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Category: Energy Matters

  • A new Revolution: China hikes Wind and Solar Power Targets

     

    With renewable energy in China continuing to struggle to compete with cheap, coal-fired power generation due to the country’s coal reserves, over the last decade, China’s policy makers have made considerable efforts to expand its renewable energy sector. Such efforts are not only driven by pollution problems and pressure on the country to reduce greenhouse gas emissions, but also by the desire to reduce reliance on imported oil. Despite being the world’s fifth largest oil producing country, China is currently forced to import nearly half of its oil demand. As a result, ‘green power’ is viewed as an issue of long term energy security.

    Green Power as National Policy

    Since the commencement of China’s power industry reform in 2002, various policy plans, laws and regulations which specifically address the renewable energy sector have been published.

    The outline for the 11th Five-Year Plan for National Economy and Social Development, announced by the State Council in 2006, states that the government plans to accelerate the development of renewable energy sources and to increase the percentage of energy consumption from renewable energy generation. To realize this goal, the National Development and Reform Commission (NDRC) released its ‘Medium and Long-Term Development Plan for Renewable Energy’ in August 2007. The plan sets specific targets for 2020, such as 30 GW installed capacity for wind power, 300 GW for hydroelectric power and 1.8 GW for solar power, raising the proportion of renewable energy in primary energy consumption to 10% by 2010 and 15% by 2020. To achieve these objectives, the plan contains a commitment to invest approximately US$200 billion in the sector and establish a ‘mandated market share’ policy which sets targets for electricity from non-hydro renewable sources at 3% by 2010 and 5% by 2020.

    The most influential vehicle, however, for the promotion of cleaner energy technologies has been proven to be the Renewable Energy Law and its implementing regulations. The Renewable Energy Law came into effect in January 2006 and reiterates the importance of established and future medium and long-term targets set by government authorities for the development and utilization of renewable energies.

    The law itself contains a clear commitment to provide special funds and offers financial incentives to stimulate renewable energy development, including discounted lending, the details of which have been set out in various regulations. Amongst other measures, in May 2006, the Ministry of Finance (MoF) issued regulations to initiate a national programme and provide financial incentives to the renewable energy sector. Under these regulations, sponsors of renewable energy projects can apply for either donor funds or discount loans with the local department of energy and the local department of finance.

    Preferential tax treatment is also available: renewable energy projects are entitled to benefit from a 50% reduction of the VAT levied on electricity generation. In addition, current tax regulations provide tax concessions of a three year exemption plus three years taxation at 50% of the full tax rate for enterprises engaging in projects involving power stations utilizing renewable energy.

    Other important elements of the Renewable Energy Law include purchase obligations on the grid companies and a regime for feed-in tariffs.

    Thus, under the legislation, grid companies are generally obliged to purchase the full amount of electricity generated from renewable energy projects that are located in the areas covered by their grids and must provide grid-connection services and related technical support.

    The law further stipulates feed-in tariffs for renewable energies shall be determined by the relevant administrative authorities in accordance with the principle of promoting the development and utilization of renewable energy. In implementing these principles, different pricing mechanisms have been established for various types of renewable energy.

    For solar PV and solar thermal power projects, a feed-in tariff, based on the principle of reasonable production cost plus reasonable profit, is set by the pricing department of the State Council once a solar power project has been approved. Obviously, this approach does not provide a high level of certainty to investors as to whether a project will be approved; nor, once a project has been approved, as to whether it will receive a feed-in price allowing it to become profitable. However, the given reason for why this approach (rather than a guaranteed-margin price with the market determining project uptake) should be adopted is that solar power remains too expensive to be supported by set feed-in prices alone, given that such prices would require additional financial support, such as government funding.

    In 2001, a different approach was introduced by NDRC for large-scale wind energy projects through the concession project programme. In effect from 2003, essentially this concession model is a competitive tender system under which renewable energy developers must submit proposals for wind energy projects of 100 MW and above. The government selects potential investors through a competitive bidding process, taking power price and domestic content as the key criteria, and the purchase of all electricity generated by the project is then guaranteed through long-term power purchase agreements. The applicable feed-in tariffs are determined depending on two different periods during the project’s lifetime (typically 25 years): during the first period, the feed-in tariff is the bidding price proposed by the winning bidder up to an electricity generation level of 30,000 accumulative equivalent full load hours; thereafter, the feed-in tariff is set as the average electricity price of the local grid at that time.

    Most recently, however, a benchmark system has been introduced for feed-in tariffs for wind power. Under a circular issued by the NDRC on 20 July 2009, feed-in tariffs for wind power projects approved from 1 August 2009 onwards are fixed on a centrally-determined price basis. The circular divides China into four different types of wind-power resource areas, based on their wind resources, and stipulates different prices for each of these areas and ranging from 0.51 yuan/kWh for wind power in regions with the most wind resources, such as Inner Mongolia, to 0.61 yuan/kWh for regions with the least wind resources (US cent 7.5–8.9/kWh). Furthermore, according to a recent statement, NDRC is planning to establish a similar framework for large-scale solar PV projects soon.

    In the past, the concession model had been criticized for resulting in downward pressure, not only on price but also on quality. Although the Chinese government intended to select the most suitable wind farm developer by way of tendering, in practice, the main selection criterion became the lowest on-grid price offered, resulting in wind parks not operating profitably and in a lack of further capital investment and related research and development. The latest step of setting up fixed feed-in tariffs, which lie above the average offers of the successful bidders in past public tenders, is therefore seen as a measure to improve the quality of the installed turbines and to further attract investment and R&D in wind parks and their development.

    Solar tibetOther Influences on Development

    In order to achieve additional benefits, it is usually intended for renewable energy generation projects in China to be recognized and registered as Clean Development Mechanism projects, a mechanism established under the Kyoto Protocol. This has been of particular relevance for wind power generation projects. Once the project has been approved by the NDRC and registered with the CDM Executive Board (an international body set up by the United Nations Framework Convention on Climate Change), the Certified Emissions Certificates (CER) obtained can be traded on the secondary CER market.

    In addition, although not directly related to clean energy, clean energy projects have also benefited from China’s Property Law (promulgated in 2007) which largely improved the legal and regulatory environment for secured lending. The new law expanded the scope of security over property and provided for the definition of mortgageable assets to include any property, property rights and assets associated with property rights, unless specifically prohibited by laws or regulations. The new law also introduced the possibility of creating a security over present and future assets and effectively established the previously unrecognized concept of ‘floating charges’ in China. This new concept enables a renewable energy project lender to take a security interest over all of the project company’s assets then existing or thereafter acquired.

    The international financial crisis, which (because of its impact on export demand) has strongly affected China’s economy, has certainly also had an impact on the Chinese renewable energy sector.

    In particular, Chinese solar panel manufacturers saw dramatic changes. After years of unsatisfied demand, China’s PV industry, like so many of the country’s export industries, has been hit hard by diminished overseas demand and the lack of a domestic market. According to some reports, 50%–90% of China’s estimated 350 – 400 solar PV manufacturers have gone out of business since October 2008.

    In the wind power sector, declining prices for CERs caused some foreign companies to exit the Chinese wind farm development business. This exodus is largely explained on the basis that oil prices declined, credit became increasingly difficult to obtain (and costly to acquire) and an overall reduction in energy use occurred together with falling power prices throughout China.

    Mandated Markets

    Despite this confluence of events, the impact on the domestic wind power industry has been limited. In part this is attributable to the fact that the development of the Chinese wind industry is in large measure directed by the central government and 80% of the market is concentrated in large state-owned enterprises. Furthermore, the decision of the Chinese leadership to forge ahead with renewable energy development has also played its part in allocating a reported $146 billion (out of the $590 billion economic stimulus fund announced by the Chinese government in November 2008) to the renewable energy sector.

    In line with this, chief policy makers have been recently cited as saying that the NDRC is in the process of drafting a plan for the development of the renewable energy sector, revising earlier targets and now contemplating targets which are more than threefold the level of these earlier versions. Officials have stated that the new goal for 2020 could amount to as much as 100 GW installed capacity for wind energy (as opposed to 30 GW in the 2007 plan) and 20 GW for solar energy (as opposed to 1.8 GW in the 2007 plan). The plan has, however, not yet been published and its details remain opaque.

    Nonetheless, according to statements made by government officials in May this year, the National Energy Bureau has finalized a solar energy promotion plan which aims to turn China into a leading global harvester of the world’s most abundant energy source. Given the confluence of lower production costs and a decreasing overseas demand, such a plan would represent a welcome boost for domestic solar deployment.

    However, concerns remain as details of the plan are yet to be made public as REW goes to press For example, although in March 2009 the government thrilled the industry with a pledge to subsidize roof-mounted panels, it has still not made clear whether such subsidies were a one-off or a permanent programme. Some industry reports then stated that the budget for such subsidies is to be capped at yuan 2.5 billion ($366 million), limiting installations under the programme to around 180 MW. In addition, the announcement failed to explain whether and how projects under the subsidy programme would be linked to the electricity grid.

    Even more ambitious plans are in place with the government intending for it to be pushed forward through large-scale wind parks. According to reports, China plans to build seven wind power ‘mega projects’ with a minimum capacity of 10 GW each by 2020 in the provinces of Gansu, Hebei, Jilin, Jiangsu, Xinjiang and Inner Mongolia. Once completed in 2020, the seven bases will have a combined capacity of around 120 GW. This means that the government envisages wind energy to be a bigger source of power than nuclear power plants for which the capacity levels have been anticipated to reach around 60-70 GW by 2020. The earliest of these mega wind projects, a 10 GW wind farm in Juiquan, Gansu province, only recently received NDRC approval.

    Reports also stated that strong efforts to develop offshore wind power recourses are to be made. Given China’s long coastlines and vast oceanic areas, offshore wind power is seen to provide power to the economically well-developed eastern areas of the country which suffer from a shortage of fossil fuels. The construction of the Shanghai East Sea Bridge Wind Power Plant, where the first set of 34 wind power turbines began construction in March this year, is seen as a start for the development of offshore wind power generation.

    One of the remaining key issues which substantially impedes wind power generation is the deficient development of China’s power grids. The lack of a fully developed power grid in China causes difficulties in connecting the country’s wind farms which are mostly located in Inner Mongolia, Gansu and Xinjiang, with the wealthier, cities and towns on the east coast thousands of kilometres away. Recently, the Inner Mongolian government announced detailed plans to accelerate the construction of power grids and to increase transmission capacity. It is also expected that some of the funds under the central government’s stimulus package will go toward grid improvements and thereby facilitate the development of wind energy by supporting wind base projects located in remote areas.

    Turbines chineseForeign Investment Opportunities

    The enormous volume of the stimulus package announced by the central government in 2008 immediately raised hopes amongst foreign market players. However, foreign investments in this sector generally face a number of obstacles and uncertainty remains as to how much foreign companies can benefit from recent plans. Under the foreign guidance catalogue (a centrepiece of China’s foreign investment policy covering all industry sectors and specifically classifying investment projects into encouraged, permitted, restricted and prohibited categories), foreign investments in the renewable energy sector are mostly encouraged projects. Whereas foreign investments in power grids are restricted (a foreign investor can hold only a minority stake in a Chinese-foreign joint venture constructing or operating power grids), in particular the ‘operation of power stations using new sources of energy’ (including solar and wind power) belongs to the encouraged category. Principally, foreign investments into wind or solar farm projects as well as in the supply and manufacturing industry are therefore possible and can, in principle, benefit from the same investment incentives that are available for domestic companies.

    In fact, in the past, China’s wind power equipment manufacturing industry had been predominantly owned and operated by foreign companies. After several years of development, Chinese competitors caught up quickly and increased their market share to over 50% in 2007. This share is continuously increasing, supported by a policy implemented by the NDRC as early as July 2005 and which requires that 70% of the equipment for any wind farm project is produced in China. In addition, in April 2008, the MoF announced the elimination of tariff-free importation of wind turbines of less than 2.5 MW, a move further supporting the domestic wind turbine industry. At the beginning of 2009, international wind farm equipment manufacturers therefore raised their concerns. A statement by the president of the European Chamber of Commerce in China, who was cited in June this year saying that bidding criteria for wind projects were set in a way that made it difficult for foreign suppliers to win, caused some tension and was answered by Chinese trade organizations complaining about preferential treatment of foreign products by the authorities.

    It remains to be seen whether foreign market players in the wind manufacturing industry will be able to gain some of their earlier market shares back. Some hope comes from the most recent move towards a fixed price system for feed-in tariffs for wind power generation. Today, foreign wind farm equipment, although usually not capable of competing in price with Chinese products, is still generally considered to be at the forefront of technological development and preferable in terms of long-term cost efficiency. The latest introduction of fixed feed-in tariffs, aimed at improving the quality of the installed turbines, might therefore be generally welcomed by the international wind power manufacturing industry.

    Christian Zeppezauer is an Associate with Freshfields Bruckhaus Deringer LLP, Connie Carnabuci and Stuart Grider, both partners at Freshfields Bruckhaus Deringer LLP, also contributed.

    e-mail: christian.zeppezauer@freshfields.com, connie.carnabuci@freshfields.com, or stuart.grider@freshfields.com,

  • Fossil Fuel Subsidies more Than Double Those for Renewables

     

    More than half the subsidies for renewables—$16.8 billion—are attributable to corn-based ethanol. Of the fossil fuel subsidies, $70.2 billion went to traditional sources—such as coal and oil—and $2.3 billion went to carbon capture and storage.

    “The combination of subsidies—or ‘perverse incentives’— to develop fossil fuel energy sources, and a lack of sufficient incentives to develop renewable energy and promote energy efficiency, distorts energy policy in ways that have helped cause, and continue to exacerbate, our climate change problem,” said John Pendergrass, ELI senior attorney. “With climate change and energy legislation pending on Capitol Hill, our research suggests that more attention needs to be given to the existing perverse incentives for ‘dirty’ fuels in the U.S. Tax Code.”

    The subsidies examined fall into two categories: foregone revenues, mostly in the form of tax breaks and direct spending, in the form of expenditures on research and development and other programs.

    ELI researchers applied the conventional definitions of fossil fuels and renewable energy. Fossil fuels include petroleum and its byproducts, natural gas, and coal products, while renewable fuels include wind, solar, biofuels and biomass, hydropower, and geothermal energy production.

    For more information on the research from ELI, click here.

     

  • Welsh construction centre leads field in sustainability

    The new £3.1 million Construction and Sustainable Energy Centre at Pembroke College, Haverfordwest, opened in June by environment minister Jane Davidson, is an object lesson in reconciliation and symbiosis. Dedicated to learning the tools of a traditionally environmentally unfriendly trade, it is nevertheless one of the most sustainable buildings of its kind in the UK, an object lesson in and of itself, and a blueprint for a greener construction industry.

    The second phase of a £30 million redevelopment currently ongoing at the college, the Construction Centre looks to all intents and purposes like any other modern college outbuilding: unassuming and functional. If you didn’t know you were entering the first further education building in the UK to have won a BREEAM (Building Research Establishment Environmental Assessment Method) rating of Excellent, in 2008, you probably wouldn’t think twice about it.

    The build is certainly traditional enough, with its steel frame and cavity construction infill, but the feel of the building is different. For a start it’s open and airy, the perfect learning environment. It has a sophisticated daylight-linked lighting control, so lights turns themselves on and off according to motion sensors, become dimmer and brighter according to how much sun there is or how close to windows they are. Urinals are waterless, while flush toilets use rainwater topped up with mains water when necessary. It has good thermal properties, with 100mm of wall insulation, 150mm in the roof and 150mm in the floors, and well-aired, high-ceilinged rooms, so it’s warm in the winter, cool in the summer. Energy consumption is so low that solar panels are not required other than to heat tap water.

    Outside is a silo for holding up to 17 tonnes of wood pellets, which are fed into a 300kW wood-fired boiler with the capacity to heat the Construction Centre, the next-door Innovation Centre and, when it’s constructed, the new Engineering Centre – phase three in the redevelopment plan. The potash produced once the pellets are burned is used as fertiliser on the college’s flowerbeds.

    The building was designed specifically to accommodate carpentry and brickwork students, and the green innovations they see all around them are part of the message that is gradually seeping into the industry: that sustainability in the way we build, teach and live is the way forward. The lessons they learn here will inform a new generation of more environment-conscious architects, carpenters and construction workers.

    The repercussions of the building are being felt already. Most building projects are sustainable only while on the architect’s drawing board, but construction company Dawnus was expected by BREEAM to monitor site management procedures, water and electricity usage, recycling and waste management procedures and recycling of waste… It was a steep learning curve that paid off with the Excellent rating, and now the company has trained up its own BREEAM assessor for future projects.

    ‘A lot of contractors might have said that BREEAM was a waste of time, whereas Dawnus had a much more positive outlook,’ says Paul Bullock of Bullock Consulting Ltd, who advised on the mechanical and electrical side of the project. ‘They can see it’s the future, it’s a case of sink or swim, and what they’ve created is a blueprint for future buildings.’

    ‘It only took six months to build and was a masterclass for our construction students in how to get something done quickly, and done well,’ agrees Pembroke College’s Laurence Rook. ‘Everyone is really pleased with the result.’

    Seventy per cent of the building’s funding came courtesy of a capital grant from the Welsh Assembly Government. The Department for Business Enterprise and Regulatory Reform’s low-carbon building programme helped pay for the renewable technologies.

    ‘This building represents the next step in education thinking, the realisation of a vision for our environment and our young people,’ said environment minister Jane Davidson AM, opening the building in June. ‘This building is exciting in that it shows the direction we are travelling. It is energy efficient, relies on biomass heating and reuses rainwater. In other words it is sustainable and represents the future of new buildings across Wales.’

    ‘It’s a real live building and the data generated from it is available for comparative analysis and benchmarking, so we can talk the talk and walk the walk,’ says Paul Robinson, head of school for construction, environment and design. ‘Most newbuild construction campuses in Wales and beyond will probably be modelled on this in the future. Whether in terms of BREEAM ratings or financial incentives, there’s real value in being sustainable. We can show the builders of the future that this is sustainable technology is in action.’

     

  • Governments failure to acknowledge oil supply crunch risks conflict and threatens the climate

     

     

    Governments and multi-lateral agencies have failed to recognise the imminence and scale of the global oil supply crunch, and most of them remain completely unprepared for its consequences. The report calls for governments to officially acknowledge the crunch and to shift urgently into safe sustainable energy alternatives.

    “The world’s governments have been asleep at the wheel. Their collective failure to recognise the imminent end of the oil age means we have lost a decade in which action could have been taken to develop alternatives and avert the worst outcomes of a dramatic drop off in the supply of oil,” said Simon Taylor,  Director of Global Witness. “Recognition of the oil supply crunch would have injected a sense of urgency and increased ambition for safer emissions reduction targets, both of which are sorely missing in the lead up to Copenhagen.”

    For most of the past decade, the International Energy Agency (IEA) held an over-confident view about future oil production.  But starting in 2007 and most dramatically in 2008, its position began to shift, when it projected a near 50% decline in conventional oil production by 2020 and a significant potential gap between supply and demand by 2015. [2] These factors should have rung alarm bells, yet the apparent lack of government response has been astonishing. 

    The report argues that it was a long-overdue breakthrough for the IEA to acknowledge the imminence of an oil supply crunch. But their suggested remedy of investment of over a billion dollars every day to 2030 is highly unlikely to bridge the supply-demand gap. [3] Massive investment cannot change the underlying fundamentals which clearly indicate a need to move away from oil.  Global Witness blames governments for not facing up to these factors and recommends that rather than spending increasingly large sums of money chasing increasingly hard to reach oil, the world should be investing in safe and sustainable alternatives.

    “A world without enough oil is unlikely to be a peaceful place. Our near-total dependence on oil for food production and transport mean that decreasing availability of oil is likely to lead to food shortages and increased geopolitical tension. It threatens the nascent global governance reform agenda and could cause major international conflict over resources. The poorest will be pushed to the back of the queue and inequality will grow, which in turn will feed social unrest,” said Charmian Gooch, Director of Global Witness.

    / Ends

    Contacts: Simon Taylor: +44 7957 142 121; Charmian Gooch: +44 20 7492 5878, or +44 7841 423 098; Amy Barry: +44 20 7492 5858 or +44 7980 664 397

    Download the report

    Notes:

  • Biomethane as an energy carrier

     

    Even though most of our natural gas is now fossil fuel, a doubling of efficiency would be just as effective as achieving 50% renewable power as far as global warming is concerned. We can simultaneously work on greening our gas supply by feeding more and more biomethane into the pipeline.  In Germany 22 billion kWh of biogas were produced in 2007. That’s a six-fold increase from 1999, driven partly by feed-in tariffs. About half of that biomethane was from landfill and sewage gas and the other half was from commercial and agricultural biomass plants. Renewable biogas is produced by natural processes of anaerobic digestion or gasification then cleaned up for sale to the gas pipeline. Sweden already gets 25% of their energy from biogas.

    Energy storage is another big advantage of gas. Both the gas and the electricity grids need energy storage to take up the slack between production and consumption. Gas storage is cheap because it can simply be pumped into depleted gas wells and salt caverns. We are already storing 4.1 Tcf of gas in the US. At 85% efficiency that gas could produce 1,180 gigawatt-hours of useful power on demand. A very cheap battery!  The smart electrical grid is all about making supply match demand because electrical storage is so expensive.

    Though the U.S. power grid uses significant hydro power and other renewables, CO2 emissions are still almost twice as much per kilowatt-hour as a 60% efficient natural gas fuel cell. In 2007 the U.S. power grid emitted 605 grams/kWh. The fuel cell emits only 340 grams. EIA data makes it easy to track the effects of our attempts to green the electric grid: In 1996 we emitted 627 grams of CO2 per kWh and by 2007 this was reduced to 605 grams. That’s a 2-gram per year decrease. If we continue at that rate, it will take 139 years to equal what we can do now with a fuel cell. Recent years show even less progress. There was no improvement between 2006 and 2007. Plugging into the grid is, unfortunately, a bit like plugging into a lump of coal.

    People have already begun selling renewable gas into the pipeline.  Landfills, manure piles and sewage plants that used to release significant amounts of methane into the atmosphere are now selling it as green gas. Biomass and garbage can also be gasified to add to the supply. The energy balance of Grass Biomethane production is 50% better than annual crops now used. When biogas is captured instead of releasing it to the atmosphere we get a double bonus. Methane is 72 times worse than CO2 as a cause of global warming in a 20-year time frame. You may have heard 25 times, but that’s based on a 100-year time frame. Methane only persists about 8 years. Also, when manure piles are covered, N²O, which is 289 times worse than CO², can also be captured. Coal mines emit almost a trillion cubic feet of methane into the atmosphere every year.

    In Cincinnati, Ohio, the 230-acre Rumpke landfill has been capped and the gas is cleaned and delivered to the pipeline to provide enough gas for 25,000 Duke Energy customers. China has an estimated 31 million biogas digesters mostly on small farms. They produce in total about 9 Gigawatts of renewable energy which is mostly used locally. Germany, Denmark, Sweden, Finland and now Ontario, Canada have feed-in tarrifs to encourage production of biogas. In Germany small farms can receive up to 25 cents per kWh for biopower. In the US, bills like SB306 that support biogas production, are still stuck in committee.

    Increased system efficiency means we will need less of these renewable sources to do the job. If we’re going to gasify biomass, it is more efficient to upgrade the gas and send it through the gas grid to customer CHP units than to generate electricity less efficiently and send it over less efficient, more expensive power lines to the customer. Until we get more efficient electrical generators, generation should always be done where the waste heat can be put to good use.

    Electric cars would be twice as efficient if they fueled up with natural gas and used a fuel cell to recharge a small battery. Like a hybrid with a natural gas fuel cell range extender. The expense and weight of a large battery is eliminated and the energy can be stored in a much lighter and cheaper tank. Refuelling can be much faster and could even be done at home from your natural gas connection. New, low pressure, adsorption tanks make this easy because they only require 500 psi of pressure. Recharging is a problem with batteries.  A 110v, 20A household plug can only supply 2.2 kW, which means that 10 hours of home charging will only take you 10 x 2.2 x 4 mi/kW = 88 miles. Natural gas refueling infrastructure is in place in much of the world to refuel five million vehicles worldwide.

    We already have prototype hydrogen cars that work on a similar principle but hydrogen has virtually no refueling infrastructure. Hydrogen is very expensive to produce, store and transport. Its tiny molecules find the smallest leaks and fly into space. They embrittle pipeline metals by nestling into the metal matrix. Storage is extremely inefficient, requiring extremely high pressure tanks or cryonic vessels. One giant hydrogen delivery truck can service about ten customers.  Methane has one carbon atom that holds four hydrogen atoms in a tight formation making containment and dense storage easy. A gallon of liquid methane actually holds 2.5 times as much hydrogen as a gallon of liquid hydrogen!

    “No carbon emissions” sounded like a great idea but 95% of our hydrogen is made from natural gas and that process emits about 30% more CO² than if we simply burned the methane. Yes, you can make hydrogen from water with electricity (at about 70% efficiency.) But you can also make carbon-negative methane from CO² and hydrogen. When you burn it, the net result is carbon neutral. The “carbon-free” cleanness of hydrogen is an illusion. Building a hydrogen infrastructure now would be folly. Biomethane can do the job now and will be cleaner and cheaper.

  • Is the German Renewable Energy Industry in Jeopardy?

    Is the German Renewable Energy Industry in Jeopardy?

    by John Blau, European Contributor
    Berlin, Germany [RenewableEnergyWorld.com]

    Germany’s newly elected government could hinder the expansion of renewable energy in the country with its plans to extend the lifetime of nuclear reactors, warns the German Renewable Energy Federation (Bundesverband Erneuerbare Energie – BEE).

    “There has to be a commitment to a sustainable energy strategy.”

    — Claudia Kemfert, Energy Expert, German Institute of Economic Research

    “A lifetime extension of the nuclear plants would slow, if not completely halt, the expansion of renewable energy in Germany,” said BEE spokesman Daniel Kluge. “There’s a simple reason for this: We have more and more renewable energy companies generating and delivering more and more electricity. So letting nuclear reactors stay on the grid longer will only lead to congestion, with too many companies generating too much electricity.” Kluge and others in the industry worry that renewable energy upstarts could be the ones bumped aside.

    Not only an overabundance of electricity could undermine the growth of renewable energy, according to BEE, but also the investment strategies of Germany’s big energy companies, which, if given a choice between investing in next-generation green technologies or generating still more profits from amortized nuclear plants, could favor the latter.

    Big German energy companies, such as E.ON and RWE, have been investing in wind turbines, most recently in huge offshore wind parks, but have been less enthusiastic about solar energy. Currently, renewable energy accounts for around 15 percent of the electricity generated in Germany, with more than 50 percent still coming from coal.

    If the country’s energy giants are allowed to keep their amortized nuclear plants on the grid longer, they stand to make big profits. The state bank WestLB estimates that E.ON, for instance, could earn an extra €8.6 billion [US $12.6 billion] if its reactors were extended an additional eight years. Germany still has 17 nuclear reactors delivering power to its nationwide electricity grid. Several of them are scheduled to be shut down over the next few years.

    German energy utilities have long voiced their opposition to a law, passed in 2002 under former Social Democratic (SPD) Chancellor Gerhard Schröder, that ended the construction of new nuclear power plants and required all plants to be shut down by the early 2020s.

    Last Tuesday, Jürgen Grossman, chief executive officer of RWE, called for extending reactor lifetimes. “I think one should use (energy) facilities as long as they are safe,” he said on the German public television station ARD.  “Nuclear energy is part of…an energy mix. I think it is necessary to talk about extending the lifetimes of all reactors.”

    Those remarks came just two days after the general election, which ended a complex coalition government of liberals and conservatives and gave right-of-center Chancellor Angela Merkel an additional four years to govern. RWE is a member of Germany’s Big Four energy producers, including E.ON, EnBW and Vattenfall, all known supporters of the Christian Democratic Union (CDU), its sister party the Christian Social Union (CSU) and their preferred coalition partner, the equally pro-business Federal Democratic Party (FDP).

    In the run-up to the election, the parties made their position clear on nuclear energy: It is — and will remain for some time — an essential part of a balanced energy mix. In a television interview following the election, Chancellor Merkel referred to nuclear energy as “a transition technology,” which Germany will require for “a certain time.” Rumors floating around Berlin put the nuclear lifetime extension at between eight and 10 years.

    While most renewable energy companies in Germany are worried about the impact of an extension, some energy experts believe it could benefit the sector. One way, according to Claudia Kemfert, an energy expert at the German Institute of Economic Research (Deutsches Institut für Wirtschaftsforschung – DIW), would be for a chunk of the additional profits to go into a special fund or foundation that, in turn, would allocate money to areas such as energy research and infrastructure expansion. Kemfert warns that an extension of the lifetime for nuclear energy “must be connected to certain conditions” such as a fund and how it is allocated. “There has to be a commitment to a sustainable energy strategy,” she said.

    Not everyone buys that argument, however. In particular, BEE points out that Germany’s big electricity producers and grid operators are mandated by law to invest in maintaining and expanding infrastructure. “They already collect enough money for their infrastructure obligations,” Kluge said. “And they don’t even spend all of that.”

    Kluge argues that Germany’s renewable energy sector doesn’t need additional money but rather a continued commitment to the country’s Renewable Energy Law (Erneuerbare-Energien-Gesetz or EEG). Under the EEG, grid operators must pay a government-set feed-in tariff to companies supplying energy to the grid from renewable sources.

    Kluge believes that while the government will look closely at the tariffs for wind, solar and other renewable energy sources, and make necessary changes based on market developments, it plans no substantial changes. German lawmakers across the board, he adds, view renewable energy not only as a means to reduce the country’s reliance on foreign oil and, ultimately, nuclear power, but also as a job machine. Today, more than 280,000 people are employed in the sector. Earlier this year, outgoing SPD Environment Minister Sigmar Gabriel predicted the sector could have as many as 500,000 by 2020.

    “I don’t expect the government to change the Renewable Energy Law,” DIW’s Kemfert said. “The only issue that is really disputed is the feed-in tariff for solar, which many argue is too high. I can imagine the new government will seek a market-oriented feed-in tariff.”

    John Blau is a U.S. journalist based in Germany. He specializes in business, technology and environmental reporting and also produces extensive industry research. John has written extensively about environmental issues in Germany.