Energy, Politics & Money (EPM) - 07 Mar. 2023
Independent, objective, and politically neutral analysis of global developments curated from sources covering the world of energy, geopolitics, and money.
In this roundup, EPM takes a closer look at:
BP’s acknowledgement that if it simply sells the green energy it produces from its wind and solar, it won’t be able to compete with traditional power generators
Chinese exports. They fell by 6.8% in January/February 2023 reinforcing concerns a global slow down is underway
Chinese views on US policy in Ukraine and Taiwan - where a red line seems to be drawn
Tesla reduced prices for its higher-end EVs
Chinese EV subsidies - which supported phenomenal growth of Chinese EV manufacturers - have been eliminated and there are calls to reintroduce them
IRA’s green subsidies are working as US Oil companies begin to plough cash into carbon capture projects, retooling refineries to make biofuels, and producing low-emission hydrogen
A report concluding only 0.001% of the world’s population breathes air considered safe - 99.82% of the globe’s land mass is exposed to unsafe levels of particulate matter (PM ≤ 2.5) recommended by the Word Health Organization
General Energy News
Abu Dhabi National Oil Company’s potential acquisition of Gunvor, the energy trading house, has reached an impasse because of a disagreement between the two sides over the size of the deal, the Financial Times writes. While ADNOC had hoped to acquire all of Gunvor, or a majority stake, the trader’s chief executive Torbjörn Törnqvist is not willing to give up control of the group he co-founded in 2000
Macroeconomics
China’s exports for the January-February 2023 period fell, according to Nikkei Asia, pointing to continued weakness in foreign demand and strengthening concerns that a global slowdown is underway. Exports in January and February were 6.8% lower than a year before, after a 9.9% annual fall seen in December.
Geopolitics
In a two-hour speech, Qin Gang, China’s Foreign Minister, addressed the media yesterday and warned that US interference in Taiwan’s future is the “first red line” for Beijing the US should not cross. According to Nikkei Asia, Qin said Taiwan is part of China’s territory, and, according to the country’s constitution, it should be reunited in a peaceful manner. But, if necessary, China could reunite Taiwan by force.
As for the Ukraine, again according to Nikkei Asia, Qin Gang commented on American involvement there:
There seems to be an invisible hand, pushing for a protraction and escalation of the conflict, and using the Ukraine crisis to serve certain geopolitical agendas
In response, he said, China must advance its relations with Russia as the world becomes more turbulent.
EPM’s perspective Qin’s speech is that it sets out China’s view on the US’s diplomatic maneuvering and foreign policy of the past year and that it is focused on containing US influence and policy.
Reuters reports China believes the US should change its “distorted” attitude towards China or “conflict and confrontation” will follow:
If the United States does not hit the brakes, and continues to speed down the wrong path, no amount of guardrails can prevent derailment, which will become conflict and confrontation, and who will bear the catastrophic consequences?
Taiwan appears attuned to the Chinese message, as Tsai Ing-wen, President of Taiwan convinced Kevin McCarthy, US House Speaker, to meet in California rather than Taipei to avoid an aggressive Chinese military response, writes the Financial Times.
Energy Transition & Technology News
BP’s new energy boss Anja-Isabel Dotzenrath said in an interview with Reuters the company is reviewing its solar and onshore wind businesses as part of a revamp that will see it move away from selling the clean electricity it produces holding on to most of it to supply its growing electric vehicle charging network and support the production of low-carbon fuels. This follows Dotzenrath review of BP’s offshore wind and hydrogen businesses over the past year which led to overhauls that saw the company install new managers, hire staff, scrap some projects, and seek to revise terms of others. The renewables revamp reflects Dotzenraht’s acknowledgement that BP is unable to compete with traditional power generators if it simply sells the energy produced by its wind and solar projects
Chinese President Xi Jinping praised and at the same time raised concern about battery maker CATL at a meeting with delegates during annual national meetings in Beijing, writes Bloomberg. Xi is cited as saying:
The good news is that our industry has come to the forefront of the world. The worry is that I am afraid of a big boom, first rushing up, and finally dispersing.
Climate Politics
The Inflation Reduction Act generous incentives for a set of lower-carbon technologies and fuels. It incentivizes oil and gas companies to accelerate moves in these areas – inside the USA at least, writes the Financial Times. Oil companies are starting to plough cash into projects to capture and lock away carbon dioxide, to retool refineries for making biofuels, and produce low-emission hydrogen, all supported by the IRA’s green subsidies.
The Electrification of Transport
Tesla has again reduced prices of its more expensive models, writes Bloomberg. The Model S and X now start at $89,990 and $99,990 in the US, down a respective 5.3% and 9.1%. The company lowered prices of the higher-performance Plaid versions of each vehicle by 4.3% and 8.3%, with the S and X now costing $26,000 and $29,000 less than they did in early January.
China is the world’s biggest market for electric cars, with shipments of new-energy passenger vehicles almost doubling last year to 6.5 million. In part, this was due to national subsidies, that at one point handed as much as 60,000 yuan ($8,700) to buyers. These subsidies ended at the end of the year. Bloomberg reports there are now calls to reinstate them. And, that while the Chinese government is working on this, local governments have taken it upon themselves to stimulate demand.
Other
According to Bloomberg, a new study on global daily levels of air pollution shows that hardly anywhere on Earth is safe from unhealthy air. About 99.82% of the global land area is exposed to levels of particulate matter 2.5 (PM2.5) — tiny particles in the air that scientists have linked to lung cancer and heart disease — above the safety limit recommended by the Word Health Organization, according to the peer-reviewed study published Monday in Lancet Planetary Health. And only 0.001% of the world’s population breathes in air that is considered acceptable, the paper says.