Friday's guest Top 10

Friday's Top 10: Nirmal Nair with a global energy & emissions stocktake, Japan's rethink, Aussie axing, the 'out in the ocean' solution, US solar push, Dilbert & more

23rd May 14, 11:27am by Guest

Today's Top 10 is a guest post from Nirmal-Kumar Nair, a senior lecturer at the Department of Electrical and Computer Engineering at the University of Auckland. He previously featured in an interest.co.nz Double Shot interview last year.

As always, we welcome your additions in the comment stream below or via email to david.chaston@interest.co.nz.

And if you're interested in contributing the occasional Top 10 yourself, contact gareth.vaughan@interest.co.nz.

See all previous Top 10s here.

1. Global energy and emissions stock-take
Electricity energy policies and actions, globally, are being primarily dictated by emissions stock takes and future GHG (greenhouse gas emissions) projection.

One such estimate to assess where we stand as mankind and what our future in this space looks like is shown below.

One might agree or disagree with these projections but policy prescriptions and reversals are the norm of the day.

Some examples of them are in this edition of Top Ten.

2. Germany ‘Energiewende’: “Leaving nuclear and fossil energy behind”
An ambitious and keenly followed policy in countries worldwide has faced some consumer angst in recent years.

A recent news item brings to the fore the dilemma that energy transition policy faces.

German consumers and voters like these targets. But they increasingly dislike their side-effects.

3. Japan’s energy policy rethink
The resolve to fully shut off nuclear generation, three years after the Fukushima Daiichi meltdown, has been tested in recent months.

The reality of energy-security seems to be taking precedence ...

The government and voters are putting economics before atoms, opening the way for Japan to restart its nuclear power plants.

Very authoritative publications have previously covered Japan’s aspiration to go fully nuclear-free since the incident.

4. Australian Renewable Energy Agency "axed": 2014 Budget

Transitioning to a larger mix of renewable is definitely not a cheap exercise. Technologies being developed globally aren't showing promising signs of being self-sustaining “financially”. Countries need to take a deep breath and decide if being ‘fast-followers’ is a better energy policy rather than being ‘leaders’.

The government plans to axe the funding body for new technologies in renewable energy, ARENA the Australian Renewable Energy Agency, in order to save a billion dollars.

5. Russia-China sign 30 year US$400 billion gas deal
Gas seems to be the favourite "transition" fuel strategy for countries.

Fracking has bought some breathing time for the USA in the midst of their combating the GFC downturn.

In addition to energy security, the China-Russia deal can also be viewed from the viewpoint of China’s transition from a predominantly coal fired electricity economy to a more benign gas powering of their economy.

6. Obama ‘lame-duck’ term executive drive: Push for solar
Energy policy in the USA has been primarily influenced by sufficiency and security needs which has led to a more rational approach towards the search for transition fuels.

Hydraulic fracturing seems to be the answer for now. Initiatives like energy efficiency and smart grid tried to address some of the low-hanging fruits associated with modernising the electricity grid infrastructure.

Solar seems to be the new initiative that's being pursued for job-creation aspirations (solar installers and integrators).

Electricity prices are relatively stable and lower (compared globally), and don't appear to support organic market transition of renewable technologies for the USA.

7. Electricity utility mantra needs a change
The well-known mantra for electricity stakeholders has been “keeping the lights on”. Is it time for them to differentiate their focus in the context of their current institutional framework?

Deregulated electricity markets have created entities that operate on a mixture of public and private (for profit) entities. Distributors are facing the heat now.

Is it time for them to offer new products and services? “Pay more for reliability?"

8. The "out in the ocean" solution is very expensive: UK story
"Not in my backyard" has been a roadblock to overhead electricity transmission builds but "out in the sea" does not appear to be cheaper either.

Renewable & low carbon generation need to connect to electricity networks in order for us to meet climate change & renewable energy targets.

Actions to achieve this are being taken on the behalf of UK consumers by the Office of Gas and Electricity Markets (OFGEM) which regulates the monopoly companies that run the gas and electricity networks. It takes decisions on price controls and enforcement, acting in the interests of consumers and helping the industries to achieve environmental improvements.

9. "Show me the load": Australia/New Zealand story
Electricity demand has been steadily dropping or flattening across Australia and New Zealand.

We are reflecting the patterns expected for OECD countries.

10. Hydrogen or electric vehicle
The Toyota-Tesla partnership of 2010 for the joint development of electric vehicles is no more.

Both are going their own way for the development of "futuristic” solutions for personal travel.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

19 Comments

by King of the whiners | 23rd May 14, 12:29pm 1400804959

Perhaps I will give Dr Nair the benefit of the doubt that he has omitted the biggest energy story of the last six months from his Top 10 as it only broke 2 days ago - 2/3rds of US shale oil reserves just went walk about:

http://www.theguardian.com/environment/earth-insight/2014/may/22/two-th…

by King of the whiners | 23rd May 14, 12:51pm 1400806316

More on the story:

http://www.peakprosperity.com/blog/85555/us-shale-oil-miracle-disappears

Particularly like the comments section (bravo Mr Tom) - alternative headlines for those still predisposed to imbibe the neoliberal/mainstream media's effluent on the subject:

'Monterrey shale oil to be strategically stored in place for future use."

"Excessive taxes make Monterrey shale oil unprofitable."

"Monterrey shale oil getting extreme competition for drilling from other formations."

by steven | 23rd May 14, 1:03pm 1400807034

That play is also compared to the other main plays which seem to be only viable in a small area....so much of these 2 plays look to be downgraded like the Monterrey one.

So today 2/3rds of the shale oil is now known as a never was. The third that is left from the other plays could be over-stated by significant amounts....50% or more...

Its going to go well, I can tell.

regards

by steven | 23rd May 14, 12:55pm 1400806509

Most of the articles point to BAU isnt possible with alternatives to fossil fuels. However since "everyone" wants BAU they wont do alternatives as they wont work as they will make ppl "poorer".

#2, #4, #8 Plus the real worry is the timescale to move to something else, not to mention money.

So lets look at the time, just this morning some of us pointed out that an energy shock on the scale of the 1970s looks probable within 5 years (rinse and repeat). This of course is a re-run of the Robbert Hirsch report of 2005 stating we need 20 years to get off fossil fuels. So we have wasted a decade and intend to waste any time left.

http://en.wikipedia.org/wiki/Hirsch_report

So #4 OZ is effectively saying we are going to let an energy crisis bugger us.

The panic is frankly going to be immense.

At least the Green's here have some idea and are pushing for Green energy. If they dont get it then waiting 3 years will be too late. If they do get in its Likely Labour will drag their feet as it wouldnt be "just" anway.

It seems we are hell bent on topping ourselves.

regards

by dh | 23rd May 14, 1:07pm 1400807260

#3 The Locals are not keen, and seem to be winning in court

http://www3.nhk.or.jp/nhkworld/english/news/20140521_80.html

If I had to depend on the Japanese Nuclear Industries estimates of plant safety, I would want a high standard as well.

by PeakEverything | 23rd May 14, 1:22pm 1400808145

Why are we wasting our time with this energy mumbo jumbo don't you realise there is talk of a capital gains tax. Stop worrying about energy unless you can show me what that is going to do to my house value.

by steven | 23rd May 14, 1:34pm 1400808889

LOL....oh I can....

PS I think you mean "how its going to increase my house value". Everyone knows that no matter what, house prices only go up!!!!!

regards

by profile | 23rd May 14, 2:50pm 1400813402

Nothing is more creepy than hand wringing chicken littles glee at other peoples misfortune. Like the UEA chief scientists Phil Jones infamous email “If anything, I would like to see the climate change happen, so the science could be proved right, regardless of the consequences”. But hey, it was only an estimated 2.8 million Californian jobs.

On balance EIA tends to underestimate oil and gas reserves and production not overestimate. Who predicted the 50% increase in US oil production since 2011 or the 8 fold increase in shale gas production since 2007?

On a global scale proven oil reserves have gone from 600 billion in 1980, we have consumed 850 odd since then, and proven reserves still stand at 1.6 trillion today. Marcellus downgrade in perspective… 13/1600=0.8%. Batten down the bunkers boys we are all doomed.

If you are still are wetting your pants remember there is 250 odd years of gas out there, and in the US at least, 1/3 the price of oil falling from $13 to $4 in recent years. If oil gets short people will just switch to gas. A 12 month payback on a ship conversion is pretty compelling.

“The global fleet of 42 LNG-powered ships will almost triple by 2014 and increase 42-fold to almost 1,800 vessels by 2020, according to DNV GL, the largest company certifying the merchant fleet for safety.

The fact that LNG has proven performance in cutting edge ship designs, favorable economics and decisive environmental advantages creates a compelling case for the maritime industry to commit to LNG. Just as diesel replaced steam locomotives in a rapid transition, it is possible to see a similar transformation happening in maritime shipping”.

http://theenergycollective.com/ed-dodge/329406/growth-lng-fuel-maritime-shipping

https://rbnenergy.com/like-a-bat-out-of-hell-the-us-crude-production-engine

http://www.eia.gov/dnav/ng/ng_prod_shalegas_s1_a.htm

by Plutocracy | 23rd May 14, 3:21pm 1400815281

"On balance EIA tends to underestimate oil and gas reserves and production not overestimate."

Eh, no they don't. They consistently over-estimate oil production. Have a look at how some of their previous predictions have fared. You'll note they have had to scale down there predictions almost every year during the last decade.

World oil supply projections EIA

Also I'm going to call you out on this statement: "Who predicted the 50% increase in US oil production since 2011"

In 2011 they produced 5.47 million barrels per day. In 2013 they produced 7.44 million barrels per day. This is not a fifty percent increase. For the record the US still needed to import ~7 million barrels per day last year on top of their production to meet their consumption. I don't think they'll be flooding the world in oil any time soon!

by profile | 23rd May 14, 3:50pm 1400817056

Pluto, as per the rbnenergy link above: "Last week US crude oil production reached 8.4 MMb/d – its highest level since October 1986 – up 50 percent since the start of 2011. The engines of growth are Texas and North Dakota and within those states, horizontal drilling in tight oil shale are generating the most exciting results. And while production is soaring, proved reserves are increasing even faster – laying the groundwork for continued output."

As for proven reserve projection being underestimated surely the global proven reserves of 600 in 1980, consumption of 850 since then and proven reserves today of 1600 are proof enough that reserves have been underestimated time and again? Though given how quickly technology advances this is really no surprise.

Sure the US imports oil but it is also worlds largest exporter of refined products (3.5 odd million per day?) and produces 20% of world industrial output - much cleaner and more efficiently than China I might add. All this and they produce 90% of their energy requirements domestically (see chart in top ten today). What oil they do import is increasingly coming from Canada and Mexico so lets just hope they keep the sea lanes open now they are not as reliant on Middle East or African oil. Add in more fuel efficent cars and natural gas conversions for ships and trucks etc. reducing pollution can conserving oil and the glass is looking half full to me.

by Plutocracy | 23rd May 14, 4:14pm 1400818497

As I said, according to EIA's own data annual crude oil production was 5.3 million barrels per day for 2010, and 5.65 million / day for 2011.

The rest of your post I don't think is unreasonable. High price has driven the exploitation of tight oil and I don't doubt that a price of $150+ per barrel would see more production coming online (assuming economies can sustain this price without crashing - which is probably unlikely). Where I do disagree with you however is the touting USA as 'Saudi America' - the saviour of world oil production, and using 'tight oil' as an excuse to sit on our hands while 'business as usual' to continues.

My biggest gripe the 'abundance meme' is that it serves as an excuse for us to fritter away the remaining time we have (while energy is still relatively cheap and abundant) to make preparations for a time when this is not the case. There's the distinct possibility that this time is coming faster than most people think.

by steven | 24th May 14, 7:06am 1400871985

Well said.

regards

by steven | 24th May 14, 7:12am 1400872340

If you want to play %s.

Estimate of annual crude oil production decrease = 4~5% of 72mbpd = 3.6mbpd annually that has to be made up (and is at present).

On top of that demand is in the order of 2~2.5%, call its 2mbpd.

So in the need is 5.6mbpd to have growth and oil needs to be $80 a barrel and prefferably 50USD a barrel....

5.6mbpd is roughly a new Saudi every year.

So your contention is that can carry on indefinately...or infinite groth on a finite planet, which is rubbish.

regards

by profile | 26th May 14, 1:57pm 1401069425

Applying that logic in 1980 when proven reserves were 600 billion would result in us being completely out of oil by now instead of having 1.6 trillion proven reserves. You forgot to factor in innovation and substitution.

by steven | 24th May 14, 7:21am 1400872886

Yet another slight of hand on your part. No the reserves have not been under-estimated.

The reserves have merely been adjusted to incl the tight and heavy oil. Which was known in the 1980s it was simply listed as non-conventional and un-economic to produce when oil was $30~$50 a barrel. Even at $100 a barrel its looking un-economic and certianly in terms of EROEI it will remain so.

On top of that even the most optimistic projectiosn think 6mbpd it the limit off these, that makes up for the losses in conventional wells of at most 2 years.

Mexico's oil output loks to be in irriversible decline, even if private companies can reverse that decline its a temp measure at most, especially considering Mexico's own growing demand.

All of these points you blithly ignore.

Glass half full, is correct, in terms of reserves but one mathematical issues, the doubling time...even at 2% growth that's a doubling time of 35 years...so at best we have 35 years of oil left.

Reserves dont of course matter, its the production rate that matters to our economy.

regards

by profile | 23rd May 14, 4:31pm 1400819487

Pluto, sorry I don't follow your first sentence. Between 2011 and now US production has increased by 50%. I didn't mention 2010 and was referring to what has happened in the past 3.5 years productionwise as per the link.

I don't believe we are sitting on our hands. Gas conversions etc. are testament to that. I am not sitting on my hands - I will personally benefit if oil prices go through the roof. Some guys on here regularly say oil production is going to crash in as little as two years. I do not buy that - especially given the rapid advances in the past decade in fuel efficiency and subtitution.

by Gummy Bear Hero | 23rd May 14, 10:37pm 1400841459

You make very good sense , Mr profile ....

... judging by the response from some of the depressive energy trolls hereabouts , I am reminded that the cretaeous era didn't end because the world ran out of cretans ...

The world belongs to the ambitious my friend , to the dreamers and innovators , to those who take risks .... not to those who sit on their hands , sniping from the sidelines ...

by profile | 24th May 14, 4:04am 1400861084

http://fuelfix.com/blog/2014/05/20/millennials-spurning-silicon-valley-…

by steven | 24th May 14, 7:24am 1400873040

Cherry picking 1 year of an expotential graph is such sound business acumen....not.

In terms of oil price everything points to our global economy not being able to withstand oil much above $120 a barrel let alone $150 or $200...July 2008 and the last 6 years of high prices is evidence of that.

regards