11/4/14, "EU auditors refuse to sign off more than £100billion ($150 billion US) of its own spending," UK Telegraph, by Bruno Waterfield. Peter Dominiczak
"Brussels accounts have not been given the all clear for 19 years running."
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2/15/15, "EU Policy Mash Roils Markets Before Paris Climate Deal," Bloomberg, Mathew Carr
"The European Union’s carbon market, designed to save the environment, is being undercut by a patchwork of national subsidies for renewables and misaligned energy policies that have helped cut in half the volume of power being traded.
The bloc wasted a quarter of the $550 billion spent on renewable energy, according to analysis by consulting firm Bain & Co. presented last month at the World Economic Forum in Davos, Switzerland. Some energy-saving policies cost more than 18 times the price of the region’s carbon allowances, Bain said. Power-trading volume in 2014 was 46 percent that of three years previously, broker data show.
Overspending lowers the chance other nations will emulate the bloc’s plans for emissions cuts as they prepare climate pledges under a United Nations process during the next six weeks, leading to a meeting in Paris in December, according to Bain. The International Energy Agency says the region, which failed to meet its own target for creating a united energy market by last year, risks losing investment in energy-intensive industries to those in the U.S.
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Uncoordinated national incentives prodded investors to build too many wind farms in Spain and led to a surplus of solar panels in Germany. This wouldn’t have happened to such an extent had the bloc relied more on its carbon market, Julian Critchlow, partner at Bain, said by phone Jan. 23 from Davos.
EU benchmark carbon allowances dropped 2.5 percent last month, their biggest decline since September. Lawmakers haven’t yet agreed on rules of a reserve that’s designed to deal with a 12-month glut in the world’s biggest greenhouse gas market. Permits were stable at 7.72 euros ($8.80) a metric ton on ICE Futures Europe at 9:53 a.m. in London.
Contending with the possible exit of Greece from the euro area, the region’s lawmakers are simultaneously seeking to redefine the so-called “energy union” of the bloc to make manufacturing more profitable and improve security of supply. EON SE, ThyssenKrupp AG and Dow Chemical Co. are among companies to have warned investment in the region is at risk.
Europe needs to rely more on the most cost-effective solutions to entice investment, Russel Mills, director of energy and climate policy at Dow Chemical, the biggest U.S. chemicals maker, said Feb. 6 by phone from Horgen, Switzerland. “At the end of last year, there was an emphasis to get a low-cost, low-carbon strategy for Europe, but now it’s back to mainly low-carbon.”
The bloc will examine the cost of its policies as it proposes by Feb. 25 rules to improve the energy union, Anna-Kaisa Itkonen, spokeswoman for the commission in Brussels, said Feb. 4 by e-mail. It may offer new laws to improve uncoordinated national policies and state support of renewables, according to an EU document obtained by Bloomberg.
It’s difficult to be sure the bloc has overspent, according to Richard Sandor, who helped invent interest-rate futures more than 30 years ago and was the founder of Climate Exchange Plc in London before selling it to Intercontinental Exchange Inc.
European countries and U.S. states including California are currently acting as laboratories to inform federal government structures how to best regulate for larger, more efficient markets being set up to reduce climate change through 2050 and beyond, Sandor said Jan. 30 by phone from Chicago. While claims of wasted money “might be true in the short term; it certainly might not be true in the long term,” he said.
Europe has used renewables to drive up the cost of climate protection, suppress carbon prices and “simply relocate emissions from one sector under the cap to another sector under the cap or from one geographic area to another under the cap, so they have no incremental climate benefits,” Robert Stavins, the director of the Harvard Environmental Economics Program, said Jan. 31 by e-mail.
The region has “deeply embedded differences” between member states, some of whom favor markets, with others preferring interventionist approaches, according to a report published in April and part-funded by the EU. That means reform, even after 2020, will be “difficult to achieve.”
About 10 percent of the installed power capacity in Germany, the region’s biggest market, is unprofitable, Sanford C Bernstein Ltd. estimated in October. The nation produced 157 terrawatt hours or renewable power last year, 50 percent more than in 2010, according to Agora Energiewende, an energy researcher in Berlin.
Warring policies mean power trading levels have been hurt because Europe’s investment in renewable resources “came on so fast that it left a lot of existing plant sitting silent before the end of its life,” said Bain’s Critchlow.
The volume of power trades shrank 6 percent last year to a level equivalent to less than half 2011 levels, according to data from the London Energy Brokers’ Association.
Europe’s energy plan “is not the strategy a country would pursue if it was taking an optimal pathway,” Bain said. “It’s a depressing picture and one that can’t be continued if the bloc wants to avoid driving more jobs out of Europe.”" via Climate Depot
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