With the outcome of COP26 judged as positive across the renewables sector, ERGLab – a think tank led by European firm ERG – recently brought together green energy experts from across Scotland for a fascinating discussion which highlighted the funding challenges being faced by the industry. By Anthony Harrington .

With so much riding on the practical outcomes that are expected to flow from COP26, analysing and following what happens once the delegates have all gone back home is of immense interest and importance.

As Simon Steen Moeller, ERG’s Head of International Affairs, notes, while the various pledges and statements by the gathering of world leaders are important, what is really crucial for companies is to understand what the positive outcomes from COP are.

“What we are all waiting for now is for the various leaders to commit, once they are back home, to pledges that are solid enough to support investment decision-making,” he comments.

Since 2014 ERG has been hosting a series of closed conferences, under the title ERGLab, run under the Chatham House rule – where anyone who comes is free to use information from the discussion, but is not allowed to reveal who made any particular comment – to discuss public policy issues.

These events feature industry leaders, senior corporate executives, lawyers, politicians and academics.

ERG’s latest event in this series was hosted on November 17, a few days after COP26 closed. The aim was to analyse and form a view of the real results of COP26. The November 17 ERGLab featured delegates from Scottish Renewables, Pinsent Masons, Statkraft, Burges Salmon and ERG.

Moeller explains that holding an event like this under the Chatham House rule is a great way for people to express their real opinions on serious matters.

“The key thing about Chatham House rule is that participants are free to use the information that emerges from the event, but neither the identity nor the affiliation of the speakers, nor that of any of the participants may be revealed. The rule was created back in 1927 and works extremely well. It frees people to speak their mind and keeps the debate real,” Moeller explains.

There was general agreement among the delegates at ERGLab that COP26 was positive and will help to boost the ongoing development of renewables. However, there was also agreement that COP26 itself did not produce the kind of funding commitments from individual governments that companies in the renewables sector could base their investment decision making on. That process may well still happen once governments return home, Moeller suggests.

One of the delegates reminded the gathering that the fact that COP is still going in 2021 when the first COP was held back in 1995, is itself a hugely positive event. There have been sustained attempts by various governments to kill it off and to refute or water down the scientific evidence for climate change.

What COP26 showed, in no uncertain terms, is that those days and that kind of resistance to attempts to mitigate climate change are fading into history.  “What governments are prepared to agree to at COP is a reflection of their take on the prevailing political climate at home.

“The large public protests at COP26 in Glasgow doubtless helped to emphasise to many world leaders that much remains to be done in the fight to prevent catastrophic climate change,” Moeller says.

Public opinion around the world has moved hugely towards the necessity for preventative action, helped by the many catastrophic floods and fires the world has seen so far in 2021.

Of itself, Moeller says, this change in the public mood in so many countries is very positive for the continued build-out of renewables technologies such as onshore and offshore wind and solar power generation.

“One area where there was some disappointment with COP26 was the way the whole topic of the continued mining and use of coal was covered. Many people would have liked to have seen world leaders agreeing to phase out coal. Instead, the language that was used focused on phasing down the use of coal.

“Coal is the heaviest polluter and CO2 emitting fuel and the language that made its way into the final declaration by world leaders was clearly a political compromise. However, one has to realise that because it is a gathering of so many countries, COP is a deeply conservative process. It is not given to radical pronouncements and one has to look at the incremental steps that countries are prepared to take,” he comments.

“Another disappointment is the fact that the Nationally Determined Contributions made at COP26 are generally agreed to be insufficient to limit the global rise in temperature to 1.5 degrees Celsius.

“However, delegates at ERGLab took heart from the fact that over the coming year, as governments review their commitments, the NDCs are more than likely going to be strengthened,” he suggests. “However, it was very positive that for the first time at COP we actually had fossil fuels put onto the agenda. That was a huge step and was welcomed.”

As to how far COP26 went from the perspective of a renewables power generation company, Moeller suggests that it is still too early to form a view.

“It is obviously very encouraging to see how many governments participated in COP26, but we need to wait until they are all back home and set out their specific plans for achieving their respective country net-zero targets.

“It is not enough for Western governments to say that they intend to be carbon neutral by 2050. That is all well and good, but we need some specific plans as to how they are going to achieve this.

“That will, in turn, help us to make our own investment decisions and to build the renewable power generation assets that will help to get them to where they want to go,” he concludes.

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CONCERNS OVER LACK OF AUCTIONS FOR ONSHORE WIND POST-COP26

THE ripples from COP26 will continue to reverberate through the rest of this year and into 2022, as governments firm up their commitments. Already, there is some clarity as to the questions that still remain to be answered right here in the UK.

Simon Steen Moeller, ERG’s Head of International Affairs, highlights some of the questions that ERG would love to see answered.

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“What is very clear is that there is no shortage of finance for investing in renewables. However, to unlock that finance, we need much more visibility on key issues,” he says.

For a start, it would be really helpful if there was a lot more visibility as to how the UK is going to treat onshore wind in future.

“Right now there are no dates set for any future auctions for onshore wind, although there have been indications from the UK government that there will be such auctions at some point.

“There is a very clear commitment from the UK government to hold bi-annual auctions for offshore wind sites. However, so far, there is no such clear commitment for onshore sites. We would definitely like to see some positive direction being provided here,” he notes.

It would also be really helpful to have some indication as to what the grid fees will be to link up future onshore and offshore wind farms to the national grid.

At present, the grid connection fees for onshore wind are far higher than they are for photovoltaic projects in England, which is an oddity. Moeller points out that across Europe, there is a lot more clarity on these points.

“If you want to succeed in reaching very ambitious targets, and the UK’s net-zero targets are hugely ambitious, then you need to set out very detailed plans. If you do not, there is no way your targets can be credible.

“One of the worries about the current state of political thinking on climate change in the UK is that there is a lot of talk and hope being placed on technologies like hydrogen and carbon capture, that are not likely to come to fruition or a decade or more.

“It is concerning that some people in government seem to see these nascent technologies as an easy way to reach their climate change targets.

“We too, hope that hydrogen will be an important technology at some point in the future. We may see solid development here by 2030 or so.

“However, there is no certainty at all that the price of power generation from such a technology will come down to levels that are attractive to consumers,” he says.

Much the same can be said of nuclear power, both as far as large scale nuclear reactors and smaller reactors are concerned. They are just not price competitive with wind and solar, nor is there any guarantee that they will be, anytime soon.

 

This article is brought to you in association with ERG as part of The Herald's Climate for Change campaign.