Energy source is about profit, power, and politics. energy does not get more political than in libya, subject of our first note, which assesses the implications of last weeks deal to reopen the countrys oil sector.

Our second note touches on power, asking if biomass can play a role in the energy transition. dan brouillette and leah stokes weigh in on californias energy woes in endnote.

Thanks for reading. let us know your thoughts and ideas at if this has been forwarded to you, please sign up for the newsletter here. derek

Last weeks libyan oil deal hangs over the oil market as a new bearish force. but how much oil will restart and when?

Current production is 100,000 barrels a day, almost all offshore, but this could rise to 600,000 b/d within a month as national oil corporation, the state company, brings big fields back on stream, according to jalel harchaoui, a libya researcher at the netherlands clingendael think-tank. exports from libya are imminent.

It gets more complex after that and the agreement could also collapse.

The russian-backed deal seems less about oil than about restoring credibility for khalifa haftar, leader of the self-styled libyan national army and opponent of the un-backed government of national accord, who lost a battle to claim the capital this year.

It is his army that has blockaded libyas oil sector since january and gen haftar now seeks acclaim for reopening it. the oil deal was not signed with the gnas prime minister, but his deputy an effort to split the government in tripoli. nor was noc a signatory to the deal.

So what next?

Bigger production rises will depend on the reopening of the prolific sirte basin and fields that supply the crucial export terminals of ras lanuf and es sider, in libyas oil crescent. the area has been an epicentre of the civil conflict in libya for years. now its energy installations are controlled by mr haftars army and wagner, the russian mercenary group.

Restarting the sirte basin could take libyan oil production to 900,000 b/d or more.

Noc, however, said it would not allow operations to resume at its oil crescent facilities until wagner had left. this may be a worthy position, but wagner isnt about to leave so either noc will have to back down or it will appear as the spoiler in a planned restart of its own oil sector. the company has been snookered, said a western analyst.

Mr harchaoui said the company would not be able to resist the calls to restart.

What would be the market impact of a return?

Oil analysts are understandably cautious. goldman sachs predicted production could rise by more than 400,000 b/d by december, but better compliance with cuts from opecs quota-busters would more than offset the libyan supply increase.

Yasser elguindi, market strategist at energy aspects, told es the markets view was show me, dont tell me. he said:

In the back of older traders minds, however, will be the headlines following the civil war of 2011, claiming the countrys oil production could remain offline for years. they were wrong and output soared, a habit of surprising the market libya has not lost.

(derek brower)

The shift to renewable energy is accelerating. as climate change hurtles up the agenda from brussels to beijing to boston, so are installations of solar panels and wind turbines.

But one problem is becoming increasingly pressing: intermittency. the sun doesnt always shine and the wind doesnt always blow and the technology is not yet there to store electricity at scale and pump it out as required.

That underlines the need for dispatchable forms of power, that can be used on-demand to compensate for renewables outages. most forms of electricity generation that can do this, however, spew greenhouse gases into the atmosphere.

Is biomass the answer? if fossil fuel generating plants can be refitted to burn bits of dead plant and trees, they can slash emissions big time, proponents say.

Its an often-overlooked area when people are so intensely focused on the rise of solar and wind adoption, john keppler, chief executive of enviva, the worlds biggest producer of wood pellets, told es.

Line chart of market capitalisation ($bn) showing enviva

Enviva buys up waste product from forestry in the us south-east and processes it into wood pellets to be sold to utilities around the world. and as generators such as drax in the uk convert coal-fired plants to burn biomass instead, business has boomed.

The company supplies about 5.5m tonnes a year or 20 per cent of the global market for wood pellets and its share price has risen sharply as biomass stakes out a niche in the transition.

But, there is a problem: experts say adopting biomass at scale would involve significant deforestation.

Biomassis the trickiest dimension of the energy transition and the area that we have most debated with our members, said faustine delasalle, director of the energy transitions commission.

Enviva says it tracks the supply chain of where its wood comes from in minute detail and that for every tonne of wood harvested in the south-east us each year another 1.4 tonnes grows.

But in other parts of the world questions around unsustainable deforestation hang over the sector prompting caution among investors.

Accounting for impact is becoming much more of an issue for investors, said zoe knight, head of hsbcs centre ofsustainable finance. [they] have a slight wariness... biomass has so many ways of being tripped up.

Spending committed to new oil and gas projects in 2020 will be just over $50bn, according to consultancy rystad energy barely a quarter of last years committed spend.

But 2022 should be a banner year. spending commitments will jump to almost $200bn, exceeding pre-pandemic levels, as companies push ahead with previously postponed projects.

Us energy secretary dan brouillette took a swing at californias green energy pivot last week, blaming the states reliance on renewables for recent blackouts.

Speaking at a virtual natural gas summit hosted by the department, mr brouillette a staunch proponent of the us oil and gas industry said renewable electricity remained completely dependent on power from fossil fuels and nuclear to compensate for shortfalls: one of the little secrets a lot of folks will not acknowledge.

He said californias decision to ramp up solar power generation and wean itself off nuclear and gas-fired alternatives had left it exposed when a heatwave pushed up demand.

The energy secretary was the latest to weigh in on the outages, which have prompted a terse debate between those like mr brouillette who blame them on californias growing reliance on green energy and those who say such claims are unfounded.

Writing in the atlantic, leah stokes, assistant professor of policy at university of california-santa barbara, said blaming the states reliance on renewable energy for the power losses was misleading: