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Unintended Consequences, Kicking the Coal Habit (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.

The Search for Precious Battery Metals Is Ramifying and Getting Harder

What happened: Volkswagen and Stellantis are involved in a complex, $1 billion financial transaction that will see the two auto giants help create a new publicly-traded mining company in Brazil to produce the nickel and copper needed for more EV batteries. Mining giant Glencore is matching the $100 million investment from the two companies.  

Why it matters: “The transaction highlights desperation to secure raw materials outside China, the world’s dominant processor of battery metals. Many automakers are seeking materials from mines that meet higher environmental and labor standards, in part to qualify for billions of dollars in electric-car tax credits, loans and subsidies in the U.S., Canada and Europe.” 

What’s next: As the share of easily-available, easily-refinable metals dwindles, the complexity and creativity involved in finding them will increase. (By Amrith Ramkumar, The Wall Street Journal)

Well-Meaning Rule to Clean Air Ends Up Polluting Oceans

What happened: A rule to reduce the amount of sulfur used in shipping fuel has inadvertently created a potential mess for delicate ocean ecosystems. One workaround, known as a “scrubber,” has made it possible for shipping companies to be compliant by dumping sulfur oxide into the water rather than releasing it into the air.

Why it matters: Each and every well-intentioned law to “green” an industry is going to have workarounds and loopholes that may increase the damage rather than reduce it. What’s more, as this example shows, that problem gets worse when you lack the ability to measure the potential new problem being created and “researchers report that guidelines created last year by an IMO committee to assess the environmental risk from scrubber discharge are woefully inadequate.”

What’s next: A mad scramble to find a way to have a more wholistic measure of shipping pollution, and an attempt to turn that into new international laws. (By Lydia Larsen, Inside Climate News)

China’s EVs Are Coming to Europe, Hurdles Be Damned

What happened: China’s homegrown EVs are beating foreign competition handily within the country. Now the nation that recently overtook Japan as the world’s largest auto exporter is hoping that many of its competitive domestic brands will also dominate in new markets, especially Europe.

Why it matters: The international freakout over China’s much-publicized domination of the electric battery supply chain is now turning into a pricing and tech advantage in the actual cars. Other countries inability to compete when it comes to raw materials is now having downstream effects on actual vehicles. If that pricing power can help consumers overcome their reluctance to buy from a new brand, legacy automakers are in deep trouble.

What’s next: A lot of people shopping for new cars will suddenly have more options. Expect in the United States, where a lowering of the current 27.5% tariff would go a long way towards more Chinese success. (By Xiaying You, Semafor)

South Africa Proves How Hard It Is to Wean Countries Off of Coal

What happened: South Africa’s hope of getting nearly half of its power from renewables by the end of the decade now looks like a pipe dream, as a recent analysis pegs the number at closer to 20%. It’s a scenario playing out all over the world where renewable production can’t keep up with expanded demand.

Why it matters: Because it shows that too much attention has been paid to renewables, and not enough to oil and gas. Those may not seem like greener alternatives, but they are far better options than the coal that South Africa and many other developing nations use for the majority of energy generation.

What’s next: Expect more pressure on international organizations to provide financing and favorable loans to countries that can’t quite quit their coal dependency without giant domestic problems. (By RystadEnergy)

California Battery Storage Is Now Enough… For at Least Four Hours of Demand

What happened: Large-scale battery supply in the nation’s biggest state has increased tenfold in only three years. 

Why it matters: “California increasingly has relied on batteries to keep the lights on as aging, gas-burning power plants retire and new solar and wind installations take their place. The grid operator has credited batteries with helping prevent blackouts during hot summer evenings, and the next triple-digit heat wave is forecast to hit the state this week.”

What’s next: There’s no better proof of concept for weary consumers used to brownouts and spotty coverage than a grid that doesn’t die in the most extreme conditions. (By David R. Baker, Bloomberg)

A weekly five-point roundup of critical events in fintech, the future of finance and the next wave of banking industry transformation.