Net Zero

1. Gas gets away
2. Greenwashing meat
3. Scaling African solar
4. Record emissions
5. Snapping up SAF

Shell’s messy exit from Nigeria, and Amazon’s messy EV investment.

Gas gets away

The Biden administration weakened a critical pillar of its climate agenda, saying on Thursday that it will exempt existing gas-fired power plants from new emissions regulations. The regulations, due to be finalized within the next few months, will apply only to newly-built gas plants and existing coal-fired power plants, leaving one of the country’s biggest sources of emissions untouched. Existing gas plants will be targeted sometime later in separate regulation, Environmental Protection Agency administrator Michael Regan said in a statement, pushing off one of the thorniest challenges in U.S. climate policy until after the November presidential election. President Barack Obama’s administration was also stymied on emissions from existing gas plants. Both presidents have faced intense lobbying and legal pressure from electric utilities that argue any effort to meaningfully curb these emissions will lead to drastic price spikes and grid instability. But without additional “sticks” to support the clean energy “carrots” in the Inflation Reduction Act, the U.S. is unlikely to meet its goal of producing 100% carbon-free power by 2035.

Greenwashing meat

New York’s attorney general sued the American branch of JBS, the world’s largest meatpacking company, on the grounds that it made misleading statements about its net zero strategy. The suit could turn into one of the largest greenwashing cases against a food company to date, as the industry faces increasing pressure to deal with the climate impact of cow burps and deforestation. JBS and other top livestock companies have set long-term net zero targets and expanded their efforts to market climate-friendly meat. But JBS hasn’t done enough to back those claims up, New York AG Letitia James said: “When companies falsely advertise their commitment to sustainability, they are misleading consumers and endangering our planet.”

Solving Africa’s solar finance problem

A new generation of African solar power entrepreneurs is finding ways to work around the market barriers — including high capital costs, gun-shy banks, and faltering utilities — that have prevented the sun-drenched continent from embracing its most obvious solution to energy poverty.

While solar adoption is soaring in wealthier regions, it remains startlingly low in Africa. As of 2022, only about 13 gigawatts of solar capacity had been installed across the entire continent, a tenth of U.S. capacity and nearly 10 times less than what China installed in that year alone. Of that amount, two-thirds is concentrated in just three of the richest countries: South Africa, Egypt, and Morocco. The region’s solar shortfall is a missed opportunity to solve not only its small carbon footprint, but also the fact that half the population remains without any access to electricity at all. And for those that have access, it tends to be expensive and unreliable. But as the cost of solar panels reaches record lows, companies are experimenting with new financial models that could finally turn the situation around. That includes AI-enabled fintech, development bank-assisted utility reform, and old-fashioned M&A.

For African countries, the biggest obstacle to building out the solar industry is that the financing tricks used in China, Europe, and the U.S. to clear the way for widespread solar adoption — government subsidies and utility payments to solar-equipped customers — can’t work in places where states, utilities, and households are all chronically strapped for cash. At the same time, supply chain problems and the widespread perception by financial institutions that investments in Africa are high-risk mean that the cost of solar is far higher than in other places — the same solar system costs twice as much in Ghana as in the U.S. Bringing down the cost of capital requires a stronger track record of profitable investments than what the industry has been able to show so far. That means new business models are needed to make solar affordable for a broader base of customers.

Record emissions

Metric tons of CO2 produced by the global energy system in 2023, a record high. Energy-related emissions, which account for at least three-quarters of the global carbon footprint, ticked upward in large part due to drought-related declines in hydropower production, which in turn led to a surge in the use of coal, the International Energy Agency reported. The good news is that in the wealthiest countries, emissions actually fell by the largest amount outside a recession. That’s a sign that renewables, and the switch from coal to gas, are already having an impact in the places that can afford them.

Snapping up SAF

The nascent sustainable aviation fuel industry sealed some of its biggest orders to date this week, but missed out on promised tax credit guidance from the White House. IAG, the airline group that includes British Airways, Iberia, and Aer Lingus, agreed to buy 260 million gallons of SAF from the Washington state startup Twelve, which will produce it using captured CO2 by 2025. Airlines worldwide, and especially in Europe, are scrambling to snap up any gallons of SAF they can get as emissions regulations and carbon pricing loom for the aviation industry. An Australian asset manager with stakes in a number of global airports also said this week it will invest $651 million in ramping up SAF production. In the U.S., meanwhile, prospective SAF producers were left hanging, as the Biden administration missed a deadline to clarify which types of biofuels can qualify for lucrative SAF tax credits. Depending how the rules shake out, U.S. corn farmers could be left out of the SAF boom.

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New Energy

• Offshore wind energy developers renegotiated contracts with New York, locking in prices that are nearly double what they agreed to in 2019, plus protections against future inflation.
• The House of Representatives approved a bill to speed up environmental reviews for new nuclear plants. The Senate has its own nuclear bill that will need to be reconciled, but revitalizing the stagnant industry is a goal that has broad bipartisan support.
• The geothermal energy startup Fervo raised $221 million. The company borrows technology from the oil and gas industry to tap heat reserves deep underground, and could be an area of clean energy that Big Oil companies are actually eager to invest in.
• Leaders of every one of the hydrogen projects selected last year for special support from the Department of Energy are now criticizing the administration’s hydrogen strategy. In a letter this week, the executives complained that the administration’s hydrogen tax credit rules are too narrow and will likely kill off many projects. At least one major hydrogen project in Texas is already on indefinite hold.

Fossil Fuels

• Coal mining and consumption are booming in India. A few years ago the country’s power companies faced a major coal shortage. Now they’re sitting on a record 44 million tons.
• Despite the Biden administration’s pause on LNG export permitting, at least one major new project is likely to go through. The Texas LNG project, which already had regulators’ approval before the pause went into effect, is lining up more customers and should reach a final investment decision this year, its owners said.

Finance

• Clean energy and transportation investment in the U.S. reached a record $67 billion in the fourth quarter of 2023. That’s 40% higher than the same period in 2022. Nearly half of the 2023 total came in the form of retail clean tech sales, especially of electric vehicles.

EVs

• EVs are a national security threat, the Biden administration warned. The Commerce Department is investigating whether internet-enabled cars could send data back to Beijing, handing a win to U.S. automakers worried about a potential flood of low-cost Chinese EVs into the U.S. market.
• Amazon lost nearly $1 billion this week on its investment in Rivian, as the EV startup’s stock price crashed.

Personnel

• The U.S. Chamber of Commerce and the Business Roundtable joined ExxonMobil’s lawsuit against activist shareholders. Climate activists have “commandeered corporate proxy statements for their own parochial ends,” the groups told a Texas judge.

Audrey Gaughran, executive director of the Centre for Research on Multinational Corporations. The group released a report this week criticizing Shell’s strategy for withdrawing from Nigeria’s Niger Delta, after the company sold its subsidiary there in January after nearly a century of oil drilling.

• Biden keeps plugging away at TikTok. Don’t expect Trump to follow.
• Iran sending attack drones to Sudan’s military.
• Capitol Hill’s tax battle gets rough.