US wind energy sets record for power generation | CNN Politics

CNN —

The United States set a major renewable energy milestone last Tuesday: wind power was the second-highest source of electricity for the first time since the Energy Information Administration began gathering the data.

As E&E reporter Ben Storrow noted and the EIA confirmed, wind turbines last Tuesday generated over 2,000 gigawatt-hours of electricity, edging out electricity generated by nuclear and coal (but still trailing behind natural gas).

Last year, wind was the fourth-largest electricity source behind natural gas, coal, and nuclear, generating close to 380 terawatt-hours for the entire year, according to the EIA. For context, a terawatt is a thousand times bigger than a gigawatt.

Confirmed: That was the first *day* that wind was the 2nd-largest source of U.S. electricity generation, according to our data (going back to July 1, 2018). — EIA (@EIAgov) April 5, 2022

Major milestone aside, wind energy in the US is still lagging behind one European country that recently broke a record of its own: Germany.

Although the US has more wind capacity by sheer numbers – it’s a larger country with a larger population – Germany is outpacing the US in terms of how much electricity it gets from wind. In February alone, windmills in Germany generated a record 20.6 terawatt-hours of wind energy, Rystad Energy reported Tuesday, which made up 45% of its total energy in February.

In 2020 – the most recent year the EIA has robust statistics for – Germany got 24% of its electricity from wind, compared to 8% in the US.

“Europe and Germany in particular, have developed significant wind power over the past decade,” said Fabian Rønningen, a power markets analyst at independent energy firm Rystad.

And the larger picture shows the US trails Europe in its renewables capacity.

In 2020, the EU and UK combined had the capacity to produce around 49% of their electricity from renewables, almost twice that of the US’ 25%, according to the International Renewables Energy Agency.

With more than 100 planned offshore- and onshore-wind projects in the pipeline, President Joe Biden’s administration is trying to make up the lost ground in the wind-power game. The administration set a goal to deploy 30 gigawatts of offshore wind energy alone.

The EIA projects the US will bring another 7.6 gigawatts of utility-scale wind online this year, alongside 21.5 gigawatts of utility-scale solar power. Just last month, for example, the Traverse wind farm in Oklahoma brought close to a gigawatt of new energy online.

The US milestone comes as the UN’s Intergovernmental Panel on Climate Change reported that wind and solar have declined significantly in cost and are now economically viable alternatives to fossil fuels. Scientists warned the world must rapidly transition to renewables and away from fossil fuels to avert the worst impacts of global warming.

“We cannot run our fossil fuel-based infrastructures anymore the way we did,” said Jan Christoph Minx, a climate researcher and a lead author on the report, at a news conference. “The big message coming from here is we need to end the age of fossil fuel. And we don’t only need to end it, but we need to end it very quickly.”

Why UK energy prices are rising much faster than in Europe | CNN ...

London CNN Business —

Millions of people in the United Kingdom are steeling themselves for colossal rises to their energy bills over the next few months, a coda to a year already marked by record price increases.

The crisis is not unique to the country. Prices have shot up across Europe since last fall, driven by a spike in demand as countries lifted pandemic lockdowns. Russia’s invasion of Ukraine in late February, and the subsequent drop in Moscow’s oil and natural gas exports to Europe, have pushed prices even higher.

But UK energy prices are now higher than in comparable economies like France and Italy, analysts told CNN Business. And Brits have suffered much bigger price increases than in most European countries, including Germany, where decades of energy policy has been turned on its head by the Ukraine war.

The Office for National Statistics said this week that UK natural gas prices rose nearly 96% in the year to July, while electricity prices are up 54%.

Annual consumer price inflation for gas and electricity in the United Kingdom is forecast to soar to an average of around 80% this year, compared to an average of 40% across the 19 countries that use the euro, analysis from Deutsche Bank shows.

The worst is yet to come. Average annual energy bills could exceed £4,000 ($4,820) from January, and £5,000 ($6,000) later in the spring, up from about £2,000 ($2,400) currently. Millions could be forced into poverty as a consequence. Leaders of the UK National Health Service warned Friday of a “humanitarian crisis.” Many people could fall sick this winter as they “face the awful choice between skipping meals to heat their homes and having to live in in cold, damp and very unpleasant conditions,” they said.

Overall UK inflation exceeded 10% in July, compared with 8.9% in the eurozone. Unlike other problems in the UK economy, Brexit doesn’t appear to be a major factor. So why are British energy bills rising so much faster than across much of Europe?

A broken market

As wholesale costs ballooned last year, 31 smaller UK energy companies — who traditionally offered competitive prices — went bust, forcing millions of customers onto the books of bigger suppliers, and to pay higher bills.

The way the British government designed the energy market made this more likely, Henning Gloystein, director of energy, climate and resources at Eurasia Group, told CNN Business. Smaller companies were acting like brokers rather than providers of an essential utility.

“Many UK retail energy providers weren’t real energy producers. Instead, they bought electricity and gas in the wholesale market and then sold it on to retail customers like households,” Gloystein said.

That meant that as soon as wholesale costs increased far above what suppliers could legally charge, they went bankrupt.

Europe operates in a different way. Most countries have tighter regulations on suppliers, Gloystein said, including rules designed to shield them from sudden price spikes.

The prices UK households pay are subject to a cap, but it is adjusted every six months — a period about to be cut to three — meaning bills rise more quickly in line with wholesale costs.

“There’s a transitional arrangement between now and when we move to that full quarterly model that’s pushing up prices a little bit more,” Sanjay Raja, Deutsche Bank’s chief UK economist, told CNN Business. “Suppliers are able to pass on the increases in wholesale gas prices a lot more quickly than they were in the past,” he added.

Lack of storage

The United Kingdom has faced a “perfect storm” of events which have bumped up energy bills, according to Raja.

Most homes are supplied with natural gas, he said, whereas electricity, nuclear energy and renewable sources make up a bigger share of the energy mix across the European Union.

The country also relies on gas to generate 40% of its electricity, compared to less than one fifth for the bloc as a whole, according to Deutsche Bank.

“It’s a double whammy effect and the UK’s overdependence on gas is a big reason why gas prices I think in the UK are a little bit more elevated than elsewhere,” he said.

High voltage power lines and cooling towers at the Dampierre-en-Burly nuclear power plant, operated by Electricite de France SA (EDF), in Dampierre-en-Burly, France, on Tuesday, May 3, 2022. EDF's falling nuclear production, combined with Russia's invasion of Ukraine, is exacerbating Europe's energy crisis as France is traditionally a net exporter of electricity. Anita Pouchard Serra/Bloomberg/Getty Images

While the United Kingdom produces about half of its gas, North Sea output last year fell to its lowest level on record due to maintenance work, according to the government’s business department.

A lack of storage has exacerbated the situation. Centrica (CPYYF), a UK energy company, closed the largest gas storage facility in the country in 2017, though it is in discussions with the government to reopen the site this winter. Europe has more storage capacity, and has been rapidly filling it ahead of winter — and a feared total cut off of Russian gas.

UK natural gas contracts for next year’s first quarter are nearly 7% more expensive than European benchmark contract prices, according to analysis by Auxilione. That’s because Europe has now built a buffer for the winter months.

The lack of storage forces the the United Kingdom to rely on “real-time flows” of gas from the North Sea, Norway, Belgium, as well as liquefied natural gas imports, Tony Jordan, director at Auxilione, told CNN Business.

“We’re much more reliant on the here and now when it gets to winter,” he said.

Europe’s gas is still eye-wateringly expensive. It was trading at €242 ($244) per megawatt hour on Friday, an all-time high, according to Auxilione. That’s much higher than the spot price for UK gas, which is trading at an equivalent of €160 ($161) per megawatt hour, but the differential is driven mostly by greater demand in Europe as it fills up its tanks for winter.

Germany declared a gas crisis in June after Russia cut flows through the vital Nord Stream 1 pipeline by two-thirds, bringing the country one step closer to rationing gas to industry.

Minimal government support

Faced with soaring bills, governments across Europe have stepped in to help ease the financial pressure on households.

But the “elephant in the room,” said Raja, is that none of the support offered by the UK government so far has directly subsidized consumer energy prices. Earlier this year, the government announced a £150 rebate on a local tax for millions of households to help ease the pain.

More help is coming soon, but it won’t be anywhere near enough, according to anti-poverty campaigners.

An electricity transmission tower near residential houses in Upminster, UK, on Monday, July 4, 2022. Chris Ratcliffe/Bloomberg/Getty Images

In May, the government announced a £15 billion ($18 billion) package of support, including a £400 ($482) credit to 29 million households from October, which will be spread over six months.

By comparison, France has capped electricity price increases to 4% until the end of the year.

Other countries “have had more direct intervention when it comes to energy prices, so comparatively UK gas and electricity prices are running a little bit higher,” Raja added.

On Thursday, Germany announced plans to slash a sales tax on gas to 7% from 19% until March 2024, which is designed to more than offset new levies introduced to pay for gas storage. The government has asked companies to pass the reduction onto their customers, according to a report by German broadcaster ZDF.

Liz Truss, the favorite to succeed Boris Johnson as the UK’s next prime minister next month, has not said how she would provide further help to households beyond cutting taxes.

The opposition Labour Party is calling for a windfall tax on the profits of oil and gas companies to be extended to help fund a freeze on energy bills this winter.

— Mark Thompson contributed reporting.

The world is burning more coal than ever before, new report shows

CNN —

The global energy crisis caused by Russia’s war on Ukraine has pushed global demand for coal – the most polluting of all fossil fuels – to a record high in 2022, the International Energy Agency (IEA) said on Friday.

Demand for coal is set to grow 1.2% and top 8 billion metric tons for the first time ever this year, the IEA said in the latest edition of its annual coal report. This record comes only a year after countries agreed to phase down their use of coal at the United Nations’ climate conference in Glasgow.

The growth is mostly down to a rapid rise in the prices of natural gas and other fuels, which has forced some countries and regions to turn to coal as a cheaper alternative.

Coal is the world’s largest source of energy for electricity generation and the production of steel and cement. But it is also the biggest single contributor to the climate crisis, accounting for around 40% of global greenhouse gas emissions from fossil fuel use.

“Europe – and the European Union in particular – has been one of the regions hardest hit by the energy crisis, given its reliance on Russian pipeline supplies of natural gas,” the report said, adding that technical problems in French nuclear power plants made the problem even worse.

To keep the lights on, Europe turned back to coal – even switching some of its recently closed coal power plants back on.

Pieter de Pous, who leads the Fossil Fuel Transition Program at E3G, a climate think tank, told CNN the growth in coal use was a U-turn, coming “at the end of a decade that saw coal use cut in half.”

The IEA said that while the increase in coal consumption was relatively modest in most European countries, Germany saw a reversal of a “significant scale.”

That has put the EU, which has positioned itself as a global climate leader, into an uncomfortable position, with some criticizing European countries like Germany for only pursuing the green agenda when it suits them. Germany and the EU have pushed back on that idea, stressing the U-turn was only temporary and that the bloc has significantly ramped up its investment into renewable energy.

The IEA expects the EU’s coal use to drop 29% by 2025 compared to 2022, de Pous said. “This will be the result of action taken in as many as 19 EU countries to accelerate renewables,” he added.

China, which accounts for more than half of global coal consumption, also ramped up its use of coal earlier this year, when the worst heatwave and drought in six decades hit its hydroelectricity production.

In August alone, coal power generation in China increased by around 15% compared to the same period last year, the IEA said, to a level of generation that was higher than the total annual coal power generation of any other country, except India and the United States.

Richard Black, a senior associate at the Energy and Climate Intelligence Unit, a climate advisory group, said that despite the increase in China’s use of coal, the long term direction for coal in China and India – another major coal user – was clear.

“Renewables are going to be providing an increasing share of the generation and the role of coal is going to transition from being a baseload fuel to being a backup,” he said.

“The science suggests that a country such as China ought to have eliminated unabated coal use by 2040 and ideally earlier than that,” he said. “That’s absolutely feasible. As with Europe, if there is a short term increase in coal use, that’s not necessarily a disaster. The key thing is going to be to build out transmission capacity, build out energy storage, keep on making energy use more efficient, and to provide alternatives for the workers in the places where coal mining is a big employer so that there’s a socially just transition.”

‘Peak in fossil fuel use’

The IEA forecasts that global coal consumption will remain flat at the current level to 2025 as falls in some countries are offset by continued strong demand in emerging Asian economies. Although there are global moves to help big coal producing countries transition off the fossil fuel. This week, Vietnam agreed to a $15.5 billion climate-financing deal with leaders from G7 industrialized nations to move away from coal, which followed a recent $20 billion funding deal for Indonesia to increase clean energy and phase out coal.

“The world is close to a peak in fossil fuel use, with coal set to be the first to decline, but we are not there yet,” said Keisuke Sadamori, the IEA’s director of energy markets and security, said in a press release.

Earlier this year, the IEA said CO2 emissions from coal power generation were forecast to grow by more than 200 million tons, or 2%, this year. It said that investment into new fossil fuels infrastructure must stop immediately if the world wants any chance of achieving net zero by 2050.

The latest climate science shows that achieving net zero by the mid-century is necessary to keep temperatures from rising well above 1.5 degrees Celsius, compared with pre-industrial times. Beyond that threshold, the world will face climate crisis impacts that could take millennia to correct, or could be irreversible altogether.

Why US gas prices are at a record and why they'll stay high for a ...

New York CNN Business —

Russia’s invasion of Ukraine is a major reason that US drivers are paying record prices for gasoline. But it’s not the only reason.

Numerous factors are combining to push gas prices up to a record. Gas hit $4.25 for a gallon of regular gas, according to AAA’s survey Wednesday.

Gas prices were already expected to breach the $4 a gallon mark for the first time since 2008, with or without shots fired or economic sanctions imposed in Eastern Europe.

“I think we reach $5 somewhere between this weekend and Juneteenth/Father’s Day weekend,” he said.

It was back in March that prices first broke the record of $4.11 a gallon, which had stood since 2008. That now seems like the good old days: The national average has been rising steadily for the past month, setting 27 records in the last 28 days.

More than one out of every five gas stations nationwide is now charging more than $5 a gallon for regular, and just more than half are charging $4.75.

There are 10 states, plus Washington, DC, where the average price is already at $5 or more: Alaska, Arizona, California, Hawaii, Indiana, Michigan, Illinois, Nevada, Oregon and Washington. Several more are within a penny of $5, so those states’ prices are likely only a day or two at most from crossing the mark.

But prices aren’t likely to fall much whenever they do start to retreat. And Kloza expects they could once again set a record after schools let out and drivers start hitting the road for vacations next month.

“Anything goes from June 20 to Labor Day,” Kloza said.

Here’s what’s behind the record price surge:

Russia’s invasion of Ukraine

Russia is one of the largest oil exporters on the planet. In December it sent nearly 8 million barrels of oil and other petroleum products to global markets, 5 million of them as crude oil.

Very little of that went to the United States. Europe got 60% of the oil and 20% went to China in 2021. But oil is priced on global commodity markets, so the loss of Russian oil affects oil prices around the globe, no matter where it is used.

The concerns about disrupting global markets led western nations to initially exempt Russian oil and natural gas from the sanctions they put in place to protest the invasion.

On Tuesday the United States announced a formal ban on all Russian energy imports. The UK government said it, too, will phase out Russian oil imports by the end of 2022 and explore ways of ending natural gas imports.

China lockdowns ending

One factor keeping oil prices somewhat in check has been the surge of Covid cases, and strict lockdown rules in much of the country. That was a major drag on demand for oil.

But as the Covid surge has started to retreat, the lockdowns are being lifted in major cities such as Shanghai. And more demand without increased supply can only drive up prices.

Video Ad Feedback This is what determines the price of gas 01:57 - Source: CNN

Less oil and gasoline from other sources

When pandemic-related stay-at-home orders around the world crushed demand for oil in the spring of 2020, oil plunged, briefly trading at negative prices. OPEC and its allies, including Russia, agreed to slash production as a way to support prices. Even when demand returned sooner than expected, they kept production targets low.

US oil companies don’t follow those types of nationally mandated production targets. But they have been reluctant or unable to resume producing oil at pre-pandemic levels amid concerns about the prospect of tougher environmental rules that could cut future demand. Many of those tougher rules have been scaled back or failed to become law.

“The Biden administration is suddenly interested in more drilling, not less,” said Robert McNally, president of consulting firm Rapidan Energy Group. “People are more worried about high oil prices than anything else.”

It takes time to scale up production, particularly when oil companies are facing the same supply chain and hiring challenges as thousands of other US businesses.

“They can’t find people, and can’t find equipment,” McNally added. “It’s not like they’re available at a premium price. They’re just not available.”

Oil stocks have generally lagged the broader market over the last two years, at least until the recent run-up in prices. Oil company executives wanted to redirect cash to buying back stock and other ways to help their share price rather than increase production.

“Oil and gas companies do not want to drill more,” said Pavel Molchanov, an analyst at Raymond James. “They are under pressure from the financial community to pay more dividends, to do more share buybacks instead of the proverbial ‘drill baby drill,’ which is the way they would have done things 10 years ago. Corporate strategy has fundamentally changed.”

One of the starkest examples: ExxonMobil (XOM) last month announced first quarter profits of $8.8 billion, more than triple the level of a year ago when excluding special items. It also announced a $30 billion share repurchase plan, far more than the $21 billion to $24 billion it expects to spend on all capital investment, including searching for new oil.

Not only is oil production lagging behind pre-pandemic levels, there’s also less US refining capacity. Today, about 1 million fewer barrels of oil a day are available to be broken into gasoline, diesel, jet fuel and other petroleum-based products.

State and federal environmental rules are prompting some refineries to switch from oil to lower carbon renewable fuels. And some companies are closing older refineries rather than invest the money it would cost to retool to keep them operating, especially with massive new refineries set to open overseas in Asia, the Middle East and Africa in 2023.

And major US refineries have yet to return to full operation after two were damaged by hurricanes last year and another by an explosion.

“Economics mandate you make more jet and diesel fuel to the detriment of gasoline,” said Kloza.

And with prices in Europe even higher than in the United States, both Canadian and US oil producers have increased exports of oil and gasoline to the continent. That has also limited the US supply.

Strong demand for gasoline

Record job gains in 2021, and the strongest economic growth since 1984, have combined to fuel the rebound in driving, as did pent-up demand for travel after the first year of the pandemic.

Video Ad Feedback How to save money on gas by being more fuel efficient 01:40 - Source: CNN

The US economy had record job growth in 2021, and while those gains have slowed, they remain historically strong. Demand is getting another boost as the many employees who have been working from home for much of the last two years return to the office.

The start of the summer travel season on Memorial Day weekend is likely to spark the typical annual increases in demand for gas and jet fuel. US airlines all report very strong bookings for summer travel, even with airfares climbing above pre-pandemic levels.

The end of the Omicron surge and the removal of many Covid restrictions is encouraging people to get out of the house for more shopping, entertainment and travel well. US trips in passenger vehicles have increased 25% since the beginning of this year, according to the mobility research firm Inrix.

“Come hell or high gas prices, people are going to take vacations,” said Kloza.

There may not be quite as much commuting as before the pandemic. Many who plan to return to the office will be there only three or four days a week, rather than five. The total number of jobs is still slightly below 2019 levels.

“Even before Ukraine, I was expecting to break the record,” Kloza said. “Now it’s a question of how much we break the record by.”

Coal sanctions: Europe is finally coming after Russia's energy | CNN ...

London CNN Business —

European leaders are planning to phase out Russian coal imports in response to harrowing scenes in Bucha, a suburb of Kyiv.

On Tuesday, the European Commission proposed a ban on €4 billion ($4.3 billion) worth of Russian coal imports per year as part of a fifth package of sanctions designed to further diminish Russian President Vladimir Putin’s war chest. Other proposals target Russian technology and manufacturing imports, worth another €10 billion ($10.9 billion).

Europe has imposed punishing sanctions on Russia’s economy since Putin’s tanks rolled into Ukraine in late February, but stopped short of targeting Russia’s energy sector — until now. Images of unarmed civilians, bound and shot, lying along Bucha’s roads — which were until recently under Russian occupation — have convinced leaders to change tack.

Russia’s oil and gas could be next. European Commission President Ursula Von der Leyen told EU lawmakers on Wednesday that the fifth round of sanctions “will not be [the] last”.

“Yes, we’ve now banned coal, but now we have to look into oil,” she said.

Charles Michel, who chairs meetings of EU leaders, said in a tweet that “measures on oil, and even gas will also be needed sooner or later.”

More details of the new package, including the timeline for the ban on coal, could come on Wednesday when EU ambassadors meet for talks. The measures still need the approval of all 27 member states.

Sanctioning coal will bite some European countries, but it’s among the easiest energy sources to wean off — much of the world is already doing just that. The trickier question is: What happens next?

How much Russian coal goes to Europe?

Russia was the world’s third-largest exporter of coal in 2020, behind Australia and Indonesia, according to the International Energy Agency, with Europe by far its biggest customer.

The continent received 57 million tons of Russian hard coal that year, compared to 31 million tons for China, IEA data shows. This amounted to more than half of Europe’s coal that year, according to Eurostat.

But the EU was already turning away from the world’s dirtiest fossil fuel.

The amount of electricity generated by coal has decreased steadily across the block in recent years, falling 29% between 2017 and 2019, according to analysis by energy think tank Ember.

And despite a brief uptick last year as gas prices hit record highs, the IEA anticipates that European demand for coal will resume its steady decline. Total imports were expected to drop 6% by 2024 even before Russia’s invasion of Ukraine.

Other countries could step in to buy Russian coal. The IEA expects India’s coal imports to rise 4% in 2024, and more than 6% in Southeast Asia. Russia has already benefited from a jump in exports to China following Xi Jinping’s block on Australian imports, the agency said in a December report.

What will a EU ban mean for coal prices?

Still, a supply crunch — even one that’s phased in — could cause a headache for countries that still use coal for much of their electricity generation, including Poland and Germany.

A drop in supply coupled with rebounding demand in China helped push global coal prices up to all-time highs in October 2021 — before falling back down, per IEA analysis.

But elevated prices could prove stickier under an EU ban on Russian imports. Rotterdam coal futures, the benchmark for European coal prices, closed at $257 a ton on Monday, but was last seen trading at $295, data from the Independent Commodity Intelligence Services showed.

Matthew Jones, lead analyst for EU power and carbon at ICIS, told CNN Business that the coal ban will “make an already tight European supply situation even tighter and will lead to a scramble to find alternative coal sources.”

“Front month Rotterdam coal futures traded on the ICE exchange were up almost 15%, and front year by 13%, since yesterday’s close in response to the news,” Jones added.

Even so, Henning Gloystein, director of energy, climate and resources at Eurasia Group, thinks EU states can withstand the shock. The think tank also said on Tuesday that any EU purchase of Australian coal would cushion the blow.

“Sanctioning coal will also make life much more difficult for European utilities, which consume a lot of Russian coal, but energy companies can cope with this” Gloystein told CNN Business.

What’s left to sanction?

Russia’s oil and gas supplies are notably absent from the latest round of sanctions. The bloc imported 26% of its crude and 46% of its gas from Russia in 2020, according to Eurostat.

But blocking oil imports is on the table: European Commission President Ursula von der Leyen said in a statement Tuesday that the bloc was “working on additional sanctions, including on oil imports.”

Already, the United States has tapped its strategic oil reserves, releasing 180 million barrels into the global market, to help bring down gasoline prices and counter the reduction in Russian oil supplies. The IEA also agreed to release additional oil from its member countries at an emergency meeting last week.

Natural gas is still the most unlikely target of sanctions, partly because of differences between member states that are heavily reliant on Russian energy and those wanting to move faster to strike at the heart of the Russian economy.

EU leaders have pledged to reduce consumption of Russian gas by 66% before the end of this year, and to break the bloc’s dependence on Russian energy by 2027.

One country has gone further. Lithuania’s Prime Minister Ingrida Šimonytė said in a tweet Sunday that “from now and so on, Lithuania won’t be consuming a cubic cm of toxic Russian gas.” Getting import-reliant countries like Germany and Hungary on board will prove more challenging.

But, according to Gloystein, the bloc’s reluctance to sanction oil and gas is about more than avoiding self-harm.

“The EU is keen to be able to keep escalating its response according to developments in Ukraine,” he said. “If Brussels now enforces maximum sanctions, how does it react to a further escalation by Moscow?”

Gloystein also said that targeting Russian oil and gas risks backfiring.

“There are serious and credible concerns that such actions would trigger a significant escalation by Russia as Putin may feel forced to act drastically and swiftly in the knowledge that his war chest might soon run dry.”

— Mark Thompson contributed to this report.

China's worst heat wave on record is crippling power supplies. How ...

Editor’s Note: A version of this story appeared in CNN’s Meanwhile in China newsletter, a three-times-a-week update exploring what you need to know about the country’s rise and how it impacts the world. Sign up here.

Hong Kong CNN —

For weeks now, a power crunch caused by a record heat wave and accompanying drought has wreaked havoc across Sichuan, a province home to 80 million people in southwestern China.

It’s dimmed skyscrapers, shut factories, darkened subways, and plunged homes and offices into rolling blackouts, forcing air conditioning to be unplugged – and killed thousands of poultry and fish at farms hit by electricity cuts.

The impact has been felt far and wide, from the neighboring mega city of Chongqing and the eastern provinces along the Yangtze River to the financial hub of Shanghai – where the iconic skyline went dark this week to save energy.

In a country that prides itself on economic growth and stability, the acute power shortage has come as a shock to residents who in recent decades have grown used to improved living conditions and infrastructure.

To many, extended power cuts revive memories of the distant past – a bygone era before China’s economic rise ushered in its glitzy metropolises and lifted millions out of poverty.

And now, climate change is threatening to disrupt that sense of security and economic growth.

A villager walks in a cracked paddy field amid a severe drought in Neijiang, Sichuan province. Huang Zhenghua/VCG/Getty Images

The ongoing heat wave is the worst China has seen since records began more than 60 years ago. It has stretched over 70 days, sweeping through large swathes of the country and smashing temperature records at hundreds of weather stations.

The sheer size of China’s economy and population means any major disruption to its power supply can cause massive loss and suffering.

“These so-called extreme weather events will have more impact on our lives and electricity supply,” said Li Shuo, climate adviser with Greenpeace in Beijing. “And perhaps we all need to reconsider whether these extreme events will become the new normal.”

Experts say the Sichuan power crunch is an example that China’s energy system is far less robust than it needs to be to face the growing challenges from climate change.

Some believe the industry is heading in the right direction toward reform, while others worry it will turn to building more coal-fired power plants to secure energy supply – and risk undermining China’s pledges to reach peak carbon by 2030 and carbon neutrality by 2060.

How did the power crunch happen?

Located along the upper reaches of the Yangtze, China’s longest and largest river, Sichuan is famous for its rich water resources and relies mostly on hydropower.

Amid scorching temperatures and a prolonged drought, reservoirs across Sichuan are drying up – crippling the hydropower stations that account for nearly 80% of the province’s power generation capacity.

This month, Sichuan has seen its hydroelectricity capacity plunge by 50%, according to the state grid. Meanwhile, the unrelenting heat wave has pushed power demand to unprecedented highs, as residents and businesses blast their air conditioning to stay cool.

An ariel view of the Baihetan hydropower station that straddles the provinces of Yunnan and Sichuan in southwest China. Cao Mengyao/Xinhua/Getty Images/FILE

“China’s electricity demand has been incredibly flat in the past, because so much of it has come from the industry, not from households or services. Now with air conditioning becoming more common, the demand is becoming higher,” said Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air in Helsinki, Finland (CREA).

“At the same time, rains are becoming more errant. Heavy rains and periods of drought make hydropower much less reliable as a source of available capacity during those peaks.”

To make matters worse, Sichuan is traditionally a huge exporter of power during the rainy season, sending about a third of its hydropower generation to provinces in eastern China, according to David Fishman, an analyst on Chinese energy at consultancy The Lantau Group.

Despite its crippled power generation capacity, Sichuan must still honor its export contracts with other provinces, which Fishman said could “be really hard to get out of.”

“But even if they could, the generating facilities in Sichuan were built to export power to the east coast,” he said. “They don’t really have great connectivity to the rest of the Sichuan grid. They were never intended to serve Sichuan power consumption needs.”

‘Quenching a thirst with poison’

To ease the energy crunch, Sichuan is firing up its coal power plants, raising concerns among environmentalists about the potential increase in greenhouse gas emissions.

Sichuan Guang’an Power Generation, the region’s biggest coal-fired power plant, has been operating at full capacity for 21 consecutive days. Its electricity generation for August is expected to jump 313% from a year earlier, the company said.

The province is also mining more coal. Sichuan Coal Industry Group, its largest coal miner, has more than doubled its thermal coal production since mid-August. And last week, Sichuan opened its first national coal reserve.

Nationwide, the daily consumption of coal at power plants was up 15% in the first two weeks of August compared with the same period last year, according to the National Development and Reform Commission.

Last week, Chinese vice-premier Han Zheng said the government would step up support for coal plants to ensure stable power supply.

While the jump in coal consumption is likely a temporary fix, Li, the Greenpeace adviser, feared the hydropower crisis could be used by coal interest groups to lobby for more coal plants.

“There is a possibility that power shortages caused by future extreme weather events might become a new motivation for China to approve more (coal-fired power) projects,” he said.

Last year, after a coal shortage caused a series of power outages across China, the government began to signal a renewed focus on “energy security.” By the last quarter of the year, new-approved coal capacity surged back, especially in state-owned enterprises, Greenpeace said in a report published last month.

In the first quarter of this year, provincial governments approved plans to add a total of 8.63 gigawatts of new coal power plants, nearly half the amount seen in all of 2021, according to the report.

“Energy security has become a sort of code word for coal, rather than for reliable supply of energy,” the report said.

Yu Aiqun, China researcher at Global Energy Monitor, likened turning to coal – the largest cause of global warming – for energy security to “quenching a thirst with poison.”

“China has an obsession with coal power – there is a very strong sense of dependence. Whenever an energy problem occurs, it always tries to seek answer from coal power …This is running in the opposite direction from its climate goals,” she said.

‘Big challenge’

China’s response to its energy crisis will have an impact on the rest of the world. The country of 1.4 billion people is the world’s largest emitter of carbon dioxide, accounting for 27% of global emissions.

But some analysts say boosting coal capacity is only part of China’s answer to the much-needed energy reform.

Following the power shortages last year, the Chinese government has taken important measures to increase the flexibility of pricing and the profitability of clean energy, said Myllyvirta with CREA.

“The big challenge in China’s system is the grid is being operated in a very rigid way,” he said. “Different provinces aren’t sharing their capacity and using their capacity in an optimal way to to balance the loads within the region.”

Therefore, the need to build more thermal power plants can be significantly reduced if China’s electricity grid can be managed more efficiently and flexibly, Myllyvirta said.

Apart form new coal power, China is also stepping up construction of renewable energy – its installed solar and wind energy capacity now accounts for 35-40% of the global total.

Fishman, the energy consultant, said the new coal power plants are not necessarily going to be used; instead, they were built as backup for the fast expanding renewable energy sector – in case it runs into problems, like the ongoing drought in Sichuan.

“Capacity doesn’t equal generation. The capacity being there creates a lot of optionality and flexibility for all these other (renewable energy sources) they’re building.” he said. “For now, I see the coal capacity additions, as for the most part, targeted at being able to support wind and solar.”

Fishman said China’s power system planners are aware of the challenges they face, and that the industry overall is moving “in the right direction.”

The record heat wave and the power crunch in Sichuan highlight the need to reform the grid system, he said. “Because without them, this would be an event that could happen every five or 10 years, and it would be crippling every five or 10 years – or maybe even more frequently,” he said.

Europe now has so much natural gas that prices just dipped below ...

London CNN Business —

Europe has more natural gas than it knows what to do with. So much, in fact, that spot prices briefly went negative earlier this week.

For months, officials have warned of an energy crisis this winter as Russia — once the region’s biggest supplier of natural gas — slashed supplies in retaliation for sanctions Europe imposed over its invasion of Ukraine.

Now, EU gas storage facilities are close to full, tankers carrying liquefied natural gas (LNG) are lining up at ports, unable to unload their cargoes, and prices are tumbling.

The price of benchmark European natural gas futures has dropped 20% since last Thursday, and by more than 70% since hitting a record high in late August. On Monday, Dutch gas spot prices for delivery within an hour — which reflect real time European market conditions — dipped below €0, according to data from the Intercontinental Exchange.

Prices turned negative because of an “oversupplied grid,” Tomas Marzec-Manser, head of gas analytics at the Independent Commodity Intelligence Services (ICIS), told CNN Business.

It is a hugely surprising turn of events for Europe, where households and businesses have been clobbered by eye-watering rises in the price of one of its most important energy sources over the past year.

Warm weather to the rescue

Massimo Di Odoardo, vice president of gas and LNG research at Wood Mackenzie, says unseasonably mild weather is largely responsible for the dramatic change in fortune.

“In countries like Italy, Spain, France, we’re seeing temperatures and [gas] consumption closer to August and early September [levels],” he told CNN Business. “Even in countries in the Nordics, the UK and Germany, consumption is way below the average for this time of the year,” he added.

The European Union has also built substantial buffers against any further supply cuts by filling gas storage facilities close to capacity. Stores are now almost 94% full, according to data from Gas Infrastructure Europe. That’s well above the 80% target the bloc set countries to reach by November.

“That’s an extremely high level,” Di Odoardo said, noting that the maximum storage level averaged 87% of capacity over the past five years.

Europe’s efforts to secure as much fuel ahead of winter as possible has caused a backlog of LNG tankers at European ports, made worse by a shortage of LNG import terminals.

The bloc has ramped up imports of LNG from the United States and Qatar as natural gas imports from Russia plummeted.

Felix Booth, head of LNG at data firm Vortexa, told CNN Business that as many as 35 vessels are either floating near, or sailing very slowly towards, ports in northwestern Europe and the Iberian peninsula because of a lack of storage options.

Those ships will “likely take another month to find home for the cargoes,” he said.

Together, they’re carrying about $2 billion worth of LNG, according to Kpler, citing energy market data provider Argus Media.

Higher prices next year

Despite the recent slump, at around €100 ($100) per megawatt hour European natural gas futures are still 126% above where they were last October, when economies started to reopen from their pandemic lockdowns and demand spiked.

Prices could rise sharply again in December and January as the weather turns colder, providing an incentive for some of those tankers to wait offshore a while longer before coming into port to unload, said Booth.

And despite the fact that Russia’s share of Europe’s total gas imports has fallen from 40% to just 9%, the region could be in a difficult spot next summer as it tries to replenish its stores ahead of the following winter.

Prices are expected to hit €150 ($150) per megawatt hour by the end of 2023, said Bill Weatherburn, a commodities economist at Capital Economics.

“Filling storage ahead of next winter will require the EU to import even more LNG because there is a need to replace lost Russian gas imports for an entire year,” he told CNN Business.

Solar energy projects are grinding to a halt in the US amid ...

CNN —

The solar energy industry has been thrown into a panic and projects are grinding to a halt after the Biden administration launched an investigation that some solar CEOs worry could tank the industry.

The Commerce Department launched the probe in March into whether four countries in Southeast Asia that supply about 80% of US solar panels and parts – Cambodia, Malaysia, Thailand and Vietnam – are using components from China that should be subject to US tariffs.

The fallout within the industry has been significant.

A survey in late April by the Solar Energy Industries Association, a non-profit trade association, found 318 solar projects in the US had already been delayed or canceled, and several CEOs told CNN they expect more to follow. Industry leaders fear the probe could also have a devastating impact on the solar workforce.

The Commerce Department has defended it as a transparent and necessary process, but several solar industry experts and executives told CNN it has also essentially frozen most solar imports into the US because of the threat of steep, retroactive tariffs.

“With this administration and this much support, we’re in a position where we’re going to be laying off people in the renewables industry,” George Hershman, CEO of utility solar contractor SOLV Energy, told CNN. “While you say all those things we agree with, we’re getting crushed because we literally can’t buy a module today. It’s so frustrating.”

The investigation was launched after one small US-based company, Auxin Solar, filed a complaint in February. Auxin CEO Mamun Rashid told CNN that the complaint “was existential” for his company.

“When prices of finished panels from Southeast Asia come in below our bill of materials cost, American manufacturers cannot compete,” Rashid said, adding that “if foreign producers are circumventing U.S. law and causing harm to U.S. producers like Auxin Solar, it needs to be addressed.”

Rashid told CNN it’s “lamentable” that frustration is aimed at his company, rather than the “foreign suppliers” that he says are circumventing US law. Rashid also noted that Auxin is “here and can quickly scale up to meet needs of utilities within 2 to 3 quarters if we have the purchase order today.”

Solar industry leaders have been communicating with the Commerce Department and have also communicated their concerns about the probe to Biden’s top climate officials – including McCarthy and US Climate Envoy John Kerry – a person familiar with the conversations said.

“The administration has been in touch with and is engaging with all kinds of solar stakeholders including the trade associations but also labor, communities, and NGOs,” a White House official told CNN.

‘The worst moment’

The Commerce probe comes on the heels of last year’s ban on solar panels and parts that were suspected of having links to forced labor in China’s Xinjiang Province.

The Department of Homeland Security directed US Customs and Border Protection to issue a Withhold Release Order, which banned imports made by Chinese company Hoshine Silicon Industry Co., after the government alleged the company uses forced Uyghur labor.

“Obviously, the industry absolutely needed to address any concerns about forced labor, but the implementation of that [order] was far from smooth,” Solar Energy Industries Association President Abigail Ross Hopper told CNN.

At ports around the country, CBP agents seized and detained any solar products they suspected had links to Hoshine, unless companies could prove they did not.

US Customs and Border Protection statistics provided to CNN note the agency detained 734 shipments valued at $246 million, which the agency said is just 1.86% of the total value of all solar imports into the United States. But Hershman said the order ultimately led to a chilling effect across the industry, where companies withheld shipments for fear of being caught in an overly broad net at US ports.

“If you have materials detained, you don’t want to ship more,” Hershman said.

Electricians with IBEW Local 3 install solar panels on top of the Terminal B garage at LaGuardia Airport in November 2021. Mary Altaffer/AP

Solar CEOs and industry analysts told CNN that while the CBP order was eventually resolved with a good outcome for the industry, the impact of the Commerce investigation is like whiplash.

“Solar is a big mess right now,” said Marcelo Ortega, an analyst for Rystad. “This seems to be the worst moment for this to happen.”

This year was supposed to be a banner year for US solar growth. Independent energy research firm Rystad estimated the US would add another 27 gigawatts of solar energy this year.

Now – between the Commerce Department probe, the border seizures, the high cost of solar components and no new legislation in Congress to grease the wheels for more renewable energy – Rystad estimates the US might only add around 10 gigawatts in 2022.

Ortega said the backslide threatens Biden’s own climate goal to slash planet-warming emissions in half by 2030. The US would have to install around 50 gigawatts of solar photovoltaic capacity each year from 2022 to 2030 to keep Biden’s goal on-track, according to Ortega’s analysis.

Ross Hopper told CNN that the industry is looking for certainty from the markets and from governments, but that it’s getting none of that right now.

“There’s certainly been this steady cadence of challenges that keep getting thrown our way right at these moments of opportunity,” Ross Hopper told CNN.

Commerce defends the probe

At a recent hearing on Capitol Hill, Secretary of Commerce Gina Raimondo told lawmakers that strict trade laws required her department to initiate and complete an investigation. The department is expected to issue a preliminary finding on the investigation by late August, but a final determination could take as long as January 2023, a Commerce Department official told CNN.

“My hands are very tied here,” Raimondo said at the hearing. “I’m required by statute to investigate a claim that companies operating in other countries are trying to circumvent the duties, and I’m required by statute to have a fulsome investigation.”

The 6 megawatt Stanton Solar Farm outside of Orlando, Florida. Paul Hennessy/SOPA Images/Getty Images

The Commerce official stressed to CNN that circumvention laws are “completely removed from political considerations.”

“We’re committed to holding foreign producers accountable to playing by the rules,” the official told CNN.

Nevertheless, Raimondo has been questioned and criticized by politicians in both parties. A bipartisan group of 19 senators wrote to Biden this week asking for an expedited preliminary decision on the investigation.

And at a recent hearing, Nevada Sen. Jacky Rosen, a Democrat, pressed Raimondo on her “very serious concerns” about the investigation.

“This will jeopardize tens of thousands of good-paying American solar jobs,” Rosen said. “If we lose these jobs, they won’t come back.”

Democratic Gov. Gavin Newsom of California and Republican Gov. Eric Holcomb of Indiana also recently wrote to Raimondo expressing concern that the investigation could impact solar growth and jobs in their states.

Although solar CEOs and industry analysts welcome the idea of a domestic solar supply chain, those who spoke with CNN said the Commerce Department investigation won’t be the catalyst – the industry needs Congress to incentivize it.

“If what we’re talking about is incentivizing domestic manufacturing, this is not the way to do it,” said Ben Catt, CEO of utility-scale solar company Pine Gate Renewables. “This is going to have not just a months but years-long impact to the solar industry. We and the administration need to be looking at how we will double and triple the renewables deployment in this country. And what we’re doing is moving in the opposite direction.”

UK energy crisis is 'bigger than the pandemic' | CNN Business

London CNN Business —

The United Kingdom will have to find an answer to soaring energy bills soon or risk a humanitarian crisis. But freezing gas and electricity prices over the next two winters could cost the government over £100 billion ($118 billion), more than it spent paying millions of people’s salaries during the pandemic.

Earlier this year, the UK government tried to protect households against 90% of the expected increases in energy bills through tax cuts, energy bill rebates and direct payments. But natural gas and power prices have shot up since then, as have forecasts of future increases.

Researchers at the Institute for Government said Tuesday that the government would need to spend an extra £23 billion ($27 billion) to protect households against about 90% of the expected rises in energy bills until April 2023. Offsetting the same proportion for the year to April 2024 would cost another £90 billion.

That forecast chimes with the cost of a proposal by Scottish Power, one of the UK’s biggest energy companies. It has called on the UK government to protect millions of households by freezing their bills for two years, according to report by the Financial Times.

The average annual bill currently stands at £1,971 ($2,318) — up 54% so far this year — but is forecast to shoot past £3,500 ($4,117) when the upper price limit is fixed Friday for the last three months of this year. Analysts at Auxilione, a research firm, say the average household could be paying as much as £6,433 ($7,579) a year for natural gas and electricity come next spring if the government doesn’t intervene.

Scottish Power says the UK government should cap energy bills at £2,000 ($2,356) and give money to suppliers to meet the much higher costs of gas and electricity on wholesale markets.

The £100-billion cost of the subsidy would come from increased government borrowing, funded by general taxation over the next decade or more, the Financial Times said, citing unnamed sources familiar with the matter.

“It is going to be truly, truly horrific for a large number of people,” Keith Anderson, CEO of Scottish Power told STV, a Scottish TV station, on Monday, referring to the price increases.

“This is bigger than the pandemic. It’s a big national crisis,” he added.

The company did not immediately respond to CNN Business’ request for comment.

The UK government’s pandemic furlough scheme, which ran for 18 months, cost almost £70 billion ($82 billion). In March 2020, when the outbreak of the coronavirus pandemic shuttered businesses, the government agreed to subsidize workers’ salaries to prevent mass layoffs.

So far this year, the government has offered about £33 billion ($39 billion) in support to households to help with energy costs, through a mix of tax cuts, energy bill rebates and direct payments, the Institute for Government said in its report published Tuesday. The UK government says it is doing more.

“We know the pressures people are facing with rising costs, which is why we have continually taken action to help households by phasing in £37 billion worth of support,” a spokesperson for the Department of Business, Energy and Industrial Strategy said.

“We are giving a £400 discount on energy bills this winter and eight million of the most vulnerable households will see £1,200 extra support. While no Government can control global gas prices, over 22 million households are protected by the price cap, which continues to insulate households from even higher prices,” the spokesperson added.

But alarm is spreading within the UK energy industry. On Tuesday, Philippe Commaret, an executive at France’s EDF, a major player in the UK market, told the BBC that, without more support, about half of UK households could fall into fuel poverty from the start of next year, meaning that they would have to spend more than 10% of their disposable income on energy.

Leaders of the UK National Health Service warned last week of a “humanitarian crisis.” Many people could fall sick this winter as they “face the awful choice between skipping meals to heat their homes and having to live in in cold, damp and very unpleasant conditions,” they said.

Wholesale natural gas prices started increasing last year as countries reopened from their pandemic lockdowns, causing a global spike in demand.

Russia’s invasion of Ukraine in late February, and the resulting energy crunch, has only pushed prices further up. Western countries have banned Russian coal and oil imports, and Europe is desperately trying to wean itself off Russian natural gas.

June was the first month on record that the United Kingdom did not import any fuel from Russia, traditionally one of its major suppliers, according to data released Wednesday by the Office for National Statistics.

Eye-watering prices have caused 29 smaller energy suppliers in the UK to go bust since last summer. Those that have survived have passed on much of the cost onto their customers.

— Benjamin Brown contributed reporting.