China's Uncertain Solar Future
At this year’s World Cup in Brazil, one of the biggest players off the field is Yingli Green Energy, the Chinese solar company looking to make a grand entrance onto the world stage. The company made a splash at the 2010 World Cup in South Africa by helping implement the “Football for Hope, Energy for Hope” program in the region, leaving a lasting impression several years after the Cup is over.
Looking just at Yingli, it would seem that Chinese solar is riding high. A part does not stand in for the whole, though, as the future solar in China is looking more uncertain by the day. Reports both positive and negative have been released in the past few days making it difficult to gauge where the industry will head next.
Looking back to the start of 2014, the outlook for solar in China was cautiously optimistic. Deutsche Bank had carefully managed hopes for Yingli as it entered into a joint venture with Datong Coal Mine Group. Yingli hoped to exceed a production of 12GW in 2014 and Deutsche Bank believed it could.
There were fears, however, that the Chinese government would place a 4GW cap on utility-scale solar installations. Deutsche dismissed this and reaffirmed that the Chinese government was committed to solar energy and hoped to reach a production goal of 35GW for 2015.
A draft proposal for the 4GW cap circulated, casting doubt on how high the actual demand for solar would be in 2014. In an analysis from Credit Suisse, the companies that would be most negatively affected by the cap would be Yingli, Trina Solar, and Jinko Solar.
The decreased demand for solar energy in China became a reality with the first quarter report out this year. Despite having a strong demand of 6GW in Q4 of 2013, Q1 of 2014 saw demand fall to only 1GW.
Deutsche Bank met with Chinese solar firms and attempted to refocus the annual goals, saying that 2GW was a more realistic target for distributed solar installations as opposed to the ambitious 8GW. In total, China hopes to have 14GW of new installations this year, with 8GW coming from distributed installations and 6GW coming from utilities. In the middle of May, solar stocks in China were down across the board.
Flash forward to this week. Solar stocks are down once again with reports that China is thinking of cutting its 2014 energy targets because of issues with credit availability. According to the Global New Energy Development Report 2014, though, China has surpassed Germany as the world’s largest solar PV market. It was also projected that solar panel production in China is expected to double by 2017.
So, what’s happening with China’s solar market? It’s a bit difficult to say.
Forbes Magazine said that China’s 2014 installation target “seems ambitious,” noting that the 8GW target in the distributed generation segment could prove problematic since that portion of the market is still a bit underdeveloped. Forbes hopes that China’s incentive driven market will keep production high and give the market a reason to keep growing. With the potential cuts, though, it remains to be seen if plans to hit target goals and beyond will come to fruition.
Chinese solar companies are also looking to break into foreign markets as well, much like Yingli has done with its involvement in the World Cup. Today, Chinese solar giant Solargiga announced its signing of an agreement to install 200MW of solar power capacity in Ghana. A scandal last year involving a number of solar companies from different countries, including China, dumping materials in the Indian market lead to scrutiny of the companies and a potential future of higher duties on foreign panels. This could make international business for Chinese solar companies a bit more difficult.
Despite the uncertainty, there are those still optimistic about China’s solar future. Many have cited China’s heavy reliance on coal and its war on pollution’s opposing forces as a driving factor for increased emphasis on renewable sources of energy such as solar. Others believe China will come close to its target goals in the solar sector for this year.
Despite these uncertainties, China’s solar energy future is definitely something to watch through the end of this year and beyond.
Carbon dioxide removal revenues worth £2bn a year by 2030
Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission.
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.
The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.
The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture.
It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.
The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020.
Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.
The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.
While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.
Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.
Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse.
"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.
“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.”
The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets.
Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.
Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."
McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:
- Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
- Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
- Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
- Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
- The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere