Home: Renewable Energy News: Wednesday 27 February, 2008

Renewable Energy News

WEDNESDAY 27 FEBRUARY, 2008 |

End of solar rebates?

The Federal Government is reviewing all its climate change related spending programs, worth hundreds of millions of dollars. The Government is assessing whether they will be needed after Australia has established an emissions trading scheme. The aim of the review, according to Finance Minister Lindsay Tanner, is to assess whether the existing patchwork of schemes are efficient or could be better designed. Citigroup’s public-sector group head Roger Wilkins will be conducting the review, which will examine whether subsidies to promote alternative energies or particular technologies will be needed, while the government looks for savings of $3 billion to $4 billion next year. The budget initiatives, worth $156 million over four years, included $96.7 million over four years to establish the Australian Centre for Climate Change, $2.3 million over four years for coal mine methane reduction, a $39.1 million expansion of the photovoltaic rebate program, and $18.4 million over four years for a global initiative on forests and climate.

The former federal government also provided $336.1 million over four years for green vouchers in schools after the election and $252.2 million for rebates for solar hot water systems. The renewable energy development initiative provides funding of up to $100 million in competitive grants to allocate to businesses over seven years for research and development, proof-of-concept and early stage commercialisation projects with high commercial and greenhouse gas abatement potential.

Regulation of carbon trading to go to new independant body

Regulation of the carbon market should be taken out of the hands of UN bureaucrats and transferred to a new independent body drawn from central banks and stock exchanges, according to an influential group of legislators. The proposal was among several affecting the carbon market floated at a meeting in Brasilia of the Globe (Global Legislators’ Organisation for a Balanced Environment) G8+5 Legislators’ Forum – more than a hundred parliamentarians from the G8 countries plus Brazil, China, India, Mexico and South Africa. Another policy document suggested raising much greater sums to help developing countries adapt to climate change, by extending the existing levy on the CDM to other trading systems including the EU ETS, and possibly also to international aviation. The proposal for reform in the regulation of the carbon market came from a working group dealing with market mechanisms. In its submission to the forum, the group argued that both the CDM and the EU ETS were too prescriptive as to the number and type of projects that qualify for credits, and that they had produced market failure through inappropriate regulation, particularly with respect to projects in the developing world. It argued that the secretariat of the UNFCCC should no longer be responsible for both the deliberative functions of the UN climate treaty and the day-to-day work of project approval and regulation of the CDM. Working group Chairman and former UK Trade and Industry Secretary Stephen Byers said that if the carbon market was to grow effectively, there was a need for a new international framework to enable carbon to be traded like any other commodity. “There would remain a role for the United Nations, which will be to lay down the policy objectives, but then there would be a separate body, perhaps made up of central bankers and stock exchanges worldwide, who would actually be responsible for implementation,” said Byers. “The UN is probably not the best organisation to do that detailed implementation work – we think that would be far better done by people who have experience of markets,” he added.

Carbon Market to be worth $100 billion dollars

The global carbon market will be worth €63 billion (A$100 billion) this year, while traded volume will amount to 4.2 billion tonnes of CO2-e, up 56% on 2007, according to a report compiled by Point Carbon. Outlook for 2008 reported that the market for allowances in the EU ETS will be worth around €46 billion in 2008, with options and auctioning contributing to the increased volume. In the market for carbon credits generated by emissions reduction projects in developing countries through the Kyoto Protocol, Point Carbon estimated that the size of the market would grow to €12 billion this year, although the share of the primary market in this figure is likely to shrink, while the value of secondary transactions will grow strongly.

Point Carbon’s Carbon Market Research Team Manager Kjetil Roine, said there were several reasons why the global carbon market would grow this year. “Most importantly, the tightness of the phase two cap [of the EU ETS] is expected to increase the traded volume compared to 2007, simply because more players are short of allowances. The proposed EU climate and energy package of 23 January this year further strengthens this tightness,” Roine said. In total, carbon markets outside the EU ETS and CDM are predicted to see transactions worth €1.5 billion in 2008, the report predicted. These markets include among other the Kyoto Protocol’s JI mechanism as well as Kyoto’s governmental credits and the emerging RGGI in the US.

Greece will cover its commitments under the Kyoto Protocol

The Greek Environment Minister has approved the NAP for emission trading in the period 2008-12, national media reported. Greece will more than cover its commitments under the Kyoto Protocol, due to the approved NAP and other measures taken by the government, Environment Minister George Souflias said, according to news agency ANA-MPA. From 2008 through 2012, Greece will allocate 346 million allowances, all of which will be free of charge. The country has also set aside 4.8% of the total emission rights for new plants in the five-year period, amounting to 16.7 mtCO2. Greece’s NAP covers 152 installations. It will now be submitted to the EC for final approval. Greek facilities covered by the EU ETS emitted 70 mtCO2 in 2006, 800,000 tonnes more than they will receive allowances to cover for the next five years. The Greek Government also plans to promote energy conservation and the use of renewable energy, Souflias said. In 1990, Greece emitted 108.7 mtCO2-e, excluding land use and land-use change and forestry, according to UN data. In 2004, the most recent available figure for its annual total greenhouse gas emissions, Greece emitted 137.6 mtCO2-e.

Sydney-based carbon credit firm to list on ASX

Sydney-based carbon credit firm Greenair Ltd has announced it is seeking to raise up to $100 million through a share offering on the Australian Stock Exchange within the next 12 months. Greenair, which has signed contracts for carbon credit projects in Asia, the Pacific and South America, was one of the first Australian companies to participate in the multi-billion dollar global carbon market as a result of Australia’s participation in the Kyoto Protocol, it said. “With Australia recently signing the Kyoto Protocol, and the Rudd Government’s plans to introduce a regulated carbon emissions trading system in Australia, the opportunities for GreenAir are significant,” said Greenair Chairman and Chief Executive Himanshu Dua.

The company’s initial 21 carbon credit projects cover forestry ventures, biomass power plants and coal mine methane reduction. The projects are expected to generate more than 9 million carbon credits under the CDM. Greenair said that another 30 to 35 carbon credit projects in China were expected by the end of March, putting the company’s “base case calculation” at more than $420 million. Dua pointed out that demand for carbon credits would outpace supply in the coming years, with some market analysts expecting a global shortage of 124 million by 2012. By 25 February, there were around 121 million CERs issued by the UN, although there were requests for 132 million, according to the website of the UNFCCC.

Carbon futures and options contracts available

The New York Mercantile Exchange (Nymex) has announced that it will introduce the first batch of carbon futures and options contracts in March as part of its Green Exchange initiative. The first slate of contracts, which will be launched on 16 March for trade the next day, will include EUA futures and options, as well as CERs futures, it said. The EUA and CER futures contracts will be physically delivered at the UK Emissions Trading Registry, with a contract size of 1000 metric tons of CO2 and a minimum price fluctuation of €0.01 per unit, according to Nymex. The EUA options contract will be a European-style option that will exercise into the underlying EUA futures contract, and the options will expire three business days prior to the EUA futures contract. The new futures contracts will be available for trading on the CME Globex electronic trading platform, and options contracts will be available for trading on the Nymex trading floor. All contracts will be cleared through Nymex’s Clearport system. Nymex has set up the exchange in partnership with Evolution Markets and Icap, both well-established brokers in environmental markets, while large investment banks will trade on the new platform. Nymex next month will also launch seasonal nitrogen oxide emission allowance contracts, annual NOx allowance futures and sulphur dioxide emission allowance options contracts, the exchange said.

Australia to meet Kyoto Protocol target

An increase in renewable energy generation will ensure that Australia complies with its Kyoto Protocol target, the Federal Government has announced. The Department of Climate Change published a report revising the country’s projected greenhouse gas emissions, taking into account planned measures by the Labor government. Climate Change Minister Penny Wong said the analysis shows Australia is on track to meet its target. “The Rudd Government’s drive to ensure 20% of Australia’s electricity supply is from renewable energy by 2020 will reduce our emissions by an extra 4 million tonnes annually in the Kyoto period,” Wong said.

According to the Department of Climate Change, Australia’s greenhouse gas emissions are projected to reach 599 mtCO2-e annually over the Kyoto period, up from 554 mtCO2-e in 1990. However, the data showed that the stationary energy sector will increase its output by 56% above 1990 levels, to 304 mtCO2-e. The main reason Australia keeps its emissions in check is that it has reduced its forest cover removal, thus cutting emissions from land use, land use change and forestry to 24 mtCO2-e in 2008-12, from 136 mtCO2-e in 1990.

Australian government commits to long term emission reductions

Climate Change Minister Penny Wong has reiterated the Government’s commitment to a long term target as Professor Ross Garnaut released his interim report in the lead up to the introduction of an emissions trading scheme. “Garnaut’s report, his interim report and his final report are an enormously valuable contribution to government policy,” said Wong. “In terms of the 60% target, I want to just emphasise that was a target set on the basis of advice and consideration from the Intergovernmental Panel on Climate Change so a scientific advice. It’s also one of the parameters in the Stern report. So we have set a 60% reduction. That is a very substantial reduction by 2050,” Wong added. She also said that one of the key policy matters that the government will have to deal with is the midterm target. “That is, what do we say will be the target pre 2050 in the post, in the second Kyoto period and that target in many ways will be much more significant in terms of getting Australia on to a low emissions trajectory,” said Wong.

Wong also said that a long-term target is important because it gives the signal to the community and to industry about where Australia needs to go. “We’ve also said we will set a mid-term target after we receive Professor Garnaut’s final report, and Treasury modelling and a range of other contributions, because we understand we have to have a mid-term target as well,” she added. Wong also said that the Government will try and reduce emissions at least cost through a market mechanism, which is the emissions trading scheme. “Reducing emissions is a key priority, that’s why we are pressing forward with our emissions trading scheme,” she said.

Vic to build worlds largest photovoltaic solar power station

The world’s largest photovoltaic solar power station will be built in northern Victoria, after a decision by TRUenergy to invest $290 million in renewable energy company Solar Systems to build the 154 MW solar power station. Construction is due to begin in 2009, once the site has been finalised. The investment by TRUenergy follows on from a $50 million contribution by the Victorian Government and $79.5 million from the former Federal in 2006 towards this leading-edge solar power station.

Victorian Premier John Brumby said the project represented investment across the state, with PV modules made in Melbourne, a pilot stage in Bendigo and the large-scale power station in the state’s north-west. Energy Minister Peter Batchelor said the Abbotsford manufacturing plant was capable of producing more than 50 MW of PV modules each year – the highest capacity in the southern hemisphere – with the possibility to expand in the future. Batchelor said construction of the full-sized power station in 2009 will follow the completion of the demonstration plant currently being built at Bridgewater, near Bendigo. “In the areas of solar, wind, wave and geothermal energy – as well as clean coal technology – Victoria has huge potential for investment and advancement, with room for new players to bring development proposals to the table,” Batchelor said.

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