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Despite growing calls for a moratorium, efforts to harvest battery minerals from the ocean floor see͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
 
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July 12, 2023
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Net Zero

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Tim McDonnell
Tim McDonnell

Hi everyone, welcome back to Net Zero.

Prospectors for nickel, manganese, cobalt, and other valuable minerals have long had an eye on the ocean floor, where vast quantities lay ready for the taking. But because of technological and bureaucratic obstacles those resources have remained out of reach, until now. This month, a small UN agency hit a legal deadline to roll out regulations for deep-sea mining and begin to approve the first round of commercial mining applications. Political opposition to the nascent industry is mounting in some corners — but at a meeting this week in Jamaica, the miners appear to hold the advantage.

Also today: Cash for coal plants dries up, low-carbon shipping won’t be easy, and Republicans take aim at the Pentagon’s EV ambitions.

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Hotspots
  1. The world’s hottest week ever
  2. Solar power is on track
  3. 🟡 Deep sea mining heats up
  4. Buffett buys in to gas
  5. Tesla winning the charging war
  6. 🟡 Texting on fixing shipping
  7. GOP wages war on DoD EVs
  8. US dealers have too many EVs
  9. Total and Iraq sign huge deal
  10. No more cash for coal
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1

A record July

REUTERS/Henry Romero

The first week of July was the world’s hottest week on record, according to the World Meteorological Organization. In addition to the dogged upward march of global temperatures caused by climate change, this year’s particular spike is the product of El Niño, which is also a likely factor in the devastating rainfall that hit Japan this week. More global temperature records are likely to fall this year because of El Niño, including the first-ever breach of the 1.5 degrees C threshold of global warming above pre-industrial levels. According to the research group Berkeley Earth, 2023 stands an 81% chance of being the warmest year ever.

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2

Solar on track, IEA says

Solar power, electric vehicles, and energy-efficient lighting are the only three out of 50 climate technologies that are being deployed fast enough to achieve global net zero emissions by 2050, according to a new International Energy Agency report. Progress in those sectors “shows what can be achieved with sufficient ambition and policy action,” the report says. But there’s no time to rest on laurels: dozens of technologies remain off-track, including international shipping, industrial processes like steel and cement production, carbon capture, and the phaseout of coal power plants.

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3

The deep-sea gold rush is beginning

REUTERS/Gustavo Graf

by Tim McDonnell

THE NEWS

A showdown between China and a coalition of island and European nations is taking place in Kingston, Jamaica this week over the prospect of mining minerals on the seafloor. For now, the industry has the upper hand.

“This is the crunch-time moment,” said Emma Wilson, policy officer at the Deep Sea Conservation Coalition, an environmental group.

TIM’S VIEW

It seems likely that deep-sea mining could begin in earnest within the next two years. The debate over the emerging industry goes to the heart of a central dilemma of the energy transition, which is that production of the minerals needed to build EV batteries and other clean tech entails its own unavoidable environmental risks.

Deep-sea mining could reduce the need for even more damaging forms of onshore mining; a boom in nickel production in Indonesia, for example, is emerging as a major threat to that country’s rainforests. But it’s not clear that these two forms of mining are indeed mutually exclusive, given the global economy’s voracious appetite for minerals. So the end result could be more mining on both fronts.

Thus far, deep-sea mining has not yet been done at commercial scale anywhere in the world. But a handful of companies — with the backing of China and other countries hungry for a new supply of nickel, manganese, and other minerals needed for the clean energy transition — are ready to forge ahead.

“The notion of a delay or moratorium is nonsense and has zero legal basis,” Gerard Barron, the CEO of Vancouver-based The Metals Company, told me. To go ahead, they need approval from an obscure UN agency called the International Seabed Authority, which hit a legal deadline this month to finalize regulations for the emergent industry and is now negotiating them in Kingston. TMC is happy with draft rules currently on the table in Kingston, Barron said. It plans to file its mining application once the rules are adopted, and is prepared to begin mining by late 2024 or 2025. China holds the greatest number of ISA exploration licenses, and is keen to extend its existing dominance of the critical mineral supply chain to the deep sea.

For now, only Canada, France, Germany, and about a dozen other countries support a temporary or permanent halt, which would require a majority vote by the ISA’s 167 member states. The U.S., which is not an ISA member, has not taken a public position.

Unless dozens more countries commit to a moratorium, TMC’s application — sponsored by the island nation Nauru — will almost certainly be approved, setting off an undersea gold rush. (Although some of its Pacific island peers are opposed to deep-sea mining, Nauru’s government has cultivated a close relationship with TMC executives and stands to reap royalties from its mining activities, according to a Bloomberg investigation.)

— For more on deep sea mining, the risks that companies involved it face, and how the world is filling the minerals shortfall, click here.

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4

Buffett buys into LNG

REUTERS/Marcy de Luna/File Photo

Warren Buffet’s Berkshire Hathaway bought a $3.3 billion stake in a Maryland liquified natural gas terminal, giving it 75% ownership of the project. The other quarter is owned by private equity firm Brookfield. Berkshire’s bet on the project gives it control of one of only half a dozen LNG terminals in the United States at a time when global demand for U.S. gas is surging. The firm has been increasing its investment in energy infrastructure over the last few years, including renewables.

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5

Tesla winning charging war

REUTERS/Mike Blake/File Photo

Tesla came one step closer to total dominance of the EV charging market, as Mercedes-Benz said it will switch to Tesla’s charging port design starting in 2025. The decision makes Mercedes the first German automaker after Ford, GM, Volvo, and others lined up behind Tesla, and increases pressure on Stellantis, Hyundai, Volkswagen, and others to follow suit. Gaining control of charging infrastructure is also a lucrative side business for Tesla that will help offset its lower margins on EVs, as it cuts their prices to stay competitive in an increasingly crowded market.

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6

One Good Text

The shipping industry agreed last week to target net-zero emissions “by or around” 2050. Aparajit Pandey is Shipping Decarbonization Lead at the Rocky Mountain Institute.

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7

Republicans wage war on Pentagon EVs

HANDOUT via Reuters

Congressional Republicans launched into the next round of budget debates this week with a fusillade against the Defense Department’s electric-vehicle aspirations. A series of bills proposed by Lauren Boebert (Colo.), Paul Gosar (Ariz.), and other House Republicans would require the Pentagon to cancel purchase orders for EVs, facilitate the use of non-EVs on military bases, and restrict the administration’s ability to invoke the Defense Production Act to speed up manufacturing of batteries and other EV hardware, according to The Washington Post. As one of the world’s top consumers of oil, the U.S. Defense Department has long been at the forefront of developing cheaper, more reliable energy sources, and is unlikely to retreat on its goal to power all combat vehicles with electricity by 2050.

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8

U.S. car dealers have too many EVs

The number of electric vehicles piled up on dealer lots across the U.S., according to the latest estimate from Cox Automotive. That’s three times higher than the same time last year, and enough to supply the market for about 92 days (inventory levels of gas vehicles, meanwhile, are hovering around a relatively low 52 days). Behind the buildup: Automakers are churning out more EV models at a faster pace, and although overall EV sales are gaining momentum, they are stagnating for higher-end models that don’t qualify for federal tax credits and have been undercut by Tesla’s recent price drops.

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9

Total and Iraq sign huge energy deal

TotalEnergies and Iraq signed a $27 billion energy deal that involves boosting the country’s oil production and its ability to generate electricity from gas and solar. In its first phase, the project will develop systems to capture vented gas from existing oil wells and use it to feed power plants. It will also entail the construction of a 1-gigawatt solar farm in Basra. Iraqi officials hope the deal will jump-start the country’s moribund energy market, Reuters reported. In a statement on the deal, the U.S. State Department said it “strongly supports Iraq’s efforts to become more energy secure and minimize harmful emissions.”

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10

No more cash for coal

Only half a billion dollars was offered by banks for the construction of coal-fired power plants in 2022 globally outside of China, the lowest in at least a decade, according to Global Energy Monitor, a research nonprofit. That money was earmarked for two plants, one in Zimbabwe and one in the Philippines. Meanwhile, 14 times that amount — previously been booked for other projects — was canceled. A growing number of financial institutions are pledging to limit or end their financing of coal power projects, while relatively high coal prices sapped interest in new plants. In China, however, there’s a different story, with a rash of new coal plants reaching approval.

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