Welcome to Grid Brief! Here’s what we’re looking at today: Colombia’s degrowther energy ministers quits, Argentina rejects Russian LNG, Goldman Sachs doubts decarbonization will lower oil prices, and more.

Colombia’s Radical Energy Minister Quits

Colombia’s Mines and Energy Minister, Irene Velez, quit Wednesday amid scandal.

“The Inspector General’s office is probing claims that Velez abused her power to get a migration official to sign off on her son’s travel abroad in January, without the paperwork required by law,” reports Bloomberg. “Local media reported that the minor was traveling with his father to meet Velez in Europe. Colombian law requires a notarized consent if both parents aren’t in attendance.”

Velez is a radical environmentalist and degrowth proponent who served as one of President Petro’s closest aides.

“Vélez's downfall offers a glimmer of hope for both Ecopetrol and Colombia's energy future. It will remain to be seen however, whether a theoretical successor is an improvement or even if President Petro heeds the counsel of a more development-oriented successor,” Juan David Rojas, an intelligence fellow at Florida International University’s Jack D. Gordon Institute for Public Policy, said in an email. “Vélez had the full backing of the president who has repeatedly stressed his commitment to wean Colombia off its dependence on fossil fuels whatever the cost.”

Petro won the presidency on a promise to pull Colombia off of fossil fuels. Oil and coal make for around half of the country’s exports and about a quarter of foreign direct investment.

“Shares of state oil company Ecopetrol SA rose for a second day in Bogota trading, gaining 0.2% to 2,190 pesos. The nation’s currency continued its strengthening trend, gaining for a sixth consecutive day to 3,974 per dollar,” reports Bloomberg.

Argentina Rejects Russian LNG

The state-run energy company of Argentina rejected a Russian shipment of LNG.

Sergio Massa, Argentina’s economy ministers, told the press that the delivery was blocked because of sanctions. “Enarsa blocked the delivery because it violates the contract because it’s a sanctioned company,” Massa said.

But sanctions may not be the real reason for the rejection. Argentina currently has an enduring supply glut of LNG. “Argentina is spending about US$1.8 billion to import 44 LNG cargoes this year, with 20 already delivered and the remainder scheduled to arrive in the coming months. The mild weather means some of those supplies may not be needed as households keep their heating off,” the Buenos Aires Times reported last month.

The last Russian cargoes to arrive in Argentina came in 2018 and 2020 according to Bloomberg.

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California: The Renewable Diesel Glutton

California consumes most of America’s renewable diesel, but the majority of the fuel isn’t made there.

“More than eight times the renewable diesel was consumed in California than was produced there in 2021,” reports the Energy Information Administration. “Instead, most of California’s renewable diesel was produced in other states or was imported, mostly from Singapore.”

Renewable diesel—made from made from fats and oils, e.g. soybean oil or canola oil—is liquid biofuel with chemical properties identical to petroleum diesel. This makes it a more suitable for use as a substitute or additive in vehicles' diesel fuel. Despite similarities with conventional biodiesel, renewable diesel has distinct chemical characteristics and follows a different production, transportation, and usage process.

Unlike biodiesel, renewable diesel can be moved through petroleum pipelines and sold directly at retail stations without the need for blending with petroleum diesel. It is typically produced at existing petroleum refineries that have been adapted to manufacture biofuels instead of traditional petroleum products.

In 2021, the entirety of renewable diesel production in the United States came from Louisiana, North Dakota, California, Wyoming, Washington, and Kansas. Additionally, numerous plants in these states had exclusive agreements to supply all their renewable diesel output to distributors in California.

Conversation Starters

• Russia has a surprising biofuel scheme. “Russia's successor to McDonald's has teamed up with energy company Gazprom Neft to fuel marine vessels with biofuel produced using waste cooking oil an effort to lower their carbon footprints, the companies said on Thursday,” Reuters reports. “Russia has said it was still committed to its climate targets despite the deepest political rift with the West in decades. Biofuels are widely considered to be less harmful in terms of emissions than conventional fuels.”

• Offshore wind in the UK is in trouble. “Vattenfall is halting the development of a major offshore wind power project in the UK due to surging costs and challenging market conditions pressuring new developments, the Swedish utility said on Thursday. Vattenfall will not proceed with the development of the 1.4-gigawatt (GW) Norfolk Boreas offshore wind project as the offshore wind industry has seen cost increases up to 40%, the company said in its Q2 results release today,” reports Oilprice.com. “The soaring costs, coupled with increased cost of capital, put significant pressure on all new offshore wind projects, according to the Swedish firm.”

• Rhode Island has offshore wind struggles of its own. “Rhode Island Energy announced Tuesday that it would not move forward with a long-term PPA with Ørsted and Eversource for their joint offshore wind project, the 884-MW Revolution Wind 2, calling it ‘too expensive,’” reports Utility Dive.

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