Sunday Thematic & Weekly Recap | Sustainability, Energy Transition, ESG

CERA Week – More Determination but More Doubt: The Pathways Get Harder
March 24, 2024
Commodities Mentioned:
Carbon, Hydrogen, LNG/Natural Gas, Crude Oil, Polymers, Ammonia, Alkylate, Fertilizer, SAF, Propylene, Ethylene, Polypropylene, Polyethylene
Companies Mentioned:
Oxy, ExxonMobil, Chevron, Petronas, Aramco, AkzoNobel, Dow, Microsoft, Issaquena Green Power, Hess, Next Wave, Braskem, Petrobras, Siemens Energy, Cummins, ThyssenKrupp Nucera, SLB, Bloom Energy, TotalEnergies, Plug Power

C-MACC Sunday Thematic, Weekly Recap and Sustainability Report

CERA Week – More Determination but More Doubt: The Pathways Get Harder

  • We did not see any pushback on whether climate change was real at this year’s CERA event: perhaps there is now too much physical evidence. However, we did see more pushback on pathways and meeting deadlines.
  • Apart from geopolitics, which are hard to avoid, the two central concerns are costs (who pays for energy transition) and whether all this is irrelevant if we cannot get permits to make the investments needed.
  • The growth in energy demand is causing challenges and it is something underestimated in earlier net-zero pathway plans. Discussions focused the energy demand growth on electrical power – heavily impacted by AI.
  • All the above may be playing into Oxy’s hands as the greater the physical transition challenges the greater the likely demand for carbon offsets. Oxy’s DAC ambitions are substantial, assuming the power is there!
  • Otherwise, the cost curve steepens, giving some international chemical price support, but not really helping margins: many not integrated into feedstocks outside the low-cost regions are burning cash unsustainably.

Exhibit 1: Global crude oil investments have slowed, in part because of investor hostility, while US gas is abundant. In 1Q24 oil prices rose to their highest levels relative to US natural gas since 2012, which was caused by a short shock.

Source: Bloomberg, C-MACC Analysis, March 2024

See PDF below for all charts, tables and diagrams

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