World Energy News for 3 July 2022
General Energy News
Energy Transition & Technology News
In our view, after the information technology revolution of past decades, biotechnology is the most likely area where the breakthroughs will appear that enable a next economic revolution:
“A key barrier to cost-effective recycling is finding chemical enzymes able to break down plastic quickly, recovering the molecules originally used to make it, a crucial initial step in reforming and reusing the material. By studying these plastic-eating bacteria, scientists have discovered some enzymes able to break down plastics far faster than was possible a decade ago. That’s a big advance from traditional recycling, which uses heat to melt plastic, leading to degraded and less useful material. Having demonstrated the new technique, a company in France called Carbios expects to soon be recycling 50,000 tons of plastic each year.”
The Macro Environment (economics & geopolitics)
“There is ample reason to worry that major economies like the United States are heading for a recession, accompanied by cascading financial turmoil. Some of the worst elements of both the 1970s and the 2008 crash are now in play, with equity markets likely to move deeper into bear territory.”
https://www.project-syndicate.org/commentary/stagflationary-debt-crisis-by-nouriel-roubini-2022-06
“On July 2, 1997, the baht plunged, as Thailand gave up the currency's dollar peg after being hit by short-selling. That day marked the start of the Asian financial crisis, which swept the region from Indonesia to South Korea, prompting rescue measures by the International Monetary Fund. Exactly a quarter century on, the region faces new challenges. With economies worldwide still struggling to find their footing as the COVID-19 pandemic subsides, the Ukraine war has sent food and energy prices soaring. Meanwhile, the U.S. Federal Reserve's shift to monetary tightening is threatening to suck capital out of Asia. Many currencies in the region are falling against the dollar, which raises the cost of dollar-denominated debts.”
https://asia.nikkei.com/Economy/COVID-inflation-stress-test-Asia-25-years-after-financial-crisis
“Russian President Vladimir Putin signed an order Thursday mandating Sakhalin-2 assets be transferred to a newly established Russian company. The oil and natural gas development project in Russia's Far East, which includes Japanese trading houses Mitsui & Co. and Mitsubishi Corp. as investors, accounts for about 10% of Japan's liquefied natural gas imports… Russia's decision to wrest control of the Sakhalin-2 energy project has brought Japan closer to losing a valuable fuel supply right at a time when the country's electrical grid can least afford it.”
“For almost two decades, the synergy between China and Germany worked. China contributed low wages and input costs. Germans contributed technical know-how and the fruits of decades of engineering breakthroughs and research. Young Chinese workers got jobs. Aging German investors got profits. But in the end, Germany has lost out to China's manufacturing prowess. China's auto industry is surpassing Germany's, certainly in size and soon, perhaps, in quality. China's relentless focus on digitalization and other emerging technologies is reducing its dependence on a rival whose manufacturing and engineering heyday was in the 1970s.”
https://asia.nikkei.com/Opinion/China-is-steadily-wiping-out-German-industry
“European-brokered efforts to revive the Iran nuclear deal are likely to resume following US President Joe Biden’s visit to the region this month, after an intense round of talks in Doha failed to overcome differences.”
The Electrification of Transport
ESG
“When companies try to look like they’re decarbonizing—or more broadly, doing right by the climate—it isn’t only out of their fealty to anxious asset managers. In many instances, it’s also because they want to retain their employees—and their largely left-of-center employees, in turn, want to feel like they’re working at a virtuous place.”
https://www.theatlantic.com/science/archive/2022/06/corporate-climate-action-employee-work/661425/
Special features – The Global Energy Crisis
It won’t get this far, because on the road the global economy would already come to sudden standstill. The global economy could not handle such further prices increases, and it would effectively cut a number of economies off from energy supplies as they do not have the foreign currency needed to import at such prices. Our analysis is not intended to play down the risk, in other words. It argues that much worse things than oil at #380 would happen if Russia would cut off crude oil supplies:
“Global oil prices could reach a ‘stratospheric’ $380 a barrel if US and European penalties prompt Russia to inflict retaliatory crude-output cuts, JPMorgan Chase & Co. analysts warned.”
“Germany's energy regulator has listed priority areas that would have protected access to power if there are severe gas shortfalls this winter, ranging from households and hospitals to pharmaceuticals companies and paper producers… ‘We can't classify every business as systemically important’.”
Other
“India on Friday imposed a ban on single-use plastics on items ranging from straws to cigarette packets to combat worsening pollution in country whose streets are strewn with waste.”
https://www.reuters.com/world/india/india-bans-single-use-plastic-combat-pollution-2022-07-01/
“Governor Gavin Newsom signed into law one of the country’s strictest rules on single-use plastic packaging, requiring its production to be cut 25% within the next decade… The law mandates recycling for polystyrene packaging — foam plates, cups and utensils — as well as levying a $500 million annual surcharge on plastic producers and manufacturers, allocating those funds for conservation efforts and forcing the industry to attack the plastic waste that is clogging oceans and possibly affecting human health.”
“The United States must meet its international obligations on climate change and do more than "shout slogans", China's foreign ministry spokesman Zhao Lijian said on Friday following a U.S. Supreme Court ruling limiting Washington's ability to cut power sector emissions.”