China in new push for national emissions trading scheme
The Chinese government has released a new consultation plan for a long-delayed national emissions trading scheme (ETS), after president Xi Jinping's pledge to achieve carbon neutrality by 2060 added new urgency to the country's emissions reduction plans.
China already operates emissions trading programmes on a pilot basis in several cities. But moves towards a nationwide scheme have stalled for several years.
The plan was released by the ecology and environment ministry, which took over responsibility for establishing the national ETS from top economic planning body the NDRC in 2018. The ministry is also be responsible for regulating carbon emissions in China.
The consultation plan sets a cut-off point of 26,000 t/yr of CO2 equivalent (CO2e) emissions, above which entities should be included in the ETS. This level is equivalent to consumption of 10,000 t/yr of standards coal equivalent, it said.
This indicates the planned ETS would cover a broader range of entities than in the pilot scheme that began in 2013 and will potentially raise emissions costs for industrial operations such as coal-fired power plants, steel mills and refineries.
China's pilot carbon market covers more than 3,000 entities in over 20 industrial sectors, including steel, power generation and cement. Total trading volumes were 400mn t of CO2e of as of August, state media said.
Under the new plan, entities will be able to use China certified emissions reduction (CCER) projects to offset as much as 5pc of emissions by volume. A single CCER unit will be able to offset 1t of CO2e, which could come from sources such as renewable projects, carbon sinks and methane recovery.
Participating entities will get free emission quotas "at the first stage" of the ETS, and then buy and sell more quotas in the market as needed when the initial quotas have been used. Entities will face fines or other penalties if they default or engage in fraud when declaring emissions volumes, although the size of the proposed fines is relatively low at 10,000-30,000 yuan ($1,500-4,500).
There is still no timescale for the ETS, although the ministry said it is accelerating its plans for the launch. Xi's carbon neutrality pledge, made in September, has focused attention on how China will reduce its world-leading carbon emissions after a planned peak before 2030.
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Taipower settles term coal deals below spot rates
Taipower settles term coal deals below spot rates
Singapore, 12 September (Argus) — Taiwanese state-owned utility Taipower has settled its thermal coal term contracts with Australian producers at $137.44/t fob, below spot market rates, a source close to the matter said. Taiwanese buyers have traditionally referred to the fixed price in the term contracts between Switzerland-based mining and trading firm Glencore and Japanese utility Tohoku Electric Power for their deals. But prolonged stalling in price negotiations between Glencore and Tohoku has prompted Taipower to settle its contracts without the reference price. The settlement has not been officially confirmed by Taipower. Taipower's latest contract deal with its Australian suppliers signals a move away from the long-time practice of using the Glencore-Tohoku price, also known as the Japanese reference price (JRP), as a pricing cue. The price negotiations between Glencore and Tohoku for term contracts that start in April have historically involved the largest volume of coal supplied from Australia to Japan. The JRP serves as a reference for other Australian coal producers and Japanese utilities. It is also followed by other Asian coal buyers including those in Taiwan, Thailand and the Philippines. Taipower and its Australian suppliers agreed to the price of $137.44/t fob in July-August this year for GAR 6,322 kcal/kg coal, the source told Argus . The price applies to term contracts that run from January-December this year. Price negotiations for these contracts usually start in April of the same year, after the contracts have started running. Taipower has a few contracts with Glencore for the supply of Australian coal, but these contracts have not been settled because the two parties have yet to agree on the price, the source said. They expect to conclude price negotiations for these contracts by the end of September. The source did not disclose the volume involved in any of Taipower's term contracts. Taipower's settlement price was lower than the spot market rates at the time when the price was agreed upon. The price of high-calorific value (CV) NAR 6,000 kcal/kg coal rose in August to above $140/t fob, according to Argus' assessment. This was because traders anticipated greater demand for thermal coal on concerns about natural gas supply because of the Russia-Ukraine conflict. The price of high-CV coal rose by 7pc from 2 August to 16 August, to $145.41/t fob Newcastle. It has since pulled back and was last recorded at $140.82/t fob on 6 September. Glencore may have tried to fix the JRP at $145.95/t fob through a smaller deal with a Japanese firm. It had signed a term contract with another Japanese firm that was not Tohoku in March at this price for the supply of high-CV Australian coal, market participants said at the time. Some Japanese utilities, steel mills and industrial users had followed the cue and settled their contracts at the same price. By Jinhe Tan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
China slowdown drags global oil demand: IEA
China slowdown drags global oil demand: IEA
London, 12 September (Argus) — A sharp slowdown in China continues to weigh on global oil demand growth, the IEA said today. In its latest Oil Market Report (OMR), the IEA sees China's demand increasing by just 180,000 b/d in 2024, compared with its forecast for 300,000 b/d last month and well below the 710,000 b/d it had projected in January. This was the main reason the IEA cut its 2024 global oil demand forecast by 70,000 b/d to 900,000 b/d. The Paris-based agency said year on year gains of just 800,000 b/d in the first half were the lowest since 2020 and based on "actual data received year-to-date." It sees demand growth remaining subdued in 2025 at 950,000 b/d, unchanged from last month's estimate. The gloomy outlook comes after China recorded a fourth consecutive oil monthly consumption decline in July, at 280,000 b/d, the IEA said. The Paris-based agency attributes the slowdown in China's oil use to a "broad-based economic slowdown and an accelerating substitution away from oil in favour of alternative fuels weigh on consumption." China is not the only country where oil demand is weaker than previously anticipated. The IEA halved its US oil demand growth estimate for this year to just 70,000 b/d, noting a sharp drop in gasoline deliveries in June. "With the steam seemingly running out of Chinese oil demand growth, and only modest increases or declines in most other countries, current trends reinforce our expectation that global demand will plateau by the end of this decade," the IEA said. The agency's latest medium term oil outlook sees world oil demand peaking at 105.6mn b/d in 2029. The IEA's latest projections add to concerns about the health of oil demand this year. Even Opec, which had until August kept its highly bullish oil demand forecast unchanged, has trimmed its expectations for this year and next although its 2024 projection of over 2mn b/d demand growth remains well above most other outlooks. Supply surplus incoming The IEA's forecast does not bode well for a plan by some members of Opec+ to start unwinding 2.2mn b/d of voluntary cuts starting in December. "With non-Opec+ supply rising faster than overall demand — barring a prolonged stand-off in Libya — Opec+ may be staring at a substantial surplus [next year], even if its extra curbs were to remain in place," the agency said. The IEA's latest balances show a supply surplus of more than 1mn b/d in 2025. On global supply, the IEA lowered its growth estimate to 660,000 b/d compared with 730,000 b/d last month. But global growth next year could be as high as 2.1mn b/d even if all Opec+ cuts are maintained, the IEA said. The agency said global observed oil stocks declined for a second consecutive month in July, by 47.1mn bl, although it noted a steep build in oil products stocks to the highest since January 2021. The IEA attributes the recent oil price declines to demand-based fears centred on China and noted the falls came despite "hefty supply losses in Libya and continued crude oil inventory draws." By Aydin Calik Global oil demand/supply balance mn b/d Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US summer gasoline demand lagged pre-Covid levels
US summer gasoline demand lagged pre-Covid levels
Houston, 11 September (Argus) — US gasoline demand ended the 2024 summer driving season well below pre Covid-19 pandemic norms and at the lower end of average post-Covid levels. US summer driving season gasoline demand — measured from the last Monday in May to the first Monday in September — averaged 9.1mn b/d this year, according to US Energy Information Administration (EIA) weekly demand data released Wednesday. That is up by 49,000 b/d from the same period in 2023 and up by 291,000 b/d from 2022 but well below the 9.4mn b/d levels in the summer of 2021 when demand surged in the wake of the pandemic as the US economy reopened. In the ten years prior to the pandemic, weekly US gasoline demand averaged 9.3mn b/d in the peak summer months ( See chart) . Even as Americans drive more than ever , demand has failed to keep pace, likely due to increases in the efficiency of internal combustion engines and fully-electric vehicles (EVs) and hybrids comprising a greater portion of the automotive fleet. The weekly EIA data released Wednesday is less accurate than the monthly numbers published by the agency at a lag, but those too have shown summer demand below pre-pandemic levels . Gasoline demand was 9.1mn b/d in June, the most recent monthly data, down by 246,000 b/d from the same month last year and down by 583,000 b/d from June 2019. Future outlook lowered The agency has also downgraded its demand outlook in recent days. On Tuesday it lowered its demand, price and inventory expectations for road fuels such as gasoline in its monthly Short-Term Energy Outlook (STEO). The agency revised down its expectations for gasoline demand in the second and third quarters of this year by 1.1pc and 0.4pc respectively to just over 9.1mn b/d. Demand in the second quarter of next year is expected to be 30,000 b/d higher than this year, but third quarter demand is expected to be 90,000 b/d lower, helping drive an overall 20,000 b/d gasoline demand decline next year. Headed into the third quarter, US refiners have been cutting runs after weaker-than-expected summer gasoline demand raised inventories and narrowed margins. Refiners also take plants offline for maintenance in the fall amid seasonally narrower margins. Access to the export markets could be a hedge against an uncertain domestic demand outlook, and several coastal refineries up for sale in North America could give a buyer access to global markets for the road fuel. US refiners have steadily exported more gasoline since about 2007, sending 298mn bls overseas last year compared to 46mn bls in 2007. By Nathan Risser US summer driving season gasoline demand ’000 b/d Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Francine spurs more US Gulf oil shut-ins: Update 2
Francine spurs more US Gulf oil shut-ins: Update 2
Update with BSEE production data. New York, 11 September (Argus) — US energy producers curtailed nearly 39pc of offshore Gulf of Mexico oil production as Hurricane Francine bore down on the Louisiana coastline today. About 674,833 b/d of offshore oil output was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE). Around 907mn cf/d of natural gas production, or 49pc of the region's output, was also off line. Operators evacuated workers from 171 platforms. Companies including Chevron, ExxonMobil and Shell relocated offshore workers and suspending some drilling operations ahead of the hurricane. Ports along the hurricane's path announced traffic restrictions in advance, with some setting out plans to close until it passes, including the port of New Orleans. Francine was last about 60 miles south-southwest of Morgan City, Louisiana, according to a 4pm ET update from the National Hurricane Center. Maximum sustained winds were reported at 90mph. The hurricane is set to make landfall in Louisiana by this evening before moving north across Mississippi on Thursday. Rapid weakening is forecast and Francine is expected to be a post-tropical system on Thursday. With the hurricane's track locked in on Louisiana, the port of Houston reopened to all vessel traffic at 1pm ET Wednesday, a ship agent said, after closing Tuesday afternoon. The Gulf of Mexico accounts for around 15pc of total US crude output and 5pc of US natural gas production. By Stephen Cunningham and Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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