A proposed reshuffle of renewable energy subsidy levels in the UK was the big news of the week. The so-called “banding review” of the Department of Energy and Climate Change scales back support for more mature renewable energy technologies such as onshore wind and hydro, while making it more generous for technologies like marine and offshore wind which hold significant promise for the sea-surrounded nation.

The largest increase in support is for power generated from wave and tidal technologies. No fewer than five Renewable Obligation Certificates are proposed to be issued for every MWh of electricity generated for projects of up to 30MW in size, against the current two certificates. Explaining the new plan, secretary of state for energy and climate change Chris Huhne said: “We’re getting more renewable for less amount of money. It is more bang for the bill-payer’s buck.”

Since the proposals are the starting point of a consultation process, they are likely to be fiercely debated and negotiated over the next few months. A new law is to be finalised next year and the new rates would come into effect only in April 2013.

There was also a churning in UK’s carbon capture and storage industry. Earlier during the week, Huhne announced the decision of the government to scrap funding for Iberdrola’s GBP 2bn carbon capture project at Longannet in Scotland, citing its high cost. The UK government had pledged GBP 1bn in a contest to fund the first post-combustion carbon capture project. The funds will be allocated to other carbon capture plants selected through a more streamlined process, Huhne said.

Across the Atlantic, the state of California provided the headlines with its cap-and-trade rules for carbon emissions receiving a crucial nod from the Air Resources Board. The state plans to cut emissions by 15% by 2020. Large emitters would have to hold a permit for every tonne of carbon released, beginning 1 January 2013. Bloomberg New Energy Finance analysts expect allowance prices at USD 13 per tonne of carbon dioxide emitted in 2013, going up to USD 59 by 2020.

The European carbon market remained subdued last week, with allowances for Dec 2011 delivery ending Friday’s session on London’s ICE Futures Europe exchange at EUR 10.35 per tonne compared with EUR 10.41 at the close of the previous week’s session. UN Certified Emission Reduction credits − which can partly be used in the EU Emissions Trading System for compliance − lost 4.4% during the week to close at EUR 6.95 per tonne for December 2011. This market has been oversupplied with new credits issued to emission-reduction projects approved by United Nations’ Clean Development Mechanism.

Bloomberg New Energy Finance estimates that trading in global carbon markets will be worth EUR 94bn in 2011 − a 13% rise from 2010 but an 11% reduction from its forecast made in July 2011.

In Asia, China revealed that it is studying an environmental protection tax. The world’s largest emitter of carbon has pledged to reduce carbon emissions per unit of gross domestic product by as much as 45% in 2020 from 2005 levels. The government will also support bond issues for companies undertaking environmental projects, and provide tax breaks, China’s cabinet decided after a meeting last week.

China’s two biggest makers of wind turbines − Sinovel and Xinjiang Goldwind − plan to offer a combined USD 1.6bn of bonds as soon as March, they said in stock exchange filings. This follows interest-rate increases which prompted banks to stop giving discounts on loans to the industry.