Lemon  

The SMH has an article on new polls showing most Australian's want substantial supplies of renewable energy by 2020.

Nine out of ten Australians believe a quarter of their electricity should come from renewable energy by 2020, a survey has found. According to Newspoll figures released by the Australian Conservation Foundation, close to 90 per cent of the 1,200 adults contacted for the phone poll over the first weekend in September, agreed that Australia should aim to produce 25 per cent of the country's electricity from renewable sources by 2020.

The strongest support for that target was from people in the 35-49 age group (94 per cent). Ninety three per cent of respondents living outside the major cities agreed Australia should aim to become a world leader in renewable energy.

ACF executive director Don Henry said Australia was well endowed with renewable energy resources, like sun, wind and geothermal hot rocks. "An overwhelming majority of Australians want our political leaders to do more to get our electricity from renewable energy so we get on with the job of cutting greenhouse pollution and tackling climate change," he said.

The NSW state carbon trading scheme is in disarray, with too many certificates making it onto the market courtesy of energy efficiency schemes like mass handouts of compact fluorescent light globes.

A NSW carbon trading scheme is on the verge of collapse, green groups and non-government politicians say. Under the Greenhouse Gas Abatement Scheme, companies get credits by cutting greenhouse gas emissions and sell them to companies needing to offset their emissions. So the makers of energy saving devices such as special light bulbs or shower heads earn the credits and get income from selling them to polluters such as power stations trying to reach benchmark reduction targets.

But NSW Greens MP John Kaye says the NSW market has been oversupplied by the government with cheap certificates, slashing the price on carbon. "It was only a matter of time until the price collapsed and the scheme became meaningless," he said in a statement. The NSW price per tonne of emitted carbon has fallen from $11 to $6, making it uneconomical for companies earning the credits to trade them.

The NSW state government is also looking to privatise its energy generation assets (basically a large group of coal fired power stations that generate a significant proportion of the national power supply). The unions aren't happy about the idea. This might actually be a good move if they can replicate the Victorian experience and/or a carbon tax is introduced in a few years time.

Some of these generators are gagging to build new coal fired power stations - the reaction to drought induced water supply problems limiting generation at the big inland plants is apparently to build "dry cooled" plants that require far less water than the current designs, but are less efficient at generating power - so we get more greenhouse emissions per megawatt.

Short sightedness knows no bounds in the lucky country.

On the subject of short, the SMH notes that Premier Lemon (a man who seems determined to imitate the Rodent in more ways than just lack of height) is ignoring some obvious energy efficiency measures that would delay the need to build any new generation facilities, and is also a (probably willing) victim of the baseload fallacy. At current electricity prices I'd expect every renewable energy form to be economic, and there is plenty of free sun and wind out there just waiting to be harvested.

NSW could sidestep the construction of a coal-fired power station, saving money and millions of tonnes of greenhouse gas emissions, by banning the installation of electric off-peak hot water systems in houses, according to an analysis of the state's electricity needs. Replacing energy-intensive off-peak electric hot water systems with gas and solar hot water over three years could even cut demand enough to retire some existing coal-fired power plants, according to the work done by the NSW Greens.

The analysis is supported by a submission to the Owen Inquiry into the state's electricity by the National Electricity Market Management Co, which said a forecast 327 megawatts of extra generation capacity needed by the summer of 2010-11 could be supplied by reducing demand. Phasing out electric off-peak water heating was a cost-effective alternative to coal-fired power stations, said the NSW Greens MP John Kaye. "Providing interest-free loans to consumers to cover the increased purchase and installation costs would make the transition painless for most households," Dr Kaye said.

The push to ban energy-intensive electric hot water systems, which use almost one-third of households' energy, is backed by the federal ALP. Labor said last month that if it won power by 2010 electric hot water systems would not be installed in new homes. By 2012 they would be replaced by solar, gas or heat-pump systems in existing homes.

The NSW Government has no plans to ban off-peak units. But a spokeswoman for the Environment Minister, Phil Koperberg, said it would work with the Federal Government on any future phase-out. The spokeswoman also defended the State Government's commitment to energy efficiency, citing its $310 million Climate Change Fund, a state emissions trading scheme and rebates for gas and solar hot water.

But on Friday the Premier, Morris Iemma, scoffed at supporters of demand management and energy efficiency, and further confirmed suspicions he was keen to build a coal-fired power station. "Demand management won't get us there, renewables are a help, a big help, but are insufficient for our baseload needs and our fuel sources," he said. "If you want baseload electricity … there are two sources: coal and gas."

The Greens' analysis says off-peak electric hot water units need about 2880 megawatts of overnight generation capacity, about the same amount of electricity the Bayswater power station in the Hunter Valley uses. ...

A senior lecturer at the Institute of Environmental Studies at UNSW, Mark Diesendorf, said by removing off-peak electric hot water, encouraging people to buy solar hot water and supplying more gas-fired power during the day, the state could significantly cut electricity demand and greenhouse gases. "Half of NSW households are on off-peak electric hot water," Dr Diesendorf said. "If we change all of those to solar or gas-boosted solar hot water, or even to straight gas, that would make a huge difference. Over a couple of years, we could shift people away from off-peak. "We could retire a lot of coal-fired power generation if we wanted to. It is just a matter of political will."

Dan at The Daily Reckoning notes that the most significant aspect of PetroChina's deal to buy LNG from the Browse field is that it marks the first time the Chinese have agreed to pay market rate for Australian LNG.

We missed an important clarification about Woodside Petroleum’s US$45 billion deal with PetroChina. The company said the Chinese will pay the going market rate for the LNG under the 20-year deal. That’s not a trivial detail. Here’s why…

In 2002, when Woodside signed an AU$25 billion deal with the China National Offshore Oil Company (CNOOC) for gas from the North West Shelf, the terms of the deal did not allow the North West Shelf partners to charge a market price for gas.

In 2002, West Texas Intermediate crude oil traded for as little as US$18.02 a barrel. That’s not a typo. Oil has gone up 325% and US$58 since Woodside made its first big deal with China. This structrual repricing of oil for the world economy—partly geopolitical and partly geological, reflecting a producion peak of cheap oil at around 85 million barrels per day —hadn’t taken place when Woodside made its first China deal.

Its first big energy deal didn’t allow Woodside to profit from rising LNG prices. No one expected oil to go up 325% and LNG to rise with it. Now that the price of energy is much higher (thanks in no small part to Chinese demand) Woodside stands to profit more from future deals with China. Why?

Thinking back on the generous terms of their 2002 deal, Chinese energy firms have been reluctant to accept market pricing in their long-term deals with Woodside. That changed last week. China will pay market prices for Woodside’s gas going forward.

The DR also has a report on Hu Jintao explaining why China is more important than the US to Australia". As a trading partner this is true, but foreign trade isn't the only measure of importance I might add - the US is still salvageable if a number of important reforms are made.

Let’s start off the week with a potential energy alliance between Russian giant Gazprom and an LNG trinity of Woodside (ASX:WPL), BHP (ASX:BHP), and Santos (ASX:STO). “OAO Gazprom, Russia’s natural-gas export monopoly, agreed to start negotiations with energy companies in Australia on potential cooperation in production and supply of liquefied natural gas,” reports Bloomberg. The Russians are coming, along with the Chinese. Is there enough LNG, iron ore and coal in Australia to satisfy this massive demand?

If the S&P ASX/200 dives today in sympathy with Friday’s wreteched jobs report from America, remember what Hu Jintao told a small crowd in the Grand Ballroom of the Sofitel Wentworth last week in Sydney. “Australia has rich resources, a developed economy and advanced technologies, whereas China has a large population, a huge market, and tremendous potential for development.” In one quiet sentence, Hu perfectly stated why China matters far more to Australia’s economy than America. He also reminds us that to focus on the negative housing-led recession that will soon hit America is to miss the much larger historical story—the emergence of China and its 1.2 billion people into a market economy that eats up resources.

The Guardian has an excerpt from Naomi Klein's new book on Disaster Capitalism, looking at the proposed Iraqi oil law. That would be the law the Zalmay Khalilzad says is vital (for US oil companies). The New York Times reports this "crucial" oil compromise is falling apart. I doubt any Iraqi government will willingly pass this into law (except possibly at the point of a gun).

US chief envoy Paul Bremer was sent to Iraq to build a corporate utopia; instead, Iraq became a ghoulish dystopia where going to a simple business meeting could get you lynched, burned alive or beheaded. By May 2007, more than 900 contractors had been reported killed and "more than 12,000 wounded in battle or injured on the job", according to a New York Times analysis. The investors Bremer had done so much to attract had never showed up - neither HSBC, nor Procter & Gamble, which put its joint venture on hold, as did General Motors. New Bridge Strategies, the company that had gushed about how "a Wal-Mart could take over the country", conceded that "McDonald's is not opening any time soon". Bechtel's reconstruction contracts did not roll easily into long-term contracts to run the water and electricity systems. And by late 2006, the privatised reconstruction efforts that were at the centre of the "anti-Marshall Plan" [by which western corporations would remake Iraq in their own image rather than help Iraqis rebuild their own economy, as the US did in Germany after the second world war], had almost all been abandoned. And some rather dramatic policy reversals were in evidence.

Stuart Bowen, US special inspector general for the reconstruction of Iraq, reported that in the few cases where contracts were awarded directly to Iraqi firms, "it was more efficient and cheaper. And it has energised the economy because it puts the Iraqis to work". It turns out that funding Iraqis to rebuild their own country is more efficient than hiring lumbering multinationals who don't know the country or the language, surround themselves with $900- a-day mercenaries and spend as much as 55% of their contract budgets on overhead. Jon C Bowersox, who worked as the health adviser at the US embassy in Baghdad, offered this radical observation: the problem with Iraq's reconstruction, he said, was its desire to build everything from scratch. "We could have gone in and done low-cost rehabs, and not tried to transform their health-care system in two years."

An even more dramatic about-turn came from the Pentagon. In December 2006, it announced a new project to get Iraq's state-owned factories up and running - the same ones that Bremer had refused to supply with emergency generators because they were Stalinist throwbacks. Now the Pentagon realised that instead of buying cement and machine parts from Jordan and Kuwait, it could be purchasing them from languishing Iraqi factories, putting tens of thousands to work and sending revenue to surrounding communities. Paul Brinkley, US deputy under-secretary of defense for business transformation in Iraq, said, "We've looked at some of these factories more closely and found they aren't quite the rundown Soviet-era enterprises we thought they were", though he did admit that some of his colleagues had begun calling him a Stalinist.

Lieutenant General Peter W Chiarelli, the top US field commander in Iraq, explained that "we need to put the angry young men to work .... A relatively small decrease in unemployment would have a very serious effect on the level of sectarian killing going on." He couldn't help adding, "I find it unbelievable after four years that we haven't come to that realisation ...To me, it's huge. It's as important as just about any other part of the campaign plan."

Do these about-turns signal the death of disaster capitalism? Hardly. By the time US officials came to the realisation that they didn't need to rebuild a shiny new country from scratch, that it was more important to provide Iraqis with jobs and for their industry to share in the billions raised for reconstruction, the money that would have financed such an undertaking had already been spent.

Meanwhile, in the midst of the wave of neo-Keynesian epiphanies, Iraq was hit with the boldest attempt at crisis exploitation yet. In December 2006, the bipartisan Iraq Study Group fronted by James Baker issued its long-awaited report. It called for the US to "assist Iraqi leaders to reorganise the national oil industry as a commercial enterprise" and to "encourage investment in Iraq's oil sector by the international community and by international energy companies."

Most of the Iraq Study Group's recommendations were ignored by the White House, but not this one: the Bush administration immediately pushed ahead by helping to draft a radical new oil law for Iraq, which would allow companies such as Shell and BP to sign 30-year contracts in which they could keep a large share of Iraq's oil profits, amounting to tens or even hundreds of billions of dollars - unheard of in countries with as much easily accessible oil as Iraq, and a sentence to perpetual poverty in a country where 95% of government revenues come from oil. This was a proposal so wildly unpopular that even Bremer had not dared make it in the first year of occupation. Yet it was coming up now, thanks to deepening chaos. Explaining why it was justified for such a large percentage of the profits to leave Iraq, the oil companies cited the security risks. In other words, it was the disaster that made the proposed radical law possible.

Washington's timing was extremely revealing. At the point when the law was pushed forward, Iraq was facing its most profound crisis to date: the country was being torn apart by sectarian conflict with an average of 1,000 Iraqis killed every week. Saddam Hussein had just been put to death in a depraved and provocative episode. Simultaneously, Bush was unleashing his "surge" of troops in Iraq, operating with "less restricted" rules of engagement. Iraq in this period was far too volatile for the oil giants to make major investments, so there was no pressing need for a new law - except to use the chaos to bypass a public debate on the most contentious issue facing the country. Many elected Iraqi legislators said they had no idea that a new law was even being drafted, and had certainly not been included in shaping its outcome. Greg Muttitt, a researcher with the oil-watch group Platform, reported: "I was recently at a meeting of Iraqi MPs and asked them how many of them had seen the law. Out of 20, only one MP had seen it." According to Muttitt, if the law was passed, Iraqis "would lose out massively because they don't have the capacity at the moment to strike a good deal".

Iraq's main labour unions declared that "the privatisation of oil is a red line that may not be crossed" and, in a joint statement, condemned the law as an attempt to seize Iraq's "energy resources at a time when the Iraqi people are seeking to determine their own future while still under conditions of occupation". The law that was finally adopted by Iraq's cabinet in February 2007 was even worse than anticipated: it placed no limits on the amount of profits that foreign companies can take from the country and placed no specific requirements about how much or little foreign investors would partner with Iraqi companies or hire Iraqis to work in the oil fields.

Most brazenly, it excluded Iraq's elected parliamentarians from having any say in the terms for future oil contracts. Instead, it created a new body, the Federal Oil and Gas Council, which, according to the New York Times, would be advised by "a panel of oil experts from inside and outside Iraq". This unelected body, advised by unspecified foreigners, would have ultimate decision-making power on all oil matters, with the full authority to decide which contracts Iraq did and did not sign. In effect, the law called for Iraq's publicly owned oil reserves, the country's main source of revenues, to be exempted from democratic control and run instead by a powerful, wealthy oil dictatorship, which would exist alongside Iraq's broken and ineffective government.

It is hard to overstate the disgrace of this attempted resource grab. Iraq's oil profits are the country's only hope of financing its own reconstruction when some semblance of peace returns. To lay claim to that future wealth in a moment of national disintegration was disaster capitalism at its most shameless.

Links:

* Huffington Post - Oil Hits $80 a Barrel for First Time.
* Energy Tech Stocks - Matt Simmons: Force All Oil Producers to Give Transparent Data
* The Australian - Woodside may sell gas to Taiwanese. The great LNG rush continues.
* SMH - Oil Search ceases production in Yemen
* SMH - Greenpower launches $10M float. Funny name for a coal seam methane company.
* The Australian - Santos finds interest in Gladstone LNG. If this ever happens I'll start to become concerned about gas supplies for the east coast in the medium term.
* The Australian - State pushes Santos for deal
* The Australian - Gorgon to double in size, says Chevron chief
* The Australian - De Graaf hot on rocking uranium
* The Canadian Press - Mexico gas line explosions force major factories to close down
* Financial Times Deutschland - Oil's golden years stifled innovation in Norway. Destined to suffer the Dutch disease along with us (though we have a radioactive mound of uranium as a buffer to help us stifle innovation for a couple of extra decades).
* San Francisco Chronicle - Federal judge gives boost to states on limiting vehicle emissions
* AP - Gas Costs Spark High-Speed Rail Interest
* The Agonist - 911: A Date Which Will Live In Infamy
* Salon - How Secure Are you ?
* SMH - Chaser's War scores 2.2m viewers
* ABC - Chaser video
* SMH - ASIO ban on terrorism expert
* SMH - FOI: After nine years, it must be a well-written manual
* Miami Herald - Obama: Pull out troops by end of '08
* Crooks And Liars - Rep. Shays has a rare Republican moment of non-talking point candor. When asked by a caller why we are still in Iraq, Shays admits it's because we just can't let any other country control that oil
* Crooks And Liars - Jon Stewart Tears Apart Petraeus’ Dog and Pony Show
* dmeissler.com - Ron Paul Is A Flawed Candidate. But the best the Republicans have to offer.
* The Guardian - 9/11 - the big cover-up?