Energy Shift: the “and” needed from O&G companies

Plus: Hydrogen in India and Brazil; Another CCS CCfD in Canada; Gigawatt scale batteries; A $25,000 Jeep coming; Remarkable US EV buyer remorse

Hi everyone,

As I forewarned in my last issue, I will be giving myself the summer off with the intent to read a book or two. I welcome your feedback for what you like or would like to see changed to make this newsletter even better.

You’ll see I’m asking for some feedback on the “and” to expect from oil and gas companies. Check out that and the other headlines from the past couple of weeks.

Enjoy your summer and watch for the next issue in September.
Thanks,
Peter

Peter’s take: The “and” for upstream oil and gas companies

In my last issue, I called out UN Secretary-General António Guterres for his “blame oil and gas” narrative, when it is consumers who are driving demand. I reminded us that approximately 80% of lifecycle greenhouse gas (GHG) emissions occur at consumption. Upstream oil and gas companies (ones that explore for and produce oil and gas, but do not refine it into final products and sell it to consumers – think gasoline) are responsible for about 20% of lifecycle emissions. I also appealed to you to get more involved in making cities more dense, walkable and bikeable (think Europe) – as things that would contribute to making cities more energy efficient, result in less demand for oil and gas and also generally be more livable (think less time in cars, even EVs).

Stopping where I did, I may have left some of you with the impression that oil and gas companies are off the hook – they are merely supplying a global market, which for the time being is demanding more each year. I apologize for not taking the time to explain myself better. .
Here is what to NOT expect from an oil and gas company, followed by what you should expect:

• Do not expect an oil and gas company to reinvent itself from producing molecules to producing electrons. I once thought O&G companies ought to heavily invest in renewables. The reality is renewables have a very different value proposition and generally a lower return on investment compared to O&G. Companies like Shell and BP who invested significantly in renewables ended up trading at a discount to north American peers who did not. Shell and BP have since reined in their ambition. The answer then is: Let companies do what they do best for their respective shareholders.

•  Do not expect upstream oil and gas companies to set targets for Scope 3 or end-use emissions. These companies do not control where their product gets used. It could be made into plastic or jet fuel.  Indeed, most large investors now agree Scope 3 targets should not be pursued by upstream O&G companies.

Here is what to expect from O&G companies:

• Expect O&G companies to reduce the emissions they control: the emissions directly from their operations (Scope 1 emissions) and the indirect emissions from imported energy like electricity (Scope 2). Many upstream O&G companies have established “net zero by 2050” ambitions for their operational emissions (Scope 1 and 2), supported by near-term targets to measure and report on progress along the way to 2050. The “net” means that by 2050, any remaining emissions would need to be offset by equivalent reductions elsewhere.

This is the “and”…

Expect O&G companies to use their voice to influence change in end-use emissions. The fair complaint – I have it too – is that we feel powerless as consumers to make change in a system that has oil and gas use “locked in”. Electric vehicles are for the time being still too expensive for many. Likewise for home energy retrofits and heat pumps. Plus, there are all manner of embedded emissions in the products we find all around us.

To make matters worse, our economies are almost entirely linear (make it, buy it, use it, toss it), when they need to be more circular. Take Tesla giga-casting for example, and the problem this creates for the inability to fix just the part that needs replacing. Learn more on that here.

We need O&G companies to still provide us with affordable (and lower emission) energy. But they can also advocate for policy change that reduces end-use emissions.  A well-designed economy-wide price on carbon is an obvious policy solution economists agree would accomplish demand reduction and therefore end-use emissions. Even though some O&G companies have advocated for a carbon price (think carbon tax), just look at how hard it is for governments to implement such policies in a way that voters would accept.

Putting “carbon taxes” or “carbon dividends” aside, where else can advocacy by oil and gas companies help? Policy advocacy aimed at reducing end-use emissions is quickly outside the typical expertise found in O&G companies, making them rightfully uncomfortable and wary. Net-zero building codes are a great example. Which is why O&G companies ought to acknowledge where they are not the experts. But they could lend their voice to amplify the calls for change by those who are experts in those arenas.  This might be provocative but imagine an O&G company joining others in calling for policies that work towards reducing, even eliminating the use of natural gas in homes. It sounds like I’m suggesting a company help put itself out of business. Perhaps, but not on any timeline that an O&G company needs to worry about. Remember that global demand picture and system lock-in? Even with modest adjustments to demand in developed countries, global demand can be expected to remain robust for decades. Meanwhile, O&G companies can be credible agents of change, earning the social permission to continue to supply the global market while it still needs them to do so.

What would a complimentary narrative from an O&G company pursuing a net-zero ambition sound like? I offer the following, inviting you to help shape it. Crowd-sourcing, if you will.

• We also acknowledge the challenge end-use emissions represents for climate change and are committed to doing our part to bring about change by engaging in new circles of influence.
• We know roughly 80% of lifecycle emissions from oil and gas happen at end use, so we are choosing to do more to influence change to lower emissions at end use and advocate for circular design.
• We know we are not the experts here, which is why we are joining with others and helping to amplify their calls for change.
• We are investing in grass-roots solutions in the places where we work and live, learning what needs to be done and offering support.
• We believe that by doing these things, we are demonstrating that we authentically understand the challenge and hope to earn your confidence and trust to continue to supply the global market while it still needs us to do so.

I could say a fair bit more, but I’ll stop there. Tell me what you think. I welcome suggestions.

Finance & Sentiment

Clean Energy Spending Will Surpass $2 Trillion This Year | Scientific American
Global spending on renewables, nuclear, energy efficiency and low-emissions fuels like hydrogen is set to eclipse $2 trillion in 2024, double the $1 trillion spent on fossil fuels, according to the International Energy Agency’s annual review of global energy spending.

A Shocking Number of American EV Drivers Want to Return to Gas Cars | Yahoo
As electric vehicles grow in popularity with new car buyers, there are some current EV drivers who can’t wait to switch back to an old-fashioned combustion engine. A new survey conducted by McKinsey & Co. dove into U.S. drivers’ views on the automobile landscape in the country today. According to McKinsey, 46 percent of EV drivers in the U.S. said they’re likely to go back to a traditional engine in their next vehicle.
[Comment] The survey was based on responses from 36,000 car owners around the globe. However, that figure of 46% is associated with 805 EV owners in the US. One third of those said the inability to charge at home influenced their perspective. Charging aside, 31% said EVs cost too much. So, for those that make EVs a priority, we need to address the barriers to getting chargers into apartment and condo complexes. 

Technology

Hydrogen 

Indian government to buy half a million tonnes of green hydrogen-based ammonia | Hydrogen Insight
The government-owned Solar Energy Corporation of India (SECI) has launched a tender for ten-year contracts in which it will purchase 539,000 tonnes a year of green hydrogen-derived ammonia, to be split across eleven projects with delivery points across the country. While a ceiling price has not been set, SECI plans to run a reverse auction, where sellers win if their bid is the lowest possible price.

Total signs major offtake deal for green hydrogen from Air Products for use in its European refineries | Hydrogen Insight
TotalEnergies has signed a 15-year offtake deal with industrial gases firm Air Products for 70,000 tonnes of green hydrogen a year from 2030, to be used in its Northern European refineries. This deal follows the launch of a tender for 500,000 tonnes of annual supply in September 2023.

‘Green hydrogen is triple the cost of grey in Europe — and doubling carbon taxes will not close the gap’: study | Hydrogen Insight
Green hydrogen today costs far more than grey H₂ in Europe today, with some analysts and industry executives arguing that this cost gap will start to close as free allowances on the EU Emissions Trading System (ETS) are phased out, increasing the penalty on CO₂. A German research institute argues that natural gas prices are much more likely to influence the cost gap than the ETS.

Indian conglomerate to invest $3.6bn in gigawatt-scale renewable hydrogen plant for green fuels | Hydrogen Insight
Essar Group plans to build 1GW of electrolyser capacity in Gujarat as part of wider spending spree on green and blue H2 projects.

FRV to invest some $5 billion in 2 GW of green hydrogen capacity in Brazil | pv magazine
FRV is one of a number of companies that has already signed contracts with the Ceará government for the production of green hydrogen and its derivatives in the state. Its H2 Cumbuco project is set to expand to 2 GW of electrolyzer capacity in two phases. The project will use residual urban water treated by the local sanitation company.

Carbon Capture 

Strong Growth: 1000 Capture Projects and Counting | Capture Map

Credit: CaptureMap

[Comment] Endrava, the developers of CaptureMap, have written a blog about the global progress of carbon capture projects. By collecting and analyzing capture project information and connecting it back to the emitters, it offers up-to-date and unique insights into the regions and segments where capture projects are being developed. Some interesting graphical representations of the data.

Preliminary engineering completed for “world’s largest” carbon capture and sequestration hub | Bioenergy Insight
Wood, a global leader in consulting and engineering, has completed the front-end engineering and design (FEED) scope for the first phase of Aramco’s Accelerated Carbon Capture and Sequestration (ACCS) project in Saudi Arabia, expected to be the world’s largest carbon capture and sequestration (CCS) hub upon completion.

Canada signs second deal to guarantee price of captured carbon | Reuters
The Canada Growth Fund, a federal clean-tech financing agency, on Tuesday signed its second deal to backstop carbon prices with a proposed Alberta facility that would convert landfill waste to electricity and sequester the resulting carbon emissions. If the facility goes ahead the CGF will provide carbon price certainty through an agreement, known as a Carbon Credit Offtake, to buy up to 200,000 tonnes a year of carbon credits generated by the project at an initial price of C$85 ($61.80) per tonne for a term of 15 years.

Groundbreaking ceremony for the world’s first large-scale carbon capture and utilisation facility in the cement industry | World Cement
Linde and Heidelberg Materials held a groundbreaking event for a carbon capture and liquefaction plant in Lengfurt, Germany. The joint venture, named ‘Capture-to-Use’ (CAP2U), aims to build and operate the plant, set to start in 2025, capturing CO2 from cement production for industrial use. Utilizing amine scrubbing technology, the plant will process CO2 to be reused in the food industry, with an expected output of 70,000 tons per year.

The Grid 

Octopus Energy, Tesla partner to help customers unlock cheaper energy bills | Current
Energy supplier Octopus Energy has partnered with battery giant Tesla to integrate its Powerwall technology into the Kraken platform. This will enable customers to shift demand flexibly and unlock cheaper bills.

Urban Design & Buildings 

Do you really get to decide the kind of place you want to live in? | Charles Marohn
[Comment] Strong Towns author Chuck Marohn offers unique insights into the factors driving development patterns in cities. The surprise factor: the way homes are financed – favouring certain styles over others, driven by government policy. The other factor most of us know: zoning restrictions. Worth a read. Note: this was originally poste on X. The link provided makes it easier to read. 

Energy Storage 

Nevada utility NV Energy seeks approval for 1GW+ of battery storage PPAs in 2024 resource plan | Energy Storage News

NV Energy is seeking approval from the Public Utilities Commission of Nevada (PUCN) of its 2024 Integrated Resource Plan (IRP) which it submitted with the regulator on 31 May 2024. The 2024 IRP, which includes a long-term 20-year strategy to meet electricity demand as well as a more immediate 3-year action plan, proposes Power Purchase Agreements (PPAs) totalling more than 1GW of both solar and storage capacity from three different projects as well as the construction of new methane (natural) gas peaking plants.

Volkswagen enters C&I energy storage business with Elli pv magazine
The Volkswagen Group has announced its entry into a new business segment with its charging and energy brand Elli. It will develop massive industrial battery energy storage systems, including initial 350 MW/700 MWh projects already in its pipeline.
[Comment] An excellent example of the blurring of lines between historically separate businesses: a car company getting into the energy storage business. 

Ørsted deploying one of ‘Europe’s largest’ Battery at UK offshore wind farm | Current
Danish energy company Ørsted has taken final investment decision (FID) on a battery energy storage system (BESS) to be installed at the onshore converter station for Hornsea 3 Offshore Wind Farm. The BESS, which has a capacity of 300MW/600MWh, is a “natural add-on” to Ørsted’s offshore wind power generation business.

VW to use old EV batteries to build massive grid battery to store wind and solar | The Driven
Car maker Volkswagen (VW) plans to install large battery storage capacities in northern Germany to store wind and solar power for times of little output, reports newspaper WirtschaftsWoche. The storage facility’s initial capacity will be 700 megawatts (the storage duration was not stated) and could be expanded to 1,000 MW later, which roughly equals the capacity of a standard gas-fired power plant.

Groundbreaking trial shows how VPPs can pay for home batteries, slash costs on the grid | One Step Off the Grid
[Excerpt] Cheney shared a chart (below) from the week leading up to the final peak demand record in February, where a pared back VPP shaved nearly a megawatt off the daily demand peak by operating daily within 90% of the the network support service contract requirements. “We saw that megawatt shaved off the whole [20-25MW] feeder and this was just with 150 battery assets and some air conditioners,” he told the conference.

Tesla launches Powerwall 3 in UK & Germany | pv magazine
Almost ten years after the “Powerwall 1,” US EV giant Tesla has launched its home battery system, Powerwall 3, in the United Kingdom and Germany. The Powerwall 3 is being officially presented at The smarter E Europe this week.

Jupiter Power unveils plan for 700MW BESS at former ExxonMobil oil depot in Massachusetts | Energy Storage News
Utility-scale battery storage developer Jupiter Power has unveiled plans to construct a 700MW standalone battery energy storage system (BESS) facility at the site of a former oil depot previously owned by ExxonMobil in Everett, Massachusetts.

Solar and Wind 

World-first 18MW wind turbine installed in China | RenewEconomy

Image Credit: Dongfang Electric Corporation

The continuing battle to build, install, and operate the world’s largest wind turbines has seen another record fall after the installation of an 18MW behemoth at a coastal testing centre in south-east China. Boasting a diameter of 260 metres and a blade swept area of a massive 53,000 square metres, a single 18MW turbine is expected to be capable of generating 72GWh of electricity each year – the equivalent of the annual power demand 36,000 households.

Farmers who graze sheep under solar panels say it improves productivity. So why don’t we do it more? | Grist
[Comment] The integration of solar farms and sheep grazing on Tony Inder’s property in New South Wales has led to increased wool production, demonstrating a symbiotic relationship between renewable energy and agriculture. Why don’t we see it more: I chalk it up laziness on the part of developers. Sure, this is not their area of expertise, which is why they ought to engage with the agricultural community.  [Excerpt] The integration of sheep and solar is “highly feasible,” McCabe says, because they can graze under ordinary height panels. 

Arevia and NV Energy sign PPA for ‘Nevada’s largest’, 2.8GWh solar-plus-storage | Energy Storage News
Developer Arevia Power has signed a power purchase agreement (PPA) for a large solar-plus-storage project in Nevada, US, with local utility NV Energy. The companies have agreed the PPA for the Libra Solar project, which will combine 700MWac of solar PV and a 700MW/2,800MWh battery energy storage system (BESS) targeting commercial operation by the end of 2027.

NextEra and Entergy to develop 4.5GW of solar and storage capacity | PV TECH
US power companies NextEra Energy and Entergy have announced plans to develop 4.5GW of solar and storage projects as part of a five-year joint development agreement.
[Comment] While the companies did not specify where the projects will be built, and when they expect to commission the projects, Entergy pointed to interest in providing “customers with low-cost, renewable energy as demand grows across Arkansas, Louisiana, Mississippi and Texas.”

Robots and Specialized Software Open New Solar Farm Development Opportunities | Financial Post
A solar farm development startup just received a boost, lining up $20 million in Series A funding from Bill Gates’ Breakthrough Energy Ventures and Khosla Ventures. The company promises to cut down on land and labor needed, allowing solar to be built in previously inaccessible locations.

Transportation 

Jeep is launching an electric Renegade for under $25,000 | electrek

An all-electric Jeep Renegade is finally confirmed. Even better, it will start at under $25,000 as Jeep expands into new markets. In the US, the Jeep Renegade EV will join two other all-electric Jeep vehicles, the Wagoneer S and Wangler-inspired Recon.

Will consumers trust someone else to automate their EV and home batteries? | One Step Off The Grid
Grid access to valuable home and EV battery capacity depends on customers being willing to hand over control. To date, that’s not happening in Australia.

Europe’s automakers fret as China EV tariff fears become reality | Reuters via MSN
The European Commission’s decision to slap tariffs on imported Chinese EVs could have far-reaching effects for European automakers, as a possible trade war would hurt not only their business in China but also their own imports of Chinese-made cars.
[Comment] At up to 38%, Europe’s tariff on imported Chinese is not as high as the 100% tariff being imposed by the US. It will be interesting to see what Canada and other countries do. Brazil is staying completely open, so Chinese EVs can be expected to pour in.