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Mitchell J.V.,Chatham House | Mitchell B.,12 Clanricarde Gardens
Energy Policy | Year: 2014

The structure of the oil and gas industry is being disrupted by technical developments which increase supply and reduce demand, the reversal of growth in demand in transport in OECD countries and less dependence of the US and Europe on Middle East oil supplies. Upstream, expectations of scarcity are changing to expectations that, at current prices, national oil companies face increasing competition from public listed companies which use diverse advanced technologies to develop reserves in areas outside NOC control. The public listed companies also have the opportunity to bring specialized technology to match NOC needs. Downstream oil markets are dividing into the OECD markets where growth has been reversed and a non-OECD markets where it continues. This is a challenge for the major public listed companies whose downstream operations are concentrated in the OECD. They may respond by focusing on local advantages or by separating the downstream from their upstream businesses. The natural gas industry is being transformed by new discoveries, particularly in the US, but regional markets remain separated by transport costs and pricing systems. The challenge will be to find prices which will grow both the supply and demand in each region. © 2013 Elsevier Ltd.

Alyousef Y.,King Abdulaziz City for Science and Technology | Stevens P.,Chatham House
Energy Policy | Year: 2011

The issue of subsidies on domestic energy prices has moved up the policy agenda, most recently as a result of the G20 commitment in September 2009 to phase out such subsidies. However, what constitutes a "subsidy" is complex and controversial. The IEA in its last World Energy Outlook claimed that Saudi Arabia was second in the world in terms of its levels of subsidy on domestic energy prices. However, because Saudi Arabia is a price maker in the international oil market, the methodology used by the IEA is seriously flawed. This paper explains the problems with the methodology for computing subsidies and explains the correct method in the case of Saudi Arabia. It then attempts to measure the levels of subsidy in Saudi Arabia using this methodology. However, while it converts the IEA's "subsidy" of $23 billion into a net "profit" of $5.7 billion, it goes on to point out that the current low price regime is causing problems for Saudi Arabia. © 2011 Elsevier Ltd.

Agency: GTR | Branch: AHRC | Program: | Phase: Research Grant | Award Amount: 410.94K | Year: 2012

This proposal seeks to build on the achievements of the Centre for East European Language-Based Area Studies (CEELBAS) in building UK capacity to understand and respond to developments in the strategically-important region of Central and Eastern Europe and Russia. The three development pathways outlined here are designed to enhance impact, particularly through interaction and engagement with non-academic communities, with a specific focus on the Humanities and Language elements of CEELBAS research and training (although the Centre will promote interdisciplinarity and will explore other funding sources to continue specifically social science-based activities). Phase 2 of CEELBAS offers a significant opportunity to underline and showcase the vital contributions made by Humanities and Language expertise in addressing major research and policy challenges in areas such as the changing global order, migration and mobility, security and stability, health and wellbeing, and inter-cultural relations. A major goal in the new phase of the project will be to clarify and promote the conceptual and practical (economic, political, social) impacts beyond academe that have been and will be generated by research in the fields of History and Culture. Drawing on networks and partnerships established since 2006, and developing new ones, the first pathway aims to create sustainable knowledge exchange relationships with public, private and third-sector organisations through both collaborative events and, where feasible, internships and placements. Efforts will be made to demonstrate the mutual benefits of interaction and exchange between researchers and external partners. In order to achieve enhanced impacts, the project will disseminate the knowledge produced by leading edge research beyond academic institutions and environments, whilst giving researchers increased access to the knowledge, perspectives and feedback of user organisations. The second pathway centres on international research networks and exchanges, through which the numerous international contacts and partnerships at CEELBAS universities will be developed to enable UK and international researchers to collaborate and share expertise, including in areas of knowledge exchange and user engagement. This aims to raise the international profile and connectedness of UK research, helping to create a vibrant research environment in which different insights and approaches are shared and applied across borders. The third pathway aims to build capacity in research and language skills training networks for postgraduates. This includes training for knowledge exchange, public and media engagement, and interaction with non-academic audiences. Building on successful CEELBAS training initiatives developed since 2006, this pathway seeks to put in place the resources and infrastructure to deliver sustainable, cost-effective and innovative provision in advanced language and research skills. The pathway activities aim to develop a template for best practice that will be applicable beyond the East European area studies research community (and its users), particularly, for example, in supporting future LBAS development for other regions, such as South Asia and Latin America. More broadly, CEELBAS aims to show innovation and leadership in promoting research excellence and knowledge exchange, and in providing training and career opportunities for postgraduate and early-career researchers. This will help to ensure that Humanities and language-based expertise at UK universities continues to play a central role in addressing issues of strategic national importance and in advancing international cooperation and intercultural communication and exchange.

Climate negotiators should not abandon hope of limiting global temperatures rises to below 1.5 degrees even if targets on the table for Paris are less ambitious, they said. Their comments came three days before the United Nations publishes a report expected to show current plans - Intended Nationally Determined Contributions (INDCs) - on the table from over 150 countries. U.N. climate chief Christiana Figueres said this week the plans would only limit the rise to just below 3 degrees. “We are hopeful that if we are responsive to science we will aim for a temperature rise that is safest for all the world’s citizens. None of us are dispensable,” Giza Gaspar Martins, chair of the Least Developed Countries group said on the sidelines of a Chatham House event on Tuesday. A three degree rise would  increase the risk of strong sea level rise from, for example Antarctica, or the collapse of marine ecosystems, according to the latest report from the U.N. Intergovernmental Panel on Climate Change (IPCC). Scientists say the rise must be kept below 2 degrees to stave off the worst effects of climate change such as drought and flooding but this could still lead to an increase in sea levels, threatening their existence of many low-lying islands states. “The INDCs are not enough to say with any confidence my country will be saved,” said Tony de Brum, foreign minister for the Marshall Islands, one of the nations most threatened by rising sea levels at the event. Britain's parliamentary under secretary for climate change, Nicholas Bourne said at the event the Paris agreement should contain provisions for a review periods, allowing countries to put forward more ambitious plans every few years. Negotiators from more than 190 countries will meet in Paris from November 30 to thrash out a United Nations climate deal.

News Article | April 19, 2016
Site: www.theenergycollective.com

Olkiluoto nuclear power plant, Finland (photo Foro Nuclear) The European Commission estimates that nearly three quarters of a trillion Euros will need to be spent on nuclear power over the next decades to enable it to maintain a market share of about one-fifth of the EU electricity mix in 2050. At the same time it notes that the cost of building new nuclear plants has risen 50% in the last decade. Critics say the Commission is too optimistic and has not analysed what the advent of renewables and changing electricity market mean for nuclear power. The cost of building a new nuclear plant in Europe is about 50% more than nearly a decade ago and rising, confirms the European Commission in a new policy paper on nuclear investments. Yet it expects a substantial nuclear new-build programme worth €350-500 billion to maintain 95-105 GW of nuclear in Europe in the long-term. That would correspond to an electricity market share of 17-21% in 2050, down from 27% (120 GW) today. The Commission also estimates that €50 billion will need to be invested in lifetime extensions and another €250 billion spent on decommissioning and waste disposal out to 2050, for nuclear to play its part in the energy mix. The Commission expects some 2-3 new reactors a year from now to 2050. The current build rate is more like 2-3 a decade These are the headline figures from the “PINC” or “Communication for a Nuclear Illustrative Programme” that was released by the Commission in Brussels on 4 April. Despite it being the current Commission’s first attempt to describe the future of nuclear power, there was no press conference, just a quiet, off-the-record technical briefing for journalists. Historical trend of cost escalation The policy paper as a whole closely resembles a draft version that Energy Post got the scoop on in early February. The overall message is clear: nuclear is getting more expensive. The cost of new-build today is 47% higher than in 2008, when the last PINC was produced, a European Commission source said. As we reported back in February, there is a “historical trend of cost escalation”, reports the Commission in the PINC. Reactors have got bigger, driving up construction times, and new safety standards impose new costs. Still, the Commission envisages a roughly 20% share for nuclear in 2050: Source: PINC. LTO = long-term operation, which means operation beyond an established time frame, e.g. of the existing licence. “As we have tended to see in earlier editions of this paper, it paints a very optimistic view of the sector,” says Antony Froggatt, who works on energy policy at Exeter University and Chatham House in the UK. He is one of the authors of the annual World Nuclear Industry Status report, which is critical of the industry. Froggatt points out that the average new-build cost projections used by the Commission to calculate its €350-€500 billon investment range are below real-world cost projections today, even the projections in the PINC itself. Thus, the Commission uses estimates of €3807-€5379/kWe in “overnight construction costs” for different reactors, but at the same time recognises that  Hinkley Point C in the UK is expected to cost €6755 per kWe. (See pages 11-12 of the PINC.) Flamanville in France is also off the scale (€6287/kWe) and every other reactor under construction is at the upper end of it. Effort at realism What could be interpreted as an effort at realism is the Commission’s decision to opt for the low end of its €350-500 billion investment estimate for new-build out to 2050 in its political communication. It now talks about €350-450 billion for 95 GW rather than €450-500 billion for 105 GW as it did in the leaked draft. It includes a stark warning that “these investments will depend of the evolution of the market environment and on the ability of the industry to reduce costs, with current constructions such as Flamanville and Olkiluoto experiencing significant delays and cost overruns that undermines the competitiveness of the EU nuclear power industry”. In contrast to the Commission’s caution, Foratom, representing the European nuclear industry, believes that the EU should plan to spend some €500-800 billion on at least 100 new reactors out to 2050. Nuclear is a provider of baseload power and there is less and less of that in Europe Who will build all these reactors and where? Traditional builders such as EDF are in dire straits, with unfinished projects and financial troubles. Yet the Commission expects some 2-3 new reactors a year from now to 2050. The current build rate is more like 2-3 a decade. There are just 4 reactors under construction (in Finland, France and two in Slovakia) and another 7 planned, including 2 at Hinkley point C in the UK. But Jean-Pol Poncelet, Director General at Foratom, is optimistic: “We did it in the past and even more than 2 or 3 a year,” says. “In the 70s and 80s we built more than 150 reactors across Europe.” He continues: I do not think there are industrial hurdles as such. What we miss is a [political] vision.” In the PINC, Poncelet expected the Commission to take a stronger stance on the future of nuclear power in the low-carbon economy. “We were expecting targets”. Instead, the Commission “just refers to figures provided by member states”. Market design challenge  Although the PINC notes that “evolution of the market environment” is crucial to the business case for new nuclear, it does not explore what this means in practice. The PINC does not address market design and the effect of a growing share of renewables because these issues are dealt with under other parts of the Energy Union, explained a Commission source. “Lifetime extensions are the cheapest way to produce electricity” The problem is that the more renewables, the fewer hours nuclear plants will run and the more expensive they become. Nuclear is a provider of baseload power and there is less and less of that in Europe. There will be no more baseload at all in Germany in 2030, says Dimitri Pescia from the German think tank Agora Energiewende. Instead, there will be days where the whole load is covered by wind and solar PV. He is unsure about whether and how the Commission has accounted for this effect of renewables on the business case for nuclear. “We would have expected their view on the market,” concurs Poncelet. “Are we really evolving towards something without any baseload? Nuclear is high capex, like renewables. We need to know where we are going.” Froggat wonders: “How does nuclear at 20% fit with renewables at 60 or 70%?” He anticipates the need for a lot of storage. Pescia argues that today’s electricity market with its very low prices makes neither new nuclear nor lifetime extensions a viable commercial proposition. He expects that France, where half of Europe’s nuclear fleet is, will propose Contracts for Difference (the UK public support model), capacity payments or long-term contracts of some sort, for both. In the PINC, the Commission expects France and the UK together to account for about two-thirds of the 80 GW of new-build it expects to be added by 2050. France’s €55-billion “Grand Carenage” programme is to upgrade its existing 58-reactor fleet. Note that the PINC does assume that France will see through its objective to reduce the contribution of nuclear to power production to 50% by 2025 (down from 75% today). Nuclear plants are 64% of the way through their lives, but have only amassed 52% of the funds needed to pay for decommissioning and disposal Pescia believes that nuclear operators will need support. “Pro-nuclear parties were always very careful because asking for support would completely break the idea that nuclear is competitive, but I really do not see any other choice,” he says. One alternative would be a carbon price that dramatically pushes up the electricity price, but no one expects the EU Emission Trading Scheme (ETS) to deliver that any time soon. “Lifetime extensions are the cheapest way to produce electricity,” says Poncelet. Maybe so, but they still need tens of billions in upfront investment. The €55-billion EDF estimate for France suggests that the PINC’s €50-billion estimate for the whole of Europe is on the low side, to say the least. Most experts think it unlikely that plants would be kept open for longer specifically to raise more money for end-of-life extensions. Yet if lifetime extensions do not materialise, will nuclear operators be able to plug the current gap in decommissioning and waste disposal funds? Normally these funds are accumulated throughout a plant’s natural lifetime. State aid bonanza The problem revealed by the PINC is that nuclear plants are 64% of the way through their lives, but have only amassed 52% of the funds needed to pay for decommissioning and disposal. “There is a huge problem of missing money especially for decommissioning and waste management,” says Green MEP Claude Turmes. The Commission puts the gap at €120 billion out to 2050. The Greens believe it is at least twice as big. A Commission source admits that decommissioning estimates are higher than they were in 2008, when the last PINC was produced. It is noteworthy that Germany, which is the only European country with actual experience of decommissioning, has one of the highest estimated costs at €1.1 billion per unit (vs. €300 million per unit for France for example). Turmes says the Commission has an obligation to go after the missing funds: “The European Commission now has a duty under the EU Treaty to follow up on the polluter pays principle.” His argument is that nuclear today has an unfair advantage in the market because its full life cycle costs are not internalised. Independent expert Mark Johnston argues that this automatically makes it a state aid issue because “if the operator can’t pay [at the end of the day], then the state will.” The state is providing an implicit guarantee to nuclear operators. Turmes says: “Personally, I think the PINC provides enough ground for a state aid investigation. If the money is missing, then the question is, ‘who steps in?’ The Commission is doing an investigation into capacity payments. Well, this is a much bigger market distortion.” “DG Competition can use this – and the Euratom Treaty – to argue that nuclear power is a common EU objective” In Germany, this debate is very much alive right now. The big question is whether utilities will be able to honour their nuclear end-of-life commitments when they are financially so badly off. But for state aid expert Maria Kleis at ClientEarth, a group of activist environmental lawyers, the PINC itself is the problem. “It says we will have nuclear for a long time to come. DG Competition can use this – and the Euratom Treaty – to argue that nuclear power is a common EU objective.” This would render it eligible for state aid. She explains that only if the EU explicitly opposes something is it banned from state aid. In all other cases, the proposed aid will be evaluated on the grounds of whether it is necessary, proportional etc. Kleis also notes that the EU has state aid guidelines for environmental protection and energy that exist precisely to make sure the polluter pays. With this logic, the Commission could consider state aid for decommissioning on the grounds that companies need an extra push to fully clean up. For Johnston, the PINC is proof that the Commission’s non-binding recommendation on decommissioning and waste management funds from ten years ago has “failed”. He says: “If member states had followed that, there wouldn’t be a funding gap or the Commission would be able to say the gap is on its way to being closed.” Long road ahead Despite all the issues it raises, this is the first PINC to include any estimate at all of decommissioning and waste disposal costs. “We do not claim these are the final figures,” emphasised a Commission source. The Commission will strive to collect more data from member states on both investments and costs in future. But it stopped short of promising to verify everything it gets. “Renewables are lower cost alternatives in many part of Europe already today” It is also the first PINC with an explicit focus on safety. This is further justification for introducing the decommissioning and waste disposal figures. “The absence of sufficient post-closure funds is a safety issue because if there’s no money, the necessary measures [for safe decommissioning and waste disposal] cannot be paid for,” points out Johnston. A Commission source said that nuclear liability, introduced as a priority for EU action by previous EU energy commissioner Günther Oettinger, has been put on the backburner. “We prefer for the moment to focus on safety” he said by way of explanation. Nuclear power faces a challenging future in Europe. For Pescia, the PINC brings “useful information on the costs and investment needs in the nuclear industry. It can also be seen as a normative contribution to value how much it will cost to keep 100 GW of nuclear in the system in the long term.” But he adds: “I think renewables are likely to be cheaper.” Pescia cites the results of an auction in Germany earlier in April, which put the cost of large-scale PV at about 7.4€c/kWh. Wind costs can be as low as 6€c/kWh in the North of Germany, he continues. Taking the PINC’s construction and financing cost estimates for nuclear projects under development in Europe leads to a levelised cost of electricity for nuclear of 7.5-11€c/kWh. He concludes: “Renewables are lower cost alternatives in many part of Europe already today and further cost decreases are expected.” Source: PINC  by Sonja van Renssen Original Post

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