Libya’s Revolution Could Provide Stimulus through Cheaper Oil

The Nicholas Institute for Environmental Policy Solutions at Duke University

After rebel forces swept into Libya’s capital, Tripoli, the country may be able to start to ramp oil production and exports again, which many analysts hope will bring down oil prices.

Libya claims Africa’s largest proven oil reserves, and was producing about 1.6 million barrels a day when the production suddenly dropped to near zero in February. Many analysts said it will take two to three years for Libya’s oil production to recover to previous levels, and by year’s end they may only be producing a quarter to a third as much as before.

Even before rebels had taken over Moammar Gadhafi’s compound, oil companies were preparing to return to the country, which they left months before.

So far, though, the price has been up and down, in part because of anticipation of the outcome of a summit this week, which may result in a new round of quantitative easing, which would likely drive down the value of the dollar.

Trading Leaks

To try to understand how much speculators are driving oil prices, the Commodity Futures Trading Commission has been looking into “excessive speculation.” Earlier this year, five traders were charged with making $50 million off speculation.

Sen. Bernie Sanders, a long-time critic of oil speculation, became frustrated with the pace of investigations and leaked the records of many trades.

Unconventional Contention

While dozens were in jail in Washington, D.C., after protests to oppose the construction of another pipeline carrying tar sands products from Canada to the U.S., a New York Times editorial argued against the pipeline because of high greenhouse gas emissions from tar sands operations. Canadian officials, meanwhile, stepped up lobbying on its behalf.

Producing natural gas from shale deposits using hydraulic fracturing has also been under scrutiny for its greenhouse gas emissions, and now a new study argues Marcellus Shale natural gas has slightly higher emissions than conventional natural gas, but fewer emissions than coal.

West Virginia issued emergency rules to regulate horizontal drilling, which the governor hoped was a first step to more permanent regulations for this drilling.

Dark Days in America, Brighter Elsewhere

With budget woes, spending cuts, and more spending cuts scheduled to be made over the coming years, it appears renewable energy in the U.S. is entering “dark days,” reported GreenBiz.

But renewables are gaining increasing traction elsewhere. In Brazil, in a large power auction, wind emerged as the cheapest source of electricity, beating out natural gas and hydroelectric power. The contracts could lead to the construction of 1.9 gigawatts of new wind farms.

Japan is expected to pass a renewable energy bill that would introduce a feed-in tariff to make renewables more attractive, and set down in law the government’s target of cutting greenhouse gas emissions 25 percent (compared with 1990 levels) by 2020. To cope with the Fukushima disaster, though, Japan has boosted its use of fossil fuels in the short term.

Germany’s national rail company, which is the country’s biggest electricity consumer, is also moving toward renewables, planning to quit fossil fuels by 2050.

The Billionth Car

The future is bright for electric cars, according to a forecast from Pike Research, which said worldwide sales are likely to grow to 5.2 million by 2017, more than 50 times this year’s estimated sales.

However, even then electric cars would make up a tiny fraction of all cars, with more than one billion on the road as of 2010, a new study said. About half of the recent growth in cars has been in China, which has higher efficiency standards than the U.S., but the country is showing little interest in hybrids and electric cars.

Scientists Scrutinized 

Scientists working on climate change have been under scrutiny, with a polar bear researcher being suspended from his job for the U.S. government.

Another researcher came under fire after the “Climategate” leak of e-mails. He was cleared earlier this year in an investigation by his university, and now has been cleared in a second investigation by the National Science Foundation.

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.

Scrambling to Head Off Power Outages Caused by Heat Waves, Rapid Growth, and Disaster

The Nicholas Institute for Environmental Policy Solutions at Duke University

Texas has suffered through the worst drought and one of the worst heat waves on record, pushing electricity use to a record high in an attempt to cope.

Texas is the state with the largest installed wind capacity, and recently installed wind farms came through to boost the state’s electricity generation just in time. However, even this jump was not enough to meet demand, and four mothballed natural-gas plants will be fired back up. Thermostats that power companies can automatically adjust also helped ease demand.

The state suffered through blackouts earlier this year, and the mere threat of more outages recently has boosted home energy audits and efficiency measures, as well as calls for more renewable energy.

Texas may also beat Massachusetts to the punch, installing America’s first offshore wind farm before the long-delayed (but finally approved) Cape Wind project. The 600-turbine, 3-gigawatt project may have its first turbine up and spinning by year’s end.

Shortages Boost Fossil Fuels

China also had to ration electricity earlier this year, and is facing a power crunch over the next few years as it struggles to keep up with fast-growing demand.

To meet the demand, China’s coal use is soaring, and the country became a net importer of coal in 2009. In July, the country’s coal imports broke a new record, possibly driven by worries of outages, and by the government’s decision to allow power companies to charge more.

Earlier this month, it was reported that China is planning to create a national cap on energy use as part of a plan to limit greenhouse gas emissions.

China is not the only one boosting coal imports. The U.K. is buying increasing amounts of coal from the U.S., and the European Union’s demand for coal may increase.

Likewise, Japan has coped with a drop-off in nuclear power mainly by using more liquefied natural gas, but was able to boost its total electricity generation higher than last year, before the Fukushima disaster.

The increased cost of energy in Japan, said some experts, risks pushing the country into a third “lost decade” of economic stagnation.

Making Fracking Friendlier

The push to produce more natural gas through fracking needs further examination to reduce any environmental risks it could be causing in the U.S., according to a task force organized by U.S. Secretary of Energy Steven Chu. Companies are failing to follow best practices, and the explosive growth of fracking has left regulators behind, the task force said, prompting the need for stronger regulations. However, the panel made few specific recommendations of how to improve the situation, focusing mainly on collecting more data on the effects of fracking and sharing the data publicly.

While there are state regulations on fracking practices, the U.S. Environmental Protection Agency proposed earlier this month its first air pollution standards aimed at cutting smog and greenhouse gas emissions from these wells.

Renewables’ Attraction

While many economies are struggling, large investors are finding renewable energy looks more favorable, with insurance giants such as Allianz and Munich Re putting billions into wind and solar and  big banks funding large installations.

The world’s biggest solar power plant, to be built in California, will use photovoltaics rather than concentrated solar, its developer announced, because of the drop in solar panel prices.

Although U.S. residential solar power has not grown as quickly as in some other countries, such as Germany, do-it-yourself kits and innovative installations are making the investment more attractive.

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.

As Markets Dive, Clean Energy Stocks Hit by “Triple Whammy”

The Nicholas Institute for Environmental Policy Solutions at Duke University

The stock market took a beating this week, after the rating agency Standard & Poor’s downgraded U.S. bonds—but clean tech stocks have been falling even faster than the market as a whole.

Shares in clean energy companies have been hit by a “triple whammy”—producing too much capacity for the demand, problems with government debt, and broader risk aversion among investors. As a part of this, clean energy venture capital funding has dropped 44 percent when compared with last year.

Analysts from the global bank HSBC said wind energy stocks are undervalued and their prices could fall more as debt crises in both the United States and European Union stand to cut wind subsidies further. There are more than seven gigawatts of wind projects under construction now—but few planned beyond 2013 because of uncertainty about policies.

Solar stocks were down after many companies reported dismal second-quarter results, as prices on panels fell—but not as fast as the costs of producing them—and as their margins shrank. First Solar, the biggest solar panel manufacturer outside of China, boosted production but suffered a large drop in profits—and their share price. Suntech, the biggest manufacturer, also saw its stock fall, hitting a one-year low.

But some analysts say renewables stocks are bottoming out, and are set to rise again.

Adjusting to No Nukes

Germany decided to phase out nuclear power within 10 years and rely more heavily on renewables, and the country’s utilities are scrambling to adjust. E.ON, the world’s biggest utility in terms of sales, suffered its first-ever quarterly loss and is laying off 11,000 workers as it aims to boost its spending on renewables.

Another utility, RWE, is also selling off assets to cope with poor performance—but is planning to stick with its renewables investments.

Making the Military Green

The U.S. military is the single biggest user of oil in the world, and has been warned by analysts its dependence is a security threat. Now the U.S. Army has formed a new renewables office that may spend $7 billion over the next decade on renewable and alternative energy power.

Although the military has a target of using 25 percent renewable energy by 2025, many installations lack the expertise to move forward quickly enough, said the U.S. Department of Defense, and the new office aims to fill that gap.

Meanwhile, units within the mega-corporations Boeing and Siemens have teamed up to pursue military contracts for smart-grid technologies, which the military could develop and bring down the costs, helping them reach the market later.

Risky Business

With oil prices high and political uncertainty in many oil-exporting countries, the U.S. faces near-record energy security risks, according to a new U.S. Chamber of Commerce report. In 2010, their energy risk index is as high, as in the late 1970s and early 1980s, and near the record high of 2008. The Chamber predicts the risk level will remain high for another 25 years.

With gloomy economic prospects, the International Energy Agency (IEA), the U.S. Energy Information Administration, and the Organization of Petroleum Exporting Countries all agreed oil demand later this year is likely to be less than they had thought.

With Saudi Arabia boosting its production to the highest level in 30 years, oil prices have fallen a bit in recent weeks, but this is largely because of weak economies, the IEA said.

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.

China Aims to Become Solar Powerhouse with New Subsidies

The Nicholas Institute for Environmental Policy Solutions at Duke University

China is already the world’s biggest solar panel manufacturer, but now it is making a move to become a major solar energy consumer as well, with a nationwide feed-in tariff to pay people or businesses a subsidy for electricity they produce with solar panels. This follows on the heels of the country’s wind energy feed-in tariff in 2009, which led to explosive growth in their wind industry.

China had a mishmash of solar incentives before, but the new policy will give a clearer signal to the market and “encourage more companies to participate in the industry,” said an analyst from Bloomberg New Energy Finance.

China’s latest five-year plan, released in March, set the goal of using 20 percent renewable energy by 2020, and a solar feed-in tariff has been expected for months—so in anticipation many solar installations have already gotten rolling, and a flurry of projects may soon qualify.

Fast and Steady Wins the Race?

China, Germany and the U.K. have the most stable and consistent clean energy policies, which helps boost investment, according to a new report by Deutsche Bank Climate Change Advisors.

However, on the same day as China’s announcement, the U.K. put into place a cut in its solar power subsidy for installations over 50 kilowatts, “effectively ending solar farm development” in the country, Business Green argued.

There was a stampede of projects trying to get completed before the deadline, but some are planning more large installations nonetheless. Also, it turns out a loophole in the solar feed-in tariff would have allowed large projects to still get high subsidies—but the government is now moving to close that.

The U.K. had planned to raise subsidies for other clean energy—but it is delaying the raise in the feed-in tariff for anaerobic digesters.

Besides the U.K., a number of other European countries—including Spain, Italy and the Czech Republic—hacked away at their solar subsidies before, and now the Australian state of Western Australia has also eliminated theirs.

The Canadian state of Ontario, on the other hand, is trying to protect clean energy projects by changing regulations to make it harder to cut clean energy subsidies.

Meanwhile, solar installations have been rising fast worldwide as the price of solar panels has fallen about 20 percent in the past year. But manufacturer’s margins are also falling, so it is not clear how much longer these price trends can continue.

Ethanol Subsidy Survives—For Now

It came down to the wire, but the U.S. Congress passed a deal to raise the debt ceiling before the Aug. 2 deadline, and Obama signed it into law.

But the deal did not include a near-term cut of ethanol tax breaks, as some had expected, which would have netted an estimated $2 billion in additional revenue.

However, it is likely the ethanol tax break will not be renewed, in which case it would cease at the end of this year.

Meanwhile, ethanol producers are pushing for a change in regulations to allow more ethanol to be blended into gasoline, allowing gasoline to be E15—15 percent ethanol—compared with E10 today. Last month, experts testified to Congress that the higher ethanol content may damage some cars’ engines, and more tests were needed to ensure E15 is safe.

There are also plans to carry ethanol in existing oil pipelines—but a new study found ethanol could crack the pipes, since bacteria that eat the fuel and excrete acids could thrive inside the pipes.

Making the Smart Grid Smarter

There have been many proposals for making our electricity grids and appliances smarter to help them use less electricity at peak times and shift use to off-peak hours of the day.

However, if many people’s appliances all switch on suddenly when the electricity rate drops, an MIT study found, the spike in power use could bring down the grid. But smarter tuning of how electricity rates go up and down during the day could avoid the problem.

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.