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Cow Burps, Charging Wars, Debt Traps and More (Energy Transitions | Week in Review)

A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance.
Energy transition

A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance.

Tesla Just Won the Charging Wars. Now It Stands to Reap the Benefits.

What happened: Tesla has its own charger. Other electric vehicles have a different kind. This was an issue for a long time until recently, when Ford and GM announced they’d make all future EVs compatible with Tesla’s NACS chargers, making available tens of thousands of chargers for their customers. 

Why it matters: Non-Tesla charging infrastructure in the United States is a joke. The government knows this, so along with incentives to build the batters and cars here, there is also some $7.5 billion up for grabs in subsidies for more chargers. Tesla may now get the lion’s share of that money so long as it provides adapters for the non-Tesla chargers.

What’s next: Possibly an industry with little to no competition. The government wants new subsidized Tesla chargers to offer multiple charging options. But if every other car manufacturer chooses to use Tesla chargers anyway, there may no longer be a need. (By Mark Kane, InsideEVs)

Climate Change Pushing Vulnerable Countries Into Debt Trap

What happened: The poorest, most climate-vulnerable countries in the world face much higher borrowing costs to repair, or mitigate, the damage from climate change. Which makes them even more vulnerable the next time disaster hits, a debt trap Pakistan’s Prime Minister warned about at a climate conference earlier this year that seems to be materializing already.

Why it matters: “As natural disasters intensify and become more frequent, investors are increasing the interest rate they charge vulnerable countries, adding to the debt burden, according to the Boston University report. The elevated risk premium could trap countries into a ‘vicious cycle of higher debt costs and a decreased capacity to invest in climate resilience, the researchers including Luma Ramos and Rebecca Ray wrote.”

What’s next: Something that looks like financial aid, but exactly what is unclear. The COP27 meetings featured an agreement for wealthy countries to provide funds to those affected by their emissions, but how it’s funded hasn’t been hashed out. There are also calls for the IMF or another international body to backstop projects to encourage more private funding for climate adaptation measures, but no one can seem to make those profitable yet. (By Anthony Sguazzin, Bloomberg)

Insurers Are Bailing On Climate-Ravaged States. Blame the Regulators.

What happened: Allstate recently became the third major insurer to exit California, saying the home insurance market was too risky in a state with a growing wildfire problem. 

Why it matters: “The flight of insurers from markets with high exposure to climate catastrophes isn’t an inevitable outcome of rising risk. Instead, it’s a symptom of a regulatory environment in which policymakers have chosen to prioritize short-term protections for a small subset of consumers over the longer-term interests of all homeowners.”

What’s next: When insurers leave, states are left to take their place. The amount of risk taken on by states like California, Florida, and Louisiana has exploded in recent years and is likely to increase even more. (By Tim McDonnell, Semafor)

Biggest Government Conservation Grants Are Making ‘Cow Burps’ Problem Worse 

What happened: A new report shows that one of the Department of Agriculture’s biggest conservation programs is providing millions in grants to massive dairy farms in California to capture excess methane gas from lagoons. But the incentivization of those farms actually increases methane production because most of it comes from, well, cow burps.

Why it matters: Simply put, money explicitly set aside for climate mitigation is not going where it needs to go. “Late last year, the Environmental Working Group, which has extensively tracked conservation funding and agricultural subsidies, found that the USDA had given more than $7 billion to farmers through its major conservation programs, including EQIP, from 2017 to 2020, yet only a small percentage of the funding went to practices that had any climate benefits, the group found.”

What’s next: Possibly way more of the same. Watchdogs say neither the Department of Agriculture nor the USDA does a good job of directing the billions they’re given to projects meant to help the climate. Which may not be good news given that billions more will be available in the form of subsidies from the Inflation Reduction Act. (By Georgina Gustin, Inside Climate News)

Toyota to Investors: No Really, This Time We’re Actually Serious About EVs

What happened: Toyota has spent the past decade making often conflicting promises about its future. Now, with a shareholder revolt a real possibility, the company is finally, yet again, saying it’s all in on EVs, with a host of promises that may be too good to be true.

Why it matters: It would seem as if the electrification of cars couldn’t happen without the world’s current largest car maker. Yet Toyota’s newest set of promises seems as much born out of desperation as dominance, given that China recently surpassed Japan as the world’s leading auto exporter and it, and Tesla’s, massive head start is growing by the day.What’s next: 900-mile range. 10-minute charges. Cars made from only three parts. Toyota’s previous EV promises revolved around offering a bunch of models that never arrives. These new promises indicate a technological revolution. Don’t expect investors to be forgiving if those promises go undelivered, again. (By Diego Lasarte, Quartz)

AT&T, T-Mobile and Verizon should be turning the volume up. Their current quiet murmur is just not enough.