Net Zero

1. High climate stakes
2. Bracing for a COP letdown
3. EV trade war accelerates
4. Big Oil beats
5. Airline offset market opens

Ford taps the brakes, and Trump raises the LNG stakes.

By this time next week, as the curtain opens on COP29 in Baku, the journalistic priorities for this newsletter will be clearer: The outcome of Tuesday’s US election will set the tone for the talks and the role Washington can be expected to play in the next phase of global climate policy as well as the energy transition. Either way, I’m keeping my expectations for COP in check, for reasons explained in my scoop below.

Glutton for punishment that I am, though (see: my 18-email thread with the official hotel booking service that ends without a solution to a scheduling kerfuffle), I will be in Baku with bells on. We’ll be sending out two special editions of the newsletter, and hosting what should be a really fun evening event on the big stories in climate tech and finance (stay tuned for details).

If you’ll be there too, please drop me a line by replying to this email, and I’d love to meet up for mutual commiseration/celebration/neutral contemplation, as circumstances prescribe.

The election’s high climate and energy stakes

With less than a week until the US presidential election, voters face a stark choice on the country’s climate and energy future. Donald Trump spent the last few days of his campaign bashing electric vehicle chargers and hydrogen, while former officials in his administration continued plotting a strategy for dismantling much of Joe Biden’s environmental agenda.

The Inflation Reduction Act and its wealth of clean energy tax credits may be relatively safe from harm, given how much they favor Republican-majority congressional districts, but there are plenty of other ripe targets, including the budgets of agencies — like the Federal Emergency Management Agency and the National Oceanic and Atmospheric Administration — emissions regulations for power plants and cars, and signing off on a significant expansion of mining and drilling on federal lands. Harris has remained relatively mum about how her climate agenda would build on Biden’s, but it’s fair to expect more of the same emphasis on taxpayer carrots over regulatory sticks. Meanwhile, billions of dollars of investment in fossil and clean energy projects are waiting on the sidelines.

Prepare for COP29 to be a letdown

Developing country leaders and their allies in the activist community should temper expectations for an ambitious deal on climate finance at the COP29 summit in Azerbaijan this month, the UK official who led the 2021 iteration of the summit told Semafor.

The main goal for COP29 is to lay out a new strategy for wealthy governments, development banks, and private investors to drastically increase the amount of money they channel to poorer, climate-vulnerable countries for their clean energy and impact adaptation efforts. There are two facets of this strategy: A specific annual fundraising target to replace the $100 billion goal that countries have been chasing since 2009, and a plan for reaching it that will likely require expanding the pool of core donors beyond the US, Europe, Japan, and the World Bank.

They shouldn’t hold their breath, said Alok Sharma, a former British minister who served as president of COP26. Political agreement on the figure that activists and researchers have coalesced around — $1 trillion — will be nearly impossible to get, he said, and could even backfire by eroding the credibility of the COP process if it gets adopted but not followed through on.

“The new goal clearly has to be ambitious, but also has to be deliverable,” Sharma, now a member of the House of Lords, said.

Last year’s COP, in Dubai, was an experiment in taking the summit to an unprecedented scale, with nearly 100,000 people in attendance. The outcome was an agreement that, while it didn’t exactly solve the climate crisis, contained the strongest-ever global commitment to “transition away from” fossil fuels. The challenge this year in Baku will be to keep the momentum going with a much smaller and quieter meeting, and one happening against a lot of political and economic headwinds. The odds of success look steep.

EV trade war accelerates

The EV trade war between China and Europe is heating up. The EU slapped new tariffs on Chinese EV imports this week that can go as high as 45%, locking in an ongoing trajectory of falling market share in Europe for automakers like BYD. In response, Chinese officials have instructed their homegrown automakers to freeze investments in new manufacturing facilities in Europe, Reuters reported, and filed a complaint with the World Trade Organization. Negotiations on the tariffs are ongoing, and could be rolled back in the future. In the meantime, BYD is doing fine: Its global sales reached $28.2 billion in the third quarter, besting Tesla’s numbers for the first time.

Big Oil beats

Share of Shell’s capital spending that went toward clean energy projects in the third quarter, down a percentage point from the previous quarter. Climate activists may not like the company’s direction, but its shareholders do — its share price jumped 4.5% after beating Wall Street’s profit expectations. Shell overcame the low oil prices that have dragged down oil company profits across the board by leaning on its gas trading unit, the world’s largest. Meanwhile, ExxonMobil and Chevron also beat Wall Street expectations, but profits for TotalEnergies’ profits sank to a three-year low.

As the US races toward a historic election, Semafor Americana is your must-read guide to understanding every angle. Veteran campaign reporter David Weigel delivers twice-weekly updates with the biggest stories, sharp analysis, and exclusive interviews, keeping you in the know about the presidential race's seismic shifts and key down-ballot contests. From polling insights to the latest ad strategies from campaigns and PACs, Semafor Americana gives you an insider’s look at American power in action. Sign up here.

Airline offset market opens

The UN’s aviation body approved four additional carbon credit-issuing organizations for its global airline offset effort. ICAO said airlines participating in the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) could accept credits issued by Gold Standard, Verra, the Global Carbon Council, and Climate Action Reserve.

The long-awaited decision is the latest in a series of efforts across global aviation to curb emissions — a particularly vexing issue given the sector accounts for an estimated 2.5% of worldwide carbon emissions, but has few technological solutions on the horizon. In the short term, the move is expected to buffet prices of carbon offsets given the expected new demand and add credibility to an industry that has been battered by press reports of poor auditing and corruption.

Still, the CORSIA program is no panacea, and the fine print is crucial, Chimdi Obienu, a senior research consultant on carbon markets at EcoAct, a unit of Schneider Electric, said in an interview: Airlines will have to buy and retire carbon credits only for every ton of carbon above 85% of their 2019 emissions, and only for international civil aviation flights — meaning most emissions won’t be offset. Supply of carbon offsets also are unlikely to meet the demand in any immediate period. And in any case, absent a deal on accounting for international carbon-offset transactions, codified in Article 6 of the Paris Agreement, making so-called “corresponding adjustments” will be a problem, too.

New Energy

• China’s Three Gorges Renewables Group laid out a $10 billion plan to build a sprawling complex of solar, wind, and coal power, with batteries, in the Taklamakan Desert.
• Low-carbon energy accounted for more than half of global energy investment in 2023 for the first time, according to Rystad Energy. Investments in the grid are projected to overtake fossil fuels by 2032.
• The International Energy Agency projects that the global market value for six core clean energy technologies — solar, wind, EVs, batteries, electrolyzers, and heat pumps — will grow from $700 million today to $2.1 billion by 2035 under current policies, and up to $2.9 billion if countries meet their climate pledges.
• Offshore wind executives are privately panicking about a possible Donald Trump presidency.

Fossil Fuels

• Donald Trump’s plan to impose crippling tariffs on Chinese imports could backfire for US LNG exporters.

Finance

• Generalist tech investors are so hyped about AI they’re forgetting to invest in climate tech.
• Asian countries need 12 times more funding for climate adaptation efforts than they currently have access to, the Asian Development Bank warned.

Mining & Minerals

• Colombia and Brazil are cooking up a new global treaty on traceability for critical minerals.

EVs

• Ford is halting production of its F-150 Lightning electric pickup until at least mid-January, in response to low demand.
• Tesla officially endorsed California’s low-carbon fuel standard, a policy that Donald Trump, with the backing of Tesla CEO Elon Musk, has promised to dismantle if elected president.

Food & Agriculture

• The UN warned that famine and acute food insecurity in places like the Palestinian territories, Sudan, South Sudan, Haiti, and Mali will worsen in the next six months, due to escalating conflict and climate impacts.

Donald Trump supporters are feeling confident about their chances — maybe too confident, Semafor’s Benjy Sarlin wrote.

His top allies are increasingly boasting about sweeping new initiatives in politically perilous territory in the election’s final days, even as they have a knife’s-edge race to complete before they have a chance to enact any of them.