European Auto Industry Decries EU Ban On Petrol Cars

By Charles Hugh Smith - Jun 09, 2022

The German auto industry is protesting a decision by EU parliament to ban the sale of cars that run on petrol and diesel by 2035, describing it as detrimental to the market and consumers. 

On Wednesday, in Strasbourg, the European Parliament voted to support a ban on the sale of new combustion engine cars beginning in 2035 in line with the bloc’s goal of achieving climate neutrality in 2050. 

The EU Assembly vote comes as the bloc desperately attempts to cut its independence on oil and gas products from Russia. 

In a statement, the German auto industry said the EU Parliament’s decision was “against citizens, against the market, against innovation and against modern technologies”m Euractiv reported. 

According to Hildegard Müller, president of VDA, the German auto industry association, Europe does not have sufficient charging infrastructure to support such a ban, and the EU Parliament is acting prematurely. 

“It will increase costs for consumers and put consumer confidence at risk,” Müller said. 

The German auto association is not alone in its opposition. EU-wide, the sentiment is one of consumer risk. 

In a press release, the German association of car drivers, ADAC, said that Europe’s “ambitious climate protection goals in transports” could not be achieved solely through electric vehicles. 

There is a disconnect between the numbers in terms of the causes of CO2 emissions in Europe. Passenger cars are said to account for 12% of all transport-related CO2 emissions in the bloc, but overall, transport accounts for some 25% of emissions. 

ACEA, the EU auto association, likewise said that markets were too volatile to absorb a ban on new combustion vehicles by 2035. 

“Given the volatility and uncertainty we are experiencing globally day-by-day, any long-term regulation going beyond this decade is premature at this early stage,” Euractiv quoted ACEA president Oliver Zipse, who is also the CEO of BMW, as saying. 

By Charles Kennedy for Oilprice.com

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