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CCNet 04/04/13

Coal Makes A Comeback In Europe As Conventional Gas Dries Up 

Industry Warning: Rising Cost Of Energy May Force Jobs Abroad



Europe is in a quandary. For years, it has claimed to be a global leader in fighting climate change and slashing carbon emissions. Now it finds itself running out of conventional gas and turning back to dirty coal. With its conventional gas fields nearly depleted and gas prices four times higher than in the United States, Europe would like to develop a thriving shale gas industry, but that seems unlikely in the near term. --Arthur Max, Midwest Energy News, 3 April 2013
 




 

The EU’s energy commissioner warned Germany not to rule out fracking, a controversial method of drilling for natural gas – saying it could hurt the country’s competitiveness, in an interview published on Tuesday. Günther Oettinger, Germany’s designated EU commissioner, criticised his country’s scepticism of fracking, telling the Frankfurter Allgemeine Zeitung that research had fallen victim to the “emotional” debate over the issue. In his interview with FAZ, Oettinger said Germany must be prepared to take certain risks to remain competitive – and would be wise not to discount fracking altogether. --The Local, 2 April 2013
 
 


Europe’s declining competitiveness with U.S. industry has its leaders worried, but they admit having no hope of matching the shale revolution that is powering a revival of manufacturing across the Atlantic. For Europe to remain in the game, energy taxes must be held in check and no new taxes levied, said the European Union’s energy commissioner, Gunther Oettinger. --Arthur Max, Midwest Energy News, 3 April 2013



Europe’s commissioner for energy this week urged the continent to avoid new energy taxes or tax increases, reflecting that competition from cheap U.S.-produced shale gas is making energy more affordable in international markets. Guenther Oettinger told the Guardian, “To compete we must have a functioning internal market for electricity, with more competition (among energy suppliers).” Oettinger urged futher liberalization of energy markets to compete with US industry. EU manufacturers have been increasingly concerned about the impact of competition from the U.S. -–Daily Caller, 29 March 2013




British industry leaders have warned that the Government is ‘badly underestimating’ the effect of energy and climate change policies on the ceramics sector. ”Uncompetitive energy prices and poor energy security will drive energy intensive manufacturing off shore.” --Ann King, The Sentinel, 3 April 2013


A small British oil drilling firm has announced its intention to develop offshore fracking in the central North Sea. It claims there could be more oil and gas from unconventional technology than all of the output so far produced from the North Sea. --BBC News, 28 March 2013
 
 
 
Europe's cap-and-trade system for reducing the release of greenhouse gases is broken. "The most important tool of climate protection no longer works," says Eva Filzmoser of Carbon Market Watch in Brussels. "The [emissions] trade has turned into a big flop," she says, "a system of fraud." --Spiegel Online, 3 April 2013
 
 
 
 
1) Coal Makes A Comeback In Europe As Conventional Gas Dries Up - Midwest Energy News, 3 April 2013

2) EU: German Fracking Fears Unwise - The Local, 2 April 2013

3) Europe’s Cap-And-Trade: ‘A Big Flop’ - Spiegel Online, 3 April 2013

4) Industry Warning: ‘Rising Cost Of Energy May Force Jobs Abroad’ - The Sentinel, 3 April 2013

5) North Sea Fracking: Britain’s Next Energy Revolution? - BBC News, 28 March 2013

6) Benny Peiser: After Kyoto – Why The West Lost The Climate Battle - Buckingham University, 10 April 2013
 
 
1) Coal Makes A Comeback In Europe As Conventional Gas Dries Up
Midwest Energy News, 3 April 2013

Arthur Max

Europe is in a quandary. For years, it has claimed to be a global leader in fighting climate change and slashing carbon emissions. Now it finds itself running out of conventional gas and turning back to dirty coal.


Open pit coal mining in Germany. (Photo by Rene Schwietzke via Creative Commons)
Open pit coal mining in Germany. (Photo by Rene Schwietzke via Creative Commons)

Europe’s declining competitiveness with U.S. industry has its leaders worried, but they admit having no hope of matching the shale revolution that is powering a revival of manufacturing across the Atlantic.

For Europe to remain in the game, energy taxes must be held in check and no new taxes levied, said the European Union’s energy commissioner, Gunther Oettinger.

Instead, Europe must use its energy more efficiently and the European Union’s 27 member countries should open their energy markets to cross-border competition, Oettinger said at a news conference last week in Brussels.

With its conventional gas fields nearly depleted and gas prices four times higher than in the United States, Europe would like to develop a thriving shale gas industry, but that seems unlikely in the near term.

“We do not have that many North Dakotas in Europe. We do not have those deserted areas where you can drill and no one is being asked or complaining,” said Connie Hedegaard, the European Union’s commissioner for climate action.

European drillers also face greater geological challenges, more stringent environmental regulations and stronger public skepticism of hydraulic fracturing.

“We will not see prices in Europe for shale gas come down to the level in the U.S.,” she said.
There is no E.U. regulation against unconventional drilling, although the environment commission is drawing up guidelines of best practices. Each country is free to chose whether to drill. So far, fracking has been conducted on a test basis, and two countries, France and Bulgaria, have banned the technique for now.

Oettinger and Hedegaard jointly were releasing a policy paper setting the framework for climate and energy targets for the decade after 2020. Documents released alongside the Green Paper made it clear the trends are not running in the climate’s favor.

Europe is in a quandary. For years, it has claimed to be a global leader in fighting climate change and slashing carbon emissions. Now it finds itself running out of conventional gas and turning back to dirty coal. Oettinger said onshore and North Sea gas deposits will be depleted by 2035 or 2040.

The price of imported gas from long-term contracts remains stubbornly high because Europe’s suppliers — Russia, Norway, Algeria and Qatar — link them to oil prices. Producing some shale gas would help Europe decouple the gas-to-oil index, the energy commissioner said.
In the meantime, coal is increasingly the option of choice.

Although Europe mines more than 70 percent of its own coal, it has been buying the surplus coal spurned by the U.S. power sector after American plants shifted largely to gas. These imports have “potentially halted, and to some extent reversed a two decade long trend of decreasing coal consumption,” says one document.



Coal is cheap not only because U.S. supplies are sold at bargain prices but because the penalty for emitting too much carbon has become almost insignificant.

Europe’s cap-and-trade program is meant to make it expensive for industry to pollute. Industries that emit more carbon dioxide than permitted must buy pollution permits from facilities that release less CO2 than allowed. The market price is determined by the availability of those permits.

In practice, the economic recession has led to an industrial slowdown, less emissions and an overabundance of permits for sale. Thus, the price of carbon has collapsed to less than €5 per ton.

That means buying carbon credits to burn coal is cheaper than fueling power stations with expensive gas. Analysts say a price of €20 is needed to incentivize power plants to switch to low-carbon energy.

“Coal has become a new and economically interesting input for power production in the E.U.,” says the paper. “The lifetime of power plants that were expected to close is now being extended, and as such the risk related to carbon lock-in for new fossil fuel developments increases.”

In Britain alone, the use of gas in power stations dropped 31 percent and the use of coal rose by the same amount from 2011 to 2012, driving a 4.5 percent increase in carbon emissions, according to figures released last week by the U.K. Department of Climate and Energy.
 


2) EU: German Fracking Fears Unwise
The Local, 2 April 2013

The EU’s energy commissioner warned Germany not to rule out fracking, a controversial method of drilling for natural gas – saying it could hurt the country’s competitiveness, in an interview published on Tuesday. 


European Energy Commissioner G√ľnther Oettinger. Photo: DPA

Günther Oettinger, Germany’s designated EU commissioner, criticised his country’s scepticism of fracking, telling the Frankfurter Allgemeine Zeitung that research had fallen victim to the “emotional” debate over the issue.

The government in Berlin is planning legislation to regulate the use of hydraulic fracturing, commonly referred to as fracking. The process uses high-pressure substances, including water, sand and chemicals, to dislodge natural gas from rocks deep underground.

Critics of fracking point to the environmental risks, saying it can cause polluting chemicals to leech into groundwater.

Members of Chancellor Angela Merkel’s centre-right Christian Democrats have reportedly been mulling whether to make the draft law on fracking even tougher, including a temporary freeze on new permits.

In his interview with FAZ, Oettinger said Germany must be prepared to take certain risks to remain competitive – and would be wise not to discount fracking altogether.

“I recommend that Germany, too, not say a firm ‘no’ to fracking,” he remarked. “Otherwise we will lose key competencies.”

Full story
 
 
3) Europe’s Cap-And-Trade: ‘A Big Flop’
Spiegel Online, 3 April 2013

Europe's cap-and-trade system for reducing the release of greenhouse gases is broken, but not everybody wants to fix it. Industry has profited immensely from the plummeting prices of CO2 emissions certificates, and from lax checks on questionable environmental projects undertaken overseas.

Saving the climate? It doesn't seem all that difficult at first glance. All you have to do is fly from Germany to Zambia once in a while, as the German energy giant RWE's environment protection team does. It has made frequent trips to the capital Lusaka in recent years to distribute a total of 30,000 small stoves -- RWE's contribution to a good cause.

The stoves were intended to help poor families cook in a more environmentally friendly way. Biomass was to replace charcoal as cooking fuel. In an advertising brochure for RWE, the company that "travels around the world to help our climate" touts the campaign with the slogan "New Cooking Pots -- Less CO2." But RWE doesn't seem to have included such factors as air travel and the production of the stoves in its calculations.

Besides, the project wasn't entirely altruistic, because RWE will receive credits for its effort. The stoves in Lusaka are expected to save 1.5 million tons of CO2 by 2020, and in return, RWE's coal-fired power plants would be allowed to emit 1.5 million tons elsewhere. This sale of indulgences is called a "Clean Development Mechanism" (CDM). With such questionable projects in emerging and developing countries, which even include the renovation of coalmines in China, European companies can simply calculate away about 20 percent of their emissions.

In the end, the flood of such projects undermines the entire emissions trading system. "The most important tool of climate protection no longer works," says Eva Filzmoser of Carbon Market Watch in Brussels. Four years ago, the Austrian national began a solo effort to take a closer look at the emissions trading market. She still believed in the idea at the time. But Filzmoser found herself confronted with an industry that had grown to a volume of $90 billion almost overnight, an industry complete with certifiers, forecasters, dealers and hackers, who trafficked in certificates and created more and more absurd projects.

'A Big Flop'

They included the supposed cleanup of African garbage dumps, as well as the retrofitting of old coolant factories in China, which only seemed to be in operation because they yielded climate certificates.

It is because of Filzmoser and her staff of five employees that, starting in May, at least the most questionable of these projects will no longer be approved by the United Nations Climate Change secretariat. "The trade has turned into a big flop," she says, "a system of fraud."

Full story
 
 
4) Industry Warning: ‘Rising Cost Of Energy May Force Jobs Abroad’
The Sentinel, 3 April 2013

Ann King

INDUSTRY leaders have warned that the Government is ‘badly underestimating’ the effect of energy and climate change policies on the ceramics sector. ”Uncompetitive energy prices and poor energy security will drive energy intensive manufacturing off shore.”

The British Ceramic Confederation (BCC) said that while new Government analysis recognises that businesses are bearing the financial brunt of policy decisions, there are some ‘serious exclusions’ in costs in its assessments.

The research for the Department of Energy and Climate Change (DECC) reveals that large energy-intensive business users face bills that are up to 14 per cent higher as a result of Government policies.

By 2020, the impact is expected to be between six per cent and 36 per cent.

But the BCC, based in Stoke, says this is despite the DECC not including the direct cost to companies of the EU Emissions Trading System, which many ceramics companies are subject to.

The system helps to set emission levels by allowing firms to buy allowances.

The BCC also says the DECC has not included future extra transmission, distribution and balancing costs required to strengthen the grid for intermittent renewables.

It warned: “Businesses are making dispassionate decisions on where to invest.

“They look at the combined effect of all energy bills and climate related taxes and charges for different countries in their business models – inside and outside Europe – and the UK is not faring well.

“All ceramic businesses compete internationally, they can’t just pass on unilateral UK only price increases to customers without losing sales.

“Uncompetitive energy prices and poor energy security will drive energy intensive manufacturing off shore.”

Energy intensive industries exist in sectors from ceramics and textiles to refineries, chemicals and plastics.

Full story
 

5) North Sea Fracking: Britain’s Next Energy Revolution?
BBC News, 28 March 2013

A small oil drilling firm has announced its intention to develop offshore fracking in the central North Sea. It claims there could be more oil and gas from unconventional technology than all of the output so far produced from the North Sea.



 
Trapoil is working up plans that would extend the technology from its extensive use onshore in North America.

It claimed there could be more oil and gas from unconventional technology than all of the output so far produced from the North Sea.

Trapoil plans test drilling a well next year, if it can find a partner for the project.

The company said the well could be “game-changing”, if it could prove that oil will flow out of tight reservoirs at a commercial rate.

The fracking process involves using high-pressure liquid to fracture shale rock in order to release oil and gas.

In a statement accompanying its annual results, Trapoil said: “The amount of oil potentially held in tight reservoirs is equal to, or probably greater than, all of the oil produced to date from the UK North Sea.

“The possible prize is therefore substantial, but this asset is still very much in its infancy and we will need to perform a considerable amount of work before drilling may occur.”

Full story
 
 

6) Benny Peiser: After Kyoto – Why The West Lost The Climate Battle
Buckingham University

Economist & International Studies Seminar, 10 April 2013 - 16:15 - 18:00

Dr Benny Peiser, Director of the Global Warming Policy Foundation

After Kyoto: Why the West Lost The International Climate Policy Battle

The failure of the 2009 Copenhagen climate summit was a historical watershed that marked the beginning of the end of global warming hysteria. It epitomised the failure of the EU’s green agenda and symbolised the loss of Western geopolitical dominance. However, the failure of international climate diplomacy was not only predictable – it was inevitable. The global deadlock simply reflects the contrasting, and in the final analysis irreconcilable interests of the West and the rest of the world. The result is most likely an indefinite moratorium on international climate legislation.

Location
Anthony de Rothschild Building
 


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