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Briefing date 09.03.2020
Oil crashes after Saudi Arabia starts price war amid slumping demand

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Oil crashes after Saudi Arabia starts price war amid slumping demand
Reuters Read Article

There is widespread coverage of the sudden plummet in oil prices triggered by tensions between Russian and Organization of the Petroleum Exporting Countries (OPEC) nations. Reuters says: “Oil fell by the most since 1991 on Monday after Saudi Arabia started a price war with Russia by slashing its selling prices and pledging to unleash its pent-up supply onto a market reeling from falling demand because of the coronavirus outbreak.” It adds: “Saudi Arabia, the world’s biggest oil exporter, is attempting to punish Russia, the world’s second-largest producer, for balking on Friday at production cuts proposed by OPEC. OPEC and other producers supported the cuts to stabilise falling prices caused by the economic fallout from the coronavirus outbreak. Saudi Arabia plans to boost crude output above 10m barrels per day (bpd) in April after the current supply deal between OPEC and Russia, – known as OPEC+ – expires at the end of March, two sources told Reuters on Sunday…China’s efforts to curtail the coronavirus outbreak has disrupted the world’s second-largest economy and curtailed shipments to the largest oil importer.” The Financial Times says the move “threatens to swamp the crude market with supplies just as the coronavirus outbreak hits demand”. It adds: “The fall in oil prices risks new turmoil in the kingdom [of Saudi Arabia], as Prince Mohammed’s plan to modernise the economy relies at least in part on higher energy revenues to fund the transformation…Higher output from Saudi Arabia would again hit the US shale sector, the rapid growth of which over the past decade has made the US the world’s top producer and forced rivals to restrict output in a bid to prop up the price. The US shale industry has struggled to generate consistent profits, however, and is struggling with tighter access to financing, leaving it vulnerable. But the kingdom appears to be targeting Russia in particular.” The Financial Times also has a Q&A on the “aggressive move” and specifically what this “means for Big Oil”: “Companies have been desperate to maintain dividends and payouts to shareholders unsettled by predictions oil demand could peak in the next decade. At the same time they need to reduce debt and look to new energy sources such as renewables, fearing a long-term shift away from fossil fuels. With oil at less than $40 a barrel, many investors doubt this is possible. Share prices will probably come under pressure in the coming days.” Bloomberg has a feature about Friday’s OPEC meeting: “At 10:16 a.m. on a wet and dreary Friday morning, Russia’s energy minister walked into OPEC’s headquarters in central Vienna knowing his boss was ready to turn the global oil market upside down.”

UK set to double funding for flood action, Treasury says
Reuters Read Article

Many UK publications focus on this week’s budget. Reuters says that “Britain is expected to double spending on flood defences to £5.2bn when finance minister Rishi Sunak delivers his budget”. It adds: “Sunak is also expected to announce a $120m Winter Defence Repair Fund to repair defences damaged in the recent storms which will return at least 300 schemes to full functionality.” BBC News says: “The money, due to be announced on March 11, will help to build 2,000 new flood and coastal defence schemes and protect 336,000 properties in the country.” (In related news, Reuters reports that Boris Johnson has been heckled during a visited to flood-hit Bewdley, following widespread criticism that he failed to visit at the peak of the flooding.) The Guardian says that “climate campaigners are urging the government to set out a clear plan for a low-carbon future in the budget”. However, it says that “Hopes were dealt a blow when it emerged on Friday that a major policy announcement on national infrastructure – including an overhaul of Britain’s energy, transport and water infrastructure to cut greenhouse gas emissions and help cope with the impacts of extreme weather – would be postponed”.

Separately, the Guardian reports that the Treasury is expected to accelerate the trend [towards electric vehicles] in this week’s budget by signalling an end to a decade of freezes on fuel duty for millions of drivers, as part of plans to meet tougher climate laws”. It adds that “British companies are expected to spend more than £12bn switching their fossil fuel vehicles for clean electric versions over the next two years”. The Sunday Times reports that “the price of new electric cars is being cut by as much as £3,500 as increasing demand intensifies competition among manufacturers”, adding: “Rishi Sunak, the chancellor, is expected to use his budget…to approve incentives to drive up sales, such as changing benefit-in-kind rates that allow employees to sacrifice part of their salary for a company car.” Writing for CapX, Joe Ware argues that “it is good news to hear that Chancellor Rishi Sunak is considering an end to the tax break on red diesel and the decade-long fuel duty freeze”. He adds: “These market-distorting policies have passed on the cost of vehicle pollution, blunting the incentive for companies to innovate and produce less polluting alternatives.”

In other UK news, the Daily Telegraph reports that: “The government is to fund 10 female entrepreneurs to turn their unique climate change concepts into businesses, as part of a £3m fund. Female inventors will receive £50,000 to develop solutions for climate change, energy efficiency and health issues, as part of the scheme.” Reuters carries the comments of Alok Sharma, the UK’s newly appointed minister in charge of the COP26 climate summit: “The world of finance must line up behind the fight against global warming, a top British climate change official said, calling for a concerted effort to turn ‘billions into trillions’ of dollars driving the transition to a green economy.” SSE chief executive Alistair Phillips-Davies writes in BusinessGreen that: “Ahead of COP26 in Glasgow I think it’s imperative the Treasury installs a new fiscal rule: the need for an annually increasing carbon price. Carbon must become a scarcity and priced high if we’re to meet net zero.” The Observer reports the conclusions of a new report by the Institute for Public Policy Research thinktank, which says that “Boris Johnson’s government must spend an additional £33bn a year on measures to tackle the climate emergency if it is to meet its target of cutting carbon of emissions to zero by 2050”. It adds: “Investment in low-carbon transport – including more infrastructure for charging electric vehicles, improved railways and better facilities for cyclists – would have to rise by £12bn a year, and spending on low-carbon homes and other buildings would need to be increased by £10bn annually.” The Times carries a report about how it has learned that “a multi-billion road building plan – including proposals to roll out controversial smart motorways – has been put on hold over climate change concerns…The £25bn strategy to expand motorways and major A-roads over the next five years has been shelved until later in the spring or even early summer.” In a separate article, the Times reports that “plans for nuclear plants in Britain face fresh uncertainty after government advisers warned against backing costly new reactors”.

Finally, the Financial Times reports that “Scottish authorities have cut the estimated cost of hosting the COP26 climate change summit in Glasgow by tens of millions of pounds, easing fears that the event which activists say represent a crucial opportunity to address catastrophic global climate change, could be moved to London”. The news comes as Reuters says that “the United Nations has canceled some meetings in Bonn, Germany, and elsewhere planned in the run-up to a crucial UN climate summit to be held in Glasgow, Scotland, in November due to the coronavirus outbreak”.

Global coal decline leads to fall in CO2 emissions from power sector, research suggests
BusinessGreen Read Article

Several publications cover a new report from analysts Ember (formerly called Sandbag) which shows that last year CO2 emissions from the global power sector fell by the highest level in three decades. “Carbon emissions from the global power sector fell by 2% in 2019, the biggest fall since at least 1990, and yet the goals set by the Paris Agreement remain at risk of being missed by a huge margin unless there is a far more rapid shift towards cleaner energy sources,” reports BusinessGreen. “Global carbon dioxide (CO2) emissions from the power sector fell by 2% last year, the biggest fall since at least 1990, owing to reduced coal usage in Europe and the United States,” says Reuters, adding: “Coal-fired power generation fell by 3% globally, also the largest fall since 1990, research by independent climate think tank Ember showed. The drop in Europe was 24%, driven by a switch to renewables, while US coal-fired generation was down 16% because of more competitive gas. However, China bucked the trend with a rise as it became responsible for half of global coal-fired power generation.” The Daily Telegraph notes that the analysis also shows that wind power generation increased by 12% “and the UK was one of just seven countries responsible for three quarters of this rise”. The newspaper adds: “The fall in coal is partly due to a structural shift towards wind and solar but also relied on one-off factors, such as nuclear generation being restarted in Japan. It would need to collapse at a rate of 11% a year up to 2030 to keep global warming to 1.5C, the report from Ember warned.” The Guardian quotes Dave Jones, the lead author of Ember’s report, who says: “To switch from coal into gas is just swapping one fossil fuel for another. The cheapest and quickest way to end coal generation is through a rapid rollout of wind and solar. But without concerted policymaker efforts to boost wind and solar, we will fail to meet climate targets. China’s growth in coal, and to some extent gas, is alarming but the answers are all there.“ Ember’s report confirms analysis published by Carbon Brief last November showing that global electricity production from coal was on track to fall by around 3% in 2019. And today Carbon Brief has published new analysis showing that how China’s burning of coal in 2019 was far lower than first anticipated.

Warning that Brussels carbon border levy could face long delay
Financial Times Read Article

The Financial Times reports that EU officials have warned that “Brussels’ plan for a carbon border levy on imports risks getting snarled up in political resistance and compliance that could radically reduce the scope of the measure and delay it for years”. It adds: “Frans Timmermans, Europe’s commissioner in charge of the Green Deal, last week said the scheme was designed to prevent ‘carbon leakage’ – where activities and industry could decamp from the EU to countries with less onerous environmental standards. ‘We will protect European industry if it takes a historic step to decarbonise,’ he said. But behind the promises, diplomats and officials have warned the mechanism is a uniquely complicated and unprecedented exercise that has already provoked resistance from powerful member states including Germany. Berlin has voiced fears that a carbon tax would intensify tit-for-tat trade retaliation from the US targeting its car industry.”

In other EU-related news, Reuters reports that “an EU energy official [has] urged Western Balkan countries seeking European Union membership to consider their own carbon taxes to shelter their coal-reliant power sectors from the sudden shock likely once they have to abide by tougher climate rules”. And the Financial Times reports that “Europe will this week announce plans for a new EU-wide partnership to develop clean hydrogen fuel technologies, as Brussels seeks ways to accelerate its push towards carbon neutrality”.


We can’t wait until 2024 to tackle the climate crisis – let’s fight for a green new deal now
Keir Starmer, The Guardian Read Article

Keir Starmer, the current frontrunner to be elected as the new leader of the UK’s Labour party, writes in the Guardian that “we have the capacity, imagination and resources to radically, democratically and fairly decarbonise our economy and repair the natural world”. But he adds: “The government must not use trade negotiations to bargain away our environmental protections. Instead we should encourage other countries to raise their ambitions for decarbonisation. As a centre of global finance, we should regulate private investment to make sure that money that comes through the UK isn’t contributing to environmental breakdown. And rather than funding fossil fuel projects abroad, we should use our development budget and technical expertise to help other countries skip our bad habits and grow their own low-carbon economies on renewables instead – while also providing support to climate refugees.” He concludes: “Labour lost the election, but we are still a movement that can fight for change and a better future. That’s why this weekend I’ll be bringing together environmentalists, trade unionists, policy experts and local government representatives to begin to develop plans for that net-zero coalition, both at home and abroad. We cannot wait until 2024 to tackle the climate crisis. The Labour movement must lead the charge for an international response at COP26 and beyond.” In the Times, Sheffield mayor and fellow Labour MP Dan Jarvis writes about his priorities for South Yorkshire: “The world needs new materials that are lighter, stronger and that use less energy. Industry needs new manufacturing and engineering processes to build new zero-carbon homes, planes and trains. The planet needs new methods of energy production so we can grow our economy while protecting our environment.”

Meanwhile, in the Sunday Express, climate sceptic columnist Nick Ferrari continues his regular attacks on Extinction Rebellion: “This government has already pledged to drag us out of our petrol, diesel or hybrid cars and vans within a few years and has brought forward the target by which we will be carbon neutral. So why don’t they go and protest in China, India or Brazil, where the message seems to go largely unheeded?” And in the Sunday Times, the climate sceptic columnist Dominic Lawson says: “Many voters, if not always as volubly as the politicians who represent them, say they agree that man-made climate change is a matter that requires action. But that apparent consensus dissolves — possibly in violent disturbance — as soon as the resulting policies start to ruin their daily lives. This is something that 17-year-old Greta Thunberg, for all her intellectual precocity and study of what she calls “the science”, fails to understand. Her grasp of human nature is less than that of any democratically elected adult politician. But at least, unlike them, she believes what she’s saying.”

'I'm profoundly sad, I feel guilty': scientists reveal their personal fears about the climate crisis
Graham Readfearn, The Guardian Read Article

In a feature for the Guardian, Australia-based reporter Graham Readfearn speaks to several climate scientists about a request back in 2014 to write letters expressing “how they feel” about climate change. Six years on, the project continues: “Feelings of powerlessness and despair for the future are evident in letters,” writes Readfearn: “The first 10 return letters are emotional outpourings of despair, hope, fear and determination in the age of the climate crisis, from the people helping the world understand its impacts while also being mums, dads and grandparents.”


Escalating global exposure to compound heat-humidity extremes with warming
Environmental Research Letters Read Article

Global temperature rise of 2C could see 789 million people exposed to at least one day a year when heat-humidity extremes rise above safe levels, a new study suggests. If warming reaches 3C, the number exposed across the world could reach 1.2 billion, the research adds. Heat-humidity extremes are considered unsafe when “wet-bulb temperatures” exceed 33C, the researchers note. (The wet-bulb temperature is the temperature read by a thermometer covered in water-soaked cloth over which air is passed.)

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