Clean Power

Published on February 8th, 2014 | by Guest Contributor


HSBC: Europeans Dragging Their Feet On Climate Action

February 8th, 2014 by  

Originally published on RenewEconomy.
By Sophie Vorrath.

Europe’s climate policy proposals reflect the lowest level of ambition required to keep global warming at 2°C, while its goals on renewable energy are “disappointing” and bad news for the industry, according to a new report by banking giant HSBC.

Released on Wednesday, the report is based on the publication of the European Commission policy framework for climate and energy in the period from 2020 to 2030, which it describes as “a first indication of the EU negotiating position in the run up to a global climate deal in Paris 2015.”

In a nutshell, the EU 2030 climate and energy package proposals are for a 40 per cent reduction in greenhouse gases (GHGs) and an EU renewables share of at least 27 per cent in energy consumption, with no individual country goals.

The HSBC report describes the 40 per cent by 2030 GHG aim as “modest” but expected, adding that it “implies a 2% CAGR (compound annual growth rate) for GHG reduction from now on, increasing ambition from the 0.2% pa rate of reduction left for delivery of the 2020 goal.”

But in the context of the long-term goal of an 80 per cent cut in greenhouse gases by 2050, the bloc’s proposals “offer the lowest level of climate ambition” possible, says the report.

“This is the lower end of the GHG emission reduction range (80- 95%) expected from the developed countries by 2050, to limit the global temperature increase to 2°C,” says the report.

“The 2030 GHG reduction target needs to be translated into national GHG targets for the non-ETS sectors before 2021. In addition, member states need to draw up their national plans for competitive, secure and sustainable energy for the period up to 2030.”

On renewables, HSBC describes the 27 per cent goal for the proportion of renewable energy in the overall mix by 2030 as “disappointing,” noting that it suggests growth of renewables in the energy mix will actually slow from a rate of 5 per cent per annum in 2010-2020, to 2 per cent during the 2020-2030 decade.

“The proposed target implies a decline in the growth rate of renewable installations from 2021-30 compared with 2011-20,” says the report (see charts below). “For electricity, from 2020-2030 we estimate 150GW of total new renewable capacity addition, compared with 210GW during the previous decade.”

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And while the report notes that this scenario is “marginally better” than the EU trends to 2050 scenario, which points to just a 1 per cent renewable energy growth rate in 2020-30, it stresses that the 2030 package is, on balance, “a negative” for Europe’s renewable energy industry, with no new target for energy efficiency.

“(The research) shows more differences in views in Europe on renewable energy targets than for GHGs,” says the report. “For instance, the UK and Poland have strongly opposed any mandating of renewable targets, whereas Germany and France favoured it.”

The proposed package also provides nations like the UK with the option to choose nuclear technology over renewable expansion. In particular, says the report, there appears to be “increased risk for the offshore wind technology given its higher capital costs and project development risks.”

“Recently, Germany announced its plan to scale down its 2020 offshore wind target from 10GW to 6.5GW, while also limiting annual wind and solar installations to 2.5GW each.

“We now see increasing downside risks for offshore wind targets in the UK, the largest offshore wind market, not only in entire Europe but also globally. In case of a scale down in the UK offshore wind expectations, supply chain development and technology cost reductions are likely to slow down, thereby adversely impacting the offshore wind installations globally.”

In the absence of country-specific renewable targets, the report points to the carbon price as “an important driver for the economics around renewable capacity additions.”

“The European Commission, rather ambitiously in our view, expects carbon prices to increase to €40/tonne in 2030 under the proposed framework, from an estimated price of €5/tonne in 2020,” says the report. “Prices at €40/t would help accelerate a switch from coal to gas and renewable technologies.”

Screen Shot 2014-02-05 at 11.45.55 AM

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  • CaptD

    Whose dragging their feet? It is NOT the Greens, I believe it is all the Leaders that are now trying to cash in on some form of Nuclear Payback* by the very industries that are threatened by renewables.

    Renewables and especially Solar (of all flavors) are now becoming much more mainstream, as in, “What took you so long to embrace going Green?”.

    Thankfully we are no longer seeing the many variations of “weirdo tree hugger” labels being used to describe all those that now are adopting Green technology, something which in the past, has also slowed down the shift in the energy marketplace from various forms of energy generation that ever more ratepayers now realize are dirty as compared to what is Clean Green and/or Renewable. When people see someone driving a Tesla S, they are thinking, Wow, that is really cool, I wish I had one because it uses NO gasoline; not there goes some weirdo.

    A great example from our own past, is how the “Ice Men” that delivered and sold block ice for ice boxes tried to pooh-pooh the refrigerator when it was first introduced; now looking back, we can clearly see that it was all just a ploy to protect their market share, in the face of a fundamental change in the marketplace that made their own industry obsolete.

    Now Big Nuclear is now suffering with major market share loses because Fukushima has proven that nuclear can go BAD and when it does for any reason, it can affect a Countries economy, if not the health of the entire Planet. After Nuclear both Big Coal and Big Oil are next in line because they too have huge health issues surrounding their usage. Soon even Big Gas will be faced with the same fate as Big Nuclear, Big Oil, Big Coal and tall hose Ice Men of old, because Big Solar is not only here to stay, but is replacing an ever greater amount of what used to be their market share day by day!

    This is why we are now seeing so many forward looking US Utilities looking into establishing very long term contracts for the energy they provide in the hopes that they can extend their business as far into the future as they can, in order to protect their market share for as long as possible. This may help the Big Utilities in the short term but as ever more ratepayers add their own solar generating capacity, I foresee these same Utilities beginning to an early shuttering their own generation assets in the next few decades because their capacity is either no long needed and/or it simply cannot compete against modern future clean Solar’s ever increasing efficiency.


    Those that support nuclear power because nuclear power somehow supports them; no matter what the health implications or other “costs” are for others.

  • jep

    There has been a big fight in the EU lately. The European Commission wanted to abolish both the efficiency target and the renewables target, and focus only on a CO2 target. Greens and many “progressives” went ballistic, of course.

    The EC plans make perfect economic sense, since market forces will automatically translate forced CO2 reductions into an optimal mix of low-CO2 generation and reduced demand. One problem though – if you’re a Green and not an environmentalist: nuclear power. The N-word of Europe. The Greens went out of their way to criticize the EC proposal without mentioning the N-word.

    So much for all the talk about low-cost renewables. The Greens are SO afraid to leave it to market forces to chose between nuclear and renewables.

    • Matt

      And Nuc’s, gas, coal; fight to remove the “unfair” support green power gets. But claims removing their government support is raising taxes, just because it has been around longer and is written all thru different laws.

    • Ross

      The cost of nuclear will reign that in, nuke fanboy.

  • Lucy Kelvin

    HSBC are said to be one of the world’s biggest investors in fossil fuels. In which case they should walk it like they talk it and not hypocritically continue to finance the world’s worst source of CO2, the coal industry.

    Stop acting as the enablers.

  • Steeple

    News flash. The Euros are broke, and their cost position is bad in many industries. It’s going to be difficult for them to invest in much of anything. It’s up to North America and Asia to lead the way on Renewables investment.

    • JamesWimberley

      Where do you get these talking points? Is Germany broke? Certainly the stagnation induced by austerity is leading to a depressing loss of ambition and nerve in the political class. What’s encouraging is that the loudest and best-informed criticism of the EU Commission policy paper is coming from the green side, now including establishment players like HSBC.
      Still, a 40% reduction in GHG emissions by 2030 is far more than the pseudo-commitments of the USA and China.

      • Steeple

        Well gee, Jim. Let me explain this to you.

        Here is a list of EU countries that have money: Germany, Netherlands, Denmark, Austria

        Here is a list of those that don’t: Spain, Portugal, Italy, Greece, gulp France and all of the others.

        Germany has plenty of checks to write already, so you’ll need to look elsewhere. They don’t even want to bail out Greece, and that’s the smallest of the problems.

        It’s nice to have a really ambitious target that they will never ever hit. Just like all of the other previous ambitious targets that the EU has breezed by and missed. Nothing like shutting down nukes and substituting coal into the mix for reducing emissions.

        And please don’t lump the US (decline emissions) in with China. The two countries have nothing in common here.

        • Ross

          The decline of Europe is greatly exaggerated.

          • Matt

            Get out of town, the news in the US gets distorted? While it would have been nice for EU to have stronger goals, at least they have a goal. The US can’t even have a plan. We have national figures saying we need to close EPA, drop labor laws, and min-wage in order to give the 0.1% freedom to make more money.

          • Rick Kargaard

            It is interesting to compare U.S. and European gasoline prices. Compacts are the norm there and electrics are taking huge steps.

          • Steeple

            You might want to let the 25% unemployed in Spain in on that

      • Steeple
  • No way

    Reducing emissions and helping the climate are not exclusive to renewables. Nuclear is the largest contributer to clean energy and will play an important role in the european and global reduction of emissions.
    Europe is very diverse so the same goal for everyone is a hard thing to do. Most countries set their own agenda where the ambition is much higher than this one.

    • Ross

      I’d be a lot happier if there were binding targets on EU countries with fines if they didn’t meet them like there is up to 2020.

      • No way

        Me too. But then having them country specific so that all countries have to reach as high as they can.

    • Bob_Wallace

      Nuclear will play a shrinking role in European energy. Germany, Belgium and Switzerland are closing all their reactors. France is planning on closing 25%. Few new reactors are going to be built.

      Globally nuclear reactors are dropping in number. Plans to build new ones are being canceled.

      Existing reactors will play a role but the world is going to use renewables going forward. Take a look at the graph. The number of nuclear reactors stalled out years ago and has been falling recently. Plans for new reactor builds are being canceled.

      Worldwide use of electricity did not stop growing back in 1989 as reactor numbers did. That means for the last 25 years nuclear has been playing a smaller and smaller role in electricity generation.

      • No way

        There will be some reactors closed in Europe in time but there are also a few being built and planned. The over all effect will probably stay about the same or slightly increase.
        It’s a good thing that Switzerland will close their oldest reactors after 50+ years of operating, a lot have happened in 50 years.
        The idea is often to let them run their lifetime, not replace them and hopefully won’t need them at that point.
        Belgium burn a lot of fossil fuel and are nowhere near replacing that so it would be horrible for the environment if they actually decide to close down reactors.
        Germany, the largest coal burner by a great margin in Europe have made a crazy move and the rest of us will have to pay for it with lesser health.
        France have stated many times that they see no reason in reducing their nuclear energy capacity but might reduce it little by little in the future (even though it would be better if they kept the capacity and exported to less environmentally friendly countries like Germany, Luxembourg, Belgium etc).

        Plans to build new ones are increasing but the total global capacity will only slowly rise since the building process have been suspended for quite some while so that old reactors whos time is up will almost cover the new reactors being built.

        Nuclear will hopefully help us step forward going hand in hand with renewables to help the local and global environment. And help us from slipping up and starting to go backwards or sideways jumping from one polluting and deadly energy source to another.

        • Bob_Wallace

          “There will be some reactors closed in Europe in time but there are also a few being built and planned. The over all effect will probably stay about the same or slightly increase.”

          Show us the math.

          I’ll help you get started. Germany is closing nine and building zero. France has 58 reactors and is planning on closing 25%, so another 14, 15 join Germany’s 9.

          Sweden and Belgium have started to phase out Nuclear. Sweden is closing 5. Belgium will be closing 7.

          Austria , Denmark , Greece
          , Ireland , Italy,
          Latvia, Liechtenstein, Luxembourg , Malta , Portugal
          , and Norway have no nuclear power reactors and remain opposed to nuclear power.

          Austria, Spain and Italy have laws against building nuclear plants.

          So that’s 35, 36 nuclear plants closing. And Europe is currently building 2. At least 15 of the EU27 countries are going nuclear free.

          Where’s your great European nuclear renaissance going to happen?

          • No way

            You’re obviously living far far away from this area since you’re cherry picking some of the official government statements.
            Closing means “we might do this sometime far into the future”.
            Germany might close their nuclear plants, but not in the close future and there will be a few German governments that might have another say in this. So maybe 2-3 german reactors closing during the next 10-15 years.
            France are keeping the same effect so even if they close some they plan on replacing the effect with upgrades and probably some new reactors. France want to export nuclear power plants and it’s hard to do that if they don’t believe in it on home soil.
            Sweden are not phasing out. They have increased the effect with upgrades and are looking into building replacement reactor(s) 10-15 years from now. The deciding factor will be the industry since it’s energy heavy with the paper and metal industries.
            Finland, Spain and Switzerland are other countries that have been boosting their effect by upgrades.

            Finland are building and planning on more. UK have agreed terms to build new nuclear. Lithuania, Slovakia, Czech republic, Ukraine, Romania, Bulgaria, Poland, Hungary and Russia are building or have ordered and agreed upon new nuclear reactors.
            And then there is Turkey in the outskirts of Europa, partly in europe, trying to get into the EU but puting their planned nuclear plants in the asian part of the country.

            So at least 13-14 under construction. A handful being closed “soon” and maybe 10-15 during the next 10-15 years. Another 25 in planning stage excluding Russia (and you never know when or how long time it will take to get them operational so there might be more closed before that time). Russia planning another 20-30 reactors but time will tell if and when and how they will be built too.

            And then there is the poor Albania who want to build but can’t afford to do it on their own. I don’t think they will ever get there 😛

            Unfortunately a lot of the european countries depend heavily on fossil fuels so even all this nuclear plus all the renewables that are buing built might not be enough to make us totally green. But it’s a decent start. But there is a long way to go to close down all the coal and gas plants and get rid of as much oil as possible. If we somehow can get Germany, Poland and Bulgaria on the green train a lot positive could happen though.

          • No way

            I forgot about Belarus who have started putting concrete in the ground for their first nuclear power plant.

          • Bob_Wallace

            Counting plants under construction twice is another good way to build up your fantasy.

          • No way

            Counting plants under construction twice? If I did that then it would be 26-28 reactors.

          • Bob_Wallace

            So your formula adds in all the “might builds” and speculations but ignores all the “stated will close”.

            That’s one way of making the total support your fantasy.

          • No way

            And you’re taking might close and not counting actually under construction and deals agreed upon and signed by governments with other governments for both building and the economical terms.
            Maybe you should visit the region and get closer to what actually happens here.
            And I’m sorry of the progress toward a greener Europe and reducing fossil fuels isn’t your fantasy. A visit to Poland and Germany to breath the air would hopefully change your fantasy of Europe increasing the fossil fuel use in some parts and only slowly decreasing the use in other parts.

      • jep

        OTOH, there are 71 reactors actively under construction right now, which is up 3x since the all-time low in the 90-ies. This recent ramping in nuclear reactor builds will soon see an increasing number of reactors coming on-line.

        With China ramping fast, India committed to an ambitious nuclear program, the US restarting its nuclear construction industry after 30 years and the UK starting to build again, we have interesting times ahead. That some European nations have a difficulty deploying rational plans due to political pressure will not stop nuclear from going forward.

        • Bob_Wallace

          It’s actually a bit less than 71, but never mind, we’ll use that number.

          OK, 71 reactors being built.

          Japan closed 54?

          The US closed (or scheduled to close) 5 last year. Another dozen or so are likely to fail over the next year or two.

          I laid out the European closures for you in another comment. The number was 35 or so.

          71 being built. 94+ closed or closing. That spells net loss to me, not “interesting times ahead” if interesting means a growth in nuclear capacity.

          BTW, China has reduced the number of new reactor starts post Fukushima. Whether they return to their previous rate of reactor construction remains to be seen,

          Something that you need to take under consideration is how the energy world has changed over the last couple of years. Wind and solar have greatly dropped in cost as has natural gas. That resets the calculations.

          Right now a combination of wind, solar and NG produces much cheaper electricity than does nuclear. And it can be built and brought on line much, much faster.

          • Matt

            They are being built in China because the cost of loan/insurance is zero. In countries that use “capitalism” they are only being built when the government promises that they can charge whatever is needed to make a profit, plus the government has to insure them since no company will (See UK or Georgia in US).

          • No way

            Japan have not closed 54 reactors. They are offline but far from closed. It looks like 48 of those will be restarted after being reviewed, no timeframe for the restarts yet though.

            And it’s a horrible thought that natural gas will be used just because it’s cheaper. It’s a horrible thought that coal, oil and natural gas is used just because it’s cheap.
            A greener world will cost money even if it is by some sponsoring or guarantees to nuclear, wind and solar.

            That’s why we need rules and regulations and such things as carbon taxes and taxes on pollution so that you can’t have a coal/gas plant and not pay the real cost for it.
            Or drive around in a 18 mpg truck like you own the world just because you can afford it.

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