Major developments in the European energy sector:

European carbon futures climbed to 63 euros per metric ton, which is a record, writes Stephen Stapczynski, Bloomberg reporter.

Gas: spot prices and the middlemen

Apart from carbon prices, also energy prices are increasing. Natural gas prices in Europe keep rising and recording new records.

“In Europe, the main spot price benchmark (the “TTF”) is a whopping €50/MWh ($17.5/MBtu). That’s never happened before,” wrote online Peter Zeniewski, Energy analyst at the IEA World Energy Outlook team (Öffnet in neuem Fenster). “So is a supply crunch looming? The winter looks pretty tight.”

Inventories are at a seasonal low. While many middlemen are taking advantage of the situation, some experts are panicking (and getting retweets).

“Russian producer Gazprom plans to send 183billion cubic metres (bcm) to Europe in 2021, Gazprom said in a conference call on Tuesday. This is the higher end of the 175-183bcm bracket the producer had already forecast in April,” wrote ICIS last week (Öffnet in neuem Fenster). A few days later, anyhow, Gazprom decreased the amount of gas shipped to Mallnow compressor station.

But some “good news” too.

“US offshore oil and gas operators are returning staff to more platforms in the wake of Hurricane Ida, but the vast majority of production remains offline,” wrote Argus Media last week (Öffnet in neuem Fenster).

 “Norway on Friday began to pump natural gas from the third stage of its offshore Troll field, a development that will extend the deposit’s producing lifetime beyond 2050, operator Equinor said on Monday (30 August),” reads an Euractiv article (Öffnet in neuem Fenster). Troll phase 3 is one of the most profitable projects throughout Equinor’s entire history, the company said.

Electricity: well…

Electricity prices are climbing too. “UK day-ahead electricity prices have surged to an all-time high of £219 per MWh, that's ***more than quadruple*** the average 2010-2020 price. Multiple factors affecting, including sky-high gas and CO2 prices, low nuclear and super-low wind,” wrote on Twitter Javier Blas, Chief Energy Correspondent at Bloomberg News.

Louder debates and politicisation risk

Politics are getting in the way. Politicians without energy experience intervene. In Italy, for instanc,e Matteo Salvini, secretary of the political party leading in the polls, supported nuclear power in an interview with La Repubblica. The risk of politicising the energy sector is increasing.

Meanwhile, in the UK continues the debate about Extinction Rebellion. Bloomberg News’ Jess Shankleman reported (Öffnet in neuem Fenster) that the group occupied “the headquarters of WWF to protest against their conservation activities.” They are (Öffnet in neuem Fenster) "demanding that WWF UK challenge the mass evictions and human rights abuses being carried out in the pursuit of conservation against indigenous groups in Tanzania, Kenya and Cameroon.” Apart from considerations about the meaning and the relevance of the act (and the reporting), it is clear that climate and human rights will be more and more overlapping themes.

Hydrogen

Possible news of the week in the hydrogen sector? “Spain leads in planned electrolyzer capacity for 2030 for producing renewable hydrogen with 72GW, followed by the Netherlands with 10GW,” wrote Alejandro Nuñez Jimenez, post-doc on Hydrogen at Harvard (Öffnet in neuem Fenster).

From my perspective, though, the most important stories are: Russia, Denmark, and Brazil are moving forward with their hydrogen plans, while Japan bets on innovation.

Starting from the country with the biggest potential in the medium term, Russia teamed up with Japan for hydrogen and ammonia production during the Eastern Economic Forum in Vladivostok. Novatek signed a Strategic Cooperation Agreement on “low-carbon projects” with the Japan Bank for International Cooperation (JBIC). “The Parties intend to cooperate on projects to produce hydrogen and ammonia, carbon capture, utilization, and storage technologies, as well as renewable energy projects in Russia, including ammonia and hydrogen production projects in the Yamal Peninsula.” The entire Russian energy system is flexing its muscles. "Our current plans include reaching a production volume of 30,000 tonnes of hydrogen per year by 2024,” Rusatom Overseas Vice President for Marketing and Business Development Anton Moskvin said on Thursday. Rusatom is a subsidiary of Russia’s nuclear energy company Rosatom.

Japan research community is registering successes. “Developed and demonstrated for the first time in the world: a photocatalyst panel reaction system that connects a two scale photocatalytic photocatalyst water decomposition panel reactor and a hydrogen / oxygen gas separation module. The test was successful,” reads a note released by Japanese research and development agency NEDO.

Brazil expects green hydrogen production to start in December 2022. “Installed in the Pecém Industrial and Port Complex (CIPP), the plant will be the group's first, with 3 MW capacity and a state-of-the-art electrolyzer module for the production of fuel with guaranteed renewable origin,” said the local government of the northeastern state, on the Atlantic coast.

Worth reminding that German companies are signing deals. Germany-based Bosch Group teamed up with US-headquartered BEV and FCEV manufacturer Nikola. The focus of the German companies include also equipment and agricultural machinery production (German Aerospace Centre teamed up with Cologne-based engine manufacturer Deutz).

In Denmark Switzerland’s H2 Energy Europe expects Power-to-X (PtX) facility near Esbjerg (Denmark) to start operations by 2024. The gas should be used in the transportation sector. 

Denmark will bank on its florid wind sector and its good relations with neighbours. Everfuel signed a deal with Trelleborg Municipality, its first contract in its ambitious to roll out hydrogen refueling stations in Sweden.

In conclusion, Sinopec is registering significant progresses in downstream, midstream, and upstream. This will have an impact also on the hydrogen sector too. "Sinopec will expand forcefully into making hydrogen from renewable energy … and using green hydrogen for refining," Chairman Ma Yongsheng commented on Monday.

European agenda

Energy Commissioner Kadri Simson will make the headlines this week. So far she has only three appointments on her calendar, but all three are quite important: today she opens the videoconference on European photovoltaics (EU PVSEC), tomorrow she participates in an online conference organized by the newspaper Politico on hydrogen. He will also hear in these days central figures from the Balkans, Colombia, and Great Britain (he hears the Secretary of State for Energy Kwasi Kwarteng). He will also hear from Irena Director General Francesco La Camera.

Commissioner Mairead McGuinness will attend the Climate Bonds Initiative Conference 2021.

European ministers continue to discuss the Recovery and Resilience Facility. The Council is also planning a working party on energy to speak about the Energy Charter and the review of the Renewables Directive.

In the energy sector, though, the most relevant developments will come from the Council. Members of the working party on taxation issues talk on Thursday about the taxation of energy products and electricity.

The Parliament will be speaking about the Farm to Fork strategy.

European political and legal developments

The Bundesnetzagentur, which reports to Germany's economy minister, has taken note (Öffnet in neuem Fenster) of the ruling by the Court of Justice of the EU (CJEU) on the independence and competence of regulators and the transposition of unbundling requirements in the energy sector. The ruling will force  the Bundesnetzagentur (BnetzA) to make changes in the way it works. tThe Court's decision effectively ruled that European energy directives were not correctly transposed into German law.

The CJEU also published the ruling on the Energy Charter Treaty (Öffnet in neuem Fenster). According to CAN Europe (Öffnet in neuem Fenster), "you can not use the arbitration system under the Energy Charter Treaty (ECT) to seek redress in disputes between Member States.”

Regarding the priorities of the Slovenian Presidency of the Council, Infrastructure Minister Jernej Vrtovec told the Parliament’s Industry, Research and Energy (ITRE) Committee (Öffnet in neuem Fenster) that the Presidency will continue to work on Trans-European Energy Networks (TEN-E regulation), and will start negotiations with the Parliament as soon as possible. The Presidency also intends to begin work on the "Fit for 55" package proposals.

The EIB has created a Climate and Environment Advisory Council that will provide independent advice and expertise on the activities the group is pursuing to achieve its ambitions for climate action and environmental sustainability. On Wednesday, September 1, the first meeting (Öffnet in neuem Fenster).