Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.
If last week’s energy bill announcement was about building the low carbon power system of the future, this week’s gas strategy and autumn statement felt like a blast from the past. With Energy and Climate and Change Secretary Ed Davey away at the COP 18 UN climate change talks in Doha, it was left to the Chancellor (increasingly the unofficial minister for gas) George Osborne to deliver the strategy which opens the way to 26 GW of new gas powered plants by 2030, with a second scenario which could generate as much as 37GW "should the 4th Carbon Budget be revised upwards".
So here is the rub — there are two gas policies — the DECC one and the Treasury one. Just a week after a major energy strategy release to provide a clear framework for investment, here we are with huge question mark hanging over everything. The growth in gas would be dramatic even under the lower scenario with 26GW at the high end of previously proposed figures — just in September the leaked figure was 20GW. Greenpeace warns that even the 26 GW build will put severe pressure on emissions targets.
The increased role for gas shows the government backing the highly questionable scenario of a domestic shale gas boom in which "we make the best use of lower cost gas power". Given that even the government’s own documents point out the very different circumstances around drilling in the UK to the US experience, this is a huge assumption. The renewed backing for gas is however likely to confuse the investment picture for low carbon power making the UK more reliant on volatile gas prices. The announcement also shows strong signs that any Conservative government after the next election would back away from UK climate commitments.
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Oil
Oil Snaps Three Days of Losses on China Output Growth Outlook
Oil rose in New York, snapping three days of losses and trimming a weekly decline after forecasts showing China’s industrial production rose at the fastest pace since March boosted speculation fuel demand will increase.
Futures advanced as much as 0.5 percent before a report Dec. 9 that may show China’s output grew 9.8 percent in November from a year earlier, according to the median estimate of economists surveyed by Bloomberg News. The country’s retail sales are forecast to have increased 14.6 percent last month, compared with a 14.5 percent gain in October. Oil slid to the the lowest price in three weeks yesterday after the European Central Bank cut its forecast for euro-area economic growth…
EIA: AEO 2013 reference case projects faster US production growth
Advanced technologies will increase US oil production more quickly than previously forecast, the US Energy Information Administration said as it released its 2013 Annual Energy Outlook reference case. Production will rise more quickly than demand as more stringent motor vehicle efficiency standards take effect, it indicated.
"EIA’s updated reference case shows how evolving consumer preferences, improved technology, and economic changes are pushing the nation toward more domestic energy production, greater vehicle efficiency, greater use of clean energy, and reduced energy imports," said Adam Sieminski, EIA administrator…
North Sea oil production ‘could rise in short-term’
North Sea oil and gas production could confound expectations by rising significantly over the next few years – but may fall short of government hopes in the longer-term, a new study has claimed.
With high oil prices of at least $90 per barrel, output from the UK could rise to 1.4m barrels per day (bpd) in 2017 as large new fields are developed, the University of Aberdeen study found. Last year production fell more than 17pc to 1.04mpbd…
U.S. Feels Less Gasoline Pain as Pakistan Tops Ranking
The U.S., the world’s biggest oil consumer, is among the nations feeling the least pain at the gasoline pump, while Pakistan tops the list of 60 countries ranked by Bloomberg.
A gallon of premium gasoline cost Americans 3 percent of their daily income in October, 55th out of 60 nations, according to data compiled by Bloomberg. In Pakistan, a gallon cost 46 percent more than a worker’s daily wage. Venezuelans paid 0.3 percent of their income to buy each gallon, the least in the world, the data show…
Gas
Gas strategy unveiled by George Osborne
George Osborne on Wednesday fired the starting gun on a new "dash for gas" that will partly use tax breaks for shale production, though the government admitted it did not know whether future gas prices would rise or fall.
The chancellor used the autumn statement on the country’s finances to unveil a long-awaited but highly controversial gas generation strategy that critics believe will lock Britain in to a high-carbon future…
Gas strategy should be ‘plan Z’, government’s climate adviser warns
George Osborne’s dash for gas is "completely incompatible" with the nation’s legally binding carbon emissions targets and should be "plan Z", according to the government’s official climate advisers.
The gas strategy, due to be published alongside the chancellor’s autumn statement on Wednesday, envisages far more gas power stations than the limit recommended by the energy secretary, Ed Davey…
Autumn Statement: More gas plants ‘needed’ – but doubts over incentives to secure investment
The number of new gas power plants needed will be greater than previously thought because of rising electricity demand and old plants closing, ministers said.
In a gas strategy published alongside the Autumn Statement, the Department of Energy and Climate Change (DECC) said gas will play "a major role in our electricity mix" for decades to come….
Cuadrilla’s Francis Egan on why fracking is the future
Depending on who you believe, Francis Egan, the private equity-backed chief executive of energy firm Cuadrilla, is either an energy maven shaping the future of Europe’s embryonic fracking industry, or an environmental criminal who won’t stop drilling until Blackpool blows up.
In April 2011, more than a year before Egan was hired by Cuadrilla chairman and former BP chief Lord Browne, exploratory drilling by the company on Lancashire’s Bowland shelf was found to be the cause of two small "earthquakes" in Blackpool…
Osborne’s dash for gas won’t happen — yet
The gas strategy, unveiled yesterday to much fanfare from the Chancellor, was in fact no such thing – it was two gas strategies.
The decision to model two such divergent scenarios for the future of gas in the UK – one based on plans deemed acceptable by the Committee on Climate Change to deliver 26GW of gas capacity in 2030 and one based on plans for an historic surge in gas investment that would deliver 37GW of capacity and almost inevitably breach the UK’s carbon budgets – invites onlookers to interpret them for what they are: a strategy developed by DECC and endorsed by Ed Davey and a strategy developed for the Treasury and designed to appease Osborne. Forget Plan A and Plan B, here we have a Plan D for Davey and a Plan O for Osborne…
Chancellor’s cheap gas strategy ‘undermines investment and jobs’
George Osborne has come under heavy criticism from green businesses and NGOs, after unveiling a raft of measures to stimulate investment in up to 37GW of new gas capacity alongside today’s Autumn Statement.
The Chancellor told the Commons the government’s new Gas Strategy would "ensure we make the best use of lower cost gas power, including new sources of gas under the land"…
Fossil fuel subsidies ‘a disaster’ for economy and environment
The Chancellor’s widely touted decision to provide more tax breaks to the fossil fuel industry represents a "desperately short-termist" approach to energy policy that will harm the UK’s economy in the long term, campaigners have warned.
George Osborne is due to announce plans to build up to 36GW of new gas capacity in his Autumn Statement and consult on tax breaks to encourage controversial shale gas developments…
Why we need a green gas strategy
The publication of a Gas Strategy alongside yesterday’s Autumn Statement showed the Chancellor’s support for gas is focused in one clear direction: supporting shale gas extraction in the UK.
Even leaving aside concerns about environmental impact and the true lifecycle emissions released by shale, this focus risks missing a huge opportunity: to reduce the carbon footprint of the gas grid through domestic green gas…
Charlotte Morton is chief executive of the Anaerobic Digestion and Biogas Association
Electricity
Paris Faces Darkness as City Set for Illumination Ban
Paris’s legendary label as the "City of Light" may soon lose some of its luster.
The French minister for energy and environment unveiled last week a proposal for lights in and outside shops, offices, and public buildings — including the flagship Louis Vuitton store and the Lido cabaret house on Paris’s Avenue des Champs Elysees — to be turned off between 1 a.m. and 7 a.m. starting in July. The plan, to be applied across French cities, towns and villages, is aimed at saving energy and money and showing "sobriety," Minister Delphine Batho said…
Nuclear
EDF to extend life of nuclear power plants
EDF Energy is to extend the operating life of two UK nuclear power stations by seven years, in a move that should help curb greenhouse gas emissions and buy the country more time as it works on plans to deliver a new fleet of nuclear reactors.
EDF Energy chief executive Vincent de Rivaz confirmed today that Hinkley Point B and Hunterston B power stations are now expected to remain operational until at least 2023, instead of closing in 2016 as originally planned…
EDF France Reactor Cost Rise May Pressure U.K. Power Price Talks
Electricite de France SA’s 2.5 billion-euro ($3.3 billion) cost overrun at a French reactor will probably influence talks with the U.K. government over paying for nuclear projects in England.
The announcement earlier this week may be a tool to secure a better power price for a reactor in the U.K., Liberum Capital Ltd. said. The cost of building EDF’s EPR reactor at Flamanville in Normandy has more than doubled to 8.5 billion euros because of changes to its design after Japan’s Fukushima disaster…
UK
Report: Decentralised energy needs a central role
Businesses and academics have said the government must establish a "clear vision" for distributed electricity generation if it intends to build a sustainable, secure, and affordable energy system.
Around 11 per cent of the UK’s generating capacity — or 9GW — is made up of small units producing electricity near to where it is consumed, and just over half of this comes from renewable technologies such as solar panels and wind turbines, according to a new report by Carbon Connect, part of the Policy Connect think-tank…
UK’s failure to win CCS funding ‘a slap in the face’ for developers
The government has been warned its failure to secure €600m of EU funding for UK carbon capture and storage (CCS) projects has "dealt a slap in the face" to developers and could delay the deployment of the technology.
Energy and Climate Change Secretary Ed Davey confirmed last week that, as expected, the three UK projects put forward have not been awarded any funds from the first tranche of the €1.5bn NER300 fund set aside by Brussels for CCS and renewables projects…
Lord Deben: Thatcherite turned green warrior defends Climate Act
The former Tory environment secretary and now head of the UK’s climate change watchdog, John Gummer — now Lord Deben — has vowed to protect legislation underpinning the UK’s climate commitments, bringing him into conflict with many in his own party.
The simmering row in the coalition is set to be reignited when George Osborne announces tax breaks for shale gas drilling in the autumn statement. The new gas strategy is intended to promote a huge rise in gas exploration and power generation. This emphasis on gas, and the split in the Tory party over green policy, threatens to derail tens of billions of pounds of investment in low-carbon energy and transport infrastructure and the creation of thousands of green jobs…
