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Daily Briefing

02.07.2020
Today's climate and energy headlines
DAILY BRIEFING UK should prioritise green projects to kickstart economy, says IMF
UK should prioritise green projects to kickstart economy, says IMF

News.

UK should prioritise green projects to kickstart economy, says IMF

The UK government should prioritise spending green projects as it looks to restart the economy following the coronavirus crisis, the Guardian reports, picking up on comments from the International Monetary Fund’s chief economist, speaking to MPs yesterday. The paper quotes Gita Gopinath saying the UK has an opportunity to “do public investment that also addresses the need for a greener planet, and at the same time as a jobs-rich recovery”. [The IMF co-authored a recent report calling for a green recovery with the International Energy Agency, covered by Carbon Brief.] The Guardian article also covers a new report by the Institute for Public Policy Research (IPPR), which, the paper says, shows a green recovery “could create as many as 1.6m new jobs in Britain”. BusinessGreen also picks up the IPPR report. And the Press Association reports on new polling by Savanta ComRes for the IPPR showing that “people support investing in insulating homes and other measures to tackle climate change to help recover from the coronavirus pandemic”. Meanwhile, the Financial Times reports that there are growing calls for a “green infrastructure bank” to form part of the UK’s recovery plans. The paper quotes Lord Nicholas Stern, the prominent climate economist, saying: “[The proposed bank] can have a very powerful effect, help bring down the cost of capital and allow the private sector to come in.” The FT adds: “A group of more than 100 UK mayors and local officials have also written to the government to ask for a new development bank that would fund projects that reduce emissions.” A comment for the New York Times by University College London’s Prof Mariana Mazzucato argues that governments “can benefit from thinking more like a venture capitalist around societal goals like a green transition”. She adds: “[D]uring the Obama administration, the Department of Energy made various investments in green companies, including $500m in guaranteed loans to the solar company Solyndra and $465m to Tesla. When Solyndra went bust, taxpayers bailed it out. But when Tesla grew, taxpayers were not rewarded.”

Separately, the Times reports that the government “has ruled out” a £6,000 scrappage scheme to encourage motorists to trade in older, more polluting cars. It quotes a letter from a junior transport minister, seen by the Times, as saying: “The government has no plans at this stage to introduce a scrappage scheme. Rather, the government is investing around £2.5bn, with grants available for ultra-low emission vehicles.” In a comment for Wired, the magazine’s science editor Matt Reynolds writes that Johnson’s “climate crisis plan is both bad and pointless”. He adds: “With plans for zero-carbon planes and carbon capture, the prime minister’s economic recovery is big on solutionism but offers very few real solutions to the climate crisis.”

In other UK news, another article from the Times reports that Norwegian oil giant Equinor has announced plans to build “the world’s biggest hydrogen production plant with carbon capture and storage technology near Hull” at the Saltend chemicals park. The paper says the plan would “cost about £600m and be in production by 2026 subject to government financial support”. Reuters and BusinessGreen also have the story. Writing for the Times Red Box, Conservative MP and chair of the foreign affairs select committee Tom Tugendhat refers to China’s dominance of the battery and electric vehicle markets, arguing that: “Britain should cut loose from Chinese fuel and lead a hydrogen revolution.” The Financial Times Lex opinion column argues in favour of hydrogen vehicles and says: “The sector needs carbon contracts for difference to close the gap with fossil fuels.” The Times separately reports that plans for a tidal lagoon power project in Swansea bay have “ended in ignominy after authorities said its planning permission had expired and accused the developer of starting work unlawfully”.

The Guardian Read Article
Airlines' climate obligations postponed as UN body endorses industry proposal

Airlines have “wriggled out of their climate obligations over the next few years”, Climate Home News reports, after “a handful of countries on the council of the International Civil Aviation Organization [ICAO] agreed to change the rules to reduce the sector’s carbon costs”. Countries on the 36-member ICAO council agreed to remove 2020 from the baseline above which offsets would be required under the three-year pilot phase of the “Corsia” aviation emissions scheme, Climate Home News reports, in light of the reduction in demand for flights during the coronavirus crisis. The website adds: “The move effectively postpones the date airlines have to start paying for carbon credits to offset a portion of their climate impact.” BusinessGreen also reports the news, quoting an NGO saying the decision sets a “bad precedent”. EurActiv describes the move as a “huge emissions reprieve” for the aviation industry. It adds: “Environmental groups have derided the decision for ‘making a mockery’ of climate policy.” It continues: “Environmental groups opposed to tweaking the baseline insist that using just 2019 will render the three-year-long pilot scheme useless, as emissions growth is unlikely to climb back above 2019’s levels. There will be no CO2 to offset.” See Carbon Brief’s explainer on Corsia for more background.

Climate Home News Read Article
Japan may close 100 old coal units by 2030 to hit emissions goal

Around 100 old coal units could be closed in Japan by 2030, Bloomberg reports, as part of plans to meet the country’s emissions target under the Paris Agreement. The newswire says: “The powerful Ministry of Economy, Trade and Industry [METI] will soon start expert panel discussions on details of the closure plan, according to an official with the ministry. ” It continues: “There are 140 coal-fired power units across Japan, of which 114 use supercritical or less efficient technology, according to METI. Some of the older generation in Okinawa and Hokkaido prefectures may be exempted from closures, given their roles in local power supplies, the ministry official said.” Bloomberg adds that Japan would still remain heavily reliant on coal power in 2030, even if the plan were to go ahead. Reuters also reports the news of up to 100 coal units being closed or suspended, saying: “Closures on that scale would mark a major shift in the government’s strong support for coal in the world’s third-biggest economy.” Reuters says a story about the news, in the Yomiuri daily newspaper, does not cite sources in reporting that closure of around 100 units is soon set to be announced by industry minister Hiroshi Kajiyama. According to Reuters, a METI official it contacted confirmed there are plans to phase out inefficient coal plants by 2030. However, it goes on to quote the official saying: “But we have not made any decisions to retire or suspend 100 plants.” A report from Axios points to the “young” coal fleet in China, which could “lock in carbon emissions for decades”.

Bloomberg Read Article
Bank of England to review climate impact of corporate bond-buying after Covid crisis

The Bank of England is to look at including climate change in its decision-making process for corporate bond-buying schemes, Reuters says, reporting the comments of the bank’s governor Andrew Bailey. The bank has been targeted by climate protestors over its £20bn coronavirus-related bond-buying scheme, Reuters reports, quoting a statement from Bailey saying: “When the pressure on our resources abates, we will turn to important issues such as the benchmark for our corporate bond portfolio.” The newswire continues by explaining that the emergency bond-buying scheme brought in during the current crisis has, according to Bailey, “deliberate[ly]” not included a climate test “because in such a grave emergency affecting this country we have focused on the immediate priority of supporting the jobs and livelihoods of the people of this country”. Separately, Reuters reports that the Bank of England has given banks and insurers an 18-month deadline to implement climate risk measures. Meanwhile, the i newspaper reports that “millions of Britons may be putting savings into ‘unethical’ fossil fuel pension funds which ‘put planet at risk’”. A report from Bloomberg says company chief executives have been talking about climate change less during earnings calls, as a result of the focus on the coronavirus crisis. A comment in the Financial Times looks at how “index investing can drive [a] sustainable finance transition”.

Reuters Read Article
Europe losing forest to harvesting at alarming rate, data suggests

New data suggests that Europe has lost a vastly increased area of forest to harvesting in recent years, the Guardian reports. It continues: “Many of the EU’s forests – which account for about 38% of its land surface area – are managed for timber production and, thus, harvested regularly. But the loss of biomass increased by 69% in the period from 2016 to 2018, compared with the period from 2011 to 2015, according to satellite data. The area of forest harvested increased by 49% in the same comparison.“ The findings indicate that much more harvesting has occurred in a short period, even accounting for natural cycles and the impact of events such as forest fires and heavy snows, the paper adds. The study, published in the journal Nature, says that large losses are particularly occurring on the Iberian Peninsula and in the Nordic and Baltic countries. It also warns that “if such a high rate of forest harvest continues, the post-2020 EU vision of forest-based climate mitigation may be hampered, and the additional carbon losses from forests would require extra emission reductions in other sectors in order to reach climate neutrality by 2050”. An editorial in Nature says that “paradoxically, the increase in harvested forest area has been driven, in part, by demand for greener fuels, some of which are produced from wood biomass”. It adds: “That includes bioenergy, which comprises about 60% of the EU’s renewable energy. This increase in biomass products can, in turn, be traced to the EU’s bioeconomy strategy, a policy that has promoted the use of forest resources for energy, as raw materials for industries and to create jobs.”

Meanwhile, Reuters reports that “the number of fires in Brazil’s Amazon rainforest rose 20% in June to a 13-year-high for the month…as researchers worry that it could signal a repeat of last year’s surge in forest fires”. In June, Brazil’s government space research agency, INPE, detected 2,248 fires in the Amazon rainforest, up from 1,880 in June 2019, notes the Independent. In a comment piece for Climate Home News, Nicole Polsterer – sustainable consumption and production campaigner at the forest protection charity Fern – argues that “as Brazil’s second-biggest trade partner, the EU should condemn President Bolsonaro’s assault on environmental protections and indigenous rights” in the Amazon rainforest. And, finally, in an “exclusive”, the Sydney Morning Herald reports that farmers in New South Wales in Australia “are increasing the rate they clear land, taking advantage of looser native vegetation controls to more than double the pace of deforestation of the previous decade”. It adds: “The state lost 60,800 hectares – or about 200 times the size of Sydney’s CBD [Central Business District] – of woody vegetation in 2018, up from 58,000 hectares the previous year, government data shows. Of that about half was the result of agriculture, with forestry and infrastructure accounting for the remainder in both years.”

The Guardian Read Article
Energy innovation spend needs to triple by 2030 to hit climate goals

Reaching net-zero global emissions by 2050 will be “impossible” without a rapid increase in clean energy innovation spending, Bloomberg reports, picking up new International Energy Agency (IEA) findings published today. The IEA says innovation spending needs to triple this decade, Bloomberg reports. Reuters also covers the findings, reporting: “In a special report, the IEA analysed more than 400 clean energy technologies and said that although renewable technologies in use now can deliver a large amount of emissions reductions, they are not enough on their own. It found that there are currently few technologies available for reducing emissions to zero in sectors such as shipping, trucking, aviation and heavy industries.” Separately, Reuters reports that the EU is to begin auctioning 50m carbon permits from the bloc’s innovation fund, with proceeds to help pay for low-carbon technology, such as “energy storage, carbon capture and storage and innovative renewable energy generation”. According to Bloomberg, the permits could fetch €1bn to go towards innovation projects.

Bloomberg Read Article
Banks Group's Bradley West coal mine expansion plan rejected

Plans to extend an opencast coal mine in northeast England have been rejected by the local council, BBC News reports. The proposal by the Banks Group was met with “more than 6,000 letters of objection” and would have seen an additional 90,000 tonnes of coal extracted, the broadcaster adds. The plan had been recommended for approval by Durham County Council planning officers, reports the Northern Echo. It adds that councillors rejected the scheme on environmental grounds.

BBC News Read Article

Comment.

Oil majors face up to plunging asset values

Whereas oil-and-gas companies “kept faith” in their fossil fuel investments during previous energy downturns, “[t]his time might be different”, writes Anjli Raval, Financial Times senior energy correspondent, in a feature on oil majors “fac[ing] up to plunging asset values”. She continues: “As the coronavirus cash crunch focuses minds, businesses – at least in Europe – also believe the crisis will only accelerate the energy transition towards cleaner fuels.” An article for Bloomberg notes that whereas BP and Shell have recently written down the value of fossil fuel assets after publishing lower long-term price assumptions, US firms such as Exxon and Chevron do not disclose similar estimates of their own. The piece says: “America’s biggest oil companies are coming under increasing pressure from climate-conscious investors to disclose their long-term forecasts for crude prices as the Covid-19 pandemic injects fresh uncertainty into the demand outlook for fossil fuels.”

Anjli Raval, Financial Times Read Article
French elections show growing strength of Europe’s Greens

In a comment for the Financial Times, economics leader writer Martin Sandbu says that recent local election results in France show why “established parties are being forced to co-opt the environmental agenda”. He continues: “Last Sunday’s achievements in France are the latest stage of the Greens’ slow encroachment on the terrain of Europe’s centre-left. Ska Keller, leader of the Green group in the European parliament, thinks they reflect ‘a general trend towards Green success’, pointing to the Irish Greens’ entry into Ireland’s new coalition government.” Whereas Sandbu cautions against the idea that the French elections point to poor prospects for President Macron, he draws wider lessons for the rest of Europe: “Increasingly, it is Greens and not Eurosceptic populists who are benefiting from the breakdown of traditional party systems. In Germany, they regularly outpoll the Social Democrats and are a credible future coalition partner with the centre-right. Such a coalition is in government in Austria.” In addition, Sandbu notes: “The Green wave does not manifest itself in electoral success only. Much like with the anti-immigrant right previously, the influence of a party is just as often seen in how it forces established parties to adopt its programme.”

Martin Sandbu, Financial Times Read Article

Science.

Drivers of marine heatwaves in the East China Sea and the South Yellow Sea in three consecutive summers during 2016‐2018

Satellite data reveals that the East China Sea and the South Yellow Sea experienced marine heatwaves during the three summers of 2016 to 2018, a new study says, which is “unprecedented in the past four decades”. Using a numerical model of the ocean, the researchers find that the increased solar radiation, ocean current anomalies, and reduced vertical mixing were three critical factors for the warming events in the three summers. The results should help “fisheries and aquaculture industries…better manage the environmental risks under a warming climate by predictions of marine heatwaves”, the study concludes.

Journal of Geophysical Research: Oceans Read Article
Early adaptation to heat waves and future reduction of air-conditioning energy use in Paris

Adaptation options for coping with increasing heat in Paris without using air-conditioning (AC) “do not appear sufficient to totally replace AC and ensure thermal comfort, under a median climate change scenario”, a new study suggests. Using Paris as a case study, the researchers provide a first quantified analysis of the efficiency of adaptation strategies – including “large scale urban greening, building insulation policy, and generalised behavioural changes in AC use” – in reducing future potential AC need. Whilst “even ambitious strategies” will likely not be able to replace AC entirely, they can “reduce AC energy use by half during heatwaves and compensate for the heat released to the outdoor environment”.

Environmental Research Letters Read Article
The new oil? The geopolitics and international governance of hydrogen

New research considers the geopolitical drivers and consequences of hydrogen developments, which have been given “little consideration” when compared to “the technical and cost hurdles to a full-scale hydrogen economy”. The authors say: “Over time, cross-border maritime trade in hydrogen has the potential to fundamentally redraw the geography of global energy trade, create a new class of energy exporters, and reshape geopolitical relations and alliances between countries.” They add: “International governance and investments to scale up hydrogen value chains could reduce the risk of market fragmentation, carbon lock-in, and intensified geo-economic rivalry.”

Energy Research & Social Science Read Article

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