(MENAFN – Gulf Times) Top executives at China’s leading energy companies are set for a power shake-up as the nation takes steps to reorganise and revamp its leadership and energy infrastructure.
The executive changes at the state-owned giants come as the sector is under pressure to increase competition and boost domestic output in the face of growing dependence on energy imports.
The government this week opened its upstream sector to foreign drillers and last month rolled out plans to spin off the nation’s pipelines into a new firm to allow more companies access to energy infrastructure.
Dai Houliang, chairman of refining giant Sinopec Group, is set to be named the new chairman and party secretary of the country’s biggest oil firm, China National Petroleum Corp, according to people familiar with the matter.
Wang Yilin, the current CNPC chairman, is set to step down and retire, they added.
The top job in Sinopec Group, formally known as China Petrochemical Corp, will be taken by Zhang Yuzhuo, former chairman of coal colossus China Shenhua Energy Co, said the people who asked not to be identified as the information is private.
Li Fanrong, deputy director of China’s National Energy Administration and former CEO of CNOOC Ltd, will be named as general manager of CNPC, said the people.
Zhang Wei, current general manager at CNPC, will be appointed chairman of the newly-established national oil and gas pipeline company.
The decision by China’s central government is set to be announced as early as this week. Nobody responded to emails or calls sent to CNPC and Sinopec’s press offices.
State Grid Corp, China’s largest operator of electric networks, also named a new top executive, putting Mao Weiming in place as chairman and party chief.
CNPC is the nation’s largest driller and natural gas importer, and is the parent of PetroChina Co, while Sinopec Group is the world’s largest oil refiner by capacity and parent of China Petroleum & Chemical Corp.
The appointment of the new CNPC executives will be especially positive for PetroChina, according to analysts at Sanford C Bernstein & Co including Neil Beveridge in a note to clients.
Dai could help shape up the company’s struggling refining and petrochemical division, while Li’s stint at Cnooc proved him ‘one of the highest calibre CEOs within China’s oil and gas industry over the past decade.
‘We view his appointment as a strong sign that significant reform could take place within the PetroChina which is undergoing major change with pipeline reform, Beveridge said.
Even as PetroChina and Sinopec have raised spending to boost output heeding calls from President Xi Jinping to bolster the nation’s energy security the country has become more dependent on foreign supplies.
China’s dependence on overseas oil has grown from less than 50% in 2005 to nearly 75% by the end of last year as more than two decades of super-charged growth have made it the world’s biggest importer.
China also became the world’s biggest natural gas importer in 2018, overtaking Japan after a government push for cleaner energy caused demand to surge.

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European coal faces another depressing year as natural gas floods the region and clean-energy policies reduce demand for the dirtiest fossil fuel.

Coal use across seven European economies fell to historic lows last year, pushing benchmark rates down by almost a third to $62 a ton. The prospects for 2020 are looking equally bleak, with analysts from S&P Global Platts and Capital Economics predicting prices plunging to the $50 mark, the lowest in four years.

It’s the latest indication that the economics for burning coal have collapsed in little more than a year since the commodity hit $100 a ton. Europe’s goal of zeroing out carbon emissions by the middle of the century along with ever-cheaper wind and solar power and falling gas prices all point to drastic reductions for generators that burn coal.

“Although we saw coal generation pushed to minimum levels in the second half of 2019, it should fall again year-on-year in the first half of 2020 due to low gas and stable carbon pricing,” said Joe Aldina, S&P Global Platts’ head of coal analytics.

For most of last decade it was more profitable to burn coal than gas in Germany, Europe’s biggest economy. That relationship was turned on its head last year as imports of liquefied natural gas and mild weather pushed down prices for the cleaner fuel, encouraging utilities to switch away from coal.

Dark spreads indicating the theoretical profit for burning coal to make power in Germany have been falling further behind spark spreads for using gas. The trend, according to Bloomberg analytics, becomes especially acute later this year.

Gas Glut

Part of the reason is the abundance of natural gas. Ample flows from pipelines along with near-record levels of LNG shipments arriving in Europe have left storage sites brimming.

The gas glut may worsen after last month’s deal between Russia and Ukraine to keep gas flowing to Europe. Construction of another direct route to Europe, the Nord Stream 2 pipeline to Germany, is expected to finish this year even though the U.S. imposed sanctions on the project.

“The gas transit agreement between Russia and Ukraine and soon-to-be completed Nord Stream 2 pipeline, allied with the prospect of higher U.S. LNG exports means that the European market will be awash with gas supplies in 2020,” said Franziska Palmas, assistant economist at Capital Economics.

While European year-ahead coal prices have slumped, the penalty for using the fuel has increased as the cost of carbon emission permits surged five-fold since 2017. At the same time, benchmark month-ahead gas contracts have slumped to 42% below the 10-year seasonal average.

“I don’t expect coal to fall below $50,” said Elchin Mammadov, an analyst at Bloomberg Intelligence in London. “Which is why I don’t think there will be gas-to-coal switching. If anything, it’ll be the other way round given that gas will likely stay cheap throughout the year.”

The pessimistic outlook for coal view is not unanimous. Perret Associates expects a global surplus of the commodity to swing into deficit by the end of this year as India and countries in the Pacific Rim region make up for a drop in demand in Europe.

Enter text here This is the year when shale drillers are finally going to deliver solid returns to investors that have grown weary of the industry’s decade-long cash burn, the head of explorer Parsley Energy Inc said. Why? Because for the first time the producers behind the US shale boom are collectively showing restraint in capital spending at a time when crude prices are rising and struggling oil-service providers are lowering their rates, Parsley chief executive officer Matt Gallagher said in an interview. In the past, explorers would instead have taken advantage of that to drill at full throttle again. “It’s the proof-in-the-pudding year,” Gallagher said. “We’ve been telling generalists in the financial community that you’re going to get a payday for investing in this great renaissance.” Whether investors will be easily convinced is yet to be seen. After Wall Street poured more than $200bn in a growth-focused, debt-driven shale patch in past years, most drillers have yet to produce free cash fl ow that would ensure healthy returns.

The S&P index of exploration and production companies fell 11% last year, even as oil jumped 34% in New York. But Parsley might have more reasons to be optimistic than others. The Austin, Texas-based company on Thursday won shareholder approval to acquire rival Jagged Peak Energy Inc for $1.8bn. Its shares fell 1% to $18.27 at 10.34am in New York as an easing of fears of disruption to Middle Eastern supplies pushed West Texas Intermediate, the US bench- mark, toward its biggest weekly loss since July. It’s a deal that Gallagher had to hit the road and man the phones for in order to convince investors of its potential. After an initial negative reaction that sent the stock plunging 11% the day the deal was announced, the shares have rebounded 20% since. That’s about double the gain for S&P’s E&P index over the same span, at a time when the market has mostly punished buyers.

Even as he works to integrate Jagged Peak into Parsley, Gallagher re- iterated that the newly merged company is a good takeover target. “It’d be very attractive to a lot of companies,” Gallagher said, declining to name possible suitors. “I don’t think that anything done in this deal would negate that.” Gallagher, who took over as CEO from Parsley founder and chairman Bryan Sheffield last year, expects a continued throttling back of US oil growth, to an expansion of about 500,000 barrels a day in 2020, with even slower growth through 2025. That’s roughly half the annual growth expected by the US Energy Information Administration. American output ended 2019 at a record level of nearly 13mn barrels a day, more than any other nation and up from less than 12mn at the start of last year, according to weekly EIA data. This will finally be the year that investor skepticism is eased, Gallagher predicts.

Coal consumption is set to rise in the coming years as growing demand for electricity in developing countries outpaces a shift to cleaner sources of electricity in industrialised nations. While use of the most polluting fossil fuel had a historic dip in 2019, the International Energy Agency anticipates steady increases in the next five years. That means the world will face a significant challenge in meeting pledges to reduce greenhouse gas emissions that cause global warming. “There are few signs of change,” the agency wrote in its annual coal report released in Paris yesterday. “Despite all the policy changes and announcements, our forecast is very similar to those we have made over the past few years.” While this year is on track for biggest decline ever for coal power, that’s mostly due to high growth in hydroelectricity and relatively low electricity demand in India and China, said Carlos Fernandez Alvarez, senior energy analyst at the Paris-based IEA. Despite the drop, global coal consumption is likely to rise over the coming years, driven by demand in India, China and Southeast Asia. Power generation from coal rose almost 2% in 2018 to reach an all-time high, remaining the world’s largest source of electricity. The steady outlook for coal comes in spite of waning demand in industrialised nations. Europe has set a goal of zeroing out carbon pollution by the middle of the century, which would mean drastic reductions for coal. In the US, competition from natural gas has cut into demand for coal, despite President Donald Trump’s vows to revive the industry. The story is diff erent in Asia, which will more than make up for reductions elsewhere. India, with a population of more than 1.3bn, will see coal generation increase by 4.6% a year through 2024 to help power its growing economy. In Southeast Asia, coal demand will grow more than 5% annually. China, which accounts for almost half the world’s consumption, will also have modest growth with usage peaking in 2022. “How we address this issue in Asia is critical for the long-term success of any global eff orts to reduce emissions,” Fatih Birol, the IEA’s executive director, wrote in a foreword to the report. Any new coal plants added to meet the growing power demand in these countries will likely be in use for decades. Even as China’s coal consumption slows and then declines after 2022, emissions from the fuel would need to rapidly decline in order to meet climate targets. Under current policies, the world is set to warm almost 3 degrees Celsius (5.4 degrees Fahrenheit) by the end of the century. That’s double the rate scientists say is needed to constrain the worst impacts of climate change. To prevent those increases, it would be necessary to use technology that captures and stores carbon as it’s emitted from power plants, the IEA said. While the technology is expensive and untested at scale. But with coal here to stay, it may be the only option to reduce emissions.

من هنا، يتخذ موضوع الغاز اللبناني – بكل ما يحمله من تفاصيل تقنية – منحى استراتيجياً بامتياز، علماً ان أبعاده السياسية في شقّيها الداخلي والخارجي مرتبطة بشكل عضوي. فخارجياً يتّخذ النفط اللبناني أهمية مضاعفة نظراً “للكميات الهائلة” التي بات من شبه المؤكد انه يختزنها براً وبحراً. وان كانت هذه الكميات نظرياً لا تغيّر الميزان الاستراتيجي المتعلق بانتاج الطاقة في الشرق الاوسط والمطلوبة بغالبيتها للانتاج الصناعي، إلا أنّ الحقول اللبنانية متّصلة جغرافياً بالحقول المصرية والاسرائيلية والسوريّة والأهم القبرصية. ذلك يعني انه وعدا عن الدور المباشر الذي يحظى به “غاز لبنان” فهو قد يبرز أيضاً لدى طرح إشكالية أساسية هي المتعلقة بأماكن انشاء محطات تسييل وتكرير الغاز بالاضافة الى المنشآت والبنى التحتية الضرورية لتسييله مع آليات نقله وتسويقه. وعليه، لا يمكن التنبؤ بهويّة الدولة التي ستتحكّم بما قد يستجدّ من تحالفات إقليمية ودولية؛ هذا الامر سيحتم حداً أدنى من التعاون بين الدول المعنيّة، وهنا يكمن بيت القصيد، بما أن هذه البلدان في حالة عداوة أو في حالة تصادم ما بين المحاور السائدة في الاقليم والمرشّح للتفاقم بسبب التنافس الشرس على الثروة الجديدة في شرق المتوسط.

اما البعد الثالث الذي يكتسبه غاز لبنان فـ”ماليّ” بحت والمقصود هنا ليس مالية الدولة بل الميل الى الالتفاف حول القانون لاستفادة الفريق السياسي المهيمن، وذلك من خلال السمسرات وعقود الخدمة للشركات والانشاءات المرتبطة بهذا القطاع فضلاً عن القدرة على توظيف “الازلام” تماماً كما جرى ولا يزال في شركتي الاتصالات وكازينو لبنان والكسارات والسدود وغيرها من المجالس التي قد تكون اكثر إغراء، خصوصاً اذا استغلّت المراسيم كمنفذ مقونن للهيمنة على ما تبقّى من موارد في البلاد، لا سيّما وأن التعويل على العائدات النفطية “اليوم”، أي في ظلّ عدم وجود قانون واضح ينظّم وجهة استخدام هذه الاموال من خلال الصندوق السيادي، يعني حُكماً أننا تخلينا عن ثروتنا هذه لخدمة الدين وتحويلها من أموال استثمارية الى أموال “منهوبة”.

من هذا المنطلق، لا يجوز الإفراط في التعويل على الثروة النفطية لانتشال لبنان من مأزقه النقدي، فالجدوى الاقتصادية، بحسب الخبراء، للنفط والغاز في المنطقة ككلّ لم تُثبّت بعد لا سيما وأن كلفة استخراج هذه المواد من قعر البحر تفوق بكثير الكلفة التي تتكبدها روسيا لاستخراج غازها. وبرأي الخبراء، فإنّ امكان تصدير هذا الغاز الى أوروبا على سبيل المثال قد يكون صعباً بما أن الاسعار ستكون عاجزة عن منافسة الغاز الروسي من جهة، ومن جهة ثانية بسبب العوامل الجيو – سياسية في منطقة شرقي المتوسط. أما كلّ ما أُثير عن احتمال إنشاء أنابيب لربط هذه الآبار بأوروبا مروراً باليونان فقد سقط عملياً بعد دخول اسرائيل الى طاولة المباحثات اضافة الى صعوبة تأمين الاموال الاستثمارية اللازمة له.

لا تعني كلّ هذه الفرضيات أن دولة من دول العالم الثالث كلبنان “عاجزة عن الاستفادة من ثرواتها النفطية بل يمكن استغلالها، وإن لم يكن للتصدير، فذلك في إصلاح الكهرباء وتحويل الانتاج ليرتكز على الغاز، وهكذا يتم تخفيض العجز وتالياً تقليص الخضوع لهيمنة صندوق النقد الدولي كلما وجدنا أنفسنا مضطرين الى الاقتراض بنسب وشروط تعجيزيّة”، بحسب الخبراء.

الطروحات الاميركية

من جهة ثانية، تُضاف معضلة ترسيم الحدود التي لا تزال تتخذ حيّزاً من المفاوضات والتي يوليها الجانب الاميركي أهمّية كبيرة خصوصاً في ظلّ التواجد الصيني والروسي في المنطقة. ولا شكّ أن مساعد وزير الخارجية الأميركي للشؤون السياسية ديفيد هيل سيتطرّق الى هذا الملف خلال زيارته إلى بيروت في الايام القليلة المقبلة.

“طروحات ثلاثة، هي ما قدّمه الطرف الاميركي في ما خصّ مسألة ترسيم الحدود مع الكيان الإسرائيلي في المنطقة المتنازع عليها: الاول هو تقسيم رضائي بنسبة ثلث للكيان وثلثين للبنان. الثاني هو تصنيفها كمنطقة عدم أنشطة وبالتالي اعتبارها محظورة للطرفين؛ أما الطرح الثالث فيتمثّل باعتبارها منطقة أنشطة مشتركة، وهو ما يرفضه الجانب اللبناني حتى الساعة متسلّحاً بالقوانين التي ترعى حقوقه في المياه الاقليمية إضافة الى الطلب الذي كان تقدّم به الى الامم المتحدة لحلّ النزاع في هذه القضيّة” يقول الخبير في قوانين وسياسات الطاقة المحامي علي برّو.

ويضيف برّو في اتصال مع “نداء الوطن” أنّ “قبرص تتحمّل مسؤولية مخالفة أحكام الاتفاقية مع لبنان سنداً لاتفاقية 2007 حيث لم يكن ينبغي عليها ترسيم الحدود مع الكيان الاسرائيلي من دون موافقة الدولة اللبنانية. من جهتها، أودعت الدولة اللبنانية الامم المتحدة احداثيات منطقتها الاقتصادية الخالصة، إلا أنها قصرت في مطالبتها قبرص لخرقها احكام الاتفاقية معه. من الناحية القانونية، لبنان جاهز لعمليّة إعادة الترسيم وفقاً للوسائل العلمية التابعة لقانون البحار. ومن خلال لجوئنا الى القانون الدولي، سنتمكن من استعادة حقوقنا السيادية في المياه البحرية”.

في الاطار عينه، يوضح الخبير النفطي رودي بارودي أنه “من المتوقع أن يأتي ديفيد هيل وفي جعبته ملف ترسيم الحدود البحرية. هذا الموضوع بحاجة الى حلّ جذريّ لا سيّما مع بدء لبنان بحفر أول بئر استكشافي مطلع العام المقبل. وبحسب قانون الامم المتحدة للبحار (UNCLOS) لا شكّ أن لبنان سيحظى بالحصة الاكبر من المنطقة الاقتصادية الخالصة المُتنازع عليها، فصحيح أن الكيان الاسرائيلي ليس طرفاً في المعاهدة مع الامم المتحدة، الا أنه طبّق قواعدها من خلال تقيّده ببنود الاتفاقية بينه وبين قبرص. بالتالي أصبح من الممكن اللجوء الى إتفاقية تنمية مشتركة تماماً كما هي الحال بين الكويت والسعودية في ما يُعرف بالمنطقة المحايدة. بهذه الطريقة، تقوم شركة محايدة بعمليات الاستخراج وتوزّع لكلّ دولة حصّتها وفق المعايير الدولية”.

كثيرة تصبح التأويلات عندما يتعلّق الأمر بغاز لبنان وليس هناك من حقيقة مطلقة عندما تكون المسألة جيو – سياسية. وحدها الايام المقبلة ستُظهر نوايا الولايات المتحدة تجاه لبنان إلا أنّ معيار ترسيم الحدود البحرية يجب أن يبقى القانون الدولي منفرداً. ولعلّه من الافضل لهذه الثروة أن تبقى نائمة في قعر البحر لحين ايجاد حلول آنية تُعيد خلق اقتصاد منتج بدلاً من اقتصاد ريعيّ وترك هذا الملف يأخذ مساره الطبيعي لئلا تصبح عوائده…”أموالاً منهوبة”.

* Capacity tax to be phased out over 2 years from 2017

* New reactors to be built to replace old ones (Adds Energy Minister comment, background)

STOCKHOLM, June 10 (Reuters) – Sweden said on Friday it would phase out some taxes on nuclear power and build new reactors to replace aging plants and secure energy supplies for decades to come.

Nuclear power providers in Sweden have said they would be forced to shut the country’s loss-making nuclear reactors unless a tax on nuclear capacity is abolished, risking a spike in electricity prices and energy shortages for industry.

“The aim is … to make sure we can always guarantee electricity at competitive prices, in a stable and sustainable way, both in the short and long term,” Energy Minister Ibrahim Baylan told reporters.

The tax, which brought in about 4 billion Swedish crowns ($488 million) in 2015, will be phased out over two years starting from 2017, but households will see their energy bills rise as Baylan said the government would increase taxes on energy users to make up for the nuclear tax. Heavy industry, however, would be excluded from the tax rise.

In a broad deal agreed with the main opposition parties, the government also said it would allow up to 10 new reactors to be built as the country closes its old plants, built in the 1970s and 80s.

The tax on capacity – which was increased last year – has hurt profitability at plants already under pressure from low market prices and the need for expensive upgrades to meet tougher safety standards since Japan’s Fukushima nuclear disaster.

Swedish state-owned utility Vattenfall and Germany’s E.ON have said they will shut four of Sweden’s 10 nuclear reactors earlier than previously planned. One of them was shut last year.

In April, Vattenfall said all the remaining six reactors would have to close by 2020 if the capacity tax was not abolished.

Nuclear plants produced around 34 percent of Sweden’s electricity in 2015.

The deal to end the tax is a blow for the Green Party, which wants nuclear power phased out as soon as possible and instigated the increase in the tax last year. ($1 = 8.1964 Swedish crowns) (Reporting by Johan Sennero; Editing by Simon Johnson and Susan Fenton)

KARACHI: When you think of electric vehicles, you think of Elon Musk, a noiseless Tesla and luxury more than zero emissions. But today the government wants to use the same technology for the common man — to run bikes, rickshaws and even buses, jeeps and trucks. Will this transition from fossil fuel vehicles to electric vehicles in Pakistan happen anytime soon?

Cities are witnessing the worst ever smog. This was followed by a climate march with youth demanding climate justice.

Thus the Pakistan Tehreek-i-Insaf government could not have chosen a better time than when the UN climate summit COP 25 is taking place to make a strong case against tailpipe emissions from urban transportation, a major contributor to air pollution and climate change.

Little wonder then they quickly got the nod of approval by the cabinet for the first national electric vehicle (EV) policy.

With 43 per cent of the airborne emissions in the country coming from the transport sector, federal Minister for Climate Change Malik Amin Aslam said that transitioning to EV provided a “huge opportunity” for the country.

“These will have many advantages for Pakistan — it will reduce pollution, will cut the cost of fuel by 70pc thereby [leading to] huge saving for FFV (fossil fuel vehicle) owners, and will cut the country’s import bill tremendously.”

There are three million private cars and 20m motorcycles and motorised rickshaws plying the roads, according to the Pakistan Bureau of Statistics, as cited in the Economic Survey 2018-19, mainly due to the absence of a good public transport system.

Riaz Haq, who has worked in various tech firms for 35 years in the Silicon Valley and is an EV enthusiast, said that with 32m households and 17.5m motorcycles registered in Pakistan, the motorcycle ownership increased from 41pc in 2015 to 53pc in 2018.

The new policy envisions using electricity to get 100,000 cars, 500,000 two- and three-wheelers, 1,000 buses and trucks to ply the roads in the next five years. By 2030 it sees 30pc of all new cars, big and small trucks, vans, and jeeps and 50pc of all two-, three- and four-wheelers to be electric vehicles reducing tailpipe emissions by 65pc. By 2040, if all goes well, 90pc of all vehicles on the roads will be EVs.

“The PM wants all new buses coming on the road to be electric hybrid — run both on electricity and CNG (compressed natural gas),” said the federal minister.

Most experts are lauding the policy as a step in the right direction. “It is a forward-looking step needed to deal with climate concerns from growing transport sector emissions with rapidly rising vehicle ownership,” Mr Haq wrote in his blog.

Another proponent for EVs, Islamabad-based energy expert Vaqar Zakaria, said that “surplus power generation capacity, building off-peak demand for better utilisation of generation capacity which also brings down generation costs, poor urban air quality, high levels of noise from traffic and safer cars” are some of the reasons to make the move.

The automobile industry remains sceptical though. “I would love to see EV launched in Pakistan, but it means developing a huge set-up anew,” said Juzer Amreliwala, the chief executive officer of a Honda partner in Karachi.

“On the face of it, it looks great. But establishing proper after-sales set-up requires both capital and human investment. Although most dealerships have come quite far in technology development, much training is still needed,” he added.

Aware of the infrastructure that will be needed for EVs, the minister for climate change sees it as an opportunity with a whole new service industry and numerous livelihood options opening up. “Pakistan is thirsting for new business opportunities and markets. If we build our capacity technologically, Pakistan can become a hub for exporting EVs — especially two- and three-wheelers,” Mr Aslam said.

However, a potential problem with the policy is the plethora of government supervisors — nine ministries, the Higher Education Commission, the State Bank of Pakistan and various authorities in energy sectors. “This industry transcends so many domains that all these stakeholders had to be included,” ex­­plained Mr Aslam. “Interaction and cooperation between stakeholders are the mark of good governance.”

Vaqar Zakaria warns of the “vested interests” who may not like the transition. “Those that sell low quality fuel and cheat on quantity sold will not like it, the refiners will not like it, the car traders will not like it as the EVs will last longer, the industry as it presently will not like it, the FBR may say the government will lose taxes on imported fuel which are huge at the moment and a significant source of revenue for the government. But as a consumer I will be delighted… if they only let me import EVs and E-bikes at reasonable cost.”

By Ewa Krukowska, Bloomberg

The European Investment Bank adopted an unprecedented strategy to end funding for fossil fuel energy projects, in a move expected to support Europe’s plans to become the first climate-neutral continent.

The board of the Luxembourg-based lending arm of the European Union decided at a meeting on Thursday to approve a new energy policy that includes increased support for clean-energy projects. The bank will not consider new financing of unabated fossil fuels, including natural gas, from the end of 2021.

With more than half a trillion dollars in outstanding loans, the EIB is the biggest multilateral financial institution in the world. Given the EIB’s market impact and influence over the lending strategies of investors, its decision could end up depriving polluting projects from other sources of financing as well.

The lender’s move to prioritize energy efficiency and renewable-energy projects will reinforce the Green Deal being pushed by Ursula von der Leyen, the incoming president of the European Commission. She wants the institution to become a climate bank and help unlock 1 trillion euros ($1.1 trillion) to shift the economy toward cleaner forms of energy.

“Climate is the top issue on the political agenda of our time,” EIB President Werner Hoyer said in a statement, calling the decision to transition away from financing fossil fuels a “quantum leap in its ambition.”

The EIB decision is part of a broader push across the EU’s most powerful institutions that’s catapulted the bloc to the forefront of global efforts to fight climate change. New European Central Bank President Christine Lagarde has pledged to make climate change more of a focus for the institution, which is considering adding climate-related risks to its stress-test scenarios, in what could potentially make exposure to high-carbon footprint projects a liability for the balance sheets of financial firms in the continent.

The 28-nation EU wants to step up its climate ambition in sync with the landmark 2015 Paris agreement to fight global warming, after the U.S. turned its back on the accord. With EU leaders considering committing to climate neutrality by 2050, Europe is a step ahead of other major emitters, including China, India and Japan, which haven’t so far translated their voluntary Paris pledges into equally ambitious binding national measures.

“For the EIB to stop funding fossil fuel projects is a game-changer that begins to deliver the EU’s vision for climate leadership as laid out in the Green Deal,” said Eliot Whittington, director of the European Corporate Leaders Group. “We need this to act as an unequivocal signal into the financial system to encourage other multilateral lenders to follow suit.”

Von der Leyen, who is due to assume her new job as head of the EU’s executive arm in the coming weeks, also wants the bloc to raise its current target of cutting emissions by at least 40 percent by 2030 from 1990 levels. That may involve a reduction in pollution in the order of 50% or even 55% to counter the more frequent heat waves, storms and floods tied to global warming. Fossil fuels such as coal, oil and natural gas are leading contributors to climate change.

The EIB deal resolved a two-month deadlock where Germany and some central European nations sought to soften the proposed rules and make certain natural-gas projects eligible for financing. The strategy adopted on Thursday allows for continued support for projects already in the works that are vital for Europe’s energy security as long as they are appraised and approved by the end of 2021.

“Hats off to the European Investment Bank and those countries who fought hard to help it set a global benchmark today,” said Sebastien Godinot, economist at the environmental lobby WWF Europe. “All public and private banks must now follow suit and end funding of coal, oil and gas to safeguard investments and tackle the climate crisis.”

New Standards

The EIB new policy includes a new Emissions Performance Standard of 250 grams of carbon dioxide per kilowatt-hour, replacing the current 550 grams standard. That means that in order to qualify for financing, new power-generation projects have to be mitigated by various technologies that significantly improve their emissions performance, EIB Vice President Andrew McDowell said in a conference call.

The EIB, which last year invested more than 16 billion euros in climate-action projects, is preparing to play a larger role in spurring low-carbon technologies.

“This is not a last step, there are many more steps to come,” McDowell said. “But this is probably one of the most difficult parts of this journey that we’re having to take.”

The days of relentless production growth from U.S. shale oil fields are ending, potentially aiding OPEC’s years-long effort to drain a worldwide supply glut, according to industry pioneers Scott Sheffield and Mark Papa.

Investor calls for shale producers to shut down rigs and stop burning through cash are being heeded, Sheffield, Pioneer Natural Resources Co.’s chief executive officer, said on Tuesday. Across the American shale industry, output growth will slow next year, providing a boost for crude prices through the early 2020s, he said.

“I don’t think OPEC has to worry that much more about U.S. shale growth long term,” Sheffield said during a conference call with analysts. He’s “definitely becoming more optimistic that we’re probably at the bottom end of the cycle regarding oil prices.”

Talk of a shale slowdown reached a fever pitch this year as investors crushed drillers’ stocks and demanded spending discipline. As if on cue, Occidental Petroleum Corp., Apache Corp., Cimarex Energy Co. and Pioneer are all signaling plans to trim budgets. Explorers’ capital spending in 2020 will be 17% lower than this year, according to Cowen & Co., citing guidance from 14 third-quarter earnings reports.

Mark Papa, who built Enron Corp. castoff EOG Resources Inc. into one of the world’s biggest independent oil explorers and now runs Centennial Resource Development Inc., has been sounding the alarm on shale growth since at least February. In reiterating that warning on Tuesday, he said the slowdown will be more dramatic than he predicted as recently as nine weeks ago.

Beyond 2020

Papa downgraded his 2020 shale growth forecast to 400,000 barrels a day compared from the 700,000 estimate he discussed in early September.

Sheffield sees about 700,000 barrels a day being added next year while the Energy Information Administration predicts that next year’s daily production will expand by 910,000 barrels. Even that would be half of last year’s increase.

Crowded Wells

For Papa, there’s a more fundamental reason driving the downturn in shale than investor sentiment. Many producers have drilled their best locations and are now turning to lower-quality sites. Some also have been drilling wells too close together, resulting in a loss of overall performance.

The counterpoint to Sheffield and Papa’s gloomy outlook is the supermajors Exxon Mobil Corp. and Chevron Corp., which are ramping up Permian Basin drilling. Each plan to produce about one million barrels a day from the basin by the early 2020s. That may provide a silver lining for independent producers: an opportunity to get bought, Sheffield said.

The majors will have “to decide whether or not to bulk up their inventory over the next two to three years and decide whether or not to acquire any independents,” he said.

— With assistance by Catherine Ngai