Growing attention is being paid to the nexus between water and energy, each of which is necessary to the other, and both of which are running short.
Here are some presentations giving the basics of the relationship:
World Economic Forum, Thirsty Energy: Water and Energy in the 21st Century (2009)
Matt Simmons, Twin Threats to Resource Scarcity: Oil and Water (2010)
Peter H. Gleick, "Has the U.S. Passed the Point of Peak Water," Huffington Post, October 12, 2010
Ibid, The World's Water: Peak Water, China's Growing Disaster, and Solutions to the World's Water Crisis (January 2009)
Michael Webber, "Energy versus Water: Solving Both Crises Together," Scientific American, October 2008 (behind paywall)
Sandra Postel, "Water: Will There Be Enough," Energy Bulletin (Yes! Magazine), June 2010
National Geographic, Freshwater
The Pacific Institute (homepage)
World Policy Institute, "The Water-Energy Nexus," March 2011
6/3/11
December 10, 2010
December 9, 2010
December 4, 2010
Visions of Abundance
Sure to drive the Peak Oilers mad is this piece by Clifford Krauss from the New York Times painting a very rosy picture for energy development and independence, "There Will be Fuel," November 16, 2010:
A critique followed in Energy Bulletin, in the form of an open letter to the Times.
THREE summers ago, the world’s supertankers were racing across the oceans as fast as they could to deliver oil to markets growing increasingly thirsty for energy. Americans were grumbling about paying as much as $4 a gallon for gasoline, as the price of crude oil leapt to $147 a barrel. Natural gas prices were vaulting too, sending home electricity bills soaring.
A book making the rounds at the time, “Twilight in the Desert,” by Matthew R. Simmons, seemed to sum up the conventional wisdom: the age of cheap, plentiful oil and gas was over. “Sooner or later, the worldwide use of oil must peak,” the book concluded, “because oil, like the other two fossil fuels, coal and natural gas, is nonrenewable.”
But no sooner did the demand-and-supply equation shift out of kilter than it swung back into something more palatable and familiar. Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation.
Meanwhile, another wave of natural gas drilling has taken off in shale rock fields across the United States, and more shale gas drilling is just beginning in Europe and Asia. Add to that an increase in liquefied natural gas export terminals around the world that connected gas, which once had to be flared off, to the world market, and gas prices have plummeted.
Energy experts now predict decades of residential and commercial power at reasonable prices. Simply put, the world of energy has once again been turned upside down.
“Oil and gas will continue to be pillars for global energy supply for decades to come,” said James Burkhard, a managing director of IHS CERA, an energy consulting firm. “The competitiveness of oil and gas and the scale at which they are produced mean that there are no readily available substitutes in either one year or 20 years.”
Some unpleasant though predictable consequences are likely, of course, as the disaster in the Gulf of Mexico this spring demonstrated. Some environmentalists say that gas from shale depends on drilling techniques and chemicals that may jeopardize groundwater supplies, and that a growing dependence on Canadian oil sands is more dangerous for the climate than most conventional oils because mining and processing of the sands require so much energy and a loss of forests.
And while moderately priced oil and gas bring economic relief, they also make renewable sources of energy like wind and solar relatively expensive and less attractive to investors unless governments impose a price on carbon emissions.
“When wind guys talk to each other,” said Michael Skelly, president of Clean Line Energy Partners, a developer of transmission lines for renewable energy, “they say, ‘Damn, what are we going to do about the price of natural gas?’ ”
Oil and gas executives say they provide a necessary energy bridge; that because both oil and gas have a fraction of the carbon-burning intensity of coal, it makes sense to use them until wind, solar, geothermal and the rest become commercially viable.
“We should celebrate the fact that we have enough oil and gas to carry us forward until a new energy technology can take their place,” said Robert N. Ryan Jr., Chevron’s vice president for global exploration.
Mr. Skelly and other renewable energy entrepreneurs counter that without a government policy fixing a price on carbon emissions through a tax or cap and trade, the hydrocarbon bridge could go on and on without end.
So what happened to shift the energy world so drastically the last few years? Is the shift reversible once the economy picks up?
The recession throttled the world’s demand for energy, particularly in the United States and Europe, but that tells only part of the story. Periodic jolts, like the Arab oil embargoes in the 1960s and 1970s, are likely to recur in a world with unpredictable actors like Iran. Access to oil and gas may always be limited by geopolitics, especially in places like the Middle East. Just in the last few days, the decline in the dollar spurred a new spike in oil prices, along with those of other commodities.
Yet, the outlook, based on long-term trends barely visible five years ago, now appears to promise large supplies of oil and gas from multiple new sources for decades into the future.
The same high prices that inspired dire fear in the first place helped to resolve them. High oil and gas prices produced a wave of investment and drilling, and technological innovation has unlocked oceans of new resources. Oil and gas from ocean bottoms, the Arctic and shale rock fields are quickly replacing tired fields in places like Mexico, Alaska and the North Sea.
Much depends, of course, on government policies in the coming decades. The International Energy Agency, the Paris-based organization that advises industrialized countries, projected this month that global energy demand would increase by an astounding 36 percent between 2008 and 2035, assuming the broad policy commitments already announced by governments were exercised. Oil demand is projected to grow to 99 million barrels a day in 2035, from 84 million barrels a day in 2009.
Even in an alternative world where there is a concerted, coordinated effort to reduce future carbon emissions sharply, the International Energy Agency projected oil demand would peak at 88 million barrels a day around 2020, then decline to 81 million barrels a day in 2035 — just fractionally less than today’s consumption. Natural gas use, meanwhile, would increase by 15 percent from current levels by 2035. In contrast, global coal use would dip a bit, while nuclear power and renewable forms of energy would grow considerably.
No matter what finally plays out, energy experts expect there will be plenty, perhaps even an abundance, of oil and gas. IHS CERA, which monitors oil and gas fields around the world, projects that productive capacity for liquid fuels could rise to 112 million barrels a day in 2030 (including 2.75 million barrels in biofuels), from 92.6 million barrels a day this year.
“The estimates for how much oil there is in the world continue to increase,” said William M. Colton, Exxon Mobil’s vice president for corporate strategic planning. “There’s enough oil to supply the world’s needs as far as anyone can see.”
More promising still is that the growing oil production comes from a variety of sources — making the world less vulnerable to a price war with the Organization of the Petroleum Exporting Countries or an outbreak of violence in a major producing country like Nigeria. As IHS CERA and other oil analysts see it, new oil is going to come from both conventional and unconventional sources — from anticipated expansions of fields in Iraq and Saudi Arabia and from a continued expansion of deepwater drilling off Africa and Brazil, in the Gulf of Mexico and across the Arctic, where hopes are high in the oil world, although little exploration has yet been done.
The vast oil sands fields in western Canada, deemed uneconomical by many oil companies as few as 15 years ago, are now as important to global supply growth as the continuing expansions of fields in Saudi Arabia, the current No. 1 producer.
“We’ve got a wealth of opportunities to address around the world,” said Mr. Ryan, Chevron’s vice president. “We have quite a few deepwater settings all over the world, some of them very new, like the Black Sea. There are Arctic settings. We have efforts under way re-exploring Nigeria, Angola, Australia. The easy stuff has been found, that’s true, but in the end, we still have many basins in the world to explore or to re-explore.”
The biggest wild card, and a potential game-changer, is Iraq, which now produces a modest 2.5 million barrels a day. With Saddam Hussein out of the picture, international oil companies have rushed there. If all the projects they have agreed to develop pan out, and if Iraq can contain its political turbulence enough to pump, production could mushroom to 12 million barrels a day by the end of the decade — well above what Saudi Arabia produces today.
But even if Iraq’s production does not rise to this level, IHS CERA predicts “it will eventually join Saudi Arabia and Russia as one of the largest global producers, with increasing influence on OPEC and world oil markets.”
New supplies are only part of the equation. Technological innovation has made the use of oil and gas more efficient, too, helping to keep rising demand for energy at least partly in check. Cars, buildings and appliances are becoming less wasteful, and biofuels are increasingly supplementing oil products and extending their reach.
Even in China, India and the rest of the developing world, where the demands of a growing middle class probably represent the world’s biggest energy challenge, there are positive signs.
China, for instance, is making a big push to reduce energy subsidies for exports like steel and aluminum. Countries around the developing world are severely cutting gasoline subsidies, forcing consumers of new cars to contain their exuberance. Cars that run on compressed natural gas are replacing more carbon-intensive gasoline-driven vehicles across Latin America and Asia. Natural gas sales should soar in Europe and the United States if the electric car takes off in the next couple of decades, as utilities are expected to phase out coal-burning plants in favor of gas.
Not surprisingly, the back-to-the-future world of oil and gas begins in the United States, still the biggest economy and the driver of energy markets since World War II.
For the last two decades, the United States has produced less oil each year and been increasingly dependent on imports than the year before. As recently as a decade ago, most experts predicted that the country had only 25 years of gas reserves, and that it would need to import at least half of its needs in the future.
Today the country has reversed both trends, chiefly because of new drilling techniques that have opened world-class oil and gas resources. In 2009, domestic production began to reverse its annual decline for the first time since 1991. The Energy Department expects domestic supplies to grow through 2035, absent a significant decline in oil prices.
Largely shut out of the Middle East, international companies including BP and Shell began seriously looking at the deep waters of the Gulf of Mexico in the 1990s. Exploration and drilling below 10,000 feet of water and through miles of hard rock, thick salt and tightly packed sands required the development of supercomputers and three-dimensional imaging and equipment that could withstand the heat and pressures common at such depths, as well as submarine robots to make repairs.
After only a decade of serious deepwater drilling, the gulf is undergoing a drilling renaissance. Despite a decline in shallow-water production, gulf oil production has increased by more than 12 percent since 2000, to 1.7 million barrels a day, comparable to Libya’s output. Those increases are bound to slow over the next year or two as the federal government recalibrates regulations after the BP accident, but oil executives say they are committed to continue the production boom.
“We’ll see the industry ramp back up, go back to work and maybe in a year or year and a half, we’ll be back in a normal pace,” Marvin E. Odum, president of Shell Oil, a major Gulf producer, predicted.
Similar advances have made drilling gas and oil from shale possible on a large scale for the first time. Advances in so-called horizontal drilling allow well drillers to steer and carve through hard shale to expose more and hard-to-reach rock, and it also makes possible drilling under city neighborhoods, as in Fort Worth, which happens to sit atop a large gas field.
Horizontal drilling and advanced fracturing techniques across wide swaths of Pennsylvania, Texas, Oklahoma, Louisiana and Arkansas over the last few years have produced so much natural gas that experts now say the United States has reserves for more than 100 years. That means the country is not only going to have plenty of gas, but also is likely to become an exporter over the next decade.
The American gas glut has set off a glut around the world, because the building spree in recent years of Middle Eastern and Asian liquefied natural gas terminals was originally intended to send much of their gas to the United States.
"The technology producing these resources has absolutely made the difference,” Mr. Odum said. “It’s the same with the Arctic, with the shale oil, all over the world. Technology is the key.”
Shale drilling is also beginning to produce significant amounts of oil in the United States. The Bakken shale field centered in North Dakota has become the fastest-growing major oil field in the United States, with production rocketing to about 350,000 barrels a day, from 100,000 barrels a day a decade ago. In a recent report, the consultancy firm PFC Energy projected production would climb to 450,000 barrels a day by 2013.
Add up the shale, the deepwater drilling and Canadian oil sands, says Edward L. Morse, the head at commodity research at Credit Suisse, and what you get is less dependency on OPEC and hostile countries like Venezuela. Synthetic oil made from Canadian oil sands has become the largest single source of imported oil this year, far more than from any OPEC country.
Mr. Morse said the demand side of the equation also helped. He noted that American demand for gasoline appeared to have peaked in 2007 and could decline by 15 to 20 percent by 2020 because of increasingly efficient cars and a federal mandate requiring that renewable fuels, like ethanol, blended into transportation fuels must increase to 36 billion gallons in 2022, from nine billion gallons in 2008.
“When you add it up,” Mr. Morse noted, “you get something that very closely approximates energy independence.”
A critique followed in Energy Bulletin, in the form of an open letter to the Times.
December 3, 2010
The Peak Oil Cycle: Crash and Burn
Heinberg on the gyrations in price that will accompany resource scarcity:
Many commentators who understand the essence of the Peak Oil dilemma have tended to assume that, as petroleum and other resources become scarcer, commodity prices will simply escalate in a linear fashion. What we saw instead was a rapid rise in prices (driven by rising demand and falling supply, and then exacerbated by speculation) precipitating an economic crash, followed by collapsing oil prices and curtailed investment in oil exploration—which, in due course, will provoke another rapid price rise. The cycle begins again. Each time the cycle churns, it will likely have an even more devastating economic impact.
The same will happen with natural gas as conventional gas grows scarce and the industry is forced to rely on quickly depleting and expensive-to-produce shale gas; and the same will happen with copper, uranium, indium, and rare-earth elements. Meanwhile, we will puzzle over the fact that the economy just doesn’t seem to work the way it once did. Instead of having plenty of energy with which to mine gold from seawater, we will find we don’t have enough cheap fuel to keep the airline industry aloft. Alternative non-fossil energy sources will come on line, but not quickly enough to keep up with the depletion of oil, coal, and gas. Prices of energy and raw materials will gyrate giddily, but the actual amounts consumed will be dropping. In general, labor costs will be falling and raw materials prices rising—the exact reverse of what occurred during the 20th century; but the adjustments will be anything but gradual.
Clugston on Nonrenewable Natural Resource Scarcity
Clugston offers an analysis of 57 nonrenewable natural resources (NNRs) and argues that while "we are not about to ‘run out’ of any NNR," we are sure "to run ‘critically short’ of many.”
http://www.theoildrum.com/node/6345
http://www.theoildrum.com/node/6345
Heinberg: The New Normal, or The End of Growth
No one does a better job in presenting the neo-Malthusian case than Richard Heinberg. His The Party's Over: Oil, War, and the Fate of Industrial Societies was one of the first books I read on the peak oil case, which at the time pretty much frightened me out of my wits. I distinctly recall his prediction that, after the oil ran out, the electrical grids would fall in about 100 years or so.
He is especially good (and grim) in setting forth the interlocking character of our energy, enironmental, and financial crises from the "peak everything" perspective. This extract is from his new book, forthcoming in 2011, which he is kindly putting up on the web as a "work in progress."
He is especially good (and grim) in setting forth the interlocking character of our energy, enironmental, and financial crises from the "peak everything" perspective. This extract is from his new book, forthcoming in 2011, which he is kindly putting up on the web as a "work in progress."
Many financial pundits point to profound problems internal to the economy—including overwhelming, un-repayable levels of public and private debt, and the bursting of the real estate bubble—as immediate threats to the resumption of economic growth. The assumption generally is that eventually, once these problems are dealt with, growth can and will pick up again. But the pundits generally miss factors external to the financial economy that make a resumption of conventional economic growth a near-impossibility. This is not a temporary condition; it is essentially permanent.
Altogether, as we will see in the following chapters, there are three primary factors that stand firmly in the way of further economic growth:
◦The depletion of important resources including fossil fuels and minerals;
◦The proliferation of environmental impacts arising from both the extraction and use of resources (including the burning of fossil fuels)—leading to snowballing costs from both these impacts themselves and from efforts to avert them and clean them up; and
◦Financial disruptions due to the inability of our existing monetary, banking, and investment systems to adjust to both resource scarcity and soaring environmental costs—and their inability (in the context of a shrinking economy) to service the enormous piles of government and private debt that have been generated over the past couple of decades.
Despite the tendency of financial commentators to focus only on the last of these factors, it is possible to point to literally thousands of events in recent years that illustrate how all three are interacting, and are hitting home with ever more force.
China's Appetite for Coal
This chart from the Oil Drum shows China's coal consumption as a percentage of world consumption. It's big! And getting bigger.
As Euan Mearns notes, China's production and consumption of coal has roughly been in balance over the last few decades. If this were to change,
then 1 of 3 things may happen. The first option is that consumption is pegged back to match stalled production and this would stall Chinese economic growth with knock on effects to the global economy. The second option is that China tries to meet any shortfall buying coal on the international market. As already pointed out China is such a huge consumer of coal this would create great competition in the international market for limited supplies leading to severe upwards pressure on coal prices. The third option is that China somehow manages to install sufficient nuclear capacity to plug any energy gap.Here's an update from Mearns noting a piece in the Wall Street Journal on China's coal crisis. The Journal reports that
The People's Daily reports a doubling of Chinese coal imports for the first 5 months of 2010 and upwards pressure on coal prices and it therefore looks like option 2 may be under way. Should Chinese coal imports double this year and next then China will be competing for about 50% of the coal on the world market and that may be like a wrecking ball going through the global economy that is founded on abundant and cheap supplies of energy.
"Beijing is considering capping domestic coal output in the 2011-2015 period, partly because officials worry miners are running down reserves too quickly to meet the needs of a rapidly expanding economy.. . .Policy makers are mulling an annual cap of between 3.6 billion tons and 3.8 billion tons in the next five-year plan, running from 2011 to 2015, the state-run Xinhua news agency reported earlier.. .' China accounts for around 14% of global coal reserves but its share of global coal consumption is already over triple that at 47%, which is unsustainable,' Hong Kong-based brokerage CLSA Asia-Pacific Markets said in a report last month.Here's the graph accompanying the Journal piece:
On China's growing imports, see this piece in the New York Times
Even as developed countries close or limit the construction of coal-fired power plants out of concern over pollution and climate-warming emissions, coal has found a rapidly expanding market elsewhere: Asia, particularly China.
At ports in Canada, Australia, Indonesia, Colombia and South Africa, ships are lining up to load coal for furnaces in China, which has evolved virtually overnight from a coal exporter to one of the world’s leading purchasers.
The United States now ships coal to China via Canada, but coal companies are scouting for new loading ports in Washington State. New mines are being planned for the Rockies and the Pacific Northwest. Indeed, some of the world’s more environmentally progressive regions are nascent epicenters of the new coal export trade, creating political tensions between business and environmental goals.
Traditionally, coal is burned near where it is mined — particularly so-called thermal or steaming coal, used for heat and electricity. But in the last few years, long-distance international coal exports have been surging because of China’s galloping economy, which now burns half of the six billion tons of coal used globally each year.
As a result, not only are the pollutants that developed countries have tried to reduce finding their way into the atmosphere anyway, but ships chugging halfway around the globe are spewing still more.
And the rush to feed this new Asian market has helped double the price of coal over the past five years, leading to a renaissance of mining and exploration in many parts of the world.
“This is a worst-case scenario,” said David Graham-Caso, spokesman for the Sierra Club, which estimates that its “Beyond Coal” campaign has helped to block 139 proposed coal plants in the United States over the last few years. “We don’t want this coal burned here, but we don’t want it burned at all. This is undermining everything we’ve accomplished.”
In Australia, environmental groups have repeatedly halted trainloads of coal headed to the export docks at Newcastle this fall, and flotillas of kayaking protesters have delayed cargo pickups by Asia-bound coal ships.
Julia Gillard, Australia’s newly elected prime minister, promised during her campaign to “put a price on carbon” — in other words, make companies pay in some way for excessive carbon dioxide emissions. But environmentalists say that such laws will be meaningless if the country continues its nascent coal rush and “exports global warming to the world,” as one group, Rising Tide Australia, puts it.
This summer an Australian company signed a $60 billion contract with a state enterprise, China Power International Development, to supply coal to Chinese power stations beginning in 2013 from a vast complex of mines, called China First, to be built in the Australian outback. It was Australia’s largest export contract ever, the company said.
The deal points to the love-hate relationship many wealthier countries have with coal: while environmental laws have made it progressively harder to build new coal-fired power plants, they do not restrict coal mining to the same extent.
That is partly because emissions accounting standards focus on where a fuel is burned, not where it is dug up; because the coal trade is a lucrative business; and because the labor-intensive mining industry creates jobs.
Such benefits are particularly hard to forgo in the midst of a recession. In the last two years, “There has been an awful lot of mining development, and much of it is based on the potential of these new markets,” said David Price, director of the global steam coal advisory service at IHS-Cera, a global energy consultancy.
Vic Svec, senior vice president of Peabody Energy, the world’s largest private coal company, said it was “planning to send larger and larger amounts of coal” to China.
“Coal is the fastest-growing fuel in the world and will continue to be largely driven by the enormous appetite for energy in Asia,” he said.
The conflict between environmental and trade concerns is gaining momentum in the United States and Canada as well as Australia.
Last year, the United States exported only 2,714 tons of coal to China, according to the United States Energy Information Administration. Yet that figure soared to 2.9 million tons in the first six months of this year alone — huge growth, though still a minuscule fraction of China’s coal imports.
New mines are planned to expand the market further. Earthjustice, a nonprofit environmental law firm, is suing to block the lease of state-owned land in Otter Creek, Mont., to Arch Coal for mining to serve demand in Asia and elsewhere. Likewise, Peabody Energy and Australia’s Ambre Energy have been separately expanding mines and exploring the idea of opening loading ports in the Pacific Northwest.
In Washington State, the Port of Tacoma said Friday that it would not host a proposed coal loading plant, citing “a multitude of business and community factors.” This week officials in Cowlitz County are expected to decide whether to grant a permit for a proposed coal port in Longview, on the border with Oregon.
Environmental groups will be there to oppose the port, noting that policies in both states effectively block new coal-fired plants and that both have plans to close the few that remain. “It’s one step forward, 10 steps back if we allow coal export in our region,” said Brett VandenHeuvel, executive director of the environmental group Columbia Riverkeeper.
Likewise, environmentalists in British Columbia, which enacted the first tax on carbon dioxide emissions in North America two years ago, are incensed that Vancouver has blossomed into a major coal loading location. “It’s just hypocritical,” said Ben West, a spokesman for the Wilderness Committee, a Canadian conservation group.
This summer, Jim Prentice, who was then Canada’s environment minister, announced a national phase-out of dirty coal-fired plants. But mines are primarily regulated by the provinces, said Henry Lau, a spokesman for the ministry. The Canadian government adds that while it is committed to its target of reducing emissions by 17 percent below 2005 levels by 2020, it has to balance “environmental and economic benefits for its citizens.”
The growth and shifts in coal exports to China are impressive, flowering even during the recession. Seaborne trade in thermal coal rose to about 690 million tons this year, up from 385 million in 2001.
The price rose to $60 from $40 a ton five years ago to a high of $200 in 2008. Coal delivered to southern China currently sells for $114 per ton.
China, which was a perennial coal exporter until 2009, the first year that it imported more than it sent out, is expected to import up to 150 million tons this year.
The lucrative export trade with China is expected to continue, said Ian Cronshaw, head of the energy diversification division at the International Energy Agency.
Although it has plentiful domestic supplies, China imports coal because much of its own is low grade and contains impurities. Coal from the Powder River Basin of Montana and Wyoming tends to be low in sulfur, for example, allowing power plants to burn more without exceeding local pollution limits.
Additionally, much of China’s coal is inland while the factories are on the coast; it is often easier to ship coal from North America, Australia or even South America.
Another emerging customer is India, whose coal imports rose from 36 million tons in 2008 to 60 million tons in 2009, the last full year for which data is available.
In Europe and the United States, coal seems past its prime, with consumption generally down from five years ago because of the recession, environmental laws and a greater reliance on natural gas and renewable energy.
For some economies, China has been a lifesaver. Although Colombia’s coal exports collapsed in 2008 when demand in America and Europe plummeted, they revived this year, with 10 million tons going to Asia.
For Australia, coal exports to China grew to $5.6 billion from $508 million between 2008 and 2009, government statistics show. While it still sends more coal to its longtime customers Japan and Korea, that balance could shift as Australian coal giants sink billions into new projects like China First.
“They are betting that there will be great markets for coal in China,” Mr. Cronshaw said.
China's Nuclear Boom
From Bloomberg News:
According to Michael Kruse, consultant on nuclear systems for Arthur D. Little, the Chinese are ready to spend $511 billion to build up to 245 reactors.
* * *
Westinghouse, for example, says it has handed over more than 75,000 technical documents to its Chinese customers as part of its agreement to license reactor technology.
“We look at this as a long-term opportunity and partnership,” says Jack Allen, Westinghouse Asia’s president. “But there are no guarantees.”
Just 13 nuclear plants operate in China today, and until recently the Chinese were building only one or two reactors a decade. Now they are building 25 facilities, accounting for close to half the reactors under construction worldwide.
China’s energy planners say they aim to have 40 reactors by 2020 and, by 2030, enough additional reactors to generate more power than all 104 reactors in the U.S., the leader in nuclear energy. Westinghouse, Areva, and other foreign companies will profit by licensing their reactor technology, consulting on safety and other issues, supplying components, and helping with construction.
* * *
President Hu Jintao wants non-fossil fuels to produce 15 percent of China’s energy by 2020. Although the Chinese have spent plenty on wind turbines and solar panels, only a buildup of nuclear power can make that target reachable.
“Developing clean, low-carbon energy is an international priority,” says Zhao Chengkun, vice-president of the China Nuclear Energy Association. “Nuclear is recognized as the only energy source that can be used on a mass scale to achieve this.”
Foreign companies are already getting contracts. On Nov. 23, Cameco Corp., the miner, agreed to supply 29 million pounds of uranium to Guangdong Nuclear through 2025. Thomas Mundy, president and chief executive officer of Exelon Nuclear Partners, whose parent company runs 17 nuclear reactors in the U.S., says he hopes to reach an agreement by mid-2011 to help the Chinese manage their reactors.
Westinghouse designs are being used for four reactors now under construction. Areva has sold two latest-generation reactors now under construction, as well as nuclear fuel. Areva Chief Executive Officer Anne Lauvergeon told the French Senate on Nov. 24 that she expected another deal on two more.
According to Lauvergeon and Allen, China is building reactors faster and at a lower cost than the rest of the world. State ownership of the industry guarantees capital and relatively quick approvals of new plants. Low-cost labor and experience in major infrastructure projects, whether power plants or subway systems, also help.
As a result, building a Western-designed reactor in China costs about $4 billion, 40 percent less than one in Normandy, and can be completed in 46 months, versus 71 months in France, according to Areva.
According to Michael Kruse, consultant on nuclear systems for Arthur D. Little, the Chinese are ready to spend $511 billion to build up to 245 reactors.
* * *
Westinghouse, for example, says it has handed over more than 75,000 technical documents to its Chinese customers as part of its agreement to license reactor technology.
“We look at this as a long-term opportunity and partnership,” says Jack Allen, Westinghouse Asia’s president. “But there are no guarantees.”
Just 13 nuclear plants operate in China today, and until recently the Chinese were building only one or two reactors a decade. Now they are building 25 facilities, accounting for close to half the reactors under construction worldwide.
China’s energy planners say they aim to have 40 reactors by 2020 and, by 2030, enough additional reactors to generate more power than all 104 reactors in the U.S., the leader in nuclear energy. Westinghouse, Areva, and other foreign companies will profit by licensing their reactor technology, consulting on safety and other issues, supplying components, and helping with construction.
* * *
President Hu Jintao wants non-fossil fuels to produce 15 percent of China’s energy by 2020. Although the Chinese have spent plenty on wind turbines and solar panels, only a buildup of nuclear power can make that target reachable.
“Developing clean, low-carbon energy is an international priority,” says Zhao Chengkun, vice-president of the China Nuclear Energy Association. “Nuclear is recognized as the only energy source that can be used on a mass scale to achieve this.”
Foreign companies are already getting contracts. On Nov. 23, Cameco Corp., the miner, agreed to supply 29 million pounds of uranium to Guangdong Nuclear through 2025. Thomas Mundy, president and chief executive officer of Exelon Nuclear Partners, whose parent company runs 17 nuclear reactors in the U.S., says he hopes to reach an agreement by mid-2011 to help the Chinese manage their reactors.
Westinghouse designs are being used for four reactors now under construction. Areva has sold two latest-generation reactors now under construction, as well as nuclear fuel. Areva Chief Executive Officer Anne Lauvergeon told the French Senate on Nov. 24 that she expected another deal on two more.
According to Lauvergeon and Allen, China is building reactors faster and at a lower cost than the rest of the world. State ownership of the industry guarantees capital and relatively quick approvals of new plants. Low-cost labor and experience in major infrastructure projects, whether power plants or subway systems, also help.
As a result, building a Western-designed reactor in China costs about $4 billion, 40 percent less than one in Normandy, and can be completed in 46 months, versus 71 months in France, according to Areva.
December 2, 2010
Yergin: Oil: Still the One
One characteristic of this new age is that oil has developed a split personality -- as a physical commodity but also now as a financial asset. Three other defining characteristics of this new age are the globalization of the demand for oil, a vast shift from even a decade ago; the rise of climate change as a political factor shaping decisions on how we will use oil, and how much of it, in the future; and the drive for new technologies that could dramatically affect oil along with the rest of the energy portfolio.
* * *
That frenetic daily trading has helped turn oil into something new -- not only a physical commodity critical to the security and economic viability of nations but also a financial asset, part of that great instantaneous exchange of stocks, bonds, currencies, and everything else that makes up the world's financial portfolio. Today, the daily trade in those "paper barrels" -- crude oil futures -- is more than 10 times the world's daily consumption of physical barrels of oil. Add in the trades that take place on other exchanges or outside them entirely, and the ratio may be as much as 30 times greater.
* * *
What is decisively new is the globalization of demand. . . For decades, most of the market -- and the markets that mattered the most -- were in North America, Western Europe, and Japan. That's also where the growth was. At the time of the first Gulf War in 1991, China was still an oil exporter.
But now, the growth is in China, India, other emerging markets, and the Middle East. Between 2000 and 2007, the world's daily oil demand increased by 9.4 million barrels. Almost 85 percent of that growth was in emerging markets.
http://www.foreignpolicy.com/articles/2009/08/17/its_still_the_one?page=full
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That frenetic daily trading has helped turn oil into something new -- not only a physical commodity critical to the security and economic viability of nations but also a financial asset, part of that great instantaneous exchange of stocks, bonds, currencies, and everything else that makes up the world's financial portfolio. Today, the daily trade in those "paper barrels" -- crude oil futures -- is more than 10 times the world's daily consumption of physical barrels of oil. Add in the trades that take place on other exchanges or outside them entirely, and the ratio may be as much as 30 times greater.
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What is decisively new is the globalization of demand. . . For decades, most of the market -- and the markets that mattered the most -- were in North America, Western Europe, and Japan. That's also where the growth was. At the time of the first Gulf War in 1991, China was still an oil exporter.
But now, the growth is in China, India, other emerging markets, and the Middle East. Between 2000 and 2007, the world's daily oil demand increased by 9.4 million barrels. Almost 85 percent of that growth was in emerging markets.
http://www.foreignpolicy.com/articles/2009/08/17/its_still_the_one?page=full