Tag Archives: alternative
Investors Call For Stronger Climate Investment Policies
28 Jun 2013 GLOBAL – The Institutional Investors Group on Climate Change (IIGCC) has called on European policymakers to create an investable low-carbon energy market by urgently tabling proposals for detailed policy. The group of investors, worth a combined €7.5trn, signalled its support for the EU’s proposed target of a 40% reduction in greenhouse gas emissions by 2030. But in its response to the European Commission’s 2030 Climate and Energy Green Paper, investors have said they would like to see draft legislation in place before the replacement of the current Commission and EU parliamentary elections next year. The longer investors have to wait for policy certainty, the stronger the economic pressure to defer investment decisions, the group said. U-turns on support for renewables and the collapse of the carbon price have meant that investors are losing confidence in Europe as a place to invest in energy. The IIGCC also emphasised the need for strong and reliable carbon price signals. While the compromise backloading vote on the Emissions Trading Scheme last week was welcome, investors believe the permanent removal of the structural surplus of carbon allowances is required. Investors would also welcome the introduction of a mechanism to reduce the risk of surpluses emerging in the future and have urged the Commission to review how other cap-and-trade schemes around the world – such as South Korea and California, or even China – have addressed this issue. Stephanie Pfeifer, chief executive at the IIGCC, which represents more than 80 of Europe’s largest investors, told IPE: “It is probably still possible to reach the 40% reduction in greenhouse gas emissions target by 2030. “But it is only possible with a lot more investment, and this will only come with the right policy in place. The longer we wait, the harder it will be, and the more investment is needed.” She pointed out that transitioning to a low-carbon economy require investment of €1trn by 2020, increasing to perhaps €7trn in the next 40 years, according to the Commission’s own projections. “New capital requirement rules mean institutional investors will need to provide more of this capital, but, to do so, they will need clear policy signals,” she said. “Without clear policy signals, allocations to infrastructure, especially low-carbon infrastructure, will be limited. Investors are therefore calling on the EU to put in place stable, long-term climate and energy policies to make its vision of a low-carbon future investable.” In their response, institutional investors have also expressed concern that policy drivers of both energy efficiency and renewable technologies in Europe are unnecessarily fragmented. Investors would therefore like to see more emphasis on pan-European instruments that work in tandem with the ETS. In addition, they have called for the Commission to consider how it might take steps to block further retroactive changes by EU member states to their renewables support packages and called for Europe to increase the ability of institutional investors to provide capital to energy infrastructure by allowing it to be included in tax efficient and liquid investment vehicles such as real estate investment trusts and master limited partnerships. The full response can be found here. In other news, the world’s 1,000 largest asset owners, including about 800 pension funds, have been challenged to disclose more detail of how each is managing climate risk. The Asset Owners’ Disclosure Project (AODP) has distributed its second global independent survey to the 1,000 funds responsible for more than $60trn (€46trn) in retirement savings across 63 countries. Fifty questions seek disclosure on how each is avoiding the looming carbon bubble in their fund portfolios. Responses will be researched, collated and scored, with the 2013 index being published for all funds later this year. Julian Poulter , AODP executive director, said: “Pension funds are long-term investors facilitating hundreds of millions of peoples’ plans for their later life. Fund trustees have the basic obligation to look after these nest eggs by managing all the known risks. “Smart fund trustees know the risks inherent in fossil fuel-related assets and are getting ahead of the curve when it comes to disclosing how they manage climate risk, including by investing in low-carbon assets to rebalance those risks. “Indeed – this is not about moral responsibility anymore but fundamental investment methodology. It seems highly likely that it is also a legal responsibility.” The AODP survey focuses on five core categories – transparency, risk management, investment-chain alignment, active ownership and low-carbon investment. It includes asset owners in all regions of the world. Last year’s survey and index are available here . Author: Nina Röhrbein Continue reading
Will EU Backloading Vote Rescue The Carbon Market?
MEP Matthias Groote predicts reworked carbon market proposals will be approved by MEPs in Strasbourg today By Jessica Shankleman, in Strasbourg 03 Jul 2013 The European Parliament is poised to back reforms to the carbon market today, that could push up the price of carbon and drive billions of euros of investment in industrial energy efficiency measures through to 2020. At least that is the view of Matthias Groote, the German MEP responsible for the “backloading” proposals that would temporarily withhold 900 million carbon allowances from the EU Emissions Trading System (ETS), in a bid to tackle the glut of carbon credits in the market that has pushed the price of carbon to record lows. Speaking to BusinessGreen ahead of the vote in Strasbourg, Groote, who is chairman of the Parliament’s environment committee, said he was optimistic MEPs will back the measure today, even though a similar proposal was narrowly rejected by 334 votes to 315 back in April . Groote insists the reworked proposals offer a better deal for energy intensive businesses as it would provide new funds for them to invest in energy saving technology before the end of this decade. “We have another approach in this proposal and we have another majority and it’s more innovative,” he said. Under the new plans, 600 million of the withheld CO2 allowances would be channelled through the European Commission and European Investment Bank’s (EIB) NER300 fund, which provides financial support to renewable energy and low carbon projects. However, the additional funding forms part of a compromise between three of the main political parties, which some environmentalists fear will water down the backloading plans to the point that they will fail to drive new investment. Speaking to reporters yesterday, Rebecca Harms MEP, co-chair of the Greens and European Free Alliance Party, questioned the effectiveness of the backloading proposals in the long term, arguing that they merely mask weaknesses in the system. “Backloading 900 million allowances is not going to help the trading system operate properly and help to reduce pollution,” she said. “We have got all these [surplus] certificates on the market… and our ambition is too weak. We need to raise the objective and keep ensuring we have the right price for CO2 so we can stimulate investment.” But some of the Greens also appear to have accepted that backloading will be a crucial first step towards delivering longer term reforms to the market. The group is now calling for the Commission to permanently retire at least 1.4 billion of allowances to address the oversupply issue. The Commission is due to publish its proposals for structural reforms later this year. Many businesses are also keen to see the backloading proposals approved. Earlier this week, 42 companies and trade associations backed a letter from 12 European energy and environment ministers, calling for the latest backloading proposals to be approved. However, other firms and trade associations, including Europe’s biggest business lobby group BusinessEurope, remain opposed to the measure amid fears it could push up the cost of energy. If backloading is approved, it has also warned against the permanent withdrawal of allowances, arguing that such a move would represent unacceptable interference in the market. Groote remains optimistic there is sufficient support in the parliament to pass the backloading plan at the second time of asking and is equally confident the European Council of member states will support the move if it is passed in Strasbourg. But he admitted that if backloading is rejected the current attempt to drive up the price of carbon would be “dead”, and serious questions would be raised about the Parliament’s ability to deliver wider ranging reforms to the EU ETS later this year. “It’s not clear,” he said, when asked what would happen if the backloading plan is rejected. “I don’t know what would happen. But… it will not happen. At least I hope not.” Continue reading
Poll Finds 51% Of UK Public Want More Investment In Renewables
02 July 2013 A poll by the Institution of Mechanical Engineers on UK energy policy has found that 51% of people think the government should support the construction of more renewable energy sources like solar, wave and tidal power. The people polled were asked about what types of technology they would favour to secure future energy supplies. Renewable energy sources like solar, wave and tidal power were the most popular, with 51% of people saying the Government should provide more support for these projects. 43% said there should be more support for offshore wind farms, 31% for onshore wind farms; while as few as 8% supported more gas-fired power stations. The poll of over 2,000 members of the public also found that 33% of people would consider personally investing in small-scale community renewable projects like wind farms, solar farms or small-scale biomass plants. Of the people surveyed, 25% said they would consider investing in Energy Bonds where money would be used to build large energy infrastructure projects like nuclear power stations or large offshore wind farms. The poll also revealed significant concern over the UK’s direction – 64% of the public is concerned about possible blackouts, and that 93% are worried about higher electricity and gas bills. “These results show there is a severe lack of public confidence in the Government’s confused energy policy,” said Dr Tim Fox, Head of Energy and Environment at the Institution of Mechanical Engineers. “There are clear concerns that there is an insufficient amount of investment in new energy infrastructure and that the UK faces a future of high energy prices for consumers and possible blackouts. Confidence in Government energy policy has been damaged by its mixed messages on low-carbon energy policy and uncertainty over its support for a new nuclear build programme,” added Fox. “Government must stop playing politics with our energy system and the environment and make clear exactly how it is going to ensure that the country’s future needs are affordably met,” said Fox. “It is only with this clarity that energy companies will have the confidence to invest in the infrastructure needed to keep the nation warm, lit, moving and working.” This poll follows the publication of another Institution poll on 28 May which found that 43% of the public would support a Government subsidy for the construction of new nuclear power in the UK – which compares with just 28% who said they would not. The poll of 2,034 people was carried out by ICM, on behalf of the Institution of Mechanical Engineers , on 3-6 May. Continue reading
