Net Zero

1. Confronting climate debt
2. Copper crisis
3. EV buyers’ remorse
4. BYD takes LatAm
5. Carbon-negative H2?

The utility boss not worried about AI, and the Navy officers worried about LNG exports.

Confronting climate debt

Climate change will fight for its slice of a shrinking global development finance budget during the annual meetings of the World Bank and International Monetary Fund in Washington, D.C., next week.

Top officials from the world’s development banks will discuss solutions to the crushing burden of sovereign debt on many developing countries, including by finding new ways to incorporate both the costs of climate risks and the benefits of climate adaptation investments in the institutions’ lending policies. Wealthy countries are also expected to announce how much they intend to give to the World Bank’s concessional lending arm, the International Development Association, which is due for restocking this year. The IDA is a critical source for climate finance, Franklin Steves, senior finance policy advisor at the think tank E3G said, but it will be competing for countries’ money with two major wars and a host of other development priorities at a time when most countries are slashing their foreign aid budgets. “If the IDA replenishment fails, that will be seen as another sign of the global north’s insincerity on climate,” Steves said.

Meanwhile, G20 finance ministers plan to meet on the sidelines of the World Bank and IMF meetings to discuss new international taxes that could be raised to support climate finance, including on billionaires, shipping, and on oil and gas profits. And Kristalina Georgieva, who is expected to be appointed for another five-year term at the helm of the IMF, will have a chance to lay out a more ambitious climate plan than the relatively timid steps the fund has taken so far, Steves said.

We’ve got some exciting additions to the list of speakers at the World Economy Summit, including Jeremy Hunt, U.K. Chancellor of the Exchequer; Gina Raimondo, U.S. Secretary of Commerce; and former U.S. Treasury Secretary Larry Summers. Join us in Washington, D.C. next week, on April 17-18, to hear from some of the world’s most influential economic and business decision-makers on the future of global economic growth, the rising middle class, digital infrastructure, AI, and much more.

Copper crisis

The price of copper hit its highest level in two years, making it one of the hottest commodities of the energy transition and, analysts say, marking just the beginning of a long uphill march.

After the closure of a major mine in Panama at the end of 2023, and with permitting delays slowing several new mines in the U.S., global copper supply is running low, pushing prices to about $4.32 per pound, up 14% since January. Rising prices are driving a rise in copper theft in the U.S.: Minnesota lawmakers are considering a bill that would mandate a state license to sell copper following a rash of robberies to pull the wires out of street lamps. Bank of America analysts project prices to push to $4.65 this year and above $5.40 by 2026. The shortfall — the result of a collision between the fast pace of the energy transition and the painfully slow and expensive process of opening a mine — will be up for debate at the world’s largest copper conference starting Monday in Santiago, Chile.

Meanwhile, mining giant Rio Tinto promoted its top copper executive, Bold Baatar, to chief commercial officer this week, an indication of the central role of copper in the company’s strategy. Mining companies can’t solve the copper crisis in isolation, Baatar told Semafor: “Joint ventures are an increasingly important pathway to securing capital, accessing new resources, developing more sustainable technologies and extending the lifetime of existing assets, all of which are needed to increase the production of critical minerals.”

The meaning of Chinese EV buyers’ remorse

China is the most important country in the world when it comes to the future of electric vehicles. So a recent survey showing that more than a fifth of battery EV owners in China want their next car to be powered by fossil fuels is understandably raising alarm bells in the industry.

Growth in sales of EVs has long been plagued by range anxiety. Enter a new challenge — what a charging-facility trade body calls “energy-replenishing anxiety.” In effect, users are concerned about limits to charging infrastructure. It spotlights one of the major challenges to the energy transition, and raises questions of how Chinese authorities respond. The country is such an EV behemoth that the speed bumps it hits — and the solutions it uses — can serve as valuable lessons for the rest of the world.

The survey from McKinsey China pegged battery EV buyers’ “regret rate” as surging from 3% in 2022 to 22% last year, which its report blamed largely on limited charging infrastructure. Chinese consumers’ “acceptance rate” of new energy vehicles in general also dropped from 68% in 2022 to 62% in 2023, meaning fewer people were looking to buy these vehicles.

BYD takes LatAm

Share of Latin American solar panel imports originating from China. The region has become one of China’s most valuable customers for cheap green technology, according to The Economist: cities like Santiago now boast more Chinese EV buses than any in China, and Chinese firms have struck utility deals to operate Lima’s electric grid. Many in Latin America are welcoming the economic boost that comes with the investment, but Washington is now starting to raise the alarm about China’s takeover in the region, with one academic calling it a “civilizational struggle” for U.S. firms losing business in the south, and for Washington losing geopolitical influence in the region.

Carbon-negative H2?

Low-carbon hydrogen is so passé. In Louisiana, an engineering company is laying the groundwork for one of the first commercial-scale factories to produce carbon-negative hydrogen.

The technology uses agricultural waste and other biomass as a fuel source, and is equipped to capture 97% of the CO2 it emits, said Brian Higgins, chief strategy and climate officer at the engineering firm Babcock & Wilcox. If that CO2 is buried, the system — in which a proprietary iron-based pellet is used in a series of chemical reactions to strip hydrogen molecules out of water — sequesters more carbon than it produces. B&W is currently building a pilot version of the plant in Ohio, and lining up permits and sales contracts for a commercial plant in Louisiana, with a plan to start production in late 2026.

In a way, the machine is designed not just to manufacture hydrogen, but to manufacture tax credits. Depending on how it’s operated and how its byproducts are marketed, the system can qualify for two of the most lucrative clean energy tax credits in the Inflation Reduction Act, for both CCS and green hydrogen, Higgins said. He also envisions selling carbon removal credits to companies like Microsoft looking to expunge their past climate sins. Once the plant is operational, the 45V hydrogen credit alone will be sufficient to offset the cost of building the plant, he said. And that’s before the revenue from actually selling the hydrogen, which promises to find a hot market among Gulf Coast refineries and other factories — assuming B&W can find a sufficient supply of biomass.

“In the U.S. we’re not going to have a carbon tax,” Higgins said. “So you have to go after all the carrots you can find.”

Personnel

• 🟡 SCOOP: Ray Mabus, the top U.S. Navy official under President Barack Obama, led a group of retired admirals and generals in a letter to Congressional leaders, shared with Semafor, supporting the pause. Increasing U.S. LNG exports, they write, are “now increasingly being exported directly to the country’s rivals, like China, allowing that country to gain leverage and build power globally while weakening our nation’s ability to respond in a crisis.”

New Energy

• Eight new battery and EV factories were announced in the U.S. in March, worth a combined $3 billion in investment. At least $121 billion in clean energy projects have been announced since the Inflation Reduction Act passed in 2022.
• U.S. power companies are slow to adopt a relatively easy way to dramatically increase the capacity of the electric grid: Replacing some of the wires.

• The U.S. and Japan will collaborate on developing advanced offshore wind technology, the countries said following Prime Minister Fumio Kishida’s visit to Washington this week. The U.S. pause on LNG export terminal permitting has been worrisome to Japan, a major LNG importer.

Fossil Fuels

• The Biden administration approved a large crude oil export terminal in the Gulf of Mexico. The terminal will be operational by 2027 and will serve customers for U.S. oil in Europe and Asia.

Politics & Policy

• Russia destroyed one of Ukraine’s last large power plants, in a strike near Kyiv. Ukraine’s electric grid is at increasing risk of collapse, and the country is running critically low on air defense ammunition.
• A staff revolt is underway at the Science Based Targets initiative, one of the leading independent groups that certifies companies’ climate plans. Senior staff are calling for the ouster of Luiz Fernando do Amaral, the group’s CEO, after he supported a controversial change in policy that will lend credibility to companies’ use of carbon offset credits.

Tech

• Want $3 million for your climate tech startup? The nonprofit investor Elemental Excelerator is looking for 15-20 new startups to back — future investments can potentially receive capital through the EPA’s $20 billion green banking program announced last week.

Minerals & Mining

• The price of lithium has probably bottomed out, HSBC analysts expect. But they recommend investors stick to buying stock of well-established mining companies over newcomers.

EVs

• While EV sales are falling for many top automakers, they’re surging at BMW. The company established a market foothold early, analysts say, and has continually updated its offerings despite uncertainty in the market.

Joe Dominguez, CEO of Constellation Energy. Dominguez and I will discuss how to power the AI boom during the Digital Infrastructure session of Semafor’s World Economy Summit next Wednesday, April 17. RSVP here.

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