The European Union’s emission trading scheme (EU ETS) has hit a brick wall erected by the International Civil Aviation Organization (ICAO). In an October 4 resolution, the ICAO denied a country (or in this case, a region) the right to unilaterally include another country’s airline in its ETS. Instead, the ICAO committed to agree, in 2016, to a global emissions trading mechanism that would take effect in 2020. There is no guarantee, however, that such a system will be introduced, and that it would be as environmentally beneficial as an all-inclusive EU ETS.

Source: Dave Keeshan

This is widely perceived as a political defeat of the EU, which had offered to exclude from its scheme any emissions released outside of EU airspace, but to include all emissions within it. In doing so, the EU had hoped to reach an international deal, particularly with the United States and China, which have opposed inclusion of their airlines in the EU ETS.

The EU has justified the inclusion of foreign airlines in its ETS on the basis of the 1947 Chicago Convention on International Civil Aviation, which allows for each country’s sovereignty of its own airspace. Although the consequences of the ICAO resolution are unclear, the decision is poised to make enforcement of the EU ETS in the aviation sector much more difficult.

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airline emissions, EU-ETS, European Commission, European Union, greenhouse gas emissions, United States

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

The 40th anniversary of the Arab Oil Embargo offers a unique opportunity to reflect on four decades of developments in the energy sector in the United States and around the world. In many ways, the shock of the embargo helped reshape the world energy sector, yet four decades later many of the same problems faced in 1973 persist, especially in the United States.

The Oil Embargo forced gasoline rationing across the U.S. (source: Wikipedia)

To a large extent, fossil fuels continue to power global economic growth and energy security, and the competition for these resources remains a significant concern for governments around the world. Just as in 1973, the Organization of the Petroleum Exporting Countries (OPEC) and the oil that its member states produce continue to be an undeniable force in global geopolitics. OPEC’s hold over 81 percent of the world’s proven crude reserves gives it a largely unchecked control over international oil prices, which it achieves by setting OPEC-wide production targets.

Although OPEC has played a key role on the production side of the international oil market over the past four decades, the consumer landscape has changed dramatically since 1973. Significant economic growth in the developing world has led to increasing competition for energy resources. Oil demand in developing countries topped demand in the industrialized nations of the OECD for the first time ever in April 2013, a drastic change from just a decade ago when all developing countries combined consumed only two-thirds of the oil used in OECD member states (by volume).

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energy policy, Oil Embargo, renewable energy, United States

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

Here at the Asia Clean Energy Forum in the Philippines, President Obama’s speech on climate change has been greeted with enthusiasm.  In particular, his decision to redirect U.S. financing of coal fired power plants to expanding the use of clean energy in developing countries is seen as a signal that the U.S. understands that coal is risky and expensive—at a time when the costs of biomass, geothermal, solar, and wind power are declining rapidly.

The positive reaction to Obama’s initiative is hardly surprising: many Asian countries share the U.S. President’s concern about climate change: recent fires, droughts, and typhoons have devastated large areas, stirred public concern, and spurred governments to act.

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coal, energy policy, renewable energy, renewable energy finance, Southeast Asia, United States

In Berlin on Wednesday, President Obama emphasized America’s moral obligation to do more to avert a future of “more severe storms, more famine and floods, new waves of refugees, coastlines that vanish, oceans that rise.” Speaking from Washington, D.C., the top White House climate change adviser, Heather Zichal, followed this statement of intention with hints at more concrete actions, suggesting that President Obama will be implementing carbon dioxide regulations for existing power plants when he reveals his climate change strategy either on Tuesday or in the upcoming weeks.

President Obama, speaking in Berlin last week, reaffirmed commitment to action on climate change. (Source: Flickr user, Matthias Winkelmann)

The regulations on carbon emissions emitted by power plants, the largest individual point sources of carbon pollution in the United States, will be a conscientious step forward. However, with the carbon pollution standard for new power plants still under review, having been delayed past its original intended ruling date in April, the anticipated proposal for existing power plants will not only be even more costly and time consuming, but will likely be met with stronger resistance from Republicans, Democrats, and industries who are worried about the future of coal, slower job growth, and higher energy costs.

These power plant standards come at a time when concerns over climate change impacts are rising significantly.  In order to meet the 2°C Scenario – the official target of the United Nations Framework Convention on Climate Change (UNFCCC) to avoid serious climate change and irreversible damage – the United States would need to at least halve its current emissions (total 6.7 billion metric tons CO2 in 2011 and 5.3 billion metric tons CO2 in 2012), of which power plants accounted for 2.2 billion tons in 2011 and around a third in 2012.

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carbon standard, Climate Change, coal, emissions reductions, EPA, Germany, low-carbon, power plant, United States

The U.S. power grid is a modern engineering marvel, but it’s overdue for an overhaul. Participants at the recent Transactive Energy Conference in Portland, Oregon, came together to discuss the changing system and to develop the concept of transactive energy as the future of the grid.

Transactive Energy seeks to engage all devices and resources in the electrical grid in a market-based system. (Source: Edward Cazalet, "Transactive Energy: Public Policy and Market Design." May 2013)

As the first such conference of its kind, the gathering was initiated by defining exactly what transactive energy is. In an interview with Sustainable Business Oregon, Carl Imhoff, manager of the electricity infrastructure sector for Pacific Northwest National Laboratory and a moderator at the conference, provided a succinct definition: “Transactive energy is a means of using economic signals or incentives to engage all the intelligent devices in the power grid—from the consumer to the transmission system—to get a more optimal allocation of resources and engage demand in ways we haven’t been able to before.”

If consumers need proof of what a smarter grid could do for them, transactive energy is a concept that can provide it. Transactive energy systems integrate both utility-owned and third-party-owned resources—including power generation, ancillary services, and load management services, among others—in order to utilize the lowest-cost electricity in real time. The key driver of transactive energy systems is the market-based approach, which allows every service provided to the grid, even those by consumers, to be valued.

This way, those providing the services, whether they are generating power or providing load reduction services or something else, can be compensated, thus splitting the benefits and savings of the increased efficiency of the electricity system between the customer and the utility. This system is a long way from the traditional unidirectional flow of power (from utility companies to consumers) and supply side-focused mindset of the historical electricity sector.

Employing the increasingly prevalent two-way information and communications technology deployed as part of smart grid development efforts, consumers can begin to interact within the electricity system in ways that were not possible in the past. A transactive energy system utilizes smart grid infrastructure to send signals back and forth between utilities, grid operators, and individual assets in the grid system, communicating the real-time flow and cost of power.

These assets can include everything from large centralized power plants to residential solar photovoltaic arrays to demand-response programs. Signals can even be sent to and from electric vehicles (EV), integrating EVs into the electrical grid.  In a transactive energy system, instead of being passive energy consumers, you and I could become what are being referred to as “prosumers,” not only receiving electricity from the grid, but providing our own services to the grid system and getting paid for it. 

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electricity, energy, energy efficiency, grid, Innovation, renewable energy, transactive energy, United States, utilities

Having just returned from my second clean energy finance summit this year, I was relieved to find that despite the rumors, the renewable energy industries aren’t dying—indeed they’re booming.

Source: Michael Liebreich BNEF Summit Keynote, 23 April 2013

In 2012, according to Bloomberg New Energy Finance, $269 billion flowed into the clean energy sector worldwide—a big number by any standard.  Total global investment in renewable generating capacity now lags total investment in coal, oil, and gas generation combined by only 25 percent. With that much money you could purchase Google or Microsoft outright.

While clean energy investment in 2012 was down 11 percent from 2011, it is still 44 percent above the 2009 figure and 230 percent higher than it was in 2005.  Moreover, virtually all of the decline stems from the sharply falling prices for solar and wind equipment—a trend that in the long run will accelerate growth. While clean energy growth has understandably slowed from the extraordinary double-digit rates of the past decade, this remains one of the world’s largest and most dynamic industrial sectors.

The one dark cloud that hovered over both conferences (the Cleantech Investor Summit in Palm Springs and the Bloomberg New Energy Finance Summit in New York) was the United States, where declining government support and the uncertainty generated by a dysfunctional Congress led to a sharp decline in financing in 2012.  While the falling investment figures do presage a slowdown inU.S. clean energy growth in the next two years, it is still notable that theU.S. added more renewable capacity than any other single country last year.

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BNEF, energy, green economy, renewable energy, renewable energy finance, United States

Germany has seen success with solar power, despite having about the equivalent solar resource of Alaska. The U.S. contains vast solar resources, but could use more federal policies to utilize this renewable resource. Trans-Atlantic collaboration could boost the transition to sustainable energy systems on both sides of the Pond. (Source: German-American Chambers of Commerce)

The U.S. and Germany are obligated, as two of the largest economies and historic emitters of greenhouse gas emissions in the world, to lead the global transition to cleaner power systems. Their success or failure in transforming energy systems has immense global signaling effects. Closer cooperation in this innovative sector could revamp a faltering historic partnership.

Germany’s chosen path to a clean energy future is ambitious and unprecedented amongst industrialized countries. The government passed a series of measures in 2011 to simultaneously move away from fossil fuels and phase out nuclear power. Renewable energy is to become the backbone of the country’s energy system – at least 60 percent of the nation’s primary energy consumption and 80 percent of electricity are to come from renewables in 2050. Meanwhile, the last nuclear reactor is to be shut down in 2022. (See the table below for an overview of German energy policy goals).

The country is already a leader in renewable energies. Few countries have a greater installed per capita capacity of renewables, excluding hydropower, than does Germany. Moreover, the government also envisions energy efficiency to be a key component in enabling the clean energy transition. Germany aims to reduce primary energy consumption by 50 percent by 2050 and increase energy productivity, or the GDP produced per unit of energy, by 2.1 percent per year.

The U.S. trails German ambition and lacks a federal clean energy strategy, but is nonetheless one of the most important and dynamic renewable energy markets in the world. As of the end of 2011, the U.S. led the world in installed biomass and geothermal power capacity, ranked second in total installed renewable power as well as wind power capacity, third in hydropower, and fifth in solar photovoltaic (PV) capacity. While total emissions in the U.S. have historically been higher than most other countries, no other country has seen a larger drop in energy-related greenhouse gas emissions over the past five years. Shifts from coal to natural gas in the power sector, as well as fuel efficiency improvements in the transportation sector, are the main reason for this reduction, but growing investments in renewable energies also contributed to this positive trend.

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energy, Europe, Germany, renewable energy, transatlantic power series, transatlantic relations, United States

A video circulated recently in which a Fox Business Network analyst made the laughable assertion that Germany’s success with solar power is due to its abundant solar resources (for those missing the humor here, Germany has about the equivalent solar resource of Alaska). While the gaff elicited plenty of chuckles from around the energy sector, the analyst also made another claim that received less attention, but may be similarly incorrect.

Shale gas operations, such as the one above, are multiplying across the U.S. But will unconventional gas resources produce as much energy as is typically touted? (Source: Flickr user Nexen)

In trying to make the argument that the United States should pursue natural gas as opposed to solar power for electricity generation, the Fox analyst states: “Now people are saying, well, solar may be dead in the water. What’s going to happen with nat. gas? You guys know this very well; we have a hundred years of energy.… Let’s take our focus off of solar, let’s move it to nat. gas, and let’s get this economy going.” (We can, for the sake of argument here, ignore the many other nuances in this debate, such as the fact that the U.S. Southwest has some of the best solar resources in the world, and that natural gas and solar are actually complementary technologies and are in no way mutually exclusive.)

The claim that natural gas resources will provide the United States with 100 years of energy is often thrown around (and not just by a fossil fuel-happy news organization like Fox) thanks to recent technological advancements in hydraulic fracturing and horizontal drilling techniques that sparked the so-called “shale revolution.” Shale gas now accounts for almost 40 percent of U.S. natural gas production and has reversed the trend of declining gas production numbers.

However, the estimated amount of natural gas that is available is not a hard number, and the upswing in gas production may not be as long-term a trend as many people believe. In January 2012, the U.S. Energy Information Administration slashed its estimate of unproven technically recoverable shale gas resources by 42 percent. This new estimate, along with proven shale gas reserves, amounts to 579 trillion cubic feet of available natural gas.

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energy, LNG, natural gas, renewable energy, shale gas, unconventional gas, United States