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Another US- Canadian corporate collaboration Silences Public Debate on it in the US

Brian Frank

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The Northern Pass Transmission targets the state of New Hampshire.The media reports polls say 50% of New Hampshire opposes it.From Quebec, Canada to Concord, NH, you see only signs of opposition to Northern Pass. Bumper stickers against it in French are seen on the Canadian side. On the US side hundreds, perhaps thousands of hand-painted postersin English ‘Northern Pass Kiss my Ass’ and commercially printed ones in French‘Enterrez-le’ (Bury It) line the route south to Concord.A public referendum would kill the proposal. There’s been no talk of referendums.

Northern Pass is a collaboration between Boston-based Eversource Energyand Hydro-Quebec, the Quebec State Utilities. Their plan isto construct power lines from Quebec to Concord, NH cutting through 192 miles of NH forest.

In the NH media the arguments against it revolve around the environmental impacts and potential declines in real estate values and tourism. There are more fundamentalreasons not to allow Northern Pass but those have not been raised. Northern Pass is billed as ‘green energy’ because its 90% hydroelectric power. But ‘green’ implies more than simply hydroelectric. Green means sustainable. Regarding this criteria scrutiny of Northern Pass has been noticeably absent in the media. The Northern Pass model is archaic.

Robert Hebner, Director of the University of Texas/ Austin Center for Electomechanics says that transmitting thousands of megawatts long distances is a thing of the past.Smaller grids are the future and threat to big utility companies. The grid-expanding Eversource-HydroQuebec deal is a shrewdmaneuver to prevent losses in the face of a grid-break up.

Small grids are more logical. They are more sustainable, a better defense against climate change. A hotter climate means more storms and higher energy storms.In big grids millions lose power with a flood, a lightning strike, a power line downed by wind, snow or a tree. Heat wavesproduce extreme demand by millions resulting in brownouts and blackouts. Human operator erroron a big grid means millions lose power.

Hydro-Quebec is famous for power failures. For example, a1989 space storm that interrupted service at Hydro-Quebec caused outages in Quebec and in turn New York City affecting 6 million people for 9 hours. The there was the 1998 ice storm. It destroyed transmission towers and caused massive prolonged power outages in Quebec. In 1999 a wind storm downed Hydro-Quebec transmission lines. It cutting  power to 600,000 people for over a week.In 2006 winds blow down Hydro-Quebec power lines. It left 450,000 without power.

The risks of big grids are well documented but absent from the debate on Northern Pass. Big grids fail big. Our experience with big gridsover the last 50 yearsis acomedy of errors. In 2003 fallen tree’s cut power to 8.5 million people in 17 states for two weeks people in Hurricane Sandy on the US’s east coast. In 2012, hundreds of millions lost power due to a surge in demand during a heat wave.In 2012  a wind storm  cut power to 4.2 million customers in 11 states in the midwest for 10 days. In 2011 downed trees and wires caused a ten-day black out for three million customers in Mid-Atlantic states and New England.  In 2011 hot weather and high demand after the end of the cause 12 hour outage , affecting 2.7 million people in Arizona and California which was importing power from Arizona. In 2003 two cables failed in London, and 250,000 customers lost power. In 2003 tree trimming caused a transmission line to short circuit. 50 million people-  10 million in Canada and 40 million in the US, were without power for four days. In 1998 lightning struck a Minnesota transmission line causing a separation of the northern Midwest  from the Eastern grid. 52,000 people in upper Midwest, Ontario, Manitoba, and Saskatchewan lost power for 19 hours. In 1996 an Idaho transmission line overheated and sagged into a tree, which tripped relays to Wyoming coal plants. Two million people in the U.S., Canada, and Mexico lost power for minutes to hours. In 1996 inadequate tree trimming shorted-circuited Washington state transmission lines which  tripped hydro  turbines  at an Oregon Dam.  7.5 million customers lost power in seven western U.S. states, two Canadian provinces, and Baja California, Mexico for up to six hours.In 1982  high winds knocked one transmission tower over causing a domino effect,  as tower fell on tower.  Five million people on the west coast lost power.In 1977 lightning struck several power lines shutting Indian Point No. 3 nuclear plant, causing power surges, overloads and disconnecting New York City from the North East grid.  Nine million people in New York City lost power. Looting lasted for 26 hours. In 1965 a wrong setting on a transmission system device near Niagara Falls led to other human errors which  lead to 30 million people losing power for 13 hours in the Central Northeast US and Ontario.

Terrorism is a bigger risk for bigger grids. Power failures can result from hacking. A Vermont electric utility was hacked by Russians. It was unaffected only because it was not connected to the bigger grid. In 2015 Kiev, Ukraine lost power as result of suspected Russian hacking.

It is irrelevant that Northern Pass makes no sense. There is a precedent here for senseless things happening. History is about to repeat itself.  US and Canadian corporations will muscle Northern Pass though the same way  the overwhelmingly unpopular Canadian Natural gas pipeline was muscled through. In VT they just dug it. They heck with permits.The corporate attitude was ‘let them stop us’. Maybe the term ‘leader of the free world’ refers to corporate freedom.

Brian Frank was trained in Hydrogeology. He writes to raise public awareness of the quiet destruction of the life-sustaining natural resources around us. It began with research he did on a municipal groundwater supply as a graduate student. That aquifer was pollutedwith industrial solvents and road salt. It was nearly dried up, shockingly unrecognizable compared to descriptions of it 100 years earlier, That contrast permanently changed Brian. He has been writing eversince as he is discovering groundwater problems wherever he goes. He has written about his radioactive tap water in Bridgeton, NJ, his lead contaminated water in Millville, NJ and his pesticide-contaminated water in Vineland, NJ. He has written for the Examiner, Earth Island Press and his own blog, subsurfacestories.wordpress.com, about geoscience and human health. Brian presented his research at the Passaic River Institute’s environmental symposium in 2012. He has also been a physical therapist for 28 years and specializes in rehabilitating people with age-related diseases.

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Energy and Poverty

Todd Royal

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Energy and poverty are intertwined. In the last ten years India according to the United Nations (UN) 2019 Multidimensional Poverty Index, lifted over 270 million Indian citizens out of extreme poverty; since they acquired growing electrification and access to energy. But many nations believe chaotic, intermittent renewables – mainly wind and solar – will achieve these results. Meanwhile, the world watches passively while the weaponization of energyled by China, Russia and Iran (CRI) is teetering Asia towards memories of 1939 and the emergence of World War III.

Europe and the U.S. wholeheartedly believe renewables will power billions in China, India, Africa, and Asia hungry for energy and electricity. Europe even welcomes with open arms, Iranian terrorist-monies for their dispirited economies. What the U.S. should do is “drown the world in oil.”Build power plants, and watch the planet flourish with affordable electricity. Nations need energy now.

Whoever controls energy – mainly oil, natural gas, coal and increasingly nuclear power – rules with either an iron fist or a benevolent one? But the world is in a stage of chaotic order with CRI challenging the US-led liberal order in place since the end of World War II (WWII). Energy is the new superpower.

Never before has energy and electricity played the leading role in alleviating poverty. Social order, religion, and family structure are still important – though all three are under attack over environmental extremism – but nothing has done more for human achievement, increased life expectancies, and ameliorating hunger like access to oil, natural gas, and coal that brings scalable, reliable affordable, abundant and flexible energy and electricity.

Allowing the Guardian newspaper, and green clergy parading as environmentalists such as Bill McKibben, Paul Ehrlich and John Holden to determine energy policies that lead to poverty is evil and shameful. These men then attack human reproduction, productivity, longevity, and technological progress through delaying or crushingenhanced infrastructure projects.

Renewables and believing an existential crisis exists via climate change when there are serious doubts (research the Oregon Petition and Marc Moreno for starters) won’t stop CRI from becoming the new hegemonic powers. Even NASA has admitted it is the sun that affects the earth more than burning fossil fuels. Then the last seventy five years of fighting poverty will be overturn over dubious, global warming claims, and relying on the sun and wind for electricity backed up by fossil fuels onto electrical grids.

We have entered the era of allowing Al Gore-types (whose predictions and science are generally wrong) to set national security, foreign policy, and realist balancing based on inaccurate predictions of the weather. But the former U.S. Vice President isn’t the only doomsayer whose global warming/climate change prognostications are deceptively incorrect. This has profound implications for energy, poverty, and global peace.

Renewables, and setting energy polices based on global warming/climate change only leads to poverty and geopolitical chaos. Poverty is now in the form of:

“Trillions in subsidies, rocketing power prices, pristine landscapes turned into industrial wastelands, wrecked rural communities and bird and bat carnage.”

The U.S. and European led “Green New Deals” will destroy humanity, and lead to backbreaking poverty. It’s why India has chosen reliable, affordable coal-fired power plants over solar and wind farms for electricity. China is following India’s lead, and slashing renewables, clean energy and technology subsidies by 39 percent; and building coal-fired power plants at a record pace.

Chinese has even used “green finance” monies for coal investments.Overall “global renewable growth (and investment) has stalled,” particularly in Europe.Why are global subsidies, production credits and tax incentives for renewables are being cut by governments and private investors?

Solar and wind have led to electrical grid blackouts in Australia, Britain, New York City, and grid instability in U.S. state, Texas, and substantially higher electricity costs. Additionally, renewables cannot replace the approximately6,000 products that came from a barrel crude oil.

Renewables (solar and wind) will never be enough for decades ahead to power modern, growing economies, or countries, and continents such as China, India and Africa, which are emerging from the energy and electrical dark ages. A city, county, state, nation, or continent needs reliable electricity 24/7/365, and renewables are chaotically intermittent. U.S. energy firm Duke Energy now believes solar farms are increasing pollution; Michael Shellenberger, Time Magazine environmental hero recipient echoes the same sentiments. Mr. Shellenberger also includes wind power with solar increasing emissions.

Moreover, renewable investments are plummeting, because unless electricity markets are skewed towards favoring renewables, the entire market for solar and wind produced electricity breakdowns. Then the entire renewable to electricity model relies on energy storage systems that do not have enough capacity or technological progress currently available to provide uninterrupted, on-demand electricity to all ratepayers and recipients from the grid.

It energy-nihilism to think, or believe storage from wind and solar will generate affordable, reliable, scalable, and flexible electricity. If fossil fuels are replaced on a large-scale basis it will lead to increased pollution, higher than average levelized cost of electricity, grid instability, environmental destruction, and poverty. This why most people don’t want renewables near them; meaning, there isn’t a green transition-taking place.

But geopolitics is where energy and poverty collide, and renewables replacing fossil fuels based on the overarching belief of anthropogenic global warming (whose climate models consistently fail) is how the global instability could deepen and grow.

According to the Bloomberg Economic gauge, China’s economy is dramatically slowing, “due to its vast self-made problems.” Which means as long as President Trump is in office the U.S.-China trade war will continue. The U.S. is winning, and Iran is still in Trump’s and the U.S.’ “crosshairs.” Both strategies receive negative media attention, but are causing geopolitical consternation. China and Iran will forcefully respond.

Nations and governments better have policies in place for energy and electrical stability to counter renewables instability, and the nation-state rivalry occurring between the U.S., NATO, and Asian allies against CRI. Either reliable energy will be chosen, or geopolitical wars over blackouts leading to lower military preparedness will happen. Either way energy and poverty are intertwined, or poverty can be defined as lower per-capita-GDP leading to conflicts that destroys countries. Choosing renewables and global warming-based energy policies will likely lead to poverty and possibly wartime catastrophes.

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Rethinking Energy Sector Reforms in a Power Hungry World

MD Staff

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Every country aspires to provide reliable, affordable, and sustainable electricity to its citizens. Yet during the past 25 years, some countries made huge strides, while others saw little progress. What accounts for this difference?

A new World Bank report—Rethinking Power Sector Reform in the Developing World—looks at the evidence on the ways in which developing countries have attempted to improve power sector performance and on what the outcomes have been.

Since 1990, many countries embarked on market-oriented power sector reforms that ranged from establishing independent regulators and privatizing parts of the power industry, to restructuring utilities and introducing competition. Each of these reforms has a story to tell.

Regulation: Regulation proved to be the most popular of the reforms, with about 70 percent of developing countries creating quasi-independent regulatory entities to oversee the task of setting prices and monitoring the quality of service. Although many countries enacted solid legal frameworks, the practice of regulation continues to lag far behind. For example, while almost all countries give the regulators legal authority on the critical issue of determining tariffs, this authority is routinely overruled by the governments in one out of three countries. While three out of four countries have adopted suitable regulations for quality-of-service, these regulations are only enforced in half of the cases.

Privatization: Thanks to the widespread adoption of Independent Power Projects, the private sector has—remarkably—contributed as much as 40 percent of new generation capacity in the developing world since 1990, even in low-income countries. However, the privatization of distribution utilities has proved much more challenging. Latin American markets drove an initial surge in the late 1990s, but there has been relatively little impetus to continue subsequently. Where distribution utilities were privatized, countries were much more likely to adhere to cost-recovery tariffs. Many privatized utilities also operate at high levels of efficiency; and their performance is matched by the better half of the public utilities. Irrespective of ownership, more efficient utilities have adopted better governance and management practices, including: transparent financial reporting, meritocratic staff selection, and modern IT systems.

Restructuring: Most developing countries continue to operate with vertically integrated national power utilities that operate as monopolies. Only one in five countries implemented both vertical and horizontal unbundling of utilities, separating out generation from transmission and transmission from distribution and creating multiple generation and distribution utilities. Restructuring is intended primarily as a stepping stone to deeper reforms, and countries that went no further tended not to see significant impacts. Indeed, restructuring of power systems that are very small and/or poorly governed—as in the case of many Sub-Saharan African countries—can actually be counter-productive by reducing the scale of operation and increasing its complexity.

Competition: Only one in five developing countries has been able to introduce a wholesale power market during the past 25 years, in which generators are free to sell power directly to a wide range of consumers. Most of these power markets are in Latin America and Eastern Europe. Such countries have reaped the benefits of more efficient allocation of generation resources, but they have typically needed to introduce more incentives to ensure adequate investment in new capacity. A demanding list of structural, financial, and regulatory preconditions for power markets prevents most other developing countries from following suit. Such a transition is rarely possible until power systems reach a size of around 3GW and a wholesale power turnover of around US$1 billion. For countries that are not yet ready, participating in a regional power market can bring many of the benefits of trade.

Reflecting on these experiences leads to conclusions that can inform future efforts to improve power sector performance. The main takeaways from the study are as follows.

Power is political: The implementation of market-oriented power sector reforms raises political challenges. Many countries announced reforms that did not subsequently go through, and some countries enacted reforms that later had to be reversed. In practice, electricity reforms proved to be most feasible in countries that already espoused a broader market ideology and in political systems based on the decentralization of power. Reform champions often played a crucial role in driving the change process, but broader stakeholder alignment proved to be equally important for reforms to be sustained in the longer term. For example, in the Dominican Republic, a far-reaching market-oriented reform was enacted in an unsupportive political environment and a turbulent macro-economic context that eventually led to the renationalization of the power utilities.

Starting conditions matter: Market-oriented reforms are complex and presuppose a power system that is already largely developed, adequately governed, and financially secured. Countries starting from this vantage point generally saw quite positive outcomes from power sector reform. But those that embarked on the process before these basic conditions were in place faced a much more difficult trajectory, with outcomes that often fell short of expectations. Thus, market-oriented power sector reform led to much better outcomes in relatively developed middle-income countries like Colombia, Peru, or the Philippines, than in more challenging environments such as Pakistan or the Indian State of Odisha. For example, in Peru, the power sector was fully restructured by 1994; private sector investment substantially increased in generation, transmission, and metropolitan area distribution networks, amounting to about $16 billion over 20 years. The creation of an effective sector regulator and wholesale power market institutions has driven the efficiency of the Peruvian power sector to best-practice levels and led to a significant reduction in the cost of energy.

One size does not fit all: Power sector reform is a means to an end. What ultimately matters are good power sector outcomes, and there may be different ways of getting there. Among the best-performing power sec­tors in the developing world are some that fully implemented market-oriented reforms, as well as others that retained a domi­nant and competent state-owned utility guided by strong policy mandates, combined with a more gradualist and targeted role for the private sector. This reality makes a case for greater plural­ism of approaches going forward. In Vietnam, for instance, the central policy focus was on achieving universal access to electricity and rapid expansion of generation capacity to achieve energy security in a fast-growing economy. These objectives were achieved through strong leadership of state-owned entities, complemented by gradual and selective adoption of market reforms and targeted private sector investment.

Goal posts have moved: It used to be enough to achieve energy security and fiscal sustainability, but countries now have more ambitious 21st century policy objectives, notably, reaching universal access plus decarbonizing electricity supply. Market reforms can be helpful in improving the overall efficiency and financial viability of the power sector, and in creating a better climate for investment. However, they cannot—in and of themselves—deliver on these social and environmental aspirations. Complementary policy measures are needed to direct and incentivize the specific investments that are needed. For example, in Morocco, an ambitious scale-up of renewable energy was achieved through the creation of a new institution parallel to the traditional utility, with a specific policy mandate to direct private investment toward the achievement of government policy goals.

Technology disrupts: Rapid innovation is transforming the institutional landscape through the combined effect of renewable energy, battery storage, and digitalized networks. What used to be a highly centralized network industry is increasingly contested by decentralized actors. These include new entrants and consumers who may have the ability to generate their own electricity and/or adjust their demand in response to market signals. How this ultimately reshapes power sector organization will depend on the extent to which regulators open up markets to new players and reconfigure incentives for incumbent utilities to adopt innovative technologies.

In sum, a nuanced picture emerges from the experiences of developing countries that have aimed to turnaround power sector performance in the past 25 years. Drawing on this wealth of historical evidence, and informed by emerging technological trends, this report offers a new frame of reference for power sector reform that is shaped by context, driven by outcomes, and informed by alternatives.

The complete report can also be accessed at http://www.esmap.org/rethinking_power_sector_reform

World Bank

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Aramco’s IPO: A bell weather of Saudi balancing between East and West

Dr. James M. Dorsey

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Saudi Arabia’s planned awarding of mandates for the management of an initial public offering (IPO) by its national oil company Aramco is likely to serve as a bell weather for how Riyadh balances its relations with the United States and China.

In an early indication that Western financial institutions like Goldman Sachs may be losing their near monopoly, Saudi Arabia this week invited China’s biggest state-owned banks, Industrial & Commercial Bank of China Ltd (ICBC) and Bank of China Ltd to pitch alongside major US, European and other Asian underwriters for the mandate of what is expected to be the largest listing ever.

Analysts took the invitation to Chinese institutions as a sign that Saudi Arabia was considering Hong Kong in addition to London, New York and Tokyo as possible exchanges on which to list the five percent stake in Aramco that would be on offer.

ICBC, the world’s largest lender by assets, is the only major Chinese state-owned bank to have a commercial banking presence in the kingdom. Bank of China’s London branch was a co-manager on Aramco’s US$12 billion bond sale in April.

The invitation to the two Chinese banks came as US investment bank and financial services giant Goldman Sachs was believed to have significantly enhanced its chances as the result of a sustained high-level lobbying effort.

Goldman had failed to secure a prominent role in 2017 when Aramco initially nominated major Western firms to manage the IPO. The offering was ultimately postponed after Crown Prince Mohammed bin Salman failed to persuade the market to adopt his US$2 trillion valuation of Aramco.

The success of the bond sale, months after the killing of journalist Jamal Khashoggi, that attracted more than $100 billion of investor orders persuaded Prince Mohammed that he might be able to pull off the Aramco offering. Goldman Sachs was the bond’s bookrunner.

Chinese state-owned oil companies PetroChina and Sinopec offered to buy the stake when the kingdom first announced that it wanted to sell five percent of Aramco in the hope of raising US$100 billion.

The sovereign funds of Russia, Japan and South Korea also signalled an interest in becoming cornerstone investors.

Granting a Chinese bank a leading role in the IPO would further cement the kingdom’s pivot towards Asia.

It would underline Saudi Arabia’s ever greater economic interdependence with Asia that it needs to balance with its increasingly uncertain security relationship with the United States and Europe and reliance on Washington in its struggle against Iran.

The kingdom’s relations with its onetime main ally have changed as the United States becomes less dependent on energy imports on the back of shale oil and renewables.

On the flip side, Saudi Arabia last year accounted for some 12 percent of Chinese oil imports and its share has since almost doubled. The US-China trade war has prompted Chinese buyers to reduce oil purchases from the United States and look elsewhere.

China and Saudi Arabia earlier this year inked deals worth US$28 billion, including a Saudi commitment to build a $10 billion petrochemical complex in China that will refine and process Saudi oil. Saudi Arabia has also invested in energy assets in the United States.

Talk of Saudi energy investments in China first emerged two years ago at the time that a possible direct Chinese investment in Aramco was being touted.

Meanwhile, Saudi relations with the US are troubled by a growing sense that the United States will over time reduce its security commitment to the Gulf and mounting questioning in the US Congress of the alliance with the kingdom as a result of its disastrous four-year-long war in Yemen and the killing of Mr. Khashoggi.

Some analysts suggest that the kingdom’s revival of the prospects of an Aramco IPO is a political ploy rather than a serious effort to sell a stake in an asset that generates the bulk of the state’s revenue. The revival coincided with Saudi plans to accelerate privatization of other state assets.

The IPO “is wheeled out to investors the same way an ailing, elderly Arab ruler is put on display — to remind subjects of the immense power of patronage, and the threat of retribution for disloyalty. But it is also sad and tiresome, a farce that everyone knows is a representation of the past and not where things are headed. The Aramco IPO has become a regular reminder to those in the finance world who depend on the Saudi government for fees, for access to deals and for that slim possibility that the offering goes through. The message is clear — stay loyal, just in case,” said Gulf scholar Karen Young, writing in Al-Monitor.

Ms. Young argued that Aramco’s ambition to diversify into refining, gas and petrochemicals neatly aligns itself with Prince Mohammed’s effort to diversify and streamline the Saudi economy. She notes that expanding the company’s shareholder base could complicate the oil company’s ability to execute its plans.

Said Ms. Young: “Any discussion of the Aramco IPO always ends on the same note. It is a political decision, which the company will have to be prepared to accept. Oil prices are not helping, as they continue to be depressed, despite rising political tensions in the Persian Gulf. If the government wants to keep its Aramco prize and be able to use its energy resources to wield political influence, it is better off making a deal with China to buy a small stake in the company.”

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