Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20
Gold Gann Angle Update - 10th Jan 20
Gold In Rally Mode Suggests Commitment of Traders (COT) Data - 10th Jan 20
Disney Could Mount Its Biggest Rally in 2020 - 10th Jan 20
How on Earth Can Gold Decline During the U.S. – Iran Crisis? - 10th Jan 20
Getting Your HR Budget in Line - 10th Jan 20
The Fed Protects Gamblers at the Expense of the Economy - 9th Jan 20
Last Chance to Get Microsoft Windows 10 for FREE! - 9th Jan 20
The Stock Market is the Opiate of the Masses - 9th Jan 20
Is The Energy Sector Setting Up Another Great Entry? - 9th Jan 20
The Fed Is Creating a Monster Bubble - 9th Jan 20
If History Repeats, Video Game Stocks Could Soar 600%+ - 9th Jan 20
What to Know Before Buying a Land Rover Discovery Sport in 2020 - 8th Jan 20
Stock Market Forecast 2020 Trend Analysis - 8th Jan 20
Gold Price at Resistance - 8th Jan 20
The Fed Has Quietly Started QE4 - 8th Jan 20
NASDAQ Set to Fall 1000pts Early 2020, and What it Means for Gold Price - 8th Jan 20
Gold 2020 - Financial Analysts and Major Financial Institutions Outlook - 8th Jan 20
Stock Market Trend Review - 8th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

European Natural Gas Industry's Green Rage

Commodities / Natural Gas May 16, 2013 - 05:43 PM GMT

By: Andrew_McKillop

Commodities

DYING IN GREEN TAPE
BusinessEurope president Jürgen Thumann speaking to EurActiv at the European Business Summit which opened 15 May, squarely blamed the European Commission for "the negative effects of green tape”, also saying EU regulations create ‘unnecessary burdensome legislative instruments in climate, energy and environment policies’. One of these is the so-called Third energy package, which is supposed to encourage Europe's gas importers, producers, pipeline transporters, distributors and users, because gas is cleaner-burning, lower emission and therefore preferable to coal for power generation. Gas-fired power is also the fastest-response, best backup power choice to run with renewable power.


 On the ground and in the real world however, the European gas sector is in a disastrous state and without policies to boost demand and more investment in gas supply, the power production of some EU countries could be at risk, with brownouts or blackouts at any time, top industry officials say.
Europe's gas sector has been mainly hit by low growth in demand for electricity, the renewable energy boom, the collapse of ETS carbon permit prices, and competition from coal-fired plants, Jean-Francois Cirelli, CEO of GDF Suez SA and president of Eurogas, which represents the industry in Europe said in an interview with Reuters on 15 May.

Cirelli said EU gas consumption dropped 2% in 2012 after falling 10% in 2011. Half of the decrease was caused by lower gas consumption by power plants, and the other half was attributed to the structural decline in final gas demand brought about by Europe's energy efficiency and fossil fuel substitution policies. Some EU countries, in the past 12 months have recorded declines in gas consumption, mainly due to reduced gas-fired power production, running at double digit rates.

He was bluntly honest about the outlook, saying "The state of affairs in the gas sector in Europe is disastrous". As Vice-chairman of French energy company GDF Suez, one of Europe's major gas-fired power producers, he is highly aware of the combined knockout impact of Europe's "green policies", the collapse of ETS prices, and the stubborn refusal of Gazprom and other major suppliers to stop "oil indexing" gas prices for exports to Europe, which cover around 60% of consumption. Oil indexing gas prices results in European prices running at up to 4 times current US domestic gas prices.

GREEN POLICY SHAMBLES
Natural gas supplies about 25% of Europe's primary energy consumption, and gas is the main fuel for heating of 200 million citizens, some 40% of the total population of Europe. By comparison, oil supplies about 34% of Europe's primary energy.

Gas for power production which in some countries covers more than 20% of electric power supply, and this end-use of gas expanded rapidly in some cases, as in Germany through 2005-2010 while ETS carbon permit prices remained high (prices have fallen about 90% from their peak in 2006), gas is simply no longer competitive in Europe for power production. Because of the influx of cheap American coal no longer needed in the US due to US utilities massively increasing their gas-burn, and rock-bottom CO2 permit prices, power companies in Europe which still use, or are forced to use gas-fired plants can lose money on every single kWh of power they produce from gas.

One example is Germany's biggest utility, E.On, which has about 19% of its total power capacity running on gas - and losing money on every plant. Earnings from E.On gas-fired plants dropped by 94% in the year April 2012-April 2013, E.On's CEO Johannes Teyssen said last week.

Cirelli's company, GDF Suez, has mothballed or closed 7.3 GW (7300 MW) of gas-fired power generating capacity since late 2009 and is set to take another 1.3 GW offline, a total equivalent to the effective operating capacity of two nuclear power plants. Countries with the sharpest drop in gas-fired power include the UK where, Cirelli said in his Reuters interview, the share of gas in the generation mix fell by 15% in one year, from 40% to 25%, mainly replaced by coal, resulting in a sizeable increase in total CO2 emissions of the UK. Coal-fired power production increased from 30% of total supply, to 42% in the UK through 2011-2012.

While the US has forged ahead with the "fracking" revolution, ignoring the claims of ecology and environmentalist groups, and the anti-global warming lobby, cheap shale gas is displacing coal in US power generation at double digit annual rates. US coal exports to Europe rose 23% in 2012, to more than as  international coal prices were driven lower by declining rates of coal consumption growth in China, India and other Emerging economies. In some EU countries, the amount of electricity generated from coal is rising at annualised rates running as high as 50%, Cirelli said.

EUROPE IMPORTS COAL
Europe's "green policy set", enshrined in the climate-energy package voted by the European Parliament in December 2008, makes almost no mention of coal - due to King Coal being deposed, in policymakers imaginations, and replaced in Europe decades ago. Today, European imports of cheap coal - about 175 million tons a year supplied at typical prices of under $20 per barrel equivalent of oil energy, including transport - are running at the highest-ever rates. The increase rate of European coal imports is higher than coal import growth in any other region of the world. For Eurogas members like Cirelli of GDF Suez, these fast-growing coal imports "make a mockery of the green EU policy".

"We reject shale gas and we import coal!" he said. Adding yet more mockery, Europe will soon be importing shale gas from the US, in a deal brokered by Exxon Mobil and Qatar Petroleum, the small but arrogant gas-rich emirate which racks European users by oil-indexing its gas export prices!

Europe will therefore be able to import and use shale gas, and hand over profits to a renowned price gouger for current gas supplies to Europe - but is "forbidden" to produce shale gas itself, and liberate itself itself from dependence on greedy price-gougers.

Eurogas member CEOs and executives are especially critical about the European Parliament, the Commission and government leaders in Europe, abandoning all effective support to the ETS CO2 market, resulting in coal-fired power producers being able to buy "bargain basement" permits and operate their facilities on bargain basement priced coal imports. They say that Europe's main climate policy tool, the CO2 market, has now reached a state of "suspended animation" following the European Parliament's April 16 rejection of support for permit prices.

Pulling the European gas industry out of its nosedive is now urgent, the industry says, and this alone needs a major rethink of current "green policy" for Europe.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2013 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

Andrew McKillop Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules