Australian government sees net zero and coal coexisting
Australia is moving towards a carbon neutral by 2050 target but parts of the federal government say this can coexist with a vibrant domestic coal industry, with some suggesting a taxpayer-funded loan scheme to ensure continuing investment in the sector.
Australian prime minister Scott Morrison is expected to take a net zero by 2050 target to the UN Cop 26 climate conference in the UK's Glasgow later this month, although it will be a target based on offsets and carbon sequestration, rather than the closure of the nation's coal industry. The government's main goal is to protect coal, gas, heavy manufacturing and agriculture, while promoting the use of hydrogen, carbon capture and storage, and soil carbon, federal energy minister Angus Taylor said this week. Canberra will provide incentives to cut emissions rather than punishing polluters, Taylor added.
Others have gone further, with federal resources minister Keith Pitt last week suggesting that the government provide an A$250bn ($180bn) lending facility to firms wishing to invest in coal mining in Australia. This will fill the gap left by the exit of traditional lenders from the sector.
The last of Australia's four largest banks ANZ committed a year ago to exiting lending to thermal coal activities from 2030, leaving a small number of private equity firms, overseas corporates and private investors providing finance to the sector, with some banks also declining to finance metallurgical coal projects.
Record breaking thermal coal prices, while driven by firm demand ahead of the northern hemisphere winter, are exacerbated by low investment in the coal mining sector. Some mining firms are unable to expand because of regulatory delays, while most cannot balance the current strong prices against the risk of over investing in an asset that could become stranded in a low-carbon economy.
This investment equation is made more complex by the volatility in coal prices over the past two years, where most Australian thermal coal mines were operating at a significant loss in 2020, and by the ever shrinking pool of investors prepared to provide financing. The uncertainty caused by the change in trade flows, because of Beijing's informal ban on Australian coal imports, adds to why even the most bullish of coal supporters have been looking elsewhere for opportunities to invest over the past couple of years.
States go their own way
While the federal government is balancing the needs of its parliamentarians representing coal-producing regions against a wider community desire for action on climate change, some states are moving forward with their own plans. New South Wales, which exports the most thermal coal of all the Australian states, today announced an A$3bn hydrogen investment plan focused on developing green hydrogen hubs in the coal-producing regions of the Hunter valley and the Illawarra.
High-grade thermal coal prices continue to hit new highs on concerns about energy supplies heading into the northern hemisphere winter. Argus last assessed the high-grade 6,000 kcal/kg NAR thermal coal price at $228.21/t fob Newcastle on 8 October, up from $174.46/t on 10 September, $151.90/t on 30 July and $47.56/t a year previously. It assessed lower grade coal at $142.60/t fob Newcastle for NAR 5,500 kcal/kg on 8 October, up from $108.67/t on 10 September and $42.08/t a year earlier.
Premium hard coking coal prices have more than trebled from early May to hit $409.75/t fob Australia in mid-September before easing slightly. Argus last assessed the premium hard low-volatile coking coal price at $402/t fob Australia on 12 October, up from $110.95/t on 11 May. Lower grade metallurgical coal prices have also increased at a slightly lower rate.
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Brazil's Bndes backs reforestation firm
Brazil's Bndes backs reforestation firm
Sao Paulo, 29 August (Argus) — Brazil's Bndes development bank approved R160mn ($28.7mn) in financing for reforestation company Mombak, which will use the funding for projects in Para state that will generate carbon offsets to be sold in the international market. The company has planted over 3mn native tree species in Para as part of its broader efforts to recover degraded areas in the Amazon basin where deforestation levels are highest. Mombak will receive R80mn from the Bndes' Climate fund and another R80mn from the banks' Finem line of credit. This is not Mobak's first project to sell carbon offsets. The company has a deal with Microsoft for 1.5mn offsets and with automobile racing firm McLaren. The funding is part of a partnership between Bndes and the environment ministry to reduce deforestation in an area known as the "deforestation arch" in the Amazon, with the goal of recovering 6mn hectares (ha) of degraded area in this region by 2030 and 18mn ha by 2050. This environmentally vulnerable region has received R1bn in financing since it was officially targeted at the Cop 28 UN climate talks. Mombak was founded in 2021 by former executives from Brazilian tech companies 99 and Nubank. The company has raised roughly R1bn in capital to invest in reforestation projects. It also received backing from the Canada Pension Plan Investment Board, Bain Capital, French insurance company AXA and the Rockefeller Foundation. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK eyes new environmental guidance for oil, gas: Update
UK eyes new environmental guidance for oil, gas: Update
Adds comment from Shell London, 29 August (Argus) — The UK government will develop new environmental guidance for oil and gas firms, in the light of a recent Supreme Court decision that ruled consent for an oil development was unlawful, as the scope 3 emissions — those from burning the oil produced — were not considered. The ruling means that "end use emissions from the burning of extracted hydrocarbons need to be assessed", the government said today. The government will consult on the new guidance and aims to conclude the process "by spring 2025", it said today. It will in the meantime halt and defer the assessment of any environmental statements related to oil and gas extraction and storage activities until the new guidance is in place, including statements that are already being assessed. The Supreme Court in June ruled that Surrey County Council's decision to permit an oil development was "unlawful because the end use atmospheric emissions from burning the extracted oil were not assessed as part of the environmental impact assessment". The government also confirmed that it will not challenge judicial reviews brought against the development consent granted to the Jackdaw and Rosebank oil and gas fields in the North Sea. A judicial review in the UK is a challenge to the way in which a decision has been made by a public body, focusing on the procedures followed rather than the conclusion reached. Environmental campaign groups Greenpeace and Uplift launched legal challenges in December seeking a judicial review of the government's decision to permit Rosebank. Norway's state-owned Equinor and London-listed Ithaca hold 80pc and 20pc of Rosebank, respectively. Greenpeace in July 2022 separately filed a legal challenge against the permitting of Shell's Jackdaw field. "This litigation does not mean the licences for Jackdaw and Rosebank have been withdrawn", the government said. The Labour government, voted into office in July , pledged not to issue any new oil, gas or coal licences, but also promised not to revoke existing ones. Equinor is "currently assessing the implications of today's announcement and will maintain close collaboration with all relevant stakeholders to advance the project. Rosebank is a vital project for the UK and is bringing benefits in terms of investment, job creation and energy security", the company told Argus today. Shell is "carefully considering the implications of today's announcement... we believe the Jackdaw field remains an important development for the UK, providing fuel to heat 1.4mn homes and supporting energy security, as other older gas fields reach the end of production", the company told Argus . North Sea oil and gas production "will be a key component of the UK energy landscape for decades to come", the government said today. The UK government introduced a climate compatibility checkpoint in September 2022, designed to ensure that oil and gas licensing fits UK climate goals. The UK has a legally-binding target of net zero emissions by 2050. The checkpoint, though, does not take into account scope 3 emissions. These typically make up between 80pc and 95pc of total oil and gas company emissions. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK plans new environmental guidance for oil and gas
UK plans new environmental guidance for oil and gas
London, 29 August (Argus) — The UK government will develop new environmental guidance for oil and gas firms, in the light of a recent Supreme Court decision that ruled consent for an oil development was unlawful, as the scope 3 emissions — those from burning the oil produced — were not considered. The ruling means that "end use emissions from the burning of extracted hydrocarbons need to be assessed", the government said today. The government will consult on the new guidance and aims to conclude the process "by spring 2025", it said today. It will in the meantime halt and defer the assessment of any environmental statements related to oil and gas extraction and storage activities until the new guidance is in place, including statements that are already being assessed. The Supreme Court in June ruled that Surrey County Council's decision to permit an oil development was "unlawful because the end use atmospheric emissions from burning the extracted oil were not assessed as part of the environmental impact assessment". The government also confirmed that it will not challenge judicial reviews brought against the development consent granted to the Jackdaw and Rosebank oil and gas fields in the North Sea. A judicial review in the UK is a challenge to the way in which a decision has been made by a public body, focusing on the procedures followed rather than the conclusion reached. Environmental campaign groups Greenpeace and Uplift launched legal challenges in December seeking a judicial review of the government's decision to permit Rosebank. Norway's state-owned Equinor and London-listed Ithaca hold 80pc and 20pc of Rosebank, respectively. Greenpeace in July 2022 separately filed a legal challenge against the permitting of Shell's Jackdaw field. "This litigation does not mean the licences for Jackdaw and Rosebank have been withdrawn", the government said. The Labour government, voted into office in July , pledged not to issue any new oil, gas or coal licences, but also promised not to revoke existing ones. Equinor is "currently assessing the implications of today's announcement and will maintain close collaboration with all relevant stakeholders to advance the project. Rosebank is a vital project for the UK and is bringing benefits in terms of investment, job creation and energy security", the company told Argus today. North Sea oil and gas production "will be a key component of the UK energy landscape for decades to come", the government said today. Argus has also contacted Shell for comment. The UK government introduced a climate compatibility checkpoint in September 2022, designed to ensure that oil and gas licensing fits UK climate goals. The UK has a legally-binding target of net zero emissions by 2050. The checkpoint, though, does not take into account scope 3 emissions. These typically make up between 80pc and 95pc of total oil and gas company emissions. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US, Italy, Germany miss goal to cut fossil fuel finance
US, Italy, Germany miss goal to cut fossil fuel finance
Edinburgh, 28 August (Argus) — Countries including the US, Italy and Germany continued to finance international fossil fuel projects last year despite committing to stop doing so by the end of 2022, according to a report by think-tank the International Institute for Sustainable Development (IISD) and civil society organisation Oil Change International. A total of 39 countries and development banks, including the US, Canada, Germany, the UK, France and Italy, promised to end international public finance for unabated fossil fuels by the end of 2022. The Glasgow pledge — the Clean Energy Transition Partnership (CETP) — signed on the sidelines of the UN Cop 26 climate talks has exemptions for "limited and clearly defined circumstances consistent with a 1.5°C warming limit and the goals of the Paris Agreement". The report found that the US invested $3.2bn in 10 overseas projects last year and its export-import bank approved $500mn for 300 oil and gas well in Bahrain. The US is "currently considering at least five fossil fuel megaprojects that are all steeped in controversy, including gas projects in Guyana, Papua New Guinea and Mozambique", the report said. The organisations said Switzerland approved five fossil fuel projects abroad last year for a total of $1.4bn, Italy and Germany approved $1bn each and Italy's export credit agency SACE provided $4.3bn for petrochemical projects. Italy's policy contains "numerous wide-ranging loopholes" that essentially allow SACE "to continue its fossil finance virtually unhindered", the organisations said. The report also pointed out that the Netherlands committed $321mn to an oil and gas project in Brazil's Santos basin. Environmental organisations had warned last year that energy security concerns would mean some countries including the US, Germany and Italy would miss the pledge made in Glasgow . But fossil fuel finance is decreasing even among signatories with policies that do not match the ambition of the CETP, according to the report. "A year after the deadline, most CETP signatories — including Canada, the UK, France and the European Investment Bank — have met their promise," IISD and Oil Change said. And the commitments have shifted billions away from fossil fuel investments towards clean energy. The report found that signatories have collectively reduced their international public finance for fossil fuel projects by around $10bn-15bn from a 2019-21 average to around $5.2bn in 2023. International investment in clean energy rose by 16pc in the same period to $21.3bn. "Signatories particularly need to adopt ambitious and quantitative targets for rapidly scaling up finance for clean energy, commit to a high standard for the quality of this financing, as well as prioritise financing for key enabling energy sub-sectors and for the countries that need it most," the organisations said. The report found that the largest recipients of the pledge signatories' finance were upper and upper-middle income countries rather than low-income nations. The top three recipients of the signatories' international public finance for clean energy last year were Spain, Germany and Poland, they said. By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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