Net Zero

1. Under the heat dome
2. Permitting inequality
3. 🟡 Japan’s misguided IRA
4. Coal-fired diplomacy
5. 🟡 An ‘atrocious’ debate
6. Staggering climate costs
7. 🟡 Shopping for carbon removal
8. Kremlin oil revenue bottoms out
9. 🟡 Don’t sweat the discharge
10. 🟡 Fixing regressive subsidies

Under the heat dome

Hundreds of local heat records were broken across the U.S. this week as the country, especially the Midwest, swelters under a “heat dome.” Extreme heat is causing flights and public school classes to be canceled, with no immediate relief in sight as El Niño continues to intensify. Globally, this month is set to be the hottest August since records began in 1850. The level of extreme heat much of the world has endured over the last month or so is a threat to public health and the economy, forcing the insurance industry to invent new kinds of coverage.

Clean energy under the microscope

Energy infrastructure projects that are delayed by federal environmental impact reviews are most likely to be clean energy, according to a review by R Street Institute, a think tank. The review tallied projects subject to the highest level of environmental impact scrutiny, and found that most fossil-fuel projects qualified to be exempted because they were similar to past projects that already underwent review (one oil well is about the same as the next, for example). The data point to three conclusions: Although “permitting reform” is ostensibly a bipartisan issue, the reality is that it will benefit renewables more, which may explain why Congressional consensus remains elusive; the more clean energy that gets built, the more projects may qualify for exemptions; and no matter how much the process is reformed, many of the most important clean energy projects are so physically large that permitting will always be an obstacle.

Japan’s answer to the IRA is a missed opportunity

By Nithin Coca

THE NEWS

Japan — the world’s third-largest economy and fifth-largest greenhouse gas emitter — has begun implementing its version of the U.S.’s Inflation Reduction Act (IRA). It may be a huge missed opportunity.

The Green Transformation Basic Policy, widely known as GX, aims to put Japan on a path towards meeting its 2050 net zero targets: The government plans to spend around 2 trillion yen ($14 billion) aimed at catalyzing 150 trillion yen, or about $1 trillion, of public-private investment into decarbonizing Japan’s energy, transport, and industrial sectors. It marks the latest in a string of efforts by countries worldwide that appear to be a direct response to the game-changing IRA, which has transformed the U.S.’s clean-energy push.

But critics are already worried Japan’s version could lead to the country wasting billions on infrastructure that does not reduce emissions, relies too heavily on unproven technologies rather than tried-and-tested ones, and compromises its energy security.

“Investing so much in these technologies that don’t have much climate impact is essentially greenwashing,” said Walter James, a Japan energy analyst and author of the Power Japan newsletter. “They’re bungling this opportunity.”

NITHIN’S VIEW

The GX ostensibly aims to create entirely new industries and make costly, unproven technologies scalable and affordable. Instead, it looks more like a paean to entrenched players and their commercial interests, rather than Japan’s.

For one, it focuses on increasing “zero-emission thermal power.” In reality, this “co-firing” technology is still being piloted. Another concern is the GX’s lack of ambition: By 2035, when other G-7 nations aim to have decarbonized most of their power sector, Japan will still rely on fossil fuels for more than half of its power generation.

“Ambitious climate policy in Japan continues to be held back by powerful business groups representing heavy industry,” said Monica Nagashima, Japan country director for the nonprofit InfluenceMap, which this year published a report cataloging “intense and negative advocacy” over GX by a range of lobby groups including Keidanren, a business federation with over 1,400 corporate members, and trade associations representing high-polluting industries.

To read the full story, including Room for Disagreement and View from Europe, click here.

Coal-fired diplomacy

Chinese power companies will help South Africa extend the lifespan of its aging, unreliable, high-carbon coal-fired power plants. In a deal announced at the BRICS summit in Johannesburg, the companies will help South Africa build out its electric grid, install pollution control equipment on some fossil fuel power plants, refurbish some coal and nuclear power plants, and invest in solar panel manufacturing facilities. A U.S.-led deal to reduce South Africa’s reliance on coal, meanwhile, is stalled over concerns about job losses. Six new countries were invited to join the BRICS group this week, meaning the bloc will soon account for more than half of global carbon emissions.

One Good Text

John Hart, co-founder and vice president, Conservative Coalition for Climate Solutions.

Staggering climate costs

Lost annual economic output in Australia by midcentury if global warming exceeds the goals of the Paris Agreement, a government report warned this week. Higher temperatures will sap worker productivity, agricultural output, and tourism, among other effects, the report found. The country’s existing climate policies are insufficient to meet those goals.

Person of Interest

Online retailing platform Shopify isn’t an obvious candidate to be one of the world’s biggest buyers of carbon removal credits. But Stacy Kauk, the company’s head of sustainability, said it has a strategic financial interest in paying hundreds of dollars per ton for credits that, today, it doesn’t really need.

Shopify is a founding member of Frontier, a coalition of nine companies in tech and other sectors that are snapping up credits derived from projects that draw ambient carbon from the atmosphere. These are far more expensive than traditional carbon offsets, but have a far greater climate benefit.

The company’s executives had a bit of sticker shock at first, she said. But a few factors justified the decision to buy. One was corporate philanthropy. A second was that climate change represents a threat to Shopify’s customers (retailers and entrepreneurs), and therefore its bottom line: “If people are focused on doing damage control in their lives, they’re not going to be able to focus on building a business. So we have a need to protect our business.”

A third reason: Shopify wants to hedge against carbon removal credit prices shooting higher in the future as regulatory pressure to cut emissions ramps up and low-cost, low-quality offsets begin to disappear.

“Carbon removal is going to become a supply-constrained market,” she said. “If you buy now, you often can negotiate access to future credits at lower prices, because you’re an early supporter.”

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Kremlin oil revenue bottoms out

Russia’s fossil fuel export revenue has fallen 41% since its full-scale invasion of Ukraine last February, according to data from the Center for Research on Energy and Clean Air, a think tank. That’s a sign that sanctions by the U.S. and G-7 countries on the country’s crude and refined oil are having an effect. But under the current sanctions regime, this level of revenues — about $715 million per day — is as low as it’s likely to get, CREA analyst Isaac Levi said. Overall oil and gas prices will likely tick up in the winter, driving revenue higher, and so far the G-7 has been reluctant to penalize insurers and trading houses that violate its price cap. “As violations of the oil price cap policy continue, Russia’s export revenues are likely to increase,” Levi said in an email.

Don’t sweat the discharge

Japan’s decision to begin the controversial release of radioactive water into the Pacific Ocean from the site of the Fukushima Daiichi nuclear power plant sparked criticism despite the water containing a seventh of the tritium — a radioactive isotope — that the World Health Organization considers safe for drinking.

INSIGHTS

• There’s broad consensus within the scientific community that the plan of pumping the water into the Pacific is safe. “I don’t know any scientists in the UK — or indeed worldwide — in the field of radiological protection who are against it,” a professor of environmental science at the University of Portsmouth told the Financial Times, referring to the program. “As a scientist I would have started the release much earlier and done it much more quickly.”
• Despite nuclear power plants routinely discharging tainted water into the world’s oceans, often with higher concentrations of radioactive isotopes, Japan’s plan attracted widespread condemnation. China, for instance, banned the import of Japanese seafood. “The ocean is the common property of all humanity, and forcibly starting the discharge of Fukushima’s nuclear wastewater into the ocean is an extremely selfish and irresponsible act,” a Chinese foreign ministry spokesperson said.

— Jeronimo

Watchdogs

Fossil-fuel subsidies don’t just drain government coffers, they disproportionately benefit the wealthy and cost lives, a new research paper from the International Monetary Fund argues.

Overall, it estimated that fossil fuel subsidies totalled $7 trillion last year. Crucially, the wealthy are far bigger beneficiaries. This “regressivity” is among the biggest misperceptions populations and policymakers have when it comes to fossil-fuel subsidies, Nate Vernon, one of the paper’s authors, said in an interview. The other major misperception: That removing such price support inevitably leads to social unrest.

Governments can reduce the risk of political unrest, according to Vernon and his co-authors, by phasing in any subsidy cuts, communicating the reforms well in advance, coupling the shift with more targeted support for vulnerable households, and — if officials insist on maintaining subsidies of some sort — depoliticizing how prices are set by developing a transparent formula or handing over decisions to a nongovernmental body.

— Prashant