EU warns of 2030 climate ambition gap

Spanish Market: Emissions, Natural gas
19/06/24

The European Commission has warned of an ambition gap on the way to member states achieving the bloc's 2030 renewables and energy efficiency goals, although it noted "some" progress. And European industry still faces comparatively high energy prices, the commission said in its twice-yearly report on countries' economies and finances.

Increasing energy efficiency and switching to less costly renewable energy is "essential" to improve the competitiveness of European industry, but most EU states lack solid and sufficiently detailed investment estimations, as well as concrete measures to attract private clean energy finance, the commission said.

And countries need to strengthen their carbon sinks from the land use, land-use change and forestry sectors. For Germany, the commission noted that the transport sector has failed to reach annual sector-specific emission targets, including in 2023, when the sector increased final energy consumption by 6.3pc compared with 2022.

EU states also need to strengthen policies to phase out fossil fuel subsidies so as to align with the EU goal of becoming a climate neutral economy, the commission said. For France, the commission estimated a net budgetary cost of emergency energy support measures at 0.9pc of GDP in 2023 and a projected 0.2pc in 2024, falling to 0pc in 2025. And for Italy the commission forecast a net budgetary cost of emergency energy support measures of 1pc of GDP in 2023, reaching 0pc in 2024. For Germany, the estimations are 1.2pc of GDP going to energy support measures in 2023, 0.1pc in 2024, and 0pc in 2025.

Another of the commission's key recommendations is to cut the share of Russian imports in total EU gas imports beyond the 15pc seen in 2023, even if the share historically stood at around 40pc. Further efforts are needed from "certain" countries to phase out imports of LNG from Russia, the commission said.

EU states have struggled to agree a further round of sanctions against Russia, which would include restricting the reloading of Russian LNG for export outside the EU at terminals in Europe. EU foreign ministers are expected to discuss the matter at a meeting on 24 June.

By Dafydd ab Iago

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05/12/24

Australia’s Woodside inks Bechtel EPC for Louisiana LNG

Sydney, 5 December (Argus) — Australian independent Woodside Energy has signed an engineering, procurement and construction (EPC) contract with US engineering firm Bechtel for its Louisiana LNG terminal located in the US Gulf region. Bechtel has maintained operations at the partially constructed site since Woodside took over the project in October, after acquiring US LNG developer Tellurian , with works to continue subject to a limited notice to proceed under contract revisions, Woodside said. The Louisiana LNG foundation development comprises phases 1 and 2, which total 16.5mn t/yr capacity across three trains. Originally named Driftwood, Louisiana has permitting for a total five-train, 27.6mn t/yr capacity, with a final investment decision (FID) for phase 1 planned for January-March 2025. "In a short period of time, we have completed the acquisition, secured competitive revised EPC pricing that covers all three trains and opened the data room with strong interest from potential project partners," chief executive Meg O'Neill said on 5 December. Analysts have identified Tokyo Gas as a potential project partner, with RBC Capital Markets' Gordon Ramsay describing Louisiana LNG as a "good fit" with the Japanese utility's strategy of diversifying long-term offtake and locking in US gas supply, most recently through its purchase of independent Haynesville shale producer Rockcliff Energy for $2.7bn last year. First LNG at Louisiana is expected ahead of the project's US Federal Energy Regulatory Commission approval, expiring on 30 June 2029, O'Neill told an investor call in July, saying such a timeframe was consistent with a first quarter of 2025 FID. Perth-based Woodside heralded its fully permitted status when it announced it would buy Tellurian in July . But the election of Donald Trump as US president means a pause on issuing LNG export permits to non-free trade agreement nations is expected to be lifted in 2025 . Under O'Neill, Woodside has moved to increase its exposure to Atlantic basin LNG, inking a sales and purchase deal with the 9.5mn t/yr Commonwealth LNG in addition to an offtake deal with the 17.4mn t/yr Corpus Christi LNG in 2014. This adds to its existing 10mn t/yr equity production on Australia's west coast. Louisiana LNG expenditure from December to the end of March will be $1.3bn, Woodside said, estimating forward costs for the initial stage will be $900-960/t, unchanged from the figure at acquisition. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Williams sues ET over gasline fight: Clarification

04/12/24

Williams sues ET over gasline fight: Clarification

Clarifies that Williams filed suit earlier this year. New York, 4 December (Argus) — US natural gas pipeline company Williams has brought a "very large lawsuit" against its US midstream rival Energy Transfer after a legal dispute between the companies delayed construction of a project by Williams, Williams chief executive Alan Armstrong told Argus in an interview on 3 December. Armstrong said Energy Transfer is the only company in "pipeline history" to have defied industry norms over pipeline crossings in a bid to block competitors' projects. The market "was always very honorable" before that, he said. Armstrong said he hopes the lawsuit against Energy Transfer will undercut the "very bad precedent" set by Energy Transfer's alleged legal strategy and "stop the industry from spiraling into that kind of behavior." Energy Transfer did not immediately respond to a request for comment. Energy Transfer throughout 2023-24 tried to block Williams and other rival pipeline companies from building new gas pipelines across its own Tiger pipeline in northern Louisiana, located in the Haynesville shale near a cluster of planned LNG export terminals on the US Gulf coast. Energy Transfer argued that Williams and other pipeline companies' projects proposed an excessive number of crossings under and over its own pipelines, while its opponents argued it was merely interested in controlling market share. Beyond trying to block Williams from crossing the Tiger pipeline, Energy Transfer also prevailed upon federal regulators to review Williams' proposed 1.8 Bcf/d (51mn m³/d) Louisiana Energy Gateway (LEG) pipeline as an interstate transmission line, rather than a gathering line, as Williams claimed. This would have subjected LEG to more regulatory oversight. But the US Federal Energy Regulatory Commission in September denied the request . The broad legal strategy by Energy Transfer provoked ire from industry groups and now-Louisiana governor Jeff Landry (R), who warned it could threaten production growth out of the Haynesville and the coming US LNG export boom. Energy Transfer lost case after case to Williams in lawsuits spanning parishes across Louisiana, but the litigation pushed back the in-service date of LEG from late 2024 to the second half of 2025. The Tiger-LEG pipeline dispute was not the first time Williams and Energy Transfer had seen each other in court. After agreeing to merge in 2015, Energy Transfer in 2016 terminated the merger because of a tax issue that arose before closing. This led a Delaware judge in 2021 to make Energy Transfer pay Williams a $410mn breakup fee for deciding to pull out of its proposed $33bn merger. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil's economy accelerates to 4pc growth in 3Q

04/12/24

Brazil's economy accelerates to 4pc growth in 3Q

Sao Paulo, 4 December (Argus) — Brazil's economic growth accelerated to an annual 4pc in the third quarter, led by stronger consumer spending, according to government statistics agency IBGE. The economy accelerated from 3.3pc annual growth in the second quarter and posted the fastest growth since the first quarter of 2023. Household consumption grew by 5.5pc in the third quarter from a year earlier, while government spending increased by 1.3pc. Services grew by 4.1pc. The industry sector grew by an annual 3.6pc, driven by civil construction and five-year high automotive production in July , according to the national association of vehicle manufacturers. Exports rose by 2.1pc, while imports grew by 18pc. The oil, natural gas and mining industry contracted by 1pc, thanks to lower oil and gas exploration and production. Brazil produced 4.35mn b/d of oil equivalent (boe/d) in the third quarter, down from 4.51mn boe/d in the July-September 2023, according to oil and gas regulator ANP. The electricity and gas, water and sewage management sector increased by 3.7pc from July-September 2023, favoured by higher demand despite higher power tariffs. Brazil faced a severe drought in the first two quarters of the year that lowered river levels at hydroelectric plants and increased power charges in September. But the agriculture and cattle raising sector fell by 0.8pc, with expected production of significant crops such as corn and sugarcane dropping from a year prior also because of adverse weather. Still, output of cotton, wheat and coffee increased by 14.5pc, 5.3pc and 0.3pc, respectively, according to IBGE. The investment rate — the percentage of a country's total production that is invested — grew to 17.6pc in the third quarter, an increase of 1.2 percentage points from the same period in 2023. Brazil's GDP growth in the third quarter was up by 0.9pc from the second quarter, reaching R3 trillion ($494bn). By Maria Frazatto Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Biogas takes record share of EU gas demand in 2023

04/12/24

Biogas takes record share of EU gas demand in 2023

London, 4 December (Argus) — Biogas production in Europe was enough to cover 6.6pc of the EU's natural gas demand in 2023, according to figures from the European Biogas Association (EBA)'s latest statistical report. Combined biogas and biomethane production in Europe was 234TWh, or 22bn m³, last year, the EBA said, while latest Eurostat data show the EU's total natural gas demand was 3,519TWh, or 294bn m³. The EBA has revised its 2023 biomethane production estimate upwards to 4.9bn m³, from 4.6bn m³ in its January report . This amounts to an increase of 0.8bn m³ compared with 2022, the biggest yearly rise on record, with year-on year growth reaching 21pc in the EU and 18pc in Europe as a whole. The number of biomethane plants in the region rose sevenfold last year to 1,510, leaving Europe with installed capacity of 6.4bn m³/yr by the first quarter of 2024. Biogas and biomethane made up 6pc of the EU's renewable electricity consumption last year, which in turn accounted for 40pc of total electricity consumed in the bloc. Italy, France, Denmark and the UK had the fastest production growth rates in Europe in 2023, but Germany remained the region's biggest biogas and biomethane producer at 100TWh. If growth rates continue at last year's pace, most European countries are likely to meet the biomethane targets in their 2030 National Energy and Climate Plans (NECPs), said the EBA. However, there is a significant gap between the volumes committed in the NECPs — which add up to 14.6bn m³/yr — and the 35bn m³/yr target in the EU's REPowerEU plan. The shortfall is partly because of insufficient investment . The EBA's report highlights the role of biogas in replacing Russian gas and LNG. According to Eurostat, 98pc of the EU's natural gas demand in 2022 was covered by imports. The bloc has the potential to produce 111bn m³/yr of biomethane by 2040 , representing over 30pc of EU gas consumption in 2022. Last year, 23pc of European biomethane was used for transport, 17pc for buildings, 15pc for power generation and 13pc for industry. Most German, UK, French, Danish, Dutch and Swiss biomethane is still generally used for heating or electricity, while Norway, Italy, Sweden, Estonia and Finland mainly use biomethane for transport. In France alone, a further 1,232 projects are at various stages of development, although French plants continue to be "on the smaller side" at an average capacity of 197 m³/h, compared with an average 468 m³/h in the rest of Europe, the EBA said. Denmark and the UK have larger plants with average capacity of 1,443 m³/h and 961 m³/h, respectively. Denmark also has the highest ratio of biomethane to natural gas in its grid — by August 2024, the share of biomethane in the Danish gas grid had reached 37.5pc. No new plants have been established to run on energy crops as the main feedstock since 2020, and there is a clear EU-wide trend towards waste feedstocks, in line with regulation that aims to phase out crop-based biofuels by 2030, the EBA said. But the feedstock mix currently used in biogas plants varies between countries and a significant portion is still crop-based, it said. Barriers to growth In a poll of network members, the EBA identified the main factors regarded as the greatest barriers to sector growth. These include market availability, low costs of natural gas, regulatory instability, the lack of a single market for biomethane, the lack of mature voluntary schemes, a political push for other solutions and long-term supply contract hurdles. To ensure 2030 targets are met, the association called for increased regulatory stability , long-term goals to boost investment, cuts to red tape and technology-neutrality under EU rules. By Madeleine Jenkins Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Treasury eyes 45Z guidance before Biden exit

03/12/24

Treasury eyes 45Z guidance before Biden exit

New York, 3 December (Argus) — The US Department of Treasury said it still plans to issue guidance before president Joe Biden leaves office next year clarifying how refiners can qualify for a new tax credit for clean fuels. The agency "anticipates issuing guidance" around the Inflation Reduction Act's 45Z credit before 20 January to "enable producers to claim the 45Z credit for 2025", disputing a report today that the Biden administration planned on punting implementation to president-elect Donald Trump. The credit, set to kick off regardless on 1 January, will differ from some prior federal incentives by offering greater subsidies to fuels that produce fewer greenhouse gas emissions. Treasury did not commit to any definitive timeline for releasing guidance, and it did not immediately clarify how thorough any eventual rule would be. Companies in the biofuel supply chain say the current lack of clarity from Treasury — particularly on how it will calculate carbon intensities for various fuels and feedstocks — has slowed first quarter dealmaking. Government guidance could make or break the economics of certain plants, particularly for relatively higher-carbon fuels like soy biodiesel or jet fuel derived from corn ethanol. The US Department of Agriculture's timing for releasing a complementary rule to quantify the climate benefits of certain agricultural practices, envisioned as a way to reward refineries sourcing feedstocks from farms taking steps to reduce their emissions, is unclear. The agency said today that a "rulemaking process" in response to its request for information on climate-smart farm practices is "under consideration" but did not elaborate. Agriculture secretary Tom Vilsack had insisted earlier this year that his department would release some package before the end of Biden's term. Some industry groups remain pessimistic that the Biden administration will answer all of the thorny questions still lingering around the 45Z credit, especially given signals earlier this year that other Inflation Reduction Act programs would take priority. The Renewable Fuels Association, which represents ethanol producers, says final regulations around 45Z "seem highly unlikely" before the end of Biden's term but that it hopes Treasury releases at least some "basic information" or safe harbor provisions. Delays getting credit guidance could prod Congress to extend expiring biofuel incentives for another year, including a $1/USG credit for blenders of biomass-based diesel. Some formerly skeptical lobbying groups have recently come on board in support of an extension, fearing that biofuel production could slump next year given the lack of 45Z guidance and uncertainty about how Trump will implement clean energy tax credits. But four lobbyists speaking on background told Argus today that the proposal still faces long odds. Congress has various other priorities for its relatively brief lame duck session, including government funding and disaster aid, that take precedence over biofuels. A staffer with the Democratic-controlled US Senate Finance Committee said last month that Republicans have been reluctant to negotiate tax policy in a divided Congress this year when they are planning a far-reaching tax package under unified Republican control next year. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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