I wrote a summary for Pictet Asset Management of what I thought were the most interesting stories from my newsletter over the past couple of months. The text is below and on the Pictet web site

From introducing a new breed of trees to the UK to help absorb carbon to powering planes with hydrogen, here is a round-up of some of the most interesting climate change-related stories from the past month.

1. Synthetic fuels for aviation. Several ventures have announced the location for their first synthetic fuel plants, principally making aviation kerosene. These will all need CO2 and green hydrogen. In Norway, Norsk eFuels and direct air capture specialist Climeworks said they would build a refinery in the north of the country where electricity is abundant, allowing green hydrogen to be created and CO2 to be captured inexpensively. The Dunkerque plant of ArcelorMittal will host a factory for Engie and the US start-up Infinium to make fuels from hydrogen and steelworks CO2. Near Porto, Veolia and its partners will build a plant using carbon dioxide from municipal waste. Sasol and Engie joined with German pioneer Ineratec to make fuels in Frankfurt using the CO2 in agricultural biogas.

2. Carbon sequestration in trees. A crowdfunding site in the UK is raising the money for the conversion of a 200 hectare portion of a large arable estate with deteriorating soil quality into woodland growing paulownia, a fast-growing Asian hardwood. This will be the first such plantation in the country. The German plant nursery supplying the sterile and non-invasive young trees says that paulownia will sequester carbon in many soils at ten times the rate of native oaks. The timber can be employed in a wide variety of non-structural uses such as furniture. The UK is the least forested large country in Europe and has struggled to increase the rate of tree planting. Paulownia hardwood may make the task of converting degraded arable land into productive forest much easier.

3. ‘Dispatchable’ green electricity. Solar and wind are intermittent. The first renewable sites are planned which will use hydrogen generated from surplus electricity to provide power when wind and sun are not available. Two are being developed by consortia linked to Hydrogène de France. One is in the French territory of Guiana and the other on the island of Barbados. In both places, night-time power will be provided by a fuel cell that uses hydrogen made from electricity from the previous day.

4. Heat pump sales. Decarbonisation of high latitude countries, in Northern Europe for example, depends on finding alternatives to natural gas for domestic and commercial heating. Heat pumps will provide a large part of the answer, converting low carbon electricity into over three times as much heat for buildings. Across Europe, sales have begun to increase very sharply in recent years. In 2021, volumes rose by a quarter and now account for over 25 per cent of all heating installations. Individual markets saw much faster growth. For example, numbers in France and Poland rose by 52 per cent and 66 per cent, respectively.

5. Steel made using hydrogen. One of the world’s largest steel producers, ArcelorMittal, started the long process of switching to hydrogen as a replacement for coal. Within the last few months it has obtained major subsidies in France, Spain and Canada to speed up the transition away from blast furnaces and towards hydrogen direct reduction. (France alone provides about 14 per cent of ArcelorMittal’s global steel output.) Recent moves by major European steelmakers - and Asian manufacturers such as Posco - towards the use of direct reduction have been encouraged by growing evidence of strong demand for green steel from major customers, such as car companies. BMW, for example, recently said that it wanted 40 per cent of its steel to come from low carbon sources by 2030.

6. Chemical recycling. The small percentage of plastic that is recycled is almost invariably treated mechanically, for example by cutting it into small pieces. The resulting product can usually only be used in lower value applications. But chemical recycling breaks down the polymers in plastic, recreating the original monomers. The plastic can then be remade with no loss of quality and can be used to make the original products. Two large projects were announced in France. One, led by the US chemical recycling leader Eastman, will recycle polyester in what will be the world’s largest plastics reprocessing plant. The second will use technology developed by French pioneer Carbios to use enzymes to break down PET. These are early but important steps towards building a fully circular plastics economy. The long-term implications for the oil refining business, which sees plastics as its biggest source of future growth, have not yet been fully calculated.

7. Taking responsibility for supply chain emissions. Large corporations are putting increasing pressure on their suppliers to reduce emissions. These businesses are aware that getting to zero carbon in their own operations (‘Scope 1’ and ‘Scope 2’) means nothing if large greenhouse gas emissions result from their supply chain or from customer use (‘Scope 3’). International brewer Guinness started a programme that will result in more carbon being retained in the soils of barley suppliers in Ireland. My rough estimate is that this programme of ‘regenerative agriculture’ might offset one sixth of its total supply chain emissions. Drug company AstraZeneca says that its Scope 3 emissions are 20 times those caused by its own operations. A surprisingly large part of AstraZeneca’s wider carbon footprint arises from the propellant gases used in inhalers for asthma and lung diseases. AstraZeneca finally announced a near-zero carbon replacement.

8. Fossil fuels out of favour. I picked up three very different decisions to cease working with high carbon companies. Danish bank Nordea said it would stop lending to offshore oil. COWI, an international engineering consultancy, said it will take on no more projects for fossil fuel companies. And Eastern Pacific Shipping, a large operator of vessels transporting bulk commodities, promised it would no longer ship coal. Software billionaire Mike Cannon-Brookes took the opposite line, bidding with a Canadian investment fund to buy AGL, a large Australian utility. His purpose is to increase the speed of AGL’s move away from using coal for power generation while raising the growth rate of renewable capacity.

9. Metals shortages. The respected energy commentator David Roberts addressed whether inflation in ‘green materials’ was likely to continue. He concluded that concerns over long-run availability of metals and other raw materials for the energy transition were not warranted. Prices should eventually stabilise. Nevertheless David Roberts also stressed that most minerals are mined and processed in a small number of countries, making future supply chain problems highly likely.

10. The growth of hydrogen. Leading electrolyser manufacturer NEL produced its results for the final quarter of 2021. Among the many interesting numbers it said that its sales pipeline had doubled to 22 gigawatts during the course of that single 3 month period. The total installed volume of electrolysers for making clean hydrogen in the world today is probably less than 1 gigawatt. The growing interest in hydrogen is often still dismissed as ‘hype’. Not so; NEL and other manufacturers are showing that hydrogen will have a large role in world energy.