Cop 27: Climate deal falls short on GHG reduction
Countries at the UN Cop 27 climate conference have adopted a final deal in the early hours of Sunday, agreeing on the creation of a loss and damage fund for vulnerable countries but making no additional progress on efforts to limit global emissions.
The creation of a loss and damage fund has been the most contentious issue debated at Cop 27, but parties finally agreed and "responded to the voices of the vulnerable", said Pakistan climate change minister Sherry Rehman, who spoke on behalf of the Group of 77 (G77) plus China. The inter-governmental organisation of developing nations comprising 134 members pushed hard for a loss and damage fund to be put on the Cop agenda this year.
Countries have decided "to establish new funding arrangements for assisting developing countries that are particularly vulnerable" to the impacts of climate change, including a fund and the mobilisation of new and additional resources, "recognising the need for support from a wide variety of sources, including innovative sources". The EU during the negotiations floated the idea of contributions from oil and gas companies, as well as levies on air tickets and shipping containers, to go towards a loss and damage fund. The creation of the fund is to be established by a transitional committee over the next year.
Countries have hailed the decision on loss and damage, although it is described as imperfect and much work remains to be done. But the lack of progress towards cutting greenhouse gas (GHG) emissions responsible for global warming left many "disheartened", Maldives environment minister Aminath Shauna said. Antigua and Barbuda advisor for climate change Lia Nicholson said — on behalf of the Alliance of Small Island States — that the loss of damage fund was just "a life boat in a brewing hurricane", and Rehman regretted that the parties did not reach "substantive guidance" with regards to updated nationally determined contributions (NDCs) — or countries' pledges to cut emissions.
EU negotiators sought to make the creation of the loss and damage fund conditional to new updated emission reduction targets under the mitigation work programme. EU executive vice-president and lead climate negotiator Frans Timmermans today welcomed the creation of the fund but said that the overall deal reached did "not bring enough added efforts from major emitters to increase and accelerate their emissions cuts". He warned today that a lot of speed was lost since Cop 26 last year.
The Sharm el-Sheikh text reiterates the need to reduce GHG by 43pc by 2030 relative to 2019 levels, unchanged from pledges made in Glasgow last year.
"It does not address the yawning gap between climate science and our climate policies," Timmermans added. The EU and nations part of the high level ambition coalition (HLAC) — including countries such as the Marshall Islands and the UK — wanted to see stronger NDCs aligned with the 1.5°C limit goal, mentions of efforts for global emissions to peak by 2025 and a pledge to phase down fossil fuels. The 2015 Paris Agreement aims to limit global warming to well below 2°C above pre-industrial levels, and ideally to 1.5°C.
Timmermans said that "too many parties are not ready to make progress today" to fight climate change, pointing at "too many attempts" to go back on what was agreed in Glasgow last year and saying that some nations were "afraid of the transition ahead".
Weak on fossil fuels
The energy and mitigation sections of the climate agreement emphasises the urgent need for a rapid reduction in GHG emissions across "all applicable sectors", including through an increase in low-emission and renewable energy, while striving for a "phase down" of unabated coal power and a "phase-out" of inefficient fossil fuel subsidies. This is unchanged from last year's Glasgow Pact and failed to increase ambition on fossil fuels. Mitigation refers to efforts to reduce GHG.
Timmermans said today that more than 80 countries supported the goal of a fossil fuel phase out in the text, but that no solution could be found.
Saudi Arabia was amongst several countries trying to water down the use of fossil fuel language in the final text, with a member of the delegation repeating today on behalf of the 22 countries in the Arab League that "the convention needs to address emissions and not the origin of the emissions".
"It is crucial that commitment [on NDCs] is delivered by all of us, including the major emitters in this room who did not come forward this year," UK lead negotiator and Cop 26 president Alok Sharma said, while pointing at the last minute weakening of the energy section of the text.
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Polymers stocks safe in storm-hit Brazil: Braskem
Polymers stocks safe in storm-hit Brazil: Braskem
Orlando, 8 May (Argus) — Brazilian petrochemical giant Braskem said its polymer inventories are safe and protected from the damage caused by heavy rainfall at its operations in southern Brazil during the past two weeks. The inventories include polyethylene (PE), polypropylene (PP), ethylene and basic chemicals. Braskem had to shutdown all of its operations in Rio Grande do Sul state after the extreme weather event in recent days , the company told Argus on Wednesday, on the sidelines of the NPE Plastics fair in Orlando, Florida. The shutdown was completed safely, with no harm to the company's plants at the Triunfo petrochemical hub, which represents about 30pc of its ethylene production capacity in Brazil. Braskem is reevaluating its supply chain strategy to deal with the lack of production at the Trinfo hub. This includes serving its clients with PE produced at other company hubs in Brazil and Mexico, where it owns PE manufacturing joint venture Braskem Idesa. The same goes for PP and polyvinyl chloride (PVC), with other production hubs serving customers if the weather situation does not improve in the coming days. Operations at Braskem's 260,000 t/yr bio-based PE plant will restart as soon as conditions improve, the company said. No fatalities occurred at the company's operations, but part of its workforce has lost their homes and are being taken care of by Braskem, according to the company. State governor Eduardo Leite called the the flooding "the worst disaster in Rio Grande do Sul's history." There are 100 people dead and 128 missing, according to the state's civil defense. Braskem said it will resume its operations gradually, after weather conditions normalize and logistics in the state such as airports, railroads and flooded roads resume. Braskem is the largest producer of thermoplastic resins in the Americas and a leader in biopolymer production. By Frederico Fernandes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Rains hamper LPG distribution in south Brazil
Rains hamper LPG distribution in south Brazil
Sao Paulo, 8 May (Argus) — Torrential rains that flooded southern Brazil's Rio Grande do Sul state decreased LPG distribution by 7-10pc in the region in the past week, market participants said. Distributor Copa Energia's operations at its Canoas city unit — which is responsible for 30pc of the LPG distributed in the state — are expected to resume in the coming days after being shut last week. The heavy rains since late April — that have left 100 people dead, 128 people missing and almost 164,000 displaced from their homes, according to the state's civil defense — have spurred companies to take measures to maintain gas supply in the region. Some firms have also advanced salary benefits to help workers deal with the crisis. State-controlled Petrobras' 201,000 b/d Alberto Pasqualini (Refap) refinery has cut LPG production, but has not disclosed by how much . The unit also produces diesel, gasoline and fuel oil, among other products. LPG distribution began normalizing earlier this week, after "the feeling of chaos and lack of information" over the weekend had passed, according to an industry executive. Many retailers are now able to retrieve products, but it is still unknown how many routes have been compromised. But LPG stocks have been able to meet demand so far, preventing any shortages. Hydrocarbons regulator ANP's measure to allow collaborative actions among sector companies without the usual bureaucratic procedures to keep the market supplied has had an immediate effect, according to LPG association Sindigas' chief executive Sergio Bandeira de Mello. Distribution has been carried out collaboratively in recent days, despite some retailers' facilities being underwater, vehicles being lost and roads destroyed. But the state will still face months of problems and precariousness, de Mello said. By Betina Moura Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Low US natgas prices help ammonia economics
Low US natgas prices help ammonia economics
Houston, 8 May (Argus) — Nitrogen fertilizer production costs in the US are primed to hit historically low levels through the third quarter, potentially creating favorable margin and arbitrage opportunities during the offseason as bloated natural gas inventories depress key feedstock prices. Estimated ammonia production costs for most US producers tied to Henry Hub natural gas prices have spent the last 12 consecutive weeks below $100/short ton (st) on sub-$2/mmBtu feedstock prices. They should benefit from sub-$3/mmBtu natural gas costs through October, based on the 7 May Nymex futures curve. A mild winter stemmed seasonal withdrawals from natural gas storage and mitigated heating demand. US natural gas inventories exited the 2023-24 winter at the highest seasonal levels in eight years. High inventories help contain US gas prices by easing concerns about spikes in demand or supply shortfalls. Slackened natural gas demand has continued through April and has maintained downward price pressure, even as producers curtail output. The US Energy Information Administration (EIA) said that it expects inventory growth to lag average levels in the coming months as producers cut output in response to lower prices. But inventories were still expected to exit the injection season, when gas stockpiles are replenished to meet winter heating needs, at an all-time high above 4.1 Tcf, the EIA said. Natural gas is the primary feedstock for US ammonia producers, comprising on average 60-70pc of total production costs at current prices. Ammonia production costs have not spent this long below $100/st since May-July 2020, according to Argus data. Ammonia is a key feedstock for urea and UAN manufacturing. Sinking feedstock ammonia costs lowers the cost floor for upgraded nitrogen alternatives and fosters favorable margin opportunities. US producer CF Industries said during its first quarter results the energy curves between North America and Europe — with the latter a higher-cost ammonia production hub — remain wider than historical levels, creating potential arbitrage scenarios. Ammonia production costs based on the Dutch TTF natural gas day-ahead contract, which serves as the European benchmark, have averaged more than three-times more than those tied to Henry Hub since January, according to Argus data. "Longer term, we expect the global energy cost structure to continue to provide significant margin opportunities for our North American production network," CF chief executive Tony Will said during the company's earnings call. By Connor Hyde Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Baltic April gas consumption rises on year
Baltic April gas consumption rises on year
London, 8 May (Argus) — Gas demand in the three Baltic states and Finland was up by 26pc on the year in April, although there were diverging trends in the different markets. Consumption in Finland, Estonia, Latvia and Lithuania totalled 3.56TWh, up from 2.82TWh a year earlier but down from 4.31TWh in March ( see data and download, graph ). That said, total demand was still well below the 2018-21 average for the month of 5.03TWh. Consumption was up on the year in all three Baltic countries, but Finnish demand edged down. This was the first month in which Finnish demand was lower on the year since April 2023. In contrast, Lithuanian consumption surged by nearly 50pc on the year, and was also higher than in February and March despite the end of the traditional heating season. Gas-fired power generation held broadly stable from a year earlier, totalling 305MW across the four countries compared with 301MW in April last year ( see gas-fired output table ). Output edged down in Estonia and Lithuania and dropped by 25MW in Finland, but this was offset by a 31MW increase on the year in Latvia. But, unlike in March, gas-fired output fell by 246MW, a large contributing factor to the lower gas demand on the month. Many combined heat and power plants will have switched off at around the end of March or mid-April as the traditional heating season came to a close, possibly driving the fall in gas-fired output. But renewables generation was also stronger in April than March, particularly in Finland, where wind output rose to 2.03GW from 1.63GW, while hydro also stepped up. In Lithuania, solar and waste-based production increased on the month. Demand was also stronger despite higher year-on-year minimum temperatures in all four capital cities, which may have curbed most residual heating demand after the end of the traditional heating season, although there was a brief cold snap towards the middle of the month that temporarily drove up demand ( see temperatures table ). With gas-fired power generation only marginally higher than a year earlier, and the warmer weather curbing residential demand, a possible uptick in industrial demand may have driven the aggregate rise in consumption. Average prices on the regional GET Baltic exchange were €33.30/MWh in April, up by 8pc on the month but 30pc lower than a year earlier, the exchange said. Prices increased in around the middle of April "due to the unexpectedly cold weather and the increased demand for gas in the market", but then fell again "as the weather warmed", GET Baltic chief executive Giedre Kurme said. There were a total of 2,400 transactions last month for a combined 642GWh of gas. Volumes sold on the Finnish market accounted for 42pc, the joint Latvian-Estonian market 33pc, and the remaining 25pc was sold in Lithuania. Klaipeda and Balticconnector to change flows The return of the Finnish-Estonian Balticconnector pipeline and the start of maintenance at the Klaipeda LNG terminal in Lithuania will drive changed flow patterns this month. The Balticconector resumed commercial operations on 22 April after being off line since 8 October following a rupture caused by a dragging ship anchor . The reconnection of Finland to its southern neighbours has allowed for strong southward flows since 22 April, at an average of 62 GWh/d on 22 April-7 May. Some of this gas is probably being injected into storage, with the region's only facility at Incukalns switching to net injections on 23 April from net withdrawals of 7 GWh/d earlier in the month. Net injections have since averaged 46 GWh/d on 23 April-6 May, the latest data from EU transparency body GIE show. Stocks at Incukalns ended the withdrawal season on 30 April at 11.29TWh, the highest since at least 2014 and well above the previous high from last year of 9.03TWh. Large volumes of gas that had been stored over the previous summer for export to Finland over the winter were left stranded in Incukalns after the Balticconnector went off line. And the Klaipeda LNG terminal began maintenance on 1 May, which will last until 15 June, as the terminal's Independence floating storage and regasification unit (FSRU) departed for dry-docking in Denmark. As a result, there were net exports from Poland to Lithuania for the first time since early November, at an average of 17 GWh/d on 1-7 May. Some of this gas could have been withdrawn from Ukrainian storage, with flows from Ukraine to Poland averaging 10 GWh/d over the same period. Lithuania's largest supplier Ignitis has said it stored some volumes in Ukraine. And flows at the Kiemenai border point with Latvia have also flipped towards Lithuania, averaging 11 GWh/d on 1-7 May, compared with net flows towards Latvia of 15 GWh/d in April. That said, there were no flows at the point on 6-26 April. By Brendan A'Hearn Finnish, Baltic average gas-fired power generation MW Apr-24 Apr-23 Mar-24 ± Apr 23 ± Mar 24 Estonia 5 6 7 -1 -2 Latvia 49 18 215 31 -166 Lithuania 46 47 52 -1 -6 Finland 205 230 277 -25 -72 Total 305 301 551 4 -246 — Entso-E Daily average minimum temperature in FinBalt capitals °C Apr-24 Apr-23 Mar-24 ± yr/yr ± m/m 2014-23 Apr avg Vilnius 5.22 3.83 0.93 1.39 4.29 2.63 Riga 5.01 4.98 1.93 0.03 3.08 3.65 Tallinn 2.00 1.46 -0.59 0.54 2.59 1.17 Helsinki 0.11 -0.45 -2.55 0.56 2.66 0.12 — Speedwell Finnish and Baltic April consumption by country GWh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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