Energy Politics & Money - 26 May 2023
Independent, objective, and politically neutral analysis of global developments curated from sources covering the world of energy, geopolitics, and investment.
In this roundup, we look at:
The redrawing of the global oil map, as the long-run impact of western sanctions channels more barrels from Russia to Asia, and the problem this creates for the Saudis
The visit by Russian Prime Minister Mikhail Mishustin to China, during which Chinese President Xi Jinping said Beijing and Moscow should lift their close ties to an even "higher level”
The growing pushback from the semiconductor industry against the US sanctions on China, which highlights that not only these sanctions are costing them money, but that they are also spurring on Chinese development of cutting-edge semiconductors
The microplastics problem of plastics recycling
The invention of a new chemical solution that traps CO2 in a salt-like crystal, in a process that does not require high heat or pressure
The call by more than 100 US and EU lawmakers to oust oil executive Sultan Al Jaber as head of this year’s COP28 climate summit
The practice of “offsetting” emissions, as the CEO of the largest certifier Verra resigns from his post a few month after his organization was accused of selling bogus offsets, while a review of Chevron’s offsets concludes they are 93% “worthless” and some 50% “harmful”
General Energy News
The global oil map is being redrawn as the long-run impact of western sanctions channels more barrels from Russia to Asia’s largest economies, with China also taking crude from Iran and Venezuela, writes Bloomberg. China and India took more than 30% of their combined imports from the three states in April, according to data tracked by intelligence firm Kpler. That’s up from just 12% in February 2022, the month Russia invaded Ukraine. Exports from traditional suppliers are being squeezed. Flows to the pair from West Africa and the US have collapsed by more than 40% and 35%, respectively.
Bloomberg also looked at the “warning” Saudi Energy Minister Prince Abdulaziz bin Salman gave short sellers in the market. The real problem for the Saudis is not speculators, it says, but rather the above shift. In other words, Russia, that is eroding Saudi Arabia’s long-term premium in the Asia region.
Geopolitics
In response to the recent G-7 meeting, Beijing and Moscow should lift their close ties to an even "higher level," Chinese President Xi Jinping said according to Nikkei Asia. Xi made the comments after a meeting with visiting Russian Prime Minister Mikhail Mishustin, who announced a series of new trade and investment deals with China. Among the deals signed Wednesday were agreements on intellectual property and facilitating trade in agricultural products, while expanding cooperation in aircraft and ship production and joint space research was also discussed.
At the same time, however, China is keeping Putin waiting on the Power of Siberia 2 gas pipeline, writes the Financial Times. EPM believes this is not surprising as China is very consciously managing its energy dependency, and it wants minimize reliance on a single source of energy – both a single energy type and single country.
The chief executive of Nvidia, the world’s most valuable semiconductor company, has warned that the US tech industry is at risk of “enormous damage” from the escalating battle over chips between Washington and Beijing, according to the Financial Times. Huang said US export controls introduced by the Biden administration to slow Chinese semiconductor manufacturing had left the Silicon Valley group with “our hands tied behind our back” and unable to sell advanced chips in one of the company’s biggest markets. At the same time, he added, Chinese companies were starting to build their own chips to rival Nvidia’s market-leading processors for gaming, graphics and artificial intelligence.“If [China] can’t buy from . . . the United States, they’ll just build it themselves,” he said. “So the US has to be careful.
On the same subject of semiconductors South Korea has called on Washington to review its conditions for new semiconductor subsidies, writes the Financial Times. The US Chips and Science Act offers $52bn in subsidies to chipmakers building new production facilities in the US, but contains “guardrails” detailing the limits on those receiving federal funds, in terms of expanding or upgrading their advanced chip capacity in China over the next 10 years. South Korea is home to leading memory chipmakers such as Samsung Electronics and SK Hynix, who are boosting investments in US production facilities even as they remain heavily exposed to the Chinese market. “The Republic of Korea believes the ‘guardrail provisions’ should not be implemented in a manner that imposes an unreasonable burden on companies investing in the United States,” South Korea said in a statement
Energy Transition & Technology News
Recycling has been promoted as a key solution to the growing problem of plastic waste, but a study has found recycling itself could be releasing huge quantities of microplastics, writes The Guardian. An international team of scientists sampled wastewater from a state-of-the-art recycling plant at an undisclosed location in the UK and found that the microplastics released in the water amounted to 13% of the plastic processed.
Scientists have created a guanidinium sulfate salt that can capture and store carbon dioxide at ambient pressures and temperatures, with little energy input – an achievement that could revolutionize CO2 capture, writes Chemistry World. Currently, the most common method of removing carbon dioxide from a gas stream involves capturing the molecule via chemisorption, usually using an amine sorbent. While this strategy is highly selective for carbon dioxide, the energy demand is high.
Climate Politics
More than 100 US and EU lawmakers have appealed to the leaders of their countries and the United Nations to oust oil executive Sultan Al Jaber as head of this year’s COP28 climate summit, writes Bloomberg. The politicians also asked that further steps be taken to limit the influence of fossil-fuel companies at the talks to be hosted by the United Arab Emirates at the end of the year.
Other
Quite some news on the practice of offsetting. The Guardian reports that the head of the world’s leading carbon credit certifier, David Antonioli of Verra, has announced he will step down as CEO next month. This comes amid concerns that Verra approved tens of millions of worthless offsets that are used by major companies for climate and biodiversity commitments. Antonioli will leave his role after 15 years leading the organisation that dominates the $2bn voluntary carbon market, which has certified more than 1bn credits through its verified carbon standard (VCS).
The Guardian also reports that an analysis of Chevron’s offsetting practices are “worthless”. Research by Corporate Accountability, a non-profit, transnational corporate watchdog, found that 93% of the offsets Chevron bought and counted towards its climate targets from voluntary carbon markets between 2020 and 2022 were too environmentally problematic to be classified as anything other than worthless or junk. Almost half of Chevron’s “worthless” offsets are also linked to alleged social and environmental harms.