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TODAY'S CLIMATE AND ENERGY HEADLINES

Briefing date 17.03.2023
European Commission releases Net-Zero Industry Act

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News.

EU: Commission releases Net-Zero Industry Act
Politico Read Article

The European Commission yesterday unveiled its Net-Zero Industry Act, which Politico describes as “a long-awaited proposal aiming at boosting Europe’s green industry”. It explains: “The proposed regulation is a key part of the European Green Deal Industrial Plan – the bloc’s response to Washington’s massive green subsidies package [the Inflation Reduction Act] – and aims to ensure that at least 40% of the bloc’s demand for clean tech is made domestically by 2030. The proposal sets out targets for technologies deemed necessary to decarbonise the bloc’s economy, a move aimed at preventing the EU from deepening its reliance on third countries like China.” Commission vice president Frans Timmermans told reporters yesterday: “If we want to get to climate neutrality as we plan in 2050 and if you want to use all the opportunities this industrial revolution is throwing at us and ward off the challenges…we will need a massive scale-up of clean tech manufacturing.” The talks “went down to the wire”, Politico says, as “commissioners sought to resolve a fight over whether to include nuclear energy”. It continues: “The final text is ambiguous. Nuclear energy is not included in a list of ‘strategic net-zero technologies’…that can benefit from faster permitting and easier access to funding. But, elsewhere in the text, a formal definition of net-zero technologies includes ‘advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle’ and ‘small modular reactors’.” Reuters reports on how, yesterday, seven EU states – including Germany, Spain and Denmark – had “strengthened their resistance to efforts by France to count nuclear energy towards EU renewable energy targets”. 

A separate Politico article looks at “five things to know” about the Net-Zero Industry Act and the Critical Raw Materials Act – the latter of which is “aimed at shoring up the bloc’s supplies”. It notes that, within the Net-Zero Industry Act, “projects that receive a special ‘strategic project’ status – and have an annual output of more than 1 gigawatt – would see permitting timeframes slashed to just one year; projects below that level would be greenlit within nine months”. However, the Financial Times reports that industry executives have warned that the new plans will fail unless they are backed up with more money. For example, the article quotes Giles Dickson, chief executive of WindEurope, who says: “We simply don’t have enough factories and infrastructure today to build all the wind power that Europe wants.” Another Politico article comments on the “Brussels fightback against [US president] Biden’s reforms”. It says: “Brussels officials are growing increasingly exasperated with businesses demanding more state cash, and threatening – if they don’t get it – to quit Europe and relocate to America.” A Reuters “factbox” on the Commission’s proposals says that it also includes “plans to boost production of clean hydrogen with an EU-funded subsidy scheme”.

Meanwhile, Politico reports that “the European Parliament doesn’t like the look of Germany’s proposed backroom deal with Brussels to save the combustion engine”. Quoting two Parliament officials, Politico reports that Roberta Metsola, the Parliament’s president, will write in a letter to EU capitals to “respect” the deal that was agreed last year to effectively ban the sale of new polluting cars and vans by 2035. The intervention was agreed yesterday, the outlet says, in response to Germany – along with Italy, Poland, Bulgaria and the Czech Republic – threatening “to blow up the agreement” by insisting that it should allow for vehicles running only on synthetic fuels made from captured CO2 and hydrogen past 2035. (See yesterday’s Daily Briefing for more details.) Germany’s manoeuvres risk a wider “contagion” across climate laws, one EU diplomat has told the Financial Times, with smaller countries following Berlin’s lead and “[reducing] ambition on other things”.

Finally, Reuters reports that European Union countries yesterday agreed “to try to reduce the number of farms covered by proposed rules to cut pollution and greenhouse gas emissions from livestock”. This came” despite criticism from some member states” – including Bulgaria, Germany, Italy and Poland, the newswire says.

Dutch pro-farmers party wins big in provincial elections
Politico Read Article

The farmer-focused FarmerCitizenMovement (BBB) landed a major victory in Wednesday’s Dutch provincial elections, which will determine the composition of the Senate, reports Politico. It continues: “The rural party came from nowhere to finish ahead of Netherlands prime minister Mark Rutte’s centre-right People’s Party for Freedom and Democracy (VVD) party in an election seen as a referendum on the government’s performance. The results call into question the Rutte government’s ability to implement harsh policies aimed at clamping down on nitrogen emissions from farms, which triggered huge farmers’ protests last summer.” According to exit polls, BBB is set to win 15 out of 75 seats, becoming the largest force in the Parliament’s high chamber (tied with a Labor-Green coalition), ahead of VVD’s 10 seats, the outlet explains: “It is major blow to Rutte’s ruling coalition…which lost eight of its 32 seats.” While the results are “unlikely to affect the government’s nitrogen agenda at the national level”, they might delay its implementation, it says. BBC News notes that the government plans aim to “slash nitrogen emissions harmful to biodiversity by dramatically reducing livestock numbers and buying out thousands of farms”. It adds: “The run-up to the vote was dominated by the sight of farmers’ tractors on the streets of The Hague and outside the venue that hosted a pre-vote leaders’ debate.” The Guardian quotes BBB’s founder, Caroline van der Plas, who said: “The Netherlands has clearly shown we’re fed up with these policies…It’s not just about nitrogen, it’s about citizens who are not seen, not heard, not taken seriously.” In response to the result, Rutte, prime minister since 2010, said the outcome did not threaten the government: “I think the cabinet can remain stable over the coming years, because we have parties that want to take responsibility.” However, the paper notes, “the result looks likely to severely complicate the remainder of his premiership”. It explains: “In principle, the right-wing liberal leader could turn to the PvdA/GreenLeft alliance for the senate majority needed to pass new legislation. In practice, both parties have said they will block the coalition’s entire climate programme unless it goes further and faster, for example by closing all coal-fired power stations within two years and halting subsidies for fossil fuel-based industry.” The New York Times and Daily Telegraph also have the story.

UK: Warnings over lower renewables investment as government announces £200m support
Press Association Read Article

Industry experts and trade bodies have warned that the UK government might fail to secure as much investment in renewable energy as it hopes this summer, reports the Press Association. Ministers said yesterday that they would allow companies to bid for £205m in support in an upcoming renewables auction under the Contracts for Difference (CfD) system, the newswire explains. However, research outfit Cornwall Insight warned that “developers are becoming increasingly concerned about bidding for projects in the next round of the…subsidy scheme, fearing they may not get a return on any investments they make.” The government said that offshore wind projects that bid for contracts this summer will not be allowed to charge more than £44 per MWh, down from £46 last year, the newswire says, adding that “the funding would be available in two pots, with £170m going to established technologies – which for the first time includes offshore wind. A further £35m will cover emerging technology such as geothermal energy and floating wind turbines and £10m for tidal stream technology”. CityAM quotes Michael Chesser, economics and markets manager of trade body RenewableUK: “Unfortunately, in the light of global inflationary pressures, the budget and parameters set for this year’s CfD auction are currently too low and too tight to unlock all the potential investment in wind, solar and tidal stream projects which the industry could deliver.” The Daily Telegraph reports that the government is also “changing the rules, so that developers will not be able to delay the start of their contract for ‘commercial gain’”. This move was made because wholesale electricity prices “are now so high that developers can make a huge short-term profit even without taxpayer support”, the paper says: “As a result, some developers have been using a clause in the contracts that allows them to postpone when the pricing arrangement kicks in, for example if construction has been delayed.” The Times and Reuters also report on the announcement. 

Meanwhile, Sky News says it has been told by the companies running the UK’s three remaining coal-fired power stations that they will not be able to commit to new emergency power contracts next winter, despite a government request to do so. At the moment, “five coal units in three power stations are on standby to help avoid blackouts on very cold, very still days where wind power is limited; Drax, EDF’s West Burton A and Uniper’s Ratcliffe”, the outlet says. Drax and EDF have said that the planned closure of their four units will go at the end of this month, the outlet reports. And Uniper, which runs the Ratcliffe power station, has said that all four of its units, one of which is currently on standby for emergency purposes, have already entered into commercial contracts for next winter. One energy analysis has warned of “sleepwalking into a capacity crunch” next winter.

In other news, BBC News reports on how campaigners hope a legal challenge will halt the extraction of 40m tonnes of coal from the planned expansion of the Aberpergwm mine in Neath Port Talbot in Wales.

China asks EU to justify upcoming carbon tax at World Trade Organization
South China Morning Post Read Article

China has asked the European Union to “justify its incoming carbon border tax” at the World Trade Organization, a move that “suggests it may challenge the law at Geneva’s trade courts”, says the South China Morning Post. It adds that Beijing’s WTO envoy has “proposed using the committee on trade and environment for multilateral talks” on “environmental measures that have given rise to controversies”, starting with the EU’s carbon border adjustment mechanism (CBAM), which China has “insisted” is “not compliant with global trading rules”. The Hong Kong-based newspaper also notes a paper from Tsinghua University, published in 2021, which found that, “as the world’s largest producer of industrial raw materials such as cement and steel, China would be the most heavily penalised by the EU law”. However, the article highlights a report by China Dialogue, which found that “just 2% of China’s EU exports would be covered by the first wave of levies”.

Meanwhile, Bloomberg reports that a “surge in Chinese wind generation helped suppress coal burning at the start of the year, even as the government tried to kick-start the economy after abandoning Covid Zero”. It says that wind turbines produced 134TWh (terawatts-hours) of power in January and February, a “30% jump” from the previous year. Along with “rising” solar output, new renewable generation was “able to more than meet the 2.3% increase in power demand over the two months”, the outlet highlights, adding that this “allowed thermal power plant operators to ramp down operations, reducing emissions from the world’s most-polluting sector”. Xinhua, the state-run newswire, writes that “renewables are no doubt winning” as the country is “on track to achieve its goal of carbon peaking by 2030”, citing Lei Yang, a professor with the Energy Institute of Peking University. Yang adds: “For China, developing its own renewable energy capacity is to help achieve energy security…The energy transition is in line with energy security in the long term.” Radio Free Asia, a US-funded news service, says that China’s “renewed coal addiction threatens the globe’s climate ambition”. China Daily carries a comment piece by Lin Boqiang, a researcher with Tan Kah Kee Innovation Laboratory and dean of the China Institute for Energy Policy Studies at Xiamen University. He writes: “To achieve the ‘dual carbon’ goals, China will, in the coming decades, build a new energy system dominated by wind and solar energy sources and phase out fossil fuels (including coal) in an orderly manner.” He adds: “The phase-out would require replacing traditional energy sources with renewable energy sources. For the time being, China’s low-carbon transition needs to take into account the cost of energy and energy security, making it impossible for the nation to wean itself off coal-fired power in the short to medium term.” He concludes: “Even when China peaks carbon emissions in 2030, coal-fired power will continue to provide the vast majority of electricity for fueling China’s economic growth, and the plans to ‘retire’ coal power capacity will be under heated debate. The key lies in recognising the coal power’s role as a ‘stabiliser’ and ‘ballast stone’ for ensuring power supplies and advancing low-carbon transition at a relatively lower cost.”

Separately, there is continuing coverage on China’s annual “two sessions”, a major political gathering in Beijing, which concluded on 13 March. An article published by China Dialogue says that legislators and political advisors have “offered thousands of suggestions and proposals, including many in the field of climate and energy”. It adds that Qian Feng of the Chinese Academy of Engineering suggested the government “issue regulations on carbon emissions trading”, saying the current national carbon market has a “weak emission monitoring system for enterprises and lacks an effective price mechanism”. Lu Xiulu, director of Guangdong’s Department of Ecology and Environment, suggested “carbon budget pilots be carried out at provincial and municipal levels”, the article continues. Although discussions are “lively on these proposals”, the article highlights, it is “hard to say if and how they will be adopted and finally become policies”. China Daily reports that during the meeting a political adviser “called for more carbon reduction projects”, including “carbon capture, utilisation and storage (CCUS), to be included in the China Certified Emission Reduction program, to boost the nation’s efforts to cope with climate change”.

Finally, Reuters writes that China’s economic recovery “appears to be on track, but is unevenly spread across sectors, which is likely to result in a similar pattern for its imports of major commodities”. Industrial output “rose 2.4%” in the first two months of 2023 from the same period last year, the newswire adds.

Global fresh water demand will outstrip supply by 40% by 2030, say experts
The Guardian Read Article

On the eve of a UN water summit, a new report has warned that demand for fresh water is expected to outstrip supply by 40% by the end of this decade, reports the Guardian. The report sets out seven key recommendations, including reshaping the global governance of water resources, scaling up investment in water management through public-private partnerships, pricing water properly and establishing “just water partnerships” to raise finance for water projects in developing and middle-income countries, the paper reports. It was published by the Global Commission on the Economics of Water (GCEW), which was convened by the government of the Netherlands and facilitated by the Organisation for Economic Co-operation and Development (OECD) and launched in May last year. The newspaper quotes lead author Mariana Mazzucato, an economist and professor at University College London: “We need a much more proactive, and ambitious, common good approach. We have to put justice and equity at the centre of this, it’s not just a technological or finance problem.” The report is published as a UN water summit, led by the governments of the Netherlands and Tajikistan, is set to take place in New York on 22 March, the paper says. While world leaders are invited, “only a few are expected to attend, with most countries to be represented by ministers or high-ranking officials”, the paper says, adding: “It will mark the first time in more than four decades the UN has met to discuss water, with previous attempts stymied by governments reluctant to countenance any form of international governance of the resource.”

Comment.

Comment: How big of a climate betrayal is the Willow oil project?
David Wallace-Wells, The New York Times Read Article

US president Joe Biden’s approval of a ConocoPhillips $8bn plan to extract 600m barrels of oil from federal lands in Alaska “landed simultaneously with the thud of betrayal and the air of inevitability”, says David Wallace-Wells. In his New York Times newsletter, Wallace-Wells writes: “On the campaign trail, Biden had promised ‘no more drilling on federal lands, period. Period, period, period’. But for all the talk about the renewables boom and the green transition, and all the money pouring into them as well, there has been little concerted effort, in the US at least, to really draw down our profligate use of the stuff that is actually poisoning the climate: fossil fuels.” He asks “how big of a carbon bomb” is the Willow project, noting: “The honest answer is non-zero, but not catastrophically large, on its own. If the project goes forward and produces oil as predicted, it is expected to generate 9.2m additional metric tonnes of CO2 each year – about the equivalent of two new coal plants added to our fleet or 2m gasoline cars added to the road. This is bad – any amount of additional carbon promises to push the world even farther outside the envelope of temperatures that have enclosed, and indeed helped cultivate, the full history of human civilization to this point…And yet 9m metric tonnes is only about two-10ths of 1% of current American emissions.” But, he continues, “this same logic could be used to justify any particular fossil fuel project”. That is “the nature of a problem that suffuses nearly every aspect of industrial and postindustrial civilisation: The scale of the challenge seems simultaneously to argue for urgency and to counsel a kind of indifference”. He concludes: “You have to draw the line somewhere, and the Biden administration keeps doing so only to cross it.”

Science.

Increasing hypoxia on global coral reefs under ocean warming
Nature Climate Change Read Article

A new study shows that 84% of coral reefs worldwide are already experiencing some degree of hypoxia, or oxygen deficiency. Researchers use field data from 32 sites around the world to determine the severity of the hypoxia, if any, experienced by the reefs at each site. Their findings “reveal that hypoxia is already pervasive on many reefs”, they write, with 13% of reefs experiencing severe hypoxia during the sampling. They also show, using climate models, that “projected ocean warming and deoxygenation will increase the duration, intensity and severity of hypoxia” in the future.

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