The government’s plans to close all unabated coal-fired generation by 2025 means the Carbon Price Support (CPS) will eventually become irrelevant, analysis by Aurora Energy Research has found. Scrapping the scheme following the phase out could actually lead to an overall reduction in carbon emissions. “The CPS was designed to reduce emissions by encouraging coal-to-gas switching,” said Aurora. “With coal mandated to close that objective loses relevance.” The mechanism also causes “economic distortions” by creating an “uneven playing field” between combined cycle gas turbines (CCGT) plants in the UK and imported power from Europe. Getting rid of the CPS after 2025 would cut interconnector imports by 39 per cent, the analysis predicted. As a result, between 2026 and 2035 an additional 21 TWh of power would be produced domestically from CCGT plants every year.   Although some of the extra output would be provided by extending the lives of existing plants or running them at high load factors, its abolition would also lead to a further 1.4GW of CCGT capacity being built over the period. Another effect of scrapping the scheme would be an overall reduction in carbon emissions, as each year 6TWh of imported coal generated power would be displaced by domestic gas generation. For marginal coal plants on the continent, this could be enough to undermine their profitability and force them to close. “With entire plants shutting down, the result is a disproportionately large decrease in Europe’s emissions,” said Aurora. However, it noted that this prediction only covered the medium term, and warned that this effect would need to be “weighed against the potential detrimental impact on long-term investment in renewables and in other carbon-free options”.   The CPS was introduced in April 2013 as a top-up to the EU Emissions Trading Scheme (ETS) to ensure UK generators pay a minimum price for carbon emissions, called the Carbon Price Floor. The CPS takes the form of a levy on the fossil fuels used for generation. The top up rate has been capped at £18 per tonne until 2019/20 to ensure UK businesses remain competitive with their European counterparts. The freeze was introduced in response to an increasing divergence between the carbon price paid by generators in the UK and those on the continent. EU ETS allowances are currently trading at just €4.74 (£4.04) per tonne. France is planning to introduce its own carbon price floor in 2017. If it is set at €30 per tonne, as was initially indicated, interconnector imports to the UK could be expected to fall by a third, an analyst at Thomson Reuters told Utility Week.   Source link

Residential property prices in Hong Kong stabilised in June with more activity mainly in the primary sector, as developers launched new projects with deep discounts and other enticements. According to the Land Registry, residential sales in June edged up 0.7% month on month, reaching 4,620 units. The gain was attributed mainly to robust activity in the new homes market. Meanwhile there have been more home buyers returning to the market looking for bargains, according to the latest monthly market review report from international real estate consultants Knight Frank. It points out that several new residential developments were oversubscribed in June. One example was Park Yoho Venezia in Yuen Long, which managed to sell over 90% of its available units within hours on the first day of the launch. This trend is expected to continue, with developers offering deep discounts and aggressive mortgage schemes to boost sales. Interest in the ultra-luxury residential market showed no signs of abating. For example, the top floor unit in Severn Villa on the Peak sold for HK$232 million or HK$170,463 per square foot, making it the most expensive apartment in Hong Kong. Knight Frank believes that high net worth individuals are expected to continue acquiring premium residential properties in Hong Kong given their scarcity and high status. The report also points out that the government of Hong Kong has announced that seven residential sites, capable of providing 4,800 flats, will be available for sale by application in the third quarter. As of the end of May, the number of homes pending pre-sale consent had risen 11% month on month to 14,526 units, the highest level in eight months, according to the Land Department. ‘Given the increase in supply and uncertainty brought about by Brexit, we maintain our forecast of a 5% to 10% drop in luxury home prices and up to a 10% decline in mass residential prices over the year,’ the report concludes. Meanwhile, in the commercial sector Grade-A office leasing on Hong Kong Island remained subdued in June. On the supply side, tight availability limited choices in the market, while on the demand side mainland companies slowed their expansion pace in Hong Kong after the previous leasing boom. The report points out that the Kowloon East office market remained very active, with the key driver being relocation demand from tenants across the harbour. One reported example involved Kingfisher, which moved from Cornwall House in Quarry Bay to KOHO in Kwun Tong. Over the past few months, a number of co-working space operators have been aggressively expanding in Hong Kong, becoming one of the major sources of demand for office space. For example, WeWork reportedly took up large office space of about 60,000 square feet in Asia Orient Tower in Wan Chai last month. A US co-working space operator reportedly took up four floors, spanning 29,000 square feet in Soundwill Plaza in Causeway Bay. ‘Looking ahead, we expect rents in core business areas to rise 5% during the year, while those in non-core areas could drop 5%. Wong Chuk Hang in Island South, another emerging commercial district, is expected to benefit from the scheduled launch of the new metro line by the end of the year, with increasing office leasing activity and rental levels,’ the report added. Source link

A fund managed by Savills Investment Management (“Savills IM”), the international real estate investment manager, has sold the property at 33 Gracechurch Street, a prominent Grade II listed building on the junction with Lombard Street in the City of London, for £75.1. The building was originally acquired by the fund on behalf of a syndicate of high net worth individuals through Société Générale Nick Hayward, Director of Institutional Business at Savills IM, commented: “The fund bought a core city office building that offered a combination of attractive income and asset management opportunities which we have successfully completed. Currently we believe there are very favourable occupational market dynamics, and this asset, let to five office tenants and one retail tenant, is evidence of this.” The property, in a prime location between the Bank of England and Lloyds of London, was comprehensively refurbished and extended in 2007 and offers 107,062 sq ft of Grade A office, retail and ancillary accommodation. Savills advised the seller on the transaction, with Westminster Real Estate Limited acquiring on behalf of an Asian client, represented by Cushman & Wakefield. Source link

At £974m, output in public housing is now at its lowest level for four years, according to the Office for National Statistics. Public housing output fell by 22 per cent in Q2. Its previous low was in Q2 2012, when output stood at £961m. On a year-on-year basis, only three sectors reported growth in Q2 – private housing (6.6 per cent), private commercial (1.1 per cent) and non-housing R&M (0.2 per cent) – compared with the same quarter a year earlier. All other sectors saw a contraction, with notable year-on-year declines in infrastructure (down 10.1 per cent), private industrial (8.2 per cent) and public housing R&M (4.8 per cent). The 0.7 per cent quarter-on-quarter decline in overall output in Q2 represents the second consecutive quarter of negative growth, placing construction in a technical recession. Source link