Impact of world recession on renewable energy
by Ray Block
The surge in world recession as America, Europe including the UK and Japan move deeper into recession is now spreading further. Even the rapidly growing Asian countries, such as China and India and the raw material supplier countries are being lashed with the buffeting winds spreading the overall mood of pessimism.
The impact on the growth of renewable energy has been to slow down the whole process to a crawl, and in a great number of cases to a dead stop. Despite the overall mood of gloom, there are still a few rays of sunshine.
A positive note of optimism came from Drax plc of the UK. Drax is the owner of Western Europe’s largest coal-fired power station, which on October 23 2008 announced that it planned to build three 300 MW power plants that would burn biomass, including energy crops and agricultural or forestry waste. The plants will be in partnership with the German electrical group Siemens. Drax will own 60 per cent of the project, with Siemens having the balancing 40 per cent. The investment cost 2 billion pounds (US$3 billion.)
Financial Times (October 24 2008) reported that Drax is the UK’s biggest single emitter of CO2. The finance director Tony Quinlan said that as a result of subsidies for renewable energy, the plants would produce a return of about 15 per cent and pay for themselves over six years. Construction is timed to start in 2010, with power generation to start in 2014.
The contrast between the future for the company and the past reinforces the benefits of new investment in renewable energy. In its latest year to June 2008, Drax’s current 4,000 MW coal fired plant was responsible for cutting almost a half of its previous net profit, due to the need to buy sufficient CO2 emission allowances to cover its carbon pollution.
Another positive for the UK comes from Scotland. Ed Crooks (Financial Times October 31 2008) says that Scotland’s renewable electricity, almost all of it wind and hydro power, which represent 1,380 MW installed capacity can now power 60 per cent of Scottish homes. The Scottish government has set a target of deriving 31 per cent of the country’s electricity from renewables by 2011, and 50 per cent by 2020.
Less positive is the outlook in the European Union’s emission trading scheme, where the mood has deteriorated, as reported by the environmental capital blog of the Wall Street Journal (October 24 2008). The price of carbon credits fell by 15 per cent in recent weeks to reach an eight month low of 20.15 euros.
With the fall in European output of the major industrial polluters, such as in steel and cement, some heavy industrial enterprises are selling permits they originally received on a free basis. The buyers are the power utilities, particularly the coal fired power stations where the permits will allow them to have sufficient offsets to reduce their immediate need to install costly low carbon equipment.
In the US, there is some good news, and equally some less positive. Despite the international credit crunch which commenced in August 2007, the accounting firm Ernst and Young’s clean tech venture capital scorecard showed September quarter 2008’s investment rose 55 per cent to US$1.6 billion. For the year to September, clean tech raised $3.3 billion, a 71 per cent rise over the year.
Wall Street Journal’s blog (October 30 2008), which covered the Ernst & Young’s report highlighted the rise in solar energy, with the September quarter’s stellar performance showing a rise of 55 per cent. The American Wind Energy Association says that 1,389 MW wind power was installed in the September quarter, and for the year to December 2008, the 2008 total will be about 7500 MW. This would generate sufficient generating capacity to power the equivalent of about 2.2 million homes.
This will be the fourth year in a row that new wind capacity installations have set records. Texas, the US state with the largest wind power installed added 693 MW in the September quarter, which propels it into the ranks of global leaders. Only Germany, India and Spain had more wind energy capacity installed at the end of 2007.
The negative news in wind power came principally from T Boone Pickens, the billionaire oil man, who has been the biggest apostle of wind power. His wind farm, which eventually will have the world’s largest wind power installed is on hold. Pickens (Wall Street Journal October 31 2008) says that the now much cheaper natural gas price over recent weeks puts wind power at an increasing disadvantage. There will be “no new wind,” Pickens says until gas prices rebound.
Posted under Carbon Abatement Scheme, Climate Change, Economies, European Emission Trading Scheme, Global Warming, Low Carbon Economy, Renewable Energies

