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#Nuclear: 'Financing projects in nuclear energy through Juncker Investment Plan is nonsense' say S&D MEPs

EU Reporter Correspondent



Brussels Nuclear AlertS&D MEPs today (18 May) warned that it would be nonsense to put money from the European Fund for Strategic Investment (EFSI) into the nuclear energy sector. “Such a plan would be in breach with the spirit of  EFSI. The Commission and the European Investment Bank need to honour what was agreed in the Regulation,” they reacted, in response to press reports.

S&D MEP and one of the European Parliament’s key rapporteurs Udo Bullmann said:  "Ailing infrastructure, slow internet connections or an inappropriate energy supply - these are the challenges that Europe faces today and the ones we wanted to tackle in the set-up of the EFSI. Thanks to the European Parliament, only investments in the future and not in the past will be possible through EFSI.

"The European Commission seems to have a poor memory. During the negotiations, the member states could not abscond fast enough when asked to contribute money for the new vehicle. Now that the European Parliament has found alternative sources of financing, such as a rededication of EU budget money, the Commission wants to offer this money to the member states for highly disputed investments in the past. We will not support this."

S&D Group Vice President responsible for sustainable development and EFSI rapporteur in ITRE, Kathleen van Brempt, added: "The EFSI is supposed to trigger innovative sustainable investments that help to reshape Europe and create, amongst others, the energy landscape of the future. Nuclear energy is not the energy of the future, it is a costly, dirty and dangerous fuel from the past - dirty business as usual - and should not get EFSI support.

"By initiating EFSI support for nuclear energy, the Commission is breaking its promise to the European Parliament. We agreed that EFSI needed to be additional, innovative, sustainable and future proof. Nuclear energy does not fit this description. With actions like these, Juncker's presentation of the EFSI as a 'game changer' looks less credible every day. Member states and the Parliament need to react and set the record straight and get EFSI back on track."


Renewable diesel boom highlights challenges in clean-energy transition

EU Reporter Correspondent



For 17 years, trucker Colin Birch has been hitting the highways to collect used cooking oil from restaurants. He works for Vancouver-based renderer West Coast Reduction Ltd, which processes the grease into a material to make renewable diesel, a clean-burning road fuel. That job has recently gotten much harder. Birch is caught between soaring demand for the fuel - driven by U.S. and Canadian government incentives - and scarce cooking oil supplies, because fewer people are eating out during the coronavirus pandemic, write Rod Nickel, Stephanie Kelly and Karl Plume.

“I just have to hustle more,” said Birch, who now sometimes travels twice as far across British Columbia to collect half as much grease as he once did.

His search is a microcosm of the challenges facing the renewable diesel industry, a niche corner of global road fuel production that refiners and others are betting on for growth in a lower-carbon world. Their main problem: a shortage of the ingredients needed to accelerate production of the fuel.

Unlike other green fuels such as biodiesel, renewable diesel can power conventional auto engines without being blended with diesel derived from crude oil, making it attractive for refiners aiming to produce low-pollution options. Refiners can produce renewable diesel from animal fats and plant oils, in addition to used cooking oil.

Production capacity is expected to nearly quintuple to about 2.65 billion gallons (63 million barrels) over the next three years, investment bank Goldman Sachs said in an October report.

Rising demand is creating both problems and opportunities across an emerging supply chain for the fuel, one small example of how the larger transition to green fuels is upending the energy economy. A renewable diesel boom could also have a profound impact on the agricultural sector by swelling demand for oilseeds like soybeans and canola that compete with other crops for finite planting area, and by driving up food prices.

Local and federal governments in the United States and Canada have created a mix of regulations, taxes or credits to stimulate more production of cleaner fuels. President Joe Biden has promised to move the United States toward net-zero emissions, and Canada’s Clean Fuel Standard requires lower carbon intensity starting in late 2022. California currently has a low-carbon standard that provides tradable credits to clean fuel producers.

But the feedstock supply squeeze is constraining the industry’s ability to comply with those efforts.

Demand and prices for feedstocks from soybean oil to grease and animal fat is soaring. Used cooking oil is worth 51 cents per pound, up about half from last year’s price, according to pricing service The Jacobsen.

Tallow, made from cattle or sheep fat, sells for 47 cents per pound in Chicago, up more than 30% from a year ago. That’s boosting the fortunes of renderers such as Texas-based Darling Ingredients Inc and meat packers such as Tyson Foods Inc. Darling shares have about doubled in the last six months.

“They’re spinning fat into gold,” said Lonnie James, owner of South Carolina fats and oil brokerage Gersony-Strauss. “The appetite for it is amazing.”Slideshow ( 4 images )

Clean fuels could be a boon for North American refiners, among the pandemic’s hardest-hit businesses as grounded airlines and lockdowns hammered fuel demand. Refiners Valero Energy Corp, PBF Energy Inc and Marathon Petroleum Corp all lost billions in 2020.

Valero’s renewable diesel segment, however, posted a profit, and the company has announced plans to expand output. Marathon is seeking permits to convert a California refinery to produce renewable fuels, while PBF is considering a renewable diesel project at a Louisiana refinery.

The companies are among at least eight North American refineries that have announced plans to produce renewable fuels, including Phillips 66, which is reconfiguring a California refinery to produce 800 million gallons of green fuels annually.

Once new renewable diesel production capacity comes online, feedstocks are likely to become more scarce, said Todd Becker, chief executive of Green Plains Inc, a biorefining company that helps produce feedstocks.

Goldman Sachs estimates that an additional 1 billion gallons of total capacity could be added if not for issues with feedstock availability, permitting and financing.

“Everybody in North America and around the world are all trying to buy low carbon-intensity feedstocks,” said Barry Glotman, chief executive of West Coast Reduction.

His customers include the world’s biggest renewable diesel maker, Finland’s Neste. A spokesperson for Neste said the company sees more than enough feedstock supply to meet current demand and that development of new feedstocks can ensure supply in the future.

Renewable diesel producers are increasingly counting on soybean and canola oil to run new plants.

The U.S. Agriculture Department (USDA) is forecasting record-high soybean demand from domestic processors and exporters this season, largely because of soaring global demand for livestock and poultry feed.

Crushers who produce oil from the crops are also scouring Western Canada for canola, helping to drive prices in February to a record futures high of C$852.10 per tonne. Soybeans reached $14.45 per bushel in the United States last week, the highest level in more than six years.

Rising food prices are a concern if the predicted demand for crops to generate renewable diesel materializes, said USDA Chief Economist Seth Meyer. U.S. renewable diesel production could generate an extra 500 million pounds of demand for soyoil this year, Juan Luciano, chief executive of agricultural commodities trader Archer Daniels Midland Co, said in January. That would represent a 2% year-over-year increase in total consumption.

Greg Heckman, CEO of agribusiness giant Bunge Ltd, in February called the renewable diesel expansion a long-term “structural shift” in demand for edible oils that will further tighten global supplies this year.

By 2023, U.S. soybean oil demand could outstrip U.S. production by up to 8 billion pounds annually if half the proposed new renewable diesel capacity is constructed, according to BMO Capital Markets.

That same year, Canadian refiners and importers will face their first full year complying with new standards to lower the carbon intensity of fuel, accelerating demand for renewable diesel feedstocks, said Ian Thomson, president of industry group Advanced Biofuels Canada.

Manitoba canola grower Clayton Harder said it is hard to envision a vast expansion of canola plantings because farmers need to rotate crops to keep soils healthy. Farmers may instead have to raise yields by improving agronomic practices and sowing better seed varieties, he said.

British Columbia refiner Parkland Corp is hedging its bets on feedstock supplies. The company is securing canola oil through long-term contracts, but also exploring how to use forestry waste such as branches and foliage, said Senior Vice President Ryan Krogmeier.

The competition to find new and sustainable biofuel feedstocks will be fierce, said Randall Stuewe, chief executive at Darling, the largest renderer and collector of waste oils.

“If there is a feedstock war, so be it,” he said.

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As Shell posts its first ever loss BP Is making good money thanks to its alliance with Russia's Rosneft Oil




The shock announcement that Shell had lost £16 billion last year, the first time in its history the oil company has posted a loss, sent shivers down the spines of pension fund managers who have always depended on dividend payments from big oil firms to pay UK pensions, writes James Wilson.

State oil company Rosneft is continuing to pump profits into the main global partner, BP.

Over the past eight years, since 2013, when BP acquired a stake in Rosneft, the Russian company has generated 65% of BP's net profit. BP's total net profit for this period was £12.7 billion, of which Rosneft accounted for £8.26bn.

In terms of BP’s contribution to British pension funds, Rosneft has contributed £573 million in dividend payouts to shareholders in 2019.

With 99 per cent of reporting out of Russia about Russian politics, it is easy to forget the high quality of Russian science and engineering, which has to battle against a hostile environment more difficult than Gulf or off-shore extraction as Russian scientific engineers keep investing in know-how and new techniques.

In February, BP's CEO Bernard Looney signed an extensive agreement with Rosneft on low-carbon strategic cooperation to support sustainability and reduce carbon emissions, including carbon capture, utilisation, and storage (CCUS). The worldwide race to turn the oil giants into low CO2 emitters is the next frontier for all energy companies. Among major oil and gas companies, Rosneft has lower CO2 emissions lower than most of the world's largest oil and gas companies, such as ExxonMobil, Chevron, Total, Petrobras, and Shell, according to the FTSE Russel rating, which is accepted as a world benchmark on global CO2 emissions by energy firms.

Rosneft is working on the important new Vostok Oil project with a carbon footprint that is 25% of similar new global projects. Located in Northern Russia, the low CO2 emitting Vostok field will produce 2 million barrels a day, more than the entire North Sea output.

The estimated emission intensity of the project will amount to about 12KG of CO2 per barrel. This is a major factor given that according to Wood Mackenzie, this figure for new fields globally is around 50kg of CO2 per barrel today. The project will use natural gas for energy supply. Besides, it is planned to use associated petroleum gas in a sustainable way and achieve zero flaring at an early stage. The project will also deploy year-round wind generation. Appropriate weather studies have been carried out, and where possible special wind fields will be constructed. The oil itself at Vostok Oil has low sulphur content of less than 0.05%, 24 times lower than the global average. Th intensity of methane emmissions will amount to less than 0.2%, which aligns with best practices.

To be sure climate change ultra purists will dismiss these efforts as green-washing but winding down dependence on fossil fuel energy requires skilful management. Rosneft says over the next 15 years. It plans to achieve:-

  • The prevention of 20 million tonnes of CO2 eq. emissions;
  • a 30% reduction in direct and indirect emissions intensity in oil and gas production;
  • zero routine flaring of associated petroleum gas, and;
  • reduction of methane emission intensity to below 0.25%.

Rosneft is already using solar power generation to power its filling stations and is exploring the possibility of using renewable energy sources within new projects in exploration and production. Unlike the Gulf Oil producers extracting oil from the desert and without few constraints from local public opinion in the tightly controlled small populations in the kingdoms and emirates in the Gulf region, environmental consciousness is high in Russia.

Moreover, Rosneft plans to increase gas production to more than 25% of total hydrocarbon output by the end of 2022, compared to 20% in 2020. The company is making a vast USD 5 billion of "green investments" in 5 years.

So Rosneft planted a record number of seedlings in 2020 and is developing a large-scale programme for forestation, increasing tree planting to create new forest ecosystems to increase the absorbing capacity of Russia's legendary forests.

 As Shell slumps to its first-ever loss in its history, the alliance between BP and Rosneft signed precisely a decade ago is turning out to be one of the best strategic investments made by a UK oil major. Pension fund managers at least will be grateful.

The author, James Wilson, is a Brussels-based freelance journalist and regular contributor to EU Reporter.

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Commission approves €254 million Romanian aid to support rehabilitation of district heating system in Bucharest

EU Reporter Correspondent



The European Commission has approved, under EU state aid rules, Romanian plans to support the upgrade of the district heating system of the municipality of Bucharest. Romania notified the Commission of its plans to provide public support of approximately €254 million (1,208 billion RON) for the rehabilitation of the distribution network (notably the “transmission” pipelines of hot water to the main distribution points) of the district heating system in the urban area of Bucharest. The planned support will take the form of a direct grant financed by EU Structural Funds managed by Romania. EU state aid rules allow member states to support district heating generation installations and distribution networks, subject to certain conditions set out in Commission's 2014 Guidelines on State aid for environmental protection and energy.

In particular, the Guidelines provide that the projects must meet the criteria of “efficient district heating” set out in the Energy Efficiency Directive in order to be considered compatible under EU state aid rules. On the basis of the type of heat fed into the system - about 80% of its input comes from “cogeneration” sources – the Commission has found that the Bucharest system fulfils the definition of efficient district heating and cooling system, as set out in the Energy Efficiency Directive and in line with State aid rules. The Commission also found that the measure is necessary, as the project would not be carried out without the public support, and proportionate, as the project will deliver a reasonable rate of return. On this basis, the Commission concluded that the measure does not distort competition and is in line with EU State aid rules, notably thanks to the reduction of greenhouse gas emissions and other polluting substances and the improvement of the energy efficiency of the district heating system.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “This €254 million aid measure, funded thanks to EU structural funds, will help Romania achieve its energy-efficiency targets and will contribute to the reduction of greenhouse gas and other pollutants emissions, without unduly distorting competition.”

The full press release is available online.

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