All posts tagged energy


Carbon Capture and Storage (CCS): the Silver Bullet of the Energy Transition?

By Gerard Kreeft

Harry Houdini, the famous 19th century illusionist, created a sensation when he made an elephant disappear. The Government of the Netherlands in 2017 continued this tradition. It promised to make one-third of CO2 emission reductions, scheduled for 2030, disappear by storing them offshore.

Houdini’s illusion caught the fancy of the world. The illusion of the Netherlands is that the promise of carbon capture and storage of CO2 is still not fully comprehended, understood or simply forgotten. Then, thanks to offshore carbon storage, the Netherlands was to become a leader of the green transition.

There is no doubt that the previous government was overzealous in promising how offshore carbon capture and storage (CCS) could benefit the energy transition. The new Dutch coalition, scheduled to be officially installed early 2022, has been rather mute about offshore CCS and the role it will play in any energy transition.

Lessons Learned

To date the only CCS project in the Netherlands is the Porthos Project, a joint venture by a consortium of companies which will capture a combined 2.5Million tonnes CO2 annually.  A final investment decision is anticipated in the spring of this year.

Can CCS offer the Energy Transition a silver bullet?  For Africa? This is highly relevant given the importance that is being placed on CCS by various oil and gas companies.

 

The basic aspects and experiences to date about CCS have been vividly described in a study authored by Clark Butler, on behalf of IEEFA(Institute for Energy Economics and Financial Analysis, July 2020). CCS basically encompasses the following steps.

  1. Capture: The separation of CO2 from other gases produced at large industrial process facilities such as coal and natural-gas-fired power plants, steel mills, cement plants and refineries.
  2. Transport: Once separated, the CO2 is compressed and transported via pipelines, trucks, ships or other methods to a suitable site for geological storage.
  3. Storage: CO2 is injected into deep underground rock formations, usually at depths of one kilometre or more, depleted oil or gas fields, deep saline aquifer formations or other forms of underground caverns, though it could apply to any form of storage.

CCS was first employed to supply CO2 for enhanced oil recovery (EOR) operations for several natural-gas processing plants in the Val Verde area of Texas in the early 1970s.

Butler’s conclusions about CCS are uncompromising:

  • CCS is prohibitively expensive compared to other greenhouse gas emissions mitigation options, such as renewable energy and energy storage technologies.
  • CCS offers no financial return for investors.
  • CCS has a dubious track-record. Even the Global CCS Institute – a booster organisation for CCS – acknowledges in its 2019 Global Status of CCS report that CCS is at best a minor contributor to decarbonisation, addressing up to 9% of greenhouse gas (GHG) emissions by 2050.
  • There isn’t one example of a CCS project anywhere in the world that offers a financial justification for investing in CCS.
  • In the absence of a carbon price, CCS will never provide a return on investment.

What have been the experiences to date by the majors? Clark maintains that

“European oil companies—in particular, Equinor, Shell and Total—are investing in CCS, notwithstanding the lack of return, because it is an important part of their decarbonisation narrative and supports their aims to be seen as ‘responsible’ energy companies”.

Shell

Shell is involved in two CCS projects: Quest in Alberta, Canada, funded by the Alberta and Federal Canadian governments and operated by Shell; and Gorgon in Western Australia, a project in which the project principals (Shell and Chevron) are financially motivated not to operate the CCS plant.

The Quest project near Edmonton, Alberta captures and stores CO2 emitted at a large oil sands upgrader complex.  The cost is $1Billion.  Although Shell as operator gains a lot of positive publicity for running this operation which adds to its “green credentials”, in actual fact 65% of the funding came from the Government of Alberta’s Carbon Capture and Storage Fund and the Government of Canada’s Clean Energy Fund.  Had government funding not been provided, this project would never have happened.

“The Gorgon plant has failed to meet its targets every year, notwithstanding a $60Million subsidy from the Western Australian government. Shell’s actual outlay in CCS over the years remains to be seen. Its overall investment in renewables is well behind its stated targets. Any progress Shell demonstrates in removing carbon from the atmosphere using CCS (1Million tonnes per annum at Quest and up to 4Million tonnes at Gorgon) should be seen in light of Shell’s total emissions of 656Million tonnes per annum .

TOTALEnergies

The company “has also promised massive investment in CCS to remove up to 5 million tonnes of CO2 per annum (8% of scope 1 and 2 GHG emissions and 1% of scope 1/2/3 emissions).”  The company” is an investor in Equinor’s Sleipner CO2 storage as well as, with Shell and Equinor, the larger Nordic project under development, Northern Lights.”

 Equinor

“Equinor, the Norwegian state oil and gas producer, has been investing in CCS since 1996, mainly because Norway has had a carbon price since 1991. Its Sleipner CO2 storage and Snøhvit CO2 storage facilities have cumulatively captured and stored around 22Million tonnes of CO2. Compared to the rest of the fossil fuel industry, this is considerable achievement but this pales into insignificance when one considers that Equinor is responsible for over 330Million tonnes of CO2 emissions every year (scope 1, 2 and 3).”

“With the carbon price, there is a modest economic return on its CCS operations but the impact on emissions is immaterial in the scheme of Equinor’s contribution to global warming. By way of comparison, Equinor’s scope 3 emissions increased by 26Million tonnes per annum from 2014 to 2018.”

Some unsettling truths

According to Butler transportation and storage are key areas of concern. The CO2 must be separated, and transported to the sequestration site.

Transportation and storage are two key areas of concern. ‘Captured’ carbon must be separated, transformed and, in most cases, transported to the sequestration site. The energy used in this process and the leakages that can occur during transportation and handling can materially reduce the net impact of the CCS process.

Butler also points out that “the underground storage into which the carbon is injected is not always secure. Wells have weaknesses and gaps. Fracking causes long-term subterranean instability, and seismic activity could dislodge even the most carefully stored carbon”.

CCS storage must have a purpose other than a symbolic gesture of appearing green to the shareholders, investors and the public. Simply producing hydrocarbons and then using CCS to store CO2 so that a company can continue to produce hydrocarbons unabated has become a non-starter. Investors and shareholders are willing to give companies a pass on blue(methane) or gray(coal) hydrogen as long as it is obvious that green hydrogen is the end game.

For example, key questions still remain surrounding ExxonMobil’s $100Billion CCS project that would be built along the Houston, Texas Shipping Channel. This undoubtedly is being driven by Engine Number One, the small but very influential American investor group, seeking a new direction for the company. Is CCS the end game or is an alternative energy strategy being developed?

Then consider the dilemma of rising CO2 prices and actively supporting a global emissions trading scheme. A sign, one would say, for encouraging the CCS market. Yet the looming threat is that green hydrogen will in the coming decade destroy this potential market. How? Simply because electrolyzer capacity will be dramatically expanded and green hydrogen dramatically reduced in cost. It would then reduce the need for grey and blue hydrogen, and the need for storing CO2. In the European Union the current installed electrolyzer capacity is 4GW and expected to increase to 40 GW of installed electrolyzer capacity by 2030.

Of course, optimism cannot be dismissed. Fortune Business Insights, a market research company, expects the carbon capture and storage (CCS) market to grow to $7 billion annully by 2028. The company expects the market to exhibit a CAGR(compound annual growth rate) of 19.5 per cent from 2021 to 2028, while the global carbon capture and sequestration market size will grow from $2.01Billion in 2021 to $7Billion by 2028.

In Africa, the prime CCS example to date is at BP’s-Equinor’s In Salah oil and gas field in Algeria. More than 3Million tonnes of CO2  have been stored before being stopped in 2011 due to capacity limits in the geological structure.

Does Africa have the ability to store all the extra carbon dioxide that it is expected to generate in the coming decades? Possible areas of interest could be the Zululand basin in South Africa, a well-mapped onshore area, offshore Angola, onshore and offshore Nigeria and offshore Ghana. The Rovuma basin offshore of  Northern Mozambique could also be an area of interest.

Can Africa withstand the politics of illusion and see CCS for what it really is? A smoke screen for not addressing the real needs of the energy transition.

Finally, a simple conclusion. A simple substitute for CCS is a tree planting campaign. In Canada the federal government has pledged to plant two billion trees in the ground by 2030. To date deadline targets have come and gone. Yet this is a campaign which requires encouragement and continued public pressure.

Such a scheme should also encourage the oil and gas sector to contribute and participate. A scheme which is practical and easy to understand why it is of such huge benefit to the energy transition. Certainly, it should prove to be of interest to Africa’s new energy players.

Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was founder and owner of EnergyWise.  He has managed and implemented energy conferences, seminars and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe.  Kreeft has Dutch and Canadian citizenship and resides in the Netherlands.  He writes on a regular basis for Africa Oil + Gas Report, and contributes to IEEFA.


Predictions 2022: How Africa Will Become a Hotbed of Consolidations, Acquisitions and Mergers

By Gerard Kreeft

The Energy Transition will continue to be dominated by two extremes: the continued growth of renewables-wind and solar-and a continued pushback by the oil and gas sector to maintain more than just a foothold in the energy landscape.

Not so much an energy transition, but an exchange of political power, disguised as an energy transition. Such a transition of energy power is fast finding its mark in Africa. A fast-moving continent which will see new players, both national and international. Both the oil and gas and renewable sectors could become a hotbed of consolidations, acquisitions and mergers.

In Africa the oil majors are for the most part playing a retreating role; instead, new players, who for the most part are not well known, will become dominant players. Some of these new players are involved in the oil and gas sector and others in the renewables sector.

 Exiting but with some exceptions

In Africa the oil majors will continue divesting assets no longer deemed to have shareholder value. Shell has for all intents and purposes exited Nigeria, and BP and Equinor are not pledging new funding to oil and gas prospects in Angola.

ENI and BP have indicated that they will merge their upstream activities in Angola. Will this be a precedent for merging their additional assets in Africa? If this is to happen other companies will join the frenzy in order to merge and consolidate assets.

If not exiting immediately, the name of the game is to extend the life cycle of a project to ensure that all of the project’s economic value is harvested. In most cases not developing new fields but adding satellite fields and oil recovery projects to maintain low project costs.

The sole exception is high value, low-cost projects such as Mozambique’s two major LNG projects: Rovuma being developed by ExxonMobil and Mozambique LNG being developed by TOTALEnergies. Yet both projects could possibly suffer delay again, or require additional partners to further mitigate the financial risks.

Nonetheless deepwater exploration, not a task for the faint-of-heart, will continue. TOTALEnergies is continuing to attract attention with its exploration campaign off the southern coast of South Africa. Its Luiperd and Brulpadda discoveries have given a further stimulus for continued exploration.

Opportunities for new oil and gas entrants

Less headline grabbing is the unfolding of new entrants seeing new business opportunities. Some examples:

Reconnaissance Energy Africa, also known as ReconAfrica, has started an eye-catching drilling campaign in the Kavango Basin in the Kalahari Desert of North Eastern Namibia.  Drilling of their 6-2 well commenced in early January 2021. Well 6-2 is the first of three wells to be drilled in the totally undrilled Kavango Basin, viewed as a classic high risk/ high reward type of oil and gas play.

Savannah Energy has taken over key assets from ExxonMobil in Chad and Cameroon: in Chad the Doba Oil Field and in Cameroon the Chad-Cameroon Oil Pipeline.

Recently Perenco has strengthened its Gabon base. TOTALEnergies has divested interests in seven mature oilfields operated by Perenco.

 Angola’s recent onshore licensing round for the nine oil and gas blocks in the Lower Congo and Kwanza basins received 45 proposals from 15 different companies with a proposed investment sum of over $1Billion. At first glance, this looks like a positive response to help kickstart an oil economy.

Angola’s National Oil, Gas, and Biofuels Agency (ANPG) stated that the bid round was designated to attract foreign companies not normally present in country and Angolan companies to boost the national potential both in terms of business and workforce. Could the Nigerian example, where today 25 indigenous companies produce nearly 400,000BOPD, also work in Angola?

Professor Jason Bordoff, Co-Founding Dean of the Columbia Climate School, Founding Director of the Center on Global Energy Policy, and Professor of Professional Practice in International and Public Relations at Columbia University SIPA, recently indicated that private equity companies are turning their attention to assets being aborted by the oil majors. Private equity now accounts for 10% of all North Sea production, up from virtually zero in 2014. Bordoff concludes that Chinese banks have also shown an ability to fill these investment slots. Could Sub-Sahara Africa become part of this scenario?

 Africa’s new green energy players

An important part of the equation could well be Africa’s power sector, normally seen as a distinct and separate category and not associated with the oil and gas industry. Their story has in many cases not been properly told. In a period of great transition, we can anticipate movement from the power sector. Companies, large internationals and others regional in scope, who already have a proven track record. Some key players to watch:

 ACWA

ACWA is Saudi owned, has 42GW generating power with a value of $66billion, spread over 13 countries. In Morocco the company has developed three solar parks totalling 500MW for the Moroccan Agency for Solar Energy (MASEN).

 Enel

Antonio Cammisecra, CEO of Enel Green Power symbolizes Enel in Africa. “We’re Africa’s top privately-owned renewable energy operator. This is something we can definitely feel proud about but still, it’s a drop in the bucket if we consider the sheer size of Africa’s untapped potential and the huge amount of energy it needs.”

The company claims to be Africa’s largest independent renewable energy player in terms of installed capacity. According to Enel’s 2019-2021 strategic plan the Enel Group is investing around €700Million in the continent, building 900 MW of wind and solar capacity.

Engie

Gillian-Alexandre Huart, CEO of ENGIE Energy Access, is Engie’s man in Africa. Its Access to Energy business in Africa, is tasked with providing millions of households and businesses across the continent with clean and affordable energy.

 Engie’s Energy Access is now one of the leading off-grid, Pay-As-You-Go (PAYGo) solar and mini-grid solutions providers in Africa, serving over one million customers and impacting more than five million lives in nine countries – Uganda, Zambia, Kenya, Tanzania, Rwanda, Nigeria, Benin, Côte d’Ivoire, and Mozambique. Engie Africa counts nearly 4,000 employees, and has 3.15GW of power generation capacity.

EDF (Électricité de France)

EDF partners with innovative start-ups to provide energy and services to a rural clientele in South Africa, Côte d’Ivoire, Ghana, Senegal, Kenya and Togo.

Such services enable more than 1 million people to light and power their low-consumption household appliances or also to be equipped by solar powered water pumps, thereby significantly improving their crop yields.

The company plans an extensive expansion of its solar and wind activities throughout Africa in the coming years.

Lekela

LeKela’s current portfolio includes more than 1.3GW of power involving projects in Egypt, Ghana, Senegal and South Africa.

The company’s focus is utility-scale projects which supply much-needed clean energy to communities across Africa.  The focus is on taking projects from mid-or late-stage development into long-term operation.

Scatec

Scatec is a Norwegian, renewable power producer, developing, building, owning and operating solar, wind and hydro power plants and storage solutions. Scatec has more than 3.5 GW in operation and under construction on four continents. The company is targeting 15 GW capacity by the end of 2025. In Africa the company has projects in Egypt, Mozambique, Rwanda, South Africa and Uganda.

Some final considerations

  1. Recently IRENA (International Renewable Energy Agency) and AfDB (African Development Bank) have jointly announced support of low carbon projects to enhance the energy transition. IRENA states in its Global Renewable Outlook that sub-Sahara Africa could generate as much as 67% of its power from indigenous and clean renewable sources by 2030. In the energy transition this would increase welfare and stimulate the creation of up to 2Million green jobs by 2050.
  2. Certainly public-private partnerships should be part of this mix. Governments to ensure a broad basis of support and energy companies who have the know-how and project management skills. A key bonus for oil/energy companies is knowing that renewables can be added to their reserve count.
  3. Developing Africa’s Green Deal should be the key theme for a new partnership among oil and gas companies, national oil and gas companies and electrical and transmission companies. Such collaboration should work closely with The Clean Energy Corridor which aims to support integration of cost-effective renewable power options to national systems, promote its cross-border trade and support creation of regional markets for renewable energy.
  4. The Clean Energy Corridor initiative has two African components: (1.) African Clean Energy Corridor (ACEC) for the member countries of Eastern and Southern African power pools.  (2.) West African Clean Energy Corridor (WACEC) within the Economic Community of West African States.
  5. Africa could well become a major hydrogen producer. For example, the Hyphen Hydrogen Project in Namibia will invest $9.4Billion over a period of nine (9) years. The project sponsors aim to produce 5GW of power by 2030, and 3GW of electrolysis capacity. A production of 300,000  metric tons of green hydrogen per year is anticipated once the project ramps up. According to the Government of Namibia a large focus would be on exporting hydrogen to Europe and to sell some of the output to neighbouring countries to “take advantage of the vision that our leaders have for the African Continental Free Trade Area”.
  6. According to Professor Jason Bordoff wealthy nations in 2009 pledged to provide $100billion annually in climate finance to low income countries. That has not happened. Now roughly $1Trillion-$2Trillion is required annually in clean energy investments in developing and emerging markets to achieve net-zero in 2050. In 2020 clean energy investments in these nations was only $150Billion.

 


How Hydrogen Will Challenge and Change the LNG Energy Value Chain

By Gerard Kreeft

For some 50 years, LNG tankers have become a common sight between LNG producers-primarily Qatar, Indonesia, USA, Australia, and Malaysia-and LNG consumers such as China, Japan, and South Korea. At the end of 2020, the global liquified natural gas (LNG) tanker fleet encompassed a total of 642 vessels.  

In the coming decade, the LNG fleet could get competition from hydrogen. Kawasaki Heavy Industries Ltd., a pioneer in transporting liquified natural gas (LNG), has now developed the world’s first tanker for liquified hydrogen.

Suiso (hydrogen) Frontier, the first liquified hydrogen tanker constructed in Kobe, Japan was first showcased earlier this year. The tanker is 116 metres long and can transport 75 tons of liquified hydrogen kept at temperatures of minus 253 degrees. Kawasaki plans to build 80 tankers which will have the capacity to transport 9Million tons of liquified hydrogen.  

The new technology, along with tanks the company developed to store liquified hydrogen as rocket fuel, is expected to be used for the Japanese government’s goal of having hydrogen and ammonia serve as the fuel for 10% of electric power generation by 2050. It is part of Japan’s overall target of achieving net-zero emissions of greenhouse gases in that year.

Kawasaki has for a number of years implemented extensive studies on how to convert cheap brown coal(lignite) to hydrogen. The lignite is mined in Australia, steamed and then the hydrogen is liquified. In the spring of 2022 Kawasaki plans to transport the first load of liquified hydrogen from Australia. 

That process emits carbon dioxide, though the plan is to sequester the CO2 in order to keep the emissions at virtually zero. Yet sequestration is a large challenge: developing such sub-surface reservoirs to inject CO2 could take 5 or more years, drilling injection wells, building compressors, installing pipelines, and other infrastructural issues.

According to  Motohiko Nishimura, Deputy General Manager of Kawasaki’s Hydrogen Strategy Division “There will be a need to quickly promote greater use of such vessels”. 

Kawasaki has already installed equipment at Kobe Port to unload liquified hydrogen from the tanker as well as tanks on land. Currently, tests are being conducted in conjunction with J-Power and Iwatani Corp.

Under the Japanese government’s plan for 2050, the total volume of liquified hydrogen imports, including for fuel for motor vehicles, is estimated at 300,000 tons per year by 2030 and increase to 20 million tons per year by 2050.

A major barrier toward importing that volume of liquified hydrogen will be bringing down the power generation cost. One estimate is that by 2030 power generated by liquified hydrogen will cost 1.5 times that generated using LNG.

Where will the hydrogen come from?

A major hydrogen producer could well be Africa. For example, the Hyphen Hydrogen Project in Namibia anticipates investing $9.4Billion over a period of 9 years.

The project sponsors aim to produce 5GW of power by 2030, and 3GW of electrolysis capacity. A production of 300,000 metric tons of green hydrogen per year is anticipated once the project ramps up. 

Hyphen Hydrogen Energy has been chosen by the Namibian government to develop the country’s first large-scale green hydrogen manufacturing project. Hyphen is a Windhoek-based joint venture between British Virgin Islands-registered investment holding company Nicholas Holdings and German renewables developer Enertrag.

According to the Government of Namibia, a large focus would be on exporting hydrogen to Europe and selling some of the output to neighboring countries to “take advantage of the vision that our leaders have for the African Continental Free Trade Area”. 

“A lot of our neighbors have been contacting us–Angola, South Africa, and Botswana–to ask how this project can be integrated into the Southern African Power Pool”.

According to the project, officials green hydrogen produced in Namibia would be cost-competitive with highly polluting grey hydrogen made from fossil fuels, at €1.50-2.00 ($1.73-2.30) per kilogram. Hyphen won a government-hosted competitive tender to build the project, but will not officially be given the rights until it concludes a feasibility study and signs a construction contract with the government.

“The first phase, which is expected to enter production in 2026, will see the creation of 2GW of renewable electricity generation capacity to produce green hydrogen for conversion into green ammonia, at an estimated capital cost of $4.4billion,” said Hyphen CEO Marco Raffinetti.

“Further expansion phases in the late 2020s will expand combined renewable generation capacity to 5GW and 3GW of electrolyzer capacity, increasing the combined total investment to $9.4billion.

“The Tsau Khaeb national park is among the top five locations in the world for low-cost hydrogen production, benefiting from a combination of co-located onshore wind and solar resources near the sea and land export routes to market.”

Earlier Germany signed the €40m partnership deal with Namibia as part of a bid to secure supplies of green hydrogen. Germany believes it is cheaper to import than to produce green hydrogen, particularly due to the lack of space in Germany to build the giga-scale projects required to reach the necessary scale of H2 production.

To date, a Letter of Intent has been signed between the Governments of the Netherlands and Namibia to collaborate in the field of energy, in particular related to green hydrogen. The goal is to stimulate the development of export-import hydrogen supply chains between both countries.

While details of hydrogen production have been revealed there is no detailed information available about how hydrogen will be transported. No doubt there is a need to bring Kawasaki and the project sponsors of Hyphen Hydrogen to the bargaining table. 

A hydrogen sub-industry, together with the development of a hydrogen fleet is very much like the early development of the LNG industry. Thus it is certainly a disruptive technology in the making. This will raise the eyebrows of the international LNG players, who are preparing for a long-term natural gas era. Their sunshine could be short-lived.

Very likely hydrogen production and transportation will become the new buzzwords of the changing LNG energy value chain. A value chain in which Africa could play a key strategic role if African countries proactively try to develop projects such as the Hyphen Energy green hydrogen project in Namibia.

Two final conclusions:

1)Time and economies of scale no doubt will drive down transportation costs making hydrogen transportation competitive.

In an analysis of the developing hydrogen market in Asia-Pacific Wood Mackenzie stated:

“Successfully managing supply chain costs will determine which countries and projects emerge as winners in the hydrogen export market, but it will be suppliers with access to the lowest cost renewables that will really stand out. For Australia and others, this should be a case of making hydrogen while the sun shines.”

2)With the projected global focus on hydrogen production, a parallel focus is now on how to dispose of the CO2 which is generated by projects such as Australia’s proposed lignite-to-hydrogen project. Geologists, geophysicists, and reservoir engineers are now exploring worldwide for subsurface sites where huge volumes of CO2 can be safely and permanently stored.

Perhaps the Japanese will explore the viability of using wind and solar power, both in abundance in Australia, to enhance their project.

Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was the founder and owner of EnergyWise. He has managed and implemented energy conferences, seminars, and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia, and throughout Europe.  Kreeft has Dutch and Canadian citizenship and resides in the Netherlands. He writes on a regular basis for Africa Oil + Gas Report and contributes to the Institute of Energy Economics and Financial Analysis (IEEFA). His book entitled The 10 Commandments of the Energy Transition, is scheduled for publication in early 2022.


ENI to Build a 50MW Solar Plant in Angola’s Namibe Province

SOLENOVA, a joint venture of the Italian major ENI and the Angolan state oil firm Sonangol, has reached Final Investment Decision (FID) for the first phase of the Caraculo photovoltaic project, located in the Namibe province in Angola.

The signing of the Engineering, Procurement and Construction (EPC) contract is also in hand.

The plant is expected to start-up in the fourth quarter of 2022. The first phase is 25 MWp (Megawatts at Peak). The planned total capacity of the plant is 50 MWp.

“The Caraculo photovoltaic plant will be an important source of electrical power from a renewable resource in the Namibe province”, ENI says in a release. “It will allow the reduction of diesel consumption for electricity generation, thus reducing the emission of greenhouse gases (GHG) and contributing to Angola’s energy transition”

 


AfDB Allocates a Whopping $25Billion for Green Growth in Cote d’Ivoire

The African Development Bank (AfDB) will inject $25Billion into climate projects and green growth in Ivory Coast. This green financing will help accelerate the level of development and reduce emissions in this West African country by 2025.

The fund is meant to finance climate change adaptation and green growth projects paying for renewable energy, green mobility and smart agriculture, with the target to create 500 000 jobs in West Africa’s third  largest economy.

“The $25Billion support will enable Ivory Coast to meet the challenges of the ecological transition and optimize its share of the 4% that the continent receives from the Global Climate Fund”, contends Charlotte Ako, the AfDB’s Head of Climate Change and Green Growth.

Since the Paris climate agreements were signed in 2015, the AfDB has embarked on promotion of the green economy.

In the event, the pancontinental lender has been investing in renewable energy projects across Africa. It has supported the Nachtigal hydroelectric project in Cameroon, the Alcazar solar photovoltaic (PV) project in Egypt and the Lake Turkana wind farm project in Kenya.

 

 


COP27 Will Be in Africa, it is Official

Egypt has officially been selected as host of the COP27 climate summit, which will be held in the red sea resort of Sharm El Sheikh in November 2022.

The parties had agreed that the conference must be hosted by an African country in 2022, based on a regional rotation system.

“Officially.. Egypt embraces the African continent by hosting the Conference of the Parties of the United Nations Agreement on Climate Change COP27”, the country’s Ministry of Environment says in a statement, adding: “it is a new chapter in Egypt’s leadership in the region’s leadership in climate work to unify the world’s efforts to combat the effects of climate change”.

There really was no contest. It was only in September 2021 that President Abdel Fattah El Sisi announced that Egypt would bid to host COP27. In October, it was selected as the sole nominee.

Next year’s summit is seen as a chance for African nations to drive home their main message: those poorer countries, who are facing the sharp end of the consequences of climate change despite being least responsible for the situation the world is in now, need a serious helping hand if they are to adapt, mitigate risk, and meet ambitious net-zero goals.

COP26 witnessed tensions between the global north and global south, after developed nations fell short of their pledge to provide $100Billion in aid annually to aid developing countries’ green transition.

Egypt has pushed, in the last 15 years, for the position of an Energy hub at the junction between the middle east, Africa and Europe. Now it sees itself as a “mediator between African and developed states on climate aid”.

 


Coal Will Not Be Phased Out, COP26 Delegates ‘Agree’

An initial draft of the Climate Agreement, hashed out in Glasgow over the last weekend, included “phasing out” coal use. But the final agreement on which diplomats at the COP26 conference signed off, last Saturday, November 13, 2021, however had replaced “phasing out” with “phasing down” coal use.

Meaning: the one fossil fuel that most delegates had decided should go, was retained

That alteration was at the instance of India, the world’s second most populated country, hosting close to a fifth of mankind. Simonetta Sommaruga, the representative from Switzerland, loudly criticized the change, leading negotiators from Mexico and other countries to lament, publicly, that the change was a last-minute call which undermined the process.

That drama itself highlights the disparity of opinions regarding the speed at which the energy transition should go.

While the headline news that diplomats from nearly 200 countries struck a major agreement, aimed at intensifying efforts to fight climate change by calling on governments to return next year with stronger plans to curb their planet-warming emissions and urging wealthy nations to “at least double” funding by 2025 to protect the most vulnerable nations from the hazards of a hotter planet, it is clear that the deal falls far short.

Saturday’s agreement will not, on its own, solve global warming, despite the increasing urgency of the campaign witnessed at the climate summit (the 26th meeting of the Conference of the Parties COP26), in Glasgow, Scotland).

There remains, stubbornly, the question of how much and how quickly each nation should cut its emissions over the next decade.

Most of the world’s poor countries have no guarantee of accessing the funding they need to build cleaner energy and cope with increasingly extreme weather disasters. Nor did the. conference achieve any of its key goals: agreeing to cut emissions in half by the end of the decade, and crucially, agreeing a roadmap that would limit warming to 1.5°C .

The gabfest underlined the complexity of trying to steer scores of countries, each with their particular economic interests and domestic politics, to act in unison for the greater good. The core of COP26 attendees were from countries that signed the United Nations Framework Convention on Climate Change (UNFCCC) – a treaty agreed in 1994.


Learning to Live with Less

By Gerard Kreeft

 

 

 

 

 

 

About half of the world’s fossil fuel assets will be worthless by 2036 under a net zero transition, according to a new paper published in Nature Energy. The lead author, Jean-Francois Mercure of the University of Exeter, said the shift to clean energy would benefit the world economy overall, but it would need to be handled carefully to prevent regional pockets of misery and possible global instability.

Countries that are slow to decarbonize will suffer but early movers will profit; the study finds that renewables and freed-up investment will more than make up for the losses to the global economy.

It highlights the risk of producing far more oil and gas than required for future demand, which is estimated to leave $11Trillion-$14Trillion in so-called stranded assets – infrastructure, property and investments where the value has fallen so steeply, they must be written off.

“In a worst-case scenario, people will keep investing in fossil fuels until suddenly the demand they expected does not materialize and they realize that what they own is worthless. Then we could see a financial crisis on the scale of 2008,” he said, warning oil capitals such as Houston could suffer the same fate as Detroit after the decline of the US car industry unless the transition is carefully managed.

The new paper illustrates how a drop in demand for oil and gas before 2036 will reshape the geopolitical landscape. Current investment flows and government commitments to reach net zero emissions by 2050 will make renewable energy more efficient, cheaper and stable, while fossil fuels will be hit by more price volatility. Many carbon assets, such as oil or coal reserves, will be left unburned, while machinery will also be stranded and no longer produce value for its owners.

To what extent can the new independents, taking over oil and gas assets from the oil majors, be a force of good? Carrying out exploration and developing of oil and gas assets and also develop green energy. Some guidance was provided at a recent conference hosted by Frontier Energy. The panel included: Ignacio de Calonje, Chief Investment Officer, International Finance Corporation; Zoḗ Knight, Group Head HSBC Centre for Sustainable Finance, HSBC; Rob Tims, Managing Director, RWT Energy Advisory; Christopher McLean, CEO, Stonechair Capital; Jim Totty, Managing Director, Viridis Capital.

Some key conclusions:

To encourage better sustainable development In emerging markets there is the need to have better financial linkages  between interest rates and CO2 emissions standards.

IFC does provide concessional financing to reduce project risk so that other investors can get on board.

In emerging markets, IFC virtually does no financing of oil and gas projects, the exception being some gas projects that are linked to sustainable development. Offshore wind is a growth area for IFC.

Important to understand Africa’s diversity: some of the highest GDP growth in the world, enormous needs for technology and sustainable energy projects. Energy affects agriculture, stable medical delivery, reliable logistics, and efficient technology growth.

Lack of standardization of financial parameters throughout Africa.

Institutions in Africa lack the sophistication to implement equity financing.

Huge need for PPPs ( private-public partnerships) for transmission and distribution projects.

Energy trading must be encouraged across Africa: for example,  North African gas and solar producers with Sub-Sahara Africa consuming countries.

Learning to Live with Less

It is estimated  that the world population will reach 9.4 billion by 2050, 10.4Billion by 2100, and will ultimately stabilize at just under 11 billion persons around 2200. A growth of such a magnitude also requires an energy system of various aspects- bringing energy poverty nations relief and in the industrialized countries greater energy efficiency with less resources.

Must we think in terms of Jonathan Swift’s Modest Proposal of 1729? In his Modest Proposal he suggests that the impoverished Irish might ease their economic troubles by selling their  children as food to rich gentlemen and ladies.

One of the most compelling energy scenarios is Wood Mackenzie’s AET-2(Accelerated Energy Transition scenario). According to Wood Mackenzie: “The AET-2 scenario is based on the Intergovernmental Panel on Climate Change carbon budget allocation for the next eight decades, to 2100. It sets out our view of how the world can limit the average rise in global temperatures to 2 °C compared with pre-industrial times, examining potential policy drivers, cost reductions and technological innovations. Electrification and low-carbon fuels are central to meeting the 2 °C limit.  We estimate that electricity meets 47% of total final energy consumption globally in 2050 compared with 20% today. Three key assumptions underlie our AET-2 scenario:

  • rapid electrification in all sectors;
  • the decarbonisation of the power sector through the penetration of renewables and storage and coal-to-gas switching;
  • the large-scale development of carbon capture and storage (CCS) and carbon capture, utilisation and storage (CCUS) – 5 billion tonnes (Bt) by 2050 – and low-carbon hydrogen – 380 million tonnes (Mt) by 2050 – in hard-to-decarbonise sectors.”

AET-2 has massive implications for oil and gas demand in 2050: 70% lower than today. From 2023 onward oil demand drops with year-on-year fall of around 2 million barrels per day (bpd). Total oil demand by 2050 is down to 35 million bpd.

Natural gas demands, in contrast, remains resilient to about 2050. Large scale CCS in the industrial and power sectors will support gas while the deployment of blue hydrogen (135Mt by 2050) is a growth sector. Growth will come primarily from Asia, especially China and India.

Under AET-2 the assumption is that as many as 80% of new vehicles sold are electric, either battery-driven or hybrid. Heavy transport- ships and trains- are electric or hydrogen driven. Non-combustion liquid petrochemical demand for plastics is damped by higher rates of recycling.

Wood Mackenzie’s AET-2’s scenario draws the following conclusions:

  • World needs no new supply of oil…” core function is to maintain current commercial production by going into full harvest mode” …
  • Market power slips from OPEC to giant gas producers such as USA, Russia and Qatar.
  • Downstream suffers death by a thousand cuts. By 2050 the refining sector will have withered to 1/3 of its current capacity with less than 150 of the current sites in operation.
  • Era of carbon-neutral gas is born. AET-2 would require $300 billion to support Liquified Natural Gas growth globally and $700Billion to support dry gas development in North America. Blue hydrogen and ammonia emerge as new market products.
  • Currently no International Oil Company nor National Oil Company is prepared for the scale of decline envisaged in this scenario.

Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was founder and owner of EnergyWise.  He has managed and implemented energy conferences, seminars and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe.  Kreeft has Dutch and Canadian citizenship and resides in the Netherlands.  He writes on a regular basis for Africa Oil + Gas Report and contributes to the Institute Energy Economics and Financial Analysis (IEEFA). His book entitled The 10 Commandments of the Energy Transition, is scheduled for publication in early 2022.

 

 


AfDBank Approves ~$58Million Loan to Eskom for Battery Storage

The Board of Directors of the African Development Bank has approved a $57.67Million loan to Eskom Holdings SOC Ltd, South Africa’s public electricity utility—and Africa’s largest— to harness battery storage technology that will increase electricity generation from reliable and efficient renewable energy sources.

The Bank’s financing, a concessional loan, will come from the Clean Technology Fund, a multi-donor trust fund under the Climate Investment Funds. The pioneering Battery Energy Storage Systems Project is being co-financed with the World Bank and the New Development Bank.

The project involves the development of 200MW of battery storage with four hours of energy storage capacity per day, or 800MW in total, at seven sites in South Africa’s Western Cape, Northern Cape, Eastern Cape and KwaZulu-Natal provinces.

Once onstream, Eskom will be able to dispatch electricity sourced from variable renewable energy that would otherwise have been wasted, reducing reliance on fossil fuel-generated electricity at peak times of the day.

Daniel Schroth, the AfDB’s Acting Director for Renewable Energy and Energy Efficiency, says:: “The approval of the Climate Technology Fund facility reflects the African Development Bank’s strong commitment to support South Africa’s Just Energy Transition plans, prioritizing investment in new low-carbon generation capacity and new technologies such as battery storage. This comes at a critical moment as the world is gearing up for action at COP26.”

The large utility-scale battery storage project, the first of its kind in Africa, is expected to contribute to a reduction in CO2 emissions of as much as  0.292Million tons. It will also inform the rollout of similar projects across the continent. Many African countries are implementing an energy transition as they strive to meet net zero emissions targets.

The project also contributes to South Africa’s ambitious Nationally Determined Contribution, part of compliance with the Paris climate agreement.

The $5.4Billion Clean Technology Fund promotes low-carbon technologies with significant potential to reduce long-term greenhouse gas emissions. The African Development Bank has been an implementing entity of the Climate Investment Funds since 2010.

 


Africa Energy Week 2021, Taking Place in Cape Town; Will  Focus on Investment, Oil and Gas, Renewables and Energy Transition

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  •  The African Energy Chamber is set to host the first-ever African Energy Week (AEW) in Cape Town on 9th – 12th November 2021.
  • Replacing Africa Oil Week, the four-day interactive conference seeks to unite industry stakeholders, international speakers and movers and shakers from the African oil and gas sector.
  • The conference comprises high-class networking events, innovative exhibitions, and one-on-one private meetings, with a golf tournament on the final day, providing a one-of-a-kind experience for stakeholders interested in the growth and success of the African energy sector.

The African Energy Chamber (AEC) is excited to announce the official launch of African Energy Week (AEW) 2021, taking place in Cape Town on 9th – 12th November 2021. AEW 2021 will showcase the first-ever African Energy Village, an interactive exhibition and networking event that seeks to unite African energy stakeholders, drive industry growth and development, and promote Africa as the destination for African-focused events.

Commencing with a three-day conference and ending with a golf tournament on 12th November, the event’s primary focus is to define and promote the African energy agenda through development, deal-making, and private sector participation. Key topics include making energy poverty history before 2030 and the future of the African oil and gas industry; African upstream, midstream and downstream opportunities; African oil, gas and finance in the face of the energy transition – highlighting African financing institutions such as the African Development Bank, the African Export-Import Bank, the African Financing Corporation, Africa50, the Industrial Development Corporation and the Development Bank of Central African States; local content; women in energy and making African energy competitive for investment into a decarbonized Africa.

Additionally, the conference will address the role of the Organization of the Petroleum Exporting Countries (OPEC), the Gas Exporting Countries Forum (GECF), the International Energy Agency (IEC), the African Petroleum Producers Organization (APPO), the International Association of Geophysical Contractors (IAGC), and the American Petroleum Institute (API) and Africa. By opening the dialogue on Africa’s gas miracle and its potential in markets including Senegal, Mozambique, Nigeria, Ghana, South Africa, Algeria, Tanzania, Equatorial Guinea, Congo-Brazzaville, and Angola ­–  as well as small-scale Liquified Natural Gas, intra-African trade and the African Continental Free Trade Agreement – the conference represents the ideal networking and deal-making platform for all African energy stakeholders.

The AEC’s commitment to hosting this Africa-focused event in Africa comes at a  crucial time for the oil and gas industry. In light of recent developments that seek to suggest that Africa is not capable of hosting events of global standards, the Chamber feels responsible to voice against this and lead by example by showcasing the continent and all its profound beauty.

With this in mind, the only African-focused, in-person energy event aims to capture the essence and cultural hub that exists in Cape Town. The AEC will not abandon the continent for international venues. AEW 2021 is an energy event like no other and the AEC is fully focused on promoting African development and growth through African-held events.

“We are happy with the tremendous support from so many in-and-outside Africa. Our Oil and Gas producers have been a force for good and we must be proud of this industry. We must also welcome energy transition and engage Africa with the most forceful conversation and solutions for the future. AEW 2021 offers a unique and interactive networking experience in which global energy stakeholders can unite and participate in the continent’s transformation. The time is now,” says NJ Ayuk, Executive Chairman, African Energy Chamber.

“Africa Energy Week will have a bold message that encourages energy solutions that cut out entitlements, handouts and foreign aid. No one owes us anything and in order for so many Africans  who want to make energy poverty history to triumph, we must embrace all forms of energy in our energy mix. We must attract investors and push our leadership so that each country wins when we create and encourage an enabling environment,” adds Ayuk.

AEW 2021 is taking place with the full support of prominent African and global industry leaders and oil and gas organizations and is focused on expanding opportunities in Africa. Additionally, AEW 2021 will present innovative exhibition spaces at Cape Town’s V&A Waterfront that aim to promote African heritage and culture, while showcasing the exciting technological advancements the industry has to offer.

“African energy producers can only grow and meet energy demand when we all do our best to mobilize our resources and advocate for important principles of personal responsibility, smaller government, lower taxes, free markets, personal liberty, and the rule of law. This will kick start investment and make a transition that works for Africa. Let’s do this in Africa, for Africa and for the energy sector,” concludes Ayuk.

Of equal importance, the event will take place under strict COVID-19 protocols to ensure the safety of all attendees. In line with current government regulations, AEW 2021 will host a series of networking events across a variety of locations at the V&A Waterfront, thereby ensuring social gathering limits are in place at all times. Additionally, through mandatory testing and the availability of personal protective equipment and facilities, AEW 2021 aims to protect attendees while ensuring a successful and productive event.

For more information about this transformative event, visit www.aew2021.com or www.energychamber.org /or email Amina Williams at amina.williams@energychamber.org

 For registration related enquiries contact registration@aew2021.com

For sales related enquires contact sales@aew2021.com

For media related enquires contact media@aew2021.com

For speaker opportunity related enquires contact speakers@aew2021.com

 

 

 

 

 

 

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