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Transatlantic Divide In Efforts To Reach Paris Targets



Paris by Moyan Brenn via flickr

‘In the Pipeline’ is a recently published report which reveals that European companies are investing into low-carbon technologies and transferring to gas, whilst US counterparts could risk being left behind.

A new report, analysing a US$1.2tn grouping of the world’s major publicly-listed international oil and gas companies reveals a transatlantic divide as European companies outperform their US peers in preparedness for a low-carbon future by beginning to invest in alternative energy sources and shifting to gas.

The oil and gas industry, and the use of its products, accounts for approximately 50% of global CO2 emissions. Climate policies and disruptive technology affecting the use of hydrocarbon products in transport and utilities sectors will require the oil and gas industry to rapidly adapt in order to future proof their business.

The report from CDP – voted no. 1 climate change research provider by institutional investors – finds that the industry needs better capital discipline to secure its place in a low-carbon future through lowering its cost base or returning capital to shareholders. The research also reveals that the absence of robust data on probable and possible reserves is a significant loss of valuable information to investors looking to compare asset portfolio risk across companies.

Tarek Soliman, Senior Analyst, Investor Research at CDP said:
“On both sides of the Atlantic international oil and gas majors need to look at how they fit into an energy system which achieves the climate goals laid out in the Paris Agreement. Our research shows that European companies have been more active in developing transition strategies for the coming decade – which is expected to feature peak oil demand, and are starting to implement these. But more needs to be done across the board by oil and gas companies in exploring their future options, and investors will want to monitor this through more thorough and consistent disclosure.”

Meryam Omi, Head of Sustainability and Responsible Investment Strategy at LGIM, said:
“It is vital that the O&G sector aligns itself to the global goal of transitioning to a low carbon economy. There is an inevitable divergence in their commitments and transparency, which this report demonstrates. LGIM, will be using many of the findings to guide its overall engagement strategy with this sector.”

Today’s report benchmarks oil and gas company performance on climate issues and finds that Statoil, Eni and Totalare the best performing companies on carbon-related metrics relative to peers, with Suncor, ExxonMobil and Chevron ranking lowest among those who disclose to CDP.

Other findings from the report include:

• Uncertain future: oil and gas majors face key short and long term decisions to secure their future business models, including improving capital discipline and rebalancing portfolios in the coming years and considering wider diversification or managed decline over the next decades.
• Regulation: the oil and gas industry will be impacted by regulatory action affecting demand in the downstream sectors which it supplies. This includes automobile fleet emissions for oil and emission reduction targets and carbon pricing for gas use in electricity generation.
• Operational efficiency: this remains an issue in the industry with the eleven companies in the study losing on average 6% of their natural gas production through flaring and methane venting and leakages. Resource management will affect demand for the industry’s products in their downstream use, for example the lifecycle carbon emissions gains of natural gas over coal in electricity generation can be eroded as a result of methane leakage (during extraction and transportation).
• Executive remuneration packages: these are currently heavily weighted to reward company performance on hydrocarbon production levels and reserve replacement indicators (only five companies currently have detailed climate-linked performance metrics).
• Water: 40% of onshore oil and gas upstream production is currently located in areas of medium or high water stress yet company disclosure remains behind other sectors facing similar risks.
• Saudi Aramco, Rosneft and PetroChina: which collectively represent over US$240bn in market capitalization, did not respond to CDP’s 2016 climate change questionnaire and are therefore not included in this report. Investors should ask these companies why they are not providing transparency on their carbon risks.

Paul Simpson, CEO of CDP, said: “The oil and gas sector and its products contribute to approximately half of the world’s CO2 emissions. This is an industry for investors to watch carefully in terms of climate risk and technology change. Mark Carney’s Taskforce on Climate related Financial Disclosure (TCFD) is expected to release its findings in December which will likely catalyse increased investor calls for full disclosures from oil and gas companies. There are reasons to be optimistic, some oil and gas majors have the balance sheets to transition to much lower carbon business models and play a key role in implementing the goals of the Paris Agreement.”

You can view the executive summary of the report here.


Are the UK Governments Plans for the Energy Sector Smart?



The revolution in the energy sector marches on, wind turbines and solar panels are harnessing more renewable energy than ever before – so where is it all leading?

The UK government have recently announced plans to modernise the way we produce, store and use electricity. And, if realised, the plans could be just the thing to bring the energy sector in line with 21st century technology and ideologies.

Central to the plans is an initiative that will see smart meters installed in homes and businesses the length and breadth of the country – and their aim? To create an environment where electricity can be managed more efficiently.

The news has prompted some speculation about how energy suppliers will react and many are predicting a price war. This could benefit consumers of electricity and investors, many of whom may be looking to make a profit by trading energy company shares online using platforms such as Oanda – but the potential for good news doesn’t end there.

Introducing New Technology

The plan, titled Smart Systems and Flexibility is being rolled out in the hope that it will have a positive impact in three core areas.

  • To offer consumers greater control by making smart meters available for all homes and businesses by 2020. Energy users will be able to monitor, control and record the amount of energy they use.
  • Incentivise energy suppliers to change the manner in which they buy electricity, to offer more smart tariffs and more off-peak periods for energy consumption.
  • Introduce new standards for electrical appliances – it is hoped that the new wave of appliances will recognise when electricity is at its cheapest and at its most expensive and respond accordingly.

How the Plans Will Affect Solar Energy

Around 7 million houses in the UK have solar panels and the government say that their plan will benefit them as they will be able to store electricity on batteries. The stored energy can then be used by the household and excess energy can be exported to the national grid – in this instance lower tariffs or even payment for the excess energy will bring down annual costs significantly.

The rate of return on energy exported to the national grid is currently between 6% and 10%, but there are many variables to take into account, such as, the cost of battery storage and light levels. Still, those with state-of-the-art solar electricity systems could end up with an annual profit after selling their excess energy.

The Internet of Things

Much of what the plans set out to achieve are linked to the now ubiquitous “internet of things” – where, for example, appliances and heating systems are connected to the internet in order to make them function more smartly.

Companies like Hive have already made great inroads into this type of technology, but the road that the government plans are heading down, will, potentially, go much further -blockchain technology looms and has already proved to be a game changer in the world of currency.

Blockchain Technology

It has already been suggested that the peer to peer selling of energy and exporting it to the national grid may eventually be done using blockchain technology.

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

Don and Alex Tapscott, Blockchain Revolution (2016)

The upshot of the government’s plans for the revolution of the energy sector, is that technology will play an indelible role in making it more efficient, more flexible and ultimately more sustainable.

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4 Case Studies on the Benefits of Solar Energy




Demand for solar energy is growing at a surprising rate. New figures from SolarPower Europe show that solar energy production has risen 50% since the summer of 2016.

However, many people are still skeptical of the benefits of solar energy.Does it actually make a significant reduction in our carbon footprint? Is it actually cost-effective for the company over the long-run?

A number of case studies have been conducted, which indicate solar energy can be enormously beneficial. Here are some of the most compelling studies on the subject.

1.     Boulder Nissan

When you think of companies that leverage solar power, car dealerships probably aren’t the first ones that come to mind. However, Boulder Nissan is highly committed to promoting green energy. They worked with Independent Power Systems to setup a number of solar cells. Here were the results:

  • Boulder Nissan has reduced coal generated electricity by 65%.
  • They are on track to run on 100% renewable energy within the next 13 years.
  • Boulder Nissan reduced CO2 emissions by 416,000 lbs. within the first year after installing their solar panels.

This is one of the most impressive solar energy case studies a small business has published in recent years. It shows that even small companies in rural communities can make a major difference by adapting solar energy.

2.     Valley Electric Association

In 2015, the Valley Electric Association (VEA) created an 80-acre solar garden. Before retiring from the legislature, U.S. Senate Minority Leader Harry Reid praised the new project as a way to make the state more energy dependent and reduce our carbon footprint.

“This facility will provide its customers with the opportunity to purchase 100 percent of their electricity from clean energy produced in Nevada,” Reid told reporters with the Pahrump Valley Times. “That’s a step forward for the Silver State, but it also proves that utilities can work with customers to provide clean renewable energy that they demand.”

The solar energy that VEA produced was drastically higher than anyone would have predicted. SolarWorld estimates that the solar garden created 32,680,000 kwh every year, which was enough to power nearly 4,000 homes.

This was a major undertaking for a purple state, which may inspire their peers throughout the Midwest to develop solar gardens of their own. It will reduce dependency on the electric grid, which is a problem for many remote states in the central part of the country.

3.     Las Vegas Casinos

A number of Las Vegas casinos have started investing in solar panels over the last couple of years. The Guardian reports that many of these casinos have cut costs considerably. Some of them are even selling the energy back to the grid.

“It’s no accident that we put the array on top of a conference center. This is good business for us,” Cindy Ortega, chief sustainability officer at MGM Resorts told Guardian reporters. “We are looking at leaving the power system, and one of the reasons for that is we can procure more renewable energy on the open market.”

There have been many benefits for casinos using solar energy. They are some of the most energy-intensive institutions in the world, so this has helped them become much more cost-effective. It also helps minimize disruptions to their customers learning online keno strategies in the event of any problems with the electric grid.

4.     Boston College

Boston College has been committed to many green initiatives over the years. A group of researchers experimented with solar cells on different parts of the campus to see where they could produce the most electricity. They discovered that the best locationwas at St. Clement’sHall. The solar cells there dramatically. It would also reduce CO2 emissions by 521,702 lbs. a year and be enough to save 10,869 trees.

Boston College is exploring new ways to expand their usage of solar cells. They may be able to invest in more effective solar panels that can generate far more solar energy.

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