Monthly Archives: November 2009

Kate Mackenzie

On FT Energy Source:

- How Norwegians are paying for Chesapeake CEO’s $75m bonus

- A cautionary tale on carbon markets?

- China’s carbon intensity targets explained

- Australia’s ETS palaver

- Executive pay and an ONGC discovery in Spot news

Further reading:

- What peak oil could mean… (Guardian)

- The liquid fuel that is clean on every measure, but CO2 (The Times)

- Higher fuel prices have surprisingly little effect on car purchase decisions (Baltimore Sun)

- Commodities market regulators: one size does not fit all (Argus and The Telegraph)

- Its CO2 data may be cloudy, but China’s economy is growing fast (Environmental and Urban Economics)

- Powering the Dubai overshoot (Gregor)

- Solar airplanes – yes, really (MIT Technology Review)

- A lifeline for small refiners? (The Barrel/Platts)

Kate Mackenzie

A report in the Guardian today quotes a trader at Bache Commodities predicting that carbon market transactions could reach $3,000bn - double the size of the oil futures market – within 10 to 20 years. Andrew Ager also says carbon futures could be used to hedge against falling equities or rising inflation. Sound familiar?

As the story notes, critics of carbon trading are not just from environmental groups such as Friends of the Earth; even EDF chief Vincent de Rivaz has voiced concerns that financial instruments based on carbon trading could cause another subprime crisis.

FT columnist Tony Jackson today considers these very same arguments, and concludes a subprime-style catastrophe in carbon markets isn’t likely – at least, judging from the state of the market today.

Kate Mackenzie

Australia, often concerned about its status in world affairs, is certainly being closely watched for its progress towards introducing a cap-and-trade scheme. Although its economy is about 2 per cent of global GDP, an Australian system might be only the second significant emissions trading scheme to operate under UN auspices – the first being the European Union’s.

But the path to such an ETS in Australia has turned into an all-out political watershed for the country’s conservative movement; one that reflects poorly on both sides of politics. The opposition leader, Malcolm Turnbull, could well be defeated in a leadership challenge over his support for the ETS. Meanwhile critics have accused the centre-left Labor government of devising a cynical piece of legislation that would do little if anything to reduce emissions from a business-as-usual scenario, while spending vast amounts compensating the fossil fuel industries; particularly coal-fired plant operators. Moreover, it cleverly wedged the opposition into a very tight spot.

Kate Mackenzie

President Obama’s announcement last week that he would both attend Copenhagen (albeit during the less important early days of the meeting) and, more importantly, bring an emissions reduction number to the table put the ball back in China’s court, in terms of making commitments. Although China’s CO2 emissions profile and the outcomes it is seeking from the Copenhagen process are vastly different to those of the US, the two biggest emitters have both been similarly reluctant to come up with firm numbers ahead of the December meeting.

Until now, that is. First came Obama’s 17 per cent statement, and then China – which will absolutely not agree to an emissions cut, but has only given fairly complicated commitments on how it will instead curb emissions growth – said it would reduce its CO2 emissions per unit of GDP by 40 – 45 per cent by 2020, from 2005 levels.

Carola Hoyos

One of the more amusing idiosyncrasies thrown up by the FT’s investigation into the pay of energy industry chief executives involves the companies that in 2008 handed their bosses the highest and the lowest compensation package.

It appears StatoilHydro, the Norwegian state oil company that paid its chief executive $1.8m in 2008 and cut his bonus because of the global economic crisis, helped finance the $112m pay package the board of Chesapeake Energy, the US natural gas producer, paid its chief executive, Aubrey McClendon.

Onlookers may be getting a chuckle out of the situation, but Norwegians are not laughing, Nordic sources tell Energy Source.

Here is what happened:

Kate Mackenzie

Oil and gas chief executives: Are they worth it?
Interactive guide to the state of executive remuneration in the industry. Plus more reports on how US and European companies fared (FT)

Iran raises nuclear stakes with plans for 10 enrichment plants
Dramatic expansion planned (FT)

ONGC close to big oil find
Indian producer could add 20,000 bpd (Business Times)

Consider complexity in assessing derivatives
The carbon market is not a time-bomb, at least for now (FT)

Ecuador oil output to rise in 2010
Three years of decline to end, says Correa (Bloomberg)

Shell reins back biofuel expectations
Won’t be in widespread use until about 2020, says Voser (FT)

Hockey and Turnbull set for spill showdown
Political turmoil creates uncertainty over Australia’s proposed carbon trading scheme (ABC)

Call for improvement on engineering nuclear sites
Productivity must improve 10% to 20% to meet UK targets (FT)

Russia’s Gazprom targets France
EDF interest in South Stream could come at expense of Nabucco (Argus)

Indian radioactive leak was deliberate, says government
Vials of tritium deliberately poured into drinking water facility (FT)

Ed Crooks

The UK’s safety regulator has published an update of its assessment of the new nuclear power plants proposed for the UK: the Areva / EDF EPR and the Westinghouse AP1000.

The widely varying coverage of that announcement says a lot about the outlook for new nuclear investment.

James Fontanella-Khan

China sets targets for 2020 carbon cuts
Plans to slash emissions per unit of economic output by 40-45% (FT)

Editorial comment: Obama goes to Copenhagen
The US president is right to attend the climate talks (FT)

India’s ONGC eyeing stake in Iran gas field
Seeking a 20-25% stake in a $7.5bn project of South Pars (Reuters)

Ghana petroleum says it had Oil deal with Kosmos before Exxon
GNPC is still in talks with Kosmos over the purchase of assets (Bloomberg)

Nuclear plant group’s safety move
Solution will ‘in principle’ meet safety, says UK regulator (FT)

Building hiatus eroded expertise
France’s nuclear watchdog warns on erosion of skills (FT)

James Fontanella-Khan

Obama to offer cuts at Copenhagen
US set to reduce emissions by 17% from 2005 levels by 2020

China’s Wen will join Obama at Copenhagen climate talks
China and US are the biggest biggest producer of greenhouse gasses (Bloomberg)

EnCana shareholders agree on split
Canadian group to be divided into two publicly traded companies (FT)

Lower oil hurts Rosneft’s net
Russia’s number-one oil producer posted a 66% drop (WSJ)

Brookfield Renewable Power sells C$300m
Toronto-Dominion, Bank of Nova Scotia and CIBC to advise (Reuters)

How saving the planet adds up
Despite the downturn, green has remained the new black for retailers (FT)

Buildings are key to tackling emissions
Good news is that greening buildings are not rocket science (FT)

UK chemicals sector bids for support
Sector has suffered a wave of plant closure (FT)

English winemaker toasts climate change
This year has produced another bountiful harvest (FT)

Ed Crooks

On Energy Source:

Obama will go to Copenhagen, and the US will offer a cut in emissions

Shell CEO sets out his strategy and challenges

Elsewhere:

China seeks to boost production and raise imports to tackle gas shortage (Xinhua)

…while Ukraine wants less gas, and Russia shows mercy on take-or-pay contracts (Tehran Times)

Energy Source is no longer updated but it remains open as an archive.

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