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Triple Crunch Log © Jeremy Leggett The triple crunch log 2010 …a log compiled by Jeremy Leggett emphasising matters relevant to the energy-, climate-, and financial crises, and issues pertinent to society’s response to this triple crunch Editor’s note This log represents one person’s reading experience of the unfolding dramas that most preoccupy him, among the all-too numerous dramas inherent in the human condition. I have compiled it while pursuing a full time day job in a solar energy company, and further parttime roles as a director in a private equity fund (throughout) and trustee of a charity (since 2006). Accordingly, there is far more source material from newspapers than academic journals and books, most of it culled and processed in evenings, weekends, and journeys. Unless otherwise stated, entries are from newspaper reports published the day after the news event. Magazine and journal reports are on the day of publication, some time (days) after the actual events referred to. Entries from monthlies appear on the first of each month. After the creation of the website (June 2009), references use url format where available. Abbreviations: boe: barrels of oil equivalent; CCS: Carbon capture and storage; CTL: Coal to liquids; mbd: million barrels per day; mcf: million cubic feet (bn: billion; tn: trillion etc); L: author’s library copy for further detail (either digital or paper); mcm: million cubic metres; oe: oil equivalent; p.a. per annum. 1.1.10. 3.1.10. Head of FSA says next UK government must tax “bads” and spend on green stimulus. Adair Turner says “If we have to raise taxes – and we will to some extent – we can deliberately design those to tax bad environmental things, like overuse of fossil fuels, rather than good welfare-enhancing things, like employment for people.”1 Arup heads industry consortium aiming to retrofit UK homes with energy efficiency and create tens of thousands of jobs. GE and EDF are among the 25 companies involved in the Thames Gateway Institute for Sustainability, which plans to use the Thames Gateway as a showcase for what can be done. Funding is a big part of the project and the group is in “advanced talks with pension funds.”2 Oil company bosses will have to solve riddles to find success in 2010, a Petroleum Review editorial asserts. Opec has more than 3 mbd of spare capacity, nearly 80% in the GCC, and if they can maintain discipline €75 oil is here for a long while. So what do you do if your incremental cost of production is higher, as so much IOC production is? And when exploration and development costs doubled between 2005 and 2008, only falling back 20% in 2009? And when investment in the oil sector as a whole fell 19% in 2009, according to the IEA?3 Total has completed Europe’s first complete CCS system at Lacq. The 30 MW capacity plant targets sequestration of 60,000 tonnes of CO2 pa from a gas-fired power plant in a nearby depleted gas field. It uses oxycombustion (where the fuel is burned pure oxygen rather than normal air) to see if the CO2 emissions can be cut in half. The plant is intended to run for two years, at a rate of 200 tonnes captured per day (i.e. 120,000 tonnes in all). France has perhaps 400 mt of stored CO2 capacity in depleted oil and gas fields, and 125 billion tonnes of capacity including saline aquifers.4 Vattenfall’s Schwarze Pump CCS plant one year on has had a better than 90% capture rate in a 30MW capacity plant. Extracted gas is shipped 350km by lorry to a Gaz de France field for use in enhanced gas production. Vattenfall’s head of communications does not reckon the plant can be commercial if scaled up to service the 1 GW Schwarze Pumpe plant.5 World Bank accuses Shell of walking away from solar PV module warranties in Sri Lanka, leaving thousands with no maintenance service as many Shell-manufactured modules display problems. Damian Miller of Orb Solar: “in Sri Lanka, poor customers with average earnings of $1,500-$2,000 a month have bought Shell's solar systems. The system is equivalent to 30% of their annual income,” he added. “They could only afford a system because they could get a loan from microfinance institutions or other banks. But now there are reports of thousands of Shell's [branded] solar panels failing in the field and Shell seemingly is not replacing them.”6 UK manufacturing sector refutes UK Chancellor’s claim of a British "green" jobs revolution, thanks to government support. Rather, the UK is in danger of “missing the boat”, the industry body, the EEF, says. Over 90% of the €2bn earmarked for the London Array, the UK’s biggest project, is being spent abroad. A Department of Business spokesperson says it is unfair to pick one project, albeit the world’s bigggest: "British companies are successfully competing for work on schemes around the world such as the Masdar city project 1 Triple Crunch Log 4.1.10. 5.1.10. 6.1.10. © Jeremy Leggett in Abu Dhabi. The government has unveiled a range of new initiatives, such as support for the Dalton Nuclear Institute in Manchester and the Nuclear Advanced Manufacturing Research Centre in Rotherham.”7 Europe's first electricity grid dedicated to renewable power takes a step closer to reality this month as nine countries formally draw up plans to link their renewables projects around the North Sea. The thousands of kilometres of highly efficient undersea cables, designed to counter the influence of weather on supply, could cost up to €30bn (£26.5bn). An EC working group will produce a plan by the end of 2010.8 Will Hutton sees an upbeat 2010 for the UK economy, thanks in part to government intervention. “Over the last nine months, the stock market has recorded the third biggest rise since 1693, according to the Bank of England, and if it carries on rising just a little more in January it will be the biggest sustained rise for 317 years. A stock market cannot jump on this scale and with this ferocity without matters quickly improving on the ground.” Unemployment has risen less than expected and fell sharply in December. “The two great students of the impact of credit crunches, Carmen Reinhart and Kenneth Rogoff, calculate in their remarkable book on 800 years of banking crises, This Time Is Different, that the average rise of unemployment in countries experiencing major systemic banking crises since 1930 is 7% of the workforce. In Britain, this would have meant an unemployment rise of around 1.75 million. It is not going to happen, catching everyone out, including me. Unemployment will certainly carry on rising in 2010, but the eventual rise will be around 1.25m; serious, but not as cataclysmic as it could have been.” “We have witnessed a powerful example of how public policy can head off putative slumps.”9 City economists see fiscal deficit as main problem in a sluggish UK economy. 37 of the 79 economists polled said the UK was threatened by a fiscal crisis that could derail any revival. Howard Davies: “The major risk is the loss of confidence in the government’s ability to get the public finances back under control.” In that case, investors would eschew the high priced government bonds, and interest rates would rise. Sir John Gieve, former deputy governor of the central bank: inadequate plans for addressing the fiscal deficit could result in sharp rate rises and a fall in the pound.10 Russia halts oil shipments to Belarus after a dispute on pricing similar to previous on in January 2007. The Russians object to Belarus importing oil, refining it, and selling it on the Europe at lower price than Russian oil. The knock-on worries in Europe about an oil price war between Russia and its former satellites are less than for gas, because oil is more fingible than gas.11 Fed chief says tougher regulation is still needed. “Borrowers chose, and were extended, mortgages that they could not be expected to service in the longer term,” Ben Bernanke says. “This description suggests that regulatory and supervisory policies, rather than monetary policies, would have been more effective means of addressing the run-up in house prices.”12 Beware the crisis around the corner, says Clive Crook in the FT. The rules have to be tightened, and they aren’t being. Something must be done about moral hazard (though not via a new Forget Glass-Steagal Act). “In good times, when lending is expanding quickly and financial institutions’ concerns about capital and liquidity are at their least, the requirements should tighten. Under current rules, they do the opposite.” Banks will oppose this of course, he notes.13 Oil price breaks $80 and FT’s Ed Crooks predicts $70-80 at the end of 2010. The current price rsie is mainly down to a US cold spell, and Carola Hoyos predicts in the FT that the Iraqi election in March will be the biggest determinant of the price ahead this year. 14 Some politicians are already saying they will reverse contracts agreed with the IOCs. Ed Crooks’s forecast is based on Opec supply availability meeting Chinese demand, but is offered with appropriate caveats.15 Cairn Energy prepares to drill its first oil well off Greenland, with shares riding high on hopes of a find. Only 6 wells have been drilled in Greenland, all of them unsuccessful. But the USGS estimates many tens of billions of barrels of available resources. FT: “Greenland is a true frontier, which is what makes it exciting; ‘romantic’, as one analyst put it. It is also nerve racking when you are spending an estimated $300m for four wells – Cairn’s expected budget – and plan to drill for two or three years.”16 National Grid warns industrial customers their gas could be cut off as a cold spell intersects with the return to work. This “gas balancing alert,” and a surge in gas prices, show once more how low UK gas storage capacity is.17 Carbon Trust says UK offshore wind faces huge challenges, but they can be overcome. The government’s announcement of the result of offshore wind licensing in a few days will see the UK emerge as the biggest offshore wind market. But 5 MW turbines will have to be installed in 30 metres of water at the rate of 2 a day to hit government targets. And the market-enablement regime beyond 2014 is in doubt, which means the economics and investability is too.18 But the CT thinks it can be done, and would create 70,000 jobs by 2020, 50,000 of them in the manufacturing that it hopes will come to the UK. The result would be comparable to the opening up of the North Sea for oil in the 1970s and 80s.19 Why don’t governments talk about peak oil? Could it be because they know it is a huge problem? So a researcher asks in a review on The Oil Drum. Shane Mulligan, a postdoctoral fellow at the University of Waterloo, examines every explanation he can find referred to in the literature. They just don’t “get it”, or they are overly committed to neoclassiocal economics, or they are hindered from realisation by cognitive biases, or they have been misled by the IEA or EIA, or we can blame it on the media, or they get it but they can’t talk about it, or they are actively avoiding the issue (as in the Wicks Review), or they’re on the case. He tends to the view that they do know about peak oil, and not acknowledging it is part of their policy response. 20 FTSE rides on 16 month high, with RBS one of the star stock performers. The FTSE 100 benchmark closes at 5,530. BIS invites top bankers to Basle to discuss resurgance of “excessive” risk behaviour in banks. The Bank of International Settlements – the central banks’ bank – says “financial firms are returning to the aggressive behaviour that prevailed during the pre-crisis period”. Among those invited were the CEOs of Goldman Sachs and JP Morgan Chase, and they do not plan to attend.21 Iceland’s President says he will take government’s EU reparation pledge to a referendum. By doing this he effectively blocks legislation to repay Britain and the Netherlands more than €3.8bn ($5.5bn, £3.4bn) lost to shareholders in Iceland’s banking collapse. He risks making Iceland a financial pariah nation.22 2 Triple Crunch Log © Jeremy Leggett Business leaders hail Scottish ministers green light for power line through the Highlands as vital for onshore and offshore renewable energy, 4GW+ of which needs to be linked to the central belt. Scottish and Southern Energy will upgrade the existing 137-mile electricity transmission line from Beauly, near Inverness, to Denny, near Falkirk. 23 7.1.10. Gas supplies cut to businesses in the British NW as freezing spell hits western Europe. 95 companies on interruptible contracts are affected. EEF the manufacturers association, says: “unless we invest in gas storage facilities to the same levels as other industrialised nations, this could have a very damaging effect on manufacturing companies in the future.” The spot price of gas has risen sharply to 56p per therm, but still well short of the 2006 peaks of over £2 per therm.24 Large parts of freezing China now face power cuts as gas is limited. Demand has gone up and coal production has been disrupted.25 EDF boss says nuclear is essential, and will be cheaper than gas, coal with CCS, and renewables. Vincent de Rivaz, CEO of EDF Energgy, says that “using gas, additional offshore wind or clean coal instead of nuclear could cost consumers dearly. EDF Energy is among the companies developing renewables towards the government’s target. But replacing the planned 16GW of new nuclear capacity with offshore wind beyond the existing renewables targets could add about £100 a year to typical domestic energy bills (NB EDF says £40 for nuclear …so less than half as expensive), or possibly more, according to our calculations. The impact of clean coal would be only slightly lower. Gas-fired generation could also carry a high price. If fossil fuel prices return to their 2008 peak, using gas to replace nuclear would add around £60 to annual household bills. Of course, depressed fossil fuel prices could reduce this impact. But using more gas would do little to cut emissions and would increase concerns about energy security. The message is clear: if we are to cut emissions and keep bills affordable we need the cheapest low-carbon technology – nuclear.”26 Google asks for regulatory approval as an energy supplier. Last month the internet search company created a subsidiary called Google Energy. Now it seeks approval from FERC to buy and sell power like utilities do. Google says its primary goal was to gain flexibility for buying more renewable energy for its power-hungry data centers. 27 But ….Google’s Green energy czar, Bill Wiehl: “We also saw a real gap in what I would describe as “engineering innovation,” between what happens in a basic research lab and what happens in a typical venture capital-funded company. From an engineering point of view, it seems like it ought to be possible to do this, but no one’s actually ever designed this thing to really drive the costs down really low. What if we were to try? What if we were to fund someone else to try?” His unit’s goal is to make renewable energy cheaper than coal. The three most likely candidates for the breakthrough, he believes are CSP, enhanced geothermal, and high altitude wind. B ut: “As a society, we have chosen to invest too little in alternative energy over the years, and that has made some of the choices much harder than they should be. We should have been investing much more in solar [photovoltaics] since the 1970s than we have.”28 8.1.10. £40bn bonus pa outs to bankers show government efforts to have made no difference. The $65bn handout by the world’s biggest banks means they have elected to take the UK Treasury's 50% tax hit themselves rather than pass it on to their workers. An Illinois pension fund has argued in a lawsuit filed yesterday that the payments harm shareholders. Goldman Sachs maintains the lawsuit is “completely without merit”.29 German firms win most of the deals in the UK’s giant offshore wind licensing round. Nine consortia sign agreements with the Crown Estate, the body with responsibility for renewable power in UK waters, to take their proposals through the planning stage. Only three have British majority stakes, and only 5 involve British firms. Eon, RWE and Siemens are big winners. Some $75bn in contracts and 70,000 jobs are at stake in the c 32GW of offshore wind (6,500 turbines) intended to generate 25% of UK electricity by 2020.30 UK imports electricity from France to meet demand in the cold spell. At 2.30pm today France was sending 1,766 megawatts under the Channel.31 9.1.10. Chinese renewables boss sees limited scope for CSP in China, preferring PV but Chinese companies are pushing ahead developing plenty of CSP nonetheless. Li Jenfung says concentrating solar power works best when cheap water, cheap land and lots of sun are available in the same place, and this is a rare combination in China. he also expects it to prove more expensive per kilowatt-hour generated than PV. Li is a deputy director general for energy research at the National Development and Reform Commission, the top economic planning agency in China, and secretary general of the government-backed Chinese Renewable Energy Industries Association. 10.1.10. US banks braced for bonus backlash. Goldman Sachs, Morgan Stanley and others prepare to be assailed by protest as they hand out massive bonus packages. GS considers a programme that would oblige its top executives to give a percentage of their package to charity. This would copy a policy at failed bank Bear Stearns, with required a 4% charity contribution from 1,000 executives in a programme that ran for decades. “Goldman set aside $16.7 billion for compensation in the first nine months of 2009, and in good years, the firm dedicates about three-quarters of its compensation budget to year-end bonuses. The firm is expected to report later this month what could be record profit of about $12 billion for 2009, according to analysts’ estimates, compared with $11.7 billion in 2007.”32 New fears about future gas supplies, as UK government signs off on new gas power plants. This new “dash for gas is fuelling concerns that Britain’s infrastructure may become more vulnerable to extreme weather and supply disruption. Some 14,000 megawatts of new gas-fired generation have been approved. Gas-fired capacity abailable this winter is about 25,000MW,33 Fear about nuclear radiation are irrational, says Oxford physics professor. The health dangers from nuclear radiation have been oversold, according to Wade Allison, who argues that low levels of radiation can be easily tolerated by the human body and that the government is right to promote nuclear power for climate change, therefore.34 11.1.10. Deep within Gazprom’s HQ, an engineer in a control room explains how he could turn off the lights. “An engineer explains how easy it would be to turn out the lights in a foreign city with the click of a button on his desk,” Dan Roberts writes in the Guardian. Gazprom claims to have natural gas in Siberia equivalent to all the oil and gas fields owned by western energy companies put together. 50.1% state owned, its taxes provide some 20% of the Russian government’s income. “Rumours persist that senior government figures (including 3 Triple Crunch Log © Jeremy Leggett Vladimir Putin) have sizeable indirect holdings.” The gas giant has had a bad year, but is bouncing back, given the return to $80 oil. Sergei Kupriyanov, Gazprom’s official spokesman, hopes Gazprom will sell to British residential sector one day. "Yes, definitely. The British market offers ample opportunities of developing downstream operations – we appreciate the fact that it's a liberalised market and all of the infrastructure is in place." UK reserves near depletion in less than eight years at current extraction rates.35 Demand for oil is increasing at such a rate in Saudi Arabia that exports are likely to be constrained, analysts fear. Domestic consumption jumped 16.4 per cent year on year in August because of an unprecedented surge in the burning of crude. Inefficient power plants and shortage of gas led the reasons. As a result, the IEA has revised up its forecasts for Saudi domestic oil consumption to 2.8m barrels a day in 2010. Last year’s production was a record 12.5m barrels a day. The government has postponed some energyintensive projects. Oil is sold for $5 a barrel in the Kingdom. “Even Saudis complain that subsidised fuel and cheap cars encourage wasteful use of energy, especially by young people who have little means of entertainment in the conservative kingdom except driving or participating in unofficial drag races.”36 UK wind farms produced “practically no electricity” during the cold snap. Low pressures cut the wind out so that only 0.2pc of a possible 5pc of the UK's energy was generated by wind turbines in the last few days.37 12.1.10. Geoengineering conference convened in March in wake of Copenhagen’s failure. Says Mike McCracken of the US Climate Institute, convenor of the California event: “Most of the talk about these geoengineering techniques says they should be saved until we get to an emergency situation. Well the people of the Arctic might say they are in an emergency situation now.”38 Coal stockpiles fall to low levels in China’s cold spell. Supplies for 11 percent of power plants connected to China State Grid’s network have fallen to less than three days’ worth and could be shut “any time,” Xinhua news agency says.39 Investors are putting trillions at risk by ignoring climate change, Ceres report says. A survey of leading asset managers shows the vast majority are not factoring climate-related trends into their short- and long-term investment decision-making.40 EIA expects US gas output this year to be down 3% due to steep new-well production declines. In its January Short-Term Energy Outlook, EIA forecast consumption averaging about 62.44 bcf per day, versus 2009 demand of 62.45 bcf daily. Growth in residential, commercial and industrial use is offset by declining demand from the electric power sector.41 13.1.10. Ofgem sees a “cliff edge” in UK gas supplies in 2015-16. Alistair Buchanan, head of Ofgem, tells the FT he sees a risk that new Russian and the Caspian gas supplies might not be available in time to meet UK demand as domestic gas production falls. UK gas production is down 40% since 2000. Buchanan questions whether the ultra-competitive UK market is structured in the right way to guarantee security of supply.42 Russian gas bailed the UK out as Norwegian supplies faltered in the cold snap, the Major Energy Users' Council says. Eddie Proffitt, chairman of the council's gas group: “The [British] gas industry has coped very well but we have been lucky. It would have been desperate if we had seen the kind of disputes between Russia and Ukraine that have reduced gas flows on the continent in the past two or three Januaries.” 43 Recession hit North Sea 2009 oil and gas production. An average of 600m barrels of new reserves were brought on stream each year between 2004 and 2008. Wood Mackenzie reports only eight oil and gas fields – expected to produce a combined lifetime total of 140m barrels of oil equivalent – began production in 2009. Investment in exploration and appraisal drilling in the UK North Sea fell by 37 per cent in 2009, and the oil price drop delayed projects as well. 43 companies were working in the UK North Sea in 2008. 24 are today. Tax revenues from the North Sea were £6.9bn in 2009, down from £12.9bn in 2008.44 Russia seeks bilateral role in Indian solar expansion. Indian Prime Minister Manmohan Singh launches the Jawaharlal Nehru National Solar Mission, aiming for 20 GW of solar energy for India by 2022, alongside Sergei Seredin, Russia's first deputy director general of economics and finance, who led a delegation from Moscow in the inaugural ceremonies. He says Moscow was interested in playing a role in New Delhi's strategy to construct solar power stations and manufacturing facilities.45 American consumerism threatens the planet, says the Worldwatch Institute. The average American consumes more than his or her weight in products each day. This culture of of greed and excess and the exporting of it is emerging as the biggest threat to the planet, according to the annual report of the Worldwatch Institute. It could wipe out any gains from government action on climate change or a shift to a clean energy economy. In the Noughties consumption of goods and services rose 28% to $30.5tn (£18.8bn). 46 Wall Street bosses apologise for mistakes but still defend bonuses. Leading Wall Street bankers tell the US government’s Financial Crisis Inquiry Commission that they underestimated the severity of the crisis and apologise for making mistakes and needing to be bailed out with $360bn. Commissioner: “If you knew then what you do now, what would you have done differently?” JP Morgan CEO Jamie Dimon: a crucial blunder was “how we just missed that housing prices don't go up forever.”47 14.1.09. China Daily reports oil imports “hit alarming levels” in 2009. 52% came from abroad. “Analysts believe that by 2020, nearly 65 percent of the oil consumed in China will have to be imported. China's oil dependency reached 45 percent in 2006 and grew at two percent every year after that.” The country first became a net importer of crude oil in 1993.48 US climate envoy US will not cede control to the UN. The UN process is too ponderous, and main emitters need to negotiate as a group, Todd Stern says. The big test for the Accord comes on 31 st January, when countries have to table their formal commitments. Copenhagen was a hair’s breadth from collapse, he says, in his first public appearance since the summit. 49 Stern’s deputy Jonathon Persching says the UN should be sidelined. Fewer than 30 of 192 countries have signed the Accord.50 Arctic permafrost leaking methane at record levels. New figures published in Science magazine show emissions rising by almost a third in just 5 years, by around 1m tonnes of extra methane each year between 2003-2007, driven by rising temperatures. The study also shows just 2% of global emissions are from the Arctic, but that is the fastest growing region. There is a clear positive feedback, says Paul Palmer of Edinburgh University, one of the researchers. 4 Triple Crunch Log © Jeremy Leggett Targeting of US weather reporters on climate-change denial has been brutally effective and may have been the most successful targeted campaign ever. Sea Kidney: “have a look at a story just published in the Columbia Journalism Review on the extraordinarily powerful impact on US public opinion of pseudoscientist TV weather reporters.51 I first became aware of the assertive ignorance of some weather reporters when my news monitoring kept turning up denialist stories on the Weather Channel website, and I dived in to try and correct some of them. The Columbia Journalism Review story explains just how widespread the problem is and, at the same time, just how central weather reporter views are to the understanding of climate change by the US public. When asked in a national survey who they trusted for information about global warming, 66 percent of respondents named television weather reporters! Unfortunately, most weather reporters don't 'believe' in climate change. The underlying story is how the 'sceptic' Heartland Institute targeted weather reporters some years back, giving them free tickets to sceptic's conferences and the like. That would have to be one of the more successful targeted campaigns in history, helping block policy progress for years; it needs to be reversed.” Targetting investors in coal is the way to do that.52 China’s growing coal imports begin to look costly as thermal coal price hit $100 a tonne, and the FT speculates that long-term coal dependence could be under review. Domestic demand for coal began to catch up with domestic production about 2008 and China began importing from new sources recently. More than half of China’s coal imports come from Australia, Indonesia and Vietnam, with Russia, Mongolia, and Canada the main second-tier suppliers. This month, for the first time, imports include Colombia coal. Prices for thermal coal hit $100/tonne this week.53 Jim Hansen in open letter to carbon traders: you “are choosing the path of corporate greed.” Capand-trade allows energy companies to add the costs of the right to pollute to consumer’s fuel bills in a hidden tax. The fee-and-dividend approach that he favours taxes fossil fuels at the point of extraction, and spreads the proceeds among the public so they can reduce their carbon footprint and avoid high fuel prices.54 Obama announces a levy that will recover $90bn from the 50 largest US financial institutions. The President calls the bankers’ bonuses “obscene” and tells them: “I’d urge you to cover the costs of the rescue not by sticking it to your shareholders or your customers or your citizens but by rolling back bonuses.” He urges other countries to follow suit.55 Obama needs to levy the fee to help cover a $117bn loss to the US treasury from the $700bn TARP bailout, and wants it in place by June. He intends to apply a levy of 15 basis points, or 0.15%, on the liabilities of 50 large financial institutions with assets of more than $50bn. Jamie Dimon, JP Morgan CEO: “Using tax policy to punish people is a bad idea. All businesses tend to pass their costs on to customers.”56 The world's biggest banks are flouting the Equator Principles, environment groups say. They continue to lend to some of the most environmentally damaging energy and infrastructure projects despite the protocol agreed to seven years ago that was meant to stem such practices, including the financing of huge projects that fuel climate change. 86 campaign groups from 27 countries have sent a letter to 60 banks pouring scorn on the way the Principles are being flouted.57 Green technologies pose “the investment opportunity of our lifetime” says Deutsche Bank. Companies specializing in energy efficiency and renewable energy such as wind and solar power outperformed peers across the wider global economy last year, a Deutsche Bank report finds in a study. The Bank expects more of the same in 2010. Kevin Parker, global head of asset management: “The absolute imperative to prevent climate change is therefore also, I believe, the economic and investment opportunity of our lifetime.” 58 15.1.10. FT editorial: “Obama is right to clobber Wall Street”. “Debate about the levy, however, must not distract from the question of how to construct a financial system where banks can fail safely. In future, it must be easier for bank debt to be turned into common equity in a crisis, and the fate of insolvent banks’ counterparties must be made clearer to prevent the panic that followed the Lehman bankruptcy. Capital requirements must also be raised.”59 Paul Krugman on the testimony of the “clueless” Wall Street bosses. “The bankers’ testimony showed a stunning failure, even now, to grasp the nature and extent of the current crisis. And that’s important: It tells us that as Congress and the administration try to reform the financial system, they should ignore advice coming from the supposed wise men of Wall Street, who have no wisdom to offer. There were two moments in Wednesday’s hearing that stood out. One was when Jamie Dimon of JPMorgan Chase declared that a financial crisis is something that ‘happens every five to seven years. We shouldn’t be surprised.’ ….Goldman Sachs’s Lloyd Blankfein, who compared the financial crisis to a hurricane nobody could have predicted.” 60 Areva weighs cheaper reactors after failure of Abu Dhabi bid. An internal review has been launched to assess whether to reintroduce the simpler second-generation CPR1,000 reactors, which it stopped building 20 years ago. “Safety standards in the US and Europe would not allow a second-generation reactor to be built,” an Areva executive acknowledges: but 20% of countries that would accept the lower safety standards. Areva's third generation EPR reactor, marketed as an advance in safety technology, has features such as a double shell reinforced to withstand an airline crash, and a secure chamber to contain waste from a core meltdown. EDF estimates the cost at about €4bn ($5.8bn) or even higher. This seems to have been too much for Abu Dhabi.61 17.1.10. A string of tech companies prepares IPOs in London after a drought of three years. “To float you need scale and and a good growth story. Many companies are talking about floating this year but I think you will be lucky if 20 per cent of them actually do,” says one analyst. In 2009 IPOs represented only 10 per cent of venture-backed exits, with M&A 90 per cent.62 SRI may be holding back sustainable investment: FT op-ed. Assets under management rose by 9 per cent a year to €53bn (£47bn, $77bn) by the end of June 2009. Some say this proves socially responsible investing (SRI) is more than a fashion. Yet SRI remains a niche area with SRI assets reaching a mere 1.11 per cent of total assets in Ucits funds this year. “We think part of the answer lies in the lopsided relationship between SRI and risk. SRI is often considered a non-financial overlay to the investment process. It seeks to protect the investor from making unethical, socially undesirable or environmentally unfriendly investments. Sustainable investment, however, has an investment return focus that regards sustainable development as an opportunity to invest based on a set of financial and non-financial criteria. These, therefore, are two very different animals and SRI may be holding back sustainable investing.”63 5 Triple Crunch Log © Jeremy Leggett 18.1.10. Goldman Sachs: oil shortages will reappear in 2011. By then supply demand will be outpacing supply because of underinvestment. Analyst Jeffrey Currie forecasts demand exceeding pre-crash levels by Q3 this year. “It’s as good as it’s going to get right now in terms of supply growth,” says Currie. Goldman predicted in December that crude would average $90 a barrel in 2010 and $110 per barrel in 2011. Goldman’s outlook for this year is joint-highest among 38 analyst estimates compiled by Bloomberg.64 ITPOES Letter to FT: Gas crunch that will prove a wake-up call for consumers. Sir, Your report “Ofggen foresees looming threat to gas supplies” (January 13) raises some serious concerns over national energy security. The “gas crunch” identified in your report is probably going to be matched, or exceeded, in its effect on the UK economy by a similar “oil crunch”. This prospect was first identified by the Industry Task Force on Peak Oil and Energy Security (ITPOES) in its report dated October 2008. Oil supply has very similar characteristics to gas, except that the run-down in indigenous production is more advanced and the availability of oil is more limited with respect to future demand. (The ability to extract “tight” gas from shale, at economic prices, has transformed the near-term international prospects for future gas supply.) A second report from ITPOES, updating and reinforcing the case, will be published by us on February 10. For those interested in the future security of UK energy supplies, it should be essential reading. From businesses to consumers, it is a wake-up call to every one of us about the future implications for our daily lives. Richard Branson, Founder, Virgin Group; Philip Dilley, Chairman, Arup; Jeremy Leggett, Chairman, SolarCentury; Ian Marchant, Chief Executive, Scottish and Southern Energy; Brian Souter, Chief Executive, Stagecoach Group65 BP joins with Sinopec in talks about shale gas exploration and development in China. Shell and Petrochina already have a shale gas programme. The deal hinges on Chinese access to western technology.66 Shell faces renewed investor pressure over tar sands. A coalition has forced a resolution onto the agenda of the May AGM calling for the Shell audit committee to do a review of risks. Catherine Howarth, chief executive of FairPensions, coordinator of shareholder opposition to the tar sands investments: “All (shareholders) are united in registering concern with the risks involved in Canadian oil sands. We expect that Shell's 2010 AGM could prove a watershed in the history of corporate accountability.”67 French nuclear industry in crisis as EDF and Areva go to war. EDF says Areva has halted uranium supplies and stopped removing spent fuel for treatment in an increasingly bitter row over their contractual relationship. The heads of the two state operators are asking Sarkozy to adjudicate. Areva supplies 68 per cent of the uranium used in EDF's reactors. EDF, which provides 77% of French electricity from its nuclear plants, has stocks for several months. The row has been cited as one of the factors behind France's failure to secure the contract to build reactors in Abu Dhabi.68 Germany removes nuclear waste from a salt dome repository that has “proven unstable”. Thousands of barrels of low-level waste are to be removed from Germany's Asse radioactive waste disposal facility. The country's Federal Office for Radiation Protection (Bundesamt für Strahlenshutz, BfS describes the job as a “major scientific and technological challenge.”69 EON boss calls for rethink on retiring all coal fired power plants to make sure lights don’t go out. “There is a question mark over keeping one or two of these oil or coal fired plants mothballed to secure supplies for a few days per year when we get these conditions,” Paul Golby says.70 Coalition letter in Guardian urges higher solar UK feed-in-tariffs for UK. Signatories include the Home Builders Federation, the Federation of Master Builders, the National Housing Federation, many companies, and NGOs.71 Larry Elliot says “enjoy it while it lasts”: global credit bubble is far from over, and much depends on China. “Everybody knows what should happen in theory: the Chinese need to boost domestic consumption rather than relying on exports. Otherwise, with America unable to act as the world's consumer of last resort, the world is going to be flooded with goods that nobody wants. The lack of global demand will force down prices, making the threat of deflation extremely real and adding to pressure for trade barriers.”72 NY Times editorial describes “how retirees saved the banks”, and get a terrible deal in the process. “Measly savings yields are central to the government effort to buy time for the banks to earn their way back to health. It is important to rebuild the banks. But more attention must be paid to the collateral damage from that effort. Here’s what’s happening: By lowering the short-term interest rate it controls to virtually zero and creating lending programs, the Federal Reserve has enabled banks to borrow cheaply. The banks re-lend that cheap money, but not necessarily to consumers and businesses. They can, for example, lend it to back to the federal government by buying Treasury securities, and earn a nice spread between their cost of funds and Treasury yields. At the same time, banks are awash in deposits, much of it from investors who have pulled their money out of riskier investments. With money rolling in, big banks don’t need to compete with one another for savers, which further depresses the interest on offer. The result is presumably healthier banks and certainly poorer savers. Or, as William Gross, the legendary bond investor told The Times’s Stephanie Strom: “It’s capitalism, I guess, but it’s not to be applauded.” 73 19.1.10. Could China be the next Enron, Thomas Friedman asks. Maybe, after the Google fiasco. James Chanos, the investor who started the shorting of Enron stock and made a fortune, has said that China is akin to Dubai only 1,000 times worse. On 12th of January, Friedman concluded he was unlikely to be right. The reasons for his doubts started with the $2 trillion of foreign currency reserves.74 But today, he revises his view. After the government-backed hacker raid on Google, Friedman thinks “Command China” is increasingly at work with “Network China.” For this reason, Freidman thinks the Communist Party is worth shorting. 75 20.1.10. UN drops deadline for emissions commitments under Copenhagen Accord. With the 31 January deadline looming, only 20 countries have filed. So the commitment becomes a “soft” target Un chief of climate Yvo de Boer decides.76 China's renewable energy consumption accounted for 8.3 percent of the total in 2009. So says an official from the National Energy Administration, Shi Lishan. China consumed 3 billion tonnes of standard coal equivalent in 2009, more than 90 percent from traditional fossil fuel sources, with over 70 percent from coal. China intends to raise total hydropower capacity to 300 gigawatts and wind power capacity to 150 gigawatts by 2020, Shi says. Total installed nuclear capacity should reach 80 gigawatts by 2020, while solar capacity should rise to 20 gigawatts.77 6 Triple Crunch Log © Jeremy Leggett IPCC leader has to back down from claims Himalayan glaciers would melt by 2035. “One paragraph, buried in 3,000 pages of reports and published almost three years ago, has humbled the head of the UN's IPCC. Facing global outcry, Rajendra Pachauri backed down and apologised today.” JL: So, another blow to credibility that will reverberate endlessly around the world, while the torrent of scientific bad news passes the the great majority by.78 Nature looks at “the real holes in climate science” and concludes they favour a worse outcome. The science magazine recounts six common myths: “- Climate models can't provide useful information about the real world. Models can reproduce much of the climate variation over the past millennium, but projections for the future are subject to well-described uncertainties, both in the understanding of climate and in estimates of future economic development. They cannot therefore provide decision-makers with exact information of the rate of future changes, but they can offer useful general information and they unconditionally predict a warmer world. - Global warming stopped ten years ago. Climate is not weather. The climate is the multi-decade average of the constantly changing state of the atmosphere. Natural variations can cause temperatures to rise and fall from year to year or decade to decade. Although global temperatures did not rise as quickly in the past decade as in previous ones, the most recent decade was the warmest on record. - Temperatures were higher in pre-industrial times. The consensus of proxy-based reconstructions of preindustrial climate is that the second half of the twentieth century was probably warmer than any other halfcentury in more than a millennium. Warmer periods did occur in the more distant past, albeit under different orbital and geological conditions. In any case, warm spells in the past do not disprove human influence on climate today. The cause of any particular climate change needs to be investigated separately. - Temperature records taken in the lower atmosphere indicate that the globe is not warming. A decade ago, there seemed to be a discrepancy between surface and tropospheric temperatures. But this issue was resolved when long-standing calibration problems with satellite sensors were discovered. Satellite measurements show that the lower atmosphere is warming at a rate consistent with the predictions of climate models. - A few degrees of warming are not a big deal. In the most recent ice age, the world was only a few degrees cooler on average than it is today. The current rate of warming is in all likelihood unique in the history of humankind. There may be no such thing as an 'optimum' temperature for the planet, but modern human societies are adapted to the weather patterns and sea levels of the past millennia. The rapidity of global warming substantially adds to the problem. - Measured increases in temperature reflect the growth of cities around weather stations rather than global warming. Climate researchers have taken great care to correct for the impact of urbanization in temperature records by matching data from more-urban stations with data from rural ones. Moreover, some of the largest temperature anomalies on Earth occur in the least populated areas, including around the Arctic and the Antarctic Peninsula. Measurements also show warming of the surface ocean and deeper marine layers.”79 Bill Gates says nuclear is worth pursuing; solar and wind, though good, have limitations. This on his Gates Notes web site, relaying his views about social problems, launched today. Gates has invested in a Seattle-based nuclear company working on reactor design, TerraPower. Solar is “way, way, way out of line” and has storage problems, he says in a podcast.80 21.1.10. Obama prepares for what he calls a “big fight with the banks” with limits on their trading. The day after a shock defeat for the Democrats in the Massachusetts Senatorial by-election, Obama makes a populist move. Proprietary trading operations, where banks use their own corporate funds to gamble in the markets, will now be limited. “We’ve got a financial regulatory system that is completely inadequate to control the excessive risks and irresponsible behaviour of financial players all around the world,” Obama says. “People are angry and they’re frustrated. From their perspective, the only thing that happens is that we bail out the banks... We’re about to get in a big fight with the banks.”81 The new banking regulation will be called “the Volcker Rule,” after its architect in the White House, Paul Volcker, the former Chairman of the Federal Reserve under Carter and Reagan.82 It prohibits any bank holding deposits guaranteed by the government from operating hedge funds, private equity funds, or from proprietary trading. On top of this will come a limit on the size of any bank.83 Goldman Sachs, announcing results, says it is exercising “restraint” in lowering bonus payouts to $16bn, so that the average pay packet is fractionally less than half a million dollars per employee. The proportion of revenue allocated to pay falls from 48% to 35.8%, the lowest proportion since the bank went public in 1999. Its compensation pool is reduced by a $500m donation taken from the pay of Goldman's 400 senior partners and given to a charitable foundation, Goldman Sachs Gives. CFO David Viniar: “We are certainly appreciative of the policies governments around the world put in place to help stabilise the world's financial system. We think they did a really, really good job.”84 UK could follow Obama lead on bank constraints. US officials will come to London to discuss co-ordinated action.85 But Darling has opposed a return to Glass-Steagal-type regulation, whereas the Conservatives say what Obama intends “needs to be done.”86 UK begins a programme to repatriate all radioactive waste from abroad. A cargo set sail for Japan last night, under an agreement that will cut Britain’s high-level waste stockpile by almost 40 per cent over the next ten years. All 925 tonnes of foreign atomic waste from Japan and four other countries will go. 28 steel canisters of waste, each weighing half a tonne but sheathed in 100-tonne steel flasks and under heavy security, are moved by rail from Sellafield, where they have been in temporary storage since the 1990s, to Barrow-in-Furness, there to be loaded on to the Pacific Sandpiper, a custom-built, double-hulled ship. Armed guards will protect the canister on their six to eight-week sea journey. The other countries involved are Germany, Italy, Switzerland and the Netherlands. Contracts from the 1970s and 1980s brought the spent nuclear fuel rods to Britain for reprocessing. But problems with the Sellafield plant and commercial disagreements led to lengthy delays. Some 5,000 steel canisters have been held at Sellafield. Direct exposure would kill a human being instantly. Japan will store the first shipment of canisters temporarily at the Rokkasho nuclear facility. It has not yet built a permanent-storage repository.87 22.1.10. FTSE and Dow Jones fall as investors fret over Obama’s move. Banks are the biggest losers of course, but Google’s spat with China isn’t helping.88 7 Triple Crunch Log 23.1.10. 24.1.10. 25.1.10. 26.1.10. © Jeremy Leggett Brown to push for a Tobin Tax in wake of Obama’s gear change. But the City Minister Myners says the UK does not to copy the US because we already have a tax and requirement for living wills.89 Barclays elects to defer bonuses for top bosses in face of public pressure. Up to 100% will be deferred for three years.90 National Audit Office doubts ministers can deliver on promise of no public subsidy for nuclear. In a new report, the government’s own accountant doubts whether companies will be able to pay the full costs.91 VC investment down 37% in 2009, PWC reports. $17.7 billion went to 2,795 start-ups — 37 percent less cash and 30 percent fewer deals than in 2008. VC funds raised $15.2 billion, a 47 percent decline from the year before. Roger McNamee, co-founder of Elevation Partners: “the venture capital industry’s just lost its way, and it needs to reinvent itself. A very cynical game has developed where they make enough money off the fees to support a lovely lifestyle and they don’t have to work very hard.” Ten-year returns for the industry have dropped to 14 percent, from 36 percent in 2000, according to Cambridge Associates. Initial public offerings and sales of venture-backed companies were both sharply down: just 13 and 262 respectively.92 A quarter of the US grain crop is now being fed to cars, not people. So new 2009 figures from the Department of Agriculture show. This is enough to feed 330m people at average world consumption levels. Lester Brown: “Continuing to divert more food to fuel, as is now mandated by the US federal government in its renewable fuel standard, will likely only reinforce the disturbing rise in world hunger. By subsidising the production of ethanol to the tune of some $6bn each year, US taxpayers are in effect subsidising rising food bills at home and around the world.” 93 Prosperity without growth: it is possible, and imperative, Tim Jackson argues in his new book. “Questioning growth is deemed to be the act of lunatics, idealists and revolutionaries. But question it we must,” says Jackson in “Prosperity Without growth.” JL Review in Guardian: “For what it's worth, as a creature of capitalism – a venture-capital-backed energy industry boss, a private equity investor, and an Institute of Directors director of the month – I am convinced that capitalism as we know it is torpedoing our prosperity, killing our economies and threatening our children with an unlivable world. Tim Jackson has written the best book yet making this case, and showing the generalities of the escape route. The specifics, post-Copenhagen, are all down to us.”94 Banking lobbyists gear up to fight Obama’s reforms. The top 8 US banks spent $26m on lobbying last year – up 6% despite the crisis. They gave $78.2m to federal candidates and party committees in the first 10 months: more than any other business sector. 95 They have a successful track record. A $300m lobbying assault during the Clinton administration saw the 1999 repeal of Glass-Steagal. Citigroup was a big beneficiary, and hired Clinton Treasury Secretary Robert Rubin soon after the appeal. 96 An IMF paper has shown that the more a bank spends on lobbying, the bigger the risks it takes. 97 If bankers had paid just 20% less in bonuses 2000-8, they would have had £75bn more capital – more than the taxpayer put in. So the Bank of England has shown, according to Will Hutton. Averting the crisis required £1.3 trillion of liquidity, guarantees and capital injections.98 Banks and investors are pulling out of carbon markets in the wake of the failure in Copenhagen. So Anthony Hobley, head of climate change and carbon finance at Norton Rose, and others, report.99 Shell CEO says Shell’s expansion in the tar sands will be “very much slower” in years ahead. The company is making a strategic shift away from unconventional oil, and rely more on conventional oil and gas for growth.100 Saudi lead climate negotiator says climate talks are a worse threat than rival oil producers, and says the Kingdown will build a solar capacity quickly. “It's one of the biggest threats that we are facing,” says Muhammed al-Sabban, head of the Saudi delegation to the U.N. talks on climate change. “We are worried about future demand ... oil is being singled out. We are heavily dependent on one commodity.” The kingdom sees “some truth” in studies that point to demand peaking in 2016. Saudi Arabia plans to invest heavily in solar, al-Sabban says, hoping to begin exporting solar electricity by 2020. Saudi Oil Minister Ali al-Naimi has also said the government aims to make solar a major contributor to energy supply in the next five to 10 years.101 Economic growth cannot be achieved while limiting global warming to 2 degees C, a new Economics Foundation report concludes. The levels of carbon intensity required are probably impossible to achieve.102 EPA may tighten anti-SO2 rules as another route to cutting US coal use. Bernstein analyst Hugh Wynne sees such an approach forcing coal into “secular decline” in the US, because the tightening proposed would require a cut in emissions of 50% by 2015.103 China is setting the oil price, Goldman Sachs analysts think. They point in their weekly review to a 1.6mb/d rise in Chinese demand more than offsetting the 1.5 mb/d fall in the US.104 More and more families are falling into debt with energy companies in the wake of the cold spell.105 Meanwhile, the cold spell has put £100m of additional profits for energy companies, analysts report.106 Recovery of public trust in business is patchy, and working with NGOs will help, a global survey for Davos shows. Trust in business has risen from 49 per cent to 53 per cent around the world, according to Edelman’s annual “trust barometer” of well-educated, highly paid and engaged “informed publics.” Trust in government rose from 44 per cent to 46 per cent globally (up from 30 per cent to 43 per cent in the US but down from 41 per cent to 35 per cent in the UK). China, in contrasts, score 77%. Trust in US banks is just 29 per cent, down from 36 per cent in 2008, and 69 per cent in 2007, when US banking was the number three most trusted industry. Now it’s second lowest after insurance. “The survey draws the clearest picture yet of an emerging ‘stakeholder society’, in which delivering financial returns for shareholders is no longer seen as executives’ sole priority,” the FT reports. Just over half of those polled saw service to “society at large” as equally important. A clear majority say they are more likely to trust companies that work with NGOs to tackle global issues.107 Cyber attacks on oil majors include reserves details. Christian Science Monitor reports that at least three US oil companies - ExxonMobil, Marathon Oil and ConocoPhilips - have been targeted by hackers, possibly in China. The hackers have accessed ‘bid data’: highly sensitive commercial information discoveries and reserve estimates.108 8 Triple Crunch Log © Jeremy Leggett 27.1.10. Obama singles out green energy and infrastructure jobs in his State of the Union address. $30bn of the money repaid by Wall Street will go to community banks for lending to small businesses. Large numbers of jobs can be created in infrastructure projects such as higgh-speed rail, and clean energy, the President says.109 He briefly refers to the world pushing ahead with a climate change agenda, but does not mention global warming or the cap and trade bill.110 Barclays President Bob Diamond lashes out at Obama measures in Davos. “If you say that large is bad and we move to narrow banks the impact on jobs and the global economy will be very negative.” 111 Darling has secret talks with bankers in Davos as top City bankers try to head off Obama-style measures in the UK. But FSA boss Turner says policymakers need more than interest rates to tame asset-price booms and calls for the creation a new macro-prudential body in Britain with the power to take pre-emptive action.112 FT commentariat split on the Volcker plan. Martin Wolf points to a number of difficulties, but John Gapper welcomes it, even though the investment banks escaape lightly.113 US courts set to become a major battleground on climate change as three cases progress. Three lawsuits have been filed around the US, and are gaining ground. Two federal appeals courts, one in Connecticut and one in Mississippi, have reversed decisions by federal district courts to dismiss climate-change lawsuits, allowing the cases to go forward. The third, an Innuit lawsuit in Alaska over eroding shoreline, is going to appeal. The American Justice Partnership argues that the conspiracy accusations on this case make it “the most dangerous litigation in America.”114 In a report last year, Swiss Re compared the suits to those that led dozens of companies in asbestos industries to file for bankruptcy. The reinsurance giant predicted that “climate change-related liability will develop more quickly than asbestos-related claims,” and said that pressure from the cases “could become a significant issue within the next couple of years.” 115 UK opinion poll shows huge public support for feed-in tariffs. A survey of more than 2,000 people carried out for the Cooperative Group and others shows that two-thirds of people think that the government's feed-in tariff plans should be more ambitious, and that 71% of homeowners would consider installing green energy systems if the tariffs give a good return. JL: says that the new government scheme could yet deliver hundreds of thousands of jobs in solar photovoltaics and other small-scale renewables. “It could also cut significantly our country's increasing dependence on imported fossil fuels,” he added.116 Up to £160bn per field tax relief available for oil companies on the North Sea frontier, the Government announces. This applies to companies planning to exploit the estimated 4bn barrels of oil and gas equivalent lying in deep waters as far as 100 km off the west coast of the Shetland Isles. Total claims the projects will be uneconomic with support because of the long distance transportation requirements.117 Areva and GDF-Suez negotiate a partnership to develop the next generation nuclear reactor. Not yet signed, it will surely be opposed by EDF’s new boss. The deal will give EDF’s rival privileged access to the design and operation of the Areva/Mitsubishi 1110MW Atmea reactor, a smaller version of Areva’s flagship 1600MW EPR reactor.118 Toyota wins the Zayeed Prize, and then has to recall millions of cars in the US with faulty accelerators. More may need to be recalled in Europe and China.119 28.1.10. Saudi Aramco and Total bosses disagree on the peak oil threat in Davos. “The concern about peak oil is behind us,” Aramco chief executive Khalid al-Falih tells a forum of oil bosses at the World Economic Forum. Total chief executive Thierry Desmarest says 95 million barrels per day will be the cap -- 10 percent above present levels in “about 10 years ….The problem of peak oil remains.” Falih: “Of the 4 trillion (barrels) of oil the planet is endowed with, only 1 has been produced. Granted most of what remains is more difficult and complex (to exploit) ... there's no doubt we can do a lot more than the 95, 100 (million barrels) that are projected in the next few decades.”120 Global demand will be >100mbd by 2030, says Tony Hayward in the same forum. This will be a “supply challenge.” He pins major hopes on Iraq growing to . 10mbd. Peter Voser of Shell agrees, and says the investment needed will be up to $27 trillion ….> $1.3 trillion a year. PWC estimates that only a third of global supply will go to the OECD by 2030. China sold 13m cars last year. Unconventional gas is a “complete game changer in the US,” says Hayward. “It probably transforms the US energy outlook for the next 100 years. It's yet to seen if it can be applied globally.” Gazprom seems un-nerved. A board meeting in Moscow this week apparently centred on the implications of US shale gas on its own investment plans for the northern Yamal peninsula, with export by ship to the US partly in mind. Meanwhile, the EPA is airing “serious reservations” about allowing shale gas drilling in parts of New York state in case NYC water supplies are affected. The EPA identifies 14 “contaminants of concern” in 11 private wells surveyed in the Pavillion farming community of Wyoming. Contamination has also been found in in Pennsylvania. Bills are under preparation in Congress that would tighten restrictions on unconventionals. In Taking over gas company XTO, Exxon inserted a clause enabling it to scrap the transaction if there were changes to the law that made hydraulic fracturing “illegal or commercially impracticable.”121 Environmental problems of fracking in shale gas production include air quality: elevated benzene. The Texas Commission on Environmental Quality has found elevated levels of benzene, a carcinogen, at 19 of 94 sites saampled above the Barnett Shale.122 29.1.10 Scientists say almost one third of warming in 1990s was down to stratospheric water vapour, an effect that had been underestimated. Susan Solomon’s NOAA team says their research does not invalidate projections of climate change, but it seems certain to be used by sceptics. Water vapour has dropped 10% since 2000. Solomon says: “We call this the 10, 10, 10 problem. A 10% drop in water vapour, 10 miles up has had an effect on global warming over the last 10 years.” She is not sure if this is a negative feedback or a natural effect.123 30.1.10. China is moving ahead so fast with green energy that dependency for West may be an issue. China became the largest manufacturer of wind turbines last year and of solar cells the year before. An article in the New York Times posits: “These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.” Renewables jobs were 1.12 million jobs in 2008 and are climbing by 100,000 a year, says the Chinese Renewable Energy Industries Association. China’s domestic demand for electricity is rising 15 percent a year, and the International Energy Agency says China will need to add nearly 9 Triple Crunch Log © Jeremy Leggett nine times as much electricity generation capacity as the United States will. The government announced the creation of a National Energy Commission this week, composed of cabinet ministers in a “superministry” led by the Prime Minister Wen Jiabao. 124 31.1.10. Senior negotiators around the world say a climate deal in 2010 is impossible. A senior British diplomat said ahead of Copenhagen: “we can go into extra time, but we can’t afford a replay.” And he is proving right.125 1.2.10. Shale gas boom may leave US as a gas exporter, some independent producers are saying. How fast things change. In 2006, Wood Mackenzie predicted the US would be the biggest importer of LNG by 2010. Ths industry says it now has enough supply for 100 years.126 UK renewables industry welcomes microgeneration feed-in tariffs announcement. JL: “Feed-in tariffs are going to be a big boost for the industry and for the first-time, homeowners can see a decent financial return. We estimate homeowners can save and earn more than £1,000 per year for 25 years, increasing with inflation (of energy bills), giving a payback in around 10 years.”127 “That’s a better return on investment than you’d get from a bank.”128 “The scheme could lead to 100,000 new jobs in the UK solar industry by 2020.”129 UEA scientist hid climate data flaws, Guardian investigation by Fred Pearce shows. Chinese data used in 1990 to demonstrate only a small warming contribution from cities were inadequate - the locations having been lost - and Phil Jones of UEA withheld the information when it was requested under Freedom of Information. Jones also asked other climatologists to delete e-mails relevant to FOI requests.130 Nonetheless, concludes Fred Pearce, “the ‘climategate’ scandal is bogus and based on climate sceptics lies. Claims based on e-mail soundabites are demonstrably false – there is manifastly no evidence of clandestine data manipulation.” Palin, Inhofe and others have quoted “evidence” cut-and-paste together by professional sceptics who have used two devices: quoting out of context, and juxtaposing quotes from e-mails sometimes written ten years apart, as though related.131 US deficit will be nearly 11% of GNP this year, and more shockingly isn’t projected to get below 5% before 2020. NYT: “For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors. Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade. As debt grew more rapidly than income, that country’s influence around the world eroded.”132 “Old Davos” is in retreat, Gideon Rachman argues in the FT. At the World Economic Forum, confidence has been shaken in the old belief – firmly held since the end of the cold war - that globalisation is good. Protectionist ideas are returning, and now it is the eastern nations that try to persuade the western that free trade is essential. Sarkhozy’s keynote address was an attack on financial capitalism. He made one Russian delegate nostalgic for the old days he remembered in the Soviet Union. Sarkhozy argues for a “carbon frontier tax” on the goods of countries that don’t act on climate change. Also, says Rachman: “Banker bashing rivalled skiing as the most popular sport at this year’s forum.”133 Petroleum Review assesses risk of “rapid rise in criminality in the oilfields” to Iraqi production, which the oil minister hopes will rise from 2.5mbd now to 12 mnd by 2016: more than Saudi Arabia and Russia. There are 13 regiments of the Oilfield Protection Force in the Basra region alone. Gun battles between this oil police force and local militias are now “frequent.” Locals are going to have to do most of the work: BP’s expats are expected to number only in the tens. Also in this ussue: OPEC spare capacity is not certain: it may be as low as 3 or as high as 6 mbd, 50-80% of it in Saudi Arabia and Kuwait. Chinese buyers of new cars face a three month delay despite round the clock shifts in factories.134 (L) Even promoters of new more efficient tar sands technology are sceptical of lifting production much: water use and gas use remain huge issues, with even CERA saying it could take up to 15 years to commercialise new more efficient technologies. 1.7 mbd of projects have been cancelled or delayed indefinitely since the oil price fell for $147.135 (L) Flawed arguments underly carbon trading, and massive fraud will be inevitable if it takes off. So an article in Petroleum Review argues. The value of total transacted carbon trades in 2008 was $126bn - $92bn of that in the EU ETS – up from $63 bn in 2007. If the US and others follow the EU, the market would be four times higher by 2014, en route to being bigger than oil and gas trading. Enron- and sub-prime-type malfeasance would then be inevitable. Traders have moved effortlessly from Enron to the property market to the carbon market. Fraudulent deals have already started: in Asia, Austrlia and most notably in Europe, where taxpayers lost €5bn in a so-called carousel fraud involving VAT. When governments changed their tax laws to close the VAT loophole, carbon trading dropped as much as 90% in some countries.136 (L) 2.2.10. Paul Volcker issues a plea direct to Congress to support his Wall Street reforms. No member of the Senate Banking Committee has yet voiced outright opposition.137 IPCC chief Pachauri refuses to apologise for one mistake in a 3,000 page report (an un-peer-reviewed reference to Himalayan glaciers melting by 2035). To do so would a “populist” measure, genuflecting to a “factory” of sceptics looking for harmful “pinpricks” in the massively comprehensive and professional work of the IPCC, he asserts, for which the mistake was completely out of character. 138 In another interview he accuses un-named companies of backing sceptics who are guilty of “skullduggery of the worse kind.”139 And note: the Himalayan claim never made it to the Summary for Policymakers – the gold standard for negotiators, and was barely referred to in the press.140 3.2.10. Ofgem warns that only state intervention can keep the lights on. Energy bills may go up by 25% by 2020, as energy companies raise £200bn to invest in essential new generation. Many will be unable to afford to heat homes as a consequence. There is also a real risk of the lights going out by mid decade. Reform is urgently need: deregulation has failed, a free market approach is “no longer an option,” obligations may be to supply may be required of energy companies (just as banks face capital requirements), and nationalisation of power may be required. All this comes in Ofgem’s Project Discovery report, published today, after a consultation that began in October 2009. Already some are supportive of Ofgem’s proposal that there should be a central buyer for energy. Andrew Watkin, head of energy at property consultancy, Carter Jonas: “a centralised renewables market might sound Stalinesque but it may be what is required to bring a structure and concerted strategy to the major campaign of the coming years – creating energy and protecting its supply.” 141 10 Triple Crunch Log © Jeremy Leggett Ofgem once enthusiastically advocated dergulation, but the financial crisis has changed regulator Alistair Buchanan’s mind. The big energy companies are not making the investments needed to replace old coal and nuclear plants.143 Ofgem’s forecasts could mean average energy bills of more than £2,000 by 2020. The consumer group u-switch says the figure could £4,000 if events conspire against markets. Now 4.6m households are in fuel poverty (spending >10% of income on energy).144 The Guardian takes a dim view of the state of UK energy, saying nationalisation is overdue. Terry Macalister: “The privatisation of the gas sector in 1986 and electricity in 1989 brought little in the way of strategic, long-term thinking and when the privatisation of the nuclear industry came in 1996 it swiftly brought problems, with British Energy having to be bailed out by the taxpayer within six years. Now ministers once again are being called on to intervene because companies left to their own devices will not invest in new nuclear, wind and other low-carbon technologies. Having sucked profits out of the industry when government "interference" was a dirty word, they are – like the banks, railways and even car industry before them – keen to see the state step in and help them out with a greener and more secure agenda. The government should seize its chance.”145 Moody’s warns that the US sovereign credit rating of AAA is under threat unless the deficit is cut or economic growth increases.146 German solar industry calls for protests as Merkel’s government dithers over cuts to feed-in tariff. As many as 10,000 workers from Solarworld, Q-Cells, First Solar and other companies will take to the streets tomorrow.147 Kuwaiti scientists forecast world conventional crude oil production will peak in 2014. The Kuait Univerisity / Kuwait Petroleum Company study, published in the journal Energy & Fuels, describes the development of a new version of the original “single cyle” Hubbert model that accounts for individual production trends (i.e. a “multi-cycle” model) to provide a global oil production forecast. The researchers analyse production trends of the 47 oil-producing countries supplying most of the world’s conventional crude oil.148 Petrobras CEO infers oil capacity, including biofuels, will peak in 2010 and drop rapidly, at 5% pa. A 1 December 2009 presentation Jose Gabrielli gave in Sao Paulo is translated on The Oil Drum. In it, he says that the world needs oil volumes to replace the equivalent of one Saudi Arabia every two years to offset future world oil decline rates …just to keep production constant at less tham 90 mbd. TOD analysis shows Gabrielli’s additions exclude additions from unsanctioned projects and from oil yet to be discovered, so many potential Iraq projects and Brazilian Santos basin projects are not included. BP professes Iraq might produce another 8 mbd by 2020. Petrobras forecasts an additional 2 mbd from Brazil by 2020, making another 10 mbd capacity by 2020. That still leaves a required lower capacity addition of 19 to 24 mbd in 2020 to come from other sources: equivalent to production from about two Saudi Arabias. SA production was an average 9.3 mbd in 2008 and new capacity addition over two years 2008&9 was less than this (9.2 mbd).149 Petrobras says that it does not predict peak in 2010. The above article makes an erroneous interpretation of a graph presented by Petrobras in December 2009. the slide was intending to show a reasonable estimate of the “challenges” that oil supply will face in the long term. “Although unsanctioned projects and oil yet to be discovered are not represented in the graph, this fact does not mean that we do not believe that these projects will add production capacity in the long run. Once again, we do not believe it is possible to predict a peak oil date. In particular, we do not believe it will happen in 2010.”150 Tony Hayward sees peak demand before peak supply – beyond 2020. “I personally – and BP – have never believed we will see peak oil because of supply. We always believed we would see peak oil because of demand. There will come a time – I believe it is beyond 2020 – when because of the changes in the energy portfolio, because of the drive for energy efficiency, because of the introduction of biofuels, demand for oil will peak.” There is plenty of oil in the world, not least in Iraq, expecting as he does production to grow from a couple of million barrels a day today to close to 10m. This makes it “a big part of oil security for the world.” he dismisses fears over dependence on Russian gas as “paranoic.”151 Shell will slow down tar sands operations in face of profits drop of 75% in fourth quarter. And more job losses, of course.152 Gazprom postpones giant Shtokman gas field as global demand drops in face of US shale gas. Shtokman is an LNG venture between Gazprom, Total, and Statoil and had expected the project to produce its first gas in 2013, with LNG shipments to North America beginning in 2014.153 IEA and other experts expect global gas glut to last until around 2015, and then for supply to tighten quickly. The new LNG production capacity in the Middle East plus new non-conventional sources of gas in the US, plus the recession, which has depressed demand in Europe by some 10 per cent. The International Energy Agency expects this glut to continue until around 2015, but many analysts predict the market will then tighten sharply. “Around the middle of the decade we expect a perfect storm of falling domestic gas production, economic recovery and tightness in the global LNG market,” says Professor Jonathan Stern, “and we might not get very much warning. It could flip in a matter of weeks.”154 NY Attorney general alleges two top BoA execs duped shareholders during Merrill Lynch takeover. Ken Lewis and Joe Price now face fraud charges.155 UK industry taskforce will warn this week of premature global peak oil by 2015. JL: “We are heading for a steep decline in oil production in a few years’ time and we are completely unprepared. Most people just assume this is not a scenario that can happen, but it can, and it will, unless we do something now.” Ian Marchant, SSE CEO: “Unless we acknowledge a shock may come, then a shock will come,” said Marchant. “The unit cost of energy will go up. The only way to offset it is to bring overall consumption down.”156 Further positive coverage of UK solar feed-in tariffs in Sunday papers. “These tariffs are going to generate rates of return that will beat high-street savings accounts by a mile, at the same time as they save carbon and generate jobs in a new fast growing, British industry. We reckon as many as 100,000 jobs by 2020, at the rates announced."157 142 4.2.10. 7.2.10. 11 Triple Crunch Log © Jeremy Leggett UEA professor at centre of leaked e-mail scandal says he has considered suicide and is receiving death threats. Phil Jones is on beta blockers and sleeping tablets. Conservatives waver on climate in face of “climategate”: most MPs are now sceptical.158 Polls show the number of Britons who believe climate-change science of has fallen in the last year. A BBC poll, which surveyed 1,000 people, reveals that 25% of adults do not believe in global warming, up of 8% since a similar November. 75% believe climate change is a reality but of these one in three feel climate change has been exaggerated. Only 26% of people think climate change is “established as largely manmade.” An Ipsos poll of 1,048 people suggests those who believe in climate change has dropped from 44% to 31% in the past year.159 Most Tory MPs now have doubts about climate change in face of leaked e-mail scandal. Tim Montgomerie, founder and editor of the ConservativeHome website, says the issue could be as divisive for the party as Europe once was. “You have got 80% or 90% of the party just not signed up to this.” This includes at least six members of the Shadow Cabinet. “No one minded at the beginning, but people are starting to realise this could be quite expensive, so opinion is hardening.”160 8.2.10. Richard Branson and other UK business leaders warn of oil crunch within five years. “The next five years will see us face another crunch – the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well. ….Our message to government and businesses is clear: act. Don't let the oil crunch catch us out in the way that the credit crunch did.” There are signs that the UK government is already beginning to listen, and move away from the narrative given on peak oil by BP, Exxon and the Saudis. JL: “[We are] in regular contact with government; we have reason to believe their risk thinking on peak oil may be evolving away from BP et al's and we await the results of further consultations with keen interest.”161 BP joins Shell on investors’ tar sands target list. The Co-operative Asset Management, the UNISON Staff Pension Scheme, a group of clients from Rathbone Greenbank and the COIF Charities Investment Fund file a motion asking BP not to commit $10bn to its Sunrise oil sands development for carbon reasons.162 Unlike Shell, BP seems to press ahead. It is upgrading a refinery near Chicago to take tar sands oil. John Browne has expressed disapproval.163 Areva buys a US solar thermal company. Ausra, a linear Fresnel company founded in 2006, has no revenues, and yet the price is believed to be $200m.164 Areva lobbied Sarkozy to oppose Desertec. 9.2.10. World’s first retail carbon credit made in Pennsylvania. A homeowner with a PV system earns $17 a tonne from a company in Ohio. The sale was brokered by a website, My Emissions Exchange. 165 Gazprom boss says UK wind plans are irrational, and more gas plants is the answer. Alexander Medvedev: "If we do not want to see the authors of the 2020 strategy decapitated in a public square, I do not think they can forget about gas. We at Gazprom believe gas should be treated on an equal footing as renewables. I just hope that after the disappointment post-Copenhagen that the decision-makers will take a more pragmatic and rational approach to this.”166 Gazprom boss says shale gas developmeny in Europe is “unimaginable.” The US Environmental Protection Agency will raise concerns about its potential contamination of drinking water in a forthcoming report, Alexander Medvedev says. 167 10.2.10. UK Industry Taskforce on Peak Oil and Energy Security releases its second report in a press conference at the Royal Society.168 Peak oil: The lessons from the financial crash ought to be stark. JL: The prevailing culture mocked the disbelievers, ahead of the crash. Gillian Tett, capital markets editor at the FT, saw the crisis coming because she was a trained anthropologist and knew how to recognise a cult when she saw one. She was accused of scaremongering from the stage of the World Economic Forum. The pattern is the same this time. BP, in particular, has a tendency to mock the concept of peak oil and its advocates. Meanwhile, as with the climate crisis, there is a general desperation to believe the comforting narrative ahead of the uncomfortable one. This is why it is so important that companies who understand risk speak out, as the taskforce companies have. It is why governments – who must lead in matters of national security – should listen to the uncomfortable arguments and, given the stakes, buy insurance against them. History is going to judge us all on how we manage the risk of premature peak oil. And soon.169 170 Wall Street Journal headline “The next crisis: prepare for peak oil” “The work of the Industry Taskforce on Peak Oil and Energy Security shouldn't be disparagingly dismissed. Its arguments are well founded and lead it to the conclusion that, while the global downturn may have delayed it by a couple of years, peak oil—the point at which global production reaches its maximum—is no more than five years away. Governments and corporations need to use the intervening years to speed up the development of and move toward other energy sources and increased energy efficiency.” “….even if the gloomsters should turn out to be wrong, the core of their message surely deserves attention. Governments should be doing all in their power to encourage developments that lessen oil dependency. That will also enhance their energy security for, as Russia's Vladimir Putin has demonstrated with use of the on/off switch on the pipeline to Ukraine, it can be uncomfortable being dependent on other countries for energy.”171 Two big US companies decide to boycott suppliers sourcing fuel from Canada’s oil sands. Whole Foods Market, an organic grocery chain, and Bed, Bath and Beyond a household goods company, are responding to ForestEthics, a non-governmental organisation campaigning to lead the US corporate sector away from oil sands fuel because of its higher carbon content. “Companies are moving with lightning speed,” says Todd Paglia, ForestEthics’ executive director. “It’s a core issue they know they need to move on. The failure of Copenhagen makes companies more willing to do this; leadership must come from somewhere.”172 Vitol, the world’s largest oil trader says oil will trade in the current $70-80 band for the rest of the year. Goldman, in contrast, forecasts $95 a barrel by the end of the year, and above $100 in early 2011. The five largest oil traders – Vitol, Glencore, Trafigura, Gunvor and Mercuria – are believed to have achieved record profits of $3.5 - $4bn collectively last year. They make large sums of money on the back of volatile oil prices.173 11.2.10. Dynamics of the peak oil debate can be expected to change after UK government move. JL: “The head of international energy security at Britain's department of energy and climate change, Chris Barton, said: "We need to work together (with industry) to do more - eg to consider recommendations in the report that 12 Triple Crunch Log 14.2.10. 16.2.10. 17.2.10. 18.2.10. 19.2.10 © Jeremy Leggett we're not currently acting on." His department will set up a forum for doing this. The outcome of this forum should be followed closely by every company that is not manufacturing its products with its own renewable power supply and distributing them by means of transport other than the internal combustion engine.”174 Around 60% of Germans still favour nuclear reactor shutdowns. The current legal obligation is to phase out nuclear reactors after 32 years of service. The latest public opinion polls show around 60 per cent favouring the current phase-out legislation, passed by the former coalition of Social Democrats and Greens. At least two of the country's 17 nuclear reactors would have to be shut down this year, and nuclear reactors provide about a quarter of the country's electricity.175 Lobby group including BP and Shell challenge California’s tar sands legislation in court. The National Petrochemical and Refiners Association says it is illegal for reasons including “undue and unconstituional burdens on interstate commerce.”176 Sellafield has similarities to Texas City, new ex-BP chief executive of NDA says. Tony Fountain admits there is still a long way to go. “If you look at Texas City, there were many kinds of practices, operating practices among them, where people had become habituated to a state of affairs that, if you stepped in from outside and took a look, was not appropriate for the nature of the activity. I think that is absolutely true of what happened at Sellafield… Legacy companies had a different set of priorities. There was clearly a set of practices that developed round those [untreated waste] silos that, if you stepped in there, did not have the right level of priority, did not have the right level of challenge, did not have the right level of spend – which is why it is where it is now and needs to be dealt with with the priority it is getting.” Asked if he has been shocked by anything he has seen so far, he says: “Shock is a strong word. But it would be right to say that the ponds and silos at Sellafield are attention-grabbing; striking in nature.” Sellafield consumes almost half of the total NDA budget.177 UK issues first licence to build a storage cavern for gas under the Irish Sea. Twenty salt caverns each around the size of the Albert Hall will be filled with 1.5 bn cubic metres, about 2 days supply, 750m below the seabed. When complete in 2014, the nations storage will have risen by a third. BP and ConocoPhillips quit US Climate Action Partnership lobbying Congress to pass climate law, undercutting Obama's efforts to cast his climate and energy agenda as a pro-business, job-creation plan. “Cap-and-trade legislation is dead in the US Congress and that global warming alarmism is collapsing rapidly,” says Myron Ebell of the Competitive Enterprise Institute.178 Obama announces $8.3bn (£5.3bn) loan guarantees for nuclear: a company building the first new nuclear reactors in America in nearly 30 years. The pledge to the nuclear industry (made just a couple of hours before the oil companies quit the CAP) is seen as part of a strategy to win Republican support for the climate and energy bill. 179 Barclays top bosses forego bonuses and say they want to be part of the bank regulation debate. But Varley and Diamond made huge amounts the previous year. Steven Chu is finding it hard to sway Congress with rational arguments. Describing how companies are not making investments and banks are not supplying loans because of the uncertainty about when, or whether, a cap on carbon will be imposed, he says: “We’re in a crazy never-never land situation. Let’s recognise that we’re postponing an inevitability,” and “[The Chinese] missed the first industrial revolution. They missed in large part the computer and biotech revolutions. They don’t want to miss this one.” 180 San Francisco now require all homes and offices to be wired for electric car chargers. This is written into new building codes. Obama will be able to deliver on his promise to put 1m electric vehicles on the road by 2015.But beyond Washington, a number of American cities and states are driving ahead. Nissan's president, Carlos Ghosn, has predicted that as many as 10% of sales will be electric vehicles by 2020. At Google, employees can already drive to work in one of the modified Priuses owned by the company – and then pull into one of 100 solar-powered parking spots and charge up.181 NII says AP1000 needs to be able to withstand a crashing airliner to get a licence. This is a blow to the Toshiba-Westinghouse group.182 French nuclear watchdog says EDF would face “massive investment” in extending life of reactors beyond 40 years. EDF is hoping to secure 60-year life-cycles for its plants, a term that is already applied in the US. Even then, he says, the plants might not be able to actually keep going that long. EDF has already been forced to invest hundreds of millions of euros replacing ageing steam generators on 34 of its 58 reactors. There is no set term for the life of reactors in France, where extensions are granted or not after inspections every 10 years. At the beginning of next year the two oldest plants in operation come up for a review to take them to 40 years. 183 Most US utility executives favour nuclear power and are climate sceptics, a poll suggests. More than 70 percent a survey of 329 executives oppose the current Obama legislation and 52 percent say the United States cannot afford the proposal. More than 75 percent think there is a future for coal-fired power plants. 44 percent don’t believe global warming is caused by human activity, and 7 percent don’t believe the planet is warming at all.184 Michael Grunwald in Time magazine describes “Why Obama’s nuclear bet won’t pay off.” “If you want to understand why the U.S. hasn't built a nuclear reactor in three decades, the Vogtle power plant outside Atlanta is an excellent reminder of the insanity of nuclear economics. The plant's original cost estimate was less than $1 billion for four reactors. Its eventual price tag in 1989 was nearly $9 billion, for only two reactors. But now there's widespread chatter about a nuclear renaissance, so the Southern Co. is finally trying to build the other two reactors at Vogtle. The estimated cost: $14 billion. And you can be sure that number is way too low, because nuclear cost estimates are always way too low.”185 Fourth generation nuclear reactors are “no clean energy secret bullet,” FT notes. Fourth generation reactors are those targeting the idea that reactors use spent nuclear fuel as a feedstock depends. One version, fast reactors, relies on sodium cooling. The International Panel on Fissile materials has produced a resport on these saying that risk of sodium fire is very high.186 Polls and evidence favour carbon tax over cap and trade. Robert Shapiro, a principal economic advisor to Bill Clinton in 1991-2: “A national poll by Hart Research found that two out of every three U.S. voters now favor a straight carbon tax over a cap-and-trade system. And the record shows clearly that it works. Sweden 13 Triple Crunch Log 21.2.10. 23.2.10. 24.2.10. 25.2.10. 26.2.10. 27.2.10. 28.2.10. 1.3.10. © Jeremy Leggett adopted a carbon-based tax in 1990; today, the Swedish economy is about 50 percent larger (adjusted for inflation), and the nation's carbon emissions are 8 percent less than they were in 1990. By contrast, emissions have risen sharply across the European Union over the last five years, despite its adoption of a cap-and-trade program.”187 China’s Saudi oil imports now exceed those of the US. In 2009, the US sank below 1 mbd for the first time in 20 years, and China’s exceeded 1 mbd for the first time.188 RBS CEO is forced to forego his bonus for 2009, echoing the Barclays duo last week. State-owned RBS will still pay its investment bankers £1.3 bn 28% of revenues (compared to 30-40% in competitors cases).189 UK public scepticism about climate change threat drops rapidly. Only 31% now think it is “definitely” a reality, down from 44% in the last year, according to the latest Ipsos Mori poll. Only one in five believe it is caused by people, down from one in three last year. 9 in 10 still think some kind of warming is happening. A recent BBC poll showed 31% thinking the extent of climate science has been exaggerated.190 Oil & Gas UK survey shows fewer North Sea projects are being developed. There are 11bn barrels of oil and gas in existing projects, up 15pc from the previous year – enough to meet half the UK's demand in 2020. But companies will need to raise £60bn to extract this oil, but this is not likely under the current incentives.191 First British company begins wildcat drilling off the Falklands. Four small independent oil companies, all single asset plays, have raised considered sums for their punts. Argentina express outrage and other Latin American and Caribbean governments issue a statement agreeing with them.192 Putin threatens Russian oligarchs with fines and bans if they don’t invest in electricity generation like they promised to do at the time of liberalisation. Record demand during a severe winter is putting capacity under strain. Oligarchs could face huge fines or even be barred from markets.193 Chinese government refuses to let Chinese company buy the Hummer brand from GM. Fuel consumption is at least part of the reason. GM will now wind the brand down.194 Blame OPEC, not China, for high oil consumption, says CIBC’s Jeff Rubin. “Last year OPEC, Mexico, and Russia consumed 14 million barrels a day of oil -- two Chinas!” Rubin railed in a recent speech. “Have you ever filled your tank up in Caracas or Riyadh? If you did, you'll soon know. It's 25 cents in Caracas, it's about 50 cents in Saudi Arabia, but the point is it's 50 cents whether oil is $20 a barrel or whether oil is $200 a barrel, because that's just the way things are over there. OPEC is a very disparate place separated by history, religion, geography, but there's one common denominator: everybody has a God-given right to consume as much cheap fuel as they bloody well feel like.”195 World Bank has raised over $1 billion with Green Bonds. A day after launching a 600m Swedish Kroner Green Bond, the World Bank has launched another 10 new Green Bonds denominated in different currencies. The 10 bonds are primarily for the new, open-ended, Nikko World Bank Green Bond fund.196 Vermont Senate votes to close a nuclear power plant when its licence expires in 2012, on the grounds of aging problems: 3 radioactive leaks, a burst pipe and a collapsed cooling tower. California took such action in 1989, but no state has in the 20 years since. With its original 40-year operating licence expired in two years, Entergy’s Yankee plant in Vermont had applied for a 20-year extension to keep it open once, as many of the US’s 103 nuclcear plants will have to do.197 Bloom Energy Corp. unveils its fuel-cell “power plant in a box” server unit. Bloom, a fuel cell company with $400m of venture capital to its name, has been one of Silicon Valley's most secretive startups. The size of a pickup truck, the 100 kW unit’s solid oxide cells are made mostly of sand, with no platinum or other precious metals thrown in as catalysts. K.R. Sridhar, Bloom's co-founder and chief executive officer, says the server will change the energy industry in much the same way that cell phones changed communications. The servers cost $700,000 to $800,000 apiece, but some have been solar already to companies including Coca-Cola, FedEx Corp. and Google Inc. e-Bay, who have bought five, hosted the launch event. Critics doubt that energy production can be maintained, but Sridhar says the servers can provide electricity at 9 to 10 cents per kilowatt hour, compared with 14 cents for power from the grid, with payback in three to five years, including 50% financial incentives from the federal and California governments. Former Secretary of State Colin Powell, who sits on Bloom's board of directors, says: “We want to move this product forward to the point where we can put it in an African village ... and they can have power, they can have light. Think of the potential."198 Centrica boss says “vast cost” could cause scrappage of UK offshore wind plans. Sam Laidlaw syas it is unclear whether the scheme to build an estimated 10,000 wind turbines will ever go ahead. Cenrica, owner of BG, would proceed only “if the economic conditions are right.” The problems are high costs for turbines and other equipment as well as limited government financial support. BWEA estimates the wind farms would cost an estimated £100 billion and create 70,000 jobs in the UK. The total generating capacity of all the projects in the latest, Round Three, would be 40 gigawatts. But Citigroup estimates the cost of installing one megawatt of offshore wind is about £3.5 million — roughly five times the cost of the same gas-fired capacity.199 Al Gore editorial in the NYT: “We can’t wish climate change away.” And if we did, we’d still have to tackle dependency on foreign oil and China’s lead in cleantech.200 Bank of America and Barclays Capital tell clients to brace for crude above $100 (£64) a barrel by next year, then relentlessly higher prices over the decade. “Oil has the potential to flirt with $100 this year. We forecast an average price of $137 by 2015,” says Amrita Sen of BarCap. “The groundwork for the next sustained step up in oil prices is now almost complete. Global spare capacity is likely to be reduced to low levels within a relatively short time. The global economic crisis has postponed, but not cancelled, a crunch which would otherwise be starting to bite now.” Francisco Blanch of Bank of America Merrill Lynch says crude may touch $105 next year, with $150 in sight by 2014. “Approximately 1.7bn consumers in emerging markets with a per capita income of $5,000 to $20,000 are eagerly waiting to buy cars, air-conditioning units, or white goods.” He expects demand to rise by a further 2.8m barrels per day (bpd) in China and 2.5m bpd in India by 2015. Global use will increase by 8.8m bpd to 95m bpd.201 Competitive gas may be as bad for BP as Gazprom, Ed Crooks reasons in the FT: the more nonconventional gas there is in the market, and more the shift to spot-price selling – the two big trends in the gas market - the smaller the size of the long-term oil-linked lgas market.202 14 Triple Crunch Log 2.3.10. 3.3.10. 4.3.10. 5.3.10. 7.3.10. © Jeremy Leggett Oil companies not investing enough on exploration, Bernstein Research says. They have been overly optimistic about production from the discoveries made in the late 1990s.203 George Monbiot labels the UK solar feed-in tariff scheme a scam. The Guardian columnist writes: “Those who hate environmentalism have spent years looking for the definitive example of a great green ripoff. Finally it arrives, and nobody notices. The government is about to shift £8.6bn from the poor to the middle classes. It expects a loss on this scheme of £8.2bn, or 95%. Yet the media is silent. The opposition urges only that the scam should be expanded.”204 US consumers are dipping into their savings to pay for gasoline. There is a “supertrend” since 2000 of personal consumption expenditure (including gasoline) rising 0.14% per month. Within that, spending on food is rising only slowly, but spending on gasoline faster. How sustainable is that? Stephen Schtork of the Schtork Report: “The bottom line is that we consider yesterday’s PCE numbers very bearish. Consumers managed to pull savings out to pay for higher energy costs, but spending from your savings is rarely preferable and never sustainable. Consumer spending could collapse - thus refiners will not be able to pass higher crude oil costs on to consumers as they did during 2007 and 2008.”205 Big European companies could share a surplus of EETS pollution permits worth €3.2 billion by 2012. So the Carnon Fat Cats study by Sandbag shows. The list is dominated by steel and cement companies. €3.2bn is more than double the EU's investment of €1.5 billion in renewable energy and clean technology as part of the economic recovery plan. JL response to the Monbiot attack on solar: Solar panels are not fashion accessories. Economies of scale in manufacturing are causing rapid reductions in costs. Feed-in tariffs work, and there will be no net transfer of funds from the poor in the UK scheme.206 Investors have filed a record 95 resolutions involving climate change this year, up 40% on last year. Ceres says that the resolutions have been filed with 82 US and Canadian companies who financial institutions and other businesses investors believe are not adequately disclosing and managing potential climate-related business impacts.207 Underground coal gasification questioned on environmental impact. Clean Coal Ltd has licences from the UK Coal Authority to perform UCG at five sites round Britain's coast. The first could be operational by 2014. The underground fire will generate carbon dioxide, methane and hydrogen. By converting coal to methane, you reduce the carbon dioxide emissions at the power station by more than half. The CO2 will be captured at the wellhead. As much as 30% can go direct back to space where the burning took place. The remaining 70% will have to find another home. “We are talking to people about what the options are, but it will be difficult. We want to be clean. But we may not be capturing all the CO2 from day one,” says a spokeswoman.208 Saudi Arabia is having trouble meeting its own needs for natural gas, much of which come from the oil industry itself. The state utility wants to add another 2,500MW this year, and 12,043MW by 2015. Some analysts believe it won’t be able to hit that target. The Kingdom has generous subsidies which bring prices to around US$0.015 - $US0.04 per kilowatt, promoting huge ineffficiency. Demand is growing by a massive 8 per cent per. Oil is used for much of the national electricity generation.209 Financial speculators are driving oil markets, the FT shows. “10 or 15 years ago would have been that spot prices drove the forward markets. But in recent years it is the forward markets - dominated, incidentally, by hedge funds and swaps dealers - that are the cart pulling the horse. ….The big break occurred in 2004, when correlations between forward prices and spot prices strengthened considerably. This change…coincided with the explosion in futures and options trading, that was particularly focused on longer-dated contracts. ….This all means that expectations about the future is driving prices - rather than fundamentals of supply and demand - which is really a here-and-now thing, after all. And that, Kemp concludes, all goes a long way towards explaining why oil prices plummeted in the second half of 2008 as expected (when sentiment was focused on the financial crisis) and recovered extremely strongly in 2009, despite the persistent lack of demand (future sentiment focused on the recovery and possible medium-term shortfall due to an investment slump and resulting production squeeze).210 Alan Simpson MP response to Monbiot: you are wrong. The German feed-in tariffs work well. “Over the three-year period from 2004 to 2007, the effect of FiTs in Germany was to add two to three euros to the average monthly electricity bill. Look at the changes in your own domestic electricity bills during this period and decide which you would prefer. The most staggering of the Deutsche Bank conclusions, however, is that the savings made by the scheme outstripped the total cost of payments made to households. Between 2004 and 2006, German FiT payments came to a total of €8.6bn. Deutsche Bank then looked at what it would have cost for this amount of electricity to have come from additional, conventional generation. What they found was that the avoided costs (of fossil fuel energy generation) came to €9.4bn.”211 Monbiot response to Leggett: “We do not have a moral obligation to blindly support inefficient, expensive renewable technologies.” And £100 bet that solar PV won’t reach grid parity in the UK by 2013.212 Alberta is losing the PR battle on tar sands. The FT reports that the perception is growing that they do more harm than good. Alan Knight of Virgin argues that surface mining will need to be closed, if they are to have any chance of carrying the argument. 213 Ten leading companies launch a plan for a European super grid in the North Sea connecting Germany, UK and Norway. The expected cost is €34bn. The group includes Seimens and Areva. Bård Mikkelsen, chief executive of Statkraft, Norway’s state-owned power company: “Hydro power in Norway should be valuable for compensating for the irregularity of wind power. That position – being a swing producer to the European market – is a very important role for us.”214 Oil companies hunt shale gas all across Europe. FT: “Unlike unconventional oil, some unconventional gas can now be developed more cheaply than its conventional counterpart. This is one reason why ExxonMobil spent $41bn acquiring XTO, the shale gas specialist, last December, despite the collapse in the price of gas. The deal is the biggest the industry has seen in almost a decade and is the clearest sign yet that big oil companies see shale as the next big thing.” BP, Statoil and Total similarly have taken smaller deals out with Chesapeake Energy. Helge Lund, chief executive of Statoil of Norway: “It is far too early to conclude whether shale will make as much of an impact outside the US as it has done inside the US.” 215 15 Triple Crunch Log 8.3.10. 9.3.10. 11.3.10. 16.3.10. 18.3.10. 22.3.10. © Jeremy Leggett Environmental concerns over fracking are pivotal for shale gas development. Alexander Medvedev, deputy chief executive of Gazprom: “Every housewife in the US has heard of the term shale gas. Not every housewife is aware of the environmental consequences of the use of shale gas...I don’t know who would take the risk of endangering drinking water reservoirs.”216 John Dizard in the FT: “ I think it might not be a bad idea to examine the faith-based assumption that the US has a virtually unlimited supply of natural gas from shale formations that can be extracted at a low price for the indefinite future. Perhaps the few people who think shale gas will be produced at a higher cost, and more slowly, than generally believed should be heard out, rather than be executed or sentenced to work in the salt mines.” E&Y says up to £50bn of investment at risk in ost-election uncertainty. In the next three years £35bn£50bn of investment will be needed in power stations, wind farms and gas storage, to hit government objectives for cutting carbon dioxide emissions while guaranteeing reliable electricity supplies. Ian Marchant, chief executive of SSE, who commissioned the report, says it is “a timely re-minder to all policymakers of the need to maintain a pro-investment climate in which investors can have confidence.”217 French anti-nuclear NGO holds leaked documents admitting crash risk to new reactors. The Sortir du Nucléaire Group, an alliance of 725 associations, says in a press release that it “has in its possession a secret defence document of EDF, the French Electricity Board, which clearly admits the danger to pressurised water reactors (PWR) in the event of a suicide crash. Because Madame Lauvergeon, Director General of AREVA, constructor of the reactor, maintains that it is built to resist to a commercial plane suicide crash, the group considers imperative to reveal the truth of the situation by publishing the contents of the secret defence document.”218 Danish environment minister says climate treaty is unlikely this year. This pessimism, from the chairperson in Copenhagen, adds to that of the FCCC219 Leggett response to Monbiot 2: I accept George Monbiot’s £100 solar PV bet. “I wish to make nine points in my response to George Monbiot's latest round in our disagreement about the importance of solar photovoltaics (PV) and the UK government's upcoming feed-in tariffs.” 220 Sarkhozy appeals to World Bank to finance nuclear reactors, ending a 50 year abstention, as part of a major international nuclear financing push. “Industry insiders believe no more than a handful will be built in the next decade,” the FT reports. “According to the Nuclear Energy Agency, a reactor costs roughly $4,600 per kilowatt to build, taking a mid-sized 1000MW reactor to $4.6bn (€3.38bn, £3.02bn). The NEA estimates between 100 and 400 new reactors could be built by 2030.” Roger Morier, World Bank spokesman, says there is no plan to change the ban on financing of nuclear set in in 1996, because it is "still not the least cost option in many areas."221 Lithium supplies uncertain as S Korea strives to extract the crucial battery element from seawater. They seem confident of an industrial process by 2014, but are hedging their bets, seeking – like Japan (who both have no domestic supplies, unlike China - deals in Chile and Bolivia in the past few years. Chile is the biggest producer, but Bolivia has the world’s biggest reserves - although they are not yet assessed as being economically recoverable.222 Synthetic Genomics optimistic about being able to bring algal biofuel to scale. Ina WSJ interview, Craig Ventor thinks Exxon’s $300m funding can make all the difference, and fuel could be in tanks within a decade, with all fuel from algae perhaps within 20-30 years. Another assault from Monbiot on PV: no corrections despite many errors pointed out to him. “Solar PV has failed in Germany and it will fail in the UK.”223 Ten sites named in £4bn UK marine energy push. Up to 1.2GW will be generated, by devices including the Pelamis wave machine, and the SeaGen tidal machine. Alex Salmond, Scotland's first minister, hopes Scotland can produce 60GW, 10 times its electricity needs, and become the “Saudi Arabia” of marine energy.224 Sheffield steelmaker wins £170m to make nuclear forges. Sheffield Forgemasters has been in funding negotiations for more than six months, including a government soft loan of £65m, and now has secured the last remaining £20m from bank loans enabling it to build “a 15,000-tonne press to make large forgings used in modern reactors being built in the UK and overseas.”225 Germany will add 5GW of solar PV in 2010, government says. Up from 3GW in 2009, which was fully half the global installations in the €18bn ($24 bn) global market. The cumulative installed capacity in Germany at end 2009 was 9 GW. A 16-percent July cut in the deed-in tariff will be followed by a further 11-13 percent cut in January. “The crucial point will be the cuts of another 11 percent in January 2011,” a government spokesman says. The FIT was already cut by 9 percent in January.226 Leggett response to Monbiot 3: “George Monbiot's third article on government grants for domestic solar panels ignores the errors that I and others have protested about in the opening assertion in his first article. He alleged that the UK government's feed-in tariff regime is "about to transfer £8.6bn from the poor to the middle classes". In saying that, he managed to get three things wrong. The actual sum raised from the tariff levy from all electricity consumers, not just households, to 2030 will be £6.7bn; it will be spread over 20 years; and it will be more than offset – if the government is true to its word – by energy efficiency savings stimulated in parallel market-building schemes. Yet we see no retraction in George's latest, much less an apology for trying to turn feed-in tariffs into a new form of class war on a false premise. That was just where the problems began in the first article. In his third, he rewords many of his original mistaken views. I address those one by one on my website.227 Jonathon Porritt offers an adjudication on the feed-in tariffs debate: “I’m sorry to say, on this occasion, that he (Monbiot) is way out of line. Jeremy Leggett’s detailed refutation of so much of what he was claiming in the original article demonstrates just how poor George’s initial research was, and how (on this occasion, at least) his love of adopting deliberately controversialist positions simply overwhelmed basic journalistic standards.”228 Government meets UK industry on peak oil: “it certainly felt like a pretty historic occasion to me”, says Rob Hopkins, a participant: “an event which could potentially be the day people look back to as the day when UK government finally starting to ‘get’ peak oil.” Summary for the minister: The exact date of peak oil is an academic extraction, what matters is its inevitability. There is a high risk of its happening as soon as we come out of recession, in 3 or 4 years time. Prices will inevitably be higher. In the near term we will be able to 16 Triple Crunch Log © Jeremy Leggett rely on more natural gas thanks to unconventional gas (not sure about that one at all, I suspect that is one of that speaker’s pet techno fantasies!!). Government intervention will be inevitable. That behaviour change will be key, and government will need to message this carefully, stating that things will be different but no worse. We need improvements in public transport, including electrification. The land use planning system needs to bear this in mind, and we may, at some point, be forced to consider rationing. “Although Chatham House rules prevent me from stating what the Minister said, there is clearly a desire to continue this dialogue on peak oil. 229 24.3.10. 25.3.10. 26.3.10. 28.3.10. 29.3.10. Engyco flotation seeks to raise up to €1bn to invest in existing Spanish solar farms. The model is to buy them cheap from distressed owners, and run them more cheaply than existing owners. John Roberts is non-executive Chairman. Former Solon CEO Thomas Krupke is a director.. A Q-cells founder is also aboard.230 Green Investment Bank announced in UK Budget will match RBS tar sands lending. It will be “throwing good money after bad,” says the World Development Movement. £2bn is not enough to transform UK into a low carbon economy, and the Government should take RBS in hand to increase its renewable investments and phase out its financing of fossil fuel companies. RBS has scaled back its lending to renewables since the bail out: it was lead arranger on six loans worth $499 million in 2009 having extended at least $2 billion in the previous three years. Platform meanwhile says the bank has underwritten $7.5 billion of loans to tar sands related companies.231 US Department of Energy official admits that peak oil may come as early as 2011. “A chance exists that we may experience a decline” of world liquid fuels production between 2011 and 2015 “if the investment is not there.” So says Glen Sweetnam, main official expert on oil market in the Obama administration, in an interview with Le Monde. Sweetnam is director of the International, Economic and Greenhouse Gas division of the Energy Information Administration at the DoE says the investments needed ar as yet “unidentified.” The DoE predicts decline of identified sources of supply at 2 percent a year, from 87 million barrels per day in 2011 to just 80 mbpd in 2015. But by then global demand is expected to be 90 Mbpd, meaning “unidentified” additional liquid fuels projects would have to fill in a 10 mbpd gap within less than 5 years.232 ConocoPhillips CEO Jim Mulva admits that pursuing new oil reserves no longer pays. Chris Nelder of Energy & Capital: “The remaining resources have become too marginal and too expensive, and the competition for them has become too intense. Rather than keep slugging it out with bigger and better-funded players in pursuit of growth, Conoco has decided to sell $10 billion worth of its assets over the next two years, all of them in the marginal category, and concentrate on producing its core assets. The proceeds will be used to buy back its stock, reduce its debt, and raise dividends — just as rival ExxonMobil has been doing for the last five years or so. When I inferred in Profit from the Peak that the oil majors were spending vastly more money on buying back stock than investing in new exploration because reserves were getting too expensive and risky, veterans of the Street greeted the idea with extreme skepticism. Now it's a plain fact. A Rice University study released in July 2008 found that the five largest international oil companies spent about 55% of their profits on stock buybacks and dividends in 2007, but only about 6% on new exploration and production. “Could we spend $20 billion or $25 billion [on exploration]? Absolutely,” Conoco spokesman Gary Russell said at the time. “Could we do it effectively, in a way that provides ultimate value to our shareholders? Probably not.” 233 FTSE sees growing re-allocation of capital to low carbon sectors. FTSE Global All Cap is valued at $28.9 trn. Carbon Intensive Sectors are $8.9 trn of that. Environmental Opportunities All Share (companies need 20% or more revenue from EO to qualify) $1.8 trn, and growing. There are six sectors in EO, of which Renewable and Alternative Energy is one. There are 18 EO indices, and all of them out perform the FTSE All Share.234 Editor of Money Week compares UK feed-in tariffs to Mao’s Chinese steel production crusade. The government’s “backyard bribes” are akin to the failed “backyard furnaces of Mao’s China. Merryn Wed quotes Monbiot.com as evidence.235 Cleantech IPOs set for a comeback, Jefferies tells the FT. New Energy Finance reported $14bn (£9.3bn, €10.3bn) worth of clean energy IPOs in 2007, $4.3bn in 2008 and $3.4bn in 2009, with none in the first quarter of this year. But there are now 78 IPO prospects in the US alone, looking to raise $13.7bn. Rooftop solar is particularly attractive, Bruce Huber of Jefferies says.236 Tesco joins the “stampede” to supply DIY electricity, as solar panels go on sale this week. Lucy Neville-Rolfe, executive director at Tesco, said: “Tesco has always led the way by bringing affordable green products to the mass market. With low-energy lightbulbs, we cut the price and demand went through the roof. Now we are making solar power mainstream by giving customers a simple, high-quality product at the right price.” But “Tom Murley of HG Capital warns that if the scheme is too successful — in encouraging a flood of small-scale generators — it could depress prices and have a detrimental effect on the wholesale electricity market, making life hard for big nuclear and wind suppliers.”237 Power crunch looms for Britain, warns new RWE Npower CEO Volker Beckers¸and his company may not invest if conditions are not to their liking. “The country has to build two large plants or more every single year.” He infers RWE might invest in plants overseas: “The UK needs to make sure it has the highest level of attraction for investors.” And “Why discriminate against nuclear in favour of renewables? Why give offshore wind ROCs and make nuclear stand on its own feet?” Ofgem predicts a £200 billion bill for pipes, plants and turbines predicted by Ofgem, the regulator, translates to a cost of £8,000 for each of Britain’s 25m households. Times: “Npower’s German parent company could ultimately choose to put its money elsewhere. For example, 53 new nuclear plants are under construction round the world, with another 469 planned or proposed. In Britain, eight are on the drawing board. Half are planned by Horizon, the joint venture formed by Npower and its rival Eon last year. EDF Energy, the French giant, and its partner Centrica want to build the rest.” 238 Siemens becomes the fourth wind turbine manufacturer to announce it will manufacture in the UK, with an £80m investment in a plant to build offshore wind turbines. The others are Mitsubishi, GE and Clipper. These plans have been greeted as a vote of confidence in the offshore wind business, which currently accounts.239 17 Triple Crunch Log © Jeremy Leggett 30.3.10. UK to rule out national gas storage to secure supply. DT: “A spokesman for the Department of Energy and Climate Change declined to comment, but added that it had been reluctant to sanction national storage in the past for fear of discouraging commercial investment.”240 Further delays at Okiluoto fuel talk of Areva chief's sacking. The new nuclear plant is already three years behind schedule and more than €2bn ($2.6bn) over its €3bn budget, and now the ongoing dispute between Areva and the Finnish regulator – on top of the defeat in Abu Dhabi - is causing talk in the French media of “Atomic Anne”’s departure.241 31.3.10. Businesses unsure how new UK commitment to carbon reduction will work. Indi: “Businesses are confused about and unprepared for the implementation of the Government's Carbon Reduction Commitment (CRC), the energy efficiency scheme which starts tomorrow. Nearly half of companies surveyed by the power supplier Npower said official advice about the new legislation had been "inadequate". About 49 per cent said they did not understand how to buy the necessary carbon allowances and 44 per cent said they do not know how to forecast their carbon emissions, according to a report published this morning. Some 5,000 businesses – between them accounting for about 10 per cent of the UK's harmful carbon dioxide emissions – will form the core of the scheme, with another 25,000 expected to register but unlikely to have to participate fully. Those affected have up to six months from tomorrow to register, and another 12 months to establish the necessary monitoring systems. The CRC is a variation of a cap-and-trade scheme. All organisations with half-hourly electricity consumption of more than 6,000 megawatt hours are required to submit annual carbon footprint audits and buy carbon permits for the following 12 months. Any surplus permits can be traded and any shortfall bought in the market. …The CRC does not make money for the Treasury. All the payments are refunded to those taking part six months later, with either a bonus or a deduction depending on the company's position in a league table ranked by reduced power use.”242 President Obama proposes oil drilling off US East coast, setting himself on course for confrontation with Democratic senators from coastal states. The Air Force had the first successful biofuel-powered test flight just last week, the president says.243 1.4.10. Oil reaches $87. It has been trading between $70 and $80 per barrel since summer 2009. Chinese demand is up more than 21% over last year's levels. Supertanker rates have risen, and nearly 13 million barrels of crude oil are sent every day to Asia from the Middle East. The US does everything it can to stem to descent, and production is actually up on last year. 502 rigs that are currently operating across the U.S, an 18 year high. With 103 rigs currently drilling in North Dakota, where the Bakken oil boom is in full swing. 244 PWC show how Europe and North Africa could get to 100% renewable electricity by 2050. To do this would require policy substantial investment, but the reports’ authors profess that experience with other large infrastructure programmes shows the financing capacity “is there.” Such a system would result in a net decrease in power imports among the countries concerned.245 246 Natural gas not such a good idea when lifecycle emissions are measured. So says Robert Howarth, a professor of ecology and environmental biology at Cornell University, His preliminary calculations suggest to him that natural gas recovered from new hydrofracturing techniques appears to have higher emissions than combustion emissions alone would suggest: at least as bad as coal from mountaintop removal and perhaps worse. He suggests leakage of methane associated with shale gas is probably far more important than normal gas production. FT: “what’s most striking about Howarth’s paper is not the alarming implications of his very rough estimates, but his statement that rigorous estimates of the emissions from developing, processing, and transporting natural gas are not available - nor are such estimates available, he says, for coal-fired power. It would be interesting to see just how detailed lifecycle studies of different energy sources would need to be in order to be fully comprehensive - and how different sources, from fossil fuels to renewables, would stack up. Perhaps none of them are what they seem.”247 Photon magazine recommends regional feed-in tariffs in Germany as solar PV market soars. PV supply including inventories was 12.4 GW in 2009, 77% up YoY, and installations of 8.8 GW, up 36%. Germany installed 3.8 GW of c 9 GW globally in 2009. 2010 will be c 10 according to EPIA, and pressing 20 if you believe Photon. Total global PV installed is now 21 GW, c 10 of it in Germany. But over half is in in the two sunny southern states. Also: at 20 GW, Photon foresees major issues for utilities, not least on their profitability.248 2.4.10. Areva guilty of lethal uranium pollution in Niger mining operation, local activists claim. Der Spiegel: “Sherpa, a lawyers' organization from Paris that fights for the rights of workers. When a Sherpa attorney interviewed more than 80 mine workers, she heard the same stories again and again: There was allegedly no safety equipment until the mid-1980s, not even dust masks. One family claimed that doctors had sent a coughing mine worker home from the Areva hospital in Arlit after diagnosing him with diabetes. When the man went to see a doctor in a larger city, Agadez, he was diagnosed with lung cancer in an advanced stage. The Sherpa attorney confronted the chief physician at the hospital. He reportedly defended himself by saying that doctors never tell patients that they have lung cancer. Another hospital employee allegedly admitted that when cancer diagnoses were given, if at all, it was only to patients who didn't work in the mine. "When workers exhibit these symptoms, we talk about malaria or AIDS," he allegedly said. Areva says that the company doctors are "independent" and calls the charges "practically slanderous." The company also insists that the doctors have "all equipment required to carry out their work."” The Greenpeace activists showed up last November and stayed for nine days. They found elevated levels of radiation everywhere. A sand sample taken near the mine in Akokan contained 100 times more radioactive material than normal sand. In the streets of Akokan, the Greenpeace team apparently even measured radiation levels that were 500 times normal levels. 249 3.4.10. Kuwait Times: Kuwait needs to be more aware of peak oil and global warming. Staff writer. Abdullah Al-Qattan, speaking of the February report by Kuwaiti scientists that peak oil might be as close as 2014, writes: “If Peak Oil is this close, then, why are we failing to adapt? One reason might be widespread ignorance of the basics of environmentalism. Some people might not realize what terms such as 'green building' actually mean, with such critically important terminology missing from even our modern textbooks. This has led to a common unawareness of the global ecological crises and a consequent lack of any consideration for these urgent problems, such as global warming and pollution, which in turn will lead to further amplification of these 18 Triple Crunch Log © Jeremy Leggett problems.” If it wanted to, Kuwait could be a green country, developing plentiful renewables including solar, Al-Qattan says.250 Silane gas dangers in solar cell manufacture addressed with new chemical. Workers have died and been injured in silane gas explosions at manufacturing plants for solar cells and semiconductors. Scientific American: “But there is an alternative. Quebec-based manufacturer Sixtron Advanced Materials has developed a way to make a more stable gas with similar properties via gasifying polymer pellets. The idea is to hook the SiXtron "Sunbox" to existing silicon photovoltaic manufacturing lines to provide a methyl silane gaseous mixture via the same pipes that would normally deliver silane from a canister. "The methyl silane gases are not pyrophoric, they are simply a flammable gas," says Bates Marshall, SiXtron's executive vice president of sales and marketing. "But a leak does not mean an explosion."251 4.4.10. “Modern capitalism is at a moral dead end. And the bosses are to blame:” Will Hutton op-ed title. “Capitalism will be continue to be demonised while our CEOs refuse to put their own corrupt house in order.” “Chief executives were paid 47 times average pay in 2000; today, they are paid 81 times the average. And all directly or indirectly colluded in the change that triggered the greatest economic calamity since the 1930s. None blew a whistle, raised a doubt or suggested strategic options. All trousered the bonuses. Nor was there any noteworthy collective improvement, despite all the dealing, in the performance of the firms they ran over and above what one might expect from reasonable stewardship.” The CEOs’ organisation, the CBI is opposing a national insurance tax proposed by Labour in the run up to the election: it will effect bottom lines nd therefore bonuses. Contrast Ove Arup and John Lewis. They believed in the notion that firms were essentially moral enterprises and that the point of profit was to serve the business purpose of the firm. Lewis said "it is all wrong to have millionaires before you have ceased to have slums". "The present state of affairs is really a perversion of the proper working of capitalism," he thundered in 1957. "Capitalism has done enormous good and suits human nature far too well to be given up as long as human nature remains the same. But the perversion has given us too unstable a society.”252 Unilever CEO adds voice to business leaders saying “shareholder value” is a flawed concept, with all its implications of short-termism. Paul Polman: “I do not work for the shareholder, to be honest; I work for the consumer, the customer . . . I’m not driven and I don’t drive this business model by driving shareholder value.” “It’s easy to be a short-term hero. It is very easy for me to get tremendous results very short term, get that translated into compensation and be off sailing in the Bahamas.”253 BP lobbies to limit controls on shale gas drilling, trying to head off rising concerns about fracing at the US Environmental Protection Agency. BP also opposes public disclosure of the chemicals used in fracturing, on the basis that the information is commercially sensitive.254 5.4.10. Trial of Project Better Place network begins in Tokyo this month: a key step in the Californian firm's bid to build the world's first infrastructure networks for electric cars by next year. PBP’s model involves building networks of charging points and battery-switch stations, with a robotic mechanism to swap the empty battery in a car for a fully charged one, meaning "refilled" in minutes, rather than several hours to charge the batteries. Copenhagen already has a network of 100 public charging points, is already being trialed in Copenhagen. The first commercial network, based on data from the two trials, will launch in Israel at the end of the year. Renault Fluence electric vehicles will be used. PBP has raised about £460m in investment in the past three years.255 7.4.10. Private equity boss gives dire warning. Guy Hands, chairman of Terra Firma, says Britain faces a decade of pain, social unrest and unemployment.256 Goldman Sachs denies betting against clients. An eight-page letter to shareholders, signed by chief executive Lloyd Blankfein and president Gary Cohn, denies accusations that Goldman had repeatedly profited by inflating unsustainable financial bubbles. They admit that Goldman “went short” in the housing market while simultaneously continuing to trade mortgage-backed securities to its clients but argue that various sophisticated investors simply took differing views.257 BNFL memoir revives nuclear safety fears. Former British Nuclear Fuels director Harold Bolter publishes an autobiography recalling industry panic over 1990 report on clusters of illness surrounding the Sellafield plant. At the time, workers at Sellafield were advised not to have children.258 8.4.10. Petrol price reaches an all time high in the UK of £1.20 a litre. The average was £1.19 at its highest in July 2008. The RAC says “it is a dark day for motorists.” The weak pound and tax rises have contributed. 259 9.4.10. World Bank approves a $3.75bn loan to build one of the world's largest coal plants in South Africa. An official says: “It was not an easy decision. Everybody recognised the concerns about climate change, but this was a balancing act.”260 Russia and Germany start work on £8bn Nord Stream pipeline under the Baltic. Its 55 billion cu metres a year from 2012 will give Russia a third of the EU gas market. The first leg of the project will carry 27.5bcm starting from 2011.261 Tories and Labour agree with industry that there is no need for strategic gas storage in UK. Industry argues it would take 4-10 years, and in that period nothing would be done by the commercial sector to build its own gas storage. 22 such projects are in planning, which would quadruple Brtain’s storage by 2020 as effective North Sea storage in gas fields depletes.262 First shale gas drilling in the UK. Igas will drill one of Europe’s first wells east of Liverpool, having as taken leases on 300,000 acres of shale. As in the US companies face two main problems. One is political resistance; the other is the danger of pollution and associated reputational risk. Wolfgang Ruttenstorfer, chief executive of Austria’s OMV, one of the companies exploring the potential of shale gas in Europe: “I don’t want to create these kind of hopes and fantasies that lack final results, so I’m extremely cautious whether [shale gas] will be an option at all”.263 11.4.10. US military warns oil output may drop unexpectedly, with missive shortages by 2015. The warning comes in Joint Operating Environment report from the US Joint Foreces Command: “By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and 19 Triple Crunch Log © Jeremy Leggett failing states further down the path toward collapse, and perhaps have serious economic impact on both China dn India.” “…..One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest.”264 13.4.10. IEA forecasts oil will hit record levels this year and threaten recovery: 86.6 million barrels of oil per day, 2% higher, up 1.67 million barrels a day. “Ultimately things might turn messy for producers if $80-$100 per barrel is merely seen as the new $60-$80, stunting economic recovery while prompting resurgent non-oil and non-Opec supply investment. A recovery in oil demand is moving apace. The return of economic growth and hence oil demand growth is fuelling the increase.” OECD recovery could be blighted, the monthly report concludes.265 McKinsey foresees no tariff rises if Europe switches to green electricity. The Roadmap 2050 report examined ways of cutting greenhouse gas emissions by more than 80 per cent by investing in renewables, such as wind and solar power, finding that the impact of this on electricity prices in the long term would be little different to "business as usual". Reasons: the operating costs of renewables are far lower than for fossilfuel power stations; and Europe's existing high-carbon electricity infrastructure will need to be replaced in coming decades. The report, for the European Climate Foundation, says a supergrid will be needed.266 Toulouse tests renewable pedestrian power. The weight of people on pavements will be tested for street lighting. The modules will be the same as used in Dutch nightclubs.267 As microfinance grows, big banks are increasingly making big profits from tiny loans. 60% of all microloans now come from banks and finance firms, rather than NGOs (35%), credit unions and rural banks (5%). Some banks charge 100% or more. Mohamed Yunus: “We created microcredit to fight the loan sharks; we didn’t create microcredit to encourage new loan sharks. Microcredit should be seen as an opportunity to help people get out of poverty in a business way, but not as an opportunity to make money out of poor people.” Chuck Waterfield, who runs mftransparency.org, a Web site that promotes transparency: “They call it ‘social investing,’ but nobody has a definition for social investing, nobody is saying, for example, that you have to make less than 10 percent profit.” The microfinance industry now has over $60 billion in assets The rush was started when Compartamos, a Mexican firm that began life as a tiny nonprofit organization, generated $458 million through a public stock sale in 2007. Mr. Yunus says interest rates should be 10 to 15 percent above the cost of raising the money. 75 percent of microfinance institutions would exceed that. NYT: “Questions had already been raised about Kiva because the Web site once promised that loans would go to specific borrowers identified on the site, but later backtracked, clarifying that the money went to organizations rather than individuals.” These sometimes are high rate chargers.268 15.4.10. Goldman Sachs charged by SEC with $1bn fraud over toxic sub-prime securities. The 22-page charges Goldman Sachs with working with a US hedge fund, Paulson & Co, to structure and sell a complex package of mortgages to clients knowing Paulson would take a “short” position betting that the very same mortgages would fail. Investors lost €1bn and Paulson gained around the same.269 Goldman Sachs prosecution threatens to open the floodgates on Wall Street as Geithner says banks must be made to pay. The case against Goldman could be the tip of an iceberg. Rabobank is accusing Merrill Lynch of a similar misdemeanour: marketing of a collateralised debt obligation (CDO) while omitting to mention a relationship with a hedge fund betting against the product's success. Bill Clinton meanwhile expresses regret, saying he should not have listened to the former treasury secretaries Robert Rubin and Larry Summers when they opposed tight protection when derivatives were gaining popularity during the 1990s.270 BP Shareholders reject a call to investigate the tar sands project. BP expects to make a final decision on its $2.4bn (£1.6bn) Sunrise project by next year. About 140 institutions backed the call for a review.271 Citi analysts, concerned about tar sands emissions, warn that shareholder action will grow. This is a setback, given that CalPers, the US’s largest public pension fund, has already joined the tar sands campaign.272 18.4.10. “Labour and the Tories are just too scared to take on the bankers,” Ruth Sutherland writes. Whereas SEC investigators are feeling Goldman Sachs’s collar in the States, and the Volcker Rule which would in effect restore Glass-Steagall and limit the size of banks so that their failure would not imperil the entire financial system. the Labour manifesto, however, simply proposes making banks keep more capital as a cushion against losses, a global levy on financial services and "living wills" to help wind down failed institutions without putting the entire system at risk. The Tories have promised a levy on banks, even if other countries do not do the same, clamping down on bankers' bonuses, and says he will seek international agreement on separating banks' speculative activities from their useful ones. “But the two main parties remain horribly in thrall to a powerful cabal of financiers and corporate executives, and are terrified of being accused of banker-bashing. It is so obvious that it should not need saying, but the financial elite to which they genuflect is both unelected and unaccountable.”273 “Now we know the truth. The financial meltdown wasn't a mistake – it was a con.” So writes Will Hutton in The Observer. “The global financial crisis, it is now clear, was caused not just by the bankers' colossal mismanagement. No, it was due also to the new financial complexity offering up the opportunity for widespread, systemic fraud.” “Just consider the roll call beyond Goldman Sachs. In Ireland Sean FitzPatrick, the ex-chair of the Anglo Irish bank – a bank which looks after the Post Office's financial services – was arrested last month and questioned over alleged fraud. In Iceland last week a dossier assembled by its parliament on the Icelandic banks – huge lenders in Britain – was handed to its public prosecution service. A court-appointed examiner found that collapsed investment bank Lehman knowingly manipulated its balance sheet to make it look stronger than it was – accounts originally audited by the British firm Ernst and Young and given the legal green light by the British firm Linklaters. In Switzerland UBS has been defending itself from the US's Inland Revenue Service for allegedly running 17,000 offshore accounts to evade tax. Be sure there are more revelations to come – except in saintly Britain.” “….The Icelandic banks, Anglo Irish bank and Lehman were all involved in opaque deals and rank bad lending decisions – but Goldman allegedly went one step further, according to the SEC actively creating a financial instrument that transferred wealth to one favoured client from others less favoured.” “….Brutally, the banks knowingly gamed the system to grow their balance sheets ever faster and with even less capital underpinning them in the full knowledge that everything rested on the bogus claim that their lending was now much less risky. That was not all they were doing. As 20 Triple Crunch Log © Jeremy Leggett Michael Lewis describes in The Big Short, credit default swaps had been deliberately created as an asset class by the big investment banks to allow hedge funds to speculate against collateralised debt obligations. The banks were gaming the regulators and investors alike – and they knew full well what they were doing.” “….We need to break up our banks, limit their capacity to speculate and bring them back to earth. Britain should also launch an official investigation into what went wrong – and hand the findings to the Serious Fraud Office. This needs to become this election campaign's number one issue.” Crisis timetable September 2007 Funding problems at Northern Rock triggers the first run on a British bank. It is nationalised in February 2008. April 2008 Bear Stern faces bankruptcy after a run on the company wipes out cash reserves in less than two days. Backed by the Federal Reserve, JPMorgan buys up shares at far below market value. September 2008 Lehman Brothers files for bankruptcy protection, becoming the first major bank to collapse since the start of the credit crisis. December 2008 Bernard Madoff arrested for operating the largest Ponzi scheme in history. January 2009 The Bank of England launches £200bn quantitative easing. March 2010 Former chairman of Anglo Irish bank Sean Fitzpatrick is arrested in Dublin after failing to disclose details of loans worth millions from the bank. April 2010 Northern Rock former directors, David Baker and Richard Barclay, are fined £504,000 and £140,000 for deliberately misleading analysts prior to nationalisation. April 2010 The US Securities and Exchange Commission accuses Goldman Sachs of "defrauding investors by misstating and omitting key facts".274 20.4.10. The Deepwater Horizon rig, working for BP explodes 50 miles off Louisiana, killing 11. The 1,500 metre riser collapses, and the wellhead begins pouring oil into the water. IMF proposes tough measures to cut banks down to size, taxing both profits and pay in a so-called Financial Activities Tax (FAT), stopping short of a Tobin tax. Gordon Brown claims credit for it. 275 IMF says banks are more powerful now than they were before the crisis, and time is running out to deal with them. “The future financial regulatory reform agenda is still a work in progress, but will need to move forward with at least the main ingredients soon”, the IMF’s Global Financial Stability Review notes. “The window of opportunity for dealing with too-important-to-fail institutions may be closing and should not be squandered, all the more so because some of these institutions have become bigger and more dominant than before the crisis erupted.”276 21.4.10. FT.com suspects policymakers, economists and peak-oilists are starting to speak same language. “It’s still the rare politician or industry executive who would use the phrase ‘peak oil’. But in the UK, a country for whom domestic oil production decline is very much a concern, the issue has become almost mainstream.”277 None of the UK political party manifestos mention peak oil going into the election. And when asked about at the Guardian debate on the environment, the three environmental spokespeople - Miliband, Hughes and Clark – show varying degrees of complacency, Miliband worst.278 25.4.10. Chevron CEO sees no future for his company in the shale gas rush. John Watson that the “price tag is too high” to justify the investments required, a big contrast with those who insist that new drilling techniques are a “game changer” and lift projections of reserves of shale gas from 30 years’ worth of supplies to 100 years.279 29.4.10. US mobilises military as BP’s oil spill approaches Lousiana coast. BP’s value falls by £13bn as share price falls Some 5,000 barrels a day are still spilling beneath the rig and BP’s efforts to cap the well could take four weeks, by which time 150,000 barrels would have escaped. If that doesn’t work, a relief well would be needed, needing maybe 3 months, and meaning 300,000 barrels – bigger than the Exxon Valdez at 258,000 barrels. 30.4.10. White House bans offshore drilling until further notice as US Navy joins the effort to contain the spill (on the surface, that is).280 Costs of Gulf oilspill likely to exceed Exxon Valdez as backlash builds against BP. Brent Coon & Associates, an American law firm playing a large role in bringing cases against BP for the Texas City refinery fire in 2005, files a lawsuit on behalf of a rig worker injured in last week's blast, and argues that criminal charges should be brought against the company for its repeated failure to act after a series of industrial accidents in the US. “They don't learn their lessons, they are the most arrogant bunch of bastards I've ever dealt with,” says lawyer Brent Coon. “It's like they just don't care. At some point, we are going to have to put some of these executives in jail and withdraw their right to exploit our natural resources.”281 Goldman Sachs faces a criminal investigation. Federal prosecutors have opened a preliminary criminal investigation. The news sent Goldman shares down 9%.282 22 arrested in carbon trading inquiry, all but one in the UK, although Deutsche Bank has been raided in a German arm of the operation, involving 2,450 British and German tax officers. The issue is carousel fraud involving VAT, as result of which criminals have pocketed an estimated €5bn. A total of 58 have now been arrested across Europe. 283 1.5.10. British H&S watchdog has warned BP over safety on North Sea oil rigs. The HSE has issued an “improvement notice on the Schiehallion Field saying that the oil group “failed to ensure the safety of your employees and others not in your employment by not providing and maintaining a system of work for the control of that operation that was, so far as reasonably practicable, safe.” Another notice pertains to Magnus. After the Piper Alpha (167 dead) investigation, pipeline emergency shut down valves were made madatory. One failed on one field and others have been found to be at risk. The HSE has called on all operators to check ESDVs. Saftety stats in the North Sea showed a marked deterioration in 2009 on 2008.284 Warren Buffett defends Goldman Sachs, saying at the Berkshire Hathaway AGM that the losers on their suspect deal “made a dumb credit decision.” Though he adds a successful criminal prosecution would be “something more serious, and we’d look at that at the time.”285 2.5.10. “Virtually impossible” spill larger than previously estimated, experts say: 3,850 sq miles. BP’s safety analysis had suggested the spill was “virtually impossible.” Obama flies to meet Hayward in Louisiana. 286 21 Triple Crunch Log 5.5.10. 6.5.10. 7.5.10. 8.5.10. 9.5.10. © Jeremy Leggett Three die in Athens as anarchists torch a bank during protests against the IMF / EU austerity programme, a condition of the €110bn bailout extended to the Greek government. The euro falls to a 14 month low against the dollar.287 Investors bet on a Tory win in UK election as they pile into gilts. The expectation seems to be that Cameron will deal best with the nation’s £163bn deficit – 11% of GDP, higher than Greece’s – and provide something of a safe haven in the troubled Eurozone.288 BP admits in a private congressional briefing that the oil escape could reach 40,000 barrels a day as White House backs a move by Senators back to put oil companies on the hook for $10bn for a spill. It could be retroactive, because under current laws (20 years old) BP’s liability is capped at $75m. BP faces 20 lawsuits to date.289 Moody’s changes BP’s Aa1 debt status from “stable” to “negative” on the basis of oil-spill fears, because it is “remains impossible to assess the full extent of the costs and business impact on BP’s results”. Equity analysts are more sanguine, having opined that the total exposure will be “limited” to $3-10bn.290 CBIC’s Jeff Rubin likens the Deepwater Horizon to Three Mile Island. Writing in the Globe and Mail, he says: “Will the unfolding environmental catastrophe from the ruptured Deepwater Horizon well in the Gulf of Mexico become deep-water oil’s equivalent to the Three Mile Island accident? In terms of environmental degradation and economic cost, it’s already become much more. The real legacy of Three Mile Island wasn’t what happened back in 1979, though, but rather what happened, or more precisely didn’t happen, over the course of the next 40 years in the United States. Literally overnight, the near-meltdown of the reactor core changed public acceptance of nuclear power plants. No company in the U.S. has built a new one since.”291 Blind voting on policies puts the Greens as the most popular UK political party. The website VoteForPolicies.org.uk lists policies and asks people to vote for those they prefer. A quarter of the 245,000 people who took the test ended up voting for the policies of the Greens, about 18% each for the LibDems and Labour, and 16% for the Tories.292 Hung Parliament in the UK. Meanwhile, Wall street is gripped by panic that Greek crisis will spread. Stliglitz and Roubini are doubtful that the Euro can survive. They do not think governments can or should squeeze their spending to the degree the IMF and EU stipulate. Professor David Blanchflower, former Bank of England monetary policy committee member, says it is "crazy" for highly indebted countries such as Greece, Spain, Portugal and Britain to enter a “death spiral” of spending cuts : “All anyone is talking about is austerity, but all you get is more unemployment and low growth. Then you find yourself in a spiral of debt as low growth forces you to cut spending further.”293 Citywire website: “Would you put up with what is being asked of the Greek people?” As part of the IMF/ EU bailout Greek leaders are proposing the following measures: Public sector pay to be frozen till 2014; Public sector salary bonuses – equivalent to two months’ extra pay – to be scrapped or capped; Public sector allowances to be cut by 20%; State pensions to be frozen or cut, with the contribution period up from 37 to 40 years; average retirement age raised from 61 to 63, and early retirement restricted; VAT to be increased from 19% to 23%; Taxes on fuel, alcohol and tobacco raised to 10%; A new one-off tax on profits to be introduced, plus new gambling, property and green taxes. 294 Dome to stem the oil flow moved into place. The leak is now 5,000 barrels a day. The structure weighs almost 100 tonnes. Such a capping has never been undertaken in waters this deep.295 EU crisis goes global. European shares finish at a 6 month low as more shares change hands in London than at any time since the credit crisis in autumn 2008. Other exchanges are down too.296 EU drops new emissions regulations that could have shut Drax. Pressure from the utilities, arguing that they cannot get enough new generating capcity onstream until 2020. makes a key committee put off the industrial emissions directive from 2016 until 2019. The parliament is likely to ratify this in July. The Large Combustion Plants Directive remains in place.297 Critics turn their attention on the rigs watchdog: a pattern repeated from the credit crunch? FT: “Just as the financial crisis revealed that US regulators were often too cosy with institutions that they were meant to supervise, BP's huge oil spill in the Gulf of Mexico has shone an unflattering light on the agency charged with regulating US oil resources. For more than a decade, the Minerals Management Service, a federal agency within the interior department, has been accused by government watchdogs of failing to inspect offshore oil leases and relying too heavily on industry data in collecting royalties and other fees related to oil and gas. In a low point for the agency, a scathing 2008 report by the inspector-general of the interior described a culture of "substance abuse and promiscuity" within the MMS department charged with collecting royalties on leases and revealed that two MMS employees had, literally, been in bed with industry contacts.”298 Hydrate crystals block the cofferdome as oil hits shore for first time. BP now plans to do a “junk shot”: blast the blow-out preventer with debris (shredded rubber etc) under pressure, hoping to block the leak. Deep-water oil’s ability to offset depletion may hinge on the Macondo cofferdam operation. If it succeeds, it should capture around 85 per cent of the leaking oil, then the spill (around 100,000 barrels, 4.2 m gallons so far) will end up at less than half the amount spilled in the 1989 Exxon Valdez disaster and won't even make it into the top 100 oil spills by volume. But if it fails, the relief well might take three months, and the spill could reach 450,000 barrels, just under twice the Exxon Valdez (into the top 50 spills). Douglas Westwood says deepwater oil production has soared from under two million barrels per day in 2000 to 8 mb/d in 2010, almost 10 per cent of global consumption, and must rise further. Chairman John Westwood: “They can't ban deepwater because the industry has nowhere else to go.” 500 deepwater wells were drilled in 2009, costing up to $100m each. The Macondo field probably contains less than 50 million barrels – an oilfield minnow. Analysts Newedge USA say that if Obama’s moratorium is in place for long, oil supply could suffer a shortfall of up to one mb/d by 2016 to 2018.299 Solar printing-press company suggests it can cut PV costs by 90%. Omar Cheema, co-founder and chief executive of Solar Press, claims a breakthrough at Imperial College that produces an “ink” made from three electrical materials dissolved in a solvent. Deposited on to panels by a high-speed printing machine, passed through an oven, the solvents evaporate, leaving behind circuits that react with sunlight to generate electric currents. Cheema estimates cost reduction by as much as 80%, and the ability to produce between 200 and 400 square metres of solar cells in one hour and 24,000 square metres of solar panels in 12 days. 22 Triple Crunch Log © Jeremy Leggett That would mean production of nine to ten gigawatts a year: around the current output of the solar power industry. The Carbon Trust invested £1.5m a year ago to fund its spinout from Imperial College. Cheema is looking for several million more to ramp up production. “We believe we can be profitable by the end of next year,” he says. “We we need only $10m [£6.8m] in total before investors start to see a return. That’s because there is no capital outlay.” Solar Press aims to start commercial operations with lighting in the developing world.300 10.5.10. €750bn Eurozone resecue package agreed by Finance Ministers. Stock markets leap across Europe as the ECB emraces quantitative easing.301 Mood at annual Offshore Technology Conference unaffected by oil spill. FT.com “Perhaps ironically, the same week saw a big offshore drilling conference in Houston pull in record crowds. Although the organisers of OTC said the Deepwater Horizon event affected the “mood and tone of the event,” it didn’t appear to put a huge dampener on things, judging from the Houston Chronicle’s extensive coverage. On the first day, “discussion centered on what went wrong rather than concern about the future of deep water drilling” and that there was no indication of companies being “spooked” by the incident enough to reconsider offshore drilling and production. Attendees were getting their shoes shined and fending off strip club promotions, while the disaster was undoubtedly a big topic of conversation, a small protest outside the conference on Thursday elicited little response.”302 BP spill may have been due to methane hydrates: escaping gas blowing out steel casing cement. A presentation by Halliburton last month pointed to the dangers.303 11.5.10. BP, Transocean and Halliburton execs try to blame each other each in Congressional testimony. They are ticked off by Lisa Murkowski, the ranking Republican on the committee and senator from Alaska. “I would suggest to all three of you that we are all in this together because this incident will have an impact on the energy policy of our country,” she ys. “If you can’t convince people that you can operate safely, not only will BP not be out there, but the Transoceans won’t be out there to drill the rigs and the Halliburtons won’t be out there cementing.304 FT: “Essentially, the testimonies go something like this: BP: Why did the BOP fail? Transocean: Were there problems with the cementing and casings? Halliburton: We did what BP asked us to The regulator: Better testing standards needed for shear ram, cementing and other factors The academic: Why did multiple blowout barriers fail, and was there human error?305 Methane explosions in Russia’s largest coal mine kill 52 with 38 still missing. FT: “One miner interviewed at the scene said he didn’t understand how the blast could have happened as they had just installed new German ventilators and British methane detectors. The Raspadskaya Coal Company’s mine is the highest-producing coal mine in Russia, but also one of the deepest, with 311km of tunnels, which makes it especially vulnerable to methane gas build up. Despite government pledges to compensate families of dead miners with roughly 1m roubles apiece, many relatives were bitter about the way they have been treated. “We send our sons to die in these holes, and for kopeks,” said the mother of one miner who declined to give her name. “There is no other work to do here. Only the mine. 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http://www.guardian.co.uk/business /2010/jan/28/bp-tony-hayward-gas-shale-rocks 122 http://blogs.ft.com/energy-source/2010/01/28/how-healthy-is-barnett-shale/ 123 http://www.guardian.co.uk/environment/2010/jan/29/water-vapour-climate-change 124 http://www.nytimes.com/2010/01/31/business/energy-environment/31renew.html?th&emc=th 125 http://www.guardian.co.uk/environment/2010/feb/01/climate-change-deal-impossible-2010 126 http://blogs.ft.com/energy-source/2010/02/01/shale-boom-leaves-industry-considering-us-gas-exports/ 127 http://www.guardian.co.uk/money/2010/feb/06/solar-power-bright-investment 128 http://www.ft.com/cms/s/0/b37099b6-0ea1-11df-bd79-00144feabdc0.html 129 http://www.ft.com/cms/s/0/26fb8a42-0f62-11df-a450-00144feabdc0.html 130 http://www.guardian.co.uk/environment/2010/feb/01/leaked-emails-climate-jones-chinese 131 http://www.guardian.co.uk/environment/2010/feb/01/climate-emails-sceptics 132 http://www.nytimes.com/2010/02/02/us/politics/02deficit.html?th&emc=th 133 http://www.ft.com/cms/s/0/fec07306-0f68-11df-a450-00144feabdc0.html 134 Petroleum Review, February 2010. 135 David Starchan, “Non-conventional oil: can it fill the gap?” Petroleum Review, February 2010. 136 Maria Kelmaas, “Crunching credit and climate,” Petroleum Review, February 2010. 137 http://www.ft.com/cms/s/0/db6a9ed8-101f-11df-841f-00144feab49a.html 138 http://www.guardian.co.uk/environment/2010/feb/02/climate-change-pachauri-un-glaciers 139 http://www.ft.com/cms/s/0/f9f86ef0-10cb-11df-975e-00144feab49a.html 140 http://blogs.ft.com/energy-source/2010/02/03/much-ado-about-climate-change/ 141 http://www.guardian.co.uk/business/2010/feb/03/energy-bills-unaffordable-system-overhaul 142 http://www.ofgem.gov.uk/Media/PressRel/Documents1/Ofgem%20%20Discovery%20phase%20II%20Draft%20v15.pdf 143 http://www.guardian.co.uk/business/2010/feb/03/ofgem-uk-energy-supplies 144 http://www.guardian.co.uk/business/2010/feb/03/ofgem-investment-energy-bills-rise 145 http://www.guardian.co.uk/environment/2010/feb/03/ofgem-report-analysis 146 http://www.ft.com/cms/s/0/a82cfe04-10f5-11df-9a9e-00144feab49a.html 147 http://www.bloomberg.com/apps/news?pid=20601100&sid=aKR8zOS.OF6w 81 82 25 Triple Crunch Log © Jeremy Leggett http://pubs.acs.org/doi/abs/10.1021/ef901240p http://www.theoildrum.com/node/6169 150 https://www.theoildrum.com/pdf/theoildrum_6206.pdf 151 http://www.guardian.co.uk/business/2010/feb/04/tony-hayward-bp-interview 152 http://www.guardian.co.uk/business/2010/feb/04/shell-job-cuts-profits-fall 153 http://www.ft.com/cms/s/0/c414ed56-11b9-11df-9d45-00144feab49a.html 154 http://www.telegraph.co.uk/finance/newsbysector/energy/7153724/How-long-before-the-lights-goout.html 155 http://www.ft.com/cms/s/0/2d0110e8-11af-11df-bceb-00144feab49a.html 156 http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7017865.ece 157 http://money.independentminds.livejournal.com/239030.html 158 http://www.timesonline.co.uk/tol/news/environment/article7017922.ece 159 http://www.guardian.co.uk/environment/2010/feb/07/climate-change-science-public-trust 160 http://www.guardian.co.uk/politics/2010/feb/07/climate-scepticism-grows-tories 161 http://www.guardian.co.uk/business/2010/feb/07/branson-warns-peak-oil-close 162 http://www.telegraph.co.uk/finance/newsbysector/energy/7182811/BP-faces-investor-revolt-overCanadian-oil-sands-project.html 163 “BP claims green credentials as it prepares for tar sands project,” Recharge, 12 February 2010. no url 164 http://www.ft.com/cms/s/0/babefaae-14e2-11df-8f1d-00144feab49a.html 165 http://www.guardian.co.uk/environment/2010/feb/09/world-first-personal-carbon-trading 166 http://www.guardian.co.uk/business/2010/feb/09/scrap-windfarms-says-gazprom/print 167 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7199259/Gazprom-scorns-shale-gasas-danger-to-drinking-water.html 168 http://blogs.ft.com/energy-source/2010/02/10/peak-oil-or-oil-crunch-richard-branson-puts-the-case-foruk-business/ 169 http://www.guardian.co.uk/environment/cif-green/2010/feb/10/oil-crunch-peril 170 http://www.youtube.com/watch?v=kaxJum8FD5g 148 149 171 http://online.wsj.com/article/SB10001424052748704140104575057260398292350.html?mod=googlenews_w sj 172 http://www.ft.com/cms/s/0/a9713b16-15e3-11df-b65b-00144feab49a.html 173 http://www.ft.com/cms/s/0/d588a942-1669-11df-bf44-00144feab49a.html 174 http://www.forbes.com/2010/02/11/peak-oil-crunch-opinions-contributors-jeremy-leggett_2.html 175 http://www.ft.com/cms/s/0/e4a2dad0-16ad-11df-aa09-00144feab49a.html 176 http://www.guardian.co.uk/business/2010/feb/14/oil-sands-ban-legal-challenge 177 http://www.guardian.co.uk/environment/2010/feb/14/sellafield-texas-city-nda 178 http://www.ft.com/cms/s/0/844be172-1b3a-11df-953f-00144feab49a.html 179 http://www.guardian.co.uk/environment/2010/feb/16/barack-obama-climate-change-laws 180 http://www.ft.com/cms/s/0/6f9abaa0-1c02-11df-a5e1-00144feab49a.html?nclick_check=1 181 http://www.guardian.co.uk/environment/2010/feb/17/san-francisco-electric-cars 182 http://business.timesonline.co.uk/tol/business/industry_sectors/utilities/article7029697.ece 183 http://www.ft.com/cms/s/0/a27d78ee-1b63-11df-838f-00144feab49a.html 184 http://greeninc.blogs.nytimes.com/2010/02/17/utility-executives-like-nuclear-power-climate-science-notso-much/ 185 http://www.time.com/time/politics/article/0,8599,1964846,00.html 186 http://blogs.ft.com/energy-source/2010/02/18/fourth-generation-nuclear-power-may-not-be-the-cleanenergy-silver-bullet/ 187 http://www.aolnews.com/opinion/article/opinion-global-warming-scandals-offer-opportunity-forprogress/19362813 188 http://www.ft.com/cms/s/0/ba370018-1f19-11df-9584-00144feab49a.html 189 http://www.ft.com/cms/s/0/a4643e02-1efd-11df-9584-00144feab49a.html 190 http://www.guardian.co.uk/environment/2010/feb/23/british-public-belief-climate-poll 191 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7301602/Companies-cant-afford-todrill-for-North-Sea-oil-and-gas.html 192 http://blogs.ft.com/energy-source/2010/02/24/falklands-oil-questions-are-about-payloads-not-conflict/ 193 http://www.ft.com/cms/s/0/cb51016a-217f-11df-830e-00144feab49a.html 194 http://blogs.ft.com/energy-source/2010/02/25/hummer-has-no-home-thanks-to-chinas-gas-guzzlingaversion/ 195 http://www.businessinsider.com/jeff-rudin-i-know-a-place-where-demand-for-oil-grows-even-faster-thanchina-2010-2 196 http://climatebonds.net/2010/02/wb-over_1billion/ 197 http://www.ft.com/cms/s/0/f523bb7a-2235-11df-9a72-00144feab49a.html 198 http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/02/24/MNIO1C6M96.DTL 199 http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7041904.ece 200 http://www.nytimes.com/2010/02/28/opinion/28gore.html?th&emc=th 201 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7266837/Barclays-and-Bank-ofAmerica-see-looming-oil-crunch.html 202 http://blogs.ft.com/energy-source/2010/03/01/a-more-competitive-gas-market-may-be-bad-news-for-bpas-well-as-gazprom/ 203 http://blogs.ft.com/energy-source/2010/03/01/oil-majors-taking-the-wrong-kinds-of-risks/ 204 http://www.guardian.co.uk/commentisfree/2010/mar/01/solar-panel-feed-in-tariff 205 http://blogs.ft.com/energy-source/2010/03/02/us-consumers-spending-their-savings-on-energy/ 206 http://www.guardian.co.uk/commentisfree/2010/mar/03/solar-panel-workable-future 26 Triple Crunch Log 207 208 209 210 211 212 213 214 215 216 217 218 © Jeremy Leggett http://blogs.ft.com/energy-source/2010/03/04/investors-increasingly-concerned-about-climate-change/ http://www.guardian.co.uk/environment/2010/mar/04/coal-gasification-ccs http://blogs.ft.com/energy-source/2010/03/05/saudi-arabia-struggling-with-gas-needs/ http://blogs.ft.com/energy-source/2010/03/05/how-financial-traders-changed-oil-markets/ http://www.guardian.co.uk/commentisfree/cif-green/2010/mar/05/solar-panel-feed-in-tariff-benefits http://www.guardian.co.uk/environment/georgemonbiot/2010/mar/05/solar-feed-in-tariff http://www.ft.com/cms/s/0/a917b8d2-2a0d-11df-b940-00144feabdc0.html http://www.ft.com/cms/s/0/b686ad54-2a15-11df-b940-00144feabdc0.html http://www.ft.com/cms/s/0/ccd8412a-2a11-11df-b940-00144feabdc0.html http://www.ft.com/cms/s/0/f15da07c-2a51-11df-b940-00144feabdc0.html http://www.sortirdunucleaire.org/index.php?menu=actualites&sousmenu=dossiers&soussousmenu=EPRrevelat ions&page=index 219 http://www.ft.com/cms/s/0/d4fe86d0-2ace-11df-886b-00144feabdc0.html 220 http://www.guardian.co.uk/environment/cif-green/2010/mar/09/george-monbiot-bet-solarpv?showallcomments=true#end-of-comments 221 http://www.ft.com/cms/s/0/4bd746ca-2b1a-11df-93d8-00144feabdc0.html 222 http://blogs.ft.com/energy-source/2010/03/09/copper-and-lithium-scramble-to-power-the-energy-future/ 223 http://www.guardian.co.uk/environment/georgemonbiot/2010/mar/11/solar-power-germany-feed-intariff?showallcomments=true#end-of-comments 224 http://www.guardian.co.uk/environment/2010/mar/16/wave-and-tidal-power-scotland 225 http://www.guardian.co.uk/business/2010/mar/16/industrial-strategy-nuclear-manufacturing-forgemasters 226 http://uk.reuters.com/article/idUKLDE62H0ZF20100318?pageNumber=3&virtualBrandChannel=0 227 http://www.guardian.co.uk/environment/2010/mar/18/solar-energy-feed-in-tariffs-monbiot 228 http://www.jonathonporritt.com/pages/2010/03/the_war_of_words_over_homeprod.html 229 http://transitionculture.org/2010/03/24/government-‘peak-oil-summit’-starts-the-process-of-governmentacknowledging-peak-oil/ 230 http://www.ft.com/cms/s/0/03edba14-35e8-11df-aa43-00144feabdc0.html 231 http://www.wdm.org.uk/cashing-tar-sands-rbs-uk-banks-and-canada’s-“blood-oil” 232 http://petrole.blog.lemonde.fr/2010/03/25/washington-considers-a-decline-of-world-oil-production-as-of2011/ 233 http://www.energyandcapital.com/articles/the-end-of-peak-oil-denial/1111 234 David Harris, Head of Responsible Investment, FTSE group, “Understanding environmental markets, London Stock Exchange, Environmental Opportunities Forum, 25 March 2010 (L). 235 http://www.ft.com/cms/s/2/143af718-390a-11df-8970-00144feabdc0.html 236 http://www.ft.com/cms/s/0/05645be6-3908-11df-8970-00144feabdc0.html 237 http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article7078855.ece 238 http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7078858.ece 239 http://www.ft.com/cms/s/0/9adb2b90-3b2a-11df-a1e7-00144feabdc0.html 240 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7536076/UK-to-rule-out-national-gasstorage-to-secure-supply.html 241 http://www.ft.com/cms/s/0/3ef33692-3b93-11df-a4c0-00144feabdc0.html 242 http://www.independent.co.uk/news/business/news/new-regulations-on-energy-efficiency-mired-inconfusion-1931580.html 243 http://www.bloomberg.com/apps/news?pid=20601207&sid=aI1saltlKjvM# 244 http://www.energyandcapital.com/articles/energy-and-capitals-weekend-edition/1112 245 http://www.pwc.co.uk/pdf/100_percent_renewable_electricity.pdf 246 http://blogs.ft.com/energy-source/2010/04/01/a-gameplan-for-getting-to-100-renewables/ 247 http://blogs.ft.com/energy-source/2010/04/01/how-good-is-natural-gas-when-lifecycle-emissions-aremeasured/ 248 Photon magazine, April 2010. And see JL notes on the April 2010 Photon conference, Stuttgart. 249 http://www.spiegel.de/international/world/0,1518,686774-3,00.html 250 http://www.kuwaittimes.net/read_news.php?newsid=NDU0MTk4MjMw 251 http://www.scientificamerican.com/article.cfm?id=explosive-gas-silane-used-to-makephotovoltaics&sc=CAT_BS_20100402 252 http://www.guardian.co.uk/commentisfree/2010/apr/04/will-hutton-capitalism 253 http://www.ft.com/cms/s/0/72d68b60-4009-11df-8d23-00144feabdc0.html 254 http://www.guardian.co.uk/business/2010/apr/04/bp-shale-gas-environment-protection-agency 255 http://www.guardian.co.uk/environment/2010/apr/05/tokyo-electric-cars-better-place 256 http://www.guardian.co.uk/business/2010/apr/07/private-equity-boss-predicts-painful-decade 257 http://www.guardian.co.uk/business/2010/apr/07/goldman-sachs-letter-shareholders 258 http://www.guardian.co.uk/business/2010/mar/07/bnfl-director-book-sellafield-cancer-concerns 259 http://www.guardian.co.uk/business/2010/apr/08/petrol-price-all-time-high 260 http://www.guardian.co.uk/business/2010/apr/09/world-bank-criticised-over-power-station 261 http://www.guardian.co.uk/business/2010/apr/09/russia-launch-baltic-gas-pipeline 262 http://blogs.ft.com/energy-source/2010/04/09/labors-energy-platform-emerges/ 263 http://www.ft.com/cms/s/0/39c9ebf6-2d48-11df-9c5b-00144feabdc0.html 264 http://www.guardian.co.uk/business/2010/apr/11/peak-oil-production-supply 265 http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7096486.ece 266 http://www.ft.com/cms/s/0/88d5231c-4695-11df-9713-00144feab49a.html 267 http://www.guardian.co.uk/world/2010/apr/13/pavement-power-toulouse-streets 268 http://www.nytimes.com/2010/04/14/world/14microfinance.html?pagewanted=all 27 Triple Crunch Log © Jeremy Leggett http://www.guardian.co.uk/business/2010/apr/16/goldman-sachs-fraud-charges http://www.guardian.co.uk/business/2010/apr/18/goldman-sachs-prosecution-wall-street-crackdown 271 http://www.ft.com/cms/s/0/ab8872e0-48bd-11df-8af4-00144feab49a.html 272 http://blogs.ft.com/energy-source/2010/04/15/oil-sands-citi-gives-a-tick-for-carbon-costs-but-a-cross-foremissions/ 273 http://www.guardian.co.uk/business/2010/apr/18/uk-politicians-afraid-regulate-bankers 274 http://www.guardian.co.uk/business/2010/apr/18/goldman-sachs-regulators-civil-charges 275 http://www.guardian.co.uk/global/2010/apr/20/imf-tax-global-banks 276 http://www.guardian.co.uk/business/banking+uk/uk 277 http://blogs.ft.com/energy-source/2010/04/21/are-policymakers-economists-and-peak-oilists-starting-tospeak-the-same-language/ 278 http://www.davidstrahan.com/blog/?p=577 279 http://www.ft.com/cms/s/0/272d6046-5088-11df-bc86-00144feab49a.html 280 http://www.guardian.co.uk/environment/2010/apr/30/oil-spill-reaches-us-coastline 281 http://www.guardian.co.uk/environment/2010/apr/30/bp-cost-deepwater-horizon-spill 282 http://www.guardian.co.uk/business/2010/apr/30/goldman-sachs-faces-criminal-investigation 283 http://www.telegraph.co.uk/finance/newsbysector/energy/7659747/Tax-officers-arrest-22-in-UK-carbonfraud-probe.html 284 http://www.guardian.co.uk/business/2010/may/01/bp-shell-north-sea-oil-rigs-health-and-safety-executive 285 http://www.guardian.co.uk/business/2010/may/01/warren-buffett-defends-goldman-sachs 286 http://www.guardian.co.uk/environment/2010/may/02/barack-obama-deepwater-oil-spill 287 http://www.ft.com/cms/s/0/fa96b574-5838-11df-9eaf-00144feab49a.html 288 http://www.ft.com/cms/s/0/7817a4fc-5881-11df-9921-00144feab49a.html?nclick_check=1 289 http://www.guardian.co.uk/environment/2010/may/04/deepwater-horizon-oil-spill-backlash-bp 290 http://blogs.ft.com/energy-source/2010/05/05/oil-spill-cost-uncertainty-gives-moodys-pause-for-thought/ 291 http://www.theglobeandmail.com/report-on-business/commentary/jeff-rubins-smaller-world/oil-disastermay-prove-tipping-point-for-world-oil-production/article1557220/ 292 http://blogs.ft.com/energy-source/2010/05/05/are-you-a-secret-green-party-sympathiser/ 293 http://www.guardian.co.uk/business/2010/may/06/debt-crisis-ecb-refuses-to-soften 294 http://www.citywire.co.uk/personal/-/blogs/money-blog/content.aspx?ID=398084 295 http://www.ft.com/cms/s/0/e3282f4e-591e-11df-adc3-00144feab49a.html 296 http://www.guardian.co.uk/business/blog/2010/may/07/market-turmoil-live-coverage 297 http://www.guardian.co.uk/business/2010/may/07/energy-pollution-drax-environment-regulations 298 http://www.ft.com/cms/s/0/832382bc-5980-11df-99ba-00144feab49a.html 299 http://www.independent.co.uk/news/business/news/oil-production-hit-for-decades-after-bp-spill1968931.html 300 http://business.timesonline.co.uk/tol/business/article7120555.ece 301 http://www.guardian.co.uk/business/2010/may/10/eu-debt-crisis-bailout-imf-ecb 302 http://blogs.ft.com/energy-source/2010/05/10/not-such-a-good-year-for-solar-so-far/ 303 http://blogs.ft.com/energy-source/2010/05/10/bps-oil-spill-fight-plagued-by-methane-hydrates-a-hazardof-deep-water/ 304 http://blogs.ft.com/energy-source/2010/05/11/bp-oil-spill-senate-hearings-live-blog/ 305 http://blogs.ft.com/energy-source/2010/05/11/the-blame-game-whos-saying-what-at-the-oil-spill-hearing/ 306 http://www.ft.com/cms/s/0/41f2f21e-5d18-11df-8373-00144feab49a.html 269 270 28