Turbocharging the US clean energy job market

Two things to start: First, energy-related CO2 emissions will rise again this year at almost record pace, erasing most of the pandemic-induced decline in 2020, according to the International Energy Agency. Soaring coal consumption is the driver.

Second, ExxonMobil and EQT added their names to the list of oil and gas companies offering support for the US government’s campaign to drive down emissions.

It’s no surprise that both those bits of news came just ahead of the international climate summit Joe Biden is hosting this week. This will dominate energy-related headlines over the coming days as the administration, corporations and NGOs tell everyone how they are doing their part.

Welcome to another Energy Source. Today’s first note is on clean energy jobs, which have bounced back since last year’s downturn — and are expected to accelerate as Biden’s plans for the sector take flight.

Our second is on Big Oil’s efforts to stay relevant as the news agenda homes in on Biden’s climate plans.

Oh, and today is the anniversary of oil’s sub-zero price shock. US crude is trading for almost exactly $100 more than this day a year ago.

Thanks for reading. Please get in touch at energy.source@ft.com. You can sign up for the newsletter here. — Derek

US clean energy jobs ready for take-off

American clean energy is primed for explosive growth in the coming years as Joe Biden throws the weight of the federal government behind the energy transition.

The sector has already clawed back about half of the 600,000 jobs it lost in early 2020, according a new report from business group E2. If Biden’s ambitious climate proposals make it on to the statute books, millions more are expected to be added in next few years.

“Despite the declines of the past year, the industry is looking better and brighter than ever and is poised for growth like never before,” said Bob Keefe, executive director of E2, at the report’s launch yesterday.

Jobs in clean energy were hit hard in 2020, especially in areas such as energy efficiency and residential solar installation, as Covid-19 restrictions stopped construction workers from entering buildings. By May 2020, more than 600,000 employees in clean energy were out of work.

But the sector has bounced back at a faster clip than the rest of the American economy, with job numbers rising by 11 per cent in the second half of 2020, according to E2, compared to 9 per cent in the wider economy.

About 3m Americans were employed in clean energy by the end of 2020, up from 2.8m at the end of the second quarter, but still below 3.4m at the end of 2019.

“Even as we’re grappling with the economic crisis from the global pandemic . . . clean energy jobs are showing a rebound that’s outpacing the rest of the economy,” said David Turk, US deputy energy secretary.

“Now what we need to do is supercharge these jobs . . . through policy and through a variety of mechanisms — and specifically with the American Jobs Plan,” Turk said.

The American Jobs Plan proposed by the White House last month would mark the largest single investment in clean energy in history — with hundreds of billions of dollars allocated to grid modernisation, energy efficiency and electric vehicle charging networks, plus a greater sum for renewables in the form of tax credits.

A report launched today by consultancy Rhodium Group estimates that decarbonising American power could create more than 600,000 jobs a year between 2022 and 2031.

Combating scepticism in the fossil fuel sector

As the administration gears up for this clean energy revolution, it will need to convince a sceptical fossil fuel industry — and the politicians that rely on it — of its prospects for traditional energy workers.

“We believe that the second coming of the Lord is going to get here before a just transition makes it our way,” said Cecil Roberts, president of the United Mine Workers of America.

The UMWA — like most groups in the oil, gas and coal production game — want the administration to focus more on developing carbon capture and storage technology, which would allow fossil fuel-powered generation to retain a role as emissions are phased out.

Biden has promised direct investment and expanded tax credits to drive large-scale commercialisation of carbon capture technology, alongside clean energy spending. That will help to secure support from politicians in fossil fuel-dependent states.

“We have many people who believe just quit using fossil — that’s all, that’ll take care of the problem,” said Joe Manchin, a Democratic senator for the coal-producing state of West Virginia.

“If you want to help Mother Earth, then you better advance carbon capture sequestration and utilisation,” Manchin said.

(Myles McCormick)

Big Oil wants its voice heard in the climate talks

If you are in the business of selling fossil fuels, expect things to get uncomfortable when Joe Biden this week announces new US emissions targets at his global climate summit.

Among other things, expect talk of oil and gas’s stranded assets as politicians push for ever more aggressive policies to deal with the climate problem.

To get ahead of things, some of the country’s biggest oil groups have stepped forward with their own commitments to help tackle emissions.

ExxonMobil is urging the US government to back a carbon price and has pledged to embed carbon capture and storage in its new climate targets. It talks of a possible $100bn project on the Gulf Coast — the latest emissions-related announcement from the company.

EQT, the US’s biggest natural gas producer, will seek to independently certify some of its gas as responsibly produced. Its chief executive also told us he backs the Biden administration’s crackdown on emissions of methane, a particularly potent greenhouse gas.

BP, the UK oil supermajor with one of the worst ecological track records in the US, has joined other Permian Basin oil producers in seeking to eliminate its practice of routinely burning off natural gas it doesn’t want.

All this comes after the American Petroleum Institute also reversed position on methane rules (it now backs them) and a carbon price (ditto). Expect other announcements from oil companies this week.

While Biden’s climate summit is the proximate cause for the sudden action, other forces are at play:

1. Underlying pressure from investors. Exxon, for example, is still waging an expensive proxy shareholder battle against activist fund Engine No. 1. But the sector as a whole is under mounting scrutiny from environmentally minded investors.

2. Foreign buyers are more discerning. The EU has yet to decide whether natural gas will be deemed “green” or not. But the risks for US oil and gas producers of a carbon border adjustment tax or other penalty are rising.

3. Regulation is coming. Biden is reversing the Trump methane rules whether EQT and others like the idea or not. Methane might even get a special mention in the new targets announced this week.

4. More scrutiny is also coming. Every week a new way comes along to measure a company’s environmental, social and governance performance, so investors can know which companies to avoid. Regulators, such as the SEC, are likely to become involved too, demanding more disclosure of climate risks.

In short, if you’re a fossil fuel producer this week is a good time to try to be seen as part of the solution to problems — flaring unwanted gas, say — you helped create.

(Justin Jacobs and Derek Brower)

Data Drill

As the global economy recovers from the pandemic, CO2 emissions are headed for “their second-largest annual increase ever” this year, according to the IEA’s latest annual energy review.

Coal demand is nearing its 2014 peak and will increase by 60 per cent more than all renewables combined, the IEA says. This will underpin a rise in emissions of almost 5 per cent — almost entirely reversing the drop in 2020.

Still, “renewables remain the success story of the Covid-19 era,” the agency says, supplying more than half of the increase in global electricity supply in 2021. Wind and solar photovoltaic generation will increase by 17 and 18 per cent, respectively, this year.

Power Points

• Private companies’ share of UK oil and gas production reached nearly a third last year as majors continue to retreat from the North Sea.

• Australian mining groups Orocobre and Galaxy Resources plan to merge in a A$4bn (US$3.1bn) deal that would create one of the world’s largest lithium producers. Rising demand for electric vehicles is turbocharging prices for the metal.

• The energy sector’s new landmen hunt for choice wind and solar acreage these days. (WSJ)