Monthly Archives: December 2009

Kate Mackenzie

Energy Source will be taking a break for the next few days, and returning with more energy news and analysis on January 4. If you haven’t already, you can sign up for our daily email (free registration required) to be reminded when we’re back on air.

Thanks to all who’ve read, commented and emailed us during our first year. It’s been fun.

Kate Mackenzie

We’ve compiled a list of some of the biggest energy issues from 2009, and the ideas that will be tested in 2010. You can add suggestions of anything that should be on the list, either via the comments or by emailing us.

1.       What role will China’s consumption, foreign acquisitions, inventories, and domestic production play in the energy future?

2.      Is the $70 crude price floor here to stay?

3.      Did oil prices help cause the recession – and might they threaten the recovery?

4.      When will oil inventories draw down?

Kate Mackenzie

There are easily more than 100 ‘big questions’ for climate change and clean technology in 2010, but here’s a few, based on some of this year’s big themes:

1.        Will a binding post-Copenhagen agreement ever be struck – and between whom?

2.       How will low-carbon investment fare in the fallout from Copenhagen?

3.      How will carbon offset projects fare after Copenhagen?

4.      How quickly and effectively will the ‘quick start’ financing promised to developing countries be deployed?

Kate Mackenzie

“Nopenhagen, fiascopenhagen, slowpenhagen, COP out, flop COP, bad COP, the great disappointment” – a few labels thrown around by one market analyst over the conclusion of the Copenhagen climate change conference.

In fact, few seem happy with the outcome, apart from China and India. Now the recriminations have begun in earnest, and though the US and Barack Obama were initially criticised, much of the blame since has focused on China. China has hit back at the criticism, particularly at comments by UK environment minister Ed Miliband, saying it is another example of developed countries shirking their own obligations (though the UK incidentally has set rather stringent targets).

But the attacks on China are continuing. Mark Lynas, an environmental activist and author who advises the Maldives government on climate change, wrote a blistering account of some of the final hours of Copenhagen in today’s Guardian, accusing China of  wrecking the deal. In it, he describes horrified reactions from Angela Merkel and Kevin Rudd as China vetoed emissions commitments – even from developed countries, which were widely believed to have agreed to an 80 per cent reduction by 2050.

Opec slide viewed by journalists in Luanda (Javier Blas/FT)

Opec slide viewed by journalists in Luanda (Javier Blas/FT)

The Opec oil cartel has repeated it through the year: as a contribution to the global economy recovery, it was supporting moderate oil prices.

Saudi Arabia put numbers on the cartel’s words, describing the $70-$80 a barrel range as “excellent”.

For sure, Opec’s aim of $70-$80 a barrel – the group avoid talking about a target – has helped the global economy, particularly of poor oil importing countries.

But there are signs that the oil cartel is not as altruistic at it appears at first glance. Opec appears to be as concerned about the global economy as to drive consumers away from oil.

Kate Mackenzie

Beijing rejects UK Copenhagen criticisms (FT)

BASIC climate change alliance crumbling already (FT)

How China wrecked the climate deal (Guardian)

Opec indicates $70 – $80 oil price target (FT)

Nations may miss Copenhagen’s Jan 31 deadline, Orteo says (Bloomberg)

Kate Mackenzie

On FT Energy Source:

- Opec production quotas maintained

- Telling it like it isn’t

- Uncool carbon markets

- The solar company, the short-seller, and the $9 taxi fare

- Iraq readies for quota allocation fight

- Copenhagen and Shell Nigerian sell-off reports in Spot news

- Angola keeps on pumpin’

- Pressure builds in BP’s US operations

- Shell’s South Africa move highlights gas potential

Further reading:

- Good riddance to Copenhagen

- What hath Copenhagen wrought?

- Neither earth-shattering, nor a failure

- Glass-half-full department

- Anything but oil

- US refining faces an uncertain future

- Desert vistas versus solar power

- Shale gas and fracking environmentalists

Kate Mackenzie

As expected, Opec has agreed to maintain production levels, although secretary general Abdullah el-Badri told reporters he wants to see compliance back at 75-80 per cent, rather than the levels of around 60 per cent seen recently.

The decision was apparently a consensus one this time. El-Badri is also reported as saying production rises for 2010 “are not on our radar at this time” and Saudi oil minister Ali al-Naimi said current price levels of $70 to $80 were “perfect” (he made similar comments earlier this year – high enough to maintain investment; but not too high to harm demand, is the rationale).

The group also showed journalists a presentation by its economists which talked about demand destruction.

The economists said:

“The crisis appears to have induced a permanent loss in oil demand in [the Organisation for Economic Co-operation and Development countries] and [a] slower rate of growth in non-OECD, due to policy measures and changes in consumer behaviour.”

More from FT.comBloomberg and Al-Jazeera.

Kate Mackenzie

The Opec press conference from the meeting in Luanda is still revving up, but here are a couple of interesting snippets form the opening address by José Maria Botelho de Vasconcelos, Angola’s oil minister and the president of this meeting:

After sounding a bearish note about the world economic outlook (Opec is widely expected to leave its output unchanged), he said:

Yet we must stress once again that it is not only OPEC that should be taking measures to balance the market. All OPEC and Non-OPEC producers should be involved in this process. They all benefit; therefore, they should all contribute. It is very hard on our Member Countries when they make sacrifices to cut back on output for the common good, only to find that other producers are stepping in to fill the gap.

Some irony there perhaps? (and no, Russia, don’t worry, we’re sure they didn’t mean you).

Some participants in today’s meeting have travelled here directly from the climate change talks in Copenhagen. They have seen how important it is for the interests of the oil industry to be properly represented in these negotiations. We can only do that through dialogue and cooperation. This will help oil keep its rightful place in the energy mix in a cleaner, safer and more equitable world.

This a few weeks after Saudi Arabia’s lead climate negotiator told the BBC that the hacked CRU emails proved climate change isn’t caused by human activities.

Kate Mackenzie

Opinions are divided over whether the rather empty deal coming out of last week’s Copenhagen meeting is a good or a bad thing for US climate change legislation.

Some say that progress on the matter of monitoring China’s emissions intensity targets will help reassure moderate Democrats that a cap-and-trade bill won’t hurt American manufacturing. Others say the failure of the meeting to come up with binding emissions targets will make Congress less likely to pass it.

But one thing everyone is agreed on is that the process that brought about last week’s agreement has to change. The UN itself has said that it will look at how to streamline future negotiations, after a small number of countries known to include Venezuela, Bolivia and Sudan (Cuba and Nicaragua have also been mentioned)  prevented the accord brokered by China, the US, Brazil, India and South Africa from being formally approved at the UN meeting.

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