Boris Johnson warned not to hit struggling Brits with expensive plans to go green
In this newsletter:
1) ‘Civil war’ breaks out between ministers over cost of Net Zero
iNews, 12 July 2021
The Sun, 8 July 2021
The Times, 13 July 2021
Bloomberg, 12 July 2021
iNews, 12 July 2021
Ministers are drawing up plans to impose carbon taxes on imports from abroad as part of efforts to hit Britain’s net-zero target by 2050, i understands. The proposals emerged as a “civil war” broke out between ministers over the best way to ensure the public pays for the carbon emissions they produce.
Chancellor Rishi Sunak is expected to lay out new carbon taxes this autumn to help the country meet its obligations to reduce greenhouse gas emissions, while also raising money to repair public finances damaged by Covid.
Among the proposals being looked at is a carbon border adjustment tax, which will slap levies on goods arriving from abroad. Such taxes aim to prevent wealthy countries such as the UK from outsourcing their carbon emissions to the developing world – known as “carbon leakage”.
One minister told i: “Carbon border adjustment tax is definitely in the mix. Eventually people will have to tackle the question of consumption – they are going to need to decide if they are willing to consume less stuff imported from China or not.”
For any domestic industry that has a carbon price placed on it, the same price would be placed on imports to prevent cheaper goods flooding the market.
Which products would be targeted has not been undecided, but the EU’s plans for carbon levies on imports will focus initially on the most carbon-intensive sectors, such oil refineries, steel and other metals, and cement.
The measures are under consideration ahead of the UK hosting the COP26 UN Climate Change Council in November. Experts have warned that the Government currently has an “alphabet soup” of carbon taxes and urgently needs to fill the policy vacuum ahead of the meeting in Glasgow.
With the UK welcoming world leaders to COP26, the Chancellor will have little choice but to spell out plans for environmental taxes in an autumn Budget and Comprehensive Spending Review.
Westminster sources said, however, that any move towards a carbon border tax would have to consider the implications it would have with major trading partners, such as the US, and how problematic it would be for post-Brexit Britain to go out and strike trade deals.
Ministers are increasingly at odds over the best way to ensure the public pays for the carbon emissions they produce, with the Treasury in a stand-off with the Department for Business, Energy and Industrial Strategy and No 10.
One source said: “There is a civil war raging between departments as to how the Government can meet its commitments.”
i understands Mr Sunak is pushing for a simpler carbon pricing approach, which would set baseline prices according to which sectors carbon emissions are coming from, while Business Secretary Kwasi Kwarteng is eager to focus on regulation.
Boris Johnson is keenly aware he needs to lead the way on the issue, but “the PM likes to spend money more than he likes to tax people”, as one well-placed source put it.
What has become clear is that the burden of who will pay for carbon emissions is shifting from the corporate sector to consumers.
The Sun, 8 July 2021
MPs have warned Boris Johnson that he must not hit struggling Sun readers hardest with his expensive plans to go green.
And it warned the costs of ditching petrol motors, replacing gas boilers and other measures must be spread fairly across society.
Chairman Darren Jones says: “We can’t let Sun readers and thousands of people on low incomes across the country be forced to pay for these changes they can’t afford.
“Otherwise, the changes we need to make to get to net zero just won’t happen.”
On Tuesday, the Treasury watchdog revealed the true cost of achieving net zero in 29 years would be £1.4trillion.
MPs demanded ministers come forward with their plans as soon as possible and spell out what it meant for ordinary families worried about the cost of the drive to net zero or risk a backlash.
Mr Jones says there are families up and down the country who did not have the cash to spend on a heat pump, adding: “The squeezed middle mustn’t be forgotten either.”
Last night, the PM admitted getting to net zero would be “very difficult” but insisted he did not want bills to go up.
He told MPs on the liaison committee yesterday: “What we can’t have is a situation in which ordinary homeowners are suddenly faced with an unexpected unreasonable cost to put in a ground or air source heat pump.
“This is a lot of money for ordinary people — at the moment the prices are too high.”
He also vowed that ministers would not put up fuel or gas bills to help plug the gap, saying: “This Government is determined to keep bills low, that is a priority.”
It comes ahead of the COP26 climate summit in Glasgow in November.
The Times, 13 July 2021
Approvals for oil and gas drilling on American public lands are set this year to reach their highest level since George W Bush was president, casting doubt on President Biden’s green agenda.
Biden campaigned on a promise to prevent new drilling on federal lands and reduce carbon emissions. His pick for interior secretary, Deb Haaland, adamantly opposed drilling on public and tribal lands throughout her career in Congress.
However, the Interior Department approved some 2,500 permits in the first six months of this year, according to an analysis by the Associated Press, including 2,100 since Biden took office on January 20.
New Mexico and Wyoming had the largest number, while Montana, Colorado and Utah each had hundreds. Decisions were pending on a further 4,700 drilling applications as of June 1.
According to the news agency, the administration could issue close to 6,000 permits by the end of the year if the current pace is maintained. That would be more than in any year of Donald Trump’s tenure as president, despite a last-ditch effort to rush through 800 approvals in December, his final full month in office. Trump repeatedly backed the fossil fuels sector while in office.
Not since 2008, when oil prices hit a record $140 a barrel and George W Bush was president, have so many permits been issued, AP noted.
The high number of drilling licences underscores Biden’s unwillingness to reduce oil production amid vocal opposition from Republicans and the fossil fuels industry.
Beyond freezing drilling leases in the Arctic National Wildlife Refuge in Alaska and cancelling the Canada-US Keystone XL pipeline on inauguration day — reversing two Trump-era policies — Biden’s climate strategy has left green groups underwhelmed.
Amid fears of rising petrol prices and gridlock in Congress, prospects for a total ban on drilling are slim.
Irina Slav, OilPrice.com, 11 July 2021
It is easy to warn against rising fossil fuel consumption. It is much harder to suggest realistic alternatives that can compete with fossil fuels on every indicator that matters, from cost to reliability of supply. Until such alternatives are developed, the IEA climate warnings are pretty much pointless.
Earlier this month the International Energy Agency had yet another dire warning for those concerned about the welfare of the planet. Natural gas demand, the IEA said, was improving faster than earlier expected and this could throw the world off the agency’s Roadmap to Net Zero by 2050.
The gas demand rebound was the result of the recovery in economic activity, the agency acknowledged as well as noting the strong growth in this demand expected in the near future would be due to natural gas replacing more polluting fossil fuels such as coal and oil in the electricity generating sector, among others. Still, this was not good enough for the IEA’s net-zero scenario.
“The rebound in gas demand shows that the global economy is recovering from the shock of the pandemic and that gas is continuing to replace more emissions-intensive fuels,” said Keisuke Sadamori, director of energy markets and security at the IEA.
“But stronger policies need to be implemented to put global gas demand on a path in line with reaching net-zero emissions by 2050 while still fostering economic prosperity,” the official added, noting this involved using gas more efficiently and promoting “cleaner and low-carbon gases”.
Now, the IEA has taken its net-zero roadmap as the target to follow but it needs noting that not everyone agrees this target is realistic. Under that scenario, the IEA said exploration for new oil and gas production had to stop now, this year. Yet just weeks after the release, the agency called on OPEC+ to increase production as demand for oil rebounded faster and stronger than the agency had apparently expected.
The agency then went on to say in its net-zero roadmap that the world needs to add more hydropower capacity in order to reach its net-zero goals. Hydropower already provides more clean energy than solar and wind taken together and accounts for a sixth of global electricity generation but we need more, the IEA said last month.
Meanwhile, California is struggling to secure enough electricity supplies for this summer, not least because drought has reduced its hydropower resources significantly. China, on the other hand, recently put online two huge hydropower projects. That happened despite environmentalist opposition that such projects affect ecosystems adversely. Opposition is emerging against solar projects, too.
What does this all mean for the net-zero goals of governments and agencies such as the IEA? For starters, it means they have got their work cut out for them. Renewable energy capacity additions ran at record highs last year amid the pandemic but now these are slowing down because raw material shortages are causing prices to soar.
Meanwhile, demand for oil and gas alike is rising fast as people start traveling again. Airlines, which last year languished under the weight of the pandemic, are now scrambling to meet soaring demand for their services. And analysts are talking about oil reaching $90 or even $100 per barrel.
Now, it’s the analysts’ job to speculate on oil prices based on all the known factors that affect it at any given time. Right now, we have a combination of internal discord in OPEC between the UAE and Saudi Arabia that adds uncertainty about supply at a time of rising demand. Naturally, prices would be going up. Yet what the current demand and supply situation also suggests is that lofty net-zero goals would be harder to achieve than their authors might like.
Governments are already pushing for more EV sales, some are even banning them, and subsidizing new wind and solar power capacity while retiring coal power plants and, in Germany’s case, nuclear plants as well for reasons unrelated to emissions. Still, oil and gas demand remains strong and even coal demand is strengthening, including in Germany.
At the time of writing, Germany, a frontrunner in the net-zero transition, was generating most of its electricity from coal, according to electricityMap. The same was true for the end of June.
Great Britain, also an ambitious net-zero nation, was generating most of its electricity from natural gas. If these two need to rely so heavily on fossil fuels, then the IEA’s scenario for net-zero will be really challenging.
EurActiv, 12 July 2021
US and Russia said on Monday (12 July) they would cooperate on climate change despite strained relations, during a visit to Moscow by US climate envoy John Kerry.
Russian Foreign Minister Sergei Lavrov (L) welcomes US climate envoy John Kerry during their meeting in Moscow, Russia, 12 July 2021. [Pool/EPA/EFE]
Kerry, the former secretary of state who has become US President Joe Biden’s globe-trotting climate envoy, said “the stakes could not be higher” as he met with Foreign Minister Sergei Lavrov.
“We spent years, you and I, negotiating on wars, on chemical weapons, on nuclear weapons, I would say without any reservation this is absolutely as critical, as urgent an initiative,” Kerry said.
Lavrov said Russia expects “close cooperation” with the US at a COP26 conference in November in Glasgow, adding that Moscow “highly values the importance of the problems on climate change” and that Kerry’s three-day visit to be “very timely.”
Russia’s top diplomat also said that Kerry’s visit was a “very important and positive” step “to alleviate tensions” between the two countries.
Russia, one of the world’s major producers of oil and gas, has in recent years made commitments and statements suggesting it is taking climate change seriously.
But critics say the country, which is also the fourth-highest emitter of carbon, is still doing far from enough to tackle the crisis.
For years Putin was notorious for his scepticism about man-made global warming and saying Russia stands to benefit from it.
He has made the development of Russia’s Arctic region a strategic priority as ice cover melts and the Northern Sea Route becomes more accessible, which Moscow aims to use in exporting hydrocarbons to Asia.
But in recent months he has also made statements to the effect that climate change is not just a boon to Moscow.
At his annual state of the nation address in April, Putin said Russia must adapt to climate change.
During a summit with US counterpart Biden in Geneva, Putin also said Moscow was interested in “stepping up international cooperation” on climate change.
6) India wants rich countries to pay more for green energy shift
Bloomberg, 12 July 2021
NEW DELHI: India can’t prioritise eliminating greenhouse gas emissions without sufficient financing from richer nations to help offset the high cost of transitioning to clean energy, according to a senior government official.
In laying out its position ahead of key global climate talks later this year, the top bureaucrat in India’s environment ministry also said the country doesn’t plan to tighten its emissions goals unless more money is promised from developed economies under the United Nations-sponsored climate change agreement.
“Every policy decision has a cost to the economy. Going netzero or using less carbon also has a cost,” Environment Secretary Rameshwar Prasad Gupta said in an interview at his New Delhi office. “We are not anti-net-zero. But without adequate climate finance being definitively available, we can’t commit on that part.”
The stance by India, the world’s third-biggest emitter, highlights a top challenge global leaders will face when they meet at the , which starts in
late October in Glasgow. While cutting net global carbon emissions to zero by 2050 is key to meet the goals of the Paris Agreement, aimed at avoiding catastrophic damage from climate change, figuring out how to pay for the
transition toward clean energy has been a sticking point.
Gupta also said the current $100 billion-a-year pledge by richer nations to help developing nations -- a target they haven’t even met yet -- is insufficient to make the shift.
“We have our own developmental imperatives,” Gupta said. “If you want that I don’t emit carbon, then provide finance. It will be much more than $100 billion per year for developing nations.”
“This is not the final decision, but most probably we won’t file a revised ,” he said. “Let there be a decision on climate finance first.” As well, until negotiations are finalized around funding help, India likely won’t upgrade the emissions targets it committed to in 2015, known as a Nationally Determined Contribution, which under the Paris Agreement were expected to be revised by 2020.
Bloomberg, 12 July 2021
France is resisting the European Union effectively phasing out combustion-engine car sales by 2035, advocating for a more lenient target for the end of the decade and a longer leash for plug-in hybrid models.
The French government backs a target to reduce emissions from cars 55% by 2030 and for hybrids to remain on the market for longer, an official in President Emmanuel Macron’s office said Monday. Bloomberg News reported last week that the European Commission plans to require emissions to fall by 65% from 2030 and drop to zero from 2035.
The official, who asked not to be identified per government policy, commented after Macron met with top executives at auto companies including Stellantis NV and Renault SA, as well as labor representatives to discuss the transition to electric vehicles. The country will also consider fresh support for the industry to help it adopt new technology, the official said.
The French position could signal a battle is brewing within the EU over new climate targets and how they will affect the auto industry. The effective ban on combustion engines by 2035 is part of an ambitious plan to align the region’s economy with more aggressive climate targets. It would also mean a faster phasing-out of hybrids than some executives and labor officials expected.
“We know there will be no choice but to switch to electric cars,” said Jean-Marie Robert, a representative of the CFDT labor union, who attended the meeting. “What’s important is that we prepare in advance.”
The new EU emission targets would be significantly stricter than existing fleet-wide goals requiring a 37.5% emissions reduction by 2030. While the auto industry has been bracing for tougher rules, the meeting with Macron was part of an effort to gain support for a slower phasing out of combustion engines.
La Plateforme Automobile, France’s main lobby group for the industry, estimates 17.5 billion euros ($21 billion) in investment is needed in the country by the middle of the decade to develop batteries, charging stations, hydrogen and related services.
The phasing-out of combustion engines could lead to a loss of roughly 100,000 auto jobs in France through 2035 and the shutdown of manufacturing sites, according to a PFA presentation. The industry directly employs about 190,000 people currently.
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