If you look back at our ESG and Climate piece this week (EIA View Suggests Natural Gas & CCS Critical To Net-Zero Goals), you will note that we focused on the recent EIA global energy outlook, and another chart from this outlook is shown below. In the ESG report, we talked about the global need to support increased “clean” natural gas use to offset as much of the coal predictions in the chart as possible and to drive additional hydrogen production to offset some of the petroleum product demand that the EIA still expects to be sued as a transport fuel in 2050. We also called for the broad and warm embrace of CCS so that some of the fossil fuel that the EIA is predicting – especially all of the fuel used for power in the exhibit below. Yesterday Air Products announced not only a large blue hydrogen complex for Louisiana but also the CCS to support it and made a very compelling argument in its presentation for the need for substantial volumes of blue hydrogen – something we fully agree with. We covered the subject in detail in yesterday’s daily. “Blue Is The Color, Hydrogen Is The Game…”
Source: EIA – Today In Energy, October 2021
COP26 is a couple of weeks away and expectations are fairly low for what will be accomplished. Agreements on natural gas and CCS are critical in our view if we are to limit inflation and give solar, wind, and other renewable sources of power and opportunity to keep pace with demand economically. It would be a shame if the meeting was hijacked by the idealists rather than the pragmatists/economists. The Mark Carney crusade is also worth reading about, not just below but in other pieces, he has written. His focus is on finance for the transition, but one of his key topics is the carbon credit market and how it needs to be better defined, better policed, and more readily available, not just to allow carbon producers to buy valid offsets, but to provide liquidity into the carbon market, without which you may limit the amount of private money that flows into the process. By limiting the private money flows less will ultimately get done. This is another stretch goal for COP26 – some sort of global agreement of how offset markets should work and how they should be governed.