Net Zero

1. A power tipping point
2. Record-breaking heat
3. Climate’s costs for Africa
4. Counterintuitive carbon taxes
5. Anti-ESG momentum

The best climate finance bang for your buck, and the first pictures of Climeworks’ mammoth DAC facility.

A power tipping point

Dave Jones is the Global Insights Program Director at Ember, an energy think tank headquartered in London.

The world reached a huge milestone in 2023: Renewable sources accounted for 30% of global electricity for the first time. That’s the biggest takeaway from the annual report produced by the energy think tank where I work, Ember.

The rapid growth in solar and wind power has brought the world to a crucial pivot point — likely this year — where fossil fuel-powered generation will start to decline at a global level.

As a result, 2023 will likely go down in history as the peak of emissions in the power sector. That’s incredibly positive news. Fossil fuels may still generate 61% of the world’s electricity, but the renewables future is coming into sight. And faster than you think.

But there’s still a long way to go. The pace of emissions falling — and what that means for efforts to keep temperature increases within the world’s 1.5 degree Celsius target — depends on how fast this renewables revolution goes.

Record-breaking heat

The world saw an 11th straight month of record-breaking temperatures in April, with climate scientists projecting the planet will blow past the Paris Agreement’s target of 1.5 degrees Celsius of warming. Global temperatures were 1.58 C above historic averages last month, according to European Union meteorological data, rises that were in part driven by the El Niño climate phenomenon but which are likely to worsen over time because of greenhouse gas concentrations, the director of the EU’s climate change service said. A Guardian survey, meanwhile, found that almost 80% of climate scientists forecast that global temperatures would rise at least 2.5 C this century, while nearly half said the increase could be at least 3 C.

How climate change hammers Africa

Africa loses as much as $15 billion a year in climate change adaptation costs according to an estimate by the Intergovernmental Panel on Climate Change, a figure that could more than triple by 2030 as climate change makes extreme weather events more common. Swaths of Africa have been variously wracked by floods and droughts at an unprecedented rate for much of the past year, contributing to rising food prices and propagating diseases such as cholera. The latent threat from extreme weather increases the need for “climate adaptation” policies in Africa, Akinwumi Adesina, head of the African Development Bank, told Bloomberg. Although the bank has pledged $25 billion for climate adaptation in the continent — the biggest such program in the world, according to Adesina — it is nonetheless a tiny fraction of what’s required: According to a recent Brookings report, the continent’s adaptation costs may be as high as $1.6 trillion overall.

The case for reversing carbon taxes

The conventional approach to carbon taxes is completely backward, a new economics paper argues. Cap-and-trade systems like the European Union’s operate on the principle that the price of carbon should start low and increase over time, effectively tightening the financial screws on high-emissions industries as the costs of climate impacts rise and the cost of clean alternatives falls. The assumption is that, because the most extreme possible future economic impacts are relatively unlikely, there’s no economic justification for the disruption to industry that would be caused by high carbon prices today.

But that approach, argues New York University economist Gernot Wagner, is effectively a high-stakes gamble that climate change won’t be as bad as many scientists warn, and that maintaining high growth will help pay for future damages. A world in which warming is contained to the Paris Agreement targets will have higher economic growth than one that overshoots those targets, Wagner says. So a better strategy, he argues, would be a carbon price that starts high today — somewhere around $250 per ton — and then falls over the next few decades.

Anti-ESG ‘more bark than bite’

Anti-ESG efforts by conservatives in the US may garner headlines but are “much more bark than bite” with the vast majority petering out or being watered down before coming into force thanks to increasingly diverse opposition, new research published Wednesday showed.

Of 113 actions taken against ESG by Republican state officials in the US, nearly half were only in the form of letters, while other efforts — rules and regulations, investigations, or legal action — faced “robust opposition” that has been “loud and consistent,” driven in part by the growth of clean-energy employers nationwide, Frances Sawyer, who authored the report, said in an interview. Studies such as one published in Texas in March by a lobby group that includes Exxon Mobil and Chevron among its members showing that anti-ESG laws cost the state nearly $700 million in lost economic activity and 3,000 fewer jobs have also chastened those behind the efforts, according to Sawyer, a former policy adviser to Tom Steyer’s 2020 presidential campaign.

That is not to say the anti-ESG efforts haven’t had an impact: Sawyer’s report noted that 40 anti-ESG laws have been passed by state legislatures across the US and in cases where executive action has successfully taken place, the consequences have been significant, such as in Louisiana, Texas, and West Virginia, where state governments have withdrawn more than $9 billion from BlackRock for allegedly “discriminating” against oil and gas companies. “Where we see there to be costs,” Sawyer said, “those costs have been incredibly high.”

Fossil Fuels

• Azerbaijan’s charm offensive ahead of hosting COP29 is backfiring. The increased attention on the petrostate has drawn scrutiny on its “foreign influence peddling, jailing of critics, political crackdowns and unrepentant fossil fuel dealmaking,” Politico reported.

Finance

• The oil and gas giant Shell sold huge numbers of carbon credits linked to CO2 removal that never took place to oil sands companies in the Canadian province of Alberta, part of a provincial subsidy program designed to boost the carbon-capture sector, the Financial Times reported.
• Banks’ reliance on metrics tracking so-called financed emissions may be flawed by being too subject to volatility in their lending portfolio, and insufficiently able to compare between and within portfolios themselves, according to Bloomberg.

Tech

• Climeworks began operating what it said was the world’s largest direct air capture facility, able to pull 36,000 tons of CO2 from the air annually. The Mammoth site is 10 times bigger than Climeworks’ original facility.
• Octopus Energy’s valuation was increased to $9 billion after investments from Generation Investment Management and the Canada Pension Plan Investment Board. The UK-based company plans to use the increased funds to expand the use of its Kraken energy-management software to the US.

EVs

• Mercedes-Benz maker Daimler backtracked on previously ambitious goals to be fully electric by 2030. The company acknowledged it would be making fossil fuel-powered cars “well into the 2030s,” with its CEO admitting that “the transformation might take longer than expected.”

Personnel

• Top US and Chinese officials opened climate talks in Washington, the first formal meeting between John Podesta and Liu Zhenmin, Washington and Beijing’s respective climate envoys.

Pradeep Philip is a partner at Deloitte Australia. Deloitte today published the latest edition of a report focused on financing the energy transition.

• Business Insider’s Editor-in-Chief Nicholas Carlson is stepping down.
• US military generals are reporting for duty on Wall Street.
• Stormy Daniels’ detailed testimony on Trump rattles his defense.