THE BIG PICTURE


Welcome to the first OilWire bulletin of 2019! In this edition, we include some stories you may have missed at the end of 2018 – like the Indigenous lawsuit brought against oil majors operating in Patagonia. So far, 2019 has brought a major win against the expansion of fossil gas infrastructure in Europe, as well as a major wake-up call to the climate threat – and deep inequity – of the unprecedented ongoing expansion of U.S. oil and gas production.

A cross-cutting theme is the leadership of Indigenous communities in resisting the spread of oil and gas infrastructure across their lands. Last year, we saw Indigenous organizing curtail new oil leases in Ecuador, block gas pipelines in Mexico, quash approval of the Trans Mountain pipeline in Canada, continue to block Keystone XL from bisecting Turtle Island, and take on oil majors’ dumping of toxic fracking waste in Argentina. In 2019, First Nations in Canada are making headlines again for defending their unceded territory from a new TransCanada fossil gas project.

Read on for the full updates, and forward the OilWire subscription link to anyone you think would be interested.

–The OilWire Team

P.S. Previous OilWire editions are available here.

THE DATA


A report released this month by Oil Change International and 17 partners examines the collision course between U.S. fracking and global climate goals. U.S. production is set to account for nearly 60 percent of global growth in oil and gas supply from 2017 to 2030, based on projections from Rystad Energy. If not constrained, new U.S. drilling could unleash as much carbon pollution as nearly 1,000 coal plants between now and 2050.

The report highlights the political leadership needed to ensure the opposite outcome – a rapid and just managed decline of the U.S. fossil fuel industry.

U.S. Oil & Gas Expansion Impedes the Global Managed Decline Required by Climate Goals:

Oil and gas decline graph

Source: Drilling Towards Disaster: Why U.S. Oil and Gas Expansion Is Incompatible with Climate Limits, Oil Change International, January 2019.

WHAT WE’RE TRACKING


Trends in the Right Direction

French regulators give ‘red card’ to major EU-backed gas pipeline
Based on lack of need and high cost, French regulators last week rejected a controversial gas pipeline project that would have run between France and Spain, a major victory for local communities and climate activists across Europe fighting new fossil gas infrastructure. The South Transit Eastern Pyrenees (STEP) project was to be the central link in the larger EUR 3 billion “MidCat” mega-project, which was one of 100 gas projects on the European Union’s “Projects of Common Interest” list. The rejection of the STEP pipeline could spell the end of the MidCat project as a whole. “This is a major setback for the gas industry, and calls into question the hundred other gas projects that the EU has prioritised for support, all of which are similarly unviable,” said Antoine Simon at Friends of the Earth Europe. (Find the French decision here.)

Swedish pension fund divests from tar sands to better align with Paris goals
This January, the Swedish state pension fund AP4, worth EUR 35.9 billion, sold off its remaining investments in companies involved in tar sands extraction, explaining the decision as a move to better align its portfolio with the Paris Agreement. The fund stated, “AP4 assesses that oil sand must be phased out in a global transition to a low carbon economy in line with the UN Climate Convention and the Paris Agreement. The decision is a development of AP4’s business strategy to reduce climate risk exposure of the portfolio.”

European development bank to cease financing new oil extraction
In mid-December, the European Bank for Reconstruction and Development (EBRD) released its new five-year energy strategy. Civil society groups from 28 countries had urged EBRD to meet and exceed the World Bank’s commitment to end all financing for oil, gas, and coal extraction. EBRD’s strategy made some progress but fell short of the mark. EBRD announced it will stop financing thermal coal mining or power projects as well as “any upstream oil exploration, and will not finance upstream oil development projects except in rare and exceptional circumstances.” However, the bank will continue to finance fossil gas projects, falling short of the standard set by the World Bank and of climate imperatives.

Insights

The next big step in climate policy?
In Nature Climate Change, scientists at the Stockholm Environment Institute (SEI) examine measures to limit fossil fuel production as “the next big step in climate policy.” The analysis presents a case study of the potential carbon pollution and environmental justice benefits if the U.S. state of California were to implement limits on oil extraction.

In 2018, New Zealand, Belize, and Denmark joined the growing list of countries taking steps to restrict new oil exploration or extraction. In 2019, OilWire will track momentum towards more “first mover” jurisdictions joining this list. Spain and Ireland are currently considering proposals to ban new licences for oil and gas exploration.

Analyzing Indonesia’s fiscal transition off oil and gas production
New research from the International Institute for Sustainable Development explores how Indonesia taxes and subsidizes the production and consumption of oil, gas, coal, and electricity now; and the implications in light of declining oil and gas production. The analysis finds that Indonesia is one of the few developing countries that can boast of reducing fiscal dependence on revenues from fossil fuel production while growing and diversifying both its economy and government revenue base.

A transition from fossil fuels requires more than adding renewables
This new article in Energy Research & Social Science from Richard York and Shannon Elizabeth Bell examines why the growth in renewable energy is currently driving an energy “addition” rather than a “transition,” pointing to the need for stronger policy intervention to phase out fossil fuels.

Climate liability cases to watch for in 2019
Climate Liability News reports on the “cascade” of cases that emerged in 2018 to hold fossil fuel companies and governments accountable over climate. In the United States, fossil fuel companies are facing suits for climate damages from more than a dozen cities, one state, and a commercial fishing association. Youth in Canada and Colombia joined U.S. youth in suing their governments, while a landmark ruling against the Dutch government could lend momentum to similar cases being brought against the EU, Germany, France, Norway, and the UK.

Why climate talks must address fossil fuel supplies
In Policy Options, Philippe Le Billon of the University of British Columbia and Berit Kristoffersen of the Arctic University of Norway consider the need for supply-side climate policies – measures to limit the production and transportation of fossil fuels – and keys to their effective implementation. They write that “a broad societal consensus needs to be reached about where and how production cuts will take place” to ensure a just transition, and that high-income countries with diversified economies should take the lead.

Campaign News

Mapuche Confederation sues oil majors over toxic fracking waste in Patagonia
In December, the Neuquén Mapuche Confederation sued Exxon, Total, Pan American Energy (partly owned by BP), and several other Argentine oil companies over toxic contamination from their fracking operations in the Vaca Muerta shale in Patagonia. An investigation by Greenpeace Andino revealed that companies operating in Vaca Muerta are dumping toxic oil and industrial waste into open ponds without proper treatment. Some of these illegal dumps sit within five kilometres of agricultural fields and drinking water sources.

First Nations continue to resist fossil gas pipeline across unceded territory
As First Nations in Canada continue to block the state-owned Trans Mountain pipeline project, Indigenous groups are also resisting construction of a 670-kilometre TransCanada pipeline that would carry fossil gas across British Columbia to a planned export facility. The Coastal GasLink project, backed by TransCanada, would run through unceded Wet’suwet’en territory, where protesters have camped in the path of the project for weeks. In early January, heavily armed police arrested 14 Indigenous land defenders blocking TransCanada’s access to a construction site, sparking solidarity protests across Canada. The hereditary chiefs of all five Wet’suwet’en clans have ratified opposition to all proposed oil and gas pipelines through their territories. Learn more about the Unist’ot’en Camp and ways to support it.

In more Canadian pipeline news, Stand.earth filed a legal motion last week calling on Canadian regulators to expand the scope of their new climate review of the Trans Mountain pipeline to include all upstream and downstream pollution impacts.

Total denied permit to drill in sensitive Amazon basin
In December, before Brazil’s new president took office, the country’s environmental agency IBAMA denied a request from Total to begin offshore oil exploration in the Foz do Amazonas Basin, near the mouth of the Amazon River. Total’s request spurred a two-year campaign to protect the ecologically sensitive area, which is near the recently discovered Amazon Reef. Greenpeace is pushing for a complete moratorium on drilling in the region.

More Headlines

Mozambique lawyers sue Anadarko, alleging illegal land grab
An Anadarko-led consortium is facing a new hurdle in its plan to develop a $20 billion liquefied natural gas (LNG) export project in Mozambique. Lawyers with the Mozambique Bar Association (OAM) sued Anadarko last month, charging that land was illegally taken from local communities to make way for gas exploration in the Rovuma Basin. The lawyers are asking an administrative court to annul the companies’ rights to use the land and develop a process to protect communities’ human rights.

UK fossil fuel subsidies biggest in the EU – and could get worse
A new report from the European Commission finds that the UK government leads the European Union in subsidizing the fossil fuel industry, with UK fossil fuel subsidies significantly outpacing those for renewables. The report also finds that “fossil fuel subsidies in the EU have not decreased,” and totalled EUR 55 billion in 2016, despite G7 and G20 commitments to phase them out. Meanwhile the UK’s National Audit Office warned this month that taxpayers could end up paying more than GBP 24 billion for the decommissioning of oil and gas infrastructure in the North Sea due to corporate tax breaks.

Industry News

Oil majors continue to prioritize fossil fuels, despite ‘green’ spin
Recent reporting by the Financial Times separates fact from industry fiction, showing that even as oil majors “say they are preparing for a greener future, their spending is still largely focused on their legacy fossil fuels businesses.” Research cited from CDP indicates that just 1.3 percent of total oil industry capital expenditures went towards low-carbon technologies in 2018. As the industry invests in expanded extraction, it incentivizes greater demand, contributing to growing fossil fuel use in tandem with the growth in renewables.

2018: The peak of the internal combustion engine?
Automotive industry analysts predict that 2018 marked the historic peak for sales of internal combustion engine cars as the transition to electric vehicles gathers pace. “What makes the present situation unique is that even if overall car sales pick up slightly in 2019 or 2020, electric cars are predicted to grow fast enough to shrink the portion of combustion engines sold,” the Financial Times reports. If U.S. shale oil production was not flooding the global market and driving down oil prices, this transition would likely be occurring faster, underlining the importance of pairing policies to limit oil supply and demand together.

RESOURCES


SEI Brief: Realizing a just and equitable transition away from fossil fuels
New analysis from SEI examines key considerations and opportunities for improving justice and equity outcomes in energy transition policy and planning – with a focus on the United States and Thailand. Read the briefing.

Who’s Banking the Coastal GasLink Pipeline?
A new brief from Rainforest Action Network exposes the key banks, led by JPMorgan Chase, financing TransCanada’s fossil gas pipeline across British Columbia that is violating First Nations’ rights. Read it here.

Rising oil and gas industry emissions in Canada undermine climate targets
Environmental Defence and Stand.earth released a report at COP24 that shows oil and gas companies in Canada are systematically weakening and delaying the country’s climate plan and further climate ambition while reaping more federal subsidies and continuing to increase production. Read the report.

Pipedream: Debunking the myths of Croatia’s Krk gas terminal
This “mythbuster” from Friends of the Earth Europe and Friends of the Earth Croatia exposes the climate, environmental, economic, and democratic flaws of arguments made in favor of a proposed Croatian LNG terminal that has received backing from the EU. View the briefing.

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