The European Union has been accused of killing off the prospect of cheap energy from shale gas by trying to impose with expensive and “reckless” regulation of fracking. The European Parliament on Wednesday voted for new EU laws requiring that exploration for potential deposits of shale gas to face the same environmental regulation as a full-scale oil drilling. Struan Stevenson, a Conservative MEP who sits on the European Parliament’s environment committee, warned that the plan could strangle the nascent fracking industry in Britain. –Bruno Waterfield, The Daily Telegraph, 10 October 2013
Many Europeans complain about their high energy costs, largely due to their increasing dependence on renewables — the most costly energy sources. But European political parties as well as a majority of people still want government to promote costly options, especially wind and solar power. This is killing European economies. Many businesses under pressure are likely move to a lower-cost location, and jobs will go with them. Antonio Tajani, European Commissioner for Industry and Entrepreneurship, warned: “We face a systemic industrial massacre.” –Jim Powell, Forbes, 19 September 2013
Germany will threaten jobs and hamper growth if it persists with expanding renewable energy at the current pace, a chemical industry lobby said. Continuing with uncapped subsidies to renewable developers and removing aid for companies that use a lot of energy risks 211 billion euros ($285 billion) in gross domestic product and 1.3 million jobs by 2030 compared with a slower renewable expansion and greater use of natural gas, the Verband der Chemischen Industrie said, citing a new IHS Inc. study it commissioned. “The current course of the energy switch is extremely dangerous for Germany, the land of industry,” Karl-Ludwig Kley, president of the VCI, told reporters today in Berlin. “The charges of the energy switch can decide over profit or loss, growth or decline, survival or collapse.” –Business Week, 9 October 2013
The average household energy bill in Britain is now £1,300 a year, twice what it was 10 years ago and shale gas exploitation is regarded as crucial to pushing prices down. Alessandro Torello, of the International Association of Oil and Gas Producers, said the MEPs’ rules would create a costly and cumbersome regulatory process that would make industry think twice about exploration. –Bruno Waterfield, The Daily Telegraph, 10 October 2013
Coal-fired power stations [in Britain] would be consigned to the fringes of the energy market under a plan being drawn up by the coalition to head off a potential defeat over its energy bill in the House of Lords. Ministers fear a rebellion this month by Liberal Democrat peers demanding a 2030 decarbonisation target for the electricity sector – something the government has rejected. In an attempt to quell the uprising, senior coalition figures are proposing a compromise involving tougher restrictions on carbon dioxide emissions from old coal-fired power stations. –Jim Pickard, Financial Times, 10 October 2013
Ed Miliband has said David Cameron has “no answer” to Labour’s pledge to freeze energy prices if it wins power, as the two clashed in the Commons. The Labour leader said bills had risen by £300 since 2010 and yet the prime minister was still backing “the energy companies not the consumer”. But Mr Cameron called the proposed freeze a “gimmick not a policy”. He suggested Mr Miliband wanted to live in a “Marxist universe” where the state could control market prices. –BBC News, 9 October 2013
Prime Minister Questions took a strangely philosophical turn today when Graham Jones, a Labour backbencher, asked the Prime Minister point blank: “Why is market intervention in… mortgages OK, but market intervention in the energy market is not?” This is the corner the Conservatives find themselves painted into: pro Help to Buy on the one hand, anti Ed Miliband’s energy price freeze on the other. Despite saying Labour’s energy policy “struck a chord” on Monday, today Mr Cameron dismissed it roundly. “I know he wants to live in a Marxist universe. He needs a basic lesson in economics,” said the PM. In response, Red Ed said his opponent was “floundering” over the cost of living. The truth is that, yes, he is a bit. –Will Heaven, The Daily Telegraph, 9 October 2013
SSE has picked a fight with ministers after claiming that it has been forced to raise gas and electricity prices by 8.2 per cent to help to pay for government environmental levies. SSE said that levies to pay for low-carbon generation and energy efficiency had risen sharply. Will Morris, the SSE group managing director, said: “For a typical dual-fuel energy customer, these schemes now cost more than three times what they did in 2005 … They are what some would call stealth taxes, many of which were introduced by the very same politicians now so outraged by rising prices.” Politicians had failed to tell consumers about the cost of green energy policy, Mr Morris said. –Susan Thompson, The Times, 10 October 2013
Some 30 years ago I was Secretary of State for Energy. In those far-off days the purpose of energy policy was to ensure a reliable supply of energy, for business and households alike, at the lowest possible cost. No longer. The Energy Bill now before Parliament is the worst energy bill within living memory. Its sole purpose is to enable the UK to reach the ambitious decarbonisation targets enshrined in Labour’s Climate Change Act. The malign effect of the Energy Bill, if enacted and implemented in its present form, will be to lock us into binding long-term contracts for high-cost nuclear and (even more) renewable energy, leaving little or no space for much cheaper shale gas. –Nigel Lawson, The House Magazine, 27 September 2013
1) Green Madness: Shale Gas Development Under Threat From EU Red Tape, Warns MEP – The Daily Telegraph, 10 October 2013
2) Green Energy Push Threatens Germany’s International Competitiveness – The Wall Street Journal, 9 October 2013
3) Cold European Winter Could Create Energy Crisis, New Report Warns – Bloomberg, 10 October 2013
5) Red Ed Still Has The Tories Squirming – The Daily Telegraph, 9 October 2013
6) UK Coalition Mulls Shutting Down Coal Fire Power Plants To Defuse Green Rebellion – Financial Times, 10 October 2013
7) It’s All Your Fault: Governments’ Green Energy Taxes Blamed For Energy Price Rises – The Times, 10 October 2013
8) Nigel Lawson: UK Energy Bill Is A Threat To Britain’s Shale Revolution – The House Magazine, 27 September 2013
9) Jim Powell: How Europe’s Economy Is Being Devastated By Global Warming Orthodoxy – Forbes, 19 September 2013
10) And Finally: ‘Green’ Europe Consumes Less Gas, More Coal
Penny Energy News, 8 October 2013
1) Green Madness: Shale Gas Development Under Threat From EU Red Tape, Warns MEP
The Daily Telegraph, 10 October 2013
Bruno Waterfield
The European Union has been accused of killing off the prospect of cheap energy from shale gas by trying to impose with expensive and “reckless” regulation of fracking.
The European Parliament on Wednesday voted for new EU laws requiring that exploration for potential deposits of shale gas to face the same environmental regulation as a full-scale oil drilling.
Struan Stevenson, a Conservative MEP who sits on the European Parliament’s environment committee, warned that the plan could strangle the nascent fracking industry in Britain.
Fracking, which involves fracturing rocks deep underground with water, sand and chemicals to extract natural gas, has dramatically cut energy bills in the US, and Conservatives ministers hope that it could do the same in the UK.
With as many as 40 permits for fracking expected to be granted in the next two years, ministers are also anticipating significant tax revenues from operators.
Mr Stevenson warned that all those hopes could be dashed if the European Parliament’s demand for full Environmental Impact Assessments for fracking projects is met.
“This would be a huge burden and will prevent the exploitation of Britain’s massive shale reserves,” he said.
“Targeting exploration in this unnecessary way amounts to stifling the potential benefits at source. We must stop this over-zealous attempt to place a dead hand on the process of exploration before it even gets going.”
The MEPs’ plan to regulate fracking will be discussed by Europe’s environment ministers next week.
The use of fracking technology means that the United States is paying half the European price for wholesale gas, driven up by expensive imports at a time when state subsidies for renewable energies are pushing up energy costs across Europe.
The average household energy bill in Britain is now £1,300 a year, twice what it was 10 years ago and shale gas exploitation is regarded as crucial to pushing prices down.
Alessandro Torello, of the International Association of Oil and Gas Producers, said the MEPs’ rules would create a costly and cumbersome regulatory process that would make industry think twice about exploration.
“The text adopted today would require undertaking long and complex environmental studies at a very early stage in the exploration phase, undermining – without bringing additional environmental benefits – the efforts to develop domestic oil and gas opportunities, such as gas from shale,” he said.
“This would erode EU attempts to encourage future economic growth and create new jobs while simultaneously depriving policy makers of one key tool they could use to reduce Europe’s dependence on energy imports.”
François Hollande, France’s Socialist president, has banned fracking his country. The MEPs’ vote was welcomed by Greens and Socialists.
y
2) Green Energy Push Threatens Germany’s International Competitiveness
The Wall Street Journal, 9 October 2013
Rising electricity costs pose a growing challenge to Germany’s export-based economy, says a major new study by global analytics firm IHS. The country faces important choices about the pace of renewables development–and how it should be funded–that will have a significant impact on economic growth and Germany’s ability to remain competitive in the global economy.
The IHS study, called The Challenge to Germany’s Global Competitiveness in a New Energy World, examines the links among Germany’s energy costs, competitiveness and economic performance. The study concludes that transitioning to a lower carbon energy policy can be compatible with maintaining German global competitiveness, and lays out a competitive energy scenario that includes a more moderate pace of renewables development and an increased role for thermal power generation, especially natural gas.
“International competitiveness is particularly important to Germany and its standard of living, owing to the country’s high dependence on exports,” the study says. “Exports of goods and services made up 52 percent of German gross domestic product (GDP) in 2012. Germany’s ability to maintain its international competitiveness is not just an issue for some companies and some sectors. It will affect the entire economy, the German populace, and the fiscal position of the German state.”
Rising electricity prices in Germany and lower energy prices in North America are making German products less competitive and forcing firms to relocate to other countries, the study says. This “investment leakage” creates a ripple effect in Germany’s highly integrated and specialized economy as other companies in the supply chain follow suit and move out of the country, slowing overall economic growth and negatively impacting the standard of living of all households.
3) Cold European Winter Could Create Energy Crisis, New Report Warns
Bloomberg, 10 October 2013
Sally Bakewell
A cold winter may plunge Europe into an energy crisis because of the over-reliance on renewable energy and the shutting of natural gas-fired generators, Cap Gemini SA (CAP) said in a report.
Gas-fired generators are running at utilization rates that are too low to meet their fixed costs as grids favor subsidized renewable power, the Paris-based management consultancy said today. About 60 percent or 130,000 megawatts of Europe’s gas-generation capacity is at risk of closing by 2016, it said, citing IHS Inc. (IHS) estimates.
“These plants — that are indispensable to ensure security of supply during peak hours — are being replaced by volatile and non-schedulable renewable energy installations that are heavily subsidized,” according to the report, produced with Exane BNP Paribas, law firm CMS Bureau Francis Lefebvre Lyon SELAS and think tank VaasaETT.
Generators are switching to cheaper coal for baseload power as the U.S. exports the fuel amid a shale-drilling boom that has driven up domestic gas demand, Cap Gemini said. The collapse of the cost of carbon credits has strengthened the appeal of the polluting fuel.
4) Cold War: Political Leaders Exchange Fire Over Energy Policies
BBC News, 9 October 2013
Ed Miliband has said David Cameron has “no answer” to Labour’s pledge to freeze energy prices if it wins power, as the two clashed in the Commons.
The Labour leader said bills had risen by £300 since 2010 and yet the prime minister was still backing “the energy companies not the consumer”.
But Mr Cameron called the proposed freeze a “gimmick not a policy”.
He suggested Mr Miliband wanted to live in a “Marxist universe” where the state could control market prices.
Labour’s pledge to cap energy price rises for 20 months from May 2015, should they be elected, dominated the leaders’ exchanges in the first Prime Minister’s Questions since their party conferences.
5) Red Ed Still Has The Tories Squirming
The Daily Telegraph, 9 October 2013
Will Heaven
PMQs took a strangely philosophical turn today when Graham Jones, a Labour backbencher, asked the Prime Minister point blank: “Why is market intervention in… mortgages OK, but market intervention in the energy market is not?”
This is the corner the Conservatives find themselves painted into: pro Help to Buy on the one hand, anti Ed Miliband’s energy price freeze on the other. Despite saying Labour’s energy policy “struck a chord” on Monday, today Mr Cameron dismissed it roundly. “I know he wants to live in a Marxist universe. He needs a basic lesson in economics,” said the PM. In response, Red Ed said his opponent was “floundering” over the cost of living.
The truth is that, yes, he is a bit. The Government has this week announced a curb on rail fare rises, apparently recognising that the cost of living really does worry voters. But though David Cameron asks (entirely justified) questions about the economic viability of Labour’s populist price freeze, he’s yet to come up with a pithy response to it.
6) UK Coalition Mulls Shutting Down Coal Fire Power Plants To Defuse Green Rebellion
Financial Times, 10 October 2013
Jim Pickard
Coal-fired power stations would be consigned to the fringes of the energy market under a plan being drawn up by the coalition to head off a potential defeat over its energy bill in the House of Lords.
Ministers fear a rebellion this month by Liberal Democrat peers demanding a 2030 decarbonisation target for the electricity sector – something the government has rejected.
In an attempt to quell the uprising, senior coalition figures are proposing a compromise involving tougher restrictions on carbon dioxide emissions from old coal-fired power stations.
Most of Britain’s coal power stations had been expected to close by 2023 because of a European directive imposing limits on the release of sulphur dioxide and nitrogen dioxide. But some companies are expected to keep their plants open by upgrading them to filter out these gases.
Paying for upgrades could make financial sense because coal is cheap.
At present, these old power stations will not need an “emissions performance standard” (EPS) – which restricts carbon dioxide emissions – as this only applies to newly built ones.
However, the coalition is proposing to extend the EPS to old power stations in a move that would make it impossible for them to keep operating at full throttle.
As a result, coal-fired power stations which operate 24 hours a day would be confined to generating back-up energy only when supplies run low.
The idea is being pushed hard by Lord Teverson, the Lib Dem energy spokesman in the Lords.
“We want to end the loophole whereby the cost of coal is so cheap it may be worthwhile for coal to pay to comply with the European legislation and continue generating [24 hours a day] well into the future,” he said.
The coalition believes that the move could halt a rebellion on October 28 in support of a 2030 decarbonisation target being led by Lord Oxburgh, former chair of Shell.
7) It’s All Your Fault: Government’s Green Energy Taxes Blamed For Energy Price Rises
The Times, 10 October 2013
Susan Thompson
SSE has picked a fight with ministers after claiming that it has been forced to raise gas and electricity prices by 8.2 per cent to help to pay for government environmental levies.
The row erupted today after the supplier became the first of the “big six” energy providers to increase its charges from November 15, adding a typical £106 to the cost of dual-fuel bills and bringing the total to £1,380.
The price rises will affect about 4.4 million domestic electricity customers and 2.9 million gas customers, but not those on fixed-price tariffs.
SSE said that levies to pay for low-carbon generation and energy efficiency had risen sharply.
Will Morris, the SSE group managing director, said: “For a typical dual-fuel energy customer, these schemes now cost more than three times what they did in 2005 … They are what some would call stealth taxes, many of which were introduced by the very same politicians now so outraged by rising prices.”
Politicians had failed to tell consumers about the cost of green energy policy, Mr Morris said.
“They can’t expect to have power stations replaced with new technologies, the network to be upgraded and nationwide energy efficiency schemes all to be funded for free,” he said.
But Ed Davey, the Energy Secretary, said that these charges were far outweighed by wholesale prices and suggested that customers should switch to cheaper suppliers.
8) Nigel Lawson: UK Energy Bill Is A Threat To Britain’s Shale Revolution
The House Magazine, 27 September 2013
Don’t let the Energy Bill threaten Britain’s shale revolution, says former Chancellor Lord Lawson
Some 30 years ago I was Secretary of State for Energy. In those far-off days the purpose of energy policy was to ensure a reliable supply of energy, for business and households alike, at the lowest possible cost.
No longer. The Energy Bill now before Parliament is the worst energy bill within living memory. Its sole purpose is to enable the UK to reach the ambitious decarbonisation targets enshrined in Labour’s Climate Change Act.
This is to be achieved by giving the Secretary of State the arbitrary power, without any parliamentary oversight whatever, to lock us into long term (15 years or more) contracts for the supply of high cost nuclear energy and even higher cost renewable energy (in particular wind power).
This made no sense even when the bill was first devised, during the dying days of the last Labour government (it was published in draft in 2010, since when the essence of the bill has remained unchanged). Yet since then everything else has changed fundamentally.
The Climate Change Act was explicitly designed to set out the UK’s contribution to an ambitious global decarbonisation agreement, along the lines of the more limited Kyoto accord of 1997. Since then, however, Kyoto has expired and all that remains is an ‘agreement’ to try and achieve a global agreement to take effect in 2020. For the UK to proceed unilaterally is highly damaging in economic terms and futile in climate terms.
The other big change is the shale revolution. Geologists have long known that there are vast quantities of gas and oil trapped in shale, a black rock which is widely distributed around the world, not least in the UK. But it has always been too expensive to extract economically. That has now changed, with the technological revolution known as ‘fracking’.
The pioneer in the use of this revolutionary technology has been the United States, which, as a result, has already overtaken Russia as the world’s foremost producer of natural gas, and may in due course overtake Saudi Arabia in oil production. This has led to US gas prices plummeting, which is an important reason why the US has recovered from the world recession better than Europe, including the UK. And US experience has proved, too, that the widely-touted environmental concerns about fracking are entirely groundless.
Despite the hundreds of thousands of shale wells that have been drilled in the US, there is not a single authenticated case of groundwater contamination. This is hardly surprising, as groundwater (as its name implies) is near the earth’s surface, whereas shale is drilled deep, deep down, and there usually at least a mile of solid rock between the two. As for earthquakes, while there have been a few instances of minor tremors deep down where the fracking occurs, these have no effect whatever on the surface, where we all live.
Moreover, the benefit of the shale revolution is not merely economic. There is also a major geopolitical prize, as the Western world need no longer rely for its energy on an unstable Middle East and unreliable Russia.
Happily, the British Geological Survey has found that we have in the UK what are almost certainly the largest reserves of shale gas in Europe. In Lancashire and Yorkshire alone they reckon there is enough to supply all the UK’s gas needs for at least the next 50 years, and probably much longer. And that is without surveying the rest of England, which is known to contain substantial shale deposits, or offshore, which is believed to contain even more.
But the malign effect of the Energy Bill, if enacted and implemented in its present form, will be to lock us into binding long-term contracts for high-cost nuclear and (even more) renewable energy, leaving little or no space for much cheaper shale gas.
This is the energy policy promoted by our Liberal Democrat Energy Secretary. Fortunately, we also have a Conservative energy policy. George Osborne is to be warmly commended for having come out strongly in favour of the fastest practicable development of our shale reserves, and has been unequivocally backed by David Cameron.
This is good news. But it makes no sense for the UK to have two separate and conflicting energy policies at the same time. It is quite clear which we must choose, and which we must junk – the sooner the better.
Lord Lawson is a Conservative peer and former Chancellor of the Exchequer
9) Jim Powell: How Europe’s Economy Is Being Devastated By Global Warming Orthodoxy
Forbes, 19 September 2013
Many Europeans complain about their high energy costs, largely due to their increasing dependence on renewables — the most costly energy sources. But European political parties as well as a majority of people still want government to promote costly options, especially wind and solar power.
This is killing European economies. Electricity costs in Europe are more than double the cost of electricity in the U.S. High electricity costs make it difficult for businesses to operate if they need a lot of electricity. Their cost of electricity is high, and they might not be able to pass it on to consumers when consumers are free to patronize businesses operating where electricity costs are much lower. Many businesses under pressure are likely move to a lower-cost location, and jobs will go with them. Antonio Tajani, European Commissioner for Industry and Entrepreneurship, warned: “We face a systemic industrial massacre.”
The Germans probably have done more than anyone else to promote high-cost wind and solar power. Other types of renewable energy, like hydropower and geothermal power, usually are limited to a small number of suitable sites. The Germans want to have renewables account for 80 percent of their electricity. Their experience illustrates consequences of such a policy.
The most obvious consequence is lots of subsidies and taxes. The German government has arranged for renewable energy producers to sell the power grid their electricity at more than 6 times the wholesale electricity market rate. Nature reported that in 2012 renewable energy producers “cashed in an estimated €20 billion for electricity worth a mere €3 billion.” Counting the costs of electricity from all sources, the Institute for Energy Research reported that “Germans pay 34 cents a kilowatt hour compared to an average of 12 cents in the United States).”
Big gap between low U.S. energy costs and high European energy costs
Americans, of course, benefit from the fracking revolution, despite President Obama’s efforts to discourage it. Fracking is responsible for natural gas prices that are one-third to one-quarter of what Europeans pay for Russian gas. As we know, fracking has boosted oil production in America, too. Since 2005, U.S. electricity rates have remained substantially the same, while European electricity rates have jumped about 40 percent. The expansion of pipelines from Canada, along existing permitted routes, will make it possible to tap larger continental reserves, even if Obama continues to block or severely restrict the Keystone pipeline. Cheap, reliable American energy helps cover sins like the world’s highest corporate income taxes. By contrast, in Europe mere talk about fracking can be enough to set off riots.
The Boston Consulting Group affirmed that electricity is one of the biggest factors that determine manufacturing costs. The cost of U.S. natural gas has come down by half since 2005, and more and more utilities are switching to natural gas, so the outlook is for U.S. electricity rates to remain steady or decline further, whereas European electricity costs seem likely to go higher as more wind turbines and solar panels are installed.
Because crude oil costs less in the U.S. than in Europe, feedstocks are cheaper for companies manufacturing plastics, pharmaceuticals, industrial chemicals and other products. Neither wind nor solar power produce feedstocks. IHS, an international market research firm, projects that by 2020 U.S. chemical production will double, but European chemical production could fall by about a third.
That sucking sound of European business going to the US
The Association of German Chambers of Industry and Commerce (DIHK) reported that its surveys indicated many German business executives would rather move operations to the US than remain handicapped by high European electricity costs as they try to remain competitive in world markets. DIHK Chief Executive Martin Wansleben acknowledged that “The U.S. has become much more attractive to companies than Europe.”
It’s no wonder more European companies are opening or expanding facilities in the U.S., and more U.S. multi-nationals are shifting overseas operations back home
10) And Finally: ‘Green’ Europe Consumes Less Gas, More Coal
Penny Energy News, 8 October 2013
In contrast to the United States, natural gas consumption in OECD-Europe has been generally declining since 2011, and coal consumption has been generally increasing.
A confluence of supply and demand factors, in both the natural gas and coal markets, as well as other economic constraints, have contributed to this phenomenon.
OECD European gross domestic product (GDP), which grew by about 1% to 2% quarter-on-quarter through 2010 and 2011, began contracting again by the second quarter of 2012.
Reduced economic activity lowered overall demand for electricity, particularly in the industrial sector. In 2011, annual natural gas consumption was 8% lower than in 2010 in OECD-Europe, while consumption of coal was 6% greater. Similarly, the region consumed 2% less natural gas and 2% more coal in 2012 than in 2011.
However, in first-quarter 2013, natural gas consumption increased 3% and coal consumption decreased 6% compared with the first three months of 2012. The latest shift in fuel consumption trends can in part be attributed to the Large Combustion Plant Directive from the European Commission, which caused a number of older coal plants to retire despite profitability, particularly in England.
Production of natural gas in OECD-Europe is declining. Production was 5% lower in 2012 than 2011, according to the European Commission. Coal production decreased less than 1% during the same period. Production decreases, along with declining natural gas imports from Russia, Norway, and Algeria, and rising coal imports from the United States and Colombiaâ”supported by the sharp decline in global coal pricesâ”have affected energy consumption patterns in OECD-Europe between 2011 and 2012. Electric power producers with the capability to use coal-fired generators have opted to reduce natural gas consumption. Comparing 2013 to 2012 (through late September), natural gas imports from Russia to Western Europe are up more than 30%, while imports from Norway are down about 7%, according to Bentek Energy.
1 Comment