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Hello!
Today’s newsletter focuses on the challenges faced by nations trying to transition to clean energy as the winter weather and Europe’s energy crisis cools efforts to lower the carbon intensity of neutral liquefied natural gas (LNG). The number of deals to ship carbon around the world has dropped and the decline in international demand for the so-called “greener” gas is a potential setback in the fight against climate change because it removes a financial incentive for producers to reduce their climate impacts. In another clean energy setback, high natural gas prices and global competition for the fuel have driven more demand for thermal coal for power generation this year.
On the upside, a report by thinktank Carbon Tracker shows that high gas prices have caused the cost of producing blue hydrogen from fossil fuels to jump and accelerated investment in green hydrogen from renewable energy sources. Although this is welcome news, some regions are less prepared for the energy transition than others.
Buyers that are worried about a European winter supply crunch are prioritizing securing shipments of any kind over burnishing their green credentials. The number of deals to ship carbon neutral LNG around the world has dropped to less than 10 so far this year, from 30 in 2021, according to energy research firm Wood Mackenzie. Natural gas can be certified as low- or no-carbon if its producers can prove they have reduced greenhouse gas emissions associated with getting it to market, or if they purchase carbon offsets to cut its net climate impact. And demand for the greener fuel has dried up, according to Reuters interviews with nine LNG market analysts, industry officials and traders.
Elsewhere, some countries are reopening mothballed coal plants to secure enough energy for this winter to try and wean themselves off Russian energy supplies and seek relatively cheaper alternatives. Others are boosting production as they seek considerable profits from exports. Click here to read our factbox on some of the revived coal projects and government plans on coal worldwide.
Although some nations are turning to coal and other fossil fuels this winter, the report by thinktank Carbon Tracker shows that soaring natural gas prices have made hydrogen produced from fossil fuels increasingly uneconomic. This has led to more than $70 billion of new investment in hydrogen from renewables since war broke out in Ukraine. In Europe, fossil-fuel hydrogen asset owners will see their costs of production rising by roughly 50% more than average green hydrogen costs to $7.60/kg, while new blue hydrogen in Asia costs 35% more at $6.40/kg and grey hydrogen is 29% more than green hydrogen.
While the news of a rise in green hydrogen investment is welcome, the rapid shift towards renewable energy means that countries in Africa that boast vast untapped hydrocarbon reserves and depend on exporting those resources, will face increasing challenges, officials, executives and analysts say. Although renewables could play a major role in Africa's energy supply in the years ahead, governments say they need fossil fuels for baseload power generation that will power industries. Africa is home to 60% of the best solar resources globally, yet has only 1% of installed solar capacity.
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Tesla Inc CEO Elon Musk walks next to a screen showing an image of Tesla Model 3 car during an opening ceremony for Tesla China-made Model Y program in Shanghai, China January 7, 2020. REUTERS/Aly Song//File Photo
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Breakingviews: Indifference to water risk in the energy sector is common, with scarcity causing problems with hydropower, and few paying attention to green hydrogen’s H2O needs. This time, though, investors quickly worked out the other side of the trade: a drop in coal supplies that is likely to push prices even higher than the record A$581 ($376) a tonne Australian coal producer Whitehaven reaped last quarter.
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Dr Philipp Aeby, CEO of RepRisk, a Swedish ESG-focused data science company
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“While decarbonization and fighting global warming are at the top of the agenda for business and governments, the biodiversity crisis continues to worsen.
“The World Wildlife Fund and Zoological Society of London’s Living Planet Report reminds us that ecosystem loss is rapidly accelerating. We must treat both crises in unison, not as separate threats.
“The relationship between climate change and biodiversity is as complex as it is interconnected. Biofuel is linked to deforestation and monoculture farming – in 2021, the Alternative Energy sector recorded the highest proportion of biodiversity risk incidents, before Mining and Utilities.
“While we need governments and regulators to tackle climate change with a global, systemic approach, investors and businesses can do their part regarding biodiversity today.
“Clear and impartial data exists that can help identify and mitigate adverse impacts of business conduct such as development near sites that are linked to biodiversity risks and will contribute to further ecological harm.”
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UK-based consultancy Salterbaxter has appointed Helen Rushton as head of sustainability transformation. Rushton previously worked as head of social responsibility at Camelot Group, the operator of the UK National Lottery, for seven years and served as a director at sustainability consultancy Corporate Citizenship for 19 years. For the last two years, Rushton has been director of sustainability for communications company Chime Group.
Irish health and safety firm EcoOnline has hired Helene Melby Brodersen as its new head of ESG & sustainability. Brodersen brings more than 20 years of experience in PR, communication, and marketing, as well as a degree in sustainability from the BI Norwegian Business School. She has been with EcoOnline for 10 years as head of PR, brand & communication.
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French private equity firm PAI Partners has appointed Denise Odaro as head of ESG and sustainability. Odaro brings more than two decades of experience as a leader in ESG and sustainable finance. Most recently, she served as head of investor relations and sustainable finance coordination at the International Finance Corporation, the private sector arm of the World Bank Group, from 2012. Odaro has also been a member of various ESG-related boards and advisory committees, including with the London Stock Exchange’s Sustainable Finance Advisory Group and Cornell University’s Emerging Market Institute.
Irish offshore wind platform Gazelle Wind Power has appointed Jason Wormald as its chief technology officer. Wormald previously worked as global head of innovation at Belgium-based crane & industrial ropes manufacturer Bridon-Bekaert Ropes Group. Before this, he spent more than 20 years in various senior technical roles across a range of industries, including for the oil and gas crane firm TSC Engineering, cleantech and switchgear company DeepStream Technologies, and software company Pace Micro Technology.
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"The UK is not prone to blackouts. But this week’s headlines tell a different story: blackouts could happen, and the country needs to brace itself. The UK is less reliant on Russian gas than its European neighbors, but our lethargic transition towards a low carbon grid has left us exposed.”
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Nick Woolley, CEO of UK-based electrical vehicle app ev.energy
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The Casablanca Finance City (CFC) will be hosting the Casablanca Sustainable Finance Dialogue (CSFD) on Oct. 21, with the aim of bringing together leaders working across financial services, government, business, and international organizations.
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Greece hosts a ministers' meeting of Eastern Mediterranean countries to discuss policies to boost resilience against heat, drought and wildfires on Oct. 21. The meeting is part of a United Nations' dialogue over a roadmap to reduce disaster risk.
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According to the Arab Barometer survey, climate change is not a major environmental concern for young Arabs in comparison with their peers worldwide. Reuters will speak to youth and activists on why this is the case and their expectations from COP27 in a video story on Oct. 23.
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Madrid doctors and nurses go on an indefinite strike from Oct. 25 over a recently announced expansion of the primary care emergency services for which, according to the unions, the regional government is not hiring extra staff.
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Charged
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The Biden administration announced it is awarding $2.8 billion in grants for projects to boost U.S. manufacturing of electric vehicle batteries and domestic mineral production, a White House official told Reuters.
The White House is also launching an effort to strengthen critical mineral supply chains as automakers race to expand U.S. electric vehicle and battery production dubbed the "American Battery Material Initiative."
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