The UK has “some concerns” over the US Inflation Reduction Act, its finance minister Jeremy Hunt has said, amid escalating global tensions over how the country’s package of green subsidies could impact trade and business in other countries. Reuters reports that Hunt told journalists on Friday: “Yes, we have some concerns about the IRA and the reason is that we believe in free trade. But are we worried about the long-term future of our clean energy industries? Absolutely not.” Reuters explains: “The EU has previously expressed serious concerns about the $369bn of investment to tackle climate change in the US IRA, which came into force this year…The EU has said it will set out its own plans to make life easier for green industry, including mobilising state aid and a sovereignty fund to keep firms from moving to the US…The US said last week it had placed the highest priority on addressing EU fears that the subsidies law will lure clean-tech businesses to US at Europe’s expense.” Reuters adds that, asked if the UK would offer its own subsidies, Hunt later told Bloomberg TV: “We will announce our plans. I have absolutely no doubt that we will be able to present a package that makes us highly competitive. But I don’t think subsidy is necessarily the best way. I think what people want is creativity, innovation, ideas, a climate – a regulatory structure – that encourages investment.”

Elsewhere, the Times reports on warnings from clean-energy businesses that the UK is already at risk of losing out because of the IRA. It reports: “Energy UK, the industry body, SSE, the FTSE 100 energy group, and trade bodies for the renewable and nuclear industries all warned that Britain needed to step up its own offering to avoid losing out. Adam Berman, deputy director at Energy UK, said: ‘We are already aware of companies that are actively pulling back from investing in the UK in favour of the US.’ The investment climate for renewables in Britain has ‘deteriorated significantly over recent months’ amid inflation, supply chain problems and the windfall tax, he said. With the increased competition from abroad, especially the IRA, international investors were reconsidering ‘where they allocate capital’. He urged the UK government to ‘act fast to put in place an equivalent mechanism’.”

It comes as the UK government is also facing calls from the nuclear industry to launch “a government agency to develop a new fleet of nuclear reactors in Britain ‘as a matter of a priority’, after delays caused by a funding dispute between the Treasury and business department”, the Financial Times reports. The UK is also under pressure from the car industry over the risk that its plans for making sure nearly a quarter of vehicles are zero emissions next year could “fall apart”, the Times says.

The Daily Telegraph reports that Norway, which exports a lot of electricity to the UK, has indicated it will protect its own supplies “in a move that could lead to its exports being blocked in a crisis”. It adds: “Oslo has confirmed measures to preserve the levels of its hydropower reservoirs after weather pushed them to record lows.” It comes as the FT reports on how a new power link between the UK and Denmark could leave the UK “reliant on neighbours for energy”.

In other IRA news, the International Energy Agency (IEA) chief Dr Fatih Birol has said that the EU needs to find a way to keep up with the US and China on climate investment, Bloomberg reports. “Europe has to come up with a master plan for a new industrial strategy,” Birol said, adding that he has pressed the issue with European leaders. The EU’s internal market commissioner Thierry Breton also said that the bloc must “quickly answer” the US IRA with its own plan, Reuters says.

In addition, the FT reports that Europe’s wind industry has warned of “continued difficulties in 2023 as high materials costs and slow approvals for new wind power projects drag back profitability, despite rising demand for renewable energy”.

Global emissions will fall more quickly than expected as Russia’s invasion of Ukraine and the US IRA quicken the transition to green energy, the oil company BP has projected, according to the Times. BP’s latest Energy Outlook upgrades its estimates for the growth in renewable power and energy efficiency as nations strive for energy security, while downgrading its estimates for economic growth because of the war, the Times says. It explains: “In its central scenario – ‘the broad trajectory along which the global energy system is currently travelling’ – it has cut its estimates for global emissions in 2030 by 3.7% and in 2050 by 9.3%. By 2035, it sees oil demand 5% lower and gas demand 6% lower than it estimated last year, with renewables deployment about 5% higher. This scenario would result in global emissions peaking some time in the 2020s and falling by 30% on 2019 levels by 2050.” In its coverage of “one of the [energy] sector’s most closely-read studies”, the Financial Times reports that the analysis also shows that “even with increased political support for the shift away from fossil fuel, governments and industry are still far behind in the race to achieve net-zero emissions by 2050”. Bloomberg quotes BP’s chief economist Spencer Dale, who says: “The increased focus on energy security as a result of the Russia-Ukraine war has the potential to accelerate the energy transition as countries seek to increase access to domestically produced energy, much of which is likely to come from renewables and other non-fossil fuel.” Reuters also has the story.

Some 27 US lawmakers have called on top US climate envoy John Kerry to urge the United Arab Emirates to withdraw its appointment of the head of its state oil company as president of the COP28 climate summit this year, Reuters reports. The 27 Democratic members of Congress sent a letter to Kerry calling on him to persuade the UAE to withdraw the appointment of Sultan Al Jaber, head of the Abu Dhabi National Oil Company, over concerns this posting could risk “undermining the very essence of what is trying to be accomplished”. The letter adds: “Furthermore, as some of us have urged, future COPs should require any participating company to submit an audited corporate political influencing statement that discloses climate-related lobbying, campaign contributions, and funding of trade associations and organisations active on energy and climate.” Kerry has previously expressed positivity about Al Jaber’s appointment. Politico also has the story.

Germany economic and climate minister Robert Habeck has called on climate activists “to distance themselves from violence” after the protests surrounding the eviction of the lignite town of Lützerath, reports Der Spiegel. It quotes Habeck saying in an interview with Die Tageszeitung that “climate protection, in particular, is about protecting freedom and life in a democracy. And violence is not a legitimate means of political debate.’ Der Spiegel also reports that the members of the Last Generation protest group, which blocked flight operations on 24 November on the apron of the Berlin airport, are to pay the costs of the large-scale deployment of security forces. Additionally, Sonntagsblatt reports that the Last Generation climate activists see churches as “important partners in the fight against global warming” because they are a place where “they are not prejudiced and criminalised because of their blockades, but where their concerns are taken seriously’.

Meanwhile, Frankfurter Allgemeine Zeitung (FAZ) reports that German agriculture minister Cem Özdemir is calling for VAT on fruit, vegetables and legumes to be abolished. This step would not only relieve consumers financially, according to the message from the Green politician, but also “promote the desired change in diet away from meat and towards a more plant-based diet”, notes the outlet. However, it adds that finance minister Christian Lindner “cautiously” rejects it: “No further changes are currently planned for value-added tax.’ Die Welt says that the number of vegans in Germany increased continuously between 2019 and 2022: from 950,000 to 1.58m. The outlet continues that, even if the majority of the 83m Germans are not entirely vegan, many are still “curious” and “at least open to less meat consumption”, according to results of a survey by the pollsters YouGov. 

Elsewhere in German news, FAZ reports that “green electricity bosses have doubts about Habeck’s goals for the energy transition”. A year ago, the vice-chancellor announced that, by 2030, 80% of electricity would be generated by renewables, explains the outlet. However, a survey of a dozen leading wind power and solar companies in Germany conducted by Frankfurter Allgemeine Sonntagszeitung (FAZ’s Sunday edition) shows that the energy companies have “serious doubts” about whether Germany will achieve the goals set by the government. “The energy transition is losing momentum,” warns Frank May, head of Alterric, Germany’s largest operator of onshore wind farms. “Under the current framework conditions, it does not seem realistic that the targets will be achieved,” says Jürgen Zeschky, head of the wind turbine manufacturer Enercon. The assessment of Siemens Gamesa sounds similar, notes the newspaper: when building offshore wind farms in the North Sea and Baltic Sea, Germany faces “extreme industrial policy challenges” due to a “lack of factories, port facilities, ships and skilled workers’.

Finally, Reuters reports that Australia and Germany have earmarked $35.5m and $54.4m, respectively, towards a joint initiative to establish a green hydrogen supply chain, Australian minister for climate change and energy Chris Bowen said on Friday. The two countries, which signed a bilateral alliance on hydrogen production and trade in June 2021, announced funding for four projects under the German-Australian Hydrogen Innovation and Technology Incubator (HyGATE) initiative, notes the newswire.

China is “fast-tracking its renewable-energy installation capacity in its five-year plan through 2025”, the South China Morning Post writes. As demand “continues to grow” to meet China’s climate goals, the need for storage facilities of solar and wind power has also become “critical to ensure a ready and consistent supply”, the outlet highlights. Lithium battery output, for example, “surged 70%” in 2022 to 957GWh (gigawatt-hours), citing a report published by sustainable energy research house EVTank and China Yiwei Institute of Economics, saying this is “more than enough to feed the domestic electric-car industry”. 

Meanwhile, Bloomberg reports that the Chinese central bank will “extend the use of three monetary policy tools designed to encourage financial institutions to support green technologies and the logistics sector”, citing a statement by the People’s Bank of China. The bank will “continue to offer cheap funding until the end of 2024 to banks which lend to firms that are helping reduce carbon emissions”, the outlet adds. Separately, The state-run newspaper Global Times says that, in China, the world’s “largest” auto market, the new-energy vehicle (NEV) sector, has “stepped up rapid development over recent years as the country vows to upgrade green transport”, adding that there is still “an unbalanced landscape in a big country with varied climate patterns and terrains”. 

Elsewhere, the New York Times writes that with its economy “severely hampered by stringent measures to curb the spread of Covid-19”, China’s oil and gas consumption “declined in 2022 for the first time in decades”, citing a statement by the International Energy Agency on Friday. Fatih Birol, the agency’s executive director, “expected a sharp rebound in demand” for oil and gas, “which could mean higher energy prices in other markets”, the article notes. Finally, the state-run newspaper China Daily  writes that China’s economic “recovery” is expected to “drive up electricity consumption with an estimated growth of 6%” this year “amid the optimisation of Covid-19 control measures”, citing “recent” forecasts from the China Electricity Council (CEC), a non-profit organisation. CEC secretary-general Hao Yingjie is quoted saying: “Under normal weather conditions, it is estimated that the country’s electricity consumption will be 9,150 terawatts-hours, an increase of about 6% compared with 2022.”

An editorial in the Times criticises progress towards the UK’s goal to phase-out petrol vehicles by 2030 and argues that “the government needs to focus single-mindedly on building the necessary infrastructure for EV use and providing incentives for buying these vehicles, and be pragmatic about extending the deadline for bans of new petrol and diesel vehicles”. It adds: “The government needs to go back to basics. An ambitious target date for banning sales of new petrol vehicles may be politically attractive, but it needs to be combined with making EV ownership more feasible and indeed attractive. Policymakers will not be giving up on the environment if they combine revisiting the target date with investing in charging points and subsidising the cost of EVs for lower-income households.”

Taking a different view, the Daily Telegraph carries an opinion column by GB News journalist Liam Halligan arguing that the UK’s “rush for electric cars risks empowering China”. He says: “What about the rare earth minerals needed to create EV batteries? China commands around two-thirds of the world’s lithium-refining capacity, rising to four fifths when it comes to cobalt. Maybe that’s why China is home to almost 80% of the world’s EV battery-making capacity. Western politicians, and many consumers, have been quick to embrace the green-friendly virtues of electric vehicles. But I cannot help but worry that we’ve embraced this still shaky technology without thinking through the bigger geopolitical picture.”

Elsewhere, the Financial Times’s Lex column comments on how heat pumps can be made more attractive to UK households over gas boilers. It says: “Removing distortions would be a good place to start. Electricity is weighed down by levies that have little to do with its real cost – some £120 on the average annual bill. Lop that off – as the government should – and the differential will narrow, to the benefit of the heat pump. But the best thing heat pumps have going for them is that they are green – and getting greener. Buildings are not currently subject to any carbon price, but accounting for their emissions at the ETS price of £80/tonne would add some £200 to the average household gas bill. Even with the current power generation mix, heat-pump households would pay less than half of that. The rising of the carbon price and the greening of the grid would widen the gap going forward.”

In addition, the Sunday Times carries a column by climate-sceptic commentator Dominic Lawson, which criticises Labour’s plan to improve energy efficiency to tackle climate change and reduce fossil fuel reliance, if elected. 

In a column, Financial Times European economics commentator Martin Sandbu says that the EU must not be “spooked” by the prospect of a clean energy race with the US. He says: “Europeans are at loggerheads. French and German ministers want a new green industrial policy and European Commission president Ursula von der Leyen has called for ‘our European IRA’. Frugal free-traders, such as Sweden and the Netherlands, resist further subsidies. The commission itself is divided on how interventionist to be. It has challenged the US’s most egregious protectionism and promised to loosen subsidy rules somewhat. A ‘sovereignty fund’ for EU-level subsidies is endorsed by European Council president Charles Michel but is hotly contested among member states. The disagreements all revolve around one big difference of judgement as to which of two dangers is the greatest: the competitive threat to EU industry or a subsidy race to the bottom? The problem for cogent decision-making is that both ‘dangers’ are misconceived.”

New research into the consumption of goods and services in the European Union (EU) finds that “large shares of all analysed environmental pressures and impacts are outsourced to countries and regions outside the EU”. The authors investigate the global distribution of 10 selected environmental pressures and impacts induced by consumption in the EU over 1995-2019. They find that, over this period, “pressures and impacts induced by EU consumption largely decreased within the EU but increased outside its borders”. Meanwhile, more than 85% of the economic benefits stay within the member countries, the paper finds. It adds that “eastern European neighbours of the EU experienced the highest environmental pressures and impacts per unit of GDP associated with EU consumption”.

Limiting global warming to 1.5C would result in $120-150bn of stranded assets in operating coal mines, with an additional $100bn if currently proposed new coal mines are realised, according to new research. The authors use open coal mine data and the open coal sector model COALMOD-World to assess the implications of 1.5C mitigation pathways on the coal mining industry. They find that “early closure of operating coal mines would affect all of the world’s major thermal coal producing regions, with most regions seeing more than three-fourths of their mine capacity closing early by 2030”. They add that Russia and the US would be hit particularly hard, seeing around 80% of their operating capacities stranded.

The implementation of carbon dioxide removal (CDR) would need to grow “exponentially” to keep the world aligned with most “well-below 2C” scenarios, new research finds. The authors use national greenhouse gas inventory data, CDR registries and commercial databases to assess current CDR activity. They estimate that current CDR activity removes 1,985m tonnes of CO2 (MtCO2) per year – almost entirely from land-use, land-use change and forestry. To keep warming well below 2C, CDR deployment would need to grow by 75-100% per year over 2020-30, adding an additional 300-2,500MtCO2 in total CDR capacity. (See the recent guest post for Carbon Brief written by the authors: “The state of ‘carbon dioxide removal’ in seven charts.”)