EuroElections 2009 : EPP-ED

This post starts a series intending to reflect on the policies on the field of Energy proposed by the main political parties/blocks running for the 2009-2014 term at the European Parliament. Consulting the information made available on-line, either at home-pages, electronic leaflets or booklets, this series will look into the guidelines on Energy Policy that each party is proposing to euro-citizens.

Starting is the EPP-ED, the Cristian-Democrat block that has held the largest number of seats at Strasbourg since the Assembly's first day.

EPP-ED is a congregation of regional Conservative or Cristian-Democrats parties plus a few scattered Liberal parties. Most of these parties are used to be rotatively in power at state level and can be seen as the largest molders of what the European Union is today. With the largest electoral base, both at state- as at union-level, the party is also home to the ideas behind most of the policies and legislation put in place by the Commission and the Parliament.

The present Commission was shaped by the EPP-ED, largely influencing the name choice for Commissioner positions. Commission President, José Manuel Durão Barroso, although a Liberal, is a member of EPP-ED through his home state party – PPD/PSD – a Liberal party that has the largest militant base in Portugal.

The party's home-page is pleasant looking and well organized; although more focused in showing the work already made or in development by the parliamentary group. There's also an entire webpage solely dedicated to this year's election, a good place to know further the party's stance and the proposed programmes on other fields of action beyond energy.

It didn't take much time to find a booklet presenting the party's political guidelines for the 2009-2014 term. This booklet is very good, presenting not only the political programme but also a sum up of the party's ideology and its place at the present geo-political landscape. After messages from the group's parliamentary leaders comes a section that explains the values at the core of the party's ideology, of which the main section is worth to reproduce:

The European Union needs to update, reassert and modernise its values: freedom, democracy equality, the rule of law, along with respect for human rights, including those of minority groups These values are common to all Member States, in a society characterised by pluralism, non-discrimination, tolerance, justice, solidarity and equality between men and women.

The essential pillars of our political activity must be to safeguard family values – particularly in response to challenging demographic trends and a falling birth rate – and to defend freedom of education. After all, the family is the basic unit that enables people to overcome crises, help each other, and prepare for the future. Our policy must be to strengthen families, ensure inter-generational solidarity and the passing on of values and heritage. The EPP-ED Group supports the laicism of the State, where this is a positive secularism that protects freedom of religion in a spirit of cooperation based on dialogue, mutual respect and reciprocal independence.

Economic rights are not secondary rights. They must be forcefully reasserted. Our Group believes that freedom of education, research, enterprise and competition are individual rights and the basis of a healthy and prosperous economy. There can be no justification for infringing these rights, which must, on the contrary, be further enhanced.

The value of effort, work, ownership and saving is insufficiently upheld. The current reforms aimed at reducing the burden on those wishing to work, save and invest must be continued.

A full page of this booklet is dedicated to Energy Policy, that his headed by the following title: Developing a coherent energy policy in the context of measures to combat climate change and sustainable development. The party's vision is resumed in a single paragraph:

The EPP-ED Group supports the establishment of a diversified energy mix, promoting higher energy efficiency in all activity sectors, the completion of the internal energy market and the development of a coherent foreign energy policy

And after it four strategic lines are laid down:

Towards a zero or low-CO emitting energy mix

The EPP-ED calls for:

• more investment in R&D for clean technologies such as carbon capture and storage, hydrogen and methanol energy, biofuels, biogas and biomass, which will allow us to rely on indigenous sources of energy in a sustainable way;
  
  


• more emphasis on clean energy technologies such as nuclear energy on the part of those States that favour it, the use of clean technology when using fossil fuels and the use of renewable wind, marine, solar and thermal energies;
  
  


• large-scale renovation of the cities (building stock, district heating systems, public transport);
  
  


• increased cooperation and dialogue between Member States in order to avoid drastic consequences for the price and quantity of imported sources and for the overall levels of the EU’s CO2 emissions.
  

The first four elements put forward are CCS, hydrogen and methanol “energy” and biofuels, which are even called “indigenous sources of energy”. A worst starting would be hard to imagine, leaving a lot to be desired for on the party's understanding of what is energy. A positive note goes for the reference to urban planning and its role in Energy Policy. Still, one can't stop thinking that these lines are simply a gathering of names that have a good echo with the press; yes, Nuclear is there, but lightheartedly, but only for those who want it.

Energy efficiency as a key driver of competitiveness and respect for the environment

Energy efficiency in all sectors represents the most cost-effective and rapid way to reduce our energy dependence on imports, rationalise consumption in households and industry and drastically reduce our CO2 emissions. This requires the involvement of all economic and social sectors.

The EPP-ED Group advocates:

• fiscal incentives for citizens and companies undertaking renovation works in the building sector and for the purchase of energy efficient vehicles and appliances;
  
  


• providing users with accurate information so that they can rationalise their energy consumption, encouraging new technologies such as smart meters in particular;
  
  


• continuing the rapid development of cogeneration in our energy-intensive industries and encouraging other sectors of industry to follow suit.
  

Things get better at this stage, the efficiency message is now well absorbed by the political class who understand how simple and light tactics can have an important impact in energy consumption (like the Labelling Directives). Naturally, one may or may not agree with specific tactics as fiscal incentives for vehicles substitution, but nonetheless, the election of Efficiency as a priority is quite welcome.

The internal energy market as enabler of open competition, higher efficiency and cost-reflective prices

Completion of the internal energy market is essential to the success of our security of supply and environmental goals. However, many obstacles to the free movement of gas and electricity within the EU still remain: lack of interconnection capacity between Member States; lack of harmonisation of basic technical rules; political protectionism; and the coexistence of 27 different regulatory frameworks.

The EPP-ED Group supports:

• further technical and regulatory harmonisation, placing all companies on a level playing field so that they can serve customers throughout the Union, increase interconnection capacity, and create competition in isolated and closed-off areas;
  
  


• setting up social programmes for vulnerable sectors of society without interfering with the market;
  
  


• encouraging a truly integrated and open market in order to ensure that energy prices reflect actual production costs; an efficient market is also essential to encourage the significant investment necessary for the introduction of renewable energy sources.
  
  

Using rhetoric similar to that of the Commission, EPP-ED advocates that increasing the competition in the internal market can secure energy supplies from abroad and moreover, foster investment in renewables. On the later, Jérôme had the opportunity to explain just recently why this isn't the case. As for the former, why more competition between, say Portuguese and Spanish companies can bring more oil from, say Angola to Europe is something that only this party and the Commission seem to know – especially in the face of natural depletion. None of this goes at saying that liberalizing the internal market is an undesirable objective; while it's priority is mainly an ideological choice, it's effect on the problems Europe is facing today is largely limited.

Creating supportive energy diplomacy.

The EU represents more than 500 million consumers and therefore needs to establish a real energy diplomacy.

Solidarity mechanisms need to be established between Member States in case of emergency situations. The gas supply crisis over the past two years as well as the two EU-wide blackouts have demonstrated the need to improve physical interconnection and rapid reaction mechanisms, in order to avoid the potentially critical consequences these events can have on the economy and on society.

Reading the header of this section one could even get the idea that the EPP-ED is proposing an European Foreign Minister/Ministry, but that's not exactly the idea. Nonetheless, solidarity and physical interconnection are some of the added strengths the Union can provide and their reference is welcome.

All in all, this programme doesn't differ much from what the Commission stood for during the term that now ends. The booklet's section on energy is close to a condensed version of the Commision's Energy Reviews. Being so, the same problems are present: it is understood that something is wrong, although not quite well what; the recipe: throw at it all that the hand can reach, well mixed with a liberalized internal market. It turns out that some of what is being thrown at the problem is actually lumber into the fire.

On a positive note is the attempt to build a thorough Energy Policy, composed by four strategic lines, submitted to an integrated vision. These strategies are not properly realised by concrete goals, which even at this level of contact with the broader public should be possible. A few tactics are put forward, that as explained above, do not exactly conform to the vision and strategies outlined. A sense of lack of commitment ends up emerging from the programme as a whole.

Calling CCS an “indigenous source of energy” is one of the most hilarious things ever present in a energy text.

London G-20 meeting: the last chance?

On the 24th of March, Frank Biancheri, head of of the LEAP2020, published in the Financial Times the following open letter directed to the G20 leaders gathering in London on the 2nd of April:

Ladies and Gentlemen,

Your next summit takes place in a few days in London; but are you aware that you have less than a semester to prevent the world from plunging into a crisis that will take at least a decade to resolve, accompanied by a whole series of tragedies and ferment? Therefore, this open letter by LEAP/E2020, who saw the arrival of a « global systemic crisis » as early as three years ago, intends to briefly explain why it happened and how to limit further damage.

[…]

Until now you have merely been concerned with the symptoms and secondary effects of this crisis because, unfortunately, nothing prepared you to face a crisis of such an historic scale. You thought that adding more oil to the global engine would be enough, unaware of the fact that the engine was broken, with no hope of repair. In fact, a new engine must be built, and time is running out, as the international system deteriorates further each month.

[…]

LEAP'S THREE STRATEGIC RECOMMENDATIONS

1. The key to solving the crisis lies in creating a new international reserve currency!

The first recommendation is a very simple idea: reform the international monetary system inherited post-wwii and create a new international reserve currency. The US Dollar and economy are no longer capable of supporting the current global economic, financial and monetary order. As long as this strategic problem is not directly addressed and solved, the crisis will grow. Indeed it is at the heart of the crises of derivative financial products, banks, energy prices... and of their consequences in terms of mass unemployment and collapsing living standards. It is therefore of vital importance that this issue should be the main subject of the G20 summit, and that the first steps towards a solution are initiated. In fact, the solution to this problem is well-known, it is about creating an international reserve
currency (which could be called the « Global ») based on a basket of currencies corresponding to the world’s largest economies, i.e. US dollar, Euro, Yen, Yuan, Khaleeji (common currency of oil-producing Gulf states, to be launched in January 2010), Ruble, Real..., managed by a « World Monetary Institute » whose Board will reflect the respective weight of the economies whose currencies comprise the « Global ». You must ask the imf and concerned central banks to prepare this plan for June 2009, with an implementation date of January 1st, 2010. This is the only way for you to regain some control over currently unwinding events, and this is the only way for you to bring about shared global management, based on a shared currency located at the centre of economic and financial activity. According to LEAP/E2020, if this alternative to the currently collapsing system has not been initiated by this summer 2009, proving that there is another solution than the « every man for himself » approach, today’s international system will not survive this summer.

If some of the G20 states think that it is better to maintain the privileges related to the « status quo » as long as possible, they should meditate the fact that, if today they can still significantly influence the future shape of this new global monetary system, once the phase of global geopolitical dislocation has started they will lose any capacity to do so.

[...]

Further detail of LEAP2020's analysis was given by Frank in an interview to the Guns and Butter radio show.

There will be other issues discussed at the meeting: tax heavens, shadow accounting practices, reserve requirements, but the global reserve currency system, that, as was known during at least the last 40 years, seems to have ceased to exist, is the most important of all.

How did it get here.

The first attempt to reach a global monetary system was held at Bretton Woods in the US in the Summer of 1944, with the end of the Second World War in sight. An agreement was reached between 44 nations in the Allies' side, that enacted the IMF, the prototype of the World Bank and a new monetary system for commercial relations. This system (named Bretton Woods) established fixed exchange rates between currencies, defining narrow fluctuations of paper currencies against gold.

This Bretton Woods system lasted for more than two decades along which countries kept on increasing paper currency supply, but managed to maintain gold prices under control by injecting reserves into the market. The system began to fail in May of 1968 when world wide panic closed down most gold trading markets. Investors had lost faith in central banks' ability to redeem the fiat currency they had issued. In the Summer of 1971, bending on the weight of increasing energy imports and the Vietnam war, the US was forced to pull out of the Bretton Woods system, abandoning the direct convertibility of the US dollar into gold.

During the following months, with the dollar loosing half of its value against gold, most other countries abandoned fixed exchange rates against the dollar. A new system emerged, with major currencies used in international trade adopting floating exchange rates.

Following came a period of about ten years between the first oil shock and the pinnacle of the early 1980s recession, when currencies slowly depreciated without much economic growth happening in the western world. During this time the foundations of the present system were launched. Perhaps the most important action towards it was the birth of the Carter Doctrine. As the economic crisis was overcome, a symbiotic relationship developed between the Midde East and the West, in exchange for military protection (conserving the ruling elites) oil producers provided easy oil that fostered economic growth in its turn reinforcing that military power. Oil producing countries stored their wealth in US Treasury bonds and other debt instruments becoming creditors of the military power that kept them safe; the flow of cheap oil allowed the economic growth that justified the faith on the US currency. This was the Petro-dollar system.

While in a different stance, US allies in the NATO framework (also Japan and Oceania) ended up also benefiting from this new system. They couldn't export debt as the US did, but benefited both from the flow of cheap oil and of the rising protective military power at the western side of the Atlantic. Two decades of unprecedented economic stability and growth unfolded.

But History is relentless. By the mid 1980s this system was being used chiefly in the Atlantic – Middle East trade, with the USSR and its allied still in place, and in a trade environment much narrower than today. As oil prices collapsed in 1985, events were set in motion that brought down the USSR both in political, military and economic terms; in 1989 the Berlin wall fell and in 1991 Russia detached from the former republics of the Warsaw Pact. In 1992 the Maastricht Treaty created a new market of international dimension; in 1999 the Euro was born and in 2001 China joined the WTO, paving the way far a major, now liberalized, economy entering the world market. At the same time other important players emerged, with Russia becoming again the world's largest oil producer and a major energy exporter, not forgetting countries like Brasil or India.

What started as a bonding scheme between two regions, became the system that prices global trade today. Not only the usage of the US dollar as reserve currency became global, it became much more intense with imports and exports having far greater weight in individual economies than 20 years ago. This scheme resulted into the US Federal Reserve setting monetary policy for the whole world, while in fact its targets and gauges are solely on the US economy.

The recent years.

After 2000 the US embarked on a monetary and fiscal policy expansion with little parallel in history: interest rates were brought down to the floor, the monetary mass grew in excess of 10% annually, an expansionary budget stimulated demand for goods and services, many of them imported from countries that accumulated US bonds and other forms of fiat currency. From 2002 to 2007 reserve currency held by central banks grew in excess of 20% annually. In parallel, lax financial regulations and reserve requirements helped creating a pile of invisible debt (out of balance sheets) on that expanding demand and monetary mass, according to some amounting today to more than the world's annual GDP.

Did this incredible expansion ended because oil production plateaued? That's an interpretation, although other views are possible. Oil prices entered the rising phase in 2004, in 2005 were raw materials and 2006 food: no matter what the underlying reason, the supply side stopped following the demand expansion. When Ben Bernanke became chairman of the US Federal Reserve and tried to change course by raising interest rates, so that at least some strain would come to the monetary expansion, it was already too late: the US economy couldn't expand anymore in order to generate the wealth promised by all the debt issued in previous years.

Without that physical growth, the result was simply default on debt. Without the proper leadership from either the US government or the Federal Reserve, panic took over last September and during two months the world assisted to one of the sharpest demand retractions in history. The awkwardness of the moment is that in order to stimulate demand once more the prescription in the US seems to be an expansionary budget and monetary policy. And here's the main problem: this policy threatens the value of US dollar reserves held abroad.

There is another side to the present crisis worth observing: countries that followed alternate monetary policies to those set by the Fed seem to be suffering the most. Those that opted for high interest rates in order to fend price inflation and/or demand enjoyed an influx of foreign investment lurking for easy profits. When the crisis hit that investment simply vanished, examples were Iceland, and Russia to some extent. At the other end were countries like Japan that during this decade had been battling problems of employment or lack of internal demand, employing expansionist measures even sharper than the US; they are now facing an influx of currency that threatens to engulf demand and massively destroy employment.

In conclusion: a regional currency running world trade had two main negative effects: impaired specific monetary policies in other regions, formating them to the issuing region, and pegged wealth in store to the economic health of a single region: the issuer. Exacerbating these problems is the hegemonic position the currency issuer gets, allowing it to leave beyond its means - what Frank Biancheri calls the reserve currency curse – the budget and trade deficits can apparently be expanded without limit, but at some point it makes foreigners wonder, and when that time comes the issuing region is engulfed in debt. A global economy running on a regional currency seems almost like a scheme designed to self destruct.

The confidence wanes.

The policies needed to bring the US economy back into contact with reality have thus the parallel effect of deriding the wealth stored by those economies that grew on exports during the past few years: be it expensive lasting goods (e.g. Germany, Japan), consumer goods (e.g. China) or energy (e.g. Middle East, Russia). The confidence on the US dollar as a reserve currency is severely demaged and as the LEAP2020 implies, it will probably never come back. No wonder then that China is openly calling for a new reserve currency system:

Zhou Xiaochuan, governor of China's central bank, has proposed to create a super-sovereign reserve currency as part of reform in the international monetary system.

The desirable goal of the international monetary system is to "create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies," he said.

Zhou said the Special Drawing Right (SDR) of the International Monetary Fund (IMF) has the potential to act as a super-sovereign reserve currency in a signed article posted on the website of the People's Bank of China Monday.

This backs up earlier calls from another major holder of reserve currency, Russia, that seems to be heading a group of nations with the same intent:

China and other emerging nations back Russia's call for a discussion on how to replace the dollar as the world's primary reserve currency, a senior Russian government source said on Thursday. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions, among other measures in the text of its proposals to the April G20 summit published last Monday.

[…]

Russia met representatives of China, India and Brazil ahead of the G20 finance ministers meeting last week, as the big emerging powers seek to up their influence on decision making globally. Their first ever joint communique did not mention a new currency but the source said the issue was discussed.
"They (China) did not formally put forward their position for the G20 summit but unofficially they had distributed their paper regarding the same ideas (the need for the new currency)," the source told Reuters, speaking on condition of anonymity.

But China has not sticked solely to articles in the western press and meetings with other reserve currency holders. Ever since the country announced its intention to make the Yuan a reserve currency, several currency swaps have been announced with its main commercial partners, Argentina being the last of a list that includes South Korea, Malaysia, Hong Kong and Belarus.

What could happen then if a new coordinated reserve currency fails to emerge? The answer is simple: the US dollar will stop being the world trading benchmark. A period will then unfold during which trading nations won't have a clear worldwide unit to value their goods, much less to store value for future trading. Possibly, some regional currencies might be tried on a geographically limited basis, and another alternative might emerge with a currency for which there isn't much policy to go about: gold. The consequences of such transition will be immense; an Hungarian mathematician called Antal Fekete, claims to already be getting signs in that sense, with gold futures entering backwardation late last year. This is a rather technical issue, way beyond the aims of this simple essay, but with or without backwardation, it is important to know what Fekete foresees [pdf!] in case the present system ceases to exist without a clear replacement:

I have to go back to the collapse of the Western Roman Empire after the abdication of the emperor Romulus Augustus on September 4, 476 A.D. It was followed by the Dark Ages when the rule of law, personal security, trade of goods against payment in gold and silver could no longer be taken for granted. Gold and silver went into hiding, never to re-emerge during the lifetime of the original holders. It is plausible to see a causal relationship between the fading of the rule of law and the complete disappearance of gold and silver from trade. Virtually all observers say that the first event caused the second.

I may be in a minority of one to say that causation goes in the opposite direction. The disappearance of gold and silver coins as a means of exchange was a long-drawn-out, cumulative event. In the end, no one was willing to exchange gold and silver coins for the debased coinage of the empire. At that point the empire was bankrupt; it could no longer pay the troops that defended its boundaries against the barbarians threatening with invasion. This is not to say that the empire did not have other weaknesses. It did, plenty of it. But the overriding
weakness was the monetary weakness. Centuries after centuries the Mint of the empire could attract less and less gold and silver. Because of this, the empire was forced to debase its coinage and the deterioration continued until the bitter end, when the gold flow to the Mint completely dried up.

[…]

The history of the monetary system of the United States [and of the World] shows an ominous parallel to that of the Western Roman Empire. As long as gold and silver was still used in trade at least to some extent, the Western Roman Empire was limping along. The modern equivalent of the disappearance of gold and silver is epitomized by the progressive vanishing of the gold basis [meaning the vanishing confidence in the US dollar as an effective long term wealth storage medium].

Coming from a different perspective, this scenario ends up remarkably close to what Frank Biancheri calls “every man for himself”: the break down of global commercial bonds, a drastic reduction in global trade and the emergence of several regions of influence deploying different economic and monetary policies, in a world resembling Europe in 1914.

A small but important sign of this unfolding change of the world's monetary system is the recent news that the US sate of Montana is considering a return to gold and silver as means of payment and state accounting units.

Europe.

Europe has possibly the most complex stake in this meeting. On the one hand it is home to about one third of the world's reserve currency, having to some extent benefited from the advantages of being a reserve currency issuer (although in its case the reserve currency issued is a relatively small fraction of total currency in circulation). On the other hand, it holds the third largest foreign currency reserve in the world, being a major creditor of the US.

Two other issues are worth nothing in Europe's stake, first, it is heavily dependent on energy imports, thus being highly vulnerable to world trade disturbances, and more so when its major fossil fuel suppliers are entering terminal decline: Norway, in the case of oil and gas, and Russia in the case of oil. Another important point is that about half of the world's reserve gold is in Europe, as so considerable sums in privately owned bullion and monetary jewelry.

All things considered, Europe is possibly the region having most to benefit (or more to lose in the opposite case) from a new reserve currency system not reliant on a single regional issuer. Up front, for it would prevent serious impact on world trade and the possible consequent disruption of energy imports, but also because it would prevent the Euro from somehow becoming a substitute for the dollar, shifting the “reserve currency curse” to the eastern side of the Atlantic.

Enter the Khaleeji.

There is still another possibility to unfold if a new reserve currency system isn't put in place. After several years of talks and on/off reports in the press about its arrival, the Gulf Cooperation Council states decided in the wake of the present crisis to precipitate the creation of its common currency, the Khaleeji. This is another sign of the confidence break up in the US dollar as a reserve currency, from countries that so far had their currencies pegged to it. It is shaping up to be something like the Euro, governed by a Middle East Central Bank. Interestingly, there's only one country from this block attending the G20 meeting, Saudi Arabia.

Speculation as come about on this new currency being backed by a physical entity, in contrast with the other fiat currencies of the main world trading blocks. Gold is the usual suspect, but that's unlikely, for the region doesn't hold much gold (compared to Europe) and a good part of what it has is non-monetary jewelry.

The important thing about the Khaleeji is that it will be backed by the economic health of countries whose main economic activity is energy production and export. This makes it a real improvement over the US dollar, the Yuan or the Euro, and a potentially emerging reserve currency in case an agreement fails at the G20.

Beyond a new reserve currency system.

The last paragraph contains an obvious caveat: if the Khaleeji comes to be a fiat currency, its backing by energy is purely abstract, shakily built on confidence. And that is the main problem world leaders face today, irrespective of what role energy prices had on the crisis unfolding, one thing is certain: if the energy flow to the world economy can't grow anymore, then all abstract currencies are condemned as long term wealth storage media.

Without economic growth to support their expansion, abstract currencies loose their main advantage over commodities: a supply totally detached from economic activity allowing for monetary policies supporting employment, wealth or international relations. As expansionary measures are put forward to revive an economic growth that might no longer be possible, paper currencies will rapidly deride in value, menacing public confidence invested on them.

A new world reserve currency, resembling the old Ecu for instance, could indeed re-instate balance in world trade, but it won't be in any way a solution for the deriding value of abstract currencies and the policies founded on them. But it would at least bound international players together into finding a way forward.

The water snakes are back onshore

Local newspapers today are making major headlines again with “the first commercial wave farm of the world”. But for the wrong reasons, the state TV website published an article yesterday with the following opener:

The three Pelamis machines of the wave farm in Aguçadoura, that was considered by the Portuguese Government as a “flagship” of the country's leadership in renewable energy, where taken out of the sea and have been onshore, at the Leixões shipyard, for 4 months.

The two Pelamis units deployed in September were at sea for only 2 months and there's no date set for a return to operation.

The article continues:

Talking to the news agency Lusa, Rui Barros, from the Companhia de Energia Oceânica (part of the Babcock & Brown group, the project owner) said a recurrent problem was detected with the bearings of the hidraulic jack's articulations in all of the three machines, prompting their move out of sea.

[…]

According to Rui Barros, the continuing problems with these bearings that are submerged, forced the transport of the three machines back to shore by mid November, “so that an inspection could take place”.

“We then verified that the problem was serious an extensive, a generalized problem and not fortuitous.” he explained.

Since then, Pelamis Wave Power, Babcock & Brown's technological partner e maker of these machines, “entailed a discussion” with the company that provided the bearings, being set for April the arrival at Portugal of new parts to repair the equipment.

“I'm awere that there's a team from Pelamis ready to come to Portugal to substitute the bearings”, said Rui Barros.

According to this official, replacing the bearings will take about a month, after which the machines can again be brought to high sea, resuming the testing they were being subject to.

“I'm convinced that, if no other problem brews up, before the end of Summer we shall have the three machines totally free for commercial production. But it is all, if, if, if...”, he said.

But other problems are menacing the project, the credit crisis is hitting Babcock & Brown hard, that was forced to sell assets to cover its debt, including the Pelamis project. Now it becomes known that the consortium announced in September between this company, tow local ones and another Australian investor was never signed. A second article gives further insight:

[…] the consortium announced six months ago between EDP, Efacec, Babcock & Brown and Pelamis for the development of the Aguçadoura wave farm and of a Portuguese 'cluster' in the field of wave energy never came to be.

[…]

“The initial assumptions of this project were altered and EDP is renegotiating them with Babcock & Brown”, said to Lusa an official from the Portuguese electric company. Underlining that it is still “committed to the project”, EDP didn't clarify if it is interested in buying the stake of the Australian fund.

[…]

On the Portuguese 'cluster' for wave energy, Rui Barros considered it “seriously compromised at the moment”.

The “race” for Portugal's leadership in this renewable energy field is already lost, for if the Aguçadoura wave farm was the first of its genre at the world level, “soon it will stop being so”, concluded Rui Barros.

There are several points worth making on this new development, but first it should be stressed that errors and faults are part of any engineering process. Such is the case for during the architecture phase details are missed and during the implementation phase things not always go as planned. In fact it is the process of testing, error discovery and correction that allows for the improvement of the final product. Knowledge improves when the product fails, not when it works as expected.

Nonetheless, a bearing leakage at this stage seems somewhat strange, especially considering that in situ tests were previously run in Scotland and in Portugal. Speculation can be made that either the bearing provider changed the manufacturing process or that the provider itself was changed in the meantime. In any event the commercial phase of the Aguçadoura project is now running almost 4 years behind the initial schedule.

On a larger scope the compromise of the wave power development 'cluster' is disheartening. And a proclaimed “flagship” project for the country being put at risk by the collapse of an investment fund managed at the other side of the world has its dose of irony. One gets the feeling it was all fireworks and that unfortunately Portugal might not have either the knowledge or the capital to be the “Denmark of wave power”. Being home to the technology and at the moment attracting the investment of E.On, Scotland seems to be righteous owner of that title.

Finally, the reserves I expressed earlier on the maturity of the technology seem to be vindicated by this new development. On the financial front, this new delay almost guarantees that the Aguçadoura project will be a money sink. As for EROEI, every error and fault corrected will improve the design and the assembly and deployment processes, thus also improving net energy. Still it seems now more than justified to at least postpone the 70 million € Aguçadoura II project, until this pilot project reaches an higher state of maturity.


Previously at EuropeanTribune: 

The First Wave Energy Farm of the World...It's About Time...


Previously at TheOilDrum: 

Tapping The Source: The Power Of The Oceans
Pelamis: A Shot in the Dark?

Have Oil prices bottomed out?

This post is a translation to English of an article penned by Jorge Nascimento Rodrigues and published in the 28th of February in the Economy section of the journal Expresso, the largest weekly publication in Portugal. It is built on the insight kindly provided by TheOilDrum contributor ace.

Jorge Nascimento Rodrigues is a free-lance journalist and author, editor of JanelaWeb.com and GurusOnline.tv

Crude Oil
February closing with the barrel close to 45 dollars

Crude oil prices might be back to a mid term bull dynamics, says Australian analyst. February behaved on significant oscillations from one day to the other and the American variety [WTI] climbed 10%, going from 40,78 dollars to 44,76 per barrel.

The minima for the price of a barrel of crude oil, since the peak in July of 2008, might have happened before the Christmas of 2008, advances the analyst from TheOilDrum, Anthony Eriksen, a Canadian mathematician seeded in Sydney, Australia, where he specialized in energy and mining investments.

The conclusion that can be made is that the price of a barrel might be back to a mid term bull trend, after the fall from 145 dollars to less than 50 in the span of only six months last year.

Eriksen reminds that prices of the American crude (WTI) and of the European (Brent) touched then the minima of 31,41 dollars per barrel in 22/12/2008 and 34,04 dollars on Christmas Eve, respectively. This year, the lowest prices occurred last week, on the 18th of February, with values of 34,62 for the WTI and 39,10 for Brent.

The International Energy Agency (IEA) points to a variation interval between 40-45 dollars per barrel, which would still be below the wishes of many producing countries that point to a minimum of 50 dollars for many of the projects they have in scope to be viable, both economically as technologically, underlines the analyst.

The price of a barrel of the American WTI variety reached on the 26th of February a figure slightly above 45 dollars and closed at 44,76 dollars. The Brent vareity closed the month with a price (44,72 dollars) practically identical to the opening figure (44,46).

Daily Brent Blend prices since last September. Source: UpstreamOnline.com; image not in original article.

Wild Oscillations

Notwithstanding, the fundamental behaviour of prices during this year has been what some analysts ironically dub “wild oscillations”.

The months of January and February have been fertile with that kind of very close extreme variations; at least 11 cases were observed for the WTI variety solely in February: on 10/2 declined 5% and climbed 10% on 13/2; on 17/2 declined 7% and climbed 14% on 19/2; on 23/2 declined 3,6% and climbed 4,2% on 24/2, 6,6% on 25/02 and 8,5% on 26/2, to go down again on the last trading day of the month. This reveals the high volatility of the agents' behaviour in this market.

To where can these extreme oscillations go and in what measure can the barrel price climb again above 50 dollars or fall below 30 dollars, derives, according to Eriksen, from the “fight” between two heavy weights.

On the one hand the impact of the crisis on the demand of this commodity, continuing to reduce it below 85 million barrels daily (mbd) – the last estimate by the IEA points to 84,8 mbd. This daily figure was still inferior to supply in January of 2009, that was around 85,2 mbd, resulting in a difference of 400 thousand barrels daily.

On the other hand there are several political and physical factors that can influence supply, producing scarcity in the market. Something that didn't happen yet, in spite of the cuts programmed by OPEC, that “should already be enforced in 89% relatively to the commulative cuts announced since September that mount to 4,2 mbd, according to Bloomberg”, says Eriksen.

Black Swans

The analyst underlines that, in the political plane, sudden geoplitics changes in productive regions (namely in the Middle East that continues to be potentially flammable with issues like Israel/Palestine and Iran) or a collapse of the dollar due to the dragging financial crisis or to the political behaviour of the main American currency supporters, can make the crude oil price shot up without previous warning. It would be the surging of inesperate “black swans” to the international scene.

Physical constraints can also have a negative influence on supply. Eriksen refers that the group of oil producing countries outside OPEC seem to have already reached, together, a production peak.

In spite of good perspectives in cases like Brasil (that, nonetheless, can reach “a production plateau around 2011”, according to the studies of this analyst) and Canada for a few more years, global supply from this group is diminishing, with high decline rates in extreme cases like the Gulf of Mexico (around 20%). In 2009 production should decline in Russia, Mexico, Norway and the United Kingdom.

Concerning OPEC a continuation of the programmed cuts policy is to be expected, with a renewal already in the 15th of March, when the cartel meets again. A pressure group formed by Algeria, Iran, Iraq and Venezuela is playing to that tune, according to quotes issued during the last week and a half.

ace adds this final comment:

There remains great uncertainty about key OPEC producer Saudi Arabia's true oil reserves as they are kept as a national secret. The last time that Saudi had a production peak was in 2005 at 9.6 mbd.  There is a risk that Saudi Arabia's true crude oil reserves could be much smaller than official estimates implying that future production will stay below the 2005 peak.

SER-2 [03] Communication on the Security and Solidarity Action Plan

Continuing the analysis of the Second Strategic Energy Review (SER-2) the insight is this time on the document entitled “Communication from the Commission to the European Parliament, the Council, The European Economic and Social Committee and the Committee of the Regions". This is a formal document that details the Energy Security and Solidarity Action Plan, presented in the Memo reviewed last time.

This post tries to highlight important aspects that aren't referenced in the Memo and presents the tactic actions proposed by the Commission to put the Plan into practice.

On the introductory section of the document the following paragraph is worth highlighting:

However, complementary measures are necessary to attain all three underlying objectives of the EU's new energy policy: sustainability, competitiveness and, above all, security of supply. For example, the EU is projected to remain dependent on imported energy - oil, coal and especially gas – for many years to come. Europe's indigenous production of fossil fuels is declining. As a result, net imports of fossil fuels are expected to stay at roughly today's levels in 2020 even when the EU's climate and energy policies are fully implemented.

These lines pretty much wrap up the motives and expectations that drive European Energy Policy at the moment: internal fossil fuel depletion is fully acknowledged forcing an end to the growing consumption, but faith still remains on an ever available foreign supply. This expectation of stable imports is a very relevant aspect of SER-2, that will become more clear in the analysis of following documents.

For each of the five strategic lines that compose the Action Plan the Commission sets a number of steps that more or less correspond to a chronological setting of the tactics that implement these strategies. Following is a digest of these.

Promoting infrastructure essential to the EU's energy needs.

First step: the EU should agree that the projects outlined by the Commission are energy security priorities. These are the infrastructure projects described in the Memo, listed below. The Communication goes at some length describing them, a worthy reading that for the sake of brevity isn't fully reproduced here.

• Baltic Interconnection Plan - to be developed in 2009 with the aim of connecting the remaining isolated energy markets in Europe, covering gas, electricity and storage. A regional Summit will be held in the second half of 2009 to start its implementation.




• Southern Gas Corridor - connecting to the Caspian and Middle Eastern sources. On a first phase the objective is to build pipelines to Azerbaijan and Turkmenistan, Iraq and Mashreq countries, later eyeing Uzbekistan and Iran; no objective time frame is given.




• Liquefied natural gas – still this year the Commission shall propose an LNG Action Plan aiming to foster regasification capacity in Europe as well as liquefaction capacity in gas exporting nations. This plan is seen as vital to states that are today dependent on a single supplier; the Solidarity Plan should facilitate the transport of gas liquefied in coastal states to inner states.




• Completion of the Mediterranean Energy Ring - linking Europe and North Africa with gas and electricity interconnectors, essential to develop the region's solar and wind resource. By 2010 the Commission shall present a Communication outlining the links that are missing from the plans set by the December 2007 Euromed Energy Ministerial meeting and the Mediterranean Solar Plan adopted in Paris in July 2008.




• North-South gas and electricity interconnections within Central and South-East Europe - a continuation of the New European Transmission System (NETS) initiative to create a common gas transmission system operator, the Energy Community Gas Ring, the priority interconnections identified by the Energy Community ministerial in December 2007, and the Pan-European Oil Pipeline.




• Blueprint for a North Sea offshore grid - in order to interconnect national electricity
  grids in North-West Europe and plug-in several planned offshore wind projects. Together with the Mediterranean Ring and the Baltic Interconnection projects, the Commission aims at a future European Supergrid.

Second step: detail these actions identifying financing needs and potential sources of finance. These needs will be identified by the Commission in collaboration with member states, industry, energy operators and regulators and the Parliament. The work shall take place during 2009 and 2010 resulting in a series of Communications.

Third step: implementation 2010 onwards. This last step will most likely require a budget reformulation; the Commission has today for this area a budget of 22 million euros, provided by the TEN-E instrument, that is visibly insufficient for projects of the dimension outlined above. Accompanying SER-2, a Green Paper is tabled to launch a reflection on the replacement of TEN-E for a new instrument, the EU Energy Security and Infrastructure Instrument, with other range of executive possibilities.

A greater focus on energy in the EU's international relations

The document goes at some length discussing economic relations in the energy field with several countries, describing several tactics to strengthen such ties. Energy is posed as essential content of the EU's foreign relations, both at the trade and political levels, something that the document alludes to not being exactly the case at the moment. Below is a digest of the tactics put forward.

• Norway - supplier of 24% of the EU's gas imports and 16% of its oil imports, is already integrated in the European Economic Area. The Commission aims at deepening further energy relations with Norway, collaborating with it for the maximization of the energy output from the Norwegian continental shelf, include its wind resource.




• Ukraine, Republic of Moldova and Turkey - negotiations are under way for these three countries to join the Energy Community, a programme to create a south-eastern energy market subject to the EU's legislation for the internal market, and security of supply of gas and electricity (with discussions on the way for an extension to oil). The Commission expects this programme to kick-start a reform of these countries' energy sector, especially an upgrade of Ukraine's gas transit infrastructure.




• Belarus - on a single sentence the document calls for the development of a specific strategy to secure the transit of energy from Russia through this neighbouring country.




• Russia - is and will for long be the EU's largest energy partner (read supplier). The Commission shows the intent of renegotiating the 1997 Partnership and Cooperation Agreement, replacing it by a new agreement deepening the EU's relations with Russia. Two goals are proposed: the liberalization of Russia's internal market (which according to the Commission would facilitate its reform) and the establishment of transit rules across the pan-European continent. So far Russia has constrained negotiations on a new Agreement to its accession to the World Trade Organisation




• Caspian - the Commission calls for the development of a Partnership with the countries of this region along the same lines of that developed with Russia. Empowered by the Council's decision to give high priority to the relations with these countries, the Commission will work to strengthen the Baku process and to build bilateral relationships.




• Iraq and the Gulf Cooperation Council - already in cooperation with the EU through the EU-OPEC Energy Dialogue. The Commission will develop further relations with these countries in the field of hydrocarbons (e.g. clean technologies) and procure bilateral agreements to secure the energy supplies from the region.




• Australia, Canada, Japan and the US and emerging consumer countries (China and India) - promote cooperation with these countries for the transparency of international energy markets and to commonly address sustainability issues.




• Latin America and the Caribbean - home to alternative energy suppliers with whom the EU is already developing multilateral and bilateral partnerships. Brasil is referenced as an important supplier of biofuels.




• Algeria, Egypt, Libya and Nigeria - already important suppliers of energy, these countries are part of a continent with great potential, not only in what concerns hydrocarbons, but also on renewable energies. The major goal put forward by the Commission is the Trans-Sahara Gas Pipeline, that it pretends to secure with bilateral agreements using instruments such as European Neighbourhood and Partnership Instrument, the European Development Fund and the European Investment Bank.

On Nuclear energy the document poses the following tactic:

With the Instrument for Nuclear Safety Cooperation, the EU will cooperate with and assist third countries in improving their nuclear safety culture and the safety of their operating nuclear power plants. For emerging countries intending to build nuclear power plants, the EU will help in the development of competent and independent nuclear regulatory authorities, capable of ensuring that the new plants are built according to international nuclear safety standards and operate in accordance with the highest standards.

Closing this section a reference is made to the construction of a common foreign energy strategy. The Commission expresses that to make such common policy a reality, a single foreign energy representative is not needed, but a proper planning and effective coordination of State level with Commission level policies. To that goal the Commission proposes to identify concrete mechanisms to ensure transparency between these two executive planes. It goes further with possible legislative measures:

[…] the Commission will consider proposing a revision of Regulation 736/96 which obliges Member States to notify to the Commission investment projects of interest to the Community in the petroleum, natural gas and electricity sectors, in order to increase its relevance to today's energy challenges. The Commission will consider how best to further develop early warning systems with key neighbouring energy partners.

Improved oil and gas stocks and crisis response mechanisms

The Commission starts this section by noting that the mandatory oil stocks regime, in place since 1968, has been successful in response to short term disruptions. Part of its success has been the relatively loose implementation leaving to each state the choice between ad hoc government stocks, industry stocks or a combination of the two. Still, the Commission will propose new legislation to improve the system, making it more transparent and less permeable to speculation.

At present, the EU publishes data on the level of strategic oil stocks for each Member State. Unlike the US, it does not publish information on the level of additional commercial oil stocks held in the EU. In order to improve oil market transparency and limit the effects of uninformed speculation, the Commission proposes that the EU now takes the step of publishing, on an aggregated basis, the level of commercial oil stocks held by EU oil companies on a weekly basis.

The Commission held off from proposing mandatory strategic gas stocks, mainly for its costs: five times those of oil stocks. Preference is given to harmonisation of security of supply standards and emergency measures, allowing for a better EU-wide coordination on crisis response. Diversifying supplies, especially with the build up of LNG infrastructure, is also given as a better alternative to strategic storage.

It is quite possible that this view will be rendered outdated during the next months, given present stock levels in the UK.

A new impetus on energy efficiency

This section of the Action Plan tables a further package towards the goal of 20% improvement in energy efficiency, adding up to the legislation presently under discussion at Parliament. This new package brakes down the following way:

• Energy Performance of Buildings Directive - to be revised broadening its scope, simplifying its implementation and developing energy performance certificates for buildings.




• Energy Labelling Directive - also to be revised in order to broaden its scope, from solely home appliances today to a wider range of energy-using products; classifications for a series of products groups will be revised or introduced anew. A new energy label for car tyres will be introduced under a separate legal instrument.




• Ecodesign Directive - its implementation will be intensified, with minimum requirements to be adopted in coming months for: light bulbs, electrical equipment in standby and off-mode functions of devices, street and office lighting equipment, external power supplies and
  simple set-top boxes for televisions; shortly after will follow: washing machines, dishwashers and refrigerators, boilers and water heaters, motors, and televisions. This Directive together with the Labelling Directive should allow the EU to save 96 Mtoe by 2020.




• Cogeneration Directive - in inception, with a Communication and technical details to its implementation to be published shortly.




• Covenant of Mayors - together with other financial and legal instruments will be used by the Commission to disseminate best practices on energy use, recurring to benchmarking and networking mechanisms.




• Cohesion Policy Funds - to be used promoting energy efficiency improvements in the industry, commerce, transport and public buildings, cogeneration and local energy production, innovation for sustainable energy, and training for monitoring and evaluation of energy performance. Funds from the Cohesion Policy will be used with the same intent.




• Green Tax Package - this will be presented to align the Energy Tax Directive with the energy and climate change package and propose the employment of VAT and other fiscal instruments in promoting energy efficiency.

Making better use of the EU’s indigenous energy reserves

This section opens up with pretty straightforward numbers:

Energy produced within the EU represents 46% of the total consumed. Before the 20-20-20 initiative, this was set to fall to 36% by 2020. Implementation of the new Energy Policy would keep it at around 44% of EU consumption.

The following energy sources are approached in the Communication:

• Renewable - this is one of the “twenties" already agreed upon: growing the renewable share of the market from 9% today to 20% by 2020. This target will be empowered by the Renewable Energy Directive after which the Commission will focus on monitoring its application. In this line the Commission will produce a Communication entitled “Overcoming Barriers to Renewable Energy in the EU", that will identify difficulties in scaling up renewable energies (e.g. grid constraints) and propose measures to deal with them. In this chapter the Commission will work with the European Investment Bank and the European Bank for Reconstruction and Development to set up a proposed EU Sustainable Energy Financing Initiative, in so facilitating the mobilization of funds needed for the proposed growth of these energies.




• Oil and Gas - for these traditional energies the Commission proposes to focus on developing the remainder of the conventional reserves and properly assess and produce unconventional reserves as shale and peat. The Commission will also work towards more transparency in the refining market and to ensure adequate diesel refining capacity in the future; a Communication on Refining Capacity and EU Oil Demand shall be presented in 2010.




• Coal - seen by the Commission as a virtually infinite energy source whose usage will grow around the world as inside the EU, among an healthy international market. Carbon Capture and Sequestration (CCS) will be introduced in 12 commercial scale demonstration plants up to 2015. Only by then will the Commission consider imposing mandatory CO2 emissions standards and only if the Emission Trading Scheme proves unsuccessful by then.




• Nuclear - the Commission notes that although Uranium supplies are well diversified and stable, and that Uranium prices do note have a major impact in the final price of electricity, the majority of Nuclear plants operating in the EU will reach the end of designed lifetime in the next 10 to 20 years. No policy tactic is defined in support of Nuclear, leaving the Commission that decision to each state. Nonetheless, it pretends to guarantee an high standard of safety by developing common legislation for nuclear plant safety and waste management.

---

The Communication closes with a few guidelines “Towards a Vision for 2050". This is still a rather immature vision composed by an open list of issues to tackle. For the sake of brevity, these issues are simply listed without further deepening:

• Decarbonising the EU electricity supply by 2050.




• Ending oil dependence in transport.




• Low energy and positive power buildings.




• A smart interconnected electricity network.




• Promoting a high-efficiency, low-carbon energy system throughout the world.

Final comments

The sheer size of the infrastructure build up plans plainly shows that the Commission has gained the sense of urgency that the moment requires. Unfortunately there is a clear over reliance on Natural Gas, especially in the ambitious plans for a Southern Corridor and the build up of LNG infrastructure. On the former, if a single transition country can be the source of the trouble seen in recent weeks, a lot is left to be desired from such international project; on the later the Commission seems to be underestimating the competition for LNG contracts from other international importers.

The document makes no acknowledgement of Norway's and Russia's depletion, the former on Oil and Gas the later at least on Oil. The intent to liberalize Russia's internal energy market is maladjusted and could even be seen as offensive by this partner. There are no moral or economic grounds on which the EU can promote Thatcher's Politics abroad.

The weekly publication of commercial stocks is quite welcome. Transparency driven initiatives like this not only benefit the market as can bring citizens closer to the Commission and promote a unified vision of the EU.

It is encouraging to see that the Commission is not actually blindly pushing CCS forward but instead putting it as a sort of last measure; even so, the 12 demonstration projects should be called into question. On the other hand the Commission doesn't perform any visible assessment of future coal supplies from exporting countries, not even acknowledging recent constraints in the international coal market.

This carefulness with CCS might actually make room for Efficiency measures to have a real impact. The approach taken by the Commission based manly on regulatory market legislation can have swift and important effect on energy consumption. The labelling tactics can also have an extra benefit in the present time of economic difficulties: it creates a product differentiation mechanism from which EU companies can benefit, valuing goods fabricated internally, that although more expensive, are more energy efficient. The Commission can go as far as forbidding altogether low efficiency products from entering the EU's market.

The laissez faire position the Commission takes on Nuclear energy boarders on irresponsibility. If this internal energy source is set to decline in coming decades the EU either needs a strategy to invert that trend or to fill the gap with other energy sources. On this point it is important to note that there's no renewable energy capable of performing the baseload role Nuclear has today. While hydroelectric and tidal power can effectively produce energy on a predictable basis, the continuous production of a Nuclear power plant isn't replicable. Even if the tactics to promote renewable energies laid down above come to fruition a parallel programme is needed to develop/implementing energy storing mechanisms.

The reflection on the Commission's energy budget is quite welcome. The Community should agree in due time how these projects are executed (in case they are approved) either by reinforcing the European budget, by state execution (in which case leaving the Commission solely on a coordinating role) or by a combination of the two. Ideally, a framework for the execution process of pan-European energy projects should be brought about.

Finally, how can any Energy Policy be successful, at this particular moment in time, without taking Transport as a central target of action is something only this Commission seems to know.

Open your mind to Open Software

Yesterday I had the opportunity to attend a forum entitled “Open Software on Public Administration" organized by the Portuguese Geographic Institute, the Portuguese Order of Engineers and the National Laboratory of Civil Engineering, taking place at the Laboratory's congress centre. It happens that I spend two days every week working at the Concrete Dams department of the Laboratory, and having the forum a high geographic content I couldn't miss it.

I have been using free/open source software in one form or another for more than ten years, and it now comprises the largest slice of applications I use. But at his forum I became conscious of something new: open source is not a computer geek curiosity any more, it is being used widely in many areas of engineering and natural sciences by folk without any sort of informatics background. A revolution may be on the brink.

This log entry is a simple list of applications that today permit doing pretty much what one expects to do with a computer, but all being open software. Starting with the basics, it is heavy on Geographic Information Systems (GIS) software, but also points to applications on other areas like education and management. At the end I leave a few notes on how to experiment these applications and environments without compromising your present system.


Start up

• Ubuntu – well, first of all you need that application that runs when you press the “on" button, gets you in contact with the hardware and presents a pleasant and friendly graphical interface. Without disregarding other Linux distributions, Ubuntu is today possibly the easiest to install and use open source operating system, and it comes on a series of flavours to better fit your needs. More on this chapter later.




• Thunderbird – ok, now you can interact nicely with your computer, but such machine is only fun when you can use it to interact with other people, so you may start by installing an e-mail client. My favourite is Thunderbird, easy to configure, effective in dealing with spam. Some folk have issues with disk space, but you can command it to use less.




• Evolution - a suite integrating an e-mail client, address book and a calendar. Never tried it but it is getting famous and comes by default with Ubuntu Desktop. Since I'm pretty happy with Thunderbird I don't feel the need to try, but I should do it some day.




• Sunbird - this is the Calendar I use, simple, no complications.




• Pidgin - the open source chat client of the day. I quitted this sort of applications some time ago because they can be quite time consuming (ok, not the applications, all the folk at the other end of the line), but the outstanding number of networks Pidgin can connect to make it quite appealing. Also included with Ubuntu.




• Google Chrome - but e-mail and instant messaging are just two of the ways with which you can connect to that knowledge monster called the internet, to take broader advantage of it you need a web browser. I strongly recommend Google Chrome; have been using it for a week and half and I'm already surrendered to it, everything's pretty clean and easy to use. This is, I think, the first open source application ever produced by this giant software house, they are starting well.




• Firefox - well, there isn't much else to be said about it, the first open source application to reach serious market penetration, I used it for a long time until I found Chrome. It is also included with Ubuntu.




• OpenOffice - but alas, some people actually use their computer to work. The first application connected to work most folk think about is the office suite. I started using OpenOffice with version 1.1 when the problems where probably more than the benefits, although by then Writer was already an acceptable application. With version 2 both Writer and Calc were already fully usable applications that I gladly embraced; at this time graphs at Calc were limited and I got the impression that Impress didn't really work. With version 3 graphs reached a very satisfactory level and I can now actually make my presentations with Impress; some difficulties persist with this last application but I wonder if they are now more on the user's side than at the application's. OpenOffice is also having another important impact by complying to the OpenDocument format it is freeing users from proprietary closed formats, that in the case of Public Administration is much more than a simple inconvenience. The full suite (including also Base, Draw and Math) is also included with the Ubuntu package.

Before moving on I must note here that a fresh Ubuntu installation contains all the applications needed by most folk. Even many engineers with whom I interact, don't go much beyond using a spreadsheet. Naturally there are applications and databases built ad hoc for the business/organization in question, but these invariably provide web based interfaces, for which a simple web browser is enough.



Data Base Management

• PostgreSQL - the momentum this Data Base Management System (DBMS) is picking up is quite staggering, possibly getting stronger than what Firefox made in its hey day. At the forum we had Olivier Dorie from the French Geographic Institute presenting how on a several year project they managed to gather all of the country's topography on a single database managed by PostgreSQL (and its spacial component PostGIS) now comprising more than 100 million data entries. This is an example of the state of maturity PostgreSQL has reached. The case is so serious that proprietary DBMS vendors were forced to release light-weight free-of-charge versions of their products. Still, PostgreSQL remains a superior option for two reasons: it is open source and includes the spatial extension. I have been using PostgreSQL for some time, but only to keep a few personal databases, so far I'm pretty happy with it, although interacting with a DBMS without using a command line interface leaves me a bit nervous.




• PG Admin - this is the secret being the success of PostgreSQL, a simple and friendly graphical management interface for this DBMS. It relieves the user of many technicalities in interacting with the “monster" a DBMS can be, making PostgreSQL useful from the tiniest personal database to the monolithic enterprise data warehouse.




• Firebird - before knowing PostgreSQL I used this DBMS and recommended it to my database students, together with Squirrel (see following). It still is a system to consider (especially for high performance applications, although here you have to pay) but the inclusion of PostGIS with PostgreSQL pretty much obliterated it.




• Squirrel - this is a fine graphical DBMS interface I used for a long time and also recommended it to my students. Up until 6 months ago it still wasn't able to present triggers associated views which is quite annoying and eventually made me trade it for PG Admin and Oracle's sqldeveloper. As a final note on databases, when I started teaching the databases course I immediately decided for open source software but was worried that my students (who didn't have any computer science background) would struggle with it; to help I made available on the internet a small document in Portuguese explaining the basic steps of installing Firebird and Squirrel on a Windows system. To my surprise not a single student had problems installing and running the software, my first real life example of free software reaching maturity.

Virtual Environment

• GISVM - some time back Ricardo Pinho, a GIS guru, was facing a problem that you might be now experiencing: how to test all these new systems and applications without quitting the primary operating system? Fortunately, microprocessors since the Intel 80386 generation allow for the creation of virtual environments – something like a virtual computer running inside your computer. This feature never worked quite well until the latest generations of microprocessors, that physically include more than one processor in a single chip and since then software to create and run these environments proliferated. So Ricardo had the idea of creating such environment with a Linux operating system (Ubuntu) and complete it with a collection of GIS software for experimentation. He went on the web to search for similar things and found none, then decided to create a website making his virtual environment available for everyone and it became a success. This is an extremely useful tool, and since Ubuntu includes a paraphernalia of other free software it can be a simple way to get to know Linux and the open world in general.

GIS

• QuantumGIS - possibly the most recognizable name in open source GIS, it evolved as a user friendly graphical interface for GRASS, an old open source GIS system from the command line times, becoming an official project of the Open Source Geospatial Foundation (OSGeo) . It provides a wide range of features to visualize, manage, edit, analyse data, and compose printable maps comprising a very complete package that is extensible by additional plug-ins.




• gvSIG - this is a multilingual GIS that can handle both vector and raster data, including a variety of useful editing tools; it reads a wide range of different file formats and is prepared to use geo-spatial data stored at a database or at remote sources. This project is a little different from similar ones in that it is being developed by a private company (IVER Tecnologías) and the Juame I University of Castellón, under commission by the Government of the Valencian Community, employing monies from the European Regional Development Fund. The multilingual features allied with its interoperability with a wide range of file formats made it rapidly successful among open source communities outside Valencia, being now the GIS desktop application of choice for many folk in the field.




• KOSMO - another open source desktop GIS developed in Spain and coded in Java. Light weight and with a clean graphical interface it is starting to get popular among some GIS operators.




• uDig - a user friendly desktop GIS developed in Canada on the Eclipse Framework. It is extendible and can itself be used as an extension to other Eclipse based applications. Its easy of use (powered by Flash walk-throughs) is making it quite popular.




• GeoServer - this application is one of several that forced the open source revolution on GIS software, providing a service that proprietary vendors neglected for a long time. GeoServer is a web server of maps and geo-spatial features, allowing the construction of web based applications that include geographic information. This field of application was ground-broken by MapServer some years ago, when commercial vendors struggled to provide a functional alternative. GeoServer is today the leading option in the field due to its superior performance.




• OpenLayers - this is not exactly an application, but a code library that allows programmers to include map data in the web pages they develop. It is a tool that provides the client side support for the data served by applications like GeoServer.

Other end-specific software

• Modellus - this is an educational software developed in Portugal for teaching Mathematics and Physics to high-school and college students. It provided for one of the funniest presentations at the forum: the speaker opened the program and chose a dinosaur cartoon figure among a list and dragged it to the centre of the screen – the subject – and then opened a small window called mathematical model and typed in x = t * 10 , then he clicked run and the dinosaur walked away out of the screen. Then he changed the model to x = t ^ 2 and the dinosaur disappeared on an accelerating run. Modellus has been adopted in many schools around the world and seems to be in the process of becoming mandatory for some curricula in the UK. This is indispensable software for anyone raising children, embodying a new teaching paradigm were children do not spend most of their time executing mechanical exercises anymore and spend more time actually understanding mathematics.




• OpenProj - described by its developer institution “as a complete desktop replacement for Microsoft Project", has reached maturity and is used today by many engineering professionals.




• QCAD - Computer Assisted Design (CAD) is an area where open source struggled to reach maturity. QCAD is part of a set of new applications set to change that, offering a workbench for two-dimensional design providing much of the functionality available in commercial software. For now three-dimensional design isn't possible, but what QCAD provides so far seems to be enough for many of the tasks engineers and architects do daily.




• Octave - this is the open source version of numerical computation software like MathLab or Mathematica. It provides a command line interface for solving linear and non linear problems numerically, and for performing other numerical experiments using a language that is similar to that used by Matlab. It may also be used as a batch-oriented language.




• Code_Aster - one of the most complex open source applications available, it was developed by EDF for finite element analysis and numeric simulation in structural mechanics and was made publicly available in 2001. Because it is employed by EDF in the Nuclear Industry most of its code has been subject to independent validation and benchmarking. It has been employed in many areas of engineering and a considerable community evolved around it.




• AlFresco - is an open source Enterprise Content Manager (ECM) providing many features like Document Management, Collaboration, Records Management, Knowledge Management, Web Content Management and Imaging. Its modularity and interoperability with other systems and applications has granted it wide acceptance.

Many more applications exist in other or similar fields of usage; finding an open source application to perform a specific task is many times a matter of searching and rarely an open source package goes without alternative. This ends up being another advantage of open source software: its modularity, fitting closer to the users needs.



Experimenting

Most of the applications cites above run on commercial operating systems, but to free your self entirely from proprietary software you should use a free operating system. Many folk still think that to use open software (or at least operating system) they have to quit their current system overnight, recurring to the fatal format c: or fdisk. That's not the case and there are several ways to start using all these new programs while keeping your current base system:

• Live CD - many Linux distributions provide an installation CD that runs the system from the CD itself, you reboot the PC with the CD and have a test run. As usually many applications are included with the operating system, it is also an easy way to get the first contact with them.




• Dual boot - it is also possible to have two operating systems in the same computer, when installing a Linux distribution there's usually an option to install a boot program that allows to choose which operating system to run at start up. To have both systems installed one need either a free secondary hard drive or a chunk of free space on the primary hard drive into which the second system goes. This option is more for advanced users (even though it can be really easy if you have a free hard drive), but provides an experience closer to the real thing.




• Virtual machine - this is the option provided by the GISVM package. There are a few software packages that allow you to build your own virtual environment fitting your needs. This option provides an environment close to real usage without any risk of compromising the main system.

After making certain that you are able to do all your work and other activities on an open source platform you are ready to migrate without pain to the world of free code.

Through time I have experimented several Linux distributions: Suse, Red Hat (now Fedora), Debian, Xandros, Mepis, Ubuntu, but most of the times I end up approaching it as a normal user and not on a technical perspective; after some time I just want it to function, providing a proper platform for my work. If you have a bit more of curiosity you should try more than one distribution and several graphical interfaces (like KDE, GNOME, Xfce) to find the one that suites your needs better. If you just want something that works and doesn't give you trouble setting up, simply go with Ubuntu.

It is possible that you run into some difficulty or another in your open source endeavours, but don't give up at the first try, remember the strongest advantage of these solutions: the Community. There are millions of folk using and developing open source software around the world, you will always be able to find a forum or mail list where you can ask for help or share your experience.



Final thoughts

My professional activity obliges me to use commercial software, so I need a commercial operating system in my computer. During the last few years I've tried to change my primary system into something open source, but there seemed to be always something missing for that change to unfold. Things started to change with Mepis and its easy of use; unfortunately it had some difficulties with the hardware of my laptop at the time. The first distribution that really became a platform I used for something more than programming was Ubuntu; I kept an installation with dual boot for a long time and was able to do a good chunk of my work with it. It had became my primary system if it wasn't for a single problem: I never managed to replicate the desktop to the video output, this had the annoying consequence of preventing me from using it in classes.

Right now I'm using Windows Vista as my primary system, it is less user friendly than XP but much more stable. I only use three commercial applications (imposed by work) and all the rest is open source. As parallel free platform I'm using GISVM. Although I'm pretty happy with the improvements Vista brought me these last months, this year won't end without me changing my primary system to open source, especially now that I'm not teaching any more. The commercial software will simply be stuffed into a virtual machine.

Open source software is gaining considerable momentum, reaching many fields of application and providing straightforward solutions for non-expert users. The present economic crisis will force many organizations to contemplate the hypothesis of abandoning commercial software. Instead of simply laying off personal, companies cutting costs by migrating to free applications might find that narrow competitive advantage that makes the difference from going down with the crisis or surviving it.

It seems to me that conditions are at the moment quite propitious for an en masse migration to open source software. Open your mind and ride the wave!

SER-2 [02] Memo on the Security and Solidarity Action Plan

In the second instalment of this series analysing the Second Strategic Energy Review (SER-2) by the European Commission, the focus is on to the Memo entitled “EU Energy Security and Solidarity Action Plan”.

This Action Plan is one of the new concepts brought about by SER-2 and marks a visible turn of the Commission's understanding of the European Energy system. Whereas during the first years of its term the Commission relegated Energy Security to second plan, expecting it to magically emerge as consequence of the internal market liberalization and deregulation, now it takes a frontal role in the Commission's Energy Policy.

After a generic introduction squaring this Action Plan with the 20-20-20 agenda, the document immediately goes to admit (even if implicitly) the failure of the past focus on liberalization:

Energy security is an issue of common EU concern. With the integration of energy markets and infrastructures within the EU, specific national solutions are often insufficient. And while each Member State is in the first instance responsible for its own security, solidarity between Member States is a basic feature of EU membership. Strategies to share and spread risk, and to make the best use of the combined weight of the EU in world affairs can be more effective than dispersed national actions.

The Plan is divided in five action points, that are tackled separately.

1. Promoting infrastructure essential to the EU's energy needs.

The idea is to promote cross-border infrastructure allowing for a deeper market integration and broadening importing choices. This point of the Plan will be enhanced by the Third Internal Market Legislative Package which will facilitate investment in these infrastructures. It breaks down the following way:

• Development of a Baltic interconnection plan, better linking the region with the rest of the EU,
  improving the security and diversity of its energy supply, enabling solidarity;



• Development of a Southern Gas Corridor for supply from Caspian and Middle Eastern sources and possibly other countries in the longer term, improving security of supply;



• As liquefied natural gas (LNG) is now contributing to diversity of gas supply, sufficient capacity should be available to all Member States, either directly or through other Member States on the basis of solidarity arrangements; particularly important for the Member States which are
  currently overwhelmingly dependent on a single gas supplier; an LNG Action Plan to be considered;



• Completion of a Mediterranean energy ring, linking Europe with the Southern Mediterranean through electricity and gas interconnections to improve energy security and to help develop the vast solar and wind energy potential;



• Development of North-South gas and electricity interconnections within Central and South-East Europe, building on the Energy Community inter alia, supporting the national energy regulators and Transmission System Operators;



• Development of a blueprint for a North Sea offshore grid, interconnecting national electricity grids and plugging in planned offshore wind projects.

There is a clear concern in these lines with the dependence on Russian gas, that is hedged with a boost in LNG gasification and a direct link to the Middle East. Although increasing the gas importing paths to Europe will in principle increase security of supply, none of the proposed options seems to represent a real advantage over the link to Russia. While a corridor from the Middle East will have to pass by a series of countries to reach Europe, from Russia it has to pass one intermediary at most. As for LNG, it is unlikely that this market can have a serious impact in future EU requirements, especially when taking account that other countries are also expanding their gasification capacity, promising to fuel the market dispute during the following decade.

To close this point a question must be asked: why aren't the measures to foster alternative energy supplies at the head? Relegated to last spot, and with the shy option of a “blueprint”, the North Sea wind resource seems especially disregarded. There's no supply more secure than that coming within the EU's borders; while the dependence on foreign energy won't disappear any time soon, developing indigenous sources is the best way to reduce it.

2. A greater focus on energy in the EU's international relations.

The EU needs to intensify its efforts in developing an effective external energy policy; speaking with one voice, identifying infrastructure of major importance to its energy security and then ensuring its construction, and acting coherently to deepen its partnerships with key energy suppliers, transit countries and consumers. The Commission will identify the concrete mechanisms necessary for ensuring transparency between Member States and the EU, so that a common message can be constructed.

Relations with Norway are to be strengthen within the framework set by the European Economic Area. Negotiations are under way for Ukraine, Moldova and Turkey to enter the Energy Community. In the case of Ukraine it will be interesting to know how the recent row with Russian gas transit will influence the process. It is important to note also that Georgia (presently an observer country of the Energy Community) isn't mentioned, qui sas a consequence of last August's coup de théâtre.

As for farther away producers new agreements will be seek with major energy suppliers: Russia and Caspian countries, in order to match the EU's need for security of supply with these partners' need for security of demand. The memo also calls for a proper assessment of Africa's role in the Union's energy needs.

This section ends with a brief reference to the EU-OPEC Energy Dialogue and the need to cooperate with energy importing nations in order to achieve a “global climate deal”. How this last issue can deal with security of supply is hard to envision.

While the tactics used to spread the EU's regional economic sphere of influence might be an effective way of turning around the lack of coherence of the Union's foreign policy, on larger chessboards things won't go as easily. It is quite possible that a consensus on a common foreign policy towards energy will be easier to obtain than on geo-politic issues, but nonetheless, the EU will likely benefit from having some sort of foreign affairs office (preferably transparently elected) as a de facto external representative of these common interests, displaying for the outside world a clear, strong and unambiguous vision on energy.

3. Improved oil and gas stocks and crisis response mechanisms.

The Commission proposes a revision in the EU's strategic oil stocks legislation, improving coherence with the International Energy Agency regime, reliability and transparency on available stocks and clarifying emergency procedures. To improve oil market transparency, the Commission proposes that the EU publish weekly, on an aggregated basis, the level of commercial oil stocks held by EU oil companies.

Quite welcome. To bad oil had to reach 147 dollars per barrel for something like this to happen.

The Commission, after its evaluation of the Directive on Security of Gas Supply concludes that greater harmonisation of security of supply standards and predefined emergency measures at regional and EU levels are needed. The threshold for triggering EU action should be reconsidered and compensation arrangements should be clarified. The Commission considers that there is insufficient evidence at this stage for making strategic gas stocks obligatory. A revision of the Directive on Security of Gas Supply2 may be tabled in 2010.

The Commission will change this assessment shortly. The EU possibly needs some sort of counterpart to the US Department of Energy's EIA, to congregates stocks information at an European scope, so that problems as those identified by Rune Likvern won't go unnoticed to the wider public again (on this specific issue it still remains to be seen how Ireland will be impacted by the lack of storage capacity in Britain).

4. A new impetus on energy efficiency.

The 2006 Energy Efficiency Action Plan will be evaluated in 2009. In the meantime, a 2008 Energy Efficiency Package is being tabled, focused on improvements in the legislation on the energy performance of buildings and on energy labelling as well as intensification of the implementation of ecodesign and cogeneration Directives. These are all areas in which energy efficiency improvements can be achieved, with substantial impact on Europe's energy consumption and energy security. A new Sustainable Energy Financing Initiative is being prepared jointly with European Investment Bank and other financial organisations, to mobilise large-scale funding from capital markets for investments in energy efficiency as well as renewable energies, clean use of fossil fuels and combined heat and power from renewables in Europe's cities.

Several points amalgamated into one paragraph make little of the most important energy policy of any importing nation: Efficiency. This is the one point that has an impact on any chapter of energy policy, be it climate concern, depletion or security of supply. As to the later, addressing the demand side of the equation is certainly an indispensable way of guaranteeing that suppliers can cope with the EU's demand.

Closing this point, it is especially worrying to see the words “clean use of fossil fuels” in a section dedicated to Energy Efficiency.

5. Making better use of the EU’s indigenous energy reserves.

Indigenous production currently provides 46% of the energy used in Europe
. The EU's greatest potential source of indigenous energy is renewable energy. Today it accounts for about 9% of final EU energy consumption and the agreement is to raise this to 20% by 2020. Technology is crucial in developing and using our resources in a cost-effective and environmentally-sustainable way so our next step in the Strategic Energy Technology Plan will be a Communication on Financing Low Carbon Technologies. This will propose ways to support large scale demonstrations at EU level, including up to twelve Carbon Capture and Storage (CCS) demonstration plants. Europe's aim to have up to twelve commercial scale demonstration plants in operation by 2015 and the G8 commitment to launch twenty demonstration plants globally by 2020 will require greater incentives than currently available. Use of coal in the longer run is only compatible with climate challenge if highly-efficient plants predominate and CCS is widely available. The Berlin Fossil Fuel Forum will look at which additional measures could be taken at Community and national level, and in partnership with Norway, to promote cost-effective and environmentally-compatible access to indigenous EU fossil fuels.

Reading “indigenous energy reserves” one would expect a few lines on Wind, Solar, Hydro-electric and other renewable energies. In fact the second sentence acknowledges these as the energy sources with greater potential, but it all ends up with blatant promotion of CCS. Startling.

Even if technical data existed to confirm the cryptic claim that “coal isn't compatible with climate change”, CCS would continue to be a terrible option, for the efficiency penalty it implies. Given that half of the coal used in the Union is imported, a much effective way to reduce its usage would be to simply cap import volumes or introduce extra tariffs on them. The promotion of this sort of tactics makes absolute no sense in the context European Energy policy and much less within a document dedicated to Security of Supply and Solidarity.

Point five ends with a important, if short, reference to Nuclear energy:

It is for each Member State to choose whether or not to invest in nuclear energy. However, the nuclear safety and security framework applied everywhere in the EU is of common interest. A common legislative framework on the safety of nuclear installations and the management of nuclear waste is needed. The Commission is tabling a revised proposal for a Directive on nuclear safety.

This measure echoes an important concern referenced in one of the Nuclear energy discussions at The Oil Drum, that managed to avoid the traditional pro/against stance on the issue. At this moment this seems a plausible way for the Commission to follow. Still, being the European community as old as Nuclear Energy (actually EUROATOM was one of the first European institutions) it seems extremely odd why it took 50 years for the work on common legislation on the subject to start. In the future, as it becomes clear that natural gas is finite, a clear European Nuclear Energy Policy will likely have to take shape.

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The memo terminates with a look forward:

Towards a vision for 2050

The EU’s agenda for 2020 has set out the essential first steps in the transition to a high-efficiency, low-carbon energy system. The EU needs to develop a vision for 2050 and a policy agenda for 2030. The fundamental technological shifts involved in decarbonising the EU electricity supply, ending oil dependence in transport, low energy and positive power buildings, a smart interconnected electricity network will only happen with a coordinated agenda for research and technological development, regulation, investment and infrastructure development. In addition, the transition to a high-efficiency, low-carbon energy system needs to be promoted not only in Europe but worldwide. The Commission will prepare in the framework of the Strategic Energy Technology Plan a Roadmap towards a 2050 Energy Policy, in dialogue with Member State officials, academics and industry experts.

Of important note in this final paragraph is the vision of a transport infrastructure not dependent on oil; unfortunately this is left for a later date, for now EU citizens have to content themselves with the agro-fuel pipe dream. This shows the underlying optimism of the Commission towards future fossil fuel availability, that sadly remains as a common denominator to its Energy Policy.

A objective critic on the whole document isn't easy. How much of it will be translated into legislation? How much will be impossible to achieve by lack of executive powers? How much is simple rhetoric? On the whole the document seems to identify correctly important problems and presents a broad choice of measures to deal with them. On the down side is a lack of focus on efficiency and renewable energy (the 20% target by 2020 might not even be enough to replace internal gas depletion). Promoting CCS in this scope is inexplicable, being a stain that seriously compromises the credibility of the Action Plan.