Oxford Institute for Energy Studies

Recent Oxford Institute for Energy Studies paper evaluates financing of a green iron plant with green hydrogen in an emerging market Link to Research Paper 👉 https://lnkd.in/ep28ZkF5 Key points: 💠 #Steelmaking is responsible for 7-9% of global emissions, with #ironmaking the most emission-intensive process as it relies predominately on use of fossil fuels to reduce iron ore in blast furnaces 💠 #Greenhydrogen can substitute fossil fuels as reductant in the direct reduced iron (#DRI) method 💠 With design capacity of 1.8 million tonnes of iron produced per year, the proposed project incurs capital costs of 9 billion USD with levelized cost of green hot briquetted iron (HBI) of 690 USD/tonne. This represents a premium of around 100% over traditional, ’grey’ HBI   💠 Corresponding levelized cost of green #hydrogen (#LCOH) is estimated at 4.84 USD/kg and #cleanelectricity of 45.5 USD/MWh   💠 Access to low-cost, long-term agency #financing will be key to the project’s success while a suite of mechanisms exists to leverage public support in the host and offtaker’s countries 💠 Other key requirements include a robust #commercial structure with long-term contracts that fix the #greenpremium for the product and lock in supply of the required specialised iron ore   💠 Project #risks can be mitigated by a combination of #governmentsupport both in #host and #offtaker countries, allocation of risks among project parties and between debt and equity through financing agreements   💠 As there is no technical requirement to integrate iron- and steelmaking when using DRI/HBI, industry #investors will seek to locate new plants in the lowest-cost locations 💠 Thus, ironmaking plants are expected to be located in regions of lowest-cost renewable electricity. On the other hand, steel plants, whilst might also be co-located with ironmaking to utilise the low-cost power, can be located in end markets 💠  This allows for usage of existing electric arc furnace (#EAF) capacity and local expertise in developed markets to produce more specialised steels or exploit proximity to end-customers to better manage inventory and product quality 💠  If/when the future steel market is dominated by green steel products and green ironmaking becomes intrinsically profitable, iron ore-producing countries which also have abundant renewable electricity resources (e.g. Brazil, Australia) will seek to capture #valueadded by building their own green ironmaking plants and #exporting green iron #greensteel #greeniron #industrialdecarbonisation #carbonmanagement #energytransition   To learn more about OIES’s steel research, visit https://lnkd.in/e4kUfrKs contact Hasan M. Stephen Craen, Paul Butterworth, Martin Lambert, Daniel Duma SEI — Stockholm Environment Institute, CRU

New Oxford Institute for Energy Studies Research Paper discusses financing of a green hydrogen-based ironmaking plant in a developing country Link to Research Paper 👉 https://lnkd.in/ep28ZkF5 Key points: 💠 Iron and steel industry represents the second highest industrial emitting sector – only second to cement – contributing around 25% of industrial #CO2 emissions and 7-9% of overall global #emissions 💠 Ironmaking is the most emissions-intensive stage in the overall steelmaking process, traditionally relying on coal/coke to reduce iron ore in blast furnaces. Substituting fossil reductants with 'green hydrogen' to directly reduce iron can #decarbonize ironmaking 💠 This study designs and evaluates the financial feasibility of an #archetype green hydrogen-based ironmaking project in a developing country for export of greeniron into developed markets 💠 #Capitalcost of the project is estimated at 9 billion USD with levelized cost of delivered green hot briquetted iron (HBI) estimated at 690 USD/tonne 💠 This represents a premium of around 100% over the traditional, ’grey’ alternative and corresponds to levelized costs of #greenhydrogen production of 4.84 USD/kg and cleanelectricity of 45.5 USD/MWh 💠 #Financing such an unprecedented, world-scale project would be a challenge but is not impossible. Key requirements include a robust commercial structure with long-term contracts that fix the #greenpremium for the product and lock in supply of the specialised iron ore required 💠 #Carbonpricing under Emissions Trading Systems (hashtag #ETS) remains unlikely to reach the levels required to support such a project on its own, where more targeted support mechanisms such as carbon contracts for difference (#CfD) can provide fixed prices for extended periods of time and in turn help attract investment 💠 As (green) ironmaking no longer needs to be located in areas with rich fossil resources but with abundant clean energy (for green hydrogen production), industry #investors will seek to locate new plants in regions of lowest-cost #renewable electricity 💠 Steel plants, whilst might also be co-located with green ironmaking to utilise low-cost power, can instead be located in end markets, effectively splitting the iron and steel #supplychain #greensteel #greeniron #industrialdecarbonisation #carbonmanagement #energytransition --------------------------------------------------------------------------- To learn more about OIES’s steel research, contact Hasan M. or visit: https://lnkd.in/e92AsGkz Stephen Craen, Paul Butterworth, Daniel Duma, Martin Lambert, SEI — Stockholm Environment Institute, CRU

New Oxford Institute for Energy Studies Research Paper illustrates the application of machine learning techniques in #forecasting global oil demand in the short- and medium-term, and further expands the methodological framework for comprehensive forecasting scenario analysis.   👉 Link: https://lnkd.in/dz8Mar6E This study introduces a novel approach to predicting global #oil #demand by integrating machine learning (ML) techniques to #forecast consumption across seven refined oil products and seven key regions. By aggregating these forecasts, we offer a comprehensive view of global demand trends. The paper examines the efficacy of ML models in providing robust and accurate demand forecasts. It also provides a transparent and repeatable process to forecast oil demand. A comparison between the extreme gradient boosting (XGBoost) model and Neural Hierarchical Interpolation for Time Series Forecasting (N-HiTS) model was conducted to determine which is a more accurate model to forecast demand. Our comparative analysis demonstrates that N-HiTS performs better. The accuracy of global oil demand forecasts is pivotal for economic planning and policy making. #energy #energyresearch #oott

New Oxford Institute for Energy Studies Podcast discusses market and regulatory headwinds build for MENA gas exporters to Europe. 👉 Link to podcast: https://lnkd.in/eYWBcZCV 👉 Link to related research paper: https://lnkd.in/ebWefeXv 🎙️ In this latest OIES podcast from the Gas Programme, James Henderson talks to Mostefa Ouki about his latest paper on “Market and EU green regulation challenges for MENA’s gas exporters to Europe.” 🎙️ The podcast looks at the key challenges faced by MENA gas exporters as demand for gas in Europe goes into decline in response to the energy transition and the desire to improve energy security in the aftermath of the Russian invasion of Ukraine. 🎙️ Initially MENA exporters have benefitted from the EU’s search for alternative sources of gas supply, but over the medium to longer term the EU’s plan to decrease gas demand and to tighten rule on environmental standards will undoubtedly affect the MENA countries. 🎙️ In particular, MENA countries will need to find an adequate response to new methane regulations and in general will be forced to focus more on their GHG footprint in order to ensure that their hydrocarbon exports are competitive in the EU market. 🎙️ Furthermore, they will also need to balance the future of natural gas exports with the potential to send hydrogen to the European market, although this option is very much for the long-term as little progress has been made to date. All of our podcasts are also available on #Spotify and #AppleMusic #EU #Gas #greendeal #Hydrogen #LNG #MENA #pipelineexports

Recent Oxford Institute for Energy Studies Insight paper looks at the role of carbon dioxide removals (CDR) as key pillar of carbon management Link to Energy Insight 👉 https://lnkd.in/evBUrcY3 Key points: 💠 Achieving #netzero will require carbon removal technologies with different profiles depending on costs, co-benefits, scalability, and policy 💠  Establishing clear definitions for what constitutes carbon removal and corresponding #accounting methods have been at the heart of recent COP discussions, particularly for inclusion within the scope of #Article6 💠  Multiple carbon accounting methodologies can track removals including project-level methodologies that are focused and detailed, while national inventories offer a broader and standardised analysis 💠 While traditional life cycle assessments (#LCA) have been applied to evaluate the environmental performance of CDR, adopting #consequential carbon accounting methods can determine system-wide effects and help overcome issues regarding responsibility allocation, overshoot scenarios, and scalability 💠  Policy support and carbon markets, along with improved practices for monitoring, reporting and verification (#MRV), are key levers for CDR developments 💠  #Carbonpricing can drive demand for CDR. Engineered removals are yet to be considered in the scope of emission trading systems (#ETS) except in the UK where industry consultation is ongoing to best assess how to integrate removals into the UK-ETS 💠  Intense competition for funding requires #policy intervention to create specific demand for CDR, especially for novel technologies which are currently only sustained by the voluntary carbon market and private investment 💠  Some removals can occur years after human intervention, and within spatiotemporal scales that can vary from the local to more regional scale, making it difficult to determine a baseline and changes over time 💠  The dynamic, long-term nature of some CDR methods requires systemic and consequential methods that foresee system-wide and temporal changes in the interventions to avoid undesirable and unexpected consequences 💠  Whether for green marketing purposes or to comply with #regulation and environmental targets, procuring CDR requires complementary, compatible, reliable, transparent, and practical guidelines #carbonremoval #CDR #netzero #carbonmanagement

New Oxford Institute for Energy Studies Energy Insight discusses carbon dioxide removals (CDR) as key pillar of carbon management and sustainability Link to Energy Insight 👉 https://lnkd.in/evBUrcY3 Key points: 💠 CDR includes a set of #nature and #technology approaches to remove atmospheric #CO2 and store it away safely and durably 💠 Achieving #netzero will require carbon removal approaches with different profiles depending on costs, co-benefits, scalability, and policy 💠 Establishing clear definitions for what constitutes carbon removal and corresponding #carbonaccounting methods have been at the heart of recent #COP discussions, particularly for inclusion within the scope of #Article6 💠 Policy support and carbon markets, along with improved practices for monitoring, reporting and verification (#MRV) can be key levers for CDR developments 💠 Strong competition for funding requires policy intervention to create specific #demand for CDR, especially for novel technologies, which are currently only sustained by voluntary carbon markets and private investment 💠 MRV for CDR should explicitly require additional and non-double counting of emissions, with leakage accounted for and permanent #storage verifiable 💠 Need to consider a broader range of #sustainability aspects to determine which CDR methods provide long-term benefits for local communities, economies, and ecosystems 💠 Hidden environmental and societal costs from either negative (e.g., pollution, #climate damage) or positive impacts (e.g. biodiversity protection, improved air quality) should be reflected in market price of CDRs to make them more competitive 💠 CO2 no longer considered a waste stream entering the atmosphere but a #resource whose adequate management can translate into environmental, social, and economic benefits #carbonremoval #CDR #netzero #carbonmanagement #climateaction

A new Oxford Institute for Energy Studies presentation on the impact of the EU Methane Regulation on LNG contracts by Agnieszka Ason   Key messages:    💠The EU Methane Regulation is having a tangible impact on LNG sales to the EU, with buyers starting to take steps to ensure that their contracts comply with the new regulatory requirements   💠The lack of a direct contractual relationship between importers and producers can have significant consequences, particularly in cases where sellers are unable to meet commitments that are beyond their control   💠 Some sellers may require a higher price for additional commitments or prioritise buyers outside the EU to reduce the risk of perceived uncertainty and complexity of the transaction falling under the scope of the EU Methane Regulation   💠 Some Importers may choose not to buy LNG from certain sellers or projects if doing so would expose them to the risk of penalties under the EU Methane Regulation 💠Responding to the requirements of the EU Methane Regulation will require new approaches and contract clauses   💠Parties need to consider the long-term impact of the EU Methane Regulation on contract performance and prepare for the emergence of new triggers for review of price, delivery or other terms   💠 The efficiency and quality of the response to the EU Methane Regulation – and any other future regulatory requirements – will be a differentiating factor in the market and will increasingly define the successful long-term strategy in the LNG business 📢 This presentation was part of our recent webinar on Methane Emissions: EU methane regulation & consequences for LNG, with Prof Jonathan Stern, Maria Olczak and Agnieszka Ason 👉 Key messages from Jonathan and Maria’s presentation: https://lnkd.in/div9CWes   📖 For an in-depth analysis, read our Oxford Institute for Energy Studies Energy Insight: ‘Analysing the EU Methane Regulation: what is changing, for whom and by when’  👉 Link to paper: https://lnkd.in/eVgsTkdt 🎧 Or listen to our Podcast with two of the authors Maria Olczak and Prof Jonathan Stern discussing the main conclusions of their report 👉 Link to podcast: https://lnkd.in/e87ZEnBq     📍 This was a sponsor only event. For more information on the OIES Gas Research Programme, please contact Bill Farren-Price, Head of Gas Research, and visit our webpage: https://lnkd.in/drMwjnj  #OIESGas #methane #methaneregulation #lng #contracts

New Oxford Institute for Energy Studies podcast discusses key questions ahead COP 29   👉 Link to podcast: https://lnkd.in/d2fgVeHU   🎙 In this latest podcast from OIES, Michal Meidan talks to James Henderson about COP 29 which will be held in Baku, Azerbaijan between November 11-22. 🎙 Michal and James take stock of last year’s COP and the key issues this year’s conference will need to address: Financing, including the outlook for contributions under the terms of the New Collective Quantified Goal (NCQG) and the Loss and Damage Fund; Adaptation and mitigation measures as well as Article 6 on voluntary carbon markets. 🎙 They also discuss methane emissions, and whether they are likely to feature in Baku and how the complex geopolitical environment will impact the outcomes of COP 29. All of our #podcasts are available on #spotify and #applemusic #Adaptation #Article6 #carbonmarkets #COP #EnergyTransition #Geopolitics #lossanddamage #Mitigation

#DrKatjaYafimava, senior research fellow at #OIES has been recently interviewed by #CNNBusinessArabic on the likely impact of Trump or Harris Administration on the energy transition. Link to interview: https://lnkd.in/ebnHjtgP Main points: 👉 Under both Harris and Trump Administrations, the US is likely to redouble its efforts to boost its domestic manufacturing capacity, including in net-zero technologies and associated supply chains; 👉 Trump administration is more likely to lift the moratorium on non-FTA LNG projects approvals faster and subject to fewer environmental restrictions, but it is also more likely to use it as a bargaining tool vis-à-vis Europe; 👉 Fossil fuels are likely to play a greater role under Trump administration, especially if the issue of financing the energy transition in developing countries is not resolved.

🚨 It was a real pleasure to welcome our sponsors back in Oxford a few days ago for the Autumn #Sponsors #Meeting of the Oxford Institute for Energy Studies OIES Gas Research Programme. Two days, seven sessions, two workshops, five roundtables and many informative presentations, insightful comments and stimulating discussions! ✨ Focus on the dinner speech: #China #gas #power – strong growth belies high uncertainty" by Anders Hove, Senior Research Fellow, China Programme, OIES Key points: 💠 China’s gas power market presents a study in contradictions. On the one hand, gas power is growing quickly: gas-fired power capacity rose from 57 GW in 2014 to 126 GW at the end of 2023, almost 10% compound annual growth, and the power sector’s gas consumption rose from 27.5 bcm to 68.5 bcm. Experts anticipate capacity could rise to 300 GW over the next decade or so. 💠A glance at recent expert views on gas power cited in Chinese media shows that views are hardly all rosy – and views differ between government, power sector experts, and oil & gas players. According to CNOOC, gas is the ‘best partner’ for China’s rising wind and solar capacity. In contrast, Huadian, the largest owner of gas-fired power, emphasizes the challenges: unclear policy, import dependence, high gas prices, and a regulatory mismatch between coal and gas-fired power. 💠Whereas coal-fired power benefits from a capacity price, gas-fired power prices depend on the province, and only a few have adopted a capacity payment for gas. There is no scope for gas to replace coal for baseload, with gas-fired power costing ~2x that of coal. Peaking power depends on compensation, but spot markets trade in limited volumes and prices are capped. 💠Government officials remain cautious on gas, leaving policies up to provincial officials, and almost all gas-fired power is located in coastal provinces with access to LNG. According to Zhou Zhenyu, Deputy Director for Electric Power at the Zhejiang Development and Reform Commission, unclear policy is the main factor driving uncertainty for gas power. Gas has ‘hovered between development and non-development’, said Zhou, with one side seeing gas as a scarce resource and a ‘luxury perfume’, while the other argues gas is ‘not a baby’ and that global gas supplies are likely to be plentiful in the future. 💠Still, with coastal LNG capacity set to rise 38% by 2030, and provincial officials pursuing self-sufficiency in power generation to meet peak loads, even if the price is high, prospects for gas-fired power remain good, albeit highly uncertain. 📍 This was a sponsor only event. If you are interested in joining us for future events and for more information on the OIES Gas Research Programme, please contact Bill Farren-Price, Head of Gas Research, and visit our webpage: https://lnkd.in/drMwjnj #OIESGas #OxfordInstituteforEnergyStudies