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It has been a tough last week for climate finance negotiators, UN officials, Northvolt’s executives, one of India’s wealthiest men, the UK government, the EU, and me, because I can’t resist a temptation, especially when it’s staring me in the face and making EV sounds.
So, buckle up because a lot’s happened in the past week at the transition asylum and it’s better than Comedy Central.
Northvolt, Europe’s EV battery hope, has filed for bankruptcy protection in the States. It turns out the company, which has managed to raise $15 billion from lenders and investors since its inception, currently has $30 million in cash and a debt pile of $5.8 billion. So, to twist the knife just a little bit, it had $15 billion and it ended up with minus $5.8 billion. In other words, Northvolt basically wasted over $20 billion. In less than 10 years. Say what you will about the transition but modest, humble, and inconspicuous it is not.
So, it seems that Europe’s dream of making its own EV batteries is not going according to plan, which is a shame because we all know how much thought went into that plan. But if you think Northvolt is throwing in the towel, you’d be wrong.
In a perfect reflection of politicians’ attitude, the company is pretending all’s well and “This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production,” per one company executive. The U.S. bankruptcy, in other words, is an opportunity. Who knew. Certainly not Northvolt’s CEO who stepped down today and said the company needs to raise $1-1.2 billion to be able to continue operating, or, as it put it, “return the company to long-term sustainability”. Because it had that once, yes.
Meanwhile, one of India’s richest men is having trouble with the law, again in the U.S. Gautam Adani, chief of the Adani Group has been indicted on allegations of solar fraud and bribery. That’s right, billionaire Adani, his nephew and a few friends were bribing Indian government officials to secure solar power purchase contracts that would have brought them some $2 billion in profits. They’d also convinced investors to give them money to the tune of $3 billion based on, I expect, those power purchase contracts. If there’s no demand for a product, create it by any means necessary.
The size of bribes already given has been calculated at some $265 million, which makes for a pretty solid return on that “investment”. The hilarious part: Adani’s nephew kept a record on his phone of the sums he was “disbursing”, with Reuters reporting that, “In his notes, Sagar Adani was detailed, sometimes calculating the bribe’s value down to the per megawatt rate.” And that’s how the energy transition killed comedy. It’s just funnier.
In other news, Florida Man strikes again, which is how I would have headlined the news that a businessman from Miami wants to buy the Nord Stream 2 pipeline. The WSJ, being much more serious than me, did not headline its story this way but it did say that the plan appears to be perfectly serious.
In short, there’s this man, Stephen P. Lynch, who used to live in Russia and do business there, and he wants to bid in the expected tender for NS2 after its bankruptcy proceedings in Switzerland end. According to him, a purchase would ensure American long-term interest in Europe and give Washington a strong bargaining chip at the future peace negotiations over the Ukraine.
“The bottom line is this: This is a once-in-a-generation opportunity for American and European control over European energy supply for the rest of the fossil-fuel era,” the Florida Man said, as quoted by the WSJ. I have questions.
My first question is what gas Lynch expects the NS2 to carry once he buys it and, presumably, repairs it because it is in dire need of repairs following the accidental accident that accidentally blew it up two years ago. My second question is how exactly he sees the pipe being used in peace negotiations. Is it going to be something along the lines of “Pull out or we’ll bomb the wretched pipe again?” or maybe something less aggressive, such as “If you play nice we’ll let you restart gas flows to Germany?” Incidentally, did anyone ask Germany what it thinks about this? Or Russia, for that matter?
Jokes aside, it appears Lynch’s plan is to just own the pipeline and collect transit fees. “Lynch argues that once the war is over it will be tempting for both Russia and its former customers in Germany and Europe to turn on the pipeline, regardless of who owns it,” per the WSJ. If it was the other way round and it was a Russian businessman offering to buy a U.S. pipe, how long do you think it would be before the “They’re gonna weaponise it?” accusations began pouring? Funny old world.
Speaking of gas and Europe, Bloomberg’s Javier Blas had a harsh message for our political elites. In a column this week, headlined Europe Is Gaslighting Itself About Its Energy Woes, Blas was less than sparing and delicate about the energy security situation in the EU.
“Since Russia’s invasion of Ukraine triggered a European energy crisis, the bloc hasn’t been completely honest about its dire situation. It misinterpreted what was pure luck with the weather for strategic success, for example. Now, it’s worse: European policymakers are gaslighting themselves about the outlook,” he wrote, which clearly makes everything the rest of us have been saying since 2022 finally legitimate and not a conspiracy theory, Russian trolling or gas industry shilling, which absolutely makes me feel a lot better. I needed this external legitimisation.
But after that lede and after a few paragraphs detailing how the situation with European gas unfolded from 2022 to this year, Blas really punched them in the face with: “European Commission President Ursula von der Leyen has floated the idea of replacing Russian LNG with American LNG to please incoming President Donald Trump. More delusion. The idea makes no sense. First, US production is already largely committed. If Europe wants more US LNG, it will have to pay higher prices than Asia to divert cargoes.”
Imagine how bad things must have become for a Bloomberg columnist who doesn’t seem to dislike the EU half as badly as I, for example, do, to call the Brussels brain trust out on their delusions and call them so, no less. Indeed, things are even worse. Because Blas implies the EU actually has a choice because its gas storage is full.
Well, the truth is it won’t be full for long if withdrawals have already started — and they have. At some point later this year or early in 2025, the EU will be forced to either buy more Russian LNG or more U.S. LNG to survive the winter with no riots. That storage, I like to remind all those distracted by sweet words, does not even come close to covering all of our nice little garden’s demand.
It gets even better with a view to the long term. “European utilities, under pressure to meet green targets imposed by Brussels and national governments, are very unlikely to commit to the kind of contracts lasting 15 to 20 years that American LNG producers demand,” Blas wrote. “The comments [by von der Leyen] sounded like a desperate attempt to pretend a policy is in place.”
Another desperate attempt at policy-making by the Brussels crowd shone out at COP29, where a — significant — number of developing countries complained about the EU’s so-called carbon border adjustment mechanism, in other words, the import emissions tax. “The use of a hard stick hitting on our heads and hands is not a solution to climate change,” these nations, 134 of them, said in a statement reported by Reuters.
The complaint about the emissions tax was first made by China, which is naturally a member of that group, and is now being taken up by the rest, who said in their statement such policies were an “unsavoury attempt to try to continue to subject our developing countries to underdevelopment.”
Things are not going well in the garden. They are not going well at all and it looks like the time for ignoring this is running out, and fast. As a keen if amateur gardener, I would suggest some serious weeding, followed by fertilisation with copious amounts of common sense.
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