Monday 24th November 2014

Wind Watch

When the US and China agree something, the world takes note.

This month, the countries hailed an agreement to lower greenhouse gas emissions. The American Wind Energy Association (AWEA) is among organisations that welcomed the deal as a good sign for investors in wind that the industry enjoys strong support.

The message is good. The US and China may be the world’s two wind superpowers, but they are also the world’s two most polluting nations. Any commitment from these giants to bring in policies that will step up their renewable energy efforts must be a positive thing.

But, as often happens, the details of the deal leave more questions than they answer. This is true for both nations.

From the US perspective the biggest question is: can President Obama deliver? The US has committed to levels of emissions in 2025 around 28% lower than in 2005. However, Republicans in Congress wasted little time in saying they would look to frustrate the plan, just as their Senate colleagues have held up extension of the wind production tax credit.

The Republicans will feel further emboldened by the Senate majority they won earlier this month, and the perception that Obama is now a ‘lame duck president’ ahead of the 2016 presidential election. This will only encourage those who oppose renewable energy, and it means that Obama will face a tough battle to bring in any policies that are pro-wind.

Against these headwinds, we aren’t confident that Obama will be able to deliver policies that are helpful for investors in wind.

The bright point for US wind investors is that at least the industry is getting to a point where it is not slavishly reliant on favourable policies. Wind has reached price parity with fossil fuels in some parts of the country; and US wind is now looking at how it will function without support from the troubled production tax credit.

Investors can't always be at the mercy of US senators who have a problem with wind.

And, as for China, we can only ask: is this the best they could do?

The nation has committed to curbing its carbon emissions after 2030, although by that point they will have risen by one-third from their current levels — which are already the highest in the world. Investors in Chinese wind will hardly feel that a target for 15 years' time demonstrates that climate change is a government priority.

Yes, China has big targets for wind, and by far the most installed
wind capacity in the world: 91GW at the end of 2013 compared to the 61GW of its nearest rival the US, although the US is actually the biggest producer of power from wind (167billion kWh in 2013 against China’s 138billion kWh). But this deal doesn't address the challenges that investors in Chinese wind face day-to-day.

For instance, this doesn't solve immediate challenges with making sure that wind farms can be connected to the grid. This new deal doesn't add anything to China's existing renewable energy policies.

Of course, those in the wind sector should welcome high profile on the issue of climate change. But let's not fool ourselves that they will have much impact on day-to-day business.

Wind Watch

When the US and China agree something, the world takes note.

This month, the countries hailed an agreement to lower greenhouse gas emissions. The American Wind Energy Association (AWEA) is among organisations that welcomed the deal as a good sign for investors in wind that the industry enjoys strong support.

The message is good. The US and China may be the world’s two wind superpowers, but they are also the world’s two most polluting nations. Any commitment from these giants to bring in policies that will step up their renewable energy efforts must be a positive thing.

But, as often happens, the details of the deal leave more questions than they answer. This is true for both nations.

From the US perspective the biggest question is: can President Obama deliver? The US has committed to levels of emissions in 2025 around 28% lower than in 2005. However, Republicans in Congress wasted little time in saying they would look to frustrate the plan, just as their Senate colleagues have held up extension of the wind production tax credit.

The Republicans will feel further emboldened by the Senate majority they won earlier this month, and the perception that Obama is now a ‘lame duck president’ ahead of the 2016 presidential election. This will only encourage those who oppose renewable energy, and it means that Obama will face a tough battle to bring in any policies that are pro-wind.

Against these headwinds, we aren’t confident that Obama will be able to deliver policies that are helpful for investors in wind.

The bright point for US wind investors is that at least the industry is getting to a point where it is not slavishly reliant on favourable policies. Wind has reached price parity with fossil fuels in some parts of the country; and US wind is now looking at how it will function without support from the troubled production tax credit.

Investors can't always be at the mercy of US senators who have a problem with wind.

And, as for China, we can only ask: is this the best they could do?

The nation has committed to curbing its carbon emissions after 2030, although by that point they will have risen by one-third from their current levels — which are already the highest in the world. Investors in Chinese wind will hardly feel that a target for 15 years' time demonstrates that climate change is a government priority.

Yes, China has big targets for wind, and by far the most installed
wind capacity in the world: 91GW at the end of 2013 compared to the 61GW of its nearest rival the US, although the US is actually the biggest producer of power from wind (167billion kWh in 2013 against China’s 138billion kWh). But this deal doesn't address the challenges that investors in Chinese wind face day-to-day.

For instance, this doesn't solve immediate challenges with making sure that wind farms can be connected to the grid. This new deal doesn't add anything to China's existing renewable energy policies.

Of course, those in the wind sector should welcome high profile on the issue of climate change. But let's not fool ourselves that they will have much impact on day-to-day business.

Wind Watch

When the US and China agree something, the world takes note.

This month, the countries hailed an agreement to lower greenhouse gas emissions. The American Wind Energy Association (AWEA) is among organisations that welcomed the deal as a good sign for investors in wind that the industry enjoys strong support.

The message is good. The US and China may be the world’s two wind superpowers, but they are also the world’s two most polluting nations. Any commitment from these giants to bring in policies that will step up their renewable energy efforts must be a positive thing.

But, as often happens, the details of the deal leave more questions than they answer. This is true for both nations.

From the US perspective the biggest question is: can President Obama deliver? The US has committed to levels of emissions in 2025 around 28% lower than in 2005. However, Republicans in Congress wasted little time in saying they would look to frustrate the plan, just as their Senate colleagues have held up extension of the wind production tax credit.

The Republicans will feel further emboldened by the Senate majority they won earlier this month, and the perception that Obama is now a ‘lame duck president’ ahead of the 2016 presidential election. This will only encourage those who oppose renewable energy, and it means that Obama will face a tough battle to bring in any policies that are pro-wind.

Against these headwinds, we aren’t confident that Obama will be able to deliver policies that are helpful for investors in wind.

The bright point for US wind investors is that at least the industry is getting to a point where it is not slavishly reliant on favourable policies. Wind has reached price parity with fossil fuels in some parts of the country; and US wind is now looking at how it will function without support from the troubled production tax credit.

Investors can't always be at the mercy of US senators who have a problem with wind.

And, as for China, we can only ask: is this the best they could do?

The nation has committed to curbing its carbon emissions after 2030, although by that point they will have risen by one-third from their current levels — which are already the highest in the world. Investors in Chinese wind will hardly feel that a target for 15 years' time demonstrates that climate change is a government priority.

Yes, China has big targets for wind, and by far the most installed
wind capacity in the world: 91GW at the end of 2013 compared to the 61GW of its nearest rival the US, although the US is actually the biggest producer of power from wind (167billion kWh in 2013 against China’s 138billion kWh). But this deal doesn't address the challenges that investors in Chinese wind face day-to-day.

For instance, this doesn't solve immediate challenges with making sure that wind farms can be connected to the grid. This new deal doesn't add anything to China's existing renewable energy policies.

Of course, those in the wind sector should welcome high profile on the issue of climate change. But let's not fool ourselves that they will have much impact on day-to-day business.