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Cop 26 profile: Europe sets climate bar high

  • Spanish Market: Crude oil, Emissions, Natural gas, Oil products
  • 22/10/21

The bloc hopes the summit will see other major emitters deliver concrete plans for net zero, writes Dafydd ab Iago

The EU has dominated global climate talks since the first UN Conference of the Parties (Cop) summit in Berlin, in addition to holding the UN Framework Convention on Climate Change secretariat in the former German capital Bonn. On top of hosting more than half of the Cops since 1995, Europe has become the first major economic region to lay out in detail a policy path towards net zero carbon emissions in 2050.

"Europe needs to lead, so the rest of the world understands where we need to go," EU climate action commissioner Frans Timmermans told EU environment ministers signing off this month on the bloc's negotiating mandate for Cop 26. That self-image of a bloc leading with ambitious headline targets, and detailed EU and national legislation, is key to the EU's negotiating position in Glasgow.

Having surpassed its previous 20pc reduction target set for 2020, the EU submitted confirmation, this May, to the UN of EU-level emission cuts of 3.8pc in 2019 compared with 2018. That is a full 24pc lower than 1990 levels, even before Covid-19 restrictions cut greenhouse gas (GHG) emissions last year. The bloc also updated its nationally determined contribution (NDC) and legally bound itself to carbon neutrality by 2050 and cutting GHG emissions in 2030 by at least 55pc compared with 1990, up from a previous 40pc target (see table).

For Brussels then, Glasgow must force other major emitters, such as China and the US, to deliver with concrete plans rather than vague commitments towards net zero. European Commission president Ursula von der Leyen only sees China's announcement at the UN that it will stop building coal-fired generation abroad or US president Joe Biden's promise to double US international climate finance as "steps in the right direction". While repeating a promise to commit an additional €4bn ($4.7bn) in climate finance in 2021-27, von der Leyen wants "concrete" plans from international partners. The EU brings to Glasgow the highest level of ambition. "We do it for our planet. And we do it for Europe," she told the European Parliament this month.

If altruism does not push other Cop parties into action, the EU is fine-tuning a carbon border mechanism to protect its carbon-intensive industries. The mechanism starts in 2026 with a duty on cement, iron and steel, aluminium, fertiliser and electricity imported to the EU from countries not subject to carbon pricing.

Concrete carbon phase-outs

Polishing the money aspects of the bloc's negotiating position for Glasgow, finance ministers from the EU's 27 member states stress that the "ambitious" updated NDC is being implemented by a package of legislative proposals adopted by the commission in July. And Timmermans warned environment ministers this month against using the energy price shocks that EU members are facing as an excuse to back down on proposals that are effectively phase-out schedules for CO2-intensive sectors. Timmermans said that if Europe leaves the climate crisis untackled, the resulting social unrest will be far worse than France's 2018 gilets jaunes protests over fuel and climate taxes.

More climate sceptical — and coal dependent — Poland is, for the moment, relatively isolated in arguing for postponing or lowering various climate and energy goals because of the energy price spikes. The majority of EU politicians seem to accept calls by Timmermans and von der Leyen to double down on decarbonisation policies such as an increased GHG cut — of 61pc, rather than 43pc, by 2030, compared with 2005 levels — for industries under the bloc's emissions trading system (ETS). Distributors of road and heating fuels will have to purchase allowances, from 2026, to cover their emissions under a separate ETS with a carbon price that may well float above €100/t. In aviation, allowances for intra-European flights will be slowly reduced, with operators losing free allowances from 2026.

The EU's commitment to delivery is evidenced by over 3,000 pages of dense legal proposals and explanatory texts that aim to set GHG fuel intensity cuts for maritime fuels, oblige flight operators to take up 5pc sustainable aviation fuels by 2030, rising to 20pc by 2035 and 63pc by 2050, and for renewables to reach 40pc, rather than 32pc previously, of EU gross final consumption of energy by 2030.

Tougher CO2 emissions standards for new passenger cars and vans require average emissions to come down by 55pc from 2030 and by 100pc from 2035, compared with a 2020-21 target of 95g CO2/km​. That effectively sets a 2035 phase-out date for sales of unabated internal combustion engines. There is also a 13pc GHG intensity reduction target for transport fuels by 2030, effectively doubling to 28pc the share of renewable fuels in road transport.

Ships calling at EU ports will have to reduce the average GHG intensity of their fuels by 6pc by 2030, 13pc by 2035 and 75pc by 2050, all from 2020 levels. And the commission wants member states to push zero-emission car sales by equipping major highways with electric charging every 60km and hydrogen refuelling every 150km.

Article 6 integrity

Signing off on a negotiating mandate for Timmermans and the commission in Glasgow, EU environment ministers have called for article 6 of the Paris climate agreement to set rules for international carbon trading that are "consistent with the necessary increased global ambition and the achievement of climate neutrality, and that avoid double counting and lock in to high-emissions pathways". Ministers specifically want article 6 provisions that promote sustainable development, ensure environmental integrity and ambition, and address risks such as "non-permanence" of carbon cuts or sequestration and "leakage" from projects.

Off the record, EU officials involved in the nitty-gritty of climate negotiations are openly sceptical about international carbon trading, flagging an increasing number of complaints about the credibility of voluntary offsets with "different controversies in different countries". Officials fear double counting and the need for "corresponding" adjustments of their own emission figures when countries sell reductions to others. "Fostering global ambition, ensuring environmental integrity and avoiding double accounting are at the core of the Paris agreement and of the EU position on market mechanisms," European environment commissioner Virginijus Sinkevicius says.

The EU's non-governmental organisations have called the bloc's negotiating position "good enough", especially as EU ministers now back a five-year timeframe for countries' NDCs to the Paris agreement to be implemented from 2031. But campaigners say the EU27 have intentionally left their negotiators room to manoeuvre, including on how the EU and member states will help reach the €100bn goal for international climate finance for developing countries. And non-governmental organisation Carbon Market Watch wants the EU to do more to ensure international carbon market negotiations move beyond just compensating emissions and zero-sum offsetting to deliver real GHG reductions. It calls for tough offsetting and carbon trading rules at Cop 26, and will this month present critical analysis of claims by companies including Shell, Total, BP, Russian state-controlled Gazprom and Chinese state-controlled PetroChina of carbon-neutral natural gas and crude shipments.

EU GHG reduction targets
NDC target % Baseline yearTarget year
2016 — 40pc19902030
2020 — 55pc 19902030
2016 — 80-95pc19902050
2020 — 100pc19902050

EU GHG emissions by source

Net EU electricity generation, 2019

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12/05/25

Australian PM reaffirms climate priority in new cabinet

Australian PM reaffirms climate priority in new cabinet

Sydney, 12 May (Argus) — Australian prime minister Anthony Albanese has reaffirmed renewable energy commitments with cabinet picks after the Labor party's election victory on 3 May. Chris Bowen, who led key changes to the safeguard mechanism , the capacity investment scheme (CIS) and fuel efficiency standards for new passenger and light commercial vehicles, remains minister for climate change and energy. Madeleine King, the minister for resources and northern Australia, retains her cabinet position, while Tanya Plibersek, previously the minister for environment, is now the minister for social services and is replaced by Murray Watt, formerly the minister for workplace relations. In the previous term, Plibersek failed to establish an environment protection authority and reform the Environment Protection and Biodiversity Conservation Act, which was an election promise in 2022, after intervention from Western Australian state minister Roger Cook. Environmental lobby group the Australian Conservation Foundation (ACF) has welcomed Watt, who was also the minister for agriculture for two years to 2024, into his new role. "Having a former agriculture minister in environment increases the opportunities for co-operation on the shared challenges facing nature protection and sustainable agriculture," the ACF said. The ACF also welcomed Chris Bowen in returning to his role as environment minister for his "clear mandate" to continue the energy transition. Josh Wilson remains assistant minister for climate change and energy. Participants in the renewable energy carbon credit industry are urging the new Department of Climate Change, Energy, the Environment and Water to speed up the creation of new Australian Carbon Credit Unit (ACCU) methods in the new government term. They are also seeking greater transparency in ACCU data base , which requires legislative change. And renewable energy companies and lobby groups will be closely following a review of Australia's National Electricity Market wholesale market settings , which will need to be changed following the conclusion of the CIS tenders in 2027 and as Australia transitions to more renewables from its ageing coal-fired plants. By Grace Dudley Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Saudi Aramco cuts dividend after fall in 1Q profit


12/05/25
12/05/25

Saudi Aramco cuts dividend after fall in 1Q profit

Dubai, 12 May (Argus) — State-controlled Saudi Aramco has announced a sharp cut to its quarterly dividend after reporting a 5pc year-on-year decline in profit for the first three months of 2025. The company's profit fell to $26.01bn in January-March from $27.3bn in the same period last year after lower oil prices squeezed revenues. Aramco said its bottom line was also hit by higher operating costs. The company said it sold its crude for an average $76.30/bl in January-March, down from $83/bl the first quarter of 2024. "Global trade dynamics affected energy markets in the first quarter of 2025, with economic uncertainty impacting oil prices," Aramco's chief executive Amin Nasser said. The company said its overall dividend for the quarter will be $20.61bn, down from $31bn in the corresponding period in 2024. The steep drop is due to the performance-linked element of the dividend being slashed to just $219mn for the quarter, from $10.7bn a year earlier. Aramco already announced in March that it expected its dividends for the full year to fall to $85.4bn from $124.3bn in 2024. Despite the current economic uncertainty, Aramco's capital expenditure (capex) rose to $12.5bn for January-March from $10.83bn in the same period last year, although this puts investment broadly in line with the lower end of the full-year 2025 capex guidance of $52bn-58bn that the company announced in March. The aggressive capex programme will help drive growth plans for the downstream and new energies sides of Aramco's business, as well as fund the firm's strategy to maintain its maximum sustainable crude capacity at 12mn b/d and expand its gas output by 60pc by 2030 compared with 2021 levels. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

India, Pakistan reach US-mediated, fragile ceasefire


11/05/25
11/05/25

India, Pakistan reach US-mediated, fragile ceasefire

Dubai, 11 May (Argus) — A US-mediated ceasefire reached on Saturday between nuclear-armed neighbours India and Pakistan is still holding, following four days of intense fighting. "After a long night of talks mediated by the United States, I am pleased to announce that India and Pakistan have agreed to a FULL AND IMMEDIATE CEASEFIRE," US president Donald Trump posted on his social media platform Truth Social on Saturday. India and Pakistan will now start negotiations on a broad set of issues at a neutral site, US secretary of state Marco Rubio said on social media platform X. India's military on 7 May launched attacks against targets in Pakistan and Pakistan-administered Kashmir in retaliation for an April terrorist attack that killed dozens. But by Saturday, the two countries seemed to be edging toward all-out war, as their militaries targeted each other's bases. India's foreign minister Subrahmanyam Jaishankar confirmed the ceasefire, saying on X that "India has consistently maintained a firm and uncompromising stance against terrorism in all its forms and manifestations. It will continue to do so." Pakistan "responded positively to the ceasefire proposal for regional and global peace, and its people and I hope that dialogue will now be chosen for resolution of water and Kashmir disputes," Pakistan's prime minister Shehbaz Sharif said in a televised address. Trump also praised leaders of both countries for agreeing to halt the aggression and said he would "substantially" increase trade with them, although this was "not even discussed". Kashmir is a contested area between India and Pakistan, and the two have twice gone to a war over the region. Fear of the conflict spreading roiled global financial markets. India is the region's second-biggest oil buyer after China — importing around 4.5mn b/d last year — and a major customer for other commodities, including LNG and coal. Pakistan also imports fertilizers, coal, oil products and LNG. The escalation between the two severely limited direct trade between them. Airlines in the region as well as some Mideast Gulf carriers rerouted or cancelled flights to avoid Pakistani airspace. But the Pakistan Airports Authority said on Saturday that "Pakistan's airspace has been fully reopened for all types of flights." By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Iraq edging towards compliance under Opec+ pressure


09/05/25
09/05/25

Iraq edging towards compliance under Opec+ pressure

Dubai, 9 May (Argus) — Iraq managed to produce just below its formal Opec+ crude production target in April for the second month in a row, following intense pressure from other members of the group to improve on its historically poor compliance record. But the country still has much to do to compensate for past overproduction. Over the last 16 months, Iraq has been among the Opec+ group's most prolific quota-busters, alongside Kazakhstan and, to a lesser degree, Russia. Argus estimates the country's output averaged over 130,000 b/d above its 4mn b/d target last year. This non-compliance has strained unity within Opec+ and was the driving force behind the group's recent decision to unwind production cuts at a much faster pace than originally planned. Iraq has made some progress on improving compliance this year, reducing production by around 190,000 b/d in the first four months of 2025 compared with the same period last year, according to Argus assessments. Output stood at 3.94mn b/d in April, which was more than 70,000 b/d below Baghdad's formal 4.01mn b/d quota for the month. And in March, Iraq was 20,000 b/d below its then 4mn b/d quota. But this is far from mission accomplished. Along with other overproducers, Iraq has agreed a plan to compensate for exceeding formal quotas since the start of 2024, yet it has fallen short of its commitments in that regard. April's output was almost 50,000 b/d above its 3.89mn b/d effective quota for the month, taking into account the compensation plan. Iraq attributes its compliance issues to ongoing disagreements with the semi-autonomous Kurdish region over crude production levels. The oil ministry claims it lost oversight of the Kurdish region's production since the Iraq-Turkey Pipeline (ITP) was closed in March 2023. Despite the pipeline closure shutting Kurdish producers out of international export markets, Argus assesses current output in the Kurdistan region ranges between 250,000 b/d and 300,000 b/d, of which considerable volumes are smuggled into Iran and Turkey at hefty discounts to market prices. An understanding between Baghdad and the Kurdistan Regional Government (KRG), when implemented, would see Kurdish production average 300,000 b/d, with 185,000 b/d shipped through the ITP and the rest directed to local refineries. Peer pressure Despite the challenges, it is hard to argue that Iraq is not heading in the right direction. Pressure from the Opec Secretariat and the Opec+ alliance's de-facto leader, Saudi Arabia, has pushed Baghdad to take some tough decisions to rein in production, which include cutting crude exports and limiting crude intake at domestic refineries. Kpler data show Iraqi crude exports, excluding the Kurdish region, fell to 3.34mn b/d in January-April from 3.42mn b/d a year earlier, while cuts to domestic refinery runs have prompted Baghdad to increase gasoil imports to ensure it has enough fuel for power generation. Fearing revenue constraints, Iraq is trying to persuade Opec+ to increase its output quota, motivated by a previous upward revision to the UAE's target. Baghdad's budget for 2022-25 includes plans to spend $153bn/yr. But this is based on a crude price assumption of $70/bl and projected oil exports of 3.5mn b/d, both of which now look out of date. By Bachar Halabi and James Keates Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

White House ends use of carbon cost


09/05/25
09/05/25

White House ends use of carbon cost

Washington, 9 May (Argus) — The US is ending its use of a metric for estimating the economic damages from greenhouse gas (GHG) emissions, the latest reversal of climate change policies supported by President Donald Trump's predecessors. The White House Office of Management and Budget (OMB) this week directed federal agencies to stop using the social cost of carbon as part of any regulatory or decision-making practices, except in cases where it is required by law, citing the need "remove any barriers put in place by previous administrations" that restrict the ability of the US to get the most benefit "from our abundant natural resources". "Under this guidance, the circumstances where agencies will need to engage in monetized greenhouse gas emission analysis will be few to none," OMB said in a 5 May memo to federal agencies. In cases where such an analysis is required by law, agencies should limit their work "to the minimum consideration required" and address only the domestic effects, unless required by law. OMB said these steps are needed to ensure sound regulatory decisions and avoid misleading the public because the uncertainties of such analyses "are too great". The budget office issued the guidance in response to an executive order Trump issued on his first day in office, which also disbanded an interagency working group on the social cost of carbon and called for faster permitting for domestic oil and gas production and the termination of various orders issued by former president Joe Biden related to combating climate change. The metric, first established by the administration of former US president Barack Obama, has been subject to a tug of war between Democrats and Republicans. Trump, in his first term, slashed the value of the social cost of carbon, a move Biden later reversed . Biden then directed agencies to fold the metric into their procurement processes and environmental reviews. The US began relying on the cost estimate in 2010, offering a way to estimate the full costs and benefits of climate-related regulations. The Biden administration estimated the global cost of emitting CO2 at $120-$340/metric tonne and included it in rules related to cars, trucks, residential appliances, ozone standards, methane emission rules, refineries and federal oil and gas leases. By Michael Ball Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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