Dairy Farmers Energy Cuts:

UK dairy processors have cut energy use for the eighth year in a row to meet their targets under the government’s Climate Change Agreement. Dairies and creameries have saved 40,000t of carbon dioxide emission since 2000, according to figures from Dairy Energy Savings (DES), which administers the agreement in the dairy sector. DES chairman Gerry Sweeney said the dairy sector now used 11% less energy to produce each pint of milk or block of cheese than it did eight years ago. “This is more great news for the environment. Dairy foods, which account for £8bn of retail sales every year, are becoming greener.”  Cut your energy consumption with a new business smart meter.

Oil Surged Past Barrier:

Oil surged past $65 a barrel on Thursday to a fresh six-month high after OPEC decided to keep output unchanged and government data showed a steep drop in U.S. crude inventories. U.S. crude oil for July delivery settled up $1.63 to $65.08 a barrel, the highest settlement since November 5, after hitting an intraday high of $65.44. London Brent crude rose $1.89 to settle at $64.39 a barrel. U.S. crude stocks fell by 5.4 million barrels in the week to May 22, the U.S. Energy Administration said, above analyst expectations for a 700,000-barrel decline, as refiners ramped up output ahead of the summer. Analysts said while the data showed gasoline demand still trailing year-ago levels, it was looking stronger during the seven days leading into the May 23-25 Memorial Day holiday weekend, which traditionally kicks off summer holiday travel. “What we are seeing here is the demand side start to improve,” said analyst Phil Flynn at Alaron Trading in Chicago.

“Gasoline demand over the Memorial Day weekend is a critical point in judging the health of the U.S. economy. I don’t think the increased demand over the holiday was a fluke.”

OPEC Secretary-General Abudullah al-Badri told Reuters Financial Television that U.S. demand was showing signs of recovering after the economic crisis battered global consumption and sent crude prices off record highs near $150 a barrel struck in July.

OPEC ministers meeting in Vienna opted to leave target output levels unchanged as they bet a strengthening economy and signs of rising demand would support prices.

Some members of the 12-member producer group voiced concern that high global inventories could weigh on prices, but Saudi Arabian Oil Minister Ali al-Naimi said demand was rising and would drain away excess supplies.

“The price is good. The market is in good shape. Recovery is under way. What else could we want?” he said.

Despite OPEC’s optimism about demand, revised EIA estimates for U.S. oil consumption in March showed demand down more than 5 percent from year-ago levels to the lowest level for the month in 12 years.

U.S. stocks gained on Thursday as the rise in oil prices boosted energy shares and overshadowed mixed economic data. .N

New orders for long-lasting U.S. manufactured goods saw their biggest gain in 16 months in April and fewer workers filed for new jobless benefits last week.

Measuring Water Footprints:

They may already be under increasing pressure to develop a standard mechanism for measuring the carbon footprint of a company or product, but that has not stopped the global body for accountants, the Association of Chartered Certified Accountants (ACCA), calling on the profession to also start working on methodologies for measuring water footprints.  ACCA has today released a new report entitled Water: the next carbon? calling on firms and their accountancy departments to better track water use and water risks. 

The report follows a recent conference hosted by ACCA and WWF-UK, which saw the global professional body sign a memorandum of understanding with the environmental group to work together on assessment of current UK water accounting and reporting processes.  The partnership could result in the development of water-reporting standards, similar to the global IFRS financial reporting standards that ACCA supports.

Vicky McAllister, sustainability advisor at ACCA, welcomed the new report and urged more firms to embrace water-reporting methodologies. “UK businesses should be addressing and reporting on the importance of water resources and management in their operations as well as upstream and downstream activities, one element of which is calculating the water footprint,” she said. “WWF UK is considered an expert in this field and the resulting research should yield some interesting results for UK organisations to take on board.”

Her comments were echoed by Dave Tickner, head of freshwater programmes at WWF UK, who warned that a failure to address water security issues could undermine firms’ long-term competitiveness.

“The sustainable supply of water to all users, including businesses, underpins economic growth, poverty reduction, food and energy security and adaptation to the effects of climate change,” he said. “Wise management of this critical natural resource is therefore in all our interests.”

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Smart Opus Energy:

Opus Energy, a leading independent supplier of electricity to UK businesses, has expanded its portfolio of smart meter providers through a new partnership with Stark. The deal will help Opus Energy continue to fulfil its commitment to its business customers by providing smart meters free of charge. The Stark contract, along with existing IMServ and Bglobal plc agreements includes the delivery of electricity smart metering, remote data collection and meter operations for Opus Energy’s customers. Opus Energy is the first energy company to make smart meters available to all its customers free of charge. Smart meters allow businesses to proactively manage their electricity consumption, by providing accurate up to date meter readings. Customers can then choose to streamline their energy usage, saving costs and reducing their carbon footprint. Figures released by The Carbon Trust state that smart meter technology has the potential to save UK SMEs £300million every year. In addition, a possible 5.1 million tonnes of CO2 could be saved each year – equivalent to the entire carbon footprint of Bristol.

Charlie Crossley Cooke, Managing Director of Opus Energy said: “Our long term ambition is to ensure all our customers have smart meters installed and in order to do this we need to make sure we have the capacity at our fingertips. By expanding our portfolio of smart meter providers, we now have strengthened our ability to roll them out faster. Although we are the first company to make smart meters available to customers at no cost, we also want to make sure we maintain this competitive advantage. We anticipate the demand in smart meters will continue to increase, especially following the government’s recent support for this technology to be installed domestically throughout the UK.

Howard Stark, Managing Director at Stark said: “We recently extended our portfolio of accredited data collection services to include a smart metering service and are delighted that Opus Energy is one our first customers. We have a strong record of developing and marketing a range of innovative data management products that help organisations cut energy waste, reduce energy expenditure and meet their carbon reduction commitments. Introducing a smart metering market product was a natural step and we are excited to be rolling out our service to many of Opus Energy’s customers.” 

Oil Rises Still Further:

Oil climbed above $US60 a barrel in New York, as glutted US crude stockpiles receded and petrol markets firmed up.  Brent crude on the ICE Futures exchange settled at $US60.59 a barrel, up $US1.67. Oil rose after a weekly report on US stockpiles that analysts called a mixed bag. The Energy Information Administration reported crude inventories fell by 2.1 million barrels to 368.5 million barrels in the week ended May 15, triple the decline analysts expected. Yet US oil demand hardly improved, and remained 7.6 per cent weaker than a year ago, when Americans were already consuming less.

As next Monday’s Memorial Day holiday approaches, signalling the unofficial start of the US northern summer driving season, petrol demand gained 3.6 per cent last week, while stockpiles sank 4.3 million barrels to below-average levels, the EIA said.

Crude first cleared the $US60 hurdle in 2005, when the world economy and demand were growing and supplies were struggling to keep pace. Today, demand is shrinking for the first time in decades, leaving many baffled by the rally.

Harry Tchilinguirian, senior oil analyst at BNP Paribas Commodity Derivatives, called it “remarkable” that “under current economic conditions and high crude oil inventories we see oil return to $US60 a barrel.”

Crude is trading for less than half of year-ago levels, as demand has softened with the economic crisis. Expectations that consumers may once again want more oil when the recession bottoms have partly fuelled the rally, with traders watching the stock market for economic telltales.

Concerns about the reliability of supply have also begun to creep into the market, highlighted by an escalating conflict between rebels and securities forces in Nigeria’s oil-rich southern region this week.

Adding jitters to the market, major oil exporter Iran appears to have successfully test-fired a ballistic missile, a US official confirmed. Iranian President Mahmoud Ahmadinejad announced earlier that the country had tested a new two-stage, medium-range missile.

UK Smart Meter Costs:

The Government has underestimated the cost of a nationwide rollout of smart meters by as much as £6.4 billion, according to Ernst & Young. Last week ministers gave a green light to install 47 million new gas and electricity meters, which can monitor energy use in real time, in every household in Britain. They said that the project could be completed at a cost of between £7 billion to £9 billion, or an average of £269 to £346 per household.

Ernst & Young, the audit firm, has rejected that estimate, arguing that the true cost would be at least 49 per cent higher, at about £13.4 billion, or £515 per household. Consumers are expected to shoulder the bulk of the extra cost in the form of higher bills, although the industry claims there will be offsetting savings.

Tony Ward, power and utilities partner in Ernst & Young, said that the Government’s figures appeared to underestimate the scale of the additional technology and infrastructure required to support the smart meters, which it is hoped will help to cut carbon emissions by promoting energy efficiency.

“Very big and complex projects of this sort always cost more than anticipated,” Mr Ward said. He cited problems of gaining access to all 26 million UK properties to install the meters and big upfront costs for purchasing equipment and software, as well as hidden costs, such as providing finance for the project. “We very rarely see one that comes in at the original estimate,” he said.

Mr Ward said that there were big questions about how the rollout would take place and the technology to be used. He added that the Government’s figures appeared to rely “on an assumption of absolute efficiency”.

A spokesman for the Department of Energy and Climate Change said: “We are confident in our cost estimates. They were arrived at after work with industry experts and external economists and clearly show the benefits of smart meters more than outweigh the costs.”

The Energy Retail Association, an industry lobby group, said that consumers would pay for the rollout through their energy bills, but claimed that the overall impact would be “cost neutral” because the smart meters would be introduced over a period of up to a decade and would allow for significant cost savings by the industry.

The phasing out of traditional meters is set to trigger thousands of job losses for meter readers, engineers, call centre staff and middle managers.

The new meters will enable power companies to introduce off-peak deals similar to those offered by telephone operators. Consumers could be rewarded for using energy-hungry appliances at off-peak times, such as between 1am and 5am, allowing for a reduction in the total number of power stations needed to power the UK. Inaccurate billing should end because suppliers would receive precise data.

Ian Parrett, of Inenco, the energy consultancy, said that the new meters would force prices up. He said: “Energy companies will face two new costs that they will inevitably have to pass on to consumers, either directly or indirectly. There is the additional cost of installing these meters across the whole of the UK. Then there is the additional resourcing and personnel required to deal with the large increase in customer inquiries.”

To help to oversee the project, which could start next year, the Government has approved the creation of a body to manage the meters and the relaying of information to energy suppliers.

The project will be highly lucrative for the manufacturers of smart meters, such as General Electric, IBM and Itron, of the United States, and Landis+Gyr, a privately owned Swiss group.

Oil Breaks Barrier:

Oil rose for a second day after an industry group reported U.S. crude stockpiles dropped for the second week in a row and the dollar declined. Oil supplies fell 3.13 million barrels to 370.7 million last week, the American Petroleum Institute said late yesterday. Additional support for crude prices came as the dollar fell to the lowest level against the euro since March, bolstering demand for commodities as an alternative investment. “We saw some gains in the price in reaction to the API decrease,” said Ken Hasegawa, a commodity derivative sales manager at brokers Newedge in Tokyo. “$60 is the main resistance so it may be tough to go higher.” Crude oil for June delivery rose as much as $1.05, or 1.8 percent, to $59.90 a barrel, and traded at $59.63 on the New York Mercantile Exchange at 3:31 p.m. in Singapore. Yesterday, it climbed as much as 2.7 percent to $60.08 a barrel before closing at $58.85, the highest settlement since Nov. 11.

Brent crude oil for June settlement gained as much as $1.11, or 1.9 percent, to $59.05 a barrel on London’s ICE Futures Europe exchange. It was at $58.79 a barrel at 3:33 p.m. in Singapore. It declined 0.8 percent to end the session at $57.94 a barrel yesterday.

UK Smart Meter Policy:

The biggest upheaval in household energy supplies for decades will be launched by the government on Monday, when it gives details of its plans to put a “smart” electricity and gas meter in every home in the country by 2020.  The huge programme, involving the fitting of 49m new meters in 27m homes, is expected to cost about £7bn ($11bn). Industry executives describe it as the biggest change in the way energy is delivered to the home since the country converted to natural gas in the 1970s.  Smart meters use information technology to collect detailed data on energy use. They offer the potential for significant savings, in particular by allowing suppliers to charge more for electricity at times of peak demand. They will also allow customers to sell electricity they have generated back to the grid, and could link up with “smart appliances”, such as a freezer that can automatically be switched off at peak times. Smart meters are also seen as a necessary first step to creating a “smart grid”, which would enable energy suppliers to be much more efficient in their use of power. Smart meters combined with a smart grid would allow far greater use of intermittent renewable sources such as wind farms, because they would allow the smoothing of demand and supply and would mean generators needed to leave fewer power stations on stand-by to meet the peaks. Smart meters could also help with the introduction of electric cars, as they could charge the cars at night. The industry has strongly backed the introduction of the meters. Suppliers expect to save money by putting an end to meter readings and estimated bills. However, the government has delayed setting out the details of its plans, which had been expected last year, while it debated the details of how the meters would be rolled out. The model it has chosen is to compel suppliers to fit their own customers’ homes with smart meters.

British Gas Price Cuts:

British Gas, the UK’s biggest household electricity supplier, is cutting electricity prices by an average of 10 percent, its parent Centrica said on Thursday. The price cut, which comes after British Gas reduced gas prices in February, will take effect immediately and apply to some 4.5 million residential customers, Centrica said. Centrica said the price cuts are a result of falling wholesale electricity prices. All the six major U.K. energy suppliers, Centrica, RWE’s nPower, E.ON, EDF, Scottish & Southern and Iberdrola’s Scottish Power — increased prices last year, although some have since reduced them. “I’m pleased we are now able to cut an average 10 percent from our standard electricity prices and continue to help our customers during this economic downturn,” said Managing Director Phil Bentley.

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Carbon Reduction Commitment:

A proposed UK scheme designed to force some 5,000 businesses to cut carbon emissions by reducing their energy consumption gives companies no reason to buy renewable energy, critics said on Friday.  “Businesses need greater incentives to demand increased renewable power in their fuel mix, not less,” said Jo Butlin, vice president at UK renewable power supplier Smartest Energy.  “The UK’s Carbon Reduction Commitment proposals partly remove that demand, and with it a great deal of support for the UK renewable industry.” The Carbon Reduction Commitment (CRC) is a mandatory scheme starting in April 2010 that will affect any business that spent more than 500,000 pounds on electricity in 2008.

The Department of Energy and Climate Change (DECC) said it will help Britain cut carbon emissions by four million tonnes a year by 2020, the equivalent of taking one million cars off the road, and save businesses some 1 billion pounds on their energy bills.

The scheme calculates the greenhouse gas emissions of a business by applying the average carbon dioxide (CO2) emitted per megawatt hour of power when purchased from the national grid.

Critics point out that the CRC does not take into account where a company’s electricity is generated, for example if bought from a wind farm, nor does it recognize if a company has already voluntarily offset emissions by buying carbon credits.

“As your emissions are based on the grid average, why would you buy renewable energy over investing in reducing your electricity consumption?” Andreas Gunst, an environmental lawyer at DLA Piper, told Reuters on the sidelines of Prince Charles’ May Day Summit on Climate Change in London.

A DECC spokesman said the scheme is meant to spur companies to make simple reductions in energy consumption.

“It’s not trying to do everything. The main thing is it’s trying to pick up that really easy block of energy than can be reduced and save businesses money at the same time,” he said.

“We have a scheme for incentivising the production of renewable energy called the Renewables Obligation, and we think people should offset their emissions if they’re unavoidable, but that should be a last resort.”

In a separate survey, DLA Piper found that 71 percent of bosses were unaware of their company’s CRC obligations.

At the end of 2010, companies will have to retroactively buy carbon allowances from the government, starting at 12 pounds per tonne of CO2, to cover their emissions for that year.

Following that, businesses must buy allowances every April starting in 2011, based on their expected annual emissions. The revenues raised will be recycled back to participants at the end of the year based on cuts in energy use.

“You’re going to get some money back, but it’s essentially giving the government free credit for a year and people are very cynical about that,” Gunst said.

The DECC spokesman said the smallest participants would have to buy around 30,000 pounds worth of allowances annually.

In its annual budget announced last week, Britain unveiled 1.4 billion pounds of initiatives to encourage investment in green energy and said it would cut greenhouse gases by 34 percent below 1990 levels by 2020.

The UK on Friday also announced 100 million pounds in funding for companies to invest in energy efficiency.