Farewell Carbon Pricing : Thu Apr 18, 2013 7:06 am  

Fairly surprised that nobody has raised the fact that the EU has just rejected a proposal which would have at least continued some pretence that the EU was serious about carbon emission abatement.

The price of carbon in the EU has crashed to around 3 Euros as a result of significant oversupply of carbon credits in the market (caused by the economic downturn in Europe reducing output and therefore demand for energy). This is at least 10 times and probably closer to 20 times lower than required for meaningful carbon abatement.

The proposal before the EU was to 'backload' carbon permits - essentially removing a significant volume from the market in order to tighten supply and therefore push up the price of carbon. The Parliament rejected the backloading proposal - which itself was seen as just the first step required to permanently reset carbon at a higher price.

As a result it can be fairly safely concluded that the EU is no longer seriously interested in reducing carbon emissions, and at the same time has probably permanently lost the "moral leadership" role it has played in carbon pricing. What chance any of the countries that matter - US, India or China - ever listening to western Europeans bleating about their carbon emissions when they are not willing to force carbon prices to meaningful levels simply because Europe is in recession?

As an interesting aside, the UK government was broadly in favour of the proposal (and actually proposed an even larger volume of backloading), whilst Germany was hugely split on the issue. Things are never quite what they seem though - the UK's position is largely because of the desire to make nuclear power more competitive (exactly what would happen under a high carbon price), whilst Germany has been fast-abandoning any practical large-scale green measures - its bringing online more than 5,000MW of coal generation this year alone as it focuses on the cost of energy.

[DaveO]

Re: Farewell Carbon Pricing : Thu Apr 18, 2013 11:53 am  

BrisbaneRhino wrote:

As an interesting aside, the UK government was broadly in favour of the proposal (and actually proposed an even larger volume of backloading), whilst Germany was hugely split on the issue. Things are never quite what they seem though - the UK's position is largely because of the desire to make nuclear power more competitive (exactly what would happen under a high carbon price), whilst Germany has been fast-abandoning any practical large-scale green measures - its bringing online more than 5,000MW of coal generation this year alone as it focuses on the cost of energy.

So the UK wanted to rig the market in favour of Nuclear? Doesn't this imply without said market rigging it is not cost effective?

As to Germany it was policy of the previous government to close Nuclear power stations for environmental reasons and domestic opposition to the idea of nuclear power anyway. Merkel was opposed to it but when the Fukushima disaster occurred she decided to go along with the policy of closure. The shortfall due to these closures was supposed to be made up from more efficient energy usage and the use if extensive wind farms. If they have had to go to coal in order to shut the nuclear plants down I'd be interested to know just how green or not these coal burners are going to be.

Re: Farewell Carbon Pricing : Thu Apr 18, 2013 6:50 pm  

This is all to do with climate change, right?

5 years ago this was all the rage.

Now, with most Western economies up the swanny without a certain instrument, no-one gives a flying french connection.

[DaveO]

Re: Farewell Carbon Pricing : Thu Apr 18, 2013 8:27 pm  

The Video Ref wrote:

This is all to do with climate change, right?

5 years ago this was all the rage.

Now, with most Western economies up the swanny without a certain instrument, no-one gives a flying french connection.

The Germans were after closing their Nuclear power stations well before the banking crisis. What they will put in place is the interesting question.

As to the UK and nuclear, that seems to be seen as a way to meet climate change targets for emissions but looks to be a costly option without rigging the market. So again it would be interesting to know why this option became the favoured one and what the cost of the alternatives is/was.

With this government I just feel there will be some market driven agenda that will put us in hock to private companies for decades. That is if there are any left interested in building any new reactors as the last time this was in the news it was due to them pulling out.

Re: Farewell Carbon Pricing : Thu Apr 18, 2013 8:46 pm  

DaveO wrote:

With this government I just feel there will be some market driven agenda that will put us in hock to private companies for decades. That is if there are any left interested in building any new reactors as the last time this was in the news it was due to them pulling out.

Hinckley C has been given the go ahead, including ALL planning approvals.

The only thing that is holding up the start is the long-term commitment to a guaranteed price per kW/hr. There's no doubt that we WILL be in hock for the future, equally there's no doubt that it's not just the incumbent government that will agree to the demanded price. The only ridiculous aspect to it all has been the government's insistence that it will be built with NO subsidies. If a guaranteed future price is not a subsidy, I don't know what is

Re: Farewell Carbon Pricing : Thu Apr 18, 2013 9:28 pm  

This is all so far above my head. You guys are all so smart. Well done.

Re: Farewell Carbon Pricing : Thu Apr 18, 2013 11:13 pm  

Using carbon pricing to push electricity prices to a level able to support nuclear power is exactly what the UK government wanted to do. Without such pricing, nuclear will always require some form of subsidy, as cod'ead alludes to.

As for Germany "what they are putting in place" is coal-fired generation on a large scale - i.e. the highest carbon-intensity large-scale generation technology currently available (natural gas at worst producing only 2/3 of the emssions of coal, and with more efficient CCGT plant less than half).

As I said, in any event carbon pricing has effectively ceased to exist in any meaningful way in Europe.

Unless Europe moves to a "direct action" approach (e.g. governments pushing investment in renewable technologies requiring significant subsidies) we'll all have to go along for the ride with increasing global carbon emissions and see if the climate change predictions are correct.

Re: Farewell Carbon Pricing : Fri Apr 19, 2013 6:16 am  

You need to look at the carbon capture technology now in place at Ferrybridge (which has been the trial plant) and now spreading to Drax.

[DaveO]

Re: Farewell Carbon Pricing : Fri Apr 19, 2013 9:27 am  

BrisbaneRhino wrote:

As for Germany "what they are putting in place" is coal-fired generation on a large scale - i.e. the highest carbon-intensity large-scale generation technology currently available (natural gas at worst producing only 2/3 of the emssions of coal, and with more efficient CCGT plant less than half).

Aren't you assuming the Germans will just pump the emissions out into the atmosphere and not attempt to mitigate them in any way?

I don't know of they are or not but it just seems odd to me that if a country such as Germany is starting to build coal fired power stations they will be building plants as dirty as we might expect in some third world country.

Given the cost of nuclear has anyone in the UK considered given the fact there is still many years of coal reserves left that were previously deemed too expensive to extract, that in comparison to nuclear that cost is now not out of order? If the technology exists to produce clean coal fired power stations I would certainly prefer that compared to nuclear if the cost is roughly the same.

Re: Farewell Carbon Pricing : Fri Apr 19, 2013 11:59 am  

DaveO wrote:

Aren't you assuming the Germans will just pump the emissions out into the atmosphere and not attempt to mitigate them in any way?

I don't know of they are or not but it just seems odd to me that if a country such as Germany is starting to build coal fired power stations they will be building plants as dirty as we might expect in some third world country.

Given the cost of nuclear has anyone in the UK considered given the fact there is still many years of coal reserves left that were previously deemed too expensive to extract, that in comparison to nuclear that cost is now not out of order? If the technology exists to produce clean coal fired power stations I would certainly prefer that compared to nuclear if the cost is roughly the same.

You are confusing emissions with pollution. The reference to carbon indicates generation of carbon dioxide in emissions. Whilst this is not a pollutant, it is the basis of carbon pricing in an effort to reduce greenhouse gas production.