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European Energy Review

European Energy Review

 

Europe’s energy scene has seen some significant developments since the start of 2020. The European Union aims to enshrine a target for carbon neutrality by 2050 into law. Major European oil and gas firms have pledged to cut carbon emissions in response to growing investor and shareholder concern about climate change and insufficient climate action. Deal-making and exploration in the oil and gas sector continue along with project development and project launches in several alternative energy areas including; offshore wind, hydrogen, solar power and energy storage.  

The European Commission proposed in early March a European Climate Law to enshrine the European Green Deal’s commitment for carbon neutrality by 2050 into legislation. Under proposed European Climate Law, the 2050 net-zero carbon target would become legally binding collectively binding all EU institutions and member states to take the necessary measures at EU and national level to meet the net-zero target.

In recent weeks, while the European Union is working on a continent-wide net-zero goal, several major oil and gas firms have pledged to reduce their carbon footprint by lowering their emissions and the emissions from the energy products that they sell.   

On 6 February, Norway’s Equinor unveiled its climate roadmap through 2050, aiming to reduce the net carbon intensity, from initial production to final consumption, of energy produced by at least 50 by 2050.

Two years ago, Equinor dropped the name Statoil to reflect its ambition to be associated with the wider energy sector. In an effort to be a part of the solution in the energy transition, Equinor will also look to grow its renewable energy capacity tenfold by 2026 and become a global offshore wind major.

“We will produce less oil in a low carbon future, but value creation from oil and gas will still be high, and renewables give significant new opportunities to create attractive returns and growth,” Equinor’s president and CEO Eldar Sætre said.

A week later, BP followed with another net-zero pledge from an oil major. The UK-based oil giant set on 12 February a new ambition to become a net-zero company by 2050 or sooner. The oil and gas supermajor will also look to cut the carbon intensity of products BP sells by 50% by 2050 or sooner and increase the proportion of investment into non-oil and gas businesses over time. BP will keep its commitment to reward investors as it transforms, chief executive Bernard Looney said.

“We can only reimagine energy if we are financially strong, able to pay the dividend our owners depend on and to generate the cash to invest in new low and no-carbon businesses,” Looney said.

Another week later, Portugal’s oil and gas firm Galp said it was embracing the energy transition, creating a new division dedicated to renewables and new business models.  

“Galp will launch new products and services and will transform its traditional businesses through technology, digitalisation and innovation,” the company said on its Capital Markets Day.
Galp now looks to develop a sustainable renewable power generation portfolio, allocating 10-15% of its investment to renewables to capture opportunities from new businesses that could be scaled up.  

Italy’s Eni joined the ranks of oil and gas firms pledging significant cuts in carbon emissions and intensity in its long-term strategic plan through 2050 unveiled on 28 February.

Under the plan, Eni expects its oil production to peak in 2025 as the company will look to boost its gas production and materially increase its renewable energy portfolio.

Eni aims to obtain by 2050 an -80% reduction in net scope 1, 2 and 3 emissions of the entire life-cycle of the energy products it sells, as well as a -55% reduction in emission intensity compared to 2018. The Italian major plans to have global renewables installed capacity of 3 GW by 2023 and 5 GW by 2025, and to raise that capacity to more than 55 GW by 2050.

“We have designed a strategy that combines economic sustainability with environmental sustainability, and we have done so by defining an action plan based on technologies – existing or developed in-house - that we know how to implement. This will allow Eni to be a leader in the market supplying decarbonised energy products and actively contributing to the energy transition process,” Eni’s chief executive Claudio Descalzi said.

France’s Total has announced several deals in renewables and battery production in recent months.

These range from setting foot on Spain’s solar market with a pipeline of 2 GW worth of projects to launching a pilot plan to manufacture European batteries for electric vehicles together with PSA and Opel, installing and operating up to 20,000 new EV public charging points in the Netherlands.

Total says it is building a portfolio of low-carbon businesses that could account for 15 to 20% of its sales by 2040. With more than 5 GW of solar projects announced since the beginning of this year, Total is well on track to reach its target to have 25 GW of installed power generation capacity from renewable sources by 2025.  

While major companies continue to announce low-carbon projects and targets, operators in the North Sea and the Norwegian Sea continue to drill for resources, aiming to raise production.  

Equinor and partner Neptune Energy have struck oil in the Sigrun East prospect in the North Sea, the Norwegian energy giant said in early March. Recoverable resources at Equinor’s first discovery on the Norwegian Continental Shelf this year are estimated at between 7 and 17 million barrels of oil equivalent.   
Spirit Energy signed in March an agreement to sell two non-core assets in Denmark—stakes in the Hejre and Solsort discoveries—to INEOS.

The Norwegian Petroleum Directorate (NPD) gave the green light to operator Aker BP to start oil and gas production from the Skogul field in the North Sea, one of the smallest fields offshore Norway developed with a subsea template tied-in to the Alvheim FPSO via the Vilje field.

”The project serves as an example that even small fields can create value for the licensees and the Norwegian society,” says Arvid Østhus, the NPD’s assistant director for development and operations in the North Sea.  

Equinor and Shell signed an agreement on digital collaboration to jointly develop solutions and methods through the exchange of expertise in areas such as data science, artificial intelligence (AI), and 3D printing.   

In alternative energy news, the European Commission unveiled on 10 March a new industrial strategy to help Europe’s industry lead the twin transitions towards climate neutrality and digital leadership. As part of the new initiatives, the Commission proposes the creation of a Clean Hydrogen Alliance to accelerate the decarbonisation of industry and maintain industrial leadership.

“Europe’s industry has everything it takes to lead the way and we will do everything we can to support it,” said Ursula von der Leyen, President of the European Commission.  

Shortly before the EC’s announcement, Europe’s largest green hydrogen project up to date was launched in Groningen, the Netherlands. A consortium of Gasunie, Groningen Seaports, and Shell Nederland launched in February the NortH2 green hydrogen project to produce green hydrogen using renewable electricity generated by a mega offshore wind farm. The project developers aim to build wind farms in the North Sea with capacity of 10 gigawatts around 2040, from which hydrogen will be produced. The project begins this year with a feasibility study and if successful, the consortium expects first green hydrogen production in 2027.

“Together we will have to pioneer and innovate to bring together all the available knowledge and skills that are required. The energy transition calls for guts, boldness, and action,” said Marjan van Loon, President-Director of Shell Nederland.   

Before this major project, another green hydrogen production project is set to begin operations at the port of Ostend in Belgium in 2025 though an exclusive partnership between the Port of Oostende, DEME Concessions, and PMV.

In wind power generation, Europe installed a total of 3.6 GW of new offshore wind capacity in 2019 – an annual record high, WindEurope said last month. Total new onshore and offshore wind installations in Europe reached 15.4 GW in 2019, bringing Europe’s wind energy capacity to 205 GW. Wind energy accounted for 15% of all electricity consumption in Europe in 2019, WindEurope said but noted that currently, Europe is not building enough new wind farms to deliver the EU’s goal that it should be half of Europe’s electricity by 2050.

In an effort to boost grid compatibility of offshore wind turbines, the Fraunhofer Institute for Wind Energy Systems IWES in Germany is launching a mobile test facility; a grid simulator to verify current and future grid system services as well as electrical properties of a wind turbine. The project will allow the testing and optimisation of the grid compatibility of large wind turbines with an output of up to 20 MW.

In plastics recycling, Eni’s chemicals company Versalis is launching HoopTM; a project aimed at developing new technology to chemically recycle plastic waste.

“The HoopTM project aims to create a theoretically endless plastic recycling process, producing new virgin polymers suitable for all applications and that are identical to polymers that come from fossil raw materials,” said Daniele Ferrari, chief executive at Versalis.

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Published: 03-04-2020

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