Labor’s Lost Love: Lamenting a State of Limbo
The lack of policy signals to encourage major investments in lower emissions plants and technologies has again been lamented, this time by Elaine Prior, the climate change and carbon specialist at Citigroup. “Regulatory limbo appears the only certainty” is the title of her analysis of the policy proposals of the two mainstream political parties and the Greens in the current election campaign. Giles Parkinson reports in Climate Spectator.
Giles Parkinson in Climate Spectator (28 July 2010)
Lamenting ETS limbo
The lack of policy signals to encourage major investments in lower emissions plants and technologies has again been lamented, this time by Elaine Prior, the climate change and carbon specialist at Citigroup. “Regulatory limbo appears the only certainty” is the title of her analysis of the policy proposals of the two mainstream political parties and the Greens in the current election campaign. “The only certainty post the August election is uncertainty about a carbon price,” she writes.
Prior is dismissive of the Labor policy that allows for early action. “We doubt that major investments in lower emissions plants and technologies will occur without confidence in a long term carbon price signal. The policy leaves industry in limbo,” says Prior. “It seems risky to build high emissions plant given the likelihood of future carbon costs, but it may be risky to over-invest in low emissions technologies. Prior says the Coalition policy is heavily contingent on substantial reductions via soil carbon at $8-10/tonne, a concept she thinks is unlikely to be achieved. “The proposal does not allow the potential for emissions reductions to be sourced at “lowest cost” via a carbon market, including via access to international markets.”
America’s other windy city
Construction began this week on what is currently expected to be the world’s largest wind energy project, the Alta Wind Energy Centre in central California. The brainchild of the now collapsed Australian finance group Allco, the 1,550MW complex will have a similar capacity to many large-scale coal and gas fired generators, and comprise nearly 600 turbines on completion in 2016, although it may ultimately have a capacity of 3000MW. The Alta project was bought by Terra-Gen, a company backed by New York energy investment group Arclight Capital after the collapse of Allco in 2008. Last week, it secured a $US1.2 billion financing deal that included a leaseback arrangement with Citibank, the first such deal of its type in the wind industry, and one that could unlock further financing initiatives for the US wind industry.
King of the hill
In New Zealand, the state-owned utility Genesis Energy has announced plans for a 600MW wind energy farm near Castle Hill on the north Island. The announcement is part of an anticipated rapid build-up of wind capacity, at least partly driven by the introduction of its emissions trading scheme on July 1. Castle Hill, which had an original capacity target of 400MW, is one of three large-scale wind energy farms planned for New Zealand, each of which is bigger than the country’s entire installed capacity to date. Meridian Energy is proposing a 630MW project in central Otago and Contact Energy’s is planning a 540MW wind farm on the coast north of Raglan.
The unpredictable nature of renewable energy supplies was underlined by the UK-based Scottish and Southern Energy, which this week revealed that output from its renewable energy projects – consisting largely of wind, biomass and hyrdro-electric – had fallen 30 per cent over the last three months compared with the same period a year earlier. SSE said in an interim statement that output had been cut to 700GWh in the three months since April 1, 2010 from 1,000MWh. Unusually, mild weather was to blame. The company is currently building more than 500MW of onshore wind capacity and more than 850MW of offshore wind facilities.
Down on coal
Ratings agency Standard & Poor’s has cut the credit rating of the Loy Yang B brown coal power station to BBB minus – just one notch above junk bond – and given it a negative outlook. The downgrade was based on S&P’s concerns about rising refinancing costs – it needs to renegotiate some $1.1 billion by 2012 – and uncertainty about legislation on greenhouse emissions. Loy Yan B is majority owned by the IK-based International Power, which also owns the Hazelwood brown coal power station, currently the target of the Victorian state government as part of its plans to cut 4 million tonnes of emissions a year from its stationary energy sector.
More hot rocks
Hot Rock Ltd has announced that its geothermal resource in Victoria’s Otway Basin has increased by 170 per cent following the addition of two new hot sedimentary aquifer reservoirs near the town of Casterton, in the south-west of the state. Hot Rock says this takes its total Inferred and Indicated geothermal resources to 180,000 petajoules from around 66,000PJ. The company says 6,700PJ would be enough to provide energy for up to 50,000 households. The company expects to start drilling its first production appraisal well early next year.
– Giles Parkinson
Labor’s Lost Love: Lamenting a State of Limbo