Net Zero

1. Don’t count BYD out
2. Oil’s cloudy future
3. Polluted PR
4. Oil money ethics
5. Beef bubble

A new GOP climate leader, and a nonstarter deal on LNG and Ukraine.

Don’t count BYD out

Tesla retook the title of world’s top-selling electric automaker in the first quarter of this year, even though its sales slumped more than analysts expected.

Tesla reported its lowest quarterly sales since 2022, with 383,810 EVs sold globally. That’s down more than 100,000 from the fourth quarter, and 9% lower than the first quarter last year — but enough to beat BYD’s 300,114. Tesla blamed the slump on escalating competition, factory stoppages related to supply chain disruptions in the Red Sea, and an arson attack on its Berlin gigafactory. But the company still produced about 47,000 more EVs than it sold, so flagging demand is clearly a problem as well — possibly because the company’s lineup is getting old, and its flashiest new product, the Cybertruck, seems like the opposite of what mainstream EV consumers are asking for.

Sales reports this week from Kia, Hyundai, and Rivian were more optimistic, showing a big bump in sales compared to the first quarter last year. But they’re all still hundreds of thousands of EV sales behind Tesla and BYD. And don’t count BYD out yet: Its sales always tend to slump in the first quarter, and could easily jump back ahead of Tesla later this year. That would be a further letdown for Tesla shareholders, who have already seen share prices fall 33% this year, among the worst in the S&P 500.

Oil’s cloudy future

The future is still wide-open for global fossil fuel demand, according to a meta-analysis of 16 market outlooks compiled this week by think tank Resources for the Future.

First and foremost, the chart above shows that there’s still so much uncertainty about how aggressive governments will get about climate policy that predicting fossil fuel demand even a few years into the future, let alone decades, is a fool’s errand — which makes investing in the sector a risky proposition. But the data also show that a long future for fossil fuels is all but guaranteed, and that, the report says, “a phaseout is not a prerequisite to achieving international climate goals.”

Big PR lets high-carbon clients off easy

More than a third of board members at the world’s largest advertising and public relations firms — all of which have made public commitments to slash their own carbon emissions — also hold roles at high-emissions companies, according to analysis compiled by DeSmog.

With combined revenues of $67 billion in 2022, Omnicom Group, WPP, Interpublic Group (IPG), Publicis Groupe, Dentsu, and Havas dominate the communications industry, and have hundreds of subsidiary agencies around the world. And of their 64 total directors, 22 maintain ongoing roles at companies in high-emissions industries such as fossil fuels, aviation, and plastics.

These ties, climate campaigners argue, represent a conflict of interest: All of these firms except Omnicom have public net zero goals, and all six are members of a voluntary industry initiative pledging to reduce in-house greenhouse gas emissions. Yet — campaigners posit — these board ties limit the firms’ willingness to stop producing marketing and public relations material that promote the fossil fuel industry, or portray climate-damaging companies as green.

Whether or not these board links are the reason behind any unwillingness to push for more aggressive climate action, the advertising industry at large certainly lags behind other comparable sectors. Banks, for example, also work with polluting companies and have also resisted activist pressure to drop fossil fuel clients entirely, but have at least set intermediate steps that ultimately pressure their clients to do more to accelerate the energy transition. The PR industry, by comparison, sets low or no expectations for its high-carbon clients, and continues to discount a large portion of its own carbon footprint.

Oil money ethics

Royalties and other revenue collected by the government of Guyana in the last four years from offshore oil drilling. In a heated BBC interview this week, the country’s president, Irfaan Ali, defended the decision to allow ExxonMobil and other foreign companies to drill there and said it did not give outside observers “the right to lecture us on climate change.” Meanwhile, an in-depth feature in The New York Times by Guyana-born journalist Gaiutra Bahadur offers a nuanced perspective on how the nation’s oil boom has benefited the country, despite running issues with the government’s handling of local pollution and negotiations with oil companies. These financial benefits are many times greater than what the country has been able to extract from foreign investors in conservation and carbon credits. “Countries like Guyana,” she writes, “are caught in a perfect storm where the consequences for extracting fossil fuels collide with the incentives to do so.”

Beef bubble

Brazil’s cattle ranching sector, and the global beef companies that rely on it, risk driving themselves out of business if they don’t do more to curb deforestation, a report from the risk forecasting firm Orbitas found. Beef production is a major source of global carbon and methane emissions and makes up 16% of Brazil’s carbon footprint, largely due to legal and illegal forest clearing, as well as the infamous cow farts and burps. And many of the policies that governments, companies, and consumers are adopting to curb those emissions — including carbon pricing, satellite monitoring of deforestation, low-meat diets, and shareholder divestment — tend to raise cattle companies’ operating costs and cut into profits. For example, anti-deforestation policies could reduce Brazil’s available pastureland 37% by 2050, driving up land prices, the report projects. If the country’s cattle production companies don’t act sooner to adopt more sustainable practices, climate-related costs could see them losing $155 per hectare of pastureland by 2050 — and Brazil has about 177 million hectares of pasture.

Conversely, the global climate policy push will likely drive more investment into sustainable ranching practices, such as those that focus on boosting the productivity of existing acreage and developing new, non-beef revenue sources, Niamh McCarthy, the report’s author, told Semafor. That could turn into a $200 billion investment windfall by 2050 for companies that are willing to embrace the transition, she said, making them both cleaner and more profitable than rivals stuck on the status quo. A lawsuit brought in February by New York’s attorney general against the livestock company JBS highlighted the pervasiveness of greenwashing in Brazil’s beef industry; McCarthy’s new report underscores that the industry’s failure to act will ultimately be most harmful to its shareholders.

Explaining the tech that could combat the climate crisis: MIT Technology Review’s weekly newsletter, The Spark, provides the latest news, analysis, and policies shaping climate technology. Sign up for free today.

New Energy

• The Biden administration approved its eighth offshore wind farm, south of Martha’s Vineyard. The 2.6 gigawatt project will be built by a division of Spanish energy corporation Iberdrola, and follows approval of a nearby Ørsted project last week. More auctions for offshore wind projects along the East Coast are expected this summer.
• Meanwhile, Brazil’s offshore wind sector is on life support as lawmakers consider new protections for coal-fired power plants.
• The European Union will investigate whether Chinese solar panel companies submitted unfair low bids in a recent auction to build a solar farm in Romania, the bloc’s latest step to crack down on the global flood of cheap Chinese solar exports. India, meanwhile, said it will re-impose trade barriers on Chinese solar, to help its own manufacturers compete.

Fossil Fuels

• Qatar chartered the construction of 19 new LNG carrying ships, as it pushes to regain dominance in the global LNG market.

• Oil consumption for transportation is falling in China, as the EV market booms. But the country’s crude oil consumption is still set to rise, because more petrochemical refining, which China historically left to other countries, is moving onshore — largely at the behest of clothing retailers like Temu and Shein.
• Shell is in court in The Hague this week to appeal a 2021 ruling that the company must cut its greenhouse gas emissions. Among the company’s arguments is that, by cutting into its bottom line and available capex, the ruling hurts Shell’s ability to invest in low-carbon technologies.

Politics & Policy

• The White House refused to reverse its pause on LNG export permitting in exchange for an expedited military aid package for Ukraine, an offer the House Speaker Mike Johnson put on the table this week. An earlier Reuters report to the contrary was “not true,” a White House spokesperson said.

Finance

• U.S. home insurance rates are expected to hit a record high of $2,522 per year on average. The main reason for the increase is the rising cost of rebuilding from natural disasters.

Minerals & Mining

• One of the strongest tools the U.S. has to build up its supply of critical minerals from overseas, the International Development Finance Corporation, is almost nonfunctional because of restrictions placed on its investments by Congress, a report from the Center for International and Strategic Studies argues.

Food & Agriculture

• Hay grown for cattle feed consumes nearly half the water in the Colorado River, a new study found. Alfalfa, the main cattle feed, is especially water-intensive.

Personnel

• “We will still keep our fair share of fossil fuels,” promised China’s new climate envoy, Liu Zhenmin. But cleaner fuels should eventually dominate, he said.

Rep. Mariannette Miller-Meeks (R-Iowa). She was named the new chair of the Conservative Climate Caucus (CCC) on Monday, taking over from Rep. John Curtis (R-Utah).

• Capital One and Discover start their uphill battle in Washington.
• As general election heats up, Trump camp prepares to be frozen in court.
• Replit launches new product in race for AI coding assistants.