RGGI Carbon Tax Soars Again, Averages Near $14/Ton Latest Auction
The so-called Regional Greenhouse Gas Initiative (RGGI), a tax on carbon dioxide emissions from coal and natural gas-fired power plants aimed at killing off those two sources of energy, is more expensive than ever. Pennsylvania Gov. Tom Wolf is forcing PA to join the RGGI cabal of 11 states (most of them in the northeast), a move endorsed by the man who wants to replace him in November, PA Attorney General Josh Shapiro (see PA AG Shapiro Signs Off on RGGI Carbon Tax…After Criticizing It). In the most recent RGGI “auction” of so-called carbon allowances, bidders paid an average of $13.90 per allowance–per short ton of CO2 emitted. That’s the highest price EVER paid, and there’s no sign that the ongoing increases will slow down.
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From time to time we highlight deals by companies that purchase landowners’ (or rights owners’) royalty payments–giving them a lump sum payment upfront in return for signing over all future royalty payments to the company buying the rights. Buying future royalty payments is not unlike companies that approach and pay lottery winners who receive payouts over a long period (for life, or for a period of years), with the lottery winner selling his or her future payments for a single lump sum now. Two companies of the larger companies in this space are about to merge.
Energy Transfer (ET) has signed a fifth customer to accept shipments of LNG produced by ET’s yet-to-be-constructed LNG export facility in Lake Charles, Louisiana, located on the Calcasieu ship channel. Yesterday (yes, on a Sunday), ET issued a press release to announce a 25-year deal with China Gas to purchase 0.7 million tonnes (MT) of LNG per year on a free-on-board (FOB) basis. Added with the other deals, ET has now pre-sold 5.8 MT per year of the site’s planned capacity to produce 16.45 MT per year, meaning 35% of the capacity is now spoken for. More than a third of the way there!
In April the New York State Assembly passed Assembly Bill A7389C. Early Friday morning the New York State Senate, on the last day of the current session, passed the same bill, sending it to Gov. Kathy Hochul’s desk for a signature. A7389C (full copy below) slaps a two-year moratorium on cryptocurrency mining (i.e. bitcoin mining) powered by electricity generated from burning fossil fuels. Here’s how it works in New York (we’ve seen this multiple times): First comes a moratorium that lasts a year or two, then the moratorium gets extended, and eventually the moratorium turns into an outright, permanent ban. That’s how it worked with fracking, and that’s how it will work with bitcoin mining in New York, a state that has become extremely hostile to business.
Last week Congressional Republicans from the House of Representatives, led by the man who will become the Speaker of the House after November’s coming tsunami election, Kevin McCarthy, introduced a road map describing how they will mitigate rising gasoline prices and address so-called climate change if the party wins control of the House in November’s midterm elections (which they will). The Republican plan arises from the task force established last year by McCarthy, called the Energy, Climate, and Conservation (ECC) Task Force. The task force rolled out a six-part “plan” (more like a framework than a fleshed-out plan) to tackle the ongoing energy crisis and the challenge of “global climate change.”
Last Friday the Federal Reserve Bank of Dallas issued a monthly update on energy indicators. This latest report tackles the popping price of natural gas and strong growth in the production of U.S. chemicals, including plastics (which largely come from oil and natural gas). We found the Fed’s analysis of where we are now, and where things are likely headed this year, of interest and value. We think you will too.
The International Energy Forum (IEF), based in Saudi Arabia, is leading a research initiative examining the elements required to create a hydrogen market. Currently, hydrogen accounts for a piddly 1% of the energy mix worldwide, but is expected to scale up in the coming years and decades as countries strive to reduce carbon emissions (reducing CO2 is a futile effort, but it is what it is). Current research and discussions on hydrogen focus primarily on the various production cost outlooks for different “colors” of hydrogen (gray for hydrogen that comes from natural gas with no carbon capture, blue if there is carbon capture, green for using water and renewables to create hydrogen, etc.). There has been, according to IEF, little discussion around the possible trajectories of the “hydrogen business model.” Scaling up hydrogen production, regardless of color, will require new types of contracts, financialization (price discovery), and/or commoditization. The IEF has just issued a new report called “Scaling-Up the Hydrogen Market” (full copy below).
OTHER U.S. REGIONS: Piedmont Natural Gas opens compressed natural gas fueling station in Wilmington, N.C.; NATIONAL: Carbon dioxide in Earth’s atmosphere soars to levels not seen for millions of years; Chevron CEO warns not to count on new US oil refinery; Consumers pay the price as Biden’s war on oil and gas expands; When a molecule’s pedigree is more important than its energy content; INTERNATIONAL: The end of energy free trade.