TWO YEARS ON FROM RUSSIA’S INVASION OF UKRAINE: Two years following Russia’s invasion of Ukraine, the Treasury issued a defense of its efforts to limit Vladimir Putin’s war funding.
The argument that the price cap is working: It’s been more than a year since the imposition of the G-7 oil price cap, meant to limit Russia’s fossil fuel revenue while also ensuring its supplies stay on the markets.
Treasury officials published a blog post this morning defending the price cap, which has come under criticism in recent months as it has become that Russia is still earning massive revenues from oil, in large part by rerouting sales away from the West and toward Asia.
The Treasury notes that, while Russian oil exports have continued to find a home, with sales increasing in 2023 compared to 2021, its revenue from its primary Urals-grade crude has dropped by 40% compared to the start of the war.
The analysis acknowledges that part of the decline in revenues is just because overall oil prices have fallen. But it also argues that it is attributable to the price cap, in part, as shown by the fact that Russia is being forced to discount its prices relative to other suppliers. It concludes that the discount rose from $12 to $13 per barrel in October, before it tightened enforcement of the price cap, to about $19 per barrel over the past month.
Deputy Treasury Secretary Wally Adeyemo told reporters yesterday evening that the U.S. has no intention of lowering the capped price from $60, at least in the near-term.
Instead, he said, the Treasury will continue to enact new enforcement mechanisms and sanction shippers and maritime service providers that continue to ferry oil above the capped price.
This action, Adeyemo said, “will force Russia to face two very tough choices,” the first being whether to continue to sell oil under the $60 cap, or spend money creating an independent ecosystem of Russian oil tankers and financial intermediaries to provide maritime services and insurance for the cross-country voyages.
Also: The updated analysis of the oil price came came alongside the announcement that the Treasury was sanctioning more than 500 Russian-linked entities, as Breanne reported, in what Adeyemo described as an effort to further isolate Russia and “put sand in the gears of Russia’s military-industrial complex.”
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment writers Breanne Deppisch (@breannue_dep) and Nancy Vu (@NancyVu99). Email bdeppisch@washingtonexaminer dot com or nancy.vu@washingtonexaminer dot com for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
FERC GRANTS NATIVE AMERICAN TRIBES AUTHORITY TO VETO HYDROPOWER: The Federal Energy Regulatory Commission is issuing more authority to Native American tribes to block hydropower projects on their land – forcing businesses to work with the groups if they want federal approval for their projects, the Associated Press reports.
The move comes after a number of applications were filed to build renewable projects in the Southwest. Before the new rule, FERC had granted approval to developers, even if tribes had objected to the projects. But now, a new policy is allowing tribes to quickly veto proposals.
Most recently, FERC had rejected seven proposed projects on the Navajo Nation, stretching across Arizona, New Mexico, and Utah. The agency simultaneously issued the new policy, granting the same power as agencies to tribes to block projects.
“This is the acknowledgement and respect of tribal sovereignty, which is critical,” said George Hardeen, a spokesperson for the Navajo Nation’s president’s office.
The Hopi Tribe asked the commission to finalize the new policy, worrying that a different administration would be less favorable to tribes. Environmental and tribal groups argue the hydropower projects use large amounts of water in regions that already lack supply. For context, approximately one-third of the 175,000 people on the Navajo Nation don’t have running water at home. More on that here.
2.5M FORCED FROM HOMES LAST YEAR DUE TO NATURAL DISASTERS: Approximately 2.5 million people were displaced from their homes in the U.S. due to weather-related disasters in the last year, according to data released by the Census Bureau.
As the New York Times outlines, more than a third said they faced some food shortage in the first month after being forced from their homes – and more than half detailed an experience of someone seemingly trying to defraud them. More than a third stated they had been displaced for longer than a month.
Why it’s important: Just last year, the U.S. experienced 28 disasters in 2023 that amounted to at least $1 billion in costs. But the number of Americans displaced by those disasters has not been clear, due to the U.S.’s faulty response systems.
Hurricanes are still the most commonly cited reason for displacement, followed by floods and fires. Florida, Texas, California, and Louisiana are states that saw hundreds of thousands flee their homes due to the natural disasters. Read more on that here.
SHELL’S LNG TRADING YIELDS $2.4B IN 2023 FOURTH QUARTER: Shell made $2.4 billion in trading liquified natural gas in the fourth quarter, sources told Reuters, making up nearly a third of overall profits and underlining how important natural gas is to the company’s portfolio.
The high performance is due to the opening of trading opportunities – otherwise known as arbitrages – between different markets as the winter months set in, according to Shell’s CEO Wael Sawan. Arbitrage opportunities have become slimmer due to a drop in natural gas prices, as a result of sufficient supply and a warmer winter.
What this means: Oil and gas trading is still playing a powerful role in the company’s success as it navigates investing into cleaner energy. More on that here.
ICYMI: Exxon Mobil is asking a federal court to continue a lawsuit against activist shareholders that sought a vote on the company’s climate policy – even after the investors had withdrawn the resolution at issue, which would have required the oil major to establish targets for Scope 3 emissions. The company’s argument? If the lawsuit pans out in its favor, it could stop activist investors from pursuing similar efforts in the future.
Let’s back it up a bit: Last month, Exxon Mobil sued investment firm Arjuna Capital and Follow This, a Dutch investor group, to prevent them from filing a climate shareholder proposal – an effort that was notable because it aimed to exclude the proposal through the courts instead of through the Securities and Exchange Commission. This lawsuit prompted the two investor groups to rescind their shareholder proposal.
The latest court filing from Exxon, filed late on Wednesday, asks the federal court for the northern district of Texas to continue the lawsuit to prevent similar proposals from being considered in the future.
“Defendants Arjuna Capital and Follow This hijack the shareholder proposal process to advance their social causes with serial filings each year at the expense of investors who focus on generating returns,” the lawsuit reads. “None of those proposals received close to majority support; the most recent was rejected by almost 90 percent of voting shareholders. ExxonMobil filed suit to stop Defendants’ cycle of shareholder activism that burdens it each proxy season.”
According to the filing, the oil major has received 141 shareholder proposals since 2014 – an average of 14 per year, with only three proposals approved by ExxonMobil shareholders. The oil company argues that shareholder activism offers benefits such as name recognition, fundraising opportunities, and a “free platform” to highlight a proponent’s issue or agenda.
In its motion to dismiss, Arjuna argues that the lawsuit is now not necessary since the shareholder proposal was withdrawn. And Follow This’s Founder Mark van Baal stated that Exxon’s legal tactics amounted to “tactics of intimidation and bullying to silence our fair ask to tackle the climate crisis.”
“Shareholders’ rights are under attack,” Van Baal told the Financial Times. “[Exxon] may vastly prefer litigation against parties like Arjuna and Follow This,” who have fewer resources to fight back. Read the latest lawsuit filing here.
RUNDOWN
Financial Times The problem with Europe’s ageing wind farms
E&E News UK to quit energy treaty that ‘penalizes’ net zero
Politico Biden’s big bet on EVs is poised to take a detour
