OCTOBER 26, 2022

Hello!

Last week was a fascinating whirlwind participating in and covering the Breakthrough Energy Summit. Anca and I still found time to toast to Cipher's one-year anniversary!

Anca has us covered today with more on-the-ground reporting from Seattle that spans the whole world, plus a Data Dive to set us up for the upcoming climate talks in Egypt.

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Send your energy photos, story tips and more to news@ciphernews.com or reach us directly at amy@ciphernews.com and anca@ciphernews.com.

Energy security and new laws fuel clean energy race

BY: ANCA GURZU

Nations are increasingly competing to establish themselves as pioneers of clean energy technologies, racing to boost energy self-sufficiency and green their economies.

The urgency to fight climate change is leading to promising collaborations among governments, businesses and investors, as we recently reported.

But geopolitical tensions and a renewed desire for energy independence, driven by the war in Ukraine, are driving parallel efforts to prop up the development of domestic next-generation cleantech industries that could become immensely profitable for regional economies.

The United States’ decision to pour nearly $370 billion to boost clean energy spending via tax credits through the Inflation Reduction Act (IRA) is not only bringing the world’s largest economy back into the game, it's also raising the bar for other countries to do more.

Asked by Cipher about the global cleantech race during a recent tour of an advanced nuclear lab near Seattle, U.S. Secretary of Energy Jennifer Granholm pointed to China, saying it “has corned the market” on many solar designs, as well as battery and cell assembly for electric vehicles—a dominance that has irked the West for years.

“We said...‘no more’: we’re going to incentivize the production of those technologies in the United States,” Granholm said last week. “It's a whole strategy to develop both supply chains and assembly of these technologies, which are a $23 trillion market by 2030.”

Granholm added: “We’re going to stamp it ‘Made in America.’ We’re going to use it here and maybe we’ll export it there, too.”

“Competition is good no matter what. But it's got to be a level playing field. And up to this point, it's not been,” Granholm said. “We have been bringing a knife to a gunfight. Now it's a level playing field.”

The clean energy race isn’t new, but China has been dominating it for years. The U.S. and other nations are inching closer with new laws.

China is likely to remain the biggest spender on clean energy despite these efforts, data compiled by BloombergNEF shows.

A March report from the International Energy Agency outlines how China strengthened its position as a global energy innovator over the last 20 years and predicts clean energy innovation will play a key role in the country’s path to carbon neutrality.

The European Union, a leader in tackling climate change, is speeding up its decarbonization and self-sufficiency efforts amid the Ukraine war that laid bare its fragile dependence on Russian natural gas.

In a speech this month, European Commission Vice-President Maroš  Šefčovič spoke about the need to achieve “strategic autonomy” by establishing a battery value chain in Europe, reducing dependence on imports of critical raw materials for electric vehicle production, accelerating the deployment of storage technologies and boosting the use of clean hydrogen for industrial decarbonization.

“We must ensure that these disruptive technologies can transition into industrial application as swiftly as possible to contribute to Europe's industrial sovereignty,” he said.

As a sign of the shifting landscape, international mining company Imerys announced Monday it will open France’s first lithium mine as part of a €1 billion project.

The pressure to step up is palpable within Brussels’ lobbying circles. This month, CEOs from 13 European solar organizations sent a letter to the Commission asking it to boost Europe’s resilience in solar manufacturing, pointing to strong industrial policy schemes in the U.S., China and India.

With national security closely interlinked with energy security, the EU is scrambling to pump cash into new technologies and come up with reinforced policies as part of its European Green Deal.

Commission President Ursula von der Leyen promised last month to create a €3 billion investment vehicle dubbed the “hydrogen bank” to help guarantee the purchase of hydrogen. The Commission already approved more than €13 billion in state aid for national and cross-border hydrogen projects.

The financial help is key since Europe-based companies will be increasingly tempted by the new tax credits in the U.S.

Cleantech competition with the U.S. could slide into unfriendly territory.

The EU, led by France, is unhappy about IRA’s “Buy America” approach, which expands subsidies for clean energy products, including electric cars that are produced and assembled in the U.S. Such policies are detrimental to external suppliers.

China and Russia have joined the EU, Japan and South Korea in complaining about the measures before a committee of the World Trade Organization, POLITICO reported.

Asked about IRA competition in a recent Bloomberg Green podcast, Canadian Prime Minister Justin Trudeau said the U.S. law “is raising the bar in a great way” and Canada is “absolutely going to stay competitive.”

To ensure international green technology competition benefits the planet, it must occur in lockstep with collaboration, according to an academic paper published in the journal Nature Energy last month.

The researchers argue competition with China alone risks undermining cooperation in research and development, as well as trade, potentially resulting in greater protectionism.

Tensions are already high. China suspended climate cooperation talks with the U.S. in August, in retaliation for the visit by U.S. House of Representatives Nancy Pelosi to Taiwan.

Instead, the authors say world leaders should strive for “coopetition"—the managed interplay of cooperation and competition through both domestic and international measures.

Coopetition, the report states, “offers opportunities for accelerating energy innovation to meet climate goals.”

In the Netherlands, Balancing Energy Security Against Climate Concerns: The New York Times

Amy’s take: The war in Ukraine compressed “into months what might normally have been years” of negotiation, permitting and construction of liquefied natural gas infrastructure.

Global Climate Summit Is Heading for a Geopolitical Hurricane: Bloomberg (paywall)

Anca’s take: This article highlights the risk of backsliding at the COP27 climate talks. Egypt’s Ambassador Mohamed Nasr issued a similar warning in a pre-COP briefing I tuned into on Tuesday. It’s clear the current geopolitical climate will loom large over the event.

‘Put up or shut up’: can Big Oil prove the case for carbon capture?: Financial Times (paywall)

Amy’s take: Good and important story. I wish I didn’t have to read until the end for the headline quote. Also, direct-source carbon capture is not the same as direct air capture.

This Chinese Province Has Three Times More EV Chargers Than All of the US: Bloomberg (paywall)

Amy’s take: This piece offers some on-the-ground reporting on China’s cleantech leadership, which we talked about in our main article this week. To be sure, most of those electric cars are being powered by coal (but will eventually run on cleaner energy).

EU countries agree on COP27 climate ambitions: Euronews

Anca’s take: The common language doesn’t show the ongoing infighting between countries and the Parliament as they work to finalize several proposed laws under the European Green Deal. Those results will determine the bloc’s real domestic climate ambition.

Exclusive: Toyota scrambles for EV reboot with eye on Tesla: Reuters

Amy’s take: I would have liked to see more analysis on how their bets on hybrid vehicles is (or isn’t) paying off or could backfire in the future.

Oil giant Schlumberger rebrands itself as SLB for low-carbon future: Reuters

Amy’s take: Rebranding is, ideally, an early step in the decarbonizing process (i.e., Statoil to Equinor, DONG to Orsted).

Battle brews in California over taxing the rich to fund electric cars: The Washington Post (paywall)

Amy’s take: This is some fascinating strange bedfellows fight brewing.

Republicans search for the next Solyndra: E&E News (paywall)

Amy’s take: I realize this is just politics, but it’d be great if people could admit that failures happen in new industries.

Europe's energy crisis heaps pain on heavy industry: Reuters

Anca’s take: Speaking of competition, our main theme this week, this line stands out: “The continent is paying five time more for its gas than the United States, stirring concerns the region will struggle to compete on the global market in the long term.”

National Grid, Woburn startup team up to develop new power lines that carry more electricity: The Boston Globe (paywall)

Amy's take: Yes, love this: getting more juice from the squeeze.

More of what we're reading:

• UK well off track to meet 2030s carbon-cutting goals, official figures project — The Evening Standard
• Britain's Lightsource BP races to hook solar farms to batteries — Reuters
• World is in its 'first truly global energy crisis' - IEA's Birol — Reuters
• Germany hails 1st delivery of 'green' hydrogen from UAE — AP News
• Microbe fertilizer companies look to expand on Iowa farms after big 2022. Do do their products work? — Des Moines Register
• Bill Gates’ energy venture fund is expanding into climate adaptation and later-stage investments — MIT Technology Review

Net zero future needs more, better, faster

Source: DNV Energy Transition Outlook 2022 • Emission calculations include the use of carbon capture and storage (CCS) and direct air capture (DAC) technologies.

BY: ANCA GURZU

If the world is to reach net-zero emissions by 2050, leading regions and sectors must get there much faster—and go even further.

That’s according to the Energy Transition Outlook 2022 released recently by Oslo-based consultancy DNV.

The outlook found North America, Europe and the Pacific region (Australia and New Zealand) must reach net zero by 2043 and net-negative emissions thereafter by using carbon capture and storage (CCS) and direct air capture (DAC) technologies.

Other regions also reduce emissions significantly, but they do not reach net zero by mid-century, reflecting their different starting points and capabilities, the report notes.

The analysis is part of the report’s “Pathway to net zero emissions” scenario, which highlights the trajectory the world would need to take to ensure the net-zero goal is met.

Power tours

Anca snapped this photo during a tour last week with U.S. Secretary of Energy Jennifer Granholm (center) at TerraPower's advanced nuclear laboratory in Everett, on the outskirts of Seattle. The company is building new-generation nuclear reactors to help drive the clean energy transition.

Editor’s note: One of TerraPower's primary investors is Bill Gates, who is chairman of the board. Gates is also the founder of Breakthrough Energy, which supports Cipher.

Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.