News round-up, Tuesday, February 28, 2023
Editor's thoughts…
—-”According to the journal Plos Pathogens from the University of Kent (England), the SARC-COv-2 virus was discovered for the first time on Friday, 17 November 2019, in Wuhan, China. An organism with a simple structure composed of proteins and nucleic acids can reproduce only within specific living cells, using its metabolism.
Our effective behaviours are the cruellest change that humanity has undergone because of the Coronavirus. This little —monster— certainly aroused the paranoia of terror in us in a very evil way... let us know. It certainly did, that we would die if we were in the company of other individuals of our kind, who were then already submerged by the sophistication of the 2.0 world, where genuine expressions of affection, handshakes, and hugs ... which do so much good for the intangible parts of the so-called soul, have been replaced by intangible faces flowing at an infinite density —billions— per second, without any compassionate human contact whatsoever.
What cruelty have we been subjected to ... How many of our loved ones are not with us today? Why? Because —perhaps—, of a human error in a laboratory in the isolated province of Wuhan in millennium China”.
THE DROUGHT BY GERMÁN & CO, SEPTEMBER, 2022Most read…
Little-known scientific team behind new assessment on covid-19 origins
Small shift in favor of ‘lab leak’ theory was prompted by new data and group of weapons-lab scientists
WP BY JOBY WARRICK, ELLEN NAKASHIMA AND SHANE HARRISBank finance for cleaner energy grows, but still lags fossil fuels - report
Several climate scenarios suggest that to limit global temperature rises to 1.5 degrees Celsius above the pre-industrial average, the world needs to be investing $4 in renewable energy for every $1 invested in fossil fuels by 2030.
REUTERSThe EU and UK have a Northern Ireland deal — so what’s in it?
The key concessions and single market safeguards in the newly-unveiled Windsor framework.
POLITICO EU BY CRISTINA GALLARDO, FEBRUARY 27, 2023LNG expansion in Europe opposes climate goals, says research
Researchers warn the doubling down on long-term liquefied natural gas deals in Europe threatens to derail decarbonization efforts.
reuters BY BEATRICE BEDESCHI, WRITING FOR GAS OUTLOOK
”We’ll need natural gas for years…
— but can start blending it with green hydrogen today, AES CEO, Andrés Gluski says…
AES chief says we’ll need natural gas for next 20 years
From the United States to the European Union, major economies around the world are laying out plans to move away from fossil fuels in favor of low and zero-carbon technologies.
It’s a colossal task that will require massive sums of money, huge political will and technological innovation. As the planned transition takes shape, there’s been a lot of talk about the relationship between hydrogen and natural gas.
During a panel discussion moderated by CNBC’s Joumanna Bercetche at the World Economic Forum in Davos, Switzerland, the CEO of energy firm AES offered up his take on how the two could potentially dovetail with one another going forward.
“I feel very confident in saying that, for the next 20 years, we need natural gas,” Andrés Gluski, who was speaking Wednesday, said. “Now, what we can start to do today is … start to blend it with green hydrogen,” he added.
“So we’re running tests that you can blend it up to, say 20%, in existing turbines, and new turbines are coming out that can burn … much higher percentages,” Gluski said.
“But it’s just difficult to see that you’re going to have enough green hydrogen to substitute it like, in the next 10 years.”
Change on the way, but scale is key
The planet’s green hydrogen sector may still be in a relatively early stage of development, but a number of major deals related to the technology have been struck in recent years.
In December 2022, for example, AES and Air Products said they planned to invest roughly $4 billion to develop a “mega-scale green hydrogen production facility” located in Texas.
According to the announcement, the project will incorporate around 1.4 gigawatts of wind and solar and be able to produce more than 200 metric tons of hydrogen every day.
Despite the significant amount of money and renewables involved in the project, AES chief Gluski was at pains to highlight how much work lay ahead when it came to scaling up the sector as a whole.
The facility being planned with Air Products, he explained, could only “supply point one percent of the U.S. long haul trucking fleet.” Work to be done, then.
Image: Germán & CoLittle-known scientific team behind new assessment on covid-19 origins
Small shift in favor of ‘lab leak’ theory was prompted by new data and group of weapons-lab scientists
WP BY JOBY WARRICK, ELLEN NAKASHIMA AND SHANE HARRISFebruary 27, 2023
U.S. Ambassador to China Nicholas Burns said Feb. 27 that China needs to be more honest about “what happened three years ago in Wuhan” with covid-19’s origin.
The theory that covid-19 started with a lab accident in central China received a modest boost in the latest U.S. intelligence assessment after the work of a little-known scientific team that conducts some of the federal government’s most secretive and technically challenging investigations of emerging security threats, current and former U.S. officials said Monday.
An analysis by experts from the U.S. national laboratory complex — including members of a storied team known as Z-Division — prompted the Energy Department to change its view earlier this year about the likely cause of the 2019 coronavirus outbreak, the officials said. Though initially undecided about covid-19’s origins, Energy officials concluded as part of a new government-wide intelligence assessment that a lab accident was most likely the triggering event for the world’s worst pandemic in a century.
But other intelligence agencies involved in the classified update — completed in the past few weeks and kept under wraps — were divided on the question of covid-19’s origins, with most still maintaining that a natural, evolutionary “spillover” from animals was the most likely explanation. Even the Energy Department’s analysis was carefully hedged, as the officials expressed only “low confidence” in their conclusion, according to U.S. officials who spoke on the condition of anonymity to describe a classified report.
The overall view — that there is as yet no definitive conclusion on the virus’s origin — has not changed since the release of an earlier version of the report by the Biden administration in 2021, according to the officials.
“The bottom line remains the same: Basically no one really knows,” one of the officials said.
Still, the news that Energy had shifted its view reignited what was already an intense debate on social media and in Washington, where members of Congress are preparing for hearings — some as early as Tuesday — exploring the circumstances behind the outbreak.
“To prevent the next pandemic, we need to know how this one began,” Rep. Mike Gallagher (R-Wis.), a member of the House Permanent Select Committee on Intelligence, said in response to news of the updated assessment, first reported Sunday by the Wall Street Journal. “The administration must move with a sense of urgency and use every tool at its disposal to ensure that we understand the origins of covid-19.”
U.S. officials confirmed that an updated assessment of covid-19’s origins was completed this year, and said the document was based on fresh data as well as new analysis by experts from eight intelligence agencies and the National Intelligence Council.
But the agencies are united, the official said, in the view that the virus was not man-made or developed as a bioweapon.
“‘Lab’ does not equal ‘man-made,’ the official said. “Even if it was a leak from a lab, they still think it would be a naturally occurring virus.”
Among the nine intelligence entities involved in the assessment, only the FBI had previously concluded, with “moderate” confidence, that covid-19 started with a lab accident. The Energy Department was the only agency that changed its view, while the CIA and one other agency remained undecided, lacking enough compelling evidence to support one conclusion over the other, officials said.
Even at low confidence, however, the Energy Department’s analysis carries weight. For its assessment, the department drew on the expertise of a team assembled from the U.S. national laboratory complex, which employs tens of thousands of scientists representing many technical specialties, from physics and data analysis to genomics and molecular biology.
The labs were established as part of the U.S. nuclear weapons program and operate largely in the classified realm. The department’s cadre of technical experts includes members of the Energy Department’s Z-Division, which since the 1960s has been involved in secretive investigations of nuclear, chemical and biological weapons threats by U.S. adversaries, including China and Russia.
The Energy Department is “a technical organization with tens of thousands of scientists,” said a former energy official. “It’s more than just physics. It’s chemical and biological expertise. And they have a unique opportunity to look at intelligence from the technical aspect.”
Both the Energy Department and the Office of the Director of National Intelligence declined to comment on the revised assessment. It was unclear what, precisely, prompted officials at Energy to see a lab leak as the more probable explanation for how covid-19 began.
Neither of the leading theories — a natural spillover or a lab leak — have been conclusively validated, in part because of China’s refusal to allow independent investigators access to environmental samples and other raw data from the earliest weeks of the outbreak.
Many scientists — and, at least for now, the majority of U.S. intelligence agencies — favor the spillover hypothesis, which holds that the virus jumped from bats to humans, perhaps at a Chinese market, and presumably after passing through a third species that had come to harbor what became known as the SARS-CoV-2 virus. Yet, three years after the outbreak began, the search for the elusive “carrier” species has produced no firm leads. The bats that naturally harbor viruses closely related to SARS-CoV-2 are native to Southeast Asia and southern China, about 1,000 miles from Wuhan, where the first cases of covid-19 were reported.
Likewise, no hard evidence of a lab leak has emerged. Supporters of the leak theory note that the outbreak began in a city that happens to be the world’s leading center for research on coronaviruses. China has had previous lab accidents, including an incident in 2004 in which lab workers were inadvertently exposed to the original SARS virus, and subsequently spread the pathogen outside the lab, resulting in multiple illnesses and at least one death, according to a World Health Organization probe.
China has repeatedly denied that an accident occurred. On Monday, Beijing denounced the new report linking Chinese labs to the pandemic, with Chinese Foreign Ministry spokeswoman Mao Ning demanding that the United States “stop defaming China.”
“Covid tracing is a scientific issue that should not be politicized,” she said.
The Biden administration on Monday emphasized the inclusive nature of the evidence so far. National Security Council coordinator for strategic communications John Kirby, speaking at a White House briefing, said the new intelligence assessment was part of an ongoing “whole of government” effort to investigate how covid-19 began, although he acknowledged that firm conclusions have remained elusive.
“There is not a consensus right now in the U.S. government about exactly how covid started,” Kirby told reporters. “That work is still ongoing, but the president believes it’s really important that we continue that work and that we find out as best we can how it started so that we can better prevent a future pandemic.”
Director of National Intelligence Avril Haines is scheduled to testify at a Senate worldwide threats hearing next week and probably will be asked to address the matter. The House select subcommittee on the coronavirus pandemic was set to hold a roundtable exploring early covid-19 policy decisions on Tuesday.
Cooperate with objective and ethical thinking…
Image: Germán & CoBank finance for cleaner energy grows, but still lags fossil fuels - report
LONDON, Feb 28 (Reuters) - Banks gave 81 cents in financing support to low carbon energy supply for every dollar they provided to fossil fuels in 2021, a report showed on Tuesday, but they will need to ramp up their commitments much further for the world to hit its climate goals.
Several climate scenarios suggest that to limit global temperature rises to 1.5 degrees Celsius above the pre-industrial average, the world needs to be investing $4 in renewable energy for every $1 invested in fossil fuels by 2030.
Energy analysts BloombergNEF compiled data from 1,142 banks for what it calls an "Energy Supply Banking Ratio" to assess whether banks are aligning their financing to the real economy and the 1.5 degrees target.
In 2021, bank financing for energy supply totalled $1.9 trillion, just over $1 trillion of which went to fossil fuels and $842 billion to low carbon energy projects and companies, according to the report.
The bank financing ratio, of 81 cents to $1, was below the global energy supply investment ratio of 90 cents to $1.
The latter ratio has been climbing in recent years from around 0.45:1 between 2011 and 2015.
"While a bounce in fossil-fuel investment is expected to counter the disruption caused by Russia’s invasion of Ukraine, the underlying economics of low-carbon energy supply mean its growth will be sustained," said BloombergNEF CEO Jon Moore, noting 2022's 15% rise in low carbon energy supply investment.
Individual banks' financing ratios varied. The Royal Bank of Canada had a 0.4 ratio and JP Morgan 0.7, against BNP Paribas' 1.7 and Deutsche Bank's 2.2, according to BloombergNEF, which said differences reflect geographic focus, client bases and strategies.
JP Morgan and RBC did not respond to requests for comment.
The report's findings differ from another study published by environmental groups last month which said the share of bank financing going to renewables had stagnated.
BloombergNEF said its research covered financing from far more banks than other studies.
Seaboard: pioneers in power generation in the country
…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.
More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.
Image: Germán & CoThe EU and UK have a Northern Ireland deal — so what’s in it?
The key concessions and single market safeguards in the newly-unveiled Windsor framework.
POLITICO EU BY CRISTINA GALLARDO, FEBRUARY 27, 2023LONDON — After four months of intense talks (and plenty of squabbling before that), the EU and U.K. have a deal to resolve their long-running post-Brexit trade row over Northern Ireland.
But as U.K. Prime Minister Rishi Sunak works to sell the so-called “Windsor framework” on the Northern Ireland protocol to Brexiteers and unionists, lawmakers on both sides of the English Channel and of the Irish Sea are getting to grips with the details.
From paperwork to plants, let POLITICO walk you through the new agreement, asking: Who has given ground, and how exactly will the deal thrashed out by EU and U.K. negotiators aim to keep the bloc’s prized single market secure?
Customs paperwork and checks
For businesses taking part in an expanded “trusted trader scheme,” the Windsor framework aims to considerably cut customs paperwork and checks on goods moving from Great Britain but destined to stay in Northern Ireland.
These goods will pass through a “green lane” requiring minimal paperwork and be labeled “Not for EU,” while those heading for the EU single market in the Republic of Ireland will undergo full EU customs checks in Northern Ireland’s ports under a “red lane.”
Traders in the green lane will only need to complete a single, digitized certificate per truck movement, rather than multiple forms per load.
Sunak has already claimed that this means “any sense of a border in the Irish Sea” — deeply controversial among Northern Ireland’s unionist politicians — has now been “removed.”
However, it’s by no means a total end to Irish Sea red tape. An EU official said that although the deal delivers a “dramatic reduction” in the number of physical food safety checks, for example, there will still be some — those seen as “essential” to avoid the risk of goods entering the single market.
These checks will be based on risk assessments and intelligence, and aimed at preventing smuggling and criminality.
U.K. public health and safety standards will meanwhile apply to all retail food and drink within the U.K. internal market. British rules on public health, marketing, organics, labeling, genetic modification, and drinks such as wines, spirits and mineral waters will apply in Northern Ireland. This will remove more than 60 EU food and drink rules in the original protocol, which were detailed in more than 1,000 pages of legislation.
Supermarkets, wholesalers, hospitality and food producers are likely to welcome the new arrangements. Many had stopped supplying to Northern Ireland because the cost of filling out hundreds of certificates for each consignment was deemed too high for a market as small as Northern Ireland.
Export declarations have been removed for the vast majority of goods moving from Northern Ireland to Great Britain.
The EU’s safeguards: While offering to drastically reduce the volume of checks carried out, the EU has toughened its criteria to become a trusted trader under the expanded scheme. The EU will now have access to databases tracking shipments of goods between Great Britain and Northern Ireland in real time. The system was tested through the winter, helping build trust in Brussels, and is being fed with data from traders and U.K. authorities. The European Commission will be able to suspend part or all of these trade easements if the U.K. fails to comply with the new rules.
The timeline: The U.K. government said it will consult with businesses in the “coming months” before implementing the new rules. The green lane will come into force this fall. Labels for meat, meat products and minimally-processed dairy products such as fresh milk will come into force from October 1, 2024. All relevant products will be marked by July 1, 2025. “Shelf-stable” products like bread and pasta will not be labeled.
Governance
A key plank of the deal is the bid to address complaints by Northern Ireland’s Democratic Unionist Party (DUP) — currently boycotting the power-sharing assembly in the region in opposition to the protocol — that lawmakers there did not have a say in the imposition of new EU rules in the region.
Under the terms of the new agreement, the Commission will have to give the U.K. government notice of future EU regulations intended to apply in Northern Ireland. According to Sunak, Stormont will be given a new power to “pull an emergency brake on changes to EU goods rules” based on “cross-community consent.”
Under this mechanism, the U.K. government will be able to suspend the application in Northern Ireland of an incoming piece of EU law at the request of at least 30 members of the assembly — a third of them. But if unionist parties in Northern Ireland want to trigger the new “Stormont brake,” they must first return to the power-sharing institutions which they abandoned last May. The EU and the U.K. could subsequently agree to apply such a rule in a meeting of the Joint Committee, which oversees the protocol.
Commission President Ursula von der Leyen said this new tool remains an emergency mechanism that hopefully will not need to be used. A second EU official said it would be triggered “under the most exceptional circumstances and as a matter of last resort in a well-defined process” set out in a unilateral declaration by the U.K. These include that the rules have a “significant and lasting impact on the everyday lives” of people in the region.
If the EU disagrees with the U.K.’s trigger of the Stormont brake, the two would resolve the issue through independent arbitration, instead of involving the Court of Justice of the EU.
Meanwhile, Northern Ireland’s courts will consider disputes over the application of EU rules in the region, and judges could decide whether to consult the CJEU on how to interpret them. In a key concession, the Commission has agreed not to unilaterally refer a case to the CJEU, although it retains the power to do so.
The EU’s safeguards: The CJEU will remain the “sole and ultimate arbiter of EU law” and will have the “final say” on EU single market disputes, von der Leyen stressed. Whether Brexiteers and the DUP are willing to accept that remains the million-dollar question.
Tax, state aid and EU rules
The U.K. government will now be able to set rules in areas such as VAT and state aid that will also apply in Northern Ireland — two major wins for Sunak that were rejected by the Commission in previous rounds of negotiations with other U.K. prime ministers.
It will, Sunak was at pains to point out Monday, allow Westminster to pass on a cut in alcohol duty that previously passed Northern Ireland by.
But London has had to give up on its idea of establishing a dual-regulatory mechanism that would have allowed Northern Ireland businesses to choose whether they would follow EU or British rules when manufacturing goods, depending on whether they intended to sell them in the EU single market or in the U.K. The whole idea was deemed by Brussels as impossible to police.
The EU’s safeguards: Northern Irish businesses producing goods for the U.K. internal market will only have to follow “less than 3 percent” of EU single market rules, a U.K. official said. But the nature of these regulations remains unclear, and there will be increased market surveillance and enforcement by U.K. authorities to try and reassure the EU.
The timeline: The U.K. government will be able to exercise these powers as soon as the Windsor framework comes into force.
Parcels
The EU and the U.K. have agreed to scrap customs processes for parcels being sent between consumers in Great Britain to Northern Ireland.
The EU’s safeguards: Parcels sent between businesses will now move through the new green lane, as is the case for other goods destined to stay in Northern Ireland. That should allow them to be monitored, but remove the need to undergo international customs procedures. Parcel operators will share commercial data with the U.K.’s tax authority, HMRC, in a bid to reduce risks to the EU single market.
Timeline: These new arrangements will take effect September 2024.
Pets
Residents in Great Britain will be able to take their dogs, cats and ferrets to Northern Ireland without having to fulfill a requirement for a rabies vaccine, tapeworm treatment and other checks.
Pets traveling from Northern Ireland to Great Britain and back will not be required to have any documentation, declarations, checks or health treatments.
The EU’s safeguards: Microchipped pets will be able to travel with a life-long pet travel document issued for free by the U.K.’s Department for Environment, Food and Rural Affairs. Pet owners will tick a box in their travel booking acknowledging they accept the scheme rules and will not move their pet into the EU.
The timeline: The new rules will take effect fall 2023.
Medicines
Drugs approved for use by the U.K.’s medicines regulator, the MHRA, will be automatically available in every pharmacy and hospital in Northern Ireland, “at the same time and under the same conditions” as in the U.K., von der Leyen said.
Businesses will need to secure approval for a U.K.-wide license from the MHRA to supply medicines to Northern Ireland, rather than having to go through the European Medicines Agency. The agreement removes any EU Falsified Medicines Directive packaging, labeling and barcode requirements for medicines. This means manufacturers will be able to produce a single medicines pack design for the whole of the U.K., including Northern Ireland.
Drugs being shipped into Northern Ireland from Great Britain will be freed of customs paperwork, checks and duties, with traders only being required to provide ordinary commercial information.
The EU’s safeguards: Medicines traveling from Great Britain to Northern Ireland will do so via the new green lane, which will have monitoring to protect the single market built in.
The timeline: The U.K. government said it will engage with the medicines industry soon on these changes.
Plants
The deal lifts the protocol’s ban on seed potatoes entering Northern Ireland from Great Britain, and its prohibition on trees and shrubs deemed of “high risk” for the EU single market. This will enable garden centers and other businesses in Northern Ireland to sell 11 native species to Great Britain and some from other regions.
The Windsor framework also removes sanitary and phytosanitary (SPS) checks on all these plants, and ditches red tape on their shipment into Northern Ireland.
The EU’s safeguards: Supplying businesses will have to obtain a Northern Ireland plant health label, which will be the same as the plant passport already required within Great Britain, but with the addition of the words “for use in the U.K. only” and a QR code linking to the rules.
Russia’s strategy of plunging the country into darkness and cold has, if not outright failed, certainly not succeeded, either. Public opinion has not shifted as a result of the blackouts—polls in recent months have shown that more than eighty per cent of respondents in Ukraine want to continue the fight, the same number as before the attacks on the energy grid began. Over time, Ukraine’s air defenses have improved, and its technicians have got faster at repairing the electrical grid. Russia’s stock of long-range missiles, meanwhile, has dwindled, leading to less frequent attacks.
The onset of spring will bring lower electricity consumption, and Kudrytskyi, the head of Ukrenergo, expects that the Ukrainian grid will soon stabilize. “Russia did not achieve its ultimate goal,” he said. “Yes, they managed to create problems for nearly every Ukrainian family.” But that is only half the story: “Instead of making us scared and unhappy, it made us angry, more resolved to win. They did not lower the morale of the nation; they mobilized the nation.”
Image: Germán & CoLNG expansion in Europe opposes climate goals, says research
Researchers warn the doubling down on long-term liquefied natural gas deals in Europe threatens to derail decarbonization efforts.
reuters BY BEATRICE BEDESCHI, WRITING FOR GAS OUTLOOKFEBRUARY 8, 2023 5:00 AM CETThe raft of new liquefied natural gas (LNG) import projects being planned in Europe, as well as the long-term gas deals being signed by buyers in recent months are incompatible with decarbonization targets and risk jeopardizing the continent’s energy transition, a report by nonprofit research organization Global Energy Monitor (GEM) has warned.
The Ukraine war has led to a massive boost in import capacity across Europe, with 195 billion cubic meters/year lined up for commissioning between 2022 and 2026.
Some of this new capacity is already online, including the Krk floating storage and regasification unit (FSRU) in Croatia, the Revithoussa LNG Terminal in Greece and the Eemshaven FSRU in the Netherlands, as well as the Wilhelmshaven and Lubmin FRSUs in Germany, which started receiving cargoes between December and January.
In 2021, the EU imported 155 billion cubic meters of gas from Russia, including LNG.
While some short-term supplies have been secured at a high price this winter, the vast majority of the new capacity will become available too late to address security issues for this winter and the next, which is when they’re most needed, the report argued.
The main concern is that all that planned capacity probably won’t be needed in the future.
While “LNG growing capacity could be in contrast with decarbonization targets… The main concern is that all that planned capacity probably won’t be needed in the future as the demand for LNG is not expected to grow at the same pace as the LNG future facilities are expected to be built,” Ana Maria Jaller-Makarewicz, Europe energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA) told Gas Outlook.
“For the last 10 years or more the gas demand in Europe hasn’t increased and if these new patterns in demand persist, the demand won’t be expected to grow in the future,” she said.
“As a result, it is likely that these new LNG terminals will become stranded assets in the future.”
Germany considers re-export option
At the same time, 15-20 year-long gas deals signed recently run contrary to EU law, which implies a 35 percent decrease in gas demand to 2035, the report said.
“Because it is a sellers’ market, sellers have the upper hand and buyers are being forced to consider longer-term contracts, even if they do not expect strong demand in the future,” Jaller-Makarewicz said.
Long-term agreements signed include Polish PGNiG’s 20-year deal with U.S. major Sempra for four billion cubic meters/year starting in 2027; and French Engie’s 15-year agreement also with Sempra for 1.2 billion cubic meters/year from 2027.
Moreover, Bulgaria’s state-owned Bulgargaz and Turkey’s Botas signed a deal in January granting Bulgaria access to Botas’ LNG and transit pipelines for 13 years.
The vast majority of contracts announced recently were however between U.S. exporters and German buyers.
“Fifteen years is great… I wouldn’t have had anything against 20 [years] or longer contracts,” Germany’s economy minister Robert Habeck was quoted as saying in November, commenting on Conoco Phillips’ deal with Qatar.
Habeck added in the future the need to meet climate targets and therefore to reduce gas volumes would result in German companies having to deliver the volumes to other countries.
Redirecting the volumes in the 2030s is an imperative for EU member states that are serious about hitting climate targets and reducing gas demand.
“Redirecting the volumes in the 2030s is an imperative for EU member states that are serious about hitting climate targets and reducing gas demand,” the GEM report’s author, Greig Aitken, told Gas Outlook. However, he said the “fundamental issue is that by entering long-term contracts at all, EU countries are potentially giving producer countries such as the U.S. the guarantees they need to continue production of fracked gas for export via new export terminals.”
These need “longer-term contract guarantees to be financially feasible. The rush for new, non-Russian supplies”, he said, is likely to create “unnecessary gas lock-in for too long, however countries try to mitigate against this by rerouting supplies.”
Andy Flower, independent consultant at FlowerLNG, told Gas Outlook: “New U.S. projects typically require a 20-year contract to support the raising of funds to support the investment in liquefaction facilities, but the contracts have destination flexibility so cargoes can be traded to alternative markets if not needed in Europe to offset the cost.
“Non-U.S. project like Qatar are typically looking for a long-term contract with little or no destination flexibility, which makes it a major commitment for a European buyer when the EU is legislating for the reduction and eventual elimination of natural gas use.”
On the other hand, the fact many new terminals are relying on FSRUs means these “can be moved to other locations if no longer needed as has already happened with FSRU-based terminals in, for example, the USA, Brazil, Egypt and Israel, or used to trade as LNG carriers”, Flower said. “So the developers of these terminals are not making a 20-year or longer commitment to use them as FSRUs.”
Stranded asset risk for these is being downplayed by promoters with their claims about future conversion to green hydrogen.
The potential repurposing of these terminals for ammonia or hydrogen imports in later years has also been suggested as a way to address the risk of stranded assets.
However, “the economics and practicalities of these conversions are still very uncertain” and the “stranded asset risk for these is being downplayed by promoters with their claims about future conversion to green hydrogen,” Aitken said.
This article was originally published by Gas Outlook.