The European Commission set out proposals yesterday that would allow member states to give higher levels of state aid to particular companies, Reuters reports. It says the aim is for “Europe [to] compete with the US as a manufacturing hub for electric vehicles and other green products and reduce its dependence on China”. The newswire continues: “​​European Commission chief Ursula von der Leyen announced, as part of the plan, a repurposing of existing EU funds, faster approval of green projects and drives to boost skills and to seal trade agreements to secure supplies of critical raw materials.” It adds: “This is partly a response to multi-billion-dollar support programmes of China and the US, including the latter’s Inflation Reduction Act.” It also quotes von der Leyen saying: “Major economies are rightly stepping up investment in net-zero industries…What we are looking at is that we have a global playing field.” Politico reports: “[T]he EU wants to revise state aid rules to allow countries to offer more targeted support for green industries, as part of a new Green Deal Industrial Plan. The Commission recommends redirecting existing funds toward a series of new ‘net-zero’ benchmarks for 2030 by offering tax breaks for clean-tech investments. A European sovereignty fund will be unveiled in the summer…​​A new temporary crisis and transition framework will simplify state aid rules for renewable energy deployments and for decarbonizing industrial processes.” Another Politico article is titled: “Europe embarks on subsidy war it can’t win.” It explains: “[T]he plan already faces major criticism, for two reasons: It’s largely drawing from existing, not new, funding lines; and it risks casting smaller EU countries against big powers Germany and France over fears that the bulk of subsidies will benefit the latter two. It means the EU with its new initiative still lacks the fire power to fight back against aggressive US subsidy sprees – and the US knows it.”

Related comment in the Spectator by assistant editor Cindy Yu says: “The [US] president’s green protectionism is freezing out his allies.” Separately, Politico reports: “EU countries failed to strike a deal on a price cap for Russian oil products, with a deadline for settling the price now just days away.” Reuters says International Energy Agency chief Fatih Birol “does not see major disruption from Russian oil product price cap”.

Profits at oil major Shell more than doubled to $40bn in 2022 as a result of surging gas prices linked to Russia’s invasion of Ukraine, the Guardian reports. The Financial Times reports: “The earnings continued a record-setting series of results of the world’s biggest energy companies, which have all benefited from high prices for hydrocarbons in the past 12 months due to the upheaval in energy markets caused by Russia’s invasion of Ukraine. Exxon this week posted a $55.7bn profit for 2022, representing the highest annual earnings for a western oil company. Chevron made $36.5bn, while BP and France’s TotalEnergies are due to report next week and bring the total profits of the supermajors last year to almost $200bn.” CNBC says Shell’s profits were the “highest ever”, exceeding the previous record $28bn in 2008. The Daily Mirror headline is “Shell profits soar to £32bn as millions struggling to pay their energy bills”.

Separately, the Guardian reports: “Shell has misleadingly overstated how much it is spending on renewable energy and should be investigated and potentially fined by the US financial regulator, according to a non-profit group which has lodged a complaint against the oil giant.” In an article trailed on its frontpage, the Daily Telegraph reports: “The boss of BP wants to ‘dial back’ its push into clean energy after US oil giants posted record profits on the back of booming demand for fossil fuels.” Meanwhile, an Energy Monitor “exclusive” analysis of the top five western oil companies BP, Chevron, ExxonMobil, Shell and TotalEnergies is titled: “Oil majors’ expansion plans pay little heed to net-zero.” It says: “The five companies are in the process of developing 157 new fields, on top of the 1,350 they already operate…The oil majors are developing fields where production is expensive, and that will likely become unviable if prices fall, as is anticipated in a net-zero scenario.”

More than 11,000 Nigerians have filed a claim for damages against Shell in the UK High Court, the Financial Times reports, in what it calls “a long-running court case set to test multinational companies’ responsibility for environmental damage overseas”. It adds: “The two communities claim that oil spills resulting from Shell’s operations in the region have contaminated drinking water, harmed air quality and destroyed farmland and fishing stocks.” The Guardian also has the story. Separately, the Financial Times reports: “Residents of an Indonesian island threatened by climate change have pressed ahead with their legal action against Swiss cement giant Holcim, as litigation over the effects of climate change gathers momentum in 2023.”

China “led the world in energy transition investment with $546bn, nearly half of the global total, as the world saw such investment reach a new record in 2022”, reports China Daily, citing a report published by BloombergNEF. It says that China “contributed to a significant increase in clean-energy factory investment”, which the report refers to as “investment in manufacturing facilities for clean-energy technologies””. It adds that this investment “grew to $78.7bn in 2022, up from $52.6bn in 2021”, with manufacturing facilities for batteries and related components forming the “largest share of this investment at $45.4bn, while solar factories attracted $23.9bn”, the state-run newspaper adds.

Meanwhile, Nato secretary-general Jens Stoltenberg said yesterday that China’s “growing assertiveness and collaboration with Russia poses a threat not only to Asia but also to Europe”, as he “sought stronger cooperation” and more “friends” for Nato in the Indo-Pacific region, CBS writes. He is quoted saying that “China is not our [Nato’s] adversary, but we must understand the scale of the challenge and work together to address it”. He stressed the alliance would continue to engage with China in “areas of common interest, such as climate change”, the article notes. The Japan Times has a comment piece by Brad Glosserman focusing on the US’ Inflation Reduction Act. He writes that US president Joe Biden has “enthused” that the green energy components are designed to give the US “the ability not only to compete with China for the future, but to lead the world and win the economic competition of the 21st century”. France 24 writes, citing a report by AFP, that the EU has “unveiled proposals to counter the threat to European industry from US green subsidies and unfair competition from China, with measures including a controversial expansion of state aid”. European Commission president Ursula von der Leyen last month also “slammed aggressive attempts” by China to “persuade Europe’s clean technology companies to relocate and take advantage of its cheaper labour and more lenient regulations”, the article adds.

Finally, China Energy News reports that, to “promote corporations to save energy and improve energy use efficiency, accelerate green and low-carbon development, promote the industrial sector to achieve peaking and carbon neutrality”, the ministry of industry and information technology (MIIT) recently issued “supervision measures on industrial energy saving”. The state-run industry newspaper adds that these measures have been “officially implemented since Wednesday”.

There is continuing coverage of the news that the Biden administration has “indicated support” for a “slimmed down” version of the “Willow” oil project in Alaska, the Financial Times reports, saying the move has “spark[ed] the ire of environmental groups”. It explains: “The Bureau of Land Management released a final environmental study for the $8bn Willow project on Wednesday that recommended cutting the scope to three drilling sites from the five initially proposed by its developer, the oil company ConocoPhillips.” The paper adds: “The storm surrounding Willow’s approval has underlined the dilemmas facing president Joe Biden, who has pursued an aggressive climate agenda while demanding oil companies increase production to ease fuel prices for consumers.” The Guardian runs the story under the headline: “Outrage as US government advances $8bn Alaska oil drilling plan.” It says: “Biden had promised during his election campaign to end federal oil and gas drilling, and transition toward renewable energy. But as oil prices rise as a consequence of the Russian invasion of Ukraine, the president has faced further pressure to increase drilling.” Bloomberg reports: “In an unexpected twist, some opponents are quietly encouraging President Joe Biden’s administration to actually approve the project, but in such a scaled-back way that it no longer makes economic sense. They’re moving fast, before the Interior Department is set to issue its final ruling in about a month.” The Hill, CNN and others also have the story.

The Indian government has pledged to invest $4.3bn towards the country’s energy transition and its 2070 net-zero target, Climate Home News reports. It says India’s budget announcement this week includes a $2.4bn spend on green hydrogen – largely “incentives to produce hydrogen with renewable electricity and to build Indian electrolysers” – and $1bn investment on solar power transmission lines from the Himalayan region of Ladakh. India’s finance minister Nirmala Sitharaman said that the country’s “petroleum and natural gas ministry will oversee investments [towards India’s energy transition], adding they would include investments in gas”, the story adds. On transport, Sitharaman “promised money to both clean and polluting transport forms”, adding support to “scrap old polluting government vehicles”. The outlet quotes Climate Action Network campaigner Harjeet Singh saying “adapting to climate change had been mostly left out” of India’s budget. Singh “criticised the lack of a new allocation to the National Adaptation Fund set up in 2015”, saying it “has been starved of funds”. 

Meanwhile, Bloomberg reports that “the government is also working on a detailed framework for [hydro] pumped storage projects”, pointing out that “India is walking a tightrope on climate” and that Sitharaman did not “give a time frame for [green] spending”. The Indian Express notes that the “focus on energy transition and climate action [is] particularly significant with India’s G20 presidency”, but that several schemes “were simply a reiteration of announcements made by last year”. Climate experts reacted to the budget in the Indian Express, calling it “a stay-the-course budget [that] seeks to stimulate green production but focuses less on green development”, while pointing out that “there is no nodal agency in place to monitor the spending and climate action.” Others commenting in the Economic Times who “inspect[ed] the petroleum ministry’s budget” found that $4.3bn had been pledged as capital support towards oil marketing companies and strategic petroleum reserves, the paper says, adding their views that “while controlling energy prices and ensuring energy security is critical, India must ensure that support is directed towards low-carbon technologies”.

The World Bank is to fund renewable energy projects with $311m in the four West African nations Sierra Leone, Liberia, Togo and Chad, Reuters reports.  It adds: “West Africa and Central Africa has one of the lowest electrification rates coupled with some of the highest electricity costs in Sub-Saharan Africa. Energy costs have increased further because of the impacts of Russia’s February 2022 invasion of Ukraine as fuel prices rise.”

US gas exports to Europe fell 5% in January compared with the previous month, Reuters reports, citing data from Refinitiv Eikon. It says analysts have warned that despite the current cold snap in the US, there will be downwards pressure on US gas prices this year, quoting one consultancy saying: “After one of the tightest gas markets of the last decade in 2022, the stage is set for one of the most oversupplied markets we’ve seen in years.”

In related news, Reuters reports that Germany’s biggest gas trader Uniper “expects a much smaller annual net loss than it feared in November after lower gas prices reduced the cost of replacing Russian supplies”. Separately, the Financial Times reports that UK energy firm Octopus “expects to repay the British government £1.2bn after its takeover of collapsed power supplier Bulb, as falling wholesale gas prices slash the final bill for taxpayers”. The paper explains: “The Whitehall financial watchdog had predicted the government could lose up to £6.5bn as a result of Bulb’s 2021 failure, which prompted one of the largest state rescues of a business since the financial crisis. But Stuart Jackson, chief financial officer and a co-founder of Octopus, said on Wednesday that the company had estimated the payback meant the cost to taxpayers would be just £260m.”

In other European energy news, Reuters reports that a Norwegian government commission “proposed to speed up the country’s efforts to produce more power, expand grid capacity and to become more energy efficient, or otherwise risk shortages and missing its climate goals”. Another Reuters article says renewables “supplied 88% of Portugal’s electricity consumption in January”.

Financial Times UK chief political commentator and UK editor-at-large Robert Shrimsley writes in a comment for the paper: “The green industrial revolution is coming: ministers need to back a Tory plan to embrace it and prosper.” Shrimsley reflects on the recent Skidmore review of the UK’s net-zero plans and writes: “The developed nations are now in an economic race to lead in clean-energy technology, and the UK is not winning.” He continues: “Skidmore’s report is important enough as a warning. But it also comes at a crucial moment in the political debate. A vocal caucus on the populist right is agitating against the net-zero agenda. While hostile MPs are a minority, their arguments are amplified in the Tory press and by outriders like Nigel Farage who have, in the past, exerted a powerful pull on the party…What Skidmore offers, as well as a jeremiad on complacency, is a call for Tories to understand that the clean-energy drive is vital to prosperity. The party of capitalism cannot allow the UK to sit back in an inescapable industrial race that will define the next century. The technology is coming, the only question is whether the jobs and income accrue only to others.” He concludes: “Failure now leaves the UK in danger of missing not only its net-zero targets but also the economic benefits of being a pioneer in an industrial revolution which cannot be avoided.”

Meanwhile, another Financial Times article asks: “How can investors ride the EV boom?” And a comment by Financial Times Asia editor Robin Harding warns that the economic returns on battery production are “not promising” He adds: “What, then, is a rich country with a large car industry to do? Batteries are heavy so there may be value in local manufacturing, especially if there are trade barriers. Geopolitical risk may also hamper the growth of China’s exports. If the battery becomes a commodity, however, then nations throwing money at them will miss the real value in future vehicles…A battle for the future of the auto industry will soon be joined. National gigafactories will not win it.”

A comment in the Financial Times Lex column advocates electricity market reform, to move away from the current system of “marginal pricing”. It explains: “Opening an electricity bill these days is enough to turn anyone into a proponent of radical market reform. Renewable electricity is getting cheaper and accounts for an ever-larger slice of the UK mix – some 60%. [It is closer to 40%.] Yet the cost for retail customers has risen by almost two-thirds over the past year. Cue proposals to bring down costs in the UK and Europe.” It continues: “In this current system, electricity is priced at the cost of the most expensive plant required to kick in to satisfy demand. Often that is gas-fired generation…One solution is to split the two markets. Renewables generators would then compete with each other for long-term contracts. Pricing would reflect the cost of investments – maybe €50-€80/MWh [per megawatt hour] for new plants. Flexible suppliers would compete on a spot market, presumably at much higher prices.” The piece concludes: “The split-market proposal has plenty of advocates, including David Robinson and Malcom Keay at the Oxford Institute of Energy Studies. It also has plenty of snags. The main one reflects committed thinking: the market we have today is not ideal but it does distribute electricity.”

Meanwhile, BBC News reports on findings from the thinktank Carbon Tracker: “The way electricity prices are set [using marginal pricing] has pushed UK household bills up by £7.2bn over two years, analysis suggests…If an average price was used instead the UK’s electricity bill could be much lower, the not-for-profit climate thinktank said.” The broadcaster adds: “The Department for Business, Energy & Industrial Strategy (BEIS) said it had ‘already launched a major review’ of the electricity market ‘to radically cut costs’ for consumers in the long term.” BusinessGreen also has the story.

Penny Sackett, distinguished honorary professor at the Australian National University Institute for Climate, Energy and Disaster Solutions and a former chief scientist for Australia, writes in the Guardian about the life of climate scientist Will Steffen, who died on Sunday. “[S]cience lost one of its greatest Earth system experts”, Sackett says, adding: “Australia lost a skilled, passionate communicator of climate science and the world lost a humble soul of the highest humanity, kindness and integrity.” She explains: “[Steffen] led the effort to map the Great Acceleration of human impact on the physical and biological systems of our planet, culminating in consideration of the geological age of humans – the Anthropocene…With colleagues, Will catalogued Earth’s tipping elements and their alarming trend of moving to transgress boundary conditions beyond which human ability to slow climate change would be ineffectual. He built the scientific case for Planetary Boundaries with Johan Rockström.” She concludes: “You would have been unlikely to directly experience Will’s anger and fears about climate change and environmental destruction because he transformed those emotions into constructive research, communication and, most of all, personal and collective action. Let part of his enormous legacy be that we do the same.” The Sydney Morning Herald carries an obituary of Steffen, calling him “one of Australia’s pre-eminent climate scientists”. It says: “He was a foundation member of the Australian Climate Commission until it was dissolved by the Abbott government in 2013.”

Summertime wildfire-induced air pollution in North America will nearly double by the mid-21st century compared to present levels, according to new research. The authors use coupled fire-climate-ecosystem model simulations to assess wildfire-induced PM2.5 (fine particulate) air pollution in North America. They find a “distinctively significant” increase in fire-induced pollution in the eastern US, due to the downwind transport of smoke from future enhancement of wildfires in North America to the eastern US. “The anticipated reductions in PM2.5 from regulatory controls on anthropogenic emissions could be significantly compromised in the future in the densely populated eastern US,” the authors conclude.