Archive for the ‘Energy’ Category

South Australian blackouts due to over-reliance on wind and solar were predicted 2 years ago

February 13, 2017

I see that in South Australia some people have been complaining about the “record” heat with temperatures of 44ºC. Of course they take this as “evidence” of global warming. Never mind that some 120 years ago without any urban heat effects and without any industrialisation, the temperature reached 48-49ºC. It wasn’t global warming then.

In any event, South Australians and their elected representatives must get used to the fact that they have only themselves – and their political correctness – to blame. Winning greenie points seems to take precedence over common sense.

The SA blackouts caused by unreliable solar and wind were predicted two years ago in the journal Transactions of the Royal Society of South Australia, and every MP in the Parliament was told.

The Telegraph: 

100,000 SA customers blacked out because of reliance on unreliable wind and solar power in our network – more than a third of SA’s generation capacity.

IT is hard to disagree with the blunt assessment of Business SA that South Australia has been caught on electricity planning like a frog in boiling water. The story goes, with mixed results in scientific experiments, that a frog suddenly put into hot water will jump out but if heated slowly it will not figure out the danger.

The state was warned of the electricity-shortage crisis – and consequent blackouts – yet ignored the warnings, according to Business SA executive Anthony Penney.

“The most frustrating aspect of this most recent event is that it was anticipated by many businesses and other energy industry experts well in advance but, like the frog in boiling water, nothing happened in time,” he says.

This week the SA frog boiled. About 100,000 customers were blacked out because of the reliance on unreliable wind and solar power in our network – more than a third of SA’s generation capacity. ……….

Ben Heard, a doctoral researcher at the University of Adelaide also runs environmental non-Government organisation Bright New World – which supports the use of nuclear – explains the problem. He says the SA blackouts caused by unreliable solar and wind were predicted two years ago in the journal Transactions of the Royal Society of South Australia, and every MP in the Parliament was told.

“Back when wind generation was providing only 28 per cent of SA’s electricity supply, we flagged the risk presented by low supply in extreme heat conditions,’’ he says. Mr Heard said it was well known that extreme heat conditions in SA were accompanied by very little wind. “Our expectation at the time was that this would make it impossible to retire other generators from the market because of the security risk. Instead, the generators were allowed to retire, we took the risk, and we have started paying the price.”

Trans. Royal Society of South Australia

sa-royal-society


Death of coal slightly exaggerated

February 4, 2017

Come 2100, I expect the world will still be using fossil fuels for around 70% of its energy needs.

19th January 2017: German court issues permit for Uniper’s Datteln 4 coal-fired power plant

The German Muenster district court on Thursday granted an emission-control permit to Datteln 4, a hard-coal fired power station under construction by utility Uniper that has been held up by an intense legal battle with environmentalists.

Uniper said it aims to begin supplying electricity and district heating from the 1,050 megawatts plant in western Germany in the first half of 2018.

Datteln 4 under construction image uniper

Datteln 4 under construction image uniper

25th January, 2017: Loy Yang B project approved

A major generator of Victoria’s coal-fired electricity is set to be expanded.

ENGIE has welcomed the Environment Protection Authority’s (EPA) recommended approach to granting statutory approval for the turbine upgrade project at the Loy Yang B power station. The approved project will see the retrofit of two turbines with a higher efficiency design to improve the station’s thermal efficiency and increase operating flexibility. The works will occur in 2019 and 2020 during planned outages.

February 1st, 2017: Japanese government planning to build 45 new coal fired power stations to diversify supply

The Japanese government is moving ahead with its plans to build up to 45 new coal fired power stations. The power plants will utilise high energy, low emissions (HELE) technology that use high-quality black coal. Japan is the largest overseas market for Australian coal producers, taking more than a third of all exports. 

February 3rd, 2017: German coal, gas plant output at 5-year high in January

  • January average coal output at 17.3 GW, highest since Feb 2012 
  • Coal, gas ramped up to offset nuclear outages, low wind, demand gains  
  • Day-ahead power average at 59-month high, spot spikes to 2008-high 

German coal and gas-fired power plant output in January rose to its highest in almost five years as cold weather boosted demand while below average wind and record-low winter nuclear availability reduced supply.

February 3rd, 2017: GE helping modernise Serbia’s largest coal-fired power plant

GE’s Power Services will complete the modernisation of Elektro Privreda Srbije’s (EPS) TPP Nikola Tesla, the largest coal-fired power plant in Serbia. 

The power plant features two, 210 MW LMZ steam turbines and four (A3-A6), 308 MW GE units. GE will provide a steam turbine full shaft line retrofit solution for high-pressure, intermediate-pressure and low-pressure turbine modules, as well as a new turbine governing controller system. In addition to the controller, the project includes GE’s advanced 3-D blades, new rotors, rotary blades, stationary blades, inner and outer casings and other associated parts. As part of the agreement, GE will commission a WT23S-106 generator unit – the largest ever installed in Serbia – at the TPP Nikola Tesla B2 site to help improve availability and reliability of the plant. …….. The operating life of the steam turbine unit – an estimated 250 000 working hours – will be extended for an additional 100 000 operating hours, and the maintenance intervals between major overhauls will be extended to nearly 10 years.


 

Trump’s choice for Energy Secretary will be a coal supporter

December 12, 2016

coal

It is reported that Donald Trump has a short-list of four for Energy Secretary. What seems clear is that whoever it is will be making coal jobs a priority. One of the four (Rick Perry) would be a fierce opponent of  all the fake science masquerading as “climate science”, while two (Heidi Heitkamp and Joe Manchin) are coal protectors rather than climate change opponents. The fourth (Ray Washburne) has been involved primarily in economic and finance matters and has (for me) unknown positions about coal and AGW. But he is from Texas and is unlikely to ignore the bottom line (which is of no consequence for the AGW orthodoxy).

Bloomberg: Donald Trump has narrowed his search for energy secretary to four people, with former Texas Governor Rick Perry the leading candidate. People familiar with the president-elect’s selection process said two Democratic senators from energy-producing states — Heidi Heitkamp of North Dakota and Joe Manchin of West Virginia — are also in the mix, along with Ray Washburne, a Dallas investor and former chairman of the Republican National Committee.

If Trump picks any of the four he’ll break with recent tradition of putting scientists at the top of the Energy Department. Among other things, the agency is responsible for policies on the safe handling of nuclear material and on emerging energy technologies.

A quick search gives the positions of the four on coal production and the global warming fantasy.

Rick PerryRick Perry said Wednesday morning that he does not believe in global warming science and suggested it is grounded in scientists manipulating data for financial gain. …….. Perry said scientists are coming forward almost daily to question “the original idea that man-made global warming is what is causing the climate to change.” He said the climate is changing but that it has been changing “ever since the earth was formed.” ……….. Perry added that “the issue of global warming has been politicized,” and argued that America should not spend billions of dollars addressing “a scientific theory that has not been proven, and from my perspective is more and more being put into question.”

Rick Perry could be expected to be quite active in cleaning out the muck in the Department of Energy Climate Change stables.

Heidi Heitkamp: I applaud the President’s efforts to address climate change and its effects. …… However, several of the initiatives introduced today by the President, while not new, amplify the Administration’s continuing war on coal and coal-fired power. While the President claims to believe in an all-of-the-above energy policy, he consistently fails to step-forward and truly commit to such a policy. Instead the Administration continues developing regulations that do nothing more than choke off good-paying American jobs, and threatening millions of Americans with the loss of a reliable and affordable energy source. Instead of taking this route, we need to find a path forward for the coal industry and coal-fired power by encouraging continued investments in new and existing technologies to further reduce emissions through clean coal technology projects including commercially scalable carbon capture and sequestration. 

Heitkamp is only concerned about jobs and will subordinate her thinking to that end. Her apparent belief in carbon capture and sequestration though suggests that her logical thinking is a little suspect. To be kind, it may just be her attempt to save coal jobs and not any strong belief in nonsense technology which which has no real purpose and which has a fundamental “floor” energy cost which makes it meaningless.

Joe ManchinSenator Joe Manchin (D-WV) went on Fox News on Wednesday to slam President Obama’s renewed push to take action on climate change.However, returning to the refrain that Obama has declared a “war on coal” appears not to be enough this time. Now, the coal-backed senator has upgraded his rhetoric to a “war on America.”

STEVE DOOCY (HOST): The President of the United States declared a war on coal and a war on jobs and essentially a war on West Virginia.

MANCHIN: Well, really a war on America. When you look at it from that standpoint, 8 billion-tons of coal is being burned in the world as we speak. The United States of America consumes about one billion tons. Now, what’s going to happen to the other 7 billion-tons? What’s going to happen to the countries that are consuming and using 7 billion and it’s increasing rapidly? Nothing is being done there. We have done more to clean the environment than ever in the last two decades. And there is more that can be done.

Manchin, like Heitkamp, is primarily concerned about jobs in the coal industry. He has not dared, politically, to be heretical about global warming orthodoxy but has fought for coal jobs.

Ray WashburneMr. Ray W. Washburne has been the Chief Executive Officer of Charter Holdings since 1990 and its President. Mr. Washburne has been National Finance Chairman at Republican National Committee Inc., since February 2013. He is a Managing Partner at HP Village Partners Ltd., and served as Managing Director. He was the Chairman of Charter Holdings since 1990. He also serves on the board of directors for M Crowd Restaurant, which he co-founded in 1991. He serves as Director of Baylor Health Care System Foundation. He has been Director of Entrust Inc. since June 5, 2006. He has been an Independent Director of Veritex Holdings, Inc., since 2009 and serves as Director of Veritex Community Bank. Mr. Washburne is also a Director for Colonial Bank, Southern Methodist University-21st Century Council, and Dallas Citizens Council. He is an Adjunct Professor at SMU’s Cox School of Business and graduated from Southern Methodist University (“SMU”) in 1984.

It is not apparent that Washburne has any strong position on coal or energy or AGW. Nevertheless he can be expected to have a clear view of the bottom line and therefore, not a great supporter of subsidising non-commercial technologies for religious or ideological reasons.

If I had to bet, I would put a small amount of money on Rick Perry.


Cold weather in Alberta gives record electricity consumption (thank goodness for coal)

December 11, 2016

Canada has been experiencing some rather cold weather with windchill factors down to -40°C.

Environment Canada has issued an extreme cold warning starting in northwestern B.C., going west through central and northern Alberta, central and southwestern Saskatchewan and southeastern Manitoba. By Friday afternoon, the extreme cold warning extended to most of central and northern Alberta, including High Level and Fort Chipewyan and as far south as Airdrie and Cochrane.

The Alberta Electric System Operator AESO reports record electricity consumption due to the cold spell.

Extremely cold weather across Alberta this week contributed to the province setting three records in a row for electricity consumption.

On December 8, 2016 between 5-6 p.m., Alberta was using a record hourly average amount of electricity at 11,442 MW. This surpassed the December 7 record of 11,404 MW, and the December 5 record of 11,400 MW.

The new winter peak usage was set due to cold weather, reduced daylight hours and the convergence of Christmas lighting load at homes, businesses, malls and buildings across the province. Another factor that contributed was the low market price for electricity – this prevented price sensitive industrial facilities from going offline during peak hours. The average wholesale price for electricity during that peak hour was approximately $30/MWh.

In Alberta the installed capacity and energy generation shows the reliance on fossil fuels in general and coal in particular. It’s a good thing they have coal to fall back on.

alberta-electricity

Reality.


 

US shale gas arrives in Scotland today

September 27, 2016

The SNP’s idiotic environmental policies means that Scotland has to import shale gas from the US even though there is plenty available locally. North Sea revenues for Scotland have collapsed and Scottish energy policy is a self-inflicted wound. In Europe generally, it is misguided, meaningless, environmental constraints on energy policies which have been a major contributor to holding back the economic recovery.

The low oil price in 2016 has effectively postponed any new independence referendum for a few years to come. Without North Sea revenues Scotland – if it wants to be an independent EU country – would be the “poor man of Europe” for 2 decades.

Image result for Scotland north sea revenue collapse

graphic: market oracle

BBC: 

The first shipment of US shale gas is arriving in Scotland amid a fierce debate about the future of fracking in the UK.

A tanker carrying 27,500m3 of ethane from US shale fields is due to dock at Grangemouth, the refinery and petrochemicals plant owned by Ineos.

The company said the gas would replace dwindling North Sea supplies and secure the future of the plant’s workforce.


 

Thermal efficiency and “emissions elsewhere” from electric cars

August 30, 2016

All electric cars shift emissions from the exhaust pipe of the vehicle to the place where the electricity is generated. The actual mix of fuel sources used to feed the grid then represent the emissions profile of electric cars. The efficiency of electric cars from generation of electricity to wheel-power is not much different from gasoline based automobiles and clearly inferior to diesel engines.

Fossil fuels used directly in vehicle internal combustion engines have a thermal efficiency ranging from 37% for gasoline to over 55% for very large marine diesels.

source JSME

source JSME

For electricity generation the thermal efficiency varies from less than 30% to over 60% for coal, oil, gas, solar thermal or nuclear power plants. Thermal efficiency is meaningless (and undefined) for hydropower, wind power or photovoltaic solar.

thermal efficiency of power generation

An electric car being charged from the grid does so after a further 10% of transmission and distribution losses but only accrues a further 2 – 5% losses through the motor(s) to shaft rotation. (There are further mechanical losses in getting to the rotation of the wheels but these are common to all kinds of motive power).

The emissions due to the use of an electric car are entirely dependant upon the emissions involved in the generation of the charging electricity. If the grid is largely dependant upon coal (India), or coal and gas (US) then the gaseous emissions are higher than for diesel engines but slightly better than for gasoline automobiles. If, the grid is primarily hydropower as in Norway, or primarily hydro and nuclear (as in Sweden) then there are virtually no emissions from electric vehicles.

The fundamental reality is that electric cars are not yet commercially viable (range, weight, charging time and cost). Two decades of subsidies also confirms for me my contention, that subsidies are usually counter-productive, always delay commercialisation and nearly always lead to a focus on milking subsidies rather than commercialising a technology.

A recent Forbes article addresses the fantasies surrounding emissions, and Tesla cars. I wouldn’t mind owning a Tesla car where my acquisition price is heavily subsidised. But now that the initial investors have milked the subsidies, and operations – in spite of the subsidies – have yet to show a profit, I would not invest in Tesla shares.

Earlier this summer, SolarCity, Elon Musk’s rooftop solar company, appeared to be headed toward bankruptcy. So it shocked investors everywhere when Musk’s other brainchild, Tesla Motors TSLA -2.21%, itself struggling, announced plans to acquire the struggling panel maker and installer.

“Tesla Talks Big, Falls Short,” read a headline last week on the front page of the Wall Street Journal. The subtitle: “Car maker has failed to meet more than 20 of CEO Elon Musk’s projections in the past five years.”

Surely combining two wrong businesses won’t make a right one. True, they’re both politically correct. But they’re economically incorrect.

Tesla’s operating losses, along with its fishy accounting practices and unrealistic investor promises, have led Devonshire Research Group to liken the car company’s business model to Enron’s.

Bad entrepreneurship is normally punished by market losses and contraction. But Musk’s market is rigged. A mountain of taxpayer subsidies is allowing Tesla’s bad show to go on — and even expand.

Musk’s various ventures have received almost $5 billion worth of government assistance. Nevada recently chimed in with $1.3 billion to incentivize Tesla to build its “gigafactory” — a new battery producing facility — near Reno. Each car sold by Tesla receives a federal income tax credit of $7,500. And California allows an additional $2,500 rebate to its citizens.

Even the White House is throwing cash Musk’s way. President Obama just announced $4.5 billion in loan guarantees for electric vehicle entrepreneurs. According to the president, the money will help fill garages with EVs and make charging stations ubiquitous.

Tesla is redefining “too big to fail” as “politically correct, so bail.”

….. 

So-called zero-emission vehicles reflect the fuel-profile of electricity generation. 2015 U.S. electricity generation consisted of 33% coal; 33% natural gas; 20% nuclear; 13% renewables; and 1% oil.

Fossil fuels, in other words, have a two-thirds market share for EVs, wind and solar just 5%. Nuclear power, hydropower, and biomass, account for the remainder. …..

…..

http://www.forbes.com/sites/robertbradley/2016/08/24/investors-confront-teslas-energy-fantasy/2/#78d77bfa2bbe


 

Saudi Arabia is losing its war against oil shale

August 3, 2016

Saudi Arabia started its war on US shale oil in the autumn of 2014. Oil prices in June 2014 were around $110 per barrel and were on the way down as US shale oil producers were ramping up production. The expectation was that the OPEC cartel would reduce production to hold prices up. The conventional wisdom was that whereas Saudi Arabia had a production cost of about $3 per barrel, shale oil had a production cost of over $50 per barrel and upto close to $100. Oil from Canadian tar sands was thought to have a production cost of above $70 per barrel. Both were though to require oil prices well in excess of $70 and close to $100 to be viable.

But Saudi Arabia decided to strangle the burgeoning shale oil industry and started an oil war. It forced other OPEC members to focus on market share and hold production levels. Even though there was a glut of oil on the market. Oil fell to below $30 per barrel earlier this year before recovering to around $45. Saudi’s strategy was based on the assumption that rock-bottom prices would kill off the upstart non-OPEC, US shale producers. Low production costs would allow the OPEC producers to take some pain for a year or so. Certainly this strategy has had some effect. U.S. oil production is about one million barrels per day lower than a year ago.

Certainly some shale oil producers have gone out of business. But US oil production is much higher than thought possible at the prevailing price. The main effect of the Saudi strategy has been counter-productive. There has been a remarkable burst of innovation among the shale frackers which has drastically reduced shale oil production costs. The costs for shale production that I had reported 2 years ago no longer apply.Then the cheapest shale oil to produce was from Marcellus shale at around $24 per barrel. But the cheapest today costs $2.25 a barrel on horizontal wells in the Permian Basin of West Texas. That is directly – and even favourably – comparable with the Saudi production costs.

Reuters: Improved fracking techniques have helped cut Pioneer Natural Resources Co’s production costs in the Permian Basin to about $2 a barrel, low enough to compete with oil rival Saudi Arabia, CEO Scott Sheffield said on Thursday. 

The comments from Sheffield, who is retiring soon, were perhaps the most concrete sign yet that the fittest U.S. shale oil producers will survive the price crash that started in mid-2014 when Saudi Arabia and OPEC moved to pump heavily to win back market share from higher-cost producers.

Dozens of shale companies, many with marginal assets, have filed for credit protection in the biggest wave of corporate bankruptcies since the telecoms crash of the early 2000s. Sheffield said high costs would continue to make U.S. shale plays outside the Permian basin relatively less competitive. 

On Pioneer’s second-quarter results call, Sheffield said that, excluding taxes, production costs have fallen to $2.25 a barrel on horizontal wells in the Permian Basin of West Texas, so it is nearly on even footing with low-cost producers of conventional oil.

“Definitely we can compete with anything that Saudi Arabia has,” he said.

“My firm belief is the Permian is going to be the only driver of long-term oil growth in this country. And it’s going to grow on up to about 5 million barrels a day from 2 million barrels,” even in a $55 per barrel price environment, he added. …….. 

Pioneer expects output to grow 15 percent a year through 2020 after posting production of 233,000 barrels of oil equivalent a day this past quarter. It sees most of its growth in the Permian, though it also has acreage in the Eagle Ford.

Pioneer helps limit costs by doing much of its oilfield services work in-house. It also has its own sand mine, and uses effluent water from the city of Odessa for frack jobs using pressurized sand, water and chemicals to unlock oil from rock.

Pioneer said it is now introducing its third generation of well completion techniques, called version 3.0, that is using even more sand and water than the super-sized volumes introduced at the start of the price crash to pull more oil out of rock.

permian basin texas

Even at prices less than $20 per barrel, some considerable quantities of shale oil would continue to be produced.

The Saudi strategy is backfiring.


 

The GT26 lives on with Ansaldo (for now)

June 21, 2016

I have previously expressed my doubts as to how long sequential combustion technology will continue for gas turbines after the technology has been transferred to Ansaldo Energia (as part of the acquisition of Alstom by GE).

Ansaldo has announced (in March this year) the sale of 2×2 GT26 machines as part of power islands for the Ibri and Sohar#3 combined cycle plants Oman.

Ansaldo Energia Switzerland has been awarded two contracts worth approximately 600 million Euros in total for the supply of major power plant equipment to two large IPP projects. The Ibri 1510 MW CCPP and Sohar III 1710 MW CCPP in the Sultanate of Oman are expected to be commissioned in early 2019. The Ibri and Sohar III CCPP IPP projects are developed by the sponsor consortium of Mitsui & Co. Ltd., ACWA – International Company for Water and Power Projects and DIDIC – Dhofar International Development and Investment Holding Company, following a simultaneous award of the two projects to the development consortium by Oman Power and Water Procurement Company SAOC of Oman earlier this month. The two power stations will operate and supply power under a PPA to the grid in the Sultanate of Oman. Ansaldo Energia will supply the main power train equipment components, including for each power plant, four of Ansaldo Energia’s newly acquired high-efficiency advanced GT26 class gas turbines, four heat recovery steam generators (HRSGs), two steam turbines and six turbo generators to SEPCOIII Electric Power Construction Cooperation of China (SEPCOIII), who will be responsible for engineering, procurement and construction (EPC) on a turnkey basis. Ansaldo Energia will also provide field services to SEPCOIII – under separate contracts – during the construction phase and long term maintenance services to the operator after commissioning. These projects mark Ansaldo Energia’s first success with its recently acquired and formerly Alstom owned GT26 gas turbine technology and will be one of the largest CCPP project awards in the Gulf region. Ansaldo Energia will certainly have a firm place the CCPP and IPP market where highly efficient, operationally flexible and reliable technology is required. With these two projects in execution in the region and Ansaldo Energia’s presence as a service provider in the Middle East area through Ansaldo Thomassen Gulf in Abu Dhabi, Ansaldo Energia’s position in the Gulf will be further strengthened. Juerg Schmidli, Ansaldo Energia Switzerland President, commented: “With its operating flexibility and high efficiency, the GT26 gas turbine will play a critical role in generating maximum project returns for our customer. This is the perfect start for our newly formed Company Ansaldo Energia Switzerland”.

I hope these machines from Baden/Birr will truly mean that Ansaldo has grabbed the sequential combustion ball and is running with it (and not that these are just machines already largely manufactured while under Alstom ownership and completed by Ansaldo).

What I still doubt is whether Ansaldo has the tradition, expertise and financial clout left to manage and implement any innovations. If they cannot, the Alstom version of the GT26 Ansaldo has acquired is already outdated. Especially since Siemens, GE and Mitsubishi have H-class machines in operation and are already moving on to H+ engines. GE’s HA-class machine (9HA) is operational in France for EdeF (62.22% claimed efficiency). The GT26 is still probably only at the G+ level and Ansaldo will need to get beyond the H-class efficiency level to be a realistic fourth player. If not the GT26 will be consigned – at best – to some niche markets. The 60Hz (including US) market and the GT24 are not available to Ansaldo and that does not help in the experience stakes.

How long it may take to get a commercial version of the next generation GT36 to market, or whether it will ever see the light of day, is an open question. I have a soft spot for sequential combustion and would like to see it continue. But I will stay pessimistic and remain doubtful that Ansaldo Energia has the wherewithal to remain a serious player with this technology.

And hope to be proved wrong.

Alstom GT26

Alstom GT26


 

Saudi Arabia seeks bank loans for first time in a decade

March 9, 2016

I am still of the opinion that the oil price war that Saudi Arabia has been waging against shale oil, Russia and Iran, was misguided and due primarily to a geopolitical machismo that was grossly overestimated. It was misguided because shale fracking is not a technology that is going to go away. In the short term some of the more expensive shale wells may close, but they can very soon start up again. But more importantly, shale gas and oil are available all over the world. They just haven’t been developed yet. And those that don’t have access to shale – like Japan – will have access to gas from methane hydrates within a decade. And there is more gas available from methane hydrate than from shale which, in turn, is more gas than all the natural gas resources known.

In the long run I expect the Saudis to be the losers. Their budget deficit climbed to approach $100 billion last year and now, for the first time in a decade, they are looking to borrow.

Reuters: 

Saudi Arabia is seeking a bank loan of between $6 billion and $8 billion, sources familiar with the matter told Reuters, in what would be the first significant foreign borrowing by the kingdom’s government for over a decade.

Riyadh has asked lenders to submit proposals to extend it a five-year U.S. dollar loan of that size, with an option to increase it, the sources said, to help plug a record budget deficit caused by low oil prices.

The sources declined to be named because the matter is not public. …

The kingdom’s budget deficit reached nearly $100 billion last year. The government is currently bridging the gap by drawing down its massive store of foreign assets and issuing domestic bonds. But the assets will only last a few more years at their current rate of decline, while the bond issues have started to strain liquidity in the banking system. …….. 

…… Analysts say sovereign borrowing by the six wealthy Gulf Arab oil exporters could total $20 billion or more in 2016 – a big shift from years past, when the region had a surfeit of funds and was lending to the rest of the world.

All of the six states have either launched borrowing programs in response to low oil prices or are laying plans to do so. With money becoming scarcer at home, Gulf companies are also expected to borrow more from abroad.

In mid-February, Standard & Poor’s cut Saudi Arabia’s long-term sovereign credit rating by two notches to A-minus. The world’s other two major rating agencies still have much higher assessments of Riyadh, but last week Moody’s Investors Service put Saudi Arabia on review for a possible downgrade. ……. 

The pricing of the loan is likely to be benchmarked against international loans taken out by the governments of Qatar and Oman in the last few months, according to bankers. Because of banks’ concern about the Gulf region’s ability to cope with an era of cheap oil, those two loans took considerable time to arrange and the pricing was raised during that period.

Oman’s $1 billion loan was ultimately priced at 120 basis points over the London interbank offered rate (Libor), while Qatar’s $5.5 billion loan was priced at 110 bps over, with both concluded in January.


 

The Paris Agreement sanctions a dash for coal

February 25, 2016

Now that the Paris Climate Agreement is out of the way (having actually achieved nothing while seeming to have solved everything), sensible countries that wish to implement their plans to utilise coal can do so without being castigated for it (since Paris has now solved everything). The non-sensible and sanctimonious countries – and Sweden leads all the rest – can refrain from using coal and other fossil fuels to their own self-inflicted disadvantage.

The real winners from the Paris Agreement are, of course, India and China. By using carbon emissions per unit of GDP as the measure, India has ensured that it can treble its coal consumption by 2030 (while GDP increases by a factor of 4) and still show a 30% decrease in emissions/GDP. Similarly China can double its coal consumption by 2030 while GDP increases by a factor of 2.65 and still show a 20% reduction in carbon emissions (based on my calculation from the Indian and Chinese INDC submissions for the Paris conference).

The 2012 global coal consumption (IEA report) was about 8.186 billion short tons of which China consumed 3.887 billion short tons and India consumed 0.745 billion short tons. By 2030, India alone would consume 2.235 billion short tons and still meet their Paris obligations. Similarly China would consume about 7.774 billion short tons and still meet their Paris promises. Effectively the Paris Climate Agreement sanctions that coal consumption in India and China alone will be about 10 billion short tons and exceed today’s global consumption. The global coal consumption in 2030 will then be above 14 billion short tons which is about 70% higher than the 2012 global consumption.

And now Reuters informs us that

A decision by Japan’s environment ministry to abandon its opposition to building new coal-fired power stations casts doubt on the industry’s ability to meet targets to cut greenhouse gas emissions, experts and environmental activists said …..

As Japan gets ready to open up its power retail market in April, companies are rushing to build 43 coal-fired plants or 20.5 gigawatt of capacity in coming years, about a 50 percent increase. ……. Coal is attractive because it is the cheapest fossil fuel source and prices have slumped in recent years. Japan has turned to the energy source in record amounts since the Fukushima disaster in 2011 led to the shutdown of reactors.

A group of 36 power companies, which supply 99 percent of the country’s electricity, have also formed a new body to take measures to trim emissions and meet the industry’s voluntary goal to cut emissions by 35 percent in 2030, compared with 2013.

The Paris Agreement has ensured that all those who wish to use coal can continue to do so.


 


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