The energy thread

[Skybird]

FOCUS writes:
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While Europe is becoming climate-neutral, China is relying hard on coal

In Europe, decarbonization is being driven forward. The central instrument for this is to be emissions trading. China is also focusing on renewable energies, but at the same time is investing massively in coal. The result: global CO2 emissions are rising, while local competitiveness is declining.
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In political reporting, rules prevail that would seem absurd to us in soccer reporting. Lovingly one describes the play of the own team. The attacking waves and even the goal shots of the opponent are not given a glance.

Which brings us to the Brussels correspondents and the results of the EU climate summit. They are being hailed this morning as a breakthrough into a CO2-free future, without relating them to the attacking game of the People's Republic of China.

The fact is: After two days of negotiations, European negotiators agreed to accelerate the decarbonization of European industry.



Emissions trading to bring climate neutrality to Europe

1 Emissions trading is the key instrument for making Europe climate-neutral by 2050. In the future, a certificate must be purchased for every ton of CO2 produced. The number of certificates issued decreases from year to year, which is why their price is rising.



The grace period for the European export industry is coming to an end. In the future, there will be no more free certificates for production shipped abroad. The steel industry and the mechanical and plant engineering sector are likely to suffer. 3.

It is true that CO2 sinners from other continents will also have to pay for their sins, in the form of CO2 penalties at the national border. However, this CO2 border tax will not be in place until January 2026. The IT systems would first have to be converted, according to Brussels.

Which brings us to the opposing team's game. The world's second-largest economy, which will soon be number one, is moving at a completely different, much more leisurely pace.



In China, economic growth takes precedence over CO2 reduction

The People's Republic of China is also investing heavily in electromobility and in power generation from the sun and wind. But, and this is the crucial difference, economic growth continues to take precedence over CO2 reduction. "Actively and prudently" they will work toward climate neutrality, said CP General Secretary Xi at the start of the party congress. The word prudent is the cipher for slow.



At the party congress, the intention to drive coal mining and coal-fired power generation to a new all-time high was reaffirmed with great frankness. This is the slightly different game strategy of our economic rival:

1. CO2 emissions in China will continue to increase year after year through the end of the decade, according to the plan. Overall, CO2 emissions will rise by nearly 300 million tons this year to 33.8 billion tons. China thus remains the world's largest coal consumer.

China relies on coal and Africa

2. energy security is at the center of all thinking, in order to be able to fulfill the promise of growth and prosperity for the billion-strong nation. After last fall's power shortage, China has relaxed the rules and several parts of the country are pushing ahead with the approval and construction of new coal-fired power plants. That's according to energy expert Yan Qin of the economic analysis firm Refinitiv in Norway.



3 We are also seeing a double game in China's Africa policy. The largest financier of coal production in Africa to date has just made a promise that the state will no longer invest in the coal industry there. However, there is still no clarification of what this means for Chinese-African technology transfer, private financing and the continuation of the billion-euro programs already promised to expand coal production.



Conclusion: The different play of the European and Chinese teams leads to an outcome that Europe cannot want in this way. Global CO2 emissions are rising, while local competitiveness is falling. Many of today's still active family entrepreneurs may soon belong to the "Last Generation". Europe is going green and China is going strong.

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[Jimbuna]

Putin forced to slash oil output by half a million barrels a day

Russia is preparing to cut its oil output by tens of millions of barrels per month in response to a Western price cap that threatens the Kremlin’s revenues.

Alexander Novak, deputy prime minister, said oil output could be reduced by 5pc-7pc per day in response to price caps imposed by the West.

Mr Novak told state television the cuts could reach 500,000-700,000 barrels per day, which is a fraction of global supply but would nonetheless add pressure on a tight oil market.

The move threatens to drive oil prices higher, adding to cost of living pressures across the West.

As well as punishing its enemies, higher oil prices would allow Moscow to demand more money from buyers such as China and India who are snapping up Russian oil.

Vladimir Putin, Russia’s president, is expected to issue a decree early next week responding to the Western policy, which uses financial muscle to impose a maximum price of $60 [£50] per barrel on Russian oil exports.

The cap has been designed to lower the money the Kremlin can make from oil, which helps fund its war against Ukraine. However, it does not prevent Russian oil from flowing, given its importance to the market. Russia accounts for about 10pc of global production.

Russian oil was trading at a heavily discounted price even before the price cap, with Urals oil blend averaging $57.49 per barrel between November 15 and December 14, below the price cap and $20-$30 cheaper than Brent Crude.

Nathan Piper, head of oil and gas at Investec, said: “What they’re trying to do is to manipulate the market, perhaps to push the price up, so that even if there is a price gap they are able to achieve a higher oil price themselves.

“It’s a 100m-barrel-per-day market, but the amount of spare capacity is only 2-3 million barrels a day. So threatening to cut half a million barrels is not nothing; they’re trying to influence what is already quite a tight market.”

India and China have ramped up their purchases of Russian oil this year as Western buyers have turned their backs on the market. India bought on average just under one million barrels per day from Russia between September and November, according to Alan Gelder, oil market expert at Wood Mackenzie. Purchases before the war were negligible.

Mr Gelder said the cuts signalled by Russia were lower than what markets had feared, while traders were focused on what would happen to Chinese demand as Covid rules are relaxed, helping the economy to re-open but driving a surge in infections.

Brent crude rose 1.7pc by 11am UK time on Friday, to $82.38 per barrel, while West Texas Intermediate rose to $78.98 a barrel, up nearly 2pc.

It means oil prices are now at similar levels to the start of the year, having hit highs of almost $128 per barrel in March.
https://www.msn.com/en-gb/money/othe...24aa03ca9346f0

[Skybird]

Achse des Guten writes:
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EU emissions trading does not stop at homes either

The new EU Emissions Trading Scheme (ETS II) affects not only companies, but all citizens. They will be required to implement cost-intensive energy efficiency measures such as home insulation, heat pumps, solar panels and electric mobility in order to achieve climate targets.

On December 19 of this year, the European Parliament issued a press release titled "Climate action: agreement on more ambitious EU Emissions Trading Scheme (ETS)." The corresponding press conference, which lasted about an hour, was recorded and can be viewed in full here. Explaining the initial situation, the release states:

"The EU Emissions Trading Scheme (ETS) is the centerpiece of European climate policy and key to the EU's climate neutrality. It sets a price for greenhouse gas emissions, leading to significantly lower EU emissions. Industry is incentivized to reduce emissions and invest in climate-friendly technologies."

Now, however, the Parliament and Council agreed to reform the ETS, which entered into force in 2005, and increased their ambitions: Emissions in the ETS sectors are to be reduced by 62 percent by 2030 compared to 2005 levels. That is one percentage point more than the Commission proposed, they said. That's why free emission allowances for companies are to be phased out from 2026 and completely abolished from 2034. According to the Federal Environment Agency, the ETS covers emissions from around 10,000 plants in the energy sector and energy-intensive industry across Europe, which together account for around 36 percent of greenhouse gas emissions in Europe.

Homeowners face high costs

Since 2012, intra-European air traffic has also been included in the EU ETS. The system works on the principle of "cap & trade": a ceiling (cap) determines how many greenhouse gas emissions may be emitted in total by the covered installations. The member states issue a corresponding quantity of emission allowances (certificates) - some free of charge, some auctioned - and companies must submit a valid certificate for each ton of CO2 emitted. The certificates can be freely traded on the market (trade), which creates a price for the emission of greenhouse gases and creates incentives to reduce greenhouse gas emissions.

Already on December 13, a preliminary agreement was reached in the EU Parliament to prevent the shift of CO2 emissions to non-EU countries in order to compensate for competitive disadvantages for EU industry. In addition, a second new emissions trading scheme (ETS II) for CO2 emissions from road transport and buildings is now to be introduced in 2027. The press release says: "Should energy prices be exceptionally high, ETS II can be postponed until 2028 to protect citizens* from excessive costs."

In other words, by 2028 at the latest, the decisions now made regarding fuels used in road transport or for heating will have a massive impact on consumers. Whether the "climate social fund" that is also planned, which is to provide support for investments in energy efficiency measures such as home insulation, heat pumps, solar cells and electric mobility, will be enough to protect citizens and small businesses is written in the stars. And then what about those who can't afford the expensive retrofits to their homes, for example? Will they have to sell their home?

Not intentions or ambitions, but obligations

The "green transition" is to be financed, among other things, by increasing the Innovation Fund, one of the world's largest financing programs for low-carbon technologies, from the current 450 to 575 million allowances. And for background on the ETS reform, it states, "The ETS is part of the 'Fit for 55 in 2030' package, which aims to reduce the EU's greenhouse gas emissions by at least 55 percent from 1990 levels by 2030, in line with European climate law." The "Fit for 55 package" was launched in July 2021 and is designed to accelerate the implementation of the European Green Deal.

According to the EU Commission, we are the last generation that can still take action against climate change in time, which is why a transformative change in our economy, society and industry must be brought about. These are no longer mere intentions or ambitions, but commitments based on the first European Climate Change Act. The "Fit for 55" package will also strengthen the EU's global leadership role as an actor and role model in the fight against climate change.

Impoverishment of EU citizens is accepted

When everything is at stake and, above all, when the EU's role model function is at stake, of course any means are justified. Whether EU citizens are impoverished by the transformation because they cannot bear the costs of the Green Deal-compliant building renovations or the traffic turnaround should then consequently also not play a role. On the EU climate bill, a June 24, 2021 EU Parliament press release notes, "Parliament approved the climate bill, which was informally agreed with member states in April, by 442 votes to 203, with 51 abstentions. It turns the EU's political promise - the European Green Deal - to become climate neutral by 2050 into a binding commitment and provides citizens and businesses with the legal certainty and predictability to be ready for the change ahead. After 2050, the EU should achieve negative emissions." And, "The Commission will present a proposal for a Union-wide climate target for 2040 no later than six months after the first global stocktake in 2023, in line with the Paris Agreement.

In line with the Parliament's proposal, the Commission will publish the maximum amount of greenhouse gas emissions that the EU is estimated to be able to emit by 2050 without jeopardizing the Union's commitments under the Paris Agreement. This so-called 'greenhouse gas budget' will be one of the criteria for setting the EU's revised 2040 target." Back in November 2019, the European Parliament declared a climate emergency and called on the Commission to ensure that all relevant legislative and budgetary proposals are fully consistent with the goal of limiting global warming to below 1.5°C.

Against this future scenario, initially trivial news from around the world no longer seems so harmless: for example, Mastercard offers a CO2 calculator that can be used to track and thus reduce one's own carbon footprint. The CO2 calculator shows approximately how much CO2 is consumed in individual purchases, from which the CO2 footprint is then calculated on a monthly basis. The use of such a card is still voluntary, but wouldn't it be very practical if all consumers could be educated to be climate neutral by means of such cards?

Everything revolves around climate targets

And what's the deal with the September 2022 "Oxford Local Plan 2040," which places great emphasis on the 15-minute city concept? While the concept of having all daily necessities within 15 minutes walking or biking distance sounds appealing at first, the planned "traffic filters" could be costly for road users who want to continue using their cars.

A Dec. 7 announcement from the city of Oxford states that traffic cameras capable of reading license plates will be installed on a trial basis starting in 2024. Now, if a vehicle passes the filter at certain times of the day, the camera will read the license plate and, unless an exemption is granted, a fine notice will be sent by mail. Residents of Oxford and some surrounding villages can apply for a permit to drive through the filters for up to 100 days a year; residents of the rest of Oxfordshire can do so for up to 25 days a year. It's a good thing that people have already practiced being on the road as little as possible during the Corona Lockdowns.

In Berlin, too, according to the December 20 edition of the Tagesspiegel, the Mobility Act is to be amended to provide "less parking space for motor vehicles" as well as "less space for moving traffic" and to control the amount of cars by "inflow metering." Everywhere you look: At the UN, EU, country and regional levels, everything revolves around the climate targets formulated in Agenda 2030 and the Green Deal. However, the crucial question of whether the measurable data on climate change actually justify the all-encompassing transformation of the economy and society to achieve these targets, which are set as absolute, is being ignored.
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The goal of the communist world revolution - the destruction of the hated bourgeois order - is finally within reach! Miserable people of all countries - unite and impoverish yourselves!

Too bad that China, India, and many other Asian and African countries do not want to participate in the European self-mutilation.


This collective madness is what you get when you raise whole generations in lack of knowledge of economic fundamentals and interrelationships, and replace reason, logic and common sense with ideological fanatism and highly biased corrupted science.

[Jimbuna]

FTSE lower as European natural gas prices fall to pre-Ukraine war levels

European stock markets tumbled into the red on Thursday as natural gas prices dropped back to their levels before the Ukraine war.

In London, the FTSE 100 (^FTSE) fell 0.6% after opening, while the CAC (^FCHI) tumbled 0.5% in Paris, and the DAX (^GDAXI) was 0.3% lower in Frankfurt.

The month-ahead European gas future contract fell as low as €76.78 per megawatt hour, its lowest level in 10 months, according to Refinitiv data.

This is thanks to warmer-than-normal temperatures this winter, and consumption reduction targets.

UK gas prices have also declined from their highs earlier this year. The day-ahead gas price closed at 155p per therm on Wednesday, compared with 200p/therm at the start of 2022, and over 500p/therm in August.

LaToya Harding·Business Reporter, Yahoo Finance UK
Thu, 29 December 2022 at 9:05 am GMT·3-min read
Nord Stream 1 Baltic Sea pipeline. The FTSE was in the red on Thursday
The FTSE was down as natural gas prices dropped back to their levels before the Ukraine war. Photo: AP Photo/Markus Schreiber
European stock markets tumbled into the red on Thursday as natural gas prices dropped back to their levels before the Ukraine war.

In London, the FTSE 100 (^FTSE) fell 0.6% after opening, while the CAC (^FCHI) tumbled 0.5% in Paris, and the DAX (^GDAXI) was 0.3% lower in Frankfurt.

The month-ahead European gas future contract fell as low as €76.78 per megawatt hour, its lowest level in 10 months, according to Refinitiv data.

This is thanks to warmer-than-normal temperatures this winter, and consumption reduction targets.

UK gas prices have also declined from their highs earlier this year. The day-ahead gas price closed at 155p per therm on Wednesday, compared with 200p/therm at the start of 2022, and over 500p/therm in August.

Watch: Why did gas prices rise?

It comes as industrial action is continuing across Britain today, with the new head of the Trades Union Congress (TUC) warning that further strikes lie ahead in 2023, unless it enters negotiations over pay rises.

Incoming general secretary Paul Nowak said “we must end Britain’s living standards nightmare” – which has been fuelled by higher energy costs – and is also accusing ministers of “sabotaging efforts to reach settlements”.
https://uk.news.yahoo.com/ftse-lower...LGgjDYTChMaGDV

[Jimbuna]

[Skybird]

Gas prices ma yreahc old levels in the charts, but not in reality for consumers. Not evenclose to it.


The germans have ordered gas like crazy ( allowing overpriced offerings being accepted, costing Germany additional billions of coins), and that caused a temporary over-supply in Europe where LNG tankers are parked in lines to get onloaded. That will not stay that way. Also, the reserves in Germany are currently quite high, the weather is warm, the demand is lower than usual at this time of the year.


Once these factors change again, prices will soar again. So, the prices in the charts are more or less meaningless for private customers in Germany at least, and they are no lasting trend, but a temporary snapshot. Prices will stay hiogher then before 2022, becasu of much higher dependeciy on LNG gas. And LNG gas simply always was much more expensive than pipeline gas.



Also, the price gets artificially blown up every damn year, due to ideological command and according price schemes. The Greens and their auxiliaries want the costs to soar higher and higher every year, and thast what the eU has decided for,.

[Jimbuna]

Oil prices settle lower as surprise build in U.S. stockpiles, China worries weigh

Investing.com – U.S. crude oil settled lower Thursday, as a surprise build in U.S. weekly crude stockpiles and ongoing worries about the demand outlook amid surging cases in China weighed.

On the New York Mercantile Exchange, crude futures fell $0.56 to settle at $78.40 a barrel, while on London's Intercontinental Exchange, Brent fell $0.53 to settle at $83.46 a barrel.

Inventories of U.S. crude increased by 718,000 barrels for the week ended Dec. 23, confounding expectations for a draw of 1.5 million barrels, according to data from the Energy Information Administration (EIA).

Gasoline inventories unexpectedly fell by 3.1M barrels, the largest draw since September, topping expectations for a build of 520,000 barrels, while supplies of distillate -- the class of fuels that includes diesel and heating oil – rose by 282,000, missing expectations for a decrease of 2.05M barrels.

The mixed petroleum data from the EIA comes as some countries are about to impose new travel restrictions for travelers from China, cooling some of the optimism that had followed the easing of COVID restrictions earlier this month. Several countries including the U.S., Italy, and Japan, imposed mandatory tests on visitors from China.

Demand, however, is expected to receive a lift from the Biden Administration's efforts to buy crude early next year to refill the Strategic Petroleum Reserve.

Efforts to replenish the strategic petroleum reserves "should be supportive for the market and could have put a bit of a floor in place," said Craig Erlam, senior market analyst at OANDA.

Goldman Sachs, citing the recent selloff in commodity prices, cut its price target on Brent crude in 2023 to $90/bbl from $110/bbl previously, though added that it remains constructive on oil prices in the near term.

"For oil prices, we remain constructive on oil prices in the near term given the potential for improving China demand, and lower supply growth from US shale due to discipline/tight service markets, and OPEC+ quota reduction," Goldman Sachs said.
https://www.msn.com/en-gb/money/othe...ce2a0a3f0b9a1e

[Jimbuna]

Putin's blackmail backfires as EU gas prices plummet to pre-Ukraine war levels

Gas prices in Europe have dropped to levels that have not been since before Russia launched its invasion of Ukraine back in mid-February 2022. Russian President Vladimir Putin's war in Ukraine and his supply cuts to Europe have sent prices soaring over the last 10 months, sparking a global energy crisis which has had a huge knock-on impact on billpayers across the continent, including the UK.

But even though Russia is hardly sending any gas at all to Europe at present (it supplied 40 percent of Europe's gas before the war), warmer weather across the continent has appeared to ease prices, calming fears of suspected shortages.

The European gas contract for the month ahead dropped to €76.78 (£68.07) per megawatt hour on Wednesday, the lowest price seen in over 10 months. before closing at a higher price of €83.70 (£74.20), according to the data company Refinitiv.

However, while prices may have dropped, this is not expected to lower household energy bills any time soon. This is despite the fact that rising gas prices are much to blame for bills costing double the amount they were last year on average.

Dr Anna Valero, a Senior Policy Fellow at the LSE's Centre for Economic Performance, told Express.co.uk: "My understanding is that the prices dropped due to lower demand (due to mild weather and demand management in EU countries) - but this is not expected to result in much cheaper energy bills for the foreseeable future as gas prices are expected to remain high over the coming year - the UK still relies on gas imports.

"Suppliers buy energy in advance, and Ofgem (the Government's energy regulator) determines the cost of buying energy from the market by tracking wholesale prices ahead of the next price cap. The price cap is set to rise to £4,279 in Jan 2023, though the energy price guarantee (EPG) protects households (typical household bill not expected to exceed £2500 until April 2023). The next quarterly price cap update will be on 27 February 2023."

According to Livia Gallarati, a Senior Analyst at Energy Asepcts, European gas prices have fallen sharply over the last few months due to a "lucky combination of factors".

She told DW News that these include "unseasonably mild weather, limited competition from China, which helped Europe build stocks and therefore dragged prices lower."

But she warned that now is not the time to get complacent, as prices may not stay this low forever. Ms Gallarati added: "There are a lot of factors that could lead to tight markets next winter in particular. That might mean prices could rise back up again.

"For example, China is coming back to the market with the Covid situation easing over there. Industrial demand could be coming back in Europe now that prices are a little bit lower. We can't rule out a cold spell in the winter in the next couple of months and also Europe will need to balance next winter with a lot less Russian gas than it ever did before.

All of this could mean we are facing a very hard situation and even in the longer term we need to consider what high prices are going to do to European industry, which is something will continue to face for many years to come."

This comes as Europe awaits several months of high domestic heating demand as the depths of winter is still yet to hit. While some industry bosses have warned over energy shortages in the coming months, they also fear this problem will not go away next winter either.

Meanwhile, in the UK, gas prices have also plunged back from their highs that were seen earlier this year. The day-ahead gas price ended at 155p per therm on Wednesday, compared with 200p/therm at the beginning of 2022, and over 500p/therm in August.

Despite this, bills remain high and are set to increase in April when Chancellor Jeremy Hunt's energy price guarantee increases. Dr Vallero warned: "In terms of household gas bills - a relatively high share of UK homes are heated using gas boilers (versus other European countries) - plus our homes are less energy efficient which means that we need to consume more of it.

"In April, the energy price guarantee (EPG) is set to become less generous, meaning that the level that the typical household bill will not exceed will go from £2500 to £3000 (with further support for some of the most vulnerable)."
https://www.msn.com/en-gb/money/othe...5efb9ff3b861d2

[Jimbuna]

Energy giant takes EU to court in furious backlash over 'counter-productive' tax

AUS energy giant is attempting to sue the EU in an effort to avoid a new windfall tax that is being slapped down on oil companies. ExxonMobil has lashed out at the bloc for introducing the "counter-productive" measure after it was ordered to pay a "crisis contribution" on its increased profits. Amid Europe's crippling energy crisis, major firms have seen their profits soar due to the surging increases in wholesale gas and electricity costs sparked largely by Russia's war in Ukraine and supply cuts to the continent.

European Commission President Ursula von der Leyen has called for firms raking in tonnes more cash for their oil and gas sales - even though they are not responsible for jumping prices - to be taxed on these extra profits. This measure can also be referred to as a windfall tax.

But Exxonmobil, which took home a staggering quarterly profit of almost $20 billion (£17.3 billion) in October, argues that a windfall tax would discourage investment. The major energy firm is not alone in its opposition to this measure, as other oil and gas giants have joined Exxonmobil in a furious backlash to the crackdown.

It comes after the bloc introduced a 33 percent tax on this year's profits. Profits were more than 20 percent higher than the average for the three previous years.

Exxonmobil spokesperson Casey Norton told Reuters: "Whether we invest here primarily depends on how attractive and globally competitive Europe will be."

The lawsuit - filed through subsidiaries in Germany and the Netherlands - claims the measure should not be allowed as it is a tax, a right reserved for national Governments only.

It also contests the use of the EU Treaty's Article 122, an emergency procedure that excludes the European Parliament, to slap down this kind of legislation.

Mr Norton told Politico in an email: "This litigation is driven by our concern about the unintended long-term effects of this policy on the competitiveness of European industry.

"This tax will undermine investor confidence, discourage investment, and increase reliance on imported energy and fuel products."

But European Commission spokesperson Arianna Podestà has argued that the EU is well within its right to enact such a measure.

She wrote that "the Commission maintains that the measures in question are fully compliant with EU law", adding that the measure is intended to "ensure the whole energy sector pays its fair share in these difficult times for many to address the extraordinary energy crisis resulting from the weaponisation of the energy supply by Russia".

It comes after billpayers across Europe have seen their bills rise astronomically while energy firms take home billions in extra profits.

Mr Norton said: "We recognize that the energy crisis in Europe is weighing heavily on families and businesses, and we've been working to increase energy supplies to Europe. Our challenge is targeted only at the counter-productive windfall profits tax, and not any other elements of the package to reduce energy prices."

It comes as the EU scrambles to wean itself off Russian fossil fuels to deprive the Kremlin of a huge source of revenue amid the war in Ukraine.
https://www.msn.com/en-gb/money/othe...35baae48e12ce3

[Skybird]

For me, the rising prices for consumers reflect the rising selling prices by the producers, and the legitimicy of their complained-about high profit stands and falls with whether they have risen costs for producing or buying the energy they sell to consumers or not. The anser to this quesiton is the decisve criterion.

I expcect to see more complaints by the EU about the profit-hungry industry in the imminent years - to distract from that the EU drives a policy that wants certain prices to soar hiogh, and pushes them upwards intentionally, or simpyl accepts that its actrions doirves prices upwards. The eU is not the ionnocent lamb in this. Its busy in making Eurpopoe econiomical unc ompetitive while trying to turn things such ways that the eU will not be accused of this, but the evil industry.

Fairness demands to mention that especially the oil industry has done its best in recent decades to hide and supress certain unwanted information on the consequences of using fossile fuels, and has done its share to slow down or prevent research on alternatives. So, the industry is no innocent lamb either.



Anyway, Europe with its moralising becomes more impotent, and Asia and America become stronger. And sinc ein our modern and insuitrilaised world you cannot become gtreener without newly inveted modenr tehcnology, I have seriuosu douzbts on that Europe at least will turn greener for sure. The current crisis shows us exactly the opposite happening, and the German incantations of salvation through renewables (which can only materialise by rewriting the laws of physics first) no longer even elicits a sardonic smile from me, but only a bored expression.

[Jimbuna]

Putin kickstarts de-industrialisation of Europe's factories

In Germany’s western industrial heartlands is BASF’s main Ludwigshafen facility, a sprawling complex that guzzles roughly as much gas as the whole of Switzerland.

Like many manufacturing giants, the chemicals maker has found that Vladimir Putin's war in Ukraine and the new normal of high gas prices is challenging the business model the country’s industrial hubs were built on.

“These challenging framework conditions in Europe endanger the international competitiveness of European producers,” its boss Martin Brudermueller admitted in October as it unveiled permanent cost-cutting measures.

As the war drags into the winter, Europe is facing up to a future without any Russian gas. That is a problem for industrial companies who have relied on plentiful supplies of cheap gas delivered through pipelines from Russia.

Experts warn that the likes of Germany and Italy will lose out to factories elsewhere as their competitiveness is hurt, not least by the US. The business model that has been the backbone of Europe’s industrial heartlands may have been broken by the Kremlin.

Carsten Brzeski, chief economist at ING Germany, says there is a “competitiveness issue” that could drive a de-industrialisation in Europe.

“It’s not going to happen overnight but it’s clear the trend is there,” he says.

“We assume energy prices remain high for at least the next year and actually also going into 2024. Then we have the entire energy transition going on, which I think in the first stage will also come at higher energy prices and only once there is the shift made towards more renewables, energy prices will drop again.”

But some are optimistic that substitutes and a massive efficiency drive can offer hope after a tough transition. In addition, companies are trying to shorten supply chains and move production away from regimes that risk being caught up in geopolitical tensions, though Brzeski says this is likely to be more than offset by the de-industralisation trend.

Holger Schmieding, chief economist at Berenberg, says: “For the longer term outlook, three-five years plus, Europe is now forced to become a world leader in energy efficiency and will, in a few years, be selling top notch technology to the world on energy efficiency.”

He adds that, given the climate push, “this could actually turn into a blessing in disguise”.

If de-industralisation does take hold in Europe, Germany and Italy would pose the biggest drags on the region. German factories made up 27pc of EU industrial production in 2021 while Italian firms accounted for 16pc, followed by France on 11pc.

A survey by Germany’s Ifo Institute in October suggests that the chemicals and metals industries were among the most likely to say that they have to cut back on production if they needed to save on gas costs over the next six months.

The clothing, data processing and paper sectors were most likely to say they could save on gas without reducing output, hinting at the sectors most and least vulnerable in any shift.

Claus Vistesen, eurozone economist at Pantheon Macro, says: “In a way, European industry is looking in a slightly better position than we might have feared when we looked at the very, very severe disruptions earlier this year when gas prices spiked.

“So far European industry has been quite good at adapting and I think that’s good news as far as the initial judgement of those long-term challenges.”

He adds that the companies that are most reliant on gas could become “non-viable” but cautions that they are “a fairly small part of European industry”.

Nonetheless, Goldman Sachs warns that the “sizeable” permanent hit to European industrial production will be between 2pc to 3pc.

Its economist Alexandre Stott says: “While lower gas supply implies a significant hit to potential output, economic models also suggest that an economy can lower this cost by substituting away from gas as an input into production. Moreover, academic studies suggest that the ability to substitute from an energy source tends to increase over time.”

The blow “can halve once one allows for substitution away from gas towards other energy sources”, she adds.

It is not just industrial powerhouses on the Continent that are exposed. The UK is one of the most services-oriented major economies in Europe but experts believe it is still vulnerable.

Persistently higher energy prices would cause a permanent impact on the economy’s potential output by reducing the amount firms find it profitable to produce, according to the Office for Budget Responsibility.

Despite oil and gas becoming less important to the UK economy, it warned in July that in the medium term it is difficult to speed up the building of new infrastructure to reduce the reliance on fossil fuels, such as renewable or nuclear energy.

It estimates that a 10pc increase in oil and gas prices cuts potential output by 0.13pc in the first year and 0.18pc after five years.

What’s clear is that any de-industrialisation would come at an economic cost for the likes of Germany. Already subdued trend growth – the long-run average rate of expansion – could be damaged by a shift of resources from the higher productivity industrial sectors.

Goldman says even with substitution away from gas the industrial sector in Europe is likely to shrink permanently, potentially weighing on growth rates.

“You could argue a positive scenario if this is then the driver to get a more services-orientated economy, to have more automation, more high quality production, more research and development back in Europe,” says Brzeski.

“The most pessimistic scenario would be a just continuing downward trend, in which Europe continues losing potential growth because high productivity growth sectors [and] companies are moving out of Europe.”

He says the US stands to gain the most given its lower energy prices and the recent introduction of the Inflation Reduction Act.

The package includes $369bn of subsidies for “Made in America” investments that hope to boost the US electric car industry among other green technologies, help that has angered leaders in Europe.

Both friends and foe are piling pressure on Europe’s industrial sector as a tough winter takes hold.
https://www.msn.com/en-gb/money/othe...2557918e7e7063

[Jimbuna]

France now world's biggest buyer of Russian natural gas despite Ukraine invasion

France, already the main importer of Russian LNG in Europe, has become the world's leading importer of Putin's natural gas, beating even Japan in February and March. It comes as European imports are said to have increased by 40 percent this year.

Between January and October, France imported 4.45 million tonnes of Russian LNG, an increase of 52 percent in one year.

It comes as Russia's deputy prime minister opened the door to a return of gas supplies to Poland and Germany via the Yamal gas pipeline, which is currently unused.

But this is unlikely to happen as Europe has found other sources, including Russian liquefied natural gas.

Moscow is currently sending contradictory signals. After threatening to cut its oil production in protest against the European embargo on crude and the price cap, Russia says it is ready to resume gas deliveries via the Yamal pipeline.

"The European market remains relevant because the gas shortage persists and we have the opportunity to resume supplies," the deputy prime minister in charge of energy, Alexander Novak, told the official news agency Tass.

The European Central Bank's decision to raise interest rates in the Eurozone is likely to lead to a collapse of the Euro and to a severe economic crisis in Italy, analysts have warned.

Some described the ECB's policy decision as "kamikaze" and said it would condemn the Eurozone to a prolonged recession.

He said the Yamal pipeline, which links Russia to Poland and Germany, had been stopped for "political reasons".

Shortly after the outbreak of the war in Ukraine, as supplies to Europe began to dwindle, Gazprom stopped its deliveries via Yamal. Then the Russian company demanded that Poland pay in roubles.

Warsaw refused and the Polish government terminated its contract with Gazprom.

At the end of August, the pipeline was shut down for three days of maintenance, but has not been reactivated since. The flows were then reversed to allow Poland to be supplied from Germany.

These statements could indicate that the various measures taken against Russia and its hydrocarbon production are beginning to dry up its economy.

So far, Moscow has been able to rely on the liquefied natural gas (LNG) market to keep its exports high. The more flexible transport of this energy by ship allows the country to diversify its customers.

Russia has developed an ambitious programme to increase its liquefaction capacity. By 2035, it hopes to be able to export 80 to 140 million tonnes per year, compared with 35 million today.

Novatek still hopes to restart the Arctic LNG 2 project, in which TotalEnergies has invested but which has been at a standstill since the Western sanctions, by the end of 2023.

A large part of Russian production could therefore now be liquefied and then shipped to international markets.

The future of gas pipelines is more uncertain. To resume deliveries to Poland, Moscow will first have to ease its own sanctions against Warsaw.

And on the Polish side, there is nothing to suggest that they are ready to start buying from Russia again, despite the fact that they have largely diversified their sources this year.

In Europe, the pressure has eased in recent weeks as temperatures have risen. Stocks have not really been affected despite the first cold snap in December.

They have even started to be filled up again and now stand at an average of 83 percent. Germany, which had fallen to a filling rate of 87 percent, has risen to 88 percent in the last few days (compared to 77 percent at the same time last year), while Poland has a record rate of 96 percent, putting it in a strong position.
https://www.msn.com/en-gb/money/othe...97635b6dca63f4

[Jimbuna]

UK power stations owner Uniper eyes 'possible insolvency' without £44bn state bailout

The boss of Germany's largest gas importer has warned that Germany's energy security would be placed in peril if Uniper is allowed to fail amid Europe's gas crunch, caused by the lack of gas flows from Russia.

Uniper, the crisis-hit German gas trader that owns seven UK power stations, has warned shareholders it faces "possible insolvency" unless they back an additional state bailout worth more than €50bn (£44.6bn).

Chief executive Klaus-Dieter Maubach told investors ahead of a crucial vote on Monday that they risked losing their entire investments in the company if they rejected the German taxpayer rescue.

The company first went cap in hand to Berlin in June, later securing €8bn in return for Finnish owner Fortum's stake, after its future was placed in peril by the loss of Russian gas flows amid the war in Ukraine.

The squeeze on deliveries from the likes of Gazprom, once its biggest supplier, had forced Uniper to buy gas elsewhere at much higher prices to meet existing contracts.

It triggered a €40bn euro net loss for the company, which provides around a third of Germany's gas and is its largest importer.

Uniper's UK interests include the Ratcliffe-on-Soar coal-fired power station and six other gas-fired plants.

It was revealed last month that it would need additional state support to survive after the German government withdrew a gas levy that was designed to help the country's gas importers bear additional costs.

The move prevented Uniper from raising customer prices.

Investors will vote on a package which includes up to €33bn in state-backed equity and up to €18bn in credit lines from state-lender KfW.

Ahead of Monday's extraordinary shareholder meeting in Dusseldorf, Mr Maubach said in a website statement: "(The measures) are indispensable for this company's future.

"If approval is not granted, we would have to review very critically the so-called going concern forecast for our company," he added.

"In the management board's view, a possible insolvency could lead to a complete loss for shareholders."
https://news.sky.com/story/uk-power-...ilout-12771093

[mapuc]

Another business idea I have is making house owner totally independent from gas, oil,coal, electricity companies

Even here I need batteries with high capacity

Example:
It's winter-No wind, cloudy
A family use around xx kw per day

So they need batteries that can manage to do so for a week or more.

However it's rarely a thing that happens. Either it's windy or the sun shine.

Markus

[Jimbuna]

Energy support not the ‘solution’ to the gas crisis, energy boss says

ScottishPower’s boss said that the Government needs to insulate homes and help with a massive roll-out of renewable energy.

The Government has bought itself two years to insulate millions of British homes, plant solar and wind farms across the country and install heat pumps, the boss of a major energy supplier has said.

Keith Anderson, who leads ScottishPower, said that the Government had helped customers with an announcement that bills will be guaranteed not to rise above £2,500 for the average household.

“Hats off to the Government, they have made a big, big intervention,” he told the PA news agency.

“They have taken away a huge amount of worry and concern for customers, and that’s a good thing. A really, really good thing. That’s what we wanted.”

But he said this is not the end of the road in the energy crisis.

“No matter what policy they picked, it was never going to be the end solution.

“The policy today buys us two years to go and fix a whole load of problems at source.

“That is a mixture of building renewables like hell, and going hell for leather building it faster and faster.”

He said offshore and onshore wind are needed, as are solar. He also called for a “massive investment and acceleration in heat pump deployment to stop us burning gas”.

“The next one is going hammer and tongs at energy efficiency. You have a two-year window now to do a massive roll-out programme, properly insulating homes and helping people save energy and save money.”

He also called for the price of electricity to be decoupled from the price of gas.

“If you do those four things that’s what allows you to stop the price freeze,” Mr Anderson said.

Chris O’Shea, chief executive of British Gas owner Centrica, promised to continue donating 10% of profits to help vulnerable households.

These households are still facing doubled energy bills despite the support announced on Thursday.

“We know people are deeply worried about the increase in their energy bills this winter,” Mr O’Shea said.

“Extraordinary circumstances call for us all to think differently and we know this bold customer support package from the new Prime Minister and Chancellor will bring immediate relief to hard-pressed households.”
https://www.independent.co.uk/busine...-b2162896.html