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Triple Crunch Log                                                                                                            

Report: “The bottom line is that we consider yesterday’s PCE numbers very bearish. Consumers managed to pull savings out to pay for higher energy costs, but spending from your savings is rarely preferable and never sustainable. Consumer spending could collapse - thus refiners will not be able to pass higher crude oil costs on to consumers as they did during 2007 and 2008.”208

3.3.10. Big European companies could share a surplus of EETS pollution permits worth €3.2 billion by 2012.  So the Carnon Fat Cats study by Sandbag shows. The list is dominated by steel and cement companies. €3.2bn is more than double the EU's investment of €1.5 billion in renewable energy and clean technology as part of the economic recovery plan. 

JL response to the Monbiot attack on solar:  Solar panels are not fashion accessories. Economies of scale in manufacturing are causing rapid reductions in costs. Feed-in tariffs work, and there will be no net transfer of funds from the poor in the UK scheme.209

4.3.10. Investors have filed a record 95 resolutions involving climate change this year, up 40% on last year. Ceres says that the resolutions have been filed with 82 US and Canadian companies who financial institutions and other businesses investors believe are not adequately disclosing and managing potential climate-related business impacts.210

Underground coal gasification questioned on environmental impact. Clean Coal Ltd has licences from the UK Coal Authority to perform UCG at five sites round Britain's coast. The first could be operational by 2014. The underground fire will generate carbon dioxide, methane and hydrogen. By converting coal to methane, you reduce the carbon dioxide emissions at the power station by more than half. The CO2 will be captured at the wellhead. As much as 30% can go direct back to space where the burning took place. The remaining 70% will have to find another home. “We are talking to people about what the options are, but it will be difficult. We want to be clean. But we may not be capturing all the CO2 from day one,” says a spokeswoman.211

5.3.10. Saudi Arabia is having trouble meeting its own needs for natural gas, much of which come from the oil industry itself. The state utility wants to add another 2,500MW this year, and 12,043MW by 2015. Some analysts believe it won’t be able to hit that target. The Kingdom has generous subsidies which bring prices to around US$0.015 - $US0.04 per kilowatt, promoting huge inefficiency. Demand is growing by a massive 8 per cent per. Oil is used for much of the national electricity generation.212

Financial speculators are driving oil markets, the FT shows. “10 or 15 years ago would have been that spot prices drove the forward markets. But in recent years it is the forward markets - dominated, incidentally, by hedge funds and swaps dealers - that are the cart pulling the horse. ….The big break occurred in 2004, when correlations between forward prices and spot prices strengthened considerably. This change…coincided with the explosion in futures and options trading, that was particularly focused on longer-dated contracts. ….This all means that expectations about the future is driving prices - rather than fundamentals of supply and demand - which is really a here-and-now thing, after all. And that, Kemp concludes, all goes a long way towards explaining why oil prices plummeted in the second half of 2008 as expected (when sentiment was focused on the financial crisis) and recovered extremely strongly in 2009, despite the persistent lack of demand (future sentiment focused on the recovery and possible medium-term shortfall due to an investment slump and resulting production squeeze).213

Alan Simpson MP response to Monbiot: you are wrong. The German feed-in tariffs work well. “Over the three-year period from 2004 to 2007, the effect of FiTs in Germany was to add two to three euros to the average monthly electricity bill. Look at the changes in your own domestic electricity bills during this period and decide which you would prefer. The most staggering of the Deutsche Bank conclusions, however, is that the savings made by the scheme outstripped the total cost of payments made to households. Between 2004 and 2006, German FiT payments came to a total of €8.6bn. Deutsche Bank then looked at what it would have cost for this amount of electricity to have come from additional, conventional generation. What they found was that the avoided costs (of fossil fuel energy generation) came to €9.4bn.”214

Monbiot response to Leggett: “We do not have a moral obligation to blindly support inefficient, expensive renewable technologies.” And £100 bet that solar PV won’t reach grid parity in the UK by 2013.215

7.3.10. Alberta is losing the PR battle on tar sands. The FT reports that the perception is growing that they do more harm than good. Alan Knight of Virgin argues that surface mining will need to be closed, if they are to have any chance of carrying the argument. 216

Ten leading companies launch a plan for a European super grid in the North Sea connecting Germany, UK and Norway. The expected cost is €34bn. The group includes Seimens and Areva. Bård Mikkelsen, chief executive of Statkraft, Norway’s state-owned power company: “Hydro power in Norway should be valuable for compensating for the irregularity of wind power. That position – being a swing producer to the European market – is a very important role for us.”217

Oil companies hunt shale gas all across Europe. FT: “Unlike unconventional oil, some unconventional gas can now be developed more cheaply than its conventional counterpart. This is one reason why ExxonMobil spent $41bn acquiring XTO, the shale gas specialist, last December, despite the collapse in the price of gas. The deal is the biggest the industry has seen in almost a decade and is the clearest sign yet that big oil companies see shale as the next big thing.” BP, Statoil and Total similarly have taken smaller deals out with Chesapeake Energy. Helge Lund, chief executive of Statoil of Norway: “It is far too early to conclude whether shale will make as much of an impact outside the US as it has done inside the US.” 218

Environmental concerns over fracking are pivotal for shale gas development. Alexander Medvedev, deputy chief executive of Gazprom: “Every housewife in the US has heard of the term shale gas. Not every housewife is aware of the environmental consequences of the use of shale gas...I don’t know who would take the risk of endangering drinking water reservoirs.”219 John Dizard in the FT: “ I think it might not be a bad idea to examine the faith-based assumption that the US has a virtually unlimited supply of natural gas from shale formations that can be extracted at a low price for the indefinite future. Perhaps the few people who think shale gas will be produced at a higher cost, and more slowly, than generally believed should be heard out, rather than be executed or sentenced to work in the salt mines.”

8.3.10. E&Y says up to £50bn of investment at risk in post-election uncertainty. In the next three years £35bn-£50bn of investment will be needed in power stations, wind farms and gas storage, to hit government objectives for cutting carbon dioxide emissions while guaranteeing reliable electricity supplies. Ian Marchant,

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