Obama and Xi join landmark climate pact that may enter into force next year
The global climate accord reached between 195 countries in Paris last December could come into force as soon as next year, following yesterday’s decision by US President Barack Obama and Chinese President Xi Jingping to formally join the pact to combat climate change. Ratification of the accord by the leaders of the world’s two largest carbon-emitting countries – which together are responsible for 38% of global emissions – means that the deal is one step closer to being crystallised in action. In total, countries representing about 40% of global emissions have now ratified the agreement, which will go into effect once the 55% global emission threshold has been met.
Obama and Xi joined the pact to limit global temperature increases from pre-industrial levels to below 2 degrees Celsius at a bilateral meeting before this week’s G-20 Summit in Hangzhou, China. The most notable outcome from the COP21 agreement brokered almost a year ago is the “five-year review cycle for country targets and the establishment of transparency requirements on all countries,” wrote Richard Chatterton, head of carbon at Bloomberg New Energy Finance, in a reaction to the news. Yet the agreement fails to properly address the issues of demarcation between countries, a long-term collective temperature goal or the aforementioned $100bn pledge in climate finance from developed to developing countries by 2020, Chatterton said in the note. “The new deal is weak, containing no concrete increase in the level of ambition to address climate change,” he wrote in December.
Meanwhile, PJM Interconnection – the operator of the largest US power market – has said that it can meet the Obama administration’s climate change goals while capping the impact on power prices to within a 3% increase. Power supplies in the US mid-Atlantic and Midwest can meet the emission reduction goals for less than $2/MWh, or 1-3% of average wholesale electricity costs, PJM said in a report. The US Clean Power Plan seeks to cut carbon dioxide emissions from generators 32% from 2005 levels by 2030. In other climate change efforts, Australia’s Climate Change Authority has recommended introducing an emissions trading system for the electricity industry. The authority put forward a proposal whereby utilities would trade permits amongst themselves to keep below a baseline emissions-intensity limit, which would gradually be lowered so that the sector would operate with net zero emissions before 2050.
Australia’s Prime Minister Malcolm Turnbull’s Coalition government is likely to favor such an intensity-based system for the power sector when it conducts a review of climate policy in 2017, as Turnbull has been known to propose comparable solutions before. Also visiting the G20 Summit in China this week, UK Prime Minister Theresa May has had to strike a delicate balance between positioning Britain as a welcoming recipient of foreign business, despite its recent decisions to leave the European Union and to delay the GBP 18bn ($24bn) Hinkley nuclear project in southwest England, for which China General Nuclear Power would provide a third of the financing.
May has said that she intends to “build on” the relationship the UK has with China, following “significant Chinese investment” in the island nation, and that she is in the process of weighing up the evidence and taking advice on Hinkley, before she makes her final decision on whether or not to approve the project by the end of September. If the nuclear project were to be cancelled, it would cost GBP 4.6bn to fill the energy shortfall with additional gas capacity – some 15% of the proposed incentive for Hinkley, according to the BNEF Analyst Reaction: UK government puts emergency brake on Hinkley C.
In other UK news, Uber Technologies announced that it plans to introduce 50 fully-electric vehicles to its London fleet in September, with the aim to bring in hundreds more next year, while in Scotland, Nova Innovation connected the country’s first tidal energy project to the grid. The 300kw three-turbine array has a price tag of GBP 3.7m ($4.8m) – half of which was provided by private investors. Elsewhere, Uganda will commission East Africa’s biggest solar plant this month – the 10MW Soroti project — which is owned by Access Power and located in the country’s eastern region.
In the Caribbean, Cuba’s communist government is turning to foreign companies to finance renewable energy projects on its soil as it faces cutbacks in cheap oil imports from Venezuela. Cuba’s president Raul Castro is pitching large wind, solar and biomass plants to foreign investors, in a bid to liberalize previously state-run sectors and reduce the island’s heavy dependence on oil-burning power plants. A new goal to add 2.1GW of new renewable capacity will cost about $3.5bn and in some circumstances the government will allow foreign companies to take full ownership of projects to make this possible.