Net Zero

1. Gas price politics
2. Germany’s carbon scandal
3. Hot trucks
4. Coal slowdown
5. Solar import rush

Sharks, EVs, and Nvidia’s weather forecasts.

What is net zero good for? Robert Jenrick, a former UK minister who is vying to become the next Conservative Party leader, landed in hot water this week after telling Politico that “there’s no prizes for being the first country in the world to decarbonize.”

In a Wall Street Journal op-ed, US Sen. JD Vance, Donald Trump’s running mate, went even further, warning that “net zero will destroy the American dream for countless millions.”

To be sure, Jenrick is right that there could be first-mover disadvantages — Germany, an early renewables pioneer, has faced some of Europe’s highest energy prices. And the free-rider problem is unavoidable: laggards like Russia, Saudi Arabia, and other major fossil fuel exporters force early movers to bear more of the cost.

But Vance’s and Jenrick’s framings miss the opportunities — political, geopolitical, and social — that leading the energy transition can bring, beyond avoiding the negative impacts of climate change.

Clean energy is superior in multiple ways: Better public health, less volatile energy pricing, and perhaps most importantly an open field for lucrative new manufacturing and software opportunities. China epitomizes this dynamic: It may still use a lot of coal, but its dominant position in EV and renewable supply chains has made it an indispensable trading partner for every other country.

Brian Deese, a former climate adviser to US President Joe Biden, argued in a Foreign Affairs article this week that America should use clean tech and climate finance not just to bolster its domestic economy but to increase its soft-power geopolitical leverage around the world. The prize for being first, in other words, is to dictate the terms of the world order for the next few decades. That’s a lesson for conservatives on both sides of the pond.

Gas price politics

Climate and energy have been out of the spotlight so far at the Democratic National Convention, but the party platform gives some clues about how Vice President Kamala Harris might handle the oil and gas industry if elected president. In her economic address prior to the convention, Harris promised to crack down on “price gouging” for groceries and other consumer goods. The Democratic platform similarly focuses on abusive pricing for gasoline, and promises to use releases of oil from the national reserve and prosecutions of dishonest executives to combat it.

Politicians love to promise lower rates at the pump, but the global nature of the market means they ultimately have little influence on crude oil prices, the main determinant of the cost of gasoline. Using the Strategic Petroleum Reserve to manipulate that price can easily backfire, said Ed Hirs, energy economist at the University of Houston, because once the government starts buying oil to refill it, the cost will go right back up. Other promises in the Democratic platform, including eliminating oil industry tax breaks and raising rents for drilling on public land, would also tend to increase prices. To the extent that Donald Trump’s administration would remove barriers to domestic production, roll back sanctions on Russia’s energy companies, and press OPEC to drill more, costs might come down, Hirs said — at the industry’s expense: “[Trump] will decimate the domestic oil patch,” he said. More detail on Democrats’ climate strategy may be forthcoming at the convention later today, when climate hawk senators Ed Markey (D-Mass.) and Jeff Merkley (D-Ore.) are scheduled to speak.

A German carbon-market scandal is driving companies out of business

In January, when a scandal was brewing in Germany over its domestic carbon market, oil and gas giant Shell received a message on its online whistleblower portal: a Chinese emissions-reduction heating project on an oilfield it was involved in was actually a chicken farm.

“I hope you will fulfill your due diligence and investigate the allegations,” the complaint, a copy of which was shared with Semafor, reads. The document also made reference to at least three other such cases.

Now, the company whose CEO made that anonymous whistleblower complaint has declared itself insolvent. It was, it says, a victim of a multibillion-euro, transcontinental scandal that has roiled Germany for months: Biofuels suppliers allege dozens of emissions-reduction projects abroad were faked or overstated their success. The controversy has focused criticism on Germany’s regulators and big energy companies, while eroding already-threadbare trust in efforts to reduce the energy sector’s emissions.

“How does fraud like this, at such a scale, happen,” Zoltan Elek, the whistleblower whose company Landwärme supplies biomethane to big companies including Shell, said in an interview. “This is not small scale, someone selling you a bad used car.”

Hot road truckers

Heat waves are driving up carbon emissions and fuel costs in the trucking industry.

Samsara, a company that makes software and web-connected devices to monitor industrial operations, kept tabs on tens of thousands of semi trucks in several states over the last year to see how their operations changed during heat waves. It found that idle time — when the truck’s engine is on but not moving — closely tracks changes in ambient temperature, as drivers are more likely to keep their air-conditioning on during stops when it’s hot. A weeklong heat wave last year in Oregon and Washington likely added a total of $1 million to freight companies’ fuel bills, and resulted in about 2,700 metric tons of extra CO2 emissions, the analysis, shared first with Semafor, found.

Coal slowdown

Gigawatts of new coal-fired power plant capacity approved in China in the first half of 2024. That’s a steep fall from the 50.4 gigawatts that were approved in the same period last year, as China’s power generation capacity catches up with demand and the government ramps up its effort to integrate more renewables and nuclear power into the grid. China’s actual coal power production has also been cut this year because of booming production from rainfed hydroelectric dams. Meanwhile, new data indicate Europe’s coal consumption in 2023 hit a record low, but surging power demand in the US is impeding plans to take some coal plants offline early.

Solar import rush

Solar installation companies in the US are racing to import a record number of panels from manufacturers in Southeast Asia before new tariffs kick in. Imports from Vietnam, Thailand, Malaysia, and other countries in the region rose to 17.4 gigawatts in the second quarter, up 36% from that period last year, as the Biden administration closes in on a decision to raise tariffs as high as 50% in response to what US trade officials say are anti-competitive price cuts and offshoring maneuvers designed to get around existing tariffs on China. US solar manufacturers say they can’t compete without higher trade barriers, and are pressing the administration to move faster. But it may turn into a game of solar whack-a-mole: In anticipation of the tariffs, some manufacturers are already packing up shop and relocating to a new round of locations, including Indonesia, Laos, and the Middle East.

New Energy

• Companies making low-carbon fuels are seeing their share prices tank as rising costs force them to pump the brakes on projects.

Fossil Fuels

• Clashes with activists, contractors, and federal regulators are piling up for the largest LNG export projects in the US, threatening to drive up global gas prices and knock America off its spot as the world’s top LNG exporter.

• The US will support a global treaty to reduce the amount of new plastic produced each year, over the strenuous objections of ExxonMobil and other oil companies.

Finance

• While big asset managers bail out of a leading climate finance advocacy group, public pension funds say they’re going nowhere.

Tech

• Nvidia is getting into weather forecasting, with a new AI model that can simulate extreme weather events down to a kilometer scale.

EVs

• Donald Trump said he might scrap the $7,500 EV tax credit if re-elected president — and would consider appointing Tesla CEO Elon Musk to a cabinet role.
• In other good news for Tesla, European Union officials said they will dramatically scale back tariffs on the company’s China-made EVs.

COP29

• Switzerland and Canada are backing a proposal to expand the list of climate finance donor countries to include Russia, Saudi Arabia, and possibly China.

• Fed officials head to Jackson Hole as interest rates loom large.
• Obamas headline Democratic convention’s second day.
• US pressures Kenya’s President Ruto over police killings.