Institute for Energy Economics and Financial Analysis (IEEFA)

?? Financing is a key aspect of the #decarbonisation challenge Amid the ever-increasing need for funds, the 29th Conference of Parties #COP29 came to be known as the climate finance COP. There were expectations that decisions taken by the attending parties would take significant strides regarding financial commitments coming from the developed world to support the developing countries in the form of the New Collective Quantified Goal (NCQG). While there was disappointment at the end, the world's most important annual #climate conference was also an opportunity to exchange ideas, discuss new and innovative solutions and find areas to collaborate to accelerate the transition to clean energy. IEEFA's Vibhuti Garg, Shantanu Srivastava, CFA and Purva Jain were on the ground in Baku, Azerbaijan, leading our efforts and sharing our ideas at key forums. Here's a glimpse of what #IEEFA was up to at #COP29 and our key takeaways from the ultimate outcome ?? ?? https://lnkd.in/gZd7SYzS ?? https://lnkd.in/gEcpP8Xp ?? https://lnkd.in/g4fKCNeJ ?? https://lnkd.in/ePUz9Yp3 ?? https://lnkd.in/gP8zNumu #ClimateFinance #COP29 #Decarbonisation #CleanEnergy #IEEFAInsights

Despite the recent reinstatement of government subsidies for?#electricity?and?#gas?bills, fuel prices are?high in?#Japan?because of the high dependence on imported fossil fuels, according to the Institute for Energy Economics and Financial Analysis (IEEFA)'s?Michiyo Miyamoto. “These subsidies mask the true cost of the fossil fuels in the energy system for customers — imported fossil fuels are the most expensive source of power, compared with renewable energy,” says Miyamoto. “For suppliers, there is no incentive to provide cheaper electricity, because the government is picking up the price over the cap price.” According to Miyamoto, these subsidies should only be a temporary emergency measure. The steps for the government?to?wean itself off fossil fuel subsidies include setting out a clear #energy policy, establishing a clear plan and timeline for the removal of fossil fuel subsidies, increasing investments in renewable energy and storage solutions, along with ramping up electric vehicle (#EV)?charging infrastructure. Delaying the switch to?#renewableenergy?sources will be a?burden for households, businesses, and industries for the long term, because renewable energy’s cost is gradually decreasing globally. https://lnkd.in/gXEM-2EX #energytransition

Anglo's $3.8 Billion #Coal Asset Sale: A Game Changer for Australian Emissions Peabody Energy's recent acquisition of Anglo American's #metallurgical coal assets, including key Queensland #mines, is set to reshape the future of coal production in the region. This move places #Peabody among the largest coal producers in #Queensland, Australia, but it also brings the challenge of managing high emissions from these mines. Key highlights from Andrew's analysis ? ?? Peabody’s Shift: Peabody will transform from a thermal/PCI coal miner into a major coking coal producer, boosting its capacity to 20 million tonnes of coking coal per year by 2026. ?? Environmental Focus: The mines, with significant methane emissions, had a strong sustainability track record under Anglo’s leadership. Peabody must continue this legacy, with a focus on methane abatement and emissions reduction. ?? Key Stakeholders: Peabody's US-based shareholders, including major asset managers like BlackRock and Vanguard, will need to align priorities with the Queensland government to meet emissions targets and ensure sustainable mining practices. ?? The Road Ahead: Peabody faces significant challenges, including the costly restart of the Grosvenor mine and the need for long-term emissions mitigation strategies. The Queensland Government's involvement will be crucial in shaping a sustainable path forward. ?? Read the full commentary to dive deeper into the complexities of this acquisition ? https://lnkd.in/g6F4XxhA #EnergyTransition #Coal #MetCoal #PeabodyEnergy #EmissionsReduction #Queensland #EnergyPolicy #CoalProduction #CoalMines

In 2020, the Institute for Energy Economics and Financial Analysis (IEEFA) published a detailed review of the flawed process used to choose New Fortress Energy as a company to serve the #naturalgas needs of #PuertoRico. In 2022, IEEFA published a broader ranging report strongly suggesting that the business model was unlikely to succeed. And on November 12, New Fortress Energy notified its investors that the company's position as a going concern is at risk. The implications of this potential bankruptcy are considerable and raise several questions: ?? Will the markets see this as an isolated event or just evidence of one more link in a long chain of weakening financial benchmarks that engulf the fossil fuel sector? ??Are #LNG markets oversupplied and is this simply one more indicator of a shaking-out process? ??Will the countries that have entanglements with New Fortress Energy be able to extricate themselves from this flawed company? ??Will the growing list of investors bringing class-action suits actually succeed, driving the company into further financial distress? More in Cathy Kunkel and I's latest for IEEFA: https://lnkd.in/eJQT8cSM

In recent years, liquefied natural gas (#LNG) markets have been highly unstable due to geopolitical disruptions, severe weather, supply outages, and other factors. For emerging countries in #Asia, an inability to secure affordable LNG supplies resulted in fuel and power shortages. Rising LNG supply will lower prices this decade, but fuel costs are unlikely to fall enough to compete with other electricity sources in #Cambodia. ? A new Institute for Energy Economics and Financial Analysis (IEEFA) report by Sam Reynolds and Christopher Doleman explains why LNG imports will increase?Cambodia’s fuel import bill and potentially hinder government efforts to reduce #electricity tariffs. Recent LNG prices have been more than double imported #coal prices, demonstrating the high costs of switching from coal to LNG. ? “The case of Cambodia reveals the clear challenges of developing an LNG-to-power value chain from scratch. Since gas has historically not played a role in the country’s #energy system, the introduction of imported LNG and its associated infrastructure could result in high fuel and power bills for the Cambodian economy,” says Reynolds. ? “Without a carefully planned strategy, the introduction of LNG could undermine the achievement of government macroeconomic and power sector targets and challenge Cambodia’s ability to meet its longer-term energy objectives," adds Doleman. ? https://lnkd.in/gn79d6FD #oilandgas #energytransition ?

Carbon capture and storage (#CCS) is proposed as a means for addressing a portion of anthropogenic carbon dioxide (CO2) #emissions by the #oilandgas industry, along with other high carbon-emitting industrial processes. CO2 disposal is not one activity but a string of separate projects that include CO2 capture from effluent streams; separation, purification, and compression for transport; transportation; compression for well injection, and geologic disposal underground or, in most cases, use for forcing more oil and gas out of older production fields in a process referred to as "enhanced recovery." Each of these steps in the disposal chain entails its own set of challenges and risks. Read more about this fact sheet by Grant Hauber, Institute for Energy Economics and Financial Analysis (IEEFA)'s Strategic Finance Advisor, Asia: https://lnkd.in/gsp3dkBg #carboncapture #energytransition

Credit agencies are sounding the alarm on climate change, making it harder for companies and investors to ignore #climaterisk.? ? In response to this climate risk, commentators have traditionally theorized two options: exit or voice. A growing body of evidence suggests that the choice is not so binary in practice.? ? A recent briefing note by IEEFA’s Dan Cohn and Connor Chung summarizes ongoing developments in investor practice and standard-setting that illustrate how investors do not need to choose between meaningful portfolio-wide engagement and intentional deployment of #divestment.?? ? Read it here ? https://lnkd.in/d32pEjmz?

Japanese companies resold a record volume of liquefied natural gas (LNG) to overseas markets in fiscal year 2023. #LNG resales reached 38.25 million tons (mt) in the fiscal year, surpassing a previous high of 38.11 mt in FY2021. Meanwhile, Japan’s own demand for the fuel fell to 64.89 mt, down 8% from FY2022, according to the Institute for Energy Economics and Financial Analysis (IEEFA)'s latest commentary. Although Japan’s own demand is declining, government policies have directed companies to maintain their current level of total LNG transactions and preserve the country’s influence in global markets. Authors Sam Reynolds and Christopher Doleman explain that Japan’s resales and domestic consumption trends have important implications for global LNG markets, which are currently experiencing an unprecedented buildout of new LNG export capacity. The rapid growth of LNG supply, combined with falling demand in key markets like #Japan and #Europe, is likely to result in a global LNG glut later this decade. “Amidst this oversupply, Japanese companies reselling LNG are likely to find themselves increasingly in competition with other exporters, putting downward pressure on prices and exacerbating financial risks for LNG traders. In other words, Japan’s efforts to maintain long-term LNG dominance may not pay off.” https://lnkd.in/ehCy8Mev #oilandgas #energytransition

CCUS for Steelmaking Rapidly Losing its Lustre Key Takeaways: ??Six commercial-scale carbon capture, utilisation and storage (CCUS) projects for iron and steelmaking are in the development pipeline, up from three in 2023. However, the lack of available detail casts doubts over their development status and timelines. ??The Al Reyadah project in the UAE is still the world’s only operational commercial-scale CCUS project for steelmaking. It captured only 26.6% of the gas-based steel plant’s emissions in 2023. There are still no commercial-scale CCUS plants for blast furnace-based steelmaking in operation anywhere in the world. ??Despite mounting evidence to the contrary, major steelmakers and miners such as Nippon Steel, ArcelorMittal and BHP continue to insist to their investors that CCUS will play an important role in meeting their decarbonisation targets. Hailed as the solution to reducing greenhouse gas emissions from steelmaking, carbon capture and storage’s prospects in the industry look increasingly bleak, according to the Institute for Institute for Energy Economics and Financial Analysis (IEEFA). Nonetheless, major steelmakers and iron ore miners such as Nippon Steel Corporation, ArcelorMittal and #BHP continue to insist to their investors that the flawed technology will play a significant role in meeting their decarbonisation targets despite growing evidence to the contrary, say IEEFA analysts Simon Nicholas and Soroush Basirat in their briefing note?Steel CCUS update: Carbon capture technology looks ever less convincing. Behind the hype, the reality is few if any of these projects will likely enter operation. “CCUS is predisposed to major financial, technological and environmental risks,” the authors say. “Low capture rates is a key ongoing issue that is often under-appreciated. “The amount of carbon targeted for capture at a project tends to be significantly below its overall emissions. Furthermore, CCUS projects consistently struggle to meet even these low capture targets.” For example, the world’s only operational commercial-scale CCUS plant for steelmaking is the Al Reyadah project in the UAE. In 2023, it captured only 26.6% of the gas-based steel plant’s emissions. Since the previous report in April, the technology has suffered further setbacks, such as: ??A C$2.4 billion CCUS proposal for power generation near Edmonton, Canada, was cancelled in May on the grounds it was not financially viable. ??Revelations the flagship Sleipner CCUS project off Norway had been grossly over-reporting its carbon capture rates for years due to faulty monitoring equipment. Of the six CCS projects in the global pipeline according to the Global CCS Institute, fundamental details remain undisclosed, unknown or “under evaluation”, casting doubt over their prospects. Should any reach completion, they face a host of technical, financial and site-specific challenges. https://lnkd.in/dgmPGs83

Four Ways to Cut Consumer Energy Costs and Alleviate Cost-of-Living Pressures ?? As energy costs continue to rise, there are significant untapped opportunities to reduce household energy bills – and provide much-needed relief for Australian consumers. Key Insights ? 1?? High-Efficiency Appliances: The shift to heat pumps for space and water heating can cut energy use dramatically. Each year of delay in adopting heat pumps costs Australians $3.4 billion in unnecessary expenses. Fast-tracking this transition through improved appliance standards is crucial. 2?? Flexible Water Heaters and Air Conditioners: By shifting when these appliances are used – such as running water heaters during the day on cheap solar power – households could save up to $6.7 billion by 2040. Flexible use could also reduce grid pressure and cut system costs. 3?? Supernormal Profits by Networks: Electricity networks have generated $15 billion in supernormal profits since 2014. In 2023 alone, network profits reached a staggering $4.35 billion – four times their allowed level. Urgent action is needed to address these profits and improve accountability and transparency in the regulatory process. 4?? Electricity Distribution Networks: Network costs represent 45% of a typical electricity bill, and there’s a high risk of over-investment in networks driving future bill hikes. A review of revenue regulation and smart integration of distributed energy resources (#DER) could help prevent this, reducing costs for consumers. ?? Institute for Energy Economics and Financial Analysis (IEEFA) recommends several solutions to accelerate change, including flexibility standards for new appliances, better use of DER, and a reevaluation of regulatory frameworks. Download factsheet ? https://lnkd.in/gdmzcnWR Also read IEEFA analyst Jay Gordon's commentary on supernormal profits ? https://lnkd.in/guz5GhnQ #EnergyEfficiency #CostOfLiving #ClimateSolutions #EnergyTransition #Australia #RenewableEnergy #PolicyReform