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Archive for December, 2016

Obama’s Offshore Drilling Ban Is ‘Largely Symbolic,’ at Least for Now

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President Obama launched a last-minute effort to protect his legacy on climate and clean energy earlier this month by approving a permanent ban on offshore oil and gas drilling in large swaths of the Arctic and Atlantic oceans.

The decision, announced in partnership with Canadian Prime Minister Justin Trudeau, was condemned by the oil industry, which argued that restricting offshore drilling areas could damage the U.S. economy. “Blocking offshore exploration weakens our national security, destroys good-paying jobs, and could make energy less affordable for consumers,” said Erik Milito, upstream director at the American Petroleum Institute (API).

At the same time, the ban was applauded by environmentalists, who fear President-elect Donald Trump and his pro-fossil fuel administration will severely undermine efforts to mitigate the effects of climate change. Trump has already pledged to roll back a host of Obama’s environmental policies within his first 100 days in office.

The offshore drilling ban is unique in that it may be able to survive a Trump attack. Obama approved the ban by using an obscure 1953 law that governs offshore leases in the U.S. continental shelf. The law gives Obama the ability to act unilaterally, and nowhere does the law say a successor can undo those actions. If Trump does attempt to repeal the ban — as the oil industry hopes he will — environmental groups will at least be able to make the rollback difficult.

But while both supporters and opponents are making a big deal of Obama’s last-minute gesture, the ban actually has little real-world significance, according to Imran Khan, senior manager of the upstream research team at Wood Mackenzie.

“The offshore drilling ban is largely symbolic,” he said. “I don’t see companies eager to explore those areas anytime soon.”

“Very much frontier exploration”

Today, the Gulf of Mexico is the primary area for offshore drilling, which is split into three planning areas: central, eastern and western. The central area is the most developed — that’s where most of the lease sales take place and most operators currently work. The western area is active as well, but with the decline in oil prices over the last two years even western lease sales have received little attention.

Parts of the eastern area, meanwhile, were recently opened up to developers but received zero bids in the last lease sale. According to Khan, that’s because there isn’t as much information available on the eastern section, and because oil and gas companies still have plenty of opportunity to work in the central and western Gulf.

These parts of the Gulf are the core of the U.S. offshore drilling market today. Operators have been working there for 20 to 30 years and they understand the geology, Khan said. “Those areas aren’t getting that much attention and they still have a lot of room to explore, so why would developers be interested in the Atlantic?”

The Atlantic Ocean has virtually no offshore oil and gas drilling infrastructure in place at the moment, which is an enormous barrier because the infrastructure is so expensive. But even if infrastructure wasn’t an issue, the Atlantic was unlikely to see much action.

Last year, the Bureau of Ocean Energy Management (BOEM) made a preliminary decision to auction as many as 104 million acres of the mid- and south Atlantic in 2021. This year, ahead of Obama’s official ban, BOEM opted not to include those areas in light of opposition from environmental groups and coastal communities, and because of low industry interest — although the decision drew harsh industry criticism. Instead, the program focused on auctions in the Gulf.

“The proposal focuses potential lease sales in areas with the highest resource potential, greatest industry interest and established infrastructure,” said Interior Secretary Sally Jewell, in a statement.

The last time a company drilled in the Atlantic was in 1983 and there are currently fewer than four wells, said Khan. Because there is very little information available on the Atlantic, drilling there “would be very much frontier exploration, which is very expensive because of the environmental conditions and lack of infrastructure,” he said.

“Any interest in the Atlantic would be in the very distant future at best,” Khan added.

It’s a similar story in the Arctic. The new Obama ban blocks offshore drilling in areas of the Chukchi Sea and the majority of the Beaufort Sea — areas that were already receiving little to no industry attention.

In September 2015, Shell announced that it would cease further exploration in the Arctic after spending $5 billion to drill two wells in the Chukchi. Shortly after Shell’s withdrawal, BOEM canceled two potential offshore lease sales scheduled for the next offshore drilling five-year lease plan from 2017 to 2022, due to a lack of industry interest.

“Even if those areas were open, they’re just way too expensive to explore in and develop,” Khan said.

ConocoPhillips, Eni, Statoil and Repsol also own leases in the Arctic, but abandoned those drilling rights earlier this year.

Still a friendly time for fossil fuels

So despite the oil and gas industry’s strong objections to President Obama’s new offshore drilling ban, in reality there were few plans to drill in the Arctic and Atlantic in the coming years — and throughout the duration of President Trump’s four-year term. API’s claim that the new drilling ban “destroys good-paying jobs” would more accurately refer to “potential future jobs,” since companies are not currently operating, and have few actual plans to operate, in the waters the ban serves to protect.

“In the long term, certainly deepwater is a key part of large companies’ portfolios,” said Khan. “But in the short run, we have seen companies divert investment from deepwater wells to lower-capex onshore oil and gas drilling.”

Of course, as an industry that operates on decade-long time horizons, it’s the long-term options that the oil companies want to defend. And in that endeavor the American Petroleum Institute and others are likely to find an ally in Trump. The new administration could also make life a lot better for oil companies long before taking on the legal battle to reopen unexplored offshore sites in the Arctic and Atlantic Oceans.

For one thing, Trump could lengthen lease times in existing offshore drilling plays in the Gulf of Mexico, giving companies more time to develop new sites. Trump could also open up additional areas of onshore drilling in the National Petroleum Reserve-Alaska (NPR-A) and the Alaska National Wildlife Refuge (ANWR), which President Obama sought to protect. He could also open up areas for offshore drilling that are not covered by the ban, such as the 2.8 million acres near the Beaufort Sea.

In addition, Trump could revive and approve the Keystone XL pipeline. And he could reduce the royalty rates that oil and gas companies pay to the federal government for production in federally owned areas. A lower royalty rate could suddenly make harder-to-reach plays economically viable.

So while Obama’s latest offshore drilling ban created quite the stir, market dynamics make it a largely symbolic move. There are plenty of other areas for oil companies to go after, and plenty of reasons why companies would choose not to explore uncharted sites for many years to come.

However, environmentalists shouldn’t get too excited. Because oil and gas companies work with long timelines, Trump may well decide to try to challenge Obama’s use of the 1953 law and bring the Arctic and Atlantic Oceans back into play. Even though it may not be viable to drill new wells in those oceans for a decade or more, Trump could decide to reverse the ban for symbolic reasons of his own.

Arguably, the only way for offshore drilling to really come off of the table is for there to be a significant drop in global demand for oil and gas, which means the offshore drilling debate doesn’t only center on lease sales and drilling laws. How electric vehicle and renewable energy markets develop in the coming years will also play a role in how this issue evolves, and how well Obama’s environmental legacy is preserved.


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Hawaii Wants to Lead on Energy Efficiency, Not Just Renewables

The conversation about Hawaii and clean technology often focuses on the state’s push for 100 percent renewable electricity by 2045.

Beyond wind, solar and novel energy storage projects, however, Hawaii is a national leader in energy efficiency, according to a new report by Hawaii State Energy Office.

For the past five years, the nonprofit Energy Services Coalition has ranked Hawaii first in government energy performance contracting. The state spends nearly six times the national average in performance contracting per capita.

In the past 20 years, the state’s energy office has signed more than $440 million in performance contracts for a savings of more than $1.1 billion. Hawaii is home to the single largest performance contract in the U.S., a $158 million deal with the Hawaii Department of Transportation that covers nearly all of the state’s airports. It will cut energy use in 12 airports by nearly 50 percent.

In 2016, the Hawaiian government made huge strides in Energy Star certification. The private sector has also substantially increased its number of Energy Star buildings in the past decade.

Hawaii voted in 2015 to upgrade its building code to the International Energy Conservation Code (IECC) 2015, which is expected to save more than 1 million megawatt-hours of energy in the first decade.

The state is also updating the rules for reporting on its energy-efficiency portfolio standard, which is no longer part of its renewable portfolio standard reporting. Overall, the state has a goal of reducing energy demand by 4,300 gigawatt-hours by 2030, or about 40 percent below 2007 levels.

Hawaii is not limiting its leadership role to renewables and efficiency. The state is convening regular stakeholder meetings to develop a transportation energy roadmap in a move away from petroleum. The roadmap will build off of the 22 recommendations that came out of the 2015 Hawaii Clean Energy Initiative’s Transportation Energy Analysis.

As for its renewable goals, Hawaii continues to grow its solar and wind portfolio, with hydro, geothermal, biomass and biofuels rounding out the mix. In 2015, Hawaii was getting nearly a quarter of its electricity from renewables.


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Undoing Obama’s Energy Legislation and Policy Won’t Be Easy

Forbes: Trump’s Energy Policy Agenda Faces Landmines And Lawsuits

The Obama administration is pouring as much regulatory sand in the Trump team’s energy policy fuel tank as possible on its way out the door. Incoming policymakers will need to carefully decide where to focus effort/political capital because they won’t be able to overturn everything at once. Generally, rules that have not been finalized (like existing source methane emission regulations) can be tossed out fairly easily, but final rules require lengthy comment periods and other procedural hurdles that will necessitate strategically choosing battles.

At the same time, however, in many cases market forces will dictate corporate strategy more than policy over the short to medium term. The coal industry’s future is probably the most commonly cited example where cheap natural gas and renewable energy sources are pressuring business models as much if not more than regulation. Additionally, the high-profile move to ban offshore Arctic and Atlantic oil and gas drilling is interesting due to its lack of legal precedent, but energy companies with embattled balance sheets would be unlikely to plow lots of risk and capital into these prospects under current market conditions regardless.

PV Magazine: SolarCity Raises Another $241 Million

As the nation’s largest distributed solar installer and a third-party solar company, SolarCity has an insatiable appetite for capital to deploy more solar. After being formally acquired by Tesla a month ago, it would appear that SolarCity’s capital worries were over.

However, the company is still raising cash at a furious rate, with the latest being a $241 million cash equity transaction which closed on December 16. Texas-based Sammons Renewable Energy (SRE) led the equity portion of this transaction, which Tesla has not reported in its financial filings.

As part of this deal Sammons is investing in SolarCity PV projects in 16 U.S. states, including 26,000 residential systems and 19 commercial and industrial arrays. Sammons says that this is part of its plans to expand its renewable energy holdings.

Biomass Magazine: Hawaii Releases Annual Energy Report

The Hawaii State Energy Office has released its annual energy report documenting progress toward its renewable energy and energy efficiency goals, particularly its renewable portfolio standard goal of 100 percent by 2045.

The 91-page report includes a map of the locations of the state’s 65 renewable energy projects, which include biomass, biofuels, wind, ocean, geothermal, solar, waste-to-energy and hydroelectric, and data indicating growth in each respective renewable sector.

According to the report, Hawaii achieved 23.4 percent renewable energy in 2015, up 2.3 percent from 2014, with the most notable advances occurring in the solar and wind sectors. Biomass experienced a slight dip in its share of Hawaii’s renewable energy supply, dropping from 21.7 percent to 19.2 percent. Biofuels increased slightly from 1.9 percent to 2.4 percent. Distributed PV rose from 27.3 percent to 31 percent, wind dropped from 29.1 percent to 27.9 percent, geothermal dropped from 12.3 percent to 10.5 percent, and hydro and commercial solar experienced less than a 1 percent change.

Energy Policy: Historical Construction Costs of Global Nuclear Power Reactors   

The existing literature on the construction costs of nuclear power reactors has focused almost exclusively on trends in construction costs in only two countries, the United States and France, and during two decades, the 1970s and 1980s. These analyses, Koomey and Hultman (2007); Grubler (2010); and Escobar-Rangel and Lévêque (2015); study only 26% of reactors built globally between 1960 and 2010, providing an incomplete picture of the economic evolution of nuclear power construction.

This study curates historical reactor-specific overnight construction cost (OCC) data that broaden the scope of study substantially, covering the full cost history for 349 reactors in the U.S., France, Canada, West Germany, Japan, India, and South Korea, encompassing 58% of all reactors built globally. We find that trends in costs have varied significantly in magnitude and in structure by era, country, and experience. In contrast to the rapid cost escalation that characterized nuclear construction in the United States, we find evidence of much milder cost escalation in many countries, including absolute cost declines in some countries and specific eras. Our new findings suggest that there is no inherent cost escalation trend associated with nuclear technology.


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Heat Is On for 2017, Just Not Record-Setting

2016 is about to cap off the hottest year on record for the third straight year, a remarkable streak fueled primarily by the excess heat trapped in Earth’s atmosphere by ever-rising levels of greenhouse gases.

While that streak is expected to end, in part because of the demise of one of the strongest El Niños on record, 2017 is still expected to be among the hottest years in more than 130 years of record keeping, according to a forecast from the U.K. Met Office.

The U.K. Met Office’s forecast for 2017’s global annual average temperature.
Credit: Met Office

Because of global warming, “each new year is basically predestined to be among the warmest on record,” Deke Arndt, chief of the monitoring branch of the U.S. National Centers for Environmental Information, said in an email.

Because of global warming, 16 of the 17 hottest years on record have occurred this century, the only exception being the strong El Niño year of 1998.

Each year, the Met Office uses climate models to forecast the global annual average temperature for the coming decade, in an effort to improve shorter-term climate forecasting of features like hurricane season activity and droughts.

Forecasters expect 2017’s temperature to fall between 1.13°F (0.63 °C) and 1.57°F (0.87 °C) above the 1961-1990 average.


To date, 2016 is 0.86°C above the long-term average, which means there will likely be a slight dip in global temperatures in 2017. But “the dip in 2017 is much smaller than the long-term increase,” Adam Scaife, head of long-range prediction at the Met Office, said in an email, and even with it, 2017 will likely still rank high in the list of hottest years.

El Niño also helped boost 2015 and 2016 to their record heights, and contributed to some exceptional streaks of monthly records. The first eight months of 2016 were all record warm; going back into 2015, there was an unprecedented streak of 16 straight record-hot months, according to the U.S. National Oceanic and Atmospheric Administration, including the first months that came in at more than 1°C above the 20th century average.

But the main reason these months and years were able to set so many records was the heat that has accumulated from human-caused warming, evident when comparing the global temperature of 2016 to that in 1998, the last year with a similarly strong El Niño.

“The world has warmed a lot since then. That two decades of general warming made it so the next strong El Niño was going to have a chance to set records,” Arndt said.

2016 was almost 0.5°F (0.9°C) warmer than 1998, according to NOAA data.

“Even 2014, which was ENSO-neutral (had neither La Niña nor El Niño conditions), surpassed 1998 by 0.19°F [0.34°C],” Jessica Blunden, an NCEI climate scientist, said.

The running average of global temperatures throughout 2016 compared to recent years. Each month shows the average of that month’s temperature and each month before it.

Warming has also made streaks of record-hot years more likely. The only other similarly long streaks of record heat in NOAA’s records came in 1939-1941 and for three of the four years in the 1995-1998 period, Arndt said. But he cautioned in a blog post that comparing these streaks to the current one is like comparing the tallest player in the NBA to the tallest in second grade — the second grader may be the tallest in their class, but they’re not going to dunk over that NBA player.

As for record-cold streaks, there haven’t been two record cold years in a row since NOAA’s records reached “statistical adulthood” in the 1990s, Arndt said. In fact, there hasn’t been a globally record-cold year since 1911, and global warming makes it virtually certain there won’t be for the foreseeable future.

As for when we might see the next streak of record heat, or even the next record-hot year, it could very likely happen whenever El Niño ramps up again, though with warming continuing unabated, it won’t necessarily take a major El Niño.

“I would expect that when we have the next strong El Niño event comparable to this year’s, probably several years in the future, we’ll be setting more record-high global temperatures,” Blunden said. “If we see new temperature records broken even without a strong El Niño, we can be even more confident in the rate of long-term warming due simply to increasing greenhouse gas concentrations. But I really hope we don’t see that.”



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Asia Clean Energy Forum 2017

Monday, June 5, 2017 – 15:30 to Friday, June 9, 2017 – 15:30

A call for abstracts will be issued in January 2017. Visit the ACEF 2017 website for further information and details.


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World Future Energy Summit

Monday, January 16, 2017 – 15:15 to Thursday, January 19, 2017 – 15:15

Meet with Solutions Center representatives at the 10th World Future Energy Summit during Abu Dhabi Sustainability Week. World Future Energy Summit continues to set the agenda for a global discussion on the future of renewable energy, clean technology and sustainability. A platform for governments, corporate decision-makers, investors, entrepreneurs and opinion makers, World Future Energy Summit is an annual meeting place that promotes dialogue, fosters knowledge transfer and accelerates strategic decision making in the pursuit of viable solutions to the world’s growing energy challenges. If you would like to meet with a Solutions Center representative in Abu Dhabi, please contact us.


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Clean Energy Ministerial 8 (CEM8)

Tuesday, June 6, 2017 – 12:30 to Thursday, June 8, 2017 – 12:30

China will host the eighth Clean Energy Ministerial (CEM8) in Beijing. The annual meeting of energy ministers and delegates from the 24 member countries and the European Union will provide an opportunity to leverage high-level political will and private sector leadership to drive ambitious, real-world clean energy policies and actions.


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Judge: Duke Energy doesn't owe $350 million for scuttled nuclear plant

The Levy County deal was struck in 2008 by Progress Energy, which Duke later bought


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NEI asks incoming Trump administration to promote nuclear power

The energy sector has always been heavily shaped by government policy, NEI said in its policy memorandum to the Trump administration


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Diablo Canyon nuclear plant cited for cooling system problem

The problem was traced to an improperly installed switch


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