U.S. Solar Industry Slams Biden for “Pittance” In Tariff Relief

By Irina Slav - Jun 08, 2022

The U.S. solar industry has criticized President Biden’s plans for setting up a domestic panel production industry to replace controversial imports from Asia as a “pittance”, noting it will be financed from a fund with barely half a billion dollars in it that are already being used for other things.

Military drones and baby formula are among the things being paid for with money from the same fund, Bloomberg noted in a report, citing a spokesman for the Coalition for a Prosperous America, a manufacturing industry group, that “Even if they spent all of that on solar panels, it’s a pittance.”

The U.S. president earlier this week invoked powers under the Defense Production Act, a Cold War-era piece of legislation, in a bid to jumpstart the domestic production of a range of critical products and technologies, including solar panels.

The White House also lifted tariffs on imported solar panels to stimulate the U.S. solar power industry, which has a central role to play in the Biden administration’s energy transition plans.

The move was supposed to serve to calm the fears in the U.S. solar industry that have been made jittery about the amount of money they must keep on hand to pay what could be potential tariffs down the road. Yet the industry has not exactly praised the administration for its latest effort to help.

According to Samantha Sloan, VP of policy at Forst Solar, the Defense Production Act falls short of the policy that the U.S. manufacturing industries need to motivate further growth.

“We have yet to see this administration put action behind word in supporting US solar manufacturing specifically,” she told Bloomberg. “That causes some heartburn on where the priorities do lie.”

According to BloombergNEF, a polysilicon factory with a capacity for 20,000 tons of the solar panel material could alone cost $1 billion. A panel factor with a capacity for just 1.4 GW annually could cost some $170 million. The U.S. imported 24 GW of panels last year.

By Irina Slav for Oilprice.com

Major Lithium Producer Could Shut German Plant Over EU Rule 

By Tsvetana Paraskova - Jun 08, 2022,

Lithium producer Albemarle could be forced to close its plant in Germany if the European Union classifies the key mineral lithium as a hazardous substance that would change the way lithium is processed and stored, the company’s chief financial officer has told Reuters.

The European Commission is currently reviewing and assessing a proposal from the European Chemicals Agency (ECHA) to classify lithium carbonate, lithium chloride, and lithium hydroxide as substances hazardous to human health. An EU committee is meeting early next month to discuss the proposal, while a final decision on the issue is expected toward the end of this year or early next year.

If the EU decides to include the lithium chemicals in the hazardous category, it would deal a blow to its own goals of becoming self-sufficient in batteries this decade and significantly raise the share of electric vehicles on the roads.

The decision would change the way lithium producers and processors work and will add costs to their operations.

In Albemarle’s case, the company “would no longer be able to import our primary feedstock, lithium chloride, putting the entire (Langelsheim) facility in jeopardy of closure,” CEO Scott Tozier told Reuters in an emailed statement.

Albemarle processes lithium products at its Langelsheim factory in Germany, which employs around 550 people.

Albemarle would sustain a financial blow if it had to shut down the German plant.

“With sales of approximately $500 million annually, the economic impact to Albemarle from the potential closure would be significant,” the company’s CEO told Reuters.

The EU is set to meet 69 percent and 89 percent of its growing demand for batteries by 2025 and 2030, respectively, the European Commission said earlier this year. The EU expects to be capable of producing batteries for up to 11 million cars per year, it added.

By Tsvetana Paraskova for Oilprice.com

Premature Closure Of Houston Refinery Could Worsen The Fuel Crunch

By Tsvetana Paraskova - Jun 07, 2022

U.S. refining capacity could take a hit from an earlier than planned closure of a major refinery in Houston, which could worsen the refining and fuel crunch in the country.

LyondellBasell—which announced in April that it would cease operation of its Houston Refinery by the end of 2023—could close the facility prematurely if a major equipment failure affects processing units, two sources with knowledge of the chemicals giant’s operations told Reuters on Tuesday.

LyondellBasell’s 268,000-bpd Houston refinery has the ability to transform very heavy high-sulfur crude oil into clean fuels, including reformulated gasoline and low-sulfur diesel. Other products include heating oil, jet fuel, olefins feedstocks, aromatics, lubricants, and petroleum coke.

The firm, however, said earlier this year that “we have determined that exiting the refining business by the end of next year is the best strategic and financial path forward for the Company.”

LyondellBasell did not immediately respond to a request for comment from Reuters.

If the Houston refinery closes much earlier than the end of 2023, it could exacerbate the already strained refining capacity in the United States.

Some 1 million bpd of refinery capacity in America has been shut permanently since the start of the pandemic, as refiners have opted to either close money-losing facilities or convert some of them into biofuel production sites.

In the United States, operable refinery capacity was at just over 18 million bpd in 2021, the lowest since 2015, per EIA data. 

U.S. refineries cannot catch up with demand, which has rebounded from the COVID lows and is still robust despite the record-high gasoline and diesel prices in America. Inventories of fuel are at multi-year lows as the Russian invasion of Ukraine upended oil trade flows and constrained supply. 

Motor gasoline inventories in the U.S. are now about 9% below the five-year average for this time of year, the EIA’s latest data from last Wednesday showed. Distillate fuel inventories, which include diesel, are about 24% below the five-year average for this time of year. 

By Tsvetana Paraskova for Oilprice.com

 

Environmentalists Challenge EU-Backed Gas Projects

By Charles Kennedy - Jun 07, 2022

Several environmental campaign groups said on Tuesday that they are challenging the European Union over its support for 30 natural gas projects under a directive earlier this year to consider certain gas projects as contributing to accelerating the energy transition.

The European Commission updated earlier this year its Taxonomy Complementary Climate Delegated Act on climate change mitigation and adaptation covering certain gas and nuclear activities. Under the new taxonomy, some gas projects, including several pipelines, were given a “sustainable investment” status. Gas projects are “transitional” if they contribute to the transition from coal to renewables, the EU says.  

The bloc is also accelerating its efforts to reduce dependence on Russian pipeline gas after Russia invaded Ukraine and, most recently, cut off the gas supply to several EU members that refused to pay in rubles.

However, the climate campaigners are having none of the “sustainable gas” projects and announced they are starting this week legal action against the European Commission for supporting 30 gas projects across Europe.

The EC has included those projects in a list known as ‘Projects of Common Interest’. Projects that make the list benefit from fast-tracked permits and EU funding.

Although the EU has accelerated its renewable energy targets, it aims to diversify its gas supplies and acknowledges that gas has a role to play in the transition.

But environmental groups Friends of the Earth Europe, ClientEarth, Food & Water Action Europe, and CEE Bankwatch Network say “the EU Commission has given these climate-destructive projects VIP status, in contradiction of its legal obligations.”

“This list amounts to a VIP pass for fossil gas in Europe, when we should be talking about its phase-out,” ClientEarth lawyer Guillermo Ramo said.

The campaigners request the Commission to review within 22 weeks the decision to give the proposed gas projects priority status. If the Commission refuses to amend its decision, the organizations will be able to ask the Court of Justice of the EU to rule, the environmentalists said.

By Charles Kennedy for Oilprice.com

Norway's Offshore Oil Workers Threaten To Strike

By Julianne Geiger - Jun 07, 2022

About 11% of Norway's offshore oil workers have threatened to strike, according to labor union data cited by Reuters on Tuesday.

Of Norway's 7.500 offshore oil and gas workers, about 845 are threatening to strike starting on Sunday should wage mediation with the state fail.

The strike, according to trade unions Industri Energi, Lederne, and Safe, the 845-member strong strike would have a limited impact on Norway's oil throughput.

"A strike would not initially affect Norway's gas exports, given the current situation in Europe," Safe said on Tuesday.

The trade unions are trying to strike a balance between effective labor negotiations and the critical needs of Europe to maintain adequate levels of oil and gas while prices are already sky high.

Norway's offshore workers are hoping to secure pay increases that are more than inflation, as well as other contract changes, although the details of their asks have yet to be revealed.

While the labor unions have stressed that their strike would have a limited impact on production, Norway's state-run oil company, Equinor, said it was too early to determine what impact the strikes would have on production.

The strikes would affect 10 permanent offshore oil installations, including the 45,700 boepd Gudrun installation. 

Mediation is expected to take place this Friday and Saturday.

The tension between Norway's oil employers and its oil and gas workers has been building for years, even pre-dating the Covid era by years, with state-appointed mediators often called in to settle the disputes.

Norway produced nearly 1.8 million bpd in February, shipping crude oil to the UK, China, Sweden, the Netherlands, and Germany. It is also the world's fourth-largest natural gas exporter.

By Julianne Geiger for Oilprice.com

Germany Remains Firmly Anti-Nuclear Despite Energy Crisis

By Irina Slav - Jun 09, 2022

Germany’s government has no intention of changing its policies on nuclear energy even as worry about a halt to Russian gas supplies intensifies among politicians.

Following calls from opposition parties to discuss the extension of the lives of Germany’s three remaining nuclear power plants, Chancellor Olaf Scholz said the decision on these power plants had already been made.

“We also know that building new nuclear power plants makes little sense,” Scholz told media s quoted by the AP, adding “If someone decides to do so now they would have to spend 12-18 billion euros on each nuclear power plants and it wouldn’t open until 2037 or 2038. And besides, the fuel rods are generally imported from Russia. As such one should think about what one does.”

Instead of prolonging the lives of its nuclear power plants, Germany will extend the life of coal plants and use them in case it needs to, the AP reported separately. The plants will be kept on standby for almost two years in case a gas supply outage occurs. The country already has several coal and oil-powered power plants on such standby in case of supply disruption.

The biggest bet Germany is making in the energy department, however, remains wind and solar. As of 2021, the country had a total renewable power capacity of 138.2 GW, which was 5 percent higher than the previous year. Last year, solar capacity overtook onshore wind capacity for the first time.

The whole European Union is doubling down on wind and solar now, with the sanctions on Russian energy, and plans to greatly simplify the licensing procedure for new wind and solar installations in a bid to spur fast growth.

Per the REPowerEU plan, the bloc eyes having 45 percent of its electricity generated from renewables by 2030, an upward revision of the previous target, which was 40 percent

By Irina Slav for Oilprice.com

Researchers study role of tall grass in post-mining soil recovery

Staff Writer | June 9, 2022 

Miscanthus x giganteus. (Image by Jenni Kane, courtesy of West Virginia University).

Researchers at West Virginia University are studying the role of fertilization in the relationship between the perennial grass Miscanthus x giganteus and certain microbes, to determine how the plant would behave under different climate change scenarios and support pollution mitigation efforts.


With over $800,000 in funding from the US National Institute of Food and Agriculture, the scientists are focusing their work on the tall grass because it has shown to be effective to regenerate damaged soils from mining.

In detail, the group is examining the ability of miscanthus to give new life to the soils in Appalachia, as in the region thousands of acres of land have been deemed unsuitable for crop cultivation because of past mining.

“Anyone could grow miscanthus on their land on a small scale or a larger scale,” Jenni Kane, a doctoral student involved in the study, said in a media statement. “This could become a crop that can be grown and sold. It could also bring back nutrients and soil structure, so the long-term impact could be economic and environmental.”

In Kane’s view, production on marginal land can help improve soil health and isolate soil carbon, restoring the land and mitigating climate change.

“The better we can have plants grow and take CO2 from the air and put it into the ground, the better outcome we can have with climate change,” soil science professor Jeff Skousen pointed out.

Delta CleanTech, Muskowekwan First Nation partner on carbon capture blockchain project

Amanda Stutt | June 9, 2022 

Carbon capture and storage facility. Photo by the International Energy Agency.

Calgary-headquartered Delta CleanTech is planning to launch a multi-million dollar carbon credit blockchain initiative with Canada’s First Nations communities.


Delta CleanTech is an ESG-driven, global technology company specializing in CO2 capture, decarbonization of energy, solvent and glycol reclamation, blue hydrogen production, and carbon credit aggregation and management.

The initiative, 13 years in the making, will allow Delta CleanTech to print and tokenize on the blockchain a carbon credit that can be traded on an exchange. Carbon percentage is to be quantified in a credit – and certified and tokenized as First Nations ESG on the blockchain so it can’t be counterfeited or lost. Then it can be traded as a carbon or ESG credit, the company said.

While still at the concept stage, the goal of the initiative is to reduce the Co2 footprint of industrial production by leveraging the acres owned by First Nations – about 7% of Canada’s total landmass.

The initiative is to be able to create a carbon credit that has been generated on First Nations land, and has a First Nations stamp of authorization. The company is working on its carbon credit initiative directly with Reginald Bellerose, former Chief of Saskatchewan’s Muskowekwan First Nation.

The vision is that First Nations take the lead in the carbon program, which will be launched nationally, with the Muskowekwan contributing the first acres of land, Bellerose told MINING.COM.

“The goal is to get more and more partners. We have advisors, First Nation leadership and a council of elders, so we can bring forward our world view,” Bellerose said.

“We continue to recognize all the challenges the First Nations are dealing with… we need to be leaders and participate. We have a council of advisors [who] will be influencers at a political level.”
The carbon economy is coming

“We’re very conscious of compliance carbon credits,” Delta CleanTech Director Lionel Kambeitz told MINING.com, adding the plan is to be able to capture carbon credits from development on [First Nations] lands – whether its mining development or energy or agricultural development.

“One of the most important underlying technologies in climate mitigation is going to be carbon currency, reflected in a carbon credit,” said Kambeitz.

“Its tradeable, and we’re tokenizing it. Many of the companies that are participating in the new carbon credit economy are, I hope going to be tokenizing as well, using the blockchain to verify the procedure and tokenizing it so it can be traded more readily.”

Kambeitz said when the tokens are traded, they will be traded with the reverence of social license.

“At every turn, at every corner that it is producing a carbon footprint, it gives the industry a chance to mitigate that footprint and have it recognized as a carbon credit, Kambeitz said. “ If we reduce and mitigate the use of carbon dioxide in our normal industrial process – that is worthy of being recognized.”

“The carbon economy is coming upon us, and it’s beyond government – when you go to Wall Street, Queens Street or Bay Street, wherever you’re raising your capital, it’s about ESG,” Kambeitz said.

“Its not about a government forcing a mine or an oil producer to look at their carbon footprint or be taxed. That may come or go, depending on the government.”

With the biggest companies in the world making commitments to be net zero by 2050, there are legal commitments made to the capital industry to be ESG compliant, Kambeitz said, adding that Delta CleanTech has brought the cost of capturing carbon dioxide down.

The cost of capital can be 20 to 25% higher for those miners with the lowest ESG scores, according to McKinsey’s report, Creating the Zero-Carbon Mine.

“The biggest single change beyond government policy of whatever party is in, is to have the investment community adapt and realize that ESG is one of the single biggest liabilities and or opportunities in a company’s balance sheet,” he said.

“This is going to live beyond the next government.”

Column: LME nickel lawsuits are about principle as much as money

Reuters | June 9, 2022 | 

Credit: LME
(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)


The London Metal Exchange’s (LME) nickel nightmare continues.

US hedge fund Elliott Management and trading house Jane Street are suing the exchange for $456 million and $15.3 million respectively over its handling of the nickel market meltdown in March.

The LME suspended trading in its nickel contract at 0815 UK local time on March 8 after the price exploded to $101,365 per tonne. It also canceled all trades between midnight and the market halt.

A legal reaction from aggrieved long position holders was only to be expected. The LME and its owner Hong Kong Exchanges and Clearing (HKEx) have dismissed the claims and “will defend any judicial review proceedings vigorously”.

The legal action will be a lawyerly stress-test of the LME rule-book, particularly the definition of what constitutes an orderly market.

But this is about more than just money.

The cancellation of agreed trades has broken a cardinal market rule for many in the investment community. The LME and British regulators will have to persuade them it won’t ever happen again if they are to return.

Legal defenses

The LME’s legal defenses are at first sight formidable.

Its rule book grants the exchange wide-ranging powers to act in “emergencies”.

Those powers are exercised through the “Special Committee”, a body established to remove any conflict of interest from LME market interventions.

Chaired by Phillip Crowson, previously a long-standing LME director, the “specials” include LME chairwoman Gay Huey Evans, who also sits on the UK Treasury board, LME Clear board member Marco Strimer, arbitration lawyer Barbara Dohmann QC and independent LME director Dr. Herta Von Stiegel.

The Committee “may take such steps as in the absolute discretion they deem necessary to contain or rectify” any “undesirable” situation.

Moreover, in the event of “a significant price movement during a short period”, the LME can suspend trading and “may cancel, vary or correct any Agreed Trade or Contract.”

As always, the legal devil will be in the detail, for which we await the LME’s own promised “forensic” report into what happened in the lead-up to the events of March 8.

Order, disorder

“The LME has undermined confidence in its ability to oversee markets by failing to perform its regulatory obligations to maintain an orderly market,” according to the Managed Funds Association, which represents over 140 investment companies.

The LME, for its part, claims it was precisely because the nickel market had become “disorderly” that it took the action it did.

“It became clear that pricing in the early hours (of March 8) trading did not reflect the underlying physical market and that the Nickel market had become disorderly,” it said in a March 10 statement. As such, trades were canceled to take the price back to the last point at which the exchange “could be confident that the market was behaving in an orderly fashion”.

However, it is now clear the exchange acted also to avert what it perceived to be a systemic threat resulting from participants’ inability to meet margin calls on nickel’s explosive price move.

The LME said it “had serious concerns” that margin-call stress was “raising the significant risk of multiple defaults”.

A cascade of defaults from less-well capitalized member companies would have risked a repeat of the exchange’s near-death experience during the 1985 Tin Crisis.

The most disorderly market of all is one when half the players have just gone technically bust.

Cardinal sin

Many fund managers, however, will take a lot of convincing.

The LME’s decision to cancel trades was “utterly, incomprehensibly wrong”, Ken Griffin, chief executive of investment company Citadel told Bloomberg TV.

Griffin, who “didn’t have a meaningful position in nickel at all”, warned that “when you interfere with markets on an ex-post basis, it’s incredibly destructive to the meaning of markets”.

Jane Street seems to agree, telling the Financial Times that the damages sought are “secondary”. Rather, it wants to send a message that it would take action against any “unreasonable” behavior by an exchange.

The retroactive cancellation of trades for such like-minded free-market advocates amounts to a cardinal sin.

March 8 was “one of the worst days in my professional career in terms of watching the behavior of an exchange,” Griffin said.

Free markets

The irony is that the LME has always prided itself on being a free-market bastion of light-touch regulation, eschewing position limits, circuit-breakers or fixed lending caps.

The 145-year-old exchange is the epitome of London’s traditional laissez-faire approach to professional, wholesale trading venues.

The LME’s rule book was written by Alan Whiting, who was parachuted into the exchange from the U.K. Treasury to clean up the aftermath of the Sumitomo copper fiasco of the 1990s.

The danger of such a hands-off approach, however, is that a market may turn so wild that regulators are left behind the curve in trying to tame it.

Whiting himself conceded that one of the strongest arguments for automatic intervention “is the difficulty in analyzing and assessing the reasons for and causes of the backwardation or unusual price movements”. (“Market Aberrations – The Way Forward”, 1998)

Any discretionary intervention by an exchange “may, inadvertently, be mistaken and inappropriate” and even when “correct” will always be “contentious because there will always be parties who will consider themselves to have been financially disadvantaged.”

Prescient words but the LME decided against automatic market constraints at the time and the London trading community has resisted them ever since.

They are now in place across all the LME’s physically-deliverable contracts and keeping them will be a minimum requirement for many funds.

The key, according to Citadel’s Griffin, is the “necessity of clarity on exchange rules”.

The days of the LME’s resistance to pre-emptive, automatic market intervention look numbered. Indeed, they may already be over.

What’s not in doubt is the urgency of repairing the regulatory system that resulted in the May mayhem.

Griffin predicted a shift in liquidity to other venues and “you’ll see people drop out of markets”.

It’s already happening.

LME nickel trading volumes fell by 35% year-on-year in May, part of a broader 13% decline in trading activity last month.

And Britannia Global Markets has just announced its intention to relinquish its clearing membership of the LME, citing “a clear hesitancy of some participants to support the existing LME market structure.”

It will continue to trade metals but on an over-the-counter basis, a warning sign that liquidity is already on the move away from the exchange.

(Editing by David Evans)