Friday, 9 October 2009

Without Kingsnorth, we have an energy opportunity

Ed Miliband may not be able to help fund a new coal-fired power station, but now he can focus on low-carbon solutions elsewhere

Catherine Mitchell, Thursday 8 October 2009 15.35 BST
Far from being a disaster for Ed Miliband, climate change and energy secretary, the decision by E.ON to shelve its plans for a giant coal-fired power station at Kingsnorth in Kent, may in fact present a golden opportunity to put in place a truly effective coal policy.
Put bluntly, Miliband simply does not have the money to pay power companies to build the carbon capture and storage (CCS) equipment he has demanded to trap and bury some of the emissions from the new plant. The technology is unproven at this scale and would be very expensive. For its part, E.ON simply faces far too many uncertainties to plough billions into a new power station with any confidence.
Having tied himself in knots to fit around the huge new Kingsnorth plant as his coal policy centrepiece, Miliband now has a blank sheet upon which to set out the emission reductions, CCS trials and regulatory frameworks needed and what he does with his – not very much – money.
The report due on Monday from the Committee on Climate Change, which advises the government, is likely to push for even tougher controls on emissions, especially from the power sector. Having removed the millstone of Kingsnorth, he should set out plans that see no emissions at all from any new coal plants and a fixed date by which all existing plants are retrofitted with CCS.
So why did E.ON postpone its Kingsnorth plan? The company cites the global recession, and the consequent cut in energy demand, but says it still supports CCS. Clearly, risk and uncertainty for the plant has ballooned as the government has dithered over its policy and Greenpeace activists climbed an E.ON smokestack two years ago. The economic environment is uncertain; the global emissions environment is uncertain before the UN climate talks in Copenhagen; the costs of CCS are uncertain; in the UK, a new government may be elected, and the Tories have said they support limiting the emissions from power plants, although those limits are not yet known.
Yet I am still confused by the decision. E.ON has always been comfortable with grandstanding to get what they want. Why not sit it out until they got it? Perhaps it is brinkmanship: give us the funding for CCS and we will give you the big new plant you need to keep the lights on. Miliband may even try to give them what they want, but this would only intensify the protests over Kingsnorth and the Treasury is very unlikely to offer any more money. Another factor could be gas: prices have fallen and gas-fired stations are quicker and cheaper to build. They also provide much more flexible back up than coal for renewable energy supplies which wax and wane with the sun and wind – a safer bet for the future?
Another potential bonus for Miliband is that he has more opportunity to offer a CCS trial to Longannet power station in Fife. This would be a retrofit – adding CCS to an existing plant – not a new build like Kingsnorth, and as such it should be cheaper and would cut, not add to emissions.
The bluff of coal appears to have been blown away: E.ON because they didn't know what costs were and the government because they didn't have enough money to help. Coal power provides security of energy supply but a truly sustainable and secure system has to have another characteristic – minimal carbon. Miliband now has to take the chance that E.ON's withdrawal offers.

White House gloats at chamber of commerce exodus over climate bill

• PG&E, Exelon and Apple break with chamber• Climate change bill now before the Senate
Suzanne Goldenberg, US environment correspondent, Thursday 8 October 2009 23.07 BST
The Obama administration took a deliberate step into the row that has engulfed the business world today, gloating at a mini-exodus from the US chamber of commerce because of its climate change policy.
In the administration's first comments on the row, the energy secretary, Steven Chu, did not conceal his delight that high-profile companies like California's PG&E, Exelon and Apple had broken with the chamber because of its opposition to a climate change bill now before the Senate and moves to regulate greenhouse gas emissions by the Environmental Protection Agency.
"I think it's wonderful," Chu said.
"I think companies like that - Exelon and others - are saying we have recognised the reality," he said. "They are saying we can't be a party to this denial and foot-dragging."
Not that the chamber is ready to listen. Earlier today, a combative head of the chamber, Thomas Donohue, made it clear he was in no mind to rethink the organisation's policies because of the high profile defections.
"If people want to attack us, bring em on," he told reporters.
"We are not changing where we are," he said. "We've thought long and hard about what is important here and we are not going anywhere."
Donohue went on to accuse environmental organisations of orchestrating a series of defections from the chamber over the last two weeks. "It's sort of interesting that we have turnover all the time and these four companies sort of woke up one morning all decided they were on their own, going to quit and put it in the newspaper." In the most bitter defection, Apple this week said the chamber's resistance to action on global warming was "frustrating".
Nike, meanwhile, has questioned how the board arrives at policy. The footwear maker - which stepped down from the board - said climate change policy was not discussed at meetings.
Other business groups - such as General Electric - have also taken issue with the chamber's stand after another official, William Kovacs, called for public hearings on climate change legislation. He compared the hearings to the 1920s Scopes monkey trial about evolution.
Donohue insisted today that the group would support action on climate change - but he argued the bill passed by the house last June and similar measures now before the Senate would harm the US economy.

Bangkok diary: acronyms, ambition and underwater meetings

Norway has proposed 40% emissions cuts. Other countries are trying to bail out of Kyoto. And as the heat rises at the Bangkok climate change talks, Ed Miliband gets a thorough basting
Lost in a forest of acronyms
What's the difference between "sustainable forest management" (SFM) and "sustainable management of forests" (SMF)? A very great deal in the surreal climate change talks here in Bangkok, where the final order of these three letters in the forestry text could make the difference between the global logging industry being subsidised by governments to continue clear-felling Africa and Indonesia, and communities being left to live in strongly protected forests. SFM is the villain – a meaningless greenwash phrase adopted widely by the global logging industry to allow it to carry on business as usual. SMF, however, emphasises conservation and protection and is backed by the likes of Greenpeace and Global Witness, as well as many countries. The problem is that the phrase SFM keeps popping up in the draft texts, courtesy of the EU, and very few diplomats have a clue which one means what.
Ed gets the gauntlet
The politicians are not here, but the G77 group of 130 developing countries is keen to send a message to the UK energy and climate change secretary, Ed Miliband. Ambassador Di-Aping Lumumba of Sudan, chair of the group, is clearly amused by Ed's statement in the Guardian earlier this week that the talks are "too important to be left to the formal negotiators". Lumumba said: "Britain are not the bad guys here. I would say the current British government just lacks the resolve. The challenge now starts with Ed Miliband. Either you are the one to direct here, or you are a general whose troops do not address your will." Quite a few people in the Foreign Office and even the cabinet probably know Lumumba, because he used to work for McKinsey and has an Oxford doctorate. But that doesn't stop him pointing the finger at the west: "Developed countries are driven here by national interests and are being pulled by very small lobby groups, and the result is no progress and a race to the bottom."
At last, some ambition
At least Norway is showing real leadership. Yesterday it came up with proposals to increase its emission cuts to 30-40% – the most ambitious target of all developed countries and what the Intergovernmental Panel on Climate Change (IPCC) says is needed if we are to avoid more than a 2C rise in temperature. The talks have, so far, failed to extract any other pledges from rich countries. That leaves Annex 1 (industrialised) countries promising just 13-21% cuts, if you exclude the tentative US proposal, and a meagre 11-18% with it.
A very diplomatic row
There's restrained diplomatic fury in the halls here over rich countries' moves to bail out of the existing Kyoto protocol in favour of a brand-new, weaker agreement that the US – and countries including Canada and Russia – would prefer. NGOs of all hues are piling in behind the G77 countries to try to save the Kyoto protocol. Oxfam accused rich countries of not just trying to change the rules of the game, but trying to change the game itself. "Fifteen years ago, rich countries agreed they would take the lead. In 2007 in Bali, they reaffirmed their commitments would be greater than developing countries. But here they are trying to force the G77 and China to take actions that would be unfair considering the gaping hole in rich country commitments," stormed Antonio Hill, Oxfam's senior climate adviser. The WWF piled in with a cunning plan to keep Kyoto alive with a second parallel treaty that would cover future US and developing country emissions. Which is fine, except for the fact that the poorest countries might not all agree to being in the same room as the US.
No country is an island
Britain has gone out of its way in its climate change preparations to help the weakest countries, even going as far as setting up a separate political grouping of 20 "most vulnerable" nations, mostly small Caribbean and Pacific island states that stand to go under with any sea level rises. But is there low political intent behind this? The word in the Bangkok bars is that this is a sophisticated way to split the quarrelsome but so far united G77 countries at the end of the talks when the politicians fly in, the horse-trading starts and the promises of aid and development cash are made. Countries such as India and South Africa are angry at not being included as vulnerable ("Do we not bleed too?" asked one diplomat).
Maldives meeting
Can Miliband swim? The question arises because there is idle, unconfirmed chatter in Bangkok that Britain intends to convene a November meeting in the Maldives of all the heads of states of the vulnerable countries to prepare their positions – and perhaps their cheques – before Copenhagen. The Maldives cabinet has been practising its diving skills for a meeting underwater later this month. If the British gathering goes ahead in November, too, politicians should maybe pack their wetsuits.

Tropics face fish famine due to climate change, report warns

The first study to look at how climate change will affect food supplies offshore warns of severe declines in fish stocks in some of the world's poorest regions
Suzanne Goldenberg, US environment correspondent, Thursday 8 October 2009 18.21 BST
Fish populations in the tropics could fall by as much as 40% over the next half century because of global warming, jeopardising a vital food source for the developing world, a new study published today has found.
The waters off Indonesia - which rank among the most plentiful areas for fish today - could see supplies fall by well over 20% by 2055 because of changes in ocean conditions. Fishermen operating in US coastal waters (excluding Alaska and Hawaii) could also face large declines in fish stocks, as would those working off Chile and China.
"Fish are very sensitive to temperatures, and when the temperatures warm because of climate change, the fish will move away. And some of the species - those that can't swim that far - may locally go extinct," said William Cheung, lead author of the study.
The study, conducted by the Sea Around Us project at the University of British Columbia, is the first to look at how climate change will affect food supplies offshore. It is published in the journal, Global Change Biology.
But not all regions would be losers. Cooler climates would see their catch potential rise by between 30% and 70% by 2055, with Norway, Greenland, Alaska and the east coast of Russia seeing the biggest increases. This is because fish will migrate northwards as the oceans warm to seek out suitable cooler waters.
But while the overall productivity of the world's oceans will remain roughly the same, the sharp declines in fish stocks in Asia, the Caribbean, and semi-enclosed seas like the Mediterranean could cause severe shortfalls in some of the poorest regions of the world.
Sub-saharan Africa and south Asia are already threatened with food shortages because of climate change. A study last week by the International Food Policy Research Institute projected sharp declines in rice and wheat crops by mid-century because of global warming, which could see more than 25 million malnourished children around the world.
In many parts of Africa and south-east Asia, people depend on fish and seafood for half of their animal protein.
"It is devastating," said Daniel Pauly, a marine biologist at the University of British Columbia who worked on the study. "Basically you have lots of people living at the edge of the sea. They depend on fisheries, not in the way we do in northern countries. So income-wise and consumption-wise they are affected directly by the decline in catch."
The study used computer modelling to gauge the effects of climate change on more than 1,000 species of fish, from krill to shark, across the 20 largest fishing zones.
It did not take into account the effects of ocean acidification - caused by more carbon dioxide dissolving in seawater and which scientists expect will reinforce the effects of warming on the oceans. "We think that our estimates should be considered conservative because adding ocean acidification into the equation would further decrease future fishery potential," said Cheung. He said a follow-up study would look at the effects of acidification.
The scientists found that the warming seas were driving fish from their current habitats, with for example, tropical mainstays like snapper moving north. Some will successfully migrate to colder waters - reflected in the projected increase in fish populations in more northern waters. But others will not survive the changes. "Not all of them will make it. They can handle it only by shifting more energy to resisting the higher temperatures, which means less growth and less potential for harvesting," said Pauly.
The study did not focus on individual species. However, scientists said the changes brought by warming seas would see the decline and possible disappearance of familiar fish even in colder waters, like those off Britain. Cod stocks will flee British waters for Iceland, Norway and Greenland.

Lithium car batteries may shift balance of industrial power

Leo Lewis, Asia Business Correspondent

The lithium car battery is primed to become a “major disruptive force” over the next decade, dictating the fate of the world’s largest vehicle makers, reshaping the electronics industry and sparking possible tensions between the mineral haves and have-nots.
As carmakers ponder moves into greener manufacturing, the risks of mistakes grow greater with every new battery maker or technology that emerges. With the industry rules reset by lithium, analysts say, new businesses are expected to appear from nowhere. Many will fail but some may go on to become the new General Motors or Toyota.
Lithium batteries and the prospect of some future worldwide market for electric cars have already propelled Wang Chuanfu, the founder of the car and battery maker BYD, to become China’s richest man as shares in his company soared. A year earlier, he was 103rd in the rankings.
The prospect of lithium’s rising dominance over a post-oil economy has begun to draw warnings from government and industrial sources that seismic shifts are about to take place. The investment scene surrounding batteries, analysts say, may become more complex as new companies emerge to challenge the established players and speculative bubbles inflate throughout all stages of the battery-making process.

Brokers are touting ways to play the lithium story, from battery producers, such as Samsung SDI and Panasonic, to lithium miners, such as SQM and Chemetall. Several analysts believe that Nissan, with its plans to build battery production in Britain and Europe, represents the best carmaker in which to buy shares to invest in electric cars.
A potentially bloody technology race is under way and mistakes will be made in the stampede, Kanehide Yahata, a CLSA analyst, said. He highlighted the temptation prematurely to view Korean and Chinese producers as the likely winners because there are still huge discrepancies in expertise. Japanese research is eyeing a battery that would allow an 80km drive on a single charge. Korea’s research efforts are focused on developing one that could manage 32km.
“Some automakers, such as Mitsubishi, have missed the point by creating commercially unviable electric vehicles,” he said. “In contrast, Nissan’s Leaf shows great promise. Honda is fretting about what to do while Toyota is quietly treading water. GM is on the wrong scent with the Volt and Chrysler’s plan is just a bluff.”
Toyota’s senior management pointed yesterday to the lithium battery as the “deciding technology” by which Japanese and American carmakers would survive or perish. The supply of lithium batteries is expected to redraw corporate partnerships throughout Asia, particularly in the technology’s heartland of Japan: lithium batteries lie at the centre of the world’s biggest electronics merger between Panasonic and Sanyo.
Nomura Securities analysts predict that lithium will create a new balance of industrial power. “We think the barriers to entry [in battery making] could quickly lower over the next four or five years with the switch to electric and hybrid vehicles the main driver of growth. That could trigger a collapse of the existing business groupings, the adoption of new materials and the deterioration of Japan’s position as the industry pacesetter,” a recent note to investors read.
On lithium’s upstream, the transformation is visible. “In terms of interest and exploration, the lithium industry is experiencing an all-time high. Over the past four months, unclaimed lithium deposits have been snapped up at a rate never seen before,” Simon Moores, an Industrial Minerals analyst, said. The majority of projects, he warned, would end in failure.
Some see a potentially risky side to the boom. On a visit to Tokyo this week, Lord Mandelson, the Business Secretary, described the coming competition for resources such as lithium as “the next battle we are going to have to take on”.

Cost of going green: £7,000 a home

Published Date: 09 October 2009
IT WILL cost £16 billion to make homes in Scotland energy- efficient over the next decade, according to a new report.
The Scottish Government's new action plan on energy efficiency, published yesterday, revealed the price of steps such as improving insulation and replacing inefficient boilers.It estimated that this would cost £7,000 per home – a total of £16 billion.Last night, environmental campaigners WWF Scotland said it would be "money well spent". The figure, in "A Consultation on the Energy Efficiency Action Plan for Scotland" came as finance secretary John Swinney announced a £2 million pilot loans scheme to help pay for home- efficiency measures. The cash is aimed at helping to cut carbon emissions from homes by 42 per cent by 2020. Interest-free loans of between £500 and £10,000 will be available. Mr Swinney said: "The new scheme will provide practical measures that can make the quickest impacts – interest-free loans to upgrade insulation, replace inefficient boilers or install double glazing or small-scale renewables."Elizabeth Leighton, senior policy officer at WWF Scotland, said: " Scotland's homes account for a third of all greenhouse gas emissions. Therefore making them low-carbon is key to Scotland achieving its 42 per cent reduction in carbon emissions by 2020. "Improving home energy efficiency is a win for not only for carbon savings but for lifting people out of fuel poverty and creating thousands of green jobs."The £16 billion price tag sounds a massive sum, but it would be spread over a decade and the cash will come from a mix of sources including energy companies and householders as well as the public purse." Campaign group Friends of the Earth Scotland welcomed the launch of the consultation but called for more cash and regulation to cut energy use.Chief executive Duncan McLaren said: "The government's figure of £7,000 per home may seem eye-watering but compared to the average house value in Scotland, it's a small investment to make homes fit for the future."Government spending of at least £100 million per year is necessary to deliver energy savings and jobs at the scale required."The Scottish Greens described the plans as "underwhelming and unsatisfactory". Patrick Harvie MSP said: "SNP ministers want us to believe they understand the benefits and opportunities real energy efficiency can bring. "Their rhetoric may be excellent, but their actual commitments remain a spectacular disappointment. The loan scheme they're proposing is not even close to the scheme we proposed in last year's Budget. It's a drop in the ocean, a bare minimum so ministers can say with a half-straight face that they've done what they promised."Mr Harvie claimed that even if every penny was spent on delivering energy-efficiency measures, it would not get the job done in "300 Scottish homes out of more than two million".He added: "To make it work, to make a real difference to those with hard-to-treat homes, we'd need to see a fund worth tens of millions."

Redd comes with risks but there is no other choice than to try

By rewarding transparency and accuracy, we can make the UN's forest protection scheme work
Erik Solheim, Thursday 8 October 2009 13.07 BST
This week, the Guardian warned that a UN scheme to reward developing countries for protecting their forests in the name of carbon reductions – known as Redd (Reducing emissions from deforestation and degradation) – could be "a recipe for corruption and will be hijacked by organised crime without safeguards".
The Norwegian government, the largest financial contributor to Redd, is well aware of the risks of the scheme – but it has no choice about whether to act. The destruction of these forests produces 17% of annual global greenhouse gas emissions, or more than the entire EU put together. If managed correctly, Redd could be a catalyst for improved forest governance in general. It could also provide vital support to local communities and indigenous populations, protect biodiversity and water resources, and help countries adapt to climate change.
The question is not whether to implement Redd, but how.
The case of Brazil is encouraging. So far, the country has reduced deforestation by more than half since 2005. The introduction of a publically available satellite system makes the authorities capable of detecting illegal logging activities as they happen. The government's offensive has led to more than 700 arrests – among them many corrupt public servants – and the confiscation of 1.4m cubic metres of illegal timber. Brazil has set up the Amazon Fund – administered in a transparent and inclusive manner by the Brazilian development bank – through which to channel external support. Norway has committed up to $1bn by 2015, given adequate progress.
We're also working with Guyana – a country which faces very different challenges – to design an approach that takes focuses on transparency, verifiable results and improved governance.
Based on this and other experience, Norway has proposed a Redd mechanism under the United Nations Framework Convention on Climate Change (UNFCCC) which we believe could go a long way in reducing the risks we all agree are real.
Firstly, a phased approach. Countries would initially receive some financial support to develop national Redd strategies, to put in place environmental and social safeguards, and to develop credible systems – both for monitoring results and handling finances in a transparent manner. These would include robust anti-corruption measures – and only when this hurdle is passed would the country be eligible for large-scale payments.
Secondly, Redd should be managed at country rather than project level. We believe that many of the issues pointed out in the Guardian are exacerbated by a poorly regulated micromanagement approach. At a national level, we would be better positioned to spot attempts to exploit the system, and to hold governments accountable for both emission reductions and negative side-effects. It would also avoid rewarding conservation in one area while deforesting activities move next door (so-called "leakage"). To avert international leakage, the mechanism must provide sufficient incentives to motivate most tropical forest countries to join.
Thirdly, large-scale Redd payments would be based on real emission reductions, and increase with the accuracy of measurements. This approach would provide an incentive to develop monitoring capabilities, and to address more promptly the forest governance problems that stand in the way of payments. Meanwhile, developed countries would verifiably get what they paid for.
There is still more carbon in forests than in the atmosphere, and we have no alternative but to try to keep it there. I have no illusions this will be easy; however, when it comes to greenhouse gases, there is no such thing as business as usual – either we deal with this together, or the battle against climate change will be lost.
• Erik Solheim is the minister of the environment for Norway.

Hatfield ‘clean coal’ plant set to win £165m from EU

Robin Pagnamenta, Energy Editor

A “clean coal” power plant at Hatfield colliery in Yorkshire is in pole position to collect £165 million in funding from the European Commission, it was claimed last night.
The Powerfuel plant near Doncaster, which is co-owned by Richard Budge, the mining entrepreneur, appeared to have won against stiff competition from companies including E.ON, the German power group, which announced on Thursday that it was delaying plans for a new coal-fired station at Kingsnorth, Kent, for up to three years.
E.ON claimed the decision had been taken because of falling electricity demand in the UK caused by the recession. But Chris Davies, a Liberal Democrat MEP who steered carbon-capture and storage (CCS) regulations through the European Parliament, claimed the decision was instead linked to the group’s failure to secure European funding. He added that a formal announcement from the European Parliament was due shortly.
Powerfuel’s location at Hatfield has been touted as a potential starting point for a “cluster” of CCS plants where emissions from a string of industrial sites on Humberside could be piped into the North Sea for permanent storage in former gas fields. National Grid has thrown its weight behind the scheme.

Separately, a row was brewing yesterday over whether E.ON’s decision to delay its Kingsnorth project disqualified it from winning a separate funding package worth an estimated £1 billion from the UK’s Department for Energy and Climate Change (DECC).
Both E.ON and the Government insisted yesterday that the company could still be eligible for the money, even though the delay leaves it unable to meet a 2014 deadline set by the Government for opening a clean-coal demonstration plant. One of the other three contenders, Scottish Power, which is trying to build a clean-coal plant at its existing power station in Longannet, Fife, said it was “seeking clarification” from the DECC on whether E.ON was still involved in the CCS competition.
Nick Horler, ScottishPower’s chief executive, added: “If other bids fall away our consortium is happy to sit down with the UK Government and agree the way to deliver their requirements of commercial-scale CCS to their original timescale of 2014.” But a spokesman for the Government said: “Nothing has changed with our CCS competition. E.ON has not withdrawn.”
Meanwhile, a government adviser warned yesterday that E.ON’s decision to shelve its plans for the Kingsnorth plant is set to make Britain more reliant on gas for generating electricity — even as domestic supplies of the fuel are running out.
The share of UK electricity produced by burning gas is set to soar from 35 per cent today to as high as 50 per cent by 2012, according to Redpoint, an energy consultancy that advises the Decc. Philip Grant, director at Redpoint, said that gas-fired stations were most likely to fill the yawning supply gap that will open up in about 2015 as a quarter of the country’s coal and oil-fired plants are set to close to meet new European pollution rules. He warned that this would further expose UK homes to volatile wholesale gas prices.
Tony Hayward , the chief executive of BP, has claimed that CCS technology will not be commercial for at least ten years. Speaking at the World Gas Conference in Buenos Aires, he said gas offered the cheapest and quickest solution to cutting carbon emissions.

Powering to the front in the carbon capture race

Published Date: 09 October 2009
THE green lobby is proclaiming victory in the battle with German energy giant E.ON over its plans to build a coal-fired power station in the south of England. But the decision to postpone the Kingsnorth project is also good news for ScottishPower.
The environmentalists were celebrating the delay after claiming Kingsnorth would pump six million tonnes of carbon into the atmosphere. It brings a truce to a two-year struggle that began with Greenpeace campaigners staging a highly publicised protest on the Kent site.E.ON says it has postponed the project because recession has dampened demand for electricity. That may be so, as the rise in company failures is bound to have reduced consumption.However, there was always more to it than E.ON facing a decline in demand, or trying to vary its mix of energy sources.The company was hoping to fit equipment to the new station that would enable it to capture dangerous greenhouse gas emissions which, ironically, should have helped the environmental cause. As such it has been in competition to secure £1 billion in government subsidy to build the UK's first clean coal plant.E.ON is up against a consortium involving ScottishPower, Shell and National Grid, and another led by RWE npower. A shortlist is due to be announced soon with a decision on the winning bid expected next year. It is thought that a new industry could arise creating up to 50,000 jobs.Yesterday's announcement should not come as too great a surprise. Scotland on Sunday revealed last month that E.ON's chief executive, Paul Golby, had become frustrated at government planning delays and was hinting that he would not be able to meet the 2014 deadline for the carbon capture and storage (CCS) competition.But, before ScottishPower gets too carried away, E.ON has not withdrawn from the process. It is talking to the Germans and Dutch about a similar project, but says nothing has changed as regards the CCS competition.However, ScottishPower has already fitted a prototype emissions unit at the company's coal-fired station at Longannet in Fife, and now that E.ON's bid is officially wounded, the Glasgow firm looks to be in pole position