Monday, June 27, 2022

Climate pledges abandoned as Putin sparks global coal crunch

It has been a striking reversal of commitments. Just seven months ago world leaders convened in Glasgow and decided to “phase-down” coal, marking a landmark agreement in the push to tackle climate change. Now, officials and power company bosses are grappling with the opposite challenge: where can they get more of it?

Countries from the UK to China and the Netherlands are scrambling for supplies of the fossil fuel to help keep the lights on this winter as Russia’s war on Ukraine tightens the squeeze on global energy markets. For the first time, the prospect of Russian gas to Europe being cut off is being taken seriously.

Yet after years of being told to shut mines in favour of more environmentally friendly energy sources, coal is in short supply globally.

Coal prices in Europe hit an all-time high of $430 (£350) per tonne in May, about four times higher than long term averages. There is little sign of cooling, with Russian imports set to be choked off by sanctions and rival exporters beset by their own challenges.

It offers little relief for households around the world stuck with high household energy bills, as the backsliding towards coal, albeit temporary, exposes further fragilities in the global energy system.

“If you want extra coal, you’re going to have to pay a lot,” says Steve Hulton, coal expert at Rystad Energy. “If you are paying a lot for your coal, and gas is incredibly expensive, then expect power prices to be really high. That's going to hurt everyone.”

Efforts to push coal to the sidelines have intensified in recent years, with politicians, investors and banks trying to clamp down on coal-fired power stations which account for about 30pc of the energy sector’s emissions.

The UK has pledged to stop using coal in power stations by 2024, while China last year said it would stop funding overseas coal projects. Yet demand has remained stubbornly high: expensive gas prices since last summer, due to shortages, have pushed many to coal.

Global power generation from coal jumped to an all-time high of 10,350 terawatt-hours in 2021, according to the International Energy Agency (IEA), generating about 36pc of global electricity. With supply restricted by the pullback in investment, benchmark Australian thermal coal hit an all-time high of $261.11 on January 28.

Russia’s war on Ukraine has added to the pressure, as traders cope with disruption and brace for loss of supply from one of the world’s biggest coal and gas exporters, due to sanctions or retaliation to them.

Last week state-owned Gazprom restricted gas sent through the Nord Stream 1 pipeline to Germany. It had already cut off supplies to the Netherlands, Denmark, Finland, Poland and Bulgaria after they refused to meet demands to pay in roubles.

Dr Fatih Birol, the IEA’s executive director, warned that Russia was using gas supplies to gain leverage over Europe, and said he wouldn’t rule out a total cut off. Europe “needs contingency plans” for that scenario, he added.

Using coal instead of gas features heavily so far in those contingency plans, with renewable power not yet able to pick up the slack. The UK, Germany, the Netherlands, Austria and Italy are all turning to coal-fired power to help provide supplies this winter.

Kwasi Kwarteng, the UK’s business secretary, wrote to coal plant owners EDF, Uniper and Drax last month urging them to stay open for back-up supply. Coal-fired power generation in Germany is already about 20pc higher year-on-year, according to Rystad Energy. Robert Habeck, Germany’s economy minister, from the Green Party, has described the situation as “bitter”.

Some plants in Europe use a particularly dirty, domestically produced form of coal, called lignite. Others need cleaner, less sulphurous, hard fuel, which has typically been heavily sourced from Russia. Many have continued to tap that source despite the war.

Russian coal exports are at record levels, from 9.8m tonnes in January to 13.6m tonnes in May and are on course for 13.2m tonnes this month. While more is going to China and India, imports into Europe have also been “unusually high” according to one senior industry source. The figures suggest stockpiling ahead of an EU ban on Russian coal imports in August.

They will still need more.


Boris Johnson forced to slash Net Zero targets in bid to tackle cost of living crisis

Boris Johnson has slashed his net-zero targets in a bid to tackle the cost of living crunch – by reducing the amount of biofuel produced in the UK.

The Prime Minister has hit the brakes in the push for green fuel, citing concerns that the drive may contribute to spiralling inflation.

Biofuel requires wheat and maize – land that Mr Johnson believes could be better used for food production to combat soaring prices. Land used globally to grow crops for the UK biofuel market could feed 3.5 million people if it was converted to food production.

The PM will call on G7 leaders to review their biofuel use, arguing that it could help mitigate the global food crisis and supply chain issues exacerbated by Russia’s invasion of Ukraine.

Mr Johnson said: ‘While Vladimir Putin continues his futile and unprovoked war in Ukraine and cravenly blockades millions of tonnes of grain, the world’s poorest people are inching closer to starvation.

He added: ‘From emergency food aid to reviewing our own biofuel use, the UK is playing its part to address this pernicious global crisis.’

The push for green fuel was one of the key pillars of the government’s net zero ambitions but now it is set to push for the amount of biofuel used globally to be cut by 10 per cent at Sunday’s G7 summit.

Government sources have stressed that the primary purpose of the Prime Minister’s review is to ensure people in poor countries have access to grain.

Britain sources more than 20 per cent of the ethanol used to create its biofuel from Ukraine. Land used globally to grow crops for the UK biofuel market could feed 3.5 million people if it was converted to food.


Europe’s Search for Natural Gas Runs Up Against Climate Goals

Europe’s scramble to replace Russian natural gas has set in motion plans for new gas production and infrastructure world-wide that critics say risk throwing the world off track in meeting the Paris accord’s climate targets.

In the wake of Russia’s invasion of Ukraine, Europe is moving quickly to set up new import terminals for liquefied natural gas from elsewhere. U.S. producers are expanding their export facilities as Europe’s thirst for gas adds to already-strong Asian demand. Such infrastructure can take years to build and is usually predicated on lifespans lasting decades. European utilities, meanwhile, are negotiating long-term supply deals with gas exporters in the U.S., the Middle East and Africa.

Both moves threaten to lock Europe into a new dependency on non-Russian gas at a time when the West has promised to start pivoting from hydrocarbons to cut emissions of carbon dioxide and other gases that scientists say are causing the earth to warm.

“This push for gas is much, much bigger than replacing Russian gas,” said Bill Hare, chief executive of Climate Analytics, a nonpartisan climate-science group. “That risks a lock-in of very high levels of carbon dioxide emissions.”

Democratic members of Congress including Senators Bernie Sanders (I., Vt.) and Elizabeth Warren (D., Mass.) and lawmakers from the European Parliament wrote in a joint letter last month that “further expansion of fossil fuel infrastructure in the United States and Europe is destined to set us back during a moment when we should be doing everything within our power to avert climate catastrophe.”

For many capitals, the urgent need to find enough supplies to replace Russian gas is outweighing longer-term goals to slash emissions. Gas from Russia, Europe’s biggest supplier, heats homes and powers factories across the continent.

European officials have emphasized gas as a transitional fuel: not ideal, but better than higher-emitting fuels such as coal. Burning natural gas produces around half the carbon dioxide of coal. The European Union is aiming to cut greenhouse gas emissions by around 14% by 2030 compared with 2020 by massively expanding wind and solar power and using energy more efficiently.

Germany, Italy, the Netherlands and Austria have all said they are now preparing to burn more coal in the next few years after Russia throttled gas supplies to the continent last week. And Europe is doubling down on gas from other parts of the world.

Plans for more than 20 liquefied natural gas import projects have been announced, relaunched or sped up across Europe since Russia invaded Ukraine, according to a recent analysis by FTI Consulting. Analysts said those projects have the potential to contribute an additional 128 billion cubic meters in natural-gas import capacity over the coming years, roughly the equivalent of 83% of the EU’s total 2021 imports from Russia.

Germany, which didn’t have any LNG import terminals before the war in Ukraine began, is taking some of the most aggressive steps to develop new infrastructure. The German government recently passed legislation to fast-track LNG developments, and pledged 2.94 billion euros, equivalent to about $3.09 billion, to put several floating terminals into operation.

The French utility Engie SA in May announced a 15-year contract to buy LNG from an export facility under construction in Brownsville, Texas. That came a year-and-a-half after the company pulled out of talks to buy gas from the project under pressure from environmentalists and the French government. It also recently struck a deal with Cheniere Energy Inc. for increased gas deliveries that would continue beyond 2040. A separate 15-year deal between Cheniere and Norway’s Equinor ASA was announced earlier this month, with deliveries to begin in 2026.

European officials and industry executives say that new LNG import terminals and other gas infrastructure can eventually be converted to handle hydrogen, a clean-burning fuel that can be produced using renewable energy. That, backers say, means building the infrastructure now doesn’t necessarily lock the continent into using more gas for years to come.

“We are firm believers that natural gas and LNG, done the right way, is an enabling partner to renewables,” said Anatol Feygin, chief commercial officer of Cheniere, which owns LNG export facilities in Texas and Louisiana. “We think that’ll be the case for decades to come.”

European officials are also fanning out to ask for gas from countries with untapped reserves. Critics say that could encourage production that might otherwise never get developed.

German Chancellor Olaf Scholz traveled to Senegal in May and said his government was interested in helping the West African nation develop its offshore natural gas reserves. Italian officials have signed deals with Angola and Congo to boost gas supplies. The EU announced plans to work with Israel and Egypt to increase exports of natural gas to the bloc.

Climate scientists warn that the world has little leeway to produce and burn more gas while at the same time complying with the Paris accord. Most of the world’s countries have agreed to the deal, which calls for governments to collectively reduce emissions to levels that scientists hope will limit warming to close to 1.5 degrees Celsius. The latest United Nations climate-science report estimates that global gas use in electricity and heating should fall 10% by 2030 compared with 2020 and 45% by 2050 to meet the 1.5-degree target.

LNG poses a double challenge. It is natural gas that has been supercooled so it can be transported as a liquid across long distances. It is turned back into a gas after it arrives at LNG import facilities. Tankers that transport it can be big emitters of methane—a powerful greenhouse gas—adding to overall emissions related to the fuel.


Australia: AgForce chief Michael Guerin questions climate science, blasts NZ pledge to cut farm emissions

The head of Queensland's peak rural lobby group AgForce says the science is not settled on climate change as he criticises New Zealand's plan to reduce agricultural emissions.

New Zealand farmers have worked with government on a proposed farm-level levy system as an alternative to the industry being included in the country's emissions trading scheme.

Queensland AgForce chief executive Michael Guerin said he was "horrified" by the plan.

"One of the things I believe very strongly, having spent a lot of time working with scientists — and I'm not a scientist — but the belief I have is that the science is never settled," he said.

"By its very definition it's a process of continuous learning, so climate change is real [but] it's coming from a number of sources, the scientists tell us.

"There are a lot of examples where things have been decided in the past where [they have] changed their mind with updated science."

He said his personal views on climate change did not affect the work he did in his role representing the state's farmers.

"What I do is represent now about 6,500 members, and through a committee process represent their collective views into the core issues," he said.

"There are various views about where climate change comes from, but there's an unanimous view that we want to work collaboratively and productively with science and with government in some of these issues."

Carbon sequestration in cattle

Mr Guerin said agriculture was the only industry in Australia that had made a tangible reduction in net emissions since 1995, but he acknowledged there was more to do.

"It's a powerfully positive story that can be accelerated through incentives, rather than slowed up through taxes," he said.

He said grazing animals contributed to carbon sequestration and a new project, AgCarE (Agriculture, Carbon and the Environment), demonstrated that much of Queensland's cattle industry was positive sequesters.




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