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Saturday 23 May 2015

The next five years - this week's Energy Crunch from the nef

This is the latest from the New Economics Foundation:
New Economics Foundation
 


Energy and climate policy was scarcely mentioned during the UK election campaign. With a new government in place much sooner than expected, what do the next five years hold?

The appointment of Amber Rudd as the new Energy Secretary was welcomed by environmentalists, with the Renewable Energy Association hailing her as “a champion of renewables and low-carbon economy”. But then, as her predecessor Ed Davey found, policy in this critical area is not exclusively controlled by the Secretary of State.

On low-carbon policy the Conservative manifesto is mixed: it pledges to support value for money renewables while simultaneously promising to abolish financial support for new onshore wind farms – one of the cheapest low carbon energy options. The new government is also a staunch supporter of fracking – but those hoping to replicate US expansion would be wise to notice the tide is turning (see our chart of the week).

Whether the fall in US shale output is temporary or terminal remains to be seen, but at least one prominent financier is scathing about the industry’s prospects. Shares in drilling companies plunged after hedge fund manager David Einhorn, famous for predicting the collapse of Lehman Brothers in 2008, likened the industry’s business model to “using $50 bills to counterfeit $20s”. Others predict output will recover if the oil price continues to rise – recently recovering to around $67 per barrel. But geologist David Hughes points to longer term output decline, since output per well is falling in key areas where the best parts have been tapped first. Either way, as the International Energy Agency noted, the fall in production brings a multiyear winning streak to a close.

Betting on cheap fossil fuels in the long-term is always risky. The New Climate Economy’s latest report makes this point clearly: fluctuations in production and price hurt investment, growth and jobs. Of course if you factor in climate change then there’s no such thing as cheap fossil fuels full stop. In the UK, we can only hope that our new Energy Secretary can build and defend sensible policies, putting us on the track to a low-carbon economy.

Best wishes,
Griffin Carpenter
Co-editor, Energy Crunch


Three things you shouldn't miss this week

  1. Article: What will a Conservative majority mean for climate and energy? - Carbon Brief’s essential post-election summary.
     
  2. Report: Decarbonizing Development Three Steps to a Zero-Carbon Future - The aim of this report is to take this lofty goal of zero emissions by 2100 and examine what it means in terms of today’s policy making for development.
     
  3. Chart: Low oil prices are making their mark on shale output in the US
    EIA US shale
    Source: Bloomberg

Energy Transition

Lessons Learned Along Europe’s Road to Renewables - Denmark, Portugal, and Spain have all made a rapid transition away from fossil fuels for electricity, but each in a different way.
China's Revolution In Wind Energy - Back in 2010, China became the world’s largest wind energy producer and the boom is continuing unabated.
The rise of green gas: Turning crops into energy - Solar panels and wind turbines got us used to the idea of green electricity, but what's called "green gas" is less well-known.
Tesla's New Battery Doesn't Work That Well With Solar - The Powerwall product that has captured the public's imagination has a long way to go before it makes sense for most people.
Japan aims to harness space solar energy - Orbiting craft will gather energy of the sun and utilise microwaves to transfer power to Earth.

Oil & Gas

EIA Predicts Shale Oil Output Cuts to Grow Next Month - The U.S. lost about 1 percent of the oil production flowing from its shale formations this month, and the decline is just starting.
US shale has 'blinked' in battle against OPEC: IEA - IEA stated Wednesday that far from winning the "battle," it had only just begun for OPEC.
Shale Oil Drillers Plunge After Einhorn Slams Fracking Costs - Money manager David Einhorn slammed the shale drilling industry that ushered in a new era of U.S. oil production as wasteful, expensive and a terrible investment.
US taxpayers subsidising world's biggest fossil fuel companies - Shell, ExxonMobil and Marathon Petroleum got subsidises granted by politicians who received significant campaign contributions from the fossil fuel industry.
Shell to resume Arctic drilling off Alaska as green groups warn of disaster - Environmentalists accuse the government of ‘looking the other way’ after US gives green light for Shell to restart drilling for oil and gas.
Russia Was Right: Shale in Europe Has Proved a Dud - Difficult geological conditions, fierce environmental opposition, cumbersome regulations and a bloody war in Ukraine have conspired to quash investors’ enthusiasm and wear down their patience.

UK

Beyond the election — the energy agenda for the new government - A number of looming issues are already obvious and the government will have no control over most of them. [sign in required]
Tory victory a huge blow to UK green energy industry, campaigners warn - Government prepares to scrap subsidies for renewables, champion fracking, and make significant cuts to spending.
Boris Johnson rejects London motion on fossil fuel divestment - Mayor dismisses call to divest £4.8bn pension fund from oil, coal and gas saying UK needs fracking to avoid relying on energy imports.
The uncertain future of Britain’s renewable energy - Many of policies during their last term have already increased uncertainty for investors in the sector.
Renewable energy target still in limbo after Labor rejects biennial reviews - Labor environment spokesman Mark Butler says two-yearly review of the RET would stifle investment and create industry uncertainty.

Climate

CO2 levels reach monthly record - Global carbon dioxide (CO2) concentrations have reached a new monthly record of 400 parts per million, according to scientists.
EU agrees 'landmark' carbon market deal - Emissions trading reform expected to pull the plug on Europe’s carbon credit glut in 2019, but environmentalists warn of need for long-term solution.

Transport

Cycling vs. Car Transportation - Lund University study says travelling by car is six times more expensive for society and individuals.

Related Reports and Commentary

U.S. shale oil and gas: Going over the hedge? – Carbon Tracker
Revisiting the Shale Oil Hype: Technology versus Geology - David Hughes, Post Carbon Institute

The Energy Crunch team: Sandra Bernick, Griffin Carpenter, Stephen Devlin, Simone Osborn, David Strahan


Energy round-up: the next five years | New Economics Foundation

See also:
The uncertain future of Britain’s renewable energy | New Economics Foundation
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