Net Zero

1. A deal and a decline
2. ‘Massively off track’
3. DAC dilemma
4. Heat wave death toll
5. Missing flood insurance

Gaming out permitting reform in the post-Manchin era, and JPMorgan reveals details of its carbon footprint for the first time.

A deal and a decline

The U.S. and China laid out a new plan to collaborate on climate change that sidesteps the most controversial issues on the table at COP28.

In the joint statement, published as U.S. President Joe Biden and Chinese leader Xi Jinping prepared to meet in San Francisco Wednesday, the countries committed to include more ambitious methane reduction targets in their official plans, something China had not previously done. The only specific target in the statement is a promise that each country will “advance” five large-scale carbon capture projects by 2030. But the statement makes no mention of phasing out fossil fuels, or of China’s controversial building of new coal-fired power plants. Given the strained U.S.-China relationship, the fact that any collaboration remains possible on climate change, however modest, should help “stabilize” the politics of COP28, said Li Shuo, incoming director of the China Climate Hub at the Asia Society Policy Institute: “The challenging U.S.-China relationship dictates that bilateral climate outcomes will only be ‘floor-setting,’ not ‘tone-setting.’”

Meanwhile, a Carbon Brief analysis this week found that China’s CO2 emissions are likely to fall next year. It’s the first time that an annual drop has been caused to a large degree by the clean energy transition, and not by an isolated disruption like the pandemic. That doesn’t mean China’s emissions have necessarily peaked — newly-commissioned coal plants could tip the scales back, for a time. But it indicates that, for the first time, renewable energy is growing fast enough to cover the country’s annual increase in demand.

‘Massively off track’

A trio of major reports published Tuesday paint a grim picture of the state of global climate progress, and raise the stakes for COP28. A U.N. assessment of all countries’ current climate commitments found that if all were met — a big if — global emissions may be about 5% lower in 2030 than they were in 2019. To limit global warming to 1.5 C above pre-industrial levels, they need to be 43% lower. “The world remains massively off track,” U.N. chief Antonio Guterres said. The U.S. government’s annual National Climate Assessment, meanwhile, shows that disasters that cause at least $1 billion in damage now occur every three weeks on average in the U.S., compared to once every four months during the 1980s. The report details how healthcare, food, insurance, and building costs have increased because of climate impacts, and how steeply those costs rise for every fraction of a degree of warming.

Finally, a report by a coalition of climate and energy research groups finds that only one out of 42 global economic indicators — electric vehicle sales — is on track to meet a 2030 target compatible with 1.5 C. Some critical metrics, such as the share of renewables in electricity production, deforestation rates, and the energy efficiency of buildings, are heading in the right direction but not fast enough. And others, like the carbon intensity of steel and public financing for fossil fuels, are in need of a u-turn.

DAC’s fossil fuel dilemma

Two major projects last week showcased the growing ambition of the direct air-capture sector. Both also illustrate a rift in the nascent industry over its relationship with fossil fuels, as it grapples with how it should — or shouldn’t — utilize, partner with, or ignore an industry it and others blame for driving climate change. This debate is as much about moral and philosophical questions as technical and financial ones.

One of the biggest obstacles to expanding DAC — which scientists see as essential for mopping up existing atmospheric emissions — is its cost, which today can range upward of $1,000 per ton. To bring that down, DAC entrepreneurs need to grapple with thorny questions about their own use of fossil fuel-based electricity, which may be the cheapest option in some cases. They also need to confront the most obvious way to turn captured carbon dioxide into revenue, which is to sell it to oil companies that use it to push the last drops out of wells, a process known as enhanced oil recovery. The fossil-fuel industry also has long invested in the capture and transport of carbon, is filled with key expertise, and is deep pocketed, making it a potential partner.

Some DAC startups are comfortable working alongside oil and gas majors, utilizing their existing infrastructure and cheap energy to display commercial viability and scale up while still sucking more carbon emissions out of the atmosphere than they emit. But for others, that approach is both morally compromised and a deterrent to investors.

The heat wave death toll

Increase in global heat-related deaths by 2050 compared to current levels, according to a major report on the health impacts of climate change in the Lancet on Tuesday. Already, heat-related deaths of people above age 65 have increased 85% since the 1990s, the report, by 114 top medical and public health researchers, found. Other key findings: One-third of cities report their health systems are being overwhelmed by climate-related maladies, a growing number of regions have favorable climates for disease-carrying mosquitoes, and heat waves and droughts caused 127 million more people to experience food insecurity in 2021 compared to the average of the last few decades.

Missing flood insurance

Commercial property owners in the U.S. are deeply underestimating their vulnerability to flood-related damages, leaving themselves exposed to hundreds of thousands of dollars of uninsured losses, a survey released Tuesday by the insurance firm Chubb concluded.

The average claim in the U.S. for flood-related commercial property damage is $380,000, making it the most expensive form of damage such properties face, Louis Hobson, senior vice president for North American flood insurance at Chubb, told Semafor. After a serious flood, less than 25% of businesses reopen. Flooding is also the most common form of property damage, and the risk is rising because of climate change, Hobson said. Yet of the 332 insurance brokers Chubb surveyed, only 16% said most of their clients opt to buy flood insurance — either because they don’t think they need it, can’t afford it, or mistakenly assume that flood damage is covered by their boilerplate insurance (it typically is not).

“There’s a massive false sense of security,” Hobson said. “Businesses have widespread misconceptions of what their risk of flooding is and the degree of [insurance] protection they have.”

Many private insurers used to not even offer flood insurance, because of the typical scale of damage, leaving property owners reliant on government-issued policies. But the availability of better, more granular climate and flood risk data is making more insurers feel comfortable enough to offer policies; for Chubb, it’s a “rapidly growing” business line, Hobson said, and one poised to grow more as awareness of climate hazards by business owners, and their mortgage lenders, increases.

New energy

• The global energy sector is adding jobs quickly, and more than half of hiring is in clean energy sectors, especially solar and EVs, according to an International Energy Agency analysis. But some big labor shortages continue to impede the clean energy transition, especially for construction workers, carpenters, electrical engineers, and truck drivers.

• The U.K.’s grid regulator is aiming to speed up the connection of new renewable energy projects by cracking down on “zombies.” Officials estimate that up to 70% of the 1,000 projects in line for a grid connection are speculative and not actually making progress toward construction. New rules would make it easier to give those the boot and clear the line for real projects.

Fossil fuels

• At COP28, the U.A.E. is planning to push state-owned oil companies, which have lagged behind their private peers in setting decarbonization goals, to commit to supporting the Paris Agreement. But an early draft of the agreement lacks specific targets, and focuses on the companies’ in-house emissions, the smallest share of their carbon footprint, rather than emissions from the use of their products.

Finance

• JPMorgan, for the first time, published data on its “absolute” financed carbon footprint. The new data reveal the climate impact of the bank’s lending and capital markets activities. The bank’s climate report also shows that progress to reduce emissions in some of the most-polluting sectors is moving slowly.

Tech

• The first commercial satellite that can measure the CO2 emissions of individual power plants and other facilities from space was launched, piggybacking on a SpaceX rocket. The satellite, called Vanguard, is the latest in a wave of space-based emissions monitoring technology that will soon make it impossible for any country or company to conceal their emissions.

Personnel

• Two top executives of Danish windfarm developer Ørsted were dismissed this week, less than two weeks after the company was forced to take a $4 billion hit on canceled U.S. offshore wind projects. CEO Mads Nipper kept his seat. But the exit of chief financial officer Daniel Lerup and chief operating officer Richard Hunte are “meant to send the message to investors that a plan is underway,” Bloomberg reported.

Politics & policy

• The EU will make a “substantial” pledge for climate reparations at COP28. The bloc’s new climate envoy, Wopke Hoekstra, has been touring European capitals to drum up contributions — but the fund is a sore spot in his relations with the tight-fisted U.S.
• Some Russian crude oil is circumventing sanctions and winding up in the tanks of U.S. military vehicles, according to a Washington Post investigation. A refinery in Greece is acting as a middleman. Meanwhile, Ukraine’s energy minister said his country is prepared to conduct strikes on Russian oil and gas pipelines if Russia continues to target Ukraine’s electric grid.

Batteries & minerals

• ExxonMobil acquired a major lithium mine in Arkansas and plans to begin producing large volumes of the critical mineral by 2027. It’s an unusual pivot away from the oil major’s core business, but could be a new revenue stream that’s more in keeping with Exxon’s core competencies than renewable electricity ever were. The price of lithium cratered this year, but will likely spike later this decade as EV adoption increases.

EVs

• The Toyota Camry, the best-selling sedan in the U.S., will only be available as a hybrid starting next year. Toyota has been slower than some peers to pivot to pure EVs, but thinks hybrids will be the first low-carbon option to actually turn a profit.
• Investors in Africa are shying away from EVs despite surging demand and a crop of promising local EV startups. That’s making it hard for startups to scale and keeping retail prices high, Semafor Africa reported.
• Bankrupt electric bus-maker Proterra found buyers for its various business lines, the company said this week. Volvo will acquire Proterra’s battery manufacturing line for $210 million, and Phoenix Motorcars will pay $10 million for its electric bus line. A group of private equity funds will acquire Proterra’s fleet-charging line for an undisclosed amount. It adds up to a fraction of what the company invested over the last two decades to build these businesses out, and leaves their future under new ownership uncertain.

Alec Stapp, co-founder of the Institute for Progress, a Washington think tank.

• A little-known Miami firm has gone on a buying spree for financially strapped sports teams and is trying to buy Everton football club. Where does its money come from?
• South Africa’s ruling party is drawing up plans to close Israel’s embassy in the country and suspend regular diplomatic relations in response to the military operation in Gaza.
• A lack of local investment in African electric vehicle companies threatens the growth of the continent’s green transportation sector.