Copy
View this email in your browser
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. 

In late-breaking news, the Irish legislature just voted to become the world’s first country to fully divest public funds from fossil fuels, pending final approval of the measure later this summer. On Tuesday, an Irish committee heard testimony on a separate bill that would ban new licenses for fossil fuel exploration and extraction in the country.

THE BIG PICTURE

–––––––––––
Over the past month, prominent investors have urged both governments and the oil industry to begin planning more seriously for a carbon-free future. Investors worth more than USD 28 trillion in assets released a letter calling on governments to close the ambition gap between current policies and the Paris goals. Separately, one of the largest asset managers in London is urging the oil industry to “face its future as a declining industry.”

Some in the oil industry are betting on fossil gas as a hedge against the coming decline in oil demand. However, the ongoing financial woes of Siemens and General Electric, which bet big on demand for gas turbines, illustrate the risks of underestimating renewables. A new UK government report on 2030 power sector scenarios underlines the increasing cost-competitiveness of wind and solar, predicting that building new wind and solar will be cheaper than running existing gas plants by the mid-2020s. Meanwhile, new analysis underscores that fossil gas is a losing bet for the climate: If G20 countries pursue new gas investments at the scale currently planned, they could put the Paris climate goals out of reach.

As investors increasingly question the outlook for oil and gas, local movements remain the center of resistance to their expansion – U.S. and Canadian protests against the Enbridge Line 3 and TransMountain tar sands pipeline projects are just a few examples.

–The OilWire Team

P.S. Starting with this third edition of OilWire, you can expect this bulletin in your inbox on a monthly basis. Please forward the subscription link to anyone you think would be interested – and send us feedback and content suggestions at oilwire@priceofoil.org.
 

WHAT WE'RE TRACKING

–––––––––––
 

Trends in the Right Direction

 

Major Investors Call on Governments to Get Serious about Paris Goals
Ahead of the G7 summit in June, 319 major investors with more than USD 28 trillion in assets released a joint letter and briefing urging governments to close the current ambition gap towards achieving the Paris goals and “to incorporate Paris-aligned climate scenarios into their policy frameworks and energy transition pathways.” The briefing echoes concern that often-used scenarios from the International Energy Agency do not fully align with the Paris goals and, consequently, could slow the transition to a low-carbon economy. The investors also call on governments to follow through on a swift phase-out of all fossil fuel subsidies. (UNFCCC, The Investor Agenda)

Oil Companies Must Plan for Their Decline, Say Leading Asset Managers
In the Financial Times, Anton Eser and Nick Stansbury of Legal & General Investment Management, the UK’s largest asset manager, argue that oil companies should “invest less and return more cash” to shareholders over the long term. This approach would free up growth capital to invest in the new energy system. They warn that if oil companies fail to plan for a future of decline, over-investment could leave “an oversupply that persists for a long time.” The consequences could be a lock-in of carbon pollution and/or significant stranded assets. Increasingly, analysis indicates that the wind-down of the oil and gas industry must begin now to stay within climate limits. (Financial Times)

New UK Renewables Could Soon Be Cheaper than Existing Gas
New scenarios for hitting carbon targets in the UK power sector, published in a parliamentary report from the Committee on Climate Change, point to building new renewables as the “low-regrets option.” The report, which looks at scenarios through 2030, indicates that building new wind and solar capacity could be cheaper than running existing gas plants by the mid-2020s. This is due to dramatic cost reductions that have far outpaced previous predictions. (CarbonBrief)

 

New Insights

 

The Bad Economics of Trudeau’s Tar Sands Pipeline Buyout
In a Fortune op-ed, researchers Richard Denniss and Fergus Green outline the short-sighted economics of Prime Minister Justin Trudeau’s decision to buy Kinder Morgan’s TransMountain pipeline assets. The deal shunts risks that Kinder Morgan was no longer willing to bear onto Canadian taxpayers and undermines Canada’s efforts to reduce emissions and decarbonize the economy. In the big picture, “profiting from this pipeline would mean the world has failed to carry out the clean energy transition within the timeframe set by the Paris climate agreement,” the authors warn. (Fortune)

A separate report from the Institute for Energy Economics and Financial Analysis dives deeper into the potential fiscal and financial implications of the deal for Canadian taxpayers. It calls on Trudeau to publicly disclose documents related to the transaction, warning that the government has likely overpaid Kinder Morgan and underestimated long-term costs to taxpayers, which pose “a significant, unquantifiable liability.”

 

Campaign News

 

‘Expect Resistance’ after Line 3 Pipeline Approval
In late June, officials in the U.S. state of Minnesota approved Enbridge’s plan to replace and expand its Line 3 pipeline to carry more tar sands oil into the U.S. The project was opposed by youth climate intervenors, indigenous communities, and environmental advocates. The Minnesota Department of Commerce had also concluded that the project is not needed based on projections of declining oil demand. As the decision emerged, Tania Aubid declared to the commission, “You have just declared war on the Ojibwe!” The next day a protestor blocked the street outside the commission with a banner reading “Expect Resistance.” Protest camps are already forming along the pipeline route. (InsideClimate News, Minnesota Public Radio

Protests Continue in the Path of TransMountain Expansion
People continue to stand in the way of Kinder Morgan-turned-Trudeau’s plans to construct the TransMountain tar sands pipeline expansion across British Columbia. Last week a dozen climbers, including Coast Salish leader Will George, scaled and suspended themselves from the Ironworkers Memorial Bridge for nearly two days, blocking the path of a Kinder Morgan oil tanker. The protest generated significant public attention and reactions across Canada. An indigenous-built Watch House near Kinder Morgan’s main pipeline terminal in Burnaby continues to serve as a nexus for organizing ongoing resistance. (The Vancouver Sun, National Observer

‘Pointless’ TAP Pipeline Under New Scrutiny in Italy
Upon taking office, Italy’s new environment minister appeared to back up the movement against the Trans Adriatic Pipeline (TAP), the final leg of a USD 20 billion project that would carry gas from Azerbaijan to southern Italy. “Given (our) energy policy, given falling gas demand, that project today looks pointless,” said the minister. Within the region of Puglia, local mothers, teachers, health workers, and olive farmers have led peaceful resistance to block the project. (Reuters, Bloomberg)

Local Elected Leaders Call for a Drilling Phase-Out in California
More than 100 local elected officials in the U.S. state of California issued a letter to Governor Jerry Brown urging him to “take the next step in bold climate leadership” by taking action to phase out fossil fuel production. (Pacific Standard, The San Luis Obispo Tribune)

 

More Headlines

 

Canadian Energy Report Sidesteps Necessary Fossil Fuel Phase-Out
In late June, the Canadian government's “Generation Energy” task force released its report envisioning Canada's energy future in a safer climate world. The report sidesteps the global climate implications of continued oil and gas production and, as revealed in public records released to Greenpeace, was influenced by the fossil fuel industry. Rather than lay out a path for phasing out oil and gas production in line with global climate goals, the study proposes steps towards “cleaner” oil and gas production. A recent study from the Stockholm Environment Institute concluded that continued production in Canada’s oil sands would undermine carbon reductions from other domestic policies. (The Canadian Press)

Church of England Threatens to Ditch Oil Shares
The Church of England’s governing body approved a rule this week that gives oil and gas firms a deadline of 2023 to align their business with the Paris climate goals. The original proposal set a deadline of 2020. The rule commits the church to selling off shares in companies that fail to meet the five-year deadline. The church currently manages more than GBP 12 billion in funds. (BBC)

U.S. ‘Ocean State’ Becomes First to Sue Big Oil
Last week, the smallest U.S. state – Rhode Island – became the first to sue 14 major oil and gas companies and affiliates over the harms of climate change. The complaint “seeks to ensure that the parties who have profited from externalizing the responsibility for sea level rise, drought, extreme precipitation events, heatwaves ... and associated consequences ... bear the costs of those impacts on Rhode Island.” Known as the Ocean State, Rhode Island has 400 miles of coastline. (InsideClimate News)

Unease in Argentina amidst U.S. Pledge to Vaca Muerta
During the G20 ministerial in June, U.S. Energy Secretary Rick Perry pledged U.S. help in developing infrastructure for Argentina's Vaca Muerta shale, stating, “The technology that has allowed for the shale gas revolution in America we want to make available to Argentina.” Just days later, Argentine President Mauricio Macri installed a new energy minister and capped oil prices amidst rising inflation. He has faced nationwide protests in the wake of agreeing to a USD 50 billion credit facility from the International Monetary Fund. Political and fiscal uncertainty is reportedly stoking unease among international investors in Vaca Muerta, one of the largest undeveloped shale reserves in the world. (Financial Times, Bloomberg, Argus

Anadarko Pushes Forward on Mozambique LNG, Displacing Residents
U.S.-based Anadarko says it plans to make its final investment decision to begin developing a massive new liquefied natural gas (LNG) export plant in Mozambique in 2019. EDF of France, Tokyo Gas, and Centrica of the UK have signed contracts to purchase LNG from the project. Anadarko is seeking to raise up to USD 15 billion in financing, which would amount to “the largest loan ever in the LNG sector.” Even before construction has officially begun, developers have begun displacing 500 local families from their land, the Financial Times reports. (Financial Times)

 

Industry News

 

“Downturns in the market for gas-fired power plants and oilfield services” were significant factors in pushing General Electric off the Dow Jones Index for the first time in more than 100 years. (Financial Times)

German manufacturer Siemens is reportedly considering selling off its gas turbine business amidst falling profits driven by the shift towards renewables. (GreenTech Media, Bloomberg

The European Commission recently ordered Luxembourg to recover EUR 120 million from Engie LNG (which was bought last year by Total), finding that Engie had captured illegal tax breaks. (ClientEarth)

THE DATA

–––––––––––
A new report, Debunked: The G20 Clean Gas Myth, unpacks five reasons that fossil gas expansion is incompatible with a climate-safe energy transition. The figure below, taken from the report, shows how there is no room for new fossil gas, even to replace coal, in a power sector on track to decarbonize by mid-century. Coal must be replaced with zero-carbon energy sources and, at the same time, the world must reduce fossil gas consumption, not increase it.
 
Global Power Sector Emissions – 2014 and Projected 2040 – Compared with Median IPCC 2040 Power Sector Emissions for 2°C*
*Assumes all coal is replaced by fossil gas

SHARE & AMPLIFY

–––––––––––
Bloomberg New Energy Finance tweets out the need to address gas, not just coal, in maintaining safe climate limits. Click here to retweet.
In Fortune, researchers break down the “bad economics” of Trudeau's pipeline purchase. Click here to tweet.

RESOURCES

–––––––––––

The Latest Bloomberg New Energy Outlook
Bloomberg New Energy Finance released its 2018 New Energy Outlook (NEO) in June, with projections on how “cheap renewable energy and batteries fundamentally remake electricity systems” globally through 2050. >> Check out publicly available insights here.

Defund Fossil Fuels: A European Guide
This new report and action guide from 350.org highlights the banks behind eight key fossil fuel battles in Europe. >> Read more.

2018 Global Investor Statement to Governments on Climate Change
Seven investor organizations released this briefing paper as a companion to the investor letter to governments that represents USD 28 trillion in assets. It outlines action steps investors want governments to take to support a smooth and just transition to a low carbon, more climate resilient, economy. >> Read the briefing here.

Explainer: Why Shifting Oil Prices Won’t Deliver Results on Climate
Oil Change International Research Director Greg Muttitt unpacks why, “whatever happens with oil prices, it’s still up to governments to drive a managed decline in fossil fuel production.” >> Read the interview 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.

Our mailing address is:
Oil Change International
714 G St. SE #202
Washington, DC 20003

Add us to your address book


Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.