China and US deliver radical climate surprise

China and US deliver radical climate surprise

It’s been called an historic agreement − a game changer in the battle to combat climate change. But can China and the US fulfil the promises in their announcement of plans to cut carbon emissions?

LONDON, 13 November, 2014 − China went to considerable lengths to make sure that this week’s Asia Pacific Economic Co-operation summit in Beijing was a successful affair.

Factories were shut down, car traffic and even cremations were restricted, and schools and most government offices were closed. As a result, delegates experienced blue skies over the Chinese capital, rather than the city’s notorious smog.

But the most newsworthy and surprising event came on the summit sidelines, with President Xi Jinping and President Obama warmly shaking hands as they unveiled plans for radical cutbacks in emissions of CO2 − the most potent of the climate-changing greenhouse gases (GHGs).

Biggest emitters

China and the US are by far the world’s biggest emitters of CO2, with China accounting for more than 20% of total global CO2 emissions and the US 15%.

Under the plans announced in Beijing, the US says it will reduce CO2 emissions by between 26% and 28% from 2005 levels by 2025, and will achieve “economy-wide reductions in the order of 80% by 2050”.

Meanwhile, China for the first time announced a date when it says its CO2 emissions will peak − 2030 − and then taper downwards. It also said it would be ramping up its already ambitious renewables programme, with the potential of cutting back on CO2 emissions at an earlier date.

“These announcements send a clear signal to the private sector and the financial markets on where global policy is now heading”

In addition, Obama and Xi – despite their considerable differences on territorial, trade and other issues − announced plans to expand co-operation on various research and technology projects related to climate change.

“The United States of America and the People’s Republic of China have a critical role to play in combating global climate change, one of the greatest threats facing humanity,” said a White House statement.

“ The seriousness of the challenge calls upon the two sides to work constructively together for the common good.”

Christiana Figueres, the executive secretary of the United Nations Framework Convention on Climate Change, said the Beijing announcement was an important step towards a better and more secure future for human kind.

“Together, these announcements send a clear signal to the private sector and the financial markets on where global policy is now heading,” Figueres said.

Resilient world

“These announcements have the potential to unleash and accelerate the kinds of entrepreneurship and innovation needed to propel all economies towards ever greater levels of ambition – if not significantly exceeding their ambitions – en route to a low-carbon, resilient world over coming years and decades.”

However, amid the euphoria, some big questions remain:

  • Global CO2 emissions are still increasing, despite years of climate change negotiations and increased warnings from the scientific community about the dire consequences of a warming world. Experts say cutbacks have to be achieved much sooner than 2030 in order to halt runaway climate change.
  • Doubts persist about how realistic these cutbacks are. Under the plans, China will need to produce an extra 800 to 1,000 gigawatts of power from wind, solar and nuclear sources over the next 15 years − more power than its coal plants produce today. And experts point out that Beijing’s timeline for reducing emissions does not represent a binding target.
  • Obama is going to have a tough time pushing these plans through. Republicans, who now control both houses of Congress, have already denounced the measures, saying they will seriously damage the US economy.
  • Negotiations on tackling climate change and limiting emissions of GHGs have been held on a worldwide basis under UN auspices. Such bilateral agreements as the one announced by the US and China could undermine the global consensus and weaken UN processes.

But the news from Beijing has been generally welcomed in the scientific community.

Nicholas Stern, lead author of the 2006 Stern Review on the economics of climate change, says the US/China announcement will give momentum to a new global deal on climate due to be negotiated in Paris late next year.

“President Obama and President Xi should be congratulated for demonstrating real leadership with this historic announcement,” Stern told the Financial Times in London. – Climate News Network

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China may be ready to kick coal habit

China may be ready to kick coal habit

Signs are hopeful that China, the world’s No.1 emitter of greenhouse gases, aims to become less reliant on the polluting coal that powered its rapid economic rise.

LONDON, 5 September, 2014 − There are still doubts. The statistics might be proved wrong. But it looks as if China might be starting to wean itself off its coal consumption habit.

China produces and consumes nearly as much coal as the rest of the world combined. Coal, the most polluting of all energy sources, has powered the growth of China’s flyaway economy. But as incomes have risen, so has pollution. The country is now the world’s No.1 emitter of greenhouse gases.

Latest figures indicate that change is on the way, spurred on by a much-vaunted government “war on pollution” campaign. The state-run National Development and Reform Commission reports that domestic coal output shrank over the first five months of 2014 – the first such decline since the start of China’s rapid economic expansion back in the late 1980s.

Virtual halt

Greenpeace, the environmental NGO, said in a recent analysis of China’s coal sector that growth in coal imports, which had been going up at an annual rate of between 13% and 20% in recent years, has come to a virtual halt.

Meanwhile, the official Xinhua news agency says Beijing – a city of nearly 12 million people – will ban the sale and use of coal in its six main districts by 2020.

Coal-fired factories and power plants around the Chinese capital are being shut down and replaced by natural gas facilities. Coal generated 25% of Beijing’s energy in 2012, and the aim is to bring that figure down to less than 10% by 2017. Other cities and regions are following Beijing’s lead.

Just how meaningful these cutbacks in coal use are is difficult to gauge. Air pollution – much of it caused by the burning of low-grade thermal coal − is not only a big environmental issue in China but also a political one as well.

China’s leaders have promised a population increasingly angry about the low quality of the air they breathe and the water they drink that the government is determined to tackle pollution.

Yet coal-fired power plants are still being built at a considerable pace, and many more are planned.

Some analysts argue that the present slowdown in China’s coal consumption is only temporary, the result of a dip in industrial output that will be reversed as soon as the economy roars ahead again.

Less reliant

Others say the decline in coal consumption is part of a long-term trend. As China’s economy matures, becoming less dependent on heavy industrial goods and embarking on more hi-tech and service-oriented projects, the country will become ever more energy efficient – and less reliant on coal.

China might be the world’s biggest emitter of fossil fuel emissions, but it also has fast become a global leader in hydro, wind and solar power.

No one is suggesting that coal is going to be absent from China’s energy mix anytime soon. The lung-jarring pollution of many of China’s cities is likely still to be evident for some years yet. But coal is no longer king.

That’s bad news for big coal exporters to China, particularly Australia and Indonesia. But it’s potentially good news for millions in China who crave clean air. And it’s very good news for the planet. – Climate News Network

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Plan to make renewables cheaper than coal within 10 years

Plan to make renewables cheaper than coal within 10 years

Three weeks before the UN Secretary-General’s extraordinary meeting of world leaders in New York to tackle climate change, a leading British scientist unveils plans for a global low-carbon fund on a par with the Apollo Moon programme.

LONDON, 2 September 2014 – There are prospects of significant progress in the response of world governments to climate change, according to a former UK Government chief scientist, Sir David King.

“There are signs that a leadership role is beginning to emerge”, he told a conference in London held by the Green Economy Coalition.

Sir David also announced that he and a colleague are working with governments to raise funds to help all countries, including developing countries,  to switch to renewable energy. Their scheme hopes to raise nearly as much as the cost of the Apollo programme, NASA’s moon-landing project.

“President Obama is getting ready to commit the US to action, and last week the Chinese Prime Minister, Li Kichiang, announced that his country’s emissions had fallen by 5% in a year”, he said.

“The US and China are positioning themselves for an agreement. And that’s not all. The first speech by the new leader of India, Narendra Modi, spoke of his determination ‘to solarise’ the economy.

Ice in retreat

“Brazil’s emissions, including from deforestation, have fallen from 16.5 tonnes per person to 6.5 tonnes since 2005. Across the Andes in Peru, where the UN climate convention negotiations will take place in December, they know well enough about climate change.

“From Lima they can see the ice retreating up the mountains. At its lowest point it is now 1,000 metres above where it reached to 30 years ago..”

Sir David praised the UK’s commitment to cut greenhouse emissions by 80% by 2050, compared with their 1990 levels. He said the target – matched by Mexico – was likely to be met. The biggest climate challenge confronting the UK, he said, was from rising sea levels.

Some critics say, despite this, that the UK Government is dragging its feet, especially on supporting renewable energy. With a colleague, the economist Professor Lord Richard Layard, Sir David is working on a scheme to raise money to address this.

“It’s called the Global Apollo Programme”, he explained. “We are urging all governments to form a Commission to spend 0.02% of their GDP, which should raise US$10-20 bn p a over 10 years,  to fund RD&D for low-carbon technology.

“We are encouraging governments to launch the Programme at the UN during Ban Ki-moon’s Climate Summit on 23 September. The objective is that by 2020 renewable power should be cheaper than coal in all sunny parts of the world, and by 2025 in all parts of the world.”

Sir David, who for seven years was the UK Government’s chief scientist, is now its Foreign Secretary’s special representative for climate change. Asked if he were hopeful about progress to tackle climate change, he replied: “I’m in this job because I’m an optimist.”

Global reach

His hopes were echoed by another speaker, Hunter Lovins, president of the Colorado-based Natural Capitalism Solutions.  She told the Climate News Network: “We can do it. But it’s going to be tough. So will we do it?

“I don’t agree with the exponents of the idea of near-term human extinction (NTHE), who say we face total collapse by around 2030 or 2035.

‘”What we need is to find incentives for business, to get big countries behind solar+, the idea David King is working on – combining renewables and efficiency, with back-up where it’s needed.”

Professor Lovins told the conference: “Business-as-usual is going to get really ugly. What’s the narrative we can produce to compete with neo-liberalism?” – Climate News Network

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Committed carbon emissions are rising fast

Committed carbon emissions are rising fast

As countries build ever more fossil fuel power plants, they commit the atmosphere to rapidly increasing levels of carbon dioxide – the opposite of what governments say they intend.

LONDON, 28 August 2014 – Challenging news for those climate campaigners who believe that renewable sources of energy are on the increase: they may be, but so are carbon dioxide emissions.

Steven Davis of the University of California, Irvine and Robert Socolow of Princeton University in the US report in the journal Environmental Research Letters that existing power plants will emit 300 billion tons of additional carbon dioxide into the atmosphere during their lifetimes. In this century alone, emissions have grown by 4% per year.

The two scientists have already reported on the increasing costs of delay in phasing out fossil fuel sources of energy. This time they have looked at the steady future accumulation of carbon dioxide in the atmosphere from power stations.

“We show that, despite international efforts to reduce CO2 emissions, total remaining commitments in the global power sector have not declined in a single year since 1950 and are in fact growing rapidly,” their paper says.

Massive commitment

“We are flying a plane that is missing a crucial dial on the instrument panel,” said Professor Socolow. “The needed dial would report committed emissions.

“Right now, as far as emissions are concerned, the only dial on our panel tells us about current emissions, not the emissions that capital investment will bring about in future years.”

Governments worldwide have in principle accepted that greenhouse gas emissions should be reduced and average global warming limited to a rise of 2°C.

The scientists asked: once a power station is built, how much carbon dioxide will it emit, and for how long? They assumed a functioning lifetime of 40 years for a fossil fuel plant and then did the sums.

The fossil fuel-burning stations built worldwide in 2012 alone will produce 19 bn tons of carbon dioxide over their lifetimes. The entire world production of the greenhouse gas from all the world’s working fossil fuel power stations in 2012 was 14 billion tons.

“Far from solving the problem of climate change, we’re investing heavily in technologies that make the problem worse”

The US and Europe between them account for 20% of committed emissions, but these commitments have been declining in recent years. Facilities in China and India account for 42% and 8% respectively of all committed future emissions, and these are rapidly growing in number. Two-thirds of emissions are from coal-burning stations. The share from gas-fired stations had risen to 27% by 2012.

“Bringing down carbon emissions means retiring more fossil fuel-burning facilities than we build,” Dr Davis said. “But worldwide we’ve built more coal-burning power plants in the past decade than in any previous decade, and closures of old plants aren’t keeping pace with this expansion.

“Far from solving the problem of climate change, we’re investing heavily in technologies that make the problem worse.” And Professor Socolow said: “We’ve been hiding what’s going on from ourselves. A high-carbon future is being locked in by the world’s capital investments.

“Current conventions for reporting data and presenting scenarios for future action need to give greater prominence to these investments.” – Climate News Network

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India’s dam building bonanza

India's dam building bonanza

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India is in the midst of a massive hydro electric dam building programme, necessary, it says, to fuel the energy needs of its fast growing economy. Kieran Cooke, one of the editors of the Climate News Network, has been in India and reports on the country’s energy plans.

Assam, northeastern India, March 16 – This region, east of Bangladesh and bordering China to the north, is an area described by politicians as India’s ‘future powerhouse’ and is a key focus point of the country’s dam building programme.

The ambition of planners in New Delhi is not in doubt. So far plans for more than 160 dams – both big and small – have been announced in the northeast, the majority of them to be built in the remote, mountainous state of Arunachal Pradesh and harnessing the waters of the mighty Brahmaputra river and its tributaries.

It’s planned that in total more than 60,000 MW of electricity will be generated from the planned dams. More projects are likely to follow.

Not to be outdone, China, which borders Arunachal Pradesh, is involved in a major dam building programme on its side of the border, also using the waters of the Brahmaputra – which it calls the Yarlung Tsangpo.

Controversy

The dam building programme is highly controversial: critics say it not only ignores geological and ecological factors – it also fails to take into account the impact of climate change in the region.

The Brahmaputra, 10 kilometres wide in places, is one of the world’s major rivers, winding for nearly 3,000 kilometres from the Tibetan Plateau through China, India and Bangladesh before joining with the Ganges and flowing out into the Bay of Bengal.

It is an extremely volatile, tempestuous river system: the Brahmaputra’s waters rise dramatically during monsoon season, causing widespread flooding, erosion  and misery for many thousands of mostly subsistence farmers.

Ashwini Saikia is a farmer on the banks of the Brahmaputra river, in the small settlement of Rohomoria in northern Assam. Even now, in pre monsoon season when the river is low, there is the “plop, plop” sound of land falling into the waters.

Erosion fears

“Each year the river has eaten away more and more of my land. Then in 2010 the waters rose so much I lost my house for the fifth time in the last 15 years” says Ashwini.

Ashwini has given up farming and is now being forced to move with his family and livestock – to where he’s not entirely sure.

Dr Partha Das is an Assamese academic who has been studying the Brahmaputra for several years. He also runs Aaranyak, a locally based environmental NGO.

“The dam building programme has many question marks hanging over it including the fact that the northeast is a highly seismic region, with an earthquake in 1950 completely altering the geological structure of the Brahmaputra river basin.

Climate change impacts

“Then there is the whole question of climate change, which has scarcely been mentioned by the planners. Already we’re seeing an increase in intense rainfall events that are accelerating the high rate of soil erosion and landslides in mountainous regions. And as temperatures rise and glaciers melt on the Tibetan Plateau and in the Himalayas, river flow levels – at least in the short term – are likely to increase.”

The Indian government defends its dam building programme, saying the power generated will mean that the country will be able to wean itself off its dependence on coal for energy, most of it low quality and extremely polluting.

But many in the northeast, who have long felt cut off from the rest of India and neglected by central government, are unconvinced by New Delhi’s arguments.

There are accusations that the mostly privately backed dam building projects are money making exercises for the wealthy: most of the power produced will be exported to other parts of India and not used to build up local industries.

Tribal concerns

The northeast is a tribal area: indigenous peoples say the influx of labourers from elsewhere in India is threatening local culture. They say the dams will also lead to more deforestation – and threaten some of India’s most important wildlife habitats.

Opponents of the dam building say no proper overall plan has been put in place: though India and China recently reached agreement on sharing various river resources, there is no specific deal on managing the Brahmaputra’s waters.

Protests about the dams has been growing, with work on what is India’s biggest dam construction project to date – the 2,000MW Lower Subansiri dam on one of the Brahmaputra’s tributaries – repeatedly held up. – Climate News Network

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Half of plants may move in warmer world

Half of plants may move in warmer world

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An international team of scientists says that by the end of the century one probable consequence of climate change will be a change in patterns of vegetation over much of the planet’s land surface.

LONDON, 16 February – By 2100, vegetation patterns will be shifting in almost half the land area of the planet, according to new research in the journal Global and Planetary Change.

Song Feng of the University of Arkansas in the US and colleagues in Nebraska, China and South Korea have taken a long cool look at what the projected patterns of warming are likely to do to the planet’s mosaic of climate types. And they predict dramatic changes.

Climate type is a century-old idea useful for making sense of geographical zones: regions are grouped according to the type of vegetation they support. Since a global map of native vegetation types can also deliver useful information about altitude, rainfall, soil type, prevailing weather and latitude, geographers regard the Köppen-Geiger classification – and an updated version known as Köppen-Trewartha – as a helpful way of describing the world.

Feng and his colleagues decided to see what projected changes in temperature would do to climate types. He wasn’t the first to do so; scientists from the US National Oceanic and Atmospheric Administration reported in 2013 in Nature Climate Change on the probable speed of change in such zones.

But science advances by challenge and replication, and the Arkansas team began looking for themselves at the details of simulated change under the notorious “business as usual scenario”  – the one in which global fossil fuel use continues to increase and higher levels of carbon dioxide and other greenhouse gases concentrate in the atmosphere.

The Intergovernmental Panel on Climate Change has made a series of predictions of rising global average temperatures, but plants, of course, don’t care about global average temperatures: they are however distinctly vulnerable to local extremes of frost and heat.

The Feng scenario projected an increase of between 3°C and 10°C; the team analysed observations made between 1900 and 2010, and then ran computer simulations from 1900 to 2100.

Drastic changes ahead

In the last three decades of the 21st century, for instance, northern winter temperatures are likely to rise by between 3° and 12°C; Arctic coastal temperatures are likely to rise by 8°C; warming in mid-latitudes is likely to be between 5°C and 7°C, the tropics and the southern hemisphere around 5°C.

The Arctic will shrink. Sub-polar vegetation is expected to advance by 5° of latitude and the temperate zones will push northwards too. Arid and semi-arid climate zones are expected to expand by somewhere between 3.3 and 6.6 million square kilometers in the last three decades of this century.

What this does to native vegetation types is hard to predict in detail but some projections have been made. In the Qinling mountain region of China, for instance, somewhere between 80% and 100% of the bamboo forests on which the giant pandas depend could disappear, because the rising temperature would be “no longer feasible for bamboo growth.”

In the south-western US higher temperatures and drier conditions could lead to more forest fires, and pest outbreaks could lead to changes in forest structure and composition.

As the plants change, the animal species that evolved with the vegetation types could be increasingly at risk. Altogether, up to 46.3% of the planet’s land area could shift to warmer or drier climate types

“Climates are associated with certain types of vegetation. If the surface continues to get warmer, certain native species may no longer grow well in their climate, especially in higher latitudes. They will give their territory to other species. That is the most likely scenario”, said Feng. – Climate News Network

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China unveils comprehensive pollution monitoring system

China unveils comprehensive pollution monitoring system

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In what is being seen as one of the world’s most comprehensive pollution monitoring exercises, China is introducing measures requiring the country’s biggest polluters to report air emissions and wastewater discharges on a more or less continuous basis – and make the information available to the public.

LONDON, 27 January – Millions of people in China endure pollution – particularly air pollution – on a daily basis.

The authorities, increasingly aware of the health risks posed by the often dense clouds of pollutants that envelop China’s cities and anxious to tackle climate change by cutting back on emissions of greenhouse gases (GHG), are making considerable efforts to tackle the issue.

The latest measures – introduced on a trial basis at the beginning of 2014 – require factories to report air emissions every hour and wastewater discharges every two hours and post the results on the internet.

About 15,000 factories are listed as required to report: of those more than 4,000 have disclosed information on GHG emissions. About half of those required to monitor their air emissions are involved in the power sector: other big polluters are the iron, steel and smelting industries, cement manufacturing and the chemical industry.

Room for abuse

Already power plants and industrial concerns in some of China’s most polluted provinces – Shandong, Zhejiang and Hebei – have begun posting regular GHG and water discharges information and more are expected to follow.

The measures, which have received little publicity outside China, are being hailed by some as one of the most important steps China has taken to date in order to tackle its serious pollution problems.

A writer on the staff of the Natural Resources Defense Council in the US describes the programme as a massive public reporting initiative, likely unprecedented anywhere else in the world.

Yet there are continuing doubts about how accurate the pollution figures will be and whether powerful provincial industrialists will implement the measures properly. Specialists point out that monitoring techniques need to be comprehensively applied: the measures are described as self-monitoring and there is much room for abuse in the system.

In its latest report on air pollution, China’s Institute of Public and Environmental Affairs (IPE), along with other academic institutions and non-governmental organisations, says significant progress is being achieved in providing information on pollution and on giving emergency warnings on air quality. “As of January 2nd 2014, 179 cities were releasing air quality information in real time”, says IPE.

Discharges continue

“Residents of these cities can use their computers, and even their smart phones, to understand all the air quality information available. Real time disclosure has highlighted serious pollution, which has prompted several areas to develop emergency contingency plans for times when pollution is severe.”

However the IPE report says a group of major emitters, including thermal power plants and steel factories, are continuing to seriously exceed pollution discharge limits even when it’s obvious surrounding areas are experiencing severe pollution.

“All parties interested in the control of atmospheric pollution cannot sit idly by”, says the IPE.

“The report calls on government, courts, enterprises, media, environmental organisations and citizens to seize the historic opportunity created by pollution source information disclosure and together push for the reduction in pollution emissions, so that the smog that hangs over Chinese cities can be dispersed as quickly as possible.” – Climate News Network

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Worse cyclones will hit East Asia

Worse cyclones will hit East Asia

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Hundreds of thousands of people in the Philippines are trying to piece together their lives after the devastation caused late last year by tropical cyclone Haiyan. New research shows that while such cyclones are growing in strength they are increasingly tracking northwards to hit the coasts of China, Korea and Japan.

LONDON, 16 January – It will be of little comfort to people in the southern and central Philippines repeatedly hit by tropical cyclones over the years, but a new study indicates that storm patterns might be shifting northwards.

The study, by a team of scientists at Seoul National University and other South Korean scientific institutions, looks at tropical cyclone activity across the north-west Pacific between 1977 and 2010.

Researchers found that increasing sea surface temperatures likely due to climate change, together with changes in atmospheric circulation patterns, have led to a significant increase in the intensity of tropical cyclones hitting the east Asia region over the 30-year period.

“Noticeable increases of greenhouse gases over the globe could influence rising sea surface temperature and change large-scale atmospheric circulation in the western North Pacific, which could enhance the intensity of tropical cyclones hitting land over east Asia”, says Professor Chang-Hoi Ho, one of the study’s authors.

Intensity changes

The study, which appears in the journal Environmental Research Letters, analyses five separate sets of data relating to the growth and behaviour of tropical cyclones across the north-west Pacific.

It found that the area of maximum storm intensity had shifted both westward and northward: while the intensity of tropical cyclones had lessened somewhat in areas of south-east Asia it had increased significantly in east Asia – particularly in coastal regions of central China and of Japan and around the Korean peninsula.

The study found that cyclones were tending to build up around the northern Philippines and track along coastal areas from Vietnam northwards, gaining energy along the way.

The researchers say a significant factor behind the alteration in the intensity and direction of tropical cyclones is a change in what’s called the Walker circulation – an ocean-based atmospheric circulation system over the Pacific.

Sea temperature difference

The Walker circulation strengthens as the difference between sea temperatures in the warmer western Pacific and the colder central-eastern Pacific grows more marked: the result is that wind flows associated with the Walker circulation drive tropical cyclones towards the north-eastern coast of Asia, where they reach maximum intensity.

“This change in large-scale climatic fields suggests that the principal region in which many tropical cyclones attain peak intensity during their lifetime might have been translocated”, says the study.

Cyclone Haiyan ravaged a large part of the central coastline of the eastern Philippines. However, the study found that over the 30-year period analysed, tropical cyclone activity in seas off the east Philippines coast had decreased while “the maximum intensity has shifted toward east Asia and intensified landfall intensity.”

That’s bad news for millions of coastal dwellers in central and northern China, Japan and on the Korean peninsula. More catastrophic tropical cyclones will strike east Asia in future than ever before, says the study. – Climate News Network

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Carbon trading slides again

Carbon trading slides again

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Carbon trading has been lauded by some as a key way to cut back on climate-changing greenhouse gas emissions. Trouble is, the market has been stuck in the doldrums for years.

LONDON, 4 January – The performance of the world carbon market continues to disappoint.

According to the latest figures from Thomson Reuters Point Carbon, a specialist group analyzing carbon market activity, a total of €38.4 bn worth of carbon allowances and credits was traded last year – a decline of nearly 40% on the 2012 figure.

The value of trading in the market has now declined for three years in a row – in 2011 trades were valued at €96 bn. 2013 also saw the volume of emissions units traded around the world drop for the first time since 2010.

“The main explanation for the falling prices in carbon markets around the world is the very modest emissions reduction targets adopted for the period up to 2020”, says Anders Nordeng, senior carbon analyst at Point Carbon.

“Without ambitious climate targets there is no need for deep emission reductions and carbon prices will remain at low levels.“

Too cheap to work

The EU’s Emissions Trading System (ETS) dominates the world’s carbon trading, accounting for 94% of the market’s total value and 88% of the volume of emission units traded.

The scheme, which has been in operation since 2005, was set up with the aim of reducing CO2 emissions by requiring companies such as energy suppliers and other industrial conglomerates to pay for their emissions through the buying and selling of allowances or “pollution permits.”

Initial market mismanagement resulted in a chronic over-supply of tradeable permits. In recent years Europe’s economic crisis lessened economic activity and reduced the demand for allowances.

Allowances, based on the market price of a tonne of carbon, are now trading at around the €5 mark though at one stage in 2013 the price dropped to under €3.  Market analysts say a price of at least €25 is needed in order to persuade companies to decarbonise and for carbon reduction targets to be achieved.

Point Carbon says it’s not all gloom in the market. While the ETS continues to underperform, other carbon markets are developing. Trading in North America, driven by activity in California, in north-eastern states in the US and Quebec in Canada, grew both in value and volume last year.

Chinese potential

“2013 was the year the North American carbon markets blossomed”, says Olga Chistyakova, a Point Carbon analyst.

China is also stepping up carbon trading, having launched the first of seven proposed regional trading schemes in mid-2013.

“Although the traded volumes are still modest, the sheer size of some of the covered provinces and cities (Guangdong, Beijing, Shanghai) points to a great potential”, says Point Carbon.

Meanwhile, the ETS has undergone some limited changes aimed at shoring up carbon prices. After months of wrangling between states, the sale of 900 million ETS allowances has been postponed. And what’s billed as a comprehensive structural reform of the ETS is due to be announced in mid-January.

There are also signs that the corporate sector, particularly in the US, is adopting carbon trading as part of business strategy. A recent survey by the Carbon Disclosure Project found that many large US corporations are setting their own internal carbon pricing in anticipation of future environmental legislation and to assess the value and risk of various investment projects. – Climate News Network

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China’s pollution problems threaten Oz coal exports

China’s pollution problems threaten Oz coal exports

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Australia has been growing rich from exporting coal and other resources to China. The good times could be coming to an end, says a new report.

LONDON, 23 December – Coal mining companies in Australia have been enjoying the good life in recent years, making millions of dollars from feeding the seemingly insatiable energy appetites of Asia’s tiger economies – particularly that of China.

But a new report by the Smith School of Enterprise and the Environment (SSEE) at Oxford in the UK warns that Australia’s coal mining party could be coming to an end.

It says coal demand in China looks likely to fall in the years ahead due to concerns about climate change and other factors, leaving billions of dollars of investments in Australian coal mining projects in jeopardy.

The report, Stranded Down Under, details the considerable growth of Australia’s coal production in recent years. Coal has been one of the main reasons behind the continuing health of the country’s economy – it now accounts for 16% of the total value of exports.

Producers want to increase output from the present level of around 440 million tonnes per year to 550 million tonnes by 2020, the main part of production going  for export.

Altogether investments of AU$100bn (US$90bn) involving 89 projects are planned over the next 15 years according to Australia’s federal Bureau of Resources and Energy Economics (BREE).

Water running short

The conservative Coalition government led by Tony Abbott, elected to office earlier this year, is rolling back taxes and environmental regulations in order to encourage mining investments.

The report says weakening global coal prices, plus a likely decline in coal demand in China – by far Australia’s biggest export market – make the outlook for these projects very uncertain.

“Demand below expectations – and lower coal prices as a result – would increase the risk that coal mines, reserves and coal-related infrastructure could become mothballed or abandoned.”

At present China accounts for half the world’s coal consumption: it imports more than 30% of its annual needs from Australia.

The report says concerns about the environment and the chronic air pollution experienced by many cities in China will lessen the role of coal in the country’s energy mix. Coal needs a lot of water – whether for “washing” or for driving steam turbines.

“Increasing water scarcity could also adversely impact coal demand, while domestic shale gas and changing international gas markets will result in more coal-to-gas switching.”

Ignoring reality

The study points out that China is investing heavily in renewables and has made clear in the present four-year plan its commitment to increasing energy efficiency and developing alternative non-fossil fuel supplies.

The authorities in Beijing have also introduced carbon pricing and trading, with the first emissions trading scheme implemented in the southern city of Shenzhen in mid-2013.

All this is likely to have a significant impact on Australia’s coal exporting industry. Yet, says the report, owners and operators of the country’s coal assets are, for the most part, ignoring what’s going on.

Any slowing of coal demand from China will have a big impact on both federal and state government finances. The state of Queensland alone – the site of many of the biggest mining projects – is paid more than AU$3bn (US$2.7bn) each year in royalties by the mining conglomerates.

The report points out that the warning signs for what is one of Australia’s biggest industries are already there: in recent months thousands of workers in the sector have been laid off and a number of projects have been suspended.

Coal is by far the most polluting of fossil fuels, contributing hundreds of thousands of tonnes of CO2 to the atmosphere each year and so increasing global warming.  On a per capita basis, Australia has among the highest CO2 emissions in the world. – Climate News Network

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