Subject: WE FACE EXTRAORDINARY ECONOMIC RISKS - and they are created by GOVERNMENT - Is NZ Next Up ?

https://www.theaustralian.news.com.au/story/0,25197,24108108-7583,00.html

Climate mettle about to be tested

Alan Moran | August 01, 2008

AN emissions trading scheme has not even started but the Government's hostility to carbon emissions is already choking off the supply of electricity, leading to an inevitable rise in prices.

Coal is used to generate 90 per cent of Australia's electricity, but no business can fund new coal-fired power plants under the existing policy settings. The last big coal-based power station built with private funding was Millmerran in Queensland, completed in 2002 by a Shell-led consortium.

One other station, Kogan Creek, also in Queensland, has been built with government funding. No others are planned.

Specifying the carbon price that new electricity generators will pay when the emissions trading scheme begins will not solve the problem either, since the carbon price will be set by politicians each year. The Government also has yet to decide when key CO2 emitting sectors such as agriculture and petrol are to be included under the cap. As long as these are excluded, the price will need to be higher for the rest.

The Government also has yet to determine many other elements of an emissions trading scheme. These include the basis on which a reserve price for carbon will be in place (effectively capping the scheme); what, if any, compensation will be provided to big emitters and big users; and whether compensation will be paid to subsidise ongoing production or as a lump sum to allow big coal power producers to close down facilities.

All this is complicated by the sale of the NSW generators.

Canberra does not want to jeopardise NSW Premier Morris Iemma's abilities to raise money from the sale, which also allows the Government to exit an industry that would otherwise make substantial calls on public funding. But any bidders for the NSW assets will need cast-iron commitments about what their future carbon credit costs will be.

In any case, the value of the assets has already been dramatically devalued by commitments to a future emissions trading scheme.

Before the proposals of Ross Garnaut's climate change report were released, most electricity generators expected to receive free carbon credits. The green paper dangles these before their noses, though it leaves their value unquantified. Free credits could compensate the most carbon-intensive power plants for leaving the market, with those remaining being reimbursed for the costs of buying credits by a higher wholesale price resulting from the capacity reduction.

A carbon tax at the green paper's mentioned range of $20 to $40 a tonne of CO2 should make it possible, theoretically, for gas-fuelled electricity generation (with its lower CO2 emissions) to take market share from coal-based power stations. But gas-fuelled generators would be likely to find their competitive edge eroded because they would face higher gas prices following the increase in demand. Solar-based renewables would remain uncompetitive in any case.

The sword of Damocles hanging over coal-based electricity power stations is causing supply to tighten by preventing new investment. Eventually this will be exacerbated as existing stations become obsolete and are scrapped. And obsolescence will accelerate as businesses see a truncated useful life for their facilities and scrimp on maintenance expenditures.

The effect of the discouragement of new supplies is being progressively felt. Generators cannot obtain forward contracts because neither they nor retailers know what the future price is likely to be.

These developments have brought an increase in wholesale prices. Average electricity prices in NSW and Victoria during the past couple of years have been $50 a megawatt hour. Ten years ago they were about $30 a megawatt hour. That increase is already equivalent to the tax of $20 a tonne of CO2 that the green paper estimates will mean a - presumably acceptable - 16 per cent rise in electricity prices.

But we have seen with petrol that very high price increases have little effect on demand; it may take a tax on electricity of $100 a tonne of CO2, bringing a 70 per cent price increase, to shave even a modest 10 per cent from demand.

Though the price increases foreshadowed in the green paper are already happening, most consumers are largely insulated from them because their retailers have contracts with generators at the previously prevailing prices. Soon, however, the higher current prices will be reflected in consumers' electricity bills. At that stage, the rhetoric about the need for higher prices will meet the reality, and test the support of the Government, the media and ordinary people for a trading scheme designed to bring deep cuts in CO2 emissions.

Alan Moran is director of the deregulation unit at the Institute of Public Affairs in Melbourne.

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https://www.theaustralian.news.com.au/story/0,25197,24098313-7583,00.html

Climate mafia has us fooled

Dennis Jensen | July 30, 2008

VESTED interests have hijacked the climate debate, and taken Australia's future hostage. The ransom they demand? Simple agreement or, at the very least, compliance.

Voices of dissent face derision. Legitimate questions are met with ridicule. But with many of the squabbling forces of power in this country now apparently united in their enthusiasm for an emissions trading scheme, it is more important than ever that we go back and examine the basis of their campaigns.

It has been an article of faith for many years that humans are gradually destroying the environment, and are specifically responsible for global warming via man-made carbon emissions. On Monday, The Australian published results of a poll showing 96 per cent of the population believes climate change is wholly or partly caused by humans.

But any detailed scrutiny of scientific data shows that the environment is quite stable. There are even suggestions the world's temperature has decreased in recent years.

Any real climate change in the past century has been at a glacial pace (that is, the speed of a glacier that is not melting because of the globe's supposedly soaring temperatures). Far greater periods of environmental change have been recorded in history without any human intervention. The Ice Ages, anybody?

While it remains almost universally popular (or perhaps just fashionable) to spout the mantra "trees are good, cars are bad" and all the similarly simplistic slogans of the green lobby and those they have seduced, the facts tell a different story. The next time someone tells you that humans are killing the environment and driving up temperatures, ask them to prove it, and demand they disprove the weighty data contradicting such claims.

The same is true of the suggestion that nuclear power be considered part of our future energy mix. The population has been conditioned to equate this incredibly clean and efficient form of power generation with terrifying weapons of mass destruction, and horrific accidents, such as that at Chernobyl.

The truth is that hundreds of nuclear reactors around the world have long been efficiently pumping out electricity, with no significant environmental impact. And more are coming on-stream all the time, using cleaner and more cost-effective models. Where is the incontrovertible evidence that nuclear power is a dangerous or unsafe option?

Even the whale-watching club that is the Rudd Government agreed to sell uranium to other countries, most of which have far less scrutiny and monitoring of nuclear power generation than would be imposed in Australia. So the Government also thinks nuclear power is a safe and reasonable alternative. Or is it just hypocritical?

I love a pristine environment as much as the next Australian, but where is the evidence that using a few less light bulbs and riding a bike to work will do anything to improve our surroundings other than in the most token way? How is the belching of coal-fired power stations preferable to the clean air that envelops nuclear plants? Or do we just have to depend on the as-yet-unviable alternatives of solar and wind generation?

If Australia's 21 million people - already some of the most environment-friendly in the world - embark alone on the course set by our climate-change mafia, what real impact will this have? What is the point when the major polluters such as India and China refuse to take part as it would hamper their economic development? If Australia ceased all carbon emissions tomorrow, in just nine months the increase in emissions of China alone would have taken up the slack.

We, too, should be mindful of the impact an emissions-trading scheme will have on our economy. If all carbon in the stationary power sector were to have a $50-a-tonne price of carbon dioxide imposed (as is the case for the European price for CO2), it would mean a cost burden of $660 a year for every Australian, or more than $2500 per household, according to data I have received. These would not all be direct costs from the emissions-trading scheme, but also from higher prices of products that would flow through as a result of increased production costs. Those higher costs would make some businesses unviable, and they would have to close or move offshore.

In short, emissions trading will have an enormous effect on every Australian. And glib assurances of compensation for some are no substitute for well thought-out, responsible policies.

Both the issues of an emissions-trading scheme and nuclear energy have been built up to instil and exploit fear in this society, largely based on flawed or questionable data and the promise of a warm-and-fuzzy sense of pride about doing something.

The history of mankind has been marked by repeated cautions against accepting populist claims as truth and is littered with the corpses (both real and metaphoric) of those who failed to heed the advice. And it continues. We laugh today at those who once believed the world to be flat, but see no irony in the widespread acceptance now of equally spurious claims made in the name of science, as in the climate debate.

I don't claim to have all the answers, but I do hope the issue can be subject to broad-ranging rational debate so that we do not fall as just another victim of history.

The subject is too important for us not to ask questions.

Dennis Jensen is the federal member for Tangney, WA and a research scientist who previously served with the CSIRO and the Defence Science and Technology Organisation.

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https://business.theage.com.au/business/wongs-climate-paper-clouded-with-mistakes-20080728-3md1.html

Wong's climate paper clouded with mistakes

  • Bob Carter
  • July 29, 2008
  • Page 1 of 2

The Government's advisory channels are clogged with rent seekers, special pleaders and green activists who have misadvised the minister.

CLIMATE Minister Penny Wong published an astonishing green paper in response to what she perceives to be the threat of global warming.

The first sentence of the opening section of her paper, entitled "Why we need to act", contains seven scientific errors — almost one error for every two words.

Here is the sentence: "Carbon pollution is causing climate change, resulting in higher temperatures, more droughts, rising sea levels and more extreme weather."

And here are the errors.

First, the debate is not about carbon, but human carbon dioxide emissions and their potential effect on climate.

It makes no more sense for Wong to talk about carbon in the atmosphere than it would for her to talk about hydrogen comprising most of Sydney's water supply.

Use of the term carbon in this way is, of course, a deliberate political gambit, derived from the green ecosalvationist vocabulary and intended to convey a subliminal message about "dirty" coal.

Next, carbon dioxide is not a pollutant but a naturally occurring, beneficial trace gas in the atmosphere.

For the past few million years, the Earth has existed in a state of relative carbon dioxide starvation compared with earlier periods.

There is no empirical evidence that levels double or even treble those of today will be harmful, climatically or otherwise.

Indeed, a trebled level is roughly what commercial greenhouse tomato growers aim for to enhance growth.

As a vital element in plant photosynthesis, carbon dioxide is the basis of the planetary food chain — literally the staff of life. Its increase in the atmosphere leads mainly to the greening of the planet.

To label carbon dioxide a "pollutant" is an abuse of language, logic and science.

Third, that enhanced human carbon dioxide emissions are causing dangerous global warming ("carbon pollution is causing climate change") is an interesting and important hypothesis.

Detailed consideration of its truth started with the formation of the UN's Intergovernmental Panel on Climate Change in 1988. Since then, Western nations have spent more than $50 billion on research into the matter.

Despite all the fulminations of the IPCC, 20 years on, the result has been a failure to identify the human climate signal at global (as opposed to local) level.

Accordingly, independent scientists have long since concluded that the most appropriate null hypothesis is that the human global signal lies submerged within natural climate variability. In other words, our interesting initial hypothesis was wrong.

Fourth, the specific claim that carbon dioxide emissions are causing temperature increase is intended to convey the impression that the phase of gentle (and entirely unalarming) global warming that occurred during the late 20th century continues today.

Nothing could be further from the truth, in that all official measures of global temperature show that it peaked in 1998 and has been declining since at least 2002.

And this in the face of an almost 5% increase in atmospheric carbon dioxide since 1998. Spot the problem?

Fifth, sixth and seventh, the statement that human carbon dioxide emissions will cause "more droughts, rising sea levels and more extreme weather" is unbridled nonsense.

Such confident predictions are derived from unvalidated, unsuccessful computer models that even their proponents agree cannot predict the future. Rather, a model projection represents just one preferred, virtual reality future out of the many millions of alternatives that could have been generated.

Complex climate models are in effect sophisticated computer games, and their particular outputs are to a large degree predetermined by programmers' predelictions. It cannot be overemphasised, therefore, that computer climate projections, or scenarios, are not evidence. Nor are they suitable for environmental or political planning.

Moving from virtual reality to real observations and evidence, many of the manifestations of living on a dynamic planet that are cited as evidence for global warming are, at best, circumstantial.

The current rates of sea-level change, for example, fall well within the known natural range of past changes.

Should we adapt to the rise? Of course. Should we try to "stop climate change" to moderate, possibly, the expected sea-level rise? Of course not; we might as well try to stop clouds scudding across the sky.

The first sentence of the "Why we need to act" section of the green paper is followed by five further short paragraphs that are similarly riddled with science misrepresentation and error. In essence, the section reads like a policy manual for green climate activists. It represents a parody of our true knowledge of climate change.

Never has a policy document of such importance been released in Australia that is so profoundly out of touch with known facts of the real world.

It is a matter for national alarm that the Government's advisory channels should be clogged with the rent seekers, special pleaders and green activists who have so obviously misadvised Wong on the content of her green paper on climate change.

Time for some due diligence, Minister.

Professor Bob Carter is a geologist who studies ancient environments and their climate, and is a science adviser to the Australian Climate Science Coalition.

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As the Earth Cools: What Does it mean for the Energy Industry

Vinod K. Dar
www.rightsidenews.com
18 June 2008


The earth warmed strongly between 1915 and 1940, cooled between 1940 and 1975 and then warmed strongly again between 1975 and 1998.  The earth has been cooling in the opening years of this century even as carbon dioxide levels have risen appreciably since 1998.  Many influential people in the industrialized world believe that global warming is a transcendent issue and human activity, especially the activity of the energy complex, is to blame and carbon management, at any cost, is imperative.

A growing number of influential people in the developing world (this includes China, India, Indonesia, Vietnam, as well as Russia) are openly rejecting the idea that human activity has any measurable influence on the planetary climate or even that there is anything unusual or abnormal about the climate at present.  Some of these people, joined by hundreds of scientists in the U.S. and Western Europe advance the idea that sunspot activity (which is cyclical) and the recently discovered (as recent as 1996) PDO (Pacific Decadal Oscillation:  20 to 30 year warming and cooling of the north-central Pacific Ocean) explain the cyclicality of global temperatures.  According to those who hold this view, the planet has entered into a 30 year or so cooling period and carbon dioxide emissions even if they keep growing, cannot prevent this cooling. 

In support they cite NASA's recent study that the global oceans are cooling and expected to cool for several years.  NASA is the leading proponent of man-made global warming. They also quote data from the new Jason oceanographic satellite that the PDO is entering a multi-year cooling period.  Jason is run jointly by NASA and a French team.  Other support for this idea that global cooling not warming, is the planetary future within anyone's strategic planning horizon comes from experiments conducted by the Danish Space Research Institute, which links global climate behavior to variations in the magnetic wind of the sun, which is changeable, driven by sunspot cycles.  Contrary to expectations, the current cycle (Cycle 24) is turning out to be very weak with negligible sunspot activity.

Two scientists at the National Solar Laboratory in Arizona project that sunspots will vanish by 2015, leading to a multi-decade down cycle in solar activity. The last time this happened was in 1645-1715 leading to bitterly cold winters and repeated crop failures (and to Napoleon's defeat in Russia during the summer that never came). Between January 2007 and May 2008 the earth cooled by as much as it had warmed in the past 100 years, according to a meteorologist at the University of Alabama. On May 19, 2008, the Oregon Institute of Science and Medicine released a petition signed by over 30,000 U.S. scientists rejecting claims that global warming is caused by human activity and condemning the Kyoto Protocol for its damage to humanity. This was well received the proponents of the cooling view and condemned by adherents of the warming view.
 
Thus, there are now two belief systems about the climate. A largely Western belief system about steady and maybe catastrophic warming and a rest of the world belief system about impending cooling. The former belief system holds human activity responsible. The latter belief system scoffs at the ability of human beings to influence climate cycles. Belief systems, of course, drive policy and strategy which drive investment flows.
 
Energy industry executives increasingly find themselves caught between these irreconcilable belief systems. In the West, public policy, hence corporate strategy, is shaped by the first belief system. In the leading non-Western nations (NWNs), including Russia, the second belief system is implicitly ascendant despite official adherence (but not commitment) to the first belief system.
 
As food and energy riots grow in Asia, Africa and later in Latin America, the second belief system will go from implicit to explicit; it will no longer be whispered but proclaimed.
 
Cooling will create greater stress on energy, food and health care than warming. This stress can only be relieved by very large increases in energy output. For example, exposure to cold is more dangerous to the fragile old, the infirm, the injured and the ailing. More energy for space heating will be needed. Increasingly, the huge waste in the food supply chain from field to table in much of the world will require tremendous investments in spoilage reduction at every step of the local, regional, national and global food supply chain. Spoilage reduction is energy intensive. So is productivity enhancement via fertilizer, bio-engineered seeds, and water management. For those who hold the second belief system, cooling is a more frightening prospect than warming. The determination of NWNs to accelerate energy and food supply growth will only be strengthened as the second belief system attracts more adherents.
 
Food riots terrify the elites much more than energy riots. Marie Antoinette was beheaded because bread, not wood or coal, was so scarce for the poor. The Roman Emperors provided free bread to a third of the population of Rome, not free wood, because they were very fearful of the hungry and jobless mob.
 
For an increasing number of third world nations civil unrest, including violence, as a result of food and energy deprivation is now the most significant threat to regime continuity. Where the governments are freely or quasi-freely elected the issue can lead to power changing hands at the ballot. Where the regimes are tyrannical, violent regime change becomes increasingly likely. For such regimes generating more electricity and providing affordable cooking and transportation fuel become survival priorities. Carbon based power generation and fuel is about the only significant near to mid term option available to those nations: diesel and coal and to a much lesser extent LNG and piped gas.
 
Energy utility executives will have to conform to the prevailing belief systems in their operating environments irrespective of personal views. The most fervent warming alarmist in India or China will have to be pro-fossil energy and pro-growth if he (or she) is a senior member of the worldwide management team of one of the 100 largest energy companies in the world; conversely, the most convinced skeptic (even a believer in global cooling) will have to be pro-carbon suppression in the U.K. or Japan or U.S. Northeast if he or she is responsible for the management of one of these 100 largest companies. Prevailing public policy and political fashion will determine corporate carbon strategy not the personal convictions of top executives.

The demographically stagnant and economically enervated parts of the world today include the U.S. Northeast and Upper Midwest, the entire EU, Japan and Eastern Canada. The public policies regarding growth and energy development in these parts are remarkably similar: they are against business, against investments in domestic energy supply and for aggressive carbon controls coupled with political support and subsidies for energy efficiency and renewable energy. This is in theory, especially in the U.S. Northeast. In practice, the U.S. Northeast, which fancies itself the global public policy leader, is not even supporting renewables and does a poor job delivering retail energy efficiency. For instance, renewables require extensive land area (or ocean area) for sites, especially wind farms and ethanol facilities and major investments in high voltage transmission. In the U.S. Northeast, large scale siting for any energy facility of any kind is now a regulatory improbability; building significant new gas and electricity transmission is almost impossible.

For the top 100 energy and utility companies, both corporate personality and strategy will have to be schizophrenic and bicameral; this is not global thought, local action but a two-world strategy: two global thoughts, many local actions in complete opposition at times. This is very difficult to achieve and will lead to further industry consolidation. The management ability to be relevant and credible to policy makers, customers, investors and voters that are driven by two opposing belief systems will be at a premium. Companies that somehow manage to be for and against economic growth, for and against carbon suppression, for and against mega coal and nuclear complexes and LNG terminals and oil and gas development, depending on the location and audience, without being rent asunder by the contradictions will do very well indeed. Context will be brand and strategy. Global branding will be almost impossible.
 
Compounding this two world model will be fragmentation and disorder caused by single fuel alliances that form amongst nations that have opposing climate belief systems. For example, on nuclear energy it will be the U.S. and France strongly allied with all important NWNs (especially India, Russia and China) except, of course, when it comes to confronting rogue nations (e.g., Iran). Then it will be pretty much the U.S., U.K. and France on their own. On coal, it will be U.S. and Australia aligned with South Africa, Colombia, Russia, Vietnam, China and India, for instance, with the EU, Japan and Brazil in opposition. On food to fuel it will be the U.S. and EU against Asia, Africa and much of Latin America. On global corporate ownership of fossil energy and uranium resources it will be the U.S., India, Japan, Canada and China against Russia, Central America, Latin America, Australia, Middle East and Indonesia. On issues after issue schizophrenia and expediency will collide. Energy and food nationalism is likely to increase and create even more market and investment distortions.
 
Very large entities with global interests or investments or supply chains, whether they be operating companies, financial and other professional service providers, institutions, advocacy groups or international treaty organizations crave uniform enforceable global standards. These standards reduce transaction costs, increase the benefits from scale and enhance institutional power. In the energy business, global standards that are clear and enforceable for carbon management will not emerge. There may well be some notional or putative global standards but they will be subject to widely varying interpretation and will not be enforceable even on relatively small nations that egregiously violate these standards. The EU and Japan are most vocal about carbon control enforcement but will have no ability at all to enforce anything outside their own domains. China, India and Russia will block any, even feeble or token, attempts at enforcement. They will be supported by many Asian and African countries. The U.S. is not going to alienate any major nation on carbon control enforcement and, indeed, may be incapable of enforcing its own rules within its own borders given its political and legal systems and the growing demographic, economic and cultural divergence between the North and the South in the U.S.
 
Energy and utility executives must conduct conversations with proponents of the two belief systems that differ not only in nature but in scale. For example, in the U.S. Northeast, Upper Midwest and Northern California as well as in most older members of the EU, the conversation is almost entirely about energy efficiency and renewables and sometimes distributed generation. The scale is limited to Megawatts spread over four to eight years. An ambitious, multi-year retail energy efficiency program hopes to achieve 500 MW of generation avoidance (if all goes well) at the end of several years. This is met with giddy press releases and laudatory statements from governors, regulators and advocacy groups. Renewable energy projects in the range of 20 to 200 MW get much press attention. Modest extensions to the natural gas and electric transmission grids are touted as bold enhancements to the regional energy infrastructure while installing a few million smart meters over five years is considered as "a major leap in combating global warming, increasing energy security and controlling customer energy bills".

The further south executives go in the U.S. the bigger and more expansive the discussion about energy. The conversation has the obligatory opening statements about energy efficiency and carbon control but soon shifts to building extensive gas pipeline and LNG systems; major expansion of the transmission grid; generation plants in the 800 MW to 2 GW range; renewable energy projects three to ten times the size of those considered dramatic in, say, New York, Massachusetts or Maryland; coal and nuclear as a vital part of the generation mix; and, yes, about opening more coal mines and drilling for more oil and gas especially in shale formations and in deeper state waters. The scale of the discussion shifts from hundreds of millions of dollars over several years to billions of dollars over a much shorter time horizon. Similar conversations also occur in the RockyMountain and Northern Great Plain states. Moreover, In the South, Southwest and Mountain states it is generally understood that the biggest constraint on scaling renewable generation is the transmission grid, particularly for wind and solar farms. This is not understood, apparently in other parts of the U.S. especially the Northeast.
It is in Asia, the oil producing Middle East and Africa that the conversations really scale in ambition, widen in scope and compress in time horizons. The conversations jump from Megawatts to Gigawatts, from millions of cubic feet of gas and thousands of barrels of oil to billions of cubic feet and hundreds of thousands of barrels, from billions of dollars to scores of billions of dollars, from eight to ten years to 2 to 5 years. What policy makers want to accomplish in 10 years in the U.S. Northeast, policy makers want to deliver in 10 months in a growing number of NWNs. Without much doubt the largest energy, utility, biofuels and petrochemical projects, the largest water purification and treatment plants, gas and electric grids, surface and marine transportation complexes and systems, perhaps even wind and solar farms, will be built in Asia in the years ahead. Inevitably, the biggest and most sophisticated energy and utility financing, risk management and trading operations will migrate to Asia although not in the next 10 years.
 
Energy and utility executives must get accustomed to increasingly schizophrenic conversations. They will need to put on and take off belief systems as they conduct or seek businesses in different parts of the world, even in different parts of the U.S. Executives will need to look equally sincere and competent in suits of white, gray and black. There will not be much to gain and there may be much to lose in trying to mediate between the two belief systems. The fanatical worship of flawed climate and planetary models is a primitive idolatry that makes civil communication across the two antagonistic belief systems impossible.
 
The ability of the West to act unilaterally on carbon management is quite limited. The U.S. and Japan will not tell Asia and Africa to choose poverty, disease, hunger and illiteracy over electricity. Europe may, but Europe's hard, soft and moral power are now negligible. Europe has no ability at all to make credible military threats; its soft power compares unfavorably with a wet noodle; its moral authority is imperceptible given that it will miss its own Kyoto targets by a considerable margin.
 
If U.S. and European banks refuse to finance coal plants in the Third World, Russian, Chinese, South Korean, Brazilian, Middle Eastern and Japanese banks will. If the U.S., Canada and EU members withhold coal and nuclear technology, the Russians, South Koreans and Chinese will be delighted to take over the markets for coal and nuclear generation globally and, of course, France will sell nuclear technology to anyone, at any time. For instance, China and Pakistan have agreed to establish a corporation to build coal and nuclear plants in Pakistan. China will expedite the delivery of 6 nuclear power plants to Pakistan which is also building a full cycle nuclear fuel and nuclear power components complex. Russia is interested in helping Vietnam build its first nuclear plant. In less than twenty years, Vietnam plans to bring online a dozen nuclear generators of 1 GW each. Russia is currently building nuclear reactors in Iran, Bulgaria and India. Russia wants to build and finance a nuclear plan in Bangladesh, as do France and South Korea.

Even in the Middle East, nuclear projects are advancing and coal generation is becoming the favored option instead of natural gas or diesel, as electricity demand is expected to triple in the next decade in the fast growing oil producing countries. Indeed, the major oil exporters of the Persian Gulf are planning substantial imports of coal. The logical sources are South Africa and Australia. The Persian Gulf countries will have no hesitation in outbidding other coal buyers for these supplies, causing coal prices to spike again in 5 or 6 years. Finally, even if the U.S. and Canada built no more coal plants and Western Europe dismantled half its coal generators, the world would scarcely notice. If it did notice, it would be to buy up European and North American EPC and equipment companies and coal reserves. The less coal the U.S. and Western Europe burn, the more there will be for NWNs to burn in plants that are less stringent about emissions control.
 
In fact, coal use for power generation is actually increasing in Western Europe, especially in Germany and Italy. The latter expects to see coal's share of power generation more than double in 10 to 15 years, rising to a third of all generation. Italy plans to convert its oil fired generation to coal, not natural gas. The U.S., of course, continues to deploy coal fired generation plants, press hysteria to the contrary. Currently, almost four dozen coal projects (23 GW) are progressing in the U.S. (i.e., fully permitted) of which half are under construction. Another 5 dozen are in the early stages of development. If only a dozen of these actually get built, they will represent another 6 to 8 GW of new capacity. Coal use in both Western Europe and the U.S. is increasing and will continue to rise despite the "death of coal" slogans.
Carbon control is what the West talks about. Carbon consumption is what the NWNs seek. Electricity efficiency and avoided generation is what the West talks about. Electricity supply is what nations big and small outside the West seek. Transportation efficiency is what the West talks about. Increased, greatly increased, mechanized mobility is what the nations of Asia, Africa, Eastern Europe and Latin America seek. The West wants to orate about wind, solar, geothermal and wave energy. The rest of the world wants more oil and natural gas, coal and uranium. The West worries about carbon control. The rest of the world, especially Asia, worries greatly about energy and food control. Asia is increasingly focused on resource control, which is now a major objective of foreign policy.

Global natural resources are very unevenly distributed. Just as the world's crude and natural gas reserves concentrated so too are the world's uranium and coal reserves.

There are 439 nuclear power reactors in the world today operating in 31 countries. There are 34 reactors under construction in 11 nations but concentrated in China, India, South Korea, Japan and Russia. About 90 additional reactors are planned and at least 200 more have been proposed. The U.S. had over 100 reactors including 47 startups in the 1980s. While no new reactor is even close to construction in the U.S., at least 20 have been proposed. China and India have the most ambitious reactor construction plans in the world. China, for example, aspires to build about 100 more reactors over the next two decades. Within a decade it is expected that the world will start up one new nuclear reactor every five to six days, compared with one every 17 days in the 1980s. Possibly within 15 years, 60 countries will have nuclear reactors.
 
Like oil and gas, there is plenty of uranium in the world but the low cost resource is heavily concentrated. Half the world's low cost uranium reserves are in just three countries: Australia, Kazakhstan and Canada. Australia, with a quarter of the world's known low cost uranium resource, is a dominant source. In this regard, Australia is as significant as Saudi Arabia as a source of low cost raw energy resources. Higher cost uranium resources are more dispersed and there are many uranium exploration and production opportunities worldwide just as there are for oil and gas. As is often the case, the issue is access and political risk not abundance, technology or capital. At present, India and China have very little in the way of low cost uranium reserves; the EU, Japan and South Korea have none. The U.S. is not badly positioned. Within the U.S., Wyoming and New Mexico are easily the leading uranium resource states. The exploration potential throughout the U.S. Southwest and Rocky Mountains is considerable (as it is for oil, gas and coal). Uranium E&P is poised to see substantial growth in the next decade all over the world except Europe. Big Uranium is on the threshold of emerging to join Big Oil and Big Gas and Big Coal.
 
There will also be a boom in nuclear fuel processing facilities, once the current supply of decommissioned nuclear war heads is used up within a few years. Worldwide, capital flows into the uranium ore to nuclear busbar value chain will be immense over the next thirty years. This will be true whether people believe the world is warming or cooling. Global electricity needs are growing so rapidly that every energy scenario includes a major increase in nuclear power generation, especially in Asia.

Nuclear power complexes can be constructed on a scale that no other energy source can match and they are not very land intensive. The new generation of small/medium sized (200 to 300 MW) reactors can be put in many more places than a comparable coal facility, including near or even in major metro markets. Quite small to very large reactor complexes are all feasible. Russia's small (70 MW) floating nuclear reactors (around $200 million a piece) are attracting growing attention. They are designed to be mobile and to serve water purification stations or remote but large natural gas fields, for example. Many more applications will be found. They need refueling and repair only once every 12 yeas. There may well be a market for hundreds of such reactors worldwide, in dozens of countries.

Low to medium cost coal resources are just as concentrated as uranium, actually even more so. The six largest coal resource and reserve nations are the U.S., Russia, China, India, Australia and South Africa. Together, these six account for over 85 percent of the global coal reserve and resource base. The exploration and production potential in all six nations is considerable. The U.S. with 30% of the world's proven coal reserves is even more dominant in its strategic position than Saudi Arabia is in oil or Russia in gas or Australia in uranium. The U.S. and Russia account for almost half the world's coal reserves. China and India together account for over a fifth and Australia and South Africa for about a sixth. OPEC controls a much lower share of world crude capacity than the big 6 coal nations do of coal capacity.

China is the world's largest producer and consumer of coal while Australia is, by far, the world's biggest exporter. China is turning into a major importer, as is India. Indonesia, Colombia and Canada are important exporters. U.S. coal exports are rising steadily but so are imports. Within the U.S., Illinois, Montana and Wyoming are the big 3 in known recoverable coal reserves, easily accounting for a majority of known U.S. coal reserves. Interestingly, Wyoming is now the second largest natural gas producer in the U.S. Wyoming is on the verge of a resource based prosperity boom that may well propel that state to the highest per capita income in the U.S. thanks to the energy boom in the Third World. North Dakota (the Bakken oil formation) and Montana may also attain per capital incomes higher than New York, Connecticut or even the Washington, DC suburbs.
 
Worldwide coal fired generation may well double in the next 25 or so years propelling a huge increase in coal use; steel making capacity will also grow rapidly impelling even more growth in coal use An astonishing three quarters of the world's growth in coal use is expected to come from just 2 nations: China and India. China alone expects to add almost 500 GW of net additional coal fired generation in the next 2 decades or so, while India plans to deploy another net 100 GW of coal fired generation. In addition, China is planning to build several CTL plants over the next 20 years further increasing coal consumption. The anticipated increases alone in the coal fired generating capacity of China and India over the next 25 years are almost twice the existing coal fired generating capacity in the U.S. Roughly once a week, for the next 25 years, India and China will add a coal generator. About every 15 months China and India together will add enough coal generating capacity to equal the entire coal powered generation in the U.K. (about a third of U.K. power generation). If the U.K. shut down every coal fired plant it would be made up by the additions in China and India within 5 seasons. For the global coal and coal services industry the golden age has begun. Big Coal will have a decidedly Chinese accent in the decades ahead and Chinese and Indian coal companies will have global operations.

As important as coal, uranium, oil and gas is to the global energy industry, so is iron ore. There is no energy facility and no energy using infrastructure of consequence that does not use steel. Every electric power generation facility from coal and nuclear to wind farms and every energy producing facility from oil and gas drilling platforms to coal mines to refineries use large amounts of steel. Thus, iron ore is tightly coupled to global economic and energy growth. The world needs energy and lots of it to make steel but energy needs steel and lots of it along its entire value chain. Iron ore is, of course, widely found in the world but very large reserves and production are surprisingly concentrated. The U.S. is not a major iron producer. The biggest reserves, by iron content, are found in Russia, Australia, Ukraine and Brazil. The big 4 account for almost 60% of the world's known reserves by iron content. Once again, Australia is a major factor in this resource. Chinese imports are now driving the world price of iron ore and, hence, steel, greatly enriching Australian and Brazilian mining companies. Indian and Chinese companies are looking at investment, joint venture and acquisition opportunities all over the world given how vital access to iron ore is to their national growth ambitions which depend on steel, coal and nuclear.

Belief systems shape national and regional strategies and investment decisions, which accumulate to define and redefine global, superregional, national and subnational industry structures. From this will emerge new and different winners and losers in terms of influence, wealth and income. Among the nations of the West the losers in the new global energy and utility industry are likely to be Western Europe, Japan, Eastern Canada and parts of the U.S. Within the U.S. the large or larger states or substates most likely to lose are New York, Michigan, Illinois, New Jersey, Massachusetts and Northern California.
 
Carbon control subsidies and taxes are the current political fashion in the U.S. They may not endure (certainly no legislation or regulatory scheme will survive intact for more than one election cycle) once consumers see electric bills jump yet again. As long as they endure, vast sums will be transferred from tax payers to privileged energy projects and industries. The state best positioned, by far, to monetize these subsidies is Texas. If there is federal money for clean coal demonstration projects Texas will capture a disproportionate share. Wind is subsidized so Texas is now the leading wind power producer in the U.S. and will expand its lead in the next few years. Of course, this means that urban tax payers in New England are transferring money to rural Texans, a fact not lost on Texas; indeed, much enjoyed by them. If there are large subsidies for cellulosic ethanol, Texas will be certain to build demonstration projects. Well over half of all federal subsidies for the next generation of nuclear plants will be captured by projects in Texas. If there are large subsidies for hydrogen, ocean energy and solar arrays spread over thousands of acres, Texas will be sure to be first in line to build the demonstration facilities. The same is true for carbon capture subsidies and projects.
 
If carbon capture turns into a commercial proposition it will be the big oil companies that actually prove the technology and the oil and gas fields of Texas will be waiting to lead the way in carbon sequestration. Washington DC sows, Texas reaps while New York weeps. Next to Texas is Wyoming in its favorable position. Wyoming has oil, gas, coal, but also uranium, wind resources and many carbon capture sites. It too will harvest the manna of federal subsidies for fashionable but expensive forms of energy and carbon management. Texas and Wyoming will continue to enjoy rates of income growth well above the U.S. average and far above the rates in the U.S. Northeast, Midwest and California, irrespective of which belief system prevails, for years to come. The warming belief system, however, will be particularly lucrative for both states.
 
The Western nation best positioned to benefit, by far, from the golden age of coal and nuclear generation and LNG trade in Asia is Australia. China, India, Japan and South Korea all see Australia as vital to national energy security and all are competing to obtain Australia's favor. The energy supply leverage that Australia will exert on those 4 Asian nations will rival and perhaps exceed the leverage exerted by Saudi Arabia. Australia was recently granted sovereignty over a very large area of the seabed (about 70 times the size of Germany) that significantly expanded the size of Australian jurisdiction over the continental shelf. Industry speculation is that this area may well have large oil and gas resources. Adding to its leverage over Asia is its role as a major source of iron ore to supply the very large and rapidly growing steel industries of China and India and the steel complexes of South Korea and Japan. Australia is to Asia/Pacific as Wyoming is to the U.S.: demographically tiny but strategically vital and about to become very rich indeed, thanks to billions of poor Asians and Africans who no longer want to stay that way.
 
The world has neither the capacity nor the will to change the trajectory of the global climate whether its warming, cooling or oscillating. Both climate belief systems are a form of intellectual and emotional self indulgence by elites. They are a distraction from reality, which is coping with and benefiting from whatever change in climate occurs. Corporate executives who ostentatiously bet their company's entire strategy and reputation on carbon control will not, at the end, fare well. They are much better off creating strategies, products and services that help people adapt to the weather, not change it. Contingency planning should entail strategic responses to a warming globe, a cooling globe and a globe whose climate reverberates with laughter at human hubris. Human beings are miserable at forecasting but they are pretty good at improvising and adapting. Why not focus on the strength rather than invest so heavily in the weakness?
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Vinod K. Dar is an energy industry professional and has published articles for electric and gas industry journals and trade press for more than 25 years. He is the Managing Director of DAR & COMPANY, founded in 1990. He has operating experience in gas and electric trading, marketing, retailing and merchant generation, and has been CEO of two energy trading and marketing companies. Mr Dar has served on the Boards of five publicly traded energy and consulting firms.

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For your edification...........You will not hear about this in the newspapers...........

https://www.houstonenergyanalyst.com/Global_Warming.html

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Global Cooling?

Global Warming Out, Global Cooling In:

Four  scientists, four scenarios, four more or less similar conclusions without actually saying it outright -- the global warming trend is done, and a cooling trend is about to kick in. The implication: Future energy price response is likely to be significant.

Late last month, some leading climatologists and meteorologists met in New York at the Energy Business Watch Climate and Hurricane Forum. The theme of the forum strongly suggested that a period of global cooling is about emerge, though possible concerns for a political backlash kept it from being spelled out.

However, the message was loud and clear, a cyclical global warming trend may be coming to an end for a variety of reasons, and a new cooling cycle could impact the energy markets in a big way.

Words like "highly possible," "likely" or "reasonably convincing" about what may soon occur were used frequently. Then there were other words like "mass pattern shift" and "wholesale change in anomalies" and "changes in global circulation."

Noted presenters, such as William Gray, Harry van Loon, Rol Madden and Dave Melita, signaled in the strongest terms that huge climate changes are afoot. Each weather guru, from a different angle, suggested that global warming is part of a cycle that is nearing an end. All agreed the earth is in a warm cycle right now, and has been for a while, but that is about to change significantly.

However, amid all of the highly suggestive rhetoric, none of the weather and climate pundits said outright that a global cooling trend is about to replace the global warming trend in a shift that could begin as early as next year.

Van Loon spoke about his theories of solar storms and how, combined with, or because of these storms, the Earth has been on a relative roller coaster of climate cycles. For the past 250 years, he said, global climate highs and lows have followed the broad pattern of low and high solar activity. And shorter 11-year sunspot cycles are even more easily correlated to global temperatures.

It was cooler from 1883 to 1928 when there was low solar activity, he said, and it has been warmer since 1947 with increased solar activity.

 "We are on our way out of the latest (warming) cycle, and are headed for a new cycle of low (solar) activity," van Loon said. "There is a change coming. We may see 180-degree changes in anomalies during high and low sunspot periods. There were three global climate changes in the last century, there is a change coming now."

Meanwhile, Madden noted that while temperature forecasts longer than one to two weeks out has improved, "what has really gotten much better is climate forecasting … predicting the change in the mean," he said.

And the drivers impacting climate suggest a shift to cooler sea surface temperatures, he said.

Perhaps the best known speaker was Colorado State University's Gray, founder of the school's famed hurricane research team. Gray spoke about multi-decade periods of warming and cooling and how global climate flux has been the norm for as long as there have been records.

Gray has taken quite a bit of political heat for insistence that global warming is not a man-made condition. Man-made carbon dioxide (CO2) is negligible, he said, compared to the amount of CO2 Mother Nature makes and disposes of each day or century.

"We've reached the top of the heat cycle," he said. "The next 10 years will be hardly any warmer than the last 10 years."

Finally, climate scientist Melita spoke of a new phase in the Pacific Decadal Oscillation.

"I'm looking at a new, cold-negative phase, though it won't effect this summer, fall or winter '08," he said.

Conference host, analyst and forecaster Andy Weissman closed the conference by addressing how natural gas prices and policy debates would be impacted by a possible climate shift  that could leave the market short gas.

This would be especially problematic if gas use for power generation were substantially increased at the expense of better alternatives.

"If we're about to shift into another natural climate cycle, we can't do it without coal-fired generation. So the policy debate has to change," he said. "Coal has to be back on the table if we're ever going to meet our energy needs."

As for natural gas: "Next year, may see a bit of price softening," Weissman said. "After that, fogetaboutit!".

Alan Lammey, Houston