India reduced support to the fossil fuel industry by 4%
Although most G20 governments have announced ambitious climate targets to reach Paris Agreement goal of limiting global temperature rise to 1.5 degree Celsius, they have continued providing support for coal, oil, gas, and fossil-fuel power to the tune of $3.3 trillion between 2015 and 2019 India reduced support to the fossil fuel industry by 4% from 2015 to 2019 even as the countries in the G20 forum of the world’s major economies are not walking the talk in addressing the climate crisis, a new report by BloombergNEF, a global research organisation, and Bloomberg Philanthropies released on Tuesday said. The G20 countries provided $636 billion in direct support for fossil fuels in 2019, which is just 10% less than that in 2015, it added. The report noted India has reduced the support, but it has 66 coal power plants in the pipeline. India is second only to China, which has 247 coal power plants in the making among G20 countries while Indonesia has 33. Most G20 countries have announced ambitious climate targets to reach the Paris Agreement goal of limiting global temperature rise to 1.5-degree Celsius compared to pre-industrial levels. But the report said they provided $3.3 trillion support for coal, oil, gas, and fossil-fuel power between 2015 and 2019. It added the sum could have funded 4,232GW new solar power plants or over 3.5 times the size of the current US electricity grid. The G20, as a whole, has cut fossil fuel funding by 10% during 2015–19. But there are significant variations across countries. Eight countries of the forum–Australia, Canada, the US, Brazil, France, Indonesia, Mexico and China–increased their support to the fossil fuel industry. “This support encourages the (potentially wasteful) use and production of fossil fuels. It can also distort prices and risks carbon ‘lock-in’— whereby assets funded today will be around for decades, locking in high levels of future emissions. All of these factors hinder the climate transition,” the report said. In a statement, Günther Thallinger, a member of the Board of Management of Allianz SE and chair of the UN convened Net-Zero Asset Owner Alliance, said as of today policy frameworks across most G20 countries are not sufficient to drive a real economy to net zero transition to achieve the 1.5 degree Celsius goal with reasonable likelihood. “The new NDCs (nationally determined contributions) and 2050 net zero targets from some G20 countries are warmly welcome, however pledges and targets alone will not be sufficient to change course. The development and publication of credible 2030 emission reduction plans, which create a rising price on carbon and have clear regulatory standards, including on climate-related financial disclosures are urgently needed.” India is under pressure to clarify its short- and long-term climate ambitions after other major economies announced carbon-neutrality goals, the report said. It added India has set up a task force to consider potential timelines and pathways for reaching net zero emissions. India is likely to request financial support from other countries in return for a net zero pledge. It could also opt for a near-zero emission target to balance the need to tackle climate change and to enable economic development. Over half of electricity generation capacity is owned by the Centre and state governments and it is mostly dependent on fossil fuels. The Centre aims to divest state-owned companies and raise ₹1.75 trillion, Union finance minister Nirmala Sitharaman said in her budget speech in February, the report noted. India does not yet have any national carbon pricing mechanism or a policy on climate risk reporting. The Climate Policy Factbook of BloombergNEF has pointed to three areas for which immediate government action is needed to limit global warming to 1.5 degrees Celsius. They include phasing out support for fossil fuels, putting a price on emissions, and encouraging climate risk disclosure. In each of these areas, the report found the policies of G20 countries were off course. The report said France and Germany have made the most progress in terms of implementing carbon pricing. Russia, Saudi Arabia, Brazil, Indonesia and India have no pricing policies. Climate-risk policies can also assess the effects of environmental changes and climate policies on the current performance of companies and financial products, the report said. Financial institutions do not have the data needed to assess climate-related risks associated with their investments. This puts the onus on regulators to enforce disclosure regulations focusing on physical assets and environmental data, the report added. A few countries have made policies on such disclosure. They include France, Germany, Italy and the UK. “G20 is a very diverse group of countries. The wealthy countries in this group are yet to meet the Paris Agreement’s climate finance goal of $100 billion, though they spent an estimated $189 billion last year on fossil fuels. For developing countries in the G20, such as India, the imminent drying up of coal finance and the EU’s new carbon tax on imports are serious signs that our industry needs to prepare to shift to low carbon technologies. This new report gives importance to carbon pricing as a way to incentivise shifts to cleaner fuels and technologies. The government of India’s Apex Committee for Implementation of Paris Agreement, set up in December 2020, is authorised to issue guidelines on carbon pricing,” said Ulka Kelkar, director of the climate programme at the World Resources Institute, India.
Chinese hackers breached 13 US gas pipeline operators from 2011 to 2013: Report
Chinese state-sponsored hackers successfully breached 13 US natural gas pipeline operators from 2011 through 2013, the Cybersecurity and Infrastructure Security Agency (CISA) announced on Tuesday (local time). “The US government identified and tracked 23 US natural gas pipeline operators targeted from 2011 to 2013 in this spearphishing and intrusion campaign,” CISA advisory said. “Thirteen were confirmed compromises, three were near misses, and eight had an unknown depth of intrusion.” The security agency said the US federal government had specifically attributed the attacks to state-sponsored forces backed by the Chinese government. “The US government has attributed this activity to Chinese state-sponsored actors. CISA and the FBI assess that these actors were specifically targeting US pipeline infrastructure for the purpose of holding US pipeline infrastructure at risk,” the advisory said. US security agencies have assessed that the attacks were ultimately intended to help China develop cyberattack capabilities against US pipelines to physically damage pipelines or disrupt pipeline operations, it added. This comes a day after the US and its foreign allies accused China of overseeing widespread attempts to extort money in cyberspace. US security agencies have issued a new advisory about a major threat to the cyberspace assets of the United States and its allies from Chinese state-sponsored cyber activities, including ransomware attacks. In a coordinated announcement, a Joint Cybersecurity Advisory (CSA) issued on Monday states that state-backed cyber actors aggressively target political, economic, military, educational, and critical infrastructure (CI) to steal sensitive data, and emerging key technologies, intellectual property, and personally identifiable information (PII). An unprecedented group of US allies and partners, including the EU, the UK, Australia, Canada, New Zealand, Japan, and NATO, have joined in exposing and criticising China’s Ministry of State Security’s malicious cyber activities. Meanwhile, China had denied accusations that actors linked to its government were behind the Microsoft Exchange hack and other “malicious cyber activities.”
Shell will appeal landmark Dutch climate ruling
Royal Dutch Shell on Tuesday confirmed it will appeal a Dutch court ruling ordering the energy company to accelerate its carbon emission reduction target. Shell had previously said it will appeal the May 26 ruling ordering it to reduce greenhouse gas emissions by 45% by 2030 from 2019 levels, significantly faster than its current plans. The Anglo-Dutch company also said it will seek to ramp up its energy transition strategy in the wake of the ruling. “We agree urgent action is needed and we will accelerate our transition to net zero,” said Shell Chief Executive Ben van Beurden said in a statement on Tuesday. “But we will appeal because a court judgment, against a single company, is not effective. What is needed are clear, ambitious policies that will drive fundamental change across the whole energy system.”
BHP considering exiting oil and gas business – Bloomberg News
Global miner BHP Group is considering getting out of oil and gas in a multibillion-dollar exit as it looks to speed up its retreat from fossil fuels, Bloomberg News reported on Tuesday, citing people familiar with the matter. The world’s biggest miner is reviewing its petroleum business and considering options including a trade sale, the report said, adding that the deliberations were still at an early stage and no final decision has been made. “BHP does not comment on rumor or speculation,” company spokesperson Judy Dane said. Mining companies around the world are under growing shareholder pressure to reduce their carbon footprint and take stringent climate actions to cut emissions, as calls for a shift towards cleaner forms of energy accelerate. Analysts at RBC said they valued BHP’s oil and gas portfolio focused on the U.S. Gulf of Mexico, eastern Canada and Australia at $14.3 billion. “With rising ESG (environmental, social and governance)pressures facing the industry, but also as this business potentially enters into a re-investment phase, we can see why management might be contemplating an exit,” they said in a note. Considering options for the oil and gas portfolio is part of BHP’s scenario planning, said two banking sources, who declined to be named as the talks are private. BHP, the bulk of whose earnings come from its iron ore and copper units, sold its shale business to British oil major BP Plc for $10.4 billion in 2018.
IOC to build India’s first green hydrogen plant at Mathura
India’s largest oil firm IOC will build the nation’s first ‘green hydrogen’ plant at its Mathura refinery, as it aims to prepare for a future catering to the growing demand for both oil and cleaner forms of energy. Indian Oil Corporation (IOC) has drawn a strategic growth path that aims to maintain focus on its core refining and fuel marketing businesses while making bigger inroads into petrochemicals, hydrogen and electric mobility over the next 10 years, its chairman Shrikant Madhav Vaidya said. The company will not set captive power plants at all its future refinery and petrochemical expansion projects and instead use the 250 MW of electricity it produces from renewable sources like solar power, he told in an interview. “We have a wind power project in Rajasthan. We intend to wheel that power to our Mathura refinery and use that electricity to produce absolutely green hydrogen through electrolysis,” he said. This will be the nation’s first green hydrogen unit. Previously, projects have been announced to produce ‘grey hydrogen’ using fossil fuels such as natural gas. Hydrogen is the latest buzz for meeting the world’s energy needs. Hydrogen, in itself, is a clean fuel but manufacturing it is energy-intensive and has carbon byproducts. Brown hydrogen is created through coal gasification while the process of producing grey hydrogen throws off carbon waste. Blue hydrogen uses carbon capture and storage for the greenhouse gases produced in the creation of grey hydrogen. Green hydrogen production – the ultimate clean hydrogen resource – uses renewable energy to create hydrogen fuel. “Mathura has been selected by virtue of its proximity to TTZ (Taj Trapezium Zone),” Vaidya said adding the green hydrogen will replace carbon-emitting fuels that are used in the refinery to process crude oil into value-added products such as petrol and diesel. He said all of the expansion projects will use grid electricity, preferably green power to meet the energy requirements. “We have got a number of expansions down the line which are already approved. We will not have a captive power plant and will utilise power from the grid, preferably green power. This will help decarbonise some part of the manufacturing,” he said. IOC’s refinery expansion plans include raising the capacity of units at Panipat in Haryana and Barauni in Bihar and setting up a new unit near Chennai. “We are going to add 25 million tonnes of our refining capacity by the year 2023-24. We are 80.5 million tonnes now including CPCL, we are going to be 105 million tonnes,” he said. Vaidya said IOC was pushing ahead with research on carbon capture, utilisation and storage technologies — space where it is seeking global collaboration to meet its Paris climate goals. Hydrogen, he said, would be a fuel of the future. IOC is planning to set up several hydrogen production units on a pilot basis. This includes a project at Gujarat refinery to produce finite purity hydrogen of 99.9999 per cent for hydrogen fuel cell buses. “Today, 50 buses in Delhi are being fueled by hydrogen-spiked compressed natural gas, or H-CNG, which has 18 per cent hydrogen content,” he said adding hydrogen fuel cell buses will be put to service on iconic routes of Vadodara-Sabarmati and Vadodara-Statue of Unity, Kevedia. “About 15 fuel-cell-powered buses, with the fuel cells entirely India-made, are expected to ply in the second half of 2021. Since running these buses would require hydrogen, IOC is setting up a plant, whose capacity could be anywhere between 200 tonnes and 400 tonnes per day,” he added. Petroleum refining and marketing will continue to be IOC’s core businesses with much higher petrochemicals integration. Also, gas will play a larger role and the firm will have a presence in electric mobility space through charging stations at petrol pumps and a planned battery manufacturing unit. Forecasts by various agencies see Indian fuel demand climbing to 400-450 million tonnes by 2040 as against 250 million tonnes now. This gives enough legroom for all forms of energy to co-exist, he said adding the demand growth makes it imperative to pursue refining expansion as well as expand footprint in compressed natural gas, LNG, biodiesel and ethanol. Vaidya said IOC had already commissioned battery swapping stations across many cities. The firm already has installed 286 charging stations, including swapping stations, across the country, which will be raised to 3,000 EV charging stations in the next few years.
Infrastructure fund GIP puts Freeport LNG stake up for sale
Global Infrastructure Partners has put up for sale its 26% stake in the limited partnership behind Freeport LNG, the second-largest export facility for liquefied natural gas (LNG) in the United States, sources familiar with the matter said on Friday. The infrastructure investor is working with an investment bank to solicit buyer interest, according to the sources. The price which GIP is seeking for its stake could not be learned. It paid $850 million for the stake in 2014, before the Freeport LNG site began exporting gas and generating revenue. There is no guarantee that a sale will happen, and GIP could ultimately keep hold of the stake, cautioned the sources, who spoke on condition of anonymity as the information is private. GIP declined to comment when contacted by Reuters and Freeport LNG did not respond to a comment request. Stakes in large energy projects often change hands once operational, as early-stage investors who backed the scheme – often when there is still considerable risk as to whether the project will be completed – book profits and other investors drawn by steady returns step in. Last year, Brookfield Asset Management bought a stake in Cheniere Energy Inc’s limited partnership from Blackstone Group Inc. This came after a unit of the Canadian investment firm paid north of $2 billion in 2019 for a 25% stake in Cove Point, an LNG terminal in Maryland predominantly owned by Dominion Energy Inc. Originally envisioned as an import terminal, Freeport LNG was converted into an export facility once the U.S. shale gas boom took off. Situated on Quintana Island off the Texas coast, exports began in 2019, with its three production units providing 15 million metric tonnes per year of liquefaction capacity. A fourth unit is planned, according to Freeport LNG’s website. Freeport LNG Development LP is majority owned by founder Michael Smith. Osaka Gas Co is also an investor.
Make GAIL lay its pipeline along the highways: Panneerselvam
Former Chief Minister of Tamil Nadu and AIADMK Coordinator, O. Panneerselvam, on Saturday, urged Chief Minister M.K.Stalin to prevent GAIL (India) Ltd from laying gas pipelines through farm lands. In a statement issued here, Panneerselvam said GAIL is laying its gas pipeline on farm lands in Krishnagiri district, much against the wishes of the farmers there. He added that projects are for people and not people for projects. Panneerselvam asked Stalin to stop GAIL from laying its gas pipelines in farm lands and lay the same along the highway. GAIL is laying a pipeline to carry gas from Kochi in Kerala to Bengaluru via several western districts in Tamil Nadu (Coimbatore, Tirupur, Erode, Namakkal, Salem, Dharmapuri and Krishnagiri). While the pipelines are laid along the highways in Kerala, the company wants to lay the pipes through the farm lands in Tamil Nadu. The company has refused to lay the pipes along the highways.
Reliance’s O2C, new energy business may be valued over $100 billion: Report
Billionaire Mukesh Ambani-led Reliance Industries Ltd’s plans for investing Rs 75,000 crore in solar, batteries, fuel cells and hydrogen could create valuation of USD 36 billion (Rs 2.6 lakh crore) for the new energy business, Wall Street brokerage Bernstein Research said in a report. Reliance currently has three verticals — oil-to-chemical (O2C) business that houses its oil refineries, petrochemical plants and fuel retailing business; digital services that comprises telecom arm Jio; and retail including e-commerce. New Energy will be the fourth vertical. At the company’s annual general meeting of shareholders last month, Ambani announced a plan to invest Rs 75,000 crore in a new energy business over the next 3 years in the next stage in its transformation. Under plans announced, the company will invest across solar, batteries and hydrogen to create an integrated clean energy ecosystem. Other big announcements at the AGM were the launch of the new smartphone JioPhone Next and induction of Aramco chairman to the RIL Board, which is positive for the spin-off in O2C business. “Clean energy has the potential to be value accretive if Reliance can pull it off,” it said. “Based on capex for clean energy, we see a route to Reliance building a clean energy business, which could be worth USD 36 billion.” It put a valuation of over USD 69 billion for the O2C business, USD 66 billion for digital services and USD 81.2 billion for retail. Upstream oil and gas operations are worth another USD 4.1 billion. Other investments such as in the media and hospitality space are valued at USD 3.7 billion. The entire conglomerate is worth over USD 261 billion. “Many oil companies have tried and failed to become clean energy manufacturing companies and instead focus on clean energy production. Reliance’s focus on manufacturing is distinctive and potentially offers higher margins but is also higher risk given their limited capabilities in clean energy,” Bernstein said. Reliance will need to find partners to work with them given the technology requirements needed for fuel cells and batteries. “While companies will be reluctant to share their technology with a potential competitor, the market opportunity in India may be enough to persuade some,” it said. “Korean battery makers could be potential partners in energy storage, while companies like Plug and Ballard could be partners in fuel cell manufacturing.” Funding is not an issue for Reliance given the current balance sheet. Reliance is almost debt free and will generate cash flow of Rs 65,600 crore in FY22 and grow to Rs 1.5 lakh crore by FY26, it said. The logic of investing in clean energy is compelling. USD 70 trillion will be spent globally on the energy transition over the next 30 years. While India has yet to declare a net zero target, the direction towards low carbon is clear, it said adding with solar becoming cheaper than coal and hydrogen reaching cost parity with diesel, there are clear economic and energy security reasons to believe that India will transition towards clean energy. In this context it is also logical to assume that India will seek to develop technologies in manufacturing capacity given the huge investments which are needed. Bernstein said O2C margins continue to improve, raising hopes for Aramco investing in buying 20 per cent stake in the business. “For FY22, we expect Reliance will deliver O2C EBITDA of Rs 52,200 crore (+90% y-o-y),” it said. “We remain optimistic that a deal will come together with Aramco albeit at a slightly lower valuation.” At the time of announcing talks to sell stake to Aramco in 2019, Ambani had put USD 75 billion as the valuation of O2C business. Reliance will spend Rs 60,000 crore to construct four ‘giga factories’ to make integrated solar PV modules, electrolyzers, fuel cells and batteries to store energy from the grid. The site of these plants will be located at the new 5,000 acres Green Energy Giga Complex in Jamnagar, Gujarat. An additional Rs 15,000 crore will be used for investments across the value chain, technology, and partnerships for the new energy business. Ultimately, Reliance plans to offer a fully integrated end-to-end renewables energy ecosystem to customers through solar, batteries and hydrogen.
Govt’s excise collections on petrol, diesel jumps 88% to Rs 3.35 lakh cr
The union government’s tax collections on petrol and diesel jumped by 88 per cent to Rs 3.35 lakh crore in the year to March 31, after excise duty was raised to a record high, the Lok Sabha was informed on Monday. Excise duty on petrol was hiked from Rs 19.98 per litre to Rs 32.9 last year to recoup gain arising from international oil prices plunging to multi-year low as pandemic gulped demand. The same on diesel was raised to Rs 31.8 from Rs 15.83 a litre, according to a written reply to a question given by the Minister of State for Petroleum and Natural Gas Rameswar Teli in the Lok Sabha. This led to excise collections on petrol and diesel jumping to Rs 3.35 lakh crore in 2020-21 (April 2020 to March 2021), from Rs 1.78 lakh crore a year back, he said. Collections would have been higher but for fuel sales falling due to lockdown and other restrictions imposed to curb the spread of the coronavirus pandemic, which muted economic activity and stalled mobility. In 2018-19, excise collections on petrol and diesel were Rs 2.13 lakh crore. To a separate question, the Minister of State for Finance Pankaj Chaudhary said excise collections in April-June this year totalled Rs 1.01 lakh crore. This number includes excise on not just petrol and diesel but also ATF, natural gas and crude oil. The total excise collection in FY21 was Rs 3.89 lakh crore. “Prices of petrol and diesel are market-determined with effect from June 26, 2010 and October 19, 2014 respectively,” Teli said. Since then, the Public Sector Oil Marketing Companies (OMCs) have been taking appropriate decisions on the pricing of petrol and diesel on the basis of international product prices and other market conditions. “The OMCs have increased and decreased the prices of petrol and diesel according to changes in international prices and rupee-dollar exchange rate,” he said adding “effective June 16, 2017, daily pricing of petrol and diesel has been implemented in the entire country.” The hike in taxes last year did not result in any revision in retail prices as they got adjusted against the reduction that was warranted because of fall in international oil prices. But with the demand returning, international oil prices have soared, which have translated to record high petrol and diesel prices across the country. More than one-and-a-half dozen states and union territories have petrol at over Rs 100-a-litre mark and diesel is above that level in Rajasthan, Madhya Pradesh and Odisha. Teli said prices vary from state to state due to freight rates and VAT/local levies. “The impact of the increase in prices of petrol and diesel can be seen in their impact on inflationary trend measured by Wholesale Price Index (WPI),” he said. “The weightage of petrol, diesel and LPG in the WPI index is 1.60 per cent, 3.10 per cent and 0.64 per cent respectively.” He said during the current fiscal 2021-22, petrol price has been increased on 39 occasions and diesel on 36. The price of petrol has been cut on one occasion during this period and that of diesel on two occasions. There was no change in the remaining days. In the previous 2020-21, petrol price was hiked on 76 occasions and cut on 10 while diesel rates went up 73 times and were reduced on 24 occasions, his reply showed.
Fuel prices set to slide soon as OPEC+ agrees to boost supply
Fuel prices are expected to come down shortly as the OPEC+ grouping on Sunday agreed to add more barrels to the market, averting a supply squeeze and reducing the risk of an inflationary oil price spike. The grouping, which includes Russia, decided to raise production by 400,000 barrels per day (bpd) from August till December to restore 2 million bpd of production, or about 44% of India’s daily requirement. It also agreed on a higher production quota for United Arab Emirates, Iraq and Kuwait – all India’s major suppliers. UAE’s demand for a higher quota had caused a rift with the OPEC lynchpin Saudi Arabia and threatened a supply squeeze amid recovering demand in India, China, the US and Europe. The OPEC+ deal comes within days of India’s new oil minister Hardeep Singh Puri reaching out to his UAE and Saudi counterparts Ahmed Al Jaber and Abdulaziz bin Salman, respectively. Leveraging New Delhi’s close ties with Abu Dhabi and Riyadh, Puri had offered to work with them to “calm the market” and conveyed concerns over the recessionary impact of high oil prices on demand recovery. More barrels will ease pump prices and inflation, both of which have risen to record levels and drawn Opposition flak. So politically, the deal will help the government blunt some of the criticism in Parliament, which begins its monsoon session on Monday, once fuel prices start declining. Lower oil prices will also give the government financial breathing space. India’s crude cost has already come down to $73 per barrel from a high of $77-78 as benchmark Brent has been edging lower from its 30-month high on news of a possible Saudi-UAE deal and resurgence in Covid-19 cases in some regions. Petrol and diesel prices are set according to a 15-day rolling average of their international quotes and the dollar exchange rate. Crude price is an intermediary factor. This is expected to reflect at the consumer level in a matter of days and consumers can expect pump prices to slide once additional barrels start flowing. Petrol price is ruling over Rs 100 per litre and diesel above Rs 90 in most states as high Central and state taxes amp up the impact of rising crude. The rupee too had recently weakened against the Greenback, putting upward pressure on pump prices. The OPEC+ grouping had last year cut production by a record 10 million bpd, or roughly 10% of daily global supply, amid a pandemic-induced slump in demand and collapsing prices. It has gradually reinstated some supply to leave it with a reduction of about 5.8 million bpd.