ODAC Newsletter - 26 March 2010
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.
The UK government took a step closer to acknowledging peak oil this week. A summit of invited participants, which took place at the Energy Institute in London on Monday, discussed with members of DECC and the Department of Transport not "whether Peak Oil would occur but rather how soon and in what form." This is a huge swing from the government's April 2009 position that "With sufficient investment, the government does not believe that global oil production will peak between now and 2020, and consequently we do not have any contingency plans specific to a peak in oil production." and reflects the growing consensus around an issue that was, when ODAC was founded in 2001, considered 'fringe'. For more detail on the summit see commentary from participants Chris Skrebowski, ODAC trustee, and Rob Hopkins of Transition Network.
While debate begins on what to do about peak oil in the UK, another report was released this week highlighting the severity of the issue. The report The status of conventional world oil reserves—Hype or cause for concern? from Oxford University claims that current global oil reserves have been exaggerated by a third, largely due to the "open secret" that OPEC reserves are inflated (OPEC production quotas are based on reserve figures). The report concludes that supply constraints could come as early as 2014 - which concurs with the recent ITPOES report and even warnings from the IEA of an oil crunch once the global economy returns to growth.
Warnings of such an imminent crisis, along with the additional pressures for the UK of declining tax revenue from oil production and rising import costs, put the friendly meeting at the Energy Institute this week into perspective. We are finally seeing the stirrings of political change with regard to energy both from Labour, and from the Conservatives whose green paper on energy released last week moves away from the free market approach and gives a nod to peak oil in its section on transport. This change however still lacks the urgency and depth of approach required for a crisis which is both so close, and potentially so far reaching. We only need to remember back two years to see that high oil prices do more than put up the price of petrol. Remember headlines about food price inflation, rising raw material costs, stretched budgets for service providers, fuel related crime, economic contraction? Time for an even more significant policy shift!
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Lord Hunt, the energy minister, is to meet industrialists in London tomorrow in a bid to calm mounting fears about the disruption that could follow a sudden shortage of oil supplies.
In a significant policy shift, the government has agreed to undertake more work on whether the UK needs to take action to avoid the massive dislocation that could be caused by the early onset of "peak oil" – the point that marks the start of terminal decline in global oil production...
At the meeting held at the Energy Institute on Monday 22 March the UK Government Department of Energy and Climate Change (DECC) fielded 4 people. The Department of Transport one, there was one senior representative of a supermajor, three people representing sponsors of the ITPOES report, four academics, two people from sustainability groups, a representative from the Energy Institute (where the meeting was held) two consultants and one other. The meeting was chaired by a retired senior oil industry executive.
Was it a historic moment? Yes I think it was largely because we weren't really debating whether Peak Oil would occur but rather how soon and in what form. One speaker suggested very forcibly that as soon as the world had fully recovered from the Great Recession we would run straight into the Oil Crunch when oil demand runs ahead of oil supply and prices spike.
The meeting started with three presentations. The first from an academic summarising the oil depletion/Peak Oil challenge, The second from one of the ITPOES sponsors summarising key conclusions from the ITPOES report and stressing the risk to UK businesses and the need for government to be pro actively taking steps to mitigate/ameliorate the impact. The third presentation was from Rob Hopkins of Transition Towns doing a joint presentation with Peter Lipman of Sustrans and the Transtion Network.
There was then an extended question and answer period before the group broke into two groups with one group discussing high level responses ie from government and the other looking local responses. I attended the group on national responses, so some of the summary below is from that group.
This was followed with a summing up as a presentation to the Minister.
So what was concluded?
It was a difficult challenge for government who still rather hope the price mechanism will resolve it by providing appropriate price signals but they do accept government action will be necessary.
Many of the steps and policies already in place to minimise greenhouse gas emissions will be helpful.
It is very important to promote necessary change as a positive, as progress and that people should see the changes Peak Oil would bring about not as a loss of living standards or amenity but as progress to a better life. For example some 25% of the fuel used in UK surface transport is used to commute to and from work. Few if any derive pleasure from commuting only doing so to earn a living which means that any steps to promote homeworking, remote working etc can be seen as a positive, beneficial development that make people's lives better while reducing fuel demand. These positive low hanging fruit should be addressed first as it renders government action in a positive light giving more confidence and less resistance to later and more difficult policy actions.
As transport fuels represent up to 75% of the UK refined barrel this is the area of maximum return though it was also pointed out that the high energy density of oil products was precisely what made them attractive transport fuels.
There was still potential to reduce heating uses of fuels although we may be approaching the irreducible core of remote locations and other special situations where alternative fuels such as gas are uneconomic.
Encouragement of electric or hybrid vehicle use is a desirable policy with it being noted that Nissan's Sunderland factory had been chosen to build Nissan's new electric small car 'the Leaf'.
The meeting concluded with agreement that the day had been helpful and that further meetings would be appropriate.
On Monday Peter Lipman and I represented Transition Network at an event which could potentially be the day people look back to as the day when UK government finally starting to 'get' peak oil. Fascinating and frustrating in equal measure, the event, "Policy Response to potential future oil supply constraints", was billed as "a half-day workshop hosted by the Energy Institute in partnership with the Department of Energy and Climate Change, under Chatham House Rules". For those who don't know what Chatham House rules are, it means that the contents of what was said can be discussed, but none of it can be attributed to anyone. Although the event was meant to be private, it was leaked and reported in the Guardian that morning. Jeremy Leggett was quoted in the piece as describing the importance of the meeting thus: "Government has gone from the BP position – '40 years of supply left, the price mechanism works, no need to worry' – to 'crikey'". So, here is an account compiled from my notes of what went on behind closed doors, bearing those Chatham House rules in mind, meaning that I can't attribute some of the comments that follow.
There were about 20 people present. It began with a startling statement about the lack of informed government capacity to formulate views on oil depletion/forecasting, along the lines of "… has no firm views on oil depletion in the future, and does not have expertise in forecasting". A key question for the workshop to explore was "what is the appropriate government, business and local government practical response to, at least, the risk of peak oil?"...
The world's oil reserves have been exaggerated by up to a third, according to Sir David King, the Government's former chief scientist, who has warned of shortages and price spikes within years.
The scientist and researchers from Oxford University argue that official figures are inflated because member countries of the oil cartel, OPEC, over-reported reserves in the 1980s when competing for global market share...
Crude oil rose for the first time in three days, after the dollar fell against the euro and on optimism Asia's emerging economies will bolster fuel demand.
Oil traded above $80 a barrel after the euro rose from a 10-month low on hopes that European leaders will agree on how to rescue Greece at the end of a two-day summit in Brussels today. A weaker dollar increases the appeal of commodities as an inflation hedge. OPEC is poised to increase shipments in the month ending April 10, led by Asian demand, according to tanker- tracker Oil Movements...
The head of Iraq's election commission has ruled out a manual recount of all the votes in the country's parliamentary election.
This comes the day before overall election result is due to be released...
In recent years, state-owned natural gas pipelines in Ukraine have been the source of such tension that a midwinter fight between Russia and Ukraine over pricing — often leading to Russia's shutting the valves and leaving people in Europe freezing — has become an annual ritual.
To prevent such blowups in the future, Ukraine's new Moscow-friendly president, Viktor F. Yanukovich, has proposed an improbable solution. This week he opened negotiations with the Kremlin to sell control over the pipelines' operations to a consortium including Ukraine's usual antagonist in these disputes, Russia's natural gas giant Gazprom, and an unspecified European company...
TNK-BP, BP's Russian oil venture, said on Tuesday it aimed to sell its vast Kovykta gas field to Rosneftegaz, the state holding company, by the end of the year, in a deal that could end a long-running dispute that has dented investor confidence...
Liverpool: it's the new Texas. If all goes to plan, Stetsons could be replacing shell suits as the latest must-have fashion for Liverpudlians as they promenade along Pier Head.
Buried deep underground in Merseyside could be a solution to Britain's energy woes. Canary-killing methane gas – one of the biggest dangers coal miners faced – offers great potential as our North sea output shrinks. But the technology needs to catch up...
A deepening electricity crisis in Venezuela is taking its toll on businesses, as 80 companies were punished on Monday with power cut-offs for 24 hours after failing to comply with a strict rationing plan...
The government has officially confirmed plans for a new carbon levy on consumer bills which it hopes will make building new nuclear plants viable, as the Guardian revealed in October last year.
Nuclear companies like EDF Energy have warned they will not make the billions of pounds of investment necessary in the UK without government financial guarantees...
The Government's sale of British Energy to France's EDF was a good price but a bad deal, an influential committee of MPs will conclude this morning.
The state received £4.4bn for its 36 per cent stake of the nuclear operator – out of a total £12.5bn price tag – thanks to peak energy prices at the time of the contract, says the Public Accounts Committee (PAC). But the deal has done little to address the danger of energy shortages from 2016 as demand rises and obsolete power stations are retired...
Government plans to hold Britain's nuclear waste in storage for 160 years before burying it permanently underground were condemned as "bizarre" yesterday.
Paddy Tipping, acting chairman of the Parliamentary Energy and Climate Change Committee, made the remarks as the cross-party group published a highly critical report on the Government's handling of recent UK energy policy. He said that the Department for Energy and Climate Change had failed to consult MPs or the public properly on a range of matters, including the handling of spent nuclear fuel, and he called for a full parliamentary vote, preferably before the general election that is expected on May 6...
A Conservative government would allow a new nuclear power station to be opened every 18 months to address the threat of a power shortage according to Greg Clark, the shadow energy spokesman.
Mr Clark said the Tories would allow energy companies to open at least one new nuclear facility every year and a half to boost the country's power supply...
American engineering giant General Electric (GE) today announced plans to build an offshore wind turbine manufacturing plant in the UK, creating up to 2,000 jobs.
The company said it had not yet decided where to build the facility but that its plans would result in around £100m being invested in Britain, creating clean energy jobs at the new site as well as in the supply chain...
If every windfarm company pledged 10% of its income to the local community, many more would be approved.
Listening to the radio yesterday, I remembered something I've been meaning to get off my chest. The PM programme carried a report from Westray in the Orkney islands, where a 900kW wind turbine was approved without a single planning objection (BBC News of Ten has more). Given that it stands 67m high on a mostly flat island, how did this happen?...
Wind farms are producing less than a fifth of the electricity predicted, a study has found.
The first detailed study of onshore wind farms has found that 20 of the sites produce less than 20 per cent of their maximum output with some producing less than 10 per cent...
A cunning plan to store energy underwater may help fulfil the promise of wind power
THE problem with wind power is that is cannot always be relied upon. The wind—and other transient, environmental energy sources such as solar—must either be used when it is harvested or stored expensively in batteries or specially designed hydroelectric schemes that use the resulting energy to pump water uphill. Alternatives would be extremely welcome. Alexander Slocum, of the Massachusetts Institute of Technology, thinks he has one. Observing that the fashion among wind-power fans is to build turbines out at sea, where the wind blows strongest, he proposes a pumped-storage system that uses seawater...
Peak oil tax? The UK government's tax take from oil and gas production in the North Sea fell to its lowest ever level, under the current fiscal regime, in the year ended March 31, 2010, according to government data published on Wednesday 24th March 2010.
The UK treasury expects to take £6.4 billion (GBP) in corporation tax and petroleum revenue tax from companies producing oil and gas in the UK over the year. This is less than half the tax take in the previous year, during which oil prices hit their record high...
Alistair Darling's proposed eco-bank is meant to be big enough to make headline news on Budget day, but a capitalisation of £2bn (of which half is public money)? That's a drop in the green ocean.
In these days of throwaway nine-zero figures, £2bn will only buy two-thirds of a nuclear power station and we're going to need ten of them. Then there's the two giant wind turbines that will need to be installed off the UK's coast every day for the next decade, a raft of gas-fired power stations to back them up and some hi-tech clean coal plants costing more than £1bn each that haven't even been invented yet...
There was an earthquake in Britain on Friday but no one was hurt. The only damage was to the Tories — the old-fashioned damage that David Cameron is so anxious to avoid ahead of the forthcoming election. The earthquake was a shift in the Conservative Party's view of energy. In a key area of economic policy — the bit that keeps the lights on, the house warm and the factories humming — the Tories have abandoned the free market and are now firmly in favour of a planned economy.
If you don't believe me, read Rebuilding Security, a document published last week that spells out Tory energy policy. It has a sensible purpose: how to reconcile conflicting aims. How do we keep the lights on and reduce greenhouse gas emissions?...
Nicolas Sarkozy, the French president who vowed to try to "save the human race" with a tax on carbon, was today accused by his junior ecology minister of pandering to "eco-scepticism" after the reform was in effect abandoned by the government.
Chantal Jouanno made no secret of her fury after the prime minister, François Fillon, said the government would not "sink the competitiveness" of French businesses by inflicting a tax on them that was not paid by their EU counterparts...
Action on climate is justified, not because the science is certain, but precisely because it is not
CLIMATE-change legislation, dormant for six months, is showing signs of life again in Washington, DC. This week senators and industrial groups have been discussing a compromise bill to introduce mandatory controls on carbon (see article). Yet although green activists around the world have been waiting for 20 years for American action, nobody is cheering. Even if discussion ever turns into legislation, it will be a pale shadow of what was once hoped for...
Tougher U.S. fuel economy standards for new cars and trucks should be completed next week, Gina McCarthy, an assistant administrator at the Environmental Protection Agency, said today.
Officials at the EPA, which has jointly proposed with the U.S. Department of Transportation to raise the average fuel economy benchmark to 35.5 miles per gallon, expect to establish final standards by April 1, McCarthy said in testimony prepared for a hearing of the Senate Environment and Public Works Committee.
The higher fuel economy standards are aimed at cutting carbon dioxide emissions and reducing oil consumption. The agency will take steps to ensure the carbon dioxide regulations for cars don't automatically trigger new emission standards for power plants, oil refineries and other industrial polluters under the Clean Air Act, McCarthy told reporters.
A smart electricity management system is needed for a successful mass uptake of electric vehicles (EVs) in Britain, by smoothing out power demand and generation spikes in a future that includes more wind farms.
Britain has committed to smart technology -- which supplies real-time power usage data to consumers with smart meters; and demand and generation information to network operators in the form of a smart grid -- with plans to supply all homes with a smart meter by 2020...
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