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EUROPE’S GAS PROBLEMS: Sky-high gas prices continue to afflict Europe, even as the American market sees relief after average spot prices hit their highest peak in years back in October.
Europe’s benchmark TTF closed at a record 128.30 euros ($144) per megawatt hour on Monday, and prices have only moved upward since. Futures traded above 145 euros this morning before falling back below 140.
Meanwhile, the U.S. has seen prices fall overall in recent weeks, with natural gas futures on the New York Mercantile Exchange trading at around 38% less today than on Oct. 5.
By comparison, gas in Europe is going for more than 10 times what it is selling for in the U.S.
A confluence of factors is driving the surge in Europe and keeping the continent from being able to catch up, said Fred Hutchison, president and CEO of LNG Allies. Hutchison noted that a leading cause goes back to last winter.
“It starts with the inability to get their storage adequately replenished over the summer,” Hutchison said.
For further comparison, European markets also have less storage capacity than the United States, he said, and they are characteristically import-reliant, whereas the U.S. has a leading natural gas production footprint.
The latter factor has especially benefited the U.S.
“The [U.S.] market has been responding,” Hutchison said, assessing that earlier price spikes were mostly due to domestic gas production having not recovered just yet from the pandemic.
Now, rig counts are up in Appalachia, and the market is getting more associated gas from oil drilling in the Permian, he said.
The Russia factor: Much of the volatility around European gas has a certain Russian flare. The market has moved with news of Russia’s troop build-up along the Ukrainian border, as well as with new comments from leaders — especially those in Germany’s new government — about how that activity is connected to the fate of Nord Stream 2.
Futures went up 10% earlier this week after German foreign minister Annalena Baerbock said troop activity is a “factor” contributing to the outstanding status of the pipeline
But separate from the prospect of new supply, Europe already has a special reliance on Russian gas through existing channels, and additional flows there have not been forthcoming.
“It appears that they haven't moved very quickly to meet Europe’s extra gas needs,” Hutchison said of Russia. “They don’t have to have Nord Stream 2 be operational to be able to provide more gas to the continent.”
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MAINE HYDRO PROJECT GETS ITS DAY IN COURT: A Maine judge heard arguments yesterday in conjunction with a request by developers of the New England Clean Energy Connect to enjoin enforcement of the recently-passed ballot initiative seeking to end the project.
District Court Judge Michael Duddy indicated that he will rule on the injunction request before Sunday, when the new law goes into effect, the Bangor Daily News reports.
Mainers passed the new law via ballot initiative in November, and it prevents such high-impact transmission projects in the Upper Kennebec Region, where the NECEC was sited. The law also requires the Maine Legislature to approve similar projects throughout the state retroactively.
The project, which would bring Canadian hydropower through Maine and into the New England grid, earlier received multiple permits from state and federal authorities to build. About 124 miles of right of way, or 80%, of the transmission line’s corridor has already been cleared, and developers have argued that the “rules of the game” were changed after construction started.
If the project fails, its backers assert it will serve a major blow to a region with natural resource limitations and high clean energy ambitions.
“You have to go where the resource is really good, and that means that you're going to have to build transmission lines,” Gary Sutherland, director of strategic affairs and stakeholder relations for NECEC’s hydropower vendor Hydro-Quebec, told Jeremy.
NUCLEAR GROUP CALLS FOR UPDATE TO NRC LICENSING: A new report from the Nuclear Innovation Alliance calls on the Nuclear Regulatory Commission to speed up its licensing reviews for advanced reactor projects in the interest of enabling “rapid decarbonization.”
The authors establish that the NRC’s process “has proven to take very long amounts of time, inconsistent with the public’s interest in timely deployment of nuclear energy for climate mitigation and other public goals.”
The commission estimates a 3-4 year period for obtaining a Combined License for a new reactor design, or 6-7 years to finish both the Construction Permit and Operating License, whereas advanced reactor projects need something in the 1-3 year range to ensure economic viability and support clean energy goals, the report says.
NIA recommends that NRC “rethink preapplication engagement” and restructure its safety evaluation process to cut down on time, as well as better communicate with applicants during the review.
“No one designs a reactor intending to build just one plant,” it also noted, saying that a faster process will make advanced nuclear plants more palatable to customers.
Lawmakers and analysts across the ideological spectrum have recognized existing nuclear and advanced nuclear technology as a veritable necessity if the U.S. is to decarbonize its grid, and speeding up NRC licensing also has some bipartisan support in Congress. Republican Rep. Anthony Gonzalez and Democratic Rep. Elaine Luria introduced legislation last week that would eliminate review fees that project developers have to pay the NRC for their license applications.
HUNDREDS-STRONG GROUP OF FIRMS CALLS FOR SPENDING BILL PASSAGE: A group of 437 businesses, investors, and trade groups is imploring Congress to achieve “swift enactment” of the Build Back Better Act for its various energy and climate provisions, telling lawmakers there is “no time to waste.”
The signatories, which include IKEA, Ben & Jerry’s, and Unilever, also praise the bipartisan infrastructure bill but assert that it’s “not sufficient” to affect climate change and hail the spending bill’s carbon-free energy and transportation tax incentives.
They also endorse a carbon price and corporate polluter fee, the latter of which has received special support from stakeholders in carbon-intensive industries like steel manufacturing, who say it will be necessary to keep the playing field level as domestic firms compete with others whose governments have more lax emissions rules.
Democratic hopes for passing the bill this year, though, faded this week, after it became clear that centrist Sen. Joe Manchin of West Virginia remained far from agreement.
WHITE HOUSE OUTLINES PLANS TO REPLACE ALL LEAD PIPES: “Action plan” week carries on. The White House revealed a plan this morning detailing how it aims to kickstart its target of replacing all the nation’s lead pipe infrastructure in 10 years.
As part of the plan, EPA will allocate $3 billion in funding authorized by the bipartisan infrastructure law to states, tribes, and territories for lead service line replacement next year. EPA and the Labor Department will also create regional technical assistance hubs “to fast track lead service line removal projects in partnership with labor unions and local water agencies.”
Removing lead paint from homes is another priority of the plan, which is to be funded through grants from the Department of Housing and Urban Development.
NEW GAS INSTALLATIONS TO BE BANNED IN NEW YORK CITY: New York City approved a measure yesterday to ban gas use in most new buildings beginning in 2024 for sub-seven story structures.The legislation passed the city council with 40 votes in favor and just seven against.
“We are in a climate crisis and must take all necessary steps to fight climate change and protect our city,” City Council Speaker Corey Johnson said.
The new law will also prohibit gas use in large buildings over seven stories beginning in 2027 with some exceptions.
CORRECTION: Yesterday's newsletter mischaracterized Rep. Ro Khanna's bill on the 45Q carbon sequestration tax credit. Khanna's bill would repeal the portion advantaging enhanced oil recovery, not the entire credit. Our apologies for the mistake.
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THURSDAY | DEC. 16
3 p.m. The American Conservation Coalition, along with Dream Corps Green For All, will host a discussion called “Finding Common Ground: The Growing Climate Solutions Act,” featuring Republican Rep. Don Bacon and Democratic Rep. Abigail Spanberger. The event will be livestreamed on Twitter, Facebook, and YouTube.