Oxford Institute for Energy Studies

New Oxford Institute for Energy Studies Energy Insight discusses decarbonising China's steel sector. 👉 Link to Energy Insight: https://lnkd.in/et9NwT-X Key points: 💠 China’s steel sector is pivotal in the global fight against climate change, given its substantial carbon footprint. Steel production accounts for 7% of global emissions and more than half of the world’s steel is produced in China. 💠 This report delves into the challenges and opportunities in decarbonising China’s steel industry as well as the impact of global trade and standard-setting. 💠 The report finds that overcapacity, coal dependence, and economic uncertainty are central hurdles in achieving China’s climate targets and will require stricter regulatory approaches to shift towards greener production. 💠 However, innovation in new technologies such as green hydrogen steel production driven by state-owned enterprises, government green procurement policies, and enhanced recycling efforts illustrate opportunities for decarbonisation. 💠 International initiatives like the EU’s carbon border adjustment mechanism have led to efforts in China to improve emission reporting and engage in the discussion on global green standards. 💠 For China’s steel sector to successfully decarbonise, it must overcome challenges from overcapacity, coal reliance, and economic uncertainty through technological innovation, material efficiency, and green procurement, with international actors supporting through trade incentives, global green steel standards, and ongoing engagement with China. #CarbonBorderAdjustmentMechanism #China #emissiontrading #greenhydrogen #industrialdecarbonisation #steel

New Oxford Institute for Energy Studies Energy Insight discusses the lessons learned from Norway’s experience with CCS 👉 Link to Energy Insight: https://lnkd.in/eUcxB3df Key points: 🔹 Norway is widely considered a global leader in carbon capture and storage (#CCS) with decades of experience in technology development and project implementation. 🔹 As competition in the #hydrocarbon industry has broadened to include areas such as #sustainability and emissions reduction from oil and gas activities, CCS can play a key role in sustaining and increasing global competitiveness of Norwegian oil & gas. 🔹 Several factors contributed to the country’s relative success in CCS to date including availability of rich offshore CO2 storage resources and a robust #carbontax which has been in place since 1991 🔹 Norway’s focus on developing international CCS policy also resulted in the first global full-chain CCS project, the Longship project, providing a flexible solution to capture CO2 from various emitters nationally and across borders to be transported and stored under the Norwegian Continental Shelf 🔹 Government’s substantial ownership and participation in CCS projects also played a key role, particularly through its establishment of Gassnova which took on the project integrator’s role and bore some of the #integration risks inherent in CCS projects. This enabled emission source owners to advance projects without needing to establish their own #transport and #storage solutions. 🔹 In 2014, the EU CCS Directive was implemented into Norwegian law and since then government has worked with the EU Commission to resolve issues pertinent to the capture of CO2 from both fossil and biogenic sources and from sectors covered under EU-ETS and others not, in addition to #crossborder CO2 transport 🔹 Government also provided generous funding for CCS projects through state aid agreements which supplemented the #EUETS price as well as a recently-implemented national combustion tax. 🔹 These state aid agreements provide cost assurances for both capital and operational expenditure up to a defined limit, thus reducing project and interface risks for industrial partners. 🔹 Amendment to Article 6 of the #LondonProtocol further allows Norway to enter into #bilateral agreements with neighbouring countries for the transport of CO2 across borders, resulting in such agreements with the Netherlands, Belgium, Sweden, Denmark and Switzerland. 🔹 Moreover, compared with other countries, studies show relatively high #publicacceptance of CCS as a decarbonization solution in Norway, which further enabled its development. #carboncapture #energytransition #carbonmanagement #industrialdecarbonization With thanks to Cathrine Ringstad at Bellona Europa for her insightful feedback and review of this paper. ------------------------------------------------------------------- Visit OIES Carbon Management Programme 👉 https://lnkd.in/e92AsGkz

A recent Oxford Institute for Energy Studies paper looks at Hedging and Tail Risk in Electricity Markets 👉 Link to Publication: https://lnkd.in/esNGu4NK Key points: 💠  A concern persistent in scarcity-based market designs for electricity over many years has been the illiquidity of markets for long-term contracts to hedge away volatile price exposures between generators and consumers 💠   These missing markets have been attributed to a range of factors including retailer creditworthiness, market structure and the lack of demand side interest from consumers 💠  Paper demonstrates the inherent challenges of hedging a legacy thermal portfolio that is dominated by volatile fat-tailed commodities with significant tail dependence 💠  Under such conditions the price required for generators to provide such hedges can be multiples of the expected value of prices 💠  The key insight is that when the real-world constraints of credit and financing are considered, the volatility of thermal fuels and their co-dependence under extremes may be a key reason as to why electricity markets have been incomplete in terms of long-term hedging contracts 💠  Counterintuitively, in the context of the energy transition, our results show that, ceteris paribus, increasing the penetration of low carbon resources like wind, solar and energy storage, can add tail-diversity and improve contractability 💠 The results point to further considerations for policy and research inquiry in market design as electricity systems progress further down the path of decarbonisation. 1️⃣ The relevance of credit worthiness and solvency in long-term risk contracting. 2️⃣ The need for tail risk assessment of systems and markets to expand in breadth towards the integration of financial, physical, and digital systems. 3️⃣ Consumers' perception of risks. 4️⃣ The critical role of energy storage in enabling effective hedging strategies, especially in grids with high renewable penetration 5️⃣ The degree of decentralization of decision making in electricity market design #electricity #electricitymarkets #tailrisks #hedging #renewables #decarbonization #decentralisation #energytransition

The new issue of Oxford Institute for Energy Studies Oil Monthly, including our latest short-term oil market #outlook to 2025, is now available. 👉 Link: https://lnkd.in/da9U6d3Z 🔹 Our #Brent #price #forecast is unchanged at $85.4/b in 2024 and $78.6/b in 2025. Brent is currently testing the upper bound of this year’s $75/b and $85/b range on signs of tightening markets ahead of expectations of strengthening summer demand, as OPEC+ supply cuts help draw down stocks. Tempering expectations of tighter balances are concerns over cooling demand in China and slow progress in drawing down product stocks, which have pressured refining margins. This has prompted us to maintain our Brent price outlook unchanged from last month, with H2 prices forecast to average near $87/b, although #uncertainty over global oil demand has skewed the balance of price risks to the downside near $83/b. For 2025, the balance of risks is dictated by #OPEC+ delaying, pausing or reversing its planned production hikes should market weaknesses prevail. 🔹 The #oil #market is forecast at 700 kb/d deficit in 2024 and a 730 kb/d surplus in 2025, assuming OPEC+ output returns as planned. We continue to forecast the market deficit deepening in the second half of the year to average -1.4 mb/d, unchanged from last month. The market is expected to shift into sustained surpluses from 2Q25 onwards averaging 930 kb/d (2Q25-4Q25), assuming OPEC+ output returns as planned. 🔹 Our global #demand #growth forecast is maintained at 1.4 mb/d in both 2024 and 2025. We have revised slightly lower non-OECD demand growth to 1.35 mb/d in 2024, on weak Q2 data particularly in #China, as #OECD demand growth remained resilient. But despite the Q2 slowdown, we still expect global oil demand growth to gain pace in the second half of the year and average 1.9 mb/d. For 2025, the pace of global oil demand growth is now expected to marginally surpass 2024 at 1.45 mb/d. 🔹 Global oil #supply is forecast to grow 270 kb/d in 2024, 100 kb/d lower than last month’s forecast, and by 2.9 mb/d in 2025. The 2024 downgrade reflects strong OPEC+ output compliance in the first half of the year with total OPEC+ output in June falling to a 3-year low and producers potentially cutting further in Q3 to meet their pledged targets and/or compensate for overproduction. Total non-OPEC #crude and global liquids are forecast to grow 880 kb/d in 2024 and 1.5 mb/d in 2025.    #energy #energypolicy #oott

EU #methane regulation is now published in the Official Journal of the #EU. The regulation will enter into force on the 4th of August. 👉 Read Oxford Institute for Energy Studies Energy Insight on EU methane regulation:   https://lnkd.in/eVgsTkdt 👉 Listen to latest OIES #podcast on EU methane regulation: https://lnkd.in/e87ZEnBq The OIES Energy Insight and podcast present the best answers we have so far to three questions: 1️⃣ What are the major changes introduced by the Regulation for different types of operators and Member States? 2️⃣ What is not yet, but will need to be, included in the Regulation before it can be meaningfully implemented, specifically in relation to delegated and implementing acts? 3️⃣ Does the Regulation meet the expectations raised in the 2020 EU Methane strategy with regard to reducing emissions associated with fossil fuel imports? #eu #methane #methaneregulation #oil #gas #coal #mrv

The Hydrogen & Decarbonized Gas Package has been published in the EU's Official Journal today and will enter into force on the 3rd of August. Read Oxford Institute for Energy Studies recent paper by Katja Yafimava analyzing the Package and its implications for hydrogen and natural gas networks, examining in particular whether the new rules ensure flexibility and security of supply. 👉 Link to paper: https://lnkd.in/e_35hwaq   Key points 💠 The Package, together with the TEN-E Regulation, will constitute the new regulatory framework, governing construction of, and access to, hydrogen networks, and the re-purposing and de-commissioning of, and access to, natural gas networks in the EU. 💠 This paper analyses the impact of this framework on the existing natural gas networks and the emerging hydrogen network, and seeks to establish specifically whether its rules ensure flexibility and security of supply. 💠 The paper concludes that although regulatory flexibility is built into the framework by establishing a transition implementation period, allowing exemptions and derogations for existing and new hydrogen infrastructure, and enabling financial and regulatory support via a PCI/PMI status, it is far from certain to be sufficient to enable the EU hydrogen market to develop at scale. 💠 The framework also does not guarantee that phasing in hydrogen networks and phasing out natural gas networks – either through re-purposing or de-commissioning – will be carried out in a coordinated manner across the EU, without negatively affecting the security of natural gas supply. 💠 The framework appears to be built on the premise that the EU hydrogen market will develop fast and at scale but lacks a “safety cushion” as it does not guarantee the coordinated re-purposing of the natural gas networks that could still be needed should the hydrogen market roll-out be slower and more gradual. 💠 The framework could of course be adjusted and will continue to remain ‘work in progress’ at least until 2030 as more rules are established in the upcoming network codes in the 2020s, as the hydrogen market rolls out (or fails to do so).

New Oxford Institute for Energy Studies Podcast discusses EU Methane Regulation. 👉 Link to podcast: https://lnkd.in/ea69uGbr 👉 Link to related Energy Insight: https://lnkd.in/eVgsTkdt 🎙 In this latest OIES podcast from the Gas and Energy Transition Programmes James Henderson talks to Prof. Jonathan Stern and Maria Olczak about their latest Energy Insight ‘Analysing the EU Methane Regulation: what is changing, for whom and by when’. 🎙 This regulation introduces new rules for measurement-based Monitoring, Reporting, and Verification (MRV), Leak Detection and Repair (LDAR), and limits on routine venting and flaring across the oil, gas, and coal supply chains. 🎙 Moreover, the EU is the first jurisdiction to set methane-related requirements for fossil fuel imports, which will be implemented gradually from 2025 to 2030. 🎙 The podcast provides the background to the new rules, considers the key components of the regulation and what it means for the EU operators and EU exporters. 🎙 In addition the authors discuss their views on the impact on new and existing LNG contracts and what the response of exporters to the EU might be. All of our #podcasts are also available on #spotify and #applemusic #Coal #EUmethane #Gas #globalmethanepledge #importstandard #LNG #MethaneEmissions #MRV #Oil

New Oxford Institute for Energy Studies podcast discusses energy transition scenarios and the impact these may have on natural gas. 👉 Link to podcast: https://lnkd.in/eS9C9iKJ 👉 Link to presentation: https://lnkd.in/dTqTzJgv 🎙 In this latest OIES podcast from the Gas Programme James Henderson talks to Mike Fulwood about this latest work on Energy Transition Scenarios and their impact on Natural Gas. 🎙 The podcast starts by discussing the key methodologies that have been used to generate the OIES scenarios before moving on to describe the three key outputs from the modelling process – the Declared Policies Scenario, the Net Zero with CCS Scenario and the Fragmented Scenario. 🎙 Mike reviews the supply and demand outcomes for natural gas in each of the scenarios and looks at the contrasting impacts for specific regions and sectors. 🎙 Future trade flows and prices are also discussed, before the debate turns to the future of decarbonised gases such as hydrogen and the need for CCUS to play a critical role if natural gas is to remain as a core part of the energy system to 2050. #gas #lng #ccs #energytransition #scenarioanalysis #podcast

Latest Oxford Institute for Energy Studies paper from the OIES China Energy Programme discusses clean energy innovation in China and its wider implications on the energy transition and industrial competitiveness 👉 Link to paper: https://lnkd.in/ekh4vwjV 🎧 Also listen to the podcast: https://lnkd.in/ekwjrwJh Key points: 💠 Excess capacity in China is an issue. It's a challenge for Chinese manufacturers of litihium-ion batteries, electric vehicles and solar panels, and its a problem for many OECD countries, where industries are struggling to remain competitive. 💠 But the common narrative attributing China's edge to subsidies alone is wrong. 💠 This paper discusses the importance of subsidies as well as a raft of other support measures 💠More importantly, though, paper highlights the innovative and entrepreneurial forces in China and, critically, the importance of vertical integration and manufacturing clusters. 💠 China’s EV, battery, and solar firms are able to innovate and scale up output quickly in part because of the important role of vertical integration and manufacturing clusters. 👉 Visit OIES China Energy Research Programme: https://lnkd.in/dymKc3Q #china #innovation #verticalintegration #wind #solar #batteries #evs #clusters

New Oxford Institute for Energy Studies Energy Comment discusses Global Climate Diplomacy at the recent Bonn climate change conference and G7 meeting. 👉 Link to Energy Comment: https://lnkd.in/euC9fy4A Key Points: 💠 The Bonn Climate Conference, an annual event that occurs mid-way between the COPs that take place each November, was held between June 3-13. It was immediately followed by the G7 conference in Italy on June 13-15. 💠 Both provided an opportunity to gauge the state of global climate diplomacy and to identify the key issues that are going to dominate COP29 in Baku, starting on November 11. 💠 The Bonn conferences are not intended to deliver substantive results in their own right, with the discussions often being more procedural in nature and preparing the way for the more high-profile COP six months later but they give a good indication of the main agenda items and the key topics that remain contentious. 💠 This year the negotiators were looking to build on the results of the Global Stocktake (GST), which was at the heart of the COP28 conclusions, and to create a roadmap towards two imminent and important objectives: 1️⃣ The delivery of updated Nationally Determined Contributions (NDCs) by all countries in early 2025 2️⃣ The establishment of a New Collective Quantified Goal (NCQG) for the provision of finance by the developed countries to encourage investment in environmental projects in developing countries as part of a just energy transition. 💠 This Energy Comment argues that the outcome of the Bonn conference underlined the key issues and challenges facing the COP29 organisers. 💠 With new NDCs set to be presented in early 2025, the COP will need to underline the need for greater commitment to efforts on mitigation to reduce emissions. 💠 At the moment the world is clearly not on target to meet the interim goals towards net zero by 2050, and the November meeting will need to encourage countries to step up their commitments significantly. 💠However, the discussions in Bonn did not provide much confidence that this will occur in practice. One of the main reasons for this is the continuing disagreement over financing. #BonnClimateConference #climatediplomacy #climatefinance #cop29  #GlobalStocktake #lossanddamagefund #ndcs #climatechange #energytransition