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Africa claims leadership role in global climate fight

  • Market: Coal, Crude oil, Electricity, Emissions, Natural gas
  • 10/11/23

African countries need to see an overhaul of global financial support to leapfrog their economies straight to low-carbon energy, writes Elaine Mills

African heads of state have reframed Africa's role in the global climate-change crisis by asserting a new leadership status for the continent and underscoring its abundant clean energy minerals and renewable energy resources as a potential solution. In return, they called for debt relief for African countries, a global carbon tax and a raft of reforms of the international financial system to support climate action on the continent and worldwide.

The proposal formed part of the "Nairobi declaration" issued at the inaugural Africa Climate Summit in Nairobi, Kenya, in September. This will underpin Africa's common position in negotiations at the UN Cop 28 climate conference in the UAE later this month, and beyond. Leaders committed to aiding global decarbonisation efforts by leapfrogging traditional industrial development, striking a different tone to their previous rhetoric, which was that Africa would pursue industrialisation by any means, including continuing to exploit its domestic oil and gas resources.

According to Kenyan president William Ruto, renewable energy can be just as strong a driver of Africa's economic development as oil and gas. So Kenya will still press ahead with its plans to develop its oil and gas reserves, but just not as a priority, he said. But Kenya's stance contrasts with other African hydrocarbon producing countries, such as Uganda, Nigeria and Senegal, which say that they need to tap their oil and gas resources to develop their economies.

The IEA, in its Africa Energy Outlook 2022, said that Africa's industrialisation will partly rely on exploiting its more than 5 trillion m³ of natural gas that has been discovered but not been approved for development. Cumulative greenhouse gas emissions from the use of these gas resources over the next 30 years would bring the continent's global emissions share to only 3.5pc, the IEA says.

As Africa is the continent most vulnerable to climate change, African leaders have depicted it as a victim of a crisis created by the industrialised world. As such, they insist that Africa will chart a "just energy transition" of its own choosing without being dictated to by the west. But at the Nairobi summit, they signalled more willingness to take part in the global shift away from fossil fuels — and to take advantage of the economic development opportunities this holds for Africa.

"The Africa Climate Summit asserted new leadership on global climate action from the continent most vulnerable to its impacts," E3G programme lead for climate diplomacy and geopolitics Alex Scott said. Ruto shepherded a declaration by African leaders calling for accelerated climate action, mobilising a massive scale of investment in green transition and adaptation in Africa, and reforming the finance system for fairer financing and debt management, Scott said.

Climate-positive thinking

World leaders should "appreciate that decarbonising the global economy is also an opportunity to contribute to equality and shared prosperity", the summit declaration says. "We urge world leaders to rally behind the proposal for a [global] carbon taxation regime including a carbon tax on fossil fuel trade, maritime transport and aviation," it adds. This could be supplemented by a global financial transaction tax to fund climate-positive investments, which should be ring-fenced from geopolitical and national interests, the declaration suggests.

African leaders also called for "a new financing architecture that is responsive to Africa's needs" and "collective global action to mobilise the necessary capital for both development and climate action". As part of this, they want to see debt restructuring and relief for African nations, a 10-year grace period on interest payments, an extension of sovereign loans, and debt repayment pauses when climate disasters strike. With these aims in mind, they suggest a new global climate finance charter should be developed through UN and Cop processes by 2025.

They also appealed for an increase in concessional finance to emerging economies, as well as reforms of the international financial system to ease the high cost of capital for African nations. "The scale of financing required to unlock Africa's climate-positive growth is beyond the borrowing capacity of national balance sheets, or at the risk premium that Africa is currently paying for private capital," the declaration says. Africa's annual climate finance needs total $250bn, but it only receives 12pc of this, according to the non-profit Climate Policy Initiative.

African leaders further called for a range of measures to "elevate Africa's share of carbon markets". The International Emissions Trading Association (Ieta) welcomed African countries' increasing interest in carbon markets and expressed hope that more would set up carbon pricing programmes to enable stronger national emissions-reduction contributions. But it baulked at the idea of a global carbon tax, which is "unlikely" to gain political traction, and highly difficult to manage centrally by the UN Framework Convention on Climate Change or any organisation.

A more practical and speedy approach would be to expand the use of national carbon markets that recognise a common pool of international carbon credits, Ieta said. "This could channel large amounts of private-sector capital to climate mitigation opportunities in Africa under Article 6 of the Paris climate agreement."

The leaders called for global and regional trade mechanisms to be designed in such a manner that "African products can compete on fair and equitable terms". In support of this, they called for unilateral and discriminatory measures such as environmental trade tariffs to be eliminated. In return, they committed to aid global decarbonisation efforts by "leapfrogging traditional industrial development and fostering green production and supply chains on a global scale". They expressed concern that only 2pc of $3 trillion in renewable energy investments in the past decade have come to Africa, despite the fact that the continent has an estimated 40pc of the world's renewable energy resources, according to the declaration.

We're all in this together

African leaders called on the international community to contribute towards increasing the continent's renewable power generation to at least 300GW by 2030 from 56GW in 2022. Meeting this target will cost an estimated $600bn and will require a tenfold increase in capital flowing into Africa's renewable energy sector over the next seven years, they said. The UAE pledged $4.5bn to accelerate the development of clean energy projects, which far exceeded the pledges of other governments, such as the US, the UK and those in the EU.

Developed countries have come under fire after missing a goal set in 2009 to provide $100bn/yr in climate financing to developing countries by 2020. The target may finally be hit this year. Just a few days after the Africa Climate Summit, the G20 summit in Delhi echoed the Nairobi declaration's clarion call for an overhaul of the global financial system. The Delhi declaration included new language on the issue of global debt, proposed that the World Bank should be reformed to address the growing economic strains on poorer countries and advocated more financing to help vulnerable nations deal with the costs of climate change.

It also showed agreement on raising investment in energy transition and climate finance from "billions to trillions" of dollars. The declaration highlighted that $5.8 trillion-5.9 trillion was needed pre-2030 to help developing nations implement their nationally determined contributions, as well as $4 trillion/yr for clean energy technologies by 2030 to reach net zero emissions by 2050. Whether African countries can advance their call for a radical reform of the global financial system at Cop 28 will be key to affirming their proclaimed new leadership role in global climate talks.


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09/04/25

Trump coal plant bailout renews first term fight

Trump coal plant bailout renews first term fight

Washington, 9 April (Argus) — President Donald Trump's effort to stop the retirement of coal-fired power plants is reminiscent of a 2017 attempt that faltered in the face of widespread industry opposition. Trump, in an executive order signed on Tuesday, directed the US Department of Energy (DOE) to tap into emergency powers to stop the retirement of coal-fired plants and other large plants it believes are critical to grid reliability. The order sets a 30-day deadline for DOE to decide which plants are critical based on a new methodology that will analyze if reserve margins, or the percent of unused capacity at peak demand, are at an "acceptable" level. The initiative shares similarities to Trump's unsuccessful effort in his first term to bail out coal and nuclear plants. In the 2017 effort, Trump backed a "grid resiliency" proposal to compensate power plants with 90 days of on-site fuel. But an unusual coalition of natural gas industry groups, manufacturers, renewable producers and environmentalists united against the idea, warning it would upend power markets and cost consumers billions of dollars each year. The US Federal Energy Regulatory Commission voted 5-0 to reject the proposal. It remains unclear if a similarly sized coalition will emerge to fight Trump's latest proposal, under which DOE would use emergency powers in section 202(c) of the Federal Power Act to keep some coal plants and other large power plants operating. Industry groups have largely been avoiding taking positions that could be seen as critical of Trump. Environmentalists say they strongly oppose keeping coal plants operating using emergency powers. Doing so would mean more air pollution and greenhouse gas emissions, they say, and higher costs for consumers. Environmental groups say they are hoping other industries affected by the potential bailout will eventually speak out against the initiative. "The silence from those who know better is deafening," Center for Biological Diversity climate law institute legal director Jason Rylander said. "I hope that we will start to see more resistance to these dangerous policies before significant damage is done." DOE said it was "already hard at work" to implement Trump's executive order, which was paired with other orders that were meant to support coal mining and coal production. US energy secretary Chris Wright said today that reviving coal will increase the reliability of the electrical grid and bring down electricity costs, but he has not shared further details on the 202(c) initiative. Trying to litigate the program could be "tricky", and section 202(c) orders have never successfully been challenged in court, in part because they are usually short-term orders, Harvard Law School Electricity Law Initiative director Ari Peskoe said. But opponents could challenge them by focusing on "numerous legal problems", he said, such as not allowing public comment or running afoul of a US Supreme Court precedent that prohibits agencies from attempting to decide "major questions" without clear congressional authorization. "Here DOE would use a little-used statute explicitly written for short-term emergencies in order to PREVENT a change in the US energy mix," Peskoe said. A projected 8.1GW of coal-fired generation is set to retire this year, equivalent to nearly 5pc of the coal fleet, the US Energy Information Administration said last month. Electric utilities often decide which plants to retire years in advance, allowing them to defer maintenance and to forgo capital investments in aging facilities. Keeping coal plants running could require exemptions from environmental rules or pricey capital investments, the costs of which would likely be distributed among other ratepayers. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Colombian crude gains on US tariff uncertainty


09/04/25
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09/04/25

Colombian crude gains on US tariff uncertainty

Sao Paulo, 9 April (Argus) — Colombian heavy sour crudes have reached their narrowest discounts to Ice Brent in at least four years, supported by uncertainty surrounding US tariffs and tight supplies of similar grades. Castilla's discount to Ice Brent was $3.50/bl on Tuesday and Vasconia's was at $1.45/bl, $4.40/bl and $3.15/bl tighter than on 2 January, respectively. Castilla has not reached that narrow of a level against the benchmark since early 2021 and Vasconia has not since mid-2019. Outright prices were $60.89/bl for Vasconia and $58.84/bl for Castilla on Tuesday. Colombian crude discounts started to narrow in January after US president Donald Trump mentioned plans for a 25pc tariff on all imports from Mexico and Canada, which produce competing heavy sours. Amid the uncertainty, buyers opted to secure supply that might not face tariffs, sources said, despite delays in tariffs implementation in early February and March. But a sweeping executive order last week excluded energy commodities from tariffs, as well as trade covered under the US-Mexico-Canada free trade agreement (USMCA). Then on Wednesday Trump announced he will pause many of the tariffs on other products for 90 days, but no changes have been announced for energy imports . Despite Trump's tariff exemptions on crude imports to the US, tight availability of heavy supply for US Gulf refiners could still support relative values for Colombian grades. Subbing in Colombian crudes are seen as good substitutes for heavy crude from the US' nearest neighbors, especially Mexican supplies, which are widely used by US Gulf coast refiners. Additionally, Colombia's geographical location makes shipping to the US Gulf coast quicker and less costly compared with other South American countries, such as Ecuador, which also produces heavy sour crude. Further tightening heavy supply for Gulf coast refiners, the US government announced in March that the deadline for the end of Chevron's waiver to produce in Venezuela is 27 May, stopping the flow of crude to the US from its joint venture with state-owned PdV. Chevron brought about 222,000 b/d in Venezuelan crude to the US from January-November 2024. according to the US Energy Information Administration (EIA). Even with the volume representing a fraction of Gulf coast imports, it represents almost 30pc of total Colombian output. Its production reached 760,000 b/d in January, according to oil services chamber Campetrol, citing figures from hydrocarbons agency ANH. Further US tariffs on countries that take delivery of Venezuelan oil and natural gas could also make Colombian barrels more attractive, although Ecuadorean crudes are possible regional supply alternatives too. Meanwhile, Mexico's state-owned Pemex has faced quality issues with its crude production since late last year, which could lead to Gulf coast buyers turning to Colombian barrels as alternatives. Pemex acknowledged issues with salt and water levels in its crude in February but denied that international buyers have rejected shipments because of those concerns. Mexico's policy of expanding domestic refining has also contributed to a decline in crude exports to the US in recent years. Colombian crude values have also likely been supported by firmer competing Canadian crude values at the US Gulf coast. Canadian crude differentials have firmed in part because of upgrader turnaround season in Alberta's oil sands region, slowing production. The shutdown of the 622,000 b/d Keystone pipeline from the region after a spill in North Dakota on 8 April also limited supply, buttressing prices. By João Scheller Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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What do tariffs mean for the global gas market?


09/04/25
News
09/04/25

What do tariffs mean for the global gas market?

Some countries are considering retaliatory tariffs, while others hope to reduce their trade deficit in order to negotiate lower rates London, 9 April (Argus) — Newly announced US tariffs on goods entering the country and some of the countermeasures already announced by large trade partners are unlikely to cause any direct disruptions to global gas markets. But the indirect effects on gas supply and demand may be huge, stemming from a weaker macroeconomic outlook, fuel substitution and inflationary pressures on infrastructure development. US president Donald Trump on 2 April imposed a minimum 10pc tax on all foreign imports from 5 April,with much higher tariffs on selected countries that briefly came into force on 9 April, before Trump announced a 90-day pause. China is the only exception. It has announced retaliatory tariffs that could disrupt US energy exports, resulting in an escalation that has already brought up the respective levies to 125pc in the US and 84pc in China. These are unlikely to have any direct impact on LNG trade flows, as China had already stopped importing US LNG earlier this year. But disruptions to trade between the world's two largest economies may weigh heavily on manufacturing activity in China, in turn reducing industrial gas demand. And the ripple effects of disruptions to US LPG exports to China may alter fuel-switching economics in the region and beyond. Most other countries in Asia-Pacific have opted not to follow China's lead by retaliating against US tariffs, even though many have warned about the potential for long-term economic disruption. The Japanese government intends to negotiate a better tariff deal and is considering investing in the US' proposed 20mn t/yr Alaska LNG export project as part of wider efforts to reduce its trade surplus with the US. Countries in Asia-Pacific have been hit with some of the highest of Trump's targeted duties. The EU is keeping retaliatory measures on the table, but these are unlikely to include any levy on US LNG. Europe has become much more reliant on LNG imports after losing the bulk of its Russian pipeline supply, and imposing tariffs on energy imports would only reignite inflationary pressures that European countries have tried to curb over the past three years. The bloc says it is ready to negotiate on possibly increasing its US LNG imports to reduce its trade surplus and would zero out its tariffs on industrial imports if the US agrees to do the same. But Trump says this offer is not enough, citing the EU's upcoming Carbon Border Adjustment Mechanism as one of the "unfair trade practices" that justifies a tariff response. Nerves of steel Much greater risks for gas markets may stem from rising infrastructure costs in the US' upstream and midstream sectors, particularly as a result of earlier tariffs imposed on steel and aluminum imports. These present an immediate risk for US LNG developers, particularly for the five projects under construction and the six others expected to reach final investment decisions this year. Metals account for up to 30pc of the cost of building an LNG export plant. An LNG terminal can cost $5bn-25bn to build, depending on its size, with steel used for pipelines, tanks and other structural frameworks. US facilities can be built using some domestic metal, but higher prices for this may lead to construction and final investment decision delays for the country's planned liquefaction projects. US tariffs' primary effect on the domestic gas market stems from duties levied on non-energy goods used by the oil and gas industry, including steel and specialised pipeline components such as valves and compressors, which are imported from overseas. The US remains a net natural gas importer from Canada , but these flows are unlikely to be affected by trade tariffs given the lack of alternative supply sources available to some northern US states. US LNG project pipeline mn t/yr Project Capacity Expected start/FID Under construction Plaquemines 19.2 2025 Corpus Christi stage 3 12.0 2025 Golden Pass 18.1 2026 Rio Grande 17.6 2027 Port Arthur 13.5 2027 Waiting for final investment decision Delfin FLNG 1 13.2 mid-2025 Texas LNG 4.0 2025 Calcasieu Pass 2 28.0 mid-2025 Corpus Christi train 8-9 3.3 2025 Louisiana LNG 16.5 mid-2025 Cameron train 4 6.8 mid-2025 Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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German coalition eyes 'limited' foreign carbon credits


09/04/25
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09/04/25

German coalition eyes 'limited' foreign carbon credits

Berlin, 9 April (Argus) — The parties likely to form Germany's next government today presented their coalition treaty, which pledges to allow the use of foreign carbon credits to reach the country's 2040 climate target. The treaty, presented in Berlin by the four party leaders Friedrich Merz of the CDU — the likely next federal chancellor — Lars Klingbeil and Saskia Esken of the SPD, and Markus Soeder of the CDU's Bavarian sister party CSU, stresses the parties' commitment to German and European climate targets, the Paris climate agreement, and reaching climate neutrality in Germany by 2045 "by combining climate action, economic competitiveness and social balance, and by focusing on innovation". "We want to remain an industrialised country and become climate neutral," the treaty reads. The parties' support for the EU's suggested interim target to reduce its emissions 90pc by 2040 compared with 1990 levels is conditional on two points. Germany must not be expected to go beyond its 88pc reduction target for 2040 enshrined in the country's climate action law. And its companies must be allowed, with a view to reducing their residual emissions in an "economically viable" way, to resort to "permanent and sustainable negative emissions", and to "credible CO2 reduction through highly qualified, certified and permanent projects" in "non-European partner countries". Making use of the latter activities should be permissible for up to three percentage points of the 2040 reduction target, although the "priority" for companies will be to reduce carbon emissions. And allowing these options must be reflected in the European Climate Law and the EU emissions trading system (ETS), the parties stipulate. The treaty also underlines the importance of "effective" carbon leakage protection to preserve Germany's "industrial value creation". The treaty calls for the European Green Deal and Clean Industrial Act to be further developed to "bring competitiveness and climate action together", and stresses the importance of carbon pricing instruments, which more countries should be persuaded to introduce. The parties also flag the importance of social acceptance, advocating an "economically viable price development" and pledging to ensure the smooth transition of Germany's domestic carbon price for the heating and transport sectors into the EU ETS 2 on the latter's launch in 2027. The parties pledge "immediately" to adopt a legislative package that enables carbon capture, transport, use and storage (CCU/CCS), particularly for industrial emissions that are difficult to avoid, and also for gas-fired power plants — a disputed issue within the SPD, and the reason why CCS legislation did not pass under the outgoing SPD-Green-led federal government. The new government said it will legally enshrine the "overriding public interest" of the construction of CCS infrastructure, as well as pledging to give the "highest priority" to ratifying the [amendment to the] London Protocol, allowing cross-border CO2 transportation, and to enter bilateral agreements with neighbouring countries on storing carbon. The new government will enable CO2 storage offshore in Germany's exclusive economic zone and the North Sea, as well as onshore where geologically suitable and accepted. The parties see direct air capture as a "possible" future technology to "leverage negative emissions". By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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China hikes US import tariffs to 84pc


09/04/25
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09/04/25

China hikes US import tariffs to 84pc

Singapore, 9 April (Argus) — China will raise import tariffs on US goods by 50 percentage points to 84pc, effective 10 April, the country's State Council said today. The increase matches the hike in US tariffs on Chinese imports imposed by US president Donald Trump earlier today. China does not appear to have exempted any products from its higher tariffs, which will take effect at 12:01am local time on 10 April (4:01pm GMT on 9 April). "The US escalation of tariffs on China is a mistake on top of a mistake, which seriously infringes on China's legitimate rights and interests and seriously undermines the rules-based multilateral trading system," the State Council said. Trump's targeted import tariffs on the US' main trading partners, including a cumulative 104pc tariff on China, took effect earlier today. China's 84pc tariff increases to around 100pc for some commodities that were caught up in earlier rounds of tariffs announced in February and March, including crude, coal, LNG and some agricultural products. By Kevin Foster Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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