NewBase 06 March -2023 Energy News issue - 1599 by Khaled Al Awadi.pdf

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NewBase Energy News 06 March 2023 No. 1599 Senior Editor Eng. Khaed Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oil Investors Get $128 Billion Handout as Doubts Grow
About Fossil Fuels
Bloomberg + NewBase
Worldwide oil demand is racing toward an all-time high and some of the smartest minds in the
industry are forecasting $100-a-barrel crude in a matter of months, but US producers are playing
the short game and looking to turn over as much cash as possible to investors.
Shareholders in US oil companies reaped a $128 billion windfall in 2022 thanks to a combination of
global supply disruptions such as Russia’s war in Ukraine and intensifying Wall Street pressure to
prioritize returns over finding untapped crude reserves.
Oil executives who in years past were rewarded for investing in gigantic, long-term energy projects
are now under the gun to funnel cash to investors who are increasingly convinced that the sunset
of the fossil-fuel era is nigh.
For the first time in at least a decade, US drillers last year spent more on share buybacks and
dividends than on capital projects, according to Bloomberg calculations.
ww.linkedin.com/in/khaled-al-awadi-80201019/

The $128 billion in combined payouts across 26 companies also is the most since at least 2012,
and they happened in a year when US President Joe Biden unsuccessfully appealed to the industry
to lift production and relieve surging fuel prices. For Big Oil, rejecting the direct requests of the US
government may never have been more profitable.
At the heart of the divergence is growing concern among investors that demand for fossil fuels will
peak as soon as 2030, obviating the need for mutlibillion-dollar megaprojects that take decades to
yield full returns.
In other words, oil refineries and natural-gas fired power plants — along with the wells that feed
them — risk becoming so-called stranded assets if and when they are displaced by electric cars
and battery farms.
“The investment community is skeptical of what assets and energy prices will be,” John Arnold, the
billionaire philanthropist and former commodities trader, said during a Bloomberg News interview in
Houston.
“They would rather have the money through buybacks and dividends to invest in other places. The
companies have to respond to what the investment community is telling them to do otherwise they're
not going to be in charge very long.”
The upsurge in oil buybacks is helping drive a broader US corporate spending spree that saw share-
repurchase announcements more than triple during the first month of 2023 to $132 billion, the
highest ever to begin a year.
Chevron Corp. alone accounted for more than half that total with a $75 billion, open-ended pledge.
The White House lashed out and said that money would be better spent on expanding energy
supplies. A 1% US tax on buybacks takes effect later this year.
Global investment in new oil and gas supplies already is expected to fall short of the minimum
needed to keep up with demand by $140 billion this year, according to Evercore ISI. Meanwhile,

crude supplies are seen growing at such an anemic pace that the margin between consumption and
output will narrow to just 350,000 barrels a day next year from 630,000 in 2023, according to the
US Energy Information Administration.
“The companies have to respond to what the investment community is telling them to do otherwise
they're not going to be in charge very long.” — Billionaire John Arnold
Management teams from the biggest US oil companies recommitted to the investor-returns mantra
as they unveiled fourth-quarter results in recent week and the 36% slump in domestic oil prices
since mid-summer has only reinforced those convictions.
Executives across the board now insist that funding dividends and buybacks takes priority over
pumping additional crude to quell consumer discontent over higher pump prices. This may pose a
problem in a matter of months as Chinese demand accelerates and global fuel consumption hits an
all-time high.
“Five years ago, you would have seen very significant year-on-year oil-supply growth, but you’re not
seeing that today,” Arnold said. “It’s one of the bull stories for oil — that the supply growth that had
come out of the US has now stopped.”
The US is crucial to global crude supply not just because it’s the world’s biggest oil producer. Its
shale resources can be tapped much more quickly than traditional reservoirs, meaning that the
sector is uniquely placed to respond to price spikes.
But with buybacks and dividends swallowing up more and more cash flow, shale is no longer the
global oil system’s ace in the hole.
In the waning weeks of 2022, shale specialists reinvested just 35% of their cash flow in drilling and
other endeavors aimed at boosting supplies, down from more than 100% in the 2011-2017 period,
according to data compiled by Bloomberg.
A similar trend is evident among the majors, with Exxon Mobil Corp. and Chevron aggressively
ramping buybacks while restraining capital spending to less than pre-Covid levels.
Investors are driving this behavior, as evidenced by clear messages sent to domestic producers in
the past two weeks. EOG Resources Inc., ConocoPhillips and Devon Energy Corp. dropped after
announcing higher-than-expected 2023 budgets while Diamondback Energy Inc., Permian
Resources Corp. and Civitas Resources Inc. all rose as they kept spending in check.

On top of shareholder demands for cash, oil explorers also are grappling with higher costs, lower
well productivity and shrinking portfolios of top-notch drilling locations.
Chevron and Pioneer Natural Resources Co. are two high-profile producers reorganizing drilling
plans after weaker-than-expected well results. Labor costs also are rising, according to Janette
Marx, CEO of Airswift, one of the world’s biggest oil recruiters.
US oil production is expected to grow just 5% this year to 12.5 million barrels a day, according to
the Energy Information Administration. Next year, the expansion is expected to slow to just 1.3%,
the agency says. While the US is adding more supply than most of the rest of the world, it’s a marked
contrast to the heady days of shale in the previous decade when the US was adding more than 1
million barrels of daily output each year, competing with OPEC and influencing global prices.
Demand, rather than supply-side actors like the American shale sector or OPEC, will be the primary
driver of prices this year, Dan Yergin, Pulitzer Price-winning oil historian and vice chairman of S&P
Global, said during an inteview.
“Oil prices will be determined by, metaphorically speaking, Jerome Powell and Xi Jinping,” Yergin
said, referring to the Federal Reserve’s rate-hike path and China’s post-pandemic recovery. S&P
Global expects global oil demand to reach an all-time high of 102 million barrels per day.
With the case for higher oil prices building, US President Joe Biden has fewer tools at his disposal
with which to counteract the blow to consumers. The president already has tapped the Strategic
Petroleum Reserve to the tune of 180 million barrels in a bid to ease gasoline prices as they were
spiking in 2022.
Energy Secretary Jennifer Granholm is likely to get a frosty reception at the CERAWeek by S&P
Global event in Houston staring March 6 if she follows Biden’s lead and attacks the industry for
giving too much back to investors. That business model is “here to stay,” said Dan Pickering, chief
investment officer of Pickering Energy Partners.
“There’s going to be a point at which the US needs to produce more because the market is going
to demand it,” Pickering said. “That’s probably when investor sentiment shifts to growth. Until then,
returning capital seems like the best idea.”

U.A.E: ADNOC to buy 10 hybrid power land rigs for $252mln
Staff Writer, TradeArabia
Adnoc Drilling Company has announced that it has signed an agreement to purchase ten newbuild
hybrid power land drilling rigs for a total investment of $252 million.
The use of hybrid power solutions is an essential element of Adnoc Drilling’s rigorous
decarbonization strategy as the Company contributes to Adnoc’s commitment to reduce
greenhouse gas intensity by 25% by 2030, as w ell as the UAE Net Zero by 2050 strategic initiative.
The rigs use a high capacity battery and engine automation in parallel with the rigs’ traditional diesel
generators.
The hybrid power technology system stores energy in its batteries to use when there is a need for
continuous power or to provide instant extra power when there is an increase in demand, reducing
a rig’s greenhouse gas emissions intensity by 10%-15%.
Each of the rigs will have the provision to be connected to the electrical grid with minimum
adjustment, depending on rig location and the availability of grid power, further reducing emissions.
Adnoc Drilling CEO Abdulrahman Abdullah Al Seiari said: "This is yet another exciting step for
Adnoc Drilling – these new rigs contribute to the capacity required to meet our customers’
expectations of maximum energy with minimal emissions."
"As our growth trajectory accelerates and we continue to build our capacity and capabilities to drive
shareholder returns, our commitment to the decarbonization of our operations remains
fundemental," he noted.
These new rigs are central to increasing Adnoc Drilling’s operational onshore capacity and are a
direct response to Adnoc’s accelerated production capacity targets. The Company is a key enabler
of Adnoc’s accelerated production capacity targets of five million barrels of lower carbon intensity
crude per day by 2027, and achieving gas self-sufficiency for the UAE.
The rigs will progressively enter the fleet from the fourth quarter of this year, with partial revenue
and EBITDA contribution from 2024 and full year annual contribution from all rigs in 2025. They are
the first new land rigs acquired as part of updated guidance which will see Adnoc Classification:
Public peak-owned rig count of 142 by the end of 2024, which compares to IPO guidance of 127
rigs by the end of 2030.

UAE's ADNOC agrees deal with Eni for more Cooperation
Reuters + NewBase
After a meeting with UAE President Sheikh Mohammed bin Zayed al-Nahyan, Italian Prime Minister
Giorgia Meloni said that now that reciprocal trust was being re-established areas for future
cooperation could range from energy to defence
Italian oil and gas group Eni said it would cooperate with Abu Dhabi National Oil Co (ADNOC) on
energy transition projects, as Rome's new government works to rebuilds ties with the United Arab
Emirates.
After a meeting with UAE President Sheikh Mohammed bin Zayed al-Nahyan, Italian Prime Minister
Giorgia Meloni said that now that reciprocal trust was being re-established areas for future
cooperation could range from energy to defence.
"Discussions ... went very, very well and we're going back to a strategic partnership. Italy historically
had very strong relations with UAE which in recent years experienced serious difficulties," she told
reporters in Abu Dhabi.
State-controlled Eni said that together with ADNOC it would explore opportunities in renewable
energy, blue and green hydrogen and carbon dioxide capture and storage. The two companies will
also work on reducing greenhouse gas and methane gas emissions, as well as routine gas flaring.
Italy on Saturday signed a declaration of intent with UAE climate envoy and designated president
of the COP28 climate summit Sultan Ahmed Al Jaber, who last month pledged to lay out an inclusive
and innovative roadmap to tackle global warming.
"We found our partners extremely open and attentive to the priorities on our agenda," Meloni said.
Meloni said the UAE was particularly interested in Italy's energy policy in Africa, which was
discussed on Saturday alongside topics such as the stabilisation of Libya and financial situation in
Tunisia, which have an impact on migration flows.
"I think there is a strong will on both sides to rebuild not just good but excellent relations, a friendship,
which I think is very important for our national interest."

Germany to become an LNG hub and supply E.U neighbors
Bloomberg + NewBase
By 2024, six floating storage and regasification units could allow capacity to handle at least 37 billion
cubic meters per year, the report showed. As Germany plans to turn its fledgling liquefied natural
gas sector into a hub for supplying some of its neighbors with fuel as Europe seeks alternatives to
Russian flows.
Since last year, the continent’s biggest economy has rapidly adopted LNG amid fears of gas
shortages caused by Russia’s supply cuts. Now it wants to expand capacity for handling the super-
chilled fuel so that it can boost exports to nations “- mostly in eastern Europe “- in the coming years.
Germany has already fast-tracked several LNG projects - including terminals in Wilhelmshaven and
Lubmin - and plans to open more floating and land-based facilities in the months and years ahead.
The government sees a need to boost capacities to ensure energy security, though critics say that
massive overcapacity for transporting the fossil fuel endangers climate goals.
Ship to European nations
Berlin expects to ship about 5.5 billion cubic meters of fuel to European nations this year, rising to
6.7 billion in 2026, according to an Economy Ministry report for the budget committee. It sees
demand for deliveries from the Czech Republic, Slovakia, Austria, Ukraine and Moldova.
With current infrastructure not sufficient to meet demand home and abroad, the expansion is in line
with what’s needed “and necessary in terms of European solidarity,” according to the report.

By 2024, six floating storage and regasification units could allow capacity to handle at least 37 billion
cubic meters per year, the report showed. The figure could reach 54 billion cubic meters once
permanent land terminals in Brunsbuettel, Stade and Wilhelmshaven open by 2026-27.
That’s close to Spain’s current
LNG import capacity, according
to European Union data. While
LNG terminals aren’t always
fully used, it would help Europe
live without Russian pipeline
gas, a study by the Institute of
Energy Economics at the
University of Cologne for the
government showed.
Gas trade between European
countries increased last year,
when those with diversified
supply sources - such as LNG -
sent more fuel to neighbors by
pipeline, especially in eastern
Europe.
The UK boosted fuel shipments to the continent to a record last summer and continued deliveries
even during the heating season. Britain normally would import gas from mainland Europe in colder
months as it lacks storage to cover peak heating demand. But a mild winter and strong LNG imports
kept UK gas prices mostly below those in the EU, encouraging exports.

U.S seeking Alaska Oil Project in Lobbying Frenzy
Bloomberg + NewBase
Alaska’s congressional delegation personally appealed to President Joe Biden to approve a
proposed ConocoPhillips oil development in the state, joining a last-minute lobbying frenzy around
the project that’s being cast as a test of his commitment to combating climate change.
The lawmakers, including freshman Democratic Representative Mary Peltola, said they made their
case for authorizing the plan to allow drilling from three locations at the Willow project during an
Oval Office meeting on Thursday that lasted more than an hour.
In a joint statement, the lawmakers called the conversation with Biden and senior aides “honest and
respectful,” saying they “appreciated the president’s recognition of how critical this moment is for
Alaska’s future our nation’s energy transition.”
The $8 billion project is forecast eventually to yield 180,000 barrels per day of crude, or about 1.6%
of current US production, with a cumulative output of about 600 million barrels. The Interior
Department could issue a final decision as soon as Monday.
Willow presents Biden with his biggest climate and energy decision yet. Although the president
campaigned on a pledge to block new drilling on public lands and accelerate the transition away
from fossil fuels, he has also pressed oil companies to boost output to tame prices. The project also

has drawn support from Alaska labor unions and some indigenous groups — important
constituencies for the White House.
“The president has all the information he needs to make the right decision for Alaska and for the
nation, and re-approve a three-pad, economically viable Willow project alternative without delay,”
the Alaska lawmakers said.
Residents of Nuiqsut, a village about 36 miles from the proposed development, sent a scathing
letter Friday to Interior Secretary Deb Haaland arguing their concerns have been drowned out by
the oil industry and corporate power that “reaches into every community and household,” even
allegedly tainting the environmental review itself.
Proposals to mitigate Willow’s impact on the community are insufficient, were not suggested by
Nuiqsut and tantamount to “payoffs for the loss of our health and culture,” said Native Village of
Nuiqsut President Eunice Brower, City of Nuiqsut Mayor Rosemary Ahtuangaruak and the city’s
vice mayor, Carl Brower, writing in their personal capacities.
Environmental advocates and lawmakers have been outlining legal options for the Biden
administration to bolster a possible denial. One memo given to administration officials makes the
case that the government could reject ConocoPhillips’s project without breaching the terms of the
company’s leases in the National Petroleum Reserve-Alaska.
Separately, almost two dozen congressional Democrats told Biden in a letter on Friday there’s legal
authority for Haaland to block proposed drilling if necessary to mitigate “significantly adverse effects”
on its surface resources.

NewBase March 06 -2023 Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oil slightly down on China outlook, spotlight on Powell testimony
Reuters+ NewBase
Oil prices slipped on Monday after China set a lower-than-expected target for economic growth this
year at around 5%, and as investors cautiously awaited U.S. Federal Reserve Chair Jerome
Powell's testimony this week.
Brent crude futures were trading down 52 cents, or 0.61%, at $85.31 a barrel at 0735 GMT. U.S.
West Texas Intermediate (WTI) crude futures were also down 0.5% at $79.28.
Oil price special
coverage
 China's growth outlook down from last year's target
 Fed Chair to testify to Congress on rate hikes this week
 U.S. February jobs report also in focus

"Crude remains in a tug-of-war between optimism over Chinese reopening and nervousness over a
hawkish Fed hurting the U.S. economy," said Vandana Hari, founder of oil market analysis provider
Vanda Insights.
China's closely watched growth outlook, announced on Sunday, was lower than its 5.5% gross
domestic product (GDP) growth target last year. GDP grew last year by just 3%. Policy sources had
told Reuters a range as high as 6% could be set for 2023.
Premier Li Keqiang said on Sunday the foundation for stable growth in China needed to be
consolidated, insufficient demand remained a pronounced problem, and the expectations of private
investors and businesses were unstable.
However, analysts at UBS
Investment Bank upgraded
their forecasts for China's GDP
growth to 5.4% for 2023 and to
5.2% for 2024 from 4.9% and
4.8% respectively.
"Economic re-opening is
proceeding better than we had
expected earlier – the feared
'second-wave' of COVID did
not materialize and there was
little sign of supply disruptions,"
Tao Wang, Head of China
economic research at UBS
Investment Bank, said in a
note.
Both crude benchmarks settled
more than $1 higher on Friday
after two sources told Reuters
a report that the United Arab
Emirates was considering leaving OPEC was inaccurate.
Hari said the rebound was bigger than the slump on the original news and put crude prices in
"overbought territory, so (it's) hardly surprising that prices are correcting downwards this morning".
At the same time, oil prices are likely to be impacted by rate hikes across the world as global central
banks tighten policy over fears of increasing inflation. Traders have started factoring in rate hikes
across the world, but are hoping for smaller increases than last year.
The United States Federal Reserve's Chair Jerome Powell will testify to Congress on Tuesday and
Wednesday, where he will likely be quizzed on whether larger hikes are needed in the world's largest
oil consuming country.
The United States' future rate hikes are also likely to depend on what the February payrolls report
reveals on Friday, followed by the February inflation report due next week.
Over the weekend, European Central Bank President Christine Lagarde said it was "very likely" they
would raise interest rates this month to keep a lid on inflation.

NewBase Specual Coverage
The Energy world –March -06 -2023
CLEAN ENERGY
Inside the U.S fierce debate over clean hydrogen, with $100
billion in federal subsidies on the line
Catherine Clifford@IN/CATCLIFFORD/@CATCLIFFORD
KEY POINTS
 One of the most significant tax credits in the historic climate bill was a massive tax credit to make
clean hydrogen, using methods that minimize greenhouse gas emissions.
 The U.S. Treasury Department and the IRS are hashing out how the tax credit will be executed, and
are facing strong arguments from two sets of stakeholders.
 If regulated too tightly, clean hydrogen will be more expensive and the industry will struggle to get
started, some stakeholders argue. But if regulations are too lax, the entire climate-saving point of the
tax credit is moot.
One type of hydrogen production uses electrolysis, with an electric current splitting water into oxygen and hydrogen. If
the electricity used in this process comes from a renewable source then some call it “green” hydrogen.
In August, the White House passed a historic piece of legislation with $369 billion in spending to
address climate change. One of the most significant tax credits in that historic law was a tax credit
to make hydrogen in climate-conscious ways.

Hydrogen is currently used for many purposes, including making ammonia-based fertilizer, which
the world depends on for growing crops, and for refining crude oil into useful petroleum products.
But it’s also likened to a “Swiss Army Knife of decarbonization,” because it could be used as a
power source in industries that are particularly hard to wean off fossil fuels, like airplanes and heavy
shipping.
The impact of the tax credit on
emissions reductions depends
on how federal agencies
implement it. And, as with most
things in accounting, the devil
lies in the details.
On one side of the debate,
some energy providers say that
making the rules too strict could
kill the clean hydrogen industry
before it ever gets off the
ground.
“Our view is that if you put too
onerous of regulations in place
... the price to produce green
hydrogen will be uneconomic and the industry won’t scale, effectively making it dead on arrival,”
said a spokesperson for NextEra Energy, which produces clean energy from wind, solar and
nuclear sources and owns a major utility in Florida.
On the other side, environmental policy groups argue the rules could end up being so lax that the
new “clean” hydrogen industry could actually end up increasing, rather than decreasing, carbon
emissions.
“Weak guidance could ... force Treasury to spend more than $100 billion in subsidies for hydrogen
projects that result in increased net emissions, in direct conflict with statutory requirements and
tarnishing the reputation of the nascent ‘clean’ hydrogen industry,” according to an open letter sent
from 18 organizations to federal agencies.
“With loose rules and weak life-cycle greenhouse gas emissions analyses for hydrogen production,
the hydrogen tax credit could end up going to producers whose hydrogen is not actually lower-
emissions than the alternatives, and could even end up having the indirect effect of increasing
emissions from the electricity grid,” explained Emily Kent, who covers fuel sources for the Clean
Air Task Force, a climate policy shop that signed on to the letter.
This debate has put Electric Hydrogen CEO Raffi Garabedian into an awkward situation.
Garabedian’s startup is working to produce a type of electrolyzer to split water into hydrogen and
oxygen, and has received funding from Bill Gates’ climate investment firm, Breakthrough
Energy Ventures, among others. With a loose interpretation of the tax credit rules, demand would
jump for electrolyzers with companies racing to cash in on the new credit.
But in the long run, if the industry actually increases rather than reduces carbon emissions, the
public would eventually demand an end to the subsidies, potentially tarnishing the entire idea of
“clean” hydrogen.

“I’d love to sell electrolyzers to everybody, but not for the wrong reason. Not if it’s going to be
installed and run in a way that’s more carbon intensive than the alternatives,” Garabedian said.
Raffi Garabedian, chief executive officer of Electric Hydrogen Co., speaks during the 2022 CERAWeek by S&P Global
conference in Houston, Texas, U.S., on Wednesday, March 9, 2022. CERAWeek returned in-person to Houston celebrating
its 40th anniversary with the theme “Pace of Change: Energy, Climate, and Innovation.”
Stifling a nascent industry?
The U.S. Treasury Department and the IRS are hashing out how the tax credit will be executed, and
their request for public comment drew input from energy giants like BP and Shell, industry
associations like the Renewable Fuels Association and the American Gas Association, and scores
of others.
The amount of the tax credit will depend on how much CO2 is emitted when a particular producer
makes hydrogen. But the debate revolves around how to account for that CO2.
On the energy grid, electricity generated in any number of ways — by burning coal or natural gas,
or capturing wind or solar energy — gets sloshed together. A renewable energy certificate, or REC,
is a legal certificate that proves a particular energy producer created a certain amount of
renewable energy.
Not all RECs are the same, however. Some are measured annually, while others are measured in
much smaller increments of time.
The divide over the hydrogen tax credit comes down to which kind of RECs should be permitted.
BP America, for example, wants annual RECs to be allowed, according to its public comment to
the IRS. The annual RECs are a more flexible way of implementing the tax law, which would help
spur investment necessary to get the industry off the ground. That’s important for BP, which plans
to spend between $27.5 billion and $32.5 billion on a combination of what the energy company

deems its transition growth engines, including hydrogen production and renewables, between 2023
and 2030.
“The rule should allow for flexibility to help jump start this nascent industry. The ability to match
renewable energy production to the hydrogen production demand over an annual basis would
provide the most flexibility,” BP said in its statement to the IRS.
19 August 2021, Schleswig-Holstein, Geesthacht: Notes on the splitting of water into hydrogen and oxygen can be seen in
a laboratory at the Helmholtz Centre hereon in Geesthacht. The Cluster Agency Renewable Energies Hamburg (EEHH)
provided information on current developments in the topic as part of a media trip. Photo: Christian Charisius/dpa
NextEra argues that requiring more granular accounting — like hourly — would make it impossible
to create green hydrogen economically, and would instead favor so-called “blue” hydrogen, which
is generated from burning natural gas or other fossil fuels.
“Requiring time matching that is too granular (such as hourly) would devastate the economics of
green hydrogen by providing a significant advantage to blue hydrogen and reliance on fossil fuels,
and does not align with legislative intent to accelerate progress towards a clean hydrogen economy,”
David P. Reuter, chief communications officer at NextEra, told CNBC.
Reuter pointed to an analysis from the global consultancy company Wood Mackenzie showing
that annual credits would allow the electrolyzers that produce hydrogen to run all the time, and that
hourly matching would make the cost of hydrogen production more expensive.
“An hourly approach would be constrictive and ensure that a nascent industry is strangled before it
gets started,” Reuter said.
Or undermining the point of the law?
On the other side of the debate, climate-focused organizations, including Electric Hydrogen and the
Clean Air Task Force, argue that adopting more flexible guidance would undermine the climate
goals of the Inflation Reduction Act.

The environmental groups say that using fossil fuels to power an electrolyzer to make hydrogen is
actually much worse for the climate than today’s method of using natural gas in a steam methane
reformer process.
These climate-focused groups are advocating hourly REC standards, and what’s called
“additionality and deliverability,″ which would serve to ensure that the energy used to power an
electrolyzer to generate hydrogen is in fact clean energy.
First and foremost, hourly accounting would allow hydrogen producers to claim renewable energy
credits only if clean energy is being generated at the same hour when they are consuming it —
when the wind is blowing, the sun is shining, or a nuclear power plant is generating energy on the
relevant transmission system.
For example, this hourly approach to energy accounting has been adopted by Google, which
has been a forerunner in adopting clean energy.
Today, hourly RECs are available only in some markets. But Beth Deane, the chief legal officer at
Electric Hydrogen, told CNBC she expects other registries to provide their own hourly RECs as soon
as demand for the more rigorous accounting standards are demanded outside of the hydrogen tax
credit debate.
It takes between 12 and 18 months to stand up an hourly matching accounting system, but at least
24 months for large scale hydrogen production to be started, according to the open letter from
the climate groups.
In the meantime, M-RETS, a noprofit and the largest North American credit tracking system, can
provide hourly REC tracking across North America as a service.

“Additionality” means that credits could not be counted for clean energy that would have been
generated anyway.
“Deliverability” means that credits could only be counted for clean energy that’s actually being
generated in a location that is connected via a transmission line that is not already congested, to
where the hydrogen producer is using the electrolyzer to produce hydrogen.
Forcing hydrogen producers to match their energy consumption hourly and on a location specific
basis is “a better approximation of reality,” said Deane.
“When it’s on the grid, an electron is electron, it doesn’t have a color, but it does have a history, and
you’re trying to make the history match up so that you have some validity to your claim that it is
clean, and therefore should be eligible for a tax benefit.”
Jesse Jenkins, a Princeton professor who studies macro-energy grids, agrees that the more
rigorous accounting is necessary.
“Our peer-reviewed research is pretty definitive on this front: hourly matching, additionality, and
physical deliverability are all required to ensure grid connected electrolysis can meet the stringent
requirements set by the IRA statute. Our research demonstrates that removing any one of those
criteria results in significant emissions,”
Without this trifecta of accounting standards, hydrogen producers could run their electrolyzers 24-
7, drawing from fossil fuel sources at night or when there is no wind energy, then claim to offset it
by getting credits from wind farms or solar farms that would’ve produced that energy anyway,
explains Wilson Ricks, who works in Jenkins’ research lab.
A projected imbalance in supply and demand for RECs is also a factor. By the end of the decade,
Ricks’ modeling shows that there will be more RECs being produced than the market wants, which
means hydrogen producers could be using existing RECs without incentivizing any new clean
energy creation.
Hi projections suggest that by 2030, there will be “a massive national gap between the total number
of clean certificates generated and the total demand for these certificates,” said Ricks. “I’m even
surprised how large it is. If this is any indicator, there will be plenty of headroom for hydrogen
producers to buy up annual RECs without needing to bring any new zero-carbon generation online.”
So far, federal agencies aren’t taking a clear side. The Treasury and IRS will implement the tax
benefit such that it “advances the goals of increasing energy security and combatting climate
change,” a spokesperson for the Treasury told CNBC.
In the long run, Garabedian said, his stance is about protecting his company, the industry’s
reputation and the tax credit.
“We have to do it right. Otherwise, this entire proposition of green hydrogen is gonna get a black
eye. We have to do the right thing for the long term if we’re going to be true to our intention here,
which is decarbonization,” Garabedian told CNBC.
“If we emit more carbon as a result of this than we were before, that’s a travesty. And the result of
that travesty is people will wake up to it, NGOs will wake up to it, environmentalists will wake up to
it, and the subsidy will get shut down. So, there’s a practical reason to hold the high ground. There’s
also an ethical reason.”

NewBase Energy News 06 March 2023 - Issue No. 1599 call on +971504822502, UAE
The Editor:” Khaled Al Awadi” Your partner in Energy Services
NewBase energy news is produced Twice a week and sponsored by Hawk Energy Service – Dubai, UAE.
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About: Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with over 30 years of experience in the Oil & Gas
sector. Has Mechanical Engineering BSc. & MSc. Degrees from leading U.S.
Universities. Currently working as self leading external Energy consultant for the
GCC area via many leading Energy Services companies. Khaled is the Founder of
the NewBase Energy news articles issues, Khaled is an international consultant,
advisor, ecopreneur and journalist with expertise in Gas & Oil pipeline Networks,
waste management, waste-to-energy, renewable energy, environment protection
and sustainable development. His geographical areas of focus include Middle East,
Africa and Asia. Khaled has successfully accomplished a wide range of projects in
the areas of Gas & Oil with extensive works on Gas Pipeline Network Facilities & gas
compressor stations. Executed projects in the designing & constructing of gas pipelines, gas metering &
regulating stations and in the engineering of gas/oil supply routes.
Has drafted & finalized many contracts/agreements in products sale, transportation, operation &
maintenance agreements. Along with many MOUs & JVs for organizations & governments authorities.
Currently dealing for biomass energy, biogas, waste-to-energy, recycling and waste management. He has
participated in numerous conferences and workshops as chairman, session chair, keynote speaker and
panelist.
Khaled is the Editor-in-Chief of NewBase Energy News and is a professional environmental writer with over
1400 popular articles to his credit. He is proactively engaged in creating mass awareness on renewable
energy, waste management, plant Automation IA and environmental sustainability in different parts of the
world. Khaled has become a reference for many of the Oil & Gas Conferences and for many Energy program
broadcasted internationally, via GCC leading satellite Channels. Khaled can be reached at any time, see
contact details above.

NewBase 06 March -2023 Energy News issue - 1599 by Khaled Al Awadi.pdf

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NewBase 06 March -2023 Energy News issue - 1599 by Khaled Al Awadi.pdf