SEPTEMBER 25, 2024

Greetings from New York, where my team and I are soaking up all that Climate Week has to offer, including moderating some events and gathering for our annual team meeting later this week.

Let us know if you’re here too!

In this week’s edition:

• Lower interest rates could help renewables;
• New York is leading on electrifying buildings;
• Two ways to measure greenhouse gas emissions.

Was this email forwarded to you? Sign up here.

Send your energy photos, story tips and more to news@ciphernews.com.

Illustration by Nadya Nickels. 

Lower interest rates should offer relief to renewables

BY: BILL SPINDLE

Clean energy projects are getting some relief from one of the biggest challenges they’ve faced over the last four years — rising interest rates.

Read the full article here.

Highlights:

The United States Federal Reserve lowered interest rates by half a percentage point last week after years of pushing them higher to combat inflation. The action followed similar moves by the European Central Bank, which has lowered its rates twice this year.

Interest rates, which have jumped five-fold since 2020, are effectively the price to borrow money. That higher funding cost has caused some renewables projects to struggle and become less affordable, especially compared to projects that rely on coal, oil and natural gas, according to economists. While not a cure-all, lower rates are a needed boost.

Indeed, the easing of interest rates is likely boosting the mood at the countless events going on throughout New York City this week connected to Climate Week.

Wind, solar, geothermal, nuclear and other kinds of clean energy projects require large investments upfront to build and connect to electricity networks, making these projects vulnerable to both inflation and the higher interest rates used to combat it.

“Everyone's facing higher interest rates, but there's some energy solutions out there which are more sensitive to that than others,” said Peter Martin, an economist at energy consultancy Wood Mackenzie. “They've got really high share of capital intensity, so they need large amounts of upfront capital.”

Historically low borrowing costs from 2012 to 2020 helped fuel a historic boom in renewable energy development by pushing upfront costs down. In May 2020, 10-year benchmark interest rates were 0.6%, the lowest in more than 50 years.

After 2020, major global events, including the Covid-19 pandemic and Russia’s invasion of Ukraine, pushed the price of goods across the economy upward.

To tamp down this inflation, central banks began ramping up short-term interest rates, which in turn pushed longer term rates up as well. The U.S. 10-year benchmark interest rate reached 4.9% in April, the highest since 2007.

Many wind projects, which require extensive borrowing to get underway, were either canceled or had to be renegotiated. Nuclear projects and battery factories also suffered cost overruns or were abandoned. And renewable energy startups have struggled.

Steady or even slightly falling rates should help stabilize the renewable energy industry and bring more predictable and even rising returns.

Nonetheless, clean energy developers could still have a tougher time competing against fossil fuels going forward without government support, predicts Wood Mackenzie.

Read the full article on Cipher’s website here.

Lunchtime Reads and Hot Takes

World’s biggest banks pledge support for nuclear power — Financial Times (subscription)

Cat’s take: The announcement came Monday at an event in New York at the start of Climate Week and follows a goal set at COP28 to triple the world's nuclear capacity by 2050. Let's see if the banks can deliver.

Leaders at climate meetings in New York warn of growing mistrust between nations — Reuters

Anca’s take: Key quotes from United Nations head António Guterres: "Crises are interacting and feeding off each other ... as digital technologies spread climate disinformation, that deepens distrust and fuels polarization."

In U.N. vote, countries show willingness to move away from fossil fuels — NPR

Amena’s take: As climate activists point out, words aren't enough, action is needed. Countries, especially low-income ones, need to figure out how to phase down fossil fuel use without hurting their economies.

Three Mile Island Plans to Reopen as Demand for Nuclear Power Grows — The New York Times

Amy’s take: Amazing how fast things can change. Fun fact: I’ve been here twice for reporting trips. Key fact: It apparently won’t cost anyone anything other than Microsoft (and the operator) to restart this.

Fusion boosters push for new federal program — E&E News (subscription)

Cat’s take: This comes as China is making ambitious investments in fusion. "They have this ability to copycat what we do and then try to advance it in ways to get ahead of us," said Senator John Barrasso (R-Wyo.).

Chinese solar panel boom threatens Pakistan’s debt-ridden grid — Financial Times (subscription)

Bill’s take: Developing countries willing to allow Chinese panels shunned in the U.S. are boosting solar rapidly, but also starting to experience grid problems.

Tugboat powered by ammonia sails for the first time, showing how to cut emissions from shipping — AP News

Amena’s take: Using renewable energy, Amogy is splitting ammonia into nitrogen and hydrogen, the latter powering the tugboat's fuel cell. I wonder where and how the ammonia and hydrogen are stored on the vessel.

Climate finance from multilateral banks up to $125 billion in 2023 — Reuters

Anca’s take: Climate finance for high-income economies rose by 30% to $50.3 billion, while the expansion of the multilateral banks' climate finance in low- and middle-income economies was lower, growing by 23%.

The Hidden Environmental Costs of Food — The New York Times

Cat’s take: I knew the environmental impact of beef is intense, but the costs were truly eye-popping to me: A pound of beef that retails for $5.34 would cost $27.36 with the environmental impact factored in.

Why millions of Americans give up control of their thermostats — The Washington Post

Bill’s take: These coordinated networks of energy demand are key to managing the rapid growth in energy consumption expected in the coming years.

More of what we're reading:

• Renewable Energy Goal Risks Falling Short Without More Money — Bloomberg

• Governors launch new effort to bolster clean energy workforce — POLITICO Pro (subscription)
• Exowatt aims to repurpose old tech to deal with new AI power demand — Canary Media
• DOE floats $3B to boost EV, grid batteries — E&E News (subscription)

We denote ‘(subscription)’ when publications don’t provide any complimentary articles, but many others may ultimately allow you to read only a limited number each month before subscribing. We encourage those who can afford it to support the journalism you love most!

New York leads the way on cleaning up our buildings

llustration by Nadya Nickels.

BY: SARA BALDWIN

Baldwin is the senior director of electrification at Energy Innovation, a nonpartisan energy policy think tank. You can reach her at electrification@energyinnovation.org.

If building decarbonization can make it in New York, it can make it anywhere.

Burning fossil fuels in residential buildings for heating, cooking and other purposes leads to more direct greenhouse gas emissions in the state than the burning of fossil fuels by all the state’s electric power plants. Buildings in New York alone are responsible for roughly 10% of total building sector emissions in the United States, releasing more greenhouse gases than the buildings in any other state.

Fortunately, New York is also leading the nation in electrification and efficiency efforts. This spring, the state launched a new home energy rebate program designed to make its buildings cleaner, more efficient and electrified with funding from President Biden’s signature climate law, the 2022 Inflation Reduction Act (IRA). New York is also prioritizing low-income households in an effort to address broader systemic inequities.

As the first state to launch IRA rebate programs, New York is showing other states how to transform their buildings and save people money.

Read the full article here.

China, Qatar and U.S. lead, depending on how you judge emissions

Source: Per Capita: Our World in Data, Absolute: Our World in Data • CO2e = carbon dioxide equivalent. Greenhouse gas emissions include carbon dioxide, methane and nitrous oxide from all sources.

BY: BILL SPINDLE

The annual United Nations climate conference known as COP29 will convene in just a few weeks in Azerbaijan. Each country will arrive in Baku with a profile of its greenhouse gas emissions and a national plan to reduce them.

Yet many of the nearly 200 nations attending the meeting are paying attention not just to overall emissions, but also to each country’s emissions per person. The two measures paint very different pictures of the problem, leading countries to conflicting conclusions about how to address global warming.

By national totals, the world’s current leading greenhouse gas emitter is China by a long shot — just under 14 billion metric tons of carbon dioxide equivalent annually — followed by the United States (six billion metric tons) and then India (four billion metric tons). But the U.S. emitted most of the greenhouse gases that have accumulated in the atmosphere since the Industrial Revolution started over a century ago.

China and India have huge populations, though — more than 1.4 billion people each, or four times the U.S. population of 345 million people. That means on a per person basis, the Chinese produced 9.8 metric tons of CO2 equivalent each year and Indians produced 2.9 metric tons of CO2 equivalent in 2022. Americans produced 17.7 metric tons per person.

At the other end of the spectrum, Qatar produces a comparatively tiny amount of greenhouse gas emissions overall, 190 million metric tons in 2022 — not even 2% of China’s emissions. But with a population of fewer than three million people, that breaks down to over 70 metric tons annually for each Qatari resident, about four times what Americans produce per person and 24 times more than what Indians emit per person.

At COP29, financing the energy transition is going to be the major topic of discussion — and already is a key point of tension. Populous nations like China, India and Nigeria at varying stages of development say more fully developed economies like the U.S. and Europe have a responsibility to reduce their per capita emissions, while developing countries should be allowed to increase their overall emissions in order to support critical economic development.

Wealthy economies, however, argue that all countries should be reducing overall emissions as quickly as possible.

Both arguments have merit, which could make finding common ground elusive.

AND FINALLY...
High Line fair

I snapped this picture of a ‘Climate Science Fair’ being set up on the High Line in New York City over the weekend. The fair was open to all strolling the elevated walking path at the beginning of Climate Week. Fun idea!

Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.