Tuesday, May 29, 2012

Death by a thousand regulations: Britain's new Energy Bill

The Bill is designed primarily to implement the government’s proposed electricity market reforms (EMR) (which were discussed in previous Oxford Energy Comments

Return of the P-word in July 2011 and Back to the Future of December 2011

It contains provisions to implement Contracts for Differences (CfDs), the Capacity Market and so-called Investment Instruments, which are intended to prevent delays in investment as the other measures are being developed.

What is noteworthy in the Bill is that despite the words “contract” and “market”, all these provisions are designed around the same pattern – a power for the Secretary of State to make regulations by means of which obligations would be imposed on electricity generators and all suppliers. In other words, what will underpin both decarbonisation and security of supply in the future electricity industry will not be a market or private contracts but a complex set of government regulations – an ironic outcome for a process originally described as one of “deregulation”.

That is, however, deliberate. The government believes that the risks of investment (and along with them required rates of return) would otherwise be too high to be acceptable to investors and consumers; the regulated approach is designed to reduce risks and costs. But it also entails a massive and unprecedented degree of centralisation and detailed decision-making by the government.

For instance, the regulations on CfDs can specify:

* The means by which electricity is to be generated

* Generating capacity

* Plant location

* Location of supply

* Duration of the CfD

* Requirements to enter into agreements with third parties

* Setting the strike price

* Setting the market reference price

* Setting maximum overall costs

* Penalties, enforcement and many other administrative matters.

Similar provisions apply to the other instruments, and it is this complex web of regulation which will govern the future operation of the industry.

Other provisions in the draft Bill

Other provisions in the Bill are less radical but generally point in the same direction. For instance, one new power is for the Secretary of State to issue a Strategy and Policy Statement setting out its energy policy priorities. Ofgem will then have to act in the manner best calculated to further the delivery of these policy outcomes. Again (although the government does not admit it) this is a significant change. Originally Ofgem’s duties focused exclusively on economic regulation – the promotion of competition and consumer protection. There was a clear demarcation – the government was responsible for energy policy; the regulator for the operation of markets.

This distinction can no longer be drawn. It started to become blurred in the early 2000s. The regulator’s duties were amended to include the promotion of sustainable development and a requirement to have regard to the effect on the environment in carrying out its functions. Under the Utilities Act 2000, it also had to have regard to social and environmental guidance issued by the government.

By the late 2000s “E-Serve” (which implements the environmental aspects of the regulator’s functions) constituted the bulk of Ofgem’s spending. The latest development is the outcome of the recent Ofgem review. Ofgem will not just have to take account of the government’s policy goals; it will be expected to set out annually how it plans to deliver its contribution to each policy outcome. In other words the job of the regulator will be as much to help deliver the government’s policy goals, as to police markets.

Much more HERE


I have commented before about the political problems of the scientific community, which are typically being turned around against Republicans. In a post last month I recalled the 2004 remark by Harvard geneticist Richard Lewontin in the New York Review of Books that “Most scientists are, at a minimum, liberals,” and the caution of MIT’s Kerry Emanuel about the dangers of “group think” and the “shocking lack of political diversity among American academics.” He concluded that “Until this profound and well-documented intellectual homogeneity changes, scientists will be suspected of constituting a leftist think tank.”

Well, this week the National Academy of Sciences had a chance to do something about this, and . . . completely blew it. A two-day symposium on science and public policy featured a panel of presidential science advisers, but the panel included only advisers to Democratic presidents, including Obama’s science adviser, the egregious John (sterilize the public) Holdren. The others were two advisers for Bill Clinton, and Jimmy Carter’s science adviser, the 87-year-old Frank Press.

Conspicuously missing from the panel was President Reagan’s science adviser Jay Keyworth, who is a spry 72. (He turns out to be the only living GOP science adviser.) When asked why Keyworth wasn’t invited, NAS president Ralph Cicerone said, “We didn’t want to go back that far.”

So let’s see: having Jimmy Carter’s 87-year-old science adviser apparently isn’t “going back that far,” but having Reagan’s still active 72-year old science adviser would be? And please tell me again why we shouldn’t regard scientific elites with suspicion?

Maybe the NAS should put together a panel to explore the strange bubble around the scientific establishment that distorts its outlook on the world. I used to respect Cicerone, in part for staring down the enviros when they tried to prevent an NAS panel on geoengineering. But no more. These people deserve every calumny thrown their way.


Obama taps Yucca Mountain critic to lead nuclear agency

Moving quickly to stem a controversy, President Barack Obama on Thursday nominated an expert on nuclear waste to lead the federal agency that regulates the nation's nuclear power plants.

Allison Macfarlane, who served on a presidential commission that studied new strategies to manage nuclear waste, would replace Gregory Jaczko as head of the Nuclear Regulatory Commission. Jaczko announced his resignation Monday after a tumultuous three-year tenure in which he pushed for sweeping safety reforms but came under fire for an unyielding management style that fellow commissioners and agency employees described as bullying.

A White House spokesman said Obama believes Macfarlane is the right person to lead the commission, calling her a highly regarded expert who has spent years analyzing nuclear issues.

Macfarlane "understands the role that nuclear power must play in our nation's energy future while ensuring that we are always taking steps to produce this important energy source safely and securely," White House spokesman Clark Stevens said.

Stevens called the NRC crucial to protecting public health and safety and said Obama hopes the Senate considers her nomination quickly.

Macfarlane, 48, an associate professor of environmental science and policy at George Mason University in Fairfax, Va., wrote a book in 2006 that raised technical questions about a proposed nuclear waste dump at Nevada's Yucca Mountain.

Senate Majority Leader Harry Reid, D-Nev., who is the leading congressional opponent of the Yucca site, praised Macfarlane as someone who will make nuclear safety a top priority. Macfarlane's education and experience, especially her service on the blue-ribbon commission on nuclear waste, make her qualified to lead the NRC "for the foreseeable future," Reid said in a statement.

Reid said he continues to have concerns about Republican Kristine Svinicki, who has been nominated by Obama for a new term on the commission, but added that he believes Svinicki and Macfarlane should be considered together, continuing a recent Senate tradition of considering NRC nominees from opposing parties at the same time.

Svinicki, a nuclear engineer and former Senate GOP aide, was among four NRC commissioners who publicly criticized Jaczko's management style last year. The commissioners - two Democrats and two Republicans - sent a letter to the White House last fall expressing "grave concern" about Jaczko' s actions, which they said were abusive and "causing serious damage" to the commission.

No disciplinary action was taken against Jaczko, who has strongly denied the allegations.

Jaczko, a Democrat, announced his resignation ahead of a potentially blistering report due out soon from the agency's inspector general, which has been investigating Jaczko's actions for more than a year.

A former Reid aide, Jaczko led a strong response to the nuclear disaster in Japan and was a favorite of industry watchdogs, who called his emphasis on safety a refreshing change from previous agency chiefs who were close to the nuclear industry or who came from it.

But scientists, fellow commissioners and many rank-and-file staffers said Jaczko had created a chilled working environment at the NRC, which oversees safety at the nation's 104 commercial nuclear reactors.

The Nuclear Energy Institute, an industry group, called Macfarlane "an active contributor to policy debates in the nuclear energy field for many years" and urged the Senate to confirm her nomination as soon as possible.

"It would not serve the public interest to have her nomination linger," the group said. "We urge the Senate to confirm both Commissioner Svinicki and Professor Macfarlane expeditiously."

Sen. Barbara Boxer, D-Calif., chairwoman of the Senate Environment Committee, said Macfarlane's background and experience demonstrate a strong commitment to safety - a commitment she called especially important in the wake of the nuclear disaster at Japan's Fukushima Dai-ichi plant.

Boxer said she will schedule a joint hearing on the two NRC nominees in June.

Per Peterson, a professor of nuclear engineering at the University of California, served with Macfarlane on the nuclear waste commission, which was appointed by the Obama administration to make recommendations on how the nation should store and dispose of more than 71,000 tons of radioactive waste at dozens of sites across the country.

"I think she will be effective in leadership" of the NRC, "mainly because she listens," Peterson said of Macfarlane.

In a 2009 interview with Technology Review, Macfarlane acknowledged that most of the objections to the never-completed Yucca Mountain site were political, but added: "The technical objections are serious and real."

The area near Yucca Mountain is seismically and volcanically active, she said, adding that spent nuclear fuel could be stored safely at nuclear plants for decades.

The presidential panel recommended that the government start looking immediately for an alternative to Yucca Mountain. The report also recommended that responsibility for managing nuclear waste be transferred to a new organization, independent of the Energy Department.


Green Energy Transition: Germany Fears De-Industrialisation

As a result of Germany's green energy transition, electricity prices are exploding. Consumers and businesses are paying the price while Germany faces gradual de-industrialisation. Economists estimate that the cost of the green energy transition will total 170 billion Euros by 2020. This is more than double of what Germany would have to write off if Greece were to withdraw from the monetary union.

In June 2011, Angela Merkel said: "German companies just as citizens of Germany have to be supplied with affordable electricity, also in the future."

Today it is obvious that Merkel has promised too much. Energy prices in Germany are increasing dramatically - by 57 percent in just the past ten years - and not least because the state is one of the biggest drivers of cost. Taxes and duties on electricity prices have now risen to 23.7 billion Euros p.a. - an increase of just over 1,000 percent within 15 years. The levies on electricity look more like a special energy tax, which is higher than the revenue from tobacco and motor vehicle taxes combined.

This figure is the result of an electricity price analysis by the Federal Association of Energy and Water Industry (BDEW). It should have been a wakeup call for the Chancellor who met with the Prime Ministers of the German states in the Chancellery this week to discuss the green energy transition. The results of the meeting were meagre: the Federal Government and state governments will work together more closely in the future. Merkel announced that summit meetings will be held every six months.

"The green energy transition is a big task to which we are committed together," said the Chancellor. A Federal network planning law to expand the electricity grid should be agreed before the summer break and adopted by the end of the year.

According to Merkel, it was also agreed to harmonise the further expansion of renewable energy “with the need for base-load capable power plants." The Federal Government will soon make a suggestion towards this goal. The Chancellor also expressed the hope that there would be an agreement in the mediation process for the energy renovation of buildings and the planned cuts in solar subsidies by the government until the summer.

For industry and consumers, this is only a small consolation. Experts agree that renewables subsidies must be cut quickly. The promotion of renewable energy has become the largest single item of green taxes and levies. This year, the subsidies will increase to the highest ever annual figure of 14.1 billion Euros.

German industry, in particular, is suffering from high electricity prices. Most affected are the chemical, metal and paper industries. In the aluminium industry, the electricity costs amount to about 40 percent of total costs.

All industries complain; some companies have already closed down: the aluminium smelter Voerdal in the Lower Rhine town of Voerde recently filed for bankruptcy because of high energy prices. The U.S. chemical giant Dow Chemical currently operates 17 plants with more than 5,000 employees in Germany. "Because of the green energy transition I get increasingly critical questions from our corporate headquarters in the US about whether energy supply in Germany is still possible at competitive prices," said Germany boss Ralf Brinkmann.

Germany's de-industrialization has already begun

"The de-industrialization has already begun," Energy Commissioner Guenther Oettinger has warned in an interview with the Handelsblatt. Hans Jürgen Kerkhoff, President of the Steel Trade Association, complains: "The levels of industrial electricity prices are higher here than in most other countries."

Within the Federal Government, the concerns are growing: "The price of electricity has become the Achilles’ heel of the energy revolution. We must design it in such a way that electricity prices remain affordable," says Thomas Bareiß, energy policy coordinator of the Parliamentary Christian Democrats (CDU). Experts estimate that the cost of the green energy transition will total 170 billion Euros by 2020. This is more than double of what Germany would have to write off if Greece were to withdraw from the monetary union.

What is of particular concern is that Germany’s industry has helped the country to more economic growth compared to other countries during the recent years of crisis. Countries such as Britain envy Germany for the 22 percent share of industry in its GDP.

Therefore, policy makers face a dilemma. On the one hand, industry has to be relieved from energy costs in order not to jeopardize its international competitiveness, says CDU expert Thomas Bareiss. On the other hand, the burden should not unilaterally end up with households. "The only solution is to make the green energy transition as cost effective as possible," says the conservative politician. In this context, he criticised the federal states that had recently rejected a cut in solar subsidies by a two-thirds majority.

At the Chancellor’s energy meeting with the prime ministers of the German states, the issue of electricity prices will be high on the agenda. Merkel initially only wanted to talk about the expansion of the national grid. Maybe she did not want to be reminded of her promise from last June that the price of electricity would be affordable for industry and consumers.

Yet, the figures tell a different story. At the beginning of the liberalisation of the electricity market in 1998, government taxes and levies for all electricity consumers amounted to 2.28 billion Euros. In 2012 the figure is about ten times as high. The 14.1 billion in subsidies for the promotion of renewable energy is also the single largest item of government taxes and levies on electricity.

Taxes and levies already make up 45 percent of the electricity bill of an average private household with three people. The average household is charged 75 Euros per month, of which only 41 Euro are derived from the procurement, transportation and distribution of electricity, i.e. the actual service. 34 Euros are taxes and duties.

The tenfold increase in taxes represents only the beginning of a trend that will further accelerate significantly in the opinion of many experts. The reason: the green energy transition. If the Federal Government wants to achieve its ambitious goals, it will have to redistribute a lot of money, which it has collected from consumers. The share of renewable energy in electricity generation is supposed to increase from currently 20 percent to 35 percent by 2020 and to 50 percent by 2030.

That will incur additional costs. There are now a number of calculations and scenarios on the subject. In a report presented in early May, the management consultancy McKinsey comes to the conclusion that the total cost of the green energy transition will amount up to 175 billion Euros between 2011 and 2020. In 2020, Germany’s electricity consumers would have to bear costs of 21.5 billion Euros, costs that are caused entirely by the switch to renewable energy.


The worldwide crash of green energy companies

The RENIXX® (Renewable Energy Industrial Index) World is the first global stock index, which comprises the performance of the world´s 30 largest companies of the renewable energy industry

The RENIXX Index of the 30 largest renewable energy companies in the world is trading at an all-time low today and has lost over 90% of its value since 2008.

A partial listing of green energy companies that have already filed bankruptcy or are teetering on the brink is below. Many of these companies were financed by taxpayers.

Filed Bankruptcy:

Beacon Power
Range Fuels
Solar Trust of America
Evergreen Solar
Eastern Energy
Bright Automotive
Olson's Crop Service
Energy Conversion Devices
Mountain Plaza

Teetering on the Brink:

Abound Solar
A123 Systems
Brightsource Energy
Fisker Automotive
First Solar
Nevada Geothermal
The Bard Group
NRG Energy
Alterra Power
Enel Green Power
Sunpower Corp


Trying to supply a growing population with water without building any new dams has been a costly disaster in the Australian State of Queensland

Rather than build the new dams needed to cope with a rising population they grabbed at any and all alternatives -- too bad about what they cost. Dams are of course anathema to Greenies

THE LNP Government is struggling to meet a key election commitment to bring down water charges as miserly Queenslanders scarred by a decade of drought save every drop.

The state's refusal to squander water will cost the Government about $400 million in the next five years as water revenues dry up. The LNP had also inherited a water debt of about $9 billion rather than the $7 billion it was prepared for. The annual interest on the debt now exceeds half a billion dollars.

Premier Campbell Newman is trying to hammer out a plan to manage the water debt while still honouring his commitment to bring down water costs for Queenslanders by about $80 a year. "This is going to take a bit of working through," a Government spokesman said. "But the Government remains committed to reducing water bills for Queensland households."

The previous Labor government ran up a huge debt attempting to drought-proof Queensland with large-scale projects, including the Gold Coast desalination plant and the Western Corridor Recycled Water Project.

The Western Corridor was the largest such project in the southern hemisphere and included 200km of large-diameter pipe as well as advanced water treatment plants at Bundamba, Gibson Island and Luggage Point.

Revenue forecasts on the capital works program, completed when the state consumed more than 300 litres a day per individual, have proven wildly inaccurate.

The latest figures show daily residential water consumption across southeast Queensland for the 14-day period ending May 9 was 151 litres per person.

With water usage well below forecasts, about $400 million is predicted to be lost by 2016-17.

The LNP is examining a plan flagged during the election campaign that involves spreading the debt repayment plan over 40 years rather than 20 years.

A plan to restructure the state's water infrastructure involving the handing back of water distribution and retailing to councils is expected to go before Cabinet soon.

The plan will also involve amalgamating the four bulk water entities into one entity to reduce the cost of supply.

The Local Government Association of Queensland says it expects the pre-election pledge to lower water costs to be honoured.



For more postings from me, see DISSECTING LEFTISM, TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC, GUN WATCH, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL and EYE ON BRITAIN. My Home Pages are here or here or here. Email me (John Ray) here. For readers in China or for times when blogger.com is playing up, there are mirrors of this site here and here


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