I'm usually known as one of the doomers'n'gloomers on the blogs, with diaries and comments on the economy heavily leaning towards negative views. And to a large extent, I still stand by these positions and fully expect (i) the economy to dive again and (ii) an even worse financial crisis coming our way.

I'm also part of the peak oil / peak resources crowd, and do not consider our current civilisation, especially as hundreds of millions in emerging markets rush to embrace it, to be sustainable. The Chinese and Indians and others cannot all live with the same resource consumption as we currently have in the West, and something will have to give at some point.

And this is a matter of years rather than decades, and most of us here will get to see that problem 'solve' itself. And of course, climate change adds a whole other dimension to that emergency.

But, surprisingly, I also have a number of arguments to be optimistic for the medium term, ie that let me hope that I will not spend my late years in poverty and/or in the middle of societal collapse.

Originally posted on DailyKos, where it has been astonishingly well received and spawned a largely civil, if really big, thread

The debate on whether it is more appropriate to say that Obama has done a lot or that he has done too little regularly divides DailyKos, and I'd like to tackle it from a slightly different perspective, to say that this is not really about Obama, but about the views of the different groups about our civilisation.

I would like to propose that those who think that Obama has not done enough consider that the current system is profoundly failing, and that it is time for systemic changes, instead of the tinkering they see Obama doing, whereas those that tend to focus on what Obama has done think that the system is flawed, but mendable, and that Obama is doing just that, moving things back in the right direction.

And the fact is - we don't know yet what group is right, and we may not know for a few more years.

THANET'S LAST TURBINE INSTALLED: WORLD'S LARGEST OFFSHORE WIND FARM ALMOST READY

The final turbine at the Thanet Offshore Wind Farm in the United Kingdom has been put in its place. When construction is complete at the end of the summer, Thanet will be the world's largest operating offshore wind farm.

Located 12 kilometers off the Foreness Point, the most eastern point of Kent, England, Thanet is composed 100 3-megawatt wind turbines.  When operating at full capacity, the offshore wind farm will be able to provide 240,000 English households with power.

This came on the heels of this:

Denmark Inaugurates World's Largest Offshore Wind Farm - 209 MW Horns Rev 2 (17 September 2009)

The world has a new largest offshore wind farm: The 209 MW Horns Rev 2 project, located 30 kilometers off the west coast of Jutland in the North Sea, was inaugurated today by Denmark's Crown Prince Frederik. Constructed by DONG Energy, the project consists of 91 Siemens turbines and is expected to produce about 800 GWh of electricity per year -- enough for 200,000 households.

That project replaced the Nysted wind farm as the largest offshore project; Nysted was built in 2003 as one of two demonstrator projects promoted by the Danish government (the other being Horns Rev 1), and, at 165MW, kept that title for a long time.

Part of the Wind power series

front-paged with picture edit by afew

I was somewhat affected by the ash cloud from Iceland as I was in Bremen (and nearby cities to the North, being Bremerhaven and Cuxhaven, where a good bit of the offshore wind industry is based) with 2 colleagues on Thursday and we were supposed to fly back yesterday morning. Needless to say, our plane was cancelled, and we tried to find other options.

We first ruled out driving back, as it is about 800km through busy parts of Germany or the Benelux countries, and headed for the train station. We managed, without any significant wait, to find a very helpful person at the ticket desk, but quickly discovered that most trains were already closed for reservations. Some of them still allowed tickets to be booked, but without seats reserved. So we managed to cook up an itinerary via Köln and Brussels as, for some reason, 3 seats were found on a Thalys to Paris. I was hoping to get a Thalys to the Roissy airport, as my car was still parked there, but we could not get to Brussels early enough for the train that did have seats. Departure just before 11am, arrival in Paris 8 hours later, with an hour wait in Köln and almost 2 hours in Brussels.

So far so good, and our first pleasant surprise was that we were actually able to sit down in the first leg of the train, to Köln (but the train got crowded a couple of stops later, and people were standing through that train). We could work, and even managed to have lunch in the train, at our seats, and considered ourselves lucky.

But the second leg did not turn out to be so easy, as several hundred people were waiting on the quay to board the next train, which was announced to be 45mn late. Checking the station maps, we positioned ourselves far from the crowd, which was actually not positioned where the train was planned to stop. That was a smart decision, as the rush to get into the (already full) train was quite frantic; we managed to get in, as opposed to about half the people on the quay, and took standing positions in the middle of our wagon.

After a number of minutes, an announcement was made (in German only) saying that the train was too full, and that people who board in Köln had to get down in order for the train to leave the station. Naturally enough, nothing happened; a few minutes later, a new announcement, in a wearier voice, indicated that people without reservations should leave the train. Still nothing, and a new announcement was again made, in a slightly annoyed voice, accompanied by a rather brusque version in English ("the train is full, if you have a reservation, it's good, you can stay, if you don't have a reservation, get off the train, or it won't leave"). No movement. Another announcement, yet more annoyed. No movement, several more announcements, each time more exasperated (I couldn't help thinking the voice told us "who are those rude people who can't follow simple instructions?") and, at some point, also made in French (even more brusque than in English). Still very little movement. After a few more announcements, there was the add-on that people getting off the train could go to the service point. After a few more unsuccessful announcements, another slightly helpful add-on was that people could take local trains to Aachen, then Liège, then Brussels.

A few people trickled out - probably those that had already missed out their connection, or had alternatives. A large fraction of the passengers were people trying to go to London, quite a few with Eurostar tickets, and they obviously had few alternatives to going to Brussels.

Finally, the inevitable happened (after about 1h30 of wait on the quay): the voice announced that people without reservations would be taken out of the train by the police (the English and French versions pleasantly added  that "then you will have big problems"...) Some people started going out of the train; we found seats in our wagon (where less than half the seats actually had seat-specific reservations visible) and waited, just in case. We had tickets for that train, but no seat reservations, so the DB guy said "out", and the police gently asked us to leave, like the majority of people in the train. At this point, we would not have made the connection to the Thalys (unless it was delayed) so we did not try to protest that in any way. I have no idea what happened to the train in the end...

We decided to have a go at the car rental agency, where there was surprisingly little wait - for a good reason: the only agency with cars was the one that only allowed you to drop the cars in Germany or the Netherlands... We tried on the internet to scour cars in nearby cities, but no success. Finally, a bit of luck: a guy was waiting on the last car of one of the bigger car rental networks, but hesitating over the price they were charging: 750 euros per day (instead of the usual 75-100 on a normal day). And, in a touch of luck, he was going to France. We immediately offered to share the car and the cost, and he agreed. We signed the papers, paid the car, went back to the train ticket office to have our tickets reimbursed (again, a relatively quick line, a helpful clerk, and a quick and successful resolution) and went to pick up the car.

The drive to Paris was largely uneventful, other than a massive traffic jam near Liège because of (poorly organised) road works; there was unusually heavy traffic for a Friday night towards Paris - and lots of obvious rental cars full of business people (we saw several from Denmark at a stop area, and countless German ones): at least a lot of people seem to have had the good sense of sharing vehicles. Our co-traveller was a very friendly Egyptian physical therapist trying to get to a conference in Barcelona - the organisers were obviously keen to have him as they were driving to Lyons to pick him up there for him to be down there this morning... We left him at Roissy, where I picked up my car - by then, it was 11pm, so we all got home in Paris at midnight.

So, for us, it was a somewhat inconvenient day rather than a major catastrophe, but it's obvious that in such circumstances, money matters. Being able to put up the cash to get an overpriced rental car helps; being able to pay for first class, flexible or otherwise more expensive tickets can help; even if you get reimbursed in the end, the ability to put the money upfront (having liquidity) matters when everybody is trying to grab the same thing. And while airlines seem to have behaved decently, and the train companies seem to be trying to help as much as possible (even if I'm not sure I understand how a train could be considered "too full" and not others), but some like the car rental companies are clearly taking advantage of the situation.

Ex-Dexia chief names advisory firm

Former Dexia head of energy Jerome Guillet has revealed the name of his new-Paris based financial advisory boutique.

The firm, which will be focussed on renewable energy project finance in both Europe and the US, will be called Energy Bankers à Paris. Registration with the French authorities was completed on Tuesday.

With a strong focus on the offshore wind sector, the firm will be based in central Paris and initially comprise of Guillet and three other project financiers, who are set to join at the start of April.

As IJ News reported earlier this month, Energy Bankers à Paris already has its first mandate, advising C-Power on the financing of phase 2 of its Thornton Bank offshore wind farm in Belgium.

Thanks to all of you here who have made me believe in my "brand" and helped me learn so many new things, and want to do more out there.

There will be more to come!

On the other hand, you may see me slightly less around the blog for a while as my work schedule is quite filled up with a lot of practicalities (Apple fans will be happy to know that the new company will be a Mac/iphone environment...).

Every year, energy giant ExxonMobil presents its own "Outlook for Energy", its view of the world's energy future until 2030. Although ExxonMobil's outlook is based on essentially the same historical data as similar "outlook" reports from the International Energy Agency in Paris and the Energy Information Administration (EIA) in Washington, it offers in many ways a different - and fascinating - perspective on the world. It may well be - although this is something no one can say for sure - a more realistic, anticipatory vision than the one offered by the "official" energy institutions.

The realists at ExxonMobil, unsurprisingly, see continued dominance of fossil fuels over the next 25 years - coming mainly from growth in emerging markets as rich countries. There's a lot of interesting data in the full report (6MB PDF!), but I especially like this graph:

Source: European Energy Review
In dotted lines: the price of coal- and gas-fired electricity without any carbon pricing. Note that this is based on unknown fuel price hypotheses, but given how the report writes about the abundance of natural gas, one can expect them not to be too high...
Click for larger version

In other words, wind power is already amongst the cheapest source of electricity, and if any minimal accouting for some externalities is put in place (such as a price for carbon emissions), it becomes the cheapest. Of course, as we know, "cheapest" does not necessarily translate into "most profitable."

And as an aside, they are also sayign that carbon capture will never make any kind of sense.

And it's not me saying it, but ExxonMobil.

front-paged by afew

Dash for gas-fired power stations raises concerns over future supplies

A steep increase in the number of gas-fired power stations has been approved by the government, raising fears about the growing pressure on future gas supplies.

This new "dash for gas", along with the huge investment in wind power launched by the government on Friday, reinforces concerns that Britain's infrastructure may become more vulnerable to extreme weather and supply disruption.

The article notes that "[c]ombined cycle gas-fired plants remain the preferred choice for many utilities because of their relatively low cost and how quickly they can be built" but of course fails to point out that they are relatively cheap because they bear the least burden of debt per kWh (so the higher cost of capital of the private sector is less penalising for such plants than it is for nukes, wind of coal), and, even more importantly, they are more profitable even when they are (on average) more expensive because their costs are better correlated, for technical reasons, to market prices.

But the article actually blames the large wind developments being planned for the 'dash-for-gas':

Gas-fired plants are being developed to back up the thousands of new offshore wind turbines planned by the government. The recent run of cold and still days has highlighted the risks created by a growing reliance on wind power.

At the end of last week, while gas supplies were being cut off for some large industrial users, wind farms, which account for 5 per cent of Britain's generation capacity, were providing only about 0.2 per cent of the country's electricity, enough to power a town the size of Tunbridge Wells.

The reality is that the UK has a creaky power system that needs massive investment just to replace existing plants. Nukes are old and will be decommissioned over the next decade or so, and coal plans are being phased out because of their carbon emissions and pollution. So new plants need to be built in any case, and not specifically as backup for wind.

The fact that wind is also being built means that the new plants will be used rather less than if wind were absent, but not that they do not need to be built: indeed, at times they will be all needed. But not often. Gas-fired plants are actually a good thing in the context of a massive wind build-up, as they are flexible enough to be able to come in when needed, and their lower capital requirements means that it still makes economic sense to build them even for lower use (gas-fired "peaker" plants that function as little as 3% of the time can be profitable, by running only at times of very high demand and commanding extremely high prices at such moments).

But - wind provides power, not capacity. Capacity needs to be built in the UK. If left to market forces, it will be mostly gas-fired plants. If wind is indeed built on the scale proposed, such build up will be a lesser evil, indeed a necessary one. If not, then it will be the dangerous, but inevitable consequence of the deregulating policies of our times, which favor financial returns over proper policies with collective purposes.

Front-paged by afew

The Economist's Charlemagne has outdone itself this week in a gleeful column about Europe's decline: Lessons from "The Leopard" - Is Europe becoming too accustomed to genteel decline?. It packs so many of the usual neolib AND neocon arguments in one place that it's worth looking at it in full detail...

Front-paged by afew

The IEA puts a date on peak oil production

FATIH BIROL, the chief economist of the International Energy Agency (IEA), believes that if no big new discoveries are made, "the output of conventional oil will peak in 2020 if oil demand grows on a business-as-usual basis." Coming from the band of geologists and former oil-industry hands who believe that the world is facing an imminent shortage of oil, this would be unremarkable. But coming from the IEA, the source of closely watched annual predictions about world energy markets, it is a new and striking claim.

I don't know what's most striking: the claim the Economist refers to, the fact that it's actually mentioned by the article, or the fact that it's mentioned with so little prominence.

In other words, this is like the articles about asset bubbles 4 years ago: there's enough publicly available information out there that there is little doubt about the underlying reality, the newspapers will be able to claim that they did cover the topic appropriately, and the topic can safely continue to be ignored by politicians, pundits and deciders. The topic is dismissed and neutralised and no policy conclusions need to be reached - and in particular no change to the system - and to the profits made by the incumbents and insiders need to be made.

Funnily enough:

The IEA reckons that co-ordinated action to restrict the increase in global temperatures to 2ºC will restrict global demand for oil to 89m b/d in 2030, compared with 105m b/d if no action is taken. That, Mr Birol says, "could push back the peak of production, as it would take longer to produce the lower-cost oil that remains to be developed." Action on climate change may yet save the world from an early supply crunch.

If any action or event is going to save the world from catastrophe, it's much more likely that fossil fuel scarcity will reduce carbon emissions, by reducing economic "growth" as we know it (and, possibly, but we can't put our hopes on this, because there simply won't be enough carbon around to burn). The good news is that the solutions to both problems (climate change and resource scarcity) are pretty much the same: energy efficiency, renewables, a re-definition of what economic propserity is. The bad news is that there's still a large consensus amongst serious people to do as little as possible to actually implement these.

It's hard for me to take sides in the debate between those sorely disappointed by Obama's policies and those that point out that his policies, however flawed, still represent very real progress and are so much better than the alternative. Or between those that feel betrayed by Obama's centrist behavior and those that remind us that he has to deal with a fairly conservative Congress.

The reality is that Bush was a hard-right, fundamentalist, administration, and we're now getting a centrist (but right of center) - and maybe more importantly, sane - administration. The reality is also that this is largely in line with what Obama promised. The reality is also, sadly, that, in today's political and media environment, this is probably close to the best (ie leftiest) we can get.

Thus, the questions we need to ask are - (1) why is it that the range of political discourse and policies considered possible in the US ranges from the hard right to the center right? And (2) what needs to be done to change this?

Of course, there's a third question pending: will center-right policies be enough to solve the current economic catastrophe? And if not, what happens then?

We get yet more hints of a "New Cold War" being revved up by the Wall Street Journal via the usual rhetorical flourishes (in this case, a "new Iron Curtain"):

But while at the moment Western Europe can bring this international gas into its networks, Eastern Europe can't. This divide, an affront to the idea of a single European market, is a "new iron curtain" that splits East from West, Pierre Noël of the European Council on Foreign Relations told a Brussels audience this week.

West of the divide, gas flows in two directions. East of it, the legacy of the past means that the pipelines allow gas to flow only from East to West, bringing gas from Russia but not allowing gas from the West.

In other words, Western Europe is relaxed about supposed Russian threats to cut gas deliveries, becuase it has alternatives, while Eastern Europe is stuck with that single supplier.

There is, of course, a basis in truth in such an assertion. Eastern Europe built its energy system to a good extent on the instruction of the Soviet Union, as it expanded its pipeline network and gas flowing from Siberia to these countries was one of the ties binding vassals tightly to their imperial master. Western Europe also connected itself to the Russian energy network, but on a more controlled way, and without giving Moscow a dominant place. And, as I've said enough, gas is an infrastructure business, and infrastructures cannot be changed overnight. However, as was noted rather prominently recently, it's been 20 years since the Berlin Wall fell, time enough to re-orient infrastructure.

First, an apparently legal obstacle:

One giant obstacle, however, is that Gazprom owns some of the key pipelines bringing Russia gas to the West. Why would it allow the building of so-called interconnectors that will allow competitors' gas to enter Eastern Europe from the West?

This suggests that for pipelines that are inside the territory of the relevant countries, and within the EU for those countries that are members, the local government or the EU cannot decide how such pipelines can be regulated? How much bad faith can there be? The EU Commission, prodded by the neoliberals, has been able to impose third party access on pipelines owned by the national utilities, which have rather more political power in their countries than Gazprom, and they wouldn't be able to impose anything on pipelines (partly) owned by Gazprom? And what about building other, independent, pipelines to ship gas from West to East if that's so important? Is it that these pipelines are not profitable? Or that States are not willing to subsidize them for the oh-so-important purpose of energy security? Is it because that would be a distortion of competition (the ultimate evil for neoliberals), or is it that governments cannot put a price on security of supply?

So new pipelines are vital, but both companies and States are apparently powerless to build them or control them? How can that be?

But wait:

Recently, there have been worried or outraged articles in the blogosphere (and here on dKos) about the stimulus money going to help create jobs in Canada, China, or going into the pockets of foreign multinational companies.

I'd like to make a few comments on this.

part of my series on wind power

Front-paged by afew

The Economist has yet another column moaning about more distance between Europe and the US and suggesting ominously that this is a bad thing.

But the arguments used are rather revealing - although maybe not of what the Economist would want us to focus on.

The main gripes are that (i) the Americans feel Europeans are not doing enough on Afghanistan and Iran and (ii) the Europeans are disappointed by Obama's policies on various topics.

Yesterday, Die Zeit published an article, translated by presseurop about Turkey's supposed rise as an energy superpower, and Europe's careless lack of reaction to its apparent increasing leverage.

All these pipelines put together will swell Turkey's sway over Europe. A peripheral country? An unloved aspirant to accession? "We expect to be treated with respect," says Suat Kiniklioğlu, foreign policy spokesman for the governing AKP party. Will Turkey's growing clout also open the door to the European Union? That alone probably will not suffice, but it should cement EU ties to Turkey. So we are going to have more to do with the Turks than, say, the French would like.

To which all I can say is "bah" and "bleh."

Front-paged by afew

As many of you know (and are reminded daily by the link on the front page...), my wife is active in L'Etoile de Martin, an association created by families of children with cancer, several of which, unfortunately, have died. The association organises activities for children who are in hospitals for long stays, and has also decided to help research in pediatric cancers by funding research stipends at l'Institut Gustave Roussy (IGR), Paris's main cancer hospital. Over the past 2 years, over 180,000 euros have been raised, and they have been used to provide research grants to post-graduate students at IGR - 2 full time positions have been funded on the basis of yearly grants.

We're trying to sustain this effort and, hopefully, expand it, and we need your help. Some of you may have already received an email about this, but I'd like to kindly request you to drop by this page and contribute to support an extraordinarily dynamic and hope-inspiring group of volunteers - which have already brought about some real results.

No donation is too small and, if you are a French taxpayer, you will get a tax credit equal to 2/3 of your donation.

So please click here to donate!

Goldman chief hits at `useless' banking

Lloyd Blankfein, chief executive of Goldman Sachs, has attacked some investment banking products as socially useless and said that the controversy over bankers' pay was both understandable and appropriate.

In a speech to the Handelsblatt banking conference in Frankfurt on Wednesday, Mr Blankfein said: "The industry let the growth and complexity in new instruments outstrip their economic and social utility as well as the operational capacity to manage them."

Belgian and Dutch investors join EIB and banks in Belwind rescue (24 Jul 2009)

Banks have signed the most important European renewable energy project financing of 2009 so far, after a band of Low Countries investors bought the Belwind offshore wind farm from the failed Econcern group.

The deal, one of the most encouraging pointers so far that the worst of the credit crunch may be easing for clean energy, sees the European Investment Bank agree to lend EUR 300m towards a EUR 482.5m (USD 686.4m), 15-year debt package for Belwind.

The remaining EUR 182.5m of the long-term debt is being provided by [commercial banks]

This is the transaction I have been working on for over a year and a half and, between my bank's bailout, the credit crunch or my client's bankruptcy, it's been a rather stressful process - and an altogether too busy one, as may have attested my patchy presence on ET in recent months.

It's the biggest offshore wind farm to be project-financed, it's the first to be financed since the credit crisis, and it's the first time the EIB is involved in taking project risk in the sector, despite the clear push from EU governments over the past year. It took coordinating 6 banks (including a multilateral and two quasi-public institutions), 6 equity investors, 2 large contractors and 1 bankruptcy administrators, jointly with a client with excellent engineers and permits to a great project, but with no money and management in chaos. It took bringing together on the same terms at the same time people who were all indispensable to the deal, all knew they were indispensable and all too often were tempted into brinkmanship to get a better seat at the table.

Quite honestly, I'm still stunned that it actually happened. I never gave up, took up an obviously big role in keeping it alive throughout but at times the odds seemed overwhelming and it took its toll on my morale and energy. It's going to take more than a bit of time to stop obsessing about clauses of the financial documentation, or the conflicting conditions imposed by the various parties, and it's going to be hard to forget the past several months, toiling away day and night in desperate efforts, but t least now I can think it was worth it.

I DID IT!!!

I saved a windfarm (a collapse of the project this month would have delayed it by at least 2 years). I gave a significant, and much needed, boost to the nascent offshore wind project finance market. I bring my bank good publicity. I help save the planet. I'm quite proud. Downright giddy, in fact.

More later.

part of the Windpower series

Brought across by afew

US Marines launch Afghan offensive

Thousands of US Marines descended upon the volatile Helmand River valley in helicopters and armoured convoys early Thursday morning, mounting an operation that represents the first large-scale test of the US military's new counter-insurgency strategy in Afghanistan.

The operation will involve about 4,000 troops from the 2nd Marine Expeditionary Brigade, which was dispatched to Afghanistan earlier this year by President Obama to combat a growing Taliban insurgency in Helmand and other southern provinces. The Marines, along with an army brigade that is scheduled to arrive later this summer, plan to push into pockets of the country where Nato forces have not had a presence.

In many of those areas, the Taliban has evicted local police and government officials, and taken power.

in rather pointed fashion...

Merkel attacks central banks

Angela Merkel, the German chancellor, criticised the world's main central banks in surprisingly strong terms on Tuesday, suggesting that their unconventional monetary policies could fuel rather than defuse the economic crisis.

The attack on the US Federal Reserve, the Bank of England and the European Central Bank is remarkable coming from a leader who had so far scrupulously adhered to her country's tradition on never commenting on monetary policy.

"What other central banks have been doing must stop now. I am very sceptical about the extent of the Fed's actions and the way the Bank of England has carved its own little line in Europe," she told a conference in Berlin.

"Even the European Central Bank has somewhat bowed to international pressure with its purchase of covered bonds," she said. "We must return to independent and sensible monetary policies, otherwise we will be back to where we are now in 10 years' time."

Ms Merkel's decision to ignore one of the cardinal rules of German politics - an unwritten ban on commenting monetary policy out of respect from central bank independence - suggests Berlin is far more concerned about the route taken by the ECB than had hitherto transpired.

I don't see this as an attack on central banks, quite the contrary - this is a defense of the independence of the Central Banks - at least the ECB - against the massive pressure from bankers, pundits and others who have said that salvation can only come from massive monetary injection into the financial system. But it is interesting that the angle chosen to describe her words are strongly critical - under the very rules that the Germans are supposed to uphold.

edited by whataboutbob

House prices rose by 1.2 per cent during April and May, according to Nationwide Building Society. It said that the increase was because of huge demand from buyers and a shortage of properties to choose from. Estate agents have reported that good-quality homes are in such short supply that gazumping -- when a buyer makes a higher offer than one already accepted by the seller -- is making a comeback in some areas.

The Times of London: Gazumping is back as house prices rise and buyers fight over fewer properties

The General Motors Corp. bankruptcy means months of shedding plants, brands, jobs and dealers just as the recession shows signs of abating. But part of the gamble is that it will prove to be better for the economy than the alternatives.

WSJ: Filing Has Potential to Lift Economy in Long Term