Carbon price 'no peril to economy'

Summaries - Australian Financial Review
Monday 22/11/2010 Page: 1

A study by Access Economics released yesterday found that a carbon price would have less effect on the Australian economy than the rising Australian dollar. Australia's gross domestic product (GDP) will have been slashed by 5%, according to the report, but the Federal Government's Carbon Pollution Reduction Scheme would have only reduced GDP by 3%.

The Clean Energy Council commissioned study was delivered as the government attempts to introduce a carbon price and coincides with the first round table meeting on climate change. The meeting will be convened by Climate Change Minister Greg Combet and Treasurer Wayne Swan and will be attended by representatives from Origin Energy, AGL Energy, BHP Billiton, Woolworths, Qantas, Shell, Rio Tinto, Woodside Petroleum and BlueScope Steel.

Meanwhile Prime Minister Julia Gillard has likened the importance of the introduction of a carbon price to floating the dollar and reducing tariffs.

Parliament gridlock threat to geothermal industry

Adelaide Advertiser
Saturday 20/11/2010 Page: 90

THE fractured nature of the current Federal Parliament is the biggest threat to funding for Australia's geothermal industry, an Adelaide conference has been told. Senator Don Farrell, representing Energy Minister Martin Ferguson, said a lack of agreement on carbon pricing was likely to sap funding for the developing industry.

"As the last Parliament showed, even with the most determined approach it is very difficult to get consensus in the Federal Parliament on questions of carbon pricing (and) therefore emission reduction targets", he said. "I'm not sure that given the current state of Parliament - where the Government is both on a knife edge in the Lower House and in the minority in the Senate - that it is going to be very easy to achieve that goal. "That presents problems for this industry. The way you access finance for this industry is by a price on carbon, that's going to make your industry the most valuable in terms of interest from finance organisations".

Mr Farrell said South Australia remained a hothed for the industry, which provided a real prospect for "24/7 baseload renewable power". Yesterday's Australian Geothermal Energy Association conference was also told it had been a "frustrating year of inaction" for research and development incentives. KPMG partner Mathew Herring said there had been no new progress on funding incentives and there was an expectation that tax changes were likely to be delayed until next financial year.

"We were close to having a new research and development regime in place that would benefit the geothermal industry, but it's been a frustrating year", he said. "We don't know what's happening and there may be some good opportunities forgone". Mr Herring said changes proposed extending the turnover threshold for R&D expenditure from $5 million to $20 million but tightening the definition of R&D to reduce production-related claims. He said details of a $40 million emerging technology fund - together with associated $100 million in venture capital funding - were still uncertain.

Powered up for next two years

Adelaide Advertiser
Saturday 20/11/2010 Page: 49

RENEWABLE energy from catchments such as wind farms have pumped enough reserve power into the grid to safeguard Adelaide's supply through the next two summers. Australian Energy Market Operator spokesman Paul Bird said South Australia's supplies were more than ready for the peak period between mid-January and mid-March. "There is sufficient supply to meet demand and a reserve buffer for contingencies and other events", he said. "The increase is a result of the ongoing growth, especially in the past six months in the amount of wind farms in the state".

He said the outlook was so promising that he predicted a surplus for both this and the following, summer despite an increase in consumer demand. More wind power is generated in SA than in all other Australian states combined and wind farms provide about 20% of the state's power. Mr Bird, however, could not rule out a return to load shedding if extreme conditions hit, such as the 2009 heatwave, because of a surge in demand for power.

ETSA spokesman Paul Roberts said the utility had learnt from blackouts over the past few summers and was well equipped to handle any issues that arise. "Previous heat waves have brought to our attention some capacity issues that we are now aware of", Mr Roberts said. SA wind farms have pumped about 280MW into the grid during the past 18 months.

Infigen opts to pay later

Adelaide Advertiser
Friday 19/11/2010 Page: 66

WIND farm operator Infigen Energy's shares slumped yesterday after it told shareholders debt repayment was limiting cash flows available for dividends and business development. Infigen Energy expects to repay close to $100 million of its debt over the next two financial years instead of the previously forecast $200 million due to the rising dollar and lower energy prices. Shares closed 12% lower at 64¢ after the company's annual general meeting.

The company - still open to the sale of its US and German assets after failed efforts this year - is focusing on its Australian business to grow. Infigen Energy recently completed the expansion of its wind farm at Lake Bonney in SA and yesterday announced a $14 million expansion of its new Woodlawn Wind Farm in NSW. "We have a high quality pipeline of prospective new developments in Australia.

However, we will only commit to initiating new developments once we are able to secure attractive off-take arrangements and satisfy Infigen Energy's strict internal rate of return requirements", managing director Miles George said. Mr George said the company was in talks with potential partners to fund the wind projects. It has also partnered with Chinese solar panel maker SunTech for a slice of the Federal Government's $1.5 billion Solar Flagships program. He also called for "clear, stable and reliable policy settings that are not subject to constant change".

Investors say it’s time to act

Business Spectator
Wednesday 17/11/2010 Page: 1

It seems the world's leading investors are sick of not being listened to on the critical issue of climate change, and financing the transition to low-carbon technologies. And they've decided to do something about it. A group of 258 investors with $US15 trillion under management - or about one quarter of the globe's market capitalisation - have declared that they stand ready to invest in new technology and have implored governments to give them the mechanisms to do so.

They say that if governments are serious about their pledge to cap average global warming to a maximum of 2°C, then it is time to act and provide the investment climate that would unlock the trillions of dollars needed to achieve this. Chief among these, of course, is a carbon price strong enough to encourage that investment, as well a range of complementary measures to encourage investment in renewables and energy efficiency. It echoes similar comments in recent weeks by many of the world's largest industrial companies.

It's estimated that around $US500 billion a year is needed to help meet the 2°C target over the next decade, but the investment in 2009 reached little more than a third of that total, and in 2010 will barely scrape above $US200 billion - a big number but still $US300 billion short. Worse, the investors say, the world faces climate-related GDP losses of up to 20% by 2050 and severe risks to individual assets, and they want to protect their investment.

"Climate change may be out of vogue in Washington today, but it poses serious financial risks that are not going away and will only increase the longer we delay enacting sensible policies to transition to a low-carbon economy", said Jack Ehnes, the CEO of the California State Teachers' Retirement System, the second largest public pension fund in the US with $US141 billion in assets. The group includes 33 investors that come under the Australian-based Investor Group on Climate Change, including AMP, AXA, Colonial and BT, which has called for Australia to implement a carbon price.

The statement highlights the fact that, while more was invested in renewable technologies on a global scale than in fossil fuel technologies in the past year, Australia anticipates little more than $2 billion a year to be invested in renewables over the next decade, while an estimated $50 billion will go to supporting and expanding existing infrastructure in the next five years alone. "Investment flows to countries with regulatory certainty and strong returns. It's as simple as that", said Frank Pegan, the chair of the IGCC and CEO of Catholic Super. "Australia should implement a carbon price as soon as possible to attract investment and avoid being last in the low-carbon race".

The group's statement is clear about what's at stake: "Investors are concerned with the risks presented by climate change to regional and global economies and to individual assets. At the same time, investors are interested in the large potential economic opportunities that the transition to a low-carbon economy presents. "Investors have a fiduciary responsibility that requires them to seek optimal, risk-adjusted returns on their investments. At present, in the absence of strong and stable policy frameworks, many low-carbon investment opportunities do not currently pass this test".

So they suggest that domestic policies include not just a carbon price (through a well designed carbon market) but frameworks to deliver renewable energy, energy efficiency and other low-carbon infrastructure - in short, the sort of complementary measures that have become a political football in Australia these past few week.

More specifically, the group recommends short, mid and long-term greenhouse gas reduction targets, policies to accelerate the deployment of energy efficiency, renewables, green buildings, clean vehicles and low carbon transport infrastructure, and the phasing out of fossil fuel subsidies - which the G20 has agreed to do but, like the Copenhagen Accord which sets the 2°C target, have yet to decide how to do it.

They also want strong action in the international arena, including defining of the mechanisms for the $100 billion a year to support mitigation and adaptation in the poorest countries, a rapid timeframe for a scheme to protect forests through the REDD mechanism, clarity on the future of international carbon markets such as the UN's Clean Development Mechanism, robust agreements on measurement, reporting and verification, and finally a clear commitment from Cancun to seal a binding international treaty in South Africa in 2011.

It notes that countries that have had strong policies that provide long-term certainty and enable credible mid-to long-term risk assessment have already managed to attract significant capital in low-carbon investment policies. But in other countries, frameworks have remained weak and uncertain (that could be Australia) or have been damaged by indication that strong policies will be retroactively scaled back in the face of the economic downturn (sounds like Spain).

Pegan notes that Australia should not be using the US deadlock as an excuse not to act, but should be paying more regard to the actions of its principle trading partners in Asia, where governments have been proactive and large industrial groups are retooling their businesses. Pegan says this gives a clearer picture of the future of climate change and energy investment trends.

This article first appeared on Climate Spectator on November 17.

Call for geothermal power subsidies

Age
Thursday 18/11/2010 Page: 5

AUSTRALIA risks being left behind in the development of geothermal power unless it introduces a subsidy to support the fledgling industry, an expert in the field warns. Jorg Baumgartner, chief executive of Bestec, a geothermal consultancy and drilling company, said geothermal power was advancing in countries such as Germany, France and even Indonesia because of established subsidies.

Dr Baumgartner, in Adelaide for the Australian Geothermal Energy Association's conference, said the take-up rate of geothermal in Germany had "increased 1000%" following the introduction of the Renewable Energy Act, which includes feed-in tariffs for renewables.

"The German government has made it clear that it doesn't want to be supporting geothermal power forever, but it is obvious that these projects need a subsidy to get going", he said. "Nuclear had subsidies to get going, coal did, all of them in fact. We need this, not forever but just until it gets off the ground. Countries like Australia that don't introduce subsidies will find it much harder".

Geothermal power uses heat from the Earth's core to generate hot water and steam, which is then brought to the surface to run turbines. Germany has about six geothermal projects feeding power into the grid. Dr Baumgartner is also an independent non-executive director of Australian company Green Rock Energy, which is using geothermal energy to power air conditioners at the University of Western Australia.

Susan Jeanes, chief executive of the Australian Geothermal Energy Association, said the Gillard government needed to support its own research, which found that geothermal energy could provide the cheapest source of clean energy. "In Australia, the Commonwealth has recognised that the development of new technologies has to be supported with $2.5 billion for clean coal and $1.6 billion for solar, but geothermal is more advanced around the world than clean coal and will be a third to half of the cost of solar for at least the next two decades", she said.

Westpac walks the line

Business Spectator
Tuesday 16/11/2010 Page: 1

Westpac has vowed to avoid the financing of any new inefficient and high carbon emitting assets, and says it will focus instead on the development of clean energy solutions. The pledge - the first to come from a major Australian bank - came in the annual report released on Monday that made a virtue of the bank's focus on sustainability, using the words "sustainability matters" as the single feature on the cover of its shareholder document.

The bank's newly drawn up position statement on the energy sector includes a framework that will apply to all finance activities - debt, financial markets, project finance and other services - relating to the energy sector. That includes all forms of power generation, distribution and transmission networks, and infrastructure and utilities associated with oil and gas production. The key phrase is the one that commits the bank to "avoid involvement in transactions which support the establishment or long-term continuation of inefficient and high carbon emitting assets into the future".

A spokesperson said that Westpac would honour its current commitments, but no new fossil fuel projects would be supported unless they adopted cleaner and less intensive generation, such as carbon capture and storage technology. Instead, the bank would focus on financing renewable energy, energy efficiency and clean technology, managing carbon risk and support research and policy development.

The bank has been a founding signatory to the Equator Principles, which broadly state that lending should avoid environmental harm, but this has been a lofty ambition that has been difficult to effect; as some might expect it to be. Just drawing up these rules has taken longer than expected, particularly with the GFC, and the bank has been busily providing additional training for its project financing staff this year to ensure that these principles and their implications are fully understood.

Australian banks have come under increasing pressure from environmental groups such as Greenpeace to curb their lending to fossil fuels, with ANZ a recent target because of its higher exposure to fossil fuel energy. ANZ is also a signatory of the Equator Principles, although it has said it sees its role as "evolutionary" rather than "revolutionary". Meanwhile, a Greenpeace spokesman has said it would be interesting to see what the Westpac pledge meant in practice.

Westpac was one of several large companies that took a prominent role last Friday at a meeting convened by Senator Christine Milne at Parliament House, that amounted to a "call to arms" to counter the influence of those who would argue for a carbon price of minimum cost, scope and flexibility.

Milne managed to attract representatives of around 70 groups - including the likes of Westpac, Lend Lease, GE, Origin Energy, AGL Energy and a bevy of clean energy groups, as well as representatives from think tanks, universities, industry bodies and NGOs for the two hour meeting.

Milne is concerned that, now that a carbon price in on the table, the debate is being hijacked by vested interests who want a narrow pricing scheme with a minimal price and without supplementary measures. She wants the vocal support from business and other groups to shift the debate from a focus on least-cost abatement to meet Australia's unconditional 5% target, to one of maximising the opportunities of a more ambitious longer term target.

The Greens are frustrated that emissions reduction targets are not on the agenda of the multi-party committee that Milne co-chairs. So, they are pushing for a carbon tax in the hope of guaranteeing a robust carbon price (mostly likely to be at least $20 a tonne) until such time as a higher target is agreed, and to ensure that there is sufficient flexibility in the scheme for it to be adjusted, as needs be, with scientific and international developments.

Rod Leaver, the head of Lend Lease's Australian operations and possibly the most senior executive at the meeting, said the company wanted a carbon price to provide certainty and drive change. Borrowing a well-used phrase, he said the risk was not from "setting the bar too high and not achieving it, but in setting it too low and achieving it".

Solar solutions in remote locations

Daily Telegraph
Wednesday 17/11/2010 Page: 67

Solar-Gem is a Sydney-based company that works to bring power to rural and regional communities around the world. Since its establishment just last year, Solar-Gem has experienced export success, landed four innovation and design awards and enjoyed growing use of its technology. Solar-Gem's system provides a "portable and reliable energy solution", according to its CEO, Khimji Vaghjiani.

It uses solar powered light-emitting diode (LED) units to create "efficient, renewable energy for lighting, mobile phones, small laptops and other appliances, while at the same time reducing reliance on grid-connected power", he said. Mr Vaghjiani said the advantages of the system are its portability and long life but getting it out into communities can be a challenge, although the company is looking at ways of improving this. The technology is being implemented in different countries, helping to achieve the company's goal of bringing electricity to the remote communities of the world.

In Africa, the LED units provide light for hospitals and surgeries, as well as a post-natal unit. A community in Fiji has also just had the system introduced. Closer to home, a trial is being undertaken at Calmsley Hill City Farm in Sydney's west. An official trial is also under way in a village on Elephanta Island in India, near the world heritage site of the Elephanta caves. A unit has been installed in each of the 35 homes in the village, and the system was first turned on in October during Diwali, the Indian festival of lights.

If successful, the trial could expand to include other villages on the island and across India. The trial was organised in conjunction with Austrade, which has worked with Solar-Gem to distribute its product. Austrade helped Solar-Gem market the business, as well as connect with potential overseas clients. Solar-Gem's innovative units, which are manufactured in Marrick have earned the company many awards, including Australian Innovator of the Year, a community contribution award and a gong for design excellence in architecture.

Funds urge clear policies on climate

Sydney Morning Herald
Wednesday 17/11/2010 Page: 3

A GLOBAL group of investment funds that control $US15 trillion have urged national governments to adopt strong climate change policies to ensure international investment in clean energy. In a statement to be published today, the group of 258 institutional investors, including HSBC and Allianz, say levels of investment in renewable energy are well below that needed to mitigate rising greenhouse gas emissions.

But if strong domestic policies are implemented, such as emissions reduction targets, energy and transport policies, and the phasing out of fossil fuel subsidies, the trillions of dollars in investment needed by the end of the decade would be sparked, they say. Governments should also ensure strong and sustained domestic carbon prices.

"Investors are concerned with the risks presented by climate change to regional and global economies and individual assets", the statement reads. "At the same time, investors are interested in the large potential economic opportunities that the transition to a low-carbon economy presents".

A recent study by the World Economic Forum found that $500 billion in public and private investment in clean energy is needed every year by 2020 to keep global warming below a 2°C increase in temperatures a crucial threshold that gives the world a strong chance of avoiding the worst effects of climate change.

Global investment in renewable energy last year was $145 billion, rising to an estimated $200 billion this year. The investors' statement says countries that do not have strong domestic climate change policies are missing out on international financing. "Capital is not flowing to low carbon investments in these countries at the scale required because of the lack of investor confidence in their climate and clean energy policy frameworks", it says.

China nuclear plant workers exposed to radiation, South China Post reports

www.bloomberg.com
Nov 16, 2010

Daya Bay nuclear power station workers in southern China were exposed to radiation equivalent to two chest X-rays after a leak at the plant, the South China Morning Post reported, citing an official from one of the plant's partners. The leak was caused by a fault in a pipe carrying hot water from a reactor, the English-language daily reported Chan Siu-hung, managing director of the Hong Kong Nuclear Investment Co., as saying.

The incident on Oct. 23 was classified a "level one" incident, on a scale of one to seven set by the International Atomic Energy Agency, the Morning Post said. Level seven is the most serious category. The leak was contained in a sealed building, according to the report. Part of the electricity produced at Daya Bay supplies power to Hong Kong.

A small leak from a fuel rod at Daya Bay was contained on May 23 and there was no change in radioactive levels in neighboring areas, according to the plant's operator. The Daya Bay Nuclear Power Station is 50 kilometers (31 miles) from Hong Kong's Tsim Sha Tsui district.

The facility has been in commercial operation since 1994 and generates 10 billionkW-hours of electricity a year to Hong Kong and Guangdong province, according to the website of the Hong Kong Nuclear Investment, a unit of CLP Group Ltd, that owns 25% of the plant. State-owned Guangdong Nuclear Investment Co, owns the remaining 75 percent.

Calls made to CLP Group's Hong Kong office before office hours this morning went unanswered.

Total to build solar panel plant in France

www.businessweek.com
November 15, 2010

French oil and gas company Total SA said Monday it will begin building a solar panel plant in the Moselle region of France early next year. The installation is slated to house two production lines for a total capacity of 50MW peak, or about 220,000 photovoltaic panels per year, the company said.

The first production line is expected to begin operating toward the end of next year. The project will create about 80 jobs in the Moselle area, Total said. "The production unit, situated near our French, German and Northern European customers, allows us to strengthen our market capabilities", said Philippe Boisseau, president of Total Gas & Power.

Falklands’ wind power contribution new record: 40% of Stanley’s consumption

en.mercopress.com
November 16th 2010

Annual wind power contribution in the Falkland Islands has set a new record with the significant milestone of 40% of renewable contribution, according to Stanley Power Station Manager Glenn Ross.

This month the Sand Bay Wind Farm produced 40% of the total electricity required by Stanley. This beats the previous high of 38% achieved in August. The Sand Bay Wind Farm produced 115,272 units of electricity at an hourly average for the week of 686kWs. The highest hourly output was 1200kWs and the highest hourly percentage was 57%.

Glenn Ross said that fuel Displacement was 30,290 litres which gave an estimated weekly saving of £14,720. The Falklands currently have a total of six wind turbines the last three became operational on line last February. The installation of the first three wind turbines in 2007 resulted in the displacement of 26% of annual fuel consumption, reported at the time the Falklands government.

"This figure (40%) compares favourably to the UK Government's goal for 20% of electricity produced in the UK to be renewable by 2020, proving the Islanders' commitment to renewable energy. As well as reducing their carbon footprint in order to protect the pristine environment of the Islands, the increase in renewable energy has meant that the cost of electricity has been reduced by six pence per unit for Islanders", said the Falklands' government release.

The latest turbines to be incorporated are the same type and make as the first three turbines: 330kW synchronous variable speed and variable pitch turbines manufactured by Enercon (Germany).

The next phase in the development of the wind farm will be energy storage, achieved by charging a 2MW battery during optimal wind times and discharging the battery when wind is not available. This will ensure that energy production is kept more constant.