Monday 22 December 2014

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What progress did the UK make tackling climate change in 2014?

Posted by on 18/12/14

It’s been more than four years since David Cameron famously claimed his would be the ‘greenest government ever’ when the Conservative party came to power in 2010.

But his path to green greatness has not been an easy one; our air is illegally polluted, our renewable industry smarting from hit after hit and our government littered with climate change sceptics.

This year alone year alone has been filled with multiple public protests, threats ranging from malaria to mass immigration and missed job growth and economy recovery opportunities due to reluctance to invest in renewable energy.

But let’s break it down and take a look back at the year that was:

Q1 2014

Flooding

Well, it’s hardly like 2014 kicked off to a great start; just a few weeks into January a newspaper investigation discovered the government had slashed its spend on preparing the UK for adverse climate change effects by almost a half.

Under the then Environment Secretary, Owen Paterson, government spending dropped from £29.1m in 2012-13 to £17.2m in 2013-14.

The timing couldn’t have been worse; the nation was in the midst of the wettest winter on record and 5,800 homes and businesses were damaged by flooding as a result of the extreme weather.

The move was, unsurprisingly, widely condemned by critics; not least of all by the Committee on Climate Change who threatened the cuts could lead to an extra £3 billion in avoidable future flood damages.

By March warnings of potential threats to the UK as a result of climate change were coming in thick and fast.

Firstly the Intergovernmental Panel on Climate Change (IPCC) warned the UK would soon be hit by a wave of mass immigration as millions of climate change refugees were made homeless by extreme weather, food shortages and consequential war, disease and famine.

Then came a report from consultancy firm PWC which showed food prices in Britain looked set to rise dramatically in the next few years as extreme weather in other countries damaged crops and the other food imports we rely on.

We only have to look a few years back to see the actualisation of the above warning, when the heat waves of 2010 damaged crops in Eastern Europe causing food prices in the UK to rise by 5%.

Despite the above evidence, the government took eight months to recognise and respond to the pressing need for the UK to not just reduce its own carbon footprint, but to also help developing countries battle climate change.

Q2 2014

Windfarm

April brought with it more bad news as Oxford University announced that manmade climate change would lead to many more extreme flooding events in the UK.

Previously the UK had only seen flooding like winter 2013’s every 100 years, but the study suggested similar events would occur in the South of England every eight years as a direct result of climate change.

The Met Office then issued a warning that climate change was also likely to cause more flash flooding in the UK as heavy rainfall reacted with the arid land caused by drier than average summers.

Though it wasn’t all bad news; April also brought with it some progress as the UK government finally agreed to back eight major renewable energy projects.

The three biomass plants and five windfarms planned came with a promise of 8,500 jobs and the ability to power millions of homes in the UK with clean energy.

Fast forward to June and the government’s top science adviser and UK chief scientist Sir Mark Walport pleased environmentalists by calling for urgent debate on climate change mitigation.

He requested a stop to debates on whether or not climate change exists and the relating energy and resources instead to be used for creating policies on how best tackle it.

He made clear his belief that ‘climate change is happening and humans are significant contributors’ and said there needed to be more roles for scientists and engineers to research and establish the pros and cons of new energy sources and technologies designed to combat climate change.

He also backed fracking, which he said was safe and environmentally sound when done properly.

June was also the month that China’s head of government visited the UK and a joint statement was released from both nations agreeing on the urgency and importance of action against climate change and the need for renewable energy.

However, it was noted that while China was putting a cap on its coal use, the UK government was refusing to regulate the UK’s ageing coal plants and was still not doing enough to encourage greater renewable energy production and use in the UK.

Q3 2014

DavidCameron

But still it seemed the government was not doing enough and in September 40,000 people including Vivienne Westwood, Emma Thompson and Peter Gabriel, took to the streets demanding greater action against climate change.

Unperturbed, David Cameron announced that he believed he had kept his pledge to run the UK’s greenest government yet when speaking at the UN summit on climate change.

At the meeting of world leaders in New York on September 23rd he said: Climate change is one of the most serious threats facing our world. And it is not just a threat to the environment. It is also a threat to our national security, to global security, to poverty eradication and to economic prosperity.”

He said his party had doubled the UK’s renewable energy capacity in the last four years, created the world’s first green bank and the UK was well on its way to cutting carbon emissions by 80% by 2050.

But it seems his words may have rung a little hollow; his speech came days after a poll revealed nearly three quarters of Conservative MPs didn’t  believe climate change was caused by human activity, with 18% of Tory MPs admitting they thought the notion of man-made climate change was ‘environmentalist propaganda’.

Q4 2014
Pollution

It took until almost the end of the year for the government to assert some authority and not only agree to spend £600m on helping poor countries tackle climate but to also quash the critics who questioned it.

After a year filled with scientifically backed reports on the negative effects climate change in other countries could have on the UK, Climate Change Secretary Ed Davey was correct in saying in November: “People recognise that we live in a global economy where when something happens in another part of the world it can impact on our lives here. The idea we should be isolationist Little Englanders is absolute nonsense.

However, this one spot of good government action could not prevent more bad news emerging; a report issued by London’s Imperial College in November showed the UK would fail to meet its carbon emissions target set for 2030 unless significant policy changes were made.

There was also a warning from the UK’s Royal Society in December who found future heat waves caused by global climate change would have catastrophic results on the UK’s elderly population, who are less able to look after themselves in extreme conditions.

All this was followed by a scathing letter written by Leader of the Opposition Ed Miliband who slammed chancellor George Osborne’s failure to mention climate change or carbon emission targets in the Autumn Statement and accused David Cameron of making a ‘long retreat from the principles in which he once claimed to believe [in]’.

However, it is possible the year may end on a high (of sorts) with the reintroduction of the Green Deal Home Improvement Fund.

The financial package aimed at helping residents improve the energy efficiency of their homes was closed a few weeks after launching earlier on in the year due to a lack of preparation.

But now it is back, and as of December 10, householders can apply for free cash to pay for home improvements such as solid wall insulation and double glazing to help them reduce their energy use and carbon production.

Round Up

2014 has certainly been a mixed bag, key politicians were certainly keen to be quoted saying they thought climate change was an important topic to be addressed, but while there was some progress made in 2014 there was certainly much more that could have been done.

With a hotly contested election due in May next year who knows what 2015 will bring.

Link Credit: Image 1, Image 2, Image 3, Image 4

Energy Union: a (long) way towards employment?

Posted by on 14/12/14
Ana Luísa Correia for FutureLab Europe Out of Juncker´s €300bn investment package, €21bn will be directed to building an effective Energy Union for secure, affordable, and environmentally-sensitive energy. But what does this mean for unemployed Europeans?

Der Ölpreisverfall

Posted by on 14/12/14

Der historische Rutsch des Ölpreises unter sechzig Dollar ist beides gleichzeitig – ein Weihnachtsgeschenk und ein Warnsignal… Der tiefe Fall des schwarzen Goldes birgt aber auch erhebliche Gefahren, zunächst wirtschaftspolitische. Denn klar erkennbar geraten diejenigen Staaten, deren Volkswirtschaft vor allem vom Ölexport abhängt, in erhebliche Turbulenzen…

Wirklich gefährlich wird der niedrige Ölpreis durch die massiven Auswirkungen auf Russland. Präsident Putin hat in all den Jahren seiner Macht nicht dafür gesorgt, dass die russische Ökonomie effektiv umgestellt wird: weg vom bloßen Öl- und Gasexport, hin zu einer breiter aufgestellten Wirtschaftstätigkeit. Russland, ohnehin gebeutelt von den Sanktionen des Westens infolge der Ukraine-Krise, gerät als Wirtschaftsmacht ins Schlingern. 2015 könnte der Crash kommen.

Besonders aber muss der Ölpreisverfall ein Alarmsignal für die Europäische Zentralbank sein. Denn die billige Energie schickt die Preise noch stärker auf Talfahrt, als sie es ohnehin schon sind – in Deutschland auf den tiefsten Stand seit fast fünf Jahren. Irgendwann könnten sie nicht mehr beherrschbar sein. Das Gespenst der Deflation, der gefährlichen Spirale von sinkenden Preisen, zurückhaltender Nachfrage und einbrechender Produktion, steht schon vor der Tür. Der Eurozone könnte eine lange Rezession, eine dahinsiechende Ökonomie nach dem Muster Japans drohen. Vor allem für die Währungshüter im neuen Frankfurter EZB-Turm ist der Absturz des Ölpreises alles andere als ein Weihnachtsgeschenk.

Effective climate policy requires action by governments and people

Posted by on 09/12/14

COP 20, the 20th annual climate conference, has started in Lima in a mood of increasing realism. Those who still believe in containing global warming within two degrees Celsius target are becoming rarer. The issue becomes more and more if Humanity will get away with acceptable conditions of survival or succumb to famine, non-ending natural disasters, tens or even hundreds(?) of millions of climate refugees and conflicts for water and fertile land.

The 20-year history of “combating” climate change has been a succession of “too little, too late”, starting with the Kyoto Protocol that turned into a failure because of its late entry into force and the non-participation of the biggest emitter countries.

For the last 20 years, we have continued to live as if climate change did not exist. The political elites in major emitter countries like Australia, Russia or, until most recently, even USA have continued to simply ignore it, whatever the rising numbers of natural catastrophes across the planet.

No political leader has dared to impose hardship on potential voters, say gasoline prices of €3/litre or electricity rates of €0.15/kWh. Our life has remained as comfortable as ever, with no restrictions on heating, cooling and lightening our homes and using planes or cars as before the climate challenge.

The global “climate policy elite” seems satisfied with the few “positive” developments in 2014, from the bilateral China-USA“deal” with the Chinese promise to peak its emissions latest until 2030 and generate 20 per cent of its energy from non-fossil sources and the US commitment to lower emissions by close to 30 per cent until 2025.

It puts a lot of faith in the bottom-up/top-down approach for the Paris Climate Summit in December 2015, under which each of the 190-odd participant countries is expected to present a strategic road-map for reducing green house gas emissions.

Judging by the response given by China to start reducing emissions latest by 2030 and the more than wary reactions from India,which will become the biggest emitter country in a few decades the outcome from Paris will not have a a positive impact on the global climate in the first half of the21st century. After all, it will have taken the EU from 1990 to 2030 to reduce its emissions by 40 per cent and, if everything works to schedule, 60 years to reduce them by 80 per cent until 2050. And the rest of the world is far behind the EU in terms of preparedness.

Climate scientists have not stopped warning policy makers about the need to go fast. But their calls have gone unnoticed because policy makers have constantly been engaged in more pressing day-to-day issues and have not dared to confront their citizens with painful measures to be taken.

Let us therefore hope that the international community will finally get serious and step up its joint efforts, focusing on mitigation and considering adaptation as the secondary issue. Indeed, if humanity fails to mitigate emissions dramatically financing adaptation will no longer help. We must prevent the natural glaciers storage of the Himalayas from melting instead of financing artificial dams for storing water.

On December 15th, at the end of the Lima Conference, which so far has not been very successful in solving the well-known technical details, we should be better able to assess the chances of success of the crucial meeting in Paris at the end of 2015.

Eberhard Rhein, Brussels, 6/12/2014

EcoDemonstrator completes first green diesel flight

Posted by on 08/12/14

Boeing’s specially outfitted 787 ecoDemonstrator flight test aircraft has completed its first flight using “green diesel,” a sustainable biofuel blended 15 per cent with 85 per cent conventional petroleum.

Green diesel is made from vegetable oil, cooking oil waste and animal fat waste, which eliminate indirect land-use consequences associated with biofuels made from feedstocks. The fuel was found to be similar to the HEFA (hydro-processed esters and fatty acids) aviation biofuel approved for use in 2011. The United States, Europe and Asia together have capacity to produce 3 billion litres of green diesel, with the potential to supply up to 1 per cent of global fuel demand near price parity for conventional fuel.

“Green diesel offers a tremendous opportunity to make sustainable aviation biofuel more available and more affordable for our customers,” says Boeing  managing director of environmental strategy and integration Julie Felgar. “We will provide data from several ecoDemonstrator flights to support efforts to approve this fuel for commercial aviation and help meet our industry’s environmental goals.”

Sustainably produced green diesel reduces carbon emissions by 50 to 90 percent compared to fossil fuel, according to Finland-based Neste Oil, which supplied green diesel for the ecoDemonstrator 787. On the EU policy side, Boeing continues to advocate for policy measures that can support aviation biofuels development and commercialisation.

Energy security for Europe or profit for Lukoil?

Posted by on 04/12/14

Despite the Russian invasion in Ukraine leading to EU and US sanctions against Moscow and major Russian energy companies, public banks supported by EU countries are just gearing up to offer a one billion dollar loan to Russian company Lukoil for gas extraction in Azerbaijan.

by Fidanka Bacheva McGrath, cross-posted from the Bankwatch blog

Half a billion dollars from the European Bank for Reconstruction and Development (EBRD) and another half billion from the Asian Development Bank (ADB) are to be invested in Lukoil’s 10 percent share in the Shas Deniz offshore gas field in Azerbaijan (a final decision by the banks is expected in early 2015 but seems certain). (A little reminder: the EBRD is a public bank of both the EU and the US, with EU countries holding over half of voting rights. The Europeans also hold 15 percent of voting shares at ADB.)

The two banks will finance two bridge-linked offshore gas platforms, 26 subsea wells, 500km of subsea pipelines, the expansion of the gas plant at Sangachal Terminal and the South Caucasus Gas Pipeline expansion.

The Shah Deniz oil and gas field is envisaged to be the main provider for one of Europe’s pet energy projects, the Southern Gas Corridor, a set of planned pipelines meant to bring gas into Europe from the Caspian region. The transportation infrastructure included in the Southern Corridor includes three major pipelines — South Caucasus, Trans Anatolian and Trans Adriatic — and all the Corridor is expected to require a total investment of more that 35 billion euros (45 billion US dollars).

The Southern Gas Corridor has been on Europeans’ minds for years but support for it gained even more momentum since the crisis in Ukraine, with advocates arguing that it is necessary to ensure the EU’s energy security in the face of an ever more aggressive Russia. Various components for the Corridor are now deemed priority energy projects for the EU and are being fast-tracked for financing by European public banks.

The first announcement for European public money support for the Southern Gas Corridor was made by the EBRD President Suma Chakrabarti at a press conference in Baku in July 2013. This July, the bank’s Director for Energy and Natural Resources, Riccardo Puliti, said that the EBRD is considering financing of up to 700 million US dollars for the Trans-Adriatic Gas Pipeline (TAP) and the Trans-Anatolian Gas Pipeline (TANAP) projects.

Yet the promise of the Southern Gas Corridor as a guarantor of EU energy security and independence from Russia is questionable for more than one reason. For one, Azerbaijan is in no way a more secure country of supply than Ukraine or Russia. The unresolved conflict between Azerbaijan and Armenia over Nagorno Karabakh, Russia-backed separatist regions like Abkhazia and South Ossetia claiming independence from Georgia, the threat of Maidan-style social unrest provoked by increasingly oppressive and corrupt elites in the region all pose a threat to the stability of Azerbaijan and neighbouring countries on the route of pipelines.


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Azerbaijan – Land of fire and repression. A Bankwatch photo story.

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The EBRD justifies its loans by claiming they have a positive „transition impact” on the countries where the projects are located. Yet gas infrastructure is rarely a guarantee of peace and security as the example of Ukraine shows very well. On the contrary, energy politics undoubtedly contributed to the civil war in the country which delivered the final blow to Ukraine’s unstable economy.

And perhaps the most obvious irony in all of this is the willingness of international financing institutions backed up by Western governments to work with Russian company Lukoil on this project deemed crucial to the EU’s energy security from Russia. And this despite countless bombastic political statements from the West blaming Russia as an aggressor and calling for independence from it.

As a matter of fact, Lukoil is a long term client of the EBRD. The company has already received five EBRD loans since 2000, amounting to 840 million US dollars, of which 310 millions went for the Shah Deniz field development in Azerbaijan. The currently proposed half a billion loan follows an earlier investment of 200 million US dollars for Shah Deniz stage 1 extension of field development, which was approved by the EBRD in January this year. At the time, the EBRD stated that ‘this project has a high level of transparency and is adhering to strict international and national standards’.

The EBRD claims that its experience with the Shah Deniz development is positive and that the lead operator, British Petroleum, ‘has demonstrated a responsible approach to environmental and social issues’. But such assessments are hard to confirm, due to the crackdown on independent critics of the Ilham Aliyev dictatorship, the threats to freedom of expression and the persecution of human right defenders in Azerbaijan.

And if Lukoil company practices back in home country Russia are anything to go by, then we have only reasons for concern. In 2007, the EBRD invested 300 million US dollars in Lukoil’s strategic environmental programme in Russia which included, among others environmental remediation investments, pollution clean-up, pipeline replacement and gas flaring reduction.

At the end of 2013, shortly before the latest EBRD loan to Lukoil was approved, Lukoil was fined 614 million rubles (18.5 million US dollars) for nine oil spills since 2011 in Russia’s northern republic of Komi, which covered an area estimated between 20.5 and 21 hectares of land in the province. Reportedly Lukoil-Komi spent 15 million rubles on recultivating the polluted land, but the court ruled it to be an insufficient measure.

Greenpeace Russia produced a shocking video and reported accounts of indigenous Komi people who failed to note the ‘environmental benefits’ that the EBRD financed, but instead complained about lack of consultation on well construction in their backyard and a cover-up attempt of a leaking oil pipeline. In April the municipal council of Izhma district supported claims of local community and voted to stop oil company Lukoil operations in the area. A rally on Sunday, Nov. 16 [ru] was only the last protest by indigenous people from Komi against the damage from Lukoil operations.

Lukoil is a company with a poor environmental and safety record, in Russia and abroad. This should be enough reason for the EBRD to halt loans to it. Since the Ukrainian crisis, support for Russian energy companies from European public finance is hardly excusable. Finally, the deal is being justified by energy security needs of Europe, though Azerbaijan is far from a secure country of supply and Europe’s energy security would be much better ensured through domestic renewables and energy efficiency than through mega-pipelines bringing fossil fuels from countries with authoritarian regimes.

The way the Sourthern Gas Corridor and the political situation in the EU neighbourghood look today, one has to wonder whether the only ones to surely win from these loans are not the oil and gas companies involved in the development of these oil and gas fields and pipelines. The likes of British Petroleum, Turkish TPAO, Azeri SOCAR, Russian Lukoil and Iran’s Nico, members of the consortium in charge of the Shah Deniz field. Should we really use scarce European public resources to prop up the profits of such companies?

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Read more>

Azerbaijan – Land of fire and repression
A Bankwatch photo story.

Read and watch >>

Germany to EU: if your climate policies aren’t up to the job, we’ll have to solve it ourselves

Posted by on 04/12/14

By Jason Anderson, Head of European Climate and Energy Policy at WWF European Policy Office

Yesterday Germany announced that it will continue its national commitment to achieve a cut of 40% in its greenhouse gas emissions by 2020, despite EU policy that is insufficient to support that aim. It will put in place measures to cut energy use and emissions, including from sectors covered by the ailing EU Emissions Trading Scheme. Germany’s announcement is important and ambitious, considering the reduction achieved up to 2013 was only 24%. It also makes the national commitment for 2020 more binding and concrete.

When the European Council endorsed a 2030 framework that would allow the EU to continue its weak approach, pressure mounted in Germany to drop or delay its 40% 2020 target. The government has countered by reinforcing its resolve instead. This this a clear signal to the EU: if your policies aren’t up to the job, we’ll have to solve it ourselves.

On the one side it’s a challenge to the system. On the other, it is exactly the spirit that the EU and others are explicitly encouraging in the UN climate talks, now underway in Peru: countries should strive to do more than they have put on the table, and seek diverse ways to achieve those reductions.

The reaction in Europe should be for those countries that are serious about fighting climate change to push for more ambitious legislation – starting with reform of the EU ETS through what is called the ‘market stability reserve’ (MSR). It will take tonnes out of the oversupplied ETS, but only starting in 2021, and only to store them for later return – an insufficient approach. The MSR should start sooner, and include mechanisms to retire excess tonnes that world otherwise continue to drag the system down.

See WWF Germany’s reaction to Germany’s announcement of its climate action programme

What LEDs in Lima tell us about climate action

Posted by on 03/12/14

By Jason Anderson, Head of European Climate and Energy Policy at WWF European Policy Office

I arrived in Lima Saturday morning for the COP20 UN climate negotiations and went directly to my hotel for a 12-hour WWF preparatory meeting, to get into the spirit of the event. One of the key issues we discussed is how we come to terms with the gap between the contribution to emissions reductions needed from different countries compared to their current likely contributions – which are much too low both individually and in aggregate.

In the case of the EU, its 2030 target is ‘at least 40%’ below 1990 levels, but according to EcoEquity’s online equity calculator, the EU’s cuts should be 80% at a bare minimum, counting both domestic and supported international action together: far, far beyond what is being proposed.

Staring at the ceiling seeking inspiration for how to close that huge gap, I noticed that all of the spot lighting was LEDs – the latest 5 watt lights that replace 35-50 watt halogens. That means that every year the meeting room saves more than the equivalent of my own home’s entire annual electricity use.

Three Japanese scientists received the Nobel prize this year for inventing the technology that makes commercial white LED lights possible. As the Nobel committee’s press release says:

“The LED lamp holds great promise for increasing the quality of life for over 1.5 billion people around the world who lack access to electricity grids: due to low power requirements it can be powered by cheap local solar power. The invention of the efficient blue LED is just twenty years old, but it has already contributed to create white light in an entirely new manner to the benefit of us all.”

To get LEDs to the point that they are cheap enough to be of interest to developing countries, they had to go from a lab experiment to an inexpensive commercial technology – often a long road. The world leader is the Dutch company Philips (three of the top 10 are European, one is American and six are Japanese). Philips made a laudable business decision that LEDs were a big future market, but their confidence is likely reinforced by the supportive European policy environment. The EU is in the process of phasing out incandescent light bulbs, giving LEDs an opening that it will capitalise on in competition with compact fluorescents, as they reduce costs and improve performance. That tipping point has now basically been crossed, bringing LEDS to the point that a mid-range Peruvian hotel has chosen to install them without phase outs, mandates or subsidies.

Naturally, China is in line to become a big player in LEDs. The NDRC predicts that by 2015, the country will earn $30 billion in manufacturing and 20% of the market will be LEDs. Not uncoincidentally, China is also phasing out many types of incandescents in the next three years.

The LED story reflects the whole package we want to see across clean energy technologies: basic research lays a solid basis; companies are willing to take those technologies into nascent markets; governments, recognising they have environmental and economic goals to reach, set efficiency standards that expand those markets, encouraging more investment in the technology. Costs drop to the point that it becomes accessible globally.

We could tell a similar story about solar PV: obligations and subsidies, first in Japan, and then at even larger scale in Germany, increased markets to the point that large-scale manufacturing, including in China, brought down costs for everyone. Germany’s efforts driving PV down the innovation cost curve means that its efforts save the globe billions of dollars every year, and gives countries across the development spectrum the opportunity to take advantage of solar’s benefits.

The nature of the international negotiations can promote a static understanding of the actions needed to reach global decarbonisation well before the end of the century: it appears to be a numbers game, with the full range of efforts supposedly contained in percentages for which governments are meant to take responsibility, but come nowhere near achieving, with the remainder of the effort deferred, or shoved under the carpet.

This view is depressing and disempowering – it makes failure appear nearly inevitable, and it undermines the momentum everyone knows is actually building globally. Technology, investment, policy and public engagement have turned a corner, and emissions reductions will follow if we continue to do two things: slow down processes that emit and speed up ones that don’t. It’s a pretty straightforward concept. If we add to that the efforts and finance needed to increase our resilience in the face of the amount of climate change that is already inevitable, then we have the main aspects covered.

In the UNFCCC, the language of commitments for such a package will of course be couched in its own abstruse form of performance art. There are elements of an international deal long under discussion that sound promising – like ‘technology transfer,’ which is one of many cul-de-sacs from which nothing ever emerges. But fortunately when looking at the draft negotiating documents coming out of the important ‘ADP’ sessions (The Ad Hoc Working Group on the Durban Platform for Enhanced Action, for heaven’s sake), most of the ingredients for a more inclusive, more flexible, and yet still equitable agreement with real commitments, are on (or at least hovering near) the table.

A good litmus test for the agreement in Europe will be whether it accommodates – or even facilitates – clearing up some currently perverse situations. Consider that the EU will blow past its 2020 target but is unwilling to commit to this in the UN. It has tabled 2030 obligations that is knows represents a slow-down in action over the previous decade, but feels compelled to paint it as a glorious achievement to avoid upsetting the perceived balance of international burden sharing. The UNFCCC needs to provide opportunities for countries to aim high, and keep ratcheting the level of efforts to help stay below 2 degrees. It should hold their feet to the fire in light of the urgent need for emissions reductions, and work towards a better recognition of the positive actions Parties can take individually and collectively.

While the reality of climate change is becoming dire, avoiding the worst of it is a challenge we will rise to only by creating a positive spirit of change and opportunity. I’m certainly hoping that staring at the ceiling two days before the start of the COP isn’t the most uplifting moment of the fortnight!

 

Low oil and fossil fuel prices are a climate poison

Posted by on 03/12/14
By Eberhard Rhein Low oil price do not fit into a global climate situation that calls for high carbon prices to reduce the consumption of fossil fuels. EU countries should lose no time in responding to the oil bonanza.

Is South Stream Pipeline Transforming Itself To “Turk Stream”?

Posted by on 03/12/14

We believe that in the current conditions Russia cannot continue with the realisation of this project [South Stream].” (Vladimir Putin)

russia vs euRussia’s $40 billion South Stream gas pipeline project came to reach a standstill on Monday 1st Dec 2014 when, as the WSJ reports, Russian President Vladimir Putin said: “We couldn’t get necessary permissions from Bulgaria, so we cannot continue with the project. We can’t make all the investment just to be stopped at the Bulgarian border.

The main reasons for halting the South Stream are plunging energy prices, stalling European demand, interpretation of the European Commission that all bilateral agreements (IGAs) for the construction of South Stream are all in breach of EU law and mostly the political standoff between the European Union and Moscow over the crisis in Ukraine.

The announcement on scrapping South Stream came during a visit by Russian President Vladimir Putin and Gazprom chief executive, Alexei Miller, to Turkey, during which Putin proposed building it to Turkey instead, offering its gas at a discount.

South Stream

South Stream is a Russian sponsored natural gas pipeline. As planned, the pipeline would run under the Black Sea to Bulgaria, and continue through Serbia with two branches to Bosnia and Herzegovina and to Croatia. From Serbia the pipelines crosses Hungary and Slovenia before reaching Italy. Its planned capacity is 63 billion cubic metres per year (bcm/y).

The key partner for Russia’s Gazprom in the South Stream project is Italy’s largest energy company, ENI.

Russia signed intergovernmental agreements with:

  • Bulgaria – January 18, 2008;
  • Serbia – January 25, 2008;
  • Hungary – February 28, 2008;
  • Greece – April 29, 2008;
  • Slovenia – November 14, 2009;
  • Croatia – March 2, 2010;
  • Austria – April 24, 2010.

The construction of South Stream started on December 7, 2012 is scheduled to be completed by 2015. The offshore section of the pipeline, which will run in part along the seabed and reach the maximum depth of 2,200 m, will be 931 km long. Each of the four parallel strings of the pipeline will consist of 75,000 pipes, each 12 m long, 81 cm in diameter, 39 mm thick and weighing 9 tonnes.

South Stream and partners South Stream and partners

Last December (2013), the European Commission said that all bilateral agreements (IGAs) for the construction of South Stream are all in breach of EU law and need to be renegotiated from scratch (Source: Euractiv ).

Field status” as solution

The European Commission threatened to launch legal action on grounds that South Stream violates EU anti-monopoly laws, with Bulgaria halting construction in August 2014. There are two main requirements for the eligibility of major new gas infrastructure projects like South Stream to be developed in the EU in compliance with the European Commission Directive 2009/73/EC concerning common rules for the internal market in natural gas. The first one relates to the unbundling between the suppliers and the owners of infrastructure, while the second one relates to the granting of third party access to the transmission and distribution systems. This is a formality – the real cause to block South Stream from EU side is of course political confrontation due Ukraine.

Bulgaria and Russia have been discussing the possibility of reclassifying the Bulgarian section of the South Stream gas pipeline into a field pipe to exempt it from EU restrictions. Indeed “the field status” could solve all the problems on restrictions related to the EU third energy package.

In the case of the South Stream Russia’s Gazprom cannot be engaged in production, transportation, and sales of natural gas at the same time. But the pipes carrying gas from EU’s sea shelf fields have a special field status, which exempts them from the restrictions of the legislation.Under EU legislation, pipelines carrying gas from the sea shelf wells of EU countries, particularly Germany, France and Belgium, have a ‘field pipeline’ status that exempts them from the requirement for mandatory granting of access of third parties to the pipeline.Austria’s OMV, Gazprom’s partner in the Austrian section of South Stream, produces gas on the Bulgarian Black Sea shelf, and a pipeline built by OMV to carry gas from the shelf can be later included in the project by reassignment of rights. (Source and more at Novinite: Bulgaria, Russia Discuss Exempting South Stream from EU Restrictions )

Consequences

The main loser of possible cancellation of South Stream project will be Bulgaria. The direct budget revenues that Bulgaria would have had from [gas] transit were at least €400 million a year. The share in the country’s €40 billion GDP to come from South Stream was expected to be 1.5 percent, according to Bulgarian Economic Ministry. Direct investment was supposed to be around €3 billion creating around 2,500 new jobs. The Northern parts of the country, through which the main pipeline route would be laid, were expected to have significantly improved social infrastructure and become more attractive to investment.

Besides Bulgaria also Serbia, Austria and Italy would have made big time revenue, and employed lots of people in need of jobs, by being links in the South Stream chain. Now they will have to pay the Turk Stream toll booth to secure their energy needs.

For Serbia it [South Stream] has been the cornerstone of our industrial strategy for the next 10 years so the situation is worrying us,” Vuk Jeremic, former foreign minister of Serbia, told New Europe on the sidelines of the Athens Forum 2014 on September 15. Right now the bets are off. But I’m hopeful that there will be progress in the future. But it would have to be part of a wider development of normalisation of relations between Russia and the West which currently does not seem to be in the making,” he said. Reminding that Gazprom is one of the biggest foreign investors in Serbia, Jeremic stressed that such a project would be of immense importance for his country’s economy so there are reasons for Belgrade to be worried.”

In addition with Turk Stream a reality, Ukraine has lost its strategic energy significance. The project operator South Stream Transport estimates that European companies will lose at least 2.5 billion euros because of the abandoned project. Japanese companies who were participating in the project will lose some 320 million euros – a Japanese consortium made up of Marubeni-Itochu and Sumitomo had received a pipe supply order worth that amount. (Source: Russia Beyond the Headlines )

If Gazprom decides to choose Turkey and Greece for the South Stream route, the pipeline project would largely resemble the TANAP-TAP project to bring Azeri gas to Italy through the territories of the same countries. The Trans-Anatolian gas pipeline (TANAP) is a proposed natural gas pipeline from Azerbaijan running through Turkey. The approximately 870 km long TAP pipeline connects with TANAP, and will cross Greece and Albania before reaching Italy through an offshore section. It is to be built by a consortium led by BP, Norway’s Statoil and Azerbaijan’s SOCAR. TAP is in an advanced stage of preparation and the start of its construction is planned in 2016.

Gazprom had spent 487.5 billion rubles ($9.4 billion) in the last three years on South Stream and upgrading the Russian pipelines that would have supplied it. Some of that work can be used for a separate link to Turkey. Supply contracts and intergovernmental agreements surrounding the project remain in force. The infrastructure built in preparation for South Stream will be used for “Turk Stream”.

“Turk Stream” instead?

Related to implementation of South Stream Russia agreed on 6th August 2009 with Turkey about energy cooperation with South Stream and also development of Blue Stream pipeline between Russia and Turkey under Black Sea so South Stream has secured also an alternative route. While EU started to create obstacles to project and in case Bulgaria continues to obstruct the construction of the South Stream pipeline this cooperation made base for Gazprom’s “Plan B”. Also on 24 May 2014 Russian President Vladimir Putin already hinted at another route for South Stream, during his meeting with leaders of world media.

Ankara would allow South Stream to reach Turkey under the Black Sea instead of Bulgaria, as originally planned. Russia would prefer not to opt for a plan B, but if the Commission doesn’t stop pressuring Bulgaria to freeze the construction of the pipeline, this alternative appears to be a viable option.

While announcing about South Stream hold off the Russian leader said he will add an extra branch to his existing Blue Stream gas pipeline to Turkey and build a new storage and trading “hub” on the Turkish-Greek border. The pipeline will have an annual capacity of 63 billion cubic meters. A total of 14 bcm will be delivered to Turkey, which is Gazprom’s second biggest customer in the region after Germany. The rest can be shipped through Turkey’s pipeline network to the Balkans.

On the left, the planned South Stream route, to the right, the Blue Stream pipeline to Turkey. Image from www.gazprom.com On the left, the planned South Stream route, to the right, the Blue Stream pipeline to Turkey. Image from www.gazprom.com

Russia’s energy minister Aleksandr Novak said that the new project will include a specially-constructed hub on the Turkish-Greek border for customers in southern Europe. Novak later confirmed that Vladimir Putin personally ordered for the South Stream project to be mothballed, and its existing facilities to be repurposed for the new Turkish pipeline. (Source: RT )

The clear winner of new plans is Turkey – the in-between partner and energy hub – who will take gas from Iran and Russia to Europe. In addition Russia and Turkey also noted that plans for Russian firm Rosatom to build a $20 billion nuclear power plant in Turkey are proceeding full speed ahead.

The bottom line

South Stream exposed cracks in EU strategy as Hungary, Austria, Serbia and Bulgaria among others saw it as a solution to the risk of supply disruptions via Ukraine, which have occurred three times during the last decade. Brussels, on the other hand, saw it as entrenching Moscow’s energy stranglehold on Europe. It remains to see whether Russia’s decision was final or a political ploy – a tactical step – to gain more favorable terms for South Stream.

From my point of view the original South Stream is the better alternative than “Turk Stream” as it is the direct option to EU/Europe and avoid a transit risk related to Ukraine or Turkey so in my opinion the best follow-up would be attempt to solve Russia-EU differences and run pipeline directly to Europe as initially planned.

P.S:

Turkey, the country that bridges Europe with Asia is merely the latest expansion of Putin’s anti-dollar alliance as Turkey and Russia agree to use local currencies in trade. Wider perspective about this issue can be read from my article ¥uan and Waterloo of Petro$

OPEC decision – what’s next?

Posted by on 01/12/14

The London petroleum exchange saw the price of Brent crude slide to just under USD 70 per barrel today. What is more, after last week’s decision by OPEC, there is no indication that the downward trend will reverse any time soon. Oil prices are at their lowest since 2008. Although I explained the reasons behind the trend in a previous entry (http://napedzamyprzyszlosc.pl/en/blog/uncertain-times), the matter generates so much interest that I have decided to supply a brief commentary (organised in bullet points) on the situation in the oil market in the wake of OPEC’s decision.

1)     Ample oil supply has overtaken demand. The price is bound to fall and adjust to the new conditions.

2)     There are two reasons for the increased supply of crude.

a)     The first reason, US tight oil, is certain. Since 2008, the amount of crude oil supplied from this source has risen by more than 3.6 million barrels a day, offsetting the decline in supply seen in the MENA countries (some 4 million barrels a day within the same time period). Were it not for tight oil, the price of crude would be much higher. It should be noted that this is not only about production increase (currently at about 1 million barrels a day), but also about room for growth (oil producers scattered across the U.S. are highly sensitive to prices – when these approach their production costs, which may vary greatly from basin to basin, they cut back on drilling).

b)    The second reason is an unexpected one. Oil production in Libya, where two factions are now fighting for power, has suddenly risen to above 900,000 barrels a day, while the expected figure was no more than 400,000 barrels. The supply spike accounted for half of the expected global crude oil demand increase (1.1 million barrels a day).

c)     Oil sourced from Iran (still burdened by sanctions), Iraq (production growing) and South America, which are all members of OPEC, is expected to enter the market soon.

3)     The increase in supply coincides with a global economic downturn, with China’s slowing economy being a major contributing factor. As a consequence, demand for crude is shrinking. The IEA has recently cut its oil demand growth forecasts for 2014 and 2015 by 200,000 to 300,000 barrels a day.

4)     All these factors contribute to the decline in crude oil prices. Will the downtrend continue? And how deep could it be?

a)     The situation in Libya and Iraq remains volatile, talks with Iran are not going as planned, while Russia is up against the wall. This may result in a sudden, actual or threatened, withdrawal of several hundred thousand barrels of oil a day from the market. Should this happen, the price of oil is likely to go up. The markets are keeping a close watch.

b)    For the time being, however, the price continues its downward march, straining the production cost barrier.

c)     Just as we predicted, OPEC did not cut production because:

i)      It is difficult to reconcile the interests of those countries which have lost their place on the market and are now making a quick comeback with the interests of those for whom high oil prices are what they want.

ii)     If OPEC had cut production, the price of crude oil would have gone up, driving oil production in the U.S. up and increasing pressure to lower prices. The move to limit production would benefit American oil companies.

iii)    As some expected OPEC to trim prices, when it eventually decided not to do so, the price dropped and is now trying to find a production cost floor (not only in the U.S., but all eyes are on the U.S.).

d)    How far can the price fall? It is difficult to say, because there are financial players on the market, who, naturally, look at the fundamentals, but react excessively and amplify their effect. This means that in the near term (one, two or three months, maybe two quarters), we may see some really low crude oil prices. As low prices put a damper on oil production in the U.S., the price will rebound on reduced output. From what floor, it is hard to predict.

e)     What is important is that low oil prices, even at the levels we are seeing today, will have an effect on crude supply in the years to come. With upstream investment curbed, supply will shrink more than what is expected today, putting upward pressure on oil prices (long-term, rather than short-term, as upstream investments take years before yielding results).

5)     What about fuel prices? Sudden changes in crude oil prices do not immediately feed through into fuel prices for several reasons – their duration is uncertain, past price levels are more important (i.e. whether a decline is a correction after a period of growth or a continuation of a downward trend). The first effect of the current price declines will be an increase in refining margins, which will quickly improve production profitability – fuel production will go up, higher capacity utilisation in refineries will bring down unit costs, opening way to increased production and, consequently, lower fuel prices. But how low can they get? It is difficult to say, but in all likelihood refiners will be fighting for their share in the market, which will drive market prices down. The wholesale and retail prices will follow.

6)      Lower crude oil prices translate into lower energy costs, stoking consumer demand and boosting disposable incomes left after all energy bills have been paid. While lower prices will promote growth in oil- and fuel-importing countries, they will have an opposite effect on oil exporters − oil-rich countries often subsidise the cost of fuel, which means that lower oil prices have weak or no transmission in the market, but at the same time cause budget revenues and spending to shrink

 

 

Passive Houses for dummies

Posted by on 29/11/14

For many years now, since 2003, the second weekend of November hosts the International Passive House Days: Passive House owners and residents around the globe open their Passive House homes and offices and share their experiences, showing what this “Passive House” idea/concept is all about.

Hungary joined this initiative in 2009, when the Hungarian Passive House Association (MAPASZ) became responsible for a local program. In 2012 the Association of Hungarian Passive House Architects (PAOSZ) followed this lead and offered its own, separate set of programmes which resulted in an even more adequate coverage of these innovative and energy efficient buildings here in Hungary.

To complete the picture, an EU-funded project dedicated to the topic of nearly zero energy buildings (Nearly Zero Energy Buildings Open Doors Days) also organised building visits this year which partly overlapped with the other two tours (organised by MAPASZ and PAOSZ), but ensured the mobilisation of further interested parties to engage with this global event.

This year Geonardo – within the frame of its AIDA project – joined forces with MAPASZ in order to reach out to and mobilise an ever increasing number of people who are genuinely interested in the concept of Passive Houses and the related advanced building engineering technologies. Similarly to previous years’ experience, only a small fraction of the participants had an architect or similar building industry-related background: the majority of them were only open to the concept and wanted to learn more about the featuring success stories, or wanted to gather some operational experience before they engage into their own passive building project.

The first day covered a wide array of innovative buildings from Western Hungary featuring a few private homes, a school, a dental clinic and an apartment building, demonstrating that not only regular houses can be considered when developing such a project but essentially any type of building can achieve this cutting-edge energy standard. Despite their versatility, the buildings on display had a few basic features in common which are absolutely essential when it comes to a nearly zero energy building (nZEB) or passive house. The most important of them are air-tightness and thermal insulation.

It is easy to understand that if you want to have an energy efficient real-estate you can’t afford wasting energy on heating or cooling the outside environment as a result of a “leaking” building envelope. This is especially true if you have a renewable-based low-temperature heating system planned/installed with an output just sufficient (with little reserve) if the building meets certain energy standards but which might prove inadequate if the structure fails to comply with those initially planned figures. The blower-door test is a common tool to measure the air-tightness of buildings: “Blower door tests are used to assess the construction quality of the building envelope, locate air leakage pathways, assess how much ventilation is supplied by the air leakage, assess the energy losses resulting from that air leakage and to determine if the building needs mechanical ventilation.” (source: Wikipedia).

The test is highly recommended when there is still some room to fix the potential problems at a relatively low cost (half-ready status), rather than wait until the building is finished, only to engage into costly repair works aiming to bring the house up to the planned standards.

One of the main highlights of the first day came when the owners described their reactions when the blower door test concluded its findings on the given building.

Some of them were relieved that the construction crew did its job properly securing the air-tightness of the property while others were quite disappointed by the results. Since the Passive House technologies and standards are relatively new there aren’t many contractors prepared enough to tackle the challenges such a job requires.

We were told that most of the tasks which make the difference between good and poor results (an additional layer of sealing around the windows, a bit more filling around the cables entering the structure etc) require no special knowledge or ability to perform them, rather patience, a bit of time and devotion. The latter of which is usually lacked by the crews responsible for the job. The general consensus was that you have to do these tedious bits for yourself if you want them properly done or you might face costly consequences to get them fixed.

It’s a cliché that thermal insulation is a key factor when it comes to energy efficiency of buildings, and in case of nearly zero energy buildings or passive houses it gets even more important.

There is a relatively wide range of building materials that are suitable for such buildings, but their inherent thermal properties alone wouldn’t make them fit for the purpose without additional layers of thermal insulation applied over them either from the inside or the outside. On our tour we came across various structures built of regular, hollow, fired clay-bricks, sandlime bricks or even cast-concrete, demonstrating that personal preferences can be taken into consideration when building an energy efficient structure and that there is more than one way to skin the cat.

For instance, the owner of the concrete building said that his home was erected in just under 2 months. Insulated concrete form (ICF) is a system of formwork for reinforced concrete usually made with a rigid thermal insulation that stays in place as a permanent interior and exterior substrate for walls, floors, and roofs. The forms are interlocking modular units that are dry-stacked (without mortar) and filled with concrete. The units lock together somewhat like Lego bricks and create a form for the structural walls or floors of a building. Because of the uniform wall structure there is no surprise that this house’s blower door test results were by far the best among the ones visited. But in my personal opinion I wouldn’t want to voluntarily live in a reinforced-concrete-walled house even though its energy performance, speed of delivery and visual appearance makes it a quite appealing option. The rest of the programme buildings followed a more traditional wall structure using different types of bricks with various thickness of insulation covering them.

In general it can be said that the main difference between a passive house and a regular home lies in the thickness of the insulating layer and in the quality of finishing.

When it comes to passive houses or highly energy efficient buildings a common concern is usually raised about not-to-be-opened windows. It makes sense to rely on the mechanical ventilation, and not to use the windows for uncontrolled ventilation once you spent so much on making your structure air-tight and thermally insulated. All of the buildings in our programme were equipped with such a system; thanks to their sophisticated ability to heat the fresh air from the outside using the heat of the used air from the inside, they minimised the amount of energy needed to maintain comfortable indoor temperatures and moisture levels. Hence we were told that in case guests are over, they might end up overheating the house simply through the overall body heat, so the fans need to be turned higher to cope with the increased demand.

 

It is quite fascinating to see that adequate air tightness and thermal insulation may render regular heating options obsolete or even futile. Some of the visited buildings had been equipped either by radiators or floor heating, but only as a backup, since 99% of the time ducted-air heating meets the needs.

Of course passive house owners may also use their windows in a traditional way (unless they choose fixed windows), but they usually do so when the temperature difference is minimal between the inside and the outside (Spring, Autumn etc). In all other cases they have uninterrupted access to fresh pre-heated or pre-cooled and moisture-controlled air via their heat-recovering ventilation system and they do not have to waste the energy they used to heat or cool the air inside when opening the window for fresh air. Nowadays many manufacturers offer amazingly compact devices which could even fit in your kitchen cupboard and take care of all building engineering tasks (heating, cooling, ventilation, DHW) in a single unit, though such a sophisticated piece of engineering comes with a hefty price tag.

Some owners prefer these types of solutions, though the more complex the design, the more specialised maintenance has to be done in case something goes wrong. We have seen a few buildings where the owners were pursuing to keep the building engineering system as basic and easy-to-repair as possible. A young couple for instance after having an air-tight and thermally insulated structure with a simple heat recovering ventilation in place, added only electric heating films to cover for their additional heating needs, if necessary using their solar PV produced energy. It is a plain, simple, cheap and easy-to-maintain solution.

Though the number of newly built and retrofitted passive houses and nearly zero energy buildings are getting more and more numerous, year by year the total number of such buildings is still in the range of a few hundred at tops, compared to the 4.2 million homes in Hungary. On one hand it is delightful to see this tendency in Hungary, but on the other hand these innovative structures can only be considered as the few exceptions to the general rule so far. A rule which still represents the traditional way of building a home using outdated approaches, concepts and materials. As long as this is the prevailing rule, such buildings will remain a minority and no bigger scale building energy targets can be met effectively.

Gambling on China’s Energy Revolution

Posted by on 27/11/14

The joint announcement signed by presidents Xi Jinping and Barack Obama at the Asia-Pacific Cooperation (APEC) summit in Beijing brought climate change back to the international headlines. The document set targets for both sides to achieve and was welcomed or damned in equal measure.

Although the announcement binds neither side, it was seen by many politicians and observers as a step forward. Two key global powers, the largest CO2 emitters, had come to an agreement on climate change. China had for the first time committed itself in an international agreement to targets. In the announcement. China stated that it, “intends to achieve the peaking of CO2 emissions around 2030 and to make best efforts to peak early and intends to increase the share of non-fossil fuels in primary energy consumption to around 20% by 2030”.

But the critics and sceptics have been many, especially of the targets China has set. One criticism had been that the emissions target is too loose, and allows China to continue emitting CO2 without constraint until 2030. Another, focusing on the non-fossil fuel target, has been that it is too easy, in fact setting out no more than what China plans to do anyway.

The announcement made the point, emphasized by President Obama, that meeting the target would require China to install 800 to 1000 GW of zero-emissions energy generating capacity by 2030, which is greater than the current coal-fired generating capacity in China. One man at least, the Australian Prime Minister Tony Abbott, who believes in the future of coal, was happy with the apparent weakness of the target on the grounds that according to him it meant that by 2030 80% of China’s energy would still come from coal. His government predicts that since China will still need to import large quantities of Australia’s coal its economic future is thus assured.

The EU has been pretty much on the sidelines in all of this, but it too has a stake in China’s commitments. The stake is not just political concern over global policy on climate change. Like others, the EU has an interest in the future direction of the Chinese economy. The EU does not have much coal of offer, but it does have environmental and energy technology and know-how that would find a market in a China committed to reducing energy use and emissions.

Predicting China’s future energy demand and emissions is difficult. The variables to be taken into account lead to huge differences in possible outcomes. But one of the most important elements in China will be government policy and its targets. In China this gives some idea of whether it will meet its commitments in the announcement, at least the 20% non-fossil fuels target for 2020.

In 2013 China’s primary energy production (in Standard Coal Equivalent (SCE), the measure used in China) was 75.6% coal, 8.9% oil, 4.6% natural gas, and 10.9% hydro, nuclear and wind. In this mix, coal has recently declined slightly, oil has also declined, while natural gas and non-fossil fuels have been rising. But primary energy consumption shows a different picture. Primary energy consumption in 2013 was 66% coal, 18.4% oil, 5.8% natural gas and 9.8% hydro, nuclear and wind. Coal has clearly declined from a recent peak of 71.1% a few years ago, oil has remained more or less at the same level for several years, while natural gas and non-fossil fuels have increased their share. The difference between primary energy production and consumption is accounted for by imports and exports. China imports most of its oil and increasing amounts of natural gas. In recent years, despite huge domestic production, it has also imported significant amounts of coal.

Table 1: China Share of Primary Energy Production Source: National Bureau of Statistics

 

Table 2: China Share of Primary Energy Consumption Source: National Bureau of Statistics

As these figures show, Tony Abbott’s belief that in 2030 80% of China’s energy will still come from coal is already wrong. He appears to suffer from two possible confusions. While it is true that currently close of 80% of primary energy production is coal this is not the case for consumption, which is what the announcement refers to. Abbott’s other possible error is a belief that even if China meets the target that 20% of energy consumption will come from non-fossil energy in 2020, then the remainder must come from coal.

Will China meet the target? Earlier this year Xi Jinping spoke of the need for a revolution in China’s energy production and consumption. At the time, he referred only to broad principles. The State Council has issued a Strategic Action Plan for Energy Development (2014-2020) which gives some detail on how this revolution will be achieved. The plan sets some targets. Non-fossil fuels are targeted to reach 15% of energy consumption by 2020, natural gas more than 10% and coal less than 62%. Although it is not specified, this leaves about 13% for oil.

The plan also calls for an installed capacity of over 200 GW of wind power in 2020, over 100 GW of solar photovoltaic (PV), 350 GW of normal hydro power and 58 GW of nuclear, with a further 30 GW of nuclear to be under construction. By comparison, at the end of 2013 China had 91.4 GW of grid-connected wind capacity and 19.4 GW of grid-connected solar PV capacity. The goals are reachable. In 2013 added 12.9 GW of solar PV and 16.1 GW of wind capacity, both the largest in the world. It also added 29.9 GW of hydro capacity.

Is not clear whether these targets will be the final word for the 13th Five Year Plan (FYP) which will cover a key period from 2016 to 2020. In recent years targets for renewables have been repeatedly raised as previous ones have been exceeded. One recent article in the Chinese media quoted an official from the planning department of the National Energy Agency (NEA) discussing the 13th FYP as saying the target for 2020 would be for coal to account for less than 60% of primary energy consumption, and he also said that the target for 2030 would be less than 50%.

On the current trend, the target for coal to account for under 62% of energy consumption by 2020 seems feasible. If the target of 15% for non-fossil fuels by 2020 is achieved, which on today’s rates of installation it probably will be, then another 5% in the following decade will not be difficult. One of the reasons why the target will be “easy” is not because it is low, but because China already is the largest investor in renewables in the world. Even if China merely continues renewable energy installations at the current rates over the next 16 years it will reach the added capacity the announcement says is required in the range of 800 to 1000 GW by 2030 with some to spare.

There are many uncertainties in all of these outcomes. President Obama has taken a political gamble on China’s energy revolution, while Tony Abbott is betting against it without apparently really understanding the odds. From a European perspective, a bet on rather than against China’s energy revolution seems wiser.

What EU funded low-carbon energy solutions in Polish regions?

Posted by on 24/11/14

The low-carbon energy ambitions of Polish regions for future EU funding are very diverse with only a few promising cases as an analysis of the Operational Programmes of Polish regions shows.

by Julia Krzyszkowska, cross-posted from the Bankwatch blog

Poland is currently in the final stages of planning how European funds under EU Cohesion Policy for 2014-2020 will be invested. Yet, beyond the national level, also Poland’s 16 regions (voivodeships) are about to conclude negotiations with the European Commission about the final shape of the Regional Operational Programmes (ROPs).

The results will show whether Poland’s regions are on the path to take full advantage of the potential of EU funds’ for the country’s sustainable development – a potential that is not to be underestimated. More than half of the EUR 9 billion that are earmarked for the low-carbon economy in Poland will be allocated and managed by the regional authorities. (For comparison, the total allocations of Cohesion Policy 2014-2020 for Bulgaria is EUR 7.59 billion, for Croatia EUR 8.61 billion.)

Bankwatch and Polish Green Network analysed the final drafts of the ROPs as they were presented to the European Commission. The analysis shows how ambitious (or not) the Polish regions are to invest in a low-carbon economy, in particularly when it comes to renewable energy and energy efficiency in residential buildings.

Report: Recommendations for the last state of programming of EU Regional Funds 2014-2020 for energy projects (pdf)

An important indicator is whether ordinary Polish households will be able to benefit from EU funds, for example through lower energy bills and greater security of energy supply. For smaller, localised investments, such as improving the energy standard in residential buildings or the production of citizen-owned energy from small renewables installations, the decisions made by the regional authorities will be essential.


Map: Allocation of funds for the thematic objective 4 on low-carbon economy as percentage of the total allocation of the European Regional Development Fund (ERDF) – Click image for full size

As the map above shows the level of ambition shown by Polish regions varies significantly.

While Śląskie in the South of Poland plans to spend almost 30 per cent of its European Regional Development Plan funds for low-carbon economy measures, there are many regions who keep the allocations close to the minimum 15 per cent, prescribed by the Polish Partnership Agreement.

While indicating the overall importance placed on the low-carbon economy objective by different regions, the map does not show their spending priorities within this area.

Energy efficiency in residential buildings

Going into more detail, one of the key elements we evaluated [1] was the availability of funding for energy efficiency in housing. The residential housing sector in Poland consumes over 30 per cent of all energy used in the country. The generally very poor energy standard of buildings resembles that of the 1970s in Western Europe and means a huge waste of energy and heat.

These losses could be avoided thanks to investments in deep retrofitting, estimated to result in up to 70 per cent energy savings.

Graph: Funds for energy retrofit of residential buildings (in euros and as a percentage of all ERDF funds in a region)

Looking at the Regional Operational Programmes, the allocations for improving energy efficiency in residential buildings are alarmingly low in relation to the entire amount of funds intended to support a low-carbon economy, and even more so in relation to the total ERDF allocation in a given region (see graph).

According to our analysis, the public sector seems to have priority in the regional spending plans with more than twice as much funds allocated to improving energy efficiency in state and municipality-owned buildings than in residential houses.

Yet, it is especially in residential buildings where energy efficiency measures should get priority funding given that such investments are more difficult to undertake for private households who — in contrast to public institutions — do not have sufficient financial resources or access to subsidies and preferential loans.

Investments in retrofitting multifamily houses could significantly alleviate the financial burden faced by many Polish families and improve their quality of life. Research by the Polish Institute for Sustainable Development and the Warsaw Institute for Economic Studies shows that Polish households spend on average around 15 per cent of their disposable incomes on energy bills. According to another research paper (pdf) on energy poverty in the EU, more than 20 per cent are unable to afford comfortable temperature levels at home during the winter.

What’s next?

Once negotiations with the European Commission are finalised, it will be up to the regions themselves to prepare the more detailed implementation documents that outline exactly who will be able to apply for funding from the EU budget, for what kind of project and on what terms.

Our report “Green Energy for All: Six recommendations for the last stage of programming of EU regional funds 2014-2020 for energy projects” contains some key demands for the last, crucial stage of the EU funds programming, and recommendations on how to make them reality.

These recommendations regard:

  • allowing for deep retrofitting of residential buildings,
  • supporting RES microinstallations and prosumer energy,
  • investing in renewables to improve air quality in Polish cities,
  • financing environmental education and information campaigns,
  • ensuring high biodiversity protection standards in energy-related projects,
  • providing support for community energy and partnerships.

We call on Polish voivodeships to show ambition, go for quality and to invest rather than just spend.


Notes

1. The other elements are prosumer renewable energy, air quality, environmental education, biodiversity protection and communities and partnerships in the energy sector.

Ukraine will scrap gas subsidies

Posted by on 24/11/14

For many years Ukraine has wasted huge amounts of energy through exorbitant subsidies on gas consumption, coupled with in-transparent multiple gas prices and large-scale corruption. Due to these factors, Ukraine has become one of the most wasteful energy consuming countries in the world. With household gas prices substantially lower than in any other European country and lower than the wholesale purchase prices, this regime had long become unsustainable.

Under the new political leadership it will finally disappear. There will be a single wholesale gas price which will cover the supply costs and yield a decent profit for the state-owned gas company. The IMF and the EU had conditioned their financial assistance to a profound reform of the Ukrainian gas market.

Gas prices will have to more than double, which cannot happen overnight. This huge rise of prices will induce consumers to a much more economic use of gas and higher energy efficiency. By the same token it will dampen the social impact of the price rise.

The future generated profits will be used to financing improvements of the gas distribution, improving energy efficiency and offering specific assistance to vulnerable groups of society.

This will be a revolution for Ukraine and other the countries still indulging in the luxury of fossil subsidies. It will not be easy to “sell” politically. But Ukrainians, having shown they can be tough, are likely to accept a higher gas price in exchange for security of supply.

If the anticipated increase of energy efficiency happens in the wake of the phasing out of subsidies Ukraine might become an example for other developing and emerging countries to be followed.

Eberhard Rhein, Brussels, 20/11/2014

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