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This year has been a financial disaster for Enviva, the world’s largest producer of wood pellets for the biomass energy industry. With more than $250 million in losses to date and worsening results expected in the fourth quarter, the once high-flying company’s viability, by its own admission, is in grave doubt.

Also in question is where Enviva’s European Union and Asian customers will source the pellets they burn in their converted coal power plants and — without those pellets — how nations will meet their energy needs and their pledged Paris Agreement carbon emission cuts.

To many financial analysts who closely follow company performance, Enviva’s near collapse this month appears to have happened rapidly and suddenly. But did it?

“The problems have been there for years. There are lots of issues, but they stem from fundamental challenges Enviva faces in wood costs and keeping its manufacturing plants operating at full capacity,” a former Enviva maintenance manager told Mongabay. “It’s all coming home to roost in a kind of cumulative way.”

In exclusive interviews with Mongabay, the former Enviva employee detailed critical problems he witnessed and grappled with as a top operations manager at two of Enviva’s 10 Southeast U.S. plants between mid-2020 and mid-2022. His insights help explain why Enviva is now in dire financial straits.

Small mountains of forest wood, chipped from whole trees and loaded into tractor-trailers for delivery, are piled up outside the Enviva wood pellet mill in Ahoskie, North Carolina. According to a former Enviva maintenance manager and whistleblower at the company’s plants in North and South Carolina, the mix of wood Enviva uses is 80% pine and 20% hardwood. Pine is cheaper for Enviva to purchase, but it has a quick and corrosive impact on pellet-making machinery, leading to production slowdowns and shutdowns, and very high maintenance costs, the source told Mongabay. Image by Justin Catanoso.

In a Dec. 5, 2022, Mongabay story that reverberated globally, this Enviva whistleblower was the first insider from the multibillion-dollar international wood pellet industry to ever go public. At the time, he accused Enviva of falsifying its green claims and not being truthful about where and how it sourced forest wood for the tons of pellets it makes every day in the U.S. for export.

“The company says that we use mostly waste like branches, treetops and debris to make pellets,” the whistleblower told Mongabay a year ago. “What a joke. We use 100% whole trees in our pellets. We hardly use any waste. Pellet density is critical. You get that from whole trees, not junk.”

But junk wood is cheap, while whole trees are not, and therein lies a part of Enviva’s operational problems.

The former employee — who declined to be named to protect his professional and family’s privacy — said last week that this wood-sourcing deception is one reason Enviva has been losing money.

“Enviva built a business model saying it uses mostly scrap and waste from lumber mills and cut sites to make its pellets,” he said. “If that were true, its feedstock would basically be free. But it has to buy trees, a lot of trees, and it’s competing for them with other companies that want that wood. Loggers sell to the highest bidder, right, and that drives up the price. It’s something Enviva can’t control.”

In its 2023 third quarter filing on Nov. 9 with the Securities and Exchange Commission, Enviva wrote that among the myriad reasons impacting its financial viability is “the amount of low-cost wood fiber that we are able to procure and process.”

“So that’s your first problem,” the former employee said. “Your feedstock is costing way more than you’re letting on, and that’s before you start dealing with the costs of making pellets.”

Enviva did not respond to multiple requests from Mongabay for comment.

Mongabay contributor Justin Catanoso spent an afternoon in November 2022 on a 52-acre formerly wooded site in Edenton, North Carolina, being cleared in part for Enviva feedstock. While the company claims it uses mostly wood scraps and treetops for its pellets, Catanoso witnessed whole trees being chipped for Enviva and loaded into a tractor-trailer for delivery to the company’s nearby plant in Ahoskie. Limbs, treetops and wood waste, seen in the foreground, were left behind. Enviva’s publicly trumpeted manufacturing model claims to use cheap wood waste to make pellets; instead, the company uses expensive whole trees, resulting in cost overruns. Image by Justin Catanoso.

Tracking the collapse

For Maryland-based Enviva, 2022 looked to be a financial launchpad for future growth. Revenue topped $1 billion for the second year in a row, up 24% from two years prior. Its stock price hit a peak of $87 per share in April 2022. New multiyear contracts were locked in with taxpayer-subsidized customers across the European Union, United Kingdom, Japan and South Korea as the firm dominated the global market for wood pellets used by the energy industry.

Enviva boldly predicted it would double wood pellet output, from 6.2 million metric tons shipped overseas in 2022, to 13 million metric tons by 2027. With 10 pellet mills operating between southern Virginia and the Gulf Coast, the company secured a $570 million line of credit to build its biggest plants yet in Alabama and Mississippi, which have been under construction.

Enviva could even afford to ignore its persistent global critics, forest advocates who argue the company is increasing deforestation amid the climate crisis by exploiting a renewable-energy policy loophole overseas that — with little scientific validity — designates wood burning as a renewable, carbon-neutral substitute for coal.

The company was on a steady upward trajectory since its founding in 2004. But cracks in the corporate façade broke wide open May 3 of this year in reporting of its first quarter results. Wall Street analysts, who were bullish on Enviva stock at the time, were stunned when the company lost $117 million between January and March, three times worse than it forecasted. Enviva canceled its shareholder dividend, a red flag for a company in distress. Its declining stock price plunged in hours from $21 to less than $8.

Enviva’s stock collapse this year: The company’s stock was trading above $51 per share on January 13, 2023, and gradually slid to half that until the May 3 plunge. It dived again on November 9, bottoming out at 62 cents per share that day, and has not recovered much value since. It is now trading as a penny stock. Source: November 16 end of day trading screenshot from Google.com.

In a conference call, CEO Thomas Meth made a passing reference to operational challenges at Enviva’s plant in Southampton, Virginia — challenges he said were a priority to address.

Things got far worse for Enviva, and Meth, on Nov. 9 with Enviva’s third quarter results. Another $85 million lost, four times more than third quarter losses in 2022. The stock price, which had climbed above $13 in August, plunged to 61 cents as major shareholders dumped their shares. The company acknowledged it had exhausted its $570 million line of credit used for construction of those plants in Alabama and Mississippi, casting those projects in doubt.

Meth was demoted from CEO to president, and Enviva made this startling admission: “The conditions and events in the aggregate raise substantial doubt regarding the company’s ability to continue as a going concern.”

Glenn Nunziata, who had joined Enviva just three months ago as chief financial officer, was named interim CEO. In a conference call to investors on Nov. 9, Nunziata also referenced the Southampton plant, saying it had improved its operating costs by shutting down half of the manufacturing lines that make pellets.

The former Enviva maintenance manager told Mongabay he knew why.

This aerial view of Enviva’s wood pellet production mill in Ahoskie, North Carolina, pictured in fall 2022, shows the large conveyors and chains in the background that move pine and hardwood chips into dryers to pull the moisture out of the wood before it is pressed into pellets roughly the size of medicine capsules. According to a former Enviva maintenance manager, those conveyors and chains are composed of carbon steel, which corrodes and rusts quickly when exposed to moisture, especially from drying resinous pine. This causes frequent and costly facility shutdowns and delays, which has contributed to Enviva losing millions of dollars over the past two years due to maintenance and manufacturing costs per ton of wood pellets made, creating a huge loss for the company as it sells pellets under fixed-price contracts. Image courtesy of the Dogwood Alliance.

Wood pellets on the cheap: Pine meets carbon steel

When Enviva built its first plants — four in eastern North Carolina along with the one in Southampton, Virginia — the goal was to contract with local loggers to supply 80% hardwoods and 20% pine. That mix proved unsustainable.

“Enviva’s business shifted to 80% pine and 20% hardwood and here’s why,” said the former employee, a mechanical engineer by training. “Let’s unravel the [Enviva] myth. You’re not getting free scraps or tree limbs; you’re buying whole trees. And hardwood costs a lot of money. Also, the thermal value of pine (how much heat it produces when burned) is higher and it’s cheaper to buy.

“But the wood scientists at the company should have known that there is pitch and resin in pine. It’s not environmentally friendly during processing; it releases a lot of on-site air pollution. But significantly for us maintaining the machines, pine is corrosive to anything but stainless steel. And all of our equipment is made out of carbon steel,” which degrades and rusts quickly when exposed to moisture.

If Enviva had been processing mostly hardwood trees into pellets, its manufacturing operations may have held up better, keeping down manufacturing costs of pellets per ton. But its pellet-making machinery, at least in Virginia and North Carolina, being made from carbon steel, while far less expensive to install than stainless steel, couldn’t hold up under the strain of nonstop production demands.

“I couldn’t believe what I was seeing,” the former maintenance manager said. “The carbon steel chains and conveyors were being sandblasted away by all the pine that was going through it. Look, these chains and conveyors are gigantic, and all this equipment is just rotting away because it’s made out of the wrong material. You can’t really repair it; you should replace it. But that’s too expensive. So, you patch it up until it breaks down again. Repairs would range from $700,000 to $1 million — just to patch things up for a while.”

Thus, higher wood-procurement expenses, coupled with expensive equipment breakdowns and repairs, have both reduced output and driven up pellet making costs. This combination turned Enviva’s profits to losses for years on contracts with fixed sale prices per ton of pellets, the former employee said.

In its SEC filing on Nov. 9, Enviva wrote that $21.1 million of its $85.2 million in third quarter losses, or 25%, was attributed to “asset impairments,” which in accounting jargon means damaged equipment and machinery.

The company also noted that its survival is based in part on “our ability to renegotiate customer contracts.”

A loaded logging truck pulls into the Enviva biomass wood pellet plant in Northampton, North Carolina. Image courtesy of the Dogwood Alliance/NRDC.
In the spring of 2019, investigators tracked logging trucks coming from a mature hardwood forest and going to Enviva’s Northampton, North Carolina, facility. The clear-cut, seen here, was located in the Tar-Pamlico River Basin, alongside Sandy Creek, feeding into the Pamlico Sound of North Carolina. Image courtesy of the Dogwood Alliance.

Hanging global questions

Forest advocates — who have long decried the stark contrast between Enviva’s forest-friendly claims and its contributions to deforestation during a climate emergency, celebrated the company’s crisis and said they weren’t surprised by it.

“Enviva built a business model based on environmental injustice [and] forest destruction,” the North Carolina-based Dogwood Alliance, an NGO, said in a statement. “The [wood pellet] industry operates on a model of greenwashing, bad climate science, large-scale clearcutting and cutting corners on community protections.”

Many questions remain. In 2023, U.S. wood pellet exports were up 6% through September over last year’s record shipments, according to the U.S. Department of Agriculture. But if Enviva, its 10 plants and the 6 million metric tons of pellets it ships to the U.K., EU and Asia vanishes, who if anyone will fill the gap? If Enviva plants in Virginia and North Carolina remain in the same poor condition as the former employee knew them to be, do they hold much, if any, resale value?

U.K.-based Drax, one of Enviva’s biggest customers, which also has profitable pellet mills in the Deep South, did not respond to questions from Mongabay. Japanese companies Sumitomo and Mitsubishi Corporation are big Enviva customers. But there is no evidence that either is willing to extend a financial lifeline to Enviva or take over its operations.

Fenna Swart, a forest advocate with the Clean Air Committee in the Netherlands, has helped coordinate opposition to EU wood pellet imports and subsidies. She told Mongabay she sees Enviva’s possible downfall as a potential incentive to move away from forest biomass as an energy source.

Forest biomass protestors outside Enviva’s Raleigh, North Carolina, offices. Image by Kimala Luna courtesy of the Dogwood Alliance.

“If Enviva indeed fails to load the bulk carriers to Europe with tons of crushed forests, the EU, and the Netherlands in particular, are expected to seize the opportunity to accelerate the phasing out of [forest biomass for energy] subsidy flows,” said Swart, referring to the billions of dollars paid annually by the EU to subsize wood pellet purchases. “In addition to the decision of the Dutch government last year to immediately stop all subsidies for new biomass projects, this will also limit long-term subsidies.

“We know that EU biomass from [manufacturer] Graanul Invest [in the Baltic states] has been limited since the Ukrainian war,” Swart noted. “With Enviva falling short, if this [trending] development continues, European governments will ideally focus more on [natural] gas as a transition fuel and redirect biomass subsidies to real forms of sustainable energy such as hydrogen and investment in energy savings.”

Banner image: Enviva has long claimed that it uses mostly wood scraps and treetops for its pellets. That’s clearly not true as evidenced by this aerial view showing a massive ring of thousands of whole trees at Enviva’s Sampson County, North Carolina, forest biomass facility. Most wood pellets made in the U.S. are shipped to Europe. Image courtesy of the Dogwood Alliance.

Justin Catanoso, a regular contributor to Mongabay, is a professor of journalism at Wake Forest University in North Carolina.

Source: News.mongabay.com

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Türkiye’s state pipeline operator Petroleum Pipeline Corporation (BOTAŞ) signed an agreement with Algeria’s state oil and gas firm Sonatrach to extend their existing deal for another three years, Energy Minister Alparslan Bayraktar said Tuesday.

Under the deal signed during an official visit to Algiers by President Tayyip Erdoğan, Türkiye will continue to buy 4.4 billion cubic meters (bcm) of liquefied natural gas (LNG) from Algeria, Bayraktar said in a statement posted on social media platform X.

Türkiye and Algeria signed 12 agreements Tuesday in various fields during Erdoğan’s visit.

Erdoğan and his Algerian counterpart, Abdelmadjid Tebboune, co-chaired the second meeting of the Türkiye-Algeria High-Level Cooperation Council in the capital, Algiers.

Afterward, the leaders joined a signing ceremony for the agreements.

Addressing trade between the two countries, Erdoğan said: “Last year, our trade volume reached a record of $5.3 billion, and we expect it to reach $6 billion by the end of this year.

“With the efforts we will increase, we hope to reach the target of $10 billion in trade volume that we set with my brother Tebboune in a short time,” he said.

Erdoğan shared his appreciation for Algeria’s efforts to evaluate its economic potential under the leadership of Tebboune.

“We closely follow the efforts of around 1,400 Turkish companies supporting this process. We take pride in our companies being the largest investors and job providers in non-hydrocarbon sectors in Algeria,” he said. “We will strive to increase these investments even further. We are pleased with Algeria’s investments in our country.”

Türkiye desires to diversify and enhance relations in energy and renewable energy through new partnerships with Algeria, added Erdoğan.

Tebboune said Erdogan’s visit, despite the “special and exceptional” conditions at the regional and international levels, is a significant success for relations.

Considering the sincere will on both sides, Türkiye-Algeria relations are strong and have open horizons for further cooperation, said Tebboune, adding Algeria has become Türkiye’s second-largest trading partner in Africa.

Erdoğan and Tebboune also signed a joint statement on the second meeting of the High-Level Cooperation Council between Türkiye and Algeria.

Source: Dailysabah.com

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When I say the cleaving is becoming tenuous, do not take that expression to indicate the Western global alliance will back down, they will not.  However, as the fracturing of the global economic systems cleave into two very distinct formations, the citizens forced to live in the Western control system are going to experience a secondary position of life that will be entirely new.  Within that dynamic, the political leaders are increasingly isolated; that’s the real ‘non-pretending’ story as expressed.

We have followed this modern construct around the issue of energy production for quite a while.  More recently, those who control the systems have become more desperate because the consequences have become far more visible.

In the big picture the world is separating, cleaving into two polar economic regions based on energy use.  The yellow team, following the WEF climate change agenda and deploying all economic tools to shift wealth and control populations; the carbon tax is at the end of this rainbow.  The grey team are continuing to exploit traditional oil, coal and gas development and provide cheap and abundant energy products; economic prosperity is at the end of this managed transition.

Now, we are entering a phase of extreme consequence.  This is the inflection point when the Western Alliance is most vulnerable, because the people affected by the design are not happy with the outcomes so far.  The BRICS+ and traditional energy development nations are gaining geopolitical influence.  Can the Western Alliance keep their citizens complacent?  That’s the question.

LONDON — World leaders will touch down in Dubai next week for a climate change conference they’re billing yet again as the final off-ramp before catastrophe. But war, money squabbles and political headaches back home are already crowding the fate of the planet from the agenda.

The breakdown of the Earth’s climate has for decades been the most important yet somehow least urgent of global crises, shoved to one side the moment politicians face a seemingly more acute problem. Even in 2023 — almost certainly the most scorching year in recorded history, with temperatures spawning catastrophic floods, wildfires and heat waves across the globe — the climate effort faces a bewildering array of distractions, headwinds and dismal prospects.

[…] The best outcome for the climate from the 13-day meeting, which is known as COP28 and opens Nov. 30, would be an unambiguous statement from almost 200 countries on how they intend to hasten their plans to cut fossil fuels, alongside new commitments from the richest nations on the planet to assist the poorest.

But the odds against that happening are rising. Instead, the U.S. and its European allies are still struggling to cement a fragile deal with developing countries about an international climate-aid fund that had been hailed as the historic accomplishment of last year’s summit. Meanwhile, a populist backlash against the costs of green policies has governments across Europe pulling back — a reverse wave that would become an American-led tsunami if Donald Trump recaptures the White House next year.

And across the developing world, the rise of energy and food prices stoked by the pandemic and the Ukraine war has caused inflation and debt to spiral, heightening the domestic pressure on climate-minded governments to spend their money on their most acute needs first. (read more)

If the WEF/Obama/Globalists had lost the 2020 election, this wouldn’t even be a consideration right now.  Then again, that’s exactly why they went to such extremes to regain footing through the weaponized manipulation of the 2020 USA election.

This is yet another ‘Biden is disposable‘ overlay.  The multinational corps (World Bank, WEF, etc), who are posed to financially benefit from the ‘climate change’ agenda, need to keep the purchased Western politicians on track.  The sheeple foot soldiers now have years of indoctrination behind them – they will play a critical role.

The economies of Russia, China, Iran, Brazil, Saudi Arabia, South Africa, Egypt and the expanded BRICS+ nations are all well positioned to grow, as the U.S, Canada, Japan, Australia, New Zealand and the EU are well positioned to shrink.  The smaller “own nothing and be happy nations” will see even more of their wealth assemble in the top tier of the control system.   This is by design.

The Western Alliance will have smaller economies overall, but the scope of the wealth will be assembled in a smaller group of people.  The result is more money in fewer hands, and that is entirely the objective.  From that position, control becomes easier and the socioeconomic ramifications then begin to take place (social scores, energy equity, etc).

What is shared in that link above is really the outline of how the management of the system becomes more tenuous as people within the Western Alliance start to awaken to the reality of what is creating their misery.  Ultimately, this is why the climate control people view Donald Trump as their greatest adversary.

Biden has no clue; he’s just doing what the Blackrock Inc group tell him to do, in order to support their advanced investment allocations.   Climate Change is a hoax similar to the Biden election victory.

Source: Theconservativetreehouse.com

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The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz is the world’s most important oil chokepoint because large volumes of oil flow through the strait. In 2022, its oil flow averaged 21 million barrels per day (b/d), or the equivalent of about 21% of global petroleum liquids consumption. In the first half of 2023, total oil flows through the Strait of Hormuz remained relatively flat compared with 2022 because increased flows of oil products partially offset declines in crude oil and condensate.

Chokepoints are narrow channels along widely used global sea routes that are critical to global energy security. The inability of oil to transit a major chokepoint, even temporarily, can create substantial supply delays and raise shipping costs, increasing world energy prices. Although most chokepoints can be circumvented by using other routes, which often add significantly to transit time, some chokepoints have no practical alternatives.

Between 2020 and 2022, volumes of crude oil, condensate, and petroleum products transiting the Strait of Hormuz rose by 2.4 million b/d as oil demand recovered after the economic downturn from the COVID-19 pandemic. In the first half of 2023, shipments of crude oil and condensates dropped because OPEC+ members implemented crude oil production cuts starting in November 2022. Flows through the Strait of Hormuz in 2022 and the first half of 2023 made up more than one-quarter of total global seaborne traded oil. In addition, around one-fifth of global liquefied natural gas trade also transited the Strait of Hormuz in 2022.

Only Saudi Arabia and the United Arab Emirates (UAE) have operating pipelines that can circumvent the Strait of Hormuz. Saudi Aramco operates the 5-million-b/d East-West crude oil pipeline and temporarily expanded the pipeline’s capacity to 7 million b/d in 2019 when it converted some natural gas liquids pipelines to accept crude oil. The UAE links its onshore oil fields to the Fujairah export terminal on the Gulf of Oman with a 1.5 million b/d pipeline.

Iran inaugurated the Goreh-Jask pipeline and the Jask export terminal on the Gulf of Oman with a single export cargo in July 2021. The pipeline’s capacity was 0.3 million b/d at that time, although Iran has not used the pipeline since then. We estimate that around 3.5 million b/d of effective unused capacity from these pipelines could be available to bypass the strait in the event of a supply disruption.

Based on tanker tracking data published by Vortexa, Saudi Arabia moves more crude oil and condensate through the Strait of Hormuz than any other country, most of which is exported to other countries. Around 0.5 million b/d transited the strait in 2022 from Saudi ports in the Persian Gulf to Saudi ports in the Red Sea.

We estimate that 82% of the crude oil and condensate that moved through the Strait of Hormuz went to Asian markets in 2022. China, India, Japan, and South Korea were the top destinations for crude oil moving through the Strait of Hormuz to Asia, accounting for 67% of all Hormuz crude oil and condensate flows in 2022 and the first half of 2023.

In 2022, the United States imported about 0.7 million b/d of crude oil and condensate from Persian Gulf countries through the Strait of Hormuz, accounting for about 11% of U.S. crude oil and condensate imports and 3% of U.S. petroleum liquids consumption. U.S. crude oil imports from countries in the Persian Gulf have fallen by half since 2018 as domestic production has increased.

Source: Eia.gov

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Despite Africa’s monumental fossil fuel and renewable energy potential, it faces high energy poverty levels, according to a new report.

And while efforts to shift to clean energy in Africa are positive – with several countries taking advantage of the enormous renewable energy potential – these efforts need to be coupled with the development of fossil fuel energy to speed up the transition, according to PwC’s new report, Africa energy review 2023: Africa’s challenges and opportunities in the energy transition.

The report looks at renewable energy across the regions and what is needed to drive efforts forward.

According to PwC Africa energy resources leader Andries Rossouw, the future for African energy involves “lower carbon technologies, driven by strategies that can see oil, gas and renewable production grow while reducing emissions to meet sustainability commitments”.

Investment into Africa’s renewables, oil and gas is pivotal to the continent’s growth. PwC Africa oil & gas leader Pedro Omontuemhen said: “Africa’s decarbonisation is important, but so is the eradication of energy poverty and improving energy security. Governments and the private sector need to collaborate so that investments in new technologies are optimised.”

Russia has reduced its supply of gas to Europe, and Africa has an opportunity to fill the gap — but it needs to act now, Omontuemhen said. “The solution for the power sector is not an ‘either/or’, renewables or natural gas proposition. It requires a multi-pronged approach to decarbonisation with renewables and natural gas power at its core.”

Gas will retain a critical role in power generation even as new power technologies emerge. “While significant emphasis has been placed on developing the hydrogen economy, it takes time to develop. However, it can play a pivotal role in Africa’s energy transition,” said PwC energy leader in East Africa David Tarimo.

Regional breakdown

North Africa has the greatest access to electricity. The area has significant oil and gas reserves, particularly in Algeria, Egypt and Libya, plus excellent solar photovoltaic electricity potential and wind resources. It is a net exporter of gas via a pipeline into the EU and has become important since Russian imports stopped.

West Africa is a net exporter of fossil fuels, primarily from Nigeria. Export growth will be driven by liquified natural gas (LNG) exports, with the Senegal and Mauritania Greater Tortue Ahmeyim LNG project coming online. There is also huge potential for investment and growth as 70% of the population is under 30 years of age.

Read: South Africa to prioritise energy security over climate goals

Central Africa’s energy sector is dominated by Angola’s oil exports. Angola is the only country that has started to invest in renewables, with the rest of the region negligible. “Both gas and renewable energy need to be developed to spur economic growth and reduce energy poverty in a region where population growth is 3.1% annually,” Rossouw said.

In Southern Africa, Namibia made significant discoveries in 2022 and 2023, primarily “oil plays”, which provide opportunities for the region to become energy sufficient, and in future an exporter. “The country’s business friendly and localisation legislation aims to stimulate growth,” said PwC South Africa energy law expert Roelof van Huyssteen.

Southern Africa has significant solar and wind potential, with South Africa having installed 10GW of renewable projects. However, that is not enough to stop load shedding as the ageing coal infrastructure energy availability factor has dropped from 58% in 2022 down to 54% in 2023.

“Changes in legislation, the unbundling of Eskom into transmission, generation and distribution units, and the draft South Africa renewable energy plan all indicate that there is a drive to accelerate renewable energy deployment,” Van Huyssteen said.

Source: Techcentral.co.za

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Sustainability funds should be able to hold traditional energy shares because excluding them is denying investors one of the best ways to bet on a shift to renewable energy, a senior ESG executive at Deutsche Bank’s Private Bank said on Tuesday.

Fossil fuel stocks have boomed since Russia’s invasion of Ukraine in February 2022 sent fossil fuel prices soaring, leaving the performance of environmental, social and governance (ESG) funds lagging.

Pure-play renewable energy stocks such as Orsted and First Solar have also fallen sharply this year as higher interest rates and inflationary pressures squeeze profitability.

Markus Müller, chief investment officer ESG at Deutsche Bank’s Private Bank, said the fossil fuel effect was behind a drop in a recent survey in the percentage of investors who believe ESG factors can help manage risks to their portfolios.

“When we think about clean energy, these are business models which are quite new and sensitive to interest rates,” Müller told Reuters, noting that the number of “meaningful” global wind power players had reduced to three from eight before COVID-19.

“Investors are looking for traditional companies that have capex in renewables… They prefer the transition than to exclusions,” he added.

European oil and gas companies including BP and Shell have increased renewable energy investment, although they are expanding production of dirtier energy too.

Sustainability-minded investors, Müller said, needed more disclosures from firms about their plans for shifting to lower-carbon models, and regulatory clarity on labelling transition-focused funds.

ESG approaches range considerably and many funds invest in fossil fuels, but as regulations tighten more exclusions are possible.

France has said that from 2025 funds using the ‘ISR’ label, or Socially Responsible Investment label, could be banned from investing in firms involved in the exploration, exploitation and refining of new fossil fuels. Morningstar estimates that 45% of funds have exposure to traditional energy, totalling 7 billion euros ($7.6 billion).

Investors remain committed to sustainability goals, Deutsche Bank’s Chief Investment Office ESG survey found, with 18% of respondents choosing the energy transition as their preferred investment opportunity, beating artificial intelligence.

Yet fewer investors are confident ESG factors can help manage portfolio risks — 37% of respondents strongly or slightly agreed, down from 44% last year and 48% in 2021.

The survey, which received 1,759 responses, mostly in Europe, also found that only 15% of investors said they had a good knowledge of ESG, while 3% considered themselves experts.

Source: Boereport.com

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Ghana has unveiled an energy transition and investment plan worth $550 billion, but it faces significant challenges like integrating renewable energy sources, raising public awareness, and attracting sufficient funding, experts told Gas Outlook.

The recent National Energy Transition Framework (NETF) paved the way for more specific and practical strategies within Ghana’s Energy Transition and Investment Plan. NETF previously set a target of net zero by 2070, but this new plan shows Ghana has become more ambitious and is targeting net zero by 2060.

Sustainable Energy for All (SEforAll) worked with the Ghanaian government to create a plan that provides a credible pathway forward to help Ghana achieve net zero energy-related carbon emissions by 2060 through deploying low-carbon solutions across key economic sectors, such as oil and gas, transportation, and power.

According to the plan, to achieve net zero, Ghana will focus on deploying six main decarbonizing technologies that would cover over 90% of the targeted reduction by 2060: electrification and renewables, carbon capture and storage, low-carbon hydrogen, battery electric vehicle technologies, clean cooking technologies, and negative-emissions solutions.

Ghana aims to use the plan as a vital tool for engaging the international community and investors in supporting the country’s energy transition and sustainable development goals. If the plan is achieved in full, it would generate nearly 400,000 jobs in the Ghanaian economy.

“Without further action, Ghana’s emissions could rise from 28 Mt CO2e in 2021 to over 140 Mt in 2050. Under Business As Usual (BAU), the bulk of emissions growth will come from transport, driven by population growth, GDP per capita growth, and vehicle ownership,” the government’s energy transition and investment plan said.

Nana Akufo-Addo, the President of Ghana said, “This pioneering Energy Transition and Investment Plan maps out Ghana’s journey to achieve net-zero emissions by 2060 based on the latest data and evidence, ensuring that as our economy thrives, it does so in harmony with the environment.

“This plan is a testament to our dedication to fostering green industries, nurturing the evolution of cutting-edge low-carbon technologies, and propelling our nation towards a sustainable industrial revolution while giving equal growth opportunities to men and women,” he said in a statement.

However, experts have noted that the feasibility of the plan’s financial projections depends on various factors, including the country’s economic stability, fiscal policies, access to funding sources, investment climate, and the ability to attract both domestic and foreign investments.

Ambitious energy transition plan

Joshua Narh, Executive Chairman of the Energy Chamber of Ghana, told Gas Outlook that by examining specific targets, a detailed roadmap, financial commitments, the technological focus, and regulatory and policy support, it’s evident that the new plan is more ambitious than the previous energy transition framework.

“Ambition in the plan is reflected in its clear and comprehensive strategy for achieving significant carbon emissions reduction and transitioning to cleaner energy sources. Specific, aggressive targets, clear timelines, and a roadmap for net-zero emissions make it more ambitious than a less detailed framework. Allocating substantial financial resources and promoting government-private sector collaboration further underline its ambition.”

He believes implementing the new plan has the potential to bring Ghana’s energy sector carbon emissions to net zero through a series of strategies and initiatives. He said it could be achieved through renewable energy expansion, energy efficiency improvements, hydrogen utilization, electric mobility promotion, enhanced energy storage, greater attraction of investment and a clearer regulatory framework.

“The plan serves as a foundation for developing energy-focused goals and integrating them into future policy and regulatory frameworks. Clear regulations can support the transition to clean energy and drive carbon reductions. Regular monitoring and accountability measures can ensure that the goals outlined in the plan are met and that emissions are reduced consistently over time.”

Michael Mfum, a Ghana-based energy transition expert, said implementing Ghana’s energy transition plan can significantly contribute to increasing the share of renewable energy sources, improving energy efficiency across all sectors, extending electricity access to rural areas and promote clean cooking solutions and shifting from fossil fuel-powered vehicles to electric vehicles.

Challenges to decarbonization 

Nevertheless Mfum said achieving a net zero carbon-level commitment by 2060 is a significant challenge for any country, including Ghana. He said several hurdles need to be addressed to transition the economy and energy sector while mitigating carbon emissions effectively.

“Integrating intermittent renewable sources like solar and wind into the grid necessitates efficient energy storage solutions to ensure a stable energy supply. The existing energy grid might require substantial upgrades to accommodate increased renewable energy capacity and improve transmission and distribution efficiency.

“Raising public awareness about the importance of transitioning to a low-carbon economy and garnering public support for renewable energy projects. Maintaining political will and cross-party support for long-term policies that encourage the transition to renewable energy despite potential challenges.”

Mfum, a youth delegate for the International Renewable Energy Association, said addressing these challenges requires a coordinated effort from the government, private sector, civil society, and international partners. “Continuous research, innovation, and adaptive policies are essential to overcoming these hurdles and meeting Ghana’s net-zero carbon commitment by 2060.”

Narh, from Ghana’s energy chamber, said meeting a net zero carbon commitment by 2060 for Ghana is a significant challenge that faces various obstacles. He said, “The transition to net zero emissions will require substantial investments in renewable energy infrastructure, energy efficiency projects, and technology adoption. Ensuring access to the necessary funding and attracting private sector investments can be challenging.”

He went on: “upgrading and expanding the energy infrastructure to accommodate renewable energy sources and electric mobility is a complex and costly endeavour. Building the necessary infrastructure can be hindered by technical, financial, and logistical challenges.

“The integration of intermittent renewable energy sources like wind and solar requires effective energy storage solutions. Developing and implementing large-scale energy storage systems is a technical and logistical challenge.”

Ghana’s economic decline

Narh noted that Ghana is facing economic decline; as such the country might encounter challenges in raising the necessary funds for a $550 billion plan. In this case, he said the government would need to assess its capacity to attract investments and consider how it plans to address the economic challenges while pursuing ambitious energy transition goals.

“It’s crucial for such a plan to undergo careful scrutiny, including an assessment of its economic impact, sustainability, and the ability to secure the required investments. The government may need to consider a phased approach or partnerships with international organizations and private investors to ensure that the financial projections are realistic and achievable.”

Mfum said Ghana’s economic decline will pose challenges to implementing large-scale projects, especially those requiring significant financial investments. He said economic downturns can lead to budget constraints, reduced government spending, and limited access to credit, which might impact the funding available for energy transition initiatives.

“In such a situation, the government of Ghana needs to prioritize projects, seek innovative financing solutions, collaborate with international partners and financial institutions, and create policies that attract private investments.

Additionally, demonstrating a clear and stable regulatory environment, ensuring transparency, and building investor confidence are crucial steps to attract the necessary funding for energy transition projects,” he said.

Source: Gasoutlook.com

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Is there any critical industrial material as bizarre as natural gas?

The stuff holds almost zero interest for the general public, for the same reason no one is interested in the sound of a washing machine. Both boring. Both ubiquitous. Natural gas isn’t even sold on Amazon. But forty-six percent of American homes use natural gas for heat, and surely more in Canada.

But consider the storm below the surface. Traders love it, because it is one of the most volatile commodities in existence, and volatility means trading profits. The volatility, at the slightest provocation, is almost unbelievable at times. The weather pattern shifts for three weeks out over a portion of the US and boom – the entire forward 18 months of prices can collapse or soar.

In the bigger picture though, natural gas today in North America trades at close to the same price it did a quarter century ago – not inflation adjusted, just the same old nominal dollar value, which is astonishing since global gas demand has increased by 60 percent in that time.

Natural gas is a critical fuel for much of the world, and usage is growing, particularly the relatively new field of LNG. According to the Global Gas Infrastructure Tracker website, which doesn’t even like the stuff, there are a total of 2,449 significant pipeline projects underway in the world for a total of 1.2 million kilometers (and that’s the big pipe, not the little straws that go to your house). There are 238 LNG import terminals and 189 export trains in development globally. One hundred and thirty countries either have natural gas systems or are constructing them.

Traders, consumers and businesses love the stuff even if they don’t say it often enough, while others loathe it because it is a ‘fossil fuel’. Natural gas is caught in an existential war whereby said opponents will do everything in their power to just make it go away (they really think they can). The Toronto Globe and Mail, “Canada’s news paper” (note to self: develop ethnocentric balloon head emoji, make millions), recently ran a pricelessly ludicrous opinion piece entitled ‘Natural gas is a dying commodity, and Canada needs to stop supporting it’. The article was written by one of those think tanks (International Institute for Sustainable Development) that produces nothing but ideological amplification, safely distanced from people that actually do stuff, and a mountain of impressive T4 income tax slips (latest fiscal year personnel/consultant expense: $33 million). There is no surprise that their team of political scientists would attack natural gas; their latest financials show that the Government of Canada granted them $40 million, a third of which is from climate activist/federal minister Guilbeault’s office. There’ll be no biting that little hand.

Many climate leadership icons of the world, the US, Canada, Western Europe, Japan… pretty much anyone that can, is building natural gas (LNG or non) infrastructure as fast as they can. Germany, home to the world’s most advanced green energy demolition derby, built an LNG import terminal in an astounding 5 months. Many that want to import LNG but weren’t able to last year because Europe hoovered up every molecule on the market are simply doing what it takes to attain energy security, and that can mean, lord tunderin’, coal. Pakistan is the most notable example – the country plans to quadruple coal fired power output and move away from gas only because it could not obtain it: “A shortage of natural gas, which accounts for over a third of the country’s power output, plunged large areas into hours of darkness last year.” The country’s energy minister went on, “We have some of the world’s most efficient regasified LNG-based power plants. But we don’t have the gas to run them.”

For those fortunate enough to line up LNG supplies, the ante is normally a 15-20 year contract.

To say that “natural gas is a dying commodity” takes either some world-class mental dishonesty, disturbingly blind faith in policy over reality, or some kind of “clouds hate me” philosophical stance on life.

Beyond the silly messaging looking to undermine natural gas though are some very powerful undercurrents that are shaping the world in ways most don’t consider, but they should.

Thanks to the shale revolution in the US and Canada, native natural gas production exploded onto a scene that couldn’t handle the excess, leading to persistently low prices. North America is turning into an LNG export powerhouse, but until that export capacity outpaces productive capability, natural gas prices in North America look set to remain far below global prices.

It is worth remembering how significant this scenario is for North America. Cheap natural gas is an industrial godsend, enabling many strata of industries and enterprises that simply would not exist without. In May of 2022, the head of the Western Equipment Dealers Association, said that the previous winter’s high natural gas prices were unsustainable for businesses that had to heat 30-40,000 square-foot shops. The 2021-22 winter of which he was discontented saw Henry Hub prices average $4.56/mmbtu – about a third of global prices, and a fraction of what the

The same article pointed out how the Industrial Energy Consumers of America, a trade group whose members include smelters, plastics and paper-goods makers, wanted the US to stop permitting new LNG export terminals because “The manufacturing sector cannot invest and create jobs without assurances that our natural gas and electricity prices will not be imperiled by excessive LNG exports.”

Those guys aren’t crazy. The US gas market is balanced on a knife edge. A change in next month’s forecast can create havoc in forward prices even up to several years out.

The rise of LNG is making things even more unstable. The Freeport LNG terminal had an 8 month outage due to an accident, removing 2 bcf/d of demand from the market (in a 100 bcf/d market); this single event caused a storage surplus in the US that has depressed natural gas prices ever since. All else being equal, the US natural gas storage scene would be in a deficit to the five year average as opposed to today’s surplus if Freeport hand not gone down, and both spot and futures prices would most likely be significantly higher. The Freeport outage probably knocked US natural gas prices down by at least $1/mmbtu for a period of 8 months, and actually probably much more. But even at that level, in a 100 bcf/d market, where 1 bcf is equal to 1 million mmbtus, the cost savings to US consumers totaled $100 million per day. (Of course, had the price stayed higher, we might have seen far more drilling, which may have caused a collapse as well, just a bit further down the road.)

That $100 million per day cost saving came out of the hide of North American natural gas producers selling into that market, and you’d think they wouldn’t like that one little bit. And they don’t. But gas producers have their own realities and game plans which don’t generally involve sacrificing any of their sales for the good of all other producers, as economically sensible as that strategy may be.

US producers find themselves in an odd situation. Every one of the large producers knows that they could cut production by 5 percent and double their profits; the market is that tightly balanced. Doing so would single handedly drive up NG prices substantially – just observe how the gas market goes ape over a change in weather forecast.

But driving up prices, even if it is in their own self interest, will mean a spike in production, because at sustained $4 US gas, the market becomes flooded. EQT president Toby Rice, the largest US gas producer (EQT, not Toby), says at a sustained $4/mmbtu natural gas price, the US could export 60 bcf/d of natural gas. Keep in mind that $4 gas is a fraction, anywhere from a third to ten percent of global LNG prices.

Mr. Rice may very well be correct, but glosses over the reality of natural gas prices: we will never see a sensible sustained price like $4, even though we may average it – we will see 2 and 8 and 3 and 9 and so on and so on. 

On top of this, solution gas from oil plays like Permian us providing massive amounts of gas in itself. The Permian, primarily an oil field, produces more solution gas than the entire country of Canada. Permian solution gas, if a stand alone country, would be one of the world’s top five largest producers.

So who cares? Well, you all do. We all do. The goofballs that wrote the Globe & Mail article do, though they either won’t admit it or simply refuse to understand.

Natural gas is the bedrock of most economies, and cheap natural gas is a special elixir to North America. It is absolutely crucial to the level of industrial activity we enjoy. There is no substitute for the clean burning capability of the stuff. Wander into a typical big box store or more crucially try to wander into an industrial building that you won’t be allowed to because it is unsafe… drive around an industrial park and look at all the magnificent industrial activity that gives us the life we live. Now imagine those being heated by wood stoves. Or solar panels in dead of winter. Geothermal? Sure, if you plan on drilling into the earth’s mantle. And if you live on an appropriate acreage. And have enough money. I guess there’s always coal.

And that sums up a lot of the world’s population’s situation: If countries aren’t building LNG, it’s likely because they are building coal, as in the countries that Europe outbid for LNG last winter in a shocking me-first display of hydrocarbon-swilling (accompanied by fossil-fuel-subsidizing self-loathing?) hypocrisy.

There are storm clouds on the horizon. The drilling efficiency that these companies boast about relentlessly in IR presentations and every 90 days in conference calls consists to a large degree on drilling longer horizontal wells. Do the math on that one. Reservoirs are finite in size. If you increase the length of wells by another mile or two, you’re just draining the reservoir faster. One day we will see true sweet spot exhaustion, which is not a laughing matter when one considers that three fields – Appalachia, Haynesville and Permian – account for more than 70 percent of US gas production, and about a fifth of global production.

But for now, North America reigns supreme with respect to the world’s most coveted heating and industrial fuel. The US, Canada and Mexico remain more or less isolated from global natural gas prices for now, which brings incalculable benefits to North American businesses and citizens, a benefit that shouldn’t be taken for granted. 

Source: Boereport.com

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