UK launches first green emission trading scheme

Last month saw the launch of trades in greenhouse emission allowances in the UK in a government sponsored scheme that will enable “cleaner” companies to profit by selling permits to polluters.

The government has hailed the scheme as giving Britain world leadership in the growing business of carbon emissions trading, widely considered to be the most cost-effective way for countries and companies to meet Kyoto Protocol commitments to reduce global warming.

Trading is carried out by specialist brokers, some of whom have been arranging future contracts on UK emissions allowances for months. Among the companies taking part were Shell, BP, DuPont, ICI and Blue Circle. Companies participating in the auction set the clearing price for cutting carbon emissions at £53/t ($76/t).

At that price the auction participants promised to reduce emissions by a total of 4m t in five years, equivalent to about five per cent of the UK’s Kyoto target to be achieved by 2010. Trading should increase as companies that did not take part in the auction seek to improve their position in relation to the state’s tax on carbon, the climate change levy.

Companies that already have emission targets set through climate change agreements will be able to help their targets or to sell over achievement.

NETA has met main objectives, says Ofgem

The New Electricity Trading Arrangements (NETA) celebrated their first anniversary with the news that Britain has, for the first time since privatization, a fully-competitive wholesale electricity market – news which is good for domestic, industrial and commercial customers alike.

The new arrangements have meant that electricity is traded much like any other commodity, with over 98 per cent of sales taking place through traded markets. Since the reforms to the trading arrangements were announced in 1988, wholesale prices have fallen by almost 40 per cent.

Callum McCarthy of regulator Ofgem said: “NETA has been operating successfully for one year and has achieved its main objective of replacing the former inflexible centralized arrangements that existed under the Electricity Pool. We are now beginning to see the impact of NETA on customer prices – strongly in the industrial and commercial markets, and we expect to see the domestic market follow suit.”

Global wind power on the up

Global wind energy capacity is likely to increase five-fold by 2010 to 120 GW from its current 25 GW according to a study from German Wind Energy Institute DEWI.

The group recommended that wind technology firms in Germany, one of the world’s leading wind energy countries, participate in planned expansions in Spain, Italy, France, Poland and Turkey.

Brazil and China were also identified as future growth markets because of their vast wind and land resources coupled with rapidly increasing energy demand. The report added that if Germany successfully develops offshore wind parks, then by 2030 wind could provide 47 000 MW of capacity, equivalent to 28 per cent of the country’s annual power requirements.

France too plans a g10bn ($9bn) investment in wind power to build 10 GW of generating capacity by 2010, while Spain has similar plans to invest g110m in six new projects. Soria province has started construction of a 25 MW wind power station at Magana, consisting of 750 kW aerogenerators, to be completed this summer.

RTE increase export capacity

French electricity grid operator RTE will boost power flows to Germany, Belgium and the Netherlands by adding several hundred MW of capacity by November.

France, which is the world’s top electricity exporter, suffers from grid congestion particularly at its 4500 MW interconnector via Belgium which flows power to the Netherlands and Germany.

The increase in capacity depends on neighbouring networks. RTE is in talks with transmission operators such as Dutch Tennet, Belgium’s Elia and German utilities EnBW, E.ON and RWE.

RTE decided a few years ago to build the conductors to match the French system more closely to that in Germany, reducing bottlenecks within France and cutting costs for diverting electricity.

Fortum’s farewell to Germany

Finland’s Fortum group has sold its remaining shares in its German energy subsidiary Fortum Energie for £74m ($106m)

The deal includes the electricity sale and supply activities of Fortum Energie and those of the regional distributor Elektrizitätswerk Wesertal.

News digest

Austria: Graz-based Energy Exchange Austria launched the country’s first power trading bourse with 13 participants. The interest of power traders indicates that Austria’s power exchange will be able to position itself as an international brand in the long term and cooperation with other energy exchanges is planned, said the province’s economic councillor, Herbert Paierl.

Denmark: LA-based Magnetek announced that it has entered into a contract with Denmark’s largest electric company, NESA, to install a data transmission system on utility power lines in the city of Copenhagen. It is one of the first power monitoring and control systems capable of transferring complex data streams on the utility grid via power-line modems.

Germany: Germany, under fire for its reluctance to regulate its energy markets, will decide by October whether to create a sector watchdog, said Economics Minister Werner Müller. Any move to abandon the current system of voluntary rules is likely to face strong opposition. Cartel office chief Ulf Boege said he believed an energy market regulator was unnecessary and could hinder competition.

Greece: RWE Solutions will supply 400 kV lines in Lavrion-Argiropolis (west Athens) in time for the 2004 Olympic games. Construction commenced last month and is scheduled for operation in February 2003. The contract is worth €4.3m.

Italy: Italy’s upper house of parliament voted into law a watered-down energy decree originally aimed at liberalizing Italy’s electricity market. The lower chamber removed the decree’s sharpest measures in March by approving only the core of the original government decree to speed up the authorization process needed to build power stations. It dropped two key amendments including the introduction of a ceiling to bar any player from holding more than 50 per cent of Italy’s generating capacity.

Spain: Mott MacDonald has been appointed owner’s engineer for two new combined cycle gas turbine power plants in Spain by Gas Natural SDG. The 800 MW combined cycle plants will be built in Arrubal in the north and La Plana del Vent close to Tarragona in the north-east.

Switzerland: VA TECH Hydro has won a contract for the supply of new Pelton turbines to Sernf and Niederenbach, Schwanden in Glarus, Switzerland, to reinforce their positions as market leader in Switzerland. Work includes installing a new 28.4 MW Pelton turbine with four jets at Niederenbach, and a new 15.6 MW Pelton turbine with six jets at Sernf, both vertical axis, including governors.