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The FT Energy Source column writes, the fire that destroyed a National Grid substation in west London was finally fully extinguished one week after the blaze broke out in a transformer containing 25,000 liters of cooling oil. But questions continue over why it managed to cause so much chaos, chiefly the 18-hr closure of Europe’s busiest airport, Heathrow, leaving 200,000 passengers displaced around the world. The fire was strong enough to knock out two other transformers at National Grid’s substation, including one designed for backup, rendering the site useless. But National Grid said two other transmission-level substations capable of supplying Heathrow were working fine, raising questions for the airport as to why it couldn’t restore power faster. The disruption has contributed to widespread angst about the state of Britain’s infrastructure and whether the right steps are being taken to ensure resilience. “We’ve got a much more intermittent electricity system—lots of renewables that work when the sun shines and the wind blows—and at the same time an economy which is digitalizing,” said Dieter Helm, a professor of economic policy at Oxford university and former gov’t adviser. “Just-in-time and just enough has replaced ready, prepared, secure and resilient,” he added. “In most of these cases, what you discover is, it’s a miracle these things don’t happen more often.” The risk to airports from power cuts has recently gained more attention in the US, where airports that responded to an official survey in 2023 reported 321 power outages between 2015 and 2022. One US airport reported steps it had taken to eliminate “90 per cent of its single points of failure” including installing a device “that automatically switches power to an alternate substation in the event one of the substations loses power.” The Heathrow incident has fueled anger among airline bosses. “It was a surprise, to be honest, that Heathrow doesn’t have resilience for a situation like this,” said Luis Gallego, CEO of International Airlines Group, which owns British Airways. Michael O’Leary, Ryanair’s CEO, was more blunt, “It is just another example of a great British f*ck-up,” he said. Meanwhile, Thomas Woldbye, Heathrow’s boss, risked stoking further ire when he said airlines could end up paying, through higher charges, for the roughly £1bn cost of a more “resilient” power system. National Grid is also likely to face questions about why one fire was able to cause so much damage at the site, as well as its maintenance and fire prevention methods. “It was very surprising to us that something like that could happen to the busiest airport in Europe, with no backup plan,” Ben Smith, chief executive of Air France-KLM told the Airlines for Europe conference. “It was a wake-up call for [Europe’s other hub airports] and for us.” 🇬🇧 👀 #uk #electricity #energy

Bloomberg writes, mentions of more than a dozen sustainability-related terms—including climate change, global warming, ESG, clean energy and green energy—for S&P 500 company earnings calls going back to 2020 show that US companies are today talking about the environment 76% less than they were three years ago. The dearth of green talk comes as Trump pivots the US away from climate action. "You have this new administration that is anti-climate and wants all of this to disappear," said Hortense Bioy, head of sustainable investing research at Morningstar. So for many execs, she said, “the climate story needs to disappear"… even if some investors want to hear it. The biggest drops in climate talk were in the consumer discretionary, financials and energy sectors. Sustainability mentions by companies in the first two categories were down more than 50% during the last four quarters—a period that coincided with the election and Trump's and return to office—compared to the four quarters prior. Meanwhile, Citi, Bank of America, Goldman Sachs and Wells Fargo have all pulled out of a global finance pact meant to help lenders reduce their carbon footprints. Oil giants like bp that attempted to switch away from fossil fuels have been rethinking their green plans. Walmart said in December it would likely miss its 2025 and 2030 emissions reduction targets. Todd Cort, of the Yale School of Management, says companies navigating the current political climate are trying to stay under the radar. "Now climate change is one of these terms that is on the list, 'Should we talk about that or not? because there is that federal pressure," Cort said. “ESG becomes this loaded term." But what hasn't changed, he said, is investors' interest in knowing businesses' exposure to the effects of climate change. Despite the increase in "greenhushing" more than 90% of corporate finance chiefs surveyed by Kearney, a management consulting firm, last year said they wanted to increase their green investments. Nearly 70% expected sustainability initiatives to yield a higher return than more traditional types of investments. PwC's 2025 State of Decarbonization report noted a nine-fold increase in companies reporting climate commitments to the Carbon Disclosure Project in 2024, compared to five years earlier. Only 16% of companies are decelerating their goals. "We are entering an era of quiet progress," the report's authors wrote, "where companies avoid publicizing climate pledges that can open them up to unwanted scrutiny and instead focus on making progress far from the spotlight." One of the authors, David Linich, says that while use of traditional terms related to the green energy transition may have been scaled back, “terms like ʻresilience' are becoming more important." Investors "want to understand—Do companies have a plan in place?" he said. ♻️❓ #esg #climatechange #capitalmarkets

Bloomberg writes, Pemex, Mexico’s national oil company, owed suppliers $24.3B at the end of 2024, the most in at least 13 years. Some contractors have halted service to the company. Others are passing the pain onto their workers by cutting back shifts and spending. While Pemex has for years held the dubious distinction of being the world's most indebted oil company, its financial woes are reaching a crisis point. The company reported $30B in losses last year. And it's struggling to pay down a $I00B debt load, 15% of which comes into maturity next year. Now, with its contractors on the cusp of revolt, the growing stack of bills is threatening to curb oil production that's already at a 40-year low, leaving Pemex with fewer ways to generate the cash it needs. Pemex's financial freefall is being felt acutely on its remote offshore production facilities. Earlier this year, union members on the rigs staged a hunger strike to protest the rationing of food. And on the floating dormitories where the contracted workers sleep, even water has been limited. Workers have had to bring their own supplies, packing bags with ramen, chips and tuna cans. Some employees say they haven't been paid in months. The bleeding among Pemex contractors could put the country's oil production at risk. Shedding support staff, maintenance workers and safety inspectors raises the odds of explosions, fires and oil spills that are already occurring at a troubling rate. A 2023 platform explosion that killed two and a 2021 leak that ignited a hellish “eye of fire" in the Gulf of Mexico are among incidents that prompted the company to vow to cut fatalities to zero. Since then, at least six people have died. Mexico’s President Sheinbaum earlier this year promised that Pemex suppliers would be paid in full by March. She later extended that deadline, without giving a new date. Pemex’s CEO says the company is working with Mexico's finance ministry on a solution, floating the idea of issuing a sovereign bond to pay the roughly $20B Pemex owes suppliers. In Jan, a group of banks tried to drum up support for a syndicated loan agreement on Pemex's behalf, but a deal never materialized. Banks including Citi and Deutsche Bank have supported some of Pemex's largest US-based suppliers, like SLB and Halliburton, to cover unpaid bills from the oil company. In the meantime, Mexican lawmakers say the finance ministry is planning a $6.4B outlay so PEMEX can pay its suppliers. Pemex’s finance chief said the company would speed up payments using bank loans. In Q4 2024, Pemex took out loans for around $7.4B to pay its supplier debt. While those loans have helped reduce some of the debt, much remains, said Cathy Hepworth at PGIM Fixed Income. "You're just moving from supplier credit to another form of debt," she said. 🇲🇽 🛢️‼️ #mexico #oilandgas #oilfield

The FT Energy Source column writes, a new report from ICF found a nuclear renaissance was “far from certain,” citing doubts over economic viability, technological scalability and long timelines. The report found restarting nuclear plants could cost between $356/kW a year to $407/kW a year, while small modular reactor (SMR) costs could be as high as $863/ kW a year, 50% more than gas-fired power plants with carbon capture. “There’s a lot of uncertainty around both the technology and, importantly, the cost,” said Shanthi Muthiah, ICF’s managing director for energy advisory. “That introduces significant financial risk.” The US race to lead in AI has sparked a proliferation of energy intensive data centers and an unprecedented surge in electricity demand. The need for low-carbon, around-the-clock sources of power is driving companies to invest in emerging nuclear technologies or restart decommissioned nuclear reactors, including Microsoft’s 20-year power deal with Constellation Energy to revive Three Mile Island in Pennsylvania. Earlier this month, Amazon, Google and Meta backed a call by big, energy-intensive companies for gov’ts and utilities to triple nuclear capacity by mid-century. Amazon purchased a stake in SMR developer X-energy last year, while Google signed a power supply deal with Kairos Power. Meta is evaluating proposals from SMR developers seeking up to 4GW of new capacity starting in the early 2030s. While restarting nuclear plants and increasing the production capacity of existing plants are much more cost effective than SMRs and could satisfy some near-term demand needs, they would not be able to provide enough meaningful new supply to data centers given that only a handful of facilities were able to reopen. Even so, the future of nuclear power now relies on emerging tech like SMRs, which have yet to reach operation in the US and whose costs and viability are still unknown to investors. Developer NuScale Power cancelled what would have been the first SMR project in the US in 2023 after not enough buyers signed up for its power. Oklo Inc, another SMR developer, pushed back the date of the first deployment of its nuclear reactor from late 2027 to early 2028. There’s also the problem of scalability. SMRs have yet to be demonstrated at scale and require more enriched uranium than traditional facilities. NuScale has yet to sign a deal with a large data center company in the US. During a Q4 earnings call CEO John Hopkins cited the “complexity of putting these deals together” as a reason for the delay. Lawrence Coben, CEO of NRG Energy, a large power producer, has said the Big Tech data center developers “are not counting” on nuclear. ICF found that nuclear plants can earn a sufficient rate of return with the availability of federal tax credits, which face an uncertain future in Congress and are slated to be phased out by 2034, a deadline that could be too soon for the slow-moving industry. ⚛️⚡ #nuclear #energy #energytransition

The FT Energy Source column writes, the world’s appetite for energy rose faster than usual last year because record high global temps meant more power was used for cooling, underscoring the vicious cycle between climate change and energy use. Half of the increase in global emissions from energy last year was down to 2024 being the hottest year on record, the International Energy Agency said. Overall greenhouse gas emissions from energy use rose 0.8% last year. Intense heatwaves in China and India drove up the use of coal to generate the electricity needed to power air conditioners, helping push global energy demand up 2.2% compared with a rate of 1.3% over the previous decade and 1.8% the previous year. The rollout of EVs and the expansion of data centers needed for AI were also to blame for rising power demands, with server capacity increasing by a fifth—mostly in the US and China. Global electricity consumption rose by nearly 1,100 TWhrs, more than twice the average annual increase over the past decade. This meant higher demand for all types of fuel. While oil’s share of global demand fell below 30% for the first time, gas generation picked up, driven by demand from emerging and developing countries. Renewable energy sources such as solar and wind were being rolled out at a record pace last year. Nuclear power also expanded, with financial institutions, tech companies and gov’ts throwing their weight behind an atomic revival. The two forms of low-carbon energy combined now account for 40% of global generation for the first time. “What is certain is that electricity use is growing rapidly, pulling overall energy demand along with it to such an extent that it is enough to reverse years of declining energy consumption in advanced economies,” said International Energy Agency (IEA) executive director Fatih Birol. 🌍🌡️⚡ 👀 #climatechange #globalwarming #carbonemissions

The Editorial Board of the UK Sunday Times writes, when the inevitable "lessons learnt" review of the loss of power at Heathrow takes place, both the airport and the company in charge of the UK's power infrastructure must answer the crucial question of whether more could have been done to prepare for this calamity. The airport has gluttonous power needs, but its back-up systems were inadequate. Reports suggest that its diesel generators and uninterruptible power supplies all functioned as expected. But they did not have enough capacity to keep the airport open. The National Grid, which was unable to rapidly reroute power, proved Heathrow's undoing. The Heathrow shutdown should be a wake-up call about the importance of resilience, particularly when it comes to systems at risk from a single point of failure. These pinch points in critical infrastructure need to be countered with suitable alternatives to ensure that any failure does not result in a catastrophe. Individual entities must take responsibility, but it is also up to gov’t to ensure that unique points of significant failure are mitigated to the greatest possible degree. The impact of the Heathrow shutdown will abate, but the economic and reputational harm to the UK will endure. Many lives have been disrupted by the cancelled and rearranged fights. It is impossible for the state to contend with every unforeseeable event. But given the fire at North Hyde power station, it’s clear that one of the most critical parts of national infrastructure should be better served. The Heathrow fire is a stark reminder that resilience is something we cannot take for granted. ⚡⚡⚡🤔 #uk #electricity #energy

The WSJ Editorial Board writes, the Energy Dep’t this week approved the Venture Global LNG CP2 LNG export project that became a cause for climate activists. Good call. Meantime, we are learning more about how the Biden team deceived Americans about its 2024 LNG export “pause.” Biden, prodded by climate adviser John Podesta, announced a supposedly temporary suspension of LNG project approvals in Jan of the election year. The stated purpose was so the DOE could do a study to determine if increased exports are in the “public interest.” It turns out that DOE career staff had already completed such a study just months earlier. A draft of that study shows that increased US LNG exports would have negligible effects on domestic prices while modestly reducing GHG emissions. The latter is largely because US LNG exports would displace coal in power production and gas exports from other countries such as Russia. The study projected that, even assuming countries meet their net-zero pledges, global natural gas consumption would grow through 2050. This is notable because the climate lobby claims building more LNG projects would result in “stranded assets” as countries wean themselves off fossil fuels. The climate lobby also says more LNG exports will increase US energy costs. But the study forecast that wholesale gas prices in the US would rise less than in the “study DOE commissioned on the economic impacts from US LNG exports in 2018.” Residential gas prices would increase by a mere 4% by 2050. DOE staff and lawyers rigorously reviewed the models and findings because these conclusions “are going to receive a lot of scrutiny” and we “need to be able to explain why the model shows reduced emissions,” as one commented in the study’s margins. Another recommended “full tabulated results in an Excel workbook be made available to provide transparency to the public.” That isn’t what the Biden crowd wanted to hear. They shelved the staff study and imposed their “pause” to motivate progressives during last year’s election. In Dec, Biden DOE Secretary Granholm released a different study, which purported to show that “unfettered” LNG exports would increase global emissions and domestic gas prices. Bottom Line: Had Kamala Harris won, her admin would undoubtedly have used the new study to justify a permanent export ban and we would never have found out about the other study. 👀 #LNG #naturalgas #energy

Javier Blas writes in Bloomberg, the mood at CERAWeek—the annual energy industry jamboree that attracts about 10,000 execs, bankers and traders—should have been ebullient. It wasn’t. “There's a lot less optimism," shale pioneer Scott Shefield noted. The gloom seems counterintuitive—Trump has brought his “drill, baby, drill” slogan back and installed an industry insider at DOE. Yes, everyone is happy about eased regulations and the prospect of lower taxes, not to mention the subject of climate change becoming taboo for this admin. But execs are far more worried about Trump’s push for lower oil prices and the potential of a trade war-induced recession. If anyone in Houston needed a reminder, as the conference got underway, Trump spoke in Washington, saying he was “very happy” with the drop in prices. For everything that affects the oil industry production levels, costs, taxes, policy and regulation, geopolitics and sanctions when it comes to a barrel of oil, half-full or half-empty is largely determined by one and just one factor—price. In just a few weeks since Wright's appointment, the industry has also realized that he's not “our guy" as many had assumed—he's "Trump's guy." And thus, the former fracking exec will do as the White House wants. If that means $50 oil and shale companies going bankrupt, so be it. But Sheffield notes, “It's really hard to make money at $50 oil." Blas has been bearish on oil prices since late 2023, when Brent hovered just below $100 a barrel. The pessimism wasn't about demand growth but supply growth, and the fact OPEC+ would sooner or later add barrels into the market. After the cartel announced this month it would boost production, Brent has fallen below $70. If OPEC + fulfills its plan to boost supply every month until Sep 2026, the cartel would add more than 2 MMBpd, enough to meet all the incremental demand expected in 2025 and 2026. In historical terms, oil is cheap, trading at the same level as it was two decades ago in nominal terms. Account for inflation, and oil is at the same level as it was 25 years ago. Bottom Line: Several quarters of OPEC+ output cuts and falling prices have demonstrated the cartel can't engineer a bull market by curbing supply. When the group pushed oil above $80 a barrel and higher, it was simply subsidizing rivals. Only Trump, via sanctions to Iran, can in the short-term refill the metaphorical barrel. And even that may not be enough if OPEC+ keeps pumping more and more. 🛢️💲👀 #oilfield #crudeoil #oil

The FT Climate Capital column writes, statements on climate change from leading corporations have been deleted or rewritten over the past year as backlash against green action has intensified and companies have begun rolling back their net zero targets. In a statement on its website in the middle of last year, Walmart the retailer said, “Climate change is one of the greatest challenges of our time. If we don’t take more aggressive action now, the damage will only worsen, and the consequences will be disastrous for this and future generations.” In Dec, these references were removed and the text on the webpage significantly shortened and rewritten. The retailer continued to include that it was “focused on reducing emissions in our operations [and] engaging suppliers to reduce emissions in supply chains.” Areeba Hamid of Greenpeace International UK warned companies were at risk of “committing brand self-sabotage by erasing and diluting references to climate on their websites… We know… customers and employees worry about how climate change is upending their lives because it’s making the air harder to breathe, their water dirtier and products more expensive,” she said. “Ultimately, tackling climate change is responsible business and reinforces the foundations on which economic prosperity is built.” Kraft Heinz rewrote its Net Zero and Science Based Targets webpage in Jan, removing a reference from the text to a target to cut emissions by 50% by 2030. Instead, the company wrote that it had “faced internal and external challenges in delivering our net zero targets” and said it was re-evaluating these. Kraft Heinz said the webpage was updated following its latest ESG report, adding that it was “fully committed to our net zero ambition”. On American Airlines’ climate change webpage a reference to how the “low-carbon transition is both urgent and under way” that appeared in July was removed in Nov before the election. The airline said the website was refreshed with language from its latest sustainability report. Meta included a section on its sustainability webpage last summer about “leading the way on climate change” and “tak[ing] bold climate action.” These references have since been removed, although it still said it was working with partners to address climate change. Ford removed a reference to “targeting climate change action” last summer from the top of its UK sustainability page where it published a new climate change report, while keeping mentions further down. And The Coca-Cola Company watered down statements around tackling waste on its sustainability webpage after weakening its environmental targets in Dec. Non-US companies have also altered their websites. A chart looking at the usage of renewable energy at @Nestlé manufacturing sites was removed from the consumer goods company’s climate change webpage, as have details of tree planting. 🌍🌡️♻️ 🔊 #climatechange #netzero

The Economist writes, the UK secretary of state for energy, Ed Miliband, says renewable energy is “desirable, because it can lead to cheaper, more secure electricity.” But there is little evidence renewables are making electricity cheaper. According to the International Energy Agency (IEA), British industry pays the most for its electricity than in any rich nations, often by an astonishing margin. Prices are 50-100% higher than in most of continental Europe and more than three times those in America. British households also face painful tariffs. Although they benefit from a regulatory cap on energy prices, this is adjusted quarterly. On Feb 25th Ofgem, the energy regulator, announced the latest increase, a whopping 6.4%, to take effect in April. Electricity in Britain is expensive because gas-fired generation sets the price. Despite increasing capacity, renewable sources cannot provide a steady supply of power all the time. Wind turbines stop turning on calm days; solar panels provide little electricity when it is cloudy and none at all at night. So Britain still depends on gas—as well as on nuclear, which provide baseload power for the rest. As a result, the overall price of electricity needs to be high enough to keep gas units in business. Since gas prices have doubled in the past year, that means dearer electricity. Most other countries use the same system, known as marginal pricing. But it affects the UK disproportionately because the nation almost always needs some gas-powered electricity, even though it is meeting a declining share of demand. Research found that gas sets the price of electricity 98% of the time in Britain, compared with a European average of 58%. This affects the wider economy. British steelmakers pay $48 million more for electricity each year than they would if they faced the same prices as their German competitors. Energy-intensive manufacturing is affected most, but hospitals, supermarkets, airports and offices all guzzle lots of power. As for consumers, in 2021 the average household spent 3.5% of its disposable income on utilities, including gas for heating and cooking as well as electricity; today that figure is around 5%. In England, 13% of households are below the poverty line and live in homes that are hard to keep warm. The most obvious solution would be to increase the amount of time Britain can manage without recourse to gas-fueled electricity. This would mean a cheaper form of electricity would determine the price more of the time. But it would require lots more investment in renewables. Though gov’t efforts to speed up approval for solar parks and onshore wind farms are encouraging, sufficient extra supply is unlikely to come on stream quickly. So British electricity bills look set to remain eye-watering until either gas prices fall sharply or storage improves. This will make the government’s desire for stronger economic growth all the harder to fulfil. 🇬🇧 💨🔆⚡👀 #UK #electricity #renewables