Bloomberg New Energy Finance - Week In Review

This Week In Review was sent on Tuesday 18 November.

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US-China pact raises hopes as power debate hots up in Turkey

The surprise announcement of an agreement between China and the US – the world’s largest emitters – to limit carbon pollution dominated the news last week. Not only does the deal alter the course for the two countries involved, it may nudge otherwise recalcitrant emitters to commit to reductions, and limit global warming.

US President Barack Obama pledged to cut his country’s emissions by 26-28% by 2025 from 2005 levels. The earlier target was to reach 17% below the 2005 emissions level by 2020. His Chinese counterpart, Xi Jinping, said that that China’s emissions would peak by 2030, and that 20% of its primary energy mix will be derived from zero-carbon sources.

“The two giants coming to an agreement in any form carries weight. The pact shows strong support for the global climate negotiations process leading up to talks in Paris next year. And it may put pressure on other major emitters to come forward with their own goals,” Bloomberg New Energy Finance said in a note, published last week: The ambition and significance of the US-China Climate Pact.

BNEF analysis shows China’s power sector emissions peaking around 2026 at just over 6.3Gt/year. Power sector emissions in the US will drop 30% by 2025, even if there are no new policies. Though the transport sector’s emissions are also expected to continue to fall, “the US would need to stretch – and more policy will be needed – to get to 26% reductions economy-wide,” the note said.

Obama is widely expected to sidestep Congress and rely on regulatory agencies like the Environmental Protection Agency to implement the cuts, steps that Republicans promised to undo. “This deal is a non-binding charade,” Jim Inhofe, an Oklahoma Republican who is the senior member of the Senate Environment and Public Works Committee, said in a statement. “As we enter a new Congress, I will do everything in my power to rein in and shed light on the EPA’s unchecked regulations.”

Meanwhile, chief executives of the biggest coal burning utilities in the US predicted black-outs and rising power bills if they were not given more time to achieve emission cuts. The move threatens to shutter coal-fired plants before enough new generation can be built to replace lost supplies, said Thomas Fanning, chief executive officer of Southern Company, and Nick Akins, CEO of American Electric Power.

In Turkey today, Bloomberg New Energy Finance is launching a report examining the power choices for that country to 2030. The report , funded by the European Climate Foundation and commissioned by WWF-Turkey, argues that a renewables-based strategy could meet Turkey's power needs over the years ahead at comparable cost to the coal-led strategy its government has so far favoured.

Moving to Europe, the news was more about projects. The Isle of Man, a UK dependency in the Irish Sea, said Denmark’s Dong Energy was its preferred developer for a 700MW offshore wind farm. The project is to be delivered in 2023.

In Norway, Swedish wind developer Eolus Vind bagged permission to build a 330MW farm – Norway’s largest. Bloomberg New Energy Finance expects global onshore wind installations to peak at 55GW in 2015, as policy uncertainty impacts build-out. Details of the forecast for the onshore and the offshore wind market can be found in our note: Q4 2014 Global Wind Market Outlook.

In the solar sector, Chinese developer Sky Solar managed to raise $44.2m in an initial public offering after twice delaying listing in the US. The company – now listed on the Nasdaq - initially sought to raise as much as $150m.

In Egypt, the government unveiled plans to invite bids to construct 2GW of solar PV projects of 0.5-50MW each and 2GW of wind farms of 20-50MW in its first auctions for clean energy subsidies. The targets for the next three years also include 300MW of smaller solar plants. 

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Bloomberg New Energy Finance expects renewables and nuclear to make up 43% of total power generation in 2030

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Q&A of the week

Customer use accounts for 61% of HP's CO2 footprint

Cloud computing uses as much energy as the country of Japan every year and it's getting bigger. 'Business as usual is not sustainable,' said Gabi Zedlmayer, vice president and chief progress officer for Hewlett-Packard.

The Palo Alto, California-based company announced in September a goal to reduce the emission intensity of its products, like printers and cloud-computing hardware and software, by 40% by 2020 on 2010 levels.

Judy Glazer, senior director of social and environmental responsibility for printing and personal systems, said this follows up on the company's previously stated goal to reduce total greenhouse gas emissions from its operations and supply chain by 20% by 2020, compared to the end of the last decade.

"This [new] goal is about what we call the 'use phase' of the product, so the energy used when the product is in our customers’ hands," she said. "We focused on that because our footprint analysis has shown us that approximately 61% of HP’s total carbon footprint is in that 'use phase,' when customers are using our products and solutions."

Zedlmayer said the company views renewable energy as an important part of its strategy to reduce operational emissions and it's set to reach 10MW of installed capacity by 2017. The company has worked with WWF to develop the Corporate Renewable Energy Buyers' Principles, a framework that aims to help corporations overcome challenges in procuring renewable energy to power their businesses.

Zedlmayer and Glazer spoke with Clean Energy & Carbon Brief about HP's renewable ambitions and the sustainability challenges ahead.

Q: HP has a goal to reduce the emission intensity of its product portfolio by 40 percent by 2020 compared to 2010 levels. Do you have any figures on how much, in terms of emissions, you are looking to save?

Judy Glazer: This target is set in terms of emission intensity. We intentionally made that choice because our product sales could go down or, obviously we hope, up significantly. To give you an example of what that would represent from the supply chain: We started measuring our supply-chain carbon footprint in 2008. We published data from calendar year 2007, and we’ve been doing it every year since. That accounts for roughly a third of our footprint. What we’ve seen during that time is a very significant reduction in both total emissions and in emission intensity. If you look, for example, from 2010 to 2012, those are calendar years, and in our most recent report, you would see our supply-chain emissions dropped from 4.5 million metric tons of carbon to 3 million. That sounds like a one-third reduction, but it also happened to coincide with a historical drop in the PC business. If you look at emission intensity, it corresponds to a very substantial decline over those three years of 7%. So, we felt it made sense for this type of goal. We haven’t focused on a specific number, but rather on a percentage improvement.

Q: How have you been making the manufacturing process greener? Do you invest in renewable energy?

Gabi Zedlmayer: On renewable energy, absolutely yes. We use renewable energy as a really important part of our operations goal to reduce total greenhouse gas emissions by 20% by 2020 over 2010 [levels]. If you look at the past few years, in 2013, our installed capacity for onsite renewable energy…

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

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