Background:
- 6th July 2007: Supply crunch due to the credit crisis.
- Trading and lending has become short-term.
- Volatility in energy prices: Brent crude oil prices have undergone a rapid rise in early 2008 (from $92 per barrel in January 2008 to $145 per barrel in July 2008).
China:
- By 2015, the Chinese economy could be the same size as the USA
- Changes are at an unprecedented level: urbanisation
- Its primary energy use will double in the next years (consumption is going to increase 3.5 times by 2030)
Gas:
- The current issue at stake with this commodity is about flow, not about reserves (e.g. the conflict between Russia and Ukraine about gas led to a lack of gas supply in Europe at the end of 2008).
- 75% of the world’s gas flows through pipelines (very important since it is a long term commodity that can flow forever).
- 60% of the increase in the supply of gas is going to come through Liquefied National Gas (LNG)
- It is said that Europe will have gas security until 2015
UK’s security of supply:
Gas:
- By 2015 the UK will rely at 70% on gas imports (40% on pipeline gas, 30% on LNG). It may expose the UK to international gas prices with their volatile dynamics
- The UK needs the Nordstream and the Southstream pipelines to secure its gas pipeline supply
UK’s renewable energy strategy:
- The EU Renewable targets require that the UK uses renewable energy sources for 15% of total power by 2020.
- The UK is going to reduce its coal production by replacing it by gas power stations
- Importance of the wind power generation but we must cast a doubt the projected level of investment due to the financial crisis
- With limited coal, the dynamics of variable wind and vulnerable gas can lead to moments of very high prices
UK’s nuclear program:
- Four power stations are being built
- There is no strategy on the search of skilled specialists in this field
