How to play the solar net-metering battle as stocks sink, plus Europe’s ghost flights

Source: LeoPatrizi / E+ via Getty Images

By David Callaway, Callaway Climate Insights

The war on solar companies in the U.S. spread to a second state this week – Florida – while California’s governor and Elon Musk spoke out against plans to slash subsidies for homeowners with just two weeks to go until a landmark decision is made. Investors are preparing for the worst.

Solar stocks such as SunPower (SPWR), First Solar (FSLR) and the Invesco Solar ETF (TAN) have tanked by a third since Thanksgiving. They are essentially in a no-man’s land until the California Public Utilities Commission (CPUC) rules on a proposal by utilities such as PG&E Corp. (PCG) to reduce payments made to residential homeowners with solar for excess energy sold back to the grid. Now Florida is trying to do the same (See Insights below).

The rift is unique in that it pits advocates for clean energy against advocates for social justice, essentially splitting the two-year partnership between climate and racial justice enthusiasts. Cutting subsidies to homeowners may crush solar installations and hurt companies and their stocks. But utilities insist the current system favors the wealthy by raising rates for those without solar panels.

Gov. Gavin Newsom, Musk, and institutional investors are against the proposal, and we can expect the rhetoric to increase the closer we get to Jan. 27, which is the earliest the CPUC can rule. A delay is possible, if a watered-down plan is put forward, which seems to be what Newsom is advocating.

For investors, the downside on net-metering has likely been priced in over the past several weeks, so any delay or possible vote against the proposal would be a boost to the shares. And the utilities, having sent their message, would likely support a compromise to the net-metering proposal. None of that will shake the drama of the next two weeks, but for solar shareholders, at this point it’s better to hang in there than to bail in the middle of the hysteria.

More insights below. . . .

Zeus: Jean Rogers jumps back in the deals game at Blackstone

. . . . Jean Rogers, founder of the Sustainability Accounting Standards Board, always insisted the point of sustainability disclosure standards was action, not measurement in its own right. Now as the new global head of Blackstone’s (BX) ESG business, she can put her company’s money where her mouth is, to the tune of hundreds of billions of dollars, writes David Callaway, who interviewed her as she set up shop in New York. If this week is anything to go by, with Blackstone pulling off its biggest renewables deal to date, a $3 billion investment, it’s going to be an action-packed year. . . .

Read the full Zeus column

EU notebook: Broader carbon border tax urged in Brussels

. . . . Europe’s plan to tax carbon intensive industries such as cement and electricity on cross-border trade is controversial enough on the world trade stage, but now an influential member of the EU Parliament negotiating the deal wants to move it up from 2026, and to broaden it to other industries, writes Stephen Rae from Dublin. It’s an even bet whether the carbon border adjustment mechanism (CBAM) will get through this summer, even in its current form. But among the EU’s tools to help reduce greenhouse gas emissions, it is one of the few that would have immediate implications on emissions, as well as the carbon trading market. . . .

Read the full EU notebook

Thursday’s subscriber insights: Backlash to Biden offshore wind plans threatens East Coast projects

. . . . In the renewable energy race, offshore wind in the U.S. is hardly off the mark compared to the thousands of turbines in Europe. That was supposed to change under President Joe Biden, but just as the government seems prepared to announce a slew of projects off the East Coast, a combination of opposition from fisheries, animal rights activists, and even wealthy coastal landowners is taking the wind from his sails. With so much opposition, can offshore wind ever take off in the U.S.? Read more here. . . .

. . . . It’s of little surprise that political donations are behind the campaign by utilities in Florida to force net-metering changes such as the ones proposed against solar companies in California. The battle against climate solutions is always fought on the down low. But Florida’s plan, which is legislation, may face a harder road than the California proposals, which are decided by the public utilities commission itself. Read more here. . . .

. . . . Europe has been enraged this week by stories of airlines flying “ghost flights” of empty passengers across the continent to maintain landing slots at international airports. The continent that invented “flight-shaming” for frequent travelers doesn’t know what to do with thousands of empty flights a week burning fossil fuels, and one executive’s call to just “sell the seats” was met with derision from the industry. This one, as they say in the media, has legs. Read more here. . . .

. . . . Cows with gas are a major methane pollution problem, but also potentially a teachable moment for educators struggling to reach young kids who will be most affected. As debate rages about the best way to reduce the methane and also use it for positive purposes, what better way to, uh, entertain a youthful audience than a climate tour of the nearby farm. Read more here. . . .

Editor’s picks: U.S. emissions spike in 2021; and where did Tesla’s Cybertruck go?

Coal helps spike U.S. greenhouse gas emissions in 2021

Total U.S. greenhouse gas emissions rose 6.2% in 2021, and the pace was faster than the rebound in energy demand, the Rhodium Group said in a report this week. The jump was attributed to the increase in use of coal-fired power plants in the face of higher natural gas prices. A report for S&P Global Market Intelligence says the research group warns in its preliminary assessment that the U.S. is now slipping farther behind its pledge to cut greenhouse gas emissions by at least 50% below 2005 levels by 2030 and reach net-zero by midcentury. After having achieved a 22.2% emission reduction since 2005 in 2020, the trajectory had slipped to just 17.4% in 2021. The Rhodium Group also said coal-fired generation in 2021 rose for the first time since 2014, as much as 17%, to reach 23% of all power produced in the U.S.

Where did Tesla’s Cybertruck go?

Where has Tesla’s Cybertruck gone — or when? Mashable reports this morning that it noticed the EV maker has removed from the Cybertruck site all references to its previously stated 2022 release date. The report notes that in October, Tesla “wiped the Cybertruck site of all pricing and model information, but kept a crucial detail: a production start time in 2022. Now if you go to the same order page, you’ll notice that where it once said, ‘You will be able to complete your configuration as production nears in 2022’ it only states, ‘You will be able to complete your configuration as production nears.’” Auto site Edmunds reports the change has some reservation holders worried about further delays in the production schedule. The Cybertruck was announced in 2019. Tesla (TSLA) stock was down about 4% in early afternoon trade Thursday. No word yet from Tesla on the delay, according to published reports.

Words to live by . . . .

“We tend to have forgotten the fact that we are a part of nature. Some people say that we are dependent upon it, but it’s become dependent upon us as well.” — Naturalist Chris Packham speaking at COP26.

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