Putting a price on cheap energy [Recharge]

Recharge is a weekly e-mail digest of energy news and analysis written by Monitor reporters David J. Unger and Jared Gilmour.

$5.3 trillion: Cheap energy isn’t so cheap. Researchers at the IMF this week saidglobal fuel subsidies amount to roughly 6.5 percent of the world’s GDP, although their analysis uses an unusually generous definition of “subsidy.” In addition to the usual direct government support, they include the uncounted environmental cost of our consumption, which has led to some semantic pushback. But regardless of exactly how much the world does or doesn’t subsidize energy, most economists say these kinds of policies distort markets, hurt the environment, and disproportionately benefit the rich.

War on coal: China is losing its reputation as a secure home for coal’s future. Last year, coal-fired power generation in the world's top emitter dropped for the first time since 1974, according to Bloomberg, and prices are plummeting amid the weaker demand. A swath of coal plant retirements are planned as President Xi Jinping aims to meet his goal of peaking emissions by 2030. But even as China slowly eases back on the world’s dirtiest fuel, India is picking up the slack.

Countdown: There are just under 200 days left before world leaders convene in Paris for highly anticipated climate negotiations. Investors and business leaders marked the occasion in Paris this week, underscoring the private sector’s increasing role in decarbonization and global climate talks. At the Petersberg Climate Dialogue in Berlin, Germany's Chancellor Angela Merkel and other leaders renewed calls for a shift to low-carbon technologies. Meanwhile, the UN’s Green Climate Fund is beginning to dole out cash, but the fund has struggled to convert pledges into actual money.

In the pipeline

• Tuesday, May 26 to Thursday, May 28: BARCELONA – EU officials and utility executives gather at the 12th annual Carbon Expo, Europe’s biggest emissions trading conference.
• Wednesday, May 27 to Thursday, May 28: MÉRIDA, MEXICO – Energy Secretary Ernest Moniz, IEA chief Maria van der Hoeven and others talk clean energy partnerships among the Americas at the sixth Clean Energy Ministerial.
• Friday, May 29: ABUJA, NIGERIA – Nigerian president-elect Muhammadu Buhari is sworn in as leader of Africa’s No. 1 oil producer. His first major challenge will be fuel shortages: Nigeria produces two million barrels of oil a day, but lacks refining capacity and has in the past subsidized fuel imports. With oil revenues low, the government has less cash to pay suppliers, and the lack of fuel has grounded airplanes and created long lines at gas stations.

Drill deeper

Santa Barbara oil spill raises questions about California pipelines [The Christian Science Monitor]
Green groups claim last week’s oil pipeline spill off the coast of Santa Barbara raises red flags about other pipelines – namely, those that would carry Canadian tar sands to US West Coast refineries. But pipelines are safer than alternatives like rail transport for oil. Experts say rail cars have over 10 times the accident rate of pipelines per billion barrels transported.

Oil's Well in Central Asia [Foreign Affairs]
China and Russia see an opportunity to win influence in Central Asia by tapping the region’s vast hydrocarbon resources. Cheap oil and Russia’s deteriorating ties with the West make for even more complex jockeying for control of oil and gas supply.

Thirty Million Gallons Under the Sea [Harper’s]
“When another expedition comes here in a hundred or a thousand years, they will say, ‘Ah, okay. Here is the 2010 oil spill,’ ” a microbiologist tells Antonia Juhasz, en route to the site of the BP oil spill on the floor of the Gulf of Mexico.

Energy sources

• Saudi Arabian Oil Minister Ali al-Naimi via Wall Street Journal: "You say decarbonize. Are you willing to have me go back home and shut all the oil wells? Can you afford that today? What will happen to the [oil] price if today I remove 10 million barrels per day of the market ... Where would the western civilization be today if it was not for fossil fuels yesterday?"
• Wood Mackenzie: "[South African utility Eskom] has been forced to implement three stages of load shedding during the first half of 2015, reducing supply by up to 4GW. And, with seasonal electricity demand increases expected over the next few months, load shedding requirements are likely to become even more pressing."
• Saudi Arabian Oil Minister Ali al-Naimi via Bloomberg: "In Saudi Arabia we recognize that eventually, one of these days, we’re not going to need fossil fuels … I don’t know when -- 2040, 2050 or thereafter. So we have embarked on a program to develop solar energy … Hopefully, one of these days, instead of exporting fossil fuels, we will be exporting gigawatts of electric power."

Unplug

"Nonpetroleum share of transportation energy at highest level since 1954"

– EIA

Recharge is a weekly e-mail digest of energy news and analysis written by Monitor reporters David J. Unger and Jared Gilmour.