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Platts Carbon Emissions Playbook maps climate change challenge

A post-pandemic economic recovery would see global CO2 emissions return to 2018 levels by 2022, according to Platts Analytics Scenario Planning Service, whose data and forecasts are visualized here. After 2022, growth in CO2 emissions essentially flattens to 0.2% a year before peaking in 2032. By 2040 emissions remain around 3 Gt above 2020 levels, […]

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INTERVIEW: Hydrogen, ammonia likely to win cleaner shipping fuel race – Euronav CEO

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INTERVIEW: Hydrogen, ammonia likely to win cleaner shipping fuel race – Euronav CEO

London — The concept of a one-size-fits-all shipping fuel is in the past, with hydrogen and ammonia the leading candidates to meet cleaner fuel goals, shipping company Euronav’s CEO Huge De Stoop said.

“The winners have already been decided and that is going to be either hydrogen or ammonia,” De Stoop told S&P Global Platts in an interview on Sept. 7. “The only problem that we have that we don’t know when it’s going to be ready and available,” he added.

“I’m speaking about an engine that is really capable of burning efficiently ammonia in a safe way because ammonia is a very toxic gas,” the tanker leader said, noting that infrastructure is crucial too.

“The world produces a certain amount of ammonia. It uses fertilizer, but the way it is produced is brown, meaning that we’re using energy to use it, which is coming from fossil fuel. So it’s a little bit ridiculous to be proud to burn ammonia or hydrogen on board your vessel” if this is the situation.

He noted there are greener ways to produce it, such as if your electricity is green and has been using renewable energy then you can co-share. He added it makes sense for the bigger vessels on longer voyages.

“Anywhere from 40 to 100 [days voyage]. It is the solution that we will have in the future,” he stated.

“However, it’s going to take time to put the infrastructure in place, and it’s going to take time to finishing the development of the engine, which I understand we are nearly there, will take about 2 years,” he added.

The International Energy Agency has also stated in a new report that biofuels, ammonia and hydrogen will meet more than 80% of shipping fuel needs by 2070, using around 13% of the world’s hydrogen production, with ammonia the outright leader. “More than 60% of the emissions reductions in 2070 come from technologies that are not commercially available today,” the Paris-based agency predicted.

Cleaner fossil fuel limits

De Stoop believes the industry is close to “hitting a brick wall” with current technology and getting the most out of oil-based fuels.

“In the meantime, do we try to be even more efficient on the existing technology, and it seems that we have reached a limit, and maybe there’s another 5%, 7%, potentially 10% saving on the consumption and therefore emissions,” he said.

De Stoop warned of the risks of adopting LNG or methanol, even with biofuel components as the industry looks to make good on decarbonization targets.

The International Maritime Organization, which capped the amount of sulfur in fuel oil at 0.5% from Jan. 1, 2020, from 3.5% previously, has a strategy of cutting carbon dioxide emissions per ship by 40% from 2008 levels by 2030. It then wants to cut the shipping industry’s total greenhouse gas emissions by 50% by 2050.

While LNG has lower carbon emissions, it emits methane through the supply chain and De Stoop is unsure there is the political will to tackle the leakage issue. He also drew parallels with the industry’s risks with scrubbers, equipment that removes sulfur from fuel oil so its engines can run cleanly, but which he said has had issues with regulation and economics.

“We all order LNG and then 5 years later, someone finally admits that is polluting more because we have not been able to solve the leakage problem, and everybody goes back to square one,” undermining the environment and this would “not be the right thing,” De Stoop explained.

With methanol and biofuel options, De Stoop raised the question of economics again and noted that with limited supply, shipping has to be honest with itself and how it competes in the greener fuel market. He gave the example of the airline industry which may have to lean much more heavily on the biojet solution given the difficulties of suitable alternatives and if other industries demand it too then the price of biofuels will be too expensive.

De Stoop also pointed out that with shipping itself, different cleaner fuels will suit certain sectors, differentiating between the size of ship and length and type of journey.

“We do long journeys so we need a fuel that … does not take away capacity from the fuel we need to transport. It’s going to be the same for the container guys. But if you look at ferries they run for just 2-3 hours and then they stop and they can run on batteries,” De Stoop said explaining the calorific value of a voyage.

“So it’s very important not to have, or not to believe that we’re going to have one solution across all shipping like we have at the moment. Tomorrow, everybody will have to find its own solution, which makes economic sense, locally and globally,” the tanker boss said.

S&P Global Platts Analytics believes alternative shipping fuels are still in the early stages of development and are expected to take significant time to displace oil. In Platts Analytics’ long-term outlook, non-petroleum marine fuels account for 11% of total bunker demand by 2040, with almost all of this accounted for by natural gas-based fuels.

“Alternative fuels are likely to be only one of a range of carbon reduction strategies employed by major shippers, with the others being improved fuel burn efficiency rates (most famously slow steaming, but also direct carbon capture, biofuels, batteries, fuel-efficient lubricants, and LNG bunkering),” Platts Analytics noted.

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Infographic: Leading Asian countries prepare for energy transition

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On this page you will find the latest Energy Transition news, information, and analysis from S&P Global Platts.

Our latest feature article examines the potential displacement in both oil demand and capital expenditure up ahead on the path to net zero.

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Platts LIVE in discussion with the European Commission

Klaus-Dieter Borchardt, Deputy Director General, European Commission sat down with Siobhan Hall, Editorial lead, EU energy policy, S&P Global Platts to discuss relations between the EU and Russia with particular focus on Nord Stream 2.

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US ELECTIONS: Trump, Biden race holds big oil policy impacts for shale, sanctions

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US ELECTIONS: Trump, Biden race holds big oil policy impacts for shale, sanctions

Washington — Note: This is the first in a series about the impact of the US elections on key energy commodities. Similar deep dives into LNG, natural gas and the energy transition will follow over the next several weeks.

The US presidential election in November presents a stark contrast for the next four years of US oil policy that could shape supply/demand dynamics domestically and abroad, with implications for shale, sanctions, trade and OPEC relations.

The greatest domestic impact could come from a promise by Democratic nominee Joe Biden to stop issuing drilling permits for federal lands and waters, which would shrink US oil production by up to 2 million b/d by 2025, primarily from New Mexico’s Delaware Basin and the Gulf of Mexico, according to S&P Global Platts Analytics.

Additional Coverage: 2020 US Elections
The top risks to the international oil market center on the next administration’s approach to Iran and Venezuela, which have seen their oil exports fall by a combined 3 million b/d as a result of President Donald Trump’s tight enforcement of sanctions against both OPEC producers.

Other potential oil impacts run the gamut of environmental, foreign relations and trade policies, but the market will ultimately dictate how any actions by the White House influence oil supply, demand and prices.

While some US oil executives have warned of bleak times for the industry if Biden wins, Platts Analytics does not expect anti-fossil fuel measures to top the new administration’s early agenda.

“I don’t believe for a moment that his first year will be marked by him taking on the oil and gas sector at a time when they’re all struggling,” said Chris Midgley, Platts global head of analytics. “That would be suicide. He needs to make sure he’s sustaining the momentum of the economy.

“This is a little bit why we do see Biden being a bearish signal to the oil markets because we see a greater likelihood of the return of Iraqi oil, maybe some Venezuelan oil — it can’t get any lower,” Midgley added. “And of course US shale, although it will continue to struggle based on the current economics, I don’t think it will be his first priority to focus on.”

Shale’s future

US oil production is returning from peak shut-ins of 2.8 million b/d during this spring’s oil price crash, but drillers’ severe capital expenditure cuts will constrict output through next year.

Platts Analytics expects US oil production to decline about 880,000 b/d year on year in 2020 and more than 1 million b/d in 2021. That would put US output about 3.1 million b/d below Platts’ pre-price collapse forecast by end-2021.

US oil production increased 3.9 million b/d between Trump’s inauguration in 2017 and the onset of the pandemic in March. But the 2015 end to export restrictions during the Obama administration arguably played a bigger role than current White House policies. Trump has promised to continue a deregulatory push in a second term, after loosening methane rules and opening new offshore and arctic areas to drilling in the first.

Fracking ban

While many of Biden’s Democratic primary opponents pushed for a total fracking ban, including on private lands, Biden has promised only to halt new federal permits.

“I am not banning fracking,” Biden said Aug. 31 during a campaign stop in Pittsburgh. “Let me say that again. I am not banning fracking — no matter how many times Donald Trump lies about me.”

Biden added that his $2 trillion clean energy investment plan held a place for oil and gas workers in western Pennsylvania.

Even if Biden freezes federal permitting, some analysts see a muted supply impact as drillers shift focus to private acreage.

Operators holding federal permits have kept actively drilling to build up an inventory of drilled-but-uncompleted wells that they can still produce if federal policies change. The share of US oil wells drilled on federal lands surged to 22% of total wells drilled in June, from 12% in February.

“A potential fracking ban on federal acreage would hardly have any impact on nationwide oil and gas output in the medium term, given the already existing depth of low-cost inventory and activity migration,” Rystad Energy said in an August report.

Energy infrastructure

Easing permitting for pipelines and other energy infrastructure has been central to Trump’s deregulatory agenda, although with limited success on the highest profile projects. The 830,000 b/d Keystone XL heavy crude pipeline and 570,000 b/d Dakota Access Pipeline continue to face court challenges.

Biden might ultimately deny Dakota Access a new permit, which could threaten the return of up to 300,000 b/d of shut-in Bakken supply in the near term and cap takeaway capacity at 1.15 million b/d, as operators reshuffle logistics and mobilize additional rail capacity, according to North Dakota regulators.

Biden would also likely appoint commissioners to the Federal Energy Regulatory Commission who would take indirect climate impacts into account during project approvals, making projects tougher to permit.

Sanctions relief

The next US president’s approach to Iran could have the biggest global supply impact, if up to 2 million b/d of Iranian oil returns, either through Biden rejoining the nuclear deal or unpredictable direct talks by Trump.

“Saudi Arabia and Russia would be unlikely to make disproportionate cuts to make way for 1 million-2 million b/d from Iran, which could accelerate the next shift back to a market-share strategy,” Platts Analytics said.

Rapidan Energy Group predicts 1.8 million b/d of Iranian exports could return by end-2021 under a Biden White House, a year earlier than under Trump negotiating scenarios.

On Venezuelan sanctions, Biden is seen as more likely to grant relief on humanitarian grounds, while Trump might be more willing to meet directly with President Nicolas Maduro.

Any easing of restrictions on state-owned PDVSA would carry a smaller supply impact than Iran sanctions relief. Exports could potentially increase 500,000 b/d to return to 2019 levels, but the country’s oil sector would remain hobbled without a change in government, debt relief and foreign investment.

OPEC, trade approach

Trump would likely continue practicing Twitter oil diplomacy, which he started in his first term to urge OPEC+ producers to increase or cut supply during their meetings in Vienna. He takes credit for helping to negotiate an end to the March oil price war between Saudi Arabia and Russia.

Under Biden, any US diplomacy toward OPEC might return behind the scenes. Antitrust legislation against OPEC would only see renewed interest if gasoline prices soar, which is not expected through 2021.

During Trump’s first term, tensions with Beijing have flared to the point that some analysts expect a decoupling of US-China ties, which could have massive trade impacts. China was seen as a top outlet for growing US crude exports, but trade tensions have limited those flows, and China is not on track to meet its Phase 1 commitments for US energy purchases.

While Biden is expected to tone down the rhetoric against China, analysts do not expect any major warming of ties that could lead to revived trade.

US crude exports to China jumped to 1.5 million b/d in May, a record high, after languishing for nearly two years. China imported 906,000 b/d in June, according to the Energy Information Administration.

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The path to net zero

Platts Carbon Emissions Playbook maps climate change challenge

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