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Tuesday, 7 June 2011

LNG to add $36 billion a year to Australian economy


LNG to add $36 billion a year to Australian economy



LNG demand to increase
Australia exported $7.2bn worth of natural gas in 2009, the latest figure available / File
AUSTRALIA is poised to become the world's largest producer and exporter of liquefied natural gas by 2020, earning $36 billion annually by then, according to the Paris-based International Energy Agency.
In a special report released in London yesterday, the IEA also says Australia will remain among the leading global suppliers for 15 years through to 2035, reported The Australian.
"We think Australia will play a crucial role in the golden age of gas. It could be a golden age for Australia's LNG industry," said IEA chief economist Fatih Birol, the lead author of the report. "By around 2020 -- only 10 years from now -- Australian production may increase threefold."
Speaking exclusively to The Australian, Dr Birol said the new report examined factors that could result in a more prominent role for gas in the global energy mix.
These included the widespread development of unconventional resources, gas targets in China's 12th Five-Year Plan, a slowdown in nuclear energy and increased deployment of natural gas vehicles.
Based on IEA's price assumptions, Australian exports, totalling 85 billion cubic metres (bcm) in 2020, would generate export revenues of $36bn a year.
Australia exported $7.2bn worth of natural gas in 2009, the latest figure available.
In 2010, it was the fourth-largest exporter behind Qatar, Indonesia and Malaysia.
But whether Australia becomes a world leader in gas exports depended on the policy framework of the Australian government and the industry making timely and sufficient investment.
However, there would be challenges, including the risk of construction delays and cost escalation due to workforce shortages, as large resources projects compete for limited manpower in Australia and also in neighbouring Asia-Pacific countries where other LNG liquefaction projects were under construction.
Asked whether the proposed carbon tax would be a negative, Dr Birol, named by Forbes Magazine as the world's fourth most powerful person in the energy scene, said it would not be a deal-breaker.
The IEA said large projects such as Gorgon, based on Barrow Island in Western Australia and producing about 20bcm per year with a capital investment of some $40bn, would be the backbone of Australian supply. Australia's key customers would be Asian countries, with growth led by China, followed by India.
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Thursday, 2 June 2011

World Bank to Back African Dams in New Energy Strategy

By: 
Zachary Hurwitz
Takeze Dam in Ethiopia
Takeze Dam in Ethiopia
The World Bank's new draft Energy Strategy makes some positive advancements in creating our energy future.  For example, the Bank has tentatively made a commitment to cut lending for coal projects in all countries that do not receive funding from the International Development Agency (IDA).  Yet what the Bank promises as a trade-off for coal spells trouble for the future of rivers in Africa.


I've just come back from a meeting with Bank officials to address some of the problem language around dams in the draft strategy.  As the meeting came to a close, it was made clear to me that the draft strategy seeks to scale up investment in hydropower – especially large dams in Africa – as a trade-off for potentially cutting its lending for coal to non-IDA countries.  However, doing so would ignore a number of problems with hydropower that could create unexpected negative outcomes for future Bank investments.

First, dams are not the solution to climate change.  Increased streamflow variability and extended droughts will make hydropower projects economically unviable, increased siltation will reduce their useful lifetime, and more extreme weather events will make them unsafe.  Meanwhile, large hydropower typically causes severe impacts on freshwater biodiversity and fisheries, which are already suffering from extensive damage due to climate change.

What's more, in recent years many countries have suffered major reductions in hydropower generation because of droughts. According to the 2010 World Bank paper “Minding the Gap:World Bank's assistance to power shortage mitigation in the developing world” (Heffner et al.), half of the 18 “notable power shortages” since 2000 were related to drought. Global climate change is very likely to increase rainfall variability and unpredictability in future, meaning that hydrological risks will increase – and will put predominantly hydropower-based economies at grave risk. Much of sub-Saharan Africa is already excessively dependent on hydropower , and many African nations have experienced the economic shocks of drought-induced energy shortages. Indeed, a new study by Funk and Williams shows that East Africa is likely to be hit by worse and more regular droughts.
Energy Emissions
Energy Emissions
Second, there is no consensus in the scientific literature over how to measure greenhouse gas (GHG) emissions from dams.  Full life-cycle GHG accounting should take place for dams, not just accounting of reservoir emissions or dam construction.  Indeed, dams can act as a driver for economic growth and migration, causing land use-induced emissions in tropical areas.  While the Energy Strategy commits to establishing GHG accounting across all projects, independent methodologies for the accounting of GHG emissions from dams should be established by an independent board in the Bank's Climate Strategy.

Third, the World Bank has not proven that dams increase energy access.  Rural Africans – who are often the poorest – often live far from centralized electrical grids.  To meet the energy needs of the poorest of the poor, African countries could benefit instead from scaled-up investments in decentralized, truly renewable energy.  Indeed, the International Energy Agency's World Energy Outlook 2010 found that it is possible to achieve universal energy access through extending decentralized renewable energy systems to 70% of the developing world's rural areas.  Further, other sources could replace large hydropower to meet the needs of grid expansion throughout Africa; dynamic investments in large-scale, grid-based solar energy, and natural gas flare tapping, could offset much of the power generation of hydropower.

The World Bank's new Energy Strategy potentially puts the Bank back into large dams in Africa, in a large way.  But large dams on the whole are not a solution to climate change nor to improving energy access.  Now is the time to contact your World Bank Executive Director and regional staff to demand that a broad mix of truly renewable energy sources – not just large dams – replaces coal as the investment of choice over the next decade at the World Bank.
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South Africa could produce its first concentrating solar power from a mooted solar farm by 2012

Eskom wants to diversify the energy mix of Africa's largest economy towards cleaner sources such as concentrated solar energy and wind energy.
South Africa could produce its first concentrating solar power from a mooted solar farm by 2012
The World Bank's Clean Technology Fund is expected to take a final decision on a $350 million loan for South Africa's power utility Eskom no later than June, a minister said on Tuesday.

State-owned Eskom, which is spending billions of dollars to build and upgrade existing coal-fired power plants, wants to diversify the energy mix of Africa's largest economy towards cleaner sources such as solar power and wind energy.

Eskom submitted a $350 million loan application to the World Bank, the African Development Bank and other co-financiers -- through the Clean Technology Fund (CTF) -- to finance a 100 megawatt concentrated solar power plant and a separate 100 MW wind power plant.

"The CTF appraisal team was in South Africa (between) 7 February and 12 February 2011 and the final outcome is expected in June 2011 at the very latest," Sibusiso Ndebele, transport minister and chairman of government's infrastructure development cluster, told a media briefing.

South Africa could produce its first concentrating solar power from a mooted solar farm by 2012, and depending on investor appetite, eventually supplying 5,000 MW of power as a viable and cost-effective alternative to energy from coal.

Eskom Gets $365 Million African Development Bank Plants Loan

(Updates with minister’s comments from fourth paragraph.)
June 1 (Bloomberg) -- Eskom Holdings Ltd., South Africa’s state power utility, received a $365 million loan from the African Development Bank to help fund wind and solar plants, Public Enterprises Minister Malusi Gigaba said.
The plants will each produce 100 megawatts of power and help South Africa meet its commitment to providing more clean energy, he told lawmakers in Cape Town today.
Eskom currently has 40,000 megawatts of capacity, more than 80 percent of which comes from coal-fired plants. The utility, which supplies about 95 percent of South Africa’s electricity, was given a $3.75 billion World Bank loan in April last year to fund expansion on condition it introduces renewable energy projects.
“Eskom has incorporated renewable energy projects into its build program,” for which is seeking to tap additional sources of funding, Gigaba said. “Eskom has submitted a $250 million loan application to the World Bank for funding from the Clean Technology Fund, the final outcome of which is expected later this year.”
Johannesburg-based Eskom supplies power to Xstrata Plc’s ferrochrome furnaces, AngloGold Ashanti Ltd.’s gold mines and BHP Billiton Ltd.’s aluminum smelters in South Africa. The utility, one of the 10 largest in the world by capacity, will spend about 76 billion rand ($11.2 billion) in the year through March 2012 on an expansion plan aimed at preventing a repetition of power blackouts that hit mines, factories and cities in 2008.
Eskom won’t be able to guarantee security of supply until its new Medupi plant begins producing power in late 2012, and will have to rely on private companies to meet any shortfall, according to Gigaba.
Since April last year, Eskom has signed contracts with five independent power producers to supply it with about 373 megawatts of power, and it has also agreed to buy 200 megawatts of electricity from municipalities for this winter, he said.

Tuesday, 31 May 2011

Why Germany said no to nuclear power


Angela Merkel's decision to phase out nuclear power stations is a cynical exercise in realpolitik, says Daniel Johnson.

Why Germany said no to nuclear power
'Politics is the art of the possible," said Bismarck, the first German Chancellor. His present-day successor, Angela Merkel, knows perfectly well that her decision to phase out all nuclear power stations by 2022 makes no scientific or economic sense. In fact, she said so herself as recently as two months ago, when she promised that Germany would not let itself be rushed into abandoning nuclear power by the Fukushima accident in Japan. "I am against shutting down our nuclear power plants only to have atomic power imported into Germany from other countries," she told the Bundestag in March. "That won't happen on my watch."
Well, as so often happens to politicians, she has been forced to eat her words by political necessity. An irrational fear of nuclear energy runs deep in Germany, and electoral defeats for Chancellor Merkel's conservative coalition at the hands of the Greens have convinced her that it is no longer politically possible to hold the line. As Bismarck might also have said: saying no to nuclear technology may be unreal, but in Germany it is realpolitik.
The nuclear debate in Germany has always been about much more than the relative merits of different forms of power generation. The enduring influence of romanticism, the love of forests and the worship of nature all contribute to the highly charged atmosphere in which the issue is discussed. The Nazis knew how to tap into this nature mysticism, yet they also secretly pursued nuclear weapons – despite publicly dismissing the "Jewish" physics on which the technology was based.
Unlike Japan, Germany surrendered before atom bombs could be used against its cities, but during the Cold War the nation was divided by the Berlin Wall and Germans knew that their country was a potential nuclear battleground. American, British and French forces on German soil were equipped with nuclear weapons to deter a Warsaw Pact invasion. While Konrad Adenauer, West Germany's postwar leader, was desperate to join this nuclear club, his Nato allies only permitted Germany to possess nuclear power, on which the resurgent German economy rapidly became dependent for cheap energy.
At first, nuclear power was seen as peaceful, in contrast to nuclear weapons. But as anti-Americanism emerged on the German Left as a by-product of the 1968 student rebellions, so too did resistance to nuclear power as a symbol of capitalism, which was now equated with militarism.
In the mid-1970s, so-called citizens' initiatives began to organise protests at nuclear plants. Their symbol, a laughing sun with the sloganAtomkraft? Nein Danke ("Nuclear power? No thanks!"), appeared on stickers and T-shirts everywhere. Anti-nuclear protest was suddenly cool.
Hence by the late 1970s, German public opinion was turning against nuclear power. Belatedly, the far-Left leaders of the student movement capitalised on this popular cause to create the Greens, the world's first major environmentalist political party. The terrorism of the Baader Meinhof gang had turned out to be a dead end, but the politics of anti-nuclear protest had a lasting appeal to middle-class Germans. In the propaganda of the Greens, Nato Cruise and Pershing missiles stationed in Germany were indistinguishable from the plants that produced cheap electricity.
Then came Chernobyl. The meltdown of an antiquated Soviet reactor in 1986 caused such hysteria in Germany that the nuclear industry has never recovered, despite the fact that fears of radioactive clouds proved greatly exaggerated. Green politics gained new momentum: "Red-Green" coalitions of Social Democrats and Greens began to be formed in the German states and eventually, in 1998, Greens took office at federal level, too.
By this time climate change had taken over as the fashionable new cause for environmentalists, bringing with it the problem of how, without fossil fuels or nuclear power, energy supplies could be maintained. Despite its promise to close down all nuclear plants, the coalition of Social Democrats and Greens had no alternative policy, because "renewables" simply could not provide sufficient cheap, reliable energy. After Merkel took over in 2005 as leader of a coalition with the Social Democrats, she quietly reversed plans to phase out nuclear power. Even today, domestic nuclear plants supply about a quarter of all electricity in Germany.
Now, however, she has taken an irreversible decision to distance her Christian Democrats from a political association that is far more toxic than any nuclear fallout. In doing so, she has succumbed yet again to the hypocrisy that surrounds this issue in Germany.
Take Iran. For decades, German industry has assisted Iran's "peaceful" pursuit of nuclear power, even though it has been obvious that the Islamic Republic's aim was to develop nuclear weapons. The computers that ran the Iranian nuclear facilities until they were sabotaged by the Stuxnet virus were supplied by Siemens. At international conferences, Germany adopts a high-minded stance on nuclear proliferation as well as nuclear power, but in practice German exports take priority over the security of Israel and other neighbours of Iran.
Or take France. In public, President Sarkozy and Chancellor Merkel are diametrically opposed on the nuclear power issue. But in reality, her decision to get out of the nuclear power business means that France will be supplying a growing proportion of German energy needs over coming decades. Most Germans are either unaware of the fact that much of their energy is imported from French, Swiss or Polish nuclear plants, or they just don't care, as long as the reactors are sited far from their own back yards. Germany has become a nation of nuclear nimbys.
So should it matter to us if Germany chooses to impose unnecessary costs on its own industrial and domestic energy consumption? Germany is the largest economy in Europe and the European Union has a habit of imposing German prejudices on the rest of its member states. Enemies of nuclear energy will be emboldened to pressurise other governments, including our own, to follow the German lead.
Ironically, not all Greens share the conclusion the German government drew from Fukushima. Our own George Monbiot, a Green fundamentalist if ever there was one, has been persuaded to drop his opposition to nuclear power by the facts of the case. This is his logic: if an ageing nuclear plant, incompetently managed and with obsolete safeguards, is hit by one of the worst earthquakes in recent history, yet hardly anybody is killed, then we must conclude that nuclear power has a lot to be said for it.
Logic, however, had little to do with yesterday's announcement: realpolitik dictated the decision. The grandchildren of the Nazis, born long after the war, have made the fatal mistake of identifying evil with a particular technology, rather than with the human beings who make use of it.
Germany is one of the most admirable countries in the world, but Germans, like other nationalities, are not immune to irrational attitudes. Decent Germans have reason to worry about the fact that, according to a recent poll, nearly half of their compatriots express anti-Semitic opinions, such as that Israel is conducting a war of extermination against Palestinians, or that "Jews try to take advantage of having been victims during the Nazi era".
But Germans have no reason to fear nuclear power. Mrs Merkel's appeasement of nuclear hysteria is disturbing far beyond Germany's borders because it represents a capitulation to irrationalism by the leader of a nation that once led the world in science and technology. The land of Leibniz and Humboldt, of Goethe and Gauss, is now indulging the fantasies of cynical scaremongers.
Daniel Johnson is Editor of 'Standpoint'

Wednesday, 18 May 2011

Carbon capture schemes could create 5,000 Scottish jobs



More than 5,000 Scottish jobs could be created if three proposed carbon capture and storage (CCS) schemes go ahead, according to a new study.
Scottish Enterprise has looked at the potential economic impact of CCS projects at Longannet, Peterhead and Hunterston.
The research also suggests CCS developments could boost Scotland's economy by more than£3bn.
The findings are being presented at an energy conference in Aberdeen.
CCS is a process involving the capture of CO2 (carbon dioxide) from power plants and other industrial sources for safe storage in sites such as depleted oil and gas fields.
The proposed CCS facilities at Longannet in Fife, Peterhead in Aberdeenshire and Hunterston in Ayrshire, if fully developed, would test and demonstrate the technical and commercial aspects of CCS technology.
The Scottish Enterprise study found that up to 4,600 jobs could be created during the construction phase of the projects to 2020, with a further 454 operational jobs supported when the sites were up and running.
Another key finding of the research, published at the All Energy conference, was that the CCS projects could boost the Scottish economy by £2.75bn, generating an additional £535m per year during their operational lifetime.
Hunterston would benefit most from jobs during construction, as the project is linked to a controversial plan to build a new coal-burning power station.
However, it would be worth less than half of the £270m annual economic value of Longannet.
'Immediate benefits'
Adrian Gillespie, from Scottish Enterprise, said: "CCS is acknowledged as having an important role to play in supporting Scotland's ambitious emission reduction targets, however, to become commercially viable, demonstration projects such as the three proposed Scottish projects are critical.
"The far-reaching impacts revealed in this study underline the potential of carbon capture and storage, not only in long term economic and environmental terms but also in the shorter term, delivering significant immediate benefits for the Scottish economy."
He added: "We want to see a number of CCS demonstration projects developed in Scotland and are working with our partners in industry, in the UK Government and in Europe to help make that happen."
Scotland is recognised as having a competitive advantage in CCS and the potential to become a global leader in the field.
It has been estimated, in separate research, that CCS could support up to 13,000 new jobs by 2025, including exporting Scottish-based skills and technology across the world.
The three Scottish based demonstration projects are still all in the running to secure EU funding from the New Entrants' Reserve programme, which has been developed to support low carbon demonstration projects across Europe.

LNG market growth to double value of Australia's resources sector to $70bn in 3 years


Crispin Murray, head of equities with BT Investment Management, said the nation's $35 billion investment will skyrocket to $70 billion as liquefied natural gas exports ramp up to China and to other emerging markets. He described it as "a unique period"."It's a huge uplift," Mr Murray said following an investor breakfast in Brisbane.
Pluto LNG project, liquefied natural gas, Woodside"You want to strike while the opportunity is there. The world needs new sources of energy."
Queensland would be a "big beneficiary" of the boom as work continued to remove export bottlenecks, such as the port expansion in Gladstone.
The flow-on effects will cascade through numerous industries contracting for parts of the work, including engineering firms, service and maintenance companies and logistics operators, he said.
For investors, key opportunities will be found in companies surfing the wave propelling China, India, Brazil and other emerging economies.
New energies such as LNG will also offer huge upside potential.
"We're comfortable that China can keep growing," Mr Murray said.
He pointed to China's social housing program which has envisaged construction of a staggering 35 million new apartments over the next five years. Even if that target is unattainable, he said the nation's insatiable hunger for coking coal and iron ore will remain unchanged.
India also offered investors vast possibilities and was "an important source of growth", Mr Murray said. He likened the country to where China was 10 years ago, although not as resource intensive and held back by infrastructure limitations.
While India benefited from being the world's largest democracy, he said protracted tendering made it harder to carry out projects than in a one-party state such as China.
Much like the "two speed economy" at play in Australia, Mr Murray said there was a similar dynamic in the world economy pitting emerging nations against the more developed old guard.
Events such as Europe's debt woes, the US housing market slump and Japan's devastation from earthquakes and tsunami are having a greater impact on equities because of globalisation, he said.
These calamities have created uncertainty and "extra volatility", deterring more people from investing. But at the same time, they have created opportunities since some equities are undervalued, Mr Murray said.