Weekly Climate Recap: Renewables 2023 and Chevron Deference
Just a few weeks into 2024 now and we already have a plethora of interesting news. This week I am covering the IEA releasing their Renewables 2023 report which dives into the cost and growth of clean capacity. In contrast to this growth, LNG continues to grow despite the harmful environmental impacts.
🔎 IEA Releases Renewables 2023 Report
Renewables are growing quickly, really quickly, but not quickly enough. Renewables are also getting cheap, really cheap, maybe cheap enough. The IEA has released their Renewables 2023 Report that details key developments in the renewable energy industry as well as forecasts and expectations.
Looking at the biggest takeaways from the report that I found relevant:
- Global annual renewable capacity additions surged by nearly 50% to reach 510 gigawatts in 2023, marking the fastest growth rate in the past two decades. The remarkable expansion was driven by record-breaking increases in Europe, the United States, Brazil, and particularly in China, where solar PV installations equaled the entire global output in 2022, and wind additions grew by 66% year-on-year.
- The International Energy Agency (IEA) called on governments to support five key actions by 2030, including tripling global renewable power capacity, ahead of the COP28 climate change conference in Dubai. The goals of tripling renewables and doubling annual energy efficiency improvements by 2030 were reflected in the Global Stocktake text agreed upon by 198 governments at COP28. Achieving the objective of tripling global renewable capacity in the power sector by 2030, as outlined in the IEA’s Net Zero Emissions by 2050 Scenario, would require exceeding 11,000 GW. However, under existing policies and market conditions, global renewable capacity is projected to reach 7,300 GW by 2028, falling short of the tripling goal, unless governments address challenges such as policy uncertainties, insufficient grid infrastructure investment, administrative barriers, and financing issues. The report suggests that overcoming these challenges can result in nearly 21% higher growth of renewables, putting the world on track to meet the global tripling pledge.
- The next five years are projected to witness the addition of more renewable capacity than accumulated in the entire history of commercial renewable energy, with nearly 3,700 GW coming online from 2023 to 2028. Solar PV and wind are expected to dominate, comprising 95% of global renewable expansion, and achieving several milestones, including surpassing hydropower in 2024, coal in 2025, and nuclear electricity generation in 2025 and 2026, leading to renewables accounting for over 42% of global electricity generation in 2028.
- China is set to contribute nearly 60% of the upcoming global renewable capacity by 2028, with onshore wind and solar PV deployment accelerating despite the discontinuation of national subsidies. The forecast indicates that China is on track to achieve its 2030 targets for wind and solar PV installations six years ahead of schedule, playing a critical role in the global effort to triple renewables, as the country is expected to install over half of the required new capacity worldwide by 2030, ultimately leading to almost half of China’s electricity generation coming from renewable sources at the end of the forecast period.
Takeaway: Renewables are having a moment right now with forecasts falling below actual deployment and consistent growth across the world. Current policies fall short of COP 28 targets with certain headwinds preventing future growth of renewables.
⛽ Natural Gas Oversupply Imminent
It is as if the natural gas industry saw the phrase “transitional fuels” in the COP 28 Stocktake as finalized last month before the ink dried the way the natural gas industry has been growing. Energy Monitor has great coverage on the impending LNG oversupply here. The Russia-Ukraine war that began with Russia’s invasion two years ago has spurred the EU to get off of Russian natural gas. Since that pivotal moment, it was reported that demand fell by 20% and exceeding the target of a 15% demand reduction.
Further attempts to get off Russian gas have included Europe maximizing LNG imports and building 7 new regasification terminals including three in germany, one in Finlands, one in France, one in Italy, and one in the Netherlands.
Falling EU demand is intersecting with plans for new infrastructure in Europe and Asia with vast new plans for LNG projects under development including an estimated USD$1T in new investment for 917 million tonnes per year of new export capacity and 705 million tonnes per year of new import capacity at the end of 2023.
Falling EU demand is intersecting with plans for new infrastructure in Europe and Asia with vast new plans for LNG projects under development including an estimated USD$1T in new investment for 917 million tonnes per year of new export capacity and 705 million tonnes per year of new import capacity at the end of 2023.
With this wave of new infrastructure coming online from 2025 onward, there will be an estimated 250 billion cubic metres of additional LNG being produced which is approximately 45% of today’s global LNG supply. The infrastructure coming online is profiles well in this article from Reuters. It adds context to the sub regions of the world and existing / planned natural has infrastructure.
Takeaway: This news really points to risks of stranded assets in the future as decarbonization issues continue. With Asia leading the world in pipeline construction it is clear that they view gas as a strategic fuel source for years to come and this is not just a blip. The prices of renewables continue to decline across the world and gas emissions are actually worse than coal when leakages are factored into the equations. These two points suggest that the investment into further gas infrastructure is financially and environmentally a poor decision.
👨⚖️ Chevron Deference Defence
I would very much like to preface this section by saying I am not a lawyer, but this case is incredibly important and I took one class in my undergrad on commercial law so I think I am more than qualified to analyze this case. For further information, there is a great podcast here.
Background: The Chevron Doctrine, established by the United States Supreme Court in the 1984 case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., outlines a principle of judicial deference to administrative agencies’ interpretations of ambiguous statutes. According to the doctrine, when a statute is unclear or ambiguous, and Congress has not provided a clear answer to the question at hand, courts should defer to the reasonable interpretation offered by the relevant administrative agency responsible for implementing the law. This approach reflects a recognition of the expertise and specialized knowledge of administrative agencies in their respective fields, aiming to promote consistency and coherence in the implementation of statutes while allowing flexibility in adapting to changing circumstances. The Chevron Doctrine has played a significant role in shaping the dynamics of administrative law and the relationship between the judiciary and executive branch agencies in the United States.
TL;DR: When statutory language is ambiguous, courts should defer to reasonable interpretations provided by administrative agencies responsible for implementing the law, emphasizing the expertise of these agencies in their respective domains.
Example: If a statute contains unclear language regarding environmental regulations, a court applying Chevron would defer to the Environmental Protection Agency’s reasonable interpretation of the ambiguous provision when reviewing a legal challenge, recognizing the agency’s expertise in environmental matters.
Stakes: Chevron enables experts to address problem that only experts can address. Overturning Chevron would case a “convulsive shock to the legal system” as put by Solicitor General Elizabeth Prelogar, who is defending the case.
Why it Matters: If Chevron were overturned, it could have adverse consequences for environmental regulations and protection. The doctrine’s core principle is to defer to the expertise of administrative agencies, like the Environmental Protection Agency, when interpreting ambiguous statutes related to environmental laws. Overturning Chevron might result in courts adopting their own interpretations, potentially leading to inconsistent and less expert-driven decisions. This could undermine the ability of agencies to implement and enforce effective environmental regulations, as their expertise and specialized knowledge might be given less weight in legal proceedings. The risk of legal uncertainty and challenges to regulatory actions could impede the government’s capacity to address environmental issues, ultimately hindering efforts to protect and preserve the environment.
Takeaway: Chevron is so unbelievably important because it defers to experts in a given field who are capable of making informed judgement as opposed to deferring to appointed members of the judicial branch who are not. Overturning Chevron would be catastrophic depending on what is implemented in its place. While still being argued as of writing this, it seems likely that Chevron will be overturned.
What Else is in the News
- John Kerry, the special presidential envoy for climate for the United States will leave the Biden administration this winter as reported by Axios. Kerry was Biden’s lead diplomat on climate change since 2021 and represented the US recently at COP 28. Key to global decarbonization efforts, Kerry worked closely with China to navigate the intersection of politics and global warming.
- I stumbled across a very interesting article on Canary Media about how New York is planning to repurpose natural gas infrastructure to infrastructure that can power heat pumps. Pipelines that carried natural gas will now carry water or other liquids to transfer heat from its source to its use. Adapting existing infrastructure to promote cleaner heating is an incredibly smart way of decarbonizing heating in our built environment while minimizing capital expenditures required.
- It happened last Thursday, but Chesapeake Energy and Southwestern Energy have revealed plans for a significant $7.4 billion all-stock merger. This announcement comes after a host of important fossil fuel industry acquisitions in 2023 including activity by Exxon and Chevron. Upon completion, this merger will establish the largest natural gas producer in the United States, with the combined entity setting up its headquarters in Oklahoma City, Oklahoma. The anticipated closure of the deal is slated for the second quarter of 2024, carrying an estimated total value of $24 billion.
