Daily Archives: October 20, 2009

Kate Mackenzie

Before we all get too optimistic about the run-up to Copenhagen, here are a couple of graphs from a recent Citi report about developed countries’ commitments. It’s what we already know, but it’s still striking:

Related links:

Concession raises hopes for climate deal (FT, 19/10/09)

Kate Mackenzie

We were excited to read this in the New York Times’ environment blog:

Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use,” a new report from the National Research Council, a branch of the National Academies, tries to put a dollar figure on what economists call externalities.

Calculating these sorts of things can be fantastically convoluted – remember that report earlier this year that found that planes could  be more environmentally sound than trains, sort of (taking into account occupancy rates, driving to meet the train, and manufacturing rail carriages and so on). So, information on energy externalities is good.  But then came this:

The study, however, comes with a major caveat: it did not look at the impact of energy on climate change and ecosystems, or at rising food prices and the risks to national security.

So what does it look at? The report costs a bunch of money but the executive summary describes it thus:

In particular, we evaluated effects related to emissions of particulate matter (PM), sulfur dioxide (SO2), and oxides of nitrogen (NOx), which form criteria air pollutants.We monetized effects of those pollutants on human health, grain crop and timber yields, building materials, recreation, and visibility of outdoor vistas. Health damages, which include premature mortality and morbidity (such as chronic bronchitis and asthma), constituted the vast majority of monetized damages, with premature mortality being the single largest health-damage category.

Coal-fired plants caused $62bn worth of damage in 2005, while natural gas plants caused $740m worth. On a per kilowatt hour basis, coal was 3.2 cents, compared to natural gas-fired plants at 0.16 cents.  And that’s mostly health problems, and mostly death. Hmm.

But wait, there’s more:

After ranking all of the plants according to their damages, we found that the 50% of plants with the lowest damages together produced 25% of the net generation of electricity but accounted for only 12% of the damages. On the other hand, the 10% of plants with the highest damages, which also produced 25% of net generation, accounted for 43% of the damages. Figure S-1 shows the distribution of damages among coal-fired plants.

So big coal-fired plants produce lots more power, but they also produce, on a per-kilowatt basis, quite a lot more death. And there was a similar skew for natural gas-fired plants.

Kate Mackenzie

On FT Energy Source:

BP chief says oil sands, cap and trade will help – but CCS won’t

Two down, two to go for Copenhagen negotiators

Markets: Crude breaches $80

Yergin vs Simmons 2: Battle of the IEA data interpretations

What will make Obama go to Copenhagen

So the US administration is not against drilling, now?

US Chamber of Commerce climate prank

Further reading:

Why the lures of geoengineering are really a ‘greener grass’ symptom (Ryan Avent)

Danes support Nordstream; Budapest supports Nabucco (UpstreamOnline)

Cutesy contrarianism on climate change from the Freakonomics authors goes too far … (Science Blogs)

Lots of reasons why the outlook for electric cars is improving (Getreallist)

Economic concerns trump climate change for voters (Politico)

$70: The new price floor that will keep the oil industry happy? (New York Times)

Big Californian solar projects versus endangered animals (LA Times)

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Kate Mackenzie

News out of yesterday’s Major Economies Forum meeting in London – where the 17 biggest emitting countries battled out their Copenhagen stance – was surprisingly positive.

Developed countries talked about relenting on their demands that poorer countries sign up for big commitments for the year 2050 – something that has been a major sticking point in talks so far.  Rich countries such as the UK and US have signalled that they would settle for 2020 targets for now.

And developing countries made a big concession, too – last week they apparently dropped demands for access to rich countries’ clean energy intellectual property. This was one of those demands that tended to fly under the radar in a lot of news coverage, but had been the source of a big rift behind the scenes.

So, what’s left? The task of reaching an international agreement in December is still mind-bogglingly challenging, but it will hinge on two more issues:

US crude oil prices breached the $80 a barrel mark on Tuesday, reaching a fresh 2009 high, while gold rose as further weakness in the US dollar provided support for sentiment towards commodities.

Nymex November West Texas Intermediate reached a fresh 2009 high of $80.05 a barrel before easing back to trade 38 cents lower at $79.23.

The November contract expires at the end of Tuesday’s session and December WTI, the benchmark from Wednesday, slipped 33 cents to $79.63 after hitting $80.40.

Positioning in the options market provided a gravitational pull on WTI as a large number of “call” options – providing the right to buy crude oil at a predetermined price – were outstanding at the $80 mark.

Once the spot oil price moved near to that level, the sellers of the call options were forced to buy futures to cover their positions.

Olivier Jakob, head of Swiss-based oil consultancy Petromatrix, said that the outstanding call options “could accelerate prices and put fundamentals considerations to the side.”

Carola Hoyos

Tony Hayward, BP’s chief executive, revealed some of his thinking on the big questions facing the energy industry in a speech this morning. First, he warned policymakers not to dilly dally lest they want to see the return of energy shortages that plagued the UK in the 1970s and California at the turn of this century.

BP estimates the world will need to spend more than $1,000bn each year until 2020, to meet the expected 45 per cent increase in energy demand. Reducing carbon also needed to be a priority, with governments giving a clear path forward.

“We can’t afford to wait. We need to begin now to begin taking carbon out of the mix today,” he told a conference in London.

But turning the global economy into a carbon-light one will be slow as turn over time of capital stock in the power sector was 30 years, and in cars is 15 years, he argued.

Ed Crooks

Pressure has been building on president Obama to attend the UN climate talks in December. Arguably that is unfair, since the meeting was always intended to be at only a ministerial level.

But on Monday the heat was turned up by Gordon Brown, Britain’s prime minister, when he addressed the Major Economies Forum meeting in London.

Mr Brown said he would definitely go to Copenhagen, and urged other leaders to do the same.
That created a slightly awkward situation for Todd Stern, the US climate representative who was at the London talks.

Sheila McNulty

The US Interior Department has decided it is okay for Shell Oil to drill exploration wells in the Beaufort Sea off Alaska for the first time in over a decade. An interesting decision by the Minerals Management Service division and one that has left the industry – except for Shell, of course – strangely silent.

In fact, the only ones who seemed to notice were the environmentalists, who insisted the decision was wrongheaded. The commentary was very much like that from the Bush years. Indeed, former President George W Bush’s name was invoked in the response by Whit Sheard, Alaska program director for Pacific Environment:

MMS is again trying to implement an overly aggressive Bush-era drilling plan in one of the riskiest areas on the planet to drill. Although fisherman, traditional indigenous communities, the courts and the global scientific community have all condemned this plan, the Arctic continues to be treated like a sacrifice zone.

Hmm. Interesting take on things, especially since during the Bush era  drilling in the area continued to be  blocked. That is the problem with stereotyping. Bush really did not do everything he could to grow US oil and gas development in the US, and Obama is not doing everything he can to kill it.

Kate Mackenzie

Reports that the US Chamber of Commerce had issued a dramatic turnround and was actually supporting a climate change tax were quickly revealed to be a hoax by an organisation called the Yes Men.

The activist group, which has put on other hoaxes aimed at ‘correcting identities’, staged a press conference at the National Press Club fronted by a man “Hingo Sembra”, which BNet notes should have been a clue in itself. It also published a fake press statement that was almost believable – if you ignored that fact that this was an organisation that recently called for climate change science to go on trial, and was now apparently calling for a carbon tax.

The stunt was quickly undone by a cranky Chamber of Commerce official,  Eric Wohlschlegel. It’s all captured on video here:

Meanwhile Talking Points Memo shows the Reuters story that bought the hoax, as run on New York Times and National Journal.

And what did it achieve? The Washington Post writes:

After the jig was up, a real reporter asked the fake spokesman if he thought this kind of event — if lying about who he was, particularly — was really going to help his side win the national climate debate.

“Don’t know,” he said, apparently speaking as himself.

James Fontanella-Khan

GE attacks protection of green industries
US group says protectionism undermining fight against global warming (FT)

Concession raises hopes for climate deal
Developed nations are preparing to relent on their demand (FT)

CNPC’s Operations Are ‘Better Than Anticipated’
Chinese group says businesses maintained ‘stability and growth’ (Bloomberg)

Reliance Industries eyeing refineries in US, Europe
Planning to buy assets worth $3-4bn (Reuters)

Options-driven rally likely if oil hits $80
A large number of call have been struck above $80 (FT)

Exxon Mobil ordered to pay $105m in NYC case
Fined for contaminating New York’s ground water (Reuters)

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