Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
There was a step forward this week for recognition of peak oil in the UK political agenda. Energy Secretary Chris Huhne has agreed that the Department for Energy and Climate Change and ITPOES (UK Industry Taskforce on Peak Oil and Energy Security) should work more closely together on peak oil threat assessment and contingency planning. The news is of course welcome, although it is to be hoped that a DECC spokesman’s assurance that a “call for evidence” will follow shortly doesn’t mean that the government will opt for the endless consultation and little action mode of recent decades. In a side note, there is a certain irony that the alliance relies strongly on Chris Huhne, and thus runs the risk of being sidelined by a speeding ticket—should allegations about a penalty points violation by him prove politically ruinous.
In other UK energy news this week the government released further details about the green investment bank, on which much hope rests for supporting innovation in the clean energy sector. The announcement, which sets the bank out to be independent of government, and aims to add £15bn of investment in renewables by 2015, was generally welcomed by industry, though the lack of borrowing powers before 2015 is seen as a major weakness.
One possible threat to renewables investment could come from over reliance on gas, which is being pushed by industry as a ‘lower carbon’ option and fits the current centralized power generation model. This point was emphasised in a report released this week by the Parliamentary Energy and Climate Change Committee on shale gas. While the report determined that there was “no evidence that hydraulic fracturing itself” is a risk to water supplies, it determined there was a risk of tilting investment away from clean energy, and that in order to decarbonize the energy sector, gas needed to be approached with caution. In determining fracking safe, the committee is essentially saying that the water contamination issues experienced in the US will be avoided here due to greater industry and regulatory vigilance. This is a risk which we must hope does not backfire. As useful as gas is, it is not as essential as clean water.
A chronic lack of water in central China, which is experiencing its worst drought in 50 years, is one factor driving growing power shortages and blackouts across the region. The Three Gorges reservoir on the Yangtze river is being drained of 5bn cubic feet of water a day for drinking and irrigation at the cost of hydro electric power generation. Added to this high coal prices are resulting in less power as Chinese utility companies reduce output rather than lose money. A government cap on electricity prices prevents the power companies from offsetting the higher fuel prices. This could reach a crisis point as summer temperatures start to soar.
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Oil
Exclusive: Government to develop Oil Shock Response Plan
Energy and Climate Change Secretary Chris Huhne yesterday agreed to develop an ‘Oil Shock Response Plan’, following a meeting with the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES).
The group, which was formed by Arup, B&Q, Buro Happold, Solarcentury, SSE, Stagecoach and Virgin, and campaigns for greater awareness of the economic threat presented by dwindling oil supplies, said that the meeting had proved “constructive” and had helped to advance the energy security dialogue…
Oil Rises on World Economy Outlook, Dollar; JPMorgan Sees OPEC Quota Gain
Oil advanced in New York, heading for a weekly gain, on speculation that the global economic recovery will sustain demand for fuel.
Crude rose as much as 0.8 percent after Group of Eight leaders said the world economy is gaining strength and as a weakening dollar boosted the appeal of commodities. The Organization of Petroleum Exporting Countries may raise output quotas to meet global demand, according to JPMorgan Chase & Co…
Goldman U-turn fuels surge in oil prices
Only weeks after calling the top of the oil market and advising clients to sell up, Goldman Sachs has performed a dramatic U-turn, pushing the price up to $112.10 a barrel in London yesterday.
Goldman, the world’s largest commodity trader, has been known for making bold predictions on the price of oil and occasionally getting its fingers burnt in the process…
Facing Up to End of ‘Easy Oil’
…Saudi Arabia became the world’s top oil producer by tapping its vast reserves of easy-to-drill, high-quality light oil. But as demand for energy grows and fields of “easy oil” around the world start to dry up, the Saudis are turning to a much tougher source: the billions of barrels of heavy oil trapped beneath the desert.
Heavy oil, which can be as thick as molasses, is harder to get out of the ground than light oil and costs more to refine into gasoline. Nevertheless, Saudi Arabia and Kuwait have embarked on an ambitious experiment to coax it out of the Wafra oil field, located in a sparsely populated expanse of desert shared by the two nations…
Ahmadinejad not to attend OPEC meeting
Iran’s President Mahmoud Ahmadinejad said on Monday one of his ministers will take his place at the next OPEC meeting, the official IRNA news agency reported, a move seen as retreat in a power struggle with hardline rulers.
The president and his allies have been fiercely criticized by conservative politicians, hardline senior clerics and the elite Revolutionary Guards in the past weeks for trying to obtain wide-ranging powers…
Danish warship sails into Greenpeace Arctic oil protest
Armed Danish commandoes are thought to have been landed on a giant oil rig by helicopter to prevent environmentalists interfering with a British oil company’s controversial exploration of deep Arctic waters. In a stand-off in the Davis Strait, west of Greenland, the Danish navy has been shadowing the Greenpeace ship Esperanza as it tracked the 53,000 tonne Leiv Eiriksson in iceberg-strewn sea to the site where it plans to search for oil at depths of up to 5,000ft.
The confrontation between Denmark and Greenpeace, which argues that it is dangerous to drill for oil in pristine Arctic waters, follows the decision by Scottish oil company Cairn Energy to explore for oil and gas in Baffin Sea this summer…
Gas
MPs urge backing for UK shale gas
A Commons committee has urged ministers to support plans for controversial shale gas drilling in the UK.
The energy select committee said environmental problems associated with it in the US could be overcome by tight regulation and good industry practice…
Big Dogs of the Oil Patch Tangle Over Gas Subsidies
Investor T. Boone Pickens has a vision of American highways in which trucks are powered by natural gas—and nudged along by government subsidies. Charles Koch, one of the richest men in the country, is gunning hard to block taxpayer money from boosting his fellow billionaire’s dream.
The oil-patch titans are brawling over a congressional bill that would provide tax breaks to trucking companies for 18-wheelers that run on natural gas instead of oil…
Second largest gas field found in Turkmenistan
A gas field in Turkmenistan has been crowned the second largest deposit ever discovered, potentially transforming the desert nation into a Caspian Qatar.
A new report from Gaffney Cline, the British oil field auditing company, to be released officially next month, has confirmed claims from the former Soviet Republic that many had dismissed as overly optimistic…
Oil industry losing the shale PR battle
As questions about hydraulic fracturing — fracking as it is known in the industry — continue to build, the oil and gas industry is finding investors asking for more transparency as to how companies are going to face the growing risks to production.
France has banned fracking, and US federal regulators are investigating the safety of the process…
Coal
Bill Allows Military to Use High-Carbon ‘Liquid Coal’
An amendment to a major military spending bill before the House would rescind a 2007 federal law barring the Defense Department from using alternative fuels, like synthetic oil made from coal, that produce more climate-altering pollution than conventional fuels.
A bill containing the amendment cleared the House Armed Services Committee this month…
Electricity
Power vs. Profit
It is a power struggle that is causing a power shortage — one that has begun to slow China’s mighty economic growth engine.
Balking at the high price of coal that fuels much of China’s electricity grid, the nation’s state-owned utility companies are defying government economic planners by deliberately reducing the amount of electricity they produce…
China crisis over Yangtze river drought forces drastic dam measures
The Yangtze — Asia’s biggest river — is experiencing its worst drought in 50 years, forcing an unprecedented release of water from the Three Gorges reservoir. The drought is damaging crops, threatening wildlife and raising doubts about the viability of China’s massive water diversion ambitions.
Between now and 10 June the dam will release 5bn cubic metres of water — equivalent to the volume of Lake Windermere in Britain every day — as engineers sacrifice hydroelectric generation for irrigation, drinking supplies and ecosystem support…
Pylon competition seeks alternative to ‘industrial soldiers’
National Grid hopes opposition to new electricity pylons can be headed off with ‘more visually acceptable’ design
They have been dubbed Britain’s “industrial soldiers”, marching across hill and valley since before the second world war to carry the national grid’s 400,000-volt power lines. But the government is calling time on the 84-year-old design of the electricity pylon, with a competition to find a more attractive 21st-century alternative…
Eurotunnel to carry electricity from France to UK
Eurotunnel has unveiled plans to run an electricity link through the Channel Tunnel as part of efforts to bolster UK power supplies.
The proposed interconnector cable with France will help to smooth out supply volatility relating to offshore wind power, meaning that energy generated from places where the wind is blowing can be shared around…
Nuclear
Europe divided over nuclear power after Fukushima disaster
Europe’s nuclear power faultlines in the wake of the Fukushima disaster were exposed on Wednesday as Switzerland moved to phase out its nuclear power plants and the extent of British and French lobbying to water down nuclear safety checks was revealed.
The UK, with the backing of France and the Czech Republic, managed to have terror attacks excluded from a series of new nuclear safety tests ordered after the Japanese tsunami led to radiation leaks from Fukushima nuclear reactors in March…
Renewables
Further details on UK Green Investment Bank
In addition to the announcements made by Deputy Prime Minister Nick Clegg earlier this week, Cable stressed that the GIB’s mission will be to accelerate private sector investment in the UK’s transition to a green economy.
“This is an opportunity for the UK to lead the way in the transition to a low-carbon economy with the world’s first dedicated Green Investment Bank,” he told MPs…
Wind forecast upgrade should mean big drop in fossil fuel use
Better forecasting of where the wind is blowing could allow British fossil fuel power stations to be switched off and counter critics’ claims that wind power is too intermittent.
National Grid, which runs the UK’s electricity grid infrastructure and spends billions each year on balancing energy supply with electricity demand, has made a significant upgrade to enable it to predict much more reliably where, when and how strongly the wind will blow…
Gas threat to wind farm growth
Construction of new wind farms in the US is set to decline next year because of competition from cheap natural gas for power generation, the country’s largest developer of new wind power projects has said.
Ignacio Galán, chief executive of the Spanish energy group Iberdrola, said the rise in US shale gas production had transformed the country’s energy industry, driving down gas and electricity prices. “Shale gas makes the production of electricity from other sources not attractive enough,” he said…
Innovative solar storage plant lands $737m loan guarantee
US government backs Nevada facility that can store thermal energy for up to 10 hours, eliminating intermittency.
The US Department of Energy has agreed a $737m (£454m) loan guarantee to support a unique solar thermal development in Nevada that boasts the world’s tallest molten salt tower…
Biofuels
Green groups take EU to court over biofuels – again
Green groups are suing the European Commission over what they see as a failure to meet its legal commitment to transparency regarding information in decisions relating to the sustainability of Europe’s biofuels policy.
A lawsuit filed on Wednesday by law organisation ClientEarth, Friends of the Earth Europe, FERN and Corporate Europe Observatory alleges that the Commission has refused the groups access to information about voluntary certification schemes used to ensure compliance with EU criteria on biofuel sustainability set out in the Renewable Energy Directive (RED)…
Gauge agreed for biofuel effects on world
Official measures for gauging the effect of bio-energy on food prices and the environment have been agreed by the world’s leading economies in a move that could undermine support for some forms of biofuel production.
The move by the Global Bioenergy Partnership (GBEP), a Rome-based group backed by governments and international organisations, is a response to concerns that the rapid growth of biofuels and other forms of bio-energy is causing global hunger and environmental damage…
Economy
OECD sees risk of ‘stagflation’ for global recovery
The global economic recovery still faces many risks, which could lead to “stagflation”, the OECD has said in its latest economic outlook.
World growth is forecast to be 4.2% this year, down from 4.9% last year, before rising to 4.6% in 2012…
Transport
Horse-drawn rubbish carts make a comeback for Suez Environnement
Horse-drawn rubbish carts are making a comeback – decades after the demise of the rag-and-bone man – in new trials by Suez Environnement, the European waste and recyling company.
Suez Environnement, the owner of Sita UK, is trying out the new horse-drawn bin lorries in cities across France – saving petrol money and therefore carbon dioxide emissions…
Ryanair set to ground more planes as fuel costs take off
Ryanair is set to ground up to 80 planes this winter, double last year’s figure, as high oil prices drive up the cost of running aircraft, and the budget airline warned yesterday that it remained concerned about the impact of the weak economic outlook.
“Higher oil prices next winter, and the refusal of some airports to offer lower charges, make it more profitable to ground up to 80 aircraft rather than suffer losses operating them to high-cost airports at low winter yields,” the chief executive, Michael O’Leary, said…
