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US energy secretary wades into price crisis

Three things to start:

  1. Vladimir Putin for rescue?Russian president is in his country Ready to step in On Wednesday, Europe’s natural gas market will skyrocket, stabilizing global energy prices. Europeans have accused Putin of squeezing supplies to help advance the Nord Stream 2 gas pipeline (more on that later).

  2. Soaring fuel prices around the world have suddenly made energy the center of the world’s financial markets again.Analysts Significantly reduce expectations for economic growth About the power shortage that China and India are hitting both countries.On the other hand, on Wall Street, prices are higher. Fuel inflation concerns It raises expectations that central banks will have to tighten monetary policy.

  3. Finally, check out the latest episode of FT’s Behind the Money podcast. Derek Browner will take us behind the scenes. Spectacular climate battle It saw emerging hedge fund engine No. 1 humble the world’s oil major, ExxonMobil.

Welcome to the energy source — and hello from Houston.

Last week we asked if the global energy market explosion would accelerate or derail. Shift to cleaner fuels.. Opinions from ES readers were devoted to accelerating the transition.

This was also a consensus at this week’s active FT Energy Transition Strategy Summit, which featured the US Secretary of Energy. Jennifer Granholm And hosts other leaders from industry, government and finance.If you miss it, go see video..

The transition is going well, with the speakers generally agreeing, and there is no reversal. But the market turmoil we see today also seems more likely.

This is because there remains a large gap in the technology and policies needed to dramatically reduce carbon dioxide emissions, as envisioned by ambitious government and corporate net-zero programs.

You need a battery that can store power for a long time. The cost of technologies such as green hydrogen still needs to drop dramatically. To reach the required scale, carbon recovery and storage requires much higher carbon prices than are currently offered. A huge amount of capital must be spread throughout the clean energy landscape.

While these gaps remain, and potentially beyond, many still see the role of natural gas. Baker Hughes CEO Lorenzo Simonelli told me that producers need to do more to get rid of carbon from the production and burning of natural gas, but fuel still has a bright future. was.

The keynote speaker for the event was Granholm. Today’s main focus focuses on what she had to say about the global energy crisis and the fate of the Biden administration’s domestic energy problems.

One big scoop: Granholm is fine with natural gas, which is part of the proposed Clean Electricity Performance Program.

Thank you for reading. Please let us know what you think. justin.jacobs@ft.com

This article is an on-site version of the EnergySource newsletter. Sign up here Send newsletter directly to your inbox every Tuesday and Thursday

Granholm considers special measures to tackle higher energy prices

US Secretary of Energy Jennifer Granholm is in the spotlight.

Soaring oil, natural gas and electricity prices threaten the economic and energy security of allies in Europe and around the world, not just in the United States.

By the way, President Joe Biden’s clean energy agenda is Climate change, Hanging in balance at home.

In unusual times, unusual measures are needed. Granholm talked to FT on Wednesday and interview It was full of news.

Can natural gas be part of CEPP? ‘Yes’

The energy and climate highlight of the $ 3.5 trillion budget adjustment package proposed by the Democratic Party is the Clean Power Performance Program. This is a scheme that rewards utilities for increasing their production of clean energy each year and punishes those who do not.

Joe Manchin, one of the two Democratic senators needed to vote for the settlement package, believes natural gas should be included in the CEPP. It’s a disgust for environmentalists.

However, Granholm extended an olive branch to Manchin in an interview with FT.

Does the government accept fossil fuels at CEPP? “Natural gas with carbon capture—yes,” Granholm said. In fact, she said, carbon-recovered coal is acceptable.

It’s a “silver backshot, not a silver bullet approach,” she said. “Decarbonization is decarbonization.”

The president is now optimistic that Granholm will eventually pass, even though he must regain his original $ 3.5 trillion ambitions for the settlement package. “This will still be a huge investment in our country.”

“All tools are in the table”

The Biden administration is serious about lowering fossil fuel prices.

As Derek and I reported on Wednesday, Granholm said:All tools As the Biden administration is trying to mitigate politically damaging oil price hikes, including potential liberation from strategic petroleum reserves.

Crude oil prices fall On Wednesday, but they remain rising, Americans are paying more on pumps than they were since 2014 — at the same time, wider inflationary pressures mean that Americans are paying more for almost everything. Means

In addition to liberating the government’s oil supply, Granholm also did not remove export restrictions in response to rising prices.

“It’s a tool we’ve never used, but it’s also a tool,” Granholm said. “We have an intergovernmental process underway and [White House press secretary Jen Psaki] I said all the tools are in the table. However, some are easier to obtain than others. “

The last part shows that such a move is unlikely to happen anytime soon, but it is clear that the Biden administration is pondering what it can do to keep fuel prices down. ..

The likelihood of an SPR release was much more likely after Saudi Arabia and the broader OPEC + Group suppliers rejected the Biden administration’s request to bring more crude oil to market than planned.

Granholm made a similar overall tone for Europe. She admitted that there is little the US government can do to direct more American gas to the continent in the short term.

However, she stepped up government efforts to pressure Russia to start supplying more to Europe.

Granholm said there was “deep concern” about Moscow’s “holding supply and market manipulation” to demonstrate Russia’s gas essentials as Germany is considering approval for Nord Stream 2. Stated.

“Weaponization of energy is a serious problem. I’m not saying it’s happening now, I’m saying we understand the concerns.” (Justin Jacobs)

Data drill

Global energy consumption and emissions are poised to grow further over the decades. According to the US Energy Information Administration, energy consumption will increase by almost 50% and energy emissions will increase by almost 25% by 2050.

“We are predicting that [gross domestic product] Population growth offsets the short-term decline in energy usage associated with pandemics. .. .. We are driving an increase in global energy consumption, “said Stephen Nalley, Deputy Director of EIA, in a presentation of the latest annual findings. International Energy Outlook report.

According to the agency, economic growth in non-OECD Asia will drive this demand significantly. Liquid fuels will continue to be a major source of energy, but EIA predicts that renewables will not be significantly delayed. Renewable energy consumption is expected to more than double in the coming decades and to be about the same liquid fuel by 2050. (Amandachu)

Line graph of British thermal unit 4 trillion showing that liquid fuel will continue to be the main source of primary energy consumption in 2050
Line chart showing carbon emissions expected to increase by about 25% by 2050

power point

Energy Source is a twice-weekly energy newsletter from the Financial Times.It has been written and edited by Derek Blower, Miles McCormick, Justin Jacobs When Emily Goldberg..

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