GWPF Newsletter: Green Madness

Europe's Renewable Energy Directive Poised To Harm Global Forests

In this newsletter:

1) Green Madness: Europe's Renewable Energy Directive Poised To Harm Global Forests
Princeton University, 12 September 2018
 
2) Is The European ETS Falling At The First Hurdle?
ICIS, 11 September 2018 

 
3) The United States Is Now The Largest Global Crude Oil Producer
U.S. Energy Information Administration, 12 September 2018 
 
4) Profits Slump After Company’s Wind Turbines Stopped Turning During Summer Heatwave
Daily Mail, 13 September 2018 
 
5) Plans For New UK Nuclear Power Station On Verge Of Collapse
The Times, 8 September 2018
 
6) Report Slams Government For ‘Crushing’ Modular Nuclear Programme
New Civil Engineer, 11 September 2018 
 
7) Why Is The British Government Stifling Nuclear Innovation?
The Spectator, 12 September 2018 
 
8) Shale Gas – Not Renewables – Has Been The Biggest Disruptor In Energy Markets
Peter Tertzakian, Financial Post, 12 September 2018

Full details:

1) Green Madness: Europe's Renewable Energy Directive Poised To Harm Global Forests
Princeton University, 12 September 2018

Europe's decision to promote the use of wood as a "renewable fuel" will likely greatly increase Europe's greenhouse gas emissions and cause severe harm to the world's forests, according to a new paper published in Nature Communications.

 

European officials on final language for a renewable energy directive earlier this summer that will almost double Europe's use of renewable energy by 2030. Against the advice of 800 scientists, the directive now treats wood as a low-carbon fuel, meaning that whole trees or large portions of trees can be cut down deliberately to burn. Such uses go beyond papermaking wastes and other wood wastes, which have long been used for bioenergy, but not to this magnitude.

The paper, co-authored by eight scientists from the United States and Europe, estimates that this bioenergy provision in the Renewable Energy Directive will lead to vast new cutting of the world's forests. This is because additional wood equal to all of Europe's existing wood harvests will be needed just to supply 5 percent of Europe's energy.

The paper also estimates that using wood for energy will likely result in 10 to 15 percent in emissions from Europe's energy use by 2050. This could occur by turning a 5 percent decrease in emissions required under the directive using solar energy or wind energy into a 5 to 10 increase by using wood.

Europe's increased wood demand will require additional cutting in forests around the world, but the researchers explain the global impact is likely to be even greater by encouraging other countries to do the same. Already, tropical forest countries like Brazil and Indonesia have announced they, too, will try to reduce the effect of climate change by increasing their use of wood for bioenergy.

"Globally, if the world were to supply only an additional 2 percent of its energy from wood, it would need to double commercial wood harvests around the world with harsh effects on forests," said study lead author Tim Searchinger, researcher scholar at Princeton University's Woodrow Wilson School of Public and International Affairs.

Although wood is renewable, cutting down and burning wood for energy increases carbon in the atmosphere for decades to hundreds of years depending on a number of factors, the researchers explained.

Bioenergy use in this form takes carbon that would otherwise remain stored in a forest and puts it into the atmosphere. Because of various inefficiencies in both the harvesting and burning process, the result is that far more carbon is emitted up smokestacks and into the air per kilowatt hour of electricity or heat than burning fossil fuels, the authors explained.

While regrowing trees can eventually reabsorb the carbon, they do so slowly and, for years, may not absorb more carbon than the original forests would have continued to absorb. This results in long periods of time before bioenergy pays off the "carbon debt" of burning wood compared to fossil fuels.

The paper also explains why the European directive's sustainability conditions would have little consequence. Even if trees are cut down "sustainably," that does not make the wood carbon free or low carbon because of added carbon in the atmosphere for such long periods of time.

Full story

2) Is The European ETS Falling At The First Hurdle?
ICIS, 11 September 2018 

Natural gas for the coming winter is certainly neither abundant nor cheap. And filling that gap in the power mix is coal.

The recent bull-run on EU emission allowances will soon no doubt draw the attention of policy-makers and the general media, which in turn could filter through to the Europe’s wider population.

There is, after all, a lot to discuss: A long lambasted EU policy is finally delivering a price which should structurally force plant operators to alter production to lower their carbon emissions. Something which was a cornerstone objective of the emissions trading scheme.

Except it is increasingly looking like it won’t, not for this winter at least in the UK.

As the ETS faces its first real test season with meaningfully priced EUAs, the scheme is instead delivering higher priced natural gas and electricity, but without any emissions savings. In fact emission may be higher than in previous years.

In what could be a fundamental oversight of the ETS, policy-makers will now need to explain to the electorate – many of whom are already irate at the cost of their utilities – why green market interventions are anything but, and yet are causing the highest wholesale prices in a decade.

The problem lies in the fact that the long-expected bountiful availability of gas in Europe, which was to be the vanguard of the energy transition heralded by higher-priced EUAs, is in short supply.

In a flat-priced gas price scenario the EUA rally would have long brought European CCGTs comfortably back into the money, compared to the dirtier coal fleet. Or, in the case of the UK, kept gas as the fuel of choice. Patient supporters of the ETS would have celebrated the structural shift in generation fuels across the continent.

But back in reality gas for the coming winter is certainly neither abundant nor cheap, with NBP prices having to remain competitive against mainland European hubs. Wholesale gas has been priced ever higher, precisely to make CCGTs less economic to run, relative to coal, even as emission allowances rise. Or at the very least to secure the additional gas needed to run the power plants that are able to switch.

In essence, gas has had to outpace the relative gains in carbon in an effort to lower consumption and maintain a balanced system. And filling that gap in the power mix is coal.

Full post

3) The United States Is Now The Largest Global Crude Oil Producer
U.S. Energy Information Administration, 12 September 2018 

The United States likely surpassed Russia and Saudi Arabia to become the world’s largest crude oil producer earlier this year, based on preliminary estimates in EIA’s Short-Term Energy Outlook (STEO).

In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999.

Although EIA does not publish crude oil production forecasts for Russia and Saudi Arabia in STEO, EIA expects that U.S. crude oil production will continue to exceed Russian and Saudi Arabian crude oil production for the remaining months of 2018 and through 2019.

U.S. crude oil production, particularly from light sweet crude oil grades, has rapidly increased since 2011.

Much of the recent growth has occurred in areas such as the Permian region in eastern Texas and western New Mexico, the Federal Offshore Gulf of Mexico, and the Bakken region in North Dakota and Montana.

Following the oil price decline in mid-2014, U.S. producers reduced their costs by temporarily scaling back crude oil production. However, after crude oil prices increased in early 2016, investment and production began increasing later that year. By comparison, Russia and Saudi Arabia have maintained relatively steady crude oil production growth in recent years.

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4) Profits Slump After Company’s Wind Turbines Stopped Turning During Summer Heatwave
Daily Mail, 13 September 2018 

More than £1 billion was wiped off the value of one of Britain’s largest energy suppliers after it admitted its wind turbines ground to a halt during the summer heatwave.

SSE, which supplies electricity to 3.8 million households, said profits would be far lower than expected after the warm, still weather dented output from its wind farms.

It warned investors that profits for the half-year would be 50 per cent lower than the £586 million reported last year.

Higher wholesale gas prices and customers not switching on the heating also contributed to the slide.

Shares in SSE fell 8.2 per cent, cutting the company’s stock market value by £1.05 billion to £11.6 billion.

Full story 

5) Plans For New UK Nuclear Power Station On Verge Of Collapse
The Times, 8 September 2018

Plans for a new nuclear power station in Cumbria are set to move closer to collapse next week, with the company developing the Moorside project expected to confirm that it is laying off the majority of its staff.


If a buyer for Nugen cannot be found the planned Moorside plant will be abandoned NUGENERATION LIMITED/PA

Nugen, owned by Toshiba, the troubled Japanese conglomerate, has been consulting throughout August on job cuts among its 100 employees after failing to secure a buyer. It is understood that it is preparing to sign off on cuts on Monday and to brief staff on Tuesday, with the most likely option resulting in the loss of at least 50 jobs.

If no buyer for Nugen is found before the end this year then the venture is likely to be abandoned altogether.

Full story

6) Report Slams Government For ‘Crushing’ Modular Nuclear Programme
New Civil Engineer, 11 September 2018 

A leading nuclear engineer has slammed the government for “crushing” the UK’s modular nuclear programme.

Nuclear engineer Andrew Dawson’s report Small Modular Nuclear: Crushed at birth criticises the government for effectively ending the development of small modular reactors in the UK.

Published by the Global Warming Policy Foundation, Dawson claims that new funding for feasibility studies into a range of new nuclear technologies will “likely to be the end of the SMRs in the UK”.

Full story

7) Why Is The British Government Stifling Nuclear Innovation?
The Spectator, 12 September 2018 
Andrew Montford

The government’s announcement last week of a funding package for feasibility studies into a range of modular nuclear reactors went largely unnoticed by the media. However, as a report published this week makes clear, the news actually represents a significant reversal of policy, and one that achieves the remarkable feat of making the UK’s energy future look even bleaker than it does already.

George Osborne, for all his faults, showed commendable vision when he launched a government competition to design small modular nuclear reactors (SMRs) in 2015. SMRs are a new approach to nukes that would involve building large numbers of small reactors rather than a few enormous ones, like the infamous Hinkley Point C. The guts of the power plants could then be built offsite in a factory, where it would be expected that learning curves would be steep, and costs would be reduced as dozens of identical units are produced. Cost projections for SMRs suggest that they might even be able to produce power more cheaply than offshore wind, the greens’ favoured energy source, without a reliance on the wind blowing.

The reactor’s parts would also be small enough to be delivered to operational sites on the back of a lorry, and could be buried underground so that their visual impact would be minimal. If built with the latest designs, they would also be extraordinarily safe, with meltdown almost a physical impossibility.

Businesses around the world have been looking to become pioneers in the new designs, and some may now only be a few years from breaking ground on pilot plants. NuScale Power, a US company with offices in Oregon and London, is now well into the process of having its designs approved by US regulators. Its bosses hope to be producing electricity from their first plant, in Idaho, by 2026.

The technology is therefore potentially revolutionary, and a win-win in the perennial climate wars: who, apart from environmentalists of course, would argue against cheap, carbon-free electricity that was available on demand? This was the vision that Osborne enunciated when he launched the competition.
Unfortunately, the Whitehall machine appears to have had other ideas.

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8) Shale Gas – Not Renewables – Has Been The Biggest Disruptor In Energy Markets
Peter Tertzakian, Financial Post, 12 September 2018

The biggest and fastest energy transition in North America hasn’t been the addition of renewables, nor the pushing out of coal. It’s been the substitution of conventional natural gas with shale gas.

And now ladies and gentlemen, for natural gas’s final trick… look, no storage!

The transition of North American natural gas from a high-cost, volatile-priced commodity to one that’s cheap and relatively stable has been remarkable. And it’s all happened in less than a decade.

But the gaseous fuel has performed a final act, convincingly unveiling its latest feat this year: the diminishing need to store the product.

Only a few years ago it felt like every molecule of natural gas needed to be hoarded. Prices would strengthen every time volumes held in storage caverns would fall below the closely watched five-year average. Then, a simultaneous cold-snap on the East Coast would call keyboard-happy gas traders into action, driving up prices further.

Now, the weekly storage report elicits a big yawn. Recently, the collective volume of natural gas in caverns and holding vessels dropped to a 15-year low, “off the charts” as is proverbially said (see Figure 2).

[…] As I have written recently, low-cost natural gas prices are an artifact of the new age of energy abundance. Collective process innovations that include horizontal drilling, faster drilling, pad development and multi-stage hydraulic fracturing are the biggest disruptions to hydrocarbon extraction — and the energy industry writ large — in over a century.

Falling a little short of gas? Just drill a few more wells. The ability to bring gigajoules of gas out of the earth’s crust has increased by an order of magnitude. New technology can access trillions of cubic feet of potential with rigs that are two times more productive than five years ago.

Of course, some level of storage will always be needed, but the question is how much? We don’t know yet, but the notion of natural gas inventory is migrating from storage facilities right back into the source rock.

In fact, extracting natural gas is now a manufacturing process that is following the just-in-time delivery model championed by many other industries. Less inventory means less cost, making the whole system more competitive in the energy complex.

In Western Canada, natural gas production is near record output levels too. It would go higher but like in many parts of North America it has nowhere to go, being market constrained. So, the stuff is backing up at the reservoir and in some cases coming out of the ground for free.

But here is the curious thing: while natural gas systems are shedding the need to store energy, renewable systems are moving toward strapping on storage (like batteries) to challenge natural gas power generation. It will remain competitive between the two systems, but the main loser from relentless innovation in gas and renewables will be coal.

The biggest and fastest energy transition in North America hasn’t been the addition of renewables, nor the pushing out of coal. It’s been the substitution of conventional natural gas with shale gas.

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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 www.thegwpf.com.