Net Zero

1. Trump’s judicial wins
2. Wall Street’s AI backdoor
3. Voter’s choice
4. Tesla’s recovery
5. Egypt’s green ambitions

Takeoffs and crash landings — financially speaking — for hydrogen-fueled airplanes, and the threat posed by climate change to childrens’ health.

Trump’s judicial wins

Joe Biden’s climate agenda suffered another blow thanks to Donald Trump, as a federal judge in Louisiana tossed the White House’s moratorium on permits for liquefied natural gas exports. Sixteen Republican state attorneys general had argued that the LNG “pause” harmed their states’ economies. In his ruling, the Trump-appointed judge wrote that the Biden administration’s policy is “completely without reason or logic.”

The decision won’t immediately unlock an LNG terminal-building boom, since the Department of Energy still has the authority to approve every project. But coming on the heels of last week’s Supreme Court decisions to toss two foundational environmental legal principles — the “good neighbor” rule on interstate air pollution and the “Chevron doctrine” on executive-branch regulatory authority — the Louisiana ruling is another reminder that Trump’s most lasting first-term legacy on climate was in the judiciary. Indeed, if the Republican wins, the further proliferation of climate-unfriendly judges should be an even greater concern for climate activists than a potential rollback of the Inflation Reduction Act.

Utility stocks are Wall Street’s secret backdoor to AI

Electric utility stocks spent years as dull, safe investments, spitting out dividends and increasing their revenues under tight rate caps. Now they’re some of the hottest stocks on Wall Street, riding the coattails of artificial intelligence hype. Investors see a sector that remains undervalued as data centers boom and vehicles and buildings go electric.

The utilities sector beat the S&P 500 index in the second quarter, with Vistra and Constellation Energy among the top five performing stocks so far this year (along with Nvidia, GE, and the data center company Supermicro), while NRG Energy is the year’s 11th-best.

Utilities are usually among the dullest corners of the stock markets — safe, if unexciting, bets. But the sector was hit hard last year by high interest rates, which undermined its reliance on debt financing to build projects, and ended 2023 as one of the market’s worst performers. Now, a turnaround is underway as more investors — who want a piece of the AI boom but don’t want to pay top dollar for Nvidia stock — realize that utilities essentially offer a discount backdoor into AI.

Investors who have always yawned at utilities are suddenly keen to have them in their portfolios, said Shahriar Pourreza, power equities analyst at Guggenheim Securities.

“Who would ever think you’d be investing in utilities for growth?” he said. “But when you shake everything out, this sector is undervalued.”

Voter’s choice

Asset management firm BlackRock is making it easier for its clients to vote for climate action at the companies they’re invested in. Funds that have a specific climate mandate will introduce a new set of proxy voting criteria, a senior executive told clients, according to the Financial Times. Under the new criteria, fund managers will proactively assess whether companies’ climate actions are in line with the Paris Agreement, and may vote against management if they aren’t — even if that puts them at odds with other BlackRock funds. The rule change only applies in Europe, for now, which means it may have a limited impact at first since votes on shareholder resolutions are less common there than in the US. But the firm may make the policy available for US and Asian funds later this year.

Tesla’s recovery

Total deliveries by Tesla in the second quarter. That’s down 5% from the same quarter last year, but still ahead of Wall Street’s expectations. The company’s stock price jumped 10% on the news, helping it regain some of what it has lost this year as one of the market’s worst-performing stocks. BYD and Tesla’s other big Chinese rivals, meanwhile, posted record sales for the quarter.

Egypt’s green ambitions

North African countries are stepping up their bid to act as Europe’s clean energy powerhouse. Egypt raised its target for renewable energy, and will aim to get 58% of its power from renewables by 2040. That’s up from less than 12% now. Its Benban solar farm is one of the world’s largest, covering nearly 15 square miles in the desert. But broader solar construction has fizzled since Benban was finished in 2019, because of the country’s deteriorating economy, a major shortage of grid transmission infrastructure, and in the case of a delayed $10 billion wind farm, disputes over land rights. Egyptian liquefied natural gas came to Europe’s rescue in the aftermath of Russia’s invasion of Ukraine. Now, investors see a lot of potential for it to rescue Europe’s green transition with its vast solar resources and open tracts of desert.

British energy company IM Power is exploring building a transmission line for Egypt to export clean power to Greece or Italy. And this week, the oil major BP said it will collaborate with several clean energy developers to build out green hydrogen production facilities in Egypt, which would target European factories as their biggest customers. Meanwhile, an ambitious plan to build a 2,500-mile power line from Morocco to the UK is running into problems with cash, permits, and cables.

New Energy

• Shell is pausing work on what could become one of Europe’s biggest advanced biofuel factories, and a cornerstone of the company’s energy transition strategy, because of weak demand for the fuels.
• China appears to have stopped publishing official data that show when solar and wind power farms have to be shut down because of oversupply on the grid. The change may be meant to avert criticism that in its dash to control the solar manufacturing market, it has gone overboard with solar installations, without the grid and storage hardware needed to make them work effectively.
• The World Bank gave India a $1.5 billion loan to support its nascent green hydrogen industry.
• Google will work with BlackRock to build solar farms for its data centers in Taiwan.
• Europe’s nuclear power renaissance is running into a shortage of workers.

Fossil Fuels

• Carbon pricing will make diesel fuel at least 50 cents more expensive per liter for drivers in Europe by 2031.
• A special icebreaking LNG tanker ship owned by a secretive British company has become key to financing Russia’s war in Ukraine.

Finance

• EV battery companies Sila, Northvolt, and Verkor, and the community solar platform Arcadia, are the most likely climate tech startups to go public this year, according to Pitchbook.
• Amazon is creating its own standard for evaluating carbon offset credits, bypassing an industry-wide standard now under development with funding from the Bezos Earth Fund.

Tech

• A promising startup building hydrogen-fueled airplanes ran out of runway and shut down. Meanwhile, American Airlines placed an order for 100 hydrogen-fueled engines from a different, happier startup, ZeroAvia.
• Two utilities are asking federal regulators to block a deal between Amazon and a nuclear power company in Pennsylvania, saying diverting power for Amazon’s data centers will drive up rates for everyone else.

Politics & Policy

• The Biden administration is exploring ways to place a carbon price on imported goods. “We’re not going to just give up our industrial base to people who are dumping carbon,” White House climate advisor John Podesta told the Financial Times.

Minerals & Mining

• China explicitly declared that rare-earth resources belonged to the state, its latest move to consolidate control over minerals needed for the green energy transition. The announcement came after Beijing this year placed restrictions on the exports of gallium and graphite, which are key to the manufacture of semiconductors and electric vehicles, respectively.

Personnel

• Luiz Amaral, CEO of the Science Based Targets initiative, is stepping down following the group’s controversial decision to loosen its standards on carbon offsets.

Debra Hendrickson, author of The Air They Breathe, which was published on Tuesday.