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Renewable Electricity Reaches 10%, Sky Doesn’t Fall(0) Wind, hydro and other renewables supplied 50% more electricity than in the same period last year, and now represent almost 10% of all electricity generated. But there have been howls of protest from energy intensive industries, echoed by Goerge Osborne at the Tory Party Conference, that the cost of all the Government policies leading to this success is pushing up energy prices. But the Government’s own documents show this is not true. Meanwhile, there is other good news in the latest quarterly energy figures, at least in terms of carbon emissions: electricity consumption was 1.5% lower than in the second quarter of 2010 fossil fuel dependency was at a record low of 85.7 % in the second quarter of 2011 renewables accounted for 9.6% of electricity supplied, whilst nuclear supply exceeded 20% for the first time since the second quarter of 2006 the total electricity supplied by all generators in the second quarter of 2011 was 1.7% lower than a year earlier final consumption of electricity for domestic use decreased by 3.7%. This will all have the positive consequence of having reduced overall carbon emissions in the last year. But prices have been rising. Average industrial gas prices, including the Climate Change Levy (CCL), were 34.1% higher in current terms in Q2 2011 compared to Q2 2010, whilst prices excluding CCL were 35.4% higher. Average industrial electricity prices including CCL were 2.7% higher, coal prices were 11.9% higher, heavy fuel oil prices were 22.1% higher and the UK retail price for petrol was ranked sixth highest in the EU, with the UK diesel price the highest in the EU. On the domestic front, electricity prices were 4.0% higher, domestic gas 6.2% higher and the price of heating oils a whopping 28.8% higher than Q2 2010. Yet we can take some comfort that UK prices for medium domestic gas and electricity consumers, including tax, were the lowest and third lowest in the EU 15 respectively. The cost of promoting low carbon energy But is it true that a significant proportion of these price rises are due to Government policies to reduce carbon emissions? Energy and climate change policies are funded by a mixture of levies and general taxation. Levy-funded policies (such as the renewables obligation (RO), feed-in tariffs (FITs) and warm home discount (WHD)) place the obligation of financing the policies onto energy companies which is then passed onto the consumer. Estimates of how these levies impact the public finances were published in Budget 2011, and include for 2010-11 £0.7 billion from the Climate Change Levy and £0.6 billion from other environmental taxes, matched by a similar expenditure on these taxes. The latest figures for the cost to the public purse for the development, construction and installation of low carbon electricity generation (latest figures) are as follows: 2009-10 The Renewables Obligation: £1.1 billion 2011-12 R&D grants for anaerobic digestion technology: £1.3 million The Treasury of course keeps a cap on levy-funded spending by DECC. DECC estimates that the impact of energy and climate change policies on average gas and electricity prices and bills paid by large energy intensive users compared with prices and bills in the absence of policies is a 2% rise this year rising to a 4% rise in 2020 for gas, and a 12%-20% rise this year and a 17% to 52% rise in 2020 for electricity. This sounds like a lot. But, to put this into context, average electricity prices faced by large industrial users rose by a huge 45% in just two years between 2007 and 2009, largely as a result of volatile fossil fuel prices. In addition, the wholesale fraction of the retail gas price faced by large energy intensive users (excluding the cost of carbon) is around 90%, and around 70% – 80% of the retail electricity price paid by these users. Wholesale gas prices are expected to continue to rise, with forward market prices trading at 76p/therm in 2016. The truth is that fossil fuel price volatility has been, and is expected to continue to be, a bigger driver of energy price variations than the impact of energy and climate change policies. The proposals outlined in the Electricity Market Reform White Paper are supposed to mitigate the impacts of policies on prices and bills by reducing the costs of support for low carbon generation (compared with what the cost of the Renewable Obligation would have been in the absence of the EMR), reducing them by 2% in 2020 and 8% in 2030. DECC makes the further point that looking at the effect on prices alone is misleading – it’s the bills that count. These will be lower in fact because of the effects of policies to encourage a reduction in consumption due to energy efficiency, which is greater than the effect on the bill from the increase cost per unit of retail gas (as a result of the Climate Change Levy). Additionally, it is hoped that the introduction of a Carbon Price Floor (CPF) starting at £16/tCO2 in 2013 and rising to £30/tCO2 in 2020 and £70/tCO2 in 2030 will increase decarbonisation of the grid, and therefore improve price stability and increase energy security. An updated assessment of the impact of energy and climate change policies on energy prices and bills for households and businesses and bills will be published alongside the Annual Energy Statement. Around the same time the Government has committed to publishing details of its support for energy-intensive users. So, if you’re worried about high energy bills, the people who deserve the most blame are the fossil fuel suppliers, and there is no shortage of incentives and support to reduce the bills. Original article About David Thorpe |
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China and Biofuels(0) By John C.K. Daly (AXcess News) – China’s omnivorous global appetite for energy resources is well known. While biofuel production is one of the rising energy stars of the 21st century, it is unlikely to become a significant source for China in the near future, as the country’s arable land is devoted first and foremost to feeding the country’s massive population 1.3 billion citizens, unless a feedstock can be found that grows well on marginal land. But the issue of food may yet prove to contribute to the country’s energy output by recycling a traditional component of Chinese cuisine – used cooking oil. According to a recent article in the People’s Daily, Beijing’s 19 million inhabitants are seeing the grease used to fry up their dim sum and other delicacies carted off by eight licensed collectors of used cooking oil, known as “hogwash,” for recycling into biofuel. Beijing Hailianghongxin Bioenergy Ltd. President Li dong said, “We have contracts with 300 catering firms, including most McDonald’s, and collect 3,000 tons each year.” Beijing Hailianghongxin Bioenergy Ltd.’s collected hogwash oil is transported to a refinery in Gu’an county in Hebei province, owned by Gu’an Zhongde Lihua Petrochemical Co, the largest hogwash-to-biodiesel processing company in Beijing, and processed into biodiesel. Hogwash oil is extracted from rotten pork and peroxided oil, used repeatedly in frying. The bad news is that when hogwash oil is reused in restaurants, it can breed a number of diseases, doctors suspecting that it is even a potential carcinogen. Recycled into biodiesel fuel, hogwash oil accordingly becomes a public health service. The good news for Chinese capitalists is a conservative estimate is that China produces 30,000 tons of hogwash oil each and every day from restaurants and that China’s annual production of oily restaurant slop is no less than a most impressive 60,000,000 tons per annum, a mere 20,000 times the modest collection efforts of Mr. Li’s cohorts. As Beijing alone currently has more than 50,000 restaurants, hotels and canteens, the city produces 90,000 tons of hogwash oil each year but currently the bulk of the used cooking oil is still being siphoned off illegally, to be used again in restaurants. Beijing Hailianghongxin Bioenergy Ltd.’s Gu’an county refinery, which opened in May, is capable of processing 40,000 tons of hogwash oil a year but it only expects to receive 15,000 tons of hogwash feedstock to process this year, according to Lu. Lu added, “Our costs include an oil-water separator for each restaurant and always payment to them in order to collect hogwash oil, recruitment of staff, buying vehicles and renting storehouses.” Unfortunately, illegal collectors don’t need so much investment, with Lu noting about the competition, “A tricycle and a big scoop are all they need, and at the cost of $47 per ton they can recycle the hogwash oil to be edible oil and sell it to restaurants for $1,400 to $1,560 per ton,” China Biodiesel Industry Association deputy secretary-general Sun Shanlin commented that insufficient feedstock input is a large industrial constraint and the collection and disposal of hogwash oil has yet to be properly organized by the relevant authorities. Shenzhen-based CIC Industry Research Center analyst Shen Hongwen said, “The greatest difficulty for the industry is the short supply of hogwash oil. The profits in the manufacturing of biodiesel from hogwash oil cannot compare with the profits in selling it as edible oil, so it’s hard for enterprises in the biodiesel sector to get sufficient raw materials to expand their production scale.” A research report issued by the China Association of Senior Scientists and Technicians a year ago noted simply, “More than 90 percent of the hogwash oil in Beijing is controlled by illegal collectors.” The Chinese government is belatedly waking up to the potential of recycling cooking oil, as earlier this month the government announced it would spend $98.5 million to support the recycling of used kitchen cooking oil into biofuel in 33 cities and districts nationwide, including Beijing’s Chaoyang district, the city’s second largest and home to the majority of Beijing’s many foreign embassies. Amusing as it is on the surface, China’s great “hogwash” imbroglio illuminates a number of contradictory truths about China’s headlong rush to prosperity. For China, 60,000,000 tons per annum of recycled cooking oil into biofuel is not an insignificant consideration. First and foremost perhaps, is that enterprising Chinese, obeying the late Deng Xiaoping’s alleged exhortation, “To get rich is glorious!” have embraced its ethos with enthusiasm – and why not go where the profits are highest, in this case, the back door of the local carryout? In the absence of a clearly defined government policy, why not slip the used oil out the restaurant’s rea rdoor for great profits? Second is that pesky issue of food security. A recent U.S. International Trade Commission publication says that China’s food security objectives may clash with its energy independence and environmental objectives, inhibiting the development of renewable biofuels. The China’s Agricultural Trade: Competitive Conditions and Effects on U.S. Exports report notes that while China is the world’s second largest corn-producing nation, using the grain primarily for animal feed and secondarily ethanol production, bad harvests in 2009-2010 coupled with rising demand led China to import around 1.5 million metric tons of U.S. corn and in 2010 China consequently became a net corn importer. China’s National Reform and Development Commission strictly regulates both the supply of and demand for biofuels and only state-owned enterprises are involved in production and the NDRC plans to increase domestic biofuel production to 12 million metric tons in 2020. More ominously for China’s illicit hogwash oil trade long term prospects, KLM Royal Dutch Airlines has recently successfully tested hogwash oil biofuel derivatives as a possible Jet A-1 “drop in” civilian airplane fuel. Microwave, anyone? Chinese free enterprise versus government control? As the late great U.S. blues singer Rufus Thomas almost said, “Wok the dog!” Source: Oilprice.com |
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