MAC: Mines and Communities

Coal wars heat up in Poland, EU, China and New York

Published by MAC on 2013-03-11
Source: Reuters, Xinhua

The Polish government's plea to obtain even more free carbon emmissions permits from the Eropean Union  has failed - at least for the time being. See: Polish ministries clash over the "green" and the black

However, the European Commission is facing stiff opoosition from industry and others to its proposal to temporairly halt - if stop altogether - the issuance of carbon trading pemits, as its price drops to a lowest-ever level.

Once again, the rationale for the Emissions Trading Scheme (ETS) - as a way of reducing the eggregious impacts of burning coal - is called into strong doubt.

Not so in New York state -  where goveror Bloomberg claims that his goal of "retiring" a third of coal-fired power by 2015 is already half way to being achieved.

For its part, the Chinese regime has said it will tax coal based on prices instead of sales volume, as well as raising coal taxe, in an effort to reduce carbon emissions.

EU court dismisses Polish challenge to EU carbon permit rules


7 March 2013

LUXEMBOURG - The European Union's second highest court on Thursday dismissed a Polish challenge against the European Commission over the allocation of free carbon permits to energy-intensive industry.

Poland has argued that the rules for free allocation of CO2 permits do not take into account its particular situation as an emerging eastern European economy with a heavy reliance on coal.

The General Court in Luxembourg disagreed.

"The Court rejects Poland's argument that the contested decision would decrease the competitiveness of companies in member states whose production is linked mainly to coal as a fuel," the court said in a statement.

In essence, the dispute comes down to whether countries in eastern Europe, which have had limited time since the collapse of Communism to overhaul their coal-dependent economies, should be given more leeway to pollute.

Poland has the right of appeal on points of law to the European Union's highest court, the European Court of Justice.

A verdict in Poland's favor would force the Commission to review the rules for all member states, throwing into question the underpinnings of the ETS system.

Carbon traders said Thursday's verdict was theoretically bullish, but the market remained preoccupied by the lack of progress on the more immediate term problem of trying to remove a surplus of permits that pushed the market to a record low of less than three euros per metric ton of carbon in January.

By 0913 GMT, carbon permits were trading at 1.4 percent lower on the day at 4.22 euros a metric ton.

(Reporting by Barbara Lewis; additional reporting by Nina Chestney; editing by Rex Merrifield)

China to introduce carbon tax: official


21 February 2013

BEIJING - China will proactively introduce a set of new taxation policies designed to preserve the environment, including a tax on carbon dioxide emissions, according to a senior official with the Ministry of Finance (MOF).

The government will collect the environmental protection tax instead of pollutant discharge fees, as well as levy a tax on carbon dioxide emissions, Jia Chen, head of the ministry's tax policy division, wrote in an article published on the MOF's website.

It will be the local taxation authority, rather than the environmental protection department, that will collect the taxes.

The government is also looking into the possibility of taxing energy-intensive products such as batteries, as well as luxury goods such as aircraft that are not used for public transportation, according to Jia.

To conserve natural resources, the government will push forward resource tax reforms by taxing coal based on prices instead of sales volume, as well as raising coal taxes. A resource tax will also be levied on water.

The article did not specify when the new measures will be implemented.

In 2010, MOF experts suggested levying a carbon tax in 2012 at 10 yuan per tonne of carbon dioxide, as well as recommended increasing the tax to 50 yuan per tonne by 2020.

China is among the world's largest emitters of greenhouse gas and has set goals for cutting emissions. The government has vowed to reduce carbon intensity, or the amount of carbon dioxide emitted per unit of economic output, by 40 to 45 percent by 2020 in comparison to 2005 levels.

Editor: Hou Qiang

Carbon market debate leans towards tighter pollution cap

By Barbara Lewis


4 March 2013

BRUSSELS - Hours of debate on reform of the European Union's Emissions Trading Scheme on Friday showed support for tighter annual pollution limits, but hardly any backing for a change to an overall EU 2020 goal on carbon cutting.

Both measures would reduce the oversupply of carbon allowances, which pushed the EU ETS to a record low of less than three euros per tonne earlier this year.

The price collapse means the ETS, a core piece of EU environment policy, is unable to engineer a shift to lower carbon energy, prompting the European Commission to propose a combination of short-term and long-term changes.

Long-term plans, debated on Friday by an audience including industry and environmentalists, include raising the EU 2020 carbon reduction goal to 30 percent from 20 percent.

"No matter how strongly I tried to force your hands, there are only very few in favor," Artur Runge-Metzger, head of international climate policy at the Commission, said. "There is not a lot of support."

Other ways of tackling the oversupply of allowances, such as permanently removing some of the surplus and bringing forward revision of a cap on how much big emitters are allowed to pollute, generated more enthusiasm.

"We are pleading to revise the linear factor before 2020 to a range of 2.3 percent," Hans ten Berge, secretary general of Eurelectric, which represents the European electricity sector, said.

Permanent removal of allowances might be needed, he added.

For now the total amount - or cap - on how much greenhouse gas big emitters can produce decreases by 1.74 percent annually.

When proposing its long and short-term measures last year, the Commission said it hoped for agreement on a temporary withdrawal of surplus allowances in time for the current phase of the carbon market (2013-2020), but the proposal has hit stiff resistance.

Member state debate has been paralyzed by the refusal of dominant EU member state Germany to take a stance and strong opposition from Poland, which is heavily dependent on carbon-intensive coal.

Only a Minority Would scraps ETS

Friday's all-day meeting was a consultation of interested parties, including representatives of member states, utilities, energy-intensive industries and green groups. There will be further consultation in April.

Around 200 written submissions to the Commission revealed a small minority believed the ETS should be scrapped, with most saying a functioning ETS was the most cost-effective way to engineer a shift towards a lower carbon energy mix.

There are, however, deep divisions over whether intervention in the market is justified and what form it should take.

Energy intensive industries, including chemicals, fertilizers and cement, echoed the Polish view that the weakness of ETS allowances reflects economic weakness and measures to drive their price higher could add to economic burdens.

In the opposite camp, environment campaigners, utilities and some academics say the lack of incentive to invest in low carbon energy augments costs and robs governments of revenue.

It also means renewable energy will require subsidies as the ETS is too cheap to force a switch towards low carbon fuel.

"There are significant negative fiscal effects. It means we have to raise the money somewhere else," Frank Convery of University College Dublin told Friday's Brussels meeting.

"We have hoped in Ireland for a price of about 30 euros a tonne. There would not be any need to subsidize (renewables, such as wind)," he said. "The downside of non-intervention is much greater than the upside."

(Editing by Jason Neely)

Campaign says has helped retire 15 percent of coal capacity

By Valerie Volcovici


1 March 2013

WASHINGTON - New York Mayor Michael Bloomberg and the Sierra Club, an environmental group, said Friday they were halfway to their goal of getting one-third of coal-fired power plants retired by 2015 through a variety of civic actions.

Bloomberg gave the Sierra Club $50 million in 2011 to launch the "Beyond Coal" campaign, which set a goal to preside over the retirement 105,000 megawatts of coal-fired power in four years and encourage a shift toward renewable energy.

The campaign took credit for helping retire an average of one coal plant per week in 2012 by engaging in public utility commission hearings, legal actions over federal Clean Air Act violations and taking part in investor meetings.

The campaign crossed the halfway mark this week after American Electric Power (AEP) announced Monday it will stop burning coal at three Midwest power plants by 2015 as part of a settlement with federal regulators, states and environmental groups, including the Sierra Club.

Environmental groups said the Ohio-based company, long known as the biggest coal generator in the country, would retire a total of 2,011 megawatts (MW) of coal-fired capacity at plants in Indiana, Ohio and Kentucky.

Since President Barack Obama took office power companies, including AEP, have announced plans to retire over 40,000 MW of coal capacity over the next several years as weak natural gas prices pushed power prices to decade lows.

Bloomberg told reporters that natural gas will continue to play a central role in the U.S. energy mix as the country weans itself off of coal use.

Solar and wind generation will only play small part in overall U.S. energy consumption, while hydro power can "help in some areas" but is constrained by energy transmission issues, Bloomberg said.

"It's safe to assume that natural gas will be part of the mix for a while," he said. "We are better off getting off coal even if it means going back to natural gas."

Bloomberg also said he supports the practice of natural gas drilling via hydraulic fracturing, known as "fracking," which faces deep opposition in the state of New York.

"We certainly should be drilling for gas," he said, but added that it should not be done in watershed areas.

(Reporting By Valerie Volcovici; Editing by David Gregorio)

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