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Japan's Shigeru Ishiba to be PM after winning LDP vote

  • Market: Coal, Electricity, Natural gas
  • 27/09/24

Former Japanese Defense Minister, Shigeru Ishiba, is set to replace Fumio Kishida as the country's new prime minister early next month. Ishiba's appointment is expected to restore public trust following a series of political scandals and continue the country's carbon-neutral policy, ensuring energy security and economic growth.

Ishiba, 67, was elected as the new leader of the ruling Liberal Democratic Party (LDP) on 27 September, defeating economic security minister Sanae Takaichi by a narrow margin of 21 votes. He is expected to be confirmed as Japan's new prime minister on 1 October at a special session in parliament, where the LDP holds a majority.

The new administration is likely to maintain the policies of the Kishida's administration, including those on diplomatic and energy issues. Kishida has updated the country's energy policies under his green transformation (GX) strategy, which aims to achieve the country's net-zero emissions goal by 2050, since he took office in October 2021.

The GX approach has gained momentum, particularly after Russia's invasion of Ukraine in February 2022, which altered global commodity trade flows and prompted advanced economies to reevaluate their energy priorities. Kishida has focused on maximising nuclear and renewable energy while enhancing conventional fuel security. Industry groups, including the Japan Business Federation, have supported the GX strategy, hoping the new administration will maintain this energy policy.

To further advance Kishida's GX policy, Ishiba has pledged to increase the development of the country's "rich" maritime resources in its vast territorial waters, aiming to make Japan more energy independent. This aligns with the country's push in March to explore national maritime resources to strengthen economic security.

Ishiba also has a special focus on lesser-utilised renewable energies in Japan, such as geothermal and hydroelectric power. The country has not fully utilised their high potential, he told Argus during the presidential campaign on 6 September.

Japan's power generation averaged 94GW in the April 2023-March 2024 fiscal year, of which hydroelectric and geothermal output accounted for 10pc and 0.3pc respectively, according to data from the country's trade and industry ministry Meti.

Ishiba's energy policy, which focuses on domestic resources, stems from his concern about the country's low energy self-sufficiency rate, which is just above 12pc. The rate is even lower than that of 1941 when the country entered World War II, Ishiba said, stressing that the country must make more efforts to raise the number.

As a defense expert, Ishiba is advocating to establish an Asian version of Nato to enhance collective security within the region. But his long-standing policy is facing opposition because the idea requires the country to amend the constitution that prohibits collective security measures.


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04/10/24

Sheinbaum targets $40bn energy transition plan

Sheinbaum targets $40bn energy transition plan

New York, 4 October (Argus) — The ambition of Mexico's new President Claudia Sheunbaum to reach 45pc of renewable generation in the electricity mix by 2030 will include an investment plan of $35bn-40bn, sources familiar with the matter said. Sheinbaum announced a more ambitious goal for renewables and promised to launch an energy transition plan in coming days during her inaugural address on 1 October. The awaited document will include specific strategies and projects to be developed in the first days of her term, Alonso Romero, deputy director of commercial strategy at state utility CFE and one of Sheinbaum's energy advisors during her campaign, told Argus . There will be around $6bn/yr in new investments under Sheinbaum's six-year term to develop a pipeline of 60GW in new capacity, mostly renewable, he added. The new administration will propose several types of contracts to developers that guarantee CFE holds the largest participation in the sector, said Romero. There have been meetings between Sheinbaum's representatives and banks to show the plan's potential, said a source familiar with the topic. But potential investors are still waiting to see if congress passes the bill to reform the energy sector sent by former president Andres Manuel Lopez Obrador. That energy bill is crucial in Sheinbaum's plan, as it will lay the groundwork for further legal modifications, said Romero. It will be easier to attract the private sector into investing in projects if a long-term contract with CFE provides support as the final source of payment in case of a default, said Romero. Under current law, CFE cannot directly buy electricity from a new power plant unless it comes from a long-term auction. Congress would need to approve the bill and then modify the electricity law to lift that prohibition, so lenders would have certainty that CFE can sign long-term contracts with new renewable or thermal power plants without holding a tender, said Romero. The Sheinbaum administration is considering signing Build, Lease and Transfer (BLT) contracts for some projects, said Romero. This way, CFE will have the opportunity to acquire the asset after 10-15 years of being operated by another company. Hopes and fears Sheinbaum's bet on the energy transition could be seen as a hopeful message for the renewables sector, but investors still need clarity on the rules in the electricity market. Market players have been worried that Sheinbaum will continue her predecessor's energy policy that for years openly attacked private-sector renewable companies. "It is clear that Sheinbaum is trying to make the energy transition her own mark," said Jesus Carrillo, energy expert at Mexican think tank Instituto Mexicano para la Competitividad. "However, it is risking her credibility by setting such ambitious goals." In 2023, Mexico generated just 24.3pc of its electricity from clean sources, despite that category holding 32pc of installed capacity, according to energy ministry (Sener) data. Reaching the new target could be possible if Sheinbaum's administration pulled off a clear path to speed up investments in renewable generation, the sector said. "The energy transition path goes much faster when the government leads it," said Romero. Private-sector renewable companies are willing to finally put an end to the impasse during Lopez Obrador's term. But the legislative electricity proposal along with modifications that will overhaul the judicial power in upcoming months create a worrisome business environment in Mexico, sources said. The Sheinbaum administration needs to provide not only a clear but also attractive legal framework so the private sector can provide the funds and capabilities to aid in this energy transition plan, sources said. Mexico's electricity system requires around $130bn in new investments to meet the country's growing demand from 2024-2030, according to a recent analysis from business trade group Coparmex. By Edgar Sigler Mexico’s share of clean electricity % Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Global bio-bunker demand to pick up, US left behind


04/10/24
News
04/10/24

Global bio-bunker demand to pick up, US left behind

New York, 4 October (Argus) — Tightening vessel carbon intensity indicator (CII) scores and looming 2025 FuelEU marine regulation are expected to raise biodiesel demand for bunkering, but non-competitive US prices should continue to weigh down on US bio-bunker demand. Houston B30, a blend of used cooking methyl ester (Ucome) and very low-sulphur fuel oil (VLSFO), in September averaged at $821/t, a $45/t premium to B30 sold in Amsterdam-Rotterdam-Antwerp, and a $55/t premium to B24 sold in the west Mediterranean hub of Gibraltar and Algeciras (see chart) . Houston B30 was also priced at $115/t and $61/t premium to B24 sold in Singapore and Guangzhou, China, respectively. The price premium would continue to incentivize ship owners with global, ocean-going fleets to pick Asia first for their biodiesel bunker purchases, followed by northwest Europe and western Mediterranean. US demand for biodiesel for bunkering would continue to stagnate unless the US passes a legislation allowing Renewable Identification Number (RIN) credit under the US Renewable Fuel Standard (RFS) program be used by ocean-going vessels fueling with biodiesel in US ports. The legislation could level US' price playing field. Two bipartisan bills were put forward in support of renewable fuel for ocean-going vessels, one in the US Senate this year and one in the US House of Representatives last year, but they are currently dead in the water. Conventional marine fuels are priced cheaper than biodiesel and green varieties of LNG, ammonia, methanol, and hydrogen. But tightening International Maritime Organization (IMO) and EU regulations are forcing the hand of ship operators to consider green fuels to avoid hefty penalties and having their vessels suspended from trading. Ship owners whose vessels are outfitted with LNG-burning engines, are poised to have the lowest marine fuel expense heading into 2025, as fossil LNG is currently ship owners' cheapest low-carbon fuel option. But retrofitting a vessel to burn LNG could range from $5-$35mn, depending on the size of the vessel. Biodiesel, a plug-and-play fuel that does not require a vessel retrofit, is the second cheapest low-carbon fuel option after fossil LNG. IMO's CII regulation came into force in January 2023 and requires vessels over 5,000 gt to report their carbon intensity, which is then scored from A to E. The scoring levels are lowered yearly by about 2pc, so even a vessel with no change in CII could drop from C to D in one year. If a vessel receives a D score three years in a row or E score in the previous year, the vessel owner must submit a corrective actions plan. E scoring vessels could be prohibited from entering some ports' territorial waters, but this penalty is yet to be imposed on any E vessels. In 2023, the IMO reported that 40pc of the vessels scored A or B, 27pc scored C, 19pc scored D or E and 14pc were unresponsive. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. It imposes a penalty of €2,400/t ($2,629/t) of VLSFO equivalent energy for vessel fleets exceeding its GHG limits. By Stefka Wechsler Biodiesel blends* Houston less global ports $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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France's wind sector weighs impact of new government


04/10/24
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04/10/24

France's wind sector weighs impact of new government

London, 4 October (Argus) — Doubts over government policy on onshore wind competed with optimism over offshore wind at the French wind sector's annual conference in Paris on Wednesday. The event took place a day after the first policy announcements of prime minister Michel Barnier , in which he said his government would "better handle the impacts" of wind energy. No more detail is available on what this will mean exactly, although far-right party Rassemblement National (RN), which props up Barnier's minority government, is strongly opposed to wind energy. And of two of the parties in his coalition, president Emmanuel Macron's EPR and Barnier's own Les Republicans (LR), the former is supportive of wind, while the latter is more sceptical without being downright opposed, one developer told Argus . While junior energy minister Olga Givernet told the conference of her intention to reduce the delays developers face, participants Argus spoke to feared Barnier's evocation of "impacts" could mean an expansion of barriers to building new capacity. "We already take the impacts into account," one developer said, noting that firms perform extensive studies and undertake environmental impact assessments (EIAs). And legal challenges are one of the main obstacles slowing down capacity increases, with one developer calling for better-trained judges to reduce the number of "arbitrary" decisions made in these cases. Delays in receiving grid connection and EIAs were other factors developers cited. But the conference was more upbeat on offshore wind. The government will in the coming weeks announce priority zones for offshore wind, which will allow it to launch tenders for 8-10GW of capacity by the end of the year. These will contribute to the country's goal of reaching 18GW of installed capacity by 2035. At the same time, the increasing occurrence of negative price hours threatens the sector, according to industry body France Renouvelables. Negative prices can pose a threat to grid stability, according to grid operator RTE. Large quantities of renewables can be shut down suddenly at the beginning of negative price hours, leading to a sharp output slope, which the grid operator has little visibility of, RTE said. Negative prices are a problem for operators too, even those under contracts for difference (CfDs) which are not directly exposed, according to Jean-Francois Petit of renewables operator Boralex. Operators typically shut down during negative pricing hours, but receive only partial compensation for lost output, he said, while the requirement that production be completely halted can be difficult operationally. And slow progress on repowering could represent another brake to capacity increases. Repowering is not underpinned by primary legislation, but only by ministerial circulars, one developer said, which offers little certainty to firms that want to undertake it. Meanwhile, height limits imposed for aviation constraints and landscape protection reduce the potential to add taller, more powerful turbines. French turbines are typically much smaller than those in neighbouring countries because of these height limits, which reduces access to higher-quality wind resource. And an open question remains over potential local content requirements in future tenders for CfDs. These requirements, enabled by the European Net Zero industry Act (NZIA) and supported by energy regulator the CRE, could prove a fillip for manufacturers of energy-transition materiel such as wind turbines, hobbled by competition from Chinese manufacturers. But incorporation of these requirements would push up costs, requiring higher strike prices at CfDs and more public subsidy. Energy minister Givernet did not appear to give the conference any hints on which way the government would lean, saying that control over both energy prices and security of supply were absolute priorities. Reaching France's goals by 2028 of 33.2-34.7GW of onshore capacity would require an installation rate of 2.3-2.7 GW/yr, roughly twice rates reached in recent years ( see graph ). By Rhys Talbot France onshore capacity and 2028 goals Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US tops expectations with 254,000 jobs in Sep


04/10/24
News
04/10/24

US tops expectations with 254,000 jobs in Sep

Houston, 4 October (Argus) — The US added more jobs than expected in September and the unemployment rate ticked down, signs the labor market is strengthening heading into the US presidential election. US nonfarm payrolls rose by 254,000 workers last month, and the jobless rate fell to 4.1pc, the Labor Department reported Friday. Gains in August were revised up by 17,000 to 159,000 and those in July were revised up by 55,000 to 144,000. September's job gains were much higher than the 140,000 estimated by economists in a Trading Economics survey. Job gains blew past expectations in the same month the Federal Reserve began cutting interest rates for the first time since 2020, citing concerns that a weakening labor market might pull down the overall economy. Odds of a quarter point rate cut at the next Fed meeting in November rose to 91pc today from about 68pc Thursday, according to fed funds futures markets, while odds of a half-point cut fell to 9pc. The Fed last month penciled in 50 basis points of cuts in the remainder of this year. Job gains were higher than the average monthly gains of 203,000 over the prior 12 months, the Labor Department reported. Employment continued to move higher in food services and drinking establishments, health care, government, social assistance and construction. The labor market was little affected by Hurricane Francine, which made landfall in Louisiana on 11 September, during the reference periods for the surveys that contribute to the report. Gains in restaurants and drinking places rose by 69,000 jobs, much higher than the average 14,000 added over the prior 12 months. Health care added 45,000 jobs, below the monthly average of 57,000. Government added 31,000 compared with monthly averages of 45,000. Social assistance added 27,000. Construction added 25,000, near the monthly average. Manufacturing lost 7,000 jobs, most of them in the auto industry. The unemployment rate fell from 4.2pc in August, still higher than the five-decade low of 3.4pc posted in early 2023. Average hourly earnings rose by 4pc in the 12 months through September, up from 3.8pc through August. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Dockworkers end US port strike


03/10/24
News
03/10/24

Dockworkers end US port strike

Houston, 3 October (Argus) — US dockworkers have ended a port strike that had shut container terminals from Maine to Texas, after their union late Thursday struck a tentative agreement on wages. The International Longshoremen's Association (ILA) has agreed to extend its contract with the United States Maritime Alliance (USMX) until 15 January to provide time for negotiating the remaining outstanding issues, the ILA said in a statement. The USMX includes containership owners, terminal operators and port associations. "Effective immediately, all current job actions will cease and all work covered by the master contract will resume," the ILA said. The strike, which started on 1 October, had forced containership operators to queue up outside US east coast ports. Major container shipping agencies such as Maersk had initiated surcharges for US east coast and Gulf coast-bound containers later in October. By Jack Kaskey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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