Latest Market News

Clean energy spending to hit fresh record in 2023: IEA

  • Spanish Market: Coal, Crude oil, Electricity, Hydrogen, Oil products
  • 25/05/23

Global energy investment is set to hit a record $2.8 trillion in 2023, led by another major boost in clean energy spending, the IEA said today in its World Energy Investment 2023 report.

The Paris-based energy watchdog said Russia's invasion of Ukraine and the ensuing energy crisis is accelerating momentum behind clean energy investment which continues to pull ahead of traditional fossil fuel spending. It sees clean energy spending rising by around $100bn to a record $1.7 trillion this year.

Spending on "unabated fossil fuel supply and power" is also projected to rise as companies and countries scramble for quick gains in oil and gas supply. But at just over $1 trillion, it lags clean energy investment. "For every $1 spent on fossil fuels, $1.7 is now spent on clean energy. Five years ago this ratio was 1:1," the IEA said.

Much of the growth in clean energy spending is being driven by investment in renewables, which hit a record $600bn last year and is projected to rise to around $650bn this year, according to the IEA. For the first time ever, solar power investment of $380bn is forecast to trump upstream oil spending.

Clean energy spending is being boosted by "improved economics at a time of high and volatile fossil fuel prices", the IEA said. Other factors include policy support from governments such as the US' Inflation Reduction Act and the EU's Green Deal Industrial Plan, as well as a push by countries to gain a slice of the emerging clean energy economy, it said. But it notes significant shortfalls in clean energy spending in emerging and developing economies. This presents a "serious risk of new dividing lines" in the energy transition, it said.

Windfall profits

High energy prices helped the oil and gas industry rake in record profits of $4 trillion last year, but the sector used the windfall as an opportunity to hike shareholder returns and pay down debt, rather than ramp up investment significantly, the IEA said. Although upstream oil and gas spending is seen rising by 7pc this year to more than $500bn, this is still below pre-pandemic levels, and half of the increase is accounted for by cost inflation, according to the agency. Clean energy investment by the oil and gas industry only represents a small fraction — around 5pc — of total upstream investment, it added.

Like last year, the rise in upstream oil and gas spending is being mostly driven by state-owned firms in the Middle East, such as Saudi Aramco and Adnoc, which represent the only segment of the industry investing more than before the pandemic. One key trend for the industry as a whole is a focus on so-called "advantaged" projects that can be brought online relatively quickly at "a low cost and with low emission intensities", the IEA said.

This trend has been reinforced by the need to secure alternative energy supplies, particularly in Europe, after Moscow's invasion of Ukraine cut off most of Russia's gas exports to the continent. The IEA expects a 25pc increase in conventional oil and gas resources approved for development in 2023 compared with last year. Most are gas projects, "reflecting market pressures as well as the push to substitute the shortfall in Russian deliveries", it said. The war has also prompted a big rise in investment on LNG regasification capacity, it added, with Europe's annual regasification capacity forecast to increase by 50bn m³ by 2025.

Current levels of fossil fuel investment are more than twice as high as they need to be if the world is to reach net zero emissions by 2050, the agency said. And while investment on bioenergy, hydrogen and carbon capture, utilisation and storage (CCUS) is picking up, it remains well short of levels needed for net zero, it said.


Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

25/07/24

South Africa adopts climate change law

South Africa adopts climate change law

Cape Town, 25 July (Argus) — South Africa's president Cyril Ramaphosa has signed into law the country's climate change bill, which sets out a national response to climate change for the first time. The new climate change act will enable the orderly reduction of greenhouse gas (GHG) emissions through the implementation of sectoral emission targets towards South Africa's commitment to reach net zero by 2050. Currently, the country is the 15th largest GHG emitter in the world, according to the World Resources Institute. The law provides policy guidelines to ensure South Africa reaches its nationally determined contribution (NDC) under the Paris climate agreement by assigning individual enterprises carbon budgets and facilitating public disclosure of their progress. In its updated 2021 NDC, the country has undertaken to cut its GHG emissions to 350mn-420mn t of CO2 equivalent (CO2e), equivalent to 19-32pc below 2010 levels, by 2030. The lower end of this range is in line with the Paris Agreement's 1.5°C global warming threshold. To meet this, South Africa will have to achieve a steep decline in coal-fired electricity generation. A carbon tax is seen as a vital component of the country's mitigation strategy, according to the president. "By internalising the cost of carbon emissions, carbon tax incentivises companies to reduce their carbon footprint and invest in cleaner technologies, and also generates revenue for climate initiatives," Ramaphosa said. South Africa's carbon tax was introduced in a phased approach in June 2019 at a rate of 120 rands/t ($7/t) of CO2 equivalent (CO2e) and increased to R134/t of CO2e by the end of 2022. But tax-free allowances for energy-intensive sectors such as mining, and iron and steel, along with state-owned utility Eskom's exemption, implied an initial effective carbon tax rate as low as R6-48/t of CO2e. South Africa's National Treasury is targeting an increase to $30/t of CO2e by 2030. But the extension of phase one from the end of 2022 to the end of 2025, together with an uncertain future price trajectory and lack of clarity on future exemptions, means the effective carbon tax rate is likely to remain well below the IMF's recommended $50/t of CO2e by 2030 for emerging markets. The new climate change act seeks to align South Africa's climate change policies and strengthen co-ordination between different departments to ensure the country's transition to a low-carbon and climate-resilient economy is not constrained by any policy contradictions. It outlines South Africa's planned mitigation and adaptation actions aimed at cutting GHG emissions over time, while reducing the risk of job losses and promoting new employment opportunities in the emerging green economy. The law also places a legal obligation on provinces and municipalities to ensure climate change risks and associated vulnerabilities are acted upon, while providing mechanisms for national government to offer additional financial support for these efforts. The new act formally establishes the Presidential Climate Commission (PCC) as a statutory body tasked with providing advice on the country's climate change response. Among other things, the PCC is developing proposals for a just transition financing mechanism, for which a platform will be launched in the next few months. Over the last three years, South Africa has seen an increase in extreme weather events often with disastrous consequences for poor communities and vulnerable groups. To address the substantial gap between available disaster funds and the cost of disaster response, the government announced in February that it would establish a climate change response fund. At the time of the announcement, Ramaphosa reiterated that South Africa would undertake its just energy transition "at a pace, scale and cost that our country can afford and in a manner that ensures energy security". Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US-Australia’s Coronado to lift coal sales


25/07/24
25/07/24

US-Australia’s Coronado to lift coal sales

Sydney, 25 July (Argus) — US-Australian coal producer Coronado Coal will boost coal sales during July-December despite logistical challenges, as it maintains its output guidance of 16.4mn-17.2mn t for 2024. The firm sold 7.8mn t of coal during January-June, leaving it a target of 8.6mn t for July-December to meet the bottom of its 2024 guidance . It has maintained this guidance despite warning that shipments from its Australian Curragh mine will be affected by a two-week rail disruption from the end of July . Coronado operates the Curragh mine in Queensland and two mining complexes in the US' Virginia. All produce coking and thermal coal. Coronado's revenues were supported during April-June compared with January-March by a smaller discount for pulverised injection coal (PCI) against hard coking coal prices, which saw the PCI price rise while other metallurgical coal prices were under pressure. Its sales prices will remain strong in July-September, forecasts chief executive Douglas Thompson, on restocking in India and the rail disruption in Queensland, as well as the fire at Anglo American's Grosvenor mine that will disrupt Australian exports. Thompson warned that there was some downside risk of $5-10/t to Australian PCI pricing but if this was realised it will see China restart buying from Australia. In the long term he expects more competition from Russia-origin PCI, as Russian coal producers find new routes to the seaborne market and regain market share lost because of an European embargo. The premium for premium hard coal prices over PCI coal prices has shrunk to around $30/t from $145/t over the past six months. Argus last assessed the premium hard low-volatile price at $224/t fob Australia on 24 July and the PCI low-volatile price at $193.65/t. Coronado's group sales volumes were up 8.3pc to 4.1mn t in April-June compared with January-March , reflecting higher sales from its Australian and US operations. The increase in volumes combined with reduced need to remove waste materials allowed Coronado to cut is mining costs by 27.5pc from the previous quarter to an average of $91.10/t of coal sold. The firm expects costs to fall further in July-December as it demobilises more of its mining fleet at its Curragh mine. This reflects reduced waste removal and should have no impact of coal production at Curragh, Thompson said. Production at Curragh should increase in the second half of 2024, with 100,000t of coal production deferred from June to July because of heavy rainfall. By Jo Clarke Coronado Coal (mn t) Apr-Jun '24 Jan-Mar '24 Apr-Jun '23 Jan-Jun '24 Jan-Jun '23 Sales (mn t) Australia (Curragh) 2.7 2.5 2.5 5.2 4.7 US 1.4 1.2 1.5 2.6 3.0 Total 4.1 3.7 4.0 7.8 7.6 Sales data % coking coal of total sales 81.0 78.7 76.0 79.9 75.3 Australian realised met coal price (fob) ($/t) 216.2 225.2 237.7 220.5 239.7 US realised met coal price (for) ($/t) 161.7 170.9 196.0 166.0 215.5 Source: Coronado Australian coal price comparisons ($/t) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Refining, LNG segments take Total’s profit lower in 2Q


25/07/24
25/07/24

Refining, LNG segments take Total’s profit lower in 2Q

London, 25 July (Argus) — TotalEnergies said today that a worsening performance at its downstream Refining & Chemicals business and its Integrated LNG segment led to a 7pc year-on-year decline in profit in the second quarter. Profit of $3.79bn was down from $5.72bn for the January-March quarter and from $4.09bn in the second quarter of 2023. When adjusted for inventory effects and special items, profit was $4.67bn — slightly lower than analysts had been expecting and 6pc down on the immediately preceding quarter. The biggest hit to profits was at the Refining & Chemicals segment, which reported an adjusted operating profit of $639mn for the April-June period, a 36pc fall on the year. Earlier in July, TotalEnergies had flagged lower refining margins in Europe and the Middle East, with its European Refining Margin Marker down by 37pc to $44.9/t compared with the first quarter. This margin decline was partially compensated for by an increase in its refineries' utilisation rate: to 84pc in April-June from 79pc in the first quarter. The company's Integrated LNG business saw a 13pc year on year decline in its adjusted operating profit, to $1.15bn. TotalEnergies cited lower LNG prices and sales, and said its gas trading operation "did not fully benefit in markets characterised by lower volatility than during the first half of 2023." A bright spot was the Exploration & Production business, where adjusted operating profit rose by 14pc on the year to $2.67bn. This was mainly driven by higher oil prices, which were partially offset by lower gas realisations and production. The company's second-quarter production averaged 2.44mn b/d of oil equivalent (boe/d), down by 1pc from 2.46mn boe/d reported for the January-March period and from the 2.47mn boe/d average in the second quarter of 2023. TotalEnergies attributed the quarter-on-quarter decline to a greater level of planned maintenance, particularly in the North Sea. But it said its underlying production — excluding the Canadian oil sands assets it sold last year — was up by 3pc on the year. This was largely thanks to the start up and ramp up of projects including Mero 2 offshore Brazil, Block 10 in Oman, Tommeliten Alpha and Eldfisk North in Norway, Akpo West in Nigeria and Absheron in Azerbaijan. TotalEnergies said production also benefited from its entry into the producing fields Ratawi, in Iraq, and Dorado in the US. The company expects production in a 2.4mn-2.45mn boe/d range in the third quarter, when its Anchor project in the US Gulf of Mexico is expected to start up. The company increased profit at its Integrated Power segment, which contains its renewables and gas-fired power operations. Adjusted operating profit rose by 12pc year-on-year to $502mn and net power production rose by 10pc to 9.1TWh. TotalEnergies' cash flow from operations, excluding working capital, was $7.78bn in April-June — an 8pc fall from a year earlier. The company has maintained its second interim dividend for 2024 at €0.79/share and plans to buy back up to $2bn of its shares in the third quarter, in line with its repurchases in previous quarters. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia’s Origin to expand Eraring battery project


25/07/24
25/07/24

Australia’s Origin to expand Eraring battery project

Sydney, 25 July (Argus) — Australian utility Origin will expand the battery energy storage system (BESS) at the site of its 2,880MW Eraring coal-fired power station in News South Wales (NSW), as part of its strategy to pivot to renewable energy. The A$450mn ($294mn) investment will add 240MW of four-hour duration supply to the 460MW, two-hour BESS already under construction as part of the project's first stage, Origin said on 25 July. Agreements for equipment supply and construction have been made with stage two construction to begin in early 2025 before the expansion comes on line during January-March 2027. Equipment will be provided by Finnish engineering firm Wartsila, which is also building the first stage of the BESS. The sanctioning of Eraring's second stage brings the firm's total commitment on storage to 1.5GW, with Origin agreeing in January to outlay A$400mn on a 300MW BESS along with the firm's 550MW Mortlake gas-fired power plant in Victoria. Origin and the NSW Labor state government agreed in May to keep Eraring, Australia's largest single power plant, open for at least two more years as part of a deal to maintain capacity because of delays with replacement projects. Australia is struggling to replace its retiring coal-fired power generation because of cost blowouts and delays for renewable projects. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australian coal rail line to shut for 2 weeks: Coronado


25/07/24
25/07/24

Australian coal rail line to shut for 2 weeks: Coronado

Sydney, 25 July (Argus) — The Blackwater rail line in Queensland, Australia will be closed for up to two weeks because of maintenance, which will restrict coal deliveries to the key port of Gladstone. The maintenance program will run from late July to early August, coal mining firm Coronado said on 25 July. This is limiting metallurgical supply from Queensland and pushing up the price of pulverised coal injection (PCI) coal relative to Australian premium low-volatile coal, it added. The two-week shutdown was planned before Coronado released its 16.4mn-17.2mn t saleable coal guidance for 2024 , which it still expects to reach despite a week-long outage on the Blackwater line in June-July following a collision . Shippers appear prepared for the reduction in shipping from the 102mn t/yr Gladstone port over the next couple of weeks, with just 12 ships queued outside the port on 25 July, down from 23 on 6 June and below-average queues of around 20. Coal is delivered to Gladstone through the 100mn t/yr capacity Blackwater rail line and the 30mn t/yr capacity Moura line, both of which are operated by Australian rail firm Aurizon. Gladstone's shipments fell by 9.5pc in June compared with a year earlier, partly because of rail constraints. Around two-thirds of Gladstone's coal shipments are metallurgical coal and a third are thermal. A fire at UK-South African mining firm Anglo American's Grosvenor mine already hit Australian metallurgical coal exports, which led the firm to cut its 2024 production guidance to 14mn-15.5mn t from 15mn-17mn t. The premium for premium hard coal prices over PCI coal prices has shrunk to around $30/t from $145/t over the past six months. Argus last assessed the premium hard low-vol price at $224/t fob Australia on 24 July, with the PCI low-vol price at $193.65/t. Aurizon and Gladstone Port were contacted for comment, but have yet to respond at the time of writing. By Jo Clarke Australian coal price comparisons ($/t) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more