Globalization of Fuel Markets

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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
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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

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Brent Crude Oil Prices 1999 - 2008
Data Source Reuters. Prices shown are front
month futures contract.
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Growth In World Oil Demand
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The Worlds Oil Reserves by Owner
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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.
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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.
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Gas Resources and Potential Demand
White where the lights are on, satellite
imagery Blue ? Red Gas resources, with
increasing size (USGS)
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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.
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Crude, Gas, and Coal MMBTU Comparison
Source Reuters. All prices are front month
futures contracts. Green is NYMEX coal, black is
Richards 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.
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Changing Projections for the Total Energy Mix in
2020
Source EIA IEO 2002, 2004, 2006.
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Coal Siting in the US Many Challenges
Source Sierra Club
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Growth in Global Hard Coal Trade Since 1975
Source RWE Power, World Market for Hard Coal,
2005
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International Coal Pricing
Sources Reuters, McCloskeys. Note US coal
prices adjusted from short tons to metric tons
for comparison. BTU content of coal varies. API
2 and API 4 are McCloskeys Index prices. NYMEX
is front month futures contract. PRB contract is
a NYMEX front month swap.
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Growth in Coal Consumption to 2030 Will Be
Dominated by China and India
Source IEA WEO 2007
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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.
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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.
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Carbon Storage Project PipelineQuantified
projects only
Speculative
Possible
Operating
Data PESD Carbon Storage Project Database
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Thank You