German Chancellor Angela Merkel has declared the G8 to be dead, thanks to Russia’s take over of the Crimea:
German Chancellor Angela Merkel declared the Group of Eight leading nations defunct given the current crisis in Ukraine, in a clear message to Russia that the world’s seven other major industrialized countries consider its actions in Ukraine unacceptable. “As long as there is no political environment for such an important political format as the G-8, the G-8 doesn’t exist anymore, not the summit nor the format,” said Ms. Merkel, in Germany’s parliament, the Bundestag. “Russia is widely isolated in all international organizations,” the chancellor said.
Ah, yes, the old “isolated in all international organizations” gambit. And what have all the “international organizations” done in reaction to Russia’s Crimean takeover? About what they did when Russia pushed into Georgia. A whole lot of nothing. It is one thing to have international organizations that have teeth and are willing to do something in reaction to such a blatant act. But when they mostly issue statements condeming the action and void the Netflix accounts of certain Russian officals, being isolated from those organizations isn’t such a big deal. All it does is make further diplomatic efforts more difficult, not that it is clear that Russia is open to diplomatic overtures.
Another thing that is happening is Europe is discovering it has managed to put itself in an energy situation that isn’t at all to its advantage. 30% of Europe’s natural gas flows through Russian pipelines (Germany gets 40% of its natural gas supplies from Russia).
So the scramble is purportedly on to change that situation.
European leaders will seek ways to cut their multi-billion-dollar dependence on Russian gas at talks in Brussels on Thursday and Friday, while stopping short of severing energy ties with Moscow for now. EU officials said the current Ukraine crisis had convinced many in Europe that Russia was no longer reliable and the political will to end its supply dominance had never been greater. “Everyone recognises a major change of pace is needed on the part of the European Union,” one EU official said on condition of anonymity. As alternatives to imported gas, the Brussels talks will debate the European Union’s “indigenous supplies”, which include renewable energy and shale gas.
Now, one would think that such a situation would call for drastic and speedy action. Anyone want to bet how long they dither and, should they decide to exploit their “indigenous supplies”, how onerous the rules and regulations will be?
When leaders of the European Union’s member states meet today and tomorrow (20-21 March) in Brussels, they hope to reach consensus on the EU’s long-term climate goals. But agreement appears unlikely because of deep divisions between east and west. Ahead of the summit, ministers from 13 member states signed a declaration supporting a European Commission proposal for an EU commitment to reduce carbon dioxide emissions by 40% from 1990 levels by 2030 – up from a 20% target set for 2020. This ‘green growth group’ includes France, Germany, Italy and the UK. But Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia are wary of the target and the timeline, and are resisting any such commitment.
The latter group will most likely be all for moving ahead as speedily as possible to exploit “indigenous supplies”. They’ll meet some pretty stiff headwinds, apparently, from the Western EU nations. You can almost see this train wreck coming.
Meanwhile in the pursuit of “green energy”, Europe is apparently ready to toss in the towel:
Governments across Europe, regretting the over-generous deals doled out to the renewable energy sector, have begun reneging on them. To slow ruinous power bills hikes, governments are unilaterally rewriting contracts and clawing back unseemly profits.
You have to laugh. “Unseemly profits”? They’re subsidies, sir. Not profit.
It’ll be interesting to see if the EU has the will to sort this all out in the next couple of days. If one is a betting person, you’d have to guess that the odds for success are long, given the EU’s recent history.
Did most of you know about this?
The U.S. Energy Information Administration’s (EIA) June energy report says that energy-related carbon dioxide fell to 5,473 million metric tons (MMT) in 2011.
That’s down from a high of 6,020 MMT in 2007, and only a little above 1995’s level of 5,314 MMT.
Better yet, emissions in the first quarter of 2012 fell at an even faster rate — down 7.5% from the first quarter of 2011 and 8.5% from the same time in 2010. If the rest of 2012 follows its first-quarter trend, we may see total energy-related carbon dioxide emissions drop to early-1990s levels.
Wow. Victory for the enviro crowd, yes? Regulation has succeeded, right? The government has turned the tide?
Nope. In fact it has nothing to do with the enviro crowd, government or regulation.
Two dirty words: Hydraulic fracking. Two more for good measure: Natural gas. And the dirtiest word of all: Markets.
Those three have combined, via a price point that has stimulated demand and made the conversion of coal plants economical to drive down emissions as they produce electricity more cheaply and efficiently. This trend began in 2007 and is now having a real effect:
Increasingly, power plants are turning to natural gas because it has become abundant, and therefore cheap. And though technology is improving our ability to reduce emissions from coal usage, natural gas is still a much cleaner source.
Natural gas, given the extensive finds and the exploitation, is much cheaper than coal now. In fact:
Indeed, natural gas has just passed an important milestone. As noted by John Hanger, energy expert and former secretary of the Pennsylvania Department of Environmental Protection: "As of April, gas tied coal at 32% of the electric power generation market, nearly ending coal’s 100-year reign on top of electricity markets."
That’s how it works in markets, or is supposed too. The fact that emissions are down is an actual side benefit of the process. And it is a process that has managed to work despite government and environmental groups like the Sierra Club’s interference or attempted interference in the process (the Sierra Club has declared war on natural gas and fracking after accepting millions in previous years from the natural gas industry).
It is a part of the creative destruction of the capitalist process. Coal will still have its uses, but just as it was replaced as a primary fuel for heating homes last century, it is now being replaced as a primary fuel for generating electricity for the same reason – there is a cheaper and more efficient fuel (which also happens to have fewer emissions) that is easier to produce and deliver than coal.
At some point coal producers will either have to reinvent themselves or find something else to do. And on the other side, opportunities will expand within the natural gas industry as more and more demand builds.
But shhhhh. Don’t want anyone knowing this all happened because of markets. Why that would hurt the argument that it requires government intrusion, regulation and the pressure of environmental groups to make things like this happen.
Can’t have that.
The Sierra Club would like to convince you they’re all about clean air, water and protecting wildlife. But if their latest campaign is any example, it’s really about banning fossil fuels.
We are in the middle of a growing natural gas boom. We have a glut of the stuff. Prices of natural gas continue to drop as more and more of the fuel is brought to market. That opens up the field to new applications from a fuel supply that is acknowledged as cleaner burning than oil. It could completely change the energy industry.
If it is given the chance.
Here’s the irony. When the “drill, baby, drill” campaign to exploit our oil resources was underway, the Sierra Club was in the forefront of pushing natural gas as a much cleaner alternative.
And, in fact, it accepted $26 million in donations from Chesapeake Energy and others in the gas industry from 2007 to2010.
Now, suddenly, it is at war with the industry as reported by the Wall Street Journal:
The battle plan is called "Beyond Natural Gas," and Sierra Club executive director Michael Brune announced the goal in an interview with the National Journal this month: "We’re going to be preventing new gas plants from being built wherever we can." The big green lobbying machine has rolled out a new website that says "The natural gas industry is dirty, dangerous and running amok" and that "The closer we look at natural gas, the dirtier it appears; and the less of it we burn, the better off we will be." So the goal is to shut the industry down, not merely to impose higher safety standards.
Another, among many, who feels entitled to limit your choices.
The Sierra Club has lobbied to stop nuclear power plants from being built and against coal and oil. They claim they are interested in fuels that have “lower carbon emissions”. Natural gas is, well, a natural in that area. And the statistics prove the point:
The federal Energy Information Administration reports that in 2009 "the 4% drop in the carbon intensity of the electric power sector, the largest in recent times, reflects a large increase in the use of lower-carbon natural gas because of an almost 50% decline in its price." The Department of Energy reports that natural gas electric plants produce 45% less carbon than coal plants, though newer coal plants are much cleaner.
Researchers at Harvard’s School of Engineering and Applied Sciences found that electric power plants reduced their greenhouse gases by 8.76% in 2009 alone. Most of the carbon reduction was driven not by mandates or regulation but by the economics of lower gas prices. The lead researcher, professor Michael McElroy, says: "Generating one kilowatt-hour of electricity from coal releases twice as much CO2 to the atmosphere as generating the same amount from natural gas, so a slight shift in the relative price of coal and natural gas can result in a sharp drop in carbon emissions."
So, what’s not to like?
The answer surely is the industry’s drilling success. The greens were happy to support natural gas as a "bridge fuel to the 21st century" when it cost $8 or more per million BTUs and seemed to be in limited domestic supply.
But now that the hydraulic fracturing and shale revolution has sent gas prices down to $2.50, the lobby fears natural gas will come to dominate U.S. energy production. At that price, the Sierra Club’s Valhalla of wind, solar and biofuel power may never be competitive. So the green left has decided it must do everything it can to reduce the supply of gas and keep its price as high as possible.
And that means attacking hydraulic fracturing (something we’ve been doing since 1948 in over a million wells) as the villain. Because it would seem somewhat hypocritical to attack the fuel that they’ve been touting for years, wouldn’t it? So instead, they’ll attempt to make the process the problem.
So let’s ask the “what if” question. What if they succeed in this hypocritical campaign of theirs?
The losers if this effort succeeds would be the millions of Americans who are benefitting from the shale boom. Shale gas supports some 600,000 jobs in the natural gas industry, according to an analysis by the consulting firm IHS Global Insight. That’s almost eight times more jobs than are employed by the wind industry.
But the losers would also include electricity consumers paying lower prices at home; the steel workers in Youngstown, Ohio who have been rehired to make pipe for gas drillers in the Marcellus Shale; and the thousands of high-paying jobs in chemicals, fertilizer and other manufacturing that is returning to the U.S. because natural gas prices are so much lower.
They’d limit your choice, drive up your energy bill, kill jobs and all for what?
For their extremist agenda, which, by the way, really has little to do with clean air, water and protecting wildlife.
It’s a cult with money – the most dangerous kind.
As Peter Glover says, writing in the Energy Tribune, this ought to be the lead story in every American paper and on every American news show. But it’s overshadowed by Japan, Libya and other developments in the world.
America’s combined energy resources are, according to a new report from the Congressional Research Service (CSR), the largest on earth. They eclipse Saudi Arabia (3rd), China (4th) and Canada (6th) combined – and that’s without including America’s shale oil deposits and, in the future, the potentially astronomic impact of methane hydrates.
The US and Russia are the two most resource rich countries in the world. Here’s the chart that shows how huge our advantage is:
Note it says “Oil Equivalent” on the left side. That’s because it includes coal. Yeah, that icky, nasty stuff that we’re trying to ban or make it supremely expensive to use.
The CRS estimates US recoverable coal reserves at around 262 billion tons (not including further massive, difficult to access, Alaskan reserves). Given the US consumes around 1.2 billion tons a year, that’s a couple of centuries of coal use, at least.
In fact, the US has 28% of the world’s coal.
In 2009 the CRS upped its 2006 estimate of America’s enormous natural gas deposits by 25 percent to around 2,047 trillion cubic feet, a conservative figure given the expanding shale gas revolution. At current rates of use that’s enough for around 100 years. Then there is still the, as yet largely publicly untold, story of methane hydrates to consider, a resource which the CRS reports alludes to as “immense…possibly exceeding the combined energy content of all other known fossil fuels.” According to the Inhofe’s EPW, “For perspective, if just 3 percent of this resource can be commercialized … at current rates of consumption, that level of supply would be enough to provide America’s natural gas for more than 400 years.”
So, the possibility of 400 years worth of NG, a couple hundred years worth of coal – but what about oil?
Well shucks, seems we have the potential to be quite free of foreign oil, doesn’t it?
While the US is often depicted as having only a tiny minority of the world’s oil reserves at around 28 billion barrels (based on the somewhat misleading figure of ‘proven reserves’) according to the CRS in reality it has around 163 billion barrels. As Inhofe’s EPW press release comments, “That’s enough oil to maintain America’s current rates of production and replace imports from the Persian Gulf for more than 50 years”
Of course that all assumes we do something about taking advantage of the resources we have and actually putting ourselves in a position where we’re not at the mercy of foreign sources of the same sorts of product.
Obviously and hopefully, we’ll come up with affordable and available renewable energy products while we’re doing that.
However, we have no coherent energy plan from this administration. Instead it seems to have gone to war with the oil industry and is doing everything it can to slow its ability to find and exploit these resources. 19,000 jobs and 1.1 billion in earnings have been lost since the imposition of the administration’s moratorium. Both former Presidents Bush and Clinton have spoken out against the delays. And the administration remains in contempt of a court order which ordered them to speed up the permitting process. As a result the EIA has estimated a loss of 74,000 barrels a day of production due to the moratorium this year.
Meanwhile our President touts foreign oil, our investment in it and claims we’ll be its “best customer”.
As Glover says:
Meanwhile US energy policy persists in pursuing the myth that renewables are the economically viable future, with fossil fuels already, as the president said in January, “yesterday’s energy”. With 85 percent of global energy set to come from fossil fuels till at least 2035 no matter what wishful thinkers may prefer, current US energy policy – much like European – is pure political pantomime.
Couldn’t agree more. We sit on a veritable treasure trove of natural resources which could actually make us energy independent and we have an administration which is doing everything in its power to not just keep us dependent on foreign oil, but to increase our dependence.
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Yesterday was a rather interesting day for me. Besides being a mild and pleasant day in Washington DC, a new Congress was being sworn in and an vital industry group was making the “state of American energy” known via a presentation and news conference at the Newseum – a museum about the history of gathering of news (and a place you should definitely put on your “must visit” list the next time you’re there).
The American Petroleum Institute’s Jack Gerard made a very sound and clear argument for the development of an energy policy which will best benefit this country and economy. Backed by a Wood Mackenzie study, the choices seem stark and the best one seems obvious. As he laid them out, choice one is to continue the policy of limited or no access to domestic drilling areas both on and off-shore and taxation of the industry at an increased percentage in order to generate revenue for government use. That will certainly generate revenue – no doubt. But at what real cost to the economy? That is the question.
Choice two is to open up access and focus on safe and environmentally sound drilling to boost production here in the US. That, of course, would have the critical side benefit of creating hundreds of thousands of jobs and, by the way, producing more revenue for government than choice one.
The numbers for the two options come from the Wood Mackenzie study as cited in an API press release.
The study calculates that increased access to America’s oil and natural gas reserves could, by 2025, create 530,000 jobs, generate $150 billion in taxes, royalties, and other revenue for the government, and “boost domestic production by four million barrels of oil a day.
The other choice? Not so good: “Raising taxes on the industry with no increase in access could reduce domestic production by 700,000 barrels of oil equivalent a day (in 2020), sacrifice as many as 170,000 jobs (in 2014), and reduce revenue to the government by billions of dollars annually”
That latter policy choice would reduce our domestic oil production, cost jobs, raise the cost of doing business for the oil and gas industry of which most will be passed along to those who can least afford it. Plus:
An additional 1.7 million barrels of oil equivalent a day in potential production that is currently of marginal economic feasibility would be at greater risk of not being developed under the modeled tax increase.
So again we see some pretty stark examples of how government enabling an industry would be vastly more beneficial to the economy and its own revenue coffers than would government using regulatory restrictions, denial of access and a straight up scheme of taxation.
Yet right now we have an administration which is choosing the latter course and is seemingly at war with that industry- an industry that “supports more 9.2 million U.S. jobs and 7.5 percent of the U.S. economy, and, since 2000, has invested nearly $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.”
Does that make sense to you?
The energy policy choice that enables Americans to increasingly address their own domestic energy needs with good paying jobs and will actually provide more in revenue for the government than taxation alone seems the obvious choice.
So why aren’t we seeing it being made?
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There’s no question that alternative and renewable fuels and energy sources are the way to go – if they’re feasible. Solar, wind, geo-thermal and others all promise clean and renewable energy for our future. But one of the more irritating things concerning some of those energy sources are the claims that they’re technologically ready for prime time. Geo-thermal being the exception (but a very minor source), wind and solar aren’t at all where they need to be to provide for the energy needs of the world. That doesn’t stop the usual suspects from implying they are.
One of the recent stories that helped blunt those sorts of assertions was that of Spain’s attempt to go green. The result was a loss of jobs and heavy subsidies for the solar power industry. Well apparently it is time to resurrect Spain and the solar industry and the New York Times obliges:
Although Spain’s long-term goal had been to produce 400 megawatts of electricity from solar panels by 2010, it reached that milestone by the end of 2007.
In 2008 the nation connected 2.5 gigawatts of solar power into its grid, more than quintupling its previous capacity and making it second to Germany, the world leader. But many of the hastily opened plants offered no hope of being cost-competitive with conventional power, being poorly designed or located where sunshine was inadequate, for example.
That’s wonderful, but in 2009, Spain’s power demand declined by 4.3% to 251,305 GWh. So while solar is a least contributing, it’s not contributing much. And there are still serious and obvious problems with solar power. The example used comes from Florida:
Across 500 acres north of West Palm Beach, the FPL Group utility is assembling a life-size Erector Set of 190,000 shimmering mirrors and thousands of steel pylons that stretch as far as the eye can see. When it is completed by the end of the year, this vast project will be the world’s second-largest solar plant.
But that is not its real novelty. The solar array is being grafted onto the back of the nation’s largest fossil-fuel power plant, fired by natural gas. It is an experiment in whether conventional power generation can be married with renewable power in a way that lowers costs and spares the environment.
The fact that they’re experimenting with solar is a good thing. It needs a lot of that. However the fact that this covers 500 acres of land is notable. 500 acres. It is the world’s 2nd largest solar array. And its contribution? At its peak, it will produce 75 megawatts of power. That’s about enough to power 11,000 homes.
Sitting right next too it is a natural gas fired power plant. In fact, that’s the plant on which these panels are grafted. It covers far fewer acres than does the solar array and it produces 3,800 MW of power – enough to power 557,333 homes.
The difference couldn’t be more obvious. Solar is much too inefficient in terms of power provided/land use to be practical as a stand alone source. To produce the same power the gas fired plant does would require an array that covers over 25,000 acres.
And there are other drawbacks as well.
This project is among a handful of innovative hybrid designs meant to use the sun’s power as an adjunct to coal or gas in producing electricity. While other solar projects already use small gas-fired turbines to provide backup power for cloudy days or at night, this is the first time that a conventional plant is being retrofitted with the latest solar technology on such an industrial scale.
The project’s advantages are obvious: electricity generated from the sun will allow FPL to cut natural gas use and reduce carbon dioxide emissions. It will provide extra power when it is most needed: when the summer sun is shining, Floridians are cranking up their air-conditioning and electricity demand is at its highest.
The plant also serves as a real-life test on how to reduce the cost of solar power, which remains much more expensive than most other forms of electrical generation. FPL Group, the parent company of Florida Power and Light, expects to cut costs by about 20 percent compared with a stand-alone solar facility, since it does not have to build a new steam turbine or new high-power transmission lines.
“We’d love to tell you that solar power is as economic as fossil fuels, but the reality is that it is not,” Lewis Hay III, FPL’s chairman and chief executive, said on a recent tour of the plant. “We have got to figure out ways to get costs down. As we saw with wind power, a lot has to do with scale.”
In other words, solar has a place as an add on, an adjunct, a gap filler for peak times (if it is sunny), but as a stand alone, the technology is not ready for prime time. As noted most stand-alone solar arrays have small gas-fired turbines to provide backup for cloudy days an night. And those backups are used – a lot.
It also requires heavy government subsidy since the cost of producing solar power is so high (inefficiency due to technology and its limitations on cloudy days and obviously, at night).
The whole point of this is to get real about the alternatives and understand that while everyone would love to see them come into their own as dependable sources of energy that can replace dirtier sources, the technology doesn’t yet exist. Until it does, I’m not at all ready to trade the eye-pollution of acres and acres of solar panels for a few megawatts of power – not when we’re the largest producer of natural gas (the cleanest burning fossil fuel we have) in the world.
When solar is ready (and that means dependable and steady power on the minimum of land) I’m ready to see it deployed. But until then, if it’s going to be pimped, it would be nice if those pimping it would include the good, the bad and the ugly when they talk about it. Of course if they did that, it wouldn’t be pimping, would it?
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And apparently force you into those electric cars the government is dumping all that money into.
According to API president Jack Gerard, in a letter he sent to members of Congress, the plan included in Waxman-Markey is pretty darn clear:
The legislation will drive up individual and commercial consumer’s fuel prices because it inequitably distributes free emissions “allowances” to various sectors. Electricity suppliers are responsible for about 40% of the emissions covered by the bill and receive approximately 44% of the allowances – specifically to protect power consumers from price increases. However the bill holds refiners responsible for their own emissions plus the emissions from the use of petroleum products. In total refiners are responsible for 44% of all covered emissions, yet the legislation grants them only 2% of the free allowances.
Upon reading that I assume anyone with the IQ of warm toast can see where that is headed. It is a targeted tax on oil and gas which will be passed on to the consumer in just about every conceivable way possible. Both at the pump and in the cost increases rolled into products we buy due to increased transportation costs, etc.
Electricity, however, whose coal plants are supposedly one of the primary producers of CO2 and very much responsible for the emissions problems we supposedly have get a pass. Does that even begin to hint that this legislation isn’t just about controlling CO2 emissions?
In fact, it shouts it out fairly clearly doesn’t it. Keep the proles happy by ensuring their power to the house is subsidized and stick it to them at the pump where government (who now has a stake in the game) wants consumers buying “green” cars. Don’t you just love it when a plan begins to come together?
Moving on, Gerard’s letter lays out some sobering numbers:
This places a disproportionate burden on all consumers of gasoline, diesel fuel, heating oil, jet fuel, propane and other petroleum products. An analysis of the Congressional Budget Office Report indicates that it could add as much as 77 cents to a gallon of gasoline over the next decade. And, according to the Heritage Foundation this legislation could cause gas prices to jump 74% by 2035. That means, at today’s prices, gasoline would be well over $4 a gallon.
Of course by 2035 we’ll all be riding around in vehicles powered by uincorn methane. And everyone knows that unicorn methane is nontoxic, environmentally friendly, smells good and is eco friendly.
That said, there is the cap and trade plan as it pertains to one vital segment of our economy in all its simple glory. It will force you to pay outrageous prices to use petroleum products in order to move you to the desired, but not yet available, means of conveyance. In the meantime, and until it is available, you’ll just have to suffer with the cost increases. Also remember that government estimates of cost are notoriously conservative and the real cost of such legislation is likely to be much higher than anticipated.
And don’t laugh too hard when they try to sell that to you by saying they’re attempting to save the planet. They’re exempting coal fired power plants for heaven sake. Trust me, this isn’t about emissions. If it were, they wouldn’t treat natural gas the way they do in the legislation as the letter points out.
After all, they’re the government and they’re there to help.