Connect with us

Energy

For the global energy industry, the conundrum is obvious

SHARE:

Published

on

We use your sign-up to provide content in ways you've consented to and to improve our understanding of you. You can unsubscribe at any time.

Global energy demand is growing at an unprecedented rate and energy companies, along with many others across a very diverse spread of sectors, are positioning themselves to respond. We all want abundant, cheap and clean energy extracted with minimum environmental disruption while affording maximum benefits to local communities, national governments and shareholders, writes Colin Stevens.

It's a daunting challenge and this sector alone already has an extensive and highly significant social, environmental and economic footprint.

Yet there are growing examples of best practice, with more and more companies shifting priorities by using business intelligence to not only save on costs but to also become environmentally aware.

Advertisement

Among the many companies becoming more eco-friendly is the oil giant LUKOIL, one of the world's largest energy providers, employing over 100,000 people in 30 countries. LUKOIL is certainly doing its bit on the environmental sustainability front.

It publishes a sustainability report annually to give detailed data on its contribution to the UN Sustainable Development Goals and show how, each year, it is implementing the company's strategy in this particular sector.

LUKOIL has, in fact, been publishing such reports since 2005, informing shareholders and others about its environmental, social and economic activities.

Advertisement

These, for example, show how the company is committed to improving industrial safety, reducing on-the-job injury rates, ensuring accident-free operation of its production facilities, and continuously reducing our environmental impacts.

The Group is also focused achieving more rational use of resources, be it natural or human.

Recognition of its efforts in this area came in 2019 when LUKOIL was voted in the top five for environmental openness rating among Eurasian oil & gas companies.

The Russian WWF and the CREON analytical group assessed the potential environmental impact and information transparency of 20 Russian companies, 14 companies from Kazakhstan, and 2 companies from Azerbaijan.

The WWF/CREON citation said that LUKOIL was one of the first Russian companies to adopt the Industrial Safety, Labour and Environment Protection Policy and that the Group had taken over 900 environmental measures, ranging from air emissions reduction to efficient use of water resources.

"The company publishes its Sustainability Report annually and demonstrates maximum openness during its interaction with civil society, local communities, and indigenous peoples when discussing future and existing projects," it said.

LUKOIL’s latest sustainability report highlights, for example, the extent it goes to pursue a responsible social policy towards its employees and their living standards in those regions where it operates. In 2019, for instance, the share of employees of LUKOIL Group covered by collective agreements equaled 88.9%; some 258,000 of its staff received training and external social support contributions amounted to some RUB 9 billion.

LUKOIL also recognizes the importance of the need for global climate change prevention measures and supports Russia's participation in joint efforts to reduce greenhouse gas (GHG) emissions. It also sees improvement of energy efficiency as one of the main factors to reduce the environmental impact of its operations.

One of the key elements of LUKOIL's Sustainability Development Strategy is to ensure a high level of occupational health and safety. Environmental protection is another priority, with costs in this sphere alone amounting to some RUB 36 billion in 2019.

A company spokesman said: "The company's approach to sustainability management is based on the alignment of our interests and plans with the basic principles of sustainable development declared by the UN, universal values and national development priorities."

Further comment comes from Ravil Maganov, chairman of its board of directors, who said that LUKOIL has "continued steadily developing its business and making strong contribution to the UN Sustainable Development Goals".

The group, according to the latest sustainability report, is "fully supportive" of the United Nations 2030 Agenda for Sustainable Development and recognizes that the UN goals "are of vital importance for ensuring a prosperous future for the human society."

But it also goes on to conceded that "greater efforts are required to ensure that the positive changes being made in support of a number of goals are sustainable.

"Therefore, we continue to implement programmes aimed at both improving the operational performance of our enterprises and ensuring the wellbeing of the people living in the regions where we operate."

The report concludes: "We have identified 11 global goals and 15 targets which we consider to be the most relevant to our operations and to which we are able to contribute. We achieved good success in 2019, but much remains to be done."

New sustainability report of LUKOIL is expected to be published this July.

Aside from LUKOIL plenty of other examples of what companies are doing to foster environmental sustainability abound, including Johnson & Johnson, most recently in the headlines for its contribution to tacking the pandemic.

For more than 20 years now, it has taken the lead in manufacturing personal care products that are environmentally responsible. It also has initiatives that reduce waste in the course of manufacturing and distribution through use of sustainable products and packaging methods where possible.

Automotive companies are thought to be among the heaviest polluters. However, Ford is changing this narrative through a ten-part environmental policy that they have implemented for years. The company uses sustainable fabrics in its vehicles while 80% of both its Focus and Escape vehicles are recyclable. The company also focuses on fuel efficiency, particularly on the six-speed transmission, offering a clean diesel heavy duty pickup truck.

Disney, another example, uses zero net direct greenhouse gas emission policies within all its facilities while computer giant Hewlett-Packard is one of the first companies to have reported its greenhouse gas emissions. They have also initiated plans that are aimed at reducing emissions and cutting back on toxic substances used in manufacturing its products like cartridges.

Ebay is another company with its focus on environmental sustainability. The company has made it possible for people to exchange or reuse goods instead of throwing them away while Google has demonstrated its commitment to going green through initiatives like powering its facilities with renewable energy sources, hosting farmers' markets as well as sustainable cooking seminars and bringing goats to trim grass.


Elsewhere, Viatris is a global healthcare company formed in November 2020 with a workforce of more than 40,000. In Europe, it is one of the leading pharmaceutical companies. Head of Europe Viatris Eric Bossan told this website: "Sustainability for us refers to the long-term durability of our overall performance.

"Viatris empowers people worldwide to live healthier at every stage of life. As part of that commitment, we are upholding sustainable and responsible operations, and work diligently to reduce our environmental impact."

Bossan added: "We have an integrated approach focused on managing our water use, air emissions, waste, climate change and energy impact; some examples of our efforts are: we grew the use of renewable energy by 485% in the past five years, and all sites from our legacy company Mylan in Ireland – a country where we have the highest number of sites in Europe - are using 100% renewable energy."

Electricity interconnectivity

Commission approves Greek measures to increase access to electricity for PPC's competitors

Published

on

The European Commission has made legally binding, under EU antitrust rules, measures proposed by Greece to allow the competitors of Public Power Corporation (PPC), the Greek state-owned electricity incumbent, to purchase more electricity on a longer-term basis. Greece submitted these measures to remove the distortion created by PPC's exclusive access to lignite-fired generation, which the Commission and Union courts had found to create an inequality of opportunity in Greek electricity markets. The proposed remedies will lapse when existing lignite plants stop operating commercially (which is currently expected by 2023) or, at the latest, by 31 December 2024.

In its decision of March 2008, the Commission found that Greece had infringed competition rules by giving PPC privileged access rights to lignite. The Commission called on Greece to propose measures to correct the anti-competitive effects of that infringement. Due to appeals at both the General Court and European Court of Justice, and difficulties with the implementation of a previous remedies submission, such corrective measures have not been implemented so far. On 1 September 2021, Greece submitted an amended version of the remedies.

The Commission has concluded that the proposed measures fully address the infringement identified by the Commission in its 2008 Decision, in light of the Greek plan to decommission all existing lignite-fired generation by 2023 in line with Greece's and the EU's environmental objectives. Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The decision and the measures proposed by Greece will enable PPC's competitors to better hedge against price volatility, which is a vital element for them to compete in the market for retail electricity and offer stable prices to consumers. The measures work hand in hand with the Greek plan to decommission its highly polluting lignite-fired power plants by discouraging the usage of these plants, fully in line with the European Green Deal and the EU's climate objectives.”

Advertisement

A full press release is available online.

Advertisement
Continue Reading

Biofuels

Commission approves one-year prolongation of tax exemption for biofuels in Sweden

Published

on

The European Commission has approved, under EU state aid rules, the prolongation of the tax exemption measure for biofuels in Sweden. Sweden has exempted liquid biofuels from energy and CO₂ taxation since 2002. The measure has already been prolonged several times, the last time in October 2020 (SA.55695). By today's decision, the Commission approves an additional one-year prolongation of the tax exemption (from 1 January to 31 December 2022). The objective of the tax exemption measure is to increase the use of biofuels and to reduce the use of fossil fuels in transport. The Commission assessed the measure under EU State aid rules, in particular the Guidelines on State Aid for environmental protection and energy.

The Commission found that the tax exemptions are necessary and appropriate for stimulating the production and consumption of domestic and imported biofuels, without unduly distorting competition in the Single Market. In addition, the scheme will contribute to the efforts of both Sweden and the EU as a whole to deliver on the Paris agreement and move towards the 2030 renewables and CO₂ targets. The support to food-based biofuels should remain limited, in line with the thresholds imposed by the revised Renewable Energy Directive. Furthermore, the exemption can only be granted when operators demonstrate compliance with sustainability criteria, which will be transposed by Sweden as required by the revised Renewable Energy Directive. On this basis, the Commission concluded that the measure is in line with EU state aid rules. More information will be available on the Commission's competition website, in the State Aid Register under the case number SA.63198.

Advertisement

Continue Reading

Energy

Biden administration aims to cut costs for solar, wind projects on public land

Published

on

By

Solar panels are seen at the Desert Stateline project near Nipton, California, U.S. August 16, 2021. REUTERS/Bridget Bennett
Solar panels are seen at the Desert Stateline project near Nipton, California, U.S. August 16, 2021. Picture taken August 16, 2021.  REUTERS/Bridget Bennett

The Biden administration plans to make federal lands cheaper to access for solar and wind power developers after the clean power industry argued in a lobbying push this year that lease rates and fees are too high to draw investment and could torpedo the president's climate change agenda, write Nichola Groom and Valerie Volcovici.

Washington’s decision to review the federal land policy for renewable power projects is part of a broader effort by the government of President Joe Biden to fight global warming by boosting clean energy development and discouraging drilling and coal mining.

“We recognize the world has changed since the last time we looked at this and updates need to be made,” Janea Scott, senior counselor to the U.S. Interior Department’s assistant secretary for land and minerals, told Reuters.

Advertisement

She said the administration is studying several reforms to make federal lands easier for solar and wind companies to develop, but did not give specifics.

The push for easier access to vast federal lands also underscores the renewable energy industry’s voracious need for new acreage: Biden has a goal to decarbonize the power sector by 2035, a target that would require an area bigger than the Netherlands for the solar industry alone, according to research firm Rystad Energy.

At issue is a rental rate and fee scheme for federal solar and wind leases designed to keep rates in line with nearby agricultural land values.

Advertisement

Under that policy, implemented by the administration of President Barack Obama in 2016, somemajor solar projects pay $971 per acre per year in rent, along with over $2,000 annually per megawatt of power capacity.

For a utility-scale project covering 3,000 acres and producing 250 megawatts of power, that is a roughly $3.5 million tab each year.

Wind project rents are generally lower, but the capacity fee is higher at $3,800, according to a federal fee schedule.

The renewable energy industry argues the charges imposed by the Interior Department are out of sync with private land rents, which can be below $100 per acre, and do not come with fees for power produced.

They are also higher than federal rents for oil and gas drilling leases, which run at $1.50 or $2 per year per acre before being replaced by a 12.5% production royalty once petroleum starts to flow.

"Until these overly burdensome costs are resolved, our nation will likely miss out on living up to its potential to deploy homegrown clean energy projects on our public lands — and the jobs and economic development that come with it," said Gene Grace, general counsel for clean energy trade group American Clean Power Association.

The renewable energy industry has historically relied on private acreage to site large projects. But big tracts of unbroken private land are becoming scarce, making federal lands among the best options for future expansion.

To date, the Interior Department has permitted less than 10 GW of solar and wind power on its more than 245 million acres of federal lands, a third of what the two industries were forecast to install nationwide just this year, according to the Energy Information Administration.

The solar industry began lobbying on the issue in April, when the Large Scale Solar Association, a coalition of some of the nation’s top solar developers - including NextEra Energy, Southern Company and EDF Renewables - filed a petition with Interior’s Bureau of Land Management asking for lower rents on utility-scale projects in the nation’s blistering deserts.

A spokesperson for the group said the industry initially focused on California because it is home to some of the most promising solar acreage and because land around major urban areas like Los Angeles had inflated assessments for entire counties, even on desert acreage not suitable for agriculture.

Officials at NextEra (NEE.N), Southern (SO.N), and EDF did not comment when contacted by Reuters.

In June, the Bureau lowered rents in three California counties. But solar representatives called the measure insufficient, arguing the discounts were too small and that the megawatt capacity fee remained in place.

Attorneys for both the solar companies and BLM have discussed the issue in phone calls since, and further talks are scheduled for September, according to Peter Weiner, the attorney representing the solar group.

"We know that the new folks at BLM have had a lot on their plates," Weiner said. "We truly appreciate their consideration."

Continue Reading
Advertisement
Advertisement
Advertisement

Trending