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SOLAR INDUSTRY CITES PROBLEMS WITH UYGHUR PROTECTION LAW: The U.S. solar industry has the wind at its back between the Inflation Reduction Act and the tariff protections provided by President Joe Biden’s trade emergency, but developers are seeing major hangups elsewhere as enforcement of the Uyghur Forced Labor Prevention Act disrupts imports, their top lobby says.
The UFLPA charges CBP with prohibiting entry of products without adequate documentation proving they weren’t produced with forced labor in China’s Xinjiang region, which according to some estimates accounts for around half of the globe’s solar-grade polysilicon.
Customs and Border Protection has stopped or delayed more than a gigawatt of solar products under the nearly year-old law, according to the Solar Energy Industries Association.
SEIA president and CEO Abigail Ross Hopper said there is “no place for forced labor in our supply chain” and that the U.S. industry has been moving its supply chain out of Xinjiang. But the group has said CBP’s enforcement requires documentation that’s more rigorous than expected in requiring proof that quartzite, an input in solar-grade polysilicon, is not sourced from Xinjiang.
“We have been focused on getting non-China polysilicon cleared through Customs and have been calling on Customs to provide additional clarity on what companies must do to get clearance for shipments,” Hopper told reporters yesterday.
“There should be clear guidelines that CBP can give us to say, ‘This is how you prove your polysilicon,’ and therefore more upstream of your supply chain is not running in jeopardy of the UFLPA,” said Hopper, who added that companies are withholding shipments to the U.S. due to the chance they get blocked at the border.
Dealing with China: China as a whole produced nearly ten times more polysilicon than no. 2 producer Germany in 2021, according to the International Energy Agency, and it has a hand in virtually every stage of the supply chain from mining to refining and production, making it immensely difficult to completely cut out Chinese companies.
The same is true across the clean energy supply chain, including the battery sector.
Other headlines: Supply chain disruptions have marred the solar industry all year long, and project developers have blamed their troubles sourcing solar panels largely on the UFLPA and the Commerce Department’s anticircumvention investigation into imports from Asia.
Commerce is expected to issue a preliminary decision in the probe, which domestic solar manufacturers support but SEIA and others oppose, by Dec. 1.
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MORE OIL VOLATILITY: Oil prices climbed today after Saudi Arabia signaled that OPEC+ could extend production cuts through December or take additional measures to balance markets as necessary, denying earlier reports that suggested the opposite.
Future prices for international benchmark Brent crude climbed today by 97 cents, reaching $88.42 per barrel, while prices for U.S.-based West Texas Intermediate climbed to $81.23, an increase of 1.5%.
The upswing comes after the Wall Street Journal reported yesterday that OPEC+ would increase production next month—news that was robustly denied by Saudi Arabia, which said they were considering more production cuts instead.
“The current cut of 2 million barrels per day by OPEC+ continues until the end of 2023 and if there is need to take further measures by reducing production to balance supply and demand we always remain ready to intervene,” Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, told local news outlet SPA today ahead of the group’s December meeting.
TOP BIDEN ADVISER SAYS U.S. WILL BE ‘OPPORTUNISTIC’ WITH SPR RELEASES: The U.S. will begin repurchasing oil to refill the Strategic Petroleum Reserve when prices drop to around $70 per barrel and will look to use the reserve aggressively to lower prices in the future, top U.S. energy envoy Amos Hochstein said this morning.
“Somewhere around that range of $70, $72, $73, maybe a little bit below that, we’ll look to immediately begin to increase and repurchase oil into the SPR,” Hochstein said on CNBC’s “Squawk Box.”
Hochstein’s remarks indicate a willingness to buy oil at the top of the range previously identified by the White House, which said last month it will buy when prices are in the $67 to $72 per barrel range or lower.
Hochstein also said the U.S. would be “opportunistic” about ordering more releases from the SPR, after Biden in March ordered the sale of 180 million barrels. That drawdown sent SPR levels plummeting to their lowest point in 40 years.
“I don’t think there’s been much criticism today” for Biden’s decision to sell the 180 million barrels, Hochstein said on CNBC.
“The releases from the SPR are a critical part of bringing prices down when we did them. Just imagine if we had not increased supply by a million barrels a day,” he said.
EU LEADERS SET PRICE CAP AFTER MONTHS OF NEGOTIATION: The European Commission proposed a bloc-wide gas price cap this morning of $282 (or 275 euros) per megawatt hour, advancing a plan that comes after months of tense and protracted negotiations, even if it is unlikely to fully appease member states.
The cap would be available for one year starting on Jan. 1, 2023. It would also only take effect if prices surpass $282 per megawatt hour, and if the difference between the cap and the LNG price exceeds 55 euros for 10 consecutive trading days, the EU’s energy commissioner, Kadri Simson, explained today.
“The mechanism is carefully designed to be effective, while not jeopardizing our security of supply, the functioning of EU energy markets and financial stability,” she added, stressing that it was not a regulatory intervention.
Reaction: Some diplomats told Reuters that the proposed gas ceiling will likely disappoint both proponents of a price cap, who had pushed for a lower limit that would be activated several times a year, as well as those staunchly opposed to the effort, including Germany.
Next steps: The proposal will be now sent to EU energy ministers, who will begin debating the cap later this week.
… EUROPE’S ENERGY EXCHANGE WARNS THE CAP IS A THREAT TO SUPPLY SECURITY: Meanwhile, the European Energy Exchange (EEX) warned that the European Commission’s proposed price cap would not result in a lower cost of gas—and would risk “serious and potentially irrevocable” damage to the EU’s energy security and financial stability as a result.
Tobias Paulun, the chief strategy officer at EEX, told Reuters in an interview that the gas price cap could result in EU traders and utilities losing out on gas cargoes on the global market.
“This proposal has the potential to widen the energy crisis into a wider financial one as well, because it significantly impairs the trading activity of market participants,” Paulun said.
“We are especially concerned that the effects of this proposal would be evaluated ex-post, which is too late when the damages have occurred,” he added.
NORWAY TO DEVELOP NEW NATURAL GAS FIELD: Norway said today it will develop a new natural gas field in the Norwegian Sea as part of its efforts to send more gas to the EU and help offset Russian supplies.
The Irpa gas discovery has estimated recoverable resources of around 20 billion standard cubic meters, or 124 million barrels of oil equivalent, which will be recovered over a period of seven years.
The project is being overseen by Norwegian energy giant Equinor, and is slated to begin production in the fourth quarter of 2026. Investments are expected to total around $1.4 billion.
“The development of Irpa will contribute to predictable and long-term deliveries of gas to customers in the EU and the U.K.,” Equinor’s vice president of projects, drilling, and procurement, Geir Tungesvik, said in a statement.
INTERIOR ANNOUNCES PLANS FOR UTAH AND NEVADA LEASE SALES: The Bureau of Land Management is taking input on new oil and gas lease sales potentially totalling more than 95,000 acres in Utah and Nevada. The sales add to acreage BLM plans to auction in May in New Mexico and Wyoming.
BLM announced the Utah and Nevada sales yesterday and was explicit that moving ahead with a scoping period in Utah and Nevada was done in compliance with the Inflation Reduction Act’s oil and gas leasing mandates.
BLM is now eyeing new onshore lease sales in at least four Western states next year, which will be held under the new and higher minimum royalty and rental rates codified in with the Inflation Reduction Act.
The IRA revamped oil and gas leasing with its mandates to Interior to carry out canceled offshore lease sales and its new contingencies tying renewable to fossil fuel resource development on federal lands.
WHAT A SPLIT CONGRESS MEANS FOR BIDEN’S ENERGY AGENDA: On this week’s “Plugged In” podcast, former FERC chairman and host Neil Chatterjee and Breanne huddled for a special holiday-week episode to explore some major news, including the results of the November midterm elections and what a GOP-led House means for Biden’s energy agenda.
The two also discussed the view coming out of COP27 and the “loss and damage” agreement, as well as NERC’s sobering Winter Reliability Assessment and regions that are particularly susceptible to energy emergencies in the months ahead. Listen to the full episode here.
The Rundown
Wall Street Journal Germany debates naming businesses with large China exposure
New York Times Inside the Saudi strategy to keep the world hooked on oil
Washington Post Cutting-edge tech made this tiny country a major exporter of food
Calendar
WEDNESDAY | NOVEMBER 30
10:00 a.m., 406 Dirksen. The Senate Environment and Public Works Committee will hold a hearing on the bipartisan infrastructure law and the view from the private sector.
