South Stream loses steam; Oil prices keep plunging; Optimism at Lima [Recharge]

Moscow cancels the South Stream pipeline; More global actions put downward pressure on oil prices; Climate talks in Lima come amid progress on emissions. Catch up on global energy with the Monitor's Recharge.

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Streaming: The plan to build the South Stream pipeline came apart slowly, and then suddenly all at once. Moscow's unceremonious cancellation of the Russia-Europe gas project suggests the Kremlin has had enough with Brussels, and has found a more receptive, energy-hungry partner in Turkey's strong-arm president. It's possible South Stream will be revived or take another form, but, most likely, a major physical guarantee of long-term European-Russian energy interdependence is no more.

Floor: Downward pressure continues to weigh heavily on oil markets. Saudi Arabia cut prices again, Kurdistan and Baghdad reached an oil deal, and US crude reserves are at their highest level in 39 years. A supply response may be kicking in: Drillers are scaling back across the globe – perhaps most notably in the US where new well permits dropped 40 percent in November.

Lima: Climate talks in Lima come amid rising optimism that global leaders can find common ground on a global pledge to reduce carbon emissions. The concern now is if the agreement will be enough to actually slow the planet's gradual warming and protect against related threats. Next year's Paris talks run the risk of being a pyrrhic victory – a diplomatic triumph rather than meaningful action on decarbonization.

In the pipeline

• Monday, Dec. 8 to Friday, Dec. 12: LIMA, PERU – The 20th session of the UN Conference of the Parties (COP20) enters its second and final week. Look for more action at the city level and additional country pledges to push the Green Climate Fund over its $10 billion goal for 2014. Even if the goal is met, the fund is already facing criticism from major industrializing nations that say it is far from what's needed to finance sustainable development.
• Thursday, Dec. 11: WASHINGTON – In one of the first actions toward lifting the US oil exports ban, the House will hold a hearing on the Energy Policy and Conservation Act of 1975, which imposed the current policy. Incoming Senate Energy Chair Lisa Murkowski has been a vocal supporter of exports, but not everyone in the GOP is pro-export and House leadership has remained quiet.
• A Friday in December: LINCOLN, NEB. – The Nebraska Supreme Court is considering whether Nebraska lawmakers acted rightly when they approved the Keystone XL pipeline's route through the state – a decision usually reserved for the Public Services Commission. If the court decides Keystone XL needs PSC review, the pipeline could face even further delay.

Drill deeper

In Iraq oil deal with Kurds, a ray of light for compromise
[The Christian Science Monitor]
The Iraqi government and Iraq's Kurds have agreed on an oil revenue sharing agreement – a sign of hope in a country still plagued by the insurgent Islamic State. The deal also means hundreds of thousands of barrels of new oil flowing onto an already oversupplied global market.

Plunging oil prices spell trouble for Alaska, America’s own petro-state
[The Washington Post]
Taxes on oil make up more than half of Alaska's total budget and fund 90 percent of the state's discretionary spending. But as global oil prices fall below $70 a barrel, Alaska is making less from its oil. Gov. Bill Walker acknowledges that low oil revenues mean Alaska is headed for "lean times," with less to spend on education and infrastructure.

Nuclear power in China: Make haste slowly [The Economist]
"Rather than picking a single proven design for new reactors from an experienced vendor and replicating it widely, the government has decided to 'indigenise' Western designs," The Economist writes. "The advantage of this approach is that China can then patent its innovations and make money out of selling them to the world; the downside is that there are now several competing designs promoted by rival state-owned enterprises, none of which is well tested."

Energy sources

• EIA: "U.S. crude oil and lease condensate proved reserves surpassed 36 billion barrels for the first time since 1975."
• NTSB on Boeing 787 fire: "... Boeing's safety assessment of the battery, which was part of the data used to demonstrate compliance with these special conditions, was insufficient because Boeing had considered, but ruled out, cell-to-cell propagation of thermal runaway (which occurred in this incident) but did not provide the corresponding analysis and justification in the safety assessment."
• World Meteorological Organization: "The year 2014 is on track to be one of the hottest, if not the hottest, on record ..."

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