This story was originally published by Guardian and is reproduced here as part of the Climate Desk collaboration.
Russia has nearly doubled its revenues from selling fossil fuels to the EU during the two months of its war in Ukraine, benefiting from soaring prices even as volumes have been reduced.
Russia has received about $65 billion from exports of oil, gas, and coal in the two months since the invasion began, according to an analysis of shipping movements and cargos by the Center for Research on Energy and Clean Air.
For the EU, imports were about $46 billion for the past two months, compared with about $147 billion for the whole of last year, or roughly $12.3 billion a month.
The findings demonstrate how Russia has continued to benefit from its stranglehold over Europe’s energy supply, even while governments have frantically sought to prevent Vladimir Putin using oil and gas as an economic weapon.
Even though exports from Russia have been reduced by the war and sanctions, the country’s dominance as a source of gas has meant cutting off supplies has only increased prices, which were already high because of tight supply as global economies recovered from the Covid-19 pandemic. Crude oil shipments from Russia to foreign ports fell by 30 percent in the first three weeks of April, compared with rates in January and February, before the invasion, according to the CREA data.
But the higher prices Russia can now command for its oil and gas mean its revenues, which flow almost directly to the Russian government through state-dominated companies, have risen even while sanctions and export restrictions bite. Russia has effectively caught the EU in a trap where further restrictions will raise prices further, cushioning its revenues despite the best efforts of EU governments.
Lauri Myllyvirta, lead analyst for CREA, said the cash propped up Putin’s war effort, and the only way to disable his war machine was to move rapidly away from fossil fuels. “Fossil fuel exports are a key enabler of Putin’s regime, and many other rogue states,” he said. “Continued energy imports are the major gaps in the sanctions imposed on Russia. Everyone who buys these fossil fuels is complicit in the horrendous violations of international law carried out by the Russian military.”
Russia in recent days has moved to cut off fossil fuel supplies to Poland and Bulgaria, which has provoked outrage. Louis J Wilson, senior adviser at campaigning group Global Witness, said Russia’s willingness to violate its own contracts meant businesses now had no excuse for continuing to trade with Russia.
“Fossil fuel majors and commodity traders who have continued trading in Russian fossil fuels, claiming that they are forced to do so by their long-term contracts, should take note of the value of the agreements they hold with Russian entities. Russia is willing to tear up these contracts to support their own war effort, yet European companies supposedly feel compelled to continue financing war crimes out of respect for them,” he said. “The corporate enablers of this deadly trade have shown they will stop at nothing to continue profiting from Russia’s blood oil.”
CREA’s data found that many fossil fuel companies continued to do high volumes of trade with Russia, including BP, Shell and ExxonMobil.
Germany was the biggest importer in the last two months, despite repeated avowals by the government that halting dependence on Russian oil was a priority. The country paid about $9.5 billion for imports during the period. Italy and the Netherlands were also big importers, with about $7.1 billion and $5.9 billion respectively, but as those countries operate major ports, which take in products for refining and use in the chemical industries as well as for domestic consumption, many of those imports were probably used elsewhere.
A spokesperson for Shell told the Guardian that the company had taken decisive action in response to Russia’s war on Ukraine. “We have announced our intent to exit our joint ventures with Gazprom and related entities and to phase out all Russian hydrocarbons, in consultation with governments. Since we announced this intent, we have stopped all spot purchases of Russian crude, liquefied natural gas and of cargos of refined products directly exported from Russia.”
And a spokesperson for Exxon said: “We support the internationally coordinated efforts to bring Russia’s unprovoked attack to an end, and we are complying with all sanctions. We have not made any new contracts for Russian products since the Russian invasion, and there are no deliveries of Russian crude or refined products currently scheduled for the UK. We will not invest in new developments in Russia.”
“Two months after Putin invaded Ukraine, Germany is still funding the Russian war chest to the tune of €4.5 billion (~$4.7 billion) a month. Berlin is the largest buyer of Russian fossil fuels,” Bernice Lee, a research director at the Chatham House think tank, told the Guardian. “The world is looking to Germany to demonstrate strength and determination towards Russia, but instead they’re bankrolling the war and blocking a European embargo on Russian oil.”
The Marvel Crane, a liquid natural gas carrier, at an LNG terminal in Hackberry, Louisiana.US Coast Guard/Flickr
This story was originally published by Yale E360 and is reproduced here as part of the Climate Desk collaboration.
In the span of weeks, Russia’s war on Ukraine has created millions of refugees, transformed the geopolitical landscape, upended global energy markets and food supply chains, and hastened Europe’s efforts to transition away from fossil fuels. The war also threatens to alter the trajectory of energy and climate policy in the United States.
On March 25, a month after Russia launched its invasion, President Biden met with European Commission President Ursula von der Leyen in Brussels and jointly announced a new initiative to help Europe reduce its reliance on Russian fossil fuels. Their plan calls for boosting exports of liquefied natural gas (LNG) from the US to the European Union by 15 billion cubic meters this year and as much as 50 billion cubic meters—a third of what Europe currently buys from Russia—by 2030.
Biden administration officials have characterized the LNG surge as a stopgap measure to help Europe bridge these next few years until it can build more renewable energy and make its buildings and industries more energy efficient. But energy analysts say the announcement could signal a pivot toward greater support for expanding gas infrastructure, potentially locking in significant new sources of greenhouse gas emissions.
New LNG terminals—whether for export on the US Gulf Coast or for import on Germany’s North Sea coast—would take several years and several billion dollars to build. Analysts say that by the time they are up and running, the geopolitical environment may look different, but climate change will be all the more urgent, and there will be powerful business incentives to keep the terminals operating.
“Europe needs more US LNG to get through the next two winters, not incentivization to use gas for the next 20 years,” said Claire Healy, of the energy think tank E3G, in a statement. “It has turned a short-term energy crunch into a long-term crutch for American oil and gas producers.”
Some energy experts caution that expanding LNG infrastructure would be a distraction from more durable solutions to promote energy security in both the US and the EU. Rather than boosting supply by building LNG projects that could become stranded assets, they say, countries should focus on energy efficiency and other ways to reduce demand for gas.
Even with new terminals, LNG from the US won’t be able to replace the massive volume of gas that Europe imports from Russia, either today or in 10 years, said Maria Pastukhova, a Berlin-based senior policy advisor with E3G. “That’s why the focus on demand is so crucial.”
Two recent analyses contend that the US can help Europe shut off the spigot of Russian gas within the next few years while also resisting the industry’s calls to expand gas infrastructure.
New US LNG export facilities aren’t needed to meet the Biden-EU targets, according to Clark Williams-Derry of the Institute for Energy Economics and Financial Analysis (IEEFA). He authored a recent analysis showing that the combined capacity of the LNG export terminals in the US currently operating and under construction is more than sufficient to reach the aim of an additional 15 billion cubic meters by the end of 2022 and 50 billion by 2030.
“They were already on track to blow through that goal of 15 billion cubic meters this year, and maybe even get close to the 50 billion cubic meter target this year,” Williams-Derry said, referring to US LNG exporters. “Which means that the goal itself doesn’t add anything new to the conversation.”
Another report, produced by E3G in collaboration with several other energy think tanks, outlines near-term measures that can be taken to slash Europe’s demand for gas. The analysis finds that deploying more clean energy, electrifying heating and industrial processes, and improving energy efficiency could cut Russian gas imports by two thirds by 2025, blunting the need for the US to export more gas.
As is, the US is expected to become the world’s largest exporter of LNG this year. It has six LNG export terminals that together move around 100 billion cubic meters of gas per year. These facilities—designed to shrink natural gas to a volume 600 times smaller by supercooling it into liquid form—were built to take advantage of the enormous glut of gas unlocked from shale formations since drillers started deploying fracking technology in the mid-2000s.
Two more terminals are on the way: Calcasieu Pass on Louisiana’s Gulf Coast and Golden Pass, located about 50 miles west on the Sabine River just south of Port Arthur, Texas. An analysis from EIA projects that, with new gas liquefaction facilities already under construction and growing foreign demand for gas, US LNG exports will exceed 165 billion cubic meters by 2033.
Long before Russia’s war on Ukraine, there were growing concerns that additional LNG export terminals would lock in climate-warming pollution for decades to come. A report published by the Natural Resources Defense Council estimated that greenhouse gas emissions from the full process of extracting, processing, transporting, and liquefying natural gas will be equivalent to the emissions of up to 45 million cars by 2030. Leaks of methane—a potent greenhouse gas trapping 80 times as much heat as carbon dioxide over a 20-year time span—account for a large portion of those emissions.
Last fall, the US led the launch of the Global Methane Pledge at the UN climate meeting in Glasgow, in which more than 100 countries promised to cut their methane emissions by 30 percent by 2030. Climate advocates are pushing the Biden administration to explain how it intends to reconcile that call to action—and its own climate targets of halving greenhouse gas emissions over the next decade—with the plan to boost gas exports out to 2030.
The Intergovernmental Panel on Climate Change’s most recent report makes it clear that no new fossil fuel infrastructure can be built if the world is to stay under 1.5 degrees Celsius of warming. Investing in any new fossil fuel development, said United Nations Secretary-General Antonio Guterres on the day of the report’s release, “is moral and economic madness.”
For climate advocates, it has been jarring to watch US Secretary of Energy Jennifer Granholm and other Biden administration officials ask oil and gas firms to increase production to help counter a surge in prices and shore up European allies. “Clearly LNG is a big part of this equation,” Granholm told energy executives assembled for a conference in Houston in March. “We have got to do our part to ensure that others are not hurting.” She pledged that the administration would look at ways to “collapse the bureaucracy” around permitting for new projects.
Industry trade associations such as the American Petroleum Institute and the Center for Liquefied Natural Gas were quick to celebrate the Biden-EU deal and to use it to amplify their longstanding push for more natural gas infrastructure and fewer regulatory hurdles. “We stand ready to work with the administration to follow this announcement with meaningful policy actions to support global energy security,” Mike Sommers, CEO of the American Petroleum Institute, said in a statement, “including further addressing the backlog of LNG permits, reforming the permitting process, and advancing more natural gas pipeline infrastructure.”
The industry has complained about burdensome regulations, but a lack of federal permits is not holding back development of new LNG terminals or pipelines to supply them. The Federal Energy Regulatory Commission and Department of Energy have issued approvals for 13 different liquefaction projects that have not broken ground because their developers have not been able to secure financing for them.
Building new LNG facilities—which include pipelines to supply natural gas, liquefaction units to chill it to minus 260 degrees F, and specialized docks for loading it onto 1,000-foot-long tanker ships—is a long and expensive undertaking. Before footing the bill for construction, banks typically want to see a slate of long-term contracts with foreign buyers that accounts for most of a project’s future gas output.
Investors have been holding back in recent years, mindful of the Covid-induced crash in natural gas demand in 2020 and the risk that climate policies implemented later this decade could suppress longer-term demand in many markets. “The infrastructure you start now may wind up being an albatross in three or four years,” said IEEFA’s Williams-Derry.
Proposed LNG export infrastructure won’t be sending gas to Europe any time soon. But a push from governments could change that.
Energy analysts say that if policymakers pivot toward supporting new gas infrastructure, that could stymie investments in clean energy and energy efficiency in both the US and Europe. Pastukhova worries that governments might provide loan guarantees and pressure their development banks to facilitate new LNG project investments, which are fraught with risks because of the mismatched timelines of 20-year-contracts required by investors in LNG terminals and looming 2030 international emissions reduction deadlines.
“If this happens and governments give in to the push by industry, we end up with public finance sunk into assets that are stranded from the beginning, leaving much less space to invest in the accelerated energy transition,” Pastukhova said. “And we really need every cent of this public finance for that transition.”
As the evidence of brutal attacks on Ukrainian civilians by Russian forces mounts by the day, the pressure on European leaders—particularly in Germany, which is heavily dependent on Russian gas—to impose an embargo on Russian energy imports is mounting. European countries send Gazprom and other government-controlled firms in Russia about $850 million for gas and oil every day. In early April, the EU’s top diplomat said that since Russia’s invasion began, the EU has sent 35 billion euros to Russia for energy, while it has sent just 1 billion euros in aid to Ukraine.
Experts say that the multiple imperatives of cutting emissions, supporting allies abroad, and achieving energy security at home, all point toward the same answer: using less natural gas.
“There is this very traditional perception of energy security as security of supply,” Pastukhova said. “But what’s happening in energy markets is this emerging understanding that it’s about security of both supply and demand.”
Research from Jesse Jenkins, an assistant professor and energy systems expert at Princeton University, suggests that while increasing and rerouting LNG shipments to Europe will help now, implementing the climate-focused elements of Biden’s long-stalled Build Back Better bill would enable more robust support for Europe’s struggle to wean itself off Russian gas over the next few years.
Jenkins and colleagues modeled the impact of a clean energy investment package equivalent to that in the bill and found it would cut domestic gas use by 57 billion cubic meters by 2028. That, in turn, would free up US natural gas supplies for export using existing LNG infrastructure—giving European policymakers the confidence to pivot away from Russian energy, while insulating US consumers and businesses from global price shocks resulting from increased demand.
Without such steps, high natural gas prices could make increasing LNG exports out to 2030 both economically and politically unsustainable. Part of the reason natural gas prices are surging now, Williams-Derry said, is the recent increase in LNG exports.
“Ultimately we solve this on the demand side,” Jenkins said. “And we do it by making alternatives on the demand side better—cheaper, better, more convenient—in the context of a large investment package in clean energy, and in accelerating US demand away from oil and gas. And in a context where the EU is doing the same thing.”
This story was originally published by the Guardian and is reproduced here as part of the Climate Desk collaboration.
Thousands of potentially harmful chemicals could soon be prohibited in Europe under new restrictions, which campaigners have hailed as the strongest yet.
Earlier this year, scientists said chemical pollution had crossed a “planetary boundary” beyond which lies the breakdown of global ecosystems. The synthetic blight is thought to be pushing whale species to the brink of extinction and has been blamed for declining human fertility rates, and 2 million deaths a year.
The EU’s “restrictions roadmap” published on Monday was conceived as a first step to transforming this picture by using existing laws to outlaw toxic substances linked to cancers, hormonal disruption, reprotoxic disorders, obesity, diabetes, and other illnesses.
Industry groups say that up to 12,000 substances could ultimately fall within the scope of the new proposal, which would constitute the world’s “largest ever ban of toxic chemicals,” according to the European Environmental Bureau.
Tatiana Santos, the bureau’s chemicals policy manager, said: “EU chemical controls are usually achingly slow but the EU is planning the boldest detox we have ever seen. Petrochemical industry lobbyists are shocked at what is now on the table. It promises to improve the safety of almost all manufactured products and rapidly lower the chemical intensity of our schools, homes and workplaces.”
The plan focuses on entire classes of chemical substances for the first time as a rule, including all flame retardants, bisphenols, PVC plastics, toxic chemicals in single-use diapers, and PFAS, which are also known as “forever chemicals” because of the time they take to naturally degrade.
All of these will be put on a “rolling list” ofsubstances to be considered for restriction by the European Chemicals Agency. The list will be regularly reviewed and updated, before a significant revision to the EU’s cornerstone Reach regulation for chemicals slated for 2027.
Chemicals identified in the new paper include substances in food contact materials, single-use nappies and PAHs (polycyclic aromatic hydrocarbon) in granules for children playgrounds.
But industry groups argue that the scheme’s focus on groups of chemicals could affect street products such as sun creams and perfumes, which may use a host of synthetic substances.
“A lot of different ingredients fall under the skin sensitizer group so a wide range of cosmetic products would potentially be affected,” said John Chave, the director general of Cosmetics Europe, a trade body. “The effect on consumers would be that there would potentially be less variety, less choice, and less functional effectiveness for cosmetic products with no gains for safety whatsoever because the ingredients were safe in the first place.”
Beyond cosmetics, affected products could include paints, cleaning products, adhesives, lubricants, and pesticides.
Europe’s Reach system is already the world’s most extensive chemical register, and new bans could hit more than a quarter of the industry’s annual turnover of around $536 billion per year, according to a study by the trade group Cefic. “Some of the restrictions may have a significant impact on the industry and value chains,” said Heather Kiggins, a Cefic spokeswoman.
The industry argues for a more narrowly targeted approach to restrictions, and for incentives and import controls to help develop safer alternative products.
Nevertheless, the European Chemicals Agency favors dealing with chemicals in groups because chemical firms have previously avoided bans on individual chemicals by tweaking their chemical composition to create sister substances that may also be dangerous, but which then require lengthy legislative battles to regulate.
The industry tactic, known as “regrettable substitution,” has been criticized by environmental groups for allowing the replacement of substances such as the endocrine-disrupting bisphenol A with other bisphenols.
Santos described it as “a cynical and irresponsible tactic by the chemical industry to replace the most harmful banned chemicals with similarly harmful ones not yet on the regulatory radar. We’ve witnessed a decades-long pattern of regrettable substitution to avoid regulation.”
More than 190 million synthetic chemicals are registered globally, and a new industrial chemical is created every 1.4 seconds on average. The UN says that it expects the industry’s global value of more than $5 trillion to double by 2030 and to quadruple by 2060.
The EU’s environment commissioner, Virginijus Sinkevičius, said the new restrictions “aim to reduce exposure of people and the environment to some of the most harmful chemicals, addressing a wide range of their uses—industrial, professional, and in consumer products.”
The EU’s internal markets commissioner, Thierry Breton, said achieving a toxic-free environment would demand transparency and visibility from the commission. “The restrictions roadmap provides such visibility, and allows companies and other stakeholders to be better prepared for potential upcoming restrictions,” he said.
Millions of metric tons of chemical substances were used by industrial giants such as BASF, Bayer, Dow Chemicals and ExxonMobil without completing safety checks between 2014 and 2019, according to research by German environmentalists.
“Models are always incomplete. They are usually lacking important data that ideally they would have, but which doesn’t exist or doesn’t exist as broadly across the world as you’d like,” says Richard Plevin, a former academic who specializes in biofuel modeling and now works as a consultant. In 2006 he was part of a team at UC Berkeley that published a study concluding that corn-based ethanol could have lower environmental impacts than gasoline.
Since then Plevin’s position has changed completely. “My conclusion at the end of all this is it’s misguided,” he says. The problem, Plevin argues, is that it’s impossible to accurately estimate the overall emissions that result from using biofuels. The effects of biofuel mandates can ripple out in unpredictable ways. If biofuel displaces gasoline in one country, then this could suppress the price of gasoline elsewhere in the world and lead to people increasing their fuel use. Add in a war, or trade embargoes, and the whole dynamic can flip again. “You can assume 10 different scenarios about the way things are going to unfold and you’ll get 10 different answers, and they might all be equivalently realistic. How do you build a policy around that?”
For Plevin this leaves us with an obvious choice: reducing our dependence on liquid fuels altogether. “If I were king for a day, I would be putting all my effort into electrification right now,” he says. Hill agrees. “It’s no longer corn ethanol versus gasoline. They have the same interest, and they’re both feeling pressure from electrification, which is their common enemy,” he says.
There are other impacts of bioethanol too. Global food prices jumped by a record 13 percent last month. Diverting some US corn away from bioethanol and toward food would help keep prices lower and replace lost exports from Ukraine and Russia. “There is all this competition for the land,” says Annie Levasseur, a professor at L’École de Technologie Supérieure, an engineering faculty based in Montreal. “If we want to look at the impact of increasing biofuel, then we will need cropland, and there will be this displacement.”
Levasseur and Hill are both part of a committee put together by the National Academies of Science, Engineering, and Medicine (NASEM) to assess current methods for analyzing the impact of low-carbon transportation fuels. The committee’s report, which will be published in the third quarter of 2022, “contains information that the EPA may wish to take into consideration if it decides to develop a new RFS or a low-carbon fuel standard,” says Camilla Yandoc Ables, a senior program officer at NASEM.
In Lavasseur’s opinion, bioethanol production is already high and shouldn’t be increased. Instead, the US government should be looking at other ways to reduce transportation emissions. “We cannot keep increasing demand for energy and then transform everything to biofuel,” she says. “We really need to decrease the demand.”