Commodity Insights Magazine showcases our pricing, news and analytics across global energy and commodities markets. Download the latest issue of the magazine
Alex Klaessig, Senior Director, Hydrogen and Renewable Gas Forum at S&P Global Commodity Insights, explores the potential impact of clean hydrogen in different sectors, from transportation and electric power to chemical feedstocks and industrial heat. Finally, Alex addresses how hydrogen developers in the US view the Inflation Reduction Act (IRA) as they await the final guidance.Conferences LIVE
Balancing profit with sustainability is key to any company's success. Klaus Kunz, Head of ESG Strategy of Bayer, talks about how the German corporate has adapted its business model to reflect an effective environmental, social, and governance approach. Kunz also gives us some insights into the company’s net zero strategy, and its views on how the voluntary carbon market can move forward from the recent criticism and scrutiny.Learn more at the Global Power Markets Conference | Las Vegas | April 15-17, 2024Conferences LIVE
Esteban Mezzano, General Counsel of Corporate Operations and Sustainability at Nestlé, explains how the Swiss food and beverage company is looking to reduce its emissions by adopting sustainable agriculture practices that address climate change, support local communities, and help protect, preserve and restore farmlands. Mezzano also talks about how carbon ‘insetting’, which involves removing and reducing carbon from a company’s supply chain has emerged as a key priority for the Swiss corporate.Learn more at the Global Power Markets Conference | Las Vegas | April 15-17, 2024Conferences LIVE
Just back from New York City, Steve Piper, Director, Energy Research, S&P Global Commodity Insights shares key takeaways from the S&P Global Financing US Power Conference.Higher interest rates and increasing costs pose challenges to the expansion of carbon-free electricity. How are capital markets responding?Want to know more? Start here.
Join Johan UtamaPrincipal AnalystEmerging Asia Gas and LNG, as he talked about the key takeaways from the 9th Asia Hydrogen and LNG Conference panel on financing hydrogen projects, held during Singapore International Energy WeekLow-carbon hydrogen has emerged to be a key component of decarbonization strategies and there have been hundreds of projects announced in recent years. However, progress has been slow and securing finance challenging.During the conference, Johan moderated a panel on financing hydrogen projects, speaking to experts from the financial sector, project developer, and research agency. Discussion points during the session involve what lenders are looking for, what can be done by project developers and governments, and other avenues of collaboration.Take a listen now to learn more!
Doreen Harris, president and CEO of the New York Energy Research and Development Authority discusses the US clean energy future with S&P Global Commodity Insights Learn more at the Global Power Markets Conference | Las Vegas | April 15-17, 2024 Conferences LIVE
Listen now as Dan ShugarCEONextracker discusses nominations for the Global Energy Awards Chief Trailblazer of the Year Technology Finalist and Commercial Technology Finalist awards!For a quarter century, we have been honored to recognize the energy sector’s exponential growth and rapid progress. As the world comes together to tackle climate change issues at COP28, we are gathering the industry to acknowledge the companies and individuals working on the crucial, innovative, practicable solutions that will solve those problems.Shine a spotlight on your organization’s accomplishments and join us this December 7th in New York City, USA to celebrate the many achievements and successes of the global energy community. Learn more now
While 2023 was seen as a banner year for clean energy capacity in global power generation, the path forward to net zero will be fraught with complications and require different strategies as oil and gas remain a substantial part of the energy mix, according to S&P Global Commodity Insights analysts."When we're thinking about the transition and how to characterize it, the word we've been using quite a lot this year is multidimensional energy transition," said Roger Diwan, S&P Global's head of global energy finance, speaking at the SPGI Excellence in Energy Conference held Dec. 6. The description is apt because the energy transition is "moving in different places in different directions at different speeds, and it's very difficult to characterize it as one movement in any direction," he added.While the energy transition focus remains firmly on producing clean electricity primarily from wind and solar power, this has created a split screen view, particularly for oil and gas producers and refiners as they look to integrate clean energy into their markets and operations. "What we're looking at here is a really different kind of energy sector proposal, it's very focused in everything we can electrify," said Peter Gardett, S&P Global’s executive director of research.Oil demand growth to peak in 2030Decarbonization is key for fossil fuel producers and refiners to meet emissions goals, especially since the fossil fuel sector has proved more durable than once anticipated.Currently, oil, natural gas and coal meet 80% of total energy demand. Stripping out coal, oil and natural gas meets 54% of total energy demand, according to S&P Global forecasts."While, yes, it loses market share over the next 30 years out to 2050, it only drops to…48%," said Daniel Pratt, vice president of upstream solutions at S&P Global."You've got to remember that demand is going to continue to grow over the next 30 years. So even though it's losing market share to the renewable sector, you might still need more oil and gas in 2050 than we're actually producing today because of the overall demand growth," he said.Coal would take the "lion’s share" of the demand loss, followed by natural gas, he said.Many countries "are looking at gas as that transition fuel for electrification, decarbonization because it's affordable, is sustainable, reliable," he said.However, oil demand is expected to continue to rise and peak around 2030, which is "just over the horizon", said Kurt Barrow, head of oil markets at S&P Global."We’ve got the split screen analogy. We’ve got demand growth of 1.5 million b/d. Next year we will 2 million b/d," he said."And if you are going to talk about the energy transition in oil, you are really talking about an energy transition of the four big transportation sectors, that make up the majority of oil demand – such as cars, trucks, ships and planes," he added.Electron generation vs molecule managementDespite driving more vehicles on the road, there is less carbon being used as new, and more efficient cars, trucks and ships are being produced, according to S&P Global.The rise of electric vehicles, particularly in Europe, has played a role in lowering carbon, with 1 in 4 cars in Europe and 1 in 3 cars in China being sold currently, due in part to government policies.Geography also plays a role in an oil company’s carbon strategy and capital investment policy. European oil and gas majors spend more on low carbon initiatives than US-based majors like ExxonMobil and Chevron.Currently, Equinor, BP, Shell, Total and ENI spend about 15% to 20% of total company capital expenditures on low-carbon initiatives, according to the panelists.ExxonMobil and Chevron, both of which recently have made major acquisitions in Permian Basin oil and gas production, spend about 5%.This is expected to rise to about 15% to 20% by 2027, while their European peers expect to increase spending to "20%, 30% even 40%," said Pratt, adding that, in contrast with their US peers, the European companies are making substantial amount of investment in renewable "electron generation."Conversely, ExxonMobil and Chevron are more focused on investing in "molecule management", which tends to focus more on decarbonization of liquid fuels.Pratt said the diverging energy transition investment strategies comes down the stakeholders. "If you look at Europe, they very much see energy transition as their path to energy security," said Pratt."It's not like that in other parts of the world. In the US, we've achieved energy security through hydrocarbons," he added."So the drivers for the European [energy majors] are much more toward renewable transition," he said.
The voluntary carbon market in 2023 has been defined by turbulence and instability as carbon credit projects have faced considerable scrutiny by the media and academia throughout the year. Ensuring and protecting the integrity of carbon credits in the voluntary carbon market was one of the main themes that delegates heard at the 2nd Global Carbon Markets Conference by S&P Global Commodity Insights in early November. Maria Choudhury, Jamila Phillips report. How market participants across the whole breadth of the value chain, from project developers to traders and brokers, react to such developments will define the future of the carbon market in the years and even decades ahead. The keynote speech given by Kris Nathanail, Chief of Staff at the International Organization of Securities Commissions (IOSCO), aptly set the tone, noting that what should be a $100 billion market cannot act like a $100 million market. Tackling the issue of integrity is crucial to growing and strengthening the voluntary carbon market. Mitigating Risk Discussions of market participants throughout the conference highlighted one of the most crucial topics surrounding the voluntary carbon markets – risk. How is it possible to manage risks while also enabling users to trade carbon credits on a global basis? When asked of the main risk in the market currently, Jeff Swartz, Vice President Strategy, Regulatory Affairs & Partnerships, bp, responded that customers are the main risk. "We are buying carbon credits to offer those to our customers and retire on their behalf if they choose to do so. That is the main risk right now – who is going to be buying these credits in the future?" he said. The speaker added that a strong belief in offsetting as a tool to help companies reach their goal is needed to generate demand from ideal customers. Chris Webb, Global Head of Carbon Markets, HSBC, said there are three types of risks plaguing the voluntary carbon markets, and insuring against these risks is essential. The first risk Webb highlighted was credit invalidation. This is when a credit will stop being recognized as a credit, i.e., a tool that can be used by someone to offset their emissions. Webb noted that a relevant authority can invalidate a credit for reasons such as fraud or negligence. Webb further pointed out delivery risk, which buyers mostly face. This is the risk that a credit you buy today may not be issued on time for you to take the original delivery planned. The third risk Webb mentioned was political risk, feeding into regulatory and policy risk. "[There are] really interesting new tools that are being developed that can assess or address the risks we’re seeing," Webb added regarding insuring against this factor. Role of rating agencies in managing risks Both speakers spoke on the role of rating agencies in managing multiple risks involved in the voluntary carbon market. Rating agencies provide a granular level of data while ensuring that projects being invested in are fulfilling safety and compliance principles, Swartz said. Although costly, agencies are required to create a sizable business in the industry, he added. However, end buyers also need internal due diligence teams who work directly with organizers and traders to ensure the quality of the credits purchased in addition to rating agencies, Swartz continued. Although this scale of expertise is not applicable for all buyers across the market, Webb pointed out. Both speakers also noted that rating agencies are new and have not covered the entirety of the carbon markets. They also use methodologies which continue to evolve. Despite using a rating agency to mitigate risk, projects may still suffer reputational risk. As projects fluctuate in ratings, the challenge will be to guide customers to comfortably take that risk on board, Swartz said. Convergence or go our separate ways Another key topic highlighted at the conference was the future interaction and role of the voluntary carbon market alongside the compliance markets. Discussion at the leaders’ panel turned its attention to the possibility of convergence between the two markets. Responding to a question regarding which market will be the primary market for project developers to sell their credits into by 2030, Dirk Forrister, President and CEO of the International Emissions Trading Association, said, "I think there has been some misplaced emphasis in recent times on the voluntary market, that for most of us was always thought of as a waystation to compliance markets, not as the destination." Echoing this sentiment, William Pazos, co-founder and CEO of ACX, added, "the integration of Article 6 credits into the compliance story will overshadow the voluntary carbon markets." However, speakers also highlighted the fact challenges faced by governments when attempting to speed up the implementation of compliance markets. "I don’t think we’re in a position whereby in 2030, the compliance [market] will be overtaking the voluntary carbon market," said speaker Hugh Salway, Senior Director for Market Development and Partnerships at The Gold Standard Foundation, pointing to the protracted time it takes for government policy to be put into place. CORSIA – a race against time for supply The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), a scheme set up by the aviation sector to offset its greenhouse gas emissions, was a popular topic among market participants during the Global Carbon Markets Conference. Rob Stevens, Director of Product Development, Climate Impact Partners, said that there are no CORSIA eligible credits available in the voluntary carbon markets currently despite an extremely strong demand. The market has approximately 15 months to respond to this lack of supply, he added. There is too little activity in the markets for host countries to be providing corresponding adjustments which is what is required for CORSIA-eligible credit demand, he continued. Article 6.2 is still being operationalized while host countries are expressing interest in CORSIA-eligible credits. However, host countries are still at a cost benefit analysis stage where they are assessing how exporting credits will interact with their commitments, Stevens said. Project developers are grappling with mitigating risks while host countries are still forming their legislation, and there is a potential for CORSIA rules to change between now and first phase compliance in 2028. Concerns around the timing in bringing CORSIA-eligible credits is also prevalent in the market, along with the capacity of forestry and removal projects to develop CORSIA-eligible credits at a large scale by 2028. This concern was called a "timing problem rather than a systemic problem" by a panel including Stevens, Audrey Goldstein, Director, Carbon Markets Development, Standard Chartered, and Roman Kramarchuk, Head of Futures Outlook, S&P Global Commodity Insights.
Riyadh became the epicenter of the carbon markets on October 26 as industry leaders from Latin America, Asia, Africa, and Oceania convened for the Global South Carbon Markets Conference to discuss emissions trading policy in anticipation of theCOP28 summit. Government and industry leaders from across the Global South gathered together advocating the swift advancement of voluntary carbon markets. The event, hosted by Saudi Arabia's Regional Voluntary Market Co. (RVCMC) in partnership with S&P Global Commodity Insights, showcased the potential for the Global South to lead in sustainable and just practices.Ibrahim Al-Buainain, EVP Global Manufacturing Aramco reiterated Aramco’s commitment to sustainability and decarbonization. Aramco has set ambitious targets, including achieving net-zero emissions by 2050 and reducing 52 million tonnes of carbon by 2035. Carbon credits play a vital role in Aramco's strategy, enabling both emission reduction and the ability to provide carbon offsets to customers. Carbon credits offer a competitive advantage for companies like Aramco, which already have low emissions.Sarah AlSuhaimi, Chairperson, Saudi Tadawul Group, emphasized their commitment to Vision 2030 and the financial sector development program, which includes developing capital markets in Saudi Arabia and the region. Tadawul's role is to facilitate the listing and trading of securities, and they recognize the importance of transparency in carbon emission reporting. By partnering with the Public Investment Fund (PIF), Tadawul aims to create an exchange for carbon credits and contribute to education and awareness in the region. This initiative intends to serve Saudi corporates striving to lower their carbon emissions and meet environmental goals.Expanding Carbon Markets for Green Development Success for the Voluntary Carbon Markets (VCMs), which has been in existence for about 18-20 years, was described as a $50bn, one gigatonne market by 2050 from the current ~$2bn market and a move from a "voluntary" carbon market to a "verified" carbon market.VCMs today are characterized by a lack of surety on account of several factors such as lack of standardization, quality of credits, transparency, and low pricing, and skepticism, especially from parts of the financial community, about the relevance of reliance on carbon offsets on the path to net-zero. The founding vision of the RVCMC addresses skepticism about the "need to use every tool to tackle the devastating impacts of climate change." In this bid, a focus on development and financial support is necessary to maximize the tool of carbon credits, especially in the Global South.The development goal of improving the livelihoods of the world's poorest is intricately linked to the development of VCMs, making it a compelling case. For the world's disadvantaged, moving away from unhealthy biomass-based cooking and preserving bio-diversity can be a source of sustained income.Some 1.3-1.5 billion of the world's poorest people are forest-dependent, and 60% of Africa still depends on wood for cooking. Also, 12-15% of the global emissions emanate from deforestation, and less than 3% of the financing goes to protect standing tropical forests. Deforestation contributes to material emissions, creating false choices and dichotomies of avoidance and removal credits, which appears counter-productive to the goal of setting up credible voluntary carbon markets. Further, the long-term view of an inter-generational / multi-generational approach needs to be adopted. For the world to meet the Paris Climate Agreement goals, it needs to tap and adequately finance the role of biodiversity in mitigating emissions.From Vision to Action During the conference, speakers shared certain companies' success stories. The "Stove champions" moved away from wood-based biomass towards a clean cooking solution for the price of a cooking pot. Another example included regenerative agriculture in Africa, indicating that 5-7 years are required to transition the land towards sustainable agricultural practices.In short, the quest for unearthing and creating quality projects relies on a mix of the right data tools, partnerships, platforms, and corporate action:Space Intelligence, a nature data provider, utilizes satellite data to track the quality of credits nature-based solutions create, relying increasingly on robust measurement and verification data tools. It emphasized the importance of the Voluntary Carbon Market Integrity Initiative (VCMI) to bring the "claims code of practice" for higher Integrity, even though compliance with the code is voluntary.Partnerships, like the one between the Norwegian Sovereign Investment Authority and Vitol, aimed to create the $50 million Carbon Vista fund in 2023. The goal was to bring knowledge about the shift from the "what" to the "how" of carbon markets and trading to Africa, ensuring a pipeline of high-quality and high-integrity credits into the global voluntary carbon markets.ACWA Power is developing a platform to offer customers the ability to offset their emissions based on credible high-quality credits generated from a broad spectrum of projects based on green desalination, circular carbon economy, and renewable energy, with the company itself working towards a 2050 net-zero target. Partnerships to deliver a carbon-neutral annual meeting, like that between ACWA Power, the European Bank for Reconstruction and Development (EBRD), and Numerco, highlight the possibility of utilizing the platform.As the winner of the two leading carbon auctions in Riyadh in 2022 and Nairobi in 2023, Aramco has shown its inherent approach of bringing a standardization approach to carbon markets. The company has set up a separate unit dedicated to building its strategy for engaging in the carbon markets with the awareness that 80% of its oil flows to the Global South and a keen responsibility to maintain the standard of the lowest carbon intensity barrel of oil.
Join Peter GardettExecutive DirectorFinancial and Capital MarketsS&P Global Commodity Insights as he discusses a clean power future.The coming decade is shaping up to be an inflection point for accelerated growth in the US power sector, panelists and speakers at the Financing US Power Summit said. But even as Wall Street investors and companies charge ahead, market structures and regulations are caught between managing a dramatically different future led by renewables and the current market that remains reliant on fossil fuels. How utilities and energy companies are managing huge growth in power demand amid shifting supply will be a crucial issue at next year’s Financing US Power Summit.Want to know more? Click here to read the latest paper: Renewable Energy Funding in 2023: A "Capital Transition" Unleashed
Join Chong Zhi XinDirector and HeadEmerging Asia Gas and LNG at the 9th Asian Hydrogen and LNG market conference held during Singapore International Energy WeekWithin the conference, Zhi Xin moderated two panels, - The LNG policy outlook of Asia and their implications on the market - The outlook of LNG’s supply and demand and impacts on AsiaSpeaking to both LNG buyers and suppliers, he shares his thoughts on the discussion points raised during these session, touching on flexibility, long term contracts and gas demand growth. The conference was a confluence of industry leaders to discuss the pertinent challenges facing the Hydrogen and LNG industry as they grapple with a net zero transition.
Houston | January 23-25, 2024