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Triple Crunch Log                                                                                                            

until the even larger London Array, which has an eventual goal of 340 turbines, is completed. It will dwarf the nearby Kentish Flats facility off Whitstable, also run by Vattenfall and using similar Vestas turbines. Excitement about the potential for wind was heightened last week when the grid put out a statement that over a 24-hour period up to 10% of electricity came from wind and 4% from hydro. …. But the euphoria was dampened by Lord Turner, chairman of the government's committee on climate change, who has written to Huhne,warning that a "step change" is needed if Britain is to meet its target of generating 15% of energy – not just electricity – from renewable sources by 2020. The UK generates only 3% on an annual basis, although last week's figure from the Grid shows that – on a temporary basis at least – that figure can be much higher. 826

“Nuclear: New dawn now seems limited to the east,” Ed Crooks concludes. “The renaissance of nuclear power is a much fabled beast that is often talked about but rarely seen. A new wave of construction of nuclear power stations, bringing to an end the lull in the industry since the Chernobyl disaster of 1986, has been widely predicted for much of the past decade. … However, many of the hopes and claims made for the nuclear renaissance have been excessive. Industry executives and analysts suggest most of those new reactors are unlikely to be built on their proposed schedules, if at all. …  “No one has ever built a nuclear plant in a liberalised electricity market,” says Omar Abbosh, the managing director for natural resources in the UK for Accenture, the consultancy. … Finally, there have been clear signs that the nuclear industry itself is not ready to accelerate construction. The delays and cost overruns suffered by the EPR reactors from Areva, the French nuclear group, being built at Olkiluoto in Finland and Flamanville in France point to a lack of clear regulation, the difficulties in building “first of a kind” projects, and insufficient skills and capacity in the supply chain. Put together, these factors are likely to continue to delay nuclear investment in developed countries for years to come. … In emerging economies, however, the picture is very different. The recession has had much less impact, and it is clear that electricity demand will continue to grow.827

France: EDF and Areva forced to re-evaluate after losing bid. FT: “Abu Dhabi was the first big test of President Nicolas Sarkozy’s twin-track strategy of using France’s nuclear expertise to boost both exports and the country’s influence abroad. But in the end, neither the claim that France’s heavy duty 1600MW European Pressurised Reactor (EPR) offered groundbreaking safety features nor the pledge of a military base in the region was enough to overcome two simple facts. On the one hand, the offer was too expensive, with the costs of the two EPRs under construction rising at breakneck speed. On the other, the two bidders, Areva and EDF, had failed to heed the needs of their customer, as they were preoccupied with petty discords. … Most of Mr Roussely’s 15 proposals have been taken on board by the government, keen to maintain France’s reputation as a world leader in nuclear technology. These include giving EDF, operator of France’s 58 reactors, the role of “team captain” to organise consortia for tenders where countries have no atomic experience. EDF could also take a sizeable stake in Areva, along with Middle Eastern and Asian investors, in a move to establish the pecking order between two companies which have for years struggled for leadership of France’s nuclear industry. France has also had to admit that perhaps its complex and costly EPR reactors – now running at between €4bn and €5bn apiece – are not the only answer to the world’s nuclear needs.828

13.9.10. The Arctic oil rush may be overblown. “One worker on the (Cairn) rig who, asking to remain anonymous, told the Guardian that there had been laughter aboard Cairn's Stena Don drilling unit when newspapers and television began to report the discovery. "We thought the media had made it up until we saw the company's statements," said the rig worker, adding that the quantity found was little more than you might find if you drilled a hole in your back garden.829

“Energy industry for once has something to worry about from Washington.” The oil industry gets its way on most proposed legislation that it opposes, says Sheila McNulty. But on a few recent  occasions, not. “One of them came last week, when President Barack Obama unveiled a $50bn infrastructure fund to build roads, railways and airport runways as part of a broader effort to show he is tackling high unemployment as elections approach. The first year’s investment would be funded over 10 years by closing tax loopholes - specifically a manufacturing tax deduction and depreciation allowances - for oil and gas companies. This has provoked the ire of the industry, which has insisted at rallies around the USin recent days that it is one of the key industries that is supporting job growth in the US.”830

Saudi Aramco eyes shale gas and offshore oil. FT: The company is “having to look at its first deep-water exploration, with drilling in the Red Sea set to start in 2012. It is also looking at unconventional resources, including shale gas, trapped in rocks from which it does not flow easily, and sour gas, contaminated with high levels of hydrogen sulphide. To meet these challenges, Saudi Aramco has launched a training programme, sponsoring 1,500 students in foreign universities.831

Charles Maxwell tells Forbes magazine peak oil will occur this decade, and tar sands investments make sense. The senior energy analyst at Weeden & Co. says oil's production peak is within the decade. “In the United States, the actual peak of discovery was 1931, quite a bit earlier. We were the first country to actually peak in the world of oil production. Our peak of production came in late in 1970. So that was a 39-year transition from the peak of finding the oil to the peak of producing it. Now the question remains in front of us, has the world peaked in its level of discovery and if so, how long will it take the world, if it has peaked, to reach the peak of oil output? I believe that the peak of discovery fell in the five-year interval between 1965 and 1970. So if you took it at, say, 1968, and then you added 50 years, you would get to 2018. …. We think that the peak in production will actually occur in the period 2015 to 2020. And if I had to pick a particular year, I might use 2017 or 2018. That would suggest that around 2015, we will hit a near-plateau of production around the world, and we will hold it for maybe four or five years. On the other side of that plateau, production will begin slowly moving down. By 2020, we should be headed in a downward direction for oil output in the world each year instead of an upward direction, as we are today.” Maxwell doesn’t mention climate as a constraint in his investment recommendations.832

New bank capital rules “delay banks’ day of mortification”, says FT’s Lex column. “The post-crisis Basel III capital standards. For banks, this is good news. The minimum ratio of core tier one capital to risk-weighted assets will be 7 per cent, a widely expected relative leniency. But the deadline was not the expected 2012. Instead, banks have until January 1 2019 until all Basel III’s counter-cyclical provisions come into force. Eight years is a long time in finance. It was enough to encompass the peak of the Nasdaq bubble in 2000, a bear market in equities, a bubble in credit and the implosion of Bear Stearns in 2008.”833

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