CCNet – 3 April 2012
The Climate Policy Network
EU Cimate Policy In Freefall
Sagging carbon prices lost nearly 14% of their value yesterday (2 April) as recession and a warm winter sparked a predicted 2.6% drop in carbon emissions from the 10,000 installations covered by the EU’s Emissions Trading System (ETS) last year. The already-depressed carbon price dived from €7 to a record low of €6.14 by early afternoon.--EurActiv, 3 April 2012
An internal General Motors strategy paper reveals that the US automaker wants to close its plants in Western Europe and transfer production to low-cost countries. The document means that the future looks bleak for Opel's plant in Bochum and Vauxhall's factory in Ellesmere Port. --Dietmar Hawranek, Spiegel Online, 27 March 2012
The British government, although not yet ready to say so, has finally rejected the bogus economics of climate change or, more likely, it always knew the figures didn’t add up but is now desperate for the internationally competitive cheap energy needed to keep our industrial base from wholesale emigration. --Dominic Lawson, The Sunday Times, 1 April 2012
Q-Cells, once the world's biggest maker of solar panels, is filing for bankruptcy. The German firm says it has abandoned an attempt to refinance its debts and will file for insolvency on Tuesday. Like other solar panel makers, Q-Cells has been hit by falling prices and last year the firm lost 846m euros ($1.1bn; £702m). The company started in 2001 with 19 staff and now employs more than 2,000 workers. --BBC News, 2 April 2012
China has already cancelled orders for 35 European Airbus A330 jets, and is threatening to cancel on 10 more. India has just banned its airlines from submitting any carbon emission data by the EU’s March 31 deadline. In February, the two Asian giants, along with 21 other countries including the United States, signed up to the Moscow Declaration, a strategic blueprint for global trade ‘war’. It has a single aim: to make sure the EU’s Airline Tax never gets off the ground. --Peter Glover, Energy Tribune, 30 March 2012
Middle East will go back to being an obscure backwater. It will attract scant attention in future, not because the region will have run out of oil — it will have found much more — but because the rest of the world will also be awash in oil. --Lawrence Solomon, Financial Post, 31 March 2012
The dividing line between creative writing and climate science - sometimes thin - has been triumphantly dissolved. A new postgraduate course at the University of East Anglia hopes to bring together "researchers in the environmental sciences, philosophy, history and literature to develop new ways of thinking about environmental change and social transitions". And put that thermometer down. If you have experience writing "eco-poetry", then the UEA wants to hear from you. UEA, the heart of the Climategate emails, already runs a project in "eco poetry" aimed at primary school children, intended to "stimulate and strengthen children's environmental awareness". It isn't cheap, though. The course costs £5,000 for UK students and £11,900 for overseas students. –Andrew Orlowski, The Register, 2 April 2012
1) EU Cimate Policy In Freefall - EurActiv, 3 April 2012
2) Dominic Lawson: Britain Has Finally Rejected The Bogus Economics Of Climate Change - The Sunday Times, 1 April 2012
3) German Solar Giant Goes Belly Up - BBC News, 2 April 2012
4) Peter Glover: Why The EU Airline Tax Won’t Fly - Energy Tribune, 30 March 2012
5) America’s Green Energy Fiasco Deepens - Power Line, 2 April 2012
6) Lawrence Solomon: A World Awash In Oil - Financial Post, 31 March 2012
7) Climategate Poetry: UEA Offers Creative Writing Course On Global Warming - The Register, 2 April 2012
1) EU Cimate Policy In Freefall
EurActiv, 3 April 2012
Sagging carbon prices lost nearly 14% of their value yesterday (2 April) as recession and a warm winter sparked a predicted 2.6% drop in carbon emissions from the 10,000 installations covered by the EU’s Emissions Trading System (ETS) last year. The already-depressed carbon price dived from €7 to a record low of €6.14 by early afternoon
According to preliminary ‘like-for-like’ data released by the EU on 2 April, emissions covered by the ETS were 1.88 billion tones in 2011, a slight fall on the 2010 figure of 1.94 billion tones.
But those numbers were also 114 Million tonnes below the EU’s ETS cap, indicating that the market was over-supplied with carbon allowances for the third year in a row, and for the sixth in seven years.
The already-depressed carbon price dived from €7 to a record low of €6.14 by early afternoon on the news of yet more spare capacity on the market, before recovering.
Bjorn Inge Vik, a senior analyst at Point Carbon, insisted that the ETS was still working. “The main reason that emissions are down is the mild winter and the deteriorating economy towards the end of last year,” he told EurActiv.
But because of “the sharp drop in carbon prices in the latter half of 2011, the impact from the ETS [on emissions] was probably less in 2011 than in 2010,” he added.
Last month, the European Parliament passed a compromise proposal enabling the EU executive to withhold carbon allowances to boost their market price before the third period of ETS trading begins in 2013.
The renewables industry believes such a move would send a price signal to investors that the EU was serious about seeing through its climate targets, so encouraging market stability and more green investment.
But carbon-intensive industries have been divided on the issue with companies such as Shell requesting that a billion carbon allowances be set-aside, while organisations including the European Chemical Industry Council (CEFIC) fear that such a move could damage their competitiveness.
Environmentalists reacted to the release of yesterday’s preliminary data with a call for urgent action
2) Dominic Lawson: Britain Has Finally Rejected The Bogus Economics Of Climate Change
The Sunday Times, 1 April 2012
The gap between comfort and chaos in modern civilisation is alarmingly narrow and defined by a four-letter word: fuel.
If we needed a reminder, the panic buying of petrol in preparation for a possible tanker drivers’ strike provided it.
Those with longer-term concerns about the survival of the good life will also have felt a spasm of fear at the news that the plug has been pulled (so to speak) on plans to build six new nuclear reactors.
Last week the two German energy giants Eon and RWE decided that the subsidies being dangled by the British government were not sufficient to justify the investment of £15 billion or so of their shareholders’ money.
It has been asserted that the companies had come under pressure from Berlin — pathologically opposed to nuclear power since the Fukushima reactor meltdown. It seems more likely that their directors sensed the way the political wind was blowing across the continent as a whole. For a nuclear programme to be confident of the subsidies required, there needs to be a long-term commitment to swingeing carbon emission reductions on a pan-European scale. Since nuclear power stations emit no CO2, they would have been the prime beneficiaries.
Yet it is becoming clear that this commitment is weakening across the chancelleries of Europe — even though no government is publicly admitting it — and for a number of obvious reasons. They now recognise there is no possibility that the leading energy users in the developing world such as China and India will agree to any binding limits on their emissions; and if they don’t, neither will America, even under that nice Barack Obama.
So the Kyoto treaty is as dead as Monty Python’s parrot — although since its full implementation would have cost hundreds of billions of dollars in forgone economic growth to reduce global temperatures by about a fifth of 1C in 100 years, it should always have been a complete non-starter on any conventional cost-benefit analysis.
When the western economies were booming on a tide of apparently limitless credit, it was easy for politicians to imagine that the problem of economic growth had been solved and their semi-religious plans of environmental self-sanctification were affordable.
The tax revenues would just keep rolling in and the banks would always be able to lend what governments couldn’t raise. Goodbye to all that: now governments across Europe have begun a rapid disassembly of their most grotesque subsidies for “renewables”.
Germany, where almost half the world’s solar energy is produced — in a country with just an hour of sun on an average December day — is now drastically cutting back (as is the much sunnier Spain, whose central plains are littered with bankrupt solar farms).
And which energy source is ecologically correct Germany now developing faster than any other? Lignite, otherwise known as brown coal, the most carbon- intensive fuel known to modern man.
This makes the countries on the European Union’s eastern borders (notably Poland, for which indigenous coal is a dominant energy source) even more reluctant to accept the national emissions targets promoted by Brussels. Eight of these nations launched a legal challenge and last week they won a ruling by the European Court of Justice that Brussels had exceeded its powers in imposing such limits. The court brushed aside the European commission’s complaint that it would not otherwise be able to “protect the integrity of the EU-wide market of [carbon] allowances”.
The most telling point is that this verdict gained almost no coverage. As Benny Peiser, director of the Global Warming Policy Foundation, observes: “In the past, Poland’s intractable hostility to green unilateralism was greeted by protestation in capitals around Europe. Today it is hardly noticed by the media, while green campaigners have become limp . . . Other and more pressing concerns are taking precedence and are completely overriding the green agenda.”
In Britain, where our great coal seams are depleted, if not exhausted, this is much less of an issue anyway. Gas is another matter. The advocates of gigantic subsidised programmes of offshore wind power (who had captured the Department of Energy and . . . er, Climate Change) based much of their economic arguments on the point that we were running out of indigenous gas and the international price of the stuff would rise inexorably. So “green” energy would not just “save the planet” but actually made financial sense, too.
This was always fanciful: the department’s own figures of two years ago showed new electricity provided by conventional sources of gas coming in at upwards of £55 per megawatt hour, while offshore wind starts at about £150 — almost three times as expensive. This was without taking into account what has rightly been described as the “shale gas revolution”. As a result of new drilling techniques, the US energy scene has indeed been revolutionised, with such vast supplies being brought on stream that a country once terrified of becoming dependent on imported gas
(Iran, anyone?) will soon be in a position to be a net exporter of the stuff.
This sudden supply of cheap energy is not only a reason why the US economy is recovering sharply while Europe remains in the doldrums: it is even causing a repatriation of manufacturing from China back to America. As Jeremy Nicholson, director of the Energy Intensive Users Group, notes, if the British government means what it says about retaining our manufacturing base, we have to find a way of emulating the Americans, “rather than continuing to engage in the puerile game of my emission reduction target is bigger than your emission reduction target”.
Over the past few years open-market gas prices in Britain and America, which used to be closely linked, have now spectacularly diverged — and not necessarily to our advantage (to quote Emperor Hirohito’s observation of the state of play on August 14, 1945).
Fortunately, last September the US company Cuadrilla announced that it had found a gigantic shale gas field beneath and around Blackpool. It is thought to contain a scarcely comprehensible 200 trillion cubic feet of gas (vastly more than any of our remaining North Sea reservoirs).
Yet Chris Huhne, the energy secretary at the time, would not pay this potential source of cheap, indigenous and secure energy a single visit even though Lord Browne, the former boss of BP and a director of Cuadrilla, said shale gas in Britain could create about 50,000 jobs and that “if they had the will they could become the centre of shale gas for Europe, much as Aberdeen became the centre of oil and gas for Europe”. Unlike nuclear, not to mention the unavoidably intermittent wind and solar, this will require not a penny of public subsidy — which would make it, in the real sense of the word, sustainable.
On BBC’s Newsnight last Thursday, in the wake of the nuclear démarche, we could see two advocates of renewable energy chorusing that solar and wind power were more economic than gas. They were described as “energy experts” yet that cannot be because if they knew anything about the subject they could not believe such a thing.
Anyway, the government, although not yet ready to say so, has finally rejected the bogus economics of climate change or, more likely, it always knew the figures didn’t add up but is now desperate for the internationally competitive cheap energy needed to keep our industrial base from wholesale emigration. Whatever the reason, there’s no need to panic over the threat by subsidy-seeking nuclear power brokers to pull the plug on Britain. We can keep the light on without them — and more cheaply, too.
3) German Solar Giant Goes Belly Up
BBC News, 2 April 2012
Q-Cells, once the world's biggest maker of solar panels, is filing for bankruptcy.
The German firm says it has abandoned an attempt to refinance its debts and will file for insolvency on Tuesday.
Like other solar panel makers, Q-Cells has been hit by falling prices and last year the firm lost 846m euros ($1.1bn; £702m).
The company started in 2001 with 19 staff and now employs more than 2,000 workers.
Q-Cells had been trying to organise a deal to swap debt for shares in the company.
But it said that a court ruling last week, which blocked a similar restructuring plan at German wood processing company Pfleiderer, convinced it that it could not go ahead with its rescue plan.
"Against the background of the final ruling of the Frankfurt Higher Regional Court in the Pfleiderer case on March 27, 2012, the company had come to the conclusion that no going concern prognosis is given anymore," Q-cells said in a statement.
4) Peter Glover: Why The EU Airline Tax Won’t Fly
Energy Tribune, 30 March 2012
China has already cancelled orders for 35 European Airbus A330 jets, and is threatening to cancel on 10 more. India has just banned its airlines from submitting any carbon emission data by the EU’s March 31 deadline. In February, the two Asian giants, along with 21 other countries including the United States, signed up to the Moscow Declaration, a strategic blueprint for global trade ‘war’. It has a single aim: to make sure the EU’s Airline Tax never gets off the ground.
While the EU’s unelected Climate Czar Connie Hedegaard bullishly dismisses threats from the Moscow group of nations as “hypothetical” – exactly how is a cancelled order for planes “hypothetical” Connie? – actual elected leaders in European capitals are unlikely to remain as sanguine. Well before the first payment Airline Tax invoices are mailed in 2013 it becomes clear just how economically damaging a global trade war would be to European national economies.
If anything, the EU’s unilateral imposition of an anti-carbon emission airline tax on non-EU national airlines pointedly demonstrates the weakness at the heart of the European Union project: federal ambitions v national self-interest. Take the key role of Europe’s largest economy. German taxpayers have recently pulled the plug on their commitment to constantly bail out the profligate public spending of Europe’s southern economies within the 17-state Eurozone. But then German national self-interest consistently undermines key EU policies. And why shouldn’t it? After all, the EU elite aren’t picking up the tab for them, national taxpayers are. Germany’s blatant undermining of the EU’s much ballyhooed white elephant, the Nabucco pipeline project, is just one example of this.
Designed to import natural gas in a pipeline that circumvents Russian soil, Nabucco is the EU’s great ‘pipe’ hope to help it diversify away from the stranglehold of Russian gas supplies. However, the pipeline still lacks the small matter of contracted gas supplies. Moreover, it has lately been outflanked by the opening in late 2011 of the Russo-German built Nord Stream, a company chaired by former German Chancellor Gerhard Schroeder and supported by a network of German politicians and industrialists. While Brussels sought diversification, backing Nord Stream against Nabucco is just one example of how Germany has been busy building up its own bilateral ‘special relationship’ with its largest trading partner, Russia. When it comes to national self-interest, energy security especially just cannot be left to the vagueries of lofty EU-style politicking – as with the ill-thought through ramifications of a unilaterally imposed airline tax.
Do we seriously expect Germany to jeopardize its trade relations with Russia? Would Berlin and others really risk losing Siberia over-fly rights if Russian is forced to carry out its threat to hand them to Japan, China and other Asian nations? And it’s not as if Germany and other EU states would be enrolling in a global air and trade war to any productive end. The purpose of the EU Directive more broadly is as a key strategy in the war against CO2, a war the EU-ETS (European Trading Scheme) is demonstrably far from winning.
According to a recent French bank report, the European Commission will release its preliminary data on emissions for 2011 on April 2, with final data being published in May. The report anticipates that Europe’s emissions “should have been stable in 2011”. But having risen by 3.2 percent the previous year, a stabilizing of emissions hardly justifies the massive cost to industry that subscribing to the EU-ETS inflicts. In the UK, for instance, the heavy cost of a range of green taxes designed to help the nation meet its EU imposed carbon targets has not only seen CO2 emissions fail to fall but, according to new figures, the UK’s carbon footprint has actually risen by 20 percent. No surprise then that the UK is considering dumping its carbon trading scheme altogether.
And worse is to come for the EU’s green ambitions.
Germany and countless other European capitals are already axing expensive wind and solar subsidy regimes. Without the oxygen of government cash, companies and projects will find maintaining costly renewable energy projects a seriously difficult proposition. They will require private investment, but much of that is already funnelling into new shale gas and deepwater oil exploration projects.
For obvious reasons, no EU state took part in the February meeting in Moscow. But the basket of prospective retaliatory air, and prospective trade, measures cited in the Declaration will target individual European economies. The measures include:
· Prohibiting national airlines from participating in the EU-ETS
· Reviewing bilateral air service agreements, including Open Skies, with individual EU states
· Suspending current and future negotiations to enhance operating rights for EU airlines
· Imposing additional levies/charges on EU carriers
And that’s just for starters. The Moscow Declaration leaves the way open for “any other actions/measures”. The EU is currently consulting on extending the ETS to shipping; given the trade clout of the already galvanized anti-airline tax alliance, good luck with that.
Divide and rule is clearly the preferred strategy of the Moscow Declaration signatories; a strategy aimed at driving a wedge between hard-nosed national self-interest and ideological federalist ambition.
5) America’s Green Energy Fiasco Deepens
Power Line, 2 April 2012
The collapse of the “green” energy industry continued today, as Solar Trust of America LLC filed for bankruptcy. Solar Trust was, it claimed, carrying out the world’s largest solar energy project in California. Two things make Solar Trust’s bankruptcy especially newsworthy: first, Barack Obama’s Department of Energy offered the company a $2.1 billion loan guarantee just last year. Fortunately, Solar Trust turned it down:
It would have been one of the largest stimulus-funded clean-technology projects, and Solar Trust had been negotiating the deal for roughly a year. But [Solar Trust's CEO Uwe] Schmidt decided it was too risky. …
The Obama administration’s vaunted initiative to catalyze the U.S. clean-energy industry — under attack for betting half a billion dollars on the solar-panel manufacturer Solyndra, which closed last month — has become a case study of what can go wrong when a rigid government bureaucracy tries to play venture capitalist and jump-start a nascent, fast-changing market.
Schmidt concluded in early 2011 that the influx of inexpensive flat solar panels was undercutting his company’s year-old proposal to use a field of parabolic mirrors that focus the sun’s energy to heat liquid-containing tubes. Despite market changes, however, the terms of the federal loan guarantee wouldn’t let Solar Trust switch in midstream to flat panels. So Solar Trust sought private financing.
So the Obama administration’s proposed loan guarantee was so dumb that the prospective borrower decided not to take it! That tells you all you need to know about the Obama administration’s ability–actually, the ability of any administration–to execute an industrial policy that doesn’t fleece the taxpayers.
Of course, Mr. Schmidt remained high on “green” energy even though he decided not to take the taxpayers’ money. He blogged about it at the Huffington Post, suggesting that voters shouldn’t let Solyndra dampen their enthusiasm for government-funded energy boondoggles:
Without a clear government mandate and ongoing support for renewable energy, America will continue to be dependent on foreign energy sources, mostly from countries in a region beset with political volatility.
So what went wrong with our federal program to support renewables? Nothing, except one company’s bankruptcy has cast doubt on the credibility of a government program that is otherwise being administered with incredible efficiency.
Except for the occasional offer to guarantee $2.1 billion in loans to a company that is about to go bankrupt.
Indeed, despite the posturing and finger pointing, the American solar energy industry is alive and well. I should know. My company, Solar Trust of America, is planning to build over 2,000 MW of new solar plants in the coming years. …
By 2014, the United States will become the largest solar market in the world, with new solar plants being the largest source of new electric generating capacity in the US.
That obviously isn’t going to happen.
What that adds up to is jobs. Good jobs.
News accounts indicate that as of its bankruptcy filing, Solar Trust employed nine people.
The second reason why the Solar Trust bankruptcy story is remarkable is that its own German parent companies declined to continue funding the company, even as Steven Chu’s Department of Energy was willing to put American taxpayers on the hook to the tune of $2.1 billion.
6) Lawrence Solomon: A World Awash In Oil
Financial Post, 31 March 2012
Today, the Middle East is in the news daily — we hear of strife in Syria, in Iran, in Israel and Palestine. Ten or 20 years from now, conflicts in the Middle East will count for less in the world’s scheme of things, just as the daily conflicts that now occur in Africa get short shrift, despite Africa’s far greater loss of life. Twenty years from now, the Middle East could be about as important as it was at the turn of the previous century — before its oil was discovered — which was not very important at all.
The Middle East will attract scant attention in future, not because the region will have run out of oil — it will have found much more — but because the rest of the world will also be awash in oil. As supplies increase, oil depreciates in price, as does the political value of its purveyors.
To see the future of oil, consider the present of natural gas. Until recently, many thought the West was running out of gas — most of the easily accessible natural gas finds were being depleted, making the West reliant on ever more distant, ever more difficult reserves to exploit. The U.S., the world’s biggest natural gas importer, began to build ports to receive liquefied natural gas from distant continents in the expectation that it couldn’t import enough from Canada and Mexico.
Then everything flipped. New technologies emerged to extract gas from shale and other rock formations. Because these so-called unconventional technologies — fracking is the best known among them — proved cheaper than obtaining gas from the harder-to-find “conventional” sources, and because shale gas is plentiful, the unconventional became the norm. Thanks to fracking, the U.S. has suddenly become the world’s largest producer of natural gas, creating a massive glut that has more than halved the price of natural gas. Those liquefied natural gas ports that the U.S. was building to import gas will now be used to export gas.
A glut will soon also materialize in Europe, another major natural gas importer, where massive finds of shale gas in the U.K., in France, in Poland, in Ukraine and elsewhere will be slashing the cost of energy. So too with China and other major energy importers — the world is now awash in shale gas and will remain so for many decades, if not centuries.
The oil story is following a script similar to that of natural gas, with “unconventional” sources of oil overtaking distant, harder-to-exploit conventional sources. Until recently, “unconventional” mostly meant oil from Canada’s plentiful tar sands, which made Canada the single largest supplier to the oil-dependent U.S. No longer. Unconventional now also means shale oil and oil from other rock formations, much of it in the U.S., which has by far the world’s largest store of shale oil. The U.S. has become the world’s fastest growing oil and gas producer, it will soon be self-sufficient in oil and it is already a net petroleum product exporter.
China, another major importer, may also become an exporter, given that it has the world’s second-largest store of shale oil. All told, some 38 countries in every continent in the world have 4.8 trillion barrels of shale oil, making oil a ubiquitous commodity that gives every region of the world the wherewithal to be energy self-sufficient.
With the world awash in oil and gas, and Western nations no longer dependent on the energy exporting countries of the Muslim Middle East, the countries of the Middle East will revert to being seen as exotic and backward curiosities in the eyes of Westerners, as they have been through most of the last 500 years. Accelerating this diminution in status will be a likely collapse in oil prices.
Although shale oil technology is still in its infancy, much of the U.S. shale oil can be developed inexpensively, at a cost comparable to the US$50 to US$60 per barrel cost of tar sands, which has itself been dropping. The trend down in shale oil costs is likely to continue over the coming years. Israel, which has some 250-billion barrels in one basin near Jerusalem alone, an amount comparable to Saudi Arabia’s reserves, expects to develop its oil at a cost of US$35 to US$40 per barrel. Should the world price of oil drop to this level — which happens to be the average price over the last two decades — the halving in oil prices will have mirrored that of natural gas. In the process, today’s Middle East energy exporters will have been bankrupted and their autocrats ousted.
Saudi Arabia, for example, now depends on petroleum for 80% of its budget, 45% of its GDP and 90% of its export earnings. A dramatic decrease in oil revenues would render the next generation of Saudi rulers incapable of maintaining the lavish payments needed to appease the Saudi clerics, let alone the social welfare payments that have kept the Saudi populace at bay, such as the US$130-billion in instant benefits conferred upon Saudi citizens last year to tamp down dissent during the Arab Spring. This artificial country, carved out of the Ottoman Empire after World War I by the British and given to the Saudi clan, would then likely break up, to once again be ruled along tribal lines. But few in the West would then take much notice.
7) Climategate Poetry: UEA Offers Creative Writing Course On Global Warming
The Register, 2 April 2012
The dividing line between creative writing and climate science - sometimes thin - has been triumphantly dissolved. A new postgraduate course at the University of East Anglia hopes to bring together "researchers in the environmental sciences, philosophy, history and literature to develop new ways of thinking about environmental change and social transitions".
And put that thermometer down. If you have experience writing "eco-poetry", then the UEA wants to hear from you.
It's the brainchild of Mike Hulme, senior scientist at the Climatic Research Unit at the University of East Anglia, founder of the Tyndall Centre for Climate Change Research, and IPCC lead reviewer, features in the Climategate emails.
The one-year MA/MSc in Environmental Sciences and Humanities also "aims to initiate and foster fundamental academic inquiry as well as encouraging practical and effective action."
All stirring stuff.
UEA, the heart of the Climategate emails, already runs a project in "eco poetry" aimed at primary school children, intended to "stimulate and strengthen children's environmental awareness". You can see a leaf haiku here.
It isn't cheap, though. The course costs £5,000 for UK students and £11,900 for overseas students.