Home Energy system Daily Update: February 15, 2022

Daily Update: February 15, 2022

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Start each business day with our analyzes of the most pressing developments affecting markets today, along with a curated selection of our latest and most important news on the global economy.

Market players and policy makers around the world have been talking about the global energy transition, but seem not yet to have invested enough in their companies’ and countries’ net zero actions to tackle carbon dioxide emissions and climate change. calamitous risks associated with it.

After 2020, how companies have solidified need a strong commitment with ESG principlesthe momentum continued into 2021 and culminated with the 26th UN Climate Change Conference‘s two weeks of deliberations between political and business leaders around the world on how best to tackle climate change. Now, S&P Global Sustainable1 predicts that investors, boards and government leaders will face a number of intersecting pressures and challenges that will advance their transparency, disclosures and actions in environmental, social and governance decision-making. This year will be once again a mixed bag for the energy transition. Looking ahead, 2022 could potentially see CO2 emissions reach an all-time high, underperforming renewable energy send already overheated electricity prices higher, supply chain disruptions reduce the supply of electric vehicles and renewable energy installations while making them more expensiveand the gap between ambitions and realities of hydrogen be tested, according to S&P Global Platts.

While S&P Global Ratings expects sustainability bond issuance will exceed $1.5 trillion in 2022, S&P Global Platts Analytics expects CO2 emissions from energy combustion to increase by 2.5%. This dichotomy raises questions about whether investing in the energy transition can overcome the growing risks to reach net zero and keep pace with the need to decarbonize the global economy.

The amount of capital needed to “fundamentally transform the energy system as we know it today” and address the climate crisis by 2050 is the “most catalytic part” of current energy transition discussionssaid Sarah Ladislaw, executive director of the U.S. nonprofit zero-carbon energy advocacy program RMI, during a Bipartisan Policy Center panel on Feb. 9, according to S&P Global Platts.

Fossil fuels majors like Duke Energy, Exxonand BP have recently allocated significant portions of their capital spending to their net zero plans, according to S&P Global Market Intelligence. S&P’s 2021 Global Corporate Sustainability Assessment found that more companies are create climate change preparedness strategiesand that almost a quarter of the companies surveyed consider climate change to be an “important issue”.

But many of the ambitious plans to tackle projected record emissions levels appear to lack the necessary political, regulatory and financial backing.

“The 2022 election presents significant risks to national environmental policy agendas,” S&P Global Platts said in its 2022 energy transition trend forecast. The midterm elections in the United States have the potential to significantly affect the environmental agenda of the Biden administration In Australia, the focus is on the opposition party and the issue whether a prioritization of more aggressive environmental goals will win political and popular support. Such elections remind us that “all politics is local” and that the fate of global agreements is often determined by national elections, local public sentiment and local policy changes.

Only 36.8% of some 5,300 companies reviewed in the CSA have announced plans to reduce direct emissions and/or emissions associated with their purchased energy, according to S&P Global Sustainable1. The Biden administration’s Build Back Better plan that aims to reinvigorate the country renewable infrastructure and economy long-term faced roadblocks who have prevented the package from passing. Last year, the biggest European banks seem to have contradicts their own net zero commitments by providing $55 billion in financing to companies that expand oil and gas production, according to research by ESG and corporate accountability advocacy organization ShareAction.

Companies could react as investors demand more attention to climate risks in the potential absence of government policy, “which basically gives governments a lot less control over the decisions they make,” said RMI’s Ladislaw. . to illustrate good returns on these types of investments is going to receive a premium, and that’s a different place for us with so much capital focused on that kind of behavior. We could be in for a real transformational stage for, quite frankly, anyone who can prove they’ve cracked this code… That means no one involved in today’s energy system is inevitable.”

Today is Tuesday, February 15, 2022and here is today’s essential intelligence.

Economy


Economic Research: Real-time U.S. data: Strong job gains and soaring prices fuel Fed policy

The massive drop in U.S. omicron cases through Feb. 8 echoes relatively healthy economic data reported by S&P Global Economics’ U.S. real-time data tracker. In fact, the improvement in the public health situation in the United States, if it continues, suggests a good outlook for February overall. As indicators of long-term inflation expectations reach a decade high, the Federal Reserve has reason to fear that high inflation expectations will persist.

—Read the full report of S&P Global Ratings

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Capital markets


For European banks, net-zero collateral helps fund oil and gas expanders

Europe’s biggest banks provided $55 billion in financing in 2021 to companies developing oil and gas production, which the shareholder group behind the research says is a clear breach of the law. climate science and banks’ own net zero liabilities. ShareAction, which coordinates shareholder campaigns, looked at the loan and issuance underwriting departments of 25 of Europe’s largest banks to 50 companies with major oil and gas expansion plans, excluding any financing sustainable, transitional or non-fossil fuel related. He revealed that some $33.2 billion had been provided to fossil fuel extenders after banks pledged to meet ambitious climate targets through the Net-Zero Banking Alliance throughout last year. .

—Read the full article from S&P Global Market Intelligence

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International trade


Listen: Middle Eastern LPG Suppliers Plan to Increase Exports to Catch Asian Demand

LPG demand in Asia has grown over the past decade, driven by China’s booming petrochemical sector. India’s LPG demand has also increased due to strong subsidy-driven household consumption. But major Middle Eastern exporters face growing competition from other producers, led by the shale-focused U.S. natural gas liquids industry. In a bid to win back traditional buyers and entrench themselves in a bullish LPG market, Middle Eastern producers are expected to increase export volumes in 2022. Wendy Wells, Ramthan Hussain and Joshua Ong of S&P Global Platts discuss this which awaits the LPG markets in 2022.

—Listen and subscribe to Commodities Focus, a podcast from S&P Global Dishes

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ESG


US offshore wind pipeline reaches 30.7 GW

The United States has a pipeline of 30.7 GW of offshore wind projects, enough to meet President Joe Biden’s goal of 30 GW by 2030, according to an S&P Global Market Intelligence analysis. But the Biden administration is facing a time crunch to meet the goal: By 2025, the United States will have 4,733 MW of operational offshore wind capacity if all projects are built on time, the data shows. Another 16,218 MW of capacity is expected to be completed between 2025 and 2030, when the United States will have 20,951 MW of operational capacity. New project proposals totaling 8,128 MW of capacity did not disclose commissioning dates.

—Read the full article from S&P Global Market Intelligence

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Energy and raw materials


Listen: Will US Oil Supply Respond to $90/B Prices?

Where is US oil production headed with prices at $90/bbl and some analysts seeing a three-digit advance? The latest episode of Capitol Crude explores the U.S. upstream outlook from multiple angles, with Mitch Fane, Ernst & Young’s energy leader for the Americas, on what drives capital decisions, l uncertainty around ESG disclosure requirements and the state of industry consolidation and digital transformation; Nathan Hasbrook, analyst for S&P Global Platts Analytics, who shares the 2022 supply outlook and a longer-term view of the future of US shale; and Starr Spencer, Platts editor for Oil News of the Americas, with the Market Minute on demand for high-end drilling rigs, an example of the cost pressures hitting the industry.

—Listen and subscribe to Capitol Crude, a podcast from S&P Global Dishes

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Technology and media


Tech market volatility may resolve mid-year after January storm

The sharp correction that technology valuations experienced in the first weeks of 2022 may ultimately prove more beneficial than bleak for the long-term health of the market. After a boom in tech stocks during the pandemic, the new year brought a period of overhaul. As personal and corporate wealth accumulated and supply chains tightened, inflation began to soar to historic rates. The US Federal Reserve has announced that it will raise its benchmark interest rates in a bid to realign markets. Investors are now rethinking the massive valuations they assigned to growth companies, especially tech stocks, as they weigh the potential risks of a changing economy.

—Read the full article from S&P Global Market Intelligence

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Written by Molly Mintz.