h/t GWPF NetZeroWatch
The Greens must be having apoplexy. In Glasgow last year everyone was signing climate agreements with no idea that by June they would be signing 15 year new deals for gas with the U.S., the Middle East and Africa. Germany is pouring $3b into floating LNG import platforms. The Germans are also suggesting that the G7 now allow funding for fossil fuel projects, presumably to allow new gas or even coal projects to solve the energy crisis. Meanwhile Boris Johnson is cutting net-zero targets and suggests maybe in the face of food shortages we should feed food to people instead of cars. Starving people to save the world was never going to sell well. Especially when the UK was getting 20% of the ethanol for the biofuel program from Ukraine.
The squeeze is everywhere. Hydrogen targets are being reconsidered or adjusted down, while still other commitments may become “voluntary”, and some start dates are being pushed back by a year. It was only March when Germany agreed to phase out the sale of new fossil fuel cars by 2035. Now in June, Germany has rejected the EU ban because suddenly there are niches where combustion engines are useful.
Some of these changes, like the gas contracts and national security issues, are going to leave a mark for years, but back-flipping again on things like biofuels and combustion engines will be done in a flash if they can get away with it. The pushback is coming.
Germany pushes for G7 reversal on fossil fuel funding
Bloomberg, 25 June 2022
Germany is pushing for Group of Seven nations to walk back a commitment that would halt the financing of overseas fossil fuel projects by the end of the year, according to people familiar with the matter. That would be a major reversal on tackling climate change as Russia’s war in Ukraine upends access to energy supplies.
A draft text shared with Bloomberg would see the G-7 “acknowledge that publicly supported investment in the gas sector is necessary as a temporary response to the current energy crisis.”
The whole world wants coal now but there is no spare capacity anymore, so coal shortages are not going away
The price is record high for coal but investors don’t have faith that there will still be a market in five years time, so there is little investment. Meanwhile in South Africa people have stolen and vandalized the rail lines so it’s hard to move coal. Australia has had flooding which has slowed production, Colombia has elected an anti fossil fuel leader, and India and China are both digging as much out of the ground as they can already.
Climate pledges abandoned as Putin sparks global coal crunch
The Daily Telegraph, 25 June 2022
The long-term pressure to move away from coal also means there is limited spare capacity, and investors are unlikely to try and pump cash into alleviating what may only be a short-term demand surge.
“Coal markets have been burned so many times [..] and you’ve still got a very drastic retirement schedule in Europe,” says Natalie Biggs, global head of thermal coal markets research at Wood Mackenzie. “What’s the purpose of opening new mines and rushing out into the market when that market disappears in the next five years?
Europe is scrambling to set up gas infrastructure to replace the Russia piped supplies, but these new capital project come with long term contracts that are making the greens very nervous:
Europe’s Search for Natural Gas Runs Up Against Climate Goals
Kim Mackrael, Wall Street Journal
Plans for more than 20 liquefied natural gas import projects have been announced, relaunched or sped up across Europe since Russia invaded Ukraine, according to a recent analysis by FTI Consulting. Analysts said those projects have the potential to contribute an additional 128 billion cubic meters in natural-gas import capacity over the coming years, roughly the equivalent of 83% of the EU’s total 2021 imports from Russia.
Germany, which didn’t have any LNG import terminals before the war in Ukraine began, is taking some of the most aggressive steps to develop new infrastructure. The German government recently passed legislation to fast-track LNG developments, and pledged 2.94 billion euros, equivalent to about $3.09 billion, to put several floating terminals into operation.
The French utility Engie SA in May announced a 15-year contract to buy LNG from an export facility under construction in Brownsville, Texas. That came a year-and-a-half after the company pulled out of talks to buy gas from the project under pressure from environmentalists and the French government.
Boris Johnson suggests maybe in the face of food shortages we should feed food to people instead of cars. Starving people to save the world was never going to sell well:
Boris Johnson hits the brakes on biofuel as he slashes net-zero targets to tackle cost of living crisis
Boris Johnson has slashed his net-zero targets in a bid to tackle the cost of living crunch – by reducing the amount of biofuel produced in the UK. The Prime Minister has hit the brakes in the push for green fuel, citing concerns that the drive may contribute to spiralling inflation.
The PM will call on G7 leaders to review their biofuel use, arguing that it could help mitigate the global food crisis and supply chain issues exacerbated by Russia’s invasion of Ukraine.
There are a big suite of carbon market rules and laws being tweaked right now:
Countries seek to weaken climate proposals
Euractive
EU countries and the European Parliament are currently negotiating a huge overhaul of the carbon market and laws on energy, transport and forestry, with the aim to bring them in line with the 2030 target to cut net greenhouse gas emissions by 55% based on 1990 levels.
For instance, a draft proposal on carbon market reforms would delay the launch of a new market for buildings and transport by a year. Meanwhile, there are moves to lower the ambitions of the energy efficiency directive by demoting one of the binding targets to an indicative target.
Countries are also considering weakening the target for how much of industry’s hydrogen use should be renewable from 50% to 40% by 2030.
Meanwhile, a binding obligation for fuel suppliers to reach a 2.6% share of renewable fuels for transport by 2030 could become voluntary, diplomats said.
It’s all good but let’s not get cocky.