Wednesday, March 14, 2018

GWPF Newsletter: Russia Gains Gas Foothold In Britain As Relations Deteriorate

Trump Ousts Tillerson: What’s Next For The Paris Climate Treaty?

In this newsletter:

1) Russia Gains Gas Foothold In Britain As Relations Deteriorate
Financial Times, 14 March 2018  
2) Trump Ousts Tillerson: What’s Next For The Paris Climate Treaty?
Marlo Lewis Jr, Competitive Enterprise Institute, 13 March 2018 

3) ‘Beast From The East’ Exposed Britain’s Energy Failings

Tony Lodge, The Daily Telegraph, 13 March 2018
4) Environmentalists’ War On Fossil Fuels Is Helping Vladimir Putin
Drew Johnson, The Wall Street Journal, 13 March 2018
5) Fritz Vahrenholt: German Opposition To Wind Farms Is Growing
Welt am Sonntag, 12 March 2018 
6) Nuclear Reactors Could Run As Long As 80 Years Under Trump Plan
Bloomberg, 21 February 2018 

7) Climate Change, Catastrophe, Regulation and the Social Cost of Carbon
Reason Foundation, 8 March 2018 

Full details:

1) Russia Gains Gas Foothold In Britain As Relations Deteriorate
Financial Times, 14 March 2018

Half of Britain’s imports of liquefied natural gas so far this year have come from Russia, illustrating how UK households have started sending more money to Moscow after Vladimir Putin made boosting exports of the super-cooled fuel a priority.

Russia has accounted for three of a total of six LNG shipments that have arrived since early January in the UK, whose tensions with Moscow have risen to the highest level since the Cold War following an alleged Russian nerve gas attack in Salisbury.

All three Russian shipments have come from the Yamal LNG project in Siberia that was targeted by US sanctions before its start-up late last year, though shipments themselves are not restricted.

Yamal’s opening, which was hailed by Mr Putin as boon for the Russian economy and evidence of its ability to withstand sanctions, has unleashed a wave of Russian LNG, with cargoes destined for the UK and on the US east coast.

The UK cargoes have a shone spotlight on the UK’s increasingly import-dependent energy strategy, with declining North Sea output and limited storage in the country.

While LNG imports make up only a small portion of UK gas demand, estimated at 3-5 per cent so far in 2018, the total could grow following the shutdown of the country’s main Rough storage site, which has left the country’s gas supplies more vulnerable to price spikes if pipeline outages or particularly cold weather coincide.

“We rely fairly heavy on imports of gas to get through the winter,” said Trevor Sikorski, chief gas analyst at Energy Aspects in London.

“Having closed down our largest storage facility we face a lot more volatility around prices and potentially higher prices.”

Full story (subscription required) 

see also
Russia’s anti-fracking campaign in Europe and the UK

2) Trump Ousts Tillerson: What’s Next For The Paris Climate Treaty?
Marlo Lewis Jr, Competitive Enterprise Institute, 13 March 2018

President Trump has ousted Rex Tillerson from his post as Secretary of State and plans to replace him with CIA director Mike Pompeo.

Tillerson, under whose leadership ExxonMobil became an advocate of carbon taxes, led the pro-Paris climate treaty faction within the Trump administration. In stark contrast, in 2015, then-congressman Pompeo said about the Paris Agreement: “Congress must also do all in our power to fight against this damaging climate change proposal and pursue policies that support American energy, create new jobs, and power our economy.”

In what would appear to be poor timing, Axios Generate today features a podcast with former White House international energy aide George David Banks, who predicts Trump will eventually decide to stay in the Agreement. Trump hosts the G-7 summit in 2020, and “Banks calls that a venue to claim victory,” Axios reports.

What sort of victory? Renegotiating the Agreement to get America a “better deal.” From the podcast:

I think it will be fairly easy for the president to agree that we are going to stay in, we are going to change the number, and then walk out of that summit arguing that he re-negotiated the Paris agreement and did something that no one thought he could do, and came up with a much better deal than what the previous administration presented.

That is deeply shallow. By “change the number,” Mr. Banks refers to President Obama’s Paris Agreement “nationally determined contribution” (NDC) pledge to reduce U.S. emissions 26-28 percent below 2005 levels by 2025. However, the specific numbers in Obama’s pledge are the least part of what makes the treaty toxic to the United States.

The Paris treaty is first and foremost an institution—a multi-decade legal framework constructed to mobilize political pressure, litigation, and punitive economic sanctions against the very pro-growth energy policies President Trump is fighting for.

Time to restate the obvious. Central to Mr. Trump’s vision of American greatness is a new era of U.S. energy dominance. The President is proudly repealing regulatory obstacles to the development, transport, and utilization of America’s “energy treasure.” Nothing could be more averse to Mr. Trump’s vision and agenda than the Paris Agreement, which seeks to rapidly phase out global access to fossil fuels, and which, like all such “progressive” policies, is wired to ratchet up in stringency and regulatory “ambition” over time.

Full post

3) ‘Beast From The East’ Exposed Britain’s Energy Failings
Tony Lodge, The Daily Telegraph, 13 March 2018

The recent severe weather placed a huge strain on Britain’s energy networks. As well as a gas supply threat there were troubling signs that electricity supplies were dangerously exposed. Current policies are set to make the situation worse.

Until recently, British power generators could supply all of the electricity the nation needed. A mixed portfolio of nuclear, gas, coal, oil and renewable plants kept the lights on and allowed for a balanced choice of fuels to generate power.

But chronic policy failures over a generation to get plants built as old ones shut, mean Britain is looking to import more electricity from Europe. Imports are set to make up to a fifth of supplies by 2025. The “Beast from the East” laid bare the risks of this approach.

Slanting the electricity market more in favour of imports exposes the UK’s energy security and undermines investment in new power plants at home. Billions of pounds of investment are now at risk, which will undermine future security of supply and threaten price rises. Policy needs to change. Energy security and more competitive pricing must become a priority as we prepare to leave the EU.

Firstly, it is important to understand our growing reliance on imported electricity, the plans to quadruple this dependency and the consequences for prices, competition and security of supply. Our new Centre for Policy Studies paper, “The Hidden Wiring”, follows months of research and analysis into plans for more undersea cables, called interconnectors, to import electricity and their negative impact on Britain’s electricity market and on investment.

Interconnectors respond to price signals and electricity flows through them to where the price is strongest. Consequently, if there is a sustained period of little or no wind and sunshine across the rest of Europe, coupled with high demand, then the UK cannot rely on imports to keep the lights on. In fact, interconnectors could exacerbate a supply shortage as power would be exported out of the UK to the Continent when prices are higher there.

During the chill at the start of the month, despite high electricity demand here, UK supplies responded to higher continental prices and almost 2 gigawatts (GW) of power was being exported to Europe, and in particular France, where the majority of household heating is electric. Of further concern was our heavy reliance on elderly coal plants, which will be closed within six years, and weather-dependent wind farms.

Any assumption that imports can replace some power generators in Britain is naive. Imports from Europe increased by 52pc in the three years to 2016, and they are set to surge as new interconnectors are planned. Back in 2012, they were expected to account for just 6 terawatt hours (TWh) of supply per year in 2030. But four years later, the projection radically changed. The 2016 forecast sees UK electricity imports rising from 21 TWh today, to a peak of 77 TWh in 2025. That’s close to a fifth of supply.

Britain’s rising electricity imports are, in the short term, an easy way out for failed energy policies stretching back over a generation. But can they be guaranteed to deliver the flows we will need? Back in 2012, the Coalition had the right plans for a new generation of gas-fired plants that would be easy to switch on and off to accommodate the sporadic nature of weather-dependent renewable supplies.

It estimated that Britain would need 26GW of additional gas generation capacity by 2030 to plug any potential gap left by cloudy, windless days and to replace the electricity output from closing older coal, oil and nuclear plants. On current trends, however, the UK is on track to build just 12GW by 2030. This goes some way to explain the dash to build interconnectors. Declining electricity generating capacity on the Continent is key to our conclusions.

Both France and Germany are reducing their reliance on nuclear power without any clear policy for replacements. Europe still generates considerable electricity from coal, and these plants are increasingly vulnerable to new legislation and political factors. Holland is keen to close coal plants with plans for a new carbon tax.

Interconnectors enjoy a competitiveness boost from the fact that generators on the Continent don’t have to pay Britain’s high carbon price floor tax. This means they can undercut British generators even if their power comes from dirty coal-fired capacity in Germany. So instead of cutting carbon emissions, the UK is in some cases just offshoring it. Furthermore, imports don’t pay the transmission charges faced by UK generators.

Full post

4) Environmentalists’ War On Fossil Fuels Is Helping Vladimir Putin
Drew Johnson, The Wall Street Journal, 13 March 2018

A tanker arrived in Boston Harbor carrying natural gas that would keep residents’ homes warm for the rest of the winter. The late-January delivery came from Siberia. Why are some parts of America reliant on Russian natural gas, especially when domestic gas production has surged?

The problem is entirely political. In 2016 officials in Massachusetts and New Hampshire blocked financing for the $3 billion Access Northeast Pipeline, which would have reliably provided fuel to three New England states. That same year a report from Massachusetts Attorney General Maura Healey’s office claimed the state could “maintain electric reliability” without new infrastructure. The Russian gas heating Boston homes this winter suggests otherwise.

Politicians are opposing pipeline projects to curry favor with increasingly radical environmentalists. The activist group is organizing online campaigns to oppose every new coal, oil, and natural-gas project. Greenpeace claims it is time to leave fossil fuels “where they belong: in the ground.” The Sierra Club is pushing the U.S. to abandon all fossil fuels, claiming the country is ready for 100% renewable energy.

These ideas might sound nice, but they would hurt America’s most vulnerable citizens. Blocking natural-gas pipelines needlessly inflates consumers’ energy bills and destabilizes the electrical grid.

Natural gas and coal are responsible for about 64% of America’s electrical power. Only 15% comes from renewables. Because of its relatively low price, natural gas is the primary energy source for half of American homes. Since 2006, when the fracking revolution began, natural-gas prices have dropped 27% for residential consumers.

Forcing utilities to rely on far more expensive renewables would mean skyrocketing bills. Families with low incomes would be forced to choose between keeping the lights on and putting food on the table…

The anti-fossil-fuels campaign is neither realistic nor environmentally sound. Blocking pipelines and other energy infrastructure projects raises costs on American families while forcing them to rely on Vladimir Putin to heat their homes.

5) Fritz Vahrenholt: German Opposition To Wind Farms Is Growing
Die Welt, 12 March 2018

Fritz Vahrenholt, Hamburg’s former environment senator, was one of the pioneers of Germany’s Energiewende. Today, he finds its implementation miserable and believes that the new federal government urgently needs to change course in response to growing public resistance against more and more wind turbines.

Fritz Vahrenholt in the offices of the German Wildlife Foundation in Hamburg. The former Hamburg environment senator leads the organisation since 2012

Fritz Vahrenholt, 68, always liked to argue against the mainstream. As Hamburg’s environmental senator in the 1990s, the Social Democrat fought with environmental organisations and the Greens. As the founder of the wind turbine manufacturer Repower Systems in Hamburg – now Senvion – and RWE’s subsidiary Innogy in Essen, Germany, he was a pioneer of the green energy transition (Energiewende), which was rejected by large parts of industry at that time. Today, Vahrenholt, the director of the German Wildlife Foundation, is critical about the expansion of wind power. He is calling for the deceleration of Germany’s transformation of the energy system.

WELT AM SONNTAG: Mr. Vahrenholt, what do you think of the coalition agreement between CDU/CSU and SPD with regards to energy and climate policy?

FRITZ VAHRENHOLT: When it comes to energy policy, the 177 pages of the coalition agreement are an act of stupidity. In 2019 and 2020, the expansion of wind power in Germany is set to be massively accelerated even though nobody knows what to do with all this wind power in times of heavy winds. And when there is little wind, the expansion does not help, as electricity production then remains close to zero. It is like the foolish acts by the people of Schilda (Schildb├╝rger) who tried to carry sacks of light  into the windowless town hall.

WAMS: Rainer Baake (Green Party) who for many years had been Secretary of State in the Ministry of the Environment and later in the Ministry of Economic Affairs, resigned this week, claiming that he did not support the climate and energy policy of the new coalition government. Baake is considered the most important architect of Germany’s Energiewende.

FRITZ VAHRENHOLT: Baake’s resignation is a stroke of luck for German energy policy. He has played a decisive role in shaping the green energy transition and is responsible for its undesirable developments. If he had his way, the energy transition would have been even more expensive: He wanted to reduce the EEG levy for wind and solar power while consumers would have to pay through new levies on heating oil and gas and the drivers with a further fuel tax. Thank God he didn’t succeed.

What is your main criticism about the Energiewende?

With our move towards intermittent wind and solar energy we have reached a dead end. Correcting the undesirable developments by imposing ever-increasing costs on households and drivers, that smells like a planned economy. A few years ago, the then Federal Minister of the Environment, Peter Altmaier (CDU), who will now become Federal Minister of Economics and Energy, estimated the possible total costs of the Energiewende at up to one trillion – i.e. thousand billion – euro. This is destroying the competitiveness of Germany as a location for industry. In his new office, he must do everything possible to ensure that this does not become reality.

Full interview

6) Nuclear Reactors Could Run As Long As 80 Years Under Trump Plan
Bloomberg, 21 February 2018

The U.S. Energy Department is throwing its support behind a request by utilities to extend the life of some nuclear power reactors — keeping them in operation for as long as 80 years.

An official with the department, who asked not to be named to discuss its decision-making process, said the agency was conducting research and working with utilities seeking permission from the Nuclear Regulatory Commission to allow nuclear reactors built in the 1970s to keep operating to 2050 and beyond.

Already, the utilities Exelon Corp., and  Dominion Energy Inc. and NextEra Energy Inc. have said they plan to ask regulators to extend 60-year licenses by 20 years for eight reactors in Virginia, Pennsylvania, and Florida. Requests for as many as as 20 more are expected to follow, according to the nuclear industry.

The plans have already raised the ire of anti-nuclear campaigners, who cite decades of wear and tear on the nation’s reactors, as well as the 2011 Fukushima disaster in Japan.

Full post

7) Climate Change, Catastrophe, Regulation and the Social Cost of Carbon
Reason Foundation, 8 March 2018 

By Julian Morris

Existing federal regulations predicated on a positive SCC should be re-evaluated, with the appropriate comparator being regulations that specifically address any co-benefits identified.

Executive Summary

Federal agencies are required to calculate the costs and benefits of new regulations that have significant economic effects. Since a court ruling in 2008, agencies have included a measure of the cost of greenhouse gas emissions when evaluating regulations that affect such emissions. This measure is known as the “social cost of carbon” (SCC).

Initially, different agencies applied different SCCs. To address this problem, the Office of Management and Budget and Council of Economic Advisors organized an Interagency Working Group (IWG) to develop a range of estimates of the SCC for use by all agencies. However, the IWG’s estimates were deeply flawed. In April 2017, President Trump issued an executive order rescinding the IWG’s estimates and disbanded the IWG. The question now is what value regulatory agencies should use for the SCC—if any—when evaluating rules that affect greenhouse gas emissions.


Most analyses of the social cost of carbon, including the IWG’s, have utilized “integrated assessment models” (IAMs), the basic methodology of which involves the following six steps:

Develop (or choose from existing) scenarios of future emissions of GHGs;

Use those scenarios to estimate future atmospheric concentrations of GHGs;

Project changes in average global temperature and/or climate resulting from these future atmospheric GHG concentrations;

Estimate the economic consequences of the resultant changes in temperature/climate;

Estimate the costs of abating specific amounts of GHG emissions;

Combine the estimates from steps 4 and 5 to produce an assessment of the net economic effect of different scenarios and thereby identify the optimum path of emissions.

Each step in this process is fraught with difficulty.

Full report

The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at

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