May 20, 2016
Is a second Chernobyl possible?
“European money is keeping Ukraine’s shaky nuclear power stations alive”
In the past, Energy Post has published several articles on why Ukraine should phase out coal power and on the necessity for the country to reform its gas sector. But what about its nuclear power stations?
As was pointed out in this article by Zuzanna Nowak of the Polish Institute of International Affairs (PISM), Ukraine’s dependence on Russia is actually worse in nuclear power than in gas. What is more, the potential risks of Ukraine’s nuclear power plants are much greater. Nobody would like to see another Chernobyl or anything remotely like that.
In a new article for Energy Post, Iryna Holovko of the NGO CEE Bankwatch, warns that “the country’s ageing nuclear fleet has a disturbing track record of mishaps and failures over the past few years”. Yet, she adds, the Ukrainian authorities keep extending the lifetimes of the plants. Since 2010, extensions have been approved for 4 of the 15 power stations and 2 are up for a decision this year.
Holovko argues that it would be better for Ukraine – and for Europe – if the country were to embark on “a safer energy path” by investing in energy efficiency and realising the country’s vast wind and solar potential.
Europe has a role to play in this, she notes. Ukraine’s nuclear power sector is supported with hundreds of millions of euros from the European Bank for Reconstruction and Development (EBRD) and Euratom. This money, which is used for safety upgrades, “effectively enables the lifetime extensions”. She calls on European policymakers to put Ukraine on a new energy course. Certainly an argument worth hearing – and debating on in Brussels.
Is US tight oil production up against its limits?
“Productivity of Bakken has peaked”
The US “tight oil” revolution (usually called “shale oil revolution”, tight oil includes shale oil) needs no introduction of course. It has been the great driver behind the increase in oil supply in recent years, and has completely upset the old World Oil Order which was ruled by OPEC and a few western multinational oil companies.
The question now – with Saudi Arabia having effectively started a price – is how long this revolution can last, and how far it will go.
Jilles van den Beukel and Enno Peters have analysed “the dramatic increase in drilling productivity over the last 10 years” in the Bakken play – one of the three great US shale plays. They come to the conclusion that much of this has been caused by “geology, drilling efficiency and increased focus on the best producing areas”. By contrast, technological improvements have made a much smaller contribution.
This has important implications. Geologically, they note, “the play is now well established. Sweet spots are well known.” In addition, drilling efficiencies have probably “reached their limit, after years of high activity and the recent intense competition in the services industry”. This means that we can expect “drilling productivity to have reached its peak”. Put simply, according to these authors: the US tight oil revolution (the same arguments apply to the other two big plays) has reached its peak.
Which news, if true, should be well received in Saudi Arabia. You can check out the article here: http://www.energypost.eu/bakken-shows-us-tight-oil-production-limits/
Can oil giants be successful in “new energies”?
“Storage is the only remaining niche”
In last week’s Energy Watch I wrote about the problems facing Big Oil in the current market. The oil companies may be against a “demand peak” – meaning that the demand growth they could count on in the past will never come back, as a result of climate policies and the advent of electric transport. With Saudi Arabia and other countries controlling low-priced oil, the western oil companies may be faced with a shrinking market.
One alternative option which they are already pursuing is to grow their natural gas business. But what about renewables or other alternative energies?
This is a more difficult proposition. All the oil companies ventured into renewables in the past (solar power, bio-energy, wind), but most of these efforts ended into failure. As one executive of Spanish oil company Repsol told me this week, his company had invested in offshore wind and geothermal energy in the past, but found it difficult to see where they, as oil company, could “add value”.
Well, as Jason Deign, publisher and editor of the newsletter Energy Storage Report points out, one alternative area that could still be lucrative for the oil companies, is energy storage. In an article that we published on Energy Post, Deign discusses some major moves of oil companies, notably Total, into the energy storage space. The French oil company acquired the battery manufacturer Saft Groupe.
Deign agrees that it “is is hard to see how the supermajors can fight their way back into a renewable industry now sewn up by companies the size of SolarCity (in solar) or Siemens (wind)”. But he argues that the storage sector is still “being dominated by cash-hungry startups with massive growth potential”. What is more, the battery industry is closely allied to the transportation sector, one of Big Oil’s most important markets.
It will be interesting to see how companies like Total, Statoil and Shell will evolve over the coming years. Total is already heavily invested in solar power. Statoil earlier this year announced it would invest in energy storage, renewables, efficiency and smart grids through a new spinoff called Statoil Energy Ventures
Can Democrats and Republicans agree on climate policy?
“Here’s how it could happen”
When you listen to presidential candidates in the US, it seems crazy to think that they could ever agree on anything – certainly not on climate policy, one of the most divisive issues in the US. Donald Trump and many others on the “right” side of the political spectrum either do not believe in climate change, or give it low priority. At the same time, on the “left” side, the climate issue has risen to one of the top spots on the political agenda. Whoever wins the presidential elections, there seems to be little hope of any compromises in the US Congress.
However, according to David Koranyi, Director of the Eurasian Energy Futures Initiative of the Atlantic Council, appearances may deceive. There may be more room for a bipartisan climate policy in the US than it seems.
In an important article for Energy Post, based on a new Strategy Paper he wrote for the Atlantic Council, A US Strategy for a Sustainable Energy Future, Koranyi notes that “the politics of climate and energy security is changing fast”. There is broad support for energy efficiency incentives, fuel efficiency regulations, and renewable portfolio standards. There is also increasing recognition of the necesssity to invest in the US’s ageing energy infrastructure and of the benefits clean energy jobs.
Koranyi also underlines why it is crucial for the US to agree on a bipartisan policy. Despite progress made under president Obama, the US “is behind the curve”, with still very high per capita emissions and modest climate goals. In addition, failure of the US to carry out a successful climate policy would send a disastrous signal to the rest of the world.
Koranyi also outlines what a bipartisan climate and energy policy would look like. A “progressively increasing, possibly revenue neutral economy-wide national carbon fee” could be at the heart of a “grand bargain”, he writes. “A market-friendly, transparent, all across the board carbon fee would serve as the central price signal and policy tool, enabling the scrapping of the politically controversial CPP and the phasing out of all energy subsidies for both renewable and fossil fuels beyond 2021.”
A bold proposal, worth thinking about. If the US were to agree on such a consensus policy, could the EU be far behind?