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The limits to renewable energy
Written by Hugh Sharman   
Sunday, 18 December 2011

Martin Livermore of the Scientific Alliance writes....

This week, the Scientific Alliance was very pleased to publish a report on renewable energy, jointly with the Adam Smith Institute. Entitled Renewable Energy – Vision or Mirage?, this sets out to review available renewable energy technologies and analyse what contribution they could realistically make to a secure and affordable future energy supply. It focuses on the UK, but the essential messages are relevant anywhere.

Our main conclusion is that wind power (which is the only technology which could be deployed on a large enough scale to have a chance of meeting the UK government’s ambitious targets) cannot fulfil the expectations which policymakers have for it.renewables_report_cover.1.png

The primary objective of the present UK and EU energy policy is to reduce fossil fuel use, and hence also carbon dioxide emissions. This is in an attempt to fulfil the EU 20-20-15 targets: a 20% reduction in carbon dioxide emissions and 15% of energy from renewables by 2020. Because, in practice, most of the renewables would be used to generate electricity rather than be used for transport or heating – which together represent about two thirds of our fossil fuel use – the target actually requires a very large switch away from coal and gas in this sector. The challenge is immense.

 
Can Germany ride through the winter without cuts or brown-outs?
Written by Hugh Sharman   
Tuesday, 06 December 2011

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

 

 
A brief economic explanation of Peak Oil
Written by Chris Skrebowski   
Monday, 26 September 2011

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.

 

 
North Sea Oil Tax – Biting the Hand That Feeds?
Written by hydrocarbons-technology.com   
Friday, 12 August 2011

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Article originaly posted here.

Significant oil tax hikes in the UK North Sea rocked investor confidence. Gareth Evans reports on the reasons behind the drop in investor activity and finds some compelling reasons for recovery despite negative initial reactions to increased taxes.

On 22 March 2011, a Second World War bomb was discovered lying in 300ft of water near the Forties pipeline, some 25 miles east of Peterhead, Scotland. In his budget a day later, many in the industry suggest that UK Chancellor George Osborne set an even larger bomb ticking under the future of North Sea offshore investment.

Unexpected changes in the budget raised the supplementary charge (SC) rate to 32% from 20%, taking the North Sea headline tax rate to 81% from 75% for fields that are subject to petroleum revenue tax, and to 61% from 50% for those that are not. As a final blow, tax relief on decommissioning was pegged at 20%.

 
Ten Inconvenient Truths
Written by Hugh Sharman   
Thursday, 28 April 2011

We recommend our readers to down-load and read (and comment upon) the current article published by the European Energy Review at  http://www.europeanenergyreview.eu/site/pagina.php?id=2929

Matthew Hulbert's important paper opens up a veritable Pandora's box of disturbing questions with the likelihood that many resulting answers will add to the growing list of no less disturbing "inconvenient truths" kicked off by Mr Hulbert.

Even if there were a scientific basis for doing away with fossil fuels on the highly questionable basis that these can entirely be replaced by so-called "low carbon technologies" (meaning to most "renewables", as new nuclear fights for its political life), the state of development of most of these in terms of supplying reliable and affordable electricity and energy and feed-stocks for manufacturing, transport and heating is, unfortunately, almost devoid of real content.

Even though fossil fuels have increased in price by a factor of roughly ten (oil) and five (internationally traded coal) since 2001, investment in new renewables seems ever more reliant on tax payer or consumer subsidy.  The renewable energy industry seems incapable of addressing the extreme intermittency of their resources intelligently.  The whole business sometimes seems to be more a moral or religious crusade than a truly serious attempt to address the pressing challenges and problems of the 21st Century.

With the greatest respect to the author, he seems to accept that there really is a significant cushion of surplus extraction capacity in Saudi Arabia, while accepting the obvious fact that there practically no such thing in the rest of OPEC.  Does this cushion really exist?  Because of the intense secrecy surrounding the publication of OPEC's economically recoverable hydrocarbon reserves, OECD energy analysts are reduced to accepting the assertion of this surplus as if it were a verifiable fact.  In fact, it is so unverifiable, that energy analysts often write about it in terms more suited to describing a witches brew or a magic potion.  Indeed, Saudi Arabia's behaviour throughout this current oil price supply crisis, strongly suggests that, despite its supposed concern over the obviously deleterious economic effects high prices are having its customers, it is not making this supposed surplus capacity available to us, most likely because it cannot. 

Mr Hulbert is quite right to emphasise the essentially political nature of this current oil supply crisis and the complete helplessness of our politicians and Government bureaucracies in the face of the political developments in MENA and other oil extracting economies. But he does his case no favour by denying  intractable and highly inconvenient geological facts.  Demand for oil is a prerequisite for economic growth in all industrial economies. While demand for oil continues to grow in Asia, it seems likely that global extraction capacity, at cost and price levels that are affordable to our economies has simply "maxed out". In other words we seem to be on the edge of "affordable peak oil" when depletion rates will exceed affordable and timely hydrocarbon extraction rates. The energy-importing States of the OECD, especially financially enfeebled Europe, simply cannot afford oil at $120/b let alone some of the fantasy prices currently being quoted in even serious financial newspapers and trade journals. We saw that in 2008; one of the consequences of that price spike was catastrophic demand destruction and wide-spread economic ruination.  Our enfeebled and debt-laden economies cannot afford the almost certain double-whammy now threatening.

To this oil supply crisis, the recent entry of China into the sea-borne coal market underlines the need for the OECD's coal-users and importers to be aware that "unaffordable" coal might be just around the corner.  But that will be the subject of another in DimWatt.

The flimflam around shale gas (though not in Mr Hulbert’s paper) makes no mention of the fact that for the time being and most of the foreseeable future, the USA depends on importing conventional Canadian gas and many of its shale gas properties are losing money.  Political concerns, some admittedly spurious, may prevent its development in Europe. Because compressed natural gas can be used as transport fuel and indeed is widely used already as a transport fuel, the small surplus of gas on the global market will be harnessed for transport applications, so re-closing the oil/gas price ratio at its historical level of one.  The use of gas in transportation is more likely to raise the value of gas than decrease the price of oil.

In the face of these immediate and impending challenges, it is inexplicable, to me at least, that our fading and weak economies in the OECD are led by politicians and bureaucrats still mouthing hysterical concerns over man-made global warming, while comforting themselves with the dangerous illusion that renewables will not only take over the functions presently delivered by fossil fuels but add to our prosperity by creating new industries and “jobs”.

 
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