Joint Science Academies' Statement: Energy Sustainability and Security g8

The g8 Joint science academies have released the outline for the global situation and the security of the energy complex for sustainability, innovation,and development.As we have suggested there are a number of interesting developments ,that will see a mix of new technology,efficiency and evolution of existing technology.

Broad international consensus recognizes three principal, inter-related components of sustainable development: economic prosperity, social development, and environmental protection. Sustainable and reliable supply of energy is one of the major conditions for achieving these three goals ,for all countries of the world: if energy sustainability and security fail, the primary human development goals cannot be achieved.

Last year we addressed the major challenges of climate change. These challenges are predominantly related to energy systems and use. We therefore welcome the opportunity to address energy sustainability and security on the occasion of the 2006 G8 Summit - and we expect to continue our focus on these critical issues in future years. The InterAcademy Council, established by the Academies of the world, is now engaged in an in- depth examination of this energy technology transition challenge, to be completed within a year.

Problems and Challenges of Energy Sustainability and Security

It has become increasingly clear that there are very serious difficulties related to sustainability and security of energy. These include:
- Major global and regional impacts on the environment, climate change and health from an extrapolation of current energy sources and systems;
- A clear projection that demand for affordable and clean energy sources will increasingly grow, requiring investments to create an efficient system of global energy supply;
- Tensions, especially in energy supplies for transport systems;
- Increasingly poor geographical correlations between energy sources and users;
- Inefficient and wasteful use of energy resources;
- Sharply rising and fluctuating oil and gas prices;
- Providing fuels and electricity to a significant portion of the world 's population to help improve their quality of life;
- Impacts of natural disasters, systems breakdowns, and human acts on energy infrastructure.

Resolving Energy sustainability and Security Challenges

Providing for global energy sustainability and security will require many vigorous actions at national levels, and considerable international cooperation. These actions and cooperative steps will need to be based on wide- spread public support, especially in exploring venues for increased efficiency of energy use. Secondly, it will be necessary to develop and deploy new sources and systems for energy supply, including clean use of coal and unconventional fossil resources, advanced nuclear systems, and renewable energy. Diversification of engine fuels, increased use of low-emissions technologies in personal transport, and greater emphasis in deployment of urban mass transit would introduce much-needed flexibility and economy in a rapidly urbanizing world.

The necessary changes and transitions in energy systems and paradigms will not be possible without achievement of many challenging scientific, technical and economic objectives, and will require the investment of enormous resources in a sustained way over decades. They will also require major openness and transfer of knowledge, technology and capital.

Achieving an acceptable level of global energy sustainability and security will therefore require sustained governmental focus and international cooperation on identifying strategic energy policy priorities, and the sustained implementation of corresponding policies, actions, and national investments. It will also be critical to involve the public and industry leadership in setting and achieving the key priorities, if we are to collectively deal with threats to energy sustainability and security in time to avoid major economic, environmental, and political damage.

The common strategic priorities should include:

- Promotion of energy efficiency, including improving the energy efficiency and economic effectiveness of the energy system in a holistic way;
- Diversification of energy supply and demand, as diversity of energy mix, sources, markets, transportation routes and means of transportation decrease vulnerability related to single or predominant sources and systems;
- Development of global energy infrastructure with attention to its resilience;
- Promotion of clean and affordable energy sources and systems, including advanced nuclear technologies and renewable systems;
- Decentralization of energy production through development of local energy resources and systems;
- Promotion of cost-effective economic instruments that can help to reduce the emission of greenhouse gases;
- Addressing the urgent human needs of approximately a third of the world population which does not have access to modern energy

Innovation, Research, Development and Deployment

We recognize the special responsibility of the science and engineering community to help implement transitions to sustainable and secure energy systems. We take special note of the areas in which international cooperation, substantial research and development, and innovation, will be critical. Important examples of such areas are:
- Energy efficiency for buildings, devices, motors, transportation systems and in the energy sector itself, which has a great capacity for boosting energy efficiency;
- Systems analysis to find efficient strategies for various conditions; - Clean coal systems, including potential for sequestering of CO2;
- Advanced nuclear systems, addressing the problems of safety, waste, and non-proliferation;
- Pollution control;
- Unconventional fossil fuels and related environmental protection;
- Biomass production and conversion, gas-to-liquid conversion;
- Renewable energy sources for the long-term, such as geothermal, wind, tidal and solar, and energy storage technologies;
- Small decentralized systems addressing needs of poor, rural, and isolated systems, and examination of wider application of such systems.

Conclusions

We call on all countries of the world to cooperate in identifying common strategic priorities for sustainable and secure energy systems, and in implementing actions toward those strategic priorities. G8 countries bear a special responsibility for the current high level of energy consumption, and should play a leading role in assuring global energy sustainability and security.

We call on world leaders, especially those meeting at the G8 Summit in July 2006, to:
- Articulate the reality and urgency of global energy security concerns;
- Plan for the massive infrastructure investments, and lead times required for a transition to clean, affordable and sustainable energy systems;
- Itensify cooperation with developing countries to build their domestic capacities to use existing and innovative energy systems and technologies, including transfer of technologies;
- Promote by appropriate policies and economic instruments the development and implementation of cost-competitive, environmentally beneficial, and market acceptable clean fossil, nuclear, and renewable technologies;
- Ensure, in cooperation with industry, that technologies are developed and implemented and actions taken to protect energy infrastructures from natural disasters, technological failures, and human actions;
- Address the serious inadequacy of R&D funding and provide incentives to accelerate advanced energy-related R&D, also in partnership with private companies;
- Implement education programs to increase public understanding of energy challenges, and to provide for energy-related expertise and engineering capabilities;
- Focus governmental research and technology efforts on energy efficiency, non-conventional hydrocarbons and clean coal with CO2 sequestration, innovative nuclear power, distributed power systems, renewable energy sources, biomass production, biomass and gas conversion for fuels.
Eduardo Krieger - Academia Brasileira de Ciencias, Brazil
Patricia Demers - Royal Society of Canada, Canada
Yongxiang Lu - Chinese Academy of Sciences, China
Edouard Brezin - Academie des Sciences, France
Volker ter Muelen - Deutsche Akademie der Naturforscher Leopoldina, GermanyR.A. Mashelkar - Indian National Science Academy, India
Giovanni Conso - Accademia Nazionale dei Lincei, Italy
Kiyoshi Kurokawa - Science Council of Japan, Japan
Yuri Osipov - Russian Academy of Sciences, Russia
Robin Crewe - Academy of Science of South Africa, South Africa
Martin Rees - Royal Society, United Kingdom
Ralph Cicerone - National Academy of Sciences, United States of America

Sea levels ,Antarctic ice and the natural balance.

One of the main scary tales used by the proponents of AGW is the raising of sealevels and coastal and regional flooding.Indeed this was a central plank of the NZ climate change conference earlier this year.Mostly model extrapolation was used that even disagrees with the IPCC estimated levels of 10-15 cm per century.

This week with the Al Gore science fiction movie getting discussion in the world press there are a number of inconvenient scientific papers and observations that suggest that hollywood and fact are some distance from the intellectual capacity of the proponents and MSM.

Arctic sea level has been falling by a little over 2mm a year - a movement that sets the region against the global trend of rising waters. A Dutch-UK team made the discovery after analysing radar altimetry data gathered by Europe's ERS-2 satellite.
It is well known that the world's oceans do not share a uniform height; but even so, the scientists are somewhat puzzled by their results.

Global sea level is expected to keep on climbing as the Earth's climate warms.

Andrey Proshutinsky from the Woods Hole Oceanographic Institution (WHOI), US, commented that it was vitally important to consider sea level using a range of scientific instruments - and to place significance only on long-term data sets.
His analysis of Russian tide gauges has also hinted at a sea-level fall during the 1990s. He said this seemed to fit with the phases of the so-called Arctic Oscillation, a seesaw pattern of change in atmospheric pressure over the polar region and mid latitudes.

"This is something like decadal variability. Sea level goes up and down, up and down - but in general, it rises," the principal investigator from WHOI's Investigation of Sea Level Rise in the Arctic project explained.

So we see both melting ice sheets and falling sealevels which is against the IPCC models we also see rising levels of GROWTH in the Antarctic ice sheets.Grace was used as evidence by the British antarctic survey at the NZ climate conference of change in th WA larsen ice sheets.

Unfortunately for their predictions GRACE is an ongoing satellite programme and the current updated symmetry observes the opposite.

We estimate mass trends over Antarctica using gravity variations observed by the Gravity Recovery and Climate Experiment (GRACE) satellite mission during its first 3.5 years (April 2002–November 2005). An image of surface mass trends is constructed from 1° × 1° pixels over the entire continent, and shows two prominent features, a region of mass loss along the coast of West Antarctica, and one of accumulation in East Antarctica. After adjusting for bias due to smoothing and to GRACE's limited spatial resolution, and removing post glacial rebound (PGR) effects, the rate in West Antarctica is −77 ± 14 km3/year, similar to a recent estimate of ice mass loss from satellite altimetry and remote sensing data. The prominent East Antarctic feature in the Enderby Land region has a rate of +80 ± 16 km3/year.

So we see decreasing icemass in the Arctic summer and increased icemass in the Antarctica polar region.

A further study published this week at Boston University and to be published in science suggests symmetry due to the cyclical progression of the earth and the three phase changes of (obliquity, precession, and eccentricity)

Through dated geological records scientists have known for decades that variations in the Earth’s orbit around the sun – subtle changes in the distance between the two – control ice ages. But, for the first 2 million years of the Northern Hemisphere Ice Age there has always been a mismatch between the timing of ice sheet changes and the Earth’s orbital parameters.

A new model of ice volume change developed by Maureen Raymo and Lorraine Lisiecki, researchers in BU's Department of Earth Sciences, proposes a reason for this discrepancy. Like other models, it is consistent with traditional Milankovitch theory – which holds that the three cyclical changes in the Earth’s orbit around the Sun (obliquity, precession, and eccentricity) influence the severity of seasons and high latitude temperatures over time. However, the new model differs from earlier ones in that it allows for a much more dynamic Antarctic ice sheet.

According to the researchers, from 3 million years ago to about 0.8 million years ago, Northern Hemisphere ice volume appears to have varied mostly with the 41,000 year period of obliquity – the periodic shift in the direction or tilt of Earth’s axis. However, summer insolation (incoming solar radiation), which is widely believed to be the major influence on high-latitude climate and ice volume change, is typically dominated by the 23,000 year precessional period – the slow “wobble” of the Earth on its axis.

“We don’t tend to think of ice volume in that region as varying significantly, even on geologic time scales,” said Raymo. “However, only a modest change in Antarctic ice mass is required to “cancel” a much larger Northern ice volume signal.”

Records used to measure the ice volume, such as sea levels, integrate the whole world. According to Raymo, the new model demonstrates that while the precession frequency is actually strong in ice volume changes at each pole, in geologic records, Northern and Southern hemisphere ice volume trends act to cancel each other out at this frequency.

World energy pricing,supply and demand

As we have noted there are large pricing differentials in the cost of oil futures and gas pricing at the indicator Henry Hub in the US.Spot prices at the Henry Hub could drop below $4/MMBtu near the end of the injection season as many gas storage fields could reach their maximum capacity, Energy and Environmental Analysis Inc. (EEA) said Tuesday, echoing the predictions of some analysts and regulators but contrasting with recent comments from analysts at Raymond James & Associates (see Daily GPI, June 20). However, EEA also said gas prices are likely to "rebound significantly as soon as winter heating load develops."This would be the lowest pricing since 2001.

A number of factors are involved here,increased storage and low demand due to utilities switching generation to coal.The reserve requirement for Hurricane season,and seasonal fluctuations.

As a cost comparison of oil to gas energy coefficent that of 1bbl to 5.176 gas units this makes both cng and lng very cost effective transport fuels.(Around 36$ now and forward 24$)

There are interesting observations coming out of the oil physical market with demand reducing in India by around 10% and the cancellation of Saudi contracts in China.Whilst the usual suspects are suggesting this is due to the higher sulphur content of the lower production grades coming out of Saudi,and indeed this was used as a reason for cancellation by China,industry sources in Kazakhastan and Russia are suggesting the reason is for a lessening in dependence of Middle East oil due to new transit options.

Kazakhstan has a long common border with China to the east and has been exporting Caspian oil to China’s north-western province Xinjiang by rail since the 1990s. In 2005, Kazakhstan exported about 30,000 barrels per day to China via the Alashankoy rail crossing – a far cry from the 200,000 Russia exported to China in the same year.

However, in August 2005, state-owned oil company China National Petroleum Corp (CNPC) agreed to buy PetroKazakhstan, a Canadian firm based in Calgary and listed on the Toronto Stock Exchange, for $4.18 billion as part of China’s strategy to reduce its dependence on foreign-owned firms and boost its energy supplies. The purchase went through in October, after a Canadian court turned down an attempt by the Russian oil firm LUKoil to block the sale.

The acquisition was a logical extension of China’s operations in Kazakhstan, which is looking to increase its oil exports by expanding its infrastructure. CNPC, China’s biggest oil producer, and the Kazakhstan National Petroleum and Natural Gas Company (KMG), are financing and building a pipeline from Kazakhstan to China. The first section was completed in 2003 and runs across Western Kazakhstan from the Aktobe oil fields to the oil hub at Atyrau. Construction began on the second segment of the Kazakhstan-China pipeline in late September 2004 and was completed in November 2005. It has a capacity of some 140 million barrels of crude per year. The Chinese side is responsible for filling the pipeline from its own oil fields in Kazakhstan, although Russia’s state-owned Rosneft oil company, which already exports oil to China by rail, wants to ship 8.8 million barrels of oil via the pipeline this year.

A Kazakh official admitted in June 2005 that, in spite of the Kazakhstan-China and Baku-Tbilisi-Ceyhan pipelines, Kazakhstan would still need additional export capacity of some 300,000 to 400,000 barrels per day by 2011.

Last week, the Shanghai Cooperation Organization (SCO) celebrated its fifth anniversary by holding a summit in its birthplace. The organization came together in 1996 as an alliance focused on military cooperation between China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. In 2001, the group admitted Uzbekistan and changed the name from the Shanghai Five to the SCO and altered its aims to include economic and political support.

Last week in Shanghai, both Pakistan and Iran stated their strong interest in joining the organization, although SCO leaders have yet to develop both a policy on enlargement and clear criteria for membership.On the economic front, the biggest news from Shanghai involved energy – a topic that has dominated every other international discussion this year as well. With Iran knocking on the SCO’s door and Gazprom getting a deal to help build and operate a multi-billion dollar gas pipeline from Iran to India via Pakistan, many analysts suggested that something similar to a gas OPEC is in the works. Russian President Vladimir Putin added fuel to this speculation by telling the SCO leaders that the time has come to coordinate their energy strategies.

Now here arises some other competitive forces,The Btc pipeline from the caspian to Turkey for transhipment to Europe and beyond to remove the transfer of oil from the Russian pipeline network to Azeri-Georgia-Turkey opened last week.The pipeline will require both Kazakh and Russian oil to be sustainable but neither is forthcoming.

There are regional conflicts of interest here .but one suspects just a realignment of bargaining areas prior to the G8 meetings on energy.Good background here http://www.thenewanatolian.com/opinion-8884.html and here http://www.thenewanatolian.com/opinion-2799.html

The two realities of the oil market

There are two markets in the oil industry ,the paper or derivitives and the wet barrel or physical market.

Dhatz has some interesting observations on the twin realities .

Afterall, for several years (since 1988), the price of oil is set by "paper barrel" trading in the derivatives markets, but these markets increasingly have NO connection whatsoever with the supply/demand picture in the market of physical oil market of real "wet barrels".

The secretary general of the Organisation of Petroleum Exporting Countries (Opec), Rilwanu Lukman, says the world oil market is held captive by the derivatives markets. The old rules of supply and demand have been distorted, he says, by the creation of what he calls "paper barrels" of oil.

The physical ("wet barrel") market is awash in oil. Saudi Arabia, the world's top exporter, had to cut production from 9.5Mbpd level of the past 2 years down to 9.1Mbpd (-400,000 barrels per day) since April-06, because it can find no buyers for it, The Wall Street Journal quoted Oil Minister Ali Al Naimi as saying on 5-Jun-2006.

All "demand" keeping prices at these absurd levels of $70+/bar is happening in the futures derivatives markets, off which real physical oil is priced. Derivatives is what OPEC calls "paper barrels", with open contracts just in NY futures market being ~1.6 BILLION "paper barrels". Nearby month futures contracts in NYMEX and ICE trading about ~250 million "paper barrels" per day (vs ~80 million barrels per day world production).

The current oil price discovery mechanism is broken. Given relatively small spare production capacity for the types of oil used in futures markets (WTI light sweet crude or UK Brent, where e.g. Brent represents 0.4% of world's total oil production but is used as benchmark to price 60% of world's oil) results in lack of meaningful arbitrage ability between physical and derivatives.Consequently, "investors" ("speculators") aided by other factors (e.g. price insensitive filling of SPR in 3yr if you believe in coincidences) were able to drive oil to $70+/barrel on sheer buying power of billions $$$, as price is set at the margin.

There was some strange statements a main investor in the London oil trading market set up early last year with prediciton satements of 100+per barrel,they also were underwriters of the float of REFCO a major worldwide derivititves trader and commodities trader,unfortunately this seemd to have been run by some very dodgy operators.

Further evidence of future oil price decrease

A rising anomaly is evident in the pricing differential between US oil futures and Natural gas prices.

A barrel of oil has about six times the energy content of a thousand cubic feet of natural gas. Although they're far from perfect substitutes, some firms can move between oil and gasdepending on price and availability. Longer term, consumers or firms making a fixed commitment to oil or natural gas will of course look at the relative prices. Thus one's first guess might be that, over the long run, a barrel of oil should sell for something around six times the price of a thousand cubic feet of natural gas.

The graph below shows that this has been a pretty fair description over the past six years. Up until the last few months, that is, which have left natural gas selling for about half its value from December, while oil is little changed.

Whilst there are some factors such as seasonal differentials,the rapid uptake of LNG in the transport sector will see further pricing constraints on oil.

In addition substantial oil requirements for China is expected in 2007-2008 as fuel oil for electricity generation is substantially lessened due to completion of gas ,hydro,and nuclear power plants equivalant to Spains total electricity complex each year for the next 5 years.

Around 30 % of oil is use in electricity generation in China,in some regional areas such as Guangdong up to 70%.

Worldwide energy prices start fall Greens say earth is flat

As we observed in our previous post with the Greens criticism of the Reserve bank pricing of oil as economic constraints,there are some interesting developments in the oil and gas markets.

Lord Browne, the chief executive of energy giant BP, has predicted that the price of oil could drop as low as US$25 a barrel, in direct contrast to a market that sees prices remaining sky-high.

The long-standing leader of BP, the world's second largest oil company, said that while prices will not moderate in the near term, within five years, Lord Browne of Madingley saw oil coming down to US$40. In about a decade, he predicted the price could be as low as US$25.

Oil prices are continuing there downward trend since the start of the Russian rouble denominated trading market commenced in Moscow last thursday.

Brent crude dropping to 65.90 overnight.

The Russian trading market is designed to allow the direct delivery of oil and its derivitives at long term sustainable prices where small companies can purchase delivery of oil and fuels oil for thier own consumption.

Purchase options are at fixed points and a marketable parcel is around 10 barrels.The security is 5% and the commission per contract is 1 rouble around 5 cents NZ.

This allow small transport companies in europe to purchase their diesil requirements in advance.

Greens have head in sand over oil prices
In a press release today the greens criticised the reserve bank statement on price risks.

Reserve Bank has head in sand about oil prices

The Reserve Bank based today's official cash rate statement on highly questionable assumptions about oil prices, and the subsequent impact on the inflation outlook, Green Party Co-Leader Jeanette Fitzsimons says.

"We cannot afford to base our economic planning, as the Bank says it does, on the assumption that the Dubai oil price (which the Bank claims to be the one most relevant to the New Zealand economy) will ease back to $45 a barrel by 2008.

"Let's get real. The hike in oil prices is not some temporary blip to be endured before we resume business as usual. Oil price inflation is here to stay. The Bank should be factoring in the end of cheap oil, not to mention the supply uncertainties to do in future with Iran.

Now let's see what the Russian government says in its press release and its prediciton of future oil prices.

MOSCOW, May 29 - Russia's government has adjusted its forecast for oil prices over the next three years, an economics official said Monday.

"A decision has been taken to upgrade a forecast for oil to $62 per barrel for 2006, $58 for 2007, $53 for 2008 and $48 for 2009," Andrei Klepach, director of the macroeconomic forecasting department at the Economic Development and Trade Ministry, told journalists after a government session.

Previous forecasts had fixed the average oil price at $60 for this year, $49 for 2007, $50 for 2008 and $46 for 2009.

Klepach also said risks remained high that oil prices would decline.

One day the greens may something factual instead of reading from Grimms Fairy tales.

Cooling trend continues in SH

As I said on the third of march this year is to be one of the coldest winters for around 30 years.
Due to a number of cosmic and solar factors namely expected increase of cosmic radiation we can expect a colder winter and colder climatic conditions for 2006.The movement from neutral to La Nina conditions has already occurred as can be observed from the colder winter in eastern europe and north east asia.The lower then average summer temperatures also confirm this with colder water temperatures and one of the coldest Antarctic summers on record.

In a press release, the Geneva-based agency WMO said tempearatures in the central and eastern equatorial Pacific had been between 0.5 and 1.0 C (0.9 and 1.8 F) below normal since the start of the 2006. "Combined with broader tropical Pacific ocean and atmosphere conditions, this is consistent with the early stages of a basin-wide La Nina event," it said.

Niwa confirms the trend for may The national average temperature of 11.0 °C was 0.3 °C above the 1971-2000 normal. This was the lowest for May since 1996.

Victoria also confirms the cooling event Coolest May Since 1970 .

If there is a major volcanic eruption in the pacific rim or in the tropic area the temperature range could fall another 2 degrees.The fall in temperature was expected due to the posterior phase of the solar cycle and the 200 year low of cosmic radiation.