Great Decisions 2012 Winter Update: Energy Geopolitics

 

Great Decisions Updates are issued seasonally and provide groups with the latest news and analysis on topics. The Winter 2012 Update is current as of January 13, 2012. Download the Winter 2012 Update as a PDF here.

by Leslie Huang, assistant editor

 

In January, Iran threatened to blockade the Strait of Hormuz, a critical shipping route for oil that handles a total of approximately 16 million barrels of oil per day and is also used by Iraq, Saudi Arabia and Kuwait. A shutdown of the Strait of Hormuz, which handles about 20 percent of the world’s oil, could increase oil prices by as much as $50 per barrel. Iran ships 2 GD 2012 Upda tes/winter 8 million barrels of oil per day through the strait, mostly to Asia. In response to Iran’s threat, the U.S. intensified its campaign to dry up Iran’s oil exports—mostly to China, Japan and South Korea—by pressuring these customers to stop buying oil from Iran and assuring them that other Middle Eastern oil producers would cover the shortfall.

SolarReserve and BrightSource, two companies based in California, are planning to build storage facilities that would allow solar energy to be captured during the day and stored for later. Solar thermal energy—which is stored by using sunlight to heat molten salt or water—would complement solar panels after dark or on overcast days. The U.S. Energy Department has guaranteed a $737 million loan to SolarReserve for the project, and companies like Google and Chevron are investors.

An Environmental Protection Agency (EPA) report in December linked hydraulic fracturing (“fracking”) with contaminated water near the Pavillion field, located in Wyoming. Chemicals found in an aquifer near Pavillion were “consistent” with those used in the process to extract natural gas from rock. The company that owns the Pavillion field disputed the EPA’s findings, and the governor of Wyoming called
for more data and testing.

On December 16, Japanese Prime Minister Yoshihiki Noda declared that the Fukushima Daiichi nuclear power plant was in “cold shutdown,” nine months after an earthquake and tsunami crippled the plant and resulted in a catastrophic meltdown of three reactors. The accident had forced the evacuation of 80,000 people. On December 26, a government investigation of the crisis castigated the government as well as Tokyo Electric Power (Tepco), the plant’s operator, for their response.  In the months following the earthquake, public anger about the government’s mismanagement of the crisis has risen.

The 17th conference of the United Nations Framework Convention on Climate Change (UNFCCC) was held in December in Durban, South Africa. At the conference, the international community agreed to begin working toward a deal to replace the Kyoto Protocol, which has been criticized for treating developed and developing countries differently.  Additionally, an agreement was reached to create the Green Climate Fund, which would assist developing countries in sustainable energy practices.

On December 12, Canada announced that it would withdraw from the Kyoto Protocol. The Conservative government of Steven Harper claims that Canada would be able to meet its commitment to Kyoto only by implementing extreme measures, and that noncompliance would have cost billions of dollars in fines.  Canada’s emissions have risen by 30 percent since 1990, though the country had committed to a reduction of 6 percent, compared with 1990 levels, by 2012. The announcement drew criticism from environmental groups in Canada as well as developing nations such as India and China, which had committed to emissions targets at the Durban meeting.