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Thursday, May 8, 2008

Energy crisis in Europe because of lack of will

I present you 4 very interesting articles on ecology in EU. They are all interconnected as you may notice. The key issues are 2- the wind energy current stagnation due to various factors and the increase into CO2 emission for 2007 due to the over-allocation of CO2 emission allowances.

My comment is very obvious. There's something wrong with the scheme. What's the point of having allowances if their price is practically zero?! This should change sooner than later. It's good for the companies, but think of it this way-you don't put any burden on them now, but they are not investing in cheap technologies at all! They don't have any stimulus to do so.
And if the new US administration decides to make the low emissions its priority, what are we doing? Because it will require that from the rest of the world in order to defend its companies. Then our industries will be in the very bad position of having missed the opportunity to invest in such technologies while they were cheap and they'll have to invest in them when there is huge demand for them. We'll have missed the moment! From innovators, we'll be turned into bad imitators. I suggest that we all think on that. Climate change and climate policies are here to stay, we have to learn to live with it and to use it into our advantage!

By the way, notice that despite the EU initiatives and money to encourage investment in wind energy, banks are still hesitant to do so and prefer to invest into fossil fuels. Contradictions, anyone?

EU wind sector confident despite cash and skills shortage

2 April 2008

Europe's wind turbine makers are facing higher raw materials costs, a lack of trained workers and insufficient investments in electricity grids and new wind parks, with the record growth rates of previous years expected to level off. But the sector remains confident that EU renewable energy targets will be met.

The wind energy sector has enjoyed impressive growth since 2000 and particularly since the middle of the decade. Europe's wind capacity grew by 19% in 2006 alone, with the global wind energy market swelling by 32%, or approximately 15,000 megawatts, according to EurObserv'ER, the European Renewable Energy Observatory.

In 2007, global growth figures for the sector were even higher than in 2006, but Europe's share of the global total declined, with the US taking the lead and developing nations in Asia and Indian sub-continent making considerable strides. China in particular has set its sights on becoming a global leader in wind turbine manufacturing (EurActiv 15/11/07).

As a result, Europe's growth rates are expected to level off in the coming period.

The problems:
  • Structural limitations may be part of the problem.

In Germany, for example, growth is being slowed by insufficient electricity grid infrastructure, hesitant investors, and rising raw material costs, notably for copper and steel, according to Ulf Gerder of the German Wind Energy Association (BWE).

  • Lack of trained technicians and engineers

A lack of trained technicians and engineers also weighs heavily on the minds of the industry. It "is an enormous challenge in Europe," according to Kjaer, who cited examples of companies that are simply unable to fill dozens of vacancies for qualified workers.

The Commission wants wind to provide 12% of the bloc's power by 2020, up from the current figure of 3.7%. To reach this sub-target, 9.5 gigawatts of new wind energy capacity needs to be installed annually over the next 12 years.

Given the challenges facing the sector and with growth expected to slow, there are concerns the industry will fall short of the target. In 2007, only 8.5 gigawatts were installed.

But he also admits that rising global demand may influence the situation. While most turbines sold and installed around the world are still being built by European firms within Europe, the situation may be set to change.

A new US presidential administration may well push for a more favourable US renewables policy, and demand from China and India is unlikely to diminish. This is likely to inspire European firms to take their operations outside the EU where production is cheaper, more engineers are available, and consumers are closer, according to Kjaer. Many observers agree that such a scenario is particularly likely if a high euro exchange rate makes turbines produced in Europe more expensive. source

What EU is doing for the wind energy?

Various funding sources and initiatives exist to support the sector, including the Strategic Energy Technology (SET) Plan (see EurActiv LinksDossier) and the European Technology Platform for Wind Energy.

And many EU member states, including Germany and Spain, have given generous support to the sector in the form of guaranteed buy-back prices or feed-in tariffs for electricity produced by turbines. Some EU money is also available through the 7th Framework Programme for Research and Development (see EurActiv LinksDossier).

But the sector faces funding constraints and shortages of skilled labour and turbine components (EurActiv 02/04/08).

In addition, and despite increases in loans for renewables projects from banks, many investors still prefer to fund fossil fuel installations given the quicker return time on investments, according to Jerome Guillet, director of energy projects at Dexia.

Similar financing woes plague an entire range of 'low carbon' technologies (EurActiv 27/02/08). The Commission is aware of the issue and is expected to put forward a communication related to the financing of the SET Plan before the end of 2008. source

European CO2 emissions up in 2007

3 April 2008

Early analyses reveal a slight increase in EU industrial CO2 emissions in 2007, casting doubts as to the bloc's ability to honour its CO2 reduction commitments on time. However, analysts predict emissions will drop in coming years as the Commission begins to tighten the EU's carbon belt.

EU industrial installations publicised data on their CO2 emissions in 2007. The figures, which may be subject to adjustment by national authorities, indicate a 1.1% overall increase, according to an initial analysis by the carbon market consultancy Point Carbon.

Member states like Germany saw a 2% rise in emissions, and the UK emitted 85 million tonnes more CO2 than it was allocated.

The increase was "no surprise" to market watchers like Cédric Bleuez of Carbon Market Data, a UK-based carbon market research firm, since the EU's carbon market collapsed early on in its first phase (2005-2007) due to an over-allocation of emission allowances which caused prices to crash.

On today's 'spot' or immediate market, one tonne of CO2 is effectively free, with the price hovering slightly above €0. But the market is set to be re-launched in the coming months as the second phase (2008-2012) of the EU Emissions Trading Scheme (EU ETS) begins.

In October 2007, the Commission cut emission allowances for the second phase by 10% in order to re-establish a viable price for CO2. Most analysts expect a CO2 price tag of around €23, though the actual price will vary according to market forces and the level of economic growth in the EU.

The EU has set itself a tight schedule to reduce overall CO2 emissions by 20% by 2020, compared with 1990 levels. For industrial emissions covered under the EU ETS, this means a cap of 21% less CO2 emissions in 2020 compared with 2005 levels.

But the 'carbon scarcity' needed to push the price of CO2 per tonne to a level that can spur large-scale investments in low-carbon technologies is not expected until the third phase of the EU ETS (after 2013), casting doubts on the bloc's ability to honour its CO2 reduction commitments on time.

In addition, many of the EU's newer member states argue the reduced emission allowances for 2008-2012 will hurt their fledgling industries (EurActiv 22/08/07). source

Power sector to reap further 'windfall' profits, says report

7 April 2008

Over the next four years, power companies in five EU countries could reap profits in excess of €70 billion because of the continued allocation of free CO2 emissions permits, says a new report commissioned by WWF.

The report , prepared by the carbon market research firm Point Carbon, provides a calculation of the likely windfall or excess profits that will be made by energy firms in Germany, Italy, Poland, Spain and the UK during the second phase (2008-2012) of the EU Emissions Trading Scheme (EU ETS).

Most of the profits are expected in Germany, where firms could cash in on up to €34 bn. The UK's power sector could collect up to €15bn, with significantly lower profits estimated for firms in the three remaining countries.

EU consumers will inevitably face higher energy bills over the coming years as firms face higher costs for producing 'clean' or low CO2 electricity, according to the Commission, which estimates that energy prices will rise by 10% to 15% by 2020.

But the handing out of free pollution allowances under EU ETS pushes prices even higher, as firms are simply passing on to consumers the extra cost of CO2 even if they did not have to actually purchase the emission rights, according to Point Carbon.

In addition, "providing a free allocation to an individual plant that is carbon intensive does reduce the incentives provided by the scheme to invest in low emissions generation technology - thereby off-setting one of the main aims of the [EU ETS]," the company says in its report. source

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