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US Army Looks To Renewables
17 July 2013 Elizabeth Block While the US continues to drag its feet on climate change in terms of national emissions legislation, its armed forces have been investing in renewable energy – on a very large scale. This article is taken from the May/June issue of Renewable Energy Focus magazine. To register to receive a digital copy click here . According to Pike Research , part of Navigant’s Energy Practice, the total capacity of US Department of Defense (DOD) renewable energy installations will quadruple by 2025 – from 80MW in 2013 to more than 3200MW by 2025. “US military spending on renewable energy programmes, including conservation measures, will reach almost $1.8 billion in 2025,” says research analyst Dexter Gauntlett. “This effort has the potential to not only transform the production, consumption, and transport of fuel and energy within the military; it will likely make the DOD one of the most important drivers of cleantech in the US.” Or, as Pike puts it in a new report : “As the largest single consumer of energy in the world, the US Department of Defense (DoD) is one of the most important drivers for the cleantech market today.” In fact, this is not a new development. According to a report by the Congressional Research Service energy specialist Anthony Andrews, Congress began mandating reductions in energy use by federal agencies back in the early 1970s. This was to be achieved by improving building efficiency and reducing fossil fuel use. This was followed by President Obama’s Executive Order of 2009 – mandating a 30% reduction in energy usage and other measures by federal agencies. Later, Net Zero, a 2010 policy introduced by the Army Energy Programme, decreed that on-site operations should use energy produced on-site, leading to use of solar at forward bases in Afghanistan, for example. In a related defence development, the Defense Advanced Projects Agency (DARPA) has been looking into renewable jet fuel. And in the 2011 documentary Carbon Nation, Colonel Dan Nolan, US Army (Ret) said: “Climate change in fact is a national security issue. This is no longer the purview of Birkenstock-wearing tree huggers. Not that there’s anything wrong with that.” Net Zero, similar to other military policies, is driven not by concern about climate change or green jobs but by the need for energy security – and fuel economy. While Net Zero is an army initiative, the other service branches, the US Air Force, Navy and Marines all have their own programmes and targets. As the Army says: “Today the Army faces significant threats to our energy and water supply requirements both home and abroad. Addressing energy security and sustainability is operationally necessary, financially prudent, and essential to mission accomplishment. The goal is to manage our installations not only on a net zero energy basis, but net zero water and waste as well.” In fact, military involvement in renewables should be seen as two separate but connected strands: efforts directly funded by government, usually via contracts with defence contractors, and independent efforts by the defence and aerospace industries, which depend on the armed forces’ procurement offices. The future As Chuck Hagel, the new US Secretary of Defense, is known for his opposition to Kyoto, a question was put to the DoD about continuity. Sharon Burke, Assistant Secretary of Defense for US Operational Energy Plans and Programmes, said: “Our commitment to giving our troops the best energy options remains unchanged. DoD missions require a significant and steady supply of energy, which is increasingly a requirement that can be exploited by our adversaries as a vulnerability. That’s why DoD’s investments in energy efficiency and renewable energy, including new investments in the FY14 budget, are focused on enhanced military capabilities, more mission success, and lower costs.” Meantime, and very importantly for our sector, it is not just defence industries. Some solar firms are in the picture, such as Solar City , which lists “military” among customer categories on its website, along with building companies and utilities. For example, late last year the US Army launched a major solar project for up to 4,7000 military homes at Fort Bliss, Texas, and the nearby White Sands Missile Range in New Mexico, with Solar City and Balfour Beatty Communities LLC , part of Balfour Beatty plc, as partners. This is a 13.2MW project, part of Solar Strong, Solar City’s five-year plan for more than $1bn in solar projects for up to 120,000 military homes throughout the US. Local utility El Paso Electric is currently in discussions on the Fort Bliss and White Sands projects. Importantly, the various US directives have stimulated innovation. For example, the US has a Defense Innovation Marketplace – and this should not come as a surprise. We all know that we owe the internet to early US military efforts. Given the large sums involved, US military commitment to low carbon could be very good news for our sector. A full copy of the report can be found here . about: Elizabeth Block is a London-based writer specialising in renewable energy. A native of New York in the US, she has a background as a financial journalist, specialising in institutional investment. Continue reading
Out Of Thin Air: Farmers’ Chance To Cash In On Carbon Trading
By Graeme O’Neill July 17, 2013, 3:30 a.m. MONEY FROM THIN AIR: Ben Keogh says his company has had “more demand than we can handle” from big polluters seeking to invest in on-farm schemes to capture carbon and reduce greenhouse emissions. THERE is money to be made from thin air if farmers in the northern Victorian Mallee are ready to become players in the growing international market for carbon credits, carbon-farming consultant Ben Keogh believes. Mr Keogh, managing director of Castlemaine-based carbon-farming consultancy Australian Carbon Traders, said his company already had “more demand than we can handle” from big polluters seeking to invest in on-farm schemes to capture carbon and reduce greenhouse emissions. Mr Keogh said Australia was moving towards an emissions trading scheme (ETS), which would require local polluters to spend 50 per cent of their investment in carbon credits within Australia – no more than 50 per cent can be invested overseas. “The details of the ETS are still not clear, but we always knew that Australia would join the world in floating the price of carbon credits,” he said. But he warned that if Australian farmers were not ready and well organised to secure funding for on-farm schemes to cut emissions, they will miss out, and the investment would go to farmers in China, India or Brazil. “Two strategies we have identified for reducing on-farm emissions in the Victorian Mallee are the use of coated fertilises, to reduce nitrous oxide emissions, and planting mallees to sequester carbon in the soil. “Mallees will grow in marginal soils, so they don’t compete for good cropping country, and they deliver environmental benefits. “They can be planted to intercept drainage, which reduces salinity, and mallee shelter belts will reduce windspeeds and evaporation rates over paddocks, provide shelter for livestock, as well as reducing windspeed and soil erosion. For more of this story, purchase your copy of Wednesday’s Sunraysia Daily 17/07/2013. Continue reading
Carbon Supply Crunch Set to Extend Longest Rally: Energy Markets
By Alessandro Vitelli July 18, 2013 The longest-ever rally in United Nations carbon prices shows little sign of easing as traders bet companies running emission-reduction projects will stop creating credits because it’s no longer profitable to do so. UN-approved Certified Emission Reductions, or CERs, for December have more than doubled to 49 cents (64 U.S. cents) from a record low in April on the ICE Futures Europe exchange. It costs a combined 50 to 80 cents a ton to have emission cuts at clean-technology projects verified and the corresponding certificates issued by the UN, said Luca Bertali, an emissions broker in London at TFS Green, a unit of Cie. Financiere Tradition SA, one of the largest inter-dealer brokers. Prices for the credits used by 34 of the richest nations from Germany to Australia to offset domestic emissions by investing in greenhouse-gas-reduction projects elsewhere tumbled 98 percent since peaking at 23.38 euros in 2008 as the global economic slowdown cut demand. The number of CERs being issued by the UN in 2014 may drop 23 percent from this year, according to Bloomberg New Energy Finance. “Unless the price of CERs covers the costs of verification and the UN share of proceeds, people aren’t going to deliver them,” Bertali said in a telephone interview. “We’ll see the result a year from now.” UN contracts climbed to a seven-month high of 56 euro cents a ton on July 3, when the European Parliament approved a plan to reduce the region’s record surplus of permits and buoy prices that had dropped to all-time record lows. They closed at 49 cents on the ICE Futures Europe exchange in London after seven weeks of gains, the longest streak since they were first offered in March 2008. CDM Support The UN’s Clean Development Mechanism, set up by the 1997 Kyoto Protocol, has supported the development of more than 6,900 projects in 87 countries and was worth 6.6 billion euros last year, according to New Energy Finance. Falling UN and European Union carbon prices shrank the value of emissions traded worldwide by 36 percent to 61 billion euros last year, New Energy Finance said in a January report. Investors in CDM projects get CERs that they can sell to companies and governments with pollution caps. The EU allows emitters to use UN offsets to comply with obligations in its cap-and-trade program, the largest in the world. One credit is equivalent to a one-ton reduction of carbon dioxide. One such investor is the Climate Cent Foundation, a group formed by the Swiss Petroleum Federation, the Swiss Trade & Industry Federation and the Swiss Road Traffic Federation, which buys CERs from a 15 megawatt hydroelectric plant in Peru, according to the United Nations Framework Convention on Climate Change, or UNFCCC. The facility is designed to generate 42,000 CERs a year for as many as 21 years from July 2009, which can be used to meet emission caps. Unbuilt Projects The low UN carbon offset price may mean new emission-reduction projects won’t be built or existing facilities are dismantled, according to Renat Heuberger, chief executive officer of project developer South Pole Carbon Asset Management in Zurich. “It’s going to be a significant amount,” he said July 12 in an e-mailed response to questions. “For example, in the landfill and biogas space there is no point keeping the collection systems in place if CER prices are so low.” CER supply in 2014 will total 260 million tons, down from the record 339 million supplied in 2012, according to New Energy Finance. July issuance of CERs will be 12.5 million tons, the fourth consecutive month of declines and the lowest since February, according to UNFCCC data. The UN regulator has issued 202 million credits this year. Limited Gains UN credit price gains may be limited because of caps on demand for existing and future certificates together with oversupply. Market rules will restrict European demand for CERs from 2013 through 2020 to 578 million tons, compared with an immediately available supply of about 500 million tons, according to New Energy Finance. Any shortfall will be met by future issuance, which may be as much as 1.3 billion tons through 2020. “There’s a total of about 500 million tons of offset supply in the market at the moment that hasn’t been submitted as part of compliance,” Richard Chatterton, an analyst at New Energy Finance in London, said by phone on June 19. “That’s a huge overhang, which could push the price back below the cost of issuance.” Trading volume in CER futures has dwindled this year to 10 million tons a week on average, a 67 percent slump from 2012, according to ICE Futures data. This decline in activity is contributing to price volatility as there are fewer parties available to buy or sell at a given time, said Fred Payne, a carbon trader at CF Partners (U.K.) LLP, a risk advisory and investment firm specializing in renewables and commodities. “If you want volume, you’re going to have to pay the offer price, and that’s squeezed prices higher,” Payne said in a July 3 phone interview. Price Recovery Project owners and investors may still be generating CERs on expectations that prices will recover, according to Trevor Sikorski, a London-based analyst at Energy Aspects Ltd. By issuing credits now, they can profit from an increase in price, he said July 12 by e-mail. “It’s hard to understand why issuance occurs at prices below 0.50 euros, which either suggests enough projects have issuance costs below that or you have some project developers that are happy to punt on the CER price going higher,” said Sikorski, a former head of carbon analysis at Barclays Plc. “I think that this would be relatively odd behavior unless you had very deep pockets and a high risk threshold.” To contact the reporter on this story: Alessandro Vitelli in London at avitelli1@bloomberg.net To contact the editor responsible for this story: Rob Verdonck at rverdonck@bloomberg.net Continue reading
