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Paris 2015: UN climate deal to boost clean power, curb coal: UBS

The UN global climate negotiations in Paris starting Monday are likely to drive further investment in renewable energy, prompt a switch to electrification in heating and transport and further curb coal-fired power, Swiss bank UBS said in a research note Monday.

The 21st Conference of Parties (COP21) to the UN Framework Convention on Climate Change aims to produce a legally binding global target for a decarbonized economy; a mechanism to periodically monitor those efforts; and to implement accountability to hold governments to their targets, all under an overarching global agreement to limit global warming to no more than 2 degrees Celsius from pre-industrial levels.

"To keep the +2 degrees C global warming target, we believe that COP21 may bring three main implications," said UBS analyst Alberto Gandolfi.

"1) As countries will have to present detailed plans on how to decarbonize their economies, we would see further support to renewables and energy efficiency," he said in the report.

"2) We might see a push towards further electrification (mostly heating and transport). 3) A long-term plan to permanently shut coal plants may be implemented," Gandolfi said.

"A global push to support renewables could revamp wind/solar growth in developed economies (e.g. Europe) and open up new markets. This would lead to longer-term capex in smart grids and storage," he said.

"Focus on energy efficiency could strengthen the role of energy services, as a growing business unit. Besides the supercritical plants recently built, COP21 could lead to a precise decommissioning schedule for less efficient coal plants; the UK has just done so and plans a full exit by 2025," he said.

"This would eventually improve [power supply and demand] and up profits from gas plants, which at the moment are in negative territory," he said.

"Longer-term, we believe that decarbonized economies will lead to larger investment opportunities in wind and solar ($7 trillion by 2030 on IEA, globally), upgrade the need for smart grids (Eur165 billion just in Europe) and up profits from supply activities (energy services)," he said.

"We see EDPR (EDP), Enel, Iberdrola, Engie and SSE as best strategically positioned to capture such megatrends," Gandolfi said in the note.

source: http://www.platts.com