Mick Jagger reminded Rolling Stones fans “You Can’t Always Get What You Want” last week as Britain’s most enduring rock band kicked off its 50th anniversary tour at London’s O2 Arena.
Those catchy chords might have been ringing in the ears of the UK’s argumentative coalition government as it unveiled the details of its newly agreed Energy Bill last week. Policymakers willing to make compromises elsewhere may have been humming the tune as France kicked off its six-month energy transition debate and negotiators at the latest United Nations climate conference sweated in the desert city of Doha, Qatar.
Prime Minister David Cameron’s government introduced to Parliament on November 29 its Electricity Market Reform, which includes plans to replace the UK’s main renewable energy support scheme, the Renewables Obligation, from 2014. The coalition is seeking instead to guarantee eligible low-carbon generators a price for power through contracts for difference, or CfDs.
The CfDs will be funded by charging all electricity suppliers, who will then pass on the costs to consumers. The total annual cost for low-carbon energy support – including existing feed-in tariffs and green certificates under the Renewables Obligation – will be capped at, in today’s prices, £7.6 billion in 2020. A separate limitation within that will be set on CfDs for biomass conversion and solar projects to address concerns over their potential rapid deployment.
The Renewable Energy Association welcomed the bill’s proposal to award contracts to low-carbon generators at an earlier stage in the project development process. “Developers will not have to risk taking a project right through to the final investment decision with no guarantee that they would be awarded a contract,” the association said in a statement.
The CfDs will be allocated through auctions as early as 2017, according to the government’s reform plans, and they will initially be technology-specific, before moving to technology-neutral auctions in the 2020s.
There were some critics, as the guaranteed prices, or “strike prices” given in the contracts for each technology will not be released until the end of 2013 at the latest. “Until the strike price is confirmed, the freeze on investment in new large-scale low-carbon energy projects will continue and the bill remains work in progress,” Tom Delay, chief executive of the Carbon Trust, said in a statement.
Delay stated that he was also disappointed with the government’s decision to defer to 2016 the inclusion of a carbon target out to 2030, saying it “misses an important opportunity to send an immediate long-term signal to the market that the overall policy to decarbonise the electricity sector is set.”
France was also looking to the future last week as it began a six-month debate on an energy transition towards more renewables. The process is meant to culminate in a new energy bill in the summer of 2013.
The debate stems back to President Francois Hollande's commitment, stated earlier this year, to cutting nuclear from 78 per cent to 50 per cent of France’s electricity mix by 2025. Hollande also wants to uphold a ban on shale gas fracking and more ambitious emission reduction targets.
France’s energy future, regardless of what path is chosen, will require “considerable” extra investment in the coming years, the country’s energy minister, Delphine Batho, said last week.
Meanwhile, representatives from more than 190 nations flew into Doha, Qatar for a two-week United Nations climate conference that ends December 7. The negotiators there are seeking to agree on a global warming treaty by 2015 that would take force in 2020. It would supersede limits on emissions for industrial nations under the Kyoto Protocol, which expires after this year.
The slow pace of negotiations in the first week has already taken its toll on negotiators. “We’ve achieved nothing this week, and I’m very concerned,” Bolivian delegation chief Rene Orellana said in an interview with Bloomberg News. “We’re fried.”
One controversial topic at the negotiations has been the UN Green Climate Fund. The fund will help mobilise a pledged $US100 billion in annual climate change aid by 2020 to developing countries.
Artur Runge-Metzger, the European Commission’s lead climate negotiator at the talks, admitted last week it is likely to take at least a year for the Green Climate Fund to become operational. The fundamental issue surrounds who will provide the money. Some countries are expecting a new fast-start finance window for 2013-15 to emerge from Doha. Still, in ongoing climate finance talks, developing and developed nations have disagreed on how much of the pledged $US30 billion fast-start finance has already been delivered, as well as how much has been “new and additional”.
If discussions continue to focus on verification and monitoring rather than new country pledges, it will be difficult to secure more funding for the next three years.
For islands most vulnerable to rising sea levels, there is real fear climate adaptation aid could come too late. They might argue that unfortunately in their case, to paraphrase another Rolling Stones’ hit, time isn’t on their side.
European carbon sank to new record lows last week after the Commission said nations will not vote on a plan to curb oversupply at a meeting in December. European Union allowances (EUAs) for December 2012 closed on the ICE Futures Europe exchange at €6.20/tonne on Friday, compared with €7.01/t at the end of the previous week. They fell at the start of last week after the chair of the Joint Implementation Supervisory Committee said there were 130Mt more Emission Reduction Units – a UN credit that can also be traded in the EU – on the market than previously known. On Thursday night, the Commission said a vote on the backloading proposal to delay the sale of 900Mt of EUAs was not on the agenda of a meeting of member states in December. The next day, EUAs fell to a record intraday low of €5.89/t.
United Nations Certified Emission Reduction credits (CERs) crumbled last week to end 17.3 per cent down at €0.67/t.
This article was originally published by Bloomberg New Energy Finance. Republished with permission.