COMMENT : Brian Rickerby Joint Managing Director
The recent talks in Bali where officials from 187 countries met to discuss the successor to Kyoto from 2012 saw distinct progress in that the US, the only Western non-signatory to Kyoto, took two major step changes. Firstly it appeared to accept the evidence of global warming caused by the burning of fossil fuels, and secondly that President Bush accepted that US led talks encompassing 16 of the world’s biggest emitters should feed into the UN process. This was the first time that the US had agreed to talk about a post 2012 framework. However setting targets on CO2 reductions was a ‘red line’ that the US would not cross, and that the US had “serious concerns” that developing countries had been let off too lightly in their commitments to cut emissions.
The ‘Bali Roadmap’ sets out an agenda of talks over the next two years, with a view to set a new agreement to cut emissions by 2009.
The conference agreed to launch a UN fund to help poor countries combat climate change and pilot projects were agreed to measure emissions reductions from forestry projects. However only the need for “deep cuts” was agreed, no actual amounts or targets were set, and no decisions were made on the role that developing countries play in greenhouse gas emissions.
As the graph below shows the UK is performing well against Kyoto targets, but these are measured against a baseline set in 1991. However like all statistics they can be misleading. Throughout the 90’s the UK adopted a ‘dash to gas’ process of replacing ageing coal-fired power stations with new combined cycle gas turbines, which were less polluting and hence reduced our emissions.
British businesses are increasingly taking their ‘corporate social responsibility’ to global warming seriously, but there is still a considerable way to go. Each business taking practical steps to reduce the amount of energy consumed is still the biggest single measure we can all take – both to reduce global warming and to improve your businesses bottom line.
Source: UNDP Human Development Report
European Action Plan
The EU has announced plans for ambitious emissions goals which could cost £45bn a year or 0,45% of gross domestic product according to the European Commission President Jose’ Manuel Barroso. However he stressed that according to the Stern report from the UK government, the cost of inaction would be ten times higher. The plan, which follows decisions made by national governments last March, is to reduce greenhouse gas emissions by 20 per cent from their 1990 levels and be prepared for a 30 per cent reduction if there is an international agreement. Other key proposals under the plan include a target of 20 per cent energy use from renewables, and industrial sectors vulnerable to non-European competition should be given free greenhouse gas emissions permits starting in 2013, to be phased out gradually by 2020, subject to review in 2011.
Display Energy Certificates & Energy Performance Certificates
Display Energy Certificates must be displayed in public sector buildings from 01/10/2008. For a guide to this new legislation please click here
Energy Performance Certificates are required for the construction, sale or rent of buildings other than dwellings’. For a guide to this new legislation please click here
On 7th January 2008, it was announced that CIBSE have been awarded certification to train and accredit energy assessors in England and Wales. In anticipation of this announcement all energyTEAM engineers have been attending the CIBSE accreditation courses to ensure they are accredited Low Carbon Consultants able to produce the relevant certificate for your organisation.
Only an accredited low carbon Energy Assessor will be able to produce the relevant certificates and Advisory Reports.
As with the recent launch of home improvement packs (HIPs), we expect that there will be insufficient numbers of accredited Energy Assessors trained in time to help everyone that needs to comply!
ENERGY FORUM
The next ‘Energy Forum’ will be held at the National Media Museum Bradford, on Tuesday 26th February.
We are delighted that EDF will speak at the forum about the energy market and the growing role of flexible contracts.
In addition the forum will look at:
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‘Total Energy Management’: how all aspects of energy management from procurement to conservation, impact on each other. |
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The importance of compiling an ‘Energy Policy’ to manage all aspects of energy from supply to conservation. |
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Renewable energy: an overview of the alternatives. |
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Display Energy Certificates’ and ‘Energy Performance Certificates’ how does new legislation taking effect in 2008 affect your organisation? |
Attendance at this event is £200 +VAT. Clients of energyTEAM can attend on a free of charge basis but places are limited. If you wish to attend this event please contact us as soon as possible or click on this link: maddie.wall@energyteam.co.uk
ENERGY INFORMATION – VIA OUR WEBSITE
From April all our clients will be able to access information on their half-hourly meters via password protected access on our website. Graphs showing consumption data in various formats will help your organisation manage your energy consumption: a pre-requisite to reducing your company’s carbon footprint.
We will be writing to you in March to explain this new service; in the meantime if you have any queries please do not hesitate to contact us.
This new service is part of a growing portfolio of services offered by energyTEAM including;
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Carbon Trust surveys and follow-up assessments |
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Carbon Footprints (How to determine and reduce your carbon footprint) |
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Help in the preparation of the Energy Policy |
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Monitoring & Targeting |
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Load Assessments |
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Building Management Systems |
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Project Management |
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Climate Change Agreements |
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Smart metering |
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Relocation and reorganisation of processes |
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Total Energy Management Agreement |
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Energy Performance Certificates |
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Display Energy Certificates |
For any preliminary enquiries contact: sally.annells@energyteam.co.uk
Electricity Market Overview
Electricity supply is under a little more strain as a couple of coal fired power stations are off line, which may be as a result of the Large Combustion Plant Directive, which kicked in from 1.1.08 (details listed below). The price of oil remains high, and as the gas price is linked to oil and gas is the biggest form of electricity generation, electricity prices have shown little sign of reducing, as has been the case in January of previous years.
Baseload Electricity Prices (Graph)
Carbon Trading Scheme Extended
Gordon Brown, in his first major speech on the environment since his tenure as prime minister announced that large retailers and other service sector companies will have just two years to prepare for carbon trading. The PM called for Britain to lead a “fourth technological revolution” by investing in low-carbon technologies and argues that tackling climate change was an economic opportunity for the UK.
British Energy Extends Life of Reactors
British Energy announced that Hinkley Point B and Hunterston B, two of its oldest nuclear generators would keep running until 2016 an extended five year period, and could be kept running until 2026. The advanced gas-cooled reactors, which jointly account for approximately 5% of the UK’s generating capacity, have been operational since 1976 and were originally planned to be retired in 2011. A decision on two further power stations at Hartlepool and Heysham will be taken in 2011, which could see closure extended beyond their scheduled decommissioning date of 2014.
British Energy Names Likely Sites
British Energy has announced four sites in the south of England: Sizewell in Suffolk, Dungeness in Kent, Hinkley in Somerset and Bradwell in Essex as the most likely sites for new nuclear construction. Lack of grid capacity has been a significant obstacle, but the National Grid has agreed to put in enough additional capacity to allow new nuclear power stations at these sites. However Greenpeace have threatened legal action warning that the decision to approve a new generation of nuclear power stations “would not be lawful”.
Sale of CO2 Emission Permits
A portion of the “permits to pollute” that would have been issued to large electricity producers may be auctioned off by the government according to DEFRA. The second phase European Union Emissions Trading Scheme took effect from January 1st and runs until 2012. The scheme is designed to limit the CO2 emissions from those industries emitting the most by constricting the allowance to produce carbon dioxide. The UK has about 10% of the EU emission permits of 1.9million tonnes. Critics have argued this constitutes an “environmental stealth tax” that could raise hundreds of millions of pounds of additional tax revenue over the next five years.
Gas Market Overview
Forward weather forecasts are for mild weather to continue which has allowed some of the risk premium to be reduced from gas prices. As new pipelines and LNG terminals have opened the supply of gas has become a lot more robust but this has not been reflected in gas prices, which remain high, predominately as they are linked to the price of oil.
Wholesale Gas Prices (Graph)
New Gas Pipeline Opens
A £1bn pipeline connecting new import terminals at Milford Haven to the national transmission network has opened. However the two liquefied natural gas terminals that will feed the pipeline are behind schedule, and therefore the resultant boost to the gas supply is unlikely to take effect until the summer.
Oil Market Overview
Oil prices are heading towards $90 a barrel, following growing unrest between Turkey and Kurdish militia in Northern Iraq, and OPEC indicating that it would not increase its production in the short term.
These short-term issues fall on the back of the fact that oil prices have been climbing steadily driven by continuing strong demand from the world's largest economies and concerns about production capacity. China's rapid economic expansion has contributed to the growth in demand for crude oil. From a low of $52 a barrel in January 2007, oil prices have shown a steady upward trend with prices currently trading around $89 a barrel. The oil price boom has renewed interest in the energy sector amongst investors and speculative traders. They have become active players in the oil markets, raising non-commercial positions in futures contracts to record levels.
Oil Prices Brent Crude (Graph)
SOURCE: BBC News – Market Data
Large Combustion Plant Directive (LCPD)
The Large Combustion Plant Directive (LCPD) is a European Union Directive that aims to reduce acidification, ground level ozone and particulates by controlling the emissions of sulphur dioxide, oxides of nitrogen and dust from large combustion plant. Large power stations in the UK must comply with the LCPD.
All combustion plants built after 1987 must comply with the emission limits in LCPD. Those power stations in operation before 1987 (namely coal and oil in the UK) are defined as 'existing plant'. Existing plant can either comply with the LCPD through installing emission abatement (Flue Gas Desulphurisation) equipment or 'opt-out' of the directive. An existing plant that chooses to 'opt-out' is restricted in its operation after 2007 and must close by the end of 2015.
'Green' Energy
New Emission Rules
Two major sets of EU rules came into effect from 1st January: the EU’s large combustion plants directive (LCPD) designed to curb emissions of sulphur dioxide and nitrous oxide and phase two of the EU’s emissions trading scheme.
Under the LCPD, electricity generators and some other coal-fired industrial plants had to decide whether to fit flue gas desulphurisation equipment to remove sulphur dioxide and nitrous oxide. If they have, the companies can run the plant like they did last year. If they have not fitted it - opted-out - they can run the plant for only 20,000 hours between now and 2015. Once the hours have been run, the station has to close. All opted out stations have to shut by the end of 2015, whether they have run the full hours or not.
The emissions trading scheme covers CO2 emissions from big polluters, including the electricity generating industry. In the first phase, allocations across the EU were too generous. This time Brussels has got tougher, demanding real cuts on 2005 levels.
The major part of the ETS was setting the national allocation plans (NAPs) for all 27 member states. The overall EU carbon cap for 2008-12 has been set at 2.08billion allowances, where one allowance equals one ton of CO2. The cap is 10% lower than the aggregate total originally requested by the member states, and significantly lower than phase one NAP. However seven states and a number of large industrial users have mounted legal challenges to the Commission’s NAP decisions which are yet to be determined.
Streamline to Planning Changes
Under the governments planning bill published in November, even the most controversial infrastructure projects, such as large-scale wind farms, could be approved in less than year. The new planning laws, which aim to halve the time taken to approve big projects, could accelerate the construction of new nuclear power stations.
Australia Ratifies Kyoto
In his first official act after his inauguration, Kevin Rudd the new Australian Prime Minister made Australia a signatory to the Kyoto Protocol. The US is now the only developed country not to have ratified the treaty on global climate change.
Biomass Plant Approved
The world’s largest biomass power station, to be fuelled by the burning of woodchips, will be opened in Port Talbot, South Wales in 2010. The £400million renewable energy plant will deliver 70% of the Welsh renewable energy target, displacing 3.5million tonnes of CO2 compared to older power stations. When opened the 350MW plant will provide energy for almost half the homes in Wales, and will be eight times larger then the next biggest UK biomass plant.
Scottish Biomass Plant Goes Live
Following successful testing of its 44MW biomass plant in Lockerbie E.on began commercial operation of its new £90million plant, which burns 475,000 tonnes of by-products from local timber industry and other energy crops. The plant will avoid around 140,000 tonnes of carbon emissions each year.
New Tariff Rating System
Ofgem has announced plans for a rating system on energy tariffs according to their carbon emissions. The rating system would label tariffs from A (zero emissions) to F (more than 1kg per kWh generated). The rating system is scheduled for later in 2008 after the industry has developed a certification scheme based on guidelines published last November.
Green Supplier Statistics
The latest fuel mix statistics show British Gas to be the ‘greenest’ of the big six energy suppliers in terms of emissions of CO2. However this is primarily due to the fact that BG has a much higher purchase of nuclear energy. Scottish and Southern is the clear leader in using energy from renewable sources.
Helpful Guides
energyTEAM publish guides on our website www.energyteam.co.uk on the following topics:
(please click on the topic of interest)
energyTEAM Media Coverage
We regularly provide articles for various respected publications on a range of energy-related topics. The following have all appeared in the last three months. (please click on any article listed)
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