Energy Transition Digest: 11-24 November 2024

1. COP29 Delivered Finance and Carbon Market Deals

Negotiations at COP29 ended with agreements on climate finance support to developing countries and the rules of global carbon trading.

So what? Despite the harsh disagreements during the talks and widely shared discontent about the COP results, it delivered the final deals, so the negotiation approach still works. However, the world is still not on track to meet the Paris Agreement targets, and implementation needs to happen much faster.

Details:

• High-income countries will provide at least $300bn annually by 2035 through various forms of public finance, and the agreement aims to unlock $1.3tn annually from private finance.
• Many stakeholders are disappointed by the deal, as the agreed amount is lower than the estimated climate finance requirements of developing countries, and a higher share of grants (vs. market-based financing mechanism) was expected.
• Countries also reached a deal on the rules of Article 6 of the Paris Agreement, regulating the international trade and accounting of carbon credits.

2. Russia Bans Uranium Exports to the US

Russia introduced a temporary ban on enriched uranium exports to the USA.

So what? Russia’s decision is a response to the US ban on uranium imports from Russia, which was introduced earlier this year. It could cause challenges for American nuclear power plants, as some depend on Russian supplies, and add upward pressure on uranium prices as the market reshuffles.

Details:

• The U.S. banned imports of Russian low-enriched uranium (LEU) in May 2024, with limited waivers allowed until 2028.
• In the US, Centrus Energy Corp. was buying uranium from Tenex, a Rosatom subsidiary. The new export ban, in effect until the end of 2025, might impact its customer deliveries.
• Russian uranium accounted for 12% of the fuel used by US nuclear power plants in 2023. Utilities might still adjust by getting supplies through third countries or under swap deals.
• Natural uranium prices rose slightly, and Centrus Energy's stock fell about 10% on the news.

3. European Battery Maker Northvolt Files for Bankruptcy

Northvolt , the most advanced European battery producer, filed for bankruptcy in the US.

So what? Northvolt’s bankruptcy filing follows unsuccessful attempts to secure additional funding, leaving the company with only a week’s worth of cash for operations. It's an example of the challenges European companies face in scaling battery manufacturing amid tough competition from established Asian firms and lower-than-expected EV demand.

Details:

• Northvolt reported having about $30 million in available cash and $5.8 billion in debt at the time of the filing.
• The company has secured $100 million in debtor-in-possession financing from Scania Group , a key customer, to maintain operations during the restructuring process.
• Northvolt operates in six countries, including Sweden, Poland, and the U.S., and employs approximately 6,600 people.

4. EU Introduces Carbon Removal Certification Framework

The EU legislators approved the certification framework for permanent carbon removals.

So what? The regulatory framework aims to standardize and promote high-quality carbon removal initiatives to support decarbonization targets. It should enhance transparency, counter greenwashing, and enable the financing of projects in voluntary carbon markets.

Details:

• The framework introduces a voluntary certification system to quantify, monitor, and verify carbon removal activities, including industrial technologies like Direct Air Capture and natural solutions such as reforestation.
• To qualify for certification, projects must demonstrate measurable benefits, additionality beyond existing obligations, the long-term nature of carbon storage, and adherence to sustainability criteria.
• Independent third-party bodies will verify eligible activities, and an EU-wide electronic registry will be established within four years.

5. Ukraine Launches Fund to Enable Energy Investments

Ukraine launched the Commercial Risk Guarantee Fund to boost investments in renewables.

So what? Ukraine needs to rebuild its energy infrastructure damaged by Russian bombings. The new fund aims to mitigate market risks and ensure price stability for investors, enabling funding for clean energy projects that will help the country's recovery and energy security.

Details:

? The war has caused severe damage to Ukraine's energy infrastructure, with 9 GW of capacity destroyed and 18 GW occupied. Renewable energy is prioritized for its cost-effectiveness, safety, and rapid deployment.

? The new fund, presented by the European-Ukrainian Energy Agency , guarantees a minimum price for electricity offtake to help finance renewable energy projects.

? Ukraine aims to double its renewable energy capacity from 10 GW to 20 GW by 2029, with support from international partnerships and private investments.

Other news headlines:

• European Commission published the 2024 report on the functioning of EU ETS.
• Donald Trump nominated Chris Wright for the Energy Secretary position.
• Six countries joined the pledge to triple nuclear power capacity by 2050.