In this newsletter:
1) Green lobby defeated: EU Commission unveils green label plan for gas and nuclear
Bloomberg, 2 February 2022
2) Boris Johnson scraps Brexit plan in favour of Net Zero agenda
The Daily Telegraph, 2 February 2022
3) The Brexit Freedoms Bill must not be watered down
Editorial The Daily Telegraph, 2 February 2022
OilPrice.com, 31 January 2022
Bloomberg, 2 February 2022
2) Boris Johnson scraps Brexit plan in favour of Net Zero agenda
The Daily Telegraph, 2 February 2022
3) The Brexit Freedoms Bill must not be watered down
Editorial The Daily Telegraph, 2 February 2022
4) Tim Stanley: ‘Partygate’ might sink Boris Johnson – but tax rises and net zero could destroy the Tories
The Daily Telegraph, 1 February 2022
The Daily Telegraph, 1 February 2022
5) Energy price cap set to jump 50% as UK faces ‘years of boom and bust’ pricing
London Evening Standard, 1 February 2022
6) Welcome to Net Zero: Almost a third of Britons are rationing energy to dodge rising bills
This is Money, 1 February 2022
7) Europe’s gas demand declining, coal demand risingLondon Evening Standard, 1 February 2022
6) Welcome to Net Zero: Almost a third of Britons are rationing energy to dodge rising bills
This is Money, 1 February 2022
OilPrice.com, 31 January 2022
8) Manchin says Biden’s $1.75T climate change & social welfare package is ‘dead’
The Washington Times, 1 February 2022
The Washington Times, 1 February 2022
9) Javier Blas: Two ways a war in Ukraine affects Europe’s gas
Bloomberg, 1 February 2022
Bloomberg, 1 February 2022
10) How the World Really Works: A Scientist’s Guide to Our Past, Present and Future
Net Zero Watch, 29 January 2022
Full details:
1) Green lobby defeated: EU Commission unveils green label plan for gas and nuclear
Bloomberg, 2 February 2022
Bloomberg, 2 February 2022
The European Union unveiled how it plans to label investments in some gas and nuclear projects as sustainable, a move that has divided member states as the energy transition collides with political reality.
The European Commission is announcing its proposal Wednesday in Brussels, which will then be scrutinized by national governments. The move has triggered concerns among investors over the risk of greenwashing, and politicians in some countries criticized the draft, saying it could damage the credibility of the EU’s new rules and divert money away from renewables.
The draft underscored deep divisions among member states. The Netherlands and Denmark oppose including natural gas because they don’t rely on such plants, while Germany -- which is phasing out nuclear -- criticized the green label for atomic power. But those opposing it may find it hard to block, as EU law requires at least 20 member states to reject the plan for that to happen.
The label system is being closely watched by investors to know what projects will count as green, and could potentially attract billions of euros in private finance to aid the shift to a low-carbon economy. The challenge is ensuring that the decision on nuclear and gas gets enough political support, at a time when some lobbies say those forms of energy shouldn’t be included at all.
“At the absolute minimum, the Commission should tighten the draft criteria to reflect the full impact of gas and nuclear energy on climate and environment and strengthen the governance rules to prevent greenwashing,” said Johannes Schroeten, a policy adviser at the E3G environmental think tank. “It would be unacceptable if nothing changes or the criteria are loosened further.”
SOME OF THE COMMISSION’S PROPOSALS:
Gas projects replacing coal and emitting no more than 270 grams of CO2 equivalent per kilowatt-hour can get a temporary green label; or annual emissions of the activity don’t exceed an average of 550 kilograms per kilowatt-hour over 20 years.
Such plants would have to obtain construction permits by 2030, and have plans to switch to renewable or low-carbon gases by the end of 2035.
Nuclear is eligible if new plants that are granted construction permits by 2045 meet criteria to avoid significant harm to the environment and water resources.
Funds need to enhance disclosures to investors on nuclear and gas holdings under the taxonomy.
The EU in April announced a first set of criteria for green investments that will allow producers of rechargeable batteries, energy efficiency equipment, low-emission cars, wind and solar plants to earn a formal green label. It delayed the decision on nuclear and gas projects amid concerns about their inclusion. [...]
It’ll be hard for the European Parliament and member states in the EU Council to reject the Commissions taxonomy proposal. Neither has the right to propose amendments -- they can only block it if they get enough votes.
Full story
Net Zero Watch: The EU must give green light to nuclear and gas or face disaster
The European Commission is announcing its proposal Wednesday in Brussels, which will then be scrutinized by national governments. The move has triggered concerns among investors over the risk of greenwashing, and politicians in some countries criticized the draft, saying it could damage the credibility of the EU’s new rules and divert money away from renewables.
The draft underscored deep divisions among member states. The Netherlands and Denmark oppose including natural gas because they don’t rely on such plants, while Germany -- which is phasing out nuclear -- criticized the green label for atomic power. But those opposing it may find it hard to block, as EU law requires at least 20 member states to reject the plan for that to happen.
The label system is being closely watched by investors to know what projects will count as green, and could potentially attract billions of euros in private finance to aid the shift to a low-carbon economy. The challenge is ensuring that the decision on nuclear and gas gets enough political support, at a time when some lobbies say those forms of energy shouldn’t be included at all.
“At the absolute minimum, the Commission should tighten the draft criteria to reflect the full impact of gas and nuclear energy on climate and environment and strengthen the governance rules to prevent greenwashing,” said Johannes Schroeten, a policy adviser at the E3G environmental think tank. “It would be unacceptable if nothing changes or the criteria are loosened further.”
SOME OF THE COMMISSION’S PROPOSALS:
Gas projects replacing coal and emitting no more than 270 grams of CO2 equivalent per kilowatt-hour can get a temporary green label; or annual emissions of the activity don’t exceed an average of 550 kilograms per kilowatt-hour over 20 years.
Such plants would have to obtain construction permits by 2030, and have plans to switch to renewable or low-carbon gases by the end of 2035.
Nuclear is eligible if new plants that are granted construction permits by 2045 meet criteria to avoid significant harm to the environment and water resources.
Funds need to enhance disclosures to investors on nuclear and gas holdings under the taxonomy.
The EU in April announced a first set of criteria for green investments that will allow producers of rechargeable batteries, energy efficiency equipment, low-emission cars, wind and solar plants to earn a formal green label. It delayed the decision on nuclear and gas projects amid concerns about their inclusion. [...]
It’ll be hard for the European Parliament and member states in the EU Council to reject the Commissions taxonomy proposal. Neither has the right to propose amendments -- they can only block it if they get enough votes.
Full story
Net Zero Watch: The EU must give green light to nuclear and gas or face disaster
2) Boris Johnson scraps Brexit plan in favour of Net Zero agenda
The Daily Telegraph, 2 February 2022
Government waters down Lord Frost’s plan to ditch Brussels regulations because it is ‘not consistent with’ hitting green targets
Boris Johnson appears to have scrapped Lord Frost’s plan to free the UK from EU red tape in favour of net zero regulations, The Telegraph can disclose.
The Government watered down plans for a post-Brexit bonfire of Brussels regulations, often cited as a major benefit of leaving the EU, and opened fresh divides between the embattled Prime Minister and his backbenchers.
A plan devised by Lord Frost, the UK’s former Brexit negotiator, to cut two retained EU regulations for every one written was dropped.
It was said not to fit in with Mr Johnson’s ambitions to cut Britain’s carbon emissions to net zero by 2050, which some backbenchers claim will stifle innovation and increase the cost of living.
However, critics claimed that the decision shows a lack of confidence in using the freedoms secured after Brexit and is a victory for the civil service “blob” said to be in control of Downing Street.
Mr Johnson came under sustained attack over net zero at a meeting of Conservative MPs on Monday night, held after his latest “partygate” apology.
The news that the Prime Minister had spared EU rules from the chop in favour of his green agenda emerged just a day after he promised to cut a billion pounds’ worth of regulation carried over into UK law and published a document called The Benefits of Brexit: How the UK is taking advantage of leaving the EU.
In the paper, the Government argued that the “one-in-two-out rule” was not “consistent with delivering world-class regulation to support the economy in adapting to a new wave of technological revolution or to achieving net zero”.
The rule would have accelerated the removal of EU-era rules from the UK statute book and was praised as an “internationally successful” reform by Lord Frost, who was in charge of Brexit opportunities.
The Telegraph understands it remained on the table until Lord Frost’s departure from the Cabinet late last year.
The former Brexit minister resigned over the Government’s policy to raise taxes and Covid restrictions and has since called for a clearout of “the neo-socialists, green fanatics and pro-woke crowd” working in Downing Street.
Mr Johnson has insisted he is preparing to “make changes” to Downing Street and the Cabinet Office, raising the prospect of a return for Lord Frost.
Donald Trump, the former US president, used a “two-for-one” strategy to roll back the frontiers of the federal regulations while in office.
Upon signing an executive order to strip back regulations in January 2017, he branded the move a “big one” for making “life easier for small businesses”.
Lord Frost’s defeat in the push for a “lightly regulated” economy is likely to be seized on by Tory MPs concerned with Mr Johnson’s net zero drive.
David Jones, a former Brexit minister, said moving away from deregulation was “deeply unconservative”.
“There was quite a lot of concern hurled at the Prime Minister over the push to net zero and the impact that these green policies are having upon standards of living,” he added.
“The impression I get is that there’s going to be a very significant amount of churn in the establishment at Number 10 very, very shortly. I think there’s going to be a lot of bloodletting and I very much hope that we’ll see less of this stuff.
“But I think that that is worrying. We do want to deregulate, we are a deregulatory party, and we should always be that.”
Britain has enshrined in law to hit a “world-leading” target to cut emissions by 78 per cent on 1990 levels by 2035.
In order to hit its net zero goals, the Government has proposed to end sales of new petrol and diesel cars and vans by 2035. In the same year, a ban will also be placed on the sale of new gas boilers.
In an interview with the Telegraph last year, George Eustice, the Environment Secretary, proposed meat taxes that could force British farmers to go greener.
3) The Brexit Freedoms Bill must not be watered down
Editorial The Daily Telegraph, 2 February 2022
Net Zero should not be allowed to get in the way of plans to regulate Britain
The Prime Minister’s allies have been eager to point to his political successes as they seek to shore up his premiership, among them “delivering Brexit.” Leaving the EU was not supposed to be an end in itself but an opportunity to repeal some of the more onerous regulations required by membership.
Indeed, a bonfire of the directives that have been carried over from our time in the EU has been promised as part of the operation to thwart any attempts to topple Mr Johnson. A Brexit Freedoms Bill is said to be in the pipeline to make it easier to remove “outdated” EU rules and cut red tape hampering businesses. The measure will bring an end to the “special status of EU law and ensure that it can be more easily amended or removed,” Downing Street said.
However, as we report today, this is not entirely as billed. An earlier plan put up by Lord Frost, the former Brexit minister, envisaged dropping two EU rules for every new rule, thereby accelerating the deregulatory process.
But the Government has abandoned the idea because it did not fit with ambitions to cut Britain’s carbon emissions to net zero by 2050. The implication is that achieving that goal will see a raft of new laws and rules imposed on businesses, motorists and householders.
In a document entitled The Benefits of Brexit published to mark the anniversary of departing the EU, the Government said the “one-in-two-out rule” was not “consistent with delivering world-class regulation to support the economy in adapting to a new wave of technological revolution or to achieving net zero”. Such timidity is worrying. Mr Johnson must resist it.
7) Europe’s gas demand declining, coal demand rising
OilPrice.com, 31 January 2022
Europe’s natural gas demand is set to decline this year as buyers begin to favor lower-priced coal, the International Energy Agency said in the latest edition of its quarterly gas market report.
According to the IEA, gas demand on the continent is seen declining by 4 percent this year, after rising by more than 5 percent last year. The decline will be partially driven by a reduction in gas burning in the power sector, the agency said, which is seen declining by 6 percent this year.
The decline will be partially compensated by renewables, according to the IEA, which should see a “strong expansion” this year, but also “high gas prices continue to weigh on its competitiveness vis-à-vis coal-fired generation.”
“Exceptionally high gas – and by extension electricity – prices have hurt consumers, utilities and wholesalers, and are likely to have a lasting negative impact beyond the current seasonal tension,” the agency warned, adding that the adverse effects of the gas shortage were not limited to Europe.
The report noted that developing markets were particularly vulnerable to energy supply shocks that they were already experiencing. On top of this, there was also concern for food supply due to tighter availability of gas-based fertilizers, the International Energy Agency also said.
Global gas supply is seen remaining tight, the IEA also said, citing production outages, project delays, and a slow pace of new investment decisions on new production capacity.
“In the absence of strong policies to curb demand growth to achieve net zero emission targets, gas supply adequacy could emerge as a concern for the medium term on a combination of recent LNG project delays, the relatively small number of new LNG final investment decisions (FIDs) in 2020-2021 and a structural decline in upstream spending since the early 2010s,” the IEA said in the report.
The Government watered down plans for a post-Brexit bonfire of Brussels regulations, often cited as a major benefit of leaving the EU, and opened fresh divides between the embattled Prime Minister and his backbenchers.
A plan devised by Lord Frost, the UK’s former Brexit negotiator, to cut two retained EU regulations for every one written was dropped.
It was said not to fit in with Mr Johnson’s ambitions to cut Britain’s carbon emissions to net zero by 2050, which some backbenchers claim will stifle innovation and increase the cost of living.
However, critics claimed that the decision shows a lack of confidence in using the freedoms secured after Brexit and is a victory for the civil service “blob” said to be in control of Downing Street.
Mr Johnson came under sustained attack over net zero at a meeting of Conservative MPs on Monday night, held after his latest “partygate” apology.
The news that the Prime Minister had spared EU rules from the chop in favour of his green agenda emerged just a day after he promised to cut a billion pounds’ worth of regulation carried over into UK law and published a document called The Benefits of Brexit: How the UK is taking advantage of leaving the EU.
In the paper, the Government argued that the “one-in-two-out rule” was not “consistent with delivering world-class regulation to support the economy in adapting to a new wave of technological revolution or to achieving net zero”.
The rule would have accelerated the removal of EU-era rules from the UK statute book and was praised as an “internationally successful” reform by Lord Frost, who was in charge of Brexit opportunities.
The Telegraph understands it remained on the table until Lord Frost’s departure from the Cabinet late last year.
The former Brexit minister resigned over the Government’s policy to raise taxes and Covid restrictions and has since called for a clearout of “the neo-socialists, green fanatics and pro-woke crowd” working in Downing Street.
Mr Johnson has insisted he is preparing to “make changes” to Downing Street and the Cabinet Office, raising the prospect of a return for Lord Frost.
Donald Trump, the former US president, used a “two-for-one” strategy to roll back the frontiers of the federal regulations while in office.
Upon signing an executive order to strip back regulations in January 2017, he branded the move a “big one” for making “life easier for small businesses”.
Lord Frost’s defeat in the push for a “lightly regulated” economy is likely to be seized on by Tory MPs concerned with Mr Johnson’s net zero drive.
David Jones, a former Brexit minister, said moving away from deregulation was “deeply unconservative”.
“There was quite a lot of concern hurled at the Prime Minister over the push to net zero and the impact that these green policies are having upon standards of living,” he added.
“The impression I get is that there’s going to be a very significant amount of churn in the establishment at Number 10 very, very shortly. I think there’s going to be a lot of bloodletting and I very much hope that we’ll see less of this stuff.
“But I think that that is worrying. We do want to deregulate, we are a deregulatory party, and we should always be that.”
Britain has enshrined in law to hit a “world-leading” target to cut emissions by 78 per cent on 1990 levels by 2035.
In order to hit its net zero goals, the Government has proposed to end sales of new petrol and diesel cars and vans by 2035. In the same year, a ban will also be placed on the sale of new gas boilers.
In an interview with the Telegraph last year, George Eustice, the Environment Secretary, proposed meat taxes that could force British farmers to go greener.
3) The Brexit Freedoms Bill must not be watered down
Editorial The Daily Telegraph, 2 February 2022
Net Zero should not be allowed to get in the way of plans to regulate Britain
The Prime Minister’s allies have been eager to point to his political successes as they seek to shore up his premiership, among them “delivering Brexit.” Leaving the EU was not supposed to be an end in itself but an opportunity to repeal some of the more onerous regulations required by membership.
Indeed, a bonfire of the directives that have been carried over from our time in the EU has been promised as part of the operation to thwart any attempts to topple Mr Johnson. A Brexit Freedoms Bill is said to be in the pipeline to make it easier to remove “outdated” EU rules and cut red tape hampering businesses. The measure will bring an end to the “special status of EU law and ensure that it can be more easily amended or removed,” Downing Street said.
However, as we report today, this is not entirely as billed. An earlier plan put up by Lord Frost, the former Brexit minister, envisaged dropping two EU rules for every new rule, thereby accelerating the deregulatory process.
But the Government has abandoned the idea because it did not fit with ambitions to cut Britain’s carbon emissions to net zero by 2050. The implication is that achieving that goal will see a raft of new laws and rules imposed on businesses, motorists and householders.
In a document entitled The Benefits of Brexit published to mark the anniversary of departing the EU, the Government said the “one-in-two-out rule” was not “consistent with delivering world-class regulation to support the economy in adapting to a new wave of technological revolution or to achieving net zero”. Such timidity is worrying. Mr Johnson must resist it.
4) Tim Stanley: ‘Partygate’ might sink Boris Johnson – but tax rises and net zero could destroy the Tories
The Daily Telegraph, 1 February 2022
The Daily Telegraph, 1 February 2022
Ukraine, believe it or not, has launched a tourist campaign to cash in on its recent publicity – "see us while we're still here!" – enticing the PM to fly to Kyiv, leaving Rishi Sunak and his treasury team behind to take questions on fraud and taxes.
Smart man. I'd rather face Russian tanks than the Commons at the moment.
By raising National Insurance, said Labour's Pat McFadden, Rishi and Bozza were like "Thelma and Louise. They've held hands and are going to drive off the cliff".
An arresting image, almost erotic – and spot on. "Partygate" might sink the PM, but Labour clearly calculates that the cost of living crisis, stoked by Government policy, could kill the Tory majority altogether.
Up popped Matt Hancock. The world's sexiest MP for West Suffolk is plotting a comeback. He's chosen a good issue, dyslexia; he's got a Ten-Minute Rule Bill; he's been appearing in the Commons to ask super-serious questions before dashing off, presumably to release a tiktok video: "Hey kids, Matty H here – just dropped a facto-bomb in Parliament about the economy. Don't mess with the fiscal rules, dawg, cos inflation will go stratospheric!"
Matt's plea in the House for Rishi to exercise caution just happened to be exactly what he wanted to hear. The strongest economic line the Government has against Labour is that they are insufficiently sober on spending – all while Tory MPs lined up to thank the Chancellor for pouring levelling-up cash into their constituencies, and hinting they'd like a bit more.
Sammy Wilson, the DUP MP for East Antrim, was the only centre-Right MP who suggested the Government might ease the cost of living crisis by dropping both the National Insurance increase and green levies.
Never, said Simon Clarke for the Treasury. "There is no other responsible way for us to finance [extra NHS spending] than if we do it through a broad-based tax increase" (designed to go easier on the poor). That was said on the same day we learnt that the Government had watered down a plan to scrap EU regulations in order to keep its green targets – one has to ask what the difference between the Conservatives and Labour actually is.
Labour's answer: We'd save money and cut taxes. Outside the window, two pigs flew past in a convertible.
Step forward Rachel Reeves, the shadow chancellor, a most effective voice in Labour's post-Corbyn strategy and sounding not unlike one of those money experts on TV who show how, by not insulating your attic, you're throwing away "pound, after pound, after pound".
Nearly five billion has been lost on fraud during lockdown she said, citing the resignation of Lord Agnew, a Conservative peer, on this point. In one bizarre case, a drug dealer and a car thief with 48 convictions was given a £50,000 loan. "Taxes are at a 70-year high!" Reeves declared, channelling the spirit of Maggie Thatcher. "With one hand, the Government raises taxes – with the other. it throws money away!"
Watch out, Rishi. If Conservative Party members were asked to vote for a new leader tomorrow, Ms Reeves might win.
Smart man. I'd rather face Russian tanks than the Commons at the moment.
By raising National Insurance, said Labour's Pat McFadden, Rishi and Bozza were like "Thelma and Louise. They've held hands and are going to drive off the cliff".
An arresting image, almost erotic – and spot on. "Partygate" might sink the PM, but Labour clearly calculates that the cost of living crisis, stoked by Government policy, could kill the Tory majority altogether.
Up popped Matt Hancock. The world's sexiest MP for West Suffolk is plotting a comeback. He's chosen a good issue, dyslexia; he's got a Ten-Minute Rule Bill; he's been appearing in the Commons to ask super-serious questions before dashing off, presumably to release a tiktok video: "Hey kids, Matty H here – just dropped a facto-bomb in Parliament about the economy. Don't mess with the fiscal rules, dawg, cos inflation will go stratospheric!"
Matt's plea in the House for Rishi to exercise caution just happened to be exactly what he wanted to hear. The strongest economic line the Government has against Labour is that they are insufficiently sober on spending – all while Tory MPs lined up to thank the Chancellor for pouring levelling-up cash into their constituencies, and hinting they'd like a bit more.
Sammy Wilson, the DUP MP for East Antrim, was the only centre-Right MP who suggested the Government might ease the cost of living crisis by dropping both the National Insurance increase and green levies.
Never, said Simon Clarke for the Treasury. "There is no other responsible way for us to finance [extra NHS spending] than if we do it through a broad-based tax increase" (designed to go easier on the poor). That was said on the same day we learnt that the Government had watered down a plan to scrap EU regulations in order to keep its green targets – one has to ask what the difference between the Conservatives and Labour actually is.
Labour's answer: We'd save money and cut taxes. Outside the window, two pigs flew past in a convertible.
Step forward Rachel Reeves, the shadow chancellor, a most effective voice in Labour's post-Corbyn strategy and sounding not unlike one of those money experts on TV who show how, by not insulating your attic, you're throwing away "pound, after pound, after pound".
Nearly five billion has been lost on fraud during lockdown she said, citing the resignation of Lord Agnew, a Conservative peer, on this point. In one bizarre case, a drug dealer and a car thief with 48 convictions was given a £50,000 loan. "Taxes are at a 70-year high!" Reeves declared, channelling the spirit of Maggie Thatcher. "With one hand, the Government raises taxes – with the other. it throws money away!"
Watch out, Rishi. If Conservative Party members were asked to vote for a new leader tomorrow, Ms Reeves might win.
5) Energy price cap set to jump 50% as UK faces ‘years of boom and bust’ pricing
London Evening Standard, 1 February 2022
‘Once the nuclear power stations start to retire in greater numbers and the coal fired power stations have closed for good, there is a new period of volatile pricing coming to the UK energy market’
London Evening Standard, 1 February 2022
‘Once the nuclear power stations start to retire in greater numbers and the coal fired power stations have closed for good, there is a new period of volatile pricing coming to the UK energy market’
50% hike in household energy bills is likely to be announced within the next week, with eight in ten families already struggling with spiraling heating costs.
The window for calculating the new domestic energy price cap closed on Monday and Ofgem is expected to announce within the next week what it will rise to from April.
Martin Young, an energy industry analyst at Investec, said the new limit was likely to be set at £1,924 based on wholesale energy prices during the review period.
That would put household bills 51% above the current level. The increase is set to affect all Brits, with research house Cornwall Insights saying earlier this month that surging energy prices had forced all domestic providers to raise their prices to the cap limit.
The massive hike in heating bills will heap more pressure on already stretched household budgets.
The Office for National Statistics said today that two thirds of Brits reported struggling with rising living costs in a recent survey. Eight in ten are facing rising energy bills. Separate data from the Bank of England showed credit card spending is on the rise.
Young said the price cap could rise even further in October when it is reviewed. He estimates it could reach £2,450.
Full story
6) Welcome to Net Zero: Almost a third of Britons are rationing energy to dodge rising bills
This is Money, 1 February 2022
Two thirds of Britons are already feeling the squeeze from the cost of living crisis, with nearly a third cutting back on their gas and electricity use in January to dodge spiraling costs, new official data shows.
The window for calculating the new domestic energy price cap closed on Monday and Ofgem is expected to announce within the next week what it will rise to from April.
Martin Young, an energy industry analyst at Investec, said the new limit was likely to be set at £1,924 based on wholesale energy prices during the review period.
That would put household bills 51% above the current level. The increase is set to affect all Brits, with research house Cornwall Insights saying earlier this month that surging energy prices had forced all domestic providers to raise their prices to the cap limit.
The massive hike in heating bills will heap more pressure on already stretched household budgets.
The Office for National Statistics said today that two thirds of Brits reported struggling with rising living costs in a recent survey. Eight in ten are facing rising energy bills. Separate data from the Bank of England showed credit card spending is on the rise.
Young said the price cap could rise even further in October when it is reviewed. He estimates it could reach £2,450.
Full story
6) Welcome to Net Zero: Almost a third of Britons are rationing energy to dodge rising bills
This is Money, 1 February 2022
Two thirds of Britons are already feeling the squeeze from the cost of living crisis, with nearly a third cutting back on their gas and electricity use in January to dodge spiraling costs, new official data shows.
Soaring energy bills were increasingly responsible for financial pressure and 'disproportionately' impacted those on lower incomes, according to the latest study measuring the impact of rising costs on households by the Office for National Statistics.
Around four in five people feeling rising pressure on their budgets have blamed an increase in gas and electricity prices - and that is before the price cap balloons in April.
Rising food costs have also squeezed people's finances, with nearly 9 in ten people saying their supermarket bill has gone up, according to a poll conducted between the 6 and 16 of January.
In light of the big jump in costs, almost a third have cut back on their use of gas or electricity to make ends meet.
Meanwhile, 53 per cent said they were spending less on non-essentials, while around a quarter were using their savings.
Full story
Around four in five people feeling rising pressure on their budgets have blamed an increase in gas and electricity prices - and that is before the price cap balloons in April.
Rising food costs have also squeezed people's finances, with nearly 9 in ten people saying their supermarket bill has gone up, according to a poll conducted between the 6 and 16 of January.
In light of the big jump in costs, almost a third have cut back on their use of gas or electricity to make ends meet.
Meanwhile, 53 per cent said they were spending less on non-essentials, while around a quarter were using their savings.
Full story
7) Europe’s gas demand declining, coal demand rising
OilPrice.com, 31 January 2022
Europe’s natural gas demand is set to decline this year as buyers begin to favor lower-priced coal, the International Energy Agency said in the latest edition of its quarterly gas market report.
According to the IEA, gas demand on the continent is seen declining by 4 percent this year, after rising by more than 5 percent last year. The decline will be partially driven by a reduction in gas burning in the power sector, the agency said, which is seen declining by 6 percent this year.
The decline will be partially compensated by renewables, according to the IEA, which should see a “strong expansion” this year, but also “high gas prices continue to weigh on its competitiveness vis-à-vis coal-fired generation.”
“Exceptionally high gas – and by extension electricity – prices have hurt consumers, utilities and wholesalers, and are likely to have a lasting negative impact beyond the current seasonal tension,” the agency warned, adding that the adverse effects of the gas shortage were not limited to Europe.
The report noted that developing markets were particularly vulnerable to energy supply shocks that they were already experiencing. On top of this, there was also concern for food supply due to tighter availability of gas-based fertilizers, the International Energy Agency also said.
Global gas supply is seen remaining tight, the IEA also said, citing production outages, project delays, and a slow pace of new investment decisions on new production capacity.
“In the absence of strong policies to curb demand growth to achieve net zero emission targets, gas supply adequacy could emerge as a concern for the medium term on a combination of recent LNG project delays, the relatively small number of new LNG final investment decisions (FIDs) in 2020-2021 and a structural decline in upstream spending since the early 2010s,” the IEA said in the report.
8) Manchin says Biden’s $1.75T climate change & social welfare package is ‘dead’
The Washington Times, 1 February 2022
Sen. Joe Manchin III said Tuesday that President Biden’s $1.75 trillion social welfare and climate change bill is “dead” in its current iteration.
Mr. Manchin, West Virginia Democrat and a key swing vote in the evenly divided Senate, was asked whether Mr. Biden’s Build Back Better Act could pass in a streamlined form.
“What Build Back Better bill?” said Mr. Manchin. “There isn’t one. I don’t know what you all are talking about.”
When pressed if the White House had attempted to renew negotiations on the topic, Mr. Manchin said there had been no developments.
“It’s dead,” he said, adding that he was always open to discussions with anyone.
“If we’re talking about the whole big package, that’s gone,” the centrist Democrat said. “We’ll see what people come up with.”
His comments are the latest signal that Democrats face an uphill battle in trying to revive the package after Mr. Manchin single-handedly killed it last year.
Full story
The Washington Times, 1 February 2022
Sen. Joe Manchin III said Tuesday that President Biden’s $1.75 trillion social welfare and climate change bill is “dead” in its current iteration.
Mr. Manchin, West Virginia Democrat and a key swing vote in the evenly divided Senate, was asked whether Mr. Biden’s Build Back Better Act could pass in a streamlined form.
“What Build Back Better bill?” said Mr. Manchin. “There isn’t one. I don’t know what you all are talking about.”
When pressed if the White House had attempted to renew negotiations on the topic, Mr. Manchin said there had been no developments.
“It’s dead,” he said, adding that he was always open to discussions with anyone.
“If we’re talking about the whole big package, that’s gone,” the centrist Democrat said. “We’ll see what people come up with.”
His comments are the latest signal that Democrats face an uphill battle in trying to revive the package after Mr. Manchin single-handedly killed it last year.
Full story
9) Javier Blas: Two ways a war in Ukraine affects Europe’s gas
Bloomberg, 1 February 2022
There’s the contained scenario. Then there’s the apocalyptic one. But would the Russian president really go there?
Inside NATO headquarters in Brussels, senior officials gathered last week to think the unthinkable: What would happen to Europe if Russia — by far its largest supplier — cuts off the flow of natural gas westward?
Every day, Europe buys almost 40% of the gas it consumes from Gazprom, the Russian-state owned giant. In 1968, Austria became the first Western European country to sign a contract to buy Russian gas. Since then, the trade has withstood political and economic upheavals, including the depths of the Cold War and the collapse of the Soviet Union.
At least, until now. The threat of military conflict in Ukraine has turned natural gas into a weapon of mass disruption.
Already, Russian gas flows into Europe are sharply lower than in the past, at times about 30% below the five-year average. Gazprom insists it’s fulfilling long-term contracts with European utilities. Indeed, last year Gazprom made 1.8 trillion rubles ($23.2 billion) from its sales to Europe — that is about 10% of all Russia’s exports, according to the International Monetary Fund. But the company is sidestepping another truth. This is less about money — Moscow makes more money from petroleum — than about geopolitical squeeze plays. In a departure from tradition, Gazprom hasn’t filled up its European storage sites.
Neither is it selling extra gas on the spot market. Europe is running on fumes: Gas inventories have dropped to less than 40% of capacity, the lowest ever for this time of the year. Europe has only avoided a gas crunch thanks to unusually mild weather so far this winter.
There are two main scenarios: the first is contained; the second, catastrophic.
If Russia invades Ukraine, gas will be snarled by military action one way or another — perhaps even by accident as pipelines and other pieces of infrastructure are hit. But if the campaign is swift and Moscow’s objectives met quickly, Europe may be able to withstand even physical damage to pipelines in Ukraine. One need only look at a map to see why: The Russian flows have changed over the last two decades.
Pipeline Puzzle
Well into the 1990s, Ukraine was the chokepoint of nearly all Russian gas into Europe via the Soyuz, Brotherhood and Progress pipelines. Since then, Russia has diversified transit with the Yamal-Europe, Nord Stream 1, Blue Stream and TurkStream. And that’s before the addition — pending regulatory approval — of Nord Stream 2. The new routes have reduced the significance of Ukraine — something many politicians have failed to understand.
Memories in Western Europe of the 2006 and 2009 Ukraine-Europe gas crises, when supplies were disrupted, still shape the understanding of the market. But in gas, 2022 isn’t 2009 by a long margin.
Two decades ago, Ukraine was the transit point for about 125 billion cubic meters of Russian gas into the rest of Europe. Last year, the flow had plunged 65% to less than 42 bcm. That’s still a significant amount, but not nearly as much as in the past. Perhaps as importantly, Ukraine is no longer a key transit point for Russian gas into Germany and another half-dozen countries. Today, it’s important for just Slovakia, Austria and Italy. Nikos Tsafos, a gas expert at the Center for Strategic and International Studies in Washington, puts it succinctly: Ukraine “used to be the main corridor for delivering Russian gas to Europe; it is no longer that.”
Europe is in a far better shape today to respond to a crisis if only gas passing through Ukraine is involved. For a limited period, Europe could cope with a shutdown of Ukraine-transit gas through a combination of higher LNG imports, and further withdrawals of the commodity from storage. If the weather remains mild, demand would be even lower.
Of the three countries at biggest risk, Italy can import LNG directly, and its gas inventories are high, in part because Rome has a strategic gas storage that the rest of the continent largely lacks. As of Monday, Italian storage was at 50.8% of capacity, significantly higher than the European average of 38.9%. Austria and Slovakia are however in far worse shape (their inventories stand at 22.7% and 32.5%, respectively), and would require significant help from their neighbors.
All this assumes Moscow would re-direct supplies away from Ukraine using other pipelines — and continue to send gas to Europe. A continent-wide total shutdown is a completely different matter.
When European regulators war-gamed potential gas disruptions in November, they analyzed 19 scenarios, with several permutations for each. But they didn’t contemplate what would happen if all Russian flows ceased. Why? Because it isn’t pretty, and, effectively, there aren’t workarounds. If that happens, there’s simply no way the continent would be able to avoid unimaginable economic pain and blackouts.
As much as U.S. and European diplomats say they’re scouting the world for extra gas supplies, there isn’t enough available elsewhere to replace Russia. On the margins, Qatar and a couple of other LNG exporters may be able to help. LNG prices would rise so much that some Asian developing countries like Pakistan and Bangladesh would be priced out of the market, freeing extra cargoes to Europe (at the cost of blackouts in Asia). At best, Europe can hope to replace two-thirds of Russian supplies. That estimate may be generous.
Europe would also face an additional challenge. It’s one thing is to attract LNG cargos to its shores; another, and far more difficult, is to actually funnel that gas into the continent-wide distribution system. Nearly a third of European LNG regasification capacity is located in Spain, which has only a tiny pipeline connecting it with the rest of the continent. Add France and the U.K. to Spain, and that’s 70% of all European regasification capacity. Germany doesn’t have a single regasification plant.
The only recourse would be rationing — first with basic services like hospitals and residential heating, then electricity production, which would try to rely on coal and oil. After that, all the gas would run out and, eventually, all industries would have to shut down.
The economic pain would be tremendous, and would test European solidarity. “There is a risk that countries with better supply situations might be unwilling to share scarce gas resources with countries that are in an even worse situation,” argues Simone Tagliapietra at the Brussels-based think tank Bruegel. He’s right: As the Covid-19 crisis showed, countries may put national interest before regional one.
In the full-shut down, gas prices will skyrocket, making the record-high seen in December look piddling. Indeed, the surges may be fivefold, perhaps even tenfold. Europe doesn’t want that but will Vladimir Putin do it?
I have my doubts. The Russian President would prefer Europe remain tied economically to Russian gas forever. For Moscow, control of the spigots equals geopolitical influence in Europe; the ability to halt it serves the Kremlin better as threat than as reality. In many ways, it plays the same role as nuclear weapons in conventional warfare: mutual assured destruction or MAD. If Russia chose to use gas as a weapon, Europe would move heaven and earth in the next few years to never again rely on Gazprom for a single gas molecule. That’s why Putin is only slightly weaponizing gas — restricting supplies, rather than cutting them off.
That’s his leverage. If he goes apocalyptic, Russia’s own future would be at risk. It’s a weapon that works only by never using it.
10) How the World Really Works: A Scientist’s Guide to Our Past, Present and Future
Net Zero Watch, 29 January 2022
Book review by Prof Michael Kelly
This book is a very strong antidote of realism against both the relentless pessimism and the blithe optimism of our day. — Professor Michael Kelly
Book review — Vaclav Smil: How the World Really Works: A Scientist’s Guide to Our Past, Present and Future; Viking, Penguin Random House
This is a hugely important and very timely book. At a time when thinkers in the developed world are split between environmental catastrophism and unbridled techno-optimism, here is a firmly grounded analysis of the present day, informed by the previous history that got us here, and the likely short-term future. This history includes many failed predictions of the future which are quickly forgotten, as exemplified by population explosion fears on the one hand and unlimited nuclear power on the other just 50 years ago.
Most of what we hear and read about today by way of prognostications and nostrums for the future will simply not come to pass. The complexity and inertia of the systems of the modern world – energy acquisition and use, food production, materials requirements for contemporary living – place strong constraints on the pace of change in any preferred direction. This is true even if all the world leaders should agree to move in any particular direction, say on a net-zero global economy by 2050, with a global command economy.
Vaclav Smil is an internationally acclaimed scholar, and has been working on energy, food and materials for decades: he has an encyclopaedic knowledge and penetrating insight. When one talks about decarbonisation, what to make of the following facts about everyday life? A medium sized (125gm) tomato put on an English table out of season has involved the consumption of 75mL of oil to get there, not much short of its own volume! The same ratio applies to a chicken (up to 1L of oil per kg of meat) and bread (0.6L of oil per kg of loaf). The four materials pillars of modern living are ammonia (half the world is fed on foods that have had the benefit of artificial fertiliser), plastics, steel and cement: the annual production of these are 150 million, 370 million, 1.8 billion and 4.5 billion tonnes respectively. Note that silicon comes a long way down at 10 thousand tonnes per year!
The key sentence from the introduction is:
The gap between wishful thinking and reality is vast, but in a democratic society no contest of ideas or proposals can proceed in rational ways without all sides sharing at least a modicum of relevant information about the real world, rather than trotting out their biases and advancing claims disconnected from physical possibilities.”
The author is at pains to point out that he is not a pessimist or an optimist, he is a scientist: there is no agenda in understanding how the real-world works.
The seven chapters explain energy, food production, materials, globalization, risks, the environment and the future. Each and every chapter serves as a reality check on public discourse, and anyone armed with the contents of this book will be able to detect arrant nonsense dressed up as gospel by the ‘experts’.
Globalization is not inevitable, but has led to greater efficiencies, but also greater risks – 70% of rubber gloves in the world were made in one factory in China. COVID-19 will have long-term effects on humanity, not available to the futurists of the past, and onshoring jobs from offshore may proceed in the cause of greater resilience.
Our perception of risks had always been very irrational. We are many times more likely to die in a road accident or a fall at home than in a terrorist incident.
On matters of the environment, there is no free lunch in human living, but a reduction in the vast levels of food waste, and a more modest diet in the developed world for example could do more good than rapid decarbonization. Meanwhile the UN rightly prioritised the elimination of human poverty and hunger over environmental protection in their ordering of the sustainable development goals. In fact, it is wealthy countries who are repairing the environment.
The future will be neither a nirvana nor a hell on earth, but an evolution of the past, a combination of our best endeavours hindered by obstacles and aided by serendipity.
What is also of great concern is the extent to which knowledgeable people are meretricious (my word) in misleading the less knowledgeable. Why are the extreme scenarios (for good or evil) focussed on to the extent that they become taken up as the mostly likely future? This is particularly bad in the case of climate science studies and the way the results are portrayed in the media.
This book is a very strong antidote of realism against both the relentless pessimism and the blithe optimism of our day.
MJK Cambridge 29/01/2022
The London-based Net Zero Watch is a campaign group set up to highlight and discuss the serious implications of expensive and poorly considered climate change policies. The Net Zero Watch newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.netzerowatch.com.
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