2024-11-21 11:12

Data centers increase reliance on fossil fuels, delaying transition to clean energy Utilities add gas plants, delay retirements to meet data-center demand Data companies' green pledges fall short, rely on existing clean power BAKU, Azerbaijan/NEW YORK, Nov 21 (Reuters) - (This Nov. 21 story has been corrected to reflect that Entergy is building its first gas-fired power plant in Mississippi in a half century, not its first gas-fired power plant anywhere in a half century, in paragraph 15) A spike in electricity demand from the world's big data providers is raising a worrying possibility for the world's climate: a near-term surge in fossil-fuel use. Utilities, power regulators and researchers in a half-dozen countries told Reuters the surprising growth in power demand driven by the rise of artificial intelligence and cloud computing is being met in the near-term by fossil fuels like natural gas, and even coal, because the pace of clean-energy deployments is moving too slowly to keep up. In the United States, home to a third of world data centers, utilities are adding new gas plants and delaying the retirements of fossil-fuel power plants as a slew of sprawling new data centers plug in to the grid. In Poland, Germany and Malaysia, coal could also be in the mix, according to interviews with company executives, regulators and analysts. The outlook poses a new obstacle to world governments, now gathered at the UN’s annual climate conference in Baku, which are already struggling to meet ambitious targets to decarbonize power systems. COP29 host Azerbaijan held the first-ever Digitalization Day at a world climate summit and launched a declaration, endorsed so far by 68 countries including China and Korea, to limit the environmental impact of digitalization. The outlook also reveals the shortcomings of data-company pledges to be green. Companies including Meta Platforms (META.O) , opens new tab, Microsoft (MSFT.O) , opens new tab and Amazon.com (AMZN.O) , opens new tab are committing to sourcing renewable energy and zeroing out emissions with clean power and offset credits - but often that only means siphoning clean power out of the grid that could have been used somewhere else. Meanwhile, agreements by data providers to power new data centers with advanced nuclear reactors or resurrected nuclear plants are uncertain and years off. "I think everyone agrees that we need more and more renewable energy to keep up with a growing demand," said Meta spokesman Jim Cullinan. "I think it is up to the utilities to comment on how they will fill the supply." Amazon told Reuters that investing in new renewable energy for the grid, including in regions relying heavily on fossil fuels, is part of its strategy to decarbonize. Investment bank Morgan Stanley projects the global data-center industry will produce around 2.5 billion metric tons of carbon dioxide-equivalent through the end of the decade, the equivalent of Russia's annual emissions. PUMPING THE GAS Northern Virginia in the U.S. has the biggest concentration of data centers in the world. Utility Dominion (D.N) , opens new tab, which serves the area, has an answer: gas. The utility is building a 1,000-megawatt gas plant in Chesterfield County and recently slashed its 15-year projection for renewables to 80% from 95% of its power mix. "Overall, power demand in our service territory is growing at an unprecedented pace," said spokesman Aaron Ruby. Several other U.S. utilities said they are keeping on fossil-fired power plants longer and building new facilities as data-center demand grows, according to a Reuters review of recent company earnings calls. Entergy (ETR.N) , opens new tab, for example, began building its first natural gas-fired power plant in Mississippi in a half-century, the company said. The 754-MW power station will serve two Amazon data-center complexes being built in Mississippi. Nearly half of utility NiSource's (NI.N) , opens new tab new $19.3 billion capital expenditure plan through 2029, meanwhile, will be spent on natural gas system improvements, the company said. NiSource covers some of the most quickly developing data center markets in parts of Indiana, Ohio and Virginia. Rob Thummel, senior portfolio manager at Tortoise Capital, said natural gas is a clear answer for data centers. "It's just the lowest cost, most reliable and it is decarbonizing in terms of it replacing coal," he said. "Is it perfect solution? No. But I don't know if we have a perfect solution to power these data centers." S&P said data centers could add between 3 billion and 6 billion cubic feet per day , opens new tab to U.S. natural gas demand by the end of the decade. That will worsen the U.S. performance on emissions, possibly for decades, clean-energy consultancy RMI said. "Data centers are just a warm-up act compared to the amount of electrification we’re going to have going forward. And if our first instinct is to start building gas plants and nuclear plants in order to do that, we're just going to create an energy system we cannot afford," RMI CEO Jon Creyts said. President-elect Donald Trump has said he intends to boost the U.S. power system when he takes office, and sources close to his transition team have said his plans are likely to prioritize gas development over renewables. COAL IN THE MIX? Research firm McKinsey said in a report last month most of the increase in data-center power consumption in the European Union by 2030 will be supplied low-carbon sources. McKinsey declined to elaborate when asked whether low-carbon sources included natural gas, and whether the trend could prolong the life of coal. In some parts of Europe, data centers will need coal. In Poland, for example, a rush of new datacenter projects will need to run at least partially off baseload sources like coal because of the still-low volume of renewables in the country, according to Szymon Kowalski, deputy head of Re-Source Poland, a platform for corporate renewable energy sourcing. The share of coal in Poland’s energy mix has been falling for years as it ramps up renewables, but still stood above 60% in 2023, according to the International Energy Agency. In Ireland, meanwhile, data centers now account for over 20% of electricity consumption, according to the IEA. System operator EirGrid told Reuters it will meet demand with 650 MW of temporary emergency generation capacity, and by delaying the retirement of older generators. It said natural gas would be an important part of the mix. Ireland’s only coal station, ESB Group’s 915 MW Moneypoint plant, extended its retirement date last year to 2029 from 2025, but intends to burn fuel oil instead of coal during that period. In Germany, Microsoft this year announced plans to expand data-center capacity with a 3.2 billion euro ($3.38 billion) investment, near the 400-meter-deep Hambach coal mine. Microsoft declined to say whether the project would rely on coal. "We are still in an early stage of the project, that's why we do not comment," spokesperson Jo Klein said. In Malaysia, some data companies are taking power from the coal and gas-dominated grid instead of paying a premium for renewables, according to a government official familiar with the matter. Less than 50% of the green power Malaysia has sought to auction this year has been purchased, the official said. ($1 = 0.9467 euro) Sign up here. https://www.reuters.com/technology/artificial-intelligence/how-ai-cloud-computing-may-delay-transition-clean-energy-2024-11-21/

2024-11-21 11:03

LONDON, Nov 21 (Reuters) - British manufacturers expect their output to grow after a recent slump linked to uncertainty about the first budget of the new government, the U.S. elections and other factors, the Confederation of British Industry said on Thursday. The CBI's monthly industrial trends survey showed output expectations for the next three months improved to +9 in November from -1 in October, the highest since August. Output over the last three months slipped to -12 from -6 in the three months to October, although the CBI's measure of industrial orders improved a bit to -19 from -27. "Output has underperformed expectations in recent months, with manufacturers pointing to uncertainty around the UK budget, the U.S. elections and recent political instability in Europe as among the factors leading customers to pause or cancel orders," CBI economist Ben Jones said. "Many firms still need to work through the implications of the budget for their own plans for pay, hiring and investment, but it's an encouraging sign that output volumes are expected to return to growth in the quarter ahead," Jones said. The CBI's measure for exports remained weak at -27, unchanged from October. Its gauge of expectations among firms for the prices they will charge in the next three months rose to +11 from zero, the highest since August but broadly in line with the historical average. The survey was based on the responses of 317 manufacturers and was conducted between Oct. 25 and Nov. 13. Sign up here. https://www.reuters.com/world/uk/uk-factories-see-signs-recovery-output-cbi-says-2024-11-21/

2024-11-21 10:48

Cuts in renewables unit correspond to 250 full-time job equivalents Many of those leaving will be offered jobs in other units European rivals have also scaled back operations in renewables Offshore wind accounts for most of the unit's activities OSLO, Nov 21 (Reuters) - Norway's Equinor (EQNR.OL) , opens new tab is trimming 20% of the staff from its renewable energy division and will compete for a smaller number of new projects as it streamlines the business unit, the company told Reuters on Thursday. The global offshore wind sector, in which Equinor is a significant player, has faced setbacks in its efforts to reach lofty targets, driven by cost inflation, high interest rates and supply bottlenecks, companies and industry insiders have said. Equinor's retreat mirrors similar moves by European rivals Shell (SHEL.L) , opens new tab and BP (BP.L) , opens new tab, which in recent months scaled back operations in renewables and low-carbon operations as they focus on the most profitable businesses. "We have decided to reduce the number of people working with renewables in Equinor," a company spokesperson said, adding that the division's workforce reduction corresponded to some 250 full-time job equivalents. The size of the cutbacks has not previously been reported. However, the number of people leaving the group would be lower, with those employed directly within the parent company being offered alternative roles in other business areas. "As we have said previously, we have exited some markets and prioritised existing markets and reduced the business development activities," the spokesperson said. Equinor earlier this year abandoned its offshore wind activities in Vietnam, Spain, Portugal and France. It also scaled back offshore wind plans in Australia. The oil, gas and renewable energy producer had some 23,000 employees at the end of 2023, according to its annual report. Equinor did not provide a detailed split of staff reductions on a country by country basis. Offshore wind accounts for most of the renewable energy unit's activities, although the scope of the staffing reductions also covered onshore wind and solar. The staff adjustments did not apply at subsidiaries such as Polish Wento or Danish BeGreen, the spokesperson specified. Equinor will participate in fewer tenders and auctions going forward, while focusing on the construction of its three large offshore wind projects - Dogger Bank in Britain, Empire Wind 1 in the United States and Baltyk 2 and 3 in Poland, he said. Equinor has not altered its goal of reaching 12-16 gigawatts (GW) of installed renewable energy capacity by 2030, with any potential changes to the target only expected as part of its annual capital markets update scheduled for February. Sign up here. https://www.reuters.com/business/energy/norways-equinor-cuts-20-staff-renewables-unit-2024-11-21/

2024-11-21 10:42

Draft text on finance goal whittled down to 10 pages Aims to decide annual finance flow to poorer countries Shows polarised positions, new draft expected overnight Talks meant to end Friday, overtime expected again BAKU, Nov 21 (Reuters) - Division and discontent spilled into the open on Thursday at a U.N. climate summit in Baku, sparked by a proposal for a new global finance deal which offered two vastly different options and left no one happy as the closing deadline neared. The key goal of COP29 is to agree how much money richer developed countries should provide poorer developing ones to help them fight climate change, a critical plank in efforts to limit the damage caused by rising global temperatures. But getting a deal on the money has proved slow going at the talks in Azerbaijan's capital, and the latest draft of the negotiating text arrived several hours behind schedule as delegates entered, in theory, the closing 48 hours. With the summit set to wrap up on Friday - but widely expected to overrun - the new document showed much remains undecided on key questions, such as what counts towards the annual figure, who pays and how much. "The text we now have... is imbalanced, unworkable and unacceptable," said European Union climate commissioner Wopke Hoekstra. He urged more leadership from Azerbaijan's COP29 presidency, which takes control of the negotiating process in the final days and compiled the new texts. Panama's lead negotiator, Juan Carlos Monterrey Gómez, told Reuters: "All of this is turning into a tragic spectacle, a clown show, because when we get to the last minute, we always get a text that is just so weak." Developing countries need at least $1 trillion a year by the end of the decade to cope with climate change, economists told the talks last week. Although the 10-page document was slimmed to less than half the size of the previous version by stripping out some options, it summed up the opposing positions of blocs of developed and developing nations established before the event. One focused on ensuring the funds were grants or grant-equivalent in form, and that contributions from developing countries to each other - a nod to large potential donors such as China - were not formally part of the target. The other, repeating the position of richer countries, aimed to broaden the types of finance that count toward the final annual goal, not just grants from developed countries, and included contributions from others. Both options avoided stating the total funds countries would aim to invest each year, leaving the space marked with an 'X'. The COP29 presidency promised a more streamlined version of the text would be published overnight that would replace the 'X' with numbers, sketching out a potential landing zone for a deal. "This is a moment when you need to put all your cards on the table," COP29 lead negotiator Yalchin Rafiyev urged countries, speaking at the start of a plenary session where delegations took turns to condemn the current version. U.N. Secretary-General Antonio Guterres returned to Baku from a G20 meeting in Brazil calling for a major push to get a deal and warning that "failure is not an option". FOSSIL FUELS Some negotiators also said Thursday's proposals failed to uphold a pledge made at last year's Dubai summit to transition away from fossil fuels, hailed at the time as a landmark moment. "We made good progress last year, we must continue that work. In the current text, some of these calls are hidden, pared back or minimised," said Australian minister for climate change and energy, Chris Bowen, speaking on behalf of the Umbrella Group of countries which includes Japan and the United States. "This is a big step back and it is not acceptable at this current moment of crisis." Saudi Energy Minister Prince Abdulaziz bin Salman has previously described the Dubai deal as a menu of options - suggesting not all countries will select quitting fossil fuels as their chosen path forward. Human activities - mainly, the burning of fossil fuels - have helped raise the planet's long-term average temperature by about 1.3 degrees Celsius (2.3 degrees Fahrenheit) since pre-industrial times, driving disastrous floods, hurricanes, droughts and extreme heatwaves. Countries seek more financing to deliver on the 2015 Paris Agreement goal of limiting the global temperature rise to well below 2 degrees C (3.6 degrees F), and ideally 1.5 degrees C (2.7 degrees F), by the end of the century. Climate scientists now say the world is now likely to cross that more ambitious threshold, beyond which even more catastrophic climate impacts could occur, in the early 2030s, if not before. Alongside finance, the future of fossil fuels is at the heart of COP29, where it has stirred disagreement from day one. Azerbaijan President Ilham Aliyev hit out at Western critics of his country's oil and gas industry at the opening plenary, describing such resources as a gift from God. The latest draft text on the Dubai pact referred to "transitioning away from fossil fuels in energy systems" but did not set out clear next steps. (This story has been refiled to say 'on,' instead of 'of,' in paragraph 25) Sign up here. https://www.reuters.com/sustainability/new-proposals-published-cop29-climate-finance-target-2024-11-21/

2024-11-21 10:19

MUMBAI, Nov 21 (Reuters) - The Indian rupee declined to its weakest level on record on Thursday due to outflows from local stocks, which were dragged by a slump in Adani group shares, while uncertainty about the Federal Reserve's path to lowering policy rates also weighed. The rupee closed at its all-time low of 84.4925, down nearly 0.1% on the day. Foreign outflows from local equities hurt the rupee on Thursday as India's benchmark stock indexes, the BSE Sensex (.BSESN) , opens new tab and Nifty 50 (.NSEI) , opens new tab fell 0.5% and 0.7%, respectively, pressured by sharp declines in Adani group company shares. Stocks of the group's listed firms fell after U.S. authorities indicted billionaire Gautam Adani for his alleged role in a $265 million scheme to bribe Indian officials. The group's flagship company, Adani Enterprises (.ADEL.NS) , opens new tab ended the session lower by more than 20%. Foreign banks were spotted bidding for dollars aggressively, likely on behalf of custodial clients, while the RBI's dollar-selling intervention helped offset some of the pressure on account of outflows, traders said. The dollar index was nudged higher to 106.7 after snapping a three-day losing streak on Wednesday as investors awaited clarity on U.S. President-elect Donald Trump's proposed policies and gauged an uncertain outlook for the Fed's benchmark interest rates. Odds of a December rate cut by the Fed declined to about 55% from 72% a week earlier, according to CME's FedWatch tool. Asian currencies were mixed, with the Indonesian rupiah declined nearly 0.4% to its lowest in three months while the Malaysian ringgit rose 0.3%. Portfolio outflows, persistent dollar strength and some concerns about a slowdown in the Indian economy are likely to keep the rupee on a path of gradual depreciation, Dilip Parmar, a foreign exchange research analyst at HDFC Securities said. Meanwhile, investors will also track geopolitical risks from the Russia-Ukraine conflict after Russia launched an intercontinental ballistic missile during an attack on Ukraine on Thursday. Sign up here. https://www.reuters.com/markets/currencies/rupee-weakens-record-low-pressured-by-foreign-portfolio-outflows-2024-11-21/

2024-11-21 07:49

JOHANNESBURG, Nov 21 (Reuters) - South Africa's rand slipped on Thursday ahead of an interest rate decision by the central bank. At 0736 GMT, the rand traded at 18.15 against the dollar , 0.2% weaker than its previous close. Like most risk-sensitive currencies, the rand has been rocked by escalating tensions between Russia and Ukraine, which sent investors scurrying towards safe-haven assets like the dollar. The currency has so far lost about 3% against the greenback this month. The South African Reserve Bank will announce the last interest rate decision for the year later on Thursday, where it is expected to cut rates by 25 basis points. Commerzbank analyst Volkmar Baur said the SARB was unlikely to cut rates more sharply despite October local inflation falling below the central bank's target range of 3% to 6%. "In view of the geopolitical situation... it is likely to remain cautious and save a further interest rate cut for next year," Baur said. On the stock market, the Top-40 (.JTOPI) , opens new tab index was up 0.35%. South Africa's benchmark 2030 government bond was marginally stronger, the yield down 1.5 basis points at 9.03%. Sign up here. https://www.reuters.com/markets/currencies/south-african-rand-slips-ahead-interest-rate-decision-2024-11-21/