WSJ : As EVs Fill Rental-Car Lots, Drivers Feel Jittery

As EVs Fill Rental-Car Lots, Drivers Feel Jittery
The shifting mix of cars means growing pains for travelers unaccustomed to operating electric vehicles

The electric-vehicle revolution is coming to rental-car counters, ready or not. Plenty of travelers fall into the “Or not” category.

Some report picking up EVs that aren’t properly charged, lack accessories or come with little to no operating instructions. Charging availability is also an issue on the road and at hotels.

The cars have fans who adore their designs and appreciate their energy efficiency. And if you really don’t want an EV, you can usually avoid one, at least for now. Still, some newbies are swearing off them after one rental or passing them over in the rental lot.

Anne-Marie Angelo reserved an intermediate car from Budget Rent A Car for a one-way drive from Virginia Beach, Va., to Dulles International Airport with her 79-year-old mother in January. The rental agency didn’t have her car or much else, so it assigned her a “specialty” Kia.

The Kia Niro she got is an EV, which no one at the counter mentioned, the history professor says. Despite getting charged overnight, the battery drained quickly. With at least 70 miles to go on the drive, the range flashed 30 miles. She had to hunt for a charging station so it didn’t die on I-95 in cold weather.

The first location, a gas station listed in a crowdsourced app, didn’t have one. Budget roadside assistance said they couldn’t help because they don’t have mobile charging units, she says. By the time she found one at a car dealership, she had to move their late flight to London and pay for a hotel.

“Normally I can get from home to Dulles on one tank of gas,” she says. “I don’t plan for random stops in weird places.”

Budget refunded her rental and gave her two free rental days for future use, but didn’t reimburse for expenses. A Budget spokesperson says the agency “takes every customer experience seriously and has addressed the issue raised with our employees and the location involved.”

Hertz, Avis Budget Group and other car-rental agencies acknowledge the steep learning curve for drivers in these early days of EV rentals. All have educational efforts under way on their websites and in emails to renters and loyalty-program members. Hertz hosted a free test drive at Los Angeles International Airport in July and offered one free rental day with a two-day EV rental this summer.

Hertz has made the biggest EV bet among rental agencies. It has deals to buy more than 300,000 cars from Tesla, Polestar and General Motors and a partnership with Uber to rent EVs to ride-share drivers. More than one in 10 cars in its fleet are electric, a figure the company says will jump to 25% by the end of 2024.

Failed experiment
Trey Johnson, a winery sales director from West Chicago, Ill., drives a 2011 Nissan Sentra. He booked a Tesla for a one-day February business trip to Louisville, Ky., instead of his usual midsize sedan because of its cheaper last-minute rate. Plus, he wanted to see what the hype was about.

He says he asked the Hertz agent about the refueling rules and got only vague answers. He found operating the car a struggle.

“Just getting out of the garage, it felt like I was learning to drive all over again,” he says.

He pulled over to watch a Hertz video on how to operate it. Finding a Tesla charging station was easy, he says, but he didn’t like the 20 minutes it took to charge the car before he returned it.

“There are a lot of Tesla evangelists out there,” he says. “Once you get used to it, I think it’s probably quite fun to drive. I don’t want to get used to it.”

Mark Nielson, an infrastructure development consultant in Foster City, Calif., is in the top tier of Hertz’s loyalty program. When he landed in Chicago in May, he says he found several Ford Mustang Mach-Es. He passed because he was driving to Cincinnati and logging hundreds of miles after that and didn’t want any charging hassles.

“You could see people liked the Mustang and as soon as they saw it was electric, they moved on to something else,” he says.

A Hertz spokeswoman says the agency’s policy is to make “every reasonable effort” to get customers where they need to be if their reserved vehicle class isn’t available at the confirmed time.

Change is coming
The Hertz spokeswoman says demand is strong from leisure and business travelers and ride-share drivers, but declined to provide specifics. “We believe adoption will continue to take hold,” she says.

Hertz CEO Stephen Scherr told Wall Street analysts in August that corporate demand for the rentals has picked up in the past couple of months since he pitched them to fellow CEOs as a “very real way” to meet new sustainability disclosure rules from the Securities and Exchange Commission and others.

Nicholas Cicio, a part-time Uber driver in Philadelphia, rented a Tesla from Hertz for a week this summer under the companies’ partnership. It was cheaper than other rentals and Uber pays more per ride for EVs, he says.

The car was only 50% charged when he rented it, he says. That didn’t worry him initially. But the battery drained more quickly than he expected. On the second day of the rental, the car died on a busy street when he was half a mile from a charging station.

Hertz sent a tow truck, but it couldn’t get into the garage at the first charging station. Two more stops were a bust. They drove 20 minutes outside the city to find a Tesla supercharging station, he says. The 25-year-old hasn’t rented an EV since.

Retiree Marc Froemelt, who lives in Atlanta, rented a Tesla Model 3 at New York’s LaGuardia Airport from Hertz in May to visit his mother-in-law on Long Island. They zipped down the Long Island Expressway in record time in the HOV lane without issue.

Their one issue wasn’t the EV’s fault: Model 3s have trunks in the front. Froemelt opened his and discovered a previous user’s Costco haul, including a 10-pound slab of meat emitting an overwhelming stench, he says. Hertz told him roadside assistance couldn’t help, so they traded the car for another Tesla at a local Hertz location.

Froemelt wasn’t happy with Hertz’s offer of a $50 credit, so he took it up with his credit card and got the rental refunded.

Hertz didn’t respond to requests for comment on Cicio’s or Froemelt’s experiences.

Froemelt isn’t soured on EVs, though.

FT : Saudi telecoms group acquires 9.9% interest in Telefónica

Saudi telecoms group acquires 9.9% interest in Telefónica
STC move on Spanish company marks latest venture by state-owned Gulf groups into Europe

Saudi Arabian telecoms group STC is acquiring close to a 10 per cent stake in Spain’s Telefónica valued at €2.1bn, a move that marks the latest foray by state-owned Gulf telecoms companies into Europe.

STC, which is majority-owned by the Saudi sovereign wealth fund, said in a press release that it had acquired 4.9 per cent of Telefónica’s shares and was using other financial instruments that would lift its stake to 9.9 per cent if approved by regulators.

Telefónica is one of Spain’s biggest companies. STC’s plan would catapult it past CaixaBank and BBVA — two pillars of corporate Spain with large stakes in the group — to become its largest shareholder. But STC said it was not seeking a controlling stake.

The transaction requires approval from the Spanish government because Telefónica has businesses related to national security and cyberdefence.

STC chief executive Olayan Alwetaid said in the statement that the company viewed the purchase as a “compelling investment opportunity to use our strong balance sheet whilst maintaining our dividend policy”.

Telefónica, which had a market capitalisation of €22bn before the announcement, said it had learnt of STC’s move on Tuesday. It took note of “STC’s friendly approach and its support [of] the management team, Telefónica’s strategy and ability to create value”.

Spain is still Telefónica’s biggest market, accounting for 27 per cent of revenue in the past quarter, followed by Brazil, with 20 per cent, Germany on 18 per cent and the UK — where it part owns Virgin Media O2 — with 13 per cent.

STC said the Madrid-based company had “a unique portfolio of best-in-class infrastructure assets” and was developing cutting-edge technology in areas such as cognitive intelligence and the internet of things.

The Saudi group said that in addition to the acquisition of 4.9 per cent of Telefónica’s shares it had acquired “financial instruments giving economic exposure to a further 5 per cent of Telefónica’s share capital”. It said it would “obtain the voting rights corresponding to this 5 per cent through the . . . settlement of these financial instruments after obtaining the necessary regulatory approvals”.

Under Spanish law, the authorities must approve the acquisition by a foreign investor of any stake of 5 per cent or more in certain “strategic” defence companies, including Telefónica.

The deal comes months after STC unit Tawal bought tower infrastructure from United Group for €1.2bn, and at the same time as Gulf countries use their wealth — boosted by rising oil prices — to search for deals amid a slump in valuation. Last year the Saudi sovereign Public Investment Fund backed a successful bid for Vodafone’s towers business. 

The neighbouring United Arab Emirates investment group e& increased its stake in Vodafone to 14.6 per cent in April, up from 9.8 per cent in 2022.

In Saudi Arabia, state-backed national champions have sought to extend their global reach alongside the PIF, which has invested in everything from video gaming companies and sports to electric vehicles and technology.

The country’s largest bank, SNB, acquired a 9.9 per cent stake in Credit Suisse late last year and inadvertently helped precipitate the bank’s downfall when the SNB chair ruled out increasing its stake, sending its shares plummeting.

STC is Saudi Arabia’s largest communications company, with more than 80 per cent of market share. It earned $17bn in revenues last year.

FT : Enbridge in $14bn deal for Dominion gas utilities as US energy mix shifts

Enbridge in $14bn deal for Dominion gas utilities as US energy mix shifts
Canadian pipeline group to become largest natural gas distribution company in North America

Dominion Energy, one of the US’s biggest utilities, has agreed to sell its natural gas distribution business to Canadian pipeline giant Enbridge in a $14bn deal that highlights momentous shifts taking place in North America’s fuels sector.

Enbridge will purchase Dominion’s three natural gas distribution companies for about $9.4bn plus debt in an all-cash deal, making it the biggest gas utility group in North America.

The transaction is significant because it underlines two distinct investment approaches as the rush to decarbonise the US economy gains steam. 

Enbridge is best known for shipping oil, operating the world’s longest crude and liquids pipeline system. After buying Dominion’s gas utilities, Enbridge’s asset mix will be evenly split between gas and renewables and liquids, the company said.

Dominion will be left to focus on its state-regulated electric utilities at a time when US power consumption is growing, sparked by factors including the shift to battery vehicles.

“Data centre expansion, bolstered by artificial intelligence . . . along with electrification, and general economic activity are driving the most significant demand growth in our company’s history and shows no signs of abating,” said Robert Blue, Dominion chief executive.

Enbridge chief Greg Ebel said natural gas utilities had become “must-have infrastructure for providing safe, reliable and affordable energy”.

“Adding natural gas utilities of this scale and quality, at a historically attractive multiple, is a once in a generation opportunity,” he said. 

Enbridge shares fell 5.8 per cent in after-hours trading on Tuesday, while Dominion declined 0.2 per cent.

The persistence of gas in the fuel mix has become a theme in recent transactions. Oil-focused pipeline group Magellan Midstream Partners has explicitly pointed to gas’s “more powerful growth engine” as it pursues a sale to the gas-heavy Oneok.

TC Energy, the Canadian pipeline operator behind the aborted plan to build the controversial Keystone XL crude pipeline, said in July it was spinning off its oil transportation business to concentrate on shipping gas.

Enbridge transports about 30 per cent of the oil produced in North America and 20 per cent of the gas consumed on the continent. It operates the third-biggest gas utility by customer numbers, all based in Canada.

After absorbing the companies involved in the deal — the East Ohio Gas Company, Public Service Company of North Carolina and Questar Gas Company — and their 3mn customers across Ohio, North Carolina, Utah, Wyoming and Idaho, it will become the largest.

Dominion’s decision to sell comes as part of an ongoing business review that it launched last year after its stock price was hit in part due to rising inflation. 

The Virginia-based utility has sought to free up capital by offloading “non-core” assets in a bid to boost its credit rating. Dominion recently sold its 50 per cent stake in a Maryland liquefied natural gas terminal, Cove Point, to Warren Buffett’s Berkshire Hathaway for $3.3bn as it refined its focus on regulated electricity sales.

Berkshire previously took ownership of the company’s long-haul gas transmission and storage business in 2020.

FT : Universal Music strikes deal to reshape streaming economics

Universal Music strikes deal to reshape streaming economics
Agreement with Deezer aims to boost royalties for artists and labels and reduce payouts for ‘noise’

Universal Music has struck a deal to reshape the economics of music streaming, with changes aimed at directing more money to professional musicians and away from a “sea of noise” that chief executive Lucian Grainge has criticised this year.

The world’s largest record company and the French streaming service Deezer have agreed an arrangement they expect will lift payouts to professional artists by 10 per cent, in the first big shift in the music streaming business model since the launch of Spotify in 2008.

As part of the new model, streams of songs from professional artists — defined as those who generate at least 1,000 listens a month — will be given double the weight of streams from non-professionals when calculating royalty payments. 

“This is a massive change in the way the music industry will work”, said Deezer chief executive Jeronimo Folgueira. “We have 90mn tracks and many of them are just noise, like literally noise, the sound of a washing machine and rain. It is fundamentally wrong that 30 seconds of the recording of a washing machine gets paid the same as the latest single by Harry Styles,” he said.

If a listener actively seeks out a song or musician, the weight of those streams will be doubled again. For example, if a user searches “Taylor Swift” on the Deezer app and listens to one of her songs, it will be counted as four streams for royalty calculations.

The goal is to reduce the money flowing towards amateurs, bots and white noise soundtracks. Goldman Sachs estimates that the “long tail” of such content generated about $900mn in royalties last year.

Universal chief digital officer Michael Nash told the Financial Times that the changes would be “revenue positive” for the company, which is home to stars including Swift, Elton John and Drake.

The changes, if replicated more widely across other streaming services, would have significant implications for the music business. Services such as Spotify, Apple Music and Deezer have revived the industry, growing sales for nearly a decade. But the way streaming money is paid out has remained the same, a source of frustration among music companies and musicians that feel short-changed.

In the current structure, listeners’ monthly subscription fees are pooled together into one royalty pot which is divided among copyrights-holders based on their share of listening. Royalties are paid the same regardless of who created the song or whether the song was listened to passively via an algorithm or actively by searching for it. As long as someone listens for more than 30 seconds, the stream counts.

Goldman Sachs projected the total music streaming market would make $38bn in revenue this year. The streaming services pay music rights holders such as Universal about two-thirds of every dollar they collect. On average, streamers pay about $0.005 per stream, or $5 for 1,000 streams. “Listening to a 31-second song by an independent artist, a full three-minute song by a popular artist, and five minutes of the sound of rain is all treated equally,” the Goldman analysts noted.

Music executives have expressed concern that fraud and clutter have proliferated on streaming services, taking royalty money away from record labels and artists. More than 120,000 tracks are being uploaded to Spotify daily in 2023, compared with only 20,000 in 2018.

Deezer will roll out the new payment model in October in France, with plans to expand globally from January. Folgueira said the 1,000 stream threshold was “pretty low”, adding that only “human artists”, not AI-generated songs, would qualify to have their royalty share weighted more. Songs that are detected as “noise” will not receive any royalty payments. 

The move would “ensure we are better supporting and rewarding artists at all stages of their careers, whether they have 1,000 fans or 100,000 or 100mn”, Nash said.

Universal is also in talks with other streaming platforms including Spotify, Tidal and SoundCloud about changing the way they pay royalties.

Sceptics say that the push to change the streaming business is a defensive move by the big labels who fear the streaming boom is slowing. “Universal Music, Sony and Warner need to maintain revenue growth in order to keep investors happy. So you start looking for non-organic growth,” said Midia analyst Mark Mulligan. 

Deezer’s Folgueira said the changes are meant to help artists who want to make a living from music. “We are taking away incentives for people to upload a ton of crap that has very little value for the actual listeners.”

FT : EU must curb Russian gas supply to avoid being ‘held hostage’

EU must curb Russian gas supply to avoid being ‘held hostage’
Belgian energy minister warns that bloc should wean itself off fossil fuel imports from Moscow by 2027

Belgium’s energy minister has urged the EU to curb imports of Russian gas by weaning itself off fossil fuels after a report showed that her country was among the world’s biggest recipients of liquefied natural gas thanks to its status as a transit hub.

Tinne Van der Straeten told the Financial Times it was “absolutely necessary” that the bloc met its goal of weaning itself off Russian fossil fuels by 2027 to prevent it “being held hostage” by Moscow.

According to figures analysed by Global Witness, the NGO, the EU is set to import record volumes of liquefied natural gas from Russia this year as part of its effort to diversify away from piped supplies, which have been steadily cut by Moscow following its full-scale invasion of Ukraine last February.

Belgium is the third-biggest importer of Russian LNG globally, taking 17 per cent of the country’s exports of the fuel, behind only China and Spain, Global Witness said.

Russia has become the bloc’s second-biggest supplier of LNG after the US, with its exports accounting for 16 per cent of the EU’s supplies between January and July, figures from industry data company Kpler showed.

Van der Straeten said she was “not happy with the fact that Russian LNG is still flowing into the EU and through Belgium”. She noted that only 2.8 per cent of the imports went to Belgian consumers while the rest transited to other countries.

The Belgian port of Zeebrugge is a major hub for the transshipment of LNG. Germany and the Netherlands were among those importing the fuel from Belgium, Van der Straeten said.

The level of Russian LNG imports has raised questions over whether Brussels should impose sanctions on the fuel, as it has for Russian crude oil and certain petroleum products. EU officials have said discussions on this could be held in future but that more work needs to be done to find alternative energy sources.

Kadri Simson, the EU’s energy commissioner, said in March that the bloc “should get rid of Russian gas completely as soon as possible, still keeping in mind our security of supply”.

Belgium supported imposing sanctions on the fuel, Van der Straeten said. But such a move was unlikely as it required the support of all EU countries, she added.

“The most effective thing that we can do . . . is to wean ourselves off fossil fuels in general and make sure . . . that we can control energy ourselves,” she said.

The Green politician was speaking ahead of the opening in Belgium of the EU’s first major thermal battery installation, a means of capturing heat from solar power and storing it for use on demand rather than relying on the weather.

The project at adhesive manufacturer Avery Dennison’s plant in the Belgian city of Turnhout is part funded by the Flemish regional government and Brussels. It will allow the company to cut annual gas use at the factory by 9 per cent on average, the company said. It could totally replace gas during the hottest months.

The technology is seen as a way for heavy industrial users to cut their fossil fuel use without relying on more expensive systems such as renewable hydrogen or carbon capture that require much larger infrastructure networks.

“Depending on where you are in the world, this can already be [cost] competitive with gas ,” said Christian Thiel, chief executive of Norwegian company Energynest, which designed the project.

Thermal battery projects are also being established in the US. The mining company Rio Tinto and petroleum producer Saudi Aramco are among those that recently invested in a $60mn funding round for Californian start-up Rondo Energy, which is piloting its own thermal battery technology.

Avery Dennison and Energynest did not disclose the overall investment for the Belgian project but said the EU had given €1.43mn in funding to support 70 per cent of the thermal battery component.

FT : Governments join race for commercial fusion power

Governments join race for commercial fusion power
Goal of abundant, zero-carbon electricity from fusing atoms brings together private and public sector

From the US to the UK and Japan, governments are launching initiatives to help public and private sector scientists work in tandem — in some cases for the first time — on the tantalising goal of fusing atoms to produce safe, zero-emissions power.

Countries have taken different approaches to supporting the nascent sector but there is growing hope that public-private collaboration can overcome the immense technical and funding barriers to turning recent scientific achievements into a global clean energy source.

“There’s been a paradigm shift,” said Richard Pearson, a co-founder of Japan’s Kyoto Fusioneering, set up in 2019.

For decades fusion research was driven by large, public sector programmes working methodically towards scientific goals, but over the past 20 years commercial companies have moved in to shake things up.

The progress made by some of those businesses has forced governments to take notice and seek to support private enterprise, Pearson added. “That’s why things are very different in 2023 than even in 2018.”

The increased government attention follows two years of unprecedented private investment in fusion companies and two breakthroughs by US scientists at a federal laboratory in the past eight months.

Total private investment into fusion has now surpassed $6bn, with most of the funding coming since 2021, according to the Fusion Industry Association (FIA), which represents the global industry.

Fusion energy, which is created when two hydrogen isotopes are fused to produce helium and neutrons, is still a long way from proving it can generate commercially viable power.

In the breakthrough experiments in December and July, US government scientists produced only slightly more energy than was in the laser used to trigger the reactions. Physicists estimate that commercial fusion will require reactions that generate between 30 and 100 times the energy going in.

But the achievement of the long-sought goal of net energy gain has elevated fusion power from science fiction to something with genuine potential.

Fusion reactions create no long-lived radioactive waste, the hydrogen isotopes used can be sourced in large quantities and a small cup of the fuel has the potential to power a house for hundreds of years.

Enthused by this promise, the US government launched a “milestone” cost-sharing programme in May that selected eight companies, including Massachusetts-based Commonwealth Fusion Systems, to receive a combined $50mn of initial public funding to support the development of commercial fusion power. Under current plans, the programme can allocate up to $415mn before the end of 2027.


The UK, Canada, France, Germany, Italy, Sweden, Israel, Australia, New Zealand, Japan and China are among the countries with at least one fusion start-up. But the private fusion industry has grown fastest in the US. Of the 43 fusion companies worldwide, 25 are headquartered in the US, according to the FIA, with 80 per cent of private investment raised by the sector going to US-based groups.

Fusion companies have proliferated in the US due to a relative lack of public-sector research opportunities and a fundraising environment that makes it comparatively easier for scientists to raise private investment for ambitious goals, said Andrew Holland, executive director of the FIA. Many of the companies have set aggressive timelines to deliver fusion power to the grid in the 2030s.

“I don’t think it’s necessarily true that there’s more ideas for fusion commercialisation in the United States, it’s just that there’s easier access to capital,” he added.

The UK has been at the forefront of fusion science since the Joint European Torus, which remains the world’s most powerful fusion machine, began operations at Culham in Oxfordshire in 1984.

The ageing device is due to be turned off next year, but three fusion companies, including UK-based groups Tokamak Energy and First Light Fusion, have plans to build prototype devices at Culham to benefit from collaborating with the facility’s publicly-funded scientists.

“We want to make use of our heritage and expertise in the UK to be at the centre of a growing fusion industry,” said Tim Bestwick, chief development officer at the UK Atomic Energy Authority (UKAEA), which runs the Culham site.

The UKAEA is both advancing plans for a new national fusion demonstration plant to be built by 2040 and supporting the development of a wider fusion industry through an initial £42.1mn in funding for private companies.

Japan is taking a different approach, said Pearson at Kyoto Fusioneering. The country published its first national fusion strategy in April and intends to use its existing manufacturing capabilities to play a prominent role in developing the supply chains needed for a global fusion industry.

“Japan is outward looking when it comes to fusion and it is positioning itself to support those global players,” Pearson added.

In contrast, the EU is lagging behind its peers in supporting commercial initiatives. Instead, the bloc has focused its efforts on the flagship Iter project, becoming the biggest funder of the multilateral fusion experiment, which is under construction in France at a cost of more than $23bn.

“The EU has been very slow in getting going on the private sector side,” said Melanie Windridge, chief executive of advisory group Fusion Energy Insights. “How the research and the expertise from the national laboratories is transferred into the private sector and into the commercial realm is very important.”

The “sleeping giant” of the fusion industry is Germany, according to the FIA’s Holland.

Publicly funded German scientists have been quietly working on an experimental fusion machine, known as a stellarator, since the 1990s. But until this year the government had shown little open support for the nascent private sector.

Germany’s ministry of education and research published its first fusion paper in May. On Tuesday it announced plans to provide an additional €370mn in funding to the fusion industry by 2028, bringing total state funding for the sector to €1bn over the next few years.

“The idea that you could have a large centralised source of zero carbon power that’s not nuclear fission is attractive to them,” said Holland. “Nowhere in the world has felt the energy security fallout of Russia’s invasion of Ukraine more than Germany.”

Despite the promising signs of increased public-private collaboration, there is still a huge gap between the funding available — either from government or investors — and what would be required to achieve fusion energy at scale.

Each fusion company is likely to need between $300mn and $1bn to build a prototype machine and even more to develop demonstration plants, said the UKAEA’s Bestwick.

“There remains an unanswered question about how the whole global fusion community is going to get the investment into fusion that’s needed to make the rate of technical progress we all aspire to.”

FT : New EU climate chief to explore controversial carbon capture strategy

New EU climate chief to explore controversial carbon capture strategy
Bloc countries divided on upgrading climate change targets

The EU’s new climate chief has been given a mandate to explore carbon capture in an effort to limit global warming, as the bloc countries debate whether to make allowances for the controversial technology in upcoming UN negotiations to end the use of fossil fuels.

In a letter to Wopke Hoekstra, the Dutch nominee to be EU climate commissioner, European Commission president Ursula von der Leyen said he should “intensify efforts” to present “an ambitious, forward looking strategy” for the technology when he takes up his role.

Hoekstra, the former Dutch foreign minister, is due to take over in October from the EU’s previous climate tsar, Frans Timmermans, who left the commission to run in the Dutch elections. The 47-year-old who was previously a partner at the McKinsey consulting group, also once worked for the oil company Shell.

In his new role, he will oversee discussions for the EU’s 2040 emissions reduction target. The European scientific advisory board on climate change has recommended EU emission reductions of 90-95 per cent by 2040, relative to 1990.

EU countries were already “deeply divided”, one diplomat said, over whether to update the bloc commitment to cut emissions from 55 per cent to 57 per cent by 2030.

The Intergovernmental Panel on Climate Change has said that to keep global warming within the 1.5C level at which irreversible changes are expected to the planet, emissions must be cut by 45 per cent by 2030.

Carbon capture, use and storage technology is unproven at scale. However, as global carbon emissions continue to rise to dangerous levels, countries and industries are looking towards it as a means of curbing climate change.

The EU first laid out a framework for the use of carbon emissions removal technology in November last year and has said it will publish a road map for how it can be used in heavy industry, such as steel and cement making, before the end of this year.

But some policymakers and climate scientists fear that it could be a way for heavy polluters to avoid having to cut their greenhouse gas output.

Von der Leyen has also been pushing heavily for a global carbon price, ahead of the EU’s own carbon border tax coming into force in October, which will affect the import of goods from the heavy polluting sectors including steel and cement.

A senior EU official said that carbon capture should only be an option for those heavy industries that were difficult to decarbonise. “Don’t use it where you have other cheap mitigation alternatives,” they said.

The issue has been raised as part of negotiations over the EU’s position for the UN COP28 summit in Dubai starting at the end of November. The bloc’s 27 member states are still debating whether to call for a phaseout of “unabated” fossil fuels, or those burnt without capturing the emissions, according to diplomats and a draft document on the EU’s negotiation position.

Countries including Poland and Italy were among those pushing to include the word “unabated”, according to one EU diplomat, as it would limit the pressure to end the consumption of fossil fuels completely.

Maria Pastukhova, senior policy adviser at the E3G think-tank, warned that “countries negotiating international language on ‘unabated’ fossil fuel phaseout need to push for rigorous, high-ambition standards” to ensure that commitments to reduce fossil fuel use were genuine.

Global leaders were gathered in Nairobi on Tuesday for the first-ever Africa Climate Summit to debate how to finance environmental initiatives in a resource-rich continent that has been at the forefront of damaging changing climate patterns.

The summit is part of a series of international talks in the lead-up to COP28, which climate campaigners hope will result in a global agreement to cut fossil fuel use.

Kenya’s president William Ruto told the Financial Times that Nairobi would support a fossil fuel phaseout by 2050 at COP28, even as some of its neighbours — notably Uganda and the Democratic Republic of Congo — were pushing for oil projects around environmentally sensitive areas.

“We have absolutely no problem with any country pushing the assets they have, just the same way we have chosen our country to go renewable, because renewable gives us an opportunity to access energy, but in a way that is responsible,” Ruto said.

>>> US Closing Stock Market Summary

Closing Stock Market Summary
This holiday-shortened week got started on a softer note following last week's big gains. The Russell 2000 paced index losses, declining 2.1%, while the Nasdaq settled with a 0.1% loss. The S&P 500 maintained a position above 4,500 for most of the session until a sharp move lower in the late afternoon led the index to close just a whisker shy of that level.

Relative strength in mega cap stocks, which reflected an overall risk-off vibe in the market, helped limit losses for the major indices. Tesla (TSLA 256.49, +11.48, +4.7%) was a standout in that regard, jumping almost 5.0%.

Today's selling was fueled by a jump in market rates, along with global growth concerns that were stoked by a batch of disappointing PMI readings from overseas and rising oil prices. The 2-yr note yield rose eight basis points to 4.96% and the 10-yr note yield rose ten basis points to 4.27%.

The sharp increase in oil prices contributed to today's lackluster showing, prompting worries about inflation expectations and consumer spending pressures. WTI crude oil futures rose 1.2% to $86.55/bbl following news that Saudi Arabia and Russia are planning to extend their voluntary oil production cuts of 1 million barrels per day and 300,000 barrels per day, respectively, through the end of 2023.

The move in oil prices propelled the S&P 500 energy sector (+0.5%) to the top of the leaderboard followed by information technology (+0.4%). Nine of the 11 S&P 500 sectors logged a decline, led by materials (-1.8%) and industrials (-1.7%).

Homebuilder stocks were also noticeably weak, reacting to concerns about rising mortgage rates. The SPDR S&P Homebuilder ETF (XHB) fell 3.9% and the iShares U.S. Home Construction ETF (ITB) fell 4.6%. Toll Brothers (TOL 79.22, -4.61, -5.5%) and Pulte Group (PHM 77.89, -4.74, -5.7%) were among the top laggards from the space.

Market participants digested some positive news today, too. Specifically, Goldman Sachs said it now sees only a 15% chance of the U.S. experiencing a recession versus 20% previously and Fed Governor Waller (FOMC voter) said there was nothing in the data last week that meant the Fed needs to do something anytime soon, meaning the Fed can sit tight with its current policy rate.
  • Nasdaq Composite: +34.0% YTD
  • S&P 500: +17.1% YTD
  • S&P Midcap 400: +7.4% YTD
  • Russell 2000: +6.8% YTD
  • Dow Jones Industrial Average: +4.5% YTD
Today's economic data was limited to factory orders for July, which declined 2.1% month-over-month (consensus -2.4%) following an unrevised 2.3% increase in June. Excluding transportation, factory orders increased 0.8% month-over-month on the heels of a 0.3% increase in June. Shipments of manufactured goods rose 0.5% month-over-month after increasing 0.2% in June.
  • The key takeaway from the report is that factory orders were better than they appeared in July given the strength seen in orders excluding the volatile transportation component.
Wednesday's economic calendar includes:
  • 7:00 ET: Weekly MBA Mortgage Index (prior 2.3%)
  • 8:30 ET: July Trade Balance ( consensus -$68.0 bln; prior -$65.5 bln)
  • 9:45 ET: Final August S&P Global US Services PMI (prior 51.0)
  • 10:00 ET: August ISM Non-Manufacturing Index ( consensus 52.4%; prior 52.7%)
  • 14:00 ET: September Fed Beige Book

>>> US After Hours Summary: MITK +11.2%, AVAV +10.3%, GTLB +4.5% up on earnings;

After Hours Summary: MITK +11.2%, AVAV +10.3%, GTLB +4.5% up on earnings; ENB -6.8% sliding on M&A announcement; ASAN -2.5%, ZS -1.1% down on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: MITK +11.2%, AVAV +10.3%, GTLB +4.5%, ASND +3%, HQY +1.7%

Companies trading higher in after hours in reaction to news: GOGO +4.7% (approves $50 mln repurchase program), RPRX +2.6% (enters into $150 mln royalty funding agreement with Ascendis Pharma), HGV +1.5% (provides Maui Wildfires impact update), BTBT +0.9% (production update), PAC +0.5% (preliminary passenger traffic for August), HA +0.3% (provides Q3 updates), DM +0.3% (expects Stratasys deal to close in Q4), ABT +0.1% (to acquire Bigfoot)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: ASAN -2.5%, ZS -1.1%

Companies trading lower in after hours in reaction to news: ENB -6.8% (acquires three utilities for $14 bln from Dominion Energy; also files bought-deal offering of common shares), CSGS -4.4% ($350 mln convertible senior notes), VSTO -2.5% (targeting Q4 for Outdoor Products spin-off), PTEN -2.2% (files mixed shelf), VTRU -1.2% (group restructuring), D -1.1% (selling three distribution firms to ENB for $14 bln), AMZN -0.4% (FTC sets antitrust suit for this month, according to WSJ), ARMK -0.1% (Vestis to be the name of its uniform services business), PH -0.1% (files mixed shelf), ASR -0.1% (total passenger traffic for August)