Saturday, July 28, 2018

GWPF Newsletter: EU Abandons Climate Stance In Trade Sop To Trump

Trump and Juncker Agree To Boost US Shale Gas Exports To Anti-Fracking Europe

In this newsletter:

1) EU Abandons Climate Stance In Trade Sop To Trump
EurActiv, 27 July 2018
2) Trump and Juncker Agree To Boost US Shale Gas Exports To Anti-Fracking Europe
CNBC, 26 July 2018

3) Trump Wants Europe To Buy U.S. Gas — But Russia Is In His Way
The Wall Street Journal, 26 July 2018
4) Oh Dear: Climate News Is A ‘Ratings Killer’, US Journalist Confirms
The Washington Times, 26 July 2018
5) And Finally: You’re a CEO—Stop Talking Like a Political Activist
The Wall Street Journal, 27 July 2018

Full details:

1) EU Abandons Climate Stance In Trade Sop To Trump
EurActiv, 27 July 2018

The European Commission abandoned its customary climate hard talk on Wednesday (25 July) in a bid to defuse trade tensions with the US. 

Commission boss Jean-Claude Juncker meets US President Donald Trump in Washington DC. 

Following a visit by commission president Jean-Claude Juncker to Donald Trump in Washington DC, the two major economies promised to work to eliminate trade barriers.

In a joint statement, they agreed to launch “a close dialogue on standards in order to ease trade, reduce bureaucratic obstacles, and slash costs”.

There was no mention of upholding the Paris climate deal or environmental protections. Instead, it called for more trade in liquefied natural gas (LNG) from the US to the EU.

US President Donald Trump and European Commission boss Jean-Claude Juncker might have cracked the united front of the 28 member states, as France has already questioned the terms of their agreement and asked the Commission for clarifications.

That’s a break from recent EU rhetoric. Trade commissioner Cecilia Malmström tweeted in February that reference to Paris was essential to any EU trade deal – and the pact finalised with Japan last week duly included a Paris clause.

Given Trump’s avowed intent to quit the Paris Agreement, the EU appeared to have ruled out the revival of transatlantic trade agreement talks unless he changed his mind. Last year, EU heads of state frequently lobbied the president on the Paris deal.

Juncker gave a speech calling Trump’s position an “abdication from common action”.

But on Wednesday, with Trump’s trade actions threatening EU auto-makers and farmers, Juncker adopted a more conciliatory tone.

“[Juncker’s] clear priority was to de-escalate the trade dispute with the US and to some extent that has been achieved for now,” said Jonathan Gaventa, director at European think-tank E3G.

“To do that the commission has diverged from its own line about the importance of the Paris Agreement and environmental standards in trade deals… That for us is a cause for concern.”

There is a split between two pillars of the EU over how to deal with Trump’s climate stance. France has pushed for a hard line against Paris defectors, while Germany – which sells a lot of cars to the US – has been more cautious.

The joint statement hints at the fragility of the truce. Both sides agreed to set up a working group of “our closest advisors” to take the agenda forward, with the caveat: “While we are working on this, we will not go against the spirit of this agreement, unless either party terminates the negotiations.”

Full story

2) Trump and Juncker Agree To Boost US Shale Gas Exports To Anti-Fracking Europe
CNBC, 26 July 2018

The United States and the European Union have agreed to work towards boosting natural gas trade, an issue that President Donald Trump pressed forcefully at this month's NATO meeting in Brussels.

Shipping more U.S. gas to Europe is one of the matters European Commission President Jean-Claude Juncker agreed to work towards on Wednesday at a White House meeting with Trump, which yielded progress in a trade dispute between the United States and the EU.

"We agreed to a strengthened and strengthening of our strategic cooperation with respect to energy," Trump said in a press conference with Juncker. "The European Union wants to import more liquefied natural gas, LNG, from the United States and they're going to be a very very big buyer. We're going to make it much easier for them, but they're going to be a massive buyer of LNG."

Specifically, Juncker said the EU will build more terminals to import liquefied natural gas, or LNG, a form of the fuel super-chilled to liquid form for shipment by sea. He did not specify whether he was referring to new terminals in addition to those already planned.

In response to a request for clarification, an EU Commission spokesperson said the EU is supporting 14 LNG infrastructure projects, which are set to increase the Continent's capacity by 15 billion cubic meters by 2021.

"The 14 projects would still need the approval of the individual financing programmes to get the grants, so this is indeed not something that could have been taken for granted prior to the commitment that President Juncker gave yesterday to President Trump," Mina Andreeva, deputy chief spokeswoman for the Commission, told CNBC in an email.

There are currently 28 large-scale LNG import terminals in Europe — 24 in EU nations — with capacity to process 227 billion cubic meters, according to King & Spalding, a law firm actively involved in LNG deals. There are another 8 small-scale facilities in EU countries, and nine more terminals that could come online through 2021, according to the firm's count.

Juncker also wants the United States to streamline the process for granting export licenses, which is currently costly and time-intensive, Andreeva said. The Department of Energy and federal regulators are already taking steps to cut back red tape.

Juncker is also encouraging countries beyond the EU, including in North Africa, to build LNG infrastructure to facilitate U.S. exports, Andreeva added.

To be sure, Europe has already begun buying more natural gas from the United States, with Portugal and Spain emerging as two of the most steady buyers over the last two years. Britain, Italy, Lithuania and the Netherlands have each taken a few cargoes, while Malta and Poland have received a single shipment, according to data from the U.S. Energy Information Administration.

Trump took an assertive stance two weeks ago in Belgium, harshly criticizing Germany for backing a pipeline that would directly link the country with Russia, Europe's dominant natural gas supplier.

Full story

3) Trump Wants Europe To Buy U.S. Gas — But Russia Is In His Way
The Wall Street Journal, 26 July 2018

Russian gas is cheaper and U.S. exporters may not want to rush to Europe, given their gas fetches a higher price in Asia

President Donald Trump wants Europe to buy more U.S. gas, but Vladimir Putin’s Russia stands in the way.
On Wednesday, Mr. Trump and European Commission President Jean-Claude Juncker dialed down trade tensions with measures that include a preliminary agreement for Europe to buy more liquefied natural gas from the U.S.

Surging U.S. LNG exports and Europe’s desire to reduce its dependence on Russian fuel was widely expected to help break Moscow’s dominance on the continent.

However, in recent years, Russia has increased its exports to Europe, and U.S. LNG has failed to take any meaningful market share. Russia is the European Union’s top supplier, with around a 35% market share.

Russian gas is simply cheaper and U.S. exporters may not actually want to rush to Europe, given their gas fetches a higher price in Asia, driven by surging Chinese demand.

“Where that gas goes is just dictated by the dynamics of the global gas market and it’s not clear to me what any [European Union] policy maker could actually do to change that,” said Trevor Sikorski, an analyst at London-based consultancy Energy Aspects.

A U.S. LNG cargo out of Sabine Pass, La., currently fetches $6.58 per million British thermal units in the U.K. and $6.65 in the Netherlands, according to S&P Global Platts Analytics. By comparison, delivery to Guandong, China, will bring in $8.08 and to Futtsu, Japan, $8.47.

Peter Altmaier, Germany’s minister of economic affairs, said that Europe has expressed willingness to build the infrastructure needed to take U.S. LNG.

However, “it will, of course, have to be competitive [in terms of price],” he said.

At the moment, it isn’t. At current prices, U.S. gas delivered to Europe costs, on average, over $7 per million British thermal units. In comparison, Russian pipeline gas costs between $4.5 and $5.5 per million British thermal units, according to Energy Aspects.

Russian gas flows down a network of long-established pipelines straight into Europe. U.S. energy has to be liquefied and shipped across the Atlantic, where a terminal has to turn it back into gas to then go into a pipe.

Since the U.S. started exporting gas in 2015, very little has come to Europe.

Last year, around 3 billion cubic meters of U.S. gas was delivered to the EU and Turkey, up from 0.5 bcm in 2016, according to S&P Global Platts Analytics.

By comparison, in 2017, Russian gas giant PAO Gazprom’s exports to Europe rose nearly 8% to 192.2 billion cubic meters, mostly to Western European countries.

Adding to Moscow’s competitive threat against the U.S. is a new Russian gas pipeline—Nord Stream 2—slated to complete construction this year.

Gas Spat

Earlier in July, Mr. Trump slammed that pipeline, saying Germany is “captive to Russia.”

Last week, a Republican senator proposed extending sanctions on Russia to include entities working on the pipeline. A U.S. official said that though Mr. Trump didn’t discuss Nord Stream 2 on Wednesday, the country won’t accept the pipeline.

Berlin says that even if it wished to stop the pipeline, it has no means to, given it is a commercial project run by private companies. German government ministers say they bought Russian gas even at the height of the Cold War.

Plus, it isn’t clear what the EU will do to support further imports of U.S. gas, even though it would support the bloc’s aim of reducing its dependency on Russian energy.

One option would be for the European Commission to create a special fund for financing LNG terminals, a German official said.

European LNG terminals can apply for funding from the Connecting Europe Facility, worth €5.35 billion ($6.28 billion) to 2020, set up to help fund European infrastructure. Recent projects in Lithuania, Poland and Malta have received European funding.

Germany has plans to build its first import terminal—at an estimated cost of €450 million—to start importing by 2022, with the goal of diversifying its gas supply.

An EU official said Thursday that Wednesday’s joint statement from Mr. Trump and Mr. Juncker didn’t amount to a commitment for more EU purchases. It was a declaration of intent, he said.

Full story

4) Oh Dear: Climate News Is A ‘Ratings Killer’, US Journalist Confirms
The Washington Times, 26 July 2018

MSNBC anchor Chris Hayes’ admission that climate change is a “ratings killer” has infuriated environmentalists who accused the liberal network of being more concerned about its bottom line than with fighting global warming.

Asked about his network’s lack of climate-change coverage, Mr. Hayes tweeted Tuesday that “almost without exception. every single time we’ve covered it’s been a palpable ratings killer. so incentives are not great.”

His frank assessment was met with chuckles from climate skeptics like Anthony Watts, who called it “hilarious, but true,” given that global warming typically brings up the rear on polls and surveys of top voter concerns.

Less amused were climate-woke environmental and media figures who blasted MSNBC for its ratings-first mentality.

“Is climate change a ‘ratings killer,’ or is something wrong with for-profit media?” asked the website Grist in a Wednesday headline.

Full story

5) And Finally: You’re a CEO—Stop Talking Like a Political Activist
The Wall Street Journal, 27 July 2018

Sam Walker

Many corporate leaders who speak out on divisive social issues forget to make a business case for their views

Like all revolutions, this one was a long time coming—although historians may argue that Brian Moynihan fired the first provocative shot.

“Our jobs as CEOs now include driving what we think is right,” Mr. Moynihan, Bank of America’s chief executive, told The Wall Street Journal in 2016. “It’s not exactly political activism, but it is action on issues beyond business.”

Over the last two years, the list of CEOs who have swept aside old taboos about activism to express their views on social and political issues has grown longer by the day.

Meanwhile, business leaders who feel reluctant to join the fray, or worry that discussing divisive issues will only alienate customers, find themselves in a perilous spot. The endless, real-time conversation taking place on social media, combined with the rising tide of advocacy bubbling up from their own employees, customers and investors, make their silence increasingly conspicuous. It might even damage their businesses.

In a recent survey, 47% of Millennials said they believe CEOs ought to take positions on issues that are important to society, according to Weber Shandwick and KRC Research. Another 51% said they were more likely to buy from companies whose CEOs express views they agree with.

There’s even some evidence of a correlation between a CEO’s public profile and their job performance. A Ruder Finn study of 100 leaders across 13 industries found that only 28% of chief executive whose companies had experienced below-average stock price growth maintained two or more social media accounts. Among the high-performing group, the figure was 50%.

While there may be value in CEOs taking a public stand on social issues, nobody seems to have a reliable set of instructions. Some have opted to play it safe by deferring to opinion polls, or weighing in only after many others have jumped the grenade. The rest fall into two camps: those who operate by instinct and those who try to develop a protocol.

Apple’s Tim Cook, who has been outspoken on topics including data privacy and the environment, recently told an audience that Apple tries to limit its comments on “hot-button issues” to subjects the company brings a certain level of expertise to.

Berkshire Hathaway ’s Warren Buffett prefers to leave his company out of it. He recently told CNBC that his occasional political statements are never made on behalf of employees and shareholders. “I’m not their nanny,” he said.

After studying scores of instances of CEO activism, I’ve noticed one overarching trend: most business leaders who speak out do so by adopting the moral language of activism. They rarely, if ever, labor to make a business case for their positions.

Full story

The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at

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