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TODAY'S CLIMATE AND ENERGY HEADLINES
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Today's climate and energy headlines:
- BP’s investment pledge fails to quell calls for UK windfall tax
- European gas prices soar after Moscow imposes sanctions on EU energy companies
- EU considers shelving ban on Russian oil as Hungary blocks sanctions
- UK starts £120m fund to develop nuclear power technology
- Germany can survive Russian gas boycott
- US climate envoy John Kerry warns world against turning back to coal
- China’s CO2 emissions per unit of GDP fall by 34% over the past decade: officials
- US: Biden cancels offshore oil lease sales in Gulf Coast, Alaska
- India takes steps to ramp up coal imports amid energy crisis
- UK: GB News chairman has history of dismissing threat of climate crisis
- The Times view on an energy tax: Windfall wishes
- The Guardian view on carbon bombs: Governments must say no
- Perspectives of UK adolescents on the youth climate strikes
- Historical seasonal changes in prescribed burn windows in California
BP has committed to reinvest all its profits from its North Sea oil and gas production over the next decade back into the UK, reports the Financial Times, “as it sought to head off political pressure for a windfall tax to help offset energy costs for consumers”. The company’s chief executive Bernard Looney told shareholders at their annual meeting yesterday that “this decade with our current plans we expect to reinvest every pound that we make and hopefully more”. He added that the £18bn BP expects to invest in the UK by the end of 2030 represents 15-20% of total capital expenditure, up from the 10-15% of spending that BP has historically deployed in the UK. Looney said that the investments would happen regardless of whether a windfall tax on oil-and-gas profits is implemented, Bloomberg reports, but, “by definition, windfall taxes are unpredictable – and so would challenge investment in home-grown energy…We know that from past experience for the whole of the North Sea sector and supply chain”. The Daily Telegraph also has the story.
Meanwhile, there is continuing coverage of suggestions from the UK government that it is considering a windfall tax. In an interview with BBC News, chancellor Rishi Sunak said he was not “naturally attracted” to the idea of a windfall tax, but he was “pragmatic” about introducing one. Sunak said he wanted to see investment “soon” to boost energy security, and “no options are off the table” if not. In an interview on LBC radio, the prime minister Boris Johnson said he “didn’t like” the idea of a windfall tax because of the potential to deter investment, but “we’ll have to look at it” if not investment was made, reports the Daily Mail. He said: “What I’m saying is I want them to make those investments. That’s the most important thing. They’ve got to be making investments in new energy supply for our country,” reports the Times. The Guardian and the Press Association also report on Johnson and Sunak’s comments, while the Guardian has an explainer on how a windfall tax would work.
Finally, Reuters reports that BP shareholders yesterday backed the energy company’s climate strategy, while fewer investors than last year supported a resolution filed by an activist group urging faster action to battle climate change.
Gazprom, Russia’s state-owned gas supplier, has said it will cut shipments to Europe through a major pipeline, reports the Financial Times, “sending prices surging and reinforcing President Vladimir Putin’s willingness to use energy as a weapon against the EU”. The paper continues: “Gazprom said gas flows would no longer be possible through the Yamal pipeline after the Kremlin imposed sanctions late on Wednesday on European gas companies. The sanctioned companies include some of its own former units as well as Europol Gaz, Yamal’s owner. The pipeline runs from Russia to Germany via Poland…The move strikes out the flow of Russian gas to Europe from a second pipeline in as many days and underlines Moscow’s appetite to push through with warnings to halt gas supplies to Europe.” The retaliatory action “pushed gas prices higher”, the FT says, with the European wholesale gas price benchmark jumping about 13% yesterday to about €106 per megawatt hour – more than quadruple levels a year ago. Bloomberg notes that the “Yamal-Europe pipeline, barely used this year, has been seen as a potential alternative route in case Russian transits via Ukraine stop during the chaos of war”. According to Robert Habeck, Germany’s vice-chancellor and economy minister, the retaliation move could curtail some 3% of Russian gas imports to Germany, another Bloomberg article says. The Times also has the story.
Elsewhere, Politico reports that “Norway is vowing to help Europe turn away from Russian gas, but that’s set off a political battle with the left-wing opposition that rejects expanded gas exploration”.
EU diplomats are weighing up shelving a plan to ban Russian oil to “get around Hungarian prime minister Viktor Orbán’s reluctance”, reports Politico. EU diplomats tell the outlet the idea would see other elements of the EU’s sixth package of Russia sanctions move ahead, with the support of all 27 member countries. The “complete ban on all imports of Russian crude and refined fuels could be put aside for now, while work continues on a compromise deal that Hungary can accept”, Politico explains. The delay would be a “major setback” for the EU’s efforts to counter Vladimir Putin’s war in Ukraine, the outlet says: “In particular, it would be a blow to European Commission president Ursula von der Leyen, who proposed the total prohibition of all imports of Russian oil in a draft sixth sanctions package on 4 May.” For landlocked countries, such as Hungary and Slovakia, which rely heavily on pipeline supplies of Russian oil, banning crude oil from Russia “will be painful”, the outlet explains: “The Commission has tried to reach compromises with Orbán, but so far his government says it needs more time – and potentially more money – before it can agree.”
Separately, Politico reports on comments by Hungary’s foreign minister Péter Szijjártó, who says that the Commission’s proposal “creates a huge problem for us” and details the potential costs: “Our refinery is designed for Russian oil. To refine other types of oil, we would have to invest between €500m and €550m – that would take about four years. To replace the oil pipeline from Russia, we would have to expand the capacity of the Adriatic Sea pipeline, which would mean €200m, and we don’t know how much time that would take.”
In related news, the Financial Times reports that Shell has agreed to sell its retail and lubricants businesses in Russia to Russian energy firm Lukoil. The FT says it is “the first big deal in the oil and gas sector since most western companies pledged to leave the country following the invasion of Ukraine”.
The UK government has opened a £120m “Future Nuclear Enabling Fund” to help meet its goal of approving eight new reactors by 2030, reports Bloomberg. In a statement, business secretary Kwasi Kwarteng said the “fund will push forward our plan to deploy a new fleet of nuclear power stations as part of a British nuclear renaissance”, the outlet reports. It notes that “the size of the fund is small compared with what’s needed to make the government’s vision a reality”, adding: “The biggest hurdle for new nuclear is financing. To help overcome that, the new fund will provide grants that will help nuclear construction projects, including small modular reactors, to attract the private investment they need to help make them a reality.” Speaking to BBC News yesterday, Kwarteng said there might be a “small effect” on domestic energy bills, but in the long-term, nuclear would provide cheaper power and energy security. The Press Association and BusinessGreen also have the story.
German newspaper Bild reports that economy minister Robert Habeck believes Germany is capable of surviving without Russian gas next winter. However, he tells WirtschaftsWoche that this will “[only be] if we have full storage facilities at the turn of the year, if two of the four floating LNG tankers we have leased are connected to the grid and if we make significant energy savings, we can to some extent get through the winter if Russian gas supplies collapse”. Der Spiegel says that Habeck noted the importance of energy savings by consumers: “Less consumption is the be-all and end-all when it comes to gas”, adding that if industry and private individuals could reduce gas consumption by 10%, it would help “not to end up in emergency”. EurActiv and Bloomberg also have the story.
In more energy news, Frankfurter Allgemeine Zeitung reports that the German government has proposed a draft law forbidding federal states to set their own regulations on distances between wind turbines and residential areas. It adds that Habeck “has been pushing for weeks for Germany to speed up the expansion of renewable energies”. The outlet explains the German rules on this issue, for example, “in North Rhine-Westphalia there must be at least 1,000 metres between new wind turbines and residential areas”. However, the outlet adds that the German conservative party FDP is against it.
Finally, Tagesspiegel reports that, after the collapse of Ukraine’s gas transit stations “due to heavy fighting”, Ukraine is looking for new transport routes for Russian gas to Western Europe”, according to Habeck.
US climate envoy John Kerry has warned the world not to turn back to coal as it attempts to wean itself from Russian gas, saying the war in Ukraine should not be an excuse to delay climate goals, reports the Financial Times. In an interview with the newspaper, Kerry says: “The key thing is not to give into this notion that, ‘Oh, Ukraine has changed everything, and so we will be building out infrastructure that we decided a little while ago that we can’t do now’…Some people are trying to interpret it as, ‘This means we gotta build coal’…But that’s not our reality.” Kerry, who has been in London for a two-day Net-Zero Delivery Summit, adds: “The climate crisis will not take account [of] current world events or the difficulty of doing some things…It will simply require that the requisite reductions be achieved, or we’re in for a very significant disruption, which will only add to whatever disruption and chaos you see in the marketplace today and life today.” Kerry also discusses the cooperation with China on climate change, noting that “we worked very effectively [together] for about a year” up to COP26 in Glasgow, but “it was clear to me from the messages I was getting from the Chinese that they were increasingly uncomfortable moving too fast, too far with us on that, because they felt the lack of progress on the other issues”.
The state-run newspaper Global Times reports that China’s CO2 emissions per unit of GDP (known as carbon intensity) have fallen by 34% “over the past decade”, according to Han Wenxiu – an official from the Central Committee of the Communist Party of China, a political organ consisting of the country’s most senior officials. Han also said at a press conference on Thursday that the country’s “total installed capacity of wind and photovoltaic power generation, production and sales of new-energy vehicles have topped the world”, the newspaper notes. The outlet writes that China has “played an active role in pushing forward the Paris Agreement and rolled out a roadmap for hitting peak emissions before 2030 and carbon neutrality by 2060”. It adds that China is “making important contributions in addressing climate change”. The state broadcaster CCTV covers the same press conference.
Meanwhile, China Energy News says that “industry insiders” have formed a consensus that there is “a high chance” that “short-time” power outages “will not happen” in China this year. The state-run industry newspaper says that the energy authorities of “many” regions – including Guangdong, Yunnan, Hebei, Mengdong, Mengxi and Guizhou – have, however, taken precautionary measures and issued notices to ensure that electricity would be consumed in an “orderly” manner in case of power shortages, the publication adds. Separately, Yicai reports that the Chinese government is “doubling its subsidies to suppliers to the national grid to help them ensure supply amid surging coal prices”, citing the State Council’s announcement on Wednesday. (Read Carbon Brief’s analysis on China’s power shortages last year.)
Additionally, Bloomberg writes that China’s “industrialised” southern provinces are “racing to restock coal in case demand recovers later this month or supplies are disrupted by the heavy rains sweeping the region”. The piece notes that China Coal Transportation and Distribution Association (CCTD) – an industry association – forecasts that China will “produce 4.35bn tonnes of coal in 2022”, about “7% more” than 2021. Elsewhere, an article on SupChina – a New York-based website focused on China affairs – asks: “Can China’s cement industry be cleaned up?” The piece explains why the cement industry is important to China’s climate actions and the plans the country has to cut the industry’s emissions and power consumption. It says: “For China to reach its ‘double carbon’ goals, it will have to clean up its dirty cement industry. The success or failure of this effort will also have a massive impact on global carbon emissions.”
The US government says it will cancel three oil and gas lease sales scheduled in the Gulf of Mexico and off the coast of Alaska, removing millions of acres from possible drilling, the Associated Press reports. The outlet continues: “The Interior Department announced the decision Wednesday night, citing a lack of industry interest in drilling off the Alaska coast and ‘conflicting court rulings’ that have complicated drilling efforts in the Gulf of Mexico, where the bulk of US offshore drilling takes place. The decision likely means the Biden administration will not hold a lease sale for offshore drilling this year and comes as Interior appears set to let a mandatory five-year plan for offshore drilling expire next month.” Republicans and oil industry leaders yesterday “seized on the cancellation of lease sales to claim Mr Biden’s actions were exacerbating the pain felt by consumers”, the New York Times says. In a statement, Garret Graves of Louisiana – the top Republican on the House Select Committee on the Climate Crisis – said the decision “approaches levels of irresponsibility and reckless stupidity never seen before”, the paper reports. For environmental groups, “the decision was welcome news”, says CBS News: “The Alaska offshore lease arrangement would have opened drilling opportunities over a span of more than 1m acres for 40 or more years of production. The new activity would have led to new underwater pipelines and platforms in the environmentally-sensitive area.” Kristen Monsell from the US charity the Center for Biological Diversity tells the Independent that she is “glad” that the critically endangered beluga whale population in Alaska’s Cook Inlet “won’t be forced to face even more oil drilling in their only habitats”. However, she adds, “much more must be done to protect these endangered whales from offshore drilling”. The Washington Post also has the story.
India’s power ministry has called on coal importers to ensure supplies as the country increasingly relies on the fuel to stem power blackouts during its extreme heatwave, reports Bloomberg. The newswire continues: “In a meeting with suppliers, ministry officials said they would help with obstacles such as late payments from provincial power plants, said the people, who asked not to be identified as they aren’t authorised to speak to the press. The ministry has asked generators to import a total of about 19m tonnes during the three months to June so they have enough reserves before the rainy season slows supplies.” The outlet notes that “India has seen an unprecedented demand for coal this summer, as soaring temperatures and industrial activity spurred electricity demand”. This has “pressured domestic coal supply infrastructure, forcing the country to turn to imports of the fuel and ditch previous efforts to slow overseas purchases”.
In continuing coverage of the heatwave, the Daily Telegraph and Independent report that the extreme heat has caused “thousands of birds” to fall from the sky. (See Carbon Brief‘s media reaction piece for more on how the heat has developed.)
The new chairman of GB News – the right-leaning television channel launched last year – “has a history” of sharing articles that dismiss the threat of climate change, the Guardian says. Reporting on an investigation by DeSmog, the Guardian notes that Alan McCormick, a co-founder of Legatum Group, a Dubai-based investment firm and one of the channel’s key funders, tweeted several articles by climate science deniers…including one claiming there was ‘no scientific proof’ that humans were causing the climate emergency”. The findings “sharpen concerns about the TV channel’s role as a platform for advocates of the continued burning of fossil fuels”, the paper says, noting that “GB News frequently hosts guests who cast doubt on climate science and oppose green polices, including the Net-Zero Scrutiny Group (NZSG) of Conservative MPs”.
Windfall taxes “are occasionally justified, but not this time”, says a Times editorial, adding: “When global conditions are constraining energy supply, a windfall tax on companies would aggravate the problem.” There is “some logic” in taking income from firms that benefit from higher energy prices in order to pay for initiatives to reduce costs for households, the paper says, “yet a windfall tax is never a costless way of raising revenue, even if the costs are hidden”. It continues: “First, it inhibits competition by deterring new entrants to a sector. An unstable tax regime makes it more difficult for a company to engage in long-term planning, so it might as well commit its capital to other activities. Second, a windfall tax on a company makes its capital more expensive, because shareholders will demand higher returns to compensate them. That cost will almost certainly be passed on to consumers. Third, there is a particular problem with a windfall tax on energy now. Prices are high because supply has been disrupted. This is partly due to the war in Ukraine but also because Britain has not invested enough in renewables and long-term storage capacity. It is crucial the energy companies be encouraged rather than deterred in making this investment.”
An editorial in the Daily Telegraph describes the mooted tax as “blackmail” and “a Labour policy that would penalise companies that have made large profits from the rise in oil and gas prices”. It continues: “This is not a Conservative approach…Companies should not have to fear that profits they make perfectly legally may be confiscated arbitrarily by the state. Down that route lies a collapse in investment, and the further erosion of the UK’s reputation as a stable place to do business.” The paper says “there are reasons why energy investment is not soaring alongside higher prices”, pointing the finger at “hubristic net-zero targets that foresee the phasing out of fossil fuels”. The article concludes: “What certainty do energy firms have that investments they make now will not be penalised in a few years time once the immediate crisis passes? Tories used to understand all of this. Now they are mired in ideological confusion. It seems the party will have to learn the lesson all over again that socialist economics does not work.”
Separately, the Daily Telegraph‘s chief city commentator Ben Marlow says that BP and Shell could be “remembered for scoring one of the greatest own goals in modern corporate history”. A “mere 10 days ago”, business secretary Kwasi Kwarteng handed “oil producers a gift-wrapped opportunity to avoid the Treasury’s grasp”, says Marlow: “If they were able to provide a clear plan to spend their profits to accelerate domestic energy production and ‘bring down consumer bills in the long term’ then BP, Shell, and other North Sea players could count on ‘the UK Government’s ongoing support”’.” But now, “officials are said to be so incensed by the behaviour of the industry’s leading names…that a windfall tax is on the table”, Marlow says: “The turning point was clearly BP boss Bernard Looney’s admission, on the back of the company’s biggest quarterly profits in a decade, that a tax wouldn’t alter BP’s investment plans.” BP also committed “another massive blunder” by its “decision to lavish billions of pounds on investors in the form of dividends and buybacks”, Marlow says, while “Shell unveiled a quadrupling of profits and a bumper payout for shareholders”. Marlow concludes that the “urge to resort to gesture politics such as a windfall tax should be resisted”, but “if ministers do buckle to pressure, then BP and Shell really only have themselves to blame”.
Writing in the Sun, Robert Halfon – the Conservative MP for Harlow, a member of the climate-sceptic “net-zero scrutiny group” of Tory politicians and long-time campaigner for lower petrol prices – mentions Looney’s comments in his piece that argues in favour of a windfall tax: “The oil companies argue that a windfall tax will deter investment and affect jobs, but it rarely does. Even the head of BP commented that they have made their investments in the UK already and such a tax would not impact their commitments here.” Halfon also says the government “needs to scrap green levies, which make up 25% of our energy costs”. (Halfon has quoted this – incorrect – figure before.)
Finally, an editorial in the Daily Mail says: “This paper believes firmly in the free market, but for years these corporations have fleeced their loyal customers. So while we have reservations about a one-off grab, it is difficult in the face of such hardship to condemn it.” It adds: “The PM should also put more money in people’s pockets by cutting income tax and VAT and scrapping hated green levies. Long-term solutions are all well and good for tomorrow. But they won’t heat the house, pay the mortgage or feed the family today.”
As part of the Guardian’s series on “carbon bombs” – large oil and gas projects whose emissions could derail global climate targets – an editorial in the paper says “the actions of the world’s biggest energy companies are perplexing as well as enraging”. The editorial argues that “leaders including Trump, Vladimir Putin and Jair Bolsonaro have worked with Middle Eastern petrostates to derail emissions reduction efforts”. Many of the carbon bombs are “under the jurisdiction of western governments that are theoretically signed up to solving the climate problem”, the paper says, adding: “A 2009 pledge by the G20 to phase out subsidies has been ignored. Chinese companies have also invested heavily in oil and gas exploration.” There is “no alternative” but to “force companies to write off the most dangerous investments”, the paper says: “Of course, this will cause an economic shock, but advances in renewables mean there are options other than carbon addiction. Total emissions must fall by half by 2030, if the worst scenarios are to be avoided. To continue on our current course would be nihilistic. The carbon bomb-makers must be stopped.”
Also in the series, the Guardian speaks to Fatih Birol, the executive director of the International Energy Agency (IEA), who says that investing in large oil and gas projects is “not the solution to our urgent energy security needs and they will lock in fossil fuel use”. In an interview, Birol said: “If the world is to succeed in moving to net-zero, these projects may fail to recover their upfront development costs.” He added: “I believe we have the chance to make this a historic turning point to a cleaner and more secure energy system…This is the first time I have seen such momentum behind the change to clean energy…The world does not need to choose between solving the energy crisis and climate crisis, we can do both.” And another article reports on the warnings from campaigners that a “multibillion-dollar” ExxonMobil deal to drill for oil off Guyana’s coast that promises to lift the country out of poverty “may be false dawn with dire impact on climate”.
A new study shows that both participants and non-participants in the school climate strikes in the UK consider climate change to be “an issue of intergenerational injustice”. Researchers interview 22 adolescents across the UK regarding their views on the international movement of school climate strikes, then analyse the interview transcripts for areas of consensus and where opinions differ. They find that strikers and non-strikers alike thought that governments were the “most responsible” for addressing climate change. However, non-strikers were more likely to question the effectiveness of the strikes in persuading governments to act on climate change.
New research shows that while prescribed burns are most often carried out in the autumn in California, burns in the winter and spring seasons are comparably efficient and can cover a greater area than the autumn burns. Researchers quantify a “burn efficiency” based on historic data of fire frequency and burned area in California over 1984-2019. They find that larger areas of the state, particularly its northern forests, are consumed with fewer burns during spring and winter. However, they also find that the “burn window” – the time period over which conditions such as temperature and relative humidity allow for safe burning – during those seasons is decreasing at a rate of one day per year.