Environmental Markets & Commodity Reports

Houston poised to become California CO2 trading hub

London, 1 February, 2012: Reuters

California will next year host the world’s second biggest CO2 market as it tries to roll back its carbon footprint two decades, but it will not be San Francisco or Los Angeles that will be the center of trade, but the U.S. oil-dealing hub in Texas. Home to dozens of oil, gas and power firms, the city of Houston stands to emerge as the nerve center for trade in California emission permits when the market starts in 2013.

Read more: Houston poised to become California CO2 trading hub

Advanced biofuels could create millions of jobs

Davos, 25 January 2012

Bloomberg New Energy Finance launched its report “Moving towards a next-generation ethanol economy” at the World Economic Forum. Commissioned by Novozymes, the world leader in bio innovation and industrial enzymes, the report estimates the socioeconomic prospects of deploying advanced biofuels in eight of the highest agricultural-producing regions in the world, i.e. Argentina, Australia, Brazil, China, EU-27, India, Mexico and the USA.

Read more: Advanced biofuels could create millions of jobs

State of Green Business Report 2012

London, 19 January 2012

The fifth annual edition of the State of Green Business report continues efforts to measure the environmental impacts of the emerging green economy. In addition to documenting what progress companies are making -- if any -- in improving their environmental performance, we track larger trends that will affect corporate America in 2012.

Read more: State of Green Business Report 2012

North American carbon market volume to double in 2012

Washington, January 2012: Thomson Reuters Point Carbon

This year, the Western Climate Initiative (WCI) will overtake the Regional Greenhouse Gas Initiative (RGGI) as America’s largest carbon market and there will be a near doubling of carbon traded in the US, predicts Thomson Reuters Point Carbon, the leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets.

Read more: North American carbon market volume to double in 2012

How will renewable energy fare in 2012?

London, 21 December 2011

Renewable energy is considered the future. The best way for us to combat climate change, survive the decline of oil and generally provide cheap, safer, secure energy. However the industry is still in its infancy and relies heavily on government subsidies and tax incentives.

Read more: How will renewable energy fare in 2012?

Supply from new mechanisms could overtake CER supply by 2030

Oslo, December 2011

Even as discussions in Durban on what should succeed the Kyoto Protocol appear as intractable as ever, momentum is building towards the emergence of new ways to tackle emissions in the developing world, beyond the Clean Development Mechanism ( CDM), in the shape of new crediting mechanisms.

Read more: Supply from new mechanisms could overtake CER supply by 2030

New policy approaches key to scale up renewable energy

London, 6 December 2011

Governments should consider scaling up of renewable energy as part of their robust economic development strategy, rather than as an environmental strategy with the secondary benefits of job creation. Such an approach is fundamental for attracting new private-sector investment to finance renewable projects at a scale that is needed to address climate change. Proven mechanisms should not be abandoned, but new policies have to target ways to reduce the risk-to-reward ratio in order to enhance private sector investor confidence for investment in large-scale renewable energy.

Read more: New policy approaches key to scale up renewable energy

Giving clean energy an affordable makeover

London, 29 November 2011: Reuters

Political will to tackle climate change by curbing greenhouse gas emissions, never very strong, has all but disappeared across much of North America and Western Europe in the last twelve months. Climate concerns have fallen victim to the recession. Fears about jobs, growth and the cost of switching to clean energy have undermined support for climate policies across the advanced industrial economies.

Clean energy is seen as an expensive luxury for households and businesses already burdened with rising fuel and food prices, stagnant incomes and falling pensions. Policymakers are responding by trying to repackage policies for limiting combustion of fossil fuels and encouraging uptake of renewable energy in terms of their benefits for energy security and affordability, rather than climate change alone. The focus is on making energy affordable for struggling consumers as well as saving the planet for future generations.

CLEAN AND AFFORDABLE

In an information paper on "Policy considerations for deploying renewables", published on November 23, the International Energy Agency ( IEA) put protecting the climate and other environmental issues third after energy security and encouraging economic development in its list of reasons why governments and consumers should take measures to increase the share of energy from renewable sources.

The authors emphasised the role of renewables in a diverse energy portfolio to limit the impact of supply disruptions and reduce the volatility associated with prices of fossil fuels.

"It is increasingly clear that having a significant share of renewables in a country's energy supply can increase energy availability by enhancing the overall diversification of the risk portfolio," according to the agency -- an argument borrowed from modern portfolio theory (MPT) in finance and extended to energy by the late Shimon Awerbuch.

The IEA argues there is an important place for renewables in the energy mix even if they remain more expensive. "The need for a portfolio-based approach makes it impossible to rely exclusively on the cheapest energy source. Such an approach would leave a country vulnerable to potential availability problems due to the imbalance in the portfolio."

In any event, the agency urges policymakers and consumers to take a long-term view on costs. "An energy system that will deliver energy at a very low price while putting the future of entire nations at stake cannot be seen as secure. A more relevant definition of energy security appropriately demands that the long-term consequences of a given strategy be taken into account, which allows for more informed decision-making".

The paper seeks to redress the negative emphasis on the costs of switching to clean energy by talking up savings from lower spending on fossil fuels as well as benefits from the creation of "new markets" reconciling limited natural resources with economic growth, something it calls green growth.

The aim is to rebrand clean energy as affordable energy, something that can spur economic growth and employment rather than damaging competitiveness and jobs.

UK ENERGY STATEMENT

The same rebranding exercise is underway in the United Kingdom. The country has been hit hard by the recession, but the energy ministry is in the hands of the Liberal Democrat party, which is fervently committed to policies limiting greenhouse emissions.

Rising fuel costs have become a politically sensitive issue, and it is unclear how far voters support the government's green energy agenda if it means higher bills for gas, electricity and transport.

So Britain's energy minister Chris Huhne used his annual statement to parliament on energy strategy on November 23 to shift the focus onto clean energy as affordable energy. Sidelining global warming, Huhne insisted "the consumer is at the heart of everything we do. The decisions we make must ensure the consumer is protected as far as possible from rising prices."

"We will secure our energy at the lowest cost: in the short term by promoting competition. In the medium term, by insulating our homes. And in the long term by steering us away from excessive reliance on fossil fuels and onto clean, green and secure energy," Huhne told the House of Commons.

"Our vision is of a thriving and globally competitive low carbon economy: with cleaner energy, more efficient homes, and lower bills".

ACCENTUATE THE POSITIVE

In the last decade, climate change policies have often displayed a streak of Puritanism, emphasising the need to put up with high short-term switching costs to secure better outcomes in the distant future, 20 or even 50 years from now.

The strategy was never terribly effective. In advanced industrial economies where short-term consumer and voter gratification is uppermost in politicians' minds, the appetite for enduring short-term pain to secure long-term gain was never high.

To the frustration of climate scientists, voters and politicians apply a very high discount rate to future benefits. But the strategy has become completely unworkable as a result of the recession. Voters are far more focused on the short-term problems of jobs and income than long-term issues posed by rising global temperatures.

At the same time, the revolution in shale gas and oil has taken away fear about peaking fossil fuel supplies that helped support ambitious fossil fuel reduction strategies.

As the IEA explains "change is often said to be driven either by desperation or inspiration. In the energy sphere, change can be driven by concerns about supply security and the negative impacts of unstable energy prices and long-term energy access (desperation)...Change can also be stimulated by willingness to support actions to improve the global and local environment, or to provide stimulation for innovation and economic development (inspiration)".

In the current political and economic climate, there is no chance voters across the United States and much of Europe will back ambitious policies to curb emissions based on their long-range climate benefits alone. If emissions policies are to be sold to the electorate, it will have to be in terms of their ability to lower (not increase) the cost of energy in the medium and long-term.

GIVING UP ON CARBON, FOR NOW

While a few politicians like Huhne remain strongly committed, Britain toys with the idea of a floor on carbon prices to support nuclear and renewable energy, and the EU's Emissions Trading System (ETS) staggers on, the political momentum behind climate change policies has mostly vanished.

Carbon has even become a dirty word for climate investors and emissions traders, as my colleague Nina Chestney explained in a recent article: "In a sign of the tough times facing the carbon sector, the Carbon Markets and Investors' Association last month dropped the word "carbon" from its name," Chestney wrote.

Many other private sector organisations are reconsidering how they communicate. "(The shift) is mainly related to the negative image that was created around carbon markets in the U.S," according to Russel Mills, global director of energy and climate change policy at Dow Chemical.

"Energy security, clean energy and jobs from shale gas or efficiency are the only topics one can safely touch in Washington for the time being," he said. Rebranding emission controls in terms of energy efficiency and affordability is unlikely to save ambitious efforts to stem the rise in atmospheric carbon dioxide in the short term. Barring some catastrophic weather event, emissions policy is dead for at least the next 3-5 years.

If the scientific consensus is right, however, the rise in temperatures will not stop, so emission controls will eventually force their way back onto the agenda. But when they do, the packaging will be different -- more focus on energy efficiency, affordability and security, and less on appeals to altruism and saving the planet for future generations.

Ends --

By John Kemp, Reuters market analyst – for Commodities Now with permission.

The views expressed here are his own.

Scarcity & degradation of land and water: growing threat to food security

Rome, 28 November 2011

Widespread degradation and deepening scarcity of land and water resources have placed a number of key food production systems around the globe at risk, posing a profound challenge to the task of feeding a world population expected to reach 9 billion people by 2050, according to a new FAO report published today.

Read more: Scarcity & degradation of land and water: growing threat to food security

Giving clean energy an affordable makeover

London, 25 November 2011: Reuters

Political will to tackle climate change by curbing greenhouse gas emissions, never very strong, has all but disappeared across much of North America and Western Europe in the last twelve months. Climate concerns have fallen victim to the recession. Fears about jobs, growth and the cost of switching to clean energy have undermined support for climate policies across the advanced industrial economies.

Read more: Giving clean energy an affordable makeover