First Solar, Suntech Power Lobby U.N. Climate Change Convention

By Ucilia Wang

Solar company executives from the United States, Asia and Europe are lobbying for solar-friendly policies at the United Nations' climate change conference in Poland this week.

First Solar (FSLR) CEO Michael Ahearn, Suntech (STP) CEO Zhengrong Shi, and SolarCentury executive chairman Jeremy Leggett are trying to convince delegates that promoting solar power will help their countries emit less pollution and fight climate change. And some of the best ways to promote solar energy include tax credits and requiring utilities to provide solar energy.

"The photovoltaic industry is much closer to generating affordable solar power than most people realize," said First Solar CEO Michael Ahern in a statement. "We call on world leaders assembled in Poznan to adopt policies individually and collectively that allow PV to demonstrate its full potential."

Solar, though, is still dependent on feed-in tariffs, tax credits and other subsides, which could become more difficult to obtain in a credit-crunched world. Feedback on these questions will likely be prominent as the conference continues.

The delegates from nearly 190 nations are in the city of Poznan to craft a treaty to succeed the Kyoto Protocol as the next global effort to reduce man-made greenhouse gas emissions, which contribute to global warming (see U.N. Climate Talks Pose Big Impact on Greentech).

The delegates began meeting a week ago and are due to wrap up the discussion this Friday. The gathering marks a mid-way point in an effort by the United Nations Framework Convention on Climate Change (UNFCCC) to develop the new climate change treaty. The delegates first met in Bali, Indonesia last year, and they hope to come up with a definitive agreement when they meet in Copenhagen, Denmark at the end of 2009.

The new agreement will succeed Kyoto when it expires at the end of 2012. Thirty-seven industrialized countries ratified Kyoto, which sets goals for cutting greenhouse gas emissions to an average of 5 percent below the 1990 levels by 2012.

Although Kyoto was considered groundbreaking, its ultimate success in reducing emissions remains a subject of debate (see Japan Proposes $4B to Cut Emissions). Last month, the World Meteorological Organization said the emission of carbon dioxide, one of the greenhouse gases, reached a record high in 2007.

For the conference in Poland, Ahearn and his fellow solar industry compatriots have come up with an agenda advocating:

• A mandate for utilities to provide solar power.
• Incentives, such as tax credits, feed-in tariffs, rebates or loans for solar energy projects.
• Stringent national and international policies for regulating carbon dioxide emissions.
• Regulations to speed up the process of getting permits for renewable energy projects, including building new transmission lines.
• Rules that allow consumers to get credits from feeding excess electricity from their solar energy systems.

Some countries – and local governments within the United States – already have laws similar to what the solar company executives are promoting. China, for example, is aiming to generate 15 percent of its electricity from renewable sources by 2020. California requires its investor-owned utilities to generate 20 percent by 2010 and 33 percent by 2020 (see Schwarzenegger: Permitting Process Too Complicated).

The new U.N. climate change treaty could have a significant impact on the greentech industry, which has grown largely as a result of government policies (see Lawmakers Approve Energy Tax Credits, Bailout, Spain Approves 500MW for Solar and Japan Promotes Carbon Trading, Hybrids).

To abide by the Kyoto Protocol, Europe and Japan, for example, have enforced regulations and spent millions to promote renewable energy such as solar and wind, biofuels and electric cars. Those regulations also have required some of the heavy polluters in Europe to pay for emitting above limits, in a program known as carbon cap-and-trade.

The big question for the future is whether U.N. members will see green subsidies as a way to build their domestic economies, or be a drain on it.

Some political leaders are worried about mandates that would require industries and countries to spend millions or even billions to meet at a time of ailing global financial health.

Others have argued that climate change initiatives will lead to new jobs as businesses embrace new technologies to generate greener energy and curb greenhouse gas emissions. That was the message from California Gov. Arnold Schwarzenegger in a video broadcast at the U.N. conference on Monday.

Comments

[Gumby:]

We kept putting off solar stocks because they used to be expensive. But now,, it is not worth any more debate on whether it is prudent to start it big... Big OIl Wolves are howling and blowing our straw houses around already... Sure a few of us pigheads built houses of brick. But they are not of our concerns.. Dont listen to those brick walled pigheads!!

2008 Dec 09 04:14 PM

[Gumby:]

We kept putting off solar stocks because they used to be expensive. But now,, it is not worth any more debate on whether it is prudent to start it big... Big Oil Wolves are howling and blowing our straw houses around already... Sure a few of us pigheads built houses of brick. But they are not of our concerns.. Dont listen to those brick walled pigheads!!

2008 Dec 09 04:15 PM

[Tom B:]

Last time I looked (last week) STP had about a 6 P/E. Which means 1) their "E" is greater than zero and 2) their stock price is seductive. With oil cheap now and credit still iffy, I expect '09 to be a bad year for solar. But, let's be realistic-- solar and wind are the future-- they aren't making any dinosaurs anymore; oil reserves are being used up!

2008 Dec 10 08:59 AM

[frflyer:]

"Solar, though, is still dependent on feed-in tariffs, tax credits and other subsides, which could become more difficult to obtain in a credit-crunched world"

How sadly ironic that this argument against renewable keeps coming up, especially when it comes to the U.S.

Oil and gas company subsidies and tax credits in the U.S dwarf any such help for renewable energy. One study pegged it at $39 billion annually, while another says more like $80 billion. The reason for the discrepencey? Oil and gas subsidies have for decades been hidden in bills as earmarks and in other non cash giveaways from the government. It's nearly impossible to find them all.

According to a study- Koplow's 2007 report to the Organisation for Economic Cooperation and Development:
"Estimating U.S. oil and gas subsidies is very challenging. Subsidies rarely involve cash payments. Instead scores of U.S. government agencies and departments create hundreds of programmes to support the U.S. energy sector. And there is no requirement for the federal government to keep track of all this."

"Energy subsidies are often simply hidden from public scrutiny. It's only recently been revealed that 40 companies granted leases between 1996 and 2000 for drilling in the Gulf of Mexico do not have to pay royalties for the publicly-owned resource. This is worth nearly a billion dollars a year in lost revenue to the federal government."

"Subsidy programmes from 1918 are still in place. "I'm not aware of any oil and gas subsidy that has ever been phased out," said Koplow, the leading expert on U.S. energy subsidies"

"In a time of skyrocketing oil prices and profits, why did the George W. Bush administration in 2005 authorise an additional 32.9 billion dollars in new subsidies over a five-year period?"

"This massive government intervention distorts energy markets, making it very difficult for alternative energy sources to compete without similarly massive subsidies. "And it promotes America's addiction to oil," Larsen added."
www.heatisonline.org/c...
And it's not just the U.S.

The largest subsidies existed in Russia ($40 billion); Iran ($37 billion); and China, Saudi Arabia, India, Indonesia, Ukraine, and Egypt (all in excess of $10 billion).

Forthcoming analysis by the European Environment Agency identifies tax exemptions on international waterborne shipping and aviation in the EU to be worth a more than $40 billion (33 billion Euro) per year

Defense of shipping chokepoints such as the Persian Gulf and key pipelines clearly cost governments tens of billions of dollars per year. Most of these costs are borne by the United States, though the benefits accrue to consumers in other countries as well
One estimate is $100 billion for military protection of oil.

Coal and nuclear are also heavily subsidized

"Over a period of nearly 50 years, Germany has propped up its domestic coal industry using a variety of state aids to the continued viability of coal production in Germany. Karl Storchmann documented nearly $200 billion in subsidies provided during this time frame through a total of nearly 60 support measures.
Although subsidies are well down from their highs in the mid-1990s, they remain more than $3 billion per year today. Subsidies have exceeded 85% of the value of sales between 1989 and 2002"

"While supports to coal mines in other countries are not as large as in Germany, government subsidies to new coal technologies, and pilot plants to try them out, run into the billions of dollars per year as well. These subsidies reduce the pressure on the industry itself to innovate, and mask the competitive advantage of alternative energy resources."

"According to Earthtrack, Federal subsidies to new nuclear power plants are likely between 4 and 8 cents per kWh (levelized)."
www.eoearth.org/articl...

Coal in the U.S - $3 billion annually this is for supposed "new coal". This isn't for "clean coal" just slightly modified coal.

.And then there's biofuel subsidies and farmers subsidies related to biofuels.
"More than 200 policies are now in place in the United States alone, at a cost of more than $500 per metric ton of CO2-equivalent displaced."

That's about 10 times as much as cap and trade would charge per metric ton of CO2

"The volumetric ethanol excise tax credit (VEETC) in the United States exemplifies much of what is wrong with this market. It is a production-linked subsidy without any cap or linkage to the price of the fuels ethanol is supposed to compete with. It duplicates incentives already provided by federal mandates purchases of "renewable" fuels, needlessly increasing the cost of achieving a particular level of market penetration. Though ethanol is promoted as a clean fuel, the blenders subsidy is the same even if the ethanol plant relies on coal rather than a cleaner energy source to convert the corn into fuel. Worth $4.5 to $6.4 billion per year in the US and growing rapidly, the VEETC also appears to be exempt from taxation, increasing its distortionary effect. There is also growing concern that a companion credit for biodiesel is being gamed by market participants who collect the credit in the US before shipping fuels abroad to collect downstream biofuels subsidies elsewhere."

www.eoearth.org/articl...

So the next time you hear someone say "Oh but solar and wind can't compete without subsidies" you'll know it's a crock of sh....

2008 Dec 10 12:36 PM