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Sustainability, ESG & Climate Services


This weekly report covers all aspects of the major changes facing industry, from climate change initiatives through ESG investing, and includes regular work on recycling, renewables, energy transition and hydrogen, and carbon capture and use.  It is included as part of our comprehensive research/consulting subscription, but can also be purchased separately.


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Do We Have The Energy To Understand ESG Investing?

The outperformance and underperformance of ESG and anti-ESG stocks appear primarily based on whether you own oil and gas stocks – other factors seem small. ESG/sustainable investing is losing its appeal because it is less clear what it means, and regulatory changes, expected to make it better, remain absent. As the developed world states a desire to become less reliant on China, inflation and other challenges slow its progress while China charges ahead and lowers costs. We note initiatives to reduce power consumption, especially in buildings, and question whether industrial conservation is good or bad relative to other efforts. Otherwise, we look at the new Lego challenge, return to CCS, which is gaining momentum, look at power inefficiency, and what keeps European industry alive.

Peak Oil Debate Is Complex: Policy Backtracking Supports Oil Use

The IEA supply/demand models assume policy can be enacted as stated – the flaw in this approach is that policy could backtrack, and costs are delaying progress.

As noted with the UK this week, as estimates of complying with net-zero goals increase, governments must choose whether to bear the costs or change course.

Cost increases that we are seeing to meet decarbonizing goals in the West are driven by hard-to-fix labor and materials issues as well as higher borrowing costs.

As we have noted in prior work, delays in the West impact hydrocarbon needs but also allow China to gain an increasing experience edge and lower costs.

Otherwise, we look at the CBAM and why it is upsetting so many countries, we look at the near-term shipping fuel options and talk more about RNG.

So Many Moving Parts: Some Moving The Wrong Way and Some Not Moving Fast Enough – Feedback from Pack Expo and CMA’s WCF

For a first effort, CMA put on a well-attended and comprehensive event last week with a strong sustainability theme throughout and bad news for polyolefins.

Our theme last week around suspension of disbelief was addressed in the bleak outlook for polyethylene and polypropylene oversupply and its likely persistence.

Energy transition and sustainability were featured throughout the event, but the idea of who pays for it all was mainly left hanging, with more hope than solutions.

Decarbonization Will Take The Last Fizz Out Of Chemical Profits

As chemical industry margins fall globally, the expense of options to decarbonize becomes a larger portion of a smaller capital pie – maybe too large.

Escalation in cost estimates for clean projects does not help: US offshore wind is the best current example – higher power cost expectations will change many plans.

Despite losses in chemicals, China is pushing ahead with green/clean projects quickly. Costs are low and low-cost/low-carbon products from China are coming.

The shipping fuel debate continues, and the only broad agreement is that change is coming – we see roles for methanol and ammonia – skeptical about hydrogen.

Otherwise, we look at other challenges with blocking China’s influence in energy transition, and we talk about the consequences of higher power costs from wind.

The ExxonMobil 2050 View Exposes Flaws in The Renewable Plan

ExxonMobil’s view of energy supply in 2050 should be taken seriously by all because its hydrocarbon forecast is driven by shortfalls elsewhere – we agree.

We are proponents of the idea that 2040-2050 forecasts underestimate electric power demand & overestimate renewable-based supply, requiring more oil & gas.

ExxonMobil’s view will only be extreme if more is done to push other sources of power: nuclear, hydro, and geothermal. The struggles with wind should be a sign.

Otherwise, we look at decarbonizing metals, one of several environmental challenges the industry must address to attract needed capital.

Given how critical it becomes in the Exxon scenario, we provide views on carbon capture and look at US capital costs pushing investments offshore.

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