Climateer Investing: Energy Analysts On The Paris Climate Accords

Tuesday, December 15, 2015

Energy Analysts On The Paris Climate Accords

So much of the commentary has been drivel, vacuous or straight-up nonsense.
We tried to counter some of that with a concrete "re: the solars last Thursday, 'The next phase will be a pop when they announce a deal and then sadness when understanding of the deal begins to permeate.'".*

Here are some other approaches, from MoneyBeat:

What Energy Analysts Are Saying About the Paris Climate Agreement

Nearly 200 nations reached a landmark climate agreement over the weekend intended to limit global emissions. A number of countries have committed to reducing their fossil-fuel use in the coming decades and investing more in renewable and low-carbon energy. However, the deal allows nations to set their own emissions-reductions plans, and some experts say that the deal is meaningless without stronger enforcement.

So, what does this mean for energy markets? Prices of oil, natural gas and coal have slumped this year amid massive oversupply, and the markets are expected to remain glutted in 2016. Here’s what analysts had to say about the latest global agreement:

PKVerleger LLC: “One year ago almost to the date, Saudi Arabia’s oil minister Ali Naimi asked a key question: ‘Is there a black swan that we don’t know about which will come by 2050 and we will have no demand?’ Saturday the world answered his query with a resounding yes. Whether countries will follow through on the agreement is debatable. Even so, the long-run future of oil and gas just got bleaker.”

PVM Oil: “A very gloomy week for oil continued over the weekend with news from Paris of a stronger than expected UN climate change deal which will trigger more cutbacks in oil exploration budgets. The aim is now to limit global warming to 1.5C rather than 2C. Just as delegates were making additional commitments to renewables, developments on the oil market were making the opportunity cost of the switch more expensive. The last thing renewables need is cheap oil, gas and LNG to compete against. Has this become a factor in Saudi strategy? A question still to be asked is whether it makes any sense for consuming countries to hold strategic oil reserves at current levels when the intent is to reduce consumption.”

Citi Futures: “Compared with the December 1997 Kyoto Protocol that sought to limit emissions from developed nations, the Paris agreement is far more comprehensive, with 186 nations accounting for an estimated 96% of global carbon emissions participating in an effort to limit global warming to 2 degrees Celsius or less. Participants will also be adopting standard methods for measuring emissions and reporting them in a transparent fashion, and committing to reviewing progress going forward. The details of implementation will be left to individual nations, with a range of possible policy measures which could include tighter environmental regulations, taxes on carbon, a shifting of government subsidies and so on. More detailed assessments will follow in the weeks and months to come, but the net impact, we think, would be a further gradual dampening of global petroleum demand growth over the decades to some, rather than an immediate downward revision to 2016 consumption.”