Germany safeguards green transition + Energy storage systems make China’s energy transition more expensive + Methane emissions increased in 2023

Dear reader,

Sometimes special things are particularly expensive. Like Germany’s new carbon contracts: The German government plans to spend a mid-range double-digit billion euro amount by 2041 to safeguard green production investments of companies against unpredictable energy and carbon prices. The concept is still in its infancy. But if it works, it could become a model for other countries, reports Malte Kreutzfeldt. Perhaps it will work particularly well.

The Chinese energy transition is also facing challenges: The country is investing a lot of money in electricity storage systems to keep fluctuating solar and wind power in reserve. However, as Nico Beckert writes, these expensive storage systems have hardly been used so far, unnecessarily driving up the costs of the Chinese energy transition.

Things could also get expensive for companies that underestimate the financial risk of climate lawsuits – and according to a study, there are a lot of them.

Ahead of next week’s Global Methane Forum, we also examine the rising methane emissions. And we also take a look at a new report that deplores the shrinking freedoms of civil society around the world, which also affects climate protests in Germany.

Your
Alexandra Endres

Carbon contracts: Germany takes on an ambitious pioneering role

Papierfabrik in Zülpich, Nordrhein-Westfalen — Industrial companies with production sites in Germany can now bid for carbon contracts. A paper mill in Zülpich, Germany

By

Malte Kreutzfeldt

Robert Habeck’s relief was palpable when he announced the launch of the carbon contracts on Tuesday. “It really is something new, something great,” said the German Minister for Economic Affairs. And something expensive: With 23 billion euros over the coming years, the carbon contracts already represent the largest item in the significantly reduced Climate and Transformation Fund (KTF). And the sum is set to increase considerably in further tenders over the next few years.

However, this large sum is qualified by the fact that the funds will be paid out through 2041. After all, the carbon contracts that BMWK will sign with companies over the next few years will run for 15 years, with part of the subsidy being paid out over each period. The funding is calculated on a seemingly complex basis but follows a simple basic concept, as laid out in a detailed guideline published on Tuesday:

Funding is provided for the additional costs resulting from greener production methods.
During an auction, the companies declare how much money they need to cover these additional costs per ton of avoided CO2 emissions. A reference system serves as a benchmark that defines the standard energy required and the resulting greenhouse gas emissions for different products. The first call lists 51 products. The contract will be awarded to companies that require the least funding per ton of CO2 saved.
To prevent the entire funding from going to a single sector where CO2 avoidance costs are comparatively low, the individual rounds can set quotas for the distribution of funds among certain sectors. The first round, which started on Tuesday, will ensure that at least three different sectors receive funding.
The actual disbursement later takes into account how the energy costs have developed compared to the estimates. And the carbon price saved as a result of the reduced emissions is also offset against the amount actually achieved in the respective year.

Safeguarding companies

The carbon contracts are effectively a hedge for companies against changes in energy and carbon prices. This assures the industry that its investments in climate action measures will pay off, even if prices rise slower than expected – and in case the new technologies are not yet profitable without financial aid. For the state, on the other hand, it means uncertainty about the actual costs of the subsidy, as it essentially depends on how quickly the carbon price rises – and could consequently turn out to be higher than budgeted.

Conversely, the subsidy is significantly lower if energy and carbon prices rise faster. This can reverse the payment flow in the final years of the contract term: If greener production is cheaper than in the reference system, companies have to pay the extra profits to the state. However, this only applies for a maximum of three years.

Germany as a pioneer in the EU

The German government is breaking new ground with the carbon contracts bidding process. Other EU member states are planning similar instruments, but plan to capitalize on Germany’s initial experience. They are also likely to benefit from the fact that Germany has thoroughly harmonized the funding guidelines with the EU Commission. This means that the individual subsidies no longer have to be reported. Instead of having to wait two years for the funding approval, as was previously the case with EU reporting, companies will receive it after just four months once the carbon contracts are in effect, Habeck explained.

Reactions to the new instrument have been almost exclusively positive. Industry associations such as the Federation of German Industries (BDI) and the German Chemicals Industry Association (VCI) were not the only ones to praise the carbon contracts as an important step towards transforming the economy. Approval also came from civil society: Germanwatch Managing Director Christoph Bals called them an “important step towards bringing together greenhouse gas neutrality, a sustainable economy, and good jobs,” while Campact head Christoph Bautz spoke of a “good start for the global race for the clean tech industry.”

CDU criticizes the government’s lack of coordination

The Free Democratic Party (FDP), which tends to have a different stance on climate action than the Green Party, had no objections this time either. On the contrary, party deputy leader Lukas Köhler expressly praised the instrument: “The expected repayments prevent companies from becoming dependent on financial injections from the state,” he said.

However, Andreas Jung, deputy chair and climate expert of the Christian Democratic Union (CDU), has voiced criticism. He shares the view that “contracts for difference can be a way to achieve a climate-neutral industrialized country.” However, he considers their introduction to be problematic. “Although the contracts extend far beyond the legislative period, there was no attempt to discuss them with the opposition,” criticized Jung. He further criticized the fact that there had been no expert consultation on the complex funding guidelines before publication. He said this makes it difficult to assess whether the carbon contracts work as presented by the BMWK.

Barely utilized energy storage systems raise the cost of China’s energy transition

Batterie-Speicher in Kaschgar, China. — Battery storage in Kashgar, China. The country is installing numerous electricity storage systems, partly due to the inefficient process of the energy transition.

By

Nico Beckert

Over the past year, China built more solar plants (217 gigawatts of new capacity) than the United States installed solar power plants (175 GW). However, the Chinese boom highlights the design flaws of the national energy system. According to some energy sector managers, China will have to significantly curtail wind and solar power production this year compared to previous years.

In theory, an overproduction of renewables could be balanced out quite well through electricity trading: If the wind is very strong in the country’s west, the electricity could be consumed in the industrial hubs in the east. However, many Chinese provinces reject importing electricity from their neighbors. Reforms to the inflexible electricity market have been delayed for 20 years. Instead, massive amounts of energy storage are now being built to reduce the curtailment of renewables, meaning that fewer solar and wind power plants have to be switched off if they generate too much electricity overall. But this makes the energy transition more expensive. And these storage facilities have hardly been used so far, meaning they hardly fulfill their purpose.

The US and the EU require less storage

“The massive expansion of energy storage is a very costly approach” for connecting more renewables to the Chinese grid, Anders Hove, researcher at the Oxford Institute for Energy Studies, told Table.Briefings. In 2023, China increased its energy storage capacity by 45 percent. A total of 86.5 gigawatts of pumped storage power plants and batteries are now in place. Although a decarbonized energy system requires storage, excessive storage makes the energy transition unnecessarily costly.

According to Hove, improving electricity trading across provincial borders would be a cheaper option. However, the provinces have so far tended to rely on their own electricity supply and are reluctant to rely on neighboring provinces. On top of this, there are economic considerations: State-owned power plant operators prefer to use coal from their own province rather than green electricity from their neighbors. This secures jobs in their power plants and mines.

Hove also points to the EU and the United States. They require less storage because they prioritize “well-functioning electricity markets and the power grid expansion.” Although China is also investing heavily in its power grid, its rigid electricity trading system poses a significant challenge for the energy transition.

Government regulations drive storage expansion

Government regulations are driving the expansion of electricity storage. Since 2020, 23 of the 34 Chinese provinces have mandated their construction when new, extensive wind and solar plants (“utility-scale”) are built. The project developers – often grid operators and energy companies – are required to install energy storage systems with a capacity of 10 to 20 percent of the newly constructed renewable energy capacity. The problem: There is no actual business model for energy storage systems. Between 2019 and 2021, investment in storage declined as grid operators were not allowed to pass on the costs of building storage systems to their customers. Investments only increased again after the government announced price reforms.

However, there is still no functioning business model. Analysts from the consultancy Trivium China write that the rates for electricity from storage systems are too low, meaning that storage systems are hardly profitable.

Many energy storage systems are hardly used

The lack of a business model means that the capacity of existing storage facilities is not being utilized. “The current utilization of energy storage in the grid is only 27 to 32 percent of the intended hours,” said Kevin Shang, an energy storage technology and renewables analyst at energy consultancy Wood Mackenzie. The financial returns are low, Shang told Table.Briefings. The low storage utilization undermines its purpose of supplying the grid with more flexibility.

Moreover, 10 to 20 percent of the energy is lost during storage and subsequent “emptying,” says Anders Hove. As long as no price mechanism compensates producers for this loss, storage is a worse business model than selling the electricity directly. Hove criticizes: Passing on the costs of the inefficiency of the Chinese electricity system “to renewables – either through higher curtailment or mandatory storage – increases the cost of the energy transition” in China.

There is a small ray of hope for the industry: Batteries and energy storage systems are expected to become even cheaper in 2024. Heavy investment by battery manufacturers has led to overcapacity. “Cheap and plentiful batteries, mostly LFP-type from China, will be widely available,” writes an analyst on X.

Climate in Numbers: Companies neglect the risk of climate lawsuits

Climate lawsuits are on the rise and could much more frequently be used as a tool for more climate action. “If the risks of climate change increase” and “the evidence for climate change continues to develop,” the number of climate lawsuits is also likely to increase, a study published in Science states. The authors recommend that companies’ risk assessments take this into account more than they have in the past.

When assessing the financial risks of climate change for their own business, companies have so far tended to base their estimates on physical risks – such as crop failures or supply chain disruptions due to weather disasters. Or on the basis of transition risks due to the shift to a greener economy. As the article shows, they continue to neglect the risk of climate-related litigation.

The Science study counted more than 2,485 climate lawsuits in 52 national jurisdictions worldwide, most in the United States. Although most are filed against governments, climate lawsuits against companies are on the rise. Their aim can be to oblige companies to reduce emissions, and they are not only directed against oil, coal, or gas companies. For example, the environmental organization Milieudefensie sued ING Diba in the Netherlands in January for “not doing enough and continues to emit too much greenhouse gases.” The bank responded that its activities would simply reflect the global economy. In the past, Dutch climate lawsuits – be it against the government or companies such as Shell – have often served as a precedent for lawsuits in other countries. ae

Methane emissions are almost at record levels despite industry pledges

Methane emissions from the energy sector remain at a very high level – despite various pledges by the oil and gas industry to fix leaks and replace leaking infrastructure. This is according to a new report published by the International Energy Agency (IEA) on Wednesday. The production and use of fossil fuels released 118 million tons of methane into the atmosphere last year – a slight increase over 2022. In the record year of 2019, the figure was 119 million tons. The number of large methane leaks from leaky fossil fuel infrastructure increased by 50 percent in 2023 compared to the previous year.

At last year’s climate summit (COP28) in Dubai, 50 oil and gas companies joined forces to form the Oil and Gas Decarbonization Charter. The charter aims to reduce oil and gas companies’ methane emissions to “almost zero” and end the routine flaring of gas. In recent years, numerous companies had already pledged to voluntarily reduce methane emissions. NGOs criticize these initiatives for being too slow in reducing methane emissions and lacking strict monitoring measures.

Hope for satellites, USA with high emissions

Satellite technology will soon be used to better detect and monitor methane leaks. The MethaneSAT satellite was launched into orbit at the beginning of March. It will provide more detailed data and have a much larger visual range than previous methane detection satellites. “2024 is going to be a watershed moment for action and transparency on methane,” said Christophe McGlade, head of energy supply for the IEA.

A recent Nature study shows just how important the precise recording and measurement of methane leaks is. It shows that almost three percent of the gas extracted in six US production regions is leaking – three times more than the US government had previously assumed. The measurements for the study were taken in 2020 and 2021. This was before the adoption of the Global Methane Pledge, with which over 155 member states aim to cut methane emissions by 30 percent by 2030. nib/rtr

German asset managers invest 28 billion US dollars in climate-damaging companies

Despite promises to the contrary, the four largest German fund companies have still invested billions of US dollars in fossil fuel companies. This is the conclusion of a recent report by the NGO Greenpeace. For instance, German asset management companies continue to invest money in coal companies with no phase-out plans and retain investments in oil and gas companies that want to expand their production.

DWS, Allianz Global, Deka and Union Investment manage a combined total of more than two trillion US dollars and, as part of the Net Zero Asset Managers Initiative, have committed to contributing to meeting the 1.5 degree target. However, Greenpeace reports that the asset managers still hold 28 billion US dollars in investments in climate-damaging companies. This is three billion US dollars less than in 2022. According to Greenpeace, however, the reduction is not a result of the climate ambitions of asset managers. Rather, this withdrawal of investments was motivated by financial reasons. The analysis is based on the “Investing in Climate Chaos” database.

The report states that the asset manager DWS, a subsidiary of Deutsche Bank, holds the majority of dirty investments with 16.8 billion US dollars in fossil fuel companies. By contrast, Union Investment has the smallest holding in coal companies, which can be interpreted as a success of its comparatively strict investment guidelines. In January, the European Central Bank (ECB) had already analyzed that nine out of ten banks do not make their investments in accordance with the Paris Agreement. kul

Many companies have no plans to reduce air travel

271 out of 328 multinational companies have no plans to reduce the carbon emissions caused by their employees’ air travel. This is the finding of an analysis by the European NGO Transport & Environment. 25 companies without specific targets caused over a third of all company emissions in the ranking.

Therefore, the NGO calls on governments to set mandatory targets for companies to reduce emissions from business travel. Furthermore, they should be obliged to disclose the climate impact of travel and formulate corresponding emission reduction targets in their transformation plans.

The analysis found that 57 companies have committed to reducing their greenhouse gas emissions, 45 of them with a specific target, and 12 specifically related to air travel. However, only five companies received the highest score: They disclosed their flight emissions and strive to cut them by 50 percent or more by 2025. nh

Report sees right to climate protest in Germany ‘impaired’

For the first time, the exercise of fundamental rights, such as freedom of assembly, freedom of association, and freedom of expression in Germany is “impaired.” This is the conclusion of the Atlas of Civil Society published on Wednesday by the Protestant aid organization Bread for the World. Previous editions of the atlas had rated Germany as an “open society.”

One reason for the downgrade is the “disproportionately harsh treatment of some climate protests.” For example, members of the “Last Generation” were in some cases subjected to “long, human rights controversial preventive detention,” and courts had imposed prison sentences without parole. Another reason is that “media professionals […] were insufficiently protected from violence at demonstrations”.

Seven countries downgraded

Germany is one of seven countries that were downgraded in the current report. In contrast, the rating has improved in five countries, four of which are in Africa.

According to the report:

2.1 percent of people live in open societies (e.g. Austria, Switzerland)
12.1 percent in countries where the scope of action for civil society is impaired (e.g. Germany, USA)
14.8 percent in countries with limited scope (including Brazil and the UK)
40.3 percent in countries with repressed scope for action (e.g. Ethiopia, Turkey)
30.6 percent in countries with no scope for civil society action (including Azerbaijan, China and Russia)

The atlas reports that civil society is coming under increasing pressure worldwide. Environmental activism can even be deadly: According to the NGO Global Witness, whose data Bread for the World refers to in the atlas, 177 environmentalists were murdered worldwide in 2022 – mainly in Latin America. Data for 2023 is not yet available. More than a third of the murder victims were indigenous people. The crimes often remain unsolved. lb

Climate risks: EU Commission wants clarity on responsibilities

The EU Commission presented a strategy on Tuesday to address the problems of Europe’s poor climate resilience. It is responding to the report published on Monday by the European Environment Agency (EEA) regarding increasing climate risks in Europe. In its communication, it identifies the following areas for action:

Strengthen governance: Member states are to identify and ensure “that risk owners at national level have necessary capabilities and resources to manage climate risks.”
Structural policy measures: Climate risks are to be better coordinated across sectors and incorporated into strategies, such as spatial planning, the construction of new infrastructure, disaster management, and solidarity mechanisms at the EU level.
Funding climate resilience: The Commission wants to provide financial support to member states in order to minimize climate risks. Industry and public and private financial institutions are to form a working group to work out funding options.

Poor implementation in the member states

In particular, the responsibilities for minimizing climate risks appear to be unclear. The Commission wants to examine the responsibilities between the EU and member states, as these vary depending on the policy area. For example, the Commission notes flaws in implementation among the Member States. It calls for improvements and specifically “to fully implement the existing commitments on adaptation.” luk

CLIMATE.TABLE EDITORIAL OFFICE

Bernhard
Pötter

Alexandra
Endres

Christiane
Kühl

Lisa
Kuner

Lukas
Knigge

Malte
Kreutzfeldt

Nico
Beckert

Dear reader,

Sometimes special things are particularly expensive. Like Germany’s new carbon contracts: The German government plans to spend a mid-range double-digit billion euro amount by 2041 to safeguard green production investments of companies against unpredictable energy and carbon prices. The concept is still in its infancy. But if it works, it could become a model for other countries, reports Malte Kreutzfeldt. Perhaps it will work particularly well.

The Chinese energy transition is also facing challenges: The country is investing a lot of money in electricity storage systems to keep fluctuating solar and wind power in reserve. However, as Nico Beckert writes, these expensive storage systems have hardly been used so far, unnecessarily driving up the costs of the Chinese energy transition.

Things could also get expensive for companies that underestimate the financial risk of climate lawsuits – and according to a study, there are a lot of them.

Ahead of next week’s Global Methane Forum, we also examine the rising methane emissions. And we also take a look at a new report that deplores the shrinking freedoms of civil society around the world, which also affects climate protests in Germany.

Your
Alexandra Endres

Carbon contracts: Germany takes on an ambitious pioneering role

By

Malte Kreutzfeldt

Robert Habeck’s relief was palpable when he announced the launch of the carbon contracts on Tuesday. “It really is something new, something great,” said the German Minister for Economic Affairs. And something expensive: With 23 billion euros over the coming years, the carbon contracts already represent the largest item in the significantly reduced Climate and Transformation Fund (KTF). And the sum is set to increase considerably in further tenders over the next few years.

However, this large sum is qualified by the fact that the funds will be paid out through 2041. After all, the carbon contracts that BMWK will sign with companies over the next few years will run for 15 years, with part of the subsidy being paid out over each period. The funding is calculated on a seemingly complex basis but follows a simple basic concept, as laid out in a detailed guideline published on Tuesday:

Funding is provided for the additional costs resulting from greener production methods.
During an auction, the companies declare how much money they need to cover these additional costs per ton of avoided CO2 emissions. A reference system serves as a benchmark that defines the standard energy required and the resulting greenhouse gas emissions for different products. The first call lists 51 products. The contract will be awarded to companies that require the least funding per ton of CO2 saved.
To prevent the entire funding from going to a single sector where CO2 avoidance costs are comparatively low, the individual rounds can set quotas for the distribution of funds among certain sectors. The first round, which started on Tuesday, will ensure that at least three different sectors receive funding.
The actual disbursement later takes into account how the energy costs have developed compared to the estimates. And the carbon price saved as a result of the reduced emissions is also offset against the amount actually achieved in the respective year.

Safeguarding companies

The carbon contracts are effectively a hedge for companies against changes in energy and carbon prices. This assures the industry that its investments in climate action measures will pay off, even if prices rise slower than expected – and in case the new technologies are not yet profitable without financial aid. For the state, on the other hand, it means uncertainty about the actual costs of the subsidy, as it essentially depends on how quickly the carbon price rises – and could consequently turn out to be higher than budgeted.

Conversely, the subsidy is significantly lower if energy and carbon prices rise faster. This can reverse the payment flow in the final years of the contract term: If greener production is cheaper than in the reference system, companies have to pay the extra profits to the state. However, this only applies for a maximum of three years.

Germany as a pioneer in the EU

The German government is breaking new ground with the carbon contracts bidding process. Other EU member states are planning similar instruments, but plan to capitalize on Germany’s initial experience. They are also likely to benefit from the fact that Germany has thoroughly harmonized the funding guidelines with the EU Commission. This means that the individual subsidies no longer have to be reported. Instead of having to wait two years for the funding approval, as was previously the case with EU reporting, companies will receive it after just four months once the carbon contracts are in effect, Habeck explained.

Reactions to the new instrument have been almost exclusively positive. Industry associations such as the Federation of German Industries (BDI) and the German Chemicals Industry Association (VCI) were not the only ones to praise the carbon contracts as an important step towards transforming the economy. Approval also came from civil society: Germanwatch Managing Director Christoph Bals called them an “important step towards bringing together greenhouse gas neutrality, a sustainable economy, and good jobs,” while Campact head Christoph Bautz spoke of a “good start for the global race for the clean tech industry.”

CDU criticizes the government’s lack of coordination

The Free Democratic Party (FDP), which tends to have a different stance on climate action than the Green Party, had no objections this time either. On the contrary, party deputy leader Lukas Köhler expressly praised the instrument: “The expected repayments prevent companies from becoming dependent on financial injections from the state,” he said.

However, Andreas Jung, deputy chair and climate expert of the Christian Democratic Union (CDU), has voiced criticism. He shares the view that “contracts for difference can be a way to achieve a climate-neutral industrialized country.” However, he considers their introduction to be problematic. “Although the contracts extend far beyond the legislative period, there was no attempt to discuss them with the opposition,” criticized Jung. He further criticized the fact that there had been no expert consultation on the complex funding guidelines before publication. He said this makes it difficult to assess whether the carbon contracts work as presented by the BMWK.

Barely utilized energy storage systems raise the cost of China’s energy transition

By

Nico Beckert

Over the past year, China built more solar plants (217 gigawatts of new capacity) than the United States installed solar power plants (175 GW). However, the Chinese boom highlights the design flaws of the national energy system. According to some energy sector managers, China will have to significantly curtail wind and solar power production this year compared to previous years.

In theory, an overproduction of renewables could be balanced out quite well through electricity trading: If the wind is very strong in the country’s west, the electricity could be consumed in the industrial hubs in the east. However, many Chinese provinces reject importing electricity from their neighbors. Reforms to the inflexible electricity market have been delayed for 20 years. Instead, massive amounts of energy storage are now being built to reduce the curtailment of renewables, meaning that fewer solar and wind power plants have to be switched off if they generate too much electricity overall. But this makes the energy transition more expensive. And these storage facilities have hardly been used so far, meaning they hardly fulfill their purpose.

The US and the EU require less storage

“The massive expansion of energy storage is a very costly approach” for connecting more renewables to the Chinese grid, Anders Hove, researcher at the Oxford Institute for Energy Studies, told Table.Briefings. In 2023, China increased its energy storage capacity by 45 percent. A total of 86.5 gigawatts of pumped storage power plants and batteries are now in place. Although a decarbonized energy system requires storage, excessive storage makes the energy transition unnecessarily costly.

According to Hove, improving electricity trading across provincial borders would be a cheaper option. However, the provinces have so far tended to rely on their own electricity supply and are reluctant to rely on neighboring provinces. On top of this, there are economic considerations: State-owned power plant operators prefer to use coal from their own province rather than green electricity from their neighbors. This secures jobs in their power plants and mines.

Hove also points to the EU and the United States. They require less storage because they prioritize “well-functioning electricity markets and the power grid expansion.” Although China is also investing heavily in its power grid, its rigid electricity trading system poses a significant challenge for the energy transition.

Government regulations drive storage expansion

Government regulations are driving the expansion of electricity storage. Since 2020, 23 of the 34 Chinese provinces have mandated their construction when new, extensive wind and solar plants (“utility-scale”) are built. The project developers – often grid operators and energy companies – are required to install energy storage systems with a capacity of 10 to 20 percent of the newly constructed renewable energy capacity. The problem: There is no actual business model for energy storage systems. Between 2019 and 2021, investment in storage declined as grid operators were not allowed to pass on the costs of building storage systems to their customers. Investments only increased again after the government announced price reforms.

However, there is still no functioning business model. Analysts from the consultancy Trivium China write that the rates for electricity from storage systems are too low, meaning that storage systems are hardly profitable.

Many energy storage systems are hardly used

The lack of a business model means that the capacity of existing storage facilities is not being utilized. “The current utilization of energy storage in the grid is only 27 to 32 percent of the intended hours,” said Kevin Shang, an energy storage technology and renewables analyst at energy consultancy Wood Mackenzie. The financial returns are low, Shang told Table.Briefings. The low storage utilization undermines its purpose of supplying the grid with more flexibility.

Moreover, 10 to 20 percent of the energy is lost during storage and subsequent “emptying,” says Anders Hove. As long as no price mechanism compensates producers for this loss, storage is a worse business model than selling the electricity directly. Hove criticizes: Passing on the costs of the inefficiency of the Chinese electricity system “to renewables – either through higher curtailment or mandatory storage – increases the cost of the energy transition” in China.

There is a small ray of hope for the industry: Batteries and energy storage systems are expected to become even cheaper in 2024. Heavy investment by battery manufacturers has led to overcapacity. “Cheap and plentiful batteries, mostly LFP-type from China, will be widely available,” writes an analyst on X.

Climate in Numbers: Companies neglect the risk of climate lawsuits

Climate lawsuits are on the rise and could much more frequently be used as a tool for more climate action. “If the risks of climate change increase” and “the evidence for climate change continues to develop,” the number of climate lawsuits is also likely to increase, a study published in Science states. The authors recommend that companies’ risk assessments take this into account more than they have in the past.

When assessing the financial risks of climate change for their own business, companies have so far tended to base their estimates on physical risks – such as crop failures or supply chain disruptions due to weather disasters. Or on the basis of transition risks due to the shift to a greener economy. As the article shows, they continue to neglect the risk of climate-related litigation.

The Science study counted more than 2,485 climate lawsuits in 52 national jurisdictions worldwide, most in the United States. Although most are filed against governments, climate lawsuits against companies are on the rise. Their aim can be to oblige companies to reduce emissions, and they are not only directed against oil, coal, or gas companies. For example, the environmental organization Milieudefensie sued ING Diba in the Netherlands in January for “not doing enough and continues to emit too much greenhouse gases.” The bank responded that its activities would simply reflect the global economy. In the past, Dutch climate lawsuits – be it against the government or companies such as Shell – have often served as a precedent for lawsuits in other countries. ae

Methane emissions are almost at record levels despite industry pledges

Methane emissions from the energy sector remain at a very high level – despite various pledges by the oil and gas industry to fix leaks and replace leaking infrastructure. This is according to a new report published by the International Energy Agency (IEA) on Wednesday. The production and use of fossil fuels released 118 million tons of methane into the atmosphere last year – a slight increase over 2022. In the record year of 2019, the figure was 119 million tons. The number of large methane leaks from leaky fossil fuel infrastructure increased by 50 percent in 2023 compared to the previous year.

At last year’s climate summit (COP28) in Dubai, 50 oil and gas companies joined forces to form the Oil and Gas Decarbonization Charter. The charter aims to reduce oil and gas companies’ methane emissions to “almost zero” and end the routine flaring of gas. In recent years, numerous companies had already pledged to voluntarily reduce methane emissions. NGOs criticize these initiatives for being too slow in reducing methane emissions and lacking strict monitoring measures.

Hope for satellites, USA with high emissions

Satellite technology will soon be used to better detect and monitor methane leaks. The MethaneSAT satellite was launched into orbit at the beginning of March. It will provide more detailed data and have a much larger visual range than previous methane detection satellites. “2024 is going to be a watershed moment for action and transparency on methane,” said Christophe McGlade, head of energy supply for the IEA.

A recent Nature study shows just how important the precise recording and measurement of methane leaks is. It shows that almost three percent of the gas extracted in six US production regions is leaking – three times more than the US government had previously assumed. The measurements for the study were taken in 2020 and 2021. This was before the adoption of the Global Methane Pledge, with which over 155 member states aim to cut methane emissions by 30 percent by 2030. nib/rtr

German asset managers invest 28 billion US dollars in climate-damaging companies

Despite promises to the contrary, the four largest German fund companies have still invested billions of US dollars in fossil fuel companies. This is the conclusion of a recent report by the NGO Greenpeace. For instance, German asset management companies continue to invest money in coal companies with no phase-out plans and retain investments in oil and gas companies that want to expand their production.

DWS, Allianz Global, Deka and Union Investment manage a combined total of more than two trillion US dollars and, as part of the Net Zero Asset Managers Initiative, have committed to contributing to meeting the 1.5 degree target. However, Greenpeace reports that the asset managers still hold 28 billion US dollars in investments in climate-damaging companies. This is three billion US dollars less than in 2022. According to Greenpeace, however, the reduction is not a result of the climate ambitions of asset managers. Rather, this withdrawal of investments was motivated by financial reasons. The analysis is based on the “Investing in Climate Chaos” database.

The report states that the asset manager DWS, a subsidiary of Deutsche Bank, holds the majority of dirty investments with 16.8 billion US dollars in fossil fuel companies. By contrast, Union Investment has the smallest holding in coal companies, which can be interpreted as a success of its comparatively strict investment guidelines. In January, the European Central Bank (ECB) had already analyzed that nine out of ten banks do not make their investments in accordance with the Paris Agreement. kul

Many companies have no plans to reduce air travel

271 out of 328 multinational companies have no plans to reduce the carbon emissions caused by their employees’ air travel. This is the finding of an analysis by the European NGO Transport & Environment. 25 companies without specific targets caused over a third of all company emissions in the ranking.

Therefore, the NGO calls on governments to set mandatory targets for companies to reduce emissions from business travel. Furthermore, they should be obliged to disclose the climate impact of travel and formulate corresponding emission reduction targets in their transformation plans.

The analysis found that 57 companies have committed to reducing their greenhouse gas emissions, 45 of them with a specific target, and 12 specifically related to air travel. However, only five companies received the highest score: They disclosed their flight emissions and strive to cut them by 50 percent or more by 2025. nh

Report sees right to climate protest in Germany ‘impaired’

For the first time, the exercise of fundamental rights, such as freedom of assembly, freedom of association, and freedom of expression in Germany is “impaired.” This is the conclusion of the Atlas of Civil Society published on Wednesday by the Protestant aid organization Bread for the World. Previous editions of the atlas had rated Germany as an “open society.”

One reason for the downgrade is the “disproportionately harsh treatment of some climate protests.” For example, members of the “Last Generation” were in some cases subjected to “long, human rights controversial preventive detention,” and courts had imposed prison sentences without parole. Another reason is that “media professionals […] were insufficiently protected from violence at demonstrations”.

Seven countries downgraded

Germany is one of seven countries that were downgraded in the current report. In contrast, the rating has improved in five countries, four of which are in Africa.

According to the report:

2.1 percent of people live in open societies (e.g. Austria, Switzerland)
12.1 percent in countries where the scope of action for civil society is impaired (e.g. Germany, USA)
14.8 percent in countries with limited scope (including Brazil and the UK)
40.3 percent in countries with repressed scope for action (e.g. Ethiopia, Turkey)
30.6 percent in countries with no scope for civil society action (including Azerbaijan, China and Russia)

The atlas reports that civil society is coming under increasing pressure worldwide. Environmental activism can even be deadly: According to the NGO Global Witness, whose data Bread for the World refers to in the atlas, 177 environmentalists were murdered worldwide in 2022 – mainly in Latin America. Data for 2023 is not yet available. More than a third of the murder victims were indigenous people. The crimes often remain unsolved. lb

Climate risks: EU Commission wants clarity on responsibilities

The EU Commission presented a strategy on Tuesday to address the problems of Europe’s poor climate resilience. It is responding to the report published on Monday by the European Environment Agency (EEA) regarding increasing climate risks in Europe. In its communication, it identifies the following areas for action:

Strengthen governance: Member states are to identify and ensure “that risk owners at national level have necessary capabilities and resources to manage climate risks.”
Structural policy measures: Climate risks are to be better coordinated across sectors and incorporated into strategies, such as spatial planning, the construction of new infrastructure, disaster management, and solidarity mechanisms at the EU level.
Funding climate resilience: The Commission wants to provide financial support to member states in order to minimize climate risks. Industry and public and private financial institutions are to form a working group to work out funding options.

Poor implementation in the member states

In particular, the responsibilities for minimizing climate risks appear to be unclear. The Commission wants to examine the responsibilities between the EU and member states, as these vary depending on the policy area. For example, the Commission notes flaws in implementation among the Member States. It calls for improvements and specifically “to fully implement the existing commitments on adaptation.” luk

CLIMATE.TABLE EDITORIAL OFFICE

Bernhard
Pötter

Alexandra
Endres

Christiane
Kühl

Lisa
Kuner

Lukas
Knigge

Malte
Kreutzfeldt

Nico
Beckert

Germany safeguards green transition + Energy storage systems make China&#8217;s energy transition more expensive + Methane emissions increased in 2023

Feature

Carbon contracts: Germany takes on an ambitious pioneering role

Safeguarding companies

Germany as a pioneer in the EU

CDU criticizes the government’s lack of coordination

Barely utilized energy storage systems raise the cost of China’s energy transition

The US and the EU require less storage

Government regulations drive storage expansion

Many energy storage systems are hardly used

Events

News

Climate in Numbers: Companies neglect the risk of climate lawsuits

Methane emissions are almost at record levels despite industry pledges

Hope for satellites, USA with high emissions

German asset managers invest 28 billion US dollars in climate-damaging companies

Many companies have no plans to reduce air travel

Report sees right to climate protest in Germany ‘impaired’

Seven countries downgraded

Climate risks: EU Commission wants clarity on responsibilities

Poor implementation in the member states

Climate.Table editorial team

CLIMATE.TABLE EDITORIAL OFFICE

Feature

Carbon contracts: Germany takes on an ambitious pioneering role

Safeguarding companies

Germany as a pioneer in the EU

CDU criticizes the government’s lack of coordination

Barely utilized energy storage systems raise the cost of China’s energy transition

The US and the EU require less storage

Government regulations drive storage expansion

Many energy storage systems are hardly used

Events

News

Climate in Numbers: Companies neglect the risk of climate lawsuits

Methane emissions are almost at record levels despite industry pledges

Hope for satellites, USA with high emissions

German asset managers invest 28 billion US dollars in climate-damaging companies

Many companies have no plans to reduce air travel

Report sees right to climate protest in Germany ‘impaired’

Seven countries downgraded

Climate risks: EU Commission wants clarity on responsibilities

Poor implementation in the member states

Climate.Table editorial team

CLIMATE.TABLE EDITORIAL OFFICE

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