Qatar is planning to build a new generation of the world’s biggest LNG ships, the largest ethane cracker in the Middle East at 2.08million/year, and what is intended to be the world’s largest blue ammonia plant at 1.2million t/year.
LNG has emerged as a pivotal player and has a crucial role in the energy transition and the path forward. Its role in bridging the gap between traditional fossil fuels and renewable energy sources is undeniable.
TotalEnergies’ CEO, Patrick Pouyanne, said “I don’t understand the West”. It’s gas finance ‘exclusion policy’ should be revisited. He added “We will never manage the transition by exclusion… We cannot do without natural gas.” “This is the reality. Let’s be clear… We need gas”.
He said energy transition goals will only be met through inclusive decisions.
The International Gas Union agrees. It says energy demand is not reflected in climate planning.
Cyprus and Egypt explored enhanced energy cooperation at a meeting this month in Nicosia. Not surprisingly, given Egypt’s dire gas supply situation, the key topic of the meeting was the acceleration of natural gas field development in Cyprus and export to Egypt.
Egypt’s journey from gas bonanza to power blackouts is remarkable. Its gas output is down more than 30% since it peaked in 2021 and is on a continuous slide. A big factor is the inability of Egypt to pay the oil companies.
The decline in gas production has become so dire that the country is seeking to buy 20 cargoes of LNG, starting in October, making it the first time in years it will import LNG in the run up to winter. This is having a massive impact on its economy.
Egypt announced new incentives to halt oil and gas output decline. However, the most important incentive is payment of its $6 billion dues to oil and gas companies and maintenance of payments.
Meanwhile, Cyprus faces several energy conundrums. Will the Aphrodite gas field ever be exploited? Will the Vassiliko LNG import project ever come to fruition? When will Eni announce its development plans for its block 6 gas fields?
The Aphrodite gas field saga is intensifying, adding more challenges to Cyprus’ energy challenges.
Chevron submitted a new proposal to develop the gas field, but it seems too costly. A response from Cyprus’ energy ministry is expected soon.
Gas prices in the EU now stand at €37.60/MWh and are expected to rise close to €40/MWh this winter.
EU
In August European gas demand was the lowest this century. Even though seasonal use should lift demand slightly in September, year-on-year losses will continue due to lower industrial and power sector use and stubbornly higher prices.
Europe’s LNG ambitions face a reality check. LNG imports fell 20% year-over-year in the first half of 2024, signalling a potential peak in demand.
Another reason is the increasing renewable capacity and production in the EU. Also, high wind and hydropower energy.
Deindustrialisation is causing a significant decline in European gas markets in 2024. But how much of deindustrialisation is reflected in the power sector gas utilisation is unclear relative to how much is a result of the inexorable rise of renewables and batteries.
Germany’s deindustrialisation is picking up speed. Since its peak pre-Covid-19, Germany’s industrial production index, dropped by more than 15% and it still is on a rapid downward trend.
An underlying factor is that Germany as a business location is falling further behind in terms of competitiveness.
Given that Germany’s industrial production is higher than in France and Italy combined, the self-inflicted demise of German industry will have profound consequences for the entire EU. It is serious.
Europe’s competitive deficit is largely due to the high cost of energy, both electricity and gas.
Mario Draghi’s much anticipated report has been released, but his plan to fix a broken Europe already looks impossible. The report is full of good intentions to mend a continent losing its way, but while the vision is bold, the politics, and the €800 billion/yr price tag, are practically impossible.
On energy, the report called for more ‘coherent’ EU climate agenda and focus on energy prices. The EU needs to bring energy prices down, especially for industry, and ramp up investments to meet climate goals.
Draghi said EU tech laws are hampering innovation. “With this legislation we’ve given ourselves, we’re actually self-defeating, we’re killing our companies”.
Draghi recommends boosting EU competitiveness.
When asked if his message was “implement the report, or die”, he responded “do this, or it’s a slow agony.” But with Germany not supportive, it is likely to be doomed.
EU Methane Regulation entered into force on 4 August. It includes measures applying to entities importing hydrocarbons into the EU, and specifically those importing LNG.
These could become an important issue for those importing US LNG to Europe. US methane emissions are high.
Annually, the majority of EU countries now generate more than 50% of their electricity from clean sources.
In 2024, wind and solar energy are expected to overtake fossil fuels to provide 30% of EU electricity. With other renewables such as hydropower included, the proportion would exceed 50% in Europe and 40% globally.
EU power generation from burning coal, oil and gas fell 17% in the first six months of 2024 compared with the same period last year. This has led to a one-third drop in the sector’s emissions since the first half of 2022.
At Bruegel’s 2024 annual conference it was suggested that the EU had 4 years of greening and it now needs 5 years to implement it. Also, EU competition policy must accommodate and not stifle innovation. It needs a step up in electrical infrastructure and AI – both require innovation and investment.
A frequently asked question is whether EU voters are turning their backs on the EU’s 2030 climate objectives. The rising costs and subsidies required to deliver Europe’s 2030 climate targets combined with the cost of living are becoming a pre-eminent concern for electorates everywhere
US
Kamala Harris and Donald Trump differ starkly on energy and climate, but neither candidate has yet released a detailed outline of their plans for US climate and energy policy.
According to the FT, despite the US-China rift, globalisation is proving more resilient than many expected. Digital technology and AI are paving the way for new forms of globalisation.
According to the EIA, North America’s LNG export capacity to more than double by 2028, to 24 bcf/d.
But the US LNG industry is under pressure as challenges and uncertainty mount, as legal clashes with activists and contractors combine with a federal permitting freeze to slow expansion.
China
China is cementing its status as global factory of the world. Every year Chinese firms churn out as much industrial output as the US and the EU combined. Only 20 years ago, China’s industrial output stood at only a fifth of America and Europe’s total output.
Its share of global markets in solar panels is 85%, in wind turbines 60%, in lithium-ion batteries 80% and in electric vehicles 60%.
Chinese start-up aims for nuclear fusion at half the cost of US rivals. Benefiting from a cost advantage on materials and staff, China would be at least 50% lower than building the same kind of machine in the US.
China has been shutting down the worst of its coal plants and replacing them as needed with modern supercritical plants. By ramping renewables and slamming the brakes on coal, it could mean massive CO2 reductions by 2030.
China has drafted laws on energy security, renewables amid US tensions. It is aiming to become more self-reliant, diversify imports of resources and enhance supplies of renewable energy.
Climate
Energy transition is crucial, but data shows that global energy demand is still outpacing renewable growth. Policies must reflect this reality to avoid future energy shortages and economic disruptions.
Where is energy transition really? Scaling up deployment of decarbonisation technologies is crucial to achieve net zero, but there is a reality gap. The lack of firm EU and US project commitments could slow momentum. Energy transition is in its early stages, with only about 10% of required deployment of low-emissions technologies by 2050 achieved in most areas.
McKinsey analysts say that a ‘Reality Gap’ has developed leaving energy transition plans crumbling without cash. Many clean energy projects touted as signs of progress on decarbonisation remain unfinalised, creating a “reality gap” between perceived uptake and actual capital invested.
Europe has set bold targets to accelerate renewable energy deployment this decade, but only a minority of projects have reached a final investment decision.
Hottest summer
New data show that the earth had just had its hottest summer on record.
Sea surface temperatures hit 36.5°C in the Persian Gulf in August. One of the highest sea surface temperatures ever recorded on Earth.
The key issue ahead of November’s UN COP29 climate summit is the New Collective Quantified Goal on Climate Finance, or NCQG. COP29 is expected to set a new target for climate-related assistance to developing nations, to ensure that climate finance reaches those who need it most.
China and US push each other on priorities for UN COP29 climate talks. US presses China for ambitious goals on emissions and China urges the US to “maintain consistency with policies”.
They discussed shared goals of stemming deforestation and paring potent planet-warming pollution.
The US and China have been locked into an increasingly disruptive game of tit-for-tat trade warfare in a battle to secure economically critical metals.
In a momentous development, the UK, home to the world’s first coal power station in 1882, will stop using coal to generate electricity this month, making it the first G7 country to do so, Remarkably, coal supplied 80% of UK electricity as recently as 1990.
In a sign of the impact of demand for battery-powered vehicles decreasing globally over concerns about cost and charging infrastructure, Volvo Cars has ditched its pledge to sell only electric cars by 2030.
One in seven new car sales worldwide is now electric.
Australia has approved a new 4,300km long Australia-Asia electricity interconnector project to export electricity to Singapore. If completed, the project will be the world’s biggest interconnector, renewable energy and battery storage facility.
ADNOC and ExxonMobil agreed to partner in the world’s largest low-carbon hydrogen facility in Texas, capable of producing up to 1 billion cubic feet/day (cfd) of low-carbon hydrogen. It will leverage advanced carbon capture and storage technologies to reduce emissions associated with hydrogen production from natural gas.
The exponentially increasing Internet has a knock-on effect on global energy needs and carbon footprint. A staggering statistic is that if ristiano Ronaldo posts something on Instagram, the energy needed to send the post to fans around the world could power 10 homes for a year!
Dr Charles Ellinas is Councilor at the Atlantic Council
X: @CharlesEllinas