ODAC Newsletter - 16 January 2009
Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
After a week of claims and counter claims, signatures and retractions by Russia and the Ukraine the gas dispute continued, leaving much of Eastern Europe still without gas supplies. The extended stoppage led on Thursday to the International Energy Agency (IEA) stripping Russia of its status as a reliable energy supplier. Hopes for a resolution are now focused on an EU brokered meeting at the weekend.
The ongoing gas dispute once again focuses attention on Europe’s dependence on Russia. In addition it has served to demonstrate how quickly environmental concerns are jettisoned when countries are faced with an energy supply shortage. Slovakia’s decision to start up its condemned Soviet era nuclear plant in order to maintain power supplies may be copied by Bulgaria. The situation underlines the urgent need to diversify power sources now before peak oil and gas lead to reactive measures - a course of action which according to a report this week from Energy Watch Group is being hindered by IEA misinformation.
Both the EIA and OPEC further reduced their 2009 oil consumption predictions this week in response to the continually worsening economic outlook. The EIA now predicts global demand to be 810,000 barrels/day less than 2008 despite growth in China and India. In the face of this, OPEC production cuts have not yet caused a price recovery despite confirmation by Saudi Arabia that it will cut production beyond its agreed quota and news that other countries may be prepared to cut production still further.
In the UK this week, evidence that the government is still in peak oil denial came in the form of an announcement on Thursday that Heathrow is to get a third runway. This decision indicates an underlying assumption that beyond the current economic crisis lies a future of unfettered growth where the only limits will be those which we choose to impose on ourselves in order to offset the spectre of climate change. The battles over the project will continue well beyond this announcement, but if built the third runway may in the future be the symbol which serves to exemplify the lack of foresight of our generation.
Join us! Become a member of the ODAC Newsgathering Network. Can you regularly commit to checking a news source for stories related to peak oil, energy depletion, their implications and responses to the issues? If you are checking either a daily or weekly news source and would have time to add articles to our database, please contact us for more details.
WASHINGTON - The U.S. Energy Information Administration on Tuesday again pared back its 2009 world oil demand forecast due to the global economic downturn, but predicted a slight recovery in consumption for next year.
World oil demand will drop by 810,000 barrels per day in 2009 compared with last year, down 200,000 bpd from its estimate in December, the EIA said in its monthly outlook.
"World oil consumption continues to be revised downward in response to the global economic downturn," the EIA said in its monthly short-term energy outlook.
The statistical wing of the Department of Energy first predicted last month that world oil consumption would contract for the first time since 1983 as the world economy slows to a near standstill.
"The EIA is acknowledging a further contraction in U.S. oil demand and while that seems to be no surprise with the economy now in recession, it points to 2009 as a challenging year," said Phil Flynn, an analyst with Alaron Trading in Chicago.
The EIA said it expected demand in the United States, the world's top consumer, to fall by 390,000 bpd in 2009, compared with 2008.
However, in its first predictions for 2010, the EIA said global demand could rise by 880,000 bpd to 85.98 million bpd, along with a modest rebound in the economy. [ID:nN13391201]
U.S. oil demand should rise by 160,000 bpd to 19.28 million bpd in 2010, the EIA said.
Despite the economic downturn, the EIA said demand in emerging economies would rise, with demand from No. 2 consumer China seen up by 280,000 bpd this year. Surging demand from emerging economies sent oil prices on a six-year rally.
Shrinking energy demand spurred by the financial crisis has taken its toll on world oil prices overall, however, with prices down from July's record over $147 a barrel to $38 a barrel on Tuesday.
The drop in prices has hit the coffers of oil producing countries as well as energy companies, prompting OPEC to agree to its steepest output reduction in history in December.
Prices have yet to rebound, however, and some members have said the group could cut production again in March.
"The market is not presently convinced that OPEC members will willingly curtail output enough to lead to much higher prices," the EIA said.
The EIA forecast OPEC production will fall by more than 2 million bpd in first quarter of 2009 and average 30 million bpd for the year, before rising to 30.7 million bpd in 2010.
The EIA's report is the first of three key petroleum demand forecasts to be released this week. Oil traders are also awaiting revised demand forecasts from the Organization of Petroleum Exporting Countries on Thursday and by the International Energy Agency on Friday.
"I would strongly expect the IEA to revise downward the growth outlook for this year," said Mike Wittner of Societe Generale. "I don't know if they're going to go all the way negative (from current projection of positive demand growth this year). They ought to. I think it's correct there will be a global contraction this year."
Editing by Walter Bagley
NEW DELHI -Saudi Arabia will cut oil output next month to below its OPEC target and the world's top exporter is prepared to go even further to halt a more than $100 collapse in prices.
Oil Minister Ali al-Naimi confirmed on Tuesday the kingdom was pumping 8 million barrels per day (bpd) in line with its OPEC target from Jan. 1 and would reduce production further in February.
"We will do what it takes to bring it back to balance," he said on arrival in India for an energy conference.
The Saudi supply target was 8.05 million barrels per day (bpd), a little under 10 percent of global output, after the Organization of the Petroleum Exporting Countries (OPEC) agreed its biggest ever reduction in December.
"It will be lower," Naimi said of Riyadh's February output.
Industry sources on Sunday told Reuters Saudi planned to cut output by up to 300,000 bpd below its OPEC target in February, taking production to around 7.7 million bpd.
That would be the lowest Saudi production in more than six years and would be about 2 million bpd below a peak hit in August, after prices soared to a record above $147.
Following Naimi's comments, U.S. crude prices rose by nearly $2 to a session high of $39.50.
Naimi declined to comment on whether the kingdom's deep cut was in anticipation of a further cut in output by OPEC.
Before OPEC's last meeting in December, Saudi Arabia pre-empted the group's record reduction by paring back supplies to its customers. OPEC next meets in March in Vienna and other members have said they would cut production again if necessary.
Recession has eroded consumption in top consumer the United States and other developed economies and global oil demand is expected to shrink this year for the first time since 1983.
Some in the group believe OPEC's total pledged cuts of 4.2 million bpd since September will be enough to remove excess oil and shore up prices.
Editing by James Jukwey
Norway's national oil company, StatoilHydro, plans to cut its exploration spending and is likely to have to borrow to fund its investment programme because of low oil prices, the company said yesterday.
Setting out its plans to investors, the first big international oil company to make such a statement since the plunge in oil prices in the second half of the year, Statoil said its strategy remained unchanged, and stuck with its target for production growth by 2012.
However, Helge Lund, its chief executive, said the changes in the world economy had been "more profound than most of us were able to plan for", and he was now "taking action to manoeuvre through the current turmoil."
Other oil groups are expected to make similar statements when they start announcing results for 2008 later in the month.
Statoil said that its dividend and capital spending programme would be covered by its cash flow with oil at $55. Oil for February delivery fell below $36 yesterday.
As a result, Statoil is making preparations to borrow. Eldar Saetre, its chief financial officer, said: "We are prepared to raise new debt in the first half."
Mr Lund said in past periods of change in the oil market, companies had made mistakes both by under-reacting and over-reacting to the changed environment, and he was endeavouring to avoid either failing.
Statoil plans to invest about $13.5bn in capital spending for 2009, down from $16bn in 2008, although that included about $3.5bn of acquisitions.
Spending on exploration for new sources of oil and gas is being cut by about 13 per cent, from $3.1bn to $2.7bn.
Statoil plans to drill 65-70 exploration wells this year, down from 79 last year, and said it was grading its exploration portfolio to focus on the best prospects.
The company is also working through the cost savings made possible from its merger with the oil and gas business of Norsk Hydro in 2007 to create StatoilHydro.
Mr Lund said he expected the decline in costs in the oil industry, starting to become apparent towards the end of last year, to accelerate in 2009.
In the autumn Statoil abandoned a plan to sign a big contract to hire 11 drilling rigs, believing that the rates it was being charged were too high and were bound to fall.
It has sufficient rigs contracted to drill all its planned wells in 2009.
The company was ready for "strong fluctuations in the oil price at a relatively low level", Mr Lund said, and could make further cuts in costs and investment if the oil price continued to fall.
The company's bigger projects tended to require higher oil prices to break even, but had high flexibility and could be deferred, he added.
Frontline Ltd., the world’s biggest owner of supertankers, said about 80 million barrels of crude oil are being stored in tankers, the most in 20 years, as traders seek to take advantage of higher prices later in the year.
Traders are seeking to profit from a market situation called contango where futures prices are higher than the cost of immediate supplies. A purchaser could buy oil now, keep it for months at sea and fetch better prices by selling oil futures that are higher than the spot price.
“In this current financial situation I guess it’s one of the more safe bets to do,” Jens Martin Jensen, Singapore-based interim chief executive officer of the company’s management unit, said by phone today. Thirty to 35 very large crude carriers, each designed to haul 2 million barrels of crude, are storing oil, with the rest on ships half the size called suezmaxes, he said.
Investment banks, which tend not to hire supertankers, are among those attempting the trade, Jensen said Jan. 9. Phibro LLC, the commodities-trading unit of Citigroup Inc., stationed the 1 million-barrel carrier Ice Transporter off the coast of Scotland for the purpose, people familiar with the matter said last week.
The contango pricing structure has been caused by excess near-term oil supply as demand slows and speculation that output cuts by the Organization of Petroleum Exporting Countries will reduce the glut later this year.
The benchmark supertanker rental rate, based on the cost of shipping Saudi Arabian crude to Japan, has risen 56 percent since Jan. 1. Thirty-five supertankers represent about 7 percent of the global fleet, according to data from London-based Drewry Shipping Consultants Ltd.
Commodities prices fell the most in five decades last year, with crude dropping more than $100 from the peak of $147.27 a barrel in July, as simultaneous recessions hit the U.S., Europe and Japan. Oil demand in 2008 fell for the first time since 1983, according to the International Energy Agency. It will fall again this year according to OPEC.
The amount being stored is equal to about four days of U.S. consumption. The cost of storing on supertankers works out at about 80 to 90 cents a barrel per month depending on the length of the contract, according to Denis Petropoulos, head of tankers at Braemar Shipping Services Plc, the world’s second-largest publicly traded shipbroker.
Frontline, based in Bermuda, has advanced 6.8 percent in Oslo trading this year. The five-member Bloomberg Tanker Index has gained 2.2 percent.
The boss of ExxonMobil, the world's largest oil company, has called for a carbon tax to tackle global warming, marking a volte-face by the firm once described by Greenpeace as Climate Criminal No 1. Assailed from all sides by scientists and a new cadre of US politicians, led by the President-elect, Barack Obama, the landmark concession by Rex Tillerson represents a nod to realpolitik after years when the company denied the existence of man-made global warming.
Exxon had already dropped its funding of lobby groups which deny the science of climate change and begun to take a softer public line, but even Mr Tillerson admitted that propounding a carbon tax had stuck in the craw until recently. However, with European-style "cap and trade" rules governing carbon emissions moving up the agenda in the US, a carbon tax may be the least worst option, he said. Environmental groups gave a sceptical response to Exxon's U-turn, calling it a deliberate attempt to torpedo the movement for outright carbon caps and any early switch to alternative energy. "A carbon tax is also the most efficient means of reflecting the cost of carbon in all economic decisions – from investments made by companies to fuel their requirements, to the product choices made by consumers," Mr Tillerson said in a speech to the Woodrow Wilson Centre for International Scholars, a Washington think-tank. "As a businessman it is hard to speak favourably about any new tax. But a carbon tax strikes me as a more direct, a more transparent and a more effective approach."
The chief executive's comments are aimed at moving ExxonMobil decisively to the centre of the political debate about global warming in a year that will see world leaders meet in Copenhagen to establish a successor to the Kyoto treaty on climate change – something that threatens to fatally weaken the long-term prospects for oil companies who are refusing to invest in alternative energy, such as Exxon.
Last year, Exxon came under pressure from descendants of the oil magnate John D Rockefeller, who said it would go the way of the dinosaur unless it shifted positions on climate change. Use of its oil and gas output is estimated to dump 500 million tons of carbon into the atmosphere each year.
A "cap and trade" system sets limits on carbon output and allows polluters to buy permits from companies which reduce their own emissions. The nascent system established in Europe was failing to lead to the reductions its proponents expected, Mr Tillerson said, and its extension into the US would create "a new Wall Street" of brokers and speculators who would make long-term planning impossible.
By backing a carbon tax, the Exxon chairman has put himself in the unusual company of the former US vice-president Al Gore and Mr Obama's designated head of the National Economic Council, Larry Summers.
But Greenpeace – which has waged a multi-decade war against Exxon, its denial of man-made climate change and its secret funding of renegade scientists – warned Mr Tillerson's intervention was a smokescreen for its attempt to slow down the switch to alternative fuels. "A carbon tax is a political poison pill," said Kert Davies, a research director at Greenpeace. "No politician in the US would propose something with the word tax in it. Being in favour of something makes Exxon look like it is being intellectual, but this threatens to derail the prevailing international discussion."
Exxon argues that raising the cost of carbon-emitting fuels could change consumer behaviour and spur the entrepreneurship needed to boost solar, wind and other alternative power sources, but that these alternatives are not now sufficiently technologically advanced to meet the ambitious targets demanded of them. Separately, this week Mr Tillerson dismissed Mr Obama's proposed targets for alternative energy use, saying "let's not kid ourselves".
Under the previous chairman, Lee Raymond, Exxon took a belligerent approach to environmental protest, dismissing man-made climate change as a fantasy, and his $400m (£264m) retirement package in 2006 aroused major controversy. Greenpeace called him the Darth Vader of climate change.
Since his appointment, Mr Tillerson has largely sought to strike a more amenable public relations stance, stressing the work that Exxon has done to reduce emissions from its own operations and the new technologies it is selling to help businesses use fuel more efficiently.
Yesterday, Greenpeace challenged ExxonMobil to come up with a detailed proposal for a carbon tax high enough to significantly reduce demand for its products.
China National Petroleum Corp. signed a $1.76 billion contract with the National Iranian Oil Co. to develop an oil field in western Iran, the Mehr News Agency reported, citing a signing ceremony yesterday.
The North Azadegan field holds six billion barrels of oil, the news agency reported. China National, parent of PetroChina Co., will develop the field in two phases, it said.
The agency said the agreement is a blow to the U.S. government and its allies, which had been discouraging investment in the Iranian oil industry.
Heritage Oil announced details of a large oil discovery in Uganda yesterday, which the company claimed could be the largest onshore discovery in sub-Saharan Africa.
Heritage said that its latest discovery – Giraffe1 – in the Lake Albert region, could total at least 400 million barrels of oil.
However, Paul Atherton, chief financial officer, told The Times that the wider field it was developing, dubbed Buffalo-Giraffe, had several “billions of barrels of oil in place”, although it was unclear how much of this would be recoverable.
He said that the field, which is 9,000 square kilometers in size – or six times the size of Greater London – was unquestionably the largest onshore discovery made in sub-Saharan Africa in at least 20 years, possibly ever.
Mr Atherton said that of the 18 wells the company had drilled in the basin so far, all had produced oil. “Clearly the entire basin is full of oil,” he said. “It’s a world-class discovery, the most exciting new basin in Africa in decades.”
Previously, the largest onshore fields discovered in sub-Saharan Africa were at Rabi-Kounga in Gabon, where 900 million barrels were found in 1985, and at Kome in Chad, where 485 million barrels were found in 1977.
Mr Atherton said that it would take at least another three years to start commercial production. The crude could be exported by road or rail, he said, but analysts believe that the most practical solution would be to build an 806-mile pipeline to take it to Kampala, Uganda’s capital, and then the Kenyan coast. The pipeline would need to be heated and designed to traverse swampy and mountainous land. It would cost an estimated $1.5 billion (£1 billion) to complete.
Heritage and its partner Tullow Oil, which also has a 50 per cent equity stake in the project, would need to demonstrate that the field could produce at least 400 million barrels of oil to justify the cost of building such a pipeline. Richard Griffith, an Evolution Securities analyst, said the latest discovery “thrashed” this commerciality threshold.
Costs in the oil and gas industry have begun to fall for the first time this decade, bolstering the profits of companies hit by the steep drop in the price of crude.
The shift could add to pressure on oil prices, which had been supported by soaring production costs.
Analysts have argued that those costs put a floor under the oil price, because if the price fell below production cost, projects would be cancelled and oil supply would be cut.
The leading survey of the industry’s capital spending costs, produced by Cambridge Energy Research Associates, a consultancy, is set to show a decline for the fourth quarter of last year, the Financial Times has learnt.
Costs began to pick up rapidly in 2005 and by early 2008 had doubled, driven up by shortages of materials, equipment and staff. The average salary for a geologist with 20-24 years of experience went from $113,000 in 2005 to $167,000 last year, according to the American Association of Petroleum geologists In the third quarter, costs were still rising at annual rates of 19 per cent in the upstream industry – oil and gas production – and 12 per cent in the downstream refining industry, according to the IHS CERA index. Now costs have fallen back, and are expected to decline further.
Candida Scott of CERA said: “They are going to go down in 2009. Oil and gas, which are used as inputs, concrete, steel... they have all been falling in price.”
Lower steel prices – they have fallen by more than 50 per cent since last summer – are particularly significant: steel typically accounts for 20-25 per cent of an oil project’s costs.
Ms Scott said labour costs were generally hard to cut, but there were already signs that staff shortages were starting to ease.
Schlumberger, the world’s biggest oil services company, revealed last week it was cutting 1,000 jobs in North America from its 84,000 global workforce.
Other oil services companies such as Halliburton have also indicated that they may cut jobs.
The pattern of the decline in global activity is uneven, with the US and Canada the worst-affected because of a slump in natural gas prices. But Kevin Norrish of Barclays Capital argued that output cuts from the Organisation of the Petroleum Exporting Countries and falling output from countries such as Russia and the UK would begin to reverse the decline in price.
“We think energy prices will go back up again in the second half of the year, which will mean the industry’s costs go back up again,” he said.
The agency advises industrialised countries on energy policy and the downgrading of Russia's credibility as a gas supplier is intended to put pressure on Moscow.
"Russia has cut off its status as being a reliable gas supplier to Europe," said Fatih Birol, the IEA's chief economist.
"The Russia-Ukrainian gas crisis is another wake up call to EU countries to restructure their energy issues."
The European Union meanwhile said that it will send a low-ranking delegation to Moscow for an East-West energy crisis summit at the weekend.
European Commission officials and Brussels diplomats are resisting calls for EU leaders to respond to a Russian "summons".
The EU is also concerned that the Moscow meeting, called by Pesident Dmitry Medvedev, is a delaying tactic as gas supplies to Europe via Ukraine continued to be blocked for an eighth day.
"No meeting should be an excuse for not switching the gas back on," a Commission spokesman said.
Vladimir Putin, the Russian prime minister, is widely regarded by European diplomats as playing a "divide and rule game" with Europe's capitals.
Mr Putin travels to Berlin on Friday for talks with Chancellor Angela Merkel ahead of the Moscow summit.
Mrs Merkel, who was holding talks with Gordon Brown, the British Prime Minister, in Berlin, warned Moscow that gas supplies must immediately be resumed by the Russian energy monopoly Gazprom.
"I think there is a risk that confidence in Russia could be lost in the long run," she said.
President Medvedev's call for leaders from all countries which import or transit Russian gas to meet in Moscow has been greeted with a lukewarm response from the EU.
In a pointed gesture, the Commission and Czech EU presidency have agreed to send a delegation of senior officials and a minister, rather than top-level representatives or national leaders.
Individual EU member states are not expected to send representatives amid fears that Russia is trying to break European unity by picking off countries one by one.
"We do not want to encourage the idea that the Russian president can summon EU prime ministers or presidents to Moscow," said a European diplomat.
Yulia Timoshenko, the Ukrainian prime minister, has agreed to meet Mr Putin in Moscow on Jan 17 to try and resolve the gas dispute over prices that's disrupted shipments to Europe for over a week.
EU monitors confirmed that Russia was still failing to restores gas supplies.
"There is no flow of gas this morning at entry point," said a Commission official.
During a telephone call to Mrs Merkel, President Viktor Yushchenko of Ukraine promised to allow the transit of Russian gas as soon as Moscow provides the "total volume" required.
Even when Russia begins pumping gas into Ukrainian transit pipelines again, Europe will remain vulnerable to supply disruptions.
Ukraine and Russia are no closer to clinching a gas supply deal for 2009 than they were when last-minute talks collapsed on New Year’s eve.
Oleh Dubyna, chief executive of Naftogaz, Ukraine’s state gas company, left empty-handed from talks with Gazprom in Moscow on Saturday – the first since the start of the year.
“Unfortunately, the talks with Gazprom have finished with nothing,” he said.
The escalation of the dispute appears to have hardened Russian determination to wring higher gas prices out of Ukraine.
For its part, Ukraine is holding out for higher gas transit fees while threatening to annul a long-term contract governing the transport of gas across its territory signed in 2006.
At the end of the year the spread between Gazprom’s asking price of $250 per 1,000 cubic metres of gas and Ukraine’s offer of about $200 was fairly narrow.
But Gazprom now insists on increasing gas prices to $450 per 1,000 cu m from $179.50 last year.
In what could signal a breakthrough, Vladimir Putin, Russian prime minister, said at the weekend Gazprom would increase gas transit payments to Ukraine from $1.7 per 1,000 cu m of gas to $3.4, if Ukraine agreed to pay a market price for supplies.
At the heart of the dispute lies Gazprom’s resolve to end decades of energy subsidies for its former Soviet neighbours.
Ukraine accepts that prices must rise to European levels but demands that Moscow sticks to a three-year adjustment period agreed last October.
The dispute over transit also has its roots in the collapse of the Soviet era with Gazprom resenting being beholden to Ukraine for access to pipelines it once built and controlled.
Moscow and Kiev are also at loggerheads over the role of RosUkrEnergo, a little know trading company, in Ukrainian gas trade.
Both Putin and his Ukrainian counterpart Yulia Timoshenko have championed RosUkrEnergo’s removal from the Ukrainian gas business.
RosUkrEnrgo’s ownership complicates the issue. The Swiss-based company is 50 per cent owned by Gazprom with remaining shares allegedly held by Ukrainian businessmen.
British gas prices rose today as it remained unclear when Russian supply would reach Europe and stocks fell as a result of the dispute.
Gas for tomorrow was up 0.75 pence at 62 pence per therm by 10:15 a.m. British time, today rose 3 pence to 61 pence and February climbed 2.05 pence to 59.50 pence.
"There's a risk this may go on a lot longer," said a trader, referring to the gas dispute between Russia and Ukraine, which has left much of Europe without Russian gas for one week now.
"There's pretty heavy (stock) withdrawl everywhere on the continent and also in the UK. The UK exports as well."
Prompt gas prices climbed, despite the long system. There was plenty of supply via major terminals, including Easington, which saw some slowdown in Norwegian supply earlier this week.
Major storages in the country, such as Rough and Isle of Grain, were also adding the supply, while exports continued via Interconnector.
Data from the Interconnector showed 274,855.4 Megawatt hours of exports were scheduled for Wednesday. Exports totalled 514,191.7 Megawatt hours on Tuesday, a lot more than initially expected, and against 522,350.8 a day earlier.
Two European Union states, cut off for a freezing week by the row, launched missions on Wednesday to plead for Russian gas flow to be restored.
In the power market, prices were firm as stronger gas and oil prices offset comfortable supply margins.
Baseload electricity for Thursday stood at about 57 pounds per megawatt hour, compared with about 55.50 pounds of day ahead late on Tuesday. February was up 1.66 pounds at 57 pounds.
Fears were raised yesterday over a decision to restart a potentially dangerous decommissioned nuclear power plant in the centre of Europe because of a shortage of gas caused by Russia’s dispute with Ukraine.
Slovakia, defying undertakings given when it joined the European Union, said that it would reactivate a Soviet-style nuclear generator that has a record of safety problems because it had received no Russian gas since last Thursday.
Russia again found a reason to delay turning the taps back on yesterday, despite an agreement brokered by Mirek Topolanek, the Czech Prime Minister, on behalf of the EU, which was signed by Russian and Ukrainian leaders at the weekend.
President Medvedev said last night that the agreement allowing EU monitors to check on the flow of gas was no longer valid because Ukraine had attached a hand-written document contradicting the deal.
Twelve countries continued to receive no Russian gas as a result of Moscow’s claims that Ukraine was stealing supplies being piped across its land to other parts of Europe. Russia stopped deliveries of gas to Ukraine on New Year’s Day after a row over unpaid bills and new payment rates, and turned off all supplies through Ukraine last Wednesday.
Slovakia’s decision to reactivate the Jaslovske Bohunice plant prompted ferocious criticism from its nonnuclear neighbour Austria, which insisted on the generator’s shutdown as a condition of allowing the country into the EU in 2004. However, Robert Fico, the Slovak Prime Minister, defended the decision, saying that his country could not afford to have energy problems. He acknowledged that his Government was breaching the EU accession agreement, but said: “This is happening at a time of crisis. I would even compare the move we made today to the state of extreme emergency.”
The nuclear power station was switched off on December 31 and will take a week to reactivate. A spokeswoman in Brussels said that the accession agreement included a provision to restart the plant in case of national emergency, and Slovakia would formally request this at a crisis meeting of EU energy ministers in Brussels today.
Michael Spindelegger, Austria’s Foreign Minister, said that the danger of the Soviet-era reactors “must not be underestimated” and called for an investigation to determine whether Slovakia was really in a state of emergency.
The head of the Austrian Green Party, Eva Glawischnig, said: “The reactor is considered one of the three most dangerous nuclear facilities in Europe. To reactivate it means to put people in danger, and not only in neighbouring Austria.”
Bulgaria has also signalled that it is considering reactivating mothballed Soviet-era reactors because the gas crisis has left them without sufficient energy.
Germany's two largest power companies joined forces yesterday and announced an ambitious plan to build at least four nuclear reactors in the UK at an estimated cost of £20 billion.
The plants, the first of which is set to enter service within ten years, will provide at least six gigawatts of new generating capacity, the equivalent of 10 per cent of the generating capacity of all Britain's existing power plants.
E.ON and RWE, which jointly operate three nuclear stations in Germany, are expected to propose building at Wylfa, on Anglesey, where RWE has recently been granted approval for a connection to the National Grid, and at Oldbury, beside the River Severn in Gloucestershire, where E.ON has obtained similar permission.
Paul Golby, chief executive of E.ON UK, said that the 50-50 joint venture would also explore the possibility of building reactors on other nuclear sites. These could include former British Energy sites such as Bradwell, in Essex, and Dungeness, in Kent, which EDF, British Energy's new owner, may dispose of in the months ahead.
The Government, which has been eager to foster competition in the market for nuclear new build after EDF's £12.5 billion takeover of British Energy, welcomed the announcement. Mike O'Brien, Minister for Energy, said that it was good news for Britain and offered proof that new nuclear plants were an attractive investment.
The joint approach would help both companies to reduce the risk and to exploit shared expertise and available funding, Dr Golby said. It could lead to the construction of nuclear plants with the same, or possibly greater, electrical power than EDF's proposal to build four new reactors on two sites formerly owned by British Energy. These are expected to be at Hinkley Point, in Somerset, and Sizewell, in Suffolk.
In a blow for Areva, the French nuclear reactor designer, E.ON and RWE backed away from a commitment to any specific technology, despite an earlier memorandum of understanding signed by E.ON to back Areva's EPR reactor design, which has been picked by EDF for the four reactors that it plans to build in Britain.
The decision represents a victory for Toshiba-Westinghouse, the Japanese-owned reactor designer, whose AP1000 is in competition with Areva's EPR. RWE is understood to be minded to back the Japanese reactor.
The Government will be on stronger ground today when the focus turns to the potential for creating thousands of “green collar” jobs.
Britain's ageing energy infrastructure is falling apart. Replacing our crumbling, dirty power stations with modern nuclear reactors, wind and tidal power schemes will be a huge challenge. It also represents a great opportunity.
At a cost of at least £100 billion over the next ten years, their construction will provide work for hundreds of thousands of people.
At the same time, the export market for clean energy is just opening up, as governments around the world pass legislation that will force them to slash their carbon emissions.
The sad truth is that, despite a strong science base at universities and a handful of world-class businesses, British companies have not led the way. The Government may have ambitious plans to ring the country with offshore windfarms but the big turbine manufacturers are Germany's Siemens and Denmark's Vestas.
Back in the 1950s and 60s, Britain's nuclear industry led the world but it has since been carved up between the French and the Japanese.
In an effort to prevent us missing out again, the Government is joining some of Britain's biggest companies in a £600 million scheme called the Energy Technology Institute (ETI), more details of which will be announced today.
The credit crunch has left small companies and universities working in renewable energy starved of funding. The ETI hopes to fill some of that gap. It should be money very well spent.
A market worth more than £50bn will be created for new wind, wave and tidal power equipment in British waters by 2020, the head of the new government-backed energy research and development group has said.
David Clarke, chief executive of the Energy Technologies Institute, will on Tuesday launch the first four projects backed by the group, which aims to encourage the commercial development of low-carbon energy sources including renewables, electric vehicles and power stations that capture and store carbon dioxide emissions.
The ETI, based at Loughborough University, is still backed by just six companies instead of the 11 that the government hoped for. Each company has promised to contribute £50m over 10 years.
Mr Clarke told the Financial Times it was “clearly challenging to find new partners in the present climate”.
However, he added that the ETI was “in discussion with a number of groups” and it would be easier to persuade them to sign up now that there was so much emphasis on low-carbon industries as a source of future jobs and economic growth.
Creating jobs and developing a UK manufacturing base in energy industries is not the principal objective of the ETI, which has been set up to develop new sources of energy supply for consumers.
Four of its six members have foreign parents – Royal Dutch Shell, Eon of Germany, EDF of France and Caterpillar of the US – and the other two, BP and Rolls-Royce, are UK-based multinationals. Moreover, the companies that receive grants from the institute need not be British.
However, Mr Clarke, who attended Gordon Brown’s jobs summit on Monday morning, said it would be “a great bonus” if the ETI could help create a thriving UK industry in both manufacturing and servicing products such as wind turbines.
He estimated that to meet government targets, about 4,000 offshore wind turbines and 2,000 wave or tidal power devices would have to be installed by 2020, at a cost of £50bn or more.
He added: “The sheer volume of the change that we are talking about in the UK energy system is so great that the number of jobs involved is bound to be very significant.”
The first four projects to be unveiled today, three in offshore wind and one in wave or tidal power, will receive a total of £60m in funding from the ETI.
Its target is to find ways to cut the cost of these relatively expensive sources of electricity so that they can better compete with coal and gas-fired power stations.
The international body that advises most major governments across the world on energy policy is obstructing a global switch to renewable power because of its ties to the oil, gas and nuclear sectors, a group of politicians and scientists claims today.
The experts, from the Energy Watch group, say the International Energy Agency (IEA) publishes misleading data on renewables, and that it has consistently underestimated the amount of electricity generated by wind power in its advice to governments. They say the IEA shows "ignorance and contempt" towards wind energy, while promoting oil, coal and nuclear as "irreplaceable" technologies.
In a report to be published today, the Energy Watch experts say wind-power capacity has rocketed since the early 90s and that if current trends continue, wind and solar power-generation combined are on track to match conventional generation by 2025.
Rudolf Rechsteiner, a member of the Swiss parliament who sits on its energy and environment committee, and wrote today's report, said the IEA suffered from "institutional blindness" on renewable energy. He said: "They are delaying the change to a renewable world. They continue touting nuclear and carbon-capture-and-storage, classical central solutions, instead of a more neutral approach, which would favour new solutions."
Today's report compares past predictions about the growth of wind power, made by the IEA and others, with the capacity of wind turbines actually installed.
It says: "By comparing historic forecasts on wind power with reality, we find that all official forecasts were much too low."
In 1998, the IEA predicted that global wind electricity generation would total 47.4GW by 2020. This figure was reached in December 2004, the report says. In 2002, the IEA revised its estimate to 104GW wind by 2020 – a capacity that had been exceeded by last summer.
In 2007, net additions of wind power across the world were more than four-fold the average IEA estimate from its 1995-2004 predictions, the report says. "The IEA numbers were neither empirically nor theoretically based," it says.
The IEA's most recent forecast, in its 2008 World Energy Outlook, predicts a fivefold increase in wind energy from 2006-2015, but then assumes a rapid slowdown in deployment over the following decade. The Energy Watch report calls this a "virtual stagnation" and says "no arguments are given why the wind sector should suffer such a crisis by 2015 and after".
The report concludes: "The IEA outlook remains attached to oil, gas, coal and nuclear, and renewables seem to have no chance to reverse this trend. This organisation… has been deploying misleading data on renewables for many years [and is still doing so]."
It adds: "One has to ask if the ignorance and contempt of IEA toward wind power and renewables in general is done within a structure of intent."
Mr Rechsteiner, who says he has investments in a handful of wind turbines, said the IEA routinely drew senior staff from the fossil-fuel industry. "The oil business is very skilful in keeping its energy access exclusive," he says.
The IEA describes itself as an "intergovernmental organisation which acts as energy policy advisor to 28 member countries in their effort to ensure reliable, affordable and clean energy for their citizens". It refused to comment on today's report. The Energy Watch group is run by the Ludwig Bölkow Foundation in Germany.
John Hemming, the Liberal Democrat MP for Birmingham Yardley and a member of the Energy Watch group, said: "The IEA has been complacent, and part of the conventional wisdom that the solution is more oil and gas. The British government relies on the IEA. In the land of the blind, the one-eyed man is king — but the IEA's one eye has a cataract."
Today's report says the number of wind turbines installed over the last decade has grown by 30% annually, and total windpower capacity is more than 90GW – the equivalent of 90 conventional coal or nuclear power stations. It adds that the boom in wind energy is "so far barely touched by any sign of recession or financial crisis".
If current trends continue, the report claims wind capacity could reach 7,500GW by 2025 – making half of all new power projects wind or solar. Conventional power stations could be phased out completely by 2037, it claims.
Werner Zittel of the Energy Watch group, said: "It is time to realise that the many detractors of wind energy have got it wrong. We have seen more than 10 years of unprecedented growth in this sector… This is not about morals or environment but the commercial reality that wind, coupled with hydro, solar, biomass and geothermal energy is not only a rapid and cost-effective alternative, but one that could deliver all our energy requirements within the first half of the century."
In medieval England, peasants were allowed to collect as much deadwood as they wanted from the royal forests - just so long as they could reach it "by hook or by crook". But the rapidly rising number of households now turning back to the forest for fuel, to protect the environment, or to simply make a lifestyle statement are finding a supply chain of this renewable, carbon-neutral fuel far more complex.
Despite the fact that Britain is now more than 10% wooded, an unprecedented increase in demand last year both for logs and woodburners - triggered largely by soaring energy prices - has caught stove manufacturers and log suppliers on the hop. It has also highlighted our profligacy. Of the 7.5m tonnes of waste wood that currently ends up in landfill every year, some 30% is of burnable quality, says the Forestry Commission.
Exeter-based Stovax, one of the UK's largest woodburning stove makers, says demand increased 50% in the last three months of 2008 compared with the same period in 2007, with a fair proportion of it coming from urbanites happy to burn wood products that do not emit smoke. Stovax's managing director, Morley Sage, reports "bulging order books".
Britain grows up to 1m tonnes of domestic firewood per year, according to the Forestry Commission, but we also import up to 180,000 tonnes of wood and wood products. The 25% to 30% increase in demand for logs year-on-year is proving hard to satisfy, says Vince Thurkettle, a forestry and woodland consultant. He believes that the shortage of good-quality, seasoned hardwood logs such as ash, beech and oak has, in the last three months, led to profiteering among suppliers.
"My own research suggests that prices are up by a third on this time last year, and there is a new generation of rogues trading in the type of unseasoned or 'green' wood that produces practically no heat, and spits at you into the bargain," he says.
While £35 will currently buy you a single "load" of logs in East Sussex - not so much a scientific or specific term as the amount that the local woodsmen can carry in their pick-up trucks - the same "load" will cost around £65 in Oxfordshire and as much as £95 in parts of the north and the west country, says Thurkettle, who fears that prices will continue to rise this year.
In some areas, supplies of good logs are now so sparse that traders are being forced to buy logs from hundreds of miles away - Kent, Surrey and Sussex being three of the favourite hunting grounds - or even to ship them in from eastern Europe.
"The dramatic upturn in demand for firewood is fantastic news in many senses because, in theory, we have so much of this resource that it is hard to see it ever running out," Thurkettle says. "Yet after so many years of relying on coal and gas to provide most of our energy needs, we have lost the art of effective woodland management. Until we relearn how to assess, manage, cut, store and burn exclusively local wood, we will continue to squander the potential of our woodlands."
His views are echoed by those of the Forestry Commission, which, while welcoming the wood comeback, fears that it exposes 50 to 60 years of undermanagement by private landowners, as well as woefully out-of-date statistics. "This is an ad hoc, 'man and boy' operation in most areas of the country and we are still relying on inadequate guesstimates in assessing our future needs," says Geoff Hogan, information officer at the commission's Biomass Energy Centre.
"If you're lucky enough to have your own woodland, or if your farmer neighbour has just felled a couple of trees and become a short-term supplier, it's good news for you, but nothing goes on the books and the official stats remain well short of the true figure. What we do know for certain, though, is that demand for woodfuel is rocketing and that its effects on the environment are negligible when compared to the harm caused by burning oil or gas - even if [the wood] is transported by road or sea."
Ensuring that there is enough quality, seasoned wood to go around is becoming trickier, Hogan says. "If we don't manage woodlands, they become inaccessible to human beings, and instead of supporting a whole array of plants, including bluebells, we get nothing but oak trees that can't easily be converted into fuel."
The commission controls just 827,000 hectares of British woodland - compared with the 2m hectares owned by the private sector, the Crown, local authorities, big government departments and charities - the current problem of scarcity, Hogan says, cannot be laid at the commission's door. "We harvest 99% of our woodland because we believe that this is the best way of both protecting and utilising it," he says. "But until the private sector wakes up to the fact that wood can be a valuable product, under-supply will remain a problem."
Convinced that the new love affair with wood is a long-term phenomenon rather than a temporary dalliance, the government's current woodfuel strategy for England aims to bring another 2m green tonnes of wood to the market by 2020 - enough to heat around 250,000 homes.
While this represents less than 50% of the potential unharvested firewood already available in privately owned English woodlands, Hogan agrees that it "it is an important start". He says: "Having seen just how uncomfortable it is to be at the mercy of oil producers living thousands of miles away, the only sensible option for many people is to choose a carbon-neutral fuel that can, if we act sensibly, be sourced locally from people who may well be neighbours, and who will recirculate their profits back into the local economy."
But the idea of sourcing logs outside Britain worries farmer Chris Eglington, owner of Thetford-based Ugly Sticks, which has until recently supplied much of Norfolk with firewood. He can't now supply his customers during the winter months due to lack of good quality, well-seasoned dry wood.
"Although I have recently been offered a new supply of wood direct from Poland, and this is still better for the environment than burning fossil fuel, I feel that if I am not able to source my logs locally, I may as well shut up shop altogether," he says.
Below Ross Davidson’s feet, the ground is sinking. But the boss of the Brogborough landfill, on the outskirts of Milton Keynes, isn’t worried that the ankle-deep mud will swallow him up.
It’s a gradual process. Every year, the largest repository of waste in western Europe sinks by about a metre as 25 years of binbag waste putrefies deep underground. Like a tray of tomatoes left out for too long, the 43m tonnes of accumulated muck breaks down into liquid, inorganic solids and methane gas.
Brogborough stopped taking waste a year ago and has since been covered with a thick layer of clay, but it will be decades before the decomposition runs its course. It is up to Davidson to keep the gurgling, seething mess under control. The black, foul-smelling liquid must be siphoned out constantly so that it doesn’t pollute the water table, and underground fires set off by chemical reactions must be smothered. Most importantly, the methane has to keep flowing because Brogborough, though it may not look it, is a gasfield.
More than 550 “wells” have been drilled into the site, their black plastic heads poking out from the mud and willowy grass. Each of them is linked to a central suction system that draws the gas generated by natural decomposition into an adjoining power station. The flow is enough to feed a line of gas-fired engines, two of which originally powered the QE2 across the Atlantic. They generate enough electricity to light 26,000 homes.
It is a set-up that any big power company would dream of. The site is big — 70 metres at its deepest point and covering an area equal to about 250 football pitches. This year it will generate about £18m in revenue for Infinis, the renewable-energy firm, but it costs only about £2m a year to maintain.
It helps that the fuel is free. Using current technology, there is enough gas underground to power the station for another decade at least. For Guy Hands, whose buyout firm Terra Firma owns the business, it’s easy money. Overall, Infinis, Britain’s biggest generator of power from so-called landfill gas, will pocket profits of £55m on £110m in revenue from the 80 sites it oversees around the country.
Yet there is a problem for the landfill business. It is dying. Owing to a combination of rocketing landfill taxes, an increasing aversion to burying garbage in these environment-conscious times, and generous subsidies for new technologies that convert rubbish into energy, Brogborough is the last of its breed.
An entirely new industry of high-tech metabolising plants and digestors is emerging to take its place. These sites are designed, essentially, to do what Brogborough does, but above ground and much quicker and more cleanly. “The great advantage of the new technologies is that instead of waiting for 40 years for this stuff to release its calorific value, we can get it in a week,” said Alan Lovell, head of Infinis.
By 2010, the amount of waste sent to landfill in the UK must be reduced by 25% from 1995 levels under the EU landfill directive. By 2013, it must be cut in half. This is a big challenge: in 2006 the UK sent 65m tonnes of waste to landfill, or more than a tonne per person. AMA Research, a consultancy, estimates that the UK will have to spend up to £30 billion to build the infrastructure to handle what, for decades, has been buried.
“In the past year there has been a sea change in the UK,” said Andy Street, head of SLR, Britain’s largest waste-energy consultancy. “When security of energy supply has become such an issue, it is sensible to get what we can out of waste. Waste isn’t waste. It’s a resource.”
Every year J Sainsbury dumps the equivalent of the Titanic into landfill — about 80,000 tonnes. Most of it, about 70,000 tonnes, is food waste such as ready meals, stale bread and spoilt fruit. By this summer, the supermarket giant expects to be sending no food waste to landfill.
It sounds ambitious, but Lawrence Christiansen, the supermarket giant’s green guru, has a plan. For the past five months Sainsbury has been testing a programme it plans to roll out across the company over the next two years. Instead of sending lorryloads of organic waste from its Northamptonshire distribution centre and 38 surrounding stores to landfill, the company has been trucking it to an anaerobic digestor operated by a small company called Biogen Greenfinch.
Mr Hoon told MPs that the Government believes the new runway is justified on economic grounds, despite a chorus of environmental objections.
Green groups and dozens of Labour MPs are strongly opposed to the decision, but Mr Hoon said it was vital to "ensuring that this country remains an attractive place to do business."
Business leaders support a new runway but environmentalists say it would encourage more flights and increase Britain's carbon emissions. Some residents in west London and Berkshire also worry that expansion will mean more aircraft noise.
David Cameron's Conservatives oppose a new runway and have pledged to halt the expansion if they win the next election. A high-speed rail link from London to the north of England should be built instead, the Tories say.
Gordon Brown, speaking on a visit to Berlin, insisted that the decision is in the best long-term interests of the UK economy.
"It is always our desire to make sure that we protect the economic future of the country while at the same time meeting the very tough environmental conditions that we have set ourselves for noise and pollution and for climate change," he said.
Despite the Prime Minister's strong support, the decision faced significant opposition in the Cabinet.
Hilary Benn, the Environment Secretary, Ed Miliband, the Climate Change Secretary, and Douglas Alexander, the International Development Secretary, all spoke against the expansion at a Cabinet meeting earlier this week.
As a result of that pressure and a rebellion by more than 50 Labour backbenchers, Mr Hoon agreed to a series of environmental safeguards and sweeteners.
There will be a new high-speed rail link from central London to Heathrow, and ministers will look at a new high-speed rail network from the capital to northern England and Scotland.
Flights from the new runway will also have to meet stricter standards on carbon emissions and noise.
Labour opponents also said that the number of take-off slots on the new runway would be much lower than BAA, Heathrow's ower, and the airline companies had wanted.
"They've only got half a runway," said a Cabinet critic of expansion. "That is a big concession to our side. This package has been significantly changed in the last week because people spoke out."
Plans to build vital facilities to help Britain secure its energy supplies at a time of increasing fears about reliance on Russian gas are in doubt as a result of the credit crunch, energy groups warn.
Stag Energy says the credit crunch is making it harder to raise the £600m for the Gateway project to build a storage facility beneath the Irish Sea. It received planning permission for the project in November.
The UK has storage capacity of about 4% of average annual consumption, or about 14 days' worth. This compares to Germany's reserves equivalent to 21% of annual consumption and France's 24%.
This makes the UK, which imported about 40% of its gas last year, more vulnerable to supply disruptions. As North Sea output declines, Britain is expected to import up to 80% of its gas by 2015.
The aim of the Gateway project is to construct 19 underground caverns to store 1.5bn cubic metres of gas, or about five days' supply of UK consumption.
Last week the energy industry wrote to the government to warn that it was currently uneconomic to build storage facilities unless tax breaks were granted. Only a handful of storage projects have made it to the construction phase.
Stag Energy has appointed the investment bank Lazard to find a partner willing to stump up the finance in return for the right to use the facility. Stag claims to be in negotiations with six companies, but one of the potential investors mentioned told the Guardian that it had not had any contact with Stag since March. George Grant, managing director of Stag Energy, admitted: "One has to say that the credit crunch is having an impact across the board. It's too early to say definitely whether there will be a delay or not."
In November, another storage developer, Portland Gas, admitted that it was suspending plans to build a £500m, 1bn cubic metre facility in Dorset. The company hopes to secure funding this year.
Andrew Hindle, chief executive, urged the government to consider introducing a storage obligation on gas suppliers to speed up construction. This would require suppliers to store a proportion of their gas in the UK. "A storage obligation exists in some countries in Europe and it is being looked at by the EU," he said.
"It could be the solution to ensure that there is enough storage built in Britain."
In a letter last week to Revenue & Customs, a group of utility companies including EDF, Portland Gas and Centrica complained that because they did not know the price of gas in five years' time - the time it takes to develop a facility - it was hard to raise the financing. Referring to the dispute over gas supplies between Russia and Ukraine, they said: "This acts as a timely reminder of supply risks that now face the UK."
Five years ago, the regulator Ofgem predicted that the UK would have built 10bn cubic metres of capacity by the end of the decade. But the current capacity is only about 4.3bn cubic metres.
Ed Miliband, secretary of state for energy and climate change, is understood to be looking at the issue.
Business leaders warn of 'bleak' 2009
Business leaders have painted a bleak picture of the UK economy, with a survey suggesting a "frightening deterioration" towards the end of 2008.
The British Chambers of Commerce (BCC) said its survey results were "awful" and the worst since it began in 1989.
Elsewhere, a separate report suggested it had been the worst December for UK retail sales in at least 14 years.
On 23 January, official figures are set to confirm the UK is in recession with six months of negative growth.
The British Retail Consortium figures on sales from the High Street and online said that like-for-like sales in December were down 3.3% on a year ago while total sales shrank 1.4%.
This made for the worst December since the survey began in 1995.
Some High Street retailers, including Sainsbury's and Greggs, have been reporting strong Christmas trading - suggesting that the economic picture is not yet entirely bleak.
But food retailers were almost the only sector to show growth, the BRC said, amid what it described as "truly awful numbers".
"Non-food retailers had a torrid December despite a blizzard of promotions and deals, which would have hit margins," the BRC's director general Stephen Robertson said.
"Many hard-pressed customers couldn't be seduced into spending."
The BCC report, based on a survey of almost 6,000 firms which employ 680,000 people, pointed to plunging domestic demand, falling exports and plummeting confidence in the last three months of 2008.
"It is clear that the UK economy is facing a very serious recession, and the downturn is deepening at an alarming pace," said the BCC report based on a survey of almost 6,000 firms which employ 680,000 people.
"The results highlight a frightening deterioration in the UK economic situation."
Its latest survey - which covered the last three months of 2008 - showed "no positive features" it added, with both the manufacturing and service sectors worsening.
Manufacturing, home sales and orders, employment expectations, investment, confidence and cash-flow have all hit record lows.
In the service sector, every key area was at a new low.
BCC director general David Frost called for a national recovery plan to be "rolled out as soon as possible".
"These are truly awful results with the scale and speed of the economic decline happening at an unprecedented rate.
"Quite frankly the last time I saw anything of this magnitude of decline was when I worked in the west Midlands in the early 1980s," he said.
"The sheer scale of this comes as a surprise to many of us."
The BCC's chief economist David Kern said that he now expected the UK economy to shrink by up to 2.4% in 2009, rather than the 2.2% he had earlier forecast.
"One must say that unfortunately in terms of GDP this recession is worse than in the 1990s," he said.
But he added it was not worse than the 1980s so it was still possible "to avoid a prolonged depression."
Last week the Bank of England cut the cost of borrowing from 2% to 1.5% - the lowest since the Bank was founded in 1694.
Mr Kern said more rate cuts were likely, but that the authorities would have to go further to avoid a prolonged depression, including printing more money.
"The MPC is running out of conventional bullets," he added.
The suggestion that investment in factories and machinery was at record lows was particularly worrying, said Ross Walker, chief UK economist at Royal Bank of Scotland.
This indicated that private sector firms would see their capacity for recovery hindered when the UK came out of economic crisis he said.
The number of passengers travelling through Britain's major airports dipped last year, figures out today showed.
The seven UK airports run by the BAA company, which include Heathrow, Gatwick and Stansted, handled 145.8 million passengers in 2008 - a drop of 2.8% compared with 2007.
At 66.9 million, the number of passengers using Heathrow airport last year was down 1.4%, while Gatwick dipped 2.8% and Stansted fell 6%.
The government is due this month to decide whether to give the go-ahead to expansion at Heathrow in the form of a third runway and a sixth terminal.
Expansion would increase the number of air transport movements (take-off and landings) from around 480,000 a year to 702,000.
Today, BAA announced that air traffic movements at Heathrow had dipped by 0.5% in 2008 to a total of 473,139.
There was a fall in passenger numbers last year at all four of BAA's other UK airports, with Southampton down 0.8%, Glasgow dipping 6.8%, Edinburgh declining 0.5% and Aberdeen going down 3.5%.
The figures for December alone showed that the seven airports handled 10.18 million passengers - 6.9% down on the December 2007 total.
Heathrow numbers last month were down only 2.3%, but Gatwick passenger numbers fell 13.8%, while Stansted was down 13.0%, Southampton fell 5.4%, Glasgow decreased 10.7%, Edinburgh was down 2,5% and Aberdeen declined 3.2%
In the individual sectors, the biggest passenger fall last year was on European and North African charter routes which were down 7.4% compared with 2007. All other sectors fell , too, with the UK and Channel Islands' traffic dropping 5.9%.
Taking December alone, the biggest fall was on European and North African charter flights where passenger numbers plunged 21.6%.
Air transport movements for December were down 5.8% compared with December 2007, while movements for the whole of 2008 were down 2.4% compared with 2007.
BAA said today: "We expect, on the evidence of historic economic downturns and the resulting effect on air traffic, that the long-term prospects for growth remain good and that passenger volumes will recover in due course."
An electric car costing only $25,000 could be on sale in Australia within three years.
The Japanese car maker used the 2009 Detroit motor show to unveil the FT-EV, a concept car that previews a new battery-electric "urban commuter" vehicle set to go on sale globally in 2012.
US media is reporting the diminutive FT-EV could wear an affordable price tag of about US$20,000 (about $25,000).
The FT-EV will see Toyota join the growing number of manufacturers who in the early years of the next decade will offer vehicles that run on electricity.
The FT-EV is based on Toyota's iQ micro-car that landed in European and Japanese showrooms in 2008, though swaps that car's 1.0-litre petrol engine for a 45kW electric motor powered by a lithium-ion battery pack.
Toyota says the three-metre-long, four-seater FT-EV has a cruising range of 80km and a targeted top speed of 112km/h.
It takes between 2.5 and 7.5 hours to recharge the FT-EV, depending on the voltage of the power supply.
The company says the FT-EV will broaden its range of alternative-fuel vehicles as the world faces dwindling oil supplies, and will be aimed at city residents who would use the battery-electric car to commute between home and work, or to drive to other forms of public transport such as railway stations.
"Last year's spike in the price of petrol was no anomaly," says Toyota Motor Sales group vice president, environmental and public affairs, Irv Miller. "It was a brief glimpse of our future. We must address the inevitability of peak oil [when the world's oil supply starts a permanent decline] by developing vehicles powered by alternatives to liquid-oil fuel, as well as new concepts, like the iQ, that are lighter in weight and smaller in size. This kind of vehicle, electrified or not, is where our industry must focus its creativity."
Toyota says its petrol-electric hybrid vehicles - such as the third-generation Prius also revealed at the 2009 Detroit motor show - will continue to be at the centre of the company's long-term sustainable motoring program.
The company will introduce 10 new petrol-electric hybrid models by the early 2010s in various markets as it targets one-million hybrid sales per year.
Toyota also used the Detroit show to announce it was fast-forwarding its plug-in hybrid program from 2010 to 2009.
Towards the end of 2009, Toyota will deliver 500 Prius plug-in hybrids to global fleet-lease customers as part of a mass-production feasibility study.
The Prius plug-in hybrid (PHV) is different to the petrol-electric Prius that has become the world's best-selling hybrid. The Prius PHV can only recharge its lithium-ion battery pack through a power outlet, whereas the current Prius recharges its nickel-metal hydride battery via its 1.5-litre petrol engine.
The FT-EV won't be the first electric Toyota to go into production. The company sold an all-electric version of the RAV4 softroader in the US between 1997 and 2003.
"They have already hit zero," said Charles de Trenck, a broker at Transport Trackers in Hong Kong. "We have seen trade activity fall off a cliff. Asia-Europe is an unmitigated disaster."
Shipping journal Lloyd's List said brokers in Singapore are now waiving fees for containers travelling from South China, charging only for the minimal "bunker" costs. Container fees from North Asia have dropped $200, taking them below operating cost.
Industry sources said they have never seen rates fall so low. "This is a whole new ball game," said one trader.
The Baltic Dry Index (BDI) which measures freight rates for bulk commodities such as iron ore and grains crashed several months ago, falling 96pc. The BDI – though a useful early-warning index – is highly volatile and exaggerates apparent ups and downs in trade. However, the latest phase of the shipping crisis is different. It has spread to core trade of finished industrial goods, the lifeblood of the world economy.
Trade data from Asia's export tigers has been disastrous over recent weeks, reflecting the collapse in US, UK and European markets.
Korea's exports fell 30pc in January compared to a year earlier. Exports have slumped 42pc in Taiwan and 27pc in Japan, according to the most recent monthly data. Even China has now started to see an outright contraction in shipments, led by steel, electronics and textiles.
A report by ING yesterday said shipping activity at US ports has suddenly dived. Outbound traffic from Long Beach and Los Angeles, America's two top ports, has fallen by 18pc year-on-year, a far more serious decline than anything seen in recent recessions.
"This is no regular cycle slowdown, but a complete collapse in foreign demand," said Lindsay Coburn, ING's trade consultant.
Idle ships are now stretched in rows outside Singapore's harbour, creating an eerie silhouette like a vast naval fleet at anchor. Shipping experts note the number of vessels moving around seem unusually high in the water, indicating low cargoes.
It became difficult for the shippers to obtain routine letters of credit at the height of financial crisis over the autumn, causing goods to pile up at ports even though there was a willing buyer at the other end. Analysts say this problem has been resolved, but the shipping industry has since been swamped by the global trade contraction.
The World Bank caused shockwaves with a warning last month that global trade may decline this year for the first time since the Second World War. This appears increasingly certain with each new batch of data.
Mr de Trenck predicts Asian trade to the US will fall 7pc this year. To Europe he estimates a drop of 9pc – possibly 12pc. Trade flows grow 8pc in an average year.
He said it was "illogical" for shippers to offer zero rates, but they do whatever they can to survive in a highly cyclical market.
Offering slots for free is akin to an airline giving away spare seats for nothing in the hope of making something from meals and fees.
The items contained in this newsletter are distributed as submitted and are provided for general information purposes only. ODAC does not necessarily endorse the views expressed in these submissions, nor does it guarantee the accuracy or completeness of any information presented.
FAIR USE NOTICE: This newsletter contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material. If you wish to use copyrighted material from this newsletter for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.