China is now the world’s #1 consumer of energy, and its hunger for oil, gas, and coal (to fuel power plants like this one) will continue to grow, according to the IEA. (image: cejournal.net)

On Monday, the International Energy Agency (IEA) reported an event that energy experts around the world have been predicting for years: China has officially overtaken the US as the world’s biggest consumer of energy.

The Financial Times reported (via cnbc.com) on Tuesday that the IEA’s just-released report on last year’s energy consumption data showed that

China last year consumed 2,252m tons of oil equivalent of energy from sources including coal, oil, nuclear power, natural gas and hydropower, about 4 per cent more than the US.

The announcement amounts to an important milestone in the shifting picture of how the world’s energy is used and who is consuming it. It also highlights two trends that have marked the last decade: rapid growth in China’s economy and thirst for energy and increasing energy efficiency in the US. More recently, the global recession curbed energy use in the US by slowing down the national economy while having less of an effect on China’s economic health and growth.

The effects of China’s ascendance to the top of the list of the world’s energy-consuming all-stars will be no less than transformative, the IEA said. As energy demand in China grows, so will its imports of oil, coal, and natural gas, which could lead to rising prices or even price spikes. Many believe that breakneck growth in Chinese oil demand was a major factor behind the crude oil price spike of 2008.

As the world’s biggest energy consumer, China will also have a major influence over how energy is used, “from the types of cars manufactured to the kinds of power plants built,” reported the Times. In doing so, China will help determine modes and methods of energy consumption in the rest of the world.

In a development that offers a glimpse at how energy-gobbling China might affect oil markets in the coming years, the Asian nation was also the top importer of crude from Saudi Arabia in 2009—a title that the US had held for decades.

While the IEA report confirms that the US saved money and reduced carbon emissions by consuming energy more efficiently over the last decade (efficiency increased by an average of 2.5 percent per year during that time), it also showed that China’s insatiable appetite for energy will more than offset any consumption reductions in the US or Europe.

The IEA’s finding does not come as much of a surprise to energy observers, but it did happen a bit more quickly than many expected. It’s now more clear than ever that if you want to know what the future of energy looks like, you should keep an eye on China.

Despite being unveiled in the wake of the devastating oil spill in the Gulf of Mexico—which left the above oil slick—the Kerry-Lieberman energy and climate bill contained few surprises. (image: AP via huffingtonpost.com)

After months of talks and weeks of promises to reveal the details, Sen. John Kerry (D-MA) and Sen. Joe Lieberman (I-CT) held a press conference on Wednesday to unveil their energy and climate bill titled the American Power Act, reports the Washington Post. The substance of the bill is familiar to those who have followed its progress—its key elements have been known since early March—but the oil spill in the Gulf of Mexico and the departure of Sen. Lindsey Graham from the front lines of the debate have altered offshore drilling provisions as well as the political calculus in the Senate.

Kerry and Lieberman’s bill would establish a cap on carbon emissions from utilities, a fee on transportation fuels, and offer incentives for the expansion of nuclear power and offshore oil drilling. Expanded nuclear and offshore drilling were meant to entice reluctant senators to vote for the bill, but the recent BP oil spill in the Gulf of Mexico has hardened some senators’ opposition to offshore drilling and forced a reappraisal of the bill’s offshore proposals. Kerry and Lieberman added a provision to the bill that would allow states to veto offshore drilling within 75 miles of its coast, even if the drilling occurs in a neighboring state’s waters.

With few surprises in the substance of the bill, a lot of commentary has been devoted to the political challenges the bill faces, especially since it appears to have lost its key Republican backer, Lindsey Graham. Graham, for his part, has fled what he believes to be a sinking ship. By his lights, the attempt to pass legislation on immigration this year—sure to be a hard-fought battle—has ruined any chance to pass an energy and climate bill, which is also hotly contested.

Though the language in the bill focuses on transportation fuels, not heating fuels, the added cost to oil companies that a fee on transportation fuels would impose would increase the cost of heating oil, as well. Much of the bill could still be changed as negotiations proceed in the Senate, and it may be the case that no version of the bill can secure the 60 votes needed to defeat a filibuster and be passed by the Senate.

President Obama’s energy policies have been attacked from the right and the left. (image: Tom Toles via washingtonpost.com)

When President Obama announced his plan to expand offshore drilling, many environmentalists (like Al Gore) were dismayed. Over at Forbes, energy analyst Michael Economides is upset, too, but that’s because he thinks the promise of offshore drilling is just bait to secure Republican support for a climate bill; once the climate bill passes, Economides says, Obama will have the EPA step in and prevent any drilling from actually taking place.

When comparing the price of a commodity over time, economists have a number of tools to correct for inflation. Energy blogger Gregor Macdonald uses Big Macs. To demonstrate how the price of oil has increased relative to other items, Macdonald created a graph that shows how many Big Macs it would take to buy a barrel of crude oil. It used to be that a barrel of crude oil cost about as much as 10 Big Macs, but oil prices have climbed and Macdonald says we have entered a new era in oil prices: the “era of 20 Big Macs.” A scary thought.

Ecofriend has a list of 12 devices that will help you save energy (and money) by reducing your electricity consumption. They show a variety of power strips, sensors, and plug adapters that will remind you to turn off and unplug appliances that aren’t being used, or even do it automatically for you. Because remembering to turn things off can be hard.

The quest to reduce emissions has led many to take another look at nuclear power, and now the expertise and deep pockets of Microsoft’s founder Bill Gates are at work on the development of small-scale nuclear reactors—or, as Kirsten Korosec of BNET Energy calls them, “mini-nukes.” In addition to being carbon free, Gates thinks the small reactors have the potential to cut energy costs in half. Now let’s see Apple top that.

Despite being a world leader in oil production, Iran lacks the refining capacity to supply its domestic demand for gasoline. (image: s.wsj.net)

The US is still working on legislation to impose new sanctions on gasoline sales to Iran, but the threat of sanctions is already having an impact. On Monday, Reuters reported that oil trading firms Vitol, the world’s largest oil trader, and Trafigura are going to stop selling gasoline to Iran. The firms join BP, Glencore, and Reliance Industries, who have already stopped selling fuel to Iran as the fear of US sanctions convinced them to halt their supplies.

The US is trying to use sanctions to pressure Iran to abandon its nuclear program. Firms who have operations in the US would be penalized for trading with Iran if sanctions pass. Gasoline sanctions are considered one of the most severe and effective sanctions that could be levied against Iran. Though it’s the world’s fifth-largest exporter of oil, Iran lacks the refineries necessarily to produce adequate supplies of its own fuel products and imports 40 percent of its gasoline.

In December Iran cut its rations of gasoline, but so far its domestic consumption has remained steady, reported Israel’s Haaretz on Sunday. The current rations allow consumers to buy 80 liters (down from 100 liters) at a subsidized price of roughly 10 cents per liter; any gasoline purchased beyond the allotted amount costs four times as much. The failure to reduce demand, coupled with Iran’s generous gasoline subsidies, could make sanctions especially painful. As major suppliers stop doing business with the country, Iran will have to seek out smaller suppliers that demand higher prices.

Vitol will complete any fuel deliveries that stem from previous agreements, but told Reuters that the company had not made any new deals with Iran since the beginning of 2010. Chinese oil traders supply Iran with 30 percent of its oil; France’s Total, Malaysia’s Petronas, and Kuwait’s Independent Petroleum Group also continue to sell to Iran.

The proposed US sanctions have already been successful in curbing gasoline supplies to Iran, even if they do not become law. How Iran will respond is unclear—especially because no new sanctions have actually been imposed. The Iranian government already plans to phase out subsidies, and is working to expand its refining capacity to make the country more energy independent. Iran’s envoy to OPEC, Mohammad Ali Khatibi, reminded observers of the most powerful card Iran has to play when he said on Monday that current oil prices were too low and that crude oil should be closer to $100 a barrel—a price point that some think would bring global economic recovery to a grinding halt.

Whether sanctions on gasoline (or the threat of them) will successfully disrupt Iran’s nuclear program—or whether Iran will use its oil exports as an economic weapon to combat sanctions and create a shock in global oil markets—remains to be seen.

UPDATE: On Wednesday the Wall Street Journal reported that Royal Dutch Shell is the latest company to announce that it has stopped selling gasoline to Iran. A company spokesperson would not comment on how possible sanctions may have influenced Shell’s decision, saying only, “Shell is not currently selling gasoline to Iran.” According to the Journal, Western companies are being replaced by companies from Asia, regardless of the threat of sanctions. Petronas, Malaysia’s state-owned oil company, confirmed that it was continuing its gasoline sales to Iran.

Clean coal and nuclear are cornerstones of Sen. Graham’s clean energy proposal. (image: treehugger.com)

Sen. Lindsey Graham (R-SC), part of a trio including Sen. John Kerry (D-MA) and Sen. Joe Lieberman (I-CT) working on compromise climate legislation, has begun circulating a draft of his own bill that would establish a clean energy standard for utilities, reports The Hill’s E2 Wire blog. Graham’s draft (full text available here) may or may not be included in any broader legislation that Graham, Kerry, and Lieberman are working on, and could move forward as a separate bill.

The notable feature of Graham’s clean energy standard is its inclusiveness—renewable sources like wind, solar, and biomass would qualify as clean energy, but so would nuclear power and coal plants that capture and sequester carbon emissions. His proposal would require utilities to produce progressively more electricity from clean sources: 13 percent in 2012, 25 percent in 2025, and 50 percent in 2050. While many Democrats and environmentalists oppose a standard that considers coal and nuclear to be “clean,” many Republicans insist that only coal and nuclear will allow their regions to produce the energy they need.

Climate legislation has faced a slew of setbacks, and Democrats have indicated a willingness to make concessions to nuclear power, clean coal, and offshore oil and gas drilling in exchange for a cap on carbon dioxide emissions. Whether Graham’s draft bill is merely the first step in renewed debate over climate and energy legislation or the foundation of a future Senate bill remains to be seen.

On the left, one of the winners of a solar power design contest held by Exxon, as featured in a 1977 advertisment. (image: greentechhistory.com)

At HeatingOil.com we’ve reported on oil majors making a move to invest in renewable energy, but apparently this is an older trend than we realized. Alexis Madrigal’s blog, Inventing Green, shows an Exxon advertisement (partially pictured above) from 1977 that features the 10 winners of a design contest for solar-powered housing.

Gazprom, the Russian natural gas giant, had planned to expand into the US market, but the expansion of shale gas production in the US has proven to be an obstacle. The company isn’t too worried, though. As Rowena Mason of London’s Telegraph reports, Gazprom’s exports chief, Alexander Medvedev agrees with environmentalists that shale gas drilling is a “danger to drinking water.” He added that is was “unimaginable” that Europe would allow such dangerous drilling practices.

Controversy has surrounded shale gas drilling, but Vincent Fernando of Business Insider reports on a new oil shale drilling technology being investigated that would take center stage in the nightmares of the green movement. It’s called the “nuclear-assisted hydrocarbon production method,” and would take advantage of the incredible heat released by spent nuclear fuel rods to extract oil trapped in shale formations. If hydrofracking worries you, the combination of nuclear power and oil drilling might seem like Frankenstein’s monster come to life, but it could also open up oil fields three times larger than Saudi Arabia’s and prevent nuclear proliferation by creating a use for nuclear rods.