Chinese state-owned companies face difficulties to align climate rhetoric with reality

MOSCOW (MRC) -- Ambitious pledges from China's leaders to cut emissions have put its giant, carbon-intensive state corporations under pressure to respond, but they are at risk of falling short amid confused policy signals and other constraints, reported Reuters.

When Chinese President Xi Jinping said last September that the world's biggest source of greenhouse gases would slash emissions to "net zero" by 2060, attention turned to China's state-owned enterprises (SOEs).

China has already submitted updated climate targets to the United Nations as a new round of climate change talks gets under way in Glasgow. The next challenge is working out how to implement them.

However, the struggles facing China's giant firms will make it harder for Beijing to offer stronger pledges and smooth the way for a more ambitious program of global emissions cuts - especially as it negotiates its way through crippling power shortages.

"State firms are busy drafting their plans and trying to set their targets, and some of them are already creating more detailed planning for the transition," said Ma Jun, director of the Institute of Public and Environmental Affairs (IPE), which tracks the environmental and climate records of big corporations in China.

"How to ensure that they can fulfil other demanding targets while in the meantime achieving climate targets needs a real solid transitioning strategy, and so far there are still major gaps," Ma added.

IPE has assessed 58 listed units of Chinese state-owned enterprises from sectors such as steel, petrochemicals, electric power and aviation, covering more than 1 B tons of annual emissions. The study found that although they are generally ahead of their private sector counterparts, some are lagging, and on indices such as energy efficiency, sectors like steel are still behind global rivals, Ma said. Of the 58, 91% have disclosed climate and emissions data in their official reports. More than half have taken action to reduce emissions, but only 16% so far have announced targets.

Meanwhile, just six have issued formal "climate declarations", including giant power generators like Huaneng , Huadian and Datang, all of which have vowed to bring emissions to a peak by 2025, earlier than the national 2030 goal.

Three others - Baowu Iron and Steel, China's biggest steelmaker - as well as the two biggest oil and gas suppliers PetroChina and Sinopec - have all promised to hit "net zero" around 2050, a decade earlier than the national target.

As MRC wrote previously, in August, 2021, Sinopec, the world's petrochemical major, launched the first phase of the Gulei refining complex in Zhangzhou city in China’s southeastern Fujian province. The refining complex, a 50:50 joint venture between Sinopec’s Fujian Petrochemical Company Ltd and Taiwan Xuteng Investment Company Ltd, invested 27.8 billion yuan (USD4.28 billion) in the first phase. That will result in an 800,000 tonnes per annum ethylene plant, a 600,000 tonnes per annum styrene unit and seven other downstream petrochemical units, Sinopec said.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.
MRC

MOSCOW (MRC) -- A proposed tax credit hike for US carbon capture and sequestration projects being mulled by Congress could trigger a big jump in use of the climate-fighting technology to clean up industry, but environmentalists worry the scheme will backfire by prolonging the life of dirty coal-fired power plants, according to Hydrocarbonprocessing.

Carbon capture sequestration (CCS) is a technology that siphons planet-warming carbon dioxide from industrial facilities and stores it underground to keep it out of the atmosphere. The administration of President Joe Biden considers it an important part of its plan to decarbonize the US economy by 2050.

Under the proposal, embedded in the Biden administration’s USD1.75 trillion spending package, CCS projects would become eligible for an USD85 credit for each metric ton of carbon dioxide captured and stored, up from the current USD50-per-ton credit that the industry says is too low.

In the current tax credit regime, known as 45Q, CCS has languished. The United States currently has just a dozen operational commercial CCS facilities, along with a handful that have been suspended due to technological or economic problems, according to the Global CCS Institute.

The Clean Air Task Force, which advocates for carbon capture, cheered the proposal to boost the credit, saying it expects the change to lead to a spike in overall carbon capture capacity in the United States of 13-fold by the mid 2030s. It said the subsidy would also help the CCS industry lower costs and speed up deployment time, paving the way for growth in other countries keen to reduce emissions.

The currently existing facilities sequestered just 6.8 MM tons of industrial carbon dioxide underground in 2020, enough to offset the emissions from 1.5 MM passenger cars, according to the Environmental Protection Agency. Additional CO2 was injected underground for so-called enhanced oil recovery, a controversial process that uses the gas to increase oil field pressure to push more oil out of the ground.

Some environmental groups expect the credit will have the unintended consequence of extending the lives of big polluters like coal-fired power plants, among the world’s biggest greenhouse gas emitters, by giving them a new revenue stream.

Under the credit proposal, industrial facilities would be required to capture at least 50% of their carbon emissions to be eligible for the credit, with that threshold rising to 75% for power plants - thresholds green groups say are too low.

As MRC reported earlier, ExxonMobil has initiated the process for engineering, procurement and construction contracts as part of its plans to expand CCS at its LaBarge, Wyoming facility, which has already captured more CO2 than any other facility in the world. The expansion project will capture up to 1 MM metric tons of CO2, in addition to the 6-7 MM metric tons already captured at LaBarge each year.

We remind that ExxonMobil plans to build its first, large-scale plastic waste advanced recycling facility in Baytown, Texas, and is expected to start operations by year-end 2022. The new facility follows validation of ExxonMobil’s initial trial of its proprietary process for converting plastic waste into raw materials. To date, the trial has successfully recycled more than 1,000 metric tons of plastic waste, the equivalent of 200 million grocery bags, and has demonstrated the capability of processing 50 metric tons per day.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.
MRC

MOSCOW (MRC) -- Kuwait and Iraq support sticking to plans to raise oil output by 400,000 barrels per day (bpd) at an OPEC+ meeting on Thursday, as the US called again for extra supply to cool rising prices, reported Reuters.

Kuwait's oil minister Mohammad Abdulatif al-Fares said on Monday that the OPEC member supports the plan to raise output, which would ensure adequate crude supply to balance the global market, state news agency KUNA reported.

Iraq's state oil marketing company, SOMO, said on Saturday that the OPEC member sees raising output as already planned was sufficient to meet demand and stabilize the market.

US President Joe Biden on Saturday urged major G20 energy producing countries with spare capacity to boost production to ensure a stronger global economic recovery. President Biden's statement is part of a broad effort by the White House to pressure OPEC and its allies to increase supply.

Brent crude prices were trading at near USD85 a barrel on Monday, despite China announcing a release of fuel reserves to increase market supply and support price stability in some regions.

OPEC heavyweight Saudi Arabia has already dismissed calls for more oil supplies from the group, saying the oil market was well-supplied.

"Other than the potential for the market returning to surplus next year, the other factor holding back the group is the uncertainty over if and when Iranian supply could return to the market," bank ING said on Monday.

Last week, Iran said talks with six world powers to try to revive a 2015 nuclear deal will resume by the end of November.

As MRC informed earlier, in September 2021, Iraq signed an initial deal with Swedish company SEAB to build a 70,000-barrels-per-day oil refinery near the northern city of Mosul. The refinery will use the heavy crude oil from the northern Qayyara oilfield to produce fuel, said oil ministry officials, without giving an estimated cost of the project.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.
MRC

MOSCOW (MRC) -- Eni's chemical business managed by Versalis swung to a third-quarter adjusted operating profit of €25m from a loss of EUR53m in the same period of last year on the back of higher margins, said the company.

Sales of petrochemical products were 1.03m tonnes in the third quarter, down by 7% year on year.
Petrochemical product margins improved significantly on the back of "macroeconomic recovery, which mitigated competitive pressure, and contingent factors due to temporary supply shortages during the first half of the year", the company said in a statement.

"The exceptionally strong products spread versus feedstocks recorded in the second quarter 2021 moderated in the third quarter as plants affected by contingent issues returned to normal activity", it said.

Adjusted operating profit for the group surged in the third quarter, with the upstream business supported by the rise in oil and gas prices.

Downstream pro-forma adjusted earnings before interest and taxes (EBIT) expected at about €200m in 2021, which is expected to be negatively affected by a deteriorated margin environment driven by higher feedstock and utilities costs. "This guidance could be revised downward under current market conditions," the company added.

As MRC wrote previously, Italian energy group Eni is evaluating conversion of its Livorno refinery in northwest Italy into a biorefinery, as part of the Italian company's wider strategy to make its activities more environmentally sustainable. Eni has already converted two of its Italian refineries and is looking to almost double its biorefining capacity to around 2 million mt/year by 2024, and expand this to at least five times by 2050, as part of its pledge to achieve complete carbon neutrality by 2050.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

Eni, abbreviation of Ente Nazionale Idrocarburi, in full Eni SpA, Italian energy company operating primarily in petroleum, natural gas, and petrochemicals. Established in 1953, it is one of Europe's largest oil companies in terms of sales.
MRC

MOSCOW (MRC) -- Exxon Mobil Corp remains focused on hydrocarbons and plans to press ahead with a USD30 B liquefied natural gas project in Mozambique, said Hydrocarbonprocessing.

"We've been in hydrocarbons for over 130 years... it's the core part of our business and it will be for a long time," Exxon Senior Vice President Neil Chapman said at a conference in the northern Italian city of Verona.

Chapman's comments come after a report that Exxon's board was questioning whether to pursue several major oil and gas projects as investors call on fossil fuel companies to be more cost-conscious and green-energy friendly. Activist investor Engine No. 1 shocked the industry earlier this year when three of its four nominees were elected to the board by Exxon shareholders. The appointment of activist Jeff Ubben in March put a third of the 12-member board in new hands.

"Yes we've had changes in the boardroom but it's the responsibility of management to lay out a clear strategy for stakeholders," Chapman said. He said Exxon's capabilities in oil and gas would support its pivot to the new technologies it was working on of carbon capture and storage, hydrogen and biofuels.

"It's the pace issue we have to manage and that requires a flexible strategy," he said. As oil and gas demand falls in the energy transition, Exxon believes the world is better served by companies supplying the lowest cost barrels with the lowest emissions, he said.

Chapman said the group had not changed its plans over multi-billion-dollar gas investments in Mozambique and Vietnam. "We don't know the date (for the Mozambique final investment decision) right now but there's no change and what was reported in the U.S. media was not correct," he added.

As per MRC, ExxonMobil plans to build its first, large-scale plastic waste advanced recycling facility in Baytown, Texas, and is expected to start operations by year-end 2022. By recycling plastic waste back into raw materials that can be used to make plastic and other valuable products, the technology could help address the challenge of plastic waste in the environment. A smaller, temporary facility, is already operational and producing commercial volumes of certified circular polymers that will be marketed by the end of this year to meet growing demand.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world"s energy.
MRC