ODAC Newsletter - 30 November 2012


Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre at nef dedicated to raising awareness of peak oil.

Thursday saw the long awaited UK energy bill finally presented to parliament. Energy and Climate Change Secretary Ed Davey described the bill as "good for the British economy, good for consumers, and good for the planet". So what is it good for?

The bill has been largely welcomed by the energy industry for setting an investment framework for the next decade. Nuclear and renewables get support via the new Contracts for Difference mechanism, though the contract amount and terms are yet to be set. The framework makes it pretty certain that the UK will meet its commitment for 30% of UK electricity to come from renewables by 2020. Davey claims the economy should get a boost of £7.2bn net.

There is considerable uncertainty on how hard the bill will hit domestic energy users. The government has capped the amount that can be added to bills at £7.6bn up to 2020. Davey claims that this would result in average price increases of £95/household, but that with energy efficiency measures bills will actually fall by 7% - this calculation however contains many unknowns about the real cost of new build in nuclear and renewables and the future price of gas. 

There were clear wins for the Treasury, however, including support for unconventional gas, the go ahead for unabated new gas builds, and the decision to postpone a new power decarbonisation target. The fact that gas policy is Chancellor George Osborne’s baby was made all the more obvious by the fact that the Gas Generation Strategy will be published alongside his Autumn Statement. The decarbonisation target may still be addressed in this parliament if sufficient Conservative and Liberal MPs are prepared to side with Labour in what might be shaping up into a rebellion. Tim Yeo, chair of the energy and climate change select committee, claimed that an amendment was “a real possibility". The lack of a clear direction on decarbonisation sends mixed signals to investors and leaves the door open for a growth in unabated gas power.

One of the few unexpected items in the announcement was a consultation paper on energy efficiency. Given the scale of the cost of new energy supply, and the challenge in lowering emissions, reducing energy use or investment in ‘negawatts’ is a logical step. Ideas include payments to companies for saving energy, and financial incentives for businesses and homeowners to make energy saving appliance upgrades. Damien Carrington writing in The Guardian points out that “By 2050, Germany projects a 25% drop in electricity demand: the UK projects a rise of up to 66%.” Clearly this is an area with significant potential.

One energy security issue which really gets no space in the Energy Bill is of course peak oil. In the UK oil is primarily used in transportation rather than in the power sector – in that sense it might be logical for the government to work on a transport security bill. Since this is vanishingly unlikely, how about including oil in the energy efficiency planning? The fuel duty escalator looks politically beyond repair, so how about introducing incentives to reduce business flights – that should free up capacity at Heathrow – and to run public transport on biogas?

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Disclaimers

Oil

Oil spills likely in the Arctic, admits Shell executive

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Oil Heads for First Monthly Gain Since August on Economic Growth

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U.S. will not surpass Saudi Arabia’s oil production by 2020

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High demand means world needs all of Canada’s oil: IEA

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Oversupply to depress oil prices next year

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BP banned from winning new US government contracts

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Gas

China planning 'huge fracking industry'

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Energy secretary says shale exploration won't lead to era of cheap gas

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Study says methane emissions from shale wells lower than thought

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Renewables

Severn's renewable energy capacity could be larger without a barrage

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UK

Davey hails 'once-in-a-generation' green transformation of energy market

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Yeo: the fight for a decarbonisation target is not over yet

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Energy saving finally gets serious as alarm bells wake ministers

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Ed Davey: my long battle for a 'grand energy bargain'

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Industries to be shielded from green energy costs as household bills to soar

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Europe

France's love affair with nuclear cools

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Germany legislates to help prevent power blackouts

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Greeks turn to the forests for fuel as winter nears

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Disclaimers

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