Year: 2011

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Debt Ceiling Impasse Could Hit Clean Energy Hard

The Nicholas Institute for Environmental Policy Solutions at Duke University

Clean energy could be among the hardest-hit sectors if the U.S. government does not raise the debt ceiling and then defaults on the national debt.

If there is a default, it could hurt in direct ways, by stopping payments for cash grants and loan guarantees that support many renewables projects. It could also hit innovation, by putting the Department of Energy program for cutting-edge energy technologies, ARPA-E, at risk.

A default could also hit indirectly, by pushing down the value of the U.S. dollar, as well as pushing up interest rates, which would affect financing for renewables projects that require large up-front investment.

Leaving Energy Subsidies, Credits Behind

Any kind of budget deal will have to include large spending cuts. According to a survey of experts by the National Journal, most energy subsidies and tax breaks could be cut back. Subsidies for wind and solar may fly under the radar and survive cuts—at least for a little while.

Corn ethanol subsidies are likely to face big cutbacks, following a Senate vote in June. Any plan to raise the debt ceiling would most likely include slashing the 45-cent-per-gallon credit for gasoline blended with ethanol. “We don’t need the excise tax credit,” said Chuck Woodside, chairman of the national Renewable Fuels Association, because ethanol is now cheaper than gasoline.

The tariff on imported ethanol is likely to go soon as well, reported Ethanol Producer—either at the end of the year when current legislation expires, or sooner, if that legislation is repealed by a deal on the debt ceiling.

Making Oil Go Further

Problems with the debt ceiling could have mixed effects on the price of oil, which has been rising again in recent weeks. A default would likely push down demand, but also push down the value of the dollar—which would have opposite effects on the price of oil. Lately, though, traders have been betting prices will continue to go up.

The oil the U.S. buys would go further under new auto efficiency standards Obama is expected to announce on Friday, which would require cars by 2025 to average 54.5 miles per gallon, compared with current requirements of 30.2 mpg.

During the first half of 2011, Detroit’s Big Three automakers—General Motors, Ford and Chrysler—boosted their lobbying to more than $10 million to try and shape the efficiency standards. Now, Platts reported, the major automakers have agreed to the plan.

Renewables Boost in U.K., Germany

The U.K. is dominating the offshore wind market lately, installing, in the first half of 2011, the most offshore turbines of any country—101 around the U.K., compared with seven across the rest of Europe.

But Germany is looking to catch up. Both houses of Parliament have now passed a new energy bill, which has more aggressive targets for expanding renewable energy, and includes higher tariffs for biomass, geothermal energy and offshore wind. But according to an analysis by Rhenish-Westphalian Institute for Economic Research, the transition to renewable energy is likely to be more expensive than the government has said.

A Warm Cloud

Server farms—which store and process huge amounts of data that zing around via the internet—eat up a lot of electricity, but the heat they spit out could be put to use, argued scientists at Microsoft Research and the University of Virginia. They propose putting servers in buildings, where the waste heat could heat the buildings, to save ­on energy—and it could also create faster, more secure networks.

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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Worldwide Energy Shortages Triggered by Drought, Subsidies

The Nicholas Institute for Environmental Policy Solutions at Duke University

As the summer heats up, energy shortages are striking around the world—including the oil-rich Middle East.

Dubai, part of the United Arab Emirates (UAE), stopped supplying gasoline to the other emirates, because the government can’t afford to continue subsidizing gasoline, which it currently sells at far below global market rates. Now a UAE company has hashed out a deal to turn fast-food fryer oil into biodiesel to fuel vehicles. In Iran, one of the world’s largest natural gas producers, many power plants have run out of natural gas, and are instead burning oil to keep the lights on.

Pakistan’s main export is textiles, but with power outages of 12 hours or more a day in many cities, the sector is ailing, forcing an estimated 400,000 people out of jobs. Many businesses in Pakistan are turning to diesel generators, but this is a major drain on the economy.

With only 19 of 54 nuclear reactors running, Japan is facing electricity shortages, and the government has instituted a 15 percent cut in electricity use by large users in eastern Japan. Temperatures are high in Japan, and the country may suffer the hottest summer on record, raising fears of heat stroke deaths.

South America’s second-largest economy, Argentina, is rationing natural gas through the cold months (it’s winter there). And Tanzania, east Africa’s second-largest economy, is facing indefinite power outages as a result of fuel shortages as well as drought—which has cut power output from the hydroelectric dams that supply more than half its power. Business leaders in the country have called on the government to work out emergency plans to save the economy from collapse.

End in Sight?

Power outages are likely to continue, says the International Energy Agency (IEA), because the world will find it difficult to raise the global investment of $16.6 trillion needed over the next 25 years to keep electricity production growing at 2 percent a year. But there are many ways countries can save energy in a hurry, according to a new IEA report drawing on case studies of nations that faced shortages.

As in Pakistan, many countries are falling back on diesel-fueled generators, the IEA points out—and this has been a boon for companies deploying generators and portable power plants, in particular to developing countries.

Many countries could face a similar problem as Tanzania, said a report by the New America Foundation, which indicates use of water in energy production is rising—both for fossil fuels, such as shale gas fracking, and for renewables. Another report, from the Institute for Development Studies, echoed similar concerns, saying climate change threatens the world’s electricity systems.

Attack of the Jellyfish

An unexpected complication at power plants—which may be related to greenhouse gases—have been plagues of jellyfish clogging up water pipes. In late June, jellyfish clogged a cooling pipe at a Japanese nuclear power plant—the first time that had happened in 14 years of operation. In Israel, jellyfish likewise clogged a cooling pipe at another power plant—requiring construction equipment to scoop up many dumpsters’ worth of the creatures.

Jellyfish numbers are likely booming in part because of overfishing, but also because of warming waters as well as ocean acidification, both caused by rising carbon dioxide levels.

The Long and Short of China’s Coal

A new study suggests pollution from China’s coal-fired power plants has stalled global warming—for the short run. It’s long been known burning coal produces sulfur dioxide, an aerosol that has a cooling effect, but which also contributes to acid rain, one reason the U.S. created the Clean Air Act requiring scrubbers on coal plants.

China’s coal consumption has more than doubled in the past decade, and the country is now responsible for about half the world’s annual coal use. Their coal plants are largely without scrubbers, although they’re now starting to install these.

French Fry Flights?

U.S. commercial flights can now use blends of biofuels made from plants and organic waste, after winning approval from a U.S. standards group. On June 29, Dutch airline KLM made the first commercial biofueled flight, from Amsterdam to Paris, and the airline plans to expand use of a 50-50 blend of jet fuel and HEFA—hydro-processed esters and fatty acids made from used cooking oil.

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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Beleaguered EPA Must Take Charge of Greenhouse Gases, Supreme Court Rules

The Nicholas Institute for Environmental Policy Solutions at Duke University

In a unanimous decision, the Supreme Court shot down a global warming lawsuit several states and environmental groups had brought against five of America’s biggest utilities, responsible for about one-tenth of the nation’s greenhouse gas emissions. The case was aimed at getting the court to rule greenhouse gas emissions a public nuisance and order the defendants to reduce them. But the court said Congress had already authorized the U.S. Environmental Protection Agency (EPA) to handle greenhouse gases under the Clean Air Act, concluding: “We see no room for a parallel track.”

The new decision bolstered the court’s 2007 decision, in which it ruled the EPA does have the authority to regulate greenhouse gases as well as traditional pollutants, like smog and particulate matter.

After the new decision, the door is still open for environmental nuisance suits in general, and potentially even for state-level nuisance suits on greenhouse gases, noted Yale law professor Douglas Kysar. And, he pointed out, if Congress strips the EPA of its authority to regulate greenhouse gases—as some recent bills attempted to do—then the nuisance suits on a federal level could return.

In the Spotlight

The new ruling “puts the spotlight squarely on EPA,” said David Doniger of the Natural Resources Defense Council. Recently, the agency has issued new rules on emissions from light-duty vehicles and is moving forward on similar rules for larger vehicles. It is also developing its regulations on power plant emissions, which were scheduled to be published in draft form in late July, but have now been pushed back two months in response to complaints from industry and state governments.

Meanwhile, a study by nonprofit group Media Matters found opponents of the EPA dominate TV discussion of the topic, appearing more than four times as often as those in favor of greenhouse regulation by the agency.

Some commentators said the ruling will stoke attempts to hamper the EPA. The Obama administration signaled it may veto any laws that attempt to block the EPA. When asked about attempts to hamstring the EPA, Obama’s chief of staff Bill Daley said, “we’re not going to allow any legislation that impedes the need to improve our health and safety.”

Obama Gets Gored

In a long article in Rolling Stone, former Vice President Al Gore made pointed criticisms of the Obama administration’s work on climate change. “His election was accompanied by intense hope that many things in need of change would change,” Gore wrote. “Some things have, but others have not. Climate policy, unfortunately, is in the second category.”

Obama’s backers pointed out that many new programs are now coming into place. One is a “game-changing” $2.6-billion solar panel project announced this week that would install nearly as many panels as were installed in the whole country in 2010. The U.S. Department of Energy is backing more than $1 billion in loans for the project, and earlier this month announced it would also back $1.9 billion in loans for two solar power projects in California.

Meanwhile, private financing of renewable energy projects has picked up, with Google emerging as one of the biggest spenders. This year, the company has already invested 10 times as much in renewables and clean tech as it did in 2010, reaching a total of $780 million—including, this month alone, $102 million for a wind energy center and $280 million for a residential solar panel partnership.

Big Oil on the Big Screen

U.S. gasoline prices have dropped somewhat in the past couple of weeks, but the high prices are still a brake on the economy, said Federal Reserve Chairman Ben Bernanke, and several members of Congress are targeting oil speculators to try to make prices lower and more stable.

Big Oil is also in the sights of the cartoon “Cars 2.” In an interview with the Wall Street Journal, Director John Lasseter said, “I kept going to big oil” as the villain in the soon-to-be-released film.

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.

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Record-breaking Greenhouse Gas Emissions, but Carbon Market Failing

The Nicholas Institute for Environmental Policy Solutions at Duke University

Greenhouse gas emissions dropped in 2009 in the wake of the Great Recession. Research now shows emissions rebounded quickly in 2010, setting a new all-time record.

In a press release, the International Energy Agency (IEA) said the prospect of limiting the global increase in temperature to no more than 2 ºC is getting bleaker. Commenting on the new data, economist Nicholas Stern said emissions are “now close to being back on a ‘business as usual’ path.”

Nonetheless, Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change, called for an even stricter goal in a speech at an emissions trading conference. “Two degrees is not enough – we should be thinking of 1.5 ºC,” she said.

Canada’s emissions likewise fell in 2009, as described in the government’s emissions report to the United Nations. However, they deliberately omitted details on tar sands operations’ emissions, which showed a 20 percent rise in pollution in 2009.

Despite record emissions, international carbon trading shrank for the first time since the program began in 2005, from $143.7 billion to $141.9 billion. The portion for the Clean Development Mechanism, aimed at helping developing countries put low-emission options in place, fell by nearly half, in large part because of uncertainties about the successor to the Kyoto Protocol. Because of this drop, Andrew Steer, the World Bank’s Special Envoy for Climate Change, told the Guardian, “The [carbon] market is failing us.”

Germany, Others Flee Nuclear

Germany had planned to expand its nuclear program, until Japan’s Fukushima disaster led to fresh debates over nuclear power. Now the government has announced it will close all the country’s nuclear power plants by 2022. The country had already shut down seven of its oldest nuclear plants in March, and those will remain off.

Germany’s largest utility, E.ON, is upset about the policy reversal and plans to sue the government for damages. E.ON and other big operators are facing big losses, not just because of the policy change but also because “customers are fleeing in droves” to companies that offer nuclear- and coal-free electricity.

Grid operators had already warned that Germany may suffer blackouts this summer if these nuclear plants were to remain off, and other European countries may likewise face blackouts due to a spring drought that has left river and reservoir levels low.

To make up for lost electricity from nuclear plants, Germany may turn to higher-emission sources like coal in the short run, boosting its carbon dioxide emissions by about 40 million metric tons, or around 5 percent. The move is a “shot in Russia’s arm,” said Steve LeVine of Foreign Policy, since it will make Germany even more reliant on natural gas from Russia, holder of the world’s largest proven reserves. Already Germany has become more reliant on heavily-nuclear France, becoming a net importer of electricity from them.

In the longer term, the government is raising its targets for renewable energy, aiming to double its share, from 17 percent today to 35 percent by 2020. In 1997, Germany set a target of achieving 14 percent renewables by 2010, but met the target early, in 2007. Integrating a large share of renewables is easier than thought before, according to a new analysis by the IEA.

Switzerland also decided to phase out nuclear power, albeit on a slower schedule—by 2034. Nuclear power supplies 40 percent of the country’s electricity, making it one of the world’s most nuclear-reliant countries.

Plea for Oil

Meanwhile, oil prices have remained high, with Brent crude remaining above $110 a barrel, leading the International Energy Agency in mid-May to make a rare formal plea to the world’s oil producers to raise their production, because continued high prices could hurt economic growth.

Saudi Prince Al-Waleed bin Talal agreed oil prices are too high, saying he would like them to be around $70 to $80 a barrel. “We don’t want the West to go and find alternatives, because, clearly, the higher the price of oil goes, the more they have incentives to go and find alternatives,” Talal told CNN.

But more than a dozen experts surveyed by Reuters said members of the Organization of the Petroleum Exporting Countries (OPEC) are unlikely to raise production quotas at their upcoming meeting.

In part this is because there’s disarray over who will even attend the meeting. Iran’s president Mahmoud Ahmadinejad sacked the country’s oil minister and announced he would take on the job himself, and planned to represent Iran at the OPEC meeting. But a few days later this was reversed, after the country’s Guardian Council said Ahmadinejad wasn’t allowed to take on the oil minister job.

Who might represent Libya has also been up in the air, after Shokri Ghanem, head of the national oil company, was reported to have defected from Muammar Gaddafi’s government. He showed up recently in Italy, announcing at a press conference that he had in fact defected, but is undecided about working with the rebels.

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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After Fukushima, Japan Vows to Boost Renewables

The Nicholas Institute for Environmental Policy Solutions at Duke University

In the wake of the nuclear disaster at Fukushima, Japan’s Prime Minister Naoto Kan pledged to boost renewable energy to at least 20 percent of its consumption in the next decade. This would double the share of renewable electricity in Japan, which gets most of its electricity from nuclear, coal, and oil. Nuclear power had supplied 30 percent of Japan’s electricity, and before the nuclear disaster, the country had planned to build more nuclear plants to boost that share to 50 percent.

“We will do everything we can to make renewable energy our base form of power, overcoming hurdles of technology and cost,” Kan said at a G8 meeting in France. In another speech in France, to the Organisation for Economic Co-operation and Development, Kan also questioned ongoing growth of energy consumption: “we must ask ourselves … whether it is appropriate for society to increase energy consumption without any limits.”

Kan was expected to announce a new “Sunrise Plan” that would make it compulsory by 2030 for all new buildings to include solar panels. Japan’s richest man, telecoms mogul Masayoshi Son, also threw his weight behind renewables, announcing plans to build 10 large solar power plants and a partnership with local officials from around the country to launch a “Natural Energy Council.”

Alternative Federal Fleet

The federal government’s vehicle fleet should be cleaned up, a memorandum from President Obama ordered. The memo directs federal agencies to switch to purchasing only “alternative fueled” passenger cars and light-duty trucks by 2015. The “alternative fuel” category would include electric vehicles and hybrids, as well as those powered by biofuels or compressed natural gas. To kickstart the switch, a pilot project is purchasing more than 100 electric vehicles.

To help consumers understand their cars’ fuel costs and environmental impacts, fuel efficiency labels have gotten an overhaul. The U.S. Environmental Protection Agency (EPA) called the change “the most dramatic overhaul to fuel economy labels since the program began more than 30 years ago.” The new labels are not as simple as those proposed last year by the EPA and the U.S. Department of Transportation, which would have given letter grades to cars.

Meanwhile, richer countries—such as the U.S., Germany and Japan—have reached “peak travel,” according to a new study, with miles traveled per person flattening off in recent years.

China’s Blackouts

In China, now the world’s biggest consumer of electricity, power companies are cutting their production. They are balking at government regulations that are raising the price of coal, while keeping the price of electricity down—policies that the companies say are threatening to push them into bankruptcy. The State Grid, the country’s largest electricity distributor, warned that this summer blackouts could be the worst since the early 1990s.

With power shortages already, Chinese stocks fell on concerns the country would not be able to keep up its high rates of growth. Nonetheless, China widened its lead as the most attractive place to invest in renewable energy, according to consultancy Ernst & Young LLC.

Globally, more money is pouring into renewable energy—but according to a new survey, some investors fear a green bubble may be forming.

Shale Gas Redemption?

A study last month by Cornell University researchers estimated power plants burning natural gas from fracking shale formations cause more global warming than burning coal.  A new assessment from the U.S. Department of Energy’s National Energy Technology Laboratory rebuts the Cornell study, finding that, watt for watt, such “unconventional” natural gas contributes only about half as much to global warming as does coal.

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.