Saturday, September 25, 2021

GWPF Newsletter: China plays its green card


In this newsletter:

1) China plays its green card, promising to sell the world its wind and solar projects produced by cheap coal
GWPF International, 22 September 2021
2) Vestas closes wind turbine factories in Europe, manufacturing moves to Asia
Clean Energy Wire, 21 September 2021

3) UK power firms stop taking new customers as energy crisis escalates
Bloomberg, 21 September 2021
4) Europe’s green ambitions could be hit as gas prices reach record highs
CNBC, 22 September 2021
5) Ben Marlow: A full-blown cost of living crisis could cost the Tories the next election
6) Putin's iron grip on energy leaves Europe increasingly vulnerable
The Daily Telegraph, 22 September 2021
7) Christopher Barnard: China seeks to extend critical minerals monopoly with help of Taliban
The Hill, 21 September 2021
8) And finally: Chinese energy companies face bankruptcy as coal prices skyrocket, 21 September 2021

Full details:

1) China plays its green card, promising to sell the world its wind and solar projects produced by cheap coal
GWPF International, 22 September 2021

President Xi Jinping told the UN on Tuesday that China will sell nations around the world its cheap wind and solar technology produced with cheap slave labour and cheap coal power, ending support for building coal-fired power plants abroad.

China’s cheap energy strategy will kill three birds with one stone:

1. By building up its coal-powered economy, it can continue to produce and export renewables much cheaper than most OECD nations. China will thus cement its role as the world’s foremost producer and exporter of renewable energy.

2. By ending support for building coal-fired power plants abroad it reduces the pressure on coal demand, improving China’s domestic coal market which is currently struggling with high coal prices.

3. By announcing this move, China is playing the green card in the run-up to COP26 in order to reduce Western pressure and kick the ball back into Joe Biden’s court.

Xi tells UN China will stop funding coal projects overseas
AFP -- Addressing the UN General Assembly, Xi made the promise as he vowed to accelerate efforts to help the world battle the climate crisis.

“China will step up support for other developing countries in developing green and low carbon energy and will not build new coal-fired power projects abroad,” Xi said in a pre-recorded address.

“We should foster new growth drivers in the post-Covid era and jointly achieve leapfrog development, staying committed to harmony between man and nature,” Xi said.

China has gone on an infrastructure-building blitz around the world as part of its Belt and Road Initiative, and until now has been open to coal projects.

In a letter earlier this year, a coalition of non-governmental groups said that the state-run Bank of China was the largest single financier of coal projects, pumping $35 billion since the Paris climate agreement was signed in 2015.

China, however, has kept investing in coal at home, preserving a form of industry that is also politically sensitive in the United States.

China brought 38.4 gigawatts of new coal-fired power into operation last year — more than three times what was brought on line globally.

Full story
2) Vestas closes wind turbine factories in Europe, manufacturing moves to Asia
Clean Energy Wire, 21 September 2021
Danish wind turbine manufacturer Vestas has announced the closure of a blade factory in eastern German state Brandenburg. The company is axeing over 450 jobs in the town of Lauchhammer and is also shutting down two other production sites in Spain and Denmark “as demand for these modules will gradually shift to markets primarily outside of Europe and be delivered via more localised manufacturing facilities”.

The decision is raising questions about the prospects for Germany as a lead market and driver for the key energy transition technology, Andreas Rausch comments for local public broadcaster rbb.
“This is a devastating signal for the entire region,” he argues, adding that the end of coal power in the eastern region Lusatia in 2038 at the latest is already taxing for local economies. “While the debate about a faster coal exit is getting louder, there are no jobs to replace it in sight,” Rausch writes, even though the government has earmarked billions of euros to fund the transition.
But the closing of the factory also casts a doubt on the speed of wind power expansion, which has slowed significantly in Germany since 2017 but needs to rebound fast to meet renewable energy goals for 2030, he adds.

Full story 
3) UK power firms stop taking new customers as energy crisis escalates
Bloomberg, 21 September 2021

A raft of small U.K. gas and power suppliers stopped accepting new customers in a dramatic escalation of the country’s energy crisis.

The British government held an emergency meeting with small power suppliers on Tuesday, and by the late afternoon Igloo, Green, Ampower, Utilita and NEO Energy had posted notices on their websites saying they were closed to new business. Hours later, the regulator demanded five small companies pay overdue levies owed to the government.

And in another sign of tension, three companies — Delta, Ampower and Avro — were issued orders that they had failed to present enough collateral to trade power. Elexon, which settles trades and ensures electricity generators and suppliers pay and are paid the right amount, released the statements late on Tuesday.

Several of the companies’ rivals have already gone out of business this year as natural gas and power prices surged to records, leaving suppliers that sold energy at lower prices to entice new customers unable to meet their commitments. There’s a growing risk that more energy retailers will become insolvent in the coming months, potentially leaving hundreds of thousands of U.K. households unsure of who will be providing their heating and light just as winter takes hold.

“A lot of the smaller ones are probably going to go,” said Niall Trimble, managing director of consultant Energy Contract Co. “If you were planning to buy gas for 50 pence and it’s 150 pence, that’s a hell of a blow to your finances.”

A cascade of corporate failures would amplify the economic disruption of the energy crisis, with industries from fertilizer manufacturing to food processing and distribution already in turmoil, prompting state intervention.

After days of talks, the U.K. government reached a deal on Tuesday to restart fertilizer factories that had shut down because their natural gas feedstock was too expensive. The move had created a shortage of carbon dioxide — a byproduct of the manufacturing process that’s crucial for the food industry.

Full story
4) Europe’s green ambitions could be hit as gas prices reach record highs
CNBC, 22 September 2021

LONDON — The European Union could struggle to advance its green agenda as gas prices soar across the bloc, according to experts who warn against slowing down investment into the sector.

The European Commission, the executive arm of the EU, has vowed to become carbon neutral by 2050, presenting a concrete plan to reduce greenhouse gas emissions by at least 55% from 1990 levels by the end of this decade.

However, these ambitions could be hit as a natural gas shortage on the continent drives prices higher. The front-month gas price at the Dutch TTF hub, a European benchmark, has risen more than 250% since the start of the year. It traded at about 74 euros ($87) a megawatt-hour on Tuesday — just shy of its record high of 79 euros it hit last week.

The recent spike is already having a tangible impact. Spain, for instance, has announced emergency measures to limit the profits that energy companies can make from gas alternatives, including renewables. The government is also hoping to cap what consumers are paying for their electricity.

“Soaring energy prices have hit economies across Europe, and if Madrid’s actions are imitated elsewhere as governments prioritize cheap energy over the green transition, the EU’s credibility in advancing global climate action could take a hit,” Henning Gloystein, director of energy at the consultancy firm Eurasia Group, said in a note Friday.

Spain is not the only country to cap energy price increases, with France and Greece making similar moves. But the plan in Spain has been the subject of some criticism.

Iberdrola, a Spanish energy firm with a focus on renewables, said the move “would undermine investor confidence in the country” at a time when the nation needs private money to achieve its climate ambitions.

“The risk to climate policymaking lies perhaps mostly in a loss of credibility ahead of the global COP26 climate talks in Glasgow later this year,” Gloystein told CNBC via email.

“If wealthy countries in the EU are seen subsidizing energy for households that is in part supplied by fossil fuels, then the EU can hardly tell poorer countries to stop subsidizing household fuel consumption supplied by fossil fuels,” Gloystein added.

Full story
5) Ben Marlow: A full-blown cost of living crisis could cost the Tories the next election
The Daily Telegraph, 21 September 2021

A full-blown cost of living crisis threatens to be this government’s winter of discontent and it could cost the Tories the next election.

“No throwback to the 1970s”, insists Kwasi Kwarteng. The business secretary is right, but only partly. There are no strikes, no power cuts, and no three-day week. Nor are we likely to see families eating meals or people drinking in pubs by candlelight.

But the parallels are undeniable. Just like that dark decade, Britain is in the throes of an energy supply shock. Gas and electricity prices are spiralling out of control. Blackouts remain unlikely on balance, but can’t entirely be ruled out as supplies continue to dwindle and smaller suppliers go bust.

And the energy crunch is part of a much wider supply chain crisis gripping Britain that is causing prices to spiral everywhere, just as they were under Harold Wilson’s shaky minority government when inflation went through the roof.

The cost of everything is shooting up at an alarming rate. Take energy. Despite howls of protests from big suppliers, Kwarteng insists that the price cap will remain in place because it protects consumers from vicious price swings. Yet the reality is that customers face average bill spikes of £139 when the limit rises in the coming weeks, increases that will be shouldered disproportionately by low income households.

House prices set new records every month, making it harder for first-time buyers to get on the housing ladder, and inflation has just chalked up its largest one-month jump for three decades, from 2pc to 3.2pc.

The Bank of England’s forecast is for a figure of 4pc by the end of the year as companies pass on rising raw material costs and wage increases to consumers. At the same time as the prices of food, petrol, and second hand cars jump, people’s spending power is falling too thanks first to cuts to Universal Credit, then national insurance tax hikes next year.

The timing would be bad enough for any government but after 18 months of lockdowns and other restrictions on our liberties, the patience of a nation is wearing thin.

The squeeze on household budgets is happening as the country tackles shortages of everything including turkey and toys, meaning supermarket shelves could be empty when the festive holiday comes around.

Even though much of what is taking place is the result of global forces out of the Government’s control, the chances of voters forgiving Boris Johnson for a second successive cancelled Christmas seem slim.

Kwarteng describes comparisons with the 1970s as “alarmist and completely misguided” but the Cabinet is unwise to dismiss the similarities. A full-blown cost of living crisis threatens to be this government’s winter of discontent and it could cost the Tories the next election.
6) Putin's iron grip on energy leaves Europe increasingly vulnerable
The Daily Telegraph, 22 September 2021

Germany and Spain in the firing line as Russia uses its energy clout to push for Nord Stream 2 completion

Kremlin critics, and now even the International Energy Agency, have accused Russia and state producer Gazprom of restricting supply to Europe, helping to fuel the surge in gas prices across the region.

The Kremlin has added to these suspicions by offering a simple solution to the feared winter shortage: approve the controversial Nord Stream 2 gas pipeline that will tighten Putin’s grip on European energy supply. The pipeline, which bypasses Ukraine and is vehemently opposed by the US, is finally ready to pump gas into Europe but is awaiting approval from German regulators.

“Get Nord Stream 2 operational or else: that’s in the end the signal they sent,” says Prof Andreas Goldthau at the Institute For Advanced Sustainability Studies.

“Typically over summer Gazprom pumps a lot of gas into Europe, not because it’s needed, but because they replenish gas storage facilities, which they have all over Europe.

“You fill up the storage and you start to stock draw in the winter. What has been happening over the summer is the Russians didn’t do that.”

Whatever the Kremlin’s intentions, soaring gas prices ahead of the winter is threatening to add to building inflationary pressures and damage Europe’s post-Covid recovery, particularly in Germany and Spain. A number of factors other than Russia are worsening Europe’s gas price crisis from freak weather in South America to higher demand in Asia.

Jacob Nell, Morgan Stanley economist, warns the gas price crisis could hit growth in Europe by squeezing disposable incomes and hurting energy-intensive businesses.

He says the price surge risks becoming more damaging if Russian supply fails to pick up following the approval of Nord Stream 2 or “a cold winter with high gas and power demand”.

The gas price crisis has revealed the fragility of the region’s energy supply and the need to beef up resilience. Governments across Europe have rushed to soften the blow on consumers with multibillion-euro packages to protect households.

Europe is heavily dependent on Russian gas for energy – and is set to become even more reliant as Nord Stream 2 arrives.

The EU imports more than 40pc of its natural gas from Russia amid warnings that it needs to diversify its energy supply. The next largest supplier, Norway, holds far less clout, providing just 16pc, according to Eurostat, the bloc's official statistics body.

Spain, Greece and Italy have three-quarters of their energy needs met by imports and Germany has seen its dependency climb, rising from 59pc in 2000 to two-thirds of its supply in 2019. Germany is the biggest consumer of natural gas in Europe, accounting for a quarter of its energy needs.

However, gas storage in Europe’s biggest economy is just 62pc full ahead of the winter when demand will pick up, according to Barclays. That is almost 30 percentage points below the normal average for the end of September and the bank’s analysts believe bringing Nord Stream 2 online will do little to boost Europe’s supply this year.

“There’s a lot of politics going on,” says Jason Durden, head of energy markets at Alfa Energy, who adds that Germany had been caught between Moscow and Washington.

“Russian-owned storage within Germany is low and partly that will be the whole Nord Stream 2. You might interpret that as political pressure.”

He says Germany’s industrial sector is “particularly exposed”.

“This is huge for industry and particularly for Germany, less so for the UK… Energy intensive industry cannot operate at these levels so it closes down.”
Full story (£)
7) Christopher Barnard: China seeks to extend critical minerals monopoly with help of Taliban
The Hill, 21 September 2021

One of the first nations to move to recognize the Taliban’s legitimacy amid its takeover of Afghanistan was communist China. For those that pay attention to geopolitics, this didn’t come as much of a surprise. Yet, beyond mere realpolitik and great-power posturing, another tangible, even materialistic, reason has become clear: Afghanistan’s abundance of critical minerals.

Despite being a poor nation, Afghanistan has nearly $1 trillion worth of untapped mineral deposits, many of which are rare earth minerals such as cobalt, nickel and copper. Used in everything from cellphones and laptops to medical and military equipment, these critical minerals are the building block of a modern, technologically advanced society. Afghanistan is thought to have the largest lithium deposit in the world, which is a key component of modern forms of energy storage, such as batteries for electric vehicles and renewable energy.

As the world transitions from fossil fuels to clean energy, the demand for lithium especially will continue to skyrocket. Increasingly, access to these types of minerals will define the future of geopolitics, in the way that oil and natural gas have shaped the modern world’s balance of power. Worryingly for the United States, China not only possesses 35 percent of the world’s entire critical mineral supply, but it also accounts for 70 percent of global production. Additionally, China directly supplies 80 percent of the U.S.’s rare earth imports.

This could have severe consequences for U.S. national and economic security. As the U.S. seeks to hold China accountable for its crimes, such as oppression of the Uyghur population, infringement on Hong Kong’s sovereignty, or the country’s environmental abuses, China can leverage its critical mineral dominance over us to evade genuine accountability. In 2019, at the height of the escalating U.S.-China trade war, the Communist Party of China’s (CCP) internal newspaper published a warning that the Chinese government might cut off all exports of critical minerals to the United States. This isn’t just empty rhetoric. In 2010, the CCP followed through on a similar threat, using a minor diplomatic scuffle with Japan to temporarily halt critical mineral exports to the country.

The opportunity to seize further control over the world’s supply of these critical minerals, particularly lithium, is a determining factor in China’s cozying up to the Taliban. If the CCP successfully aligns itself with the Taliban and brokers a productive relationship to tap the nation’s mineral resources, China will gain a nearly insurmountable leg up in the global clean energy arms race.
Full post
8) And finally: Chinese energy companies face bankruptcy as coal prices skyrocket, 21 September 2021

China’s energy industry is caught between a rock and a hard place. As the world’s second-largest economy has surged back to life in the wake of the novel coronavirus pandemic, energy demand has skyrocketed, leading to soaring fuel prices and unprecedented decisions out of Beijing to compromise some of the country’s energy security in the interest of keeping the lights on in the immediate term. What’s more, all of this is taking place as the Chinese economy enters a slowdown and inflation rates are on the rise

“Inflation is soaring, and the country's producer price index hit a 13-year high last month, driven by rising commodity prices,” CNN Business reported about the Chinese economy’s woes earlier this month. “The government has warned that high costs for raw materials such as energy and petrochemical products will exacerbate growth and employment challenges facing manufacturers — especially small and medium-sized businesses.”

It is against this worrying backdrop that Beijing made the historic decision to sell off some of the oil that President Xi Jinping’s administration has been stockpiling for years in a strategic reserve. China, the world’s biggest oil importer and second-biggest oil consumer in the world, is heavily dependent on foreign oil to keep the economy afloat. Correcting for this glaring vulnerability has put energy security at the center of China’s energy policy for a long time now, but now Beijing’s sole focus seems to be damage control. 
In fact, thanks to the skyrocketing demand for electricity, some provinces are even experiencing the worst power shortages the country has seen in a decade. And to make things worse, coal prices have started to climb, and Chinese electricity companies are facing the very real possibility of bankruptcy. 
Coal makes up more than 50 percent of China’s energy mix, and a recent row with Australia had already made Chinese coal supplies particularly tight before the recent demand spike. In fact, the unofficial embargo against Australian coal reportedly caused its blackouts throughout China earlier this year. 
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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