We are grateful to Karel Beckman for alerting us to a new report by ENTSO, (European association of transmission system operators) which alerts Europe to the risk of a capacity-caused electricity supply shortage in the event of another cold winter.

Perhaps it can only be outright supply failures that will alert German voters to the dangers they face if they continue on their present path of accelerating the closure of nuclear power plants while excoriating fossil fuel generation.

Their now 20 GW of installed PV will be useless in the coming winter.  Cold weather is characterized by extended anticyclones.

Fortunately, the UK has time to take stock of what is happening elsewhere in the EU (and nowhere else in the world) of what happens when an advanced economy takes leave of its senses.

Karel's blog article appears, alongside many other important and relevant papers and articles at http://www.europeanenergyreview.eu/site/pagina.php?id=3316

Kindly consider putting your signature against Paul Hunt's Downing Street e-petition at

http://epetitions.direct.gov.uk/petitions/23067

"That Parliament establish an independent inquiry in to energy policy and regulation.

The Government is proposing to alter energy policy and regulatory arrangements in the context of a huge demand for investment to replace ageing generation plants and of the EU's climate change objectives.It is concealing the real reason which is that long-standing dysfunction in policy, regulatory and market arrangements has not delivered the investment required.Its current proposals will layer further dysfunction on the existing dysfunction and impose unnecessary and excessive costs on consumers and the economy.It will create a paradise for the influential, but unelected, who exercise economic power and for rent-seekers, regulator-capturers and consumer-gougers.It is for Parliament, in the public interest, to establish an independent inquiry to investigate this dysfunction, to identify remedies and to recommend effective and efficient reforms." 

This is a reprint of a newsletter posted on http://www.odac-info.org/

For a number of years there has been an arid debate between economists and geologists about Peak Oil. The geologists maintain that Peak Oil (maximal production) is a geological imperative imposed because reserves are finite even if their exact magnitude is not, and cannot be, known.

In contrast many economists maintain prices will resolve any sustained supply shortfalls by providing incentives to develop more expensive sources or substitutes. The more sanguine economists do concede that the adaptation may be slow, uncomfortable and economically disruptive.

The reality, I believe, is that both groups have part of the answer but that Peak Oil is, in fact, a complex but largely an economically driven phenomenon that is caused because the point is reached when: The cost of incremental supply exceeds the price economies can pay without destroying growth at a given point in time.While hard to definitively prove, there is considerable circumstantial evidence that there is an oil price economies cannot afford without severe negative impacts.

The current failure of most western economies to achieve anything more than minimal growth this year (2011) is most likely because oil prices are already at levels that severely inhibit growth. Indeed, research by energy consultants Douglas-Westwood concludes that oil price spikes of the magnitude seen this year correlate one-for-one with recessions.

The original story can be found here.

London, 2 September:

One of the UK's leading energy and environment economists warns that the government's promise that green energy policies will create tens of thousands of jobs and stimulate competitive industries is an illusion.

In his report The Myth of Green Jobs, published today by the Global Warming Policy Foundation, Professor Gordon Hughes (University of Edinburgh) dispels this assumption by finding that

• The government target for generating electricity from renewable energy sources will involve a capital cost that is 9-10 times the amount required to meet the same demand by relying upon conventional power plants.

• The extra investment required for renewable energy - about £120 bln - will be diverted from more productive uses in the rest of the economy

• Increases in the cost of energy together with the diversion of investment funds means that many manufacturing firms will either go bankrupt or relocate.

• It is impossible for the UK to acquire a long-term comparative advantage in the manufacture of renewable energy equipment by any combination of policies that are both feasible and affordable.

• Policies to promote renewable energy could add 0.6-0.7 percentage points per year to core inflation from now to 2020.

• The cumulative impact of these policies could amount to a loss of 2-3% of potential GDP for a period of 20 years or more.

"Claims by politicians and lobbyists that green energy policies will create a few thousand jobs are not supported by the evidence. In terms of the labour market, the gains for a small number of actual or potential employees in businesses specialising in renewable energy has to be weighed against the dismal prospects for a much larger group of workers producing tradable goods in the rest of the manufacturing sector," Professor Hughes said.

The full report can be downloaded here: The Myth of Green Jobs

About the Author

Dr Gordon Hughes is a Professor of Economics at the University of Edinburgh. He was a senior adviser on energy and environmental policy at the World Bank until 2001. He has advised governments on environmental policies and was responsible for some of the World Bank’s most important environmental guidelines.

Review by Paul-Frederik Bach (www.pfbach.dk) of the latest analysis of the implications of managing huge quantities of wind power by Howard Rogers of the Oxford Institute for Energy Studies

An important report by Howard Rogers [down-loadable at http://www.oxfordenergy.org/wpcms/wp-content/uploads/2011/08/NG-54.pdf ] challenges the optimistic perspectives of the UK White Papers on the future UK energy supply.

The supply of gas is the common thread in the report with seasonal variations and storage facilities as key issues.

Between 1970 and 2000 the gas supply system was established and developed to cover about 40% of the primary energy consumption in the UK. In 2000 the country was self-sufficient in gas. Seasonal variation was included in the supply contracts or absorbed by depleted gas fields. The need for onshore storage facilities was modest.

A decade of increasing vulnerability

A significant change developed from 2000 to 2010. The British production of gas fell to slightly above half the level of 2000. Additional supplies had to be imported from Norway, from the Netherlands and as LNG. Due to poor storage capacity (in UK about 5% of the annual consumption, in Denmark about 25%) considerable seasonal variations had to be included in the agreements with Norway and with the Netherlands. In 2010 about half the need for seasonal flexibility was covered by variations in the import of gas and LNG.

The enlargement of the storage facilities has so far been prevented by practical and finacial problems. The energy supply for the UK has become vulnerable and should give rise to concern.

Howard Rogers discusses the background of this development. He concludes that 'the 2000s decade does provide a useful suite of examples to illustrate the extent to which the UK gas market has become increasingly impacted by unforeseen events, some occurring on the other side of the globe'.