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Back in September, the City of Houston agreed to buy all the solar power from a proposed NRG $40-million solar plant on a 25-year power purchase agreement, or PPA. The deal called for NRG to foot the bill for the plant, and the city to pay for the power at a rate of 8.2 cents per kilowatt-hour for the first year. What this meant, in real-world terms, was that NRG would supplant some of the solar output with power from other plants, giving the city an effective rate of 8.2 cents, though the agreement overall calls for Houston to pay 19.8 cents per kilowatt-hour. If built, the 10-megawatt solar plant would have been the biggest in the state, providing up to 1.5 percent of the city's electrical needs at a locked-in price on 90 percent of production - a fixed rate that would have served the city well if Reliant Energy raised its rates due to rising costs of oil, gas or coal. Reliant Energy's generation mix is 39.8 percent, followed by natural gas at 23 percent and coal at 22.5 percent - the former two prices likely to rise as the recession eases and tension over Middle East oil prices and production rises.

Back in September, the City of Houston agreed to buy all the solar power from a proposed NRG $40-million solar plant on a 25-year power purchase agreement, or PPA. The deal called for NRG to foot the bill for the plant, and the city to pay for the power at a rate of 8.2 cents per kilowatt-hour for the first year. What this meant, in real-world terms, was that NRG would supplant some of the solar output with power from other plants, giving the city an effective rate of 8.2 cents, though the agreement overall calls for Houston to pay 19.8 cents per kilowatt-hour. If built, the 10-megawatt solar plant would have been the biggest in the state, providing up to 1.5 percent of the city's electrical needs at a locked-in price on 90 percent of production - a fixed rate that would have served the city well if Reliant Energy raised its rates due to rising costs of oil, gas or coal. Reliant Energy's generation mix is 39.8 percent, followed by natural gas at 23 percent and coal at 22.5 percent - the former two prices likely to rise as the recession eases and tension over Middle East oil prices and production rises.

"Based on updated information and scientific assessments, Secretary of Energy Steven Chu, Secretary of the Interior Ken Salazar, and Chair of the National Incident Command's Flow Rate Technical Group (FRTG) Dr. Marcia McNutt (Director of the U.S. Geological Survey) today announced an improved estimate of how much oil is flowing from the leaking BP well. Secretary Chu, Secretary Salazar, and Dr. McNutt convened a group of federal and independent scientists on Monday to discuss new analyses and data points obtained over the weekend to produce updated flow rate estimates. Working together, U.S. government and independent scientists estimate that the most likely flow rate of oil today is between 35,000 and 60,000 barrels per day. The improved estimate is based on more and better data that is now available and that helps increase the scientific confidence in the accuracy of the estimate. At the direction of the federal government, BP is implementing multiple strategies to significantly expand the leak containment capabilities at the sea floor even beyond the upper level of today's improved estimate. The Lower Marine Riser Package (LMRP) cap that is currently in place can capture up to 18,000 barrels of oil per day. At the direction of the federal government, BP is deploying today a second containment option, called the Q4000, which could expand total leak containment capacity to 20,000-28,000 barrels per day. Overall, the leak containment strategy that BP was required to develop projects containment capacity expanding to 40,000-53,000 barrels per day by the end of June and 60,000-80,000 barrels per day by mid-July."

On this basis, we estimate that the average observed decline rate worldwide is 6.7%. Were that rate applied to 2007 crude oil production the annual loss of output would be 4.7mmbpd.

As the United States' power grid becomes more sophisticated, electricity rates will need to rise to reflect periods of intense energy use and to encourage consumers to change their electricity habits, U.S. Energy Secretary Steven Chu said on Monday. Chu said currently most local electricity rate commissions view themselves as consumer advocates and try to keep electricity prices as low as possible. "Hopefully that will evolve somewhat, so that they begin to fold in some of the real costs of electricity generation and electricity use," Chu said at conference focused on creating a "smart grid."

Here is a list of energy news items that the WattzOn team found most interesting in 2008: * CO2 is officially a pollutant (maybe) - In a ruling by the Environmental Appeals Board (a panel within the EPA), it was decided that the EPA has no valid reason to not limit CO2 emissions from coal plants. Confusingly, the EPA has recently overruled itself by stating that officials cannot consider greenhouse gas outputs in judging applications to build new coal-fired power plants. So, it's back up in the "air." * We need to be at 350 PPM of CO2 - James Hansen of Columbia University, and NASA's head of the Goddard Institute for Space Studies, published a landmark paper: "Target Atmospheric CO2: Where Should Humanity Aim?" in which he argues for an atmospheric CO2 concentration of 350 parts per million (PPM) for humanity to be safe on this planet. As some background, pre-industrial Earth had a CO2 concentration of around 275 PPM, and for years policy makers have set a target regulatory goal of 550 PM - twice that number. More recently, 450 PPM has been proposed as a better goal by the EU and a few others. Unfortunately, recent evidence has shown that the Arctic sea is melting at an alarming rate and a giant ice sheet in Greenland is starting to slide into the ocean. This is the reality with the world today at 383 PPM. Hansen points out that this means we set overly lax targets and proposes the 350 PPM goal with tons of paleo-climatic data to back him up. We need to bring the CO2 in our atmosphere back down to this concentration. * Energy scientists primed to enter government - US President-Elect Obama has nominated Steven Chu to be the Secretary of Energy, and named John Holdren as the Assistant to the President for Science and Technology / Director of the White House Office of Science and Technology Policy / Co-Chair of the President's Council of Advisors on Science and Technology. As the President-Elect puts it, "Today, more than

So burn this into your mind: between 2007 and 2008 the IEA radically changed its assessment. Until this year's report, the agency mocked people who said that oil supplies might peak. In the foreword to a book it published in 2005, its executive director, Claude Mandil, dismissed those who warned of this event as "doomsayers". "The IEA has long maintained that none of this is a cause for concern," he wrote. "Hydrocarbon resources around the world are abundant and will easily fuel the world through its transition to a sustainable energy future."(7) In its 2007 World Energy Outlook, the IEA predicted a rate of decline in output from the world's existing oilfields of 3.7% a year(8). This, it said, presented a short-term challenge, with the possibility of a temporary supply crunch in 2015, but with sufficient investment any shortfall could be covered. But the new report, published last month, carried a very different message: a projected rate of decline of 6.7%, which means a much greater gap to fill(9).

The Financial Times has leaked the results of the International Energy Agency's long-awaited study of the depletion profiles of the world's 400 largest oilfields, indicating that, "Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent." This is a stunning figure. Considering regular crude oil only, this means that 6.825 million barrels a day of new production capacity must come on line each year just to keep up with the aggregate natural decline rate in existing oilfields. That's a new Saudi Arabia every 18 months.

The Bush administration gave energy companies steep discounts in the royalties they will be required to pay as it established the groundwork Monday for commercial oil shale development on federal land. Interior Department officials said the 5 percent royalty rate during the first five years of production was needed to spur drilling while still giving taxpayers a fair return. But that rate is much lower than the 12.5 percent to 18.8 percent the government collects from companies harvesting conventional oil and gas on public lands.

The United Nations Environment Programme's latest Year Book is out: The UNEP Year Book 2009 presents work in progress on scientific understanding of global environmental change, as well as foresight about possible issues on the horizon. The aim is to raise awareness of the interlinkages among environmental issues that can accelerate the rates of change and threaten human wellbeing. The UNEP Year Book 2009 examines in six chapters new science and developments, and discusses the cumulative effects expected from degradation of ecosystems, the release of substances harmful to those ecosystems and to human health, the consequences of our changing climate, the continued human and economic loss resulting from disasters and conflicts, and the overexploitation of resources. It calls for an intensified sense of urgency for responsible governance in the face of approaching critical thresholds and tipping points.

"As part of the Obama Administration's ongoing commitment to transparency surrounding the response to the BP oil spill, U.S. Energy Secretary Steven Chu announced today that Department is providing online access to schematics, pressure tests, diagnostic results and other data about the malfunctioning blowout preventer. Secretary Chu insisted on making the data widely available to ensure the public is as informed as possible, and to ensure that outside experts making recommendations have access to the same information that BP and the government have. The site will be updated with additional data soon. "Transparency is not only in the public interest, it is part of the scientific process," said Secretary Chu. "We want to make sure that independent scientists, engineers and other experts have every opportunity to review this information and make their own conclusions." The information is posted at energy.gov/oilspilldata. It includes detailed raw data on the pressure readings within the blowout preventer, as well as rates and amounts of hydrocarbons captured by the top hat and by the riser insertion tube. There is also a timeline of key events and detailed summaries of the Deepwater well configuration, the blowout preventer stack tubes, and the containment system."

How the world is fed and fueled will in large part define development in the 21st century as one that is increasingly sustainable or a dead end for billions of people. A new and hard-hitting report concludes that dramatically reforming, re-thinking and redesigning two sectors -- energy and agriculture -- could generate significant environmental, social and economic returns. Current patterns of production and consumption of both fossil fuels and food are draining freshwater supplies; triggering losses of economically-important ecosystems such as forests; intensifying disease and death rates and raising levels of pollution to unsustainable levels."

The Environmental Protection Agency seems on the brink of issuing a new regulation that would make it easier for power plants to operate longer hours - and emit more pollution. Under the proposed rule, power plants would be able to measure their rate of emissions on an hourly basis instead of their annual total output. As long as the hourly emissions stay at or below the plant's established maximum, the plant would be treated as if it were operating cleanly - even if its total annual emissions increased as plant managers stepped up output. Under the current policy, power plants that seek to operate longer must install pollution-control equipment. The proposed rule, expected to be finalized in the next two weeks, would increase the life span of older power plants without owners having to install costly new pollution-control equipment.

The United States will fall well short of biofuels mandates on the uncertain development of next-generation fuels made from grasses and wood chips, the government's top energy forecasting agency said on Wednesday. "The key risk factor is rate of development of cellulosic biofuels technology," Howard Gruenspecht, the Energy Information Administration's acting head, said at press conference in Washington introducing the agency's annual energy forecast. "Near term growth of cellulosic ... is certainly a question mark."

Given the converging financial, ecological, and energy situations, I often wonder what we should be telling our children about subjects that are a)over their heads and b)potentially 'R' rated or worse. Verbal navigation between hope and reality is difficult enough for our adult network, let alone the generation of young people growing up under our influence. Below the fold is a letter I wrote to the 7 yr old son of a friend of mine who asked his mom 'When will the oil run out?'.

Most climate experts accept that, in order to avoid catastrophic effects of global warming, greenhouse gas emissions (mostly CO2) must be cut by 60-80% by 2050 (though the figure may need to be a 95% cut in the US). The belief that replacing fossil fuels with solar and wind technology can accomplish this reduction tends to overlook several factors: 1. Corporations bombard the world with the message that everyone should consume like Americans do; 2. Corporations tell those in the US that they should ape after the playthings of the rich; 3. Population is growing; 4. Market economics force pathological expansion; and, 5. Solar and wind comprise a minute fraction of current energy. Let's combine these to get an idea of how much solar and wind would need to expand to replace coal, oil, nukes and gas by 2050. First, the US consumes about 25% of the world's energy while having only 5% of the world's population. For the rest of the world to consume at the rate of the US would require global production to increase by a factor of 6.33.

Today's announcement that Joseph Kelliher, chairman of the powerful Federal Energy Regulatory Commission (FERC) and a commissioner since 2003, is stepping down provides President-elect Barack Obama with an opportunity to fix an agency with a history of promoting deregulation and power company profits at the expense of fair energy prices to American families. Under Kelliher's watch, FERC continued the failed policy of deregulation, resulting in consumers paying billions of dollars more in home energy costs than if markets under FERC control had been properly regulated. Kelliher, who served as the Energy Department's liaison to Vice President Dick Cheney's infamously corporate-biased Energy Task Force prior to becoming FERC commissioner, consistently overlooked the agency's top statutory mandate: to ensure that all electric rates be "just and reasonable."As a result, Kelliher's FERC has undergone ongoing criticism by states and consumer groups for its backward priorities.

"Even if oil demand was to remain flat to 2030, 45m bpd of gross capacity - roughly four times the current capacity of Saudi Arabia - would need to be built by 2030 just to offset the effect of oilfield decline", according to Nobuo Tanaka, executive director of the IEA, speaking at a news conference in London. Oil reached a record peak of more than $147 a barrel in July, but has fallen back below $60, a drop of more than 50pc. Given the high cost of bringing on new output and the struggle to match supplies with demand, the IEA has assumed consumers will pay an average of $100 a barrel for oil over the next seven years and more beyond that. "Current trends in energy supply and consumption are patently unsustainable - environmentally, economically and socially - they can and must be altered," said Mr Tanaka. * o Text Size o click here to increase the text size o click here to decrease the text size * Email this article * Print this article * Share this article o delicious o Digg o Facebook o Fark o Google o Newsvine o NowPublic o Reddit o StumbleUpon http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/3448385/Credit-crunch-risks-world-oil-supply.html Related Content * More on Oil and Gas More on ... Oil and Gas Get feed updates Finance Get feed updates Energy Get feed updates telegraph tools Switch Utilities Save on fuel bills Search the market for the best prices on gas and electricity. Telegraph Utilities Comparison Service Advertisement telegraph financial partners Investment solutions * Investor services * Portfolio management * Investing for income guide * Inheritance tax advice * Reader guides Finance most viewed * TODAY * PAST WEEK * PAST MONTH 1. Row breaks out at easyJet 2. Abandon all hope once you enter deflation 3. B

Got your attention now? That amount of oil equivalent, three cubic miles, is how much the world uses in a year if you take into account all sources of energy, says Ripudaman Malhotra of SRI International's Chemical Science and Technology Laboratory in Greentech Media. What's more, is that by 2050 at current rates of increase the world will consume nine cubic miles of oil. Pretty sobering, but what is more sobering (it does indeed feel like cold water thrown on the renewable energy industry) is that to replace that amount of energy usage with renewable sources is nigh impossible. Here's Malhotra on the challenge laid before us in a nutshell:

The American auto industry is running on fumes. General Motors, the nation's largest automaker, warned Friday that it may run out of money by the end of the year after piling up billions in third-quarter losses and burning through cash at an alarming rate. Ford sustained heavy losses, too. The situation is so severe, GM has suspended talks to acquire Chrysler and is appealing to the government for help as the slumping economy drags cars sales to their lowest level in a quarter century.

Just days before a scheduled Board of Supervisors' vote Tuesday on a "clean energy" plan, Pacific Gas and Electric Co. submitted a brief summary of its proposal to join with local governments to boost use of renewable energy. The PG&E summary, which contained few details, was submitted to the county on Friday in advance of supervisors' decision on whether to join a Marin County joint powers authority that would compete with PG&E for Marin customers. Supporters of the Marin Clean Energy initiative say the authority would match PG&E's rates while substantially reducing use of nonrenewable, "dirty" energy required to meet Marin County's energy needs.