First Australian Carbon Abatement Auction
In April 2014, the Australian Federal government released a White Paper outlining the design of the Emissions Reduction Fund ("ERF"), which was covered in the Summer 2014 issue of the Climate Report. The ERF is the cornerstone of the Coalition government's Direct Action Plan, which replaced Australia's carbon price legislation (repealed with effect from July 1, 2014). The government has committed AUD 2.55 billion to the ERF, which the Clean Energy Regulator (the "Regulator") will use to purchase emissions reductions in reverse auctions from registered bidders.
The first of these carbon abatement auctions was held on April 15, 2015, with the Regulator buying approximately 47.3 million tons of emissions reductions at an average price of AUD 13.95 per ton. The total value of the contracts awarded was about AUD 660 million. Forty-three contractors made successful bids at the auction, securing funding for 144 projects running for between three and 10 years. Most of the projects involved either carbon sequestration methods, or landfill and alternative waste treatment methods. Notable initiatives include a project run by Kia Ora Piggery to capture biogas from pig manure (accounting for 120,000 tons) and a project by Olkola Aboriginal Corporation for controlled fire management across the savannas of Australia's fire-prone tropical north (accounting for 455,000 tons).
If the current price of carbon emissions holds, the ERF would acquire 180 million tons of emissions reductions by 2020. Australia's current emissions reduction target ("ERT") is 236 million tons by 2020, or 5 percent below 2000 levels.
In April 2015, the ambition of Australia's ERT was questioned in the United Nations by the United States, China, the European Union, Brazil, Switzerland, and Saudi Arabia. The Federal government has previously said that it would consider increasing the 2020 ERT to 15 percent or 20 percent depending on the extent of international action on climate change.
Shale Gas in France: Still a "Viable" Option?
Originally viewed as one of the most promising countries in Europe for shale gas development, France recently affirmed its decision to ban hydraulic fracturing.
By way of background, the 2011 French law—which was found to be constitutional by the French Constitutional Court in 2013—banned hydraulic fracturing and annulled exploration permits that several energy companies had already received, thus prohibiting even exploratory projects to assess the resources and determine whether shale gas exploration should be taken into consideration.
To date, the sole technique for extracting shale oil and gas is hydraulic fracturing, also known as "fracking." Fracking is a well stimulation technique whereby the gas-bearing rock along the well bore is fractured by high-pressured water, chemicals, and sand, and the sand or similar media is used to keep the cracks open once made so that trapped gas can flow out to the head of the well.
However, in 2012, former industry minister Arnaud Montebourg commissioned a report to investigate alternatives to fracking and especially to the extensive use of water to extract shale gas. Completed in 2014, the report was promptly set aside by the French government, which has repeatedly voiced its opposition to shale gas.
In brief, the report, drafted by multiple experts, recommends the testing in France of an operating technique using nonflammable propane ("NFP"), as an alternative to controversial "fracking." NFP is a liquid currently used as propellant for asthma inhalers or fire extinguishers and is mainly produced by the French-Belgian chemical company Solvay. In essence, the advantages of this technique would be to limit the use of water—a highly contested issue concerning fracking in France—and of chemical additives.
In addition, the report emphasizes the beneficial effects for the French economy: In the best-case scenario, France could have an estimated 3.8 trillion cubic meters of shale gas, which has been predicted to reap an economic benefit of €100 billion and create up to 225,000 jobs.
However, the lack of testing, combined with the fact that NFP is a greenhouse gas, was sufficient justification for the French government to set aside the report. Additionally on April 7, 2015, Ségolène Royal, the French Minister for the Environment, stated in a press release that "reopening the shale gas debate may jeopardize the economic recovery created by the law on energy transition," and that energy companies should instead concentrate on investing in renewable energy.
She concluded by saying that shale gas extraction was no longer a "viable" topic. What will the next chapter be?