Net Zero

1. Trump v. OPEC
2. ESG vibe check
3. Emitters take the stand
4. EV sales heat up
5. Costly coal phaseout

Trump’s climate cabinet takes shape, and the Popemobile goes electric.

OPEC readies for a showdown with Trump

The OPEC+ group of major oil producing countries held off on raising production quotas until at least April, setting up a showdown with President-elect Donald Trump over his plans to boost US drilling.

Thursday’s decision was the third time since June that OPEC+ has postponed a planned production increase — it is currently refusing to pump as much as 6% of global oil demand — a sign that the group still sees no way to put more oil on the market without cratering the price, as demand in China and other major importers remains tepid. OPEC’s hesitancy is a bad sign for Trump. If the oil price is too low for OPEC, it’s definitely too low for US producers. But when Trump returns to office, he’ll find himself in a high-stakes game of chicken with OPEC. The grouping’s production cuts help Trump, because they keep the price elevated to a point that US producers can turn a profit at; more than any action the president can take, it’s the price that determines whether “drill, baby, drill” happens or not. But the group’s leaders know this, of course, and could be running out of stamina to maintain cuts that increasingly threaten to spark an exodus of smaller members, further weakening the cartel’s influence in the global market.

“Nobody wants a price war,” said Jim Krane, co-director of the Middle East Energy Roundtable at Rice University. “But OPEC won’t be content forever to watch its market share frittered away in small increments.”

ESG vibe check

Stock market investors are pulling a record amount of cash out of climate funds, even though many have not underperformed.

Globally in 2024, nearly $600 billion was held in mutual funds and ETFs designed around shares of companies participating in the energy transition, according to a report this week from Morningstar Sustainalytics. That’s 6% more than last year. But the growth is only because many of those stocks have gained value, not because more investors are putting their money into the funds, said Hortense Bioy, Morningstar’s head of sustainable investing research.

To the contrary, investors pulled $24 billion out of these funds, reversing a rush into climate funds that peaked in 2021. High interest rates that are bad for renewable energy companies are one reason. But the main driver of the exodus, Bioy said, is bad vibes. “These aren’t bad strategies, and they haven’t underperformed,” she said. “It’s more about the anti-ESG sentiment.” One segment that remains popular, she said, is “climate transition” funds that select companies based on their long-term decarbonization targets, not their carbon footprint today — and that are often loaded with Big Tech and fossil fuel companies.

Mixed Signals is back for Season 2, and this time we’re following the money in the ever-changing media business. With podcasters and YouTubers dominating the election, is this the end of legacy media? And, can advertisers keep up with audiences’ evolving media habits?

Ben and Nayeema bring on author, New Yorker writer, and media savant Ken Auletta, who has been examining the industry since the ’90s. They discuss whether this moment feels different from past disruptions, how Elon Musk is reshaping media, and Ken’s, uh, colorful recollections of flying with Ted Turner, his girlfriend, and their bed.

Listen to the latest episode of Mixed Signals now.

Emitters take the stand

The US and China took the stand in an unprecedented climate case unfolding this week at the International Court of Justice. The hearings now underway are meant to inform a nonbinding ICJ ruling expected next year on what obligation rich, high-carbon countries have under international law to curb their emissions. The case, initiated by the Pacific island nation Vanuatu, could provide ammunition for other highly vulnerable countries to use in COP summits, future lawsuits, and other legal fora.

But top emitters made clear in their statements this week that in their view, no further legal intervention is needed in the climate crisis. Representatives of both China and the US argued that the Paris Agreement is sufficient, and that they should not be held responsible for anything more than what they’ve committed to in the COP process. That didn’t sit well with Vanuatu climate envoy Ralph Regenvanu, who said in a statement that he has been “disappointed” by testimony so far: “Let me be clear: these treaties are essential, but they cannot be a veil for inaction or a substitute for legal accountability. There needs to be an accounting for the failure to curb emissions and the climate change impacts and human rights violation that failure has generated.”

EV sales heat up

EVs sold by Ford in the US in November, the automaker’s best-ever sales month for EVs. Hyundai, Kia, and Honda also had banner months for US EV and hybrid sales, a sign that automakers are starting to find a sweet spot for prices — and that drivers might be scrambling to take advantage of federal EV tax credits before Trump follows through on a threat to scrap them. Still, EVs only accounted for less than 7% of Ford’s total sales, so the transition is still far from a tipping point. In Norway, meanwhile, the future is here: a record 93.6% of new vehicles registered in November were EVs.

Costly coal phaseout

Indonesia’s new plan to rapidly shutter its coal-fired power plants is feasible, but it won’t be cheap.

President Prabowo Subianto last month set a deadline for the country to completely phase out coal power by 2040, 15 years earlier than a prior target. In order to meet that goal, the country needs to close multiple coal plants every year, according to a study this week by the research group Ember. The big question, then, is how to replace those electrons in Indonesia’s grid. The current government plan entails a ramp-up of renewables, but really relies on a five-fold increase in gas power — a move that would be a boon for US LNG exporters, but that Ember warns wouldn’t put the country on track for its midcentury emissions goals.

Filling the gap with renewables instead is possible, Ember found, but would require Indonesia to clear numerous barriers to private investment in the energy sector, build up its grid-scale battery storage capacity from close to zero today, and be more specific about which coal plants it intends to retire, when. No matter what, the conversion will be costly, including the expense of building new systems and lost revenue from state-owned coal plants: at least $4.6 billion by 2030, Indonesian researchers concluded this week.

New Energy

• China will install nearly 260 gigawatts of solar this year, shattering its previous solar build record even as its solar manufacturing industry struggles with falling margins.
• Denmark hosted its largest-ever offshore wind auction this week, with a disappointing result: Not a single bid was entered.

Fossil Fuels

• South Africa’s highest court ruled that the state can’t order more coal-fired power plants to be built, citing the impact they have on public health.
• New York prosecutors are investigating a shadowy Israeli private investigator who sought to dig up dirt — possibly using illegal hacking methods — on ExxonMobil.

Finance

• As conventional home insurance providers bail out of high-risk markets in the US, an obscure and lightly-regulated new form of insurance is stepping into their place.
• Southeast Asian countries could tap up to $3 trillion in new climate finance if they accelerate their efforts to open domestic carbon markets, a report found.

Tech

• The energy tech company SLB is redoubling its work on carbon capture, finishing construction work on the world’s largest CCS system on a cement factory, in Norway, and signing a deal with Aramco to build a massive CCS hub in Saudi Arabia.

Politics & Policy

• Russia’s attacks on energy infrastructure in Ukraine have been particularly dangerous for healthcare workers, a study found, forcing hospitals to work in the dark and without reliable access to vital medical equipment.
• A small town in North Carolina sued the utility giant Duke Energy, alleging that it led a campaign to obscure climate risks. It’s the first climate accountability lawsuit in the US to target a power company.

EVs

• The Popemobile is going electric. The new Mercedes-Benz EV was custom-built for a religious leader who has long been an outspoken advocate for climate action.
• The leader of one of the most ambitious EV battery projects in the US isn’t worried about Trump.

Personnel

• Trump’s climate cabinet continues to take shape. Jared Isaacman, the billionaire commercial astronaut nominated to lead NASA, has advocated using the agency’s technology to study climate change on Earth. Paul Atkins, nominated to chair the Securities and Exchange Commission, is expected to walk back the agency’s efforts to support ESG investing.
• Meanwhile, watchdog groups warn Trump’s efforts to curb spending on federal staff salaries could lead to a “brain drain” at science and environmental agencies.

BlackRock’s $12 billion acquisition of HPS Investment Partners shows that what was once set up as an existential war between public and private lending is anything but, Semafor’s Liz Hoffman wrote.

For most of its decade-long rise, private credit has been cast in opposition, and competition, to loans and bonds underwritten by banks. That’s a satisfying but outdated lens, and as more money flows into private credit, the lines will start to blur.