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WHAT IS “PHASE TWO” OF THE OIL PRICE CAP? Treasury officials stressed in recent days that their novel Russian oil price cap plan is entering “phase two” — which includes stepping up enforcement measures against entities that refuse to comply with the cap, and raising costs for Russia to ship its oil outside the reach of G-7 providers.
Stepping up enforcement of the cap: Last week, the U.S. announced new enforcement measures aimed at cracking down on violators of the price cap, including sanctioning two new entities for shipping Russian oil above the capped price; a first since the mechanism came into force in December.
The U.S. also joined other coalition members last week in publishing a Maritime Safety Advisory publication, which provides specific recommendations to help public and private sector entities comply with the terms of the cap (and take action against those who violate it).
It appears that Russia has been able to command higher prices due in part to the lack of enforcement in the first 10 months of the cap. Russia’s flagship Urals-grade crude exports averaged around $85 per barrel in September, according to market data— roughly $25 higher than the capped price of $60 agreed to by members of the coalition. And sizable volumes were still being transported by Western ships. According to data compiled by the Center for Research on Energy and Clean Air, 37% of Russian fossil fuel exports during the first week of October were sent on ships owned or insured by countries in the G-7 or Europe.
…and raising costs for Russia to ship oil outside the reach of the G-7: The other part of the effort is focused on limiting Russia’s profits by increasing the costs associated with using non-G-7 services, Eric Van Nostrand, Treasury’s acting Assistant Secretary for Economic Policy, said yesterday at an event hosted by the Brookings Institute.
For example, Russia has been selling oil to India at prices well above the cap.
Russia incurs tremendous costs to build a new ecosystem that operates without G-7 services, and the costs “keep stacking up,” Van Nostrand said.
To date, he said, “Putin has bought hundreds of new oil tankers, and faces elevated costs of insurance, longer transport times, elevated capital expenditures, and reinvestments in ports that service non-G-7 providers,” making it far more costly for them to do business.
That means that Russia will either have to finance more of its own shipments if it seeks to continue selling oil above the cap—or agree to sell more barrels at the lower capped price using G-7 provided shipping services. The Treasury did not respond to a request for follow-up information.
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PUTIN STRIKES OPTIMISTIC TONE ON GAS PIPELINE TO CHINA: Russian President Vladimir Putin struck an upbeat tone today on the status of the Power of Siberia 2 gas pipeline linking Russia to China, telling Mongolian President Ukhnaagiin Khurelsukh at a sit-down meeting that he believes the project will continue to move along “at a good pace” and help bolster supplies to the region.
The gas pipeline, which is slated to run from Russia to China via Mongolia, is of particular significance as Russia has ramped up its exports to China following the start of its war in Ukraine and subsequent sanctions from the U.S. and European allies.
Once completed, the pipeline is expected to supply China with an additional 50 bcm of natural gas per year.
“Everyone agrees with this project, all parties want to participate, want to work. It’s a matter of implementation. I think we will move at a good pace,” Putin said today in Beijing, where he met with Khurelsukh on the sidelines of China’s Belt and Road Initiative conference.
The update comes just three years after Russia’s Power of Siberia pipeline began operations in 2019, supplying China with 10.5 bcm of natural gas in 2021 and 15.5 bcm so far this year, according to Reuters.
AUTO GROUPS TAKE AIM AT PROPOSED CAFE STANDARDS: The Alliance for Automotive Innovation took aim at the Biden administration’s plan to drastically hike fuel economy requirements, saying yesterday that the National Highway Traffic Safety Administration’s proposed CAFE rules were “unreasonable” and would significantly drive up average vehicle costs for consumers.
Under the proposal, U.S. automakers would be required to increase the average mileage of passenger vehicles sold by 2% per year, and 4% per year for light-duty trucks and SUVs between 2027 and 2032—resulting in an average fuel economy of 58 miles per gallon.
AAI, which represents nearly all major U.S. automakers excluding Tesla, said yesterday that NHTSA’s plan “exceeds reason and will increase costs to the American consumer with absolutely no environmental or fuel savings benefits.”
The American Automotive Policy Council also urged the administration to halve its proposed fuel economy increases for trucks, saying in a separate statement Monday that the proposed rule “would disproportionately impact the truck fleet,” including more than 80% of vehicles produced by the Detroit Three automakers. Read more from Reuters here.
TWENTY-ONE EXTINCT SPECIES REMOVED FROM ENDANGERED LIST: The U.S. Fish and Wildlife Service declared 21 species extinct on Monday, nearly doubling the number of species delisted under the Endangered Species Act due to their eradication, Nancy writes.
The list, which contains 10 species of birds, two fish species, eight species of mussels, and one mammal, contains a majority of organisms that were originally listed under the ESA in the 1970s and ‘80s. According to the agency, most of the species were in low numbers and were likely already extinct at the time of listing.
“Federal protection came too late to reverse these species’ decline, and it’s a wake-up call on the importance of conserving imperiled species before it’s too late,” agency director Martha Williams said in a statement.
Before yesterday’s announcement, the number of species that had been delisted by the U.S. Fish and Wildlife Service due to extinction came up to 11. The 21 species declared extinct will bring that total up to 32.
The newly extinct species will also join at least 881 organisms in having gone extinct since roughly 1500, dating back to the records first held by the International Union for Conservation of Nature, a global scientific authority on the status of nature and wildlife. Read more on that here.
CLIMATE TECH INVESTMENT TAKES A DOWNTURN: Private market equity and grant funding for climate tech startups around the world totaled $65 billion for the last fiscal year, according to a new report from PricewaterhouseCoopers LLP. That marks a more than 40% decrease compared to the year prior.
As Bloomberg lays out, the reasons for the drop in funding levels can be pointed to geopolitical turmoil, inflation, rising interest rates and lowered valuations – all factors that affect the tech investment landscape at large.
But the stakes for climate investing are higher than ever – the Earth just experienced its hottest September ever, following a record-breaking summer.
The market downturn means that climate tech startups need to be more focused on solving real world problems and understanding “the buyer persona,” Amit Chaturvedy, a global head and managing partner of SE Ventures, a $1 billion venture capital firm, told Bloomberg. Read more on that here.
HAMM BACK ON BOARD WITH TRUMP? Oil and gas magnate Harold Hamm donated to former President Donald Trump’s campaign in August, E&E News reports.
Hamm, a major conservative donor, had backed Trump in previous elections, and was in consideration to be his energy secretary. But he’d backed away from supporting him this cycle, raising doubts about his electability and giving money to rivals Ron DeSantis and Nikki Haley.
GRETA THUNBERG ARRESTED FOR DISRUPTING OIL CONFERENCE IN LONDON: Climate activist Greta Thunberg was arrested today after she joined hundreds of other protesters in London to disrupt the Energy Intelligence Forum, a three-day conference attended by CEOs from some of the world’s largest oil and gas companies as well as politicians and investors.
The protest was organized by Fossil Free London and Greenpeace, who have dubbed the event as the “Oscars of oil” and plan to stage similar disruptions through the rest of the gathering.
Thunberg said protesters “have no other option but to put our bodies outside this conference and to physically disrupt” the gathering.
Speakers include the CEOs of major fossil fuel companies including Occidental Petroleum, Equinor, Saudi Aramco, and Shell. Read more from Euronews here.
The Rundown
Financial Times Slowing Chinese EV demand drives down battery metal prices
E&E News Farm bill may be Jordan’s first big climate test as speaker
