Smartest Insight | Issue 133

Our weekly company round-up covers the key market and industry news in one place, so you don’t have to look any further to stay ahead.

August 30, 2023


Market Update:

The northeast and mid-Atlantic had been spared most of the summer from extreme heat conditions. This is expected to change as 85% of country is expected to see above normal temperatures in the 6-to-10-day forecast extending through the 8-to-14-day forecast.

Hurricane Idalia making landfall Wednesday morning in the near Keaton Beach. This is about 75 miles southeast of Tallahassee. Idalia missed major natural gas production rigs and LNG facilities and is not expected to cause major shifts in production or consumption as it crosses the Florida into Georgia. We are watching possible new formations of tropical storms as we are right in the middle of hurricane season.

Gas has been a bit volatile this week as we saw natural gas since last week's storage reported a build of 18 Bcf vs consensus estimates of 28 Bcf. Gas fluctuated between $2.56-2.66 per MMBTU then peaked at $2.82/MMBTU on updated weather forecasts. Currently, it's trading around $2.75/MMBTU on an expected build of 30 BCF for the week ending 8/25.


Regulatory Report:

DOE will awards grants in support of CO2 infrastructure

The US Department of Energy (DOE) has announced a plan to allocate approximately $500 million in grants to support the development of carbon dioxide (CO2) transportation infrastructure, as part of the Biden administration's commitment to combat climate change. The DOE issued a notice of intent to fund the construction of CO2 pipelines and transport facilities, utilizing funds from the bipartisan infrastructure law passed in 2021, with a funding opportunity announcement expected in late 2023.

The aim is to accelerate the responsible deployment of CO2 capture technologies from industrial operations and power generation and to transport captured CO2 safely. This supports the administration's goal of achieving a net-zero emissions economy by mid-century.

The $500 million will be provided through Future Growth Grants (FGG), encouraging developers to build CO2 transport capacity that may not be immediately required but will become vital as new CO2 capture projects and storage facilities emerge. This strategy promotes cost efficiency and minimizes environmental impacts by avoiding redundant transport infrastructure.

To qualify for grants, CO2 transport networks must be physically connected through pipelines, rail, roads, or bodies of water. Repurposing existing infrastructure for CO2 transport is also eligible.

The funding initiative is part of the broader Biden administration's efforts to promote emerging carbon capture, utilization, and storage (CCUS) technologies to decarbonize the power sector and heavy industry. Meeting the goal of a net-zero economy by 2050 necessitates the removal of significant CO2 emissions from the atmosphere. The existing carbon transport infrastructure capacity in the US is expected to increase significantly by 2040, driven by new projects.

In a major CCUS initiative, DOE recently committed up to $1.2 billion to support two direct air capture projects on the Gulf Coast, marking a significant step in advancing carbon removal technologies.

Should NY expand “zero-emission” definition

The Independent Power Producers of New York (IPPNY) have raised concerns about New York's ability to meet its 2040 decarbonization deadline for the power grid solely with solar, wind, and battery storage. To address this, IPPNY requested the New York Public Service Commission (PSC) to expand its definition of "zero-emission" resources to include technologies like renewable natural gas (RNG) and carbon capture systems. The PSC was tasked with defining zero-emission resources under the state's 2019 Climate Leadership and Community Protection Act. IPPNY argued that renewable generation alone cannot ensure grid reliability once fossil fuel generation is phased out.

IPPNY's proposal includes technologies such as RNG, carbon capture, long-duration storage, green and pink hydrogen, virtual power plants, fuel cells, and demand response programs. They stressed the need for a diversified energy portfolio to maintain reliability.

However, environmental groups, including Sierra Club and Earthjustice, oppose including technologies associated with fossil fuels, asserting that the climate act should only consider genuinely zero-emission sources like renewables and long-duration storage. IPPNY cautioned that such a stance could hinder New York's transition away from fossil fuels and urged the PSC to adopt a more inclusive approach to achieve the state's emissions reduction goals.