It’s a gas: Exclusive LNG Club. Bite out of Bitcoin mining. OK disrupting Biden goals?

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News of the Day:

China’s emissions surpass all developed nations combined
Ben Geman, Axios, May 6, 2021

The distribution of global greenhouse gas emissions has reached an inflection point: China’s emissions exceeded developed nations combined in 2019, a new Rhodium Group analysis concludes.

Why it matters: “The shifting dynamics of global emissions — with China surpassing the developed world for the first time — means that meeting the Paris goals will require significant and rapid action from all countries,” Kate Larsen, a director at Rhodium, tells Axios.

The big picture: Rhodium compared China’s emissions to nations in the multilateral Organization for Economic Co-operation and Development as of 2019 and all 27 EU members.

  • The analysis also showed that on a per-capita basis, China’s 2019 emissions were close to the OECD average. The firm expects that the final 2020 data will show China’s per-capita emissions exceeded the OECD average.
  • Rhodium’s Larsen notes China’s per-capita rise stems from higher living standards, China’s relatively fossil-intensive power mix and its export-focused manufacturing.

What we’re watching: The steps China takes — or doesn’t — in coming years to breathe life into its pledge to have its emissions peak before 2030 and reach carbon neutrality by 2060.

By the numbers: China’s emissions are over a quarter of the world’s total. Their per-capita emissions were over 10 tons of CO2-equivalent in 2019, but that’s still far below the world-leading U.S. at 17.6 tons, per Rhodium.

Yes, but: China’s emissions look very different when measured on a historical basis.

Why it matters: It helps explain why nations that industrialized first bear such responsibility for tackling warming, even as emissions growth is centered in the Asia-Pacific.

The big picture: “A large share of the CO2 emitted into the atmosphere each year hangs around for hundreds of years. As a result, current global warming is the result of emissions from both the recent and more distant past,” Rhodium notes.


Exxon Mobil Expects $200 Million in Charges for Job Cuts This Year
Reuters, May 5, 2021

Exxon Mobil Corp. expects up to $200 million in charges this year related to job cuts in an era of cost savings, according to a regulatory filing.

The biggest U.S. oil producer has slashed costs, delayed projects and said it could trim an estimated 14,000 employees globally, or 15%, including contractors. Exxon Mobil reported its first annual loss last year as the COVID-19 pandemic battered energy demand.

The company will spend more this year than in 2020 as workers exit, according to the filing.

Total cash outflows would be between $400 million and $600 million, versus $47 million last year, according to the filing. Exxon Mobil had set aside some money last year toward the costs.

The severance cost estimate does not include job cuts related to changes in the company’s portfolio, it said.

Reductions should be “substantially complete” by year-end, including voluntary and involuntary exits and the use of fewer in contractors, Exxon Mobil said.

In the first quarter, the company had before-tax charges of $39 million mostly from employee separation costs in Singapore and Europe.

Cost savings from its global staffing review are likely to range between $1 billion and $2 billion per year versus 2019 levels, according to the filing on May 5.


U.S. LNG Club Could Get More Exclusive
JinJoo Lee, The Wall Street Journal, May 4, 2021

It’s a real gas being an incumbent in this business.

Cheniere EnergyLNG -1.11% the largest exporter of U.S. liquefied natural gas, had a great first quarter and can look forward to many more. Revenue increased 14% from a year earlier—higher than the 4% growth analysts polled by Visible Alpha had expected. Net income increased 5%, a much better result than the 42% decline analysts had penciled in.

The East Asian LNG spot price benchmark, the Japan/Korea Marker, spiked to a record $32.50 per million British thermal units in mid-January—six times what it was a year earlier—buoyed by cold weather and a tighter shipping market. That helped boost Cheniere’s margins. Though more than 80% of Cheniere’s export capacity is sold through long-term contracts, the company is able to capitalize on shorter-term spikes through its uncontracted capacity.

Pricing dynamics are favorable for U.S. exports at the moment: Brent crude is approaching $70 a barrel even as the U.S. benchmark Henry Hub natural gas prices remain below $3 per million British thermal units. Higher oil prices tend to make American LNG more competitive because it is sold under Henry Hub-indexed prices rather than oil-indexed pricing used elsewhere.

After a year of shrinking demand growth, the global LNG supply-demand balance looks tight for 2021, according to Samer Mosis, team lead for Europe, Middle East, and Africa LNG analytics at S&P Global Platts. It is expected to continue tightening until 2024-2025 because of a lack of new supply growth.

What happens after that has some observers concerned. Some major LNG suppliers, including Qatar, are expected to bring on massive capacity by 2026. At the same time, some countries have become ambivalent toward LNG contracts because of climate concerns. Last year, France’s Engie backed out of its multibillion-dollar LNG contract negotiation with Houston-based Next DecadeCorp. , reportedly citing concerns about the environmental impacts of fracking. That deals a blow to a company that already has had to push back its final investment decision date multiple times.

That is terrible news for U.S. export projects in development—particularly those starting from scratch. But it is great news for existing ones such as Cheniere, which only need to find smaller contracts for expanded capacity rather than having to secure large chunks all at once. Cheniere’s plan—announced in February—to provide cargo emission tags to all produced cargo starting 2022 should help give it an edge, too.

Things are looking up for U.S. LNG exporters that got their foot in the door early and bleak for pretty much everyone else.


New York Bill Would Freeze Bitcoin Miners Pending Environmental Review
Danny Nelson, Coin Desk, May 4, 2021

A new bill in the New York state legislature seeks to place a three-year moratorium on crypto mining pending an environmental review by the state. 

The bill, from state Sen. Kevin S. Parker (D-Brooklyn), would lift the moratorium only for mining facilities that “will not adversely affect” New York’s carbon-cutting benchmarks. The legislation is in its earliest stages and was referred to the Senate’s environment committee Monday.

If passed, the bill would empower state inspectors to evaluate the impact mining facilities have on water quality, air quality, carbon emissions and wildlife. Miners would be allowed back online only after they complete an environmental impact statement. Those deemed to be hurting New York’s carbon-cutting plans would be nixed.    

Parker’s bill comes as state power plants roar back from their grave as bitcoin (BTC, -0.48%) mining operations. In the Finger Lakes region in upstate New York, for example, a long-dormant coal plant now burns 19 megawatts worth of natural gas to feed its armada of power-hungry mining rigs. The endeavor has proven so profitable that site operator Greenidge Generation is planning to boost capacity to 500 megawatts by 2025.

But environmentalists argue mining plants like Greenidge counter New York’s decarbonization goals. The state is seeking to slash its greenhouse gas emissions 70% by 2030. Burning more natural gas kneecaps that effort, advocates say.

They also question the wisdom of allowing a plant that could power nearby homes to mine bitcoin instead.

The fight over Greenidge’s expansion plan foreshadowed what could be a monumental blow to New York’s miners – one that if successful would freeze every commercial mining operation in the state and likely threaten those found to be irreconcilable with the state’s climate and environmental goals.

Just two weeks ago, the operator convinced local politicians to approve its expansion plan without subjecting it to an environmental review. Environmentalists were aghast. The politicians said they were too. But their hands were tied by state law.

“We got all the same issues you do,” David Granzin, chairman of the planning board in the upstate town of Torrey, which is located near the Greenidge plant, told skeptical attendees at the approval hearing, according to Binghamton NPR affiliate WSKG.

“We know that Bitcoin is a big waste of energy, but we’re bound by the law. We have to follow the rules,” Granzin said.


Legislators wrestle with budget as clock ticks toward May 19 adjournment
Tim Bradner, The Frontiersman, May 6, 2021

The clock is ticking for state legislators in Juneau. There is two weeks left before a required adjournment May 19 and a closely divided state House has been unable to get an operating budget to the Senate.

Traditionally the House originates the budget, working off a draft from the governor, and sends it to the Senate.

Things are rocky in the 40-member House, which is split between Republicans and Democrats aligned with independents and two Republicans, one of them Rep. Louise Stutes, R-Kodiak, who is House Speaker.

There was a big push to get the budget, in House Bill 69, passed last weekend but the effort collapsed in disagreements on Sunday. The bill was sent back to the House Rules Committee to allow time for frayed tempers to mend.

By midweek that appeared to be happening. A bill sponsored by Stutes to create a new management structure for the state ferry system passed the House by a wide margin on Wednesday, with many Republicans in support.

That seemed to signal better feelings. Otherwise, angry Republicans in the House Minority would likely to have ditched a bill by the Speaker.

It isn’t known what the disagreements are about but the Permanent Fund Division, or PFD, is surely one of them. Last week a proposed budget amendment to fund a “full” dividend, which could be about $2,000, failed 20-20.

The House is readying another try at passing the budget that may come this weekend. Meanwhile, the state Senate isn’t waiting. The Senate Finance Committee introduced its own version of an operating budget Wednesday.

This Is mainly a procedural step, Finance cochair Sen. Bert Stedman, R-Sitka explained, to allow work to be done while the committee waits for the House to pass its bill.

What complicates the budget work is incorporating over $1 billion in federal American Rescue Plan, or ARPA, funds into the spending plan. The House proposes to combine part of the new federal money with state funds in its budget bill and leave the rest to be appropriated next year.

It isn’t clear what the Senate will do but the bets are that a similar partial-funding is likely. Many legislators suggest having a special session later in the year so that more time is available in developing an orderly spending plan. Federal instructions on how the money can be used isn’t expected until May 10. To try to rush decisions involving hundreds of millions of dollars in nine day, so that a budget can be passed May 9, as in invitation to poor choices, many lawmakers believe.

The Legislature can extend the session by 10 days if enough votes can be rounded up, but the better choice, many believe, might be to appropriate the bare-bones normal state budget with some of the new federal money included and then return later in the fall for a special session devoted to a plan for the federal money.

Those funds can be staged over three years. The money doesn’t have to be spent until the end of 2024.


Will Okla. disrupt Biden’s 100% clean energy goal?
Edward Klump, E&E News, May 6, 2021

Reaching President Biden’s goal of 100% clean electricity by 2035 would require a massive shift away from fossil fuels across the U.S. — including in red states.

As Oklahoma shows, that may not be easy.

The state’s natural gas devotion is setting up a potential clash with the White House and environmental groups as Biden eyes climate action through a flurry of executive orders and his $2.2 trillion infrastructure plan.

But while Oklahoma’s approach to electricity isn’t aimed at meeting the Biden administration’s decarbonization goals, state leaders are still betting they can foster renewables and slash emissions while keeping the lights on.

Just don’t expect Oklahomans to stop relying on natural gas for power anytime soon.

“We’ve been pretty good at putting renewables on the grid,” said Kenneth Wagner, Oklahoma’s secretary of energy and environment. “We’ve been pretty good at lowering carbon. We see that trend continuing, and without driving up artificial costs by making us remove natural gas and making it more difficult.”

Oklahoma depends mostly on a blend of generation fueled by natural gas and wind, and it’s part of a multistate grid managed by the Southwest Power Pool. While Texas was hammered by long outages in February as power supplies fell short of demand in a cold blast, residents in Oklahoma generally saw short interruptions in electric service tied to controlled outages during that extreme period.

But Oklahoma did see extraordinary gas costs estimated at $3 billion to $4.5 billion, according to Wagner.

He said the state is investigating why gas prices rose during the storm, and it is turning to low-interest financing to help smooth out some potential bill impacts on residents over time. Oklahoma leaders don’t want a big price spike to happen again, but they also don’t want to give up on natural gas.

Wagner, a former senior adviser to the administrator at EPA, described Oklahoma as a “pioneer” in energy and said hydrogen development may be another area for future growth. He said hydrogen and gas are complementary in terms of production and power generation.

For now, Oklahoma can point to carbon-cutting accomplishments from its evolving generation mix. That includes a roughly 34% drop in CO2 emissions from the state’s power sector from 2005 to 2018, according to data from the U.S. Energy Information Administration cited by Wagner’s office. EIA often reports that Oklahoma has among the lowest average residential power prices in the country, but it had some of the highest electricity prices in February.

Johnson Bridgwater, director of the Oklahoma Chapter of the Sierra Club, said the February freeze showed natural gas wasn’t reliable or affordable. “We have been brainwashed in Oklahoma,” Bridgwater said. “We have drunk the Kool-Aid of fossil fuels.”

The Sierra Club said Oklahoma should be looking to move to sustainable, renewable power generation. Proponents of fossil fuels point out that building, installing, and maintaining wind and solar facilities come with certain carbon emissions and other environmental impacts.

It’s true that no firm plan exists to shift Republican-led Oklahoma toward a generation mix that doesn’t rely heavily on natural gas, which still releases emissions — albeit much less CO2 than coal when burned in modern plants.

A White House spokesperson didn’t provide a response to E&E News on questions about natural gas, electricity and Oklahoma in time for publication. Biden’s campaign called for moving to a 100% carbon pollution-free U.S. power sector by 2035.

Wagner, who worked under both administrators Scott Pruitt and Andrew Wheeler at EPA, indicated an intention to work cooperatively with the Biden administration — while saying Oklahoma would review any new proposals. Lawsuits from states have already started to fly over some of Biden’s policies, including a suit over a halt on oil and gas leasing on federal land from Louisiana, Oklahoma and a number of other states.

“I will stand firmly against any executive action of the Biden administration that hurts the oil and gas industry in the state,” Oklahoma Attorney General Mike Hunter (R) said in a statement.

In the meantime, Oklahoma’s power sector remains tied closely with the Southwest Power Pool, or SPP, which helps manage the grid in all or part of 14 states as a regional transmission organization. That’s different than the main Texas grid, which is mostly isolated. SPP has said its 2020 load was served more by wind than any other source at about 31%, though coal and gas weren’t far behind.

Oklahoma’s power generation as reported by SPP was about 48% from gas and 42% from wind in 2020. Nearly 9% was tied to coal. Surplus power produced in Oklahoma can go to other states, and vice versa, and solar and batteries may change Oklahoma’s power mix even further over time.

Using natural gas and renewables is the “perfect combination” for Oklahoma, according to Mark Yates, vice president of the Advanced Power Alliance, which advocates for utility-scale wind, solar, energy storage and transmission infrastructure.

“I think we’re going to have a nearly 50-50 blend between gas and renewables,” Yates said, adding that generation may trend heavier toward renewables over time.

Yates also touted Oklahoma’s efforts to lower emissions through market forces. He said the state is “not bound by arbitrary dates into the future to meet certain goals.”

Sooner energy

Oklahoma’s origin story revolves around people eager to be first — those who “jumped the gun” in a race for land in 1889. The University of Oklahoma has grappled with the controversial and complicated history of the so-called Sooners, who rushed to claim spots after Native Americans were moved.

The energy industry is also ingrained in Oklahoma’s culture, built from more than a century of oil development and more recent pushes to tap shale formations and set up wind projects. In 2020, a federal snapshot shows, Oklahoma was the fourth-biggest producer of crude oil and marketed natural gas among states. The state was third in the U.S. in terms of total net power generation from wind.

Brook Simmons, president of the Petroleum Alliance of Oklahoma, said the oil and gas business is also part of the current renewable boom.

“It doesn’t matter whether you’re talking about lubricants in wind turbines or whether you’re talking about hydrocarbon precursors for every synthetic blade manufactured,” he said, “or the fact that the energy and the components that go into solar panels require the oil and gas industry and those petrochemical precursors in many instances.”

The Petroleum Alliance has also been touting the role of gas in keeping the lights on in SPP’s region during the February cold blast.

The petroleum and wind industries have sniped at each other in Oklahoma over the years, especially as lawmakers moved to phase out certain state incentives for renewables (Energy wire, April 27, 2018).

Groups tied to fossil fuel interests were among the foes of a proposed wind and transmission project in Oklahoma called Wind Catcher, according to the Energy and Policy Institute, which promotes renewable energy. Opposition to Wind Catcher among Texas regulators ultimately doomed that project, but American Electric Power Co. is moving forward with a different wind development in Oklahoma (Energy wire, May 28, 2020).

About a third of Oklahoma’s total economic output was tied to oil and gas as of 2018, according to the Petroleum Alliance, an industry group. That gives fossil fuels a strong talking point inside the state, though backers of the renewable industry have credited it for billions of dollars of investment as well as providing cleaner power in Oklahoma.

Bridgwater of the Sierra Club said economics will be the ultimate arbiter in how power generation is remade in Oklahoma.

“We can realistically say we can achieve 100% sustainable, renewable energy if the will of the public and the will of the state come together,” Bridgwater said, noting that battery storage would be part of that outlook.

The city of Norman, Okla. for example, pledged a few years ago to reach 100% renewable electricity by 2035.

Tale of 2 utilities

The Sierra Club laid down a marker in a January report about climate pledges, outlining different approaches that two of Oklahoma’s biggest electric utilities are taking.

The group said in a statement Oklahoma Gas and Electric Company scored “an abysmal 4 out of 100, highlighting the utility’s lack of commitment to renewable energy.”

OG&E, which is part of Oklahoma-based OGE Energy Corp., said it has been cutting emissions while working to keep rates low. The utility touts a more than 40% reduction in CO2 emissions from 2005 to 2019. There have been efforts to convert some coal-fired units to gas and put scrubbers on certain ones that continue to use coal.

Looking ahead, OG&E is planning to boost its solar footprint and seeking to cut fleet emissions in part by using electric vehicles.

David Kimmel, a spokesman for OG&E, said the utility is comfortable using an all-of-the-above energy mix for electricity as it sees load and customer growth.

On the other hand, the Sierra Club said the Public Service Co. of Oklahoma scored 87 out of 100, “the highest of any utility in the report, due to the utility’s decision to retire its entire coal fleet and its ongoing commitment to wind and solar energy,” the Sierra Club said.

In a statement, PSO said customers indicate they want more clean energy, and it’s seeking to provide that without compromising reliability or affordability. The company plans to exit its remaining coal-fueled generation by the end of 2026.

“We believe using a balanced mix of natural gas and renewable energy delivers on our commitment to customers and the communities we serve,” said PSO, which is part of Ohio-based American Electric Power.

More wind is coming on this year and next year via the project that followed the failed Wind Catcher plan, including one already online. PSO also is involved in a proposed solar and natural gas project at Fort Sill in Oklahoma.

Low-carbon strategy

The Oklahoma Corporation Commission provides utility oversight in the state, but its role has limits. Wind developers, for example, can push ahead and tap federal tax credits to make their projects viable.

The commission’s responsibility comes into play when a regulated utility files for cost recovery, according to Matt Skinner, an OCC spokesman. The outcome of such requests depends on whether a project is reasonable, useful and beneficial to the consumer.

“In terms of generation itself, we don’t approve power plants,” Skinner said. “We approve or disapprove, when filed before us, whether or not there can be cost recovery.”

The OCC’s Public Utility Division is examining a variety of emerging energy and utility issues, from battery storage to biogas.

Casey Cathey, director of system planning at SPP, said his organization also doesn’t determine what type of generation resources get built. SPP is an RTO, and its functions include acting as a transmission planning coordinator.

Based on member input, SPP directs the build-out of transmission upgrades for reliability and economic reasons in Oklahoma and elsewhere in the region.

“Oklahoma is part of SPP’s region and benefits from these projects,” Cathey said.

Some members may disagree on individual projects, and the SPP board is the deciding entity.

In the meantime, Oklahoma and SPP plug ahead as officials in Washington eye new ways to push along the energy transition.

“I think heading into this new administration, you’re going to see some … pretty clear and rapid attempts to remake the electricity markets as well as the electricity production and generation side of things,” Bridgwater said.

Wagner, the Oklahoma energy and environment secretary, said solar energy may climb in Oklahoma as it comes down in price and the reliability of panels is greater over a longer period of time. He questioned the need for some sort of state incentive for solar, however.

Wagner said natural gas has been key to putting so many renewables on the grid while keeping costs low and helping to reduce emissions. Hydrogen may offer a new angle for power plants going forward.

“We have a great low-carbon strategy, and we’re doing it better than almost anybody,” Wagner said. “And I hope that continues.”