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Recently, the UK's energy and climate change secretary, Chris Huhne, spoke of his country's ambitious low-carbon energy plans, telling conference-goers at the Royal Geographic Society that the billions invested in renewable energy will pay off economically. There's a caveat, though: this only happens if oil exceeds $100 a barrel. As Huhne predicts, consumers will see reduced utility bills from low-carbon energy investments when oil soars above what he calls "the break-even point" of $100 a barrel. Huhne worded it like this:

If we relied on oil and gas, and the price stayed relatively low at $80 a barrel then consumers will pay more under our policies – about an extra 1% on their bills by 2020.

At the oil price reached this month – $100 a barrel or more – consumers will pay less through the low carbon energy policies than they would pay for fossil fuel policies.

And if the U.S. administration is right, and the price is $108 a barrel in 2020, then our consumers are winning hands down.
We know that accurately predicting future oil prices is next to impossible, but with price up to $95 right now, doesn't investing in alternative seem like the smart bet?

[Source: Guardian.co.uk | Image: David Spender – C.C. License 2.0]


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  • 22 Comments
      • 3 Years Ago
      Ouch!
      David, I will attempt to reply in a civilized manner.
      First, an apology. My use of the word shill was based on the following definition "person who publicizes or praises something or someone for reasons of interest, personal profit, or friendship or loyalty." However reading through other definitions it is apparent that the on-line community emphasises that current usage concentrates on the paid to deceive by subterfuge model rather than the more innocous definitions. I have no reason to to believe you are paid by the nuclear industry and withdraw the comment unreservedly.
      Now lets look at your other comments. The article you point to states that new coal plants are planned in Germany. It also states that some of these plants are to replace
      existing outmoded plants that are far from efficient. It then ges on to say that some of the others are being promoted for political reasons - it will be interesting to see whether the unions and their political allies will be able to push this through in the face of increasing environmental awareness. These plants have NOT been built yet.
      My comment on plants being closed and not replaced in Spain is based on the REE 2010 report linked to in my reference. (ie this has actually happened) This is an official site; citing Der Spiegel and Wikipedia as evidence may not be the best guarantee of absolute truth.
      My request for your sources of CO2 emissions were based on the very fact that finding factual and credible information on the web is notoriously difficult to do.

      Big mouth? I´ve already apologised. Malice and stupidity? How is stating the facts from a credible source malice, I have not and have never intended to personally attack you, attacking your ideas is not malice.
      Stupidity? A matter of opinion - my last IQ test was around 120 (though of course I could just be making this up) Let´s change it to ignorance then.
      In the 1970s I was installing solar thermal water heating in the UK. I was part of a group
      that helped develope hydraulic regenerating and flywheel systems for Mercedes trucks; another group that built prototype energy recovering vehicular shock absorbers,and other energy efficiency devices.
      However because in those days it was difficult to earn a decent living from alternative energy and energy conservation I actually worked in the upstream oil industry for over thirty five years, and now teach production techniques to newcomers to the industry. During my career I designed and built solar sytems to power remote wellhead safety and communication systems. I had hands on experience of operating large scale gas turbine, steam turbine and mixed fuel reciprocating engine powered electrical generation systems. All through my career however I have always maintained my interest and research into RE and participated in installation of domestic PV on and off grid systems.
      I work in a CIS country at the moment. One of my Russian colleagues lost his parents as a result of the Chernobyl disaster. I have lost friends in the oil industry due to accidents. I know that if there is a way to operate something unsafely somebody will eventually find it. I don´t know anybody who has been hurt in the RE business yet outside of the usual trips, slips and falls accidents that bedevil all industries.
      Lastly I don´t know of a single commercial nuclear installation that has actually come in on budget; aagin your arguments are on projections, not history.
      • 3 Years Ago
      Mr.Loveday

      Using $100 barrel as the break-even is a very interesting point the UK climate secretary made in the speech - “The Perfect Strom." As an electrical engineer who is really interested in electrical vehicles, I am immediately fascinated and shocked by the point Huhne made. While 95 percent of our transportation depends on oil, oil still seems to be an inelastic natural resource. In 2008, when the oil prices were pushing $150 dollars a barrel: while the vehicle mileage traveled peak proving the demand for oil is not inelastic. However, in July 2008, instead of buying hybrid cars, hybrid sales went down, and people held on to gasoline dependent internal combustion vehicles. So what is the tipping point for people to switch to electric cars?

      Although Electric cars right now has a "range-anxiety" and is more expensive than an average gasoline car, test drivers have reported that charging the Chevy Volt for a fifty mile range cost about 80 cents worth of electricity. However, with $95 a barrel at the moment, it’s lucky to 50 miles with 7 dollars from a gasoline car (assuming the car runs at 20 miles/gallon). While the Chevy Volt may seem to be the obvious winner, the battle really still depends on the prices between gas and battery packs. Right now, lithium battery pack is about $1000. If the battery pack can be lowered to $200 while gas prices goes up to 5 dollars/gallon then Electric vehicle sales should skyrocket. Furthermore, If Charles T. Maxwell's predictions are correct and the oil prices reaching $300 a barrel in 2020, the gas prices could easily go well over 5 dollars/gallon and let electric vehicles win the easy race.
      • 3 Years Ago
      Wind Turbines have now graduated in size to 5 Megawatt.
      Wind farms are now as cheap as oil or coal in many states, with none of the pollution, mercury or water.

      These 1900 technologies should really be dead.
      Don't know why oil is still investing in what will soon be MORE EXPENSIVE Technologies across the United States.

      I guess it's time shareholders DEMANDED some action from the Oil industry.
      • 3 Years Ago
      My insight hybrid cut my gas bill by 50% the day I bought it, six months ago.
        • 3 Years Ago
        This is the point I try to make for going efficient. If the price goes to $6 a gallon but, I buy a car that gets 60 mpg then gas is affordable again. It is that simple.
      • 3 Years Ago
      David you are really beginning to annoy with your constant shilling for nuclear power.
      When will you accept that however much nuclear power is good for baseload power many populations in many countries just do want the disadvantages such as the huge upfront costs, operating risks and the problems of long term disposal of radio active materials for which no definitive answers have been found.
      Some of your other comments don´t make sense. Using the Spanish model the existing nuclear supplies have been running at nominal output for at least the last two years continously, even while the renewable contribution has been ramping up. Therefore the contention that renewables are spoiling the economics of baseload nuclear is nonsense. Looking at recent months the gas fired standby units have not been fired up to supply more than a tiny amount of power for small periods (less than a few hours in many cases), so the phrase "ignoring the associated gas burn" is a red herring. What is relevant from REEs website is that coal plants have been made much more flexible and that coal plants are being slowly being phased out, not built as you assert. Incidentally by looking at the information http://www.ree.es/ingles/home.asp everyday as I do shows wind is not a nominal 10% of production, in fact wind has not dropped much below 10 % on any day for about six months and contributes as much as 60%. To say that when the wind blows thermal plants run less efficiently is not a probem with the wind, its a problem with the thermal plants - modify them. As I ´ve said before, I don´t care if I am supplying 15 percent of my load less efficiently from coal plants while I´m making 40 percent from wind, I'm still ahead in the cost and pollution stakes. Where do your figures for the CO2 production in Germany and Denmark come from? Do they refer only to production or to all activities?
      The only thing I agree with you is yes of course any renewable energy supply has to be built in a suitable area. And in the interests of fairness I should note that Spain is blessed with substantial and flexible hydro electric/ pumped storage systems. So wouldn`t it be better to go and improve Dinorwig instead of banging on about the "problems" involved with wind power?
        • 3 Years Ago
        Paul,
        Do find out some facts before giving your opinion.
        A few of the inaccuracies I can be bothered to nail:
        Nuclear costs for UK build based on the Finnish plant are around a third or so of the costs of off-shore wind, in terms of actual average output.
        No new coal plants to 'assist' wind?
        'Utility companies want to set up a total of 26 new coal-fired power plants in Germany during the coming years.'

        http://www.spiegel.de/international/germany/0,1518,472786,00.html

        The figures for CO2 are per capita total, and can be found from any reputable source, for instance Wiki, although not of course from much of the renewables who prefer to lie and distort, for instance in the WWF 'report' on CO2 emissions which declared that Germany had the lowest in Europe, and in a very small footnote said that they had created CO2 emissions for France and other nuclear output as though the power were outputted by Natural gas, on the grounds that they did not much fancy nuclear power.
        Not a peep came from the 'renewables' community about this attempt to grossly deceive the public, which is not surprising as if all the costs including those of mandates on utilities to take renewable power when it is not needed were made clear the industry would hardly exist.

        So I am not in the mood to be chastised as a 'shill' which is as baseless and uninformed as the rest of your comments.
        I make it a practise to have evidence before I open my mouth to accuse others.
        Where is your evidence that I am paid by the nuclear industry, or have you just got a big mouth and nothing behind it?

        The effects of stupidity sufficiently pronounced are indistinguishable from those of malice.
        There are up to 50,000 excess winter deaths in the UK a year, and the ludicrous cost including paying scum bags 66cents kwh for power from their solar arrays, in the UK for God's sake, when the grid pays around 6 cents/kwh for gas are being loaded on to the bills of the poor.
        How many people are supposed to suffer the cold to pay for it as the coalition of ideologues, the innumerate and con-men push renewables?

        • 3 Years Ago
        Yeah, and there are up to 50,000 excess winter deaths in the UK a year.
        They go up when power costs go up, and for the cost of augmenting the grid to cope with UK plans alone, around £15bn, you could build nuclear power plants enough to provide about half the average annual output of the planned wind arrays, before you add in the £100bn or so for the actual turbines.

        Electricity costs $0.30kwh in Germany and $0.45 in Germany, and they use the far less expensive on shore.
        The cost in nuclear France is $0.12kwh.

      • 3 Years Ago
      WE ARE ABOVE $100 A BARREL NOW WITH BRENT CRUDE AND NOT FAR OFF WITH WTI !!?? SEE http://www.oil-price.net/
      • 3 Years Ago
      "$108 a barrel in 2020" lol, That's the price TODAY!!!
      • 3 Years Ago
      renenable really makes sense when the oil runs out.
      it's running out and we wont be ready in time.
      • 3 Years Ago
      He gets that remarkable result by lumping in cheap nuclear with ludicrously expensive off-shore wind, and probably by ignoring the associated gas burn to make up for slack periods in said wind.
      Americans should note that off-shore wind, which this idiot is committing the country to, is a very different kettle of fish to on-shore, costing ~3 times as much per nominal MW, and furthermore the US in several areas has better wind resources than almost anywhere in Europe, so whatever the putative advantages of wind in the US they certainly do not apply to Europe.
        • 3 Years Ago
        Michael,
        Wind does almost nothing to save CO2 emissions.
        Germany and Denmark both have some of the highest emissions per capita in Europe, at around 9tons pa. Nuclear France has around 6 tons.
        The reason it is so ineffective at reducing emissions is twofold:
        To cover intermittency gas or coal must be burnt, and since it has to be at the beck and call of wind it is used inefficiently instead of in combined heat and power set ups.
        The same money as they have thrown away on wind could have been far more effectively employed by building better CHP and insulation and not bothering with the turbines.
        Secondly, with electricity at $0.30kwh in Germany and $0.45kwh in Denmark no one uses electricity for heating, instead they use gas, so simply displacing the burn.
        Wind save in a few locations and at a small percent of the grid is a scam.
        That is not to mention the 53bn Euros Germany has thrown away on solar, which at that latitude during the mid winter when it is needed provided on some days between 6% and 1% of it's nominal capacity.
        It provides some power there when it is virtually useless in midsummer as Germany is not big on air conditioning and when it is more sensible to run baseload and almost none when it is needed.

        The renewables everywhere movement has increased, not decreased CO2 emissions, because people have been chasing fools gold instead of building nuclear which demonstrably does the job.
        • 3 Years Ago
        Joe,
        I have nothing against using any resource where it is appropriate and cost effective.
        Unfortunately that is not what is commonly happening with renewables, and under the entirely false pretence that they can run a high latitude large, densely populated industrial economy enormous sums are being wasted for tiny gains, when simply improving the efficiency of the existing grid would pay many times better, both financially and in CO2 reduction terms.
        So for #1 I don't really understand what you are talking about,a s of course wind and solar do not require back up baseload power, what they need is back up on-demand power to make up for their intermittency, which effectively is fossil fuels, so ruining the economics of baseload power like nuclear and geothermal, which is one reason why German CO2 levels remain some of the highest per capita in Europe.
        #2 Not only do you still need baseload plants, but for wind in particular once wind reaches any appreciable proportion of the grid it's enormous intermittency means that baseload plants are difficult to run economically.
        For instance in Spain a nominal 10% of the grid from wind is not only zero for periods of up to a week or so, but in a blow is over 100%, which if you are running base-load plants has to be thrown away.
        In practise that means you build more fossil fuel plants which can produce power on demand, and not nuclear or geothermal.
        #3 Peak load solar plants in hot places are indeed the first place where they will be economic, but on the grounds that solar is a 'good thing' by mandate nearly as many solar installations are being made in northerly, cloudy Maryland as in Phoenix, where they would get around twice as much sun over the year.
        The notion that subsidies will reduce prices also has limits. More of the costs now are for installation and balance of plant etc than for the panels, and that is likely to drop in cost a lot slower.
        At the moment the economic way to produce peaking power even in Arizona is by burning gas, let alone in northern areas where a lot of the installations are.

        In the same way for you point 1) building more power for peak use, the problem with renewables is just that, they are not despatchable.
        And where it is installed little regard is paid to matching peak needs.
        So we are told that wind is a 'good thing' in Texas as in Michigan.
        What they don't say is that in Texas the wind is very low in the summer when you really need it and there is peak demand, whereas in Michigan peak matches up a lot better to demand.

        So the very limited benefit that renewables can provide is obscured by an ideological zeal for putting wind turbines where it is not windy at the right times or is stupidly expensive, and solar where the sun don't shine.

        Other than hydro there is precious little evidence that renewables will be much help at all, and many of them such as geothermal are at such an early stage of development and provide such a miniscule portion of our power that they can hardly help at all over the time scale we need to get off fossil fuels.

        We need to use nuclear with it's million times as dense power. The Luddites have delayed it and increased costs so much that we will certainly have a very unpleasant crunch before we can ramp it up enough, but we actually know how to do it, which is more than can be said for the purported 'alternatives', and have provided 80% of France's electricity using it for decades.
        • 3 Years Ago
        David,

        There are 2 ways to look at it:

        1) Many places only need to increase capacity to cover "peak" demand. (not necessarily population growth, but demand that can be scheduled to match production times).

        2) Across the board demand growth. (such as population growth, new cities, etc.)

        3) Replacing current daytime Peaking-Powerplants with renewable alternatives.


        ----------------

        For #1, intermittent sources like Wind or Solar do NOT require additional baseload power. And therefore can be given a very low cost/MW.

        For #2, you are absolutely correct. Intermittent renewables would need to be supplemented by baseload powerplants.

        For #3, Solar is a good fit to replace some Natural Gas Turbines that operate almost exclusively during the daytime (to help with peak demand for air-conditioning). In the southern U.S. this is no small factor.

        -------------------------------------------

        And with a national super grid or local storage (batteries, flywheels, or hydrogen).... Intermittent sources such as Wind and Solar... don't need to be supplemented at all.

        • 3 Years Ago
        What kind if "negative externalities" are associated with the price of oil.
        Like, for instance, the fishing industry of four southern states devastated by an oil spill?

        Can the US charge a Freedom Shipping Lane tax on the UK?
        Do US troops stationed in Iraq have a cost?

        Oil is getting a free ride. Take some of these costs into account, and wind is cheaper today, even offshore wind.

        If you check this chart: http://www.metoffice.gov.uk/energy/renewables/wind/site/wind-map

        There are a few locations, North-East where the wind reliably blows even in the UK. Looks like a 10-20 knot location, and these look like prevailing winds that essentially always blow. Putting up wind towers in these locations is like getting Free Money.
        • 3 Years Ago
        "The reason it is so ineffective at reducing emissions is twofold:
        To cover intermittency gas or coal must be burnt, and since it has to be at the beck and call of wind it is used inefficiently instead of in combined heat and power set ups."
        "The renewables everywhere movement has increased, not decreased CO2 emissions"

        Sorry, but I'm not drinking that kook-aid.

        When Wind power is tied to a larger grid, and over a larger area, the intermittency is less of a problem.

        It is a flaw to think of coal and gas as "MUST BE BURNT" to make up for the intermittency... think of all the coal and gas that Would have been burned to run those power plants at full capacity, all day.... and YES, even when the consistency can be done at higher efficiencies.

        Peaking plants are not THAT inefficient compared to baseload. Not enough to increase emissions versus not having any wind or solar at all.

        -------------------

        I am sorry, but the line you were fed by anti-renewable lobbyists does NOT pass the common sense test.

        True, many situations (especially in Europe) do not provide the best emissions bang for the buck as the pro-renewable lobbyists claim.... but....

        Is it Wind and Solar's fault that peaking power plants are not as efficient as baseload??? Not really. And even though they are not.... the reduction of efficiency is not as much as you seem to think.
        • 3 Years Ago
        Joe:
        Look at the facts. CO2 emissions remain just as high in Denmark and Germany as in countries that have not gone for wind in that way, and that is a fact.
        There is always pie in the sky from the renewables kooks, since you like that term.
        It is always ridiculously uneconomic and impractical now, but the odd few hundred billion thrown at it will turn things around.
        Weather systems are big, and the cold snaps lasting over a week both this year and last would not have been significantly mitigated by a merely Western European wide network.
        In the UK the costs of the beefed up network alone is around £15bn, and the cost of the 33GW of wind planned, mainly offshore, around £100bn.
        That would, very optimistically, produce an average output of about 11Gwe.
        For the same money using costings from the Finnish plant, the first of it's kind, you would get around 29 1.6 GWe power plants, producing an average output of around 40Gwe and replacing all baseload and then some, not to mention drastically reducing CO2 emissions.
        Here is an analysis by Cyril R of building nuclear plants in Holland, to provide all electricity, space heating and hot water, together with power for electric cars.
        Only heavy trucking, air transport and high grade process heat would be left to fossil fuels.
        Heat pumps would be used to multiply the effectiveness of electricity input for hot water and space heating:
        http://www.energyfromthorium.com/forum/viewtopic.php?f=2&t=2827

        Translated into UK terms it boils down to that the money being thrown away on off-shore wind would build about half of a serious solution.

        Sorry, I don't buy the renewables con-job.

        • 3 Years Ago
        "...ludicrously expensive off-shore wind, and probably by ignoring the associated gas burn to make up for slack periods in said wind."

        You think of this backwards. Wind is a Hybrid system. Use it when you can and use gas when there is no wind. Terrible how Faux News brainwashes their viewers to think of wind power as bad. We should be celebrating every ton of carbon, mercury, sulfur dioxide, nitrogen oxides, that are not spewed into the atmosphere, not demonizing it.
      • 3 Years Ago
      Remember plutonium and uranium are a finite resource too.
      • 3 Years Ago
      An oil price of $108 a barrel in 2020 seems wildly optimistic to me, but as Yogi Berra said, "Making predictions is hard, especially about the future."
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