Daily on Energy: Cracks in the EU plan to ditch Russian fossil fuels

New data reveals that the EU is still purchasing Russian supplies either indirectly or directly, harming its efforts to drain the Kremlin’s war chest and end the war in Ukraine.

The bloc imported roughly $5.78 billion in Russian liquified natural gas (LNG) in the first seven months of this year, according to a report from the nonprofit group Global Witness.

Meanwhile, a Ukraine official criticized the EU this week for its imports of Russian petroleum products from India, accusing the bloc of using a loophole to circumvent existing sanctions.

Both are signs of the difficulty in achieving the stated goal of cutting off Moscow’s primary source of war revenue. The EU had imposed eight sanctions packages on Russia last year, which banned oil imports and called for a full end to Russian LNG by 2027.

Natural gas: The EU’s imports of Russian LNG jumped by 40% between January and July, according to data from the nonprofit group Global Witness, with Spain and Belgium ranking as second- and third-largest buyers of Russian LNG, behind only China. Spot LNG prices have cooled significantly since last summer, and EU gas storage tanks are already exceeding targets for the winter heating season.

Refined products: The EU banned all Russian oil imports and refined products in December. But they’re relying on countries like China and India, whose imports of Russian crude have soared tenfold compared to pre-war levels, as a middle-man to refine and sell them the products legally.

In fact, the EU has not so much reduced its Russian oil so much as it has redrawn the map to secure supplies from outside buyers reliant on Russian crude, according to a recent report from Transport & Environment. The bloc’s imports of refined products from India and China have increased by 70% and 13% year-on-year, respectively, prompting a push for tighter sanctions that would ban all products from refineries using Russian crude.

EU leaders should support “a ban for all refined products going to G7 countries” if they’ve been produced from Russian oil, even if they were refined by an outside country, Ukrainian economic advisor Oleg Ustenko told Politico EU in an interview.

Bigger picture: It’s whiplash from the previous year, when the EU repeatedly issued calls for solidarity and lower energy consumption to end their reliance on Russian supplies.

In announcing the EU’s Russian oil ban last May, European Commission President Ursula Von der Leyen described the step as critical to ensuring Russian President Vladimir Putin paid “a high price for his brutal aggression” in Ukraine.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

WHITMER’S CALL FOR CLEAN ENERGY STANDARD: Michigan Gov. Gretchen Whitmer is asking lawmakers to pass a 100% clean energy standard, a move that will allow Michigan to join a slew of states that have previously set similar policies for reducing carbon emissions from the power sector.

During a “What’s Next” address to state legislators and leaders yesterday, the Democratic governor laid out a number of her legislative wish list items, including a requirement for all energy to be produced from renewable sources such as wind and solar. Whitmer did not provide a timeline for these goals but did use the year “2050” as a benchmark to discuss how this proposal could benefit Michiganders.

“We can achieve 100% clean energy while creating jobs, lowering costs, and bringing back billions of our federal tax dollars from Washington to Michigan,” Whitmer said.

Democrats currently control the governor’s mansion along with the state legislature, so movement on a proposal is possible. Democrats in the Michigan House have been working with the governor’s office to allow the approval of large-scale solar energy projects since various local townships have been frequently blocking developments. The obstacles to getting the projects authorized also serve as one of the main hurdles to reaching broader energy goals. Read more from Nancy here. 

TRUMP GOES AFTER BIDEN, VIES FOR AUTO UNION SUPPORT IN NEW CAMPAIGN VIDEO: Former President Donald Trump continued to vie for an endorsement from the United Auto Workers in a new campaign video, characterizing Biden’s electric vehicle goals as a “transition to hell” and one that he said would destroy the U.S. auto industry.

“What’s happening to our auto workers is an absolute disgrace and an outrage beyond belief,” Trump said, describing Biden’s targets as “cruel and foolish.”

“You’re going to hell,” he said. “You’re going to hell, and you won’t have any jobs.”

“All those cars are going to be made in China,” Trump said of Biden’s EV push. “Every one of them. You can forget it, Michigan. You can forget it, South Carolina. You can forget it, everybody. All of those cars are going to be made in China.”

He did not mention the sourcing and “Made in America” manufacturing requirements included in the Inflation Reduction Act, which are aimed at the goal of reshoring EV and battery production.

The new message from Trump comes as a broader push to curry favor with the UAW, which has soured on Biden over his electric vehicle and climate goals that they say have come at the expense of auto workers.

“There’s no such thing as a fair transition that destroys over 100,000 auto manufacturing jobs, it will be much more than that; [one that] wastes tens of billions of dollars that should be going to workers and that makes new cars unaffordable for the middle class,” he said. ”That’s a transition to hell, you’re going to hell and your bosses are leading you right down the tubes.”

SASHIMI, ANYONE? Japan’s prime minister Fumio Kashida and three Cabinet ministers ate Fukushima fish sashimi at a lunch meeting yesterday, in a show that the fish is safe to eat following the release of treated radioactive wastewater from the Fukushima Daiichi nuclear power plant, according to the Washington Post. 

The four officials had sashimi of flounder, octopus, and sea bass, which was caught off the Fukushima coast, along with vegetables, fruits and a bowl of rice that was harvested in the prefecture, according to Economy and Industry minister Yasutoshi Nishimura, who was at the lunch meeting.

“We will do everything in our power to bridge the gap between safety and peace of mind,” he said.

The release of the treated wastewater into the ocean, which began Thursday and is expected to continue for years to come, has been receiving heavy pushback by fishing groups and neighboring countries. China immediately banned all imports of Japanese seafood in response to the move, while thousands of people in South Korea joined rallies over the weekend to condemn the discharge.

Japanese authorities and the International Atomic Energy Agency have repeatedly issued reassurances that the release is safe, and scientists have described the levels of tritium – a radioactive form of hydrogen – in the water release as insignificant.

OKLO TENTATIVELY AWARDED CONTRACT FOR MICRO-REACTOR: The Defense Logistics Agency Energy has issued a notice of intent to award nuclear fission company Oklo a contract to site a micro-reactor at Eielson Air Force Base in Alaska, and provide power to the facility.

Oklo will design, construct, own and operate the power plant, aiming to deliver “clean” electricity under a long-term power purchase agreement, according to a statement issued on Thursday. It didn’t provide a schedule for the installation, and will still need approval from the Nuclear Regulatory Commission.

The Air Force’s micro-reactor pilot program was initiated in response to the Fiscal Year 2019 National Defense Authorization Act, which required DOD to identify potential military sites to place, construct and operate a micro-reactor.

SMR BUILDOUT AT PALISADES: Hyundai E&C and Holtec – a U.S. nuclear power plant design and manufacturing company – has secured more than $3 billion to build out a small modular reactor by 2026, Business Korea reports. The two companies are aiming to finish the project in three years and start electricity production by 2029.

In an interview at Holtec’s Philadelphia headquarters, Holtec Chair Dr. Kris Singh stated that the first SMR will be constructed on the Palisades nuclear power site in Michigan. The Palisades plant was permanently shut down in May 2022, but with the support of the state government, the nuclear power plant is getting restored back to life with Holtec pushing for construction of the SMR on the remaining site. Singh said that two to four SMRs will be built, noting that no new environmental assessment is required.

Holtec holds over 100 patents in core areas of nuclear power plant design, materials, and manufacturing. The company is also developing a 160 MW pressurized water SMR, the “SMR-160.”

SHELL SHELVES CARBON OFFSETS: Shell’s Chief Executive Wael Sawan is quietly ending the world’s biggest corporate plan to develop carbon offsets to counteract CO2 emissions, Bloomberg reports.

In an all-day investor event in June, Sawan laid out an updated strategy for the oil company that included cutting costs and doubling down on profit drivers like oil and gas. But what was significant was what he omitted: any mention of the company’s prior commitment to spend up to $100 million a year to build a pipeline of carbon credits, which was a key component of the company’s promise to zero out emissions by 2050.

The company confirmed to Bloomberg that the offsets program has been retired, along with the plan to harvest 120 million carbon credits annually by the end of the decade from projects that sequester carbon with natural resources such as plants and grasses – a proposal that would’ve accounted for about 10% of the company’s emissions. The company has not made public any new targets for developing offsets or clarified how Shell plans to deliver on its future climate commitments.

The pullback showcases Sawan’s renewed commitment to the oil and gas industry that generates most of Shell’s profits, and an admission that prior goals were unreachable. More on that here.

The Rundown

Reuters Brazil eyes tax perks for energy sector, sparking ‘green’ vs oil debate

POLITICO Newsom embraces dirty energy in bid to stave off blackouts

Fox News Blue Supermoon apparently generated solar energy for the Texas electric grid