NOCs’ painful renewables pivot, Volcano-powered bitcoin + MORE

💥Energy Flux💥Friday 11th June 2021

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What can Ghana learn from Denmark’s energy transition? Not a lot, according to a recent webinar exploring the role of national oil companies in renewable energy. Wind and solar returns are slimmer than ever, while supply-side constraints are bolstering the oil recovery – presenting strong incentives for business-as-usual at NOCs around the world.

And, El Salvador is getting all steamed up over bitcoin. The Central American state is bankrolling bitcoin mining using volcanic geothermal power and will soon accept the cryptocurrency as legal tender.

Those are the lead stories in today’s edition of Energy Flux, which looks like this:

💥Mixing oil with water – NOCs struggle to pivot into renewables

💥El Salvador gets hot for bitcoin with volcanic mining

Transition lines – Decarbonisation stories you need to read

🧠Energised minds – Critical thinking on crucial energy issues

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Mixing oil with water

National oil companies face competing priorities of decarbonising their activities while sustaining oil and gas revenues that bankroll economic development and pay for basic social welfare services. Can NOCs in developing countries follow the example of Denmark’s Ørsted, which morphed from a small state oil and gas company into global renewables champion? The answer is an emphatic ‘no’, according to experts.

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El Salvador gets hot for bitcoin

The small Central American nation of El Salvador sent #CryptoTwitter into a frenzy this week by becoming the first country in the world to adopt bitcoin as legal tender. The government is also bankrolling geothermal-powered cryptocurrency mining to harness the country’s considerable untapped volcanic energy.

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⚡Transition lines

Decarbonisation stories you need to read

There’s been a slew of major energy stories in the last 48 hours or so. Here’s a summary of the main developments with links back to primary source material and credible coverage from other outlets (plus my ‘hot takes’ in italics):

  • Exxon’s board shakeup ‘could force review of billions of dollars in spending’. I honestly don’t know how the activist trio will do this without majority control of the 12-person board. Top of the new board’s agenda should be Exxon’s Permian Basin oil and gas reserves, which the IEEFA says are “not world class” — contrary to what CEO Darren Woods says.

  • TC Energy terminates Keystone XL pipeline project. Did anyone *not* see that coming? Republicans blamed president Joe Biden for “killing” a pipeline that could lower fuel bills (I bet that press release was written months ago), while environmentalists hailed a successful “Indigenous-led resistance” (ditto)

  • Cheniere collaborates with US natural gas suppliers and academics to quantify, monitor, report and verify climate emissions at upstream production sites. This one has been a long time coming too. Cheniere began engaging with its upstream suppliers on methane last year. Regular readers of Energy Flux will be familiar with the challenge of selling US LNG with a heavy methane footprint into Europe. Cheniere should expect to uncover some pretty bad news; only 10% of methane emissions measured by satellites are reported by well operators, according to the International Energy Forum.

  • Fossil assets could trigger the next ‘subprime mortgage’ financial crisis. Major European banks have €532 billion in fossil fuel assets and “would struggle to put up with a sudden drop in their value”, says a report, which calls for the creation of a European “fossil bank” to sustainably manage the fossil fuel phase-out. The first step to dealing with a problem is acknowledging it, and a ‘bad bank’ is better than a bankrupt one, I guess.

  • China ‘mulls price caps on coal in bid to tame inflation’. Curiously, this Bloomberg piece makes no mention of Beijing’s geopolitical standoff with major coal supplier Australia, which analysts say is driving up domestic coal prices.

  • Shell pledges to ‘rise to the challenge’ of landmark Dutch court ruling, while criticising it. Rather than wait for an appeal outcome, CEO Ben van Beurden promises to “accelerate” Shell’s “industry leading” emissions reduction strategy but stops short of saying how. This is a clever PR move that buys Shell some time. Wrapping up a firm rebuttal of the ruling in positive messaging that embraces the sentiment behind it is a clear effort to rebalance the prevailing ‘Big Oil is evil’ popular narrative.

  • Five Polish citizens take their government to court over its ‘regressive’ climate stance and failure to reduce greenhouse gas emissions. “The government must take responsibility and reduce Polish emissions in line with the goals of the Paris Agreement to protect the claimants from the severe effects of climate change,” says ClientEarth, which is supporting the claimants. The Dutch court ruling against Shell probably won’t be the last time a European judiciary intervenes in energy and climate matters. It would be quite something if the next ruling on human rights grounds came from a judge in a less progressive nation such as Poland. Related news: Polish state utility PGE abandons plan for major new lignite mine and sets end-date for Europe’s largest coal plant.

  • North Carolina signs executive order to develop 2.8 GW of offshore wind by 2030 and 8 GW by 2040, in bid to reduce power sector GHGs 70% by 2030 and hit net zero by 2050. Offshore wind commitments from US states now top 40 GW, reports Politico. NGOs rejoiced but opposition is brewing.

  • Air Products unveils multi-billion dollar net-zero hydrogen project in Edmonton, Canada. The hydrogen critics were quick to denounce the news as ‘hopium’. Related news: Axpo and ABB to develop green hydrogen pilot project in Italy focussing on H2 innovation to reduce emissions in industry and transport.

  • Wind will be a critical link in India's energy transition and green recovery, “helping to meet the country’s surging demand while avoiding carbon emissions and creating new jobs and industrial opportunities,” according to a wind industry-sponsored report.

  • BP opens UK’s first rapid charging hub for electric vehicle fleets in central London. Oil major plans “hundreds of similar hubs across London and other UK and European cities by 2030”. But wait — range is more important to EV uptake than fast charging, according to new research. That said, fleet operators might see saving time as a more important consideration than household EV owners.

  • Emerging and developing economies will play a huge role in determining the fate of the global energy transition, says a new International Energy Agency report calling for a “step change in global efforts to mobilise and channel the massive surge in investment that is required”. If you think there is any chance of this happening, today’s lead story about NOCs struggling to pivot to renewables will set you straight.

  • Europe ‘risks wasting €27bn battery opportunity with weak CO2 targets’. Study says planned EU battery production capacity could be almost three times higher than demand in 2025-30. You could argue it would be more efficient to dial back investment in redundant factories, if it weren’t for the fact that the EU’s 2030 climate targets will be hard enough to reach as things stand.

  • Scottish government approves Loch Ness pumped hydro storage project. More long-duration storage could help absorb constrained Scottish wind power, but financing such capital-intensive projects is tricky without a clear market signal or subsidy support mechanism.

Quote of the day:

Either [nuclear] fusion has made great gains toward commercialization or venture capitalists and corporate investors have developed a markedly higher risk tolerance — or we're in the midst of an irrational decarbonization bubble.”

Eric Wesoff from Canary Media on the current venture capitalist obsession with fusion.

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🧠Energised minds

Critical thinking on crucial energy issues

‘Britain still relies heavily on coal’Periods of “coal-free” power are hyped in the summer but the UK’s continued use of coal in winter goes unremarked, writes Kathryn Porter of Watt-Logic. “Last winter saw high and spiky prices, a trend which is likely to continue in coming winters as capacity margins fall: as coal exits and older nuclear see declining reliability, there is a growing market tightness, particularly with yet more delays to the opening of Hinkley Point C and rising demand due to the electrification of transport and heating.”

Social equity must be energy transition priority’ — Work to combat climate change must keep equity front and center, writes Laurie Stone of RMI. “Although the climate emergency requires quick and drastic action, that action also must be just. We must ensure that the changes we make in the energy transition minimize impacts to energy customers, workers, and frontline communities.”

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🙃And finally...

As the British government welcomes G7 world leaders, remember that hypocrisy is the hallmark of a kakistocracy

That’s all for today. Energy Flux returns to your inbox at some point next week — I’m away all week looking after my post-operative mum. Wish me luck and patience 😇.

I’ll aim to get at least one issue out mid-week, maybe two depending on family commitments.

Thanks for reading!

Seb