Archive for the ‘Climate’ tag
In a recent blog post, the Financial Times’ energy blogger Nick Butler, a former BP executive, states that uncertainty of the U.K.’s energy policy framework is here to stay. He interprets the failure of the U.K.’s Department for Energy and Climate Change and the Treasury to come to an agreement on the level of subsidies for wind energy as a symptom of a permanent public policy risk for energy investors. Energy policy change, Butler writes, can come from numerous sources: from a change of government and changing energy market fundamentals to technical leaps. (Note that the latter two are hardly public policy in a conventional sense.)
While Butler is absolutely right to point out that energy markets are fundamentally political, it depends on political culture and the actual policies in place whether the political nature of energy markets creates political risk.
Consider the success of Germany’s feed-in-tariff regime for renewables. Regardless of the question whether one is for or against this colossal subsidy scheme, it is quite obvious that it is very successful in unlocking serious investments in renewable energy, particularly PV.
This is, of course, partially due to the fact that investors think the current levels of feed-in-tariffs create a compelling business case. But equally important is the fact that they rate the risk that the German government might change its mind and retroactively cut feed-in-tariffs for existing assets (like the Spanish government has in the wake of the fiscal crisis) as very low. This trust, of course, is grounded (a) in the general credit-worthiness of the German sovereign and (b) in German political culture which rates “Rechtssicherheit” (legal certainty) very highly.
So it comes down to the question whether investors believe that energy policies create a stable investment environment, or not. With the right policies in place, I don’t see any reason why the U.K. shouldn’t be able to create this belief.
In its report on the Electricity Market Reform (EMR) of April 2011 the Energy and Climate Change Select Committee recognised the “potential” of the new low carbon generation delivery mechanism, but cried out that the consultation paper’s proposals were “overly-complex, potentially expensive and fail to recognise the urgency of the transformation that needs to take place”. In short, EMR for all its innovation and cross-party political support would not attract the investment needed soon enough.
Fifteen months later and the committee have had another chance to review the government’s plans to attract new investment in the UK’s electricity market. In today’s report Draft Energy Bill: pre-legislative scrutiny the committee cast their judgement on every aspect of the government’s 2012-13 Energy Bill and its central tenet, the EMR.
Tim Yeo, the chair of the committee, and his colleagues did not hold back. “Unworkable,” “unacceptable” and “counter-productive” where just some of the salvos fired at DECC, who will sponsor the bill, and HM Treasury, who will have the final say on the financial instruments under-pinning so much of the Bill. In his statement accompanying the report Yeo concludes:
“The Government has a lot of work to do over the summer to make sure that the Bill is fit for purpose in the autumn and is not subject to any further delays.”
Select committees tend to find provocative language in order to help them secure media interest in their often very dull reporting but this is pretty strong stuff from the ECCC. The damning report picks holes into several of EMR’s central components and takes aim at the lack of detail provided by the Government. The later charge is hardly surprising to those following the committee’s progress with the Bill. Its chair Tim Yeo has complained very publicly in recent weeks about the Treasury’s refusal to give oral evidence to his committee on the essential features of its measures in the Bill over which it has control.
Today’s report addresses those measures by attacking the government for failing to back the EMR’s new system of long-term contracts. These new contracts seek to give power companies a guaranteed price for the low-carbon electricity they produce. The theory goes that the long-life of the contracts will reduce the risk of investment in projects with high up-front capital costs – a key barrier to investment in the sector – by providing certainty for a longer-period of time.
The prospered ‘Feed-in Tariffs with Contracts for Difference’ mechanism in the Bill was declared “too complex” and “unworkable”. The committee also warns that the proposed reforms will probably consolidate the dominance of the big six energy companies. Instead the Committee would like to see the Government use its strong credit rating to underwrite the new contracts in order to keep the costs of energy investment down for customers. The report also criticises the Treasury for the spending cap on green levies that can be passed on to consumers in energy bills as they “could mean unacceptable risk to investors”. This is because the levy cap will ration the number of contracts available to the various competing low carbon technologies.
Other concerns around the Bill include:
The draft Bill and its associated documents are fundamentally flawed by the lack of consideration given to demand-side measures – potentially the cheapest methods of decarbonising the UK’s electricity system.
- Given that the Government (and the Committee on Climate Change) see nuclear playing a key role in the future energy mix, Government should consider how carbon and security objectives could be delivered if no new nuclear is forthcoming.
- The ECCC want a clearer understanding of the likely impact of the EMR proposals on the future role for gas. They recommend that the Government, in its forthcoming Gas Strategy, considers the interrelationship between EMR and the capabilities of the gas infrastructure, in particular the potential need for more gas storage.
- They do not believe that it is appropriate for National Grid, a private company, to act as the EMR delivery body.
- The FT quotes Mr Yeo as saying: “If the energy bill does not set a target to largely decarbonise the electricity sector by 2030, then the UK may miss one of the biggest opportunities it has to create a low-carbon economy in the most cost effective way.”
The report comes at a time when the UK media are also reporting on George Osborne’s blocking of a new subsidy regime for renewable energy, as he fights another coalition battle with the Liberal Democrats, this time to ensure that gas remains central to Britain’s future power needs. The FT reports that the stand-off between Mr Osborne and Ed Davey, the Lib Dem energy secretary who wants to prioritise renewables, has infuriated business. John Cridland, head of the CBI employers’ group, claims the “political row” is holding back investment in Britain’s energy infrastructure.
Speaking at the company’s Worldwide Partner Conference on Wednesday, Microsoft Chief Operating Officer Kevin Turner refuted Apple’s “post-PC” view of the current computing industry climate, instead dubbing it a “PC+” era.
Although we were bewitched by the glorious pomp and ceremony surrounding the Queen’s Speech today (I particularly liked the tour of John Bercow’s magnificent bed chamber on the BBC) we did capture the key mesaures for the energy sector and the intial reaction of stakeholders and the media.
Key Bills announced:
- Energy Bill
- This is the Bill which will implement key elements of the EMR package
- The aim of the Bill is to enable large-scale investment in low-carbon generation capacity in the UK and deliver security of supply, in a cost-effective way.
- The Bill will cover three of the four main elements of EMR:
- Introducing a feed-in tariff with Contracts for Difference (FiT-CfD), a system of low-carbon generation revenue support. The Government’s hope is that the FiT-CfD will provide more certainty of revenues for low-carbon generation and make investment in clean energy more attractive;
- Introducing an Emissions Performance Standard (EPS) to prevent construction of new coal plants which emit more than 450g/kWh (the most carbon-intensive form of electricity generation);
- Introducing a capacity mechanism to ensure security of supply, making sure there is sufficient reliable and diverse capacity to meet demand.
- The fourth element, a Carbon Floor Price, has already been legislated for through last year’s Finance Bill.
- The Bill will also create an independent, industry-financed statutory regulator, the Office for Nuclear Regulation, and enable the sale of the Government Pipeline and Storage System (GPSS) (currently a Ministry of Defence asset). The GPSS is a network of pipes and storage depots serving defence installations – see map here: http://www.linewatch.co.uk/pipeline_network.php
- Enterprise and Regulatory Reform Bill
- A wide-ranging Bill covering competition, employment disputes, directors’ pay and regulatory reform.
- It will also establish the Green Investment Bank in law, and equip it with the powers it needs to operate.
Initial stakeholder reactions
John Cridland, CBI Director-General, said: “The test for this Queen’s Speech is whether it will help businesses to grow. Two Bills stand out for me: energy and regulatory reform. The first should help, but the jury’s out on the second.”
On energy: “Let’s be clear, electricity market reform is about keeping the lights on. Business investment in low-carbon will only happen when the detailed market framework is in place. Today’s announcements are an important stepping stone.”
Renewable Energy Association
Gaynor Hartnell, Chief Executive of the Renewable Energy Association – “Four years ago David Cameron said that we can’t afford not to go green and nowhere is that truer than the energy sector. Energy investors are demanding a strong policy framework in support of renewables and a decisive shift away from fossil fuels – so this Bill simply has to deliver. “While it is great that the Government have accepted the principle of legislating for carbon emissions; the way it is currently drawn up simply won’t work. You are not on a diet if you allow yourself 5,000 calories a day. You shouldn’t be surprised if it has no effect.”
UK Green Building Council
Paul King, Chief Executive of the UK Green Building Council – “By reforming regulation of the electricity market, the Government will be able to reduce uncertainty about the future returns from the tens of billions of pounds that must be invested, and will boost the confidence of the private sector. Private investors will also welcome plans to include the establishment of the Green Investment Bank in the proposed Enterprise Bill. However, the Government should recognise that it will slow down investment by the private sector, and hence hinder growth, if it delays giving the Bank powers to borrow.”
The Climate Group
Mark Kenber, Chief Executive of The Climate Group- “Let’s be clear, electricity market reform is about keeping the lights on. Business investment in low-carbon will only happen when the detailed market framework is in place. Today’s announcements are an important stepping stone.”
As part of her speech the Queen announced that the Government will propose reforms to the electricity market. These reforms will be laid out in the Energy Bill, scheduled for publication on 22 May. Commentating on the forthcoming Energy Bill, a DECC spokeswoman said: “This is crucial legislation. The Energy Bill would reform the electricity market to keep the lights on and emissions down in a more cost-effective way, while reaping the economic benefits. It is designed to provide investors with long-term certainty and incentives to invest in low-carbon. We will shortly publish a draft Bill for pre-legislative scrutiny, to enable swift passage of well-considered legislation this session. This legislation would reach the statute book by 2013 so that the first low-carbon projects can be supported under its provisions in 2014”.
Caroline Lucas, MP, Green Party
“This is of immense importance to project developers in renewables, as the measures it puts in place will eventually replace the Renewables Obligation. Many of the projects in development now are working to a timescale that takes them into the new regime, and they need to know the detail as soon as possible. If all works as intended, it should make project development less risky and means that the public pays no more than it needs to for green power.”
Grantham Research Institute on Climate Change and the Environment at London School of Economics
Professor Sam Fankhauser, co-director of the Grantham Research Institute on Climate Change and the Environment at London School of Economics
“We recognise that mechanisms to encourage investment in low carbon electricity generation are necessary, but the cost to the consumer should be the Government’s overriding concern when they are negotiating contracts.
“Transparent and robust processes must be put in place to ensure value for money. Badly- designed policies like the Carbon Price Floor, the Green Deal and the smart meter rollout could cost the consumer billions, it is imperative that this is not allowed to happen with electricity market reform.
Margaret Ounsley, Head of Public Affairs at WWF-UK, said “There is much that is encouraging here, with legislation to help green the power sector, and to protect our precious rivers and streams; we now just need to make sure that what is being suggested will work.”
Commenting on the Energy Bill, Keith Allott, Head of Climate Change at WWF-UK, said: “Reform of the UK energy market should be one of the Government’s highest priorities. Backing jobs and investment in the renewable energy sector is also a golden opportunity for growth that the government should be grabbing with both hands.”
Initial media reactions
- The Financial Times, Kiran Stacey
David Cameron and Nick Clegg have pledged to make the UK “one of the most business-friendly countries in the world”, as the Queen outlines dozens of new bills set to dominate the next session of parliament.The prime minister and deputy prime minister said in a statement: “We will continue to extend opportunity in our economy – with an enterprise and regulatory reform bill that will make Britain one of the most business-friendly countries in the world.” They added: “[There will be] a banking reform bill that will clear up the regulatory mess and protect our economy and Britain’s families from the sort of risky activity that led to the recession.” The enterprise bill will encourage employers and employees to go through conciliation rather than legal tribunals as the government looks to help relieve businesses of the burden of some of employment law. The moves fall far short of those advocated by Adrian Beecroft, the Tory donor and venture capitalist, who has said there should be no right for employees to claim unfair dismissal. The bill would make shareholder votes on directors’ pay binding but again falls short of some more radical proposals, which would have forced companies to achieve a 75 per cent majority to approve pay packages.
- BusinessGreen, James Murray
Setting out her government’s agenda for the next parliamentary year, the Queen said the government would bring forward an Energy Bill that will “propose reform of the electricity market to deliver secure, clean, and affordable electricity, and ensure prices are fair”. She also confirmed plans to introduce legislation that will enable the launch of the government’s promised Green Investment Bank, and plans for a draft water bill to better manage water resources and rivers. There had been reports, strongly denied by the Department of Energy and Climate Change (DECC), that the Energy Bill could be delayed or downgraded as the coalition sought to make room for alternative legislation, such as controversial reforms to the House of Lords. However, the bill was included in the speech as expected and is now set to be put before Parliament in the coming months. The speech did not confirm the precise timetable for the next wave of bills and as such speculation will continue over when the Energy Bill will be finalised, although DECC sources have revealed they remain confident it will be formally published before the end of the calendar year.
- Edie Energy
The commitment to introduce legislation to ‘establish’ the GIB is in line with business secretary Vince Cable’s announcement in March this year that the new bank will be headquartered in Edinburgh and that it will be “in a position to be fully operational this Autumn”. The timetable for the GIB to achieve full borrowing status, however, is scheduled to take until April 2015, a date which, even then, is subject to public sector net debt falling as a percentage of GDP. The EMR commitment upholds a previous Government pledge that it would legislate for the key elements of this package in the second session of this Parliament, starting in May 2012. The intention is to ensure that such legislation reaches the statute book by spring 2013, allowing the first low-carbon projects to be supported under its provisions ‘around 2014′. There has, of course, been growing impatience in some industry sectors with the slow progress of the EMR process, including a warning given to Emily Bourne, head of the EMR programme team, when she addressed the Scottish Renewables annual conference in Edinburgh in March this year. Simon Christian, UK managing director of ScottishPower Renewables, said at the time that uncertainty over EMR was effectively blocking projects timed to start beyond 2017, due to future revenue uncertainties. The Queen’s Speech declaration on EMR today, however, went no further that to confirm that legislation would be introduced to “deliver secure, clean and affordable electricity and ensure prices as fair”. The commitment on water resources was equally brief, committing to the publication of a draft bill to “reform the water industry in England and Wales
The Heartland Institute disputes global warming, but that didn't stop the conservative social-issues group from turning up the heat with a suburban Chicago billboard showing a typically crazy-faced portrait of Unabomber Ted Kaczynski and the headline, "I still believe in global warming. Do you?" After predictably pissing off just about everyone generating lots of free publicity, Heartland removed the incendiary sign. "This provocative billboard was always intended to be an experiment," the group says. "And after just 24 hours the results are in: It got people’s attention. This billboard was deliberately provocative, an attempt to turn the tables on the climate alarmists by using their own tactics but with the opposite message." It's unclear if the organization intends to make good on its original plan (some would say threat) to depict Charles Manson, Fidel Castro and Osama bin Laden on subsequent signs. "These rogues and villains were chosen because they made public statements about how man-made global warming is a crisis," Heartland explains. For now, the group is reveling in the coverage generated by its PETA-style "marketing strategy," convinced that $200 for a one-day billboard equals significant bang for the buck. Ultimately, however, such antics always bomb; they leave the public cold—which would be a relief, as the temperature for some mysterious reason seems to be on the rise these days.
Stephanie Strom via NYTimes.com
Researchers have found that climate change is likely to have far greater influence on the volatility of corn prices over the next three decades than factors that recently have been blamed for price swings — like oil prices, trade policies and government biofuel mandates.
The new study, published on Sunday in the journal Nature Climate Change, suggests that unless farmers develop more heat-tolerant corn varieties or gradually move corn production from the United States into Canada, frequent heat waves will cause sharp price spikes.
More critical than short-term spikes is relatively high growth rates for food stuffs across the board, and especially for building blocks like corn and soy in the industrial food chain.
Last fall, former Crispin Porter + Bogusky star Alex Bogusky oversaw "Denial Hits the Fan," a campaign for Al Gore's Climate Reality Project in which denial looked a lot like a certain smelly brown substance. Now, Bogusky and creative shop m ss ng p eces are out with a new ad that, despite its more serious tone, offers more or less the same message: Climate-change skeptics are spewing nonsense. The spot adds to the recent hullabaloo over conservative think tank Heartland Institute's plans to sow doubt about global warming in school curriculums. Meanwhile, the vigilante environmental scientist who leaked those plans this month as part of an off-the-reservation sting operation has now become the star of "FakeGate," a new Heartland campaign aimed at demonstrating that committing fraud to steal and distribute confidential documents is bad. Take notes, kids.
I thought perhaps he/she was being unfair, and then clicked on the link: Snowflakes! Mittens! “Wishing you a sparkling holiday season” in Helvetica! What is this, 1998?
Okay I get it, you were just trying to do something nice around the holidays (Bah humbug!) but seriously Scale (can I call you Scale?), it’s 2012. When you’ve got First Round Capital and Techstars and who knows who else producing holiday vids worthy of Hollywood, you can’t just throw down some clip art snowflakes and call it a day.
Merry Christmas! (Or whatever else you celebrate, or don’t)
If you don’t live in a climate where you need a pair of expensive waterproof boots or you just don’t want to buy any, Instructables user csymmank has a guide to making slipcovers for any shoe that will work in a pinch. More »
Some 15 million Africans abandon the countryside every year in pursuit of better lives in the city. Climate change and further desertification will only exacerbate the trend. How will these ballooning urban populations survive? OnEarth articles editor Jocelyn C. Zuckerman and photographer Antonio Bolfo traveled to Kenya and Ghana, where they found that the best strategy is sowing seeds right in the heart of cities, where the people live. See Bolfo’s photos and hear Zuckerman tell journalist Jaime Bedrin about their trip in this audio slideshow, then read “The Constant Gardeners“ in OnEarth’s Winter 2012 issue.