This week we give OPEC and oil prices a break and lead off with the portentous pronouncements of UK Energy and Climate Change Secretary Ed Davey on the future, if any, of fossil fuels (photo credit: Telegraph).
Greenwise Business: Fossil fuels “no longer a safe financial bet”, says Davey
Britain’s Energy and Climate Change Secretary, Ed Davey, has said companies should be required to disclose their investments in fossil fuels, bringing firmly into the mainstream the idea that climate risk will affect the value of such holdings. Davey said it was time to recognise that as economies moved away from fossil fuels as part of that deal, coal, oil and gas were no longer presumed to be a safe financial bet. “We are seeing a move from carbon capitalism to climate capitalism,” he said. “We know with climate change we have got to move out to a low carbon agenda and we are already seeing the signs that the market is going to be helping to drive this,” he said. “I think we need to look again at rules of disclosure for big companies who have large investments in fossil fuels,” Davey said. “I think there is a case for making that mandatory is what I am saying.”
If sentiment wasn’t already bad enough across the industry after a 35pc slump in Brent since June, then remarks made by the energy secretary Ed Davey suggesting that pension funds should dump the sector have only added to the sense of foreboding. In an interview with the Telegraph over the weekend, Mr Davey argued that the age of fossil fuels was coming to an end and that within the space of just 30 years oil, gas and coal, might no longer play a meaningful role in the economies of major industrialised nations. His opinions, I am sure, are well meaning enough, in that they are aimed partly at addressing legitimate concerns over the impact that climate change will have on the entire resources industry. But they are also misleading and potentially dangerous for both the economy and investors who may be persuaded to now suddenly exit the sector in a hurry.
The usual mix below the fold, including same-old-same-old at the Lima climate talks, Russia’s energy deals with India, fuel poverty in UK, bullish predictions from Exxon, more problems with Germany’s Energiewende, a Greenpeace publicity stunt backfires big-time and the coywolf – a vicious new hybrid species created by climate change.
U.S. Secretary of State John Kerry made an impassioned plea on Thursday for all nations to work for an ambitious U.N. deal next year to fight climate change, saying time was running out to reverse a course “leading to tragedy”. He also took aim at domestic U.S. critics of President Barack Obama who question whether climate change is mainly man-made. Kerry said scientific findings were overwhelming and “screaming at us, warning us”. Even after two decades of talks about global warming, “We are still on a course leading to tragedy,” he told delegates.
National governments present at the Lima climate talks are being urged to “follow Scotland’s lead” on wind power as new figures reveal a surge in generation last month. The figures, released today (8 December) by WWF Scotland, reveal that wind turbines generated approximately 812,890MWh of electricity to the National Grid in November, meeting the electricity demands of 107% of Scottish households. This is almost five times higher than the relative equivilant wind power generated in the rest of the UK during the same month – the 1,902,665MWh of generated wind power met the energy demand of just 22% of UK households.
Guardian: Lima climate talks stumble
Climate talks in Lima ran into extra time amid rising frustration from developing countries at the “ridiculously low” commitments from rich countries to help pay for cuts in greenhouse gas emissions. The talks – originally scheduled to wrap up at 12pm after 10 days – are now expected to run well into Saturday , as negotiators huddle over a new draft text many glimpsed for the first time only morning. The Lima negotiations began on a buoyant note after the US, China and the EU came forward with new commitments to cut carbon pollution. But they were soon brought back down to earth over the perennial divide between rich and poor countries in the negotiations.
New York Times: 196 Nations Near Preliminary Climate Change Deal
Negotiators from around the globe were haggling Saturday over the final elements of a draft climate change deal that would, for the first time in history, commit every nation to cutting its greenhouse gas emissions — yet would still fall far short of what is needed to stave off the dangerous and costly early impacts of global warming. At its core, the draft is expected to require every nation to put forward, over the next six months, a detailed domestic policy plan to cut its emissions of planet-warming greenhouse gases from coal, gas and oil. Those plans, which would be published on a United Nations website, would form the basis of the accord to be signed next December and enacted by 2020. By requiring action from every country, the Lima framework will fundamentally change the old world order that stymied earlier climate change talks. But on its own, that political breakthrough will not achieve the stated goal of the deal: to stop the rate of global emissions enough to prevent the atmosphere from warming more than 3.6 degrees Fahrenheit over the pre-industrial average.
At more than 50,000 metric tons of carbon dioxide, the negotiations’ burden on global warming will be about 1 1/2 times the norm, said Jorge Alvarez, project coordinator for the U.N. Development Program. For electricity, the talks are relying exclusively on diesel generators. Organizers had planned to draw power from Peru’s grid, which is about 52 percent fed by non-polluting hydroelectric power. “We worked to upgrade transformers and generators but for some reason it didn’t work,” said Alvarez.
The Irving-based oil giant predicts that increased fracking and oil sands development would push North American production towards 30 million barrels of oil a day equivalent, as continental energy demand stagnates. Currently, it would be virtually impossible for North America to become a net exporter because of a U.S. crude export ban instituted in the 1970s. But U.S. oil companies, eager to sell their crude on the international market, have been lobbying heavily to end it. By 2040, Exxon predicts global energy demand will grow by 35 percent as the world’s population grows and living standards in developing countries increase. By 2040, renewables will make up 15 percent of the world’s energy supply, Exxon said.
Oil prices have plummeted in recent months, from US$115 a barrel in June to less than US$70. That dramatic shift could increase greenhouse gas emissions in the short term, as consumers take advantage of cheap fuel. It also gives policymakers a “golden opportunity” to scrap fossil fuel subsidies and bring in carbon pricing, a leading energy expert argued on Tuesday. Maria van der Hoeven, executive director of the International Energy Agency, said they could consider measures that “would have been unthinkable a year ago”.She was addressing media at the UN climate talks in Lima, where negotiators are considering a target of net zero emissions by 2050.
Russia and India are ramping up energy ties and will construct at least 12 new nuclear reactors by 2035. Two will be completed by 2016 at the Kudankulam Nuclear Power Plant, Russian state-owned power company Rosatom confirmed Thursday. Nuclear cooperation between Russia and India has been on the rise, and has been a main topic of discussion during Russian President Vladimir Putin’s official visit to New Delhi December 10 -11. Putin and Indian Prime Minister Narendra Modi will also discuss at $3 billion helicopter deal, oil exploration and supply, infrastructure projects, and diamond sales by Alrosa, the Russian state-owned diamond company, to India.
Russia’s top oil producer Rosneft struck oil and gas deals with India on Thursday, seeking to strengthen ties with Asia and diversify its exports away from Europe, under pressure from Western sanctions. During President Vladimir Putin’s one-day visit to the Soviet-era ally, Rosneft signed an initial deal to supply 10 million tonnes a year or 200,000 barrels per day (bpd) of oil to India’s Essar Group over 10-years, its head Igor Sechin told reporters. Supplies could begin as early as in 2015. Essar Group said in a statement that the two companies signed key terms of crude and oil product supplies by Rosneft to its Indian refinery. Russian bank VTB also signed a deal to open a $1 billion credit line to Essar.
Bloomberg: Putin’s eastern gas deals are just for show
In May, Putin went to Beijing to press for a $400 billion contract to send gas to China through a new pipeline. Alexei Miller, head of Russia’s natural gas monopoly, Gazprom, announced that, after some tense negotiations, a final 30-year deal to supply 38 billion of cubic meters of natural gas annually was signed. This appeared to be a major victory for Putin and a warning both to Europeans, who bought 160 billion cubic meters of natural gas from Gazprom last year (30 percent of their imports), and to Americans, who would like to supply liquefied natural gas to Asian markets. More than six months on, however, the deal doesn’t appear to be moving forward as hoped. In May, Miller counted on a Chinese advance to start building the $55 billion infrastructure for the project. In November, he declared the loan would not be forthcoming.
The power plant in Luoyang, central Henan Province, is burning old and damaged banknotes instead of coal – the first time this has been done in China, the official Xinhua news agency reports. The plant says one tonne of notes can generate more than 600 kWh of electricity, and is better for the environment than burning coal. The country’s central bank, the People’s Bank of China, has given permission for the notes to be burned, and says it’s an efficient way to make electricity. With the province’s unused paper money the company “can help generate 1.32 million kWh of electricity annually, which is equal to burning 4,000 tonnes of coal”, a member of staff at the bank tells Xinhua.
NUCLEAR power is 4000 times less dangerous than coal and it is “terribly strange” that Australia would export uranium but not use it for electricity, says Barack Obama’s former energy minister Steven Chu. Dr Chu warned against a black-and-white approach to unconventional gas, including coal-seam gas, which could be exploited in an “environmentally responsible” way. Dr Chu also advocated phasing out subsidies for both renewable and fossil industries, saying green power was already “the low-cost option” in many places. Dr Chu, in Canberra to receive an honorary doctorate from the Australian National University, said of nuclear power: “Australia has actually an economic opportunity here. You have a low population, you have many good rock structures; you could actually have nuclear power in your own country and you could take spent fuel from other countries (because) you have the geology.”
The Local: German consumers still hot for nuclear power
The country is due to shut down its nuclear power plants by 2022 in favour of fossil fuels and renewable energy, but customers are flocking to a new provider’s offer of “100 percent nuclear power”. In the first week, Maxenergy poached 3,000 customers from the competition after its new offer launch on December 1 – the day the UN climate change summit opened in Peru. “Several hundred” applications were being received every day, a company spokesperson told Die Welt newspaper.
Generated and imported from two nuclear plants in Switzerland, the electricity isn’t markedly cheaper than other options. But it is cleaner and safer, argues the company, which is a subsidiary of the Augsburg-based mineral oil trader Sailer. Meanwhile, Germany’s Association for Environment and Nature (BUND) condemned the offer as “immoral and scandalous”, arguing that national energy policy should aim instead to become more efficient to meet demand, rather than generating more.
Swelling CO2 emissions from coal-fired power generation hurt Germany’s score in the latest global climate protection index compiled by the NGO Germanwatch. In contrast to previous years, Germany scored average results in an annual climate change study conducted by the environment NGO Germanwatch. Among the world’s 58 largest CO2 emitters, it ranked 22nd. The NGO blamed Berlin’s continued support of the coal industry. “The so-called ‘Energiewende dilemma’ – the considerable increase in coal power generation alongside simultaneous expansion of renewable energies – has been damaging Germany’s climate balance.”
Shares in the owner of the UK’s largest power stations fell by almost 13pc in early trading on Friday as a government department proposed a change to subsidies for biomass plants. The Department of Energy & Climate Change (DECC) said that generators which convert stations from burning coal to biomass, or increase co-firing – replacing part of their fuel with a renewable alternative – could stand to lose Government support.
Households with electric heating face paying £360 a year in green levies by 2030 – more than a quarter of their total energy bill, the Government’s official climate change adviser has warned. The 7 per cent of UK homes – almost 2 million households – who rely on electricity for their heating will be the hardest hit by the Government’s drive for green energy because subsidies for the technologies are levied solely on electricity bills, a report by the Committee on Climate Change (CCC) shows.
Poor families in the UK will need more help to pay for heating their homes as energy bills rise, government advisors have warned. A report by the Committee on Climate Change (CCC) said subsidies for clean energy will add an extra 36p per day onto household bills by 2030. Many poor households will also need more support with insulation and clean heating, the report added. Energy-intensive industries will need continued help too, the CCC said. A government spokesman said that investing in energy efficiency is the best way to reduce long term bills – and that thanks to government policies, bills are an estimated £90 lower this year than they would otherwise have been.
The firm went into administration last month after failing to secure enough funding to develop its technology. Last week administrators at KPMG said they had been encouraged by the amount of initial interest shown in the Edinburgh-based company. They said it could “take some time” after the deadline to select a preferred bidder. Meanwhile, Aquamarine Power – also based in Edinburgh – is in the process of making most of its workforce redundant. The company is the developer of the Oyster 800 wave energy device.
Greenpeace has apologised for any “moral offence” it has caused, after a publicity stunt on the ancient Nazca lines in Peru. Activists from the organisation placed a banner next to a figure of a hummingbird, carved more than 1,500 years ago. They were hoping to increase pressure on UN negotiators currently meeting in Lima. “It’s a true slap in the face at everything Peruvians consider sacred,” Deputy Culture Minister Luis Jaime Castillo said, speaking to news agencies. Greenpeace have now issued a fulsome apology, saying they are deeply concerned about any “moral offence” and stating that they will speak to the authorities and explain what really happened. The Peruvian government said it would prosecute the activists who took part.
ThinkProgress: Climate change breeds new hybrid species
A new hybrid between coyotes and wolves, the coywolf, is rapidly expanding across the East as it combines the prowess of a wolf and cunning of a coyote — a bad combination for deer, another species that is thriving across suburban America. This inter-species breeding of the coywolf is brought on by human-driven stresses on species, such as habitat loss, over-hunting, and climate changes that lead to things like drought.