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Montreal set for World Energy Congress

Milton_CloseUp2_Cropped

Milton Catelin, Chief Executive, WCI

On Sunday, the 21st World Energy Congress will open in Montreal. Held every three years, the Congress brings together the world’s energy leaders to discuss challenges facing the energy sector globally and runs from 12-16 September.

The theme for WEC Montreal 2010 is “Acting now on global challenges – energy in transition for a living planet,” reflecting the sense of urgency that faces the world’s energy sector.

Each day of the Congress will focus on a key challenge facing the global energy sector. The theme of the first day is “accessibility – meeting energy demand: a global challenge requires global solutions”. The second day will focus on the challenge of “availability – what is the right mix for long term stability?” Day three looks at “acceptability – energy solutions for a living planet”. The final day will examine “accountability – policies, regulations and financing”.

I will be in Montreal for the Congress and discussing coal’s important role in the global energy mix and how the industry is working hard to meet the challenges it faces. I am chairing a session on Tuesday 14 September, from 1.15pm-2.45pm looking at the “Challenges of efficient and clean use of fossil fuels”, featuring speakers from American Electric Power, Japan Energy Association and the Polish Ministry of Economy, among others.

I hope to see some of you in Montreal!

Further details on the event can be found on the WEC website.

For any media requests for interviews, please contact Katie Warrick, Communications Director, kwarrick@worldcoal.org

September 7, 2010 | Categories: Climate change, Sustainable Development, WCI

CCS cannot be a victim of politics

Milton Catelin, Chief Executive, WCI

Milton Catelin, Chief Executive, WCI

Election time in Australia; today is the final day of the 2010 campaign. An election was due this year but the circumstances under which it has come about were not anticipated at all, even by the most seasoned of political commentators. Kevin Rudd’s fall from the top job after having such a strong start was a surprise and it was under these circumstances that Australian history was made with the first female Prime Minister, Julia Gillard.

It has been a chaotic campaign and one that has seemingly left many in the electorate disillusioned and no clear front-runner between either Labor’s Julia Gillard or the conservative Coalition’s Tony Abbott. The latest poll has put them at 50-50.

While the result of the election is unclear, what has become clear is the importance of energy and climate policy to the political landscape in Australia – firstly with the protracted discussions on the Carbon Pollution Reduction Scheme (CPRS), then the mining tax and now with announcements from both parties of proposed cuts in support for Carbon Capture and Storage (CCS).

Julia Gillard and Tony Abbott, currently running neck and neck in the Australian election.

Julia Gillard and Tony Abbott, currently running neck and neck in the Australian election.

The Coalition has said it will cut funding to the CCS Flagship Program, a A$2 billion programme that was set to provide support for the first 2-4 industrial-scale CCS projects (the Australian black coal industry has stepped up too, with direct investment of A$1 billion through its COAL21 Fund). Both Labor and the Coalition have now announced plans to cut funding for the Global CCS Institute (GCCSI). Tony Abbott has stated he intends to scrap the Institute altogether; the latest from Labor has been that it will cut $45 million from the Institute’s A$100 million annual funding. All of this is a worry for not just for CCS but for those concerned about climate change.

While economies everywhere are tightening belts, it shows short-termism in making significant cuts, if not eradicating, programmes to seriously tackle the long-term challenge of climate change. To date, Australia has been demonstrating global leadership on climate change by establishing the GCCSI – an initiative aimed at accelerating the worldwide commercial deployment of at-scale CCS.

CCS technology is the only currently available technology that allows very deep cuts to be made in CO2 emissions to atmosphere from fossil fuels at the scale needed. Failure to widely deploy CCS will seriously hamper international efforts to address climate change.

CCS will be needed alongside other low carbon technologies to meet the climate challenge, while maintaining energy security and meeting growing energy demand. For CCS to be a victim of the economic culls, to varying degrees by both parties, is a disappointment.

We will be watching with interest the results of the election this weekend and hoping that a turbulent time in Australian politics does not translate into a turbulent time for CCS.

Photos: Julia Gillard facebook and www.tonyabbott.com.au

August 20, 2010 | Categories: Climate change

Slow progress on the road to Cancun

Benjamin Sporton, WCI Policy Manager

Benjamin Sporton, WCI Policy Manager

There is only one more week of climate negotiations before COP16/CMP6 at the end of November. This week’s talks in Bonn and those due to take place in October are key to laying the groundwork for the UN climate change negotiations in Cancun.

This week has been highly technical and focussed on draft texts developed by the Parties to the climate treaties. One delegate reportedly described a “text explosion” mid-week when one section of draft text grew from three to eleven pages in the course of three hours of discussion! Another delegate admitted to not even understanding a presentation on counting forestry credits made by another delegation. Some delegates have even commented that things seem to be going backwards – draft text that was previously all-but agreed as far back as Copenhagen now seems to be up for grabs. This doesn’t look like progress!

Going into this week, a lot of commentators were hoping to have a better idea of what might be possible come Cancún. Not much will have become clear as a result of this week, which leaves a lot of work to be done in Tianjin in China in October.

A fundamental issue has been what is going to happen when the first commitment period under the Kyoto Protocol ends in 2012. A paper released by the UNFCCC secretariat sought to reassure delegates that a lot of the important machinery of the Protocol would continue following the end of the first commitment period. It also explored legal options for avoiding a gap between the first and subsequent commitment periods. Even if technically there isn’t a legal problem, at the very least the existence of a gap will reduce the confidence of many stakeholders in the process. It’s going to be important to try and avoid this and we’ll be keeping a keen eye on how that progresses.

A big focus for coal has been getting Carbon Capture and Storage included in the Clean Development Mechanism. That hasn’t really been an issue at these talks (it has been referred to the COP/CMP in Cancun) but the form of financing arrangements under any future agreement has been. Beyond the CDM, ensuring that any new financing mechanisms include a role for CCS is critical to making sure climate goals can be achieved.  WCI is going to be focussing on this as we get closer to Cancun.

On financing, a special briefing was held at the talks by the Secretary-General’s High-Level Advisory Group on Climate Change Financing. They are exploring ways to raise the $100 billion a year for climate financing committed to under the Copenhagen Accord. At the briefing, prominent British economist Lord Nicholas Stern said potential revenue sources include auctioning the right to pollute, taxes on carbon production, an international travel tax, and a tax on international financial transactions, as well as government grants and loans. He also said private capital will be crucial, and governments need to adopt policies that reduce the risk to investors. This is a key point for CCS, where risks to investors are a key stumbling block that governments must resolve.

It’s good to see there is constructive work being done by the Secretary-General’s group. Their report is due out shortly before Parties convene in Cancun so it can make an important contribution to discussions about financing. If serious progress can be made on financing, it might give Parties the energy and confidence they need to resolve other issues as we look towards a future agreement.

August 6, 2010 | Categories: Climate change, WCI

Using the Kyoto Protocol to clean up coal

Milton_CloseUp2_Cropped

Milton Catelin, Chief Executive, WCI

Last week, the Guardian newspaper ran an article entitled “Rich countries to pay energy giants to build new coal-fired power plants”. Given the nature of the title, the article unsurprisingly generated a lot of interest!

It opened up with: “The UN is set to channel billions of pounds of public money from rich countries to giant energy companies to build 20 heavily polluting coal-fired power plants on the basis that they will emit less carbon dioxide than older ones”. That sort of statement is always guaranteed to create a bit of a stir! But unfortunately it’s not accurate and the criticism is based on a flawed understanding of how a specific UN programme works.

The real focus of the article is the UN Clean Development Mechanism. The CDM is a mechanism included within the Kyoto Protocol to help countries meet their emissions targets and to encourage the private sector and developing countries to contribute to emission reduction efforts. The CDM has been operating since 2006 and allows emission reduction projects in developing countries to earn Certified Emission Reduction (CER) credits. These CER credits can be traded and sold, and used by industrialised countries to meet a part of their emission reduction targets under the Kyoto Protocol. The CDM is designed to stimulate sustainable development and emission reductions, while giving industrialised countries some flexibility in how they meet their emission reduction targets.

Public Funding?

The CDM does not provide a direct cash injection for projects and does not involve direct government or UN funding. The economic benefit of a CDM project arises from the issuing of CER credits which can be sold in emissions trading schemes under the Kyoto Protocol, thus enabling funds to be raised. The credits purchased can be used by Annex I Parties to the Kyoto Protocol (i.e. developed countries) in order to meet their emissions quotas and the funds from those sales support projects registered under the CDM – so there isn’t a cash injection from UN or public funds.

Rushing projects through?

The article also suggested there has been a ‘rush’ by companies to take advantage of the CDM ‘subsidies’ for coal. This is difficult to explain when the CDM has already been operating for four years and the approval process itself can take a number of years. Only one coal project to date has been registered under the CDM (in India) and two further Indian projects are under review. These are not ‘rushing’ timeframes or out of control numbers – it is a difficult and slow process. And this has actually been the criticism levied at the CDM to date – the speed at which projects get approved and the complexity of the process.

UN – fossil fuels part of energy mix for years to come

The UNFCCC states: “Fossil fuels will be part of the energy mix for many years to come. It makes sense that the CDM should be used to reduce the emissions associated with that fossil fuel use”. The CDM is not used to ‘subsidise’ any fossil fuel-fired power station that developers construct – it can only be used with fossil fuel-fired power stations that actually use technology that can significantly reduce CO2 emissions – technology that otherwise would not be deployed in that location.

The idea of technologies that improve the ‘efficiency’ of coal-fired power stations is something that is often derided – many people think ‘coal is coal’, and hence it is bad. But improving the amount of energy we can get out of each tonne of coal used is essential to meeting the challenge of climate change. Using these efficient technologies does make a significant difference in reducing emissions from coal-fired power plants. Replacing all older and smaller coal power stations with best available, most efficient technology and larger plants could globally reduce GHG emissions by 5.5%. To put this 5.5% global GHG emission reduction figure into context, the intended effect of all the measures included in the Kyoto Protocol on Climate Change is 5%.

This is not about taking money from renewable energy and putting it into coal. It’s about using all options open to us, including mechanisms set up under the Kyoto Protocol to achieve significant emissions reductions at a global level. India, South Africa, China, Indonesia…the list could go on…coal is critical to all these countries and projections show this role will continue. Reducing emissions from coal-fired power stations worldwide is a critical part of any effective response to climate change. Arguing that developing countries shouldn’t use coal and shouldn’t get any form of support, such as through the CDM, to actually clean up their coal burn is not helpful – either to the sustainable development of these countries, or to the global response to climate change.

AFRICA!

I will be in Johannesburg, South Africa, next month to talk at the ‘Coal Energy Africa’ event. The event, taking place 16-17 August, is a niche forum that addresses energy challenges facing Africa. Electricity demand in Southern Africa is increasing at a rate of 1000 MW per year. The abundant reserves and low cost of coal make it the preferred energy source to meet increasing electricity demand for the foreseeable future. The challenge is to enhance the efficiency and environmental acceptability of coal use. Full details on the event are available on the ‘Coal Energy Africa’ website.

July 23, 2010 | Categories: Climate change

Setting standards or providing solutions – why an EPS won’t tackle climate change

Milton Catelin, Chief Executive, WCI

Milton Catelin, Chief Executive, WCI

The new UK government has pledged to introduce an Emissions Performance Standard (EPS) for CO2 emissions from new power stations. On the surface, introducing standards for CO2 emissions seems like a positive step – who could possibly have a problem with governments setting targets to limit CO2 emissions? Dig a little deeper and the complexities and pitfalls of using an EPS to tackle the long-term challenge of climate change become clearer.

Emissions performance standards have long been used by governments to limit the release of pollutants. The successful use of an EPS to limit sulphur emissions from power stations in the USA in the 1970s and 1980s is often held up as a positive example. However, in terms of drawing parallels between the reduction of sulphur emissions and CO2 emissions, you’re really comparing apples and oranges. The two issues are on a completely different scale. Retrofitting a coal-fired power plant to reduce some tens of tonnes of sulphur dioxide per day is not comparable with retrofitting a plant to control the release of 20,000 tonnes of CO2 per day. It is a more difficult, more complicated challenge and one that will not simply be solved by slapping standards onto power plants!

Technology is available to make significant reductions in CO2 emissions. Carbon capture and storage (CCS) is the only currently available technology that allows very deep cuts to be made in CO2 emissions to the atmosphere from fossil fuels at the scale needed. Yet, an EPS will not encourage power plant operators to invest in technologies such as CCS. Rather it will lead operators to simply switch to the cheapest, short-term option to meet energy demand and the standards set by an EPS…and that is unabated gas.

This switch will reduce energy security by weakening the energy mix, driving up gas (and therefore electricity) prices and will only deliver modest, short-term emissions reductions – natural gas is not a low emission energy source, it needs CCS as well.

It is now generally accepted by groups including the G8 that governments and the private sector must work together to deploy CCS to all fossil fuels and other industrial sectors and that this will involve policies that reduce the commercial risk of CCS, enabling the private sector to make the massive investments that are required. An EPS does not reduce commercial risk – it does the opposite. To a CCS developer, an EPS is simply another regulatory risk, which increases the challenge of investing in first-of-a-kind plants.

What’s the alternative? In Europe a mechanism already exists which is supposed to encourage power plant operators to invest in low CO2 emitting technologies – the Emissions Trading Scheme. The World Coal Institute has been supportive of an effective carbon pricing system to support the deployment of CCS and other low carbon options. But current CO2 prices are below the level necessary to drive early investment and there are no signs that this is likely to change. In the face of a low carbon price, further public financing incentives are needed to help bridge the investment gap. ‘Feed-in tariffs’ have been effective in incentivising other new energy technologies – such as renewables – and could do the same for early CCS deployment. The levy on electricity proposed by the UK to directly support CCS deployment is also an option that could help to successfully bridge the gap. In addition, the inclusion of CCS in the Clean Development Mechanism would act as a means of driving down early costs via large scale deployment in developing countries.

Implementing a combination of these incentives domestically and internationally should see CCS costs driven down to a level where deployment can be successfully supported by an effective cap-and-trade system.

If the aim of setting a CO2 EPS on power stations in the UK is to push the UK once again down the path of a dash for gas, then this is the perfect step to take. If the aim is to tackle CO2 emissions and the long-term challenge of climate change, then a rethink is needed.

July 9, 2010 | Categories: Climate change, WCI
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