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Briefing date 26.05.2022
Windfall tax on oil and gas firms to fund energy bills handouts

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UK: Windfall tax on oil and gas firms to fund energy bills handouts
The Times Read Article

The Times splashes its frontpage on the news that UK chancellor Rishi Sunak is to announce a package of measures to ease “huge rises” in household energy bills that will be “funded in part by a windfall tax on the excess profits of oil and gas companies which is likely to come into effect in the autumn”. It says the government is “expected to compromise with a tapered approach under which companies will be taxed less if they invest more in the UK”. The paper says the chancellor will say a previously announced energy bill loan of £200 for all households would be converted to a grant and “increased to as much as £400”. It says the government has resisted calls for scrapping VAT on energy bills and increasing the “warm homes discount” for the most vulnerable homes.

The Guardian reports, on the contrary, that Sunak “is expected to announce an increase in the warm home discount scheme”. It adds: “The U-turn on the windfall tax will be seen as a win for Keir Starmer’s [opposition] Labour, which has long called for such a measure.” The Daily Telegraph also carries the story prominently on its frontpage, reporting that “[e]very household in the country will get extra money taken off their energy bills this autumn” under a package set to be unveiled today. The paper adds: “The multi-billion pound package is also expected to include new ‘targeted’ support for the poorest households, possibly through Universal Credit or extra help for pensioners.” BBC News reports that the support package for UK energy bills will be worth £10bn, of which £7bn could be raised by the windfall tax. It quotes Paul Johnson, director of the Institute for Fiscal Studies, saying a universal payment to all households would mean much of the support overall going to those that “don’t desperately need it”. The broadcaster says that plans to extend the windfall tax on oil and gas firms to electricity generators “have been shelved”. It adds that oil and gas firms “have made huge profits following Russia’s invasion of Ukraine”, pointing to Shell’s “record £7bn profit in the first three months of this year” and BP’s £5bn – before quoting the head of industry group Offshore Energies UK saying a windfall tax would “undermine investor confidence”. The Press Association also reports on the industry concerns. An Independent “exclusive” says a 63% majority of the UK public support a windfall tax – including 69% of those saying they voted for the Conservatives at the last election – citing polling commissioned by thinktank Green Alliance.

The Financial Times, in a story trailed on its frontpage, reports that the chancellor’s package of support “could be worth more than £10bn and will primarily be focused on the poorest households and pensioners”. It says a windfall tax on electricity generators “could potentially still be on the table for the autumn”, citing “North Sea oil and gas company executives”. The paper continues: “Executives at energy generators on Wednesday blamed their counterparts in the oil and gas sector of lobbying ministers to expand the windfall tax to include them. Several energy executives told the Financial Times that it was ‘only right’ that other beneficiaries of high gas and power prices were also hit.” The paper says of today’s announcement: “Sunak agreed the final package with [prime minister] Boris Johnson, who is desperate to prove the government is ready to ‘move on’ from the ‘partygate’ scandal that has dogged his premiership.” The Daily Mirror calls the announcement a “Partygate distraction”. The Evening Standard headline says: “Energy bills to be slashed as Boris Johnson looks to move on from partygate.” The Independent also has the story.

Egypt says climate finance must be top of agenda at COP27 talks
The Guardian Read Article

The COP27 climate talks due to be held in Egypt this November should be “about…moving from pledges to implementation”, the Guardian reports Egyptian minister for international cooperation Rania Al Mashat saying in an interview with the paper. It continues: “Financial assistance for developing countries must be at the top of the agenda for UN climate talks this year, the host country, Egypt, has made clear.” The paper adds: “Mohamed Maait, the Egyptian finance minister, also spoke of the need to address bigger finance issues, such as the ‘huge burden’ of mounting debt that many poor countries are facing.” Reuters carries an interview with Wael Aboulmagd, special representative to the COP27 president, described as a “senior Egyptian official”. The newswire reports: “Delivering this [pledged $100bn in climate] financing is among Egypt’s priorities for COP27. It also wants to focus on securing separate ‘loss and damage’ funds, or compensation payments to climate-vulnerable countries already suffering from climate-related weather extremes, Aboulmagd said in an interview.” The publication says that Egypt, where unauthorised public demonstrations are banned, “would also welcome protests within the rules of the 7-18 November summit in Sharm el-Sheikh, said Aboulmagd”.

A comment for the Daily Star in Bangladesh, by Saleemul Huq, director of the International Centre for Climate Change and Development, runs under the headline: “Finance for loss and damage from climate change must be ensured soon.” He notes that the “Glasgow Dialogue” on loss and damage finance, due to start at an intersessional meeting in Bonn in June, is not the first, pointing to the “Suva Expert Dialogue”, though this only considered insurance. He suggests that vulnerable countries should make their own proposal to the Glasgow process.

G7 ministers may pledge to phase out coal, decarbonise power – draft
Reuters Read Article

Climate ministers from the G7 group of major economies will “consider committing to phase out polluting coal-fuelled energy by 2030 and decarbonise their power sectors by 2035”, Reuters reports, citing a “draft meeting communique”. It says the ministers are meeting in Berlin from Wednesday to Friday this week, where they “will attempt to agree on commitments to ensure their short-term response to soaring global energy prices and fuel supply fears does not derail longer term commitments to slash greenhouse gas emissions”. It quotes the draft communique saying: “We commit to phase out domestic unabated coal power generation and non-industrial coal-powered heat generation aiming at the year 2030.” However, the newswire adds: “The draft could change before it is adopted on Friday. Sources familiar with the discussions said Japan and the US had both indicated they could not support the coal phaseout date.” It says a Japanese government official said the timeline would not be compatible with Japan’s domestic policy. Another Reuters article reports: “Ministers from the world’s wealthiest democracies will wrangle over how to keep climate change goals on track as they meet in Berlin on Thursday for talks overshadowed by spiralling energy costs and fuel supply worries sparked by the war in Ukraine.” A comment for EurActiv by the chief executive of NGO the World Resources Institute, Ani Dasgupta, is titled: “G7 leadership is critical to put the brakes on deforestation.” Dasgupta says: “The upcoming G7 Summit meeting will understandably be dominated by discussions around the conflict in Ukraine, the soaring cost of food, the Covid recovery and an ever-warming climate. These immediate challenges – which at first glance seem good reasons for delaying action on tropical deforestation – are deeply connected to the issue. That’s why the G7 is also an opportunity for the leaders of some of the world’s largest economies, which are all signatories to the Glasgow goal, to get real about what it will take to end deforestation.”

China aims to beat its own emission targets, envoy says
Caixin Read Article

Caixin reports that China aims to hit its carbon-reduction goals “ahead of schedule”, according to a speech by Chinese climate change envoy Xie Zhenhua on Tuesday at the World Economic Forum in Davos, Switzerland. Xie said that “the country is moving to beat those targets [of achieving carbon peaking by 2030 and carbon neutrality by 2060]”, the Shanghai-based outlet notes. Additionally, Bloomberg writes that Xie Zhenhua – who the outlet says is among the “handful” of Chinese officials “who were allowed to leave the country’s strict Covid lockdown” – “reaffirmed” at the World Economic Forum China’s promise to do “what’s needed to meet the goals of the Paris Agreement”, despite China “doubling down on coal to combat the energy crisis”. In an article by the New York Times, US climate envoy John Kerry is reported calling the meeting with Xie “constructive”. The newspaper writes that Kerry “acknowledged that the broader disagreements between Washington and Beijing were having an impact on climate talks”, adding his comments that “we are trying very hard to maintain capacity for serious progress because the world can’t make progress without China and the US working on this”.

Meanwhile, the state news agency Xinhua reports that premier Li Keqiang stressed – at the national television and telephone conference on stabilising the economy held by the State Council on Wednesday – that the nation should “solidly promote the stabilisation of economic policies on the ground to achieve effective results”. The Financial Times carries the story on its frontpage, reporting: “China’s premier has said the world’s second-largest economy could struggle to record positive growth in the current quarter, urging officials to help companies resume production after Covid-19 lockdowns.” Bloomberg also covers the meeting, adding that “Li indicated that China will try to reduce the impact of its strict coronavirus control policies on the economy”. Another article by the outlet says that China’s “commitment” to “Covid Zero” means it is all but certain to “miss its economic growth target by a large margin for the first time ever”. According to a separate Bloomberg article titled, “China’s economic recovery faces new hurdle in rising power costs”, Jiangsu and Zhejiang – described by the outlet as two of China’s “biggest” provinces – are “raising power rates for factories amid increased environmental scrutiny and higher fuel costs”. It says this adds to the difficulties in meeting “economic growth targets“. The outlet says the moves come after “global coal and gas prices soared following Russia’s invasion of Ukraine”. It adds that the decisions of the provinces highlight the government’s “focus on reducing emissions and shifting its economy away from the large polluting industries of the past to more efficient high-tech sectors”.

Elsewhere, China’s State Council – the country’s state administrative agency – on Wednesday issued an opinion on “revitalising stock assets to expand effective investment” that mentions “giving priority support for large clean energy bases”, China Energy News – a state-run industry newspaper – reports. (See Carbon Brief’s recent article on China’s planned clean energy bases.)

ExxonMobil investors back push for fossil fuel transition audit
Financial Times Read Article

Shareholders in ExxonMobil have “backed a measure calling on the oil company to lay out how a rapid global shift away from fossil fuels would affect its finances”, the Financial Times reports. The vote, opposed by the company’s management, was backed by 52% of shareholders, the paper says, making “another victory for climate campaigners against America’s most valuable oil company”. Reuters reports that shareholders nevertheless voted with the board and “against most proposals to accelerate cuts of carbon emission”. The newswire says: “Shareholders voted down a resolution from Dutch activist group Follow This that sought to set targets for reducing its customers’ emissions from burning its fuels, called scope 3.”

Meanwhile, another Reuters article reports that shareholders in TotalEnergies yesterday voted in favour of the French oil and gas firm’s climate strategy. It says: “The company last month blocked another proposed resolution that it bring its emissions targets in line with the Paris climate deal, citing legal reasons.” The newswire adds: “Investors in rivals BP and Shell also backed their respective climate plans, while alternative climate resolutions put forward by investors failed to garner enough support.” Reuters and Associated Press report on protests outside the firm’s annual general meeting on Wednesday. A comment in the Financial Times Lex column argues that news – reported by the paper yesterday – of TotalEnergies buying half of US renewable energy developer Clearway Energy Group “should reassure climate-focused shareholders and lobbyists that the company is on the right track”.

Finally, Reuters reports that sharedholders at Chevron’s annual general meeting: “voted against a proposal to adopt greenhouse gas emissions reductions targets, indicating support for the steps the company has already taken to address the issue”. In a wrap article it says shareholder approval of the “energy transition strategies” of US oil majors Chevron and ExxonMobil follows “similar support of European oil firms’ climate plans”.

Corporations pledge to 'buy green' at Davos gathering
The New York Times Read Article

More than 50 additional companies have used the World Economic Forum in Davos, Switzerland, to join a “buyers’ club” promising to buy low-carbon commodities – including aluminium and steel – the New York Times reports. Under the banner of the “First Movers Coalition”, it says car giants Ford and Volvo pledged to buy 10% of their aluminium by 2030 from low- or zero-carbon sources, while Alphabet, Microsoft and Salesforce have jointly pledged $500m towards carbon capture and storage. Another three companies each pledged under the coalition to “removing 50,000 tonnes of carbon from the atmosphere by 2030”, the paper adds. Bloomberg also has coverage of the pledge to invest in carbon removal. (BusinessGreen reports on the launch of the “DAC Coalition”, which it says aims to “connect and mobilise companies engaged in the nascent direct air capture (DAC) sector and build public support”.)

Elsewhere, the Financial Times “Moral Money” newsletter says that the “First Mover Coalition” was first launched last year “to help build markets for clean technologies”. It adds that yesterday’s announcements in Davos amounted to a “significant expansion”, with seven countries including India and Japan joining and with the number of companies in emissions-intensive industries making commitments “almost doubl[ing]”. Associated Press says the UK, Denmark and Sweden also joined the coalition, first launched by the US. Finally, Bloomberg notes that “as many as a third of the panel discussions on the main stage [at Davos] are related to global warming”.

Pakistan's mango production to fall by 50% due to heatwave, water shortage
Reuters Read Article

Mango production in Pakistan is expected to fall by 50% this year due to a heatwave and water shortages, Reuters reports, citing the chief of a growers’ and exporters’ association. The newswire notes that the country “witnessed an extreme heatwave this month, with temperatures in the south crossing 50C”. It adds: “More than a billion people are at risk from the effects of heat in the region, scientists have warned, linking the early onset of an intense summer to climate change.” A feature for the Guardian reports from Jacobabad under the headline: “‘It seems this heat will take our lives’: Pakistan city fearful after hitting 51C.”

Separately, the New York Times says “blistering spring temperatures have devastated crops” of mango in India. A comment for Bloomberg says the heatwave “has stunted grain formation” in India and adds: “India’s [wheat] crop will be lucky to exceed 100m tonnes this year, a steep decline from the initial government estimate of a record 111m-tonne harvest.” A Bloomberg headline says of the recent heatwave in India that it is a “warning of global catastrophes to come”.

Germany unconvinced by Russian ‘wheat for sanctions’ relief offer
EurActiv Read Article

EurActiv reports that Germany, according to a government official, “will not rely on Russia to keep any of the promises it makes, after Moscow offered to allow wheat exports from Ukrainian ports in return for an easing of sanctions”. Meanwhile, Die Zeit reports that the German federal minister of agriculture Cem Özdemir “expects further price increases and delivery bottlenecks for individual foods in Germany if the supply of Russian gas is stopped”. It quotes the minister saying: “Many companies in the agricultural and food industry (such as dairies, slaughterhouses, mills and bakeries) are absolutely dependent on the supply of gas in order to be able to produce food or animal feed…Overall, however, the food supply in Germany is still secured.”

Elsewhere, Reuters reports that “recent payments for Russian gas made in euros or dollars have worked”, German government sources said on Wednesday, adding that the payments were in line with EU rules. The media outlet explains that “the [European] Commission advised companies against opening a bank account in roubles at Gazprombank to do this, as requested by the Kremlin, but has not explicitly said doing so would breach sanctions in formal written guidance to governments”.

In more German news, Die Welt reports that landlords are to become partly responsible for CO2 costs in buildings, alongside tenants. It adds “a new draft law is intended to promote emission reduction and at the same time improve the energy balance of buildings”. The news refers to economy minister Robert Habeck who spoke of a “fair” approach that also creates a “real incentive” to renovate apartments.

Finally, Reuters reports a deal for US firm Sempra Energy to sell about 2.25m tonnes of liquefied natural gas per year to Germany’s largest power producer, RWE, “which is trying to wean itself off Russian gas”.


Australia’s election sets a heartening precedent on climate change
Editorial, The Economist Read Article

An editorial in the Economist reflects on the success of the “teal” independents in Australia’s recent election, who were “several shades greener” than the Liberal Party and “help[ed] to usher it out of power…dramatically expanding the boundaries of what is politically possible overnight”. The piece continues: “For Americans who long for their politicians to do more about climate change, in particular, it is an encouraging example.” According to the editorial, the “watershed” election “marks the first time that an Australian prime minister has come unstuck for doing too little, rather than too much, to curb climate change”. It adds that whereas the Liberals and now-governing Labor both “tried to talk as little as possible about how they might bring [their pledges for net-zero by 2050] about…this circumspection won them both fewer first-choice votes than at the previous election, while the teals and the Greens saw their share of the vote jump”. The piece concludes that Australia is now likely to set a more stringent 2030 climate goal but also “policies to give the new target teeth”, meaning “the role of chief climate laggard among big, wealthy economies is likely to revert to America”. Politico reports: “Australia’s Liberals are the latest major party to pay the price for slow climate action.”

Separately, the Guardian reports comments from new Australian foreign affairs minister Penny Wong saying the Labor government planned to submit its promised target of cutting emissions to 43% below 2005 levels by 2030 and net-zero by 2050 to the UN “very soon”. ABC News says climate change was “the defining issue of this election” and asks what more ambitious action would look like. It notes that more people listed climate change in its “vote compass” as their most important election issue than any other topic, adding that this was the case in all except two constituencies. The Australian broadcaster points to several “key elements” in Labor’s climate platform, including a A$20bn investment in electricity networks, a stronger cap on emissions from the country’s largest emitters and government support for electric vehicle infrastructure, as well as tax breaks for buying them. A feature for CNN says Australians voted for stronger climate action and asks “will they get it?”, quoting new prime minister Anthony Albanese saying it is among his priorities. It adds: “But experts say it won’t be easy to turn around a coal-powered ship that has for years been chugging in the wrong direction, partly fuelled by a government earning billions of dollars in export revenue.”

In other news from Australia, the Guardian reports that power prices are increasing following rising coal and gas prices internationally, combined with repairs and outages at many of the country’s coal-fired power stations. Another Guardian article reports that Liberal National Party MP Colin Boyce “was a founding member of a club formed to promote climate science denial”.

Why burning more money on coal is not the answer to India’s current or future power crises
Sunil Dahiya and Karthikeyan Hemalatha, Read Article

A comment for Indian publication says the country should “move forward from polluting fuel and instead invest in renewable and green energy for a just and viable future”. It argues against recent calls from ministers to increase the supply of coal, saying that the recent power crisis “has occurred despite the availability of coal”. The piece continues: “Coal’s reliability to power the country has come under increasing scrutiny with several plants being shut down in the recent past for a variety of reasons: water shortages, causing severe air pollution to the lack of coal.” It concludes: “The current coal crisis-induced power cuts cannot be a means to justify further investments in mining and thermal power plants. Having powered the country for more than a century, it is time for coal to be slowly retired…The current coal crisis-induced power cuts cannot be a means to justify further investments in mining and thermal power plants. Having powered the country for more than a century, it is time for coal to be slowly retired.”

Elsewhere, the Economic Times reports that India’s minister of power and new and renewable energy R K Singh “has asked states and union territories to set up state-level steering committees for energy transition”. It says Singh used a statement to add that “energy transition is the only means of reducing carbon emissions and fulfilling our commitments made at international forums”. Separately, Reuters reports that India’s power ministry is seeking a two-year extension to the deadline for energy firms to install pollution control equipment at their coal-fired power stations, noting that the move, if approved by the environment ministry “would mark the third pushback on a commitment to clean up dirty air”.

No one is ready for the rising tide of climate litigation
Helen Thomas, Financial Times Read Article

In a comment for the Financial Times, business columnist Helen Thomas argues that the risk of climate litigation “is a reality for companies, whether they realise it or not”. Thomas gives examples including the ruling against Shell last year and says of the recent Bank of England “climate stress test” that it “highlight[ed] one black spot: the potential exposure of the insurance sector”. Thomas concludes: “Of course, and ‘avalanche’ of cases was expected after Shell; many won’t succeed. But the gaps flagged by the Bank of England – including the suggestion that a publicly-backed reinsurance pool might be needed were successful cases to increase suddenly – reinforces the impression of a very fast-moving area, where companies and their insurers are struggling to keep up.”

Asia-Pacific Climate Leaders 2022: interactive listing
Neville Hawcock, Financial Times Read Article

A “special report” in the Financial Times looks at the companies in the Asia-Pacific region that have achieved the “greatest reduction in the Scope 1 and 2 greenhouse gas emissions intensity between 2015 and 2020”. These “core emissions”, it explains, come from the firms’ operations and from generating the energy they use. It notes that the region includes the world’s largest and most populous continent, and that it has “already been feeling the effects of global warming, from 2019-20’s bushfires to flash floods in central China”. The paper notes that some countries, including China, are excluded from the list due to “concerns over data accessibility and reliability”.


Rural land abandonment is too ephemeral to provide major benefits for biodiversity and climate
Science Advances Read Article

While “hundreds of millions of hectares of cropland have been abandoned globally since 1950”, this is usually only “fleeting”, a new study says, limiting the climate and biodiversity benefits of the land returning to nature. Assessing 11 sites across four continents using annual land-cover maps for 1987–2017, the researchers find that abandonment lasts an average of only 14 years. At most sites, they project that >50% of abandoned croplands will be recultivated within 30 years, “precluding the accumulation of substantial amounts of carbon and biodiversity”. Recultivation resulted in 31% less abandonment and 35% less carbon accumulated by 2017 than expected without recultivation, the study notes.

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