NZ Centre for Political Research

Leaked Strategy Paper: EU Plans To Phase Out Green Energy Subsidies
Hendrik Kafsack

The economic cost of the expansion of renewable energy could become prohibitively expensive. Subsidies in the EU for solar and wind power should be phased out as quickly as possible. That is what the European Commission says in an internal draft strategy paper that EU Energy Commissioner, Gunther Oettinger, will present in Brussels early next month.

In doing so, the EU Commission is supporting the German government which wants to reduce solar subsidies by up to 30 percent, a plan which has met with resistance in the Upper House of the German Parliament.

The expansion and especially the maturity of renewable energy such as solar and wind power have grown much faster than expected, the strategy paper points out. The cost of photovoltaic systems, for instance, had fallen by 48 percent in the last five years. The cost for the construction of offshore wind farms had decreased by 12 percent since 2008. In light of these developments, member states would have to make their programmes more flexible to phase them out.

At the expense of taxpayers

If green subsidy programmes are too rigid, there is a risk that producers would be over-compensated and the cost of developing renewable energy would become intolerable, the paper warns. The sharp decline in the cost of many new green energy sources together with the strong expansion of solar and wind energy had driven the cost for consumers and, in some cases, for taxpayers sharply higher. For many people, energy costs were already too high, especially in light of the difficult economic situation today. The price for renewable energy such as solar and wind power would therefore have to be left entirely to the forces of the free market and as quickly as possible.

However, the Commission does not intend to abolish all forms of renewable subsidies. The development of newer green energy sources, such as geothermal or novel solar thermal power plants, that are not yet commercially viable should be encouraged even beyond the year 2020.

Harmonisation of green subsidies among member states

In its strategy paper, the Commission also calls for the harmonisation of national subsidy and support programmes. The Commission has been criticising the coexistence of different support systems for some time. This discrepancy has led to the inefficient use of renewable energy within the EU given that they have often been developed in countries where they are simply inappropriate. Instead of subsidising the expansion of solar energy in Northern Europe, for example, the Commission wants these nations to finance their expansion in sunny countries like Greece. The paper specifically mentions the so-called Helios Project in Greece. Energy generated in such projects could then be counted towards the renewable targets which Northern Europeans have signed up.

Until now, the German government has opposed any such Europe-wide plan because it would put in question Germany’s Renewable Energy Law (EEG) in which the feed-in tariff for renewable energy is set out. Not a single German party is currently prepared to agree to such a plan.

Translation Benny Peiser
Frankfurter Allgemeine Zeitung, 19 May 2012

Icecap Note: The administration and the media in the pockets of the environmental extremists ignore the realities of the major problems in Europe with Green energy...one of the reasons for economic turmoil there. The Obama administration used initially Spain as the model for green economy with its heavy subsidy of wind and solar. The subsidies of these inefficient sources drove up energy costs so much that industry relocated its factories to India and China and unemployment soared to a world high 25.5%. Not a single fossil fuel plant could be closed because energy from them was needed to maintain power and CO2 emissions INCREASED 50% because they were being used in less efficient back up mode. A similar situation was found in Denmark, Italy, the UK and Germany although Germany came to its senses and is building fossil fuel plants and France built nuclear power. The UK’s new energy minister has a much more balanced view on energy sources than the extremist Chris Huhne. Energy costs have skyrocketed in the UK and over 25% of the households in Wales are in energy poverty.

US ahead of Europe on energy policy
By James Boxell, Financial Times

Europe’s manufacturers are rapidly losing ground to US rivals because of soaring energy costs and the failure of the continent’s governments to be “rational” about nuclear power and shale gas, the head of one of the world’s biggest chemicals groups has warned.

In an interview with the Financial Times, Jean-Pierre Clamadieu, the new chief executive of Franco-Belgian Solvay, accused Germany, France and Belgium of acting in isolation on nuclear and gas policy and failing to come up with a coherent strategy to keep Europe’s companies competitive.

“There is very little European co-ordination,” he said, warning that energy costs should be ranked alongside the eurozone crisis as the most urgent problem confronting industry.

Natural gas in the US is three times cheaper than in Europe because of its decision to exploit shale gas through the environmentally-controversial process of “fracking” – the high-pressure injection of water and chemicals to free up trapped gas.

“The fact that energy is cheap in the US, and probably will be for a long time, is changing the game,” Mr Clamadieu said. “Electricity’s getting more and more expensive in Europe, and some of the decisions that have been announced regarding nuclear energy production will certainly move the price in the wrong direction. For industry this is really a concern.”

He added that US industry’s advantage on energy prices also meant “you can’t just close the book and say we’ll never look at whether Europe has shale gas”, despite vocal environmental opposition.

Solvay makes chemicals used in the fracking process, but concerns about the competitive impact of soaring power costs are shared by other heavy users of energy. BASF, the world’s biggest chemicals group, has also warned that shale gas is a “game changer for parts of the US industry”.

The chief executive of one of Europe’s largest power groups told the FT that the continent’s political leaders were paying “zero attention to competitiveness” when deciding energy policy.

Germany accelerated its withdrawal from atomic power following last year’s Fukushima nuclear disaster in Japan, while Belgium is considering phasing plants out sooner than expected. In France, the new Socialist president, François Hollande, has promised to cut reliance on nuclear energy from 75 per cent of electricity production to 50 per cent.

The issue of energy costs is acute in France because the country is desperately trying to improve its industrial competitiveness to make up ground lost to Germany.

“The debate on energy is a bit difficult to understand for someone who wants to have a rational approach,” Mr Clamadieu said. “It’s very difficult to replace nuclear produced electricity, which costs about €40 per megawatt hour, with a wind turbine put far away in the sea, which costs €200 per megawatt hour.”

Full story: http://www.ft.com/intl/cms/s/0/45afd57a ... z1utA5y3w6

Submissions on the government's review of the Emissions Trading Scheme close at 5pm Friday 11 May 2012.

The New Zealand Centre for Political Research's submission can be found here: http://breakingviewsnz.blogspot.co.nz/2 ... on-on.html

Our world-leading ETS actually hikes hydro
Richard Treadgold
http://www.climateconversation.wordshin ... more-13354

Bluff aluminium smelter at Tiwai Point. This is about as far south as you can get in the South Island. If you insist on continuing and miss Stewart Island, the next stop is Antarctica. Beautiful spot. In silent witness to the smelter’s status as the country’s largest single electricity consumer, note not one but two rows of high-voltage transmission towers marching up to the door. Anywhere else, such towers would lead you to a major city. Tiwai Pt uses 15% of the country’s entire production of electricity — substantially more than Auckland’s central business district.

The Bluff aluminium smelter has won an award from a xenophobe group for milking the ETS (Emissions Trading Scheme). That’s interesting by itself, however the award draws our attention for the unexpected proof it provides of a little-known, hidden effect of the ETS: instead of penalising carbon dioxide “polluters” at source while making wind and solar seem cheaper, it actually increases the cost of all generators by creating windfall profits for them.

It’s a testament to years of calculated deception of the electorate and a recipe for ruin.

The ETS was intended to apply a “carbon price” to thermal power generation (using coal, oil or gas) for what are thought to be its dangerous, polluting emissions of carbon dioxide. The ETS, or carbon tax, is also applied to geothermal generation because of the carbon dioxide it releases — despite the fact that most people consider geothermal just as renewable as wind or solar power (but not so the guardians of our national carbon footprint).

The stated intention of the ETS was to provide a financial incentive for operators of these “polluting” power plants to “save” the planet. But that was a smoke-screen, a mere gaseous concealment. The real purpose was fund-raising and along the way some of the worst examples of pork-barrel politics since the Wild West.

The Roger Award For The Worst Transnational Corporation operating in New Zealand has run annually since 1997. It is organised by CAFCA and GATT Watchdog, both Christchurch-based groups.

So says the web site of CAFCA (Campaign Against Foreign Control of Aotearoa), whom I’ve never heard of and who seem overly concerned, even obsessed, with being told what to do by people they don’t know. Perhaps if I read some of their material I’d form a different view, but who knows?

New Zealand Aluminium Smelters Ltd/Rio Tinto Alcan NZ Ltd (NZAS) (previously Comalco) had been nominated for this strange “Roger Award” for lobbying two governments over several years to secure excessive allocations of free emissions units under the NZ Emissions Trading Scheme (ETS).

CAFCA judged NZAS the winner, saying:

“Between July 1 and December 31, 2010, NZAS was allocated 210,421 free emissions units yet only had to surrender 156,147. This adds up to a new gain of 24,274 free emissions units worth $759,836. [The arithmetic here is faulty and the gain is actually 54,274 units; I don't know if this affects the value – RT] In this regard it appears that NZAS has already been secretly compensated for any electricity price increases associated with the emissions trading scheme. Since this was written, the nominator, at the request of the judges, used the Official Information Act, and has advised that NZAS were provisionally allocated 423,047 New Zealand Units for 2011.”

The judges report also said:

“New Zealand Aluminium Smelters Ltd (NZAS) has effectively undermined the purposes of the carbon emissions trading scheme… the New Zealand taxpayer is subsidising a transnational corporate rort of the emissions trading scheme. NZAS has, effectively, abrogated any responsibility to mitigate the incidence of anthropogenic global warming… a major transnational player within New Zealand materially benefits from its non-compliance with a strategy to reduce global climate change…”

But Rio Tinto draws all its electricity from hydro sources, mainly Manapouri. Why, then, did MfE expect the smelter to need compensation against “electricity price increases associated with the ETS” – when the ETS (everybody assumes) only taxes fuels which emit carbon dioxide?

Because, by the way the ETS distorts the spot-price auction system, all forms of generation, including wind and hydro, are more expensive. And all the power companies earn “windfall profits.”

Our world-leading ETS pushes up the price even of clean, “ethical” energy like wind and hydro, and thus average Kiwis provide generous compensation through their power bills to generators and their major corporate customers like Rio Tinto for saving the Earth.

Hurrah.

The CO2.con Bubble

CO2Australia boasts of planting three million carbon credit trees. This is "just the beginning" of a new bubble industry, the CO2.con.

This bubble is set to inflate rapidly. To offset just one day of Qantas operations, CO2 promoters must plant more than 200,000 trees in permanent forests covering 130 hectares. How much land is required to offset all Australian power stations, industry and transport?

Yes these trees will consume carbon dioxide. However CO2 levels today are well below what is ideal for plant growth. While they are growing strongly, these trees will suck the gas of life from the atmosphere, competing strongly with nearby crops and plant life for the traces of carbon dioxide remaining.

Then as the trees mature, growth stops. The aging forest just sits there, some trees growing, some dying and net carbon sequestration ceases. It becomes a sterile shrine to the green religion whose main impact on the biosphere is providing a haven for feral animals and noxious weeds.

Green spruikers claim that they only use land not suitable for anything else. Wrong! Every bit of Australia not covered by road, cities, parks or deserts can support crops, timber-getting or grazing animals. Carbon-credit forests gnaw away at this national land asset every year.

Moreover, CO2.con investors, like all speculators, want quick returns. Their quick return demands rapidly growing trees in arable country - deserts and salt pans are uneconomical. Thus the wheat/sheep belt is shrinking.

No one can demonstrate any climate or environmental benefit from the CO2.con.

Forcing consumers and taxpayers to fund this large scale permanent land sterilisation is clearly unsustainable. All Australians fund this destruction via increased prices for electricity, cement, steel, air tickets and rail fares, and reduced land for food production. The carbon tax will increase their burden.

Like all bubble industries, the CO2.con industry must end in tears, and the sooner it ends the better.

Viv Forbes,
Rosewood Qld Australia
forbes@carbon-sense.com

ETS FEEDBACK:

The National Government has no mandate for implementing this scheme.

Apart from the fact that this is merely a tax to cover the huge debt incurred over unaffordable welfare, social and soaring Maori costs there is widespread knowledge that this Climate Change of Human Global Warming is technically suspect.

It is merely a sop for the Greens and the liberals.

National has betrayed its principals and its supporters, by turning this once proud party into just another socialistic bureaucracy bent upon power at any price.

- Brian

ETS FEEDBACK:

We burn coal to grow tomatoes and cucumbers and this is at present costing us $30,000 per annum, set to double in about a years time. We have no other viable options for heating.

This is serious stuff. We get 60% carbon credits per tonne of carbon emitted but this in turning out to be a joke... I want to grow food, and a "unit" is not cash in the bank, so I have to learn how to trade these now (which no one seems to be that interested in them!).

We are also getting charged $28 per tonne of coal when in actually fact this figure should be about $5-$8 per tonne. We need to be able to (with a watch dog) sell our own credits to ourselves so we can at least pay the least for our coal per tonne.

We are a "fringe" sector and as always we seem to be hung out to dry.

Nick Smith (former Envir Min.) told me to my face "that crap happens, if this puts us out of business".

Other growers were present. It sure has the potential to put us out of business.

I am in a "price takers" market, not a "price setters" market, so I cannot pass this onto consumers, (supply and demand).

Let's not forget the fuel increases and cost of production in consumables that we use within our business that have escalated since ETS inception.

Abolish ETS - its core is only about money!

- LH

ETS FEEDBACK:

Our business is in Automotive crash repair - the increase in gas and electric energy providers cannot be passed on.

Lots of products we use are petroleum based and with increases in petrol prices over the last few years have increased - some over 100%.

The main work providers for us are Insurance companies - they are trying to drive down any increase we offer and will not pay.

Example - since 1999 we have had a 11% increase in paint allowance per panel - any further increases will only add to an almost unviable situation.

The answer is to abolish the whole mindless scheme altogether.

Ironic side issue: Every time the per litre price of petrol increases there are less cars on the road and a reduction in traffic accidents - this is the main contributor not any scheme the Govt has introduced. Less road movements equals less accidents! Also reduces our income - less disposable income for food etc.

- Dennis

ETS FEEDBACK:

Humates. This is a carbon based product from lignite. It is produced from coal that cannot be burnt. The process is simply one of crushing and screening, so there are no emissions whatsoever. It is used as a soil conditioner, enhancing the operation of other fertilisers, so that you use less (and import less) while achieving a better result. It also improved water holding capacity, always a + in drought prone areas and means less irrigation required, therefore less power used.

However as it's carbon based, farmers are paying carbon tax on it, even though it's being sequestered (which earns credits in Aussie?)

It's an awesome product and relatively inexpensive so a great way to improve productivity and the entire farm too.

We've been through all this with government but it's still taxed.

- Brenda

India Warns: EU Carbon Tax Is A Deal Breaker For Global Climate Talks
Reuters
http://uk.reuters.com/article/2012/04/1 ... 7S20120411

A European Union law that charges airlines for carbon emissions is "unacceptable" and would be a "deal breaker" for global climate change negotiations, India's environment minister said on Wednesday.

From January 1, all airlines using EU airports have come under the European Union Emissions Trading Scheme, which has stirred up strong opposition in the United States, China and India.

India has already joined China in asking its airlines to boycott the European Union's carbon scheme.

"For the environment ministry, for me it is a deal breaker because you simply cannot bring this into climate change discourse and disguise unilateral trade measures under climate change," Jayanthi Natarajan told reporters.

Any airline that does not comply faces fines of 100 euros ($128) for each metric tonne of carbon dioxide emitted for which they have not surrendered allowances. In the case of persistent offenders, the EU has the right to ban airlines from its airports.

Carbon Trading ‘Like Titanic’ Sinking On EU Permit Glut
Ewa Krukowska
http://www.bloomberg.com/news/2012-03-3 ... -glut.html

The plunge in European Union carbon permits is putting prices on course for their longest-ever decline and shows no sign of ending as member states wrangle over curbing a glut in the market.

EU allowances for December fell 4.9 percent this year, extending a streak of quarterly losses stretching back to March 2011. Prices may drop a further 50 percent and lawmakers will probably fail to cut supply in the world’s largest emissions market through a so-called set-aside process, according to UBS AG. For First Climate AG, an asset manager that advises the European Investment Bank’s carbon funds, emissions are unlikely to recover in the next quarter.

“Unless EU governments come up with a surprise decision to strongly support the set-aside or ambitious mid-term emission- reduction targets, I don’t see prices moving up much over the coming months,” Tuomas Rautanen, head of regulatory affairs and consulting at First Climate in Zurich, said by e-mail.

A surplus of permits and the inability of European nations to agree how to tackle the glut in the $120 billion market sent prices to an all-time low this year. Verified emissions data due on April 2 may show 2011 discharges from more than 12,000 factories and power plants in the region’s trading system fell short of the number of issued and sold permits for a third year, according to Bloomberg New Energy Finance.

Low-Recovery Odds

Permits for December, the benchmark contract, slid as low as 6.38 euros ($8.47) a metric ton on Jan. 4 on London’s ICE Futures Europe exchange. The current-year contract was up 1.6 percent at 6.96 euros at 11:29 a.m. today. The average in the past year was 11.87 euros.

Prices will probably fall to about 3 euros before lawmakers are able to tighten the bloc’s emissions targets, a process that may take “years,” Per Lekander, UBS’s Paris-based global head of utilities research, said in a phone interview yesterday.

“It’s not that I’m skeptical on the set-aside, it’s just not going to happen,” he said. “It’s going to get blocked.”

Permits have slid 61 percent in the past 12 months as industrial production slowed, reducing demand. Companies covered by the trading program discharged 1.93 billion tons of carbon in 2010, compared with their allocated 1.99 billion tons.

A potential set-aside of permits may offer only a temporary relief to the system, which needs a “deep overhaul” after expectations that a global climate deal will lead to a system of interlinked national markets failed to materialize, according to Jan Pravda, director of Prague-based Pravda Capital Trading.
U-Turn or Crash

“It’s a big challenge to re-design the ETS and make it a system that would reward both energy efficiency and pure emission reductions, but you can’t avoid it,” he said today by phone. “It’s like being on the Titanic and seeing the iceberg in front of you; either you make a U-turn or crash.”

The EU’s cap-and-trade program, which imposes emission quotas on businesses and requires those exceeding their limits to buy permits from companies that discharge less, allows unused allowances to be rolled over into later years. That may produce a 1.1 billion-ton oversupply of permits in the 2008-2012 trading phase, equal to about 53 percent of an average annual EU pollution limit in that period, according to BNEF.

The current price of greenhouse-gas pollution is less than a fourth of what policy makers expected it to be when the system was reviewed in 2008 to meet the bloc’s climate-protection targets and encourage investment in low-carbon technologies, Peter Liese, a German member of the European Parliament representing the European People’s Party, told reporters Feb. 29.