Another view on cap-and-trade giveaways
The revised Waxman-Markey bill now plans to give away about 85 per cent of initial carbon allowances for free – despite President Obama’s first budget back in February planning for all allowances to be auctioned; with no freebies. Many commentators, including the FT, have been critical of the giveaways.
Robert Stavins at Harvard has written a defence of giving away allowances; in principle, he says, they are not as bad as they sound.
The Source: Opec holds; Steven Chu and open source software
On Energy Source:
Steven Chu: Open source software can reduce need for coal plants
A non-event Opec meeting leaves output unchanged
Opec ministers divided: fundamentals, or a bubble?
Opec set to leave output unchanged
Elsewhere:
Carbon credits: Ecuador pursues an unusual plan: leaving oil untapped But working out how and whether credits should be paid is incredibly difficult (Washington Post)
Corporate news: GE’s expansive ‘Economagination’ definition The conglomerate is keen to play up the performance of its much-advertised business unit – but includes an ever-broader group of products under that heading (WSJ)
Products: US to create gasoline reserves A new act paves the way for 30m barrels of refined products, and not a moment too soon, according to some (The Chron)
Renewables: Winged creatures should fear carbon, not wind: Gigawatt for gigawatt hour, fossil fuel energy supplies apparently result in more avian deaths than wind turbines (IEEE)
Cap and trade: How much will it cost? And the difficulty of answering that question, by economist Casey B. Mulligan (Economix/NY Times)
Solar: The trouble with rooftop solar Are grid-connected solar PV cells worthwhile? (The Oil Drum)
Steven Chu: Open source software can reduce need for coal plants
Could open source software save the planet? Steven Chu, the US energy secretary, says it can certainly help, by making it easier for all countries to access tools to design and build more energy-efficient buildings.
Chu has been the subject of high hopes for environmentalists and scientists since the Nobel prize winner was appointed energy secretary. Some of those cheering him on have been disappointed as his strident criticism of coal has given way to political reality.
In the report linked to above, he tells FT journalists Clive Cookson, Fiona Harvey and Carola Hoyos that “there will be no moratorium in India, China and other developing countries.”
Chu still believes coal, even with carbon capture and sequestration, is not an attractive energy source. But he is adamant that great efficiency, particularly in buildings, will significantly reduce the number of power plants built. To really take effect, he says, global co-operation on technology to improve efficiency is vital. And that co-operation, he says, could be best facilitated by open source software to avoid the wrangling over intellectual property that is sometimes a source of tension between developed and developing countries in climate change talks.
In line with consensus, the Organisation of Petroleum Exporting Countries (Opec) decided on Thursday to keep current production quotas unchanged. The decision was a speedy one coming just two hours after ministers sat down, something that usually indicates general consensus among the cartel.
Here’s the latest from Bloomberg:
May 28 (Bloomberg) — OPEC decided to keep production quotas unchanged at today’s meeting in Vienna, banking on a recovery in oil demand toward the end of the year. The Organization of Petroleum Exporting Countries, responsible for 40 percent of global crude supply, agreed to maintain production quotas, Saudi Oil Minister Ali al-Naimi said. It’s the second time this year the 12-member group has met without revising that total.
Opec ministers rarely agree on anything, other than they like high, not low oil prices, Oil reporters, analysts and industry executives in Vienna for the cartel’s meeting usually spend quite a lot of time – and
coffees – pondering the latest disagreement.
But even for the cartel’s standards of division, today’s meeting has seen a more profound split than usual on what force is behind the large rise in oil prices above $60 a barrel from February’s four-year low of
$32.70 a barrel.
The ministers are divided into two camps on the issue: the “fundamentals” and the speculative “bubble”.
Ali Naimi, Saudi oil minister and Opec’s de facto leader, believes that fundamentals of supply and demand are mostly behind the price rise and, probably because of his firmly belief that better times are around the
corner, has exhibited a particular good humour since he arrived to Vienna on Tuesday.
Opec set to leave output unchanged
Javier Blas has the word on Opec’s decision from Vienna:
Opec was on Thursday set to leave its production levels unchanged, betting that higher oil demand as the global economy recovers would push prices towards the cartel’s target of $75-$80 a barrel by the end of the year.
Speaking ahead of their meeting in Vienna, Opec delegates said ministers were expected to call for improved compliance with the cartel’s previous cuts.
Compliance in April was estimated at 80 per cent, down from 85 per cent in March.
Delegates said that the increase in over-production was a concern and ministers were likely to promise to cut back their pumping to agreed output levels, but left the official targets unchanged.
This was the majority view of analysts. Prices are down slightly right now; they also moved little immediately after the last meeting in March, which also opted to hold. But despite falling compliance, crude prices have steadily moved higher since then. So how well will compliance be enforced this time round? And given the inscrutable moves on the demand side, how much does it really matter anyway?
Related stories:
Opec set to leave output unchanged (FT, 27/05/09)
- Rise in taxes on US petrol ‘not feasible’
Steven Chu, US secretary of energy, talks to the (FT)
- Saudis back increase to at least $75
Naimi says world economy has strengthened enough (FT)
- Shell shake-up to cut costs
Thousands of jobs are expected to go (FT)
- Questions over Voser’s plans for Shell
Analysts query merits of units merger (FT)
- Chinese miner backs $5bn Australian coal deal
Asian giant continues its relentless pursuit of resource assets (FT)
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Insight into the financial, economic and policy aspects of energy and the environment.
