Newsletter - April 29, 2020
The global oil industry is going through perhaps its roughest patch in its 200-year history, most of which is marked by growth. While countries representing about 90% of the world’s GDP are under some form of lockdown due to the COVID-19 pandemic, demand for energy, and by extension oil, has plummeted. According to the International Energy Agency (IEA) Oil Market report published earlier this month, 2020 will likely see a dip in demand in the region of 9.3 mb/d (million barrels/day) despite picking up in the second half of the year. This would be close to 10% of the 99.9 mb/d demand seen in 2019. In April, the demand is expected to be nearly 30% lower than 2019 levels, while demand in the entire second quarter is likely to be 23.1 mb/d lower, about 25% lower than the demand at this time last year.
The steep drop in demand has translated to a supply glut that has seen the world run out of storage space. The matter came to a head on April 20 as the US-based West Texas Intermediate (WTI) oil exchange saw prices fall to negative $40 per barrel with some producers paying buyers to take oil off them. The prices have since bounced back to the region of $15 per barrel, which is still much lower than the $50/ barrel that American oil producers see as cost of production. International indices are quickly going the same way. The OPEC+ deal to cut production in order to stabilise prices only managed to briefly stave off the inevitable crash in global prices. Currently, the Brent Crude and the Dubai indices are teetering at just about $20/barrel, a debilitating 70% fall from prices seen at the turn of the year.
The oil price crash is almost certainly going to have implications for climate action. But what that would look like will depend on a number of variables, chief among which will be the nature of the post-pandemic revival. The oil industry’s plight could intuitively point to gains for the clean energy transition. Historically, however, low prices of oil and natural gas could suppress the movement away from fossil fuels in the short term, especially when it comes to power generation and mobility, where transitions to renewables seem the most forthcoming. While low prices could incentivise consumers to delay a switch to renewables, there is also the fear that companies considering a move towards renewables and other mitigating technologies might now defer the move. Further, renewables are also not insulated from the negative impacts of the current pandemic on energy demand and supply chains.
Recessions, such as the one we are currently witnessing, typically cause a temporary contraction in energy demand and associated emissions, only for them to bounce back to their original trajectories in a matter of a few years. But in the longer term, the current price dive is likely to only hasten the gradual weakening of oil as a safe investment. The last sustained decline in the oil industry in 2014-15 did not move the needle on energy transition immediately, but it did give an added incentive for governments to finalise the Paris Agreement the following year. Since then, the renewables industry has only grown and matured, and has begun to be viewed as a stable investment with over $1.2 trillion invested globally in renewables since 2015.
By comparison, oil has been much shakier for investors over the past decade. Investments in oil are now considered riskier and more susceptible to shocks than ever before. Within a decade, oil and gas shares, which occupied 15% of the US stock market, have now fallen to below 5%. Energy analysts have also argued that the current crisis could have very well effected a change that would see oil never again reach the peak levels of 2019. The move away from electricity sourced from fossil fuels in Europe following the financial crash of 2007-08 serves as an apt example. Now, with RE prices down by up to 90% relative to 2008 levels, the probability of a wider transition to renewables is much higher. Analysts also believe that the current shock to the oil sector may end in an “eternal scrappy battle for survival, struggling with overcapacity and stranded assets, with low returns and high risks.”
A similar case can also be made for electric mobility, although auto manufacturers have claimed that low oil prices would make IC engine automobiles much more competitive for the consumer over the lifetime of a vehicle. Despite the fact that electric vehicles are yet to gain investor confidence and maturity seen by RE, running costs of EVs are already substantially lower than ICE vehicles. Additionally, battery costs, which have typically kept the costs of EVs high, have been experiencing precipitous falls in prices, too. Over the past decade, battery storage costs for EVs have been falling by close to 25% year-on-year and are expected to go below the $100/kWh by the middle of this decade. As the sector matures, it is unlikely that consumers gravitate back towards cheaper oil, while ignoring sustained gains made in electric mobility.
The current drop in prices could delay a move among companies towards emission reductions and net-zero ambitions. Oil companies’ stance betrays a more sustained lack of confidence in the sector to continue to enjoy the growth it has seen over several decades. Major oil producers such as BP and Shell have already committed to reducing emissions and achieving net-zero emissions by 2050. Total Oil this week announced that it would cut 2020 capital expenses by 20%, but none of the cuts would come from its “new energy” division, which currently accounts for 13% of the company’s capital spending. A similar position can be expected from other oil majors as investments in fossil fuels rapidly lose sheen amidst the climate crisis, a much larger and sustained existential threat to the industry.
Investment firms and asset management firms, too, have increasingly advocated renewable energy portfolios over oil and gas for lower-risk investments with generous dividends and strong future projections while divesting from the risk-prone oil sector.While transport and power are the two sectors most ready to navigate away from fossil fuels, how the current price crash will impact countries’ fossil fuel demand and emission trajectories hinges on the plans governments conceive for the post-pandemic economic revival. While calls to use the crisis as an opportunity to reduce dependence on fossil fuels have been resounding, there has been increasing support to use the historically low oil prices to formulate taxation schemes that could be put to use to deliver clean energy additions. France has already called for the implementation of a ‘carbon price floor’ for oil that would reflect true costs to the environment. There have also been calls to divert fossil fuel subsidies towards renewable energy, similar to what India did following the 2014 oil price crash, even though subsidies for renewable energy in the country have fallen 2016 onwards because of an increase in competitiveness with conventional energy sources.
This time around for India, which imports 85% of its oil needs, the price crash is mostly a boon as it cuts the import bill significantly. The drop could help check inflation especially at a time when the economy is under the added stress of a pandemic. Sustained low prices could further boost the government’s tax revenues substantially, a part of which could be diverted reducing the dependence on imports. The country has already moved towards expanding oil and gas production in the country, which forms one part of the equation to reduce oil imports. The other part of this equation would be to reduce overall dependence by incentivising and streamlining investments towards infrastructure and manufacturing for renewables, electric mobility and energy storage.
But lobbying for relief packages for the oil industry has also intensified in recent weeks and the case for a bailout only grows when one considers the deep reverberations of shocks in the oil sector on a multitude of other sectors. Governments have a tough choice ahead and prudence would dictate a measured approach that leans towards the progressive and gradual winding down of fossil fuels, even if pulling the plug on the sector is scarcely an option at this juncture.
India’s monsoon season this year is likely to be normal, according to a long-range forecast (LRF) issued by the India Meteorological Department (IMD). The IMD has predicted the intensity to be at anywhere between 96% and 104% LRF this year. This is good news for farmers who are reeling from the Covid-19 lockdown as well as excess rain in March.
It is important to note, however, that a ‘normal monsoon’ in total does not mean ‘normal distribution’ of rain. The IMD’s first LRF does not give any specifics on the expected spatio-temporal distribution across the country. A better picture of this, however, can be expected in the second LRF in May. An internal assessment note available with the government has, however, has made an initial month-wise prediction of ‘below normal’ rainfall during June, long dry spells in July and ‘excess rainfall’ to make up for the deficiency during August and September — almost similar to last year’s pattern.
GHG emissions drop not enough to reverse climate crisis: WMO
Even as the world reports a massive drop in greenhouse gas emissions because of the Covid-19 pandemic, it isn’t enough to reverse the climate crisis, the World Meteorological Organization (WMO) said.
These reductions are only temporary, WMO said, adding that the pandemic was likely to make a bad situation worse for people affected by climate disasters. The organization urged governments to add green measures into their coronavirus relief packages.
Climate change contributing to severity of mega drought already underway in western US: Study
Scientists have warned that a mega drought, the worst western US has seen ever, is already underway, according to a recent study, published in the journal Science. While the mega drought is a naturally occurring event that began in 2000, the climate change-related temperature rise is making it even more severe, researchers said.
There have been four mega droughts western US has seen – the first one dating back to the late 800s. The present mega drought is already worse than three of the four recorded, researchers said. Another study published in the journal Earth’s Future, concluded that by the end of the 21st century, many parts of the world could see an increase in drought frequency and severity even with the most robust climate change action.
UN climate science report likely to include important lessons from coronavirus
The next UN climate science report, due to be published in stages over 2021-22, is likely to include lessons from the coronavirus – primarily how human pressure on the natural world are raising the risk of pandemics. The coronavirus is believed to have first originated in animals (bats) before jumping to humans in Wuhan, China.
The UN report will study how rising human population, air pollution and the destruction of wildlife habitats raised the risk of such a virus jumping from animals to humans.
Poland fighting its largest wildfire in years
While Poland faces its most severe drought in decades, marshes in the Biebrza National Park in northeastern Poland are being destroyed by wildfires spread across 6,000 hectares. According to officials, the fire was most likely to have been caused by illegal grass burning. While wildfires are not unusual in the region, this has been the largest to break out in years, officials said. Environmentalists are blaming climate change for the severity and are pushing for a change in the country’s water management policies.
Meanwhile, new data has indicated that 2019 was the warmest year on record for Europe thanks to a series of heatwaves. While globally, temperatures in the past five years have risen to just over 1°C above pre-industrial levels, Europe has seen a 2°C rise during the same period, according to the data which comes from the EU’s Copernicus Climate Service.
Arctic likely to have iceless summer within next 30 years: Study
A recent study concluded that the Arctic region will see an iceless summer within the next 30 years, blaming climate change for the loss. Climate change could have ‘devastating consequences’ to the Arctic’s ecosystem by 2050, the study warned. This is now inevitable, regardless of whether emissions are reduced, according to the researchers.
Greenland’s ice sheet shrank by a record amount last year, another study found. The region lost 600 billion tonnes of water, an amount that could contribute to a 1.5mm rise in sea levels, according to the study.
Extreme rainfall caused Hawaii’s Kīlauea volcano to erupt in 2018: Study
Researchers found that it was excessive and sustained rainfall that caused the Kīlauea volcano in Hawaii to erupt two years ago. The new study, published in the journal Nature, stated that wet rocks in the volcano, which are already under pressure from magma, break easier than dry rock. The Kīlauea region had seen persistent extreme rainfall in the months leading up to the eruption. The study concluded that with climate change, the potential for rainfall-triggered volcanic activity could greatly increase across the world in the years to come, a point that has not been seriously explored in previous studies.
Amidst the coronavirus lockdown, India’s power ministry has asked states to allow construction of thermal and hydro power plants that fall outside of municipal corporation limits. In a directive issued on April 15, the Ministry of Home Affairs (MHA) has also asked states to allow intra- and interstate movement of construction materials and equipment in order to complete these projects.
Dialogue on climate ends with calls to align climate action with COVID-19 recovery
The first inter-governmental climate meeting of the year, the 11th Petersberg Dialogue, was live-streamed amidst travel restrictions on April 27 and 28. The conclusion of the two-day conference, attended by 30 nations, was marked by UN Secretary General António Guterres’s closing remarks, which once again called for ambitious ramping up of climate action by governments, especially those of G20 nations. “The key to tackling the climate crisis is the big emitters. Let us not forget that the G20 countries collectively account for more than 80% of global emissions and over 85% of the global economy. All of them must also commit to carbon neutrality by 2050.” Guterres also zeroed-in on China and the US as the biggest and most influential players in determining the success of climate change mitigation efforts. “The Paris agreement was largely made possible by the engagement of the United States and China. Without the contribution of the big emitters, all efforts risk to be doomed,” he said.
The UN Secretary general also outlined six-climate related actions to recover from the COVID-19 pandemic while also combating climate change. A day earlier, German Chancellor Angela Merkel, as head of state of the host country, had highlighted the importance of large-scale financing for climate-friendly projects and the need for internationally agreed CO2 pricing. She also warned nations against the temptation to push climate action to the back-burner in favor of short-term economic stimulus measures.
New Zealand is sticking to its current 2030 climate goal, for now
In some disappointing news for environmentalists, New Zealand has reaffirmed its previously set 2030 climate target even as the United Nations (UN) expects countries to toughen up their goals by the end of this year. The country’s current target is to reduce emissions by 30% below 2005 levels by 2030 and a net zero goal for all greenhouse gas emissions (except biogenic methane) in 2050.
The country said it has set up a Climate Change Commission that would make recommendations in early 2021 on how New Zealand’s climate plan can become more consistent with the 1.5°C temperature goal. Its current plan, according to Climate Action Tracker, is insufficient to hold warming to 2°C – the minimum level agreed under the Paris Agreement.
South Korea on track to set 2050 net zero emissions goal after Democratic Party’s landslide win
The Democratic Party’s recent landslide victory in South Korea means the country is on track to set a 2050 net zero emissions goal as well as put an end to coal financing, which was part of the ‘Green New Deal’ mentioned in the party’s poll manifesto. Voting took place amidst the coronavirus pandemic, with voters turning out in record numbers wearing masks and gloves. President Moon Jae-in’s party won 180 seats in the 300-member National Assembly. South Korea has become the first country in East Asia to pledge the 2050 net zero emissions goal.
US flying near-empty flights leading to ‘huge environment waste’
Near-empty flights in the US on account of the coronavirus lockdown has led to a ‘huge environment waste’, according to the International Council on Clean Transportation. In the US, for example, the Transportation Security Administration (TSA) reported a 96% fall in passenger volume, but this has not been matched by a cut in flights.
Speaking of the impact on big industries, a new report analysed corporate lobbying on climate policy globally and found that it was the oil and gas sector and the airlines sector, which were actively seeking aid from the government in response to Covid-19, especially in the US, Canada and Australia.
Trump rolls back Obama-era mercury rule for coal plants
The Trump administration, this past fortnight, withdrew the legal justification for an Obama-era rule that compelled coal power plants to cut their mercury emissions. According to the current administration, the cost of compliance was far greater than the benefits to public health. While the Mercury and Air Toxic Standards still remain in place, this latest move could mean companies opposed to these guidelines can file lawsuits and also prevent the implementation of similar regulations in the future.
Meanwhile, the US Supreme Court rejected arguments put forth by the Trump administration to limit the reach of a water pollution law in Hawaii. Environmentalists had moved court seeking to sue Hawaii’s Maui County for letting discharge from a sewage facility reach the Pacific Ocean without obtaining the necessary permit under the Clean Water Act. The Trump administration had sided with the county in the case.
The waste was not directly pumped into the Pacific. It was discharged into groundwater that ended up in the ocean. The Supreme Court held that a permit was required when ‘the discharge into groundwater is the “functional equivalent” of the discharge from a pipe or other point source’. This interpretation will help environmentalists move court in other cases where wastewater is discharged into groundwater.
ICE unveils global carbon price tracker
The Intercontinental Exchange (ICE) has now launched an index that tracks and benchmarks the global price of emitting carbon dioxide. The index includes pricing from the world’s three most actively traded carbon markets – Europe’s Emissions Trading System, California’s Cap and Trade Program and the Regional Greenhouse Gas Initiative (RGGI). The price will be calculated in US dollars based on the volume weighted average price of all three markets.
Around 80% of 115 cities recorded “good” and “satisfactory” in the Air Quality Index during the lockdown period compared to 44% cities before the lockdown was announced, according to Central Pollution Control Board data from March 16 to April 15. Particulate matter (PM) and Nitrogen Dioxide (NO2) and Sulphur Dioxide (SO2) emissions fell drastically after the lockdown was announced on March 24, and vehicular traffic and industrial and commercial activities were highly restricted. In Delhi, data generated from continuous ambient air quality monitoring network was analysed from 38 stations; a 46% reduction in PM2.5 levels and 505 in PM10 was observed during the lockdown period.
During the lockdown period, no city recorded ‘very poor’ AQI. However, a few cities recorded ‘poor’ AQI on some days.
Aerosol levels, tiny solid and liquid particles suspended in the air, some of which can potentially damage the human lungs and heart, were recorded at a 20-year-low over Gangetic plains in north India during early April according to NASA satellite imagery. Scientists compared aerosol optical depth (AOD) measurements over India between March 31 to April 5 for five years (2016-2020). AOD levels in north India at the beginning of April were significantly below the norm for this time of year and the lowest in 20 years, according to the study.
Delhi and Mumbai 2nd and 3rd most polluted in the world during lockdown: Study
Delhi and Mumbai ranked second and third among world’s 10 most polluted cities during the lockdown, according to Swiss-based air quality research body IQAir. Wuhan was the world’s most polluted city. The research collected real-time PM2.5 data from monitoring stations over the three-week lockdown. Mumbai’s PM2.5 levels dropped 42% on average between March 23 and April 13, compared to average PM2.5 levels (during the same period) over the past four years. Compared to 2019, the drop in PM2.5 levels was 34%. Mumbai’s PM2.5 concentration at 28.8 micrograms per cubic metre (μg/m³) during the lockdown period was the third-worst among the world’s 10 cities.
Wuhan, was the most polluted at 35.1 μg/m³ followed by Delhi, second most polluted at 32.8 μg/m³. New York had the lowest PM2.5 levels at 4.4 μg/m³, and had the cleanest air across 10 cities.
First evidence that air pollution particles carry COVID-19 emerges
The theory that air pollution particles could be harbouring and carrying the novel coronavirus has found some backing in preliminary scientific evidence emerging from the University of Bologna in Italy. Scientists used samples collected from one urban site and one industrial site in Bergamo province of northern Italy to look for the presence of the coronavirus. Upon analysis, a gene highly specific to COVID-19 was found in multiple samples indicating the presence of the virus on pollutant particles suspended in the air. The preliminary findings are yet to be peer-reviewed, and the longevity and transmissibility remain unknown.
Almost 80% of COVID-19 deaths in 4 countries of Europe occured in most polluted regions
Air pollution was “one of the most important” contributors to COVID-19 deaths in four countries of Europe, says latest research. Nearly 80% of the deaths attributed to COVID-19 in 66 administrative regions in France, Spain, Italy and Germany occurred in the most polluted regions. The research examined levels of nitrogen dioxide (emitted mostly by diesel vehicles) and weather conditions that can prevent dirty air from dispersing away from a city. Research says NO2 can cause lung disease, which could make people more likely to die if they contract COVID-19.
“The results indicate that long-term exposure to this pollutant may be one of the most important contributors to fatality caused by the COVID-19 virus in these regions and maybe across the whole world,” said Yaron Ogen, at Martin Luther University Halle-Wittenberg in Germany, who conducted the research. The researcher said it was now necessary to examine whether the presence of an initial inflammatory condition is related to the response of the immune system to the coronavirus.
Milan to redesign transportation system, cars to remain off streets post-lockdown
After the lockdown, Milan plans to reset the city’s old transport system, ban vehicular traffic and open the roads to pedestrians and cyclists. Cars will be off limits on at least 35km (22 miles) of the city’s streets. The city, located in the northern region of Lombardy, is among Europe’s most polluted regions and has been hit hard by the epidemic. Since the countrywide lockdown, vehicular traffic has dropped by 30-75%, bringing the air pollution down significantly.
Milan’s deputy mayor Marco Granelli said reopening of the economy will be done differently to the way it was before the lockdown. Janette Sadik-Khan, a former transportation commissioner for New York City, is helping Milan design the new transport system. Experts said the Milan plan will provide a playbook for how you can reset your cities now.
Around 150 GW of renewable projects are at risk across Asia Pasific over the next four years if the coronavirus-induced recession extends beyond 2020, according to research and consultancy firm Wood Mackenzie. The region accounted for 75% of global power demand growth over the past five years as it led the world in wind and solar energy sectors. Researchers said the next few months will reveal if the region falls further into recession or if it recovers. Key indicators to monitor the trajectory include power demand growth, credit terms for renewables projects, cost competition between renewables and fossil fuels and government support, including stimulus for renewables markets. WoodMac said if markets go into big recessions and the pandemic is not brought under control then approximately 1,000 TWh of demand could be lost by 2023. This is equivalent to about two years of growth in the region.
Renewables subsidies fell by 35% in 2016-2019, ‘critical to back RE post COVID-19’
India cut the renewables subsidies by 35% between 2016 to 2019, latest research by Institute for Sustainable Development (IISD) and the Council on Energy, Environment and Water (CEEW) said, adding that following the pandemic, increase in support for renewables is critical. CEEW researchers point out that policy decisions such as solar safeguard duty and capping of tariffs suggested a slowdown in renewables capacity addition. Now is the time to rein-in subsidies for fossil fuels and support renewables, experts added. The research also said subsidies for oil and gas sectors increased by a huge 65% during the same period.
IRENA: Renewables agency charts path to zero-carbon energy system by 2050
Governments can fully decarbonise the energy system by 2050, and boost the economy hit by the coronavirus pandemic, provided they use the stimulus packages to boost renewables, according to Global Renewables Outlook by Abu Dhabi-based International Renewable Energy Agency (IRENA). With governments offering massive recovery packages amid the pandemic, experts have called for “green recovery”. Campaigners, including 180 European politicians, companies and lawmakers have urged the EU to align its economic rescue measures with climate goals. The report suggests that policies between 2016 and 2050 will need to unlock a total of $110 trillion of investments to reduce energy-related CO2 emissions to 70% below today’s levels by mid-century, and $130 trillion to decarbonise fully. This would boost global GDP growth by 2.4% by 2050 compared with current plans, and quadruple jobs in the renewable energy sector to 42 million, more than offsetting job losses in the fossil fuel industry.
Andra Pradesh drafts policy to export renewables energy
Andhra Pradesh has become the first state to launch a renewables power export policy. The draft of the state energy department said the policy will enable the state to export power without obligation to discoms. Andhra Pradesh has proposed to construct 29 pumped hydro storage projects (PSP) with a capacity of 33,240 MW both on-river and off-river sites to convert renewable energy sources of wind and solar into round-the-clock power and attract investments.The state energy department has released a feasibility report that says that the estimated potential for PSP projects is 33,240 MW with investment of Rs 5 crore per MW.
Britain breaks record for coal-free power generation
For 18 days at a stretch, Great Britain ran on clean energy, that’s the longest time country went without coal-fired power generation since the industrial revolution. The 18-day stretch has broken the UK’s 4 June 2019 record, following a decline in the demand for electricity during the coronavirus lockdown and because of greater use of solar power. The UK set a new solar power record on 20 April:generated over 9.6GW of solar electricity for the first time. The lower overall demand for electricity means low-carbon energy sources are able to make up a greater proportion of the energy system than usual. This month National Grid said it may need to turn wind farms and some power plants off in order to avoid overloading the electricity grid. The new coal-free record comes almost three years after the grid first ran without coal power for 24 hours for the first time.
Wartsila: Share of renewable energy rose 43% in Europe & UK amid COVID-19
Amid the coronavirus crisis, Germany, Spain and Britain had to temporarily shut down coal power plants causing the share of renewables energy to rise quickly by 43%. Coronavirus has caused demand for electricity to fall across Europe, Wartsila the Finnish ship technology and power plant maker said. The analysts said the epidemic exposed the problems related to coal power, adding that coal-fired electricity production has to be run at full capacity all the time, it cannot be adjusted. Wartsila’s analysis showed coal-based power generation fell by 25.5% across the European Union and the United Kingdom in the first three months of 2020, and RE’s share reached 43% after the response to COVID-19.
All GM facilities in the US to run on renewables by 2023
Automaker giant General Motors said all its factories in southeast Michigan will run on clean and renewable energy in the next three years. GM has purchased 500 GW hours of solar energy from DTE Energy’s MIGreenPower program. DTE said GM’s investment will provide nearly 1,500 clean energy jobs in Michigan during project construction. The renewable power will be enough to run GM’s Southeast Michigan facilities by 2023, GM said. That includes its global headquarters in the Renaissance Center in Detroit, the technical center in Warren, the facility in Milford and two assembly plants, Orion and Detroit-Hamtramck.
The Indian Auto LPG Association has requested the government to defer its plans to expand the country’s fledgling EV sector for now, and instead focus on using LPG (liquified petroleum gas) as a cleaner alternative for the already struggling conventional auto sector. The latter has been badly hit by the coronavirus-imposed national lockdown, which has caused demand for new cars to plummet, and the OEMs are reportedly losing as much as Rs1,000-2,000 crore ($133-266 million) every day. The manufacturers are struggling to sell their inventory of BS-IV vehicles as well, despite oil-marketing firms having switched over to BS-VI fuel.
However, India’s Society of Manufacturers of Electric Vehicles (SMEV) has reported that sales for electric two-wheelers jumped by 20.6% in 2019 to 156,000 units — with electric scooters accounting for 97% of the numbers. Electric buses did even better with 50% higher sales, while electric cars sold 5% fewer units (5,500) due to the lack of bulk purchases and some models being discontinued. Yet, SMEV says acceptance for premium electric cars is on the rise, and that post-Covid-19, 2021 could be an important year for the Indian EV market.
US army considering electric Humvee successor for tactical benefits
The United States army is considering the Joint Light Tactical Vehicle (JLTV) as a replacement to the fuel-guzzling Humvee (Hummer), and it could be all-electric. The JLTV could be powered by solar and/or portable nuclear power, which would be of advantage to US troops in remote locations. They currently drive Humvees powered by a 6.6-litre V8 diesel engine.
Fuel supply lines are a weak link in the army’s plans as they are attacked by terrorists. Fluctuating fuel prices also make cost projections difficult, and a nearly-silent JLTV could be used to get much closer to targets. Reports suggest the Pentagon could order 50,000 JLTVs and deploy them for 20 years.
China: EV subsidies to be cut by 10% in 2020, but extended till 2022
The Chinese government has cut EV subsidies by 10% this year, starting April 23, on “new energy vehicles” that are priced below 300,000 yuan ($42,376), but the 2015 decision to fully phase out subsidies in 2020 has likely been deferred. EV subsidies have now been extended till 2022 — possibly as a measure to shore up declining sales in the world’s largest EV market.
This implies that the subsidies will be scaled back by 20% in 2021 and by 30% in 2023. However, commercial EVs will be exempt and EVs in general will be prioritised in purchases for government use.
Australia launches battery programme to boost residential energy storage
Australia has launched a pilot, interest-free loan scheme for homeowners to opt for battery systems, and will target 300,000 installations over 12 months. The scheme has been kicked-off in New South Wales with a 13.5 kW Tesla Powerwall system, and will cost buyers between AUD 9,000-14,000, depending on whether the systems are coupled with solar panels.
The country is home to the Tesla-built, 129MWh Hornsdale Power Reserve, which has saved the state of South Australia from debilitating power cuts following repeated shutdowns at its coal power plants — and is partly responsible for raising awareness about battery energy storage.
Indian engineering students develop 80km e-scooter for ₹1 lakh
Six mechanical engineering students from Tamil Nadu have re-purposed a petrol scooter into an e-scooter that runs for 80km on a single charge and would currently cost Rs1 lakh (~ $1,300). Called the Fuerzo (Spanish for force), the vehicle was initially to be scrapped, but was turned into an e-scooter after its 12-litre petrol tank compartment was converted to house the battery.
The Fuerzo can support a payload of 250kg, drive at a top speed of 35kmph and would reportedly cost a mere ₹20 to recharge. The students have also said that under mass production, it could be manufactured at ₹60,000-70,000 (~$900-1,000). In comparison, while most electric scooters are priced at around a similar figure, the ones with driving range in excess of 100km and speeds of over 50 kmph currently retail at around ₹1,10,000.
The government of India has relaxed its oil & gas exploration rules for new entrants even further and approved self-certification for applicants that notify discoveries and the test results that back them up. The changes come seemingly as a bid to ease doing business in India, and also specify that development plans for these sites will be deemed to have been approved 30 days after the documents are submitted.
What’s most surprising is that the approval for self-certification includes information on bank guarantees, environmental impact assessments (EIAs) and contingency plans. The new rules follow somewhat similar plans for coal mining, which, too, are under talks to be opened up to entrants without prior experience.
Austria & Sweden shut down last coal plants, Germany eyes geothermal power under coal exit
Austria and Sweden have become the latest EU nations to shut down their last coal plants. The former’s 34-year old Mellach power plant was shut down as part of the nation’s plan to fully exit fossil fuels for power generation by 2030, and its gas-fired power plants will follow suit. Sweden’s 31-year old Värtaverket plant was also shut down — two years ahead of schedule — and its output will be replaced either by renewables or recycled energy.
Germany is also stepping up its coal exit strategy, as it has released a draft “Coal Exit Law” under which geothermal energy will be strongly considered as a baseload power-capable source of heat. The draft law intends to slash Germany’s carbon emissions from grid-connected sources of power and is likely to sidestep increased investment in natural gas.
Oil storage to peak in three weeks, LNG market imploding over poor demand
The global glut in oil supplies has helped countries stock up on strategic reserves, but new reports suggest that the cumulative storage capacity could be used up in the next three weeks. Several oil producers have already been holding unsold shipments at sea — figures say up to 160 millions tonnes are being stored on supertankers — and with countries still some time away from economic recovery, demand for crude oil remains at historic lows.
This has caused crude prices to crash again, and at the time of writing this piece Brent Crude was trading at $20.47/barrel. This is a far cry from the average of $55-$60/barrel a year ago.
The LNG market is also said to be “imploding” as the commodity trades at around $2/MMBtu, instead of the breakeven price of $5.56/MMBtu (for Asian contracts) — which is terrible news for the billions of dollars invested into the product by oil majors like Shell, Total, Chevron and ExxonMobil.
Shell to go net-zero by 2050, focus heavily on carbon capture
Royal Dutch Shell has unveiled its plan to go net-zero in operations by 2050 by focussing heavily on carbon capture, as well as selling more green energy. The latest announcement also includes provisions to curtail scope 3 emissions (emissions from users of its products), and the use of natural solutions, such as planting trees, to remove CO2 from the atmosphere.
The firm is one of the largest oil drillers and its announcement follows BP’s, whose strategy is to target an absolute reduction in emissions. Shell, on the other hand, will pursue emissions offsets and halve the carbon intensity of its operations by 2050.
HSBC, Sumitomo Mitsui join the ranks to stop financing coal
Japan’s Sumitomo Mitsui Group and UK-based HSBC, two of the largest coal financiers, have announced their decisions to stop financing any new coal power projects. Sumitomo Mitsui’s decision is influenced by relentless pressure by shareholders, and goes into effect on May 1. Its contemporary, Mizhuo, will also ban investments in new coal power from June 1st and eliminate funding for existing commitments by 2050.
Similar pressure on HSBC has brought forward the decision to abandon its “obsolete energy guidelines” and to no longer exempt the new coal plants being built in Vietnam, Indonesia and Bangladesh — which were previously justified as a balancing act between low-carbon transition and humanitarian needs in the developing world.