Renewable electricity must compete harder

Updated 21 January 2013
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Renewable electricity must compete harder

LONDON: Growth in renewable electricity risks slowing in the world’s two major economies in the near-term, especially if China can replicate US shale gas success.
That has implications for global wind and solar manufacturing over-capacity and climate targets.
The narrative of global energy forecasting has been for renewables to outstrip fossil fuels, putting combined wind, solar, bioenergy and hydropower on an equal footing with coal-fired power generation in two to three decades.
But soaring domestic US production of natural gas from shale deposits has helped depress international coal prices and poses a competitive threat to rival energy technologies including wind and solar.
The latest US forecasts suggest renewable energy will trail far behind gas and coal for the next three decades, while data shows growth in US natural gas power generation last year was far ahead of wind and solar both in percentage and absolute terms.
Meanwhile, fossil fuel’s share of energy consumption in China grew in 2011 despite Beijing targeting the opposite, showing the heavy lift for more expensive renewable energy to displace fossil fuels.
Renewable technologies have so far only achieved commercial parity with fossil fuels in niche markets.
Faster growth will require further cost-cutting, and benefit from stiffer carbon pricing policies which may be expected in the 2020s if climate change impacts more dangerously.
Energy forecasters see renewable electricity overtaking coal as the world’s leading source of power generation in the next few decades.
For example, the International Energy Agency in its World Energy Outlook last November predicted that renewables collectively would account for 31 percent of power generation in 2035, under existing policy commitments, surpassing natural gas and just short of coal.
The oil and gas company BP is slightly less ambitious in its outlook, seeing all renewables accounting for 26 percent of total power generation in 2030, behind coal at 38 percent.
But both of these are far ahead of the US outlook.
The abridged, early release of the US Energy Information Administration’s (EIA) Annual Energy Outlook 2013, published last month, saw natural gas rising to almost a third of US power generation by 2040.
It saw all renewables accounting for just 16 percent of power generation, up from 13 percent now. The EIA had amended its forecasts on the back of lower natural gas prices, it said.
That is a warning to renewable energy if other countries can replicate or benefit from the US shale gas experience.
US natural gas last year not only displaced coal but outstripped wind and solar, posting faster percentage growth than non-hydro renewables for the first time since 2007, EIA data published last month showed.
Gas-fired power generation leapt a quarter in the first 10 months of the year compared with the same period in 2011.
Natural gas took market share predominantly from coal, in the month of April drawing closer than ever in absolute terms, all but level generating about 96 terawatt hours (TWh) each.
But gas also posted absolute growth 10 times that of non-hydro renewable energy, at 214 TWh compared with 21.4 TWh.
That was even as the US saw record growth in wind and solar capacity which the country will not equal this year.
Wind power installations will slump around 75 percent this year because of uncertainty injected by the last-minute extension of a key tax credit, according to preliminary estimates from Denmark-based MAKE Consulting.
The world’s biggest economy looks no closer to agreeing ambitious federal climate, carbon or renewable energy targets.
Meanwhile, China saw a decline in the combined share of non-fossil fuels in all energy consumption (heat, transport as well as electricity) in 2011, the latest year for BP energy data.
Non-fossil fuels (nuclear, hydropower and other renewables) accounted for 7.4 percent of the country’s energy mix in 2011, down from 8.0 percent in 2010, according to BP’s “Statistical Review of World Energy” published last year.
That should be a temporary blip following a dip in hydropower generation, given Beijing has targets to raise the collective share of non-fossil fuels.
But China is also actively targeting a shale gas strategy which could put a spanner in the growth of renewable energy.
A widening, global experience of the impacts of shale gas exploration so far all but confined to the US will demand further sharp falls in renewable costs to compete.
— The author is a Reuters market analyst. The views expressed are his own.


Wells Fargo to pay $1B for mortgage, auto lending abuses

Updated 20 April 2018
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Wells Fargo to pay $1B for mortgage, auto lending abuses

  • Fine the latest in a series of setbacks for US bank
  • Federal Reserve in February prohibited lender from growing assets until governance issues addressed

Wells Fargo will pay $1 billion to federal regulators to settle charges tied to its mortgage and auto lending business, the latest chapter in years-long, wide-ranging scandal at the banking giant. However, it appears that none of the $1 billion will go directly to the victims of Wells Fargo’s abuses.
In a settlement announced Friday, Wells will pay $500 million to the Office of the Comptroller of the Currency, its main national bank regulator, as well as a net $500 million to the Consumer Financial Protection Bureau.
The action by the CFPB is notable because it is the first penalty imposed by the bureau under Mick Mulvaney, who President Trump appointed to take over the consumer watchdog agency in late November. The $500 million is also the largest penalty imposed by the CFPB in its history, the previous being a $100 million penalty also against Wells Fargo, and matches the largest fine ever handed out by the Comptroller of the Currency, which fined HSBC $500 million in 2012.
The fine against Wells Fargo had been expected. The company disclosed last week that it was in discussions with federal authorities over a possible settlement related to its mortgage and auto lending businesses, and that the fine could be as much as $1 billion.
The settlement also contains other requirements that would restrict Wells Fargo’s business. The bank will need to come with a risk management plan to be approved by bank regulators, and get approval from bank regulators before hiring senior employees.
“While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency,” said Wells Fargo Chief Executive Tim Sloan in a statement.
The $500 million paid to the Comptroller of the Currency will be paid directly to the US Treasury, according to the order. The $500 million paid to the CFPB will go into the CFPB’s civil penalties fund, which is used to help consumers who might have been impacted in other cases. But zero dollars of either penalty is going directly to Wells Fargo’s victims.
The bank has already been reimbursing customers in its auto and mortgage businesses for these abuses. Wells Fargo has been refunding auto loan customers since July and been mailing refund checks to impacted mortgage customers since December.
While banks have benefited from looser regulations and lower taxes under President Trump, Wells Fargo has been called out specifically by Trump as a bank that needed to be punished for its bad behavior.
“Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased. I will cut Regs but make penalties severe when caught cheating!,” Trump wrote on Twitter back in December.
The abuses being addressed Friday are not tied directly to Wells Fargo’s well-known sales practices scandal, where the bank admitted its employees opened as much as 3.5 million bank and credit card accounts without getting customers’ authorization. But they do involve significant parts of the bank’s businesses: auto lending and mortgages.
Last summer Wells Fargo admitted that hundreds of thousands of its auto loan customers had been sold auto insurance that they did not want or need. In thousands of cases, customers who could not afford the combined auto loan and extra insurance payment fell behind on their payments and had their cars repossessed.
In a separate case, Wells Fargo also admitted that thousands of customers had to pay unnecessary fees in order to lock in their interest rates on their home mortgages. Wells Fargo is the nation’s largest mortgage lender.
Wells Fargo has been under intense scrutiny by federal regulators for several months. The Federal Reserve took a historic action earlier this year by mandating that Wells Fargo could not grow larger than the $1.95 trillion in assets that it currency held and required the bank to replace several directors on its board. The Federal Reserve cited “widespread abuses” as its reason for taking such an action.
This settlement does not involve Wells Fargo’s wealth management business, which is reportedly under investigation for improprieties similar to those that impacted its consumer bank. Nor does this involve an investigation into the bank’s currency trading business.
Consumer advocates have been critical of the Trump administration’s record since it took over the CFPB late last year. However, advocates were pleased to see Wells Fargo held to account.
“Today’s billion dollar fine is an important development and a fitting penalty given the severity of Wells Fargo’s fraudulent and abusive practices,” said Pamela Banks, senior policy counsel for Consumers Union.