U.S. EPA’s power plant rule offers a mixed bag of winners and losers
The Environmental Protection Agency’s proposed measures to slash greenhouse gas emissions from U.S. power plants aim to thread the needle between a hostile Congress and Supreme Court and the Biden administration’s 2035 clean grid goal. Not only is that goal set to be sacrificed, but over three-quarters of currently operating gas plants are not covered by the new proposals, writes Rebecca Leber in Vox.
LNG has become a geopolitical bellwether and it’s fuelling global imbalances and anger
The fallout from Europe’s dash for gas last year, when its LNG imports jumped by 63%, continues. Economic disruption, short-term supply uncertainty, and resentment towards the West are still rife, in South Asia particularly, writes Paul Dempsey in Engineering and Technology.
The oil and gas industry has the technologies, the money, and the know-how to clean up its act
With six months to go before COP28 in Dubai, oil and gas producers have the means — and the responsibility — to act rather than talk and make steep cuts in the emissions that they have failed to address for too long, writes Fatih Birol, executive director of the International Energy Agency.
Australia’s LNG industry stretches credulity with net-zero talk
An oil and gas conference in the world’s top LNG exporting country was awash with corporate ambitions for the industry to be a key driver in delivering a net-zero carbon future. Such chutzpah doesn’t square with the business-as-usual expansion hopes of Australia’s gas players, writes Clyde Russell in Reuters.
Groups and Norwegian government call for 1.5°C alignment in Equinor’s energy transition plan
Despite being voted down by a majority of Equinor’s shareholders, a joint proposal lodged by Greenpeace and WWF at the state-owned energy company’s recent annual general meeting nevertheless elicited a formal response from the Norwegian government broadly backing the environment groups’ call for Equinor to up its climate ambition and set goals in line with the target to limit global warming to 1.5°C. Holding a 67% stake in Equinor, the Norwegian state “expects” — among other stipulations — that “[t]he company sets targets and implements measures to reduce greenhouse gas emissions in both the short and long term in line with the Paris Agreement, and reports on goal attainment.” (Equinor [Pdf])
Vietnam makes big gas bet in newly approved power development plan: After more than two years and about a dozen draft revisions, the Vietnamese prime minister, Pham Minh Chinh, has approved the power development plan VIII (PDP8) for the period 2021–2030. Requiring investment of US$135 billion, PDP8 lays out the government’s ambition to more than double Vietnam’s overall power generation capacity to 158,200 megawatts (MW) by 2030, with gas-fired plants projected to become the nation’s prime source of energy and account for 37,330 MW of installed capacity. Domestic reserves in the South China Sea would generate 15,000 MW while Vietnam will have to start importing LNG to fuel an additional 22,400 MW of project gas power capacity by 2030. The infrastructure buildout for PDP8’s gas targets involves at least two import terminals, 15 LNG power plants, and at least ten gas plants to be fuelled by domestic gas. “Vietnam could be entirely exposed to the spot market and price shocks,” warned San Naing, senior gas analyst at research firm BMI, “because they do not have long-term LNG sale and purchase agreements.” (Reuters, Reuters)
Study reveals the fossil fuels behind worsening forest fires in western North America: As the wildfire crisis in western Canada shows no signs of letting up, leaving thousands still evacuated and further disrupting the heart of the country’s oil and gas industry, a new climate attribution study by the Union of Concerned Scientists has found that the world’s top 88 fossil fuel producers and cement manufacturers are responsible for more than a third of the area burned by wildfires across western North America since the 1980s. The peer-reviewed research is the first to attribute the worsening wildfires and the increasing drought and fire-danger conditions that are ravaging the region to heat-trapping emissions traced to the world’s major fuel producers, including BP, Chevron, and ExxonMobil. The authors also detail how wildfires are disproportionately impacting low-income and Black, Indigenous, and people of color communities by increasing health risks from smoke inhalation, as well as endangering outdoor workers. (Union of Concerned Scientists, CNN)
Pro- and not so pro-gas factions set to square up at G7 leaders’ summit: Ahead of this weekend’s summit of the Group of Seven (G7) industrialized nations in Hiroshima, activists in more than 20 countries have stepped up mobilizations primarily aimed at pressuring Japan to stop derailing the global energy transition through its promotion of climate-busting gas. Germany has also attracted heavy criticism in the last week following reporting in The Financial Times that Berlin is pushing for a final G7 text that endorses new public investments in the gas sector. France, the UK, and likely Canada are said to be strongly opposed to Germany’s U-turn following last year’s G7 commitment to end international public finance for fossil fuels by the end of 2022 “except in limited circumstances … consistent with a 1.5°C warming limit.” Italy and the U.S. are expected to make up the pro-gas faction at the summit. Also up for discussion in Hiroshima is a proposal to permanently ban the restart of Russian gas pipelines where the Kremlin shut down supplies last year. According to reporting from Politico, hopes of including this measure in the EU’s 11th Russia sanctions package have faded. (The Financial Times [Paywall], Reuters, Climate Home News, Politico)
Unconvincing decarbonization initiative heaves into view ahead of COP28: The provisionally named Global Decarbonization Alliance (GDA) is taking shape under the leadership of the United Arab Emirates (UAE) COP28 presidency, with reports suggesting that it is expected to set a goal for oil and gas companies to reach net-zero emissions from their production activities by 2050. Initial responses from campaigners have been critical of the fledgling initiative’s lack of a target for tackling the sector’s scope 3 emissions, the much larger emissions generated from the use of fossil fuels. Equally, almost all major oil and gas companies already have more ambitious targets than net-zero scope 1 and 2 emissions by 2050. A draft framework document for GDA also says that its members will “aim for zero routine flaring and near-zero methane emissions by 2030 on our upstream operations (e.g., below 0.20% methane intensity).” In 2018, by comparison, the Oil and Gas Climate Initiative, which comprises 12 major oil and gas companies, set a goal to reduce methane intensity from upstream oil and gas operations to below 0.25% by 2025. (Climate Home News, Energy Flux)
Non-stop gas litigation in the U.S.: Several legal challenges and setbacks have stood out in the last week. In a landmark case, a coalition of Indigenous peoples, youth, frontline community members, and environmental groups have filed suit against the state of New Mexico for its failure to control skyrocketing oil and gas production in the state. The lawsuit demands that the state comply with its constitutional duty to prevent the despoilment of New Mexico’s air, water, and other natural resources. Shell has been sued by two environmental groups who say that the company’s massive petrochemical plant in Pennsylvania, which opened in November last year, has repeatedly violated federal and state air quality laws. Meanwhile, an early legal challenge brought by environmental groups against the proposed US$39 billion Alaska LNG project, and its potential to “wreak havoc” on Alaska’s wildlife and the climate, was dismissed by the U.S. Circuit Court of Appeals for the District of Columbia. The US$6.6 billion Mountain Valley Pipeline was also granted a permit by the U.S. Forest Service to cut through 3.5 miles of the Jefferson National Forest in the Appalachian Mountains, a decision that is expected to end up back in court. (Reuters, Inside Climate News, Reuters, The Associated Press)
“Ukraine has significant potential for the development of the oil and gas industry. We call on our partners to participate in the reconstruction of Ukraine, which will allow not only to increase our energy independence but also the pan-European energy security,”
said Farid Safarov, Ukraine’s Deputy Minister of Energy, at the Lugano Business Forum while discussing the state’s readiness to both accelerate deregulation and increase the transparency of the oil and gas sector in order to attract new investment.
Argentina: The government will shortly announce a tender for work to reverse gas flows on existing export pipelines that will allow production from the Vaca Muerta shale formation to be transported to the north and center of the country.
Germany: In spite of widespread local opposition, Berlin is pressing on with plans for two floating LNG terminals on the Baltic Sea island of Rügen and has included the port of Mukran in the national LNG Acceleration Act. According to a federal government source, the Rügen plans have been scaled down from the originally planned 18 billion cubic meters per year (bcm/y) of import capacity to 10 bcm/y.
India: LNG import volumes continued to rise in April and, seeking protection from further price volatility, Indian buyers are said to be accelerating efforts to secure 20-year LNG supply deals with suppliers in the U.S., Qatar, and the UAE.
Kazakhstan: Energy minister Almasadam Satkaliyev said that a route has been “preliminarily determined” for an export pipeline to take Russian gas through the northern territories of Kazakhstan to China.
Montenegro: The government has signed an initial memorandum of understanding with two U.S. companies for the construction of an LNG import terminal and an associated gas-fired power plant near the Port of Bar, with potential start-up by the end of 2025.
Romania: The European Commission has asked for clarification about the €1.4 billion (US$1.5 billion) REPowerEU “green” investment plans submitted by Bucharest that feature gas pipeline and power plant proposals.
South Africa: Under its Energy Action Plan and emergency power procurement measures, the government has said it is open to contracting gas power ships though these emergency power contracts will not be longer than five years.
South Korea: Korea Southern Power has signed a deal with U.S. company Cheniere to purchase 0.4 million tonnes per year of LNG from 2027 until 2046.
Spain: Energy minister Teresa Ribera believes that a belated EU ban on Russian LNG imports could be enacted “sooner than later” as part of the bloc’s efforts to deprive Russia of energy export revenue.
Tanzania: The costs on a major LNG export project backed by Equinor and Shell have soared to US$42 billion from prior estimates of US$30 billion. A final investment decision is now anticipated in 2028 rather than 2025.
U.S.: New research from DeSmog has found that 82% of board directors at the six biggest banks in America – all multi-billion dollar financial backers of the fossil fuel industry – currently hold or have held positions at oil and gas firms, investment companies that finance polluting sectors, and trade associations known to lobby against climate action.
The Gas Graph
Via McKinsey, Europe spent over €1 trillion more on oil, gas, and coal in 2022 than in 2021, more than doubling the share of GDP spent on energy to almost 10%. Europe’s energy spending is projected to stay high and remain above pre-Ukraine war levels until at least 2025.
‘Green’ pension funds rapped for investing billions in oil and gas companies: Carbon Tracker has warned the growing number of UK employees seeking to make sustainable pension investment decisions that more than 160 ‘green’ pension funds have holdings totaling US$4.6 billion in 15 companies including Chevron, ExxonMobil, and TotalEnergies. This is part of a wider problem, according to the environmental think tank, where asset managers have invested US$376 billion in oil and gas companies, despite publicly pledging to back efforts to limit global warming to 1.5°C. As calls intensify for investment funds to stop propping up climate-wrecking fossil fuel companies, the UK’s Financial Conduct Authority is consulting on how to establish anti-greenwashing rules in order to clean up how investment funds are labeled. (Carbon Tracker, The Guardian)
German taxpayers pick up the tab for big gas trader bonuses: The energy companies Sefe and Uniper dished out hundreds of millions of dollars in bonuses to their traders last year just months after they were bailed out by the German state. Berlin provided the pair with €26 billion (US$28.6 billion) in direct equity payments and favorable loans after they ran into severe financial difficulties as a result of accruing huge losses when buying gas cargoes at record prices to replace lost supply from Russia. The nationalization of the companies means that German taxpayers are footing the bill for gas trader bonuses while also coping with persistently elevated energy bills. According to Uniper, “Competition for traders in the energy industry is intense. A zero bonus is therefore not appropriate.” (Reuters, Clean Energy Wire)
Report finds gas usage for electricity generation is collapsing in Australia: Despite repeated claims from senior politicians and the Australian gas industry that more gas is needed to fire gas power stations in the country’s renewables-rich power grid, a new report from the Institute of Economics and Energy Financial Analysis (IEEFA) details how Australia’s gas usage for power generation has fallen 47% between 2014 and 2022. With renewables now accounting for 35% of electricity generated in the National Electricity Market, up from 14% in 2014, and the federal government aiming for 82% renewables by 2030, the Australian Energy Market Operator is forecasting a further 34% drop in gas usage by end of decade. The root of the problem for the industry continues to be the closure of baseload plants as gas is too expensive in Australia for baseload generation. Although some state-subsidized gas-peaking plants are opening, these will typically operate for only 4-14% of the year. Report author Bruce Robertson says that the transition fuel mantra still being trumpeted is due to industry voices “intentionally conflating an increase in gas-peaking capacity with an increase in gas demand from electricity generation.” (IEEFA [Pdf])
Two more major banks announce restrictions on upstream oil and gas financing: BNP Paribas, France’s biggest commercial bank, and Singapore’s Oversea-Chinese Banking Corporation (OCBC), the second largest commercial bank in Southeast Asia, have announced similar clampdowns on financing for upstream oil and gas projects alongside wider decarbonization targets aimed at aligning their credit portfolios with net-zero climate targets. Both institutions will end all project financing for the development of new oil and gas fields, with OCBC — not a major financier of the sector — stating that its restriction would apply to fields approved for development after 2021. BNP Paribas, however, is recognised as the top banker for BP, Eni, and Shell, and also counts TotalEnergies as one of its major clients. While welcoming the bank’s new restriction, finance campaigners pointed out it would have little material impact on the majors and other companies actively involved in gas expansion as they could continue to tap other financial services not directly related to projects, such as the issuing of corporate bonds, that BNP Paribas provides without restrictions. (Reuters, Eco-Business, Reclaim Finance)
Shell-backed gas capture project in Iraq set to profit Iran: An investigation by Greenpeace’s journalism unit Unearthed and The Financial Times has raised concerns about a flagship Shell joint venture in Iraq, which has received World Bank funding, that could provide benefits to a company linked to Tehran. The Basra Gas Company, in which the multinational is partnering with Iraq’s South Gas Company and Japan’s Mitsubishi, was established to capture gas previously flared at Iraq’s oil fields and process it for use in local power generation or for export. However, according to leaked documents, under a deal signed in 2019, Basra Gas is due next month to start offtaking electricity from a 3,000 MW power plant that was built by Mapna Group, a company based in Tehran with links to Iran’s repressive government. Although Mapna has been sanctioned by the US government since 2018, it is still entitled to 78% of the revenues from the power plant’s electricity sales. Shell commented that it has had “no dealings with Mapna or any Iranian entity,” a position echoed by Basra Gas, which also said it was paying Iraq’s ministry of electricity for power. (Unearthed, The Financial Times)
Saudi Aramco struggling with blue hydrogen turn as it mulls LNG opportunities: The decision by the world’s largest oil company to prioritize the production and export of blue hydrogen — because it’s seen as a cleaner fuel than LNG — is facing difficulties, according to its CEO, due to potential customers in Europe, Japan, and Korea being put off by the sky-high costs involved. Amin Nasser, overseeing Aramco’s multi-billion dollar exploitation of the massive Jafurah gas field, said that blue hydrogen could cost the equivalent of about US$250 a barrel of oil, more than three times higher than the current Brent spot price. Elaborating on the difficulty to secure requisite supply deals at such high pricing, the company’s CEO said it would need to “consider either additional local demand [for the Jafurah gas] as a priority or exporting as LNG.” Whether or not Aramco opts to start up LNG exporting from Saudi Arabia, Nasser said the company was in discussions for overseas LNG terminal investment opportunities, including in Australia and the U.S. (Hydrogen Insight, Bloomberg [Paywall])
“[Tellurian’s Driftwood LNG project] doesn't have enough customers to underwrite the investment, and in the absence of customers, you don’t have a project. And that’s true for a lot of U.S. projects — they don’t have enough customers,”
said Gordon Shearer, senior advisor at Poten & Partners.
Emissions from Oil and Gas Operations in Net Zero Transitions, International Energy Agency, May 2023. [Pdf]
This 33-page report maps the changes and measures needed to reduce the emissions intensity of oil and gas operations in the IEA’s Net Zero Emissions by 2050 Scenario, and finds that investments totalling US$ 600 billion would be required to halve this emissions intensity globally by 2030.
Race to Replace: The economics of using renewables to free Europe from Russian gas, University of Oxford Sustainable Finance Group, May 9, 2023. [Pdf]
This 29-page report finds that the EU can replace Russian gas with green technologies by 2028, and up to 90% of the additional investment required — on top of currently planned European Green Deal spending — could be recouped over the next 30 years by eliminating the need to buy gas.
EBRD — the biggest l[REDACTED]ar of them all, CEE Bankwatch Network, May 10, 2023. [Pdf]
This four-page briefing describes how the European Bank for Reconstruction and Development continues to promote its Paris alignment while at the same time financing new gas infrastructure that risks locking countries such as Cyprus and North Macedonia into decades of dependency on fossil fuels.
The Carbon Capture Scam, Food and Water Watch, May 11, 2023.
This online information hub exposes the truth behind the carbon capture myth and how it is designed to extend dependence on fossil fuels.