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Daily Briefing

24.12.2021
Today's climate and energy headlines
DAILY BRIEFING UK: Kwasi Kwarteng plots energy rescue package amid calls for VAT cut
UK: Kwasi Kwarteng plots energy rescue package amid calls for VAT cut

News.

UK: Kwasi Kwarteng plots energy rescue package amid calls for VAT cut
The Daily Telegraph Read Article

In a story trailed on its frontpage, the Daily Telegraph reports that UK business secretary Kwasi Kwarteng is “racing to draw up a rescue package to protect millions of households from surging energy prices as demands grow for a VAT cut to household bills”. Kwarteng is “seeking to protect consumers from a predicted jump in the energy price cap that will send annual gas and power bills up to £2,000 or more from April”, the paper explains, adding that he has “frequently ruled out direct financial support to energy companies but is understood to be considering a series of other interventions including extending fuel grants”. At the same time, “industry leaders are calling for the Government to axe the 5% VAT on household energy bills”, the paper says, with the tax “set to hand the Treasury an extra £1.4bn a year if bills rise as expected”. Adam Scorer, chief executive of the fuel poverty charity National Energy Action suggested “at the very least” that the Treasury “should use its own tax windfall created by the energy crisis to take the sting out of these catastrophic price rises for those least able to weather the gathering storm”. Emma Pinchbeck, chief executive of trade body Energy UK, said the government could shave £90 off each customer’s bill by cutting taxes or VAT and a further £190 by bringing forward proposals to remove policy costs, particularly on electricity, the i newspaper reports. She added that “there is only so much suppliers can do in the face of rising gas prices: policy and network costs, VAT and the sheer cost of buying gas make up the majority of the bill. That means there is also need for government to act on this incredibly worrying situation”.

The Times reports that chief executives of major suppliers are to hold virtual “emergency talks” with Kwarteng on Monday to discuss how to ease further increases in bills. It adds: “The energy industry is likely to ask for tax cuts and relaxation of green levies to avoid what EDF, the fifth-biggest supplier, has described as a ‘critical’ situation.” Michael Lewis, chief executive of E.On, tells the Independent that “the government will probably need to take more radical action to reassure families and businesses worried about energy bills”. He adds: “As an example, that could mean the government taking some or all of the cost rises onto its balance sheet, allowing these sudden price spikes to be paid back later and reducing the immediate burden on consumers.” The Guardian says the idea of government-administered scheme to smooth the impact of high prices “is gaining traction within the industry, including at the trade body Energy UK”. It continues: “Under plans sketched out by energy suppliers, one or more commercial lenders – such as banks – would cover the immediate cost that they are incurring to buy energy on wholesale markets at record prices, with a sum of at least £7bn required. The loans would not require a government guarantee, but officials would be responsible for ensuring repayments.”

Meanwhile, Reuters reports that Russian president Vladimir Putin said yesterday that Moscow was not to blame for Europe’s gas price crisis and instead pointed to Germany reselling Russian gas to Poland and Ukraine rather than relieving an overheated market. During his annual news conference, Putin said that Russian majority state-owned energy company Gazprom is “supplying all volumes requested under existing contracts”. Putin said the transfer of gas through the Yamal pipeline – which connects Russia, Belarus, Poland and Germany – went into “reverse from Germany to Poland” this week because “we supply gas to Germany under long-term contracts and the price is three to four, (even) six to seven times cheaper than on spot. Just reselling 1bn cubic metres (bcm) one can earn $1bn.”

Elsewhere in Europe, the Financial Times reports that “some of Europe’s biggest energy users are curbing production as they warned soaring power and gas prices could lead to higher manufacturing costs and hit competitiveness”. Reuters reports that the Belgian government agreed in principle yesterday to close its nuclear power plants by 2025, but “left open the possibility of extending the life of two reactors if it could not otherwise ensure energy supply”. Reuters also reports that a seventh Dutch energy provider has filed for bankruptcy due to surging gas prices. And the Financial Times “Energy Source” column picks out the “energy price inflation crisis” as one of “four trends that defined the 2021 energy sector”.

Biden energy loans revamp starts with $1bn for hydrogen
Bloomberg Read Article

The US Energy Department is set to back a Nebraska project to convert natural gas into hydrogen, marking the first conditional loan guarantee of its kind under President Joe Biden, reports Bloomberg. The loan of up to $1.04bn – guaranteed by the Energy Department – will fund the commercial-scale venture by Monolith Nebraska LLC to supply hydrogen to the agriculture sector, the outlet explains: “The move represents a revival of the Energy Department’s loan programs office, which aims to use more than $40bn in loan authority to accelerate the development and deployment of clean-energy technologies. The conditional loan guarantee is the first of its kind offered under the Biden administration and the first to go to a non-nuclear project since 2016.” The plant will also make carbon black, a product used in making tyres and other rubber products, notes Reuters, which adds that according to the department, “the project aims to slash carbon emissions by cutting the use of fuel oil to make those products”. The newswire also reports the comments of US energy secretary Jennifer Granholm, who said: “Advanced, clean production technology like Monolith’s are the types of impactful projects that support not just sustainability, but economic growth and clean energy jobs.” The outlet says that the loan guarantee “requires several steps before becoming final”.

Elsewhere, Reuters reports that Germany will put 900m euros ($1bn) into a funding scheme to support “green” hydrogen. It continues: “The H2Global project is designed to speed up the global market ramp-up of green hydrogen by using a ‘double auction’. Under the scheme, hydrogen or hydrogen derivatives are bought cheaply on the world market and sold to the EU’s highest bidder.” In a statement, economy and climate protection minister Robert Habeck said: “We will in future have high demand for green hydrogen and need imports as well as production in Germany…So we are starting to ramp up the international hydrogen economy and to build long-term value and supply chains through the H2Global instrument.” Renewable hydrogen can be produced through the electrolysis of water with electricity from renewable sources, the newswire notes. For more on the different types of hydrogen production, see Carbon Brief‘s explainer.

New Wales coal mine may soon be approved despite COP26 pledges
The Guardian Read Article

Plans for a new underground coal mine in Wales “could be approved imminently”, reports the Guardian, “despite pledges made at the COP26 climate conference to move away from the dirtiest fossil fuel”. The paper says the Coal Authority is expected to decide whether the conditions have been met to allow work to begin at an old deep-shaft site at Aberpergwm in south Wales. In 2016, Energybuild Ltd was given a conditional mining licence that would allow the firm to extract up to 40m tonnes of anthracite over the coming two decades, the paper explains, noting that “anthracite (sometimes referred to as ‘hard coal’) has the highest carbon content of all coal varieties, although it has relatively low levels of sulphur and produces less particulate matter than other forms of coal. It can be used for a number of industrial purposes, but is also burned as a domestic fuel”. However, “a row has emerged since COP26 between ministers at Whitehall and the devolved Welsh administration over which government office holds responsibility for reviewing and making a final decision on the impending permit”, the paper says. According to Wales’s deputy climate change minister, Lee Waters, the date of the licence “means that new devolved powers – which came into force in 2018 and have been used to block new opencast mining applications last year – do not apply to this case. Waters has written to the department for business, energy and industrial strategy, in which the Coal Authority is housed, to request the licence be cancelled”. Aberpergwm “may come to represent a serious unforeseen headache for Boris Johnson’s government”, the paper notes, “as the UK pledged to lead international coal phase-out efforts when hosting November’s UN climate summit”.

China ETS reduces carbon but needs map to cap-and-trade based system: study
South China Morning Post Read Article

The regional pilots of China’s emissions trading scheme (ETS) “were effective in reducing companies’ carbon emissions in the early trading phase, despite low carbon prices and infrequent allowance trading”, the South China Morning Post reports, citing a new paper. The newspaper says that the study assessed seven regional ETS pilots – including those in Beijing and Shanghai – and found that the regional schemes had resulted in “a 16.7% reduction in total emissions and a 9.7 per cent reduction in emissions intensity”. The research also suggested that “a cap-and-trade system would create stronger regulatory pressure than the rate-based rule currently used by China’s national ETS”, the outlet writes. Meanwhile, the cumulative trading volume and turnover of China’s ETS have reached 140m tonnes and 5.8bn yuan, respectively, according to Xinhua. The state news agency cites Liu Youbin, spokesman of the Ministry of Ecology and Environment (MEE). At a press conference on Thursday, Liu said that the first compliance period of the national ETS – which lasts from 1 January to 31 December of 2021 – was “running smoothly”, Xinhua says.

Furthermore, at the MEE press conference, Liu said that the authority had accelerated expanding coal production capacity in response to orders from the central government, according to news portal Sohu. Liu noted that, since October, coal mines with a combined annual production capacity of 127m tonnes had been approved or were in the process of being approved, the report says. In addition, the MEE has begun investigating claims that some residents in a city in eastern China had been left suffering from coldness in winter due to the local officials’ “clean heating” campaign, People’s Daily reports. The newspaper – the mouthpiece of the Communist Party in China – says the officials of Shanhaiguan had enforced a “one-size-fits-all” approach in their pursuit of “clean heating”, prohibiting some locals from burning firewood and blocking their stoves indiscriminately. Speaking of the matter, Liu urged the regional authorities to ensure that the residents would have a warm winter, People’s Daily says.

Elsewhere, Daily Mail Australia reports that “politicians and climate activists around the world have failed to focus on China in the quest to reduce global emissions”, according to Angus Taylor, Australia’s federal energy minister. The Financial Times says that “China has approved the merger of three leading rare earths companies”. The newspaper describes the move as “creating a state-owned powerhouse that will be the world’s largest producer of the strategic resource and strengthen government control over the industry”. It notes that rare earth elements are “seen as critical in the solutions to climate change among other key strategic factors”.

Finally, the South China Morning Post and the Independent report on a new study that warns global warming could result in China being hit by twice as many crop pests and diseases by the end of the century, threatening the country’s food security.

Comment.

Britain faces a national crisis because of soaring energy costs – but making gas cheaper is not the answer
Editorial, The Independent Read Article

The problems caused by soaring energy prices are “easy to see”, but the answers “rather less so”, says an Independent editorial. The online newspaper considers the options, noting that “rebuilding gas storage facilities seems one very obvious step that can be taken soon, and can only be done by the state. Equally – though this is more difficult – we must explore more efficient ways of storing renewable energy, and matching supply with demand”. The article continues: “Nuclear power, which creates different (and toxic) problems of its own, may be the only realistic way to prevent a fresh energy crisis, but it is slow to build and, in the round, expensive. Insulation and improved energy efficiency are also part of the answer, but Britain’s ageing housing stock, designed and built in an era of cheap coal, is not ideally placed for the air- or ground-pump revolution.” The “well-meaning energy price cap” is “suffering from the law of unintended consequences”, the editorial says: “The one ‘solution’ suggested by the energy industry, which consists of cuts in VAT and renewable energy levies, is the one that will merely make for worse energy crises in the future.” The “understandable focus” on household bills and business costs “must not distract the country from the even bigger climate crisis”, the article concludes: “Given the effects on the viability of life on earth, no less, energy costs at a global level have been too low for too long, with official fuel subsidies operating in many low-income countries. Making gas cheaper for all is not the answer.”

Also in the Independent, business reporter Ben Chapman writes that the surging energy prices highlight that “the government can no longer ignore calls to fix the UK’s broken energy market”. There are “structural issues to confront”, he writes: “First, the idea that deregulation and market forces are the answer to every problem has been found wanting, especially in the context of essential goods like energy and water, which are natural monopolies. Where the government did attempt to soften the impact of market forces on hard-up consumers, it did so in a clumsy way with a poorly designed energy price cap. There are growing calls for a more fundamental reassessment of how the UK energy market functions. It’s time for ministers to start listening to them.” Taking a different tone, climate-sceptic columnist Ross Clark has an opinion piece for the Daily Mail where he criticises “Britain’s creaking energy supply and the distortions created by this government’s drive to achieve net-zero carbon emissions by 2050”. His piece concludes: “Earlier this year the Prime Minister told us he wanted Britain to become the ‘Saudi Arabia of wind’. Outer Mongolia, more like. Because when the wind isn’t blowing and the sun isn’t shining, it may soon be completely dark.”

Climate change: Small army of volunteers keeping deniers off Wikipedia
Marco Silva, BBC News Read Article

Marco Silva – BBC News “climate change disinformation specialist” – has a feature on the volunteers around the world keeping climate sceptics “at bay” from Wikipedia, the online encyclopaedia. “The point of Wikipedia is that anyone with an internet connection can edit it,” notes Silva, “but that also makes it vulnerable to manipulation, and those who deny the climate crisis know it. They’ve been waging an editing war to get their views across, and subtlety is not always their forte”. Silva speaks to several volunteers, including David Tetta, who has worked for US Environmental Protection Agency for more than 30 years. Tetta is “is part of a small but dedicated group of volunteers who have made it their mission to curate and protect articles about climate change on English Wikipedia. And they’re not afraid to pick a fight”, says Silva. Tetta “started small by proposing edits and discussing them with other volunteers. But he soon found himself pouring hundreds of hours into Wikipedia editing”, says Silva. Tetta notes that “you have to read through about 100 pages of scientific information to edit a sentence”. And the reach and scale of Wikipedia – the English language version alone gets more than nine billion page views a month – “gives you a certain sense of responsibility for making sure you’re getting it right”, says Tetta.

Science.

Global maps of cropland extent and change show accelerated cropland expansion in the twenty-first century
Nature Food Read Article

A new study finds that global cropland area increased by 9% over 2003-19, while cropland area per person decreased by 10% due to population growth. The authors use satellite data to analyse the global change in cropland area over 2003-19. They find that half of the new cropland area replaced natural vegetation and tree cover – indicating “a conflict with the sustainability goal of protecting terrestrial ecosystems”. The authors add that net primary production (NPP) increased by one-quarter – mainly due to agricultural expansion in Africa and South America – while annual cropland NPP per person increased by 3.5% due to “intensified agricultural land use”.

Not all biodiversity rich spots are climate refugia
Biogeosciences Read Article

Global warming will impact “almost all” biodiverse-rich spots on land and in water across the world, a new study says. The researchers assess the spatial distribution of both historical and projected climate change in terrestrial, freshwater, and marine rich spots. The “characteristic biota” in all types of rich spots “is expected to witness similar forcing to other areas, including range shifts and elevated risk of extinction”, the study finds. Marine rich spots “seem to be particularly sensitive to global warming”, the authors note as “they have warmed more, have higher climate velocities, and are projected to experience higher future warming than non-rich-spot areas”.

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Get a Daily or Weekly round-up of all the important articles and papers selected by Carbon Brief by email. By entering your email address you agree for your data to be handled in accordance with our Privacy Policy.