A Look At Europe’s Ambitious $140 Billion Hydrogen Plan | OilPrice.com
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Anti-Fracking Effort Crumbles After Colorado Supreme Court Rejects Online Signature Gathering
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Which Version of Hickenlooper Will Emerge In The General Election? Will Activists Support Him?
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Trump abuses our national parks, and he's doing it again at Mount Rushmore | Jonathan B Jarvis and Gary Machlis
Past presidents used the parks to inspire and unite. Trump sees them as backdrops for self-serving, divisive campaign rallies
In the United States, parks have always been used as spaces for public protest, places for commemorating acts of resistance and the struggle for a more perfect union, and stages for presidents to call for national unity or celebrate civic purpose.
As his Mount Rushmore event scheduled for Friday makes clear, Donald Trump misunderstands and misuses all these precedents.Continue reading......
'Fundamental change': How write downs and bankruptcies are fuelling stranded asset fears
Shell and BP are writing down assets while a raft of US fracking firms are entering bankruptcy protection – change is coming to the fossil fuel industry faster than anyone expected
The stranded asset hypothesis just got real.
In the past month, first BP and now this week Shell have announced plans for multi-billion pound write downs on some of their fossil fuel assets; the former poster child of the US fracking industry Chesapeake Energy has filed for bankruptcy protection; dividends have been cut, job losses are on the way, and a raft of top energy companies have publicly announced plans to accelerate their clean energy transition strategies.
Analysts who for much of the past decade have regarded warnings that fossil fuel assets could become stranded as an intriguing, yet essentially premature theory have been rushing to raise the alarm over how many more major write downs and likely insolvencies are in the pipeline. As Ernest Hemmingway famously observed in his 1926 novel The Sun Also Rises bankruptcies happen two ways: "Gradually, then suddenly".
It might have taken an unprecedented pandemic to send oil prices plummeting, leaving oil majors with portfolios of existing and prospective projects where, in BP boss Bernard Looney's words, "we are spending much, much more than we make". But there is a good reason why a growing number of fossil fuel giants are not simply battening down the hatches in preparation for a period of recession and sustained low prices, before firing up a new wave of projects. Price and demand projections have been trimmed and there is a real sense that the clean energy transition that much of the industry has tip-toed around for the past decade could be about to accelerate.
Shell's announcement that it could write down up to $22bn of assets in the second quarter generated headlines this week, but it is its new price projections that will have investors and many of its peers worried.
The company cut expectations for Brent crude prices in 2022 from $60 to $50 a barrel, while Henry Hub US gas price projection now stand at $2.50 per million British thermal units, down from $3. As Colin Smith at Panmure Gordon told the FT, "these price decks are now sensible as they were too aggressive beforehand", but the lower price projections raise major questions. "Longer term, the world is not short of resources versus consumption that would be in line with the Paris climate goals," Smith observed. "The impairments from BP and Shell together with the lower price decks sharpen the question of where future growth and returns are going to come from as they lean in to the energy transition."
However, the contention that the new price projections are more realistic is contestable. It is possible demand could recover strongly post-pandemic, but every business in the world is currently wrestling with unprecedented levels of uncertainty. It is also possible that a second wave of the pandemic or years of disruption could lead to further downward price projections in the future.
In a widely shared briefing note issued in response to Shell's announcement, Luke Parker, vice president of corporate analysis at consultancy Wood Mackenzie, spelled out what is fast becoming the new orthodoxy. "The impairment Shell has announced is about more than an accounting technicality, or an adjustment to near-term price assumptions," he argued. "It's about fundamental change hitting the entire oil and gas sector. Within this write-down, Shell is giving us a message about stranded assets, just like BP did a few weeks ago."
That message from BP had been similarly clear. The company announced it was looking at write-downs and impairment charges that are expected to total between $13bn and $17.5bn, while preparing around 10,000 jobs losses and accelerating its new net zero transition strategy.
For a growing number of investors alarm bells are ringing. In the wake of BP's announcement influential think tank Carbon Tracker - which has been warning of stranded asset risks for over a decade - welcomed moves across the industry to revise oil price and demand projections downwards, but it warned that the oil majors' assumptions for future oil demand still remain far higher than levels the think tank estimates would be in line with the goals of the Paris Agreement. The organisation concluded that no oil and gas firms across Europe and the US are currently basing their asset valuations on realistic price assumptions for oil.
Moreover, a previous analysis from Carbon Tracker has shown that Shell and BP are amongst a handful of oil majors who have at least started to diversify their business model through investments in emerging clean technologies and boast portfolios that, while far from immune the stranded asset risks that come with low oil prices, are more competitive than many of their peers in a low price environment. Some leading oil firms, in the US in particular, are burdened with project portfolios that require sustained high oil prices to turn a profit. A consensus is building that more write downs are on the way - potentially a lot more.
Charles Ward, a professional trustee at Dalriada Trustees, this week offered a stark assessment of the risks investors now face. "Yet another oil major is writing down the value of its assets," he said. "It's a sign there will be an accelerated move to a lower carbon economy, which calls into question the financial rationale for continuing to invest in fossil fuels. Research conservatively suggests that between $1tr and $4tr of value will be written down as a result of economies transitioning to lower carbon technologies. This is a trend that pension fund trustees cannot ignore."
The trend was further hammered home by analyst firm DNV GL, which this week joined those predicting that the slump caused by the coronavirus crisis means oil demand has peaked, with 2019 marking the high tide for global emissions. The risk management consultancy had previously predicted a peak in demand from 2022, arguing that clean technologies are reshaping the global energy market. But the pandemic has accelerated its projected timeline for the clean energy transition and it is now predicting that global energy use would be eight per cent lower in 2050 than previously expected.
"Lasting behavioural changes to travel, commuting and working habits will also decrease energy usage and lessen demand for fossil fuels from the transport sector as well as from iron and steel production," the company said in a statement.
"While we expect oil demand to recover next year, we think that it's likely that it will never reach the levels seen in 2019," Sverre Alvik, head of DNV GL's Energy Transition Outlook, told Reuters.
The company, like most other analysts, is still a long way from projecting a pace of emissions reductions that would be compatible with the Paris Agreement, but the implications for the fossil fuel industry and its finances are still stark. And investors are starting to ask ever more pointed questions. Ward's advice to trustees is that they "should be asking challenging questions of their investment managers and how they are managing their exposure to stranded asset risk". "As trustees, we are responsible for over £1tr of our members' money and it is incumbent on all of us to look to the future and make sure we are proactively managing our exposure to such a material risk," he added.
The response to such concerns from oil and gas majors have been broadly two-fold: some have argued they can manage transition risks and are responding responsibly by ramping up increasingly ambitious net zero transition plans; others have largely rejected such fears and continue to insist high fossil fuel demand can be sustained for decades to come, even as climate responses escalate.
It is this first camp that are really worth watching closely. BP, Shell, Total, and others have recently unveiled net zero strategies, while promising much more detailed emission reduction plans are on the way. Critics maintain those majors that have committed to net zero have a long way to go to bring their investment plans into line with a net zero decarbonisation trajectory, but while some fear 'greenwash' from an industry with a dubious track record it is clear that public and stated support for net zero is now there.
Moreover, business models are evolving. Just this week BP announced it has agreed to sell its global petrochemicals business to INEOS in a deal worth $5bn. Looney made clear the deal was of a piece with the company's clean energy transition strategy. "This is another significant step as we steadily work to reinvent BP," he said. "Strategically, the overlap with the rest of BPis limited and it would take considerable capital for us to grow these businesses. As we work to build a more focused, more integrated BP, we have other opportunities that are more aligned with our future direction. Today's agreement is another deliberate step in building a BP that can compete and succeed through the energy transition."
In other parts of the energy value chain similar re-organisations are underway, as businesses that were once almost entirely reliant on fossil fuels seek to position themselves for a clean energy transition and minimise the risk of further write downs. This week alone Equinor has invested in carbon capture specialist Carbon Clean Solutions, British Gas parent company Centrica has issued a clarion call for a nationwide roll out of heat pumps, and engineering giants Hitachi and ABB formally launched their new smart grid focused joint venture Hitachi ABB Power Grids.
Most notably, RWE's high profile asset swap with E.ON - one of the largest deals in German industrial history - was finally completed this week, creating a new European renewables powerhouse. The last phase of the deal see RWE take over the E.ON's renewables activities, including its wind, solar, and hydropower businesses as well as the biomass, biogas and gas storage activities and its stake in Austrian power utility Kelag, which boasts a major hydroelectric power business.
Rolf Martin Schmitz, CEO of RWE, was clear on the rationale behind the deal. "The new RWE has been completed," he said. "It is a new, bigger and more diverse company, with a clear goal. By 2040, we will be carbon neutral. This will take us far beyond what other companies are aiming for."
As Parker observed in his note on Shell's write down, "demand might still grow from here, and many companies are still chasing a share of that growth. But make no mistake, the corporate landscape is changing, and the majors are changing with it."
And what of those that are resisting the pressure to change? The story of Chesapeake Energy is informative, if not prescient. The company that was synonymous with the US fracking boom filed for Chapter 11 insolvency protection last Sunday.
It joins a wave of US shale gas and oil firms that have crashed in recent weeks as the oil price has plummeted far below their breakeven point. But the trend was already apparent before the coronavirus crisis hit, with debt-laden companies struggling to turn a profit whenever oil and gas prices dipped. Over 200 oil producers have reportedly filed for bankruptcy in the US in the past five years.
Chesapeake Energy is the largest fracking operator to date to fall foul of volatile market conditions. Having once boasted a market cap of $37bn, the firm was valued at around $115m at the close of trading on Friday. The company is working on a restructuring plan and will continue to operate throughout the bankruptcy process. But that plan will see it cut $7bn of its $9bn debt mountain. It joins other US fossil fuel players, such as coal giants Peabody Energy and Murray Energy, in falling into bankruptcy protection. A lot of people have lost a lot of money as the energy markets have evolved - and all the trends suggest the clean energy transition has only just begun.
Those oil majors that have failed to fully engage with the clean energy transition are a long way from calling in the administrators and it remains perfectly possible that a recovery from the coronavirus crisis could yet trigger a renewed fossil fuel boom. But investors and analysts are more nervous than ever before. The stranded asset theory has gone from intriguing hypothesis to practical reality.
Moreover, there is an element of self-fulfilling prophecy at play here. The more energy companies lean in to the energy transition, the faster it goes, curbing demand for fossil fuels still further, leading to yet more stranded assets, which then encourage energy companies to speed up their transition plans, and so on. The coronavirus crisis has served to amplify still further a process that was already underway. Last month's write downs are a likely sign of things to come, and, crucially, everyone knows that....
City crumbles as the sands shift on Senegal's coast – in pictures
Nicky Woo has won the Marilyn Stafford award 2020 with her project As the Water Comes, documenting rising sea levels in Saint-Louis
Britain beyond lockdown: can social and climate justice come together?
Communities in Bristol are devising their own solutions to problems linked with the city’s role in slavery
During lockdown, the wild grass in Bristol’s Greenbank cemetery has grown higher than many of the tombstones, transforming the land above the dead into a gothic meadow. Nominally closed to the public before 4pm each day, the grounds are a popular location for joggers, strollers and dog walkers, who enter through a gap in the fence. For Zakiya Mckenzie, a local writer, this is the furthest from home she has been in three months, but she has chosen this spot for an interview because of its historic symbolism – a subject that has has come to the fore like never before in the wake of the pandemic.
She leads me down wooded slopes to a waist-high monument set in a glade, a little apart from the other tombs. It is the relocated grave of a group of Baptist people, including Fanny Coker, who was born a slave in the Caribbean island of Nevis in 1767 and died in Bristol in 1820, serving as a housemaid to one of Bristol’s wealthiest plantation-owning families.Continue reading......
Can New England's cod fishing industry survive?
Scientists and fishers agree that cod fishery is at a crisis point – but they disagree on what’s causing it
It’s said cod were once so plentiful in New England they would throw themselves into a boat. It’s said you could walk across their backs to shore.
Gloucester, Massachusetts, grew up around cod. The waterfront teemed with boats and fishermen, heaps of fish thrashing in wire baskets. Boats were inherited from fathers and shipyards boasted of operating since 1684. As late as the 1980s, the cod were so abundant and large (30-50lb each) that the fishermen still brought in big hauls. Cod remains the state fish of Massachusetts.Continue reading......
'Human swan' to take flight on new mission to follow migrating ospreys
Conservationist Sacha Dench will also log marine mammals she sees from her paramotor on the 7,000km journey across Europe and Africa
Sacha Dench is not one to sit still. Known to many as “the human swan” for her record-breaking journey tracking migrating swans in a motorised paraglider, the conservationist and adventurer is planning her next aerial mission: to follow ospreys migrating 7,000km across Europe and Africa.
“It’s really hard to get people to care about migratory species because they are not the responsibility of any one country,” says Dench, who founded Conservation Without Borders and was named as a UN ambassador for migratory species this year. “Birds often don’t fit within borders so they don’t sit in national action plans unless they breed there. But we need to think of conservation in terms of a species’ entire flyway or migratory track.”Continue reading......
UK risks missing net zero target in Covid-19 recovery, Labour warns
Chancellor urged to prioritise plans to realign spending with cuts to carbon emissions
The chancellor of the exchequer must lay out urgent plans to realign government spending with the target to cut carbon emissions to net zero, or risk missing the target and fuelling high carbon emissions for years to come, Labour has urged.
The warning comes as the Treasury prepares key policy announcements on the UK’s recovery from the coronavirus recession, which Rishi Sunak is expected to set out in his spending review next week.Continue reading......
AESO 2019 Annual Market Statistic: a real world example of carbon pricing
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Mr Muscle bottles aim to help clean up ocean plastic
Household cleaning brand SC Johnson launches ocean-plastic Mr Muscle bottle line following success of similar initiative with Windex in the US
Household cleaning brand SC Johnson has launched a new line of Mr Muscle window and glass cleaner bottles made entirely from ocean-bound plastic bottles.
The new line will be gradually rolled out in shops across the UK over the coming months, the company said.
The plastic used to produce new bottles has been provided by Plastic Bank, a social enterprise that works to remove plastic pollution from land and water around the world while providing income for those living in poverty.
Fisk Johnson, chairman and chief executive of SC Johnson, said the new bottles were the company's latest effort to incorporate post-consumer recycled waste its packaging. "Together with Plastic Bank, we're working to help protect the health of our ecosystems and at the same time improve the lives of individuals around the world," he said.
SC Johnson and Plastic Bank signed a three-year deal to work together last October. Under the terms of the agreement, the partners will develop 509 collection centres and points across several countries, including Indonesia, the Philippines, Thailand, and Vietnam - four of the five countries that contribute most to ocean plastic.
"Our partnership with SC Johnson is an important step in ocean stewardship," said David Katz, founder and chief executive of Plastic Bank. "By supporting the collection of plastic waste and use of 100 per cent recycled ocean-bound plastic in their bottles, they are enabling people to make a profound impact on the world."
The launch of the bottles comes more than a year after the cleaning product company unveiled an ocean-plastic version of its Windex bottle in the US.
SC Johnson has signed the The New Plastics Economy Global Commitment, an initiative led by the Ellen MacArthur Foundation in collaboration with UN Environment to establish a common vision for companies to help create a circular economy for plastics.
The company is aiming to triple the amount of post-consumer recycled plastic content it uses by 2025....