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Energy demand, environmental costs and resilience - 17 May

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Canada's Quebec province opens up north for mining

BBC News
The government of Quebec has unveiled a massive plan to develop a largely inhospitable but untouched area in the north of the province.

The "Plan Nord" aims to turn 1.2 million sq km of land into a major area of mining and renewable energy.

The plan also aims to ensure that half of the area will be environmentally protected.

"It is one of the world's last virgin territories," said Quebec's Premier Jean Charest.

"It's also a fragile territory and a territory of great richness and it's also a responsibility."...
(10 May 2011)
See the Plan Nord website here.



Arctic nations eye region's potential

Irene Quaile, Deutsche Welle
An oil bonanza in the Arctic could be one step closer this week.

On May 12, the Arctic Council will hold its 7th Ministerial Meeting in Nuuk, Greenland.

Among other things, the organization - which includes the United States, Canada, Russia, Sweden, Finland, Denmark, Iceland and Norway - is expected to sign the first legally binding Arctic search-and-rescue treaty, an important step towards assigning responsibilities for previously inaccessible tracts of ocean.

The accord is the council's reaction to increased shipping in Arctic sea lanes, as well as to growing interest in the oil and gas reserves, which climate change has rendered more accessible.

Scientists believe that up to 13% of the world's not-yet-discovered oil reserves will be found in the Arctic.

After the massive oil spill in the Gulf of Mexico, many people thought the plans to drill for oil in the Arctic would be put on ice once and for all.

Yet barely a year later, the oil industry is venturing ever deeper into the once-impenetrable region and environmental groups are sounding loud warnings about the dangers of a possible catastrophe on the fragile Arctic ecosystem.

...Environmentalists unconvinced

Environmental protection groups, such as WWF and Greenpeace, on the other hand are far from impressed with the oil industry's preparation for an 'Arctic incident.'

They say the planned search-and-rescue responsibility pact that the Arctic Council wants to sign won't change that, either.

Frida Bengtsson from Greenpeace in Norway argues that the vast Arctic region is difficult to access, and notes it would take a long time to react to an oil spill from a drilling or transportation accident.

"I think that will pose the biggest threat to the immediate Arctic system, but there's also the long-term effects of climate change, of burning that oil that you find. We're worried about both," Bengtsson said...
(16 May 2011)



Oil prices, poor countries and policy responses

Dirk Willem te Velde, Overseas Development Institute blog
The recent turmoil in the Middle East and North Africa has pushed the price for a barrel of Brent crude oil to $115, an increase of more than 40% on last year’s average of $79.6. UK Development Minister Alan Duncan suggests the unrest could double current oil prices to more than $200 a barrel.

ODI has mapped out the potential impact of rising oil prices on GDP, and what this could mean for the poorest countries, and the poorest people within them. High and volatile oil prices are an incentive to support growth strategies which are less vulnerable to oil price volatility and more resilient against crises.

Past conflicts and oil prices
As an ex-forecaster of oil prices, I know how difficult they can be to predict. The industry is always vulnerable to short-term disruption caused by the weather, strikes or conflict. With this in mind, our study for Crisis Action examined past conflicts and their impact on oil prices...

...Global policy responses
Oil price shocks need a three pronged policy response:
Terms of trade shocks can hit poor countries hard. The international community has international shock facilities to help them, such as the European Commission’s V-FLEX, the IDA crisis facility, or support from the IMF in the case of Balance of Payment shocks. Given that the world has faced so many shocks in recent years, these facilities need continuous review. The IDA crisis facility has recently been negotiated, but the future of the EC’s shock facilities will be discussed as part of the new financial perspectives over 2014-2020.

Countries are less exposed to oil price shocks when they are 1) more energy efficient and 2) more dependent on other energy sources, e.g. renewable energy where there is a large unexploited potential in poor countries. A global low carbon strategy could include incentives for investment in renewable energy and energy efficiency in poorer countries. An updated architecture of Development Finance Institutions, including the CDC, can help to address such global challenges. Energy efficiency and better access to renewable energy can promote growth whilst preserving the environment. Ahead of the COP 17 conference in Durban at the end of the year, the RIO+20 conference in 2012, a G-20 presidency intent on dealing with commodity price volatility this year and the UN’s year International Year for Sustainable Energy for All, this seems a promising route. The energy minister in South Africa suggested that current turmoil demonstrated the need to use fuel more efficiently.

The global financial crisis has taught us that ‘vulnerability equals exposure minus resilience’. So promoting resilience seems a sensible strategy to deal with crises. This includes promoting not only fiscal space, but also economic and social governance such as effective natural resource rents, good state-business relations and growth-enhancing social programmes. Measures to build resilience need to be built firmly into the G-20 pillars for growth and growth strategies in countries that are highly vulnerable to oil prices rises and other shocks that threaten the well-being of their people.
(March 16, 2011)
The report referred to in the article above is available here.

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