Monday, June 28, 2021

GWPF Newsletter: Russia curbs gas supply to Europe


China uses climate weapon as a pawn in its trade war against Australia

In this newsletter:

1) Surprise: Russia curbs gas supply to Europe
Financial Times, 24 June 2021 

2) China uses climate weapon as a pawn in its trade war against Australia
Daily Mail, 23 June 2021  
3) Britain set to approve new oil and gas projects despite COP26 climate conference
The Times, 23 June 2021
4) Unelected climate advisers attack Boris Johnson for putting COP26 at risk
Global Warming Policy Forum, 24 June 2021
5) Fact checking IRENA: Ignore the renewables industry PR and turn to empirical data
GWPF Energy, 23 June 2021
6) Biden’s solar folly: Administration must rethink its climate agenda
Editorial, The Washington Times, 23 June 2021
7) How radical climate activists are destroying Western power
Tsvetana Paraskova,, 23 June 2021
8) As Biden retreats, Norway expands Arctic oil exploration
OilPrice, 23 June 2021
9) Electric cars on collision course with reality 
PowerLine, 23 June 2021

Full details:

1) Surprise: Russia curbs gas supply to Europe
Financial Times, 24 June 2021
“Gazprom is effectively saying to the EU: give us the green light for Nord Stream 2 and we will send you all the gas you need.”


Russia has exacerbated a shortage of European natural gas supplies that has driven prices to a 13-year high by quietly limiting top-up sales to customers, according to executives and analysts.

Pipeline exports of natural gas from Russia’s state-backed monopoly Gazprom to continental Europe have dropped roughly one-fifth in 2021 on pre-pandemic levels despite a sharp rebound in demand and low stockpiles of the important fuel. The imbalance has helped send prices in Europe to the highest levels since 2008, increasing energy costs for homes and businesses.

The rise in prices comes during a period of volatile relations between Russia and the West. On Wednesday, Russia said its forces fired warning shots at a British destroyer off the coast of Crimea, claims the UK denied. At the same time, Germany and France sought this week to cool tensions with Russia, proposing a new EU plan for closer engagement with Moscow.

Energy industry executives and analysts said that while Gazprom was meeting its long-term contractual obligations, its reluctance to boost supplies to Europe through more immediate measures like spot market sales was putting pressure on the market.

“Gazprom is just trying to maximise its profits at a time when spot prices are high, gas storage is empty and LNG demand in Asia is strong,” said one executive at a German energy company. “They’re just being opportunistic.”

Gazprom said in a statement that it “supplies gas precisely in line with consumers’ requests”. “It is based on those very requests as well as the possibilities for portfolio capacity optimisation that the company books transportation capacity in particular directions,” it added.

Several industry participants said Gazprom’s moves appeared designed to support prices and may be aimed at pressuring EU governments to approve the controversial Nord Stream 2 pipeline to Europe.

“Gazprom is effectively saying to the EU: give us the green light for Nord Stream 2 and we will send you all the gas you need,” said Tom Marzec-Manser, lead European gas analyst at ICIS.

“Don’t, and we won’t. We’re not going to send the extra gas via Ukraine and you’ve seen what that means for wholesale prices in a tight global [liquefied natural gas] market,” he added.

Nord Stream declined to comment.

The Nord Stream 2 pipeline, which is almost complete, has been beset by financial and legal sanctions from the US and opposition from eastern European countries, which have argued it will increase Russia’s leverage over the continent’s energy supplies.

The pipeline, which runs through the Baltic Sea directly to Germany, also bypasses Ukraine, which is heavily reliant on gas transit fees from Russia to support its economy. Russia has backed a proxy war in Ukraine’s eastern territory since 2014, when Moscow annexed Crimea.

Germany has been a long-term backer of the Nord Stream 2 project. It is set to approve the pipeline’s start-up later this year after the Biden administration waived additional sanctions against the pipeline’s operator in a tacit admission that Washington was unable to prevent its completion. But German elections in September could boost the Green party, which has opposed the pipeline.

Ronald Smith, a senior oil and gas analyst at BCS in Moscow, said: “Gazprom, shall we say, appears in no hurry to volunteer to deliver additional non-contracted [gas supplies] via Ukraine.”

Full story (£)
2) China uses climate weapon as a pawn in its trade war against Australia
Daily Mail, 23 June 2021 
The communist nation believed to be using UNESCO as pawn in political war 
China is complaining Australia's Great Barrier Reef is under threat from climate change while it tears up the South China Sea to build military bases.

Beijing is furiously building outposts in the powder-keg region, destroying huge bodies of lush reefs in its quest for military dominance.

The authoritarian's regime's hypocrisy is not lost on on scientists who condemned its rampant destruction while using the Great Barrier Reef as a pawn in its economic coercion campaign against Australia.

Marine biology professor John McManus of the University of Miami said large patches of coral are 'gone forever' as a result of China's building.
'If you built something, if you've put dirt, rubble, and pavement… There's no way to recover that,' he told Radio Free Asia.

A draft recommendation from the UNESCO World Heritage Committee listed the reef's world heritage status as 'in danger' due to Australia's failure to address the effects of climate change on the 2,300km stretch of coral.
UNESCO is heavily influenced by Chinese officials, and its Australian members claim this is the latest move to apply political pressure to Australia.
The move is particularly hypocritical given their destruction to the South China Sea, home to 300,000sqm of coral reef.
Full story
3) Britain set to approve new oil and gas projects despite COP26 climate conference
The Times, 23 June 2021
Ministers are set to approve a new North Sea oil and gas project months before Britain hosts a global climate change conference in Glasgow.

Under proposals submitted to the government, developers behind the Cambo heavy crude field off the coast of the Shetland Islands expect to extract 150 million barrels of oil — roughly equivalent to operating 16 coal-fired power stations for a year.

Setting up and powering the oil rig will emit more than three million tonnes of carbon over the project’s lifetime.

The oilfield is expected to operate until 2050, by which time Britain has pledged to be net carbon neutral. However, the project will not be covered by the government’s “climate checkpoint”, which will assess whether new oilfield developments are “compatible with the UK’s climate change objectives”, because it was licensed for exploration in 2001 and 2004.

The development also goes against recommendations made by a government-commissioned report from the International Energy Agency, ahead of November’s Cop26 conference in Glasgow, that called for “no investment in new fossil fuel supply projects”. A report due tomorrow from the Committee on Climate Change is also expected to be critical of ministers’ progress in putting policies in place to meet the net-zero commitment.
Full story
4) Unelected climate advisers attack Boris Johnson for putting COP26 at risk
Global Warming Policy Forum, 24 June 2021

The UK’s Climate Change Committee has attacked Boris Johnson for failing to deliver on cutting CO2 emissions, warning that his failure is putting COP26 at risk. The time has come to abolish this unelected group of eco-activists.
The unelected climate activists and green energy lobbyists who run the Climate Change Committee have turned the institution into a radical opposition party that is effectively undermining the government, damaging Britain’s image and credibility both at home and abroad.

While Lord Deben, the CCC’s chairman, attacks Boris Johnson over his failing climate policy, the Climate Change Committee is calling on the government to “kill off business travel to maintain Covid’s green benefits,” a mad proposal that would almost certainly kill thousands of UK businesses and tens of thousands of jobs.
It is high time to abolish the current structure of the Climate Change Committee and institute a radical reform of scientific government advice.
Boris Johnson told lack of climate action puts COP26 in jeopardy
Bloomberg, 24 June 2021 
Two years after the U.K. government enshrined in law a target to reach net zero emissions by 2050, strategies covering everything from transport to home heating have been scrapped, delayed, or fell short when they were published, the Climate Change Committee said Thursday.
As a result, Johnson’s promises may ring hollow with other leaders when they convene in Glasgow, Scotland, later this year for a round of global talks known as COP26, said John Gummer, chairman of the committee. As COP26 president, the U.K. will need to encourage other nations to set their own mid-century decarbonization goals, putting the world on a path to limit global warming to 1.5 Celsius.
Other countries “want us to say and do the same thing. And if we do that, then I think we can make a real success of COP26,” said Gummer, who is also a member of Parliament’s upper chamber, the House of Lords. “If we don’t, then it seems to me that it puts the whole process into jeopardy.”

Full story
5) Fact checking IRENA: Ignore the renewables industry PR and turn to empirical data
GWPF Energy, 23 June 2021

Dr John Constable, GWPF Energy Editor
In sharp contrast to claims by the renewables lobby, the costs of wind and solar energy are not falling, empirical data shows.
When soap bubbles burst they vanish in an instant. Financial bubbles by their nature take a little longer to deflate, and doubtless the renewables industry bubble will take several years, not least because it has vested interests puffing the sector harder and faster than the realists, such as ourselves, can pick holes. But eventually, the lobbyists will run out of breath and the tissue of propaganda will be more holes than substance. The wretched pretence will collapse in an embarrassing mess.
We don’t know precisely when this will happen, but China seems to be betting on the later 2020s, just before it has undertaken to reach peak emissions, giving it plenty of time to blame the West for breach of promise and return to carbon business as usual. That seems like a plausible date to us too.
In the meantime, analysts and market-watchers are confronted by a confusing storms of argument bringing prolonged gales of high temperature Public Relations, such as the extravagantly upbeat claims of the International Renewable Energy Agency (IRENA) published yesterday, and brief but chillingly cold showers of empirical information regarding the underlying high and increasing costs of renewable energy.
On the one hand, for example, IRENA claims, though without evidence to us, that “new solar and wind projects are increasingly undercutting even the cheapest […] of existing coal-fired plants”.
On the other we see the striking paper in the Harvard Business Review indicating that the solar industry has failed to correctly price-in the cost of recycling its own waste, meaning that “the sheer volume of discarded panels will soon pose a risk of existentially damaging proportions”, increasing the Levelised Cost of Electricity “to four times the current projection”, with the result that the “the economics of solar – so bright-seeming from the vantage point of 2021 – would darken quickly as the industry sinks under the weight of its own trash”.
And, in fact, even the current economics don’t look that promising, as can be inferred from recent Bloomberg and Financial Times’ reports of significant rising costs for steel, polysilicon and freight, resulting in an 18 per cent fall in the value of solar company shares.
Nor is wind power exempt from these concerns, as is evident in Bloomberg’s report in early May this year that Vestas would have to increase its wind turbine prices due, amongst other things, to rising costs for steel – up 25% in China this year. Furthermore, as readers of the work of Professor Gordon Hughes for both GWPF and the UK’s Renewable Energy Foundation will know, capex is in a sense the wind industry’s least concern, with long term opex costs, particularly offshore, looking all but certain to sink the vast flagship wind projects whose low bids for guaranteed prices are the toast of European governments. The champagne will have gone distinctly flat by the later 2020s when taxpayers are called upon to bail out failing wind farms or face blackouts.
None of these empirically grounded criticisms of renewables should be surprising to anyone who had a basic understanding of the physics of wind and the solar flux; these are high entropy energy flows, close to random heat, and require large masses of capital equipment to correct the defect and produce a low entropy supply to consumers. This is an intrinsically low productivity energy sector, with consequently high costs. And even if you choose not to think along these abstract lines, the empirical information in company accounts, such as that examined by Professor Hughes and my GWPF colleague Andrew Montford should be utterly conclusive. The costs of renewables are just not falling in the way claimed by industry lobbyists.
The real wonder is why why anyone believed that guff in the first place.

And, for the avoidance of doubt, there is no need to take this post’s word for granted or to trust that of Gordon Hughes or Andrew Montford. Analysts and investors, politicians and civil servants, are invited to conduct their investigations and come to their own conclusions. That is the way that financial bubbles burst, one realistic and inquiring mind at a time.
References & Notes for further reading
6) Biden’s solar folly: Administration must rethink its climate agenda
Editorial, The Washington Times, 23 June 2021

President Joe Biden’s goal to make the U.S. electric grid carbon-free by 2035, will require the U.S. to diversify its domestic energy sources, including a heavy reliance on solar power. This is foolish for two reasons: The solar industry in the U.S. is non-existent, so most purchases will have to be made from Chinese companies and solar panels create more waste than they’re worth.
Of the top 10 solar panel manufacturers in the world, only one is based in the U.S., First Solar Inc., and it ranks ninth in overall production. The top four suppliers are all Chinese-based companies, as the Chinese government heavily subsidizes and finances the industry, exporting panels at a price non-Chinese makers simply can’t match. The only other two manufacturers in the top 10 global manufacturers that aren’t Chinese-run firms are from Canada and South Korea.
Even First Solar produces most of its panels offshore — only 40% of its panel manufacturing is done domestically. Economists predict reshoring the solar industry — as Mr. Biden has proposed to create new green jobs to replace the thousands he killed by canceling construction on the Keystone Pipeline — will entail huge sums of U.S. taxpayer monies.
“It would require a combination of hefty subsidies through tax breaks and tariffs to burden low-priced imports,” according to economists and industry specialists who spoke to the Wall Street Journal, and even then, they considered it, “a long-shot” in being able to compete with China.

So, in other words, the Chinese would benefit from higher global solar purchases, not U.S. workers. America last.

The other misnomer about solar is that it’s clean. Yet, a new Harvard Business Review Study has found solar panels will create 50 times more waste than predicted.
“The economics of solar,” will “darken quickly as the industry sinks under the weight of its own trash,” the study’s authors wrote. The study calculated customers would have to replace panels far sooner than every 30 years, as the industry assumes, and by 2035 “discarded panels would outweigh new units sold by 2.56 times. In turn, this would catapult the LCOE (levelized cost of energy, a measure of the overall cost of an energy-producing asset over its lifetime) to four times the current projection.”
It’s more cost-efficient to manufacture new panels than it is to recycle them, the authors found, leading to a huge volume of hazardous, heavy metal waste that will seep into the earth, causing more pollution. Indian researchers last year found the amount of solar waste will far exceed that produced by iPhones, laptops, and other electronics.
“The totality of these unforeseen costs could crush industry competitiveness,” the authors concluded.
Perhaps, it’s time for the Biden administration to rethink its climate-change agenda. For there’s a real dark side to solar.
7) How radical climate activists are sucking out Western power
Tsvetana Paraskova,, 23 June 2021
While Big Oil fights climate activists in the courtrooms, OPEC+ will gain an ever greater geopolitical influence.

The ‘day of reckoning’ for Big Oil, when events at boardrooms and courtrooms issued last month the starkest warning to oil majors’ license to operate yet, was hailed as a huge victory for climate activists. But the climate celebration may be a bit premature.
Rebel shareholder votes at Exxon and Chevron and a court ruling against Shell delivered a blow to Big Oil in a single day, and environmentalists are ecstatic.    
But for all the glee that oil majors ‘got what they deserved’, climate activists may be overlooking the unintended consequences of shareholders punishing oil companies about their continued investment in oil and gas production.
‘Pyrrhic Victory’
The court and boardroom wins for climate enthusiasts could be a pyrrhic victory, because unless oil demand also drops, emissions may not fall, Jason Bordoff, the co-founding dean of the Columbia Climate School and a columnist at Foreign Policy, says.  
Global oil demand will continue to rise, probably for another decade, until electric vehicles (EVs) and other technologies—which are not yet to scale—undermine demand for fossil fuels.
As demand grows, the gap left by international oil majors, if they accelerate a shift away from oil and gas faster than they have planned under investor and activist pressure, will simply be filled by national oil companies. Those companies, held by the Middle East oil powerhouses such as Saudi Arabia, the United Arab Emirates (UAE), Iraq, or Kuwait, as well as Russia’s Rosneft, haven’t pledged any ‘net-zero energy company’ goals. Nor do they operate in major markets that have net-zero emission targets.  
While activists are focused on punishing international oil majors, the national oil companies will not be sitting on the fence drafting net-zero strategies. They will step up to explore for and extract more oil and gas because, first, the world still needs fossil fuels. And second, because oil revenues are the pillars of government budgets and the social contracts in major Middle Eastern economies, including that of the world’s largest oil exporter, Saudi Arabia.
Moreover, how many shareholders would demand climate action at Saudi Aramco or Abu Dhabi National Oil Company (ADNOC), considering that the state holds (nearly) all the shares in each of those oil giants? Would Greenpeace activists dare breach a court order and board a rig offshore Saudi Arabia, as they have done several times in the North Sea in recent years?

Emissions Pledges
The primary goal of recent climate activism, leaving aside the radical ‘keep it in the ground,’ should be forcing a change in the emissions profile of oil and gas production and planning for a future where oil demand may not be rising year after year.
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All international majors have pledged to cut emissions, but environmentalists don’t think those are enough.
The easiest and certainly the cheapest way to cut emissions from oil and gas production is to reduce oil and gas production. Yet, if Big Oil slashes production based on environmental wishes instead of on plans for gradual deceleration of investment in fossil fuels, Saudi Aramco and Rosneft will boost their output, and the net outcome for society and the climate would be no emission reduction at all.
To be fair, Shell, BP, and Eni have said over the past year that their respective oil production would gradually fall over time as they plan to become net-zero energy businesses by 2050. Shell affirmed earlier this year its oil production peaked in 2019. BP looks to slash oil and gas production by 40 percent by 2030. Eni sees its oil production peaking in 2025.
All these pledges from oil majors would do nothing to reduce overall emissions from oil and gas globally because as long as there is growing or plateauing demand for oil and gas, there will be producers willing to offer supply. Just ask Saudi Arabia.  
Global Oil Demand Is Not Falling
Since oil demand is not showing any signs of falling anytime soon, a supply reduction from one international oil major will not reduce global emissions, Shell’s CEO Ben van Beurden said earlier this month.
The change the world needs toward low-carbon energy “must address the demand for carbon-based energy, not just its supply,” he wrote on LinkedIn in response to the court ruling which Shell expects to appeal. 
“To mention one, perhaps extreme scenario, imagine Shell decided to stop selling petrol and diesel today. This would certainly cut Shell’s carbon emissions. But it would not help the world one bit. Demand for fuel would not change. People would fill up their cars and delivery trucks at other service stations,” van Beurden said.  
If Big Oil was forced to cut production faster than it intends to, people filling up their cars would likely mean that producers like Saudi Arabia and Russia would own an even greater share of the oil market. Moreover, persistently low investment in oil and gas from international majors will give OPEC and its allies led by Russia more license to pump more oil to meet global demand and “stabilize the oil market.” In other words, OPEC+ would have all the more reasons to step up and fill the gap and prevent the world from running “the risk of facing an acute deficit of oil and gas,” as Rosneft’s CEO Igor Sechin said earlier this month.
While Big Oil fights climate activists in the courtrooms, OPEC+ will gain an ever greater geopolitical influence and will step up production, hindering the global fight to reduce emissions from oil and gas operations and the use of fossil fuels.
8) As Biden retreats, Norway expands Arctic oil exploration
OilPrice, 23 June 2021

Norway has awarded four new exploration licenses in frontier Arctic areas as it looks to support its oil and gas industry, as well as value and job creation, the Ministry of Petroleum and Energy said on Wednesday.

The ministry has offered seven companies stakes or operatorship in four production licenses, one in the Norwegian Sea and three in the Barents Sea, as part of its 25th licensing round. The so-called numbered licensing round typically includes frontier parts of the Norwegian Continental Shelf (NCS).

According to Norway’s oil ministry, it will be the frontier regions that are most likely to host large new discoveries.
Norway needs new discoveries to maintain employment in one of its most important industries and its supply chain, especially after the last few challenging months, Energy Minister Tina Bru said last year when the ministry proposed the expansion of areas for oil and gas exploration.
In the 25th licensing round, announced in November 2020, companies could apply for licenses in nine different areas—eight in the Barents Sea and one in the Norwegian Sea.
Full story
9) Electric cars on collision course with reality 
PowerLine, 23 June 2021
“Green” energy policies are a disaster everywhere they are being implemented, but California will probably crash and burn before the other states that have gone down the “green” path. 
California’s energy policies are a mess. Ostensibly committed to cutting CO2 emissions, the state shuttered its main nuclear power plant. California has invested massively in wind and solar energy, but since these technologies produce electricity only a minority of the time, California keeps the lights on by importing electricity from other states–electricity that was generated using the reliable sources that California ostensibly eschews.
Then we have electric vehicles. Currently, fewer than two percent of the vehicles on the road in the U.S. are electric. That percentage may be a little higher in California, but it is still miniscule. Nevertheless, California has enacted legislation that seeks to ban gasoline-powered vehicles beginning in 2035. Where the infrastructure will come from to support such a transition in the automobile fleet in the next 14 years is anyone’s guess.

Meanwhile, California’s grid is so inadequate that it can’t effectively charge the tiny number of electric cars already on the road. Newsweek reports:
"As temperatures hit triple digits during California’s heat wave last week, the state’s power grid operators encouraged residents to relieve pressure on the grid by charging their electric vehicles before the peak energy use times of day.... “Now is the perfect time to do a load of laundry,” the state’s Flex Alert Twitter account posted on June 18. “Remember to use major appliances, charge cars and devices before #FlexAlert begins at 6 p.m. today.”
It is characteristic of some especially poor or war-torn third-world countries that electricity is available only intermittently during the day. California, welcome to the third world.
"Patty Monahan, the lead commissioner on transportation at the California Energy Commission, told Newsweek last month that the times of day Californians choose to charge their electric vehicles will be important in keeping the power grid balanced as reliance on electric vehicles grows...
Matthew Moniot, a researcher with the National Renewable Energy Laboratory, said during a recent interview with Newsweek that electric vehicle owners now mostly charge their vehicles at night, but that will likely have to change so that more drivers are charging while energy production levels are higher."

There is a reason why EV owners charge their cars at night. It is because that is when they are not driving them. The problem is inherent, since the Sun doesn’t shine at night and winds tend to die down at night, as well.
There is no real solution to the problem when EVs represent two percent of the cars on the road, let alone in the hypothetical world where they are 100 percent.
"Increased reliance on solar and wind energy will present a “tricky problem” regarding “how much can we move what’s currently overnight charging to be during the daytime hours, when generation may be more excessive,” Moniot said. “The key is flexibility,” he added."

Sure. Drive your car at night, and charge it during the day.
“Green” energy policies are a disaster everywhere they are being implemented, but California will probably crash and burn before the other states that have gone down the “green” path.

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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