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Winds of change – the case for renewable energy in Turkey

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Winds of change - the case for renewable energy in Turkey

By Levent Lezgin Kılınç, Founding Partner, Kılınç Law & Consulting

Levent Lezgin Kılınç, Founding Partner, Kılınç Law & Consulting

Levent Lezgin Kılınç, Founding Partner, Kılınç Law & Consulting

As one of the world’s fastest growing energy markets, Turkey has been increasing its drive towards greater self-sufficiency for several years. To satisfy its annual 300bn kilowatts of electricity consumption, the current energy mix has been quite well-balanced:a quarter of electricity generation is hydro-based, while roughly a third comes from natural gas and another third from coal. However, the problem is that domestic output has been insufficient to meet rising demand: energy imports have therefore averaged $55 bn a year.

In order to reduce this deficit, the Ministry of Energy and Natural Resources (MENR) has been driving forward plans to boost domestic energy output across the board. This serves as a further step in the significant reforms of recent years relating to energy provision, which have resulted in much greater participation from private entities, and the creation of a more competitive energy market.

A more recent issue has emerged from the economic problems resulting from this year’s sharp devaluation of the Turkish Lira. In October, electricity and natural gas prices increased for the third consecutive month: electricity rates for residential consumers rose by 8 percent and for commercial and industrial consumers by 18 per cent. Since January 2018, Turkey’s natural gas prices have increased by 29.5 and 54 percent respectively for residential and commercial/industrial consumers.

As one of the top ten countries in the world for coal production (mostly lignite), renewable resources and geothermal energy, Turkey’s oil and gas resources are,however, more limited – imports of both are one of the principal factors in the energy current account deficit. To diversify the energy mix further and to maximise the use of domestic resources, a government road map has been implemented over several years to transform and modernise thermal plants and to increase output and efficiency in coal production, which has gone from 60m to nearly 100m tons over the past five years.

So where does wind power feature in the energy equation?

Turkey’s wind electricity generation hit a new daily record in September with approximately 16.8 per cent of the country’s total power being generated from wind turbines –a clear demonstration of the increasing capacity of renewable energy in Turkey’s power generation. However,one day does not necessarily mean every day. Incorporating wind power into existing power grids is notoriously challenging because fluctuating wind speeds and direction mean that turbines generate power inconsistently.

So, does this daily wind record indicate a potentially more sustainable shift away from non-renewable energy sources?The argument for renewable energy as part of the mix has already been won: installed capacity of wind energy in Turkeyhas increased rapidly from 20MW in 2002 to 4.4GW by 2015. Currently, 158 wind energy companies are actively operational in Turkey at 207 wind energy plants with 6.5GW of installed capacity, while 32 projects with 808 MW of installed capacity are under construction. The potential capacity of many pf the existing wind power plants in Turkey can be raised, according to industry experts. In total, wind provided roughly eight per cent of the country’s total installed power capacity last year,while wind energy accounted for 6 percent of Turkey’s electricity production.

For Turkey’s expanding wind energy market, further private investment is needed to meet growing demand.Although the country has extremely good wind resources, both onshore and offshore, very deep waters surrounding it require specialist know-how. Since 2006, Turkey’s wind energy sector has attracted $12.3bn in investment, according to data published by the Turkish Wind Energy Association.In June, MENR announced that it was launching a tender: inviting applications for the construction and operation of a 1,200-MW offshore wind farm with the precise location yet to be determined. When completed, it will become the world’s biggest.

The supporting mechanisms of government have also been in place for some time. A Sustainable Energy Action Plan was launched in 2011 which received subsequent support from the EBRD in the financing of several Turkish wind projects. Domestically, the MENR and the Energy Market Regulatory Authority regulate entities operating in the region.

Meanwhile current Turkish energy policy is committed to further rolling out the adoption of renewable energy and boosting the necessary infrastructure with plans to increase the share of renewable energy resources in electricity production is to increase to at least 30% by 2023. To realise this objective, the government is in the process of implementing supportive policies, such as feed-in tariffs and investment incentives for renewable energy.

As originally determined by the Electricity Market and Security of Supply Strategy in 2009, several targets have also been adopted to generate electricity from renewable sources. If met, these renewable energy targets will generate between 275,000 and 545,000 direct job opportunities in the energy sector. They will also enable a fossil fuel saving of approximately 790,000 tonnes of natural gas, or 464,000 cubic meters, by 2023.

In line with countries elsewhere, renewable energy in Turkey has a critical role to play in shifting dependence away from fossil fuels. Although the region is of strategic importance for oil and natural gas producers, it is also well positioned as a diversified energy market for the future. For this reason, it is crucial for Turkey to use a variety of different energy sources, ranging from imported oil and natural gas to renewables. This will ensure that supply security and continuity are maintained, as well as allowing for the further development of energy transportation projects.

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Exclusive: AstraZeneca to miss second-quarter EU vaccine supply target by half – EU official

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Exclusive: AstraZeneca to miss second-quarter EU vaccine supply target by half - EU official 1

By Francesco Guarascio

BRUSSELS (Reuters) – AstraZeneca expects to deliver less than half the COVID-19 vaccines it was contracted to supply the European Union in the second quarter, an EU official told Reuters on Tuesday.

The expected shortfall, which has not previously been reported, comes after a big reduction in supplies in the first quarter and could hit the EU’s ability to meet its target of vaccinating 70% of adults by the summer.

The EU official, who is directly involved in talks with the Anglo-Swedish drugmaker, said the company had told the bloc during internal meetings that it “would deliver less than 90 million doses in the second quarter”.

AstraZeneca’s contract with the EU, which was leaked last week, showed the company had committed to delivering 180 million doses to the 27-nation bloc in the second quarter.

“Because we are working incredibly hard to increase the productivity of our EU supply chain, and doing everything possible to make use of our global supply chain, we are hopeful that we will be able to bring our deliveries closer in line with the advance purchase agreement,” a spokesman for AstraZeneca said, declining to comment on specific figures.

A spokesman for the European Commission, which coordinates talks with vaccine manufacturers, said it could not comment on the discussions as they were confidential.

He said the EU should have more than enough shots to hit its vaccination targets if the expected and agreed deliveries from other suppliers are met, regardless of the situation with AstraZeneca.

The EU official, who spoke to Reuters on condition of anonymity, confirmed that AstraZeneca planned to deliver about 40 million doses in the first quarter, again less than half the 90 million shots it was supposed to supply.

AstraZeneca warned the EU in January that it would fall short of its first-quarter commitments due to production issues. It was also due to deliver 30 million doses in the last quarter of 2020 but did not supply any shots last year as its vaccine had yet to be approved by the EU.

All told, AstraZeneca’s total supply to the EU could be about 130 million doses by the end of June, well below the 300 million it committed to deliver to the bloc by then.

The EU has also faced delays in deliveries of the vaccine developed by Pfizer and BioNTech as well as Moderna’s shot. So far they are the only vaccines approved for use by the EU’s drug regulator.

AstraZeneca’s vaccine was authorised in late January and some EU member states such as Hungary are also using COVID-19 shots developed in China and Russia.

OUTPUT BOOST DOWN THE LINE?

While drugmakers developed COVID-19 vaccines at breakneck speed, many have struggled with manufacturing delays due to complex production processes, limited facilities and bottlenecks in the supply of vaccine ingredients.

According to a German health ministry document dated Feb. 22, AstraZeneca is forecast to make up all of the shortfalls in deliveries by the end of September.

The document seen by Reuters shows Germany expects to receive 34 million doses in the third quarter, taking its total to 56 million shots, which is in line with its full share of the 300 million doses AstraZeneca is due to supply to the EU.

The German health ministry was not immediately available for a comment.

If AstraZeneca does ramp up its output in the third quarter, that could help the EU meet its vaccination target, though the EU official said the bloc’s negotiators were wary because the company had not clarified where the extra doses would come from.”Closing the gap in supplies in the third quarter might be unrealistic,” the official said, adding that figures on deliveries had been changed by the company many times.

The EU contracts stipulates that AstraZeneca will commit to its “best reasonable efforts” to deliver by a set timetable.

“We are continuously revising our delivery schedule and informing the European Commission on a weekly basis of our plans to bring more vaccines to Europe,” the AstraZeneca spokesman said.

Under the EU contract leaked last week, AstraZeneca committed to producing vaccines for the bloc at two plants in the United Kingdom, one in Belgium and one in the Netherlands.

However, the company is not currently exporting vaccines made in the United Kingdom, in line with its separate contract with the British government, EU officials said.

AstraZeneca also has vaccine plants in other sites around the world and it has told the EU it could provide more doses from its global supply chain, including from India and the United States, an EU official told Reuters last week.

Earlier this month, AstraZeneca said it expected to make more than 200 million doses per month globally by April, double February’s level, as it works to expand global capacity and productivity.

(Reporting by Francesco Guarascio @fraguarascio; Additional reporting by Andreas Rinke and Sabine Siebold; Editing by David Clarke)

 

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Facebook ‘refriends’ Australia after changes to media laws

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Facebook 'refriends' Australia after changes to media laws 2

By Byron Kaye and Colin Packham

CANBERRA (Reuters) – Facebook will restore Australian news pages, ending an unprecedented week-long blackout after wringing concessions from the government over a proposed law that will require tech giants to pay traditional media companies for their content.

Both sides claimed victory in the clash, which has drawn global attention as countries including Canada and Britain consider similar steps to rein in the dominant tech platforms and preserve media diversity.

While some analysts said Facebook had defended its lucrative model of collecting ad money for clicks on news it shows, others said the compromise – which includes a deal on how to resolve disputes – could pay off for the media industry, or at least for publishers with reach and political clout.

“Facebook has scored a big win,” said independent British technology analyst Richard Windsor, adding the concessions it made “virtually guarantee that it will be business as usual from here on.”

Australia and the social media group had been locked in a standoff after the government introduced legislation that challenged Facebook and Alphabet Inc’s Google’s dominance in the news content market.

Facebook blocked Australian users on Feb. 17 from sharing and viewing news content on its popular social media platform, drawing criticism from publishers and the government.

But after talks between Treasurer Josh Frydenberg and Facebook CEO Mark Zuckerberg, a concession deal was struck, with Australian news expected to return to the social media site in coming days.

“Facebook has refriended Australia, and Australian news will be restored to the Facebook platform,” Frydenberg told reporters in Canberra.

Frydenberg said Australia had been a “proxy battle for the world” as other jurisdictions engage with tech companies over a range of issues around news and content.

Australia will offer four amendments, which include a change to the proposed mandatory arbitration mechanism used when the tech giants cannot reach a deal with publishers over fair payment for displaying news content.

‘UNTESTED’

Facebook said it was satisfied with the revisions, which will need to be implemented in legislation currently before the parliament.

“Going forward, the government has clarified we will retain the ability to decide if news appears on Facebook so that we won’t automatically be subject to a forced negotiation,” Facebook Vice President of Global News Partnerships Campbell Brown said in a statement online.

The company would continue to invest in news globally but also “resist efforts by media conglomerates to advance regulatory frameworks that do not take account of the true value exchange between publishers and platforms like Facebook.”

Analysts said while the concessions marked some progress for tech platforms, the government and the media, there remained many uncertainties about how the law would work.

“Retaining unilateral control over which publishers they do cash deals with as well as control over if and how news appears on Facebook surely looks more attractive to Menlo Park than the alternative,” said Rasmus Nielsen, head of the Reuters Institute for the Study of Journalism, referring to Facebook headquarters.

Any deals that Facebook strikes are likely to benefit the bottom line of News Corp and a few other big Australian publishers, added Nielsen, but whether smaller outlets win such deals remains to be seen.

Tama Leaver, professor of internet studies at Australia’s Curtin University, said Facebook’s negotiating tactics had dented its reputation, although it was too early to say how the proposed law would work.

“It’s like a gun that sits in the Treasurer’s desk that hasn’t been used or tested,” said Leaver.

COOLING-OFF PERIOD

The amendments include an additional two-month mediation period before the government-appointed arbitrator intervenes, giving the parties more time to reach a private deal.

It also inserts a rule that an internet company’s existing media deals be taken into account before the rules take effect, a measure that Frydenberg said would encourage internet companies to strike deals with smaller outlets.

The so-called Media Bargaining Code has been designed by the government and competition regulator to address a power imbalance between the social media giants and publishers when negotiating payment for news content used on the tech firms’ sites.

Media companies have argued that they should be compensated for the links that drive audiences, and advertising dollars, to the internet companies’ platforms.

A spokesman for Australian publisher and broadcaster Nine Entertainment Co Ltd welcomed the government’s compromise, which it said moved “Facebook back into the negotiations with Australian media organisations.”

Major television broadcaster and newspaper publisher Seven West Media Ltd said it had signed a letter of intent to strike a content supply deal with Facebook within 60 days.

A representative of News Corp, which has a major presence in Australia’s news industry and last week announced a global licensing deal with Google, was not immediately available for comment.

Frydenberg said Google had welcomed the changes. A Google spokesman declined to comment.

Google also previously threatened to withdraw its search engine from Australia but later struck a series of deals with publishers.

The government will introduce the amendments to Australia’s parliament on Tuesday, Frydenberg said. The country’s two houses of parliament will need to approve the amended proposal before it becomes law.

(Reporting by Colin Packham and Byron Kaye; additional reporting by Renju Jose, Kate Holton and Douglas Busvine; Writing by Jonathan Barrett; Editing by Sam Holmes and Mark Potter)

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Oil rises on positive forecasts, slow U.S. output restart

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Oil rises on positive forecasts, slow U.S. output restart 3

By Bozorgmehr Sharafedin

LONDON (Reuters) – Oil prices rose on Tuesday, underpinned by the likely easing of COVID-19 lockdowns around the world, positive economic forecasts and lower output as U.S. supplies were slow to return after a deep freeze in Texas shut down crude production.

Brent crude was up 36 cents, or 0.5%, at $65.60 a barrel by 1212 GMT, and U.S. crude rose 39 cents, or 0.6%, to $62.09 a barrel.

Both contracts rose more than $1 earlier in the session.

“Vaccine news is helping oil, as the likely removal of mobility restrictions over the coming months on the back of vaccine rollouts should further boost the oil demand and price recovery,” said UBS oil analyst Giovanni Staunovo.

Commerzbank analyst Eugen Weinberg said optimistic oil price forecasts issued by leading U.S. brokers had also contributed to the latest upswing in prices.

Goldman Sachs expects Brent prices to reach $70 per barrel in the second quarter from the $60 it predicted previously, and $75 in the third quarter from $65 forecast earlier.

Morgan Stanley expects Brent crude to climb to $70 in the third quarter.

“New COVID-19 cases are falling fast globally, mobility statistics are bottoming out and are starting to improve, and in non-OECD countries, refineries are already running as hard as before COVID-19,” Morgan Stanley said in a note.

Bank of America said Brent prices could temporarily spike to $70 per barrel in the second quarter.

Disruptions in Texas caused by last week’s winter storm also supported oil prices. Some U.S. shale producers forecast lower oil output in the first quarter.

Stockpiles of U.S. crude oil and refined products likely declined last week, a preliminary Reuters poll showed on Monday.

A weaker dollar also provided some support to oil as crude prices tend to move inversely to the U.S. currency.

(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Jessica Jaganathan in Singapore; editing by David Evans and John Stonestreet)

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