Net Zero Watch: 'Lights might go out' as EU receives terrifying warning over Russia gas crisis

 

In this newsletter:

1) 'Lights might go out' as EU receives terrifying warning over Russia gas crisis
Daily Express, 1 December 2021

 
2) US warns Russia has plans for ‘large scale’ attack on Ukraine
The Guardian, 1 December 2021

 
3) Europe's energy security problem leaves it in the cold
War on the Rocks, 30 November 2021
  
 
4) EU Commission considers to classify gas and nuclear power as 'green energy'
Bloomberg, 30 November 2021
 
 
5) Benny Peiser: After COP26, we are entering a new phase of the climate debate
The Irish Climate Science Forum, 2 December 2021
 
 
6) 'Liberal' Boris is making huge mistake with wind energy says Trump 
Daily Express, 2 December 2021
 
 
7) Rising lithium prices risk pushing electric car dreams off the road
The Daily Telegraph, 2 December 2021


8) Manchin pushes Democrats to water down climate change provisions in Biden’s social welfare bill
The Washington Times, 30 November 2021
 
 
9) Tilak Doshi: India’s Net Zero pledge: What does it really mean?
Real Clear Energy, 29 November 2021

Full details:

1) 'Lights might go out' as EU receives terrifying warning over Russia gas crisis
Daily Express, 1 December 2021

THE EU has been sent a terrifying warning over fears "the lights might go out" this winter as Russia's grip on Europe's gas looks set to intensify.
 
It comes as the energy prices have skyrocketed to record highs, with the price of natural gas costing five times as much compared with the same period last year. Analysts say Russia have played a large hand in orchestrating the crisis, after tightening gas travelling into Europe in the hope to speed up the certification of the Nord Stream 2 pipeline and avoid EU tariffs applying to the system.
 
Russian President Vladimir Putin and German Chancellor Angela Merkel struck a deal to see the pipeline transit gas from Russia to Germany through the Baltic Sea, bypassing Ukraine and Poland.
But now, certification from German regulators has been suspended in a move that has likely enraged the Russian President.
 
And as winter approaches, demand for energy is set to soar too, while Europe’s storage facilities are already low.

Emily Holland, assistant professor in Russia Maritime Studies, warned that countries across the EU could face gas shortages and potential blackouts.
 
“The continent is facing a severe energy crisis that could lead to a very cold and dark holiday season across the continent.”
 
Ms Holland noted that last month, Moldova, which is right on the EU’s doorstep, declared a state of emergency when Gazprom cut supplies in the country by a third when its gas contract ran out.
 
Russia’s state-owned gas conglomerate is the dominant supplier of gas to Europe, supplying around 40 percent of its natural gas.
 
The move again reinforced Russia’s tight grip on the European energy market.
 
Ms Holland wrote: “Moldova appealed to the European Union for emergency aid — even though it’s not an E.U. member — receiving 60 million euros to help manage the crisis.
 
“Poland and Ukraine, both of whom regard themselves as victims of Gazprom’s vice-like grip on Europe, rushed to Chisinau’s aid, pledging to sell additional volumes.
 
“But less than two days later, Moldova concluded a new five-year gas contract with Gazprom that reinforces both Moldova’s energy dependence on and political relationship with Russia.”
 
And while Moldova was able to escape the crisis, Europe’s appears far from over as a combination of high prices, lower storage levels and tighter supplies look set to bring about a winter of chaos.
 
Ms Holland said: “Households are already paying higher prices and some energy-intensive industries, particularly in Eastern Europe, have been forced to slow production.
 
“Ukraine is in a particularly dire situation and may face severe natural gas and coal shortages, leading to potential blackouts.”
 
It comes as tension between Ukraine and Russia has already been escalating as Mr Putin sent 100,000 troops to the Ukraine-Russia border.
 
NATO and the US have warned that they will support Ukraine and take action if Russia continues with military advances in the region.

2) US warns Russia has plans for ‘large scale’ attack on Ukraine
The Guardian, 1 December 2021

Secretary of state says Nato is ‘prepared to impose severe costs’ on Moscow if invasion attempted

The US says it has evidence Russia has made plans for a “large scale” attack on Ukraine and that Nato allies are “prepared to impose severe costs” on Moscow if it attempts an invasion.

Speaking at a Nato ministers meeting in Latvia, the US secretary of state, Antony Blinken, said it was unclear whether Vladimir Putin had made a decision to invade but added: “He’s putting in place the capacity to do so in short order, should he so decide.

“So despite uncertainty about intention and timing, we must prepare for all contingencies while working to see to it that Russia reverses course.”

He said he had found solidarity among his fellow Nato ministers in the Latvian capital, Riga, saying the alliance was “prepared to impose severe costs for further Russian aggression in Ukraine” and would “reinforce its defences on the eastern flank”.

While repeating the US position that Washington is “unwavering in our support for Ukraine’s sovereignty and territorial integrity, and committed to our security partnership with Ukraine”, the secretary of state stopped well short of saying the US or the alliance would intervene militarily. “Should Russia follow the path of confrontation, when it comes to Ukraine, we’ve made clear that we will respond resolutely, including with a range of high impact economic measures that we have refrained from pursuing in the past,” Blinken said.

He did not specify the nature of those measures, but most observers believe that the Nord Stream 2 pipeline project, intended to bring Russian gas to Europe, could be cancelled if there is another invasion. The new German coalition government is already sceptical about the scheme.

Blinken said the US would spell out the consequences to Russia’s leaders “at the appropriate time”. His remarks represent the strongest warning from the Biden administration so far, and were delivered a day before Blinken is due to meet his Russian counterpart, Sergei Lavrov, in Stockholm under increasingly tense circumstances.
 
Full story
 
3) Europe's energy security problem leaves it in the cold
War on the Rocks, 30 November 2021
 
By Emily Holland

The lights in Europe might go out this winter. The continent is facing a severe energy crisis that could lead to a very cold and dark holiday season across the continent. Natural gas prices are five times higher than they were a year ago due to a sharp rebound in demand from the pandemic, a colder than usual spring, increased and unanticipated Asian consumption, and the European Union’s own energy and climate policies. As a result, storage facilities are low, and states across Europe could face gas shortages or potential blackouts.

Last month, Moldova declared a state of emergency after its gas contract with Russia’s state controlled gas conglomerate Gazprom, Europe’s dominant supplier of natural gas, expired in September. Gazprom cut supplies to Moldova by one-third until a new contract and gas debt arrears arrangement could be reached. With gas pressure levels dangerously low, Moldova appealed to the European Union for emergency aid — even though it’s not an E.U. member — receiving 60 million euros to help manage the crisis. Poland and Ukraine, both of whom regard themselves as victims of Gazprom’s vice-like grip on Europe, rushed to Chisinau’s aid, pledging to sell additional volumes. But less than two days later, Moldova concluded a new five-year gas contract with Gazprom that reinforces both Moldova’s energy dependence on and political relationship with Russia.

An emergency European Union summit to address the crisis hardened divisions between member states with divergent energy interests. As gas prices dropped over the past decade, some European states sought to extract themselves from long-term natural gas contracts with Russia while others deepened commercial ties — stalling union-wide energy reform efforts and increasing exposure to market volatility. Further disagreements over European Union climate policies and Gazprom’s Nord Stream 2 gas pipeline have made addressing energy security even more difficult. European energy security has long been a major concern due to structural interdependence with Russia: Europe is dependent on Russia for over a third of its energy needs, and Europe has been Russia’s most profitable hydrocarbons consumer.

Energy sits at the nexus of security and economic development. Secure and uninterrupted access to energy is vital for all aspects of the national economy and it enables nearly every function of the military. Energy has been a major driver of conflict and a strategic consideration in warfighting for over a century, but between 1970 and 2010, the energy intensity of conflict has grown by a factor of sixteen. European gas crises in 2006 and 2009 highlighted a NATO vulnerability. In recent years Russia has deployed a range of hybrid threats against critical energy infrastructure and assets in NATO member states (Poland, Turkey, the United Kingdom, and the United States) and NATO partners (Ukraine).

Energy insecurity can have a profound effect on security outcomes. Europe has discovered that there is no easy path to energy security, and short-term solutions to the energy crisis (e.g., signing long term contracts for additional volumes of Russian gas) may undermine longer-term goals. The current crisis underscores the biggest problem of the European energy security conundrum: Europe’s diverging interests block a unified agenda, diminishing European bargaining power and rendering the union less secure. Because the gas trade is conducted bilaterally rather than at the European Union level, Russia exploits Europe’s divisions, punishing states with less relative bargaining power, and rewarding its best consumers. Nevertheless, Europe and the United States should take action to alleviate the immediate crisis while bolstering longer-term European resilience to Russian energy coercion. These policies, including increased flexibility on green initiatives, reevaluating nuclear energy, and improving energy infrastructure between states, may be a foul tasting, but life-saving medicine.

Europe’s (Latest) Gas Crunch

Although Moldova managed avert an energy disaster, this year’s European energy crisis is far from over. Europe is entering the winter season with less gas in storage than usual, higher prices, and tighter global supplies. As a result, households are already paying higher prices and some energy intensive industries, particularly in Eastern Europe, have been forced to slow production. Ukraine is in a particularly dire situation and may face severe natural gas and coal shortages, leading to potential blackouts. Relations with Moldova and Ukraine are shaped via the European Neighborhood Policy and are thus a significant consideration in European foreign and security policy.

Lithuania, Poland, and others have accused Russia of manipulating gas markets to increase prices, and called on the European Commission to launch an investigation into Gazprom’s market practices in Europe. Pawel Majewski, the chief of executive officer of Polish utility giant PGNiG, argued that the situation in Moldova is “proof of what we have been saying for many months: that unfortunately the interests of the main gas supplier from the east are enforced hard. Gazprom is not a friend of the EU.”

Russia’s response to the energy crisis has been lukewarm: Although Putin rebuffed claims that the Kremlin was weaponizing energy, it waited until very late in the season to begin refilling its European gas storage facilities. Gazprom also announced that it would not book additional transport capacity through existing Ukrainian and Polish pipelines next year, signaling its intent to wait for final approvals of Nord Stream 2, now delayed until spring 2022 at the earliest. Putin also offered to sell more gas to Europeans immediately — if they booked additional volumes through Gazprom’s preferred long-term contracts. In September, Hungary did just that, signing a binding 15-year contract for Russian natural gas supplied through Gazprom’s Turk Stream pipeline, circumventing the traditional transit route through Ukraine and thus depriving it of valuable transit fees. This enraged many Eastern European states, prompting Ukraine’s foreign ministry to argue that Budapest’s “purely political, economically unreasonable decision” was signed “to the detriment of Ukraine’s national interest and Ukrainian-Hungarian relations.”

Europe and Russia’s Uneasy Interdependence 

Long before the advent of liquified natural gas, the European gas market was set up with pipeline infrastructure linking Russia to its European consumers, locking both Russia and Europe into mutual dependency: Europe requires Russia’s hydrocarbons, and in turn the Russian economy is cripplingly dependent on revenues from resource sales. Gas and oil revenues contribute, on average, 40 percent of the annual budget of the Russian Federation. But unlike oil, natural gas is both highly flammable and pressurized, and difficult to handle and transport, which traditionally has required fixed infrastructure, long-term investments and point-to-point delivery. This interdependence explains why Russia is both empowered and constrained by its resources.

This crisis takes place in the context of a crucial Russian foreign policy goal: the approval of Gazprom’s Nord Stream 2 pipeline, which bolsters important commercial and political relationships with Germany while at the same time weakening Ukraine’s role as a gas transit state. Putin was justifiably annoyed by Belarusian President Alexander Lukashenko’s threats to cut off gas transit to Europe in response to European Union sanctions — Gazprom has spent much of the last two decades trying to demonstrate that it a reliable and apolitical supplier of natural gas to Europe. At the same time, Putin wants to show Europe that direct pipelines are safer.

The two Ukrainian gas crises of 2006 and 2009 demonstrate this conundrum for both Russia and Europe. In both 2006 and 2009 gas price disputes between Kiev and Moscow resulted in failures to renew long-term gas contracts ahead of their expiry, which prompted Russia to reduce volumes of gas sent through Ukrainian transit pipelines. After Russia accused Ukraine of stealing gas bound for European consumers, Gazprom turned off the spigot altogether, causing a humanitarian crisis in the Balkans when there was no energy available to heat homes or generate electricity for hospitals.

These events brought European energy security to the front of the policy agenda, and resulted in the implementation of the European Union’s Third Energy Package in 2009, designed to liberalize gas markets and decrease the potential for Russia to weaponize energy. The main effect of the third energy package was breaking up Gazprom’s monopoly over the European gas market by forcing the separation of energy supply and generation from the operation of transmission networks. This legislation forced Gazprom to adopt its market strategy, which up to that point was vertically integrating the entire energy chain of downstream consumers. Some states, including Lithuania, forced Gazprom to sell its interests in their transmission systems, others, like Moldova, have derogated this responsibility, allowing Gazprom to continue operating as a monopoly for at least another year.

European Energy Disunity

While the Third Energy Package did reduce Gazprom’s leverage, it did little to address Europe’s divergent energy interests. Over the past two decades, Russia has taken advantage of the bilateral contracts that oversee gas sales, extracting major concessions from weaker, energy poor states that do not have access to alternative supplies (ports for liquid natural gas, or even alternative energy sources like nuclear power). At the same time, Gazprom enjoyed a cozy relationship with Germany, its most profitable consumer, whose gas demand increased as it reduced its reliance on nuclear energy in response to the Fukushima nuclear disaster. In 2020, Germany represented over 26 percent of Gazprom’s total exports outside of the former Soviet Union.

Further European Union efforts at rendering the opaque natural gas market more transparent were met with resistance by Germany, Hungary, and others who refused a proposed initiative to publish bilateral natural gas contracts. These states, who opted to maintain long-term contracts with Gazprom, argued that these contracts contained confidential “commercially sensitive” information that must remain protected. Moscow’s divide and conquer approach has allowed industry corruption to flourish all along the energy value chain, benefiting elites within European states that participated in Russian energy exports. Energy corruption in Ukraine was so endemic that it contributed to the Maidan revolution, annexation of Crimea, and ongoing war in eastern Ukraine.

The latest crisis also reveals the tension at the heart of European Union energy policy between energy security supply on one hand, and decarbonization efforts on the other. The European Union has pressured members to phase out coal consumption by 2050, in line with the outcome of the recent COP26 summit, increasing reliance on natural gas for electricity generation. This disproportionately affected Eastern European member states, who were already the most dependent on Russian supplies to begin with. Forcing states to choose between secure access to energy supplies and increasingly existential environmental consequences has not been a successful policy. The European Union also pushed developing states to move away from coal consumption, transforming them into rivals for liquid natural gas supplies from Qatar and the United States. This was unexpectedly and keenly felt when gas demand rose sharply in Asia as economies came roaring back from the pandemic.

Europe’s lack of consensus on energy issues renders in unable to act as a unified block, and is its biggest obstacle towards achieving greater energy security. Gazprom learned in the early 2000s that bilateral gas contracts were beneficial, because it undermined collective bargaining and facilitated effective hostage taking. While Poland and Lithuania were forced to pay exorbitant gas prices in the early 2010s, larger states like Germany and France ignored their pleas so as not to endanger the profitable relationship with Russia.

The profound disagreement over Nord Stream 2 is evidence that this disunity still stymies European energy security. Poland and Ukraine, two of Russia’s harshest critics in the region, have repeatedly warned against the inherent danger of increasing dependence on Russian energy supplies, arguing that approval of Nord Stream 2 removes a critical deterrent against further Russian aggression in Ukraine. For now, Ukraine remains a primary gas transit corridor to European markets, increasing the costs of full-scale war. Meanwhile, as gas prices spiked across the continent, Berlin remained silent, until the German Federal Ministry for Economic Affairs and Energy released an assessment declaring that the Ministry believed certification of Nord Stream 2 would “not endanger the security of the gas supply to the Federal Republic of Germany and the European Union.”

While the critical cleavage on energy has generally been along the East-West divide, disparities in factor endowments, as well as divergent policy directions, means that even within Central and Eastern Europe there are profound disagreements on how best to pursue energy security. Poland and Lithuania have led the charge on diversification away from Russian supplies, but Hungary has chosen to manage its energy dependence by deepening its relationship with Moscow, signing a sweetheart gas deal and securing a $11 billion loan to build a nuclear power plant.

The Energy-Environment Balancing Act 

The beneficiary of these disagreements, is of course, Moscow, which has watched with pleasure as Europe consistently fails to reach consensus on energy issues. October’s summit in Brussels yielded few concrete results on the energy crisis, serving instead to calcify divisions within the bloc. Poland, Hungary, and the Czech Republic called for major revisions to the European Union’s climate plan, citing it as a major contributor to the energy crisis. These large policy differences contribute to the European Union’s schizophrenic Russia policy, imposing sanctions on one hand, while increasing engagement on the other. Nevertheless, this latest crisis, along with Russia’s continued aggression towards Ukraine, provides a focal point for engagement within the West to increase European resilience to Russian energy coercion. Given the state of European disunity, this may require bilateral rather than union-level policy initiatives.
 
Given that Europe will remain locked into a mutually dependent energy relationship with Russia for the foreseeable future, there are several policy options, but all have trade-offs. In the short and medium terms, there is an unfortunate clash between energy and environmental problems. To ensure the energy security of its member states and the wider European community, the European Union may have to consider modifying or temporarily suspending some of its ambitious climate rules.

The energy crisis in Ukraine exemplifies this hard choice: Ukraine will likely face energy shortages that may be severe enough to cause blackouts this winter. The West could help avoid this by sending coal supplies immediately, a policy that contradicts long-term climate goals. Poland, the biggest coal producer in the European Union, may also need to push back its coal phase out by more than a decade to maintain its energy buffer against Russia. This short- and medium-term solution would help lessen Ukraine and Poland’s dependency on Russia, but are counter to European Union green initiatives.

In the long-term, the European Union will have to reckon with its profound disagreement on nuclear energy, which could both reduce dependency on Russian energy supplies and help the European Union meet its climate initiatives. Both Angela Merkel and the new German government have reiterated Germany’s firm anti-nuclear energy position, arguing that nuclear power should not be considered clean energy. Many in Central and Eastern Europe as well as France, disagree, which presents a unique opportunity for U.S. nuclear power firms to regain market share lost in recent years to Russia’s Rosatom.

The United States has long wanted Europe to wean itself from Russian energy. The State Department’s appointment of Amos Hochstein as an energy security envoy to Europe underscores this aim. Given the state of European energy disunity, it may be more expedient to work bilaterally with the states most vulnerable to Russian energy coercion: Ukraine, Moldova, and Southeastern Europe. In these states, one of the biggest obstacles towards energy independence is endemic energy corruption, which enriches powerful individuals at the expense of state energy security. This is not a quick or easy fix, but it is crucial.

Looking Ahead

Europe is facing its most existential energy challenge in over a decade. This crisis, however, presents an opportunity for European states to work together, or at the very least bilaterally with the United States, to coordinate plans on how to manage its energy relationship with Russia. If Europe does not manage to overcome its energy coordination problem, it will continue to be vulnerable in the face of Russian pressure, and will not adequately manage the threat of climate change.
 
4) EU Commission considers to classify gas and nuclear power as 'green energy'
Bloomberg, 30 November 2021
 
The European Union is considering allowing some natural-gas and nuclear energy projects to be labeled as green investments -- as a temporary measure -- in a move that could help the shift to net zero but will also upset environmentalists.

The European Commission is weighing whether to classify as sustainable investment in gas plants that replace coal and emit no more than 270 grams of carbon dioxide equivalent per kilowatt-hour, according to two people with knowledge of the matter. The projects would have to be finalized by 2030, said the people, who asked not to be identified as the talks on the proposal are private.

The design of the EU investment classification system, known as taxonomy, is closely watched by investors worldwide and could potentially attract billions of euros in private finance to help the green transition. The challenge is to ensure the decision on nuclear and gas gets political support, while avoiding the risk of greenwashing, or overstating the significance of emissions cuts.

The commission, the EU’s executive arm, plans to unveil the rules “in the near future,” its spokesman said on Tuesday. He declined to elaborate on the details of the proposal. 

Covering almost every sector of the economy, the taxonomy aims to guide investors to clean projects. The decision on whether it should include gas and nuclear power was delayed in April following warnings by some investors, governments and environmental activists that such an addition could undermine the credibility of the system.

Giving a temporary green label to gas projects with emissions not exceeding 270 grams of CO2 equivalent could facilitate investments in cleaning up coal-based district heating systems in countries such as Poland. That’s an argument often raised by East European politicians.  

The inclusion of some nuclear energy projects in the taxonomy would help attract private finance in nations from France to the Czech Republic, which plan to rely on atomic power in their transition to net-zero emissions.
Europe wants to become the world’s first continent to reach carbon neutrality by the middle of the century under the Green Deal, a sweeping overhaul that aims to accelerate pollution cuts in all areas from energy production to transport.

After a meeting of the bloc’s leaders last month, European Commission President Ursula von der Leyen said that while the EU needs more renewable and clean energy, it also requires “a stable source, nuclear energy, and during the transition, also natural gas.” ....
 
5) Benny Peiser: After COP26, we are entering a new phase of the climate debate
The Irish Climate Science Forum, 2 December 2021
 
In his lecture, Dr Peiser provided an overview of the main conclusions of COP26, and why the UN climate summit failed to overcome the deep divisions between developed and developing nations.

 

He argued that we are entering a new phase of the so-called Issue Attention Cycle surrounding climate change as concerns about the climate are being increasingly overshadowed and eclipsed by growing concerns about the economic and political costs of Net Zero. He highlighted the increasing public fears about the damaging impact of Net Zero plans on the cost of living, with particular reference to the immense technical, economic and political challenges of Boris Johnson's “Net‐Zero 2050” strategy. 
 
Full lecture

6) 'Liberal' Boris is making huge mistake with wind energy says Trump 
Daily Express, 2 December 2021

DONALD TRUMP has criticised the British Prime Minister for his commitment regarding the development of 'ridiculous' wind energy in the UK.

In an exclusive interview the former American president gave to Nigel Farage for GB News, Mr Trump reiterated his critical views on renewable energies with a particular emphasis on 'destroying' windmills.

After Farage underlined that Boris Johnson and President Joe Biden bonded over wind energy and net-zero promises at COP26, Mr Trump said he did not believe in wind energy for a second.
 
He said on air: “I think wind is ridiculous.

“Wind is a horrible thing for Scotland and I got to see it because I have big properties in Scotland and Ireland.

“I look at these magnificent fields with these horrible windmills all over them with some turbines that had started to rust.

“Because once they are there for a couple of years they start to rust and wear out and look terrible, even worse.”
 
In his opinion, the former US president thinks wind turbines are “destroying” landscapes in the UK, on top of killing birds and requiring public funds to be financially sustainable.

He added: “The environmentalists are liking this stuff, I think they hate the world.

“In Aberdeen, they built this big wind farm in the ocean, I think it’s so disgusting to look at, it’s a shame.”
 
7) Rising lithium prices risk pushing electric car dreams off the road
The Daily Telegraph, 2 December 2021

With battery costs predicted to soar by 16pc, vehicle makers face a defining choice

As demand for electric vehicles grows amid a push for a greener economy, carmakers globally are grappling with rising prices of everything from semiconductor chips to copper and aluminium.

Now the expense of lithium, a metal found in every commercial electric battery, is starting to bite as a lack of mining capacity strains supplies. Experts say it is likely to get worse and more investment in production is needed to meet electric vehicle supply chain needs.

While alternatives such as sodium exist, they are some years away from mass manufacture and demand will only grow. New mines take years to develop, while countries are promising to stop the sale of petrol and diesel engines - in Britain’s case by 2030.

Pricing and analysis firm Benchmark Mineral Intelligence estimates lithium carbonate prices could push up the production costs of electric batteries, especially mass-market models, by 16pc or more.

Lithium carbonate, which is often used to make cheaper electric cars, is up 289pc so far this year to about $24,000 per tonne, while lithium hydroxide, used in longer-range motors, is up 192pc to about $26,000 per tonne, according to figures from Benchmark.

“I think it'll go higher,” says chief executive Simon Moores. “Long-term lithium demand is locked in; the question is how much you get out of the ground and into EVs as quickly as possible.”

Among the two, lithium carbonate is starting to be more widely used by electric vehicle makers, making its rising costs a headache. It is used to make lithium-iron phosphate (LFP) batteries that do not need cobalt, an element found largely in The Democratic Republic of Congo where mining is tainted by accusations of human rights abuse. The batteries are also considered to be safer, albeit with shorter range. 

Tesla told customers in October to expect more LFP batteries in its standard-range models.

Demand is being driven in China, Tesla’s fastest growing market and home to one of its gigafactories in Shanghai. It comes as the Asian nation tries to clean up its carbon act and push ahead with homegrown electric cars from the likes of Nio and Xpeng.

Carmakers worldwide are lining up to commit billions of pounds to electrifying their fleets, and all will need thousands of tons of lithium.

In July Fiat and Vauxhall owner Stellantis committed £26bn to electric vehicles and software developments in the next four years, while Nissan pledged £13bn last week to a programme which will see it decarbonise by 2050.

A limiting factor for battery makers is that while a gigafactory can be built in a couple of years, it will immediately need a source of the metal. A new mine, however, requires five to seven years before production can begin.

The mine must also produce a certain quality of the commodity, which can slow things down further, according to Benchmark’s Moores.

Australia is currently the biggest producer, having mined almost half the world’s lithium in 2020, according to the US Geological Survey (USGS), while second-in-line Chile holds the largest reserves. China, a top 10 producer and with the fifth most reserves, owns many of the processors that turn the metal into batteries.

While lithium is not scarce - more reserves are being found as exploration grows - the capacity to pull it out of the ground is limited. 

China, a top 10 producer and with the fifth most reserves, owns many of the processors that turn the metal into batteries. More than 70pc of the mined metal goes towards being used in batteries, the USGS noted.

And as its price rises, the portion of a car’s cost from lithium has gone from 1.5pc to 4pc since the start of the year, according to Moores.

So far, consumers are being cushioned from the metal’s price rises. As carmarkers’ margins become more squeezed, however, buyers may end up absorbing the extra expense in the coming months.

This is because many carmakers have signed long-term deals with battery makers and lithium processing companies but not at a fixed price, says Scott Yarham, head of battery metals pricing at S&P Global Platts.

“Their involvement with lithium hedging is still in its infancy—and the same applies to all other stages of the supply chain, which still didn’t embrace hedging for the most part,” he said. 

Rising lithium, however, isn’t the only worry. Andrew Bergbaum, a partner and car expert at consulting firm AlixPartners, says its swing in price is symptomatic of a broader problem carmakers face as other components suffer price jumps and supply droughts. Copper and aluminium, for instance, reached 10-year highs in the spring.

“While lithium price hikes are likely to impact car prices to some degree, there is a much bigger concern at play here,” he says. 

“The battery of an electric vehicle only contains around 40-60kg of lithium, but the price hikes that we’re seeing across a broader range of materials could send the cost of a car soaring by thousands. 

“It has never been more important for manufacturers to be able to pivot rapidly in the face of disruption and for the industry as a whole to find new ways to innovate.”

While lithium dominates today’s car batteries, it is far from the only solution. Sodium, found in seawater, which could eventually ease the car industry’s reliance on its fellow metal.

Sodium technology could be about up to seven years from mass production and could replace lithium-based batteries for cheaper cars, says Prof David Greenwood, a battery development expert at the University of Warwick, although this depends on how much is spent on its development.

"From our perspective, we think we see sodium ion as being a chemistry that the UK could do pretty well at, but which isn't quite ready for mass production yet,” he says.

"Lithium mining is confined to certain geographies. Sodium isn't, it's way cheaper, is much more sustainable, and it doesn't have the geopolitics around it" since anyone can obtain it.

Prof Greenwood adds, however, that lithium is likely to come up trumps in the making of premium long-range vehicles.

But until a viable alternative is produced to ease constraints or miners dig more out of the ground, the price of lithium looks set on rising. With demand moving in the same direction, carmakers’ electric dreams risk veering off track.
 
8) Manchin pushes Democrats to water down climate change provisions in Biden’s social welfare bill
The Washington Times, 30 November 2021
 
Since Democrats planned to push the spending package along party lines in the 50-50 split Senate, Mr. Manchin’s opposition effectively kills both proposals.
 
Sen. Joe Manchin III, a key swing vote for the White House’s agenda, is pushing Democrats to modify climate change provisions in President Biden’s mammoth social welfare bill.

Mr. Manchin, West Virginia Democrat, met Tuesday with Senate Majority Charles E. Schumer to discuss the bill. A particular area of concern is the package’s climate change provisions, which would affect jobs in Mr. Manchin’s coal and natural gas-producing state.

“The different energy stuff is what we mostly talked about,” Mr. Manchin said. “Just basically looking at different things that we agree [on] and adjustments that need to be made.”

Earlier this month, Mr. Manchin expressed skepticism about two provisions in the package: a fee on methane emissions and a tax credit for electric vehicles made in union plants.

The fee on methane, a short-lived but potent greenhouse gas that is the primary component in natural gas, is seen as a non-starter for Mr. Manchin. West Virginia is currently the eighth largest natural gas producer in the U.S.

Republicans also say the fee would function as a tax on everyday Americans and cause home heating bills to spike.

“Home heating costs are rising by as much as 54% this winter,” said Ronna Romney McDaniel, chairwoman of the Republican National Committee. “Biden’s response [is] pushing a home heating tax in Build Back Broke that will increase prices even more.”

As chairman of the Senate Energy Committee, Mr. Manchin is increasingly receptive to such arguments. Not only has the senator urged the White House to address skyrocketing energy costs, but he’s also urged Democrats to take inflation seriously.

Similarly, Mr. Manchin has raised concerns about Mr. Biden’s proposal to provide upwards of $12,000 in tax credits to consumers who purchase an electric vehicle made at a union plant. The credit is $4,500 more than consumers purchasing electric vehicles from non-union-run plants would be eligible to receive.

“We should not use everyone’s tax dollars to pick winners and losers,” Mr. Manchin recently told Automotive News, an auto industry trade publication.

Since Democrats planned to push the spending package along party lines in the 50-50 split Senate, Mr. Manchin’s opposition effectively kills both proposals.
 
Full story
 
9) Tilak Doshi: India’s Net Zero pledge: What does it really mean?
Real Clear Energy, 29 November 2021

As the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC) came to an end last week, India became something of a whipping boy in the mass media, accused of being the “last-minute spoiler” by forcing the summit communique to water down language on “phasing out” coal to merely “phasing down.”
 
It also earned notoriety by demanding $1 trillion of public cash for itself before the end of the decade, to be put up by the wealthy countries if they want India to steeply cut emissions in order to avoid the “climate crisis.” Let’s put some context to the hyperbole that has marked much of the popular press coverage as the summit wound down.

Net Zero by 2070

In early 2021, speculation abounded in the Indian media about the government’s plans for a net-zero goal. One report indicated 2047 – the centenary of India’s independence from British colonial rule – as a possible target. With China announcing a net-zero target of 2060, and other large emitters such as the EU, U.S., Japan, and South Korea having made their net-zero-by-2050 pledges, India saw a slow but steady ratcheting of diplomatic pressure to announce a net-zero target in the months leading up to the global climate summit in Glasgow.

U.S. climate envoy John Kerry visited India twice in 2021, in April and September. Kerry’s visits focused on raising climate ambitions ahead of COP26. He proposed collaboration on a 2030 agenda for clean and green technologies and met ministers, policymakers, and business and civil society leaders. During his interactions, Kerry tried to pressure India to agree to a net-zero-by-2050 target.
 
In September, Kerry attended the launch of the U.S.–India Climate Action and Finance Mobilization Dialogue as part of the U.S.–India Climate and Clean Energy Agenda 2030 Partnership, announced by President Biden and Prime Minister Modi during the Leaders’ Summit on Climate 2021. During his visit, Kerry continued to attempt to raise climate ambitions ahead of COP26.  

COP26 president Alok Sharma had also visited India for discussions with ministry, industry, and civil society leaders in August 2021. During Modi’s visit to Washington in late September 2021, the White House released a joint statement of the leaders of Australia, India, Japan, and the United States (called “the Quad”), discussing the aim of achieving global net-zero emissions by 2050.

Just before the start of COP26, India’s environment secretary R.P. Gupta rejected calls for his country to announce a net-zero carbon emissions target. “It is how much carbon you are going to put in the atmosphere before reaching net-zero that is more important,” he said. Earlier, at an April meeting organized by the International Energy Agency to discuss climate ambitions, India’s power minister Raj Kumar Singh called the “net zero by 2050” mantra pushed by the EU and the U.S. “pie in the sky . . . you have 800 million people who don’t have access to electricity. You can’t say that they have to go to net zero, they have the right to develop, they want to build skyscrapers and have a higher standard of living, you can’t stop it.”  

However, at the COP26 Summit, Modi surprisingly pledged to cut India’s emissions to net zero by 2070. The pledge was one of five that he made, which included a promise for India to get 50% of its energy from renewable resources by 2030, reduce its total projected carbon emissions by 1 billion tons from 2021 till 2030, build 500 GW of non-fossil electricity capacity by 2030, and reduce emissions intensity of  GDP by 45% by 2030.

The mixed international media response to Modi’s net-zero-by-2070 announcement is instructive. Some in the press were scathing, pointing out that the target was two decades behind the 2050 commitments made by the EU, UK, U.S., and Asian OECD members Japan and South Korea, and a decade behind China’s 2060 target. Others found it promising that even recalcitrant India wanted to commit to a net zero target.

To hard-bitten observers of realpolitik in international negotiations, inured to long-term promises by politicians in office (elected or otherwise), the response might well be that “if you can believe that China will be net zero by 2060, then you can believe India will be so by 2070.” In any credible long-term scenario, developing-country governments face the imperative of meeting the aspirations of their citizens to climb out of poverty and deprivation and ascend into the comparative Valhalla of middle-class comfort. India, like China, is decades away from peaking in terms of its emissions, or – what amounts to much the same thing – its use of fossil fuels.

The Limits of Renewable Energy
 
India’s non-fossil-fuel-installed power-generating capacity (excluding nuclear energy) currently stands at 38.3%, consisting of 149.56 GW of hydro, wind, solar, and other renewable resources. India’s fossil fuel capacity is 234 GW. The country’s target of 450 GW of renewable energy by 2030 was considered easily achievable, with several ministers and industry bodies making confident assessments. However, as renewable energy (primarily solar and wind) is gradually being increased in India’s stretched and under-capitalized electricity grid, challenges have emerged.
 
The scale-up of renewable across the country coupled with the inherent nature of intermittent supply (as a function of weather) has meant that supply curtailment – a purposeful reduction in electricity output below the levels that could otherwise have been produced – to ensure grid stability has been increasingly common.

A study conducted by Solar Energy Corporation of India (SECI) projected that the grid would have to curtail up to 50% of solar generation in 2030 with 450 GW renewable energy to keep the grid stable. With 500 GW of non-fossil energy, including nuclear and hydro power, being envisaged by 2030, the costs of integrating intermittent solar power would be even higher.
 
The massive costs of integrating unreliable, weather-dependent power into existing grids have already been made apparent in countries or U.S. states that have gone furthest in adopting renewable – such as Germany and California. California’s situation increasingly resembles that of developing countries, with frequent blackouts; it would be ironic if India – no stranger to erratic electricity and blackouts itself, given its creaky, capital-starved power infrastructure – adopted policies leading to more such power shortages.

Indian renewable energy output and generation capacity has been increasing impressively at an annual growth rate of 18% and 22%, respectively, but this growth comes on a very small base. Meeting the 500 GW non-fossil-fuel target may seem to be within the realm of possibility. But given the current near-bankrupt status of many, if not most, state power utilities, the imposition of intermittent power may well prove to be the proverbial straw that breaks the camel’s back of India’s power sector.

Increased dependence on renewable energy, as promised by India’s “nationally-determined contributions” to COP26, would only add to the burdens that have long afflicted the country’s power-distribution companies. These include multiple constraints on cash flow, such as political compulsion to subsidize power (making it “free”) for favored constituencies such as farmers, labor unions’ ability to block privatization, the inability to hike tariffs to reflect input cost increases, and theft and line losses aggravated by poorly maintained infrastructure. 
 
Reflecting these weaknesses of India’s power utilities, renewable-energy developers are currently facing issues of grid access and congestion, land availability, delayed payments for their generation, supply chain issues, and reduced investor confidence.

We Want Real Electricity!
 
Perhaps the question about what India’s promise to get to net zero by 2070 really means can be answered by a real-life parable from one of India’s multitudinous villages – the village of Dharnai, in the state of Bihar, one of India’s poorest states. The village lacked access to the country’s electricity grid. In 2014, to much fanfare, Greenpeace activists set up a solar-powered microgrid for the village. Problems emerged almost immediately with the load put on the village solar “grid,” as households began hooking up appliances such as television sets, electric water heaters, irons, and air conditioners.
 
On the day of inauguration of the solar power system in the village, its inhabitants protested with banners saying, “we want real electricity, not fake electricity.” As a reporter explained: “By ‘real,’ they meant power from the central grid, generated mostly using coal. By ‘fake,’ they meant solar.” In a wonderful irony, embarrassed VIPs present for the gala opening of the Greenpeace-promoted solar showpiece ensured that the village was soon connected to the coal-fired power grid.
 
Having grown up in the small town of Vadnagar in northern Gujarat, the son of a street merchant who struggled to support his family, Prime Minister Modi is well aware of the struggles of the poor to uplift themselves. While visiting Glasgow for COP26, surrounded by the glitz and glamour of the world’s plutocrats – all flying in on fossil-fuel-guzzling private jets to “fight climate change” – the politically savvy prime minister will almost certainly have had the energy needs of villages such as Dharnai, and so many others like it, in the back of his mind.

The London-based Net Zero Watch is a campaign group set up to highlight and discuss the serious implications of expensive and poorly considered climate change policies. The Net Zero Watch newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.netzerowatch.com.