Brazil pledges carbon neutrality, seeks compensation

Spanish Market: Crude oil, Emissions
10/12/20

Brazil reaffirmed its commitment to climate neutrality by 2060 amid rising international pressure to check growing Amazon deforestation, but it is demanding financial compensation from developed nations to preserve the environment.

The country could adopt a more ambitious emissions target in the future, but this would depend on the "proper functioning of market mechanisms provided for in the Paris Agreement," Brazil said in its updated nationally determined commitment (NDC) on 8 December, a requirement under the Paris Agreement.

Specifically, the Brazilian government said it could reach net-zero emissions ahead of schedule, but would need to receive an annual payment of $10bn for environmental preservation from developed countries starting in 2021.

These payments could eventually be made through carbon-trading mechanisms which are stipulated as part of the agreement, environment minister Ricardo Salles said after a meeting of the inter-ministerial climate change committee, which issued the updated NDC.

Brazil also reaffirmed its pledge to reduce its greenhouse gas emissions by 37pc from 2005 levels by 2025 and by 43pc in 2030.

Brazil saw a 9.6pc increase in GHG emissions in 2019 from a year earlier, according to the emissions-monitoring system (SEEG) developed by local environmental NGO Observatorio do Clima. According to SEEG estimates, deforestation accounted for 44pc of total GHG emissions in 2019. Emissions from deforestation increased by 23pc from 2018.

The agriculture sector accounted for 28pc of total emissions in 2019, down from 30pc in 2018.

The energy sector produced 19pc of total emissions, down from 20pc in 2018. This is largely because of the large share of renewable power in Brazil's power mix.

The country passed sweeping biofuels legislation in 2017, known as Renovabio, which aimed to reduce emission by 10pc by 2028 through an increase in biofuels use.

Despite its sweeping biofuels program, the country remains committed to pre-salt oil production, although state-controlled Petrobras recently announced its goal of reducing emissions by 25pc from 2015 levels by 2030.

Emissions are likely to continue to rise in 2020 after deforestation in Brazil's Amazon basin reached the highest level in over a decade in the 12-month period ending in July, marking the second consecutive year of increasing environmental devastation. Brazil lost 11,088km2 of rainforest in the 2019-20 season, which runs from August to July, up 9.5pc from the 10,129km2 in the previous period.

The steady increase in deforestation is a growing risk for Brazil, especially after US president-elect Joe Biden takes office in January. Biden is expected to join European leaders to pressure Brazil to make concrete progress towards reducing deforestation.

With the 2019-20 number, Brazil is far from reaching the goal of reducing 2020 deforestation to a maximum of 3,925km2, which was established as part of its 2009 national climate change policy (PNMC).

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11/10/24

Pemex Deer Park refinery H2S leak kills 2: Update

Adds comment from Mexican energy minister, context from regulatory filings. Houston, 11 October (Argus) — A hydrogen sulfide (H2S) leak at Pemex's 312,500 b/d Deer Park, Texas, refinery on 10 October killed two workers and injured 35 more. The leak occurred accidentally during maintenance, according to a regulatory filing submitted by Pemex this morning. Several units, including an amine unit, an alkylation unit, a hydrocracker and a sulphur recovery unit were promptly shut and flaring was initiated so the leak could secured. Mexican energy minister Luz Elena Gonzalez said in a press conference in Mexico City Friday morning that the refinery was expected to restart operations later today. Deadly accidents at US refineries usually require extensive regulatory investigations by federal agencies, however, which require facilities or certain units at a plant to remain shut down. H2S is an extremely hazardous gas commonly produced as a byproduct of refining, which can be processed into pure sulphur in a sulphur recovery unit (SRU) or removed by hydrotreating. Shell's Deer Park petrochemical facility, located adjacent to Pemex's refinery, said it was doing a "controlled slowdown" of its operations as of 8:52pm yesterday in response to the accident as a precaution. A flaring event was initially reported by a Deer Park Office of Emergency Management (OEM) social media account at 6:23pm ET on 10 October. A shelter in place advisory was issued for all Deer Park residents in a follow-up notice and Texas State Highway 225 running adjacent to the refinery was also closed to traffic. Areas of nearby Pasadena were also placed under a shelter in place advisory. The Deer Park shelter in place was lifted at 10pm ET. The Pemex refinery had previously reported an aromatic concentration unit (ACU) leak on 6 October. Amine units strip H2S from methane gas generated by hydrotreaters. Alkylation units produce high-octane blendstocks used in gasoline. Hydrocrackers use hydrogen, pressure, and catalyst to produce distillates and gasoline low in contaminants like sulphur. SRUs help to remove sulphur and other impurities from refinery products and gas streams. By Gordon Pollock Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Iran slows oil exports as it braces for Israeli attack

11/10/24

Iran slows oil exports as it braces for Israeli attack

Dubai, 11 October (Argus) — Iran's crude exports have slowed down dramatically this month as the country braces for a possible strike on its oil facilities in retaliation for its large-scale missile attack against Israel on 1 October. Although US president Joe Biden has suggested Israel should think about an alternative response , potential strikes on Iranian oil facilities have been up for discussion and the Israeli government appears to be still weighing up its options. In the meantime, there has been a noticeable drop off in Iranian exports. Crude loadings from Iran only averaged about 600,000 b/d in the first 10 days of October, around a third of the amount it has exported in the past few months, according to Armen Azizian, senior oil risk analyst at trade analytics firm Vortexa. "The first 10 days has been very slow compared to what we usually see," Azizian said. "Normally, over this period, we see an average of 5-8 tankers load ꟷ a mix of VLCCs and Suezmaxes. But so far, we have only seen just 3-4 load." A VLCC typically carries 1.9mn-2.2mn bl, while a Suezmax can carry 800,000-1mn bl. Of the three VLCCs that have loaded this month, two did so at Iran's Kharg Island terminal in the Mideast Gulf and the third co-loaded between Kharg Island and the Soroush terminal, also in the Mideast Gulf. An Aframax also loaded at Kharg this month but it is a tanker that typically engages in domestic trade. The Kharg terminal is Iran's largest and most important by some distance, handling more than 90pc of Iranian crude and condensate exports. All of the vessels that have loaded at Iranian terminals this month have been sanctioned. "It seems like the operators of the non-sanctioned tankers are being more cautious," Azizan said. "The thinking being that the value of the sanctioned tankers is so low anyway, that they are more worth taking a risk with." The slowdown in exports coincides with Iran moving many of its empty tankers away from Kharg Island. "It was likely done as a precaution, in the event of an Israeli retaliation," said Homayoun Falakshahi, senior oil analyst at trade analytics firm Kpler. Iran's crude exports have been rising in recent years, notably since the start of 2023. Vortexa puts them s at 1.7mn b/d in July-September, while Kpler's estimate is slightly higher at 1.75mn b/d. September was a particularly strong month — 1.83mn b/d according to Kpler and 1.75mn b/d according to Vortexa. Kpler's September estimate is the highest since the fourth quarter of 2018 and Vortexa's is just 50,000 b/d short of a six-year high of 1.8mn b/d in June. This month's exports will be much lower. Even if Iran's loading activities were to return to normal for the rest of October, it would struggle to breach the 1.35mn b/d mark for the full month, a level it has surpassed consistently since the fourth quarter of last year. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japanese firms eye developing CCS project in Alaska

11/10/24

Japanese firms eye developing CCS project in Alaska

Tokyo, 11 October (Argus) — Two Japanese firms are looking to develop a carbon capture and storage (CCS) value chain between Japan and US' Alaska state to help achieve Japan's 2050 decarbonisation goal. Japanese trading house Sumitomo and Japanese shipping firm Kline today reached a deal to sign a joint research agreement with US independent Hilcorp, for a strategic partnership to capture CO2 in Japan and transport it on a large liquefied CO2 (LCO2) carrier to storage and injection facilities in Alaska. Oil and gas fields have been developed in Alaska since the 1950s and the total storage capacity of the CCS project is expected to be 50 gigatonnes, equivalent to 50 years' worth of Japan's CO2 emissions, Sumitomo said. The world's first LCO2 transportation for CCS is scheduled to start next year ahead of this project, Kline said. Japanese companies are gearing up efforts to seek overseas storage sites for CO2, as domestic storage sites would be insufficient to store all of the country's possible emissions. Tokyo aims to add 6mn-12mn t/yr of CO2 storage capacity domestically and internationally from 2030, with a target of 120mn-240mn t/yr by 2050. The government has projected that Japan will be able to store up to 70pc of its forecasted CO2 emissions of approximately 240mn t/yr in 2050. Japan's parliament in May allowed the government to ratify the 2009 amendment to the International Maritime Organization's London Protocol that will enable the export of CO2. By Reina Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexico’s Sep inflation slows with energy prices

10/10/24

Mexico’s Sep inflation slows with energy prices

Mexico City, 10 October (Argus) — Lower energy prices supported an easing in Mexico's consumer price index (CPI) in September for a second consecutive month. The CPI slowed to an annual 4.58pc in September, down from 4.99pc in August, Mexico's statistics agency Inegi said on 9 October. This was lower than both Mexican bank Banorte's own 4.59pc estimate and its analysts' consensus estimate of 4.61pc. Energy inflation eased for a second month, dropping to 6.9pc from 7.9pc in August and 9.2pc in July, with LPG prices — the largest component — slowing to 14.7pc in September from 16.8pc in August and 25.6pc in July. Seasonal rains, now ending, have largely reversed the price spikes in farm goods caused by extreme drought earlier this year, with fruit and vegetable inflation slowing to 7.65pc in September from 12.6pc in August, making it the first single-digit rate since November 2023. "Despite the positive performance of agricultural items since August, lingering risks could turn them negative again," Banorte said in a note, emphasizing that above-normal rainfall will be needed in the coming months to avoid a return to drought and price spikes next year. For now, Mexican weather agency Conagua still estimates relatively heavy rains in October, but "more adverse" conditions for November and December, with no state forecast to exceed the upper range of historical rainfall. Core inflation, which strips out volatile food and energy, eased in September to 3.9pc from 4pc, moving within the central bank's 2pc to 4pc target range for the first time since February 2021. Inside core, said Banorte, packaged and manufactured goods continue to improve, standing at 2.9pc from 3pc in August. Services also moderated, adjusting to 5.1pc from 5.2pc. "A downward trend in the latter is needed to corroborate additional gains for the core," Banorte said. "This will still take some time, especially given that the margin for additional declines in goods may be running out." The Mexican bank added that within this context, it maintains its estimate for full-year 2024 core inflation to hold to 3.9pc. Though less weighted than core inflation, the bulk of September's easing in the headline was due to non-core inflation, including prices on more volatile items such as fuels and farm goods. Inegi reported non-core moving to 6.5pc in September from 8pc in August. Despite two months of better-than-expected price improvements, Banorte warned that "risks remain," with energy prices susceptible to gains amid "geopolitical tensions in the Middle East and economic stimulus in China." Still, there is "room to adjust gasoline subsidies" to cushion these effects, it added. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

UN carbon market regulator takes 'agile' approach

10/10/24

UN carbon market regulator takes 'agile' approach

Berlin, 10 October (Argus) — The regulator of the new UN carbon crediting mechanism under Article 6 of the Paris climate agreement decided on key rules this week, adopting an "agile" approach to difficult issues to allow the rules to adapt to "ever-evolving developments in addressing climate change". The Article 6.4 supervisory body decided at its meeting this week in Baku, Azerbaijan, to adopt standards on methodologies and greenhouse gas (GHG) removals open to additional guidance by parties at the UN Cop 29 climate conference in Baku next month. This will allow the supervisory body to review and further improve the standards "whenever necessary" and to "keep up with market developments", it said. The body has requested that the parties meeting at Cop 29 to endorse this approach. The standards will help project developers create and submit methodologies for their projects, to allow them to be registered under the new Paris Agreement Crediting Mechanism (PACM), the group said. Article 6 takes a bottom-up approach to methodologies, allowing project developers to draw up their own methodologies provided they comply with the standard. The standard includes principles such as the downward adjustment of GHG mitigation paths to "encourage ambition over time" and the selection of a baseline against which the mitigation is measured that is below business-as-usual levels. It also includes provisions for equitably sharing the mitigation benefits between the participating countries. This could also be achieved through applying the so-called Sustainable Development Tool adopted at the meeting. The tool, a key objective of which is to set apart the PACM from its predecessor the clean development mechanism's indifference towards environmental and human rights, will require all participants to assess, demonstrate and monitor the environmental and human rights impacts of their projects. Activity participants must also notify the supervisory body of any potential reversal of the achieved mitigation within 30 days of becoming aware of the event. The supervisory body will establish a Reversal Risk Buffer Pool Account in the mechanism registry to compensate fully for avoidable and unavoidable reversals, by cancelling an equivalent amount of buffer Article 6.4 emissions reductions. The supervisory body has tasked experts on the so-called Methodological Expert Panel with continuing their work on various unresolved principles, such as developing a tool for assessing the reversal risk of removals, including the possible application of upper limits and specific risk factors. The supervisory body did not look into the issue of registries at this week's meeting, considered another tricky issue among several outlined by UK department for energy security and net zero head of carbon markets negotiations Dexter Lee at a conference in London this week. But speakers at the event noted a renewed willingness to agree on Article 6 rules this year. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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