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HISTORIC DROUGHT HITS HYDRO: A new study found that the “historic” drought levels seen in 2022 are cutting into hydropower production in a major way—dampening emissions reductions and forcing many countries to increase their use of fossil fuels to replace the lost capacity.
According to research from the climate think tank Ember, hydropower output dropped by roughly 177 terawatt hours (TWh) last year, or more than any single-year decline over the past two decades, pushing up total power sector emissions by 0.2% in the first half of 2023.
The majority of hydropower reductions occurred in China, where record drought caused a whopping 75% reduction in the country’s hydropower capacity, according to the group’s estimates.
Last year, water levels at China’s Yangtze River plummeted to nearly half their normal width due to triple-digit temperatures and the worst drought on record, completely drying up some reservoirs and forcing leaders in the Sichuan and Chongqing provinces to halt operations at hundreds of factories that on hydroelectric power.
The drought affected global carbon emissions: The lower hydropower levels were significant enough to slightly offset major solar and wind power growth, which increased by 12% in the previous year.
Had hydropower output remained at 2021 levels, researchers said, these emissions would have dropped by 2.9% by the first half of 2023.
Why it matters: “While it is encouraging to see the remarkable growth of wind and solar energy, we can’t ignore the stark reality of adverse hydro conditions intensified by climate change,” Malgorzata Wiatros-Motyka, a senior electricity analysis at Ember, said in a statement.
Countries were forced to turn to fossil fueled power plants last year to replace the lost hydropower capacity, the report found, with the U.S. and China generating 8.1% and 8% more power from coal and gas plants, respectively.
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YELLEN TRIP AGENDA – CLIMATE FUNDING, CRITICAL MINERALS, AND PRICE CAP: Treasury Secretary Janet Yellen will travel to Morocco and Luxembourg next week to talk with leaders about climate change, reducing the West’s alliance on China for clean energy manufacturing, and the efficacy of the Russian oil price cap.
First, Yellen will travel to IMF and World Bank annual meetings in Morocco, where she is expected to pledge more U.S. money to helping vulnerable countries fight climate change and call on other wealthy nations to do the same, senior Treasury Department officials said on a call yesterday previewing her trip.
Yellen will then travel to Luxembourg for the Eurogroup Finance Ministers Meeting to meet with EU leaders on efforts to deepen their cooperation on clean energy manufacturing— including developing a potential cooperation agreement on critical minerals. (Any draft agreement could be signed during EU Commission President Ursula von der Leyen’s trip to the White House later this month, though officials did not offer further details on a timeline.)
… Importantly, Yellen is also expected to discuss the Russian oil price cap, or the first-of-its-kind effort that seeks to limit Russian oil profits while still keeping its barrels on the market.
Last week, Yellen acknowledged for the first time that the Russian price cap may not be as effective as leaders had intended. Russian crude has been trading close to $100 per barrel—far higher than the $60 the capped price.
Yellen told reporters that the prices, coupled with the Kremlin’s efforts to build out its “shadow fleet” and otherwise evade the cap, have complicated enforcement efforts for the G-7-led price cap coalition, even as she pledged to take action to crack down further.
“Russia has spent a great deal of money and time and effort to provide services for the export of its oil,” Yellen said. “They have added to their shadow fleet, provided more insurance and that kind of trade is not prohibited by the price cap.”
TREASURY DROPS ELECTRIC VEHICLE REBATE TAX GUIDANCE: The United States Treasury Department released new proposed guidance on Friday for electric vehicle tax credits under the Inflation Reduction Act that will put money back in buyers’ pockets instantly, our Eden Villalovas reports.
Beginning next year, buyers of new, clean vehicles can transfer federal tax credits to use at the dealership rather than waiting for a tax refund.
Starting in January 2024, buyers who opt to purchase a new vehicle can get up to $7,500 off the sticker price if they make less than $150,000 — or $225,000 for heads of households and $300,000 for married couples. Buyers of used electric vehicles can get $4,000 off a car priced at less than $25,000 if they make under $75,000 — or $112,500 for heads of households and $150,000 for married couples.
“For the first time, the Inflation Reduction Act allows consumers to reduce the up-front cost of a clean vehicle, expanding consumer choices and helping car dealers expand their businesses,” Laurel Blatchford, Treasury’s chief implementation officer for the Inflation Reduction Act, said in a statement. Read more on that here.
OIL PRICES FALL FOLLOWING EASING OF RUSSIAN FUEL EXPORT BAN: Oil prices fell further on Friday, with demand for fuel continuing to decline, compounded by another partial lifting of Russia’s fuel export ban.
At the time of writing, Brent Crude futures had a price of $83.87, while West Texas Intermediate had futures at $82.23.
As Reuters reports, Brent and WTI were on the path for almost 12% and 10% week-on-week declines, respectively, on Friday, as concerns increased that higher interest rates for an extended period of time could slow global growth. Russia also announced on Friday that it had lifted its ban on diesel exports for supplies delivered to ports by pipeline, under the provision that companies sell at least 50% of their diesel production to the domestic market. Read more on that here.
AFRICA’S FIRST DAC PLANT RAISES QS ON CLIMATE SOLUTIONS: A proposed direct carbon capture plant in Kenya could be the first carbon removal facility on the African continent – and could remove up to 1 million tons of carbon dioxide from the atmosphere every year, CNBC reports.
The proposed DAC plant is a joint venture between Swiss company Climeworks and Kenya-based Great Carbon Valley. It has been marketed as a springboard for creating a greener economy in Africa as the world is expected to invest trillions in combating climate change in the coming years.
The case for investing in Africa is in part that African nations stand to be hit especially hard by changes in the climate even though they have contributed little to the world’s greenhouse gas emissions. Last month, discussions at the United Nations and the Africa Climate Summit in Nairobi focused on how to attract more capital to the continent. However, calls for investment in Africa have been tempered by critics who say foreign investment in the global South can be harmful if investors from the North prioritize profit over the safety and rights of local populations. Read more on that here.
STEPS CLOSER TO A PIONEER-EXXON MERGER: Exxon Mobil is closing in on a deal to purchase Pioneer Natural Resources, a stunning acquisition that could be worth roughly $60 billion and reshape the U.S. oil industry, according to reporting by the Wall Street Journal.
A deal could be sealed as soon as in the coming days – however, it is possible that one won’t materialize at all, sources told the Wall Street Journal.
Purchasing Pioneer, which has a market cap of around $50 billion, would likely be Exxon’s largest deal since its merger with Mobil in 1999. The acquisition would give Exxon a dominant position in the oil-abundant Permian Basin of West Texas and New Mexico, a region the oil giant has said is integral to its growth plans.
A deal would also eclipse the industry’s most recent acquisition – Occidental Petroleum’s 2019 purchase of Anadarko Petroleum for roughly $38 billion. Read more on that here.
NEW OIL WASTE RULES IN TEXAS: For the first time in almost 40 years, Texas oil and gas regulators are proposing new rules to address how companies in the sector build and maintain waste pits.
Environmental groups and community advocates have long complained that the rules from the state’s regulator, the Texas Railroad Commission, are too lax. Critics say they’ve allowed operators in the state to build and maintain aboveground storage ponds – which are used to store waste created as a byproduct of drilling – in a way that jeopardizes surrounding groundwater. The advocates also argue that the ponds put neighbors’ health at risk and can result in industrial waste washing off during rainstorms.
The commission said in a Monday statement that protecting groundwater was the main reason the group would begin the process of updating the existing rules on waste pits.
“One of the highest priorities of the Railroad Commission of Texas … is the protection of groundwater resources,” commission officials wrote in the statement, adding that the proposed rules “reflect the Commission’s mission to serve Texas through our stewardship of natural resources and the environment.” Read more on that here.
The Rundown
Reuters Tesla cuts US prices of Model 3, Y in push to meet delivery goal
CNN Chevron workers at key LNG facilities in Australia vote to restart strikes
Washington Post How government neglect, misguided policies doomed Libya to deadly floods
