Net Zero

1. UAW’s next battle
2. China’s hydrogen gambit
3. Climate on the ballot
4. Dirt-cheap solar
5. No acquisitions ahead
6. ‘Unparalleled and inspiring’
7. Energy market fallout
8. Climate tech’s global shift

UAW’s next battle

Stellantis and General Motors followed Ford in reaching tentative deals with the United Auto Workers union, putting an end to the strikes that derailed the Big Three and cost them hundreds of millions of dollars in lost revenue. The deals put an encouraging spin on the electric-vehicle transition for workers, including higher wages and the ability of workers at those companies’ battery plants to join the union. But it weakens those companies’ competitive edge against non-unionized, foreign-headquartered EV makers, including Toyota and Volkswagen. The UAW’s biggest target is now Tesla, which dominates the EV market and has consistently squashed unionization attempts. But CEO Elon Musk won’t be a pushover, especially as the company’s EV profit margins run thinner than ever after a series of steep price cuts. As one former Biden advisor put it to Bloomberg: “Any effort to organize Tesla would be a battle royale.”

China’s hydrogen gambit

China’s Inner Mongolia province is emerging as a world leader in green hydrogen production, according to a Columbia University analysis this week.

China as a whole produces about one-third of the world’s hydrogen, of which about two-thirds is derived from coal. Like the U.S. and Europe, China is counting on hydrogen to help decarbonize its industrial sector, but is currently stuck with only a miniscule supply of low-carbon hydrogen, amounting to less than 0.1% of its total. That’s beginning to change in Inner Mongolia, which has a rich supply of wind and solar energy, lots of pre-existing hydrogen demand, and is the starting point of the country’s first planned long-distance hydrogen pipeline. The region is aiming to produce nearly 500,000 tons of green hydrogen by 2025, which would make it one of the world’s top green hydrogen hotspots.

Climate on the ballot

THE NEWS

High-stakes climate and energy decisions are on the ballot in a number of U.S. state-level elections next week. Both Virginia and New Jersey are within a slim margin of flipping from Democratic to Republican control, putting major clean-energy and electric-vehicle initiatives at risk as many voters remain unaware of the economic benefits of Biden administration climate policy. Voters in Texas and Maine, meanwhile, will choose whether to place more control of their electric grids in the hands of fossil-fuel companies.

TIM’S VIEW

Next Tuesday’s off-cycle elections are important for climate in their own right, with emissions and clean energy investments on the line. They’re also a referendum on whether a core Biden administration argument — that the energy transition is a surefire win for jobs and economic growth — is getting through to voters in some of the states that have, up to now, moved most quickly to embrace it. In that sense, they’re a bellwether for 2024: If Tuesday delivers a sweep to state-level Republican candidates (off-cycle elections often have low turnout, a factor that in the U.S. tends to favor Republicans), it would bode ill for Biden and Congressional Democrats next year.

Local governments are also critical gatekeepers for Inflation Reduction Act dollars, having the choice to apply, or not, for federal loans and grants to support investments in manufacturing facilities, job retraining, building efficiency upgrades, and other measures. So far, most post-IRA clean energy investment has flowed to Republican-majority states. But as the general election approaches, state Republicans may be more cautious about handing Biden any wins, and if next week’s elections consolidate Republican control of states with potential for growing clean energy sectors, the outflow of IRA money could slow.

On the other hand, whether they win this time or not, local Democratic candidates are key to informing voters about how they can benefit from the IRA, said Emma Fisher, deputy director of Climate Cabinet Action, an advocacy group that supports climate-focused candidates in local elections. Recent polling indicates that most voters aren’t aware of the law’s consumer-oriented tax benefits.

“Local candidates are last-mile communicators,” she said. “The work they’re doing talking about the energy transition is laying the groundwork for that message to take seed in 2024.”

Dirt-cheap solar

Average price per watt for solar panels, a record low. The price of solar hardware is crashing to new lows every week because of a global oversupply, BloombergNEF analyst Jenny Chase wrote this week in her annual analysis of the market. That might be good news for consumers, but not for panel manufacturers in the U.S. and Europe, many of which will not be able to compete with Chinese rivals and are certain to face bankruptcy in the next year or two, Chase wrote.

No acquisitions ahead

It’s been a rough week for European oil majors. Last week Shell laid off 200 employees from its low-carbon division, mostly in positions working on hydrogen-based fuels. The layoffs reflect a growing consensus among energy economists that hydrogen, while promising as an alternative to natural gas in industrial facilities, probably makes less sense than electrification for decarbonizing the transportation sector. BP and TotalEnergies also reported lackluster quarterly earnings, far below the bumper profits they pulled in this time last year as the Ukraine war scrambled energy markets. And in a shareholder presentation Tuesday, BP interim CEO Murray Auchincloss said not to expect any big acquisitions, as his U.S. rivals ExxonMobil and Chevron pulled off in the last few weeks: The company is happy with the oil production volume it already controls, and is “focused really on transition,” he said.

One Good Text

Harjeet Singh, global head of political strategy for Climate Action Network International. Saleemul Huq was a Bangladeshi climate scientist and director of the International Centre for Climate Change & Development in Dhaka. Huq died at home on Saturday at the age of 71 of a heart attack. He attended all 27 COP summits since 1995 and was a pioneer of the concept of climate reparations for low-income countries.

How the Israel-Hamas war hits energy security

Israel’s war with Hamas is already destabilizing regional energy supplies and fears are growing that an escalation in the conflict could also bring power insecurity to other parts of the world.

• Egypt said gas imports from Israel — on which the country’s power grid relies — have ceased. According to authorities in Cairo, imports have fallen from 800 million cubic feet per day to zero, leading to rolling power cuts throughout the country as higher-than-usual temperatures strain energy supplies. Egypt relies on natural gas for more than 75% of its power supply. The cease in imports appears to be linked to a decision by Israeli authorities to halt production from the Tamar gas field over concerns it could be impacted by the fighting with Hamas, Bloomberg reported.
• Further escalation of the Israel-Hamas war into a regional conflict could cause oil prices to soar above $150 per barrel — a price not seen in decades — according to the World Bank. Should the war spill beyond Gaza’s borders, oil prices would enter “uncharted waters,” the Washington D.C.-based lender said in its first assessment of economic risk since the Oct. 7 attacks.
• Israel’s drop in gas production will likely lead to its electricity mix becoming greener. Athens will begin sending energy produced from renewable sources to Israel via Cyprus after Greece’s grid operator agreed to promote a plan to connect the two nations to Europe’s electric grid system. “Israel will want to strengthen its energy security and that aim will probably be heightened with what’s happening now,” the head of Greece’s Independent Power Transmission Operator said.

Green Shoots

Climate tech investment is branching out from its Silicon Valley comfort zone, with companies in China, India, and Europe capturing a greater share of investment.

The U.S. still dominates the climate tech market, according to a new analysis from the consulting firm Deloitte. But investors are getting more comfortable with moving into territories that may have seemed risky in the past, said David Schatsky, the firm’s global leader for “GreenSpace” research. One reason is that more investment opportunities are becoming available from the new generation of developing-country entrepreneurs. Investors are also drawn by the possibility of higher returns in less crowded markets, even if risk is a bit higher, he said. And as more governments lock in policies to support clean energy, the risk feels more manageable.

“Climate change is a global phenomenon, but it requires some local customization,” he said. “And now, you can find a favorable policy or talent environment in a lot of places.”

• Some of the Hamas militants who attacked Israel on Oct. 7 were fueled by a synthetic amphetamine. U.S. and Israeli officials believe it was used to suppress fear and anxiety during the rampage, and stimulate the willingness to kill civilians.
• Inside the last-chance effort to sell Republicans on anyone but Trump.
• An up to $1 billion fine may end the scandal that has captivated Wall Street.