[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] T [/yt_dropcap] he stage is set. The world waits. There are murmurs and whispers. There are speculations and surmises. On 30th November OPEC and Non OPEC countries engage in a rendezvous in an effort to secure a deal. The whole world looks up to it. But a thwart seems to hang over.
From a month or two there has been a deluge of speculations. Sometimes oil markets reveled and at times tensed. There were “Ayes” and “Nays”. Whenever uncertainty trampled the prices we could see any of the oil producers peddling a “There will be a deal” comment into the news hence striving hard for maintaining the optimism. In these nictitating oil market sentiments, uncertainty lurks everywhere.
There is Russian defection. The Iran and Iranian obstinacy. The Saudi fickleness. All are adding up to the worries. As of today (29th Nov) KSA has proposed a production cut for Iraq and a freeze for Iran. The former has refused and want to freeze and the latter, albeit agreeing to freeze, exceed the ceiling proposed by KSA. They have proposed that Iran freezes at 3.79 million barrels but Tehran says it will not concur to anything less than 3.97 million barrels per day.
The oil prices took a dive Friday (25th Nov) when there was an announcement that fell like a sharp dagger breaking the beautiful picture of a deal into little pieces. I think there has been a sudden realization, a bedazzling epiphany that has put a kibosh (temporarily) on the much awaited November Oil deal.
There has been a ham-fisted attempt at creating a buffoonish illusion. The illusion to make the world buy a production-freeze as a production cut! And the executioner of this oily legerdemain is none other than Russia. It is important here to note that it was Russia’s unconditioned support to a production cut that has been able to drive up the prices from past two months when the party met in Istanbul on the sidelines of International Energy Forum.
In my recent series of articles on this November 30th deal I have always clung to the point that these meetings amount to nothing but a lull to appease the restless markets. The comments serve as a pain-killer for the debt-ridden producers, attrition-smitten and bankrupt oil companies. The recent Trump Triumph is another stock amidst the confounding milieu. His pro-drilling nature and environmental nescience makes many to ponder what effect it will have on the future energy markets. But if we critically analyze it he and his stances are not to affect, at least oil, profoundly. Only the price wields the prowess to change the situation and this bring us to the fundamentals.
The world is still awash with oil. Last time the inventory buildup at Cushing, Oklahoma was termed as “the most bearish report on oil”. However, EIA has provided a little breathing space as it reported a 1.3 million barrel decline in inventory levels at Cushing, Oklahoma for the week November 18. Also, the number of increasing rigs is a continuous worry. This week Baker and Hughes reported an additament of 3 rigs making the total 474 and a week before oil rigs also followed on the heels of Cushing inventory rising by 19, the greatest since July 2015.
The upward tick in prices, whenever it ensues, starts a vicious cycle. As prices aggravate, the nodding donkeys are herded towards the oil fields, resultantly more production, and more supply which, ergo, once again pushes down the supply. There are at-least 5000 DUC wells right now in U.S. if prices rise imagine the deluge. This has been the case from the second half of 2015 and hitherto. And it won’t change either.
Then what is the panacea? It is demand. Unless or until the maw of demand gobbles up the excess supply there is no permanent solution to these predicament. IEA’s Oil market report for November doesn’t helps in this regard. Also the Middle Eastern producers Iran and Iraq are a cause of continuous exasperation as they have not agreed to be a part of any production cut or freeze. Iran says it can freeze their production at 4.2mbpd but the proposition given to them is of 3.2-3.6mbpd. Iraq says it needs to pump in order to have the money to fight IS. Libya and Nigeria has also started to ramp up the production as the attacks in Libya settle down and Niger Delta Avengers have dwindled their strikes. Chinese slow demand is always, once again, a great issue.
With all this being said I opine that KSA will still attend the meeting. But as the current overtures tacitly insinuates. The likelihoods of any deal are very low. What can happen is that there can be a word-play and commitments with hand-shakings and smiles. The chances of even this are also very low. As the days will pass, uncovering the stark reality which was and is always there, the prices will come more down. When they started it was a production cut, then there were few defectors, now it has transmogrified into a freeze and the worse, Russia’s non-participation. These are, certainly, omens that bade ill for the future. These are the signs that show a chronic oil price dip. These signs…are not good.
Let us not be naïve. Let us not be blind. This procrastination. This deliberate defection. This infusion of confusion. To a man cherishing a decent amount of common sense. It clearly indicates: No deal. It seems as it was in a fit of optimism and friendship that OPEC and Non-OPEC producers played with the feelings of the market. No one wants to lose their share. In talks, in news it all sounds and look good. But in reality, in paper, in practice no one wants to do it. This is a bitter truth.
Higher Shares of Renewable Energy Central to Sustainable Development Across Southeast Asia
Southeast Asian countries are on course to meet their aspirational renewable energy target of a 23 per cent share of total primary energy supply by 2025, according to new analysis from the International Renewable Energy Agency (IRENA). Achieving this target would also significantly improve the access to affordable clean energy in the region in line with its pursuit of Sustainable Development Goal (SDG) 7.
In the report, Renewable Energy Market Analysis: Southeast Asia – launched during the United Nations Global SDG7 Conference in Bangkok, IRENA highlights that renewable energy is proving key to expanding energy access in a region where 65 million people lack it. With Southeast Asia’s vast, untapped renewables potential, considerable opportunities exist to accelerate renewables deployment in the power sector but also in heating, cooling and transport. Strong enabling and investment frameworks however need to be put in place to overcome barriers facing renewables uptake.
“Southeast Asia is making important progress towards the diversification of its energy supply, and is recognising that renewables are a cost-competitive solution to power economic growth and meet rising energy demand ” said IRENA Director-General Adnan Z. Amin at the launch event during the Conference.
“The accelerated adoption of renewable energy offers broad environmental, economic and social benefits, including creating jobs, reducing air pollution and tackling climate change,” continued Mr. Amin. “Policy makers and other development actors should prioritise investment in clean, reliable and affordable energy as a pillar of development across the region.”
Renewable Energy Market Analysis: Southeast Asia covers the critical considerations for effective policy-making to accelerate the energy transformation, and analyses trends in energy supply and consumption at the regional and national level. It also examines the investment trends and policy instruments supporting the current deployment of renewable energy in a region where economic growth exceeds 4 per cent. Southeast Asia’s renewable energy potential is also explored, both in terms of resource potential, and the spectrum of benefits the transition to a sustainable energy future brings.
The report notes that in 2016, 611,000 people were employed in Southeast Asia’s renewables sector, primarily in liquid biofuels, however up to 2.2 million people could be employed in the sector by 2030 should renewables scale-up in line with the region’s potential.
Synergies between decentralised renewable energy and livelihood development, whether in rural, urban or island settings are also highlighted. Drawing on a number of projects that demonstrate how decentralised renewable energy solutions — such as micro-hydro and biogas solutions based on local entrepreneurship and strong community participation — the analysis draws parallels between modern energy services and socio-economic development.
The report forms part of IRENA’s wider body of work in the region, including country-level engagement and regional initiatives, advancing joint efforts of IRENA and the governments of the ASEAN to accelerate the region’s transition to low-carbon, sustainable energy.
It is also part of IRENA’s Renewable Energy Market Analysis series capturing knowledge and experience from different regions to identify emerging public policy and market development trends. The first two editions covered the GCC (Gulf Co-operation Council) region (2015) and Latin America (2016).
The full report can be downloaded, here.
Concentrating Solar: Delivering Renewable Electricity When It’s Needed
Last year, right after graduating from college, Hajar Abjeg left her vibrant hometown of Agadir on the west coast of Morocco to live in the middle of the desert in Ouarzazate. A newly minted engineer, her goal was to work at the sprawling solar complex on the outskirts of the city because, she said, it was the future.
“What’s exciting for me about this plant (is) that we use a resource that’s taken for granted… to produce something that is essential for us,” Abjeg said. “The more we study this kind of plant, the more we operate it, the more we find ways to make it as efficient as possible, and the less reliant (we are) on traditional energy-producing methods such as fossil fuels. And in the long term, that’s fantastic.”
Abjeg is not alone in her optimism.
Concentrating solar power (CSP) is moving ahead in many countries, especially in the Middle East, North Africa and Latin America, where exceptional year-round solar resources and vast swathes of available land make it an attractive option, often over traditional sources of power such as coal and oil.
With thermal storage that is superior to batteries for bulk energy storage, CSP provides power that is dispatchable any time there is demand for electricity. The plants store heat from the sun in large tanks of molten salt – where it can be stored for hours, days or as long as needed — and turn it into electricity on cloudy days or during peak usage, which occurs at night for many countries in the Middle East and North Africa. This allows electric utilities to regulate electricity production and integrate other variable renewable sources of electricity – solar photovoltaic (PV) or wind – into their energy mix more easily.
In 2017, CSP had a global installed capacity of 5.1 GW. That number is expected to reach 10 GW by 2022, with almost all new capacity incorporating storage, according to the International Energy Agency. Worldwide, 23 countries have CSP projects. While the largest installed capacities are in the United States and Spain, there are CSP plants in operation or under development in numerous other countries, including the United Arab Emirates, Egypt, Israel, India, China, South Africa, Chile, Mexico, Australia, Kuwait and Saudi Arabia.
In Morocco, the Noor Ouarzazate CSP project is the country’s first utility-scale solar energy complex, and expects to reach over 500 megawatts (MW) of installed capacity, ultimately supplying power to more than 1 million Moroccans and contributing to Morocco’s goal of producing 42 percent of its electricity through renewable sources by 2020.
But while CSP will undoubtedly play a role in the energy mix for some countries, significant hurdles remain.
The high cost of setting up a CSP plant is one such challenge. CSP technology is expensive and more time-consuming to build than wind or solar PV. Developing countries already face difficulties in financing capital-intensive infrastructure, so for a relatively new technology like CSP, investment can be much harder to attract. In many cases, the World Bank and other international financial institutions have stepped in and provided concessional financing to help attract private investors and make the market for CSP competitive and drive down prices even further.
Concern around costs, especially when compared to solar PV, is also a hurdle. But prices are dropping – in 2017 the cost per kilowatt hour (kWh) fell to 6 US cents in Australia and 7.3 US cents in Dubai. Also, as CSP has a built-in storage solution, the true comparison is against solar PV plus batteries – the price of which are also falling, but remain expensive. Without costly battery storage, PV often cannot deliver power when its value is highest—which is where CSP shines. It offers the guarantee of continuous electricity production – especially at night – something solar PV cannot do.
Ultimately, solar PV plus some form of storage will likely be CSP’s biggest competitor. But for the moment, CSP has a potentially important role in the energy mix for many countries – particularly those with abundant sunshine and available land – helping improve energy security and In Morocco, CSP is expected to decrease dependence on oil by about 2.5 million tons and reduce carbon emissions by 760,000 tons per year, CSP is expected to decrease dependence on oil by about 2.5 million tons and reduce carbon emissions by 760,000 tons per year. The Noor Ouarzazate project has also encouraged several start-ups in the country and youth, and women in particular, to pursue education and jobs in the renewable energy sector.
“The future of CSP is very bright,” said Abjeg. “When I first walked in here, (I saw) the sheer size of the plant and how much energy they produce. To produce that just from collecting sun rays – it’s amazing.”
EU Doubling Renewables by 2030 Positive for Economy, Key to Emission Reductions
The European Union (EU) can increase the share of renewable energy in its energy mix to 34 per cent by 2030 – double the share in 2016 – with a net positive economic impact, finds a report by the International Renewable Energy Agency (IRENA), launched in Brussels.
Presenting the findings during a launch event, ‘Renewable Energy Prospects for the European Union’ – developed at the request of the European Commission – IRENA’s Director-General Mr. Adnan Z. Amin highlighted that achieving higher shares of renewable energy is possible with today’s technology, and would trigger additional investments of around EUR 368 billion until 2030 – equal to an average annual contribution of 0.3 per cent of the GDP of the EU. The number of people employed in the sector across the EU – currently 1.2 million – would grow significantly under a revised strategy.
Raising the share of renewable energy would help reduce emissions by a further 15 per cent by 2030 – an amount equivalent to Italy’s total emissions. These reductions would bring the EU in line with its goal to reduce emissions by 40 per cent compared to 1990 levels, and set it on a positive pathway towards longer-term decarbonisation. The increase would result in savings of between EUR 44 billion and EUR 113 billion per year by 2030, when accounting for savings related to the cost of energy, and avoided environmental and health costs.
“For decades now, through ambitious long-term targets and strong policy measures, Europe has been at the forefront of global renewable energy deployment,” said IRENA Director-General Adnan Z. Amin. “With an ambitious and achievable new renewable energy strategy, the EU can deliver market certainty to investors and developers, strengthen economic activity, grow jobs, improve health and put the EU on a stronger decarbonisation pathway in line with its climate objectives.”
Welcoming the timeliness of the report, Mr. Miguel Arias Cañete, European Commissioner for Energy and Climate Action said: “The report confirms our own assessments that the costs of renewables have come down significantly in the last couple of years, and that we need to consider these new realities in our ambition levels for the upcoming negotiations to finalise Europe’s renewable energy policies.”
The report highlights that all EU Member States have additional cost-effective renewable energy potential, noting that renewable heating and cooling options account for more than one-third of the EU’s additional renewables potential. Furthermore, all renewable transport options will be needed to realise EU’s long-term decarbonisation objectives.
Additional key findings from the report, include:
- Reaching a 34% renewable share by 2030 would require an estimated average investment in renewable energy of around EUR 62 billion per year.
- The renewable energy potential identified would result in 327 GW of installed wind capacity an additional 97 GW compared to business as usual, and 270 GW of solar, an 86 GW increase on business as usual.
- Accelerated adoption of heat pumps and electric vehicles would increase electricity to 27 per cent of total final energy consumption, up from 24 per cent in a business as usual scenario.
- The share of renewable energy in the power sector would rise to 50 per cent by 2030, compared to 29 per cent in 2015.
- In end-use sectors, renewable energy would account for 42 per cent of energy in buildings, 36 per cent in industry and 17 per cent in transport.
- All renewable transport options are needed, including electric vehicles and – both advanced and conventional – biofuels to realise long-term EU decarbonisation objectives.
The report is a contribution to the ongoing discussions on the European Commission’s ‘Clean Energy for All Europeans’ package, tabled in November 2016, which proposed a framework to support renewable energy deployment.
Renewable Energy Prospects for the European Union is part of IRENA’s renewable energy roadmap, REmap, which determines the potential for countries, regions and the world to scale up renewables to ensure an affordable and sustainable energy future. The roadmap focuses on renewable technology options in power, as well as heating, cooling and transport. The REmap study for the EU is based on deep analysis of existing REmap studies for 10 EU Member States (accounting for 73 per cent of EU energy use), complemented and aggregated with high-level analyses for the other 18 EU Member States.
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