Clean energy buyers grappling with supply chain

Spanish Market: Electricity, Emissions
20/10/22

US renewable energy buyers continue to contend with a market beset by supply chain disruptions, but recent federal legislation bolstering investments in low-carbon technologies could eventually smooth the landscape, industry analysts said this week.

US renewable energy projects may have to push back operations in the near-term as developers continue to wrestle with a confluence of hurdles in the supply chain, consultancy Edison Energy, a subsidiary of California utility Edison International, said in its third quarter market update. These constraints on new generation coincide with demand for renewables hitting "record highs."

The near-term development pipeline for "available" projects — those that have not fully contracted for their output — remains thin, with Edison saying it expects just seven such utility-scale wind and solar farms combined on line in 2023. That total is expected to jump to 27 in 2024 and 30 in 2025, with another 17 projects slated for 2026 or after. The bulk of those available projects, 65 overall, are solar farms.

One new impediment to the US solar industry is the Uyghur Forced Labor Prevention Act, which restricts goods imported from China's Xinjiang Uyghur Autonomous Region from entry into the country under the assumption they were made with forced labor. The US began enforcing the law in late June and in roughly three months has detained more than 3,000MW of solar panels at the border. Industry analysts forecast that the US could impede 9,000-12,000MW of modules by the end of 2022.

The US relies heavily on imported raw materials, components and modules to build new solar farms. This disruption, coupled with high demand, will result in delayed operations, and buyers should expect premiums on purchases from systems with allocated panels, Edison said. As the sector builds more transparency into the supply chain, and the industry can ensure "responsible sourcing," delays will alleviate, likely in the "medium-term."

Additionally, uncertainties around the US Department of Commerce's inquiry into solar imports from Cambodia, Malaysia, Thailand and Vietnam — which froze the solar sector during the second quarter — still loom over the sector after Commerce extended the deadline for its preliminary decision to 28 November. While President Joe Biden delayed the onset of any new tariffs resulting from the agency's investigation until June 2024, the industry remains "eager" to see where Commerce will land on the issue, as any decision will provide "longer-term clarity" on the availability of components and help set price expectations going forward.

The four countries under investigation provided 80pc of the US panel supply to be installed this year, according to Edison.

The US has added 4,200MW of solar during the first half of 2022, less than half of the planned capacity.

Buyers have fared little better finding favorable pricing in the wind sector. Major wind turbine manufacturers such as Siemens Gamesa and Vestas Wind Systems have raised prices in the face of inflation and supply restrictions. Inputs like steel and copper have increased significantly since the beginning of 2020, which has hit manufacturers' bottom lines.

The federal Inflation Reduction Act should ultimately alleviate these issues through its tax incentives for both project and domestic supply chain development. Edison expects the policy suite to lead to an increased availability of projects and lower power purchase agreement prices for buyers in the medium- to long-terms.

At the same time, the group warned that the new law is likely to change wholesale market dynamics, effects of which could include difficulties for new projects in securing grid interconnections because of higher renewable buildouts and congested interconnection queues.

By Patrick Zemanek

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15/11/24

Climate finance talks halt, parties fail to cut options

An ‘ambitious and realistically achievable' agreement in Baku seems unreachable at present, write Georgia Gratton and Caroline Varin London, 15 November (Argus) — Parties at the UN Cop 29 climate summit are tonight considering a third draft for a new climate finance goal, but it is lengthy, fails to bridge long-standing divisions and still lacks a position on the amount to be provided by developed countries. Agreement on finance is key to ensuring all countries can implement energy transitions and cut emissions in line with the Paris accord. Developed countries agreed in 2009 to deliver $100bn/yr in finance in 2020-25 to developing nations, and Cop 29 is focused on the next iteration of this — the new collective quantified goal. The draft is riddled with options and brackets — not uncommon in the first week of Cop negotiations. But it still has every opinion given in the past year on offer, so parties have a long road ahead to reach agreement. "We cannot afford to leave too much ground to be covered later in the summit," Cop 29 lead negotiator Yalchin Rafiyev said this week. Developed nations have not yet settled on a sum, but are promoting a "multi-layered goal" and want to expand the contributor base. Developing countries are now pushing for sub-targets of $220bn/yr for least developed countries and $39bn/yr for small island developing states, while broadly calling for climate public finance of over $1 trillion/yr, mostly in grant and concessional finance. EU negotiator Jacob Werksman struck a pessimistic tone earlier this week, saying parties are far apart and that it is hard to see where the landing zone lies. Parties stuck to their guns at a high-level meeting. "The support goal should be both ambitious and realistically achievable," the US negotiator said — echoing Belgium's representative almost word for word. Developed countries called for more contributors, including from developing countries in a position to contribute. UN climate body the UNFCCC works from a list of developed and developing countries from 1992 — delineating 24 countries plus the EU as developed — and many of these note that their economic circumstances have changed over the past 32 years. Parties such as the UK called for increased mobilisation of private-sector finance, through multilateral development banks, whose reforms should be accelerated, while Sweden called for enhancing the mobilisation of domestic finance. But these issues are largely outside Cop's remit, although they might get more of a platform at next week's G20 discussions. Panama's representative called for trillions, Guatemala said that "finance must be more accessible", with Colombia saying that it is currently "entangled" in development agencies. Zimbabwe told fellow negotiators that it was crucial that developing countries' debt burdens were not increased. Ministerial progress Werksman is hoping for some compromise next week, when ministers join negotiations. Parties had in October reached some convergence after a series of ministerial meetings ahead of Cop 29. He pointed to a finance report released this week by a UN-mandated group that, he said, could guide policy makers. Private finance could meet around half of the funds that developing countries need — $1 trillion/yr by 2030 and $1.3 trillion/yr by 2035 — the group said. The possibility of levies — on shipping and air travel — as well as on fossil fuel producers, is likely to be floated too. Many jurisdictions, including the EU, have previously called for taxes and levies to be imposed to provide further climate finance. Colombia called for increased action on global taxation. But "that requires very careful consideration before we stunt some of our industries", Egypt's representative said. Tanzania and Marshall Islands delegates reiterated that finance for fossil fuel development should not be part of the goal. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil looks beyond forests to reduce CO2

15/11/24

Brazil looks beyond forests to reduce CO2

Sao Paulo, 15 November (Argus) — Brazil will target energy and transportation emissions as part of its nationally determined contribution (NDC) it outlined ahead of schedule, as the country prepares to host the Cop 30 conference in Belem, Para state next year. The government's goal with the new NDC is to "lead by example" by committing to the more aggressive emissions-reduction targets. The new NDC, which was released ahead of the UN Cop 29 climate change conference in Baku, Azerbaijan, aims to go beyond deforestation — which causes roughly half of the country's emissions — to include other sectors of the economy, including industry, transport, energy and agriculture. Under the new proposal, Brazil will aim to reduce greenhouse gas emissions by 59-67pc from 2005 levels by 2035, equivalent to emissions levels of 850mn-1.05bn metric tons of CO2 equivalent (tCO2e). The government promised to finalize the targets for each sector of the economy during the first half of next year. On the energy and transport fronts, Brazil is seeking to further expand the use of renewables, which currently stand at 89pc of electricity and 49pc of total energy consumption. To reduce emissions from this sector, the government plans to gradually reduce the use of fossil fuels and to replace them with electric motors and biofuels. Additionally, the government cited policies that have been approved this year, including the low-carbon hydrogen law and the fuels of the future law, which will reduce emissions from the industrial and transport sectors. The government also underscored the expanded use of advanced biofuels and the production of conventional biofuels in conjunction with carbon capture to reduce energy emissions. The plan singled out the waste-management sector for its potential to contribute to methane emissions reductions while generating renewable energy from CH4 capture. It cited the expansion of biomethane use, to reduce the use of LPG and natural gas in cooking. For the agriculture sector, the government is targeting large-scale conversion of degraded pastures into crop land, as well as the expanded use of new farming techniques, such as crop-livestock and crop-livestock-forest integration. Additionally, the government promised to expand its efforts to combat deforestation beyond the Amazon basin into new biomes, including the Atlantic rainforest, Pantanal, pampa and cerrado tropical savanna biomes. The government has also launched a plan to reforest roughly 12mn hectares of forests by 2030, which would contribute to the country's net GHG removals. Some Brazilian NGOs commended the government for issuing the new NDC ahead of schedule, and for citing concrete measures that will be adopted to reduce GHG emissions. But they warned that the new NDC is not in line with the goal of limiting global warming to 1.5°C above pre-industrial levels. Climate NGO Greenpeace classified the new target as "unambitious" and "clearly insufficient," while Brazilian climate think tank Observatorio do Clima criticized the government's failure to increase its targets for 2030. Observatorio do Clima, along with roughly 100 other NGOs, issued a report earlier this year calling on Brazil to adopt a much more aggressive target to slash CO2 emissions by 92pc from 2005 levels by 2035, equivalent to 200mn tCO2e/y. While the NDC did cite policies aimed at reducing dependence on fossil fuels, Observatorio do Clima criticized the government's failure to announce a plan to end the expansion of fossil-fuel use. This sentiment was echoed by Oil Change International, which said that Brazil's goal of being on the "forefront of the global energy transition" is incompatible with its plans to increase oil production over the next decade. Observatorio do Clima also criticized the lack of clarity regarding its plans to double renewable energy capacity and triple energy efficiency. It also questioned the government's deforestation goals, arguing that all deforestation, not just illegal deforestation, needed to be eliminated. 2023 Brazil emissions sources Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Parties start talks on third finance goal draft

15/11/24

Cop: Parties start talks on third finance goal draft

Baku, 15 November (Argus) — Parties at the UN Cop 29 climate summit in Baku have dived into a new round of informal consultations tonight armed with a fresh, but still hefty, draft that few seem to have the time to read. Country representatives are seeking to agree on a new climate finance goal for developing nations, following on from the current — broadly recognised as inadequate — $100bn/yr target. The new draft text still fails to bridge the huge divide between developed and developing countries on key issues such as an amount for the goal, the contributor base and what the funds should be used for. "We must be honest, we believe that the current pace of work is too slow, we cannot afford to leave too much ground to be covered later in the summit," Cop 29 lead negotiator Yalchin Rafiyev said today. Parties continue to stick to their positions. Developed countries have still not come forward with a number for the goal, and want the contributor base broadened. One observer noted that the possibility of the US leaving the Paris agreement is putting added pressure on the EU. Developing countries remain broadly united in calling for climate public finance of over $1 trillion/yr. Options show that developing country parties seek a new finance goal that serves mitigation — actions to reduce emissions — adaptation and loss and damage. Adaptation refers to adjustments to avoid global warming effects where possible, while loss and damage describes the unavoidable and irreversible effects of such change. Developed nations are also pushing for sub-targets of $220bn/yr for least developed countries (LDCs) and $39bn/yr for small island developing states (Sids), in which money for adaptation should come in the form of grants and highly concessional finance and funding for loss and damage "primarily in grants". The multi-layered approach in the draft, mostly supported by developed countries, does not mention loss and damage. On broadening the contributor base, it has options calling on "parties in a position to contribute" or "all capable parties" to "mobilise jointly $100bn/yr for mitigation and adaptation in developing countries by 2035. The UN climate body the UNFCCC works from a list of developed and developing countries from 1992 — delineating 24 countries plus the EU as developed — and many of these note that economic circumstances have changed in some countries, including China, over the past 32 years. China between 2013 and 2022 provided $45bn in climate finance to developing countries, equivalent to 6.1pc of climate finance provided by all developed countries in the period, according to think-tank WRI. A few options in the multi-layered approach in the draft talk about "investments" and "investing trillions "from all sources, public, private, domestic and international". "A commitment on investment undermines the principles of the Paris Agreement, shifting the burden of climate finance onto the private sector," Samoa's environment minister and chair of the Alliance of Small Island States Toeolesulusulu Cedric Schuster said. Some parties on both sides are calling for the reforms of multilateral development banks, key to leverage billions in private sector finance, to accelerate. But these issues are largely outside of the remit of the Cop, even though they may get a boost from the upcoming G20 leaders summit at the start of next week. By Caroline Varin, Tng Yong Li and Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Chile to submit updated NDC after deadline

15/11/24

Cop: Chile to submit updated NDC after deadline

Singapore, 15 November (Argus) — Chile will not submit its nationally determined contribution (NDC) — emissions reduction plan — for 2035 by the February deadline set by the UN climate body the UNFCCC, but in the middle of next year, the country's environment minister Maisa Rojas told Argus at the UN Cop 29 climate summit today. Rojas said that this is because the country wants to make sure that its updated NDC is "strong". Cop parties are expected to submit their NDCs in November-February, as part of a cycle that requires countries to "ratchet up" their commitments every five years. Chile last updated its emission pledge under its NDC at Cop 27, in Egypt, in 2022. The country committed to to carbon neutrality by 2050 and peaking of all greenhouse gas (GHG) emissions by 2025. Its carbon neutrality goal is legally binding as it is part of its climate law. Chile is not the only one facing challenges in providing updated 2035 target, with southeast Asian nations also flagging headwinds . Host country Azerbaijan also pointed to the "difficulties of developing ambitious NDCs" earlier this year . The IEA at the start of this year indicated that ahead of the next round of NDCs, it had received "several requests" from countries asking for help on data, analysis and policy advice, and that the agency would provide some support. Earlier this week, Chile, alongside Germany, launched a global management platform aimed at providing emerging and developing countries with access to international technical and financial resources to reduce carbon emissions, including assistance to incorporate industrial decarbonisation into the design of NDCs. Rojas today also announced that some Latin American countries, including Brazil, Guatemala, Mexico, Panama and Chile will work towards including methane emission reduction in the waste management sector in their new NDCs, in line with the global methane pledge. Brazil on 13 November announced the country aims to reduce greenhouse gas emissions by 67pc by 2035, compared with 2005 levels. By Tng Yong Li and Jacqueline Echevarria Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Climate summits need reform, former UN chief says

15/11/24

Cop: Climate summits need reform, former UN chief says

Singapore, 15 November (Argus) — Climate advocates including former UN secretary general Ban Ki Moon today submitted an open letter to the UN calling for a reform of the Cop climate change summit as it has failed to deliver change at the speed and scale required. Signatories also include former executive secretary of the UN climate body the UNFCCC Christiana Figueres, and former president of Ireland Mary Robinson. They suggested excluding countries that do not support the "phase-out/transition away" from fossil fuel energy. The president of Cop 29 host country Azerbaijan Ilham Aliyev drew criticism after stating earlier this week that oil and gas is a "gift of god" . Several media organisations reported earlier today that the letter mentioned the Cop system was not "fit for purpose". The phrase is not included the latest version. "It has become clear that constructive, supportive ideas developed some time ago on the international climate negotiations have been misinterpreted in today's context," Figueres said. She added that the Cop process was an essential and irreplaceable vehicle for supporting the change that is urgently needed. Other suggestions from the signatories include streamlining Cop summits for speed and scale. "We need a shift from negotiation to implementation, enabling the Cop to deliver on agreed commitments and ensure the urgent energy transition and phase-out of fossil energy," stated the letter, whose signatories also The Cop process should also be strengthened with mechanisms to enforce accountability, such as enhanced reporting and benchmarking, independent scientific oversight and transparent tracking of pledges and action. The letter also pointed out that a record number of 2,456 fossil fuel lobbyists were allowed to attend Cop 28, almost four times more than Cop 27. "The fact that there were far more fossil fuel lobbyists than official representatives from scientific institutions, indigenous communities and vulnerable nations reflects a systemic imbalance in Cop representation." Other concerns include the necessity for more robust tracking of climate financing as well as climate Cops not sufficiently integrating latest scientific evidence. There is no permanent scientific advisory body that is a formal part of the Cop structure. This year's Cop has been plagued by diplomatic issues and poorer attendance by heads of state, including from G7 countries, compared with previous years. Papua New Guinea prime minister James Marape pulled out of Cop 29 just before the summit and has sent a streamlined delegation this year, complaining about the lack of global commitment, especially from "large industrial countries" to rainforest conservation. French energy minister Agnes Pannier-Rauncher on 13 November cancelled her planned visit to the summit, because of what she called host Azerbaijan's "unacceptable remarks" on France and Europe. French negotiating teams will work as usual at the conference, but this week marked the first time that the French president was not represented in high-level meetings since the Cop 21 conference in Paris in 2015. Argentina also on 13 November withdrew its delegation from the summit, with the country's foreign affairs ministry confirming that the delegation had been told to leave the event. No reason was given for this, but it was in line with the general policies of president Javier Milei, who has expressed skepticism about climate change. Cop 29 lead negotiator Yalchin Rafiyev on 15 November acknowledged that "the multilateral process is under pressure" and faces "challenges and external complexities" but said the presidency considers Cop 29 a "litmus test for the global climate architecture". "Parties have to come together," he said. By Prethika Nair and Tng Yong Li Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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