Converting Biodiesel Waste Into A Valuable Chemical to Clean the Environment

Interactions of nanoparticles with biological molecules are facilitated by ligands on nanoparticle surfaces. Rice University scientists discovered a palladium and gold nanocatalyst that is about 10 times faster at converting glycerol into high-value products than catalysts of either metal alone. Vectorised version of image from Journal of Nanobiotechnology, courtesy of WikimediaCommons.

Interactions of nanoparticles with biological molecules are facilitated by ligands on nanoparticle surfaces. Rice University scientists discovered a palladium and gold nanocatalyst that is about 10 times faster at converting glycerol into high-value products than catalysts of either metal alone. Vectorised version of image from Journal of Nanobiotechnology, courtesy of WikimediaCommons.

Using nano-particles as a catalyst could usher in a global market for industrial catalysts, projected to top $19 billion by 2016

A Rice University team of scientists is on the cusp of a potential breakthrough in chemistry. By using nanoparticles to convert biodiesel into an environmental cleaning agent Michael Wong and his team are at the cutting edge of 21st century scientific advances that synthesizes these disparate strands.

Through dozens of studies, Wong’s team focused on using the tiny metallic specks to break down carcinogenic and toxic compounds. But his latest study, which is available online and due for publication in an upcoming issue of the Royal Society of Chemistry’s journal Chemical Science, examined whether palladium-gold nanocatalysts could convert glycerol, a waste byproduct of biodiesel production, into high-value chemicals.

In scientific parlance, the data from the study produced a “volcano plot,” a graph with a sharp spike that depicts a “Goldilocks effect,” a “just right” balance of palladium and gold that is faster — about 10 times faster — at converting glycerol than catalysts of either metal alone.

“We’ve now seen this volcano plot at least four times now, first with TCE, then with the dry cleaning contaminant ’perc,’ and more recently with chloroform and nitrites,” Wong said. “The remarkable thing is that the reaction, in each case, is very different.”

In previous studies, the nanocatalysts were used in reduction reactions, chemical processes marked by the addition of hydrogen. In the latest tests on glycerol conversion, the nanocatalysts spurred an oxidation reaction, which involves adding oxygen.

“Oxidation and reduction aren’t just dissimilar; they’re often thought of as being in opposite directions,” Wong said.

While catalysts don’t always take part in reactions they help speed up, in chemistry they do act as “matchmakers” by causing other compounds to react with one another, according to the story on Wong and his associates that ran in the Fort Bend Sun (Texas). The global market for industrial catalysts is projected to top $19 billion by 2016, the article said.

Palladium and gold — and mixtures of the two — have long been recognized as extremely effective catalysts. Among catalysts, gold is now valued because it doesn’t tarnish or oxidize, a process that can shorten a catalyst’s lifespan. Palladium is typically prized because it is especially good at binding and inducing molecules to reduce or oxidize. Wong and colleagues have demonstrated a way to bring these two metals together with better control. They build their catalysts on gold spheres that are about four nanometers in diameter. The spheres are partially covered with palladium, so that the particles’ surface contains some gold and some palladium.

Wong and colleagues have shown that covering 60-80 percent of the gold’s surface area with palladium typically produces the ideal catalyst — though the exact percentage varies for different reactions.

“Palladium by itself oxidizes, which is not good because it slows down the catalysis,” Rice graduate student and lead author Zhun Zhao said, a co-author with Wong. “We found that the gold in our catalysts helps stabilize the palladium and prevents it from degrading. The catalysts in our tests had extremely high durability. Our best catalyst produced a glycerol product with higher purity and in less time than anything else we found in the literature,” he said.

“Now that we understand how these work with glycerol, we can study reactions of other biomass molecules like glucose, a building block of plants,” Wong said.


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Contrary to Conventional Wisdom — It’s The Friday Daily Energy News Dump

"Patent puffs to raise the wind or Dandy steam packets on contrary Jacks!" Print shows three men attempting to power their bicycles by means of flatulence, London 1819. An etching from the British Cartoon Prints Collection, via the U.S. Library of Congress, courtesy of WikimediaCommons.

“Patent puffs to raise the wind or Dandy steam packets on contrary Jacks!” Print shows three men attempting to power their bicycles by means of flatulence, London 1819. An etching from the British Cartoon Prints Collection, via the U.S. Library of Congress, courtesy of WikimediaCommons.

A Contrarian — And Much Worth Considering – Take On Solar Power

Is residential PV solar more trouble than it’s worth?

  • The electrons generated by residential PV solar systems are green, but the electric current they send to the grid is intermittent, unreliable and generally filthy.
  • Since residential PV solar system owners aren’t required to pay the hidden costs of intermittency abatement, their systems increase electricity costs for everybody else.
  • Preferential tariffs and net metering schemes compound the problem by under-charging residential PV solar owners for their utility’s infrastructure.
  • Investment tax credits for residential PV solar systems are patently unreasonable, because the future economic benefits of the investment aren’t taxed at all.
  • While regulatory structures, billing practices and tax regimes will change because they must change, grid-scale energy storage will be a crucial part of the solution.
Now there’s a man who doesn’t mind telling it the way he sees it. And you know, he may be right! What say you, who care about fairness above all?

Germany is headed for its biggest electricity glut since 2011 as new coal-fired plants start and generation of wind and solar energy increases, weighing on power prices that have already dropped for three years.

Utilities from RWE AG to EON SE are poised to bring units online from December that can supply 8.2 million homes, 20 percent of the nation’s total, according to data compiled by Bloomberg. That will increase spare capacity in Europe’s biggest power market to 17 percent of peak demand, say the four companies that operate the nation’s high-voltage grids. The benchmark German electricity contract has slumped 36 percent since the end of 2010.

The new coal plants are starting as Germany aims to almost double renewable-power generation over the next decade. Wind and solar output has priority grid access by law and floods the market on sunny and breezy days, curbing running hours for nuclear, coal and gas plants, and pushing power prices lower. The profit margin for eight utilities in Germany narrowed to 5.4 percent last year from 15 percent a decade ago.

“The new plants will run at current prices, but they won’t cover their costs,” Ricardo Klimaschka, a power trader at Energieunion GmbH who has bought and sold electricity for 14 years, said June 25 by e-mail from Schwerin, Germany. “The utilities will make much less money than originally thought with their new units because they counted on higher power prices.”


Giving It To ‘Em Good and Hard: EU Seen Curbing Coal Use By Quadrupling Carbon Price

Europe could coax utilities to shift from burning coal to cleaner natural gas by quadrupling the price that financial markets place on carbon dioxide emissions, the head of Spain’s biggest power generator said.

Ignacio Galan, chairman and chief executive officer of Iberdrola (IBE) SA, said European Union leaders should take steps to boost prices in the EU Emissions Trading System in addition to setting a target to reduce pollution by 40 percent by 2030.

“A carbon price of 20 to 30 euros is the right level for switching from coal to gas,” Galan said in an interview at Bloomberg’s office in London. Carbon has fallen by a third to less than 6 euros ($8.17) a metric ton since 2011 as slower economic growth reduced industrial production and the need to offset pollution.

The comments were meant to guide EU leaders as they negotiate targets to restrain emissions, part of an effort by more than 190 countries led by the United Nations to curb the gases blamed for global warming. Coal’s share of world energy demand rose to the highest level since 1970, making it the fastest-growing fossil fuel, the oil producer BP Plc (BP/) estimates.

Muddying the Waters: Norway Oil Engineers May Walk Off The Job Next Week

About 100 workers from oil services firms could walk off the job from July 5 if wage talks fail, the head of Norway’s biggest oil sector union said on Friday, a move that would not have an immediate impact on oil output.

However were such a strike to last for several weeks or longer, or if more workers were to join the action at a later stage, it could potentially affect production and even lead to shutdowns.
Several rounds of wage talks between energy firms and unions have taken place in Norway in recent weeks, with none of them resulting in industrial action after all sides accepted the outcome of state mediation.

Next up is mediation on July 4-5 between oil services workers represented by Industri Energi, the largest union for energy workers, and the Norwegian Oil and Gas Association, which represents employers.

If these talks fail, around 100 engineers from firms including Schlumberger and Halliburton, will go on strike, the head of Industri Energi said.

“These are mud engineers … It will have an impact on drilling,” Leif Sande told Reuters.

Related: More on Norway’s oil and gas industry here, from the archives of the Daily Energy Dump.

I’ll Drink to That: Bacardi in Puerto Rico Being Powered by the Wind

Bacardi, creator of the world’s favorite rum, generates energy with power from the wind. Installed in 2010, two majestic, wind turbines now are a distinct part of the landscape – and the environmental consciousness – at the world’s largest premium rum distillery in Catano, Puerto Rico, just outside San Juan.

“The wind turbine project is important for both Bacardi and Puerto Rico as it creates renewable energy,” says Magaly Feliciano, Environmental Health & Safety Manager for Bacardi Corporation in Puerto Rico. “The two industrial-scale turbines produce enough energy to power our visitor center, one of San Juan’s top tourist destinations,” [a press release said.]

The wind turbines generate approximately 1,000,000 kWh of electricity per year, providing three to seven percent of the power for Bacardi in Puerto Rico. To put these numbers into perspective, that’s enough electricity to run all tourism-related activities at the Casa BACARDI Visitor Center – equivalent to the energy that 100 households would consume on an annual basis. All of the power generated by the wind turbines is used onsite at the facility, resulting in an average carbon offset of more than 900 tons of CO2per year. [...]

The two Bacardi wind turbines can be seen from miles away and are industrial scale at 250kW each. They are owned by Catano-based Aspenall Energies, which will sell the wind-produced electricity to Bacardi under a power-purchase agreement.  With their blades, the turbines stand 137 feet high and have a rotor diameter of 75 feet.

Filling the Void: Energy Transfer Partners Board Okays Bakken-Patoka Pipeline

Energy Transfer Partners LP has received approval from its board of directors to manufacture a roughly 1,100-mile pipeline (Bakken Pipeline). The publicly traded energy pipeline operator will transport crude oil from the oil producing region in the Bakken shale to Patoka, IL. Bakken Pipeline will thereafter join the partnership’s existing Trunkline Pipeline (Trunkline).  

Energy Transfer Partners added that the shippers will get the opportunity to access the Midwest and East Coast markets by transporting crude from Patoka via rail. The shippers can also use the Trunkline to carry crude to the Gulf Coast market and Sunoco Logistics Partners LP’s crude oil terminal at Nederland, TX.
The partnership’s plan to build the Bakken Pipeline stems from sufficient interest that shippers showed in transporting the produced crude oil from the Bakken shale to the multiple markets. The pipeline will be able to carry 320,000 barrels per day crude oil initially. Later on, Energy Transfer Partners will boost the capacity as per customer demand. The partnership expects the Bakken Pipeline to start operating by the latter half of 2016.

Dam This Hydropower: Dam Potential To Be Examined Near Philadelphia

Norristown, Montgomery County [Pa.] is exploring whether the Norristown Dam on the Schuylkill would support a hydroelectric power system.

A nationwide study by Oakridge National Laboratory identified the 869-foot-long, 12-foot-high dam as a potential hydroelectric site, estimating that it could generate 12 million kilowatts per year – enough to power 3,600 homes, said Ken Starr, county director of assets and infrastructure.

That Musky Smell: SolarCity Acquiring Start-Up, Silveo, to Build Solar Panels

SolarCity, the fast-growing provider of rooftop solar electricity systems, is moving into the panel manufacturing business, acquiring a start-up and planning to build one of the world’s largest module factories in Buffalo, executives said on Tuesday.

The move into manufacturing, a business that has proved deadly for many other upstart American solar companies, is intended to help the company bring the cost of the electricity it sells below that of fossil fuels, even after subsidies phase out.

To accomplish that goal, the company plans to pay at least $200 million in stock for Silevo, which makes high-efficiency panels at a low cost, executives said. It is also in talks with New York State officials to expand on a plant that Silevo was already planning.

“If we don’t do this, we felt there was a risk of not being able to have the solar panels we need to expand the business long term,” Elon Musk, SolarCity’s chairman and the chief executive of the electric carmaker Tesla, told investors in a conference call. “We’re seeing high-volume production of relatively basic panels but not high-volume production of advanced panels, so we think it’s important that the two be combined.”


“The energy of the mind is the essence of life.” — Aristotle



Lifting Oil Export Ban May Be Boon For Dispirited Economy, Cover For Obama

A pumpjack doing its work in South Texas near the Eagle Ford shale play. Photo by Tony Cadwalader.

A pumpjack doing its work in South Texas near the Eagle Ford shale play. Photo by Tony Cadwalader.

Limited modified hangout by U.S. allows opening for oil exports

Perhaps it is a grudging concession by the Obama administration to allow a limited amount of united States oil to be exported, but a concession it is. On Tuesday the U.S. Department of Commerce announced it would allow the exports as a result of a petition filed by two independent Texas oil companies, Pioneer Natural Resources, a Dallas-based oil and gas producer, and Enterprise Products Partners of Houston, one of the country’s biggest pipeline operators.

The ruling would allow the companies to export condensate and not heavy oil, an important distinction in refining terms. But the ability to finally export this lighter crude product should alleviate some of the built up reserves from America’s booming shale market. Condensate is the slightly refined product that has been stripped of gases to make it less volatile, a minimal level of processing known as stabilization. “Under current rules, companies can export refined fuel, such as gasoline and diesel, but not oil itself; the government’s new approach reportedly redefines some ultra-light oil as fuel after it has been minimally processed, making it eligible for sale abroad,” a Seeking Alpha brief on the decision said. The first shipments could be made as soon as August and could mean an outflow of as much as 3 million barrels per day.

The ruling loosens a 1975 ban — the Arab oil embargo — that came about because of the OPEC-influenced U.S. oil crisis from the early 1970s. Politically this is probably as far as Obama is willing to go for fear of angering his leftwing, the grass-root Democrats who do not like the oil and gas industry, and in turn angering big oil and its lobbying arm, which has always had a protectionist streak in it, and does not really appreciate the independent drillers. The one area the bigs have the most control is at the refineries, and that is the one place that would be hit the hardest by fully lifting the export ban.

That’s not to say that the big oil companies are hard core Democrats. None of the states at the center of the oil and gas revolution voted for Obama, save Pennsylvania, according to this analysis from December 2013.

Elections have consequences, and the U.S. oil industry backed the loser in 2012. Not only that but oil and gas producers allowed themselves to be painted as an arm of the Republican Party. By contrast, environmental groups and clean-energy companies were among the president’s most important supporters in terms of fundraising and mobilization on the ground. Environmental campaigners have therefore wielded immense influence over the White House throughout the president’s first and second terms.

They are unlikely to be sympathetic to permitting oil exports if it means more domestic oil production and more fracking. While many environmentalists, and the White House itself, have grudgingly embraced natural gas as a cleaner-burning alternative to coal, that enthusiasm is unlikely to extend to crude oil.

Earlier this year, the International Energy Agency (IEA) argued “either U.S. crude is shipped abroad or it stays in the ground” But that is exactly what many environmental groups want.

That said, in an economy that is one quarter of bad numbers away from falling back into a recession, this stand does little to create new jobs. And the oil and gas boom has been a great provider of that. Indeed, export restrictions harm job growth in the oil industry, but they support thousands of jobs in the refining and petrochemical industries, many of which are unionized, and some of which are based in Democratic districts, the above linked article said. “So while the White House probably has the legal authority to lift the export ban, acting on its own if necessary, it is not a political priority for the president.”

Economically the decision has already shown in the markets where the distance between higher priced Brent Crude, which is linked to the world price of oil and gas, and its export-locked competitor West Texas Intermediate has narrowed. Bloomberg, citing Citigroup, estimates about 300,000 barrels a day of an ultra-light oil known as condensate could be exported by the end of the year. “In total 750,000 barrels a day of condensate is pumped from U.S. shale plays, according to Wood Mackenzie Ltd. Exports would give U.S. producers access to niche markets in Asia and Latin America, while having only a small impact on the price domestic refiners pay for crude.”

The U.S. pumped 8.45 million barrels of oil a day in the week to June 20, according to U.S. Energy Information Administration data. The Eagle Ford shale produced 205,000 barrels a day of condensate in the first quarter, according to data from the Railroad Commission of Texas. Pioneer Natural Resources pumped about 29,000 barrels a day of oil and natural gas liquids from the formation over the same period, according to a presentation on the company’s website.

There is probably no greater student of the oil and gas industries than Daniel Yergin, the author of The Quest, and vice chairman of IHS, an analytics think tank. Coincidentally Yergin spoke on Tuesday of the economic benefits of lifting the export ban. In summary he said:

  • Natural gas production increased 27 percent between 2007 and 2013. Estimates of recoverable natural gas reserves have more than doubled since 2005. U.S. oil production has increased 3.3 million barrels per day since 2008 – a 66 percent increase. This increase alone is larger than the output of 11 of 12 OPEC countries.
  • By 2012, the unconventional natural gas and oil activity was already supporting more than 2.1 million jobs across a vast supply chain. About 60 percent of these jobs – 1.3 million – were from shale gas activity; the rest from tight oil.
  • By 2012, the unconventional natural gas and oil activity was already supporting more than 2.1 million jobs across a vast supply chain. About 60 percent of these jobs – 1.3 million – were from shale gas activity; the rest from tight oil.
  • The total number of jobs supported is expected to rise to 3.3 million by 2020 – with 1.8 of those jobs from shale gas.
  • In 2012, this revolution added $74 billion to federal and state government revenues. IHS projects the number to rise to about $125 billion by 2020. Between 2012 and 2035, unconventional activity is expected to generate nearly $1.6 trillion in cumulative government revenues. 

According to Yergin, the increase “has almost exactly balanced the amount of oil currently missing from the world market owing to disruptions in countries like Libya and Iraq and sanctions on Iran. In other words, the increase in U.S. oil production has compensated for loss of oil elsewhere. Without that increase, we would be looking at much higher oil prices than today.” 

That’s via Zero Hedge where Tyler Durden notes the issue is too politcal to move any further:

“In other words, the enormous growth in U.S. oil production has helped to displace imports, but only at marginally lower prices than imported oil would have commanded. Unlike the shale-gas revolution, the growth in shale-oil extraction hasn’t led to a big price drop.

“Allowing exports on a large scale under these conditions wouldn’t be a good idea. Pioneer, a small producer, and pipeline operator Enterprise Product Partners, which doesn’t have its own extraction operations, aren’t going to make much difference to the U.S. energy balance if they are allowed to sell some lightly processed condensate abroad. What is valuable to President Barack Obama’s administration is the public-relations effect of the rulings: The world will now know that the U.S. is an oil exporter for the first time since the 1970s. Europeans may take U.S. promises to help wean them off Russian hydrocarbons a bit more seriously. The Organization of Petroleum Exporting Countries and Russia will keep in mind the threat of U.S. pressure on global oil prices.”

Study: Solar Panel Costs Likely To Rise Sharply In U.S. By 14% Because Of Tariff War

The American and Chinese flags stand at center table before a meeting between U.S. and Chinese delegates for a meeting at the Pentagon, from Aug. 23, 2012. This Image was released by the United States Department of Defense. Photo by Glenn Fawcett, courtesy of WikimediaCommons.

The American and Chinese flags stand at center table before a meeting between U.S. and Chinese delegates for a meeting at the Pentagon, from Aug. 23, 2012. This Image was released by the United States Department of Defense. Photo by Glenn Fawcett, courtesy of WikimediaCommons.

The downside to the U.S.-China solar tariff tiff is higher prices for American consumers

According to a recently released study by GTM Research, a clean-energy research firm, U.S. consumers of Chinese-mannufactured solar cells should see prices go up by some 14 percent. GreenTechMedia’s Mike Munsell said in an article summarizing the study that U.S. Department of Commerce’s June 4, tariff announcement will likely cause “Chinese suppliers to increase prices for delivery in the U.S. and consider a number of different value chain strategies.”

If the eventual margins, including both the countervailing duty and antidumping components, exceed the preliminary countervailing duty margins of 27 percent on average, suppliers are unlikely to preserve their previous shipment strategies. GTM Research expects that some suppliers will elect to ship all-China products into the U.S. and pay the under-order import tariffs imposed in the 2012 solar trade case, while others will sell via internal or OEM manufacturing in locations such as India, South Korea, Poland or Mexico.

GTM Research identifies and evaluates four individual strategies and their likely adopters. The price impact of these strategies ranges from 7 percent to 20 percent, but the most affordable strategies are not available to all companies. GTM Research anticipates an average overall price increase of 14 percent on modules shipped into the U.S. by Chinese suppliers.

Cheap Chinese-made solar panels have largely undercut American-made solar cells, and have driven the boom in residential solar installations. As reported here at the Daily Energy Dump, in early June the Department of Commerce imposed newer and steeper anti-subsidies tariffs on Chinese solar panels, ramping up a trade war between the two countries that is now well into its third year.  which have fueled the boom in residential solar-power systems. 

The U.S. installed 1,330 megawatts of solar photovoltaics in the first three months of 2014. (See above link.) China is both the world’s largest supplier of and the largest market for renewable energy technologies, according to the United States Department of Commerce International Trade Administration.

A Marketwatch story by Claudia Assis today said, Chinese companies supplied a third of the modules installed in the U.S. last year, and more than half of the modules used in residential systems. Now those looking to install solar module will likely see their costs go much higher.

Prices for Chinese modules shipped to the U.S. are “highly likely” to increase starting in July, the consultants said. “Consequently, the primary competitive advantage of Chinese suppliers in the U.S. market – lower pricing by as much as 25% historically – could be greatly diminished,” they said.

With the Chinese companies’ likely retreat, beneficiaries will include Norway’s REC Solar ASA, one of the largest European PV makers, and LG Solar, which cater to the residential market, and First Solar Inc. in the utility market, GTM Research said.

Shares of First Solar retreated 1.6% on Thursday, approaching the end of the week with gains of 6.4%. First Solar shares have advanced 54% in the past 12 months, and lost 1.2% in the last three months.

Assis noted the repercussions are already beign felt on Wall Street where among Chinese-based PV makers, U.S.-listed shares of Chinese-based photovoltaic maker JA Solar Holdings Co. were off 3.5 percent, while Trina Solar Ltd.’s U.S.-listed shares declined 2.4 percent. U.S.-listed shares of Yingli Green Energy Holding  fell 1.8 percent.

Shares of SunPower Corp., which also emerged as a beneficiary when the tariffs were announced, were down 0.9% on Thursday. In the past 12 months, SunPower shares have gained 110%, and advanced 22% in the last three months.

SolarCity Corp. shares declined 0.9%. SolarCity shares have gained 84% in the past 12 months, and lost 8.6% in the last three months.

The petitioner for the Commerce Department’s investigations is SolarWorld Industries America Inc., a subsidiary of a German company.

The products covered by these investigations are crystalline silicon photovoltaic cells, and modules, laminates, and panels, consisting of crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products, including, but not limited to, modules, laminates, panels and building integrated materials, according to Commerce Department documents referenced above.

Excluded from the scope of these investigations are thin film photovoltaic products produced from amorphous silicon, cadmium telluride, or copper indium gallium selenide, the Commerce Department said.

After a sunny run of strong performances by many U.S. solar companies the solar industry is beginning to see black clouds on the horizon, according to Jennifer Runyon at She said Tony Clifford, CEO of Standard Solar sees no sign of a settlement coming anytime soon between the two countries. “’Module prices are going up, not down, and uncertainty confuses the supply chain and the entire industry,’ he said.  ‘That is truly bad news for our industry.’”

Clifford also has fears about reaching grid parity, a brewing battle on income tax credits applied to the solar industry, and, perhaps closest to home, a battle between solar and the public utilities, who see solar as threat to their turf “and have not yet begun to do the work involved in adapting to a changing electricity market,” Runyon said paraphrasing.
The wake-up call for them came last year when the Edison Electric Institute said that solar and other forms of distributed generation posed “disruptive challenges” for the utility industry.  Clifford said that solar companies need to be prepared for a fight. However, he said, these battles won’t take place in a large arena but rather in small utility rate cases at public utility commissions all across America.  “Decisions of utilities will vary,” he said.  But they are conservative by nature and “most will fight to defend their turf,” said Clifford.  “Ultimately the value of solar will be determined in utility rate hearings across the country, he warned. “To protect our interests the solar industry must be present and well-prepared for hearings nationwide otherwise utilities will eat our lunch,” he concluded. 

The issue is a complex one that reaches from the lowliest solar user and installer to the highest levels of two governments and Wall Street. GTM Research’s report found that both the tariff process and its potential outcomes remain poorly understood by much of the solar industry.

It may be that it is poorly understood by the Department of Commerce too, as its efforts to prop up Solar World Industries is contributing neither to freer trade nor to increased competition and the influence that has on markets, but to higher prices for solar consumers. That’s a disturbing consequence.


Wind Generates New Record In Texas

Image courtesy of the U.S. Energy Information Agency

Image courtesy of the U.S. Energy Information Agency

Texas see surge in wind generating, underpinning overall boost

The U.S. Energy Information Agency reports Texas has reached new levels of wind energy production, reaching instantaneous peak output of 10,296 megawatts (MW). The moment came on March 26, and means wind supplied almost 29 percent of total electricity load.

According to the Electric Reliability Council of Texas, the grid’s operator, “The average wind production in that hour was 10,120 MW. The new wind record surpassed two highs reached in the previous week, while the record prior to March was 9,674 MW set in May 2013.” The EIA goes on to report:

March’s wind power record will likely be surpassed in the near future as wind capacity continues to be added in the state. Texas currently has more than 12,000 MW of operational utility-scale wind capacity (see graph below)—about one-fifth of the total wind capacity in the United States. According to preliminary data from the U.S. Energy Information Administration’s Electric Power Monthly, Texas added 150 MW of utility-scale wind capacity in 2013, less than one-tenth of the nearly 1,600 MW added in the previous year.

The significant slowdown in wind additions in 2013 mirrored the national trend, which reflected the lapse of the federal production tax credit (PTC) at the end of 2012. That lapse encouraged those with facilities under construction to complete them and begin operation before the end of 2012 in order to receive the tax credits (which are for all generation during the first 10 years of operation). The subsequent one-year extension in early 2013 required only that plants commence construction in 2013 to be eligible to receive the tax credits after the start of operations at a later date. This modification of eligibility requirements led to many wind projects beginning construction in 2013 with expected completion dates in 2014-15.

The EIA notes that there were some 7,000 MW of wind projects under construction in Texas at the end of 2013, though when that added capacity is ready to come on line is still unknown. EIA credits the Competitive Renewable Energy Zones (CREZ) program as reason for the successful surge in wind energy in the Lone Star State. The CREZ “was specifically designed to allow wind power to reach a wider swath of the ERCOT grid and reduce grid congestion-related curtailments of wind power,” the EIA said.

The high readings in March can perhaps be seen as a sign that wind is playing a crucial role as part of Texas’s energy grid. A Bloomberg article from June 17, said while spot wholesale energy prices moved higher in the MIdwest, Mid-Atlantic and Northeast because of the first hot days leading into summer, in Texas prices dropped.

“Wind turbines produced an average of 7,447 megawatts for the hour ending at 2 p.m. local time, surpassing the day-ahead forecast by 77 percent, or 3,237 megawatts, according to the Electric Reliability Council of Texas Inc., which manages most of the state’s power. Wind provided 9.9 percent of the electricity used in the Ercot region in 2013,” Bloomberg said. “Spot power across the Ercot grid fell 48 cents, or 1 percent, to average $46.09 a megawatt-hour during the hour ended at 2 p.m. local time from the same time yesterday.”

This is a compelling anecdote for those in favor of an all-of-the-above energy strategy, as wind energy production proves itself to be a valuable buffer to fluctuating market prices for oil and gas, which are today being buffeted by the problems Iraq.


Brazil: World Cup Brings a Spike in Energy Use, Leaves a Huge Carbon Footprint

Brazilians gather to watch the 2010 World Cup. Photo courtesy of Wikimedia Commons.

Brazilians gather to watch the 2010 World Cup. Photo by Marcello Casal Jr., courtesy of Wikimedia Commons.

Brazil is uniquely capable of providing the energy needs for the World Cup, but the event doesn’t come without great costs in CO2 emissions

The United States begins its World Cup bid today in Brazil. So what are Brazil’a energy capabilities and how much energy is expected to be used during the month-long festivities? Moreover what does its carbon foot print look like?

To begin with let’s note Brazil is large. It’s by far the largest country and South America  land-wise, representing half of Latin America’s surface area, as well as being its most populated, with more than 196 million people as of 2011, according to the International Energy Agency. With a gross domestic product of $1,126.72 billion (U.S.)

According to a 2006 study done by the International Energy Administration, Brazil also ranks 10th in the world for energy consumption, and the second largest proven oil reserves after Venezuela. It is third in proven natural gas reserves behind Venezuela and Bolivia.

It produced more than 249 million tonnes of energy (Mtoe) in 2011, and consumed some 480 terawatt-hours (TWh) of electricity, the study cited above said.

Indeed, Brazil has a unique energy profile. It is the world leader in ethanol use and production, and the predominant role of hydropower in electricity generation results in very low emissions from its power sector.

The breakdown of Brazil’s energy supply is: 38.4 percent from petroleum, 15 percent from hydroelectric sources, 13.7 percent from woodfuels, 13.1 percent from sugarcane by-products (bagasse), 9.1 percent from gas, 6.4 percent from coal, 2.9 percent from other renewable sources, and 1.4 percent from nuclear.

It is the largest producer of hydroelectricity in the world after Canada. In 2005, it generated 340 terawatt-hours (TWh), equivalent to 77.1% of total electricity generation. The rest includes: imports (8.3 percent), gas-fired generation (4.1 percent), biomass (3.9 percent), oil derivatives (2.8 percent), nuclear (2.2 percent), and coal (1.6 percent), according to the study.

The national oil and gas company, Petrobras, the largest company in Brazil in terms of profits and revenues, and the 14th largest international oil company, has won international recognition as an expert in deepwater offshore drilling technology. Even though the federal government controls only 32.5% of the total equity, it has retained 55.7% of the voting shares of the company. Therefore, Petrobras is not state owned but state controlled. The government ended Petrobras’ monopoly in 1997 creating the ANP to take on the role of regulator of the oil and gas sector. [...]

Hydropower, accounts for nearly 80% of generation capacity in Brazil. The country enjoys the largest capacity for water storage in the world, and one of largest transmission networks, given the vast geographical area to cover and the resulting long distances between power stations and consumers and the need for back-up circuits to ensure alternative supply routes and optimal regional balance in supply. Both private and government-owned companies operate in generation, transmission, and distribution.

Brazil is also a large exporter of ethanol, and enjoys a special duty free access to markets in the United States, along with several other Caribbean and Latin American countries. Its ethanol is based mostly on sugar cane.

Image courtesy of

Image courtesy of

So that’s Brazil in a nutshell. But what of energy consumpiton during the World Cup, where an estimated 500,000 fans alone will attend, most of home are flying in to the country and using all that jet fuel?

Nick Cunningham of estimates today that the 2014 World Cup will be “one of the biggest energy-consuming, greenhouse gas-spewing World Cups in history.” He estimates it will generate 2.72 million tons of CO2 to the atmosphere, mostly from the flights coming in. “Think about this as the music blasts through the stadium and the fans cheer and scream and the players race up and down the field chasing the ball: The 2014 World Cup tournament will burn through enough energy before it’s over to fuel almost every one of the 260 million cars and trucks in the United States for an entire day, or the equivalent of what 560,000 cars use in a year.”

FIFA, the governing body for international soccer has its own study of the World Cup’s carbon foot print, measuring more commonly thought of items like television production, diesel usage, and floodlights, to the more esoteric things like uniform production, team equipment transportation, and furniture moving.

The FIFA study notes 61 percent of carbon emissions will come through airplane travel, followed by air freight (15 percent), and equipment and satellite transmissions (9 percent).

Interestingly, and perhaps only as an international governing body can do, it lays all this off as no big deal saying, “the uncertainties from the scope of the carbon footprint analysis are considered to be irrelevant. [...] Besides activity data, emission factors play an important role for the quality of the final results. Adequate emission factors were available or could be modelled for all activities but satellite transmission.”

(For more on the unsavory aspects of the ruling bodies that govern soccer, or European football, it is worth reading last week’s Economist article, “Beautiful Game, Dirty Business.”)

Cunningham, in his OilPrice piece, notes that none of this takes into account the building of the new stadiums for the event nor any other Cup-related energy use in ramping up to the first kick off, a win by host Brazil, incidentally, 3-1 over Croatia.

A spike in energy use is likely to occur in places when millions of people turn on their TVs at the same time to watch a match. For example, in the United Kingdom, the record for an energy surge during a TV program occurred during the 1990 World Cup, when England went to a shootout against West Germany in the semi-final. (Incidentally, West Germany prevailed and went on to win the trophy. West Germany’s title run was led by Jurgen Klinsmann, who is now coaching the U.S. national team.)

During that match, the UK National Grid experienced a spike of 2,800 megawatts of demand, as people across England tuned in to watch the game’s climax. Other significant power surges in the UK occurred during England’s 2002 quarter-final match against Brazil (2,570 MW surge), and the 2011 royal wedding of Prince William and Kate Middleton (2,400 MW surge).

In fact, it’s relatively common for the UK to experience a spike in power demand during big soccer matches. National Grid operators have become accustomed to forecasting higher electricity demand during games, according to its operations manager, Jon Fenn. Not only does electricity consumption spike from millions of TV sets, a surge is felt most acutely during halftime or just after the final whistle, when everyone heads to the kitchen to turn on electric tea kettles or grab a snack from the fridge.

Perhaps this is all just a one-off that happens every four years on the international stage, and it is possible to look at the overall benefits to Brazil and the participating countries, as we are wont to do. But if you care a great deal about greenhouse gases and carbon emissions, then the World Cup might be enough to boil your blood.

Brazil's starting 11 beat Croatia on June 12, in the opening match of the 2014 World Cup.

Brazil’s starting 11 beat Croatia on June 12, in the opening match of the 2014 World Cup. Photo by Jefferson Bernardes courtesy of WikimediaCommons.

Via Brazil Business Today

Everything Old Is New Again: It’s the Friday Energy News Dump — Iraq 2014 Edition

U.S. Army Staff Sgt. Darren Vogt, assigned the 1st Battalion 66th Armor Regiment, performs perimeter security in an area where a recent insurgent attack took place on an Iraqi oil pipeline near Taji. U.S. Navy photo by Photographer's Mate 1st Class Michael Larson from March 11, 2006, courtesy of WikimediaCommons.

U.S. Army Staff Sgt. Darren Vogt, assigned the 1st Battalion 66th Armor Regiment, performs perimeter security in an area where a recent insurgent attack took place on an Iraqi oil pipeline near Taji. U.S. Navy photo by Photographer’s Mate 1st Class Michael Larson from March 11, 2006, courtesy of WikimediaCommons.

Iraq Insurgency Risks Biggest Source of New OPEC Oil, IEA Says

The Islamist insurgency in Iraq highlights the risks to oil supply from a nation forecast to provide about 60 percent of OPEC’s output growth in the rest of this decade, the International Energy Agency said.

Iraqi Oil Minister Abdul Kareem al-Luaibi speculated yesterday that U.S. planes may bomb his nation’s north as militants linked to al-Qaeda, who captured the city of Mosul this week, moved south toward Baghdad. The country’s crude output capacity will increase by more than 1.2 million barrels a day in the six years through 2019, the Paris-based IEA estimated in its monthly oil market report today.

“While Iraq’s production potential is huge, so are the political hurdles it is facing – and nothing provides a clearer example of that risk than the military campaign,” the IEA said. “Concerning as the latest events in Iraq may be, they might not for now, if the conflict does not spread further, put additional Iraqi oil supplies immediately at risk.”

Iraq Unrest Tests U.S. ‘Energy Independence’

The idea of U.S. “energy independence” is about to get its first real test as a militant uprising in Iraq raises a potential threat to OPEC’s second-largest producer. [...]

Although no Iraqi exports or production have been affected yet, there has been some impact on the country’s oil infrastructure, as Bloomberg reported:

“The group that calls itself the Islamic State in Iraq and the Levant, know as ISIL, seized Mosul this week, forcing a halt to repairs at the main pipeline from the Kirkuk oil field to the Mediterranean port of Ceyhan in Turkey. There were conflicting reports that Baiji, the site of Iraq’s biggest refinery, had been captured.”

The potential is even greater. The International Energy Agency has predicted Iraq will about for 60 percent of OPEC’s production gain by 2020. [...]

But the events in Iraq pose a greater test of the notion that the U.S. can drill its way to energy independence. The upheaval comes as seasonal demand for gasoline is picking up and two other OPEC members, Iran and Libya, are producing below their capacity – Iran because of sanctions and Libya because of its own political turmoil.

As the Financial Times points out, these issues are compounded by production outages from South Sudan, Colombia and Kazakhstan.

In other words, the available supply of oil on the world market could tighten quickly.

Oil Heads for Year’s Biggest Weekly Gain on Iraq Unrest

West Texas Intermediate and Brent crudes headed for the biggest weekly gains this year as Islamist fighters extended their advance in Iraq, triggering concern of a return to civil war.

Futures in New York climbed as much as 1.1 percent today while they added 1.5 percent in London. Government forces in Iraq, OPEC’s second-biggest oil producer, are seeking to dislodge Islamist militants from cities north of Baghdad after they overran army positions in Mosul this week. U.S. President Barack Obama said yesterday he won’t rule out using airstrikes to help the government.

“Prices have jumped to nine-month highs as the upsurge of violence in Iraq has raised additional risk of supply disruption,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The situation in Iraq is going to continue to guide the market for a while.”

How Iraq’s Kurds May Be The Unlikely Losers In The ISIS Chaos

It’s been a tough few days for Iraq’s Kurds. They have failed in their efforts to sidestep Baghdad to sell their own oil. And they have been forced, by the ISIS offensive, to stretch their security forces thin, in order send peshmerga to protect Kirkuk.

It wasn’t supposed to be this way. The Kurds have long appeared to be the only group in Iraq that knows how to get anything done. For a decade now the Kurdish Regional Government of northern Iraq, backed by their loyal peshmerga security forces, has presided over a relative calm. That has helped draw in billions of dollars of investments from oil companies eager to tap some of the world’s last virgin megafields. [...]

The events of this week have made those dreams of independence seem further away. On Monday two car bombs near the offices of the Patriotic Union of Kurdistan, the party of Iraqi President Jalal Talabani, reportedly killed 22.

Then on Tuesday came the ISIS attack on the northern city of Mosul. It’s not out of the realm of possibility, suggests my source, that Iraq’s federal security forces were encouraged by Baghdad to run away rather than fight ISIS. Why? Because in leaving such a security vacuum it has forced the Kurds to stretch their own security forces thin by occupying Kirkuk and standing on guard against ISIS. This necessarily weakens the Kurds’ security stance along the border with Turkey.

Viewed from 20,000 feet, away from the reality of summary executions and refugees, it’s all a big chess game. “Though I hate to give him credit, Maliki is playing the crisis well,” says a source.

Oil Volatility Rebounds From Record Low as Iraq Violence Worsens

Oil-price volatility rebounded from the lowest on record as violence escalated in Iraq, the second-largest crude producer among the Organization of Petroleum Exporting Countries.

The 20-day historical volatility of Brent crude futures rose as high as 13 percent yesterday, according to exchange data compiled by Bloomberg. It fell to 7.2 percent on June 3, the lowest since the contract began trading in 1988. Islamist fighters extended their advance in Iraq, entering two northeast towns as government forces failed to halt an offensive that triggered concern over a civil war and prompted the U.S. not to rule out airstrikes.

“Volatility is a reflection of uncertainty,” Olivier Jakob, managing director of Switzerland-based researcher Petromatrix GmbH, said by phone today. “Up until last Friday, we were in a period where uncertainty in the market was low. Libya was out, and we knew, and nobody was expecting it to come back quickly. The market was pretty well supplied. This week we are back to having some uncertainty” because of Iraq.


Solar Energy Is On The Verge of Disrupting the Status Quo and Changing the Industry

Solucar PS10 is the first solar thermal power plant based on tower in the world that generate electricity in a commercial way. Photo provided by Solucar PS10, courtesy of WikimediaCommons.

Solucar PS10 is the first solar thermal power plant based on tower in the world that generate electricity in a commercial way. Photo provided by Solucar PS10, courtesy of WikimediaCommons.

Solar energy seems primed to move to another level for investors and users World events like Russia vs. Crimea, the fundamentalist Islamic insurgency sweeping through Iraq, or China vs Everyone Else portend difficulties in the oil and gas industry, still the most used form of energy. It’s good to look forward to the traction being gained by solar energy as an important source. This week showed the continuing evolution of the solar energy industry into one with potential to attract investment and prove to be a leading disruptor. And, it’s appearing in myriad ways, which is why there is reason for optimism. CBD Energy Ltd., a Sydney-based renewable-energy developer, plans to expand along the U.S. East Coast after completing the purchase of a solar company in North Carolina and selling shares in the U.S, according to BloombergCBD Energy sold 1.8 million shares for $4 each. They began trading today on the Nasdaq Capital Market and no longer trade over the counter. The company will receive about $6 million in net proceeds, according to a statement.

“We’ve seen the U.S. understands renewables very well, and it’s been well received in the financial community,” he said in an interview. “The Australian market is really a mining exchange — it doesn’t have the cleantech market — which is why we delisted from there.” CBD Energy licensed technology from Westinghouse Solar Inc. that it will sell to homeowners in the U.S., where about 1 percent of homes have rooftop systems, compared with 15 percent in Australia, McGowan said. He plans to start in Massachusetts and expand along the East Coast from there. “When you’re seeing solar able to compete with fossil-fuel generation, people see that there’s a market for it,” he said.

This is a small example, but it adds to other similar stories that begin signifying a trend. Leslie Shafer of CNBC explores the improving prospects of solar energy, noting that what was once thought to be a “pipe dream” is becoming more than that. While it’s use in the” renewable energy remains tiny compared with fossil fuels, it may be poised to completely reshape the energy market.”

“Solar is now cheap enough that it competes with oil, kerosene, diesel and LNG in developing markets and yet is still small enough that it cannot disturb pricing for energy in any market,” Bernstein Research said in a note earlier this month. [...] “Solar can simply get bigger and bigger,” it said. “Since it is a technology, it will get even cheaper over time. Fossil fuel extraction costs will keep rising,” it said. Once solar begins to displace a material share of the fossil fuel supply, energy-price deflation would be inevitable, Bernstein said, although it added, “even on an aggressive view, this could take the better part of a decade.” Power plants in California, Germany and Australia – places which have significant solar installations – are already starting to feel the effects, [he] said. [...] “Cost reductions will put solar within striking distance, in economic terms, of new construction for traditional power-generation technologies, such as coal, natural gas, and nuclear energy,” McKinsey & Co. said in a report earlier this month. “Depending on the market, new solar installations could now account for up to half of new consumption,” it said, noting that more than 20 percent of newly-installed capacity in the U.S. was solar during the first ten months of 2013.

To be sure, calling solar a potential disruptor has been happening for a number of years now. In 2010 Forbes staff writer Kerry A. Dolan said advanced biofuels, onshore wind, solar photovoltaic energy and concentrated solar power are likely to be the important disruptors by 2025, citing a report from  energy experts at Boston Consulting Group. (Note: The link on the Forbes site comes up as a 404 error.)

Solar photovoltaic technology shows promise as a disruptive technology because it, too, can reach cost competitiveness – 9 cents to 10 cents a kilowatt-hour – without government subsidies by 2020, BCG says. Solar shares some of the same barriers to adoption with wind: land requirements, transmission requirements and permitting. But the adoption rate of solar is likely to accelerate in the next decade.

Perhaps those days are arriving well before 2025. Alpha Seeking has an interesting look into solar disruptors in a June 11 article, noting that the utilities section is prime for a makeover, but will have to overcome special interests.

The energy sector is primed for disruption. The rise of solar as an efficient and realistic source of energy is becoming a reality today. Use of solar power using photovoltaic (PV) systems has been around for over a century. [..] We saw immense subsidies from Germany in the last decade that drove the technological innovation and prices down in the PV systems. However, Germany made a policy change after the Fukushima disaster to quit using nuclear power to fulfill its power needs. This was good news for the solar industry, but in a surprising move, Germany is now planning on cutting the subsidies to the solar sector, even though its facing rising energy costs. The baton for making solar energy affordable now has been passed onto China. China took a decision to pursue clean energy avenues in order to solve its problems of both energy needs and pollution. The Swanson’s law is an observation that the price of solar photovoltaic modules tend to drop 20% for every doubling of cumulative shipped volume. A detailed analysis of how China took this problem seriously and dove head-first into piling on the investments was recently published on Business Insider. BI has also featured a couple of interesting articles on the unprecedented drop in solar energy prices and Goldman’s take on it. I recommend readers check out these articles as they make for an interesting read. The US still faces the onslaught of the incumbent special interest groups, but the tide is slowly turning with new installations and support for the solar industry. [...] The utilities sector is prime for disruption. The sector has remained in the dark ages by relying on burning coal and gas to provide for the energy needs. The new EPA regulation sets a target to cut coal emissions by 20%. While this is definitely bad news for the coal industry, it may also spell bad news for the utilities sector. Not surprisingly, Barclay’s downgraded the whole utilities sector. Some utility companies see the rising solar movement as a threat to their business and are trying to create roadblocks such as the one seen in Arizona and Oklahoma. But the widespread use of new technology always comes with such hurdles and will eventually find a way to disrupt the sector.

Germany’s efforts to quit using nuclear may have been noble, but the cost of subsidizing the industry trying to make up for the loss nuclear power has brought on a string of unintended consequences, been extremely costly, sending energy prices up, and forcing the country to import dirty coal to supplement the power supply. The abrupt wholesale abandonment of nuclear was shortsighted. Still, the country is on the right track, and one of the largest solar players in the world. China, as we’ve noted here before, along with the U.S. are the biggest players and the biggest disruptor drivers. With the continuing evolution of solar technology — in photovoltaics, and storage capacity, particularly — the industry is on the cusp of changing the direction of energy production and consumption.

Tit-for-Tat Moves Over Oil Rig Increase Territorial Tensions on The South China Seas

Map of the South China Sea, with nine-dotted lines highlighted in green showing rough territorial borders, from 1988, from the U.S. Central Intelligence Agency. Courtesy of WikimediaCommons.

Map of the South China Sea, with nine-dotted lines highlighted in green showing rough territorial borders, from 1988, from the U.S. Central Intelligence Agency. Courtesy of WikimediaCommons.

Discord between Vietnam and China ratcheted up last week as Hanoi pushed Beijing to have a Chinese offshore oil rig moved; both parties look to United Nations

A dispute between Vietnam and China over oil exploration in the South China Sea took another turn when Vietnam’s United Nations ambassador urged China last Tuesday to withdraw its oil rig and more than 100 ships from the South China Sea to create “an environment” for negotiations on the disputed waters, the Associated Press said.

But Ambassador Le Hoai Trung said in an interview with The Associated Press that Beijing refuses to engage in dialogue and insists there is no dispute, claiming the area around the rig belongs to China.

The escalation in tensions is the most serious in years between Vietnam and its massive northern neighbor, which claims nearly all of the South China Sea.

China sent the rig into the disputed waters on May 1, provoking a confrontation with Vietnamese ships, complaints from Hanoi and street protests that turned into bloody anti-Chinese riots. Hundreds of factories were damaged, and China said four of its citizens were “brutally killed” and over 300 injured.

Trung said “some extreme elements” provoked by China’s deployment of the rig undertook actions which the government “very much regrets.” He said many suspects have been arrested and prosecuted, and the government has taken measures to prevent a repetition of the violence.

The Haiyang Shiyou 981 rig is drilling between the Paracel islands, which China occupies, and the Vietnamese coast. Vietnam has said the rig is in its 200-nautical mile exclusive economic zone and on its continental shelf. China says it is operating within its waters.

Beijing accused Hanoi of infringing its sovereignty and illegally disrupting a Chinese company’s drilling operation, the Japan Times said.

Moreover, China claims all the waters as its own, according to the AP, which includes areas of strategic interest to many area nations beside Vietnam, including the Philippines and Japan.

China is optimistic about finding a big discovery in the area, according to a May 28 Reuters story.

That would give China its first viable energy field in the disputed South China Sea, as well as make it a source of friction with Hanoi for years to come. [...]

The $1 billion deepwater rig owned by state-run China National Offshore Oil Company Group (CNOOC Group), parent of flagship unit CNOOC Ltd, is scheduled to explore until mid-August. [..]

China National Petroleum Corporation (CNPC), the dominant oil and gas producer in China, owns the block being drilled but has given it no name, Chinese officials said. The world’s largest energy user imports nearly 60 percent of its oil needs and more than 30 percent of its natural gas. [...]

Vietnam has two fields to the left of the rig, much closer to its coast, where U.S. giant Exxon Mobil Corp discovered oil and gas in 2011 and 2012.

According to the Asian News Network, the United States is pushing to have both countries withdraw to make room for a negotiated settlement.

“We do have a problem with blanket assertions by both Vietnam and China that their claims are indisputable,” Daniel Russel, US Assistant Secretary of State for East Asia and the Pacific, told select journalists yesterday in a conference call from Yangon, where he attended meetings related to the Asean Regional Forum.

“The issue is one of behaviour, not absolute rights, and the problem with the deployment of the rig in part is that it was done at a time of heightened tensions following a series of other troubling confrontations at sea,” he said.

The senior US official was speaking two days after China’s Foreign Ministry presented its case for sovereignty over the Paracels, based on historical grounds, such as ancient naval expeditions and latter day evidence such as Vietnamese maps describing the isles with Chinese names.

Russel noted that Vietnam has claimed sovereignty of the Paracels for a long time. Moreover, it had been developing oil and gas reserves in an area where it had formally declared an Exclusive Economic Zone that derives from its mainland coast.

“Both China and Vietnam should remove all their ships, and China should remove the oil rig not because we take a position on who is right, but to create space for the diplomatic process to manage tensions,” he said.

The conflict is increasingly becoming defined by tit-for-tat maneuvering. Chinese state media said Beijing sent a position paper to U.N. Secretary-General Ban Ki Moon on Monday, alleging that Vietnam rammed Chinese vessels more than 1,400 times near oil drilling operations in the South China Sea, the Asia News Network said. This came after Vietnam released dramatic footage showing a large Chinese ship ramming one of its fishing boats, which then sank.

According to Reuters, Vietnam said Wednesday that the Chinese oil rig at the centre of the dispute appeared to be on the move again, as China denied Vietnamese accusations that it had sent warships to the scene. China had 119 vessels in the rig’s operating area, it added, including six naval ships and four circling military aircraft. “However, Chinese Foreign Ministry spokeswoman Hua Chunying dismissed as ‘completely incorrect’ the accusations that China had sent six warships, adding that the rig operations were commercial in nature,” Reuters said.

As of June 7, Chinese ships had been rammed 1,416 times by Vietnamese vessels, according to the Chinese account, the Wall Street Journal said. Those parries followed the sinking in early May of a Vietnamese fishing boat by a much larger Chinese vessel, which each side blamed on the other.

As for its appeal to the U.N., “Beijing still opposes arbitration but seeks to spread its position via [the] global body,” the  Journal said.

China maintained its resistance to seeking a multilateral resolution in the dispute, but the approach suggested that Beijing is growing uneasy about the damage its reputation has suffered from the spat with Vietnam and from a similar dispute with the Philippines, both of which have characterized China as a bully pushing around its smaller neighbors.

China’s bid to spread its message via the U.N. came after Beijing’s rejection of a legal case the Philippines has brought against to an international tribunal in The Hague under the terms of the U.N. Convention of the Law of the Sea.

n a sign that the criticism is starting to hurt China—which had worked hard to convince its Asian neighbors of its “peaceful rise” before taking a more assertive approach to territorial issues in recent months— Wang Min, China’s deputy permanent representative to the U.N., requested that Mr. Ban distribute the paper among the U.N.’s 193 member states, according to China’s official Xinhua news agency.

Xinhua said Mr. Wang called on nations to uphold principles of the Convention on the Law of the Sea.

“The Chinese government believes that the most effective way to peacefully settle maritime disputes is negotiation and consultations between the parties directly involved in the dispute on the basis of respect for historical facts and international law,” Mr. Wang said, according to Xinhua.

This, however, has not stopped China from rejecting any U.N. arbitration of the dispute with Vietnam.

The tensions portend a larger clash around the South China Sea, and shows signs of new national alliances. Walter Russell Mead at the American Interest explains:

In the fight over the South China Sea, a system of alliances is emerging, as the AI wrote last week. Vietnam and the Philippines have been the most vocal in opposing China’s claim on the Sea so far. Last week, Indonesia appeared to join them. The presidents of both countries met in Manila and agreed to redraw their maritime boundaries so they no longer overlapped. Indonesian President Susilo Bambang Yudhoyono even got in a dig at China, telling reporters that “disputes including maritime border tension can be resolved peacefully.” Benigno Aquino concurred.

On the other side is China and not too many other countries. The failure of the Association of Southeast Asian Nations (ASEAN) to collectively condemn China’s actions proves that Beijing has at least one or two friends within the southeast Asian alliance. But who else is there? Surprisingly, Taiwan might be on China’s side. Reuters reports:

Taiwan is building a $100 million port next to an airstrip on the lone island it occupies in the disputed South China Sea, a move that is drawing hardly any flak from [...] China.

The reason, say military strategists, is that Itu Aba could one day be in China’s hands should it ever take over Taiwan, which it regards as a renegade province.

While Itu Aba, also called Tai Ping, is small, no other disputed island has such sophisticated facilities. Its runway is the biggest of only two in the Spratly archipelago that straddles the South China Sea, and the island has its own fresh water source.

“Taipei knows it is the only claimant that (China) will not bother, so it is free to upgrade its facilities on Tai Ping without fear of criticism from China,” said Denny Roy, a senior fellow at the Hawaii-based East-West Center think tank.

“China would protect Taiwan’s garrisons if necessary.”

The battle for the South China Sea is taking shape, and fast.

The Wall Street Journal article linked above from today notes that Western analysts and at least one former Obama Administration official are increasingly concerned that China is not sufficiently worried about its image, and that the surging power “didn’t much care what the world thought about its actions, and would continue forcefully pressing its territorial claims regardless of other countries’ complaints.

“Gary Samore, the White House adviser on weapons of mass destruction during President Barack Obama’s first term, commented that China seemed completely unfazed by the damage being done to its international image. ‘Does this even matter back in Beijing?’ he asked.”

State Dept. Revises Key Injury, Fatality Numbers from Hauling Oil Upward

BNSF eastbound oil train in Bad Rock Canyon. Empties making the return trip to North Dakota for more Bakken oil. Near Columbia Falls Mont. Photo taken Jan. 5, 2013 by Roy Luck, courtesy of WikimediaCommons.

BNSF eastbound oil train in Bad Rock Canyon. Empties making the return trip to North Dakota for more Bakken oil. Near Columbia Falls Mont. Photo taken Jan. 5, 2013 by Roy Luck, courtesy of WikimediaCommons.

State Dept.’s updated report does little to clear the path for Obama to  make a decision thwarting the pipeline

Perhaps it was intended to not make waves among environmentalists, however the State Department’s report released on Friday roiled the waters nonetheless. In it the State Department said there could be hundreds more deaths and thousands more injuries than expected over the course of a decade if the Keystone XL pipeline is not built, and freight trains are used instead.

Using a full annual incident dataset for the 10-year period, updates previously released revise estimates, increasing the number of injuries from 700 to 2,947 and number of fatalities from 92 to 434, according to the report.

As Reuters reports, the updated figures are a revision from a January State Department report which said that blocking the controversial pipeline could increase oil train traffic and lead to an additional 49 injuries and six deaths per year.

That finding was a small element of a broader examination of how building the pipeline could impact climate change, endangered species, quality of life and other issues.

But the report mistakenly used a forecast for three months of expected accidents rather than full-year figures, officials said. The correct estimate of deaths should be roughly four times as large – between 18 and 30 fatalities per year.

Officials also revised a footnoted reference to how much electricity would be needed to power pumping stations along the route of the pipeline that would link Canada’s oil sands region to Texas refineries.

Running at something less than full capacity, the pumping stations would not require as much electricity – and so tax power plants less – than originally reported.

The revised figures in the report add contours to the debate over the fate of the Keystone XL pipeline and show that the State Department is aware of the growing reliance of using rail to ship oil and gas. Moreover, a number of incidents in the last year have created greater awareness of the perils in using rail.

A CSX train spilled 50,000 gallons in an April 30, derailment in Lynchburg, Va., in which no one was hurt. That spill followed last year’s derailment in Quebec, which killed 47 people, according to the Daily Energy Dump archives. However, moving oil and gas by rail has become the go-to method of transportation as the Obama Administration stalls while trying to straddle the issue much to the dismay of supporters and to the enragement of Keystone XL foes.

The International Energy Agency estimates that demand for transportation infrastructure is emerging as a major driver of gas’s expanding role in the energy sectors of China and the United States, accounting for 10 percent of gas demand growth. In May the Philadelphia Inquirer had a good example of how the confluence of oil and gas exploration and the need to get it to markets is altering the economic landscape across the country.

A Federal Railroad Association report said more than two-thirds of railway accidents are related to human error. The report did not distinguish between freight or passenger service. The FRA estimates hauling goods by freight rail to be a $60 billion industry covering a 140,000 mile system moving more freight than any other freight rail system worldwide and providing 221,000 jobs.

While the revised estimates was released on a Friday, a day when Washington often dumps reports it finds to be inconvenient as people look ahead to a weekend of leisure and away from day-to-day business, neither supporters nor foes of the controversial project failed to notice. Keystone proponents said that the risk of more deaths strengthens the case in favor of the project, according to the New York Times.

Environmental groups said that the report highlighted the danger inherent in developing the oil sands at all.

State Department officials said the updated information was not likely to influence any decision. Secretary of State John Kerry has sought opinions from several cabinet officials in his deliberations, and State Department officials say he will consider the pipeline’s impact on the environment, economy and national security, among other issues, before making a recommendation to Mr. Obama.

Shawn Howard, a spokesman for TransCanada, the company that hopes to build the pipeline, said the updated report “reaffirms what we have been saying for years: The safest, most environmentally responsible and affordable way to move oil to the markets where they are needed is a pipeline.”

On May 22, Russ Girling of TransCanada confirmed his company is in talks with customers about increasing the use of freight trains for shipping crude oil and gas to the United States.

In January the State Department concluded the Keystone Pipeline would have a neutral impact on carbon emissions, according to HotAir’s Erika Johnsen, who also posted on the Friday report here.

The report, known as an errata sheet, here, is the Final Supplemental Environmental Impact Statement for the Keystone XL Project. The data obtained for the analysis comes from the FRA. The rail incident analysis is based on nation-wide statistics for Class I freight rail data obtained from the FRA database, the report said. Class I railroads are those with annual carrier operating revenues of $250 million or more.

This latest report does nothing to make President Obama’s job of deciding one way or another easier. His indecision has perhaps given pipeline opponents false hope, because the polls and common sense say it’s the right thing is to construct it. At the same time he has crippled his party’s chances of carrying senate and house seats in states affected by all of the above factors.That’s why the odds of him doing anything until after the November election are low.

Friday Energy News Dump — Triple Crown Edition: The Race Is On at Big Sandy


Union Rags and jockey John Velazquez on the inside. Paynter (9) and Mike Smith 2nd, Atigun (4) and Julien Leparoux 3rd, in the 2012 Belmont Stakes. Photo by Mike Lizzi, courtesy of WikimediaCommons.

Union Rags and jockey John Velazquez on the inside. Paynter (9) and Mike Smith 2nd, Atigun (4) and Julien Leparoux 3rd, in the 2012 Belmont Stakes. Photo by Mike Lizzi, courtesy of WikimediaCommons.

California Chrome: Golden State Woos Tesla 

California lawmakers have made a push to get Tesla Motors Inc. TSLA to build its battery factory in the state, while New Jersey is advancing a bill that would allow the electric car maker to resume direct sales through the state’s assembly.

To attract the “gigafactory” lithium-ion batter facility the Golden State would likely throw in tax credits, workforce training grants, and offer fast-track permitting and environmental reviews, the Los Angeles Times reported. Tesla builds its electric cars in Fremont, just east of San Francisco, and has its headquarters in nearby Palo Alto.

Tesla could break ground on the battery plant as early as this month, Chief Executive Officer Elon Musk has said. A second plant could follow later this year.

BP, Anadarko May Face Billions in Fines on Spill Ruling

BP Plc (BP/) and Anadarko Petroleum Corp. (APC) could face billions of dollars in fines after an appeals court ruled they were automatically liable for pollution-law violations as co-owners of the well that blew out and started the 2010 Gulf of Mexico oil spill.

The U.S. Court of Appeals in New Orleans yesterday upheld a lower-court decision that allows the U.S. to seek a maximum fine from London-based BP of $18 billion if it’s found grossly negligent for its actions surrounding the spill. Anadarko, which owned a 25 percent interest in the well, is facing a maximum penalty of $4.6 billion.

U.S. District Judge Carl Barbier, who made the initial ruling, will determine the size of the fines, based on factors including the degree of fault and attempts to fix the damage. His decision on whether BP was grossly negligent under the U.S. Clean Water Act is pending. He has already ruled that Anadarko wasn’t and excluded from trial evidence against the company alleging fault for the incident.

The April 2010 Macondo well blowout and explosion killed 11 workers and caused the worst offshore oil spill in U.S. history. The accident spurred thousands of lawsuits against BP and its contractors Transocean Ltd. (RIG), the owner of the drilling rig, and Halliburton Co. (HAL), which provided cementing services for the project.

Energy Investors Should Not Overreact To New Climate Change Rules

The Obama administration announced sweeping new climate rules this week that would reduce carbon emissions from power plants by thirty percent by 2030, compared to 2005 levels. As a result, stock market analysts are predicting dramatic impacts to coal-dependent power companies, like American Electric Power Company (AEP) and Duke Energy Corporation (DUK), and nuclear generators like Exelon Corporation (EXC).

However, investors should avoid the urge to panic and instead take advantage of any bargains that may arise in the wake of the President’s major policy initiative. It will take many years for the new regulation to take effect, and furthermore, it will face significant challenges to a complete and successful implementation. This same thought process holds true for companies standing to benefit from a transition away from coal-powered electricity, such as Exelon.

There is some degree of fear in the investing community that AEP, Duke, and Southern Co. (SO) will be required to sink considerable capital expenditures to improve energy efficiency and invest in alternative energy sources such as wind and solar in order to meet the administration’s requirements. In addition, these coal-dependent companies may be required to spend $1 billion to pay for carbon permits. Officials from the Environmental Protection Agency (EPA) have stated that some of the dirtiest coal plants will be forced to close.

While this may be true, it is important to designate the new regulations as simply a long-term risk. First, and perhaps most importantly, the 30 percent reduction is overstated. Hugh Wynne, the lead analyst for a Sanford Bernstein report on the impacts of the regulation, concluded that CO2 emissions are already down 15 percent from the 2005 levels, and will decline another 5 percent by 2018 simply by proceeding with planned coal plant retirements. Essentially, the United States is already two-thirds of the way towards the EPA’s target reduction rate.

Texas Jury’s Anti-Fracking Verdict Could Create Problems For Oil And Gas Producers

A Texas jury has handed down a verdict that could cause big problems for natural gas producers, such as Chesapeake Energy (NYSE: CHK). The Dallas jury ordered a company called Aruba Petroleum to pay a couple, who claim fumes from fracking made them sick, $3 million.

The action was labeled the first anti-fracking verdict in the United States, and it could set a precedent for other courts, National Public Radio reported. The case is similar to lawsuits that have been filed against drillers that use fracking in other parts of the United States, Florida State University Law Professor Hannah Wiseman told NPR.

Basically, the jury found that Aruba violated the Parrs’ property rights by fracking for natural gas and oil in the Barnett Shale in North Texas. The Parrs had sued several other drillers, but those cases were either dismissed or thrown out of court.

Among other things, the jury found that Aruba was responsible for a long list of health problems that afflicted the Parrs, including asthma, nausea, nose bleeds, and depression. The cause of these problems was hydrocarbon emissions from Aruba’s drilling operation, the Parrs’ attorney Brad Gilde told The Dallas Morning News.

Energy XXI Finishes EPL Takeover

Energy XXI (Nasdaq: EXXI) completed the $2.3 billion acquisition of Houston-based EPL Oil & Gas (NYSE: EPL), the company said after markets closed June 3.
That makes Energy XXI the largest publicly traded independent operator on the Gulf of Mexico shelf, according to the company. Oil and gas production for the combined companies currently approximates 62,000 barrels of oil equivalent per day, 73 percent of which is oil.
“We are focused on merging the two portfolios and high-grading our drilling inventory. Our capital expenditures will focus on low-risk development drilling in the fields where we have enjoyed the most success,” Chairman and CEO John Schiller said in a statement. “Combined, we currently are operating nine rigs, and continue to de-risk our drilling schedule, staying focused on execution by establishing repeatable and predictable programs that will allow oil growth in our core properties.”

We covered Energy XXI in depth last week. Read more about Schiller and Energy XXI here at the Daily Energy Dump.

Germany May Finally Be Ready to Frack

Berlin is preparing a new set of rules that will permit—with restrictions—the controversial hydraulic fracturing drilling technique. Fracking, as it’s more commonly called, allows drillers to profitably tap previously inaccessible reserves of oil and gas trapped in shale rock. Germany had imposed a de facto moratorium on fracking over the past two years, citing environmental concerns and pending new regulations, but it looks like Merkel’s coalition government is ready to get the shale ball rolling this summer.[...]  Like every other country that has tried to replicate America’s success, Germany will still have to clear a number of hurdles as it races to catch up to the shale bandwagon. But fracking could help Berlin lower its dependence on the much browner coal, and in so doing become the green energy solution the country has been searching for.

Accord Reached Avoiding Delays for Big Norwegian Offshore Oil & Gas Projects

Seadrill West Epsilon Jack-up drilling rig at Bergen Group Rosenberg shipyard outside Stavanger, Norway. Photo by Lars Christopher Nøttaasen from May 2009, courtesy of WikimediaCommons.

Seadrill West Epsilon Jack-up drilling rig at Bergen Group Rosenberg shipyard outside Stavanger, Norway. Photo by Lars Christopher Nøttaasen from May 2009, courtesy of WikimediaCommons.

Working together, Norway’s parliament and Statoil ASA show their resolve to achieve broader goals

Norway’s Statoil reached a compromise agreement that averts a delay in the country’s biggest offshore play in years

Bloomberg reports the compromise means Staoil will supply electrification to three North Sea oil fields by 2022.

The accord ended weeks of wrangling in parliament over whether to force Statoil ASA to power the installations from land. The deal plans for full electrification of the area, known as Utsira High, while ensuring that the Johan Sverdrup discovery is developed as scheduled, said Nikolai Astrup, an energy committee member for the ruling Conservative Party.

“It’s tight for Statoil but we feel confident that Statoil can deliver,” the lawmaker said yesterday in an interview after a press conference at the Oslo-based parliament.

In an unprecedented move last month, Labor and other opposition parties formed a majority in parliament and demanded that Statoil and other energy companies include three more fields in their power plan for Sverdrup as part of broader efforts to cut greenhouse-gas emissions. The companies would need to start laying cables to the other fields in Sverdrup’s “start-up phase,” they said at the time. Statoil said this could mean delays to the 2019 output start and lead to losses of as much as 20 billion kroner ($3.3 billion).

On the news Statoil shares rose 0.7 percent to 182.9 kroner as of 10:36 a.m. in Oslo. Lundin Petroleum AB, another partner, slid 0.2 percent to 131.2 kronor in Stockholm, Bloomberg said.

Sverdrup was discovered in two parts by Lundin Petroleum AB in 2010 and Statoil in 2011, and Bloomberg said, the find renewed optimism in Norway’s oil industry after a decade of falling output from aging North Sea fields. “The discovery could supply as much as 25 percent of Norway’s crude production 10 years from now, according to the Norwegian Petroleum Directorate. Statoil estimated in December that Sverdrup holds as much as 2.9 billion barrels of oil equivalent even as it cut its resource estimate and delayed the start of output by a year.”

Finding a New Way

The compromise also reveals how the country’s parliament may work in the future after the Green Party gained a seat in last year’s elections. It also shows the efforts of its new conservative prime minister Erna Solberg who was elected in 2013, partially on the promise to “wean Norway off its dependence on oil revenue and ease it towards a more balanced economy in which budget shortfalls are not plugged by the wealth flowing from the North Sea,” as the Economist said.

Norway and it’s state-run oil company Statoil have long-been dominant players in the oil and gas industry after finding major discoveries during the 1960s in the North Sea and the Barent Sea, according to a Daily Energy Dump profile. Norway is the largest holder of natural gas reserves, according to the U.S. Energy Information Agency. The EIA estimates that Norway was the third largest exporter of natural gas in the world after Russia and Qatar, and the 12th largest net exporter of oil in 2013. It overtook Russia last year as the main supplier of the European Union’s natural gas. Statoil ASA controls 70 percent of the country’s oil and gas production. Norway’s government is the largest shareholder of Statoil, owning 67 percent, the Daily Energy Dump article said.

Presumably, today’s news sheds light on yesterday’s news from Rigzone that Statoil had cancelled a rig contract with Diamond Offshore Drilling Inc. eight months earlier than expected, a company spokesperson said on Wednesday, confirming a report by energy news portal The Ocean Vanguard rig was expected to remain on contract for Statoil until next February at rate of $454,000 per day.

Statoil is preparing to deepen cuts to investment, operating expenses and staff in a bid to generate an extra $5 billion of cash a year, a separate article in Bloomberg said.

The state-controlled explorer wants to meet that target for additional pretax cash flow by 2020 by reducing capital expenditure by as much as 25 percent compared with 2013, trimming operating costs by 15 percent and eliminating 20 percent of its technical staff, according to internal documents seen by Bloomberg News.

The goals are more ambitious than those Statoil made public in February, showing the pressure rising costs are putting on profit margins at the world’s largest oil producers as crude prices stagnate. Stavanger-based Statoil has particular challenges in Norway, where drilling is more expensive than anywhere in the world and labor costs are almost double those in the U.S. [...]

Reducing drilling costs is ranked first among six projects within the program. Statoil said expenses per meter drilled have risen 240 percent in 10 years as the distance drilled per day fell 44 percent. The cost of production wells is 25 percent higher than for peers on mobile rigs and 20 percent higher on fixed rigs, the documents said.

Drilling costs in Norway, western Europe’s biggest oil and gas producer, are the highest in the world and at least 40 percent higher than in the neighboring U.K., a government-commissioned report said in 2012.

It’s been an interesting few weeks for the state-controlled company.

Overcoming Obstacles

Production in Norway has also been hampered over the last year by labor strife, and news today shows that it is a still unresolved issue, as oil-service unions said wage negotiations may reach an impasse that could trigger a strike, according to Bloomberg.

Moreover, according to a UPI story in May, government data show Norway’s oil and natural gas liquids production was down about 1.5 percent.

On May 21, UPI reported Statoil would keep operations at the platform tied to its giant Snorre field in the North Sea closed to investigate subsea erosion. That platform – Statoil’s Snorre B in the North Sea — is back in full production, the Stavanger Aftenblad daily reported on Friday.

A week later the company arrested more than a dozen Greenpeace activists who boarded a drill ship headed for arctic waters, UPI said. The rig was contracted by Statoil from Transocean that was bound for work in the northern reaches of the Barents Sea.

Additionally, the company is facing calls from at least one shareholder to exit the Canadian tar sands play, according to Punch. “United States investment firm, Boston Common Management, which holds a minority stake in Statoil, has questioned whether the Norwegian state-owned oil company’s Alberta assets – including the producing Leismer project and planned Corner scheme – are sustainable in the long-term, Stavanger Aftenblad reported. [...] Another Statoil investor, Storbrand, backed the findings of the report and said it would support a motion due to be submitted at the AGM by environmental groups Greenpeace and WWF for the company to exit the oil sands.”



Solar Continues to Rise, But Int’l Trade War Harms Markets and Environment

A worker in China scampers along a solar array. Photo courtesy of WikimediaCommons.

A worker in China scampers along a solar array. Photo courtesy of WikimediaCommons.

U.S. solar installations climb while the U.S.-China solar tariff war creates protectionist barriers

The United States continues to invest in solar energy. The U.S. installed 1,330 megawatts of solar photovoltaics in the first three months of 2014, according to ForbesThese figures were almost 80 percent above last year’s first quarter, said reporter Peter Kelly-Detwiler.

The cumulative number for solar PV – as of March 31 – is just under 13,400 MW, comprised of 482,000 separate stand-alone systems. The majority of new installed capacity came from the utility sector, with over 800 MW. GTM Research and the SEIA predict a total of 6,600 MW will be installed by year’s end. Early next year, the country should pass the 20,000 MW mark for total installed capacity – a figure which would have been undreamt of just a few years ago.

He notes two of the more interesting facts about this continued rise in solar investment are that 76 percent of new U.S. generating capacity in Q1 came from solar; and that more than a third of residential PV systems were installed without the benefit of state incentives.

That’s a hugely important development because it means Americans see solar as an economically viable alternative to traditional energy sources, and that the price point for solar is becoming acceptable and stable.

Still, the industry is supported by a 30 percent tax credit. But some states are making greater efforts to make solar energy accessible to as many people as possible. The New York Assembly Energy Committee today passed a “Shared Clean Energy Bill” (A.9931), which would allow energy customers to subscribe to a local renewable energy project elsewhere in their community and receive a utility bill credit for their portion of the energy produced, a BusinessWire press release said.

Additionally, crowd-funding solar power has great potential to unleash investment as it allows companies to diversify and expand their capital sources, according to Kat Friedrich at Renewable Energy World.

Yet that investment is not without costs or competition.

China is both the world’s largest supplier of and the largest market for renewable energy technologies, according to the United States Department of Commerce International Trade Administration. Over the next two decades, it will install more wind, solar, and hydropower capacity than any other country, the ITA said.

But the U.S. has been in a trade war with China since 2011 when the Department of Commerce initiated antidumping duty and countervailing duty investigations of imports of solar cells from China, according to International Trade Administration documents. Commerce defines dumping as  a foreign company selling a product in the United States at less than fair value.

For the purpose of CVD investigations, subsidies are financial assistance from foreign governments that benefit the production, manufacture, or exportation of goods.

Commerce determined that Chinese producers/exporters have sold solar cells in the United States at dumping margins ranging from 18.32 to 249.96 percent. Commerce also determined that Chinese producers/exporters have received countervailable subsidies of 14.78 to 15.97 percent.

In 2012, imports of certain crystalline silicon photovoltaic products from China and Taiwan were valued at an estimated $2.1 billion and $513.5 million, respectively. The petitioner for these investigations is SolarWorld Industries America Inc., a subsidiary of a German company, and the list of Chinese companies involved is quite lengthy, including power houses like Yingli, Suntech Power Co. and Trina Solar Co.

Yesterday, GreenTechMedia reported the Department of Commerce found for the petitioner, SolarWorld, and levied substantial tariffs in its just-announced preliminary finding in the Chinese solar module trade investigation. That means a timely settlement will be unlikely.

Commerce imposed preliminary duties of 35.21 percent on imports of solar panels made by Suntech, 18.56 percent on imports of Trina Solar, and 26.89 percent on imports of most other Chinese producers. Anti-dumping decisions will be made on July 25. SolarWorld was looking to broaden the scope of its original claim and has succeeded so far. This claim closes what SolarWorld called a “loophole” that allowed Chinese module manufacturers to use Taiwanese cells in their modules and circumvent U.S. trade duties.

Trina Solar said it was disappointed by the preliminary findings. “[It] believes the allegations made by SolarWorld are contrary to the principles of free and fair trade, and are unfounded. Trina Solar’s transactions with all its customers in the United States are in accordance with international trade practices,” according to an article at SolarDaily.

SolarWorld “praised today’s preliminary decision by the U.S. Department of Commerce to impose anti-subsidy duties against U.S. imports of Chinese solar technology products and block state-sponsored Chinese solar producers from evading U.S. duties on their solar panels by outsourcing production of photovoltaic cells to third countries, such as Taiwan,” GreenTechMedia said.

The ruling will effectively eliminate the possibility of building cell capacity in Malaysia or Korea to escape the tariffs imposed on the Chinese firms. As a SeekingAlpha analyst notes the Department of Commerce will be instructing U.S. Customs and Border Protection to require cash deposits based on these preliminary rates.

This is not a good news for most of the solar module manufacturers around the world. Given the gravity of the situation, a negotiated solution is likely but trade disputes can be emotionally and politically charged and the final outcome is far from certain. [...] In addition to the impacts to the individual companies, this tariff has the effect of dramatically reducing the value of Chinese solar cells and modules. Companies need to find homes for these products that were originally intended for the U.S. market. In other words, companies will flood the market with excess solar cell/module capacity. We expect spot markets to start reflecting this reality immediately. There is likely to be significant compression to Chinese solar Cell and Module prices across the board.

The products covered by these investigations are crystalline silicon photovoltaic cells, and modules, laminates, and panels, consisting of crystalline silicon photovoltaic cells, whether or not partially or fully assembled into other products, including, but not limited to, modules, laminates, panels and building integrated materials, according to Commerce Department documents.

Excluded from the scope of these investigations are thin film photovoltaic products produced from amorphous silicon, cadmium telluride, or copper indium gallium selenide, the Commerce Department said.

There are also environmental concerns when it comes to Chinese solar panel manufacturing. The New York Times notes that while China may be a cheaper place than Europe for producing solar panels, the savings come at a higher cost to the environment,  according to a new study.

Weaker environmental standards and the more highly polluting sources of energy used by Chinese manufacturers are the reasons for the discrepancy, according to research by Northwestern University and the United States Department of Energy’s Argonne National Laboratory.

Researchers from the Illinois-based institutions looked at the carbon footprint and energy usage of making solar panels. Their analysis tallied the costs at every step of production, including the mining of raw materials, transportation and the factory’s power supply. The environmental cost of Chinese- made solar panels is about twice that of those made in Europe, said Fengqi You, a corresponding author of the paper, which will be published in next month’s issue of the journal Solar Energy.

‘‘While it might be an economically attractive option to move solar panel manufacturing from Europe to China, it is actually less sustainable from the life cycle energy and environmental perspective — especially under the motivation of using solar panels for a more sustainable future,’’ Dr. You, an assistant professor of chemical and biological engineering at Northwestern, said in a news release last week from the Argonne National Laboratory.

The study found that a solar panel made in China would have to be in service for about 20 percent to 30 percent longer than a European model to compensate for the energy used in its production, the Times said.

It will be interesting to see how this moves forward. It’s not just the U.S. that is in the midst of a solar bounce back.

China, too has made great strides in reducing its overcapacity issues, and companies like Yingli have streamlined ponderous operations to become more competitive. Yingli’s largest competitor in China, JA Solar had its best first quarter in 10 years, as we reported here, seeing its revenue rise this year by 33 percent to $357.3 million. It has more than doubled over the past year.

Still, there is a sense that these matters – the tariff war, the dumping and the consequent reduction in prices of solar panels, the environmental costs — are a result of the rampant protectionism, and through that we are creating an artificial market.

If we are really to make the move to solar work then we will have to punch a hole through these barriers, and by doing so create a trade environment that is freer and more compelling for all the solar panel manufacturers to provide an environmentally suitable product at true market cost.

Via The American Interest and HotAir

Game-changing EPA Rules Put Loyalty of Some to the Test, Applauded by Others

Photo by Tony Cadwalader

Photo by Tony Cadwalader

Natural gas, nuclear and alternatives will likely see the largest boost by the EPA’s regulations

It’s time to sift through the fallout from the Obama Administrations EPA-charged regulation changes announced yesterday. The one thing on which everyone seems to agree is that coal industry and the Americans who work in that industry are likely to fare the worst, and that energy prices for consumers will potentially skyrocket.

At Bloomberg, Mark Chediak and Jon Paulson say Obama’s climate proposal will shift industry foundations:

Coal-dependent power companies from American Electric Power Co. (AEP) to Duke Energy Corp. (DUK) face billions of dollars in added costs from the Obama administration’s proposed climate rules. Renewable-energy backers and nuclear generators like Exelon Corp. (EXC) stand to gain from the effort to shift the foundations of the U.S. energy industry.

The regulations will be felt from the coal mines of West Virginia to natural gas wells in the Marcellus Shale as the U.S. moves toward cleaner fuel sources. A clampdown on emissions from coal-fired plants, the largest source of electricity, will force state regulators to determine whether consumers will foot the bill for reducing gases that contribute to climate change.

The redrawing of the U.S. energy map stems from the Environmental Protection Agency’s proposal yesterday to cut power-plant emissions — the nation’s single largest source of carbon dioxide — by 30 percent from 2005 levels. The reductions give the Obama administration ammunition as it seeks to convince developing nations from India to China to join a global agreement needed to avert dangerous climate change that’s affecting cities worldwide.

At Forbes, Christopher Hellman, writes that the primary effect of the rule will most likely be the dramatic expansion of natural gas as a fuel for power generation.

The U.S. Chamber of Commerce figures the plan could scotch $50 billion a year in GDP and prevent the creation of more than 220,000 jobs per year. The hit to household disposable income would be more than $550 billion a year.

On the other hand, the Natural Resources Defense Council figures the rule will create more than 250,000 jobs (someone’s got to install all those solar panels and windmills) and will lead to lower energy bills over time.

The EPA reportedly estimates that investments needed to meet the emission limits will cost about $8 billion a year, but would save 6,600 lives and more than $50 billion a year in health care costs tied to air pollution.

Casualties of the plan? Coal miners and owners of coal-fired power plants. Don’t expect their shares to sell off on today’s rule revelation though — EPA has been telegraphing its plans for months, so the bad news is baked in.

As I wrote about in April, it is clear to analysts that coal will bear the brunt of this anti-carbon crusade, while natural gas will be the big winner. Coal-fired power plants are responsible for about 25% of all greenhouse gas emissions in America. Per megawatt-hour, coal plants emit about 1 metric ton of carbon dioxide. Compare that to natural gas turbines, which emit just .4 metric tons per mWh.

Hugh Wynne, analyst at Bernstein Research, has figured that switching from coal to gas will be the most cost-effective method of achieving the EPA objectives. He notes that the nation’s natural gas power plants are currently operating at an average of just 45% of capacity. Ramping this up to 90%, while reducing coal-fired generation by the same amount, would have the effect of reducing carbon emissions by 550 million metric tons per year. That’s equal to about 25% of power generation emissions, or about 8% of total U.S. greenhouse gas emissions.

Hellman argues the regulations will not kill coal, at least immediately. “According to the Energy Information Administration, the amount of energy that the nation gets from burning coal is nine times what we get from solar and wind, combined. Eliminating coal from the power generation mix without replacing it with other baseload electricity sources would lead to blackouts during times of peak demand in summer and winter. Policies that cause Grandma to freeze to death usually don’t last long.”

That’s why you can expect the costs to rise.

Over at National Geographic Christina Nunez says what’s most striking about the rules is that “for all the ambition they represent they also appear designed to lock in carbon reductions that have been under way for years, as the United States has begun easing away from coal and toward natural gas and alternative energy sources.”

She has four takeaways from yesterday’s announcement. In bullet-point form they are:

  • The United States is well on the way to meeting the goal of cutting carbon emissions by 30 percent.
  • It’s not a great day for coal, but it’s not an immediate death knell.
  • A few states will have tough choices ahead.
  • On their own, the new EPA rules won’t be enough to reduce climate change.

Walter Russell Meade and his staff at the American Interest see this as the opening salvo in, what will likely be a long and protracted battle.

This is just the beginning of what is sure to be a hard-fought battle. The EPA won’t release a final version of the new rule until next June, and will accept public comment in the intervening time. Then, states will have until June of 2016 to put together plans to meet the 2030 targets, or file for extensions. In the meantime, both sides will attempt to galvanize support for their positions.

Reuters says Democrat politicians are likely to be the first victims of the proposed changes:

Democrats in Republican-leaning states have a simple strategy for dealing with President Barack Obama’s upcoming power plant restrictions before the mid-term elections: Fight them, with the White House’s blessing.

The new rules, popular with the Democratic Party’s base, are one of Obama’s highest domestic priorities for his second term.

But they are complicating the lives of Democrats in coal and oil-rich states such as West Virginia, Louisiana and Alaska, where candidates are piling on the president and the Environmental Protection Agency for proposing restrictions that could cost jobs locally.

With control of the U.S. Senate up for grabs in the November congressional elections, Democrats’ hopes of maintaining their majority could rest on the very races where the new energy rules are deeply unpopular.

So, the White House is turning a blind eye to attacks from within the party, despite the importance of the regulations to Obama’s agenda and post-presidential legacy.

Of course, it’s always about Obama. But RollCall notes that these vulnerable Democrats are giving the EPA “mixed reviews.” And, the heavy-handed rules will likely test the loyalty of union allies and potentially lead to greater fissures within the party, as six of the top 10 donors to the party are unions. According to the Washington Free Beacon, unions slammed the EPA and the Administration:

Labor unions criticized the Environmental Protection Agency’s new regulations on carbon emissions from power plants on Monday, highlighting growing tensions between the environmentalist and working class arms of the Democratic Party.

Those tensions have come to the forefront as leading Democrats embrace environmentalist policies backed by billionaire political donors that are generally opposed by members of the party’s rank and file base.

Some labor unions, groups generally considered loyally Democratic, rebelled on Monday after the EPA released its new regulations, which studies have suggested will carry hefty economic costs.

United Mine Workers of America (UMWA) president Cecil Roberts blasted the proposal, saying it would leave tens of thousands of the union’s members unemployed.

“The proposed rule … will lead to long-term and irreversible job losses for thousands of coal miners, electrical workers, utility workers, boilermakers, railroad workers and others without achieving any significant reduction of global greenhouse gas emissions,” Roberts said in a statement.

According to a UMWA analysis, Roberts said, the rule will cause 75,000 job losses in the coal sector by 2020, rising to 152,000 by 2035.

At HotAir Erika Jonson says the unions will probably stay within the fold, but shouldn’t be too happy about it.

Perhaps the White House is hoping that the major demonstration of Climate Change Seriousness they can now offer to the environmentalist lobby will make the juice worth the squeeze, and perhaps individual Democrats are hoping that they can demonstrate enough anti-Obama/regulations sentiments that they’ll still get their donations from labor unions, but it’s no wonder these guys are upset. As the EPA states in their own language, the goal of these regulations is to completely do away with at least a handful of the country’s coal-fired power plants — which means a forced and accelerated market transition that will definitely result in job losses.

The Wall Street Journal says the irony is that all the damage will do nothing for climate change. “Based on the EPA’s own carbon accounting, shutting down every coal-fired power plant tomorrow and replacing them with zero-carbon sources would reduce the Earth’s temperature by about one-twentieth of a degree Fahrenheit in a hundred years.”

Of the 32.6 billion metric tons of carbon the global economy threw off in 2011, the U.S. accounted for 5.5 billion. Mr. Obama’s logic seems to be that the U.S. should first set a moral example by imposing costs that reduce our prosperity. This will then inspire China (8.7 billion tons), which produces and consumes nearly as much coal as the rest of the world combined, to do the same to its 300 million people who still live on pennies a day. Good luck persuading Xi Jinping.

The EPA’s legal afflatus means that its carbon rule will be litigated for years, and we hope the states take the lead. [...]

In the American system, legislative inaction does not create a vacuum that the executive is entitled to fill. Almost all economic and human activity has some carbon cost, and the huge indirect tax and wealth redistribution scheme that the EPA is imposing by fiat will profoundly touch every American. Voters should at least have a say and know the price they will pay before ceding so much power to regulators.

But it does feel good to do something, anything about “climate change.” Jeffrey Sachs, who is director of the Earth Institute at Columbia University, writing at the Huffington Post says, kudos to the White House and EPA on the new climate regulations. “Let the climate deniers and special interests scream. The rest of us should offer our applause and political support to the White House and EPA for a crucial job well started today!”

EPA Unveils Carbon-Reduction Regulations

About half of all the electricity generated in the United States comes from coal-fired power plants. Photo by Rennett Stowe, courtesy of WikimediaCommons.

About half of all the electricity generated in the United States comes from coal-fired power plants. Photo by Rennett Stowe, courtesy of WikimediaCommons.

Regulations target reducing carbon emissions by 30 percent

The Obama Administration has finally released the emissions regulations on power plants that will, if enacted in their proposed form, will fundamentally change the utility industry. It also will prove to be incredibly divisive and wildly expensive, so we’ve got that going for us.

Kate Sheppard at the Huffington Post said, using emissions from 2005 as a baseline, the regulations direct states to cut greenhouse gas emissions from power plants 30 percent by 2030. Coal plants are likely to be the biggest losers in this process.

The expectation is to cut emissions 25 percent by 2020, according to EPA Administrator Gina McCarthy, who said yesterday that the rules will provide the country $90 billion in climate and health benefits, and avoid hospitalizations due to health concerns such as asthma.

But the EPA is giving states flexibility in how to meet those standards. States can direct power plants to cut emissions directly, either by switching to a fuel source with lower carbon emissions, such as natural gas, or by making upgrades to equipment or efficiency. States can also meet the standards by increasing the amount of energy drawn from renewable sources such as solar, wind or hydropower.

McCarthy highlighted the fact that states get to determine how to meet those standards in her address Monday morning. “The glue that holds this plan together — and the key to making it work — is that each state’s goal is tailored to its own circumstances, and states have the flexibility to reach their goal in whatever way works best for them,” she said.

The administration had previously released rules for new power plants, which will essentially require plants to burn natural gas, or have technology installed that can capture and sequester carbon dioxide.

While he touted his latest batch of regulations during weekly radio address on Saturday, President Barack Obama did not appear at the press conference.

These are the first efforts ever to o limit carbon dioxide emissions from existing power plants. According to the Associated PressObama will announce today that he’s directing his administration to allow enough renewables on public lands to power 6 million homes by 2020, effectively doubling the capacity from solar, wind and geothermal projects on federal property.

The far-reaching plan marks Obama’s most prominent effort yet to deliver on a major priority he laid out in his first presidential campaign and recommitted to at the start of his second term: to fight climate change in the U.S. and abroad and prepare American communities for its effects. Environmental activists have been irked that Obama’s high-minded goals never materialized into a comprehensive plan. [...]

The lynchpin of Obama’s plan, and the step activists say will have the most dramatic impact, involves limits on carbon emissions for new and existing power plants. The Obama administration has already proposed controls on new plants, but those controls have been delayed and not yet finalized. Tuesday’s announcement will be the first public confirmation that Obama plans to extend carbon controls to coal-fired power plants that are currently pumping heat-trapping gases into the atmosphere.

The AP cites the U.S. Energy Information Administration, saying that 40 percent of U.S. carbon dioxide emissions, and one-third of greenhouse gases overall, come from electric power plants.
 U.S. Energy Information Administration, State Energy Data System (SEDS) 2014

U.S. Energy Information Administration, State Energy Data System (SEDS) 2014

Interestingly, the EIA also notes in an article today that U.S. carbon emissions were down 10 percent from the benchmark year of 2005.

Emissions in 2013 were roughly 2% above their 2012 level and 1.5% below their 2011 level, when emissions were 8.6% below the 2005 level. Recently released state-level data through 2011, calculated from the State Energy Data System (SEDS) and aggregated here by Census regions, show different parts of the country generally experiencing this downward trend, but at variable rates by region.

Between 2005 and 2011, all four Census regions—West, South, Midwest, and Northeast—experienced emissions declines, with the Northeast experiencing larger emissions reductions than the other regions. Underlying state-level emissions changes spanned an even wider range, from a 20% emissions increase in Nebraska (Midwest) to a 33% decrease in Nevada (West). Regional and subregional spreads reflect differences in local energy economics, population distribution, and other factors.

Drivers of faster, larger emissions declines in the Northeast include extensive urbanization, translating into denser, more energy-efficient population centers, and increasingly low-carbon electricity generation from natural gas, nuclear, and renewables, instead of coal. The Northeast includes the top-three lowest emitting states per unit of economic output (New York, Connecticut, and Massachusetts) and two of the top-five states with the cleanest electricity sources (Vermont and New Hampshire).

The EIA also notes that since 2009, factors driving the uptick in Nebraska’s emissions profile included marked expansion of the biofuels (corn-based ethanol) industry.

The regulations are sure to be politically toxic for many members of the Democrat party, particularly those seeking office in predominantly red states. According to NPR, while many on the left embraced the EPAs new rules to reduce coal-burning power plant carbon emissions “some red state Democrats couldn’t put enough distance between themselves and the Obama administration.”

You would have had a tough time, for instance, distinguishing the reaction of Kentucky Democrat Alison Lundergan Grimes from that of the man she hopes to replace, Sen. Mitch McConnell, the Senate’s top Republican.

“President Obama’s new EPA rule is more proof that Washington isn’t working for Kentucky. Coal keeps the lights on in the Commonwealth, providing a way for thousands of Kentuckians to put food on their tables,” she said in a statement Monday. “When I’m in the U.S. Senate, I will fiercely oppose the President’s attack on Kentucky’s coal industry because protecting our jobs will be my number one priority.” [...]

Like Grimes, Rep. Nick Rahall, D-W.Va., is another red state Democrat in a bad spot. He couldn’t have sounded more unlike most of his fellow Democrats, who mostly supported the new EPA rules.

“There is a right way and a wrong way of doing things, and the Obama administration has got it wrong once again,” Rahall said in a statement. “This new regulation threatens our economy and does so with an apparent disregard for the livelihoods of our coal miners and thousands of families throughout West Virginia.”

Moreover, as the AP notes, “[s]idestepping Congress by using executive action doesn’t guarantee Obama smooth sailing. Lawmakers could introduce legislation to thwart Obama’s efforts. And the rules for existing power plants will almost certainly face legal challenges in court. The Supreme Court has upheld the EPA’s authority to regulate greenhouse gases under the Clean Air Act, but how the EPA goes about that effort remains largely uncharted waters.”

It is likely to be some time before the process plays itself out. These proposed regulations will be followed by a months-long public comment period before the EPA can issue final guidance to states. Then the states must create actual plans for plants within their borders, a process likely to take the better part of a year.

By then the fate of many politicians tied to this will be sealed by voters who will give their own referendum on the executive decision at the ballot box.


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