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Week 7: Skiers to the climate rescue! ⛷
In this issue: ▸ Skiers to the climate rescue! ▸ Heia Norge! ▸ World Bank invests in climate disaster ▸ Aviation a “green investment”? ▸ Trouble in the wind sector ▸ And much more...
Far away in the past are snowy winters in the north of Europe. Far away in the past are walks on snow-covered paths and the sound of heavy snow hitting the branches of trees. Nowadays everything is just grey. Chernobyl grey colours of tired months, January and February. Their faces battered by darkness and never-ending grey days passing by like zombies. People, streets, houses melted into a mass of grey.
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The winters in the north of Europe are gone. Yes, you can find them far, far north, hiding from the climate emergency, firmly holding their last stand, waiting for the assault. I grew up skiing, and skiing is one of the sports I still practice when time allows for it. For me it is closely connected with a genuine feeling of freedom and the beauty of the nature. Over the course of my life things related to skiing have changed dramatically and a grave sadness occurs every time I visit one of the places I used to ski where the natural snow is now more or less permanently gone.
The climate emergency seems to be a topic that at least some of the people heavily dependent on skiing have now begun to realise the importance of. But some of the conclusions they make are rather tragicomic. For example, top skiers have now signed a letter to the International Ski and Snowboard Federation (FIS) demanding action over the climate emergency.
Skiers to the climate rescue! ⛷
This season, there has been a notable lack of snow across Alpine resorts, leaving holidaymakers disappointed and causing some ski tournaments to be called off. Global heating has meant that there is no longer guaranteed snow at some of the top ski areas, with the situation predicted to get worse as the planet heats and weather becomes more erratic.
Now, leading athletes have called for the FIS to overhaul its sustainability strategy, as it is lacking. They have asked for a more “geographically reasonable” race schedule to reduce carbon emissions, as often the races entail flying across the world multiple times. This year, the men’s circuit will have travelled from Europe to North America and back twice. They are also asking for the ski season to be changed to keep up with climate breakdown. They have suggested shifting the start of the season from late October to late November and the end of the season from mid-March to late April.
The Norwegian racer Aleksander Aamodt Kilde told the Associated Press: “We see that the world is changing. We see also the impact of our sport … I want the future generations to experience winter and to be able to do what I do.”
Well, this got me going, and if you pay attention to what the top skiers are actually asking for then it’s not an overhaul of the economic system, not immediate action on the climate emergency and CO2 emissions. What they ask for is to move the ski season, to have more “geographically reasonable” race schedule. And, for example, Mr Norwegian racer Aleksander Aamodt Kilde is NOT saying that it’s a problem that the country he represents has just handed out new drilling licences in the North Sea. Yet he wants “future generations to experience winter”.
Maybe he does not understand how things in this world are interconnected. Or maybe it’s a matter of commercial interests. Maybe it’s both.
Norway is now Europe’s biggest gas supplier. Heia Norge! 🇳🇴
Anyway, it’s jolly noble all of it, isn’t it? A frog in the pot, slowly heating up. We just change the pot and all of it will be fine.
As it is, Norway has now awarded 47 new offshore oil and gas exploration permits to 25 firms in its latest mature areas licensing round, with two of the permits in the Arctic waters of the Barents Sea.
“Today’s award is an important contribution to ensuring that Norway remains a safe and predictable supplier of oil and gas to Europe,” Minister of Petroleum and Energy Terje Aasland told an industry conference in Sandefjord in southern Norway. The government remains committed to maintaining industrial activity on the Norwegian continental shelf, he said.
Each of the 47 drilling permits – 29 in the North Sea, 16 in the Norwegian Sea and two in the Arctic Barents Sea – will have multiple owners. Norwegian state-controlled energy major Equinor was the single biggest recipient with stakes in 26 of the licenses, of which it will be the operator of 18.
Last year, Norway overtook Russia as Europe’s biggest gas supplier last year, after Moscow cut off much of its supply. Norway’s oil output is expected to rise by 6.9 percent (but it’s ok, my dear friend, because every second car in Norway is a Tesla!) this year while gas volumes are predicted to remain unchanged near record highs, the Norwegian Petroleum Directorate (NPD) said on Monday.
World Bank invests in climate disaster 🏦
World Bank. Say it slowly. World. Bank. Sounds big, important, for the world. For all of us. For the better. Well. The World Bank president, David Malpass, has announced his resignation months after sparking controversy by failing to say whether he accepted that fossil fuels were driving the climate crisis.
Malpass, who was appointed to the post by Donald Trump in 2019, said he would step down from the multilateral development bank, which provides billions of dollars a year in funding for developing economies, by the end of June. Malpass offered no specific reason for the decision, and did not explain why he was leaving the bank with less than a year remaining in his five-year term. He said in a statement: “After a good deal of thought, I’ve decided to pursue new challenges.”
The controversy started after he appeared on a climate finance panel at a conference in New York in September. Asked repeatedly whether he believed “manmade burning of fossil fuels …[are] rapidly and dangerously warming the planet”, Malpass tried to dodge the question before saying: “I don’t even know. I’m not a scientist.” The US, which traditionally chooses the World Bank president, is expected to select a new candidate who could attract the backing of other leading shareholders and accelerate its reform to put climate change at the heart of its work.
The US is the largest shareholder in the bank by far, out of almost 190 member countries, followed by Japan, China, Germany, France and the UK. The countries are represented by a board of governors, generally ministers of finance or development from member countries, and 25 executive directors that are responsible for operations.
The US. Oil & Gas. World Bank. Maybe “The US Oil and Gas Government Bank” is a better name for it. At least it would be far easier to explain the whole thing. The World Bank has provided nearly $15bn of finance directly to fossil fuel projects since the Paris agreement was signed in 2015, and is likely to have spurred far greater investment indirectly, new research has found.
Funding for “upstream” oil and gas projects from the World Bank was meant to stop from 2019, but the Big Shift Global, a coalition of more than 50 NGOs, has found the bank and its subsidiaries funding oil refinery and gas processing since then. As the bank is also instrumental in helping to catalyse investment from other donors and the private sector, its direct funding of $14.8bn to fossil fuel since the Paris agreement.
I recommend you read the report from Big Shift Global, which you can find here.
Aviation to be labelled “green investment”? 😳
It gets even better now, oh, so much better. Grey is the name of the game, but this time it is all about a lobby that, as it looks, may get the aviation industry qualified as a “green investment” under EU taxonomy. And no, it is not a joke.
The inclusion of aircraft in the EU’s “taxonomy for sustainable finance”, a framework designed to guide private capital into environmentally friendly activities, is being assessed by the commission. According to calculations by environmental campaign group Transport & Environment, due to be sent to policymakers on Friday, more than 90 percent of the order book of Airbus, the world’s biggest aircraft manufacturer as measured by deliveries, could be considered green under criteria drafted by the EU’s advisory body on sustainable finance.
The aviation industry argues investments in new planes should be considered sustainable even if they burn jet fuel because they produce fewer emissions per passenger than older models. The newest designs are up to 20 percent more fuel efficient than older aircraft, according to industry executives.
The debate comes as European policymakers consider how to respond to the US Inflation Reduction Act, a package of incentives to encourage investment into green technologies. Europe’s aerospace trade industry body, the ASD, said on Thursday that including civil aviation in the EU taxonomy was “even more important” when the US was “providing substantial support to its own industry”.
The aviation industry is one of the hardest to decarbonise due to the cost and other limitations of alternative fuels. The sector accounts for about 2 percent of global CO2 emissions, according to industry experts. And executives, of course, argue that sales of more efficient aircrafts are needed to help fund investment into zero carbon options, such as electric or hydrogen-fuelled planes.
Airbus told the Financial Times on Thursday that it was “key” that air transport was included in the EU taxonomy and that to “meet the EU’s climate ambition and Paris [climate] agreement targets, the aviation industry needs access to sustainable finance”.
I have real trouble understanding the EU Commission and why on earth the taxonomy exists at all. Nuclear, gas, aviation. I think soon the weapons industry will be there too. And not long after that it will also include the “transformative” oil and gas businesses.
But who cares? The taxonomy sounds good and important, and a zillion consultants around Europe are making a living on explaining what it means and how it works. The EU Taxonomy is indeed a great business opportunity…
Trouble in the wind energy sector 💨
We end this week’s newsletter with windy troubles.
Denmark is a star in offshore wind. But on February 6th it stopped processing all applications for such projects, after a dawning realisation that it may be in breach of EU law. The gains from cutting red tape are large. The International Energy Agency, an official forecaster, estimates that renewables generation would rise by an extra 25% by 2027 if bureaucratic and financing barriers were removed.
The bigger problem is that some renewables providers are now rethinking their investments altogether, because energy projects are becoming less attractive. Price caps and various taxes, together with rising costs, are putting them off. Between January 2021 and April 2022 logistical hiccups, post-lockdown rebounds and war-induced disruptions together buoyed the prices of everything from shipping to industrial metals, which in turn raised the prices of solar modules and turbines.
Higher interest rates have made money dearer – a headache for builders of green plants, which are much hungrier for capital than their fossil-fuel-fired counterparts. Such costs would be manageable if they could be passed on. But governments are increasingly micromanaging power markets to keep prices low, or to raise revenue of their own.
The EU has imposed a price cap on renewable generators, and many European countries have implemented a windfall tax on their profits. Around the world, auctions for renewables contracts are being designed to keep electricity cheap – so cheap that generators will struggle to make money. That leads them to sell electricity on the spot market instead, which is riskier and less appealing to investors. Some tenders entice developers to compete over how much they are willing to pay to run projects, a system known as “negative bidding”. This may bloat costs yet more.
The result has been squeezed profits. The four largest Western turbine-makers are losing money. In January Orsted, the world’s largest offshore-wind developer, took a $365m charge on a big American project; on February 8th the renewables arm of Equinor, Norway’s state-owned energy giant, reported a widening loss for the fourth quarter of 2022 – despite an 81% jump in revenue compared with the same period in 2021. That week Duke Energy and Dominion Energy, two American firms, also booked charges of $1.3bn and $1.5bn, respectively, on chunks of their wind and solar portfolios.
Governments are keen to keep power prices low today, but that may be a false economy if it reduces the renewables spending needed for tomorrow. And as more wind and solar capacity is built, developers will probably need to withstand even bigger cost increases: a shortage of copper, say, would push up the prices of cables and wires, and a scarcity of trained workers needed to maintain and operate turbines would boost wages.
All this means that, if investing is to stay attractive, green power will need to be sold at higher prices than governments would like. If the energy transition is to happen fast, there must not be a race to the bottom.
Read more in this splendid piece from The Economist.
Have a great not-so-grey week!
PS: For all of you who requested the inverted analysis example, you will get it by email later today!
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