Matrix Corporate Finance                           The Impact of Shale Gas on the                           Environment an...
Matrix Corporate Finance                           THE GLOBAL energy context
Matrix Corporate Finance
20%Matrix Corporate Finance
It is not all about CO2Matrix Corporate Finance
Matrix Corporate Finance                           Premature deaths a year from air pollution:                            ...
Matrix Corporate Finance
1.3 billionMatrix Corporate Finance
Matrix Corporate Finance                           Could shale gas help the uk achieve its                           carbo...
Matrix Corporate Finance                           the uk targets                           80% reduction in carbon emissi...
Matrix Corporate Finance                           Impact on uk carbon targets - 1                           Tyndall Centr...
Matrix Corporate Finance                           Impact on uk carbon targets - 2                           Poyry        ...
Matrix Corporate Finance                           Climate change committee                            “Extensive use of u...
Matrix Corporate Finance                           More research needed?                           Tyndall Centre         ...
Matrix Corporate Finance                           Three driving factors                           The effect depends on 3...
Matrix Corporate Finance                           Will the availability of shale gas destroy                           th...
Matrix Corporate Finance                           Poyry scenarios                           BOOM                         ...
Matrix Corporate Finance                            EFFECT ON RENEWABLES INDUSTRY                           Scenario     G...
Matrix Corporate Finance                           Gas and renewables                           Integrated Renewables Comb...
20Matrix Corporate Finance
Matrix Corporate Finance                           Positively managing the                           environmental impact ...
Matrix Corporate Finance                           Environmental concerns                           -   Water             ...
Matrix Corporate Finance                           The need for transparency
Matrix Corporate Finance                           Mindset and two stages                           Mindset has to be to p...
Matrix Corporate Finance                           TWO Approaches to regulation
26Matrix Corporate Finance
Matrix Corporate Finance                           CARBON TARGETS                           i.e. will carbon targets survi...
Matrix Corporate Finance
Matrix Corporate Finance                           contact                           Steven Fawkes                        ...
Upcoming SlideShare
Loading in …5
×

Steven fawkes shale gas 07 11 12

482 views

Published on

Presentation given at Responsible Shale seminar 7th November 2012

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
482
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
8
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • Good evening. I am very pleased to be here tonight. I am Steven Fawkes. I am a partner in Corporate Finance at Matrix, a boutique advisory firm in London, and Chairman of Day 1 Energy Solutions, a company that has been established to develop and finance energy retrofits. I have been involved in energy efficiency since 1980 and wrote a PhD about the potential for energy efficiency in UK industry and then went on spend many years implementing large energy management programme s for corporates, the public sector and governments. I also co-founded two energy services companies, one in the UK that became part of RWE and one in Romania.
  • I like to set the context first and talk about energy problems. I won ’ t spend much time on these because I know this audience will be very aware of them.
  • As we know energy is in the news a lot and everywhere you look there are energy problems. The first of these is oil peaking, the idea that oil production will peak while demand for the fuels and products that come from oil is still increasing. This is a controversial idea but there is some evidence that oil production has already peaked, certainly in some of the major oil producing regions of the world.
  • The next big problem is energy security. These two guys are guarding oil tankers in the Straits of Hormuz, which has been under threat from Iran. 20% of the world ’s oil goes through the very narrow straits, if it was disrupted we would have major energy supply problems. There are a number of other critical choke points in the global energy supply network.
  • We also hear a lot about the environmental effects of energy use. Over the last decade the focus has been on carbon dioxide and global warming but there are a number of other big environmental problems arising from energy use – this shows a small part of the oil slick from the BP disaster in the Gulf of Mexico.
  • This slide shows a beautiful satellite photo that illustrates the level of atmospheric pollution over China. The numbers from the WHO and the World Bank illustrate that air pollution is a big cause of premature death in many parts of the world including China, 2 million premature deaths a yea globally, 300,000 across the EU. That is a high price to pay for cheap energy.
  • Another big energy issue is nuclear power. The terrible events in Fukushima illustrated here show some of the dangers of nuclear power. I know France is dependent on nuclear, and I am not anti-nuclear. The issues of safety and proliferation, however, are very real.
  • A really big issue with energy is that despite all the concerns over energy supplies, we really are not using enough of it. Over 1.3 billion people are estimated to be without electricity at all – an almost unimaginable scenario for most of us who are becoming more and more electrified.
  • Let ’ s now look at the size of the energy resource, and we really have to start to think about it as a resource, just like other energy resources. As with conventional energy resources there is an economic level of reserves and it is those reserves I am interested in exploiting.
  • Let ’ s now look at the size of the energy resource, and we really have to start to think about it as a resource, just like other energy resources. As with conventional energy resources there is an economic level of reserves and it is those reserves I am interested in exploiting.
  • Let ’ s now look at the size of the energy resource, and we really have to start to think about it as a resource, just like other energy resources. As with conventional energy resources there is an economic level of reserves and it is those reserves I am interested in exploiting.
  • The potential to become more efficient , and become more efficient profitably, is everywhere – you just need to put on the right pair of glasses to see it.
  • We are going to concentrate on finance but I do want to quickly talk about demand and supply. Creating demand for energy efficiency is difficult, especially in the residential sector. Nobody wakes up in the morning and says I want to buy some energy efficiency today. Even when energy efficiency is offered with no capital cost and net savings people still don’t buy it. Hassle factor, lack of visibility, lack of engagement. Energy efficiency is not sexy or cool We need to understand the drivers of energy efficiency demand in each sector much better than we do at the moment.
  • Steven fawkes shale gas 07 11 12

    1. 1. Matrix Corporate Finance The Impact of Shale Gas on the Environment and the Renewable Energy Industry Dr. Steven Fawkes CEng, FEI 7th November 2012
    2. 2. Matrix Corporate Finance THE GLOBAL energy context
    3. 3. Matrix Corporate Finance
    4. 4. 20%Matrix Corporate Finance
    5. 5. It is not all about CO2Matrix Corporate Finance
    6. 6. Matrix Corporate Finance Premature deaths a year from air pollution: 2 million global World Health Organisation 700,000 China World Bank 300,000 EU European Commission 50,000 UK House of Commons Environmental Audit Committee
    7. 7. Matrix Corporate Finance
    8. 8. 1.3 billionMatrix Corporate Finance
    9. 9. Matrix Corporate Finance Could shale gas help the uk achieve its carbon targets?
    10. 10. Matrix Corporate Finance the uk targets 80% reduction in carbon emissions by 2050 set in law June 2011 Period Reduction Mt CO2 cf. 1990 2008-12 23% 3,018 2013-17 29% 2,782 2018-22 35% 2,544 2018-27 50% 1,954 Current debate over 2030 carbon intensity target for generation
    11. 11. Matrix Corporate Finance Impact on uk carbon targets - 1 Tyndall Centre “even if there were to be a rapid transition from coal to shale gas electricity, this could still not be reconciled with the UK’s 2°C commitments under either the international Copenhagen Accord or its own national Low Carbon Transition Plan.” “there is a paucity of information on which to base an analysis of how shale gas could impact GHG emissions and what environmental and health impacts its extraction may have.” “whilst the UK may be able to reduce its national emissions through indigenous shale gas consumption, this risks triggering a net increase in global emissions.”
    12. 12. Matrix Corporate Finance Impact on uk carbon targets - 2 Poyry “You can develop shale and you can still achieve your carbon targets. The one caveat to that is that if the government chose to change its renewables support mechanisms that would mean the targets are not achievable.” Higher cut of emissions in 2020s as shale gas substitutes for more coal in power generation. Higher production of shale gas leads to lower imports of LNG (higher emissions).
    13. 13. Matrix Corporate Finance Climate change committee “Extensive use of unabated gas-fired capacity (i.e. without carbon capture and storage technology (CCS)) in 2030 and beyond would be incompatible with meeting legislated carbon budgets.” Climate Change Committee to Ed Davey 13 September 2012 NB This is a position on the “dash for gas” and not a comment on the source of the gas
    14. 14. Matrix Corporate Finance More research needed? Tyndall Centre “even if there were to be a rapid transition from coal to shale gas electricity, this could still not be reconciled with the UK’s 2°C commitments under either the international Copenhagen Accord or its own national Low Carbon Transition Plan.” “there is a paucity of information on which to base an analysis of how shale gas could impact GHG emissions and what environmental and health impacts its extraction may have.” “whilst the UK may be able to reduce its national emissions through indigenous shale gas consumption, this risks triggering a net increase in global emissions.”
    15. 15. Matrix Corporate Finance Three driving factors The effect depends on 3 factors: - What shale gas substitutes for: - Gas for coal is net positive - Gas for imported gas is roughly neutral - Any price effect on overall demand and efficiency legislation: - Low price, unconstrained demand - Effect of energy efficiency legislation and programmes - Renewables legislation and cost curves: - Removal of subsidies - Can renewables reach cost competiveness?
    16. 16. Matrix Corporate Finance Will the availability of shale gas destroy the market for renewables?
    17. 17. Matrix Corporate Finance Poyry scenarios BOOM - Unconventional gas price falls below North Sea production costs c.2020 BALANCED - GB annual average cost of gas moves from cost level of Middle East LNG to oil indexed oil prices by c.2030 RESTRAINED - Cost of unconventional gas is very high
    18. 18. Matrix Corporate Finance EFFECT ON RENEWABLES INDUSTRY Scenario Gas Policy response Effect on renewables price Boom Down Relax on renewables & efficiency Strongly negative Keep up pressure on renewables Moderate & efficiency Balanced Up Relax Negative to neutral Keep up pressure Positive Restrained Up Relax Neutral Keep up pressure Strongly positive Wild card will be cost curves of renewable technologies
    19. 19. Matrix Corporate Finance Gas and renewables Integrated Renewables Combined Cycle (IRCC) 07 June 2011 MetCap Energy Selects GE’s New FlexEfficiency Technology for World’s First Integrated Renewables Combined Cycle Power Plant (in Turkey) GE FlexEfficiency 50 510MW high efficency CCGT 22MW wind 50MW solar thermal 69% efficiency at site conditions
    20. 20. 20Matrix Corporate Finance
    21. 21. Matrix Corporate Finance Positively managing the environmental impact of shale gas
    22. 22. Matrix Corporate Finance Environmental concerns - Water - Ground water contamination - Surface water contamination - Water demand – pressure on water resources - Air - Fugitive methane release - Radon gas release - Other - Seismic - Noise - Road congestion - Site restoration
    23. 23. Matrix Corporate Finance The need for transparency
    24. 24. Matrix Corporate Finance Mindset and two stages Mindset has to be to positively manage Stage 1: Manage with integrity and transparency Apply the highest standards of quality, H&S and environmental management Failure to do so will relegate the industry to the level of bankers Stage 2: Research and development on lower impact technologies
    25. 25. Matrix Corporate Finance TWO Approaches to regulation
    26. 26. 26Matrix Corporate Finance
    27. 27. Matrix Corporate Finance CARBON TARGETS i.e. will carbon targets survive anyway?
    28. 28. Matrix Corporate Finance
    29. 29. Matrix Corporate Finance contact Steven Fawkes Energypro Limited +44 77 0223 1995 stevenfawkes@aol.com www.outsource-energy.co.uk

    ×