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19 December 2019

The world of renewables this week

The automotive industry is showing dramatic signs of consolidation. Peugeot and Fiat Chrysler have agreed a €45 billion merger to create the world’s fourth largest carmaker, in the same week that the Volvo Group and Isuzu Motors have signed a strategic alliance to capture electric vehicle opportunities. With regulations getting harsher, momentum is building in the shift away from fossil-fuels, towards either electric or hydrogen-powered vehicles. This has seen new market entrants like Dyson unable to produce commercially viable technology. This two-heads-is-better-than-one approach to the transition may help provide the economies of scale, which are necessary for a clean automotive industry, but living under one roof this will almost certainly cause a dent to the companies’ traditional streams of combined revenue.

 

The months of lobbying from the US wind power industry for tax credit extensions has paid off – sort of. A $1.37 trillion deal has been squeezed out of an end of year deal, which will see the government extend tax incentives for just one additional year. This still hinges on the deal passing through congress, although little friction is expected, which is why the agreed it beforehand in some detail and also because it is part of the funding bill for the next term of Government. Under the new deal, developers making deals in 2020 will receive a 60% Production Tax Credit (PTC) based on the amount of electricity produced only by onshore (so not offshore) wind farms, providing projects are completed by the end of 2024. However, an extension has not been agreed for the solar investment tax credit or for further support to be provided for electric vehicles or storage, despite heavy lobbying attempts from renewables.

New court filings have shown that Robert Murray, CEO of Murray Energy, was heavily funding climate denial as his coal company plunged into bankruptcy in October. Despite $2.7 billion in debts and $8 billion in obligations, Murray managed to fund $18 million in bonuses for himself and his successor, while setting aside $1 million to fund his company’s attempt to cast doubt around climate change. A vocal denier of climate change, through his company Murray has supplied funds to organizations that support the Trump administrations environmental rollbacks, actively try to disprove that human activity is linked to global temperature rise, as well as sponsoring climate change deniers to speak at United Nations conferences. All these details only became available because of the bankruptcy.

 

Standard Chartered has withdrawn funding from three coal-fired power project in Southeast Asia, as part of the bank’s new intentions to only support businesses with intentions to reduce their revenue contributions from coal operations to less than 10% of total earnings by 2030. With investment in coal becoming increasingly risky, this move is part of a wave of global banks becoming more climate conscious with investments.

Danish investor Obtron is launching a €1.6 billion fund to develop its solar portfolio. The Impact Fund intends to support parks primarily in European countries like Germany, Ireland, France and the Netherlands, with other assets in North America and Asia.

California regulators are eyeing ratepayers’ pockets to fund a $166 million Self-Generation Incentive Program to support energy storage technologies. Following PG&E’s public safety power shut-offs due to wildfires in the state, public concern is growing around how to maintain consistent electricity supply as the presence of renewables grows in the energy mix. PG&E is seemingly close to finalizing a settlement with victims of wildfires, despite California Governor Gavin Newsom claiming that reorganization plans go against state legislation. In a letter to the company on Friday, Newsom claims that the proposed plan violates a bill which is intended to help utilities pay for wildfire damages. Stating that he “would definitely do whatever he could to prevent the state regulators from moving forward,” any traction behind Newsom’s complaint is likely to be damaging to PG&E’s attempt to pull out of bankruptcy, as the company has said it will not do so without his blessing.

As part of an academic collaboration, initiative Co-Optima has published research detailing a potential oxygenate molecule which can be produced from biomass for use within diesel fuel. By making use of the 30% of oxygen in biomatter, research highlights how the sooting tendency of fuel can be reduced upon burning, improving fuel economy.

Satellites on a routine global survey have identified and measured methane escaping from ExxonMobil’s gas well explosion site in Ohio. In a study released by the Proceedings of the National Academy of Sciences, it is reported that the methane leak rate at this location is around 120 tons per hour. ExxonMobil claims that the leak has now been plugged, three weeks after the explosion. This exposure of ExxonMobil’s negligence suggests potential for future satellites to be used to monitor methane throughout the full cycle of producing gas-fired power. “We’re entering a new era. With a single observation, a single overpass, we’re able to see plumes of methane coming from large emission sources,” said Ilse Aben, one of the authors of the research. “That’s something totally new that we were previously not able to do from space.” Let’s see what the EPA does about this.

 

The Italian Ministry of Justice has signed a memorandum for professional training of inmates with Enel, to train prisoners for work in the renewables sector. The scheme will help inmates acquire skills that can be used in the workplace and potentially identify occupational placements. Enel has been one of the most progressive fossil-fuel companies in switching its focus to renewables. Programs like this are superb for raising the profile of the renewable sector while simultaneously addressing shortages in the existing supply chain.

The Bank of England (BoE) has stated plans to test Britain’s banks and insurers to assess financial risks around climate change. According to BoE Governor Mark Carney, who has just been appointed as UN special envoy for climate action and finance, “Climate change will affect the value of virtually every financial asset.” The tests aim to evaluate the impact of climate change on asset prices and business models over three scenarios: taking early action, acting late, or taking no action to meet global climate goals, but will not assess whether the capital held by organizations is sufficient to withstand the impacts of climate change. With no pass/fail criteria or intentions to publicly state the results of individual firms, the plans fall short of facilitating real change in how the UK views investment towards industries which contribute towards climate change, and the decisions of financial institutions to continue promoting fossil fuels.

 

Under new CEO Larry Culp, General Electric (GE) seems to be losing its way in renewables. While GE’s stock seems to be rising regardless, the company is shedding its renewable capacity, most recently by selling 812 MW of US onshore wind farms to asset manager Harbert Management Corp. Since Culp took over as CEO in October last year, signs have started to emerge that the company wants out of its joint venture with Enel Green Power – EGPNA, with the latter acquiring GE’s stake in seven renewable projects earlier this year.

An analysis from climate think-tank Sandbag has suggested that burning biomass instead of coal in power stations risks accelerating climate change. Traction is mounting around biomass as a renewable source of energy in Europe, with Drax suggesting plans for carbon-negative biomass plants by 2030. However, key findings from the study entitled ‘playing with fire’ suggest that 2,700 square kilometers of forest would have to be cut down every year to meet the EU’s coal-to-biomass proposals, only to meet 2% of the EU’s electricity production. With tremendous difficulty of replacing such a large number of trees, the key policy recommendation from the study states that “Governments should focus policy support on renewable energy sources which deliver near immediate carbon and cost savings vs. fossil fuels – such as wind and solar – rather than on biomass, which delivers questionable carbon savings, perhaps not realized for many decades (if at all), at a cost much higher than that of fossil fuels.”