Overview

Argus provides key insights into the developments and discussions at Cop. We shine a light on how they will affect the global energy and commodity markets.

Decisions made at Cop meetings have far-reaching effects on the markets we serve. Almost 200 countries agreed on "transitioning away from fossil fuels in energy systems" and tripling renewable power capacity at the UN Cop 28 summit in Dubai last year.

Progress at the next two meetings will be crucial in transforming ambitions into actions aligned with the Paris Agreement. Countries must get new plans ready for 2025.

This year, Cop 29 will focus on climate finance. It will cover funding energy transition in developing countries, and increasing private sector involvement and sectorial investment. Article 6 and voluntary carbon markets discussions will also take centre stage. 

Follow the key developments in energy transition field with our Net zero page and keep up to date with ongoing coverage of these issues by following Argus Media on LinkedIn and on X.

News

News
02/12/24

French government faces no confidence vote

French government faces no confidence vote

London, 2 December (Argus) — The French government could be set to fall within days, leaving its energy programme up in the air, after far-right party Rassemblement National (RN) declared it would launch a vote of no confidence. Prime minister Michel Barnier today announced he would use a parliamentary manoeuvre to push through a budget for the social security system without a vote. Since his nomination in September, Barnier has been attempting to achieve consensus on state budgets for 2025, while lacking a majority in the parliament. Left-wing and right-wing groups responded to today's move by promising to launch motions of no confidence. The RN had previously tacitly supported Barnier, preserving him in office as he prepares the budget, which must be finished before the end of the year. A successful vote of no confidence on 4 December at the earliest would require 289 deputies, a majority of the national assembly, to vote in favour. A previous confidence vote on 8 October garnered 197 in favour, falling short. But the 121 RN deputies supported the government on that occasion, and their switch to the opposition could provide enough votes for the measure to pass. If the government falls, no new parliamentary elections can be held until June. President Emmanuel Macron could name a new prime minister, but this appointee would not have a majority either. And left- and right-wing groups have called on him to resign and trigger new presidential elections. If the budget does not pass, the government's energy programme could be delayed or ignored. A potential way forward out of the budget deadlock could be to pass a special budget law, which would carry forward measures already in place this year, extending them for a month at a time until a permanent budget can be voted through. Changes which could not go forward in this situation could include a mooted increase to the tax on electricity — taking it up to roughly €30/MWh from 1 February 2025, from current levels of €21-21.50/MWh. Others include changes planned to subsidies for domestic energy efficiency measures and electric vehicles. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Denmark pledges DKr150mn to Brazil's Amazon fund


29/11/24
News
29/11/24

Denmark pledges DKr150mn to Brazil's Amazon fund

Sao Paulo, 29 November (Argus) — Denmark will donate 150mn Danish kroner ($21.3mn) to Brazil's Amazon fund, adding the Nordic country to a growing list of nations supporting the South American country's efforts to preserve the Amazon forest. The Amazon fund issues grants to projects that prevent, monitor and combat deforestation while promoting conservation and sustainable development in the Amazon. The fund was created in 2008 and is managed by Brazil's Bndes development bank. It has R4.5bn ($750mn) under management and has supported 114 projects to date. Norway is the fund's largest donor, having pledged R3.5bn, followed by German development bank KfW with R388mn and the US with R291mn. Other donors include the UK, Switzerland and Japan. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

German opposition insists on carbon pricing role


28/11/24
News
28/11/24

German opposition insists on carbon pricing role

Berlin, 28 November (Argus) — Germany's dominant opposition party group CDU/CSU, which is almost certain to lead the next federal government following early elections on 23 February, has warned against "ideological" energy and climate policy, and pledged it will give a stronger role to carbon pricing. "Climate policy must be accepted," deputy head of the CDU/CSU parliamentary group Jens Spahn told delegates at an industry conference this week, after not having been accepted "in the last two years". The CDU/CSU will not support the outgoing government, which lost its parliamentary majority earlier this month, on the proposed power plant bill currently under consultation, Spahn said. He cited the bill's "dirigiste" slant, reflected for instance in the fixed time frames for switching to hydrogen. The CDU/CSU will also roll back the buildings energy act passed last year, with a focus on putting carbon pricing at the centre of the law and not "enforcing ideological choices", Spahn said. The current buildings energy act supports the shift to a heating sector predominantly based on heat pumps and decarbonised heat grids. But a focus on reducing CO2 as quickly as possible, rather than aiming for "the perfect solution", would make easier solutions such as combining heating oil with bio-oil or gas with hydrogen possible, Spahn said. Spahn underlined that heat pump sales had been rising for years before the buildings energy act came into force following a months-long acrimonious debate, since when they have plummeted. And he warned against keeping industries in Germany that "permanently depend on subsidies to function". It should be acceptable for Germany to meet its target to become carbon neutral in 2045 a few years later, Spahn added. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Sweden extends EU ETS 2 application


28/11/24
News
28/11/24

Sweden extends EU ETS 2 application

London, 28 November (Argus) — The European Commission has approved the application of the new emissions trading system for road transport and buildings (EU ETS 2) to additional sectors in Sweden. Sweden will unilaterally apply the new system to emissions from freight and passenger railway transport, non-commercial leisure boats, airport and harbour off-road machinery, and fuel combustion in agriculture, forestry and fishing. The extension means additional carbon allowances will be issued to the country in 2027, on the basis of emissions from the activities listed calculated at 1.68mn t of CO2 equivalent. Sweden must monitor and report emissions from the additional sectors from 1 January. The EU ETS 2 is due to launch fully in 2027, and will apply in its basic form to fuel combustion in buildings, road transport and small industry not covered by the existing EU ETS, in all the bloc's member states plus Norway, Iceland and Liechtenstein. The commission approved similar unilateral extensions of the system's scope in the Netherlands and Austria in September. By Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

LNG use poses risk to Cambodia's energy security: IEEFA


28/11/24
News
28/11/24

LNG use poses risk to Cambodia's energy security: IEEFA

Singapore, 28 November (Argus) — Cambodia's increasing reliance on LNG for power generation could be detrimental to its energy security because of instability in LNG markets, according to Institute for Energy Economics and Financial Analysis (IEEFA). Rapid economic growth and electrification have led to Cambodia's electricity demand growing by 16pc/yr since 2009, according to IEEFA's report released on 26 November. Its power generation is mostly from hydropower and coal, but the country aims to boost its gas-fired power generation to meet its decarbonisation targets. Cambodia has a net zero by 2050 goal, and aims to reach 70pc renewable energy generation by 2030. The share of coal in Cambodia's power mix was 45pc in 2023, with hydropower representing 44pc, solar 5pc and imports from neighbouring countries making up the remaining 6pc. The country in 2021 declared that it would not build new coal plants beyond those already approved. Natural gas had not played a role in the country's power mix until recently, but "optimism has grown in recent years regarding the ability of new LNG-to-power projects to help the country meet rising electricity demand," stated the report. Gas operator Cambodian Natural Gas imported the country's first LNG shipment in 2020 from China's state-owned firm CNOOC, according to IEEFA. The firm also planned to complete a 1,200MW LNG-fired power plant and a 3mn t/yr import terminal by 2023, although there has been no progress as of June this year. Cambodian officials in November 2023 announced the cancellation of a 700MW coal project, which will be replaced with a 800MW gas-fired power plant instead. Cambodia is seeking to build these large LNG-fired power plants because of concerns over the intermittency of renewables such as wind and power, and LNG is viewed as a suitable transition fuel for grid reliability. The government expects LNG-fired capacity to reach 900MW by 2040, which would require roughly 840,000 t/yr of imports. When considering long-term wholesale prices of $8-16/mn Btu, Cambodia's LNG import bill could range between $361mn-722mn/yr, according to IEEFA. Some forecasts estimate that Cambodia's LNG-fired capacity could rise to as much as 2,700MW by 2040 and 8,700MW by 2050, stated the report. This would entail import requirements of 2.53mn t/yr in 2040 and 8.14mn t/yr in 2050. The fuel import costs for 2,700MW of LNG-fired capacity could amount to $1.08bn-2.17bn. LNG volatility LNG markets have been volatile over the past two years, because of factors such as geopolitical tensions and outages at supply facilities. Other emerging Asian economies such as Pakistan and Bangladesh faced fuel and power shortages because they have been unable to secure affordable LNG supplies, and this "demonstrates the evident risks of LNG importation for developing countries," states the report. Cambodia already has one of the highest electricity tariffs in Asia at $0.16/kWh, so higher LNG prices could require higher tariffs. LNG prices in Asia have been roughly $14/mn Btu and would have to fall below $5mn/mn Btu to compete with other electricity sources, according to IEEFA, but these low price levels are rare. The ANEA price, the Argus assessment for spot LNG deliveries to northeast Asia for the front-half month, stood at $15.08/mn Btu on 27 November. Cambodia's LNG demand and LNG-fired power plant expansions remain uncertain, so long-term offtake commitments will be challenging and the country will likely have to initially source cargoes from the sport market, according to the report. But the spot market poses risks in terms of supply security and price stability. Establishing an LNG supply chain also entails rigid long-term contracts that lock in fossil fuel infrastructure for decades. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop party profiles

Cop party profiles
21/11/24

Cost of government support for fossil fuels still high

Cost of government support for fossil fuels still high

London, 21 November (Argus) — The cost of government measures to support the consumption and production of fossil fuels dropped by almost a third last year as energy prices declined from record highs in 2022, according to a new report published today by the OECD. But the level of fiscal support remained higher than the historical average despite government pledges to reduce carbon emissions. In an analysis of 82 economies, data from the OECD and the IEA found that government support for fossil fuels fell to an estimated $1.1 trillion in 2023 from $1.6 trillion a year earlier. Although energy prices were lower last year than in 2022, countries maintained various fiscal measures to both stimulate fossil fuel production and reduce the burden of high energy costs for consumers, the OECD said. The measures are in the form of direct payments by governments to individual recipients, tax concessions and price support. The latter includes "direct price regulation, pricing formulas, border controls or taxes, and domestic purchase or supply mandates", the OECD said. These government interventions come at a large financial cost and increase carbon emissions, undermining the net-zero transition, the report said. Of the estimated $1.1 trillion of support, direct transfers and tax concessions accounted for $514.1bn, up from $503.7bn in 2022. Transfers amounted to $269.8bn, making them more costly than tax concessions of $244.3bn. Some 90pc of the transfers were to support consumption by households and companies, the rest was to support producers. The residential sector benefited from a 22pc increase from a year earlier, and support to manufacturers and industry increased by 14pc. But the majority of fuel consumption measures are untargeted, and support largely does not land where it is needed, the OECD said. The "under-pricing" of fossil fuels amounted to $616.4bn last year, around half of the 2022 level, the report said. "Benchmark prices (based on energy supply costs) eased, particularly for natural gas, thereby decreasing the difference between the subsidised end-user prices and the benchmark prices," it said. In terms of individual fossil fuels, the fiscal cost of support for coal fell the most, to $27.7bn in 2023 from $43.5bn a year earlier. The cost of support for natural gas has grown steadily in recent years, amounting to $343bn last year compared with $144bn in 2018. The upward trend is explained by its characterisation as a transition fuel and the disruption of Russian pipeline supplies to Europe, the report said. By Alejandro Moreano and Tim van Gardingen Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop party profiles

Lula, Biden reach new energy transition deal


19/11/24
Cop party profiles
19/11/24

Lula, Biden reach new energy transition deal

Rio de Janeiro, 19 November (Argus) — The US and Brazil have sealed a new partnership to advance the energy transition, despite looming uncertainty over the future of US climate policies under the incoming Donald Trump administration. The partnership was announced following a meeting today between US President Joe Biden and Brazil's Luiz Inacio Lula da Silva on the sidelines of the G20 summit in Rio de Janeiro. Energy transition was one of Brazil's three goals for its G20 presidency, which it handed over to South Africa today. The two countries have agreed to focus on three pillars, the US embassy in Brazil said, as they pursue the dual objective of fostering economic growth and job creation while meeting climate targets like emissions reduction and keeping average global temperatures from rising by more than 1.5°C. These pillars are the acceleration and expansion of clean energy production and deployment, the development of the clean energy supply chain and green industrialization. The partnership intends to mobilize financing from public, private and multilateral development institutions to pursue the decarbonization of the power, transportation, industrial and manufacturing sectors in both countries. This joint effort between the US and Brazil is aligned with their domestic policies, the embassy noted, notably Brazil's new industrial policy and the US' bipartisan infrastructure law and the 2022 Inflation Reduction Act. A commitment to fighting climate change and developing the green economy is a key aspect of Lula and Biden's shared agenda. But both this cooperation and the future of Biden-era clean energy incentives are in question following Trump's victory in the US election. Trump has tapped oil executive and energy transition critic Chris Wright to lead the US Department of Energy (DOE). By Constance Malleret Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop party profiles

UK ramps up climate action under new leadership


28/10/24
Cop party profiles
28/10/24

UK ramps up climate action under new leadership

London, 28 October (Argus) — The UK's Labour government, elected in July, has taken the country's climate policy in a new direction, restoring pledges the previous administration scrapped and seeking to funnel investment to renewables. The UN Cop 29 climate summit presents an opportunity for it to follow this up on an international stage. Hosting Cop 26 in 2021 allowed the UK to burnish its climate leadership credentials, but subsequent changes in the Conservative government saw policy reversals. Labour sought to differentiate its position on climate during the election campaign — possibly noting an increase in support for the UK's Green and Liberal Democrat parties, both of which hold firm pro-environment stances. Labour promised to issue no new oil, gas or coal licences — although it said it would not revoke existing permits — and is aiming for zero-emissions power by 2030. Energy minister Ed Miliband in his first week in office lifted the de facto ban on onshore wind, and set up a taskforce to speed the country's path to a decarbonised power grid. The UK has in recent weeks pulled in around £24bn ($31bn) of investment for renewables, including from utilities Orsted and Iberdrola, and announced "up to" £21.7bn in funding over 25 years for carbon capture, use and storage (CCUS) — although it is unclear how the money will be deployed. The government moved swiftly to raise the windfall tax on oil and gas profits, lifting it to an effective rate of 78pc and scrapping one of the investment allowances — although the decarbonisation investment allowance remains in place. And, spurred by a landmark ruling made by the UK's Supreme Court in June, the government pledged new environmental guidance for oil and gas fields by spring 2025. The judgment ruled that consent for an oil development was unlawful, as the Scope 3 emissions — those from burning the oil produced — were not considered. The government has in the meantime halted assessment of any environmental statements for oil and gas extraction, including those already being processed, until the new guidance is in place. The Labour government has declined to defend in court decisions taken by various iterations of the Conservative administration, including the permission granted for a proposed coal mine in northwest England. The High Court quashed that planning permission in September. International stage Miliband has sought guidance from independent advisory the Climate Change Committee (CCC) on the country's new climate plan, known as a nationally determined contribution (NDC). The CCC assessed the previous government as off track to hit legally binding emissions-reduction targets. The UK has cut emissions by half since 1990 and is in line with all carbon budgets to date. But much of this progress was made from a baseline of a high rate of coal-fired power generation, all of which is now shut down. The next stage of the country's decarbonisation will be more fragmented and is likely to pose more of a challenge. The UK has bucked the trend set by some European neighbours by shifting further left with Labour, although the new government has promoted fiscal caution. Climate finance will dominate the talks in Azerbaijan, and the UK has been clear it will continue to contribute. Labour pledged in its manifesto to "return to the forefront of climate action", noting that the previous administration had "squandered [the UK's] climate leadership". Foreign minister David Lammy has embedded climate and nature issues into his foreign policy brief and the government has appointed special representatives for climate and nature. But Cop 29 will prove the first real test of the pledges made, with a global audience watching. UK greenhouse gas emissions Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop party profiles

Southeast Asia's coal phase-out faces slow progress


22/10/24
Cop party profiles
22/10/24

Southeast Asia's coal phase-out faces slow progress

Singapore, 22 October (Argus) — Southeast Asia remains heavily reliant on coal to meet its energy needs, and although some countries have embarked on initiatives to phase out coal-fired power, they will have to overcome considerable obstacles. Coal is still projected to be the region's second-largest source of energy by 2030 after oil, according to the Asean Centre for Energy's 8th Asean Energy Outlook , released last month. The IEA expects southeast Asia's power demand to rise by 5pc/yr through 2026, with most of that additional demand to be met by fossil fuels. It sees coal's share of the regional power mix edging down in the coming year, but absolute coal-fired generation rising by 4pc/yr through 2025. Regional coal dependency rose to 33pc in 2023 from 31pc in 2022, according to energy think-tank Ember. Coal's share of the mix in Indonesia hit a record 61.8pc in 2023, while its share in the Philippines rose to 61.9pc, making them the region's two most coal-reliant countries. Vietnamese demand is also growing fast, with coal accounting for 57pc of generation in the first half of 2024. But Indonesia and the Philippines have also begun to take steps to reduce their coal dependence, in line with decarbonisation targets. The Monetary Authority of Singapore (MAS) last year launched the Transition Credits Coalition, to use carbon credits for the early retirement of coal-fired plants. Philippine energy firm Acen aims to use the transition credits to accelerate the retirement of the 246MW South Luzon coal-fired facility, and replace it with a clean energy dispatch facility. Indonesia joined the Just Energy Transition Partnership (JETP) in 2022, putting it in line to receive $20bn from international financing partners. Under the JETP, a bank provides a loan to buy the coal-fired plant from the current operator, which receives compensation for debt equity and profits foregone for selling the asset for its early retirement, energy finance specialist at the Institute for Energy Economics and Financial Analysis, Mutya Yustika, told Argus . But the JETP has not been successful because policy makers want a higher proportion of grants than loans, Mutya added. Efforts to retire regional coal-fired plants early have yet to scale up because of a "heavy reliance on concessional capital", which is not enough to mobilise the necessary private capital to finance Asia's large and young fleet of coal-fired plants, a joint report by MAS and consultancy McKinsey said. Locked in and loaded Private sector financiers are also more interested in investing in renewable energy assets that generate returns, Mutya said, rather than taking on a polluting asset until it shuts. The JETP has motivated Indonesia to develop a comprehensive investment and policy plan, but the plan remains aspirational and lacks a clear strategy for implementing investment, Mutya said. Coal plants in southeast Asia are on average less than 14 years old, according to a 2023 report by Climate Analytics. Phasing out young plants is challenging because of recent investments and unpaid debt, so this could lock in their emissions for decades. About 60pc of coal plants in south and southeast Asia are financed by state-owned utilities or based on a single-buyer model, which "shields them from market competition", Climate Analytics said. Most power purchase agreements with state utilitiesin Indonesia and Thailand extend beyond 2030. And Jakarta has yet to signal a move away from coal reliance, while public ownership and state officials' shareholdings in mining operations might complicate this, Mutya said. China, Japan and South Korea dominate financing of regional coal plants, and their support checks renewables' expansion, Climate Analytics said. Unless governments and private-sector investors can reduce risk and raise concessionary funds, new coal-fired generation could stay in the region's energy mix until 2030. By Prethika Nair and Tng Yong Li Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop party profiles

Africa seeks trillions in climate finance at Cop 29


07/10/24
Cop party profiles
07/10/24

Africa seeks trillions in climate finance at Cop 29

Africa faces the heaviest economic burden from climate change, and the most uncertainty over funding, writes Elaine Mills Cape Town, 7 October (Argus) — A key priority for African countries at the UN Cop 29 climate talks in Baku next month is to secure a new climate finance goal for developing countries. But as well as serious commitments on an amount, the continent wants increased accessibility and cheaper funding. Regional alliance the African Group of Negotiators (AGN) is seeking a climate finance commitment from developed countries of $1.3 trillion/yr by 2030, under a new climate finance goal currently being negotiated — the so-called new collective and quantified goal (NCQG). The NCQG is the next stage of the $100bn/yr target that developed countries agreed to deliver to developing countries over 2020-25. It was met for the first time in 2022, according to the OECD, but some countries in Africa have complained that the money never reached them. The AGN wants to steer clear of the old target, contesting whether it has even been met. The group says it wants lessons to be learned, especially regarding the quality of the finance and the difficulties countries have had in accessing it. Uganda asks that the new goal avoids "political statements that are not implemented", referring to uncertainties over how the finance was counted and accessed. African states want the funding to come mostly from public sources, largely in the form of grants and highly concessional loans. This should improve borrowing costs and ease debt burdens, which are forcing countries to make trade-offs with critical development needs. The group does not want market-based loans to be counted as climatefinance — the majority of multilateral climate loans were market-based in 2016-22. Most African countries face an unsustainable debt situation that has been worsened by higher global interest rates, AGN chair Ali Mohamed says. "Our focus is on agreed obligations within the multilateral climate process and the need to improve investments to unlock the continent's potential to tackle the climate crisis, which is paralysing most economies," he says. Africa receives only 2pc of total global climate finance, according to think-tank Climate Policy Initiative. The new NCQG must create the right conditions to push that share to at least 30pc, "otherwise it is a failed process", a South Africa negotiator said last month. The heaviest price The first global stocktake at Cop 28 in Dubai last year acknowledged the world is off track in meeting the Paris Agreement's goals, with significant ambition and implementation gaps in mitigation and adaptation, as well as loss and damage, Mohamed says. African countries submitted ambitious nationally determined contributions, but there has not been corresponding financial and technical support for their implementation. "We lack clarity on the amount of current and future funding, capacity building and technical support," Kenya's cabinet secretary for environment, climate change and forestry, Aden Bare Duale, says. This vagueness undermines transparency of support under the Paris accord, and addressing it should be prioritised in the forthcoming negotiations, he says. African countries lose 2-5pc of their GDPs annually and many divert up to 9pc of their budgets responding to climate extremes, according to the State of the Climate in Africa 2023 report by the World Meteorological Organisation. The report serves as a stark reminder of the urgent need for climate action in Africa, where extreme weather events disproportionately impact the continent's socio-economic development, Zambian environment minister Mike Mposha says. "It is African nations who pay the heaviest price," Simon Stiell, head of UN climate body the UNFCCC, says. "But it would be incorrect for any world leader — especially in the G20 — to think ‘It's not my problem'. The economic and political reality — in an interdependent world — is we are all in this crisis together." Climate finance flows and needs in Africa Bilateral climate finance loans in 2016-2022 Multilateral climate finance loans 2016-2022 Multilateral climate finance loans 2016-2022 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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