Daily Archives: July 13, 2009

Kate Mackenzie

The CBI, the UK’s main business group, has called for a number of changes to energy policy. Efficiency, grid investment, faster planning processes and support for low-carbon investment are all on the list. But it’s their calls for reduction in expected wind power growth that have gained the most attention. The report, which uses modelling from McKinsey, draws a ‘business as usual’ scenario, in which wind accounts for 24 per cent of the generation mix, and a ‘balanced’ scenario where it makes up 20 per cent. (Click the image below to view details of the scenarios). 

The primary argument is that the government’s slow and inadequate support for CCS and nuclear means the UK will spend more than is necessary to reach its targets, and end up with expensive energy supplies and difficulty meeting its later goals for 2030 and 2050.

How does wind figure in this? Read more

Kate Mackenzie

Opec may have problems on its hands as compliance levels fall – right when crude oil prices are falling, too.

Compliance levels with the combined 4.2m b/d reduction agreed by the cartel late last year reached as high as 85 per cent – an unusually high level – earlier this year. It began to decline again, as some members took advantage of higher prices. Oil prices of course continued their rise for much of the past few months. But with the decline of the past week, those falling compliance levels might become more of a problem. Read more

Ed Crooks

The signing in Ankara today of the inter-governmental agreement for Nabucco, the proposed gas pipeline from the Caspian to the EU, is a historic moment, but only the first step in its journey from the drawing-board to reality.

With the five transit countries on the 3,300km route – Turkey, Bulgaria, Romania, Hungary and Austria – finally in agreement, the pipeline consortium can begin signing up gas trading companies for contracts to use Nabucco’s capacity, and complete its detailed design and engineering work to submit for environmental approvals.

The biggest question over Nabucco is whether the gas can be found to fill it. There are huge gas reserves around the Caspian region, but for one reason or another those sources are difficult to tap.

The key for Nabucco is the Field of Dreams principle: “if you build it, the gas will come”. Read more

Kate Mackenzie

On Energy Source:

What’s really moving the energy markets Read more

Oil prices steadied on Monday after a sharp fall in the previous week while base metals were mixed and gold consolidated above the $900 an ounce level as commodity markets made a cautious start to trading, awaiting fresh impetus.

Last week saw equity, commodity and emerging markets all retreat as investors continued to question the sustainability of global economic recovery, ensuring risk appetite remained subdued.

Nymex August West Texas Intermediate dipped 9 cents to $59.80 a barrel while ICE August Brent added 14 cents at $60.66 a barrel, down 7.7 per cent this week. Read more

Kate Mackenzie

Can you spare a few euros for Desertec?

At an estimated cost of €400bn, you might think the first challenge for the ambitious plan to cover much of the Sahara with solar thermal plants and wind farms to power Europe would be raising the money.

Some impressive German names are among those forming a company to explore the further challenges of the task: Siemens, Eon, Munich Re, Deutsche Bank, and RWE are all members of an industrial initiative launched today. Some of them are quite optimistic about the prospects: Siemen’s chief executive Wolfgang Dehen says the plans, which rely on solar thermal concentrating plants and high-voltage cables, are ‘technically feasible for the first time’ after being talked about for 30 years. Read more

Kate Mackenzie

There might be little of environmental merit in Formula One racing. But when Honda pulled out of the race last year, where did its engineers go? To hybrid development, apparently.

The company’s new chief executive Takanobu Ito, who started last week, was all about hybrids in his first public appearance today. “I think everyone is going to go the way of hybrids,” he said, adding that Honda would speed up the development of a new hybrid system with two electric motors for medium to large vehicles. Read more

By Izabella Kaminska

Supply? Bleh.

Demand? Bleh.

Geopolitical risk? Bleh.

Speculators? Sort of.

Fear of over-regulation? Yup!

That, at least, is the observation of Jeff Korzenik at (in)efficient frontiers this week, a prominent market commenter in the US. And he has a point. The sudden turnaround in energy, and overall commodity markets for that matter, took many by surprise last week as it came just when energy fundamentals were actually looking more bullish. The descent, interestingly, also comes a year since crude’s last epic turnaround from historic highs of $147 per barrel on July 11th 2008. Read more

James Fontanella-Khan

China and Russia lead oil deals
Emerging economy buyers paid for $24.2bn of the total $48bn value of oil gas deals (FT)

CBI urges shift to nuclear from wind power
Labour’s policy is weakening the country’s energy security, says CBI (FT)
 Read more