Weekly Climate Recap: Raw Materials and EU Emissions
Hello all, hope you are doing well! I have an interesting series of stories prepared for this week, read on below! Rare earth elements get some much needed attention as prices are expected to rise this year. Hurricanes get a recommendation to upgrade their scale given increasing intensity and finally the EU calls for 90% emissions cut by 2040 with plans to enshrine it in law.
🪙 Rare Earths and Other Critical Minerals
After a surge of prices in 2022 and a subsequent crash of prices in 2023, analysts expect prices for critical rate earth materials to rise this year. Rate earth elements are composed of a set of 17 metallic elements and are exceptionally important for high-tech consumer produces, as put by the USGS:
“Rare-earth elements (REE) are necessary components of more than 200 products across a wide range of applications, especially high-tech consumer products, such as cellular telephones, computer hard drives, electric and hybrid vehicles, and flat-screen monitors and televisions. Significant defense applications include electronic displays, guidance systems, lasers, and radar and sonar systems”
When it comes to the supply of REEs, China is undisputed king with a reported 70% of rare earths mining and 90% of refined output. Given the dominance that China wields over the minerals critical to the technologies required to decarbonize, it is important to see what China does as it has a global impact. To that point, the reasons for prices falling in 2023 was due to increase production in China and slower demand growth than expected.
Important to understanding China as king, is their system of quotas for the production and mining of REEs. China puts out quotas that are closely monitored given their dominance of the supply chain.
The below chart details the prices of praseodymium oxide. Praseodymium oxide plays a crucial role in the development of clean energy technologies such as wind turbines and electric vehicle batteries, where it is used in the production of powerful magnets. These magnets are essential for the efficient generation of renewable energy and the advancement of sustainable transportation systems. The trend in the price of this critical raw material demonstrates the overarching trend being shown across REEs.
Takeaway: Rare earth elements are vital components in various clean energy technologies such as wind turbines, electric vehicles, and solar panels, playing a crucial role in decarbonization efforts worldwide. China dominates the global rare earth market, supplying over 80% of the world’s demand, thus wielding significant influence over the supply chain critical for green technology production and sustainability initiatives. Paying attention to the quotas released is critical to understand how the prices of inputs will trend.
🌀 Hurricanes Due for an Upgraded Scale
Have you also been thinking that category 5 hurricanes are a bit stale recently? If so you’re in luck! A new paper published in the journal PNAS, finds that our current existing Saffir-Simpson hurricane wind scale may be inadequate to reflect the size and scale of storms. The rationale for this proposed change is that once you hit category 5, there is nothing higher, winds could be 3x what they are to qualify for category 5 and they would still be classified as a category 5.
The authors of the paper also highlight the impact that global warming has had on this scale:
“Global warming increases available sensible and latent heat energy, increasing the thermodynamic potential wind intensity of tropical cyclones (TCs). Supported by theory, observations, and modeling, this causes a shift in mean TC intensity, which tends to manifest most clearly at the greatest intensities.”
By the authors own hypothetical threshold for meeting the category 6 requirement, which is a wind speed of ~309km/h, there have been 5 such storms that have all occurred in the past 9 years of record keeping. They include the famous:
- Super Typhoon Haiyan, known locally as Yolanda, struck the Philippines in 2013 as one of the most powerful tropical cyclones on record, devastating the region with winds exceeding 195 mph and causing widespread destruction and loss of life.
- Hurricane Patricia, the strongest hurricane ever recorded in the Western Hemisphere in terms of wind speed, made landfall on the Pacific coast of Mexico in 2015, with winds reaching 215 mph, though it caused minimal damage due to its remote location.
- Super Typhoon Meranti, one of the most intense tropical cyclones of 2016, made landfall in Taiwan and China, bringing destructive winds and heavy rainfall, causing widespread power outages and significant damage to infrastructure.
Takeaway: The warming climate feeds into the need for a new category to fit the higher intensity of hurricanes that we are experiencing. As we continue to warm (January is the 9th straight warmest month on record), these storms, and their financial and human toll will continue to increase. This is just another example of the impact to our civilization that climate change is having.
⏬ EU Calls for 90% Reduction in Emissions by 2040, Drama Ensues
On February 6 this week, the EU announced their commitment to reaching net zero emissions by 2050. To this goal, the EU executive recommendation is to cut GHG emissions by 90% by 2040. The ambitious climate target would be a 90% cut relative to 1990 levels. Further context on the goals are a 55% cut by 2030 relative to 1990 and as of 2022, the EU has actually reduced emissions by 32.5% compared to 1990 levels. Interestingly, this target, through the announcement:
“While the major part of this effort will come from reducing current emissions levels in the coming years, we will also need technologies that can capture CO2 or remove it directly from the atmosphere and then store or utilise it. These technologies will focus on sectors where emissions are particularly difficult or costly to reduce, such as the process emissions in cement or waste-to-energy for example.”
This particular aspect of the announcement, in conjunction with the announcement of an Industrial Carbon Management Communication, reveals that the EU plans to partly rely on carbon capture technologies to reach this target. This inclusion has stirred drama among researchers who highlight the risk of relying on technologies that is largely unproven at commercial scale, rather than focusing on concrete actions such as cutting off fossil fuels. Per an article published in Nature:
“It’s going to be very difficult to reach a 90% or 95% emissions reduction without cutting very strongly on fossil fuels,” says Richard Klein, a climate researcher at the Stockholm Environment Institute. “Carbon capture and storage is great if it works,” says Klein. “But it simply hasn’t been shown to work at the scale that would be needed — it remains a pipe dream.”
This announcement comes just a few short months after the EU’s Carbon Border Adjustment Mechanism or CBAM came into effect. A policy that will equalize the price of carbon between domestic products and imports to help prevent relocation of production to countries where there is less sustainable methods of production.
Takeaway: In my view, the intention is more important than the path. While using carbon capture is likely not the optimal path relative to others, the fact that this commitment is aiming to be enshrined in law is an incredibly positive step forward for a continent that represents 17% of cumulative carbon emissions since the Industrial Revolution and the joint third largest emitter of GHGs in 2021. While CCS may prove to be a distraction to the true goal, an enshrinement as a law will catapult countries into getting more serious about their climate goals through technologies and paths beyond just CCS.
What Else is in the News
- Nice to see my current home province of Ontario recognized for an innovative energy policy (no, not SMRs) in the form of a VPP program. The story was covered by Utility Dive and includes 100,000 homes enrolled since the program began in 2023 with the ability to reduce peak demand by 90 MW. This update is yet another VPP program that joins the current list of VPP programs in the US that you can track here.
- Germany’s government has announced plans to subsidize gas power plants that can switch to hydrogen, as part of efforts to transition to low carbon generation. The subsidies are estimated to cost $17 billion and are intended to supplement intermittent renewable energy. The government plans to launch a tender process for four gas plants with a total capacity of up to 10 gigawatts. The state support will include capital and operating subsidies, and the transition to hydrogen is expected to be completed between 2035 and 2040.
- Disaster has struck Chile with forest fires having killed 123 people so far and entire neighbourhoods have been burnt as a heatwave tears through the country. You can see footage of the disaster as reported by Reuters here. The combined effects of El Nino and climate change are major drivers of extreme heat waves.
