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FOREIGN MINISTERS LOOK TO PRESS HUNGARY: European Union foreign ministers meeting in Brussels Monday looked to put pressure on Hungary, whose Prime Minister Viktor Orban is the major obstacle to passing an embargo on Russian oil.
Orban, whose landlocked country depends on Russia for some 60% of its oil, has remained steadfast in his opposition to the EU’s sixth round of sanctions, which was formally proposed this month.
He hasn’t been mollified by a provision that would have grant extensions of up to 12 months to Hungary, the Czech Republic, and Slovakia in an effort to help the land-locked countries secure alternative supplies. (Orban flatly dismissed that proposal two days after it was introduced by the commission, saying the timeline was not nearly long enough and would amount to a “nuclear bomb” for the Hungarian economy.)
Since all EU countries must vote to approve the sanctions package, Orban could single-handedly block the sanctions package. That’s prompting deep concern within the bloc, which has so far managed to strike a unified tone in condemning Russia and passing punishing sanctions against Moscow, including a ban on Russian coal supplies.
Lithuanian Foreign Minister Gabrielius Landsbergis told reporters that “the whole union is being held hostage by one member state.” (EU diplomats later told Reuters that Landsbergis was, in fact, referring to Hungary.)
Landsbergis added that Orban’s opposition took some in the bloc by surprise this time around, especially since recent proposals might have given them more time to slowly phase off Russian supplies and secure a viable alternative. “Everybody expected that [the concessions] would be enough,” he said of the EU’s effort.
So why is Hungary holding out on the oil ban so long? Orban might be making a strategic play, some diplomats suggested, holding out for EU funds he’d been seeking for energy infrastructure projects in his country before agreeing to the plan.
"The European Commission has caused a problem with a proposal so it's a rightful expectation from Hungary ... that the EU should offer a solution: to finance the investments and compensate for ... the (resulting) price rises which necessitates a total modernisation of Hungary's energy structure in a magnitude of 15-18 billion euros," Hungarian Foreign Minister Peter Szijjarto said on Facebook, according to Reuters.
But the cracks are beginning to show. And while the bloc may well move to pass the oil embargo if Orban manages to come around, the likelihood that the bloc can successfully reach consensus in taking aim at Russia’s gas sector is not high.
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RELATED – GUIDANCE ON MAKING PAYMENTS FOR RUSSIAN GAS: Meanwhile, EU leaders drafted guidance this weekend on Russian gas payments, seeking to add clarity within the bloc and help members avoid any possible sanctions violations as they continue to import Russian gas.
News of the draft guidance was reported by Bloomberg, and comes after Putin issued a decree ordering all “unfriendly nations” to begin paying for their gas in rubles at risk of getting cut off. Kremlin officials said countries could make payments in euros or dollars to its state-owned bank, Gazprombank, which it would then convert to rubles; but the EU had stopped short of saying whether making those payments would amount to a breach of sanctions.
EU leaders sent a copy of the revised guidelines to member states Friday, a spokesperson told Bloomberg, which told utility companies they should “make clear” in a statement that they consider their obligations fulfilled by making payments in euros or dollars.
EU sanctions “do not prevent economic operators from opening a bank account in a designated bank for payments due under contracts for the supply of natural gas in a gaseous state, in the currency specified in those contracts,” the commission said. “Operators should make a clear statement that they intend to fulfil their obligations under existing contracts and consider their contractual obligations regarding the payment already fulfilled by paying in euros or dollars, in line with the existing contracts.”
SAUDI ARAMCO POSTS RECORD PROFITS: Oil giant Saudi Aramco posted record Q1 earnings yesterday, amounting to an 80% increase in net income over the same period last year.
The company netted $39.5 billion during the first three months of the year, versus $21.7 billion during Q1 2021.
Comparatively, earnings for competing majors ExxonMobil and Chevron during Q1 were $5.5 billion and $6.26 billion respectively.
POLICY PAPER TAKES UP ADVANTAGES OF US PLASTICS: Much of the conversation around plastic products deals with the negative consequences of ocean pollution, but a new paper out today from conservative policy group CRES Forum posits that plastics can have net environmental benefits and that the U.S. plastics industry wields special advantages over competitors, such as China’s industry, that enable emissions reductions.
As a starting point, the paper notes that plastics are lighter weight than alternative materials like cloth and therefore require less energy to be transported.
It also lays out how ethane, a key feedstock in plastics manufacturing which can be extracted abundantly from U.S. shale reserves, has a lower emissions intensity than naphtha, the primary feedstock in Chinese plastics manufacturing.
Author Dave Banks, formerly an energy adviser in the Trump White House, argued lawmakers have underappreciated these advantages and sought instead to punish manufacturers for environmental impacts of their products which are out of their hands.
As an example, he referred to the Break Free from Plastic Pollution Act of 2020, which won nearly 100 exclusively Democratic cosponsors in the House and proposed a moratorium on new permits for domestic plastics production. Democratic Sen. Jeff Merkley introduced a version of the bill last March.
“They would essentially say the industry needs to be responsible for the environmental costs related to consumer behavior,” Banks told Jeremy. “And I think that is a bridge way, way, way too far.”
REPUBLICANS ASK FOR SOCIAL COST OF GHG UPDATE: Leading Senate Republicans are asking the White House for updates on the activities of President Joe Biden's working group on social cost of greenhouse gasses, which he created via executive order on his first day in office.
Nine committee ranking members, including Shelley Moore Capito of Environment and Public Works, sent a letter to the White House on Friday asking for information on the working group’s mechanics, membership, and details about how it will solicit public comment on its update to the “SC-GHG.”
The working group was ordered to develop new estimates for the monetized damages resulting from carbon dioxide, methane, and nitrous oxide emissions.
In the meantime, the administration had been using an interim cost of $51 per ton of carbon in particular when performing environmental reviews before a federal judge enjoined them from doing so in February. A federal court later lifted the injunction, allowing agencies to employ the methodology again.
The Interior Department noted in its onshore lease sale announcement last month, which shrank the acreage to be made available by 80%, that it had performed its environmental assessment with the $51 per ton social cost of carbon value, and it only announced the lease sales once the appeals court lifted the order enjoining its use.
The Republican members pointed to the shrinking of acreage and said the working group’s GHG interim recommendations “are being marshaled by federal agencies in an attempt to slow or stop the development of energy resources and infrastructure.”
NEWSOM SEEKING ADDITIONAL FUNDING TO SHORE UP GRID: Gov. Gavin Newsom is asking California’s legislature for billions of dollars to make the grid more reliable, a pressing need for a state that has been subjected to rolling blackouts in recent years.
Newsom’s request, circulated on Friday, asks for $5.2 billion for a “Strategic Electricity Reliability Reserve,” which it envisions would provide 5,000 megawatts “when the grid is stressed.”
And the grid is stressed. Utilities and public officials are warning of shortages and potentially more blackouts in the coming months in California, as they are in other regions.
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Financial Times Ukraine war is ‘best opportunity’ for nuclear comeback since Fukushima, industry says
TUESDAY | MAY 17
12:00 p.m. The Environmental Law Institute will host a remote webinar event where experts will break down the SEC’s climate-related risk disclosure rule.