IEA TAKES DIM VIEW OF OIL DEMAND GROWTH: The International Energy Agency has a pretty harsh assessment in its latest monthly oil market assessment: that the expansive post-pandemic growth phase in global oil demand is over, having “largely run its course.”
The February oil market report, released this morning, stakes out the position that global oil demand is losing momentum, pointing to a million-barrel-per-day decline in gains between the third and fourth quarter of 2023 – and estimating that expansion is expected to “decelerate further” from 2.3 million barrels per day last year to 1.2 mb/d in 2024.
What’s the cause? The monthly report points to China’s decline in demand in the last quarter as driving the decrease. The country, along with India and Brazil, however, “will continue to dominate gains,” the report notes.
The trend: The independent agency’s view that oil demand will peak in 2030 has bled consistently into its monthly reports and predictions for 2024 – but runs in stark contrast to other estimates from fossil fuel groups, such as OPEC’s. In its monthly report published Tuesday, OPEC forecasted that oil demand will grow to 2.25 million bpd for 2024.
The IEA and OPEC have butted heads on their forecasts before – with the IEA being criticized by the petroleum group for its predictions on oil demand, arguing that it could cause market volatility. OPEC Secretary General Haitham Al-Ghais warned last year that “energy and economic chaos” would result from underestimating oil demand.
But similarly, IEA has criticized OPEC+ for its production cuts, which it argues risks destabilizing the global economy.
“Consumers confronted by inflated prices for basic necessities will now have to spread their budgets even more thinly,” the IEA said in its April 2023 Oil Market report. “This augurs badly for the economic recovery and growth.”
Month-to-month comparison: In the latest report, the IEA did increase its supply growth projection to 1.7 billion bpd, up from 1.5 million bpd in its January forecast.
Tidbits to highlight: January, specifically, saw a sharp decline of 1.4 million barrels per day in global supply month over month, after an Arctic blast shut down production in North America combined with OPEC deepening output cuts. Oil stocks plummeted by about 60 million barrels, with “on-land inventories falling to their lowest levels since at least 2016,” the report reads.
But, the report acknowledges that output from top producers such as the U.S., Brazil, Guyana, and Canada will help to fill in the gaps in non-OPEC+ supply with 1.6 mb/d this year – compared to 2.4 mb/d in 2023.
The report also makes a note to acknowledge conflict in the Middle East has further tightened supplies, with oil tankers avoiding their usual route through the Red Sea – disrupting supply flows to global markets. ICE Brent crude oil futures rose by $5 per barrel of crude during the month.
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LNG BILL SET FOR HOUSE VOTE: The House is scheduled to vote on a bill that aims to undo President Joe Biden’s pause on approvals for liquified natural gas export facilities – a move that Republicans argue would unfairly punish domestic producers and would be a giveaway to our adversaries.
The bill, led by GOP Rep. August Pfluger but previously introduced by retired Rep. Bill Johnson, would grant the Federal Energy Regulatory Commission sole authority to authorize exports instead of the Department of Energy. The lawmakers argue repositioning the authority “depoliticizes” the export of LNG, considering that FERC is an independent and bipartisan body.
Eyes to the floor: But, be on the lookout for Democrats crossing the aisle to join Republicans in overturning the Biden administration’s LNG pause. Earlier this month, a group of 10 House Democrats asked Biden to “refocus” his policy on U.S. liquefied natural gas exports – underlining a growing party divide that has pitted liberal Democrats against some centrists in the party on the issue. The letter, however, stopped short of condemning the pause itself.
Who’s on the letter: Democratic Reps. Marc Veasey, Don Davis, Henry Cuellar, Jim Costa, Mary Peltola, Vicente Gonzalez, Lou Correa, Colin Allred, Sylvia Garcia, and Lizzie Fletcher.
LARGEST CCS PROJECT AT RISK: The world’s largest carbon-capture project could be delayed if it doesn’t figure out whether governments in Canada are able to support the development, according to research and consultant group Wood Mackenzie.
As Bloomberg outlines, the first phase of Pathways Alliance’s plan to store emissions underground “will be delayed and potentially scuppered” if Canada’s federal and provincial governments don’t agree to underwrite the financial risk involved, according to a report written by Wood Mackenzie Analyst Peter Findlay.
The groups that are behind the project have been warning since last year that they would need firm commitments of government support to move forward with the development. Without it, deadlines for reducing emissions could be missed, according to Pathways.
The significance of the project: The Pathways project plans to capture and store carbon dioxide in the group, slashing an estimated 22 million metric tons of emissions by 2030. Read more on that here.
MAJOR ACTIVIST INVESTOR CLIMATE GROUP LOSES JPMORGAN AND STATE STREET: The activist investor climate group Climate Action 100+ has lost JPMorgan Asset Management and State Street Global Advisors as corporate members, according to the Financial Times.
The departure of the two megabank asset managers is a major setback for Climate Action 100+, which bills itself as an investor-led initiative to press corporations to reduce emissions.
It had included many of the biggest asset management firms as members, but has seen attrition as it has come under scrutiny in the past few years from Republican attorneys general and Republicans in Congress opposed to ESG investing.
JPMorgan Asset Management told Bloomberg that it left the group because it has built out its own climate risk efforts. State Street Global Advisors told the Financial Times that it left because Climate Action 100+ went too far with its latest efforts, which shifted from pressuring companies for climate disclosures to pressing them for emissions reductions.
GOP victory lap: “Today’s decisions by JPMorgan and State Street are big wins for freedom and the American economy, and we hope more financial institutions follow suit in abandoning collusive ESG actions,” House Judiciary Committee Chairman Jim Jordan said in a statement.
BAD NEWS FOR FRENCH NUCLEAR: Falling power prices are threatening the French government-owned utility EDF’s plans to keep its nuclear fleet up and running, Reuters reports.
A source told the publication that falling power prices are “seriously disrupting both the market and EDF” and slowing talks with industrial customers for contracts. The French baseload contract for 2026 has fallen in half over the past year.
Why it matters: EDF reportedly needs advantageous deals in order to improve its finances and maintain its 56 existing nuclear reactors and fulfill its plans to build new ones.
France produces a larger share of its power through nuclear than any other country, and in years past has been an energy exporter to the rest of Western Europe. In 2022, though, as Europe faced an energy crisis because of Russia’s invasion of Ukraine, many plants were closed for repairs, so much so that France was forced to become a net importer of power.
TEXAS GRID GETS ITS TIME TO SHINE AT THE FEDERAL LEVEL: The first-ever federal bill that would connect Texas‘s energy systems to the national grid was introduced in the House on Wednesday, Nancy reports.
Texas Democrat Rep. Greg Casar introduced the legislation, the “Connect the Grid Act,” on the third anniversary of winter storm Uri — a snowstorm that created a power crisis in the Lone Star State in 2021 and killed at least 246 people. The legislation, introduced with Rep. Alexandria Ocasio-Cortez, is meant to address the shortfalls of Texas’s struggling energy grid, which has been strained due to low reserves and high demand during cold and hot weather.
“Whether you’re in the middle of a heat wave or a winter storm, every single American should be able to keep the lights on,” Casar said during a press conference on Wednesday. “If Texas is in trouble and we connect to the grid, we’ll make sure that Texas can draw power from other states.”
Texas is the only state in the country that is not connected to national grids — which means that if there’s a shortfall in supply, it is unable to grab power from neighboring states. In times of high demand, businesses and homes are forced to cut their own use of electricity to alleviate stress on the grid.
Casar’s bill would mandate interconnection between the Electric Reliability Council of Texas, which oversees the state’s energy grid, and the grids of neighboring states. The bill would bring ERCOT under the purview of the Federal Energy Regulatory Commission, specify a gigawatt range for transfer capacity between grids, and require the Department of Energy to study the benefits of interconnection with Mexico. Read more on that here.
RUNDOWN
E&E News Farmers, tribes reach ‘historic’ Klamath River deal
Bloomberg Climate Change Threatens Europe’s Trains, But Resilience Is Expensive
Financial Times World’s biggest solar company warns west not to cut out Chinese suppliers
