Significant price differences between regional natural gas markets have driven many European countries to increase coal consumption while decreasing use of natural gas (Source: BP).

Coal, natural gas, and oil accounted for 87 percent of global primary energy consumption in 2012 as the growth of worldwide energy use continued to slow due to the economic downturn. The relative weight of these energy sources keeps shifting, although the change was ever so slight. Natural gas increased its share of global primary energy consumption from 23.8 to 23.9 percent during 2012, coal rose from 29.7 to 29.9 percent, and oil fell from 33.4 to 33.1 percent. The International Energy Agency predicts that by 2017 coal will replace oil as the dominant primary energy source worldwide.

The shale revolution in the United States is reshaping global oil and gas markets. The United States produced oil at record levels in 2012 and is expected to overtake Russia as the world’s largest producer of oil and natural gas combined in 2013. Consequently, the country is importing decreasing amounts of these two fossil fuels, while using rising levels of its natural gas for power generation. This has led to price discrepancies between the American and European natural gas markets that in turn have prompted Europeans to increase their use of coal for power generation. Coal consumption, however, was dominated by China, which in 2012 for the first time accounted for more than half of the world’s coal use.

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China, coal, Europe, India, natural gas, oil, Russia, shale gas, United States

In early April, leading French nuclear company AREVA signed a series of strategic agreements with the China National Nuclear Corporation (CNNC) to foster a strategic civil nuclear partnership between France and China. With presidents Francois Hollande and Xi Jinping in attendance, the two governments finalized a letter of intent to build a facility for treating and recycling spent nuclear fuel in China.

Citizens protest nuclear energy in China.

Just three months after the agreement, China cancelled a planned China General Nuclear Power Group (CGN) nuclear fuel processing project in Heshan, Guangdong province, in the wake of opposition from local residents. Although China has both official support and the technological capacity for nuclear energy development, emerging public resistance to nuclear projects is an increasing challenge.

In 2011, nuclear power provided 13 percent of the world’s electricity, but less than 2 percent in China. The country still relies heavily on coal—accounting for 68.5 percent of electricity generation in 2012—because of its lower cost and greater accessibility. Meanwhile, China’s carbon emissions have grown at an average annual rate of 7 percent since 2000, reaching 7.57 billion tons in 2011, according to the International Energy Agency.

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China, Climate Policy, greenhouse gas emissions, nuclear power, wind power

Once celebrated as the best policy instrument for curbing harmful greenhouse gas emissions, emissions trading seems to be attracting new critics every week. Europe’s cap-and-trade scheme, the EU Emissions Trading System (EU ETS), has come under particular scrutiny. With carbon prices falling from around EUR 30 in 2008 to lows of under EUR 3 in April 2013, voices from within and outside of Europe are challenging not only the region’s choice of instrument, but also its willingness to take ambitious climate action.

Is all the criticism of Europe’s flagship policy justified? And are cap-and-trade schemes still the go-to climate policy that we should be promoting globally?

Critics are wrong to pronounce the demise of the EU ETS, but policymakers should go beyond small adjustment measures, such as the decision to temporarily hold back the sale of allowances, to fix its carbon price. Internationally, the importance of emissions trading is growing as new schemes emerge. Discussions of the benefits of emissions trading should make way for efforts to ensure the optimal design of new systems that can ultimately be interlinked.

Source: Environmental Defense Fund

Critics should remember that the most important job of cap-and-trade schemes is to ensure the reduction of greenhouse gas emissions. The EU emissions target is enforced through a mandatory emissions cap, a tightly controlled monitoring system, and heavy fines for non-compliance. The cap is declining by 1.74 percent year by year for the sectors covered under the scheme. Other policy initiatives—such as feed-in tariffs, renewable quota obligation, and energy efficiency laws—also contribute to emission reductions, but only the EU ETS can guarantee that the actual environmental target is met. The scheme serves as the backbone policy instrument to ensure that the EU remains on a predefined path of decarbonization.When setting interim targets, emission reductions from additional measures should be factored into the cap.

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California, China, Climate Policy, EU 20/20/20 policy, EU-ETS, European Union, GHG emissions, transatlantic power series

Solar and wind continue to dominate investment in new renewable capacity. Global use of solar and wind energy grew significantly in 2012. Solar power consumption increased by 58 percent, to 93 terrawatt-hours (TWh), while wind power increased by 18.1 percent, to 521.3 TWh.

Global investment in solar energy in 2012 was $140.4 billion, an 11 percent decline from 2011, and wind investment was down 10.1 percent, to $80.3 billion. Due to lower costs for both technologies, however, total installed capacities still grew sharply.

Solar and wind energy investments were down slightly in 2012, though installed capacities still grew sharply (Source: BNEF).

Solar photovoltaic (PV) installed capacity grew by 41 percent in 2012, reaching 100 gigawatts (GW). Installed PV capacity has grown by 900 percent since 2007. The countries with the most installed PV capacity today are Germany (32.4 GW), Italy (16.4 GW), the United States (7.2 GW), and China (7.0 GW). Concentrating solar thermal power (CSP) capacity reached 2.55 GW, with 970 megawatts (MW) alone added in 2012.

Europe remains dominant in solar, accounting for 76 percent of global solar power use in 2012. Germany alone accounted for 30 percent of the world’s solar power consumption, and Italy added the third most capacity of any country in 2012 (3.4 GW). Spain added the most CSP capacity (950 MW) in 2012 as well. However, Italy reached the subsidy cap for its feed-in tariff (FIT) program in June 2013, while Spain recently made a retroactive change in its FIT policies, meaning that growth in solar energy will likely slow in these countries in the near future.

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China, feed-in tariff, Germany, Italy, japan, renewable energy, renewable energy investment, renewable energy policy, solar power, Spain, United States, wind power