Net Zero

1. GOP cuts solar and wind
2. China’s greener investment
3. Trump chases Gulf mining
4. Foreign policy vs. drilling
5. Rethinking climate finance

Don’t hold your breath for a takeover of BP; do hold it for multibillion-dollar gas turbine acquisitions.

House GOP cuts wind and solar

US House Republicans are narrowing in on a compromise within the party over the fate of some clean energy tax credits, and it’s less extreme than the wind and solar industries’ worst fears.

Draft budget legislation released Monday targets nearly all of the clean energy tax credits in the Biden administration’s Inflation Reduction Act, with some listed for immediate repeal and others given new phaseout deadlines and hung with additional supply chain restrictions.

Some of the proposed cuts from the House of Representatives Ways and Means Committee, especially to EV credits, have been long-anticipated. On others — including credits for hydrogen and nuclear power, as well as a provision that allows the credits to be traded between investors — the draft takes a more aggressive posture than what will likely be able to survive scrutiny by more moderate Republicans in the full House and their peers in the Senate. But on the so-called “tech-neutral” production and investment credits, which primarily benefit wind and solar, a consensus is forming around the idea that they should be phased out earlier than originally planned but not killed overnight, Rep. Julie Fedorchak (R-N.D.) told Semafor.

The wind and solar credits, she said, are “providing the wrong incentive and signal to investors in energy projects. Right now, in the US, we need a lot more generation, but we don’t need a lot more wind and solar, because that’s what’s already flooding the queues.”

China’s energy gets greener

China’s domestic and international energy investments are getting greener, but face some big challenges ahead, a pair of new reports shared first with Semafor argue.

At home, China’s massive energy demand growth in recent years has meant that even as it builds renewables at a world-leading pace, it is also responsible for the vast majority of new coal-fired power plants under development worldwide. But as the country’s political and economic winds turn increasingly against coal, the rate of clean energy build will likely be fast enough by 2030 to cover all the growth in domestic energy demand, the research group Ember reported.

Meanwhile, new data on China’s Belt and Road Initiative shows the country is keeping leader Xi Jinping’s 2021 promise to stop financing new coal plants overseas: In 2022 and 2023, for the first time in the last two decades of foreign investment by China’s government and private sector, no new coal plants were approved. Instead, renewables accounted for two-thirds of newly planned projects, in terms of generation capacity, according to a study from Boston University’s Global Development Policy Center.

Trump chases Gulf mining

US President Donald Trump arrived in Saudi Arabia on Tuesday on a four-day tour of the Gulf where he is expected to strike deals with Riyadh and the UAE on the production and processing of critical minerals. Mining minerals is a centerpiece of Saudi Arabia’s plan to diversify its economy away from oil by 2030, and its top mining company Ma’aden has been considering joining forces with US mineral processing firms. Washington has reaped a lot of geopolitical and economic benefits from its close allyship with the kingdom over the past 70 years over oil, said Geoff Pyatt, senior managing director for energy and critical minerals at the consulting firm McLarty and a former top energy official in the State Department: “We need to ensure that we’re doing the same as Saudi seeks to have a leadership role in new energy sectors.” It’s not yet clear what shape a US-Saudi mineral deal will entail, but Pyatt said it may be more substantive as a high-level political signal than as a detailed mining plan.

During his trip, Trump will also discuss OPEC’s recent production quota increases, which have helped keep gasoline prices low in the US. While Riyadh may have been willing to let prices fall a bit recently — in large part to keep quota cheaters within OPEC’s own ranks in line — analysts say further production boosts may be getting harder for Trump to find.

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Foreign policy vs. drilling

Decline in US crude oil production (barrels per day) that S&P analysts project will happen next year, the first time in a decade for US drilling to fall. Global economic uncertainty caused by the Trump administration’s tariff campaign will significantly cut into global oil demand this year, S&P said, leading to lower prices and the shutdown of some US drilling rigs: “A price-driven decline in US production would be a pivot point for the oil market — and set conditions for a potential price recovery,” Jim Burkhard, S&P’s global head of crude oil research, wrote in a note. At the same time, S&P warned that the administration’s willingness to negotiate on lowering energy sanctions on Russia — and, reportedly, restore sales of Russian pipeline gas to Europe — puts US LNG exporters at risk of canceling $120 billion in planned terminal investments.

Rethinking Africa’s climate finance

Africa is still nowhere near receiving the $3 trillion experts say it needs to adapt to and mitigate the effects of climate change. Meeting that target will require a radical rethink of the continent’s climate finance options.

There is precious little new donor money available for climate finance. The world of aid and development cooperation has been upended by severe cuts to the US aid budget. Add to that acute aid fatigue in Europe. Yet, the way climate finance blueprints are currently done is totally dominated by catering to the global development bureaucracy, with limited focus on how international investors see the world and their motivations for moving capital.

African countries need to rethink this paradigm of concocting complicated, over-egged strategies targeted at this bureaucracy and then, like an afterthought, inviting the private sector to sample. What they should do is ask themselves what is their “competitive climate positioning,” and leverage that positioning to attract particular types of best-fit investors.

New Energy

• Equinor threatened to cancel its massive offshore wind project in New York if the Trump administration doesn’t pull back a stop-work order the company says is costing it $50 million per week.
• Renewable energy generation is sagging in Germany, in part because of prolonged low wind speeds.

Fossil Fuels

• The Texas-based power company NRG will spend $12 billion to double its gas-fired generation capacity through the acquisition of LS Power’s portfolio, with a view toward speeding up power access for data centers.

Finance

• Climate adaptation goods and services are already a $1 trillion annual market, a London Stock Exchange Group study found.

Tech

• The world’s biggest hydrogen company is struggling, and investors are in revolt over its decarbonization plans.

Politics & Policy

• The White House ordered federal agencies to stop considering the “social cost of carbon” in their decisions, effectively arguing that climate pollution has no cost to society.

Personnel

• Pope Leo XIV will likely carry on his predecessor’s championing of climate and environmental causes.

Christopher Kuplent is Bank of America’s head of European energy research.

There’s been a steady drumbeat in Gulf state-backed media ahead of US President Donald Trump’s visit, with expectations ranging from cautious optimism to what can politely be called wishful thinking. The result will land somewhere in between. Trump is not going to resolve Iran’s nuclear deal, recognize a Palestinian state, normalize Saudi-Israeli ties, or break ground on a Trump Tower in Damascus — all of which have been floated by pundits as possible outcomes.

What is more likely are deals that converge “America First” alongside Saudi, Qatari, and Emirati priorities, Semafor’s Mohammed Sergie wrote.