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On Stellantis and Samsung’s factories, a new Jaguar EV, and innovative climate finance
Current conditions: Japan’s warmest autumn ever recorded has delayed the country’s vibrant foliage season • The east coast of Australia is bracing for a “rain bomb” • A Canadian storm system is bringing a blast of Arctic air to the Midwest and Northeast today through Thursday.
The Biden administration yesterday approved a $7 billion conditional loan for the joint venture between Stellantis and Samsung SDI – called StarPlus Energy – to help the companies build two EV battery plants in Kokomo, Indiana. The Department of Energy estimates the projects will create 3,200 construction jobs and 2,800 operations jobs, and the finished plants will produce 67 GWh of batteries, “enough to supply approximately 670,000 vehicles annually.” The loan isn’t finalized yet, and its fate hangs in the balance as President-elect Trump’s administration may not see it through. Though as The New York Timesnoted, “both projects are in congressional districts represented by Republicans,” and “some of them may be unwilling to get in the way of projects that bring thousands of jobs and billions of dollars to their districts.” Just two days ago, Stellantis CEO Carlos Tavares resigned, and the company has been posting sluggish U.S. sales figures. Last week the DOE announced another conditional loan for EVs: $6.6 billion for Rivian to build its Georgia manufacturing plant.
Jaguar has unveiled the first concept car of the company’s new all-electric era. The much-anticipated electric Type 00 (which apparently is pronounced “zero zero”) is a two-door coupe that comes in two colors: Miami pink and London blue. It will get up to 430 miles of range and charge 200 miles in 15 minutes. It will go on sale sometime in 2026 and cost at least $127,000. In its announcement, Jaguar called the car “an unmistakable, unexpected, and dramatic physical manifestation of Jaguar, as the brand continues its transformation.” The company has committed to going fully electric by 2025, and recently launched a rebrand complete with a new logo and a flashy but kind of weird ad campaign that hasn’t been entirely well received.
Jaguar
Barbados completed a “debt for climate resilience” swap that will free up about $125 million and enable the Caribbean island to invest in water and sewage infrastructure. So-called debt for nature swaps involve a country reducing or cancelling its debts by agreeing to preserve biodiversity or nature preservation. This is apparently the first case of a country using such a transaction to build climate resilience, and others are likely to follow Barbados’ lead. “In the face of the climate crisis, this groundbreaking transaction serves as a model for vulnerable states, delivering rapid adaptation benefits for Barbados,” said Prime Minister Mia Mottley. The government will have to meet sustainability performance targets as part of the deal.
The aviation industry is relying on “sustainable” aviation fuel – or SAF – to help it lower its carbon footprint. But a new report finds airlines aren’t using enough of the stuff to make any meaningful difference. The report, from Brussels-based advocacy group Transport and Environment, ranks 77 major global airlines and airline groups on their use of and commitment to SAF using a points scale of 0 to 100 and found that none of them scored above 61 points, “highlighting how much progress airlines still need to make.” Most airlines failed to get above 24 points. SAF makes up about 1% of global aviation fuel use, Reutersreported. It is more expensive than fossil fuel-based kerosene and there isn’t much of it to go around. The report points to a lack of investment in SAF from oil producers. Below is a graph showing oil giants’ estimated 2023 fuel production. You can just about see the SAF if you squint.
Transport and Environment
Tesla reportedly told Cybertruck workers at its factory in Austin, Texas, not to come to work today, tomorrow, or Thursday. “Given that it is a critical time for Tesla deliveries, particularly of its flagship model, the timing is suspect,” said Jameson Dow at Electrek, suggesting a sales slowdown. The company also lowered its Cybertruck leasing pricing, which might also indicate a demand slump for the electric pickup. Meanwhile, a Delaware judge yesterday rejected CEO Elon Musk’s $56 billion pay package for a second time, even after shareholders voted to reinstate it. Judge Kathaleen McCormick said the attempts to get the package approved were “creative” but “go against multiple strains of settled law.” If Tesla appeals, the case could go to the Delaware Supreme Court.
About 12,000 public EV charging ports came online in the U.S. over the last three months, bringing the total in the national charging network to more than 200,000. That’s double the number recorded in 2020.
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On powering data centers, China exports, and surprising pollinators
Current conditions: Monsoon rains caused severe flooding in Thailand and Malaysia that left more than 30 people dead • In Germany, a recent wind lull known as a “Dunkelflaute” has led to a drop in wind power and a rise in gas-fired electricity production • It is chilly and cloudy in Paris, where French lawmakers will vote today on whether to topple the government.
Facebook parent Meta put out a call yesterday for nuclear energy developers who can add 1-4 gigawatts of new nuclear generation capacity by the early 2030s to power the tech giant’s data centers. “Advancing the technologies that will build the future of human connection — including the next wave of AI innovation — requires electric grids to expand and embrace new sources of reliable, clean and renewable energy,” the company said in its announcement. Interested developers are asked to basically write a pitch explaining their qualifications and why they should be considered for the job, with proposals due by February 7 of next year. Other big tech companies, including Amazon and Google, are also relying on nuclear to satisfy their growing energy needs as AI becomes more prevalent.
Somewhat relatedly, the International Energy Agency is hosting a conference on energy and AI today and tomorrow. Experts from the tech and energy industries (including Google’s chief sustainability officer Kate Brandt and Kairos’ head of power commercial team Jeffrey Olson) will discuss “how artificial intelligence could transform global energy systems, exploring the key opportunities and challenges ahead.”
China is banning exports of some critical minerals to the U.S. in retaliation for the Biden administration’s latest decision to curb China’s access to American-made memory chips. The tit-for-tat move bans exports of gallium, germanium, antimony. These materials are key components in semiconductors, and have many varied applications in clean tech. Gallium, for example, is used in solar panels, and antimony is used to make EV battery alloys. A recent report from the U.S. Geological Survey concluded that a total Chinese export ban on gallium and germanium could cut U.S. GDP by $3.4 billion.
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Speaking of China, General Motors is shaking up its operations in the country, sustaining more than $5 billion in losses. The company’s Chinese joint venture, known as SAIC-GM, has gone from being a success to a liability in recent years, losing ground to Chinese competitors that poured money into producing EVs and hybrids. Electric vehicles make up more than half of all car sales in China. “Almost all foreign automakers there, including European, Japanese, and South Korean companies, are struggling as increasingly ambitious Chinese car companies like BYD and Geely introduce new models and slash prices,” reportedThe New York Times, noting that BYD is likely to overtake Ford this year in global sales.
The Biden administration this week is celebrating the milestone of awarding more than $100 billion in grants as part of the Inflation Reduction Act. “Crossing the milestone of $100 billion awarded shows just how quickly we’re getting these funds out the door and into communities so they can make a real difference for the American people,” climate envoy John Podesta toldReuters. And another official said the administration will exceed its goal of obligating more than 80% of the available IRA grant money by the end of Biden’s term, explaining that this would mean the funds are protected: “They are subject to the terms of the contract, so when those contracts are signed and executed, this becomes a matter of contract law more than a matter of politics.”
The Arctic could experience its first ice-free summer day before 2030, perhaps even by 2027, according to a new study published in the journal Nature Communications. The international research team behind the study used multiple computer models and simulations to make the projection, which is “unlikely” but becoming more plausible as greenhouse gas emissions rise. Extreme weather events – like a series of exceptionally warm years – could trigger rapid melting leading to an ice-free day or days. Such an event could “have cascading effects on the rest of the climate system,” the authors wrote. “It would notably enhance the warming of the upper ocean, accelerating sea ice loss year round and therefore further accelerating climate change, and could also induce more extreme events at mid-latitudes.”
Recent research suggests rare wolves in Ethiopia feed on the sweet nectar of plants known as red hot poker flowers, becoming covered in pollen in the process. This unusual behavior would make the wolves perhaps the first known large carnivores to be plant pollinators.
Ecology journal
Rob and Jesse talk with the deputy White House official in charge of implementing the Inflation Reduction Act.
The Inflation Reduction Act, President Joe Biden’s landmark climate law, is the biggest investment in clean energy in American history. It is also in danger. In January, the Trump administration and a GOP Congress will take over the federal government — and they have made a variety of promises about how they’ll disrupt the law, ranging from full repeal to a more “surgical” reform approach.
On this week’s episode of Shift Key, Rob and Jesse talk with Kristina Costa, who has worked since 2022 to implement the IRA’s climate provisions at the White House. She joins us to discuss what went right about the Biden administration’s rush to implement the law, why state government capacity is holding back Democratic policy goals, and why the federal government needs more tools to support energy innovation if it wants to keep up with China. She also discusses how the administration is trying to Trump-proof the law. Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.
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Here is an excerpt from our conversation:
Robinson Meyer: What do you hear from the companies? And I guess from your vantage point, are they beginning to do the lobbying work you feel like they should be doing to protect the parts of the law that are working?
Kristina Costa: I think they are. You know, we hear a lot of anxiety, as you can imagine, which is —
Meyer: Theme of this period.
Costa: Theme of this period is that there’s a lot of anxiety. And our hope is, and our belief is that they will turn that anxiety into action, in terms of educating members of Congress about how the law actually works and how it is underpinning the investments that they’re making.
And I think, you know, to take a step back and talk about policy for a little bit, one of the things, I think, that is not well understood in the rhetoric about how the different pieces of the Inflation Reduction Act actually work together is that — you know, we have provisions that are incentivizing investments in manufacturing, and people are generally pretty excited about that. We also have provisions that are incentivizing adoption of the technologies that are being manufactured. And in some cases people are pretty excited about that, and in other cases, it has been turned into a bit of a political cudgel. But the fact of the matter is that those two things are pretty interdependent.
So, for instance, we have what is called the 45X advanced manufacturing production tax credit, and that is largely a per-unit tax credit that goes to manufacturers of a specified list of clean energy components, including batteries for electric vehicles, as well as for grid storage. And we have seen just gangbusters investment in the EV battery space since the passage of the Inflation Reduction Act. It has set the United States up to be an EV battery manufacturing powerhouse. And this is, of course, an area of importance for the clean energy transition. It is also an area of incredible importance for U.S. energy security, given the currently dominant market position that China plays, that China holds in the EV battery supply chain.
And I think people generally think this is pretty good. But one of the reasons besides the 45X credit just providing a strong, straight-up incentive to invest in the United States and make these things in the United States is that the much-maligned 30D new clean vehicle tax credit that provides a subsidy to individuals to buy electric vehicles that are made in the United States has a bunch of pretty stringent requirements about the sourcing of batteries and of critical minerals contained within those vehicles in order to be eligible for the tax credit. And so you have both incentives to manufacture, but you also basically have incentives to provide support for the offtake of what those manufacturers are actually producing.
Those two things go hand in hand, and I don’t think that is well understood in the political rhetoric.
This episode of Shift Key is sponsored by …
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Music for Shift Key is by Adam Kromelow.
Absolute Climate wants to grade all carbon credits the exact same way.
In the wake of a wave of scandals in the carbon credit market, a boatload of brokers arrived to mediate between buyers and sellers and improve the integrity of carbon claims. In came the consulting firms staffed by scientists to advise companies on which credits to buy, ratings agencies to assess individual carbon projects, and carbon credit registries with new business models that promised to be more scrupulous than those that came before.
But to Peter Minor, none of these players is getting at the root issue. So Minor, an alum of the carbon removal advocacy group Carbon180, is launching his own company, Absolute Climate, to solve what he sees as the two biggest problems in the carbon credit market: inconsistent accounting and conflicts of interest.
“If we don’t fix these things, the carbon removal industry may never get to the trust and adoption that it’s going to need to get to enough scale to actually reduce harms,” Minor told me.
Absolute Climate’s solution is a new standard, or set of rules, for accounting for the climate benefits of carbon removal projects that would ensure carbon credits from different projects are comparable on an apples to apples basis. That is, as long as it’s widely accepted by a market that’s fraught with divisions.
To date, the registries — the businesses that certify and sell carbon credits — have been the ones to create and oversee accounting standards. But the registries have an incentive to set permissive requirements, Minor said, because the more credits they certify, the more they can sell. This arrangement has resulted in standards that all use slightly different criteria to account for how much carbon has been removed. These differences show up not just across registries, but also within registries across different types of projects.
Here’s an illustrative example: Climeworks is a company that builds industrial-scale plants to suck carbon out of the air, compress it, and inject it underground. Under the carbon removal registry Puro’s standard, Climeworks must take into account the emissions related to clearing the land, building the plant, powering it, transporting the captured carbon, and injecting it before coming up with the net total tons of carbon the plant has removed and the number of credits the company can sell.
Compare that to Red Trail Energy, which owned a corn ethanol refinery and recently began capturing carbon emitted from the facility’s fermentation tank and injecting it underground. Corn absorbs carbon from the atmosphere as it grows, and Red Trail puts away some of that carbon permanently. But to calculate how many carbon removal credits Red Trail can sell based on this project, Puro does not require the company to account for the emissions associated with growing the corn, transporting it to the plant, or heating it up using a natural gas boiler. Nor does it require measurement of the emissions released when the ethanol is burned in a vehicle. If it did, all those emissions would exceed the amount of carbon Red Trail is storing.
On the Puro registry, Climeworks’ credits and Red Trail’s credits are identical, both advertised as carbon removal. But to Minor, the credits are fundamentally different — one is a truly net-negative process, the other reduces emissions to the atmosphere from an existing source. Once the world has cut carbon nearly to zero, only the first project could provide a counterweight to any residual emissions and help halt or even reverse warming. Minor worries that if both are called carbon removal, the difference won’t be clear until it’s too late.
“We might get to the point where we’ve scaled up the infrastructure and the political economies around certain projects because they were cheaper or more efficient in our minds, but actually it’s just that they weren’t net-negative,” he said. “So we may put ourselves in a position where we can’t actually meet our climate goals.”
Minor is not alone in this concern. Several recent peer-reviewed papers have identified this as a pervasive issue and proposed ideas for how to solve it. “Big picture, we want net flux of carbon out of the atmosphere into storage,” Anu Khan, founder of the non-profit Carbon Removal Standards Initiative, told me. “We want to set rules that motivate this and allow us to add it up over time.”
Absolute Climate’s solution is based on a framework developed by scientists from Lawrence Berkeley National Laboratory. Minor described it as a single standard that verifiers can apply in exactly the same way to every method of carbon removal and determine whether a given project is net-negative or not. Each type of carbon removal, like enhanced rock weathering or direct air capture, will still require individualized rules for how it should conduct physical measurements, he said. But the project scope — the question of what to measure — will be consistent.
In practice this doesn’t seem like a major paradigm shift. It requires project developers to identify all the activities associated with their project that either release or store carbon, measure each one, and add them together to get the net result. The main difference is that they can’t selectively ignore certain emissions in the calculation if, for example, those emissions are related to a co-product like ethanol.
To meet Absolute’s standard, a project must also be able to store carbon for 1,000 years, similar to the amount of time carbon emissions stay in the atmosphere. That’s in contrast to most standards, which have different requirements depending on the project type. For example, reforestation and soil carbon storage projects typically only have to store carbon for 100 years, while any project injecting carbon underground has to promise 1,000 years.
Any carbon credit registry can adopt the standard, and the company will earn a fee for each project certified under it, rather than for the number of credits certified. One registry, called Evident, which sells renewable energy credits, has already agreed to use it.
But it’s hard to imagine other registries that have invested significant time into developing standards — and certified credits using them — throwing those out anytime soon. When I wrote about the questions raised by the Red Trail Energy project earlier this year, Puro defended its rules. Marianne Tikkanen, Puro’s co-founder and head of standards, said the point of carbon credits is to pay for an intervention that wouldn’t have happened otherwise. In this case, that meant it was appropriate to isolate the carbon capture and storage part of the project when it came to certifying credits, she said.
Adding yet another layer between buyers and sellers could also increase costs. “There are market pressures that drive towards vertical integration of registries that do everything,” Khan told me. “Cost savings are a really big deal. Companies want to buy credits at the lowest cost that is good enough for the type of claim that they want to make.”
Absolute will face competition, both in the literal market and in the marketplace of ideas, from Isometric, a registry my colleague Katie Brigham wrote about earlier this year. Isometric has tried to address the conflict of interest problem by charging fees to buyers — not sellers — for verifying carbon credits.
In setting such a high bar, Absolute also risks having a chilling effect on the carbon removal industry by blocking promising projects that are working through yet-unproven science or have other early-stage growing pains from a key source of funding. As a solution, Absolute plans to designate some projects as part of an “innovative class.” One example Minor gave me is a new direct air capture company that can’t procure enough renewable energy to power its pilot plant and has to run using dirty power. “We can allow them to take those shortcuts where it makes sense, assuming their buyers or the governments that they’re delivering to are okay with that, but we’re going to be transparent about it,” he said.
In short, there will be two classes of credits under the Absolute standard — those that really, definitely, represent carbon removed from the atmosphere, and those that may or may not but support projects that maybe one day could.
This is all a lot to make sense of, and it’s possible Absolute could introduce more confusion into the market with all these new terms and definitions.
“This is most valuable, I think, for those people who care about whether or not what they are investing in can play that future role of being actual carbon removal,” Corinne Scown, a scientist at Lawrence Berkeley National Laboratory whose work influenced the Absolute standard, told me. But for those who just want to fund projects that help fight climate change, the distinction matters less, she said. “Mitigation is still really valuable. We do want people to have a way to pay for that.”
While there are some companies trying to do the former, most are aiming mainly to reduce the amount of emissions on their annual sustainability reports. Today, these reports are voluntary and companies can use whatever math suits them. But soon they will be required by governments such as the European Union and the state of California, which will have rules about how companies should calculate their carbon footprints. Depending on how those rules are implemented, the distinction between an Absolute-certified carbon credit and a Puro-certified carbon credit could matter a great deal.