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HOW THE GRID WILL CHANGE THIS YEAR: Utilities are planning another healthy share (or unhealthy — depending on your frame of reference) of coal and natural gas retirements this year alongside what could become a new record year for solar if things pan out as planned, which is no guarantee.
The most updated forecasts from the Energy Information Administration show planned generation retirements are expected to effectively spare nuclear sources. Nearly all the planned capacity retirements, 98%, are forecast to be gas and coal.
It follows a larger trend in the evolution of the electric sector that renewable energy champions like President Joe Biden, who wants to see 100% carbon-free power by 2035, want to speed up.
It’s one that coal interests in particular desperately want to slow down.
What’s in the forecasts: Coal retirements are forecast to make up well over half of all planned generation retirements this year at 8.9 gigawatts. Utilities are putting plants to bed for a number of reasons: They’re aging, they’re costly to maintain, and any future they would have in a green economy would involve CCUS, which hasn’t performed especially well when tried in the U.S. — something proponents are working on with new funding from the Inflation Reduction Act.
The 6.2 gigawatts of planned gas retirements EIA forecasts do not reflect a net loss. EIA projects 7.6 of gas additions this year.
But the marginal additions do reflect the ever stronger economic case behind wind and solar plants than new gas plants, said Lauren Shwisberg of RMI. EIA expects 29.1 gigawatts of utility-scale solar capacity additions this year, more than half of all planned additions.
“We were seeing a significant proportion of plants that were less economically competitive than their clean energy alternative” going into last year, Shwisberg told Jeremy. “And what we’re seeing now is that the Inflation Reduction Act has tipped the scales even further in that direction.”
Shwisberg and her colleagues estimate more than 90% of gas plants planned through 2030 are outcompeted by clean energy sources where the IRA’s incentives are maximized.
Different ways of doing it: Congress has loaded the electric sector with subsidies to make clean energy sources cheaper but only went as far as Sen. Joe Manchin was willing to go with the Inflation Reduction Act. The earlier Build Back Better package’s clean electricity performance program, which would have paid grants to utilities to generate increasing shares of power from clean sources while penalizing those that don’t, was nixed from the final deal.
States are acting differently. Minnesota just approved a new clean energy standard, introducing an incremental requirement utilities will have to abide by beginning in 2030, requiring 100% clean generation beginning in 2040. States including New York, Rhode Island, and California have adopted similar standards.
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CRUDE OIL PRICE CAP SHOWS EARLY SIGNS OF SUCCESS: The G7 Russian oil price cap and European Union ban on Russian oil imports have “significantly” curtailed Moscow’s revenues while still allowing buyers in China and India to import goods at a discounted rate, traders and analysts told Reuters—an early sign of success for the West and the crude oil price cap that came into force two months ago.
As recently as last week, Russia was selling its crude at discounts of between $15-$20 per barrel, according to traders. Russian sellers have also incurred additional shipping costs since the cap took effect – paying an average of $15-20 more per barrel to shippers. As a result of the discounts and the extra expenditures incurred on Russia’s end, its profits are down more than 40% year-on-year, and are at just 60% of prices for international benchmark Brent crude.
SHELL DIRECTORS ACCUSED OF ‘FLAWED’ CLIMATE STRATEGY IN NOVEL SUIT: Environmental law firm and Shell shareholder ClientEarth said today that it has filed a lawsuit against Shell’s board of directors, alleging that the members have mismanaged climate risks and failed to implement an energy transition strategy in line with the 2015 Paris accord, which plaintiffs argued is in violation of company law.
If judges agree to hear the lawsuit, filed at the High Court of England and Wales, it would be the first-ever legal case seeking to hold board members directly accountable for their company’s failure to adequately prepare for a transition to clean energy.
The challenge also earned the backing of European institutional investors and pension funds, who collectively manage $543 billion in assets, and 12 million of Shell’s seven billion shares, according to Reuters.
The lawsuit comes just one week after Shell posted a record annual profit of nearly $40 billion for 2022, smashing previous earnings and more than doubling its profits from 2021. Like other major oil companies, Shell saw its profits skyrocket in 2022 due to the energy crisis caused by Russia’s war in Ukraine.
Shell has pledged to become a net-zero emissions business by 2050, and has set targets to cut its carbon intensity by 20% in 2030 and 45% by 2035 compared to 2016 levels. But ClientEarth argued that Shell’s strategy excludes short- to medium-term targets to cut Scope 3 emissions, which accounts for the lion’s share of their overall emissions.
“The board is persisting with a transition strategy that is fundamentally flawed, leaving the company seriously exposed to the risks that climate change poses to Shell’s future success – despite the board’s legal duty to manage those risks,” ClientEarth attorney Paul Benson said in a statement.
If heard by the court, the case could have far-reaching implications for how companies manage their emissions reductions efforts. Shell said it will appeal the challenge, and dismissed the allegations as having “no merit.”
BP’S LOONEY STANDS BY CAPITAL PLAN TO INCREASE PRODUCTION: BP CEO Bernard Looney is fending off critics of his plan to increase spending on oil and gas production, which led the company to reduce its emissions reduction forecasts.
Detractors of the updated capital plan, which provides an additional $1 billion per year through 2030 for fossil fuel production, are underappreciating how much capital BP has devoted to decarbonize its portfolio, Looney said.
“Our strategy squarely fits with giving the world what it wants and needs, which is: Please help me with energy security and affordability today, and please don’t discount the energy transition,” he told Barron’s in a new interview.
Looney stressed that directions were coming from the top: President Biden is demanding oil majors increase production.
“Here in the United States, the administration is saying, ‘We want you to drill more,’” he said. “We’re going to drill more.”
BP intends to double its onshore production between now and 2030. The company announced 2022 earnings this week of $27.6 billion, which trailed competitors.
SENATE GOP TAKES ON BIDEN TRUCK RULE: Senate Republicans want to overturn EPA’s recent final heavy-duty vehicle emissions rule, arguing it’s too onerous and will make vehicles like heavy trucks prohibitively expensive.
Sen. Deb Fischer of Nebraska and 32 other Republicans are backing a Congressional Review Act resolution introduced today that would repeal the rule, which sets stronger emissions standards to limit pollution of nitrous oxide and other pollutants from heavy-duty vehicles and engines.
Republicans said the rule would penalize a sector critical to the functioning of the economy in trucking and that existing regulations have sufficiently reduced nitrous oxide pollution.
EPA finalized the rule in December and said the rule would reduce the risk of respiratory and other illnesses from vehicle emissions. The regulations kick in beginning with model year 2027 vehicles. Costs associated with the program were estimated to range from $3.9 billion in 2027 to $4.7 billion in 2045.
Republicans are using the CRA to go after multiple Biden administration rules, including EPA’s waters of the United States rule and Labor’s ESG retirement rule.
HALEU DEVELOPER COMPLETES CONSTRUCTION AT OHIO PLANT: Centrus Energy Corps. announced completion of initial construction of enrichment centrifuges and testing at its high assay, low-enriched uranium plant in Ohio, which the company said will be the first U.S.-owned enrichment plant utilizing U.S.-technology to begin production in 70 years.
Maryland-based Centrus said it still has work to complete on some remaining support systems at the plant before it can commence with demonstration of HALEU enrichment at the plant, expected in 2023. The plant, whose fuel is designed for advanced nuclear reactors, also needs final approval from the NRC.
Centrus’s demonstration plant began under a Department of Energy contract that preexisted the recent $700 million infusion the department got for HALEU under the Inflation Reduction Act.
Biden administration officials and advanced reactor developers have warned that the dearth of domestic HALEU supply threatens to delay demonstration of the new reactors.
TerraPower, the Bill Gates-backed nuclear startup, announced in December it will have to delay the demonstration of its Natrium sodium-cooled reactor because its relationship with its planned fuel supplier, Russia, has been fractured by the war.
The Rundown
Wall Street Journal What is electrochemistry, and why is it so important to a green-energy future?
Politico EU France and Germany go it alone as EU summit prepares to tackle fightback against US
Bloomberg Europe’s oil giants slow green goals and act more like Exxon
Calendar
WEDNESDAY | FEBRUARY 15
10 am. 406 Dirksen. The Senate Environment and Public Works Committee will convene for a hearing to examine the future of low carbon transportation fuels in the U.S. and considerations for a nationwide clean fuels program.
THURSDAY | FEBRUARY 16
10 am. 366 Dirksen. The Senate Energy and Natural Resources Committee will hold a hearing to examine the impact Russia’s war in Ukraine has had on global energy security nearly one year after its invasion. Learn more here.
