Daily Archives: March 10, 2010

Kate Mackenzie

On FT Energy Source:

- Will nat gas profit from the death of US coal?

- The 2009 disappointment in green stimulus spending

- An optimistic analysis of the Copenhagen accord, as China and India sign up

- The curious story of Chinese refining

- Chu tells oil and gas industry what it wants to hear

- Natural gas the focus of CERA conference

- Obama’s climate meeting, Chevron’s refinery cuts and more in Energy headlines

Further reading:

- The myth of energy breakthrough

- Renewables and intermittancy: Not as bad as it sounds

- What shale gas could mean for Canada

- Bottled wind as constant as coal?

- Gasifying biomass with sunlight

- George Monbiot and Jeremy Leggett’s solar feed-in tariff bet

- Much, much more on CERA Week

Kate Mackenzie

The US natural gas industry, so angsty of late about its profile in Washington as a way of reducing CO2 emissions, might not have so much to worry about.

Despite the uncertainty over the outlook for GHG regulations in the US, Bernstein Research believes a broad switch to gas-fired power will start to come about anyway as a result of existing plans in the Clean Air Act. Firstly, eastern states that are currently allowed to trade sulphur allowances among themselves are likely to come under a state-by-state restriction from next month. Secondly, plans to curb mercury emissions by insisting coal plants use the best technology available could mean all coal-fired plants across the country would need to install SO2 (sulphur dioxide) scrubbers.

Interestingly, the measures are targeted at health, not environmental improvements.

Kate Mackenzie

HSBC has revised its estimates of the billions of money spent last year by governments on green stimulus packages downwards, from $94bn to $82bn, citing the difficulty in actually spending the money.

As lead analyst on the report, Nick Robins, told the FT:

“When we were first looking at the green stimulus, last February, we had not fully appreciated all of the administrative issues surrounding the disbursement of this money,” he said.

However, Robins and the report’s other authors believe that much of that spending will simply shift into this year and the next. Like this:

Robins told the FT that the US is ‘on track’ to spend the money, but:

If money is not spent by the end of this year, Mr Robins warned, there was a risk that in some countries it would be axed “owing to austerity measures generally”.

Not to mention the growing backlash against stimulus money for some renewable projects – particularly wind farms - based on the idea that it’s supporting foreign manufacturing. This is gaining some serious traction in the US, with Democratic Senator Charles Schumer introduced a bill last week to ensure all green stimulus money goes to local manufacturing, despite opposition from the wind industry itself.

Related links:

Renewable energy and domestic content (Energy Outlook)
Green stimulus and the dangers of ‘buy American’
(FT Energy Source)
China’s lead on alternatives is not as significant as it seems (FT Energy Source)

Kate Mackenzie

The narrowing gap between current and forward crude oil contract prices in recent weeks has been been widely attributed to two things.

OECD oil storage, the story goes, is falling and oil stored at sea is also widely believed to be declining – both paving the way for Asian demand growth to really kick in, in terms of prices. Yet it’s not completely clear cut: crude inventory volumes are mostly a pretty opaque affair, and the all-important Chinese demand for crude and products is particularly fuzzy. In fact the IEA pointed out in November that uncertainty over demand for, and storage of, refined products in China was such that it made the entire worldwide demand outlook rather challenging.

Now, Olivier Jakob of PetroMatrix makes a strong case that, far from using up its product inventories, China is awash in product – so much so that it’s exporting it.

Kate Mackenzie

Connie Hedegaard’s pessimism on the chances of a successor to the Kyoto protocol being agreed doesn’t bode well, coming after comments last month by outgoing UN climate chief Yvo de Boer that a treaty will be ‘very difficult‘. After all, these two know the challenges of the negotiations process as intimately as anyone.

This would be a shame. Not only have China and India now formally agreed to support the Copenhagen accord, but there is a good argument that the deal – despite being non-binding and lacking specific emissions targets – could make some real progress. There was process, for example, on issues such as technology transfer, the very thorny question of financing, and crediting for land use practice.

And as for emissions, the Peterson Institute for International Economics has published a paper by Trevor Houser which estimates that the Copenhagen commitments – if they are all met – may come just within a whisker of what’s needed for an emissions peak in 2020.

Kate Mackenzie

Kerry says ‘great deal’ of consensus reached in US climate talks (Bloomberg)

Green stimulus hit by slow spending (FT)

China, India give qualified nod to climate deal (AP)

Chevron to cut 2000 jobs (FT)

Opec’s oil output on the rise (Platts)

Israel to ‘unveil plans to build nuclear power plant’ (BBC)

Hargreaves and UK Coal in deep mines merger talks (FT)

Welsh refinery sale spurs job fears (FT)

Valero reaping profits from Bill Gates’ ethanol loss (Bloomberg)

EPA hopes to launch shale gas drilling study this year (Reuters)

French grid operator doubles interconnector investments (Argus)

International Power profits beat expectations (FT)

IP’s GDF deal ‘fell on valutions’ (FT)

Sheila McNulty

US Energy Secretary Steven Chu was in the lion’s den, so to speak, when he gave a keynote speech at the IHS CERA energy conference in Houston this week attended by thousands of oil, gas and power generation executives. And several noted that he finally gave them what they have been looking for – a signal that the Obama administration recognises the importance of domestic natural gas to the US’ energy future.

Chu said that he requested in September a study from the National Petroleum Council entitled Prudent Development of North American Natural Gas and Oil Resources. Groundwork, he said, is underway to initiate the study this spring. He noted that while natural gas still produces emissions, it is less than other fossil fuels. And he said that natural gas is a key enabler of renewable energy, by providing a power source when solar and wind are not available.

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