Editors: Tom Whipple, Steve Andrews
Quote of the Week
“Shale companies from Texas to North Dakota have been managing their wells to maximize short-term oil production. That has long-term consequences for the future of the American energy boom. By front-loading the wells to boost early oil output, many companies have been able to accelerate growth. But these newer wells peter out more quickly, so companies have to drill new ones sooner to sustain their production. In effect, frackers have jumped on a treadmill and ratcheted up the speed, becoming ever more dependent on new capital to keep oil production humming, even as Wall Street is becoming more skeptical of funding the industry.” Rebecca Elliot, The Wall Street Journal (4/8)
Graphic of the Week
1. Oil and the Global Economy
Oil prices continued to creep up last week closing out at $71.55 in London and $63.89 in New York, making the sixth consecutive week of gains. If you have been watching your gas pumps lately, you have noted that regular is up 30 cents a gallon in the last month to average $2.83 in the US. In California, however, regular is just about $4 a gallon and is going for $4.62 in one county.
The now familiar situations in Venezuela and Iran have been joined by upheavals in Libya and Algeria as places where oil exports could fall substantially. On the bearish side is news that there may be a settlement to the US-China trade war and a new IMF forecast that cuts global growth for 2019 down by 0.2 percentage points to 3.3 percent. The IMF sums up the oil situation by saying: “Upside risks to [oil] prices in the short term include geopolitical events in the Middle East, civil unrest in Venezuela, a tougher US stance against Iran and Venezuela, and slower-than-expected US production growth. Downside risks include stronger-than-expected US production and noncompliance among OPEC and non-OPEC countries. Trade tensions and other risks to global growth can also further affect global activity and its prospects, in turn reducing oil demand.”
The Wall Street Journal ran a very significant story last week pointing out that shale oil drillers in the US have been managing their wells to maximize short-term production in a way that will have long-term consequences for future production. “By front-loading the wells to boost early oil output, many companies have been able to accelerate growth. But these newer wells peter out more quickly, so companies have to drill new ones.”
This paradigm is in contrast with what Exxon and Chevron plan to do in the Permian in the next few years. “You don’t try to grow production fast,” Chevron Chief Executive Mike Wirth said in a recent interview. “You really look at the entire life cycle of the asset.” The story notes that the growth of shale oil already has begun to slow. U.S. production fell slightly to 11.87 million b/d in January, from 11.96 million in December, after rising steadily for much of last year. The next few months should give us a good idea of whether forecasts of a 1.4 million b/d increase in US oil production this year have a chance of coming true.
The OPEC Production Cut: The future of the OPEC+ production cut is coming into question with the 32 percent increase in oil prices this year to circa $72 a barrel coupled with the expectation that less oil will be coming from Venezuela and Iran and possibly from Libya and Algeria. Even the likelihood that there will be a significant increase in US shale oil production this year is coming into question. The current OPEC+ agreement to cut 1.2 million b/d for six months expires at the end of June.
OPEC’s monthly oil market report which came out last week estimates that the cartel’s production in March was down to 30.2 million b/d, 534,000 b/d lower than in February. Last month was the cartel’s lowest production since February 2015. Saudi production was down by 324,000 b/d for the month to less than 10 million b/d. OPEC says that Venezuela’s production was down by 289,000 b/d during March although this number is at the high end of estimates as to what happened to Venezuelan output in March.
Moscow has never been enthusiastic about the current production agreement and has been slow to make cuts, citing technical reasons. In the last few weeks, there have been official hints that the production cut will end on June 30th. The Saudi energy minister said last week that it was premature to tell whether a consensus existed among OPEC and its allies to extend oil supply cuts, but a meeting next month would make the decision. The minister added that “I don’t think we will need (to do more) … the market is on its way toward balance. We have done a lot more than others.”
US policies targeting Iran and Venezuela have introduced a new level of uncertainty for OPEC as the producer group struggles to predict global supply and demand. Some Saudis are saying that OPEC will act after it sees what the Trump administration does about the waivers which currently allow some Iranian exports to its best customers.
US Shale Oil Production: The most important news of the week was Chevron’s purchase of Anadarko Petroleum for $33 billion. The combined company is set to become the leading operator in the Permian Basin. In recent years, small and midsize oil-and-gas companies such as Anadarko have performed poorly and are facing investor pressure to slow growth and deliver more profits and cash flow. Chevron’s move says the firm believes that large integrated companies can make a profit from whatever remains of the shale oil boom where smaller producers have failed.
The EIA remains optimistic about the future of US crude production which it now expects to increase by 1.43 million b/d in 2019 to average 12.39 million b/d. This is an increase from the EIA’s last forecast of a 1.35 million b/d increase this year.
There are several reasons to question the EIA’s forecasts. Last week, North Dakota reported production of 1.355 million b/d during February, down from 1.403 million in January. Bad weather this winter slowed fracking operations, and well completions were down to 59 in February from 113 in December and 92 in January. Fracking in sub-zero temperatures is not possible. The rig count in the basin currently is three below the January count, and the state government says that “gas capture, workforce availability, and competition with the Permian and Anadarko shale oil plays for capital continue to limit drilling rig count in the state.” North Dakota is having problems with more natural gas coming to the surface than can be piped away, so that the percent flared in February climbed to 19.2 percent. State policy is that only 12 percent of total production is allowed to be flared.
If a 1.4 million b/d increase in US shale oil production happens this year, the increase will have to come from the Permian Basin as the other shale oil regions are growing slowly and give indications of approaching a peak. April’s Permian crude production is expected to reach 4.177 million b/d, according to Energy Information Administration, up 8,000 b/d from March while the April natural gas output will increase to 14,075 million cf/d from March’s 13,859 million cf/d. The price gap between Permian Basin oil and gas will continue to widen as steady demand for crude continues to overwhelm oversupplied natural gas markets, an analysis by S&P Global Platts showed last week. Permian natural gas prices have fallen to record lows as planned maintenance on transmission lines strands gas, forcing some regional gas processing plants to flare.
As the smaller and middle-sized drillers in the Permian say they are reducing capital expenditures, any large increase is likely to come from Exxon and Chevron who are talking about substantial increases in profitable production where smaller companies have failed. The large companies, however, say they plan to move very slowly to ensure that they extract all the oil possible and not front-load production so that more oil comes out in the first month and then tails off quickly resulting in less production during the lifetime of the well than expected. How well these plans come out would seem to be the key to the future of the US shale oil industry and maybe even the global oil industry itself.
2. The Middle East & North Africa
Iran: Tehran’s oil exports have recovered close to prior levels, supported by robust demand from China and South Korea, according to data from shipping sources and provisional tanker tracking data. Shipments from Iran grew 12 percent to 1.70 million b/d in March, the highest since October, as buyers scrambled to import more oil before US sanctions waivers expire in early May. Exports could fall this summer if the US tightens its sanctions on Iran crude purchases from the eight countries given special treatment.
India imported about 5 percent more oil from Iran in the last fiscal year through March as companies raised purchases ahead of US sanctions. However, Indian refiners are holding back from ordering Iranian crude for loading in May waiting to see if Washington will extend the waivers. Companies that continue to do business with Iran, including oil purchases allowed under US waivers, will have to be careful in their dealings with Tehran after the US designated the Islamic Revolutionary Guard Corps a terrorist group. Most importers of Iranian oil do far more business with the US than with Iran and fear that their trade could be damaged if they become involved with some Iranian firm run by the Revolutionary Guard.
Iraq: The Basra Provincial Council has voted to hold a referendum on creating a new federal region, as anger over a dysfunctional government in Baghdad continues. If past efforts to turn Basra into a distinct region are any indication, there will be many obstacles to gaining some form of home rule as the Kurds have. There will be no support from the federal government to hold a vote, and the problem of convincing over half the population to vote “yes.” Basra is the oil hub of Iraq with much of the oil and the export terminal. Should some form of limited independence emerge, still more controversy is likely.
Saudi Arabia: Saudi Arabia’s crude production slumped to the lowest in two years as the Kingdom cut output to boost prices. The country’s rate of compliance with the OPEC+ production cut agreement reached 153 percent according to the IEA. The Saudi cut, coupled with a sharp drop in production in Venezuela under the weight of sanctions and a string of blackouts, helped reduce global oil supply by 340,000 bpd in March.
Saudi Aramco is set to raise $12 billion with its first international bond issue after receiving more than $100 billion in orders, a record-breaking vote of confidence in the prospects for the giant oil company. A bond issue is a safer form of investment in an oil company in a nation that can turn a larger share of profits into tax revenues should the need arise. The question now is whether the Saudis will continue with the plan to sell a 5 percent equity interest in Aramco or continue to issue bonds to raise the capital needed to diversify the economy.
The government denied last week that recent claims the Kingdom would sell its oil in currencies other than the dollar are accurate. The statement follows reports that Riyadh was considering switching from the dollar to other currencies in its oil trade in response to anti-OPEC legislation plans in the US Congress. Reuters reported last week that the switch to other currencies had been discussed in senior Saudi circles and that it had also been shared with US government officials. The Saudis fear the possibility that they could be involved in US litigation for as long as OPEC lasts.
The Saudis could begin natural gas exports in five to six years and have already started talks with neighboring Gulf Arab states about building natural gas pipelines to friendly countries in the Persian Gulf. The Saudis claim that large quantities of natural gas have been found in the Red Sea.
Libya: The National Oil Corporation said last week it is discussing ways to keep national crude production stable despite fighting between the country’s two main rival forces. For now, oil production and exports remain unaffected despite the fighting, but the recent escalation in violence has raised the risk of oil supply outages. The CEO of the oil company says that Libya’s oil and gas exports are facing the most significant threat since 2011 given the scale of the fighting. “Unless the problem is solved very quickly, I am afraid this will affect our operations, and soon we will not be able to produce oil or gas.”
Days before General Haftar launched an offensive to seize the capital and attempt to unite the divided country under his rule, Saudi Arabia promised tens of millions of dollars to help pay for the operation, according to senior advisers to the Saudi government. Should Haftar succeed in taking Tripoli, he will still face many opponents across the country who will likely look to sabotaging oil production as their best option.
BP is set to become the latest international oil company to quit drilling for shale gas in China because of poor exploration drilling results. In 2016, BP and China National Petroleum Corporation signed a production sharing contract for shale gas exploration, development, and production in the Sichuan Basin in southwestern China. Later in 2016, BP signed a second PSC deal with CNPC for shale gas exploration. However, poor results are now making BP withdraw from the projects. Every few months Beijing announces a renewed effort to exploit shale oil and gas, but so far there have been no significant results.
Those worried about the climate will be unhappy to learn that China is set to produce an additional 100 million tons of coal this year according to Wang Hongqiao, vice president of China National Coal Association. “Coal demand for power generation in China will increase, but the growth rate of general coal consumption will slow down,” Wang said. Imports of thermal coal are due to slip by 11 percent from last year due to increased domestic production. China produced 4 billion tons of coal in 2018, according to the National Bureau of Statistics but also added 194 million tons in mine capacity that year, despite promising to cut excess capacity for the sector.
China’s economic transformation over the last 40 years has driven its demand for forest products, and it is now the world’s largest importer of wood. It is also the largest exporter — turning much of the wood it imports into products headed to Home Depots and Ikeas around the world.
Since China began restricting commercial logging in its forests two decades ago, it has increasingly turned to Russia, importing vast amounts of wood in 2017 to satisfy the needs of its construction companies and furniture manufacturers. This situation is leading to a backlash in Russia where environmentalists are starting to complain that China is taking too much of the Siberian forests. Protests have erupted in many cities, and members of Russia’s parliament have assailed governmental officials for ignoring the environmental damage in Siberia and the Far East.
Chinese demand is also stripping forests elsewhere — from Peru to Papua New Guinea, Mozambique to Myanmar. In the Solomon Islands, the current pace of logging by Chinese companies could exhaust the country’s rain forests by 2036. In Indonesia, activists warn that illegal logging by local Chinese partners threatens one of the last strongholds for orangutans on the island of Borneo.
Shell pulled out of a project to build a Russian liquefied natural gas plant partly because Gazprom suddenly added another partner with links to President Vladimir Putin. After three years of work on the Baltic Coast project, Shell discovered that Gazprom was bringing in a company linked to Arkady Rotenberg, who is on a US sanctions blacklist. The sudden change in the line-up of partners was one of the key factors contributing to Shell’s Wednesday announcement that it was pulling out of the project.
Belarus is threatening to suspend transit of Russian crude to Europe via the Druzhba Pipeline in an attempt to pressure Moscow amid deepening economic disagreements between the two countries. Russia exports more than 1 million b/d of crude to Europe through Druzhba, including to Germany, Poland, the Czech Republic, Slovakia, and Hungary.
European refiners are paying the price for the sanctions on Venezuela and Iran as they try to find replacements for the sour crude Washington has blocked from the global market. To make matters worse, OPEC members have cut sour crude output as part of their deal with allied producers to boost oil prices, and a new refinery designed to run on sour oil has just started up in Turkey. So far Moscow is the primary beneficiary of the sour oil shortage as prices for the grades are increasing.
The International Monetary Fund (IMF) has advised Nigeria and other countries still subsidizing fuel for domestic consumption to stop doing so. The IMF said fuel subsidy removal would help boost revenue and improve on local infrastructure development. IMF wants Nigeria to remove the subsidy due to the lack of funds for infrastructure reforms and other social services. Nigeria has among the lowest tax to GDP ratios in the world. The fund also noted that Nigeria’s Excess Crude Account, which takes in revenue during times of high oil prices and pays out when prices are low, was not achieving the goals for which it was set up.
Petroleum Minister Kachikwu said the average production cost for a barrel of oil in Nigeria has declined to just $23 a barrel and that oil companies are aiming to reduce this further, to $15 a barrel. Some 226 companies have bid for a contract to manage the 176 gas flaring sites in Nigeria. The government wants to stop gas flaring in the country by the year 2020 as the wasteful practice is losing billions, but it will take a substantial investment in new pipelines and natural gas utilization facilities to make any progress. Given past experience, it is doubtful if the government’s goal will be met.
More than 50 percent of Nigeria’s oil and gas blocks remain untapped as gas shortages persist in the country. Out of 390 oil blocks in the country, 211 are yet to be allocated by the Federal Government. With many other countries making efforts to increase their oil and gas production, industry experts are concerned about the lack of new oil-licensing rounds in Nigeria since 2008.
Venezuela’s oil output sank to a new low last month due to US sanctions and blackouts. OPEC reported last week that Venezuela pumped 960,000 b/d in March. This number was published by Caracas and may be an exaggeration of production. Of more importance is the status of the four crude oil upgraders which normally process some 700,000 b/d of heavy oil so that it can be refined or exported.
While power has been mostly restored for at least part of the day in Caracas, much of the country where Venezuela’s industry is located is receiving power for less than 12 hours a day. As of the last report, only two of the four heavy oil upgraders have resumed operations, and together they are processing less than 300,000 b/d. The two other upgraders appear to have been out of service for over a month. If the operators are unable to get the upgraders back into service, Venezuela’s oil production and exports should be substantially lower in April.
Washington continued its crusade against the Maduro government last week by slapping more sanctions on shipping companies transporting oil from Venezuela. The US blacklisted four companies with nine ships for carrying oil some of which went to Cuba.
Venezuela’s government has signed an agreement with Russia under which the iron, steel, mining and agriculture industries will receive Russian investment and other participation. This agreement is nonsense as the press is reporting that only a small part of the country’s industrial concerns is working.
7. The Briefs (selections from the press – date of article in Peak Oil News is in parentheses – see more here: news.peak-oil.org)
Norway, Western Europe’s biggest petroleum producer, is falling out of love with oil. To the dismay of the nation’s powerful oil industry and its worker unions, the opposition Labor Party over the weekend decided to withdraw its support for oil exploration offshore the sensitive Lofoten islands in Norway’s Arctic, creating a solid majority in parliament to keep the area off limits for drilling. The dramatic shift by Norway’s biggest party is a significant blow to the support the oil industry has enjoyed and could signal that the Scandinavian nation is coming closer to the end of an era that made it one of the world’s most affluent. Oil companies led by state-controlled Equinor ASA, the biggest Norwegian producer, have said that gaining access to an estimated 1 to 3 billion barrels of oil offshore Lofoten is key if the country wants to maintain production as resources are being depleted. (4/10)
In Sudan, President Omar al-Bashir, who has ruled since 1989, was toppled from power by the military on Thursday and placed under “heavy guard”, following months of protests against the government and its handling of a severe economic crisis in the country. After South Sudan’s secession from Sudan, the two countries have been mutually dependent on oil revenues, because the south has 75 percent of the oil reserves, while the north has the only current transport route for the oil to international markets.
South Sudan’s information minister told reporters in Juba, the capital, that the country will provide 30,000 b/d to state-owned lender Export-Import Bank of China to help fund South Sudan’s largest infrastructure project, which is being funded by Beijing. The amount has tripled from the 10,000 b/d it provided to China in February. South Sudan, which produces around 170,000 barrels of oil per day, gained its independence from Sudan in 2011 after years of civil war which saw China supply Sudan with arms and financing in spite of allegations of human rights abuses. (4/9)
The future of Algeria’s oil industry was called into question earlier this week as its political crisis took hold, and now its future is even more suspect, as its state-run oil company, Sonatrach, will once again find itself under the microscope as old corruption investigations are reopened and as the date is set for presidential elections after President Bouteflika stepped down earlier this month. (4/12)
Algeria again: The oil patch is reeling from a political crisis in Algeria that first saw Exxon halt its prospective shale ambitions in the country and has now spread to major trading houses and far beyond its borders. (4/10)
New “Arab spring”? From a Western point of view, the removal of president Bashir of Sudan, after several weeks of mass protests in Khartoum and other cities, is in line with the exit of Algeria’s long-time leader Abdelaziz Bouteflika. Optimism in the press, especially in the West, over both developments seem to be based on emotions and not on facts. As the Arab Spring has shown, don’t ever count out the existing power structures of the respective regimes, and specifically the armed forces. The Egyptian revolution was the first example, shortly after the ‘democratic revolution’ the military took over and reinstated the status quo. (4/12)
In Papua New Guinea, ExxonMobil, France’s Total, and Australia’s Oil Search have signed a gas agreement with the government, outlining the fiscal terms for a new liquefied natural gas (LNG) project in the Pacific island, estimated to cost $13 billion and thought to double Papua New Guinea’s LNG exports from the Exxon-operated PNG LNG plan. (4/10)
In Argentina, oil production from shale in Vaca Muerta is expected to reach 200,000 b/d by the end of 2021, said Ryan Carbrey, senior vice president of Rystad Energy. The play produced 78,000 b/d in February, up 70 percent year on year. (4/10)
Mexico’s government will open retail gasoline stations controlled by the army if retailers do not decrease fuel prices, President Andres Manuel Lopez Obrador said last week. CIF Eastern Mexico RBOB gasoline prices have averaged Peso 9.71/liter so far in April, down slightly from the October average of Peso 10.04/l. But according to the Mexican government, retail profit margins for regular gasoline have increased by 55 percent since October, as retailers have absorbed tax cuts without passing on the savings to customers. (4/10)
The US oil rig count grew by two to 833, while the active gas rig count dropped by five to 189, according to Baker Hughes, a GE Company. This brings the nation’s total to 1,022 rigs – 14 higher than one year ago when the rig count was 1,008. (4/13)
New data from the US EIA revealed that demand skyrocketed to 9.8 million b/d last week. The estimate is approximately 700,000 b/d more than the previous week and 550,000 b/d more than the first week of April in 2018. Many market analysts expect the estimate to be revised downward when EIA releases final demand figures for April later this year, but the high estimate likely signals that 2019 could bring the highest gasoline demand rates ever recorded by EIA — potentially as early as this summer. (4/13)
Rotten oil? Exxon Mobil is the latest company to raise concerns that a stockpile of US government crude is tainted with poisonous gas. The American energy giant said some of the oil it purchased last year from the Energy Department’s Strategic Petroleum Reserve, or SPR, contained “extremely high levels” of hydrogen sulfide, up to 250 times higher than government safety standards allow. (4/13)
In the GOM: Shell has sold its 22 percent interest in the Anadarko-operated Caesar-Tonga field in the US section of the Gulf of Mexico to Israeli Delek Group for US$965 million. The divestment report comes on the heels of Shell’s entry into China’s shale gas industry via a joint exploration project with the country’s largest refiner and main shale gas player, Sinopec. The exploration will take place in the eastern Chinese province of Shandong where Sinopec’s shale operations are. (4/12)
Pipeline rules bruhaha: President Trump has signed an executive order seeking to limit states’ powers in the approval or rejection of new oil and gas pipeline projects. The signing was scheduled for a trip to Texas yesterday, and expectations are that opponents of new oil and gas infrastructure will challenge it in court. Some lawyers have noted the states’ powers to grant or refuse permits for federal infrastructure projects are stipulated in federal law and a presidential order cannot trump this. (4/11)
New at Interior: The Senate on Thursday voted to confirm David Bernhardt, a former lobbyist for the oil and agribusiness industries, as secretary of the interior. The confirmation of Mr. Bernhardt to his new post coincided with calls from more than a dozen Democrats and government watchdogs for formal investigations into his past conduct. (4/12)
US natural gas-fired combined-cycle capacity overtook coal-fired capacity in 2018, the US Energy Information Administration reported on Wednesday. In the United States, natural gas-fired combined-cycle capacity has increased for years, finally overtaking coal-fired capacity, which has seen a steady decline over the last decade. (4/11)
The US’s 2019 coal production of 684.1 million tons will likely be 9.2 percent lower than the 753.7 million tons produced in 2018, while 2020 production is estimated at 640.1 million tons, the EIA said in its April Short-Term Energy Outlook. The 684.1 million tons expected in 2019 would be the lowest production since 670.16 million tons was produced in 1978. (4/10)
Car guys’ nightmare: As the Trump administration prepares to drastically weaken Obama-era rules restricting vehicle pollution, nervous automakers are devising a strategy to handle their worst-case scenario: a divided American auto market, with some states following President Trump’s weakened rules while at least one-third of the market sticks with the tougher ones. The new rules would all but eliminate the Obama-era restrictions, essentially freezing standards at about 37 miles per gallon, compared to 54.5 miles per gallon required by the current rules. (4/11)
EV batteries: Ford Motor Company is teaming up with Solid Power to develop all solid-state batteries (ASSB) for next-generation electric vehicles. The announced partnership will focus on further developing ASSBs toward automotive requirements. Solid Power’s solid-state technology combines a cathode, metallic lithium anode, and an inorganic solid electrolyte layer. Solid-state batteries offer improved energy capacity and safety as compared to current industry-standard lithium-ion batteries. (4/12)
Global sales of plug-in electric vehicles fell by 21 percent in February month on month, led by a sharp fall in China due to seasonal factors and ahead of the government cutting subsidies for EVs in March. (4/9)
EV ultra-chargers: An Australian company, Tritium, makes chargers that can add more than 215 miles to an EV’s range in just ten minutes. Companies around the world are developing such superchargers that can “fill up” an EV battery in a matter of minutes, but there is one problem: they can’t be deployed because battery makers have yet to make their product capable of withstanding the supercharge. (4/8)
New biofuel: For centuries the world has agonized over its relationship with waste – by burying it, burning it, flushing it. But entrepreneurs at Fulcrum BioEnergy are now trying to turn it into jet fuel. Organic material like banana peels will be put into a vessel to decompose under pressure and heat, in a similar process to the creation of fossil fuels over hundreds of millions of years. The Californian start-up is investing $280m in a plant near Reno, Nevada, that, once fully operational, is expected to produce 10m gallons of renewable “syncrude” [synthetic crude] a year from organic material that would otherwise go to waste. (4/8)
An Achilles heel of RE: While proponents argue that solar and wind are already cost competitive with oil and gas, that’s not true in extreme winter weather. Critics of the Green New Deal proposed by Congresswoman Alexandria Ocasio-Cortez have used the opportunity to point at the shortcomings of solar and wind in extreme weather conditions as an argument against a Green New Deal. (4/11)
UK’s move to RE: The UK’s Department for Business, Energy & Industrial Strategy has set out its aim to increase renewables generation 75% from 2018 levels by 2035, with the expectation that there will be a gradual decline in gas-fired generation. The department forecast renewables production to rise to 211 TWh by 2035. This 211 TWh also represents 58% of total electricity supplied in the UK in 2035. (4/12)
South Africa is facing an energy crisis. The once distinguished national public energy provider, Eskom, has been driven to the point of collapse by “years of corruption, incompetence and political meddling”. Under the Presidency of Jacob Zuma, Eskom went from making a billion Rand profit in 2008 to making a 2.3 billion Rand loss. The Eskom crisis has only depressed an already strained economy. This critical situation has left Cyril Ramaphosa, the presidential incumbent, in an uncomfortable position. To address South Africa’s myriad problems, Ramaphosa must garner support and reform a party filled with discredited Zuma loyalists. (4/11)
London clampdown: The Ultra-Low Emission Zone (ULEZ) has come into force in central London. Drivers of older, more polluting vehicles are being charged to enter the congestion zone area at any time. However, the Federation of Small Businesses said many small firms were “very worried about the future of their businesses” as a result of the “additional cost burden”. Most vehicles which are not compliant will have to pay £12.50 for entering the area each day, in addition to the congestion charge. (4/8)
Shipping speed limit? France’s delegation to the International Maritime Organization has proposed mandatory slow steaming as a means of cutting the shipping industry’s greenhouse gas emissions. France is suggesting that speed limits differentiated by shipping sector should be implemented “as soon as possible.” Reducing a ship’s speed to the level at which it has maximum fuel efficiency reduces its bunker fuel consumption and emissions. (4/11)
Shell’s carbon offsets: Royal Dutch Shell is launching a $300m forestry program in an attempt to reduce its emissions, at a time when an increasing number of oil companies are investing in carbon offset plans to comply with climate goals. The energy company will spend $300m over the next three years on projects to store carbon, including large forests in the Netherlands and Spain, and will start offering motorists the option of purchasing carbon offsets when they buy petrol or diesel at the pump. (4/10)