Daily Archives: February 4, 2010

Sheila McNulty

A new study called, Job Impacts of a National Renewable Electricity Standard, conducted by independent firm Navigant Consulting and released by the RES Alliance for Jobs, has found that without stronger near-term targets than currently envisioned, industries like wind will experience flat job growth and long-term stagnation and the US biomass industry could collapse altogether.

This is yet another reminder that in the global cleantech energy race, the US industry needs government support to get anywhere.

Kate Mackenzie

It’s been written about an awful lot here, already been picked up by some prominent analysts and even a nascent fund manager, but BP chief executive Tony Hayward has further publicised the peak demand concept on the BBC:

LONDON (Reuters) – World oil demand will peak sometime after 2020 at a maximum of around 110 million barrels per day (bpd), BP Chief Executive Tony Hayward said on Thursday.

“World demand will peak before its supply peaks because there is plenty of oil in the world, there really is,” he said in an interview on BBC Radio 4.

As to numbers, he was somewhat vague:

“It will probably occur beyond 2020 — who knows what the number will be, but it will be somewhere between sort of 95 and… 110 million bpd, probably, versus the 85 we consume today.”

If Total chiefs are right, we better hope it’s at the lower end of that scale.

On price:

“You can sort of argue on a supply side it’s $60 and on a demand side it’s $90, is the world going to turn out like that?”

Let’s see if ‘demand destruction’ enters the popular lexicon in the next decade or so…

(H/T John Kemp)

Related links:

Peaking oil demand? (FT Energy Source)
Deutsche: the end of the age of oil is night (FT Energy Source)
Peak demand: Going big
(FT Energy Source)
Do oil sands plus peak demand spell doom for majors? (FT Energy Source)

Kate Mackenzie

On FT Energy Source:

- The IPCC controversy explained

- Tullow the likely winner in Uganda

- Shell’s refining headache

- Energy and the free market fail

- Cap-and-doomed

- China’s wind lead underline’s missed US opportunity

- How the UK could spend (and raise) £200bn for energy security and climate

- Big biofuels targets aren’t enough

Further reading:

- To get clean energy, upgrade to electricity 2.0

- The fuel cell scooter

- LNG vs unconventional gas

- Refining glut has oil majors spluttering

- Anyone interested in Louisiana well logs?

- How long before the lights go out?

- The quiet energy revolution

- Physicist discovers how to teleport energy

- Saudi Aramco touts its new oil-finding laser

- How bad are China’s e-bikes really?

Kate Mackenzie

Obama has come and and said what everyone knew: that cap-and-trade legislation might be split out from other green measures, which are more likely to pass Congress.

There is still a slim chance some form of cap-and-trade might go ahead in the current Congress, but even then it would probably be a pared back version such as that suggested by Republican Lindsey Graham:

Energy and climate legislation being drafted by a bipartisan group of senators may include a “hybrid” approach under which some sectors would be subject to a cap-and-trade program and others may pay a carbon fee, Sen. Lindsey Graham (R-South Carolina) said today.
Such an approach could make the bill better suited to meet the “different needs” of different sectors of the economy, Graham told reporters after speaking to members of We Can Lead, a coalition of 150 businesses pushing for energy and climate legislation.

“At the end of the day we’ve got I think an opportunity here to price carbon using a hybrid system of the old cap-and-trade system,” said Graham, who is working with Sens. John Kerry (D-Massachusetts) and Joe Lieberman (I-Connecticut) on comprehensive energy and climate legislation.

Meanwhile John Kemp of Reuters points out that the two Democrat representatives who this week promised to put forward a bill preventing the EPA from regulating greenhouse gases both voted in favour of the Waxman-Markey climate bill, which included cap-and-trade provisions.

Sheila McNulty

US President Barack Obama has just announced that the Environmental Protection Agency has finalised a rule to implement the long-term renewable fuels standard of 36bn gallons by 2022 established by Congress. This is a rule a recent study by Rice University pointed out as unrealistic, noting that the Energy Independence and Security Act passed by Congress in 2007 mandated production targets of 9bn gallons of biofuels a year in 2008, rising to 36bn gallons a year by 2022.

Corn ethanol is capped at 15bn gallons a year in the law, but the study says even that level will be difficult to reach given logistical and commercial barriers. And it notes that the law called for 21bn gallons of advanced biofuels, produced from sources like switchgrass, corn stover and algae, to be used in the US fuel supply by 2022. But existing mandated targets for advanced biofuels are not currently achieveable from domestic supplies – scientifically or commercially. Therefore, the report says lawmakers should question the tariff imposed on ethanol imported from Latin America and the Caribbean.

Kate Mackenzie

After its third-quarter oil major results back in October, some analysts were hypothesising that Shell was being overly maligned. Their reasoning was that while BP was riding high on the better-than-expected cost savings from a restructure by relatively-new chief executive Tony Hayward, Shell, with an even newer chief, still had a lot of fat left to cut.

Shell did indeed realise a further $1bn of cost savings in the fourth quarter alone, taking the full-year number to $2bn. But this quarter for the majors has been more about the dire state of refining margins, and the low price of natural gas. (2009 downstream earnings, on current cost of supplies basis, were down a whopping 95 per cent year-on-year – compared to 69 per cent overall.)

Kate Mackenzie

The highly deregulated state of the UK market may have helped reduce energy prices, but a raft of difficult new challenges are facing the sector which the free market isn’t solving – and both sides of politics seem to agree a more interventionist approach is needed.

With the country’s own domestic supplies falling, there are some well-known problems facing the electricity sector.  First is concern over energy security and storage, as the country imports a large proportion of its power needs – especially given the fears around securing supplies from Russia. Meanwhile the need to shift to lower-emissions power sources is also pressing, under both UK and EU commitments. And some older coal-fired and nuclear power plants are nearing the end of their lives.
Ofgem estimates that £200bn needs to be spent by 2020 to deal with these issues. Left to its own devices, the industry is not spending enough, and what it is doing is building new gas-fired power generators, which are reasonably quick to deploy and lower in emissions than coal – but don’t do enough to address either security or climate issues.

Fiona Harvey explains:

The market isn’t always right for energy security (FT Energy Source)
Ofgem urges energy market shake-up (FT)
Ofgem: £200bn of investment needed (FT Energy Source)

Kate Mackenzie

How £200bn investment needed to guarantee the UK’s electricity and gas security, and greenhouse emissions reductions, breaks down:

Here are the options outlined by Ofgem, as explained by Ed Crooks:

Option A

Targeted reforms including a floor under the price of carbon emissions permits, and allowing gas and electricity prices to rise more sharply when supplies are tight. There could also be more incentives for customers to use less electricity at peak times. That would encourage investment in low-carbon technologies and in reserve capacity that will be used only occasionally, but might not be a strong enough guarantee for investors. Support for the carbon price is also a blunt instrument that helps all low-carbon generation indiscriminately, rather than targeting support where it is most needed.

Sheila McNulty

The American Wind Energy Association says China in 2009 passed the US in new wind power installations and in manufacturing of wind turbines. It is no surprise that China has overtaken the US. It has been moving swiftly to capitalise on the clean tech revolution, while the US cannot even come up with a coherent energy policy passed by Congress. But Denise Bode, chief executive of the association, put it best:

The US still remains the largest market in cumulative capacity for the second year in a row, but here again China is hard on our heels. If this isn’t the case-closed evidence that America must have stable renewable energy poicy and hard targets in order to create jobs and revitalize our economy, I don’t know what is. China gets it, 37 other nations get it, and we still don’t. It is time to act now on a national Renewable Electricity Standard so that America can immediately create manufacturing jobs and be the world wind power leader. The economy can’t wait, job creation can’t wait, and America can’t wait.

Yet Congress seems to think it can.

Kate Mackenzie

UK energy regulator urges market shake-up (FT)

UN climate boss defends record; Interview transcript: Rajenda Pachauri (FT)

Senators may use ‘hybrid’ approach in GHG bill (Argus)

Obama eyes biofuels, clean coal in new climate push (Reuters)

Net fraudsters target carbon markets (FT)

Biofuel production falls far short of targets (WSJ)

Europe agrees to carbon capture and storage trials (FT)

Japan eyes March to set emissions reduction roadmap (Argus)

ExxonMobil suspends work on PNG LNG site after fatal dispute (Asia Pulse)

Germany’s solar industry protests subisidy cuts amid deadlock for industry (Bloomberg)

BP chief positive about low-carbon energy (FT)

Statoil to spin off filling station division (FT)

Oil and gas chiefs set spending record for US lobbying in 2009 (Greenwire)

Chloride order book powers ahead (FT)

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