PowerSwitch

1. Coal. The price of coal has collapsed in the last 2 years or so, and it is by far the cheapest primary fuel for electricity at present. However, recent legislation puts strict quotas on industrial processes using coal for heat, such as power generation. At present, a plant can only be operated on coal for about 40% of the time, this figure will be gradually reduced to 0% by 2016. (This applies, even if a plant can operate on coal only - e.g. a coal fired power station - current such power stations must be idled 60% of the time, and must close permanently by 2016).

In addition, the price of carbon credits has also collapsed due to the recession in Europe and reduced industrial activity. The price of carbon emissions credits is supposed to be a free-floating market. However, UK govt policy is to put a "ratchet" mechanism in, so that once the price of carbon increases, it cannot decrease again. The difference between the "ratchet" price and the market price is taken as a tax. So, although carbon pricing on the market is at a record low, UK carbon taxes have essentially made energy sources like coal and heavy fuel oil, prohibitively expensive.

2. New policies are specifically designed to decrease investment in North Sea oil and gas reserves. This includes recent changes in tax law which increases corporation tax for oil/gas producers to 50%, and restricts allowable business expenses, so that corp tax is effectively paid on revenue, rather than profit. This has severely changed the economics of North Sea production and exploration, such that a number of companies have abandoned their plans to develop North Sea sites, as they cannot achieve an adequate sale price post-tax to make the venture viable.

Planning for renewable energy sources, such as wind, is still a major difficulty (especially on shore, which is the only economically viable way of building it - off shore, is simply too expensive in maintenance and construction).

There are other minor energy sources, such as nuclear. There are stockpiles of uranium held which would supply many years of power. In addition, there are about 200 tonnes of plutonium stored at sellafield. This is a safety and security hazard, but this plutonium alone could provide nearly 10% of the country's electricity for 20 years.

ziggy12345 wrote:The tax regime for North Sea Oil makes all the difference. There are still ecconomic recoverable reserves under the north sea if the tax regime was anything like other favourable countries.

The whole lot should be nationalised

Blue Peter wrote:

ziggy12345 wrote:The tax regime for North Sea Oil makes all the difference. There are still ecconomic recoverable reserves under the north sea if the tax regime was anything like other favourable countries.

The whole lot should be nationalised

What's the current Brent price? $110? Can they not make a profit at that price?


Peter.

clv101 wrote:The majority of that goes straight back to the Treasury. Then there's all the normal taxes... surprisingly little is left at the end. It's why it doesn't make that much difference that the North Sea is operated by private companies and the Gulf is operated by national oil companies.

Adam2 wrote: Coal is carbon intensive fuel and should idealy be left in the ground

UndercoverElephant wrote:I believe that humans will, eventually, recover and burn every deposit of fossil fuel that it is worth them recovering. Nothing will be left in the ground, not even very poor quality lignite.

What I cannot imagine happening is for cold human beings in places like Russia and North America leaving burnable, recoverable coal in the ground

emordnilap wrote:

UndercoverElephant wrote:I believe that humans will, eventually, recover and burn every deposit of fossil fuel that it is worth them recovering. Nothing will be left in the ground, not even very poor quality lignite.

Yup; I've said this on several occasions. Nothing barring an outright extinction can stop it.

Tarrel wrote:

What I cannot imagine happening is for cold human beings in places like Russia and North America leaving burnable, recoverable coal in the ground

An interesting thought-experiment; if you found yourself marooned in such a climate for the winter, in a cabin on the edge of the tree-line, with enough frozen seal-meat to keep you going for a few months, and someone had thoughtfully left a tonne of coal in there, would you burn it? (Assume wood is available, but in limited supply, and would require expenditure of large numbers of calories to fell and process it.)

adam2 wrote: Agree entirely, all technicly and economicly recoverable FF will be extracted and used.

adam2 wrote: And remember that rising prices and technical improvements will render many presently unviable rescources worth extracting.

biffvernon wrote:

adam2 wrote: Agree entirely, all technicly and economicly recoverable FF will be extracted and used.

Hmmm....even ignoring for a moment all consideration of factoring in the costs of externalities like environmental damage, there is no economic case for burning fossil fuel if gathering energy from sunshine is cheaper. We're not going to dig coal if it's cheaper to generate electricity from renewables. Current trajectories make this look real.