Net Zero

1. Trade strategy
2. Offsetting controversy
3. Carbon credits for coal
4. Clean growth
5. Climate data windfall

Environmentalists call for RFK to drop out of the US presidential race, and Exxon shareholders call for the ouster of the company’s CEO.

The US’s climate trade off

The U.S. needs to raise tariffs and other trade barriers against low-cost clean tech exports from China, even if doing so raises the price of solar panels and EVs for U.S. consumers, White House climate adviser Ali Zaidi said this week during Semafor’s World Economy Summit.

“It’s penny wise, pound foolish,” he said, to rely on China for U.S. energy transition hardware.

Zaidi also downplayed the risk that congressional Republicans, or a second-term President Donald Trump, would follow through on threats to repeal the Inflation Reduction Act, arguing that the law is shielded by its job creation potential.

Politicians from both parties “are right now flying off to their districts to cut ribbons at projects that were facilitated by the IRA,” he said. “As much as the political part of their brain would love to remain in denial about the massive economic opportunity here, reflexively, they probably get that investing in the American people and our industrial competitiveness is working, and turns out to be pretty good politics.”

Other major stories from our World Economy Summit include:

• Moderna’s CEO says AI will help scientists understand ‘most diseases’ in 3 to 5 years.
• Out of control spending risks an economic crisis, a senior Goldman Sachs executive says.
• The New York Fed chief says there is no ‘urgency’ to cut rates.

The case for offsets

Jeff Bezos’ climate philanthropy group supports a move by a top arbiter of corporate net zero plans to walk back its opposition to carbon offsets, Andrew Steer, CEO of the Bezos Earth Fund, told Semafor.

Last week, the Science Based Targets initiative — which is partly funded by the Bezos Earth Fund — sparked an outcry among environmentalists and members of its own staff by saying it would broaden the circumstances under which companies can count carbon offsets against their emissions. Bloomberg reported that the Fund organized a meeting in London last month in which SBTi officials were pressured by carbon market lobbyists to drop their long standing opposition to offsets. Steer disputed that report, saying that the Fund “was not involved” in any decision-making at SBTi. However, he said, the policy change in favor of offsets “is a very good idea.”

Until now, he said, SBTi officials “understandably have focused on risk, but what they don’t focus on, because it’s not their job, is the benefits of carbon markets.” As an example he pointed to the type of coal decommissioning project we report on in the following item, which wouldn’t be possible without the sale of carbon offsets. In general, Steer said, environmentalists have become too conservative about the carbon market: “The climate movement, although very well-intentioned, is becoming so obsessed with risks of greenwashing that we’re not paying enough attention to actually positive things.”

Carbon credits close coal

A pilot plan underway to force the early retirement of a major coal-fired power plant in the Philippines could prevent 19 million metric tons of CO2 emissions, about the equivalent of taking 4.5 million cars off the road for a year, a study this week found.

The Rockefeller Foundation is working to close down the coal plant a decade ahead of its planned retirement by calculating the carbon savings and then selling offsets to corporate polluters. Some of the revenue from those carbon credit sales would go to the plant’s owners, with some left over to finance the construction of renewables facilities to replace the lost power generation as well as providing benefits for the plant’s employees and neighboring community.

Raj Shah, president of the Rockefeller Foundation, acknowledged to Semafor this week that greenwashing is prevalent in much of the carbon market. He also said the work wealthy countries have done in recent years to fund the retirement of coal plants in South Africa and elsewhere is moving too slowly. Transitioning all developing countries off coal and diesel will take about $1.5 trillion in investment annually for at least the next 20 years, he said. Last year, net finance made available to those countries through multilateral development banks — after deducting their crippling debt payments — amounted to just $2 billion. Climate finance is stuck in a blame game between the West and China and “is not yielding any real progress,” Shah said.

Carbon markets, on the other hand, “are actually one of the only real sources of new concessional capital,” he said. “It’s literally the only way to win the climate fight. We tend to forget that the U.S. Inflation Reduction Act and its European equivalent and all of China’s green subsidies are not going to win the climate fight unless you also decommission coal plants throughout the developing world.”

Green global growth

Share of global GDP growth in 2023 that stemmed from clean energy, according to an International Energy Agency study this week. Clean energy accounted for one-fifth of China’s growth last year, and in the U.S. added as much to GDP as the entire tech industry. The upshot is that clean energy isn’t just good for the environment, but an increasingly fundamental element of the global economy.

A climate data windfall

The Securities and Exchange Commission may be under fire from all sides over its new climate risk-disclosure rules — remarkably, it is being sued by both the U.S. Chamber of Commerce and the Sierra Club nonprofit for being too tight and too lenient respectively — but some groups are quietly celebrating the regulations: consulting firms and climate data providers.

The SEC rules are a boon for firms specializing in collating and analyzing climate data, whose services are more in-demand than ever thanks to companies wanting to ensure they do not fall afoul of the new regulations. Among those specialist companies is Berkeley, California-based UrbanFootprint, which organizes, cleans up, and makes sense of highly localized data to help firms understand the climate risk to their physical assets: factories, power-generation plants, warehouses, and the like. Among its customers are major consultancies that are doing the heavy lifting of ensuring their clients will be SEC compliant.

“Companies spend upwards of a billion dollars a year on data, and for the most part, they do it in really manual ways,” UrbanFootprint co-founder and CEO Joe DiStefano said in an interview. “Not only is that not cost efficient, but we’re a mission driven, impact oriented business: It doesn’t meet the urgency.”

DiStefano believes the increased use of climate data — in part thanks to the new SEC rules — and improvements in the collection and analysis of that data thanks to machine learning should mean companies can better manage their facilities and make more pinpointed decisions to guard against the consequences of climate change. “The data allows you to spend your time working on targeted risk,” he said. “If you have risk, know about it, remediate it. … Yes the science is constantly changing, there’s not necessarily uniform views, but the friction point should be in what do we do about it?”

Fossil Fuels

• The Biden administration expanded federal protection over millions of acres of Alaskan wilderness. The new protections will block oil, gas, and mining operations across swaths of the state. Officials also announced a drilling ban on the 23-million-acre National Petroleum Reserve-Alaska, The New York Times reported.

Finance

• The asset management firms Wespath Benefits and Investments and Mercy Investment Services, both of which hold shares in ExxonMobil, are calling for the ouster of CEO Darren Woods over the company’s lawsuit against shareholder advocacy groups.

Politics & Policy

• The Scottish government backtracked on a plan to cut emissions by 75% by 2030, conceding that target was unachievable. Although the government remains committed to eliminating greenhouse gasses by 2045, its net zero secretary said they would chart a new path to get there.

EVs

• Researchers found that lithium-ion battery life can be extended by changing the charging pattern. Engineers successfully tried using high-frequency pulses, which distribute ion particles more evenly as they pass through the membrane, reducing stress and damage. Commercial batteries tested by researchers maintained at least 80% of their original capacity for twice as many charge cycles as they did with continuous charging.
• Car sales in Europe dropped last month on the back of slowing demand for EVs. Overall sales dropped by 2.8% compared to March 2023. However concerns over high prices led to sales of EVs dropping by more than 11%, falling for the second time in four months.

Manish Bapna, president and CEO of the NRDC Action Fund. Bapna was among dozens of top environmental group leaders calling this week for Robert F. Kennedy to end his presidential campaign.

• Nigeria’s government is targeting a 60% jump in revenues — finance minister.
• Ukraine aid is a step closer to passage with release of House bill.
• Carlyle sees a cash cow in the AI electricity boom.