Warning to Fossil Fuel Investors: Coal and LNG Markets Shrinking Due to Competition From Renewables
In both cases it is competition from renewables, principally wind and solar power, that is being blamed for the threat. The cost of electricity from renewables continues to fall in Europe and Asia as the numbers of wind and solar installations grow in both continents, cutting demand for imported gas and coal.
Two separate reports on coal and gas were published at the same time as a round of annual financial reports from oil companies showed that this third fossil fuel could be in serious trouble too.
Despite massive cutbacks on exploration and development, companies like Shell and BP still need a price of US$60 a barrel by the end of this year if they are to break even on many of their current projects—almost double the current market price.
Overproduction of coal, gas and oil spells trouble for investors in mines, pipelines, ports and the other infrastructure needed to transport fossil fuels round the globe. The cost of development requires a long lifetime for the equipment and a high long-term guaranteed price for the fuels if investors are to get their money back.
The first report, Stranded Assets and Thermal Coal, found that Australian and U.S. coal assets were the most vulnerable. Australian mines were particularly at risk because of their heavy reliance on exporting coal to markets that were rapidly shrinking.
Australia exports three times as much coal as it consumes locally, but two of the world’s largest markets for coal, India and China, are cutting imports. India’s imports fell by 34 percent last year and China’s by 31 percent. Australia’s mines were also seen as high-risk because of environmental regulations and the widespread opposition to their development.
U.S. coal assets were risky because of competition from cheap gas for the same markets. This meant exporting coal and competing in a world market where there is already a significant surplus.
In the Dark
The report said company statements made it clear that investors were not being given the full picture of the risks from environmental regulation and policy.
Many countries pledged in the Paris agreement reached last December to cut their coal use. If these pledges were kept, the report said, then much of the coal currently shown as an asset would have to be left in the ground.
A separate report, on liquefied petroleum gas (LPG), also raises the possibility that investors may lose their money. The trade is based on the fact that gas is cheap in the U.S. and expensive in Europe, so the expense of liquefying it and transporting it to Europe is offset. Large investments are being made in the pipelines, ships and ports required to transport it.
There are two problems outlined in the report, LNG and Renewable Power. The first is that the price of gas, which is tied to that of oil, has dropped in Europe, squeezing the margins of the companies that are spending large sums setting up the supply line.
The second is that the market for gas is itself shrinking as the output of the solar panels and wind farms increases. Unless gas investors can see a long-term return from a stable market they will not make a profit and LPG becomes high-risk.
Predictions on the future of fossil fuel investments all hinge on the price of oil. With big oil companies—and many countries—needing the current price to double to more than $60 a barrel to break even on their current investments. Everybody in the business believes it is only a matter of time before prices double again.
Paul Spedding, former global co-head of oil and gas research at HSBC, an adviser to Carbon Tracker, said he believes the price of oil may never recover. Structural changes in the energy markets, more efficient electric cars, batteries and hybrid solutions no longer favor oil. The European Union for example is already reducing its demand by 1.5 percent a year.
Similar drops can be expected elsewhere as governments strive to meet their targets under the Paris agreement. If that happens, an oil surplus will become the new normal and investors in major oil companies will face a difficult future.
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Jean-Marc Neveu and Olivier Civil never expected to find themselves battling against disposable mask pollution.
When they founded their recycling start-up Plaxtil in 2017, it was textile waste they set their sights on. The project developed a process that turned fabrics into a new recyclable material they describe as "ecological plastic."
Mounting Piles of Waste<p>It is not only the streets of Chatellerault where pandemic pollution is piling-up, but also the world's beaches and oceans. Once there, they can take up to 450 years to degrade and disappear.</p><p>Esther Röling, co-organizer of the annual Adventure Clean Up Challenge held on Hong Kong Island, has seen this waste firsthand. In October the sports challenge pitted teams against one another in a competition to remove trash from 13 hard-to-reach coastal areas around the city.</p><p>They find tons of both disposable and reusable masks, said Röling. "You wonder how it ended up there. Was it just thrown on the ground? Or was it in a garbage bag that broke open?"</p><p>Almost 10,000 kilometers away in Antibes on the sunny French Riviera, it's a similar picture. For the past few months, divers and clean-up volunteers working with an ocean clean-up non-profit called Operation Mer Propre have been collecting an increasing number of masks found on land and in the sea.</p><p>"Since the beginning of the lockdown when we started to count, we've reached 800, 900, [and now in total] 1000 masks," said co-founder Joko Peltier. </p><p>According to <a href="https://unctad.org/news/growing-plastic-pollution-wake-covid-19-how-trade-policy-can-help" target="_blank">UN estimates</a>, up to 75% of all coronavirus-related plastic could end up as waste in oceans and landfills.</p>
The Limits of Recycling<p>Yet not all are convinced the recycling of this waste is possible on a global scale. </p><p>"What those citizen groups are doing is really beneficial but once they collect it, it should just go to a landfill or an incinerator. They shouldn't necessarily expect it to get recycled," said Jonathan Krones, an industrial ecologist and visiting assistant professor of environmental studies at Boston College.</p><p>That's because mask recycling programs like Plaxtil are few and far between and most don't have the benefit of a readily adaptable production process. </p><p>Even in countries with solid recycling infrastructure, he says, the system is designed to separate out specific types of waste like bottles or cardboard.</p><p>"I imagine that it would be technically feasible to develop a separation process to filter out masks, but there simply aren't enough of them to make that economical," he said.</p><p>Collection is a big hurdle, he adds. Since each mask only weighs a fraction of a gram and they're scattered on roads or mixed with other trash, it is difficult and costly. </p><p>"You need a lot of raw material of the right quality to make investing in the recycling technology and the recycling system worthwhile," he said.<span></span><br></p>
Hemp, Sugar Cane and Sustainable Alternatives<p>Some projects are instead addressing the material used to make masks.</p><p>French company Geochanvre have created a mask made primarily from hemp, while in Australia, researchers at the Queensland University of Technology are experimenting with a disposable product made from agricultural waste. </p><p>Biodegradable options are exciting alternatives to reduce the fossil fuels needed for the creation of plastic-based masks, said Krones, but they don't absolve the wearer from the responsibility of what happens afterwards. </p><p>Bio-based masks often need their own composing solutions, he explains, because in landfill they can produce high amounts of the greenhouse gas methane when anaerobic bacteria feeds on the organic material. Methane is known to be significantly more potent than carbon dioxide.</p><p>"I think as long as we have in our mind that we want to have disposability, we're going to have to wrestle with a variety of different sorts of environmental tradeoffs," he said, adding that reusable, fabric masks are the best option available to most people.</p><p>Precimask is developing a clear face covering with an optional visor made from hard plastic, designed to be long-lasting.<br></p><p>Air enters either side of the cheeks through a technology normally found in pool filters and car exhaust systems, said company spokeswoman Juliette Chambet.</p><p>"We wanted to make ceramic-based filters that would be washable and cleanable, which would allow them to be reused as many times as desired without having to buy a new consumable or produce waste," she said. </p><p>Ultimately, encouraging mask wearers to think about the entire lifecycle of a mask is key, explains Neveu. </p><p>"We want people who put on the masks to realize that they are also responsible for the waste, he said. "It's not inevitable that this [pandemic] will become an environmental catastrophe.</p><p><em>Reposted with permission from </em><em><a href="https://www.dw.com/en/covid-19-recycling-pollution-trash-pandemic/a-55707817" target="_blank">Deutsche Welle</a>.</em><a href="https://www.ecowatch.com/r/entryeditor/2649032193#/" target="_self"></a></p>
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