A State of Confusion

In the wake of Paris and COP21 both sides are claiming victory. The Greens believe they finally have a treaty that will deliver the dismantling of the fossil fuel industries and capitalism propelling the human race into a renewable idyll. The Sceptics see Paris as toothless mush that will likely deliver nothing apart from hardship on already struggling economies. The impact on YOU will of course depend upon the voluntary commitments made by YOUR government. And so I set off to find the UK INDC (Intended Nationally Determined Contribution) to discover that the UK does not have one. It is part of an EU “bid” submitted by Latvia that says:

The EU and its Member States wish to communicate the following INDC. The EU and its Member States are committed to a binding target of an at least 40% domestic reduction in greenhouse gas emissions by 2030 compared to 1990.

In dark blue the reference year of 1990 and the target years of 2020 and 2030. CO2 emissions from BP, GDP growth from The World Bank. Implementation of Kyoto in 2005 sent Europe’s CO2 emissions onto a downward trajectory… and GDP growth with it? The rise in energy prices caused by a peak in conventional oil production, unsustainable growth in debt, the € project and the outbreak of WWIII make the big picture somewhat more complex.

So this is not a “National” but a group submission, and while it says “binding”, the Paris treaty is not. I guess some major horse trading lies ahead within the EU group, which as we all know is currently a picture of gracious harmony. The EU has found that recession and depression are the most effective way of cutting greenhouse gas emissions and the question does need to be asked to what extent climate and energy policies have created that state (see chart)? European leaders must hope that strong growth does not return because that will almost certainly send emissions upwards. Of course saddling economies with inefficient, expensive and subsidised CO2 reduction and renewables targets may guarantee never ending recession. All this is packaged as Green Hot economic growth opportunities. But I digress somewhat since, in this post, I really want to highlight some contradictory trends starting with the new direction of UK energy policy.

New broom Amber Rudd has actually set a radical and interesting course. One cornerstone is to phase out coal fired power generation by 2023. Baseload and dispatchable supply is to be provided by nuclear and gas that will manage to fit around the existing suite of wind and solar. Subsidies to wind and solar have been slashed and these technologies effectively de-prioritised. If one accepts that the Climate Change Act exists and partnership within the EU INDC exists, then this is perhaps the most sensible course to follow. Whether or not this course delivers on the commitment is another story but that will have to wait for another day.

Much will depend upon the UK’s ability to deliver a new fleet of nuclear power stations, and to source gas to 2030 and it is here that some confusion lingers. UK hopes are pinned to shale gas, still presented as environmentally friendly and cheap. It is neither. It is amusing to observe that while US shale drillers run for the hills the UK has decided to give it a go, in a land where the social and geographical circumstances are far less conducive to industrial scale drilling than in the USA. Mass shale defaults and bankruptcies have yet to materialise in the USA, but I’m told they are on the way. But the UK can always fall back on LNG imported from the Arab World. Let’s hope the RAF doesn’t pound all of the oil and gas facilities in the region.

On the other side of the coin, the USA has just unexpectedly extended tax credits (I assume those are subsidies) for wind and solar for a further 5 years and a new boom in wind and solar deployment is now expected, just as the Europeans are abandoning that strand of the Green fantasy. Perhaps the next time they are all around the table at the endless round of summits they could learn from each others’ mistakes.

2005 is a landmark year. That was the year of implementation of the Kyoto Protocol.  The EU dictatorship set its 20 20 20 targets for production and consumption in 2007 that were enacted into law in 2009. While the macro scale economic backdrop in the global and European economies, in particular, is complex, the chart up top shows quite clearly that this was the time economic malaise grew roots. The EU, half of which now lies to the east of the Berlin wall, seems to have forgotten completely how production target based economies fail.

Returning to my chart, its easy to see how targets could appear to be easily attained. And it’s easy to see how a yarn can be spun that this is all down to solar PV and wind. But does anyone seriously believe if 5% growth returned to the powerhouse economies sending thousands of Porsches to India and millions of tourists to Greece, Spain and Portugal that the down trend in emissions would continue? The Dictators of the European Commission and the leaders of the member states need to realise they are juggling with Green fire.

If you want to find out the INDC of YOUR country look here.

This entry was posted in Energy, Political commentary and tagged , , , , , , , . Bookmark the permalink.

26 Responses to A State of Confusion

  1. When this whole mess of stupid ideas collapses, probably in the next 15-20 years, there is going to be a world record amount of finger pointing…

  2. RDG says:


    Looks like the communists (global governance) hate nuclear for a good reason…”its uncontrollable”…therefore we should all learn nuclear energy like there is no tomorrow.

    “The EU and the proposed North American Union are some examples. In parallel, national sovereignty would be weakened by treaties, alliances and UN resolutions. Nations that don’t “play ball” get sanctioned or bombed.

    Civilian nuclear power was initially a carrot but the offer was retracted when the planners realized that it might not be controllable. “

  3. Hugh Sharman says:

    With regard to the US shale crisis, this came in this morning from Douglas Westwood in Houston!

    DW Monday December 21, 2015: Drilling in Debt – Interest Rates and US Shale

    So far this year nearly forty North American E&P companies have filed for Chapter 11 bankruptcy with expectations of more to follow. Falling oil prices have forced many debt laden shale operators to reevaluate their capital structure. Next year, operators in the US are expected to cut capital expenditures by nearly four times the amount of any other country.

    The North America region saw the largest reduction in investments this year, with Capex falling by approximately 35%. With a fall of an additional 20% or more during 2016, operators will continue to focus on core assets in order to pay down debt. What caused the situation where North American oil companies are in such high debt and facing requirements for an extreme reduction in Capex?

    Over the past several years operators have been able to access cheap debt due to low interest rates. With short-term interest rates as low as ever, the Zero Interest Rate Policy caused investors to look into riskier options with higher returns. Investors began sinking money into shale drillers through junk bonds as a vehicle to access growth from technological advances in unconventional oil and gas. These junk bonds offered high yield returns to investors in a low yield environment.

    Fast-forward to late 2015 and the oil price environment has worsened considerably. Operators are struggling to manage their debt obligations while debt holders are, in some cases, only receiving 30 cents on the dollar of debt in bankruptcy. In combination, low interest rates, technology and high oil prices acted as a catalyst of the shale “bubble.” Many analysts believe that the recent increase in federal funds rate will put increasing pressure on the wounded industry, strengthening the dollar and stifling demand growth. Further hikes in interest rates could lead to steeper production declines, more bankruptcies, increased cost of capital and less exploration. In the meantime, we expect more shale E&P bankruptcies as hedges roll off throughout 2016.

    Mitchell Zlotnik, Douglas-Westwood Houston

    +1 713 714 5839 or mitchell.zlotnik@douglaswestwood.com


  4. Grant says:

    A very interesting analysis and replies.

    So much does not add up. For example – gas.

    If the objectives of Government (UK or EU) policy is to remove carbon from the mix by 2030 or thereabouts who in their right mind would invest in gas extraction (via fracking) of generation plant at this time? Unless the guaranteed price was ridiculously high of course.

    Likewise consumers, in a year or two form no, will presumably stop buying gas appliances since continuity of supply would appear to be threatened.

    Quite how the country can erect a huge swathe of disturbines, build a new grid, build a million houses or more, change out all gas cookers and heating systems (for what one wonders?) and install 20 million ground heat pump systems while electrifying the railways (and HS2) and converting the entire transport fleet to electricity …. (tales breath) in 15 years (or 25 if we assume overruns) is entirely unclear to me.

    Let’s hope the newly arrived peoples from around the world bring with them the requisite skill sets to get stuck in straight away for I doubt that we have the training facilities to add value to their skill sets in time to start the projects apparently required.

    Maybe China can provide a couple of million workers from Beijing who would like to escape the local pollution?

    However having also discouraged the activities of many of our better companies by promotoing the Green cause I would love to know where the money will be found to pay for the effort.

    Moreover what would be the short term effect on CO2 output? Hardly likely to be a reduction yet we are being cajoled into believing that only a rapid to total CO2 reduction within 10 years (preferably tomorrow) will be of any possible benefit for the perceived CO2 problem.

    Perhaps, being used to “making things happen” by printing press releases they imagine that all the infrastructure stuff can just be 3D printed …. but don’t we need oil and energy for that (along with some realism about what might be possible and what certainly is not).

  5. gweberbv says:

    I have another theory:

    In 2005 a webpage called Youtube went online. Since then people are sitting in front of the screens watching cat videos, instead of working and driving SUVs around the block.
    As a result economic growth and CO2 emissions stalled.

    Political power grows out the barrel of a gun (according to well-known Chinese poet). And economy growths comes from the shear fact that consumers (be it private households or big government) are buying more things than a year ago. On the short term, also the expectation of companies that the consumers are going to buy more in the future can accelerate growths but this fires back as soon as the expectation turns out to be wrong.
    For various reasons most people and governments in Europe are not able to expand their spending significantly. On the contrary, they seek to reduce spending. And if the political landscape is not changing dramaticly, this situation might last for years, even decades.
    Economic growth in such an environment just cannot happen. Even with 1$ per barrel and 1 eurocent per kWh growth will not come back.

    • robertok06 says:

      “As a result economic growth and CO2 emissions stalled.”

      Actually, the USA uses 24% of its electricity just to power smart-phones, tablets and computers which are used mainly to gain access to facebook/twitter/youtube/younameit… and this using largely coal and shale gas… cough!… cough!… cough!…

  6. Confused Mike says:

    I keep seeing that the emissions reductions are binding commitments but cannot find out what is the penalty in the event of failure – if a fine who pays, to whom and how much per tonne ‘over the limit’.
    If not a fine then what is the penalty – products created not marketable or some other form of sanction?
    If this is known can the size of the penalty (say per tonne of CO2) not be used as an incentive to support the emission lowering investments even possibly ‘justifying’ the huge Nuclear power strike price .
    At least this could help create a (positive) NPV for emission lowering investments especially as I understand the UK will need to
    a) reduce or remove gas fired central heating (by converting to electric) eventually to reduce national emissions, and
    b) rely on switching to electric cars.
    Both of these will increase electric power demand above today’s figure and possibly increasing generating capacity or at least utilisation.

    • Euan Mearns says:

      The EU have imposed a binding agreement upon themselves while Paris is voluntary to the point any country can leave any time without penalty. And if you have a look at some of the INDCs you will find they are vague and wooly. We promise to plant more trees and to reduce the CO2 intensity of per unit GDP etc.

      At one level this is OK. For example if countries become more focused on re-forestation – that’s good. But I don’t think it will make the blindest bit of difference to CO2 growth in the atmosphere.

  7. Willem Post says:

    Germany’s ENERGIEWENDE has been much more costly than officially admitted and about $50-$75 billion of north-south HVDC transmission lines, much of it to be buried to allay NIMBY concerns, have not even been built yet.

    This WENDE has introduced a huge inefficiency into the German economy, causing its economic growth to decline.

    Adding refugees, terrorism protection, losing the Russian market, subsidizing the black hole called Ukraine, increasing defense spending, all add inefficiencies to the malaise, requiring more quantitative easing by the ECB, while the US FED is inexplicably is RAISING rates.

    As Germany is the engine of the EU, etc., other economies’ growth declined as well. EU investments in RE have declined by a factor of about three since the middle of 2011, because the EU cannot afford to follow Germany’s example, as I predicted about a decade ago.

    The 40% by 2030 appears to be a phony target that was easy to agree to in Paris, as the current CO2 trend is already below it.

    Keep in mind NO CO2 IS MEASURED. It is all based on Brussels-inspired, FACTORS, which are biased to yield reductions in CO2, regardless of reality, as shown regarding Ireland wind turbine adventure in this article.

    • gweberbv says:


      you will have a hard time to back your claims with data. 10 years ago Germany was regarded as the sick man of Europe, now this has turned by 180 degrees.
      Of course, this is not related to the Energiewende. But claiming that the Energiewende did any harm to German economy is really strange.

      • willem post says:


        You obviously did not read my article, as it contains detailed analyses, based on published government numbers from various German sources that I had to pull together.

        A lay person would not have a snowball’s chance in hell to do that type of analysis. The German government had to have done that type of analysis (based on me reading between the lines), but that is kept “internal”.

        Such persons, about 95% of the population, have to rely, and do rely, on what is fed to them by the media. Such persons usually act as an RE echo chamber.

        This URL shows, Germany had a greater growth rate before 2000, than at present, followed by a flat period (2001 -2005), followed by a period of lesser growth rate.

        My contention is, the WENDE was a factor reducing that growth rate.

        This caused other EU nations to have lesser growth rates as well, even though they did not spend as much money on RE as did Germany; most could not afford to follow Germany’s lead.


  8. A C Osborn says:

    Euan, I have a problem with this statement
    “UK hopes are pinned to shale gas, still presented as environmentally friendly and cheap. It is neither. It is amusing to observe that while US shale drillers run for the hills the UK has decided to give it a go, in a land where the social and geographical circumstances are far less conducive to industrial scale drilling than in the USA.”
    Surely the USA was drilling for shale OIL and got Gas a by product, whereas the UK would really only be interested in the Gas part with any Oil as a by product?

    • Euan Mearns says:

      AC, if you follow my Vital Statistics posts you will be familiar with this chart:

      It shows first the shale gas drilling frenzy followed by the great migration to shale oil drilling frenzy. A point I have made repeatedly, but is difficult to get across is that both shale oil and shale gas are expensive to produce. Over-production of this expensive resource has dumped price. So prices have fallen and the producers are losing their shirts.

      It is alleged that shale gas has never made money and that’s one reason for the migration to shale oil that did make good money at $100 / bbl. I’m not sure where mean break even is, its likely somewhere N of $80. So mass bankruptcies are still expected in the shale patch USA. I’m sitting on the fence here since Wolf has been Cried more than once and he never showed up.

      But you just need to look at the direction of UK energy policy. Wind and solar are subsidised, nuclear is going to be subsidised, so shale gas may be subsidised too. Who knows? All I know is this is the end of capitalism.

      In the shale patch there is pretty much a continuum from gas with some liquids to liquids with some gas. At last rig report, some wells got reclassified.

      • A C Osborn says:

        I thought it was the advent of Shale that drove the price of gas down in the US, so basically what you are saying is that they undersold it and basically put themselves out of business, because isn’t the world price of Gas still higher than in the US?

        • ristvan says:

          The underlying problem in the US was the following. When US gas was $8/mbtu, fracked shale gas made serious money. So everybody rushed out to lock up drilling rights. Landowners naturally wanted their land drilled, so the vast majority of leases contained ‘use it or lose it’ provisions: drill x by y date or the lease terminates. My sister actually signed one. So even though overproduction dropped prices down to now $2, companies had to drill on. Cheasapeake was a major offender.

          The switch to fracked oil was not accompanied by the same use it or lose it lease frenzy. And shale oil (LTL) never fully displaced US imports. But it did result in global oversupply when China slowed. And that resulted in a price war when the Saudis decided to discipline the market rather that cutback production. The horizontal drill frack outfits not bought by the majors were severely financially weakened by their gas leasing mistakes that caused overproduction. They were surviving on fracked oil at $100/bbl. The oil price war will now finish a large number off by YE 2016. Just as the Saudis planned. With rig counts about halved, US fracked oil decline curves mean US shale oil production will in all likelihood be down by more than a third by YE 2016. That would remove about 1.9mbpd from global supply and nearly rebalance the global market.
          And I think Euan is right that fracked shale oil needs between $65 (Barnett, Permian with preexisting infrastructure) and $80+ (Bakken, Niobrara from scratch) to be viable.

  9. Roger Andrews says:

    Here for informational purposes is a brief synthesis of major country Intended Nationally Determined Contributions submitted to the COP21 Paris Conference (from http://www.carbonbrief.org/paris-2015-tracking-country-climate-pledges)

    The EU commits to reduce domestic greenhouse gas emissions by at least 40% by 2030, against a 1990 baseline, with EU member states having already agreed to specific targets. (These targets are supposedly legally binding on EU members relative to the EU but so far as I know the overall EU target is not not legally binding on the EU relative to the UNFCCC).

    The USA promises to cut emissions by 26% to 28% in 2025 against a 2005 baseline. (This is not and can’t be a binding commitment because the Republican-controlled Congress can’t wait to overturn it. The US INDC in fact had to be carefully worded to circumvent the need for Congressional approval.)

    China aims to peak its carbon dioxide (CO2) emissions “around 2030”, while making its “best efforts” to peak early, to reduce its carbon intensity by 60-65% of 2005 levels by 2030 and to source 20% of its energy in 2030 from low-carbon sources. Again no binding commitments.

    India will build lots more coal-fired plants to lift its people out of poverty. It promises a 33-35% reduction in emissions intensity by 2030 compared to 2005 levels, pledge to nearly triple its renewable energy capacity by 2022 and to raise the share of zero-carbon electricity generating capacity to 40% of the total by 2030. But India’s emissions would still roughly double by 2030.

    Russia effectively plans to do nothing. (Many were surprised that Russia even submitted an INDC).

    Japan targets a 26% cut below 2013 levels by 2030 provided it can bring most of its nuclear fleet back on line.

    Canada pledges to cut emissions 30% below 2005 levels by 2030. As others point out, however, this works out to a 6% increase over 1990 levels.

    Australia pledges a reduction of 26-28% below 2005 levels, noting that “It’s better than Japan. It’s almost the same as New Zealand. It’s a whisker below Canada. It’s a little below Europe. It’s about the same as the United States. It’s vastly better than Korea. Of course, it is unimaginably better than China.” But none of this did any good. Australia’s pledge was still “disappointing”.

    My reaction to all this? Well, COP21 brought the world no closer to the problem of solving its GHG emissions problem, assuming there is one. The fact that no nation or group of nations was prepared even to consider the draconian emissions cuts allegedly necessary to save the planet from projected climate disaster in fact leaves it farther away than ever from a solution.

    Politically, however, COP21 was a triumph. The INDC approach was a master-stroke that allowed the Conference to give the impression of global unity and progress where there is none and thereby avoid another Copenhagen debacle. Most important, it guarantees the continuation of climate bureaucracies and climate conferences well into the future. Next up COP 22 in Morocco.

    • willem post says:

      A masterful summary that indicates COP21 is a cop-out, just as were the other 20 meetings.

      • Robin Guenier says:

        Here’s another good summary:

        From Private Eye No. 1408 (19 December 2015):

        Joy to the world! The “Paris Agreement” is come – marking the culmination of carefully choreographed UN climate negotiations known as COP-21. François Hollande clinched the role of messiah, obtaining his long-plotted diplomatic triumph; the world is saved.

        At least, it was until the morning after, when everyone noticed that nothing of substance had been agreed. But that was how Hollande got a result. From the moment French diplomats latched on to the wheeze of entirely voluntary “intended nationally determined contributions” towards mitigating climate change (INDCs, aka vague aspirations), “success” was assured.

        Nations such as China and India who have refused to reduce CO2 emissions were in the clear; the US, which will not countenance legally binding obligations, could breathe easy; and George Osborne could continue his cull of “green crap” regulations.

        INDCs can range from non-binding targets for reducing CO2 emissions to “mitigation efforts” including “gender-responsive adaptation actions” (sic). The main commitment is that an INDC should be “recorded in a public registry” and monitored on occasion. And “a party may withdraw from this agreement by giving written notification”.

        One of the few decisions made in Paris was to ask the UN “to convene a high-level signature ceremony” in New York next April. Trebles of bubbly all round – with mitigated CO2!

  10. garethbeer says:

    Looking at both sides, maybe even controlled opposition to put many asleep or back to bed, to give the appearance of both sides winning!

    The crux is, co2 danger is clearly a hoax, a conduit, a Trojan horse, a wicked-witch to hide the man behind the curtain.

    The true program is global social control (world govt to implement it) and the maintencence of a huge bureaucracy to make great wealth for a chosen few. Up the chimney will go the middle class and any hope of any assension for the third world!

  11. Pingback: Klima-Schwindel: EU wählte Jahrzehnte der Rezession – Zitat

  12. Pingback: A State of Confusion – Olduvai.ca

  13. Pingback: AWED Energy & Environmental Newsletter: January 4, 2016 - Master Resource

  14. Pingback: Recent Energy And Environmental News – January 4th 2016 | PA Pundits - International

Comments are closed.