Daily Update: The Push and Pull of Australia’s Energy Transition
Today is?Monday, July 11, 2022, and here’s your?curated selection of essential intelligence on financial markets and the global economy?from?S&P Global. Subscribe?to be notified of each new?Daily?Update.?
The new government of Australian Prime Minister Anthony Albanese is seeking to balance more ambitious net-zero targets with the need to maintain energy capacity and security in a country heavily dependent on coal.
The Australian government?informed the United Nations?of its intention to increase its carbon emissions reduction target by 43% by 2030, in keeping with its commitments under the Paris Agreement and marking more aggressive action from its previous 26%-28% reduction target, according to S&P Global Commodity Insights. The Carbon Markets Institute—a trade body of carbon credit buyers and sellers— has suggested that for the government to achieve this more ambitious goal, it must introduce?tighter emissions targets and specialized credits.?
Fossil fuel companies in Australia need to be?given the time and opportunity?to green their business while maintaining energy and economic resilience, according to participants at a March roundtable led by S&P Global Sustainable1 on managing greenwashing in Australia.?
In pursuit of greener and cleaner energy, Australia has been moving aggressively to build out it’s hydrogen infrastructure. As many as five?hydrogen refueling stations are planned?between Melbourne and Sydney through a partnership between Hydrogen Fuels Australia and Clara Energy worth $415.7 million. However, the Green Hydrogen Taskforce, composed of both German and Australian companies, has called for?fiscal support for early-mover hydrogen projects?that may otherwise risk becoming stranded assets.
To develop hydrogen as a fuel, early projects are forced to take on "challenges to invest in infrastructure and technology buildup and mobilize the renewable hydrogen supply chain," the Green Hydrogen Taskforce?said in a report, according to S&P Global Commodity Insights. "But first movers risk locking in assets at price points that might quickly render them uncompetitive."
While hydrogen may be the fuel of the future, coal accounts for more than 50% of the Australian power mix, although?this number has been declining?in recent years. In 2021, Australia’s greenhouse gas?emissions increased 0.8%?from the previous year, a figure the government was quick to attribute to the unusually low emissions resulting from the lockdowns and depressed economic activity during the pandemic.?
The recent spike in energy prices has?increased debate?around the tension between energy transition and energy security in Australia. The Australia government has expressed?concern over the pace of coal plant closures, looking to maintain energy security by providing incentives for plants to remain open and by?restricting exports of liquefied natural gas.?
"Australia's greenhouse gas emissions are now at 21.4% below June 2005 levels—the baseline year for our 2030 Paris Agreement target," Australian Climate Change and Energy Minister Chris Bowen said announcing the country’s quarterly greenhouse gas inventory update on June 27, according to S&P Global Commodity Insights. "It is the Albanese government's view that a global recession, pandemic, and drought are not economically desirable, nor sustainable ways to reduce national emissions.”
Today is?Monday, July 11, 2022, and here is today’s essential intelligence.
?
Written by Nathan Hunt.?
Economy
Economic Research: Emerging Markets: Where Is The Growth Shortfall From Pre-Pandemic Trend?
In S&P Global Ratings’ recently published Emerging Markets (EM) economic outlook report, Testing Times Ahead, it pointed out that most major EM economies are back at their pre-pandemic level of GDP, and in some cases, meaningfully above that level. Real GDP of a median EM, in its sample of 15 countries, is now approximately 5% above its pre-pandemic Q4 2019 level. In comparison, a similar metric for the median of U.S., Eurozone, and Japan stands just above 1%.
—Read the report from?S&P Global Ratings
Capital Markets
U.K. PE Deals Highest In Europe; Global M&A Records Strong 1st Half
The U.K. is now Europe's largest private equity market in both deal volume and value after a flurry of first-half megadeals, or transactions worth at least ￡1 billion. Completed private equity deals in the U.K. totaled 96 with an aggregate value of ￡19.7 billion in the six months to June 30. Among the largest deals was KKR & Co. Inc.'s offer to buy renewable energy company ContourGlobal PLC, which was valued at roughly ￡1.75 billion.
—Read the article from?S&P Global Market Intelligence
领英推荐
Global Trade
Japan, South Korea, Thailand Lead Asia's Alliance Against Russian Crude Oil
A large volume of Russian sweet and sour crude cargoes may continue to find outlets in China and India, but other major Asian crude importers are fully committed to halting trading with the non-OPEC producer—with South Korea, Japan, and Thailand leading the regional alliance against Russian oil.
—Read the article from?S&P Global Commodity Insights
ESG
European Banks Ignore Climate In Credit Models Despite Short-Term Risk, Says ECB
European banks are vulnerable to climate-related credit risks in the short term, yet most institutions have not yet included climate in their credit risk models, according to the European Central Bank. Four in five institutions neither consider climate risk as a variable when granting loans, the ECB said. Banks participating in the ECB's supervisory climate stress test projected an increase in cumulative credit impairments of about 73 basis points of total risk exposure over the next three years in the event of a sudden increase in the price of carbon emissions.
—Read the article from?S&P Global Market Intelligence
Energy & Commodities
Listen: Russia’s Fuel Riddle, Wrapped In A Mystery, Inside An Enigma
Russia has long supplied European and U.S. markets with fuel oil. Considering the war in Ukraine, where is this fuel going and how can the usual buyers make up the shortfall? S&P Global Commodity Insights reporters David Petutschnig and Chloe Davies discuss with Joel Hanley how the dynamics of high sulfur fuel oil and vacuum gasoil are changing fast.
—Listen and subscribe to Oil Markets, a podcast from?S&P Global Commodity Insights
Technology & Media
China Lines Up More Measures To Aid Automobile Consumption, To Benefit Metals Demand
China on July 7 issued several policy measures to aid demand for new energy vehicles, a move that follows a series of measures taken to stabilize the country's economic growth which will eventually benefit metals consumption, industry sources said July 8. China's 17 key departments, including the National Development and Reform Commission, jointly issued the notice targeting the automobile sector, according to a statement released by the Ministry of Commerce.
—Read the article from?S&P Global Commodity Insights