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Briefing date 24.11.2022
EU seeks energy package deal as gas price cap splits nations

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EU seeks energy package deal as gas price cap splits nations
Bloomberg Read Article

EU energy ministers will meet today to discuss proposals for a cap on gas prices, Bloomberg reports, adding that “no quick outcome [is] expected”. The publication says: “Tensions are running high: the cap proposal was derided by Spain on Wednesday as a ‘mockery,’ as it would only be triggered if a series of conditions are met. Those conditions are so strict that even during the historic peak of European gas prices in August it would not have been activated. France also complained.” Reuters says some EU member states are opposed to the idea of a gas price cap while others want a stricter plan. It reports: “There are as many as 15 EU countries demanding a solid cap. Among them Belgium, Poland, Italy and Greece threatened to block other energy measures up for approval on Thursday if the package does not contain an actionable plan to prevent excessive prices. On the other side of the table, however, is a small but powerful camp led by the EU’s biggest economy, Germany. Together with the Netherlands, Sweden and Finland, they have argued a cap would push providers to sell elsewhere and cut incentives to bring down gas consumption.” Politico says the gas cap proposal has “set off a political crisis”. Reuters reports German economy minister Robert Habeck saying he was “not blocking” the idea but was “sceptical”. (Another Reuters article says Germany is to introduce “a special levy to skim off 33% of windfall profits made by oil, coal and gas companies, which could generate revenue of between one and three billion euros, finance ministry sources told Reuters”. BBC News has a report titled: “Ukraine war: How Germany ended reliance on Russian gas.” Reuters reports that the Germany government bailout of energy giant Uniper is to cost $53bn.) The Financial Times reports: “Energy traders would have to stump up an additional $33bn in margin payments if a plan by Brussels to cap the price of a key European gas benchmark goes ahead, a leading exchanges operator has warned.”

Separately, Reuters says EU governments “failed to reach a deal on Wednesday at what level to cap prices for Russian sea-borne oil under the Group of Seven nations (G7) scheme and will resume talks on Thursday evening or on Friday, EU diplomats said”. It continues: “Earlier on Thursday representatives of the EU’s 27 governments met in Brussels to discuss a G7 proposal to set the price cap in the range of $65-$70 per barrel, but the level proved too low for some and too high for others.” Another Reuters article reports: “The G7 nations’ proposed price cap of $65-$70 a barrel on Russian oil would have little immediate impact on Moscow’s revenues, as it is broadly in line with what Asian buyers are already paying, five industry sources with direct knowledge of the purchases said on Wednesday.”

Tory rebels seek to reverse onshore windfarms ban in England
Financial Times Read Article

“Rebel Tory MPs” are attempting to force their government to drop the de-facto ban on onshore wind in England, the Financial Times reports. It names former minister Simon Clarke, saying he “has tabled an amendment to the levelling-up and regeneration bill which is currently before parliament”. The paper says: “Clarke’s amendment would force Michael Gove, who replaced him as levelling-up secretary in Sunak’s cabinet, to allow onshore windfarm applications by revising the government guidance known as the National Planning Policy Framework. In an attempt to reassure other MPs, Clarke’s amendment would ensure that the projects could only go ahead where they had the backing of councils by preventing developers from appealing to the national Planning Inspectorate when their schemes are rejected.”

Meanwhile, CapX reports on the government’s “economically illiterate” plan to reclassify agricultural land in a way that “risks effectively banning solar panels from 41% of land in the UK”. BusinessGreen reports: “Government crackdown on solar farms could cost farmers £1bn.”

In other UK energy news, the Financial Times says Roll-Royce is urging the government to “enter formal negotiations over the funding for small nuclear reactors [SMRs]”. The paper reports: “Tom Samson, head of the company’s small modular reactor business, told a committee of MPs on Wednesday that Britain would face an electricity crisis next decade if it did not push ahead with building more ‘baseload’ power stations that offer a reliable source of generation when weather-dependent renewables including wind and solar are not producing.” (Rolls Royce has said it could build a first SMR by 2029, but does not yet have regulatory approval for its design.) Elsewhere, the Press Association reports on a High Court challenge by the planned Aquind electricity interconnector with France, which was rejected by the government earlier this year. Separately, the Guardian reports on how the “tide has turned on UK tidal stream energy as costs ebb and reliability flows”. Finally, BBC News reports that Durham County Council has secured a £110,000 grant to explore the use of abandoned mines to generate geothermal energy.

Britons told how to save energy
The Times Read Article

The UK government will finally launch a £25m public information campaign on how to cut energy bills, the Times reports on its frontpage, adding that the plan had been blocked by former prime minister Liz Truss. The paper says: “Officials have identified eight changes to save up to £420 a year with no loss of comfort…Advice to turn down thermostats or take shorter showers has been rejected amid concerns that it could affect health and risk being seen as ‘nannying’.” It adds: “Ministers will also encourage people to take up low-cost energy efficiency measures, such as loft insulation, cavity wall insulation and thermostatic radiator valves. In the autumn statement Hunt announced a further £6bn in energy efficiency funding from 2025.” The paper also says: “Ministers have been presented with three options for a public campaign: scaling up existing messaging with a mainly digital campaign at a cost of £5m; a limited range of broadcast adverts led by ministers; and a ‘full- scale’ campaign led by ministers and celebrities. The Times has been told that the full-scale campaign is the most likely, although no decision has been taken.” It adds: “[Chancellor Jeremy] Hunt said ministers would end all universal energy support in the spring of 2024, even if energy bills remained high.” BBC News reports: “Chancellor Jeremy Hunt has said people should cut their energy use to stop the UK being ‘blackmailed’ by people like Russian president Vladimir Putin…The government has extended support with energy bills until April 2024, but at a less generous level than now.” The Daily Telegraph headlines its coverage: “Households must slash energy use to defeat Putin, says Hunt.” The Daily Mail takes the same line. The Sun reports: “Hunt last night urged home-owners to turn down their thermostats – to stop ‘blackmail’ by Vladimir Putin. The chancellor said households can save £500 by joining a ‘national mission’ to slash energy use by 15%.” (As noted by the Times, the government is explicitly not asking people to turn down their thermostats.)

Meanwhile, BusinessGreen writes: “Study concludes government’s new energy demand targets can be met.” The New Statesman reports: “Britons are reducing their energy usage to save money this winter – and to help prevent climate change, according to new Ipsos polling shared with the New Statesman.” Elsewhere, Reuters reports that average UK household energy bills would have risen to £4,279 per year in January, if they had not been offset by government support that will limit the total to £2,500 for typical homes. It adds: “The cost of wholesale gas has increased, especially since Russia’s invasion of Ukraine in late February.” Bloomberg also has the story. The Press Association reports: “Shielding households from high energy bills set to cost government £5bn a month.”

For BusinessGreen, Green MP Caroline Lucas writes: “The government says it has a fiscal hole to fill yet continues to subsidise oil and gas through tax breaks and financial support to the tune of billions of pounds.”

Global summit is 'last chance' for nature
BBC News Read Article

BBC News previews next month’s COP15 UN biodiversity summit, being held in Montreal, Canada, with the aim of agreeing a “landmark deal to safeguard nature”. The broadcaster says: “Biodiversity refers to all the different living things on Earth and how they fit together in a delicate web of life. And the new Global Biodiversity Framework is seen as the ‘nature equivalent’ of the Paris climate agreement, an international treaty in which nations committed to limit global temperature rise.” It explains that some of the key targets that could be agreed at COP15 include: “Turning 30% of the Earth’s lands and seas into protected areas by 2030; Ensuring that, by 2050, a ‘shared vision of living in harmony with nature is fulfilled’; Eliminating billions of dollars of environmentally-damaging government subsidies and restoring degraded ecosystems.”

China: A $300bn bond market holds the key to solving the climate crisis
Bloomberg Read Article

The Chinese Communist Party has made its $300bn “green bond” market – which the country has built up in less than a decade and is now the world’s largest – “central to reducing emissions in the world’s biggest polluter”, Bloomberg writes, adding that an analysis by the outlet “reveals important gaps in disclosure and transparency”. Xie Wenhong, head of the China programme at the Climate Bonds Initiative, a UK-based organisation that sets international norms for green bonds, is quoted saying: “There aren’t enough regulations in China on how the green bonds are used and whether the issuers allocate the money where they promised.” The analysis also takes a “closer” look at “five key projects in China financed by green bonds”, saying that “more than 20bn yuan ($2.79bn) was poured into these projects, but, for some, the emission reduction capacity remains unclear”. According to Bloomberg, one of the projects will be the 8,000km pipeline, due to be completed by 2025, that will link China (the world’s “hungriest energy consumer”) to Russia (the “largest gas reserves on the planet”).

The Washington Post has an article under the headline: “How China, the world’s top climate polluter, avoids paying for the damage.” Li Shuo, a senior policy advisor at Greenpeace East Asia, is quoted saying: “The facts are clear: China is the largest emitter in the world now…so it is a very valid question to talk about growing responsibility from China on the international stage.” The article adds that Chinese officials have not officially said whether they will contribute to the “loss and damage” fund agreed at COP27. Analysts are quoted saying it appears unlikely that Beijing officials will send more climate aid overseas when they are under pressure at home to address an economic slowdown caused in part by China’s strict “zero covid” policy and a property market “downturn”. Separately, S&P Global Commodity Insights quotes Andrea Bonzanni, international policy director at the International Emissions Trading Association, who says: “Enough progress has been made [at COp27] for countries to implement bilateral agreements on Article 6.2, which sets out accounting rules for the transfer of international emissions units between countries.” He continues: “Japan was planning to become one of the largest buyers…while there were also signs that China was looking to use Article 6 credits in addition to domestic offsets.” Additionally, the South China Morning Post has an editorial, saying COP27 “avert[ed] collapse with last-minute agreement and then witnesses the return of collaboration between China and the US”.

In other news, Bloomberg writes that China’s “world-leading ramp-up of clean energy” is “stuttering as rising costs and Covid restrictions take their toll on the pace of solar and wind installations, heaping pressure on developers to meet their annual targets”. Another Bloomberg article says that China’s coal production is “set to climb for the sixth year in a row, reaching a new record, as the Beijing government acts to ensure supplies in the top miner and consumer of the fuel, spurring further declines in prices”. The state news agency Xinhua reports that “in some recent moves, Chinese researchers have designed the flow battery for better energy storage, proposed a new eco-friendly cooling strategy and tried to utilise microalgae to capture the carbon”. Finally, Shanghai-based financial outlet Yicai writes that energy supply “risks” have led to many European companies “shutting down, triggering a new round of industrial relocation, which will benefit China, especially in the chemical and transportation sectors”.

US aims to sanction Brazil deforesters, adding bite to climate fight
Reuters Read Article

The US is considering the use of “Magnitsky” sanctions against “environmental criminals behind surging deforestation in the Brazilian Amazon”, Reuters reports, citing “US sources and officials”. It calls the idea “a major shift in Washington’s strategy to combat global warming, adding the bite of direct sanctions to its toolkit of tax incentives, diplomatic nudges and complex, slow-moving multilateral accords”. The newswire says there are “still question marks” over how incoming Brazilian president Luiz Inacio Lula da Silva views the sanctions plan “which is still in its early stages”. It continues: “Magnitsky sanctions aim to punish those accused of corruption or enabling human rights abuses. They would freeze any US assets and bar all Americans and US companies from dealing with sanctioned individuals or entities…Targeting environmental criminals with Global Magnitsky sanctions is unusual but not unprecedented.”

Bankers pour cold water on red hot coal
euters Read Article

Demand for coal has surged this year and coal miners are “making money hand over fist”, Reuters reports, but it adds that new coal mining projects “are being left on the table as most Western banks stand by climate pledges to restrict lending to the sector, according to a dozen mining company executives and investors”. The newswire notes: “Despite the pressure on Western lenders, global investments in coal supply are expected to rise by about 10% this year to $116bn, with China leading the way, the International Energy Agency said…With funding hard to come by from Western banks, coal miners outside China have turned more to equity markets this year…But analysts said the fund raisings have not been enough to offset the billions of dollars of Western bank lending that has disappeared over the last couple of years.” Meanwhile, the Financial Times “moral money” newsletter has a section titled: “Research shines a light on big investors’ coal exposure.” It says: “some big institutional investors have much greater exposure to coal than they would if they simply mirrored the overall market”.


The story behind the loss and damage fund at COP27
Saleemul Huq, The Daily Star Read Article

Writing for the Daily Star in Bangladesh, Saleemul Huq, director of the International Centre for Climate Change and Development (ICCCAD) at the Independent University, Bangladesh (IUB), tells the backstory to the loss and damage fund agreed at COP27 last week. He writes: “This story begins a few COPs ago, when the LDC group [of least developed countries], with support from the ICCCAD at the IUB, began to organise pre-COP planning workshops with loss and damage negotiators from the other three subgroups [AOSIS, AILAC and the Africa Group, which jointly with LDC make up 100 countries from the 134-nation G77 plus China bloc] to try to present a common demand to the G77 first. The G77 then supported these demands and put forward two demands in COP25, which was held in Madrid, Spain in November 2019.” He continues: “The demands were to create a technical body for carrying out research and providing technical support on loss and damage, and for the creation of a fund through which the rich polluting countries will pay compensation to poorer developing countries suffering from human-induced climate change.” The first of these, the Santiago Network, was agreed at COP25, Huq says, but COP26 failed to agree a fund. The next step, he writes, was to push for loss and damage finance to be on the agenda at COP27: “Then the difficult negotiations began…This unity of the G77 at COP27 was an important factor in persuading the developed countries.” Huq notes that securing the fund “is just the beginning” as countries still need to agree “who will pay into it, how much will be paid, who will manage it and finally, who will be eligible to receive funds once they are available”. He concludes: “COP27 has ushered in a new era of shared acknowledgement of responsibility for human-induced climate change. I believe it would not be wrong to rename it as COP1, due to this historic commitment.”

Elsewhere, columnist David Wallace-Wells writes in the New York Times under the headline: “The world took a bold, toothless step forward on climate justice.” Meanwhile, a comment for the Washington Post by Marc Thiessen, columnist and former speechwriter to George W Bush, is titled: “Climate reparations are insanity. They will hurt poor nations most.” Thiessen writes: “[C]limate activists are advocating policies that would deny poor nations access to inexpensive, abundant fossil fuels they need to develop their economies”. (Renewables were the cheapest way to generate electricity in most countries even before the current energy crisis of high fossil fuel prices.) He goes on to write, incorrectly: “[W]ealthy nations have agreed to pay poor nations reparations for costs of natural disasters supposedly caused by the industrialised world’s use of fossil fuels”. (As Huq’s articles notes, the loss and damage fund at COP27 was explicitly “agreed with the caveat that it would not be used for liability or compensation”. The US is by far the largest contributor to current warming, which has already increased the frequency and intensity of extreme weather events.) Writing for DeSmog, African peace activists Sylvie Jacqueline Ndongmo and Leymah Roberta Gbowee say: “We, African women on the front line, fear that the expansion of oil, coal, and especially gas will only reproduce historic inequalities, militarism, and war patterns. Presented as essential development tools for the African continent and the world, fossil fuels have demonstrated over more than 50 years of exploitation that they are weapons of mass destruction.”

Separately, the Guardian Temperature Check column by environment reporter Graham Readfearn factchecks the Australian opposition leader Peter Dutton’s claim that the government had “just signed up to funding a $2tn loss and damage climate fund”. (Again, as Huq notes, the amount of money in the fund has not yet been agreed. Dutton’s exaggeration is likely based on a completely separate request, which has also not been agreed to, for climate finance after 2025.)

UK has passed on the COP baton, but it still has a responsibility to lead on climate
Rachel Kyte, BusinessGreen Read Article

The UK should make use of its “huge soft diplomatic power” to drive global decarbonisation, writes Rachel Kyte, dean of the Fletcher School at Tufts University, in a comment for BusinessGreen. She writes: “For the moment, looking from the outside, the UK has slashed aid, stalled on climate, decimated its aid delivery capacity in a poorly executed merger of the FCO and DFID, stalled on climate finance, and abandoned a total government approach to climate change the day COP26 ended. But we expect others to be there for us at the UN, on mitigation ambition or Ukraine. We have failed to internalise that governments may act bilaterally but don’t forget, multilaterally.”

Danger signs: Time to be alarmed about the state of the climate
Editorial, The Sydney Morning Herald Read Article

An editorial in the Sydney Morning Herald reflects on the latest “state of the climate” report from Australia’s Bureau of Meteorology, saying it “makes grim reading”. The paper says: “It provides even more statistics and scientific theory about the damage caused by climate change, confirming the lived experience of the past few years of drought, bushfire and, more recently, flood.” It adds: “Australia must take this report seriously and start to prepare for a world of increased droughts, bushfires, heatwaves, acid oceans, rising sea levels and flash floods.” The editorial continues: “While it is vital to prepare for the impacts of climate change such as drought, it is not a substitute for reducing emissions…The State of the Climate report has again made clear the danger threatening our way of life. It is high time for a more rational and long-term response.” Axios covers the state of the climate findings under the headline: “Climate extremes hitting Australia, more intense weather to come.”

Elsewhere, the Guardian says South Australia’s largest gas-fired power station is to be closed in 2026 instead of 2035, with owner AGL Energy “citing the completion of a new grid link to NSW that will give the state more access to low-cost renewable energy”.


Drivers and implications of the extreme 2022 wildfire season in south-west Europe
Science of the Total Environment Read Article

The 2022 fire season in south-west Europe reached record “burned area” in some regions, according to new research. The “preliminary but comprehensive analysis” of south-west Europe’s 2022 wildfire season finds that total burned area exceeded the 2001–21 average by a factor of 52 in some regions. It adds that large wildfires started earlier than in the traditional fire season. A few large wildfires were responsible for 82% of the burned area, the paper says, while 47% of the burned area occurred in protected areas. The authors add that “2022 may be a spyglass into the ‘new normal’ for fire activity under global warming”.

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