EU Finalizes Ban On Gasoline And Diesel Cars From 2035
The European Union has finalized an agreement to phase out internal combustion engine cars by 2035 by enforcing a zero-emission regulation on carmakers in the bloc. National government negotiators, the European Parliament, and the European Commission all agreed to make carmakers reduce their emissions to zero by 2035, which is an effective ban on the sales of fossil-fuel-powered vehicles after that year. “This deal is good news for car drivers… new zero-emission cars will become cheaper, making them more affordable and more accessible to everyone,” Jan Huitema, chief negotiator for the European Parliament said. The EU’s lead on the Green Deal, Frans Timmermans, also welcomed the news, saying “Europe is embracing the shift to zero-emission mobility,” as quoted by Reuters. The proposal for the ban of internal combustion engine vehicles across the European Union was made earlier this year and drew criticism from the car manufacturing industry. The head of the German car industry association, Hildegard Mueller, said in June, when the proposal was first made, that Europe’s charging infrastructure is insufficiently developed for the EV targets the shift would entail. She also warned that the Commission, which made the proposal, was acting prematurely. Besides such concerns, however, there are even more direct ones that will in all likelihood interfere with the zero-emission plans of the EU. Chief among them is an expected shortage of copper, which is used heavily in electric vehicles. The world is already short on the basic metal and the deficit is only set to widen in the coming years as there is no new supply coming on stream soon, aside from a few mine expansions. Battery technology is also a potential challenge—with raw materials getting costlier due to strong demand and catching up supply, battery costs continue keeping total EV costs higher than ICE car costs, too, discouraging drivers from making the switch.
U.S. LNG Cannot Replace The Russian Natural Gas That Europe Has Lost
Europe cannot rely solely on imports of U.S. LNG to offset the pipeline gas supply it will have lost from Russia when it starts rebuilding inventories after the end of this winter, according to BloombergNEF. So far this year, American LNG has been crucial in meeting demand in Europe, which is scrambling for gas supply and willing to pay up for spot deliveries, outbidding most of Asia. The United States is shipping record volumes of LNG to Europe to help EU allies and nearly 70% of all American LNG exports were headed to Europe in September, according to Refinitiv Eikon data cited by Reuters. However, the significant drop in Russian gas supply this year occurred only in June, meaning that Europe could still stock up on some Russian gas earlier this year. Ahead of the 2023/2024 winter, however, the gap in gas supply in Europe will be much wider without Russian gas. Europe will not be importing much Russian gas—or none at all if Russia cuts off deliveries via the one link left operational via Ukraine and via TurkStream—compared to relatively stable imports from Russia in the first half of this year, before Moscow started gradually cutting volumes via Nord Stream in June until shutting down the pipeline in early September. “The year-on-year increase is not sufficient to offset a total cut in Russian piped supply with under half of these volumes met by LNG increases,” BNEF analyst Arun Toora said. “The good news is that Russia looks close to having played its last card in terms of gas leverage over Europe. However Europe’s challenges will not disappear with the daffodils next spring,” London-based consultancy Timera Energy said in a winter gas market outlook at the beginning of October. Without most of the Russian gas supply, Europe will likely need to offset around 40 bcm of additional lost Russian flows next year. LNG alone cannot meet this volume, considering a lack of new global liquefaction capacity in the short-term, including in the U.S., limited further demand elasticity in Asia, and European regasification capacity constraints. Therefore, European demand will need to fall, Timera Energy said.
How India’s Bingeing On Russian Oil Is Hitting Middle East
India’s total oil imports in September fell to a 14-month low of 3.91 million barrels per day (bpd), down 5.6% from a year earlier, due to maintenance at refiners such as Reliance Industries and Indian Oil Corp, the data showed. India’s oil imports from the Middle East fell to a 19-month low in September while Russian imports rebounded although refining outages hit overall crude imports, data from trade and shipping sources showed. Iraq remained the top supplier while Russia overtook Saudi Arabia as the second biggest after a gap of a month, the data showed. India’s total oil imports in September fell to a 14-month low of 3.91 million barrels per day (bpd), down 5.6% from a year earlier, due to maintenance at refiners such as Reliance Industries and Indian Oil Corp, the data showed. India’s imports from the Middle East fell to about 2.2 million bpd, down 16.2% from August, the data showed, while imports from Russia increased 4.6% to about 896,000 bpd after dipping in the previous two months. Russia’s share of India’s oil imports surged to an all-time high of 23% from 19% the previous month while that of the Middle East declined to 56.4% from 59%, the data showed. The share of Caspian Sea oil, mainly from Kazakhstan, Russia and Azerbaijan, rose to 28% from 24.6%. India has emerged as Russia’s second biggest oil buyer after China, taking advantage of discounted prices as some Western entities shun purchases over Moscow’s invasion of Ukraine. “The discount on Russian oil has narrowed now but when you compare its landed cost with other grades such as those from the Middle East, Russian oil turned out to be cheaper,” said a source at one of India’s state refiners. Imports for Saudi Arabia fell to a three-month low of about 758,000 bpd, down 12.3% from August, while imports from Iraq plunged to 948,400 bpd, their lowest level in a year, the data showed. Imports from the United Arab Emirates declined to a 16-month low of about 262,000 bpd. Higher intake of Caspian Sea oil has hit the share of other regions in India’s imports in April-September, the first half of the fiscal year, and also cut OPEC’s market share in the world’s third biggest oil importer and consumer to its lowest ever.
India to see biggest jump in energy demand globally: IEA
India is likely to see the world’s biggest rise in energy demand this decade, with demand climbing 3 per cent annually due to urbanisation and industrialisation, the International Energy Agency (IEA) said in its World Energy Outlook released on Thursday. While the push for renewable energy will see it meeting as much as 60 per cent of the growth in demand for power, coal will continue to meet a third of overall energy demand by 2030 and another quarter will be met by oil. “India becomes the world’s most populous country by 2025 and, combined with the twin forces of urbanisation and industrialisation, this underpins rapid growth in energy demand, which rises by more than 3 per cent per year in the Stated Policies Scenario (STEPS) from 2021 to 2030,” IEA said. “It sees the largest increase in energy demand of any country.” Even though India continues to make great strides with renewables deployment and efficiency policies, the sheer scale of its development means that the combined import bill for fossil fuels doubles over the next two decades, with oil by far the largest component. “This points to continued risks to energy security,” IEA said. IEA said the world is in the midst of the first global energy crisis, triggered by Russia’s invasion of Ukraine. “Pressures in markets predated Russia’s invasion of Ukraine, but Russia’s actions have turned a rapid economic recovery from the pandemic – which strained all manner of global supply chains, including energy — into full-blown energy turmoil,” it said. Russia has been by far the world’s largest exporter of fossil fuels, but its curtailments of natural gas supply to Europe and European sanctions on imports of oil and coal from Russia are severing one of the main arteries of global energy trade. All fuels are affected, but gas markets are the epicentre as Russia seeks leverage by exposing consumers to higher energy bills and supply shortages. In India, coal meets a third of growth with demand rising above 770 million tonnes of coal equivalent (Mtce) by 2030, and continuing thereafter before peaking in the early 2030s. Oil demand meets a further quarter of the energy demand growth and rises to nearly 7 million barrels per day by 2030 from 4.7 million bpd in 2021. Coal generation is projected to continue to expand in absolute terms, peaking around 2030, though its share of electricity generation falls from just below 75 per cent to 55 per cent over this period. Renewables meet more than 60 per cent of the growth in demand for power, and account for 35 per cent of the electricity mix by 2030 — solar PV alone accounts for more than 15 per cent. “However, coal still meets a third of overall energy demand growth by 2030, and oil, mainly for transport, another quarter,” IEA said. In the Announced Pledges Scenario (APS), more rapid progress in deploying low-emission alternatives in power, industry and transport sectors in particular puts India on a trajectory in line with its goal of net zero emissions by 2070. IEA projected India’s oil demand to rise from 4.7 million barrels per day (bpd) in 2021 to 6.7 million bpd by 2030 and 7.4 million bpd by 2040 in STEPS. Under APS, the demand is projected to rise to 5.9 million bpd in 2030 before falling to 5.4 million bpd in 2040 and further to 3.9 million bpd in 2050. However, oil imports double between 2021 and 2050 because of limited local resources. Natural gas demand reaches 115 billion cubic meters (bcm) by 2030 from 66 bcm in 2021. “Most of the growth comes from manufacturing and other industry, helped by the expansion of city gas distribution networks,” it said. Gas satisfies less than 5 per cent of the increase in total power generation, but this is enough to raise demand by 10 bcm. “The government recently announced a doubling of its licence area for oil and gas exploration; however, this is unlikely to contribute significant volumes in this decade,” IEA said, adding that gas imports double to reach nearly 70 bcm by 2030 before growth moderating to reach 90 bcm by 2050. Coal demand rises by 25 per cent to 2030. “Strong economic growth — the economy expands 90 per cent between 2021 and 2030 — brings with it more demand for coal-fired power generation and in the use of coal to produce iron and steel and cement.” Coal-fired power capacity increases from 240 GW in 2021 to 275 GW in 2030. India became the world’s second-largest coal producer in 2021 (in energy terms), overtaking Australia and Indonesia, and it plans to increase domestic production by more than 100 Mtce from current levels to 2025. Coal supply increases from about 450 Mtce in 2021 to 550 Mtce in 2030 in the STEPS and just over 500 Mtce in the APS, IEA said.