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Briefing date 03.03.2023
Heat pumps and EV batteries could save grid £4.7bn, says Ofgem

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Every weekday morning, in time for your morning coffee, Carbon Brief sends out a free email known as the “Daily Briefing” to thousands of subscribers around the world. The email is a digest of the past 24 hours of media coverage related to climate change and energy, as well as our pick of the key studies published in peer-reviewed journals.

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UK: Heat pumps and EV batteries could save grid £4.7bn, says Ofgem
The Daily Telegraph Read Article

The UK’s energy regulator has estimated that hooking up millions of electric vehicles, heat pumps and other devices to the UK’s electricity grid could save up to £4.7bn a year by the end of this decade, reports the Daily Telegraph. Ofgem yesterday set out proposals for how the electricity grid of the future could work, using technology to ensure infrastructure is used as efficiently as possible, the paper says: “The regulator estimates it could save households between £3.2bn and £4.7bn a year compared to the alternative, which is keeping gas power plants running. Instead, its prefAdd Brieferred proposals will give households a bigger role in fine tuning supply and demand for electricity, by consuming or generating power through smart devices such as batteries, electric cars and heat pumps when required.” The biggest of these will be electric cars, reports the Press Association, with the potential for “around 27.6m electric vehicles on Britain’s roads by 2035”. Ofgem suggests that if “these were able to send back electricity into the grid when supplies are tight – so-called demand flexibility – it could provide a major boost and avoid the need to build a lot of extra nuclear or renewable generation”, the newswire says. It quotes Laura Sandys, chairwoman of the government’s Energy Digitalisation Taskforce, who says: “Just consider the prize – by 2035 the number of EVs (electric vehicles) will be equivalent to three nuclear power stations. Their inherent flexibility can support our transition to net-zero, but only if we have the right tools in place.” BusinessGreen has additional coverage, while the Daily Telegraph also has a comment piece by financial columnist Matthew Lynn, who says that “heat pumps have triggered a revolt against net-zero”.

Also on EVs, the Financial Times reports that the UK’s car industry is “struggling to ensure a successful transition from making petrol and diesel cars to manufacturing electric vehicles for the mass market”. The “core concern” of car manufacturers overseas is that “Britain’s reputation as a stable and pragmatic place in which to manufacture vehicles has been shattered, initially by the 2016 Brexit vote, and more recently by last year’s political turmoil at Westminster”, the paper says. One person “close to” Japanese companies tells the paper that “they are asking whether the UK is a stable partner”. This comes as “other European countries have been racing to secure investments in electric vehicles, while the UK falls behind”, the paper says.

US: Biden admin offers $1.2bn for distressed, shut nuclear plants
Reuters Read Article

The Biden administration announced yesterday that it is offering $1.2bn in aid to extend the life of nuclear power reactors that are at risk of retiring soon or – for the first time – that have recently closed, Reuters reports. The funding comes from the $6bn Civil Nuclear Credit programme, created by the 2021 infrastructure law, and will be distributed by the Department of Energy (DOE), the newswire explains. It quotes energy secretary Jennifer Granholm, who says: “Expanding the scope of this… funding will allow even more nuclear facilities the opportunity to continue operating as economic drivers in local communities that benefit from cheap, clean, and reliable power.” The newswire notes that “President Joe Biden’s climate team believes nuclear power is a crucial source of virtually carbon-free electricity needed to be maintained and expanded to reach his pledge of what it calls 100% clean electricity by 2035”. 

Meanwhile, Politico reports that Biden yesterday signed a new strategy to counter weapons of mass destruction, which includes the “emerging concerns” around “small modular reactors that produce clean energy, but which account for a new proliferation risk”. A senior administration official told the outlet before the signing that the reactors could produce “usable material” for terrorist groups, adding: “We have to anticipate that and prepare and prevent that becoming a risk. That’s been a focal point of this work since the very beginning.”

In other US news, Politico reports that European Commission president Ursula von der Leyen will travel to Washington on Friday next week to meet the US president “for talks on the Inflation Reduction Act and broader security issues”. It notes that “Europe and the US have been at odds for months over Washington’s landmark green subsidies plan, which Brussels fears will drain the continent of investment and green technology”. Reuters quotes a White House statement, which says the pair would “ discuss US-EU coordination to combat the climate crisis through investing in clean technology based on secure supply chains”. For more on the ructions caused by the Inflation Reduction Act, see Carbon Brief’s recent media reaction article.

Wildfires in boreal forests release record levels of carbon, satellite study shows
Financial Times Read Article

New research warns that wildfires in the boreal forests that ring the globe’s far northern latitudes are emitting rapidly increasing amounts of carbon dioxide, the Financial Times reports. The study, which uses “new satellite technology”, estimates that burning boreal forests across Eurasia and North America in 2021 released a record 1.76bn tonnes of CO2 — representing 23% of the world’s entire CO2 emissions from fire, the paper explains, adding: “Over the past 10 years, wildfires in the boreal regions have increased faster than in tropical forests, partly reflecting the fact that average temperatures are rising more quickly in the north of the planet than close to the equator, as the reflective layer of snow and ice melts through global warming.” Study co-author Steven Davis tells the outlet that “boreal forests could be a time bomb of carbon and the recent increases in wildfire emissions make me worry that the clock is ticking”. Davis tells the Independent: “These fires are two decades of rapid warming and extreme drought in northern Canada and Siberia coming to roost, and unfortunately even this new record may not stand for long…If this scale of emissions from unmanaged lands becomes a new normal, stabilising Earth’s climate will be even more challenging than we thought.” New Scientist also covers the study, which is included in the “new climate research” section of this newsletter (see below).

In other forest news, French president Emmanuel Macron yesterday committed 50m euros to a new global scheme to reward countries for protecting their forests and biodiversity, reports Reuters, as he “called for more concrete action on global climate commitments”. The pledge was announced at the end of the two-day One Forest Summit in Gabon that aimed to assess progress made since last year’s COP27 climate conference and renew targets for the preservation and sustainable management of the world’s forests, the newswire explains. In a speech on the first full day of a four-nation Africa tour, Macron said: “We understood the need to have cash on the table and concrete actions.”

An editorial in the Economist mentions the summit, but notes that “more effort is urgently required”. Citing the examples of Brazil, Indonesia and the Democratic Republic of the Congo, the outlet says that “such places will struggle to enforce their own laws unless the people who live in the forests see benefits in conserving them. That will require a big, reliable flow of cash to make rainforests more valuable intact than flattened. This should come from rich-country governments and from private firms buying carbon credits to offset their own emissions”. The editorial concludes: “In the past such flows have been too small and ill-designed. Rather than financing lots of small projects, which are hard to monitor, more money should go to political entities large enough to make a difference, such as state or provincial governments. Such ‘jurisdictional’ carbon credits could be used to accelerate the transition to a greener local economy, to clean up local land registries and to police infractions. If there is enough cash, conditionally disbursed, locals will have more incentive to protect trees and less inclination to elect environmental renegades. By one estimate, $20bn a year would slow deforestation significantly. To preserve such a huge carbon sink – never mind the biodiversity it contains – this would be a bargain.” An accompanying feature in the Economist says “the biggest obstacle to saving rainforests is lawlessness”. Finally, a Reuters comment piece asks whether the private sector will answer the call of US president Biden and Brazilian president  Luiz Inacio Lula da Silva to help save the Amazon.

China's new energy storage tech drives high-quality development

“Developing new energy storage technology is one of the measures China has taken to empower its green transition and high-quality development”, as the country is “striving for peak carbon emissions in 2030 and carbon neutrality in 2060”, says state-run broadcaster CGTN. China’s 14th five-year-plan (which covers the 2021-25 period) on renewable energy development targets a “50% increase in renewable energy generation and a 30% decrease in the per unit cost of energy storage by 2025”, it adds.

Meanwhile, there is continuing coverage of the report recently released by Global Energy Monitor and the Centre for Research on Energy and Clean Air which highlights the rise in proposed new coal plants given permits in China last year. NPR quotes Ryna Cui, the assistant research director at the Center for Global Sustainability at the University of Maryland School of Public Policy, who says that “there are government and industry arguments that the coal plants will be used as backup support for renewables and during periods of intense electricity demand, like heatwaves…that’s being used as an excuse for new projects”. Yu adds that last year’s boom in new coal permits “didn’t come out of nowhere…the domestic coal industry has long pushed the message that coal is a reliable form of energy security”. The article also quotes Flora Champenois, coal research analyst at Global Energy Monitor and one of the co-authors of the report, who says that “the surge in permits last year could be China’s coal industry seizing upon a last chance to get financing for new coal plants, which are increasingly uneconomical compared to renewables”. China Dialogue carries an article, which cites recent analysis by Lauri Myllyvirta for Carbon Brief, which says that the “true year-on-year rise” of China’s coal use may be “closer to zero”.

Separately, CNN reports that “in the second high-level ministerial meeting under India’s G20 presidency this year, foreign minister Subrahmanyam Jaishankar, met his American, Chinese and Russian counterparts, hoping to find enough common ground to deliver a joint statement at the end of the summit”. India’s prime minister Narendra Modi said that “the experience of the last few years, the financial crisis, climate change, the pandemic, terrorism and wars clearly shows that global governance has failed”. Finally, the state-run newspaper China Daily writes that to achieve the goals of carbon peaking and carbon neutrality, Chinese government departments and authorities “at all levels” have in “recent years made efforts to formulate guidelines for green finance, low-carbon transportation and construction of the carbon market”. It highlights that the “most important” is the “ongoing development of education and professional qualifications for people working toward the reduction of carbon emissions and carbon neutrality”.

UK: Rising costs ‘could block’ Hornsea Three
The Times Read Article

The developer of the £8bn Hornsea Three project to build the world’s biggest offshore wind farm in UK waters “will be shelved within months unless the government offers tax breaks to offset soaring costs”, says the Times. The paper continues: “Orsted, the Danish renewable energy company, said that sharp rises in construction and financing costs meant it was no longer viable to build Hornsea Three on the terms agreed with the government last summer.

The wind farm, about 75 miles off the coast of Norfolk, would be the biggest in the world. Its capacity of 2.9 gigawatts would generate enough electricity to supply more than 2m homes. It is due to begin production in 2026 and is critical to the government’s goal of generating 50GW of offshore wind by 2030 to boost energy security and cut emissions.” Orsted is calling on the government to introduce generous tax breaks in this month’s budget to make the project viable and “to ensure the UK remains an attractive destination for investors”, the paper reports. Duncan Clark, head of Orsted UK, said that if the government did not intervene by the end of April, “the project would have to go on hold” and Orsted would cancel reservations with companies in its supply chain. Clark warned that it would be difficult to “suddenly turn that supply chain back on” and was likely to result in Orsted handing back Hornsea Three’s government contract, which will lapse early next year if the project does not proceed, the paper adds.

At the same time, the Times also reports that the renewable energy industry has warned the government it has done “almost nothing” and has “no ambition” to lift a de facto ban on onshore wind farms in England, despite prime minister Rishi Sunak’s promise to ease planning rules. The paper says: “Just two turbines were installed in England last year because of the effective ban, announced by former Tory leader David Cameron in 2015. Not one onshore turbine has been installed this year so far. None are under construction, none have received planning consent and none have been submitted into the planning system. Before the ban, hundreds of turbines were installed each year.” When Sunak came to power, he pledged a relaxation of planning rules for onshore wind, but “the technical consultation resulting from that pledge, which ends on Thursday evening, has massively frustrated wind energy companies and green groups by leaving barriers in place”, the paper says. It quotes James Robottom, head of onshore wind at industry body RenewableUK, who said: “As they stand, the proposed changes do not give the industry, communities or businesses the confidence to start investing in onshore wind in England again from a completely standing start. The fact is that there is no ambition for onshore wind in these proposals.” CityAM and BusinessGreen also have the story, while CityAM also reports that “the UK’s North Sea industry body has urged the chancellor Jeremy Hunt to create an attractive investment climate to compete with rival energy markets such as US, China and EU ahead of the spring budget this month”.

In related comment, Times columnist and Sky News economics editor Ed Conway writes on the “British Industry Supercharger” – an “obscure scheme, unveiled by the government last week and ignored by just about everyone [that] might represent one of the biggest shifts in economic policy in a long time”. He says that, for the UK to “thrive in the coming decades we will need more – much more – energy”. He says: “Clean energy from renewables, from nuclear, from hydrogen and possibly other sources too. The aim should not be energy efficiency but energy abundance. It is hard to think of any other goal that could boost economic growth so dramatically.”

UK: Sizewell C nuclear plant funding drive likely to take until end of 2024
Financial Times Read Article

The UK government’s drive to raise private finance for the new Sizewell C nuclear plant so construction can start may not conclude until the end of next year, more than a decade after the project was launched, the Financial Times reports. Ministers gave the go-ahead last year for what would be the next project in Britain’s new nuclear programme, with the government paying £697m for an initial 50% stake in the company behind Sizewell C alongside French state-backed utility EDF, the paper explains. However, “before construction can start the government needs to raise an estimated £20bn in private finance through a mix of debt and equity, with the cost clawed back through a surcharge on energy bills while it is being built”, it says. Barclays was appointed last June to run the process but will not launch a formal fundraising until later this year, with one “senior industry figure” telling the paper that “I don’t think they will reach the [final investment decision] until late next year and the election will add further to the delay as investors would need to trust [any] new government”. The paper adds: “Potential backers of Sizewell have also warned of waning investor appetite, with the environment for pension funds and other large City institutions having changed markedly over the past year.” 

In other nuclear news, the Daily Telegraph reports on new research that suggests technology that helps control nuclear fusion reactions could be redeployed to “help stabilise electricity grids in the push to net-zero”. And Energy Monitor reports that “nuclear proponents lost significant voting power when the UK left the EU, but France is cobbling together a new nuclear alliance and has racked up a number of recent successes”.

Germany: Habeck is planning a ban on oil and gas heating systems
Frankfurter Rundschau Read Article

German economy minister Robert Habeck wants to ban the installation of new oil or gas heating systems from 2024, reports the German newspaper Frankfurter Rundschau. It adds that, according to the draft law, old fossil-fuel heaters should be replaced by 2045 at the latest. Die Zeit explains that the German ruling parties agreed last year that, from 1 January 2024, every newly installed heating system should be operated with 65% renewable energy, under the Building Energy Act. Der Spiegel carries an article saying that concerns that there would not be enough heat pumps available for such a conversion “is now considered exaggerated”. The outlet notes that manufacturers are currently “massively converting” and “reorienting” themselves. Der Spiegel also says the exchange program has “a social imbalance” due to recently enforced electricity and gas price “brakes”, which have helped millions of German households with their energy costs.

Meanwhile, Handelsblatt reports that Habeck has announced that the German mandatory levy on electricity producers’ excessive profits should end in the middle of the year. “Now, at the moment, there is nothing more to be skimmed off because the markets have calmed down again,” said the Green politician at a conference in Cottbus, notes the outlet. It also adds that the “war profits” from higher electricity prices due to the war in Ukraine were supposed to be a relief for households via the electricity and gas price brakes. The outlet continues that, since December 2022, electricity producers, in particular, have had to “skim off” 90% of the income that exceeds a certain limit. The federal government had hoped for revenue of €‎30bn, notes Handelsblatt. Clean Energy Wire also has a story. 

In other Germany news, the Daily Telegraph has continuing coverage of how “Germany threatens to throw EU’s electric car dream into reverse”. It says: “Under plans going to a vote by European Union ministers on Tuesday, the bloc will effectively ban the sale of new internal combustion engine vehicles from 2035. The proposals were agreed in principle last year and are designed to cement the transition to electric cars. But with just days to go until the final decision, [German chancellor Olaf Scholz’s] coalition partners in the Free Democratic Party (FDP) are mounting a rearguard action that risks morphing into a diplomatic fiasco.”

Finally, the Financial Times reports that two big German chemical companies, Evonik and Covestro, have warned their profits will fall in 2023 as they adapt to high energy prices. According to German finance minister Christian Lindner, “Germany needs to use all energy options available to bring down high prices and protect certain sectors of the economy”, Reuters adds.


The promise and peril of Biden’s climate policy
Paul Krugman, The New York Times Read Article

Economist and New York Times columnist Paul Krugman ponders whether the US Inflation Reduction Act is “a big enough deal”. He writes: “The media often uses hyperbolic language about any programme that involves spending hundreds of billions of dollars, so Biden’s climate initiative, which the Congressional Budget Office estimates will involve roughly $400bn in climate spending, gets described as ‘massive’. But that’s spending over the course of a decade. And the budget office expects cumulative gross domestic product over the next decade to be more than $300tn. So we’re talking about spending only a bit more than one-10th of 1% of GDP. Can this possibly be enough to make a real difference in facing an existential threat?” There are “reasons to believe that Biden’s climate policy may be a much bigger deal than the numbers might suggest”, says Krugman, including that it “comes at a crucial technological juncture” and that the tax credits set out in the IRA may see a “multiplier effect” to drive additional investment. However, while the US “finally has a serious climate strategy”, says Krugman, “it depends not just on a rapid expansion of solar and wind power, but also on linking these new energy sources to the electrical grid”. And, he notes, “the US power grid doesn’t have enough capacity, and it is in general a mess”. Krugman concludes: “Here’s how I think of it: A clean-energy future suddenly looks eminently possible thanks to a technological miracle – incredible cost declines for renewable energy – and a political miracle – Democrats’ success, despite the narrowest of congressional majorities, in enacting legislation that looks even better when examined closely. But we may need a third, bureaucratic miracle to fix the electricity grid and make this whole thing work.” (For more on the contents of the IRA, see Carbon Brief’s media reaction piece after the initial announcement.)


Record-high CO2 emissions from boreal fires in 2021
Science Read Article

A new study finds that CO2 emissions from fires in the northern hemisphere’s boreal forests reached their highest-recorded levels in 2021. Using satellite data, researchers calculate wildfire emissions from the boreal forests for every year going back to 2000. They find that although these fires typically make up only 10% of annual global fire-related emissions, they were responsible for nearly one-quarter of annual global fire emissions in 2021. The authors note that both the Eurasian and North American boreal forests experienced drought in 2021 and write that the increase in fires will “challenge climate mitigation efforts”.

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