Warsaw progress: All about aid

The week in clean energy was dominated by the $100bn aid fund being discussed at the typhoon-affected Warsaw talks while, elsewhere, the EU moved closer to a carbon price fix.

As we bring you the latest round-up of the week gone by, delegates from across the world are busy trying to work up a solution to global warming. While the climate change negotiations being held in Warsaw, Poland are not expected to usher in radical changes, it could still pave the way for an agreement of sorts by 2015. 

The 19th session of the Conference of the Parties, COP19, is to last two weeks and comes in the wake of a report in September from the Intergovernmental Panel on Climate Change warning that rapid industrialisation had already put the globe on a path to exceeding the goal of limiting the temperature gain to 2 degrees Celsius.

The plight of the Philippines took centre stage at the conference on day one with super typhoon Haiyan wreaking havoc in the Asian country. Winds at nearly 200 miles per hour battered the nation in one of the most powerful cyclones ever recorded. The storm should add urgency to the talks, according to UN Framework Convention on Climate Change executive secretary Christiana Figueres in her opening speech. Scientists warn that rising temperatures threaten to make tropical cyclones such as Haiyan more intense.

Also at COP19, Asian giant China is expected to push the developed world to make good on its pledge to raise $US100 billion per year in financial support for climate action in the developing world by 2020. Ahead of the talks, Xie Zhenhua, vice director of the National Development and Reform Commission, said that the funding issue “is the biggest concern” for developing countries, and will be “pivotal” for them in reducing emissions and securing technology transfers. The $US100 billion figure has become a pillar of the UNFCCC talks but no one seems to know if or how such a sum will be raised. The Green Climate Fund has been launched to help deliver climate finance, but it is yet to raise any capital. So there will be a lot of talk about finance in Warsaw, but it is unlikely that any cash will be forthcoming in the near future. 

Meanwhile, away from Warsaw, last week also saw European member states approve a mandate on November 8 to start talks with the bloc’s Parliament on a carbon market fix, overcoming a 15-month deadlock. The European Commission plan, known as backloading, would delay sales of emission permits to curb an oversupply in the market. The European Parliament has set an indicative date for a plenary vote on backloading for December 10.

The EU also presented a set of recommendations for governments to improve their state-aid mechanisms in energy markets, including support programs for renewable power. The European Commission, the 28-nation bloc’s regulatory arm, aims to give member states guidance on public intervention in the electricity market as end-user prices rise. The principles for state support address renewable energy and back-up capacities, which involve mainly fossil fuels, the commission said in Brussels on November 5. The debate about state support comes as Germany – Europe’s biggest economy – is looking for ways to reduce the cost of renewable-energy subsidies after deciding to close its nuclear power plants. The fee that German power-grid operators charge consumers to support wind and solar power has more than quintupled since 2009, helping to make the country’s household power bills the second-highest in the EU. 

Finally, last week saw 60 of the power sectors’ decision-makers from utilities, equipment suppliers, policy makers and financiers examine new power market structures and tackle the question of how to incentivise generation flexibility with a high – and increasing – penetration of renewables. Forum findings will shortly be made available in a white paper, setting out recommended courses of action for industry players and policy-makers.

EU carbon

European Union Allowances for December 2013 finished the week 2.8 per cent down as traders awaited EU member states to vote November 8 on a mandate to start talks with the bloc’s Parliament on a plan to curb an oversupply in the region’s emissions market. EUAs for delivery in December ended last Friday’s session at €4.49/t on the ICE Futures Europe exchange in London, compared with €4.62/t at the close of the previous week. Front-year permits were on an upward track at the start of last week and spiked to €5.04/t on Friday after EU governments approved the mandate. However, prices quickly declined, indicating permits may have been overbought ahead of the vote. German power for delivery in 2014 ended Friday’s session at €37.90/MWh, up 1.6 per cent on the previous week’s close of €37.30/MWh. UN Certified Emission Reduction Credits for December 2013 ended the week unchanged at €0.50/t.