Australia has a gas export problem
Australia is one of the world’s top exporters of LNG. Yet right now, it faces a gas shortage. How? As research from the Australia Institute’s climate and energy program puts it, Australia doesn’t have a gas supply problem—it has a gas export problem. Currently, about 75 percent of Australia’s natural gas production is exported, and in many cases according to long-term contracts with Asian buyers that tie it up. This leaves very little for domestic consumption, and winter is hitting down under. Compare this to the US: In 2020, the United States exported around 15 percent of its natural gas production via pipelines and as LNG, and 52 percent of its petroleum production. Gas analysts in Australia are now calling for the country’s eastern states to put in place a gas reservation policy, similar to that which Western Australia implemented in 2006, that would require all new gas export projects to reserve a certain percentage for domestic use.
More broadly, Australia’s travails constitute a dangerous barometer what winter has in store elsewhere in the world – especially among less well-LNG-endowed countries. And black swans are not helping: On Wednesday, an explosion hit a Texas liquefied LNG plant. The Freeport LNG export facility – responsible for about 20 percent of US LNG exports – is expected to remain closed for at least three weeks; it has issued a force majeure to buyers with shipments scheduled until at least June 30.
Italy turns cold on tech transfer to China
The Italian government this week stepped in to block the transfer of technology and software from Robox, an Italian maker of electronic components for robotics and motion control systems, to the Chinese industrial robot maker Efort Intelligent Equipment. Efort’s move to raise its stake in Robox to 49 from 40 percent was approved. This is the seventh time Italy has applied its anti-takeover legislation, introduced in 2012 to protect strategic industries from unwanted foreign bids. Six of those uses have rebuffed targeted bids from Chinese firms. This trend could suggest a real turning point for Italy, and Europe more broadly: For years, China has, as a matter of state policy, taken advantage of weak investment-screening rules in Europe to acquire sensitive technology.
The Biden administration eases up on solar tariffs
On June 6, the Biden administration announced a two year suspension of tariffs on solar products from four Southeast Asian nations, re-igniting hope in the industry, which has been stalled by tariffs on imports from China and that China channels through third parties in Southeast Asia. This move is a clear concession to inflation and the solar lobby – at the expense of the administration’s stance on trade. But it is no panacea for the solar industry: On June 21, the Uyghur Forced Labor prevention Act will go into effect, banning the import into the US of any goods produced, mined, or manufactured, in part of in whole, in Xinjiang into the United States. And Xinjiang accounts for approximately 60 percent of all global production of polysilicon, a fundamental input into solar products.
The bigger picture: This solar tariff suspension risks suggesting that the administration might be prepared to respond to out-of-control inflation by relaxing tariffs on Chinese goods, rather than investing in alternative supply. Of course, there are plenty of voices pushing against such a move: US trade chief Katherine Tai, for example, has said that fighting inflation is “a more complicated issue than just tariffs” on Chinese goods. But clearly such voices did not win in the solar fight.
The Chinese stock market inches up, but can investor confidence?