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Globalization of Fuel Markets

Globalization of Fuel Markets. David G. Victor Director Program on Energy & Sustainable Development Freeman Spogli Institute, Stanford University Professor of Law Stanford Law School Adjunct Senior Fellow Council on Foreign Relations. PESD Overview. Initiated in 2001

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Globalization of Fuel Markets

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  1. Globalization of Fuel Markets David G. Victor Director Program on Energy & Sustainable Development Freeman Spogli Institute, Stanford University Professor of Law Stanford Law School Adjunct Senior Fellow Council on Foreign Relations

  2. PESD Overview • Initiated in 2001 • Funded mainly by EPRI and BP • Six principal research topics • Electricity Markets • Global Natural Gas Market • Energy Services in Low-Income Communities • National Oil Companies & The World Market • Climate Change Policy after Kyoto • Emerging Global Coal Market

  3. Brent Crude Oil Prices: 1999 - 2008 Data Source: Reuters. Prices shown are front month futures contract.

  4. Growth In World Oil Demand

  5. The World’s Oil Reserves by Owner

  6. Middle East OPEC Source: P. Nolan, OPEC Annual Statistics Bulletin 2007, BP Statistical Review. Note: Oil Prices 1950-1983 Arabian Light posted at Ras Tanura, 1984-2007 Brent dated.

  7. Projected U.S. Natural Gas Supply Sources (Lower 48) LNG Imports from Canada Domestic Production Sources: EIA Natural Gas Gross Withdrawals and Production for history, EIA AEO (Annual Energy Outlook) 2008 for forecast. Note: AEO forecast is for Lower 48. Nat gas production history has been adjusted to exclude Alaska from total production. Because the EIA had not yet released 2007 Alaskan production data, 2007 Alaskan "dry production" assumed to be the same as 2006 given similarity in "marketed production" year on year. Imports from Mexico not included.

  8. Gas Resources and Potential Demand White: where the lights are on, satellite imagery BlueRed : Gas resources, with increasing size (USGS)

  9. “Spare” LNG Import CapacityUS serves as LNG market of last resort Sources: EIA Natural Gas Imports, EIA AEO 2008, Damien Gaul – EIA. Note: EIA AEO is the Energy Information Administration's Annual Energy Outlook. Large increase in 2008 due to splicing history and forecast.

  10. Crude, Gas, and Coal: MMBTU Comparison Source: Reuters. All prices are front month futures contracts. Green is NYMEX coal, black is Richard’s Bay South Africa, orange is the Northwest Europe ARA contract. NYM is New York Mercantile Exchange (NYMEX). ICE is Intercontinental Exchange. HH is Henry Hub gas.

  11. Changing Projections for the Total Energy Mix in 2020 Source: EIA IEO 2002, 2004, 2006.

  12. Coal Siting in the US: Many Challenges Source: Sierra Club

  13. Growth in Global Hard Coal Trade Since 1975 Source: RWE Power, World Market for Hard Coal, 2005

  14. International Coal Pricing Sources: Reuters, McCloskey’s. Note: US coal prices adjusted from short tons to metric tons for comparison. BTU content of coal varies. API 2 and API 4 are McCloskey’s Index prices. NYMEX is front month futures contract. PRB contract is a NYMEX front month swap.

  15. Growth in Coal Consumption to 2030 Will Be Dominated by China and India Source: IEA WEO 2007

  16. Fragmented Carbon Markets Sources: Danny Cullenward, Point Carbon, Reuters, Nordpool. Note: EU ETS is European Union Emissions Trading Scheme. CDM is the Clean Development Mechanism. UK ETS is the United Kingdom Emissions Trading Scheme. NSW is New South Wales. CCX is Chicago Climate Exchange.

  17. Carbon Parity Price in Europe(results highly sensitive to market particulars) Carbon Price Required to Make Gas and Coal Generation Equally Profitable German Baseload CAL09 Futures Market Carbon Parity Price (CAL 09) EU ETS (DEC 09 EUA) Source: Reuters. Note: Carbon intensity of gas generation assumed .411 mtCO2e / MWh, .91 mtCO2e / MWh for coal generation. CO2 prices are EUAs (Nordpool). Note: EU ETS is the European Union Emissions Trading Scheme. EUA is European Union Allowance. CAL09 is the 2009 calendar year futures contract.

  18. Carbon Storage Project “Pipeline”Quantified projects only Speculative Possible Operating Data: PESD Carbon Storage Project Database

  19. Thank You

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