UK

As environmental protection and decarbonization efforts have ramped up in the past few decades, policymakers around the world have come up with a variety of schemes to lower industrial emissions. The Kyoto Protocol in 1997 committed developed nations to reduce their greenhouse gas (GHG) emissions by a defined amount from 1990 levels by 2012. The treaty was never brought up for ratification in the U.S. Senate, which unanimously opposed it because developing nations — such as China — weren’t included. Across the Atlantic, the Kyoto Protocol was received much more favorably, with all 15 members (at the time) of the European Union (EU) ratifying the treaty in 2002. In 2005, the EU launched the Emissions Trading System (ETS) as a mechanism to help reduce emissions from power plants, industrial facilities and commercial aviation, covering nearly half of total EU emissions. In today’s RBN blog, we explain the European cap-and-trade system, examine how the ETS is affecting the EU’s refining industry as a whole, and drill down to the refinery level to discuss disparities in carbon-cost exposure from one refinery to the next.

Russia’s invasion of Ukraine last February upended long-standing expectations about natural gas supplies to Europe and resulted in elevated global gas prices as countries bid for LNG to fill the void. But U.S. suppliers can only produce so much LNG, and how much of it ends up in Europe versus Asia or other gas-consuming regions in 2023 and beyond will depend largely on market forces — in other words, who needs the LNG more and is willing to pay up for it. At the center of these market-based decisions about LNG cargo destinations are large portfolio players like Shell, BP, TotalEnergies and Naturgy and short-side portfolio players like Japan’s JERA. In today’s RBN blog we look at these two types of players, the roles they play, and their contributions to energy security.

As we approach the 238th anniversary of our independence from the UK, is it possible the British Isles are about to become at least a bit dependent on us, natural gas-wise? With UK gas production falling, and with the aggressive actions of Vladimir Putin raising the specter of gas-supply interruptions from Russia to Western Europe, a case could be made that our jolly-good friends across the pond may be thinking risk-mitigation, supply diversification, and deals to buy more LNG from their former colonies. (They already plan to buy some.) But, as we discuss in today’s blog, gas prices in the UK are currently very low and the situation is, well, complicated.