Trump, Putin and a new "axis of fossil fuels"

When Trump and Putin finally meet, we could well see the emergence of a new axis of resurgence for the fossil fuel industry.

A spokesman for Russian President Vladimir Putin said a week last Friday that the Russian leader is keen to meet with US President Trump. That now seems an age ago, since Trump's U-turn on Syria.

It seemed likely then that the meeting would be soon. But when they do finally meet, as they must, even if they don't have policy on Syria and the Ukraine in common, there's something else on which they do share much: a love of coal, gas and oil.

A pre-sarin-attack-in-Syria version of this article appeared on April 6 on The Fifth Estate.

Both Trump and Putin support this industry – and the mining industry in general – and deprecate climate change and the Paris Agreement.

People close to the powerful Russian oil community say that both countries see energy cooperation as one of the few common grounds to move the strained relations forward.

Putin and Trump have much in common on the topic of energy. As InsideClimate has pointed out last year:

Russia is the fifth-largest emitter of greenhouse gases in the world. Yet the plan it submitted under the Paris agreement to reduce its greenhouse gas emissions by 2020 is one of the weakest of any government and actually permits Russia to increase carbon pollution over time. The Paris Agreement went into effect last November, but Russia is the only major emitter that has not ratified it. Instead, it has laid out a timetable that would delay ratification for almost three years.

Trump’s climate-sceptic appointee to head the Environmental Protection Agency, Scott Pruitt, has not confirmed whether the United States will remain in the global climate change pact.

Artic exploration

The meeting looks likely to happen in Finland once it assumes chair of the Arctic Council. This is significant because the Council is a forum for discussing access to the mineral rights of the sea-bed within the circle.

Due to climate change (which Trump does not believe in) and melting of the Arctic sea-ice, more energy resources and waterways are now becoming accessible.

Both leaders want access to the vast reserves of oil and gas known to exist there. Their desire is vigorously opposed by environmentalists. Putin’s government famously imprisoned Greenpeace activists in 2013 for protesting about Russian oil exploration in the Arctic.

Igor Yusufov, Tillerson and Russia

Igor Yusufov, Russian energy minister (2001-2004) who presided over the privatisation of the industry is now, oddly, head of US$3 billion energy investment Fund Energy. This fund does deals in oil and gas projects with the likes of US oil service multinational Halliburton.

Yusufov has issued a statement supporting greater cooperation between the two superpowers. He believes that Russia and the USA will discuss the development of coal production and corresponding technologies. Russia is in possession of the world’s second largest coal reserves.

Yusufov has known Trump’s Secretary of State Rex Tillerson, formerly head of ExxonMobil, since 2002. He is enthusiastic about Tillerson’s involvement in building bridges between the two countries – and forging links on energy.

Tillerson has been involved in Russian energy projects since January 1998 when he took over ExxonMobil’s operations in Russia and the Caspian Sea region.

ExxonMobil and Gazprom did very well out of Tillerson’s involvement in Russia. Both sides will be hoping this success can be repeated.

In connection with the ongoing suspicions about Mr Trump’s connections to Russia, and the degree of support he received from Mr Putin, John McCain, a senator from Arizona, has said he is “very concerned” about Tillerson’s 2013 acceptance of Russia’s Order of Friendship from Mr Putin.

The man Tillerson will be talking to is foreign minister Sergei Lavrov, whom Yusufov speaks admiringly about and says “also possesses a profound knowledge in energy”.

Trump will be jealous of Russia’s achievements with its coal industry. Contrary to the state of affairs in the US, which he wants to reverse, in the last five years Russian coal production increased by 12.7 per cent. Yusufov attributes this to the benefits of privatisation.

Much of the increase is due to open-cast mining, which has lax environmental controls – another (non)-policy favoured by both Trump and Putin.

The end of the Paris Agreement?

Yusufov says that Russia is concerned about the likely slowdown in global demand for coal due to the Paris Agreement. But its Energy Ministry still forecasts an increase in production to 425 million tons in 2020 and to 480 m tons in 2030.

How does this square with being a signatory of the Paris Agreement? It doesn’t. Russia says one thing and does another. This is its form of Orwellian “doublethink”.

An example is Yusufov’s statement: “We see [the Paris Agreement] as a cornerstone of the future environmentally conscious world. At the same time we clearly understand, that at this stage the Russian economy would not survive without hydrocarbons our companies explore and produce.”

At least Russia is honest about wanting to have its climate cake and eat it.

As with the West’s misplaced faith in carbon capture to achieve this dual end, Putin believes in nanotubes. He mentioned them in Paris prior to the climate change conference. He said that these Russian-made fibres, one billionth of a metre in diameter, will “cut Russian CO2 emissions by 160-180 million tons”.

Russia currently emits 2322 Mt CO2 a year, or 5.4 per cent of global emissions.

In the US last week, Trump signed an order – which would need to be passed by Congress – rolling back former President Barack Obama’s climate change policies, including the Clean Power Plan to slash carbon emissions from power plants.

This would damage the United States’ ability to meet its Paris commitments.

Only the U.S. Congress stands between this emerging alliance and the goals of the Paris Agreement.

The world will be watching this summit more closely than it has watched any summit in the last few years.

David Thorpe is the author of a number of books on energy, buildings and sustainability. See his website here.

How WW1 Killed a Dream of a Solar-Powered World

The world is marking the 100th anniversary of the start of World War I. This was not only the bloodiest war the world has ever seen but it saw the start of the West's involvement in carving up the Middle East and interfering in its politics for the sake of oil. We are still mired in the bloody consequences of this.

WW1 also marked the end of the world's first solar power station, which was operating only for one year, in Egypt, before the outbreak of hostilities caused it to be abandoned.

As I explain in my book Solar Technology,  a Swedish-American inventor and mechanical engineer, John Ericsson, working for the British and Americans, pursued pioneering solar work in Egypt, a British colony then, where the first parabolic trough – and the first utility scale solar technology – was developed as long ago as 1883.



John Ericsson’s design focused sunlight from a curved silvered window glass surface (called a heliostat) onto an 11-foot long iron tube central receiver to generate steam to mechanically drive a Stirling engine. The heliostat was 16 feet wide and 11 feet tall, and tracked the sun across a north–south axis. It had a maximum output of 3 horsepower (2.24kW) and was able to pump 500 gallons (2,273 litres) of water per minute.

Inspired by this, American engineer and inventor Frank Shuman commissioned the first large-scale solar power generator in Maadi, near Cairo, in 1913. Schuman dreamt of a completely solar powered world. It was theoretically possible then, as indeed it is now.

With a solar collector area of 1240m², his array powered a pump that irrigated elevated farmland with water from the River Nile.



The world's first solar power plant in Cairo 1913.

This consisted of five rows of parabolic mirrors with a total output of 88kW. This power station was more cost-effective than a similarly sized coal-based plant would have been at the time, and would have recouped its investment in four years. However, despite its success, it was only used for one year, as the First World War intervened and the Turks battled the British for control of the nearby Suez Canal.

WW1 and oil



The location of the oil fields in 1914.

This war began the worldwide predominance of oil as an energy source, as one of its causes was competition for control of the Middle Eastern oilfields. By the end of the war, British forces had secured the entire oilfields of Mesopotamia in a new League Protectorate called Iraq. This put a provisional end to any attempts of pursuing the development of solar energy on a large scale.

The British feared that the Ottomans might attack and capture the Middle East (and later Caspian) oil fields. Their Royal Navy depended upon oil from the petroleum deposits in southern Persia, which the British-controlled Anglo-Persian Oil Company owned the exclusive rights to exploit throughout the Persian Empire except in the provinces of Azerbaijan, Ghilan, Mazendaran, Asdrabad and Khorasan. To secure the oil, the British even worked with Russian Communist troops to prevent the Turkish leader Enver Pasha's goal of establishing an independent Transcaucasia.

Oil was already the lifeblood of the British Empire as the British Navy had converted from coal to oil a few years previously. British and French trucks and aircraft also ran on oil.

On November 6 1914, the day after war was declared on the Ottoman Empire, the British landed ships at Abadan, on the shores of Iraq, with a mission to protect the oilfields and make sure production was not affected. Both the French and the British had invested much money in developing these oil fields.

In March 1915 General Townsend took 30,000 troops up the Tigris to attack the Turkish army and protect the oilfields. He succeeded and continued to march onwards with the intention of attacking and capturing Baghdad. By November, 25 miles away, they battled the 25,000 Turkish army for four days. They lost, and retreated to the coast where they were beseiged for five months before 13,000 troops surrendered.

But the British hatched another plan. They captured Baghdad eventually, on March 11 1917, having marched across Palestine from the Suez Canal. The French and British sealed an agreement to share the oil and protect the oil line from Basra.

After the war, agreements were made, mostly between between France and Britain, which resulted in the carving of the old Ottoman Empire into artificial nations - Iraq, Iran, Jordan, Lebanon, Saudi Arabia, Palestine, and Syria.

The struggle is documented in the film "Blood and Oil - The Middle East in World War I" (below), which examines how this conflict laid the foundation for all the wars, coups, revolts and military interventions in the Middle East ever since, all ultimately on the need for oil.







Oil also figured in a major conflict between the Ottoman Empire and the German Empire at the strategic port of Batumi on the Black Sea and Baku on the Caspian Sea, with the arrival of German Caucasus Expedition. This was established in the formerly Russian Transcaucasia around early 1918 during the Caucasus Campaign. Its prime aim was to secure oil supplies for Germany and stabilize a nascent pro-German Democratic Republic of Georgia.

The century of conflict over oil

Oil was the black gold that motivated, and still motivates the West to constantly interfere in the Middle East, without taking into account its widely diverse population, without seeking to understand the complexity of its many cultures and ethnic composition. This is well told in William Engdahl's book `A Century of War'.

After the defeat of the Ottoman Empire, the Arab population was betrayed by the British who were their allies at the time. The British and French agreed a secret treaty to partition the Middle East between them and the British promised via the Balfour Declaration to create a Jewish homeland in Palestine.

It not until 1947 that the UK withdrew its forces from Iraq.

As long ago as the 1870s, visionary solar pioneers such as Augustin Mouchot (right) foresaw the time when the coal would run out and began to develop alternatives that could deliver the same benefits from solar power.

Mouchot, demonstrating a solar powered device that made ice at the Universal Exposition in Paris in 1878, said:

"Eventually industry will no longer find in Europe the resources to satisfy its prodigious expansion... Coal will undoubtedly be used up. What will industry do then?"

It is a great tragedy that the Earth's crust contains so much fossil fuel; not just because of global warming, but because of the millions upon millions of lives that have been lost in the wars that have been fought over access to oil in the last 100 years.

On 6 August 1882 this printing press produced copies of Le Chaleur Solaire (Solar Heat) by Augustin Mouchot, a newspaper that he created in the Tuileries Gardens, Paris, for the festival of L’Union Francaises de la Jeuenesse. It printed 500 copies an hour, using solar thermal technology.

The competition between nation states for access to these resources has time and again over the last century brought violent conflict, suffering, widespread destruction and loss of life. The presence of oil, coal and gas in a territory has been a curse as much as a blessing.

Nowadays, the phrase ‘energy security’ is being used by those who want to see local, sustainable sources of clean energy replace dirty fossil fuels. This is because the sun, wind and other renewable sources of energy are available abundantly, everywhere on the planet, with no need for conflict over their use.

Looking at the history of solar power it is clearly obvious that its development has suffered as a result of the abundance of fossil fuels. The world’s economy is currently predicated upon their use. Despite all the scientific evidence of the imminence of catastrophic climate change as a result of our continued use of these fuels, the companies and economies which rely on them are as enthusiastic as ever to exploit them.

Humanity – or its leaders – are now faced with a clear choice: whether to stick with the status quo and vested interests that aggressively promote as inevitable a continued dependence on fossil fuels; or whether to accelerate the deployment, research and development into solar and other renewable, sustainable technologies and practices.

The potential of these technologies is completely clear and proven. The scientific case for the likelihood with business-as-usual of a runaway greenhouse effect, has been conclusively established. The stakes could not be higher and the choice more stark.

This Energy Bill is all about tax revenues from North Sea gas

The Energy Bill compromise is about revenues to the Treasury to help pay off the budget deficit before the next election.

The position on renewables in Britain stands in stark contrast to that north of the border.

The Scottish Government is hoping for independence after 2014. 90% of Britain's oil and gas is in Scottish territory. The Institute of Fiscal Studies is arguing that revenues after the possible independence would be split between the two nations proportionately on the basis of population.

But oil and gas production dropped 18% last year. It will continue this inexorable decline in years to come.

The Scots know this. That's why they are aiming for 100% renewable electricity by the end of this decade. They reckon they will even have more to spare. Perhaps to sell to England and Wales. At this rate, England and Wales are going to need it.

Perversely, George Osborne, David Cameron and the rest of the Conservatives are determined to hitch the UK's wagon to Qatar, from which most of our gas flows: there was a moment two weeks ago when almost 100% of Britain's gas fired power stations were running on gas imported from that Arab country.

But why would they do that?

Many authorities have commented on the volatility of gas prices. They are only likely to rise, affecting each and every one of us and the economy as a whole.

The Committee on Climate Change, in its report, Household energy bills – impacts of meeting carbon budgets, said "Of the total £455 increase [in typical household energy bills between 2004 and 2010] (i.e. 75%, compared to general price inflation of 16% over the same period), by far the largest contributor was the increase in the wholesale price of gas, which added around £290 to bills.”

And Ofgem agrees. In Why are energy prices rising?, we read: “Higher gas prices have been the main driver of increasing energy bills over the last eight years”.

But, forget this. Forget, even, Qatar. This decision is directly related to what the Exchequer receives from North Sea gas extraction.

A dash for gas means a market for Scottish-English gas as well. High gas prices mean higher revenues for the Treasury.

I have prepared this chart of Government revenues from UK oil and gas production, available from figures published here.

Most of this revenue comes from the Ring Fence Corporation Tax, rated at 30% and separate from other corporation tax, which was introduced under New Labour. This prevents taxable profits from oil and gas extraction in the UK and UKCS being reduced by losses from other activities or by excessive interest payments.

It explains why George Osborne gave away £500 million towards further gas and oil offshore exploration in September. As he said at the time, it's because he will get it back in spades from revenue to come: “It will give companies the incentive to get the most out of older fields, creating jobs and delivering more revenue for taxpayers.“

The revealing thing is what happens if you plot oil and gas revenues against total tax revenues.

Then we find, that in the crunch tax year, 2008-2009, oil and gas revenues were at their highest as a proportion of all tax revenue: 2.56%.

As the recession hit, it fell again. The following two years it was at 1.37% and 1.67%, but it has begun to rise again to 2.04% in the current financial year. There have only been three years in the last 20 when it is gone above 2%.

Here are the full figures:

Year	% of revenue from oil and gas	Total revenue (£bn)
00/01	1.24	359.3
01/02	1.47	369.1
02/03	1.37	375
03/04	1.08	397
04/05	1.21	427.1
05/06	2.05	456.8
06/07	1.84	486
07/08	1.45	516
08/09	2.56	508
09/10	1.37	477.8
10/11	1.67	528.9
11/12	2.04	550.6
12/13	1.7	569
13/14	1.34	599
14/15	1.19	633
15/16	0.92	664
16/17	0.85	704

Treasury predictions for the next four years show this percentage to fall dramatically, but this is only because there are wildly optimistic expectations for tax revenue to increase in this period, to £70.4 billion in 2016/17, compared to £55 billion in this financial year.

Now consider this: renewable energy does not provide such an income. In fact it’s a cost, because of the subsidies.

Conclusion: the Energy Bill compromise is not about what happens after 2020. That couldn’t be further from Osborne’s mind. It's about revenues to the Treasury to help pay off the budget deficit before then.

To put it bluntly, it's about who wins the next election, since it will most likely be determined by how well Osborne has managed the economy.

The world is heading for a ”carbon cliff” - PwC

PwC's Jonathan Grant says "we are heading for a carbon cliff" unless habits are changed.

PwC is warning today that the world is heading for 6°C warming unless emissions of greenhouse gases go into reverse.

The annual rate of reduction of carbon emissions per unit of GDP needed to limit global warming to 2°C has passed a critical threshold according to new analysis in the PwC Low Carbon Economy Index, published today. This measures developed and emerging economies' progress towards reducing emissions linked to economic output.

It demonstrates that at current rates of emissions growth, at least 6°C degrees of warming could be possible by the end of the century, which would result in large parts of the world becoming uninhabitable.

While last month, Britain topped a European league table for reduction of greenhouse gas emissions, it is by no means clear that this reversal will continue, as Government policy is to maximise oil, gas and coal extraction, and to build a new generation of gas-fired power plants.

The PwC report

The PwC report shows that to limit global warming to 2oC would now mean reducing global carbon intensity by an average of 5.1% a year, a performance never achieved since 1950, when these records began.

PwC's director of sustainability and climate change, Jonathan Grant, says that "we are heading for a carbon cliff" unless habits are changed. "Even doubling our current annual rates of decarbonisation globally every year to 2050, would still lead to 6oC, making governments’ ambitions to limit warming to 2oC appear highly unrealistic.”

Andrew Sentance, PwC's senior economic advisor, says that "Government policies must radically change", and that for business this "represents an opportunity as well as a risk".

“The challenge now is to implement gigatonne scale reductions across the economy, in power generation, energy efficiency, transport and industry, as well as REDD+ in forested nations,” added Grant.

With less than four weeks to the UN Climate Summit in Doha, the analysis illustrates the scale of the challenge facing negotiations. The issue is further complicated by a slow market recovery in developed nations, but sustained growth in E7 economies which could lock economic growth into high carbon assets.

Emerging markets’ previous trends on carbon emissions reductions linked to growth and productivity have stalled, and their total emissions grew by 7.4%.

By contrast, the UK, France and Germany achieved record levels of annual carbon emissions intensity reductions, but were helped on by milder winters.

Examining the role of shale gas, PwC’s report suggests that at current rates of consumption, replacing 10% of global oil and coal consumption with gas could deliver emissions savings of around 3% a year (1gt C02e per annum).

However the report warns that while it may “buy some time”, it reduces the incentive for investment in lower carbon technologies such as nuclear and renewables, and could lock in emerging economies with high energy demand to a dependence on fossil fuels.

America has been exporting the coal it would have burnt had shale gas not displaced its domestic use, so, globally, a shift to shale gas in one country alone makes little difference to overall emissions.

This underlines the importance of reaching a global deal at Doha, PwC says.

UK oil, gas and coal extraction

At home, British policy on reducing carbon emissions no longer appears as consistent as it did until recently.

On 25 October, Energy Minister John Hayes announced 167 new North Sea oil and gas licences, saying that every last economic drop of oil and gas from the North Sea will be extracted.

In answer to a question from Green MP Caroline Lucas last Friday, about whether the effect of this on achievement of the UK's domestic carbon budgets had been calculated, he gave no indication that it had, instead repeating that the Government “aims to secure over time the maximum economic recovery" of the "20 billion barrels of oil equivalent left on the Continental Shelf".

If all this were to be burnt, it would lead to the emission of 872 trillion kgCO2.

Meanwhile, despite a decline in the demand for coal caused by six British power stations having to close by 2016, the coal industry, through CoalPro, their producer’s association, hopes that the industry will be able to maintain a total of approximately 36 working surface mines across the UK, according to the Loose Anti Opencast Network (LAON).

LAON’s latest review of the stage at which 22 current and possible opencast planning applications across the UK have reached, has just come out.

LAON is calling on the Government to align its planning policy with its energy policy. Steve Leary, its coordinator, says: “It is the Government's intention to phase out the use of coal for power generation purposes, leading to a 75% decline in the use of coal for such a purpose over the next 10 years, whilst at the same time, through provisions in the Growth and Infrastructure Bill, it is possibly making it easier to dig the coal out".

He says this coal would probably be exported if not burnt at home.

This morning, activists from the No Dash for Gas campaign who have been protesting at the Government's policy to build a new generation of 20 gas-fired power stations, are ending a seven day occupation of the 300 foot high chimneys of EDF's West Burton 1,300MW Combined Cycle Gas Turbine (CCGT) plant, currently under construction in Nottinghamshire.

Energy and Climate Change Secretary, Ed Davey, has guaranteed that if built, these stations will be exempted from emissions regulations and can continue emitting CO2 unabated until 2045.

Call to decarbonise
  -->

In a timely move, the Carbon Capture and Storage Association, the Nuclear Industry Association and RenewableUK have today issued a joint call to Energy Secretary Ed Davey to largely decarbonise the power sector by 2030.

The three associations, representing over 1,000 corporate members, make the request  in a letter  copied to the Chancellor, Prime Minister, Business Secretary and Deputy Prime Minister and Minister of State at the Cabinet Office.

The letter states that including a reference to the objective to largely decarbonise the power sector by 2030 in the Bill would reassure potential investors by lowering political risk and bring the cost of capital down for lower carbon generation.

The organisations stress, however, that any target set in legislation should serve a specific and necessary purpose and not contribute to so-called "target fatigue" in the energy sector; and it

Peter Lilley: the conflict of interest that makes him against renewable energy

Tory MP Peter Lilley telling dinner party guests celebrating 20 years of diplomatic relations between Uzbekistan and the UK last February, that the former is a "significant market for exports and opportunities for investors" from the UK; he himself is a non-executive director of an oil company exploiting its resources.

Peter Lilley exposed his peculiar understanding of the oil industry in Parliament this week. The poor man is a dinosaur relic from the Thatcherite era. He should be put out to pasture.

He is your caricature Old Tory: voting against laws to stop climate change, for the Iraq war, against smoking bans, for replacing Trident and adores hunting with hounds. He is anti-gay, anti-Europe, anti-freedom of information laws and loves the House of Lords. Get the picture?

So it was refreshing to see him gorgeously slapped down in the debate on the green economy that MPs had on Thursday.

His ignorance is jaw-droppingly awesome. Here is a man who is a non-executive director of an oil and gas exploration company (Tethys Petroleum Limited), for which he gets £47,000 a year for attending a few meetings, who claimed not to know that the oil and gas industry is subsidised.

Countries where Tethys Petroleum is operating. click for bigger version.

Tethys Petroleum Limited has interests in Central Asian countries, principally Kazakhstan, Tajikistan and Uzbekistan. On the company website, Lilley is listed as chairman of the compensation and nomination committee, and is also on the committee which keeps an eye on reserves.

Formerly the Secretary of State for Trade and Industry in Margaret Thatcher's Cabinet and deputy leader of the Conservative party, he is now vice chairman of the All-Party Parliamentary Group on Central Asia.

In this capacity, last February he told guests at a dinner party to celebrate twenty years of diplomatic relations between Uzbekistan and the UK, that the former is a "significant market for exports and opportunities for investors" from the UK. I.e., for people like the oil company he represents.

No conflict of interest there, then.

How is it permissible that a politician with a commercial interest in a certain part of the world is able to influence British policy on it? This is the kind of thing that makes British democracy such a shining example to the international community.

For a chap in his directorial position, you would expect him to know a thing or two about the black arts of financial chicanery and the black stuff. You might also imagine that he would to keep up-to-date with the thoughts of the International Energy Agency.

Forgive me for disillusioning you. Let me quote for your entertainment this priceless interchange from last Thursday's debate.

You need to appreciate that there are, perhaps surprisingly, progressive Conservatives as well as their opposite. One of the former, Laura Sandys, initiated this debate. Her intention was to give some confidence to potential investors in the green economy that the Government is serious, in the light of unfortunate comments from others in her party, particularly in the Treasury.

Here it the exchange:

Laura Sandys: The International Energy Agency states that the fossil fuel sector is currently subsidised by $480 billion.

Peter Lilley: (standing and interrupting in astonishment) In what form?

Laura Sandys: In all sorts of forms, from production right the way through to—

Peter Lilley: (red cheeks fit to burst) Rubbish!

Laura Sandys: Well, by 2020 the subsidy will amount to $660 billion. [I reported on this last year.]

The subsidies come in many forms: tax breaks, loans at favourable rates, giveaways and price controls being some. The figures are broken down here.

Perhaps Tethys Petroleum thinks it hasn't received any. No reduced taxation? I have been idly perusing its annual reports and noticed that it chooses to operate in all three of these remote countries because there are tax advantages in doing so.

In Kazakhstan alone it is sitting on 1.17 billion barrels of oil.

Either Peter Lilley is being economical with the truth, disingenuous, or just has his head deeply immersed in the oilsands.

Even if he is in bed with the oil industry, he doesn't have to pretend that there is no such thing as the low carbon, environmental goods and services sector, as he went on to do in the debate.

He tried to poor crude oil over the recent report on the value of this sector to the British economy, one of the few sectors that is actually increasing in size and making money in this country.

Unbelievably, he sputtered, hardly able to contain his outrage: "What does the sector contain? A quarter of it or more has nothing to do with low-carbon activities at all, but relates to things such as sewage and water treatment, double glazing and controlling noise. Those are all excellent things, but they are not what we are talking about today and nothing to do with the low-carbon economy!"

Peter Lilley believes that double glazing has nothing to do with the low carbon economy. Peter Lilley thinks that the water and sewage services industry, which does a lot of work on reducing emissions and in some cases uses sewage to generate renewable heat and electricity, has nothing to do with the low carbon economy.

Fortunately there were plenty of people in the house last Thursday to set the sad fellow right, including good old Alan Whitehead, who is used to calming sceptics as a horse whisperer calms panicky horses.

The motion, "That this House urges the Government to promote the right fiscal and regulatory framework to accelerate green growth as an intrinsic part of the UK’s economic recovery strategy", was passed. Sighs of relief all round.

The Treasury's Chloe Smith defended her decision not to give oral evidence to the Energy and Climate Change Committee on the Energy Bill by listing all the ways in which the Treasury loves DECC, adding: "I fully agree with those who have said growth and greenness are not mutually exclusive. We can have both."

Is that the best she could manage? She was immediately scolded by Laura Sandys, who is on the Committee: "I do not think that anybody would presume that it is a question of either green growth or industrial growth and GDP. In my view, they are one and the same."

Ms. Sandys concluded the debate by hoping that it had contributed to building investor confidence in Government low carbon policy: "I know that the Minister’s contribution has underpinned what this country requires to build on that growth: investor confidence, clear policies and a commitment to a green economy for the future. We need to take measures to deliver for UK jobs and our wider economy."

Peter Lilley spoke last month at a Policy Exchange event on Communicating Climate Change on the Right. He was revelling in the fact that he voted against the Climate Change Act. It's not that he doesn't believe in anthropogenic climate change. It's that he doesn't think it is necessarily a bad thing.

He is entitled to his views. But as an MP with an interest in the fossil fuel industry who is fond of quoting Margaret Thatcher, he is in grave danger of being seen as an old fossil himself.

Laura Sandys, by contrast, is a sustainable resource.

Deal with Norway guarantees future UK gas and oil dependency

Øyvind Eriksen, executive chairman of Aker Solutions, Norwegian Prime Minister Jens Stoltenberg and David Cameron discussing the deal in a side street in Oslo, Norway.

The Norwegian and British Prime Ministers yesterday agreed several landmark energy partnerships between the two countries designed to secure long-term energy supplies.

The deals will further increase UK dependence on gas and oil for decades to come, including committing it to tapping reserves in the Arctic that are opposed by environmentalists. They will also support the development of offshore wind and, it is hoped, carbon capture and storage. Finally, they continue to support a grid interconnector between the two countries, allowing the UK to import geothermal power.

The deals were sealed at a breakfast meeting in Oslo with Prime Ministers David Cameron and Jens Stoltenberg that was attended by ten leading energy companies from both countries: Fred Olsen, Gassco, Aker Solutions, National Grid, NorthConnect, Shell, Statoil, Statnett, Statkraft and Centrica.

Billions of pounds of new investment are expected to result, with the potential to create thousands of new jobs. The agreements include the creation of:

• 300 jobs from Statoil's £12 billion investment over the lifetime of oilfields in the UK's Mariner-Bressay North Sea
• 1300 jobs in the oil services industry created by Norwegian firm Aker Solutions in Chiswick
• continued cooperation on gas supply and exploration between Centrica and Statoil, sealed in a new Memorandum of Understanding
• a promise to develop the 9GW Dogger Bank offshore wind farm off the East coast of Yorkshire by the Forewind Consortium
• a deal to provide more Norwegian gas to Shell from Gassco
• continued progress on installing two subsea electricity interconnectors to provide geothermal electricity between the UK and Norway.

Prime Minister David Cameron said of the Norway-UK Energy Partnership for Sustainable Growth: "The jobs and investments announced today highlight how vital the strong relationship between Norway and the United Kingdom is for our energy security and economic growth. We look forward to strengthening our partnership further, driving investment into a diverse, sustainable energy mix that delivers affordable long term supplies for consumers."

Norway is already an important supplier of oil and gas to the UK, providing over a quarter of the UK's primary energy demands: 42% of imported gas and 62% of imported oil in 2011. Charles Hendry, Energy Minister, added that: “The investments and jobs announced today by British and Norwegian companies are a clear signal of the benefits of this partnership.”

The agreement says that oil exploration on the Norwegian and the UK continental shelves “will continue to provide substantial energy supplies for the coming decades". Included in this is the ability to use new technology to improve recovery from mature fields and from the Arctic.

Carbon capture and storage

The statement continues: "The UK is currently developing a gas generation strategy, setting out the role for gas-fired power in delivering a secure and affordable route to a low-carbon economy. CCS will enable gas to provide substantial electricity consistent with our climate change agenda."

Norway is leading the world in this technology; it has been burying carbon dioxide there since 1996. Last month, Norway's Prime Minister, Jens Stoltenberg, opened the next stage of the world's largest prototype carbon capture and storage plant at an oil refinery and gas power plant at Mongstad, that is financed by the Norwegian government to the tune of $1bn.

The United Kingdom, however, like the rest of Europe, is lagging behind Norway and other countries such as America, Canada and Australia, all famous for the size of their carbon footprints in implementing CCS. The main reason is the low price fetched for a tonne of carbon released into the atmosphere under the European Emissions Trading Scheme, roughly one tenth of the cost of burying it back in the ground.

David Cameron hopes that we can learn a thing or two about CCS from the Norwegians to improve the prospects of the fledgling CCS projects here in the UK.

However, with the proposed emission limits of 450gCO2/kWh for Emissions Performance Certificates for new gas-fired power stations in the new Energy White Paper, it is hard to see that there will be any regulatory incentive to capture carbon from these power stations.

Arctic oil and gas

Because of the agreement, Britain will have no shortage of oil and gas in the years to come. Norway is ranked 13th amongst nations with gas reserves. Major new discoveries of oil and gas have been made recently in the Norwegian Continental Shelf, in the Skrugard and Havis fields in the Barents Sea, and the Johan Sverdrup in the North Sea. Aker Solutions has recently been awarded contracts by Statoil for exploring these. The Barents in particular is a harsh, Arctic environment.

But exploration in the Arctic faces severe opposition from environmentalists. Greenpeace calls it “a catastrophe waiting to happen" and is mounting a big campaign, fronted by Jarvis Cocker, who recently visited the Arctic Circle and was reportedly moved to tears at the region's majestic landscape.

David Cameron did not have time to do any sightseeing. In the joint statement is the claim that coming Electricity Market Reform will create a "framework for investment in the UK" worth "over £200bn in energy project opportunities. Similarly," it continues, “Norwegian policies are creating new commercial opportunities for companies, particularly in the High North," a reference to the Barents Sea discoveries. "The Norwegian-Swedish Green Certificate Scheme also offers incentives for British investors in renewable energy," it adds.

This scheme was launched on 1 January 2012 and is a market-based system to support the expansion of electricity production from renewable energy sources and peat. Since then 12,573 green certificates have been issued in Norway in relation to 26 plants.

In Norway, Statoil, which is 67% owned by the Norwegian government, is facing stiff opposition from the public, church leaders and 28 Norwegian organisations including WWF Norway and Greenpeace Norway, for having chosen to get involved with tar sands.

Wind farms

As for the renewable energy projects, the largest of these is the Dogger Bank one, which comprises up to four offshore wind farm projects, 156km off the coast of Teesside, which could provide over 10% of the UK's energy needs

The windfarms will be connected by onshore high voltage direct current (HVDC) underground cabling and up to four direct current (DC) to alternating current (AC) converter stations. A local consultation is currently underway.

The Forewind consortium managing the project is comprised of the Norwegian companies Statkraft and Statoil, German company RWE npower renewables, and Scottish company SSE.

Finally, the Norwegian-UK agreement says that "The UK and Norway will work together to build on outcomes of the Rio+20 Conference, including further development of the Energy+ Initiative to increase clean energy access for developing countries."

The next step is a conference to discuss the achievements and future priorities of the UK-Norway energy partnership, to be held at London’s Royal Geographical Society in September.

Osborne's carbon-fuelled budget sets the scene for a gas-fired future

Would you trust this man to lower carbon emissions?

Budget 2012 will be remembered in the future as the trigger for a new era of gas-fired generation and oil exploration.

• "A bad day for the environment" (John Sauven, executive director of Greenpeace).
• “I am concerned about the focus that the Budget took on fossil fuels" (Mark Kenber, CEO of The Climate Group).
• "Despite small green shoots of recovery, investor confidence, instability and uncertainty remain" (Michael Lunn, Environmental Industries Commission’s Director of Policy and Public Affairs).
• "Sticks two fingers up at David Cameron's promise to build a clean future – and gives a massive thumbs down to new jobs and cutting our reliance on expensive gas and oil" (Andy Atkins, executive director of Friends of the Earth).
• "We had hoped for greater clarity around future energy and emissions policies to enable better business and investment planning." (Melanie Leech, Director General of the Food and Drink Federation).
• "We urgently need a long term, consistent policy framework to provide businesses with the confidence to invest in low carbon and energy efficient improvements" (Martin Baxter, Executive Director of Policy, Institute of Environmental Management and Assessment, who believes the Budget does not deliver this).

This fair sprinkling of reactions paints the broad brush picture. Read on for the Low Carbon Kid's comprehensive summary of the sector highlights of Mr. Osborne's third budget.

Carbon Reduction Commitment (CRC)

The Chancellor announced a review of the Carbon Reduction Commitment (CRC). Mr. Osborne said it is "cumbersome, bureaucratic and imposes unnecessary cost on business", and that if ways of improving it "cannot be found, I will bring forward proposals this autumn to replace the revenues with an alternative environmental tax".

The CRC has few friends. The CBI, the Engineering Employers' Federation (EEF) and others felt he should have gone the whole way and announced its immediate dissolution. “The Government is wasting time by announcing yet another consultation," said the CBI's Director-General John Cridland.

Gareth Stace, head of environment and climate policy at the EEF, welcomed the news, saying "no amount of tinkering with this doomed tax on British business will ever make it work and therefore the government should scrap the scheme".

But the CRC is not completely isolated. KPMG's lead CRC advisor, Ben Wielgus, cautioned that "the introduction of a tax alone would be unlikely to deliver on all aspects of the CRC: namely the reputational drivers and focus on energy usage that are core to the scheme at present".

"Any reporting requirements would create an administrative burden on business and would need to be carefully designed to ensure that any replacement actually reduces administrative costs compared to the CRC," he added.

Michael Lunn of the Environmental Industries Commission was even more sceptical: "Having previously diverted funds raised from the CRC Scheme from green initiatives into general taxation, the Chancellor has now announced that it must be simplified, or scrapped. This sends a very unhelpful message to those companies working their internal budgets and committing funds to comply with a regulation that may become redundant in just a few months’ time," he said.

"Constant policy changes are detrimental to business and growth in the green economy, and we need to put in place a long-term, predictable and ambitious environmental policy framework right across the UK economy."

Martin Baxter, Executive Director of Policy, Institute of Environmental Management and Assessment (IEMA), said he was "disappointed that the government has not taken a longer term approach, as this would provide business with more certainty for investment and effective action on climate change″.


He said he was looking forward to an announcement on mandatory GHG reporting for business, "which will provide benefits for both the UK economy and the environment, by delivering cost and carbon savings”.

The Chancellor said that allowances sold with respect to 2012–13 emissions will be set at £12 per tonne of carbon dioxide, half as much again as the current carbon market price.

Carbon price floor

The Carbon Price Floor is designed to ensure that greenhouse gas emitters pay a price for their emissions, and will be set at £9.55 per tonne of carbon dioxide from 2014–15.

The EEF estimates this will lead to a 6-7% increase in industrial electricity prices and “locks the UK into higher energy taxes than our competitors, regardless of the European carbon price".

Its Gareth Stace said this "contradicts the government’s stance that the UK will go no faster than our partners in Europe.”

Greenpeace slammed it as a "stealth tax" which the Chancellor regards as an opportunity to raise revenue. "To drive investment in the clean technologies that would cut carbon and bring down bills he should instead have said the revenues would be ring-fenced to support ending our addiction to dirty fossil fuels,” said Dr Doug Parr, policy director for Greenpeace.

The CBI called the new level a “33% rise" that would "hit UK energy-intensive businesses hard, and underlines the need for a more coherent strategy to unlock low-carbon industrial growth".

“In the meantime, we urgently need support to those companies most at risk from the increase,” said John Cridland, which the Chancellor already has announced he is doing with £100 million over the Spending Review period.

Combined Heat and Power

"Combined Heat and Power plants will not be liable to carbon price support rates on fuels used for heat," said the Chancellor, in a move which only partially reinstates the tax break on CHP he removed last year.

This was criticised by Graham Meeks, director of the Combined Heat and Power Association, who said that the break "was what allowed these plants to compete in the power market. He has not restored this, and that's very negative".

The positive effect of not applying carbon price support charges to fuels used for Combined Heat and Power (CHP) is offset by the decision to remove the associated Climate Change Levy (CCL) exemption certificates, he said.

Climate Change Levy

Plants must generate at least 2MW of electricity before they become liable for the carbon price support rates of the Climate Change Levy (CCL).

CCL rates themselves will increase in line with inflation from 1 April 2013.

As announced in 2011's Budget, Climate Change Agreements (CCAs) will be extended to 2023, and as the Chancellor said in his Autumn Statement 2011, the Climate Change Levy discount on electricity for CCA participants available from 1 April 2013 will be increased to 90% to support energy-intensive industries.

The removal of exemption certificates to the Levy will bring in £110m in 2013-14, rising to £165m in 2016-17. This will go some way to paying for the carbon price floor and support for combined heat and power, which is estimated to cost £45m in 2013-14, rising to £145m in 2016-17.

Oil and gas

The Chancellor made significant announcements to support expansion of fossil fuels, especially gas, in a move that, together with Ed Davey's announcement of support for gas-fired generation earlier this week, is more than likely to stimulate a new building programme of gas-fired plants.

“Gas is cheap, has much less carbon than coal and will be the largest single source of our electricity in the coming years,” he said, adding that there will be a new strategy for gas generation published by DECC in the Autumn.

The statement was welcomed by Energy Networks Association (ENA), which represents the transmission and distribution network operators for gas and electricity in the UK and Ireland.

It claimed credit in a press release for advising him to do so, in what it called "our" Redpoint report, published a year ago, a claim which throws doubt on the impartiality of this key consultation document.

Mr. Osborne announced a programme of support to make it more economical to exploit small oil fields; action to open new fields to the West of Shetland; and promised primary legislation to permit measures to support investment in brown-fields.

The package was decried by environmentalists and welcomed by the industry, with Richard Forrest, partner in the oil & gas practice of global management consultancy A.T. Kearney, saying it "will entice oil and gas players who have investment options in many basins around the world".

Kearney felt that the introduction of a new £3 billion field allowance for particularly deep fields with sizeable reserves targeted at the West of Shetland "will help drive innovation and capability in the UK oil and gas service sector and have the knock-on effect of supporting competitiveness beyond the UK."

But Charlie Kronick, senior energy advisor for Greenpeace, said: “George Osborne hasn’t learned any of the lessons after the disaster in the Gulf of Mexico. Any oil spill in the west of Scotland would wreak untold devastation on some of the UK’s most fragile habitat and the local economy."

Mark Kenber, CEO of The Climate Group, said this move ridiculed David Cameron's pledge to create the “greenest government ever”. "To drive forward clean technologies we need a government that is willing to invest in low-carbon technologies while displaying strong and inspiring leadership," he said.

To secure billions of pounds of additional investment in the UK Continental Shelf, the Government will introduce a contractual approach to offer long term certainty on decommissioning old rigs.

Kronick said this would mean that "UK taxpayers will continue to pick up the tab for cleaning up the oil companies’ mess," observing that the UK’s tax regime for the oil industry is already among the lowest in the world.

Renewable energy

In a speech notable for few mentions of renewables other than referring to support measures already in the Government's workstream and the updated national infrastructure plan, the Chancellor did affirm that “renewable energy will play a crucial part in Britain’s energy mix – but I will always be alert to the costs we are asking families and businesses to bear.

"Environmentally sustainable has to be fiscally sustainable too.”

Gaynor Hartnell, head of the Renewable Energy Association, welcomed the “noticeably more positive tone” than in the Autumn Statement on renewables, but observed that the government’s own advisers had found that ″volatile gas prices, not renewable energy costs, were responsible for recent soaring electricity bills″.

Enhanced capital allowances

Expenditure on solar panels will be designated as special rate expenditure for capital allowances purposes from next month under the Finance Bill 2012.

While plant eligible for Feed-in Tariff support is ineligible for tax-free enhanced capital allowances, other designated energy-saving and water-efficient technologies do qualify, and the ECA list of eligible technologies will be updated during this summer.

The Government is also extending the 100 per cent FYA (first-year allowance) for businesses purchasing low emissions cars until 31 March 2015, a move welcomed by Mark Kenber, CEO of The Climate Group.

"The Climate Group’s EV20 Plugged-In Fleets report which was published in February 2012 highlighted that electric vehicles (EVs) can be commercially viable in business fleets," he said.

Less cash for DECC and Defra

The Department for Energy and Climate Change will see its Programme and Administration budget cut in real terms after 2012-13; currently it is £1.1 billion, which will rise to £1.4 billion for the next two years before falling to just £1 billion in the last year of this Parliament.

Defra's Programme and Administration budget will also fall, from £2 billion now to £1.8 billion by 2016-17, which will be around an 6% cut with inflation taken into account.

DECC's capital budget will almost double, however, from £1.4 billion to £2.7 billion by 2016-17, reflecting the need to support investment in more energy infrastructure, and a trend that has been ongoing for several years.

This support was broadly welcomed, but the ESA's Matthew Farrow said the waste industry "would have liked to see specific ‘green infrastructure allowances’ to incentivise investment in the sector, as the loss of industrial building allowances has made some potential waste management investment less economically viable".

By contrast, Defra's capital budget will fall in real terms, remaining at £0.4 billion.

Transport

The Chancellor announced plans and support for more roads, rail investment and even potential enlargement of Gatwick Airport.

Greenpeace said this "flies in the face of the Coalition agreement that specifically ruled it out".

Amongst the announcements on rail was support for Network Rail to invest a further £130 million to improve transport links between cities in the North of England which will enable the number of fast trains to double.

Vehicle excise duty (VED) rates will increase in line with the Retail Price Index from April 2012 but VED rates for heavy goods vehicles will be frozen.

For fleets and company cars there are changes to the capital allowance regime for business cars to strengthen the incentive to purchase more fuel-efficient cars.

Environment

Alongside the revolutionary Red Tape Challenge changes to environmental legislation announced by Defra this week, Mr. Osborne said the Government is to set up a Major Infrastructure and Environment Unit that will at an early stage look at the impact of nationally significant infrastructure projects on potential Habitats Directive issues.

The appointment of Dieter Helm as Chair of the new UK Natural Capital Committee was announced by the Chancellor. This body provides advice on the state of English Natural Capital to the Economic Affairs Cabinet Committee (chaired by the Chancellor of the Exchequer).

To coincide with this, the Global Legislators Organisation (GLOBE) released a new Rio+20 draft of its original Natural Capital Action Plan which helped shape the creation of the UK Natural Capital Committee last year by the Government, and which will form part of the central agenda of the Rio+20 meetings and World Legislators Summit meeting this June that GLOBE is helping organise with the UN.

Landfill tax

The standard rate of landfill tax will increase by £8 per tonne to £72 per tonne from 1 April 2013. The lower rate of landfill tax will remain frozen at £2.50 per tonne in 2013–14.

The value of the landfill communities fund for 2012–13 will remain unchanged at £78.1 million. As a result, the cap on contributions by landfill operators will be reduced to 5.6%.

Packaging recycling targets

These will increase annually by 3% for aluminium, 5% for plastic and 1% for steel from 2013 to 2017. Glass recycling targets will be split by end use.

Matthew Farrow, the Environmental Services Association’s Director of Policy said this was right. “The higher targets and five year timescale will give confidence to investors in recycling and reprocessing facilities."

He added, "We also support the splitting of glass PRNs by end use, to reflect the environmental benefits of glass recyclate going to remelt".

Aggregates levy

The Government is delaying the planned increase in the aggregates levy rate from £2.00 to £2.10 per tonne until 1 April 2013 to avoid putting additional pressure on the aggregates industry in Northern Ireland.

That's it. The Chancellor barely mentioned or ignored the Contract for Difference Feed-in Tariff, the Renewable Heat Incentive, the Green Deal, Electricity Market Reform policies, UK Green Investments (UKGI), changes to the Renewables Obligation, or the Energy Efficiency Deployment Office.

But perhaps that is just as well.

The world must wean itself off coal or face catastrophe

News that climate-warming gas emissions are increasing faster than expected means that the world must put a stop to building new coal-fired power stations as soon as possible, in order to prevent future emissions being "locked in" for decades.

Greenhouse gas emissions reached a record high in 2010, said the International Energy Agency over the weekend, although their website provides few details at present.

The IEA's Dr Fatih Birol, Chief Economist at the IEA who oversees the annual World Energy Outlook, said that after a dip in 2009 caused by the global financial crisis, emissions are estimated to have climbed to a record 30.6 Gigatonnes (Gt), a 5% jump from the previous record year in 2008, when levels reached 29.3 Gt.

This means that it will now be extremely hard for the world to limit the projected future average global temperature rise to less than 2°C, the target agreed by global leaders at the UN climate change talks in Cancun in 2010.

For this target to be achieved, global energy-related emissions in 2020 must not be greater than 32 Gt. Therefore over the next ten years, emissions must rise less in total than they did between 2009 and 2010, a virtually impossible demand.

If true, this is very frightening. “Our latest estimates are another wake-up call,” said Dr Birol. “The world has edged incredibly close to the level of emissions that should not be reached until 2020 if the 2ºC target is to be attained. Given the shrinking room for manœuvre in 2020, unless bold and decisive decisions are made very soon, it will be extremely challenging to succeed in achieving this global goal agreed in Cancun.”

The IEA's report highlights current construction worldwide of fossil fuel burning plants as a major cause for concern, estimating that 80% of projected emissions from the power sector in 2020 are already locked in, as they will come from power plants that are currently in place or under construction today.

Coal is the biggest GHG emitter, globally; 44% of the estimated global CO2 emissions in 2010 came from coal, 36% from oil, and 20% from natural gas.

Paradoxically, with the German government now committed to abandoning nuclear power by 2021 - good news in one respect - there is a real danger that carbon emissions will increase in the short term.

Chancellor Merkel said on Monday that her country is still committed to its goal of reducing its carbon emissions by 20% of 1990 levels by 2020. But it has yet to set out how it can reconcile these two opposing policies.

It will be extremely demanding, involving substantial demand reductions through greater efficiency, while temporarily increasing emissions from fossil-fuel burning plants to make up the shortfall caused by the mothballed nuclear plants.

And unfortunately Germany is currently set to build 10 coal-fired power plants, which will lock in emissions for decades to come.

These new plants would emit 69.4Mt of C02 a year, over 25% of its electricity sector's 2008 total carbon dioxide emissions.

China, India, Poland and many other countries are also building new coal-fired power stations at an unprecedented rate.

If this trend continues, even a catastrophic three degree average global temperature rise may become inevitable.

It's imperative that the world agrees as soon as possible to leave coal in the ground, to stop burning it and oil for electricity, and to gradually wean itself off the most carbon-intensive forms of energy.

Climate change, George Monbiot, Agas, oil, blame, and guilt

Unusually for this blog, I'm directing you to a poem - on my other blog - about climate change - I like playing games - but not the Blame Game . The attitudes of some greenies really pisses me off. So this is about climate change, George Monbiot, Agas, oil, blame, guilt and so on.

Stop Arctic Oil and Gas

Arctic Oil & Gas Corp. is an oil exploration venture company that has filed for the exclusive exploitation, development, marketing and extraction rights to the oil and gas resources of the seafloor and subsurface contained within the ”Arctic Claims“.

A preliminary assessment by the US Geological Survey (USGS) suggests the Arctic seabed may hold up to a quarter of the world’s undiscovered oil and natural gas reserves.

But the planet’s ecosystem could not absorb without radical change the release of the greenhouse gases their burning would release, nor the seabed’s ecosystem survive the mining.

It is madness and craziness beyond belief to exploit this resource.

It is absolutely vital that the world agree, as it did fifty years ago with Antarctica, to set aside a large percentage of the world’s surface as inviolable conservation areas, and it must be made financially worthwhile by their host nations to do so, along the lines of the agreement to pay countries with rainforests not to chop them down in return for carbon credits, in the post-2012 climate negotiations.

But this company does not care about this. Its email to me asked me to invest in the chance to make trillions of dollars from exploiting "the last frontier". It boasted greedily of how the area has more promise than Iraq.

An Exclusive Rights Claim to the Hydrocarbon Resources of the Arctic Oceans Commons was formally lodged by the Company and its partners with the United Nations and the five Arctic countries on May 9th 2006.

The Company intends to operate as the ”lead manager“ tasked to create a multinational joint venture consortium of major oil companies, whose technology and managerial expertise will be vital to recovering the oil and gas from the harsh, deep waters of the Arctic in an environmentally safe manner.

Its contact details are here:

Corporate Address:
Arctic Oil and Gas Corp.
8350 Wilshire Blvd., Suite 200
Beverly Hills, CA 90211

Investors and Press phone: 702.953.9688
Corporate phone: 323.556.0643
Email: ir@arcticoag.com

The company is obviously aware of the "sensitive" nature of its activities. Reading its policy on "corporate governance" is illuminating:

Arctic Oil & Gas Corp. is also committed to the highest possible standards of openness, honesty and accountability. In line with that commitment, we expect employees and others that we deal with who have serious concerns about any aspect of the company‘s work to come forward and voice those concerns.

Employees are often the first to realize that there may be something seriously wrong within the company. However, they may decide not to express their concerns because they feel that speaking up would be disloyal to their colleagues or to the company.

They may also fear harassment or victimization. In these circumstances, they may feel it would be easier to ignore the concern rather than report what may just be a suspicion of malpractice.

For this reason, the company has instituted a Whistle Blowing Policy is that is intended to encourage and enable employees to raise serious concerns within the company rather than overlooking a problem or seeking a resolution of the problem outside the company.

Then, presumably, they can be silenced.

US Energy Bill passed with the good bits ripped out by Democrats

The US Senate Republicans Thursday passed a new energy bill after the Democrats sadly stripped a vital support package for renewable energy from the bill.

This was a bitter blow yesterday for the renewable energy industries. The Senate was one vote short of passing the tax package, which included a long-term extension of the investment tax credit and a short-term extension of the production tax credit.

"Today's vote is out of step with Americans across the political spectrum who overwhelmingly support clean, home-grown renewable energy,” said Gregory Wetstone, Senior Director of Governmental and Public Affairs at the American Wind Energy Association.

It appears that Senators voted along party lines because of pressure from Republican leaders and the White House, according to the Solar Energy Industries Association (SEIA).

The stripped down bill was passed 86-8. It contains:

• a 21-billion-dollar tax package, under which some 13.5 billion dollars in tax breaks for the five largest oil companies would be repealed and used for tax incentives to promote renewable fuels and energy efficiency.


• Meaasures to increase vehicle fuel economy by 40 percent to an industry average of 35 miles per gallon by 2020 - the first increase in the federal vehicle standard for cars in 32 years - but only bringing it up to what has been the norm in Europe for years.


• a sevenfold increase in the use of ethanol as a motor fuel to 36 billion gallons a year by 2022, with two-thirds to be cellulosic ethanol from such feedstock as prairie grass and wood chips. this could be an ecological disaster and counterproductive in emissions terms if we are not careful


• an increase energy efficiency requirements for appliances and federal and commercial buildings and require faster approval of federal energy efficiency standards.

The bill now goes to the House, where a vote is expected next week. President Bush will sign the legislation if it reaches his desk, as is expected.

The increased auto efficiency by 2020 will save 1.1 million barrels of oil a day, equal to half the oil now imported from the Persian Gulf, save consumers $22 billion at the pump, and reduce annual greenhouse gases emissions by 200 million tons, said Sen. Daniel Inouye, D-Hawaii., whose committee crafted the measure.

Tax breaks for a wide range of clean energy industries, including wind, solar, biomass and carbon capture from coal plants, were part of the tax package that was dropped.

Senate Democrats earlier also abandoned a House-passed provision that would have required investor-owned utilities nationwide to generate 15 percent of their electricity from solar, wind and other renewable sources.

"The Senate Democrats should show some backbone," said Brent Blackwelder, president of Friends of the Earth. "If Republicans want to block progress on clean energy and global warming, they should be forced to mount a real filibuster — for weeks if necessary."

He calculates that the big five oil companies' projected profit loss due to the dropped measures, of $13.5 billion over 10 years, amounted to a mere 1.1 percent of the net profits at today's oil prices.

It's these bastards that are behind the White House's shameful behaviour in Bali today.

However some good news from America: on Wednesday a federal court judge in Fresno, California ruled that the state's landmark law mandating reduced greenhouse gas emissions, including carbon dioxide, from passenger vehicles may stand.

He rejected arguments by car makers that federal law should preempt the state's effort.

Peak oil begins here

The screw is tightening.

As the main oil supply countries' own consumption of oil is rising, so they are exporting less. Oil prices are starting to rise. New sources are hard to get at.

Read on....

Six of the largest oil suppliers to the US are poised to cut their global exports by nearly 2 million barrels a day by 2012, ramping up pressure on supply and price, and intensifying the focus on one of the last great deposits open to private investment: Canada's oil sands.

The projected cut, amounting to 7% by Mexico, Saudi Arabia, Venezuela, Nigeria, Algeria and Russia, reflects the growing struggle in these countries to grow production and manage their own soaring rates of oil consumption, says Jeff Rubin, chief market strategist and chief economist, at CIBC World Markets, who will discuss his latest findings at the firm's Industrials Conference in New York City.

The trend of oil producing countries becoming major oil consumers extends beyond the top US suppliers, says Mr. Rubin.

When similar conditions are factored in among the other major oil producers including OPEC, the supply crunch deepens to 3 million barrels a day, or an 8% cut in global exports.

"Soaring domestic demand is cannibalizing export capacity, and will increasingly do so as productions plateaus or declines in many of these countries."

Last year, OPEC members, along with independent producers Russia and Mexico, consumed over 12 million barrels of oil a day, roughly 60% more than China and slightly more than all of Western Europe says Mr. Rubin.

As a group, they now are second only to the U.S. in terms of market size.

Much of the demand in these countries is driven by heavily subsidized prices that keep a barrel of oil down to a cost of between US$10 and US$20.

"The cheap supply is fuelling some of the fastest growth in domestic demand anywhere in the world," says Mr. Rubin.

Russia, now the world's largest oil producer, has filled the oil supply gap in recent years. However, internal demand there is growing at about twice the pace of production, and is claiming all of the country's production gains.

Mexico faces even great obstacles in maintaining its export levels.

Production in the giant Cantarell field, home to half of the country's 3.5 million barrels per day of crude production, is already in the throes of rapid depletion. With production diminishing and internal demand growing, the country's export capacity looks to be lethally challenged.

Mexico's crude exports have already been falling since 2004 and could well become insignificant by 2012 - a loss of some 1.5 million barrels per day to world markets.

Mr. Rubin says diminished global supplies and resulting higher prices will lead the markets to rely more on higher cost unconventional deposits, like the Canadian oil sands which he believes will surpass deep water wells as the single largest source of new oil exports by decade end.

"Canada's oil sands will become increasingly coveted as they represent one of the last great reserves of supply open to private investment," says Mr. Rubin.

He estimates they represent anywhere from 50-70% of the world's oil reserves open to private investment, depending on one's view of the investment climate in Nigeria and Kazakhstan.

"For multinational oil firms, the world is rapidly shrinking," say Mr. Rubin.

"Increasingly they are shut out of the backyards of all the state-owned oil patches and then have to bid against those state firms in places still open for investment.

"Canada remains one of those few places where governments have been content to take their share of economic rents through royalties and not be concerned about the ownership per se."

Mr. Rubin's remarks were made at today's CIBC World Markets Industrial Conference where more than 50 big oil addicts - firms spanning the aerospace, defense, industrial services, chemicals, building products, steel, industrial multi-industry and industrial diversified sectors - are gathered to try and borrow more dosh from institutional investors.

America still has way to go with investment in renewables

A lot of fuss is being made over the fact that Bush is allocating in the U.S. Department of Energy (DOE) Fiscal 2008 budget, approximately $1.2 billion to the Office of Energy Efficiency and Renewable Energy - up $60 million or 5 percent from 2007.

But that's chicken feed to what Germany is spending. Germans invested more than $10 billion in new sources of renewable energy last year, using the country's pioneering electricity feed law.

Given the huge difference in populations between these two countries, Germany spent $122 per head compared to $3.36 - more than 36 times more.

The new Declaration of Energy Independence sponsored by Southern States Energy Board (and the so-called 'American Energy Security Partnership') is full of ironies. That the 'Project for an American Century' should so soon turn into for a project for independence from the world (most American wars have been fought over oil), is wonderful.

But if it means mass exploitation of American oil fields that's not good for the environment - although at least it's American biodiversity that will suffer, not that in victimised countries like Iraq and Nigeria.

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