What does U.S. and Chinese Climate Announcement Mean for the Renewable Energy Sector?
Some big news came out of China yesterday, at U.S. President Barack Obama and Chinese President Xi Jinping announced a new climate deal with a goal of greatly reducing each country’s greenhouse gas emissions.
The U.S. will focus specifically on reduction of greenhouse gasses, doubling its current target to 26 percent by 2025 and China will focus more on ramping up its use of both nuclear and renewable energy sources. Combined, the countries account for one-third of global greenhouse gas emissions, making them the largest two producers in the world.
While this is great news in terms of climate action, what does it mean for the renewable energy sector?
In short: very good things.
China wants to drastically ramp up its alternative energy usage to levels that would be more than all of China’s coal fired power plants combined and be the equivalent of the total electricity generation in the U.S.
"In China, it's going to require a huge investment in clean energy," NPR’s Scott Horsley said on Morning Edition. "By 2030, China wants to be getting 20 percent of its energy from nonpolluting sources. And when you look at the growth of energy consumption in this country, that's a lot of windmills and solar panels."
This deal has implications in the sector beyond China and the U.S.
Jake Schmidt, director of international programs for the Natural Resources Defense Council in Washington told Bloomberg news that the U.S. and China have been “two of the most difficult players in the history of climate negotiations,” noting “the fact that they are coming out and saying they are going to take deep commitments will be a powerful signal to the rest of the world.”
Dave Griggs, director of the Monash Sustainability Institute at Monash University in Melbourne, sees this deal as an imperative to other countries to get on board with addressing climate change. These solutions would require large amounts of renewable energy, spelling dramatic growth for the sector over the next decade.
“There’s no doubt, with the U.S. and China taking this seriously, it really leaves other countries nowhere to go,” he told Businessweek. “They either follow suit or appear to be lagging behind.”
Drax advances biomass strategy with Pinnacle acquisition
The Group’s enlarged supply chain will have access to 4.9 million tonnes of operational capacity from 2022. Of this total, 2.9 million tonnes are available for Drax’s self-supply requirements in 2022, which will rise to 3.4 million tonnes in 2027.
The £424 million acquisition of the Canadian biomass pellet producer supports Drax' ambition to be carbon negative by 2030, using bioenergy with carbon capture and storage (BECCS) and will make a "significant contribution" in the UK cutting emissions by 78% by 2035 (click here).
This summer Drax will undertake maintenance on its CfD(2) biomass unit, including a high-pressure turbine upgrade to reduce maintenance costs and improve thermal efficiency, contributing to lower generation costs for Drax Power Station.
In March, Drax secured Capacity Market agreements for its hydro and pumped storage assets worth around £10 million for delivery October 2024-September 2025.
The limitations on BECCS are not technology but supply, with every gigatonne of CO2 stored per year requiring approximately 30-40 million hectares of BECCS feedstock, according to the Global CCS Institute. Nonetheless, BECCS should be seen as an essential complement to the required, wide-scale deployment of CCS to meet climate change targets, it concludes.