Bloomberg New Energy Finance - Week In Review

This Week In Review was sent on Tuesday 27 May.

Advertising Banner

LANDMARK RUSSIA-CHINA GAS DEAL, AS AUSTRALIA MOOTS ITS RENEWABLES TARGET

The last week has seen not one – but two – gas deals between Russia and China: under the biggest, Gazprom will export 38bn cubic metres per annum (1.4 trillion cubic feet per year) of natural gas to the Asian country, with the first deliveries expected in four years. After nearly a decade of price negotiations, China will become Russia’s second-largest export market after Europe.

There should be no fundamental impact on Europe’s gas supply, said Bloomberg New Energy Finance in its report responding to the deal. This is because the new fields and pipeline infrastructure in the east of Russia will be physically separate from those serving the European market. The agreement is good news for both sides: China needs more and cleaner sources of energy to meet its surging demand, and Russia needs new markets for its gas.

The parties did not disclose the agreed price but the deal in total was worth “about USD 400bn”, said Alexey Miller, Gazprom chief executive. This would equate to some USD 10 per million British thermal units, based on our calculations, meaning China would pay a similar price to Europe, as the German border price is some USD 10.9/MMBtu. In addition to this agreement, China National Petroleum Corporation reached another gas-import deal last week, this time with Russian company Novotek for 3m metric tons per annum of liquefied natural gas for 20 years. While being a tenth the size of the other deal, this contract alone is for more than Ukraine imports from Russia.

Another country with LNG ambition is Australia where its renewable energy target has come up for review, with far-reaching changes on the cards. Abolishing or reducing the target would shelve AUD 12-21bn (USD 11-19bn) of investment in clean energy, scrap 7,000-11,000 jobs in wind and solar industries each year, increase power prices for consumers and deliver power companies AUD 6-12bn (USD 5.6-11bn) of additional revenue over 2015-20. These are the findings of Bloomberg New Energy Finance’s recent White Paper on the target review.

The analysis shows that scrapping or reducing the renewable target would strongly benefit power generators rather than consumers. Although costs to the average household would fall by AUD 10 (USD 9) a year for the first four years if the target is abolished, prices would surge thereafter due to less supply and competition in the power markets. Existing electricity generators would then receive an extra AUD 70.2bn (USD 65bn) in revenue between 2015 and 2030 if the target were scrapped, and AUD 40.3bn (USD 37bn) if it were reduced in line with some power company proposals. The majority of this extra revenue will flow to coal-fired power stations, which dominate Australia’s current power mix.

Australia’s renewable energy target currently comprises a goal to add 41TWh of new power generation from large-scale renewable sources by 2020; there is also a a small-scale scheme aimed at incentivising 4TWh of electricity generated from renewable sources by 2020. The deadline for submissions to the review was 16 May and the assessment panel is due to report mid-year.

Advertising Banner

Global venture capital/private equity investment in energy storage, hydrogen and fuel cells was $241m in Q1 2014

NYSE BNEF Global Clean Energy Indexes
Advertising Banner

Q&A of the Week

Hot drinks machine maker to cut GHGs 25%

Keurig Green Mountain, whose single-serve pods and brewers are in more than 16m US homes, says it needs to address energy use in customer kitchens if it’s going to meet climate goals by the end of the decade.

The Vermont-based maker of Keurig hot drinks machines for the home – like the K-Cup model – aims to reduce life-cycle greenhouse gas emissions of brewed coffee, tea and other drinks by 25% versus a 2012 baseline.

This is going to be a challenge as most of the company’s emissions footprint is out of its direct control – in the hands of suppliers and customers, according to Monique Oxender, senior director of sustainability.

Q: By the end of this decade, Keurig Green Mountain aims to reduce lifecycle greenhouse gas emissions of brewed beverages by 25% versus a 2012 baseline. What’s counted toward the life-cycle emissions of your beverages and which part will be most challenging to reduce?
A: 
In terms of that life-cycle footprint, we’re looking at cultivation, bean drying, packing for shipment, processing, distribution, consumption and end of life. In terms of energy use, the most significant contributor is within the supply chain and the consumption stages. Both of those are out of our direct scope of control, so they will be the most challenging for us to address. We just finished an enterprise greenhouse gas footprint and we are in the process of translating the results of that footprint into a five-year operational plan that will enable us to get to this 25% reduction.

Q: How do you get customers to reduce energy use?
A: There are two aspects...

 

This is an excerpt from the Clean Energy & Carbon Brief published weekly. To subscribe to the Clean Energy & Carbon Brief, click here.

 

Advertising Banner

BNEF services | Contact BNEF

Copyright © 2007-2014 Bloomberg Finance L.P. All rights reserved. This email has been sent to you by Bloomberg New Energy Finance, a division of Bloomberg Finance L.P. Please feel free to forward it to colleagues interested in renewable energy and energy technologies, provided it is complete and identifies Bloomberg New Energy Finance as the source. Bloomberg New Energy Finance does not purchase data from or to third parties. If you have received this from a colleague and would like to receive your own personal copy each week, please contact sales.bnef@bloomberg.net Please send any queries/comments to the Week in Review editor, and make sure you send us your own financial transactions in renewable energy and energy technology sector: editor.bnef@bloomberg.net.

This service is derived from selected public sources. Bloomberg Finance L.P. and its affiliates, in providing the service, believe that the information it uses comes from reliable sources, but do not guarantee the accuracy or completeness of this information, which is subject to change without notice, and nothing in this document shall be construed as such a guarantee. The statements in this service reflect the current judgment of the authors of the relevant articles or features, and do not necessarily reflect the opinion of Bloomberg Finance L.P., Bloomberg L.P. or any of their affiliates (“Bloomberg”). Bloomberg disclaims any liability arising from use of this document and/or its contents, and this service. Nothing herein shall constitute or be construed as an offering of financial instruments or as investment advice or recommendations by Bloomberg of an investment or other strategy (e.g., whether or not to “buy”, “sell”, or “hold” an investment). The information contained herein should not be considered as information sufficient upon which to base an investment decision. BLOOMBERG, BLOOMBERG PROFESSIONAL, BLOOMBERG MARKETS, BLOOMBERG NEWS, BLOOMBERG ANYWHERE, BLOOMBERG TRADEBOOK, BLOOMBERG BONDTRADER, BLOOMBERG TELEVISION, BLOOMBERG RADIO, BLOOMBERG PRESS, BLOOMBERG.COM, BLOOMBERG NEW ENERGY FINANCE and NEW ENERGY FINANCE are trademarks and service marks of Bloomberg Finance L.P. or its subsidiaries.

The data contained within this document, its contents and/or this service do not express an opinion on the future or projected value of any financial instrument and are not research recommendations (i.e., recommendations as to whether or not to “buy”, “sell”, “hold”, or to enter or not to enter into any other transaction involving any specific interest) or a recommendation as to an investment or other strategy. No aspect of this service is based on the consideration of a customer’s individual circumstances. You should determine on your own whether you agree with the content of this document and any other data provided through this service. Employees involved in this service may hold positions in the companies covered by this service.