Friday, 21 March 2014

Budgeting for resilience?

The New Economic Foundation has released an analysis of the budget:

Energy round-up: budgeting for resilience?

Photo credit:   D. Reichardt

Three things you shouldn't miss this week

  1. The Oil and Gas Weapon Won't Work - Russia produced 10.6 million barrels per day (mbd), consumed 3.2 mbd, leaving 7.4 mbd available for export. The United States produced 8.9 mbd, consumed 18.5 mbd, and imported 10.5 mbd.
  2. Budget 2014: Key climate and energy announcements - Among a few pre-election treats for voters were some important changes to the government's energy and climate policies.
  3. Big public majority agree that benefits of tackling climate change at least equal the costs:

    Source: The Carbon Brief

East-West tensions spiralled to levels not seen since the end of the cold war as Russia annexed Crimea this week. Energy supplies have not yet been affected but Russian Foreign Minister Sergei Lavrov ominously threatened “consequences” in response to any sanctions imposed by the US and EU.
When Russia cut off gas supplies to Ukraine in 2006 and 2009 the impact was felt throughout Europe. Europe still imports more than a third of its crude from Russia and about a quarter of its gas, meaning sanctions are a two way street – particularly if the crisis drags on. Paolo Scaroni, the chief executive of the Italian oil and gas group, Eni, told the Financial Times the balance of power lies with Russia: “If, in the middle of a tough winter, we don’t have Russian gas, we are in trouble. But Russia is not in trouble if they get our money the day after.”
The Ukraine crisis was briefly mentioned in George Osborne’s budget speech on Wednesday because of the risk of higher commodity prices, but the main theme was building a “resilient economy”. Will his latest budget help deliver this?
The headline measure was to cap the carbon tax at £18/tonne until the end of the decade instead of £30/tonne as originally intended, just two years after it was established. The cap was one of a number of measures aimed at protecting industry from the cost of decarbonising the energy sector, but some commentators worry it could also now revive coal, skewing the market against cleaner alternatives and creating an uncertain environment for investment. The carbon tax cap is also anticipated to cut £15 from retail consumer bills, another area of high political pressure.
If resilience means an economy fit for a future of greater resource competition and the impacts of climate change, then there was little on offer in this week’s package – no additional measures to support renewables or energy efficiency, a frozen fuel price escalator, and the December deal with energy companies to slow the pace of home energy efficiency measures is still in place.
The Chancellor also flagged shale gas as another way to cut energy costs for manufacturing: “To those who say manufacturing is finished in the West, I say: look at America”. But since even shale’s biggest British cheerleader, Lord Browne, accepts fracking is unlikely to deliver cheaper gas, this doesn't look like a strategy for real resilience.
Energy round-up: budgeting for resilience? | new economics foundation

Some notes:

A resilient economy:
"With the help of the British people we're turning our country around. We're building a resilient economy. This is a Budget for the makers, the doers, and the savers." ... focus on support for industry, investors and exporters in order to create a more resilient economy. Why have neo-liberal economic ideas been so resilient since the 1980s, despite major intellectual challenges, crippling financial and political crises, and failure to deliver on their promises?
The circular economy, like all economies, is about flow. The flow of energy and materials which produce what we use or consume and the flows of money which enable exchange. What is different about the flows in a circular economy is that unlike the linear economy all of these flows matter. 
“Resilience is the capacity of a system to absorb disturbance and reorganise while undergoing change so as to still retain essentially the same function, structure, identity, and feedbacks.”
circulareconomy - Resilience vs Efficiency

Decarbonising the energy sector:
Shifting away from our reliance on volatile gas supplies will ultimately lead to lower energy bills for households
How a decarbonisation target will lead to lower energy bills | Environment | theguardian.com
There is now an overwhelming consensus that the best way to position the UK as a modern, efficient economy attracting investment and creating jobs, while cutting carbon emissions and controlling energy bills, is to use the Energy Bill to decarbonise our electricity supply by 2030v
As a report by UK Energy Research Centre (UKERC) found: “The absence of a 2030 decarbonisation target in the bill may not persuade investors of the need for new manufacturing assets in the UK, as there is a risk that these could be stranded after 2020 once the current targets have been met”.
Q&A: What would decarbonising the power sector mean? | Greenpeace UK

Some more notes from NEF:

Oil & Gas

US opens emergency oil stockpile in signal to Putin - Department of Energy releases 5m barrels from Strategic Petroleum Reserve, first used seriously in "Desert Storm".
IEA says supply surge led by Iraq will ease oil tensions - The International Energy Agency expects the pressure on global oil markets to ease, in spite of rising geopolitical tensions...
Russia tensions risk higher gas prices for Europe, says Eni boss - Europe will face disrupted supplies and higher prices for gas next winter if tensions with Russia cut off flows through Ukraine, the head of Italy’s largest energy company has warned.
Shell cuts spending in U.S. to lower shale exposure - Royal Dutch Shell (RDSa.L) will cut spending by a fifth and lay off staff at its American exploration and production business, the company said on Thursday.
Chevron cuts production outlook, raises oil price view - Chevron Corp, the second-largest U.S. oil company, cut its 2017 production forecast on Tuesday by 6 percent, citing project delays and asset sales, while saying high prices have pushed its new baseline for oil to north of $100 a barrel.

Energy Transitions

Cheap batteries will revolutionise the renewable energy market - The big power companies will struggle to keep up as a solution emerges to the problem of storing wind and solar power.
Liquefied Air to Store Energy on U.K. Grid - When it comes to storing energy on the grid, giant batteries are the only game in town.
Deal of the century: buy out the US coal industry for $50bn - What if Bloomberg, Branson and Grantham came together to buy out the coal industry, close and clean up the mines, retrain workers and accelerate the expansion of renewable energy?
E.ON cuts dividend, closes plants in deep sector crisis - E.ON, Germany's biggest utility... said it would shut more than a quarter of its power plants in Europe in response to a rise in renewables that has rattled utilities across the continent.
Germany’s carbon targets in doubt as emissions rise in 2013 - New lignite-fired power stations prompt rise in Germany’s CO2 emissions, tarnishing the country’s green revolution


Dungeness nuclear power station quietly taken offline for five months over fears of Fukushima-style flood disaster - An internal report by operator EDF found that the shingle bank sea defences at the site in Kent were 'not as robust as previously thought'
Russian state nuclear firm in talks to build power station in the UK - Rosatom meeting Whitehall officials but experts say a Russian VVER reactor is unlikely to open in UK for at least 10 years.


Fracking 'could harm wildlife' - Fracking has the potential to devastate wildlife habitats across the UK, says research…
UK energy security at risk as gas imports surge – Centrica - Gas imports will hit 70pc of supply by 2020, raising the need for new sources of supply.
Renewable energy industry celebrates as Merton Rule retained - The government has retained a key planning rule enabling councils to impose local targets for green energy in new homes, but looks set to remove their powers to set energy efficiency goals.
How a false solution to climate change is damaging the natural world - In growing maize for biogas, the crop that does most damage to the soil is being specifically exempted from the rules.
Deal to cut energy bills 'will cause 20,000 job losses and 50,000 homes to go uninsulated' - Labour and the IPPR criticise government over consequences of deal with energy companies to cut £50 from bills by reducing insulation targets.


Will fossil fuels melt the global economy? - Politicians, investors, NGOs and the UN’s climate chief have warned that the world’s stock markets have over-invested in fossil fuels…

Related Reports and Commentary

Water for Energy: Is Energy Becoming a Thirstier Resource – International Energy Agency
How do ex-Saudi Aramco geologist Dr Husseini's oil price spike predictions of USD 140 by 2016-17 stack up? - Matt Mushalik, Crude Oil Peak

new economics foundation

No comments: