So says the FT’s Lex column: “the appeal, and likely returns, of climate change investing are fading fast.”
Will Hutton in the Observer: “The last time Britain endured such an extended period of depression and falling living standards – the 1870s and 1880s – saw the mushrooming of the co-operative movement and the emergence of the Labour party as the more moderate expressions of anger that wanted to challenge the very basis of capitalism. Be sure that British civil society will not accept its grim fate as if nothing is happening. There will be organised and angry responses – and rightly. We are about to experience economic, social and political tectonic plates on the move.”
Guardian: “The construction of new renewable energy generation capacity has fallen dramatically, as the big six energy suppliers pursue a “dash for gas” policy that could put the UK’s climate change targets out of reach and leave households with higher bills.” Wind projects are down by half on last year. Less than a GW of wind has been approved and 30 GW of gas is at planning stage.
As the Telegraph puts it: “The first of the new plants will not be built until 2019 because of extra safety checks following Japan’s atomic disaster. Ministers originally hoped to get the first nuclear power station built by 2017, before revising this to 2018. Now there has been a further slippage, after an updated timetable showed the first station in Somerset is not expected until nearer the end of the decade.”
New analysis for the Guardian by Manchester University shows a progressive widening between wholesale and retail prices.
Japanfocus.org: “Last year, according to figures from Bloomberg New Energy Finance (link), investment in new generation capacity from renewable energy sources (excluding hydro) totaled USD 187 billion, outpacing the USD 157 billion new investment in natural gas, oil, and coal-fired generating capacity.
….The FIT cost the Germans EURO 3.2 billion in 2008, but the German Federal Ministry for the Environment calculates that the FIT saved Germany EURO 7.8 billion in fossil and nuclear fuels and the public health and other external costs from carbon emissions, air and water pollution, and the like by EURO 9.2 billion. …. it has worked far above expectations in Germany for the past 10 years. Germany set a 2010 target of 12.5 percent share of renewable energy in electric generation in 2000. They surpassed that goal in late 2007 with 15.1 percent share. …. since the German’s have launched their FIT program, approximately 35 to 40 counties have followed suit and implemented their own.
…. Japan introduced a FIT in November of 2009… This FIT is encouraging a rapidly expanding volume of renewables investment inside Japan from co-ops and farmers, households and local communities through to such heavyweights as Softbank, NTT, and Marubeni as well as overseas giants including Germany’s Siemens and China’s number 2 PV producer JA Solar. …. The real risk in Japan is that prices will be set too low so that little deployment is encouraged. This would blunt the incentives of the world’s third-largest economy to lead the energy transition, at the same time driving down its own power costs and externalities as well as those for billions elsewhere, especially in Asia and Africa. This risk is due to the nuclear village having managed to get its people named to the committee that is to set prices. As Japan’s Institute for Sustainable Energy Policies (ISEP) warns in a November 24 press release, these individuals include Shindo Kosei, Executive VP of Nippon Steel and head of Keidanren’s Global Environment Division. ….This ongoing fight over structuring the FIT is part of the larger fight between renewables and nuclear as the pillar of Japan’s power economy, a fight the November 18 New York Times understands to be a “contest over the future of Japan itself”.”
Mervyn King: “The crisis in the euro area is one of solvency not liquidity. And the interconnectedness of major banks means the banking systems and economies around the world are all affected. Only the governments directly involved can find a way out of this crisis.” The Financial Policy Committee urges banks to continue building up their capital stock and urges them to limit bonuses and dividend payouts rather than cutting back on lending to businesses and households.
In the wake of the sacking of the british Embassy in Tehran, and oil embargo is under discussion in Europe. The FT reports that “diplomats said one of the key questions for European countries in the weeks ahead would be whether Saudi Arabia and other Gulf states could be persuaded to boost oil production to mitigate the effects.”
Enron was a high risk hedge fund disguised as a diversified energy company and some 500 companies had been approved by regulators to trade energy at the time it blew up 10 years ago. It took down Mirant, NRG, NEG and Calpine with it. Now, says Julian Dumoulin-Smith, director of equity research in the Electric Utilities & IPPs Group at UBS Securities, there is a growing queue of groups interested in trades beyond physical assets: Constellation Energy, Mercuria, Arcadia Petroleum, Glencore, RWE, EON, EDF. As one commentator says, its almost come full circle.
As the Guardian puts it: “The government has astonished the anti-nuclear lobby by outlining plans to spend £3bn of public money building a new mixed-oxide fuel (Mox) plant – months after announcing the closure of a similar facility that lost taxpayers hundreds of millions of pounds.”
A senior Conservative quoted in the FT: “(Osborne) has begun to sneer at the green lobby: it’s a clever strategy within the party.” Latest casulaties: the Green Investment Bank now looks to have fallen foul of Osborne’s lending proviso: that it would only be able to borrow once debt was falling against gross domestic product. So no borrowing now until 2016.
A RIIA report: “Saudi Arabia’s place in the world oil market is threatened by unrestrained domestic fuel consumption ….on the current trajectory, Saudi Arabia’s domestic energy consumption could limit its exports of oil within a decade. This would have a severe effect on government spending, over 80% of which is dependent on oil revenues. Ultimately, it may reduce Saudi Arabia’s spare production capacity, causing greater volatility in the world oil markets. ….simulations show that adding renewable and nuclear power based on current estimates will only delay the onset of an intractable fiscal deficit by a couple of years. An ambitious effort to increase energy efficiency is also essential.”
Three American banks –JP Morgan Chase, Citigroup and Bank of America – top the list of coal financiers, having between them provided at least €42bn to the coal sector since 2005. Barclays took fifth place, having lent more than €11.5bn to big coal companies in the same period.
The plant at Ferrybridge, an SSE coal station, will capture only some of the fumes: 5 MW worth from 2,000.
My latest column in Sublime magazine: “The current government in Britain appears to be playing fast and loose with some fantastic renewable energy opportunities – and ones that could provide much-needed jobs. what is that about? If the British Prime Minister were being authentic, he could be leading on an impressive story right now. Those of his core mantras that involve energy, taken together in strategic harness, make for an inspiring vision. Picture the scene. His Big Society concept sees communities taking power for themselves, providing for themselves. In short, Britain could be less centralised, more community-centric, more resilient to economic shocks.”
So writes Newsnight’s economics editor. “Yesterday’s Autumn Statement will set the political tone of the decade: it will tie the hands of future governments; and it has already brought a philosophical debate on the British right to an abrupt end. Within six hours of their tight-lipped ordeal on the government benches, Lib Dem MPs heard Danny Alexander pledge them to go into the 2015 election fully committed to £30bn more austerity than they signed up for in the Coalition Agreement. ….Plan A, in short, failed. It failed because the eurozone did begin to slow, and confidence was hit, and so exports – having surged – will not surge much more. But also because the very survival mechanism adopted by the Bank of England – near-zero interest rates, QE and talking down the pound, which has produced and maintained a 20% fall of sterling against world currencies – led to imported inflation. This has hammered the spending power of a workforce whose wages have been pinned to the floor, even in the weak recovery phase.”
Stock markets surge after central bankers say they will cut the interest rate on emergency dollar loans to cash-strapped banks by 0.5 percentage points and extend the scheme until February 2013. In the dollar swap scheme to date, though, banks have been reluctant to borrow from central banks, for prestige reasons.
Greg Barker to a combined meeting of the Environmental Audit and Energy & Climate Change Committees: delaying UK the cuts to April would be “bonkers”. Jeremy Leggett: “they have launched a lethal attack on the underpinnings of a vital industry.” A fairly full ventilation of the issues.
So argues Martin Wolf in the FT: “The big facts are that the UK is set for a lost decade and a longer period of stringency than expected. The government’s position is that there is no alternative. That has now become a self-fulfilling prophecy. So blame foreigners: that always works.”
Ahead of the Durban climate summit next week, the US, backed by Saudi Arabia, has still not agreed to adopt a blueprint for the Green Climate Fund. Proposed at the 2009 Copenhagen climate summit, the fund channels “a significant portion” of the $100bn a year developed countries have promised to mobilise by 2020 to help developing countries fight climate change.