Commission proposals for a “progressive phase out of fossil gas” lack teeth: The European Commission’s long-awaited raft of gas proposals, the second part of its ‘Fit for 55’ package aimed at redesigning the EU’s internal gas market rules and governing a future European hydrogen pipeline network, landed with concerns coalescing around how much latitude had been granted to the industry in spite of the Commission’s banner headline that it had presented a “new framework to decarbonise gas markets”. Other than the controversial proposal to allow EU member states to decide on the blending of hydrogen into national gas systems, a costly and inefficient undertaking according to many studies, the onus placed on network operators to provide information on infrastructure that can be decommissioned or repurposed has been undermined by an absence of targets for ending gas development and downsizing gas infrastructure. A newly proposed methane regulation, which would establish a system of monitoring, reporting and fixing the biggest leaks of methane, is set to apply only to oil and gas companies operating within the EU and not to import sources, a major oversight when the EU imports over 80 per cent of the gas it consumes. The Commission’s proposals will be negotiated and approved by member states and the European parliament. (European Commission, Climate Home News, Reuters)

Danish 2050 phase-out plan passes into law: A year on from its introduction in the Danish parliament, a bill cancelling future exploration rounds for oil and gas extraction has been passed into law in the country that is currently the largest producer of oil in the EU. With it, Denmark has also established a final phase-out date for fossil fuel extraction by 2050 and laid out plans for the just transition of impacted workers. The package of measures, aimed at ensuring a reduction of the country’s greenhouse gas emissions by 70% by 2030 compared to 1990 levels, also includes plans for carbon capture and storage facilities in the North Sea to come online in 2025. (Dan Jørgensen [Tweet], Danish Ministry of Climate, Energy and Utilities, Reuters)

TEN-E Regulation deal cuts off gas funding – with exceptions: ‘Far from ideal’ was the conclusion of many to the deal reached by the European Parliament, EU countries and the European Commission on the revised Trans-European Networks for Energy (TEN-E) Regulation. TEN-E sets out how to select cross-border energy infrastructure projects that will receive EU funding and fast-tracked permitting. While EU funding will no longer be permitted for new gas and oil projects under the new regulation, money from the Connecting Europe Facility will still remain available until 2027 for gas infrastructure projects – deemed to be ‘projects of common interest’ – that will be used to carry hydrogen. Muddying the waters further were exceptions granted to Cyprus and Malta that will allow them “to have one hydrogen-ready gas project each funded with a view of connecting them to the EU network, under strict conditions.” For Cyprus, this may grant a public money funding lifeline to the vastly expensive and delayed EastMed gas pipeline. The Maltese government’s successful lobbying for the Melita gas pipeline means that EU coffers may end up supporting a project that will feed a power plant partly owned by the man on trial for the murder of journalist Daphne Caruana Galizia. (European Parliament, EURACTIV, Global Witness)

Irish policy shift opens the door for up to seven new gas plants: A new pro-gas policy statement from Ireland’s Minister for the Environment Eamon Ryan has announced the government’s plan to build an extra 2000 megawatts (MW) of gas power generation in the next decade to supplement Ireland’s transition to renewables. Four to seven new gas plants could be given the go-ahead, though climate groups are challenging the plans, which they say will undermine Ireland’s 2050 decarbonisation target and are likely to result in stranded assets. Grassroots campaign group Not Here Not Anywhere has written to Ryan with concerns that data centres are driving new power demand. There is also speculation that the shift in government policy has enhanced the chances of the controversial and long-delayed Shannon LNG project advancing. In mid-November this year, Minister Ryan told a parliamentary committee that LNG imports would not be needed for national energy security. (The Irish Times, Irish Independent, Green News, Not Here Not Anywhere [Tweet])  

Italian backing for huge Russian LNG terminal as France drops out: More than two years after Novatek and its partners took a final investment decision on the Arctic 2 LNG terminal in Siberia, a €9.5 billion (US$10.7 billion) financing package has been finalised for the project. Financing had proved to be contentious, with members of the European parliament and NGOs urging the export credit agencies of France, Germany and Italy not to back the 19.8 million tonnes per year terminal in which TotalEnergies also has a stake. Reuters reported comments from Italy’s ambassador to Russia that SACE is providing insurance coverage for funding from Italian bank Intesa Sanpaolo and state lender Cassa Depositi e Prestiti. While the involvement of Germany’s Euler Hermes remains unconfirmed, French NGOs welcomed the ultimate non-involvement of Bpifrance in the project. Anna-Lena Rebaud at Friends of the Earth France commented: “France’s backing away from such a project sends a strong signal. Emmanuel Macron is indirectly acknowledging that continuing to extract gas is problematic for both the climate and biodiversity.” Other disclosed project financiers are Russian commercial banks, the Japan Bank for International Cooperation, China Development Bank and Export-Import Bank of China. (Upstream, Reuters, Friends of the Earth France [French])

Azerbaijan: Hardline Azerbaijani president Ilham Aliyev has told Spanish daily El Pais that Caspian gas export flows to Europe via the Trans Adriatic Pipeline can be increased beyond the 11 billion cubic metres (bcm) planned for 2023.

Brussels: Industry group the European Network of Transmission System Operators for Gas has appointed Piotr Kuś, a former board member of pipeline lobbyists Gas Infrastructure Europe, as its new General Director.

Cyprus: A second offshore gas exploration license has been awarded to ExxonMobil and Qatar Energy by Cyprus, in spite of Turkey’s opposition to the deal in contested Mediterranean waters. 

Greece: Despite warnings from NGOs, the European Bank for Reconstruction and Development has approved a €75 million (US$84.5 million) loan for the 826 MW combined cycle gas turbine Mytilineos power plant in Viotia, central Greece. 

Greece: The proposed floating Alexandroupolis LNG Terminal, not included on the EU’s most recent 5th Projects of Common Interest list, has received European Commission consent for its new Greek-Bulgarian ownership structure.

Italy: The new business plan of Italian energy multinational Enel has set out the company’s exit from gas-fired power generation by 2040. 

Norway: For the first time since 1965, next year Norway will not grant new oil exploration licences in ‘virgin’ or little-explored areas as part of a compromise deal on the national budget for 2022. 

Poland: The final sea bed section offshore of Poland of the ten bcm per year Baltic Pipe project has been completed. 

UK: The two-year old moratorium on fracking in England is being upheld by the UK government in the face of mounting legal pressure from shale gas companies.

Nord Stream 2 saga hots up: The pegging of European gas market movements to announcements from Russia’s Gazprom has further intensified due to deepening uncertainty over when the company’s Nord Stream 2 pipeline (NS2) will be able to be approved by Bundesnetzagentur, Germany’s energy regulator. Diplomatic tit-for-tat on Russia’s alleged intention to invade Ukraine in the coming months is also exacerbating the situation. An intervention from Bundesnetzagentur in mid-December, seemingly at the behest of the new German government, declared that a regulatory decision on NS2 will not be made before July next year. This timetable is in line with the maximum timeframe for NS2’s approval set out by Bundesnetzagentur in September. Already panicked traders reacted to the news, sending Europe’s benchmark gas price to a high of €116.75 per megawatt hour (MWh), just shy of the record closing price of €116.78/MWh set in early October. The Kremlin reacted to the news by saying that the NS2 company was continuing to engage with the German regulator over the certification process. (The Guardian, Bloomberg, Reuters)

Big Gas enjoying a profitable energy crisis: Research from Global Witness has shown that while millions of domestic consumers in Europe and elsewhere are being hammered by soaring gas bills, major gas companies such as Equinor, ExxonMobil, Gazprom and TotalEnergies amassed at least US$65 billion in profits in the third quarter of 2021 as the gas-driven energy crisis was starting to bite. This represents an across the board 24% rise in profits over the same period in 2019, with nine of the 15 global gas firms analysed boasting higher profits in the July-September period compared to the first six months of 2021. “There is something very wrong when the companies that are disproportionately responsible for the climate crisis also find themselves reaping the benefits,” said Jonathan Gant, Senior Gas Campaigner at Global Witness. “It’s time to rethink how we do things, starting with a phase out of fossil fuels and a push towards clean, renewable energy that can provide both stability and low costs for consumers.” (Global Witness, The Guardian)

Top energy consultancy expects ‘volatile’ European LNG prices in 2022: In its end-of-year outlook for global LNG markets, WoodMackenzie is predicting that the stronger than expected LNG prices of 2021 will weaken by the end of the northern hemisphere winter next year, but will still remain volatile in Europe for the coming 12 months. The energy consultancy also foresees higher prices than had been expected out to 2025 as a result of supply constraints, with LNG availability to Europe expected to fall due to increasing demand in Asian markets. WoodMackenzie also flags the growing imperative for LNG suppliers to green their supply chains, “despite there still being no industry standard for this”. (WoodMackenzie) 

CO2 reporting part of bond issue for top LNG trader: Gunvor Group has tapped the bond markets for US$1.135 billion, a ‘first of its kind’ financing deal that requires the world’s largest independent trader of LNG to report on its carbon emissions and disclose more about the carbon footprint of its LNG value chain. The bond issue involved a range of international banks, with Rabobank of the Netherlands and Société Générale and Natixis of France as the principals. Rabobank said that the deal “reflects the strong interest of banks to support responsible participants in the growing global LNG market, one of the main enablers of the Energy Transition.” (Gunvor Group, LNGPrime) 

Europe’s hydrogen lobby mapped: In recent years, hydrogen’s rise, in its various forms and colours, from relative obscurity to becoming a central part of Europe’s energy plans has been astronomical. Key to this rise has been the dense network of fossil fuel companies, trade associations, PR firms and other organisations that has successfully made the case for hydrogen amongst decision makers in Brussels. As recent mapping by Desmog shows, powerful stand-out players within this network such as Hydrogen Europe are representing major fossil fuel interests intent on using hydrogen to maintain countries’ dependence on the fossil fuels that are integral to their current businesses. (DeSmog)

Amundi and Crédit Agricole announcements disappoint: Following recent breakthrough policy making by French bank La Banque Postale to fully end its financial services for oil and gas​​, announcements in December from two of France’s most significant financial institutions aimed at reducing exposure to the development of hydrocarbons have been found wanting by the Paris-based NGO Reclaim Finance. A new ‘societal plan’ from France’s top asset manager Amundi, which holds US$12 billion in shares in oil and gas companies planning to expand operations in the Arctic, was criticised for being vague and unambitious as it permits the company to continue to take holdings in most companies with expansion plans. While it has committed to reducing its exposure to upstream production of oil by 20% by 2025 compared to 2020 and to ending its financing for all new gas projects in the Arctic region, major French bank Crédit Agricole has not ruled out financial support for conventional oil and gas projects or corporate financial support for more than 500 companies involved in oil and gas expansion, including in the Arctic. (Reclaim Finance, Business Wire, Reclaim Finance [French])

Why gas is the new coal, Climate Analytics, November 2021. (Pdf, with summary here)

This 70-page report examines the role of gas in a 1.5°C global energy mix and the transition to net zero by 2050. Including a critical assessment of plans to scale up carbon capture and storage and blue hydrogen, the authors conclude that governments and investors must treat gas the same way they now treat coal and phase it out as quickly as possible.

A first look at the EU Hydrogen and Decarbonised Gas Markets Package, Florence School of Regulation, December 2021.
 
This rapid response to the European Commission’s gas package provides a summary breakdown of the broad suite of proposals and asks whether the protections afforded to the commercial interests of the gas industry may undermine efforts to make the necessary 32-37 per cent reduction in EU gas consumption by 2030.

Gas-reliant Italy is lagging behind in Europe’s race to renewables, Ember and ECCO, December 2021.

Although Italy signed a G7 agreement this year to ‘overwhelmingly’ decarbonise its electricity system in the 2030s, this short analysis shows how the country’s capacity mechanism, which is weighted in favour of gas, is acting as a drag on clean energy ambitions.