China Is Quietly Building A Green Energy Empire In Latin America
China is rapidly expanding its green energy production and growth potential and, in doing so, is quickly gaining influence in key emerging markets around the world. While China is busily making inroads in renewable energy markets in Southeast Asia, Africa, and even the West, nowhere has its sphere of influence grown more rapidly or completely than in Latin America. China has been vastly outpacing the rest of the world in terms of clean energy spending, with more numerous and more developed clean energy supply chains than anywhere else on the planet. China alone was responsible for nearly half of all renewable energy spending worldwide in 2022, totalling a whopping $546 billion USD according to figures from a BloombergNEF analysis released early this year. This figure crushed the next-biggest spenders, the US and the EU: Beijing’s spending nearly quadrupled Washington’s $141 billion in clean energy spending, and was 2.5 times more than the EU’s $180 billion. China’s intensive spending on the sector has paid off; the country’s clean energy sectors are now economically independent enough to be weaned off of heavy government support, and are now outcompeting every other clean energy leader on the global stage. “China has managed to nurture these really integrated, efficient value chains for making things like solar panels, for making things like battery cells,” Antoine Vagneur-Jones, head of trade and supply chains research at BloombergNEF, was recently quoted by Scientific American. Due to the massive head start that China has in these sectors – not to mention its near-complete control over many rare Earth metals markets – it’s more than likely that Beijing will continue to dominate for at least the next decade, if not longer. This dynamic is especially pronounced in Latin America, where around 90% of all installed wind and solar technologies are produced by Chinese companies. As of 2023, Beijing has active free trade agreements with Chile, Costa Rica, Ecuador, and Peru (and is currently in negotiations with Uruguay), and so far 21 Latin American countries have signed on to China’s massive international infrastructure investing scheme, the Belt and Road Initiative (BRI). China’s State Grid now controls the majority of Chile’s regulated energy distribution. Similar problems are unfolding in Peru. Earlier this year, a Peruvian industry group warned that a major deal in development for a Chinese company to buy out two local power suppliers “would hand the Asian country a near monopoly over the sector in Peru, particularly in and around populous capital Lima.” The deal, which is still awaiting regulatory approval, would just be the latest of a long series of Chinese acquisitions in Peru. “If approved, it would lead to a concentration of 100% of Lima’s electricity distribution market in the hands of the People’s Republic of China,” the Peruvian National Society of Industries, a chamber of private companies, was quoted by Reuters. Beijing is also rapidly ramping up its investments in Latin American minerals. The continent is rich in key materials in renewable energy and electric vehicle manufacturing such as lithium, nickel, and cobalt. China is already the “dominant producer of rare earths and graphite globally,” The South China Morning Post recently reported based on recent BloombergNEF data. “It also owns around a third of global rare earths, a sixth of graphite and an eighth of lithium reserves.” And expanding its acquisitions of Latin American minerals is a key part of China’s strategy. Chinese companies already own major stakes in one of the largest lithium producers in Chile, has purchased a ‘major evaporative lithium project’ in Argentina, and has signed dozens of trade-strengthening agreements with Brazil. And China is not the only global power eyeing Latin American lithium. The United States, too, has a vested interest in forging trade agreements with the continent’s producers of rare Earth minerals. In fact, it’s a key part of the nation’s strategy to catch up with China and become competitive in renewable energy markets. However, countries in Latin America are increasingly talking about shying away from such agreements with the US and China in the interest of shoring up their own manufacturing industries and taking advantage of value-addition opportunities domestically.
Indian Importers Of Russian Oil Brace For Banking Problems
Indian refiners buying Russian crude are preparing for problems with their bankers as the flagship Russian oil grade topped the G7-imposed price caps. In a report citing sources from three Indian refiners, Bloomberg wrote today that the companies were bracing up for more requirements from banks before they grant them the loans to buy the cargoes. Russia’s flagship crude grade, which has been trading consistently below the price cap set by the G7 and the European Union, climbed above $60 per barrel on Wednesday and remained there. It is now, for the first time, that observers can judge if the price cap is actually working. Before, with Urals trading below it anyway, it could hardly be argued that the cap was doing anything to deliberately squeeze Russia’s oil export income. Earlier this week, energy analyst Vandana Hari from Vanda Insights noted that this price for Urals will be problematic for Indian buyers. “Indian banks have been extra cautious in the last few months for fear of sanctions, requiring the refiners to show that the free-on-board price of their cargo was below $60 in order to put the payment through,” Hari told Bloomberg. According to the more recent Bloomberg report, buyers expect their bankers to start asking for more evidence to verify the price, at which the crude is being bought. Also, importers of Russian crude will stop using Western insurance and tanker services – the basis on which the price cap was designed. As long as the price of the crude was below $60 per barrel, buyers could use Western shipping transport and insurance. If the price moved above $60 access to insurers and tanker owners in the West shut off. According to one of the sources that Bloomberg spoke to, a switch from dollars to other currencies for payments for Russian cargo was also an option under consideration.
Lower prices help RIL-BP, Nayara treble share in June diesel sales
Reliance-BP and Nayara Energy have nearly tripled their share of the country’s diesel sales to 9.4% in June from a year earlier, using price discounts to regain domestic customers they had lost last year while focusing on the high-margin export market. RIL-BP’s share in total diesel sales rose to 4% in June from 1.2% in the same month a year earlier. Rosneft-backed Nayara Energy’s share has expanded to 5.4% from 2%. Shell’s share remained stagnant at 0.1%. As a result, the share of state-run players has dropped to 90.5% from 96.7% despite BPCL and HPCLgaining marginally. Indian Oil Corp has been the only loser in the game, with its share declining to 41.4% from 49.1%. Indian Oil’s market share gain was equally dramatic last year, rising from 42.4% in June 2021 as it stepped in to fill the gap left by the private players.
India not looking to cut excise duty on fuel right now: Revenue Secretary Sanjay Malhotra
India is currently not looking at lowering the excise duty on petroleum and diesel with rates already quite low following the two cuts administered in November 2021 and May 2022, Revenue Secretary Sanjay Malhotra told Moneycontrol in an interview. “The government continuously monitors inflation and takes measures on excise as well as customs side to control it on need basis. This is ongoing exercise not only for petrol and diesel but also for many other essential produces,” Malhotra added. In November, 2021, the central government reduced the excise duty on per litre of petroleum by 5 rupees and on diesel by 10 rupees, while another round of cuts came in May, 2022, wherein the duty was lowered by 8 rupees on a litre of petrol and 6 rupees on diesel. The central government’s collections from excise duties have been pegged at 3390 billion rupees for the current fiscal, targeting a growth of nearly 6% over the revised estimates of the previous financial year. Infact, for FY23, the government has revised downwards the Budget estimate for mop up from excise duties by 150 billion rupees.