Weird stuff

Some weird stuff has been happening in energy and related fields lately. Despite repeated assurances that decarbonisation would be a boon for every economy, we have recently learned that Germany’s GDP slipped into an unexpected contraction in the second quarter and that the UK dropped out of the world’s top 10 manufacturing nations for the first time ever. Also, employees are suing American Airlines for investing their money in ESG funds. The world no longer makes sense. Or does it?

The “unexpected” contraction in Germany’s economic growth follows a gradual weakening of Europe’s biggest economy since the end of cheap gas supplies in 2022. In case anyone’s wondering how the least surprising thing ever could be described as surprising, that’s because economists and analysts did not expect the contraction and as we all know economists — and analysts — can never be wrong, especially when they’re actively turning a blind eye on obvious developments such as the cause-and-effect relationship between cost of energy and economic growth.

I’m sure going forward there will be no more such surprises because the Q2 dip followed a massively strong GDP growth of 0.2% for the first quarter and it was probably just a temporary hiccup along the way of sustained strong growth. Note: when a European economy posts 0.2% growth, that’s strong. If China posts such a number, it would be called the disaster of the century.

In other weird and unexpected news, the UK lost its place among the world’s ten biggest manufacturers for the first time in the history of manufacturing rankings. What’s worse, it has been replaced by Mexico and, worst of all, Russia — as in, the most heavily sanctioned country in the history of sanctions. In fact, to say that this was unexpected is an understatement. It is a truly shocking development in the age of believing you can will certain outcomes into existence even if your actions are the opposite of what is required for those outcomes to materialise.

A gasp of normalcy came this week from the Starmer government, which said it would offer 50% more money to wind and solar developers in this year’s so-called renewable energy auction. That 50% increase will bring the total to 1.5 billion pounds. In further evidence that not all is lost, 1.1 billion pounds of this will be dedicated to offshore wind. The Starmer cabinet is taking its decarbonisation seriously — even if it means it is caught in a lie when promising cheaper electricity for all.

The weirdness rules elsewhere, however. Take this random report about the former head of oil at Glencore who left the commodity firm to found an investment company focused on utility-scale battery storage. Billionaire Alex Beard left the board of Adaptogen, as the battery firm is charmingly named, earlier this month and the firm has provided no explanation of the move. Nobody is talking. Weird.

More weird stuff is happening in the United States, where the latest annual auction of the country’s top grid operator, PJM, resulted in prices that were — you might want to sit down - 800% higher than last year’s auction. That’s eight hundred percent, it’s not an extra zero. We need not wonder why but let’s spell it out anyway: supply is dwindling and demand is rising.

Even weirder is the energy mix PJM ended up contracting for the auction year that will run between June 2025 and May 2026, so remain seated. 48% of the mix was natural gas; 21% was nuclear; 18% was coal; 5% was demand response, meaning energy conservation; 4% was hydro. Wind and solar, you say? One percent for each.

Just a quick reminder that PJM services 13 states, though, to be perfectly clear, not in their entirety. Still, parts of 13 states is quite a big number of consumers. Who will be getting 1% of their electricity from wind and another percent from solar. Weird.

That is not all, either. It looks like it’s gas time for America, with Reuters’ John Kemp reporting that generators consumed a record amount of freedom molecules over the first four months of the year. They were bingeing on the cheap fuel, he said, as prices dropped to the lowest in 50 years. Of course, this is in no way evidence that price always has the final say when it comes to energy. It’s just a random fact.

It’s as random as another column from Reuters, this one from Gavin Maguire, who wrote that power utilities were driving higher demand for natural gas in the U.S. Certainly a weird development for a country that, if we are to believe its federal government, wants to get rid of gas. Not any time soon, apparently.

Still, Maguire sounded a note of optimism by reporting that while power utilities consumed more gas, everyone else consumed less because people bought heat pumps. Sales of those have been declining since last year but no matter, Americans are on the right track.

Natural gas producers had better watch it, too, because if they become too reliant on power utilities as consumers they’d be at a loss when the decarbonisation happens, or, as Maguire put it, “further rapid decarbonization of power systems could trigger a swift decline in gas demand for power while other major consumption sources are already in decline.” Who said “data centers”? Leave the room immediately and think about what you’ve just done.

This is what the executive suit of American Airlines might be doing right now, after employees launched a class-action suit against the airline… for putting their retirement money into ESG investment funds. If you feel like this is the top weird news of the month, I won’t disagree. These people, led by some clearly confused pilot, are claiming that ESG investments had lost them money. And the judge hearing the case — in Texas, if you can believe it — has agreed this seems to be the case.

There is, however, one more contender for top weird news and it comes from a company that apparently provides ESG data to other companies for emission tracking and reporting reasons, and more. So, this company, Clarity AI, did a study on Scope 3 emissions from investments and waste no time wondering what those might include because they include the emissions that fall to minority partners in oil and gas projects. Amazingly, these companies mostly do not report these Scope 3 emissions. Even more amazingly, it doesn’t really matter.

That’s right, you didn’t misread or misheard. Here it is per one of the authors of the study. “I’m a strong believer that traditionally, we have relied way too much on the data that companies are reporting,” Patricia Pina, head of Clarity AI’s product research and innovation business, told Inside Climate News. “Companies don’t have the incentive to report everything, … just because they don’t have the means to, or haven’t been able to measure it.” 

It gets even weirder, if you can believe that, with the director of something called the Erasmus platform for sustainable value creation (which is exactly what is sounds like) saying that investors don’t really need all that emission data. Nobody needs all that emission data. “We need them [energy companies] to transition decisively to net zero and to invest massively in renewable energy,” Nathan de Arriba-Sellier told Inside Climate News.

Luckily, not all is lost to weirdness, with one activist with an asset management job saying that emission reporting is totally necessary because if companies don’t report emissions they expose themselves and all of us to constantly changing weather.

In her own words, referring to the insurance industry, “Greenhouse gas emissions drive climate change, and that’s directly antithetical to being able to cover people and institutions when the weather is constantly changing.” Here’s to weather that’s as fixed as the coupon on an extra-boring bond.