Category: Carbon Risk

Policy impacts, right side of the bell curve

ERF funding – is it a play on words.

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The Government is confident it will stem the march of climate change with its $2.55 billion Emissions Reduction Fund and its Green Army of tree-planting enthusiasts. So confident, in fact, that it has commissioned $10 million for a new icebreaker in Antarctica.

At least one problem is solved – broken ice will be served with drinks. It sort of makes sense does it not?

But, where is the money, it was not mentioned at all in the budget speech. Even more interesting is submissions on the draft legislation for the ERF are due to close 23rd May 2014. So how will it be funded if it is to start 1 July 2014? As kids often say, Daddy it will just wish-t-appear – how mature of them to understand the minds of our pollies!

In her coverage of the Federal budget Annabel Crabb makes another point on health – why strip away the ability to service our health in order to fund health research. A similar parody could be said a tipping point is fast approaching that mankind is under threat for its existence – anthropogenic influences of climate change will outpace the ability to research a medical solution. Doesn’t make sense except give the opportunity for a fiddle! On reflection Annabel said something about twiddle – could that be what she meant?

Perhaps the last word should go to the Prime Minister, speaking on August 22, 2011:

“Nothing could be more calculated to bring our democracy into disrepute and alienate the citizenry of Australia from their government than if governments were to establish by precedent that they could say one thing before an election, and do the other afterwards.”

Source – Annabel Crabb is the ABC’s chief online political writer – www.abc.net.au .

Co2land org now asks about the $20 billion to be spent on health research, is that a play on words – a weasel? Another worry is as an Australian entity I am at a disadvantage at influencing the wealth of this country, and it is suggested we should register as an offshore entity and get preferential treatment in Australia? It is not a flippant comment: For example, register in Singapore as a $1 company ($500 setup cost), pass their Directorship rule test and there you go! You can sell back your Australian ideas as a new desirable off-shore package and thumb your nose on paying the correct tax. Albeit the UK now says money shifting will be discouraged via London markets. But I guess that only affects the likes of tech suppliers, mining etc. As they tend to use those markets.

What has this got to do with sustainable futures? Nothing. Even the economics make no sense in terms of society – but maybe a small community might do well from it!

Co2Land org has a theory it reflects in the term ‘hubris’. Hubris: The Inside Story of Spin, Scandal, and the Selling of the Iraq War (9780307346827): Michael Isikoff, David Corn: Books

www.amazon.com/Hubris-Inside-Story-Scandal-Selling/dp/030734682X.

The theory is we are being spun the same text book sell on something of an ideal as opposed to a solution. It is even something tried and failed in other political arenas of the world. As in Lewis Carroll’s Alice in Wonderland – Alice in wonderland grew a mile high after eating one mushroom. She was then subject to rule 42 which says that anyone taller than a mile must leave the court immediately. That thought line then mandates that if you think it is a joke you will be subject to rule 13. And, do not dare to ask what is rule 13. If you paraphrase this you just might understand Joe the Treasurer is a Lewis Carroll fan.

Maybe – yes, we are a fan of the real Malcolm Turnbull. He might just turn bull into hope. For those that did not know, he was a former Environment Minister in the Howard Government and is credited with strongly supporting sustainable solutions.

 

White Paper to Draft Legislation – ERF

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In case you have not heard: The Clean Energy Regulator survives – it was an error the government has corrected on 7 May 2014. What was intended was to say the Clean Energy Fund is gone. Thank you Greg Hunt for your courage in having that clarified.

It is also hoped you heard late Friday 9th May 2014 the Federal Government released its exposure draft legislation for the Emissions Reduction Fund. They want you to be quick in responding -Two weeks have been given for the review, with submissions due EST 12 noon, Friday 23 May 2014.

The key matter is the draft legislation rebadges the Carbon Credits (Carbon Farming Initiative) Act. And:

  • A broader range of activities can create “carbon abatement” and include avoidance activities
  • A broader definition of additionality is given
  • A broadening of the authority of the Clean Energy Regulator
  • Establishing the Emissions Reduction Assurance Committee
  • Establishing that a yet to be (re)named CFI audit legislation will carry through the audit and assurance through the existing CFI audit legislation.

Why hoped you heard – well we did not want you going to sleep on us because we are boring!

Those that see opportunity are, for instance:

Currently celebrating their 30th year – Energetics consult and offer fee for service activities, and they say:

  • Immediately assess the abatement opportunities you have to create emission reductions to sell into the ERF
  • Understand your risk profile for future capital investments – has this shifted?
  • Assume you need a shadow carbon price
  • Comment on the draft legislation.

Of course the issue for their advise is for you to work out – www.energetics.com.au.

Those that see tragedy are, for instance:

The Climate Spectator www.businessspectator.com.au say,

“Half-baked outline

The half-baked nature of this scheme is revealed on the very first page of descriptive text within the Explanatory Memorandum, where it states:

The Emissions Reduction Fund … will allow businesses, local governments, community organisations and individuals to undertake approved emissions reduction projects and to seek funding from the government for those projects through a reverse auction or other purchasing process.

Government ignores its own red tape cutting advice

I was shocked to find no regulatory impact statement accompanying the ERF legislation, comparing this scheme against alternatives and why it represented a superior cost-benefit case.

Amidst a bonfire of red tape, the government had assured us that they were going to force public servants to see regulation in a ‘new light’ by following a seven-step guide to evaluating new regulations.”

Then finish off saying “I wonder when we’ll see the detailed cost-benefit analysis for the ERF relative to other regulatory alternatives, such as a simple price on carbon emissions.”

For CO2Land org the ‘scary spice’ is the mechanisms can change at any time at the whim of government – regardless of the pain you the business offered or suffered. Again the need for consistent policy is far greater than the words spoken to date. We also tend to agree with one aspect of Energetics spiel – prepare your alternatives. Just in case. And, you don’t have long to comment.

 

 

A glimpse of our new utility model

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Change the name Hawaii for Australia in this story. Then you might get a glimpse into our new utility model. Just like in Australia – east or west coast, Hawaii Electric, the US state’s biggest utility, has failed to create a long-term, customer-focused business model. The problem, according to the Hawaii PUC as reported as said last week is “An increasing penetration of utility-scale renewables and distributed generation has ‘broken’ the traditional utility-customer regulatory compact….An overhaul of the traditional cost-of-service utility regulation model is being touted as a possible solution.”

Now we hear you say but Tony and Joe are going to put an end to the renewable industry in Australia by 1 July 2014. Well, according to the Climate Speculator and Tristan Edis the Environment Minister, Greg Hunt says his Cabinet Colleagues are dreaming. http://www.businessspectator.com.au/climate .

We might get cheeky here and refer to CO2Land org’s last posting, 7 May 2014 – Fantasy and Budgets, in particular on after eating a mushroom Alice in Wonderland grew a mile high – we guess it was a magic one! However, no amount of distorted truths can hide the reality and its acceptance here, as in the US state utility regulators, there is a need to take steps to incentivize changes to the utility business model, and utilities should lead on these issues, instead of being dragged along. One furphy that can be dispelled by recent reports cannot attribute renewable to price increases, again quoting, 8 May, 2:22 PM, Explaining electricity markets to dummies by TRISTAN EDIS: “While economic modeling shows that the injection of lots of solar and wind power via the RET will lower wholesale electricity prices, 95% of politicians and 98% of journalists struggle to understand and accept it” (RET refers to Renewable Energy Target). We can only say, sad but true.

Now back to the utility change model, rather than waffle on like a ‘polly’ – aussie slang for politician. You might better get a grip on the case and idea by directly reading –

http://www.utilitydive.com/news/hawaiis-overhaul-of-the-utility-business-model/259923/

We should also add that in Australia, after eight years of study there is no evidence that Wind Energy in South Australia has been causal of wholesale energy price increases in that state or the eastern seaboard to which it is connected. To refer to that story refer to the Climate Speculator again.

Have got to go now – put my waste into the gasifier, produce syngas to start the generator for our power needs, it is cold overcast and foggy outside – need a backup for the solar on the roof. It is just like having a battery without acid. Sorry Alice!

Bidding process – The White – ERF Paper

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Lets talk more about the bidding process, assuming you managed to read the Energy Reduction Fund White Paper released 24 April 2014. We talked about profiling you risk in our post ‘The White – ERF Paper’ on 2 May 2014. It has been attracting worldwide interest. What we don’t know is why it is so. We can only speculate many are expecting a ‘big bang’ or ‘flip flop’ for the policy. Regardless, it is better than doing nothing, so lets assume we can get past the regulatory uncertainty and look at things assuming you business can access the funds, has eligible projects, and has in place safeguard mechanisms.

First question you need to ask is are you strategic or tactical in your approach – or a hybrid. We might suggest hybrid is a good hedge. Why because you can be reactive to changes without being too hung up on risk factors. Also, providing funding could be as easy as the 2014/2015 Federal Budget being approved, without the specialist legislation. Yep, the good ole executive bypass is possible. But that is the government’s risk.

To bid in you need to create a program with a project size that has a prospect of being awarded funding. We note that some say, and repeated by Energetics (a consulting firm that is known to influence policy on Climate), claim 2,000 t CO2 equivalent abatement will get you a jersey. However, remember this is a reverse auction – the lowest price wins! There is no guarantee the best project will win. You could be forgiven for getting a little suspicious over who and what will be rewarded.

That said, the usual suspects for the preparation to be included in the bidding, may actually preclude you too! Namely, the requirement of ‘additionality’ for the projects. Back in 2012, August 14 – CO2Land org looked a little harder at additionality and its association with the word ‘real’ (concluding real was used as a synonym) and found:

  • Specifically ISO 14064-2 (project accounting) does not include ‘Real’ because during development of ISO 14064-2 ‘Real’ was regarded as a programmatic rule/criteria, which is outside the scope of ISO 14064-2.
  • ISO 14064-2 is a standard rather than a program
  • ISO 14064-2 (Clause 5.4) specifies the following requirement in regards to additionality: “The project proponent shall select or establish, justify and apply criteria and procedures for demonstrating that the project results in GHG emissions reductions or removal enhancements that are additional to what would occur in the baseline scenario.”
  • Additionality is incorporated into ISO 14064-2 is based on the core principles of ISO standards in general, i.e. that ISO standards not be a barrier to trade (WTO-TBT – anyone following development of ISO 14067 (product) will know this is a major issue). As such, ISO standards must be policy-neutral (extended to include program-neutrality). This is of course very important for market confidence.
  • ISO 14064 deals with the concept of additionality by requiring that the GHG project has resulted in GHG emission reductions or removal enhancements in addition to what would have happened in the absence of that project. It does not use the term “additionality”…Thus the project proponent may apply additionality criteria and procedures, or define and use boundaries consistent with relevant legislation, policy, GHG programmes and good practice.”
  • Although the concept/requirement of additionality is within the requirements of ISO 14064-2, the simple reason why the ‘term’ additionality is not present within the requirements of ISO 14064-2 is because of certain sensitivities/perceptions/politics of certain parties involved in the development of the standard –

And, the following references helpful in gaining a more complete understanding:

Oh dear, I wonder if they understand the standard says the concept should be policy- neutral. Why to give confidence to the market, elementary is it not?

But, here comes the good news. If you are aware, adopt a pragmatic approach, and are proactive in that you go low first up and go early you might just get there for your funding. All you got to do is keeping improving on your targets into the future.

What projects might have the better chance of winning a place. Energy Efficiency projects are probably the best suited for the auction process and the pre-qualification needs.

The conclusion: If you have done nothing meaningful before about your energy use. You can now be rewarded? Good policy, hey!

To ponder, Mark Jackson – a professional, asked in the Australasian Renewable Energy and Carbon Professionals Group on LinkedIn: “Is anyone else getting a sense that renewables are not getting a fair airing…budget etc”.

The White – ERF paper

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Have you read the Energy Reduction Fund White Paper released 24 April 2014? No, but I heard Hockey say the Clean Energy Regulator is gone – was the reply. Then another said: Isn’t Hunt the Minister. We replied yeah, but it was an interview for the news and you know what that means. But seriously, what does it mean?

The answer may have come from a company that markets itself as emphasising Climate Change Matters. No, not left wing, not opportunist. Just pragmatic of what is best for you to plan for what is ahead and how to best cope with it. So what can you do to cope? How do you position to be safe?

It is not really that simple. But at least it gives you a chance to prepare. So what is the greater risk? The hubris (excessive ambition, self-confidence) of the government, other parties not supporting the government position for the Direct Action Plan and appearing to support the repeal of the carbon pricing mechanism. Add to that those other parties that will not support either plan and you could say now and into the next senate period the legislation to support the Direct Action Plan will not pass the senate vote.

So the risk is prolonged regulatory uncertainty. But, prudent behaviour and textbook risk management says you must assess risk by anticipating that risk has associated alternatives.

What alternative? The bluster of government says the Energy Reduction Fund will be implemented and the related reverse auction process will commence 1 July 2014. Or, the Clean Energy Act – and the regulator stay put. Or, nothing happens – we blunder on and questions remain in terms of price liabilities. And, of course for business that is not good not good for spruiking ‘open for business’.

What methods would you use to profile your risk? I hear some say a scenario-based approach. But, is it really safe to say the stories lines are plausible because the causal relationships can be demonstrated? In these cases when scenario planning is integrated with a systems thinking approach to scenario development, it is sometimes referred to as dynamic. That is the point here the nature of dynamic is difficult to assess as certainty. Maybe good ‘old fashioned’ (Howard era) sensitivity analysis might be a better way to manage your risk profile. Nonetheless it would be remiss to say you can avoid the need to develop your position and become involved.

Assuming the Emissions Reduction Fund is on track as described in the White Paper: The reverse auction, with $300 million to spend, will begin on 1 July 2014. There are a set number of eligible type projects to participate. Methodologies can include a method to enable facilities reporting under NGERS to bid in the auction.

Baselines have a threshold, but what is different is the inclusion of ‘meaningful’. This differs from ‘generic’ and you need to have an understanding of the likelihood of what happens when or if you exceed the baselines. For example in July 2014 you are in one threshold and after 1 July 2015 above the line.

What is your safeguard position – it is up to you to get involved.

We will give you time to read the paper. But shortly, we might talk more on the bidding process.   If we decide to get involved!

 

Car Batteries – policy or technology the bigger threats

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What is a Gigafactory, costs $5b US and is said will reduce battery pack cost per kWh by 30% by 2017? We kid you not the source of this statistic is talking about TESLA plans for an enormous battery factory in south western USA, and the source is IIT Takeshita dated 2013. The report is linked to the BBC news service 31 March 2013. Whilst all that sounds wonderful, we have a problem. The weakest link for the acceptance of the electric car is the batteries.

It follows that the technology of batteries also mean any plans to set up Gigafactories, such as the TESLA plan to produce lithium-ion batteries for 500,000 cars by 2020 is under threat before it has started. New technologies are being developed that could offer better alternatives to address what experts say is one of the biggest limiting factors for electric vehicles.

“The problem these cars face is that batteries are big and heavy, and as a consequence only a limited number can be installed. The Tesla Model S for example, has a battery pack approximately two metres long by 1.2 metres wide, which is installed flat along the floor of the car. In the top-spec car, that gives a range of about 300 miles (482km) before plugging in and recharging is required. The Nissan Leaf achieves more like 80 miles (128km). On top of that, charging is a much slower process than just filling up with petrol.

How can you make a better battery, then? At its most basic a battery contains a positive and negative electrode, a separator and an electrolyte. Many different types of materials can be used as electrodes, the different combinations of materials allowing different amounts of energy to be stored. However battery life and the safety characteristics change as the materials change, so a compromise is always necessary. Lithium-ion batteries are popular, but have been implicated in fires on board planes, and their transport is restricted . Anything more reactive or unstable could be a hazard. Get the combination right, though, and the payoff could be huge.

The latest efforts follow a long line of improvements over the decades. First we had lead-acid batteries, the type that is still commonly used in cars; they are huge. Then, you might remember NiCad (nickel-cadmium) batteries – they were the rechargeable batteries that heralded a new era of portable technology – laptops, phones, and the like, as well as the remote control cars of our childhoods. Then came NiMH (nickel metal hydride) batteries, with about twice the capacity, or energy density. Now modern devices and electric cars are powered by lithium ion, or Li-ion, batteries.” Again the source is BBC News quoting Phil Gott, the senior planning director at HIS Automotive.

Then comes news that there are materials which can double the current energy density available for batteries. The BBC again quoted Daniel Abraham, a material scientist at Argonne National Laboratory, outside Chicago in the US. “We dream up or imagine the types of materials we would like to work with, then we attempt to synthesize the materials in the laboratory.”

Being developed, or maybe more correctly investigated, is batteries known as lithium-air, or lithium-oxygen, or lithium-sulphur batteries. Lithium-oxygen batteries. Talked about, as they are not yet working as planned, but are promising when that is sorted will be an order of magnitude improvement over the current Li-ion batteries.

But although the technology has revolutionary potential, the technical challenges of making a Lithium-air battery work consistently, reliably, and safely – and crucially for extended durations – are large. So far the electrodes have proven unstable.

But we guess we can look forward to a future where we will eventually have better, faster, travel further cars that run on batteries.

The question then becomes: Will the treat to the planned Gigafactory be the technology, will nothing be done after all. Co2Land org supposes if the politics of the day says government will announce yea or nay support after the project is ready to proceed – will it happen at all? It would be an enormous risk for investors. If the government were a more traditional policy announcement then left to be proven would that not be a better business risk? Interesting is it not?

 

 

from Gonna Do and Talk About to – the Paradigm Shift needed

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A discussion group, Sustainability Professionals, is having a long running discussion on the need for a paradigm shift in how we think and act. After CO2Land org posted, 22 April 2014, an Ecoprofit Management Newsletter item on World Meters – Population (pop increase 655,000 net in 3 days). It started a thought process that indicated we complain too much, and do not address the more important aspects – the real dangers of accepting the status quo. How do we go from gonna do and talk about to formulating the tools for shifting our mindsets?

We all know about the importance of educating our children, and use well worn terms like: they are our future and history shows us the way. But, what faces us now is unprecedented in human history, and if adults don’t act there may not be a future for humans. It is therefore foreseeable the paradigm shift needs to have an education component and have:

“INTERNAL TRAINING IN THE ADULT SECTORS on all issues explaining what sustainability is all about. This is sorely needed. We need to work education and training in these issues into the corporate and government structures. They are so risk management oriented. So let’s take a different approach. We need to address and train in the ROI across the board on what sustainability and bringing in why ecosystems working together is key. In the corporate and governments culture employees and all of management must take courses on line such as sexual harassment in the workplace, ADOBE training, how to deal with difficult co-workers, etc. WHAT IF we added:

Sustainability Planning
Sustainability Has a History
Planning Policies for Government and Business
Introduction to Action Initiatives
Waste Streams for Consideration
The Plan: Design and Implementation
Social Responsibility
Definition and Benefits
Guidelines for Transparency for Your Stakeholders
Basic Training of Renewable Energy
Leadership and Administration
Green Building / Systems/Materials
Green Building and Renovations Defined
Energy Efficient Systems
Driving Forces for Change
Risks and Benefits of Green Construction
Green Construction Risk Assessments
Green Certification and Standards
Green Certifications and Standards
Energy Ratings and Audits Defined
Certifications and Energy Standard Case Studies
Green Building Adding to the Bottom Line
Green Supply Chain Management
Leadership, Assessment, and Life Cycle Analysis
Environmental Costs and Benefits
Guiding Your Company’s Plan
Success Story
Waste Management
Waste Concepts are a Part of History
Tracking and Transporting Waste
Solid Waste Principles
What Can Be Recycled?
A Plan to Begin Managing Your Waste
Contractual Guidelines are a Must
Transportation / Green Fleet Management
Introduction to Green Fleet Concepts
Alternative Fuel Overview
Green Fleet Case Studies
Green Transportation Saves on the Bottom Line
Sustainable Purchasing Practices
Concepts in Green Purchasing
Involve Your Purchasing Department in Sustainability
Green Cleaning Practices
Becoming Familiar with Green Cleaning Concepts
Changing Your Cleaning Practices
Water Conservation
Efficient Use of Your Water Resources
Learn about Water Conservation From The Health Care Industry
Water Filtering Options and Storage
Preventing Stormwater Pollution
Environmental Accounting
General Environmental Management System Guidance
International Standards
Environmental Management System Implementation
Planning for Environmental Accountability
Tracking Carbon Emissions
Food Service
Waste and Recycling in Food Service
Greener Food Service Practices
Renewable Energy
Introduction Renewable Energy to Government and Business
Identifying Local Renewable Resources
Waste to Energy Saves Money!

So, wouldn’t this type of internal training help to effect change, catapult the forming of internal committees and cause departments to change business practices? I think it would. This is available now and courses include core competency testing, narration and are of high quality. Place these on corporate and government websites globally, and make them part of compliance internal training programs then the wider public can make better and more ‘informed’ business decisions. http://www.greeneducationonline.com “. Quoted is Kerry Mitchell from Green Education On Line/ Berkshire Hathaway Home Services.

Maybe she has nailed it, a big like from this end. Now how do you get our pollies interested?

Gas Prices – irrelevant statements

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Are you having trouble making fracking sense of the gas price? Don’t understand that if we triple our gas production we pay more for energy! Simple answer is it is a case of people on the far queue. The queue being the mantle of ‘world price’, and dismantle of price protection for domestic consumption. In this instance we mean Australian industry and households described as domestic.

It was bemusing to hear the new NSW Energy Minister (in case you did not hear – new premier and new cabinet after the shock resignation of the old, but same party, Mid April 2014) say we need to find more gas to keep prices down after the regulator said we approve 17% increase for gas from 1 July 2014. Bemused because our price is now set at what the world is prepared to pay to keep their industries productive. Therefore the more we produce the more economical it is to export the gas in economies of scale – simple is it not?

Then the Australian Broadcasting Commission (ABC) reported via Stephanie Smail : “The mooted gas price hike in New South Wales has created tensions with Queensland about the future of the coal seam gas industry. The NSW Government wants more information about overseas buyers from Queensland’s fast-growing market. The Queensland Government says that’s not an issue”.

Co2Land org is not so sure, that it is not an issue. The issue is how do we have faith that government is still relevant and capable of making decisions that are patriotic. But wait I hear you say we need to be aware of world trade and economic cooperation (AKA, Economic Participating Agreements, Free Trade etc). But something gets lost in all that: Governments tend to add fees and charges to balance their own end. So even if you agree on the level playing field for border entries (AKA Tariffs), the distribution price can be distorted by subsidies, fee and other charges.

This leads to the next matter. Why do we not have a social protection price for our own gas? We did, but it was not privatised then. So who wins? As we said increasingly, government is making itself irrelevant.

But let us, Co2Land org, propose a new angle for social inclusion and we could engage in for Direct Action (being the new Energy Reduction Fund white paper is released by the Federal Government) on this issue: 1. Do not engage in reverse auctions with no detail yet. 2. Crowd funding future developments. That is correct we the people fund the projects to the tune we expect prices to rise, and then from the interest we charge we pay off the increases when they come. Oh no! A terrible thought, we could tell the Treasurer the idea come from overseas and he will buy it. Imagine it now: We will save you, we are responsible managers etc. Overseas experience says etc. They are doing it as it is proven?

Unfortunately, it is all too true – we do follow others, and despite all the measures not working overseas we are being told to have faith. Again a case of people on the far queue.

Rock and Hardplace – RET and DAP predictions

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Let us now predict: Soon after the RET review the fossil fuel generators will celebrate with a short-term price relief. It is a two edged sword, as they will discover the relief may be temporary. Partly because large-scale renewables facilities are likely to continue to experience cost reductions, and the Federal government’s Direct Action Plan may further dampen electricity demand – not a good outlook for coal fired generation known for its baseload dependability to be profitable.

It is scheduled for the Australian government’s Direct Action Plan (DAP) to release its white paper -Emissions Reduction Fund, this month April 2014. Also scheduled for mid-2014, the Government’s Renewable Energy Target (RET) Review expert panel will report to the Prime Minister. We might even guesstimate that the PM will find DAP will be unlikely to be a benefit or too expensive for the resources sector, and simply drop it. It could be easier than you think, why because it is not yet funded!

Apart from funding, the Governments’ own wording suggests the final design of the government’s Direct Action Plan will be critical for coal generators, and their survival, with potential for emissions baselines and penalties to curb potential growth prospects. Add to this that individual states do more and encourage energy efficiency, and other large-scale efforts to improve energy efficiency via the Emissions Reduction Fund will be a terrible place for coal fired generators to be if the predicted demand for electricity continues to decline. This will put significant pressure on profit margins of these generators.

CO2Land org feels the PM is in a rock and hard place, by his own doing. Come July he will have no choice but to continue with the threat to repeal the Carbon Price Mechanism (which he refers to as the Carbon Tax) – Which results in a short term gain for coal fired generation. Even if RET is reduced or halved, the long term trend for coal output is still dependent on the price effectiveness of that form of supply – it might even need a ‘subsidy’ to continue supply.

That said, if energy security is the stated reason for a subsidy, it is likely the penetration of renewable energy will continue because it will continue to be subject to falling prices to its advantage, and those prices are dropping because of efficiencies in the way it can deliver. Let us not forget – business too will be more efficient, and in order to survive will factor in the need to reduce energy demands, or at least be more efficient in the use of energy.

Lastly, if the PM were thinking of killing off the Direct Action Plan (DAP) it would be unwise. It is the only mechanism the government has to show they care, or are earth aware. Even South Africa has come to recognize a price on carbon + Renewable Energy + Energy Efficiency + Land use change = business success. We don’t want to appear dumb do we!

 

 

Inverted J Curve – Gas, and RET recommendation predictions

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Time to make predictions: Gas prices will rise through an ‘inverted J curve’ response and world political pressures – antidote – devalue our Dollar. The outcome of the Australian Renewable Energy Target Review will recommend ‘constraint payments’ to be paid to renewable sources such as wind farms.

Gas prices will rise very soon, but not because of domestic pressure, but more because we will ‘promise’ it to be exported. Japan says thank you, as will others. This prediction is not new and it may have been part of the detail not yet released to the public over our new trade agreement. But the actual more recent driver is energy security concerns because of the Russian threats to gas supplies.

The evidence comes from Russia itself and the letter released by the Kremlin says that ‘if Ukraine does not settle its energy bill, Gazprom will be “compelled” to switch over to advance payment, and if those payments are not made, it “will completely or partially cease gas deliveries”. Mr Putin added that Russia was “prepared to participate in the effort to stabilise and restore Ukraine’s economy” but only on “equal terms” with the EU”.

Why is that so scary? Nearly one-third of the EU’s natural gas comes from Russia.

Co2Land org previously said we tend to borrow policy from overseas and then rebadge as a new idea here. Our Eastern seaboard National Electricity Market is a prime example. It should follow then what is happening in the UK will happen here (albeit the gas supply market is their greater influence and here we have the coal supply as the influence).

You might note that also recently posted by CO2Land org was that our Conservative brigade finds it ‘unpopular’ for wind farms to be ‘forced’ onto local rural communities. They will find it reassuring that the UK are it is “Long unpopular among some Conservative MPs from rural constituencies, onshore wind turbines appear to have incurred the wrath of the Prime Minister as well”. We do not have to be a guru to work out that this tactic will be mimicked in Australia, anytime soon.

There is the pointer to this likely development? Plans to restrict wind farms to seas around Britain will need much larger subsidies from consumers, experts say.

Newspaper reports suggest that the Conservative Party will include a pledge to limit onshore turbines in next year’s election manifesto.

But a member of a working group reviewing UK wind energy said this would require increased subsidies of around £300,000 per turbine per year.

Prof Richard Green said this would have a knock-on effect on electricity bills.

The dilemma for our politics is, just as they in UK promised the next few years will be difficult for the better good – they limit subsidies and toughen planning laws to make wind farms unviable in the countryside. The issue will be that to do so will make alternative energy more expensive to build and run. Why? As the UK report points out that “onshore wind energy is more expensive than electricity from coal or gas, but wind is one of the cheapest sources of low carbon power”. It is going to be very difficult to eliminate a energy source with a low carbon benefit! Forget arguments about Carbon Price (Carbon Tax sometimes called for emotive responses), this is about the need to respond to business pressures for them to be competitive, and like it or not gas prices are going up and wind is looking good in terms of low carbon benefit. Add to that the energy storage capability being developed and game set and match.

In the mean time (interim) constraints being put on renewable generation may well include payments to not participate in the market. This would allow traditional coal fired generators to at least run until the end of their economic life.

Is this fair? Glass half full or half empty – depends on your view.