Perceptions of energy

Sept. 26, 2011
Two different reports by separate sources recently demonstrated most succinctly how Canada's vast oil sands resource is regarded by government officials in different parts of the world.

Two different reports by separate sources recently demonstrated most succinctly how Canada's vast oil sands resource is regarded by government officials in different parts of the world.

In its Sept. 20 online European news section, The Wall Street Journal reported that, in order to reduce carbon emissions, the European Union proposed in its Fuel Quality Directive the mandated use of low-carbon transport fuels in member countries. Canada claims such a restriction would unfairly penalize its oil sands and vows to take the EU before the World Trade Organization if the legislation, now under review, isn't changed. Analysts in the Houston office of Raymond James & Associates Inc. said litigation may not be necessary since European trade and energy officials also oppose writing off that resource.

Meanwhile, the Houston Chronicle's online Fuel Fix reported Sept. 19 that Chinese firms have been buying up Canadian oil sands assets to the sum of $15 billion over the last 18 months in Alberta province alone, despite having no viable means of transporting that oil to Asia.

"The most likely solution is the Northern gateway pipeline, which has already received enough interest to fill the pipeline, but the project has come under fire from environmentalists concerned with oil spills—similar to the troubles facing the Keystone Pipeline XL in the US," Raymond James analysts said.

So on one hand, we have China—one of the few dynamic economies left on the planet at the moment—shoveling cash into a low-risk oil investment to meet its burgeoning energy demand, while on the other hand, the EU—saddled with sovereign debt and Green Party legislators—flips off one of the biggest available energy resources on the globe.

Solar hits the panel, wind hits the fan

Perceptions about various energy sources started to come into focus for this reporter decades ago when writing one of my first articles on alternative energy. The article centered on an interview with an advocate for retrofitting Texas Gulf Coast homes with solar panels that ultimately would do little more than run residential water heaters. Considering the low cost of natural gas and electricity in the 1970s, the advocate conceded a Texas homeowner likely would never recover the installation costs of retrofitting a home with solar panels. Real savings, he said, would require designing and building an energy-efficient home from scratch.

Apparently that still holds true even in the UK where Nick Duxbury early this month on the Inside Housing web site reported a 2-year, £1.2 million national Future Fit program showed "a funding gap of around £3,000 between the net cost of the [retrofit environmental] works and the value of the energy savings." Duxbury also reported only 4.8% of the 800 residents approached accepted the offer of free energy improvement works initially. "The low response rate suggests residents are not interested in retrofit work. This could affect take-up of the green deal, which needs to retrofit 14 million homes by 2020," he said.

Meanwhile, more than wind hit the fan following UK news reports in early September that a Norwegian firm was paid £1.2 million to shut down a wind farm in the Scottish Borders for little more than 8 hr on a weekend for fear the electricity grid would overload. A newspaper said that was 10 times more than the wind farm's owners would have received had they actually generated any electricity. The London Telegraph newspaper reported the usual rate for wind-generated power is £100/Mw-hr—"half of that in the form of a generous consumer subsidy."

It reported 11 UK wind farms were temporarily shut in because of high winds generated by Hurricane Katia. Wind farm owners received a total £2.6 million for those shutdowns. That cost will be added to residential bills and paid for by consumers, the newspaper said.

This came just days before pensioners urged London Mayor Boris Johnson to provide relief from "fuel poverty." The London Evening Standard reported a quarter of London's population cannot pay energy bills because of rising prices and welfare reforms.

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