ESG Fatigue?  Worst Projection of 2022

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Today’s Key Takeaways:  Bankers want clarity on ESG commitments to investors. Russian oil exports reduced by 54% in first week of G-7 sanctions.  Europe’s proposed gas price cap threatens supply to the area.     U.S. lithium project advances to final stages.  From “no oil” to “more oil.”


The ESG Hype Is Showing Signs Of Fatigue
Irina Slav, OilPrice.Com, December 19, 2022

  • The Net Zero Asset Managers alliance, set up just two years ago, brought together asset managers worth a combined $66 trillion.
  • In October, banks including JP Morgan, Morgan, Stanley, and Bank of America, threatened to leave the UN-backed group of ESG-conscious financial institutions.
  • Texas has also threatened to pull out its investments from large asset managers if they continued to be antagonistic to the oil and gas industry.

Earlier this month, Vanguard, the world’s largest asset manager, quit a net-zero banking alliance saying it wanted more independence and more clarity about its ESG commitments to investors.

Then, a week later, HSBC, the UK-based, developing world-focused lender, announced it would suspend direct financing and advisory services to new oil and gas projects, bowing under the pressure of shareholders and environmental activists.

The two events seem completely unrelated, but they are signs of things to come: fractures in the ESG investment movement are appearing–and they are likely to grow bigger at a time when consumption of fossil fuels is set to hit a new high.

The Net Zero Asset Managers alliance, set up just two years ago, brought together asset managers worth a combined $66 trillion. It later joined the UN-backed Glasgow Financial Alliance for Net Zero, led by former Bank of England governor Mark Carney.

In October, banks including JP Morgan, Morgan, Stanley, and Bank of America, threatened to leave the UN-backed group of ESG-conscious financial institutions on the concern of breaking U.S. antitrust legislation if they comply with the GFANZ guidelines for making investment decisions.

It is in legislation that the biggest cracks are appearing, after Republicans regained a majority of the lower house of the U.S. parliament and began a crackdown on ESG investments and the possibility of such investments violating antitrust law.

It is these same Republicans, both in Congress, and in states, that are mounting pressure on asset managers and banks with regard to their ESG commitments. And some are pulling out their investments from the majors: Florida recently pulled out $2 billion worth of investments from BlackRock because of its ESG agenda.



Russia’s Oil Exports Collapsed Since G-7 Sanctions Began
Juliann Lee, Bloomberg, December 20, 2022

Country’s volumes plunged by more than half in week to Dec. 16

Russia’s seaborne crude shipments collapsed in the first full week of Group of Seven sanctions targeting Moscow’s petroleum revenues, a potential source of alarm for governments around the world seeking to avoid disruption to the nation’s giant export program.

Some of the plunge was exaggerated by work at a port in the Baltic that’s now finished, but there also appeared to be a shortage of ship owners willing to carry key cargoes from an export facility in Asia. Several other ports also showed week-on-week declines. The data must be treated carefully, because weekly flows are at the mercy of the timing of cargo scheduling, the weather, and even the quality of signals that the vessels themselves transmit.

European Union sanctions that began on Dec. 5 are designed to curb Russia’s revenue from oil. On one hand, the bloc stopped buying but it also barred the provision of key services to enable the oil to be moved. The US, alarmed at the severity of the measures, pushed for the measures to be softened with the implementation of a price cap, keeping those things — especially insurance — available for buyers

But in the first full week after the EU ban on seaborne Russian crude imports came into effect, total volumes shipped from the nation dropped by 1.86 million barrels a day, or 54%, to 1.6 million. A less volatile four-week average also plunged, setting a new low for the year. Baltic Sea volumes should recover with work now ended, but the issues in the East may take longer to solve. elsewhere in the world when traders paid $60 a barrel or less for Russian oil.



Europe’s Gas Price Cap Threatens to Intensify Energy CrisisStephen Stapczynski, Yonchang Chin, Vanessa Dezem, Bloomberg, December 19, 2022

  • LNG exporters may send fuel to Asia if prices are better
  • Price ceiling without demand cap risks supply deficit: Goldman

Europe’s move to cap natural gas prices threatens to curb supply to the region and intensify its energy crisis.

European nations this week reached a deal to put a ceiling on gas prices, ending months of political wrangling over whether to intervene in its energy sector. But while the mechanism may help prevent extreme price swings, it may leave the region vulnerable to insufficient supplies and stronger competition from Asia.

A price ceiling without an associated cap on demand risks making Europe’s gas supply deficit worse by encouraging consumption, Goldman Sachs Group Inc. analysts including Samantha Dart said in a report published Monday. That could tighten global supply next year and, in a worst-case scenario, force governments to ration gas.



NEVADA LITHIUM MINING PROJECT CLEARS KEY HURDLE AMID SOARING DEMAND: Emerging lithium supplier Ioneer said yesterday that its Rhyolite Ridge lithium-boron mining project in Nevada has advanced to the final stages of federal permitting, putting it on track to begin production in 2026 amid soaring demand for the critical mineral stoked by the IRA and other EV adoption incentives.

The project is the first lithium development project in the U.S. to advance to the final stage of federal permitting under the Biden administration.

According to a Benchmark analysis, lithium demand is forecast to rise to a whopping 2.4 million tonnes LCE, or lithium carbonate equivalent, in 2030 — far higher than the 600,000 tons expected to be produced in 2022.

Ioneer announced the news yesterday after the Bureau of Land Management said it would publish a notice of intent in the Federal Register to begin preparation of an environmental impact statement—a significant advancement toward completing the NEPA review process and approving the Rhyolite Ridge project’s plan of operations.

The company struggled to get permits earlier in the process due to its proximity to Tiehm’s buckwheat, an endangered wildflower protected by the U.S. Fish and Wildlife Service. It sent a revised plan of operations in July.

Ioneer inked deals with both Ford and Prime Planet Energy & Solutions, the joint battery venture between Toyota and Panasonic, to provide thousands of tons of lithium carbonate annually for its first five years of production.