Tag Archives: power

The Clean Power Plan means changes for coal, but not the ones you might expect

June 18, 2014 |

 

Under President Obama’s recently announced Clean Power Plan, the Environmental Protection Agency (EPA) proposed that states cut greenhouse gas emissions from existing power plants by 30 percent from 2005 levels.

Commenters on both sides of the aisle say this rule means big changes for the coal industry.

But before we get fired up about the changes, it’s important to take a look at the facts: While states will need to retire coal plants at the end of their useful lives to meet the proposed limits, EPA’s rule would give states a great amount of flexibility to avoid coal asset stranding and still meet emissions reduction targets. In fact, valuing the right services from coal plants will prove the more important question for a low-cost, low-carbon electricity system.

Let’s look at why.

First, we need to understand what the rule really means for coal asset stranding. An asset is “stranded” if a reduction in its value (that is, value to investors) is clearly attributable to a policy change that was not foreseeable by investors at the time of investment.

In our upcoming analysis of stranded assets, Climate Policy Initiative finds that if no new investments are made in coal power plants and existing plants retire as planned (typically, 60 years for plants with pollution control technology investments and 40 years for plants without), the U.S. coal power sector stands to experience approximately $28 billion of value stranding from plants that are shut down. While that’s a big sounding number at first glance, it’s very small relative to the size of coal power sector. As the figure shows, that retirement schedule puts the U.S. coal power sector on track to come close to the coal power capacity reductions called for in the IEA 450 PPM scenario to limit global temperature increase to 2°C.

U.S. Coal Power w emissions (2)

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Looking behind IPCC’s WG3 climate finance figures

April 15, 2014 |

 

Last Sunday, the Intergovernmental Panel on Climate Change (IPCC) released the final version of the Summary for Policymakers for its working group dedicated to the assessment of the options for mitigating climate change. This is the first time an IPCC assessment report features a chapter dedicated to investment and finance. We are thrilled to see that the results draw heavily on CPI Climate Finance pioneering work in the field.

To demystify the term ‘climate finance’ and better understand the magnitude and type of climate financing available, CPI has provided an overview of the climate finance landscape for the past three years. Three particular objectives have guided our work:

(1)  identifying the main dimensions of climate finance,
(2)  highlighting issues and gaps in the tracking of flows, and
(3)  pointing to remedies when needed.

The third edition of this study, the Global Landscape of Climate Finance 2013 is the most comprehensive look at climate investment to-date.

$356-363 bn. went to climate finance projects in 2012…

The Summary for Policymakers indicates that “published assessments of all current annual financial flows whose expected effect is to reduce net GHG emissions and/or to enhance resilience to climate change and climate variability show USD 343 to 385 billion per year globally.” These numbers are taken from the 2012 edition of the Global Landscape of Climate Finance and are relative to the year 2011. We updated these numbers in the 2013 edition and found that climate investment plateaued at an average $359 billion in 2012, far short of even the most conservative estimates of the investment need.

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Climate policy in 2014

February 14, 2014 |

 

Around the world, nations are striving to use increasingly scarce resources more productively, meet energy security goals, and reach economic growth targets, all while reducing climate risk. These are complex and urgent challenges, and policy plays a critical role in addressing them.

Since our inception in late 2009, Climate Policy Initiative has been working hard to answer pressing questions posed by decision makers through in-depth, objective analysis on some of the most significant energy and land use policies around the world, with a particular focus on finance.

As we continue to tackle these important and complex issues, your feedback on how we’re doing is extremely important. We hope you’ll help us reflect on the past, as we ring in a new year, by participating in a five-minute survey about our work.

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In India, Renewable Energy Certificates are missing the target

February 11, 2013 |

 

In 2008, India’s National Action Policy on Climate Change set a renewable portfolio standard, called the Renewable Purchase Obligation (RPO), to produce 15% of the country’s electricity with renewable energy sources by 2020. Further, under the Jawaharlal Nehru National Solar Mission, the Indian government aims to develop 20,000 MW of solar energy by 2022.

To help reach these ambitious targets in a cost-effective manner, India launched a market-based mechanism called Renewable Energy Certificates (RECs) in 2010.

However, in the one year of trading so far, participation in the REC markets has been low: RECs have failed to attract investment. Though the design of the REC mechanism appears adequate, the performance of the market has been far from satisfactory. This, along with other issues, such as the cost of debt, translates to real concerns over whether India is on track to meet its ambitious targets.

So why is this happening?

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