Daily Energy Report
Charts of the Day: Africa is already “greener” than Europe.
Summary
Figure (1) shows trends in sources of total energy supply in Africa. It shows the continuous increase in energy use until the dip in 2020 because of COVID-19 and the lockdown. Biofuel, biomass, and waste constitute the largest energy source on the continent.
Figure (2) shows the same trends for Europe. Total energy use has been declining since 2008. It also shows the decline in 2020, just like the rest of the world. Oil remains the main source of energy, followed by natural gas.
EOA’s Main Takeaway
Two sayings come to mind: “Be careful what you wish for” and “You cannot have your cake and eat it, too.”
If the EU (and the Biden administration) want to classify biofuel, biomass, and waste as renewable energy, then Africa is already greener than Europe and more climate-friendly. If this is the case, why are Europeans and the IEA pressuring African leaders to abandon fossil fuel in favor of more “renewable energy”?
The charts above are pretty clear: based on current definitions, the share of renewable energy in Africa is way larger than the share of renewable energy in Europe. The share of renewable energy in Europe, excluding hydro, is only 15% of total energy supply. That share is 48.3% in Africa.
One thing is clear, most of the biomass and waste used in Africa is inefficient and harms the environment. When they move up, they move to a more available and dense fuel that can be transported easily, and that is a fossil fuel. In short, the demand for oil and gas will increase in Africa as the use of biomass and waste decline.
Even the IEA talks about the need for the reduction of energy poverty and the need for clean cooking in developing countries. By focusing on clean cooking, all of a sudden, biomass and waste are NOT renewable sources of energy when it comes to Africans. Europeans want them to use wind and solar. It is worth noting that during the energy crisis last year, the demand for wood for heating increased substantially! Europeans cannot have it both ways: Desperate Europeans Return to the World’s Oldest Fuel for Warmth.
Story of the Day
Pulse News (S. Korea): Hyundai Motor posts record operating profit for three consecutive quarters in Q2
Source: Economics Times.
Summary
Those interested in the details may read the news in the link above. Our focus is only on the electric vehicles segment.
The report states:
“The expansion of electric vehicles (EVs) and hybrid electric vehicles (HEVs) is particularly rapid. EVs increased by 1.9 percentage points from a year ago, reaching 7.4 percent, while HEVs saw a 3 percentage point increase, reaching 9.1 percent. Most notably, in the U.S., where subsidies are no longer available due to the implementation of the Inflation Reduction Act (IRA), Hyundai Motor’s EV sales surged 134 percent, driven by increased commercial sales of the Ioniq 6 and leases and rentals.”EOA’s Main Takeaway
It has become very common in the media to report the quarterly results of auto manufacturers with fine sales details by car models in numbers & percentages, but when they report sales of electric vehicles, they list only percentages! No numbers. They are biased. The corporate press wants to show large percentage increases so readers think they are the only ones who have not bought an electric vehicle yet. They also want to convey the message that oil demand is declining. According to our calculations, the number of electric vehicles that Hyundai sold in the US will supposedly reduce oil consumption by only about 600 barrels per day! This small number is not even the net. If we add the amount of oil used to make these cars and their rubber components and tires, the amount is far less. How does this statement sound now: “Hyundai Motor’s EV sales surged 134 percent!”
News of the Day
CNBC: Portfolio Manager Says OPEC+ Could Break, Driving Oil to $35
Summary
Per Lekander, managing partner of Clean Energy Transition, predicts that the influential oil producers' alliance, OPEC+, could collapse due to waning oil demand growth and lack of cooperation on output policy. A breakup of OPEC+ might cause oil prices to fall as low as $35 per barrel. The alliance has been reducing oil production since November, with oil prices trading higher on Thursday afternoon. If the OPEC+ alliance were to fail, short-term oil prices might plummet to $35, with mid-term prices possibly stabilizing at $45. OPEC+ has tried to distance itself from allegations of cartel behavior, arguing that its policies target global supply inventories rather than fixed prices.
EOA’s Main Takeaway
It seems that Mr. Lekalander forgot to look at the data before the interview... so he made up his own! Oil demand is hitting record after record as we speak. Even the IEA does not think global oil demand will peak soon. See the news item below. If demand for coal, despite the war on coal for the last 20 years, is still hitting record after record, why should believe that oil is any different?
Saying “waning oil demand growth” means global oil demand will continue to grow but at lower rates. Why is that going to lead to the breakup of OPEC+? Did he mean a decline in global oil demand? He needs to show the evidence first. Such evidence does not exist
What Lekalander did not get was that low prices as he predicts will reduce the growth of his own business. Lower oil prices mean no pressure to switch to electric vehicles (other than non-market pressure from politicians). Some countries might find it cheaper to burn oil in power plants! What Lekalander apparently does not understand is that the range of prices he was talking about would kill the US shale industry and reduce supplies while demand will start rising again. The whole foreign policy of the US will change toward Russia, Iran, and Venezuela. We end up again with the same dilemma: national security vs. environmental security.
What Lekalander does not see is that by the time electric vehicles reduce global oil demand by 5 mb/d, Asia’s oil demand will increase by 8 mb/d! The net is an increase of 3 mb/d, and that is Asia alone!
Any problems within OPEC+ that lead to a collapse in the oil market are reminiscent of what happened at the end of the first week of March 2020 when Russia refused to cut production and decided to increase production to full capacity. The Saudis decided to do the same. Russians learned their lesson, returned to the table, and cut production. Saudi Arabia is using the carrot and stick policy at this stage which resulted in Russia cutting production and exports.
IEA: Global Coal Demand to Remain at Record Levels in 2023
Summary
Global coal consumption reached a record high in 2022, driven by strong demand in Asia, according to the IEA. Consumption rose by 3.3% to 8.3 billion tonnes, with China, India, and Southeast Asia projected to account for 75% of global coal consumption by 2023. Despite coal demand declining in Europe and the U.S., consumption in Asia remains high. In fact, China and India already account for two-thirds of global consumption, and it is expected to rise to nearly 70% by 2023. Coal prices have fallen in 2023 due to abundant supply and lower natural gas prices, which has made coal imports, especially in China, more attractive.
EOA’s Main Takeaway