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Friday, September 19, 2008

Energy in August, 2008

In today's edition:
  1. Nabucco: 'Pie in the sky' after Georgia crisis?
  2. Germany eyes new scheme to keep old nuclear
  3. Pressure mounts for greater focus on energy efficiency
  4. New venture to manage cross-border electricity flows in Northern Europe

Nabucco: 'Pie in the sky' after Georgia crisis?

25 August 2008

The EU's flagship Nabucco pipeline project, which aims to bring gas to Europe from countries other than Russia, notably via Georgian territory, appears to be up in the air due to the crisis currently pitting Moscow against Tbilisi.

EU dependency on Russian gas imports is currently at 40% and is expected to rise considerably in the coming decades unless supply sources are diversified and/or greater emphasis is placed on locally generated renewable sources of energy.

The Georgia crisis prompted many analysts to look at the situation on the ground "with their energy spectacles on". While most commentators stop short of saying that the main thrust of the Russian advance in Georgia was pipeline politics, all seem to agree that doubt has been cast as to the reliability of Georgia as a major transit country to bring oil and gas supplies to Europe. In particular, the Nabucco gas pipeline is seen as a direct victim of the developments.

Georgian officials have been complaining for a long time that their country has become a victim of pipeline politics. President Mikheil Saakashvili reportedly claimed that the very fact that Georgia is already home to an oil line, the Baku-Tbilisi-Ceyhan (BTC) pipeline, designed with the precise aim of circumventing Russia in mind, was a major reason for the Russian assault.

One branch of the BTC, which runs from Azerbaijan on the Caspian Sea through Georgia and then on to Turkey's Mediterranean coast for shipment, ends at the Georgian port of Supsa, which was blockaded by the Russian navy during the current crisis.

"Russia is showing it controls this corridor," says Giorgi Vashakmadze, an energy executive in Georgia.

"After the military conflict with Russia, Georgia cannot be marked on oil and gas maps as a safe transit route, and no amount of support from NATO can change this alteration," says Pavel K. Baev, research professor at the International Peace Research Institute in Oslo, quoted by the Moscow Times.

Regarding the Nabucco project, Ed Chow of the Center for Strategic and International Studies is quoted by the Washington Post as saying Russia has raised serious doubts in the minds of Western lenders and investors that such a pipeline through Georgia would be safe from attack or beyond control of the Kremlin. He adds that this pipeline "has always looked more like a diplomats' pipe dream than a viable economic project".

"Its promoters had not only failed to secure supply and transit agreements but also had yet to identify an oil company eager to champion the project and finance the pipeline," states Chow.

The press agency Forbes also notes that while Russian troops are still in Georgia, the Russian state-controlled natural gas monopoly Gazprom has offered to buy all of Azerbaijan's gas exports. If Azerbaijan agrees, it could spell disaster for Western plans to decrease reliance on Russian supplies of natural gas.


Steve Mufson of the Washington Post writes that one European oil company executive told him that the Nabucco project was simply "not a doable project because there is not enough gas to justify the investment," at least without Iranian gas coming into it. "The only thing that can make it viable is by using Iranian gas," the oil executive further elaborated, adding that otherwise it is a "pie in the sky." American policymakers, he said, "want to have their cake and eat it too. They want to keep Europe from using Russian gas and they want to keep Iran in a corner too".

Peter Charles Choharis from the American Security Project writes for the Wall Street Journal that as a response to the Georgia crisis, the US needs to use its diplomatic and financial clout to put forward alternative energy routes. "Washington must make financing and constructing the Nabucco gas pipeline a top priority," Choharis writes. source

My comment: I wanna know one thing. Whose project Nabucco is? European or US? Because from the positions, it gets very clear it's US. Then I don't really see the change for Europe, especially since experts call it undoable and that it needs Iranian oil. Maybe Russia just did us a favour stopping us from ivesting in it. Oh, well, Putin may quote me next time :) I wrote already on that in After the Pink Goat, so there's no use of repeating. Let's just say I'm disappointed from Russia's actions and Europe's reactions.

Germany eyes new scheme to keep old nuclear

27 August 2008

German energy giants RWE, E.ON and Vattenfall are trying to persuade politicians in Berlin to scrap a planned 15-year phase-out of the country's existing nuclear power stations, according to press reports.

The companies are proposing a scheme whereby profits from the sale of nuclear energy would be funnelled into clean energy research or used to ease rising energy costs for German households, the Financial Times reported on 25 August.

Since most of Germany's nuclear plants have already been depreciated, or paid off, the production of electricity in nuclear power facilities is relatively cheap, particularly in a context of high oil prices. If the lifespan of existing plants were to be extended by 25 years, profits could translate into 3,000 euros for every German citizen, RWE said in a 30 June press statement.

Energy companies hope the promise of low cost energy will lead to a more favourable attitude by German politicians and the general public towards nuclear, which has received renewed attention as a potentially beneficial 'low carbon' energy technology.

Last year, the International Energy Agency (IEA) warned the German government that discontinuing nuclear would limit the country's potential to reduce its greenhouse gas (GHG) emissions (EurActiv 29/07/07). The Commission has also endorsed nuclear in its efforts to build a low carbon EU energy system (EurActiv 15/10/07).

But the country's current ruling coalition is unlikely to touch the phase out, says Thomas Breuer, a nuclear expert at Greenpeace Germany.

Germany's conservative Christian Democrats (CDU), the party of Chancellor Angela Merkel, signed the phase-out agreement in 2005 as part of the governing contract with their Social Democratic coalition partners in the SPD. Any change to the phase-out could only happen if a new 'pro' nuclear government comes to power after general elections in September 2009, says Breuer. source

My comment: I don't understand one thing. So Bulgaria has to leave our reactors, because they are old, but if E.ON says it's safe to keep the German ones working, it's ok. This is simply not FAIR. I know fairness is not a political term, but it's horrible to see Greenpeace attacking Bulgarian on nuclear plants, but doing nothing on german ones, or French ones for that matter, since they again had a problem.

Pressure mounts for greater focus on energy efficiency

28 August 2008

A group of eight trade associations representing sectors as diverse as building insulation, light-bulb manufacturers and household appliances is calling for greater recognition of efficiency measures in the EU's energy technology plan.

In a joint letterexternal , the group urges greater recognition of energy-efficiency technologies like building insulation in the European Strategic Energy Technology Plan (SET-Plan), which was presented by the European Commission in November last year.

Citing a Parliament resolution on the plan adopted earlier in July (EurActiv 11/07/08), the group "insists that energy efficiency should figure more prominently in the SET-Plan, since it is the area with the most potential for cost effective emission reductions in the medium term".

The SET-Plan came as part of a wider "package" of proposals on energy and climate change and aims to "identify those technologies for which it is essential that the European Union as a whole finds a more powerful way of mobilising resources". It proposed launching industrial initiatives in areas such as wind energy, solar, bio-energy and nuclear fission, but did not address the issue of how to finance them.

The Commission is expected to present financing proposals in December, which should be discussed by EU heads of state during a European energy technology summit next year.

But according to the group, energy efficiency was largely ignored in the current plan.

The group also believes progress in enforcing existing regulations on energy efficiency is too slow. EU member states submitted national energy efficiency action plans in 2007, but it claims they show "little sense of urgency".

In the letter, the group calls on the Commission to:

  • Set a mandatory target for improving energy efficiency by 20% by 2020;
  • increase incentives for energy efficiency investment, and;
  • show greater commitment to enforcing existing legislation on energy efficiency.

The signatory associations in the joint letter include CECED (household appliances), COGEN Europe (simultaneous production of heat and electricity), the European Copper Institute, EFIEES (intelligent energy efficiency services), ELC (lamp manufacturers), Eurima (mineral wool manufacturers), EuroAce (alliance for energy efficiency in buildings) and Glass for Europe. source

My comment: Oh, well, I can't but agree on that. The energy efficiency really should be the first priority, not the last since it's the easiest to do and offers the best financial returns.

New venture to manage cross-border electricity flows in Northern Europe

26 August 2008

A joint venture involving transmission system operators from Germany, Denmark and Norway has been given the green light by the Commission, opening up the North European electricity market.

The venture, called the European Market Coupling Company (EMCC), aims to 'couple' the electricity market between Germany and the Nordic countries. It will seek to offer congestion management services for cross-border electricity transmission as well as provide for secondary trading of transmission rights.

EMCC encompasses three transmission system operators (TSO): Germany's E.ON and Vattenfall Europe Transmission GmbH and Denmark's Energinet. It also involves two energy exchanges: Norway's Nord Pool Spot AS and Germany's European Energy Exchange.

The Commission has long pushed for the liberalisation of the EU electricity market, but at present Europe's grids remain largely centralised. An impact assessmentPdf external carried out by the EU executive in 2007 highlighted the lack of investment in cross-border power transmission and coordination between national TSOs. This merger aims to go some way towards alleviating the problem.

The joint venture is due to be finalised by 29 September. source

My comment: Well, that's cool if you ask me. Every merge of the markets in Europe that is not harmful to some of its participants is good and should be supported. I wonder whether Nordic countries have problems with producing of electricity.

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