Triple Crunch Log Jeremy Leggett

15.11.07. Saudis propose a $1bn oil producers fund to fight climate change: with CCS, not taxes on oil. Few details are provided by them. About 70% of oil is for vehicles and aircraft.

16.11.07. Overall summary of IPCC 4^th Assessment Report warns of “catastrophe” unless we act. The main document is released by the UN-Secretary General in Seville.

17.11.07. Live unwitting broadcast at OPEC summit shows ministerial disagreement as Saudis try in vain to charm journalists by flying them to the Shaybah project. Half an hour of secret conversation was beamed to journalists by mistake after a technican plugged in the wrong cable. The Venezuelan and Iranian oil ministers believe that pricing oil in the weak dollar is damaging the cartel. The Saudis do not want to rock the boat for fear of sending the dollar still lower.

US utilities make nuclear plans but GE CEO doesn’t fancy their chances much. Three decades after the last plant, 30 are now planned by 20 utilities. The first license application was filed in September (in Texas). GE CEO Jeff Immelt thinks only around a third will be built: “If you were a utility CEO and looked at your world today, you would just do gas and wind. You would say [they are] easier to site, digestible today [and] I don’t have to bet my company on any of this stuff. You would never do nuclear. The economics are overwhelming.” The US has 103 plants, many operating on 20 year extensions of their 40 year operating licenses, supplying 20% of electricity. In its Energy Policy Act, the Bush administration offers incentives to the first companies to build reactors, including tax incentives, federal loan guarantees and insurance should the projects get shut down.

18.11.08. Wall Street Journal warns on front page that oil officials see production limit looming. The old adherents of peak oil, those who believe the peak would come around the half way point, have been proved wrong, the WSJ maintains. “The new adherents - who range from senior Western oil-company executives to current and former officials of the major world exporting countries - don't believe the global oil tank is at the half-empty point. But they share the belief that a global production ceiling is coming for other reasons: restricted access to oil fields, spiralling costs and increasingly complex oil-field geology. This will create a global production plateau, not a peak, they contend, with oil output remaining relatively constant rather than rising or falling.”⁹⁴

21.11.08. Time magazine publishes article warning about peak oil ….possibly the first. Since Matt Simmons’s book appeared in 2005, Saudi output has dropped from 9.6 million bbl. a day to 8.6 million, despite rising prices. “Gentlemen, it's nobody's fault, but we've peaked,” says Simmons. “We've got to embrace some conservation practices that are draconian, or we will be at war with each other.”⁹⁵

1.12.07. ConocoPhillips submits plan to build gas pipeline from Alaska to Canada and US. A $40bn project, it has been on the drawing board for years, and will require participation of other majors.

Indonesia plants 79 million trees ahead of the Bali climate summit. Meanwhile an illegal logger with a strong case against him walks free from court. 15,000 politicians, officials, activists, journalists, and business people from 190 countries travel to the summit, emitting between 60,000 and 100,000 tonnes of CO2. UN agencies have spent £50,000 offsetting UN emissions.

New Australian PM Kevin Rudd greeted by standing ovation in Bali, having ratified the Kyoto Protocol as the first thing he does in office.

Over $1bn in venture capital goes into North American solar companies, up from $318 bn last year. Of 50 start ups identified, 22 are headquartered in Silicon Valley.

3.12.07. Soaring costs mean oil companies need $70 oil in order to maintain profits. To match the returns they made at $30 a barrel just three years ago in 2005, oil companies need a price of $70 today. This is because of the sharp increase in costs and higher government licence fees, so Wood Mackenzie say in a report. The average return on oil exploration projects was just under 15% over the last three years at an average of $70 in real terms.⁹⁶

4.12.07. David Cameron launches Tory feed-in policy at Greenpeace’s office. His vision of decentralised energy is now much at odds with the government. He also attacks Labour’s nuclear stance: they haven’t tackled the waste problems and have to do so before there can be competition on a level playing field. 7.12.: David Cameron: “Imagine a Britain where each community is able to meet its own energy requirements instead of relying on a few huge power stations.” Oliver Letwin: “Our costings suggest that by 2020 one million homes and businesses could be producing 2GW [2bn watts] of electricity. That is just a starting point. There is no limit to the scale of what is possible.”

5.12.07. BP does a U-turn over exploiting the tar sands. It invests $5.5 bn over the next 8 years in a joint venture with Husky Energy. BP gets a half share in Husky's Sunrise field, expected to begin production in 2012, for about $3bn. Its expected production will rise to 200,000 barrels per day by the end of the decade. Husky gets half of BP's Toledo refinery in Ohio, where BP will invest $2.5bn by 2015 to allow it to take more Canadian heavy oil. The Sunrise deposit holds some 3.2bn barrels of oil. Under SEC rules BP will be able to book them only gradually, as the deposit is developed.⁹⁷

US intelligence agencies conclude that Iran halted its nuclear weapons programme in 2003. This conclusion, a setback for Bush administration hawks, comes in a National Intelligence Estimate: a collective judgement of all 16 of America's intelligence agencies.

6.12.07. Margaret Beckett: “The historical approach of the DTI has always been to squeeze out renewables because we ‘need’ nuclear.” Note: 372 GW of nuclear power in 439 reactors 2007, being 6% of total world power, and 16% of electricity. 34 are under construction, 86 planned, 223 proposed. 1 GtC wedge of C = 700 GW+. <10 GW of the 372 GW is in developing countries. Both nuclear speakers admit it will take at least 10 years to build new reactors. (L: JL notes of a meeting at the Royal Society).

No more than a sheet of paper between nuclear weapons and nuclear power, says Swedish non-proliferation expert at Royal Society. Frank Barnaby: UK has exploded two bombs with reactor-grade plutonium. 6.6.07. ORG factsheet: Jan Willem Storm van Leeuwen (an independent nuclear analyst), shows that supplies of the high-grade uranium ore required to fuel nuclear power generation will, at current levels of consumption, last to about 2034. After that date, recoverable uranium ores would be of such a low-grade that more and more energy (and therefore more CO2 emissions) would be required to produce uranium fuel. (L: JL notes of a meeting at the Royal Society).

10.12.07. Mexico faces collapsing oil exports unless energy industry is reformed, Government says. The energy ministry releases a report calling for deregulation and better management at Pemex. Its Crude Oil Market Prospectus 2007-2016, finds that if without these changes, crude production will fall over the period from 3.26 million b/d to 2.14 million b/d. With rising domestic consumption, exports would slump from 1.87 million b/d to just 289,000 b/d over the period, a drop of 85%.⁹⁸

12.12.07. Saudi oil exports come under pressure as nation drives its own economic expansion. In the next 12 years, Saudi Arabia will spend some $600 bn on industrial cities, seaports, refineries, power plants, aluminium smelters and chemical plants. Per capita oil consumption has risen around 18% since 2000 and is going to continue growing. It was more 32 barrels per person in 2006, the largest in the world, compared to 25 in the US. A big aluminium smelter under construction will consume upwards of 60,000 barrels of oil a day, because the Saudis are turning to crude oil to generate electricity. Saudi Arabian consumption stood at more than two million barrels a day in 2006, up 6.2% from 2005. Production actually slumped by 2.3% in the same period. Saudi and the other Arabian states saw demand jump 3.5%, while total world demand was growing just 0.7%. Gas is not helping. Dry wells in the Empty Quarter contributed to a decision by the King last year to use oil for growing electricity needs. Lehman Brothers have predicted that oil needs in Saudi Arabia, Kuwait, the UAE, Qatar and Bahrain will jump by almost 200,000 barrels a day in 2008 alone. By 2012, the head of the national electric utility estimates that 60% of electricity generation will come from oil (55GW by 2015, up from 31 GW now).⁹⁹ (L)

All new homes built in Germany will be required to install renewable energy heating systems from January 1st 2009 under a new law called the Renewable Energies Heating Law (Erneubare-Energien-Warmegesetz). The government is allocating 350 million euros [US $517 million] each year in grants for homeowners to install renewable energy systems such as solar panels, wood pellet stoves and boilers and heat pumps.

13.12.07. Ocean acidification may kill 98% of corals by 2050, scientists conclude. Researchers from Britain, the US and Australia, working with teams from the UN and the World Bank.

14.12.07. US forces EU to drop demand in Bali for 25% to 40% cut on 1990 global emissions by 2020. Meanwhile in the US, at least 25 states and more than 600 cities are committed to emission reductions.

Chinese CO2 emissions overtake US to become highest in the world in 2006. IPCC 2005 figures (the latest available) C02 global total 28.19 bn tonnes, 28% growth 1005-2005. US 5,957 mt, 13% growth. China 5,323 mt, 87% growth (sic). Germany 844 mt, -4% growth (the only negative growth in the top twenty emitters except Ukraine). UK 577 mt, 4% growth. China increases 9% in 2006 to overtake US, which shrank 1.6%. Per capita emissions: Qatar is highest on 61.94, US 20.14, UK 9.55, global average 4.37.

15.12.07. US joins Bali compromise deal after a night of drama. Paula Dobriansky, head of the US delegation, at first said the US would oppose calls from developing countries for technological and financial help to combat climate change. This was greeted by a unprecedented thing: a prolonged round of booing by delegates. The US later acceded. Just before, New Guinea’s delegate said: “If you’re not willing to lead, get out of the way.” Cook Islands: “We are merely asking for survival: nothing more, nothing less.” The US also dropped its insistence that developing countries commit to cuts. Angus Friday, Grenada’s Ambassador to the UN and chairman of AOSIS: “We are ending up with something so watered down there is no need for 12,000 people to gather in Bali. We could have done that by e-mail.”

16.12.07. Analysts use satellite imagery to speculate about drilling on Ghawar. Bernstein Research finds drilling on two major expansion developments, not on EOR in existing production areas, and so speculates that the reservews decline is overstated. The Oil and Gas Journal relays the news.

18.12.07. More injections of cash from central banks: €20bn by the Fed, £10bn by the Bank of England, £249bn from the European Central Bank.

20.12.07. Shell and StatoilHydro abandon CCS project as uneconomic. The gas-fired power project was to have been built at Tjeldbergodden in Norway. It was to capture carbon dioxide from an 860 megawatt gas-fired power station, and then inject it into two offshore oil wells: Shell’s Draugen field and later Statoil’s Heidrun field. Shell says the project cannot happen without require significant public funding. It was launched in March 2006, hailed by Shell as “an important milestone towards our vision for greener fossil fuels”.¹⁰⁰

21.12.07. UK Ministers ordered to assess climate cost of all decisions. New initiative by Gordon Brown requires a “shadow price for carbon” to be factored into all projects, including road and airport building. Starting at £25.60 for 2007 and rising to £59.60 by 2050, supposedly calculated to allow government to be consistent with the 450-550 ppm target recommended by the Stern Review. (Check: did it?).

22.12.07. David King proposes that we power UK with nuclear waste. DBERR Chief Scientific Advisor recommends taking the UK’s 60,000 tonnes of high-level radwaste and reprocessing it to extract the 6 tonnes of plutonium and c. 60 of uranium. This would take a £1 bn upgrade of the reprocessing plant at Sellafield, or a completely new plant. A further £1 bn MOx plant would be needed to make reactor pellets. Or the waste could be burned in fast breeder reactors. In this way 60% of UK electricity could be produced until 2060.

23.12.07. EU scientists propose we burn nuclear waste in reactors to cut terrorism threat. 100 tonnes of plutonium could be burned in a new generation of reactors. The vast bulk of EU plutonium is held at Sellafield, over 100 tonnes of it belonging to UK. Weapons grade plutonium from 50 years of reprocessing sits under 24 hour armed guard. The Sizewell B PWR is the only UK reactor able to burn MOx, and heavy subsidy would be needed to to produce the fuel.

27.12.07. Shell takes control of large Chinese project to tap methane from coal. Buys a 55% stake in the North Silou project. BP has been active in coal bed methane (CBM) in the US, but this is Shell’s first project. The intention is to explore until 2010, then five years of development and 20 years of production. No figures given.

28.12.07. Further delays to Finnish nuclear plant. The operator of the troubled Olkiluoto 3 plant, TVO, announces further time and cost delays. The first go-ahead for a new plant for ten years in Europe was given to this project in 2002. Projected completion was 2009, at projected budget €3 bn (£2.2 bn). Projected completion is now 2011 at unknown cost over-run. A big factor has been the difficulty of bringing sub-contractors up to the level required.

Nanosolar begins mass production of solar PV printed on aluminium. They say they can get down to 99 cents (50p) per watt. UK front page headline: “solar energy revolution brings green power closer.”

29.12.07. German experiment shows that distributed power can run a nation. One of the loudest arguments of those who profess that traditional energy is needed even if renewables markets grow large is that modern nations cannot be powered properly without it. In particular, they say, renewables cannot meet baseload demand. Late last year, a German Economics Ministry-funded experiment showed that distributed power can indeed produce reliable baseload in a secure and reliable manner. Three companies (including Solarworld) and a university (Kassel) conceived and ran a “Combined Renewable Energy Power Plant” experiment aiming to show in miniature via what could be done, if the will can be summoned on the national scale to replace both fossil fuels and nuclear power. They linked thirty six decentralised wind, solar, biogas combined heat-and-power and hydropower plants in a nationwide network controlled by a central computer. Using detailed weather data, they turned up the biogas and the hydropower, the latter in the form of pumped storage, whenever necessary to compensate for wind and solar intermittency. The system was scaled to meet 1/10,000th of the electricity demand in Germany, and was equivalent to a small town with around 12,000 households. It worked perfectly, meeting both continuous baseload and peakloads round the clock and regardless of weather conditions. The network was capable of generating 41 gigawatt hours of electricity a year. Over the period of the experiment, 61% of the electricity came from eleven wind turbines (total 12.6 megawatts capacity), 25% from four biogas CHP plants (total 4 MW capacity), and 14% from twenty PV installations (5.5 MW capacity). During the day of the press conference to announce the results, there was no wind at all in Germany and the country was covered by cloud. Extrapolating the results of the experiment suggests that by 2020, 40% of German power demand could be met with wind, solar and bioenergy, and by 2050 100% could be. The current cost of generating electricity from the combined power plant is 13 euro cents per kWh, twice as expensive as conventional electricity. But then the price of conventional polluting electricity is rising fast in Germany, as everywhere else.¹⁰¹

30.12.07. SEC votes to liberalise the rules for how reserves are calculated. The 3-0 vote will allow companies to use up-to-date technology to assess reserves, as well as loosening requirements for disclosure. To be fair, the current rules date back to the 1970s. The SEC will publish a “concept release,” which will then be open to public comment for 60 days. Thereafter the Sec can propose a rule.¹⁰²

DBERR release LCBP allocation figures showing majority of grant funding remains unclaimed. Only £7.5m of the £18m Low Carbon Buildings programme pot for private homeowners has been claimed so far.¹⁰³

European Large Combustion Plants Directive (LCPD) comes into force. Designed to curb emissions of sulphur dioxide and nitrous oxide, it will combine with the second phase of the EU's emissions trading scheme (capping CO2) to pose challenges for generators. Electricity generators and some other coal-fired industrial plants have to decide under the LCPD whether or not to fit flue gas desulphurisation equipment to remove sulphur dioxide and nitrous oxide. If they do, the companies can run the plant like they did last year. If they have not, they can run the plant for only 20,000 hours between now and 2015.¹⁰⁴

Spanish state of Castile La Mancha hits 40% renewables in energy mix en route to goal of 100% by 2012. The state, population 2m in the centre of Spain, has a 2006 plan to do this. PV would be 15% of the mix in with wind, biomass, and 20% increased efficiency. The plan is captured in a regional law, and the state is already at 40%, mostly thanks to wind. The state is number one in Spanish PV. Around 1 MW of PV is approved every day 1 MW is completed every second day.¹⁰⁵

1.1.08. CCS is quickest way to save emissions, says CCS expert. Jon Gibbins, a carbon capture expert and senior lecturer at Imperial College London, says: “[CCS] is probably the quickest way of making really significant cuts in British CO2 emissions.” The UK government announced the terms of a competition to design and build a CCS demonstration project in November. The plant is intended to be operational by 2014 with an output of 300MW. Companies including Shell, Scottish and Southern Energy, Conoco-Phillips, Marathon Oil and Centrica favour integrated gasification combined cycle (IGCC) power plants, but this is excluded. John Hutton, secretary of state for business, enterprise and regulatory reform, says “Our analysis shows that post-combustion capture is the most relevant technology to the vast proportion of coal-fired generation capacity globally. A commercial-scale demonstration of this technology, as part of a full CCS chain, opens up huge possibilities, not just for Britain but also for the world.” The EU has mandated that all new power plants must be "capture ready" by 2010, targeting 10 - 12 demonstration projects by 2015. A new coal plant typically costs around £2bn to build, and adding CCS adds around extra few hundred million.¹⁰⁶

James Baker Institute urges oil chiefs to address falling investment in exploration. The big five international oil companies cut exploration spending in real terms between 1998 and 2006, in spite of the rise in oil prices. ExxonMobil, BP, Chevron, Royal Dutch Shell and ConocoPhillips used more than half (56%) of their increased operating cash flow not on exploration but share buybacks and dividends.¹⁰⁷

2.1.08. Oil breaks the $100 barrier for the first time. Front page news in FT and Times. “Oil at $100 threatens to choke the economy,” shouts the Times. 4.1.: Grains hit multi-year highs on anticipation of higher biofuel prices. UK utility bills are hiked more than 10% within three days.

Council approves first coal fired power plant in the UK for 24 years. Medway, a Tory council, approves the £1 bn Eon plant at Kingsnorth, due to be complete 2008. BERR approval is now needed. Seven other new coal plants are on the table.¹⁰⁸

Trees absorbing less carbon as the world warms, study finds. A study of 30 sites in the far north across Siberia, Alaska, Canada and Europe shows that trees have transitioned from net sink to net source progressively earlier over more than 2 decades since 1980. This provides more evidence that the “50% discount on emissions” (the half of annual absorbed by sinks onland and at sea) is weakening. Researchers speculate that the result could partly explain why the rise in CO2 levels in the atmosphere is accelerating. Between 1970 and 2000 the concentration rose by about 1.5 parts per million (ppm), but since 2000 the annual rise jumped to an average of 1.9ppm.¹⁰⁹

In Kansas, the majority of citizens support a state government decision to stop 2 coal plants. On In October 2006, Kansas Department of Health and Environment Secretary Roderick Bremby rejected two plants proposed by Sunflower Electric Power Corp., citing carbon dioxide emissions and global warming as cause of concern. Kansans support this decision by a two-to-one margin, according to a poll today. Three out of four Kansans also want the state to increase its commitment to wind-powered energy. The Land Institute polled 1,000 Kansans.¹¹⁰

California sues the federal government over right to limit emissions. The state is challenging the EPA’s recent decision to block California rules curbing greenhouse-gas emissions from new cars and trucks. California has the right to set its own standards on air pollutants under the Clean Air Act, but must receive a waiver from the EPA to go ahead. The environmental agency broke denied California a waiver to move forward with its proposed limits on vehicular emissions. Governor Schwarzenegger says: “It is unconscionable that the federal government is keeping California” from adopting new standards.¹¹¹

3.1.08. UK scientists and economists condemn the UK nuclear consultation. 17 energy economists and several government advisors on nuclear waste condemn the methods used. They say the government asked loaded questions of the 1,000 people interviewed (of whom 44% said that energy companies should be given the option of nuclear, and 36% said no).¹¹²

Burning many biofuels is worse than using coal or oil, experts say: fewer greenhouse gases, but higher costs in terms of biodiversity loss and destruction of farmland. A Swiss team study 26 biofuels showing that 21 of them reduce greenhouse-gas emissions by more than 30% compared with gasoline when burned. But almost half of the biofuels, a total of 12, had greater total environmental impacts than fossil fuels. These include US corn ethanol, Brazilian sugar cane ethanol and soy diesel, and Malaysian palm-oil diesel.¹¹³

4.1.07. First UK energy bill price rise: npower puts gas up 17.2% and electricity up more than 12.7%. The average household energy bill is now more than £1,000 pcm. 7.1: In a move criticised as populist by the Time, Chancellor Alistair Darling asks the energy companies to justify their price rises.¹¹⁴