NEWS OF THE DAY:
Work-in-progress U.S. infrastructure bill faces test on Senate floor
Susan Cornwell, Reuters, July 21, 2021
President Joe Biden’s goal of passing a $1.2 trillion bipartisan infrastructure bill faces a test on Wednesday as Democratic Senate Majority Leader Chuck Schumer presses ahead with a planned procedural vote despite Republican appeals for delay.
Weeks after senators from both parties reached agreement on the outline of a bill to rebuild roads, bridges, ports and other infrastructure, Schumer sought to start floor debate on the measure with a vote on a motion to proceed. The vote is scheduled for 2:30 p.m. (1830 GMT).
But Republicans who helped negotiate it said the bill was not ready, lacking a complete text and cost estimates. Republican Senator Mitt Romney said he had written to Schumer to ask for a delay.
With the Senate split 50-50 on party lines, the bipartisan measure needs the support of at least 10 Republicans to garner the 60 votes required to advance under Senate rules.
Romney warned on Tuesday that if the vote goes ahead, he and other Republicans will vote “no” even if they support the broad infrastructure framework. It is unclear what would happen next, although Senate Republican leader Mitch McConnell insisted that alone would not torpedo the effort, because the Senate could later reconsider.
“I still hope that he (Schumer) can be prevailed upon to delay the vote until Monday,” Republican Senator Susan Collins, another member of the bipartisan group, said on Tuesday between meetings with Democrats. “We’re making progress. We’re working nonstop.”
But some progressive Democrats worried that Republicans are deliberately trying to drag out negotiations on a measure they ultimately will not support.
“They’ve been killing time for months and at this point, I believe that it’s starting to get to a point where this bipartisan effort is seeming to serve less on investing in our infrastructure and serving more the end of just delaying action,” Representative Alexandria Ocasio-Cortez, a leading Democratic progressive, told reporters.
Biden has deemed the bipartisan infrastructure bill essential. But he also wants Congress to pass a separate $3.5 trillion budget initiative that includes climate change and social spending provisions that are anathema to most Republicans.
Democrats want to push the larger measure through Congress along party lines as soon as the bipartisan bill is finished.
Schumer said his bid to launch debate on an unfinished bill was nothing unusual. Other Democrats said Schumer was simply trying to get control of the schedule after the bipartisan group spent weeks haggling over details, including how to pay for the measure.
“We never, almost never wait on a complex bill like this for the full bill to be put on the floor to be debated,” Schumer told reporters. “So we’re moving forward, and we’re hoping our Republicans friends decide they want to move forward as well.”
Related: DeFazio warns he’s no rubber stamp for Senate infrastructure bill
OIL:
Oil prices rise, shaking off rise in crude inventories
Market Watch, July 21, 2021
Oil futures rose Wednesday, extending a bounce from a recent pullback as investor appetite for risky assets revived, despite industry data late Tuesday showing an unexpected rise in U.S. crude inventories ahead of a government storage report on Wednesday.
West Texas Intermediate crude for September delivery CL00, 3.60% CLU21, 3.65% rose $1.29, or 1.9%, to $68.49 a barrel on the New York Mercantile Exchange. September Brent crude BRN00, 3.26% BRNU21, 3.27%, the global benchmark, gained $1.37, or 2%, to trade at $70.72 a barrel on ICE Futures Europe.
Oil bounced higher on Tuesday, with the U.S. benchmark rebounding from a 7.5% fall on Monday that marked its biggest one-day drop since March. Equity markets and other assets perceived as risky, which were also slammed on Monday, have also rebounded sharply on ideas worries over the spread of the delta variant of the coronavirus that causes COVID-19 were overdone.
Crude’s bounce comes despite data from an industry trade group late Tuesday showing an unexpected rise in U.S. crude inventories, putting the spotlight on the official take from the Energy Information Administration later Wednesday.
“Wednesday’s EIA report has the potential to put a floor in the market or accelerate the slide in prices.
The American Petroleum Institute reported late Tuesday that U.S. crude supplies climbed by 806,000 barrels for the week ended July 16, according to sources. The API report also reportedly showed a climb of 3.3 million barrels for gasoline stockpiles, but distillate inventories fell by 1.2 million barrels.
On average, the EIA is expected to show crude inventories declined by 6.7 million barrels, according to a survey of analysts conducted by S&P Global Platts. The survey also calls for supply decreases of 1.1 million barrels for gasoline and 600,000 barrels for distillates.
GAS:
U.S.-German Deal on Russia’s Nord Stream 2 Pipeline Expected Soon
Bojan Pancevski and Brett Forrest, The Wall Street Journal, July 20, 2021
The U.S. and Germany have reached an agreement allowing the completion of a controversial Russian natural-gas pipeline, according to officials from Berlin and Washington, who expect to announce the deal as soon as Wednesday, bringing an end to years of tension between the two allies.
The Biden administration will effectively waive Washington’s longstanding opposition to the pipeline, Nord Stream 2, a change in the U.S. stance, ending years of speculation over the fate of the project, which has come to dominate European energy-sector forecasts. Germany under the agreement will agree to assist Ukraine in energy-related projects and diplomacy.
U.S. officials under the previous two presidential administrations opposed Nord Stream 2, out of fears it would heighten Moscow’s economic and political sway across Europe. The pipeline would allow the Kremlin to increase European dependence on its natural gas, then use it to blackmail U.S. allies, critics have said, charges Russia has dismissed.
President Biden, seeking closer ties with Europe and with Berlin in particular, waived U.S. sanctions against the Swiss-registered Russian pipeline firm, Nord Stream 2 AG, and its chief executive in May, signaling a change in the U.S. stance.
Mr. Biden continues to oppose the pipeline and views it as a Kremlin move to expand its influence over others, officials said Tuesday, but considers a united group of allies to be the most effective way to counter Moscow.
For Russia, the U.S.-Germany deal means it will be able to double the volume of natural gas exported directly to Germany via the pipeline beneath the Baltic Sea, while bypassing an existing route through Ukraine.
One person familiar with the talks said the deal was close to conclusion and expected in coming days. Another person familiar with the talks said the deal could be announced as early as Wednesday.
Under the four-point agreement, Germany and the U.S. would invest $50 million in Ukrainian green-tech infrastructure, encompassing renewable energy and related industries. Germany also would support energy talks in the Three Seas Initiative, a Central European diplomatic forum.
Berlin and Washington as well would try to ensure that Ukraine continues to receive roughly $3 billion in annual transit fees that Russia pays under its current agreement with Kyiv, which runs through 2024. Officials didn’t explain how to ensure that Russia continues to make the payments.
The U.S. also would retain the prerogative of levying future pipeline sanctions in the case of actions deemed to represent Russian energy coercion, officials in Washington said.
State Department spokesman Ned Price on Tuesday noted that Mr. Biden told German Chancellor Angela Merkel during a White House visit last week that “we continue to oppose the Nord Stream 2 pipeline,” while adding that the project was 90% complete when Mr. Biden took office and that officials didn’t think it could be stopped through sanctions.
German officials said they rejected a U.S. demand to include a so-called kill-switch clause in the pipeline’s operating rules. This would have enabled Berlin to suspend gas flows if Russia were to make aggressive moves toward its neighbors or Western allies. German negotiators argued that such state interference in a privately owned project could be the target of a legal challenge.
Berlin agreed instead not to reject future sanctions against the Russian energy sector, officials said.
The agreement between the Biden administration and Germany was described by officials in Berlin and Washington and by a congressional official familiar with the issue. Details of the agreement began circulating Monday evening, following a Reuters report on a possible deal.
Kyiv sees the existing gas-transit network in Ukraine and the revenue it brings as a check against Russia, especially after Moscow seized the Ukrainian region of Crimea and fomented rebellion in the country’s east in 2014. U.S. supporters of Ukraine have opposed any agreement permitting the construction of the pipeline.
“Any deal that allows for the completion of the Nord Stream 2 pipeline is badly flawed,” said Pat Toomey (R., Pa.), the ranking member of the Senate Banking Committee. Mr. Toomey urged the administration to impose sanctions “to halt Moscow’s efforts to weaponize the supply of gas in Europe.”
A focus of the forthcoming deal is the promotion of Ukrainian energy independence, said one of the people familiar with the talks, adding that the agreement ensures that Russia “cannot use energy as a coercive tool against Ukraine or any nation.”
Despite the U.S. sanctions waiver in May, this person said the U.S. would continue to examine entities involved in the project and will make clear “companies risk sanctions if they are involved in Nord Stream 2.”
Derek Chollet, a senior State Department policy adviser, is in Kyiv this week along with a German counterpart to inform Ukrainian President Volodymyr Zelensky of the agreement’s details. Mr. Chollet is scheduled for a similar trip to Poland, which has vehemently opposed the pipeline.
Word of the deal has rankled Ukrainian officials, who view the existing pipeline network in their country as a rare point of leverage against Russia in the two countries’ seven-year-old conflict. Last week, Mr. Putin delivered another in a series of polemics challenging Ukrainian sovereignty. Rendering the existing pipeline superfluous could offer Russia a freer military hand on Ukrainian territory, Ukraine advocates fear.
White House press secretary Jen Psaki said Tuesday that Mr. Biden told Ms. Merkel last week “that we have ongoing concerns about how the project threatens European energy security, undermines Ukraine’s security and the security of our…allies and partners.”
Ms. Psaki said Mr. Biden directed staffers to work jointly with German counterparts to complete an agreement.
An announcement of the deal was delayed to avoid eclipsing Ms. Merkel’s farewell visit to the White House, according to officials close to the negotiations. Ms. Merkel has made the completion of the pipeline, which could occur later this year, a signal achievement marking the close of her political career, people familiar with her thinking said.
MINING:
Dawn of a mining supercycle. Are you taking the fizz?
Frik Els, Mining.Com, July 16, 2021
Written by global metals expert Simon Morris, VP for research, metals & mining global metals at the Scotland-based analytics firm, the whitepaper is titled:
Champagne supercycle: Taking the fizz out of the commodities price boom
Scots may be known for their frugality, but at this website we don’t believe in taking the fizz out of anything, so we decided to get on the wagon and take another look at Woodmac’s GET™ and planet decarbonisation predictions.
Under Woodmac’s most aggressive scenario for cutting the world’s carbs (like a strict keto diet – you’re not allowed beer, only Scotch), Morris says $50 trillion must be invested by 2050 “to electrify infrastructure and engineer out the aspects of modern life that most significantly contribute to carbon emissions”.
$50 trillion certainly looks and quacks like a supercycle duck (or on current trajectory the combined worth of Bezos/Scott, Musk/c and Gates/French in 2050) and miners would be pleased as punch for even a snifter of that, considering the dregs the industry has had to be content with in the past.
But Morris warns not to pop the corks just yet.
While the report does say “a supercycle is coming,” it’s not here yet, and overall the Morris metals and mining message is a sobering one – essentially saying mining and metals pundits are already drinking, but the party hasn’t started.
Designated drivers
Morris says decarbonisation creates “as many risks as opportunities” (Morris ran due diligence for Rio Tinto before joining Woodmac so circumspection may be expected).
The sweeping paper lays out the many ways the GET-induced supercycle could see miners sipping sovetskoye shampanskoye instead of downing Dom Perignon:
One, China. China rules over swathes of the mining world, especially the battery metals supply chain, but “its aspirations have not yet been satisfied and we expect its control to continue to grow,” says Morris:
“Those who choose to participate too late in the cycle – be they nations seeking to secure supply for themselves, customers wanting to protect their production lines or investors wanting to cash in on supernormal profits – are likely to find that they either can’t afford to participate or are precluded altogether.”
Delirium tremens
Two, systemic supply uncertainty. Under Woodmac’s mid-range net-zero by 2070 scenario (keto, but with pizza and beer on weekends) the required installed capacity becomes “eye-watering”.
But they will not be tears of joy, because “if consumption patterns and the metal processing technologies used today endure over the coming decades, the disconnect between supply capability and demand will become almost inconceivably large, under any scenario.”
In agreement so far with Woodmac’s thesis but not so sure about the third fizzle factor – a new generation of green consumers turning against miners.
Morris says electric vehicles would be the single most impactful driver of metals demand, but both carmakers and miners are faced with the rise of “consumption consciousness”.
“Whipping up a frenzy over the dizzying levels of additional metal” needed to feed the GET over the next 20 years “could prove a Pyrrhic victory,” says Morris.
“If metals producers are too successful in drawing attention to how much of their primary (that is, non-recycled) metal will go into cars, phones, telecoms and energy transition infrastructure, they may find themselves the new target of consumers’ ire.”
Battery lives
Not sure about this contention, have you ever tried to come between a gen Z (and to be fair gen Y and X too) and his/her/their/zir’s phone?
We’ll crawl over non-recycled broken glass for the next Tiktok, swim through deep sea tailings to Insta, climb leach heaps to become Youtubers and drink slurry to binge Netflix.
Ground zero for consumption consciousness over battery metals would be the cobalt–Congo–China chain, but the billion iphone users in the world care whether their battery is going to run out before the next Star Wars meme loads, not who dug out the Co with bare hands.
No-one reads the terms and conditions of social media networks or mobile phone apps, much less Facebook, Google or Apple’s Form SD on conflict minerals.
And for good reason, here’s a quote:
“At the end of an Apple-managed assessment or specialized audit, the supplier is given a list of areas to strengthen against Apple’s Supplier Code and Responsible Sourcing Standard, and the supplier is required to correct any identified nonconformances in a timely manner.”
Dear Mr. Gertler, you were randomly selected to participate in an Apple-managed assessment or specialized audit. Please strengthen the following areas and correct the following nonconformances in a timely manner.
Generalized range anxiety disorder
Morris warns about increasing thrifting and substitution if the reduce, reuse and recycle people heroes see too much fresh metal coming out of too many new holes.
It may also lead them to “conceivably switch off more fully from some types of consumption”:
“For instance, if the ‘Uberfication’ of private transport drove a switch to pooled rather than individual vehicle ownership, cutting car consumption, metals demand will suffer.”
Fair point, until the average conscious consumer is stranded next to the road because the government banned all ICE cars, the shared electric car is an LFP because of thrifting by underpaid Uber drivers, and too much aluminum and not enough copper was recycled to build the charging stations.
At this stage of the GET – best bet circa 2030 – there’s no amount of nickel-cobalt-manganese mining the average conscious consumer will not allow.
And if the next mining supercycle is to be a Pyrrhic victory as Morris says, it sure shouldn’t be because not enough cobalt in the batteries caused thermal runaway.
Mining is the aperitif, not the main course
While Leonardo Dicaprio’s Rhodesian accent was admirable, Blood Diamond was forgettable, Matthew McConaughey’s Gold simply wasted its source material, and Avatar was just silly (not just the use of Papyrus but the word “unobtanium”. Come on).
Chinese rare earths is the one mining narrative that caught the imagination of the broader public, albeit briefly, becoming the basis of a best-selling video game and a plot point in a once top-rated Netflix series.
Ten years ago: Chinese control of rare earths sparks a world war and millions of hours are spent by brave soldiers fighting in dark basements late into the night to secure supply (Call of Duty Black Ops II).
Today: let’s include rare earths on this government critical minerals investment and state support list to show we’re serious and before we file it under nice-to-have-but-never-going-to-happen.
To use Morris’s parlance some aspects of modern life simply cannot be engineered out. And since we’re talking about the newest generation of consumer: aKsHUaLlY the kids aren’t going to harsh mining’s mellow. They’ll remain oblivious.
Nose, palate
Under Woodmac’s base case, the world’s fossil fuel needs continue to grow well into the next decade (dirty keto if you must) and demand for aluminum, nickel, copper, lithium and cobalt rises at a brisk trot, but it’s more or less business as usual for the mining industry.
No trillions of dollars, no inconceivably large gaps between supply and demand, just another honest day’s digging.
MINING.COM thinks Woodmac’s base case is the most likely scenario. Rather than champagne without fizz, the coming mining supercycle will be like a good Laphroig or Bruichladdich, something the analysts in Edinburgh may appreciate:
Warm leather, TCP, freshly laid tarmac, TCP, carbolic soap and coal smoke sit behind baked apples and sweet sultanas. On the palate it starts gently with some soft spice and honeysuckle before the richness rolls in: charcoal, ash, tar, pungent pipe tobacco. Then things settle down and reveal a dry and ashy core with a medicinal peat and strong mineral character.
Finish
Woodmac:
“Those with a vested interest in metals are already enthusiastic cheerleaders for an intoxicating narrative about the energy transition and the quantum of metal that will be needed to achieve it.”
MINING.COM:
Get everyone another round! It’s on us!
POLITICS:
DOE jobs report: EVs up, but unions back fossil fuels
Lesley Clark, E & E News, July 20, 2021
A Department of Energy effort that tracks energy jobs in the U.S. has returned to DOE after the Trump administration did not produce the survey for several years.
Energy Secretary Jennifer Granholm marked the reappearance of DOE’s role in the U.S. Energy and Employment Jobs Report at a virtual meeting yesterday with Sen. Jeanne Shaheen (D-N.H.), who had pressed for the government to do the accounting.
“This isn’t just any old energy jobs report,” Granholm said, calling the level of detail by industry, state and demographics on union membership “the most complete snapshot that you get of who works in the energy field and where.”
The survey — originally launched as part of the Obama administration’s Quadrennial Energy Review in 2015 — assesses energy-related employment and is constructed from a survey of nearly 30,000 employers across 53 energy technologies.
The new report found that the energy sector suffered pandemic-related losses, with energy job totals reaching 7.5 million by the end of 2020, a decrease of 840,000 jobs, or 10%, from 2019.
But the report said there were signs that the sector was rebounding — at the pandemic’s peak in mid-2020, energy jobs had decreased by 1.4 million. By the end of 2020, 520,000 energy jobs had returned. Additionally, the report said employers that responded to the survey signaled confidence in the employment trend through 2021.
The survey tracks five major energy sectors: electric power generation; transmission, distribution and storage; fuels; energy efficiency; and motor vehicles.
The first three make up the largest number of workers with 3.1 million, which declined 9.8% from 2019. Workers in the motor vehicle field had a 9% decline, and energy efficiency, which employs 2.1 million, saw an 11.4% decline.
The fuel sector declined 211,200 jobs from 2019, an 18% loss and the highest of the five categories. Job losses were concentrated in oil and gas, with oil declining by 121,300 and gas decreasing by 66,000. Job losses in biofuels were the lowest, ranging from 1,000 for woody biomass to 1,400 for corn ethanol.
The report found growth in several areas, including 8% in electric vehicles, which added 6,000 jobs last year. Other areas with growth: Wind generation grew by 2,000 jobs, or 2%; battery storage increased by 800 jobs, or 1%; and hybrid electric vehicles increased by 6,000 jobs, or 6%.
Granholm noted the increases came because of “consistent investment in those technologies even in the face of a global pandemic.”
The report underscores that the energy sector “has work to do” to provide better wages and make it “look like America,” she said.
She included a pitch for President Biden’s infrastructure plans, including a clean energy standard to require the use of green energy, contending that if Congress adopts his plan, “you can bet that next year’s report and every year after that will show unprecedented job growth in clean energy.”
Biden has promised the transition to green jobs will mean better-paying union jobs, but renewables have struggled to compete with the wages available in the fossil fuel industry. Granholm asked clean energy leaders on the call which policies the federal government could pursue to boost union jobs.
Madeline Janis, co-founder and executive director of Jobs to Move America, noted the report underscores that the best-paid, highly unionized jobs are in the fossil fuel sector, which is shedding the greatest number of jobs.
“That leaves an enormous challenge to achieve the president’s vision of a clean energy economy fueled by good union jobs for all,” she said, adding that there are a number of steps the administration can take, including requiring companies seeking federal contracts to commit to high wages and job training.
From Trump to Moniz
The last report under DOE imprimatur was released in January 2017, even as Trump Energy Secretary Dan Brouillette last July promised Congress that DOE would deliver a report, saying it was his “commitment to you that we are going to continue to provide this kind of data.”
Instead, the National Association of State Energy Officials and the Energy Futures Initiative, a think tank run by former Energy Secretary Ernest Moniz, along with contractor BW Research Partnership, compiled the last four surveys.
Moniz in a statement said the groups were pleased to produce the last four surveys but are “delighted that it is back where it belongs — at the DOE, where we established the report in 2016.”
A Shaheen provision to require DOE to produce the report was included in legislation that cleared the Senate Energy and Natural Resources Committee last week.
“This is information that allows us to make decisions, particularly good policy decisions,” Shaheen said.
Moniz noted that pre-COVID-19, job growth in the energy sector was double the pace of job growth in the economy as a whole.
CLIMATE CHANGE:
What more space flights would actually mean for emissions
Ben Geman, Axios, July 21, 2021
Jeff Bezos says his suborbital space flight Tuesday reinforced his commitment to fighting climate change, but growth of this travel would also add a new source of carbon emissions.
By the numbers: S&P Global Sustainable1 offered some perspective on the amount of fuel burned and corresponding emissions from that type of commercial space launch.
The sustainability intelligence provider said it’s roughly akin to…
- One car traveling 1.8 million miles.
- The average travel of 157 cars in the U.S. per year (based on Transportation Department data).
- “A full passenger roundtrip flight in commercial aircraft from London to New York.”
Our thought bubble: Axios space reporter Miriam Kramer notes that the number of launches each year is increasing but still relatively low.
- In the future, however — if companies like Blue Origin and Virgin Galactic have their way — launches could increase dramatically, she notes. Richard Branson’s Virgin Galactic envisions 400 flights per year.
- Reckoning with exactly how bad emissions from rocket launches are today could pay off in the future as more launches occur worldwide.
Reality check: Even a major increase in space flight would not create a big emissions source compared to CO2 output from power, industry and other forms of transport, including traditional commercial air travel.
- But it’s another CO2-emitting sector at a time when steep cuts are needed to keep Paris Agreement goals within reach.
Of note: Bezos is a major funder of efforts to fight global warming, unveiling the $10 billion Bezos Earth Fund in early 2020 and in November announcing initial grants totaling $791 million across 16 organizations.