Today’s Key Takeaways: Global energy transition suffering due to lack of fossil fuel investment. Europe’s energy security requires a collective effort from many nations. Portugal plans to be Europe’s top supplier of lithium. Most voters think Biden is the worst President ever. EU labels nuclear and gas as sustainable.
NEWS OF THE DAY:
The Lack of Fossil Fuel Investment Is Hindering The Energy Transition
Michael Kern, OilPrice.Com, February 1, 2022
- Last week, the CEO of Saudi Aramco announced that the global clean energy transition is “not going smoothly.”
- Underinvestment in fossil fuels has led to soaring prices across the globe.
- To make the energy transition work properly, the world needs to find a balance between renewable and fossil fuel investment, at least in the short to medium term.
In the statement that launched a thousand headlines last week, the CEO of Saudi Aramco announced that the global clean energy transition is “not going smoothly.” Amin Nasser said that in order for the transition to avoid some of the turbulence and pitfalls it has been experiencing in recent months, simultaneous investment in both fossil fuels and renewable energies will be necessary.
It’s true that already installed renewable energy is not yet even close to reaching the kind of capacity necessary to support the world’s energy needs. What’s more, installing renewable energy capacity requires much more infrastructure and investment than simply building more wind turbines and solar panels. It will require huge advancements in energy storage and smarter energy grids as well in order to make decarbonization feasible, reliable, and sustainable.
All of this will take a lot of time and a lot of money. Unfortunately, we don’t have a lot of time. Last year’s landmark 6th Assessment Report from the Intergovernmental Panel on Climate Change (IPCC) laid out the grim prognosis in no uncertain terms last August. The report, titled Climate Change 2021: The Physical Science Basis, shows with certainty that climate change is undeniably fueled by human industrial activity, and that we have already irreversibly altered the climate’s natural trajectory.
However, there is hope. There is still a window in which the world can decarbonize quickly enough to avoid the very worst impacts of climate change (think more frequent and more extreme weather events, devastating drought in some areas and devastating flooding in others, rising sea levels, and acidic oceans) but that window is closing frighteningly fast.
In order to avoid these apocalyptic effects, the global community needs to keep temperatures from rising more than 1.5 degrees Celsius over pre-industrial averages. “The report provides new estimates of the chances of crossing the global warming level of 1.5°C in the next decades,” the IPCC wrote in a press release that accompanied the publishing of the report, “and finds that unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting warming to close to 1.5°C or even 2°C will be beyond reach.”
The problem is that this kind of rapid decarbonization will require unprecedented levels of action and cooperation from the public and private sectors across borders and will need to take place in the immediate term, while the global economy is still reeling from the Covid-19 pandemic. The major supply chain issues emanating from the pandemic continue to wreak havoc across virtually every major economic sector in the world. One of the hardest hit has been the energy sector.
From Asia to Europe, countries around the world are experiencing devastating energy crunches and soaring electricity prices, all of which are preventing economic recovery as well as that fabled smooth clean energy transition. “As the global economy has started to recover there has been a resurgence of demand for oil and gas but since investment in oil and gas has fallen supplies have lagged which is why we see very tight markets in Europe and parts of Asia,” Aramco CEO Nassar said. “I am proposing that investment in both existing and new energy be continued until the latter is developed enough to realistically and significantly be able to meet rising global energy consumption.”
What this statement fails to capture, however, is that last year’s low oil and gas production levels were more than likely just a pandemic-related fluke rather than a result of intentional and targeted decarbonization efforts. In fact, the EIA projects that oil and gas production will not only bounce back, but will break records, reaching an unprecedented 12.4 million b/d in 2023.
From the Washington Examiner, Daily on Energy:
OPEC+ COMMITS TO ADDITIONAL PRODUCTION: The cartel announced today that it will again increase crude oil production at a rate of 400,000 barrels per day in March, oil that consumers could use with prices on the Brent crude benchmark around $90 per barrel.
Members have agreed to increase production at this same rate for the past several months to creep up towards pre-pandemic levels, but some have been unable to carry their shares of the load during the ramp-up period.
Qatar says it cannot unilaterally replace Europe’s gas needs in case of shortage | Nasdaq
Maher Chmaytelli, Reuters, February 1, 2022
Qatar, one of the world’s top natural gas exporters, will not be able to unilaterally replace Europe’s energy needs in case of a shortage due to the crisis between Russia and Ukraine, the emirate’s minister of state for energy said on Tuesday.
“The volume of gas needed by the EU cannot be replaced by anyone unilaterally, without disturbing supplies to other regions around the world,” the minister, Saad Sherida Al-Kaabi, said in a statement.
“Europe’s energy security requires a collective effort from many parties.”
Kaabi issued the statement after a meeting in Doha with the European Union’s Commissioner for Energy Kadri Simson.
Kaabi expressed hope that “tensions in Europe can be resolved diplomatically, so that all suppliers can work together to ensure energy security for the short- and long-terms”.
Qatar is a key U.S. ally in the Middle East region and a leading trade and political partner of the EU.
The United States is concerned that Russia is preparing to invade Ukraine and has in recent weeks asked Qatar and other major gas producers to study if they can supply extra gas to Europe if Russian flows are disrupted.
“Keeping our contractual word is sacrosanct in Qatar,” said Kaabi, implying that it will not be possible to divert to Europe gas shipments already contracted for delivery to other countries without their consent.
Portugal may launch long-awaited lithium auction within two months
Mining.Com, February 2, 2022
Portugal’s long-awaited lithium licensing auction could be launched within two months after an environmental assessment gave the green light to mining the metal in six areas, the government said on Wednesday.
The auction, initially planned for 2018, has been repeatedly postponed due to concerns over the environmental and social impact of lithium mining.
It is part of a plan to make Portugal Europe’s top supplier of the metal for electric car batteries, helping meet an expected surge in global demand for lithium.
Portugal is already Europe’s biggest lithium producer, but its miners sell almost exclusively to the ceramics industry and are only now gearing up to produce higher-grade metal for batteries.
The environment ministry said the environmental assessment conducted by the energy and geology agency analysed eight lithium-rich areas in central and northern Portugal, concluding “there were conditions to move forward in six of them.”
“Within the next 60 days, the auction procedure to award lithium prospecting and research will advance,” it said in a statement. “After the auction and prospection, to be carried out within a maximum period of five years, lithium exploration may begin.”
It added that, in the six areas to be auctioned, mining would be not be allowed in areas of high urban and population density.
Licences to search for the metal in other areas have already been granted. The environment regulator has given preliminary approval to an environmental study by London-based Savannah Resources to mine in the Barroso region, a world heritage site for agriculture.
Lithium projects in Portugal face strong opposition from environmentalists and local communities, who are demanding stronger regulation and more transparency.
They have expressed concern about irreversible environmental damage such as soil pollution and destruction of the natural habitat of various endangered species.
Worst President Ever? Voters Rate Biden Below Trump, Obama
Rasmussen Reports, February 2, 2022
Most voters think President Joe Biden is one of the worst ever to hold the office and rank him below his two immediate predecessors in the White House.
A new national telephone and online survey by Rasmussen Reports and The National Pulse finds that 54% of Likely U.S. voters think Biden will be remembered as one of the worst presidents in American history. Only 15% believe Biden will rank in history as one of America’s best presidents, while 25% think his presidency will be remembered as about average. (To see survey question wording, click here.)
Voters have a much higher opinion of former President Donald Trump. Forty-one percent (41%) think Trump will be remembered as one of America’s best presidents, compared to 43% who believe Trump will rank as one of the worst presidents in U.S. history, and 12% who say Trump’s presidency was about average.
Voters also rate former President Barack Obama higher than Biden. Thirty-four percent (34%) believe Obama will be remembered as one of the best presidents in American history, 33% say Obama is among the worst presidents and 30% think Obama’s presidency was about average.
The survey of 1,000 U.S. Likely Voters was conducted on January 30-31, 2022, by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.
As might be expected, Democrats rate Biden better than do other voters. Still only 27% of Democratic voters believe Biden will be remembered as one of the best presidents in American history, while 28% think he’s one of the worst presidents and 39% say the Biden presidency will be remembered as about average. By comparison, 57% of Democrats think Obama will be remembered as one of America’s best presidents, as do 17% of Republicans and 26% of voters not affiliated with either major party.
Seventy-four percent (74%) of Republicans and 62% unaffiliated voters believe Biden will be remembered as one of the worst presidents in American history. Only seven percent (7%) of Republicans and eight percent (8%) of unaffiliated voters think Biden is one of America’s best presidents.
Predictably, Trump is rated much higher than Biden by GOP voters, 68% of whom say Trump will be remembered as one of America’s best presidents. Thirty-eight percent (38%) of unaffiliated voters and even 18% of Democrats share that view. Sixty-eight percent (68%) of Democrats, 42% of unaffiliated voters and 16% of Republicans think Trump will be remembered as one of the worst presidents in American history.
Voters under 40 are more likely than their elders to rate Obama as one of America’s best presidents, but solid majorities in every age group believe Biden will rank among the country’s worst presidents.
More black voters (54%) than whites (31%) or other minorities (30%) believe Obama will rank historically among America’s best presidents. However, only 18% of black voters think Biden’s presidency will be remembered as one of the best in U.S. history, an opinion shared by 15% of whites and 11% of other minorities. Fifty-seven percent (57%) of whites, 40% of black voters and 56% of other minorities expect Biden’s presidency to be remembered as one of the nation’s worst.
While a majority (52%) of government employees believe Obama will rank as one of the best presidents in American history, only 36% of private sector workers agree. More private sector workers (40%) than government employees (22%) think Trump will be remembered as one of America’s best presidents.
Among voters who think Obama was one of America’s best presidents, 37% say Biden will also be remembered as one of the best presidents in U.S. history. Among voters who believe Trump will be remembered as one of the best presidents, 89% think Biden’s presidency is one of the worst.
Half of voters believe President Joe Biden should be impeached, and nearly as many think Republicans will do it if they win a congressional majority in the midterm elections.
Nuclear and natural gas energy plants could be counted as “green energy” under controversial EU plans just unveiled.
The European Commission says it has decided that both types of energy can classify as “sustainable investment” if they meet certain targets.
But the move has divided the EU and been fiercely opposed by some members.
Austria’s chancellor responded to the news by saying “nuclear power is neither green nor sustainable”.
“I cannot understand the decision of the EU,” Karl Nehammer said.
He said he would back his environment minister, Leonore Gewessler, in pursuing legal action at the European Court of Justice if the plans go ahead.
“This decision is wrong,” Ms Gewessler said. “The EU Commission today agreed its greenwashing programme for nuclear energy and [the fossil fuel] natural gas.”
Luxembourg has also said it will join in legal action.
The EU has set itself a goal of becoming climate neutral by 2050 and the Commission argues that to get there, a great deal of private investment is needed. Its proposals are meant to guide investors.
Spain, too, has strongly objected to the idea which was debated for months before being formally proposed on Wednesday.
But those objections are balanced by support from nuclear-using nations such as France. Nuclear energy involves fewer carbon emissions but has different safety concerns and requires disposal of dangerous waste.
Classifying natural gas as “sustainable” also has supporters who argue that some countries which still rely on coal for energy – such as Poland – would benefit from incentives to move to a relatively cleaner supply.
Germany, a powerful country in EU politics, relies heavily on gas in its own energy mix though its environment minister, Steffi Lemke, has criticised the plans.
EU officials were keen to stress that the change was not a requirement for any state or company to invest in gas or nuclear.
It is instead a highly technical set of rules, called the “EU Taxonomy”, about what classifies as “sustainable” so that private investors can decide where to put funds, the commission says.
It also regulates what can be said to be environmentally friendly, so that climate-conscious investors can make informed decisions.
The list is supposed to recognise green projects that make a “substantial” contribution to at least one of the EU’s environmental goals, “while not significantly harming any” of them.
Commission officials point to the strict limits on what qualifies. For example, natural gas generation is under a strict CO2 emissions limit, and a requirement to switch to low-carbon gas by 2035. Nuclear power, meanwhile, must be in countries with clear plans and funding for dealing with nuclear waste.
Critics, however, have accused the EU of so-called “greenwashing” – precisely what it says its classification system is supposed to avoid.
But the decision to label both controversial industries as “green” is not yet final.
In addition to the threat of legal action from Austria and Luxembourg, the European Parliament, and the council of heads of state have four months to consider the suggestion and object to it.
The bar is, however, relatively high. In order to block the commission’s proposed plans, either a majority of parliament members or at least 20 of the 27 national leaders are needed.
Green parties, which together with independents and others form one of the main power blocs in the European Parliament, are fiercely campaigning against the plan.
But European Commissioner Mairead McGuinness said “we need to use all the tools at our disposal” to reach the climate-neutral target.
Private investment was “key”, she said, and the proposals were “setting out strict conditions to help mobilise finance to support this transition, away from more harmful energy sources like coal”.