Block’s Indicator of Sustainable Growth

 Wind energy is by far the largest renewable energy source in the world, and its leadership over solar and other renewables is likely to continue in coming years. The implications for the industry including wind turbines, the electricity generating companies, the high voltage transmission lines yet to be developed, and the long term infrastructure investors to be involved in wind farms and wind parks is becoming very big business in the 21^st Century. There is a competitive race for world leadership. This note sets the scene.

 

During calendar year 2009, the extremely disruptive year of very low economic growth world-wide, when venture capital was scarce, at least 26 GW (26,000 MW) of new wind energy was installed in the big three economic blocs- United States, European Union and China. The year set up a new challenge, with China- the country which had doubled new wind energy installations each year over the previous five years to December 2008, almost doubling it again in 2009, and for the first time exceeding new wind energy installations in United States.

 

Preliminary figures for country totals from the global wind energy council (GWEC) and the two country group associations, AWEA in the US, and EWEA in the 27 country- EU, are still being assessed. China stole a march on its economic rivals adding about 10 GW (10,000 MW) in new wind energy installations in 2009 to reach a total capacity of 22.2 GW.

 

United States added only a disappointing 7 GW in new wind energy capacity in 2009 to reach a cumulative installed capacity of 32.2 GW. The first quarter started very strongly, but the financial crisis led to a sharp fall in the second quarter, followed by some growth in the third quarter, and finally a retreat towards the end of the year.The American wind energy history in recent years is marked by a ziz zig pattern of strong growth followed by low or even no growth. This disruptive pattern is associated with periods when the US Congress didn’t renew the production tax credits. This occurred three times in seven years, between 1999 and 2006.

 

Understandably, the wind energy industry needs tax certainly, as a means of encouraging long term infrastructure capital to invest in costly large scale wind farms. The largest wind farm in the world consisting of 627 wind turbines with a total capacity of 781.5 MW opened in Roscoe Texas in October 2009. Significantly, the developer is the German energy supplier, E.ON, and some of the turbines predictably came from Siemens.

 

In 2009, the equally hard hit European Union added about 8.6 GW in new wind energy installations to reach a cumulative capacity of 73.5 GW.Looking forward to 2020, the EU is forecasting installed wind energy capacity of 230 GW, which would comprise 190 GW in onshore installations and 40 GW in offshore installations. This would represent between 14.3 per cent and 16.6 per cent of total electricity consumption in the 27 country community.

 

Denmark, the original home of the modern wind energy industry opened the world’s largest offshore wind park, Horns Rev11, 30 km from its shoreline in September 2009.

For 2030, the EU is forecasting installed capacity of 400 GW, made up of 250 GW onshore and 150 GW offshore. In this scenario, wind energy would represent between 26.2 per cent and 34.3 per cent of total EU electricity consumed.

 

China is currently aiming for 150 GW of cumulative installed capacity by 2020. But it is more than likely that China will continue to surprise, with substantially higher levels of installed capacity. Its six wind bases are mainly located in the north west of the country, with the best wind resources, and where the population is relatively sparse. The National Energy Administration chose Xinjiang, Inner Mongolia, Gansu, Hebei, Jiangsu as the most suitable locations. No estimate for installed capacity in 2030 has yet been released.

 

The US Department of Energy (DOE) report “20% Wind Energy by 2030” was released in July 2008. The 20 per cent refers to the assumption that US wind energy installed capacity by 2030 would be more than 300GW, which would deliver 20 per cent of total electricity consumed.

 

The race for wind energy leadership goes on unabated. It is best seen in the highly competitive market for wind turbines, with Vestas of Denmark hanging on to a slight lead over GE Wind Energy (US). Gamesa (Spain) is in third place, followed by Evercon (Germany), and Suzlon (India) in fifth place

 

Suzlon is the largest offshore wind supplier. No 6 spot goes to German giant, Siemens, and bringing up the rear are three very ambitious Chinese turbine suppliers, destined to be in the top tier – Sinovel,Goldwind and Dongfang.

 

 

 

 

 

 

 by Ray Block

Wind energy, a race for long term leadership

 

By Ray Block December 28 2009

 

Wind energy is by far the largest renewable energy source in the world, and its leadership over solar and other renewables is likely to continue in coming years. The implications for the industry including wind turbines, the electricity generating companies, the high voltage transmission lines yet to be developed, and the long term infrastructure investors to be involved in wind farms and wind parks is becoming very big business in the 21^st Century. There is a competitive race for world leadership. This note sets the scene.

 

During calendar year 2009, the extremely disruptive year of very low economic growth world-wide, when venture capital was scarce, at least 26 GW (26,000 MW) of new wind energy was installed in the big three economic blocs- United States, European Union and China. The year set up a new challenge, with China- the country which had doubled new wind energy installations each year over the previous five years to December 2008, almost doubling it again in 2009, and for the first time exceeding new wind energy installations in United States.

 

Preliminary figures for country totals from the global wind energy council (GWEC) and the two country group associations, AWEA in the US, and EWEA in the 27 country- EU, are still being assessed. China stole a march on its economic rivals adding about 10 GW (10,000 MW) in new wind energy installations in 2009 to reach a total capacity of 22.2 GW.

 

United States added only a disappointing 7 GW in new wind energy capacity in 2009 to reach a cumulative installed capacity of 32.2 GW. The first quarter started very strongly, but the financial crisis led to a sharp fall in the second quarter, followed by some growth in the third quarter, and finally a retreat towards the end of the year.The American wind energy history in recent years is marked by a ziz zig pattern of strong growth followed by low or even no growth. This disruptive pattern is associated with periods when the US Congress didn’t renew the production tax credits. This occurred three times in seven years, between 1999 and 2006.

 

Understandably, the wind energy industry needs tax certainly, as a means of encouraging long term infrastructure capital to invest in costly large scale wind farms. The largest wind farm in the world consisting of 627 wind turbines with a total capacity of 781.5 MW opened in Roscoe Texas in October 2009. Significantly, the developer is the German energy supplier, E.ON, and some of the turbines predictably came from Siemens.

 

In 2009, the equally hard hit European Union added about 8.6 GW in new wind energy installations to reach a cumulative capacity of 73.5 GW.Looking forward to 2020, the EU is forecasting installed wind energy capacity of 230 GW, which would comprise 190 GW in onshore installations and 40 GW in offshore installations. This would represent between 14.3 per cent and 16.6 per cent of total electricity consumption in the 27 country community.

 

Denmark, the original home of the modern wind energy industry opened the world’s largest offshore wind park, Horns Rev11, 30 km from its shoreline in September 2009.

For 2030, the EU is forecasting installed capacity of 400 GW, made up of 250 GW onshore and 150 GW offshore. In this scenario, wind energy would represent between 26.2 per cent and 34.3 per cent of total EU electricity consumed.

 

China is currently aiming for 150 GW of cumulative installed capacity by 2020. But it is more than likely that China will continue to surprise, with substantially higher levels of installed capacity. Its six wind bases are mainly located in the north west of the country, with the best wind resources, and where the population is relatively sparse. The National Energy Administration chose Xinjiang, Inner Mongolia, Gansu, Hebei, Jiangsu as the most suitable locations. No estimate for installed capacity in 2030 has yet been released.

 

The US Department of Energy (DOE) report “20% Wind Energy by 2030” was released in July 2008. The 20 per cent refers to the assumption that US wind energy installed capacity by 2030 would be more than 300GW, which would deliver 20 per cent of total electricity consumed.

 

The race for wind energy leadership goes on unabated. It is best seen in the highly competitive market for wind turbines, with Vestas of Denmark hanging on to a slight lead over GE Wind Energy (US). Gamesa (Spain) is in third place, followed by Evercon (Germany), and Suzlon (India) in fifth place

 

Suzlon is the largest offshore wind supplier. No 6 spot goes to German giant, Siemens, and bringing up the rear are three very ambitious Chinese turbine suppliers, destined to be in the top tier – Sinovel,Goldwind and Dongfang.

 

 

 

 

 

 

 

by Ray Block

Posted under World Inflation

by Ray Block

 Although the Chinese were downright difficult and even hostile in the Copenhagen Accord fizzer, showing off their defiance to impress the allies in the E7 (India, Brazil, Russia, Indonesia, Mexico and Turkey), there is a serious race going on between United States and China over leadership.

 The fact that China would not commit to emissions reductions and to international inspectors doesn’t mean that much. What China has been doing in a flat out campaign extending back to 1978 is to keep on increasing energy efficiency. As Julian Wong said in his blog, GreenLeapForward by 2000, Chinese GDP output required two thirds less energy than it did in 1978.

 From the beginning of 2006 to the end of  2010, the headline target has been to reduce energy intensity, that is the amount of primary energy per unit of GDP by 20 per cent. Now the big goal is to further reduce energy intensity per unit of GDP by 40 to 45 per cent by 2030.

 The Chinese have caught up to the Americans in modernization of plant and equipment, and at this rate of growth will leave them behind in the time range 2020-2030.

 A report in China Daily, and further circulated by Reuters dated August 18 2009, says that a panel from the chief planning body, the National Development and Reform Commission (NDRC) and the Development Research Center of the State Council, are saying that with the right policies, emissions could slow after 2020, with a peak around 2030.

 The emphasis is to invest significantly in low carbon technology R&D, and this is what the Chinese are doing.

 I believe that once China’s emissions peaks, the next step is that they will move quickly to be carbon neutral at least by 2050, if not before. Carbon neutral is to achieve net zero carbon emissions by balancing the carbon generated with an equivalent amount sequestered (that is stored underground), or offset.

 Norway is expecting to be carbon neutral by 2030, which given the export commodity base of oil resources, and 80 per cent of its energy usage coming from hydro power makes it understandable, that they can move relatively quickly.

 Industrialised Sweden is aiming to be carbon neutral by 2050, with renewable energy levels at 50 per cent by 2020. Sweden made a u-turn in 2009, having voted decisively in 1980 to ban expansion of its 10 nuclear power stations, and pledged to close them all down by 2010. Now Sweden is embracing nuclear technology with a new excitement, and so too are a number of other European countries.

 If China as probably the largest superpower by the mid century can reach carbon neutrality by 2050, that will be a giant step forward.

 

 

 

   

 by Ray Block

Zero emissions by 2050?

By Ray Block December 23 2009

 

Although the Chinese were downright difficult and even hostile in the Copenhagen Accord fizzer, showing off their defiance to impress the allies in the E7 (India, Brazil, Russia, Indonesia, Mexico and Turkey), there is a serious race going on between United States and China over leadership.

 

The fact that China would not commit to emissions reduction and to international inspectors doesn’t mean that much. What China has been doing in a flat out campaign extending back to 1978 is to keep on increasing energy efficiency. As Julian Wong said in his blog, GreenLeapForward by 2000, Chinese GDP output required two thirds less energy than it did in 1978.

 

From the beginning of 2006 to the end of  2010, the headline target has been to reduce energy intensity, that is the amount of primary energy per unit of GDP by 20 per cent. Now the big goal is to further reduce energy intensity per unit of GDP by 40 to 45 per cent by 2030.

 

The Chinese have caught up to the Americans in modernization of plant and equipment, and at this rate of growth will leave them behind in the time range 2020-2030.

 

A report in China Daily, and further circulated by Reuters dated August 18 2009, says that a panel from the chief planning body, the National Development and Reform Commission (NDRC) and the Development Research Center of the State Council, are saying that with the right policies, emissions could slow after 2020, with a peak around 2030.

 

The emphasis is to invest significantly in low carbon technology R&D, and this is what the Chinese are doing.

 

I believe that once China’s emissions peaks, the next step is that they will move quickly to be carbon neutral at least by 2050, if not before. Carbon neutral is to achieve net zero carbon emissions by balancing the carbon generated with an equivalent amount sequestered (that is stored underground), or offset.

 

Norway is expecting to be carbon neutral by 2030, which given the export commodity base of oil resources, and 80 per cent of its energy usage coming from hydro power makes it more meaningful, that they can move relatively quickly.

 

Industrialised Sweden is aiming to be carbon neutral by 2050, with renewable energy levels at 50 per cent by 2020. Sweden made a u-turn in 2009, having voted decisively in 1980 to ban expansion of its 10 nuclear power stations, and pledged to close them all down by 2010. Now Sweden is embracing nuclear technology with a new excitement, and so too are a number of other European countries.

 

If China as probably the largest superpower by the mid century can reach carbon neutrality by 2050, that will be a giant step forward.

Posted under Carbon Abatement Scheme, Climate Change, Economies, Global Warming, Low Carbon Economy, Renewable Energies, World Inflation

by Ray Block

 Although the climate accord in Copenhagen was a bit of a damp squib, and in no way robust, there is something to go on with.  Down the track, there is a binding agreement, but not yet.

 It must have been excruciating for Yvo de Boer, the chief UN climate negotiator, to get so far, and still miss out. But before one becomes too cynical about reaching any worthwhile agreement on climate change, there has been some good news.

 To have more than 190 countries represented in the one arena on climate change is historic in itself. With so many delegates and country blocs, some chaos and confusion was inevitable, with delegates staging dramatic walk outs at times. When time ran out, President Obama’s short circuit approach of making a political side deal with China and its BRIC companions enabled the compromise deal to be struck.  

 The Financial Times reprinted a letter signed by chief executives of 30 major US corporations addressed to President Obama. The letter was dated December 15 2009. The companies included some of the US’s largest companies in electric power generation, manufacturing, technology and consulting.

 Some of the verbatim sentiments expressed in the letter:

 Business needs a strong global deal to provide certainty, to create a level playing field and to fuel public sector investment in adaptation strategies world wide.

 Based on experience investing in and accelerating companies with low carbon solutions- wind, solar, geothermal, smart grid and efficiency, we’re flipping the competitiveness argument on its head.

 An agreement to price carbon will not hurt the economy, it will provide an urgently needed renewal of growth and job creation.

 We must put the United States on the path of significant emissions reductions, a stronger economy, and a new position of leadership in the global effort to stabilise our climate.

 The costs of inaction far outweigh the costs of action. Our environment and economy are at stake. In addition, millions of people in developing and low-lying nations are at risk from climate and related economic dislocations, which further pose geopolitical threats.

 The Financial Times quoted Mindy Lubber of the Investor Network on Climate Risk as saying: “The climate treaty announcement is legitimately catching some heat for being too little, too late.”

“ The enormity of the crisis cries out for strong binding reduction targets by all countries and massive infusions of public and private capital to catalyse a fast track transition to a low carbon economy. But expecting we’d get all this at COP15 was never realistic.”

Both United States and China, the two biggest carbon polluters have agreed to a ceiling level of global temperatures not to exceed two  degrees Celsius increase, which has both short run and long run implications for the level of greenhouse gas emissions in the atmosphere.

 There is a virtual commitment for a fund earmarked for small developing countries, which will start off with US$10 billion a year and will grow to $100 billion a year by 2020. This is to be reserved for adaptation to and mitigation of climate change.

 Funding will only partly  rely on voluntary handouts from developed countries, as non- conventional sources will be tapped, including the use of special drawing rights of the International Monetary Fund, together with a mix of public and private capital.

 In addition to funding proposals at Copenhagen, February 2010 will see developed countries required to restate their pledged targets on carbon emissions for 2020 and 2050, and the developing countries pledges for below current “business as usual” conditions. Copenhagen also made progress on tropical forest preservation, which is inadequately funded, and headway too on reducing carbon emissions from agriculture.

 The Copenhagen showdown demonstrated the serious battle of wits and guile between United States and China, for the hearts and minds of the developing world. Both countries want to be the undisputed leader in renewable energy, and they will go to any length to stay ahead of the opposition.

Posted under Carbon Abatement Scheme, Climate Change, Economies, Global Warming, Low Carbon Economy, Renewable Energies, World Inflation

by Ray Block

 There have been repeated attempts since 2005 to secure a meaningful international agreement to save the tropical forests, and still it has not been achieved.

 The urgency for reform is that tropical deforestation and degradation represent 17 per cent of global emissions. And if you could quickly take concrete measures to reverse the trend, you’re one step ahead in the much bigger battle to redress the excessive intensity in the carbon based world economy.

 Deforestation puts Indonesia in No3 place in world carbon emissions, closely followed by Brazil in No 4 place.

 2008 saw the creation of the US based bipartisan Commission on Climate and Tropical Forests to develop a plan for halving emissions from tropical forest destruction within a decade. This is achievable with plans by Brazil to reduce emissions from the Amazon by 80 per cent within a decade.

 One of the directors of the commission Michael G Moore is chief executive of American Electric Power, an environmentally model company, both in the US, and in a collaborative effort with two conservation movements in the Atlantic Rain Forest of southern Brazil. Here on acquired land, they are assisting natural forest regeneration and regrowth on pastures and degraded forests.

 This December in Copenhagen, in an effort to reach finality for tropical forest protection, United States had proposed a funding deal of US$ 25 billion. This would be largely funded through offsets as provided in the emissions trading scheme in Europe, and in the proposed emissions trading schemes to be implemented in the US and Australia.

 The US had the support of the 40 member Coalition for Rainforest Nations, as well as Brazil, which along with Indonesia, has been in the forefront of REDD (reduced emissions from deforestation and degradation). A UN backed scheme had proposed that REDD carbon credits could be available for developing countries that protected their forests from illegal logging and other land clearing for cattle grazing, and for growing soy and oil palms.

 The Rainforest Coalition saw a carbon price of US$10 a tonne, which has been received in the carbon markets in Europe as a cost effective way to curb emissions from deforestation. A report by the International Union for Conservation of Nature released such a report last week.

 It says the opportunity costs for cattle grazing in Brazil ranges from zero to $2 a tonne, as against soybean production of $2.5-3.5 a tonne. In Indonesia, opportunity costs for conversion to oil palms could be as low as 49 cents a tonne for small holder farming, and as high as $19.6 depending on the rate of converting degraded forest land to oil seeds. Unsustainable logging on a commercial scale in Sumatra would have opportunity costs of $1.65 a tonne.

 The $25 billion has been withdrawn from the table and a critical time table to reduce deforestation 40 per cent by 2020 has gone with it. In its place is a scheme of $3.5 billion over the next three years, with the US putting up $1 billion. Other contributors are France, Japan, Norway, United Kingdom and Australia.

 If Charles Dickens was alive today, he would say with his character Oliver Twist, “Please Sir, can I have some more.”

Posted under Carbon Abatement Scheme, Climate Change, Economies, Global Warming, Low Carbon Economy, Renewable Energies, World Inflation

by Ray Block

Europol, the international police force has exposed criminal activities associated with the European Union’s emissions trading scheme, involving fraud costing European taxpayers more than 5 billion euros (US$7.4 billion).

 Fraudulent activities existing at least over the last 18 months became evident, with an exceptional level of trading volume, when several of the European carbon markets had unprecedented rises in trading volume in late 2008. The fraudulent trading could have accounted for up to 90 per cent of overall financial trading in the carbon markets. While the trading volume peaked in May 2009, Interpol is still trying to stamp out all the elements of fraud.

 Under the cap-and-trade carbon scheme, there are six European trading platforms in UK, Norway, Germany, Austria, Netherlands and France creating an overall European carbon market worth about $132 billion a year, on Europol estimates.

 Apart from fraudulent trading in carbon credits, which is always potentially present, the use of carbon offsets under the Clean Development Mechanism (CDM) is wide open to manipulation.

 The CDM, originating under the Kyoto Protocol, was designed to ensure that worthwhile carbon reducing projects in renewable energy were installed in developing countries, which could be credited as emission reduction credits (CERs).

 These credits, traded and sold to European manufacturers, qualified as if they were their own European emission reduction targets. Each credit is equivalent to one tonne of CO2. The effect on the part of the European companies was to limit carbon reductions in their own facilities. This practice still continues to this day.

 In theory, the projects “must qualify through a rigorous and public registration and issuance process designed to ensure real measurable and verifiable emission reductions, additional to what would have occurred without the project. The mechanism is overseen by the CDM Executive Board.” 

 A Barclays Capital report estimate that four countries-Brazil, India, China, and Korea currently have generated 92 per cent of all the credits created through CDM projects. Moreover, 75 of the largest projects represented 90 per cent of the CDM credits, which were subsequently sold in the world cap-and-trade markets.

 This is a distortion of what should happen in practice, if the mechanism is to live up to its name of reducing emissions, a policy prescription China and India are not prepared to accept.  Moreover, the two large industrialising countries,China and India, have had too many”free lunches.”It’s about time they pay their own way.

 

Finally, some common sense has developed within the CDM Executive Board in knocking back support for some new Chinese wind farms, on the grounds that the Chinese would have otherwise funded the projects themselves.

 

The World Bank wants the carbon offset program to continue post-Kyoto in 2012, thereby compounding the opportunities for some to profit at the expense of the many.

Posted under Carbon Abatement Scheme, Climate Change, Economies, Global Warming, Low Carbon Economy, Renewable Energies, World Inflation