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HAPPY THANKSGIVING: Daily on Energy will be off the rest of this week, but back in your inboxes on Monday. Read on below for all the latest, and then please enjoy the holiday!
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
INTERIOR APPROVES WIND PROJECT OFF NEW YORK-NEW JERSEY COAST: The Interior Department approved plans today for the Empire Wind offshore wind project operated by Equinor and BP, advancing what will be the sixth commercial-scale offshore development project approved by the Biden administration.
The Empire Wind project will consist of two separate wind farms offshore New York and New Jersey, officials said: Empire Wind 1, near Long Island, and Empire Wind 2 near Long Branch, New Jersey. Combined, the projects will have a capacity of more than 2 MW, or enough capacity to supply roughly 700,000 homes.
The Empire projects are slated to begin operations in 2026 and 2027, respectively.
The Bureau of Ocean Energy Management, or BOEM, said the projects will add some 830 jobs per year during the construction phase, and roughly 300 jobs annually during the operations phase.
BOEM officials touted the newly approved projects as crucial to delivering on the Biden administration’s target of reaching 30 GW offshore wind by 2030.
Why it matters: Empire Wind was one of four offshore wind projects that sought to amend its power purchase agreement in New York earlier in October, a request that state regulators unanimously denied. Earlier this month, however, New York officials said they will publish a new solicitation for offshore projects, including those with existing contracts—a move designed to allow developers to exit their old agreements and negotiate new contracts to reflect the higher project costs. Read more here.
FORD TO SCALE BACK PLANNED $3.5B EV BATTERY PLANT IN MICHIGAN: Ford Motors said yesterday it is scaling back its $3.5 billion investment plans for its EV battery plant in Michigan, news that comes as U.S. automakers look to pare back their aggressive production targets amid slower-than-expected consumer demand.
Ford officials said yesterday that they still plan to move forward with the construction of their Marshall, Michigan battery factory, which is slated to open in 2026, but noted they are “re-timing and resizing some investments” to fit the market.
That includes reducing the number of jobs at the plant from 2,500 to around 1,700, officials announced yesterday.
Ford also said it will cut the facility’s planned battery production from 30 gigawatt hours per year down to 20 gigawatt hours.
Ford’s chief communication officer, Mark Truby, told reporters that the company is “still very bullish on EVs and our EV strategy, but clearly, while there is growth, both in the U.S. and worldwide, clearly, the growth isn’t at the rate that we and others had expected.”
Bigger picture: Ford said last month that it will look to cut costs in the EV space by roughly $12 billion, including postponing construction of a planned battery factory in Kentucky. While U.S. EV sales increased in 2023, and are on track to exceed one million by the end of the year, sales remain well below where automakers and the Biden administration had hoped in order to achieve its goal of reaching at least 50% EV sales by 2030.
…GOP RESPONSE: Meanwhile, Republican lawmakers, who sharply criticized Ford’s partnership with Chinese battery maker CATL, urged Ford to sever ties with the company completely.
Rep. Mike Gallagher of Wisconsin, the Republican head of the Select Committee on the Chinese Communist Party, said yesterday that Ford’s announcement was “disappointing,” noting in a statement, “The American people deserve better from an iconic U.S. company that receives massive taxpayer subsidies.” Read more here.
UAE COMPANIES VENTURE INTO GREEN HYDROGEN FOR STEEL: The United Arab Emirates’ largest renewable energy company and top steel producer will collaborate in a pilot project to produce the metal using green hydrogen, Bloomberg reports.
Masdar and Emirates Steel Arkan will start the test project in 2024, in which it will extract iron from iron ore in the steel-making process using green hydrogen instead of natural gas. Green hydrogen is produced using renewables such as wind or solar.
The company will be installing electrolyzers – a key ingredient in making hydrogen – at Emirates Steel Arkan’s facilities in Abu Dhabi. Steel-making produces about 8% of global carbon dioxide emissions. Read more on that here.
FRANCE GETTING ON BOARD WITH DELAYED TARIFFS FOR ELECTRIC VEHICLES? France is signaling that it wants to delay the introduction of tariffs on electric vehicle sales between the U.K. and the E.U., removing a huge hurdle to a new deal on the fee, which is set to take effect in January.
French trade minister Oliver Becht told the Financial Times in an interview that his country wanted to resolve the issue, since France was the only big voice of opposition within the EU to the UK’s request to postpone the 10% tax on EV sales.
“I hope that we can find a solution in the coming weeks,” Becht told the FT, adding that Paris was “open to ideas” relating to postponing the tariffs before December 31.
Some background: The post-Brexit Trade and Cooperation Agreement (TCA) entailed that a 10% tariff will be imposed on EVs shipped across the Channel if they have batteries substantially made outside Europe or the UK. However, the UK and EU car industries have said that Europe does not have enough domestic battery production capacity to meet the agreement, and warned the tariffs would cost billions while stifling demand.
A request to delay the tariff for three years was supported by Germany and other member states, which believed Chinese companies that already pay the tariffs would be the main beneficiaries from higher prices for EU-made EVs.
France, however, was the country that opposed changing the terms of the TCA, arguing that it risks creating a precedent that could be exploited by London to argue for other changes to the deal that could hurt EU-UK trade ties since it was introduced in January 2021. Read more on that here.
GOLDMAN SACHS SAYS DEEPER OPEC + CUTS ‘ON THE TABLE’: Goldman Sachs says the possibility of OPEC+ deepening oil production cuts “is on the table” as the group prepares to meet in Vienna next week, a scenario that analysts sad could cause prices to rise by a few dollars in the first several months of 2024.
In a new market note, Goldman said there is a “a significant 35% subjective probability” that OPEC+ may move to deepen existing cuts, which stand at a combined 5.16 million bpd. It also cited a higher likelihood that Russia and Saudi Arabia will extend their voluntary supply cuts through the first several months of 2024.
“Our base case is that policymakers leave the voluntary group cut unchanged given near-average inventory levels and timespreads, an already low Saudi market share, and OPEC’s strong demand forecast,” the bank said in a note yesterday.
A deeper cut could be spread out across major producers to maximize efficacy in a short period and push up Brent prices to OPEC’s target range of between $80 to $100 per barrel, Goldman analysts said.
“One option is a 0.5-1 million bpd cut through Q1 shared proportionally among the large producers which cut in April, including Saudi Arabia, Russia, the UAE, Iraq, and Kuwait.” Read more on the report here.
Also of note: OPEC+ also pushed back its planned Nov. 26 ministerial meeting in Vienna for four days, to Nov. 30. The group did not announce a reason for the surprise delay, though oil prices tumbled below $75 per barrel on the news.
EU PLAYING CATCH-UP ON GREEN TECHNOLOGY RACE: The European Parliament on Tuesday passed the Net-Zero Industry Act, a bill that would incentivize more renewable technology to be domestically produced in the EU. Lawmakers hailed the legislation as a signal of Europe’s intent to keep pace with the U.S. and China – which are both throwing money at green tech manufacturers.The group also approved new legislation to boost European mining for critical minerals needed for the technology.
“That’s good news for the climate, it’s good news for the European economy and it’s a clear answer to the Americans,” Christian Ehler, a German MEP from the center-right European People’s Party who helped lead the negotiations, told Politico after the vote.
What the bill does: The Net-Zero Industry Act sets a goal of producing 40% of the EU’s clean technology domestically by 2030, and would include incentives to help the bloc hit its goal, such as fast-track permitting and easier access to funding for certain industries. Lawmakers also added a goal for the EU to produce 25% of the entire world’s clean technology by 2030.
Reality check: The EU faces tough global competition and a late start in the race to dominate sales of green technology. The U.S. has already approved $369 billion in incentives for green investments and local manufacturing, while China has long sought to dominate green technology through robust state support. The EU is also trying to shift from a global free-market stance to being as protectionist as necessary. Read more from Politico here.
ENEL TO CUT RENEWABLE INVESTMENTS: Italian Energy company Enel is planning on cutting renewable investments, while spending more on grids and pledging fiscal discipline under the new management’s first three-year plan, the Financial Times reports.
Enel now plans on investing a total of €35.8 billion between 2024 and 2026, with nearly €19 billion being spent on grids, which are mostly funded by EU grants. Its investment in renewables – specifically onshore wind, solar and battery storage – will fall from €17 billion to €12.1 billion.
The group said it planned to add 13 gigawatts to its renewable energy capacity by the end of the three-year period by focusing on partnerships with companies outside of Italy and the Iberian peninsula.
The state-controlled company had become one of the world’s largest renewable energy producers under its previous chief, Francesco Starace, who clashed with Italy’s right-wing government over the group’s strategy and debt levels. He was replaced by Flavio Cattaneo earlier this year.
Enel’s debt was €69 billion at the end of last year, which became an issue between its previous management and Italy’s government, and forced the group to make a €21 billion divestment plan to exit Argentina, Peru, and Romania.
The transition at the top followed a bitter battle between Italy’s government and a group of international investors who feared the company would renege on its renewables strategy.
“We will adopt a more selective approach towards investments in order to maximise profitability while minimising risks,” Cattaneo said in a statement on Wednesday. Read more on that here.
NIGERIA AND GERMANY INK DEAL ON RENEWABLE ENERGY AND GAS: Nigeria and Germany reached a $500 million renewable energy pact and a massive LNG export agreement, as part of a broader effort to deepen economic ties between the two countries and build on their different areas of need.
According to the joint memos of understanding signed yesterday, Berlin agreed to invest $500 million in renewable energy projects across Nigeria, particularly in rural areas.
And Nigeria agreed to export roughly 850,00 tons of LNG to Germany annually beginning in 2026 and eventually increasing to 1.2 million tons. The exports will amount to 2% of Germany’s total LNG imports, officials said.
“This is a further step towards diversifying German gas imports,” the chief operating officer of Germany’s Johannes Schuetze Energy Import, Frank Otto, said in a statement.
Mutually beneficial relationship: The gas export deal is also helpful for Nigeria, as it allows the county, which is home to the largest gas reserves in Africa, to ship out roughly 50 million cubic feet per day of natural gas that it would have otherwise flared off.
And it allows Germany to be a part of green energy projects going forward, including green hydrogen projects. Chancellor Olaf Scholz said earlier this week that the investments could help Germany’s economy accelerate its transition to carbon neutrality and meet its net-zero emissions target by 2045. Read more on the effort here.
The Rundown
E&E News Biden still hasn’t named a pipeline chief. Is regulatory push in peril?
Time How solar sales bros threaten the green energy transition
Bloomberg Can oil ever be green? Norway turns to wind-powered drilling
