Triple Crunch Log © Jeremy Leggett

The triple crunch log

2010…a log compiled by Jeremy Leggett emphasising matters relevant to the energy-, climate-, and financial crises, and issues pertinent to society’s response to this triple crunch

Editor’s note

This log represents one person’s reading experience of the unfolding dramas that most preoccupy him, among the all-too numerous dramas inherent in the human condition. I have compiled it while pursuing a full time day job in a solar energy company, and further part-time roles as a director in a private equity fund (throughout) and trustee of a charity (since 2006). Accordingly, there is far more source material from newspapers than academic journals and books, most of it culled and processed in evenings, weekends, and journeys. Unless otherwise stated, entries are from newspaper reports published the day after the news event. Magazine and journal reports are on the day of publication, some time (days) after the actual events referred to. Entries from monthlies appear on the first of each month. After the creation of the website (June 2009), references use url format where available.

Abbreviations:

boe: barrels of oil equivalent; CCS: Carbon capture and storage; CTL: Coal to liquids; mbd: million barrels per day; mcf: million cubic feet (bn: billion; tn: trillion etc); L: author’s library copy for further detail (either digital or paper); mcm: million cubic metres; oe: oil equivalent; p.a. per annum.

1.1.10. Head of FSA says next UK government must tax “bads” and spend on green stimulus. Adair Turner says “If we have to raise taxes – and we will to some extent – we can deliberately design those to tax bad environmental things, like overuse of fossil fuels, rather than good welfare-enhancing things, like employment for people.”1

Arup heads industry consortium aiming to retrofit UK homes with energy efficiency and create tens of thousands of jobs. GE and EDF are among the 25 companies involved in the Thames Gateway Institute for Sustainability, which plans to use the Thames Gateway as a showcase for what can be done. Funding is a big part of the project and the group is in “advanced talks with pension funds.”2

Oil company bosses will have to solve riddles to find success in 2010 , a Petroleum Review editorial asserts. Opec has more than 3 mbd of spare capacity, nearly 80% in the GCC, and if they can maintain discipline €75 oil is here for a long while. So what do you do if your incremental cost of production is higher, as so much IOC production is? And when exploration and development costs doubled between 2005 and 2008, only falling back 20% in 2009? And when investment in the oil sector as a whole fell 19% in 2009, according to the IEA?3

Total has completed Europe’s first complete CCS system at Lacq. The 30 MW capacity plant targets sequestration of 60,000 tonnes of CO2 pa from a gas-fired power plant in a nearby depleted gas field. It uses oxycombustion (where the fuel is burned pure oxygen rather than normal air) to see if the CO2 emissions can be cut in half. The plant is intended to run for two years, at a rate of 200 tonnes captured per day (i.e. 120,000 tonnes in all). France has perhaps 400 mt of stored CO2 capacity in depleted oil and gas fields, and 1-25 billion tonnes of capacity including saline aquifers.4

Vattenfall’s Schwarze Pump CCS plant one year on has had a better than 90% capture rate in a 30MW capacity plant. Extracted gas is shipped 350km by lorry to a Gaz de France field for use in enhanced gas production. Vattenfall’s head of communications does not reckon the plant can be commercial if scaled up to service the 1 GW Schwarze Pumpe plant.5

Photon forecasts saturation in one or more key PV markets by 2013. This will cause an earthquake for the industry bigger than the capping of the Spanish market and the illiquidity in H2 2008. Prices will collapse, margins will fall, installation volumes will drop. Photon has identified seven potential interconnected drivers, including emerging impact on the profit of utility business, causing massive resistance to PV. This could happen as soon as 20 GW installed (2010 in Germany) and is likely by 50 GW (2012 in Germany).6

VC funding for solar plummets 62% to $1.45bn in 2009. That was 85 deals. 2008 saw $3.85bn in 92 deals. The biggest 2009 deal was Solyndra’s $100m.7

3.1.10. World Bank accuses Shell of walking away from solar PV module warranties in Sri Lanka, leaving thousands with no maintenance service as many Shell-manufactured modules display problems. Damian Miller 1 http://www.guardian.co.uk/business/2010/jan/01/fsa-adair-turner-green-economy 2 http://www.guardian.co.uk/business/2010/jan/01/business-academia-institute-sustainability-technology 3 Petroleum Review, Editorial, January 2010, no url.4 “Laq links up full-chain CCS in France,” Recharge, January 1010, no url.5 “Germany’s Schwarze Pumpe: one year on,” Recharge, January 1010, no url.6 Photon magazine, January 2010.7 Photon magazine, January 2010.

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of Orb Solar: “in Sri Lanka, poor customers with average earnings of $1,500-$2,000 a month have bought Shell's solar systems. The system is equivalent to 30% of their annual income,” he added. “They could only afford a system because they could get a loan from microfinance institutions or other banks. But now there are reports of thousands of Shell's [branded] solar panels failing in the field and Shell seemingly is not replacing them.”8

UK manufacturing sector refutes UK Chancellor’s claim of a British "green" jobs revolution , thanks to government support. Rather, the UK is in danger of “missing the boat”, the industry body, the EEF, says. Over 90% of the €2bn earmarked for the London Array, the UK’s biggest project, is being spent abroad. A Department of Business spokesperson says it is unfair to pick one project, albeit the world’s bigggest: "British companies are successfully competing for work on schemes around the world such as the Masdar city project in Abu Dhabi. The government has unveiled a range of new initiatives, such as support for the Dalton Nuclear Institute in Manchester and the Nuclear Advanced Manufacturing Research Centre in Rotherham.”9 Europe's first electricity grid dedicated to renewable power takes a step closer to reality this month as nine countries formally draw up plans to link their renewables projects around the North Sea. The thousands of kilometres of highly efficient undersea cables, designed to counter the influence of weather on supply, could cost up to €30bn (£26.5bn). An EC working group will produce a plan by the end of 2010.10

Will Hutton sees an upbeat 2010 for the UK economy, thanks in part to government intervention. “Over the last nine months, the stock market has recorded the third biggest rise since 1693, according to the Bank of England, and if it carries on rising just a little more in January it will be the biggest sustained rise for 317 years. A stock market cannot jump on this scale and with this ferocity without matters quickly improving on the ground.” Unemployment has risen less than expected and fell sharply in December. “The two great students of the impact of credit crunches, Carmen Reinhart and Kenneth Rogoff, calculate in their remarkable book on 800 years of banking crises, This Time Is Different, that the average rise of unemployment in countries experiencing major systemic banking crises since 1930 is 7% of the workforce. In Britain, this would have meant an unemployment rise of around 1.75 million. It is not going to happen, catching everyone out, including me. Unemployment will certainly carry on rising in 2010, but the eventual rise will be around 1.25m; serious, but not as cataclysmic as it could have been.” “We have witnessed a powerful example of how public policy can head off putative slumps.”11

City economists see fiscal deficit as main problem in a sluggish UK economy. 37 of the 79 economists polled said the UK was threatened by a fiscal crisis that could derail any revival. Howard Davies: “The major risk is the loss of confidence in the government’s ability to get the public finances back under control.” In that case, investors would eschew the high priced government bonds, and interest rates would rise. Sir John Gieve, former deputy governor of the central bank: inadequate plans for addressing the fiscal deficit could result in sharp rate rises and a fall in the pound.12

Russia halts oil shipments to Belarus after a dispute on pricing similar to previous on in January 2007. The Russians object to Belarus importing oil, refining it, and selling it on the Europe at lower price than Russian oil. The knock-on worries in Europe about an oil price war between Russia and its former satellites are less than for gas, because oil is more fingible than gas.13

Fed chief says tougher regulation is still needed. “Borrowers chose, and were extended, mortgages that they could not be expected to service in the longer term,” Ben Bernanke says. “This description suggests that regulatory and supervisory policies, rather than monetary policies, would have been more effective means of addressing the run-up in house prices.”14

Beware the crisis around the corner, says Clive Crook in the FT. The rules have to be tightened, and they aren’t being. Something must be done about moral hazard (though not via a new Forget Glass-Steagal Act). “In good times, when lending is expanding quickly and financial institutions’ concerns about capital and liquidity are at their least, the requirements should tighten. Under current rules, they do the opposite.” Banks will oppose this of course, he notes.15

4.1.10. Oil price breaks $80 and FT’s Ed Crooks predicts $70-80 at the end of 2010. The current price rsie is mainly down to a US cold spell, and Carola Hoyos predicts in the FT that the Iraqi election in March will be the biggest determinant of the price ahead this year.16 Some politicians are already saying they will reverse contracts agreed with the IOCs. Ed Crooks’s forecast is based on Opec supply availability meeting Chinese demand, but is offered with appropriate caveats.17

Cairn Energy prepares to drill its first oil well off Greenland, with shares riding high on hopes of a find. Only 6 wells have been drilled in Greenland, all of them unsuccessful. But the USGS estimates many tens of billions of barrels of available resources. FT: “Greenland is a true frontier, which is what makes it exciting; ‘romantic’, as one analyst put it. It is also nerve racking when you are spending an estimated $300m for four wells – Cairn’s expected budget – and plan to drill for two or three years.”18

5.1.10. National Grid warns industrial customers their gas could be cut off as a cold spell intersects with the return to work. This “gas balancing alert,” and a surge in gas prices, show once more how low UK gas storage capacity is.19

Carbon Trust says UK offshore wind faces huge challenges, but they can be overcome. The government’s announcement of the result of offshore wind licensing in a few days will see the UK emerge as the biggest offshore wind market. But 5 MW turbines will have to be installed in 30 metres of water at the rate of 2 a day to hit government targets. And the market-enablement regime beyond 2014 is in doubt, which means the

8 http://www.guardian.co.uk/business/2010/jan/03/shell-sri-lanka-solar-warranty-row#start-of-comments 9 http://www.guardian.co.uk/business/2010/jan/03/manufacturing-sector-slams-darling-claim-government-supports-green-jobs 10 http://www.guardian.co.uk/environment/2010/jan/03/european-unites-renewable-energy-supergrid 11 http://www.guardian.co.uk/commentisfree/2010/jan/03/uk-economic-recovery 12 http://.ft.com/cms/s/0/e7b2258a-f8af-11de-beb8-00144feab49a.html 13 http://www.ft.ccms/s/0/45e87598-f863-11de-beb8-00144feab49a.html 14 http://www.ft.com/cms/s/0/a8fe3a18-f8af-11de-beb8-00144feab49a.html 15 http://www.ft.com/cms/s/0/46d725b0-f897-11de-beb8-00144feab49a.html 16 http://blogs.ft.com/energy-source/2010/01/04/oil-price-rallies-to-more-than-80-but-will-it-stay-that-way/#more-38666 17 http://www.ft.com/cms/s/0/dd836182-f57b-11de-90ab-00144feab49a.html 18 http://www.ft.com/cms/s/0/233587c0-f962-11de-80dc-00144feab49a.html 19 http://www.ft.com/cms/s/0/6990fba0-f999-11de-8085-00144feab49a.html

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economics and investability is too.20 But the CT thinks it can be done, and would create 70,000 jobs by 2020, 50,000 of them in the manufacturing that it hopes will come to the UK. The result would be comparable to the opening up of the North Sea for oil in the 1970s and 80s.21

Why don’t governments talk about peak oil? Could it be because they know it is a huge problem? So a researcher asks in a review on The Oil Drum. Shane Mulligan, a postdoctoral fellow at the University of Waterloo, examines every explanation he can find referred to in the literature. They just don’t “get it”, or they are overly committed to neoclassiocal economics, or they are hindered from realisation by cognitive biases, or they have been misled by the IEA or EIA, or we can blame it on the media, or they get it but they can’t talk about it, or they are actively avoiding the issue (as in the Wicks Review), or they’re on the case. He tends to the view that they do know about peak oil, and not acknowledging it is part of their policy response.22

6.1.10. FTSE rides on 16 month high, with RBS one of the star stock performers. The FTSE 100 benchmark closes at 5,530.BIS invites top bankers to Basle to discuss resurgance of “excessive” risk behaviour in banks. The Bank of International Settlements – the central banks’ bank – says “financial firms are returning to the aggressive behaviour that prevailed during the pre-crisis period”. Among those invited were the CEOs of Goldman Sachs and JP Morgan Chase, and they do not plan to attend.23

Iceland’s President says he will take government’s EU reparation pledge to a referendum. By doing this he effectively blocks legislation to repay Britain and the Netherlands more than €3.8bn ($5.5bn, £3.4bn) lost to shareholders in Iceland’s banking collapse. He risks making Iceland a financial pariah nation.24

Business leaders hail Scottish ministers green light for power line through the Highlands as vital for onshore and offshore renewable energy, 4GW+ of which needs to be linked to the central belt. Scottish and Southern Energy will upgrade the existing 137-mile electricity transmission line from Beauly, near Inverness, to Denny, near Falkirk. 25

7.1.10. Gas supplies cut to businesses in the British NW as freezing spell hits western Europe. 95 companies on interruptible contracts are affected. EEF the manufacturers association, says: “unless we invest in gas storage facilities to the same levels as other industrialised nations, this could have a very damaging effect on manufacturing companies in the future.” The spot price of gas has risen sharply to 56p per therm, but still well short of the 2006 peaks of over £2 per therm.26

Large parts of freezing China now face power cuts as gas is limited. Demand has gone up and coal production has been disrupted.27

EDF boss says nuclear is essential, and will be cheaper than gas, coal with CCS, and renewables. Vincent de Rivaz, CEO of EDF Energgy, says that “using gas, additional offshore wind or clean coal instead of nuclear could cost consumers dearly. EDF Energy is among the companies developing renewables towards the government’s target. But replacing the planned 16GW of new nuclear capacity with offshore wind beyond the existing renewables targets could add about £100 a year to typical domestic energy bills (NB EDF says £40 for nuclear …so less than half as expensive), or possibly more, according to our calculations. The impact of clean coal would be only slightly lower. Gas-fired generation could also carry a high price. If fossil fuel prices return to their 2008 peak, using gas to replace nuclear would add around £60 to annual household bills. Of course, depressed fossil fuel prices could reduce this impact. But using more gas would do little to cut emissions and would increase concerns about energy security. The message is clear: if we are to cut emissions and keep bills affordable we need the cheapest low-carbon technology – nuclear.”28

Google asks for regulatory approval as an energy supplier. Last month the internet search company created a subsidiary called Google Energy. Now it seeks approval from FERC to buy and sell power like utilities do. Google says its primary goal was to gain flexibility for buying more renewable energy for its power-hungry data centers. 29 But ….Google’s Green energy czar, Bill Wiehl: “We also saw a real gap in what I would describe as “engineering innovation,” between what happens in a basic research lab and what happens in a typical venture capital-funded company. From an engineering point of view, it seems like it ought to be possible to do this, but no one’s actually ever designed this thing to really drive the costs down really low. What if we were to try? What if we were to fund someone else to try?” His unit’s goal is to make renewable energy cheaper than coal. The three most likely candidates for the breakthrough, he believes are CSP, enhanced geothermal, and high altitude wind. B ut: “As a society, we have chosen to invest too little in alternative energy over the years, and that has made some of the choices much harder than they should be. We should have been investing much more in solar [photovoltaics] since the 1970s than we have.”30

8.1.10. £40bn bonus pa outs to bankers show government efforts to have made no difference. The $65bn handout by the world’s biggest banks means they have elected to take the UK Treasury's 50% tax hit themselves rather than pass it on to their workers. An Illinois pension fund has argued in a lawsuit filed yesterday that the payments harm shareholders. Goldman Sachs maintains the lawsuit is “completely without merit”.31 German firms win most of the deals in the UK’s giant offshore wind licensing round . Nine consortia sign agreements with the Crown Estate, the body with responsibility for renewable power in UK waters, to take their proposals through the planning stage. Only three have British majority stakes, and only 5 involve British firms. Eon, RWE and Siemens are big winners. Some $75bn in contracts and 70,000 jobs are at stake in the c 32GW of offshore wind (6,500 turbines) intended to generate 25% of UK electricity by 2020.32

20 http://www.ft.com/cms/s/0/4742578a-fa37-11de-beed-00144feab49a.html 21 http://www.ft.com/cms/s/0/bc088e70-fa34-11de-beed-00144feab49a.html 22 http://www.theoildrum.com/node/6100 23 http://www.ft.com/cms/s/0/310b5c88-fb0d-11de-94d8-00144feab49a.html 24 http://www.ft.com/cms/s/0/2019f466-faea-11de-94d8-00144feab49a.html 25 http://www.ft.com/cms/s/0/e792283a-fade-11de-94d8-00144feab49a.html 26 http://www.ft.com/cms/s/0/98d6049a-fbca-11de-9c29-00144feab49a.html 27 http://www.ft.com/cms/s/0/a08bea5e-fbb3-11de-9c29-00144feab49a.html 28 http://www.ft.com/cms/s/0/c970c97c-fbc1-11de-9c29-00144feab49a.html 29 http://bits.blogs.nytimes.com/2010/01/07/google-applies-to-become-power-marketer/?th&emc=th 30 http://greeninc.blogs.nytimes.com/2010/01/07/qa-googles-green-energy-czar/ 31 http://www.guardian.co.uk/business/2010/jan/08/bonus-time-city-banks 32 http://www.guardian.co.uk/environment/2010/jan/08/north-sea-wind-contracts

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UK imports electricity from France to meet demand in the cold spell. At 2.30pm today France was sending 1,766 megawatts under the Channel.33

9.1.10. Chinese renewables boss sees limited scope for CSP in China, preferring PV but Chinese companies are pushing ahead developing plenty of CSP nonetheless. Li Jenfung says concentrating solar power works best when cheap water, cheap land and lots of sun are available in the same place, and this is a rare combination in China. he also expects it to prove more expensive per kilowatt-hour generated than PV. Li is a deputy director general for energy research at the National Development and Reform Commission, the top economic planning agency in China, and secretary general of the government-backed Chinese Renewable Energy Industries Association.

10.1.10. US banks braced for bonus backlash. Goldman Sachs, Morgan Stanley and others prepare to be assailed by protest as they hand out massive bonus packages. GS considers a programme that would oblige its top executives to give a percentage of their package to charity. This would copy a policy at failed bank Bear Stearns, with required a 4% charity contribution from 1,000 executives in a programme that ran for decades. “Goldman set aside $16.7 billion for compensation in the first nine months of 2009, and in good years, the firm dedicates about three-quarters of its compensation budget to year-end bonuses. The firm is expected to report later this month what could be record profit of about $12 billion for 2009, according to analysts’ estimates, compared with $11.7 billion in 2007.”34

New fears about future gas supplies, as UK government signs off on new gas power plants. This new “dash for gas is fuelling concerns that Britain’s infrastructure may become more vulnerable to extreme weather and supply disruption. Some 14,000 megawatts of new gas-fired generation have been approved. Gas-fired capacity abailable this winter is about 25,000MW,35 Fear about nuclear radiation are irrational, says Oxford physics professor. The health dangers from nuclear radiation have been oversold, according to Wade Allison, who argues that low levels of radiation can be easily tolerated by the human body and that the government is right to promote nuclear power for climate change, therefore.36

11.1.10. Deep within Gazprom’s HQ, an engineer in a control room explains how he could turn off the lights. “An engineer explains how easy it would be to turn out the lights in a foreign city with the click of a button on his desk,” Dan Roberts writes in the Guardian. Gazprom claims to have natural gas in Siberia equivalent to all the oil and gas fields owned by western energy companies put together. 50.1% state owned, its taxes provide some 20% of the Russian government’s income. “Rumours persist that senior government figures (including Vladimir Putin) have sizeable indirect holdings.” The gas giant has had a bad year, but is bouncing back, given the return to $80 oil. Sergei Kupriyanov, Gazprom’s official spokesman, hopes Gazprom will sell to British residential sector one day. "Yes, definitely. The British market offers ample opportunities of developing downstream operations – we appreciate the fact that it's a liberalised market and all of the infrastructure is in place." UK reserves near depletion in less than eight years at current extraction rates.37

Demand for oil is increasing at such a rate in Saudi Arabia that exports are likely to be constrained , analysts fear. Domestic consumption jumped 16.4 per cent year on year in August because of an unprecedented surge in the burning of crude. Inefficient power plants and shortage of gas led the reasons. As a result, the IEA has revised up its forecasts for Saudi domestic oil consumption to 2.8m barrels a day in 2010. Last year’s production was a record 12.5m barrels a day. The government has postponed some energy-intensive projects. Oil is sold for $5 a barrel in the Kingdom. “Even Saudis complain that subsidised fuel and cheap cars encourage wasteful use of energy, especially by young people who have little means of entertainment in the conservative kingdom except driving or participating in unofficial drag races.”38 UK wind farms produced “practically no electricity” during the cold snap. Low pressures cut the wind out so that only 0.2pc of a possible 5pc of the UK's energy was generated by wind turbines in the last few days.39

12.1.10. Geoengineering conference convened in March in wake of Copenhagen’s failure. Says Mike McCracken of the US Climate Institute, convenor of the California event: “Most of the talk about these geoengineering techniques says they should be saved until we get to an emergency situation. Well the people of the Arctic might say they are in an emergency situation now.”40

Coal stockpiles fall to low levels in China’s cold spell. Supplies for 11 percent of power plants connected to China State Grid’s network have fallen to less than three days’ worth and could be shut “any time,” Xinhua news agency says.41 Investors are putting trillions at risk by ignoring climate change, Ceres report says. A survey of leading asset managers shows the vast majority are not factoring climate-related trends into their short- and long-term investment decision-making.42 EIA expects US gas output this year to be down 3% due to steep new-well production declines. In its January Short-Term Energy Outlook, EIA forecast consumption averaging about 62.44 bcf per day, versus 2009 demand of 62.45 bcf daily. Growth in residential, commercial and industrial use is offset by declining demand from the electric power sector.43

13.1.10. Ofgem sees a “cliff edge” in UK gas supplies in 2015-16. Alistair Buchanan, head of Ofgem, tells the FT he sees a risk that new Russian and the Caspian gas supplies might not be available in time to meet UK demand as domestic gas production falls. UK gas production is down 40% since 2000. Buchanan questions whether the ultra-competitive UK market is structured in the right way to guarantee security of supply.44

33 http://www.guardian.co.uk/commentisfree/2010/jan/09/energy-supplies-offshore-wind-power 34 http://www.nytimes.com/2010/01/11/business/economy/11goldman.html?th&emc=th 35 http://www.ft.com/cms/s/0/cd32ec4e-fe40-11de-9340-00144feab49a.html 36 http://www.guardian.co.uk/environment/2010/jan/10/nuclear-power-irrational-fears 37 http://www.guardian.co.uk/business/dan-roberts-on-business-blog/2010/jan/11/gas-oilandgascompanies 38 http://www.ft.com/cms/s/0/04bc672c-fed1-11de-a677-00144feab49a.html 39 http://www.telegraph.co.uk/finance/newsbysector/energy/6957501/Wind-farms-produced-practically-no-electricity-during-Britains-cold-snap.html 40 http://www.guardian.co.uk/environment/2010/jan/12/geo-engineering-summit 41 http://www.bloomberg.com/apps/news?pid=20601072&sid=aqX2L6dP3z1g 42 http://blogs.ft.com/energy-source/2010/01/12/climate-change-isnt-making-inroads-necessary/ 43 http://www.reuters.com/article/idUSN1219634020100112 44 http://www.ft.com/cms/s/0/1cde9d3a-ffe3-11de-ad8c-00144feabdc0.html

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Russian gas bailed the UK out as Norwegian supplies faltered in the cold snap , the Major Energy Users' Council says. Eddie Proffitt, chairman of the council's gas group: “The [British] gas industry has coped very well but we have been lucky. It would have been desperate if we had seen the kind of disputes between Russia and Ukraine that have reduced gas flows on the continent in the past two or three Januaries.”45

Recession hit North Sea 2009 oil and gas production. An average of 600m barrels of new reserves were brought on stream each year between 2004 and 2008. Wood Mackenzie reports only eight oil and gas fields – expected to produce a combined lifetime total of 140m barrels of oil equivalent – began production in 2009. Investment in exploration and appraisal drilling in the UK North Sea fell by 37 per cent in 2009, and the oil price drop delayed projects as well. 43 companies were working in the UK North Sea in 2008. 24 are today. Tax revenues from the North Sea were £6.9bn in 2009, down from £12.9bn in 2008.46 Russia seeks bilateral role in Indian solar expansion. Indian Prime Minister Manmohan Singh launches the Jawaharlal Nehru National Solar Mission, aiming for 20 GW of solar energy for India by 2022, alongside Sergei Seredin, Russia's first deputy director general of economics and finance, who led a delegation from Moscow in the inaugural ceremonies. He says Moscow was interested in playing a role in New Delhi's strategy to construct solar power stations and manufacturing facilities.47 American consumerism threatens the planet, says the Worldwatch Institute. The average American consumes more than his or her weight in products each day. This culture of of greed and excess and the exporting of it is emerging as the biggest threat to the planet, according to the annual report of the Worldwatch Institute. It could wipe out any gains from government action on climate change or a shift to a clean energy economy. In the Noughties consumption of goods and services rose 28% to $30.5tn (£18.8bn).48

Wall Street bosses apologise for mistakes but still defend bonuses. Leading Wall Street bankers tell the US government’s Financial Crisis Inquiry Commission that they underestimated the severity of the crisis and apologise for making mistakes and needing to be bailed out with $360bn. Commissioner: “If you knew then what you do now, what would you have done differently?” JP Morgan CEO Jamie Dimon: a crucial blunder was “how we just missed that housing prices don't go up forever.”49

14.1.09. China Daily reports oil imports “hit alarming levels” in 2009. 52% came from abroad. “Analysts believe that by 2020, nearly 65 percent of the oil consumed in China will have to be imported. China's oil dependency reached 45 percent in 2006 and grew at two percent every year after that.” The country first became a net importer of crude oil in 1993.50

US climate envoy US will not cede control to the UN. The UN process is too ponderous, and main emitters need to negotiate as a group, Todd Stern says. The big test for the Accord comes on 31 st January, when countries have to table their formal commitments. Copenhagen was a hair’s breadth from collapse, he says, in his first public appearance since the summit.51 Stern’s deputy Jonathon Persching says the UN should be sidelined. Fewer than 30 of 192 countries have signed the Accord.52

Arctic permafrost leaking methane at record levels. New figures published in Science magazine show emissions rising by almost a third in just 5 years, by around 1m tonnes of extra methane each year between 2003-2007, driven by rising temperatures. The study also shows just 2% of global emissions are from the Arctic, but that is the fastest growing region. There is a clear positive feedback, says Paul Palmer of Edinburgh University, one of the researchers.Targeting of US weather reporters on climate-change denial has been brutally effective and may have been the most successful targeted campaign ever. Sea Kidney: “have a look at a story just published in the Columbia Journalism Review on the extraordinarily powerful impact on US public opinion of pseudo-scientist TV weather reporters.53 I first became aware of the assertive ignorance of some weather reporters when my news monitoring kept turning up denialist stories on the Weather Channel website, and I dived in to try and correct some of them. The Columbia Journalism Review story explains just how widespread the problem is and, at the same time, just how central weather reporter views are to the understanding of climate change by the US public. When asked in a national survey who they trusted for information about global warming, 66 percent of respondents named television weather reporters! Unfortunately, most weather reporters don't 'believe' in climate change. The underlying story is how the 'sceptic' Heartland Institute targeted weather reporters some years back, giving them free tickets to sceptic's conferences and the like. That would have to be one of the more successful targeted campaigns in history, helping block policy progress for years; it needs to be reversed.” Targetting investors in coal is the way to do that.54

China’s growing coal imports begin to look costly as thermal coal price hit $100 a tonne , and the FT speculates that long-term coal dependence could be under review. Domestic demand for coal began to catch up with domestic production about 2008 and China began importing from new sources recently.  More than half of China’s coal imports come from Australia, Indonesia and Vietnam, with Russia, Mongolia, and Canada the main second-tier suppliers. This month, for the first time, imports include Colombia coal. Prices for thermal coal hit $100/tonne this week.55 Jim Hansen in open letter to carbon traders: you “are choosing the path of corporate greed.” Cap-and-trade allows energy companies to add the costs of the right to pollute to consumer’s fuel bills in a hidden tax. The fee-and-dividend approach that he favours taxes fossil fuels at the point of extraction, and spreads the proceeds among the public so they can reduce their carbon footprint and avoid high fuel prices.56

Obama announces a levy that will recover $90bn from the 50 largest US financial institutions. The President calls the bankers’ bonuses “obscene” and tells them: “I’d urge you to cover the costs of the rescue

45 http://www.guardian.co.uk/business/2010/jan/13/russia-aids-gas-uk-gas-supply 46 http://www.ft.com/cms/s/0/e0db0b90-0099-11df-ae8d-00144feabdc0.html 47 http://www.upi.com/Science_News/Resource-Wars/2010/01/13/Moscow-eyes-role-in-Indias-solar-plans/UPI-17341263401397/ 48 http://www.guardian.co.uk/environment/2010/jan/12/climate-change-greed-environment-threat 49 http://www.guardian.co.uk/business/2010/jan/13/financial-crisis-inquiry-mistakes 50 http://www.chinadaily.com.cn/china/2010-01/14/content_9317561.htm 51 http://www.guardian.co.uk/environment/2010/jan/14/climate-change-us-envoy-copenhagen 52 http://www.guardian.co.uk/environment/2010/jan/14/climate-talks-un-sidelined 53 http://www.cjr.org/cover_story/hot_air.php?page=all 54 e-mail from Sean Kidney to undisclosed recipients, 14 January 2010. 55 http://blogs.ft.com/energy-source/2010/01/14/could-china-fall-out-of-love-with-coal/ 56 http://www.guardian.co.uk/environment/2010/jan/12/james-hansen-carbon-emissions

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not by sticking it to your shareholders or your customers or your citizens but by rolling back bonuses.” He urges other countries to follow suit.57 Obama needs to levy the fee to help cover a $117bn loss to the US treasury from the $700bn TARP bailout, and wants it in place by June. He intends to apply a levy of 15 basis points, or 0.15%, on the liabilities of 50 large financial institutions with assets of more than $50bn. Jamie Dimon, JP Morgan CEO: “Using tax policy to punish people is a bad idea. All businesses tend to pass their costs on to customers.”58

The world's biggest banks are flouting the Equator Principles, environment groups say. They continue to lend to some of the most environmentally damaging energy and infrastructure projects despite the protocol agreed to seven years ago that was meant to stem such practices, including the financing of huge projects that fuel climate change. 86 campaign groups from 27 countries have sent a letter to 60 banks pouring scorn on the way the Principles are being flouted.59

Green technologies pose “the investment opportunity of our lifetime” says Deutsche Bank. Companies specializing in energy efficiency and renewable energy such as wind and solar power outperformed peers across the wider global economy last year, a Deutsche Bank report finds in a study. The Bank expects more of the same in 2010. Kevin Parker, global head of asset management: “The absolute imperative to prevent climate change is therefore also, I believe, the economic and investment opportunity of our lifetime.”60

15.1.10. FT editorial: “Obama is right to clobber Wall Street”. “Debate about the levy, however, must not distract from the question of how to construct a financial system where banks can fail safely. In future, it must be easier for bank debt to be turned into common equity in a crisis, and the fate of insolvent banks’ counterparties must be made clearer to prevent the panic that followed the Lehman bankruptcy. Capital requirements must also be raised.”61

Paul Krugman on the testimony of the “clueless” Wall Street bosses. “The bankers’ testimony showed a stunning failure, even now, to grasp the nature and extent of the current crisis. And that’s important: It tells us that as Congress and the administration try to reform the financial system, they should ignore advice coming from the supposed wise men of Wall Street, who have no wisdom to offer. There were two moments in Wednesday’s hearing that stood out. One was when Jamie Dimon of JPMorgan Chase declared that a financial crisis is something that ‘happens every five to seven years. We shouldn’t be surprised.’ ….Goldman Sachs’s Lloyd Blankfein, who compared the financial crisis to a hurricane nobody could have predicted.” 62

Areva weighs cheaper reactors after failure of Abu Dhabi bid. An internal review has been launched to assess whether to reintroduce the simpler second-generation CPR1,000 reactors, which it stopped building 20 years ago. “Safety standards in the US and Europe would not allow a second-generation reactor to be built,” an Areva executive acknowledges: but 20% of countries that would accept the lower safety standards. Areva's third generation EPR reactor, marketed as an advance in safety technology, has features such as a double shell reinforced to withstand an airline crash, and a secure chamber to contain waste from a core meltdown. EDF estimates the cost at about €4bn ($5.8bn) or even higher. This seems to have been too much for Abu Dhabi.63

17.1.10. A string of tech companies prepares IPOs in London after a drought of three years . “To float you need scale and and a good growth story. Many companies are talking about floating this year but I think you will be lucky if 20 per cent of them actually do,” says one analyst. In 2009 IPOs represented only 10 per cent of venture-backed exits, with M&A 90 per cent.64

SRI may be holding back sustainable investment: FT op-ed. Assets under management rose by 9 per cent a year to €53bn (£47bn, $77bn) by the end of June 2009. Some say this proves socially responsible investing (SRI) is more than a fashion. Yet SRI remains a niche area with SRI assets reaching a mere 1.11 per cent of total assets in Ucits funds this year. “We think part of the answer lies in the lopsided relationship between SRI and risk. SRI is often considered a non-financial overlay to the investment process. It seeks to protect the investor from making unethical, socially undesirable or environmentally unfriendly investments. Sustainable investment, however, has an investment return focus that regards sustainable development as an opportunity to invest based on a set of financial and non-financial criteria. These, therefore, are two very different animals and SRI may be holding back sustainable investing.”65

18.1.10. Goldman Sachs: oil shortages will reappear in 2011. By then supply demand will be outpacing supply because of underinvestment. Analyst Jeffrey Currie forecasts demand exceeding pre-crash levels by Q3 this year. “It’s as good as it’s going to get right now in terms of supply growth,” says Currie. Goldman predicted in December that crude would average $90 a barrel in 2010 and $110 per barrel in 2011. Goldman’s outlook for this year is joint-highest among 38 analyst estimates compiled by Bloomberg.66

ITPOES Letter to FT: Gas crunch that will prove a wake-up call for consumers. Sir, Your report “Ofggen foresees looming threat to gas supplies” (January 13) raises some serious concerns over national energy security. The “gas crunch” identified in your report is probably going to be matched, or exceeded, in its effect on the UK economy by a similar “oil crunch”. This prospect was first identified by the Industry Task Force on Peak Oil and Energy Security (ITPOES) in its report dated October 2008. Oil supply has very similar characteristics to gas, except that the run-down in indigenous production is more advanced and the availability of oil is more limited with respect to future demand. (The ability to extract “tight” gas from shale, at economic prices, has transformed the near-term international prospects for future gas supply.) A second report from ITPOES, updating and reinforcing the case, will be published by us on February 10. For those interested in the future security of UK energy supplies, it should be essential reading. From businesses to consumers, it is a wake-up call to every one of us about the future implications for our daily lives.Richard Branson, Founder, Virgin Group; Philip Dilley, Chairman, Arup; Jeremy Leggett, Chairman, SolarCentury; Ian Marchant, Chief Executive, Scottish and Southern Energy; Brian Souter, Chief Executive, Stagecoach Group67

BP joins with Sinopec in talks about shale gas exploration and development in China. Shell and Petrochina already have a shale gas programme. The deal hinges on Chinese access to western technology.68

Shell faces renewed investor pressure over tar sands. A coalition has forced a resolution onto the agenda of the May AGM calling for the Shell audit committee to do a review of risks. Catherine Howarth, chief executive of FairPensions, coordinator of shareholder opposition to the tar sands investments: “All (shareholders) are united in registering concern with the risks involved in Canadian oil sands. We expect that Shell's 2010 AGM could prove a watershed in the history of corporate accountability.”69

French nuclear industry in crisis as EDF and Areva go to war. EDF says Areva has halted uranium supplies and stopped removing spent fuel for treatment in an increasingly bitter row over their contractual relationship. The heads of the two state operators are asking Sarkozy to adjudicate. Areva supplies 68 per cent of the uranium used in EDF's reactors. EDF, which provides 77% of French electricity from its nuclear plants, has stocks for several months. The row has been cited as one of the factors behind France's failure to secure the contract to build reactors in Abu Dhabi.70

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Germany removes nuclear waste from a salt dome repository that has “proven unstable”. Thousands of barrels of low-level waste are to be removed from Germany's Asse radioactive waste disposal facility. The country's Federal Office for Radiation Protection (Bundesamt für Strahlenshutz, BfS describes the job as a “major scientific and technological challenge.”71 EON boss calls for rethink on retiring all coal fired power plants to make sure lights don’t go out. “There is a question mark over keeping one or two of these oil or coal fired plants mothballed to secure supplies for a few days per year when we get these conditions,” Paul Golby says.72 Coalition letter in Guardian urges higher solar UK feed-in-tariffs for UK. Signatories include the Home Builders Federation, the Federation of Master Builders, the National Housing Federation, many companies, and NGOs.73 Larry Elliot says “enjoy it while it lasts”: global credit bubble is far from over , and much depends on China. “Everybody knows what should happen in theory: the Chinese need to boost domestic consumption rather than relying on exports. Otherwise, with America unable to act as the world's consumer of last resort, the world is going to be flooded with goods that nobody wants. The lack of global demand will force down prices, making the threat of deflation extremely real and adding to pressure for trade barriers.”74

NY Times editorial describes “how retirees saved the banks”, and get a terrible deal in the process. “Measly savings yields are central to the government effort to buy time for the banks to earn their way back to health. It is important to rebuild the banks. But more attention must be paid to the collateral damage from that effort. Here’s what’s happening: By lowering the short-term interest rate it controls to virtually zero and creating lending programs, the Federal Reserve has enabled banks to borrow cheaply. The banks re-lend that cheap money, but not necessarily to consumers and businesses. They can, for example, lend it to back to the federal government by buying Treasury securities, and earn a nice spread between their cost of funds and Treasury yields. At the same time, banks are awash in deposits, much of it from investors who have pulled their money out of riskier investments. With money rolling in, big banks don’t need to compete with one another for savers, which further depresses the interest on offer. The result is presumably healthier banks and certainly poorer savers. Or, as William Gross, the legendary bond investor told The Times’s Stephanie Strom: “It’s capitalism, I guess, but it’s not to be applauded.” 75

19.1.10. Could China be the next Enron, Thomas Friedman asks. Maybe, after the Google fiasco. James Chanos, the investor who started the shorting of Enron stock and made a fortune, has said that China is akin to Dubai only 1,000 times worse. On 12th of January, Friedman concluded he was unlikely to be right. The reasons for his doubts started with the $2 trillion of foreign currency reserves.76 But today, he revises his view. After the government-backed hacker raid on Google, Friedman thinks “Command China” is increasingly at work with “Network China.” For this reason, Freidman thinks the Communist Party is worth shorting.77

20.1.10. UN drops deadline for emissions commitments under Copenhagen Accord. With the 31 January deadline looming, only 20 countries have filed. So the commitment becomes a “soft” target Un chief of climate Yvo de Boer decides.78

China's renewable energy consumption accounted for 8.3 percent of the total in 2009. So says an official from the National Energy Administration, Shi Lishan. China consumed 3 billion tonnes of standard coal equivalent in 2009, more than 90 percent from traditional fossil fuel sources, with over 70 percent from coal. China intends to raise total hydropower capacity to 300 gigawatts and wind power capacity to 150 gigawatts by 2020, Shi says. Total installed nuclear capacity should reach 80 gigawatts by 2020, while solar capacity should rise to 20 gigawatts.79

IPCC leader has to back down from claims Himalayan glaciers would melt by 2035 . “One paragraph, buried in 3,000 pages of reports and published almost three years ago, has humbled the head of the UN's IPCC. Facing global outcry, Rajendra Pachauri backed down and apologised today.” JL: So, another blow to credibility that will reverberate endlessly around the world, while the torrent of scientific bad news passes the the great majority by.80

Nature looks at “the real holes in climate science” and concludes they favour a worse outcome. The science magazine recounts six common myths:“- Climate models can't provide useful information about the real world. Models can reproduce much of the climate variation over the past millennium, but projections for the future are subject to well-described uncertainties, both in the understanding of climate and in estimates of future economic development. They cannot therefore provide decision-makers with exact information of the rate of future changes, but they can offer useful general information and they unconditionally predict a warmer world.- Global warming stopped ten years ago. Climate is not weather. The climate is the multi-decade average of the constantly changing state of the atmosphere. Natural variations can cause temperatures to rise and fall from year to year or decade to decade. Although global temperatures did not rise as quickly in the past decade as in previous ones, the most recent decade was the warmest on record.- Temperatures were higher in pre-industrial times. The consensus of proxy-based reconstructions of pre-industrial climate is that the second half of the twentieth century was probably warmer than any other half-century in more than a millennium. Warmer periods did occur in the more distant past, albeit under different orbital and geological conditions. In any case, warm spells in the past do not disprove human influence on climate today. The cause of any particular climate change needs to be investigated separately.- Temperature records taken in the lower atmosphere indicate that the globe is not warming. A decade ago, there seemed to be a discrepancy between surface and tropospheric temperatures. But this issue was resolved when long-standing calibration problems with satellite sensors were discovered. Satellite measurements show that the lower atmosphere is warming at a rate consistent with the predictions of climate models.- A few degrees of warming are not a big deal. In the most recent ice age, the world was only a few degrees cooler on average than it is today. The current rate of warming is in all likelihood unique in the history of humankind. There may be no such thing as an 'optimum' temperature for the planet, but modern human societies are adapted to the weather patterns and sea levels of the past millennia. The rapidity of global warming substantially adds to the problem.- Measured increases in temperature reflect the growth of cities around weather stations rather than global warming. Climate researchers have taken great care to correct for the impact of urbanization in temperature records by matching data from more-urban stations with data from rural ones. Moreover, some of the largest temperature anomalies on Earth occur in the least populated areas, including around the Arctic and the Antarctic Peninsula. Measurements also show warming of the surface ocean and deeper marine layers.”81

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Bill Gates says nuclear is worth pursuing; solar and wind, though good, have limitations . This on his Gates Notes web site, relaying his views about social problems, launched today. Gates has invested in a Seattle-based nuclear company working on reactor design, TerraPower. Solar is “way, way, way out of line” and has storage problems, he says in a podcast.82

21.1.10. Obama prepares for what he calls a “big fight with the banks” with limits on their trading. The day after a shock defeat for the Democrats in the Massachusetts Senatorial by-election, Obama makes a populist move. Proprietary trading operations, where banks use their own corporate funds to gamble in the markets, will now be limited. “We’ve got a financial regulatory system that is completely inadequate to control the excessive risks and irresponsible behaviour of financial players all around the world,” Obama says. “People are angry and they’re frustrated. From their perspective, the only thing that happens is that we bail out the banks... We’re about to get in a big fight with the banks.”83

The new banking regulation will be called “the Volcker Rule,” after its architect in the White House, Paul Volcker, the former Chairman of the Federal Reserve under Carter and Reagan.84 It prohibits any bank holding deposits guaranteed by the government from operating hedge funds, private equity funds, or from proprietary trading. On top of this will come a limit on the size of any bank.85

Goldman Sachs, announcing results, says it is exercising “restraint” in lowering bonus payouts to $16bn, so that the average pay packet is fractionally less than half a million dollars per employee. The proportion of revenue allocated to pay falls from 48% to 35.8%, the lowest proportion since the bank went public in 1999. Its compensation pool is reduced by a $500m donation taken from the pay of Goldman's 400 senior partners and given to a charitable foundation, Goldman Sachs Gives. CFO David Viniar: “We are certainly appreciative of the policies governments around the world put in place to help stabilise the world's financial system. We think they did a really, really good job.”86

UK could follow Obama lead on bank constraints. US officials will come to London to discuss co-ordinated action.87 But Darling has opposed a return to Glass-Steagal-type regulation, whereas the Conservatives say what Obama intends “needs to be done.”88

UK begins a programme to repatriate all radioactive waste from abroad. A cargo set sail for Japan last night, under an agreement that will cut Britain’s high-level waste stockpile by almost 40 per cent over the next ten years. All 925 tonnes of foreign atomic waste from Japan and four other countries will go. 28 steel canisters of waste, each weighing half a tonne but sheathed in 100-tonne steel flasks and under heavy security, are moved by rail from Sellafield, where they have been in temporary storage since the 1990s, to Barrow-in-Furness, there to be loaded on to the Pacific Sandpiper, a custom-built, double-hulled ship. Armed guards will protect the canister on their six to eight-week sea journey. The other countries involved are Germany, Italy, Switzerland and the Netherlands. Contracts from the 1970s and 1980s brought the spent nuclear fuel rods to Britain for reprocessing. But problems with the Sellafield plant and commercial disagreements led to lengthy delays. Some 5,000 steel canisters have been held at Sellafield. Direct exposure would kill a human being instantly. Japan will store the first shipment of canisters temporarily at the Rokkasho nuclear facility. It has not yet built a permanent-storage repository.89

22.1.10. FTSE and Dow Jones fall as investors fret over Obama’s move. Banks are the biggest losers of course, but Google’s spat with China isn’t helping.90

Brown to push for a Tobin Tax in wake of Obama’s gear change. But the City Minister Myners says the UK does not to copy the US because we already have a tax and requirement for living wills.91

Barclays elects to defer bonuses for top bosses in face of public pressure. Up to 100% will be deferred for three years.92

National Audit Office doubts ministers can deliver on promise of no public subsidy for nuclear. In a new report, the government’s own accountant doubts whether companies will be able to pay the full costs.93 VC investment down 37% in 2009, PWC reports. $17.7 billion went to 2,795 start-ups — 37 percent less cash and 30 percent fewer deals than in 2008. VC funds raised $15.2 billion, a 47 percent decline from the year before. Roger McNamee, co-founder of Elevation Partners: “the venture capital industry’s just lost its way, and it needs to reinvent itself. A very cynical game has developed where they make enough money off the fees to support a lovely lifestyle and they don’t have to work very hard.” Ten-year returns for the industry have dropped to 14 percent, from 36 percent in 2000, according to Cambridge Associates. Initial public offerings and sales of venture-backed companies were both sharply down: just 13 and 262 respectively.94

A quarter of the US grain crop is now being fed to cars, not people. So new 2009 figures from the Department of Agriculture show. This is enough to feed 330m people at average world consumption levels. Lester Brown: “Continuing to divert more food to fuel, as is now mandated by the US federal government in its renewable fuel standard, will likely only reinforce the disturbing rise in world hunger. By subsidising the production of ethanol to the tune of some $6bn each year, US taxpayers are in effect subsidising rising food bills at home and around the world.” 95

23.1.10. Prosperity without growth: it is possible, and imperative, Tim Jackson argues in his new book. “Questioning growth is deemed to be the act of lunatics, idealists and revolutionaries. But question it we must,” says Jackson in “Prosperity Without growth.” JL Review in Guardian: “For what it's worth, as a creature of capitalism – a venture-capital-backed energy industry boss, a private equity investor, and an Institute of Directors director of the month – I am convinced that capitalism as we know it is torpedoing our prosperity, killing our economies and threatening our children with an unlivable world. Tim Jackson has written the best book yet making this case, and showing the generalities of the escape route. The specifics, post-Copenhagen, are all down to us.”96

Banking lobbyists gear up to fight Obama’s reforms. The top 8 US banks spent $26m on lobbying last year – up 6% despite the crisis. They gave $78.2m to federal candidates and party committees in the first 10 months: more than any other business sector.97 They have a successful track record. A $300m lobbying assault during the Clinton administration saw the 1999 repeal of Glass-Steagal. Citigroup was a big beneficiary, and hired Clinton Treasury Secretary Robert Rubin soon after the appeal.98 An IMF paper has shown that the more a bank spends on lobbying, the bigger the risks it takes.99

If bankers had paid just 20% less in bonuses 2000-8, they would have had £75bn more capital – more than the taxpayer put in. So the Bank of England has shown, according to Will Hutton. Averting the crisis required £1.3 trillion of liquidity, guarantees and capital injections.100

24.1.10. Banks and investors are pulling out of carbon markets in the wake of the failure in Copenhagen . So Anthony Hobley, head of climate change and carbon finance at Norton Rose, and others, report.101

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Shell CEO says Shell’s expansion in the tar sands will be “very much slower” in years ahead. The company is making a strategic shift away from unconventional oil, and rely more on conventional oil and gas for growth.102

Saudi lead climate negotiator says climate talks are a worse threat than rival oil producers, and says the Kingdown will build a solar capacity quickly. “It's one of the biggest threats that we are facing,” says Muhammed al-Sabban, head of the Saudi delegation to the U.N. talks on climate change. “We are worried about future demand ... oil is being singled out. We are heavily dependent on one commodity.” The kingdom sees “some truth” in studies that point to demand peaking in 2016. Saudi Arabia plans to invest heavily in solar, al-Sabban says, hoping to begin exporting solar electricity by 2020. Saudi Oil Minister Ali al-Naimi has also said the government aims to make solar a major contributor to energy supply in the next five to 10 years.103

25.1.10. Economic growth cannot be achieved while limiting global warming to 2 degees C , a new Economics Foundation report concludes. The levels of carbon intensity required are probably impossible to achieve.104

EPA may tighten anti-SO2 rules as another route to cutting US coal use. Bernstein analyst Hugh Wynne sees such an approach forcing coal into “secular decline” in the US, because the tightening proposed would require a cut in emissions of 50% by 2015.105 China is setting the oil price, Goldman Sachs analysts think. They point in their weekly review to a 1.6mb/d rise in Chinese demand more than offsetting the 1.5 mb/d fall in the US.106

More and more families are falling into debt with energy companies in the wake of the cold spell.107

Meanwhile, the cold spell has put £100m of additional profits for energy companies, analysts report.108

Recovery of public trust in business is patchy, and working with NGOs will help, a global survey for Davos shows. Trust in business has risen from 49 per cent to 53 per cent around the world, according to Edelman’s annual “trust barometer” of well-educated, highly paid and engaged “informed publics.” Trust in government rose from 44 per cent to 46 per cent globally (up from 30 per cent to 43 per cent in the US but down from 41 per cent to 35 per cent in the UK). China, in contrasts, score 77%. Trust in US banks is just 29 per cent, down from 36 per cent in 2008, and 69 per cent in 2007, when US banking was the number three most trusted industry. Now it’s second lowest after insurance. “The survey draws the clearest picture yet of an emerging ‘stakeholder society’, in which delivering financial returns for shareholders is no longer seen as executives’ sole priority,” the FT reports. Just over half of those polled saw service to “society at large” as equally important. A clear majority say they are more likely to trust companies that work with NGOs to tackle global issues.109

26.1.10. Cyber attacks on oil majors include reserves details. Christian Science Monitor reports that at least three US oil companies - ExxonMobil, Marathon Oil and ConocoPhilips - have been targeted by hackers, possibly in China. The hackers have accessed ‘bid data’: highly sensitive commercial information discoveries and reserve estimates.110

27.1.10. Obama singles out green energy and infrastructure jobs in his State of the Union address. $30bn of the money repaid by Wall Street will go to community banks for lending to small businesses. Large numbers of jobs can be created in infrastructure projects such as higgh-speed rail, and clean energy, the President says. 111

He briefly refers to the world pushing ahead with a climate change agenda, but does not mention global warming or the cap and trade bill.112

Barclays President Bob Diamond lashes out at Obama measures in Davos. “If you say that large is bad and we move to narrow banks the impact on jobs and the global economy will be very negative.”113

Darling has secret talks with bankers in Davos as top City bankers try to head off Obama-style measures in the UK. But FSA boss Turner says policymakers need more than interest rates to tame asset-price booms and calls for the creation a new macro-prudential body in Britain with the power to take pre-emptive action.114

FT commentariat split on the Volcker plan. Martin Wolf points to a number of difficulties, but John Gapper welcomes it, even though the investment banks escaape lightly.115

US courts set to become a major battleground on climate change as three cases progress. Three lawsuits have been filed around the US, and are gaining ground. Two federal appeals courts, one in Connecticut and one in Mississippi, have reversed decisions by federal district courts to dismiss climate-change lawsuits, allowing the cases to go forward. The third, an Innuit lawsuit in Alaska over eroding shoreline, is going to appeal. The American Justice Partnership argues that the conspiracy accusations on this case make it “the most dangerous litigation in America.”116 In a report last year, Swiss Re compared the suits to those that led dozens of companies in asbestos industries to file for bankruptcy. The reinsurance giant predicted that “climate change-related liability will develop more quickly than asbestos-related claims,” and said that pressure from the cases “could become a significant issue within the next couple of years.”117 UK opinion poll shows huge public support for feed-in tariffs. A survey of more than 2,000 people carried out for the Cooperative Group and others shows that two-thirds of people think that the government's feed-in tariff plans should be more ambitious, and that 71% of homeowners would consider installing green energy systems if the tariffs give a good return. JL: says that the new government scheme could yet deliver hundreds of thousands of jobs in solar photovoltaics and other small-scale renewables. “It could also cut significantly our country's increasing dependence on imported fossil fuels,” he added.118

Up to £160bn per field tax relief available for oil companies on the North Sea frontier, the Government announces. This applies to companies planning to exploit the estimated 4bn barrels of oil and gas equivalent lying in deep waters as far as 100 km off the west coast of the Shetland Isles. Total claims the projects will be uneconomic with support because of the long distance transportation requirements.119

Areva and GDF-Suez negotiate a partnership to develop the next generation nuclear reactor. Not yet signed, it will surely be opposed by EDF’s new boss. The deal will give EDF’s rival privileged access to the design and operation of the Areva/Mitsubishi 1110MW Atmea reactor, a smaller version of Areva’s flagship 1600MW EPR reactor.120

Toyota wins the Zayeed Prize, and then has to recall millions of cars in the US with faulty accelerators. More may need to be recalled in Europe and China.121

28.1.10. Saudi Aramco and Total bosses disagree on the peak oil threat in Davos. “The concern about peak oil is behind us,” Aramco chief executive Khalid al-Falih tells a forum of oil bosses at the World Economic Forum. Total chief executive Thierry Desmarest says 95 million barrels per day will be the cap -- 10 percent above present levels in “about 10 years ….The problem of peak oil remains.” Falih: “Of the 4 trillion (barrels) of oil the planet is endowed with, only 1 has been produced. Granted most of what remains is more difficult and complex (to exploit) ... there's no doubt we can do a lot more than the 95, 100 (million barrels) that are projected in the next few decades.”122

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Global demand will be >100mbd by 2030, says Tony Hayward in the same forum. This will be a “supply challenge.” He pins major hopes on Iraq growing to . 10mbd. Peter Voser of Shell agrees, and says the investment needed will be up to $27 trillion ….> $1.3 trillion a year. PWC estimates that only a third of global supply will go to the OECD by 2030. China sold 13m cars last year.Unconventional gas is a “complete game changer in the US,” says Hayward. “It probably transforms the US energy outlook for the next 100 years. It's yet to seen if it can be applied globally.” Gazprom seems un-nerved. A board meeting in Moscow this week apparently centred on the implications of US shale gas on its own investment plans for the northern Yamal peninsula, with export by ship to the US partly in mind. Meanwhile, the EPA is airing “serious reservations” about allowing shale gas drilling in parts of New York state in case NYC water supplies are affected. The EPA identifies 14 “contaminants of concern” in 11 private wells surveyed in the Pavillion farming community of Wyoming. Contamination has also been found in in Pennsylvania. Bills are under preparation in Congress that would tighten restrictions on unconventionals. In Taking over gas company XTO, Exxon inserted a clause enabling it to scrap the transaction if there were changes to the law that made hydraulic fracturing “illegal or commercially impracticable.”123

Environmental problems of fracking in shale gas production include air quality: elevated benzene. The Texas Commission on Environmental Quality has found elevated levels of benzene, a carcinogen, at 19 of 94 sites saampled above the Barnett Shale.124

29.1.10 Scientists say almost one third of warming in 1990s was down to stratospheric water vapour, an effect that had been underestimated. Susan Solomon’s NOAA team says their research does not invalidate projections of climate change, but it seems certain to be used by sceptics. Water vapour has dropped 10% since 2000. Solomon says: “We call this the 10, 10, 10 problem. A 10% drop in water vapour, 10 miles up has had an effect on global warming over the last 10 years.” She is not sure if this is a negative feedback or a natural effect.125

30.1.10. China is moving ahead so fast with green energy that dependency for West may be an issue. China became the largest manufacturer of wind turbines last year and of solar cells the year before. An article in the New York Times posits: “These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.” Renewables jobs were 1.12 million jobs in 2008 and are climbing by 100,000 a year, says the Chinese Renewable Energy Industries Association. China’s domestic demand for electricity is rising 15 percent a year, and the International Energy Agency says China will need to add nearly nine times as much electricity generation capacity as the United States will. The government announced the creation of a National Energy Commission this week, composed of cabinet ministers in a “superministry” led by the Prime Minister Wen Jiabao. 126

31.1.10. Senior negotiators around the world say a climate deal in 2010 is impossible. A senior British diplomat said ahead of Copenhagen: “we can go into extra time, but we can’t afford a replay.” And he is proving right.127

1.2.10. Shale gas boom may leave US as a gas exporter, some independent producers are saying. How fast things change. In 2006, Wood Mackenzie predicted the US would be the biggest importer of LNG by 2010. Ths industry says it now has enough supply for 100 years.128

UK renewables industry welcomes microgeneration feed-in tariffs announcement. JL: “Feed-in tariffs are going to be a big boost for the industry and for the first-time, homeowners can see a decent financial return. We estimate homeowners can save and earn more than £1,000 per year for 25 years, increasing with inflation (of energy bills), giving a payback in around 10 years.”129 “That’s a better return on investment than you’d get from a bank.”130 “The scheme could lead to 100,000 new jobs in the UK solar industry by 2020.”131 UEA scientist hid climate data flaws, Guardian investigation by Fred Pearce shows. Chinese data used in 1990 to demonstrate only a small warming contribution from cities were inadequate - the locations having been lost - and Phil Jones of UEA withheld the information when it was requested under Freedom of Information. Jones also asked other climatologists to delete e-mails relevant to FOI requests.132

Nonetheless, concludes Fred Pearce, “the ‘climategate’ scandal is bogus and based on climate sceptics lies. Claims based on e-mail soundabites are demonstrably false – there is manifastly no evidence of clandestine data manipulation.” Palin, Inhofe and others have quoted “evidence” cut-and-paste together by professional sceptics who have used two devices: quoting out of context, and juxtaposing quotes from e-mails sometimes written ten years apart, as though related.133

US deficit will be nearly 11% of GNP this year, and more shockingly isn’t projected to get below 5% before 2020. NYT: “For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors. Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade. As debt grew more rapidly than income, that country’s influence around the world eroded.”134

“Old Davos” is in retreat, Gideon Rachman argues in the FT. At the World Economic Forum, confidence has been shaken in the old belief – firmly held since the end of the cold war - that globalisation is good. Protectionist ideas are returning, and now it is the eastern nations that try to persuade the western that free trade is essential. Sarkhozy’s keynote address was an attack on financial capitalism. He made one Russian delegate nostalgic for the old days he remembered in the Soviet Union. Sarkhozy argues for a “carbon frontier tax” on the goods of countries that don’t act on climate change. Also, says Rachman: “Banker bashing rivalled skiing as the most popular sport at this year’s forum.”135

Petroleum Review assesses risk of “rapid rise in criminality in the oilfields” to Iraqi production , which the oil minister hopes will rise from 2.5mbd now to 12 mnd by 2016: more than Saudi Arabia and Russia. There are 13 regiments of the Oilfield Protection Force in the Basra region alone. Gun battles between this oil police force and local militias are now “frequent.” Locals are going to have to do most of the work: BP’s expats are expected to number only in the tens. Also in this ussue: OPEC spare capacity is not certain: it may be as low as 3 or as high as 6 mbd, 50-80% of it in Saudi Arabia and Kuwait. Chinese buyers of new cars face a three month delay despite round the clock shifts in factories.136 (L)Even promoters of new more efficient tar sands technology are sceptical of lifting production much : water use and gas use remain huge issues, with even CERA saying it could take up to 15 years to commercialise new more efficient technologies. 1.7 mbd of projects have been cancelled or delayed indefinitely since the oil price fell for $147.137 (L)Flawed arguments underly carbon trading, and massive fraud will be inevitable if it takes off. So an article in Petroleum Review argues. The value of total transacted carbon trades in 2008 was $126bn - $92bn of

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that in the EU ETS – up from $63 bn in 2007. If the US and others follow the EU, the market would be four times higher by 2014, en route to being bigger than oil and gas trading. Enron- and sub-prime-type malfeasance would then be inevitable. Traders have moved effortlessly from Enron to the property market to the carbon market. Fraudulent deals have already started: in Asia, Austrlia and most notably in Europe, where taxpayers lost €5bn in a so-called carousel fraud involving VAT. When governments changed their tax laws to close the VAT loophole, carbon trading dropped as much as 90% in some countries.138 (L)Wind and PV did more than half all new power generation in 2009: 55%. Renewable energy installations in Europe totalled 61% of all new power generation in 2009 (25.9 GW). 10.1 GW of wind was installed, up 23% on 2008. At 39% of the total this was the single biggest source. Natural gas was second at 26% and PV third on 16%. Data come from EWEA.139

2.2.10. Paul Volcker issues a plea direct to Congress to support his Wall Street reforms. No member of the Senate Banking Committee has yet voiced outright opposition.140 IPCC chief Pachauri refuses to apologise for one mistake in a 3,000 page report (an un-peer-reviewed reference to Himalayan glaciers melting by 2035). To do so would a “populist” measure, genuflecting to a “factory” of sceptics looking for harmful “pinpricks” in the massively comprehensive and professional work of the IPCC, he asserts, for which the mistake was completely out of character.141 In another interview he accuses un-named companies of backing sceptics who are guilty of “skullduggery of the worse kind.” 142 And note: the Himalayan claim never made it to the Summary for Policymakers – the gold standard for negotiators, and was barely referred to in the press.143

3.2.10. Ofgem warns that only state intervention can keep the lights on. Energy bills may go up by 25% by 2020, as energy companies raise £200bn to invest in essential new generation. Many will be unable to afford to heat homes as a consequence. There is also a real risk of the lights going out by mid decade. Reform is urgently need: deregulation has failed, a free market approach is “no longer an option,” obligations may be to supply may be required of energy companies (just as banks face capital requirements), and nationalisation of power may be required. All this comes in Ofgem’s Project Discovery report, published today, after a consultation that began in October 2009. Already some are supportive of Ofgem’s proposal that there should be a central buyer for energy. Andrew Watkin, head of energy at property consultancy, Carter Jonas: “a centralised renewables market might sound Stalinesque but it may be what is required to bring a structure and concerted strategy to the major campaign of the coming years – creating energy and protecting its supply.” 144 145 Ofgem once enthusiastically advocated dergulation, but the financial crisis has changed regulator Alistair Buchanan’s mind. The big energy companies are not making the investments needed to replace old coal and nuclear plants.146

Ofgem’s forecasts could mean average energy bills of more than £2,000 by 2020. The consumer group u-switch says the figure could £4,000 if events conspire against markets. Now 4.6m households are in fuel poverty (spending >10% of income on energy).147

The Guardian takes a dim view of the state of UK energy, saying nationalisation is overdue. Terry Macalister: “The privatisation of the gas sector in 1986 and electricity in 1989 brought little in the way of strategic, long-term thinking and when the privatisation of the nuclear industry came in 1996 it swiftly brought problems, with British Energy having to be bailed out by the taxpayer within six years. Now ministers once again are being called on to intervene because companies left to their own devices will not invest in new nuclear, wind and other low-carbon technologies. Having sucked profits out of the industry when government "interference" was a dirty word, they are – like the banks, railways and even car industry before them – keen to see the state step in and help them out with a greener and more secure agenda. The government should seize its chance.”148

Moody’s warns that the US sovereign credit rating of AAA is under threat unless the deficit is cut or economic growth increases.149

German solar industry calls for protests as Merkel’s government dithers over cuts to feed-in tariff. As many as 10,000 workers from Solarworld, Q-Cells, First Solar and other companies will take to the streets tomorrow.150

4.2.10. Kuwaiti scientists forecast world conventional crude oil production will peak in 2014. The Kuait Univerisity / Kuwait Petroleum Company study, published in the journal Energy & Fuels, describes the development of a new version of the original “single cyle” Hubbert model that accounts for individual production trends (i.e. a “multi-cycle” model) to provide a global oil production forecast. The researchers analyse production trends of the 47 oil-producing countries supplying most of the world’s conventional crude oil.151 Petrobras CEO infers oil capacity, including biofuels, will peak in 2010 and drop rapidly, at 5% pa. A 1 December 2009 presentation Jose Gabrielli gave in Sao Paulo is translated on The Oil Drum. In it, he says that the world needs oil volumes to replace the equivalent of one Saudi Arabia every two years to offset future world oil decline rates …just to keep production constant at less tham 90 mbd. TOD analysis shows Gabrielli’s additions exclude additions from unsanctioned projects and from oil yet to be discovered, so many potential Iraq projects and Brazilian Santos basin projects are not included. BP professes Iraq might produce another 8 mbd by 2020. Petrobras forecasts an additional 2 mbd from Brazil by 2020, making another 10 mbd capacity by 2020. That still leaves a required lower capacity addition of 19 to 24 mbd in 2020 to come from other sources: equivalent to production from about two Saudi Arabias. SA production was an average 9.3 mbd in 2008 and new capacity addition over two years 2008&9 was less than this (9.2 mbd).152 Petrobras says that it does not predict peak in 2010. The above article makes an erroneous interpretation of a graph presented by Petrobras in December 2009. the slide was intending to show a reasonable estimate of the “challenges” that oil supply will face in the long term. “Although unsanctioned projects and oil yet to be discovered are not represented in the graph, this fact does not mean that we do not believe that these projects will add production capacity in the long run. Once again, we do not believe it is possible to predict a peak oil date. In particular, we do not believe it will happen in 2010.”153

Tony Hayward sees peak demand before peak supply – beyond 2020. “I personally – and BP – have never believed we will see peak oil because of supply. We always believed we would see peak oil because of demand. There will come a time – I believe it is beyond 2020 – when because of the changes in the energy portfolio, because of the drive for energy efficiency, because of the introduction of biofuels, demand for oil will peak.” There is plenty of oil in the world, not least in Iraq, expecting as he does production to grow from a couple of million barrels a day today to close to 10m. This makes it “a big part of oil security for the world.” he dismisses fears over dependence on Russian gas as “paranoic.”154

Shell will slow down tar sands operations in face of profits drop of 75% in fourth quarter . And more job losses, of course.155

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Gazprom postpones giant Shtokman gas field as global demand drops in face of US shale gas. Shtokman is an LNG venture between Gazprom, Total, and Statoil and had expected the project to produce its first gas in 2013, with LNG shipments to North America beginning in 2014.156 IEA and other experts expect global gas glut to last until around 2015, and then for supply to tighten quickly. The new LNG production capacity in the Middle East plus new non-conventional sources of gas in the US, plus the recession, which has depressed demand in Europe by some 10 per cent. The International Energy Agency expects this glut to continue until around 2015, but many analysts predict the market will then tighten sharply. “Around the middle of the decade we expect a perfect storm of falling domestic gas production, economic recovery and tightness in the global LNG market,” says Professor Jonathan Stern, “and we might not get very much warning. It could flip in a matter of weeks.”157 NY Attorney general alleges two top BoA execs duped shareholders during Merrill Lynch takeover . Ken Lewis and Joe Price now face fraud charges.158

7.2.10. UK industry taskforce will warn this week of premature global peak oil by 2015. JL: “We are heading for a steep decline in oil production in a few years’ time and we are completely unprepared. Most people just assume this is not a scenario that can happen, but it can, and it will, unless we do something now.” Ian Marchant, SSE CEO: “Unless we acknowledge a shock may come, then a shock will come,” said Marchant. “The unit cost of energy will go up. The only way to offset it is to bring overall consumption down.”159 Further positive coverage of UK solar feed-in tariffs in Sunday papers. “These tariffs are going to generate rates of return that will beat high-street savings accounts by a mile, at the same time as they save carbon and generate jobs in a new fast growing, British industry. We reckon as many as 100,000 jobs by 2020, at the rates announced."160

UEA professor at centre of leaked e-mail scandal says he has considered suicide and is receiving death threats. Phil Jones is on beta blockers and sleeping tablets. Conservatives waver on climate in face of “climategate”: most MPs are now sceptical.161 Polls show the number of Britons who believe climate-change science of has fallen in the last year. A BBC poll, which surveyed 1,000 people, reveals that 25% of adults do not believe in global warming, up of 8% since a similar November. 75% believe climate change is a reality but of these one in three feel climate change has been exaggerated. Only 26% of people think climate change is “established as largely manmade.” An Ipsos poll of 1,048 people suggests those who believe in climate change has dropped from 44% to 31% in the past year.162

Most Tory MPs now have doubts about climate change in face of leaked e-mail scandal. Tim Montgomerie, founder and editor of the ConservativeHome website, says the issue could be as divisive for the party as Europe once was. “You have got 80% or 90% of the party just not signed up to this.” This includes at least six members of the Shadow Cabinet. “No one minded at the beginning, but people are starting to realise this could be quite expensive, so opinion is hardening.”163

8.2.10. Richard Branson and other UK business leaders warn of oil crunch within five years. “The next five years will see us face another crunch – the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well. ….Our message to government and businesses is clear: act. Don't let the oil crunch catch us out in the way that the credit crunch did.” There are signs that the UK government is already beginning to listen, and move away from the narrative given on peak oil by BP, Exxon and the Saudis. JL: “[We are] in regular contact with government; we have reason to believe their risk thinking on peak oil may be evolving away from BP et al's and we await the results of further consultations with keen interest.”164

BP joins Shell on investors’ tar sands target list. The Co-operative Asset Management, the UNISON Staff Pension Scheme, a group of clients from Rathbone Greenbank and the COIF Charities Investment Fund file a motion asking BP not to commit $10bn to its Sunrise oil sands development for carbon reasons.165 Unlike Shell, BP seems to press ahead. It is upgrading a refinery near Chicago to take tar sands oil. John Browne has expressed disapproval.166

Areva buys a US solar thermal company. Ausra, a linear Fresnel company founded in 2006, has no revenues, and yet the price is believed to be $200m.167 Areva lobbied Sarkozy to oppose Desertec.

9.2.10. World’s first retail carbon credit made in Pennsylvania. A homeowner with a PV system earns $17 a tonne from a company in Ohio. The sale was brokered by a website, My Emissions Exchange.168

Gazprom boss says UK wind plans are irrational, and more gas plants is the answer . Alexander Medvedev: "If we do not want to see the authors of the 2020 strategy decapitated in a public square, I do not think they can forget about gas. We at Gazprom believe gas should be treated on an equal footing as renewables. I just hope that after the disappointment post-Copenhagen that the decision-makers will take a more pragmatic and rational approach to this.”169

Gazprom boss says shale gas developmeny in Europe is “unimaginable.” The US Environmental Protection Agency will raise concerns about its potential contamination of drinking water in a forthcoming report, Alexander Medvedev says. 170

10.2.10. UK Industry Taskforce on Peak Oil and Energy Security releases its second report in a press conference at the Royal Society.171

Peak oil: The lessons from the financial crash ought to be stark. JL: The prevailing culture mocked the disbelievers, ahead of the crash. Gillian Tett, capital markets editor at the FT, saw the crisis coming because she was a trained anthropologist and knew how to recognise a cult when she saw one. She was accused of scaremongering from the stage of the World Economic Forum. The pattern is the same this time. BP, in particular, has a tendency to mock the concept of peak oil and its advocates. Meanwhile, as with the climate crisis, there is a general desperation to believe the comforting narrative ahead of the uncomfortable one. This is why it is so important that companies who understand risk speak out, as the taskforce companies have. It is why governments – who must lead in matters of national security – should listen to the uncomfortable arguments and, given the stakes, buy insurance against them. History is going to judge us all on how we manage the risk of premature peak oil. And soon.172 173

Wall Street Journal headline “The next crisis: prepare for peak oil” “The work of the Industry Taskforce on Peak Oil and Energy Security shouldn't be disparagingly dismissed. Its arguments are well founded and lead it to the conclusion that, while the global downturn may have delayed it by a couple of years, peak oil—the point at which global production reaches its maximum—is no more than five years away. Governments and corporations need to use the intervening years to speed up the development of and move toward other energy sources and increased energy efficiency.” “….even if the gloomsters should turn out to be wrong, the core of their message surely deserves attention. Governments should be doing all in their power to encourage

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developments that lessen oil dependency. That will also enhance their energy security for, as Russia's Vladimir Putin has demonstrated with use of the on/off switch on the pipeline to Ukraine, it can be uncomfortable being dependent on other countries for energy.”174

Two big US companies decide to boycott suppliers sourcing fuel from Canada’s oil sands. Whole Foods Market, an organic grocery chain, and Bed, Bath and Beyond a household goods company, are responding to ForestEthics, a non-governmental organisation campaigning to lead the US corporate sector away from oil sands fuel because of its higher carbon content. “Companies are moving with lightning speed,” says Todd Paglia, ForestEthics’ executive director. “It’s a core issue they know they need to move on. The failure of Copenhagen makes companies more willing to do this; leadership must come from somewhere.”175

Vitol, the world’s largest oil trader says oil will trade in the current $70-80 band for the rest of the year. Goldman, in contrast, forecasts $95 a barrel by the end of the year, and above $100 in early 2011. The five largest oil traders – Vitol, Glencore, Trafigura, Gunvor and Mercuria – are believed to have achieved record profits of $3.5 - $4bn collectively last year. They make large sums of money on the back of volatile oil prices.176

11.2.10. Dynamics of the peak oil debate can be expected to change after UK government move . JL: “The head of international energy security at Britain's department of energy and climate change, Chris Barton, said: "We need to work together (with industry) to do more - eg to consider recommendations in the report that we're not currently acting on." His department will set up a forum for doing this. The outcome of this forum should be followed closely by every company that is not manufacturing its products with its own renewable power supply and distributing them by means of transport other than the internal combustion engine.”177 Around 60% of Germans still favour nuclear reactor shutdowns. The current legal obligation is to phase out nuclear reactors after 32 years of service. The latest public opinion polls show around 60 per cent favouring the current phase-out legislation, passed by the former coalition of Social Democrats and Greens. At least two of the country's 17 nuclear reactors would have to be shut down this year, and nuclear reactors provide about a quarter of the country's electricity.178

14.2.10. Lobby group including BP and Shell challenge California’s tar sands legislation in court. The National Petrochemical and Refiners Association says it is illegal for reasons including “undue and unconstituional burdens on interstate commerce.”179

Sellafield has similarities to Texas City, new ex-BP chief executive of NDA says. Tony Fountain admits there is still a long way to go. “If you look at Texas City, there were many kinds of practices, operating practices among them, where people had become habituated to a state of affairs that, if you stepped in from outside and took a look, was not appropriate for the nature of the activity. I think that is absolutely true of what happened at Sellafield… Legacy companies had a different set of priorities. There was clearly a set of practices that developed round those [untreated waste] silos that, if you stepped in there, did not have the right level of priority, did not have the right level of challenge, did not have the right level of spend – which is why it is where it is now and needs to be dealt with with the priority it is getting.” Asked if he has been shocked by anything he has seen so far, he says: “Shock is a strong word. But it would be right to say that the ponds and silos at Sellafield are attention-grabbing; striking in nature.” Sellafield consumes almost half of the total NDA budget.180

UK issues first licence to build a storage cavern for gas under the Irish Sea. Twenty salt caverns each around the size of the Albert Hall will be filled with 1.5 bn cubic metres, about 2 days supply, 750m below the seabed. When complete in 2014, the nations storage will have risen by a third.

16.2.10. BP and ConocoPhillips quit US Climate Action Partnership lobbying Congress to pass climate law, undercutting Obama's efforts to cast his climate and energy agenda as a pro-business, job-creation plan. “Cap-and-trade legislation is dead in the US Congress and that global warming alarmism is collapsing rapidly,” says Myron Ebell of the Competitive Enterprise Institute.181

Obama announces $8.3bn (£5.3bn) loan guarantees for nuclear: a company building the first new nuclear reactors in America in nearly 30 years. The pledge to the nuclear industry (made just a couple of hours before the oil companies quit the CAP) is seen as part of a strategy to win Republican support for the climate and energy bill. 182

Barclays top bosses forego bonuses and say they want to be part of the bank regulation debate . But Varley and Diamond made huge amounts the previous year.

17.2.10. Steven Chu is finding it hard to sway Congress with rational arguments. Describing how companies are not making investments and banks are not supplying loans because of the uncertainty about when, or whether, a cap on carbon will be imposed, he says: “We’re in a crazy never-never land situation. Let’s recognise that we’re postponing an inevitability,” and “[The Chinese] missed the first industrial revolution. They missed in large part the computer and biotech revolutions. They don’t want to miss this one.” 183

San Francisco now require all homes and offices to be wired for electric car chargers. This is written into new building codes. Obama will be able to deliver on his promise to put 1m electric vehicles on the road by 2015.But beyond Washington, a number of American cities and states are driving ahead. Nissan's president, Carlos Ghosn, has predicted that as many as 10% of sales will be electric vehicles by 2020. At Google, employees can already drive to work in one of the modified Priuses owned by the company – and then pull into one of 100 solar-powered parking spots and charge up.184

NII says AP1000 needs to be able to withstand a crashing airliner to get a licence. This is a blow to the Toshiba-Westinghouse group.185

French nuclear watchdog says EDF would face “massive investment” in extending life of reactors beyond 40 years. EDF is hoping to secure 60-year life-cycles for its plants, a term that is already applied in the US. Even then, he says, the plants might not be able to actually keep going that long. EDF has already been forced to invest hundreds of millions of euros replacing ageing steam generators on 34 of its 58 reactors. There is no set term for the life of reactors in France, where extensions are granted or not after inspections every 10 years. At the beginning of next year the two oldest plants in operation come up for a review to take them to 40 years. 186

Most US utility executives favour nuclear power and are climate sceptics, a poll suggests. More than 70 percent a survey of 329 executives oppose the current Obama legislation and 52 percent say the United States cannot afford the proposal. More than 75 percent think there is a future for coal-fired power plants. 44 percent don’t believe global warming is caused by human activity, and 7 percent don’t believe the planet is warming at all.187

18.2.10. Michael Grunwald in Time magazine describes “Why Obama’s nuclear bet won’t pay off.” “If you want to understand why the U.S. hasn't built a nuclear reactor in three decades, the Vogtle power plant outside Atlanta is an excellent reminder of the insanity of nuclear economics. The plant's original cost estimate was less

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than $1 billion for four reactors. Its eventual price tag in 1989 was nearly $9 billion, for only two reactors. But now there's widespread chatter about a nuclear renaissance, so the Southern Co. is finally trying to build the other two reactors at Vogtle. The estimated cost: $14 billion. And you can be sure that number is way too low, because nuclear cost estimates are always way too low.”188

Fourth generation nuclear reactors are “no clean energy secret bullet,” FT notes. Fourth generation reactors are those targeting the idea that reactors use spent nuclear fuel as a feedstock depends. One version, fast reactors, relies on sodium cooling. The International Panel on Fissile materials has produced a resport on these saying that risk of sodium fire is very high.189

19.2.10 Polls and evidence favour carbon tax over cap and trade. Robert Shapiro, a principal economic advisor to Bill Clinton in 1991-2: “A national poll by Hart Research found that two out of every three U.S. voters now favor a straight carbon tax over a cap-and-trade system. And the record shows clearly that it works. Sweden adopted a carbon-based tax in 1990; today, the Swedish economy is about 50 percent larger (adjusted for inflation), and the nation's carbon emissions are 8 percent less than they were in 1990. By contrast, emissions have risen sharply across the European Union over the last five years, despite its adoption of a cap-and-trade program.”190

21.2.10. China’s Saudi oil imports now exceed those of the US. In 2009, the US sank below 1 mbd for the first time in 20 years, and China’s exceeded 1 mbd for the first time.191

RBS CEO is forced to forego his bonus for 2009, echoing the Barclays duo last week. State-owned RBS will still pay its investment bankers £1.3 bn 28% of revenues (compared to 30-40% in competitors cases).192

23.2.10. UK public scepticism about climate change threat drops rapidly. Only 31% now think it is “definitely” a reality, down from 44% in the last year, according to the latest Ipsos Mori poll. Only one in five believe it is caused by people, down from one in three last year. 9 in 10 still think some kind of warming is happening. A recent BBC poll showed 31% thinking the extent of climate science has been exaggerated.193

24.2.10. Oil & Gas UK survey shows fewer North Sea projects are being developed. There are 11bn barrels of oil and gas in existing projects, up 15pc from the previous year – enough to meet half the UK's demand in 2020. But companies will need to raise £60bn to extract this oil, but this is not likely under the current incentives.194

First British company begins wildcat drilling off the Falklands. Four small independent oil companies, all single asset plays, have raised considered sums for their punts. Argentina express outrage and other Latin American and Caribbean governments issue a statement agreeing with them.195

Putin threatens Russian oligarchs with fines and bans if they don’t invest in electricity generation like they promised to do at the time of liberalisation. Record demand during a severe winter is putting capacity under strain. Oligarchs could face huge fines or even be barred from markets.196

25.2.10. Chinese government refuses to let Chinese company buy the Hummer brand from GM. Fuel consumption is at least part of the reason. GM will now wind the brand down.197

Blame OPEC, not China, for high oil consumption, says CIBC’s Jeff Rubin. “Last year OPEC, Mexico, and Russia consumed 14 million barrels a day of oil -- two Chinas!” Rubin railed in a recent speech. “Have you ever filled your tank up in Caracas or Riyadh? If you did, you'll soon know. It's 25 cents in Caracas, it's about 50 cents in Saudi Arabia, but the point is it's 50 cents whether oil is $20 a barrel or whether oil is $200 a barrel, because that's just the way things are over there. OPEC is a very disparate place separated by history, religion, geography, but there's one common denominator: everybody has a God-given right to consume as much cheap fuel as they bloody well feel like.”198

World Bank has raised over $1 billion with Green Bonds. A day after launching a 600m Swedish Kroner Green Bond, the World Bank has launched another 10 new Green Bonds denominated in different currencies. The 10 bonds are primarily for the new, open-ended, Nikko World Bank Green Bond fund.199

Vermont Senate votes to close a nuclear power plant when its licence expires in 2012 , on the grounds of aging problems: 3 radioactive leaks, a burst pipe and a collapsed cooling tower. California took such action in 1989, but no state has in the 20 years since. With its original 40-year operating licence expired in two years, Entergy’s Yankee plant in Vermont had applied for a 20-year extension to keep it open once, as many of the US’s 103 nuclcear plants will have to do.200

Bloom Energy Corp. unveils its fuel-cell “power plant in a box” server unit. Bloom, a fuel cell company with $400m of venture capital to its name, has been one of Silicon Valley's most secretive startups. The size of a pickup truck, the 100 kW unit’s solid oxide cells are made mostly of sand, with no platinum or other precious metals thrown in as catalysts. K.R. Sridhar, Bloom's co-founder and chief executive officer, says the server will change the energy industry in much the same way that cell phones changed communications. The servers cost $700,000 to $800,000 apiece, but some have been solar already to companies including Coca-Cola, FedEx Corp. and Google Inc. e-Bay, who have bought five, hosted the launch event. Critics doubt that energy production can be maintained, but Sridhar says the servers can provide electricity at 9 to 10 cents per kilowatt hour, compared with 14 cents for power from the grid, with payback in three to five years, including 50% financial incentives from the federal and California governments. Former Secretary of State Colin Powell, who sits on Bloom's board of directors, says: “We want to move this product forward to the point where we can put it in an African village ... and they can have power, they can have light. Think of the potential."201

26.2.10. Centrica boss says “vast cost” could cause scrappage of UK offshore wind plans . Sam Laidlaw syas it is unclear whether the scheme to build an estimated 10,000 wind turbines will ever go ahead. Cenrica, owner of BG, would proceed only “if the economic conditions are right.” The problems are high costs for turbines and other equipment as well as limited government financial support. BWEA estimates the wind farms would cost an estimated £100 billion and create 70,000 jobs in the UK. The total generating capacity of all the projects in the latest, Round Three, would be 40 gigawatts. But Citigroup estimates the cost of installing one megawatt of offshore wind is about £3.5 million — roughly five times the cost of the same gas-fired capacity.202

27.2.10. Al Gore editorial in the NYT: “We can’t wish climate change away.” And if we did, we’d still have to tackle dependency on foreign oil and China’s lead in cleantech.203

28.2.10. Bank of America and Barclays Capital tell clients to brace for crude above $100 (£64) a barrel by next year, then relentlessly higher prices over the decade. “Oil has the potential to flirt with $100 this year. We forecast an average price of $137 by 2015,” says Amrita Sen of BarCap. “The groundwork for the next sustained step up in oil prices is now almost complete. Global spare capacity is likely to be reduced to low levels within a relatively short time. The global economic crisis has postponed, but not cancelled, a crunch which would otherwise be starting to bite now.” Francisco Blanch of Bank of America Merrill Lynch says crude may touch $105 next year, with $150 in sight by 2014. “Approximately 1.7bn consumers in emerging markets with a per capita income of $5,000 to $20,000 are eagerly waiting to buy cars, air-conditioning units, or white goods.” He

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expects demand to rise by a further 2.8m barrels per day (bpd) in China and 2.5m bpd in India by 2015. Global use will increase by 8.8m bpd to 95m bpd.204

1.3.10. Competitive gas may be as bad for BP as Gazprom, Ed Crooks reasons in the FT: the more nonconventional gas there is in the market, and more the shift to spot-price selling – the two big trends in the gas market - the smaller the size of the long-term oil-linked lgas market.205

Oil companies not investing enough on exploration, Bernstein Research says. They have been overly optimistic about production from the discoveries made in the late 1990s.206

George Monbiot labels the UK solar feed-in tariff scheme a scam. The Guardian columnist writes: “Those who hate environmentalism have spent years looking for the definitive example of a great green rip-off. Finally it arrives, and nobody notices. The government is about to shift £8.6bn from the poor to the middle classes. It expects a loss on this scheme of £8.2bn, or 95%. Yet the media is silent. The opposition urges only that the scam should be expanded.”207

2.3.10. US consumers are dipping into their savings to pay for gasoline. There is a “supertrend” since 2000 of personal consumption expenditure (including gasoline) rising 0.14% per month. Within that, spending on food is rising only slowly, but spending on gasoline faster. How sustainable is that? Stephen Schtork of the Schtork Report: “The bottom line is that we consider yesterday’s PCE numbers very bearish. Consumers managed to pull savings out to pay for higher energy costs, but spending from your savings is rarely preferable and never sustainable. Consumer spending could collapse - thus refiners will not be able to pass higher crude oil costs on to consumers as they did during 2007 and 2008.”208

3.3.10. Big European companies could share a surplus of EETS pollution permits worth €3.2 billion by 2012.  So the Carnon Fat Cats study by Sandbag shows. The list is dominated by steel and cement companies. €3.2bn is more than double the EU's investment of €1.5 billion in renewable energy and clean technology as part of the economic recovery plan. JL response to the Monbiot attack on solar: Solar panels are not fashion accessories. Economies of scale in manufacturing are causing rapid reductions in costs. Feed-in tariffs work, and there will be no net transfer of funds from the poor in the UK scheme.209

4.3.10. Investors have filed a record 95 resolutions involving climate change this year, up 40% on last year. Ceres says that the resolutions have been filed with 82 US and Canadian companies who financial institutions and other businesses investors believe are not adequately disclosing and managing potential climate-related business impacts.210

Underground coal gasification questioned on environmental impact. Clean Coal Ltd has licences from the UK Coal Authority to perform UCG at five sites round Britain's coast. The first could be operational by 2014. The underground fire will generate carbon dioxide, methane and hydrogen. By converting coal to methane, you reduce the carbon dioxide emissions at the power station by more than half. The CO2 will be captured at the wellhead. As much as 30% can go direct back to space where the burning took place. The remaining 70% will have to find another home. “We are talking to people about what the options are, but it will be difficult. We want to be clean. But we may not be capturing all the CO2 from day one,” says a spokeswoman.211

5.3.10. Saudi Arabia is having trouble meeting its own needs for natural gas, much of which come from the oil industry itself. The state utility wants to add another 2,500MW this year, and 12,043MW by 2015. Some analysts believe it won’t be able to hit that target. The Kingdom has generous subsidies which bring prices to around US$0.015 - $US0.04 per kilowatt, promoting huge ineffficiency. Demand is growing by a massive 8 per cent per. Oil is used for much of the national electricity generation.212

Financial speculators are driving oil markets, the FT shows. “10 or 15 years ago would have been that spot prices drove the forward markets. But in recent years it is the forward markets - dominated, incidentally, by hedge funds and swaps dealers - that are the cart pulling the horse. ….The big break occurred in 2004, when correlations between forward prices and spot prices strengthened considerably. This change…coincided with the explosion in futures and options trading, that was particularly focused on longer-dated contracts. ….This all means that expectations about the future is driving prices - rather than fundamentals of supply and demand - which is really a here-and-now thing, after all. And that, Kemp concludes, all goes a long way towards explaining why oil prices plummeted in the second half of 2008 as expected (when sentiment was focused on the financial crisis) and recovered extremely strongly in 2009, despite the persistent lack of demand (future sentiment focused on the recovery and possible medium-term shortfall due to an investment slump and resulting production squeeze).213

Alan Simpson MP response to Monbiot: you are wrong. The German feed-in tariffs work well. “Over the three-year period from 2004 to 2007, the effect of FiTs in Germany was to add two to three euros to the average monthly electricity bill. Look at the changes in your own domestic electricity bills during this period and decide which you would prefer. The most staggering of the Deutsche Bank conclusions, however, is that the savings made by the scheme outstripped the total cost of payments made to households. Between 2004 and 2006, German FiT payments came to a total of €8.6bn. Deutsche Bank then looked at what it would have cost for this amount of electricity to have come from additional, conventional generation. What they found was that the avoided costs (of fossil fuel energy generation) came to €9.4bn.”214

Monbiot response to Leggett: “We do not have a moral obligation to blindly support inefficient , expensive renewable technologies.” And £100 bet that solar PV won’t reach grid parity in the UK by 2013.215

7.3.10. Alberta is losing the PR battle on tar sands. The FT reports that the perception is growing that they do more harm than good. Alan Knight of Virgin argues that surface mining will need to be closed, if they are to have any chance of carrying the argument. 216

Ten leading companies launch a plan for a European super grid in the North Sea connecting Germany, UK and Norway. The expected cost is €34bn. The group includes Seimens and Areva. Bård Mikkelsen, chief executive of Statkraft, Norway’s state-owned power company: “Hydro power in Norway should be valuable for compensating for the irregularity of wind power. That position – being a swing producer to the European market – is a very important role for us.”217

Oil companies hunt shale gas all across Europe. FT: “Unlike unconventional oil, some unconventional gas can now be developed more cheaply than its conventional counterpart. This is one reason why ExxonMobil spent $41bn acquiring XTO, the shale gas specialist, last December, despite the collapse in the price of gas. The deal is the biggest the industry has seen in almost a decade and is the clearest sign yet that big oil companies see shale as the next big thing.” BP, Statoil and Total similarly have taken smaller deals out with Chesapeake Energy. Helge Lund, chief executive of Statoil of Norway: “It is far too early to conclude whether shale will make as much of an impact outside the US as it has done inside the US.” 218

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Environmental concerns over fracking are pivotal for shale gas development. Alexander Medvedev, deputy chief executive of Gazprom: “Every housewife in the US has heard of the term shale gas. Not every housewife is aware of the environmental consequences of the use of shale gas...I don’t know who would take the risk of endangering drinking water reservoirs.”219 John Dizard in the FT: “ I think it might not be a bad idea to examine the faith-based assumption that the US has a virtually unlimited supply of natural gas from shale formations that can be extracted at a low price for the indefinite future. Perhaps the few people who think shale gas will be produced at a higher cost, and more slowly, than generally believed should be heard out, rather than be executed or sentenced to work in the salt mines.”

8.3.10. E&Y says up to £50bn of investment at risk in ost-election uncertainty. In the next three years £35bn-£50bn of investment will be needed in power stations, wind farms and gas storage, to hit government objectives for cutting carbon dioxide emissions while guaranteeing reliable electricity supplies. Ian Marchant, chief executive of SSE, who commissioned the report, says it is “a timely re-minder to all policymakers of the need to maintain a pro-investment climate in which investors can have confidence.”220

French anti-nuclear NGO holds leaked documents admitting crash risk to new reactors. The Sortir du Nucléaire Group, an alliance of 725 associations, says in a press release that it “has in its possession a secret defence document of EDF, the French Electricity Board, which clearly admits the danger to pressurised water reactors (PWR) in the event of a suicide crash. Because Madame Lauvergeon, Director General of AREVA, constructor of the reactor, maintains that it is built to resist to a commercial plane suicide crash, the group considers imperative to reveal the truth of the situation by publishing the contents of the secret defence document.”221

Danish environment minister says climate treaty is unlikely this year. This pessimism, from the chairperson in Copenhagen, adds to that of the FCCC222

Leggett response to Monbiot 2: I accept George Monbiot’s £100 solar PV bet. “I wish to make nine points in my response to George Monbiot's latest round in our disagreement about the importance of solar photovoltaics (PV) and the UK government's upcoming feed-in tariffs.” 223

9.3.10. Sarkhozy appeals to World Bank to finance nuclear reactors, ending a 50 year abstention, as part of a major international nuclear financing push. “Industry insiders believe no more than a handful will be built in the next decade,” the FT reports. “According to the Nuclear Energy Agency, a reactor costs roughly $4,600 per kilowatt to build, taking a mid-sized 1000MW reactor to $4.6bn (€3.38bn, £3.02bn). The NEA estimates between 100 and 400 new reactors could be built by 2030.” Roger Morier, World Bank spokesman, says there is no plan to change the ban on financing of nuclear set in in 1996, because it is "still not the least cost option in many areas."224

Lithium supplies uncertain as S Korea strives to extract the crucial battery element from seawater. They seem confident of an industrial process by 2014, but are hedging their bets, seeking – like Japan (who both have no domestic supplies, unlike China - deals in Chile and Bolivia in the past few years. Chile is the biggest producer, but Bolivia has the world’s biggest reserves - although they are not yet assessed as being economically recoverable.225

Synthetic Genomics optimistic about being able to bring algal biofuel to scale . Ina WSJ interview, Craig Ventor thinks Exxon’s $300m funding can make all the difference, and fuel could be in tanks within a decade, with all fuel from algae perhaps within 20-30 years.

11.3.10. Another assault from Monbiot on PV: no corrections despite many errors pointed out to him . “Solar PV has failed in Germany and it will fail in the UK.”226

16.3.10. Ten sites named in £4bn UK marine energy push. Up to 1.2GW will be generated, by devices including the Pelamis wave machine, and the SeaGen tidal machine. Alex Salmond, Scotland's first minister, hopes Scotland can produce 60GW, 10 times its electricity needs, and become the “Saudi Arabia” of marine energy.227

Sheffield steelmaker wins £170m to make nuclear forges. Sheffield Forgemasters has been in funding negotiations for more than six months, including a government soft loan of £65m, and now has secured the last remaining £20m from bank loans enabling it to build “a 15,000-tonne press to make large forgings used in modern reactors being built in the UK and overseas.”228

18.3.10. Germany will add 5GW of solar PV in 2010, government says. Up from 3GW in 2009, which was fully half the global installations in the €18bn ($24 bn) global market. The cumulative installed capacity in Germany at end 2009 was 9 GW. A 16-percent July cut in the deed-in tariff will be followed by a further 11-13 percent cut in January. “The crucial point will be the cuts of another 11 percent in January 2011,” a government spokesman says. The FIT was already cut by 9 percent in January.229

Leggett response to Monbiot 3: “George Monbiot's third article on government grants for domestic solar panels ignores the errors that I and others have protested about in the opening assertion in his first article. He alleged that the UK government's feed-in tariff regime is "about to transfer £8.6bn from the poor to the middle classes". In saying that, he managed to get three things wrong. The actual sum raised from the tariff levy from all electricity consumers, not just households, to 2030 will be £6.7bn; it will be spread over 20 years; and it will be more than offset – if the government is true to its word – by energy efficiency savings stimulated in parallel market-building schemes. Yet we see no retraction in George's latest, much less an apology for trying to turn feed-in tariffs into a new form of class war on a false premise. That was just where the problems began in the first article. In his third, he rewords many of his original mistaken views. I address those one by one on  my website.230

Jonathon Porritt offers an adjudication on the feed-in tariffs debate: “I’m sorry to say, on this occasion, that he (Monbiot) is way out of line. Jeremy Leggett’s detailed refutation of so much of what he was claiming in the original article demonstrates just how poor George’s initial research was, and how (on this occasion, at least) his love of adopting deliberately controversialist positions simply overwhelmed basic journalistic standards.”231

22.3.10. Government meets UK industry on peak oil: “it certainly felt like a pretty historic occasion to me”, says Rob Hopkins, a participant: “an event which could potentially be the day people look back to as the day when UK government finally starting to ‘get’ peak oil.”  Summary for the minister: The exact date of peak oil is an academic extraction, what matters is its inevitability. There is a high risk of its happening as soon as we come out of recession, in 3 or 4 years time. Prices will inevitably be higher. In the near term we will be able to rely on more natural gas thanks to unconventional gas (not sure about that one at all, I suspect that is one of that speaker’s pet techno fantasies!!). Government intervention will be inevitable. That behaviour change will be key, and government will need to message this carefully, stating that things will be different but no worse. We need improvements in public transport, including electrification. The land use planning system needs to

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bear this in mind, and we may, at some point, be forced to consider rationing. “Although Chatham House rules prevent me from stating what the Minister said, there is clearly a desire to continue this dialogue on peak oil. 232

Engyco flotation seeks to raise up to €1bn to invest in existing Spanish solar farms. The model is to buy them cheap from distressed owners, and run them more cheaply than existing owners. John Roberts is non-executive Chairman. Former Solon CEO Thomas Krupke is a director.. A Q-cells founder is also aboard.233

24.3.10. Green Investment Bank announced in UK Budget will match RBS tar sands lending. It will be “throwing good money after bad,” says the World Development Movement. £2bn is not enough to transform UK into a low carbon economy, and the Government should take RBS in hand to increase its renewable investments and phase out its financing of fossil fuel companies. RBS has scaled back its lending to renewables since the bail out: it was lead arranger on six loans worth $499 million in 2009 having extended at least $2 billion in the previous three years. Platform meanwhile says the bank has underwritten $7.5 billion of loans to tar sands related companies.234

25.3.10. US Department of Energy official admits that peak oil may come as early as 2011. “A chance exists that we may experience a decline” of world liquid fuels production between 2011 and 2015 “if the investment is not there.” So says Glen Sweetnam, main official expert on oil market in the Obama administration, in an interview with Le Monde. Sweetnam is director of the International, Economic and Greenhouse Gas division of the Energy Information Administration at the DoE says the investments needed ar as yet “unidentified.” The DoE predicts decline of identified sources of supply at 2 percent a year, from 87 million barrels per day in 2011 to just 80 mbpd in 2015. But by then global demand is expected to be 90 Mbpd, meaning “unidentified” additional liquid fuels projects would have to fill in a 10 mbpd gap within less than 5 years.235

ConocoPhillips CEO Jim Mulva admits that pursuing new oil reserves no longer pays. Chris Nelder of Energy & Capital: “The remaining resources have become too marginal and too expensive, and the competition for them has become too intense. Rather than keep slugging it out with bigger and better-funded players in pursuit of growth, Conoco has decided to sell $10 billion worth of its assets over the next two years, all of them in the marginal category, and concentrate on producing its core assets. The proceeds will be used to buy back its stock, reduce its debt, and raise dividends — just as rival ExxonMobil has been doing for the last five years or so. When I inferred in Profit from the Peak that the oil majors were spending vastly more money on buying back stock than investing in new exploration because reserves were getting too expensive and risky, veterans of the Street greeted the idea with extreme skepticism. Now it's a plain fact. A Rice University study released in July 2008 found that the five largest international oil companies spent about 55% of their profits on stock buybacks and dividends in 2007, but only about 6% on new exploration and production. “Could we spend $20 billion or $25 billion [on exploration]? Absolutely,” Conoco spokesman Gary Russell said at the time. “Could we do it effectively, in a way that provides ultimate value to our shareholders? Probably not.”236

FTSE sees growing re-allocation of capital to low carbon sectors. FTSE Global All Cap is valued at $28.9 trn. Carbon Intensive Sectors are $8.9 trn of that. Environmental Opportunities All Share (companies need 20% or more revenue from EO to qualify) $1.8 trn, and growing. There are six sectors in EO, of which Renewable and Alternative Energy is one. There are 18 EO indices, and all of them out perform the FTSE All Share.237

26.3.10. Editor of Money Week compares UK feed-in tariffs to Mao’s Chinese steel production crusade . The government’s “backyard bribes” are akin to the failed “backyard furnaces of Mao’s China. Merryn Wed quotes Monbiot.com as evidence.238

28.3.10. Cleantech IPOs set for a comeback, Jefferies tells the FT. New Energy Finance reported $14bn (£9.3bn, €10.3bn) worth of clean energy IPOs in 2007, $4.3bn in 2008 and $3.4bn in 2009, with none in the first quarter of this year. But there are now 78 IPO prospects in the US alone, looking to raise $13.7bn. Rooftop solar is particularly attractive, Bruce Huber of Jefferies says.239

Tesco joins the “stampede” to supply DIY electricity, as solar panels go on sale this week. Lucy Neville-Rolfe, executive director at Tesco, said: “Tesco has always led the way by bringing affordable green products to the mass market. With low-energy lightbulbs, we cut the price and demand went through the roof. Now we are making solar power mainstream by giving customers a simple, high-quality product at the right price.” But “Tom Murley of HG Capital warns that if the scheme is too successful — in encouraging a flood of small-scale generators — it could depress prices and have a detrimental effect on the wholesale electricity market, making life hard for big nuclear and wind suppliers.”240

Power crunch looms for Britain, warns new RWE Npower CEO Volker Beckers¸and his company may not invest if conditions are not to their liking. “The country has to build two large plants or more every single year.” He infers RWE might invest in plants overseas: “The UK needs to make sure it has the highest level of attraction for investors.” And “Why discriminate against nuclear in favour of renewables? Why give offshore wind ROCs and make nuclear stand on its own feet?” Ofgem predicts a £200 billion bill for pipes, plants and turbines predicted by Ofgem, the regulator, translates to a cost of £8,000 for each of Britain’s 25m households. Times: “Npower’s German parent company could ultimately choose to put its money elsewhere. For example, 53 new nuclear plants are under construction round the world, with another 469 planned or proposed. In Britain, eight are on the drawing board. Half are planned by Horizon, the joint venture formed by Npower and its rival Eon last year. EDF Energy, the French giant, and its partner Centrica want to build the rest.”241

29.3.10. Siemens becomes the fourth wind turbine manufacturer to announce it will manufacture in the UK, with an £80m investment in a plant to build offshore wind turbines. The others are Mitsubishi, GE and Clipper.These plans have been greeted as a vote of confidence in the offshore wind business, which currently accounts.242

30.3.10. UK to rule out national gas storage to secure supply. DT: “A spokesman for the Department of Energy and Climate Change declined to comment, but added that it had been reluctant to sanction national storage in the past for fear of discouraging commercial investment.”243

Further delays at Okiluoto fuel talk of Areva chief's sacking. The new nuclear plant is already three years behind schedule and more than €2bn ($2.6bn) over its €3bn budget, and now the ongoing dispute between Areva and the Finnish regulator – on top of the defeat in Abu Dhabi - is causing talk in the French media of “Atomic Anne”’s departure.244

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31.3.10. Businesses unsure how new UK commitment to carbon reduction will work. Indi: “Businesses are confused about and unprepared for the implementation of the Government's Carbon Reduction Commitment (CRC), the energy efficiency scheme which starts tomorrow. Nearly half of companies surveyed by the power supplier Npower said official advice about the new legislation had been "inadequate". About 49 per cent said they did not understand how to buy the necessary carbon allowances and 44 per cent said they do not know how to forecast their carbon emissions, according to a report published this morning. Some 5,000 businesses – between them accounting for about 10 per cent of the UK's harmful carbon dioxide emissions – will form the core of the scheme, with another 25,000 expected to register but unlikely to have to participate fully. Those affected have up to six months from tomorrow to register, and another 12 months to establish the necessary monitoring systems. The CRC is a variation of a cap-and-trade scheme. All organisations with half-hourly electricity consumption of more than 6,000 megawatt hours are required to submit annual carbon footprint audits and buy carbon permits for the following 12 months. Any surplus permits can be traded and any shortfall bought in the market. …The CRC does not make money for the Treasury. All the payments are refunded to those taking part six months later, with either a bonus or a deduction depending on the company's position in a league table ranked by reduced power use.”245

President Obama proposes oil drilling off US East coast, setting himself on course for confrontation with Democratic senators from coastal states. The Air Force had the first successful biofuel-powered test flight just last week, the president says.246

1.4.10. Oil reaches $87. It has been trading between $70 and $80 per barrel since summer 2009. Chinese demand is up more than 21% over last year's levels. Supertanker rates have risen, and nearly 13 million barrels of crude oil are sent every day to Asia from the Middle East. The US does everything it can to stem to descent, and production is actually up on last year. 502 rigs that are currently operating across the U.S, an 18 year high. With 103 rigs currently drilling in North Dakota, where the Bakken oil boom is in full swing.247

245 http://www.independent.co.uk/news/business/news/new-regulations-on-energy-efficiency-mired-in-confusion-1931580.html57 http://www.ft.com/cms/s/0/b11ad8ea-013e-11df-8c54-00144feabdc0.html 58 http://www.guardian.co.uk/business/2010/jan/14/barack-obama-tax-wall-street 59 http://www.guardian.co.uk/business/2010/jan/14/equator-principles-banks-environment-campaigners 60 http://uk.reuters.com/article/idUKTRE60D48F20100114?sp=true 61 http://www.ft.com/cms/s/0/54b1a434-0211-11df-8b56-00144feabdc0.html 62 http://www.nytimes.com/2010/01/15/opinion/15krugman.html 63 http://www.ft.com/cms/s/0/b51161ae-0174-11df-8c54-00144feabdc0.html 64 http://www.ft.com/cms/s/0/ed07a246-038e-11df-a601-00144feabdc0.html?nclick_check=1 65 http://www.ft.com/cms/s/0/029259ae-0203-11df-8b56-00144feabdc0.html 66 http://www.bloomberg.com/apps/news?pid=20601207&sid=axnm2BeGMveI# 67 http://www.ft.com/cms/s/0/53d59b84-03d2-11df-a601-00144feabdc0.html 68 http://www.ft.com/cms/s/0/39ba8172-0460-11df-8603-00144feabdc0.html 69 http://www.guardian.co.uk/business/2010/jan/18/shell-shareholders-fury-tar-sands 70 http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article6992750.ece 71 http://www.world-nuclear-news.org/WR_Germanys_waste_removal_decision_1801101.html 72 http://www.guardian.co.uk/business/2010/jan/18/eon-coal-plant-plea 73 http://www.guardian.co.uk/environment/2010/jan/18/rnewables-feedin-tariffs-drax-nuclear 74 http://www.guardian.co.uk/business/2010/jan/18/recovery-china-economic-reform 75 http://www.nytimes.com/2010/01/18/opinion/18mon3.html?th&emc=th 76 http://www.nytimes.com/2010/01/13/opinion/13friedman.html?ref=opinion 77 http://www.nytimes.com/2010/01/20/opinion/20friedman.html?th&emc=th 78 http://www.guardian.co.uk/environment/2010/jan/20/copenhagen-accord-deadline-climate-change 79 http://uk.reuters.com/article/idUKTOE60J03Y20100120 80 http://www.guardian.co.uk/environment/2010/jan/20/himalayan-glaciers-melt-claims-false-ipcc 81 http://www.nature.com/news/2010/100120/full/463284a.html 82 http://www.thegatesnotes.com/ 83 http://www.ft.com/cms/s/0/af927fe4-0640-11df-8c97-00144feabdc0.html 84 http://www.guardian.co.uk/business/2010/jan/21/profile-us-economist-paul-volcker 85 http://www.guardian.co.uk/business/2010/jan/21/obama-banking-restrictions-reform-wall-street 86 http://www.guardian.co.uk/business/2010/jan/21/goldman-sachs-bonus-cut 87 http://www.guardian.co.uk/business/2010/jan/21/uk-considers-obama-banking-rules 88 http://www.ft.com/cms/s/0/34722f64-06de-11df-b058-00144feabdc0.html 89 http://www.timesonline.co.uk/tol/news/environment/article6995925.ece 90 http://www.ft.com/cms/s/0/59a631a8-0720-11df-a9b7-00144feabdc0.html 91 http://www.guardian.co.uk/business/2010/jan/22/gordon-brown-tobin-tax-banking 92 http://www.ft.com/cms/s/0/6cb023c8-07aa-11df-915f-00144feabdc0.html 93 http://www.telegraph.co.uk/earth/earthnews/7046958/National-Audit-Office-raise-prospect-of-public-subsidies-for-nuclear.html 94 http://www.nytimes.com/2010/01/22/technology/start-ups/22venture.html?th&emc=th 95 http://www.guardian.co.uk/environment/2010/jan/22/quarter-us-grain-biofuels-food 96 http://www.guardian.co.uk/books/2010/jan/23/properity-without-growth-tim-jackson 97 http://www.guardian.co.uk/business/2010/jan/24/wall-street-lobbyists-banks-obama 98 http://www.guardian.co.uk/business/2010/jan/24/obama-banks-reform 99 http://www.guardian.co.uk/commentisfree/2010/jan/24/boris-johnson-will-hutton-bankers 100 http://www.guardian.co.uk/commentisfree/2010/jan/24/boris-johnson-will-hutton-bankers 101 http://www.guardian.co.uk/environment/2010/jan/24/carbon-emissions-green-copenhagen-banks 102 http://www.ft.com/cms/s/0/f7283aa8-0927-11df-ba88-00144feabdc0.html 103 http://www.reuters.com/article/idUSTRE60N0YE20100124 104 http://www.guardian.co.uk/business/2010/jan/25/world-economic-growth-climate-change 105 http://blogs.ft.com/energy-source/2010/01/25/the-death-of-us-coal/ 106 http://blogs.ft.com/energy-source/2010/01/25/china-setting-the-worlds-oil-prices/

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PWC show how Europe and North Africa could get to 100% renewable electricity by 2050.  To do this would require policy substantial investment, but the reports’ authors profess that experience with other large infrastructure programmes shows the financing capacity “is there.” Such a system would result in a net decrease in power imports among the countries concerned.248 249

Natural gas not such a good idea when lifecycle emissions are measured. So says Robert Howarth, a professor of ecology and environmental biology at Cornell University, His preliminary calculations suggest to him that natural gas recovered from new hydrofracturing techniques appears to have higher emissions than combustion emissions alone would suggest: at least as bad as coal from mountaintop removal and perhaps worse. He suggests leakage of methane associated with shale gas is probably far more important than normal gas production. FT: “what’s most striking about Howarth’s paper is not the alarming implications of his very rough estimates, but his statement that rigorous estimates of the emissions from developing, processing, and transporting natural gas are not available - nor are such estimates available, he says, for coal-fired power. It would be interesting to see just how detailed lifecycle studies of different energy sources would need to be in order to be fully comprehensive - and how different sources, from fossil fuels to renewables, would stack up. Perhaps none of them are what they seem.”250

107 http://www.independent.co.uk/news/business/news/more-families-cannot-pay-their-fuel-bills-1878031.html 108 http://business.timesonline.co.uk/tol/business/industry_sectors/utilities/article7000918.ece 109 http://www.ft.com/cms/s/0/5d3466e8-09ee-11df-8b23-00144feabdc0,dwp_uuid=91d7b52e-0527-11df-a85e-00144feabdc0.html 110 http://blogs.ft.com/energy-source/2010/01/26/cyber-attacks-on-oil-majors/ 111 http://www.ft.com/cms/s/0/d2d709ae-0b8e-11df-8232-00144feabdc0.html 112 http://www.guardian.co.uk/world/2010/jan/28/obama-job-tour-state-union 113 http://www.ft.com/cms/s/0/f58ce0bc-0b30-11df-9109-00144feabdc0,dwp_uuid=91d7b52e-0527-11df-a85e-00144feabdc0.html 114 http://www.guardian.co.uk/business/2010/jan/27/davos-alistairdarling 115 http://www.ft.com/cms/s/0/f00aa3dc-0b7a-11df-8232-00144feabdc0.html 116 http://www.nytimes.com/2010/01/27/business/energy-environment/27lawsuits.html?th&emc=th 117 http://www.swissre.com/resources/7249eb804e42012db8a8bcb8626ab849-Publ09_FR_Globalisation_en.pdf 118 http://www.guardian.co.uk/environment/2010/jan/27/feed-in-tariffs-renewable-energy119 http://www.guardian.co.uk/business/2010/jan/27/oil-firms-shetland-tax-breaks 120 http://www.ft.com/cms/s/0/ff68e8da-0b83-11df-8232-00144feabdc0.html 121 http://www.guardian.co.uk/business/2010/jan/28/toyota-recall-widens-europe-china 122 http://www.reuters.com/article/idUSLDE60R1LZ20100128?type=marketsNews 123 http://www.guardian.co.uk/business /2010/jan/28/bp-tony-hayward-gas-shale-rocks 124 http://blogs.ft.com/energy-source/2010/01/28/how-healthy-is-barnett-shale/ 125 http://www.guardian.co.uk/environment/2010/jan/29/water-vapour-climate-change 126 http://www.nytimes.com/2010/01/31/business/energy-environment/31renew.html?th&emc=th 127 http://www.guardian.co.uk/environment/2010/feb/01/climate-change-deal-impossible-2010 128 http://blogs.ft.com/energy-source/2010/02/01/shale-boom-leaves-industry-considering-us-gas-exports/ 129 http://www.guardian.co.uk/money/2010/feb/06/solar-power-bright-investment 130 http://www.ft.com/cms/s/0/b37099b6-0ea1-11df-bd79-00144feabdc0.html 131 http://www.ft.com/cms/s/0/26fb8a42-0f62-11df-a450-00144feabdc0.html 132 http://www.guardian.co.uk/environment/2010/feb/01/leaked-emails-climate-jones-chinese 133 http://www.guardian.co.uk/environment/2010/feb/01/climate-emails-sceptics 134 http://www.nytimes.com/2010/02/02/us/politics/02deficit.html?th&emc=th 135 http://www.ft.com/cms/s/0/fec07306-0f68-11df-a450-00144feabdc0.html 136 Petroleum Review, February 2010.137 David Starchan, “Non-conventional oil: can it fill the gap?” Petroleum Review, February 2010.138 Maria Kelmaas, “Crunching credit and climate,” Petroleum Review, February 2010.139 “Wind in power: 2009 Euroepan statistics,” European Wind Energy Association, February 2010.140 http://www.ft.com/cms/s/0/db6a9ed8-101f-11df-841f-00144feab49a.html 141 http://www.guardian.co.uk/environment/2010/feb/02/climate-change-pachauri-un-glaciers 142 http://www.ft.com/cms/s/0/f9f86ef0-10cb-11df-975e-00144feab49a.html 143 http://blogs.ft.com/energy-source/2010/02/03/much-ado-about-climate-change/ 144 http://www.guardian.co.uk/business/2010/feb/03/energy-bills-unaffordable-system-overhaul 145 http://www.ofgem.gov.uk/Media/PressRel/Documents1/Ofgem%20-%20Discovery%20phase%20II%20Draft%20v15.pdf 146 http://www.guardian.co.uk/business/2010/feb/03/ofgem-uk-energy-supplies 147 http://www.guardian.co.uk/business/2010/feb/03/ofgem-investment-energy-bills-rise 148 http://www.guardian.co.uk/environment/2010/feb/03/ofgem-report-analysis 149 http://www.ft.com/cms/s/0/a82cfe04-10f5-11df-9a9e-00144feab49a.html 150 http://www.bloomberg.com/apps/news?pid=20601100&sid=aKR8zOS.OF6w 151 http://pubs.acs.org/doi/abs/10.1021/ef901240p152 http://www.theoildrum.com/node/6169 153 https://www.theoildrum.com/pdf/theoildrum_6206.pdf 154 http://www.guardian.co.uk/business/2010/feb/04/tony-hayward-bp-interview 155 http://www.guardian.co.uk/business/2010/feb/04/shell-job-cuts-profits-fall 156 http://www.ft.com/cms/s/0/c414ed56-11b9-11df-9d45-00144feab49a.html 157 http://www.telegraph.co.uk/finance/newsbysector/energy/7153724/How-long-before-the-lights-go-out.html 158 http://www.ft.com/cms/s/0/2d0110e8-11af-11df-bceb-00144feab49a.html 159 http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7017865.ece 160 http://money.independentminds.livejournal.com/239030.html 161 http://www.timesonline.co.uk/tol/news/environment/article7017922.ece 162 http://www.guardian.co.uk/environment/2010/feb/07/climate-change-science-public-trust 163 http://www.guardian.co.uk/politics/2010/feb/07/climate-scepticism-grows-tories 164 http://www.guardian.co.uk/business/2010/feb/07/branson-warns-peak-oil-close

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Photon magazine recommends regional feed-in tariffs in Germany as solar PV market soars . PV supply including inventories was 12.4 GW in 2009, 77% up YoY, and installations of 8.8 GW, up 36%. Germany installed 3.8 GW of c 9 GW globally in 2009. 2010 will be c 10 according to EPIA, and pressing 20 if you believe Photon. Total global PV installed is now 21 GW, c 10 of it in Germany. But over half is in in the two sunny southern states. Also: at 20 GW, Photon foresees major issues for utilities, not least on their profitability.251

2.4.10. Areva guilty of lethal uranium pollution in Niger mining operation, local activists claim. Der Spiegel: “Sherpa, a lawyers' organization from Paris that fights for the rights of workers. When a Sherpa attorney interviewed more than 80 mine workers, she heard the same stories again and again: There was allegedly no safety equipment until the mid-1980s, not even dust masks. One family claimed that doctors had sent a coughing mine worker home from the Areva hospital in Arlit after diagnosing him with diabetes. When the man went to see a doctor in a larger city, Agadez, he was diagnosed with lung cancer in an advanced stage. The Sherpa attorney confronted the chief physician at the hospital. He reportedly defended himself by saying that doctors never tell patients that they have lung cancer. Another hospital employee allegedly admitted that when cancer diagnoses were given, if at all, it was only to patients who didn't work in the mine. "When workers exhibit these symptoms, we talk about malaria or AIDS," he allegedly said. Areva says that the company doctors are "independent" and calls the charges "practically slanderous." The company also insists that the doctors have "all equipment required to carry out their work."” The Greenpeace activists showed up last November and 165 http://www.telegraph.co.uk/finance/newsbysector/energy/7182811/BP-faces-investor-revolt-over-Canadian-oil-sands-project.html 166 “BP claims green credentials as it prepares for tar sands project,” Recharge, 12 February 2010. no url167 http://www.ft.com/cms/s/0/babefaae-14e2-11df-8f1d-00144feab49a.html 168 http://www.guardian.co.uk/environment/2010/feb/09/world-first-personal-carbon-trading 169 http://www.guardian.co.uk/business/2010/feb/09/scrap-windfarms-says-gazprom/print 170 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7199259/Gazprom-scorns-shale-gas-as-danger-to-drinking-water.html 171 http://blogs.ft.com/energy-source/2010/02/10/peak-oil-or-oil-crunch-richard-branson-puts-the-case-for-uk-business/ 172 http://www.guardian.co.uk/environment/cif-green/2010/feb/10/oil-crunch-peril 173 http://www.youtube.com/watch?v=kaxJum8FD5g 174 http://online.wsj.com/article/SB10001424052748704140104575057260398292350.html?mod=googlenews_wsj 175 http://www.ft.com/cms/s/0/a9713b16-15e3-11df-b65b-00144feab49a.html 176 http://www.ft.com/cms/s/0/d588a942-1669-11df-bf44-00144feab49a.html 177 http://www.forbes.com/2010/02/11/peak-oil-crunch-opinions-contributors-jeremy-leggett_2.html 178 http://www.ft.com/cms/s/0/e4a2dad0-16ad-11df-aa09-00144feab49a.html 179 http://www.guardian.co.uk/business/2010/feb/14/oil-sands-ban-legal-challenge 180 http://www.guardian.co.uk/environment/2010/feb/14/sellafield-texas-city-nda 181 http://www.ft.com/cms/s/0/844be172-1b3a-11df-953f-00144feab49a.html 182 http://www.guardian.co.uk/environment/2010/feb/16/barack-obama-climate-change-laws 183 http://www.ft.com/cms/s/0/6f9abaa0-1c02-11df-a5e1-00144feab49a.html?nclick_check=1 184 http://www.guardian.co.uk/environment/2010/feb/17/san-francisco-electric-cars 185 http://business.timesonline.co.uk/tol/business/industry_sectors/utilities/article7029697.ece 186 http://www.ft.com/cms/s/0/a27d78ee-1b63-11df-838f-00144feab49a.html187 http://greeninc.blogs.nytimes.com/2010/02/17/utility-executives-like-nuclear-power-climate-science-not-so-much/ 188 http://www.time.com/time/politics/article/0,8599,1964846,00.html 189 http://blogs.ft.com/energy-source/2010/02/18/fourth-generation-nuclear-power-may-not-be-the-clean-energy-silver-bullet/ 190 http://www.aolnews.com/opinion/article/opinion-global-warming-scandals-offer-opportunity-for-progress/19362813 191 http://www.ft.com/cms/s/0/ba370018-1f19-11df-9584-00144feab49a.html192 http://www.ft.com/cms/s/0/a4643e02-1efd-11df-9584-00144feab49a.html 193 http://www.guardian.co.uk/environment/2010/feb/23/british-public-belief-climate-poll 194 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7301602/Companies-cant-afford-to-drill-for-North-Sea-oil-and-gas.html 195 http://blogs.ft.com/energy-source/2010/02/24/falklands-oil-questions-are-about-payloads-not-conflict/ 196 http://www.ft.com/cms/s/0/cb51016a-217f-11df-830e-00144feab49a.html 197 http://blogs.ft.com/energy-source/2010/02/25/hummer-has-no-home-thanks-to-chinas-gas-guzzling-aversion/ 198 http://www.businessinsider.com/jeff-rudin-i-know-a-place-where-demand-for-oil-grows-even-faster-than-china-2010-2199 http://climatebonds.net/2010/02/wb-over_1billion/200 http://www.ft.com/cms/s/0/f523bb7a-2235-11df-9a72-00144feab49a.html201 http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/02/24/MNIO1C6M96.DTL 202 http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7041904.ece 203 http://www.nytimes.com/2010/02/28/opinion/28gore.html?th&emc=th 204 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7266837/Barclays-and-Bank-of-America-see-looming-oil-crunch.html 205 http://blogs.ft.com/energy-source/2010/03/01/a-more-competitive-gas-market-may-be-bad-news-for-bp-as-well-as-gazprom/ 206 http://blogs.ft.com/energy-source/2010/03/01/oil-majors-taking-the-wrong-kinds-of-risks/ 207 http://www.guardian.co.uk/commentisfree/2010/mar/01/solar-panel-feed-in-tariff208 http://blogs.ft.com/energy-source/2010/03/02/us-consumers-spending-their-savings-on-energy/209 http://www.guardian.co.uk/commentisfree/2010/mar/03/solar-panel-workable-future210 http://blogs.ft.com/energy-source/2010/03/04/investors-increasingly-concerned-about-climate-change/211 http://www.guardian.co.uk/environment/2010/mar/04/coal-gasification-ccs 212 http://blogs.ft.com/energy-source/2010/03/05/saudi-arabia-struggling-with-gas-needs/213 http://blogs.ft.com/energy-source/2010/03/05/how-financial-traders-changed-oil-markets/

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stayed for nine days. They found elevated levels of radiation everywhere. A sand sample taken near the mine in Akokan contained 100 times more radioactive material than normal sand. In the streets of Akokan, the Greenpeace team apparently even measured radiation levels that were 500 times normal levels. 252

3.4.10. Kuwait Times: Kuwait needs to be more aware of peak oil and global warming . Staff writer. Abdullah Al-Qattan, speaking of the February report by Kuwaiti scientists that peak oil might be as close as 2014, writes: “If Peak Oil is this close, then, why are we failing to adapt? One reason might be widespread ignorance of the basics of environmentalism. Some people might not realize what terms such as 'green building' actually mean, with such critically important terminology missing from even our modern textbooks. This has led to a common unawareness of the global ecological crises and a consequent lack of any consideration for these urgent problems, such as global warming and pollution, which in turn will lead to further amplification of these problems.” If it wanted to, Kuwait could be a green country, developing plentiful renewables including solar, Al-Qattan says.253

Silane gas dangers in solar cell manufacture addressed with new chemical. Workers have died and been injured in silane gas explosions at manufacturing plants for solar cells and semiconductors. Scientific American: “But there is an alternative. Quebec-based manufacturer Sixtron Advanced Materials  has developed a way to make a more stable gas with similar properties via gasifying polymer pellets. The idea is to hook the SiXtron "Sunbox" to existing silicon photovoltaic manufacturing lines to provide a methyl silane gaseous mixture via the same pipes that would normally deliver silane from a canister. "The methyl silane gases are not pyrophoric, they are simply a flammable gas," says Bates Marshall, SiXtron's executive vice president of sales and marketing. "But a leak does not mean an explosion."254

4.4.10. “Modern capitalism is at a moral dead end. And the bosses are to blame:” Will Hutton op-ed title. “Capitalism will be continue to be demonised while our CEOs refuse to put their own corrupt house in order.” “Chief executives were paid 47 times average pay in 2000; today, they are paid 81 times the average. And all directly or indirectly colluded in the change that triggered the greatest economic calamity since the 1930s. None blew a whistle, raised a doubt or suggested strategic options. All trousered the bonuses. Nor was there any noteworthy collective improvement, despite all the dealing, in the performance of the firms they ran over and above what one might expect from reasonable stewardship.” The CEOs’ organisation, the CBI is opposing a national insurance tax proposed by Labour in the run up to the election: it will effect bottom lines nd therefore 214 http://www.guardian.co.uk/commentisfree/cif-green/2010/mar/05/solar-panel-feed-in-tariff-benefits215 http://www.guardian.co.uk/environment/georgemonbiot/2010/mar/05/solar-feed-in-tariff216 http://www.ft.com/cms/s/0/a917b8d2-2a0d-11df-b940-00144feabdc0.html217 http://www.ft.com/cms/s/0/b686ad54-2a15-11df-b940-00144feabdc0.html218 219 http://www.ft.com/cms/s/0/ccd8412a-2a11-11df-b940-00144feabdc0.html220 http://www.ft.com/cms/s/0/f15da07c-2a51-11df-b940-00144feabdc0.html221 http://www.sortirdunucleaire.org/index.php?menu=actualites&sousmenu=dossiers&soussousmenu=EPRrevelations&page=index222 http://www.ft.com/cms/s/0/d4fe86d0-2ace-11df-886b-00144feabdc0.html223 http://www.guardian.co.uk/environment/cif-green/2010/mar/09/george-monbiot-bet-solar-pv?showallcomments=true#end-of-comments224 http://www.ft.com/cms/s/0/4bd746ca-2b1a-11df-93d8-00144feabdc0.html225 http://blogs.ft.com/energy-source/2010/03/09/copper-and-lithium-scramble-to-power-the-energy-future/226 http://www.guardian.co.uk/environment/georgemonbiot/2010/mar/11/solar-power-germany-feed-in-tariff?showallcomments=true#end-of-comments 227 http://www.guardian.co.uk/environment/2010/mar/16/wave-and-tidal-power-scotland228 http://www.guardian.co.uk/business/2010/mar/16/industrial-strategy-nuclear-manufacturing-forgemasters 229 http://uk.reuters.com/article/idUKLDE62H0ZF20100318?pageNumber=3&virtualBrandChannel=0230 http://www.guardian.co.uk/environment/2010/mar/18/solar-energy-feed-in-tariffs-monbiot231 http://www.jonathonporritt.com/pages/2010/03/the_war_of_words_over_homeprod.html232 http://transitionculture.org/2010/03/24/government-‘peak-oil-summit’-starts-the-process-of-government-acknowledging-peak-oil/ 233 http://www.ft.com/cms/s/0/03edba14-35e8-11df-aa43-00144feabdc0.html 234 http://www.wdm.org.uk/cashing-tar-sands-rbs-uk-banks-and-canada’s-“blood-oil” 235 http://petrole.blog.lemonde.fr/2010/03/25/washington-considers-a-decline-of-world-oil-production-as-of-2011/236 http://www.energyandcapital.com/articles/the-end-of-peak-oil-denial/1111237 David Harris, Head of Responsible Investment, FTSE group, “Understanding environmental markets, London Stock Exchange, Environmental Opportunities Forum, 25 March 2010 (L).238 http://www.ft.com/cms/s/2/143af718-390a-11df-8970-00144feabdc0.html239 http://www.ft.com/cms/s/0/05645be6-3908-11df-8970-00144feabdc0.html 240 http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article7078855.ece241 http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7078858.ece242 http://www.ft.com/cms/s/0/9adb2b90-3b2a-11df-a1e7-00144feabdc0.html243 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7536076/UK-to-rule-out-national-gas-storage-to-secure-supply.html 244 http://www.ft.com/cms/s/0/3ef33692-3b93-11df-a4c0-00144feabdc0.html246 http://www.bloomberg.com/apps/news?pid=20601207&sid=aI1saltlKjvM#247 http://www.energyandcapital.com/articles/energy-and-capitals-weekend-edition/1112248 http://www.pwc.co.uk/pdf/100_percent_renewable_electricity.pdf249 http://blogs.ft.com/energy-source/2010/04/01/a-gameplan-for-getting-to-100-renewables/250 http://blogs.ft.com/energy-source/2010/04/01/how-good-is-natural-gas-when-lifecycle-emissions-are-measured/251 Photon magazine, April 2010. And see JL notes on the April 2010 Photon conference, Stuttgart.252 http://www.spiegel.de/international/world/0,1518,686774-3,00.html253 http://www.kuwaittimes.net/read_news.php?newsid=NDU0MTk4MjMw254 http://www.scientificamerican.com/article.cfm?id=explosive-gas-silane-used-to-make-photovoltaics&sc=CAT_BS_20100402

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bonuses. Contrast Ove Arup and John Lewis. They believed in the notion that firms were essentially moral enterprises and that the point of profit was to serve the business purpose of the firm. Lewis said "it is all wrong to have millionaires before you have ceased to have slums". "The present state of affairs is really a perversion of the proper working of capitalism," he thundered in 1957. "Capitalism has done enormous good and suits human nature far too well to be given up as long as human nature remains the same. But the perversion has given us too unstable a society.”255

Unilever CEO adds voice to business leaders saying “shareholder value” is a flawed concept, with all its implications of short-termism. Paul Polman: “I do not work for the shareholder, to be honest; I work for the consumer, the customer . . . I’m not driven and I don’t drive this business model by driving shareholder value.” “It’s easy to be a short-term hero. It is very easy for me to get tremendous results very short term, get that translated into compensation and be off sailing in the Bahamas.”256

BP lobbies to limit controls on shale gas drilling, trying to head off rising concerns about fracing at the US Environmental Protection Agency. BP also opposes public disclosure of the chemicals used in fracturing, on the basis that the information is commercially sensitive.257

5.4.10. Trial of Project Better Place network begins in Tokyo this month: a key step in the Californian firm's bid to build the world's first infrastructure networks for electric cars by next year. PBP’s model involves building networks of charging points and battery-switch stations, with a robotic mechanism to swap the empty battery in a car for a fully charged one, meaning "refilled" in minutes, rather than several hours to charge the batteries. Copenhagen already has a network of 100 public charging points, is already being trialed in Copenhagen. The first commercial network, based on data from the two trials, will launch in Israel at the end of the year. Renault Fluence electric vehicles will be used. PBP has raised about £460m in investment in the past three years.258

7.4.10. Private equity boss gives dire warning. Guy Hands, chairman of Terra Firma, says Britain faces a decade of pain, social unrest and unemployment.259

Goldman Sachs denies betting against clients. An eight-page letter to shareholders, signed by chief executive Lloyd Blankfein and president Gary Cohn, denies accusations that Goldman had repeatedly profited by inflating unsustainable financial bubbles. They admit that Goldman “went short” in the housing market while simultaneously continuing to trade mortgage-backed securities to its clients but argue that various sophisticated investors simply took differing views.260

BNFL memoir revives nuclear safety fears. Former British Nuclear Fuels director Harold Bolter publishes an autobiography recalling industry panic over 1990 report on clusters of illness surrounding the Sellafield plant. At the time, workers at Sellafield were advised not to have children.261

8.4.10. Petrol price reaches an all time high in the UK of £1.20 a litre. The average was £1.19 at its highest in July 2008. The RAC says “it is a dark day for motorists.” The weak pound and tax rises have contributed.262

9.4.10. World Bank approves a $3.75bn loan to build one of the world's largest coal plants in South Africa. An official says: “It was not an easy decision. Everybody recognised the concerns about climate change, but this was a balancing act.”263

Russia and Germany start work on £8bn Nord Stream pipeline under the Baltic. Its 55 billion cu metres a year from 2012 will give Russia a third of the EU gas market. The first leg of the project will carry 27.5bcm starting from 2011.264

Tories and Labour agree with industry that there is no need for strategic gas storage in UK. Industry argues it would take 4-10 years, and in that period nothing would be done by the commercial sector to build its own gas storage. 22 such projects are in planning, which would quadruple Brtain’s storage by 2020 as effective North Sea storage in gas fields depletes.265

First shale gas drilling in the UK. Igas will drill one of Europe’s first wells east of Liverpool, having as taken leases on 300,000 acres of shale. As in the US companies face two main problems. One is political resistance; the other is the danger of pollution and associated reputational risk. Wolfgang Ruttenstorfer, chief executive of Austria’s OMV, one of the companies exploring the potential of shale gas in Europe: “I don’t want to create these kind of hopes and fantasies that lack final results, so I’m extremely cautious whether [shale gas] will be an option at all”.266

11.4.10. US military warns oil output may drop unexpectedly, with missive shortages by 2015. The warning comes in Joint Operating Environment report from the US Joint Foreces Command: “By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China dn India.” “…..One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest.”267

13.4.10. IEA forecasts oil will hit record levels this year and threaten recovery: 86.6 million barrels of oil per day, 2% higher, up 1.67 million barrels a day. “Ultimately things might turn messy for producers if $80-$100 per barrel is merely seen as the new $60-$80, stunting economic recovery while prompting resurgent non-oil and non-Opec supply investment. A recovery in oil demand is moving apace. The return of economic growth and hence oil demand growth is fuelling the increase.” OECD recovery could be blighted, the monthly report concludes.268

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McKinsey foresees no tariff rises if Europe switches to green electricity. The Roadmap 2050 report examined ways of cutting greenhouse gas emissions by more than 80 per cent by investing in renewables, such as wind and solar power, finding that the impact of this on electricity prices in the long term would be little different to "business as usual". Reasons: the operating costs of renewables are far lower than for fossil-fuel power stations; and Europe's existing high-carbon electricity infrastructure will need to be replaced in coming decades. The report, for the European Climate Foundation, says a supergrid will be needed.269

Toulouse tests renewable pedestrian power. The weight of people on pavements will be tested for street lighting. The modules will be the same as used in Dutch nightclubs.270

As microfinance grows, big banks are increasingly making big profits from tiny loans. 60% of all microloans now come from banks and finance firms, rather than NGOs (35%), credit unions and rural banks (5%). Some banks charge 100% or more. Mohamed Yunus: “We created microcredit to fight the loan sharks; we didn’t create microcredit to encourage new loan sharks. Microcredit should be seen as an opportunity to help people get out of poverty in a business way, but not as an opportunity to make money out of poor people.” Chuck Waterfield, who runs mftransparency.org, a Web site that promotes transparency: “They call it ‘social investing,’ but nobody has a definition for social investing, nobody is saying, for example, that you have to make less than 10 percent profit.” The microfinance industry now has over $60 billion in assets The rush was started when Compartamos, a Mexican firm that began life as a tiny nonprofit organization, generated $458 million through a public stock sale in 2007. Mr. Yunus says interest rates should be 10 to 15 percent above the cost of raising the money. 75 percent of microfinance institutions would exceed that. NYT: “Questions had already been raised about Kiva because the Web site once promised that loans would go to specific borrowers identified on the site, but later backtracked, clarifying that the money went to organizations rather than individuals.” These sometimes are high rate chargers.271

15.4.10. Goldman Sachs charged by SEC with $1bn fraud over toxic sub-prime securities. The 22-page charges Goldman Sachs with working with a US hedge fund, Paulson & Co, to structure and sell a complex package of mortgages to clients knowing Paulson would take a “short” position betting that the very same mortgages would fail. Investors lost €1bn and Paulson gained around the same.272

Goldman Sachs prosecution threatens to open the floodgates on Wall Street as Geithner says banks must be made to pay. The case against Goldman could be the tip of an iceberg. Rabobank is accusing Merrill Lynch of a similar misdemeanour: marketing of a collateralised debt obligation (CDO) while omitting to mention a relationship with a hedge fund betting against the product's success. Bill Clinton meanwhile expresses regret, saying he should not have listened to the former treasury secretaries Robert Rubin and Larry Summers when they opposed tight protection when derivatives were gaining popularity during the 1990s.273

BP Shareholders reject a call to investigate the tar sands project. BP expects to make a final decision on its $2.4bn (£1.6bn) Sunrise project by next year. About 140 institutions backed the call for a review.274

Citi analysts, concerned about tar sands emissions, warn that shareholder action will grow. This is a setback, given that CalPers, the US’s largest public pension fund, has already joined the tar sands campaign.275

18.4.10. “Labour and the Tories are just too scared to take on the bankers,” Ruth Sutherland writes. Whereas SEC investigators are feeling Goldman Sachs’s collar in the States, and the Volcker Rule which would in effect restore Glass-Steagall and limit the size of banks so that their failure would not imperil the entire financial system. the Labour manifesto, however, simply proposes making banks keep more capital as a cushion against losses, a global levy on financial services and "living wills" to help wind down failed institutions without putting the entire system at risk. The Tories have promised a levy on banks, even if other countries do not do the same, clamping down on bankers' bonuses, and says he will seek international agreement on separating banks' speculative activities from their useful ones. “But the two main parties remain horribly in thrall to a powerful cabal of financiers and corporate executives, and are terrified of being accused of banker-bashing. It is so obvious that it should not need saying, but the financial elite to which they genuflect is both unelected and unaccountable.”276

“Now we know the truth. The financial meltdown wasn't a mistake – it was a con .” So writes Will Hutton in The Observer. “The global financial crisis, it is now clear, was caused not just by the bankers' colossal mismanagement. No, it was due also to the new financial complexity offering up the opportunity for widespread, systemic fraud.” “Just consider the roll call beyond Goldman Sachs. In Ireland Sean FitzPatrick, the ex-chair of the Anglo Irish bank – a bank which looks after the Post Office's financial services – was arrested last month and questioned over alleged fraud. In Iceland last week a dossier assembled by its parliament on the Icelandic banks – huge lenders in Britain – was handed to its public prosecution service. A court-appointed examiner found that collapsed investment bank Lehman knowingly manipulated its balance sheet to make it look stronger than it was – accounts originally audited by the British firm Ernst and Young and given the legal green light by the British firm Linklaters. In Switzerland UBS has been defending itself from the US's Inland Revenue Service for allegedly running 17,000 offshore accounts to evade tax. Be sure there are more revelations to come – except in saintly Britain.” “….The Icelandic banks, Anglo Irish bank and Lehman were all involved in opaque deals and rank bad lending decisions – but Goldman allegedly went one step further, according to the SEC actively creating a financial instrument that transferred wealth to one favoured client from others less favoured.” “….Brutally, the banks knowingly gamed the system to grow their balance sheets ever faster and with even less capital underpinning them in the full knowledge that everything rested on the bogus claim that their lending was now much less risky. That was not all they were doing. As Michael Lewis describes in The Big Short, credit default swaps had been deliberately created as an asset class by the big investment banks to allow hedge funds to speculate against collateralised debt obligations. The banks were gaming the regulators and investors alike – and they knew full well what they were doing.” “….We need to break up our banks, limit their capacity to

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speculate and bring them back to earth. Britain should also launch an official investigation into what went wrong – and hand the findings to the Serious Fraud Office. This needs to become this election campaign's number one issue.”Crisis timetableSeptember 2007 Funding problems at Northern Rock triggers the first run on a British bank. It is nationalised in February 2008.April 2008 Bear Stern faces bankruptcy after a run on the company wipes out cash reserves in less than two days. Backed by the Federal Reserve, JPMorgan buys up shares at far below market value.September 2008 Lehman Brothers files for bankruptcy protection, becoming the first major bank to collapse since the start of the credit crisis.December 2008 Bernard Madoff arrested for operating the largest Ponzi scheme in history.January 2009 The Bank of England launches £200bn quantitative easing.March 2010 Former chairman of Anglo Irish bank Sean Fitzpatrick is arrested in Dublin after failing to disclose details of loans worth millions from the bank.April 2010 Northern Rock former directors, David Baker and Richard Barclay, are fined £504,000 and £140,000 for deliberately misleading analysts prior to nationalisation.April 2010 The US Securities and Exchange Commission accuses Goldman Sachs of "defrauding investors by misstating and omitting key facts".277

20.4.10. The Deepwater Horizon rig, working for BP explodes 50 miles off Louisiana, killing 11. The 1,500 metre riser collapses, and the wellhead begins pouring oil into the water.IMF proposes tough measures to cut banks down to size, taxing both profits and pay in a so-called Financial Activities Tax (FAT), stopping short of a Tobin tax. Gordon Brown claims credit for it.278

IMF says banks are more powerful now than they were before the crisis, and time is running out to deal with them. “The future financial regulatory reform agenda is still a work in progress, but will need to move forward with at least the main ingredients soon”, the IMF’s Global Financial Stability Review notes. “The window of opportunity for dealing with too-important-to-fail institutions may be closing and should not be squandered, all the more so because some of these institutions have become bigger and more dominant than before the crisis erupted.”279

21.4.10. FT.com suspects policymakers, economists and peak-oilists are starting to speak same language. “It’s still the rare politician or industry executive who would use the phrase ‘peak oil’. But in the UK, a country for whom domestic oil production decline is very much a concern, the issue has become almost mainstream.”280

None of the UK political party manifestos mention peak oil going into the election . And when asked about at the Guardian debate on the environment, the three environmental spokespeople - Miliband, Hughes and Clark – show varying degrees of complacency, Miliband worst.281

25.4.10. Chevron CEO sees no future for his company in the shale gas rush. John Watson that the “price tag is too high” to justify the investments required, a big contrast with those who insist that new drilling techniques are a “game changer” and lift projections of reserves of shale gas from 30 years’ worth of supplies to 100 years.282

28.4.10. Deepwater Horizon had no remote shut off of the kind required in Norway and Brazil. U.S. regulators don't mandate use of the so-called acoustic switch, a third line of defence. On all offshore oil rigs, there is one main switch for cutting off the flow of oil by closing a valve located on the ocean floor. Many rigs also have automatic systems, such as a "dead man" switch as a backup that is supposed to close the valve if it senses a catastrophic failure aboard the rig. The Deepwater Horizon had a dead-man switch, and nobody can explain why it didn’t work. With an acoustic switch a crew can trigger an underwater valve that shuts down the well even if the oil rig itself is damaged or evacuated. Regulators in Norway and Brazil require them. Norway has had acoustic triggers on almost every offshore rig since 1993. Shell and Total often install them even where regulators don’t require them. An acoustic switch costs about $500,000. U.S. regulators have considered mandating the use of remote-control acoustic switches or other back-up equipment. But the oil industry argued against the acoustic systems.283

29.4.10. US mobilises military as BP’s oil spill approaches Lousiana coast. BP’s value falls by £13bn as share price falls Some 5,000 barrels a day are still spilling beneath the rig and BP’s efforts to cap the well could take four weeks, by which time 150,000 barrels would have escaped. If that doesn’t work, a relief well would be needed, needing maybe 3 months, and meaning 300,000 barrels – bigger than the Exxon Valdez at 258,000 barrels.

30.4.10. White House bans offshore drilling until further notice as US Navy joins the effort to contain the spill (on the surface, that is).284

Costs of Gulf oilspill likely to exceed Exxon Valdez as backlash builds against BP. Brent Coon & Associates, an American law firm playing a large role in bringing cases against BP for the Texas City refinery fire in 2005, files a lawsuit on behalf of a rig worker injured in last week's blast, and argues that criminal charges should be brought against the company for its repeated failure to act after a series of industrial accidents in the US. “They don't learn their lessons, they are the most arrogant bunch of bastards I've ever dealt with,” says lawyer Brent Coon. “It's like they just don't care. At some point, we are going to have to put some of these executives in jail and withdraw their right to exploit our natural resources.”285

Goldman Sachs faces a criminal investigation. Federal prosecutors have opened a preliminary criminal investigation. The news sent Goldman shares down 9%.286

22 arrested in carbon trading inquiry, all but one in the UK, although Deutsche Bank has been raided in a German arm of the operation, involving 2,450 British and German tax officers. The issue is carousel fraud involving VAT, as result of which criminals have pocketed an estimated €5bn. A total of 58 have now been arrested across Europe. 287

1.5.10. British H&S watchdog has warned BP over safety on North Sea oil rigs. The HSE has issued an “improvement notice on the Schiehallion Field saying that the oil group “failed to ensure the safety of your employees and others not in your employment by not providing and maintaining a system of work for the control of that operation that was, so far as reasonably practicable, safe.” Another notice pertains to Magnus. After the Piper Alpha (167 dead) investigation, pipeline emergency shut down valves were made madatory. One failed on one field and others have been found to be at risk. The HSE has called on all operators to check ESDVs. Saftety stats in the North Sea showed a marked deterioration in 2009 on 2008.288

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Warren Buffett defends Goldman Sachs, saying at the Berkshire Hathaway AGM that the losers on their suspect deal “made a dumb credit decision.” Though he adds a successful criminal prosecution would be “something more serious, and we’d look at that at the time.”289

2.5.10. “Virtually impossible” spill larger than previously estimated, experts say: 3,850 sq miles. BP’s safety analysis had suggested the spill was “virtually impossible.” Obama flies to meet Hayward in Louisiana.290

5.5.10. Three die in Athens as anarchists torch a bank during protests against the IMF / EU austerity programme, a condition of the €110bn bailout extended to the Greek government. The euro falls to a 14 month low against the dollar.291

Investors bet on a Tory win in UK election as they pile into gilts. The expectation seems to be that Cameron will deal best with the nation’s £163bn deficit – 11% of GDP, higher than Greece’s – and provide something of a safe haven in the troubled Eurozone.292 BP admits in a private congressional briefing that the oil escape could reach 40,000 barrels a day as White House backs a move by Senators back to put oil companies on the hook for $10bn for a spill. It could be retroactive, because under current laws (20 years old) BP’s liability is capped at $75m. BP faces 20 lawsuits to date.293

Moody’s changes BP’s Aa1 debt status from “stable” to “negative” on the basis of oil-spill fears, because it is “remains impossible to assess the full extent of the costs and business impact on BP’s results”. Equity analysts are more sanguine, having opined that the total exposure will be “limited” to $3-10bn.294

CBIC’s Jeff Rubin likens the Deepwater Horizon to Three Mile Island. Writing in the Globe and Mail, he says: “Will the unfolding environmental catastrophe from the ruptured Deepwater Horizon well in the Gulf of Mexico become deep-water oil’s equivalent to the Three Mile Island accident? In terms of environmental degradation and economic cost, it’s already become much more. The real legacy of Three Mile Island wasn’t what happened back in 1979, though, but rather what happened, or more precisely didn’t happen, over the course of the next 40 years in the United States. Literally overnight, the near-meltdown of the reactor core changed public acceptance of nuclear power plants. No company in the U.S. has built a new one since.”295

Blind voting on policies puts the Greens as the most popular UK political party. The website VoteForPolicies.org.uk lists policies and asks people to vote for those they prefer. A quarter of the 245,000 people who took the test ended up voting for the policies of the Greens, about 18% each for the LibDems and Labour, and 16% for the Tories.296

6.5.10. Hung Parliament in the UK. Meanwhile, Wall street is gripped by panic that Greek crisis will spread. Stliglitz and Roubini are doubtful that the Euro can survive. They do not think governments can or should squeeze their spending to the degree the IMF and EU stipulate. Professor David Blanchflower, former Bank of England monetary policy committee member, says it is "crazy" for highly indebted countries such as Greece, Spain, Portugal and Britain to enter a “death spiral” of spending cuts : “All anyone is talking about is austerity, but all you get is more unemployment and low growth. Then you find yourself in a spiral of debt as low growth forces you to cut spending further.”297

Citywire website: “Would you put up with what is being asked of the Greek people?” As part of the IMF/ EU bailout Greek leaders are proposing the following measures: Public sector pay to be frozen till 2014; Public sector salary bonuses – equivalent to two months’ extra pay – to be scrapped or capped; Public sector allowances to be cut by 20%; State pensions to be frozen or cut, with the contribution period up from 37 to 40 years; average retirement age raised from 61 to 63, and early retirement restricted; VAT to be increased from 19% to 23%; Taxes on fuel, alcohol and tobacco raised to 10%; A new one-off tax on profits to be introduced, plus new gambling, property and green taxes. 298

Dome to stem the oil flow moved into place. The leak is now 5,000 barrels a day. The structure weighs almost 100 tonnes. Such a capping has never been undertaken in waters this deep.299

7.5.10. EU crisis goes global. European shares finish at a 6 month low as more shares change hands in London than at any time since the credit crisis in autumn 2008. Other exchanges are down too.300

EU drops new emissions regulations that could have shut Drax. Pressure from the utilities, arguing that they cannot get enough new generating capcity onstream until 2020. makes a key committee put off the

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industrial emissions directive from 2016 until 2019. The parliament is likely to ratify this in July. The Large Combustion Plants Directive remains in place.301

Critics focus on corruption of the rigs watchdog: a pattern repeated from the credit crunch? FT: “Just as the financial crisis revealed that US regulators were often too cosy with institutions that they were meant to supervise, BP's huge oil spill in the Gulf of Mexico has shone an unflattering light on the agency charged with regulating US oil resources. For more than a decade, the Minerals Management Service, a federal agency within the interior department, has been accused by government watchdogs of failing to inspect offshore oil leases and relying too heavily on industry data in collecting royalties and other fees related to oil and gas. In a low point for the agency, a scathing 2008 report by the inspector-general of the interior described a culture of "substance abuse and promiscuity" within the MMS department charged with collecting royalties on leases and revealed that two MMS employees had, literally, been in bed with industry contacts.”302

8.5.10. Hydrate crystals block the cofferdome as oil hits shore for first time. BP now plans to do a “junk shot”: blast the blow-out preventer with debris (shredded rubber etc) under pressure, hoping to block the leak.

9.5.10. Deep-water oil’s ability to offset depletion may hinge on the Macondo cofferdam operation. If it succeeds, it should capture around 85 per cent of the leaking oil, then the spill (around 100,000 barrels, 4.2 m gallons so far) will end up at less than half the amount spilled in the 1989 Exxon Valdez disaster and won't even make it into the top 100 oil spills by volume. But if it fails, the relief well might take three months, and the spill could reach 450,000 barrels, just under twice the Exxon Valdez (into the top 50 spills). Douglas Westwood says deepwater oil production has soared from under two million barrels per day in 2000 to 8 mb/d in 2010, almost 10 per cent of global consumption, and must rise further. Chairman John Westwood: “They can't ban deepwater because the industry has nowhere else to go.” 500 deepwater wells were drilled in 2009, costing up to $100m each. The Macondo field probably contains less than 50 million barrels – an oilfield minnow. Analysts Newedge USA say that if Obama’s moratorium is in place for long, oil supply could suffer a shortfall of up to one mb/d by 2016 to 2018.303

Solar printing-press company suggests it can cut PV costs by 90% . Omar Cheema, co-founder and chief executive of Solar Press, claims a breakthrough at Imperial College that produces an “ink” made from three electrical materials dissolved in a solvent. Deposited on to panels by a high-speed printing machine, passed through an oven, the solvents evaporate, leaving behind circuits that react with sunlight to generate electric currents. Cheema estimates cost reduction by as much as 80%, and the ability to produce between 200 and 400 square metres of solar cells in one hour and 24,000 square metres of solar panels in 12 days. That would mean production of nine to ten gigawatts a year: around the current output of the solar power industry. The Carbon Trust invested £1.5m a year ago to fund its spinout from Imperial College. Cheema is looking for several million more to ramp up production. “We believe we can be profitable by the end of next year,” he says. “We we need only $10m [£6.8m] in total before investors start to see a return. That’s because there is no capital outlay.” Solar Press aims to start commercial operations with lighting in the developing world.304

10.5.10. €750bn Eurozone resecue package agreed by Finance Ministers. Stock markets leap across Europe as the ECB emraces quantitative easing.305

Mood at annual Offshore Technology Conference unaffected by oil spill. FT.com “Perhaps ironically, the same week saw a big offshore drilling conference in Houston pull in record crowds. Although the organisers of OTC said the Deepwater Horizon event affected the “mood and tone of the event,” it didn’t appear to put a huge dampener on things, judging from the Houston Chronicle’s extensive coverage. On the first day, “discussion centered on what went wrong rather than concern about the future of deep water drilling” and that there was no indication of companies being “spooked” by the incident enough to reconsider offshore drilling and production. Attendees were getting their shoes shined and fending off strip club promotions, while the disaster was undoubtedly a big topic of conversation, a small protest outside the conference on Thursday elicited little response.”306

BP spill may have been due to methane hydrates: escaping gas blowing out steel casing cement. A presentation by Halliburton last month pointed to the dangers.307

11.5.10. BP, Transocean and Halliburton execs try to blame each other each in Congressional testimony. They are ticked off by Lisa Murkowski, the ranking Republican on the committee and senator from Alaska. “I would suggest to all three of you that we are all in this together because this incident will have an impact on the energy policy of our country,” she ys. “If you can’t convince people that you can operate safely, not only will BP not be out there, but the Transoceans won’t be out there to drill the rigs and the Halliburtons won’t be out there cementing.308 FT: “Essentially, the testimonies go something like this: BP: Why did the BOP fail? Transocean: Were there problems with the cementing and casings? Halliburton: We did what BP asked us to The regulator: Better testing standards needed for shear ram, cementing and other factors The academic: Why did multiple blowout barriers fail, and was there human error?309

Methane explosions in Russia’s largest coal mine kill 52 with 38 still missing. FT: “One miner interviewed at the scene said he didn’t understand how the blast could have happened as they had just installed new German ventilators and British methane detectors. The Raspadskaya Coal Company’s mine is the highest-producing coal mine in Russia, but also one of the deepest, with 311km of tunnels, which makes it especially vulnerable to methane gas build up. Despite government pledges to compensate families of dead miners with roughly 1m roubles apiece, many relatives were bitter about the way they have been treated. “We send our sons to die in these holes, and for kopeks,” said the mother of one miner who declined to give her name. “There is no other work to do here. Only the mine. They have no choice.”310

Cities “charging ahead” with EVs, WSJ reports. “The electrification efforts aren't limited to the usual suspects—traditionally green cities like San Francisco and Seattle. Efforts are also under way in places like Orlando, Indianapolis and Memphis, Tenn., where the motor vehicle is the main mode of transportation—and where electric cars will likely meet their ultimate success or failure.” “If it can work in Houston, it can work anywhere,” says James Tillman, assistant director of the city of Houston's finance department. e.g. “Nissan Motor Co. is crafting alliances with municipalities and utilities in the 15 to 20 markets where it will initially launch the Leaf, a compact hatchback. As part of the effort, Electric Transportation Engineering Corp., a Nissan partner, will install more than 11,000 charging stations in Arizona, California, Oregon, Tennessee and Washington state, using a $100 million award from the U.S. Department of Energy. More than half will be public stations, and a few hundred of those will be "fast charging," able to charge a vehicle in minutes instead of hours.” Note: Cars charge twice as quickly from a 220-volt outlet as from a standard 110-volt outlet, which can take more than 12 hours for a full charge.311

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IEA says solar could be generating 20-25% of world electricity (9,000 TWh pa) by 2050. They launch their solar PV and CSP roadmaps in Valencia today. “With effective policies in place, PV on residential and commercial buildings will achieve grid parity – i.e. with electricity grid retail prices – by 2020 in many regions. PV will become competitive at utility-scale in the sunniest regions by 2030 and provide 5% of global electricity.” PV would do 11% of global electricity by 2050, the IEA figures.312

12.5.10. IEA warns against US oil spill over-reaction. “A knee-jerk reaction by regulators, banning new offshore licensing altogether, as some are proposing, risks pushing companies to ever more precarious locations in search of hydrocarbons. The law of unintended consequences may apply,” the IEA says in its monthly market report released on Wednesday.313

Mark Jacobson of Stanford interviewed by FT.com on his 100% renewable power ideas. The engineering professor, author with Mark Delucchi of a paper on the subject in Scientific American, says most of the response has been positive. Other views: “Why waste your time on biofuels, where the air pollution is the same or higher than fossil fuels — so people will stil die? It just seems a waste of effort. Internal combustion engines are only 15 - 20 per cent efficient, so it just makes sense to use electricification, plug-to-wheel efficiencies of electric vehicles are 75-86 per cent.” “There are two types of concentrated solar; one that uses water cooling and one that uses dry air cooling. The water-cooled, per Kwh, requires about the same amount of water as a nuclear plant or coal per Kwh, however the dry-air cooling requires hardly any water, except for cleaning — the cost of that is that you lose about 4 per cent of the energy generated.” “I’m optimistic it’s technically feasible, not so optimistic on people coming together and agreeing on things in a particular way, though we have seen some movement on that.” “Right now we don’t have a free market, we have a free-loading market where the fossil fuel companies pollute the air, and get subsidies from the government. Subsidies should be given for a benefit, not to allow people to damage other people’s health. But the fossil fuel companies are taking subsidies and at the same time damaging people’s health, including killing them. In the US, 50,000 to 100,000 people die each year [from fossil fuel pollution], and worldwide, it is 2.5 million people per year.”314

13.5.10. Eight Wall Street banks investigated over misleading mortgage securities. Subpoenas served by the New York Attorney General include Citigroup, Goldman Sachs, Merrill Lynch and Morgan Stanley. They stand accused of misleading ratings agencies. Banks’ practice of hired ratings agencies employees to package mortgage deals will be probed. The only criminal prosecution so far – of two Bear Stearns traders – say them acquitted.315

More and more reports are coming in about delays to oil drilling projects in the wake of the Deepwater Horizon accident. A temporary moratorium on new drilling permits is in place. Hearings on Virginia’s offshore development have been suspended. BP’s Tiber field and Shell’s Alaska plans could be affected.316 BP was aware of equipment problems aboard the Deepwater Horizon rig hours before the explosion, a congressional hearing finds. Documents suggest BP, Transocean, and Halliburtonignored tests that indicated faulty safety equipment. Henry Waxman, the chair of the energy and commerce committee demands to know why work was not stopped. FT: “The failures included a dead battery in the blowout preventer, suggestions of a breach in the well casing, and failure in the shear ram, a device of last resort that was supposed to cut through and seal the drill pipe in the event of a blowout.” 317

Climate bill unveiled in Senate is amended to give states veto power over projects in deep water (75 miles from their shores). The previous draft of the Kerry-Lieberman bill, unveiled yesterday, supported offshore drilling. (FT: “The bill aims for a 17% cut in emissions over 2005 levels, the same weak target enshrined in a bill passed by the House in June last year. But the Senate version would apply to a smaller share of the US economy. Heavy industries would not be required to cut emissions until 2016. The bill would stop the Environmental Protection Agency regulating greenhouse gases and would scrap region cap and trade systems now underway in two dozen states and Canadian provinces”).318 The bill will need 60 votes to overcome any filibuster - the Democrats have 59. Also in the legislation: a cap-and-trade system for power plants, and for large industrial facilities at a later date, incentives for nuclear including $54bn in loan guarantees for new plants. It does not cover transport emissions.319

Obama drops the cap on BP’s liability for the oil spill. BP has shelled out $450m so far and the lawsuit total now stands at nearly 100.

14.5.10. Fears over Greek bailout send shares and euro tumbling. A Spanish newspaper didn’t help by claiming that Sarkhozy had threatened to pull out of the Euro unless Germany backs the bailout. But after a recent regional election, Merkel’s coalition is under pressure.320

Cameron says his coalition will be “the greenest government ever.” In DECC, flanked by Liberal Democrat, Chris Huhne, who will run the department, Cameron says that the environment was a top priority for him. “There is a fourth minister in this department who cares passionately about this agenda and that is me, the prime minister, right. I mean that from the bottom of my heart.” Cameron pledges to cut emissions from government 10% within a year.321

Hayward says the Gulf oil spill is “relatively tiny” compared with the “very big ocean .” “The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume,” says the BP CEO in an interview with the Guardian. Asked if he felt his job was already under threat, he replies: “I don't at the moment. That of course may change. I will be judged by the nature of the response.” Some analysts put BP's total bill for the clean-up and damages at $23bn. As for the future of deep-water drilling: “Apollo 13 did not stop the space programme. The Air France airplane that fell out of the sky off of Brazil did not stop the aviation industry.’’ 322

Debate over rate of oil leakage after BP releases video footage: three scientists say rate is much higher than the official 5,000 barrels a day. One says 70,000, another 20,000-100,000.323

Marine toxicologist Jacqueline Savitz says dispersants cause huge toll on wildlife out at sea. “You obviously can't count how many zooplankton are being impacted,” she says. The estimated 400,000 gallons of dispersant so far may will be damaging to fish, she says. “It certainly helps BP's public relations story if oil is not hitting the shore.”324

Credit rating agencies under investigation alongside Wall Street banks. The New York attorney-general’s office is now investigating whether the credit rating agencies allowed themselves to be co-opted by Wall Street Banks. Subpoenas ask for documents and e-mails between bankers and rating agency counterparts who ultimately approved the triple A designations. FT: “Analysts at credit rating agencies who earned between $100,000 and $200,000 per year could improve their salaries by a factor of five or more by moving to a Wall Street bank. Prosecutors are looking for instances where analysts who moved from a rating agency to an

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investment bank still held some pull over their old colleagues, or whether the lure of a potential move to Wall Street affected the judgment of the analysts who slapped triple-A ratings on highly correlated parcels of subprime securities.”325

NEF issues Better Banking Manifesto, with a ten-point charter. 1. Separate retail banking from speculation. 2. Break up banks that are ‘too big to fail’. 3. Create a National Post Bank based on the existing Post Office network. 4. Set up a Green Investment Bank. 5. Launch a competition enquiry into the banks, that looks also at the role played by ratings agencies and accountancy firms. 6. Introduce controls on bonuses. 7. Introduce a financial transaction (or ‘Robin Hood’) tax. 8. Demand better regulation. 9. Bailouts are not free: bring-in a taxpayer ‘quid pro quo’. 10. Introduce a Universal Banking Obligation326

15.5.10. EDF’s de Rivaz says the UK coalition is a boost for nuclear, but experts say the opposite, pointing to the stipulation that no state money can be contributed.327

16.5.10. New financial investment in clean energy worldwide totalled $27.bn in Q1 2010, up 31% on the same quarter last year. 2009 total was $162 bn down just 7% on the record year of 2008 ($173bn) in the teeth of recession. Only 9% $16.6bn) of stimulus funding for cleantech has been dispersed so far. Of the total $184bn, 66.6 is US, 46.9 China, 27.8 S Korea, 8.6 Japan, 4.2 Germany, 3.7 UK. $55bn will be dispersed in 2010, 55.2 in 2010, 33.1 in 2012.328

17.5.10. Concern is growing that vast dead zones are forming below the surface of the Gulf. BP has used 500,000 gallons of dispersants, which break the oil down into small particles, so far. The company is now collecting 1,000 barrels a day via 4 inch diameter pipe. But between 4,000 and 99,000 barrels are still escaping. The faulty blow-out preventer has been subpoenaed by US investigators.329

18.5.10. Tar balls reach Mexico and the no fishing zone now embraces 19% of the Gulf. The Obama administration admits it has underestimated the risks of offshore drilling.330

19.5.10. German regulator bans “naked short selling” as Merkel says Euro is in danger of collapse. Shares fall sharply across Europe. “Every one of us here can feel that the current crisis of the euro is the greatest challenge that Europe has faced for decades, since the signing of the Treaty of Rome,” Merkel says in a speech to the German Bundestag. “The euro is in danger ... If we don't deal with this danger, then the consequences for us in Europe are incalculable.” The German clampdown covers sovereign bonds issued by eurozone countries, CDSs on those bonds, and the shares of 10 of Germany’s biggest financial institutions including Deutsche Bank and Commerzbank. The ban will run until 31 March 2011. City experts were broadly united in attacking the proposal as badly thought out, and potentially counter-productive, arguing that if investors cannot hedge their exposure to Europe by short-selling of bonds and CDS contracts, then they may simply sell the Euro instead. The Euro has fallen to $1.2146 against the dollar, the lowest since April 2006. But analysts also believe other European countries could follow Germany's move.331

Tony Hayward tries to soothe his employees’ turmoil over the oil spill concerns with an email. In it, he felt he needed to reassure his staff members that their jobs and pensions were safe and that the  BP could afford the massive response it has launched in the wake of the Deepwater Horizon explosion. “We can afford to do the right thing.” He also promises not to “get distrected” by Congressional hearings.332

Obama’s handling of the gulf oil spill has been disappointing, writes Thomas Freidman in the NYT. “It’s his 9/11 — and it is disappointing to see him making the same mistake George W. Bush made with his 9/11. Sept. 11, 2001, was one of those rare seismic events that create the possibility to energize the country to do something really important and lasting that is too hard to do in normal times. President Bush’s greatest failure was not Iraq, Afghanistan or Katrina. It was his failure of imagination after 9/11 to mobilize the country to get behind a really big initiative for nation-building in America.” “So far, the Obama policy is: “Think small and carry a big stick.” He is rightly hammering the oil company executives. But he is offering no big strategy to end our oil addiction.” “Why is Obama playing defense? Just how much oil has to spill into the gulf, how much wildlife has to die, how many radical mosques need to be built with our gasoline purchases to produce more Times Square bombers, before it becomes politically “safe” for the president to say he is going to end our oil addiction?”333

Britain could become the "Saudi Arabia of the renewables world" by using North Sea wind and wave resources, according to a study carried out by the Offshore Valuation Group, a government-and-industry group. By 2050, so the OVG estimates, the UK could generate the equivalent in electricity to the 1bn barrels of oil and gas being produced annually offshore. The Boston Consulting Group carried out the study, which suggests that Britain could both keep the lights on and export electricity via subsea cables. Even the most conservative scenario – 13% resource utilisation, producing 78 gigawatts of power at a capital cost of £170bn – would provide half of the UK's electricity demand. A more ambitious scenario, using 29% of resources would see 169GW installed at a cost of nearly £433bn and would make Britain a net exporter of electricity.334

20.5.10. BP sent a vital Schlumberger crew home without final checks on well 11 hours before the disaster. Hired to test the strength of cement linings on the well, a Schlumberger crew was flown off the rig 11 hours before the explosion “without performing a final check that a top cementing company executive called 'the only test that can really determine the actual effectiveness' of the well's seal.” So the New Orleans Times-Picayune reports. A worker has told “60 Minutes” that BP ordered Transocean to ignore a critical safety measure during the sealing of the well. By failing to use drilling mud to seal the well, BP saved money but may have caused the explosion.335 Survivors had to spend 40 hours in isolation after the Deepwater Horizon explosion – barred from phoning their families – while lawyers believe Transocean readied its legal defences. “This will be one of the biggest torts probably in the history of the US”, says Anthony Buzbee, a Houston lawyer who is representing survivors who are seeking $5.5m (£3.7m) each in damages from Transocean and other firms. Lawyers say Transocean deliberately isolated the men, trying to wear them down so they would sign statements denying that they had been hurt or that they had witnessed the explosion that destroyed the rig. Buzbee: “These men are told they have to sign these statements or they can't go home. I think it's pretty callous, but I'm not surprised by it.”336

Deepwater wells may not be as productive as had been thought, says the PostCarbon Institute BP's Thunderhorse started producing in 2008, after years of delay, and was supposed to produce a billion barrels of oil at the rate of 250,000 barrels a day (b/d). Production reached 172,000 b/d in January of 2009, but then fell rapidly to a low of 61,000 b/d last December. BP watchers are growing increasingly skeptical that the platform will ever produce the planned billion barrels. “At least 25 other deepwater projects are said to be facing problems of falling production, raising the question of just how much oil these very expensive deepwater projects will ever produce.”337

UK coalition in danger of backing off zero-carbon by 2016 target, Green Building Council fears. “We

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will require continuous improvements to th energy efficiency of new housing,” the new manifesto says. “Without urgent clarification, this one line risks a wave of uncertainty sweeping throughout the construction and property sector,” says the GBC’s John Alker. “To pull the rug out from under the feet of all those companies who have been investing and innovating and preparing for 2016 would be disastrous.” On the positive side, there is a commitment to “encourage home energy efficiency improvements paid for by savings from energy bills.”338

National Grid says its new investment in greener infrastructure will cost £4 a year on energy bills . It will seek £3.2bn in a rights issue next month as it steps up spending on electricity and gas infrastructure to £22bn over the next five years, from £14bn in the past five. Three-quarters of the total will be spent in the UK. The measures announced include an offshore electricity grid to support a “new generation of offshore wind power” and promoting gas from waste through anaerobic digestion.339

China mines 90% of the rare earths vital for clean energy technology. Professor Rex Harris of Birmingham University puts it like this: “We worry about peak oil, we should worry about peak magnets as well.” Most came form the United States in the 1960s but tightening environmental regulations and a price war closed the last Californian mine, handing China a virtual monopoly. But last year the Chinese said that as part of their latest 5 year plan they would continue to reduce the export of these materials to the West and that they were considering stopping the export of certain of them. They want both Western users to do their manufacturing in China and supplies for their own wind energy programme. In the search for alternative sources of rare earths, mines are planned for California, Australia, Arctic Canada and even Greenland. But there are environmental concerns. The mines at Baotou in Chinese Inner Mongolia involve enormous open-cast mines with refineries leaking vast quantities of polluted water into the landscape. Professor Animesh Jha at Leeds University proposes a cleaner alternative, having discovered that purification of Titanium dioxide, commonly used in paints, leaves a residue of rare earths. Titanium oxide deposits are found in many places, including Norway, India, Brazil, US.340

Martin Wolf in FT: “The challenge of halting the financial doomsday machine.” “Can we afford our financial system? The answer is no. Understanding why this is so is a necessary condition for evaluating ideas for reform. The more aware of the risks one is, the more obvious it becomes that radicalism is the safer option.” “People pay too much attention to the direct cost of bail-outs. As Andrew Haldane of the Bank of England has noted, these costs may be around 1 per cent of gross domestic product in the US and UK. The costs that matter, however, are those of the recession and the huge jump in public debt. If only a quarter of the world’s loss of output during the recession were to prove permanent, the present value of these losses could be as much as 90 per cent of annual world product. How did this happen? Quite simply, the financial sector has become bigger and riskier. “….The combination of state insurance (which protects creditors) with limited liability (which protects shareholders) creates a financial doomsday machine. What happens is best thought of as “rational carelessness”. Its most dangerous effect comes via the extremes of the credit cycle. Most perilous of all is the compulsion upon the authorities to blow another set of credit bubbles, to forestall the devastating impact of the implosion of the last ones. In the end, what happens to finance is not what matters most but what finance does to the wider economy.”341

Nearly a year after the recession likely ended, the US housing market looks “as sick as ever.” Wall Street Journal: “At the end of March, borrowers on 10.06% of residential mortgages had missed at least one payment, up from 9.47% at the end of 2009, according to the Mortgage Bankers Association. ….Since the end of 2007, outstanding household mortgage debt has remained at about $10 trillion, sustained in part by huge government mortgage purchases, loan-modification programs and superlow interest rates. Yet those haven't stopped house prices sliding 20%.342

21.5.10. Oil hits Louisiana wetlands as concern focuses on impacts of dispersants. Robert J Gordon, an attorney epresenting 500 commercial fishermen suing BP: “We are concerned that the cure may be as bad as the injury.” The EPA has required BP to identify and use a less toxic and more effective dispersant from the list of EPA authorized dispersants.343

Biggest Wall Street shake-up since Great Depression: Senate backs Obama’s banking reform bill. The bill gives the US government the power to seize control of a failing bank to avoid a collapse that could threaten the financial sector. Derivatives trading will have to take place through a central clearing house, rather than directly between trading teams, and banks will also have to post collateral to cover potential losses, pushing up the cost of dealing in derivatives. There will be a British-style “say on pay” vote on boardroom bonuses. A consumer financial protection bureau will be created to police the sale of products such as mortgages and credit cards. Obama: “Taxpayers will never again be asked to foot the bill for Wall Street's mistakes. There will be no more taxpayer-funded bailouts. Period.” However, some measures were dropped from the bill – including stringent conflict-of-interest rules and tighter controls on proprietary trading – after Republicans prevented these topics being voted on. And it remains unclear whether US deposit-taking banks will also be banned from engaging in proprietary trading (i.e. whether the Volcker Rule will apply, and if so in what precise shape). This element will be covered in an amendment yet to be voted upon, as will a tougher proposal forcing banks to spin off desks trading in credit swaps. The Senate bill must now be merged with a version approved in December by the US House of Representatives. Then it goes to the president to be signed into law, possibly in July. Jim Hardesty, president of Hardesty Capital Management: “The lobbyists are firmly in control of Washington, and the reform efforts are likely to be modest.” He fears Wall Street firms might simply “reinvent themselves.”344

23.5.10. Europe markets set for more turmoil as rifts over how to deal with mounting deficits widen. Spanish Prime minister José Luis Rodríguez Zapatero says his government will not revise its €15bn austerity plan, despite pressure from unions. Meanwhile, the Spanish government has been forced to rescue a regional mortgage lender. £6bn of cuts mapped out by the new UK coalition government came under attack. David Blanchflower who said revised figures for last year – showing the UK spent less than expected – allows the government to delay cuts. He says the economy needs to recover before the government cuts spending or it could slip back into recession.345

Climate change concern declines in poll: only 62% of Britons interested in subject, down from 80% in 2006, according to YouGov survey. The poll also suggests resistance to building new nuclear power stations is decreasing. The number of climate change agnostics – those unsure whether human activity is warming the planet – has risen from 25% in 2007 to 33% now.346

US safety regulators to energy companies: “Your workers are dying on the job, and it has to stop.’’ Jordan Barab, of the federal Occupational Safety and Health Administration (Osha): “Something is desperately wrong. The status quo isn’t working.’’347 In the last 3 months, 58 workers have died in explosions, fires and

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collapses at refineries, coal mines, an oil drilling rig and the construction site of a gas-fired power station. Of particular concern is a spate of recent incidents at oil refineries that have scalded, burned or killed workers.348

BP accounts for 97 per cent of all wilful violations found in the refining industry by regulators over the past three years. So says a recent report by the Washington-based Center for Public Integrity. In 2005, Osha found more than 300 “egregious, wilful violations” in Texas City, where 15 died. FT: “Yet three more fatalities have happened at the Texas plant since the blast – one of which is under investigation by the US Chemical Safety Board. Last August, Osha notified BP of continued lapses there and issued $87.4m in proposed penalties – the largest fine in the agency's history.” 349

25.5.10. BP Chairman hits back at critics saying the company is “big and important” to the US economy, and that the CEO is doing a “great job.”350

Commentators increasingly point to high deep-water production costs as incentive to cut corners. e.g. Treehugger.com: The leasing of a deep water rig has to be hugely expensive. Thousands of dollars per minute possibly. Such high costs explain the pressure engineers are under to get on with the job of producing oil once all the equipment and people are in position to tap the leased reserves.351

26.5.10. BP tells US lawmakers that there were “several new warning signs of problems” in the hours before the Deepwater Horizon explosion, and that a “fundamental mistake” may have been made in the face of abnormal pressures by the rig crew. When the pump was shut down, 41 minutes before the explosion, the well continued to flow instead of stopping. Drill pipe pressure increased unexpectedly. BP also identified ‘several concerns’ relating to the cementing process. Some mechanisms used in the process did not initially operate as intended and required nine attempts before functioning properly.352

Transocean, the rig owner, says BP directed the operation. “A well is constructed and completed the same way a house is built — at the direction of the owner and the architect. And in this case, that’s BP.”353

27.5.10. BP begins its “top kill” operation to plug the Macondo well by pumping heavy mud in to reverse the oil flow. In two days the world will supposedly know if it has worked, or whether – as some oil drilling experts are saying is possible – the spill has been made worse by damage to the parts of the blow-out preventer that might be working.354

At Congressional hearings, rig staff accuse BO of taking “short cuts” in run up to spill. BP’s share price has fallen by 28% now, a reduction in market value of $84bn. (Profits in 2009 were $13.9bn).355

The spill is becoming Obama’s problem. 51% tell CNN that they disapprove of his handling of the crisis. The Republican ggovernor of Lousiana, Bobby Jindal, is becoming a persistent thorn in his side.Obama finally links the oilspill to the “dangers of fossil fuels.” This he does while touring a solar panel plant in California: “we’re not going to be able to sustain this kind of fossil fuel use,” he says.356

Deep-water oil accounts for 23.5% of US GoM production (EIA): the delay or loss will be serious. In 2008, 14.9% of US reserves were in the deep-water GoM (EIA). Both figures are based on defining deepwater as 1,000 feet plus. But deep water oil is often classified as anything deeper than 500 feet. Over 5,000 feet is ultra-deep water. 33 wells have been suspended for 6 months in the GoM. Production underway is not affected: 591 oil and gas production wells are still producing in deep water (as are 4,515 in shallow water).357

US oil imports were scheduled to drop, in large part due to expanding deep-water production. Current consumption is 51% imported and the EIA was forecasting that to drop by a third, from more than 12 mbd in 2007 to about 8 mbd in 2030, assuming consumption remains roughly flat. Domestic production is around 5 mbd, 30% of which is in the Gulf of Mexico, around 70% of it in deep water (i.e. 1.1 mbd+), a proportion that is growing fast. The GoM is more than 90% of all offshore US production. The EIA aniticpates “a vast majority” of projected increases in U.S. production in the near term will come from Gulf deepwater fields. (Lots more useful info in this CFR article).358Globally, deep water production accounts for around 7 mbd in 2010 (under 10%). Energy Files shows deep water production rising a peak at just to just under 12 mbd by around 2020.359

The EU says it might tighten oil company operating rules once it has reviewed the safety implications of the Deepwater Horizon incident.The European Commission shies away from toughening its carbon target even though its own most recent study shows it would be cheaper than expected: €81bn a year to cut to 30% by 2020, as opposed to €45bn a year to get to 20% (down from the €70bn estimated when the target was set two years ago). Germany and the new UK government support a move to 30%, in the UK’s case unilaterally, to show leadership. The analysis goes to an EU environment ministers meeting in June.360

EDF say they have enough assurances from new UK government to press ahead with UK nuclear. CEO De Rivaz is particularly pleased there will be a floor price for carbon. He quotes from a report published by Parsons Brinckerhoff Power.361 “Their data shows that with typical generation costs in the range of £55-£86 per megawatt hour [MWh], new nuclear is well placed in helping keep low carbon energy affordable in the long term. That compares particularly favourably to other low carbon technologies. Offshore wind represents a generating cost of up to £204 per MWh and carbon capture and storage technology up to £154 per MWh.”362

28.5.10. BP says it may need as much as 48 more hours to see if the Top Kill process can work. The costs of the cleanup approach $1bn. BP shares fall further.363

New official estimates for the BP spill are 12,000-19,000 bd for 37 days, making c 444-703 barrels in all: the worst environmental disaster in US history, twice the size of Exxon Valdez, and the biggest spoill since 1972. The Top Ten league table is: 1. First Gulf War, 1991, Persian Gulf, 7m barrels. 2. Ixtoc 1, 1979, Bahia de Campeche, 6m barrels. 3. Nowruz Oil Filed, 1983, Persian Gulf, 2m barrels. 4. Atlantic Express, 1979, Little Tobago, 2m barrels. 5. ABT Summer, 1991, Angola, 1.85m barrels. 6. Castillo de Bellver, 1983, Cape Town, 1.8m barrels. 7. Amoco Cadiz, 1978, Brittany, 1.6m barrels. 8. M/T Haven, 1991, Genoa, 1m barrels. 9. Odyssey, 1988, Nova Scotia, 1,000 barrels. 10. Sea Star, 1972, Gulf of Oman, 0.85m barrels. The Deepwater Horizon is 0.4 – 0.7m barrels and the Exxon Valdez was 0.26m barrels.364 Obama puts a 6 month moratorim on all new deep water drilling in the Gulf of Mexico. The American Petroleum Institute calls it “a moratorium on economic growth and job creation.”365 Obama admits he did not do enough in the early days of the spill, especially in forcing BP to share information.366

MSS director resigns as Obama criticises the regulator of having a “sometimes corrupt” relationship with the oil industry.

29.5.10. Community Interest Companies growing as an alternative form of investment for renewables in the UK. This new type of limited company is designed for those wishing to operate for the benefit of the community rather than owners or individuals. Water Power Enterprises (h2oPE) is the latest, seeking investors for its ground-breaking renewable hydroelectricity schemes. Its is launching a £1m social share offer to finance its

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next two schemes, offering a return of around 3% per annum after the first two years, rising to 5% per annum in later years. Investors can claim back 20% of their initial investment against their income tax. Given how low interest rates are on deposit accounts, it adds up to an attractive package. Ideally, the organisers say, investors should be prepared to lock their money away for at least 10 years – and preferably longer: investors should perhaps see it as a social rather than financial investment.367

30.5.10. Top Kill and Junk shot fail in the Gulf. Obama calls the situation "heartbreaking" and Carol Browner says the spill may go on until August now. BP is deploying American Bob Dudley on TV. He is confronted with a New York Times report that BP engineers were concerned almost a year ago that the metal casing around the well would buckle under the pressure 5,000ft below sea level. He smoothly plays these down without rejecting them. “The casing designs that are used in the Gulf of Mexico: we’ve used those in other places,” he tells ABC’s This Week.368

Louisiana residents have taken to calling Tony Hayward Mr Wayward, and invective heaped on him in local media includes his “toffee-nosed voice.” Congressman Ed Markey to CNN: “I think it’s pretty clear that BP, from the very beginning, has been making it up. They really did not have a plan in place to deal with a catastrophe of this size.” ATimes-Picayune reader on the paper's website: “Has anyone Googled ‘Tony Hayward spill minor’ to see what the CEO of BP is saying to the European press? Very different press releases ... Look at the May 19 report ‘environmental impact will be very, very modest’.”369 Markey has also said that BP is “either lying…or incompetent.”370

Bob Dudley calls’ BP’s effort “the equivalent of doing heart surgery on TV.” The next attempt with be to cut the pipe in two places, one immediately above the blow-out preventer, and try and siphon oil in a cap (or the use the tech term, a lower marine riser package) to a tanker at the surface. BP admits this next gambit can’t hope to collect all oil. And press articles mention the hurricane season, which starts 1 June, with increasing frequency. The tanker collecting from a successful cappint operation above a new break in the pipe could not stay on station in severe weather.371

The Deepwater Horizon was registered in the Marshall Islands, under a flag of convenience , it emerges in Congress. Further fury is toked at this discovery.372

“Malia for President:” Tom Friedman op-ed title in the New York Times. Obama had said in a press conference: “When I woke this morning and I’m shaving and Malia knocks on my bathroom door and she peeks in her head and she says, ‘Did you plug the hole yet, Daddy?’” Friedman: “His most important job is one he has yet to take on: shaping the long-term public reaction to the spill so that we can use it to generate the political will to break our addiction to oil. In that job, the most important thing Mr. Obama can do is react to this spill as a child would — because it is precisely that simple gut reaction, repeated over and over, speech after speech, that could change our national conversation on energy. ….Kids get it. They ask: Why would we want to stay dependent on an energy source that could destroy so many birds, fish, beaches and ecosystems before the next generation has a chance to enjoy them? Why aren’t we doing more to create clean power and energy efficiency when so many others, even China, are doing so? And, Daddy, why can’t you even mention the words “carbon tax,” when the carbon we spill into the atmosphere every day is just as dangerous to our future as the crude oil that has been spilling into the gulf?” …..That is what a child would want to know if he or she could vote. That is the well of aspiration for a game-change on energy that Mr. Obama can tap into. And he could even rip off BP for his moon shot motto: Let’s get America “Beyond Petroleum.” As you would say, Mr. President, this is your time, this is your moment. Seize it. A disaster is an inexcusable thing to waste.”373

More oil has been spilled in the Niger delta than has been lost in the Macombo spill. So say two major independent studies over the last two years (necessary because government and industry keep the figures secret). “We are faced with incessant oil spills from rusty pipes, some of which are 40 years old,” says Bonny Otavie, a Nigerian MP. Writer Ben Ikari, a member of the Ogoni people: “If this Gulf accident had happened in Nigeria, neither the government nor the company would have paid much attention. This kind of spill happens all the time in the delta. The oil companies just ignore it. The lawmakers do not care and people must live with pollution daily. The situation is now worse than it was 30 years ago.” The Niger delta and its 600+ oilfields supply 40% of all the crude the United States imports. Amnesty has calculated that the equivalent of at least 9m barrels of oil was has been spilled.374

Do brewing sovereign debt crises mean we are about to slide into Global Meltdown part II? Most economists say no. But sceptics “warn that shares will plummet as investors take stock of the unprecedented scale of a swathe of sovereign debt crises. They see confidence-shattering debt defaults, a eurozone in a perpetual identity crisis and years of financial pain as households ultimately foot the bill for the bailouts ushered through in Meltdown part I.”375

31.5.10. BP has asked for $700m from Transocean’s insurers. This has gone down badly: insurers claim they convered the rigg, not the subsea leakage. Meanwhile BP faces a “blizzard” of claims against them.376

Hayward makes another gaffe: “There's no one who wants this over more than I do. I’d like my life back,” he says on camera. Invective flies on the websites, some pointing out he should be spending a piece – or the rest – of it in jail.377 The public relations strategy for dealing with a disaster such as the Gulf of Mexico spill, now officially the worst in US history, was always going to be about damage limitation.Scottish government bullish about renewables job prospects. The Offshore Valuation Group recently forecast that renewables could create 145,000 new jobs and make Britain a net exporter of electricity by 2050. They estimate that if wind and wave power use only a third of the available resource they could generate electricity equivalent to the current level of North Sea oil and gas production. The group also forecasts renewables could create 145,000 new jobs and make Britain a net exporter of electricity by 2050. Some 5,000 people are employed directly in the UK’s large-scale onshore and offshore wind industries, according to Renewables UK,and up to 60,000 new recruits will be needed in the next 11 years. The Scottish government estimates that renewable energy could create 26,000 jobs in Scotland during the next decades and provide up to £15bn ($22bn) of investment opportunities.378 Presence of world leaders in Copenhagen “paralysed” process, according to UN’s top climate official. A leaked letter from Yvo de Boer, UN climate chief, “suggests the Copenhagen climate summit failed because the presence of 130 world leaders paralysed decision-making and the Danish presidency backed the US and other western nations over the interests of the poor.379

UK ministers order review of looming commodities shortages: from fish and timber through food and water to precious metals, as concerns grow that that the problem could hit every sector of the economy. The Department for Food, Environment and Rural Affairs will lead the initiative.380

1.6.10. Obama administration incensed that BP waited a day and half to alert them of Top Kill’s failure. 381

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Meanwhile:BP shares, already down about 25% since the leak began in April, fall a further 15.4% to 418.9p, their worst level since March 2009. The company’s market capitalisation of just over $90bn is now $20bn below Shell’s. At the end of 2009 it was $181 bn, i.e it has more than halved. 382

Arbuthnot analyst says BP survival is at stake.383 “BP has spent $1bn to date and the future costs will be significant. Adding in the inevitable litigation costs, this will have a major financial impact on the company which realistically cannot be quantified in the short term. What worries us the most is the emotive language coming from the Obama administration and the reputational damage done so far. It is difficult to see how the company can recover and it remains unclear what punitive measures will be put in place in terms of its operations in the Gulf of Mexico.”384

BP has lost nearly 25%, or $46bn, from its market value since mid-April. FT: “the oil giant is beginning to look cheap — and vulnerable.” Lex in the FT: “BP must now give investors guidance on “its own best estimate of the scale of its potential liabilities.” Credit Suisse estimates total liabilities could be $17.6bn including claims and clean-up. BP had net cash from operations of $7.7bn in Q1. Lex: “investors should bear in mind that, ultimately, the costs to BP might include not just Tony Hayward’s job as chief executive but the company’s independence”. BP’s market cap is now half of Exxon’s, and they and Shell must be running the numbers. But how will they know how big the liabilities might be?385

BP disputes existence of underwater plumes of oil. Its simple, says Tony Hayward: oil has a specific gravity half that of water, therefore all the oil is on the surface. The universities of Florida, Georgia and Mississippi all say they have detected huge plumes of underwater oil, and they must be wrong.386

Parallels with Ixtoc 1 oilspill of June 1979 are striking, with one big exception. The uncontrolled well 600 miles of Houston gushed oil and gas for nine months and 22 days, spilling about 3.3m barrels of crude through many attempts to seal the leak, until it was finally capped by two relief wells in March 1980. But that well lay under just 150ft of water, not 5,000ft.387

Last year’s Montara leak, in the Timor Sea, was eventually stopped by a relief well operation after more than 10 weeks. It was at 75m depth, leaking only slowly compared to Macondo, but, in the FT’s words, “it provides plenty of examples of just how difficult relief well operations can be even today.”BP has warned that the relief wells risk a similar blowout to the original well. This in a regulatory filing with the Department of the Interior. But Tony Hayward has elsewhere discounted the chances of that happening: “The relief wells will be successful,” he told reporters in Houston. Drilling two wells will “assure ultimate success.” 388

8 hurricanes forecast for 2010 season, out of an unusually high figure of 15 named storms. A Florida State University estimates that a hurricane or tropical storm could push oil up to 12 miles into the grassy marshes that cover much of the Gulf shoreline and act as breeding grounds for fish and birds.389

Peak demand debunked: “It is not that mature economies do not want or need oil. Quite the contrary, the advanced countries desperately need low cost fuel to facilitate recovery of their economies. Decision makers need to recognise this reality. Pretending that oil has somehow become unfashionable or unnecessary will just make matter worse.” So Steven Kopits, Managing Director of Douglas-Westwood writes in Petroleum Review. The US economy, for example, has shed consumption when crude oil expenditures exceed 4% of GDP: equating to $82 a barrel today. This means the US is about to be priced out of the market.390 (L)UK faces a £4bn black hole in unavoidable nuclear decommissioning and waste costs in next 4 years, new energy secretary Chirs Huhne says. Is department’s entire budget this year is £3bn. Huhne tells the Guardian: “As you can imagine, this is a fairly existential problem. The costs are such that my department is not so much the department of energy and climate change, as the department of nuclear legacy and bits of other things.” The black hole is equivalent to wiping out one-sixth of the overall cuts in public spending identified by the Treasury with last week.391

Lloyd’s and Chatham House publish a report warning about energy crisis coming. “Businesses which prepare for and take advantage of the new energy reality will prosper - failure to do so could be catastrophic. Market dynamics and environmental factors mean business can no longer rely on low cost traditional energy sources. China and growing Asian economies will play an increasingly important role in global energy security. We are heading towards a global oil supply crunch and price spike. Energy infrastructure will become increasingly vulnerable as a result of climate change and operations in harsher environments Lack of global regulation on climate change is creating an environment of uncertainty for business, which is damaging investment plans. To manage increasing energy costs and carbon exposure businesses must reduce fossil fuel consumption. Business must address energy-related risks to supply chains and the increasing vulnerability of 'just-in-time' models. Investment in renewable energy and 'intelligent' infrastructure is booming. This revolution presents huge opportunities for new business partnerships.”392 (L)

2.6.10.1. BP future now in jeopardy as US government launches criminal investigation. “We will closely examine the actions of those involved in the spill,” says the Attorney General. “If we find evidence of illegal behaviour, we will be extremely forceful in our response.” So far BP has lost around a third of its market value – some £40bn – since the Deepwater Horizon rig exploded and sank on 20 April.393

Hayward admits BP was not fully prepared to fight the Deepwater Horizon leak, as pressure mounts on the company not to pay its annual dividend to shareholders. “What is undoubtedly true is that we did not have the tools you would want in your toolkit,” he tells the FT. Democratic senators write to tell him it would be wrong for BP to pay investors a dividend until it knows the full cost of the disaster. 394

BP has turned down James Cameron’s offer to help. Cameron, who has experience of undnerwater filming via “Titanic”, now says: “Over the last few weeks I've watched, as we all have, with growing horror and heartache, watching what's happening in the Gulf and thinking those morons don't know what they're doing.”395

Hayward says BP is looking for new ways to manage “low-probability, high-impact” risks such as the Deepwater Horizon oil rig accident. His company is using equipment not much different from the time of Ixtoc spill. The gas blowout was a “one in a million” hit, Hayward professes.396

BP’s reputation has “fallen off a cliff” to an all-time low. So says Covalence, an organisation that tracks the ethical reputation of large companies. BP a grade E, its lowest, in a ranking used by some ethical investors, and not just because of the spill. Working conditions have fallen.397 BP has gone from 7th place to 26th place among the 31 energy sector peers in Covalence rankings. It is now 558th of 581 across all the companies ranked. Another five companies still come out lower, amongst BP’s sector. Worst is Halliburton, at 580th out of 581 companies, across all sectors.398

Fitch downgrades BP from AA to AA+ assaw gets stuck in latest effort to contain the spill. 399 BP's

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survival is now openly discussed in the City. It has lost a third of its value (equating to £44bn) since the Deepwater Horizon explosion. 400

US firmly rebuffs proposal by Matt Simmons, Russians and others of a nuclear blast in the Gulf to stop the spill. Decades ago, the Soviet Union reportedly used nuclear blasts to successfully seal off runaway gas wells. “It’s crazy,” an anonymous senior government official says. A senior Los Alamos scientist, also anonymous: “It’s not going to happen. Technically, it would be exploring new ground in the midst of a disaster — and you might make it worse.”401

A boycott BP campaign is creating a buzz on the internet, with more than a quarter of a million sign-ups on Facebook. BP forecourt logos are being smeared with mud. And 40% of BP’s business is in the US. The US interior secretary, Ken Salazar, has warns that BP's “life is very much on the line.” John Kilduff, an energy analyst turned hedge-fund manager at Round Earth Capital, tells CNBC television: “It's questionable whether they can continue to do business in the United States.” The company's market value has dropped from $122bn to barely $80bn. Dan McGinn, a communications expert at TMG Strategies, says corporates can cover from PR disasters. The worst sin, he says, is not necessarily the accident itself but a sense of gross incompetence, a perception of cruelty or veneer of sheer arrogance. “If it comes across that you not only don't understand but don't care about the consequences of your actions, that's unforgivable to Americans.”402

EDF lobbying watered down last government’s effort to make nuclear industry pay for waste. The Brown government originally planned to charge the industry a high, fixed, disposal levy tied to the amount of nuclear waste it produced. The government envisaged responsibility for the waste transferring to the state only once the waste had been disposed of, at least 110 years from the start of a reactor's operations. In March, the Labour government published revised proposals that made significant concessions on both issues, and documents now released under the Freedom of Information Act show that EDF lobbied hard for this on the grounds that investment prospects would be impaired.403

EC to probe the acrimonious nuclear power joint venture between Areva and Siemens after the German company revealed previously undisclosed “non-compete” clauses. At the time it signed up to the JV in 2000 Siemens didn’t think a nuclear renaissance would happen, but now it does, and wants to work with the Russians, not the French.404

3.6.10. BP elects to go ahead with $10bn shareholder payout, despite US senators’ requests not to. Hayward will hope to appease City investors by promising in a conference call with analysts to stick with BP's dividend policy, saying he is confident the company can pay for liabilities resulting from the Deepwater Horizon rig explosion – up to $60bn according to latest analysts’ estimates – as well as rewarding investors. BP's dividend is vital for the pensions of millions who depend on payouts from profitable companies to boost their retirement funds. Shell and BP accounted for 25% of the total dividends of £50bn paid in the UK market last year.405

This decision would be a mistake, Nils Partley argues in the Guardian. “The problem is not that BP cannot afford its dividend ….it would be bone-headed for BP to parade its financial armoury while oil is still belching from the seabed. That is so even when you consider that the bulk of the final bill will be payable only after the lawyers have done their work, which could be several years from now. ….at a moment of crisis, one calculation overrides others: don't make more enemies if you don't have to. BP shareholders' long-term interests would be best served by making a short-term dividend sacrifice.”406

Obama vows to rescind “billions of dollars” in 'Big Oil' tax breaks by the end of the year. The White House’s cosy relationship with the oil industry is over, he pledges.407

EIA cuts its prognosis for global oil supply: just 92 mbd by 2020 . In 2007 it forecast 118 million b/d by 2030. The forecast has fallen every year since, to 2010’s 104 million b/d by 2030. Supply increases about 0.6% a year from 86 million b/d in 2011 to about 92 million b/d in 2020, which is a bit over 500,000 b/d per year, or essentially flat (for all liquids, not just crude oil).408 Steven Kopits of Douglas Westwood notes that EIA has gone “hardcore” on peak oil. Through 2020, even though China would be expected to hit its stride for increased oil demand, the EIA sees no year in which liquids production will increase by even 1%.409

Climate talks resume in Bonn with “barely a whimper.” “Little has changed since Copenhagen, says the FT. On Climategate: “The furore was overblown, according to the investigations that have thus far reported into the matter, and the central science of climate change remains unchanged, experts say. But the public perception of climate change science has certainly been damaged.” “The oil spill - the worst environmental disaster to hit America, according to President Barack Obama - could yet be the most important thing to happen to the public discourse on climate change.”410

Vince Cable admits U-turn on early public spending cuts, and falls into line with Tories on UK budget deficit. Early spending cuts will be offset by support for economic growth, such as pressure on banks to increase lending to small firms, the creation of new apprenticeship schemes and an overhaul of regulations to make life easier for businesses, he says. For banks, he sees three priorities – separating retail and investment banking, resolving the question of a levy on the banks to reflect the fact the taxpayer is providing insurance, and ensuring that banks' lending agreements are being honoured.Regulators appalled as JP Morgan found to have mixed its own money and its clients’ money. This failure to keep segregated accounts – among many other ills – would actually restrict clients' access to their cash in times of financial disaster. The FSA fines JPM £33m, the biggest it has ever imposed by the Financial Services Authority. JP Morgan's failure went undetected by external audiros for seven years from 2002 to 2009. Guardian: “At this point, you have to wonder whether external auditors can be trusted to do their jobs properly. Shouldn't the FSA simply check compliance with client-money rules itself and send a bill to the bank?”411

Britain risks default on debt unless government cuts public sector pensions. Edmund Conway, Economist corrspodent at the Daily Telegraph: “I suspect that inflating away Britain’s debt will be far more difficult than some people think – because so many of Britain’s debts are index-linked – in a way that they weren’t before. If you include index-linked gilts (which weren’t around before the 70s), public sector and state pensions and PFI and local government debt, some four fifths of UK debt is linked to inflation. ….This implies that inflation may not be the escape valve Britain hopes it will be. It would erode away the nominal section of the national debt, but would do nothing to reduce the other bits and pieces. They could only be slashed if the Government takes a knife to the state’s pension bill.”412

4.6.10. Cap placed on Macondo wellhead. We will need to wait up to 24 hours to see if it stable. Even if so, BP does not expect to trap all the escaping oil. Obama postpones trip to Australia and Indonesia to visit the stricken region and presents a preliminary bill for $69m to BP and “other responsible parties.”413

Oil could spread as far as North Carolina, says the National Center for Atmospheric Research. NCAR

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scientist Synte Peacock: “I’ve had a lot of people ask me, ‘Will the oil reach Florida?’ Actually, our best knowledge says the scope of this environmental disaster is likely to reach far beyond Florida, with impacts that have yet to be understood.”414

BP hives off 'toxic' Gulf spill operation to an American in an effort dilute anti-British feeling in US. Bob Dudley steps into the hot seat. Hayward meanwhile makes another gaffe. “They've thrown some words at me, but I'm a Brit. Sticks and stones may break my bones but words will never hurt me.” Chairman Carl-Henric Svanberg has been accused of keeping himself out of the line of fire.415

BP has developed a new, more hurricane-resistant oil collection system, which will be working by mid July. It is based on a “submersible riser” which will offer “very rapid connect and disconnect capabilities.”416

MMS document shows how dependent the oil industry is becoming on deep water in the GOM. The Minerals Management Service document Deepwater Gulf of Mexico 2009: Interim Report of 2008 Highlights defines deepwater as anything in a depth greater than 1,000 feet. In February 1997, there were 17 producing deepwater projects in the GOM, up from only 6 at the end of 1992. At the end of 2008, there were 141 producing projects. There are some 7,310 active leases in the GOM, 58 percent of which are in deep water. In 1992 there were around 5,600 active GOM leases, only 27 percent of which were in deep water. Deepwater oil production rose about 786 percent and deepwater gas production increased about 1,067 percent from 1992 to 2007. Production from seven deepwater fields began in 2008, including Thunder Horse, the largest daily producer in the GOM. The deepest is 356 ft (2,852 m) below the water surface in Shell’s Silvertip project.417

China and America are the most attractive locations for renewables, E&Y concludes in its annual index on national renewables prospects. China invested $34.6 billion on clean-energy projects last year, almost double the investments by the US. China has vowed to cut carbon emissions per unit of gross domestic product by as much as 45 percent of 2005 levels by 2020.418

G20 finance ministers dash hopes for early implementation of Basel III anti-speculation rules for banks. They will be phased in over several years. Ferocious lobbying from the global finance industry was the reason. Germany, France and Japan argued that forcing banks to hold more capital to guard against a future financial meltdown would starve companies and individuals of finance and risk plunging the global economy into a double-dip recession.419

The $2.6 trillion mystery of who owns Europe’s loans. That’s the amount that foreign financial institutions have lent to public and private institutions in Greece, Spain and Portugal. But nobody knows exactly which banks are sitting on the biggest rotting loans in those countries. Jörg Rocholl, a professor at the European School of Management and Technology in Berlin. “Banks continue to not trust each other. They know other banks are sick, but they don’t know which ones.”420

5.6.10. G20 drops support for fiscal stimulus and global bank levy. Finance ministers from the world’s leading economies, meeting in South Korea, drop their support for fiscal stimulus, professing that financial market concerns over sovereign debt had forced a much greater focus on deficit reduction. Their communiqué posits that expansionary fiscal policy is no longer sustainable or effective in fostering an economic recovery because of “market realities”: investors no longer being confident about some countries’ public finances. “The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability.” The G20’s previous communiqué, in April, called for fiscal support to “be maintained until the recovery is firmly driven by the private sector and becomes more entrenched.” George Osborne, British chancellor, claimed credit for the change. The US is the country most concerned about the new austerity drive and most fearful for the momentum for global growth. The G20 found no consensus for a global levy on banks. The decision to allow countries to pursue their own domestic agendas on new taxes on banks was particularly pleasing for Canada, which has long opposed the idea.421

Americans are signing up for telephone courses in post peak-oil living as Transition US reaches 68 official chapters, up from just two in 2008.422 The Transition Network worldwide, just four years old, has nearly 300 member districts.423

6.6.10. BP claims first progress against Gulf spill as the the cap collects about 10,500 barrels of oil. The estimated flow from the well is put at 12,000-19,000 barrels per day. Meanwhile the spill has disaggregated into hundreds, maybe thousands of smaller pieces of oil.424

BP told by independent expert to cut overtime at US refineries, and raise other safety levels. Duane Wilson, a retired ConocoPhillips expert appointed in 2007, in his third annual report: “Overtime for some individuals at all refineries remained at a level that may compromise the performance of workers.” Operators had worked 29 or more consecutive 12-hours shifts prior to the 2005 Texas City disaster and were likely fatigued when the accident occurred.425

BP threatened with legal case over safety of all its oil rigs. Action group Food and Water files for an injunction in a Houston court halting drilling on a Gulf platform, arguing that their case raises questions about the way the company's rigs are operated throughout the world. Guardian; “Ken Abbott, a former offshore worker subcontracted to BP, will tell a press conference in London that 6,000 out of 7,000 documents supposed to be in place regarding the Atlantis platform were missing, and that his attempts to raise his concerns with the oil company were not taken seriously.” 426

Rival oil company bosses have expressed their belief that blowout could not have happened to them, professing their procedures are tighter. There has been criticism of BP only using one casing on the well that blew out, with some companies saying they use two.427

Demonstrations in 29 US cities will call on Obama to seize BP. The Answer Coalition, a campaign group that grew out of opposition to the Iraq war, is organising a week of demonstrations in 29 cities calling for seizure of BP. Robert Reich: “This is a national emergency. It's simply untenable for a for-profit company with responsibility to its shareholders to be in charge of handling one of the worst environmental disasters in American history. At the moment, the president has no direct ability to instruct BP to do anything.” He cites the precedent of AIG, where the US government had few qualms.428

$550bn spent each year by big developing countries on oil, gas and coal energy subsidies, about 75 per cent more than previously thought ($c300bn), according to the first exhaustive study of fossil fuel subsidies. The IEA included 37 large developing countries in the study. Phasing out subsidies over the medium term, as agreed last year by the G20, would trigger vast savings: energy consumption could be reduced by 850m tonnes equivalent of oil by 2020, or the combined current consumption of Japan, South Korea, Australia and New Zealand. The consumption cut would save the equivalent of the current carbon dioxide emissions of Germany, France, the UK, Italy and Spain. Iran, Russia, Saudi Arabia, India and China top the ranking of subsidy givers.

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Fatih Birol, chief economist at the IEA: “I see fossil fuel subsidies as the appendicitis of the global energy system which needs to be removed for a healthy, sustainable development future.”429 Getting rid of fossil-fuel subsidies would raise GDP in most countries. FT Energy Source: “Many countries are reluctant to abandon subsidies. The American Petroleum Institute opposed the US signing the G20 agreement, and India says it needs subsidies to encourage development and fight inflation. Their opposition might be misguided, however. The IEA’s modelling in 2008 showed that removing subsidies are actually raiseper-capita GDP “in most countries concerned”.430

7.6.10. BP seeks to increase capture of leaking oil: Hayward says the aim is “the vast majority.” But at the moment only around half is being collected. FT: “The only proven way the leak can be stopped is with one of the two relief wells now being drilled. The challenge is formidable. The drillers need to intersect the original well, about eight inches across, through a mile of water and more than two miles of rock. The method is proven, but it takes time.431

Obama turns fire on Hayward. He says that if he were in charge of BP, the chief executive “wouldn’t be working for me after any of those statements ”. “The fact of the matter is there is going to be a thorough review, and I don’t want to prejudge it, but the initial reports indicate there may be situations in which not only human error was involved, but you also saw some corner cutting in terms of safety.”432 Goldman accused by FSA of hindering probe into financial crisis. The FSA speaks of an “abysmal” response to requests for information: an attempt to “stonewall” and “obfuscate” over months of “mischief making.” It says it has issued a subpoena to compel the bank to provide documents and executives for interviews as other banks have done.433

IPSOS-MORI survey shows responsible businesses outperform rivals in both good and hard times. Business in the Community CEO Steve Howard: “The analysis revealed that those companies managing and measuring their corporate responsibility issues through the CR Index continued to outperform their FTSE 350 peers on Total Shareholder Return (TSR) in seven out of the eight years from 2002 to 2009. Furthermore, their TSR recovered more quickly in 2009. The business case is clear, therefore, for investors and shareholders, as well as the business. This research demonstrates that our assertion that responsible business is just good business is valid.”434

8.6.10. “Fossil fuels have plenty of form in staring down disasters.” FT Energy Source: “Look at coal, for example: cheap, geographically well-distributed and ever more popular in recent years. The industry’s history is littered with accidents and fatalities, and just this year we have seen tragic mine accidents in the US (in which 29 people died) and Russia (at least 66 died) . There were also major coal accidents in China, but they need to be seen in the context of 2,631 deaths in coal accident deaths in the country last year alone. And few have raised the prospect that coal mining will be reduced.”435

Norway bans deepwater oil drilling until the investigation into the Gulf disaster is complete, Terje Riis-Johansen energy minister, has said. “It is not appropriate for me to allow drilling in any new licences in deepwater areas until we have good knowledge of what has happened with the Deepwater Horizon and what this means for our regulations.” 436

More than $40 trillion needs to be spent on infrastructure – the stuff that makes economies turn - in the next 25 years, in developed and developing worlds, for replacement as well as projected growth. In the UK, the Treasury estimates £40-50bn a year ($59-73bn) all the way to 2030. But banks are less willing to lend, pension fund money is less attracted to infrastructure, equity is in shorter supply ….and governments are intent on deficit reduction. (L: special FT issue).437

$787bn US stimulus gets mixed reviews as airports are built for small towns etc. Around $126bn of it went on infrastructure, and of that some $50bn went on transportation, mostly highways. Shovel ready projects were favoured and the expenditure was neither at the scale of the New Deal nor designed to provide lasting legacy. The Recovery Accountability and Transparency Board had received 1,771 complaints by late January.438

China’s stimulus spending seems to have been greener than the US’s. About half went on infrastructure, with the biggest emphasis on rail. The airlines watch this anxiously.439 South Korea has allocated 80% of its $38bn stimulus package to broadly green projects (energy efficiency in buildings, railways, water and waste management). Africa, meanwhile, needs $93bn a year in infrastructure investment if it is to halve poverty, accoridn to a 2009 World Bank report. Nothings else would have such an impact.Corruption has been and still is a huge problem in the infrastructure industry, part of an unholy trio including arms and energy industries. Recent fines and legal costs: Siemens - $1.6bn ref $1.6bn of suspect payments; Halliburton and its subsidiary KBR - $579m for bribery in Nigeria (a $130m fund to win a $5bn gas liquefaction project, 4% of the contract size, and a former KBR CEO serving 7 years; BAE Systems - $400 payments without admitting bribery; Amec and Balfour Beatty – £5m+ in penalities without admitting bribery; Most countries have now signed the UN’s Convention Against Corruption, and slowly a clampdown takes shape, with growing significance attached to brand damage.440

Mike Haywood, an analyst who predicted much correct about the financial crisis, links it to peak oil . In an e-mail to his readers: “I started my Peak Oil digests in June 2006, (during the economic boom) in order to highlight the effect that peak oil and rising energy costs would have on the global economy. For an excellent summary, Gail Tvberg, editor of The Oil Drum links the financial crisis to peak oil and I agree with her arguments441. As the banking crisis unfolded, I replaced the Peak oil digest with the Banking Crisis digest in August 2009. Over the last 4 years my predictions have been pretty well spot on; with the exception of the UK housing market which I thought would fall more heavily.  Here is what I predicted would happen: The Global banking system would continue to be in crisis, due to the unknown and potentially unlimited losses of the banks; Stimulus and bailout packages would have no impact as most of the intervention money is borrowed, sucking capital from private economy and transferring the debt to the taxpayer; Continued unwinding of debt and deflation of all asset values would lead to more stock market falls; Huge falls in tax revenues; Pension schemes and retirement plans severely underfunded; Contraction of the public sector; Global Civil unrest; Severe global banking crisis; High probability of Financial collapse like the one we were within hours of in October 2008.442 We are now in the final stages of this slow motion car crash. The global financial system is inherently weak because of its interconnectivity.”

9.6.10. Oil company bosses must make personal safety pledges before they can drill from now on. New government rules mean oil company bosses will be required personally to certify that their operations are in compliance with regulations in order to obtain licences to work on the outer continental shelf of the US, both in shallow and deep water. Third-party consultants will also have to sign off on key safety kit, such as blow-out preventers. 443

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Scientists report layers of degraded oil lurking deep beneath the surface of the Gulf. Ernst Peebles, a biological oceanographer at the University of South Florida, has identified layers of degraded oil, in some cases 30m thick, suspended at depths of 400m or more. BP has contested the presence of “plumes” of subsea oil. Further research is underway.444 Barack Obama: BP chief would be fired if he was working for me, because he downplayed the catastrophe in the Gulf of Mexico. Obama also lifts restrictions on offshore oil and gas exploration in shallow waters.445

BP faces bill for lost drilling wages including paying any workers hit by the government’s moratorium on offshore drilling imposed on 33 deep-water rigs while safety reviews take place.446

Cameron to discuss BP crisis with Obama as shares plunge. At today's lowest point, BP had lost 47% of its value since the Gulf of Mexico disaster struck, wiping around £58bn off the market capitalisation of one of Britain's biggest companies. 447

Numerous errors in BP's contingency plan to handle an oil spill included naming a deceased scientist as a recommended expert.448

Tony Hayward’s wife and children are under police protection following threats. Anger in the US now extends far and wide. Matt Simmons has told many TV audiences that the oil spill was "entirely BP's fault" and that the company will be bust within months. In the UK, pressure emerges on Cameron to fight back for because the “Britain bashing” has gone too far. Only 8 workers on the rig were BP employees. Transocean was asked this week to explain to a congressional committee the apparent poor staffing on the rig on the night of the gulf disaster: 18 employees on shift, the lowest number in a fortnight of records, with no engineers, electricians, mechanics or subsea supervisors. BP shed its “British Petroleum” name a decade ago. It employs 80,300 people, 29,000 of them in the US. Some 40% of its shares are held in the UK, while 39% are held in the US. 449

Also, a quarter of its production is in the US, according to ING. 450

EIA’s oil production optimism peaks. So says Steven Kopits of energy consultants Douglas-Westwood. In 2030, the EIA still sees oil production at an optimistic 103.9m barrels per day in its reference case (the IEA, for comparison, is 103m). But the EIA’s forecasts to 2020 — 92.1m barrels a day — are now lower than almost anyone’s. Question: Will the BP Statistical Review of World Energy reflect peak oil risk? JL: “On June 2, the day BP found itself facing a criminal investigation into its deepwater-production risk management, Tony Hayward, the company’s chief executive, admitted it had to find entirely new ways of handling “low-probability, high-impact” risks. Today, as it publishes its review of energy statistics, the question is: will BP find entirely new ways of handling the high-impact risk that is peak oil?”451

Answer: Quite the reverse. BP chief economist says “reseves remain sufficient to meet demand” and “supply will never peak”, professing to feel “very safe” in that risk assessment.452

BP Statistical Review shows importance of Gulf of Mexico. American crude production rose faster last year than anywhere else in the world, and the 7% increase to 7.2m barrels a day is largely attributed to Gulf of Mexico. Global oil consumption declined by 1.2m barrels a day, or 1.7%, the largest fall since 1982. OECD consumption fell by 2m barrels a day – a fourth consecutive annual decline.453

Hayward doesn’t mention peak oil, or “47 years of supply” in his introduction to the BP SRWE . He did mention the rise in energy intensity of energy activity last year, because of “many energy-intensive fiscual stimulus programmes.”454

Chinese regulators order a freeze on some renewable energy initial public share offerings, amid fears that overcapacity will weigh on the rapidly growing industry. “The Chinese government hasn't said so publicly, but certain sectors including polysilicon and wind are forbidden from hitting the primary IPO market," says a well placed Reuters source. “They're holding approval for certain IPOs because of overcapacity concerns.” China Securities Regulatory Committee officials could not be reached for comment.455

10.6.10. Head of US government-appointed experts group says flow rate could have been up to 40,000 bd. Marcia McNutt, director of the US Geological Survey, said the average flow from macondo pre-cap was probably 25,000 -30,000 barrels a day.456

160 class action suits have now been filed against BP. FT: “One is on behalf of holders of BP’s American Depository Receipts, which have fallen to 14-year lows. The suit states that BP had previously said its gulf operations were one of its main economic drivers and that it had asserted that it had the technology to safely conduct the operations. This means BP violated the Securities Exchange Act by issuing false and misleading statements about safety, technology, inspections and precautions at its offshore oil facilities, the action states.” The share price is 40% down, meaning $73bn (£50bn) less market capitalisation since the accident.457

Investors are beginning to fear the claims against BP could have no limit, constrained only by the US government. FT: “As estimates of the cost to BP escalate, however, the financial strain it could impose on the company begins to look significant. Analysts at Citigroup forecast that BP will have free cash flow after its dividend of only about $1.2bn (€1bn, £827m) this year, after paying the same dividend as last year, at a cost of $10.5bn. The cost of tackling the spill has already exceeded that figure, BP has said, which means that the cost of the clean-up will have to be funded by higher borrowings.”458 UK Funds sweat on BP dividend news. The company is still undecided. FT: “UK shareholders were anxiously awaiting a statement on the oil company’s plans for its dividend on Thursday. The oil major is a big income generator for UK fund managers, accounting for 12 per cent of dividend Income fund managers have bought into the company as a result. BP is the top holding in just under half of the UK’s 86 equity income funds. Some hold as much as a 10th of their funds in the oil stock. Fund managers admitted that if BP were to suspend its dividend, they would struggle to maintain their own dividend payments to investors. One said that if the dividend were suspended for a year, it would cause a 10 per cent hit on the yields paid by his funds.”UK industry alarmed over White House attack on BP. FT: “The references to "British Petroleum" - which has not been the company's name since 1998 - by senior US politicians have fuelled fears of a backlash against UK groups in the US.” Richard Lambert, director-general of the CBI: the presidential attack is "obviously a matter of concern - politicians getting heavily involved in business in this way always is."459

Oil spill “probably not a supply side changer”, FT Energy Source concludes. The IEA estimates only 300k bd will be locked in by 2015 as a result of regulatory changes. Over 100 new maintenance and safety procedures were implemented after the Piper Alpha disaster in 1988, and the regulation of field licensing and operational safety were separated (as the US is now belatedly copying). Scores of new oilfields were developed after that though. 460

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Tom Bower, author of Oil: Money, Politics, and Power in the 21st Century calls peakists “charlatans” in Newsweek. “In slashing costs, (John Browne) disregarded safety and maintenance. He fired hundreds of engineers, instead opting for cheaper subcontractors. That led to three major incidents: the il spill in Alaska, the explosion at Texas City, and the tilting of the Thunder Horse oil platform in the Gulf of Mexico. All three were the results of bad engineering, which went directly to John Browne’s leadership.” On Beyond Petroleum: “In the end, Exxon was right; oil corporations should stick with the business they know, which is finding oil. Browne eventually had to retreat, because he just couldn’t make money off it without government subsidies.” “There’s no such thing as the end of oil. This idea that we’re reaching “peak oil” is nonsense. They’re charlatans, the people who talk about peak oil. There’s ample oil.”461

Right wing blogger James Delingpole on the peak oil “scare story” as featured by gullible Newsnight.“Peak Oil is a scare story  talked up by greenie catastrophists on every possible occasion to justify higher taxation, greater government intervention, global rule by people like the Hon Sir Jonathon Porritt and Al Gore and massive bonanzas for anyone involved in the wind farming or solar power industry. Somehow, Newsnight had managed to twist the arm of Jeremy Leggett – who runs Britain’s largest solar power company – to come on the programme and crossly, passionately declare that Peak Oil represents a real threat. (Wot? Even bigger a threat than the one we’d suffer if we all relied for our energy on solar power in a country like Britain not known for its sun? Pull the other one, Jezza!)” … “PO Theorists fail — or more precisely refuse — to grasp that the best method of dealing with any form of commercial scarcity is market-based ingenuity.”462

11.6.10. Lend Lease bans its subsidiary Bovis from nuclear work because it is “unethical”. Bovis Lend Lease has had to pull out of a nuclear deal with EDF energy at the eleventh-hour after parent company Lend Lease objected to working in the sector.463

13.6.10. Spill may not be over before Christmas, says ex-Aramco drilling expert. Nansen Saleri, chief executive of the consultancy group Quantum Reservoir Impact, dealt personally with four blowouts. “I know it is a frightening assessment but everyone should be prepared for a worst-case scenario, and that could mean a Christmas timeframe.” The technological challenges “are enormous.” Other experts have also said that no one can rule out another blowout. BP warned in a regulatory filing that a blowout on one of the relief wells could release a further 240,000 barrels of oil a day, but Tony Hayward subsequently discounted the chances of this, saying “The relief wells ultimately will be successful.”464

Britain should back down over BP, writes Clive Crook in the FT. “The question of whether even this company’s mighty resources are adequate to meet these demands cannot be dismissed. In such circumstances, I cannot see why BP has hesitated to suspend its dividend. The idea that it can take this calamity in its stride and proceed on the basis of business as usual is absurd, and politically foolish too, since it is a provocation to critics intent on vengeance.”465

We must end oil dependency “before it is too late”, says David King, former UK chief scientific advisor. “The bottom line is that demand for liquid fuels is virtually certain to outstrip production by a considerable margin over the next two decades, regardless of how much oil remains in the ground.” … “Today, the rest of the world pours more than $2 trillion a year into the Gulf states, which is $6m per day. This money would surely be better spent developing energy resources that are much closer to home?466

While the spotlight is on on oil, “the banks have won.” Ruth Sutherland in the Observer: “Tomorrow Channel 4 airs a Dispatches programme, narrated by my colleague Will Hutton, entitled How The Banks Won. It is a timely reminder of how the banks are quietly going back to business as usual, while customers and taxpayers suffer. Despite their disgrace, the banks' well-oiled propaganda machines continue to spin their lines that the finance sector services the productive economy, is the major contributor of tax revenues to the Treasury, and that it is a significant engine of job creation. But the Centre for Research on Socio-Cultural Change (Cresc) at the University of Manchester, which contributed to the programme, challenges each of these assertions. Between 1997 and 2009, almost a third of lending was between banks. Half went to individuals, mainly on mortgages that fuelled the housing bubble; manufacturing received just 3% of the pie; other business loans accounted for only 17%. Since the crash, net lending to business has fallen by £40bn. The Cresc research also shows that even in a finance-led boom the sector created no net new jobs. Direct employment in finance hovered around the 1 million mark, less than half that in a weakenedmanufacturing sector – and most of the jobs it does produce are concentrated in London and the south-east. Neither can the finance sector credibly claim to be the major source of tax revenue in the UK. It contributed just 6.8% of tax revenues between 2002 and 2008, just over half the amount paid by manufacturers; the reason traditional industry generates more is because it is labour-intensive. On a worst-case scenario, using Bank of England figures, Cresc reckons it could take the finance sector 25 years to repay the £1 trillion costs of bailing it out.”467

“Time to tame the boardroom titans”, who are ruining environment, pensions and more. Ruth Sutherland in the Observer: “Deepwater has also exposed another dangerous dependency in which we are all complicit: our blind reliance on Tony Hayward, Sir Fred Goodwin and other corporate titans to provide for our welfare in old age. The environment is fragile, and so are our pensions. BP accounts for £1 in every £7 of British pension funds' dividend income, and 40% of its dividend payments go to US investors, including state pension funds for teachers and other public servants. Its innocent victims are not just fishermen in Louisiana, but grandmothers from Texas to Torbay.” We need to awaken shareholder – “a sleeping giant” – to turn the system away from its ruinous short-termism towards long-term ownership.468

Banks are back to business as usual, Will Hutton rues. After a trillion pounds of tax-payer support and a trillion pounds of lost output, “our banking system is as disconnected from real wealth generation as ever. The return to business as usual – bonuses, trading in derivatives, the organising of banking as an exercise in which money is made from money – is breathtaking and depressing. And so, given the recent buoyant profit figures reported by our banks, is the easy money.” Banks still keep only £1 in equity for every £50 lent. “Without substantial and far-reaching reform a second crisis is almost inevitable within 10-25 years.” Multitrillion dollar trading in derivatives – essentially bets on the future prices of financial assets – continues: “an invitation to speculate.” “Progress on financial reform – nationally and internationally – is glacial.” “British banks shamefully neglect enterprise, entrepreneurship, investment and innovation. Only 3% of cumulative net lending in the decade up to the crash went to manufacturing; three quarters went to commercial real estate and residential mortgages.” “The result – devastated industries and sky-high property prices.”469

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14.6.10. US senators demand BP puts $20bn in an escrow account. They say it does not infer a limit on BP’s liability. Investors are now talking about a fire sale of BP’s US assets as a route to the company’s survival.470

470 http://www.ft.com/cms/s/0/19e96c64-7805-11df-a6b4-00144feabdc0.html301 http://www.guardian.co.uk/business/2010/may/07/energy-pollution-drax-environment-regulations302 http://www.ft.com/cms/s/0/832382bc-5980-11df-99ba-00144feab49a.html303 http://www.independent.co.uk/news/business/news/oil-production-hit-for-decades-after-bp-spill-1968931.html304 http://business.timesonline.co.uk/tol/business/article7120555.ece305 http://www.guardian.co.uk/business/2010/may/10/eu-debt-crisis-bailout-imf-ecb306 http://blogs.ft.com/energy-source/2010/05/10/not-such-a-good-year-for-solar-so-far/ 307 http://blogs.ft.com/energy-source/2010/05/10/bps-oil-spill-fight-plagued-by-methane-hydrates-a-hazard-of-deep-water/308 http://blogs.ft.com/energy-source/2010/05/11/bp-oil-spill-senate-hearings-live-blog/309 http://blogs.ft.com/energy-source/2010/05/11/the-blame-game-whos-saying-what-at-the-oil-spill-hearing/310 http://www.ft.com/cms/s/0/41f2f21e-5d18-11df-8373-00144feab49a.html311http://online.wsj.com/article/SB10001424052748703837004575013744046280672.html? mod=WSJ_hpp_MIDDLENexttoWhatsNewsThird312 http://www.iea.org/press/pressdetail.asp?PRESS_REL_ID=301313 http://www.ft.com/cms/s/0/a2646102-5db6-11df-b4fc-00144feab49a.html314 http://blogs.ft.com/energy-source/2010/05/12/qa-mark-jacobson-on-100-renewables/315 http://www.guardian.co.uk/business/2010/may/13/wall-street-banks-investigated-mortgages-ratings316 http://blogs.ft.com/energy-source/2010/05/13/shells-alaska-plans-bps-tiber-appraisal-delayed-by-spill/317 http://www.guardian.co.uk/environment/2010/may/12/deepwater-gulf-oil-spill-hearing318 http://www.guardian.co.uk/environment/2010/may/12/deepwater-gulf-oil-spill-hearing319 http://www.ft.com/cms/s/0/c218f6a0-5e26-11df-8153-00144feab49a.html320 http://www.guardian.co.uk/business/2010/may/14/nicolas-sarkozy-threatened-euro-withdrawal321 http://www.guardian.co.uk/environment/2010/may/14/cameron-wants-greenest-government-ever322 http://www.guardian.co.uk/business/2010/may/13/bp-boss-admits-mistakes-gulf-oil-spill323? http://blogs.ft.com/energy-source/2010/05/14/how-much-oil-is-there-leaking-from-bp-well/324 http://www.guardian.co.uk/business/2010/may/16/bp-gulf-of-mexico-oil-spill325 http://www.ft.com/cms/s/0/b3f59f8e-5ee8-11df-af86-00144feab49a.html326 “Better Banking: A manifestor to re-organise the UK banking stystem to serve and strengthen the Broitish economy through structural reform, New Economics Foundation. 327 http://www.telegraph.co.uk/finance/newsbysector/energy/7728799/Coalition-a-boost-to-nuclear-says-EDF-boss.html328 Ernst and Young at Resource Point, based on Bloomberg New Energy Finance. 329 http://www.guardian.co.uk/environment/2010/may/17/gulf-oil-spill-flow-stemmed330 http://www.guardian.co.uk/environment/2010/may/18/oil-spill-threatens-atlantic-coast331 http://www.guardian.co.uk/business/2010/may/19/debt-crisis-markets-fall-germany-naked-short-selling332 http://blogs.ft.com/energy-source/2010/05/19/bps-hayward-tries-to-soothe-his-employees-oil-spill-concerns-in-an-email/333 http://www.nytimes.com/2010/05/19/opinion/19friedman.html334 http://www.guardian.co.uk/business/2010/may/19/wind-wave-power-north-sea 335 http://www.huffingtonpost.com/2010/05/20/bp-smoking-gun-oil-giant_n_583590.html336 http://www.guardian.co.uk/environment/2010/may/20/survivor-deepwater-horizon-gulf-oil-explosion337 http://www.postcarbon.org/article/101140-the-peak-oil-crisis-the-deepwater338http://www.guardian.co.uk/environment/cif-green/2010/may/20/zero-carbon-buildings-coalition-agreeement 339 http://www.guardian.co.uk/business/2010/may/20/national-grid-rights-issue340 http://news.bbc.co.uk/1/hi/sci/tech/8689547.stm341 http://www.ft.com/cms/s/0/f2e4dbb0-4caa-11df-9977-00144feab49a.html342 http://online.wsj.com/article_email/SB10001424052748703691804575254860399350420-lMyQjAxMTAwMDIwMDEyNDAyWj.html343 http://blogs.ft.com/energy-source/2010/05/21/oil-hits-louisiana-wetlands-confirming-worst-fears-of-locals/344 http://www.guardian.co.uk/business/2010/may/21/wall-street-reform-obama-banking-shakeup345 http://www.guardian.co.uk/business/2010/may/23/european-markets-expect-further-turmoil346 http://www.guardian.co.uk/environment/2010/may/23/climate-change-interest-yougov-survey347 http://www.ft.com/cms/s/0/c7458506-668e-11df-aeb1-00144feab49a.html348 http://www.ft.com/cms/s/0/c7458506-668e-11df-aeb1-00144feab49a.html349 http://www.ft.com/cms/s/0/c7458506-668e-11df-aeb1-00144feab49a.html350 http://www.ft.com/cms/s/0/9203a112-6827-11df-a52f-00144feab49a.html 351 http://www.treehugger.com/files/2010/05/welcome-peak-oil-deeper-you-drill-the-more-you-might-spill.php 352 http://www.ft.com/cms/s/0/87cd590e-6859-11df-a52f-00144feab49a.html

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History shows that cuts now would be a massive ruinous mistake: Larry Elliot in the Guardian. “As things stand, a second Great Depression has been averted, but growth has ranged from the weak in Europe to the unspectacular in the United States. Banks are not lending. Unemployment is running at near double-digit levels in the US and the eurozone. The determination to cut budget deficits in these circumstances does not show that policymakers of probity and integrity have replaced the irresponsible spendthrifts of 2008 and 2009. It shows that the lunatics are back in charge of the asylum.” The danger is not seeing the parallels with 1937, he argues. The budget for 1937 was slashed and the US economy promptly went back into recession. Falling tax revenues meant the budget deficit rose. …. “Just as in 1937, private demand in most advanced countries is too weak to sustain the recovery. Budget deficits are a reflection of high unemployment and low levels of private investment. They are also a reflection of the big financial surpluses that have been amassed in the private sector. Animal spirits, in Keynes's phrase, are low. Consumers are worried about losing their jobs and are having their incomes squeezed. That makes businesses anxious about investing.” …. “So why are they doing it? Is it, for all Nick Clegg's guff about "progressive cuts", that the real agenda is to complete the demolition job on welfare states that was started in the 1980s? Or is simply that the deficit hawks are simply crackers? Either way, we now have the bizarre spectacle of China, Japan, the eurozone and Britain all set on reducing budget deficits while simultaneously pursuing export-led growth. This is a logical absurdity because somebody, somewhere has

353http://blogs.ft.com/energy-source/2010/05/26/early-bp-report-talks-of-mistakes-and-large-abnormality-prior- to-accident-say-congressmen/ 354 http://www.ft.com/cms/s/0/451599ac-68ed-11df-910b-00144feab49a.html 355 http://www.guardian.co.uk/environment/2010/may/27/gulf-oil-spill-top-kill 356 http://blogs.ft.com/energy-source/2010/05/27/obamas-energy-tangle/ 357 http://news.bbc.co.uk/1/hi/world/us_and_canada/10177716.stm358 http://www.cfr.org/publication/22204/us_deepwater_drillings_future.html359 http://www.energyfiles.com/global/deepwater.html360 http://www.guardian.co.uk/environment/2010/may/26/eu-analysis-carbon-emissions-target 361 http://www.pbworld.co.uk/index.php?doc=7&aid=126362 http://www.guardian.co.uk/business/2010/may/27/edf-nuclear-huhne 363 http://www.guardian.co.uk/business/2010/may/28/bp-shares-drop 364 http://blogs.ft.com/energy-source/2010/05/28/how-the-deepwater-horizon-oil-spill-compares/ 365 http://blogs.ft.com/energy-source/2010/05/28/how-the-deepwater-horizon-oil-spill-compares/ 366 http://www.guardian.co.uk/environment/2010/may/27/gulf-oil-spill-bp-obama 367 http://www.guardian.co.uk/money/2010/may/29/ethical-investments-communities-environment368 http://www.ft.com/cms/s/0/56b59b90-6bf3-11df-86c5-00144feab49a.html 369 http://www.ft.com/cms/s/0/a60eada8-6a95-11df-b282-00144feab49a.html 370 http://www.guardian.co.uk/environment/2010/may/30/oil-spill-bp-huge-risks-operation 371 http://www.guardian.co.uk/environment/2010/may/30/oil-spill-bp-huge-risks-operation 372 http://www.guardian.co.uk/environment/2010/may/30/oil-spill-deepwater-horizon-marshall-islands 373 http://www.nytimes.com/2010/05/30/opinion/30friedman.html 374 http://www.guardian.co.uk/world/2010/may/30/oil-spills-nigeria-niger-delta-shell375 http://www.guardian.co.uk/business/2010/may/30/financial-crisis-again376 http://www.guardian.co.uk/business/2010/may/31/bp-compensation-claims-us-oil-spill 377 http://thehill.com/blogs/e2-wire/677-e2-wire/100735-bp-ceo-id-like-my-life-back 378 http://www.ft.com/cms/s/0/3eca7c78-6c41-11df-86c5-00144feab49a.html379 http://www.guardian.co.uk/environment/2010/may/30/copenhagen-climate-talks-united-nations-letter380 http://www.guardian.co.uk/politics/2010/may/31/world-resources-shortage-threat-review381 http://www.ft.com/cms/s/0/d19c97d4-6d4a-11df-bde2-00144feabdc0.html 382 http://www.ft.com/cms/s/0/d19c97d4-6d4a-11df-bde2-00144feabdc0.html 383 http://www.bloomberg.com/apps/news?pid=20601087&sid=a8R2sUuN_W7o&pos=3384 http://www.ft.com/cms/s/0/d19c97d4-6d4a-11df-bde2-00144feabdc0.html 385 http://ftalphaville.ft.com/blog/2010/06/01/248181/bp-a-takeover-target/386 http://www.guardian.co.uk/environment/2010/may/31/bp-clashes-scientists-sea-oil-pollution 387 http://www.ft.com/cms/s/0/9930dd86-6d15-11df-921a-00144feab49a.html388 http://blogs.ft.com/energy-source/2010/06/01/how-difficult-are-relief-wells-some-comparisons-with-montara/389 http://www.guardian.co.uk/environment/2010/jun/01/storm-warning-deepwater-horizon-oil-spill-bp390 “Debunking peak demand,” Steven Kopits, Petroleum Review, June 2010. no url.391 http://www.guardian.co.uk/politics/2010/jun/01/chris-huhne-black-hole-nuclear-power-budget392 http://www.chathamhouse.org.uk/publications/papers/view/-/id/891/393 http://www.guardian.co.uk/environment/2010/jun/02/bp-criminal-inquiry-gulf-of-mexico394 http://www.guardian.co.uk/business/2010/jun/03/gulf-oil-spill-senators-ask-bp-to-suspend-dividends395 http://www.guardian.co.uk/business/2010/jun/03/gulf-oil-spill-senators-ask-bp-to-suspend-dividends396 http://www.ft.com/cms/s/0/e1e0e21c-6e53-11df-ab79-00144feabdc0.html397 http://www.ft.com/cms/s/0/80484514-6e8e-11df-ad16-00144feabdc0.html398 http://blogs.ft.com/energy-source/2010/06/03/whos-less-popular-than-bp-right-now/399 http://ftalphaville.ft.com/blog/2010/06/03/250766/bp-downgraded-to-aa-from-aa-by-fitch/400 http://www.guardian.co.uk/environment/2010/jun/02/oil-spill-bp-gulf-of-mexico401 http://www.nytimes.com/2010/06/03/us/03nuke.html402 http://www.guardian.co.uk/environment/2010/jun/02/gulf-oil-deepwater-sink-bp403 http://www.guardian.co.uk/business/2010/jun/02/edf-nuclear-waste-lobbying404 http://www.ft.com/cms/s/0/d3dd7000-6e2a-11df-ab79-00144feabdc0.html405 http://www.guardian.co.uk/environment/2010/jun/03/gulf-oil-spill-bp-dividend406 http://www.guardian.co.uk/global/2010/jun/03/bp-dividend-tony-hayward407 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7798790/Gulf-of-Mexico-oil-spill-Barack-Obama-to-rescind-billions-of-dollars-in-Big-Oil-tax-breaks.html408 http://247wallst.com/2010/06/03/is-peak-oil-finally-here/409 http://www.businessinsider.com/everyone-missed-it-but-the-eia-just-totally-confirmed-peak-oil-2010-6410 http://blogs.ft.com/energy-source/2010/06/03/bonn-courage/

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to be importing all the exports. If the rest of the world assumes that the US is once again going to become the world's spender of last resort it is seriously mistaken.”471

15.6.10. Obama uses an Oval Office TV address to call for “national mission” on clean energy. This is his first. Presidents usually only use them in times of great stress, e.g Kennedy during the Cuban Missile Crisis, Bush when invading Iraq. Apart from the expected pledges on further action in the Gulf, and BP’s requirement to pay, he says: “For decades, we have known the days of cheap and easily accessible oil were numbered. For decades, we have talked and talked about the need to end America’s century-long addiction to fossil fuels. And for decades, we have failed to act with the sense of urgency that this challenge requires” ...The consequences of our inaction are now in plain sight”. …“We cannot consign our children to this future. The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now. Now is the moment for this generation to embark on a national mission to unleash American innovation and seize control of our own destiny.” But there is no mention of a timeframe for the stalled clean energy bill, or other specifics. There is a lot of criticism of the speech in commentariat around “nothing new.” John Boehner, the Republican leader in the House: “President Obama should not exploit this crisis to impose a job-killing national energy tax on struggling families and small businesses.”472

411 http://www.guardian.co.uk/global/2010/jun/03/jp-morgan-financial-services-authority-regulation412 http://blogs.telegraph.co.uk/finance/edmundconway/100006007/britain-risks-default-unless-government-cuts-public-sector-pensions/413 http://www.guardian.co.uk/business/2010/jun/04/bp-shares-rise-oil-spill-cap414 http://blogs.ft.com/energy-source/2010/06/04/dont-panic/415 http://www.guardian.co.uk/environment/2010/jun/04/deepwater-horizon-leak-bp-criticism416 http://www.guardian.co.uk/business/2010/jun/04/bp-chief-executive-faces-investors-gulf-oil-spill417 http://peakgeneration.blogspot.com/2010/06/peak-oil-means-deepwater-drilling-is.html418 http://www.businessweek.com/news/2010-06-04/china-spends-34-6-billion-on-renewables-ernst-young-says.html419 http://www.guardian.co.uk/world/2010/jun/04/financial-crisis-basel-bank-curbs-delay420 http://www.nytimes.com/2010/06/06/business/global/06toxic.html?pagewanted=2&src=busln421 http://www.ft.com/cms/s/0/786776b4-708f-11df-96ab-00144feabdc0.html422 http://www.nytimes.com/2010/06/06/us/06peak.html423 Sublime Magazine, June 2010.424 http://www.ft.com/cms/s/0/b345d9d0-7196-11df-8eec-00144feabdc0.html425 http://www.ft.com/cms/s/0/33121c48-719a-11df-8eec-00144feabdc0.html426 http://www.guardian.co.uk/business/2010/jun/06/bp-legal-challenge-oil-rig-safety-fears427 http://www.guardian.co.uk/business/2010/jun/06/bp-legal-challenge-oil-rig-safety-fears428 http://www.guardian.co.uk/business/2010/jun/06/seize-bp-barack-obama-told429 http://www.ft.com/cms/s/0/27c0ff92-7192-11df-8eec-00144feabdc0.html430 http://blogs.ft.com/energy-source/2010/06/07/the-cost-of-fossil-fuel-subsidies-557bn/431 http://www.ft.com/cms/s/0/335837f4-725e-11df-9f82-00144feabdc0.html432 http://www.ft.com/cms/s/0/76f45aa4-7247-11df-9f82-00144feabdc0.html433 http://www.ft.com/cms/s/0/b4d477f4-7252-11df-9f82-00144feabdc0,dwp_uuid=5158848c-b6a7-11db-8bc2-0000779e2340.html434 http://www.ft.com/cms/s/0/13311418-6f76-11df-9f43-00144feabdc0.html435 http://blogs.ft.com/energy-source/2010/06/08/why-it-will-take-more-than-this-to-affect-fossil-fuel/436 http://www.ft.com/cms/s/0/986a577e-72fb-11df-9161-00144feabdc0.html437 http://www.ft.com/cms/s/0/d1990b3c-6fc5-11df-8fcf-00144feabdc0,dwp_uuid=3ca8735a-6fb6-11df-8fcf-00144feabdc0.html438 http://www.ft.com/cms/s/0/b7c4e616-6fc7-11df-8fcf-00144feabdc0,dwp_uuid=3ca8735a-6fb6-11df-8fcf-00144feabdc0.html439 http://www.ft.com/cms/s/0/0126d2d6-6fc5-11df-8fcf-00144feabdc0,dwp_uuid=3ca8735a-6fb6-11df-8fcf-00144feabdc0.html440 http://www.ft.com/cms/s/0/dc65a5c8-6fc2-11df-8fcf-00144feabdc0,dwp_uuid=3ca8735a-6fb6-11df-8fcf-00144feabdc0.html441 http://www.theoildrum.com/node/5230442 http://www.bloomberg.com/apps/news?pid=20601087&sid=aMfETcYI2t7Y  443 http://www.ft.com/cms/s/0/a2e795a8-7356-11df-ae73-00144feabdc0.html444 http://www.ft.com/cms/s/0/a2e795a8-7356-11df-ae73-00144feabdc0.html445 http://www.guardian.co.uk/environment/2010/jun/09/barack-obama-bp-tony-hayward446 http://www.ft.com/cms/s/0/9e38e194-73db-11df-87f5-00144feabdc0.html447 http://www.guardian.co.uk/business/2010/jun/10/bp-shares-plunge-gulf-mexico448 http://www.guardian.co.uk/business/2010/jun/10/bp-shares-plunge-gulf-mexico449 http://www.guardian.co.uk/commentisfree/cifamerica/2010/jun/10/us-bloodlust-bp-oil-spill450 http://blogs.ft.com/energy-source/2010/06/09/bp-british-parochialism-or-british-pariah-ism/451 http://www.ft.com/cms/s/0/6b195284-733c-11df-ae73-00144feabdc0.html452 http://www.guardian.co.uk/commentisfree/cif-green/2010/jun/09/oil-spill-credit-crunch-bp453 http://www.guardian.co.uk/business/2010/jun/09/bp-annual-statistical-review-us-gulf454 http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf455 http://www.reuters.com/article/idUSTOE65803S20100609456 http://www.ft.com/cms/s/0/88bde5ee-7494-11df-b3f1-00144feabdc0.html457 http://www.ft.com/cms/s/0/f7b6db16-74d2-11df-aed7-00144feabdc0.html458 http://www.ft.com/cms/s/0/49e6cec8-74d3-11df-aed7-00144feabdc0.html459 http://www.ft.com/cms/s/0/a63ab74a-7427-11df-87f5-00144feabdc0.html460 http://blogs.ft.com/energy-source/2010/06/10/oil-spill-probably-not-a-supply-side-changer-at-300k-bd/461 http://www.newsweek.com/2010/06/10/behind-petroleum.html

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Obama administration lifts estimate of spill size to 60,000 barrels a day: an Exxon Valdez every four days.House Energy & Commerce Committee lists 5 big questions for BP in a letter published ahead of congressional hearings today. FT Energy Source:“Well Design. On April 19, one day before the blowout, BP installed the final section of steel tubing in the well. BP had a choice of two primary options: it could lower a full string of “casing” from the top of the wellhead to the bottom of the well, or it could hang a “liner” from the lower end of the casing already in the well and install a “tieback” on top of the liner. The liner-tieback option would have taken extra time and was more expensive, but it would have been safer because it provided more barriers to the flow of gas up the annular space surrounding these steel tubes. A BP plan review prepared in mid-April reconunended against the full string of casing because it would create “an open annulus to the wellhead” and make the seal assembly at the wellhead the “only barrier” to gas flow if the cement job failed. Despite this and other warnings, BP chose the more risky casing option, apparently because the liner option would have cost $7 to $10 million more and taken longer.Centralizers. When the final string of casing was installed, one key challenge was making sure the casing ran down the center of the well bore. As the American Petroleum Institute’s recommended practices explain, if the casing is not centered, “it is difficult, if not impossible, to displace mud effectively from the narrow side of the annulus,” resulting in a failed cement job. Halliburton, the contractor hired by BP to cement the well, warned BP that the well could have a “SEVERE gas flow problem” if BP lowered the final string of casing with only six centralizers instead of the 21 recommended by Halliburton. BP rejected Halliburton’s advice to use additional centralizers. In an e-mail on April 16, a BP official involved in the decision explained: “it will take 10 hours to install them . … I do not like this.” Later that day, another official recognized the risks of proceeding with insufficient centralizers but commented: “who cares, it’s done, end of story, will probably be fine.”Cement Bond Log. BP’s mid-April plan review predicted cement failure, stating “Cement simulations indicate it is unlikely to be a successful cement job due to formation breakdown.” Despite this warning and Halliburton’s prediction of severe gas flow problems, BP did not run a 9- to 12-hour procedure called a cement bond log to assess the integrity of the cement seal. BP had a crew from Schlumberger on the rig on the morning of April 20 for the purpose of running a cement bond log, but they departed after BP told them their services were not needed. An independent expert consulted by the Committee called this decision “horribly negligent. ”Mud Circulation. In exploratory operations like the Macondo well, wells are generally filled with weighted mud during the drilling process. The American Petroleum Institute (API) recommends that oil companies fully circulate the drilling mud in the well from the bottom to the top before commencing the cementing process. Circulating the mud in the Macondo well could have taken as long as 12 hours, but it would have allowed workers on the rig to test the mud for gas influxes, to safely remove any pockets of gas, and to eliminate debris and condition the mud so as to prevent contamination of the cement. BP decided to forego this safety step and conduct only a partial circulation of the drilling mud before the cement job.Lockdown Sleeve. Because BP elected to use just a single string of casing, the Macondo well had just two barriers to gas flow up the annular space around the final string of casing: the cement at the bottom of the well and the seal at the wellhead on the sea floor. The decision to use insufficient centralizers created a significant risk that the cement job would channel and fail, while the decision not to run a cement bond log denied BP the opportunity to assess the status of the cement job. These decisions would appear to make it crucial to ensure the integrity of the seal assembly that was the remaining barrier against an influx of hydrocarbons. Yet, BP did not deploy the casing hanger lockdown sleeve that would have prevented the seal from being blown out from below.”473

Oil company bosses testify that they could not have contained spill any better then BP – but Exxon, Chevron, ConocoPhillips and Shell all tell the house energy and commerce committee that they operate to a higher safety standard than BP. Rex Tillerson, chairman and chief executive of Exxon: “When these things happen we are not very well equipped to handle them. There is no response capability that will guarantee you will never have an impact. It does not exist.” He and others say they would have stopped drilling when confronted with the problems in well control. “This incident represents a dramatic departure from industry norms in deepwater drilling. We do not proceed with operations if we cannot do so safely.” Like BP in its so-called disaster plan, the companies listed the phone number of a long-dead marine scientist and raised concerns about protecting walruses – not found in the gulf for the past 3 million years. Ed Markey, chairman of the subcommittee on global warming: “The only technology you seem to be relying upon is a Xerox machine to put together your response plans.”474

16.6.10. BP agrees to suspend dividend and back $20bn spill fund afer meeting with Obama. “This is not a cap,” Obama says. The account is an escrow over 4 years with the first $5bn to be paid this year.475

Congressman suggests drilling relief wells at the same time as exploration wells . Rex Tillerson, Exxon CEO, says that would just be doubling risk. And cost of course. “This is an exploration well so it means you’re drilling in an area that’s not previously been drilled before. If you look at the history of well control problems and blowouts, most of them have occurred on the way down to the objective, not once they reach their objective. They’re caused by shallow gas hazards, they’re caused by unknown pore pressures on the way down to the objective, so if you have two wells going down at the same time it means you have just increase your risk of having a problem on the way down to them.” FT Energy Source: “So what does this mean for relief wells, then? And about risk management of deepwater drilling more generally?”476

George Osborn abolishes the FSA and hands the regulatory keys to the Bank of England. Mervyn King describes his new role, beyond the Bank’s normal monetary policy, as being to “turn down the music when the dancing gets a little too wild”. The transition will take two years. He also sets up and Independent Banking Commission to report by September 2011.477

462 http://blogs.telegraph.co.uk/news/jamesdelingpole/100042904/bow-down-to-peak-oil-says-bbcs-cthulu-worshipping-newsnight/463 http://www.building.co.uk/news/lend-lease-bans-bovis-from-£40bn-nuclear-sector/5000815.article464 http://www.guardian.co.uk/world/2010/jun/13/bp-oil-spill-timetable465 http://www.ft.com/cms/s/0/168b5580-771c-11df-ba79-00144feabdc0.html466 http://www.guardian.co.uk/commentisfree/2010/jun/13/bp-energy-oil-recession-economy467 http://www.guardian.co.uk/business/2010/jun/13/banking-commission-report-alistair-darling468 http://www.guardian.co.uk/business/2010/jun/13/sir-fred-goodwin-tony-hayward469 http://www.guardian.co.uk/commentisfree/2010/jun/13/will-hutton-banks-crash-refuse-reform

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E&Y to be investigated for its role in approval of Lehman’s hiding of debt. UK accountancy regulator how it could have allowed the bank to hide $50bn off its books. One industry expert describes the development as the “tip of the iceberg”, to be followed by a potential flood of legal claims against E&Y. Just like the ratings agencies, the paying of audit firms for an opinion seems to be fatally flawed, when clients can always move to a firm with a more favourable view.478 Nils Pratley: “Perhaps we can proceed to the wider debate about how auditors are paid. At the moment, auditors are paid by the company – the people they are meant to be policing. That seems a straightforward conflict of interest. Plenty of alternative models have been suggested. It's time they were properly examined.”479

17.6.10. Tony Hayward inflames Congress by emulating Ronald Reagan in not recalling . He uses multiple versions of “I don’t recall,” and “I wasn’t involved in the decisionmaking”, insisting that all verdicts have to await the outcome of BP’s own enquiry. He is told he should quit, mocked for his $6bn salary, and asked to consider whether a firm with a safety record like BP's should be banned from America. “With respect sir, we drill hundreds of wells around the world,” he says along the way. “That's what's scaring me now,” replies Michael Burgess, a Texas Republican. Members read out emails from BP engineers pointing to a disaster waiting to unfold, and others over-riding concerns, including one scarcely-credible message: “Who cares, it's done, end of story, will probably be fine.” Waxman: “It appears to me BP knowingly risked well failure to save a few million dollars.” Joe Barton, a Texas Republican, says he is ashamed BP was compelled to agree to pay $20bn into an independently managed fund for victims of the spill. “I apologise. I do not want to live in a country where every time a corporation does something wrong, it's subject to a political process that amounts to a shakedown.” (He also said “slush fund”). After a storm of criticism from Democrats and Republicans alike (to some of which I listened on C-Span) Barton later apologised for this apology.480 Throughout the hearing Hayward maintains steady eye contact with his enraged critics. “But his nerves were betrayed by his fingers, which appeared to be busily crocheting a pair of invisible socks.”481

Kuwait parliament to debate power cuts amid record heat. Kuwait's parliament will hold an emergency session at the weekend. Power consumption has almost reached the maximum production capacity, and there have been repeated power cuts in dozens of residential areas. The temperature soared to 51 degrees Celsius (123.8 Fahrenheit) in Kuwait City, early for this time of year. No new power plants have been built since 1988.482

18.6.10. Macondo oilfield contains enough oil for an out of control well to go on spewing for 2 to 4 years, says an oilfield expert: Philip Johnson, professor of petroleum engineering at the University of Alabama. This is based on Hyward’s testimonty that there is still 50 million barrels of recoverable oil in the field, and the US government’s estimate of 60,000 barrels a day escaping483 Bank Matt Simmons founded distances itself from his opinions on Macondo spill. Matt Simmons has for several weeks been voicing the view that the Macondo well casing itself is damaged (if correct, a horrific escalation of the problem). He has also advocated the use of a nuclear explosion to stop the spill.484

Energy and Capital in an e-mail to its readers: it’s bound to get much worse. Aluding to emerging testimony from scientists that there is more than one leak: “Exxon fought tooth and nail for its shareholders; it appealed court rulings for 19 years. Union Carbide wasn't settled for 25 years. BP is rolling over like a simpering dog. Why? The only reason I can think of is that the company knows — better if not as well as the Obama administration does — that it will get worse. Much worse.”Government’s cancellation of £80m loan to Sheffield Forgemasters means no EDF reactor by 2017 . Chris Goodall: “The only other company currently making forgings of sufficient size for an international market, Japan Steel Works, has recently tripled its capacity to make 10 pressure vessels a year. But last year 11 new nuclear power stations were begun around the world and the pace is accelerating. 55 reactors were in full planning at the end of 2009 and in the US over 30 licence applications are under active discussion. Without the new investment by Sheffield Forgemasters, the waiting list for pressure vessels means that EDF's plan to build at least one nuclear power plant in the UK by 2017 will be unattainable.”485

19.6.10. Tony Hayward spotted on his yacht on the Isle of Wight, inflaming Obama officials and no doubt ordinary Americans in the process.

20.6.10. BP accused of lying to Congress by Ed Markey. He says an internal document shows BP’s assessment of the size of the spill was 20 times its public estimate (up to 100,000 barrels a day as opposed to 5,000). “This document raises very troubling questions about what BP knew and when they knew it. It is clear that, from the beginning, BP has not been straightforward with the government or the American people about the true size of this spill.”486

Hayward must travel to Moscow to reassure Medvedev that BP is not on the verge of collapse and continue to be a reliable partner in Russian oil production. Talk of asset sales is unsettling the Russians. BP produces one in every four of its barrels there.487

Oil companies are keeping rigs on reserve in the Gulf, having been told that the moratorium could end early. Obama officials have told the non-BP companies behind closed doors that they can’t live with the economic downsides of the ban, given 10% US unemployment etc. There are 32 deep-water rigs inactive in the Gulf that the companies had been threatening to send elsewhere.488

Anger grows across the world at the cost of “frontier oil.” The Gulf of Mexico tops a long list of arenas where NGOs accuse the oil industry of destroying land and livelihoods..489

21.6.10. Anadarko turns on BP. The CEO of the company owning 25% of the Macondo well says he is shocked by the revelations about BP’s “reckless” operation of the well, which “likely represent gross negligence or wilfull misconduct.” In using this language the company is trying to invoke a clause in the joint operating agreement that would get if off the hook on a share of costs. BP issues a furious rebuttal.490

22.6.10. Rig worker spotted oil leak on the blowout preventer “weeks before blast” and informed BP. They switched off the faulty part – a control pod – rather than repair it. So Tyrone Benton tells Panorama.491 Belarus turns off flow of Russian gas to Europe. This after Russia cut the flow of gas to Belarus by 15% yesterday in the latest dispute over unpaid bills. Gazprom says Belarus owes for consumption. Belarus says Gazprom owes for transit fees. President Medvedev: “Gazprom can't accept anything but cash - neither pies, nor butter, nor cheese, nor pancakes.” President Lukashenko: “When they are trying to insult us with meat chops, sausage, butter or pancakes we consider it as an insult for the Belarussian people.” Russia supplies 25% of Europe’s gas, 20% of which crosses Belarus.492

23.6.10. Oil industry persuades a Louisiana judge to overturn Obama’s ban on deepwater drilling. Lawyers representing the companies argue that “a whole ecosystem of business” is at threat. 493 Judge is found to have shares in Halliburton, Transocean and other offshore companies. The administration will appeal.494

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Analysts warn that only Shell, Chevron, and ExxonMobil will have the ability to drill the Gulf if the liability cap is hiked from $75m to the billions, or even effectively removed. Other smaller companies are likely to be driven away by the risk.495 Does BP’s debt threaten other companies outside the oil sector? FT: “Alphaville reports that Moody’s, the rating agency, has listed several synthetic collateralised debt obligations (CDOs) that contain relatively high exposure to the debt default insurance of BP and other companies involved in the ill-fated Deepwater Horizon/Macondo project, such as Transocean and Anadarko. This has led to some slightly fuzzy fears that even companies completely unassociated with the oil and gas industry, whose debt default insurance happens to be in the same structured finance products as BP et al’s, will be affected. The logic being: if the costs of the Deepwater Horizon disaster were sufficient to trigger some kind of a credit/default event on one of the associated oil firms, that could lead to the synthetic CDOs in which they feature being liquidated, dragging the other referenced companies’ credit with them.”496

China set to become largest importer of thermal coal, only three years after becoming an importer. The IEA says it should overtake Japan this year. Greg Boyce, chief executive of Peabody Energy, told investors recently that the world economy was at “the early stages of a long-term supercycle for coal”. The IEA expects China to add 500 GW of coal capacity between now and 2020.497

24.6.10. BP reinstalls the cap on the Macondo well, after a robot accidentally dislodged it yesterday. Meanwhile Obama’s job performance rating is at an all time low of 45%, and thick pools of oil have begun washing up on the Florida coast.498

Tony Hayward tells staff that BP is in “intensive care” but the worst is over. This in a series of town hall meetings in the UK.Oil majors rethink willingness to partner with BP on fields where they are main operator. An exec at one company professes “shock” at the design of the Macondo well.499

Chris Huhne announces “green deal” and says renewables can protect UK from oil and gas crises. Speaking at the Economist energy summit, the new UK energy minister says new legislation (by November) will allow energy companies and others to spend up to £6.5bn on a massive energy efficiency overhaul of homes. Up to £200bn will need to be spent on upgrading the UK’s energy infrastructure in the next ten years and a lot of it must be renewables. In yesterday’s UK budget his DECC budget – already half allocated to nuclear decommissioning, is to be cut by 25%.500

Chavez nationalises 11 US oil rigs in Venezuela as his drive for socialism amid recession grows . They belong(ed) to Helmerich and Payne.501 Basle committee thins down proposals for reform after intense bank lobbying. The recommendations included the need to set aside billions in extra capital.502 “The debt-financed model has reached its limit”, an Economist special issue argues. Japan owes the most as a percentage of GDP, including all financial –business debt, all non-financial-business debt, all household and all government debt: >450%. UK is second, almost at 400%. Economist: “The answer to all problems seemed to be more debt. Depressed? Use your credit card for a shopping spree “because you’re worth it”. Want to get rich quick? Work for a private-equity or hedge-fund firm, using borrowed money to enhance returns. Looking for faster growth for your company? Borrow money and make an acquisition. And if the economy is in recession, let the government go into deficit to bolster spending. When the European Union countries met in May to deal with the Greek crisis, they proposed a €750 billion ($900 billion) rescue programme largely consisting of even more borrowed money.” “….From early 2007 onwards there were signs that economies were reaching the limit of their ability to absorb more borrowing.” “….Rising government debt is a Ponzi scheme that requires an ever-growing population to assume the burden—unless some deus ex machina, such as a technological breakthrough, can boost growth.” “…..The problem with debt, though, is the need to repay it. Not for nothing does the word credit have its roots in the Latin word credere, to believe. If creditors lose faith in their borrowers, they will demand the repayment of existing debt or refuse to renew old loans. If the debt is secured against assets, then the borrower may be forced to sell. A lot of forced sales will cause asset prices to fall and make creditors even less willing to extend loans. If the asset price falls below the value of the loan, then both creditors and borrowers will lose money. This is particularly troublesome if the economy slips into deflation, as happened globally in the 1930s and in Japan in the 1990s. Debt levels are fixed in nominal terms whereas asset prices can go up or down. So falling prices create a spiral in which assets are sold off to repay debts, triggering further price falls and further sales. Irving Fisher, an economist who worked in the first half of the 20th century, called this the debt deflation trap.” “….This special report will argue that, for the developed world, the debt-financed model has reached its limit. Most of the options for dealing with the debt overhang are unpalatable. As has already been seen in Greece and Ireland, each government will have to find its own way of reducing the burden. The battle between borrowers and creditors may be the defining struggle of the next generation.”503

26.6.10. New Australian oil company Peak Oil and Gas plans a $55m IPO next quarter. The Perth based entity plans to use the funds for restarting an offshore oilfield in the Philippines, shutdown in 1992.504

27.6.10. Delays feared as BP relief hole nears Macondo well 6,060m below the sea surface and 4,500m below the seabed. The target is a 25cm-wide steel cased hole, itself encased in cement, and experts fear the unprecedented effort may not work first time. Each attempt takes days to weeks. Relief wells have always worked in the past, but often after several attempts. And they have never been tried at this depth.505

Krugman fears that G20 belt-tightening will mean a third global depression. “This third depression will be primarily a failure of policy. Around the world – most recently at the weekend's deeply discouraging G20 meeting – governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending…. It's almost as if the financial markets understand what policymakers seemingly don't: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating. ….So I don't think this is really about Greece, or indeed about any realistic appreciation of the trade-offs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times. And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.”506

28.6.10. G20 Summit shows it will take another crisis to bring global economic reform, Larry Elliot concludes. “The communique from the weekend's meeting is easily summed up: do your own thing. The Americans cannot persuade the Europeans to hold off from fiscal tightening until the recovery is assured; the Germans and the

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British think the risks of a sovereign debt crisis are far more serious than the possibility of a double-dip recession.”507

Central bankers insist that governments must force banks to bolster capital, as anger spreads over G20 failure to take a harder line. Theis in the Bank for International Settlements annual report, which also argues for a rise in historically low interest rates around the world.508

BP is now spending $100m a day, and the total cost of the spill so far is $2.65bn. BP hopes to seal the well by mid July now, given progress with the relief wells.509

BP “staked future on expanding offshore drilling”, released company strategy document shows. A strategy paper shows this was to be its number one area for long-term growth.510

More BP bonds being borrowed for shorting than shares. The average for the corporate sector is 1% of bonds, but one BP bond has 24% on loan. The sentiment is very negative, to say the least.511

Energy from renewables falls in the UK: down 7.5% in the first quarter of 2010 compared to 2009, from 6.7% to 6.2% of total electricity supply.512

29.6.10. High concentrations of methane gas identified around the BP oil spill, raising fears of a dead zone. Some concentrations are up to 1m times the normal concentration of 1-2ppm. The concern is that the methane, which is around 40% of the leak, will be a nutrient for algal blooms resulting in an oxygen-depleted zone where marine life cannot survive. Texas A&M University has found the high methane in an area 6 miles square round the leak. There is already a 17,000 sq km dead zone off the Mississippi, caused by alagal growth resulting from nutrients in runoff.513

Anadarko approved many of the controversial suspected cost-cutting decisions BP made. “What we knew was that the design, the long string and the use of centralisers all met industry standards if executed correctly. The problems were caused by BP’s execution of each of these,” Anadarko says. (A long string is a cheaper way of lining a well but one that gives less protection against gas leaks than using multiple layers, including liners and casings. Centralisers stabilise a well before it is cemented). The two partners remain in conflict over the details wioth respect to responsibility. For Anadarko, already holding junk-rated bond status, the outcome could easily be a life or death issue. Mitsui is a third partner on the well.514

Obama’s effort to leverage Senate support on climate change from the Gulf spill falls flat. He fails to rally a group of Democratic and Republican senators around an energy and climate change law. Guardian: “The standoff suggests the Senate would formally give up on climate change law, and recast energy reform as a Gulf oil spill response, that would roll in far more limited proposals such as a green investment bank, or a measure to limit greenhouse gas emissions that would apply only to electricity companies.515

FSA says auditors were insufficiently sceptical in run up to credit crisis. The Guardian understands that the FSA has already referred some of the practices it has found to the Accountancy & Actuarial Disciplne Board, which investigates accountants and has the power to take action if it finds wrongdoing( (unlike the FSA), and the to the Financial Reporting Council, which oversees corporate accounting.”516

Martin Wolf likens the financial crisis to simulataneous games of pass the parcel, set to end badly. His cites four of these games: “The first is played within the financial sector: the aim of each player is to ensure that bad loans end up somewhere else, while collecting a fee for each sheet unwrapped along the way. The second game is played between finance and the rest of the private sector, the aim being to sell the latter as much service as possible, while ensuring that the losses end up with the customers. The third game is played between the financial sector and the state: its aim is to ensure that, if all else fails, the state ends up with these losses. Then, when the state has bailed it out, finance can win by shorting the states it has bankrupted. The fourth game is played among states. The aim is to ensure that other countries end up with any excess supply. Surplus countries win by serially bankrupting the private and then public sectors of trading partners. It might be called: “beggaring your neighbours, while feeling moral about it”. It is the game Germany is playing so well in 471 http://www.guardian.co.uk/business/2010/jun/14/lunatics-economy-cuts-frankin-roosevelt472 http://www.ft.com/cms/s/0/735700fc-78de-11df-a312-00144feabdc0.html473 http://blogs.ft.com/energy-source/2010/06/15/the-nightmare-oil-well-and-five-questions-for-bp/474 http://www.guardian.co.uk/environment/2010/jun/15/exxon-bp-oil-gusher-congress475  http://www.ft.com/cms/s/0/52b23b50-7951-11df-92c1-00144feabdc0.html476 http://blogs.ft.com/energy-source/2010/06/17/compulsory-relief-wells/477 http://www.ft.com/cms/s/0/0203b99e-797f-11df-b063-00144feabdc0.html478 http://www.guardian.co.uk/business/2010/jun/16/ernst-and-young-lehman-inquiry479 http://www.guardian.co.uk/business/2010/jun/16/viewpoint-auditors 480 http://www.guardian.co.uk/environment/2010/jun/17/gulf-oil-spill-bp-chief-tony-hayward481 http://www.guardian.co.uk/business/2010/jun/17/tony-hayward-congressional-committee482 http://www.google.com/hostednews/afp/article/ALeqM5iIN4LLwRZNGXJac1HEex_vVY4NdA483 http://www.guardian.co.uk/business/2010/jun/18/bp-gulf-oil-leak-estimates484 http://blogs.ft.com/energy-source/2010/06/17/simmons-says/485 http://www.guardian.co.uk/environment/2010/jun/18/sheffield-forgemasters-loan-new-nuclear486 http://www.guardian.co.uk/environment/2010/jun/20/gulf-oil-spill-bp-lying487 http://www.ft.com/cms/s/0/d2c5270c-7c95-11df-8b74-00144feabdc0.html 488 http://www.ft.com/cms/s/0/94aec29e-7c99-11df-8b74-00144feabdc0.html489 http://www.guardian.co.uk/business/2010/jun/20/frontier-oil-exploration-pollution490 http://ftalphaville.ft.com/blog/2010/06/21/266581/bp-and-anadarko-turn-on-each-other/491 http://www.guardian.co.uk/environment/2010/jun/21/bp-oil-spill-deepwater-horizon-leak492 http://www.guardian.co.uk/world/2010/jun/22/belarus-gas-row-russia493 http://blogs.ft.com/energy-source/2010/06/23/administration-response-to-ruling-on-moratorium/494 http://www.guardian.co.uk/environment/2010/jun/23/judge-drilling-ban-shares-oil495 http://www.ft.com/cms/s/0/0d250e1c-7e17-11df-8478-00144feabdc0.html496 http://blogs.ft.com/energy-source/2010/06/22/the-deepwater-horizon-effect-spreads-wider/497 http://www.ft.com/cms/s/0/43cc3c94-7eec-11df-8398-00144feabdc0.html498 http://www.guardian.co.uk/environment/2010/jun/24/bp-refits-gulf-mexico-oil-cap499 http://www.ft.com/cms/s/0/d9c7e826-7fb7-11df-91b4-00144feabdc0.html500 http://www.guardian.co.uk/environment/2010/jun/24/huhne-renewable-energy-security501 http://www.ft.com/cms/s/0/6a1caee4-7f49-11df-84a3-00144feabdc0.html502 http://www.ft.com/cms/s/0/96ca4a38-7fbb-11df-91b4-00144feabdc0.html

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the eurozone. What have these four games to do with the G20 summit? In a word, everything. The first game scattered toxic assets across the financial system. The second left the non-bank private sector with a debt overhang and deleveraging. The third duly damaged the finances of states. The fourth helped cause the crisis and is now an obstacle to recovery. Above all, these games are all linked to one another and so have to be changed together. The G20 does understand this, but only up to a point.”517

Naomi Klein urges people to “take no orders to slash and burn from this G20 club .” “My city feels like a crime scene, and the criminals are all melting into the night, fleeing the scene. No, I'm not talking about the kids in black who smashed windows and burned cop cars on Saturday. I'm talking about the heads of state who, on Sunday night, smashed social safety nets and burned good jobs in the middle of a recession. Faced with the effects of a crisis created by the world's wealthiest and most privileged strata, they decided to stick the poorest and most vulnerable people in their countries with the bill.”518

30.6.10. First hurricane of the season expected to disrupt BP’s oil-spill effort for days to come. Waves as high as 3.6 metres will delay additions to the oil-capture system system, but not relief well drilling.519

Abuse heaped on BP petrol station franchisees in US. Apart from vanadalism and “hate” incidents, including gunshots through windows at one Mississippi station, business has dropped 10-20%.520

BP shares surge 9% on suggestions that the company’s days in the US are numbered. A Cazenove note suggesting either Exxon or Shell could take BP over starts investors piling in.521

UK government subsidises deep-water drilling without transparency on drilling risk . Guardian: “The British government is subsidising one of the world's largest and riskiest oil-drilling projects in the Atlantic Ocean and would be liable for tens of millions of pounds if a major accident took place. Documents seen by the Guardian show that UK trade ministers underwrote loans taken out by the Brazilian state-run energy company Petrobras in 2005 in order that Rolls Royce and other companies could contribute to the building of the giant P-52 platform. The platform is now operating 125km off the coast of Brazil in 1,798 metres (5,900 feet) of water - deeper than BP's Deepwater rig that exploded in April and led to the disastrous oil spill in the Gulf of Mexico. But the 14-page environment report prepared by the UK’s Export Credits Guarantee Department (ECGD) and obtained under freedom of information rules by watchdog group Corner House, makes no mention of blowouts or the equipment needed to prevent them. Ministers have edited out all ECDG's comments assessing the risks involved in deep-sea drilling in the Atlantic.”522

UK Climate Change Committee: urgent government action needed if UK is to hit emissions targets . The committee’s second annual report says that action is needed within a year, beyond the “light touch” interventions to date, in electricity (efficiency), renewables, electric cars, and action to cut the footprint of farms. The 8.6% reduction in emissions last year was almost entirely the result of recession.523

Banks repay €442bn to the ECB, easing fears, lifting euro and shares. More than 1,000 banks borrowed this huge sum a year ago, with repayment due today.524

1.7.10. BP aims to raise $9bn from sale of South American assets to Chinese as Russians also eye assets: CNOOC is interested in the 60% BP stake in PanAmerican energy and TNK-BP wants to buy BP assets.525

The 95 islanders of Eigg win the top Ashden award for their 90% renewable electricity use, near halving of energy efficiency, and plans to do more. Using hydro, wind and solar, they cap electricity use at 5 kW for homes and 10 kW for businesses, using e-mail alerts to notify people of low supply.526

Ex Intel CEO Andy Grove argues for US protectionism in a long essay in Bloomberg magazine. “Bay Area unemployment is even higher than the 9.7 percent national average. Clearly, the great Silicon Valley innovation machine hasn’t been creating many jobs of late -- unless you are counting Asia, where American technology companies have been adding jobs like mad for years. The underlying problem isn’t simply lower Asian costs. It’s our own misplaced faith in the power of startups to create U.S. jobs.” It’s the scale-up phase where the jobs are created. When Intel and others exploded into the digital revolution, that could be done in the States. That was before China opened for serious business. Now? “What kind of a society are we going to have if it consists of highly paid people doing high-value-added work -- and masses of unemployed?” “….Our fundamental economic beliefs, which we have elevated from a conviction based on observation to an unquestioned truism, is that the free market is the best economic system -- the freer, the better. Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief, largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better.” “…Unemployment is corrosive. If what I’m suggesting sounds protectionist, so be it.”527

2.7.10. “BP braces for shake-up at the top”: FT front page headline. “Investors are braced for a clear-out of BP’s leadership once its leaking oil well in the Gulf of Mexico is capped, which could come in the next few weeks, according to several leading shareholders and people close to the group.” Tope ten investors have objections to the performance of the chairman, and think the CEO’s departire is essential.528

503 http://www.economist.com/node/16397110?story_id=16397110504 http://www.theaustralian.com.au/business/peak-oil-and-gas-plans-55m-ipo/story-e6frg8zx-1225884481093505 http://www.ft.com/cms/s/0/a20fb29a-8202-11df-938f-00144feabdc0.html506 http://www.nytimes.com/2010/06/28/opinion/28krugman.html?ref=paulkrugman507 http://www.guardian.co.uk/world/2010/jun/28/g20-summit-economics-global-imbalances508 http://www.guardian.co.uk/business/2010/jun/28/g20-proposals-let-bankers-off-the-hook509 http://www.guardian.co.uk/environment/2010/jun/28/bp-oil-spill-bill-100m-day 510 http://www.guardian.co.uk/environment/2010/jun/28/bp-plans-offshore-drilling-expansion511 http://www.ft.com/cms/s/0/227b1b14-82e8-11df-8b15-00144feabdc0.html512 http://www.guardian.co.uk/environment/2010/jun/28/drive-switch-green-power-setback 513 http://blogs.ft.com/energy-source/2010/06/29/oil-spill-in-gulf-could-cause-dead-zone-further-hitting-sealife/514 http://www.ft.com/cms/s/0/bac553ac-83a7-11df-b6d5-00144feabdc0.html515 http://www.guardian.co.uk/business/2010/jun/29/barack-obama-energy-bill516 http://www.guardian.co.uk/business/2010/jun/29/financial-auditors-not-sceptical-fsa517 http://www.ft.com/cms/s/0/3a4d4966-83af-11df-b6d5-00144feabdc0.html518 http://www.guardian.co.uk/commentisfree/2010/jun/29/g20-slash-and-burn519 http://www.guardian.co.uk/environment/2010/jun/30/hurricane-hits-bp-oil-cleanup520 http://www.guardian.co.uk/business/2010/jun/30/consumer-anger-bp-petrol-stations521 http://www.guardian.co.uk/business/2010/jun/30/bp-share-rise-takeover-speculation522 http://www.guardian.co.uk/environment/2010/jun/30/uk-loans-brazil-offshore-drilling

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BP brushes off call by Co-op to keep away from ecologically sensitive areas. “When the leak is plugged and we return to normal we will be carrying out an assessment of where the new BP goes from here. We will – like the rest of the industry – be working out how we can do things differently in terms of safety but not where we do them,” says a BP spokesman in London. “The position is the same now as it was at the strategy update earlier in the year. We are committed to three core areas of deep water oil, unconventional gas and enhanced recovery on super-sized fields. The world needs oil to meet growing demand and total risk aversion would just drive up prices.”529

Shell drags the FSTE 100 down to a 10 month low on talk that analysts are cutting their forecasts based on the Gulf drilling moratorium, maintenance issues in Canada, and problems in Nigeria.530

EDF faces “expropriation” and inquest on “ballooning” costs of keep nuclear plants open . Bloomberg: “Electricite de France SA, Europe’s biggest power generator, is facing demands to justify ballooning cost estimates for extending the lives of French nuclear reactors as the government opens the market to competitors. ….EDF will have to spend about 600 million euros ($750 million) on each of its 58 reactors to keep them in service for more than four decades, according to Chief Executive Officer Henri Proglio. That’s 50 percent more than an estimate given earlier this year. The utility will have to fork out almost 35 billion euros to keep aging plants in working order, the CEO has said.” A draft law under scrutiny in the Senate would require EDF to sell about a quarter of its power to GDF and others. Proglio calls it “expropriation.”531

3.7.10. To replace US offshore oil with renewables, 195 Californias or 74 Texases would be needed. Chris Nelder: “Federal offshore Gulf of Mexico has been our last great hope for domestic oil production against a four-decade declining trend. Offshore oil now accounts for 1.7 million barrels per day (mbpd), or over 30%, of our domestic production of 5.5 mbpd. What would it take to substitute wind for offshore oil? At 5.8 MBtu heat value in a barrel of oil and 3412 BTU in a kWh, 1.7 mbpd is equivalent to 2.9 billion kWh per day, or 1,059 billion kWh a year. By comparison, total 2008 wind generation was 14.23 billion kWh in Texas, and 5.42 billion kWh in California. Therefore, to replace our offshore oil with wind, you’d need 195 Californias, or 74 Texases of wind, and probably 20 years to build it. Then there are some not-so-simple facts. ….Our only defense against the crushing weight of these forces will be to aggressively improve efficiency.”532

4.7.10. Saudi Arabia's King Abdullah orders a halt to oil exploration operations in the Kingdom . So the official Saudi Press Agency, or SPA, reported yesterday. “I was heading a cabinet meeting and told them to pray to God the Almighty to give it a long life," King Abdullah tells Saudi scholars studying in Washington. “ I told them that I have ordered a halt to all oil explorations so part of this wealth is left for our sons and successors God willing.” A senior oil ministry official, who declined to be named, tells Zawya Dow Jones the king's order isn't an outright ban but rather means future exploration activities should be carried out wisely.533

Macondo relief well is only a few days from the pipe, and “one shot” moment of truth. Wayne Pennington, chair of geophysical engineering at Michigan Tech University: “They pretty much have one shot. Once they hit it and they try to kill it they really just have that one chance.” Guardian: “One wrong move as engineers break through the cement and steel pipe of the Macondo well could increase the torrent of oil into the Gulf. In the worst case scenario, it could even trigger a blow-out in the relief well.”534

Pension funds are failing people as stewards of their cash. Ruth Sutherland argues that the credit crunch and the oil spill should together be a line in the sand. “The Green Investment Bank Commission estimates that up to £1 trillion is needed by 2030 to upgrade and decarbonise Britain's infrastructure – investment on a scale not seen since reconstruction after the second world war. Pension funds have £1.5tn of assets under their control and are meant to be long-term investors, so they should be ideal candidates to put up some of the capital. But there is no guarantee they will do it.” One option is to enfranchise pension fund members, she says, so they - the end owners - can cut through the layers of advisers, brokers, analysts, and money managers to reach and influence the boards of the companies causing the problems. 535

Obama gives nearly $2bn to two solar companies to create up to 5,000 jobs. Abengoa will get $1.45bn to build a huge solar thermal plant in Arizona. Abound Solar will get $400m in loan guarantees to build a solar panel manufacturing plant in Colorado.536

5.7.10. Saudi oil pronouncement is in context of 4.4 mbd spare capacity, and 11% of oil diverted to gas. FT: “Saudi oil minister Ali al-Naimi said in June that the country wouldn’t need to increase its oil production capacity until 2020. The country now reports it has 4.4m b/d of spare capacity - more than double the ‘cushion’ that it officially targets. Upstream reported in May that Saudi Arabia is exploring for hydrocarbons in the Red Sea, and has recorded 22,000km of seismic data there, among challenging geography including 2km-plus water depths, high temperatures and a layer of salt. It has also commissioned exploration around the Manifa oil field in the Persian Gulf. But the overall focus is on gas, not oil, because of the Kingdom’s domestic electricity supply problem. It heavily subsidises both fuel and electricity use, and consequently consumption is growing too fast for domestic gas supply to keep up with. Platts reported last month that Saudi Arabia diverts about 877,000 b/d - or 11 per cent of its current oil output - to its own domestic electricity supplies.”537

As Gulf spill cost passes $3bn, BP hands a $400m bill to Anadarka and Mitsui , its partners on the Macondo well. Around 44,500 personnel, more than 6,500 vessels and 113 aircraft are involved in the clean up.

523 http://www.guardian.co.uk/environment/2010/jun/30/climate-change-carbon-emissions-targets524 http://www.guardian.co.uk/business/2010/jul/01/european-banks-calm-fears-funding-crisis525 http://www.guardian.co.uk/business/2010/jul/01/bp-china-oil-spill526 http://www.guardian.co.uk/environment/2010/jul/01/eigg-island-renewable-energy 527 http://www.bloomberg.com/news/2010-07-01/how-to-make-an-american-job-before-it-s-too-late-andy-grove.html528 http://www.ft.com/cms/s/0/72ea44d4-861d-11df-bc22-00144feabdc0.html529 http://www.guardian.co.uk/business/2010/jul/02/bp-cooperative-group-oil-spill530 http://www.ft.com/cms/s/0/6d0daae8-8572-11df-aa2e-00144feabdc0.html531 http://www.businessweek.com/news/2010-07-02/edf-s-french-nuclear-spending-plans-face-scrutiny-update1-.html532 http://www.theoildrum.com/node/6649533 http://www.zawya.com/Story.cfm/sidZW20100704000064/Saudi%20King:%20Halt%20To%20Oil%20Exploration%20To%20Save%20Wealth534 http://www.guardian.co.uk/environment/2010/jul/04/bp-oil-spill-relief-well535 http://www.guardian.co.uk/business/2010/jul/04/pension-funds-corporate-governance-investors536 http://www.guardian.co.uk/business/2010/jul/04/obama-hands-solar-firms-2bn

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Two caps are now in place, and together have trapped over half a million barrels to date. A floating riser system, designed for rapid connection and disconnection appropriate for the hurricane system, should be in place within a week.538

China and India offset the developed world’s recession-induced fall in CO2 emissions last year. FT: “The Netherlands Environmental Assessment Agency (PBL), a national policy institute, estimates that total CO2 emissions from fossil fuels and cement in the OECD and Russia collectively fell by 7 per cent last year.   China and India’s emissions rose by 9 per cent and 6 per cent, respectively. The result was that total world emissions growth was flat between 2008 and 2009 …the first time since 1992 that CO2 emissions haven’t increased.”539 “Public speculation rather public profligacy is the real villain of Labour years,” Philip Inman argues in the Guardian. “Borrowing in 2009 reached £159.2bn, which was equivalent to 11.4% of national income. Added to all the other borrowing down the years the UK's accumulated mortgage was £950.4bn, equivalent to 68.1% of national income. Borrowing projections (without Osborne's extra spending cull) showed the debt graph heading for 90% of national income. It all sounds like the nation is drowning under the weight of debt. And for some doomsayers it is.” “….Consumer spending grew as property wealth sustained confidence. With property values in decline from the autumn of 2007, consumption dived. Alistair Darling borrowed to fill the gap, not to fund welfare or departmental budgets – they had risen, but not uncontrollably.” “….It is in the consumption and asset price numbers that politicians should look for the roots of the crisis. It is in the over-spending by private households that we find the causes of the crisis much more than in the overspending of governments.” “….Vince Cable, when Liberal Democrat treasury spokesman, was one of the most vociferous critics of Labour's laissez-faire policies regarding private consumption. From 2003 onwards he called for higher taxes and a limit on lending to curtail ballooning property prices. Yet now in his role as secretary of state for business innovation and skills, he must nod while George Osborne blames spending by the previous Labour government for the country's ills rather than the British obsession with property. A glance at the budget projections shows that Cable and Osborne expect the property boom to be back within a couple of years and providing even more tax receipts than before. In 2015/16 stamp duty taxes will fill the exchequer with £17.7bn, with the majority from duty on property sales. A £10bn net boost to the exchequer will mark a return to a consumption-led boom and a return to all the same old problems.”540

6.7.10. Deepwater oil discoveries are increasingly important to the global and U.S. reserve base, according to research compiled by IHS CERA. The volume of new oil reserves coming from deepwater has been rising since the 1990s, and accelerating in recent years. The figures show that from 2006 to 2009, annual world deepwater discoveries in over 600 feet of water accounted for 42 percent to 54 percent of all discoveries onshore and offshore. In 2008, deepwater discoveries added 13.7 billion BOE to global reserves. Global deepwater production capacity in 2,000 feet (610 m) of water or greater has more than tripled since 2000, rising from 1.5 million b/d in 2000 to more than 5 million b/d in 2009, i.e. global deepwater production also exceeds that of any country except Saudi Arabia, Russia and the U.S. Pre-Macondo projections showed deepwater production capacity had the potential to rise to 10 million b/d by 2015. Crucially, the average size of deepwater discoveries significantly exceeds new onshore discoveries: about 150 million BOE for 660 feet+ wells in 2009, compared with the onshore average of just 25 million barrels. U.S. Gulf production accounting for 30 percent of U.S. crude oil production in 2009, or 1.6 million b/d out of 5.3 million b/d. This 2.6 million b/d of Gulf supply was the result of a 33 percent, or 399,000 b/d, increase in output from 2008, which has contributed to a drop in U.S oil imports.541

Spain wants to double its subsidies for domestic coal-fired power. The EU is giving it trouble in doing so, under competition rules. Umpeloyment is running at 20% and PM Zapatero is from the coal-mining district, Leon. The FT observes that governments everwhere are doing this kind of thing. Under pressure, domestic jobs come before the environment, or targets set.542

UK nuclear waste store plan will be dependent on no government cuts, the Nuclear Decommissioning Authority syas. Alun Ellis, repository project director at the NDA: “It would mean going into hibernation – keeping our core capabilities but not delivering anything.” Ft: “The NDA hopes that the construction of deep underground caverns can be started in 2025, with the first consignments of waste to be buried there in 2040. But a site for the facility, which will need to store about 400,000 to 500,000 cubic metres of waste – enough to fill the Albert Hall five times – has yet to be found. The only area to have expressed an interest is west Cumbria.” The waste from a new generation of nuclear power plants would add about 10 per cent to the existing waste pile, the NDA says.543

7.7.10. BP’s relief well is only 300 feet from its target, having traversed 17,710 feet of water and rock. FT: “If the relief wells fail, the company may be doomed.” The target well is only 7 inches across: a salad plate under and mile of water and 2.5 miles of rock. Peter Clark of the University of Alabama: “While hitting the well with the relief well is difficult, they have more than one chance. Technology is available to accurately locate the position bit, so the chances of success are high.”544

AP investigation shows Gulf is packed with abandoned oil wells: “an environmental minefield” ignored for decades, along with environmental safety. Of the 27,000 abandoned wells, more than 600 belonged to BP. A particularly worrying category involved 3,500 classified as “temporarily abandoned”, for which the shut-off rules are no as strict as for completely abandoned wells. More than 1,000 have remained unfinished for more than a decade, despite a requirement to reuse or permanently plug such wells within a year. State officials estimate tens of thousands are badly sealed, and there is very little investigation of the sites. Guardian : “ The Bureau of Ocean Energy Management, Regulation and Enforcement (formerly the US Minerals Management Service), which is charged with keeping an eye on offshore drilling, has little power to deal with abandoned wells. It merely requests paperwork to prove that a well has been capped and, unlike regulators in states such as California, it does not typically inspect the job.”545

537 http://blogs.ft.com/energy-source/2010/07/05/saudi-arabias-real-energy-problem/538 http://www.guardian.co.uk/business/2010/jul/05/bp-asks-oil-spill-partners-for-400m-dollars 539 http://blogs.ft.com/energy-source/2010/07/05/china-and-india-the-co2-culprits-of-2009/540 http://www.guardian.co.uk/business/2010/jul/05/government-borrowing-public-sector-cuts541 http://www.rigzone.com/news/article.asp?a_id=95542&hmpn=1542 http://blogs.ft.com/energy-source/2010/07/06/spain-wants-it-both-ways-on-energy-like-everyone-else/543 http://www.ft.com/cms/s/0/00b27dbc-891c-11df-8ecd-00144feab49a.html544 http://www.ft.com/cms/s/0/f6be6d0a-8a03-11df-bd30-00144feab49a.html545 http://www.guardian.co.uk/business/2010/jul/07/abandoned-oil-wells-gulf-mexico

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Third review of UEA “climategate” scientists concludes their “rigour and honesty” are not in doubt and the IPCC conclusions are not impacted. This one is led by Sir Muir Wood, a senior civil servant. They could have been more open about the work, the report also concludes.546

546 http://www.guardian.co.uk/environment/2010/jul/07/climategate-review-clears-scientists-dishonesty

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