EU faces tougher path to climate legislation

Spanish Market: Electricity, Emissions, Hydrogen, Natural gas, Oil products
14/06/24

Right-wing parties' strong showing in the European Parliament elections are likely to mean a looser embrace of the Green Deal, writes Dafydd ab Iago

The European Parliament elections have resulted in a workable majority for parties that supported the EU's 2030 climate and energy strategy. But political uncertainty in the EU's two largest countries, Germany and France, could add to the difficulties the bloc faces in legislating for its2040 target of cutting net greenhouse gas (GHG) emissions by at least 90pc, compared with 1990 levels.

Outgoing member of the European Parliament Markus Pieper sees the majority paving the way for a more pragmatic approach in 2024-29, with internal combustion engine vehicles staying on the roads beyond 2035, and more flexible rules for CO2-neutral fuels such as low-carbon hydrogen, e-fuels, and biofuels.

The newly constituted parliament's first plenary session is scheduled to take place in Strasbourg on 16-19 July, when members will choose the parliament's next president and vice-presidents and decide on committee memberships. Awaiting legislation for 2040 climate goals, members from the influential environment and energy committees have a range of technical legislation to approve related to the bloc's 2030 climate goals.

This begins with the approval of legislation defining vehicles running "exclusively" on CO2-neutral fuels. A little further down the line, the environment committee will weigh in on legislation setting methane intensity classes for producers and companies selling oil, gas and coal in the EU by 2030.

Passing legislation for the 2040 GHG targets will depend on parliamentary and member state approval. Overseeing the legal proposals will be the European Commission president, with Ursula von der Leyen eyeing re-election to this post after her centre-right EPP won 189 seats in parliament. Together with centre-left and liberal parties, von der Leyen's EPP group could form a comfortable majority for climate and energy legislation, with over 400 of the 720 seats. This does not include the Greens, who lost 19 seats and are now down to 53, nor the 135 centre-left socialists.

The election results have undoubtably strengthened von der Leyen's bid to be re-elected as commission president, and EU leaders are due to meet on 17 June for their first formal discussions on the matter. The parliament as a whole must approve the EU leaders' choice of commission president, along with the 27 commissioners, including those responsible for energy and climate, that are to take office by the end of the year.

Green knights

Von der Leyen oversaw the implementation of the Green Deal — the overarching set of policies aimed at cutting EU GHG emissions by 55pc by 2030 compared with 1990 levels. Environment committee member Michael Bloss says it is "absurd" that the Greens now appear to have to come to von der Leyen's aid to rescue her Green Deal, and that he fears the prospect of von der Leyen's EPP group forming majorities in parliament with the conservative ECR and far-right groups. "The Green Deal is not dead," Bloss says.

If reappointed, von der Leyen will find herself contending with national capitals more willing to oppose ambitious climate and energy targets. In response to strong gains by the far-right, eurosceptic National Rally party in the EU elections, French president Emmanuel Macron dissolved parliament and called snap National Assembly elections for 30 June and 7 July. And Germany's far-right opposition AfD party outperformed chancellor Olaf Scholz's centre-left SPD, altering Berlin's coalition politics. With Germany's Bundestag election on the horizon in September or October 2025, sensitive coalition politics could well hinder approval of more ambitious, and costly, EU climate legislation.

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19/05/25

Phillips 66 vote could change company's course

Houston, 19 May (Argus) — Just four of Phillips 66's 14 board members are up for election at its annual meeting this week, but the outcome could shape the future direction of the US refiner and midstream operator. Activist hedge fund Elliott Investment Management has named four of its own candidates for the vote which will come to a conclusion on 21 May, part of its multi-year effort to push the company to sell assets and focus on core businesses. Elliott, which has amassed a $2.5bn stake in Phillips 66, contends that the company has consistently trailed its industry peers and needs to streamline operations, including spinning off or selling its midstream business, selling its stake in Chevron Phillips Chemical (CPChem), and possibly other assets. Phillips 66 has told shareholders that Elliot is pushing "an aggressive short-term agenda" that would cause disruption, slow momentum and jeopardize shareholders' investments. It says the Phillips 66 board and management team are implementing a "transformative strategy" that has delivered results, expanded its NGL business, improved its refining cost structure and continues to position CPChem as the lowest cost producer of ethylene. "We don't act out of fear or short-term trends," Phillips 66 chief executive office Mark Lashier said in a first quarter earnings call last month. "We act on what we believe will create the most long-term value for our shareholders each and every time." Turning up the heat Elliott alleges that Phillips 66 suffers from "continuous poor corporate governance" and "disingenuous shareholder engagement." Elliott said its proposals could push Phillips 66 stock to more than $200 per share. The stock was trading near $124 per share Monday morning. Elliott's campaign has grown more aggressive in the months leading up to this week's shareholder meeting. It includes launching a website dubbed "Streamline 66" with slide shows, podcasts, biographies of its dissident board nominees, press releases and information on how shareholders can vote by mail, phone or online. Elliott nominees include Brian Coffman, former chief executive at Motiva; Sigmund Cornelius, former chief financial officer of ConocoPhillips; Michael Heim, former chief operating officer of Targa Resources; and Stacy Nieuwoudt, former energy analyst at Citadel. Three top shareholder advisory firms [are backing the Elliott nominees](https://direct.argusmedia.com/newsandanalysis/article/2687988) in the proxy fight. Institutional Shareholder Services (ISS) and Egan-Jones are recommending all four of Elliot's dissident nominees, while Glass Lewis is backing three of the four — and supporting Phillips 66 nominee Nigel Hearne, a 35-year veteran of Chevron, because his experience "is more critical at this juncture". Phillips 66 pushback Phillips 66 has made some adjustments since Elliot started to agitate for change. In February 2024 it appointed former Motiva and Cenovus downstream executive Robert Pease to the board to address Elliott's concerns about a shift in focus from refining to midstream. And this year it agreed to sell off [some of its European retail business](https://direct.argusmedia.com/newsandanalysis/article/2688808), and expects about $1.6bn in pre-tax cash proceeds from the sale that it will use toward debt reduction and shareholder returns. But for the other Elliott recommendations to divest from midstream and sell its 50pc share of CPChem, Phillips 66 said the board has evaluated them and "came to the conclusion that neither action is in the best interest of long-term shareholders at this time". In additon to Hearne, Phillips 66's slate for the open board seats includes putting up Pease and current director John Lowe for re-election and nominating Howard Ungerleider, a former Dow president and chief financial officer. Current board members Gary Adams and Denise Ramos will not stand for re-election. Analysts with US bank TD Cowen said they "suspect Elliott could get some or all of its board members elected" and there could be larger board turnover next year if shareholders approve an Elliott proposal to require each director to submit a resignation to the board every year. The most likely outcome of an Elliott win is that the board "more deeply examines a midstream restructuring", TD Cowen said. By Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU gas stockbuild rises further in 1H May

19/05/25

EU gas stockbuild rises further in 1H May

London, 19 May (Argus) — Injections into EU gas storage facilities quickened in the first half of May from the second half of April, remaining above the previous two years' pace. Net injections across the EU averaged 3.42 TWh/d on 1-15 May, up from 2.7 TWh/d in the previous two weeks and 2.82 TWh/d over the same period of 2024, the most recent data from EU transparency body GIE show ( see injections graph ). The stockbuild was also slightly higher than on 1-15 May 2023, although below the 3.74 TWh/d average in 2018-22. The EU needs a strong stockbuild this summer to close the gap to the two-year average, as storage facilities entered this summer at a much lower base of 388TWh in store, or just 34pc of overall technical capacity. Stocks have since increased to 497TWh as of the morning of 16 May, but this remains 238TWh lower than the 16 May average in 2023-24, although much closer to the 2018-22 average of 503TWh ( see stocks graph ). The German government's recent decree lowering the country's storage target to 70pc by 1 November from 90pc previously reduces required injections in the EU's biggest storage market, although operator Sefe's continued failure to market significant capacity at Rehden may require a strong stockbuild late in the season. And European legislators' push to drop the EU-wide target to 83pc and to essentially abolish intermediary fill targets further decreases the pressure to inject immediately, but could lead to some firms taking a wait-and-see approach while the legislation is finalised. Prompt prices across major European hubs have dropped to significant discounts to the front-winter price so far this month, incentivising injections. The TTF day-ahead price averaged €34.32/MWh on 1-15 May and the balance-of-month €34.37/MWh, each well below the average for the winter 2025-26 contract of €35.92/MWh. An even larger gap opened up in Germany, with the day-ahead on average €2.32/MWh below the winter and the balance-of-month €2.25/MWh beneath it. Sendout from EU LNG terminals remained strong at 4.3 TWh/d on 1-15 May, slightly down from 4.4 TWh/d in the second half of April but well above 3 TWh/d over the same period of 2024. Chinese LNG demand has continued to hold much weaker on the year after a mild winter that left stocks high, along with booming domestic production and stronger pipeline imports from Russia. This has meant that Europe has faced less competition for marginal cargoes. Additionally, a slight drop in gas demand for power generation has left more gas available to add to storage than a year earlier. The EU's gas-fired power generation slipped to 23.1GW on 1-15 May from 23.7GW a year earlier, according to data from Fraunhofer ISE. By Brendan A'Hearn EU net injections GWh/d EU stocks TWh Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Infinium takes FID on 100MW Texas e-fuels plant

19/05/25

Infinium takes FID on 100MW Texas e-fuels plant

London, 19 May (Argus) — US project developer Infinium has taken a final investment decision (FID) on an e-fuels production plant in Texas, and has selected compatriot Electric Hydrogen to provide 100MW of proton exchange membrane (PEM) electrolyser capacity. Construction of Project Roadrunner, at Pecos, west Texas is underway, with commercial production due to start in 2027, Infinium said. The facility will make 23,000 t/yr of synthetic aviation fuels (e-SAF) and other e-fuels, specifically e-diesel for trucking and maritime industries and e-naphtha. This will make it the largest e-fuels facility in the world, Infinium said. Supply will be sold domestically and exported to international markets, it said. Infinium last year struck a 10-year offtake deal with UK-based International Airlines Group (IAG) for delivery of 75,000t of e-SAF to any of the group's airlines: Aer Lingus, BA, Iberia, Level and Vueling. The UK will introduce mandatory e-SAF quotas for the aviation sector from 2028, with the EU to follow suit in 2030. The 7,500 t/yr deal with IAG would cover roughly one-third of Project Roadrunner's expected output. Infinium also has a supply agreement with American Airlines, the developer said. Project Roadrunner will be fed with 150MW of wind power generation capacity from a subsidiary of Florida-headquartered NextEra Energy Resources, via a long-term power purchase agreement. Infinium said Electric Hydrogen's integrated 100MW PEM plant "will not only produce hydrogen for the e-SAF facility but will also have capacity to support future hydrogen offtake opportunities." Canadian asset management Brookfield in 2024 agreed to invest $200mn in Infinium, and specifically Project Roadrunner, in the short term, with potential further investments of $850mn for future projects. Project Roadrunner previously received conditional funding commitment of $75mn from the Bill Gates-founded Breakthrough Energy Catalyst. Infinium has not specified whether it intends to avail itself of the 45V hydrogen production tax credits, which could yield up to $3/kg of hydrogen. Start of construction would leave this possibility open even if a bill proposed by Republicans in the US House of Representatives goes through. The proposed bill foresees that tax credits would only be available for projects that start construction before the start of 2026. By Alexandra Luca Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US LNG developers brush off tariff concerns

19/05/25

US LNG developers brush off tariff concerns

Houston, 19 May (Argus) — The US' biggest LNG developers have little worry over potential costs from President Donald Trump's 25pc steel and aluminum import tariffs as they prepare to spend billions building new export infrastructure. The top exporters of US LNG so far in 2025 — Cheniere, Venture Global and Sempra — are pushing ahead with plans for new terminals and expansions, dismissing concerns that Trump's protectionist trade policy could throttle projects that would help add more than 80mn t/yr (12bn cf/d) of capacity to the world's largest supplier of LNG by 2030. Sempra and Venture Global both estimate that just 1pc of capital expenditure for the first phases of their respective Port Arthur and CP2 projects is exposed to tariffs. Sempra plans to spend $13bn on the 13.5mn t/yr first phase of the Port Arthur, Texas, project. Venture Global expects to spend $27bn-28bn on both phases of the 28mn t/yr CP2 plant in Louisiana, but has yet to reach a final investment decision for phase 1. About 90pc of the Port Arthur project's spending is with domestic suppliers and contractors, Sempra chief executive Jeffrey Martin told investors in an earnings call on 8 May, with steel for the first liquefaction train fully sourced in the US. The two-train first phase is expected to have its trains on line in 2027 and 2028. Disruptions during the Covid-19 pandemic had already forced the company to identify and adapt to risks in the supply chain. "We expect those diversified sources to help us better manage and mitigate tariff risks," Sempra chief financial officer Karen Sedgwick said. She later added that the firm preemptively began importing materials for Port Arthur LNG into a foreign trade zone in February, a tactic that can reduce or delay duties payments . Neither of Venture Global's existing 12.4mn t/yr Calcasieu Pass and 27.2mn t/yr Plaquemines plants in Louisiana faces tariff risks, chief executive Mike Sabel told investors on 13 May. But up to $350mn of materials in the 20.2mn t/yr first phase of CP2 are subject to duties. The 26 prefabricated trains in phase 1 are being built in Italy and represent the largest exposure (see table) . Venture Global expects 12 of those trains to arrive in Louisiana by the end of the year. Inflation and high interest rates represent a bigger threat, Sabel said, calling it "probably the toughest environment to build our projects since the 1970s". "It's something we work and live every day because of the scale of construction we're doing," said Sabel, whose company has 73.8mn t/yr of capacity in development. Sempra expects to make a final investment decision on the 13.5mn t/yr second phase of Port Arthur LNG by the end of 2025. Venture Global is eyeing a decision on CP2's first phase by mid-2025. ‘Our best salesmen for US LNG' Cheniere, the largest LNG exporter in the US, faces no tariff risks at its 11.45mn t/yr Corpus Christi, Texas, stage 3 expansion. The seven-train project "is basically complete", chief executive Jack Fusco told investors on 8 May, with all materials on site and construction ongoing. The company expects to have the first four trains producing LNG by the end of the year and plans to reach an investment decision this year to add trains 8 and 9. The largest portion of spending for those trains will be on labor, and "a fair amount" of equipment and materials will be sourced domestically, limiting tariff exposure, Fusco said. The company has already spent $500mn in early procurement. Cheniere also plans to jump on what it sees as a friendly permitting window under the Trump administration and add about 17mn t/yr to its existing 33mn t/yr Sabine Pass plant in Louisiana. Fusco said he has been meeting with administration officials in Washington to discuss trade issues and how LNG fits in Trump's energy agenda. The first Trump administration "were some of our best salesmen for US LNG, and that's continued during the president's current administration", Fusco said. Since taking office in January, Trump's administration has worked to buttress the US LNG industry, quickly ending the Biden administration's pause on issuing licenses to export to countries that do not have free trade agreements with the US and making it easier for projects to receive extensions for such licenses. But the new projects by Cheniere, Venture Global and Sempra may benefit from having already been in at least preliminary development when Trump unveiled the metals tariffs in February. For developers in earlier phases who are just now procuring supplies, "it's a different story", Alex Whittington, director of international affairs at Cheniere, told a conference in April. By Tray Swanson Venture Global CP2 Phase 1 - Tariff Exposure Component Country of Origin Delivery Status Tariff Exposure Liquefaction trains Italy First module delivery in mid-2025 $145mn-255mn Pre-treatment modules Fabricated in US First module delivery in mid-2026 $10mn-20mn Power island components US, Europe, Vietnam Delivered, major equipment in US storage $3mn-5mn Piperack modules, structural steel and pipe Various Piperack and structural steel procured $6mn-10mn Balance of plant Various Major bulk materials procured $40mn-50mn LNG tanks Various 9pc nickel steel plate and pipe piles procured $6mn-10mn Total $210mn-350mn — Venture Global Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU, UK to ‘work towards’ linking carbon markets

19/05/25

EU, UK to ‘work towards’ linking carbon markets

London, 19 May (Argus) — The EU and UK agreed to work towards linking their respective emissions trading systems (ETS), as part of their common understanding agreement concluded at a summit in London today. "The European Commission and the United Kingdom share the view that a functioning link between carbon markets would address many of the issues raised in respect of trade and a level playing field," the agreement states. A linking agreement should exempt both jurisdictions from their respective carbon border adjustment mechanisms, according to the common understanding, and the linked systems should cover power and industrial heat generation, and domestic and international maritime and aviation emissions. The statement specifically states that any link "should not constrain the European Union and the United Kingdom from pursuing higher environmental ambition". It also underlines that the UK ETS's supply cap and its emissions reduction pathway are "guided by" the country's Climate Change Act and nationally determined contributions to the Paris climate agreement, and that these should be "at least as ambitious" as the EU's. The UK has legally binding targets to cut its greenhouse gas (GHG) emissions by at least 68pc by 2030 and 81pc by 2035, both compared with 1990 levels. The EU aims to cut its net GHG emissions by 55pc by 2030, and is yet to set a 2035 target. Both jurisdictions are targeting net zero emissions by 2050, while they share the "same interests" in addressing climate change, commission president Ursula von der Leyen said today. Linking the systems would "save British businesses £800mn in EU carbon taxes", UK prime minister Keir Starmer said today, without specifying a timeframe for the savings. A study commissioned by a range of utilities and published last week found that linking the two systems would save up to €1.2bn on lower hedging costs resulting from improved market liquidity and lower bid-offer spreads. Today's agreement provides no timeline for linking the systems. The process to negotiate and link the Swiss ETS to the EU's scheme took almost 10 years. Alongside plans to work towards linking the EU and UK ETS, the jurisdictions also alluded in the agreement to continuing "technical regulatory exchanges" on energy technologies including hydrogen, carbon capture and storage and biomethane. And they will "explore in detail the necessary parameters" for the UK's potential participation in the EU's internal power market. By Victoria Hatherick and Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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