COLOGNE, May 26 (Reuters) – Governments should focus more on generating returns and reducing risk for investors to attract the $100 billion in aid needed by developing countries to cope with climate change, a panel of experts said on Wednesday.
Rich countries are being urged to adhere to key elements of a climate accord signed in Copenhagen last year, including a promise of $10 billion a year in quick-start aid from 2010-12 for poor countries, rising to $100 billion a year from 2020.
"$100 billion sounds like a lot of money … (but) raising large amounts of money in the private sector is actually very easy," said Martin Lawless, head of environmental financial products at Deutsche Bank.
"Too much attention is focussed on who will provide the money. Instead it should be on the other side, how to increase returns and reduce risks. Once that is established, the finance will follow."
The United Nations urged rich nations on Tuesday to keep their pledge to give $30 billion to poor nations by 2012, saying it was "not an impossible call" despite budget cuts in Europe. [ID:nLDE64O1P4]
But with worries over sovereign debt also growing, the private sector may be asked to help fill more of the funding gap.
"When you have the right proposition, the financing will come," said Mohsen Khalil, global head of the International Financial Corporation’s new Climate Business Solutions Group.
"We’re at a transition phase where the public and private sectors have to align their interests because heavy subsidies will be required initially until costs come down and we can have a large-scale sustainable business."
The panel agreed that the role of carbon markets in directing funds to financing clean energy and climate change adaptation in developing countries was shrinking.
Another panel of analysts said earlier on Wednesday that market mechanisms will survive beyond 2012, but their exact shape remains unclear as international climate talks now bypass their role in favour of the wider policy picture. [ID:nLDE64P1AQ]
"Carbon credits were good for a time, but is it the only instrument (to engage the private sector)? I don’t think so," said Khalil.
"Against the background of recent economic turmoil, investors are particularly risk averse, so the private sector needs TLC: transparency, longevity and consistency," Lawless said.
He cited a unilateral carbon price floor set by China in 2007 and growing uncertainty over the $144 billion global carbon market’s future post-2012, when the first five-year leg of the Kyoto Protocol expires, as deterrents to investors.
Key ministers and climate negotiators from China to Norway have said governments are unlikely to agree a successor to Kyoto at UN talks in Cancun, Mexico later this year. [ID:nTOE64O059]
"It will never be possible to motivate substantial private sector finance if the market faces the same uncertainties every 5-10 years. Incentive mechanisms need to be assumed to be permanent," he added. (Editing by Amanda Cooper)
LONDON (Reuters) – Ontario, Canada’s most populous province, is a dormant renewable energy giant lacking the investment and government support needed to awaken it, the head of a Canadian wind power developer told Reuters.
Trillium Wind Power is developing four offshore wind farms in Canada’s Great Lakes, including the 142-turbine Wind 1 project 17-28 kilometers into Lake Ontario, which the company’s CEO said will generate up to 500 megawatts of electricity by 2014, or enough to power over 200,000 homes.
LONDON, May 26 (Reuters) – Ontario, Canada’s most populous province, is a dormant renewable energy giant lacking the investment and government support needed to awaken it, the head of a Canadian wind power developer told Reuters. Trillium Wind Power is developing four offshore wind farms in Canada’s Great Lakes, including the 142-turbine Wind 1 project 17-28 kilometres into Lake Ontario, which the company’s CEO said will generate up to 500 megawatts of electricity by 2014, or enough to power over 200,000 homes.
Trillium’s four projects, once completed, are collectively expected to generate up to 3,700 megawatts.
"People don’t even realize there’s this kind of capacity in the Great Lakes … It’s completely unknown," Trillium’s John Kourtoff said in a telephone interview.
"Because of the amount of resources available and its geography, able to export power to nearly half the continental U.S., Ontario is an awakening giant for renewable energy in North America for the twenty-first century."
"We have a tremendous amount of offshore wind, but we haven’t harnessed any of it," he said, comparing it to Niagara Falls hydro power’s role in industrialising Ontario last century.
Wind 1, which Kourtoff expects will get government approval by Q1 2011 and begin construction by late 2012, could create over 2,000 jobs and displace Ontario’s greenhouse gas emissions by 1.8 million tonnes annually.
Kourtoff said the Great Lakes, four of five of which border Ontario and are among the biggest in the world, are ideal for offshore wind due to their consistent wind speeds and the lack of tides and strong waves.
"Lake Ontario’s average waves are less than a metre high and its wind is consistent at around 9 metres per second," he said.
"It’s essentially a windy, fresh water bathtub."
Kourtoff said wind turbines in the Great Lakes can also help regenerate aquatic life up to 8 times faster than normal.
Though Ontario may have great green energy potential, Kourtoff said the investment climate remains difficult. "That’s the main challenge here and it’s a bit of a sore point," he said, referring to early stage financing.
"Canadian banks have been extremely slow getting into renewables, giving the opportunity to foreign firms. The approaches we’ve had so far have been from European and Middle Eastern firms and American private equity players."
Last year the province introduced a new feed-in tariff in an effort to spur growth in renewable energy. The tariff is guaranteed for 20 years and sets offshore wind generation rates at C$0.19 ($0.177) per kilowatt hour for approved suppliers.
Kourtoff also pointed to offshore wind permitting in Ontario, guaranteed to take under 6 months compared to an average wait of 42 months in Europe.
"We’ve got no venture capital and no support from the federal government in the form of subsidies … though they’re happy to hand out billions for carbon capture and storage (CCS) for Alberta’s oil sands," he said.
The Canadian federal government has allocated around C$1.4 billion to go along with $2 billion in CCS funding from the Alberta government. These pilot projects will see only a total of some 4-5 million tonnes of carbon dioxide buried underground.
In February Trillium picked Danish wind turbine maker Vestas <VWS.CO> to supply the turbines for Wind 1. [ID:nLDE6181TI]
Kourtoff would not comment on rumours that Vestas will build a turbine plant in Ontario, but said Hamilton, the province’s steel manufacturing centre, would make an obvious choice.
"Ontario’s Great Lakes are the low-hanging fruit … and firms that come early will get the lion’s share," he added. ($1=1.072 Canadian Dollar) (Editing by James Jukwey)
COLOGNE, Germany (Reuters) – The global carbon market grew 6 percent to $144 billion last year, from $135 billion in 2008, as a rise in speculative trading offset a drop in carbon finance for developing nations, the World Bank said on Wednesday.
Greenhouse gas emissions cuts in developing nations funded by rich countries under the Kyoto Protocol fell by half to 211 million tonnes of carbon dioxide (CO2) in 2009, down from 404 million in 2008, the bank said in a report.
LONDON (Reuters) – A central bank for the U.S. carbon market would be more effective in managing volatility than the price ceilings and floors included in a Senate climate bill unveiled last week, the head of NYMEX’s emissions exchange said.
Tom Lewis, CEO of the Green Exchange, also slammed the bill being put forward to Congress by Democrat John Kerry and independent Joe Lieberman, saying it was flawed.
BRUSSELS (Reuters) – The European recession last year slashed more than 11 percent off the amount of climate-warming emissions from heavy industry, the European Union’s executive said on Tuesday.
The EU said carbon dioxide emissions from the more than 11,000 installations regulated by its Emissions Trading Scheme fell by 11.6 percent to 1.873 billion tonnes.
LONDON (Reuters) – Alberta will hand out the first C$100 million of its cleantech fund next month, the province’s environment minister said, around the same time that one of the fund’s main contributors is expected to learn if it has been found guilty of killing 1,600 ducks.
Between 5 and 10 shortlisted clean energy projects will receive grants under Alberta’s technology fund, said Rob Renner. The fund is financed by a carbon tax put on the province’s oil sands developers like Syncrude Canada Ltd.
LONDON (Reuters) – London-based Total Global Steel was named by a source on Friday as a seller of recycled carbon credits, as the Hungarian government said it was still unsure as to the remaining used credits’ whereabouts.
“Total Global Steel sold recycled CERs over BlueNext,” an anonymous source familiar with the matter told Reuters, referring to used Kyoto Protocol carbon credits sold over the French emissions exchange.
LONDON (Reuters) – A U.S. Senate climate bill, unveiled on Wednesday, has garnered general support from European carbon market players, though some have raised concerns over a few components of the proposed legislation.
The draft bill, to be tabled by Democratic Senator John Kerry and independent Senator Joseph Lieberman, would introduce a price collar to curb wild volatility and restricts participation by parts of the financial sector.
LONDON (Reuters) – A United Nations agency on Wednesday cut its forecast for pre-2012 Kyoto Protocol carbon offsets, estimating for the first time that less than 1 billion tonnes will come to market before the climate pact expires.
“Due to the medium issuance in March (11.4 million) and in April (9.9 million), our projection for the amount of (Certified Emissions Reductions) to be available by the end of 2012 decreased a little from 1,035 million to 992 million,” the UNEP Risoe Center said on its website.