BP becalmed as economic problems hit green energy projects
Its bad news for the green sector as a number of news stories point to a negative fall out from the global credit crunch. Firstly BP has ditched its ‘Beyond Petroleum’ plans at least in the UK, and has scrapped plans for investments in the UK wind sector, preferring instead to focus on renewable energy in the US which a BP spokesman said is ‘the best place to get a strong financial return’. Shell has already abandoned its current wind-sector ambitions. BP, which made a profit of £6.4 billion last year has also said it will not bid to be involved in the government backed sdcheme to develop coal fired power stations with carbon capture and storage (CSS) capacity. Commentators have said that Britian’s efforts to become a clean energy leader will be seriously hampered by a lack of investment but the country’s complex planning laws, soaring costs, difficulties in getting connections to the National Grid and lack of established investment climate mean that countries such as Spain and the US are preferred destinations for green energy projects and a drop in oil prices currently makes the sustainble power industry less atractive than the oil and gas industries.
Then came news that there has been a collapse in the market price for recycled materials paralleling the collapse in world commodity prices. A meeting by the Irish waste Management Association (IWMA) was told that globally, the price for recycled materials has fallen as much as 75%, the recycling industry heard and speaking after the meeting, IWMA chairman Jim Kells told the Irish Times: “To date the market has been very buoyant, and recycling rates have increased, but the recent fall in commodity prices will have an impact across the retail, commercial, industrial and household sectors.”
Among the solutions discussed at the meeting was storing recyclables in the hope prices will recover, selling off the material at a loss or, controversially, selling them as a fuel for cement-kilns. The story is the same in the UK with the Confederation of Paper Industries warning that demand had dried up for recycled products in the Far East (who were snapping up three quarters of Britian’s exports of paper fro recycling) meaning current collections run the risk of being incinerated or going to landfill. With the UK collecting over 8.6 million tonnes of paper and cardboard a year - thats a heck of a lot of landfill!
Finally a general drop off in industry is likely to result in less demand for the European trading scheme’s carbon allowances according to market analysts. Many commentators have been upbeat on the likely impact of the credit crunch on the environmental sector, arguing that many ‘green’ corporate initiatives also protect the bottom line, so are likely to become more, rather than less, popular as the business world feels the bite. But for carbon trading, the picture could be less rosy as companies around the world tighten their belts, carbon emissions are likely to drop off slightly which means the price of carbon is likely to fall.
But one glimmer of good news on windfarms - two current windfarm operators, ScottishPower renewables, part of Spain’s Iberdrola Renewables and Sweden’s Vattenfall have said they plan to build 6000 megawatts of installed capacity as part of the next round of UK offshore licences with Vattenfall saying the UK’s coastline made it ideal for offshore windfarms.
On carbon trading see the article by Sam Bond on www.edie.net and see the Guardian (p26) 11th November 2008.