Tag Archives: investments
Kazakhstan: Carbon Trade Scheme Fuels Divisions In Kazakhstan
uly 9, 2013 – 1:47pm Alisher Khamidov Viewed from the top of Kök-Töbe (Green Hill) a thick, hazy blanket of pollution settles over the southeastern city of Almaty in March 2011. The Kazakh government intends to implement a carbon dioxide trading scheme for companies generating polluting emissions. (Photo: Dean C.K Cox) Authorities in Kazakhstan are at loggerheads with business executives over a plan to introduce a carbon dioxide trading scheme for companies generating greenhouse gas emissions. The government sees two benefits to the scheme — a healthier environment and more revenue for state coffers. But leaders of the country’s business community, including KazEnergy, a powerful alliance of energy producers, is opposing the plan, arguing that it would stifle economic growth and decrease Kazakh global competitiveness. Left largely unsaid is what the government would do with the extra revenue. In Transparency International’s most recent corruption index, Kazakhstan ranked 133 out of the 174 countries surveyed. According to various estimates, Kazakhstan annually generates approximately 240 million tons of CO2 emissions, and along with Ukraine, it accounts for only 2 percent of global carbon emissions . Despite this comparatively low emissions figure, Kazakhstan in recent years has sought to project itself as the regional leader in environmental protection. In 2009, Kazakhstan joined the Kyoto protocol, whose signatories pledge to fight global warming by reducing their greenhouse emissions. Using the year 1990 as a benchmark, Kazakhstan agreed to achieve a 15-percent reduction in emissions by 2020 and 25-percent drop by 2050. In 2012, Kazakhstan was first among CIS republics to announce the formation of the carbon emissions trading system (ETS). In keeping with the so-called cap-and-trade scheme, the government initially set a nationwide cap of 147 million tons on allowable emissions (using the year 2010 as the benchmark year for calculating quotas for companies). Officials then planned to distribute allowances among 179 state-run and private companies that account for 80 percent of all emissions. Companies that fail to reduce their emissions, or do not purchase allowances from other companies that have credits to spare, would risk incurring significant fines (approximately $15 per ton), or losing their business licenses, according to the Ministry of Environmental Protection. Government officials are extolling the virtues of the ETS. Addressing Kazakh law-makers at a November 2012 meeting, Minister of Environmental Protection Nurlan Kapparov said: “The advantages [of the ETS] need no mentioning. I will just give one figure. The market for carbon emission allowances in the EU was estimated at $120 billion in 2010.” Privately, some Kazakh observers say authorities are pushing ETS because promoting a green economy is currently one of President Nursultan Nazarbayev’s pet projects. ETS plans quickly ran up against stiff opposition in corporate corner offices. The push-back prompted officials to back down. For example, instead of using 2010 (a year when production was lower due to the fallout from the global financial crisis) as the benchmark year for emissions, officials agreed to use 2013, and adjust standards accordingly. Addressing a government meeting on June 11, Kapparov, the environment minister, announced ETS standards would go into effect in 2014, instead of 2013, and indicated that the government would soften punishments for companies that fail to comply with ETS standards. Even after the government backtracking, some observers say ETS standards may hit the country’s energy sector (particularly the coal industry) hard. Bela Syrlybayeva, an economist at the Kazakh Institute of Strategic Studies under the Kazakhstani Presidential Administration, told EurasiaNet.org; “The current situation demands urgent measures aimed at reducing emissions. At the same time, it is important to ensure a reasonable balance between the economic growth rate and development of low-carbon technologies.” ETS is lauded by the UNDP, but it is causing consternation of some foreign investors who say that they were not consulted. At a May 30 environmental forum held in Astana, foreign investors complained that they already pay various taxes for their CO2 emissions. The Ak Zhaik news website quoted Kenneth E. Mack, managing partner of Dechert’s law office in Almaty, as telling forum participants: “The tax for excessive emission is 10 times more than the tax for emission below the allowed limit. No other country has such a figure. On top of these, by Kazakh laws, administrative penalties and damage recovery sums are also levied .” A representative of KazEnergy, who agreed to speak with EurasiaNet.org on condition of anonymity, complained that ETS implementation was injecting uncertainty into the market. “The uncertainty regarding the volume, costs and rules in the internal carbon market is causing significant problems for investors as they plan their budgets and forecast growth,” the representative said. There is also widespread concern that companies with close governmental connections will get special treatment. In the court of public opinions, ETS is causing a different set of concerns. Abiljan Husainov, head of “Eko-Kokshe,” an environmental non-profit in the Akmola Province, told EurasiaNet.org; “The problem is that although we have good laws and regulations that protect environment, their implementation leaves much to be desired, especially at the level of small towns and villages.” Husainov added that “stricter measures must be adopted to preserve environment,” and that flaws in the monitoring mechanism, especially a lack of inspectors, will likely hinder compliance. There are also fears that the ETS can prompt businesses to pass along higher costs to end users, spurring inflation and generating discontent in many communities. Privately, some government officials, even some of Kapparov’s subordinates, have reservations about the viability of the ETS plan. Insiders say that the MEP is ill-equipped to administer ETS, and suggest it is possible that the 2014 implementation date will get pushed back again. Editor’s note: Alisher Khamidov is a researcher specializing in Central Asian affairs. Continue reading
Europe Acts to Fix Its Crippled Carbon Market
SustainableBusiness.com News After months of wrangling, a vote in the European Parliament is bringing relief to the EU’s stricken Emissions Trading System (ETS), the world’s first and largest cap-and-trade program. The vote shows the political will to address the oversupply of allowances (permits to emit carbon) that has led to unsustainably low carbon prices. On July 2, Members of the European Parliament (MEPs) voted in favor of a “backloading” proposal which would withhold hundreds of million of permits. Pulling back available permits to balance supply and demand (in order to raise prices) is exactly what’s been needed, but a previous vote caved to industry interests, which convinced them that higher carbon prices risked the bloc’s competitiveness. That move collapsed carbon prices by another 45%, to €2.63 ($3.38) per ton of carbon dioxide, and led many to question whether Europe remains committed to the program – its flagship climate change policy. However, that price collapse triggered intense debate and a renewed effort to save the market. “This is a good decision by the European Parliament and is an important step forward for climate change policy,” says Ed Davey, the UK’s climate change minister. “We need a stable carbon market so we get more certainty for investors so emissions reductions can be achieved at the lowest cost possible.” Carbon allowances have lost 75% of their value over the last four years as Europe’s economic downturn, and the faster-than-expected development of renewable energy capacity has reduced demand for allowances from emitters. As the world’s first market, it did not have rules that would come into play when demand drops. The lack of the ability to reduce the supply of allowances led to a glut. Last year, the European Commission proposed to ‘backload’ 900 million allowances, holding them back until later in the decade. This would push prices up, giving time for structural reforms to the system to be introduced. “This is a reassuring signal for industry and international observers – many of whom have recently adopted their own emissions trading schemes – that the EU remains committed to decarbonizing Europe’s economy in the most cost-efficient way,” says Hans ten Berg, the Secretary General of Eurelectric, which represents Europe’s electricity sector. “Today’s positive vote is a much needed step in the right direction, but it is nevertheless only a first step. We urge the Commission to continue down this path of strengthening the ETS in the long run by proposing more significant structural reforms.” The backloading proposal still needs to clear several more hurdles, although analysts say last week’s vote was the toughest. Traders expect the Commission to begin withholding allowances next year. Structural reforms, however, are likely to be years off, given the drawn-out processes involved in European policy making. Elections next year to the European Parliament are likely to slow deliberations, and most observers don’t expect reforms to be agreed until 2017. But last week’s vote shows there is political will to fix Europe’s carbon market, say participants. “The ‘yes’ vote should provide a short-term boost to carbon prices and confirms the EU’s commitment to the success of the ETS and to implementing the long-term improvements that are still needed,” says Thomas Rassmuson, a Founding Partner at CF Partners, a risk advisory and investment firm specializing in renewables and commodities. Continue reading
Jonathan Elliott – Can The UK Be A Green Energy Giant?
Posted on 09 July 2013 by ELN reporter That’s one of the big questions the nation faces right now – and from the looks it, with renewable energy projects cropping up all over the UK, the potential for rapid growth is strong. The emphasis on cutting carbon emissions and ramping up the UK’s green credentials is hardly a secret: the government has targets to meet and there are EU goals and industry calls for investment to boot. But I wonder if the country will capitalise on its potential to become a world leader. We may be a dominant force when it comes to offshore wind – but surely that’s to be expected from an island with our infrastructural and financial assets. Keep it fresh – look beyond offshore wind turbines I believe we should have one eye on continuing to build up our vast arrays of turbines and another on fresh initiatives. It strikes me there are some genuinely exciting examples to point to right now. Take the Swansea Bay Tidal Lagoon initiative. This is a plan to invest £650 million on harnessing power from the ebb and flow of the tide. Developers say the lagoon would be the first of its type anywhere in the world, able to supply Swansea’s entire domestic electricity needs and run for more than 120 years. While the project is still very much in its infancy it’s generating a huge amount of interest. It’s easy to understand why. The company says it will save an estimated 216,000 tonnes of CO2 a year – as much as taking 81,000 cars off the UK’s roads every year and could provide 3,600 construction jobs. The lagoon’s appeal notches up even further if you think about similar projects it could inspire in other areas of the UK coastline. Obviously this is all speculation – much depends on the developers getting financial backing, not to mention approval from the relevant authorities. But early signs are undeniably encouraging. With plans for the facility to be operational by 2017, the ambition is clearly there. Watch this space. Digest this – a new UK-wide anaerobic digestion network Elsewhere, keep an eye on an adventurous programme by Tamar Energy. They want to create a network of 40 anaerobic digestion (AD) power plants in the UK – and all by 2018. With four stations set to become operational in 2014 and another 14 sites in various stages of development, the firm seems dedicated to meeting its ambitious target. If successful, their AD sites will produce enough electricity and gas to power more than 200,000 homes. What’s more, with the plants using organic waste to generate renewable energy, Tamar’s project is an effective waste management solution for local authorities. A renewables revolution – but is the backing there? Notwithstanding the role private firms have to play in driving a potential renewables revolution in the UK, government support for the sector remains crucial. With cutbacks on the agenda and austerity the theme of many a spending review, we’d be forgiven for concerns that clean energy firms may not get the backing they desire. Still, there are some promising signs. Greg Barker, Minister of State for Energy and Climate Change, recently told the Intersolar Conference in Germany that the UK “has a reformed, robust and fully-financed support framework for renewables, set all the way to 2020 and beyond”. In the latest Spending Review the Chancellor announced an extra £800 million worth of funding will be pumped into the Green Investment Bank. Finally, the Scottish government recently opted to introduce new subsidies designed to make it less expensive to develop offshore wind farms: the backing is there to provide carbon-neutral businesses with a platform to build. If the majority are dedicated to clean power and the UK continues to dedicate itself to renewables then the nation could well establish itself as a global giant in the green energy arena in the coming years. Imagine the economic benefits in store as the driver of that bandwagon. Jonathan Elliott is the MD of Make It Cheaper , which helps small businesses save money on energy and other bills. If you would like to get a quote on your energy needs, please call 0800 158 5265. Continue reading
