Von der Leyen faces new Green Deal challenges
The president promises a ‘clean industrial deal', but will need to make compromises over climate policy, writes Dafydd ab Iago
Ursula von der Leyen's re-election by the European Parliament as president of the European Commission on 18 July promises to see a doubling down on climate and energy policy, with her 2024-29 mandate stipulating greenhouse gas (GHG) emissions cuts of at least 90pc by 2040 compared with 1990.
"I have not forgotten how [Russian president Vladimir] Putin blackmailed us by cutting us off from Russian fossil fuels. We invested massively in homegrown cheap renewables and this enabled us to break free from dirty Russian fossil fuels," von der Leyen says, promising to end the "era of dependency on Russian fossil fuels". She has not given an end date for this, nor specified if this includes a commitment to ending Russian LNG imports.
Von der Leyen went on to detail political guidelines for 2024-29. She has pledged to propose a "clean industrial deal" in the first 100 days of her new mandate, albeit without giving concrete figures about how much investment this would channel to infrastructure and industry, particularly for energy-intensive sectors. The clean industrial deal will help bring down energy bills, she says.
Von der Leyen told parliament that the commission would propose legislation, under the European Climate Law, establishing a 90pc emissions-reduction target for 2040. Her political guidelines also call for scaling up and prioritising investment in clean technologies, including grid infrastructure, storage capacity, transport for captured CO2, energy efficiency, power digitalisation and a hydrogen network. She plans to extend aggregate demand mechanisms beyond gas to include hydrogen and critical raw materials, and notes the dangers of dependencies and fraying supply chains — from Putin's energy blackmail to China's monopoly on battery and chip raw materials.
Majority report
Passing the necessary legislation to implement her stated policies will now require approval from EU states and parliament. Unless amplified by Germany's election next year, election victories by far-right parties in France and elsewhere appear not to threaten EU state majorities for specific legislation.
Parliament's political centre-left S&D and liberal Renew groups, as well as von der Leyen's own centre-right European People's Party (EPP), have elaborated key policy requests. These broadly call for the continuation of the European Green Deal — a set of legislation and policy measures aimed at 55pc GHG emissions reductions by 2030 compared with 1990.
A symbolic issue for von der Leyen to decide on — or compromise on — is that of internal combustion engine (ICE) vehicles. EPP wants to stick to technological neutrality and revise the current mandate for sales of new ICE cars to be phased out by 2035, if they cannot run exclusively on carbon-neutral fuels. The EPP wants an e-fuel, biofuel and low-carbon fuel strategy. Von der Leyen's guidelines reflect the need to gain support from centre-right, centre-left and greens. She says the 2035 climate neutrality target for new cars creates investor and manufacturer "predictability" but requires a "technology-neutral approach, in which e-fuels have a role to play". She has not mentioned carbon-neutral biofuels.
It will be impossible for von der Leyen to satisfy all demands in her second mandate. This includes policy requests put forward by the EPP, ranging from a "pragmatic" definition of low-carbon hydrogen and market rules for carbon capture and storage, to postponing the EU's deforestation regulation.
EU member states are expected to propose their candidates for commissioners in August, including for energy, climate and trade policy, with von der Leyen's new commission subject to a final vote in parliament in late October.
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East Timor takes stake in Bayu-Undan gas field
East Timor takes stake in Bayu-Undan gas field
Darwin, 17 September (Argus) — The partners in the Bayu-Undan joint venture (BUJV) gas project have agreed to transfer a 16pc stake to East Timorese state-owned firm Timor Gap. A sale and purchase deed has been signed, with Timor Gap to participate in BUJV for the remainder of the project's lifespan, with the production-sharing contract for Bayu-Undan running to 30 June 2026 or until extraction ends, said operator Australian independent Santos. The deal follows an initial agreement in 2023 with Timor Gap on the proposed Bayu-Undan carbon capture and storage project, which Santos chief executive Kevin Gallagher recently described as the "next big project we really want to focus on" . BUJV includes the near-depleted gas field located 500km northwest of Australia in East Timorese waters, which formerly produced feedstock for the 3.7mn t/yr Darwin LNG terminal operated by Santos. Darwin LNG is preparing to receive next year the first gas from Santos' Barossa project , while Bayu-Undan continues to produce natural gas liquids and for the Australian domestic market. Santos will hold a 36.5pc interest in BUJV following the transfer, Japanese upstream firm Inpex 9.6pc, Tokyo Timor Sea Resources, owned by Japanese utility groups Jera and Tokyo Gas 7.7pc, Italian energy firm Eni 9.2pc and South Korean upstream firm SK E&S 21pc. Timor Gap is the majority shareholder in the Greater Sunrise LNG project, presently in the concept select phase . The Australian government is pressing for more action after years of stalled progress with concerns China could instead develop the field in partnership with East Timor. Greater Sunrise partners Timor Gap with 56.56pc, Australian independent Woodside with 33.44pc and Japanese utility Osaka Gas with 10pc. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Competitive SAF prices, policy needed to scale market
Competitive SAF prices, policy needed to scale market
Monterey, 16 September (Argus) — Efforts to scale the US sustainable aviation fuel (SAF) market will hinge on the industry's ability to narrow the price premium to conventional jet fuel, an impossible task without expanded policy and a coordinated industry focus, stakeholders said today. "The final frontier of scale is cost," SGP Bioenergy chief executive officer Randy Delbert Letang said at the Argus North American Biofuels, LCFS and Carbon Summit. Airlines are ultimately concerned with the economic feasibility of low carbon fuels versus conventional, Letang said, adding that where finer details on the road to the lowest-cost and -carbon SAF are concerned, they don't necessarily want to "know or see how the sausage is made". Fellow panelists deemed advancement in feedstock technology, risk mitigation for investors and lenders and a coordinated industry effort as essential in scaling SAF in the US and abroad via the lowering of SAF prices. Incentive programs such as Low Carbon Fuel Standard (LCFS) programs across the west coast, and the potential for expansion into other states, are one way to narrow the gap. But those present opposed restrictions on incentives between renewable feedstocks, such as those recently proposed for diesel alternatives in California, and agreed the market remains in too early a stage for complicating incentives. To narrow the scope of the aviation industry's carbon-reduction discussion to specific feedstocks and their respective carbon intensity scores could "let perfect be the enemy of good," said Eric Holle, Phillips 66's renewable fuels commercial optimization manager. As SAF projects are alternately proposed and shuttered , panelists emphasized a need for the industry to mitigate but ultimately accept the risks inherent to an adolescent and quickly evolving market. Ensuring the industry's narrative is consistent will be key in the next few years to convincing investors and lenders to accept that risk, Letang said. Reducing the carbon footprint of conventional petroleum fuels via blending biofuels, as well as expanding the applicability of those fuels — to the maritime and aviation industries, as example — is the best focus of industry efforts in the near term, he added. By Jasmine Davis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US SAF stakeholders call for coordinated support
US SAF stakeholders call for coordinated support
Monterey, 16 September (Argus) — Government needs to provide stronger and more harmonized regulation to encourage sustainable aviation fuel (SAF) production in the US, according to a number of industry stakeholders. The high cost of SAF compared with conventional jet fuel requires federal and state regulatory policy to help minimize risks for SAF plant investors, said Bruce Fleming, chief financial officers of SAF producer Montana Renewables at the Argus North American Biofuels, LCFS and Carbon Summit today. But while there is broad support, a "tapestry of different regulations, with important details materially at odds" is creating an unstable regulatory environment, he said. Producers have a roughly 10-year recovery period on investments, according to Fleming, so investors require long-term certainty of their return through offtake agreements and support from lawmakers, but this has thus far been inconsistent . On a federal level, there's a "donut hole" in the proposed switch in incentives from the current blenders' tax credit to the new 45Z clean fuel production tax credit which is due to be implemented from 1 January 2025, said Fleming. But detailed guidelines for the new credit have not yet been released, and it is only guaranteed until 2028, rather than for the 10 or more years that would smooth investors' risk profile. Meanwhile the Environmental Protection Agency has signaled it will miss its statutory deadline to [finalize 2026 biofuel blending targets , creating further confusion, Fleming said. Mismatch internationally, locally US policies are also somewhat at odds with other regions, notably the EU which is mandating 2pc SAF in the jet fuel mix from next year, which could draw US volumes away from the domestic pool. On a local level, different US states are going at different speeds with regards to their low carbon fuel standard programs and the feedstocks they will accept, injecting further complexity in the calculations for SAF producers and airlines. Illinois, for example, is implementing a $1.50/USG credit but is capping the volume of soybean-derived SAF and making it only available to airlines operating in the state rather than producers — at odds with similar schemes in California, Washington and Oregon. Tax incentives also need tweaking to encourage flexibility in manufacturers to produce SAF rather than renewable diesel, said Sean Newsum, Airlines for America Managing Director of Environmental Affairs. Renewable diesel consumption has grown so quickly in markets such as California because the mix of RINs and LCFS credits essentially meant customers are paying no premium for the product over fossil fuel diesel, Newsum said. Now even stronger incentives are required to lower the final cost airlines are paying for SAF to close the price gap over jet fuel, and push producers towards renewable aviation rather than road fuels. The uncertain regulatory environment means the US is due to fall far short of its SAF Grand Challenge target to supply 3bn USG/yr in the domestic market by 2030, according to speakers at the conference and Argus analysis, rising up to 35bn USG/yr by 2050. There is 3.5bn USG/yr of SAF production capacity planned by 2030, according to Argus data, but only around 90mn USG/yr is currently operational and 535mn USG/yr of the planned projects are categorized as "firm" — meaning there is a relatively high degree of confidence they will move forward. The rest are either seen as only "provisional" or "very provisional" given the difficulty in answering the risk questions posed. By Amandeep Parmar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Washington voters waver on GHG repeal: Poll
Washington voters waver on GHG repeal: Poll
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