Net Zero

1. Climate debt trap
2. Zombie coal
3. Breaking free of captive coal
4. Lithium windfall
5. Solid state’s moment

Banks take on biodiversity, and first-time climate voters take on the US election.

Climate debt trap

World leaders in Washington this week for the autumn meeting of the World Bank and International Monetary Fund seem unlikely to make much headway on alleviating the debt crisis that has become a major impediment to developing countries’ climate agendas.

The world’s most climate-vulnerable nations are paying twice as much every year to service external debt than they receive in climate finance from development banks or rich countries, a recent analysis showed.

Debt is a cyclical trap for these countries, which find themselves having to borrow more to recover from disasters, leaving them unable to invest sufficiently in preparations for the next disaster. The World Bank took a small step forward ahead of this week’s meeting by increasing its equity-to-loan ratio, which should free up more concessional lending for climate projects. But other measures that activists and leaders like Barbados Prime Minister Mia Mottley have spent years asking for, including more debt cancellations or pauses and receiving a greater share of climate finance as grants, have yet to materialize. The outcome of this week’s meetings will set the tone for COP29 next month, at which climate finance will be at the top of the agenda.

Zombie coal

King Coal is down but not out. The International Energy Agency’s sweeping survey last week of the energy transition contained some good news about the pace of renewable energy deployment. But the biggest takeaway was that overall power demand is growing too fast for renewables to keep up. As a result, the IEA actually revised its near-term forecast for global coal demand upward compared to its forecast last year (although it revised its midcentury forecast downward).

Bloomberg’s Javier Blas calls this “a sign of the uneven, fits-and-starts nature of the energy transition.” I’m not convinced of that; the coal figures are driven by overall economic growth in China and India, not the electrification of industries in the US or Europe per se, which for now benefits gas and renewables much more than coal. Still, the fact that global coal demand still may not have peaked, after so many years of apparent progress on climate policy, is a stark reminder of how hard it will be to phase coal out in the years ahead.

Breaking free of captive coal

Asia is now responsible for the majority of global greenhouse gas emissions, and decarbonizing the continent is critical for the world to keep temperature increases below 1.5°C. But one major loophole isn’t just holding back progress — it could doom global net zero goals.

Following the COP27 climate summit in 2022, G7 nations unveiled plans to help countries including Southeast Asia’s most coal-dependent nations, Indonesia and Vietnam, retire their coal plants earlier than scheduled, while a growing number of major Western banks and Asian countries announced they will no longer finance coal-fired energy.

But so-called captive coal — coal-fired power plants that are not connected to national electricity grids, but instead used for individual industrial facilities — is not subject to the raft of new pledges, even though its growth across Asia imperils international climate efforts.

And with climate finance back on the table at the upcoming COP29 summit in Baku, captive coal still seems unlikely to face the chopping block. A top Asian Development Bank (ADB) official told Semafor that while he and his peers would prefer to invest in clean energy, they may not always be able to avoid channeling finance to industrial projects that, for now at least, rely on coal power — especially when some, like in Indonesia’s nickel refining sector, are integral to the global clean energy supply chain.

“These are still developing economies, and they need to invest in these sectors of the economy that require energy. And we are sensitive as their partner to not tell them somehow some sectors would be off-limits,” said ADB Vice President Scott Morris. “The challenge is, how do you get a better, more sustainable energy source attached to them? It’s no small task to get that right.”

White House Senior Advisor to the President for Energy and Investments Amos Hochstein will join the Sustainability session at the Fall Edition of Semafor’s World Economy Summit on Oct. 25. The discussion will focus on the challenges posed by climate change and what they mean for the future of climate finance, decarbonization, and food security.

Lithium windfall

Tons of lithium that could be available in the Smackover Formation brines in southern Arkansas, enough to supply the world’s future EV needs several times over. That’s according to a study released this week by the US Geological Survey, a figure that is far higher than previous estimates of the state’s lithium reserves. It’s great news for ExxonMobil, which was already getting into position to start up major lithium production in Arkansas by 2027. But actually extracting all the available lithium will require some new technology — and healthier demand for EVs.

Solid state’s moment?

Some venture capitalists aren’t ready to give up on chasing the holy grail of EV batteries. Solid-state batteries, which use a solid electrolyte rather than the liquid that is common in typical lithium-ion batteries, can hypothetically charge faster, run longer on a single charge, and last years longer. But they require tricky chemistry to prevent destructive chemical “dendrites” from building up on the battery over time, and have struggled to compete on cost with conventional lithium-ion batteries, production of which has become cheaper through economies of scale.

Some industry observers see solid-state batteries as the kind of technology that will be forever “five years away.” But others think they really are just around the corner this time. One of those is Laurie Menoud, a partner at At One Ventures, who led a $15 million Series A fundraising round announced today for the solid state battery startup Adden Energy. The company’s main technology, spun out of Harvard, is a proprietary “self-healing” material that prevents dendrite growth. But equally important, Menoud said, is Adden’s strategy for commercialization, which hinges on the tech being easily integrated with mainstream lithium-ion battery manufacturing equipment, lowering the cost of adoption for automakers or other potential customers.

Adden’s next step is to build a pilot plant to produce its batteries at commercial size. The promise of the technology is worth being patient for, Menoud said: “If you can really charge your car in 10 minutes, then you can really unlock EVs for everybody.”

New Energy

• One of the largest solar farms in the US opened in Texas, thanks to a power purchase deal with Google.
• Wind farms are the biggest bottleneck in the clean energy transition.
• The US plans to help the Philippines and other southeast Asian nations install small modular nuclear reactors, a Biden administration official said.

Fossil Fuels

• An oil and gas lobbying group whose members have been pursued by the Donald Trump campaign for contributions has an extensive plan to dismantle Biden-era climate policies, the Washington Post reported.
• Satellite imagery shows that Russia’s “shadow fleet” of unregistered oil tankers, built to evade sanctions, is already responsible for numerous oil spills around the world. Meanwhile, a top Biden administration official promised to crack down harder on Russian LNG exports.

Finance

• Hedge funds are increasingly betting against clean energy stocks.
• The market for trading clean energy tax credits in the US is growing quickly, with an estimated $7 billion in deals during the third quarter, on top of $9-11 billion in the first half of the year.
• The head of carbon credit registry Verra defended its conflict of interest policies after a former board member was charged by US federal prosecutors of faking data from a carbon project he was invested in.
• More companies are setting a goal to be “nature positive,” but watchdogs see a big opening for greenwashing.

Politics & Policy

• First-time voters for whom climate is a top priority are already turning out in large numbers for the US election, according to advocacy group Environmental Voter Project.

EVs

• EU countries still spend at least $45 billion per year subsidizing corporate car fleets with gas engines.

Personnel

• JP Morgan Chase hired Sarah Kapnick, formerly chief scientist of the National Oceanic and Atmospheric Administration, as its new global head of climate advisory, whose job will entail helping the bank’s clients “realize the economic opportunities of the transition to a low carbon economy.”

Gwen Yu, head of nature and biodiversity at JP Morgan Chase. Yu is in Colombia this week for the COP16 summit on biodiversity.

The Republican Party has successfully courted a group of billionaires — and self-proclaimed billionaires — to pour vast resources into Donald Trump’s reelection bid, Semafor’s David Weigel wrote. However as Michael Bloomberg’s unsuccessful 2020 run for the presidency shows, “self-funders don’t guarantee an election victory,” Weigel wrote.