Energy Transition Digest: 10-16 June 2024

1. EU Introduces Tariffs on Chinese EVs

European Commission announced 17.4%-38.1% customs duties on EVs from China.

So what? Despite experts saying the tariffs are lower than expected, Beijing is likely to retaliate, which might lead to a trade war. China already signaled it might target the EU's aviation and agricultural exports as a counter-measure.

Details:

• EU tariffs will be differentiated: 17.4% on BYD, 20% on GEELY, 38.1% on SAIC Motor, and 21% on others. Tesla may also get an individual rate "following a substantiated request".
• Tariffs will apply from July 4 "should discussions with Chinese authorities not lead to an effective solution."
• German car industry association opposed the decision, saying it was the wrong instrument and would slow down the mobility transition.

2. Kyrgyzstan Lifts Uranium Mining Ban

The Parliament of Kyrgyzstan reversed the ban on the exploration and mining of uranium and thorium deposits that had existed since 2019.

So what? The uranium market is expected to enter a structural deficit as new projects drive demand, while supply can't catch up as fast. This situation is further complicated by production interruptions in Kazakhstan and the US ban on importing Russian uranium fuel. New volumes from Kyrgyzstan can contribute to balancing the market, albeit not overnight.

Details:

• The ban on the development of?uranium and thorium deposits in Kyrgyzstan was introduced in 2019, following protests against the exploration works at the Tash-Bulak uranium deposit.
• Uranium was mined in Kyrgyzstan during Soviet times between 1947 and 1968. In 1958, radioactive tailings were washed into the river in Mailu-Suu town because of a tailings dam collapse. This negative legacy impacts today's public perception of uranium mining.
• 18 exploration licenses were issued before the ban was introduced.

3. The Netherlands Allocates 4 GW of Offshore Wind

The Dutch government completed the tender for the IJmunden Ver Alpha and Beta wind farm zones in the North Sea, which will host at least 4 GW of offshore wind capacity.

So what? Offshore wind development in the Netherlands is going full speed ahead. It is likely to be the backbone of the country's decarbonization – under the new coalition agreement, the new government should prioritize offshore wind before other types of renewable generation. Besides, Dutch offshore wind tenders use innovative non-financial selection criteria and keep attracting new investors to the market.

Details:

• "Noordzeker," a consortium of SSE Renewables , Pensioenfonds ABP , and APG , secured a development license for a 2 GW IJmunden Ver Alpha with an obligation to make a positive contribution to the North Sea ecosystem.
• "Zeevonk", a JV of Vattenfall and Copenhagen Infrastructure Partners , received a permit for IJmunden Ver Beta – a 2 GW project that will include a 50 MW floating offshore solar farm and a large-scale electrolyzer to produce green hydrogen in the Port of Rotterdam .
• Each project will be subsidy-free and is planned for completion by 2029.

4. China Pushes Industrial Emission Reduction

Chinese central planning body published detailed emission reduction plans for heavy industries: iron & steel, cement, oil refining, and synthetic ammonia.

So what? Given China's state-level targets to peak emissions by 2030, the pressure on key polluting industries is on. We might soon see new sectors added to the national emissions trading system that currently only covers power generation.

Details:

• Targets for steel: -2% energy intensity for the BF-BOF route, and -1% for the EAF route in 2025 vs. 2023; -53 Mt CO2 emission reduction by 2025; significant improvements in energy efficiency and carbon intensity by 2030; development of low-carbon steelmaking.
• Targets for cement: clinker production will be capped at 1.8bn tons by 2025; energy efficiency benchmark will be set, with 30% of capacity required to be above that level; -13 Mt CO2 emission reduction by 2025; energy efficiency to reach international level by 2030.