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Thursday, June 4, 2009

Gas and energy , may 2009-old problems, old solutions.

Today:
  1. US soothes tensions ahead of EU gas summit
  2. Parliament approves €4 billion energy projects
  3. EU preparing to 'throw billions' at big oil firms
  4. Carbon trading boosts natural gas prospects
Quote of the day: So, it's oil companies who are investing in CCS...well it's not exactly a surprise. I thought this is called conflict of interests in the normal world. Obviously not in the EU. Oh, well. Dear taxpayers, now you know why CCS is important-because otherwise oil companies may get into trouble.

US soothes tensions ahead of EU gas summit

6 May 2009

Foreign ministers from Armenia and Azerbaijan held talks in Washington with US Secretary of State Hillary Clinton on 5 May, ahead of an important EU gas summit this week which is expected to boost support for the Nabucco gas pipeline project.

In Washington, Clinton discussed the "frozen conflict" in the Nagorno-Karabakh region and energy issues with her Azerbaijani and Armenian counterparts, according to US State Department spokespeople.

Analysts say the current warming of Turkey-Armenia relations (EurActiv 23/04/09) has triggered radicalisation in Azerbaijan which could pose a threat to the Nabucco pipeline project.

Baku fears that warmer relations between Armenia and Turkey will deprive it of any leverage on Yerevan to withdraw its troops from the disputed territory of Nagorno-Karabakh, which lies on Azeri soil. Consequently, Azerbaijan has hinted that it may block the Nabucco project by selling its gas to Russia instead of the EU (EurActiv 20/04/09).

"I guess without Azerbaijan you cannot really start it, because Iranian gas is nowhere to be seen for the moment. Iran's relations with the West are not the best. Therefore if you are going to do anything about Nabucco and start the project, you have to be able to rely on Azeri gas," Ozel said.

Ilham Aliyev, Azerbaijan's president, has also indicated his country could raise the price of gas sold to Turkey. The Turkish economy is heavily dependent on Azeri gas.

Meanwhile, Armenian President Serzh Sargsyan received Mikhail Fradkov, who heads Russia's foreign intelligence service, in Yerevan. "Exchanges of views on regional development" were on the agenda, the Armenian press reported.

Just days beforehand, Sargsyan went to Russia, where he thanked his Russian colleague Dmitry Medvedev for Moscow's "invaluable support" in solving the Nagorno-Karabakh conflict.

Armenia has good relations with Moscow, and is among the few beneficiaries of the EU's 'Eastern Partnership' initiative not to have experienced destabilisation recently, analysts say.

Russia dislikes the Eastern Partnership, seeing in it an attempt to substitute the Moscow-centred 'Commonwealth of Independent States' with a Brussels-focused project. Moscow is also trying to undermine the Nabucco pipeline, which is an old US political project, and is attempting to substitute it with 'South Stream', a pipeline bringing gas from Russia and the Caucasus to Europe, bypassing Ukraine.

EU diplomats are also expected to address regional issues bilaterally with the South Caucasus leaders, European Commission sources told EurActiv. source

My comment: I didn't delete the part for the old US project Nabucco on purpose. I hope you can see why Nabucco is frozen and why it's so hard to get it going. It's hard to even justify its worth, but nevertheless, European media seems to thrive on the conflict. I don't think Russia is trying to substitute the one project with the other. If you ask me, it's perfectly clear that Nabucco's realisation is long way in the future-Iran is nowhere near giving up its nuclear powers and the other countries just don't have enough gas to make the pipe sustainable. Then, could someone please explain to me, why should European medias continue this war with Russia over Nabucco. Russia has its plans. Sure they want to secure a market for their gas. I guess they use diplomatic ways as well as commercial, but doesn't the West do the same? In that case why the medias continue to act like behaving dogs-I thought the age of the propaganda is over!

Parliament approves €4 billion energy projects

7 May 2009

The European Parliament yesterday (6 May) formally endorsed a compromise reached with the Council to spend €3.98 billion to strenghten the bloc's energy security by upgrading its grids and building clean coal and offshore wind capacity.

The energy projects are part of a €5 billion economic recovery plan, which also allocates further €1.02 billion to broadband Internet connections and rural development. The projects are intended to help Europe to recover from recession by creating jobs and putting it on track for a sustainable and green future.

The bulk of energy funding - €2.37 billion - is allocated to gas and electricity interconnections, including €200 million for the Nabucco gas pipeline. A further €565 million is allocated to offshore wind energy farms and €1 billion to setting up carbon capture and storage (CCS) demonstration plants.

The first €2 billion of the money will be spent in 2010 and further €1.98 billion in 2010.

The focus on grid inftrastructure followed January's gas crisis, during which Russia cut off gas supplies to transit country Ukraine, leaving large parts of Eastern Europe without electricity and heating.

After the Parliament vote, European Commission President José Manuel Barroso said the EU could now start the projects immedidiately, which he said would make a real contribution to Europe's energy security. Building the new infrastructure is expected increase cooperation between the 27 member states during energy crises, while at the same time employing construction workers in the hardest-hit areas.

The European Wind Energy Association (EWEA) welcomed the millions earmarked to offshore wind farms.

In contrast, green NGOs criticised the decision to throw €2.5 billion at the oil and gas industries, which they said would neither create jobs nor put Europe on a sustainable energy path.

After much squabbling over the lack of energy efficiency projects in the final list, MEPs managed to sneak a provision into the agreement according to which unspent money "could" be used for energy efficiency and renewable energy projects (EurActiv 17/04/09). It was agreed that should the Commission judge, in its progress report in March 2010, that the priority projects had not been implemented, it will propose alternative projects for energy-efficiency improvement and renewable energies.

The Greens slammed the compromise package as a flawed.

"Allocating part of the funds to EU cities to invest massively in the renovation of their public buildings or the modernisation of public transport would have had an immediate economic and employment impact. By contrast, the €1 billion given to big energy utilities for carbon capture and storage pilot projects, which will not be ready to go for three years, will have limited benefits on the wider economy," Green MEP Claude Turmes (Luxembourg) argued. source

My comment: Definitely agree with mr. Turmes and I cannot stop wondering who's going to take all those money for carbon capture and storage. I mean they are betting so heavily on this technology, are they expecting money from patents or they fear that someone else will get the patent instead? It's very very mysterious. Because the CCS is nowhere near completion if it's possible at all. It's a highly risky technology, because even if it manages to store the carbon dioxide, it's not exactly clear for how long would it store it and how safe it will be in the long run. It's clear that such technology has many benefits, for example in space technology or in other closed environments, but is it better to drive the old cars instead of the new, more efficient and cheaper electric cars, or to make electricity by fossil fuels instead of by wind-something definitely cheaper for many countries with big surface or windy climate-I think not. I think there is something much more important here and we're simply not seeing it.

EU preparing to 'throw billions' at big oil firms

5 May 2009

Billions of EU taxpayers' money have been pumped into the fossil fuel industry over the last five years, environmentalists have warned in a report published ahead of a European Parliament vote on the Union's proposed €5 billion economic recovery plan.

The Green group in the EU assembly has called on MEPs to abide by a Parliament resolution adopted in November 2007, which calls for public funding for fossil fuel projects to be halted.

The EU's proposed economic recovery plan, which was approved by the bloc's leaders at their March summit, has earmarked €3.98 billion for energy projects, with €2.5 billion going on gas interconnectors and carbon capture and storage (CCS; see EurActiv LinksDossier).

CCS is considered crucial to reducing CO2 emissions from the coal-fired power stations on which the world is expected to continue to rely for decades to come. Moreover, the need to build more gas interconnectors was highlighted recently by the gas dispute between Russia and Ukraine, which left millions of Central and East Europeans in the cold in the heart of winter.

A report by environmental NGO Friends of the Earth Europe argues, however, that enough EU money has been spent on projects involving large oil and gas companies already. The most significant contribution was European Investment Bank (EIB) loans for the production and primary processing of fossil fuels, which amounted to €6.782 million over the past five years, according to the report.

The research also looked at public spending on fossil fuels in three member states: France, the UK and the Netherlands. Most of this money went to export guarantees, averaging €580 million in the UK, €390 million in France and €460 million in the Netherlands.

The Netherlands stood out, with high expenditure on research and development. Most of this went to CCS and other clean fossil-fuel technologies.

Moreover, the environmentalists claimed that taxpayers' money should not be spent on CCS.

"Oil and gas companies should not receive taxpayers' money to use for unproven technology such as CCS while they continue to make billions of euros of profit each year and invest their own capital in dirty projects like oil sands, which produce three times more emissions than conventional oil," FoEE's international corporate campaigner Paul De Clerck said.

Urbaniak added that the CCS studies on which the Commission had based its evaluation were carried out by research institutes financed by the same big oil companies whose very interests are at stake.

The environmentalists are arguing that if the recovery plan is to achieve its objective of stimulating job growth, the money should be spent on renewable energies. source

My comment: So, it's oil companies who are investing in CCS...well it's not exactly a surprise. I thought this is called conflict of interests in the normal world. Obviously not in the EU. Oh, well. Dear taxpayers, now you know why CCS is important-because otherwise oil companies may get into trouble. This reminds me of the researches on the effect of certain psychiatric drugs on children, funded by the producers of the drug in the USA. Fun. Btw, it might be worthy to ask your MEP why are we cofunding oil companies projects? They are rich enough to do it on their own and since they are the most interested in that technology, shouldn't they fund it entirely on their own? Or maybe governments are simply too fond of the taxes on the oil/gas, they're willing to invest in CCS just to make sure we continue paying them. :(

Carbon trading boosts natural gas prospects

5 May 2009

Boosted by carbon trading schemes, natural gas will be the "preferred energy option" in decades to come, experts believe.

"High carbon prices are a very strong driver of gas-fired power," Ian Cronshaw, head of the International Energy Agency's (IEA) energy diversification division, told liquified natural gas (LNG) industry representatives at an energy breakfast organised by Ifri in Brussels last Thursday (30 April).

He argued that strong prices of around €25-28 a tonne witnessed at the beginning of last year gave gas-fired companies a big competitive advantage in the UK, for example.

EU allowance (EUA) prices have crashed since then, as the financial crisis has significantly reduced industrial demand (EurActiv 09/02/09). Speakers at the seminar nevertheless argued that it is important not to rely on short-term signals to predict the long-term future of gas markets.

William C. Ramsay, director of Ifri's energy programme and a former IEA deputy director, argued that coal and gas are still actively competing in the US, whereas the EU's emissions trading scheme has already skewed the market in favour of gas in the UK.

Last week, a former US government energy official said that the US should also expect a surge in gas-generated power should President Barack Obama manage to pass a cap-and-trade bill, Platts reported.

Caruso pointed out that while coal now accounts for around 50% of electrical power in the US, the share would fall below 40% if emissions trading legislation is pushed through.

EU domestic natural gas production is expected to decrease in the coming years, which means that there will be a growing need for imports.

Europe relies heavily on Russian gas, which makes up 44% of its imports. The problems of such dependence became apparent earlier this year, when the winter gas dispute between Russia and Ukraine forced the EU to rethink its energy import routes (EurActiv 22/01/09).

As identified by the European Commission in its Second Strategic Reviw in November 2008, liquid natural gas (LNG) would allow Europe to import gas from sources that are not connected with pipelines. Hence, the bulk of Europe's LNG comes from Algeria and Nigeria, while its pipelines run mostly through territories that fall under Russian influence .

The process involves liquefying the gas at source and then shipping it in a much more compact form to its destination, where it is turned into gas again.

According to Tom Vanden Borre from the Commission's energy and transport department, LNG is important in terms of enhancing Europe's energy security, as there are more countries producing gas than can be delivered through pipelines. source

My comment: Hm, that gives a clear leverage on the investment in gas infrastructure discussed in previous articles. I cannot say I'm very happy about it. Because if gas from pipes comes from Russia, LNG comes from France dominated countries. So, from the point of view of a small country that needs gas, whose gas we take is not so important. I don't mind the competition, it's good for the prices. But I mind how western Europe solves its problems while they don't care about our problems. You know how much I love Europe, but this is something I definitely dislike.

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