EU carbon trading could hurt European energy industry: Shell chief

April 16, 2008

Energy Daily: Plans to make business pay for carbon permits previously distributed for free in the European Union’s carbon-trading system could hurt the bloc’s energy industry, the chief executive of Shell said in an interview released Monday.

“In the past 20 years the refining industry in Europe has been very difficult,” Jeroen van der Veer, the Anglo-Dutch oil giant’s boss, told The Times in an early edition of its Tuesday paper. “But if we have additional penalties because we move away from a system of free allocations to a large extent, then in such a marginal industry that is a real problem.”

EU leaders hope to enact a plan to meet the bloc’s goal of reducing emissions of carbon dioxide — the main gas reponsible for global warming — by 20 percent by 2020, compared to 1990 levels. A widespread concern among Europeans, though, is the possibility of so-called carbon leakage, whereby heavy industry migrates out of Europe to cheaper, less-regulated countries, taking the pollution and the jobs with them…

Shown here: Shell’s Anacortes refinery in Puget Sound, photo by Walter Siegmund, Wikimedia Commons under the terms of the GNU Free Documentation license.


We should leave oil before it leaves us

March 2, 2008

Dr Fatih Birol is chief economist at the International Energy Agency, writing in the Independent (UK): We are on the brink of a new energy order. Over the next few decades, our reserves of oil will start to run out and it is imperative that governments in both producing and consuming nations prepare now for that time. We should not cling to crude down to the last drop – we should leave oil before it leaves us. That means new approaches must be found soon.

Even now, we are seeing a shift in the balance of power away from publicly listed international oil companies. In areas such as the North Sea and the Gulf of Mexico, production is in decline. Mergers and acquisitions will allow “big oil” to replenish reserves for a while,and new technologies will let them stretch the lives of existing fields and dip into marginal and hard-to-reach pools. But this will not change the underlying problem. Oil production by public companies is reaching its peak. They will have to find new ways to conduct business.

Increasingly, output levels will be set by a very few countries in the Middle East. This does not necessarily mean an immediate return to the price shocks of the 1970s, because producing countries have learnt that stability is in their interests. Even so, it is not certain that they are ready to increase production to meet growing world demand. Building new capacity takes time.

On the demand side, we see two big transformations. Wherever possible, people have already switched from oil, particularly for industrial use, home heating and electricity generation. In future, oil will mainly be used in the transport sector, where we have no readily available alternatives.

The other transformation is that the bulk of demand growth is coming, and will come in the future, from China and India. Here again, car ownership is the main driver. By 2020, India will be the world’s third-largest oil importer, and we expect China will be importing 13 million barrels in 2030, which means another US in the market. In terms of car sales, we estimate that by 2015 at the latest, more cars will be sold in China than in the US.

What will all this mean for the price of petrol? The indications are that if the producers don’t bring a lot of oil to the markets, we may see very high prices – perhaps oil at $150 a barrel by 2030. If the governments do not act quickly, the wheels may fall off even sooner.

The developed, oil-consuming countries can do several things to ease the transition to the new energy order. One would be to boost vehicle efficiency. Another would be to make better use of biofuels, although to be helpful, these need to be produced cheaply in developing countries like Brazil, not by heavily subsidised farmers in the developed world.

High prices also make it profitable to produce fuel from unconventional sources such as tar sands. But to do this requires plenty of energy, mostly from natural gas, and the process emits lots of CO2. Tar sands are attractive, but like biofuels, they will never replace Middle East oil.

In the long term, we must come up with an alternative form of transport, possibly electric cars, with the electricity being provided by nuclear power stations. The really important thing is that even though we are not yet running out of oil, we are running out of time.

Offshore platform located in the Gulf of Mexico, port location Cd. Del Carmen, photo by Chad Teer, Wikimedia Commons

Nanotechnology and public trust

February 20, 2008

Space Mart reports on a study of potential barriers to acceptance for nanotechnology: When the public considers competing arguments about a new technology’s potential risks and benefits, people will tend to agree with the expert whose values are closest to their own, no matter what position the expert takes. The same will hold true for nanotechnology, a key study has found.

The study results appear in a report issued today by the Project on Emerging Nanotechnologies (PEN). The study was based on experiments involving some 1,600 American adults and was carried out by the Cultural Cognition Project at Yale Law School – an interdisciplinary team of researchers from Yale University, the University of Washington, The George Washington University, Cornell University, and Decision Research in Eugene, Oregon.

As part of the study, participants read opposing arguments that were randomly attributed to fictional policy experts from major universities to form an opinion on nanotechnology – a cutting-edge technology about which little is known by the public.

“Because most people lack the time and expertise necessary to make sense of scientific information on complex and novel risks, they naturally rely on experts whom they trust to determine what information to believe. Individuals are inclined to trust those who share their cultural outlooks,” according to the study’s lead author Yale Law School professor Dan Kahan.

The new results are consistent with those from an earlier study – part of an ongoing series being sponsored by the National Science Foundation, PEN and the Oscar M. Ruebahausen Fund at Yale Law School – in which the same researchers found that individuals’ values influence how they respond to information about nanotechnology risks. The findings reinforce the fact that the task of engaging the U.S. public about nanotechnology will not be simple or easy, PEN Director David Rejeski says…..

Wales outlines Renewable Energy Route Map: bioenergy, marine, wind power can meet all electricity needs by 2025

February 19, 2008

Biopact: An important step on the path to making Wales a low carbon energy economy was taken today when the Minister for Environment, Sustainability and Housing, Jane Davidson launched the Renewable Energy Route Map. The route map sets out an ambitious programme aimed at transforming the way Wales produces and uses energy as part of the Welsh Assembly Government’s commitment to tackling climate change.

Policy makers believe that with Wales’ coastline, geography and climate, it is quite feasible for the nation within 20 years to produce more electricity from renewables than it consumes as a nation.

With sufficient innovation and investment, the right Government framework and public support, Wales could produce some 33TWhr per year of electricity (its current consumption is around 24 TWhr) from renewable sources. The potential for 2025 looks as follows:

  • marine power (wave, tidal stream, tidal range): up to 14TWh of electricity
  • wind (both on and offshore): up to 10 TWh of electricity
  • bioenergy from biomass and waste: 7.7 TWh of electricity and 2.4 TWh of heat

If Wales were to achieve this, then not only could its electricity needs be met entirely from low carbon energy sources but it would also contribute significantly to the UK’s energy security objectives….

Caribbean nations ask for help in pursuing alternative energy

February 18, 2008

The Barbados Advocate: The Barbados Advocate: Representatives from the Caribbean continue to point out at the United Nations the dangers posed to their islands as a result of climate change, such as unpredictable weather and threats to food security, and are asking for help in pursuing alternative sources of energy.

This occurred last week during a three-day thematic debate on climate change in the UN General Assembly, which was entitled “Addressing Climate Change: The United Nations and the World at Work”. During the debate several representatives of small island states spoke of the inequalities of the current framework and lack of plans to address the problems, and argued that it was time to move beyond debate with strong leadership. They also called for developed countries to shoulder their full load.

One of three representatives from the Caribbean making a submission to the debate, Delano Bart of St. Kitts and Nevis noted that some states were still not yet committed to addressing the issue, but stressed that it was time to look at the consequences. He said that unpredictable rainfall and flooding were responsible for eroding topsoil in the region and therefore threatening food security.

Bart also noted that the partnership of industrialised countries was vital to finding a solution, since adequate finances must to flow from those countries to the developing world to address the issues of mitigation and adaptation. Action did not need to wait until the end of negotiations, he said, and to that end, his country sought support in examining alternative sources of energy in the Caribbean. He concluded by underlining the need for all nations to be proactive in the implementation of strategies to mitigate the impending disaster.

The representative from Jamaica, Raymond Wolfe, who aligned himself with previous positions of the Group of 77 and China, the Alliance of Small Island States and the Caribbean Community, noted that development agenda had switched to relief, reconstruction, and rehabilitation, because of the effects of climate change. Wolfe supported calls for significant cuts in greenhouse gas emissions, in line with the principle of common but differentiated responsibilities and urged sates to give high priority to providing new and additional financial resources to support the transfer of climate-friendly technologies. “By working together in a broad global alliance, we can confront – and overcome – our greatest challenges,”he said.

Another representative, Paulette Bethel of the Bahamas, called for the strengthening of the United Nations Development Programme, the United Nations Environment Programme, as well as the small island developing states unit and other parts of the United Nations system in their efforts to assist national adaptation and sustainable development, in general.

Bonus depreciation for renewable energy projects completed in 2008

February 15, 2008

Solar Daily: Late last week Congress passed the Economic Stimulus Package of 2008 (the Act), which President Bush is expected to sign into law this week. Although the proposed extensions of the production tax credit (PTC) and investment-based energy credit were removed from the bill before it was passed, the final version of the Act does contain a bonus depreciation provision that could provide significant economic benefit for certain renewable energy projects that are acquired and placed in service in 2008.

To qualify for bonus depreciation, property that is part of a renewable energy project must satisfy the followng four criteria: (i) the property must have a recovery period of 20 years or less under normal tax depreciation rules, (ii) the original use of the property must commence with the taxpayer seeking to claim the deduction, (iii) the property generally must be acquired during 2008 and no written binding contract for the acquisition must have been in effect before 2008, and (iv) the property must be placed in service during 2008 (or, in certain limited cases, 2009).

If property meets these requirements, the owner is entitled to deduct 50 percent of the adjusted basis of the property in 2008. The remaining 50 percent of the adjusted basis of the property is depreciated over the ordinary tax depreciation schedule. Thus, for example, the portion of a wind project that qualifies for five-year MACRS depreciation may qualify for a total first-year depreciation deduction of 60 percent or 52.5 percent, depending on when during the year the facility is placed in service (50 percent bonus depreciation plus normal first-year depreciation for the remaining 50 percent of the adjusted tax basis)….

Heavy manufacturing, steel, and coal-fired power stations to close for 2008 summer Olympics

February 14, 2008

Here’s one way of making sure the air is tolerable for a major sporting event, from Terra Daily: China is preparing to shut entire sections of heavy manufacturing across swathes of its industrial heartlands in preparation for this year’s summer Olympics, in a determined bid to clean up its key host cities before and during the games, according to Platts, a leading global provider of energy and commodities information.

Sources returning from a visit to China told Platts this week that government officials have quietly let major coal-fired power stations, steel mills and other heavy polluters know that a broad shut-down order will be passed down the line 30 days before the Olympics begin on August 8.

The policy could slow China’s economic growth at a time when world oil markets are already viewing the supply-demand mix with skepticism. With GDP growth of 11.4% in 2007 — China’s fastest growth for 13 years — the country generated an estimated 300,000 barrels per day (b/d) of new oil demand last year, about one-third of total world demand growth.

The International Energy Agency has forecast Chinese demand growth could come in at another 500,000 b/d this year, or a quarter of total world growth. But that forecast could be placed in danger by any unforeseen economic slow downs.

The Chinese industrial and power plants will likely be closed for the 30 days prior to the games and until the Olympics are completed on August 24. Most shutdowns will happen in and near Beijing, and northern China’s Shenyang City, the capacity city of Liaoning province and a co-host city for the Olympics.

The Beijing government is well-known to be determined that the country’s famous pollution problems should not blemish the highest-profile event to be held in China since it fully rejoined the international community in the 1970s.

The likely impact of the closures on China’s economy is unpredictable, but it is likely to be quite substantial. Sources within China estimate that around 13 gigawatts (GW) of electricity production will be closed down — almost half the size of Mexico’s total production capacity….