China steps on the clean energy pedal
China unveiled its intention to step harder on the clean energy pedal last week when it announced its plan to add 49GW of capacity this year. As much as 18GW of new wind power and 10GW of solar installations has been proposed, with the balance being hydro power – large and small.
The world's second largest economy wants to "develop energy in sync with the ecosystem, turning from excessive reliance on conventional hydrocarbon energy to more dependence on new and renewable energy,” according to a statement on the website of the National Energy Administration.
The country – the world's largest carbon emitter – is also targeting a sharp reduction in its industrial carbon emissions per unit of value-added. According to a plan published on the website of the Ministry of Industry and Information Technology, emissions per unit would be reduced by 21 per cent in the five years to 2015.
China emerged as a star performer in 2012 too, accounting for a quarter of the global investment total of $US269 billion in clean energy – the largest by any single country – according to the latest numbers released by Bloomberg New Energy Finance. It sprung back to the top position after being eased out in 2011 when the rush to catch stimulus-related benefits pushed the US to the number one spot. China invested a record $US68 billion in the clean energy sector in 2012 while the US managed an investment of $US44 billion.
Overall investment in clean energy declined 11 per cent from a revised estimate of $US302 billion in 2011. This is the second recorded dip in investment since Bloomberg New Energy Finance started tracking investment trends in clean energy in 2004. The first was in 2009, when overall investment fell 2 per cent. Against a backdrop of policy reversal in some countries and policy uncertainty in others, as well as the overall economic situation, it is encouraging that the decline is not bigger. "Rumours of the death of clean energy investment have been greatly exaggerated," said Michael Liebreich, chief executive of Bloomberg New Energy Finance.
The fall in the prices of solar and wind equipment also means that more capacity can be added per dollar of investment.
The drop was arrested somewhat by an increase in investment by countries hitherto off the clean energy map. Investment in South Africa, for instance, leapt to $US5.5 billion from a just a few tens of millions in 2011 while Japan ratcheted up a total of $US16.3 billion as it tried to rejig its energy mix following the Fukushima nuclear disaster in 2011. Australia and Mexico also posted significant gains in investment year-on-year.
In terms of sectors, solar continued to be at the helm, accounting for over half the total investment, at $US143 billion. This was almost double the $US78 billion invested in the wind sector. The third largest sector was energy-smart technologies, which includes smart-grids, energy efficiency and electric vehicles. Investment in specialist companies, and in corporate and government research and development, in this area accounted for $US19 billion, although this was lower than in 2011.
It was a similar story for other sectors like biomass-to-power, biofuels, geothermal and carbon capture and storage, all recording investments lower than the previous year. The only sector to show growth in investment was small hydro, which includes projects up to 50MW in size.
Coming back to 2013, US Senator Bernard Sanders is working on a climate bill – expected to be introduced mid-February – that could raise $US1 trillion over 10 years by putting a fee on greenhouse gas emissions. This could then be used to make a "historic investment" in energy efficiency and renewables, according to an aide to the Senator.
On the flip side, the investments already made by the US Department of Energy will come under scrutiny as an electric car maker and an energy storage company – XP Vehicles and Limnia – filed complaints in two federal courts in Washington seeking damages for what they say were abuses of the $US25 billion Advanced Technology Vehicle Manufacturing loan program.
“Defendants used the ATVM loan program as nothing more than a veil to steer hundreds of millions of taxpayer dollars to government cronies,” according to the district court complaint.
EU carbon
European carbon prices fell last week as permit sales kicked off and traders feared that supply will outweigh demand. European Union allowances (EUAs) for December 2013 lost 6.6 per cent to end Friday's session on London's ICE Futures Europe at €5.92/tonne, compared with €6.34/t at the close of the previous week. About 14.7Mt of allowances were auctioned last week, while 18.8Mt are expected to be offloaded the week beginning 14 January, according to data from exchange websites. December EUAs were trading as high as €6.72/t on Tuesday morning. The day before, the EU auctioned allowances at a price above the prevailing market level. But the situation was reversed later in the week, as the bloc sold permits at below market prices.
United Nations Certified Emission Reduction credits (CERs) for December 2013 gained 7.5 per cent last week to close at €0.43/t. The UN issued 9.2Mt of CERs last week, a 26 per cent decrease from the previous week and the least since the week ending November 16, according to UN data compiled by Bloomberg.