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TODAY'S CLIMATE AND ENERGY HEADLINES

Briefing date 08.02.2023
French giant TotalEnergies posts record $20.5bn profit amid high oil prices

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News.

French giant TotalEnergies posts record $20.5bn profit amid high oil prices
France 24 via Agence France-Presse Read Article

France’s TotalEnergies has reported that high oil-and-gas prices bolstered its net profit to a record $20.5bn in 2022, according to Agence France-Presse (AFP). It notes that the 28% increase in profits “would have been much higher save for the nearly $15bn in charges linked to its leaving the Russian market, with adjusted profits excluding such exceptional items rising to $36.2bn”. Other news outlets, such as Reuters, have reported this higher number, describing it as “double the level of a year earlier”. Bloomberg remarks that “the French energy giant capped another stellar quarter for Big Oil, with most companies pledging more generous returns to investors while also paying down debt and in some cases boosting investment”. Meanwhile, the Norwegian fossil fuels company Equinor has also reported record profits, according to Reuters. The majority state-owned firm made “$74.9bn adjusted operating profit for 2022, more than double the previous record”, the newswire says. 

Yesterday, Carbon Brief posted a chart showing the massive increase in profits for BP, Shell, Chevron and ExxonMobil in 2022. Following BP’s bumper profits, which were reported yesterday, the Independent says environmental groups have “condemned” oil giant BP for slashing its emissions-cutting target by a third even as its profits hit record highs. BusinessGreen asks if the surge in profits from fossil fuels is “luring BP and Shell into a stranded asset trap”. Bloomberg has a feature titled “Shell’s grand plan to fight climate change (and continue to cause it)”.

Finally, Politico reports that Russia’s tax income from oil and gas in January “was among its lowest monthly totals since the depths of Covid in 2020”. It notes that this comes as sanctions tighten on the nation, because – as of Sunday – “it is illegal to import petroleum products – those refined from crude oil, such as diesel, gasoline and naphtha – from Russia into the EU”.

Renewable spurt pushes power towards emissions 'tipping point'
Reuters Read Article

An increase in wind and solar production combined with more nuclear power, will “dominate growth in global power supply over the next three years, curbing the emissions impact of greater energy use”, according to a new report by the International Energy Agency (IEA), covered by Reuters. It says the share of wind and solar in the generation mix is set to rise from 29% in 2022 to 35% in 2025, with the “largest gains in renewable power expected in the Asia-Pacific region”. According to the Financial Times, the IEA says the power sector is getting close to “a tipping point” on its carbon dioxide (CO2) emissions as low-carbon generation is “set to provide almost all the new global electricity demand in the next three years”.

Meanwhile, the Financial Times also reports that the European wind industry has dismissed a Danish government decision to suspend approvals for all offshore wind farms as “absurd” in light of the EU’s push for “a rapid rollout of clean energy supplies”. Denmark has been a leader in wind-power expansion, but its “open door” policy for projects has been suspended after the government “cited concerns that it violates the EU’s state aid rules”, the piece continues. The newspaper says this comes as the EU “tries to protect its clean technology industries in response to the billions of dollars of incentives available to clean energy projects through the US Inflation Reduction Act”. Another Financial Times article quotes the economy ministers of France and Germany, who have stated that the US has agreed to address European concerns over the Inflation Reduction Act. (For more on why the IRA is fuelling global trade tensions, see Carbon Brief’s media reaction article.)

Finally, the Guardian has created a new dashboard tracking how electricity is generated in Great Britain.

Rishi Sunak breaks up UK business department to refocus on energy and science
Financial Times Read Article

The Financial Times confirms reports from yesterday that UK prime minister Rishi Sunak has decided to break up the Department for Business, Energy and Industrial Strategy (BEIS) and create three new departments to put an emphasis on energy security and efforts to turn the nation into a “science superpower”. It also confirms that Grant Shapps, previously business secretary, will head the newly formed Department for Energy Security and Net-Zero, “a ministry charged with boosting Britain’s energy supplies and its transition away from fossil fuels”. The Guardian describes the new department as “a version of the Department for Energy and Climate change, which the Tories scrapped in 2016”. According to the Press Association, an official spokesman of the prime minister said Shapps’ role would involve slashing energy bills and driving long-term projects, such as new nuclear power plants. BusinessGreen has an article about responses from the “green economy” to the news, with thoughts from “policy wonks, thinktanks, former civil servants, environmental groups and green businesses” about what it means for the UK’s energy and climate policy. In its coverage, BBC News quotes Labour’s shadow climate and net-zero secretary, Ed Miliband, who said “rearranging of deckchairs on the sinking Titanic of failed Conservative energy policy will not rescue the country”.

COP28 chief’s global tour begins with a defence of fossil fuels
Bloomberg Read Article

Oil and gas will have a key role as the world shifts to cleaner energy, as “a bridge from the current energy system to the new one”, according to Sultan Al Jaber, president of the upcoming COP28 climate summit, as reported by Bloomberg from an energy forum in Bengaluru, India. The United Arab Emirates (UAE) minister and oil company chief executive also emphasised that climate talks should reflect the challenges of energy poverty, the news outlet says. According to Reuters, Jaber said “the global south, where almost 800 million people have no electricity,” should be empowered in “an inclusive energy transition”. Other global south leaders speaking at the India Energy Week conference joined these calls, it notes. The newswire quotes Tanzania’s energy minister January Makamba calling for “a move away from hypocrisy” by wealthy nations refusing to finance gas projects, while using gas themselves. On a related topic, the Wall Street Journal features a “debate” between two experts under the question: “can developing economies have high growth without using coal?”

Meanwhile, Reuters reports that, ahead of COP28, EU member states “may seek support for an agreement to phase down fossil fuels”. A draft set of negotiating positions for EU diplomats, seen by the news service, says “while natural gas has a role in the transition, the shift towards a climate neutral economy requires unabated fossil fuel consumption to peak already in the near term. The EU will systematically promote a global move towards energy systems free of unabated fossil fuels well ahead of 2050”. At the same time, Politico reports on new research by Global Energy Monitor (GEM) that finds the new liquified natural gas (LNG) projects and long-term gas deals being signed by EU leaders “are incompatible with decarbonization targets and risk jeopardising the continent’s energy transition”.

US: Biden takes victory lap on climate bill in State of the Union
The Hill Read Article

US president Joe Biden “touted the historic climate investments in the Inflation Reduction Act” (IRA) in his second State of the Union address last night, the Hill reports. Biden describes the legislation – passed last year – as “the most significant investment ever to tackle the climate crisis, lowering utility bills, creating American jobs and leading the world to a clean energy future”. The Hill says Biden presented the law “as an investment in resilience to natural disasters and the impacts of climate change”. Biden said: “I’ve visited the devastating aftermaths of record floods and droughts, storms and wildfires…In addition to emergency recovery from Puerto Rico to Florida to Idaho, we are rebuilding for the long term: new electric grids able to weather the next major storm, roads and water systems to withstand the next big flood, clean energy to cut pollution and create jobs in communities too often left behind.” The outlet also notes that Biden “drew some applause” for saying “we’re still going to need oil and gas for a while, but there’s more to do”. Bloomberg says that Biden “went off-script” with that remark on fossil fuels in what was “otherwise [a] climate-friendly” speech. The comments “acknowledge an uncomfortable reality for the White House”, the newswire says: “The unusual assessment from the president, slipped twice into his address to congress and not included in prepared remarks circulated beforehand, lays bare the conflict between his administration’s climate and economic goals. Biden has repeatedly exhorted oil companies to invest in pumping more crude even as he seeks to end its use.” The New York Times says that there “were no major new initiatives” in Biden’s address, noting that this was “a nod to the reality of divided government, with Republicans now controlling the House”. The paper adds: “That was a striking departure from the president’s previous appearances before a Democratic-controlled congress, when he called for trillions of dollars in new spending to significantly reshape government programs on health care, child care, climate change, taxes, infrastructure and more.” (Carbon Brief has updated its timeline of how climate and energy have featured in all State of the Union addresses since 1989.)

In other US news, the Financial Times reports that the “fall in petrol use in gas-guzzling US heralds [a] shift for global markets”, Reuters reports on new analysis showing that large US electric utilities with renewable power projects in the works “will benefit most in the sector” from the funding in the IRA. And Bloomberg has a story on how solar panels are the Midwest’s “new cash crop as green energy booms”.

An 'inland tsunami': 15 million people are at risk from catastrophic glacial lake outbursts, researchers find | CNN

CNN covers a widely reported new study, published in Nature Communications, which finds that roughly 15 million people around the world that live within 30 miles of a glacial lake are at risk from “glacial lake outbursts”. The news website says “glaciers around the world are melting at an alarming rate, and are leaving massive pools of water in their wake”. It adds that, as these lakes swell, they can burst and send “water and debris rushing down mountains”, noting that more than half of those at risk live in India, Pakistan, Peru and China. South China Morning Post highlights that 1 million people are at risk in China alone. New Scientist explains how researchers used satellite imagery of glacial lakes to arrive at the conclusion of their study, which BBC News calls the “first global attempt to map potential hotspots for such floods”. According to the Washington Post, “so far it doesn’t seem like climate change has made those floods more frequent, but as glaciers shrink with warming, the amount of water in the lakes grows, making them more dangerous in those rare situations when dams burst”.

India rushes to long-term LNG deals to speed shift from coal
Bloomberg Read Article

India is looking to sign a series of long-term liquefied natural gas (LNG)  deals “to power its economic growth”, Bloomberg reports. The story quotes prime minister Narendra Modi as saying that his country is looking to “boost its LNG import capacity to increase the share of natural gas in its coal-heavy electricity mix to 15% by 2030 from about 6% now”. India’s biggest gas importer Petronet LNG “wants to secure 12m tonnes a year of additional supply under long-term contracts…equivalent to about 60% of the nation’s deliveries last year”, said the firm’s managing director, speaking at India Energy Week. Petronet is also looking to “extend an existing contract” and will request an additional 1m tonnes from Qatar. Meanwhile, state-run gas giant Gail India “is in discussions with Abu Dhabi National Oil Co. and Russia’s Novatek PJSC for long-term deals”, the story adds. Not everyone is optimistic. “The LNG market will remain tight until 2026,” said Satinder Pal Singh, chief executive of Adani Total quoted in the story. 

Separately, the Financial Times reports that “India’s small but vocal opposition” demonstrated outside parliament on Monday, demanding “an opportunity to quiz the government about the group chaired by Gautam Adani, a longtime ally of prime minister Modi”. However, the presiding officers of both houses of parliament, “dominated by Modi’s ruling party, have rejected all calls for debate on the issue”. 

In other energy news, India’s “appetite for Russian crude” rose to “unseen levels”, with imports rising to 1.27m barrels per day in January, newswire PTI reports. According to energy cargo tracker Vortexa, “Russia’s share of India’s crude imports rose to 28% in January 2023…from a market share of just 0.2% in India’s import basket before the start” of the war. “We will continue to buy oil from anywhere in the world, including Russia,” an unnamed government official is quoted as saying, adding that “for all practical purposes, if I can send a ship, cover insurance and device a mode of payment, I can continue to buy oil from Russia”. 

Meanwhile, Reuters reports that the Reserve Bank of India is set to issue guidelines for “regulated entities to boost green finance and mitigate climate-related financial risks”.

Can coal-reliant China and India make a smooth transition to green energy?
South China Morning Post Read Article

The South China Morning Post writes that the world’s “two largest coal consumers” China and India have outlined “ambitious plans for boosting renewable energy, but consumption of the fossil fuel has started to pick up as industrial activity rebounds after three years of Covid”. China will “continue to use coal in tandem with its renewable energy transitions given Beijing’s focus on energy security”, the outlet says, adding that “in recent months, Chinese buyers have booked several cargoes of coal from Australia since Beijing lifted an import ban”. Ghee Peh, an energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), is quoted saying: “China is likely to have increased power demand as its economy opens up after lunar new year [last month]. The issue is whether renewables share, especially solar, will pick up.”

Meanwhile, Yicai writes that Japanese brokerage firm Nomura Securities has “upwardly revised its prediction for China’s gross domestic product growth this year to 5.3% from 4.8% following an encouraging rebound in consumption” during the week-long lunar new year holiday. Lu Ting, chief China economist at Nomura, is quoted saying that “the relaxation of pandemic prevention measures and the return to a path of stabilising economic growth will boost the economy and help unleash some repressed demands in the short run”.

Elsewhere, China Dialogue has an article by Xia Zhijian, titled: “China’s rice farming trials cut methane emissions and increase yields.” It focuses on a new climate-friendly way of growing rice in a mountain village in south-west China. Xia writes that the approach is being “trialled and will reduce methane emissions by about 20%”. In China, “unlike other industrialised countries”, paddy field rice farming is a “significant source of the gas, accounting for 16% of human-caused methane”, the article adds. Finally, the state-run industry newspaper China Electric Power News reports that, from January to December 2022, the country’s cumulative power generation reached 83,886 terawatts-hours and the cumulative power generation of operating nuclear power units was 4,177 terawatts-hours, accounting for 4.98% of the country’s cumulative power generation.

Comment.

Debating DESNeZ
James Murray, BusinessGreen Read Article

BusinessGreen editor James Murray muses on the UK government’s latest reshuffle, which has seen the creation of new departments, including one tasked with tackling net-zero. “Is the revival of the Department of Energy and Climate Change (DECC) in the zeitgeist-grabbing guise of the new Department for Energy Security and Net-Zero (DESNeZ) a good thing, a bad thing, or a deckchair shuffling non-thing that will make no difference either way? Like all good conundrums, seasoned observers disagree on the answer,” Murray writes. He says that veterans of previous government energy and climate departments have responded to the news with “wildly different takes”. Some have welcomed the focus that a net-zero department could bring to the task at hand, whereas others said placing climate responsibility within a business-focused department, as has been the case in recent years, had “helped embed action across government”. Either way, Murray says that even in the messaging around the reshuffle the government has not indicated that climate will be a priority. “Climate change, delivering on the UK’s net-zero goals, and ensuring the country remains competitive in the global green industrial revolution were not deemed worthy of a mention. As an insight into Downing Street’s sense of its own priorities it is a revealing omission,” he concludes.

An article in the Conversation by climate policy researcher Dr Mitya Pearson explains the “quite subtle positives and negatives for climate policy associated with different departmental designs”. On the plus side, he notes that having a net-zero focused department could help make the issue more visible in government, with a clear leader. At the same time “the danger of a smaller department, more focused on climate change, is that it gets drowned out in favour of more powerful voices within government, or unable to influence Treasury decisions”. Times business commentator Alistair Osbourne describes the move as a “nice bit of deckchair rearranging” that will cost the government millions. Writing in the Times, Whitehall editor Chris Smyth notes that the new science department will take two thirds of the old business department’s budget and “a big chunk of the old Department for Culture, Media and Sport, with the new energy and business departments relative minnows in terms of cold hard cash”.

An editorial in the Daily Mail highlights what it sees as an entirely different kind of benefit, noting that the new minister Grant Shapps “must inject some realism” into the energy department. “Reaching net-zero by 2050 is an admirable ambition, but fossil fuels will be needed for decades to keep the lights on,” the newspaper states. Noting that Shapps will be in charge of both energy security and net-zero, the Daily Telegraph’s editorial says it “might be thought that these two ambitions are in conflict – with the embrace of green technologies leaving the UK vulnerable to swings in international energy prices – but at least this policy area will be the sole responsibility of a single Cabinet minister”. The Sun also picks up on this apparent inconsistency, stating – without basis – that “energy security and net-zero are currently incompatible”. It adds: “Without several new nuclear power stations we will always need oil and gas because solar and wind is intermittent”.

Meanwhile, an editorial in the Scotsman carries a very different message, linking the reshuffle with the recent news about enormous oil company profits. It says the “key test for ministers is whether they will play along with oil companies’ reckless disregard of climate science and the plight of their customers, or demand that they do better”. A Guardian editorial concludes: “Perhaps the biggest winner from the reshuffle may be Labour’s Ed Miliband. He gets a whole new department – energy security and net-zero – to shadow and a high-profile cabinet minister, Grant Shapps, to joust with.” An editorial in the Times concludes simply that “following the departure of Alok Sharma, the COP26 president, from the cabinet, it is right that there is once again someone focused on energy at the top table”.

Don't say it out loud, but BP is back into petroleum
Javier Blas, Bloomberg Read Article

Bloomberg columnist Javier Blas writes about BP chief executive Bernard Looney’s apparent change of direction on supporting a transition to low-carbon energy, rather than fossil fuels. While Blas says the company “put out some fine words about its commitment to green energy and several billion dollars in investment to back it” it also  “promised shareholders it would invest heavily into oil and gas projects. Instead of a 40% output cut, oil and gas production would fall by 25% by the end of the decade”. Blas notes that Looney justified this position by stating that the current energy system is predominantly based on oil and gas, and that requires investment. “Of course, this is right. But it was also true back in 2020 when Looney decided instead to shrink the company’s fossil fuel footprint dramatically,” Blas writes. He concludes that: “By altering course, BP has finally acknowledged what had been crystal clear to shareholders for a while: Pumping fossil fuels is very profitable, and demand for oil and gas will stay strong for longer. It hasn’t pulled a U-turn, but it isn’t going in a straight line either.” The Lex column in the Financial Times notes that the UK company’s share price jumped 8% following the announcement from Looney, and concludes that “BP is compromising in a bid to catch up with US peers”.

Times business commentator Alistair Osbourne suggests Looney “got his timing wrong” when he previously made a big show of aiming for net-zero, describing it as “a laudable but over-hasty push on the net-zero front before either the world or BP shareholders were ready for his big transition”. He points to BP underperforming compared to its big oil peers, describing this as “a bigger issue for Looney” than the threat of taxation. “Ecowarriors won’t like it. But the BP boss has clearly decided the shares need an extra drop of oil,” he concludes. The Daily Telegraph’s chief city commentator Ben Marlow writes that, for BP, “maybe it is time to consider a plan B and admit that it isn’t easy being green. In fact, for a major oil business, it is impossible”. 

Meanwhile, an editorial in the Daily Mirror accuses UK prime minister Rishi Sunak and his government of “siding with BP, Shell, British Gas and the other behemoths lobbying against a more effective tax” on oil majors. Columnist Pilita Clark writes in the Financial Times that “windfall taxes are not the only option for fossil fuel profits”, noting that a so-called “carbon takeback obligation”, pushed by some UK scientists, “would make fossil fuel companies pay to clean up their carbon emissions”.

Elsewhere, five Goldman Environmental Prize laureates call on financial institutions in Le Monde to stop supporting French company TotalEnergies’ oil-and-gas expansion strategy, “which is responsible for accelerating global warming and social injustice”. And Lord Deben, chair of the UK’s Climate Change Committee (CCC) has written an article for the Independent with the provocative title: “Exxon-Mobil has deceived the world – now it must pay reparations”. He writes: “As long as it denies the facts and its unique responsibility for the delay, this is not the company with which to ally. We should give other businesses our custom.”

Science.

Arctic warming contributes to increase in north-east Pacific marine heatwave days over the past decades
Communications Earth & Environment Read Article

Arctic warming is playing an “important role” in the increase in marine heatwaves in the north-east Pacific during northern-hemisphere summers, a new study says. The researchers focus on the north-east Pacific, which “has experienced intense and extensive marine heatwaves since the late 1990s – characteristically called ‘the Blob’”. Using a combination of satellite and reanalysis data, the authors find that “strong Arctic warming has acted to change the atmospheric circulation pattern over the north-east Pacific and reduce the low-level cloud fraction from late spring to early summer”. This has caused an “increase in sea surface temperatures and marine heatwave days”, the authors say, adding that the influence of Arctic warming on marine heatwaves “should be considered in climate change adaptation and mitigation plans”.

European tree-ring isotopes indicate unusual recent hydroclimate
Communications Earth & Environment Read Article

The European summer drought over 2015-18 was “highly unusual in a multi-century context and unprecedented for large parts of central and western Europe”, a new study finds. Analysing isotopes in tree rings, the researchers produce a reconstruction of summer hydroclimate spanning the entire European continent back to AD1600. The authors find “three distinct phases of European hydroclimate variability as possible fingerprints of solar activity (coinciding with the Maunder Minimum and the end of the Little Ice Age) and pronounced decadal variability superimposed by a long-term drying trend from the mid-20th century”. The findings provide “further evidence of European summer droughts potentially being influenced by anthropogenic warming”, the paper says.

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