Tag Archives: alternative
USDA, FAA Extend Agreement To Develop Biobased Aviation Fuel
Harvard Don Tells EU Kill Grants to Save Carbon: Energy Markets
By Mathew Carr on April 17, 2013 Europe may have to change course to save the world’s biggest carbon market after an unprecedented plunge in pollution-permit prices, according to a pioneer of so- called cap-and-trade systems designed to help the environment. The European Union should consider moving away from costly subsidies for renewable energy and carbon-efficient projects, which compete with the market in meeting nations’ emission- reduction targets, said Robert Stavins, the director of Harvard University’s Environmental Economics Program. Carbon permits for December fell to an all-time low after lawmakers yesterday rejected a rescue plan to tackle a record surplus of allowances. Prices in the EU’s 54 billion-euro ($71 billion) emissions market have slumped 63 percent from a year ago as the euro area’s second recession since 2008 cut industrial demand for permits, exacerbating the glut. The cap-and-trade system, started in 2005, is the bloc’s main tool in meeting greenhouse gas-reduction targets, a model gaining favor from California to China and Australia. “This would be a foolish time for the EU to back away from cap-and-trade because the rest of the world is starting to follow,” Stavins, who helped set up a market system to control acid rain in the U.S. 30 years ago, said in a phone interview yesterday. “The climate and energy directorates in Brussels need to work together going forward to ensure they’re interacting benignly instead of in perverse ways.” Carbon Plunge Carbon fell as much as 19 percent to a record 2.50 euros a metric ton on the ICE Futures Europe exchange in London, compared with 31 euros a ton in 2006. It traded at 2.57 euros at 2:04 p.m. Australia will lower its expected revenue from selling carbon allowances after the EU, its partner in a cap-and-trade system set to start in 2015, failed to win support for its surplus fix, Climate Change Minister Greg Combet said today. Europe’s emissions-trading system imposes limits on about 12,000 power plants and factories. The program allocates permits to polluters that must surrender enough allowances to cover their discharges of carbon dioxide or pay fines. Declines in the cost of allowances erodes the incentive for them to stop burning cheaper fossil fuels and invest in carbon-efficient technology. Backloading Critics EU parliamentarians opposed a proposal to alter the bloc’s emissions trading law yesterday, which would have enabled the European Commission to withhold the sale of some allowances through 2015 and reintroduce them at the end of the decade in a strategy known as backloading. The Parliament’s vote followed criticism from lawmakers including the European People’s Party, the biggest group in the assembly, which argued that the move amounted to market intervention and would boost energy prices at a time when the economy is shrinking. Gross domestic product in the region contracted 0.6 percent last year and will decline in 2013 by 0.4 percent, according to the median of 61 economist forecasts compiled by Bloomberg. EU Climate Commissioner Connie Hedegaard, who proposed backloading as a stopgap measure, said the vote was “not the total end of everything” and she would continue to work on a more permanent fix. “Many of those who don’t support backloading believe in the emissions-trading approach,” Dirk Forrister, president of the International Emissions Trading Association, a Geneva lobby group, said yesterday by e-mail. “Emissions trading continues to be the policy of choice for addressing climate change.” Renewables Cost EON SE, Germany’s biggest utility, estimated in November that solar technologies were costing consumers at least 10 times more than prices suggested by the carbon market at the time, when permits were more than 6 euros a ton. “The emissions trading system has sadly become marginalized, and we are concerned that it has lost its ability to prompt low-carbon investments,” according to Oeystein Loeseth, chief executive officer of Vattenfall AB, the biggest Nordic utility. “Against this backdrop, the EU needs to recalibrate,” he said in a statement yesterday. The bloc provided $50 billion of renewable-energy support in 2011, the highest level in the world and more than double the U.S.’s $21 billion, according to International Energy Agency estimates from Nov. 12. The commission, the EU’s regulatory arm, said in a March 27 paper that the bloc needs better coordination between its energy efficiency, renewables and climate policies. Those targets “do absolutely nothing for the environment” in an economy with a cap-and-trade market because they merely shift emissions to other industries, Stavins said. U.K. Floor EU carbon permits will fall to near zero as the bloc seeks to repair the market, said Patrick Hummel, an analyst in Zurich for UBS AG. “There is no plan B in my view,” he said yesterday by e- mail. “Instead, we might see some national governments thinking about carbon taxation, but of course this debate is at the very beginning.” The U.K., the market’s second-biggest emitter, set a floor on carbon prices this month to encourage investment in clean- energy projects. The EU vote shows policy makers shouldn’t start “a war” against their emitters while most of the rest of the world isn’t regulating greenhouse gases, said Matteo Mazzoni, an analyst at NE Nomisma Energia Srl in Bologna, Italy. The EU will probably take two years to address the oversupply because of resistance from manufacturers and other energy-intensive industries, which lobby lawmakers, Mazzoni said. “Some people may object to the fact that the EU got out in front” in its bid to tackle climate change, said Harvard’s Stavins. “I’m not going to applaud and I’m not going to jeer.” To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Continue reading
If Carbon Markets Can’t Work in Europe, Can They Work Anywhere?
By Bryan Walsh April 17, 2013 But the ETS—and carbon trading more generally—is not doing well, and its problems are taking some of the green shine off of Europe. Since its launch the ETS has struggled, with the price of carbon falling as the 2008 recession and overly generous carbon allowances undercut the market. In the ETS business are given free allowances to emit carbon—too many free allowances mean they don’t need to reduce their carbon emissions much, which erodes the demand for additional carbon allowances on the market and causes the price to drop. Prices fell from 25 euros a ton in 2008 to just 5 euros a ton in February. There was a way to fix this—take 900 million tons of carbon allowances off the market now and reintroduce them in five years time, when policymakers hoped the economy would be stronger and demand would be greater. As anyone who’s taken Econ 101 would know, artificially reducing the supply of carbon allowances in such a drastic way—something called “backloading”— should force the price back up.America may be a bit of a mess when it comes to climate policy—though that mess has been surprisingly effective in reducing carbon emissions in recent years—but environmentalists could always look across the Atlantic Ocean to Europe , where greens are green, cars are small and global warming actually matters. Countries like Germany and Spain have led the way in supporting renewable energy, and cities like Amsterdam and Copenhagen put America to shame when it comes to encouraging dense development and carbon-free cycling. But the green jewel was the Emissions Trading Scheme (ETS)—the European-wide carbon market, by far the largest such system in the world. The ETS, launched in 2005, allowed Europe to put a common price on a ton of carbon, which was meant to encourage utilities and factories to reduce carbon emissions in the most efficient way popular. A similar system carbon cap-and-trade system for the U.S. died in the Senate in 2010, and there’s little chance it will be revived any time soon. ( MORE: As the World Keeps Getting Warmer, California Begins to Cap Carbon ) But on April 16, the European Parliament surprised observers by voting down the backloading plan. In turn, the European carbon market collapsed, with the price of a carbon allowance falling by more than 40% over the day. “We have reached the stage where the EU ETS has ceased to be an effective environmental policy,” Anthony Hobley, the head of climate change practice at the London law firm Norton Rose, told the New York Times. The ETS is a mess. Backloading failed because even in very green Europe, economic concerns seemed to trump environmental ones. European Parliamentary members worried that any action that would cause the price of carbon to rise would add to European industry’s already high energy costs. Europe, unlike the U.S., doesn’t have relatively cheap, relatively clean natural gas to help cushion that blow. At the same time, European nations like Germany are rethinking some of their renewable energy policies, concerned by the rising cost of electricity. It looks like a textbook example of what Roger Pielke Jr. calls the “ iron law of climate policy “: when climate policy starts to hurt economically, even the greenest states start to back away. It’s possible that backloading may get a second chance before the European Parliament, and even without a viable carbon market, Europe is still the global leader in climate action. Nor is the ETS the only game in town. California launched its own cap-and-trade system this year—though that’s come under political pressure as well—and Australia has introduced a price on carbon. China may do so as well. But the hope that we may be able to reduce carbon emissions the same way we cut pollutants like sulfur dioxide and nitrous oxide—through a well-run cap-and-trade —seems to be dimming, a victim of its own complexity and a sluggish global economy. That might leave the door open for other policies, including a straight carbon tax, more support for renewables or increases R&D funding for carbon-free power. We could use all three, but carbon markets may be finished. If carbon trading can’t make it in Europe, it can’t make it anywhere. Read more: http://science.time…./#ixzz2QjSZABlC Continue reading
