Energy, (Geo)Politics & Money - 2024.05.01
Non-partisan, objective & neutral analysis where global developments in energy, business & geopolitics intersect & sourced from leading global sources.
Welcome to EPM, where we take our daily look at the interconnected worlds of Energy, (Geo)Politics and Money. Curated from the world’s leading sources of information, we provide you both the information and the objective, neutral commentary that you need to make sense of it all – and beat the market.
In this roundup, we look at:
The final permits for the Trans Mountain oil pipeline expansion, the $34 billion CDN project to triple the flow of crude from Alberta to the Pacific coast to 890,000 barrels per day
How the US continues to devastate its soft power through its positioning in Israel’s War on Gaza; as well the Chinese positioning on the same issue, which appears designed to avoid the mistakes the US making and to benefit from these
The progress in Australia’s development of an offshore wind industry, which has the potential to generate 5,000 GW
The question if the world should drop the 1.5 – 2.0 degree target of the Paris Agreement
The Intergovernmental Negotiating Committee on Plastic Pollution, which concluded a weak long meeting in Canada, and why it ended in disappointment for countries and environmental groups pushing for limits on plastics production
Photograph by Nick Fewings at Unsplash
General Energy News
CANADA’S TRANS MOUNTAIN PIPELINE STARTS SHIPPING TODAY
The Canada Energy Regulator (CER) approved the final permits for the Trans Mountain oil pipeline expansion, writes Reuters. The C$34 billion ($24.69 billion) pipeline expansion, bought by the Canadian government in 2018 to ensure it went ahead, will nearly triple the flow of crude from Alberta to the Pacific coast to 890,000 barrels per day (bpd).
ERM’s PERSPECTIVE
In the EPM view, the project makes strategic sense for Canada. Its crude traditionally flowed south to the US, where it has to deal with severe competition from US Shale and is hindered by limited pipeline capacity. By making the molecules flow west, Canadian crude can become more accessible for customers in the Asia Pacific region. The relatively heavy nature of Canadian crude will make it a competitor primarily for Middle Eastern grades, as Russian crude flows to Asia are discounted to such an extent that no one can (or wants) to compete with it.
Geopolitics
US TRIES TO INFLUENCE ISRAEL NOT TO ATTACK RAFAH
Yesterday EPM reported on how the US is rapidly losing soft power in Africa. Today, we look in a bit more detail at Israel’s planned invasion of Rafah in that context. As highlighted yesterday also, via a Reuters report, Israeli prime minister Netanyahu has said this invasion will take place irrespective of a ceasefire deal with Hamas. Today, Bloomberg writes that the United Nations humanitarian chief is diametrically opposed to the idea. Under-Secretary General Martin Griffiths said in a statement. “A ground operation in Rafah will be nothing short of a tragedy beyond words. No humanitarian plan can counter that.” UN Secretary-General Antonio Guterres also said it’s important for the US to “put all possible pressure” on Israel to avoid “what would be an absolutely devastating tragedy.” But the US is doing the opposite, it seems. Reuters writes, the US fundamental position on the issue has been that Israel “should not go ahead without a credible plan to avoid civilian harm”. Which effectively means that in the US view, Israel can go ahead if it makes the promises the US wants to hear – irrespective of whether these promises are realistic or reliable. US Secretary of State Blinken was explicitly asked to respond to Netanyahu’s latest threat regarding Rafah, which in the EPM view is designed to remove the incentive for Hamas to agree to any ceasefire deal – which would then justify the Israeli invasion of Rafah. Where a harsh response would be in order if the US wanted to appear aligned with the concerns of humanitarians globally, Blinken chose not to do so, and instead complimented Israel. Le Monde writes, “Blinken did not respond directly to the question, saying that Washington's focus was on reaching a truce deal, which is being brokered by Egypt and Qatar, and credited Israel with compromising in negotiations.”
According to CNBC, Blinked called the Israeli conditions for a ceasefire “extraordinarily generous”. At EPM we discuss this to show why the US, in the eyes of the world, is on the wrong side of history in this conflict. This is because its words and actions are in conflict with the views and opinions of even the United Nations. The impact on US soft power as just the beginning therefore, we believe. We expect to see a similar weakening of US soft power influence around the world, which will have significant implications for the US – China competition.
MEANWHILE, CHINA ALIGNS ITSELF WITH GLOBAL OPINION REGARDING GAZA
While the US appears focused on supporting Israel, China is positioning itself in a manner that appeals to global opinion on the Israel War in Gaza. Reuters writes it brought together Hamas and Fatah in Beijing, to discuss reconciliation of the two main political entities in the Palestinian territories. The two factions have not managed to heal political disputes since Hamas fighters expelled Fatah from the Gaza Strip in a short war in 2007. Hamas praised China's efforts to reunite Palestinian factions, its historical "supportive stance on the Palestinian cause, and its rejection of the genocide against our people".
Energy Transition & Technology News
AUSTRALIA MOVES CLOSER TO OFFSHORE WIND POWER
Australia has moved a step closer to its ambition of establishing an offshore wind industry through providing six potential wind farm projects the green light to begin assessing their feasibility, writes Nikkei Asia. The six feasibility licenses have been granted for proposed wind farms off the country's southeast coast in Gippsland. The projects are High Sea Wind, Gippsland Skies, Blue Mackerel North, Kut-Wut Brataualung, Orsted Offshore Australia (Gippsland 01) and Star of the South Wind Farm. Star of the South, which includes plans for up to 150 turbines that would generate 2.2 gigawatts, is considered the most advanced. Its backers, Copenhagen Infrastructure Partners (CIP), on Wednesday unveiled a new company called Southerly Ten to oversee the project. The company is also behind the Kut-Wut Brataualung project, which it says it will also deliver 2.2 GW but is at an earlier stage of development. Turbines off Australia's coasts have the potential to generate 5,000 GW, 100 times the installed capacity of Australia's two largest electricity networks, according to the Global Wind Energy Council.
Climate Politics
WORLD POWERS ADVISED TO DROP PARIS TEMPERATURE TARGET
Energy Intelligence asks if the world should not drop the 1.5 – 2.0 degree target of the Paris Agreement. It notes, based on a review of energy outlook scenarios, that policies already undertaken, as well as those announced and planned by governments, will yield temperature increases far in excess of the Paris Agreement goal. It concludes that relaxing or abandoning the target would have serious impacts, and therefore suggests that instead, henceforth, all outlook scenarios, by whomever published, include an estimate of the level of global warming they would result in, as well as specify the risks and adverse impacts and related losses and damages that would result.
Other
PLASTIC POLLUTION STRATEGY DISCUSSIONS ENDS WITHOUT AGREEMENT
The Intergovernmental Negotiating Committee on Plastic Pollution has concluded its week-long meeting in Canada. Most of the world’s countries agreed in 2022 to kick off talks on ending plastic pollution. The efforts have pitted the so-called “Like-Minded Countries” — oil, gas and petrochemical producers including China, Saudi Arabia and Russia — against a group calling itself the “High Ambition Coalition,” including European Union members, Canada, Mexico and Australia. The former wants to see a treaty that only tracks plastic waste, while the latter wants one that tackles production. The US, for its part, has avoided joining a negotiating bloc but is unlikely to support production limits. It has argued that countries should take action on single-use plastics and chemicals harmful to public health, but that they should also craft their own national plans on how to reach those goals, rather than having global targets and measures imposed upon them. The most recent round of talks ended in disappointment for countries and environmental groups pushing for limits on production, writes Bloomberg, as it was agreed that meetings planned for the coming months will not address the creation of new plastic. Those meetings will take place ahead of the fifth and final session of talks in Busan, South Korea, in late November, before an end-of-year deadline to reach a binding treaty.
The Financial Times notes that in the conversations in Canada, the US effectively joined coalition that includes China, Russia and Saudi Arabia who resisted the inclusion of production controls in any treaty.