GREEN DEALS: Deutsche cuts carbon forecasts

Deutsche Bank has downgraded its forecast for European carbon prices in dramatic fashion, blaming the slump in market sentiment, sovereign debt issues, a court case against the EU from US airlines over the carbon price, and the assumption that EU economic growth will fall significantly, even if it does avoid a double dip recession. The bank has lowered its year-end 2011 forecast to €12/t from €17/t, as and has also cut its predicted prices for year-end 2012 to €15/t from €19/t.

Analyst Mark Lewis also lowered his forecast range for the longer term, with 2013 downgraded to €19/t from €23/t, and 2014 to €22/t from €24/t. He says he now projects a year-end 2020 EUA price of €28/tonne (€30/t previously), and an average price over the Phase 3 period of €24/tonne, (€26/t previously). "As in previous notes, we would emphasise that should policymakers prove unable to prevent the financing crisis still engulfing Greece – and, increasingly, the more systemically important economies of Italy and Spain as well – from tipping the EU into a double-dip recession, we would then be forced to downgrade further our ETS emissions forecasts, and hence our EUA price forecasts," Lewis wrote.

Australia's proposes a fixed carbon price of $23 from July 1, rising to $29 by July 2015, when the price will be set by the market. It is expected to follow the international carbon price set through the UN's CDM mechanism, which creates opportunities for developed countries to invest in abatement projects in developing countries. Bloomberg new Energy Finance recently predicted that the Australian market price could track close to the propose $15 floor price because of a lack of demand for international credits.

Wind wrangling in Tasmania

Hydro Tasmania is planning to divest its Circular Head wind-farm assets in the hope that the sale will help the state-owned power generator finance its $400 million Musselroe wind farm proposal. The company said Monday it was seeking a buyer for as much as 75 per cent of its Woolnorth wind farm assets. The sell-off follows this year's split of the Roaring 40s joint venture, reports The Hobart Mercury, in which partner China Light and Power took full ownership of the venture's interstate wind farms. The move left Hydro with full ownership of the 65MW Bluff Point and 75MW Studland Bay wind farms, both located on the giant Woolnorth property in Tasmania's north-west. Hydro chief Roy Adair says he hopes the sell-off, to be managed by ANZ Project Advisory, can be finalised by the end of this year, and that he expected the new financial partner would take a stake in the 168MW Musselroe project.

"Work on Musselroe is expected to progress materially in November this year with construction of the transmission line," Adair told the paper. He said Musselroe, in the state's north-east, was a priority for cementing Tasmania's position as a renewable energy leader.
"We are in the process of finalising new construction contracts and the choice of turbine suppliers," he said. Hydro chairman David Crean said the board also saw the move as a way of tackling Hydro's debt. Adair added that Hydro was committed to wind farm expansion to complement its generation assets, which made it Australia's largest renewable energy generator. Hydro's Bluff Point wind farm, commissioned in 2004, has 37 turbines and Studland Bay has 27.

Pacific power solutions

The New Zealand government announced on Tuesday that it would invest $7.9 million towards funding the construction of a 1MW solar PV plant in Tonga – a project that is being developed through an innovative public-private partnership with Meridian Energy, Tonga Power Limited, and the Tongan government. "Reducing the Pacific's reliance on expensive, imported fossil fuels and promoting renewable energy will be a major topic of discussion for Leaders during the 42nd Pacific Island Forum," New Zealand foreign minister Murray McCully said. "We want to share our considerable knowledge of this sector with our Pacific neighbours, and Meridian Energy's experience in renewable energy makes them a logical partner for the Tongatapu solar project," he said. "This public-private partnership is an exciting approach to delivering aid that also represents a possible model for similar infrastructure projects in the Pacific."

Tongan Prime Minister, Lord Tu'ivakano welcomed New Zealand's commitment to the project, saying the solar plant's construction in Tongatapu – Tonga's main island, located in its southern island group – would support the nation's Energy Road Map, a 10 year plan to reduce reliance on imported fuel for electricity generation. "The Tonga government is grateful for such an assistance, which will contribute to Tonga's target of reducing fossil fuel use by 50 percent by the end of 2012," Lord Tu'ivakano said. The construction of the plant is expected to begin before the end of 2011. When operational, it is expected to produce about 4 per cent of Tongatapu's annual generation and to offset approximately 470,000 litres of diesel per annum.

White certificate talks

Parliamentary secretary Mark Dreyfus says the federal government says it will begin negotiations with the states in a few weeks on a national energy efficiency scheme, which will seek to unite the various state-based initiatives. A so-called “white certificate” scheme was one of the key planks of a task force in energy efficiency that delivered its report last year, however while the potential of energy efficiency was included in the Clean Energy Future package, the details were not.  Dreyfus says the negotiations will take some time, but is confident that the states will support the measures as they have already committed to state-based schemes.