Why soaring clean energy capacity isn't flowing to energy stocks yet
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As record heat waves kill people across the U.S. and Europe this summer and stall economic growth as outside workers can’t do their jobs, one silver lining is that clean energy usage is surging as electric grids seek to keep the air conditioning on.
Growing solar and wind energy surpassed nuclear energy as the largest forms of renewable energy in the U.S. for the first time in the first six months of this year, according to Ember, and are on pace for a new record in 2024, up some 30% and 10% respectively.
But you wouldn’t know it from many solar and wind stocks and ETFs, which have not participated much in the Wall Street rally as their companies remain mired in borrowing and fund-raising dilemmas caused by stubbornly high interest rates.
Shares of some companies, such as NextEra Energy NEE 0.00%↑, First Solar FSLR 0.00%↑ and new-issue darling GE Vernova GEV 0.00%↑ have started to reflect growing clean energy use. But others, such as Enphase ENPH 0.00%↑ and Sunpower SPWR 0.00%↑, and ETFs such as Invesco Solar and iShares Global Clean Energy remain depressed for the year.
All of which points to the narrow breadth of the stock market this year, where big tech and AI-related stocks have soared while the rest of the market still waits for lower rates to stimulate spending and borrowing.
But there may be one benefit to the extreme heat, at least for climate activists seeking to speed the clean energy transition from fossil fuels. It reportedly is so hot in some places that some oil refineries are nearing levels where they can no longer actually refine). How’s that for schadenfreude?
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How Trump could gut Biden’s climate law; why Utah holds the key
. . . . Supporters of President Joe Biden’s Inflation Reduction Act, which has pumped tens of billions of dollars into clean energy projects in the past two years, are fearful that climate law could become one of the early victims of a second Trump term, writes Bill Sternberg. While he can be expected to use executive actions to maim the law and not hire enough staff to continue managing it, Trump will probably not be able to wipe it out, in part because the business lobby that supports him also supports the investments. For political climate watchers, it may all come down to a specific Senate race in Utah on election night.
Thursday’s subscriber insights
Tesla bears won’t find relief in market share numbers
. . . . For Tesla investors, this week’s news that its U.S. market share of electric vehicles had finally fallen below the 50% threshold was a long time coming and more of an excuse to look for dips to buy than anything else. Tesla shares rose both Tuesday, when Cox Automotive released its market share numbers, and Wednesday, when they appeared across the media.
Tesla’s news last week that deliveries were down in the second quarter was also greeted with enthusiasm, as shares rose 10% in a day, mostly on excitement that while down year to year, they were up 15% quarter to quarter. After a 40% decline through June, Tesla was ready for a recovery, and neither the delivery or market share numbers were enough to stop it.
That suggests the worst may be behind the U.S. EV industry, which Cox said is up about 11% so far this year, as more and more brands compete with Tesla on range, on design, and importantly, on price. With the U.S. economy slowing down, all auto sales will be scrutinized more closely for signs consumers are pulling back. So far, at least with regards to EVs, it’s a growth story again. . . .
Gates admits delay to 2050 net zero plans; BYD in Turkey; and the coming fight to restart Three Mile Island
. . . . Bill Gates is one of the biggest, if not the biggest, champions of fighting climate change with renewable energy in the tech universe. We tend to read everything he says, including a recent interview in the Financial Times about AI energy usage.
The Microsoft founder, who has invested billions in fighting global warming and is a huge proponent of nuclear energy, was defending the surging electricity consumption of Big Tech data centers, arguing essentially that AI development will someday pay for itself with new technology. A common refrain from Silicon Valley.
It wasn’t until the last paragraph of the interview that Gates — in our opinion — made news. Gates said that while green energy is surging, the amount of electricity eventually needed to feed the data centers and everything else means the world’s timetable for net zero emissions in 2050 will have to be set back — by 10 to 15 years! File under “buried the lead”.
. . . . Speaking of nuclear energy, the rising demand for more energy from everywhere to feed the AI beast has reached the inevitable point where someone has suggested restarting the infamous nuclear power plant on Three Mile Island. Constellation Energy CEO Joe Dominguez told the Washington Post this week that his team believes the long dormant plant in Pennsylvania is in good enough shape to be restarted if energy demands required it, although it would likely take several years.
This is only one of several conversations going on about how to restart the U.S. nuclear power program and develop it as part of a new era in clean energy. Presumably some updated equipment would be needed for this one, though.
. . . . Well, that was easy. Three days after the European Union doubled tariffs on Chinese electric vehicles to more than 37%, Turkey announced that China’s leading EV maker, BYD, will build a $1 billion auto plant there to produce as many as 150,000 BYD electric vehicles a year, according to CNN.
Because Turkey is in the customs union with the EU, that means it should be able to skirt the tariffs all together. And just to be safe, BYD has already announced it plans to build a plant in Hungary, and for our U.S. audience, Mexico. They’re coming.
Editor’s picks: Secure sources of critical minerals'; plus,
Watch the video: Critical minerals, like copper and lithium, are key ingredients for many clean energy technologies. In this video, the IEA’s Tae-Yoon Kim, K.C Michaels, Amrita Dasgupta and Eric Buisson discuss what these minerals are, why they’re needed and the risks that supply disruptions pose to the clean energy transition.
Houston still in the dark after Beryl
It’ll take days longer to get power back to more than a million people in the Houston area after Hurricane Beryl made landfall in Texas on Monday. Houston utility CenterPoint Energy CNP 0.00%↑ said it has restored power to about one million of the 2.26 million affected customers. But many remain without air conditioning in deadly hot weather. According to a report from The Associated Press, the slow pace of restoring power in America’s fourth-largest city has put CenterPoint Energy under increasing scrutiny over whether it was sufficiently prepared before the storm. Officials said this week that 11 people died in the greater Houston area as the result of storm-related incidents, including a security officer who drowned when his car was submerged in floodwaters.
Latest findings: New research, studies and projects
Get the message out
Climate change communication campaigns can reach many audiences cost-effectively, say the authors of a recent paper titled Climate Change Messages Can Promote Support for Climate Action Globally. According to the abstract, an online experiment across 23 countries found that three climate messages had modest positive effects on support for climate action. An “Urgency & Generational” message had the strongest effect overall and had, on average, stronger effects in countries with lower baseline support for climate action (e.g., developed countries, democratic countries). While the size of this message’s positive effects varied across countries, effects were positive across all audience subgroups investigated and there was no evidence of backfire effects. For instance, this message had positive effects across the political spectrum and effects were marginally stronger among the political right. Although message effects were small, on average, the results indicate that climate change messages have the potential to strengthen public support for climate action when deployed at a large scale. Authors: Matthew Ballew, Laura Thomas-Walters, Matthew Goldberg, Marija Verner, Seth A. Rosenthal, Anthony Leiserowitz, all of Yale University; Jessica Lu and John Marshall.
More of the latest research:
Words to live by . . . .
“Even if you never have the chance to see or touch the ocean, the ocean touches you with every breath you take, every drop of water you drink, every bite you consume. Everyone, everywhere is inextricably connected to and utterly dependent upon the existence of the sea.” — Dr. Sylvia Earle, American marine biologist, oceanographer, explorer, author, and lecturer.