A logo of Brazil’s state-run Petrobras oil company is seen at their headquarters in Rio de Janeiro, Brazil October 16, 2019. REUTERS/Sergio Moraes/File Photo Acquire Licensing Rights
RIO DE JANEIRO, Sept 28 (Reuters) – The head of Brazil’s state oil firm Petrobras (PETR4.SA) said on Thursday it will sign a memorandum of understanding with mining giant Vale (VALE3.SA) to study potential joint ventures in renewable energy, even as looks to new suppliers for diesel.
“Vale is a consumer (of energy) and probably very interested in hydrogen production, it has some activities in energy transition that are interesting,” Petrobras CEO Jean Paul Prates told reporters, saying the companies would look for synergies.
The partnership would come at a time when Petrobras is pushing to move into renewable energy. Earlier this month, the state-run firm unveiled plans to develop offshore wind farms.
Regarding diesel, Prates said Petrobras could if necessary and strategic import the fuel from abroad as bans on Russian imports – the main source of imported diesel in Brazil – could force the country to look for suppliers elsewhere.
Russia surpassed the United States as Brazil’s top supplier this year.
“We’re going to import to meet our contracts and possibly one or two more quotas that are necessary and that we see as an opportunity to enter a new market or a new customer that is good for us,” Prates said.
Meanwhile, spiking oil prices have widened the gap between Petrobras’ refinery prices and those charged abroad, which analysts say is discouraging third-party imports. Petrobras last adjusted its gasoline and diesel prices in mid-August.
“The models, for the time being, indicate it’s possible to maintain the same level with absolutely no risk to the company’s profitability,” said Prates.
Petrobras’ refinery utilization factor is currently at a rate of 94%, he added.
Reporting by Marta Nogueira; Editing by Steven Grattan and Sarah Morland
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LITTLETON, Colorado, Sept 19 (Reuters) – The deepening debt crisis in China’s construction sector – a key engine of economic growth, investment and employment – may trigger an unexpected climate benefit in the form of reduced emissions from the cement industry.
Cement output and construction are closely correlated, and as China is by far the world’s largest construction market it is also the top cement producer, churning out roughly 2 billion tonnes a year, or over half the world’s total, data from the World Cement Association shows.
The heavy use of coal-fired kilns during manufacturing makes the production of cement a dirty business. China’s cement sector discharged 853 million tonnes of carbon dioxide in 2021, according to the Global Carbon Atlas, nearly six times more than the next largest cement producer, India.
The cement sector accounts for roughly 12% of China’s total carbon emissions, according to Fidelity International, and along with steel is one of the largest greenhouse gas emitters.
But with the property sector grinding to a halt due to spiralling debt worries among major developers, the output and use of cement are likely to contract over the next few months, with commensurate implications for emissions.
HOUSING SLUMP
The property markets account for roughly a quarter of China’s economy, and for years Beijing has used the sector’s substantial heft to influence the direction of the rest of the economy by spurring lending to would-be home buyers and fostering large scale construction projects.
But the big property developers racked up record debt loads in recent years that have forced borrowing levels to slow, stoked concerns among investors, and slowed spending across the economy.
China Evergrande Group, once the second largest developer, defaulted on its debt in late 2021, while top developer Country Garden has drained cash reserves to meet a series of debt payment deadlines in recent months.
Fears of contagion throughout the property industry has spurred households to rein in consumer spending, which has in turn led to deteriorating retail sales and further economic headwinds.
Beijing has stepped in with a slew of measures designed to right the ship, including easing borrowing rules for banks and lowering loan standards for potential home buyers.
But property prices in key markets remain under pressure, which has served to stifle interest among buyers and add to the pressure on investors and owners.
CEMENT CUTS
With construction activity across China slowing, and several major building sites stopped completely while tussles over debt payments among developers continue, cement output is likely to shrink to multi-year lows by the end of 2023.
During the March to August period, the latest data available, total cement output was 11.36 million short tons, down 2 percent from the same period in 2022 and the lowest for that period in at least 10 years, China National Bureau of Statistics data shows.
In addition to curtailing output in response to the bleak domestic demand outlook in the property sector, cement plants may be forced to curb output rates over the winter months as part of annual efforts to cap emissions from industrial zones during the peak season for coal heating.
Some cement producers will likely look to boost exports in an effort to offset lower domestic sales, and in July China’s total cement exports hit their highest since late 2019.
But Chinese firms will face stiff competition from lower-cost counterparts in Vietnam, which are by far the top overall cement exporters and already lifted overall cement shipments by close to 3% in the first half of 2023, data from the Vietnam National Cement Association (VNCA) shows.
Some Chinese firms may be prepared to sell exports at a loss for a spell while they await greater clarity over the domestic demand outlook.
But given the weak state of global construction activity amid high interest rates in most countries, as well as the high level of cement exports from other key producers such as India, Turkey, United Arab Emirates and Indonesia, high-cost Chinese firms may be forced to quickly contract output to match the subdued construction sector.
And if that’s the case, the sector’s emissions will come down too, yielding a rare climate benefit to the ongoing property market disruption.
The opinions expressed here are those of the author, a columnist for Reuters.
Reporting By Gavin Maguire; Editing by Miral Fahmy
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
An Airbus A319 can be seen flying 500 feet above the ground while on final approach to land at LaGuardia Airport in New York City, New York, U.S., January 6, 2022. REUTERS/Bryan Woolston Acquire Licensing Rights
BRUSSELS, Sept 4 (Reuters Breakingviews) – Short flights within Europe are frequent flyers on wish lists of things to ban. In the name of cutting carbon dioxide emissions, countries from Germany to Spain are proposing to prevent brief air trips, and lobbyists like Greenpeace say governments should require travellers to choose trains or other ground transport for shorter journeys. But not all short flights are alike, and banning commercial hops makes less sense than targeting private jets.
In 2022 aviation emitted 800 million metric tons of CO2, around 10% of the world’s 8 billion tons of CO2 emitted annually by various means of transport, according to the International Energy Agency. In the same year European Union emissions were around 2.5 billion tons and in the recent past flying has contributed about 4%. But most of that is long-haul flights. A 2022 study of 31 European countries found that flights shorter than 500 km account for 28% of departures, but under 6% of fuel burnt.
Commercial jets do pollute more than ground transit, but they also have advantages that can’t be easily matched. To avoid a disproportionate impact on disabled passengers and others en route to more distant destinations, train services need to catch up first. Denying a short flight to connecting passengers could just send them to their cars, according to KLM CEO Marjan Rintel.
Limiting private jet travel would make a bigger difference, with fewer broad-based disruptions. Private jets have a far bigger impact per passenger on the environment than their flying-bus counterparts: as much as 45 times the amount of emissions per passenger, according to the Institute for Policy Studies. Greenpeace data shows that private jet flights in Europe put out 3.4 million tons of CO2 in 2022, twice 2021 levels, and mostly on flights with a range of less than 750 km.
Short-haul bans are especially beside the point when they look more like industrial policy than climate action. In France, where domestic connections are already prohibited for journeys of under two and a half hours, only three routes were actually banned, with projected savings of just 55,000 tons of carbon dioxide output per year. Shuttering unprofitable routes and prohibiting new competition on those legs acted more like a leg-up for Air France’s business plan, according to Davy transport analyst Stephen Furlong.
In any case, there’s a positive non-climate economic case for short-haul flights. They have allowed upstart carriers like Norwegian Air to challenge legacy airlines and rebuild after the pandemic. Connecting flights also make it possible for Brussels Airlines to serve as a hub for passengers in and out of Africa, a lifeline for countries whose livelihoods depend on travel routes.
There’s a case for phasing out shorter flights over time, and for surcharges like Belgium’s 10 euro tax on flights of less than 500 km. But banning brief mass-transit trips now is a hop too far.
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Countries such as France, Spain, Belgium and Germany have enacted or are considering measures to reduce or ban short flights. The European Union’s long-term mobility plan calls for discouraging plane travel where lower-impact alternatives exist.
Direct emissions from aviation accounted for 3.8% of the EU’s total carbon dioxide emissions in 2017, according to the European Commission. Aviation is responsible for 14% of transportation-sector emissions.
Greenpeace research found that the number of European private jet flights jumped from 118,756 in 2020 to 572,806 in 2022, with carbon dioxide emissions going from about 355,000 metric tons to 3.4 million tons over the same period. More than half of 2022 private jet travel was for distances of less than 750 km.
Editing by George Hay and Oliver Taslic
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[1/2]Damaged rooftops of a Fort Myers apartment complex are seen from a U.S. Army National Guard helicopter as U.S. National Guard Bureau Chief General Daniel Hokanson tours the area by air after Hurricane Ian caused widespread destruction in Fort Myers, Florida, U.S., October 1, 2022. REUTERS/Kevin Acquire Licensing Rights
Aug 31 (Reuters) – Hurricane Idalia is expected to increase insurance costs for Florida commercial real estate (CRE), particularly owners of apartments and other multifamily properties already grappling with soaring premiums driven by climate change, industry executives and analysts said.
Idalia on Wednesday plowed through Florida’s Gulf Coast as a Category 3 storm, lashing the area with sustained winds of up to 125 mph (201 kph), accompanied by torrential rains and pounding surf, before heading north to the Carolinas.
The storm follows wildfires in Hawaii’s island of Maui, the deadliest in the U.S. in more than a century, which burnt the resort town of Lahaina to the ground, leaving at least 115 people dead and hundreds missing.
Scientists say global warming is fueling such disasters and
making hurricanes worse.
Ten industry executives and analysts said that in turn is pushing up insurance costs for commercial real estate developers in California and the southern coastal Sun Belt States, particularly Florida, which is hit by more hurricanes than any other state, according to U.S. government data.
This year, Florida commercial property insurance rates have climbed to 93 cents per $100, from 68 cents per $100 in 2022, according to estimates provided to Reuters by real estate investment firm Walker & Dunlop.
That 37% jump was driven in large part by last September’s Hurricane Ian, the worst storm to hit the state in two decades, causing $53 billion of insured damages.
“The bottom line is the economics of climate change are coming into our business, and if you’re not focused on it, you’re missing something,” said Willy Walker, CEO of Walker & Dunlop, one of the largest U.S. CRE lenders.
Costs have risen the most on multifamily properties such as apartments and condos, according to industry executives and data from credit ratings agency Moody’s. That is because such buildings often have wood frames which are more prone to fires, and because high tenancy rates generate more claims.
In Florida, UBS expects Idalia to result in insured losses of $9.36 billion based on preliminary estimates, the brokerage said. Those losses will mainly arise from homeowners and commercial property lines, according to Moody’s.
“Compared to other CRE asset classes, multifamily has half, if not a third the amount of insurers willing to underwrite the risk,” said Ryan Barber, a managing director at Marsh, a leading insurance broker.
Florida multifamily property owners are bearing the greatest insurance cost increases of all states and asset classes in the U.S., according to Martha Bane, managing director of the property practice at Gallagher, a major insurance and reinsurance broker.
“Wood frame multifamily assets in Florida will be skewed in the impact from a financial standpoint,” Bane said, referring to Idalia and the peak in hurricane season expected in September.
“They are most likely to suffer significant damage, already have high deductibles, and they are going to see elevated rate increases and just a general pullback in coverage.”
Property insurance costs to multifamily assets in Florida have gone up anywhere from 30% to 70% in the past year, and are even higher for those with prior losses, non-renewing insurance carriers or valuation issues, she said.
Nationally, CRE properties’ insurance costs have grown roughly 7.6% annually on average since 2017, according to an August Moody’s report.
Some insurance firms have pulled out of Florida in recent years because of the risk of heavy losses.
RENTS, CAP RATES
Rising insurance premiums on multifamily properties have contributed, among other factors, to rent increases in Florida and elsewhere, said three industry executives.
Apartment rents have increased by over 20% on average since 2020, according to an August report by ratings agency KBRA. The Florida markets of Miami, Tampa and Orlando topped the list, each seeing hikes of over 33% from January 2020 to April 2023.
Insurance costs are also forcing CRE lenders to boost due diligence on refinancing and when pricing deals on apartment blocks, executives said.
For example, insurance costs are increasingly factoring into the so-called “cap rates” that CRE lenders use to assess the profitability of a prospective loan used to finance apartment blocks, which in turn affects the loan interest rate.
“When we’re looking at cap rates in Florida right now on our sales, we do a pre-insurance/post-insurance cap rate adjustment,” said Walker. “Insurance cost is a huge issue.”
Reporting by Matt Tracy; editing by Michelle Price and Marguerita Choy
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SYDNEY, July 28 (Reuters) – The Australian state of Victoria will ban natural gas connections to new homes from next year as part of a plan to cut emissions and lower energy bills, the state climate action minister said on Friday.
Australia’s second-most populous state is the country’s largest consumer of natural gas with around 80% of homes connected but also has ambitious plans to reach net zero emissions by 2045, five years ahead of the federal government.
Minister for Climate Action Lily D’Ambrosio said on Friday that new homes requiring planning permits must connect to all-electric networks. The gas sector contributes 17% of the state’s emissions.
“Reducing our reliance on gas is critical to meeting our ambitious emission reduction target of net zero by 2045 and getting more Victorians on more efficient electric appliances which will save them money on their bills,” D’Ambrosio said in a statement.
The changes will apply to all new public buildings yet to reach the design stage, including housing, schools, and hospitals.
Victoria also launched several grant and training programmes to support electrification, including a A$10 million ($6.7 million) programme to lower prices for solar equipment and heat pumps and a A$3 million package to train tradespeople on new equipment.
The plan comes as southeastern Australia faces potential gas shortages from mid-decade as output falls from the offshore fields, operated by Exxon Mobil Corp (XOM.N), that have long supplied the region.
Rewiring Australia, a non-profit which advocates for electrification, backed the move and said “electrification is the fastest and most cost-effective way to shave thousands of dollars a year from energy bills and lower our emissions.”
Australia last month finalised a package of rules for the domestic gas market including a cap on wholesale prices that was first introduced in December.
($1 = 1.4932 Australian dollars)
Reporting by Lewis Jackson; Editing by Stephen Coates
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KAMPALA, July 26 (Reuters) – France’s TotalEnergies (TTEF.PA) said on Wednesday it had begun commercial drilling this month at its Tilenga petroleum project in Uganda’s west ahead of an expected start of oil production in the east African country in 2025.
TotalEnergies has faced fierce resistance from environmental protection groups and green energy campaigners who say the Tilenga project, which is partly located in a national park, and a planned crude oil export pipeline are a disaster for the planet.
“Drilling of the Tilenga wells began in July 2023, with production scheduled to start in 2025. A total of 420 wells will be drilled at Tilenga,” a spokesperson for TotalEnergies said.
TotalEnergies and its partner, China’s CNOOC, have said production in Tilenga will hit a peak of 190,000 barrels per day.
Tilenga is one of Uganda’s two oil projects. Commercial drilling at Kingfisher, the second project – which is controlled by CNOOC – begun in January.
A coalition of environmental pressure groups said on Wednesday that drilling in the Murchison Falls National Park (MFNP) and the associated crude oil pipeline was detrimental to global efforts to cut reliance on fossil fuels and would devastate the park’s ecosystem.
“The decision by TotalEnergies and its partners to drill for oil within MFNP, while ignoring the biodiversity conservation, climate change and socio-economic risks … is a direct contradiction to the global urgency to protect our remaining wild spaces and reduce fossil fuel reliance,” they said in a statement.
The park, one of Uganda’s largest and most visited, is bisected by the River Nile and is famed for its spectacular vistas and rich biodiversity that includes wild animals such as elephants, giraffes, hippos and chimpanzees.
The park is also home to a wetland site designated to be of international importance under the Ramsar Convention – the Murchison Falls-Albert Delta Wetland System.
TotalEnergies says it is committed to protecting the park’s biodiversity and that development will be limited to an area that is less than 1% of the park land.
Reporting by Elias Biryabarema in Kampala and Benjamin Mallet in Paris; Writing by Elias Biryabarema; Editing by George Obulutsa and Mark Potter
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[1/2] Greenpeace activists hang a banner to protest Deutsche Bank and DWS investment policies on Deutsche Bank’s headquarters in Frankfurt, Germany, June 14, 2023. REUTERS/Tom Sims
FRANKFURT, June 14 (Reuters) – Greenpeace activists scaled Deutsche Bank’s (DBKGn.DE) headquarters in Frankfurt on Wednesday and strung up a large yellow banner to protest against the climate investment policies of the German lender and its asset management company DWS.
The action came a day ahead of the annual shareholder meeting of DWS (DWSG.DE), which is mostly owned by Deutsche Bank and has drawn attention from activists and regulators over allegations that it misled investors about “green” investments. DWS has disputed the allegations.
Deutsche Bank said that sustainability and climate protection were “strategic priorities”, and that it supports DWS in the development of its sustainability policies and standards.
The German-language Greenpeace banner was unfurled shortly after 6 a.m. CEST (0400 GMT) and stretched across part of the glass facade on the lower section of Deutsche Bank’s twin office towers. The banner translated as “Force DWS, protect the climate”.
The event drew a half dozen police vehicles, but an officer said there would be no arrests.
Last year, the chief executive of DWS stepped down after raids by prosecutors over the allegations of so-called “greenwashing”.
The new CEO, Stefan Hoops, plans to tell shareholders at Thursday’s meeting that DWS has been cooperating with investigations, according to a transcript of prepared remarks on its website. The company also continues to stand by its financial disclosures and its fund prospectuses, Hoops will add.
Mauricio Vargas, a Greenpeace finance expert who was standing outside Deutsche Bank’s headquarters, said: “DWS’s scandal is Deutsche Bank’s scandal.” He plans to address shareholders on Thursday.
DWS said in a statement that it agreed with Greenpeace that climate change requires decisive action but disagreed on “how to get there”. It said it had recently adopted new policies on dealing with coal companies.
Reporting by Tom Sims, Editing by Rachel More and Jamie Freed and Sharon Singleton
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June 12 (Reuters) – Duke Energy Corp (DUK.N) said on Monday it has agreed to sell its unregulated utility scale Commercial Renewables business to Brookfield Renewable (BEP.N), (BEPC.N)
in a deal valued at about $2.8 billion.
Duke said it expects net proceeds of about $1.1 billion from the sale, which the company will use to help incorporate more than 30,000 megawatts of regulated renewable energy into its system by 2035.
The proceeds are also expected to help strengthen its balance sheet, avoid additional debt and improve grid reliability.
The deal comes at a time when electric utilities in the United States are largely shifting away from fossil fuels toward cleaner energy sources, including solar and wind, to meet climate goals.
Charlotte, North Carolina-based Duke is planning to spend $65 billion over the next five years, most of it directed toward its transition to low-carbon energy sources, the company’s CFO told Reuters last week.
Duke aims to reduce carbon emissions by more than 50% by 2030 and plans to retire all of its coal plants by 2035. Its goal is to achieve net-zero carbon emissions by 2050.
The sale agreement with renewable power assets operator Brookfield Renewable includes more than 3,400 megawatts of utility-scale solar, wind and battery storage across the United States, along with operations, new project development and current projects under construction, Duke said on Monday.
The deal is expected to close by the end of 2023, Duke said. Morgan Stanley & Co LLC and Wells Fargo Securities LLC are Duke’s financial advisers, with Skadden, Arps, Slate, Meagher & Flom LLP serving as legal counsel.
Duke, which initiated the sale process for the commercial renewables unit in November, reported a smaller-than-expected first-quarter profit last month, hurt by unfavorable weather, lower volumes and higher interest expenses.
Reporting by Deborah Sophia in Bengaluru; Editing by Krishna Chandra Eluri and Pooja Desai
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June 12 (Reuters) – Rio Tinto (RIO.AX), (RIO.L) will invest $1.1 billion to expand its “low-carbon” aluminum smelter at Complexe Jonquière in Quebec, Canada, the Anglo-Australian mining giant said on Monday.
The investment will boost annual capacity by about 160,000 metric tonnes of primary aluminum, the global miner said, adding it was sufficient to power 400,000 electric cars.
Pressure to cut greenhouse gas emissions has prompted Rio, Alcoa Corp (AA.N), and other aluminum manufacturers to launch a raft of products with lower carbon emissions.
The Canadian government has been involved in such efforts. It has invested in the ELYSIS technology pioneered by Alcoa and Rio Tinto that eliminates all CO2 emissions and replaces them with oxygen.
“This announcement brings us one step closer to the deployment of the first ELYSIS pots, which will make Quebec the leader in greenhouse gas-free aluminum production,” said Pierre Fitzgibbon, Quebec’s minister of economy, innovation and energy.
The Quebec government will provide up to $113 million in support for the latest smelter expansion.
“This is the most significant investment in our aluminum business for more than a decade…,” Rio Tinto CEO Jakob Stausholm said.
Construction will run over two-and-a-half years, with commissioning of the new pots expected to start in the first half of 2026 and the smelter fully ramped up by the end of 2026.
The project will create up to 1,000 jobs during peak construction, with about 100 permanent jobs.
The investment has been factored into the capital expenditure for 2023 to 2025, Rio Tinto said, retaining the capex guidance of $9 billion to $10 billion for 2024 and 2025.
The expansion will coincide with the gradual closure of potrooms at the Arvida smelter on the same site, Rio said.
Rio and the Canadian government also signed a memorandum of understanding (MoU) to strengthen supply chains for low-carbon primary metals, critical minerals and other value-added products, the miner said.
Reporting by Harish Sridharan in Bengaluru; Editing by Sriraj Kalluvila
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BRUSSELS, June 9 (Reuters) – The European Commission is working on plans to speed up investment in capturing and storing carbon dioxide emissions, it said on Friday, as the bloc prepares to slash its net greenhouse gas emissions to zero by 2050.
In a public consultation on the plans, the Commission said infrastructure to capture and store CO2 underground or use it in industries was not developing fast enough, hampered by factors including high costs to develop storage sites.
To try and boost the industry, the Commission said it will produce an EU strategy that could include 2040 and 2050 targets for CO2 storage infrastructure, or EU-wide standards on CO2 quality and access to carbon capture infrastructure.
Carbon capture and storage (CCS) projects are in their infancy in the EU and have a history of controversy in countries including Germany, where states blocked past efforts to launch projects. Some campaign groups have also opposed the technology on the grounds that it could be used to extend the life of coal power plants and polluting industries.
But plans to remove CO2 from the atmosphere have regained some traction as countries map out how to achieve net zero emissions – which will require some CO2 removals to balance out remaining emissions from industries that cannot reduce their CO2 output to zero, like aviation or agriculture.
“Emission reduction remains the highest priority of EU climate policies,” the Commission document said.
The EU already has targets in place requiring countries to expand forests and other natural ecosystems that can absorb and store CO2.
Brussels proposed a target in March for the EU to be able to store 50 million tonnes of CO2 per year by 2030, and has said this may need to reach 550 million tonnes by 2050 to hit the bloc’s net zero emissions goal.
For comparison, the EU’s total CO2 emissions from energy use were nearly 2.4 billion tonnes in 2022, according to Eurostat data.
Reporting by Kate Abnett;Editing by Elaine Hardcastle
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