2013-05-24T13:35:56-04:00 Nick Molho http://www.huffingtonpost.co.uk/author/index.php?author=nick-molho Copyright 2008, HuffingtonPost.com, Inc. HuffingtonPost Blogger Feed for Nick Molho Good old fashioned elbow grease. tag:www.huffingtonpost.com,2013:/theblog//3.3098306 2013-04-17T05:03:12-04:00 2013-04-17T09:43:54-04:00

Nick Molho http://www.huffingtonpost.com/nick-molho/ The European Parliament's vote against back-loading of carbon allowances under the EU emissions trading system (ETS) shows that strong domestic action will be more important than ever now to support the growth of Europe's low-carbon industry and the international climate talks, says Nick Molho

The European Parliament's vote this week against delaying the release of some 900 million carbon allowances (known as the 'back-loading' proposal) is disappointing on several grounds.

Not only did it happen in what is supposed to be the EU's most progressive institution but the back-loading proposal that was turned down by MEPs also amounted to only a small first step at increasing the carbon price, which has hit an all-time low in the EU at around €3 a tonne of carbon dioxide.

In a recent report looking at strengthening the EU ETS, emissions trading organisation Sandbag argued that up to some 3.1bn carbon allowances (as opposed to 900 million allowances) needed to be withdrawn from Phase 3 of the EU ETS (which runs until 2020) to restore the credibility of the scheme.

It is also widely agreed that the EU ETS needs additional structural reforms to make it into an instrument that low-carbon investors could at least partially rely on in making their long-term investment decisions.

Add to this the decision by a large group of Conservative MEPs to vote against the back-loading proposal and ignore their own party's climate change policy and you could easily interpret this week's vote as marking an appalling withdrawal of climate leadership by the EU.

But with the clock ticking on the need to tackle climate change, build momentum towards the 2015 climate talks in Paris and get the EU out of its protracted economic slowdown, we have to keep on looking for solutions. Whilst strong European policy will be key in the long run, this week's vote in the European Parliament shows once again the importance of ambitious domestic climate and energy policies.

For foreign investors in low-carbon technologies, the vote will ring alarm bells about the EU's commitment to growing its clean tech industry. This is all the more the case given that today's vote follows several price crashes in the EU ETS since 2005 and the EU's previous failure to agree an increase in its emission reduction ambitions from 20% to 30% by 2020 which would have helped boost the carbon price.

If the EU's member states are keen to reap the economic growth benefits that organisations like the CBI show the low-carbon sector could provide, domestic action such as a strong Energy Bill in the UK is going to be more important than ever.

But with two major climate change summits taking place in the EU in the next two and half years (Poland in 2013 and France in 2015), domestic action by EU member states is also going to be key to build the significant momentum needed to deliver a global deal in 2015 that could credibly prevent the worst impacts of climate change.

Tuesday was a sad day for EU climate change policy but ambitious action in key member states could- and must - help the EU reclaim its leadership in the clean energy race and the fight against dangerous climate change.]]> tag:www.huffingtonpost.com,2012:/theblog//3.2177039 2012-11-23T08:14:53-05:00 2013-01-23T05:12:01-05:00

Nick Molho http://www.huffingtonpost.com/nick-molho/
Here in the UK, after years of consultation on proposals to reform our electricity markets and months of government infighting fuelled in particular by a handful of Conservative backbenchers and ministers, the main details of the Energy Bill were finally announced today.

Two key points came out of this morning's announcement. First, the coalition government has agreed a financial pot out to 2020 (referred to as the 'Levy Control Framework') which should be sufficient to fund projects to meet the EU's 2020 renewables target that the UK is legally bound to. Whilst this is good news for some project developers, it is a depressing indictment of the process that we must applaud the government's willingness to meet a legally binding target.

Secondly, in what is being seen as big victory for Chancellor George Osborne, the government kicked into the long grass any decision on a target to commit the UK to have a near carbon-free power sector by 2030 (referred to as a 'decarbonisation target'). They will not decide on whether to have such a target until after the next general election in 2015. The lack of a target, which had been strongly recommended by the Committee on Climate Change as a pre-condition to reducing our carbon emissions by at least 80% by 2050 under the Climate Change Act, means that what will happen in the UK's energy market post 2020 is far from clear. This matters because it could deter long-term investment in the UK's 'green business' sector, a sector which the CBI predicts could halve our trade deficit by 2014/2015.

I spoke earlier this week at a conference organised by the UK Sustainable Investment and Finance Association on the future of green infrastructure in the UK. I was struck by two key themes that dominated the conference. The first is that, despite regular claims to the contrary, there is a considerable amount of private sector money available to invest in UK green infrastructure - and especially renewable energy - but that money is currently sitting in low interest saving accounts because of a lack of confidence to invest. A recent report from LSE and the Grantham Research Institute showed for instance that the UK private sector generated a surplus of some £110bn in 2010, which compared with total investments in the UK's clean energy sector of only £2bn in that same year.

The second is that in order to continue growing, the green infrastructure sector does not require large amounts of public money. What it does need, however, is robust policy signals to unlock the large amounts of private sector capital currently available. It was clear that on both counts, the introduction of a decarbonisation target for 2030 would have made a big difference in unlocking that investment and putting the UK's green sector on a long-term path of growth. The audience were in near-universal agreement that they wanted solid milestones from 2012 all the way to 2050.

If the prime minister David Cameron wants to honour his pre-electoral commitments of making the UK a leader in tackling dangerous climate change and an industrial leader in the clean energy race, he cannot afford to postpone a decision on a decarbonisation target until after the next election. We need strong leadership, not dithering and delays. Such a target is not only a pre-condition to meeting our Climate Change Act commitments which Mr Cameron played such a big role in getting through parliament just four years ago, it is also key in allowing the continued growth of one of the few promising areas of the UK economy.

For someone who claimed earlier this week that he was leading a government, which "was not afraid of taking tough decisions", it is high time for the prime minister to bring his government and party together in support of a stronger, better Energy Bill. This would avoid a cliff edge in renewable energy investment which would undermine the UK's environmental credentials and one of its best chances for a sustained economic recovery.]]> tag:www.huffingtonpost.com,2012:/theblog//3.2087460 2012-11-07T07:30:17-05:00 2013-01-07T05:12:01-05:00

Nick Molho http://www.huffingtonpost.com/nick-molho/
Almost exactly four years ago, the government passed the Climate Change Act, under which the UK is legally committed to reducing its greenhouse gas emissions by at least 80% by 2050 compared to 1990 levels. The overwhelming majority of MPs voted in favour of the Act (with only 5 voting against), reflecting an outstanding cross-party consensus behind an issue which was clearly understood to sit above every day politics. The 80% target was set to try to restrict levels of global warming to what climate science tells us the UK (and other industrialised countries) need to do to as a minimum to prevent temperatures rising by more than 2°C compared to pre-industrial levels.

The Act set up an independent Committee on Climate Change (CCC), to recommend carbon budgets for rolling five year periods out to 2050 and to advise the government on the action needed in each sector of the economy.

One consistent message from the CCC is that to be on a credible pathway to meet our 2050 target, the UK's power sector needs to be nearly carbon-free by 2030. The power sector is a major polluter in its own right, representing around 25% of the UK's carbon emissions today. It is also the sector where it is easiest to move quickly away from fossil fuels to renewable energy - and clean electricity, together with a much wiser use of energy, is a key part of addressing emissions from transport and heating.

So one of the most important issues in the debate over the Energy Bill is whether and how it should set a so-called 'decarbonisation target' for the power sector. Including such a target in the Bill, ideally at a level of 50g CO2 per kWh by 2030 (down from 500g today), as the CCC recommends, is one of the most important points that WWF and others are calling for, calls which have been backed by Labour, the Liberal Democrats and some prominent Conservatives like Tim Yeo.

A decarbonisation target should be a no-brainer - especially because it is a critical factor in ensuring that the UK delivers on the objectives set in the Climate Change Act just four years ago with broad cross-party support. But it would also greatly benefit economic growth in the clean energy sector, one of the few high performing parts of our economy.

2030 is a critical date in that from an investors' perspective, it is only one investment cycle away. Take the example of companies like global engineering giant Siemens and renewable energy company Gamesa, which both have plans to build offshore turbine factories in the UK. It takes roughly five years to build a factory and then around ten years of continued operation to make a return on investment. To make the case to their boards that they should invest in the UK, these companies therefore need to know that there will be a sizeable market for renewable energy in the UK out to 2030. And a key benefit of this long-term commitment will be to accelerate the deployment of renewable technologies and the rate at which their costs fall, making a clean energy system attractive and affordable.

But the more the Treasury keeps on refusing to engage constructively in the energy policy debate (having for instance ignored several requests to provide evidence to the Energy and Climate Change Select Committee's inquiry in the Energy Bill this summer) and the more we keep on witnessing unhelpful anti-wind farm declarations of the type recently made by Energy Minister John Hayes, the more international investors will consider the UK's energy market as a risky sector to invest in. This assessment has already been made by companies such as General Electric and Doosan Power who both shelved their major investment plans for the UK's renewable energy sector earlier this year.

It is high time for David Cameron, who made his support to the UK's green sector ever so clear back in 2006, to intervene and bring his government once and for all together in support of a strong Energy Bill. Inter-departmental politicking and coalition in-fighting have been features of the debate around energy within government in recent months, to the frustration of environmental groups, consumer bodies and industry alike. Yet, Mr Cameron, who once claimed he would be "the fourth minister" in DECC as energy was so important a topic, has been virtually silent on the energy issue for over two years. Mr Cameron is going to have to get off the fence at some point. Only then will we know whether he has kept his promise.]]> tag:www.huffingtonpost.com,2012:/theblog//3.1880445 2012-09-14T09:39:31-04:00 2012-11-14T05:12:01-05:00

Nick Molho http://www.huffingtonpost.com/nick-molho/
Not only do the results of the Global Consumer Wind Survey show that an increasing number of consumers want renewable energy, there have also been some very positive developments of late on the costs of these technologies. Whilst the cost of many renewable technologies are still high, several technologies like onshore wind and solar PV are rapidly reducing in costs (by 50% alone in 2011 for solar PV according to the Pew Centre) and many other less mature technologies like offshore wind could soon follow this trend.

The chaotic manner in which the solar PV feed-in tariffs were reviewed last autumn and the way in which the 10% cut to onshore wind support was finally negotiated over the summer were very detrimental to the UK, not only because it damaged investment certainty in its renewables sector but also because it over-shadowed a more positive story. What unfortunately missed the headlines during these periods of turmoil was the fact that a drop in technology costs in both onshore wind and solar PV had allowed for their financial support levels to be reduced, with more promising cost reductions possible in the future. The costs of both technologies is heading in the right direction and that's surely good news whether you look at this from the consumer or environmental angle.

The key to continuing these costs reductions and delivering the 30% cost reduction in offshore wind which the Crown Estate says is achievable in the UK by 2020 is investment certainty. Having been through two difficult support level reviews over the last year and now awaiting the introduction of a new Energy Bill this autumn, this is a crucial time for the future of the UK's renewables industry.

To provide genuine investment certainty to the sector, the Energy Bill needs to do two key things. First, it needs to provide a clear sense of direction for investors. A decarbonisation target for 2030, the date by which the UK power sector should be near-decarbonised according to the Committee on Climate Change, would be a start. Whist not as helpful as a renewables target, it would have the merit of providing a clear signal as to how much low-carbon generation is required in the UK by 2030, a date which is only one investment cycle away.

Second, the Government's feed-in tariff contract proposals need to be properly tailored to the wide range of renewable energy technologies and project sizes available, not just in terms of the financial support being provided but also in terms of the clarity surrounding the amount of contracts that will be available in coming years for the renewables sector, the steps that need to be taken to obtain these contracts and their level of complexity.

If the Bill can get these two aspects right, this will not only allow for a greater deployment of renewable energy and help make these technologies cheaper faster, it could also be an important step in allowing the UK to make the most of the economic growth opportunities the renewables sector has to offer. At a time where the UK ponders how to re-energise its economy, that is surely something worth pursuing.]]> tag:www.huffingtonpost.com,2011:/theblog//3.1094837 2011-11-15T18:00:00-05:00 2012-01-15T05:12:01-05:00

Nick Molho http://www.huffingtonpost.com/nick-molho/
We regularly hear calls for the EU's 2020 renewable energy target - which requires the EU to consume 20% of its energy from renewable sources by 2020 (the figure is 15% in the case of the UK) - to be scrapped.

The justification for this is often that renewable energy infrastructure is just too costly, that renewable subsidies distort the market and that a much easier way of reducing emissions would be to just burn 'cheap' gas, instead of coal.

This sort of rhetoric is disingenuous.

First, the vital role renewables have in substantially reducing the world's CO2 emissions seems to have dropped off the media and political agenda.

This is more urgent than ever if we want to avoid the worst impacts of climate change. The United Nations Environment Programme's (UNEP) Emissions Gap Report earlier this year made it very clear that the world's emissions need to peak well before 2020, if the world is to avoid an increase in temperatures above 2c, the limit that current scientific consensus tells us not to exceed if we want to avoid dangerous climate change.

This comes on top of last week's warning by the International Energy Agency (IEA) - who are far from being an environmental lobby group - that unless the world is clearly set on a course to reduce its emissions by 2017, the door to keeping temperatures below 2c "will be closed forever."

The IEA also made the point in its Golden Age of Gas report, that a new dash for gas (including shale gas) would almost certainly set the world on a path towards at least 3.5c warming.

Second, whilst there is clearly an upfront cost to supporting renewable energy technologies, this support is absolutely essential.

Several renewable technologies are still relatively immature, and need support through the form of clear financial mechanisms and volume targets in order to improve their performance.

This has been done with other technologies in the past and is all the more important, when you consider that the current energy market is already completely skewed against renewable energy, not the other way round - as some observers like to suggest.

For example; last weeks' World Energy Outlook from the IEA also revealed that global fossil fuel subsidies amounted to $409 billion in 2010, and could go up to $660 billion in 2020 without further reform. In contrast, renewable energy received just $66 billion of support in 2010, said the IEA.

Not only are these subsidies incentivising the use of the most polluting fossil fuels, and tend to be directed primarily to rich rather than poor countries, the level of these subsidies is substantially higher than any help that is given to zero-carbon, renewable energy technologies.

Given that substantial subsidies have been given and are still being given to support nuclear power too, it is very hard to see how emerging renewable technologies could have a chance to compete on a level playing field without the help of policy support measures, such as the EU's renewable energy target and associated subsidies.

Finally, an issue that critics of renewable energy support schemes conveniently forget to mention is that the longer we debate the future role of renewable energy, and whether or not it is worth supporting, the longer it will take us to reduce costs.

Providing investment certainty to the renewables sector through clear targets and financial support schemes, is the very factor that could substantially reduce the costs of renewable energy technologies and help create green jobs.

In other words, investment certainty holds the key to lowering the cost of capital, incentivising investment in domestic supply chains, standardising products and increasing investment in R&D. All this is critical to reducing costs and creating jobs in the sector.

Renewable energy has an urgent and substantial role to play in our energy supply. Yes, there are important initial costs that come with supporting them, but these costs are absolutely dwarfed by those the world economy will have to bear in trying to adapt to the worst impacts of climate change - not to mention the tragic human and environmental consequences that would come with it. ]]>