US LNG Not Enough For Europe Next Year // Indonesia and Vietnam to G7: We Want Coal // Sweden Scraps Environmental Ministry

US LNG Not Enough For Europe Next Year

Mercifully, this winter looks like it will be a mild one, and Europe's been able to store a great deal of gas to make it through. But what about next year? Is American LNG enough to plug the huge hole left by the sanctions against Russia?

Not likely. "While US fuel now makes up 40% of Europe’s liquefied natural gas imports, it will only offset a fraction of the deficit from Russia next summer," reports Bloomberg. "That means it’ll be harder to rebuild inventories next year when faced with a longer period without Russian gas."

It's true that American LNG will flow to Europe, at least as long as Asian demand stays quiet. But if China eases its Covid restrictions, sparking a rebound in demand, the two regions will have to compete over premium buyer status. And America isn't expanding production enough to cover Europe for the whole of 2023, let alone subsequent years.

But that's not all--America's got limited supplies. "An outage at the Freeport project in Texas means American LNG exports will rise by a less-than-expected 12% this year, and increase by a similar rate in 2023," Bloomberg reports.

Remember that the Russian gas cut came in the summer of this year, giving the Continent a good deal of time to buy up what they could from Russia. Next year, there will be nothing from the East. And depending on how winter goes in New England, which buys from the same market as Europe due to the Jones Act and a lack of pipeline infrastructure, many Americans in that powerful corridor may be less inclined to share.

Indonesia and Vietnam to G7: We Want Coal

The G7 have offered Vietnam and Indonesia billions of dollars to transition off coal. Both countries have responded with a tepid "maybe." What gives?

"The G7 hoped the deals could be touted at the COP 27 climate talks next month. Discussions with Vietnam and Indonesia have advanced to the point where initial cash offers of around $5 billion and $10 billion, respectively, have been made, according to reports from the EU’s diplomatic service for the Council of the EU, dated October 24," reports Politico. "A person familiar with the matter said the numbers attributed by the EU to the deals may have changed."

The donors for these deals are the G7, Denmark, Norway, and perhaps New Zealand. The cash on offer is supposed to flow from public and private finance in addition to technical assistance. "But raising public funds for climate efforts abroad has become increasingly challenging even for the world's richest countries as inflation, rising energy costs and the war in Ukraine add to the strain on treasuries," writes Politico.

Another problem is that the deals demand cutting coal subsidies and replacing coal with renewables. Renewables are incapable of fully replacing coal at a technical level because they are intermittent and non-dispatchable. Thus, they increase overall costs and fragilize the electricity system. If only the West would offer nuclear instead.

Sweden Scraps Environmental Ministry

For the first time in 35 years, the Swedish government will run without an environmental ministry. "Sweden's new right-wing government has sparked an outcry after scrapping the Ministry of Environment in a move the opposition has branded 'devastating,'" reports EuroNews. "Previously, the ministry was a high-profile stand-alone department with a minister in the cabinet, but now it will operate as part of another ministry instead."

"It is impossible to describe more clearly how little this government values ​​the environment and the climate. This is a historic decision with devastating consequences for environmental issues," said Per Bolund, the leader of the Swedish Greens.

And yet the new Swedish government has earmarked nearly $36 billion for nuclear power, pledges to build more reactors, and wants to make it harder to politically force nuclear power plants to close. Vattenfall, the state utility, is even exploring life extensions for its Ringhals 3 and 4 reactors. The new government also considers the environment a key area to handle during its first year in office and remains committed to reducing emissions.

Perhaps the conflict is less about whether or not the new government cares about the environment, but rather that it has no need for "environmentalism" to do so.

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Conversation Starters

1. Special climate envoy John Kerry is considering leaving the Biden White House. According to Axios, Kerry is contemplating leaving for three reasons: 1) he doesn't want to have to defend himself against charges of hypocrisy with regard to his family's private jet and his anti-emissions stance if Republicans retake the House and Senate; 2) he stands to make more money in the private sector; 3) he believes he's done all he can do for climate policy in his role given the present circumstances.

2. The UK has re-opened a natural gas storage site to help it survive the winter. "UK energy firm Centrica reopened its Rough natural gas storage site on Friday — which was closed five years ago — to boost storage capacity by 50% for this winter," reports Oilprice.com. "After completing engineering upgrades over the summer and commissioning over the early autumn, Centrica announced today the reopening of the Rough gas storage facility off the east coast of England in the Southern North Sea."

3. A diesel shortage is reaching across the US. "The diesel shortage that had the White House on edge last week is spreading from the Northeast to the Southeast, prompting at least one supplier to initiate emergency protocols," reports Bloomberg. "[F]uel supplier Mansfield Energy is now requiring a 72-hour notice for deliveries to secure fuel and freight, according to a note to customers. In areas that are tightest, fuel prices are running 30-80 cents higher than the market average, Mansfield said, adding that Tennessee is 'seeing particularly acute challenges.'"

Crom's Blessing