The Committee on Climate Change released its latest report today highlighting the devastating impact the economic recession has had on carbon trading schemes and investment for low carbon technologies. The report emphasises the vast investment needed in efficiency through green housing, power and transport in Britain, to service the goal of meeting the commitments in the Climate Change Act.

The Committee has called for ‘dramatic improvements’ in efficiencies across the economy, suggesting that more ‘forceful’ policies may be required to increase annual cuts in emissions by four-fold.

The Committee also recommends

- The introduction of 1.7m electric cars, with 3.9m drivers trained in fuel-efficient techniques, by 2020

- Building 8,000 new wind turbines, alongside four new coal power stations fitted with carbon capture technology and three new nuclear power plants, to slash emissions from the power sector by 50% by 2020.

The Government’s largest proposed clean coal plant to be fitted with CCS was shelved by E.ON last week, also reportedly as a result of the recession. However, the announced delay in the Kingsnorth project, which had become the focus of protests against climate change, heavily targeted by climate camp activists and the media; leaves politicians wondering how they might fill the expected energy supply gap in 2016.

The recession has also had a significant impact on the world’s emissions trading schemes – expected to be pivotal in driving market signals for low carbon investment. The drop in energy consumption, which led to the shelving of the Kingsnorth project in the UK, has also led to a drop in emissions in Europe, resulting in a surplus of carbon credits in the EU ETS. It is feared that this might result in a carbon price of just €20 a tonne in 2020, rather than the €50 a tonne used for its previous analysis.

The Committee has suggested that options to strengthen the carbon price, including the government underwriting a minimum price or intervening in the electricity market, should be “seriously considered”. On Friday, a report from Ofgem suggesting domestic energy bills could rise 14-60% by 2020 was seen by energy industry experts as an acceptance that the market-driven system has failed and the government needs to be more interventionist.

So the recession has played its role in dampening the prospects of the low carbon investment opportunities, and strong leadership will be essential to deliver the ‘radical’ and ‘dramatic’ improvements that the Committee has demanded. With Ed Milliband’s small budget, and uncertainties over changes in government next year, the UK needs to dig deep to create green opportunities that rescue the nation from the dire straits, courtesy of the economic recession.

© Laura Padgett

Following two days of high-level discussions held in Washington at the beginning of last week, the U.S. and China signed an agreement to increase cooperation on climate change and energy.

These discussions were the first meeting in the China-U.S. Economic and Strategic Dialogue which was launched by Hu Jintao and Barak Obama at the G20 meeting in London in April, and are set to continue later this year. They consisted of two parallel tracks – an economic track, co-chaired by US Treasury Secretary Geithner and Chinese Vice Premier Wang Qishan; and a policy one, co-chaired by U.S. Secretary of State Hillary Clinton and Chinese State Councilor Dai Bingguo

In the Memorandum of Understanding (MoU) which was signed at the end of the meeting the two nations agree to “strengthen and coordinate our respective efforts to combat global climate change, promote clean and efficient energy, protect the environment and natural resources, and support environmentally sustainable and low-carbon economic growth”. The countries agree that cooperation between them is crucial to reaching these goals, and that they both have an important role in global negotiations. The document also states that this future cooperation will also strengthen and improve the relationship between China and the US, something that will benefit both countries in areas other than climate change as well.

As far as practicalities, the MoU doesn’t contain a whole lot of those. There are no exact targets and no detailed plans for cooperation other than stating that the two countries will “establish Climate Change Policy Dialogue and Cooperation as a platform for the United States and China to address global climate change and to identify and resolve areas of concern.”

So this agreement is no more than a general outline for future cooperation, which while it is definitely a step in the right direction, as US Senator John Kerry pointed out “the fully defined mutuality of effort between our two countries—did not materialize.”

This does not mean though that the improved relationship between the US and China since Obama took office has not yielded more concrete developments. These came two weeks previously when – during secretaries Steven Chu (energy) and Gary Locke (commerce) visit to China – the two countries agreed on several joint projects including an agreement between the U.S. DoE and the Chinese Ministry of Urban-Rural Development to foster collaboration in the development of more efficient building designs and sustainable communities; and an announcement of a joint Clean Energy Center to which the two countries pledged $15 million in support of initial activities.

These increasingly closer ties with China also provide opportunities to expose the US public and members of Congress to the progress made within China in fields such energy efficiency, renewable energy and clean energy technologies. This is important as the perceived lack of progress in other major emitters, especially China, is often used as an excuse to oppose and water down the US climate bill.

The transport sector once again takes centre stage, as the European Environment Agency criticizes the green credentials of motor vehicles, freight transport and rail networks. Highlighting the need to shift investments in the current economic climate to more sustainable and energy efficient modes, Professor Jacqueline McGlade, EEA executive director, added that

“…trends in transport are pointing in the wrong direction and will continue to contribute to air pollution, rising emissions of greenhouse gas and many negative environmental impacts.”

Jaguar Land Rover has just received a £330m bailout from the European Investment Bank to safeguard its 15,000 jobs an make investments in low emission technologies. The loan, the repayment of which will be guaranteed by the British government, is for a research and development project on reducing emissions. Jaguar Land Rover has been seeking Government assistance for some time and has recently put its workforce on a four-day week to avoid job losses.

The UK government received renewed pleas for an industry bailout from the motoring industry this week. Lobby groups are hoping April’s budget will include a ‘scrappage scheme’ – where car owners are given a financial incentive of about £2,000 to swap their old vehicle for a new greener model.

Whilst no decision has been announced, it is believed the scheme, which increased sales by 40% in March, attracting half a million buyers when it was introduced in Germany; is being taken seriously by MPs.  Statistics showed yesterday that sales of cars in the UK have dropped almost a third year on year. However, environmental campaigners highlight that the transport sector has been slow to introduce more environmental vehicles, and said that the money could be better used to fund sustainable transport solutions. There was also a fear that funds could be diverted from existing budgets set aside by the government for investment in green technologies, such as the £400m earmarked in the pre-budget report for an “environmental transformation fund”, which supports the development of new low-carbon energy and energy efficiency technologies in the UK.

A new report, The State of Green Investing 2009, by Progressive Investor, a green investment newsletter, has increased confidence in green investments, backed by positive signs from the stock market. The US report adds that the green industry is “at the nexus of stimulus support by governments around the world”.

Photo courtesy js42/Flickr

Renewable energy has been in the Indian news a lot lately. Firstly, India is gearing up for a partnership in renewable energy with the United States: an American trade mission exploring possible tie-ups in solar energy has come to India at a time when India is fleshing out its national solar mission (which was announced in the climate change action plan last year).

As far as public awareness on energy conservation is concerned, there seems to be a new push towards fostering awareness. The government has been running a series of environmentally themed ads (although the approach is one of cutting costs and economising) on conserving energy (saving cooking gas, petrol and switching to ecofriendly lighting). Let’s also not forget that today a number of mostly urban Indians will observe Earth Hour and turn off their lights for an hour this evening.

Thirdly, Greenpeace’s recent report on energy efficiency notes that given the right political will, India could potentially source 35% of its electricity requirements from renewable energy. Arguing that economic development need not be compromised, it calls for an “energy revolution” that will push for encouraging innovation, removing subsidies that support fossil fuels, reforming the energy sectors and introducing better regulation and laws. The press release adds that “there is a huge opportunity in going green now given the fact that India is still developing its energy infrastructure and has the human and intellectual capital to be world leaders on this front”.

Clearly, the political will required to push such policies through is very important. India has been pretty slow in formulating an environmental agenda and acting upon it in the past (indeed, as mentioned above, the climate change action plan was mostly silent on policies and most of the missions announced in the action plan are yet to be articulated). The recently released election manifestos of the main political parties don’t really mention any environmental or climate change initiative because elections in India are fought on a very different set of issues. And of course, India doesn’t have a green party. A report published by FICCI (the Federation of Indian Chambers of Commerce and Industry) evaluates the incumbent government’s environmental performance noting that it has fallen short in a number of areas: inefficient CDM processing procedures, weak EIA monitoring measures and insufficient biodiversity and conservation initiatives.

Nevertheless, energy security is perhaps the most important feature of India’s climate change policy so far. The economic ramifications are perceived to be just as important as (if not more than) the environmental ones and the renewable energy market is poised to expand considerably. Given also the fact that the infrastructure and networks are still being set up in India the pursuit of energy self sufficiency is a priority and will continue to be so, irrespective of political and electoral outcomes.

A field of sunflowers in front of the Areva Tricastin nuclear plant in in Bollene, in the south of France. Photograph: Fred Dufour/AFP/Getty images. Source: Guardian.co.uk

The past week saw reports of at least four of the country’s leading green activists accepting that nuclear power may have a significant role to play if we are to avoid runaway climate change. Concerns over safety issues, build-up of radioactive wastes and the proliferation of nuclear weapons were realistically balanced against the environmental impacts of burning fossil fuels such as coal, oil and gas.

Stephen Tindale, a former director of Greenpace; Lord Chris Smith of Finsbury, the chairman of the Environment Agency; Mark Lynas, author of the Royal Society’s science book of the year; and Chris Goodall, a Green Party activist and prospective parliamentary candidate, are now all lobbying in favour of nuclear options to support a renewable strategy to decarbonise the electricity system.

Nuclear power currently accounts for about a fifth of the UK’s electricity, compared with the 35% from coal and 35% from gas. It is being argued that more nuclear capacity will need to be added to replace the existing capacity, which is likely to be obsolete in around 15 years. But nuclear is not the only dwindling supply. Around 8 gigawatts – equivalent to about 6 power stations – of coal-fired generating capacity will be out of action by 2015 as Europe’s Clean Air Directive comes into force and older facilities prove uneconomic to upgrade. Taken together, the UK needs to replace a third of its electricity generating capacity in the next 15 years. Even plans for 7 gigawatts of new gas-fired capacity, expected by 2015, and another 5 gigawatts recently given the go-ahead by the Government, will not be enough as estimates put energy demand ballooning by anything up to 20% in the coming decade.

Nuclear power fits neatly with the Government energy policy goals, providing a carbon emission free source of secure energy supply – particularly important in light of recent geo-polictical tensions between Russia and Ukraine last month.

Investments are being planned by EDF (owner of British Energy), E.on and RWE Power, which are expected to create in excess of 15,000 jobs – welcomed with open arms in the current economic climate; but any planned build will only become operational by the mid 2020s at the earliest now.

George Monbiot, who has also changed his position on the nuclear argument, argues that if we want to decarbonise the UK’s energy system quicker and more cheaply, nuclear power must play a significant complementary role, alongside increased renewable energy generation, demand reduction, CHP and energy efficiency. Mark Lynas adds that nuclear power could provide a realistic solution to combating climate change and providing energy security, and as polls suggest that the public are opposing the nuclear option less and less, he calls for the Green movement to reconsider their 30 year dogma on energy generation from nuclear power.

Whilst plans for new reactors are still expected to raise face opposition, the Green movement’s acknowledgement of nuclear as the lesser of two evils will take away some of the sting. Ironically, it is the environmental agenda that made the economics of commercial nuclear expansion work. Regardless of moral reservations, the cost of nuclear power stations compared with their gas and coal-fired alternatives has always been a major factor; but the introduction of an emissions trading mechanism has forced fossil fuel plants to pay for their environmental impact, and the predictable income for nuclear plants provides much-needed clarity for private sector investors.

Whilst the safety and waste worries still remain, the arguments for and against nuclear power seemed to have changed to serve urgent targets.

Nuclear power…

*In an increasingly power-hungry world, the generation capacity of nuclear is potentially enormous

*Nuclear reactors are the best way to produce lots of electricity, reliably, with no carbon emissions

*Except for the purchase of uranium, nuclear power stations offer absolute security of supply 

However:

*Safety records may be far better than they were in the early days, but accidents can always happen

*Despite technical advances, digging a hole is still the only way to get rid of spent fuel rods

*More countries, buying more uranium, means more mining and more chance of nuclear proliferation

Cities love climate change. Well, they don’t exactly love climate change itself, obviously. But they love doing something about it, at least if you measure their enthusiasm by the number who’ve signed up to take action against global warming at a local level.

Under banners that include Cities for Climate Protection, Energie-Cités, the C40 Cities Climate Leadership Group, hundreds of cities have made a commitment of some kind to addressing the problem, either by mitigation, adaptation, or both. These commitments have often been made at international conferences, and with the support of high-profile figures like Bill Clinton and Arnold Schwarzenegger.

But what can this plethora of commitments, conferences and coalitions actually achieve, other than making local politicians feel good about making themselves known on the world stage? At first glance, it may seem that the short answer to this question is ‘not much’. City authorities typically have little control over energy generation and regulation of large industry activities, and lack the tax-raising powers and other policy levers used by national governments to induce large-scale changes in greenhouse gas emissions.

Energy-guzzling: 70% of energy consumption occurs in cities. Image: mischiru at Flickr.

This week, however, Mayors from over 350 European cities set out to demonstrate that they could take measurable action against climate change. The Covenant of Mayors, signed on Tuesday, commits the cities to meeting and exceeding the EU’s 20% carbon reduction target by the year 2020. To do so, they will all produce a sustainable energy action plan, which will outline how they intend to achieve this, and report on progress every two years.

Even as the ink was drying on the newly-signed Covenant, concerns were being voiced about the amount of money available to fund the commitments. A cross-party group of MEPs claimed that the Commission’s President, José Manuel Barroso, had promised €500m for this initiative as part of the EU’s economic recovery plan, but that this has now been withdrawn.

To coincide with the signing, the European Investment Bank announced that it was developing a financing facility to assist cities to mitigate greenhouse emissions. The facility would be made available to two types of initiative that fall naturally into cities’ policy remit: public transport and energy efficiency in buildings. But the grant funding available in the first year is only €15m: not significant in infrastructure terms (Transport for London alone will spend around a hundred times this amount in the current financial year). The initial grant fund is accompanied by an intention on the bank’s part to spend more money on these types of project in its ordinary lending portfolio. How well city-based climate initiatives will fare among the Bank’s many other priorities remains to be seen.

The signing of the Covenant this week is a reflection that it’s not just national governments who feel they have an important role to play in addressing climate change. But it will be some time before we know whether this city-level initiative is capable of delivering real cuts to carbon emissions.

The Annual Meeting of the World Economic Forum (WEF) ended yesterday. A selection of the sessions were webcast. One week every year, the tranquil swiss skiing village of Davos is transformed into an extravagant schmoozefest for the rich and powerful that are lucky enough to make it through WEF president Klaus Schwab’s door.

This year, bankers kept a low profile, not wanting to be seen in extravagant and luxurious settings. Some of those who came reportedly swapped their lear jets with first-class seats on commercial aircraft. According to one, the crisis had humbled them. Others said that for bankers, “sorry” is indeed the hardest word. The current and former U.S politicians that attended were those willing to take the blame. (Clinton, Gore, and Dean) The usual contingency of US senators was largely absent. Obama sent Valerie Jarrett, a senior advisor.

Not surprisingly, the financial and economic crisis figured heavily on the schedule this time, with each panel seemingly gloomier than the previous. Nouriel Roubini, whose previous warnings about an overheating economy used to be dismissed, was now the centre of attention. For most commentators, the main stories were the absence of bankers and the blame for the crisis that they received, as well as Turkish PM Erdogan’s overheating in an angry exchange with Israeli President Peres (and its possible implications) in a session on Gaza.

Against this backdrop, climate change featured as a bit of a side show, despite it being the most important year for global negotiations since 1997. However, the forum featured many sessions on the topic. (although few public transcripts) The official outcomes report (pdf) notes that, at the request of PM Gordon Brown, a new WEF task force of business leaders, economists and other experts was launched to provide advice to the UN climate negotiations. No details yet on who is on it.

The most newsworthy climate session (at least of the few that were webcast) was structured as a call to action featuring former VP Gore, UNSG Ban Ki-Moon, UNFCCC SG de Boer, Danish PM Fogh Rasmussen, Shell CEO van der Veer, and Swiss Re CEO Algrain.

- Ban-Ki Moon urged participants to stay focused on reaching a global agreement despite the economic uncertainty. In previous sessions, he noted climate change was the only “existential threat that we face”, and called on business and government to support a “Green New Deal.

- Gore urged participants not “to get the impression that Copenhagen is a weigh station on the way to something next year.” He reiterated comments he made during last week’s senate hearing and said “we need an agreement this year, not next year, but this year.” He noted that developing countries hold the key to a global agreement, as their engagement was more or less a precondition for some developed countries (i.e US) to consent to binding targets. And Gore came out in favour of a carbon tax, saying emissions trading was the next best solution to integrating carbon externalities in markets.

- de Boer said “we have got to get it right in Copenhagen, as there is absolutely no second chance here.” Offering few specifics, he said a global deal would need to include ambitious targets, significant engagement by developing countries (notably BRICS), stable, predictable financing for mitigation and adaptation, and new global governance. On the last point, he talked about the contradiction of asking developing countries to take more responsibility in global climate governance, while keeping their formal influence in global economic institutions (G8, IMF/World Bank) well below what the size of their economies warrants.

- Shell CEO van der Veer called for an a global agreement where developed countries take on obligatory cuts, and developing countries are included through sector agreements. He referred to CCS as an interesting technology with huge potential, but hampered by cost and lots of uncertainty. He said it could, at best, be a bridge to a future of renewable energy.

- Fogh Rasmussen said agreeing on a fixed framework with clear targets is a prerequisite for creating a market. He held out Denmark as an example of how renewable energy can be a driver for both climate mitigation and economic growth.

Some other notable messages;

In a session on emissions trading,

- Nic Frances of Cool nrg said energy efficiency will have to account for 50 percent of global emissions reductions under any long-term plan, and described plans to distribute millions of free energy-efficient light bulbs in the UK and Mexico.

- Lars Josefsson, head of energy giant Vattenfall, said global average per capita emissions would have to come down to 1 ton per day this century in order to avoid dangerous climate change. Today, that would amount to EITHER one hot meal, a t-shirt, or a 20km car ride. Take your pick.

- U.S Congressman Baird (D-WA) flew to Davos to call for 20 percent cuts in 20 weeks (!), all based on each of us making voluntary reductions in personal energy use. Why not?

In a session on climate justice,

- Kofi Annan offered few specifics but said a global agreement in Copenhagen would have to be fair and equitable.

- President Jagdeo of Guyana lamented the limited amount of adaptation funding available under Kyoto (USD 400 million) and said his country alone needed USD 450 million. He questioned the politicians willingness to spend hundred of billions to bail out financial institutions “too big to fail”, but their unwillingness to save the planet. He was in Davos to push for financing for poor countries to fund reforestation.

- Howard Dean said the EU was now the global leader in environmental standards and carbon markets after eight years of Bush, but predicted President Obama will get the U.S back on track.

Update 5/2: Here is IISD’s brief Davos climate wrap-up.

Yesterday the House of Representatives approved President Obama’s $819 billion economic recovery plan (the vote was supported by all but 11 Democrats, with 177 Republicans voting against).

As anyone following the recent events in the US will know, this package places a strong emphasis on ‘green’ development – stimulating economic growth while increasing investment in environmental solutions. The large – and revolutionary – increase in the investment in renewable energy (the original proposal included $32 billion to “transform the nation’s energy transmission, distribution, and production systems by allowing for a smarter and better grid and focusing investment in renewable technology” ) was hailed by environmentalists across the board.

Somewhat less attention was paid to the big investment planned (about $20 billion) to increase energy efficiency in public housing and private homes. This of course reduces American dependence on foreign oil, a favorite mantra, even further; but it will also make improving home and businesses energy efficiency accessible to anyone, which will in turn demonstrate how reducing CO2 emissions is not just about climate change and future generations but also makes financial sense in the here and now. Finally, being efficient won’t be just for the environmentalists.

But what about public transport? While $30 billion was allocated for highway construction, with a further $36 billion added in separate spending programmes voted on yesterday by the House as well, a mere $10 billion were allocated for “transit and rail to reduce traffic congestion and gas consumption”.

The United States however is in need of a major overhaul in the way it approaches transportation infrastructure. According to a report by the Brookings Institute the US is “one of the few industrialized countries that fails to link aviation, freight rail, mass transit and passenger rail networks“, and reliance on private cars is so great, that only a substantial shift in attitudes, both by the public and the government, will bring the change needed for a more sustainable transportation infrastructure.

This deep rooted change will apparently have to wait for now, but hopefully only a little while longer.