Just as the European Commission got a new president, the Federal Energy Regulatory Commission (FERC) in the US has just published figures which show a dramatic about turn in the approach of energy suppliers – dumping coal and nuclear in favor of renewables – wind and solar, while gas remains strong.
While Ursula von der Leyen only won the president’s seat by 2% of the vote, she does have some new carbon taxation plans that might just have swung the newly elected green-leaning seats, which enjoyed success in the recent European elections. So, while the EUC now seems to be pretty set on implementing stronger environmental protections, data from the US shows that despite its president’s best attempts, coal is still dying at pace.
FERC offers a monthly update and although not much has changed from last month, coal has announced 5 more plant retirements planned by June 2022, totaling 4 GW of electrical energy. Gas, wind and solar, are pretty much as they have been throughout this year – with renewables clearly on the up, but more gas retirements that many would expect, although the dominant fossil fuel resource being built out continues to be natural gas turbines.
This is probably not the picture that you would expect from a government hell bent on keeping coal in high production. In fact, if you go back a year, this represents a fall from 77 GW of natural gas planned, to just 59 GW, a fall of 14 GW, and a rise from 146 GW of renewables to 184 GW, so momentum is building.
If all of these renewables actually get built by June 2022, that would represent a rise from the average rate over the past few years of solar from 8.4 GW in the US, to around 21 GW; and for Wind from 7 GW in a year to an average of 25 GW. This has been rising as a development pipeline for some time.
The latest Energy Infrastructure Update was in fact for May, but was only published on July 5 – clearly news that it was trying to hide around the July 4th celebrations. Nuclear retirements have also been on the rise during that time also. As more natural gas installations are challenged at the state level, in states which have promised to lower emissions drastically, they will end up being replaced with renewables, so we expect to see the natural gas project numbers begin to fall. But so far this has not materialized.
Returning to Europe, in the run up to the election, Leyen laid down her position on child poverty, youth unemployment, child care, and vocational training and taxing US multinationals, before she opened up on climate change, finishing her pitch calling for being tougher on illegal immigration into the EU.
Her first climate port of call was on the Emissions Trading System (ETS), which she wants to see recalibrated and expanded to include imports. The message came loud and clear that if you create CO2 inside the EU, there is a price to be paid; and if you create CO2 in the process of making anything, which you then import to the EU, there will also be a price to be paid. She stressd that the ETS needs to take in the Maritime industry, Aviation and the process of putting up new buildings. There is a lot of movement in that simple sentence, implying deadlines for electrical home heating, not gas, and CO2, the end of bunker fuel, and taxation on cheap flights.
Leyen insisted this could be done without it happening at the expense of jobs and that it must offer genuine benefits, and should be a “just” transition using the existing cohesion funds. These are funds put aside to bring poorer communities up to speed with EU law, preserved for countries where the Gross National Income is below 90% of the EU average.
She believes that doing this could help the EU move from its current aim of a 40% reduction in emissions by 2030 from 1990 levels, to perhaps reach 50%, and to become the first climate neutral bloc in the world. Leyen then went on to endorse Green finance and Green bonds.
This seems to have been enough to win over the Greens, or at least enough to win her the election. Leyen seems to have shifted towards their position and it may achieve a “better the Devil you know” effect among her opponents. Her political career to date shows that she can adapt from a “previously” held view, to one that is more popular, when the situation demands it.
The carbon border tax idea has been around for a while, and Rethink Energy would not be surprised to see it emerge, once the few recalcitrant states (Poland and the Czech Republic) who are still 98% reliant on coal, have been bribed out of coal support – so not imminently, but perhaps within five years.