Tag: OPEC

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U.S., China Reach Climate Deal

The Nicholas Institute for Environmental Policy Solutions at Duke University
The Nicholas Institute for Environmental Policy Solutions at Duke University

Two nations that account for more than one-third of all greenhouse gas emissions reached a climate deal. The United States will accelerate the pace of its net greenhouse gas emissions reductions from 17 percent below 2005 levels by 2020 to 26–28 percent by 2025. China will increase the non-fossil fuel share of all its energy to approximately 20 percent—roughly a fifth of its energy supply—by 2030.

“This is a major milestone,” said President Obama. “This is an ambitious goal, but this is an achievable goal. We have a special responsibility to lead the world effort to combat global climate change.”

The deal was reached after several rounds of talks between the two nations. At a joint press conference where the deal was announced, Obama indicated that he hoped the deal would “encourage all major economies to be ambitious and all developed and developing countries to work across divides” so that an agreement could be reached on climate change targets in Paris next year.

Chinese President Xi Jinping had similar comments.

“We agreed to make sure international climate change negotiations will reach agreement as scheduled at the Paris conference in 2015 and agreed to deepen practical cooperation on clean energy, environmental protection and other areas,” he said. The deal calls for China to deploy an additional 800–1,000 gigawatts of nuclear, wind, solar and other zero-emission energy sources—a capacity greater than that of all the coal–fired power plants in China and nearly equal to total electricity generation in the United States. Among other initiatives on which the two countries agreed: Expand joint clean energy research and development, advance major carbon capture and storage demonstrations, enhance cooperation on hydrofluorocarbons, creating a federal framework for cities in both countries to share experiences and best practices for low-carbon economic growth and adaptation to climate change impacts, and boosting trade in “green” goods, including energy efficiency technology and resilient infrastructure.

China is still largely poor, but its economy and energy use is still growing rapidly. At the same time, China is combating severe air pollution.

“Just the fact that they agreed to cap their emissions in the future is a significant development,” said Brian Murray, director of the Environmental Economics Program at Duke University’s Nicholas Institute for Environmental Policy Solutions. “As important as these two countries are, they can’t get the job done working alone. But without them, the world can’t get the job done.”

Will China’s pledge keep the climate from warming 2 degrees Celsius above pre-industrial levels—a scientific benchmark for averting dangerous climate impacts? A number of scientists say it falls short of what is needed to hit that target.

Congressional Republicans are skeptical of the deal. “As I read the agreement, it requires the Chinese to do nothing at all for 16 years, while these carbon emission regulations are creating havoc in my state and other states across the country,” said Mitch McConnell, who is in line to become the new Senate majority leader in January.

Grid Reliability In Question

New analysis by the North American Electric Reliability Corporation (NERC) discusses the potential impacts of the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan on grid reliability (subscription). Specifically, NERC points to rapid transition as a factor in damaging capacity margins, increasing the difficulty of maintaining power quality and leaving the grid vulnerable to extreme weather.

The EPA said the report on the impact of the Clean Power Plan, which would reduce carbon emissions from existing fossil fuel–fired power plants, offered no new analysis and overlooks new capacity that will be built by 2020.

“The world is going to change regardless of this new proposed rule, and we know new capacity is going to build and NERC just ignores that completely,” a staff member in the EPA’s Office of Air and Radiation told Greenwire (subscription). “There are a lot of assertions and claims in the report that aren’t really substantiated by any particular analytics they mention, or supported by a deeper look into the issues.”

A U.S. Department of Energy study, due out in 2015, will examine the rule’s impact on utilities, according to The Hill.

OPEC Reduces Forecast Amid Low Oil Prices

In its annual World Oil Outlook, the Organization of the Petroleum Exporting Countries (OPEC), which supplies a third of the world’s crude oil, cut demand forecasts to 28.2 million barrels per day in 2017—a 14-year low. The 2014 report estimates approximately 600,000 barrels a day less than the 2013 report and 800,000 below the amount required this year.

The report further states that there will be a “small decline in real values” over this decade, together with a “constant nominal price” of $110 a barrel between now and 2020.

Booming U.S. oil production has put domestic output on the same level as that of energy giants Russia and Saudi Arabia, but oil prices are on the decline. UT San Diego News says the overall economy may still win, noting that “we still consume far more petroleum—in the form of gasoline and thousands of related products—than we pump from the ground. This means import costs are falling, too.”

Despite the decline in oil prices—to some $77 a barrel—companies like BP and Total are continuing to invest in major projects.

“We are not changing our investment decisions because of this [current price],” said Bob Dudley, BP chief executive.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

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Reach of BP Oil Spill Still Strong Two Years Later

The Nicholas Institute for Environmental Policy Solutions at Duke University

BP has made headlines again, two years after the Gulf oil spill. For the spill, the company stands to pay billions of dollars in environmental fines under the Clean Water Act; a new study indicates thousands of jobs could be created along the coast if those funds were used for coastal restoration. Specifically, if $1.5 billion per year over the course of the next decade were spent on coastal restoration, it could result in close to 57,000 jobs. Penalty figures are still being decided.

As Hollywood actors are clenched in a legal battle over technology that may have helped clean the Gulf following the spill, federal investigators are looking at whether BP officials lied to Congress about just how much oil was actually leaking between April 20 and July 15, 2010. Internal e-mails, to the highest levels of BP, show a struggle over well flow and reveal that some company engineers warned early on that size estimates of the undersea leak might be too low. Meanwhile, another set of recently released e-mails—some 3,000 to be exact—is stirring up controversy. In a Boston Globe op-ed two Woods Hole Oceanographic Institute scientists detail how they reluctantly acceded to BP’s demands for confidential e-mails detailing the scientific process they used to calculate oil flow rate following a court order. The scientists cited concerns over “not simply invasion of privacy, but the erosion of the scientific deliberative process.” BP’s request for access to White House e-mails related to the spill, however, was denied.

While people are beginning to return to the Gulf to vacation and Gulf leases to oil and gas companies are on sale for the first time since the spill, the tiny microbes that once inhabited the area’s beach sands still haven’t bounced back.

Negotiators Face Stumbling Blocks on Way to Rio+20

Spring in the U.S. has been the warmest since record keeping started in 1895. As temperatures rise, representatives from some 135 heads of state will be present when United Nations Conference on Sustainable Development, or Rio+20 Earth Summit, begins June 20. A newly surfaced document indicates there may be some difficulty reaching a blueprint for sustainable development that all can agree on. Specifically, just 20 percent of the wording in the draft—addressing everything from corporate sustainability reporting to universal access to clean energy—has been agreed upon. With the deadline for negotiations soon approaching, WWF director general Jim Leape worried about the prospect of “an agreement so weak it is meaningless, or complete collapse.”

In a recent interview with Yale e360, the International Energy Agency’s Fatih Birol urges countries to band together to address dangerous rises in global temperatures. “Individual efforts of countries or sectors will not bring us to 2 degrees,” said Birol. “And if the trends continue like this, we can very soon kiss goodbye to a 2-degree trajectory.”

Despite worldwide criticism, a senate panel in North Carolina approved a bill that would prohibit some scientific data to be used to predict future sea level rise. The current bill allows only the state’s Coastal Resources Commission to calculate the rate of rise using historic data, not projections of sea level rise from climate change. The senate went on to approve the controversial bill Tuesday by a vote of 35-12. Virginia appears to have taken a similar approach. Lawmakers there have commissioned a study of the coastline, only after references to climate change were removed.

The New Hampshire legislature passed a bill that would pave the way for the state to exit the Regional Greenhouse Gas Initiative (RGGI), but the law would require that two other states leave the cap-and-trade pact first. New England’s emissions have fallen recently—supporters of the cap-and-trade pact attribute this RGGI; others say cheap natural gas explains the decrease. “Natural gas has changed the complexion of the whole situation,” said the Nicholas Institute for Environmental Policy Solutions’ Brian Murray. Meanwhile, a New York judge has dismissed a lawsuit that would have ended that state’s participation in RGGI.

U.S. Energy Output Soars

As global energy consumption grew 2.5 percent worldwide, so did the United States’ energy output, as the U.S. became the world’s largest natural gas producer and its oil output grew more than any nation outside the Organization of Petroleum Exporting Countries. Meanwhile, two industry groups have come out with a study indicating the Obama administration has overestimated methane emissions from hydraulic fracturing, or fracking. This comes after the U.S. Environmental Protection Agency issued the first regulations for fracking in April.

North Carolina is closer to legalizing hydraulic fracturing, despite new evidence that the state’s reserves might be much smaller than previously thought. New Jersey is looking to restrict wastewater treatment plants from accepting water used in hydraulic fracturing—claiming it could harm water supplies.

Hydraulic fracturing is not the only energy method in the spotlight. A new U.N. report shows global investment in renewable energy is at a record high. In fact, in 2011 it was up 17 percent to $257 billion—with solar investment surging past wind to take the lead.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

 

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Surprise Deal Emerges at United Nations Climate Talks

The Nicholas Institute for Environmental Policy Solutions at Duke University

In a surprise turnaround, the United Nations climate talks managed to produce a new deal to eventually curb global emissions moving forward. In a press release announcing the agreement, the United Nations Framework Convention on Climate Change (UNFCCC) called it a “breakthrough.”

The new agreement marks a break from the Kyoto Protocol, which divided the world into two categories—the developed and the developing world. Instead, said the European Union’s Climate Commissioner Connie Hedegaard, the new agreement reflects “today’s mutually interdependent world,” and moves toward an agreement that partners all countries in combating climate change.

The new agreement—dubbed the “Durban Platform“—created a group with an unwieldy name, the Ad Hoc Working Group on a Durban Platform for Enhanced Action, which has the mandate to develop “a protocol, another legal instrument or an agreed outcome with legal force.” In essence, it is an agreement to finalize an accord no later than 2015, which would go into effect in 2020.

The agreement would also extend the Kyoto Protocol, set to expire at the end of 2012, for an additional five years, allowing the system’s carbon trading to continue. This won’t have much impact on carbon markets or renewable investment in the next few years, analysts told Reuters, but could have an effect over the longer term.

How the Deal Was Done

To forge the deal at the thirteenth hour, the talks were extended nearly two days.

The push for the new agreement reportedly came from developing nations and those likely to be most affected by climate change, which put pressure on the European Union to work for an extension of the Kyoto Protocol.

The bloc of emerging countries known as BASIC—Brazil, South Africa, India and China—was divided, with India the strongest holdout against binding emissions cuts for these countries—at least until richer countries met the targets they’d already committed to.

India was persuaded by an addition in the Durban text of an option of an “outcome with legal force”—although the difference in meaning between that and a protocol or “legal instrument” is not yet clear. The United States’ Special Envoy for Climate Change, Todd Stern, said overall it is “pretty clear that we’re talking about something probably in the nature of a protocol.”

Just after the talks wrapped up, Canada pulled out of Kyoto Protocol, saying it won’t meet the goals it had agreed to for cutting its emissions, bringing condemnation at home and abroad. Nonetheless, UNFCCC Executive Secretary Christiana Figueres said Canada still has a “legal obligation” to cut its emissions.

Landmark or Disaster?

Opinions were divided over the new pact’s significance.

Some called it a “landmark deal,” although many seem to think it is unlikely to keep warming below 2 degrees Celsius, the line the U.N. had drawn for “dangerous climate change.”

A Nature editorial called the outcome “an unqualified disaster” for the climate, and argued politicians can no longer talk “with a straight face” of meeting the 2-degrees-Celsius goal. With India’s agriculture under major threat from further warming, the country’s reluctance to sign a binding climate treaty was “suicidal,” argued Gwynne Dyer.

Persian Gulf Tensions

Meanwhile another deal was being hashed out, among the members of the Organization of Petroleum Exporting Countries (OPEC). They agreed to raise officially allowed production to 30 million barrels a day—but since production is already at that level, the agreement will likely have little effect on oil prices. The compromise came out in Saudi Arabia’s favor, since the country defied other OPEC members earlier this year and unilaterally raised its own production.

Oil markets are “cooling” as the Eurozone crisis has slowed global growth, said the International Energy Agency; nonetheless, the agency warned oil prices are high enough to threaten growth.

Tensions between Iran and the West continued, with some saying a covert war has already begun. An escalation would likely drive oil prices much higher, and the U.S. and European Union are reportedly trying to find ways to apply pressure to Iran that would neither raise oil prices nor hand Iran windfall profits.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

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Only Five Years Left to Make Transition to Low-Carbon Infrastructure

The Nicholas Institute for Environmental Policy Solutions at Duke University

The infrastructure built over the next five years could “lock in” enough emissions to push the world past its target for limiting warming to 2 degrees Celsius, according to the International Energy Agency’s (IEA) latest annual update of energy trends, World Energy Outlook.

The Agency is “increasingly pessimistic” about the prospect for dealing with climate change, said deputy executive director Richard Jones.

To stay below 2 degrees Celsius of warming, the world has a budget of greenhouse gases it can emit, equal to about 1 trillion tons of CO2. Infrastructure already in place, or in the process of being built, will emit about 80 percent of that, the IEA estimated.

Unless there is a binding international agreement soon to ensure a swift transition to low-carbon infrastructure, “the door to 2 degrees will be closed forever,” said IEA Chief Economist Fatih Birol. So, investment in cleantech can’t wait until economic good times, argued the Guardian’s Damian Carrington.

This transition away from fossil fuels will require that annual subsidies for renewable energy continue rising, reaching $250 billion by 2035—four times today’s level—the IEA estimated, but this would still be considerably less than today’s fossil fuel subsidies.

The IEA foresees oil prices remaining high for decades to come, with a tight market with risks of price spikes if there is a cut-off due to war or soaring prices if there is insufficient investment in oil fields.

Because of these climate and security risks, Birol argued, “We have to leave oil before it leaves us.”

Solar Trade War?

The boom in Chinese production of low-cost solar panels has hit U.S. manufacturers hard, making it difficult for them to compete.

Subsidies for renewable energy in China have sparked accusations of a trade war with the United States, prompting a U.S. Department of Commerce investigation.

Some U.S. manufacturers launched an official complaint against China, and have called for a duty on Chinese panels imported into the U.S.

Another group of U.S. solar manufacturers and installers banded together to form the Coalition for Affordable Solar Energy to oppose the complaint. This led China’s largest solar power plant developer to shelve plans for a $500 million U.S. project.

Despite China’s large exports of solar panels, they’re also using many at home—and may install as much solar capacity as the U.S. this year.

Carbon Tax Approved

Australia will impose a large tax on carbon emissions, after the country’s Senate passed the legislation. The tax will kick in next July, and the country is pursuing linking its carbon market with others in New Zealand and Europe.

The system will be tax-and-dividend in which households will be compensated for higher energy prices, with payments of about 10 Australian dollars per week scheduled to start in May, before the tax hits.

Pipeline Controversy

The proposed Keystone XL pipeline to carry tar sands from Canada to Texas faced its biggest opposition yet with a revival of protests in Washington, D.C., in which thousands of protesters encircled the White House.

Canada is also considering another tar sands pipeline called Northern Gateway to reach a port on the Pacific coast, sited for export to Asia.

Oil historian Daniel Yergin argued opposition to the Keystone XL pipeline is misguided because if the U.S. doesn’t buy the fuel, China will.

Either way, the large store of tar sands in Canada could reshape world oil markets, said the Organization of Petroleum Exporting Countries (OPEC), which represents large exporters such as Saudi Arabia, but does not include Canada.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

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“Crony Capitalism” Alleged Behind Tar Sands Pipeline Review

The Nicholas Institute for Environmental Policy Solutions at Duke University

The proposed Keystone XL pipeline, which could carry a diluted form of tar sands from Canada to Texas, has attracted the ire of many environmentalists, including Bill McKibben, who spearheaded protests in front of the White House last month.

This week, McKibben argued the Obama administration is practicing “crony capitalism” and that e-mails obtained through a Freedom of Information Act request imply the State Department—charged with evaluating the pipeline—may have worked closely with TransCanada, the company building the pipeline, to help the plan win approval.

The State Department rejected the accusations of bias. In response, the heads of a more than a dozen major environmental groups and other nonprofits called for President Obama to strip the State Department of its authority over the pipeline. Environmental groups also sued to stop the pipeline, saying TransCanada had unlawfully begun preparations in Nebraska for the pipeline, although it is still awaiting approval.

The opposition went more mainstream when a New York Times editorial called for the United States to “Say No to the Keystone XL,” arguing it would not do much to help energy security because much of the oil appears slated for export, and the best bet for long-term job creation is through renewable and alternative energy, rather than building more pipelines.

The European Union appears likely to stymie imports of fuels made from tar sands, through a new fuel quality directive.

Haunting Visit

The Obama administration also came under fire because the U.S. Department of Energy (DOE) had hired top campaign supporters to help direct loan guarantees and other support for cleantech companies, including $535 million for now-bankrupt solar panel manufacturer Solyndra.

Obama was warned before his May 2010 visit to Solyndra, the trip may come back to haunt him because the company was already looking shaky, according to newly released e-mails.

Before a major loan guarantee program ended, the DOE completed $4.75 billion in loan guarantees for four large solar projects, on top of $11.4 billion in loans backed by the program before.

Solar Decline

It’s not just solar companies such as Solyndra that have struggled. Sales of solar panels may drop in 2012, according to a Bloomberg New Energy Finance analyst and two large solar companies. This runs counter to 15 years of double-digit growth rates, and would be the first time, at least since 1975, that annual installations have fallen.

The U.S. solar industry is headed for a “solar coaster” as key federal subsidies are set to expire.

In Germany, consumers are rushing to install more panels in anticipation of a scheduled drop in the country’s solar subsidies. Chancellor Angela Merkel also said the government may cut the subsidies further.

With a surplus of panels on the market and prices falling, Germany’s plan to shut its nuclear plants may cost the country less than expected, taking away some of the bite of this transition.

Subsidy Backfire

In 2010, the world spent $409 billion subsidizing fossil fuels, up 36 percent from the year before, since policies remained largely unchanged while fossil fuels prices rose, according to a new report by the International Energy Agency (IEA).

In industrialized countries, subsidies tend to go to fuel producers, while in developing countries the price to consumers is subsidized as a way to help the poor. However, the vast majority of fossil fuel subsidies go to middle and upper classes, the report found. It also argued the subsidies encourage waste and make prices more volatile, thus backfiring by creating hardship for the poor.

The countries with the biggest subsidies are major oil and gas producers that rely heavily on oil revenue—mostly members of the Organization of Petroleum Exporting Countries (OPEC), plus Russia. In 2010, about half the subsidies went toward oil, a quarter toward natural gas, and the remaining quarter toward coal. “The time of cheap energy is over,” said the Executive Director of the IEA, Maria van der Hoeven.

Fighting Denial

Many of the leading Republican candidates for the presidency have, while on the campaign trail, questioned whether climate change is real, or whether people are causing it.

Some Republicans who supported policies to cut emissions in the past have been quiet about this issue recently. But National Journal reports that, behind the scenes, former Republican officials and other insiders are trying to shift the GOP’s focus back to acknowledging climate change is real.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

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Japan, Germany Struggle With Nuclear Power Slowdown

The Nicholas Institute for Environmental Policy Solutions at Duke University

With a large share of their nuclear power plants down at the moment, both Japan and Germany are scrambling to meet energy demand and figure out how to get by without nuclear in the future.

Two-thirds of Japan’s 54 nuclear reactors are currently down, most of them for maintenance and testing. To cope with the power shortfall, Japan’s central government asked consumers to cut back on electricity use. But by spring of next year, all reactors currently running in the country would need to shut down to go through scheduled check-ups. If they fail, or if local opposition prevents them from restarting, it could lead to “a once unthinkable scenario,” the Japan Times reports, with the country losing all its nuclear power generation.

After Japan’s nuclear disaster, Germany temporarily shut down seven of its oldest nuclear reactors, and later decided to keep them shut. Not long after, the country’s parliament voted to phase out all of the country’s nuclear power plants by 2022. But Germany’s Federal Network Agency said last week one of the old reactors may need to be restarted to meet energy demand.

Less Nuclear Means More Coal, Gas

While Germany has voted for an “energy revolution” based on renewables, the country is slated to boost its reliance on fossil fuels in the short run. Germany plans to build new coal and natural gas power plants, subsidized by revenues from selling emissions credits—money previously slated for energy efficiency efforts.

Germany also signed a deal with Russia to boost cooperation between the countries. Germany is already Russia’s biggest natural gas customer, and their purchases will likely increase once a new pipeline under the Baltic Sea opens in October.

In Japan, if all the nuclear plants did go offline, in the short term the country would be unable to fill the gap with fossil fuels, according to a study by the Japan Center for Economic Research. Nonetheless, Japan will boost its use of fossil fuels this year, raising its greenhouse gas emissions significantly, which could potentially throw the country off its targets under the Kyoto Protocol. Morgan Stanley estimated Japan would use more coal, liquefied natural gas, and oil—including, in the worst-case scenario, an additional 540,000 barrels a day for the rest of the year.

Oil Addiction Leaves Few Options

If terrorists were to attack the world’s largest oil production facility in Saudi Arabia, the U.S. would have few options to deal with the resulting massive oil shortfall, according to a “war game” run by Securing America’s Future Energy, a coalition of retired military leaders and business officials.

Global oil markets are well-enough supplied for the moment, concluded the International Energy Agency in a 30-day review of its release of emergency oil stocks in June, so it will not coordinate release of more stocks right now. The agency is still waiting to see the effects of its release of 60 million barrels—less than one day’s worth of global consumption—which is still in process.

One reason for the agency outlook is some members of the Organization of Petroleum Exporting Countries have boosted production—in particular Saudi Arabia. That country’s own oil consumption has reached a record high, and is set to continue rising—meaning in the longer term their exports will probably dive.

Green Helmets

The United Nations Security Council heard arguments for the creation of a peacekeeping force to deal with climate change-related conflicts. The President of Nauru, a small island nation in the Pacific, pushed for the new force, and also wrote an editorial for the New York Times, arguing his own country’s unsustainable reliance on phosphate deposits, now largely depleted, is a cautionary tale about ecological limits and the threat of climate change.

However, the U.N. failed to agree on whether climate change poses a security threat.

Carmageddon’s Unforeseen Benefit

Americans are willing to avoid gridlock traffic, at least for a few days, as Los Angeles found. The city closed its most heavily used freeway for roadwork to add a carpool lane. Los Angeles Mayor Antonio Villaraigosa warned residents to “stay home. Or go on vacation. Walk. Go on a bike. But do not get in your car … It’s going to be a mess.” The feared traffic jams were quickly dubbed “carmageddon.”

What actually happened was anti-climactic, as people heeded the warnings and stayed off the roads, leading to a dramatic drop in smog levels. County Supervisor Zev Yaroslavsky said locals “turned Carmageddon into Carmaheaven.” He added, “Why can’t we take some chunk of L.A. and shut it down to traffic on certain days or weekends, as they do in Italy?”

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

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Australia’s Ambitious Scheme Sets World’s Highest Price on Emissions

The Nicholas Institute for Environmental Policy Solutions at Duke University

Australia, with the highest per capita greenhouse emissions of any large developed country, will soon take on one of the most ambitious schemes to tackle climate change, with a new carbon-trading system.

The planned carbon tax will start in 2012 and apply first to the 500 worst polluting companies responsible for about 60 percent of the country’s emissions, making it the largest carbon market outside of Europe. Rates will start at 23 Australian dollars per tonne of carbon (US$24.20 per ton), higher than prices have been on the European emissions market for the past couple of years.

The carbon prices would gradually rise, and then the government would transition in 2015 into a cap-and-trade system, aiming for emission cuts by 2050 of 80 percent compared with 2000 levels.

Taxes Redefined

Australia’s plan was generally hailed by environmentalists and those working on renewable energy, and economists generally support it. But it was panned by many in big industry, and Prime Minister Julia Gillard’s administration, already suffering low approval ratings, saw ratings drop further after announcement of the new plan.

To avoid the carbon tax penalizing the poor, about half of the new revenues will be returned to citizens in the form of tax breaks for the lowest earners, part of an effort toward “reducing taxes on desirable things (work and income) … and replacing them with a charge on something undesirable (carbon pollution).”

The carbon tax is part of a package of new policies on climate and energy, which also include the creation of a new Australian Renewable Energy Agency, which will oversee more than $3 billion in funding, primarily for solar, wind, and geothermal energy. The funding boost will put “solar on steroids,” said John Grimes, chief executive of the Australian Solar Energy Society, aiding large-scale solar installations.

Nuclear Power Continues to Polarize

Meanwhile, the U.K. is embarking on a huge restructuring of its electricity market, which is outlined in a new white paper. The Guardian’s Damian Carrington argues the “sprawling and complex maze of measures … has the central aim of getting new nuclear power stations built.”

Since Japan’s Fukushima disaster, the U.K.’s Secretary of State for Energy and Climate Change, Chris Huhne, and others in the U.K. government have supported expanding the country’s nuclear power. Within days of Japan’s disaster, the U.K. government began drawing up a public relations strategy to downplay the disaster, according to a recent report on a leak of government e-mails.

The restructuring proposed in the new white paper would require spending £200 billion ($320 billion) on new infrastructure, but this won’t necessarily lead to higher electricity prices than customers would face otherwise, argues Huhne, since customers now are vulnerable to rising oil and gas prices.

Elsewhere, there are a growing number of countries planning or weighing a nuclear retrenchment. Most recently, Kuwait’s Deputy Prime Minister said the country is no longer interested in developing nuclear energy, and Japan’s Prime Minister urged his country to phase out nuclear.

France, the most nuclear-reliant country, is embarking on a new study of the country’s future energy mix that will consider the possibility of phasing out nuclear by 2040 or 2050.

Saudi Oil Peak?

After the announcement by the International Energy Agency that the world’s richer countries would tap into their emergency oil reserves, oil prices initially fell. For the U.S. portion of the release, many bidders vied for the oil, offering about $105 to $110 a barrel—which would raise more than $3 billion for the government.

The high number of bidders “shows there are concerns in the marketplace over just how much oil is going to be out there,” said David Pumphrey, deputy director of energy and national security for the Center for Strategic and International Studies.

After an acrimonious meeting of the Organization of Petroleum Exporting Countries in which members disagreed about whether to boost production, some countries decided to go it alone. The most significant is Saudi Arabia, which raised its output to about 9.5 million barrels a day—the same rate as before the global recession.

Meanwhile, major Wall Street firms warned of rising oil prices over the rest of this year and into 2012. Goldman Sachs, for one, raised its forecast prices, and said “it is only a matter of time before inventories and OPEC spare capacity become effectively exhausted” and prices soar. A major reason for the gloomier outlook, Goldman Sachs said, is Saudi Arabia won’t be able to pump as much oil as many had expected.

Solar Purchasing

The company Groupon offers big discounts as long as a bunch of people will sign up to a particular deal, and now San Francisco is emulating this model to boost solar power installations. By forming buyers’ groups, they hope to get around some of the barriers to small-scale solar, such as high transaction costs and availability of credit.

In another effort to finance small-scale solar, some firms are emulating Wall Street’s bundling of mortgages, by creating “asset-backed securities”—bundles of leases on residential solar panels.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

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Ailing Economies Push Richer Countries to Tap Emergency Oil Reserves

The Nicholas Institute for Environmental Policy Solutions at Duke University

In a move that caught many by surprise, the world’s richer oil-importing countries will soon tap into emergency oil reserves, the International Energy Agency (IEA) announced, arguing: “Greater tightness in the oil market threatens to undermine the fragile global economic recovery.”

In total, over the next 30 days, IEA member countries plan to release 60 million barrels of crude—less than one day’s worth of global consumption. Half that oil would come from the U.S., and the rest from a dozen other countries, including many European Union members, Turkey, Korea, and Japan. The IEA has coordinated a release of oil from its members’ reserves only twice before, in response to the 1991 U.S.-Iraq war and to Hurricanes Katrina and Rita in 2005.

U.S. Secretary of Energy Steven Chu said, “We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries.” However, the Obama administration began considering tapping the strategic oil reserve in January.

Speculation of Motives

Reactions to the oil release ran the gamut, with the chairman and the managing director of oil analysis firm IHS CERA saying the new release is “an unprecedented use of strategic reserves as an economic stimulus.” Some said the move is symbolic, to boost market optimism and to give the sense that the government is doing something about high gasoline prices while others said the real motivation was to hurt oil speculators by catching them by surprise.

Some speculators, it seems, may have gotten a jump on it: oil started trading suspiciously in the hours before the IEA announcement, driving prices down and prompting an investigation by the Commodity Futures Trading Commission. In fact, oil prices fell more than 5 percent in the day of the IEA announcement, but the following day rebounded, in part because of fears about supplies getting tighter later this year.

Spare a Barrel

Many members of the Organization of Petroleum Exporting Countries (OPEC) criticized the decision, saying the IEA had not given them time to boost their production. In late May, OPEC countries decided against formally raising their production quotas, but some members—in particular Saudi Arabia—signaled they would boost production anyway.

OPEC members in the Persian Gulf—such as Saudi Arabia and Kuwait—are widely considered to hold most of the world’s spare capacity for oil production. But oil expert Euan Mearns noted that despite a sharp rise in drilling activity in Gulf nations in February 2011, their production hasn’t risen much. He interprets this as a sign of goodwill, and as an indication that “usable spare capacity does not exist”—or that it must be of relatively undesirable heavy, sour crude.

A Natural Gas Bubble?

In the U.S., “fracking” to get natural gas out of underground shale has been booming—but the vast majority of fracking wells are “inherently unprofitable” and the fast-growing industry is a “Ponzi scheme,” according to industry e-mails obtained by the New York Times. Much of the shale gas activity has been financed by a rush of investment money into the sector, rather than by profits from production, the e-mails say.

In a companion article, the New York Times reported e-mails from the Energy Information Administration reveal internal doubts over their forecasts of shale gas production, such as projections it would triple from 2009 to 2035.

California Carbon Cap Stalled

California’s legislation for a cap-and-trade system for many of the state’s largest greenhouse gas emitters had faced a legal battle—but the court hearing the case ruled the state can go ahead. The project was scheduled to start in January 2012, but Air Resources Board Chairwoman Mary Nichols, who oversees the program, announced enforcement for major polluters would will be delayed until 2013.

Efficiency from Detroit to Afghanistan

The Obama administration is trying to cut demand for oil by boosting vehicle efficiency. In closed-door talks with Detroit’s big three—General Motors, Ford and Chrysler—officials called for average mileage for cars and light trucks to reach 56.2 miles per gallon by 2025.

Meanwhile, Obama announced plans for troop withdrawals from Afghanistan, prompting renewed discussion of the costs of the war—including NPR’s report that U.S. military operations in Afghanistan and Iraq spend an estimated $20 billion a year on air conditioning.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

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Ethanol Tax Breaks Survive, but Vote May Have “Broken the Dam”

The Nicholas Institute for Environmental Policy Solutions at Duke University

While a bill to slash $6 billion in annual tax breaks for ethanol fuel failed to pass the U.S. Senate, it was still hailed by some lawmakers and analysts as a major break from the past.

It raises a philosophical quandary, says the Christian Science Monitor: “If Congress takes away a tax subsidy, should that count as a tax hike?” Nearly all Republican representatives have signed on to “The Pledge,” an agreement to never vote to raise taxes.

The bill to end ethanol tax breaks attracted votes from both sides of the aisle, with 34 Republicans and 6 Democrats voting for it—but it fell 20 votes short of passing. Nonetheless, some Democrats said the vote broke the dam, opening the way for the repeal of other tax breaks, such as larger ones for the oil industry.

Meanwhile, a bipartisan group of Midwestern senators introduced an alternative to ending ethanol subsidies. Instead of a flat-rate tax credit of 45 cents per gallon of ethanol-gasoline blend, the new bill would introduce a variable subsidy that would increase when oil prices drop, and fall when oil prices climb.

On Thursday, a wide majority in the Senate did vote in favor of another piece of legislation that would end tax breaks for U.S. ethanol as well as tariffs on foreign ethanol. However, the change is unlikely to go into effect immediately, Bloomberg reports, because the repeal of the subsidies and tariffs is attached to another piece of legislation that is unlikely to become law.”

Fuel Woes Cause Ripple Effects

A report by the United Nations Food and Agriculture Organization, the World Bank, the World Trade Organization, and seven other international agencies called for an end to subsidies for biofuels because they are driving up food prices. Prices for both food and fuel have been rising fast in India and China, leading the Chinese government to adjust banking rules to try to quell inflation.

Meanwhile, if oil prices remain high—above the current level of $120 for Brent crude—there is a risk of derailing the economy, into a double-dip recession, said Fatih Birol, chief economist of the International Energy Agency. “We all know what happened in 2008. Are we going to see the same movie?”

U.S. Secretary of Energy Steven Chu also warned high fuel prices are taking their toll. “We’re very cognizant of … the fact that higher gasoline prices so impede the economic recovery,” Chu said. One of the measures the Obama administration considered for bringing down gasoline prices, he said, was to tap the government’s Strategic Petroleum Reserve, intended for emergencies.

More details came in a report from Reuters, with anonymous sources saying that in the weeks before a recent, fractious OPEC meeting, U.S. and Saudi officials met to discuss “an unprecedented arrangement” of oil trades. In the proposed deal, the U.S. would send Europe low-sulfur, “sweet” crude from the strategic reserve, and in return receive more high-sulfur, “sour” crude from Saudi Arabia. The deal fell through, the sources said, because Saudi Arabia was unwilling to sell the oil at a discount.

Another Kind of Military Power

The U.S. military—the world’s single largest user of oil, and responsible for 80 percent of the U.S. government’s energy consumption—has now created an Operational Energy Strategy. “Before, it was assumed energy would be where you needed when you needed it,” a Pentagon official told National Journal. “The new strategy is to say that energy is a strategic good that enables your military force.”

Earlier this month, Gen. David Petraeus, the top U.S. commander in Afghanistan, called on the Army to use fuel more efficiently. In addition to efficiency, renewable energy will be a major priority for investments by the military over the next 20 years, according to a study by clean tech group Pike Research.

Nuclear Risks Still Weigh Heavily

Nuclear plants and nuclear waste disposal have been under increased scrutiny since Japan’s Fukushima disaster, which the government recently confirmed had led to a meltdown of three of the six reactors at the site.

Republicans called for Gregory Jaczko, head of the U.S. Nuclear Regulatory Commission, to step down after it was revealed he had “unilaterally” moved to stop work on the Yucca Mountain nuclear waste dump—a project for a long-term disposal site that has been in the works for decades, but that President Obama vowed in 2009 to end.

An independent review of temporary waste storage sites in the U.S. indicated that the threat of a release of radioactivity dwarfs the risk Japan faced. The report’s lead author, Robert Alvarez, said, “The largest concentrations of radioactivity on the planet will remain in storage at U.S. reactor sites for the indefinite future.”

Meanwhile, China’s nuclear power plants all passed a recent safety review by government inspectors, paving the way for the country to move ahead with its ambitious plans for expanding atomic energy.

Germany’s decision to phase out nuclear power by 2022 has turned the country into “a multibillion-dollar laboratory experiment” on how to roll out alternatives quickly to replace the quarter of Germany’s electricity that came from nuclear prior to Japan’s disaster. To enable renewables to take on a larger share of the load will likely require huge investments in expanding the grid and add a few thousand miles (several thousand kilometers) of additional power lines.

Are We Headed for a New Ice Age?

The Sun may go into hibernation for decades, a few new studies suggest, with a dramatic drop in the number of sunspots. Previous drops in the number of sunspots have been linked to cooler times on our planet, such as the “Little Ice Age” that struck medieval Europe.

Although some newspapers trumpeted that we’re approaching a “second little ice age,” New Scientist says the effect would actually be more like “a slightly less severe heatwave.” In fact, even if sunspots do go quiet, it would lower the Sun’s heating of Earth by at most 0.3 watts per square meter, whereas theman-made greenhouse effect is now about six times larger, at 1.7 watts per square meter.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

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OPEC Discord May Be “the Beginning of the End” of the Oil Cartel

The Nicholas Institute for Environmental Policy Solutions at Duke University

With oil prices high, the International Energy Agency (IEA) last month made a rare plea for the world to produce more oil. So the latest meeting of the Organization of Petroleum Exporting Countries (OPEC), where they set their production quotas, was closely watched. After a rancorous meeting, most member countries refused to raise quotas.

Before the OPEC meeting, the chief economist of the IEA, Fatih Birol, told the New York Times: “Oil prices are hurting the economy.” He added, “I hope to see more oil in the markets soon.”

Saudi Arabian Oil Minister Ali al-Naimi declared it “one of the worst meetings we ever had,” with opposing views from the “haves” and “have-nots”—in terms of spare production capacity.

Saudi Arabia had been pushing to boost production by more than 1.5 million barrels per day, above current levels. Already OPEC members have gone beyond their quotas, producing an estimated 28.8 million barrels per day, compared to the current overall quota of 24.8 million barrels per day. “Everybody in OPEC is cheating and everyone knows that,” an oil analyst told the New York Times.

The Saudi oil minister suggested his country would decide on its own production levels, telling Platts, “let the buyers come and we will supply them with what they want, whatever they need.” The Wall Street Journal quoted one Gulf-state delegate as saying it’s “the end of the quota system,” and the Guardian reports some analysts say the split could mark the beginning of the end for the cartel.

Some analysts argued OPEC doesn’t matter, and Russia is the big winner, since they have added more to exports in the past few years than Saudi Arabia, and have the ability to boost their production further.

Is Increasing the Gas Tax the Answer?

The head of General Motors’ North American unit predicted gasoline prices will continue to climb in coming years. While, General Motors’ CEO, Dan Akerson, called for higher gas taxes to push people to buy more efficient cars. “We ought to just slap a 50-cent or a dollar tax on a gallon of gas,” Akerson said.

Meanwhile, the Liveable Communities Taskforce in the U.S. House of Representatives issued a report titled “Freedom From Oil.” “Providing a range of transportation choices can help break auto dependence,” the report said, and it encouraged a range of measures from more efficient cars, to better city planning, to “pay-as-you-drive” auto insurance.

Clean Energy Trade Wars

Subsidies for clean energy and emissions trading schemes were also a source of discord, within countries and internationally. China agreed to end subsidies that favored wind power firms using domestic parts, after the U.S. complained it was protectionism that broke World Trade Organization rules.

Starting next year, the European Union plans to include flights in and out of Europe in its greenhouse gas emissions trading system. But China may threaten a trade war over this issue, following on U.S. carriers, who have already started a legal battle to fight European Union levies on flights.

In several countries, feed-in tariffs that subsidize renewable energy are on the chopping block. The United Kingdom is considering slashing its subsidy by 40 to 70 percent for installations producing more than 50 kilowatts, but the solar industry pleaded for a re-think, saying the move would “decapitate” the industry. The chief policy director of the Confederation of British Industry said “business confidence has clearly been bruised by sudden and unexpected policy shifts,” including the reversal of these tariffs.

Climate Talks Stumble, Coal Rises

A few countries are starting to oppose an extension of the Kyoto Protocol. The climate treaty expires in 2012, and countries have been trying to negotiate a successor, but with limited success. At the latest round of talks in Bonn, Germany, one of Canada’s delegates said their country would not take on any emissions targets under an extension of the treaty. Russia and Japan also took a similar stance. The European Union’s lead negotiator said it may take until 2014 or 2015 to create a full successor treaty.

To help cut emissions and cope with a decline of nuclear power, the world could create a “golden age of gas,” according to a new IEA report. However, renewable energy such as wind and solar is often competing with natural gas—so the rise of natural gas could “muscle out” renewables, delaying their deployment.

Only six months ago, the IEA was warning about a gas glut, but that is already beginning to dissipate as gas demand has surged. In part this is due to increased imports by Japan of liquefied natural gas, after shutting another of its nuclear power plants.

The world may be moving increasingly toward coal, according to numbers published in the latest BP Statistical Review. Coal consumption  rose to 29.6 percent of the world’s energy—its highest share of the energy mix since 1970—with China’s use growing 10 percent in 2010, but richer countries also consuming 5 percent more in 2010. To reflect the rise of renewables, BP added them to their report for the first time, reporting that in 2010, solar grew 73 percent and wind close to 25 percent.

A New Kind of Crude

Instead of relying one kind of black goop—crude oil—to power cars, researchers at MIT developed another liquid they call “Cambridge crude.” The conductive liquid can store electrical charge, so that the battery could be slowly charged by plugging it in, or could be quickly “refueled” by draining the liquid and pumping in a new, pre-charged batch—giving electric cars the flexibility of fuel cars.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.