Picking from its executive summary:
The energy policy framework combines competitive energy markets and effective, independent regulation Recent experience from the gas market in Great Britain has shown that markets can deliver significant investment in new supplies which help to maintain security of supply. It also highlighted that when investments are delayed or shocks lead to supplies being very tight relative to demand, prices rise and customers respond by reducing their consumption, thereby helping to prevent blackouts or shortages. But this response comes at a cost to customers, particularly industrial customers who compete in international markets. No amount of investment will ever be enough to deliver an absolute guarantee that energy supplies will be sufficient to meet any level of demand. Therefore, security of supply is not a simple question of "will the lights stay on?", but a matter of assessing the risks to supplies. In other words, "how likely is it that some level of demand will not be met in the future?"
Recent experience from the gas market in Great Britain has shown that markets can deliver significant investment in new supplies which help to maintain security of supply. It also highlighted that when investments are delayed or shocks lead to supplies being very tight relative to demand, prices rise and customers respond by reducing their consumption, thereby helping to prevent blackouts or shortages. But this response comes at a cost to customers, particularly industrial customers who compete in international markets.
No amount of investment will ever be enough to deliver an absolute guarantee that energy supplies will be sufficient to meet any level of demand. Therefore, security of supply is not a simple question of "will the lights stay on?", but a matter of assessing the risks to supplies. In other words, "how likely is it that some level of demand will not be met in the future?"
"Markets invest enough, except when they don't. In which cases, markets work, as consumers adapt to reality. Funnily, that adaptation has a cost. But let's not blame the market for underinvestment. Nobody can invest enough."
There are significant opportunities for the construction of new generation capacity In the medium term, there appear to be significant opportunities for the construction of new generation capacity in order to meet current expected levels of demand.
In the medium term, there appear to be significant opportunities for the construction of new generation capacity in order to meet current expected levels of demand.
"shit, lots of power plants need to be built quickly!"
Price signals will play an important role in balancing gas supply and demand In terms of capacity, on the assumption that facilities currently under construction are completed to target, new import capacity should more than offset declining indigenous production until around 2015. Gas supplies to the UK will therefore not be constrained by physical capacity until this time (although prices may need to rise to attract supplies to the UK.) Further investment will be needed to avoid physical capacity constraints from around 2015. It should be noted that as gas and, in particular, liquefied natural gas is traded internationally, import infrastructure will be used to deliver gas supplies only if UK prices are attractive relative to other countries. Although this allows for considerable flexibility to respond to shocks affecting one or more supply source or route, it does increase the complexity of assessing the future security of supply; and means that price signals may have an increasingly important role in balancing gas supply and demand in the short term.
In terms of capacity, on the assumption that facilities currently under construction are completed to target, new import capacity should more than offset declining indigenous production until around 2015. Gas supplies to the UK will therefore not be constrained by physical capacity until this time (although prices may need to rise to attract supplies to the UK.) Further investment will be needed to avoid physical capacity constraints from around 2015.
It should be noted that as gas and, in particular, liquefied natural gas is traded internationally, import infrastructure will be used to deliver gas supplies only if UK prices are attractive relative to other countries. Although this allows for considerable flexibility to respond to shocks affecting one or more supply source or route, it does increase the complexity of assessing the future security of supply; and means that price signals may have an increasingly important role in balancing gas supply and demand in the short term.
As noted in yesterday's story, relying on volatile short term prices creates investment uncertainty and imposes a volatility premium on prices (compared to long term contracts with smoothed indexed prices). It also creates the risk of shortages - which translate into price spikes, i.e. prices high enough for shortaged to covnert "efficiently" into "voluntary" demand destruction by those most hurt by such high prices.
The UK government sees these things as a good thing - rationing by price is still rationing.
And, btw, getting new LNG terminals or pipelines onstream by 2015 will require to get started really soon, as these things take a bit of time to plan and build...
The future use of coal, oil and nuclear fuels is unlikely to be limited by resource availability We conclude that global resources [of oil and gas] are sufficiently abundant to meet demand for the foreseeable future, but a number of constraints have the potential to threaten the ease with which these resources can be turned into production. These include labour, equipment and service sector constraints and geopolitical risks (such as resource nationalism and the risk of disruptions as supply routes become longer and have to cross more borders).
We conclude that global resources [of oil and gas] are sufficiently abundant to meet demand for the foreseeable future, but a number of constraints have the potential to threaten the ease with which these resources can be turned into production. These include labour, equipment and service sector constraints and geopolitical risks (such as resource nationalism and the risk of disruptions as supply routes become longer and have to cross more borders).
Peak oil? Nope. In the long run, we're all dead. John Maynard Keynes
Maybe it's time to negociate a change of plans? "The womb that spawned that thing is fertile yet"
Now those are real worries ;-) "The womb that spawned that thing is fertile yet"
Oh Lord, French is he? Put him on the Eurostar back... When locusts move on, they leave nothing behind
These include labour, equipment and service sector constraints and geopolitical risks (such as resource nationalism and the risk of disruptions as supply routes become longer and have to cross more borders) [emphasis added].
Is it just me or does that translate roughly into:
If our former colonies decide to use their new-found sovereignty to insist that we don't exploit their natural resources (at least not without paying them their fair share), then we are royally screwed.
Nah... Neo-colonialism from the neo-liberalists? Can't be! They're all about freedom ain't they? Or is that just for rich, white people?
Bleh!
- Jake Ceterum censeo Chicago esse delendam
It looks like 'serious' English, reads like 'serious' English, but has the content of a third rate school essay.
When will these idiots realise that a polished but slightly stodgy prose style is no substitute for creativity and ideas?
Whitehall:
The energy policy framework combines competitive energy markets and effective, independent regulation
But stable affordable energy? Er - actually, no.
competitive energy markets
means
(a) awash with speculative money; and
(b) shamelessly manipulated by investment banks and traders.
while
effective, independent regulation
is a sad joke.
