw a substantial increase, up from 18MW in 2010 to an estimated 277MW by the end of 2011, while another 500MW to 750MW of solar projects could be added in the coming year.
Asset financing for utility-scale projects remains the main type of clean energy investment in India, with $9.5bn in 2011, BNEF said. Venture capital and private equity investment made a strong comeback with $425m invested in 2011, more than four times the 2010 figure, but equity raising via the public markets was only $201m compared with a record $735m in 2010, when the Indian stock market was at its all-time high.
"There was concern at the beginning of last year that increasing lending rates might hit investment," said Ashish Sethia, head of India research at BNEF, in a statement. "The surge in installation of renewable energy shows it is becoming cost competitive and scalable."
BNEF expects India to exceed the target of adding 12.4GW of grid-connected renewable energy during its 11th five-year plan, running from April 2007 to March 2012, and is likely to bring 14.2GW of capacity online.
However, Sethia said that if the targets are to be met, the country needs to improve the grid to handle increasing amounts of renewable energy, as well as ensuring renewable purchase obligations are enforced and project developers are paid on time for the power they produce.
But India still has significant scope for growth as it only accounts for four per cent of global investment in clean energy.
"India's record performance in 2011, and the momentum it is carrying into 2012, is one of the bright spots in the clean energy firmament," concluded BNEF chief executive Michael Liebreich.
"With support mechanisms falling away in the US, the ongoing financial crisis in Europe and China already going flat out, it is gratifying to see some of the world's other major potential markets coming alive."
BusinessGreen, part of the Guardian Environment Network
guardian.co.uk, Friday 3 February 2012 14.07 GMT
India's transformation into a cleantech powerhouse moved up a gear in 2011 when it racked up investments of $10.3bn in the sector, a growth rate of 52 per cent year on year that dwarfed the rest of the world's significant economies.
Solar investments led the growth with a seven-fold increase in funding, from $0.6bn in 2010 to $4.2bn in 2011, just below the $4.6bn invested in wind during the year, according to figures released yesterday by analysts Bloomberg New Energy Finance (BNEF).
A record 2,827MW of wind energy capacity was added in 2011, which kept India third behind China and the US in terms of new installations. BNEF said a further 2,500MW to 3,200MW could be added in 2012.
Grid-connected solar also saw a substantial increase, up from 18MW in 2010 to an estimated 277MW by the end of 2011, while another 500MW to 750MW of solar projects could be added in the coming year.
Asset financing for utility-scale projects remains the main type of clean energy investment in India, with $9.5bn in 2011, BNEF said. Venture capital and private equity investment made a strong comeback with $425m invested in 2011, more than four times the 2010 figure, but equity raising via the public markets was only $201m compared with a record $735m in 2010, when the Indian stock market was at its all-time high.
"There was concern at the beginning of last year that increasing lending rates might hit investment," said Ashish Sethia, head of India research at BNEF, in a statement. "The surge in installation of renewable energy shows it is becoming cost competitive and scalable."
BNEF expects India to exceed the target of adding 12.4GW of grid-connected renewable energy during its 11th five-year plan, running from April 2007 to March 2012, and is likely to bring 14.2GW of capacity online.
However, Sethia said that if the targets are to be met, the country needs to improve the grid to handle increasing amounts of renewable energy, as well as ensuring renewable purchase obligations are enforced and project developers are paid on time for the power they produce.
But India still has significant scope for growth as it only accounts for four per cent of global investment in clean energy.
"India's record performance in 2011, and the momentum it is carrying into 2012, is one of the bright spots in the clean energy firmament," concluded BNEF chief executive Michael Liebreich.
"With support mechanisms falling away in the US, the ongoing financial crisis in Europe and China already going flat out, it is gratifying to see some of the world's other major potential markets coming alive."