India Becomes Centre Of The World’s Oil And Coal Demand Growth
In this newsletter:
1) After Paris: China Stokes Global Coal Growth
China Dialogue, 23 September 2016
2) India Becomes Centre Of The World’s Oil And Coal Demand Growth
Bloomberg, 26 September 2016
3) Mexico To Open Its Huge Shale Fields To U.S. Drillers Next Year
Houston Chronicle, 23 September 2016
4) Don’t Look Now, but the Global Oil Surplus Just Tripled
The American Interest, 25 September 2016
5) Fracking Scare Stories Condemned By UK Watchdog
The Times, 26 September 2016
6) Obama Climate Plan, Now in Court, May Hinge on Error in 1990 Law
The New York Times, 25 September 2016
China Dialogue, 23 September 2016
2) India Becomes Centre Of The World’s Oil And Coal Demand Growth
Bloomberg, 26 September 2016
3) Mexico To Open Its Huge Shale Fields To U.S. Drillers Next Year
Houston Chronicle, 23 September 2016
4) Don’t Look Now, but the Global Oil Surplus Just Tripled
The American Interest, 25 September 2016
5) Fracking Scare Stories Condemned By UK Watchdog
The Times, 26 September 2016
6) Obama Climate Plan, Now in Court, May Hinge on Error in 1990 Law
The New York Times, 25 September 2016
Full details:
China Dialogue, 23 September 2016
Beth Walker
Chinese companies and banks are continuing to drive global coal expansion, as state owned companies, backed by state loans, build coal-fired power plants across the world. This is despite commitments from China’s top leaders to deliver clean energy and low carbon infrastructure for developing countries.
Coal hotspots are emerging in Turkey and the Balkans, where local players are also active. (Image by Iwona_Olczyk)
The world’s largest carbon emitter aims to reposition itself as a global green power. In a joint US-China statement at the White House in September 2015, President Xi Jinping agreed to strictly control public investment for overseas projects with high pollution and carbon emissions. China won praise for promising to peak its greenhouse gas emissions by 2030 at the UN climate summit in Paris in 2015 – and trying to wean itself slowly off coal. Chinese manufacturers are now major suppliers of cheap solar and wind parts worldwide.
However, these efforts are being undercut by Chinese backed coal power plants planned and under construction from Indonesia to Pakistan, Turkey to the Balkans –as well as in Africa and Latin America. These could boost global emissions and lock developing countries into fossil fuel intensive energy systems for decades.
New data collected by chinadialogue and the CEE Bankwatch Network shows that since 2015 many new Chinese coal plant project deals have been announced and are under development. “The majority of these projects are under loan consideration by China’s policy-driven financing, and supplied by equipment from the country’s largest power generation manufacturers,” said Wawa Wang, public finance policy officer at CEE Bankwatch Network.
Chinese banks and companies are currently involved in at least 79 coal fired generation projects, with a total capacity of over 52 GW, more than the 46 GW of planned coal closures in the US by 2020.
Beijing has encouraged state owned coal companies and energy intensive industries such as concrete, steel and cement, to “go out” as part of the One Belt One Road Initiative (OBOR). This aims to open up new opportunities for Chinese companies and to build infrastructure to link China to European markets and beyond.
New outlets
The overseas push comes as China’s power sector is struggling with severe overcapacity with the slowing economy and slashing of energy intensive industries at home. This has led to the lowest use of existing power generation capacity since 1978. Greenpeace estimates that at any given moment, more than half of China’s coal capacity lies idle.
Yet despite central government attempts to reduce its coal fired power and the toxic smog it produces, there is a surge in new approvals for power plants as a result of pushback from provincial authorities and the perverse incentives created by falling coal prices and government fixed electricity prices.
In addition, Huaneng– one of five state owned energy giants – plans to significantly boost its share of profits from overseas projects by 2020, according to its five year strategy. Its expansion will focus on coal in South and Southeast Asia, Russia and Eastern Europe; hydropower in South Asia, Africa and Europe; and wind and solar in Europe and Latin America. While the corporate strategy highlights overseas risks from war, terrorist attacks and corruption, environmental risks are not mentioned.
All this contributes to concern that China will follow developed countries’ example and simply export its carbon emissions as it moves up the global value chain, threatening any fragile international progress on emissions reduction.
Industry insiders argue that China’s coal advance will bring tangible environmental benefits by providing more efficient technologies than countries could otherwise afford. But the number of new projects in the pipeline will counteract any modest emissions savings made by “supercritical” technology, especially since China’s new, stringent standards for domestic plants do not apply to exports.
Full post
Background info:
GWPF Report: The Truth About China
Paris Agreement: A Blank Cheque For CO2 Emissions By China And India
2) India Becomes Centre Of The World’s Oil And Coal Demand Growth
Bloomberg, 26 September 2016
Dan Murtaugh
India has become the center of the world’s oil demand growth and the country’s economic growth will affect global commodities, Citigroup Inc. said in a research note.
The world’s second-largest country by population after China will see its economy expand at about 8 percent a year through 2021, Citi researchers including Ed Morse said. The country’s working-age population will increase by 220 million over the next 20 years, and about 240 million people will move to cities.
Urbanization and rising incomes will boost demand for transportation fuels, gold jewelry and electricity generation, while looser regulations should spur increased exports of iron ore into the market. India’s economy won’t copy China’s near-decade of double-digit economic growth that pushed oil prices into the $100-a-barrel range, but will be enough to impact global supply-and-demand balances of several commodities, Morse said.
“While India is no China, the sub-continent’s largest economy is becoming the third largest oil consumer and importer of oil, with a tangible impact on oil, coal and iron ore markets, less so on metals,” Morse said. “As India’s base rises, so too should its global commodities’ impacts.”
Citi expects 2016 to be the best in four years for commodity investments. The Bloomberg Commodity Index is up 7.4 percent this year. Oil, zinc, copper and soft commodities will be the best investments in 2017, with Brent crude seen averaging $60 a barrel after ending this year around $50.
India’s crude demand has grown by 350,000 barrels a day this year, higher than China, as the country surpassed Japan to be the world’s third-largest oil buyer.
Gasoline demand has risen 14 percent this year and should continue to increase at double-digit rates as car and motorcycle purchases climb, Morse said.
Coal demand will grow between 6 percent and 8 percent a year through 2020 as the country tries to electrify more rural areas. Domestic production of coal for power will rise even faster, reducing imports, while a strong domestic steel-production outlook means the nation will have to increase metallurgical coal imports.
Full story
3) Mexico To Open Its Huge Shale Fields To U.S. Drillers Next Year
Houston Chronicle, 23 September 2016
David Hunn
After years of delay, Mexico could open up its vast shale oil fields to U.S. drillers as soon as next year, the Mexican secretary of energy said Friday.
Pedro Joaquin Coldwell, speaking to energy executives, attorneys and academics at Rice University, said that the long-suspended auctions for northern Mexico’s shale fields could reopen after the first quarter of 2017.
“Everything will be ready by March,” he said.
The fields could provide Houston oil companies with nearby and ready-made opportunities for expansion. Much of it is essentially an extension of the Eagle Ford reservoir, which stretches from central Texas and into Mexico. Local companies, familiar with the geology and now experts in hydraulic fracturing, could be first in line to develop the fields.
Mexico, in the middle of sweeping energy reform, is holding auctions to sell the rights for private companies to drill in its untapped oil fields. The country has gathered more than $22 billion in private sector commitments so far, on projects ranging from oil drilling to pipelines to power plants.
Full story
Mexican Shale Revolution: Fracking expected to begin next year
4) Don’t Look Now, but the Global Oil Surplus Just Tripled
The American Interest, 25 September 2016
Way back in June of 2014, oil was trading above $110 per barrel and producers were sitting pretty. Now, some 27 months later, those same producers have been put through the wringer and been forced to endure prices that dipped as low as $27 per barrel at the start of this year before recently settling in the $40-50 range. A global oversupply precipitated this price collapse, and its persistence has been as much of a boon for buyers as it has been a headache for sellers. Now, as Bloomberg reports, that glut appears to have tripled over the course of the past month:
More than 800,000 barrels a day of additional crude is pouring into the global market this month compared with August as Russia pumps at an all-time high while Libya and Nigeria restore disrupted supplies, according to statements from their ministry officials. That would imply a tripling of the supply surplus, estimated currently at about 400,000 barrels a day by the International Energy Agency. […]
The global oil oversupply will persist into 2017 as members of the Organization of Petroleum Exporting Countries such as Saudi Arabia pump near record levels, others such as Iran and Iraq bolster capacity and production outside the group weathers the price slump, according to the IEA. Prices may struggle to hold above $40 a barrel unless OPEC acts, Citigroup Inc. predicts.
This ought to give the delegates from various petrostates assembling in Algiers next week extra motivation to come to an agreement to freeze their collective agreement. The Saudis, for their part, seem more willing to play ball this time around, and have reportedly agreed to cut production by 1 million barrels per day if Iran joins in and other countries roll back their output to levels they hit earlier this year.
But while we wait for that meeting and analysts vacillate back and forth on the likelihood of a consensus emerging, it’s worth taking a step back to look at the bigger energy picture here: the world is awash in oil (and natural gas too, for that matter), and those cheap hydrocarbon inputs will be welcomed by all sectors of the global economy besides, of course, the oil and gas industry. Moreover, it bodes well for future global energy security that after all the peak oil hand wringing, suppliers around the world keep finding and extracting more and more of one of civilization’s most important commodities.
5) Fracking Scare Stories Condemned By UK Watchdog
The Times, 26 September 2016
Ben Webster
Friends of the Earth (FoE) failed to substantiate claims that fracking could cause cancer, contaminate water supplies, increase asthma rates and send house prices plummeting, the Advertising Standards Authority says.
Scientists accused the group of scaremongering after it made the claims in thousands of copies of a leaflet asking for donations to help stop fracking.
Cuadrilla, which wants to frack in Lancashire, and the Reverend Michael Roberts, a retired vicar, complained to the ASA about the leaflet last year.
The ASA produced its draft ruling in July but has been forced to delay sending it to its council for approval because FoE has repeatedly requested more time to challenge its findings.
The draft upholds the complaints against FoE on all four grounds, finding in each case that the group had breached the ASA’s code by making misleading statements that it had failed to substantiate.
Full story
6) Obama Climate Plan, Now in Court, May Hinge on Error in 1990 Law
The New York Times, 25 September 2016
Coral Davenport
WASHINGTON — The pitched battle over President Obama’s signature climate change policy, which is moving to the courts this week, carries considerable political, economic and historical stakes. Yet its legal fate, widely expected to be ultimately decided by the Supreme Court, could rest on a clerical error in an obscure provision of a 26-year-old law.
That error, which left conflicting amendments on power plant regulation in the Clean Air Act, will be a major focus of oral arguments by opponents of Mr. Obama’s initiative when the case is heard on Tuesday in the United States Court of Appeals for the District of Columbia Circuit.
The initiative, known as the Clean Power Plan, which Mr. Obama sees as at the heart of his climate change legacy, gave the United States critical leverage to broker the landmark 2015 Paris climate change accord. If the plan is struck down, the United States, the world’s largest carbon polluter over the centuries, will lose its main tool to cut greenhouse gas emissions. If it is upheld, it will transform the nation’s electricity system, closing hundreds of coal-fired power plants and setting in motion a wholesale shift to wind, solar and nuclear power, as well as to improved electric transmission systems.
Twenty-eight states and more than 100 companies and labor and industry groups are fighting to overturn the plan. Defending it are 18 states and dozens of environmental and public health groups that have joined forces with the Obama administration. Nearly 20 lawyers will take turns arguing the case before 10 judges — much larger than the typical three-member panel. The judges have allocated four hours to hear the arguments, rather than the usual one or two. The chief judge of the court, Merrick B. Garland, who is also Mr. Obama’s Supreme Court nominee, has recused himself.
Adding to the drama will be the presence of Mr. Obama’s mentor at Harvard Law School, Laurence H. Tribe, who will argue against the climate plan on behalf of the nation’s largest coal company, Peabody Energy.
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