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OilWire is a new bulletin distributed by Oil Change International in collaboration with civil society organizations around the world tracking the phase-out of oil and gas supply. 

THE BIG PICTURE

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With deadly heatwaves and record wildfires hitting communities across the globe, the stakes for shifting off fossil fuels are hitting home for millions of people this month.

Resistance to oil and gas expansion is also heating up, with a late-breaking victory in Portugal and movements against fracking in the spotlight. In Colombia, a new bill was just introduced to ban fracking and in Mexico, the country’s incoming president has thrown his support behind a ban. The grassroots group Alianza Mexicana contra el Fracking says there is support to pass a fracking ban through Mexico’s legislature. In the UK, activists are defying a court injunction to protest the granting of the country’s first fracking permit. In addition to protecting local communities from harmful effects like air pollution, these bans on fracking would help limit the expansion of the shale industry beyond the United States.

As the world marks its first terawatt of installed wind and solar capacity, both investors and governments are debating the consequences of letting Big Oil “get bigger.” Ireland is considering banning oil and gas exploration as a way to respond to “climate emergency.” The Wall Street Journal reports that investor confidence in ExxonMobil is falling, in part because the company has fallen behind other oil majors in planning for a world of declining fossil fuels. In South Africa, civil society leaders are challenging foreign finance that still prioritizes oil, gas, and coal over renewables.

Meanwhile, as rising oil prices translate into higher profits and more investment options for oil and gas companies, workers are demanding their fair share in the form of better pay and working conditions. From the North Sea to Gabon, labor strikes have stopped the flow of oil and gas operations over the past month. As climate impacts mount, solidarity between labor and climate movements will be key to ensuring just transition policies are at the heart of the response.

–The OilWire Team

P.S. Please forward the OilWire subscription link to anyone you think would be interested – and send us feedback and content suggestions at oilwire@priceofoil.org.

 

WHAT WE'RE TRACKING

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Trends in the Right Direction

 

Portuguese Groups Prevail in Court Against Offshore Drilling
The Algarve Free of Petroleum Platform (PALP) coalition in Portugal won a big victory yesterday, as a court suspended a license the government had granted to oil companies to begin drilling off the Aljezur coast. PALP, including 18 organizations and supported by 42,000 petition signers, has been fighting since 2015 to halt oil and gas drilling off Portugal's southwest coastline, which is one of the most well preserved in Europe. The court ruling came just a month before a Galp-Eni consortium was scheduled to begin preliminary drilling. PALP will keep fighting to turn the license suspension into a permanent ban. (Algarve Daily News)

Mexico’s President-Elect Vows to Ban Fracking
At the end of July, the incoming president of Mexico, Andrés Manuel López Obrador, announced that he supports banning fracking in Mexico. While this move would not affect current fossil fuel production in Mexico, which is dominated by conventional drilling, it would limit future expansion into the country’s significant shale reserves. The Mexican Alliance against Fracking (AMCF), which has been organizing for a ban since 2013, welcomed this pledge. They are calling on López Obrador to help pass a ban into law through the Mexican legislature, and to follow through on his promise to review contracts for drilling granted to private companies. AMCF is also “demanding a stop to bidding processes to award new contracts to Pemex or private companies until the future government presents a viable, transparent plan including a clear time schedule to gradually abandon hydrocarbon exploitation” (translated from Spanish). (The Associated Press, Alianza Mexicana contra el Fracking – in Spanish)

New Proposal in Colombia Would Ban Fracking, Phase Out Fossil Fuel Use
Adding to momentum against fracking in the Americas, Colombian legislators introduced a bill this month that would ban fracking across the country while initiating a 15-year transition to end use of fossil fuels as part of Colombia’s commitment to the Paris Agreement. The bill has support from all parties in the legislature apart from the ruling party. It is being championed by the Colombia Free from Fracking Alliance, which includes more than 100 organizations, collectives, and academics, including unionized workers and farmers. You can find the bill here (in Spanish). (TeleSUR, El Espectador – in Spanish)

Ireland Weighs Bill to End Oil and Gas Exploration
Just days before approving a bill that would make Ireland the first country to divest its assets from fossil fuels, the Irish parliament heard testimony last month on a separate measure to end new licenses for oil and gas exploration. Expert witnesses with Zero Carbon Britain and Oil Change International explained why this step is necessary to align Ireland’s policies with the Paris goals, and how Ireland can meet its energy needs with renewable sources. While the Climate Emergency Measures bill is opposed by Ireland’s minority government, it has so far received support from opposition parties that make up a majority. The bill would position Ireland alongside other first-mover countries like France, Costa Rica, and New Zealand in placing limits on fossil fuel expansion. In the words of bill sponsor Bríd Smith, it “would send a message that the game is up for fossil fuels.” (The Irish Times)

Europe’s Largest Bank Finalizes Policy to Cease New Tar Sands Lending
In July, HSBC, Europe’s largest bank, finalized its new Energy Policy. The bank will no longer provide lending to greenfield tar sands projects or related pipelines. Its policy also prohibits lending for offshore oil and gas drilling in the Arctic. Signalling the policy’s significance, Canada’s largest integrated oil company Suncor pushed back promptly, announcing in August that it had “fully severed” its relationship with HSBC. In the banking sector, there is growing momentum towards exclusion of tar sands and coal lending. In the context of climate goals, all lending for new fossil fuel projects must cease. (Financial Post)

New Milestone for Global Wind and Solar Capacity
Global installed capacity of wind and solar power surpassed one terawatt at the end of June, with wind power accounting for 54 percent and solar for 46 percent, according to Bloomberg New Energy Finance (BNEF). For context, that is roughly equal to the capacity of the entire U.S. electric grid. While this first terawatt took all of human history to reach, BNEF projects that the world will install a second terawatt by mid-2023, and at a 46 percent lower cost. (BNEF)
 

Insights

 

Tackling Fossil Fuel Supply through the Paris Accord
Georgia Piggot and Peter Erickson of the Stockholm Environment Institute unpack the “growing appetite to tackle fossil fuel supply” under the UN climate process in Climate Home News. Some countries are already looking towards “oil exploration bans and coal phase-outs, as well as efforts to reform and redirect fossil fuel finance and subsidies.” In the model of the Powering Past Coal Alliance, leading countries could “form a ‘coalition of the willing’ to address fossil fuel supply at the intergovernmental level.” (Climate Home News) (Read the related journal article in Climate Policy.) →  Click here to retweet 

Rich Countries Push Dirty Energy in Africa
In an op-ed for Reuters, Mohamed Adow of Christian Aid calls on rich countries to “stop funnelling wealth into short sighted fossil fuel projects and instead put Africa – and the world – on a cleaner and brighter path.” The piece cites findings from a recent Oil Change International report on public finance flows into energy in Africa from 2014 to 2016. The report found that 60 percent of the finance went toward fossil fuels. Less than 2 percent supported distributed renewable energy, which is considered the most efficient way to expand energy access. 

“Getting Africa hooked on fossil fuels when better alternatives are available is like a drug dealer making sure he doesn’t get hooked on his own supply while eagerly turning the next generation into addicts. […] Africa’s billion people have a chance to show the world that the link between development and dirty energy can be broken,” writes Adow. (Reuters) →  Click here to retweet 

Debunking the Oil and Gas Industry’s ‘Clean’ Narrative
New commentary in Project Syndicate counters common rhetoric used by the oil and gas industry to convince governments to keep backing its expansion. Authors Lili Fuhr of the Heinrich Böll Foundation and Hannah McKinnon of Oil Change International explain that, rather than serving as a ‘bridge fuel,’ new gas production increasingly displaces new wind and solar. Meanwhile, the oil and gas industry’s investments in ‘clean’ technologies often serve to perpetuate dependency on fossil fuels, rather than hastening the rapid emissions cuts the world needs. “Governments that claim to be committed to the Paris accord must offer a robust plan for phasing out fossil fuels, rather than supporting that sector’s continued expansion,” they conclude. (Project Syndicate) →  Click here to retweet 

This new piece in Vox catalogues all the ways that the industry narrative described above is falling apart fast. As the costs of wind, solar, and battery storage go “down, down, down,” and these technologies are able to “play all the same roles (and more)” compared to gas plants, new gas plants built today could become “stranded assets” – in addition to being incompatible with rapid decarbonization. (Vox)

 

Campaign News

 

UK Government Buried Key Fracking Study before Permitting Drilling
Three years ago, a UK government study concluded that fracking will increase local air pollution. But the report was not made public – until a few days after the UK energy minister issued the first permit for fracking to begin in Lancashire. The study was posted quietly on a government website. The Frack Free Lancashire coalition has organized ongoing resistance. Despite a court injunction, local residents continue to protest at the site where shale firm Cuadrilla is preparing to begin drilling, leading to arrests. The most recent government polling showed only 18 percent of the UK public supports fracking. (The Guardian, BBC)

Pipeline Protesters Meet Trudeau as Canada Prepares to Own TransMountain
Prime Minister Justin Trudeau continues to face backlash over his purchase of Kinder Morgan’s TransMountain tar sands pipeline. Protesters “dogged” him throughout a recent weekend tour of British Columbia, and members of his youth council are calling on him to cancel the deal to keep his promises on indigenous rights and climate. Meanwhile, new hitches are emerging in the Canadian government’s purchase of the pipeline assets. The latest filings from Kinder Morgan, released ahead of an August 30 shareholder vote required to close the deal, indicate that the expansion project could cost CAD 1.9 billion more than the company’s last estimate. Amidst trade tensions, the deal must still pass a national security review by the Trump administration. In the longer term, a legal challenge from British Columbia’s government is still pending in court. The Assembly of First Nations, a federal body representing more than 600 nations, recently gained intervenor status in the case, which is expected to be heard in March 2019. (The Vancouver Sun, National Observer, CBC)

Groups Challenge BRICS to Do Better on Climate and Human Rights in Johannesburg
While leaders of the BRICS countries – Brazil, Russia, India, China, and South Africa – met last month in Johannesburg, civil society and community groups organized a “BRICS From Below” counter summit to develop an alternative vision for energy investment in Africa. The conveners included Earthlife Africa, groundWork, the Southern African Faith Communities’ Environment Institute, and the South Durban Community Environmental Alliance. In a pre-summit statement, groups warned that, “South Africa is seen as the gateway to Africa, partly because of its coal and gas which are being purchased by and dug up by BRICS companies. The BRICS contribution to climate change from the extraction of African minerals and raw materials will further cause more disruption to our climate.” The bottom-up summit included a teach-in and two protests. During a picket outside of the BRICS-led New Development Bank (NDB), led by four Goldman Environmental Prize Winners, protesters challenged mega-projects the NDB is financing in Africa that lack transparency and drive privatization and fossil fuel expansion. (Independent Online)

Court Rulings Revoke Key Permits for Under-Construction U.S. Gas Pipelines
Two major gas pipelines under construction across an ecologically rich, mountainous corridor of the U.S. southeast are facing new legal hurdles. Since construction began earlier this year on the Atlantic Coast and Mountain Valley projects, protesters have resisted with tree sits, camps, and a creative car blockade, among other tactics. In recent weeks, in two separate rulings, judges revoked key federal permits for the pipelines, determining that agencies had issued them improperly. Federal pipeline regulators ordered work to stop on both projects in the wake of the court rulings. (The Washington Post, E&E News)

 

More Headlines

 

Workers Stage Series of Strikes at Total’s UK Drilling Platforms
Over the past month, workers with the UK union Unite have organized a series of strikes on three offshore drilling platforms operated by French oil major Total in the North Sea. The work stoppages were triggered by lagging pay and new policies requiring workers to spend three continuous weeks offshore instead of two, raising health and safety concerns. Unite members working for Aker Solutions on a UK platform owned by Equinor had also approved strike action, but recently accepted an improved pay offer from Aker.

The North Sea is the site of growing labor unrest, as workers have yet to see the recovery in oil prices lead to better pay or conditions for them. Earlier last month, Norwegian rig workers went on strike for 10 days over pay and pension issues, shutting down a Shell-owned oil field. (Platts, Reuters)

Oil Workers in Gabon Also Strike at Total Facilities
Workers for Total also went on strike last month in Gabon. The union ONEP coordinated a strike that lasted 11 days across all facilities operated by Total Gabon’s employees, seeking better pay, bonuses, and career advancement, as well as a reduction in the proportion of foreign workers. (Reuters)

Financial Pressures Pinch Vaca Muerta Shale Development
Government, labor, and industry leaders were scheduled to hold a summit yesterday in Argentina’s Neuquen province “as issues mount that could slow development” in the Vaca Muerta shale, reports Platts. Currency devaluation against the U.S. dollar, a rise in interest rates, and slower-than-planned increases in gas prices could depress investment, pushing up costs and pushing down profits. Unions are also not satisfied. Companies are paying workers late, and labor leaders are threatening walkouts or other work stoppages if this trend continues. (Platts)

A Reality Check for Trump’s LNG Push to Europe
As U.S. gas production climbs, producers are looking for more markets. But Trump’s claim that Europe would buy “vast amounts” is unlikely, particularly in the near term, and has received a “lukewarm” response across the Atlantic, as reported by Bloomberg. U.S. LNG is expensive for Europe, and existing import terminals are running at just over a quarter of their capacity. If European leaders hold to their decarbonization goals, demand for gas should decline in coming years. Previous analysis has shown that the power sector must switch to zero-carbon energy sources, rather than gas, to meet climate goals. (Bloomberg, Reuters)

 

Industry News

 

Carmakers say that Trump’s rollback of U.S. fuel efficiency standards won’t slow their planned rollouts of new electric vehicles (EVs), according to Bloomberg. That’s in part because EVs are key to the auto industry’s competitiveness in China, which is already the world’s largest auto market and has a zero-emission vehicle mandate starting in 2019 and 2020. (Bloomberg)

The rebound of oil prices to around USD 75 per barrel is forcing oil majors to decide: Invest more in growth or return cash to investors? According to Platts, “Uncertainties over the future of oil demand and the clamor for low-carbon energy” are factoring into these decisions. While investment in shale and offshore drilling is ticking upward, most producers are choosing to give investors “value over volumes” for now. As we saw in last month’s edition of OilWire, the UK’s largest asset manager has warned oil companies should shift in this direction and face their future as a declining industry. (Platts)

In related news, The Wall Street Journal reports that investors are souring on ExxonMobil, in part because they “aren’t sure they want Big Oil to get bigger.” As Exxon starts spending big to boost future production, investors are “favoring smaller, nimbler competitors” that have begun returning more cash to shareholders, and are looking for companies to diversify. According to sources, an advisor challenged new CEO Darren Woods last year with the question, “What if Exxon is wrong in its view of a bright future for fossil fuels?” (The Wall Street Journal)

THE DATA

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Nearly 60 percent of public finance for energy in Africa from 2014 to 2016 went toward fossil fuels, with oil and gas receiving nearly eight times more than coal-fired generation:

Source: From the Oil Change International report Assessing International Public Finance for Energy in Africa: Where Do Development and Climate Priorities Stand?. The database included finance from multilateral development banks and from the development finance institutions and export credit agencies of countries providing the most public finance to energy in Africa (China and the World Bank Group were the leading providers of finance over this period).

RESOURCES

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Swimming Upstream: Addressing Fossil Fuel Supply under the UNFCCC
In Climate Policy, experts with the Stockholm Environment Institute examine why and how parties to the Paris Agreement should explicitly address fossil fuel production through the UNFCCC process. >> Read the abstract here (purchase required for full text).

Climate Limits and Fossil Fuel Production: The Case for an Oil Exploration Ban in Ireland
You can view resources that Oil Change International Research Director Greg Muttitt presented to the Irish parliament in support of banning new licenses for oil and gas exploration. >> View the written statement here and the slide presentation here.

Assessing International Public Finance for Energy in Africa
This new report from Oil Change International provides an overview the public finance flowing to energy infrastructure in Africa from fiscal years 2014 through 2016, finding that oil and gas received more finance than any other form of energy. >> Read the report.

Off-grid Renewable Energy Solutions: Expanding Energy Access
A new brief from the International Renewable Energy Agency looks at trends in the growth of off-grid renewables, which have emerged as a mainstream solution to energy access (compared to centralized fossil fuel plants). The brief shows that the number of people served by off-grid renewables globally has expanded six-fold since 2011, but greater investment is needed to achieve sustainable development goals. >> Read it here.

OilWire is a monthly bulletin distributed by Oil Change International in collaboration with civil society organizations around the world tackling oil and gas supply and production.

Send suggested updates and material to include, and feedback, to oilwire@priceofoil.org.

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