WHAT WE’RE TRACKING
Trends in the Right Direction
Major Investors Call on Governments to Get Serious about Paris Goals
Ahead of the G7 summit in June, 319 major investors with more than USD 28 trillion in assets released a joint letter and briefing urging governments to close the current ambition gap towards achieving the Paris goals and “to incorporate Paris-aligned climate scenarios into their policy frameworks and energy transition pathways.” The briefing echoes concern that often-used scenarios from the International Energy Agency do not fully align with the Paris goals and, consequently, could slow the transition to a low-carbon economy. The investors also call on governments to follow through on a swift phase-out of all fossil fuel subsidies. (UNFCCC, The Investor Agenda)
Oil Companies Must Plan for Their Decline, Say Leading Asset Managers
In the Financial Times, Anton Eser and Nick Stansbury of Legal & General Investment Management, the UK’s largest asset manager, argue that oil companies should “invest less and return more cash” to shareholders over the long term. This approach would free up growth capital to invest in the new energy system. They warn that if oil companies fail to plan for a future of decline, over-investment could leave “an oversupply that persists for a long time.” The consequences could be a lock-in of carbon pollution and/or significant stranded assets. Increasingly, analysis indicates that the wind-down of the oil and gas industry must begin now to stay within climate limits. (Financial Times)
New UK Renewables Could Soon Be Cheaper than Existing Gas
New scenarios for hitting carbon targets in the UK power sector, published in a parliamentary report from the Committee on Climate Change, point to building new renewables as the “low-regrets option.” The report, which looks at scenarios through 2030, indicates that building new wind and solar capacity could be cheaper than running existing gas plants by the mid-2020s. This is due to dramatic cost reductions that have far outpaced previous predictions. (CarbonBrief)
New Insights
The Bad Economics of Trudeau’s Tar Sands Pipeline Buyout
In a Fortune op-ed, researchers Richard Denniss and Fergus Green outline the short-sighted economics of Prime Minister Justin Trudeau’s decision to buy Kinder Morgan’s TransMountain pipeline assets. The deal shunts risks that Kinder Morgan was no longer willing to bear onto Canadian taxpayers and undermines Canada’s efforts to reduce emissions and decarbonize the economy. In the big picture, “profiting from this pipeline would mean the world has failed to carry out the clean energy transition within the timeframe set by the Paris climate agreement,” the authors warn. (Fortune)
A separate report from the Institute for Energy Economics and Financial Analysis dives deeper into the potential fiscal and financial implications of the deal for Canadian taxpayers. It calls on Trudeau to publicly disclose documents related to the transaction, warning that the government has likely overpaid Kinder Morgan and underestimated long-term costs to taxpayers, which pose “a significant, unquantifiable liability.”
Campaign News
‘Expect Resistance’ after Line 3 Pipeline Approval
In late June, officials in the U.S. state of Minnesota approved Enbridge’s plan to replace and expand its Line 3 pipeline to carry more tar sands oil into the U.S. The project was opposed by youth climate intervenors, indigenous communities, and environmental advocates. The Minnesota Department of Commerce had also concluded that the project is not needed based on projections of declining oil demand. As the decision emerged, Tania Aubid declared to the commission, “You have just declared war on the Ojibwe!” The next day a protestor blocked the streetoutside the commission with a banner reading “Expect Resistance.” Protest camps are already forming along the pipeline route. (InsideClimate News, Minnesota Public Radio)
Protests Continue in the Path of TransMountain Expansion
People continue to stand in the way of Kinder Morgan-turned-Trudeau’s plans to construct the TransMountain tar sands pipeline expansion across British Columbia. Last week a dozen climbers, including Coast Salish leader Will George, scaled and suspended themselves from the Ironworkers Memorial Bridge for nearly two days, blocking the path of a Kinder Morgan oil tanker. The protest generated significant public attention and reactions across Canada. An indigenous-built Watch House near Kinder Morgan’s main pipeline terminal in Burnaby continues to serve as a nexus for organizing ongoing resistance. (The Vancouver Sun, National Observer)
‘Pointless’ TAP Pipeline Under New Scrutiny in Italy
Upon taking office, Italy’s new environment minister appeared to back up the movement against the Trans Adriatic Pipeline (TAP), the final leg of a USD 20 billion project that would carry gas from Azerbaijan to southern Italy. “Given (our) energy policy, given falling gas demand, that project today looks pointless,” said the minister. Within the region of Puglia, local mothers, teachers, health workers, and olive farmers have led peaceful resistance to block the project. (Reuters, Bloomberg)
Local Elected Leaders Call for a Drilling Phase-Out in California
More than 100 local elected officials in the U.S. state of California issued a letter to Governor Jerry Brown urging him to “take the next step in bold climate leadership” by taking action to phase out fossil fuel production. (Pacific Standard, The San Luis Obispo Tribune)
More Headlines
Canadian Energy Report Sidesteps Necessary Fossil Fuel Phase-Out
In late June, the Canadian government’s “Generation Energy” task force released its report envisioning Canada’s energy future in a safer climate world. The report sidesteps the global climate implications of continued oil and gas production and, as revealed in public records released to Greenpeace, was influenced by the fossil fuel industry. Rather than lay out a path for phasing out oil and gas production in line with global climate goals, the study proposes steps towards “cleaner” oil and gas production. A recent study from the Stockholm Environment Institute concluded that continued production in Canada’s oil sands would undermine carbon reductions from other domestic policies. (The Canadian Press)
Church of England Threatens to Ditch Oil Shares
The Church of England’s governing body approved a rule this week that gives oil and gas firms a deadline of 2023 to align their business with the Paris climate goals. The original proposal set a deadline of 2020. The rule commits the church to selling off shares in companies that fail to meet the five-year deadline. The church currently manages more than GBP 12 billion in funds. (BBC)
U.S. ‘Ocean State’ Becomes First to Sue Big Oil
Last week, the smallest U.S. state – Rhode Island – became the first to sue 14 major oil and gas companies and affiliates over the harms of climate change. The complaint “seeks to ensure that the parties who have profited from externalizing the responsibility for sea level rise, drought, extreme precipitation events, heatwaves … and associated consequences … bear the costs of those impacts on Rhode Island.” Known as the Ocean State, Rhode Island has 400 miles of coastline. (InsideClimate News)
Unease in Argentina amidst U.S. Pledge to Vaca Muerta
During the G20 ministerial in June, U.S. Energy Secretary Rick Perry pledged U.S. help in developing infrastructure for Argentina’s Vaca Muerta shale, stating, “The technology that has allowed for the shale gas revolution in America we want to make available to Argentina.” Just days later, Argentine President Mauricio Macri installed a new energy minister and capped oil prices amidst rising inflation. He has faced nationwide protests in the wake of agreeing to a USD 50 billion credit facility from the International Monetary Fund. Political and fiscal uncertainty is reportedly stoking unease among international investors in Vaca Muerta, one of the largest undeveloped shale reserves in the world. (Financial Times, Bloomberg, Argus)
Anadarko Pushes Forward on Mozambique LNG, Displacing Residents
U.S.-based Anadarko says it plans to make its final investment decision to begin developing a massive new liquefied natural gas (LNG) export plant in Mozambique in 2019. EDF of France, Tokyo Gas, and Centrica of the UK have signed contracts to purchase LNG from the project. Anadarko is seeking to raise up to USD 15 billion in financing, which would amount to “the largest loan ever in the LNG sector.” Even before construction has officially begun, developers have begun displacing 500 local families from their land, the Financial Times reports. (Financial Times)
Industry News
“Downturns in the market for gas-fired power plants and oilfield services” were significant factors in pushing General Electric off the Dow Jones Index for the first time in more than 100 years. (Financial Times)
German manufacturer Siemens is reportedly considering selling off its gas turbine business amidst falling profits driven by the shift towards renewables. (GreenTech Media, Bloomberg)
The European Commission recently ordered Luxembourg to recover EUR 120 million from Engie LNG (which was bought last year by Total), finding that Engie had captured illegal tax breaks. (ClientEarth) |
