Israel-Egypt Standoff Over Gas

From UPI, "Israel, Egypt Rift over Gas Escalates": 

Egypt's cutoff of natural gas supplies to Israel is escalating a dispute over resources that is wrecking the Jewish state's relations with its Arab neighbor, which, until the fall of President Hosni Mubarak in February, were the linchpin of the Middle East peace process.

Israel has found major natural gas fields off its coast under the eastern Mediterranean, but none is likely to come on-stream before 2013, leaving Israel facing a serious energy crisis.

The military-led interim government in Cairo has been distancing Egypt from the historic peace treaty that Mubarak's predecessor, Anwar Sadat, signed with Israel in March 1979, reflecting the deep and abiding opposition to the pact felt by most of Egypt's 80 million people.

The dispute has been complicated by the fact the new rulers in Cairo have to be seen getting tough with Israel on this issue because they have to show Egyptians they're serious about unraveling the high-level corruption within the former regime.

The gas supplies to Israel from Egypt have been cut off since April 27, when an explosion damaged a gas terminal at El Arish in the Sinai Peninsula. It's a key link in the pipeline that carried the gas from Egypt's Nile Delta.

The pipeline was damaged in a Feb. 5 bombing. Another sabotage attempt was reportedly thwarted March 27. The attacks were apparently carried out by Bedouin tribesmen in the long-neglected Sinai demanding a bigger share of pipeline revenues, rather than opponents of Israel.

But whoever the perpetrators were, the 20-year gas deal negotiated in 2005 has become highly politicized.

The Egyptians had repaired the pipeline by mid-May but refused to resume deliveries until Israel agreed to pay double for the gas. Israel refuses.

Cairo says the gas was sold at preferential, below-market prices by officials close to Mubarak and his family who allegedly pocketed millions of dollars from the deal.

Former Energy Minister Sameh Fahmi and five other ministry officials were detained in Egypt April 21 on charges of cheating the state out of $700 million from the gas deal. . .

By 2010, Egypt was supplying 40 percent of Israel's gas requirements, used to fuel the country's power stations. . . . Under the 2005 deal, Egypt agreed to supply Israel with 60 million cubic feet of gas per year. In 2009, that was increased to 74.13 mcf.

"By pushing for a revision of the gas deal, the Egyptian military aims to both increase its revenue to help pay Egypt's budget deficit and debt, which could make the Egyptian economy even more vulnerable while it is trying to recover from the ongoing political turmoil, and to legitimize itself in the eyes of the Egyptian public by distancing itself from the former regime," the U.S. global security consultancy Stratfor observed.

In May, Egypt's Al-Ahram newspaper quoted Israel Radio as saying the Persian Gulf emirate of Qatar had offered to sell liquefied natural gas to Israel to help its energy crisis.

"Though Qatar's offer does have long-term potential to make Israel less dependent on Egyptian energy supplies, in the near term, Israel will have little choice but to accede to Cairo's demands," Stratfor noted.

Order to Suspend Keystone 1 Pipeline Operations Reversed

On Friday, the New York Times reported that the US government found that the continued operation of the Keystone 1 pipeline "without corrective measures would be hazardous to life, property and the environment." That looked like a big deal; then, the next day, came word that the decision had been overturned. Given the language of the original order, the rapidity of the change raises the question whether political higher-ups were responsible for the reversal. Here is the original story:

After a series of spills, the United States Department of Transportation has ordered the TransCanada Corporation to suspend operation of its one-year-old Keystone 1 pipeline, which carries oil extracted from oil sands in the Canadian province of Alberta to the United States. The so-called “corrective action order” was issued by the department’s Pipelines and Hazardous Materials Safety Administration.  

“Effective immediately, this order prevents TransCanada from restarting operations on their Keystone crude oil pipeline until P.H.M.S.A. is satisfied with the ongoing repairs and is confident that all immediate safety concerns have been addressed,” the agency said. It issued the order in response to two incidents in May involving oil leaks from small-diameter pump-station pipe fittings.  

Transcanada’s Keystone1 is under particular scrutiny because the company has applied to build and operate a much larger pipeline, the Keystone XL, which will run from Canada all the way to refineries on the Gulf of Mexico. That pipeline will pass under some of the Midwest’s most productive farmland and through its major aquifer.

Just last month, the Keystone 1 pipeline suffered two leaks, according to the Sierra Club, one of which involved over 10,000 gallons of oil. Leaks could prove dangerous and economically damaging.  

Environmental experts have raised concerns about the possibilities of leaks from Keystone XL, in part because TransCanada has in the past been granted waivers that effectively allow it to use thinner steel than would normally be required in the United States. They add that the company’s s pipelines are particularly vulnerable because oil from tar sands is more corrosive than conventional oil and is pumped under higher pressures and temperatures.  

“I find that the continued operation of the pipeline without corrective measures would be hazardous to life, property and the environment,” Jeffrey Wiese, an administrator at the department, wrote in issuing the order. 

Secretary of State Hillary Clinton has to decide whether to approve the Keystone XL project and is expected to render her opinion by the end of the year. In reaching a decision, she will have to weigh both energy and environmental concerns to determine whether the pipeline is in the national interest.

China's Epic Water Shortage

From the New York Times, excerpts from a story by Edward Wong showing the enormity of China's water problem and its stupendous, if risky, response:

North China is dying. A chronic drought is ravaging farmland. The Gobi Desert is inching south. The Yellow River, the so-called birthplace of Chinese civilization, is so polluted it can no longer supply drinking water. The rapid growth of megacities — 22 million people in Beijing and 12 million in Tianjin alone — has drained underground aquifers that took millenniums to fill. 

Not atypically, the Chinese government has a grand and expensive solution: Divert at least six trillion gallons of water each year hundreds of miles from the other great Chinese river, the Yangtze, to slake the thirst of the north China plain and its 440 million people.  

The engineering feat, called the South-North Water Diversion Project, is China’s most ambitious attempt to subjugate nature. It would be like channeling water from the Mississippi River to meet the drinking needs of Boston, New York and Washington. Its $62 billion price tag is twice that of the Three Gorges Dam, which is the world’s largest hydroelectric project. And not unlike that project, which Chinese officials last month admitted had “urgent problems,” the water diversion scheme is increasingly mired in concerns about its cost, its environmental impact and the sacrifices poor people in the provinces are told to make for those in richer cities.  

Three artificial channels from the Yangtze would transport precious water from the south, which itself is increasingly afflicted by droughts; the region is suffering its worst one in 50 years. The project’s human cost is staggering — along the middle route, which starts here in Hubei Province at a gigantic reservoir and snakes 800 miles to Beijing, about 350,000 villagers are being relocated to make way for the canal. Many are being resettled far from their homes and given low-grade farmland; in Hubei, thousands of people have been moved to the grounds of a former prison. . . . 

Some Chinese scientists say the diversion could destroy the ecology of the southern rivers, making them as useless as the Yellow River. The government has neglected to do proper impact studies, they say. There are precedents in the United States. Lakes in California were damaged and destroyed when the Owens River was diverted in the early 20th century to build Los Angeles. 

Here, more than 14 million people in Hubei would be affected if the project damaged the Han River, the tributary of the Yangtze where the middle route starts, said Du Yun, a geographer at the Chinese Academy of Sciences in Wuhan, the provincial capital. 

Officials in provinces south of Beijing and Tianjin have privately raised objections and are haggling over water pricing and compensation; midlevel officials in water-scarce Hebei Province are frustrated that four reservoirs in their region have sent more than 775 million cubic meters, or 205 billion gallons, of water to Beijing since September 2008 in an “emergency” supplement to the middle route.

Overseers of the eastern route, which is being built alongside an ancient waterway for barges called the Grand Canal, have found that the drinking water to be brought to Tianjin from the Yangtze is so polluted that 426 sewage treatment plants have to be built; water pollution control on the route takes up 44 percent of the $5 billion investment, according to Xinhua, the official news agency. The source water from the Han River on the middle route is cleaner. But the main channel will cross 205 rivers and streams in the industrial heartland of China before reaching Beijing.

“When water comes to Beijing, there’s the danger of the water not being safe to drink,” said Dai Qing, an environmental advocate who has written critically about the Three Gorges Dam. 

. . .Wang Jian, a former environmental and water management official with the Beijing government and the State Council, China’s cabinet, agreed that the project “carries huge risks,” but he said there were no other options given the severity of the current water shortage.

The middle route is to start major operations in 2014, and the eastern route is expected to be operational by 2013. The lines were originally supposed to open by the 2008 Summer Olympics, but have been hobbled by myriad problems. 

The diversion project was first studied in the 1950s, after Mao uttered: “Water in the south is abundant, water in the north scarce. If possible, it would be fine to borrow a little.”

In a country afflicted by severe cycles of droughts and floods and peasant rebellions that often resulted from them, control of water has always been important to Chinese rulers. Emperors sought to legitimize their rule with large-scale water projects like the Grand Canal or the irrigation system in Dujiangyan. . . . 

The central question for people in Hubei is whether the Han River, crucial to farming and industrial production hubs, will be killed to keep north China alive. . . . 

The demands of the north will not abate. Migration from rural areas means Beijing’s population is growing by one million every two years, according to an essay in China Daily written last October by Hou Dongmin, a scholar of population development at Renmin University of China. . . .

Beijing has about 100 cubic meters, or 26,000 gallons, of water available per person. According to a standard adopted by the United Nations, that is a fraction of the 1,000 cubic meters, or 260,000 gallons, per person that indicates chronic water scarcity. 

The planning for Beijing’s growth up to 2020 by the State Council already assumes the water diversion will work, rather than planning for growth with much less water, said Mr. Wang, the former official.

The next day, Wong weighed in with a report on the Three Gorges Dam, noting a story in the Shanghai Daily criticizing its planners, who failed to take realistic account of the effects downstream.

...[T]he dam has contributed to lower water levels in two of China’s largest freshwater lakes, raising the threat to them during long droughts, the report said. Large areas of central and southern China are suffering from the worst drought in 50 years, and the levels have plummeted in the Yangtze River and other bodies of water, including here in Chongqing.

Wang Jingquan, the official quoted by the newspaper, said water levels in the two lakes — Dongting in Hunan Province and Poyang in Jiangxi Province — had fallen in part because of the storage of water in the reservoir behind the dam, which is on the Yangtze.

In addition, the dam has had an impact on fish breeding and the growth of plants in the lower reaches of the Yangtze, said Mr. Wang, who works in a flood control and drought relief office that is linked to the Yangtze River Water Resources Committee. He said proper discharge from the reservoir would help the lakes.

“We failed to think of all the impacts that the dam might bring about when designing the dam, but its advantages should outweigh the disadvantages.” . . .Two weeks ago, senior Chinese officials admitted that there were “urgent problems” associated with the dam, the world’s largest hydroelectric project. The admission came in a vague statement from the State Council, China’s cabinet. “Although the Three Gorges project provides huge comprehensive benefits, urgent problems must be resolved regarding the smooth relocation of residents, ecological protection and geological disaster prevention,” the Council said.

Plans for the 600-foot-high dam were criticized at an early stage, but the Chinese government pressed ahead. Besides the ecological impact, the dam displaced 1.4 million people when the water levels upstream were raised.

The central government is also trying to deal with concerns over another ambitious water project, the South-North Water Diversion, which would siphon water from the Yangtze to Beijing and other northern cities. The drought in the regions along the middle and lower reaches of the Yangtze has underscored worries about channeling the river’s water to the north.

Cities are turning to increasingly desperate measures to combat the drought’s effects. The island city of Zhoushan in Zhejiang Province started water rationing on Wednesday, according to Xinhua, the state news agency. Residents have been told they can use running water for only five hours a day because the city can no longer depend on 20 of its 29 reservoirs. From January to May, rainfall in Zhoushan was the lowest on record, Xinhua said.

On Thursday, Xinhua said that rainfall along the middle and lower reaches of the Yangtze was down 40 percent to 60 percent from the average, with the totals being lower than at any time since 1951. The report cited data from the State Flood Control and Drought Relief Headquarters.

In Jiangsu Province’s Sushui County, fish and clams are dying, and crab-breeding farms are parched and cracked, Xinhua said. At Honghu Lake, fish spawning has been affected, said Zeng Xiaodong, leader of the Honghu marshland management office. “The drought has done considerable damage to the ecological environment of Honghu Lake,” he said.

Oil Sands a Big Deal for Big Oil

From Steve Levine:

For years, companies from around the world have poured into Alberta in order to sample the oil sands, a massive concentration of bitumen containing some 170 billion barrels of proven recoverable reserves and more than 1.7 trillion barrels in place. Unlike liquid hydrocarbons, bitumen traditionally has been mined and is thus visible, and the price of extraction has been relatively high, but there were no exploration costs, and hence no dry holes. Neither was there political risk: unlike Libya, Canada was highly unlikely to erupt in civil war; nor, like Venezuela, was it liable to nationalize anyone’s oil property. 

Yet somewhere along the road between that bout of nibbling and now, the oil sands have assumed more profound significance in the eyes of the industry. Exxon, a bellwether and the largest of the super-major companies known as Big Oil, is signaling that the oil sands are a hot, strategic play. At a time when the super-majors are barred from more than 75 per cent of the world’s known oil reserves, located in petro-states that wish to develop the hydrocarbons themselves, Alberta’s bitumen belt represents a profoundly shrewd, core, geostrategic hold. “The resource is bigger than the Saudis,” says Amy Myers Jaffe, director of the Energy Forum at Rice University in Houston, Texas. “The bottom line: There is no risk and no geologic constraint.” . . . 

[At the nucleus of the super-majors] are two anchors – LNG and Canada’s oil sands, both of which are humongously large components of Exxon’s and Shell’s reserve base. For Shell, the Athabasca oil sands deliver 250,000 barrels of oil a day, a large eight per cent slice of its daily global production of 3.1 million oil equivalent barrels; Exxon’s Alberta holdings are producing more than 200,000 barrels a day, or about five per cent of its 4.8 million barrels of daily global output, with more to come. So not only are both unconventional; they are also both long on Alberta. . . . 

The oil sands – by far the largest slice of Exxon’s current slate of 1.6 million barrels in new projects planned over the next five or so years – are part of Exxon’s gamble that unconventional oil and gas will save it from the dust bin. Over the last five years, the company has almost doubled the percentage of its resource base comprised of unconventional resources such as oil sands, LNG and gas fraccing plays to a whopping 40 per cent. Conventional oil and gas are just nine per cent of currently planned major projects. 

This does not mean that the oil industry, already whipped and tossed by expropriation, the rise of national oil companies, plus the turbulence of war, hurricanes and terrorist attack, is moving unhampered into these unconventional plays. A vocal number of Canadian and American environmentalists reject the assertion that the oil sands are a necessity – that the resource, the second-largest volume of oil on the planet next to Saudi Arabia’s, comprises half the world’s known reserves unencumbered by national oil companies, and so must be exploited for both economic and security reasons. 

These critics say that greenhouse gas emissions and water demands make the oil sands unfit as a primary energy source. The super-majors, oil companies from China, Norway and Thailand, and the Alberta government have offered concessions including an active tax on carbon emissions, but otherwise have fought back. There seems little if any chance that the provincial jewel will go underdeveloped. The advantages of the oil sands have been simply too tantalizing to ignore. . . .

Today, reserve replacement remains the key issue, but the stakes are far more momentous than the mere massaging of numbers. For the gas-guzzling United States, the oil sands are a geostrategic asset – a large, long-term supply of oil directly next door and wholly invulnerable to the vagaries of politics that plague so many reservoirs around the world. 

For Exxon, Shell and the others, the resource offers salvation from another bane of oil drillers – production decline, an annual average drop of six per cent to eight per cent in a field’s productivity that sets in immediately once extraction begins. Because of field decline, companies are forced to find new oil every year to compensate not only for what they drill, but for the average field decline, too. It is an extraordinarily difficult feat, particularly if you are, like Exxon, a gigantic super-major producing 4.8 million barrels of oil a day, meaning that you must somehow acquire in excess of one-and-a-half new supergiant oilfields every year.

In the absence of environmental considerations, the case for the oil sands is unassailable. The economic and security advantages are real and significant, as Levine insists. In the presence of those considerations, however, the case is severely weakened.

It is easier to predict what will happen--there is indeed "little if any chance that the provincial jewel will go underdeveloped"--than to say with certainty which set of objectives (the mitigation of economic and strategic insecurity as against the mitigation of environmental catastrophe) is most worthy of pursuing in the here and now.

If blocking the oil sands meant simply "off-shoring" emissions to heavy oil producers elsewhere (Saudi Arabia, for instance), there would be an increase in strategic vulnerability and no significant environmental gain. If the United States refused to be a market for Canadian oil sands, China would undoubtedly step up to the plate.

Oil sands are grim from just about every environmental standpoint imaginable, but its competitors are also not without sin, and its strategic advantages are substantial.

Both "Climate hawks" and "Peak oilers" are vitally engaged in understanding the interaction between "man and nature." They are both keen on "bringing nature back in" to the understanding of the human predicament. But their respective analyses point to profoundly different conclusions with regard to the development of the oil sands.

Iran's Bushehr Plant to Join National Grid

From Xinhua:

Iran's Foreign Minister Ali-Akbar Salehi said Tuesday that his country is getting ready to connect Bushehr nuclear power plant to the national grid in one month, the official IRNA news agency reported.

Talking to reporters, Salehi said, "the power plant is approaching steam production stage and we hope that, in the following month, the steam production capacity of the plant to reach to a point so that it could be fed into turbine to generate electricity," said IRNA. . . .

Asked whether the Russian president or premier will attend the opening ceremony, he said that "Tehran will announce its opinion about it in due time," according to IRNA. . . .

Construction of the Bushehr plant was started in 1975 by several German companies. However, the work halted when the United States imposed an embargo on hi-tech supplies to Iran after the 1979 revolution. Russia signed a contract with Iran to complete the construction in 1998. Completion of the plant's construction was postponed several times by mounting technical and financial challenges and pressure from the U.S..

Water-Energy Nexus in Middle East and North Africa

From an abstract of an article in Energy Policy by associates of the Belfer Center at Harvard:

Extracting, delivering, and disposing water requires energy, and similarly, many processes for extracting and refining various fuel sources and producing electricity use water. This so-called 'water–energy nexus', is important to understand due to increasing energy demands and decreasing freshwater supplies in many areas. This paper performs a country-level quantitative assessment of this nexus in the MENA region. The results show a highly skewed coupling with a relatively weak dependence of energy systems on fresh water, but a strong dependence of water abstraction and production systems on energy. In case of Saudi Arabia it is estimated that up to 9% of the total annual electrical energy consumption may be attributed to ground water pumping and desalination. Other countries in the Arabian Gulf may be consuming 5–12% or more of total electricity consumption for desalination.

The Great White Big Bad North

From the UK Guardian, a sharp critique of Canada's campaign for tar sands:

Newly released government memos have exposed a secret war that Canada is waging in Europe to kill clean energy policies and ensure no market closes to the dirtiest crude in the world – the tar sands of Alberta. 

The decline of easily accessible oil has set in motion not a shift to renewable energy but a frantic race for the filthiest, hardest-to-extract and most geographically remote fossil fuels. The prize resource are the tar sands: a sludgy bitumen found in northern Alberta whose conversion to oil requires a uniquely destructive, energy-intensive and costly process. To extract the vast deposit – trailing only Saudi Arabia's in reserves – the industry is stripmining a pristine Boreal forest the size of England, guzzling one of the planet's largest watersheds, poisoning downstream native communities, and emitting three times more carbon than conventional oil production. The planetary scars from the largest industrial project in history can already be seen from outer space. 

The dream of the tar barons scouring new frontiers should be familiar to the British: that the sun never sets on their pipeline empire. Canada's laboratory has provided an environmentally disastrous but extremely profitable model – which they now want to export everywhere: Congo's rainforests, Russia's remote basins, the US desert, Jordan, Venezuela, Madagascar and even Trinidad and Tobago. 

But the road to these spoils leads through Europe. While the continent doesn't import any Canadian crude, the oil giants and their government backers realise a European fuel quality directive that would slap a dirty label on tar sands to promote cleaner transport fuels could set the global standard – and effectively shut the door on Alberta's exports. "Our fear is that if something happens in the EU and it is spread in other countries … we could have roughly one third of the world's population subscribing to regulation or legislation that mitigates against our oilsands," a provincial minister in Alberta said last year. It is also sure to raise the heat on European oil companies to withdraw their enormous and growing investment in tar sands industries.

Hence the public relations blitzkrieg, conducted since 2009 through missions in key cities: London, Paris, Brussels, Oslo, Berlin and the Hague. Headquartered in England, an "oil sands team" run by Canada's foreign ministry has mounted the offensive. They've monitored green groups; furiously lobbied against the fuel quality directive; coordinated junkets to Alberta for EU parliamentarians; and targeted international journalists in an attempt to improve media coverage. The British government appears to have succumbed to the campaign and is working to block the EU from singling out the larger carbon footprint of the tar sands.  

Canada's foreign team has also been getting cozy with big oil corporations they call "like-minded allies". They've held numerous secret meetings with BP, Shell, Total and Norwegian Statoil to share "intelligence" and discuss joint initiatives. The plans run to the very top: Canada's prime minister, Stephen Harper himself, met covertly with Total's CEO in Paris in June 2010, after a visit with French President Sarkozy. Total has since announced plans to pump $20bn into their Alberta projects by 2020. 

Harper's Conservative party now has majority control of a government that is the most rightwing in modern Canadian history. He will eagerly execute a philosophy befitting the son of an oil executive. This means the construction of pipeline corridors – to the south through midwest US states, to the eastern seaboard, and to the west carrying crude for shipment to China and beyond – with the goal of converting Canada into a "global energy powerhouse". Output will increase five-fold to 5m barrels of dirty oil a day by 2040. The cost to the global climate is incalculable. 

The good news, however, is that the Canadian government is losing the wider battle over hearts and minds. "Oil sands are posing a growing reputational problem [in Europe], with the oil sands defining the Canadian brand," states one government memo anxiously assessing the "resurgence of highly critical public campaigns" on the continent. The Keystone XL pipeline that would run through the US heartland has faced stiff resistance, and is currently under review by Secretary of State Hilary Clinton. And on the home front, the world's top political risk consultancy Eurasia has acknowledged that the opposition of scores of First Nations (indigenous peoples) to the westward "Gateway" pipeline may be insurmountable: "Native land claims scare the hell out of investors," they note. . . .

Looking on the bright side, it is apparently not true that director Peter Jackson is planning to shoot the Hobbit in Alberta, "with the tar sands as the set of the dark land of Mordor."

Offshore Wind in Doldrums

This detailed new report on offshore wind energy from the Center for American Progress notes that "in the United States, lack of a clear regulatory structure, inconsistent messages from other ocean stakeholders, congressional budget battles, opposition to specific project siting, and instability in financial markets have all played a role in preventing domestic offshore wind from becoming a reality." The report has a lot of valuable material on the most notable U.S. projects. It argues that the initial subsidies for offshore wind would pay for themselves as ultimate costs were lowered, but notes the sharp resistance to be encountered in convincing the public of the benefits: "Consumers used to paying 16 cents per kilowatt hour (the current average rate for residential consumers in New England) will naturally balk when their local utility starts buying power that costs more than 20 cents per kilowatt hour and passing all of these new costs along to them. This creates enormous challenges for offshore wind development, and it is a tremendous barrier to widespread public embrace of these projects."

Iran's Nuclear Program: The Road Not Taken

This is the New Yorker's summation of a new piece by Seymour Hersh suggesting that Iran’s nuclear program is being exaggerated. 

Is Iran actively trying to develop nuclear weapons? Members of the Obama Administration often talk as if this were a foregone conclusion, as did their predecessors under George W. Bush. There’s a large body of evidence, however, including some of America’s most highly classified intelligence assessments, suggesting that the U.S. could be in danger of repeating a mistake similar to the one made with Saddam Hussein’s Iraq eight years ago—allowing anxieties about the policies of a tyrannical regime to distort our estimates of the state’s military capacities and intentions.

The two most recent National Intelligence Estimates (N.I.E.s) on Iranian nuclear progress have stated that there is no conclusive evidence that Iran has made any effort to build the bomb since 2003. Yet Iran is heavily invested in nuclear technology. In the past four years, it has tripled the number of centrifuges in operation at its main enrichment facility at Natanz, which is buried deep underground. International Atomic Energy Agency (I.A.E.A.) inspectors have expressed frustration with Iran’s level of coöperation, but have been unable to find any evidence suggesting that enriched uranium has been diverted to an illicit weapons program.

In mid-February, Lieutenant General James Clapper, the director of National Intelligence, provided the House and Senate intelligence committees with an updated N.I.E. on the Iranian nuclear-weapons program. A previous assessment, issued in 2007, created consternation and anger inside the Bush Administration and in Congress by concluding, “with high confidence,” that Iran had halted its nascent nuclear-weapons program in 2003. . . .

Thomas E. Donilon, Obama’s national-security adviser, said in a speech on May 12th that the U.S. would continue its aggressive sanction policy until Iran proves that its enrichment intentions are peaceful and meets all its obligations under the nonproliferation treaty. Obama has been prudent in his public warnings about the consequences of an Iranian bomb, but he and others in his Administration have often overstated the available intelligence about Iranian intentions. . . .

The unending political stress between Washington and Tehran has promoted some unconventional thinking. One approach, championed by retired ambassador Thomas Pickering and others, is to accept Iran’s nuclear-power program, but to try to internationalize it, and offer Iran various incentives. Pickering and his associates are convinced that the solution to the nuclear impasse is to turn Iran’s nuclear-enrichment programs into a multinational effort. . . .

Hersh says that the most important finding of the N.I.E., which news accounts failed to convey, was "that nothing significantly new had been learned to suggest that Iran is pursuing a nuclear weapon." Said one retired senior intelligence official: "nothing substantially new has been learned in the last four years, and none of our efforts--informants, penetrations, planting of sensors--leads to a bomb."

Hersh recounts some inventive steps taken by U.S. intelligence to penetrate Iran's nuclear program: "Street signs were surreptitiously removed in heavily populated areas of Tehran--say, near a university suspected of conducting nuclear enrichment--and replaced with similar-looking signs implanted with radiation sensors. . . .High-powered sensors disguised as stones were spread randomly along roadways in a mountainous area where a suspected underground weapon site was under construction. The stones were capable of transmitting electronic data . . ."

Hersh quotes a senior European diplomat as arguing that Iran is definitely on course to develop a nuclear weapon. Even if there is no direct evidence of weaponization, the "more important questions are: Is Iran behaving in a way that would be rational if they were not developing a nuclear weapon? And the answer on that is very clear--their behavior only makes sense if their goal is to have a bomb. And are they doing the other elements of developing a bomb? And they definitely are. There may or may not be weaponization in Iran today, but I don't think it is an interesting question. It says nothing about their intention." The only evidence the diplomat offered, however, was Iran's decision "to enrich some uranium to a purity level of twenty percent for medical purposes." 

Iran is isolated and needs friends. Thus it is significant that the Turks say the following: "We tell the Iranians all the time that we would not like to see a nuclear bomb in Iran. They know the price of not telling the truth."

Hersh recalls the excellent 2008 piece by Thomas Pickering and associates in the New York Review of Books, which proposed that Iran be conceded the right to enrich uranium on its own soil while "internationalizing" the operation. I will post some extracts from that below. As a negotiating strategy, it has been the road not taken. Instead, Obama bowed to the forces dictating hostility and unremitting opposition to Iran, dooming any prospect of an agreement.

I've excerpted about a third of the February 2008 piece by Thomas R. Pickering, William Luers, and Jim Walsh, "A Solution for the US-Iran Nuclear Standoff," the thrust of which I strongly endorse:

We propose that Iran’s efforts to produce enriched uranium and other related nuclear activities be conducted on a multilateral basis, that is to say jointly managed and operated on Iranian soil by a consortium including Iran and other governments. This proposal provides a realistic, workable solution to the US–Iranian nuclear standoff. Turning Iran’s sensitive nuclear activities into a multinational program will reduce the risk of proliferation and create the basis for a broader discussion not only of our disagreements but of our common interests as well. . . .

Historically, countries that have enriched uranium for a nuclear weapons program have built many more centrifuges than Iran has so far, and run them for years at a time. Centrifuges are famously fragile and difficult to operate on a large scale, and building a nuclear weapon also requires fashioning the enriched uranium into a nuclear device—”weaponization.” There is the additional problem of finding a way to shrink the device so that it can fit on a plane or, harder still, onto the tip of an extremely reliable missile. In short, Iran is still years away from a nuclear weapon, as the recent NIE suggests.

The more immediate problem, however, is that every centrifuge Iran builds—whether it works or not—creates new facts on the ground. The current policy of containment and sanctions does not prevent Iran from continuing to build large numbers of centrifuges. . . .

Still, the question remains, what should the US propose? Iranian enrichment on Russian soil clearly seems unworkable. Even a disinterested observer would have to concede that the Russians cannot be trusted, as their willingness to cut off natural gas exports for political purposes has vividly demonstrated. Regime change and military strikes are unrealistic, dangerous, and, in any case, unlikely. So what should be done?

As a solution to the nuclear dispute, the US and its allies should propose turning Iran’s national enrichment efforts into a multinational program. Under this approach, the Iranian government would agree to allow two or more additional governments (for example, France and Germany) to participate in the management and operation of those activities within Iran.³ In exchange, Iran would be able to jointly own and operate an enrichment facility without facing international sanctions. Resolving the nuclear issue would, in turn, make it possible for Iran to enjoy a variety of other benefits such as membership in the World Trade Organization (WTO), increased trade with Europe, access to badly needed equipment for its aviation and energy industries, and perhaps normalized relations with the United States.

A number of Iranian officials—including President Ahmadinejad himself—have already publicly endorsed a multilateral solution. Of course, Iran’s concept of multilateral enrichment is likely to be different from an American or European version, but those differences could, we believe, be resolved in negotiations.

Proposals to bring nuclear programs under multilateral supervision are neither new nor few in number. Several models of multinational uranium enrichment have been successfully used in Europe. Applied to the Iranian case, a multilateral approach would allow Iran to continue to own its existing nuclear facilities and centrifuges; but the management and operation of those facilities would be shared with the other partner governments, and any new facilities and technology would be owned and managed jointly by the consortium. All the multinational partners would contribute financially to the establishment and operation of the program and would also share in any revenues coming from the sale of the fuel. Such an arrangement could take many different forms, but any version of it would likely be subject to the following conditions:

• Iran would be prohibited from producing either highly enriched uranium or reprocessed plutonium. This is the most important principle in the proposal. If Iran cannot produce or acquire highly enriched uranium, it cannot build a nuclear weapon. If Iran’s enrichment program is turned into a multilateral project, it makes it extremely difficult for Iran to produce highly enriched uranium. Any attempt to do so, even secretly, would carry the risk of discovery by the international management team and the staff at the facility; the high probability of getting caught will likely deter Iran from trying to do so in the first place.

• No work on nuclear fuel, including research and development, could be conducted in Iran outside the multilateral arrangement. In addition, no institution, personnel, or facility associated with the Iranian military would be allowed to participate in the production of nuclear fuel or other nuclear activities. Neither of the two kinds of materials used to make a weapon—highly enriched uranium and reprocessed plutonium—would be produced, only uranium enriched to low levels that could be used in nuclear power plants.

• Iran would fully implement the Additional Protocol of the Nuclear Non-Proliferation Treaty, which requires member nations to make their nuclear facilities subject to snap inspections, environmental sampling, and more comprehensive reporting requirements. Iran has already offered to go beyond the current safeguards of nuclear processes it adheres to, and it should be held to that offer. Inherent in any multilateral arrangement for Iran’s nuclear program is a requirement for greater transparency, since Iran’s foreign partners will need full access to records and personnel to carry out their management responsibilities.

• Iran would commit itself to a program only of light water reactors (LWRs), which require uranium fuel enriched only to low levels and which, compared with other types of reactors, produce relatively small amounts of plutonium in the nuclear waste generated. This is a reasonable demand since the LWR is the de facto international standard.

Of course, there are many other issues that would need to be agreed to by the parties, for example, restrictions on the sale or transfer of technology and material used or produced in Iran to other countries.⁴ Still, the proposal cannot be one-sided. Iran needs to get something out of such a deal. A proposal that is all restrictions and no benefits is unlikely to be appealing or sustainable. Iran would be giving up some degree of control over part of its program and should rightly expect something in return. Certainly the Iranian government will have to be able to show that a multilateral nuclear program is advantageous for Iran.

US negotiators should design a package that would create and encourage constituencies for this consortium approach—such as the Atomic Energy Organization of Iran, which runs the country’s civilian nuclear program—which have a clear self-interest in the success of a multilateral approach. As it stands, US policy is all about limiting or eliminating the functions of Iran’s nuclear bureaucracy, so an Iranian nuclear agency can be expected to fight tooth-and-nail to resist the US and protect itself.

Under a multilateral program, Iranian scientists and engineers would benefit from the knowledge and experience of the international managers and staff sent to work at the facility. This expertise could help Iran address the current technical problems its engineers have encountered in trying to get their existing centrifuges to work at full capacity. More importantly, Iranian nuclear scientists and engineers would be able to be part of the international scientific community: for example, they could travel, exchange ideas with colleagues, and attend professional conferences without sanction or suspicion. The Iranian government would thus get something out of this arrangement and see a path where it can win with nonproliferation and lose with nuclear weapons.

In order to assure Iran that the multilateral nuclear facility has the full support of the international community, construction and operation of the facility should be authorized by a resolution adopted by the United Nations Security Council. The resolution should also include a provision that any future move by Iran to nationalize the facility or withdraw from the NPT would automatically trigger punitive steps against Iran.

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DCH:

It is not clear if such a proposal, even if offered by the U.S. government, would be accepted by Iran. There is such a larger climate of hostility as to make any formal agreement virtually impossible. To say nothing of the howl certain to be directed against any such negotiating position in the U.S., it would certainly be argued within some Iranian circles that this better offer from the West was still discriminatory against it.

I am made uneasy by the authors' bottom line, which seems to reject any deal whereby enrichment, under Iranian ownership, was permitted on Iranian soil under the international inspections entailed in the Additional Protocol to the NPT. I think that this course was and is the most reasonable arrangement, though politically it is even more vulnerable than their proposal.

How much of this proposal for negotiation, in any case, is itself negotiable? That is not clear to me. Despite such reservations, the proposal by Pickering, Luers, and Walsh is an exemplification of wise and creative statesmanship. Too bad that its prospects today seem other-worldly.

Was it overly optimistic to believe in 2008 that Obama might be attracted by a real offer to negotiate? So it would seem.

In India, The Target is Carbon Intensity

From the New York Times, "India Wants Market to Curb Emissions":

With four times the population of the United States, an economy growing 8 percent to 9 percent a year and surging energy demand, India’s race to become an economic power has propelled it to No.3 on the list of top carbon polluters, after China and the United States.

India’s greenhouse gas emissions are very likely to keep rising as the country tries to lift millions out of poverty and connect nearly half a billion people to electricity grids. But India is also trying to curb emissions growth in its own way, fearing the effects of climate change and spiraling energy costs.

The government is betting big on two market-based trading programs to encourage energy efficiency and green power across the country of 1.2 billion people, sidestepping the kind of emissions trading programs that have poisoned political debates in the United States and Australia.

One is the world’s first national market-based energy efficiency trading mechanism, called Perform, Achieve and Trade. It would set benchmark efficiency levels for 563 big polluters, like power plants, steel mills and cement plants, which account for 54 percent of the country’s energy consumption.

The program would allow businesses that use more energy than stipulated to buy tradable energy-saving certificates, or Escerts, from those that use less, creating a market that the government estimates will be worth about $16 billion in 2014, when trading is to start.

The number of Escerts would depend on the amount of energy saved in a target year.

“The policy road map India is adopting to curb emissions is innovative — something that will make industries look at making efficiency the centerpiece rather than some step that follows an ineffective carrot and stick policy,” said Srinivas Krishnaswamy, chief executive of the green policy consultants Vasudha Foundation India.

A three-year rollout phase for the Perform, Achieve and Trade program is set to start in September and is expected to help India cut about 100 million tons of carbon emissions, the government estimated. The gradual introduction is meant to work out problems in the process for companies to measure and report their energy use.

The other program has already been set up. Under it, India has established a renewable energy certificate trading program for wind, solar and biomass power plants. Green power makes up about 8 percent of energy production in India, while coal generates more than 60 percent, leading to a hefty coal import bill.

Trading of renewable energy certificates, which currently occurs once a month, has picked up as more projects participate, underpinning a government plan to increase solar power from near zero to 20 gigawatts by 2022, about one-eighth of current power generation.

During the May 25 session, 14,002 renewable energy certificates valued at 207.8 million rupees, or $4.6 million, were traded on the Indian Energy Exchange, compared with 260 units at the previous session in April.

But concerns remain about how both initiatives could evolve because of a lack of data and trained manpower, as well as weak penalties for companies that refuse to comply.

“India has an issue of manpower and data,” said Girish Sant, energy analyst at the nonprofit research house Prayas.

Hiring people and building up capacity and institutions “is a long-term game,” Mr. Sant said.

Some analysts also pointed to technical gaps in the Perform, Achieve and Trade program, including the way various units of one company are graded and curbs that allow the renewable energy certificates to be traded only once, limiting the entry of intermediaries or market makers.

“In order to have an effective cap-and-trade or market mechanism that aids desired reduction in energy use, it is necessary to have targets that are neither too easy nor too difficult to achieve,” said a report on the program by Emergent Ventures, a leading Indian clean-energy-project developer and adviser.

But industry observers said it still made sense for India to choose a national energy efficiency program, rather than carbon emissions trading, which requires an absolute emissions cap that would require companies to invest in expensive clean technology quickly. India has already said it does not want to establish an emissions cap.

In a program focusing on energy efficiency, “the target is intensity, so you are basically asking people to reduce their intensity, and that matches the overall target,” said Mr. Sant of Prayas.

The government has pledged to cut carbon intensity — the amount of carbon dioxide emitted per unit of economic output — by 20 percent to 25 percent by 2020, from 2005 levels.

India’s approach differs from that of its rival, China, which is also looking at promoting energy efficiency but is focusing more on carbon emissions trading. . . .