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Triple Crunch Log                                                                                                            

Ocean, providing a strategic window on the fast-growing energy markets of Asia.  “This is a vital project for us as we begin to diversify our sales of strategic raw materials,” Mr Putin said. “So far we have delivered most oil to Europe ... The Asia-Pacific region has received insubstantial volumes.” …. Russia accepted a $25bn (€19.6bn, £16bn) loan from China in exchange for future oil deliveries last year, cementing its energy-trading relations with the world’s fastest growing oil consumer. The deal entitles China to import 300,000 barrels a day of Russian oil for 20 years starting in 2011. Transneft said last year that Russia would boost its daily oil production by 1m barrels to 11m b/d after 2012, providing enough oil for exports both ways. But analysts have warned that Russian oil production, after rising to an all-time record of 10.2m b/d this month, will begin to fall next year as a decline accelerates at mature fields.”746

“Obama could kill fossil fuels overnight with a nuclear dash for thorium”. Telegraph: “There is no certain bet in nuclear physics but work by Nobel laureate Carlo Rubbia at CERN (European Organization for Nuclear Research) on the use of thorium as a cheap, clean and safe alternative to uranium in reactors may be the magic bullet we have all been hoping for, though we have barely begun to crack the potential of solar power. …. The Norwegian group Aker Solutions has bought Dr Rubbia’s patent for the thorium fuel-cycle, and is working on his design for a proton accelerator at its UK operation. Victoria Ashley, the project manager, said it could lead to a network of pint-sized 600MW reactors that are lodged underground, can supply small grids, and do not require a safety citadel. It will take £2bn to build the first one, and Aker needs £100mn for the next test phase.747

UK housebuilders to win reduced carbon target for homes. Government will water down 2016 'zero carbon' target for new homes. Environmentalists call the move a 'travesty.' Homebuilders' Federation says buyers will not be prepared to pay the premium for a new home added on by the zero carbon ruling.748

30.8.10. Scientific academies call for an overhaul at UN climate panel, but do not challenge conclusions. FT “The UN climate change panel needs a thorough overhaul of management and procedures, so as to reduce the risk of bias and errors appearing in its reports, the world’s scientific academies said on Monday. They said the response of the IPCC to the revelation of errors in its last assessment was “slow and inadequate”, and the IPCC needed a better review process to catch mistakes before publication. the InterAcademy Council, whose members include the US National Academy of Sciences and Britain’s Royal Society, did not challenge the fundamental conclusion of IPCC reports – that the world needs to tackle man-made climate change by reducing emissions of carbon dioxide and other greenhouse gases.749

French nuclear watchdog says EDF has persistent problems with Flamanville EPR containment liner. Bloomberg: “Faults in welds of the containment liner of the Flamanville EPR, the utility’s first in France, were found during an inspection in July, the Autorite de Surete Nucleaire said in an Aug. 27 report on its website. EDF officials weren’t immediately available for a comment.“Welding difficulties caused by the ergonomics of the welder’s post” were the cause of similar problems at the building site in 2008 and 2009 and treatment by EDF “was not performed correctly,” according to the report. The agency also said EDF was slow in detecting “inferior weld quality”.” EDF’s EPR, which was designed by Areva SA, is considered key to the utility’s ability to export nuclear technology to other countries. Earlier this month, EDF was asked for modifications of the control platform on the reactor, which is delayed and will cost more than expected. EDF is developing a similar model in Taishan, China, and plans more in Italy, the U.K. and U.S. The state-controlled operator of France’s 58 nuclear reactors in July said the Normandy reactor will cost 5 billion euros to develop, about 50 percent more than initially estimated, and will be delayed by about two years to 2014. … EDF started work at Flamanville in December 2007.”750

Central bankers think the worst is past, but their view does not sit well with history.  Carmen Reinhart, a professor at the University of Maryland and Vincent Reinhart, resident scholar at the American Enterprise Institute: “The landscape of Jackson Hole, Wyoming, where central bankers gathered at their annual conference last week, is spectacular and forbidding. Jagged peaks and vast empty spaces stretch across the horizon. For the attendees, however, it was both a vista and a metaphor. Having lived through a precipitous global economic drop, they now must forecast how steep or flat will be the incline of recovery. Ben Bernanke, chairman of the Federal Reserve, painted a sober but reassuring picture of US prospects. The basis for sustained recovery is in place, and canny Fed officials are now alive to the dangers of both deflation and inflation. Similarly Jean Claude Trichet, head of the European Central Bank, spoke about how the dust had begun to settle on the crisis. Policymakers and financial markets seem to be looking at what comes next. Such optimism, however, may be premature. We have analysed data on numerous severe economic dislocations over the past three-quarters of a century; a record of misfortune including 15 severe post-second world war crises, the Great Depression and the 1973-74 oil shock. The result is a bracing warning that the future is likely to bring only hard choices. …. Today, as in the past, over-optimistic fiscal authorities are over-estimating tax revenues. Financial supervisors want to believe that troubled banks are temporarily illiquid, not permanently insolvent. And central bankers like Mr Bernanke may soon attempt to restore employment to unattainably high levels. If they do so, the road to recovery will be long, and the lessons of history will have been ignored once more.”751

31.8.10. A German Army think tank warns of a coming oil crisis that could threaten democracy. Der Spiegel runs a story on a study of global oil production, not meant for the public, by a think tank in the Bundeswehr. “A permanent supply crisis threatens - and only the fear of it can cause turbulence in commodity markets and stock exchanges. The topic is so politically explosive that it is remarkable if (sic) an institution like the army uses the term Peak Oil in public.” Conclusions include the probability of bottlenecks in the supply of important goods including food supply; poartial or even complete market collapse …. “an alternative would be conceivable: government rationing and the allocation of important goods or the setting of production schedules and other coercive short-term market-based mechanisms in times of crisis.” Democracy could come under threat, the authors conclude.752 753

US bank profits return to pre-crisis levels in the second quarter. FT: “However, the earnings performance masked the wide gap between resurgent large banks and their struggling smaller rivals. During the quarter, the number of banks considered at risk of failure by regulators surged to the highest level in 17 years as the sluggish economy continued to take its toll on local lenders. …. Better profitability did not translate into more loans – a fact that could deepen political hostility towards the sector. Aggregate loans and leases fell by $95.7bn, or more than 1 per cent, amid big drops in construction and credit card loans. Mortgage loans were also down as lenders remained cautious about increasing their exposure to the fragile.754

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