Climate

Month by month, the consequences of the shale gas revolution in the United States are working their way through the international energy market. There has been much discussion of whether the US will permit shale gas exports in any quantity. But even before that is decided the growth of shale gas production in the US is already having an impact. The reduced need for US gas imports leaves supplies from Trinidad, North Africa and elsewhere to find a new home. That means that gas prices in Europe and Asia will fall. And even more important, shale gas is displacing coal from the US power generation sector. Read more

Organisations die when they become irrelevant. That is what is happening to the G8 which, for reasons I can’t understand, continues to exclude China. When the G8 was formed in the 70s to bring together the leaders of the world’s main economic powers at a time of crisis and recession, China was tiny in global economic terms and focused on its own internal political struggles. Now it is at the heart of the global economy. Excluding the Chinese in favour of Canada or Italy is insulting. Read more


The collapse of the European emissions system over the last few weeks is a serious indicator of the loss of interest in the issue of climate change among the top policy makers, especially in Germany. Unless the market can find a new credibility the whole structure of the European climate agenda looks vulnerable. Read more

The news that Exxon is to build a $10 bn LNG export facility in Texas marks another significant step forward in the story of shale gas and its disruptive impact on the world energy market. Those who want a parallel for the painful process through which so many of the established forces of the industry on one side and the lobby groups on another have struggled to come to terms with the reality of shale gas over the last three years should read John Heilbron’s fascinating book on GalileoRead more

Access to energy is now crucial for India’s continued development. But the scale of the challenge and the changes required could alter the whole structure of governance and the way in which the Indian economy works over the next few years.

A seminar held at Kings College London earlier this week looked at the issues – investment, trade, energy security and the impact of energy on the balance between the urban and the rural communities. We produced more questions than answers but even the questions are instructive. Read more

Those who think that the best responses to the risks of climate change are ever stronger regulation, complex international agreements and higher energy prices should take a look at what is happening in America.

In the US, carbon emissions have fallen by 13 per cent in the last five years and are at their lowest level since 1994. Energy demand is flat even though the economy is growing. The key statistics to watch are oil demand, which is at a 15 year low, and coal demand in the power sector, which is down by more than 20 per cent since 2008.

Furthermore, energy prices are also falling thanks to shale gas. They have yet to stabilise and there will have to be a shakeout within the gas sector. But prices will settle in the range of $4.50 to $5 – sustaining development but also providing a sharp reduction in input costs for consumers including manufacturing industry. Shale gas, however, is not the whole story. Next will come tight oil, which is oil from shale rocks. Then and potentially most important of all will come advances in energy storage. Bill Gates has just made his third major investment in an energy storage technology business. Read more

Climate pessimists, shale gas deniers, Opec ministers and (most important of all) investors in the energy sector should read the new Energy Outlook to 2040 produced by Exxon Mobil. It is an excellent piece of work, even if there is one important omission. Read more

US oil rig. Getty Images

I have always been sceptical of the extensive theories of peak oil built around the study first published in 1956 by M King Hubbert. Those studies have always seemed to ignore the reality of technical progress that opens new frontiers and reduces costs. They have been much used to support the idea that oil prices should be ever increasing, on the basis that scarcity should be reflected in high prices.

The reality is that oil provinces (think of the North Sea) keep going well beyond their original schedule, and recovery rates from established fields keep rising. On average, even after some advances in reservoir management technology, only some 50 per cent of the oil in place is recovered from most fields, so there is a long way still to go. On top of that, we now have tight oil (the oil equivalent of shale gas), which BP in its latest Long Term Outlook now expects to provide some 9 per cent of global production in 2030. Read more

How will Barack Obama tackle climate change? Getty Images

The comments in President Obama’s second inaugural speech on climate change have encouraged campaigners to think that something substantive is about to happen. It is always good to be optimistic, but the hard question is what exactly is he going to do and what will it achieve. Read more

The World Economic forum is getting underway in Davos, Switzerland. Getty Images

Fashions come and go and the agenda for the annual meeting of the World Economic Forum in Davos is usually a pretty good guide as to whether skirts are long or short this year. This year’s title for the meeting is “Resilient Dynamism”, which is very cool. But the issues that have slipped down the agenda are energy security and climate change.

There are a few odd sessions, but the focus has shifted and apart from one brief reference to natural resources, neither energy nor climate are mentioned on the web page setting out this year’s themes. This is a very big change from only four or five years ago, when both were prominent topics at every meeting. Read more

The growth of wind farms and other renewable energy projects is heading for a sharp slowdown after 2020 according to official forecasts, despite ministers’ claims they want the UK to become a global centre of green power.

Figures from the Department of Energy and Climate Change predict a tenfold increase in the amount of new renewable power capacity added between 2012 and 2020.

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The UK’s Department for Energy and Climate Change has a new permanent secretary, as predicted before Christmas. The elegantly orchestrated process, along with a comparable process at the Home Office has reasserted the independence of the civil service appointments process. Sir David Normington, the first civil service commissioner is providing to be more than a match for Francis Maude, Theresa May and the others who want to make senior civil servants political appointees.

Stephen Lovegrove, the new man at the DECC, has a number of challenges to overcome. Read more

In the real world, disputes over natural gas production often pit billion-dollar companies against individual landowners. In films, it is the industry’s opponents that command the big battalions.

Promised Land , a fictional account of a gas company’s nefarious tactics, stars and is co-written by Hollywood A-lister Matt Damon, and the supporting cast includes the reliably excellent Frances McDormand and John Krasinski. Read more

By Julio Friedman and Armond Cohen

If you believe the hype, shale gas will solve many of America’s problems, from high petrol prices to wars in the Middle East. There is no doubt that it will bring huge benefits to the US. However, its role in climate change is misunderstood – and must be dealt with urgently.

There is some cause for optimism, at least from a US perspective. The International Energy Agency concluded recently that America will be the world’s largest gas producer by 2015, surpassing Russia. The US is also leading Europe on climate change. If it had ratified the 1997 Kyoto protocol, America would by now have met its obligations.

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What does 2013 hold for the UK’s Climate Change Committee? This worthy body was established in 2009 and is responsible for advising the government on emissions targets and reporting to parliament on the progress being made on reducing greenhouse gas emissions.

The remit sounds reasonable but the reality is that the committee has been written off in Whitehall. The committee’s advice is blatantly ignored and its chief executive, despite his obvious knowledge and capability, has been dismissed by no less than the prime minister as too inexperienced and unqualified to be appointed as permanent secretary of the energy department. For a serious public servant that is pretty damning. Read more

Is David Cameron playing politics with energy bill? Image by Getty

When in doubt, kick the can down the road. That is what has happened with the UK energy bill after weeks of bitter negotiations between the Treasury and the department now known across Whitehall as DoSAC – after the disfunctional organisation in the television comedy series The Thick of It.

A couple of weeks ago, I said the bill would seriously disappoint some participants in the debate. The conclusion as announced – and we will only see the detail next week – seems likely to disappoint everyone.

The core decision is that long-term policy is postponed until 2016, after the next election. But the energy business does not work to election timetables or four-year horizons. Most investments are designed for decades, and in some cases, such as nuclear and power generation, the payback for investors won’t come until 10, 15 or even 20 years into the project. The investors, it is always worth remembering, are not men in black hats but ordinary people trying to decide what to do with our collective savings – in particular our pension funds. Read more

President of the World Bank. Getty

Jim Yong Kim, World Bank president, has made an urgent plea for action to address the “devastating” risks of climate change as the development body releases a stark assessment of the potential impact of rising global temperatures.

“It is my hope that this report shocks us into action,” Dr Kim said in the foreword of a study the bank commissioned to look at what would happen if the world warmed by 4°C from pre-industrial levels.

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Scroby Sands offshore wind farm in Norfolk, just two miles off Britain's east coast. Image by Getty

A good rule in politics is never to take on those who care about a particular issue more than you do. I was in Norfolk at the weekend and came face to face with the new force in UK politics – a regiment of middle-aged ladies burning with indignation and determined to use their considerable powers of organisation to protect what they hold dear.

The issue at stake is not Europe, which is the obsession at Westminster, or the recession, or gay marriage. The issue is the growth of wind farms and the march across the beautiful Norfolk coast of developers planting the farms in order to milk the generous subsidies on offer. Norfolk, of course, is not an isolated case. Read more

Why are renewables losing out? According to the International Energy Agency, renewables, excluding biomass but including hydro, currently provide just 8 per cent of global electricity supply and 3 per cent of total energy demand. By 2035 on the IEA’s main scenario those figures will rise to just 15 and 7 per cent respectively. That represents some serious growth but not a breakthrough. Hydrocarbons on all the IEA scenarios will still be providing well over 60 per cent of final energy. The figure could be higher if shale gas and tight oil developments spread from the US and if coal prices fall further.

This limited achievement comes despite a decade of high spending on research – especially in the US, and despite a variety of generous subsidies – ranging from direct grants and feed-in tariffs, to protected market shares. In the UK, the support is entrenched in legislation requiring the government to produce long-term plans for reducing emissions over the next four decades. Renewables have benefitted over the past few years from concerns about rising energy prices and energy security, as well as from the desire to tackle climate change. Read more

Mitt Romney has given Barack Obama a free pass when it comes to energy and environmental policy.  Obama needs only to point to Romney’s energy plan - with its proposed demolition of federal controls on new energy developments and its omission of any mention whatsoever of climate change to claim the votes of the environmental lobby.

Even those most disappointed by the last 4 years can hardly fail to back Obama when the alternative is someone who used his acceptance speech last week to mock Obama’s commitment to the environment and to contrast Obama’s aim of helping to save the earth and the oceans with his own commitment to helping ordinary American families get jobs.  But what won’t be said this week at the Democratic Convention in Charlotte is that the American energy outlook for the next four years at least is already very largely set, and won’t be much altered by whoever is elected in November. Read more