Solar prices on the rise; plus why the Middle East needs to change its oil bet
Welcome to Callaway Climate Insights. Unlike everything else, our rates aren't rising. Please consider a 30-day free trial.
The National Weather Service says dangerous heat will affect much of the western U.S. this week, with temperatures up to 120°F. Forecasters say this heat wave will be record-breaking, not only for the high temps, but also for how long it will last.
Tucked into a new solar industry report today about energy capacity doubling in the past three-and-half years were the first hints of how this spring’s inflation scare is starting to raise costs on solar supply chains.
The Solar Energy Industries Association and Wood Mackenzie said that while prices were generally stable from the fourth quarter to the first quarter of this year, supply constraints of key materials such as polysilicon, steel, copper and other metals began to hit solar installers near the end of March and are expected to impact prices for several quarters to come.
“There is a lag between commodity prices and subsequent solar system prices,” said Michelle Davis, the report’s main author. “Installers are managing current equipment shortages and deciding whether to renegotiate contracts.”
It was only a matter of time before the falling solar and wind prices that have made renewable energy so enticing in the past five years ran headlong into rising prices that have hit almost every industry since the world began emerging from the pandemic. This morning’s Producer Price Index in the U.S., which measures prices at the wholesale level, was reported to have climbed at the fastest rate in 11 years in May, generally depressing financial markets.
What’s worse, oil prices rising to above $71 a barrel on Monday have started to generate discussion — amplified by The Wall Street Journal — that the push among fossil fuel investors to transition Big Oil to renewable energy might lead to a global shortage. Just as energy demand peaks this summer, for example, in the heat-ravaged Western United States.
The transition was always going to happen in phases, and prices and supply constraints are part of the equation. To move to renewable energy from oil and gas, renewable energy must be significantly cheaper, as well as benefit the environment. Governments fighting over taxing oil and carbon on the supply side need to focus now on ways to increase demand to stop the pendulum swinging too far.
More insights below. . . .
Don’t forget to contact me directly if you have suggestions or ideas at email@example.com.
Book review: Fighting the deserts; how the Middle East could become a solar superpower
. . . . No region is more threatened by climate change than the Middle East, where rising heat will make it more uninhabitable and changing oil demand threatens the fortunes of many countries. But there is a way to fight the desert, and Jack Hamilton examines one such argument in his review of The Power of Deserts, by Dan Rabinowitz. Hamilton mixes his own recollections of reporting in the Middle East with the author’s description of where climate is taking the region, and a controversial call for oil rulers to think big and lead the switch to solar power vs. fighting it. . . .
Tuesday’s subscriber insights: As sun bakes U.S. southwest, prospects for a new Dust Bowl migration grow
. . . . Searing heat in the U.S. Southwest this month, with temperatures in triple digits most days, and wildfires a constant threat, will soon start to shift moving patterns among Americans in what could be a new Dust Bowl migration. Minnesota, anybody? Read more here. . . .
. . . . Big tech is leading the call for more climate disclosure from companies at the federal regulatory level, which is either a welcome exercise in leadership from one the most important American industries, or a cynical grab for green credentials. Read more here. . . .
Editor’s picks: Flying taxis, PwC launches sustainability program
Where’s my flying car?
Flying taxis are one step, er, flap, closer to liftoff, as airlines and aerospace companies are lining up to invest, Bloomberg reports. The UK’s Vertical Aerospace Group reportedly has conditional orders for as many as a thousand aircraft, resulting in $4 billion buys from American Airlines (AA) and Virgin Atlantic. The report notes Brazil’s Embraer SA is in talks to merge its unit developing electric vertical takeoff and landing aircraft (eVTOL) into a public company, and Archer Aviation in California got $20 million from United Airlines Holdings, which could buy up to 200 of Archer’s eVTOL.
PwC launches new sustainability program
Professional services giant PwC is launching a new global strategy it’s calling The New Equation, placing increased emphasis on areas including action on climate change and ESG, ESG Today reports. In a statement, PwC Bob Moritz, chair of the PwC International Network, said, "The profound changes in the world mean that our clients can only succeed by creating a virtuous circle between earning trust and delivering sustained outcomes. By bringing our unique combination of capabilities together we can help them do that, unlocking value for their shareholders, stakeholders and wider society." ESG Today says that as part of the new strategy, PwC plans to invest $12 billion over the next five years, creating over 100,000 net new jobs, with ESG one of the key focus areas for investment. PwC’s ESG investments will include expanding Centres of Excellence for specialists on key ESG topics, including climate risk and supply chain.
EPA to reinstate pollution advisory board
The Environmental Protection Agency is going to reinstate an advisory board focusing on air pollution which had been disbanded under the Trump administration, The Hill reports. EPA spokesperson Tim Carroll said in an email to The Hill that the EPA’s Science Advisory Board will seek nominations for the Particulate Matter Review Panel. Former EPA Administrator Andrew Wheeler disbanded the panel, made up of scientists who are considered experts on particulate matter, in 2018. The Hill also notes the news follows an EPA announcement it will review the Trump administration’s decision not to tighten air quality standards for particulate matter.
This week in wildfires
. . . . As of June 15, the Fire Information for Resource Management System reported five new large incidents in the U.S. and Canada, two large fires contained, and 20 large fires uncontained. In the southwest, eight new fires were reported, and there were nine large fires uncontained. The Telegraph and Mescal fires east of Phoenix, seen in the satellite imagery above, are still burning. For the Telegraph fire, officials say its fire behavior is “extreme,” numerous structures are threatened, and evacuations, area, road and trail closures are in effect. Across the nation, the National Interagency Coordination Center reports as of Wednesday morning, more than 345,500 acres had burned. . . .