PAST NEWSLETTERS

Main Takeaways for the week of January 5, 2022

New year, same energy crises. Europe continues to face high prices for natural gas due to short supply from Russia, prompting France to consider allowing utilities to burn more coal. Other strange events unfold in Europe, including U.K. natural gas prices briefly going negative, ammonia production restarting at eyewatering prices, and Germany warning of “dangerous” nuclear while German Chancellor Olaf Scholz seeks “reset” of relations with gas supplier Russia. OPEC+ signals confidence that Omicron will have a muted effect on oil demand. Pakistan and Kazakhstan are walloped by high energy prices. Energy vulnerabilities are becoming evident in New England and Texas. Major coal exporter Indonesia cuts off all exports until a domestic shortage is resolved.

Featured Article

Little Green Men and the Resurgence of Civilian Nuclear Power by Richard Norris for CGAI

Headlines

Global Petroleum Liquids

• OPEC+ isn’t scared of Omicron, maintains monthly output rise at 400k bbl/d due to internal analysis showing lower than expected 2022 oil surplus

Global LNG

• FID on 11 MMT/yr Rio Grande phase 1 LNG Liquefaction terminal delayed to H2 2022
• Pakistan’s textile industry is being ravaged by natural gas shortage as LNG spot prices soar
• South Korea retires two oldest coal-fired power plants, to be replaced with new LNG power plants

Global Coal

• Indonesia’s government institutes coal export ban due to low domestic stockpiles, threatening supply for China, Japan, and Korea
• Korea’s POSCO plans to build two mini-mills using EAF to replace country’s oldest blast furnace
• IEA releases Coal 2021 report, warning of climate impacts of hot coal market

North American Energy Infrastructure

• Limited space in NGTL pipeline system suppressing AECO gas prices despite high demand
• New England (CT, ME, MA, NH, RI, VT) at high risk of severe energy shortages due to lack of natural gas infrastructure and the Jones Act, which narrows ability to import LNG
• Texas natural gas production experiences sharp drop during cold weather, signaling that supply may still be vulnerable

U.S. - China Energy Relations

• No significant developments

EU – Russia Energy Relations

• Norwegian fertilizer producer Yara brings back most European ammonia production despite high gas costs, because fertilizer prices are even higher
• Low Russian flows to Europe keep natural gas prices high
• K. gas balancing market prices briefly go negative due to lack of storage and immediate buyers
• New German Chancellor Olaf Scholz plans to “reset” relations with Moscow at upcoming meeting

U.S. - Canada Energy Relations

• Manchin and Sinema maintain opposition to tossing the filibuster, keeping them in control over the final fate of the Build Back Better Act

Middle East Energy Geopolitics

• UAE begins term as non-permanent member of the U.N. Security Council
• Libya shuts in 200k bpd oil production due to a damaged pipeline, largely offsetting OPEC+ production increases

Canadian Oil and Gas

• No significant developments

Central Asia Energy Geopolitics

• Kazakhstan protests erupt over high LPG prices caused by rollback of subsidies

Electricity

• New York State’s decarbonization plan proposes using carbon pricing and capacity markets for emissions free dispatchable electricity to reach zero emissions electricity by 2040
• France considering allowing electricity producers to burn more coal to prevent power shortages

Renewables

• EIA calculates that renewables became the second largest source of power in the U.S. in 2020

Copper

• China looks to restrict runaway development of copper smelting

Lithium

• First lithium-ion battery is assembled at Northvolt gigafactory in Northern Sweden

Nickel

• No significant developments

Cobalt

• Toronto-based Electra signs tolling agreement with world’s largest cobalt miner Glencore to refine large amounts of cobalt in Ontario, with a portion of product marketed by Glencore

Hydrogen

• $1.04 billion loan guarantee provided by DOE for scaling up Monolith Nebraska LLC Methane Pyrolysis plant to produce hydrogen for ammonia and carbon black for tires

Nuclear

• European Commission’s draft Sustainable Finance taxonomy includes nuclear and natural gas as “transition” technologies to be treated favourably by regulations under certain conditions
• Germany calls EU inclusion of nuclear “dangerous” days after shutting down 4.2 GW of nuclear

Other Recommended Content

• The Coming Carbon Tsunami, by Kelly Sims Gallagher for Foreign Affairs
• Europe Sleepwalked into an Energy Crisis That Could Last Years, by Isis Almeida, Anna Shiryaevskaya, and Ewa Krukowska for Bloomberg
• New England is an Energy Crisis Waiting to Happen by Doomberg