Inside Bay Area - Alameda Times-Star - Op-Ed
THE FRESHEST and, for some, most encouraging part of President Bush's lackluster State of the Union address and budget was the proposal to increase federal spending on alternative energy research by 22 percent.
Our nation, Bush posited, is "addicted to oil" — an admission that can't come easily for an administration whose top two officeholders are beneficiaries of the industry.
The fund increase is part of Bush's avowed goal of cutting our dependence on Middle Eastern petroleum imports by 75 percent in the next 20 years. Particularly favored are the development of solar energy and biofuels, as well as taking a new look at reviving the use of nuclear power plants. But increased funds for coal-powered plants, wind energy, hydrogen fuel cells and batteries for hybrid cars also are part of the proposal.
The money is intended to be not an end-all but a catalyst for increased investments in alternative energy by private industry. Hopefully they'll take the bait.
Such investment is long overdue but must be sustained. The tipping point of peak world oil production is expected to occur within the next 20 years. Some say it's already happened.
Meanwhile, international competition for oil and natural gas has increased dramatically, with China and India at the forefront. Demand is expected to jump 50 percent within the next 20 years, and our nation no longer enjoys the relative monopoly it did for more than a century. It's a finite resource, and some experts contend we could deplete supplies of easy-to-retrieve, relatively cheap oil within 40 years.
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All of which could seriously erode our fossil-fueled quality of life, economic base, production of modern conveniences and easy mobility. At worst, we could be headed for a period of "generalized and chronic (economic, political and social) contraction," James Howard Kunstler says in his compelling but somber book "The Long Emergency."
We currently have no good alternatives to oil and natural gas. It's vital that we invest in developing some. Our future depends on it.
So, has the Bush administration finally gotten religion on alternative energy, or is it playing politics with an issue that is key to the world's future?
The proof will be seen in the length and depth of our commitment. UC Berkeley Nobel laureate Steve Chu and Stanford biologist Cliff Summerville indicate that our dedication needs to be sustained for 15 years or more.
It's comparable to the space race. To start such an undertaking and then say "no" a few years later would be farcical.
Now that it's made this commitment to alternative energy, the Bush administration — and its successors — must sustain the effort to fuel such options.
We can't afford to dabble in alternative fuels and then abort the venture — as we did in the 1970s. This time, that could be a disastrous.
Thursday, February 16, 2006
Rich nations seek stable energy supply - Breaking News - Business - Breaking News
Finance ministers of the world's wealthiest nations complained about high oil prices at talks in Russia on Saturday but said they still believed economic growth would be good again this year.
Ministers from the Group of Eight industrialised countries said in a communique that global growth remained strong but that high and volatile energy prices posed a threat. They also called for more progress in trade liberalisation negotiations.
International Monetary Fund Managing Director Rodrigo Rato, present at the talks, said high energy prices seemed to be the result of supply problems as well as high demand.
The meeting in icy Moscow marked Russia's first turn as G8 president and focused primarily on concern over the cost and reliability of supplies of oil and gas.
As ministers signed off the communique and headed to lunch with President Vladimir Putin at the Kremlin, Finance Minister Alexei Kudrin was quoted by Russian RIA-Novosti news agency as saying that the talks had at times been "stormy".
It was not immediately clear whether Kudrin was referring to tension over energy supply or other issues at the meeting, such as Russian repayment of foreign debts and aid for the world's poorest countries.
ENERGY SUPPLY WOES
Russia is one of the world's biggest oil and gas suppliers but a recent row with Ukraine, in which it closed the gas taps, has triggered ill-ease among others in the G8 club - which comprises the United States, Japan, Canada, Germany, Italy, Britain, France as well as Russia.
The diplomatically phrased communique made no reference to that issue but officials said they are keen for Russia itself to allow more foreign investment in its energy sector and to loosen the grip of the monopoly supplier Gazprom.
The finance ministers kicked off their talks over breakfast with their opposite numbers from some of the rising stars of the world economy, China, India, Brazil and South Africa.
China's breakneck expansion rate, more than twice the pace of the world in general, has also made it the world's second largest consumer after the United States of oil.
Rising demand has doubled oil prices in the past two years but another major worry is securing reliable supplies of energy from regions often prone to instability.
The standoff with oil-rich Iran serves as a reminder of how vulnerable supplies can be, as did the Russia-Ukraine spat over how much the latter paid for gas.
RUSSIA RESISTS
Russia has declared energy security a priority of its annual G8 presidency, but is being asked to prove it is serious after cutting gas exports to Ukraine and Western Europe at the start of 2006.
Russia's number two oil official Sergei Oganesyan was quick to dismiss the idea of an end to Gazprom's monopoly before the G8 ministers even arrived in the Russian capital. "There is and there will continue to be a monopoly," he told Reuters.
Pressure could mount though, with another meeting scheduled for March among energy ministers.
Gazprom does not allow others to export gas to Europe or to even produce more than it is prepared to accept in trunk pipelines, all of which are under its control.
For Putin, the presidency of the G8 is a celebration of his country's transformation after the collapse of the Soviet Union, but the other finance ministers still do not consider Russia an equal, mindful that it went to the brink of financial ruin and debt default in 1998 even if it is rich in oil and gas.
© 2006 AAP
Brought to you by
Finance ministers of the world's wealthiest nations complained about high oil prices at talks in Russia on Saturday but said they still believed economic growth would be good again this year.
Ministers from the Group of Eight industrialised countries said in a communique that global growth remained strong but that high and volatile energy prices posed a threat. They also called for more progress in trade liberalisation negotiations.
International Monetary Fund Managing Director Rodrigo Rato, present at the talks, said high energy prices seemed to be the result of supply problems as well as high demand.
The meeting in icy Moscow marked Russia's first turn as G8 president and focused primarily on concern over the cost and reliability of supplies of oil and gas.
As ministers signed off the communique and headed to lunch with President Vladimir Putin at the Kremlin, Finance Minister Alexei Kudrin was quoted by Russian RIA-Novosti news agency as saying that the talks had at times been "stormy".
It was not immediately clear whether Kudrin was referring to tension over energy supply or other issues at the meeting, such as Russian repayment of foreign debts and aid for the world's poorest countries.
ENERGY SUPPLY WOES
Russia is one of the world's biggest oil and gas suppliers but a recent row with Ukraine, in which it closed the gas taps, has triggered ill-ease among others in the G8 club - which comprises the United States, Japan, Canada, Germany, Italy, Britain, France as well as Russia.
The diplomatically phrased communique made no reference to that issue but officials said they are keen for Russia itself to allow more foreign investment in its energy sector and to loosen the grip of the monopoly supplier Gazprom.
The finance ministers kicked off their talks over breakfast with their opposite numbers from some of the rising stars of the world economy, China, India, Brazil and South Africa.
China's breakneck expansion rate, more than twice the pace of the world in general, has also made it the world's second largest consumer after the United States of oil.
Rising demand has doubled oil prices in the past two years but another major worry is securing reliable supplies of energy from regions often prone to instability.
The standoff with oil-rich Iran serves as a reminder of how vulnerable supplies can be, as did the Russia-Ukraine spat over how much the latter paid for gas.
RUSSIA RESISTS
Russia has declared energy security a priority of its annual G8 presidency, but is being asked to prove it is serious after cutting gas exports to Ukraine and Western Europe at the start of 2006.
Russia's number two oil official Sergei Oganesyan was quick to dismiss the idea of an end to Gazprom's monopoly before the G8 ministers even arrived in the Russian capital. "There is and there will continue to be a monopoly," he told Reuters.
Pressure could mount though, with another meeting scheduled for March among energy ministers.
Gazprom does not allow others to export gas to Europe or to even produce more than it is prepared to accept in trunk pipelines, all of which are under its control.
For Putin, the presidency of the G8 is a celebration of his country's transformation after the collapse of the Soviet Union, but the other finance ministers still do not consider Russia an equal, mindful that it went to the brink of financial ruin and debt default in 1998 even if it is rich in oil and gas.
© 2006 AAP
Brought to you by
Wednesday, February 15, 2006
US nuclear waste strategies evaluated
Methods planned for transporting radioactive spent fuel from nuclear power reactors are generally safe, but questions remain over the safety of nuclear casks in the event of a sustained, hot fire, a review panel of the US National Academy of Sciences has concluded.
The NAS report released in Washington DC on Thursday, found there are "no fundamental technical barriers" to safe transportation, but that a number of "serious challenges" remain.
Assuming no new plants are built, disposing of fuel from the US's 112 operating plants will require a two-decade-long programme of daily shipments, and more planning needs to be done for managing this massive operation, the report says.
The report assessed the adequacy of planning for every kind of accident scenario, but not the potential for deliberate acts such as terrorist attacks. To evaluate that aspect, it says, would require creation of a new committee with full access to classified materials.
Trains versus trucks
There are several main scenarios under consideration for moving the 54,000 tonnes of high-level radioactive waste from the US's 103 nuclear power plants, and a similar amount from military weapons-production plants. One is the movement to their ultimate repository, proposed as the Yucca Mountain facility in Nevada. Another is transport to an interim storage spot or possibly to reprocessing facilities.
The material could be moved in an estimated 55,000 truckloads, or in 9600 dedicated trainloads and just 1000 truckloads, they say. The multidisciplinary panel "much preferred the rail option", says Neal Lane, its chairman, both because of the greatly reduced number of trips and because the rail lines are less subject to disruptions, such as traffic jams.
Research on the strength of the planned containment vessels or casks – which included dropping them from aeroplanes and slamming into them in simulated railroad crossing collisions – assures that they would survive any likely accident or natural disaster, except for the contingency of a very hot fire sustained over a long period, the report says.
Structural issues
Such fires have occurred, for example, in at least two cases where trains of petroleum-filled tanker cars burned for days before being controlled. The only way to minimise that risk for now, the panel concluded, is to make sure petroleum-carrying trains never get close to nuclear waste trains, but more research should be done on the effects of such fires on the nuclear casks.
More research is also needed on other points, such as the best ways of organising and coordinating the shipments, the panel says.
"There are significant questions" about the performance of the Department of Energy agency running the programme right now, panel member Seth Tuler told New Scientist. The report concludes that "changing the organisational structure for this programme will improve its chances for success".
Methods planned for transporting radioactive spent fuel from nuclear power reactors are generally safe, but questions remain over the safety of nuclear casks in the event of a sustained, hot fire, a review panel of the US National Academy of Sciences has concluded.
The NAS report released in Washington DC on Thursday, found there are "no fundamental technical barriers" to safe transportation, but that a number of "serious challenges" remain.
Assuming no new plants are built, disposing of fuel from the US's 112 operating plants will require a two-decade-long programme of daily shipments, and more planning needs to be done for managing this massive operation, the report says.
The report assessed the adequacy of planning for every kind of accident scenario, but not the potential for deliberate acts such as terrorist attacks. To evaluate that aspect, it says, would require creation of a new committee with full access to classified materials.
Trains versus trucks
There are several main scenarios under consideration for moving the 54,000 tonnes of high-level radioactive waste from the US's 103 nuclear power plants, and a similar amount from military weapons-production plants. One is the movement to their ultimate repository, proposed as the Yucca Mountain facility in Nevada. Another is transport to an interim storage spot or possibly to reprocessing facilities.
The material could be moved in an estimated 55,000 truckloads, or in 9600 dedicated trainloads and just 1000 truckloads, they say. The multidisciplinary panel "much preferred the rail option", says Neal Lane, its chairman, both because of the greatly reduced number of trips and because the rail lines are less subject to disruptions, such as traffic jams.
Research on the strength of the planned containment vessels or casks – which included dropping them from aeroplanes and slamming into them in simulated railroad crossing collisions – assures that they would survive any likely accident or natural disaster, except for the contingency of a very hot fire sustained over a long period, the report says.
Structural issues
Such fires have occurred, for example, in at least two cases where trains of petroleum-filled tanker cars burned for days before being controlled. The only way to minimise that risk for now, the panel concluded, is to make sure petroleum-carrying trains never get close to nuclear waste trains, but more research should be done on the effects of such fires on the nuclear casks.
More research is also needed on other points, such as the best ways of organising and coordinating the shipments, the panel says.
"There are significant questions" about the performance of the Department of Energy agency running the programme right now, panel member Seth Tuler told New Scientist. The report concludes that "changing the organisational structure for this programme will improve its chances for success".
U.S. May Yet Lose Billions on Oil, Gas - Yahoo! News: "The Interior Department estimates that as much as $66 billion worth of oil and natural gas taken from the deep waters of the Gulf of Mexico between now and 2011 will be exempt from government royalty payments.
That could amount to the government losing an estimated $7 billion to $9.5 billion based on anticipated production and current price projections for oil and gas, according to an analysis in the department's five-year budget plan.
The analysis assumes oil prices will hover around $50 a barrel and natural gas in the $8 to $9 per thousand cubic feet range between now and 2012.
Johnnie Burton, head of the department's Minerals Management Service, said Tuesday the actual revenue losses would be subject to many variables, but that more than $7 billion was 'in the range' of probability.
The industry windfall was first reported by The New York Times.
The disclosure prompted calls in Congress on Tuesday to curtail or end the royalty relief that lawmakers made available in 1995.
'The American people are getting stood up and hung out to dry by an administration that favors sweetheart deals with Big Oil,' said Rep. Ed Markey, D-Mass., one of six Democrats who said they planned to introduce legislation to end the royalty relief.
Sen. John Kerry, D-Mass., said he planned to introduce a resolution putting the Senate on record against the royalty break. 'No one in their right mind think oil companies turning record high profits and squeezing Americans at the pump should now get to keep $7 billion,' Kerry said.
Although Kerry was among those who voted for the royalty relief in 1995, his spokeswoman said that the relief is no longer needed when oil prices are near $60 a barrel.
Oil cost an average of $18.43 a barrel in 1995, according"
That could amount to the government losing an estimated $7 billion to $9.5 billion based on anticipated production and current price projections for oil and gas, according to an analysis in the department's five-year budget plan.
The analysis assumes oil prices will hover around $50 a barrel and natural gas in the $8 to $9 per thousand cubic feet range between now and 2012.
Johnnie Burton, head of the department's Minerals Management Service, said Tuesday the actual revenue losses would be subject to many variables, but that more than $7 billion was 'in the range' of probability.
The industry windfall was first reported by The New York Times.
The disclosure prompted calls in Congress on Tuesday to curtail or end the royalty relief that lawmakers made available in 1995.
'The American people are getting stood up and hung out to dry by an administration that favors sweetheart deals with Big Oil,' said Rep. Ed Markey, D-Mass., one of six Democrats who said they planned to introduce legislation to end the royalty relief.
Sen. John Kerry, D-Mass., said he planned to introduce a resolution putting the Senate on record against the royalty break. 'No one in their right mind think oil companies turning record high profits and squeezing Americans at the pump should now get to keep $7 billion,' Kerry said.
Although Kerry was among those who voted for the royalty relief in 1995, his spokeswoman said that the relief is no longer needed when oil prices are near $60 a barrel.
Oil cost an average of $18.43 a barrel in 1995, according"
Wednesday, February 08, 2006
DALLAS (Reuters) - President Bush's call for the United States to end its dependence on Middle East oil has become "the topic of the hour" for Saudi Arabia and left the it wondering what the White House has in mind, the Saudi ambassador to the United States said on Tuesday.
Prince Turki Al-Faisal said the Saudis were talking with the Bush administration about the president's January 31 State of the Union speech in which he said the U.S. was "addicted to oil" and should cut Mideast oil imports by 75 percent by 2025.
"This is the topic of the hour for us. We are talking to the U.S. administration on exactly where they plan to go with this," Faisal said a speech in Dallas. "I hope there will be more discussion between us and the U.S. administration because this is an issue of prime importance."
"Oil is our bread and butter, at least for the time being, and so any decisions by such an important partner as the United States affects us and makes us concerned about where we are going," he said.
In his speech, Bush said: "America is addicted to oil, which is often imported from unstable parts of the world."
The goal, he said, is to use technology to "move beyond a petroleum-based economy, and make our dependence on Middle Eastern oil a thing of the past."
Prince Turki Al-Faisal said the Saudis were talking with the Bush administration about the president's January 31 State of the Union speech in which he said the U.S. was "addicted to oil" and should cut Mideast oil imports by 75 percent by 2025.
"This is the topic of the hour for us. We are talking to the U.S. administration on exactly where they plan to go with this," Faisal said a speech in Dallas. "I hope there will be more discussion between us and the U.S. administration because this is an issue of prime importance."
"Oil is our bread and butter, at least for the time being, and so any decisions by such an important partner as the United States affects us and makes us concerned about where we are going," he said.
In his speech, Bush said: "America is addicted to oil, which is often imported from unstable parts of the world."
The goal, he said, is to use technology to "move beyond a petroleum-based economy, and make our dependence on Middle Eastern oil a thing of the past."
BP's record profit disappoints City
· £11bn profit overshadowed by rivals' performance
· Lord Browne defends 'quality of asset base'
Mark Milner, industrial editor
Wednesday February 8, 2006
The Guardian
BP yesterday announced record profits of $19.3bn (£11bn), driven by the high oil price, but the 25% increase fell short of City expectations and the world's second largest oil firm by market value saw its shares fall in response.
Weakness in the final quarter of 2005 left BP's refining and marketing business $160m in the red - compared with its $1.3bn profit in the last three months of 2004. The company blamed a combination of its Texas City refinery being closed, the $500m spent on boosting efficiency in Europe, and the changes to the way BP has to account for long-term North Sea contracts.
BP's record profit disappoints City
· £11bn profit overshadowed by rivals' performance
· Lord Browne defends 'quality of asset base'
Mark Milner, industrial editor
Wednesday February 8, 2006
The Guardian
BP yesterday announced record profits of $19.3bn (£11bn), driven by the high oil price, but the 25% increase fell short of City expectations and the world's second largest oil firm by market value saw its shares fall in response.
Weakness in the final quarter of 2005 left BP's refining and marketing business $160m in the red - compared with its $1.3bn profit in the last three months of 2004. The company blamed a combination of its Texas City refinery being closed, the $500m spent on boosting efficiency in Europe, and the changes to the way BP has to account for long-term North Sea contracts.
Article continues
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Lord Browne, BP's chief executive, was upbeat about the results, which saw the group deliver record cash flow as well as record profits, slash its gearing to 17%, and for the 13th successive year replace 100% of its production with new proven reserves. "Our 2005 result was a record; this reflects the quality of our asset base and operations. Strong operating cash flows and ... disposals have enabled record distributions to shareholders."
Over the past three years BP has returned $40bn to shareholders, a return that could rise to up to $65bn in the next three years.
However, Richard Hunter, equities head at the stockbrokers Hargreaves Lansdown, said: "BP's profits of £11bn underperformed both Royal Dutch Shell's £13bn and Exxon's £20bn, not to mention market expectations." The combination of the reserves replacement programme and the expected distribution to shareholders meant, however, that the market consensus remained "overwhelmingly positive towards what is still seen as the pick of the oil majors".
The level of the profits enjoyed by oil companies has attracted increasing criticism and yesterday Tony Woodley, general secretary of the Transport & General Workers Union, called for some of the money to be used to support the Finance Assistance Scheme, the pensions lifeboat.
Mr Woodley said: "At a stroke we could bolster that scheme and sort out the injustice of decent people having lost their pensions through no fault of their own. The oil companies' windfall should help those people, for we can be sure the shareholders will be looked after anyway."
Earlier Lord Browne had rejected suggestions that the firm was making excess profits. The money BP made went either to investment in the business or to shareholders. "BP distributes £1 out of every £6 that goes into UK pension funds via the dividend. That's rather important." While 96% of BP's profits were generated outside Britain, more than half the company's shares were held in the UK. Yesterday the shares fell 18p to 647.5p.
Lord Browne was scathing about the accounting changes the company had had to bring in under international financial reporting standards. "Some would argue that IFRS neither produces a record of the accountability of management nor a measure of the changes in the economic value of assets and liabilities. I would agree with them. What IFRS actually does is to make our results more difficult to understand."
BP believed there was good medium-term support for oil prices to stay above $40 a barrel and that the supply industry's vulnerability to "significant supply disruption" remained high. BP's strong portfolio of assets meant it would continue to increase production organically at that price level, though Lord Browne appeared unenthusiastic about acquisitions.
Backstory
With the other big oil firms, BP may be cashing in on high prices but its chief executive, Lord Browne, insists 2005's record performance had its origins in days of much lower prices. Brent crude averaged $54.42 a barrel in the final quarter of last year, 42% higher than in the same period in 2004. Prices below $20 a barrel, as in 2001 and 2002, seem a distant memory. But Lord Browne says the results are rooted in that era of low oil prices, and through sustained investment and performance improvements.
Special reports
Oil and petrol
Useful links
Opec
International Energy Agency
American Petroleum Institute
Energy Institute
· £11bn profit overshadowed by rivals' performance
· Lord Browne defends 'quality of asset base'
Mark Milner, industrial editor
Wednesday February 8, 2006
The Guardian
BP yesterday announced record profits of $19.3bn (£11bn), driven by the high oil price, but the 25% increase fell short of City expectations and the world's second largest oil firm by market value saw its shares fall in response.
Weakness in the final quarter of 2005 left BP's refining and marketing business $160m in the red - compared with its $1.3bn profit in the last three months of 2004. The company blamed a combination of its Texas City refinery being closed, the $500m spent on boosting efficiency in Europe, and the changes to the way BP has to account for long-term North Sea contracts.
BP's record profit disappoints City
· £11bn profit overshadowed by rivals' performance
· Lord Browne defends 'quality of asset base'
Mark Milner, industrial editor
Wednesday February 8, 2006
The Guardian
BP yesterday announced record profits of $19.3bn (£11bn), driven by the high oil price, but the 25% increase fell short of City expectations and the world's second largest oil firm by market value saw its shares fall in response.
Weakness in the final quarter of 2005 left BP's refining and marketing business $160m in the red - compared with its $1.3bn profit in the last three months of 2004. The company blamed a combination of its Texas City refinery being closed, the $500m spent on boosting efficiency in Europe, and the changes to the way BP has to account for long-term North Sea contracts.
Article continues
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--------------------------------------------------------------------------------
Lord Browne, BP's chief executive, was upbeat about the results, which saw the group deliver record cash flow as well as record profits, slash its gearing to 17%, and for the 13th successive year replace 100% of its production with new proven reserves. "Our 2005 result was a record; this reflects the quality of our asset base and operations. Strong operating cash flows and ... disposals have enabled record distributions to shareholders."
Over the past three years BP has returned $40bn to shareholders, a return that could rise to up to $65bn in the next three years.
However, Richard Hunter, equities head at the stockbrokers Hargreaves Lansdown, said: "BP's profits of £11bn underperformed both Royal Dutch Shell's £13bn and Exxon's £20bn, not to mention market expectations." The combination of the reserves replacement programme and the expected distribution to shareholders meant, however, that the market consensus remained "overwhelmingly positive towards what is still seen as the pick of the oil majors".
The level of the profits enjoyed by oil companies has attracted increasing criticism and yesterday Tony Woodley, general secretary of the Transport & General Workers Union, called for some of the money to be used to support the Finance Assistance Scheme, the pensions lifeboat.
Mr Woodley said: "At a stroke we could bolster that scheme and sort out the injustice of decent people having lost their pensions through no fault of their own. The oil companies' windfall should help those people, for we can be sure the shareholders will be looked after anyway."
Earlier Lord Browne had rejected suggestions that the firm was making excess profits. The money BP made went either to investment in the business or to shareholders. "BP distributes £1 out of every £6 that goes into UK pension funds via the dividend. That's rather important." While 96% of BP's profits were generated outside Britain, more than half the company's shares were held in the UK. Yesterday the shares fell 18p to 647.5p.
Lord Browne was scathing about the accounting changes the company had had to bring in under international financial reporting standards. "Some would argue that IFRS neither produces a record of the accountability of management nor a measure of the changes in the economic value of assets and liabilities. I would agree with them. What IFRS actually does is to make our results more difficult to understand."
BP believed there was good medium-term support for oil prices to stay above $40 a barrel and that the supply industry's vulnerability to "significant supply disruption" remained high. BP's strong portfolio of assets meant it would continue to increase production organically at that price level, though Lord Browne appeared unenthusiastic about acquisitions.
Backstory
With the other big oil firms, BP may be cashing in on high prices but its chief executive, Lord Browne, insists 2005's record performance had its origins in days of much lower prices. Brent crude averaged $54.42 a barrel in the final quarter of last year, 42% higher than in the same period in 2004. Prices below $20 a barrel, as in 2001 and 2002, seem a distant memory. But Lord Browne says the results are rooted in that era of low oil prices, and through sustained investment and performance improvements.
Special reports
Oil and petrol
Useful links
Opec
International Energy Agency
American Petroleum Institute
Energy Institute
BP's record profit disappoints City
· £11bn profit overshadowed by rivals' performance
· Lord Browne defends 'quality of asset base'
Mark Milner, industrial editor
Wednesday February 8, 2006
The Guardian
BP yesterday announced record profits of $19.3bn (£11bn), driven by the high oil price, but the 25% increase fell short of City expectations and the world's second largest oil firm by market value saw its shares fall in response.
Weakness in the final quarter of 2005 left BP's refining and marketing business $160m in the red - compared with its $1.3bn profit in the last three months of 2004. The company blamed a combination of its Texas City refinery being closed, the $500m spent on boosting efficiency in Europe, and the changes to the way BP has to account for long-term North Sea contracts.
BP's record profit disappoints City
· £11bn profit overshadowed by rivals' performance
· Lord Browne defends 'quality of asset base'
Mark Milner, industrial editor
Wednesday February 8, 2006
The Guardian
BP yesterday announced record profits of $19.3bn (£11bn), driven by the high oil price, but the 25% increase fell short of City expectations and the world's second largest oil firm by market value saw its shares fall in response.
Weakness in the final quarter of 2005 left BP's refining and marketing business $160m in the red - compared with its $1.3bn profit in the last three months of 2004. The company blamed a combination of its Texas City refinery being closed, the $500m spent on boosting efficiency in Europe, and the changes to the way BP has to account for long-term North Sea contracts.
Article continues
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Lord Browne, BP's chief executive, was upbeat about the results, which saw the group deliver record cash flow as well as record profits, slash its gearing to 17%, and for the 13th successive year replace 100% of its production with new proven reserves. "Our 2005 result was a record; this reflects the quality of our asset base and operations. Strong operating cash flows and ... disposals have enabled record distributions to shareholders."
Over the past three years BP has returned $40bn to shareholders, a return that could rise to up to $65bn in the next three years.
However, Richard Hunter, equities head at the stockbrokers Hargreaves Lansdown, said: "BP's profits of £11bn underperformed both Royal Dutch Shell's £13bn and Exxon's £20bn, not to mention market expectations." The combination of the reserves replacement programme and the expected distribution to shareholders meant, however, that the market consensus remained "overwhelmingly positive towards what is still seen as the pick of the oil majors".
The level of the profits enjoyed by oil companies has attracted increasing criticism and yesterday Tony Woodley, general secretary of the Transport & General Workers Union, called for some of the money to be used to support the Finance Assistance Scheme, the pensions lifeboat.
Mr Woodley said: "At a stroke we could bolster that scheme and sort out the injustice of decent people having lost their pensions through no fault of their own. The oil companies' windfall should help those people, for we can be sure the shareholders will be looked after anyway."
Earlier Lord Browne had rejected suggestions that the firm was making excess profits. The money BP made went either to investment in the business or to shareholders. "BP distributes £1 out of every £6 that goes into UK pension funds via the dividend. That's rather important." While 96% of BP's profits were generated outside Britain, more than half the company's shares were held in the UK. Yesterday the shares fell 18p to 647.5p.
Lord Browne was scathing about the accounting changes the company had had to bring in under international financial reporting standards. "Some would argue that IFRS neither produces a record of the accountability of management nor a measure of the changes in the economic value of assets and liabilities. I would agree with them. What IFRS actually does is to make our results more difficult to understand."
BP believed there was good medium-term support for oil prices to stay above $40 a barrel and that the supply industry's vulnerability to "significant supply disruption" remained high. BP's strong portfolio of assets meant it would continue to increase production organically at that price level, though Lord Browne appeared unenthusiastic about acquisitions.
Backstory
With the other big oil firms, BP may be cashing in on high prices but its chief executive, Lord Browne, insists 2005's record performance had its origins in days of much lower prices. Brent crude averaged $54.42 a barrel in the final quarter of last year, 42% higher than in the same period in 2004. Prices below $20 a barrel, as in 2001 and 2002, seem a distant memory. But Lord Browne says the results are rooted in that era of low oil prices, and through sustained investment and performance improvements.
Special reports
Oil and petrol
Useful links
Opec
International Energy Agency
American Petroleum Institute
· £11bn profit overshadowed by rivals' performance
· Lord Browne defends 'quality of asset base'
Mark Milner, industrial editor
Wednesday February 8, 2006
The Guardian
BP yesterday announced record profits of $19.3bn (£11bn), driven by the high oil price, but the 25% increase fell short of City expectations and the world's second largest oil firm by market value saw its shares fall in response.
Weakness in the final quarter of 2005 left BP's refining and marketing business $160m in the red - compared with its $1.3bn profit in the last three months of 2004. The company blamed a combination of its Texas City refinery being closed, the $500m spent on boosting efficiency in Europe, and the changes to the way BP has to account for long-term North Sea contracts.
BP's record profit disappoints City
· £11bn profit overshadowed by rivals' performance
· Lord Browne defends 'quality of asset base'
Mark Milner, industrial editor
Wednesday February 8, 2006
The Guardian
BP yesterday announced record profits of $19.3bn (£11bn), driven by the high oil price, but the 25% increase fell short of City expectations and the world's second largest oil firm by market value saw its shares fall in response.
Weakness in the final quarter of 2005 left BP's refining and marketing business $160m in the red - compared with its $1.3bn profit in the last three months of 2004. The company blamed a combination of its Texas City refinery being closed, the $500m spent on boosting efficiency in Europe, and the changes to the way BP has to account for long-term North Sea contracts.
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Lord Browne, BP's chief executive, was upbeat about the results, which saw the group deliver record cash flow as well as record profits, slash its gearing to 17%, and for the 13th successive year replace 100% of its production with new proven reserves. "Our 2005 result was a record; this reflects the quality of our asset base and operations. Strong operating cash flows and ... disposals have enabled record distributions to shareholders."
Over the past three years BP has returned $40bn to shareholders, a return that could rise to up to $65bn in the next three years.
However, Richard Hunter, equities head at the stockbrokers Hargreaves Lansdown, said: "BP's profits of £11bn underperformed both Royal Dutch Shell's £13bn and Exxon's £20bn, not to mention market expectations." The combination of the reserves replacement programme and the expected distribution to shareholders meant, however, that the market consensus remained "overwhelmingly positive towards what is still seen as the pick of the oil majors".
The level of the profits enjoyed by oil companies has attracted increasing criticism and yesterday Tony Woodley, general secretary of the Transport & General Workers Union, called for some of the money to be used to support the Finance Assistance Scheme, the pensions lifeboat.
Mr Woodley said: "At a stroke we could bolster that scheme and sort out the injustice of decent people having lost their pensions through no fault of their own. The oil companies' windfall should help those people, for we can be sure the shareholders will be looked after anyway."
Earlier Lord Browne had rejected suggestions that the firm was making excess profits. The money BP made went either to investment in the business or to shareholders. "BP distributes £1 out of every £6 that goes into UK pension funds via the dividend. That's rather important." While 96% of BP's profits were generated outside Britain, more than half the company's shares were held in the UK. Yesterday the shares fell 18p to 647.5p.
Lord Browne was scathing about the accounting changes the company had had to bring in under international financial reporting standards. "Some would argue that IFRS neither produces a record of the accountability of management nor a measure of the changes in the economic value of assets and liabilities. I would agree with them. What IFRS actually does is to make our results more difficult to understand."
BP believed there was good medium-term support for oil prices to stay above $40 a barrel and that the supply industry's vulnerability to "significant supply disruption" remained high. BP's strong portfolio of assets meant it would continue to increase production organically at that price level, though Lord Browne appeared unenthusiastic about acquisitions.
Backstory
With the other big oil firms, BP may be cashing in on high prices but its chief executive, Lord Browne, insists 2005's record performance had its origins in days of much lower prices. Brent crude averaged $54.42 a barrel in the final quarter of last year, 42% higher than in the same period in 2004. Prices below $20 a barrel, as in 2001 and 2002, seem a distant memory. But Lord Browne says the results are rooted in that era of low oil prices, and through sustained investment and performance improvements.
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Sweden plans to be world's first oil-free economy
· 15-year limit set for switch to renewable energy
· Biofuels favoured over further nuclear power
John Vidal, environment editor
Wednesday February 8, 2006
The Guardian
Sweden is to take the biggest energy step of any advanced western economy by trying to wean itself off oil completely within 15 years - without building a new generation of nuclear power stations.
The attempt by the country of 9 million people to become the world's first practically oil-free economy is being planned by a committee of industrialists, academics, farmers, car makers, civil servants and others, who will report to parliament in several months.
The intention, the Swedish government said yesterday, is to replace all fossil fuels with renewables before climate change destroys economies and growing oil scarcity leads to huge new price rises.
"Our dependency on oil should be broken by 2020," said Mona Sahlin, minister of sustainable development. "There shall always be better alternatives to oil, which means no house should need oil for heating, and no driver should need to turn solely to gasoline."
According to the energy committee of the Royal Swedish Academy of Sciences, there is growing concern that global oil supplies are peaking and will shortly dwindle, and that a global economic recession could result from high oil prices.
Ms Sahlin has described oil dependency as one of the greatest problems facing the world. "A Sweden free of fossil fuels would give us enormous advantages, not least by reducing the impact from fluctuations in oil prices," she said. "The price of oil has tripled since 1996."
A government official said: "We want to be both mentally and technically prepared for a world without oil. The plan is a response to global climate change, rising petroleum prices and warnings by some experts that the world may soon be running out of oil."
Sweden, which was badly hit by the oil price rises in the 1970s, now gets almost all its electricity from nuclear and hydroelectric power, and relies on fossil fuels mainly for transport. Almost all its heating has been converted in the past decade to schemes which distribute steam or hot water generated by geothermal energy or waste heat. A 1980 referendum decided that nuclear power should be phased out, but this has still not been finalised.
The decision to abandon oil puts Sweden at the top of the world green league table. Iceland hopes by 2050 to power all its cars and boats with hydrogen made from electricity drawn from renewable resources, and Brazil intends to power 80% of its transport fleet with ethanol derived mainly from sugar cane within five years.
Last week George Bush surprised analysts by saying that the US was addicted to oil and should greatly reduce imports from the Middle East. The US now plans a large increase in nuclear power.
The British government, which is committed to generating 10% of its electricity from renewable sources by 2012, last month launched an energy review which has a specific remit to consider a large increase in nuclear power. But a report by accountants Ernst & Young yesterday said that the UK was falling behind in its attempt to meet its renewables target.
"The UK has Europe's best wind, wave and tidal resources yet it continues to miss out on its economic potential," said Jonathan Johns, head of renewable energy at Ernst & Young.
Energy ministry officials in Sweden said they expected the oil committee to recommend further development of biofuels derived from its massive forests, and by expanding other renewable energies such as wind and wave power.
Sweden has a head start over most countries. In 2003, 26% of all the energy consumed came from renewable sources - the EU average is 6%. Only 32% of the energy came from oil - down from 77% in 1970.
The Swedish government is working with carmakers Saab and Volvo to develop cars and lorries that burn ethanol and other biofuels. Last year the Swedish energy agency said it planned to get the public sector to move out of oil. Its health and library services are being given grants to convert from oil use and homeowners are being encouraged with green taxes. The paper and pulp industries use bark to produce energy, and sawmills burn wood chips and sawdust to generate power.
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· 15-year limit set for switch to renewable energy
· Biofuels favoured over further nuclear power
John Vidal, environment editor
Wednesday February 8, 2006
The Guardian
Sweden is to take the biggest energy step of any advanced western economy by trying to wean itself off oil completely within 15 years - without building a new generation of nuclear power stations.
The attempt by the country of 9 million people to become the world's first practically oil-free economy is being planned by a committee of industrialists, academics, farmers, car makers, civil servants and others, who will report to parliament in several months.
The intention, the Swedish government said yesterday, is to replace all fossil fuels with renewables before climate change destroys economies and growing oil scarcity leads to huge new price rises.
"Our dependency on oil should be broken by 2020," said Mona Sahlin, minister of sustainable development. "There shall always be better alternatives to oil, which means no house should need oil for heating, and no driver should need to turn solely to gasoline."
According to the energy committee of the Royal Swedish Academy of Sciences, there is growing concern that global oil supplies are peaking and will shortly dwindle, and that a global economic recession could result from high oil prices.
Ms Sahlin has described oil dependency as one of the greatest problems facing the world. "A Sweden free of fossil fuels would give us enormous advantages, not least by reducing the impact from fluctuations in oil prices," she said. "The price of oil has tripled since 1996."
A government official said: "We want to be both mentally and technically prepared for a world without oil. The plan is a response to global climate change, rising petroleum prices and warnings by some experts that the world may soon be running out of oil."
Sweden, which was badly hit by the oil price rises in the 1970s, now gets almost all its electricity from nuclear and hydroelectric power, and relies on fossil fuels mainly for transport. Almost all its heating has been converted in the past decade to schemes which distribute steam or hot water generated by geothermal energy or waste heat. A 1980 referendum decided that nuclear power should be phased out, but this has still not been finalised.
The decision to abandon oil puts Sweden at the top of the world green league table. Iceland hopes by 2050 to power all its cars and boats with hydrogen made from electricity drawn from renewable resources, and Brazil intends to power 80% of its transport fleet with ethanol derived mainly from sugar cane within five years.
Last week George Bush surprised analysts by saying that the US was addicted to oil and should greatly reduce imports from the Middle East. The US now plans a large increase in nuclear power.
The British government, which is committed to generating 10% of its electricity from renewable sources by 2012, last month launched an energy review which has a specific remit to consider a large increase in nuclear power. But a report by accountants Ernst & Young yesterday said that the UK was falling behind in its attempt to meet its renewables target.
"The UK has Europe's best wind, wave and tidal resources yet it continues to miss out on its economic potential," said Jonathan Johns, head of renewable energy at Ernst & Young.
Energy ministry officials in Sweden said they expected the oil committee to recommend further development of biofuels derived from its massive forests, and by expanding other renewable energies such as wind and wave power.
Sweden has a head start over most countries. In 2003, 26% of all the energy consumed came from renewable sources - the EU average is 6%. Only 32% of the energy came from oil - down from 77% in 1970.
The Swedish government is working with carmakers Saab and Volvo to develop cars and lorries that burn ethanol and other biofuels. Last year the Swedish energy agency said it planned to get the public sector to move out of oil. Its health and library services are being given grants to convert from oil use and homeowners are being encouraged with green taxes. The paper and pulp industries use bark to produce energy, and sawmills burn wood chips and sawdust to generate power.
Special reports
Oil and petrol
Useful links
Opec
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American Petroleum Institute
Energy Institute
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Tuesday, February 07, 2006
Oil trade seen cushioning US-Venezuela spat
CARACAS, Venezuela (Reuters) - A barrage of insults and two foreign staff expulsions have knocked U.S.-Venezuelan relations to a new low, but the pair's mutually vital oil trade should act as a collision buffer, analysts say.
Already icy relations worsened last week after the U.S.-bashing Hugo Chavez expelled a U.S. naval attache on spying allegations and the State Department responded by ordering out a Venezuelan diplomat. Exiled diplomat Jeny Figueredo arrived back in Caracas to cheering crowds on Monday.
"Relations are probably at their lowest point. Things have gotten very bad. The two governments are on a collision course," said Michael Shifter, a Latin American analyst at the Inter-American Dialogue, a Washington-based think tank.
"But relations have hit a low before, and so far oil dependence on both sides has been a check. Chavez tends to go up to a line and then pull back, and the oil question prevents things going completely off track," he said.
Chavez, a blunt-speaking, self-styled revolutionary who has become a regional standard-bearer for anti-American sentiment, upped the ante over the weekend when he warned he could halt oil shipments to the United States and close Venezuelan-owned refineries there.
Nervous about the stability of Middle East oil, the United States needs every barrel of the crude it gets from Venezuela, supplier of some 15 percent of U.S. imports. Other suppliers like Canada and Mexico are already pumping at full capacity.
Likewise, left-wing Chavez is reliant on the roughly $80 million a day he gets from U.S. oil sales to fund sweeping social programs introduced since he took office in 1998.
The United States swallows more than half of Venezuela's oil, and analysts doubt that far-off importers like China could emerge as buyers of Venezuela's heavy crude any time soon. Chavez's past threats to cut off U.S. oil never materialized.
"Markets will keep an eye on the situation but I haven't heard anything to suggest people are giving it more credence than usual," said Jed Baker, head of Latin American research at think tank Cambridge Energy Research Associates.
"It's not something they could do for a sustained period. Venezuela needs the U.S. as much as the U.S. needs Venezuela."
ELECTION IN VIEW Continued ...
© Reuters 2006. All Rights Reserved.
CARACAS, Venezuela (Reuters) - A barrage of insults and two foreign staff expulsions have knocked U.S.-Venezuelan relations to a new low, but the pair's mutually vital oil trade should act as a collision buffer, analysts say.
Already icy relations worsened last week after the U.S.-bashing Hugo Chavez expelled a U.S. naval attache on spying allegations and the State Department responded by ordering out a Venezuelan diplomat. Exiled diplomat Jeny Figueredo arrived back in Caracas to cheering crowds on Monday.
"Relations are probably at their lowest point. Things have gotten very bad. The two governments are on a collision course," said Michael Shifter, a Latin American analyst at the Inter-American Dialogue, a Washington-based think tank.
"But relations have hit a low before, and so far oil dependence on both sides has been a check. Chavez tends to go up to a line and then pull back, and the oil question prevents things going completely off track," he said.
Chavez, a blunt-speaking, self-styled revolutionary who has become a regional standard-bearer for anti-American sentiment, upped the ante over the weekend when he warned he could halt oil shipments to the United States and close Venezuelan-owned refineries there.
Nervous about the stability of Middle East oil, the United States needs every barrel of the crude it gets from Venezuela, supplier of some 15 percent of U.S. imports. Other suppliers like Canada and Mexico are already pumping at full capacity.
Likewise, left-wing Chavez is reliant on the roughly $80 million a day he gets from U.S. oil sales to fund sweeping social programs introduced since he took office in 1998.
The United States swallows more than half of Venezuela's oil, and analysts doubt that far-off importers like China could emerge as buyers of Venezuela's heavy crude any time soon. Chavez's past threats to cut off U.S. oil never materialized.
"Markets will keep an eye on the situation but I haven't heard anything to suggest people are giving it more credence than usual," said Jed Baker, head of Latin American research at think tank Cambridge Energy Research Associates.
"It's not something they could do for a sustained period. Venezuela needs the U.S. as much as the U.S. needs Venezuela."
ELECTION IN VIEW Continued ...
© Reuters 2006. All Rights Reserved.
Monday, February 06, 2006
Euro gas pipe 'hits UK consumer'
Euro gas pipe 'hits UK consumer'
Supply problems are threatening price hikes across Europe
UK consumers have paid an extra £300m for gas this winter because of problems with the European gas supply system, British Gas owner Centrica has said.
Centrica said a lack of competition had made it difficult to get enough gas to meet demand at peak times.
It added that the way gas contracts are currently structured - being linked to the price of oil - could cost European consumers as much as £40bn this year.
The report comes as politicians prepare to discuss the UK gas market on Monday.
The Parliamentary Trade & Industry Select Committee is scheduled to meet on Monday to discuss the changing UK energy environment.
Gas prices have become a worry for consumers and policymakers alike as the UK produces less from its fields and relies more on imports from Europe.
Europe's failure to open up its energy markets is costing UK customers dear
Mark Clare, managing director of British Gas
With supplies being squeezed, the cost of wholesale gas has increased by 70% over the past 12 months and has trebled since 2003.
Greater freedom
Suppliers have warned that prices are likely to rise, and there have been suggestions in the media that the increase may be as much as 25%.
This would make the average household bill about £1,000 a year.
Duncan Sedgewick of the Energy Retail Association told the BBC: "To see the sort of dramatic rises we've had in wholesale prices over the last 12 months is quite incredible."
Centrica denied it had made a decision on how much it would increase prices, and other suppliers also said they had no intention of raising prices in the near future.
"Clearly, all suppliers are buying their gas in the same market, therefore we would expect that suppliers will be increasing their tariffs substantially as we go through 2006," said a spokesman for Centrica.
"But we haven't said anything about timing or scale of an increase."
However, in December, Centrica warned it was selling gas to its customers at a loss.
This is because wholesale price rises are not immediately passed on to domestic customers, so, when the price rise comes, it can seem unnecessarily steep.
Patrick Heron, chairman of Heron Energy, which monitors gas prices told the BBC: "When they eventually do move the price up they have to move it up sufficiently to cover their accumulated losses and their loss going forward for a period."
Supply problems
To avoid a hike in prices, Europe needs to open up its gas markets to greater competition, Centrica said.
"With Britain now dependent on gas imports from the continent, Europe's failure to open up its energy markets is costing UK customers dear," said Mark Clare, managing director of British Gas.
He went on to explain that Russia's recent decision to cut off gas to Ukraine as it negotiated a new pricing contract - a move that impacted on supplies to Europe - showed the problem was not limited to the UK.
Greater freedom and access to the European gas pipelines could cut the cost of transporting gas across Europe by up to £180m a year, Centrica said.
In the meantime, industry experts predict that wholesale prices rise will last for another year at least.
"The very high wholesale prices are likely to continue for probably another 12 months, but after that they are likely to fall off a cliff," said Patrick Heron.
Euro gas pipe 'hits UK consumer'
Supply problems are threatening price hikes across Europe
UK consumers have paid an extra £300m for gas this winter because of problems with the European gas supply system, British Gas owner Centrica has said.
Centrica said a lack of competition had made it difficult to get enough gas to meet demand at peak times.
It added that the way gas contracts are currently structured - being linked to the price of oil - could cost European consumers as much as £40bn this year.
The report comes as politicians prepare to discuss the UK gas market on Monday.
The Parliamentary Trade & Industry Select Committee is scheduled to meet on Monday to discuss the changing UK energy environment.
Gas prices have become a worry for consumers and policymakers alike as the UK produces less from its fields and relies more on imports from Europe.
Europe's failure to open up its energy markets is costing UK customers dear
Mark Clare, managing director of British Gas
With supplies being squeezed, the cost of wholesale gas has increased by 70% over the past 12 months and has trebled since 2003.
Greater freedom
Suppliers have warned that prices are likely to rise, and there have been suggestions in the media that the increase may be as much as 25%.
This would make the average household bill about £1,000 a year.
Duncan Sedgewick of the Energy Retail Association told the BBC: "To see the sort of dramatic rises we've had in wholesale prices over the last 12 months is quite incredible."
Centrica denied it had made a decision on how much it would increase prices, and other suppliers also said they had no intention of raising prices in the near future.
"Clearly, all suppliers are buying their gas in the same market, therefore we would expect that suppliers will be increasing their tariffs substantially as we go through 2006," said a spokesman for Centrica.
"But we haven't said anything about timing or scale of an increase."
However, in December, Centrica warned it was selling gas to its customers at a loss.
This is because wholesale price rises are not immediately passed on to domestic customers, so, when the price rise comes, it can seem unnecessarily steep.
Patrick Heron, chairman of Heron Energy, which monitors gas prices told the BBC: "When they eventually do move the price up they have to move it up sufficiently to cover their accumulated losses and their loss going forward for a period."
Supply problems
To avoid a hike in prices, Europe needs to open up its gas markets to greater competition, Centrica said.
"With Britain now dependent on gas imports from the continent, Europe's failure to open up its energy markets is costing UK customers dear," said Mark Clare, managing director of British Gas.
He went on to explain that Russia's recent decision to cut off gas to Ukraine as it negotiated a new pricing contract - a move that impacted on supplies to Europe - showed the problem was not limited to the UK.
Greater freedom and access to the European gas pipelines could cut the cost of transporting gas across Europe by up to £180m a year, Centrica said.
In the meantime, industry experts predict that wholesale prices rise will last for another year at least.
"The very high wholesale prices are likely to continue for probably another 12 months, but after that they are likely to fall off a cliff," said Patrick Heron.
Gas rise takes home energy bills over �1,000
Calls for investigation into 25% price hike
· Fears for welfare of poor, sick and elderly customers
Richard Wray
Monday February 6, 2006
The Guardian
The energy regulator was facing demands for a full scale investigation into gas prices last night as it emerged that British consumers are to be hit with a record-breaking rise in gas bills.
British Gas is to inform its 11 million customers that their gas bills are going to rise by as much as 25% as the company, which supplies more than half of all UK households, tries to pass on some of the recent jump in the wholesale cost of gas.
The increase - the largest forced through by an energy supplier since the market was deregulated at the end of the 1990s - will see the average customer pay an estimated £209 extra a year, taking the average energy bill up to £1,030. It will be the third price rise in a year.
MPs will raise the issue today at a select committee meeting with the trade and industry secretary, Alan Johnson. He will face questions on the precarious state of the country's energy supply, which has lead to rampant price rises .
Consumer groups reacted angrily to British Gas's planned price rise, warning that it would condemn many vulnerable people to a very cold winter, while Age Concern warned that for some pensioners the move could be fatal.
Last year's winter deaths were the highest for five years, but this winter looks particularly severe, already ranking as the third coldest in the last decade.
"Many pensioners live on a low, fixed income and are hit particularly hard by hikes in their fuel bills," said Gordon Lishman, Age Concern's director general. "Despite the government's efforts to tackle fuel poverty, many older people will be anxious about their fuel costs and some will choose between heating or eating."
Ann Robinson, director of consumer policy at uSwitch.com, the online price comparison service, attacked the price rises and called for the industry regulator, Ofgem, to investigate. "We have been expecting an increase from British Gas but frankly these figures are shocking," she said. "There is insufficient justification for such excessive price rises. We will be looking to Ofgem to step in and investigate the reasons for these increases and verify that they are legitimate."
She estimates that the British Gas price rise will bring in an extra £1.23bn from customers. "This is a dramatic response to the recent volatility within the wholesale gas market, which is likely to subside in the near future. The fact is that British Gas ... is banking on customer apathy to keep its balance sheet looking healthy."
British Gas's owner, Centrica, pointed out yesterday that its consumer business has been loss making since the latter half of 2005 as bills have failed to keep pace with rising gas prices. The company said the wholesale gas price, which typically accounts for about half a customer's bill, had risen 75% over the winter, having gained 43% last year. "We are not going to comment on the timing or the size of any price increases but given the fact that wholesale gas prices are up 75% this year over last year it is more or less inevitable that all suppliers in this market will be pushing through substantial price increases," said a spokesman.
The recent rise in the wholesale gas price is due not just to increased demand during the cold weather but to a squeeze on supplies. Reserves from the North Sea are insufficient to meet UK gas needs, while supplies from mainland Europe have been patchy.
One focus of the government's recently announced energy review is the UK's reliance on gas from overseas. MPs have become increasingly concerned about the vulnerable nature of Britain's gas supplies after Russia halted the flow of gas to Ukraine last month.
These concerns will be voiced by members of the trade and industry committee today when they take evidence from Mr Johnson. They are also likely to question the minister over the likely impact of gas price rises on the government's own targets for reducing fuel poverty among the elderly, sick and disabled by 2010. From 2000 to 2003 the number of people deemed to be in fuel poverty fell from 5 million to 1.3 million, but rampant bill increases since then are understood to have taken the number over 2 million.
Adam Scorer, campaigns director at the consumer group Energywatch, said the government should also look at the state of the UK market where the 20 energy suppliers who sprang up after deregulation have been consolidated into just six major players who not only supply gas to residential customers but make huge profits from the wholesale market.
Calls for investigation into 25% price hike
· Fears for welfare of poor, sick and elderly customers
Richard Wray
Monday February 6, 2006
The Guardian
The energy regulator was facing demands for a full scale investigation into gas prices last night as it emerged that British consumers are to be hit with a record-breaking rise in gas bills.
British Gas is to inform its 11 million customers that their gas bills are going to rise by as much as 25% as the company, which supplies more than half of all UK households, tries to pass on some of the recent jump in the wholesale cost of gas.
The increase - the largest forced through by an energy supplier since the market was deregulated at the end of the 1990s - will see the average customer pay an estimated £209 extra a year, taking the average energy bill up to £1,030. It will be the third price rise in a year.
MPs will raise the issue today at a select committee meeting with the trade and industry secretary, Alan Johnson. He will face questions on the precarious state of the country's energy supply, which has lead to rampant price rises .
Consumer groups reacted angrily to British Gas's planned price rise, warning that it would condemn many vulnerable people to a very cold winter, while Age Concern warned that for some pensioners the move could be fatal.
Last year's winter deaths were the highest for five years, but this winter looks particularly severe, already ranking as the third coldest in the last decade.
"Many pensioners live on a low, fixed income and are hit particularly hard by hikes in their fuel bills," said Gordon Lishman, Age Concern's director general. "Despite the government's efforts to tackle fuel poverty, many older people will be anxious about their fuel costs and some will choose between heating or eating."
Ann Robinson, director of consumer policy at uSwitch.com, the online price comparison service, attacked the price rises and called for the industry regulator, Ofgem, to investigate. "We have been expecting an increase from British Gas but frankly these figures are shocking," she said. "There is insufficient justification for such excessive price rises. We will be looking to Ofgem to step in and investigate the reasons for these increases and verify that they are legitimate."
She estimates that the British Gas price rise will bring in an extra £1.23bn from customers. "This is a dramatic response to the recent volatility within the wholesale gas market, which is likely to subside in the near future. The fact is that British Gas ... is banking on customer apathy to keep its balance sheet looking healthy."
British Gas's owner, Centrica, pointed out yesterday that its consumer business has been loss making since the latter half of 2005 as bills have failed to keep pace with rising gas prices. The company said the wholesale gas price, which typically accounts for about half a customer's bill, had risen 75% over the winter, having gained 43% last year. "We are not going to comment on the timing or the size of any price increases but given the fact that wholesale gas prices are up 75% this year over last year it is more or less inevitable that all suppliers in this market will be pushing through substantial price increases," said a spokesman.
The recent rise in the wholesale gas price is due not just to increased demand during the cold weather but to a squeeze on supplies. Reserves from the North Sea are insufficient to meet UK gas needs, while supplies from mainland Europe have been patchy.
One focus of the government's recently announced energy review is the UK's reliance on gas from overseas. MPs have become increasingly concerned about the vulnerable nature of Britain's gas supplies after Russia halted the flow of gas to Ukraine last month.
These concerns will be voiced by members of the trade and industry committee today when they take evidence from Mr Johnson. They are also likely to question the minister over the likely impact of gas price rises on the government's own targets for reducing fuel poverty among the elderly, sick and disabled by 2010. From 2000 to 2003 the number of people deemed to be in fuel poverty fell from 5 million to 1.3 million, but rampant bill increases since then are understood to have taken the number over 2 million.
Adam Scorer, campaigns director at the consumer group Energywatch, said the government should also look at the state of the UK market where the 20 energy suppliers who sprang up after deregulation have been consolidated into just six major players who not only supply gas to residential customers but make huge profits from the wholesale market.
Chavez warns U.S. over refineries if cuts ties - Yahoo! News
CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez warned on Saturday he could shut his government's U.S.-based refineries and sell oil to nations other than the United States if Washington decided to cut diplomatic ties, as relations between the two countries continue to worsen.
Chavez said he did not want to take such measures after he expelled a U.S. military attache earlier this week on spying charges and Washington responded by ordering out a Venezuelan diplomat in a tit-for-tat retaliation.
"If the U.S. government wants to break relations, then they have to take that decision over there, over there. I could easily order the refineries we have over there closed," Chavez told a large crowd of supporters.
"We'll see how high oil prices go, we'll see how much a gallon of gas will cost. I could easily sell the oil we sell to the United States to other countries," he said. "We don't want to get to that extreme, we want them to leave us in peace.
Venezuela, the world's No. 5 oil exporter, supplies about 15 percent of U.S. petroleum imports. Venezuelan state oil firm PDVSA also operates refineries and gas stations in the United States through its Citgo refining and retailing arm.
Washington has made no suggestion that it plans to cut off relations with Venezuela.
Since his 1998 election, Chavez has clashed repeatedly with the United States, which he accuses of trying to overthrow his government and backing a brief 2002 coup attempt that he survived with the help of loyal troops.
CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez warned on Saturday he could shut his government's U.S.-based refineries and sell oil to nations other than the United States if Washington decided to cut diplomatic ties, as relations between the two countries continue to worsen.
Chavez said he did not want to take such measures after he expelled a U.S. military attache earlier this week on spying charges and Washington responded by ordering out a Venezuelan diplomat in a tit-for-tat retaliation.
"If the U.S. government wants to break relations, then they have to take that decision over there, over there. I could easily order the refineries we have over there closed," Chavez told a large crowd of supporters.
"We'll see how high oil prices go, we'll see how much a gallon of gas will cost. I could easily sell the oil we sell to the United States to other countries," he said. "We don't want to get to that extreme, we want them to leave us in peace.
Venezuela, the world's No. 5 oil exporter, supplies about 15 percent of U.S. petroleum imports. Venezuelan state oil firm PDVSA also operates refineries and gas stations in the United States through its Citgo refining and retailing arm.
Washington has made no suggestion that it plans to cut off relations with Venezuela.
Since his 1998 election, Chavez has clashed repeatedly with the United States, which he accuses of trying to overthrow his government and backing a brief 2002 coup attempt that he survived with the help of loyal troops.
Oil-Hunting China Aims to Curb Appetite - Yahoo! News
BEIJING - Just days before a Chinese firm announced a $2.3 billion investment in a Nigerian oil field last month, President
Hu Jintao' name=c1> SEARCHNews News Photos Images Web' name=c3> Hu Jintao warned that China has to rein in surging energy use that has made it one of the world's biggest oil importers.
The announcements underlined the dual tracks of Beijing's energy policy. While striving to secure foreign oil and gas to fuel sizzling economic growth of more than 9 percent a year, it is struggling to limit soaring reliance on outside supplies by increasing nuclear and hydroelectric power.
China is not alone in this predicament — witness
President Bush' name=c1> SEARCHNews News Photos Images Web' name=c3> President Bush's plea to cut American dependence on Mideast oil. But the voracious appetite for energy in China and other fast-developing nations, notably neighbor India, is one factor propelling oil prices upward.
And some of China's energy deals are causing bumps on the world's political landscape. Its investments in
Iran' name=c1> SEARCHNews News Photos Images Web' name=c3> Iran and Sudan have prompted complaints it is abetting pariah nations, and Chinese pursuit of deals in Canada and other U.S. allies is causing unease in Washington.
Last year, China's state-controlled CNOOC Ltd. gave up an $18.5 billion takeover bid for Los Angeles-based oil company Unocal Corp. after critics complained the deal might jeopardize U.S. security.
The energy buying spree has taken Chinese firms as far afield as Venezuela and Australia. In the past six months, these companies have signed deals totaling $7 billion for stakes in oil fields in Kazakhstan, Nigeria and
Syria' name=c1> SEARCHNews News Photos Images Web' name=c3> Syria. A state-controlled company is reportedly considering a $2 billion bid for yet another Kazakh property.
"There is a strategic element to it," said Kevin Norrish, an energy analyst for Barclays Capital in London. "It's something that we've seen before. Japan was doing the same thing about 10 to 15 years ago, with a lot of its natural resource companies, including oil companies, buying into foreign projects."
China's oil firms began investing abroad in the late 1990s, after double-digit economic growth outstripped supplies from domestic fields that had met its needs for decades. Rising family incomes have led to an explosion in private car sales, while industry demands for plastics and other petrochemical products have soared.
The jump in imports has Chinese leaders fretting about depending on Middle Eastern oil that arrives by sea routes they don't control.
The biggest state-owned oil company, China National Petroleum Corp., agreed in August to pay $4.2 billion for an oil producer in neighboring Kazakhstan that can deliver oil to China by pipeline.
Yet China has to go where the oil is. CNOOC said in January that it was paying $2.3 billion for a share in a Nigerian offshore oil field. In December, CNPC said it would pay $576 million with an Indian partner for access to a Syrian oil field.
In a sign that Beijing plans still more acquisitions, it signed an agreement with India last month to share information on what they pay for foreign assets in an effort to avoid costly bidding wars.
Such purchases have prompted suggestions Beijing is using its state companies to lock up foreign supplies. But industry analysts say the oil market is too complex for that.
"This is definitely not about buying up oil resources in order to ship the oil into China," Norrish said.
"Basically, China's interest is in ensuring growth in energy supplies," he said. By buying stakes in foreign projects, "it can assist in ensuring that investments take place and projects go ahead."
Deals currently being signed by oil-producing countries only give foreign investors a share in output for a limited time, rather than control of the oil field, said Leo Drollas, chief economist for the Center for Global Energy Studies in London.
"If they think that by investing in Sudan and Venezuela and elsewhere they've secured oil somehow, I'm not so sure of that, from a strategic standpoint," he said.
Drollas said it might be safer to sign long-term contracts to buy oil on the open market. "Given the volatility of some regions, who is to guarantee that your assets might not be worthless one day?" he said.
China suffered just such a setback when a $1.2 billion deal signed by a state firm to develop an oil field in
Saddam Hussein' name=c1> SEARCHNews News Photos Images Web' name=c3> Saddam Hussein's
Iraq' name=c1> SEARCHNews News Photos Images Web' name=c3> Iraq became worthless after the U.S.-led invasion toppled the dictator three years ago.
Beijing has tried to curb oil imports by raising output from its own wells. It has reported modest success, saying imports in 2005 fell by 5 percent to 953.2 million barrels, while output from domestic wells rose 3.7 percent to 1.27 billion barrels.
China's booming oil needs have pushed up average long-term prices on world markets, according to financial analysts. But they say other factors are to blame for the recent price spike, noting that China's consumption stayed nearly flat last year.
"You can't blame China for $70-a-barrel oil," Norrish said.
The government is pushing conservation measures and more use of nuclear power, wind turbines, hydroelectric dams and other alternative sources. Plans call for building 30 nuclear plants by 2020.
But its goals are modest, calling for nuclear power to supply 4 percent of the country's needs by 2010, with an additional 5 percent from wind and solar generators.
And with economic growth forecast above 9 percent in coming years, China's total oil and gas imports are expected to rise sharply.
"The share of fossil fuels (in China's energy use) may fall but the absolute amounts consumed will grow," Norrish said.
BEIJING - Just days before a Chinese firm announced a $2.3 billion investment in a Nigerian oil field last month, President
Hu Jintao' name=c1> SEARCHNews News Photos Images Web' name=c3> Hu Jintao warned that China has to rein in surging energy use that has made it one of the world's biggest oil importers.
The announcements underlined the dual tracks of Beijing's energy policy. While striving to secure foreign oil and gas to fuel sizzling economic growth of more than 9 percent a year, it is struggling to limit soaring reliance on outside supplies by increasing nuclear and hydroelectric power.
China is not alone in this predicament — witness
President Bush' name=c1> SEARCHNews News Photos Images Web' name=c3> President Bush's plea to cut American dependence on Mideast oil. But the voracious appetite for energy in China and other fast-developing nations, notably neighbor India, is one factor propelling oil prices upward.
And some of China's energy deals are causing bumps on the world's political landscape. Its investments in
Iran' name=c1> SEARCHNews News Photos Images Web' name=c3> Iran and Sudan have prompted complaints it is abetting pariah nations, and Chinese pursuit of deals in Canada and other U.S. allies is causing unease in Washington.
Last year, China's state-controlled CNOOC Ltd. gave up an $18.5 billion takeover bid for Los Angeles-based oil company Unocal Corp. after critics complained the deal might jeopardize U.S. security.
The energy buying spree has taken Chinese firms as far afield as Venezuela and Australia. In the past six months, these companies have signed deals totaling $7 billion for stakes in oil fields in Kazakhstan, Nigeria and
Syria' name=c1> SEARCHNews News Photos Images Web' name=c3> Syria. A state-controlled company is reportedly considering a $2 billion bid for yet another Kazakh property.
"There is a strategic element to it," said Kevin Norrish, an energy analyst for Barclays Capital in London. "It's something that we've seen before. Japan was doing the same thing about 10 to 15 years ago, with a lot of its natural resource companies, including oil companies, buying into foreign projects."
China's oil firms began investing abroad in the late 1990s, after double-digit economic growth outstripped supplies from domestic fields that had met its needs for decades. Rising family incomes have led to an explosion in private car sales, while industry demands for plastics and other petrochemical products have soared.
The jump in imports has Chinese leaders fretting about depending on Middle Eastern oil that arrives by sea routes they don't control.
The biggest state-owned oil company, China National Petroleum Corp., agreed in August to pay $4.2 billion for an oil producer in neighboring Kazakhstan that can deliver oil to China by pipeline.
Yet China has to go where the oil is. CNOOC said in January that it was paying $2.3 billion for a share in a Nigerian offshore oil field. In December, CNPC said it would pay $576 million with an Indian partner for access to a Syrian oil field.
In a sign that Beijing plans still more acquisitions, it signed an agreement with India last month to share information on what they pay for foreign assets in an effort to avoid costly bidding wars.
Such purchases have prompted suggestions Beijing is using its state companies to lock up foreign supplies. But industry analysts say the oil market is too complex for that.
"This is definitely not about buying up oil resources in order to ship the oil into China," Norrish said.
"Basically, China's interest is in ensuring growth in energy supplies," he said. By buying stakes in foreign projects, "it can assist in ensuring that investments take place and projects go ahead."
Deals currently being signed by oil-producing countries only give foreign investors a share in output for a limited time, rather than control of the oil field, said Leo Drollas, chief economist for the Center for Global Energy Studies in London.
"If they think that by investing in Sudan and Venezuela and elsewhere they've secured oil somehow, I'm not so sure of that, from a strategic standpoint," he said.
Drollas said it might be safer to sign long-term contracts to buy oil on the open market. "Given the volatility of some regions, who is to guarantee that your assets might not be worthless one day?" he said.
China suffered just such a setback when a $1.2 billion deal signed by a state firm to develop an oil field in
Saddam Hussein' name=c1> SEARCHNews News Photos Images Web' name=c3> Saddam Hussein's
Iraq' name=c1> SEARCHNews News Photos Images Web' name=c3> Iraq became worthless after the U.S.-led invasion toppled the dictator three years ago.
Beijing has tried to curb oil imports by raising output from its own wells. It has reported modest success, saying imports in 2005 fell by 5 percent to 953.2 million barrels, while output from domestic wells rose 3.7 percent to 1.27 billion barrels.
China's booming oil needs have pushed up average long-term prices on world markets, according to financial analysts. But they say other factors are to blame for the recent price spike, noting that China's consumption stayed nearly flat last year.
"You can't blame China for $70-a-barrel oil," Norrish said.
The government is pushing conservation measures and more use of nuclear power, wind turbines, hydroelectric dams and other alternative sources. Plans call for building 30 nuclear plants by 2020.
But its goals are modest, calling for nuclear power to supply 4 percent of the country's needs by 2010, with an additional 5 percent from wind and solar generators.
And with economic growth forecast above 9 percent in coming years, China's total oil and gas imports are expected to rise sharply.
"The share of fossil fuels (in China's energy use) may fall but the absolute amounts consumed will grow," Norrish said.
Saturday, February 04, 2006
Madrid backs Gas Natural takeover
The Spanish government has given approval to Gas Natural's 22.4bn euro ($27bn; £15bn) hostile takeover of fellow Spanish energy company Endesa.
Gas Natural's approach for electricity firm Endesa had already been approved by Spain's energy industry watchdog.
Combined, they create the world's third biggest energy firm.
Endesa has strongly opposed the deal, but Spain's government has a policy of promoting industry consolidation to create "national champions".
Not only does it not damage competition, it fosters it
Deputy Prime Minister Maria Teresa Fernandez de la Vega
Madrid hopes that such larger firms will be better able to compete on the global stage.
Outside of Spain both companies have large operations in Latin America.
'National interest'
"The success of the transaction will produce increased competition and, as a result, an increase in the quality of the service and a reduction in prices," said Spain's Deputy Prime Minister Maria Teresa Fernandez de la Vega.
"The deal is in Spain's interest because the company that will be formed by the merger will be one of Europe's biggest companies.
"Not only does it not damage competition, it fosters it."
However, the approval is subject to conditions, and the combined group will have to shed 4,300 megawatts of electricity generating capacity.
Gas Natural will also have to sell all but 1% of its 15% stake in gas distributor Enagas.
Endesa shareholders will now discuss the Gas Natural offer at their annual general meeting on 24 February.
They will vote on the deal at an extraordinary general meeting at a later date.
The Spanish government has given approval to Gas Natural's 22.4bn euro ($27bn; £15bn) hostile takeover of fellow Spanish energy company Endesa.
Gas Natural's approach for electricity firm Endesa had already been approved by Spain's energy industry watchdog.
Combined, they create the world's third biggest energy firm.
Endesa has strongly opposed the deal, but Spain's government has a policy of promoting industry consolidation to create "national champions".
Not only does it not damage competition, it fosters it
Deputy Prime Minister Maria Teresa Fernandez de la Vega
Madrid hopes that such larger firms will be better able to compete on the global stage.
Outside of Spain both companies have large operations in Latin America.
'National interest'
"The success of the transaction will produce increased competition and, as a result, an increase in the quality of the service and a reduction in prices," said Spain's Deputy Prime Minister Maria Teresa Fernandez de la Vega.
"The deal is in Spain's interest because the company that will be formed by the merger will be one of Europe's biggest companies.
"Not only does it not damage competition, it fosters it."
However, the approval is subject to conditions, and the combined group will have to shed 4,300 megawatts of electricity generating capacity.
Gas Natural will also have to sell all but 1% of its 15% stake in gas distributor Enagas.
Endesa shareholders will now discuss the Gas Natural offer at their annual general meeting on 24 February.
They will vote on the deal at an extraordinary general meeting at a later date.
Friday, February 03, 2006
Guardian Unlimited Business | Business latest | Russia's Gazprom considers bid for British Gas owner Centrica
Move by state-owned outfit alarms government
· Takeover would give it 12m British gas customers
Terry Macalister, Nick Paton Walsh and Mark Milner
Friday February 3, 2006
The Guardian
Russian plans to seize control of a major part of Britain's gas supply industry hardened last night when Gazprom revealed that a bid for British Gas's parent group Centrica was "possible".
Alexander Shkuta, deputy chairman of Gazprom's export business, Gazexport, said a takeover of Centrica, which has 12 million gas customers, was being "analysed and investigated".
The statement triggered alarm in government circles, but in the City it sent shares in Centrica racing 25% at one stage before they closed 11% higher at 300p, adding nearly £1bn to its market capitalisation - it is now valued at nearly £11bn.
The Russian state-owned Gazprom has recently tarnished its image by cutting off gas supplies to the Ukraine over a pay row; it was seen by some as a move by the Kremlin to punish a former ally that had drifted towards Washington.
The Department of Trade and Industry said last night that any new ownership at Centrica would face robust scrutiny and that "security of energy supply to the UK's consumers is paramount".
The prospects of a merger were first raised in the Guardian last month when the deputy chairman of Gazprom, Alexander Medvedev, told this paper that he was looking closely at various UK firms with an eye to acquisition.
Yesterday Mr Shkuta went further when he was quoted by Reuters as saying: "As far as acquisitions go, the acquisition of the company Centrica in Britain is possible. This question is currently being analysed and investigated. A decision has not been taken."
A spokeswoman for Gazprom initially said the comments, carried by both the local Interfax and Reuters, were made during a conference call with investors. She later claimed Mr Shkuta had been misquoted but declined to say what he had really said.
Last night Centrica denied it had held any merger talks with Gazprom, which is the largest gas company in the world and sits on massive reserves in Siberia.
"We have had no approach, this is just speculation and we don't comment on speculation," said a Centrica spokesman.
Through British Gas, Centrica is the biggest supplier of energy to UK homes with 12 million gas customers and six million electricity customers. This puts it ahead of other utilities, many of which are already owned by foreign firms such as Germany's E.ON and RWE, and France's EDF Energy.
Centrica employs almost 30,000 people in Britain and operates seven gas-fired power stations generating 6% of the UK's electricity. It is currently considering the construction of an eighth, in Devon. It also owns the offshore Rough field, which accounts for 80% of Britain's gas storage capacity, and is developing a number of wind farms. Outside Britain, Centrica has interests in North America, where it has five million customers, and Belgium and has exploration interests in Nigeria.
The DTI said it was aware of all the bid speculation. "Any new ownership would face robust scrutiny by the regulatory regime before entering that market. The energy market regulator Ofgem and the competition authorities would have to be satisfied that consumers' interests were assured," said a spokesman.
Gazprom previously told the Guardian it wanted to deliver up to 20% of Britain's wholesale gas supplies by 2015 and mentioned ailing Scottish Power, a rival of Centrica, as a potential acquisition target.
Mr Medvedev accused western critics of trying to use Cold War rhetoric and insisted it was a normal commercial argument. A source close to Gazprom told Interfax the acquisition had been studied for two years.
Move by state-owned outfit alarms government
· Takeover would give it 12m British gas customers
Terry Macalister, Nick Paton Walsh and Mark Milner
Friday February 3, 2006
The Guardian
Russian plans to seize control of a major part of Britain's gas supply industry hardened last night when Gazprom revealed that a bid for British Gas's parent group Centrica was "possible".
Alexander Shkuta, deputy chairman of Gazprom's export business, Gazexport, said a takeover of Centrica, which has 12 million gas customers, was being "analysed and investigated".
The statement triggered alarm in government circles, but in the City it sent shares in Centrica racing 25% at one stage before they closed 11% higher at 300p, adding nearly £1bn to its market capitalisation - it is now valued at nearly £11bn.
The Russian state-owned Gazprom has recently tarnished its image by cutting off gas supplies to the Ukraine over a pay row; it was seen by some as a move by the Kremlin to punish a former ally that had drifted towards Washington.
The Department of Trade and Industry said last night that any new ownership at Centrica would face robust scrutiny and that "security of energy supply to the UK's consumers is paramount".
The prospects of a merger were first raised in the Guardian last month when the deputy chairman of Gazprom, Alexander Medvedev, told this paper that he was looking closely at various UK firms with an eye to acquisition.
Yesterday Mr Shkuta went further when he was quoted by Reuters as saying: "As far as acquisitions go, the acquisition of the company Centrica in Britain is possible. This question is currently being analysed and investigated. A decision has not been taken."
A spokeswoman for Gazprom initially said the comments, carried by both the local Interfax and Reuters, were made during a conference call with investors. She later claimed Mr Shkuta had been misquoted but declined to say what he had really said.
Last night Centrica denied it had held any merger talks with Gazprom, which is the largest gas company in the world and sits on massive reserves in Siberia.
"We have had no approach, this is just speculation and we don't comment on speculation," said a Centrica spokesman.
Through British Gas, Centrica is the biggest supplier of energy to UK homes with 12 million gas customers and six million electricity customers. This puts it ahead of other utilities, many of which are already owned by foreign firms such as Germany's E.ON and RWE, and France's EDF Energy.
Centrica employs almost 30,000 people in Britain and operates seven gas-fired power stations generating 6% of the UK's electricity. It is currently considering the construction of an eighth, in Devon. It also owns the offshore Rough field, which accounts for 80% of Britain's gas storage capacity, and is developing a number of wind farms. Outside Britain, Centrica has interests in North America, where it has five million customers, and Belgium and has exploration interests in Nigeria.
The DTI said it was aware of all the bid speculation. "Any new ownership would face robust scrutiny by the regulatory regime before entering that market. The energy market regulator Ofgem and the competition authorities would have to be satisfied that consumers' interests were assured," said a spokesman.
Gazprom previously told the Guardian it wanted to deliver up to 20% of Britain's wholesale gas supplies by 2015 and mentioned ailing Scottish Power, a rival of Centrica, as a potential acquisition target.
Mr Medvedev accused western critics of trying to use Cold War rhetoric and insisted it was a normal commercial argument. A source close to Gazprom told Interfax the acquisition had been studied for two years.
Nuclear energy's uranium deficit
From Washington to Tehran, nuclear energy has become a white hot topic of debate. The nuclear energy industry looks set for significant expansion with the price of oil surging and concerns about the environment increasing. However, there is a problem in that demand for uranium is outstripping supply.
Uranium prices have risen sharply in the past three years, transforming the dynamics of the market, attracting new risk capital and speculators and promising significantly higher earnings growth for existing players.
From Washington to Tehran, nuclear energy has become a white hot topic of debate. The nuclear energy industry looks set for significant expansion with the price of oil surging and concerns about the environment increasing. However, there is a problem in that demand for uranium is outstripping supply.
Uranium prices have risen sharply in the past three years, transforming the dynamics of the market, attracting new risk capital and speculators and promising significantly higher earnings growth for existing players.
Wind power capacity surged by 18 percent in EU in 2005
A total of 40,504 megawatts of wind generators were installed at the end of December, a rise of 6,183 MW, or 18 percent, over a year earlier, the Brussels-based European Wind Energy Association (EWEA) said.
Wind GeneratorsPortable Generator Guide Products, Brands, Price and more.
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Over the last decade, wind power capacity in the EU has increased by an average 32 percent year, it said in a press release. Germany, Spain and Denmark have the most capacity, with 18,428 MW, 10,027 MW and 3,122 MW respectively. The 40,504 MW installed last year will produce some 83 Terawatt hours (TWh) of electricity in an average year for European weather, EWEA said. For 2004, that accounts for 2.8 percent of EU electricity consumption. The EU has placed a big political priority on the quest for clean, domestically-produced energy sources to help wean it from dependence on oil and gas, which with coal are the biggest sources of the greenhouse gas carbon dioxide. The search has been sharpened in past weeks by concern over Russia as a reliable supplier of gas. Six percent of the EU-15's energy needs are met today by wind and other renewables, half of which comes from wind, although the proportion varies greatly among member states. The European Commission has set a goal of 12 percent from renewables by 2010, and the European Parliament last September demanded a mandatory benchmark of 20 percent by 2020. © 2006 AFP
A total of 40,504 megawatts of wind generators were installed at the end of December, a rise of 6,183 MW, or 18 percent, over a year earlier, the Brussels-based European Wind Energy Association (EWEA) said.
Wind GeneratorsPortable Generator Guide Products, Brands, Price and more.
Complete Home Power eBookFree biodiesel book stirling solar make electricity, methane, and more
Renewable Energy StoreWe stock a range of wind turbines solar panels, batteries and more
All the Wind TurbinesAll the Wind Turbines Savings Find Local Wind Turbines Here!
(Ads by Google)
Over the last decade, wind power capacity in the EU has increased by an average 32 percent year, it said in a press release. Germany, Spain and Denmark have the most capacity, with 18,428 MW, 10,027 MW and 3,122 MW respectively. The 40,504 MW installed last year will produce some 83 Terawatt hours (TWh) of electricity in an average year for European weather, EWEA said. For 2004, that accounts for 2.8 percent of EU electricity consumption. The EU has placed a big political priority on the quest for clean, domestically-produced energy sources to help wean it from dependence on oil and gas, which with coal are the biggest sources of the greenhouse gas carbon dioxide. The search has been sharpened in past weeks by concern over Russia as a reliable supplier of gas. Six percent of the EU-15's energy needs are met today by wind and other renewables, half of which comes from wind, although the proportion varies greatly among member states. The European Commission has set a goal of 12 percent from renewables by 2010, and the European Parliament last September demanded a mandatory benchmark of 20 percent by 2020. © 2006 AFP
Startech Environmental Starts Manufacturing Plasma Converter for Australia
Company Puts 20,000 pound-per-day System in Production For PlasTech Solutions The System is the First of Its Kind in Australia
Startech Environmental Corporation (OTC Bulletin Board: STHK), a fully reporting company, announced today that the 10 ton-per-day Plasma Converter System for PlasTech Solutions, Ltd. has been put into production. The commencement of the manufacturing process scheduled for February 6, 2006, actually started about two weeks ahead of schedule on January 24, 2006. Delivery is scheduled for a date later in the year.
PlasTech Solutions, Ltd. of New South Wales, Australia is Startech's exclusive distributor for Australia, New Zealand and Oceania. The first-of-its-kind Startech 10 TPD Plasma Converter in the PlasTech territory will be processing an assortment of industrial and institutional wastes.
For further information, please contact: ruth.buchanan@plastechenviro.com
Joseph F. Longo, CEO of Startech said, "With PlasTech based in Australia, GlobalTech in China, and Mihama in Japan, the Company's distributors are now perfectly positioned to sell to and service the enormous Western Pacific Rim and Asian markets. Mihama, located in Kobe, Japan is expected to have completed the recommissioning of its Startech Plasma Converter System, moved from Fukuoka, and to be processing wastes by the end of February, 2006 in Mihama's newly built Plasma Converter Processing and Demonstration Center in Kobe.
About Startech - a Waste Industry and Energy Company
Startech Environmental is a Waste Industry and Energy company engaged in the production and sale of its innovative, proprietary plasma processing equipment known as the Plasma Converter System(TM). The Plasma Converter System safely and economically destroys wastes, no matter how hazardous or lethal, and turns them into useful and valuable products. In doing so, the System protects the environment and helps to improve the public health and safety. The System achieves closed-loop elemental recycling to safely and irreversibly destroy Municipal Solid Waste, organics and inorganics, solids, liquids and gases, hazardous and non-hazardous waste, industrial by-products and also items such as "e-waste," medical waste, chemical industry waste and other specialty wastes while converting many of them into useful commodity products that can include metals, a syn-gas energy product called Plasma Converted Gas (PCG)(TM) and also hydrogen for use and for sale.
Startech regards all wastes as valuable renewable resources. Plasma Converters process, as feedstocks, materials previously regarded as wastes.
For further information, please visit http://www.startech.net or contact Steve Landa at +1-888-807-9443, +1-203-762-2499 x148 or sales@startech.net.
Safe Harbor for Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the Company's plans and expectations regarding the development and commercialization of its Plasma Converter(TM) technology. All forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those projected. Factors that could cause such a difference include, without limitation, failure of the customer to obtain appropriate financing for the project, general risks associated with product development, manufacturing, rapid technological change and competition as well as other risks set forth in the Company's filings with the Securities and Exchange Commission. The forward-looking statements contained herein speak only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based.
Web site: http://www.startech.net
Distributed by PR Newswire on behalf of Startech Environmental Corporation
Company Puts 20,000 pound-per-day System in Production For PlasTech Solutions The System is the First of Its Kind in Australia
Startech Environmental Corporation (OTC Bulletin Board: STHK), a fully reporting company, announced today that the 10 ton-per-day Plasma Converter System for PlasTech Solutions, Ltd. has been put into production. The commencement of the manufacturing process scheduled for February 6, 2006, actually started about two weeks ahead of schedule on January 24, 2006. Delivery is scheduled for a date later in the year.
PlasTech Solutions, Ltd. of New South Wales, Australia is Startech's exclusive distributor for Australia, New Zealand and Oceania. The first-of-its-kind Startech 10 TPD Plasma Converter in the PlasTech territory will be processing an assortment of industrial and institutional wastes.
For further information, please contact: ruth.buchanan@plastechenviro.com
Joseph F. Longo, CEO of Startech said, "With PlasTech based in Australia, GlobalTech in China, and Mihama in Japan, the Company's distributors are now perfectly positioned to sell to and service the enormous Western Pacific Rim and Asian markets. Mihama, located in Kobe, Japan is expected to have completed the recommissioning of its Startech Plasma Converter System, moved from Fukuoka, and to be processing wastes by the end of February, 2006 in Mihama's newly built Plasma Converter Processing and Demonstration Center in Kobe.
About Startech - a Waste Industry and Energy Company
Startech Environmental is a Waste Industry and Energy company engaged in the production and sale of its innovative, proprietary plasma processing equipment known as the Plasma Converter System(TM). The Plasma Converter System safely and economically destroys wastes, no matter how hazardous or lethal, and turns them into useful and valuable products. In doing so, the System protects the environment and helps to improve the public health and safety. The System achieves closed-loop elemental recycling to safely and irreversibly destroy Municipal Solid Waste, organics and inorganics, solids, liquids and gases, hazardous and non-hazardous waste, industrial by-products and also items such as "e-waste," medical waste, chemical industry waste and other specialty wastes while converting many of them into useful commodity products that can include metals, a syn-gas energy product called Plasma Converted Gas (PCG)(TM) and also hydrogen for use and for sale.
Startech regards all wastes as valuable renewable resources. Plasma Converters process, as feedstocks, materials previously regarded as wastes.
For further information, please visit http://www.startech.net or contact Steve Landa at +1-888-807-9443, +1-203-762-2499 x148 or sales@startech.net.
Safe Harbor for Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the Company's plans and expectations regarding the development and commercialization of its Plasma Converter(TM) technology. All forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those projected. Factors that could cause such a difference include, without limitation, failure of the customer to obtain appropriate financing for the project, general risks associated with product development, manufacturing, rapid technological change and competition as well as other risks set forth in the Company's filings with the Securities and Exchange Commission. The forward-looking statements contained herein speak only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based.
Web site: http://www.startech.net
Distributed by PR Newswire on behalf of Startech Environmental Corporation
Suzlon to build Australia's largest wind farm for AGL - India News - Webindia123.com
Suzlon Energy has announced that it would install a wind farm of 95 MW turbine capacity in rural South Australia for a gas company, which once completed next year will be the largest wind farm in that country.
The farm, to be built by Melbourne-based Suzlon Energy Australia Pty Ltd (SEA) which is a subsidiary of Suzlon Energy A/S of Denmark, has entered into a contract with Australian Gas Light Company (AGL) to design, procure, construct and commission a wind farm consisting of 45 units of the S88 2.1 MW wind turbines. It would become operational in 2007.
The farm will be located at Hallett, around 220 km north of Adelaide.
''This is an exciting day for Suzlon, and the one that we have worked hard to reach in Australia,'' said Dan Kofoed Hansen, CEO, SEA.
Suzlon was proudly continuing its expansion globally with its entrance into the Australian market with such a well-respected customer, the release quoted Indian subidiary's Chairman and CEO Tulsi Tanti saying.
''Suzlon Australia's team has professional experience and history in EPC contracting, whilst our India-based group has extensive experience in successfully providing total wind farm solutions. I believe the Suzlon groups combined background knowledge and expertise is set to deliver an outstanding wind power plant for AGL,'' he added.
UNI AR SSS SKB1726
Suzlon Energy has announced that it would install a wind farm of 95 MW turbine capacity in rural South Australia for a gas company, which once completed next year will be the largest wind farm in that country.
The farm, to be built by Melbourne-based Suzlon Energy Australia Pty Ltd (SEA) which is a subsidiary of Suzlon Energy A/S of Denmark, has entered into a contract with Australian Gas Light Company (AGL) to design, procure, construct and commission a wind farm consisting of 45 units of the S88 2.1 MW wind turbines. It would become operational in 2007.
The farm will be located at Hallett, around 220 km north of Adelaide.
''This is an exciting day for Suzlon, and the one that we have worked hard to reach in Australia,'' said Dan Kofoed Hansen, CEO, SEA.
Suzlon was proudly continuing its expansion globally with its entrance into the Australian market with such a well-respected customer, the release quoted Indian subidiary's Chairman and CEO Tulsi Tanti saying.
''Suzlon Australia's team has professional experience and history in EPC contracting, whilst our India-based group has extensive experience in successfully providing total wind farm solutions. I believe the Suzlon groups combined background knowledge and expertise is set to deliver an outstanding wind power plant for AGL,'' he added.
UNI AR SSS SKB1726
Improving the Forward Curve for Green Power
Problem: Financing Constrains Renewable Energy Development
As renewable energy project developers know full well, financial institutions demand certainty. Financial resources for traditional power projects are conditioned on the existence of long-term power purchase agreements (PPAs). But due to the cost of doing business renewable energy project developers are asked to demonstrate long-term commitments for the purchase of not only the electricity, but also the RECs.
Many project developers are finding a market for their electricity, but power sold at market rates does not go far enough to recoup investment in most renewable power projects. Banks are hoping that projects can improve their bottom lines and achieve profitability faster by forward selling the renewable energy credits, in many cases separately from the power itself.
However, long-term sales of RECs have been very difficult to execute. Despite a number of state renewable portfolio standard (RPS) programs set up to facilitate compliance trading in RECs - and a nascent wholesale nation-wide voluntary REC market - forward sales of RECs rarely exceed five years. This is short of the typical 10-year REC sale agreements most banks require before financing a renewable energy project.
Solution: REC Forward Curve
State policy makers created RECs as a means to monetize the environmental and fuel diversity benefits of renewable power. Sure, these projects produce electricity, but they do so without many of the environmental impacts of traditional fossil fuel generation. There are now more than 19 states and the District of Columbia that have created state legislation, which require entities selling electricity in these states to have a specific portion of their supply from renewable sources. In addition to buying renewable power directly, companies in many states can also purchase just the RECs to meet their RPS requirements.
These RECs are being traded in nascent markets that have yet to attain the liquidity, efficiency, and transparency needed to develop investor assurance. Most RPS programs have been implemented in states with deregulated energy markets. Competitive energy suppliers in these markets usually only have certainty in their load for a period of 1-3 years, because of how load is auctioned in cycles. For this reason trades are usually made for compliance with the current year's obligations - not for long-term sales that extend several years.
Long-term trading is also hampered by regulatory policy in individual states or regions that continues to be in flux. Several states continue to fine-tune their RPS requirements, including the mechanics of trading mechanisms in response to renewable energy supply and demand considerations or other public policy goals. If regulation was more certain and uniform across regions liquidity and price transparency would improve, inviting the entrance of additional speculative capital to the REC markets.
This market-generated view of future REC prices is called the forward curve, and it is a common factor in all types of commodity trading from energy and metals to soft commodities like coffee or sugar. Establishing a forward curve would greatly increase the amount of renewable energy facilities being built because developers could more easily obtain financing.
Benefits of the Forward REC Curve
Banks and other financial institutions look for revenue streams for extended periods of time to determine the economic feasibility of projects. Knowing that a developer can sell his or her RECs for a 10-year term allows these financial institutions to have the confidence they need to lend a more substantial percentage of project costs.
In addition, creating a stable forward market allows market speculators to enter into the marketplace. As speculators enter the marketplace, there are more potential buyers and sellers of RECs at any given time, enhancing liquidity. Once a marketplace becomes more liquid, participants become more confident in both the viability of the market and price stability. The price volatility of today's liquid and short-term REC markets has scared off participants who feared they might have gotten caught on the wrong side of a trade, unable to exit their positions.
How to Establish a Forward Curve
The key to creating a viable forward curve lies in transparency and regulatory certainty. Foremost, there must be stable regulatory policy underpinning REC markets. If the rules governing state RPS and REC trading remain consistent, REC market players can make long-term decisions without the risk of regulatory change.
In most state RPS, a premium is put on certain types of renewable generation that provide the most environmental benefits, such as photovoltaic solar, wind, landfill gas, and in some cases biomass generation. These premium renewable sources are often labeled "Class 1" or "Tier 1". States could provide additional clarity by creating uniform market standards for Tier 1 or Class 1 generation. Standards for these generation sources differ by region. Coordination of these standards will allow the market to more easily trade specific tiers or classes of RECs over broader geographic regions with consistent price expectations, bolstering the forward market.
Market transparency must also be improved in order for a forward curve to develop. Buyers and sellers in the REC market can more easily make long term trading decisions if they are fully aware of supply conditions and market prices. REC tracking systems that market participants can trust and that effectively account for market supply are essential. Price transparency is vital as well. Evolution Markets was the first to offer daily updates on REC prices through its online evo.ID market data system. This bulletin board is publicly available and the belief is that the improved availability of accurate price information will give the market confidence to engage in forward trading.
Lastly, a successful forward REC market will depend on the entrance of new participants. These participants will need to be entities willing to take on risk for substantial upside, either by bridging the gap between wholesale term deals and retail sales to compliance buyers, or by serving as credit-worthy counterparties themselves. Renewable energy project development is poised to leap from a niche to mainstream market, but first REC markets will need to align with the same forward structure currently available in traditional energy markets such as fuel and power.
About the author...
Andrew Kolchins is a Director, Renewable Energy Markets for Evolution Markets LLC. Working from Evolution Markets' White Plains headquarters, Mr. Kolchins leads the company's brokerage services focused on facilitating trades in the compliance driven state renewable energy certificate (REC) markets in the Northeast and Texas, providing expert brokerage service to renewable energy project developers, green power marketers, traders, utilities, and end users. With extensive structured transaction and energy markets expertise, Mr. Kolchins serves customers in regional compliance REC markets. He will also seek to leverage environmental credit markets to coordinate renewable energy project finance, facilitating an overall increase in regional renewable energy capacity. Mr. Kolchins joins Evolution Markets from Green Mountain Energy where he built and managed the sales team for Sunshine Energy, a premium program for Florida Power & Light (FPL) that allows residential customers of FPL to purchase a cleaner form of electricity for the grid. Before working with Green Mountain, he served for seven years as a broker of natural gas swaps, options, and physical basis trades for a handful of institutional brokerage firms. Mr. Kolchins also assisted in the development and marketing of Bloomberg's online energy trading platform, PowerMatch.
The information and views expressed in this article are those of the author and not necessarily those of RenewableEnergyAccess.com or the companies that advertise on its Web site and other publications.
--------------------------------------------------------------------------------
For further Information
Evolution Markets
Please Note: RenewableEnergyAccess.com does not endorse the sites behind these links. We offer them for your additional research. Following these links will open a new browser window.
--------------------------------------------------------------------------------
Total Comments (9) reader comments on this story
post a new comment
-- Adrian Akau, January 31, 2006
Andrew Kolchin are truly comprehensive. The renewable energy industry cannot have a true market until it attains stability. As the master says, market interest in renewables is presently in its infancy. The changes he suggests must be further implemented before renewables become acceptable as every day investment commodities. Right now, many investors are not willing to touch them with a 10 foot pole. Just wait until the price of oil hits $150 a barrel, Andrew.
adrianakau@aol.com
-- Charles Butterfield, January 31, 2006
During the great depression of the 1930's President Franklin Delano Roosevelt implemented the Tennessee Valley Authority.
The Tennessee Valley authority probably deserves more credit than any other source for developing our modern electrical grid, and establish electricity as a dominant source of energy, rather than merely a supplemental one for the wealthy people who could afford it.
Investors did not like this new invention of electricity. It was too uncertain. It was merely a luxury only for the wealthy. Kerosene lamps were the source of light for a large portion of the population.
This large government project demonstrated the desirability and reliability of electricity. It also created the demand that the investors were looking for.
(contiinued)
-- Charles Butterfield, January 31, 2006
Can you imagine what we could accomplish if we spent the money that we are spending on the war in Iraq on renewable energy instead?
We would not have to sit around and wait for the investors. We would lead the way on renewable energy. This country could become energy independent, we would not have to import oil from the middle east, and we would dramatically reduce our greenhouse gas emissons.
We have a tremendous opportunity coming up for us in 2008. We will be electing a new president in 2008. We should elect someone who is willing to implement a Tennessee Valley Authority type project to develop renewable energy sources as the dominant souce of energy, not merely a supplemental one.
And we do not want to be left to the whims of the investors when it comes to renewable energy.
Thank you,
Charles Butterfield
-- Werner Loell, February 1, 2006
It's too late to stop the disaster and the eventual extinction of ours and other vulnerable species, just like the dinosaurs, except they did not cause climate change.
-- Roy Bauer, February 1, 2006
I agree there is not enough liquid and the states are in flux. They will continue to be as more and more developments arise.
This is a competely new world that is growing by leaps and bounds. It is no longer going to be about power generation. But about how the power is generated, or distributed.
With a broader means of developing and transporting comes with a broader market. So we do not depend on any (one) or become dependant on any (one) be it a person, place, or thing again.
-- Francis Golden, February 1, 2006
The Renewable Obligation (RO) in the UK requires the distribution companies to obtain 10% and increasing year on year, of their supplies from renewable sources.
Intermittant power, e.g. wind and tide, still needs a backup. Nuclear cannot do this: it cannot switch on and off. There is a still a need for a continuous supply that is currently coming from fossil fuels. However
coal incineration produces harmful emissions and LNG: CO2 and negative balance of payments.
Pyrolysis (non incineration) of the bio-degradable part of waste is eligible for ROCerts. This is struggling to get established due to obtaining contracts from waste authorities to take to the Banks. The waste authorities will not accept a tender unless backed by a contract, - Catch 22.
Ironically the first plant is probably to be in the USA; converting waste tyres to produce heat and power.
-- Charles Butterfield, February 1, 2006
Werner:
Thank you for your exaggeration and hyperbole. It is not too late to reverse climate change by any stretch of the imagination.
In fact, we have the greatest opportunity that I have seen in the past forty years to make renewable energy sources the dominant energy source instead of fossil fuels.
That opportunity also carries with it great risk. If we do not act quickly, fossil fuels will be repaced with nuclear power plants, not renewable energy sources.
One of the best ways to get some influence that I have found is to help a political candidate that supports your point of view.
I recommend: Get started helping on a congressional campaign for a candidate who supports renewable energy.
Thank you,
Charles Butterfield
-- Roy Bauer, February 2, 2006
The climate has bean getting warmer even before the industial development. The thing is that we have the means to try to stable the climate before it takes a serious turn for the worst. The problem lies with not just our goverment. But with the industry as we know of it.
Question is it the fosil fuels or is it the electromagnetic field of the earth. Or could it be the amount of black top that we use on our roads. Or could it be the amount of asfalt on our roofs. Or just the amount of dark color with both. Or is it some thing that the earth goes through.
The idea is that we know what is harmfull to us. We know that in a closed enviroment it is bad for us. But because it is so good for our pocket books, and that we neeed it to live off of today. There is no body going to do anything today about it.
-- Roy Bauer, February 2, 2006
That is why I am here today to talk about it and to bring it to every bodies attention. We must change our ways.
Even if it has some thing to do with just about money. Every were you go a person has to use money or curency. It is not about how much we teach or tell our children how to live any more. It is about how we teach our childern how to spend or make money. Not about how we use or conserve or enviroment any more. This is just some of the things that have to change.
Add Your Comment
Registered users, please make sure to Log In. We and others want to know your ideas and opinions.
If you are not yet Registered -- it's quick and easy. Just click below.
Thanks!
Register Now!
Log In
Problem: Financing Constrains Renewable Energy Development
As renewable energy project developers know full well, financial institutions demand certainty. Financial resources for traditional power projects are conditioned on the existence of long-term power purchase agreements (PPAs). But due to the cost of doing business renewable energy project developers are asked to demonstrate long-term commitments for the purchase of not only the electricity, but also the RECs.
Many project developers are finding a market for their electricity, but power sold at market rates does not go far enough to recoup investment in most renewable power projects. Banks are hoping that projects can improve their bottom lines and achieve profitability faster by forward selling the renewable energy credits, in many cases separately from the power itself.
However, long-term sales of RECs have been very difficult to execute. Despite a number of state renewable portfolio standard (RPS) programs set up to facilitate compliance trading in RECs - and a nascent wholesale nation-wide voluntary REC market - forward sales of RECs rarely exceed five years. This is short of the typical 10-year REC sale agreements most banks require before financing a renewable energy project.
Solution: REC Forward Curve
State policy makers created RECs as a means to monetize the environmental and fuel diversity benefits of renewable power. Sure, these projects produce electricity, but they do so without many of the environmental impacts of traditional fossil fuel generation. There are now more than 19 states and the District of Columbia that have created state legislation, which require entities selling electricity in these states to have a specific portion of their supply from renewable sources. In addition to buying renewable power directly, companies in many states can also purchase just the RECs to meet their RPS requirements.
These RECs are being traded in nascent markets that have yet to attain the liquidity, efficiency, and transparency needed to develop investor assurance. Most RPS programs have been implemented in states with deregulated energy markets. Competitive energy suppliers in these markets usually only have certainty in their load for a period of 1-3 years, because of how load is auctioned in cycles. For this reason trades are usually made for compliance with the current year's obligations - not for long-term sales that extend several years.
Long-term trading is also hampered by regulatory policy in individual states or regions that continues to be in flux. Several states continue to fine-tune their RPS requirements, including the mechanics of trading mechanisms in response to renewable energy supply and demand considerations or other public policy goals. If regulation was more certain and uniform across regions liquidity and price transparency would improve, inviting the entrance of additional speculative capital to the REC markets.
This market-generated view of future REC prices is called the forward curve, and it is a common factor in all types of commodity trading from energy and metals to soft commodities like coffee or sugar. Establishing a forward curve would greatly increase the amount of renewable energy facilities being built because developers could more easily obtain financing.
Benefits of the Forward REC Curve
Banks and other financial institutions look for revenue streams for extended periods of time to determine the economic feasibility of projects. Knowing that a developer can sell his or her RECs for a 10-year term allows these financial institutions to have the confidence they need to lend a more substantial percentage of project costs.
In addition, creating a stable forward market allows market speculators to enter into the marketplace. As speculators enter the marketplace, there are more potential buyers and sellers of RECs at any given time, enhancing liquidity. Once a marketplace becomes more liquid, participants become more confident in both the viability of the market and price stability. The price volatility of today's liquid and short-term REC markets has scared off participants who feared they might have gotten caught on the wrong side of a trade, unable to exit their positions.
How to Establish a Forward Curve
The key to creating a viable forward curve lies in transparency and regulatory certainty. Foremost, there must be stable regulatory policy underpinning REC markets. If the rules governing state RPS and REC trading remain consistent, REC market players can make long-term decisions without the risk of regulatory change.
In most state RPS, a premium is put on certain types of renewable generation that provide the most environmental benefits, such as photovoltaic solar, wind, landfill gas, and in some cases biomass generation. These premium renewable sources are often labeled "Class 1" or "Tier 1". States could provide additional clarity by creating uniform market standards for Tier 1 or Class 1 generation. Standards for these generation sources differ by region. Coordination of these standards will allow the market to more easily trade specific tiers or classes of RECs over broader geographic regions with consistent price expectations, bolstering the forward market.
Market transparency must also be improved in order for a forward curve to develop. Buyers and sellers in the REC market can more easily make long term trading decisions if they are fully aware of supply conditions and market prices. REC tracking systems that market participants can trust and that effectively account for market supply are essential. Price transparency is vital as well. Evolution Markets was the first to offer daily updates on REC prices through its online evo.ID market data system. This bulletin board is publicly available and the belief is that the improved availability of accurate price information will give the market confidence to engage in forward trading.
Lastly, a successful forward REC market will depend on the entrance of new participants. These participants will need to be entities willing to take on risk for substantial upside, either by bridging the gap between wholesale term deals and retail sales to compliance buyers, or by serving as credit-worthy counterparties themselves. Renewable energy project development is poised to leap from a niche to mainstream market, but first REC markets will need to align with the same forward structure currently available in traditional energy markets such as fuel and power.
About the author...
Andrew Kolchins is a Director, Renewable Energy Markets for Evolution Markets LLC. Working from Evolution Markets' White Plains headquarters, Mr. Kolchins leads the company's brokerage services focused on facilitating trades in the compliance driven state renewable energy certificate (REC) markets in the Northeast and Texas, providing expert brokerage service to renewable energy project developers, green power marketers, traders, utilities, and end users. With extensive structured transaction and energy markets expertise, Mr. Kolchins serves customers in regional compliance REC markets. He will also seek to leverage environmental credit markets to coordinate renewable energy project finance, facilitating an overall increase in regional renewable energy capacity. Mr. Kolchins joins Evolution Markets from Green Mountain Energy where he built and managed the sales team for Sunshine Energy, a premium program for Florida Power & Light (FPL) that allows residential customers of FPL to purchase a cleaner form of electricity for the grid. Before working with Green Mountain, he served for seven years as a broker of natural gas swaps, options, and physical basis trades for a handful of institutional brokerage firms. Mr. Kolchins also assisted in the development and marketing of Bloomberg's online energy trading platform, PowerMatch.
The information and views expressed in this article are those of the author and not necessarily those of RenewableEnergyAccess.com or the companies that advertise on its Web site and other publications.
--------------------------------------------------------------------------------
For further Information
Evolution Markets
Please Note: RenewableEnergyAccess.com does not endorse the sites behind these links. We offer them for your additional research. Following these links will open a new browser window.
--------------------------------------------------------------------------------
Total Comments (9) reader comments on this story
post a new comment
-- Adrian Akau, January 31, 2006
Andrew Kolchin are truly comprehensive. The renewable energy industry cannot have a true market until it attains stability. As the master says, market interest in renewables is presently in its infancy. The changes he suggests must be further implemented before renewables become acceptable as every day investment commodities. Right now, many investors are not willing to touch them with a 10 foot pole. Just wait until the price of oil hits $150 a barrel, Andrew.
adrianakau@aol.com
-- Charles Butterfield, January 31, 2006
During the great depression of the 1930's President Franklin Delano Roosevelt implemented the Tennessee Valley Authority.
The Tennessee Valley authority probably deserves more credit than any other source for developing our modern electrical grid, and establish electricity as a dominant source of energy, rather than merely a supplemental one for the wealthy people who could afford it.
Investors did not like this new invention of electricity. It was too uncertain. It was merely a luxury only for the wealthy. Kerosene lamps were the source of light for a large portion of the population.
This large government project demonstrated the desirability and reliability of electricity. It also created the demand that the investors were looking for.
(contiinued)
-- Charles Butterfield, January 31, 2006
Can you imagine what we could accomplish if we spent the money that we are spending on the war in Iraq on renewable energy instead?
We would not have to sit around and wait for the investors. We would lead the way on renewable energy. This country could become energy independent, we would not have to import oil from the middle east, and we would dramatically reduce our greenhouse gas emissons.
We have a tremendous opportunity coming up for us in 2008. We will be electing a new president in 2008. We should elect someone who is willing to implement a Tennessee Valley Authority type project to develop renewable energy sources as the dominant souce of energy, not merely a supplemental one.
And we do not want to be left to the whims of the investors when it comes to renewable energy.
Thank you,
Charles Butterfield
-- Werner Loell, February 1, 2006
It's too late to stop the disaster and the eventual extinction of ours and other vulnerable species, just like the dinosaurs, except they did not cause climate change.
-- Roy Bauer, February 1, 2006
I agree there is not enough liquid and the states are in flux. They will continue to be as more and more developments arise.
This is a competely new world that is growing by leaps and bounds. It is no longer going to be about power generation. But about how the power is generated, or distributed.
With a broader means of developing and transporting comes with a broader market. So we do not depend on any (one) or become dependant on any (one) be it a person, place, or thing again.
-- Francis Golden, February 1, 2006
The Renewable Obligation (RO) in the UK requires the distribution companies to obtain 10% and increasing year on year, of their supplies from renewable sources.
Intermittant power, e.g. wind and tide, still needs a backup. Nuclear cannot do this: it cannot switch on and off. There is a still a need for a continuous supply that is currently coming from fossil fuels. However
coal incineration produces harmful emissions and LNG: CO2 and negative balance of payments.
Pyrolysis (non incineration) of the bio-degradable part of waste is eligible for ROCerts. This is struggling to get established due to obtaining contracts from waste authorities to take to the Banks. The waste authorities will not accept a tender unless backed by a contract, - Catch 22.
Ironically the first plant is probably to be in the USA; converting waste tyres to produce heat and power.
-- Charles Butterfield, February 1, 2006
Werner:
Thank you for your exaggeration and hyperbole. It is not too late to reverse climate change by any stretch of the imagination.
In fact, we have the greatest opportunity that I have seen in the past forty years to make renewable energy sources the dominant energy source instead of fossil fuels.
That opportunity also carries with it great risk. If we do not act quickly, fossil fuels will be repaced with nuclear power plants, not renewable energy sources.
One of the best ways to get some influence that I have found is to help a political candidate that supports your point of view.
I recommend: Get started helping on a congressional campaign for a candidate who supports renewable energy.
Thank you,
Charles Butterfield
-- Roy Bauer, February 2, 2006
The climate has bean getting warmer even before the industial development. The thing is that we have the means to try to stable the climate before it takes a serious turn for the worst. The problem lies with not just our goverment. But with the industry as we know of it.
Question is it the fosil fuels or is it the electromagnetic field of the earth. Or could it be the amount of black top that we use on our roads. Or could it be the amount of asfalt on our roofs. Or just the amount of dark color with both. Or is it some thing that the earth goes through.
The idea is that we know what is harmfull to us. We know that in a closed enviroment it is bad for us. But because it is so good for our pocket books, and that we neeed it to live off of today. There is no body going to do anything today about it.
-- Roy Bauer, February 2, 2006
That is why I am here today to talk about it and to bring it to every bodies attention. We must change our ways.
Even if it has some thing to do with just about money. Every were you go a person has to use money or curency. It is not about how much we teach or tell our children how to live any more. It is about how we teach our childern how to spend or make money. Not about how we use or conserve or enviroment any more. This is just some of the things that have to change.
Add Your Comment
Registered users, please make sure to Log In. We and others want to know your ideas and opinions.
If you are not yet Registered -- it's quick and easy. Just click below.
Thanks!
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Behind GE's clean-energy push Tech News on ZDNet
You can say clean technologies have gone mainstream when General Electric gets into the act.
The industrial giant began a few years ago to buy up some of the renewable-energy divisions from larger companies like Enron. Now, GE is increasing its R&D and marketing development budgets to create a larger name for itself in coal gasification, wind power and fuel cells.
Ali Iz, the general manager of technology growth at General Electric, the group that oversees GE's solar and other alternative-energy efforts, recently sat down with News.com Editor at Large Michael Kanellos to discuss how the conglomerate will bring out products that will pollute less and add to GE's bottom line.
Q: GE has been running a lot of ads on alternative energy lately. Is this a new direction for the company, or are you just bringing attention to it now?
Iz: We entered wind four years ago and solar a year and a half ago. We're working on integrated coal gasification. There wasn't an epiphany earlier this year or last year where we said, "We're going to do cleaner and better stuff." We've always been doing it. It's just that it has not been focused.
One thing we are doing though is doubling the R&D spending from about $700 million to a billion and a half by 2010 on cleaner technologies. That's a major commitment, and that includes fuel cells, wind, coal gasification, combined cycle and cleaner gas-turbine technology.
And this is not just energy. Cleaner products and technology also will impact our transportation business, rail and our aircraft engine business.
When you look at the alternatives, which ones seem most promising? What do you like about solar, for instance?
Iz: The installation today is costly. It has to be a lot less. The inverter has to be more robust and less costly than today. We're going to be introducing a new inverter (a device that converts direct current into alternating current) in early '06 for residential applications that is going to be, we believe, significantly more reliable.
Also, we are working on module technologies that integrate seamlessly with rooftops. If you integrate seamlessly, it doesn't jut out of the roof. It's a great product.
It's been very successful in California. We're in 55 home development sites in California. The home builders see it as a differentiated house, and it reduces the electricity bill of the buyer significantly--like to about a third. In Ladera Ranch in Orange County, many home builders are using solar. Our consumer finance, GE Consumer Finance, came up with a mortgage product (for solar homes).
Here's a good example. Shafer Vineyards in Napa Valley installed a 129-kilowatt solar system, and they are 100 percent solar powered. That includes their processing units, refrigeration, their offices. It's a 100 percent solar powered facility.
One thing that has hurt solar before is that the panels make it look like you're putting up an aircraft hangar on your roof. They are very ugly.
Iz: Right. So we want to do away with that, and we've done it with concrete roof tiles. We're also working on other roof systems.
At the end of the day, solar has to be under $3 a watt without incentives to become mainstream because, under $3 a watt, it will compete with the retail price of electricity. And that's the key. Today it's between $6 and $8. (Editor's note: Japan, Germany and several U.S. states give rebates and tax cuts to property owners who install solar systems.)
Who is buying solar? Demand is obviously way up because of the shortage in panels.
Iz: Even today with all the attention solar is getting in the U.S., the U.S. market is about 10 percent of the total. Japan is about 30 percent, Europe is about 50 percent. And the biggest market in Europe--in the world, actually--is Germany, a country that is really not known for its abundance in sun, right? Germany grew by 90 percent last year.
Is geography ever a problem? You can't really expect solar to do well in Alaska.
Iz: You do want sunshine, but there are some subtleties in the technology. For example, thin film can generate more power with less sunshine versus conventional technology. But in general, the more sunshine there is, the more electricity you're going to have to generate. You're always going to produce more in California, Arizona, Nevada than, say, in Minnesota.
Now how about coal gasification? A lot of start-ups have recently landed VC money for this.
Iz: We acquired ChevronTexaco's gasification technology about a year ago, and we've been working on that, and we believe that is going to be a significant growth opportunity for it. It is certainly much cleaner, and we are close to getting the cost to a point where it's going to be competitive with pulverized coal--very close. It's still a little bit more expensive but we recently received our first order.
It just makes sense. It's less polluting. You're gasifying and burning it like natural gas. And the technology has been around a long time. The Germans had something like this during World War II.
And there is a lot of coal, not only in the U.S., but in China and elsewhere.
How about wind?
Iz: Wind has been a tremendous growth story for us. When we acquired Enron's wind business--in 2001, I believe--the revenues were about a few hundred million, and in '06 we're expecting $3.5 billion.
Europe has been very big for the past couple of years. The U.S. now is booming. As the turbine--the machines--get bigger, the cost will come down. The turbines are getting larger, and the diameters on the blades are increasing, and so they can capture more wind.
We believe shortly wind is going to be competitive with centralized generation--particularly with turbines located offshore. This is now the major growth initiative.
Do you mean offshore as in something that would resemble an oil platform?
Iz: Well, no. These are wind farms anchored to the sea bottom, not too far offshore. There are good winds there, and you don't have as many issues with land use.
Are emerging nations looking at alternative energy technologies? The additional expense sometimes has a tendency to push these ideas into established markets. China has been kind of the vanguard of how to make a country really dirty.
Iz: Actually, cleaner energy is really no longer limited to Europe and the U.S. I think just about every country is concerned about cleaner environment. Thailand is one of the countries promoting solar and wind.
Are you doing anything in wave? A lot of experts shake their heads when someone proposes trying to install this sort of heavy equipment in stormy seas.
Iz: We're evaluating it. When you look at statistics on solar...I've read somewhere that if you covered 7 percent of Arizona with solar panels, it would be sufficient to power the entire U.S. It sounds fantastic, but you aren't going to do that. The same logic applies to wave. Yes, there may be sufficient potential wave power, but how much area do you need? And where do you put it? And what are the technology issues? It's early.
Now onto fuel cells. I'm just guessing where GE is mostly looking at residential fuel cells.
Iz: Well, actually our fuel cell effort is focused on not necessarily the residential and the small commercial, but bigger systems, so substation megawatt-plus systems. We also have our global research center working on the hydrogen economy. It's still early.
How would a megawatt fuel cell substation operate anyway?
Iz: In the U.S. and in a lot of the developed world, we believe our utility customers, instead of building peaker power plants, may opt for putting a small 1-to-5-megawatt fuel cell hybrid in a substation. These would be solid oxide fuel cells.
You can say clean technologies have gone mainstream when General Electric gets into the act.
The industrial giant began a few years ago to buy up some of the renewable-energy divisions from larger companies like Enron. Now, GE is increasing its R&D and marketing development budgets to create a larger name for itself in coal gasification, wind power and fuel cells.
Ali Iz, the general manager of technology growth at General Electric, the group that oversees GE's solar and other alternative-energy efforts, recently sat down with News.com Editor at Large Michael Kanellos to discuss how the conglomerate will bring out products that will pollute less and add to GE's bottom line.
Q: GE has been running a lot of ads on alternative energy lately. Is this a new direction for the company, or are you just bringing attention to it now?
Iz: We entered wind four years ago and solar a year and a half ago. We're working on integrated coal gasification. There wasn't an epiphany earlier this year or last year where we said, "We're going to do cleaner and better stuff." We've always been doing it. It's just that it has not been focused.
One thing we are doing though is doubling the R&D spending from about $700 million to a billion and a half by 2010 on cleaner technologies. That's a major commitment, and that includes fuel cells, wind, coal gasification, combined cycle and cleaner gas-turbine technology.
And this is not just energy. Cleaner products and technology also will impact our transportation business, rail and our aircraft engine business.
When you look at the alternatives, which ones seem most promising? What do you like about solar, for instance?
Iz: The installation today is costly. It has to be a lot less. The inverter has to be more robust and less costly than today. We're going to be introducing a new inverter (a device that converts direct current into alternating current) in early '06 for residential applications that is going to be, we believe, significantly more reliable.
Also, we are working on module technologies that integrate seamlessly with rooftops. If you integrate seamlessly, it doesn't jut out of the roof. It's a great product.
It's been very successful in California. We're in 55 home development sites in California. The home builders see it as a differentiated house, and it reduces the electricity bill of the buyer significantly--like to about a third. In Ladera Ranch in Orange County, many home builders are using solar. Our consumer finance, GE Consumer Finance, came up with a mortgage product (for solar homes).
Here's a good example. Shafer Vineyards in Napa Valley installed a 129-kilowatt solar system, and they are 100 percent solar powered. That includes their processing units, refrigeration, their offices. It's a 100 percent solar powered facility.
One thing that has hurt solar before is that the panels make it look like you're putting up an aircraft hangar on your roof. They are very ugly.
Iz: Right. So we want to do away with that, and we've done it with concrete roof tiles. We're also working on other roof systems.
At the end of the day, solar has to be under $3 a watt without incentives to become mainstream because, under $3 a watt, it will compete with the retail price of electricity. And that's the key. Today it's between $6 and $8. (Editor's note: Japan, Germany and several U.S. states give rebates and tax cuts to property owners who install solar systems.)
Who is buying solar? Demand is obviously way up because of the shortage in panels.
Iz: Even today with all the attention solar is getting in the U.S., the U.S. market is about 10 percent of the total. Japan is about 30 percent, Europe is about 50 percent. And the biggest market in Europe--in the world, actually--is Germany, a country that is really not known for its abundance in sun, right? Germany grew by 90 percent last year.
Is geography ever a problem? You can't really expect solar to do well in Alaska.
Iz: You do want sunshine, but there are some subtleties in the technology. For example, thin film can generate more power with less sunshine versus conventional technology. But in general, the more sunshine there is, the more electricity you're going to have to generate. You're always going to produce more in California, Arizona, Nevada than, say, in Minnesota.
Now how about coal gasification? A lot of start-ups have recently landed VC money for this.
Iz: We acquired ChevronTexaco's gasification technology about a year ago, and we've been working on that, and we believe that is going to be a significant growth opportunity for it. It is certainly much cleaner, and we are close to getting the cost to a point where it's going to be competitive with pulverized coal--very close. It's still a little bit more expensive but we recently received our first order.
It just makes sense. It's less polluting. You're gasifying and burning it like natural gas. And the technology has been around a long time. The Germans had something like this during World War II.
And there is a lot of coal, not only in the U.S., but in China and elsewhere.
How about wind?
Iz: Wind has been a tremendous growth story for us. When we acquired Enron's wind business--in 2001, I believe--the revenues were about a few hundred million, and in '06 we're expecting $3.5 billion.
Europe has been very big for the past couple of years. The U.S. now is booming. As the turbine--the machines--get bigger, the cost will come down. The turbines are getting larger, and the diameters on the blades are increasing, and so they can capture more wind.
We believe shortly wind is going to be competitive with centralized generation--particularly with turbines located offshore. This is now the major growth initiative.
Do you mean offshore as in something that would resemble an oil platform?
Iz: Well, no. These are wind farms anchored to the sea bottom, not too far offshore. There are good winds there, and you don't have as many issues with land use.
Are emerging nations looking at alternative energy technologies? The additional expense sometimes has a tendency to push these ideas into established markets. China has been kind of the vanguard of how to make a country really dirty.
Iz: Actually, cleaner energy is really no longer limited to Europe and the U.S. I think just about every country is concerned about cleaner environment. Thailand is one of the countries promoting solar and wind.
Are you doing anything in wave? A lot of experts shake their heads when someone proposes trying to install this sort of heavy equipment in stormy seas.
Iz: We're evaluating it. When you look at statistics on solar...I've read somewhere that if you covered 7 percent of Arizona with solar panels, it would be sufficient to power the entire U.S. It sounds fantastic, but you aren't going to do that. The same logic applies to wave. Yes, there may be sufficient potential wave power, but how much area do you need? And where do you put it? And what are the technology issues? It's early.
Now onto fuel cells. I'm just guessing where GE is mostly looking at residential fuel cells.
Iz: Well, actually our fuel cell effort is focused on not necessarily the residential and the small commercial, but bigger systems, so substation megawatt-plus systems. We also have our global research center working on the hydrogen economy. It's still early.
How would a megawatt fuel cell substation operate anyway?
Iz: In the U.S. and in a lot of the developed world, we believe our utility customers, instead of building peaker power plants, may opt for putting a small 1-to-5-megawatt fuel cell hybrid in a substation. These would be solid oxide fuel cells.
Virent Startup Hydrogen From Biomass System
Virent Energy System today announced that it has successfully started up the first ever demonstration system capable of directly converting sugars and glycerin into power. The system, purchased by Madison, Gas & Electric (MGE), is based on Virent's patented Aqueous Phase Reforming (APR) process, a carbon neutral, one-step method for on-demand production of hydrogen, natural gas and/or other fuel gases for distributed power systems from widely available renewable biomass.
The MGE system integrates a Virent APR System with a hydrogen/natural gas fueled generator set provided by City Engines. The system has demonstrated the ability to deliver a minimum of 10kW of environmentally friendly power to the MGE grid since its startup at the beginning of this year at Virent's location in Madison, Wisconsin. Virent was able to customize the gas production from its APR system to deliver desired compositions of hydrogen, natural gas and other fuel gases to the generator set. The system currently operates on pure glycerin. In the future, the Company will use a lower grade of glycerin that is generated as a byproduct of the biodiesel production process. Virent also intends to use sugar in the form of sorbitol and glucose as a feedstock for this initial unit. Over the next 18 months, this system will generate needed reliability and performance data for an APR system in a live environment.
Virent's APR system offers a cost effective method for low temperature production of hydrogen and/or fuel gas. By demonstrating the capability of localized, on-demand fuel delivery, the system is a promising first step to providing a reliable method for renewable fuel generation from a variety of widely available biomass sources. The APR systems can be designed to deliver predominantly hydrogen or alkanes (i.e. natural gas, ethane, butane and propane), or a customized blend of these fuels. Virent refers to these various biomass-generated streams as SupernaturalTM fuels. This system design will target a number of opportunities, ranging from stationary power systems, industrial hydrogen, renewable fuel stations or, longer term, mobile applications.
Dr. Randy Cortright, Chief Technical Officer and Founder of Virent, pointed to the extensive laboratory and design work that went into the system as the key to this successful startup. "This system is a validation of all of our work over the past couple of years on developing the APR process. We have told collaborators about the promise of this technology, and now we have a working system to demonstrate that APR is capable of becoming a viable production system. I believe this is a crucial first step to delivering a reliable, cost effective system for production of renewable fuels. Through our efforts on this system, we now have a much fuller understanding of the process that will lay the groundwork for even more compelling APR units in the near future."
Eric Apfelbach, Chief Executive Officer of Virent, commented on the performance of the system, "The level of excitement generated by this APR system start-up is very high because the system greatly exceeded all of our targets for power output and performance with an integrated ICE. It is very clear that the APR system represents a compelling option for cost effective, clean, distributed energy generation. With the global availability of CO2 neutral feedstocks and the ability to fuel microturbines, fuel cells, and ICEs in an unteathered fashion, the market opportunities are enormous. We are proud of Virent development team and appreciative of the support provided by MGE."
Related Fuel Storage, Distribution & Production Stories
Virent Energy System today announced that it has successfully started up the first ever demonstration system capable of directly converting sugars and glycerin into power. The system, purchased by Madison, Gas & Electric (MGE), is based on Virent's patented Aqueous Phase Reforming (APR) process, a carbon neutral, one-step method for on-demand production of hydrogen, natural gas and/or other fuel gases for distributed power systems from widely available renewable biomass.
The MGE system integrates a Virent APR System with a hydrogen/natural gas fueled generator set provided by City Engines. The system has demonstrated the ability to deliver a minimum of 10kW of environmentally friendly power to the MGE grid since its startup at the beginning of this year at Virent's location in Madison, Wisconsin. Virent was able to customize the gas production from its APR system to deliver desired compositions of hydrogen, natural gas and other fuel gases to the generator set. The system currently operates on pure glycerin. In the future, the Company will use a lower grade of glycerin that is generated as a byproduct of the biodiesel production process. Virent also intends to use sugar in the form of sorbitol and glucose as a feedstock for this initial unit. Over the next 18 months, this system will generate needed reliability and performance data for an APR system in a live environment.
Virent's APR system offers a cost effective method for low temperature production of hydrogen and/or fuel gas. By demonstrating the capability of localized, on-demand fuel delivery, the system is a promising first step to providing a reliable method for renewable fuel generation from a variety of widely available biomass sources. The APR systems can be designed to deliver predominantly hydrogen or alkanes (i.e. natural gas, ethane, butane and propane), or a customized blend of these fuels. Virent refers to these various biomass-generated streams as SupernaturalTM fuels. This system design will target a number of opportunities, ranging from stationary power systems, industrial hydrogen, renewable fuel stations or, longer term, mobile applications.
Dr. Randy Cortright, Chief Technical Officer and Founder of Virent, pointed to the extensive laboratory and design work that went into the system as the key to this successful startup. "This system is a validation of all of our work over the past couple of years on developing the APR process. We have told collaborators about the promise of this technology, and now we have a working system to demonstrate that APR is capable of becoming a viable production system. I believe this is a crucial first step to delivering a reliable, cost effective system for production of renewable fuels. Through our efforts on this system, we now have a much fuller understanding of the process that will lay the groundwork for even more compelling APR units in the near future."
Eric Apfelbach, Chief Executive Officer of Virent, commented on the performance of the system, "The level of excitement generated by this APR system start-up is very high because the system greatly exceeded all of our targets for power output and performance with an integrated ICE. It is very clear that the APR system represents a compelling option for cost effective, clean, distributed energy generation. With the global availability of CO2 neutral feedstocks and the ability to fuel microturbines, fuel cells, and ICEs in an unteathered fashion, the market opportunities are enormous. We are proud of Virent development team and appreciative of the support provided by MGE."
Related Fuel Storage, Distribution & Production Stories
Investors press top 2,000 firms on climate change
LONDON (Reuters) - Investors with some $30 trillion of assets have written to 1,933 of the world's biggest companies demanding disclosure on their climate change stance, the UK-based Carbon Disclosure Project (CDP) said on Wednesday.
The world's biggest shareholders want to know how well prepared companies are for the effects of climate change and for hardening climate change policy, as fears grow for impacts on investments.
The CDP's fourth such annual request is on behalf of a swelling investor group, up from $20 trillion last year and $10 trillion the year before, and is directed at a growing company target list, up from 500 last year.
"There are business risks and opportunities (from climate change) that have implications for the value of investments in corporations worldwide," said Paul Dickinson, CDP project coordinator.
The investors have demanded disclosure on companies' risk from extreme weather events, often associated with climate change, and about their emission of carbon dioxide (CO2), widely blamed by scientists for climate change, and for their strategies to cut emissions.
Detailed information on emissions is seen even more key this year given high energy prices, increasing the attractiveness of companies which are less carbon and energy intensive, or which have active programs in this direction.
"It's a question of institutional investors taking a well-informed view of the profitability of companies based on energy consumption and (carbon) emission performance," said Dickinson.
"You could take a view that climate change will be good for green technology companies such as GE."
Unprepared companies could also find themselves in the firing line of policy, investors fear, as political rhetoric hardens on the need for CO2 cuts, for example as required under the Kyoto Protocol, while a blase attitude to climate change could also risk reputation damage.
Some large companies are taking a proactive line on climate change, including companies associated with high carbon energy.
For example BP Plc said last November it plans to double its investment in greener energy sources over the next three years.
The world's second-largest listed oil firm said it may invest up to $8 billion in wind, solar, hydrogen and high efficiency gas-fired power generation projects over the next 10 years.© Reuters 2006. All Rights Reserved.
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