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TODAY'S CLIMATE AND ENERGY HEADLINES

Briefing date 06.12.2021
UK: Shell U-turn on Cambo could mean end for big North Sea oil projects

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News.

UK: Shell U-turn on Cambo could mean end for big North Sea oil projects
The Guardian Read Article

There is continuing coverage in the UK media of Shell’s decision last week to pull out of the controversial Cambo oilfield off the Shetland Islands. The Guardian says: “Shell’s decision…could sound the ‘death knell’ for new large-scale North Sea projects, industry figures say, as the UK’s tougher climate agenda prompts oil companies to retreat from the ageing oil basin. Sources said Shell’s project partner, the private equity-backed Siccar Point, would struggle to find another partner to take on Shell’s 30% stake in the new oilfield, which has provoked outrage among green campaigners.” The newspaper quotes an unnamed industry source: “This is a turning point…Companies will be thinking: if Shell can’t do it, can we? I just don’t see any truly large-scale projects being sanctioned in the North Sea any more. There will still be small developments around existing fields. But this is a death knell for major new projects in the UK.” It adds: “The Guardian understands that Shell scrapped the Cambo project after the government made clear it would need to meet certain ‘climate concessions’ to win its approval. The company said publicly that the ‘economic case for investment’ was not strong.”

The Times says that “Scotland’s first minister [Nicola Sturgeon] is facing a backlash over her stance on the Cambo oilfield as business leaders warned that jobs are being put at risk and criticism of her government intensified. It continues: “There are concerns that pressure by environmentalists to block Cambo, which lies about 80 miles northwest of the Shetland Isles, may reduce the likelihood of any new North Sea fields being approved. That would put tens of thousands of jobs at risk while also increasing the UK’s reliance on importing oil and gas. Sir Ian Wood, one of the British oil and gas industry’s most respected leaders, urged politicians ‘to reflect carefully on their public statements’ and the impact they can have.” Wood is quotes as saying: “We must not create an adverse investment environment at this crucial moment in our energy transition journey. The future prosperity of our region and the country’s ability to meet net-zero, depends on it. It has been made patently clear for some time we cannot put ourselves in the position of reducing domestic production only to increase carbon-heavy imports from overseas. This would be entirely counterproductive, both environmentally and economically. The skills, experience and infrastructure of a world-class oil and gas industry will play a crucial role in accelerating energy transition and meeting net-zero.” (See “Climate and energy comment” below for more reaction.) A separate article in the Times says that “a £110m project to build the UK’s biggest wind tower manufacturing facility is expected to bring 400 jobs to the Highlands”.

Meanwhile, the Observer reports that “environmental campaigners will this week ask the high court to rule that the government’s fossil fuel strategy is unlawful, in a case that could undermine the UK’s claim to be leading the fight against climate change”. It adds: “The campaigners will argue that the government is effectively subsidising oil and gas production with billions of pounds in handouts, which conflicts with its legal duty to achieve net-zero emissions by 2050. Pressure group Paid to Pollute says oil and gas companies received billions of pounds in tax relief for new oil and gas exploration, and billions more towards decommissioning costs between 2016 and 2020. The group says this amounts to fossil fuel subsidies.” Separately, the Times says that “about one in five new cars sold in Britain in November were fully electric plug-in vehicles, the highest proportion recorded in a normal month outside lockdowns”.

Winter heatwave breaks records in four US states
The Guardian Read Article

A record-breaking heatwave has swept large parts of the US, with “much of the country experiencing balmy conditions even as Americans move into what is supposed to be meteorological winter”, reports the Guardian. It adds: “Much of the western half of the US has seen temperatures 35F (19C) above average for this time of year in the past days, with [last] Wednesday bringing the hottest December weather on record for Montana, Wyoming, Washington state and North Dakota. Parts of British Columbia in western Canada hit 72.5F (22.5C), tying the national record for the highest temperature ever recorded during December.” Associated Press has an “explainer” about the “weird weather” affecting larges parts of North America. It says: “Meteorologists attribute the latest batch of record-shattering weather extremes to a stuck jet stream and the effects of a La Niña weather pattern from cooling waters in the equatorial Pacific…These bouts of extreme weather happen more frequently as the world warms, said meteorologist Jeff Masters, founder of Weather Underground who now works at Yale Climate Connections. But scientists haven’t done the required study to attribute these events to human-caused climate change.” Meanwhile, the Financial Times says that “the La Niña phenomenon has developed for the second consecutive year, with the weather pattern expected to intensify rainfall as well as droughts around the world”. It continues: “Climate change is making extreme weather events more likely and severe, with La Niña and El Niño events anticipated to exacerbate the effects.” The Guardian notes that “California has become the latest jurisdictions to set up a system that would categorise and name heatwaves like cyclones or hurricanes”.

In other US news, Reuters covers a new study which shows that “North Atlantic hurricanes have become more frequent amid warming”. It adds: “The findings were fairly consistent with the record of storms spotted by flights and satellites, and earlier from land or ships. It is still unclear why there were more Atlantic storms, which account for about 12% of the world’s tropical cyclones. The models did not show similar increases for other cyclone-prone regions like the Eastern Pacific or the Bay of Bengal.” The Washington Post covers a separate study which shows that the “world’s strongest ocean current [which circles Antarctica] is speeding up – and humans are to blame”.

The New York Times looks at the $1tn infrastructure bill currently passing through Congress and says that it “funds programs that tend to favour wealthy, white communities – a test for [Joe] Biden’s pledge to defend the most vulnerable against climate change”. It continues: “Biden has insisted that at least 40% of the benefits of federal climate spending will reach underserved places, which tend to be low income, rural, communities of colour, or some combination of the three. But historically, it is wealthier, white communities – with both high property values and the resources to apply to competitive programs – that receive the bulk of federal grants. And policy experts say it’s unclear whether, and how quickly, federal bureaucracy can level the playing field.” Finally, the Hill says “green groups” are “spending big” to promote climate policies, amid deliberations by lawmakers: “The League of Conservation Voters (LCV) and a group called Climate Power have partnered on a number of advertisements, spending a total of $50m promoting climate legislation and Democrats’ major climate and social spending bill so far this year, according to figures shared with the Hill.”

China releases five-year green development plan for industrial sectors
Reuters Read Article

Reuters reports that China’s Ministry of Industry and Information Technology (MIIT) unveiled a five-year plan on Friday “aimed at the green development of its industrial sectors, vowing to lower carbon emissions and pollutants and to promote emerging industries so as to meet a carbon peak commitment by 2030”. The newswire adds: “The world’s top greenhouse gas emitter is aiming to bring its carbon emissions to a peak by 2030 and become ‘carbon-neutral’ by 2060.” MIIT will treat the “comprehensive utilisation of industrial resources and clean manufacturing” as “important levers” for promoting “green development”, according to state-run China National Radio. It says that the explanation was given by You Yong, deputy director of the department of energy-saving and comprehensive utilisation of MIIT, at a press conference. You said that MIIT would “increase the strength” of work in the two areas. China Economic Net reports that the five-year plan stipulates that, by 2025, China should achieve “substantial results” in the “green and low-carbon transition” in its industrial structure and production methods. The plan also sets out that the output value of the “green environmental” industry should reach 11tn yuan (£1.3tn) by 2025, the website says.

Separately, Economic Information Daily – an affiliation with state news agency Xinhua – reports that the “technical roadmap” for peaking emissions and achieving carbon neutrality for the iron and steel industry has “been largely formulated”. Industry insiders said that promoting the emissions peaking of the iron and steel industry was “an opportunity and a challenge” for the sector, the newspaper says.

Meanwhile, the South China Morning Post reports that Hong Kong experienced “its third-warmest autumn on record” this year – a phenomenon “bolstered by a particularly sunny November and the hottest September since 1884”. Another South China Morning Post article says that China’s national emissions trading scheme (ETS) is “riddled with policy ambiguities” – according to “analysts” – as the programme “prepares to allow more sectors to participate in the new year”. Furthermore, Reuters reports that “China’s state planner said on Thursday it would guarantee supplies of key energy feedstocks for fertiliser companies”.

Indian demand for air-conditioning heats up climate fears
Financial Times Read Article

As temperatures routinely soar above the 40C mark in India, so too does the “demand for ways to stay cool”, reports the Financial Times. It says authorities and researchers are working to ensure this demand “is met with more energy-efficient methods”. It notes that the International Energy Agency estimates that India is expected to account for a third of all sales of air conditioners over coming decades”, while the NRDC, a campaign group, estimates that “nine of 10 households in India do not have air conditioning”, just as “improved cold storage is also needed for vaccine and food supply chains”. Measures to keep temperatures down could include “reflective paints on roofs…vital in slums where residents have little prospect of affording an air conditioner” and “energy conservation rules” for buildings. But “only a fifth of households use five-star rated air conditioners”, it says, quoting a study by Oxford University’s Radhika Khosla.

In other energy news, India’s ministry of coal claims that “coal production from captive mines” – mines owned and operated by private companies for their own specific use – has “already reached around 50m tonnes…[and is] likely to touch 85m tonnes during the current financial year”, reports Mint. It issued the statement at a meeting to “further enhance coal production” and resolve “environment and forest clearances impacting development of new coal blocks”. In October, Mint reported that the ministry has allowed private miners to sell half of their output from captive mines in the open market, following a coal shortage.

Writing in the New Indian Express, G Madhavan Nair, the former chairman of the Indian Space Research Organisation, says that “the Glasgow summit has left several issues unresolved with funding being a major one” and “though most of the developed countries agreed to raise $100bn, it remains a dream.” He adds that “it is their moral responsibility to help the developing world not only with money but also with technology”.

Everyone in Wales to be given a free tree to plant
WalesOnline Read Article

Every household in Wales will be offered a free tree to plant as part of the Welsh government’s climate crisis plans, reports WalesOnline. It adds: “People can choose a tree of their own to plant or opt to have a tree planted on their behalf. The first trees will be available to collect from March from one of five regional community hubs being set up with 20 more set up by October next year as part of the scheme, being run with the Woodland Trust. It has also been announced that a consultation will launch in early 2022 on plans to create a National Forest for Wales.” Sky News says the project is estimated to cost around £2m, according to Lee Waters, the deputy minister for climate change, who is quoted as saying: “We need to plant lots more trees to meet our climate change targets by the end of this decade – we have to plant 86m more trees in Wales.” The Guardian also covers the news: “In June the Welsh government held what it called a “deep dive” exercise into trees and timber and concluded a step change was needed to create enough woodland to tackle the climate emergency. The Labour-led government judges it needs to plant 43,000 hectares (106,000 acres) of new woodland by 2030, and 180,000 hectares by 2050 to meet climate crisis targets. In 2020, just 290 hectares of woodland was planted in Wales and annual woodland creation has not exceeded 2,000 hectares since 1975.”

Comment.

Cheering Shell’s Cambo exit may be premature
Editorial, Financial Times Read Article

Several UK newspapers react to Shell’s withdrawal from the Cambo oilfield project. An editorial in the Financial Times says that “it is better that listed, not private, companies hold brown assets”. It explains its position: “It is preferable for publicly listed companies, accountable to their shareholders and regulators, and beholden to disclosure requirements, to hold brown assets than for them to fall into the hands of private capital, which does not have such obligations…This reflects an unfortunate reality that there are many willing private-capital investors in fossil fuels. Oil majors under pressure to divest brown assets present a buying opportunity at knockdown prices, particularly if oil and gas prices continue to ricochet. Governments’ failure to curb oil and gas consumption means there are still years where healthy returns can be made…Brown assets ought not to be private capital’s dirty secret: some transparency can be brought to bear, particularly on the larger private equity firms that are publicly listed. Markets regulators on both sides of the Atlantic need to be tougher on firms’ disclosure of their fossil-fuel holdings. The Cambo case shows the path to carbon neutrality is far from smooth. And not every victory claimed by activists necessarily constitutes progress towards that goal.”

An editorial in the Guardian says that “it may be more realistic to see Shell’s act as a first victory in a longer war to keep hydrocarbons in the ground”. It adds: “Oil majors have lost the battle for public opinion in Scotland and this has dramatically altered the calculations for the ruling Scottish National party, which for decades ran on oil. Without supportive politics, and with the science against them, oil majors – this time – bowed out…The counter argument is that abandoning the North Sea will cost the UK jobs. But the appropriate policy response is to raise investment aimed at the transition to net zero. Last year a poll suggested that four-fifths of oil workers would consider leaving the industry. This is a pool of labour willing – provided there was a measure of security and reasonable pay – to transfer skill sets to the offshore wind and renewable energy sector. What has been lacking is the government drive to tap such desires.”

An editorial in the Daily Mail takes the opposite view: “While it is ultimately sensible to wean Britain off fossil fuels, the truth is green sources such as wind and solar cannot yet fulfil our energy needs. So although eco-warriors will celebrate Shell’s decision to abandon plans to drill North sea oil after resistance from Nicola Sturgeon, it is disastrous environmentally, economically and for energy security. Not only does it cost Scotland billions in investment and thousands of jobs, this farcical ‘greenwashing’ means we must import costly energy from abroad, which increases pollution and carbon emissions. We will become even more dangerously reliant on erratic foreign countries – and vulnerable to surging power bills. Ignoring our own oil may allow politicians to flaunt their green credentials. But it is an act of extraordinary self-harm – and not what is best for the people of this country.”

In the Daily Telegraph, a feature by Rachel Millard and Matt Oliver says that “although Cambo is a relatively small project for the supermajor, it has potentially large consequences for Britain as it tries to chart its path towards a greener economy”. They add: “Shell’s choice to wave goodbye…raises further doubts over the future of an industry that employs more than 100,000 and whose skills will also be essential in helping the country move towards greener energy…What’s clear is that any new partner is unlikely to be among majors such as Exxon and BP, all of whom face the same reputational struggles over climate change as Shell. ‘Cambo risks being seen as poisoned chalice,’ says one industry source…Senior figures at Shell are understood to have become frustrated by the UK Government’s unwillingness to give Cambo public support. A Whitehall source, however, accused Shell of bowing to a ‘vocal minority’ of activists who have blocked the projects.” (Rachel Millard has a separate feature in the Sunday Telegraph about how “National Grid ESO, the body responsible for balancing electricity supply and demand, is investigating soaring charges”.) Also in the Daily Telegraph, financial columnist Matthew Lynn writes: “This is madness. Of course, everyone agrees that we should switch to green energy as fast as possible. Fossil fuels should be steadily phased out. And yet, as we have already discovered this winter, that is not going to happen instantaneously, and in the meantime we have to make sure we have a back-up plan in place.”

Meanwhile, in other UK comment, John Harris in the Guardian warns that the “new Tory right is fanatical and dangerous – and should be Labour’s prime target”. He continues: “They have Johnson’s ear on everything from face masks to net zero. But the public mood is against them, and Starmer needs to be too.” One member of that same group Harris refers to – the climate-sceptic Conservative hereditary peer Matt Ridley who chaired the failed Northern Rock bank a decade ago – writes in the Daily Telegraph that “Storm Arwen showed the value of gas stoves and diesel”. And another affiliate of the same political group – Annabel Denham, who is the director of communications at the right-wing, climate-sceptic lobby group known as the Institute of Economic Affairs – writes in the Sunday Telegraph attacks the Climate Change Committee saying its “solutions are statist, interventionist and lacking thorough cost-benefit analysis”.

Finally, the Financial Times has a special section today on “energy efficiency”, which includes a range of features.

Science.

Equity implications of net-zero visions
Climatic Change Read Article

In an essay in Climatic Change, a group of authors discuss how the recent flurry of net-zero pledges by national governments could affect global equity. They note that “it is unclear which policy measures are available for achieving net-zero equitably” or how measures can “be implemented in ways that advance rather than undermine equity”. Using three “stylised future pathways”, the authors show that “there are potentially serious international and domestic equity effects from global net-zero policies, as well as opportunities to achieve an equitable net-zero future for all through appropriate policy design”.

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