The focus this week is on the recent nuclear agreement with Iran. What happens if sanctions on Iran are lifted? (photo credit MarketWatch)
Irish Independent: Oil driven lower as markets prepare for Iranian shipments
Iran could resume oil exports within months, adding to a glut of supply that has already halved wholesale oil prices in recent months. The preliminary agreement outlined on Thursday signals the Persian Gulf nation may be able to resume exports within months of a final deal, which negotiators aim to conclude by June 30, analysts at UBS Group and Commerzbank said.Iran’s shipments abroad have been curbed 50pc by measures imposed in mid-2012. The return of Iran’s oil to a global market oversupplied including by US shale output threatens the price recovery fellow producers are expecting later this year. Under the accord, the US and European Union would lift the economic sanctions if inspectors from the International Atomic Energy Agency verify Iran’s compliance with curbs on its nuclear programme. “In essence, there will be more Iranian oil soon,” Giovanni Staunovo, an analyst at UBS, said.
Oil futures settled sharply lower on Thursday with traders betting that a preliminary deal on Iran’s nuclear program will only add to excess supplies that have been weighing on prices. The oil market had been concerned that an agreement would lead to an easing of sanctions on Iran, which would in turn be able to release much more of its oil onto world markets. Under the agreement reached on Thursday, the U.S. will end all nuclear-related sanctions on Iran. “The Iran nuclear deal is a massive blow for the oil price and we could see the crude-oil price falling to $30 very easily,” said Naeem Aslam, chief market Analyst at AvaTrade. Some analysts estimate that the lifting of oil sanctions would lead to an addition of around 800,000 barrels a day in global markets and that Iran’s return to the oil market would be “long and arduous.”
More on Iran and the Middle East below the fold, plus leaks at nuclear plants, layoffs at Hinkley, smart grids, the coal glut, Europe falling behind in renewables, Republican senators going after the EPA, methane emissions from hydro plants and a temperature record that wasn’t.
Houston Chronicle: Iran nuclear deal upending Middle East, OPEC politics
Iran’s agreement to limit its nuclear program in return for the international community ending sanctions has just upended the geopolitical balance in the Middle East and within OPEC. The framework deal comes as Shiite rebels move closer to taking over Yemen just as a Sunni coalition, led by Saudi Arabia, scrambles to prop up beleaguered government forces. While such fighting tends to drive up oil prices, the long-term political game in the region could actually lead Sunni nations to use prolonged low prices as an economic weapon.
A coalition led by Saudi Arabia has launched air strikes against Shia Houthi rebels in Yemen, saying it is “defending the legitimate government” of President Abdrabbuh Mansour Hadi. Saudi jets targeted Houthi positions in the capital Sanaa overnight, along with missile batteries and warplanes. A Houthi official warned the coalition that it risked provoking a wider war. Shia power Iran, which Sunni-ruled Saudi Arabia accuses of backing the rebels, also demanded an immediate halt to the strikes, which it said violated Yemen’s sovereignty. “We will make all efforts to control [the] crisis in Yemen,” Iranian Foreign Minister Mohammad Javad Zarif said, according to the Isna news agency. A conflict that pulls in regional powers could disrupt global oil supplies, and the price of Brent crude rose almost 6% after the strikes began.
Natural Gas Intel: BP Sees North American Natural Gas Overtaking Oil, Coal Sooner Than Expected
What has changed are BP’s assumptions about how much and how soon the United States becomes a net exporter of natural gas and oil — and how much faster gas is expected to overtake coal as the primary power generation fuel. “North America becomes a net exporter this year (2015), and accounts for 66% of net global export growth 2015-35,” according to the updated forecast. North America is expected to switch from importing 6% of its energy in 2013 to exporting 19% by 2035. Oil is seen accounting for more than 60% of that reversal, with North America becoming a net exporter in 2018. In February, BP economists said they expected net oil exports to begin in 2031. Global net inter-regional natural gas imbalances now are expected to more than double by 2035, and North America is forecast to become a net gas exporter in 2019. By 2035, the region’s gas exports are expected to reach 16 Bcf/d.
Japan’s ruling party wants a revived nuclear power sector to eventually make up a fifth of electricity generation, local media said, a controversial move for a public opposed to nuclear power in the wake of the Fukushima disaster. A panel of Prime Minister Shinzo Abe’s Liberal Democratic Party approved a proposal in a closed-door session on Thursday that would boost stable “baseload” energy supplies – nuclear, coal, hydroelectric and geothermal – to about 60 percent by 2030 from 40 percent now, according to reports in several major media outlets. The LDP will present the proposal as early as next week to Abe, the Asahi said. Abe’s government supports reviving nuclear power, but must walk a delicate line as it deliberates the best energy mix for the world’s third-biggest economy.
The Emsland nuclear power plant in Germany has been taken off grid after leakage was detected, according to its operator RWE Power AG and the German state of Lower Saxony’s environment ministry. The 1,400-megawatt plant located in northern Germany near Lingen was taken offline at around 1 pm local time (11:00 GMT) on Friday. The plant’s operator said it was shut down as a precautionary measure, after a leak was detected in a sample line used to monitor the boron content of reactor coolant. According to the environment ministry no radioactivity escaped from the plant. An investigation into the causes has been launched. “When the plant can be restarted depends on the results,” the ministry said in a statement.
Herald Scotland: Radiation leak at Torness nuclear power station
According to the French state company that runs Torness, EDF Energy, radioactive tritium was discovered in water contained in part of the power station’s drainage system. The discovery was immediately reported to the Scottish Environment Protection Agency (Sepa) and the UK government’s Office for Nuclear Regulation (ONR). A suspect waste discharge pipe at the plant has been taken out of service, and contaminated water has had to be been removed and disposed of. The radiation leak was detected on February 11 and disclosed to a meeting of the Torness local liaison committee on March 19. Though the amount of radioactivity involved is said to be small, there are growing concerns that the ageing 27-year-old nuclear plant could develop more serious problems.
As many as 400 workers at the site of a new nuclear power station at Hinkley Point face being laid off while the French owners of the project decide whether to make an investment in the £16bn project. EDF has almost completed the project’s preparatory earthworks, drainage, welfare facilities and roadworks, but is yet to decide on the investment to mark the beginning of the construction the plant in Somerset. Phil Whitehurst, the GMB union’s national officer, described the news as devastating. “The problem seems to be the stalled final investment decision. This should now be a wakeup call for the next UK government to take charge and manage the failing energy policy we have in place,” he said. “We cannot tolerate our energy new-build destiny being managed by companies who are in such disarray on funding when so deep into a project’s development. If we do, then the lights will surely go out.”
Financial Times: Rio Tinto cuts Japan thermal coal prices
Rio Tinto has lowered the price of the annual benchmark thermal coal contract with Japan by almost a fifth, as producers continue to struggle with an oversupplied market. The Anglo Australian miner has settled the first annual supply agreement with a Japanese utility company at $67.80 a tonne for coal with an energy content of 6,322 kcal/kg, according to a person with knowledge of the negotiations. That is 17 per cent below the price achieved last year. A supply glut has pushed the price of Australian thermal coal — the benchmark for Asia — down by more than 60 per cent since early 2011. It has fallen 10 per cent this year. This has put buyers in a stronger position.
Coal-fired power plants are set to be taken offline this year as a result of the doubling of the UK’s top-up carbon tax on Wednesday, according to market analysts. The carbon floor price went up from £9.54 to £18.08 per tonne of CO2, raising the cost of a tonne of carbon for British power plants to £23, when allowances on the EU’s emissions trading system (ETS) are factored in. The carbon floor price was designed to set a minimum price, related to emissions from fossil fuels, which would rise annually and encourage manufacturers to switch to greener fuels. It was introduced in 2013. Market experts believe the hike in the UK carbon floor price should be enough to force fuel switching from coal to gas – a key aim of carbon pricing – unless gas prices now rise substantially.
Clean Energy Wire: German emission cap faces legal challenge, utility resistance
A government proposal that would make Germany’s older power plants pay for carbon emissions exceeding set levels linked to their age is meeting resistance from plant operators and trade unions. The “national climate contribution” outlined in a paper by the Ministry of Economic Affairs and Energy, which could cost operators of old lignite and hard coal-fired power stations several million euros annually, has also drawn criticism from within Energy Minister Sigmar Gabriel’s own Social Democrat Party (SPD), while legal experts question its compatibility with EU law and the German constitution. RWE, one of Germany’s largest utilities, says that the proposal “would introduce a total exit from lignite in the short run.” The energy provider, which operates 25 lignite and five hard coal-fired power stations in Germany (20 of which are more than 20 years old), said old coal-fired power stations would not be able cover their operating costs if their output was limited or subject to this level of financial penalty, forcing closure.
Solar power could provide up to 4% of the UK’s electricity by the end of the decade, the government has said. The plummeting cost of solar panels has caused the government to revise upwards its forecast for solar energy use, Energy Secretary Ed Davey said. This had contributed to the government decision to end most subsidies for large-scale solar this month, he added. But the solar industry said the cuts were a mistake and would prevent it from competing with fossil fuels. The Solar Trades Association said as much new capacity has been installed in the first three months of this year as in the whole of 2014. But after April it expects installations to fall 80%, because most firms will not be able to compete.
Renewable energy investment across the European Union almost ground to a standstill last year, with less than 1% growth, despite a strong global rebound in financing led by China and the United States, according to figures published on Tuesday (31 March). Global investment in renewable energies jumped by 17% to €290 billion, the first funding increase for three years, according to the United Nations Environment Programme’s (UNEP) annual Global Trends in Renewable Energy Investment report. China was by far the biggest investor. It pumped a record €89.5 billion into projects, up 39% from last year. The US was second at €41.2 billion, up 7%, but well below its all-time high reached in 2011. Japan was third, at €38.4 billion, 10% higher than in 2013.
European Commission Vice President Maroš Šefčovič said smart grids are crucial for EU single energy market plans as they could integrate more renewables into electricity networks, boost security of supply and help lower prices for consumers. “Smart grids should become Europe’s shale gas,” he told a conference of Brussels-based European grid organisations ENTSO-E and EDSO. Abundant shale gas has boosted US energy independence, lowered power prices and given the country’s energy-intensive industries a competitive edge. Earlier, EU climate and energy commissioner Miguel Arias Cañete said smart grids were central to the Commission’s vision of making the EU the world’s number one in renewable energy and reforming European power markets.
Four Republican senators are seeking additional information from the Environmental Protection Agency on the science linking climate change to drought, hurricanes and increased temperatures, including an analysis of climate change modeling results. In an April 1 letter, Sens. Jeff Sessions (R-Ala.), James Inhofe (R-Okla.), Roger Wicker (R-Miss.) and John Barrasso (R-Wyo.) asked EPA Administrator Gina McCarthy to defend recent statements that there have been more frequent and more intense hurricanes and droughts and detail whether climate models have accurately predicted temperature increases. The senators asked McCarthy to provide data and analysis comparing Intergovernmental Panel on Climate Change climate models with actual global average temperatures. “Given that the Administration’s proposal to fundamentally change the nature of domestic energy generation is based on the apparent need to avoid `devastating’ climate impacts to the United States and the planet, it is imperative that the agency be candid and forthright in assessing the reality of this projection,” the senators said.
Climate Central: Hydropower May Be Huge Source of Methane Emissions
Reservoirs and hydropower are often thought of as climate friendly because they don’t burn fossil fuels to produce electricity. But what if reservoirs that store water and produce electricity were among some of the world’s largest contributors of greenhouse gas emissions? Scientists are searching for answers to that question, as they study how much methane is emitted into the atmosphere from man-made reservoirs built for hydropower and other purposes. Until recently, it was believed that about 20 percent of all man-made methane emissions come from the surface of reservoirs. New research suggests that figure may be much higher than 20 percent, but it’s unclear how much higher because too little data is available to estimate. Methane is about 35 times as potent a greenhouse gas as carbon dioxide over the span of a century.
RE New Economy: The future of energy, cheap oil or renewables?
In a major new report, global investment bank Citigroup has defined the current battle between cheap oil, and renewables like wind and solar, to be so fundamental it will define the future of energy. But it says that while the slump in oil and associated gas prices may provide some road-humps for wind and solar, renewables will win out because of basic economics, as well as energy security and environment issues. And, Citigroup says, because renewables are the cheapest way to substitute coal-fired power. Citigroup believes the fall in the oil price is terminal – it says the days of triple figure oil prices are over – meaning the end to some high-risk, high-polluting oil ventures in marginal regions such as the Arctic, tar sands and deepwater. On the other hand, the long-term outlook for renewables remains bright. “Fundamental factors – increasing economic competitiveness, energy security, and environmental goals – all remain potent forces driving ever more rapid adoption of renewable energy globally.”
Over the last few months, chatter about “existential threats” to western civilization has become remarkably commonplace. Two of the most talked about threats to the prosperity and freedoms enjoyed in western democracies are Islamist extremism and climate change. Our president repeatedly asserts that climate change – which now apparently means little more than bad weather – is the greatest and more immediate threat to humanity. And quietly behind the public scene, he continually advances his climate policy to supplant those hydrocarbon energy sources on which western civilizations are now utterly dependent. Announced Tuesday on medium.com, not exactly a mainstream platform, the State Department officially committed the U.S. to doubling the current rate of carbon reduction in order to achieve a phantasmagorical 80 percent reduction of CO2 by 2050. The president’s widely mocked warnings, however, could prove prescient if slightly reformulated. Climate change policy — not any changes in the physical climate — may indeed prove to be the West’s undoing.
Daily Caller: Did Antarctica Actually Hit Record High Temps?
The media went wild Monday with reports that Antarctica hit its highest temperature on record, 63.5 degrees Fahrenheit. But what the media hype glossed over one inconvenient truth: this temperature measurement wasn’t actually taken in Antarctica. The Weather Underground blog reported that on March 24th Argentina’s Base Esperanza reported the temperature reached 63.5 degrees Fahrenheit. This came just one day after Argentina’s Marambio Base recorded a temperature of 63.3 degrees Fahrenheit. Sounds like global warming, that is, until it’s revealed that Base Esperanza and Marambio Base are not located in the Antarctic Circle, but at the very tip of the Antarctic Peninsula, on the continent’s western side under South America. It’s not even clear if the world’s main meteorological body considers these bases as part of the south pole’s temperature record.