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https://www.ft.com/content/352b38a7-f298-4b54-adc2-f4cc1b17444b
The world needs a “reality check” on its move from fossil fuels to renewable energy, JPMorgan has warned, saying it may take “generations” to hit net-zero targets. In a global energy strategy report sent to clients this week, the US investment bank said efforts to reduce the use of coal, oil and gas had been set back by higher interest rates, inflation and wars in Ukraine and the Middle East. “While the target to net zero is still some time away, we have to face up to the reality that the variables have changed,” Christyan Malek, JPMorgan’s head of global energy strategy and lead author of the report, told the Financial Times. “Interest rates are much higher. Government debt is significantly greater and the geopolitical landscape is structurally different. The $3tn to $4tn it will cost each year come in a different macro environment. Malek predicted that the levels of investment required would put pressure on governments to step back from more aggressive energy policies. The Scottish government on Thursday scrapped its ambitious plan to cut carbon emissions by 75 per cent by 2030, conceding that the target was unachievable. In its report, JPMorgan said changing the world’s energy system “is a process that should be measured in decades, or generations, not years”. It added that investment in renewable energy “currently offers subpar returns” and that if energy prices rose strongly, there was even a risk of social unrest.
Malek noted that it was not guaranteed that demand for oil and gas would peak in 2030, as predicted by the International Energy Agency, as the populations of developing countries begin to buy more cars and take more flights. JPMorgan forecasts that the world will need 108mn barrels of oil a day in 2030, and that building more wind, solar and electric vehicle capacity could add a further 2mn daily barrels to this total. “We are at a tipping point in terms of demand,” Malek said. “More and more of the world is getting access to energy and a greater proportion want to use that energy to upgrade their living standards. If that growth continues it puts huge pressure on energy systems and governments."
https://www.ft.com/content/352b38a7-f298-4b54-adc2-f4cc1b17444b
In our haste to not be seen as on the wrong side of history, we failed to make conservative arguments for environmental improvement – arguments centred on property rights, individual and family endeavours and the free market. Instead, we empowered our ideological opponents and accepted much of their extremist agenda.
Britain should aim to be energy independent by 2040 using oil and gas as well as nuclear and renewables. We are in an excellent position to become a net energy exporter, given the amount of sea by which we are surrounded where offshore wind farms can be located, as well as our expertise in nuclear power. The use of North Sea oil and gas is crucial, so there needs to be investment in that too. There also should be fracking in the UK. We are in the ludicrous position of importing fracked gas from the US that has been liquefied to -180˚C but refusing to frack ourselves. Meanwhile, Brits are paying twice as much for their energy as Americans.
The number one threat to the environment and our freedom and security is the rise of authoritarian regimes and the decline of democracy. Therefore, we need to cancel failed multilateral structures and work with allies that share our values. We should abolish the Climate Change Act and instead adopt a new Climate Freedom Act that enables rather than dictates technology.
We should protect our environment by protecting property rights and allowing enterprise to develop new green technologies. We should call out the green lobby’s brazen anti-capitalist agenda. They are the extremists in today’s politics and should be labelled as such. They say they want to reduce carbon but oppose nuclear power. They say they want less pesticide use but oppose genetic modification. They organise their protests on iPhones, devices that came into existence through free markets.
“Liz is the Grinch who wants to stop Christmas!”
That was the response in Cabinet from Michael Gove, the Environment Secretary, to my eleventh-hour attempts to ditch COP26, the UN climate change conference that the UK was bidding to host in 2020.
It was late 2018 and I was Chief Secretary to the Treasury, charged with keeping a tight grip on public spending. With an estimated price tag of over £200 million, I strongly questioned whether organising this jamboree should be a priority for the Government.
Had I believed the conference was likely to make any difference, I might have been more sympathetic. But I could see no prospect of that. World leaders would fly in on private jets to pontificate about the environment and reaffirm their aspirations to reduce emissions, while the biggest culprits would continue to do nothing. More than anything, bidding for COP26 was about appeasing the green lobby by making a grand gesture aimed at gaining short-term popularity without changing the fundamentals. It was environmental virtue signalling, with the taxpayer picking up the hefty bill.
But the rest of the Cabinet was in the grip of climate fever. When they weren’t posing for selfies with Greta Thunberg, they were busy trying to ban wood-burning stoves and plastic straws. After David Cameron’s ‘hug a husky’ phase, we’d done nothing to reverse Labour’s statist climate change policies. By the end of Prime Minister Theresa May’s government in 2019, we had committed ourselves to binding climate change targets with very little discussion of the consequences.
We have dumped costs on families with no regard for whether they can afford them and we have failed to plan for the long term. Meanwhile, there is little discernible impact on overall environmental outcomes. Many programmes, such as the switch from petrol to diesel in cars or the use of electric vehicles, have either harmed the environment in other ways or empowered our polluting adversaries elsewhere in the world by making us dependent on imported gas and coal and Chinese solar panels.
There are also ludicrous claims that pursuing a net zero agenda will boost the economy and drive growth. This is patently not true and wishful thinking. Additional environmental regulations have already hampered growth. For example, the National Grid estimates a cost of £3 trillion for decarbonising the electricity system.
The zealous drive to net zero is undeniably making business less competitive, hitting taxpayers through the cost of additional subsidies and hiking energy bills for consumers and industry alike, all of which is acting as a drag on economic growth.
The Climate Change Committee was established by the 2008 Climate Change Act passed by the Labour government, legislation that has not been reversed or reformed by the Conservatives.
The zealous drive to net neutrality is making business less competitive, hitting taxpayers, and acting as a drag on economic growth.
https://www.telegraph.co.uk/news/2024/04/19/unaccountable-net-zero-elite-has-seized-control-of-britain/
The rest of Europe, Remainers like to tell us, is forging ahead into a glorious green future while Brexit Britain is stalling, the government backsliding one by one on its net zero commitments.
It is hard to square that narrative with what’s really going on across the channel. In March, according to data from the European Automobile Manufacturers’ Association, registrations of new electric vehicles plummeted by 11.3 per cent. In Germany – the grown up country that’s supposed to show childish Britain how it’s done – the drop was even more precipitous at 28.9 per cent.
Apparently it’s not just Britain where motorists have gone distinctly cool on electric cars. The electric vehicle industry appears to going the same way as one of its own products when the battery charge lowers: it’s slowing rapidly to a crawl.
And it’s plain to me that the reasons in Europe are the same as they are here: electric cars are too expensive to buy, and too fussy to recharge. They have a niche as local runabouts for people with their own off-street recharging facilities, but little appeal otherwise. Enthusiasts will point to te example of Norway, where the vehicles have a 90 per cent share of the market, but that exception merely demonstrates what has been clear for a while: people buy electric cars when the government rigs the market in their favour
In Norway, buyers of EVs pay less VAT, are given access to bus lanes or free parking in various regions, pay lower road tolls and are given the right to charge their vehicles if living in apartments. Add to that the government mandating that cars purchased in public procurement need to be zero emissions, and it’s not hard to see why sales are high.
Elsewhere, however, takeup is more moderate, and the EU’s dislike of cheap Chinese imports certainly isn’t going to help. The European Commission is currently considering whether to jack up import tariffs. This is necessary, it says, because the Chinese government is plastering the industry with unfair subsidies.
In other words, the EU is telling motorists that it wants them to go electric, but when cheaper imported products arrive on the market making it slightly more affordable for them to do so, it it cracks down on those imports.
It isn’t just electric cars, though. The EU is full of bluster when it is setting net zero targets, but arguably no more enthusiastic than we are about hitting them. Less so, even. Germany has a net zero target date of 2045, five years earlier than Britain, yet it has reopened coal mines.
Moreover, it’s wriggling out of its electric vehicle targets. Thanks to German carmakers, internal combustion engines will still be acceptable so long as they are capable of running on bio- or synthetic fuels. And thanks to German homeowners, the ban on gas boilers were also watered down. The problem, in other words, is not that Brits are lousy environmentalists. It’s that once again, Net Zero is collapsing as t
Https://www.telegraph.co.uk/business/2024/04/18/charts-show-scale-europe-electric-car-crash/
As long as they are heavily subsidized by taxpayers' money :
Electric car demand plunges across Europe
Electric car sales plummeted across Europe last month as demand dried up despite the EU’s push to ban petrol and diesel vehicles by the middle of the next decade.
Sales of battery-powered cars dropped by 11.3pc as demand in Germany, Europe’s largest economy, plunged by 28.9pc, according to the European Automobile Manufacturers’ Association (ACEA).
Only 13pc of new registrations were electric, down from 13.9pc in March last year and down from 14.6pc for all of 2023.
Sales of electric cars have stalled despite Europe’s plans to ban the sale of new internal combustion engine cars by 2035.
From the article in Energy Voice about Hartshead Resources :
In the run up to a looming general election, with Labour leading the polls, Mr Lewis said fiscal uncertainty damages not just jobs and investment but receipts to the Treasury to fund public services.
“Jobs are really important. Labour should be about protecting jobs more than anything else, that’s where the Labour Party came from, protecting workers, came out of the trade union movement. This does not do that, what Labour are doing at the moment.
“It doesn’t protect jobs today, and it doesn’t protect jobs in the future because there will be companies that will not be able to survive the period between now and when we have full energy transition jobs in floating wind, CCS, and hydrogen.
“We need to preserve the supply chain and the skilled workforce today to have those available for tomorrow.
“That’s nothing to do with the difference between oil and gas. That’s just about solid industrial strategy.”
The industry has repeatedly pointed out that oil and gas giants’ profits – like Shell, BP or TotalEnergies – are driven by areas outside of the UK and are not made here, despite rhetoric to the contrary from politicians, NGOs and parts of the media.
Mr Lewis added: “When Labour came out and said we’re going to “close the loopholes that returned cash to oil and gas giants”, they were effectively damaging oil and gas minnows and mid cap companies, you know from Harbour and Serica all the way down to us. These aren’t oil and gas giants that they’re having a punitive impact on.
“And so I think the rhetoric is really unhelpful and I think there’s just no recognition of what oil and gas has brought to the UK in terms of, you know, jobs and industry, receipts to the Exchequer, energy security, and it would be nice to see a little bit more balance in the rhetoric.”
Britain is incapable of building the wind farms, solar farms and transmission networks essential to net zero, a government report has warned.
A shortage of ships, steel and concrete in the quantities needed to build new infrastructure casts doubt over government targets to decarbonise the energy system, according to a study by management consultancy Baringa.
The problem is compounded by a shortage of skilled workers who can install the new structures.
https://www.telegraph.co.uk/business/2024/04/17/britains-shift-net-zero-threatened-shortages/
U.K. engineering and oilfield services firm John Wood Group (OTCPK:WDGJF) (OTCPK:WDGJY) should either move its listing on the London Stock Exchange to the U.S. or consider a sale, activist investor Sparta Capital Management said Tuesday.
Wood's (OTCPK:WDGJF) (OTCPK:WDGJY) shares have fallen a third to all-time lows since Apollo Global Management abandoned its attempt to buy the company last year, but traded +1.5% in London following Sparta's letter to Wood's board.
Sparta founder Franck Tuil said he was "frustrated" by the stock's continued underperformance, and "if the U.K. public markets are unwilling or unable to engage in Wood's story, we believe you should undertake a strategic review and actively seek alternative solutions."
Tuil said it is "time to recognize that the next chapter of Wood's journey could be best supported by different owners," and urged the company to "explore the best way to maximize shareholder value, including a sale of the company."
Sparta said the company has begun a turnaround but the share price is struggling under the "U.K. mid-cap curse."
U.K. stocks have lagged the valuations of U.S. peers, causing frustration among executives and investors, including at Shell, whose CEO said recently the company has "a location that clearly seems to be undervalued."
Wouldn't this be one of the reasons why ENQ wants to ditch the GE-stake?
https://www.energyvoice.com/oilandgas/north-sea/551646/the-threat-alone-is-something-security-experts-weigh-chinas-role-in-north-sea/
"Strain in the relationship between China and the UK has raised concerns about whether Chinese state-linked companies like CNOOC pose a potential threat to the UK’s energy security.
The UK and the EU have both taken recent actions against Chinese groups, ranging from accusations of cyberespionage to dominating energy supply chains. Against a backdrop of the Russian invasion in Ukraine, the role of foreign companies controlling energy infrastructure is coming under scrutiny. This is especially true for the UK, as the last decade has seen Chinese companies gain a larger presence in the North Sea."
"The issue is not a new one – politicians have warned that Chinese companies working in the North Sea pose a threat to the UK’s energy security. In 2023, chairman of the cross-party policy group Inter-Parliamentary Alliance on China (IPAC) Iain Duncan Smith said the government was “failing to take seriously” the energy security threat posed by the involvement of China-backed groups in the UK’s oil and gas sector."
Other news, probably not so important : Steve Bowyer is appointed to the OEUK-board
https://www.energyvoice.com/oilandgas/551724/oeuk-appoints-trio-of-north-sea-bosses-to-its-board/
Britishvolt’s gigafactory site sold off in electric car blow
US private equity investors have bought the site of what had been hoped would become Britain’s first electric car battery gigafactory in a blow to Britain’s net zero ambitions.
Land in Cambois near Blyth in Northumberland had been expected to become the home of the £3.8bn Britishvolt factory before the company fell into administration last year.
However, Northumberland County Council revealed it has sold the site to Blackstone, which plans to turn the site into a data centre.
Britishvolt, which was backed by mining giant Glencore, collapsed with the loss of more than 200 jobs and had been in line for £100m in funding from the Government via its Automotive Transformation Fund.
"The claim that abandoning fossil fuels will make this country safer in a hostile world is a perversion of reality; it should be treated with contempt. "
https://www.telegraph.co.uk/news/2024/04/15/true-british-patriots-have-gas-boilers-and-petrol-cars/
In US not so different : Bets against energy stocks were higher at the end of March. Average short interest across energy stocks in the S&P 500 index rose 14 basis points to 2.56% of shares floating at the end of the month from February end.
Oil, Gas, and Consumable Fuels remains the most shorted industry within the energy sector, with 2.66% short interest as of March-end, up from 2.50% at the end of February. Energy Equipment and Services was the least shorted industry within the sector, with 2.07% short interest as of March-end, up from 2% during February end.
1) With the exception of the Saudis, the OPEC+ cut is not real. Supplies are higher than what's being penciled in, so the risk of supplies surprising to the upside is significantly lower than what people think.
2) US oil production growth is nowhere near what headline figures show. As a result, the decline will be larger and more severe than people expect. This will directly impact how we exit 2024 and 2025.
What Does that Mean for Price?
Even with our variant perception, we still see oil prices being rangebound this year. Why? Because the Saudi cut is real and they have every incentive to start unwinding it by H2 2024. This means supplies could surprise by ~500k b/d to ~1 million b/d.
This year is an election year and if oil prices get too hot, the US could use SPR again to combat higher prices. China is also capable of releasing SPR this year, which could complicate things.
However, once the market sees what we are seeing, the unwinding of the voluntary cut will be bullish for balances in 2025. People will realize that this production cut is not real, and the reversal of it will have no real impact on the market. Analysts will have to readjust their modeling for 2025 and oil traders will see that despite the production increase, exports are the same. Physically and financially speaking, oil prices will get a tailwind because of this (unwinding of the voluntary cuts).
Lastly, because of the overstated growth in US oil production, market participants will be surprised to see both the drop in US oil production this year and the subsequent lack of growth. This will alter people's perception of supply growth in 2025. Once US shale production peaks, non-OPEC supply growth also peaks. The peak supply thesis is going to come much sooner than the peak demand thesis.
What does it mean for price?
It's going to be a lot higher than $90/bbl WTI.
https://seekingalpha.com/article/4683659-two-variant-perceptions-in-the-oil-market-today-and-why-they-are-so-important-for-where-we-are-headed
"
As rising oil prices complicate the UK’s escape from this ghastly cost of living crisis, it was noteworthy a British energy company announced last week it is to start drilling at the biggest oil field discovered in the North Sea in at least 20 years.
EnQuest plans to bring two fields onstream with the potential to produce 500 million barrels of crude over coming decades. This reignites the political battle over the UK’s energy future, with the Tories having just extended the 75pc “windfall levy” on North Sea output and Labour threatening to block new production completely, citing environmental concerns.
This makes no sense. There are around 300 active North Sea oil and gas fields, over half of which will cease production by 2030. The North Sea currently delivers the equivalent of 83pc of UK oil demand and 54pc of our gas use. What are our plans to replace those supplies?
Even the Climate Change Committee, the official green watchdog, acknowledges fossil fuels will still account for around half of Britain’s energy needs by 2030 and a quarter by mid-century. And that’s if the proposed net zero 2050 transition to renewables is achieved, which looks pretty unlikely.
So if that’s the case, that we’ll be using oil and gas for at least the next three decades, why not drill our own? Even if such energy is exported, at least UK energy workers would keep their jobs and the Treasury would get the tax.'
Ready reserves can cushion the blow – but only if we are prepared to use them.
Hoping the narrative keeps changing...
https://www.telegraph.co.uk/business/2024/04/14/britain-north-sea-oil-resources-protect-rising-fuel-prices/