Friday, August 5, 2022

Europe: Countries of the bloc sound out strategies to avoid the commodities trap

 After the rude awakening caused by the military aggression by Russia on Ukraine and the assessment of the overwhelming dependency of countries - especially Germany - on gas supply from Russia, thinktanks in the EU reflect about how not to repeat the same mistake with other commodities such as rare earths, titanium or graphite, writes WELT:

The Ukraine war and the gas crisis are causing politicians to view Europe's heavy dependence on a few raw material suppliers with greater concern than before. When it comes to mining and processing strategically important raw materials, countries such as China hold quasi-monopolies – and of all things when it comes to the materials on which the European energy and mobility transition depends.

The business-oriented think tank Center for European Politics (CEP) has now investigated how dependent the EU is on such raw materials. Germany and other European economies are therefore too dependent on raw materials from a few countries for future key technologies and should end this dependency as quickly as possible. "The chances of survival of the European economic and social model are also decided on the international commodity markets," says the unpublished study, which is available to WELT.

For the study, the researchers specifically identified resources that are indispensable for future technologies, but whose supply situation is critical. To do this, they brought together two analyses: on the one hand, a study by the German Raw Materials Agency (DERA), which identifies groups of raw materials that are essential for the energy transition and digitization, and on the other hand, a list from the European Commission of 30 raw materials for which there are supply risks.

The researchers have identified twelve substances that are equally promising and supply-critical. The list includes materials such as lithium, cobalt and rare earths, which also dominate the public debate about the scarcity of raw materials. However, substances such as titanium, graphite and more exotic substances such as scandium and vanadium also appear.

They are in wind turbines, solar systems, batteries for electric cars, fuel cells, electric motors or in microchips, displays and fiber optic cables. And for all the substances examined, a few or even just individual countries dominate the global supply.

"Not only is a large part of the relevant raw material deposits outside of one's own sphere of influence," says study author André Wolf. “The global markets are currently also predominantly dominated by countries that represent strategic rivals or that do not share the environmental and social standards that are essential for the EU’s self-image. The move away from fossil resources threatens to replace old dependencies with new, unwanted ones.”

The dominance of China is particularly striking: The country was the most important sponsor of eight of the twelve substances examined in 2020. If one also takes into account the processing of raw materials, China's dominance is likely to be even greater.

And the leadership in Beijing has shown in the past that it is willing to use this power. At the end of 2010, China had stopped exports of rare earths to Japan because of a diplomatic dispute in order to extort concessions from Tokyo.

The realization is not new, but Brussels and national capitals have been alarmed since Russia invaded Ukraine. The fact that geopolitical upheavals are jeopardizing the supply of raw materials is suddenly no longer an abstract danger.

“Russia is blackmailing us. Russia uses energy as a weapon,” said Ursula von der Leyen, President of the European Commission recently. There is concern in her authority and in the national capitals that such a scenario could happen again.

Because geopolitically the world threatens to split into two blocs again: on the one hand the western world, on the other hand countries like Russia, China and other authoritarian systems. Against this background, the EU states want to secure the supply of critical raw materials and end one-sided dependencies.

Two years ago, Industry Commissioner Thierry Breton's staff presented an action plan on raw materials, but it was relatively non-binding. Since the outbreak of the Ukraine war, the agency has tightened its course. In March von der Leyen announced a law on critical raw materials. The draft should be available by the end of the year.

One of the things discussed in Brussels is that companies or even states should build up strategic stocks of important raw materials. The increased mining of critical raw materials in Europe should also make the EU more independent from the rest of the world.

However, the CEP experts warn that the Commission's plans could overshoot the mark. In particular, the scientists consider plans to mine critical raw materials in Europe to be misleading. "Massive state support for the mining of future raw materials in the EU area would be a questionable strategy from an economic policy point of view," says the study.

The EU does have significant deposits of lithium and rare earths, for example. States like China are not only so dominant on the raw materials markets because of the deposits there, but also thanks to state subsidies, low wages and low environmental standards. “The EU cannot and should not copy such a strategy.”

Instead, in the short term, Europe should look around for new sources of raw materials in friendly countries that have large deposits, good infrastructure and share Europe's values. Norway, Canada and the USA in particular are ideal partners.

In fact, the EU is striving for such strategic raw material partnerships, but so far it has only agreed on two: with Canada and, of all places, Ukraine. However, a sense of proportion is required for the agreements, after all, new one-sided dependencies must not arise.

In the long term, the EU must expand the recycling of strategically important raw materials in order to secure supplies, write the CEP researchers. The EU Commission is also in favor of this. According to a study by the authority, the recycling rate for cobalt and platinum metals, which are mainly used for electric motors, was 20 percent in the EU in 2020. In the case of iridium or lithium, however, the quotas would be close to zero.

Friday, July 1, 2022

Gas: tortuous manoeuvering for gas transports between Spain, Morocco and Algeria

 The tensions between Morocco and Algeria on the issue of Western Sahara make gas shipments to a very tricky question. In reason of Spain's support for the moroccon position, Algeria has stopped every gas supply to Spain through the Maghred-Europe Gas Pipeline (MEG) and interdicted all shipments to Morocco from Spain of algerian gas, source Le Monde:

Spain began, for the very first time, to transport gas to Morocco through the Maghred-Europe Gas Pipeline (MEG), assuring that it was not Algerian gas, while Algeria does not supply plus the GME to Spain since the end of October 2021 against the backdrop of the diplomatic crisis.

“On the basis of commercial relations and good neighborliness, yesterday [Tuesday] the first shipment by the Maghreb gas pipeline of LNG [liquefied natural gas] previously acquired by Morocco on international markets and landed in a regasification plant took place. Spain,” sources from the Spanish Ministry for Ecological Transition told AFP.

Spain had announced in February that it would re-export gas to Morocco via the GME, which Algeria no longer supplies to Spain through Moroccan territory since the end of October 2021 due to a diplomatic crisis around of Western Sahara. “A certification process guarantees that this gas [routed from Spain to Morocco] is not of Algerian origin,” the same source told AFP.

Algiers had threatened in April to break its gas supply contract with Spain if Madrid were to transport Algerian gas "to a third destination", an implicit reference to Morocco.

LNG: Germany negotiates with Canada for LNG-shipments

 Source WELT:

Saint John on Canada's rough east coast offers many photo opportunities: a lighthouse, a former fort, a marketplace with a fountain. It is the oldest city in the country, with almost two million tourists visiting each year, many on cruise ships.

What is hardly known, however, is that Saint John is also the only Canadian port with a terminal for liquid gas - and therefore probably a new hope for Germany recently.

On the fringes of the G-7 summit in Elmau, Bavaria, Chancellor Olaf Scholz (SPD) spoke to Canadian Prime Minister Justin Trudeau and advocated an expansion of energy trading, according to the Bloomberg news agency. Specifically, Scholz wants to import more liquid gas from Canada to replace Russian gas. It is apparently another attempt to free Germany from Vladimir Putin's grip.

The industry speaks of “Liquified Natural Gas”, or LNG for short. These three letters have been at the center of world politics since the beginning of the Ukraine crisis. It's about the question of where millions of Europeans should get the raw material with which they heat and operate many of their power plants.

Because Russia, the most important gas supplier up to now, became an outlaw after attacking its neighbor. An unpredictable aggressor who cannot be trusted.

Tuesday, April 26, 2022

Gas: Italy shifts to Algeria for gas procurement

Eager to divest itself von Russian dependance on natural gas, Italy has switched in a precipitous move to Algeria as a supplier just days after the russian invasion into Ukraine. Italy and especially its energy giant ENI have deep and decade-old ties to Algeria. Even major investements by ENI and acquisitions of BP shares on oil fields are under discussion, Le Monde

Algeria is showing a diplomatic upturn with Italy which takes on a particular meaning as Europe is prospecting for alternatives to Russian gas, war in Ukraine obliges. The recent ballets of visits by Italian officials to Algiers, where the red carpet is rolled out at the energy giant Ente Nazionale Idrocarburi (ENI) – already historically well treated – testify to a most cordial atmosphere. Italy had become, in recent years, increasingly dependent on Russian energy supplies (40% of its gas imports, or about 30 billion cubic meters [m3]). It is now more than ever eyeing Algerian gas, while it is imperative for it to diversify its purchases abroad, particularly in the Mediterranean.

The overall economic relationship between the two countries has certainly always been healthy. Italy is Algeria's third supplier (behind China and France) and its first customer (ahead of France and Spain). It is also the first foreign investor, a status due to the weight that ENI represents on Algerian soil. History is a big part of it. The tutelary figure of the historic leader of the company, Enrico Mattei (1906-1962), a Christian Democrat politician who was a great promoter of independent Algeria (who died in 1962 after a mysterious plane crash), has always acted bridge between the two countries.

“ENI is a company considered to be a friend of Algeria, a friend of the Algerian revolution at the time, notes Akram Kharief, Algerian security expert and founder of the Menadefense site. It is very difficult to compete with her. In recent weeks, the glorification in the Algerian press of this memory has reached unprecedented levels. "The esteem for Italy is felt among the people of the people", could we read, on March 30, in an editorial of the official daily El Moudjahid.

The staging, in Algiers, of friendship with Italy does not date from the war in Ukraine. The distinguished welcome reserved in the Algerian capital for the Italian President of the Republic, Sergio Mattarella, during a visit in November 2021, had already sent a first message in the midst of the crisis between Algiers and Paris. The recent Algerian-Spanish turbulence on the Western Sahara issue – following concessions made by Madrid to Rabat – has added to the ambient Italophilia in Algeria. The remarks of the boss of the Algerian public company Sonatrach, Toufik Hakkar, on April 1, evoking the possibility of "recalculating" the price of gas sold to the Spaniards, announce a probable changeover in the long term of part of the supplies from Spain to Italy.

This is fitting, at a time of Rome's strategic shift vis-à-vis Russian gas dictated by urgency. As usual, Italian diplomacy negotiated it in a few hours, with a mixture of agility and pragmatism. Monday, February 28, barely four days after the start of the Russian offensive in Ukraine, the Italian Foreign Minister, Luigi Di Maio, was in Algiers, accompanied in particular by the managing director of the energy giant ENI, Claudio Descalzi, to to assess the possibility of increasing gas imports. In energy matters, Italian diplomacy and ENI are used to moving forward together.

Exploitation of new deposits

In the Algerian case, the calculation is simple. Algeria is the country's second largest supplier (21 billion m³), ​​and the Transmed gas pipeline transporting gas to Sicily – also called the Enrico Mattei gas pipeline – is not operating at full capacity (its capacity is 30 billion m³ per year) . What hope, in the short and medium term, additional deliveries.

The Italian minister's trip to Algiers was only the start of a tour centered on energy issues, which took the head of Italian diplomacy, in March, to Africa, the Arabo-Persian Gulf and Azerbaijan. But Algeria is considered, within Italian diplomacy, with particular attention.

So Claudio Descalzi was back in Algeria on April 3 to meet once again the CEO of the Algerian public energy giant, Sonatrach, ENI's historic partner, to discuss the increases in deliveries in the short term and, at a further afield, the exploitation of new deposits. In particular, it is a question of “accelerating” the implementation of joint projects in the region of Berkine Sud, on the border with Tunisia. According to the Algerian press, ENI is also negotiating the acquisition of assets from British Petroleum (BP) in two major gas projects in In Saleh (Centre) and In Amenas (East). According to unconfirmed information, Sonatrach is also discussing the acquisition of ENI assets in Russia.

Be that as it may, the prospect for Algeria to deliver significant quantities of gas to Italy is long term. In the immediate term, its production and transport potential is limited. "Algeria's ability to offset Russian gas for Europeans is questionable," says Olivier Appert, energy and climate center adviser at the French Institute for International Relations (IFRI). Faced with the aging of its infrastructure and the flight of its domestic consumption, Algeria has in fact suffered from a continuous decline in its gas exports, which have fallen from 64 billion m3 in 2005 to 41 billion in 2020. substantial investments to reverse the curve. ENI and the Italians are in the running.

Monday, March 28, 2022

US: four russian hackers indicted

Four russian hackers with links to russian intelligence service FSB are indicted for the failed attempts to infiltrate energy companies, SPON:

The US government on Thursday published its indictments against four Russian citizens, whom it accuses of having hacked numerous energy companies around the world on behalf of the secret service FSB and the Ministry of Defense.

The charges relate to cases that date back a while. In the US, there are sealed, ready-made indictments that can be made public at any time. In this case, they are from June and August of the previous year. Now the US authorities thought the time had come to make them public.

These are two separate charges, but they have one thing in common: the hacking activities they describe are sophisticated and have been carried out over a long period of time. They are not aimed at short-term effects, but consist of targeted and well-prepared attacks in which malware is intended to be smuggled into the systems of companies in the critical infrastructure - in order to manipulate their operation on a »Day X« chosen by the attacker or even completely shut it down sabotage.

It is this type of cyber attack that is of greatest concern to security agencies around the world. An infiltrated energy infrastructure, which in extreme cases could be switched off by malicious actors, is considered a nightmare scenario.

Thursday, March 24, 2022

Europe: Anti-fracking NGO's received russian money

Investigations by different media suggest that european environmental NGO's opposed to fracking received money injections from russian sources, WELT:

The interests of western climate protectionists and the Russian dictator Vladimir Putin coincide, albeit for very different reasons: slowing down the promotion of fossil fuels in western countries is their common goal. For the activists, this is a stage on the way to a CO₂-free industrial society, for Putin, whose country benefits enormously from the international oil and gas business, it is an important trump card.

For years there have been indications that Moscow is supporting activists in the US and Europe in their fight against fossil fuels in order to be able to sell Russian gas and oil better. In the mid-2000s, the Kremlin decided to fill what it called a “value vacuum”: using so-called “soft power” to place its own views and interests in other countries. According to various sources, Russia also financed non-governmental organizations (NGOs) in Europe and the USA in order to push through its agenda.

Many NGOs enjoy special rights in the West: the EU and the United Nations grant environmental organizations extensive legal standing and information rights. Germany grants many organizations the tax-privileged status of "non-profit". As a rule, the NGOs do not have to disclose where they get their money from.

Researchers who analyzed NGO funding on behalf of the European Parliament in 2016 had to admit their failure: "The analysis reveals a complex web of intertwined NGOs, linked by the membership of numerous overlapping networks that pursue many different purposes," she said Conclusion. “It is often difficult to identify which organization in a network is engaged in which activities, or how grants flow between them in relation to those activities.”

There is an "obvious gap between NGOs' declared commitment to accountability and transparency and actual practice," the researchers concluded. Entries in the transparency register of the EU would mostly be avoided. It often remains unclear what interests the funders of the associations really have.

Anyone who demands insight into the funding of NGOs is therefore dependent on key witnesses. The Russian government has transferred 82 million euros to European climate protection associations whose aim is to prevent natural gas production in Europe, an informant told scientists at the Martens Center for European Studies.

Former NATO Secretary General Anders Fogh Rasmussen reported back in 2014 that Russia had supported environmental organizations "in order to maintain European dependence on Russian gas". "What are they smoking at NATO headquarters to spread such accusations?" Greenpeace countered the allegations. Due to the lack of transparency of the money flows described, it is not possible to make a conclusive, independent assessment of whether they are correct or not.

At least NATO stuck to their description. "We share the concern of some allies that Russia may seek to impede potential shale gas exploration projects in Europe in order to maintain Europe's dependence on Russian gas," a NATO official told Foreign Policy. Experts have puzzled over the "sudden" emergence of well-organized anti-fracking environmental groups in Eastern Europe, where Russia has been selling its energy but previously had no public concerns about natural gas production, the magazine wrote.

Fracking, which involves breaking up rock in the ground with a liquid to produce gas, has gotten a bad rap, although it's been tried and tested for decades with few problems now. Former US Secretary of State Hillary Clinton had also advocated fracking, but reported unusual resistance. In a private speech in 2016, made public by Wikileaks, she lamented: "We were dealing with fake environmental groups, and I'm a big environmentalist, but they were funded by the Russians."

American security expert Fiona Hill, former director for Europe and Russia on the Trump administration's National Security Council, reported on a conversation with Putin in November 2011 in which he made it clear to experts and journalists that he saw fracking in the US as a "major threat of Russian interests”. "We were struck by how much emphasis he put on the subject," Hill said.

American media reported on documents that were supposed to show that energy managers from Russian companies had transferred millions to American environmental organizations - which they, however, rejected. Representatives of American energy companies also accused the Kremlin of covert financing of climate protection groups. "Russia is funding the anti-fracking movement in the US," the head of Continental Resources claimed.

Climate and environmental protection organizations distributed misleading films of places where fracking is being done: Drinking water from the tap was burning, toxic gases and chemicals were seeping out of the ground, and entire regions were contaminated. Mass media picked up on the scenarios, particularly aggressively by the Russian channel “Russia Today”.

He labeled fracking companies as child molesters, falsely claiming natural gas extraction would cause cancer in children. A US National Security Agency report saw Putin's people behind the reports, which "probably reflected the Russian government's concerns about US natural gas production and potential challenges to Gazprom's profitability." "We have seen Gazprom funding from environmental NGOs," agrees Dominique Reynié of the Fondation pour L'innovation politique, a French research institute.

After Germany's decision to phase out nuclear energy, Gazprom celebrated "building new, modern gas-fired power plants in Germany". However, the expansion of fracking in the USA worried the Russian competition: the Americans had achieved a decisive turnaround by intensifying natural gas production by fracking in their own country - with positive consequences for the climate. The USA has been able to reduce its CO₂ emissions more than almost any other country in the past 15 years because it has replaced coal with cracked natural gas, which releases much less CO₂.

Europe also has immense shale gas resources. The EU Commission states that gas contained in shale rock using fracking "can contribute to the security of supply of the EU and its competitiveness". In the 2000s, the big energy companies in Europe were ready to develop domestic natural gas.

But the resources remained in the ground, the pressure from climate activists on companies and governments led to investors turning away, the investment bank Goldman Sachs determined. The Financial Times and recently the New York Times came to the same conclusion.

Exploration of new gas fields in Europe collapsed, including in Great Britain, which has particularly rich shale gas resources. Not only NGOs, but also scientific institutes cheered the trend. For example, the Grantham Research Institute on Climate Change of the London School of Economics recently called for the end of all domestic oil and gas exploration.

The market is now "fixated on climate change and the dwindling appetite for fossil fuels," wrote financial news agency Bloomberg. Share prices of companies that said they would expand their production of gas and oil came under pressure; Apparently, investors feared damage to their image. In the Netherlands, a court ordered the energy company Shell to reduce its CO₂ emissions, which further slowed exploration efforts.

The great opposition to natural gas production in Europe made gas from Russia attractive. Europe has radically reduced its production of conventional natural gas: 15 years ago it produced more gas than Russia exported, now Russia exports three times more natural gas than Europe produces. From 2015 to 2019 alone, Russia was able to increase its natural gas imports to Europe by a third. The continent now covers around 40 percent of its needs with Russian natural gas.

The market is now "fixated on climate change and the dwindling appetite for fossil fuels," wrote financial news agency Bloomberg. Share prices of companies that said they would expand their production of gas and oil came under pressure; Apparently, investors feared damage to their image. In the Netherlands, a court ordered the energy company Shell to reduce its CO₂ emissions, which further slowed exploration efforts.

The great opposition to natural gas production in Europe made gas from Russia attractive. Europe has radically reduced its production of conventional natural gas: 15 years ago it produced more gas than Russia exported, now Russia exports three times more natural gas than Europe produces. From 2015 to 2019 alone, Russia was able to increase its natural gas imports to Europe by a third. The continent now covers around 40 percent of its needs with Russian natural gas.

In recent years, Germany has relied particularly consistently on Russian energy. It phased out nuclear power, but did not allow terminals for gas shipments by ship from the US, instead planning dozens of new gas-fired power plants. The intended main supplier: Russia.

When former US President Donald Trump declared in 2018 that Germany had become dependent on Russia for its energy supply, German diplomats laughed at him. At the latest, however, the Russian invasion of Ukraine revealed Germany's dependency relentlessly. Chancellor Olaf Scholz (SPD) said Germany was dependent on Russian gas. If no more gas came from Russia, there would be a risk of “damage to society as much as possible,” said Economics Minister Robert Habeck (Green Party).

In the USA, too, the new government of President Joe Biden has meanwhile made a change. On his first day in office, Biden stopped the Keystone XL pipeline, which was supposed to transport oil from Canada 3,500 kilometers to the United States, after protests by activists. After the import stop for Russian oil, the President now has to put up with the accusation of endangering the supply security of the USA.

The result of the fight against natural gas production in Europe and the USA is sobering, it has not served climate protection. Natural gas is still burned, it only comes from Russia. Nuclear power plants were shut down in favor of natural gas. The war in Ukraine also makes natural gas more expensive, so that the demand for coal increases, which causes CO₂ emissions to rise more sharply. In Germany, the green economics minister is considering letting coal-fired power plants run longer due to a lack of alternatives to Russian gas.

British Prime Minister Boris Johnson, on the other hand, is now considering starting fracking in his country. Russia is no longer a reliable source, it is important to ensure the energy supply. The climate protection group Extinction Rebellion has announced that it will soon occupy oil refineries in Great Britain. "Fossil energies must be stopped once and for all," declared the activists. "Now is the time, this is the moment".

Wednesday, March 23, 2022

France: Nuclear Safety Authority stops construction on ITER fusion reactor site

 Le Monde:

On the pharaonic construction site of the prototype of the ITER nuclear fusion reactor at the Cadarache site (Bouches-du-Rhône), it is not just the workers who are busy. The engineers had to change their priorities to respond quickly to the long list of requests from the Nuclear Safety Authority (ASN), so that the assembly of this unique machine in the world continues on schedule.

ASN's requests, in the form of a letter addressed by its chairman to the director general of the international organization ITER, were revealed on 21 February by the news site New Energy Times, which is highly critical of the energy of merger. The missive is not good news. It indicates that, as it stands, the assembly of the reactor cannot begin, in particular the key and irreversible stage of welding the first two elements together, out of nine, constituting the vacuum chamber 19.4 meters in diameter and 11.4 meters high, in which the fusion reactions must take place.