Net Zero

1. Shifting energy war tactics
2. Exxon tests the waters
3. AI for grid security
4. Dissent at FEMA
5. SE Asia’s nuclear dilemma

Wind problems in Japan, and solar problems in India.

Wall Street’s climate coalition is drawing its last breaths, and that may be a good thing. The Net-Zero Banking Alliance will suspend its activities, the group said on Wednesday, pending a vote next month by its few remaining members on whether it should continue to exist. What started in 2021 as a venue for green virtue signaling quickly ran into trouble as shareholders and Republican politicians balked at the notion of banks making choices based on climate aspirations rather than profit demands. Most of the big US members bailed this year, and European members were rumored to be next out the door.

In a sense, the group’s collapse doesn’t change much: It “never truly challenged the fossil fuel-oriented business models of major banks,” Lucie Pinson, the founder of climate nonprofit Reclaim Finance, told the Financial Times; in the last decade, global banks have lent about $1.50 to fossil fuels for every dollar they’ve lent to green energy, according to Bloomberg.

Still, that ratio is slowly shifting; there is plenty of money for banks to make in the energy transition. Coalitions like NZBA arguably did more harm than good by drawing political heat to genuinely profitable and climate-benefitting investments, and, on the left end of the political spectrum, by giving reputational cover to the most laggard members. Going forward, banks should focus on notching tangible green finance wins and not get bogged down in PR.

“I don’t see this as a pulling-back of actual work being done,” Cary Krosinsky, a sustainable finance lecturer at Yale University’s Center for Business and the Environment, told me. “It’s just that there was way too much focus on vague concepts like net zero pledges that no one actually knows how to fulfill.”

Shifting energy war tactics

The past week of the Ukraine war has showcased just how much the energy conflict between Kyiv and Moscow has changed. In prior years, Russia focused on hitting Ukrainian power plants, whereas Kyiv focused on keeping them up as its Western backers hit Moscow with sanctions and global energy firms pulled out en masse. Little of that remains true today.

Now that Russian gas is no longer flowing across Ukraine into Europe, Moscow has pivoted to attacking gas infrastructure — most recently a series of attacks on Tuesday night — driving a gas deficit of several billion cubic meters that could result in winter heating cuts and production problems at military industrial facilities. Kyiv, for its part, has stepped up long-range drone attacks on Russian oil refineries, which have succeeded in pushing Russia’s gasoline prices to record highs. Still, there’s enough spare production capacity that “the sort of full-scale fuel crisis that could end up impairing the functioning of the economy — or the army — is still a long way off,” Sergey Vakulenko at the Carnegie Russia Eurasia Center wrote. And Ukraine’s strikes on the Druzhba oil pipeline risk rupturing its relations both with the EU and the US.

The Trump administration, meanwhile, seems to be dangling the prospect of Russia’s re-integration with the Western energy market: A range of energy deals were reportedly discussed during recent talks in Moscow.

Exxon tests the waters

ExxonMobil engaged in secret talks with Russia’s state-owned oil company about re-entering offshore drilling projects on the country’s Pacific coast, The Wall Street Journal reported. Exxon took a $4 billion loss on its investment in the Sakhalin project when it left Russia in 2022 following the invasion of Ukraine, and saw its share in the project seized by the Russian government, a painful ending to what had been one of Exxon’s most high-stakes overseas investments ever.

Since then, US oil companies’ general appetite for expensive new overseas drilling projects has waned in the face of tepid prices, protracted court entanglements in Guyana, and a wave of government support for more drilling at home. Still, re-entering Russia would be a chance for Exxon to recoup losses. And it would be a major win for Moscow, which is keen to re-integrate with the Western energy market and in need of technical assistance and hardware from the West.

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AI for grid security

US power companies are increasingly mulling whether to allow artificial intelligence-aided systems to play a role securing their physical sites, according to a security executive. Energy firms have been willing to use AI to help secure their software, but had until recently been unwilling to even countenance using the technology in the operations of their production or delivery sites. That has begun to change in the past two years, Marcus Fowler, the head of security firm Darktrace’s US strategic engagements and threats team said in an interview.

Companies are still not going so far as to actually use AI in physical security in the energy sector, Fowler cautioned, but “there’s an interesting conversation” underway. Because of the risks that a technological malfunction could affect the operations of an energy production site, for example, “historically, that would have been a, ‘We’re not even going to talk about that’,” Fowler said. “Today, it is, ‘We want to talk about that,’ but the progression and maturity… is a much longer tail.”

—Prashant Rao

Dissent at FEMA

The number of employees of the US Federal Emergency Management Agency suspended within 24 hours of sending a letter to Congress warning about President Donald Trump’s plans to overhaul the agency. The remaining 146 who signed the letter did so anonymously, fearing retaliation.

The timing of the employees’ letter wasn’t coincidental: Friday marks 20 years since Hurricane Katrina hit Louisiana — one of the deadliest, costliest storms in US history, and the catastrophe that pushed Congress to give FEMA more power, more money, and a mandate that its director be a disaster expert.

Two decades later, staffers have warned that the Trump administration is on track to undo those measures, with repeated threats of closure prompting one-third of its permanent staff to depart, even as recent deadly floods in Texas served as a reminder of the necessity of an efficient emergency response team.

—Natasha Bracken

View: SE Asia’s nuclear dilemma

Countries in Southeast Asia are forging ahead on a nuclear energy expansion that could have wide-reaching benefits for local economies and the global climate.

But with this growth comes tricky choices. The region’s nuclear pivot has attracted the attention of the great powers. The United States, China, and Russia are all vying for lucrative contracts to build the new plants. For them, the prize isn’t just money but clout. Supplying nuclear reactors, fueling them, and providing technical support creates long-term dependencies — dependencies that can be exploited for geopolitical gains. For that reason, Southeast Asian leaders should be careful who they work with.

To protect their energy sovereignty, the region’s governments must make sure they choose partners that treat them like equals, and in particular, they should think long and hard before dealing with Beijing and Moscow. The reason: What’s good for China and Russia might not align with what’s good for the region. Both authoritarian states use nuclear exports to lock countries into their sphere of influence. The endgame is to turn partners into vassals.

New Energy

• Bank of America stock analysts added the nuclear power startup Oklo to their coverage portfolio, giving it a “buy” rating. “Of the ~50 [small modular reactor] developers we track, Oklo has the largest publicly disclosed customer pipeline,” they wrote in a note.
• Mitsubishi Corp. plans to withdraw from three offshore wind projects in Japan amid high costs, interest rates, and a shift away from green policies in some countries.
• Among those countries is the US, which mounted one of the strongest pushbacks against green policies, despite warnings of higher electricity costs and Trump’s past support for stronger climate legislation under Obama.
• US tariffs on Indian solar panel exports could worsen the existing supply glut in India next year.

Fossil Fuels

• Despite a 2024 slowdown and China’s clean energy shift, the country’s coal power capacity continues to grow: 21 gigawatts of new projects were commissioned so far this year, the most in a six-month period since 2016.

Tech

• Nuclear energy is set for a boom in the US amid a growing need to power AI and massive data centers.
  

Politics & Policy

• Scientists have found several major errors and distortions in the Trump administration’s new documents, which attempt to undermine the fundamental conclusion that climate change is real and dangerous.

Minerals & Mining

• Germany and Canada pledged to deepen cooperation on securing critical minerals, which are essential to the defense and energy sectors.

EVs

• Europe’s