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Daily Briefing |

TODAY'S CLIMATE AND ENERGY HEADLINES

Briefing date 20.05.2022
UK: Hinkley Point C costs set to soar by another £3bn, warns EDF

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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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News.

UK: Hinkley Point C costs set to soar by another £3bn, warns EDF
Financial Times Read Article

France’s state-controlled energy group EDF has warned that the costs of the Hinkley Point C nuclear power plant under construction in south-west England could rise by an additional £3bn and be delayed by a further year, reports the Financial Times. In a statement released yesterday, EDF estimated that the 3.2 gigawatt plant in Somerset could cost a total of £25bn-£26bn compared with an estimate of £18bn when it received the go-ahead in 2016, the paper explains. It is now anticipated that the first of the two next-generation European Pressurised Reactors (EPR) being installed at Hinkley Point C will start generating electricity in June 2027 – a year later than previously scheduled. But EDF added that the “risk of further delay of the two units is assessed at 15 months” because of ongoing supply-chain problems arising from Covid-19, the paper reports, adding that Hinkley was originally planned to start operating in 2017. EDF said in its statement that there would be no additional cost to UK consumers, reports Agence France-Presse. The GuardianPress Association and Evening Standard also have the story.

Meanwhile, the Guardian covers a report by the House of Commons public accounts committee that warns the cost of decommissioning the UK’s seven ageing nuclear power stations has nearly doubled to £23.5bn and is likely to rise further. The paper says: “The soaring costs of safely decommissioning the advanced gas-cooled reactors (AGRs), including Dungeness B, Hunstanton B and Hinkley B, are being loaded on to the taxpayer, their report said. Failures in the government’s investment strategy for the fund, which was set up to pay for the decommissioning, have led to the taxpayer topping it up by an additional £10.7bn in just two years.” The Press Association reports that the RSPB – UK’s largest nature conservation charity – has staged a “once in a generation” protest against plans for a nuclear power plant to be built on a nature reserve in Suffolk, which they claim will endanger more than 6,000 species.

In other nuclear news, the Financial Times reports that the European Commission says it will help EU countries end their dependency on Russian nuclear fuel as it seeks to cut the bloc’s ties to Russian energy by 2027. The paper explains: “The European Commission said it would assist the five EU states that use Russian-designed reactors to speed up the process of licensing alternative fuel. The Czech Republic, Hungary, Slovakia, Bulgaria and Finland need Russian atomic fuel for reactors built to Russian design and in some cases the Russian company Rosatom is the only licensed provider. Russian aircraft supplying the fuel are currently exempt from EU sanctions against Moscow.”

G7 to meet climate finance support goal next year – draft
Reuters Read Article

In a draft communique from a meeting in Germany, finance chiefs from the Group of Seven (G7) economic powers say they expect to meet a climate change financing goal for developing countries, which was originally set for 2020, by next year, reports Reuters. The draft – which is still to be finalised before the meeting ends today – says: “We are strongly committed to achieving the collective climate finance mobilisation goal of $100bn per year from a wide variety of sources through to 2025 to address the needs of developing countries…We expect this goal will be met in 2023.”

UK: Windfall tax would hit renewables investment, National Grid boss says
The Guardian Read Article

National Grid chief executive John Pettigrew has “weighed into the row over whether to introduce a windfall tax on North Sea oil and gas producers” by warning that it would hit investment in renewables and harm customers, reports the Guardian. Speaking to the paper yesterday, Pettigrew said that “a windfall tax is something that I see as a deterrent for investment when we think about the context of the energy transition that we have going on and the level of investment needed to support the climate change targets…and the increasing desire for energy independence”. Despite BP’s admission earlier this month that a levy would not stop it from making any of its planned UK investments, Pettigrew said: “I can tell you that for someone who’s investing in assets that are going to be in the ground for 40, 50, 60 years, having a stable regulatory and policy environment is massively important…The benefits of that stable environment is you are able to raise capital privately, and therefore not put pressure on the public purse at the lowest cost possible, which flows through to customers.”

The Evening Standard also reports on Pettigrew’s comments, while the Times reports that the operating profits of National Grid – which manages energy networks in the UK and US – jumped to £4bn last year, “boosted by high demand for its subsea power cables linking Britain and Europe amid the energy crisis”. In a separate article, the Times reports that Pettigrew says he is “not losing sleep” over the UK keeping the lights on and gas flowing this winter, but suggested that other European nations could face rolling blackouts if Russia cuts off the gas. And the Financial Times reports that Pettigrew has defended National Grid’s decision to limit imports of liquefied natural gas (LNG) arriving on the UK’s west coast over fears the UK’s national gas network could become overwhelmed. “You can only inject so much” gas into the UK system, he said, “if you are not using it in the UK otherwise pressures rise and you have a safety issue…That is just the reality of the physics of the network”.

Also on the topic of a windfall tax, the Sun reports that the prime minister Boris Johnson and the chancellor Rishi Sunak “will decide in days whether or not to whack a windfall tax on energy giants”, adding that the two are said to be “aligned” on the issue and that using a levy on firms’ better than expected profits “is still on the agenda”. The Press Association says that “wrangling has continued within the cabinet over the idea of using a windfall tax”. And the Guardian has an analysis piece looking at three ways UK chancellor Rishi Sunak “could raise £10bn to help Britons struggling with energy bills”.

Europe will need Nord Stream 2 gas pipeline one day, Kremlin says
Reuters Read Article

The Kremlin says that Russia has “no hope” of starting up its undersea gas pipeline Nord Stream 2 anytime soon, but is confident that Europe will need the pipeline some day regardless of what it says now, Reuters reports. While the infrastructure for the pipeline – which is designed to double the flow of Russian gas direct to Germany – is “ready”, a spokesperson said, “for some time it will lie in working condition at the bottom of the sea”. However, “this will be the very project that Europe will need, no matter what it says”, they added.

Meanwhile, Reuters also reports that the European Commission told member states this week they can keep buying Russian gas without breaching sanctions imposed on Russia following its invasion of Ukraine, but advised against opening rouble bank accounts to pay for it. According to “officials with knowledge of the matter”, the Commission gave the advice at a closed-door meeting on Wednesday, the newswire says: “At the meeting of EU envoys, the Commission repeated its stance that companies can keep buying Russian gas without breaching sanctions, if they pay in the currency of their existing contracts and declare that doing this fulfils their contract obligations, the EU officials said…The Commission said it did not have a more conclusive position on whether companies can open rouble accounts at Gazprombank to do this, but advised companies against it, the officials said.” Bloomberg reports that comments of Russia’s deputy prime minister Alexander Novak, who said that around half of Gazprom’s foreign clients have complied with a request from Russia’s president to open accounts with Gazprombank. And Politico reports that Italian police raided the homes of three climate activists yesterday over accusations they damaged the offices of two gas importers with business links to Russian energy company Gazprom.

Australia’s greenhouse pollution from coal higher per person than any other developed country, data shows
The Guardian Read Article

New analysis suggests that Australia had the highest levels of greenhouse gas pollution from coal per person than any other developed country last year, reports the Guardian. The data, produced by UK-based thinktank Ember, also shows that Australia is the second most coal-dependant country for power generation in the OECD, behind Poland, the paper explains. In 2021, Australian emissions from coal amounted to 4.04 tonnes of CO2 for each person, followed by South Korea, with 3.18 tonnes a year, China (3.06), South Africa (2.68) and the US (2.23). However, per-capita emissions have fallen from an average of 5.34 tonnes a year between 2015 and 2020, the paper says, thanks to “a rise in rooftop solar and wind power”.

Meanwhile, the Guardian looks ahead to tomorrow’s election, with Australian Greens “in position to gain up to three seats in the Senate, with a potential, though unlikely, addition of another lower house seat in Brisbane”. And in a “guest essay” in the New York Times, Australian writer and activist Van Badham writes that voters could “make [the prime minister Scott Morrison] pay” for “ignoring climate concerns”. (For more on the election, see Carbon Brief‘s interactive grid that lays out the climate and energy-related manifesto pledges of the main parties.)

US will propose new offshore oil and gas plan by 30 June
Reuters Read Article

The US interior secretary Deb Haaland has said that the Biden administration will propose a new five-year plan for offshore oil and gas development by the end of June, the date when the current plan expires, reports Reuters. Haaland was speaking before the Senate energy committee to answer questions on the administration’s 2023 budget proposal, the newswire explains, but was “grilled by Republican senators and Democrat Joe Manchin about her department’s limited offering of new oil and gas leases on federal lands and waters”. Haaland responded that “we are working expeditiously to move this forward”. The newswire continues: “The interior department is required by law to produce a five-year schedule of offshore oil and gas auctions. The administration earlier this month scrapped the current plan’s last three planned sales, in Alaska and the Gulf of Mexico. The department will issue a draft proposal by 30 June, and according to its timeline, could finalise a plan by 30 November. Interior cannot hold any lease sales without a final program in place.” The Hill‘s reporting focuses on Manchin’s comments. While acknowledging that “new lease sales would not immediately increase production,” Machin claimed the administration’s focus on current production “puts America’s energy security at risk”.

Meanwhile, Reuters reports that “the US House passed a bill on Thursday that allows the US president to issue an energy emergency declaration, making it unlawful for companies to excessively increase gasoline and home fuel prices”. However, the bill must pass the Senate on its route to becoming law, which the newswire says is “unlikely”. The Hill notes that “the bill passed 217-207, with no Republicans voting for it and four Democrats voting against it”.

Finally, the Hill reports that the Biden administration announced yesterday that it was launching a programme that would put $3.5bn towards the removal of carbon from the atmosphere. The “Regional Direct Air Capture Hubs” programme is funded under the bipartisan infrastructure law and will involve the construction of four regional hubs for carbon dioxide removal, the outlet says. The Associated Press also has the story.

EU’s latest carbon tariffs will have big impact on China’s high-emission exports, experts say
Yicai Read Article

Yicai reports that the European Union (EU) has “brought forward and broadened the scope of its proposed carbon dioxide emissions tariffs on the imports of polluting goods” – a move that is “expected to significantly raise the cost of China’s exports in energy-intensive industries”, according to experts. It adds that the latest version of the Carbon Border Adjustment Mechanism – which is set to start “a year earlier” in 2025 – will have a “much greater negative impact” on goods from China, according to Zhang Jianhong from the China International Engineering Consulting Corporation. Zhang tells Yicai that, as the EU’s “biggest trading partner”, China is “likely to be the country that is most affected”. The outlet also notes that “the levies will make it difficult for China to permit manufacturers from developed countries to relocate factories to China at a low cost”.

Meanwhile, Chinese renewable power companies are “poised to benefit from the European Union’s plan to cut its reliance on Russian energy”, Bloomberg reports. The outlet says that “some of China’s, and therefore the world’s, biggest solar manufacturers” have been “forced to divert panels” away from the US amid “trade frictions”, but face “no such obstacles” in the EU. According to Morgan Stanley, the EU market – described as the “single largest market for Chinese firms” – accounts for 46% of the exports from Chinese solar manufacturers in 2021, Bloomberg says. Separately, the Global Times reports that China’s coal production has “maintained a strong momentum since the beginning of 2022”. The state-run newspaper says that China’s domestic output of raw coal has achieved “a double-digit growth for four consecutive months”, according to the country’s top energy regulator.

Elsewhere, a separate Bloomberg report says that China is “seeking to replenish its strategic crude stockpiles with cheap Russian oil”. The outlet describes this move as “a sign Beijing is strengthening its energy ties with Moscow just as Europe works toward banning imports due to the war in Ukraine”. Additionally, Reuters says that China is in “pretty good position when it comes to the global energy shakeup”. Finally, the S&P Global Commodity Insights published an article by analyst Jing Zhang titled: “For steel sector, China’s decarbonisation is a costly quest”.

Biden tells America to brace for a ‘more extreme’ hurricane season amid worrying loop current
The Independent Read Article

US president Joe Biden has warned that the country will see “another tough hurricane season” in 2022, reports the Independent. On a visit to Joint Base Andrews – where he was taken on a tour of the aircrafts that will be used to fly through and track data on the developing storms throughout the 2022 season – Biden said US citizens should “pay attention to hurricane warnings and follow the guidance of your local authorities”. His remarks “echo researchers who are forecasting an above-average season that could see at least 19 named storms with four of them amounting to Category 3 or higher hurricanes”, the Independent notes.

Comment.

The coming food catastrophe
Editorial, The Economist Read Article

The Economist’s frontpage and editorial focus on how the war in Ukraine is “battering a global food system weakened by Covid-19, climate change and an energy shock”. The idea of a cost-of-living crisis “does not begin to capture the gravity of what may lie ahead”, the outlet warns, noting: “The high cost of staple foods has already raised the number of people who cannot be sure of getting enough to eat by 440 million, to 1.6 billion. Nearly 250 million are on the brink of famine. If, as is likely, the war drags on and supplies from Russia and Ukraine are limited, hundreds of millions more people could fall into poverty. Political unrest will spread, children will be stunted and people will starve.” Even before the invasion, “the World Food Programme had warned that 2022 would be a terrible year”, the outlet says. A lack of rain “threatens to sap yields” in breadbaskets “from America’s wheat belt to the Beauce region of France”, while “the Horn of Africa is being ravaged by its worst drought in four decades”. It warns: “Welcome to the era of climate change.” Solving this myriad of problems requires states to “act together”, the editorial says, and should include “keeping markets open” and reducing the amount of grain that goes into biofuels. It adds: “Immediate relief would come from breaking the Black Sea blockade. Roughly 25m tonnes of corn and wheat, equivalent to the annual consumption of all of the world’s least developed economies, is trapped in Ukraine. Three countries must be brought onside: Russia needs to allow Ukrainian shipping; Ukraine has to de-mine the approach to Odessa; and Turkey needs to let naval escorts through the Bosporus. That will not be easy. Russia, struggling on the battlefield, is trying to strangle Ukraine’s economy. Ukraine is reluctant to clear its mines. Persuading them to relent will be a task for countries, including India and China, that have sat out the war. Convoys may require armed escorts endorsed by a broad coalition. Feeding a fragile world is everyone’s business.”

The Times view on the cost of living crisis: Tough times
Editorial, The Times Read Article

The UK government “is clearly in disarray over what to do about the cost of living crisis”, says a Times editorial: “One minute Boris Johnson is promising new measures within days, the next minute the Treasury says nothing is planned. One day a windfall tax on oil companies is under consideration, the next day we learn that the prime minister has ruled it out ‘for ideological reasons’.” However, chancellor Rishi Sunak “has few good options”, the paper says: “A windfall tax might be politically popular but will not raise enough to justify the damage it will do to Britain’s reputation as a stable place to invest. A VAT cut, even if limited to energy, would need to be substantial to have a significant impact on inflation and in any case is poorly targeted. Further increases in fuel subsidies and council tax rebates have the advantage of being one-off but don’t reach all the people who need help.” The paper argues that “the simplest and most effective way to provide targeted support is to increase universal credit”. It says: “This is something Mr Sunak appears determined to resist, having spent considerable political capital last year reversing a temporary £20 a week uplift during the pandemic. While that makes it politically difficult, it is still the right thing to do.”

Writing in the Daily Telegraph, David Frost – a member of the House of Lords and former cabinet minister in Boris Johnson’s government – argues against a windfall tax on oil and gas producers, warning: “No aspect of economic policy needs stability and predictability more than tax policy. Random changes to the tax system play havoc with everyone’s plans.” Frost writes that “windfall taxes, because they are retrospective, amount to expropriation of legitimately earned profits – which, by the way, feed back to all of us in dividends to pensions and savings plans. They are also inherently unfair because if a company makes a windfall loss in future, there will be no ‘windfall tax credit’.” He concludes: “We simply can’t afford more tax increases. Chancellor, put the official Treasury back in its box and focus on growth. Give us an emergency Budget before the summer, reverse the planned tax rises, take VAT off energy – and give consumers a break.”

Climate change inaction in congress has high costs
David Wallace-Wells, The New York Times Read Article

In his latest newsletter, New York Times opinion writer David Wallace-Wells looks at the “true cost” of the climate stalemate in the US political system. He writes: “ In the US, we have gotten used to legislative inaction, on climate as with much else. But even by those debased standards a failure to pass a major emissions-cutting bill this Congress would be, potentially, a generational setback — pushing hopes for paradigm-shifting legislation so far over the time horizon they effectively disappear.” At the moment, the “prospects for such a bill seem grim”, Wallace-Wells writes: “The key vote, Senator Joe Manchin of West Virginia, has rejected version after version of Build Back Better (BBB) and has recently begun huddling with Republicans to talk about a bipartisan energy bill — which may or may not be political theatre, and surely signals at least frustration with, and possibly disinterest in, negotiating further with other Democrats and the White House.” He sets out seven ways of look at the “really, really large” costs of not passing the BBB bill. These include the US being “5.5bn tonnes short of a net-zero pathway by 2030”, 91% of Biden’s decarbonisation pledge going “unfulfilled”, tens of thousands of American lives being “needlessly lost to air pollution”, and the idea of American leadership on climate becoming “even more of a joke” on the global stage.

Science.

Policy-enabled stabilisation of nitrous oxide emissions from livestock production in China over 1978–2017
Nature Food Read Article

Implementing technologies for managing manure could mitigate up to 21% of nitrous oxide emissions from livestock in China by 2030, according to a new study. Researchers carry out a detailed accounting of nitrous oxide emissions related to livestock production, then calculate the emissions reductions that would be achieved through widespread implementation of several manure management technologies. They find that different technologies produce the best outcomes for different types of livestock – for example, the biggest reductions from cattle are achieved by switching to a feedstock that is lower in protein content. In addition, they write, different strategies should be implemented in different regions to maximise the effectiveness of the interventions.

The heterogeneous role of energy policies in the energy transition of Asia–Pacific emerging economies
Nature Energy Read Article

A new study finds that across 42 “emerging economies”, energy policies have helped improve energy access by 3.0%, access to clean cooking fuels by 3.8% and renewable capacity by 6.9% over 2000-17. By combining data on socioeconomics, energy policies and progress towards sustainable development goals on energy access, researchers explore the effects of different energy strategies and laws in the Asia-Pacific region. They find that on aggregate, these policies have had “significant effects” on the energy transition in the region but that it also “requires increased action in national policy commitments” in order to achieve its goals.

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