This week we give OPEC a rest and focus – inevitably – on the UK election and its potential impacts on UK energy policy:
The UK’s renewable energy sector has issued a desperate plea for the new Conservative government to show early support for the low carbon economy, warning tens of thousands of jobs rely on the British onshore wind power industry the party has pledged to block. During the past year, the wind power industry had raised repeated concerns over a Tory manifesto pledge to “halt the spread of onshore wind farms” by ending subsidies for new projects and changing the law so local people have the final say on wind farm applications. The manifesto argued that while onshore wind now makes a “meaningful contribution to our energy mix”, wind farms “often fail to win public support” and are “unable by themselves to provide the firm capacity that a stable energy system requires”.
More post-election predictions and perspectives below the fold, plus German coal causing air pollution in France, US coal is either dead or it isn’t, rationing UK internet use to keep the lights on, Scotland’s green energy vision, a record trade deficit in Canada, Australia squabbles over renewables targets, Iran determined to sell more oil, jet fuel from fungus, CO2 exceeds 400ppm, how Americans can fight global warming by eating insects and the US Army promises not to invade Texas.
The next five year years will be critical in the international fight to combat global warming, starting with a crunch UN summit in December, and David Cameron is very clear that action is needed. “Climate change is one of the most serious threats facing the world today. It is not just a threat to the environment, but also to our national and global security, to poverty eradication and economic prosperity,” he said in a cross-party pledge in February. The difficulty is that for many observers, even supporters, he has been horribly inconsistent on green issues, having said “vote blue, go green” before the 2010 election then afterwards installing a climate change sceptic as environment secretary and reportedly railing against the “green crap” levies on energy bills. Will the short-term difficulties of a tiny majority and a referendum on the UK’s membership of the European Union trump the medium-term benefits of supporting the thriving green economy and cutting carbon emissions?
Telegraph: New government faces potential energy crisis
Avoiding a power blackout will be one of the first priorities for whoever forms the next government, a leading consultant has suggested. Ahead of the results of one of the closest elections in decades, Simon Virley, UK chair of energy and natural resources at KPMG, has warned of tight energy capacity in 2015 and 2016. “The next couple of winters are expected to be among the tightest this decade in terms of electricity capacity margins due to announced plant closures; while Britain’s overall dependence on imported energy is soaring as North Sea production declines,” he said. According to KPMG, the margin for power generation this winter could be even lower than the 4.1pc winter outlook provided by National Grid last year following the potential closure of plants at Killingholme and Longannet.
The UK has a long way to go in hitting its binding renewable energy target for 2020, and the Conservatives’ victory Thursday night does little to shore up confidence that it can catch up to its European peers. The country has been limping towards its goal of having 15 percent of energy come from renewables by the end of the decade; as of 2013 only 5.1 percent was generated in that way. Onshore wind is the key to closing that gap, renewable supporters say — but it’s something the Tories do not plan to support. Officially, Westminster has remained committed to the renewable energy target, which Labour Party leader Ed Miliband pushed through in 2009 as the first head of the Department of Energy and Climate Change. But in the country’s overall energy use, the share of renewables (in 2013) was still 9.9 percentage points short of the 2020 goal – putting it in last place among the 28 member states, the bloc’s official statistics agency Eurostat said in March.
David Cameron’s choice to lead the Department of Energy and Climate Change (DECC) will now be critical in ensuring a competitive environment for energy utilities to make a fair profit. It will need to make sure investment is encouraged to generate the new electricity capacity that is vital to power the growing economy that will come from another five years of Conservative government. With spare energy capacity expected to drop to around 4pc again this winter, Britain must urgently build more conventional and nuclear power plants without delay. Forget ill-conceived commitments to generate 15pc of the UK’s power from renewables by the end of the decade by building even more useless windmills and solar parks. The construction of the Hinkley Point nuclear plant and several new gas-fired stations is now vital.
Cameron’s hand will be freed by an end to coalition government and the poor election re-turn for UKIP, in particular the resignation of its leader Nigel Farage after failing to win in Thanet South. “What’s interesting about this result is it enormously increases the degrees of freedom… [David Cameron] will no longer have to appease the headbangers [within his own party].”
Wall Street Journal: UK Government to block foreign ownership of energy assets
An unusual feature of the U.K. electoral season wrapping up Thursday has been the current government’s signal that it would actively block foreign ownership of energy assets, a reversal from previous, more welcoming stances. The most recent effort by Prime Minister David Cameron’s Conservative-led coalition government focused on ensuring that U.K. oil major BP BP.LN +0.92% PLC remains a British champion. (T)he government late last month gave Russian billionaire Mikhail Fridman up to six months to sell the North Sea gas fields his investment fund acquired earlier this year. The government’s recent moves are in sharp contrast to the earlier enthusiasm from British governments of all stripes for dealmaking, even in the most strategic parts of the country’s energy sector. In a multi-billion dollar deal in 2009, the Labour-led British government welcomed the takeover of Britain’s atomic power industry by French state-controlled nuclear giant Electricite de France. In 2013, the current Conservative-led coalition government didn’t flinch when Chinese nuclear companies partnered up with EDF to build two new reactors in a $24 billion deal. Nor did it object the previous year when China’s CNOOC picked up a stake, via its acquisition of Canada’s Nexxen Inc., in an important North Sea oil field that feeds into the Brent benchmark.
The Courier: Scottish Government’s green energy vision
The Scottish Government yesterday said the country’s renewable energy assets made it a net exporter of electricity. Responding to Tony Mackay’s criticism over Longannet, a spokesperson said the Government had a clear vision for the power sector. “A balanced mix of clean thermal generation progressively fitted with Carbon Capture and Storage (CCS) operating alongside renewables is the Scottish Government’s clear objective,” said the spokesperson. “Scotland’s comparative advantage in the generation of renewable electricity is huge – with 90% of the UK’s hydro capacity, 25% of the EU’s offshore wind and tidal power potential and 10% of its wave power potential. Renewables now supply almost half of Scotland’s electricity consumption and our role as a net exporter is well-established, and we are set to continue this vital role in the future.”
Farming News: UK solar energy leapfrogs to third in world
The UK is now third in the global rankings for utility-scale solar energy after a surge in installations in the first quarter of 2015. According to figures released by wiki-solar, the UK is behind only China and the US in terms of capacity, this places us above Germany, India and Spain (view the rankings on the wiki-solar site here). With over 300 attendees, the Large-Scale Solar UK Conference took place this past week in Bristol where the NFU’s chief energy adviser, Dr Jonathan Scurlock, made two presentations on the subject of multi-purpose land use (for food, energy and biodiversity), and also took part in a panel discussion chaired by BBC Countryfile’s Tom Heap. The majority of Britain’s large solar installations are hosted by farmers, supporting profitable food production. According to Dr Scurlock: “It’s a remarkable testament to the entrepreneurial spirit and skill of British solar farm developers that they have built a world-class clean energy sector in collaboration with farmers and landowners – but with little recognition (and fast diminishing support) from the ‘greenest government ever’!”
Internet access may soon need to be rationed or restricted because the UK’s power supply and communications network cannot cope with consumers’ appetite for online video, the Royal Society will hear this week. The Internet is already consuming at least 8 per cent of Britain’s power output, with the energy demand from data transmission and storage as well as smartphones, laptops and televisions. Demand doubles every four years, according to one estimate. At the same time optical cables and switches are set to reach their capacity to carry data by the end of the decade. The Royal Society will hear this week that the country’s communications networks face a “potentially disastrous capacity crunch”, as academics meet to discuss the problem.
Though net profits and spending are down, companies working in U.S. shale basins are finding well costs going down while production forecasts grow. The low price of oil is forcing energy companies to spend less on exploration and production efforts. Oil field services companies Halliburton and Baker Hughes are merging in an effort to control costs, while others shed numbers from their work force. Anadarko Petroleum said it’s deliv-ered strong production results during the first quarter while spending less. At shale basins in Colorado, the company said it’s saved around $500,000 on drilling operations so far this year. In the Eagle Ford shale basin in Texas, the company said the cost of drilling a well is 14 percent less than during the fourth quarter while it set a production record of 275,000 barrels of oil equivalent. Concho Resources, which has headquarters in Texas, said its quarterly production of 11.9 million barrels of oil equivalent beat its expectations. Total crude oil production increased 9 percent from the fourth quarter. For full-year 2015, the company aims to increase overall production by an average range of 20 percent while spending less, largely in the Permian shale in Texas.
Chicago Tribune: Brazil mulls opening deep water reserves to outside operators
Brazil is weighing changes to lure foreign companies into its high-cost deepwater region after a corruption scandal and fiscal mismanagement left its national oil company unable to fund projects. “The reality today is to attract investment,” Energy Minister Eduardo Braga said in an interview in Houston Sunday. Braga said. “There’s no way Petrobras can put down all the investments needed for the Brazilian economy.” Currently, companies bidding to gain access to Brazil’s rich pre-salt oil reserves need to hand control of day-to-day operations in the region to Petroleo Brasileiro, along with a 30 percent stake. Those rules resulted in no companies competing against a Petrobras-led consortium at the first and only auction of the deep-water blocks, where exploration costs are among the highest in the industry. The idea of giving outside companies a bigger role is part of Brazil’s broader effort to encourage investment in its oil sector, after Petrobras was hit by a corruption scandal as prices sank. Efforts to develop past discoveries have helped Petrobras become the world’s most indebted oil producer.
Mexico City News: Pemex may lose right to extract oil reserves:
Petróleos Mexicanos (Pemex) could lose the right to extract the reserves that were as-signed to it in Round Zero due to a lack of resources. This information is contained in the 2014 annual report the company sent to the Permanent Commission of the Mexican Con-gress. The Energy Reform envisioned a process called Round Zero, a phase in which the federal government assessed the technical, financial and execution capabilities of Pemex. The Energy Secretariat as a result of its assessment assigned PEMEX 10,292 million barrels of crude oil, condensed and liquefiable hydrocarbons, as well as 10,859 million cubic feet of gas which represents 95.1 percent of the country’s proven reserves. “It should be noted, however, that Pemex cannot guarantee that it will be in a position to attain the results at the expected times, nor enough resources to explore and extract oil from the assigned areas,” the report states.
Iran is determined to regain its share of the crude oil export market when sanctions imposed over its nuclear programme are lifted, the oil ministry’s website SHANA quoted Oil Minister Bijan Zanganeh as saying on Wednesday. The former second-largest OPEC producer behind Saudi Arabia aims to boost crude exports by up to 1 million barrels per day (bpd) if Tehran and six major powers finalise a nuclear agreement by a June 30 deadline. The two sides are seeking a deal in which Iran would restrict sensitive nuclear work in exchange for sanctions relief. “Oil-producing countries should create space for Iran when we increase our exports after sanctions are lifted”, Zanganeh said. Sanctions imposed by the European Union and the United States have halved Iran’s oil exports to a little more than 1 million bpd since 2012. Lower oil prices have also caused pain for less wealthy producers, with Iran having repeatedly called for the Organization of the Petroleum Exporting Countries to cut its daily output target and maintaining that increased Iranian production will not cause a price crash.
New York Times: French Nuclear Model Falters
For decades, France has been a living laboratory for atomic energy, getting nearly three-quarters of its electricity from nuclear power — a higher proportion by far than in any other country. And France’s nuclear companies have long been seen as leaders in building and safely operating uranium-fueled reactors around the world — including in the United States — and championed by Paris as star exporters and ambassadors of French technological prowess. But in the last few years, the French dynamo has started to stall. New plants that were meant to showcase the industry’s most advanced technology are years behind schedule and billions of euros over budget. Worse, recently discovered problems at one site have raised new doubts about when, or even if, they will be completed. Many nations in the developing world, though, see little choice but to adopt nuclear power as the hazards of burning coal become all too evident. If the French industry cedes its global leadership after six decades of building and operating nuclear reactors without major mishap, less seasoned providers from China and Russia would increasingly fill the vacuum.
France has been reporting heavy levels of air pollution which authorities in the country are blaming on diesel cars there. But the real culprit may in fact be the renewed German penchant for coal power. Up until a few years ago, Germany, along with France, was at the forefront of nuclear power use. But after the Fukushima disaster in Japan in 2011, the Germans were quick to begin phasing out nuclear power. But after starting the phase out of nuclear power, Germany still needed to find a source of replacement power. (T)he Germans have increasingly turned to coal as their power generation source of choice, especially U.S. coal. Today coal power plants are responsible for generating nearly half of Germany’s power, and numerous new plants are scheduled to come online in the next few years. Overall, the increase in coal is likely to create a significant increase in airborne pollution and potentially stoke tension between Germany and its neighbors. But at the same time, if Germany wants to phase out nuclear power, coal is the only realistic option; a fact which some German politicians are starting to admit.
Coal mining companies pose an increasingly risky investment, according to the Bank of America, which has said it will continue to reduce its financing of the sector. “The dynamics around coal are shifting,” said the bank’s new coal policy published on Wednesday, which cited pollution regulations, changes in economic conditions, increased competition from shale gas and renewable power. “Over the last several years, the coal mining sector has experienced a challenging environment in which increasing risks and shifting dynamics have reshaped its landscape,” a Bank of America spokeswoman told the Guardian. She said the bank had been downsizing its investments in coal mining for several years in order to reduce its exposure to the troubled sector, but could not say how much it had reduced its lending by previously or offer future targets for its retreat from the sector. The new policy said: “Going forward, Bank of America will continue to reduce our credit exposure to coal extraction companies.” It also committed to increasing lending to renewable energy, energy efficiency and carbon capture and storage. The spokeswoman said the bank’s renewable energy portfolio was currently more than three times as large as its coal extraction portfolio.
Financial Times: Coal could be the comeback kid in US environment fight
(T)here is the distinct possibility that the gradual progress of the US in shutting down coal-fired power plants and replacing them with renewables and gas-fuelled turbines could be slowed dramatically, at least for a few years. The coal-mining companies, and the state governments friendly to them, are on the legal offensive and could, conceivably, score some victories. They have two legal actions challenging the EPA’s authority to regulate coal-fired plant emissions: Murray Energy vs EPA, which is before an appeals court in Washington, and Michigan vs EPA, which should be decided by the Supreme Court in June. According to Hugh Wynne, a utilities securities analyst at Bernstein, the brokerage, if the EPA wins both cases and is allowed to enforce its existing and proposed rules, utilities would ultimately be required to shut down more than 100 gigawatt of coal-fired power station capacity. If the EPA loses both cases, only about one-third of the prospective coal plant closures, or 33GW, would probably be required under the regulations that have survived past court challenges. This would translate into hundreds of millions of tons more of coal being burnt every year. Such an outcome would be a bonanza for coal investors, and a serious additional challenge for an already stressed gas exploration and production industry.
Canada’s merchandise trade deficit reached a record in March as energy exports declined and imports of consumer goods increased, one of the starkest signs of an oil shock the central bank says stalled the economy early this year. The C$3.02 billion ($2.51 billion) deficit broke the old record of C$2.87 billion set in July 2012, Statistics Canada said Tuesday in Ottawa. The shortfall exceeded the highest forecast of C$1.33 billion in a Bloomberg economist survey with 15 responses, which had a median forecast predicting the trade deficit would narrow. Canada’s trade balance has been dominated by oil prices that collapsed more than 50 percent in the second half of last year. March’s trade shortfall is the sixth straight for the Group of Seven’s largest exporter of crude, which had a surplus of C$2 billion as recently as July. “It’s a big disappointment relative to the consensus expectation,” Nick Exarhos, an economist at CIBC World Markets in Toronto, said by telephone. “It highlights that Canada is more reliant than ever on the energy sector.”
A deal to end the lengthy stand-off over Australia’s renewable energy target has hit a dramatic late hitch after Labor accused the Coalition of trying to include the burning of wood waste as a renewable energy source. The federal government and the opposition have held on-off talks for several months over a deal to cut the renewable energy target (RET), which mandates that 41,000 gigawatt hours of Australia’s energy must come from renewable sources such as solar and wind by 2020. Talks between Greg Hunt, the environment minister, Ian Macfarlane, the industry minister, and Mark Butler, Labor’s environment spokesman, in Melbourne on Friday agreed that the RET be cut to 33,000GWh, with exemptions for energy-intensive industries such as aluminium. However, Labor has objected to part of the deal after claiming that the government introduced a last-minute amendment that the burning of wood waste be included in Australia’s renewables target. The burning of native wood, or other biomass, for energy is viewed as environmentally damaging by the Greens and some conservation groups.
The number of patents for renewable energy products filed worldwide has fallen by 42% over the last three years, which could suggest that global investment in green energy is stalling. Research from commercial law firm EMW shows that 20,655 green energy patents were filed globally in 2014, for solar power, wind energy, biofuels and waste-generated energy – down from 35,590 in 2012. EMW said this sharp decline has been mainly caused by oversupply in the solar panel market, with Chinese mass production hitting profit margins of other companies. Solar-related patents accounted for 65% of the total (13,551 patents) last year. This has been exacerbated by subsidy cuts for renewables in many countries, including the UK, as well as the dramatic fall in oil prices that has widened the price gap between low carbon and conventional energy. James Geary, head of EMW’s waste, renewables and energy team, warned this could well hamper efforts by governments around the world to meet their carbon reduction targets.
The Supreme Court announced Monday that it will review whether a federal agency may require electric market operators to compensate customers who lower their consumption of electricity during peak demand hours. The court said it would determine whether the Federal Energy Regulatory Commission (FERC) exceeded its statutory authority when in 2011 it adopted the approach, which is called “demand response.” Environmentalists, the Obama administration and some large consumers say demand response is a key mechanism for getting people to use less energy overall and, therefore, producing fewer emissions of carbon dioxide or other harmful pollutants. Electricity generators say that FERC’s proposed compensation is too generous and, more importantly, is a power grab that exceeds the authority Congress has given it. “The Federal Power Act draws a ‘bright line’ distinction between state and federal jurisdiction over the regulation of sales of electric power,” said a brief filed by the Electric Power Supply Association.
Science Codex: Jet fuel from fungus
Researchers have found a way to make jet fuel from a common black fungus found in decaying leaves, soil and rotting fruit. The researchers hope the process leads to economically viable production of aviation biofuels in the next five years. They used Aspergillus carbonarius to create hydrocarbons, the chief component of petroleum, similar to those in aviation fuels. The fungus produced the most hydrocarbons on a diet of oatmeal but also created them by eating wheat straw or the non-edible leftovers from corn production. Fungi have been of interest for about a decade within biofuels production as the key producer of enzymes necessary for converting biomass to sugars.
Planetsave: Monthly Atmospheric CO2 Now Exceeds 400 ppm
For the first time since people started tracking carbon dioxide in the earth’s atmosphere, the global average concentration of CO2 has surpassed 400 parts per million for an entire month. Says Pieter Tans, lead scientist of NOAA’s Global Greenhouse Gas Reference Network, about the record carbon dioxide level: “It was only a matter of time that we would average 400 parts per million globally. We first reported 400 ppm when all of our Arctic sites reached that value in the spring of 2012. In 2013 the record at NOAA’s Mauna Loa Observatory first crossed the 400 ppm threshold. Reaching 400 parts per million as a global average is a significant milestone. This marks the fact that humans burning fossil fuels have caused global carbon dioxide concentrations to rise more than 120 parts per million since pre-industrial times. Half of that rise has occurred since 1980.”
The San Jose Mercury News reported on June 30, 1989 that a “senior environmental official at the United Nations, Noel Brown, says entire nations could be wiped off the face of the earth by rising sea levels if global warming is not reversed by the year 2000.” Rajendra Pachauri, the former head of the Intergovernmental Panel on Climate Change said in 2007 that if “there’s no action before 2012, that’s too late.” (In 2009 Gordon) Brown warned there was only “50 days to save the world from global warming”. In 2009 …. the head of Canada’s Green Party wrote that there was only “hours” left to stop global warming. “We have hours to act to avert a slow-motion tsunami that could destroy civilization as we know it”. James Hansen warned in 2009 that Obama only “has four years to save Earth.” When Laurent Fabius met with Secretary of State John Kerry on May 13, 2014 to talk about world issues he said “we have 500 days to avoid climate chaos.” Ironically at the time of Fabius’ comments, the U.N. had scheduled a climate summit to meet in Paris in December 2015 — some 565 days after his remarks.
American Spectator: Americans Should Eat Insects to Fight Global Warming
Marie Antoinette may or may not have said “Let them eat cake” at the outset of the French Revolution 200-plus years ago, but former United Nations General Secretary Kofi Annan just made Marie Antoinette’s alleged dictate seem downright magnanimous. Pointing his finger at America and other Western democracies, Annan this week said Americans should begin eating insects to do our part to address the fictitious global warming crisis. Complaining about a “rapidly growing middle class,” Annan told the Guardian that more people being able to afford beef and chicken is causing “a major threat to the climate” because raising livestock produces global warming emissions. “There are alternative sources of protein,” said Annan. “Insects have a very good conversion rate from feed to meat.” Annan criticized people in Western democracies for not embracing insect food sources linked to poverty in developing nations. Insects “make up part of the diet of two billion people and are commonly eaten in many parts of the world. Eating insects is good for the environment and balanced diets,” said Annan.
More paranoid corners of the American internet have become fixated on Operation Jade Helm 15, a massive training exercise scheduled for this summer. Around 1,200 US commandos will test out their skills in Texas and several other south-western states, sometimes dressing in civilian clothes and moving in unmarked vehicles as part of their covert warfare training. But no, the Pentagon insists, it is not part of a secret plan to take over Texas. Conspiracy theorists first became agitated with the release of a map showing that Texas had been labelled a hostile zone for the purposes of the training exercise. From there rumours began to fly. Was “Jade” a reference to China and a Chinese takeover of the United States? Was “Helm” a nod to the blue helmets of UN peacekeepers, who are perennial boogiemen for those Americans fearful that the global body is trying to subdue US democracy? It was Greg Abbott, the governor of Texas, who gave real credence to the conspiracies by ordering Texas national guard troops to “monitor” the US forces taking part in Operation Jade Helm. The order was met with outrage even by some fellow Republicans. “Your letter pandering to idiots… has left me livid,” one former Republican politician wrote to Mr Abbott.