Saturday, 19 December 2009

CO2 Pact Leaves Businesses Feeling Up in the Air

The agreement achieved at the Copenhagen climate summit leaves business leaders around the world close to where they began, facing uncertainty about how environmental policy will affect their costs and decisions about investments.
Companies around the world had hoped the United Nations-sponsored talks would bring clarity on the new rules of the game in a new low-carbon world. They have had to think again.

"It's very frustrating at this stage that we haven't got a more-comprehensive agreement," said Richard Gledhill, head of carbon markets at PricewaterhouseCoopers.
Much of the business elite in rich countries has already resigned itself to tighter restrictions on greenhouse gases. Companies in energy-intensive industries are already mapping out plans to drive down their emissions. Utility executives in the U.S. have been pouring money into lower-carbon technologies.
A legally binding treaty on emission cuts would have created a level playing field for clean energy, allowing it to compete on an equal footing with fossil fuels. No such deal emerged from the summit.
"If we'd had bankable emissions reduction targets for 2020, it would have given a stronger price signal for carbon," said Joan McNaughton, senior vice president, Power and Environment Policies, at Alstom Power SA, an engineering company which is a leader in clean coal. "That would have kick-started a lot of the needed investment in clean technology."
Steen Riisgaard, chief executive of Novozymes, a Danish biotech company, says he has the technology ready for second-generation biofuels. "But the deployment of that technology will not happen as fast as it would have had if there had been binding targets at Copenhagen," he said.
Advocates of cap-and-trade -- which lies at the heart of climate legislation now stuck in the U.S. Senate -- dream of a global network of emissions-trading systems that could one day link up. In their view that would give industry what it needs to make decisions about long-term investments -- a robust and stable price of carbon. But Copenhagen has set back those hopes.
Carbon trading is in its infancy. Europe's Emissions Trading Scheme is the world's largest market. If the U.S., the world's second-largest emitter after China, sets up its own system, that could help boost the global carbon market to $1.9 trillion by 2020, says New Carbon Finance, a London-based research firm.
But regulatory uncertainty in sectors like power generation has driven down the carbon price on Europe market, and it had its biggest fall in six months on Thursday -- nearly 5% -- and stayed at that level Friday. And now it is falling even lower. EU Allowances for December 2010, The benchmark contract fell 70 cents per tonne of CO2 Thursday, settling at 13.66 euros. They stayed at the same level Friday. It was the biggest fall in six months.
"We were hoping that a deal in Copenhagen would open up new opportunities for emissions trading," said Patrick Birley, head of the European Climate Exchange, one of Europe's main carbon marketplaces. That expectation has now faded, he says.
Some analysts think Friday's events could still stimulate carbon trading. Friday's deal "has somewhat of a market-stabilizing element," said Ben Feldman, an executive director in J.P. Morgan Chase & Co.'s environmental markets group. He said it indicates a commitment to the concept of emission reductions.
In recent months, utilities, oil and gas companies in North America have become more active in carbon offsets, even on a voluntary basis. In the third quarter, U.S. carbon-trading volume increased 8% from the second quarter in spite of falling prices, New Carbon Finance says.
"Even with Copenhagen not really coming up with any major, ground-breaking decisions, everyone realizes that some sort of climate action is coming, and they are trying to learn the market," said Anthony D'Agostino, director of emissions markets at Royal Bank of Canada.
In the clean-technology industry, executives said they weren't counting on a deal at Copenhagen. They said companies have been making investments in low-carbon technologies on their own, driven by factors like the rising cost of traditional power and increased subsidies for alternative energy at the state and local level.
"Copenhagen is important to help drive awareness of the issues, but the private sector has not been waiting for governments for solutions," said Dallas Kachan, managing director of the Cleantech Group, a market research firm in San Francisco. "They have been putting money into this for a long time."
With or without a strong Copenhagen agreement, many U.S. states will continue to shift toward lower-carbon fuels, said Michael Peevey, president of the California Public Utilities Commission, which regulates investor-owned electric, gas and water utilities in the state.
"California will continue on the path it's on, regardless," Mr. Peevey said.—Liam Pleven, Rebecca Smith and Jim Carlton contributed to this article.
Write to Guy Chazan at

China 'will honour commitments' regardless of Copenhagen outcome

Wen Jiabao says China will commit and even exceed target in passionate plea for other countries to live up to promises

Jonathan Watts in Copenhagen, Friday 18 December 2009 13.58 GMT
China, the world's biggest emitter, struck a defiant tone at the UN climate talks in Copenhagen today, setting the stage for a tense final session of the negotiations.
With prospects of a deal still remote, the Chinese prime minister, Wen Jiabao, said his country would "do its share regardless of the outcome of international negotiations."
He stressed that China's efforts are voluntary rather than binding, but affirmed that his government had proved its ability to turn words into action. "China's measures are a sign of responsibility to the Chinese people and the whole of humanity. They are unconditional and they are not dependent on the reduction targets of other nations."
As the first speaker at the plenary session, Wen mounted a passionate defence of his country's existing commitments, saying China was prepared to make a "tremendous effort" to meet its pledge to reduce carbon intensity by 40% to 45%.
While he did not directly criticise any nations by name, the premier implicitly accused developed nations of failing to live up to the promises they have made so far. But, in a potential concession, he said China might be willing to beat its own goals. "We will honour our words with real action. We commit to meet and even exceed our target," he said. But there were no new targets or signs of major change in the government's position.
China was singled out for criticism earlier in the day by French president Nicolas Sarkozy who said progress in climate talks was being held back by China. It is understood that developed nations pressed Wen hard last night to raise its targets for emissions reductions and to make its data more transparent.
China insists that, as a relative newcomer to industrialisation, it is not obliged to meet international binding targets or to allow foreign monitoring of its emissions. But Wen said China would improve transparency, echoing the slight softening of language that has been seen on the issue that is of greatest concern to the US.
Observers said the body language, tone and content of Wen's speech indicated the strains in relations between delegations. "China is not happy about being put up there as a target," said Wu Changhua of the Climate Group. "I have rarely heard premier Wen so emotional. This is not what he expected. By setting a target ahead of Copenhagen China wanted to show it is playing a constructive role."
Yang Ailun of Greenpeace said the prospects of an agreement was dim if leaders pushed too hard. "China is taking a very tough line. It feels like the tactic of pressing China to agree to demands that it is not comfortable with is not going to work."
Barbara Finamore, the China programme director of the US-based National Resource Defence Committee, saw signs of hope in the speeches by the leaders of the world's two biggest emitters: "Premier Wen and President Obama are both signalling their willingness to come to a meaningful deal. We think there is certainly space here for agreement, but it looks like the negotiators are going to have to work overtime to hammer out the details."

Gordon Brown hails Copenhagen success despite widespread condemnation

Angela Merkel expected to announce a conference in Germany to deal with monitoring emissions targets — a major stumbling block in talks

Allegra Stratton in Copenhagen, Saturday 19 December 2009 01.47 GMT
The UN climate negotiations in Copenhagen broke up last night with Gordon Brown hailing the night a success on five out of six measures but most observers united in damning the meeting a grave disappointment.
Last night, the talks wrapped up with countries agreeing that rather than using Copenhagen to announce how they would curb their carbon emissions, instead over the the "next few weeks" they would publish their targets and another meeting would be convened to discuss the legality of the measures agreed.
Europe's pledge to move from 20% to 30% — trumpeted as likely all week — failed to materialise suggesting that the European leaders believed the outline agreement on offer not sufficient to merit the higher commitment.
"It is not sufficient to combat the threat of climate change, but it's an important first step ... No country is entirely satisfied with each element," said a US official.
The deal said little on the major sticking points of the last few days — whether or not the US or China and other heavy polluters were serious about curbing their emissions.
In a press conference held at 11pm immediately after talks had broken up, Brown himself said the agreement was just a "vital first step" and accepted that there was a lot more work to do to before it could become a legally binding agreement. In questions afterwards he declined to call it an "historic" conference.
He said that one of the outcomes of the day's negotiations was that Angela Merkel would be announcing shortly a conference in Germany to deal with the issue of monitoring emissions targets. This body would be tasked with developing the most effective means of monitoring whether a nation is cutting its emissions without intruding on its sovereignty - a major stumbling block in this week's negotiations.
Brown said: "This is the first step we are taking towards a green and low carbon future for the world, steps we are taking together. But like all first steps, the steps are difficult."
"I know what we rally need is a legally binding treaty as quickly as possible."
However Brown brushed off a suggestion that Europe hadn't gone from 20% to 30% in its carbon emission target because of the paucity of other agreements on the table.
Instead he said it was the first time so many countries had come together to agree a 2C target by 2050.
NGOs gathered in Copenhagen were severely disappointed. Senior climate change advocacy officer at Christian Aid, Nelson Muffuh said: "Already 300,000 people die each year because of the impact of climate change, most of them in the developing world. The lack of ambition shown by rich countries in Copenhagen means that number will grow."
Kate Horner from Friends of the Earth said: "This is the United Nations and the nations here are not united on this secret back-room declaration. The US has lied to the world when they called it a deal and they lied to over a hundred countries when they said would listen to their needs. This toothless declaration, being spun by the US as an historic success, reflects contempt for the multi-lateral process and we expect more from our Nobel prize winning President."
Tim Jones, climate policy officer at the World Development Movement said: "This summit has been in complete disarray from start to finish, culminating in a shameful and monumental failure that has condemned millions of people around the world to untold suffering."

What was agreed at Copenhagen – and what was left out

Jonathan Watts
The Guardian, Saturday 19 December 2009
National leaders and sleep-deprived negotiators thrashed out a text late last night that could determine the balance of power in the world and possibly the future of our species. The list below gives a breakdown of the key points:
"The increase in global temperature should be below two degrees."
This will disappoint the 100-plus nations who wanted a lower maximum of 1.5C, including many small island states who fear that even at this level their homes may be submerged.
Peak date for carbon emissions
"We should co-operate in achieving the peaking of global and national emissions as soon as possible, recognising that the time frame for peaking will be longer in developing countries …" This vague phrase is a disappointment to those who want nations to set a date for emissions to fall, but will please developing countries who want to put the economy first.
Emissions cuts
"Parties commit to implement individually or jointly the quantified economy-wide emissions targets for 2020 as listed in appendix 1 before 1 February 2010."
This phrase commits developed nations to start work almost immediately on reaching their mid-term targets. For the US, this is a weak 14-17% reduction on 2005 levels; for the EU, a still-to-be-determined goal of 20-30% on 1990 levels; for Japan, 25% and Russia 15-25% on 1990 levels. The accord makes no mention of 2050 targets, which dropped out of the text over the course of the day.
"Substantial finance to prevent deforestation; adaptation, technology development and transfer and capacity."
This is crucial because more than 15% of emissions are attributed to the clearing of forests. Conservation groups are concerned that this phrase lacks safeguards.
"The collective commitment by developed countries is to provide new and additional resources amounting to $30bn for 2010-12 … Developed countries set a goal of mobilising jointly $100bn a year by 2020 to address needs of developing countries."
This is the cash that oils the deal. The first section is a quick financial injection from rich nations to support developing countries' efforts. Longer term, a far larger sum of money will be committed to a Copenhagen Green Climate Fund. But the agreement leaves open the questions of where the money will come from, and how it will be used.
Key elements of earlier drafts dropped during yesterday's negotiations:
An attempt to replace Kyoto
"Affirming our firm resolve to adopt one or more legal instruments …"
This preamble, killed off during the day, was the biggest obstacle for negotiators. It left open the question of whether to continue a twin-track process that maintains Kyoto, or whether to adopt a single agreement. Europe, Japan, Australia and Canada are desperate to move to a one-track approach, but developing nations refused to kill off the protocol.
Deadline for a treaty
"… as soon as possible and no later than COP16 …"
This appeared in the morning draft and disappeared during the day; it set a December 2010 date for the conclusion of a legally binding treaty. The final text drops this date, but small print suggests it will still be next year.

Copenhagen negotiators bicker and filibuster while the biosphere burns

George Monbiot despairs at the chaotic, disastrous denouement of a chaotic and disastrous climate summit

George Monbiot in Copenhagen, Friday 18 December 2009 22.24 GMT
First they put the planet in square brackets, now they have deleted it from the text. At the end it was no longer about saving the biosphere: it was just a matter of saving face. As the talks melted down, everything that might have made a new treaty worthwhile was scratched out. Any deal would do, as long as the negotiators could pretend they have achieved something. A clearer and less destructive treaty than the text that emerged would be a sheaf of blank paper, which every negotiating party solemnly sits down to sign.
This was the chaotic, disastrous denouement of a chaotic and disastrous summit. The event has been attended by historic levels of incompetence. Delegates arriving from the tropics spent 10 hours queueing in sub-zero temperatures without shelter, food or drink, let alone any explanation or announcement, before being turned away. Some people fainted from exposure; it's surprising that no one died. The process of negotiation was just as obtuse: there was no evidence here of the innovative methods of dispute resolution developed recently by mediators and coaches, just the same old pig-headed wrestling.
Watching this stupid summit via webcam (I wasn't allowed in either), it struck me that the treaty-making system has scarcely changed in 130 years. There's a wider range of faces, fewer handlebar moustaches, frock coats or pickelhaubes, but otherwise, when the world's governments try to decide how to carve up the atmosphere, they might have been attending the conference of Berlin in 1884. It's as if democratisation and the flowering of civil society, advocacy and self-determination had never happened. Governments, whether elected or not, without reference to their own citizens let alone those of other nations, assert their right to draw lines across the global commons and decide who gets what. This is a scramble for the atmosphere comparable in style and intent to the scramble for Africa.
At no point has the injustice at the heart of multilateralism been addressed or even acknowledged: the interests of states and the interests of the world's people are not the same. Often they are diametrically opposed. In this case, most rich and rapidly developing states have sought through these talks to seize as great a chunk of the atmosphere for themselves as they can – to grab bigger rights to pollute than their competitors. The process couldn't have been better designed to produce the wrong results.
I spent most of my time at the Klimaforum, the alternative conference set up by just four paid staff, which 50,000 people attended without a hitch. (I know which team I would put in charge of saving the planet.) There the barrister Polly Higgins laid out a different approach. Her declaration of planetary rights invests ecosystems with similar legal safeguards to those won by humans after the second world war. It changes the legal relationship between humans, the atmosphere and the biosphere from ownership to stewardship. It creates a global framework for negotiation which gives nation states less discretion to dispose of ecosystems and the people who depend on them.
Even before the farce in Copenhagen began it was looking like it might be too late to prevent two or more degrees of global warming. The nation states, pursuing their own interests, have each been passing the parcel of responsibility since they decided to take action in 1992. We have now lost 17 precious years, possibly the only years in which climate breakdown could have been prevented. This has not happened by accident: it is the result of a systematic campaign of sabotage by certain states, driven and promoted by the energy industries. This idiocy has been aided and abetted by the nations characterised, until now, as the good guys: those that have made firm commitments, only to invalidate them with loopholes, false accounting and outsourcing. In all cases immediate self-interest has trumped the long-term welfare of humankind. Corporate profits and political expediency have proved more urgent considerations than either the natural world or human civilisation. Our political systems are incapable of discharging the main function of government: to protect us from each other.
Goodbye Africa, goodbye south Asia; goodbye glaciers and sea ice, coral reefs and rainforest. It was nice knowing you. Not that we really cared. The governments which moved so swiftly to save the banks have bickered and filibustered while the biosphere burns.

Winners to be revealed in £100bn bid battle to build UK windparks

Robin Pagnamenta: Energy Editor

A £100 billion project to erect up to 5,000 giant wind turbines around the coastline of Britain will take a big step forward next month when winning bidders to build nine offshore windparks will be announced.
The Crown Estate, which owns the UK seabed and is administering the auction, is preparing to announce the consortiums for the sites on January 6, The Times has learnt.
A string of companies is involved in the bidding for the Round Three projects, including a consortium involving ScottishPower and Vattenfall, the Swedish state-owned energy company that is thought to be well placed to win one of the most attractive sites — a 5,000-megawatt wind-farm site off the coast of Norfolk. It will be three times the size of the 341-turbine London Array project, which is being built in the Thames Estuary.
Another utility consortium called Forewind — including RWE npower renewables and Scottish and Southern Energy — is thought to be the front-runner to construct the even bigger 10,000-megawatt Dogger Bank plot in the North Sea.

Together, if completed, the nine sites would have the potential to generate 25,000 megawatts of electricity — the equivalent of 21 Sizewell B nuclear power stations, or enough to meet the needs of more than 30 million homes when the wind is blowing.
Nick Medic, a spokesman for the British Wind Energy Association, said there would be a long planning review and the first Round Three turbines would not be erected before 2015.
However, big uncertainties persist over the financing of the projects. Peter Atherton, utilities analyst at Citigroup, estimates that the cost of installing one megawatt of offshore wind is about £3.5 million — roughly five times the cost of building a gas-fired power station with the same capacity.
On that basis, 25 gigawatts of offshore wind would lead to a bill of about £87.5 billion, with further investment required to strengthen the national grid.
Mr Medic said most of the turbines used for the offshore wind farms would be at least twice as big as the 2.5-megawatt turbines commonly used now. Only a small number of offshore wind projects are currently generating electricity in Britain.