Net Zero Watch | 7 Sep 2022
Zero Samizdat7 September 2022 1) Britain appoints Rees-Mogg, who dismissed climate change risks, to energy role Reuters, 6 September 2022 2) Truss makes Rees-Mogg energy chief to dismay of climate campaigners The Independent, 6 September 2022 3) Truss set for clash with Climate Change Committee The Daily Telegraph, 7 September 2022 4) Thanks, Boris: UK electricity price highest in Europe Financial Times, 7 September 2022 5) WSJ: Liz Truss to the British Rescue The Wall Street Journal, 6 September 2022 6) The great wind farm rip off: greedy energy giants sell us wind electricity at wholesale gas price Scottish Daily Express, 7 September 2022 7) Dutch farmers forces minister to quit over costly climate policy fiasco The Times, 6 September 2022 8) Anti-ESG activist investor urges Chevron to increase oil production The Wall Street Journal, 6 September 2022 9) And finally: EU, China trade barbs over failed G20 climate talks Reuters, 7 September 2022 1) Britain appoints Rees-Mogg, who dismissed climate change risks, to energy role Reuters, 6 September 2022  LONDON, Sept 6 (Reuters) – Britain appointed lawmaker Jacob Rees-Mogg, who has expressed scepticism about the need to fight climate change as the new business secretary, raising concerns that he could delay the target of reducing net zero emissions by 2050. Rees-Mogg, nicknamed “the honorable gentleman from the 18th century” because of his poshness and trademark double-breasted suit, was on Tuesday put in charge of the Department for Business, Energy and Industrial Strategy, which is responsible for the government’s strategy on climate change. In the past, Rees-Mogg has expressed concerns about “climate alarmism”, said humanity should adapt to, rather than mitigate, climate change, and warned that the drive to getting to net zero emissions is responsible for high energy prices. After his appointment, Rees Mogg said his priority would be to provide help for people dealing with sharply higher energy bills and that the government will soon bring forward a package to help the public. New Prime Minister Liz Truss has backed the legally binding target of reducing net zero greenhouse gas emissions by the middle of this century, but has supported scrapping green levies and bringing back fracking if there is local support. One contentious issue facing Rees-Mogg is providing a clear and settled policy environment for business after successive Conservative governments have produced energy and industrial strategies that were abandoned just a few years later. The 2017 Industrial Strategy, which aspired to make Britain the world’s most innovative economy, was abolished by Rees-Mogg’s predecessor Kwasi Kwarteng in 2021, who said it was a “pudding without a theme”. British business leaders told Reuters they need certainty to underpin investment and expressed scepticism Rees-Mogg will be able to provide that assurance. Full story 2) Truss makes Rees-Mogg energy chief to dismay of climate campaigners The Independent, 6 September 2022 Jacob Rees-Mogg, who once blamed high energy prices on “climate change alarmism”, has been appointed energy secretary in Liz Truss’ new cabinet to the widespread dismay of environmental campaigners. Climate activists and opposition politicians described the Conservative MP’s appointment as secretary of state for business, energy and industrial strategy as “deeply worrying”. Mr Rees-Mogg will not take on the brief of minister for the climate following pressure from Tory MPs, with Graham Stuart appointed minister for the climate in the business department. No 10 had planned to give Mr Rees-Mogg the brief as part of his new role as business secretary. But Mr Rees-Mogg, who has previously expressed climate and net-zero sceptic views, but will lead the department responsible for the country’s strategy to reach net zero emissions by mid-century. “No government that’s remotely serious about tackling the twin climate and nature emergencies would even contemplate putting Jacob Rees-Mogg in charge of that portfolio,” said Caroline Lucas, the Green MP for Brighton Pavilion. “He’s the worst possible candidate at the worst possible moment.” In 2013, in an article written forThe Telegraph Mr Rees-Mogg questioned climate fears, saying: “It is widely accepted that carbon dioxide emissions have risen but the effect on the climate remains much debated while the computer modelling that has been done to date has not proved especially accurate.” While that was nearly a decade ago, earlier this year Mr Rees-Mogg said Boris Johnson’s government wanted “every last drop” of oil and gas from the North Sea dismissing warnings that a renewed push for fossil fuels would ruin the UK’s chances of achieving net zero by 2050. “2050 is a long way off,” Mr Rees-Mogg told LBC at the time. “We’re not trying to become net zero tomorrow. We’re going to need fossil fuels in the interim.” The cabinet minister also described the idea of reopening fracking sites “quite an interesting opportunity.” “Putting someone who recently suggested ‘every last drop’ of oil should be extracted from the North Sea in charge of energy policy is deeply worrying for anyone concerned about the deepening climate emergency, solving the cost-of-living crisis and keeping our fuel bills down for good,” said Friends of the Earth’s head of political affairs, Dave Timms. Full story 3) Truss set for clash with Climate Change Committee The Daily Telegraph, 7 September 2022  Liz Truss is set for a clash with the Government’s official climate advisers after they sought to shoot down her plans to revive fracking. The climate change committee, which advises on emissions targets, said ambitions to lift the ban on fracking and expand gas extraction in the North Sea will not make a meaningful difference to consumer prices. In a letter to the new Prime Minister, the committee said the gas reserves are also too small to bring down prices. Instead, they urged her to focus on improving energy efficiency of buildings and improving the market for renewable energy. “Ninety per cent of the recent increase in the energy price cap is driven by changes in the price of gas. Addressing our dependency on fossil energy offers us the best way out of these crises,” Lord Deben and Sir John Armitt said in the letter. Ms Truss has said she wants to shore up Britain’s long-term energy supply by issuing a new licensing round for North Sea oil and gas exploration and reversing a ban on shale-gas extraction. She has said she remains committed to the UK’s target of reaching net-zero emissions by 2050 but must improve energy security at the same time. Gas prices have surged since Russia invaded Ukraine and the Office for Budget Responsibility expects prices to remain at three to four the pre-invasion average until 2027. The climate change committee set out five recommendations for Ms Truss on how to “reduce the UK’s exposure to volatile fossil fuel prices”. They include developing “credible” policies to make buildings more energy efficient, removing barriers to a delivering decarbonised power system and delivering a “working” market-based mechanism for low-carbon heat. Members said addressing a “comprehensive energy advice service” to help the public understand how they can cope with the crisis was vital. Draught-proofing and lowering boiler temperatures alone could reduce gas consumption by 6-8pc. Ms Truss is expected to unveil an £170bn energy package to help struggling households and businesses within days. 4) Thanks, Boris: UK electricity price highest in Europe Financial Times, 7 September 2022  The UK’s household electricity price is about 30 per cent higher than the next most expensive country, partly down to various levies the UK government adds to bills. The average UK household electricity price is at least 30 per cent higher than in many of its European neighbours, with the country’s greater reliance on natural gas for power generation hitting consumers hard.  Europe is experiencing a continent-wide energy crisis caused by reduced oil and gas flows from Russia, but the direct impact on households varies widely depending on the energy mix of the country, according to electricity and gas pricing from Energy Prices, a Dutch consultancy. Levels of government support, pricing mechanisms and taxation are also important factors, with countries such as France capping the amount electricity prices are allowed to rise. The EU has proposed a cap on Russian gas prices and a levy on energy companies to protect households and businesses, and many European countries have announced individual measures such as tax cuts. “Russia’s invasion of Ukraine has shifted the energy axis. There can be no other way out of this, other than government intervention,” said Sumit Bose, founder of low-carbon advocacy group Future Net Zero. But the cost of electricity is still expected to rise across Europe this winter as high gas prices continue to feed through to the power market, while supplies from other sources are down due to issues such as widespread maintenance problems at France’s nuclear power plants and dry weather conditions affecting hydropower. The UK generates about 40 per cent of its electricity from burning natural gas after moving faster than many peers to reduce its reliance on coal. While that helped cut the country’s emissions — coal generates about twice as much CO₂ as gas when burnt — it has left the UK more exposed to surging gas prices after Russia cut supplies in retaliation for western sanctions imposed after its full-scale invasion of Ukraine. The UK’s household electricity price is about 30 per cent higher than the next most expensive country, Italy. That is partly down to various levies the UK government adds to bills to support renewable power and poorer households. The UK has said it is less exposed to Russian gas cuts because it has no direct pipeline connections to the country, but cannot completely escape increases in wholesale prices. Full story 5) WSJ: Liz Truss to the British Rescue The Wall Street Journal, 6 September 2022  Britain’s new prime minister has yet to disavow Mr. Johnson’s net-zero carbon emissions goal that deters energy investment. Liz Truss won the job of British Prime Minister Monday, and now we’ll see if she can lift her Conservative Party and country out of the economic and energy mess into which Prime Minister Boris Johnson has driven it. Ms. Truss defeated rival former Chancellor Rishi Sunak 57%-43% by rallying the rank and file behind her with a Thatcherite economic message the party and U.K. haven’t heard from the Conservatives in years. Tax cuts top her agenda, including a reversal of Mr. Johnson’s 2.5-percentage-point payroll-tax increase and planned increase in the corporate tax rate to 26% from 19%. More important than the specific policies, however, has been Ms. Truss’s emphasis that economic growth rather than income redistribution can solve Britain’s problems, and that private enterprise can do it better than government direction. She also pushed back against the woke pieties that have swept United Kingdom media and academic elites almost as thoroughly as they have America’s. That marks a major break from the last 12 years of Tory governance. Starting with Prime Minister David Cameron, the party began a leftward tilt that culminated in the fiasco of Mr. Johnson’s tenure. He won a historic parliamentary majority in 2019’s election on a pledge to finalize Britain’s departure from the European Union. But the rest of his agenda consisted of ruinous climate pledges and tax increases. The mistake was for the Tories to turn themselves into another party of redistribution instead of standing as Britain’s party of prosperity. The prosperity is evaporating as Britain becomes the worst-performing major economy. Opinion polls suggest voters trust the opposition Labour Party more on redistribution. The danger is that time may be too short for Ms. Truss to execute a turnaround before a national election due by 2024. Her immediate challenge will be soaring energy prices that promise a winter of hardship. Ms. Truss seems to be leaning toward caps on energy prices, which would be a mistake. Once imposed they are hard to lift and they distort supply and demand. The least awful among bad short-term policy options is a support program for households and small businesses, amounting to handouts of tens of billions of pounds. As for a longer-term solution, Ms. Truss supports more domestic energy production via shale fracking and drilling in the North Sea, but she has yet to disavow Mr. Johnson’s net-zero carbon emissions goal that deters energy investment. Ms. Truss’s tax-rate cuts are a good economic start. But Britain needs a deeper reform of the tax system to weed out myriad awful incentives that deter investment and job creation, such as steep taxes on business premises. It also hasn’t tapped its Brexit dividend by overhauling economic regulations. Ms. Truss will have to persuade recalcitrant Tory lawmakers who have grown comfortable with the redistributionist and woke state. The main charge against Ms. Truss is that her agenda is fiscally reckless. But the Tory status quo has failed miserably and it would be reckless for the country and political malpractice to keep doing the same thing. Wish the new Prime Minister luck, because she is going to need it. 6) The great wind farm rip off: greedy energy giants sell us wind electricity at wholesale gas price Scottish Daily Express, 7 September 2022  The UK is facing an unprecedented energy crisis with a £100billion bailout set to blow the country’s bank balance – and all the while renewables firms are finding huge profits literally blowing in the wind One of the UK’s leading energy experts has explained why the UK is facing an unprecedented energy bill crisis despite having more wind farms than ever before. Dr Benny Peiser, the director of Net Zero Watch, said the price of electricity is determined by the price of gas on the international markets. As a result, renewables companies are making record profits selling energy that is generated by the wind. He added that consumers effectively had to pay for both wind farms – which are subsidised to the tune of £400 per household per year – AND a back-up gas-fired system for those days when the wind is not blowing. He told the Scottish Daily Express: “It’s a lot of hot air. The cost of wind energy hasn’t really dropped significantly despite all the PR because it is based on auction prices and contracts. “The price of electricity from wind is determined by the price of gas so wind farm companies are currently getting record high prices. They say they will just take the highest possible price which is the gas price.” Mr Peiser added: “Renewables only generate electricity for very short periods when the wind blows or the sun shines. Most of the time Scotland and the rest of the UK is relying on conventional energy so you need a back up system for when there is no wind. “As a result, we have to pay very, very high prices. If a gas-fired power plant is only being used half the time because wind is given preferential treatment then when it is being used the owner will ask for astronomical sums. “When wind is backed up by conventional energy the prices go through the roof and that cost is added to the average energy bill. The more wind farms we have the more expensive the costs will be. This was happening long before the gas price went up.” Scotland is already virtually self-sufficient in terms of renewable energy due to the vast number of onshore wind turbines installed over the past 15 years, although that only applies when the wind is blowing steadily at the right times of day. Asked if the drive to build more and more turbines would eventually push down the cost of electricity, Dr Peiser was adamant that it would never lead to lower bills. “There’s no evidence that these wind turbines are getting cheaper and a lot of evidence to show the more we have the higher the costs,” he said. “They have been saying that costs will go down for 30 years but it hasn’t happened yet. I think it’s unlikely and in my view impossible because you can’t have an energy system with renewables alone. “What do you do on days when there is little wind or no sun? How do you power a country like Britain with wind and sun alone? You need two systems; one renewable and one whole system that powers the country when there’s no wind.” And he said that successive SNP governments in Edinburgh have encouraged wind farm building despite the fact they were well aware it would not drive down the cost of electricity. He said: “They knew that at the end of the day they would not have to sort out the mess, it would be English subsidies that will save the Scottish Government from disaster. This is a utopian dream which is not going to work. It is very expensive as we are finding out now and the next Prime Minister and the one after that will struggle to get a grip.” However, he went on to explain that nuclear power cannot be used to back up renewables as nuclear plants can only generate a steady constant supply. “You have to have a power plant that you can turn down and turn up, you can’t do that with nuclear so it has to be coal or gas,” he said. Dr Peiser said the UK is going to have to “throw the sink at the energy cost crisis and get more gas and oil out of the ground”. He added: “The future will be nuclear but in the short to medium term we need more gas. “We are in a pickle, we are in a complete mess and the government and ministers haven’t got a clue what they are doing. Energy companies don’t care, they are making money left, right and centre. Everywhere in Europe is the same. In Poland and Germany they have got coal but everybody is building renewables. It is a utopian dream which is going up in smoke.” The expert said that wind farm subsidies add “£11billion a year to our energy bills” and if they were scrapped “it would save £400 a year for every single household in the UK”. He added: “If the next PM was going to cut subsidies for renewables, nobody would build wind farms anymore, they are just not profitable on their own.”For empirical data on the UK’s wind energy costs see papers and publications by Net Zero Watch 7) Dutch farmers forces minister to quit over costly climate policy fiasco The Times, 6 September 2022  The Dutch agriculture minister has resigned amid mass protests and a political storm over climate change measures to cut nitrogen emissions from farms. The final straw for Henk Staghouwer, who took office just nine months ago, was a European Union decision to cut the amount of manure that farmers in the Netherlands are allowed to use on their fields. He had been accused by Dutch MPs and farmers alike of failing to give adequate details of how a draconian reduction in agricultural nitrogen emission would be implemented, fuelling fears of massive farm closures. He told a press conference last night: “I have asked myself if I was the right person to oversee the tasks in front of me. I came to the conclusion last weekend that I am not that person.” Staghouwer, 60, admitted that the Dutch agricultural sector, one of the most successful in the world, faced “huge” challenges and that farmers “needed certainty”. The reduction in emissions will lead to a 30 per cent reduction in livestock numbers, with more than half the country’s farmers affected and almost 12,000 farms expected to close. Full story 8) Anti-ESG activist investor urges Chevron to increase oil production The Wall Street Journal, 6 September 2022  The author of ‘Woke, Inc.,’ Vivek Ramaswamy and other ESG critics argue that companies should focus on maximizing profits and nothing else.Vivek Ramaswamy is bringing ESG battle to oil patch by calling on Chevron to slow spending on its energy-transition planA conservative activist turned investor who has criticized Wall Street’s efforts to address climate change and other issues is publicly urging Chevron Corp. CVX to pump more fossil fuels over the next decade. Vivek Ramaswamy, who launched an energy-focused exchange-traded fund nearly a month ago, is among the most prominent critics of so-called environmental, social and governance—or ESG—investing. He quickly turned his sights on Chevron, arguing the country’s second-biggest fossil-fuel company should slow spending on its energy-transition plan, which he said was partially motivated by pressure from top shareholders such as BlackRock Inc. In the letter Tuesday to Chevron CEO Mike Wirth and the company’s board, Mr. Ramaswamy said he wanted to “liberate you from constraints imposed on Chevron by its ESG-promoting ‘shareholders.’ ” Mr. Ramaswamy writes that he looks forward to engaging with the company before next year’s proxy voting season. The Wall Street Journal previously reported on the letter. Chevron didn’t immediately respond to a request for comment. The author of “Woke, Inc.”, a book arguing businesses shouldn’t be affected by politics, Mr. Ramaswamy invested in Chevron through his Strive Asset Management’s ETF nearly a month ago. The ETF tracks an index of energy stocks. Strive, which counts investor Bill Ackman and tech executive Peter Thiel among its backers, is part of a pushback by conservatives against ESG investing. The fund has hit about $315 million in assets, a strong start for a new offering. The Chevron effort is a response to last year’s proxy victory by hedge fund Engine No. 1 at Chevron rival Exxon Mobil Corp. that forced Exxon to accelerate energy-transition efforts. Strive’s letter calls for energy producers to dump their current strategy of limiting investments and returning cash to shareholders. It is one of the first formal calls for an oil giant to do so. Mr. Ramaswamy, whose fund holds a roughly 0.02% stake in Chevron, would likely need support from large shareholders who have generally embraced Chevron’s current strategy to get the company to change course. He is unique in targeting a company that is posting stock-price gains and record profit. High oil-and-gas prices have lifted Chevron shares about 35% this year. A former pharmaceutical executive, Mr. Ramaswamy says Chevron could earn a higher valuation relative to earnings if it addresses possible supply shortages over the next decade. That approach is more appropriate than limiting output and devoting resources to the energy transition, he says. Large index-fund providers BlackRock, State Street Corp. and Vanguard Group own about 20% of Chevron. The asset managers have previously responded to criticism of ESG—the loosely defined practice of considering issues beyond short-term profits when making financial decisions—by saying companies that manage environmental risks and opportunities will be the most profitable over time. They don’t always oppose energy companies increasing fossil-fuel output and don’t always take the same stances on company proposals. Heavy long-term spending on fossil fuels when demand is expected to fall in the decades ahead is a failing strategy, many investors and analysts say. Mr. Ramaswamy’s letter marks a new front in this year’s war over ESG. Republican-led states such as Florida and Texas have recently taken steps to move their investments and retirement funds away from some Wall Street firms. Both sides have accused the other of being anti free market and inserting political views into business. Mr. Ramaswamy is counting on large shareholders like Warren Buffett to help Chevron shift its strategy. Mr. Buffett’s Berkshire Hathaway Inc. is Chevron’s largest individual shareholder with a roughly 8% stake it has built as part of recent bets on U.S. oil companies, FactSet data show. The letter says that the legendary investor’s independent thinking and opposition to ESG-disclosure proposals at Berkshire last year could make it easier for Chevron to fight the biggest Wall Street firms. Mr. Buffett has typically invested in companies where he likes the management and has opposed activist investors. He has historically supported strategies that maximize long-term earnings and share prices. Mr. Buffett’s largest bet this year is Occidental Petroleum Corp., one of the energy industry’s biggest backers of new climate technologies like removing carbon directly from the atmosphere. Mr. Ramaswamy said in an interview he thinks there is room for many company approaches in an investment portfolio as long as they maximize financial performance and nothing else. Many investor campaigns are unsuccessful or end up having a limited impact, but any back-and-forth between Strive and Chevron could have implications for other companies that are defining their climate plans. 9) And finally: EU, China trade barbs over failed G20 climate talks Reuters, 7 September 2022 The European Union and China are questioning each other’s commitment to fighting climate change, following the failure of climate talks by the Group of 20 (G20) last week. At the end of last week’s negotiations in Bali, Indonesia, the 20 governments failed to agree a joint communique on climate change. Diplomatic sources had said some countries, including China, were unhappy with language that had already been agreed and enshrined in past deals. The EU’s climate change chief on Monday accused “the biggest emitter on this planet” – a reference to China – of attempting to backtrack on the Glasgow Climate Pact, which capped two weeks of U.N. negotiations in November. “Some of the very, very big players on this planet are trying to roll back from what they had agreed in Glasgow,” Frans Timmermans told a meeting in Rotterdam on climate adaptation in Africa. “And some of them, even the biggest emitter on this planet, try and hide behind developing countries in using arguments that I think, at some point, are no longer viable,” said Timmermans, who is executive vice president of the European Commission. China is responsible for about 30% of annual emissions, making it the world’s biggest emitter today while the United States is second and the EU third. The United States, however, is the biggest emitter historically. China’s Ministry of Foreign Affairs rebuffed the accusation, and said Beijing demanded an “accurate” interpretation of past climate deals. The 2015 Paris Agreement, for example, committed wealthy countries – whose emissions are largely responsible for global warming – to cutting carbon dioxide emissions fastest while also supporting developing countries in following suit. Under the Paris deal, China is defined as a developing country. “As a developing country itself, China has always stood by the vast number of developing countries and firmly safeguarded their common interests,” a spokesperson from the Chinese ministry said. The failure by rich nations to deliver promised climate finance has raised tensions in global climate negotiations. The 27-country EU is the biggest provider of climate finance, according to OECD data. China has pledged to peak emissions by 2030 – a target which could see its emissions increase in the near term as it opens new coal plants. Beijing has resisted calls from Europe to revise this goal to cut emissions faster. The Foreign Affairs Ministry said China’s low-carbon transition remained “firm”, and pointed to European countries burning more coal as they race to replace Russian gas. “The green and low-carbon process is now encountering countercurrents,” the ministry said, referring to European coal use. European policymakers have said the uptick in coal is a temporary measure, and will not thwart climate targets. The EU has fixed into law its target to cut net emissions 55% by 2030, from 1990 levels. |
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