Net Zero

1. Power contract shakeup
2. Nuclear competition
3. Ocean carbon floats & sinks
4. ESG ‘chilling effect’
5. Carbon market boom

Wildfire smoke and scorching temperatures should qualify officially as natural disasters.

Google is reinventing the clean power market

Google is closing in on deals to expand a new method for buying clean electricity that could open a major new path to viability for low-carbon power projects that have been too expensive for utilities to pursue on their own.

Google revealed last week that it had signed a first-of-its-kind deal involving the Nevada utility NV Energy and the geothermal power startup Fervo. The Nevada deal is an untested iteration on the traditional power purchase agreement (PPA), a type of clean power contract that Google also pioneered nearly a decade ago. Under the contract (the value of which wasn’t disclosed), Google will pay a higher rate for power at its Nevada data centers and other facilities. In exchange, NV Energy will commit to a long-term deal to buy 115 megawatts of newly-built geothermal power from Fervo.

Now, Google is working on deals following the same approach with utilities including AEP, Dominion, Southern Company, and the Tennessee Valley Authority, Caroline Gollin, Google’s global head of energy market development and innovation, told Semafor. Those deals will go beyond geothermal, and could include advanced nuclear power plants, long-duration storage, and grid enhancements.

PPAs have arguably been the most powerful tool for bringing clean energy into the grid in the US and Europe — but they are in need of a serious makeover if that impact is to continue. A new approach to PPAs is especially urgent to ensure the wave of new power demand from data centers and EVs isn’t met with fossil fuels.

Nuclear competition tightens

The US Senate passed a bipartisan nuclear energy package on Tuesday, a major piece of energy and climate legislation as Washington seeks to play catch-up with China’s rapid nuclear expansion.

The new law is designed to allow for a more rapid build-out of nuclear reactors by breaking some of the red tape that has hindered its development in the US, but is unlikely to materially advance the industry or address a dearth of innovation that sees the US lag behind rivals, analysts said. Beyond requiring the US’ nuclear regulator to update its mission so it does not “unnecessarily limit” nuclear development or its use, “no one will remember anything else that happened in this piece of legislation,” argued Third Way, a progressive think tank. The US currently has the most nuclear power reactors in the world, but Beijing’s push to advance its own nuclear industry has been so comprehensive that the US lags an estimated 15 years behind China in deploying the newest generation of reactors, according to a report from the Information Technology and Innovation Foundation, a think tank.

Ocean carbon floats & sinks

Ocean-based carbon removal, a cutting-edge climate tech that could be massively scalable, is having a mixed week. First, a promising startup called Running Tide said it would shut down, citing a collapse in demand for voluntary carbon removal credits. The company last year launched a pilot version of its plan to capture ambient CO2 using floating kelp and other biomass and then sink them to the ocean bottom. But it saw an exodus of scientists over concerns it wasn’t paying enough attention to the potential environmental side effects of the practice. Ultimately, its CEO told the company’s local newspaper in Maine, “we were building this for a growing market and all of a sudden it was shrinking.” One of Running Tide’s early customers was Stripe, which bought 600 tons in 2021 for $150,000. Running Tide delivered on that agreement before its closure, said Nan Ransohoff, the company’s head of climate, and added that Stripe was realistic about the risks for first movers in the carbon removal industry: “We should expect that not all attempts will succeed. That’s what an early ecosystem looks like.”

In better news, a different startup, Equatic, said it broke ground on the first commercial-scale ocean carbon dioxide removal plant in North America. The company’s technology is very different — it pulls seawater into a factory and uses electrolysis to crystallize carbon — but the market challenges it faces are the same.

ESG ‘chilling effect’

Share of bills introduced in US state legislatures this year targeting ESG investing that passed into law, compared to 14% last year. One reason for the drop, according to a report by consulting firm Pleiades Strategy, is that the sky-high cost to public pensions of banning ESG considerations in investment decisions, or blacklisting asset management firms that do, is becoming more stark in states like Texas where such laws have been passed. The opposition to anti-ESG bills is spreading among Republican-dominated business lobbying groups, and is increasingly unpopular with voters. Still, the Pleiades report noted, “it is clear that these state policies are having a chilling effect on corporate dialogue on key issues such as climate change.”

Carbon market boom

Carbon prices in Europe are approaching the level needed to start making a dent in emissions from the industrial sector, Goldman Sachs analysts project. By 2028, the price for a permit to emit one ton of CO2 should increase from about €70, where it has hovered for the last few years, up to €100-130, Michele della Vigna, who leads the bank’s Carbonomics research team, wrote in a note. Behind the increase are two main factors. The cap on the bloc’s cap and trade system, which is mandatory for big emitters across a range of sectors, is falling, as is the number of freebie credits regulators hand out to certain hard-to-abate facilities. Also, the low-hanging-fruit steps that companies could make to operate more efficiently or source renewable energy have mostly been taken, della Vigna said, leaving more companies in the position of having to buy credits to cover their remainder.

Up to now, the market has worked effectively in the power sector, where numerous relatively low-cost decarbonization options are available. Industrial sectors like concrete and steel, however, haven’t been much affected by the market, because carbon prices were much lower than their decarbonization alternatives, like carbon capture or green hydrogen. When the price goes above €100, he predicted, those companies will have a sound business reason to boost their investment in emissions-cutting tech.

One important question is what this will mean for consumers. European policymakers have moved very cautiously to raise carbon prices, fearing a backlash over consumer inflation. But the drop in natural gas prices Europe is expected to see over the next few years as more LNG arrives from the US will be deep enough to offset the increase, della Vigna said: “The EU emissions trading scheme is often overlooked, because everybody only talks about the US Inflation Reduction Act, but I actually think it’s been probably the best and most interesting instrument of decarbonisation, one which doesn’t create massive holes in government budgets because actually it raises revenues.”

New Energy

• The CEO of NextEra Energy Resources, the largest operator of renewables projects in the US, said the Biden administration’s higher tariffs on clean tech imports from China will “definitely create higher costs for customers and make it more difficult to get some of the clean energy goals that the Biden administration has over the finish line.”
• Ghana finished construction on one of the biggest floating solar farms in Africa, built on the surface of a large reservoir.

Fossil Fuels

• Shell is doubling down on its LNG business by agreeing to acquire Singapore-based LNG trading firm Pavilion Energy. The buy will cement Shell’s position as the world’s top LNG purveyor, which it sees as a growing cornerstone of its business.

Finance

• A federal judge dismissed ExxonMobil’s lawsuit against activist shareholders. Because the investment firm Arjuna Capital withdrew its resolution and promised not to introduce a copy next year, Exxon has no reason to complain, the judge reasoned.

Tech

• An Australian manufacturer is nearing completion of the world’s largest electric ferry boat, which will be capable of carrying 2,100 passengers and 226 vehicles.

Minerals & Mining

• Indonesia’s race to dominate the global nickel mining and refining market is having deadly consequences for workers, a glaring supply chain risk for practically every EV maker.

EVs

• EV startup Fisker filed for bankruptcy. The company was plagued by quality issues with its cars and accounting snafus, and lost money on each of the 4,900 electric SUVs it managed to deliver.
• The US is getting closer to a $25,000 EV, starting with the re-introduction this year of the Chevy Bolt, which will start at $28,000 (after IRA tax incentives).

Jean Su, senior attorney at the Center for Biological Diversity, which is petitioning the Biden administration to officially designate heat and wildfire smoke as natural disasters.

• Why Trump is ready to go harder on China
• Bitcoin (sort of) grows up.
• Spying fears delay British army badges.