It's probably fair to say that when most people conjure images of the pharmaceutical industry, it's not often there's an association between the production of life-saving drugs and environmental decline. But according to one 2019 study by The Conversation, drug companies produce more tonnes of carbon dioxide equivalents per million dollars than the automotive industry. "By our calculations, the pharma market is 28 percent smaller yet 13 percent more polluting than the automotive sector," the outlet said of the state of the pharmaceutical industry in 2015. Put another way: drug companies need to reduce their carbon emissions for the health of the planet and everyone living on it.

Thankfully, a group of scientists from the University of Bath in the United Kingdom may have found a way for the industry to do exactly that. In a study published in the journal ChemSusChem, the team describes a process they created for converting β-pinene, a component found in turpentine, into pharmaceutical precursors that they then used to synthesize paracetamol and ibuprofen. Right now, most companies producing those painkillers use chemical precursors derived from crude oil. Turpentine, meanwhile, is a waste by-product the paper industry makes at a scale of more than 350,000 metric tonnes per year. The researchers say they also successfully used turpentine to synthesize 4-HAP, a precursor for beta-blockers, the asthma inhaler drug salbutamol and a range of household cleaners.

In addition to being more sustainable, the team's "bio-refinery" process could lead to more consistent drug costs for consumers since turpentine isn't subject to the same geopolitical pressures that can send energy and oil prices skyrocketing. However, a significant pitfall of the process in its current form is that it costs more to produce drugs with turpentine than crude oil. The team suggests consumers may be willing to pay slightly higher prices for more sustainable drugs, but let's be honest, when someone is sick or in pain, paying more for relief is the last thing most people want to do.

Korean companies LG and Hyundai are teaming up to build a new EV battery cell manufacturing plant in the US and have signed a memorandum of understanding to invest $4.3 billion in the project. The companies will each hold a stake of 50 percent in the joint venture, which will start construction on the new plant in the second half of 2023. Their new manufacturing facility will be located in Savannah, Georgia, where Hyundai is also building its first all-EV factory in the US. The battery plant is expected to be operational by 2025 at the earliest. After it starts production at full capacity, it will be able to produce 30GHWh of battery every year, which is enough to support the production of 300,000 electric vehicles.

LG and Hyundai are just the latest companies to invest in US-based battery manufacturing facilities over the past couple of years. Toyota announced in 2021 that it will build a battery plant in the country as part of a $3.4 billion investment, while Ultium Cells (GM's and LG's joint venture) secured a $2.5 billion loan from the Energy Department for the construction of EV battery facilities. More recently, Ford announced that it's spending $3.5 billion to build a lithium iron phosphate battery plant in Michigan. Lithium iron phosphate, which can tolerate more frequent and faster charging, costs less than other battery technologies and could bring down the cost of EVs.

Other companies could follow suit, seeing as the Biden administration is pushing to bring more EV and battery manufacturing to the US. Last year, it launched the American Battery Materials Initiative, which will give 20 companies $2.8 billion in grants in hopes of encouraging manufacturers to start battery production stateside and making sure that the US won't be heavily dependent on "unreliable foreign supply chains."

Hyundai and LG believe that the new facility can help create "a stable supply of batteries in the region" and allow them "to respond fast to the soaring EV demand in the US market." Hyundai Mobis, the automaker's parts and service division, will be assembling battery packs using cells manufactured in the plant. The automaker will then use those packs for Hyundai, Kia and Genesis electric vehicles. 

The Biden administration wants to impose a 30 percent tax on the electricity used by cryptocurrency mining operations, and it has included the proposal in its budget for the fiscal year of 2024. In a blog post on the White House website, the administration has formally introduced the Digital Asset Mining Energy or DAME excise tax. It explained that it wants to tax cryptomining firms, because they aren't paying for the "full cost they impose on others," which include environmental pollution and high energy prices. 

Crypto mining has "negative spillovers on the environment," the White House continued, and the pollution it generates "falls disproportionately on low-income neighborhoods and communities of color." It added that the operations' "often volatile power consumption " can raise electricity prices for the people around them and cause service interruptions. Further, local power companies are taking a risk if they decide to upgrade their equipment to make their service more stable, since miners can easily move away to another location, even abroad. 

It's no secret that the process of mining cryptocurrency uses up massive amounts of electricity. In April, The New York Times published a report detailing the power used by the 34 large scale Bitcoin miners in the US that it had identified. Apparently, just those 34 operations altogether use the same amount of electricity as three million households in the country. The Times explained that most Bitcoin mining took place in China until 2021 when the country banned it, making the United State the new leader. (In the US, New York Governor Kathy Hochul signed legislation that restricts crypto mining in the state last year.) Previous reports estimated the electricity consumption related to Bitcoin alone to be more than some countries', including Argentina, Norway and the Netherlands. 

As Yahoo News noted, there are other industries, such as steel manufacturing, that also use large amounts of electricity but aren't taxed for their energy consumption. In its post, the administration said that cryptomining "does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity."

Critics believe that the government made this proposal to go after and harm an industry it doesn't support. A Forbes report also suggested that DAME may not be the best solution for the issue, and that taxing the industry's greenhouse gas emissions might be a better alternative. That could encourage mining firms not just to minimize energy use, but also to find cleaner sources of power. It might be difficult to convince the administration to go down that route, though: In its blog post, it said that the "environmental impacts of cryptomining exist even when miners use existing clean power." Apparently, mining operations in communities with hydropower have been observed to reduce the amount of clean power available for use by others. That leads to higher prices and to even higher consumption of electricity from non-clean sources. 

If the proposal ever becomes a law, the government would impose the excise tax in phases. It would start by adding a 10 percent tax on miners' electricity use in the first year, 20 percent in the second and then 30 percent from the third year onwards. 

The PC market has been reeling for months, but it just got worse. Both Canalys and IDC estimate that worldwide computer shipments dropped between 29 to 33 percent year-over-year in the first quarter of 2023. That's a steeper drop than during the holidays, and this time none of the major brands escaped the worst of the downturn. Second-place HP escaped relatively lightly with a 24 percent drop in shipments, while fourth-place Apple felt the most pain with a drop of more than 40 percent. ASUS, Dell and Lenovo all took a roughly 30 percent hit.

The explanations may sound familiar. Customers are reluctant to buy PCs in a turbulent economy where inflation is running wild, and the pandemic-era boom in remote work is still winding down. People either can't afford new machines or already have ones that are good enough. There's no comment on why Apple struggled more than its peers, but it generally targets the high-end market and is more vulnerable to poor economic conditions. TechCrunch also notes that Apple's transition to in-house chips helped it avoid the tough times that Windows vendors faced in recent years, but that the honeymoon period may be over.

Analysts are optimistic. Canalys believes this is the worst drop the PC market will see in 2023, while both research groups expect to see recovery as soon as the second half of 2023. Old computers will be due for upgrades, including Chromebooks at schools, while businesses will update to Windows 11 systems. IDC also sees the slowdown as giving manufacturers a chance to move some production outside of China.

There's still a note of caution. IDC warns that the PC industry could be in for a "slog" if recessions continue into 2024. Although the sharpest declines may be over, it could take a long time for the market to bounce back. Don't be surprised if brands play it relatively safe with computers they know are likely to sell, rather than experimenting with unusual designs.

Mercedes-Benz is developing a new in-house operating system to power its next generation of electric vehicles. Announced today at an event the automaker held in California, Mercedes said MB.OS – short for Mercedes-Benz Operating System – will deliver enhancements in safety, automated driving and navigation.

The automaker is working with several partners to build its new software stack, including NVIDIA, Luminar and Google. Mercedes will lean on NVIDIA for the company’s software, data and AI expertise. The GPU maker's Orin chipset will also power the first generation of electric cars Mercedes builds based on its upcoming Mercedes Modular Architecture (MMA) platform. The automaker expects the first MMA EV to arrive by mid-decade.

Mercedes-Benz

As for Luminar and Google, the former will provide Mercedes with its LiDAR technology, while the latter will work with the company to build a branded navigation experience incorporating features from Google Maps. In the meantime, Mercedes is partnering with Google to bring the company’s “Place Details” data to all cars that sport the latest version of its MBUX infotainment system. You can use the integration to look up a local business, find out when it opens, and see photos of the inside and what other Google users have to say about it. Mercedes plans to open MB.OS to other partners as well, including TikTok, Zoom and even Angry Birds developer Rovio.

All MMA EVs will ship with the hardware needed for Level 2 automated driving. Mercedes is also working with NVIDIA and Luminar to offer Drive Pilot, a Level 3 automated driving system. The software will arrive later this year in 2024 EQS and S-Class models. Naturally, MB.OS will also enable Mercedes to deliver over-the-air updates, allowing it to add new features to existing cars.

The company isn’t shy about the fact that some upgrades may cost a one-time fee or come as part of a subscription package. In fact, Mercedes has already announced a handful of software bundles it will offer to owners of cars with MB.OS. MB.Connect, for instance, will bring together the company’s navigation, entertainment and communication features in one package. Other bundles, such as MB.Charge, will provide customers with priority access to Mercedes-Benz charging stations. The automaker says it will allow drivers to explore and buy upgrades for their Benz online, through the Mercedes mobile app and directly from the car.

“The company is confident that this strategic approach to software and hardware development will be the basis for lifetime revenues as well as additional contributions,” Mercedes said, adding it expects software revenue from bundles like MB.Connect to contribute “a low-to-mid single-digit billion euro figure” to its bottom line by mid-decade.

Elizabeth Warren is calling for more federal oversight of Big Tech. In a letter (PDF link) the Democratic senator sent on Tuesday, she asked the Federal Trade Commission and Department of Justice to look into Google, Apple and Amazon’s expansion into the automotive industry.

Warren claims the three companies are using their positions in mobile and cloud computing to become dominant players within the sector. “This expansion has potentially alarming implications for developers, workers, and consumers,” Warren states. She’s urging FTC Chair Lina Khan and Jonathan Kanter, the head of the Justice Department’s antitrust division, to act decisively before it’s too late. “As Chair Khan has written, ‘it is much easier to promote competition at the point when a market risks becoming less competitive than it is at the point when a market is no longer competitive.’ This market finds itself at exactly such a juncture,” Warren warns.

Specifically, the senator calls out the companies for employing “all-or-nothing” bundling tactics. As one example, she points to the terms of Android Automotive. Google’s operating system doesn’t come with Maps or Assistant included. To access one of those services, automakers must purchase a bundle that includes all of them. Warren argues that tactic allows Google to leverage its dominant position in one area to obtain market share in another. In this specific case, she suggests the company is using Maps to grow Assistant.

“These tactics are reminiscent of past Big Tech bundling controversies,” Warren states, drawing a parallel to cases like the Justice Department’s 2001 lawsuit against Microsoft. Apple and Amazon did not immediately respond to Engadget’s request for comment. “Carmakers choose to partner with tech companies to improve the experience for their customers,” a Google spokesperson told Engadget. "There is enormous competition in the connected car space – including Apple CarPlay, Amazon Alexa, Cerence, TomTom, ChargePoint and many others – and carmakers continue to invest in their in-house solutions simultaneously. At Google, our goal is to enable carmakers and developers across the auto industry to develop software solutions at scale.”

As Vox points out, automakers are partly to blame for the current state of the market. One reason platforms like CarPlay and Android Auto are so popular is that first-party options from car companies have historically failed to meet consumer expectations. In 2019, Ford paid $17 million to settle a class-action lawsuit related to its MyFord Touch infotainment system. The platform was known for freezing and crashing while in use.

Warren says ensuring there’s fair competition in the automotive sector should be a priority for the FTC and DOJ. “The FTC and DOJ don’t have to wait until there’s a problem to take action,” she writes. “Now is the time to prevent Big Tech from strangling competition in the automotive industry before it’s too late.”

Though primarily still known for its school buses here in the US, BYD has become China’s largest automaker with a one trillion yuan market capitalization (~$149 billion) — that’s bigger than Ford and GM’s market caps ($66.01B and $56.63B, respectively) put together. And while Americans were gearing up for Fourth of July festivities, BYD was quietly supplanting Tesla as the world’s most prolific EV automaker with the Shenzhen-based, Berkshire Hathaway-backed car company reportedly outselling Tesla in the first half of 2022 by 641,000 cars to 564,000.

BYD is one of more than 450 registered EV firms in China, all of which are competing for a slice of the world’s largest automotive market with future designs for the US and Europe as well. American ingenuity may have initially ushered in the EV era, but it’s been China’s relentless commoditization of the technology that has put the nation’s automakers at the forefront of the global electric vehicle race.

“Developing new energy vehicles is essential for China’s transformation from a big automobile country to a powerful automobile country,” Chinese President Xi Jinping said in 2014. “We should increase research and development, seriously analyze the market, adjust existing policy and develop new products to meet the needs of different customers. This can make a strong contribution to economic growth.” In China, so-called New Energy Vehicles (NEVs) are basically any plug-in electric (either hybrid or battery) which qualifies for financial subsidies from the government — specifically battery electrics, plug-in hybrids, and fuel cell EVs.

These efforts can also help China meet its Paris Accord carbon neutrality targets of a 20 percent reduction by 2035 and a 100 percent reduction by 2060 – lofty goals given it’s currently the world’s biggest emitter of carbon dioxide. These policies aim to reduce pollution in Chinese cities, reduce the nation’s reliance on imported oil, and “position China for global leadership in a strategic industry,” per a 2019 study by Columbia University.

The country’s central government has invested heavily over the past decade to spur growth in the NEV industry, leveraging a mix of policy, tax incentives and consumer subsidies. As of 2020, EVs must account for 12 percent of production for any company that manufactures or imports more than 30,000 vehicles in China (up from a 10 percent requirement the previous year). The government has also deeply subsidized consumers’ EV purchases with more than $14.8 billion since 2009, providing up to $3,600 for battery electric vehicles (BEVs) with more than 400 km range, though those rebates were first halved, then eliminated by 2021.

The government has also provided funding and standardization mandates for building out China’s charging infrastructure with a goal of 120,000 EV charging stations and 4.8 million EV charging stalls available by 2020. Local and municipal governments further incentivized EVs with discounts on licensing fees and preferential parking spots for NEVs.

Anadolu Agency via Getty Images

The plan appears to be working. Nearly 15 percent of new vehicle sales in 2021 (totaling $124.2 billion) were NEVs — that’s a record 2.99 million units and a 169 percent increase over the previous year, according to data compiled by the China Passenger Car Association (CPCA). Of the 6.75 million total EVs sold in 2021, itself a 108 percent YoY increase, Chinese EVs accounted for 53 percent of the global market. Including PHEVs, some 3.3 million electrified vehicles were sold in China last year, compared to just 608,000 in the US. What’s more, the China Passenger Car Association now estimates that another 6 million EVs will be sold in 2022.

The Chinese government anticipates EVs will achieve 20 percent domestic market penetration by 2025 and 60 percent by 2030. UBS Global has forecasted that three in five vehicles (60 percent) on China’s roads by 2035 will be electrified, up from the 1 percent they constituted in 2019. By 2027, the market is expected to reach $799 billion.

“Emerging China EV companies are making a concerted effort to target the premium end of the local market and eventually abroad,” Deutsche Bank equity analyst Edison Yu told Forbes in July. “We are already witnessing intense domestic competition in the mass market from Leap Motor, Hozon Neta, WM Motor, BYD and numerous sub-brands from incumbent OEMs (GAC/Aion, BAIC/Arcfox, SAIC/R-brand). Newer entrants have shown willingness to absorb deep losses to quickly gain volume share.”

The Chinese EV market is currently dominated by five firms: Tesla comes in third surrounded by domestic automotive manufacturers BYD (27.9 percent market share), SGMW (10.1 percent), Chery (4.9 percent), and GAC (4.2 percent). Geely, which owns stakes in Volvo, Polestar and Lotus, didn’t crack the top five but its various brands did manage a record 2.2 million worldwide vehicle sales in 2021. XPeng and NIO are additional noteworthy brands, totaling 98,155 and 91,429 sales in 2021, respectively.

At the Boao Forum in 2018, President Jinping announced a raft of sweeping economic reforms designed to further open the nation’s markets, including an announcement to phase out existing limits on foreign ownership of automakers. The Policy for the Automotive Industry of 1994 contained a key provision that banned foreign business entities from owning more than 50 percent of a joint venture with a Chinese firm as well as from participating on more than two such ventures for any single vehicle type sold in the country — the so-called 50%+2 rule. Jinping’s reforms will see the 2-venture limit lifted in 2022 and the restriction on ownership share eliminated at the end of 2023.

Xinhua News Agency via Getty Images

This regulatory relaxation could have immense impact on the Chinese EV market, potentially increasing competition for domestic OEMs from an influx of international automakers hawking additional NEV brands and models. The rule change could also see foreign firms renegotiate their ownership stakes, potentially even fully buying out their Chinese partners, though as Sino Auto points out, that isn’t likely to happen in the immediate future as the existing joint ventures have an average remaining contract length of 19 years. Overall, the policy shift should give international firms a more even footing with local Chinese automakers.

That’s not to say that local firms won’t still enjoy a number of advantages. For one, switching costs associated with transitioning from internal combustion to electric drivetrains are largely non-existent because for many Chinese consumers, an EV will be their first vehicle. The local automakers also have a better handle on what their customers want, offering tech-laden, customizable EVs at a variety of trim levels (starting at literally $4,300) to tech-savvy, price sensitive, middle-class consumers.

SOPA Images via Getty Images

International auto companies will need to tread carefully around any number of hot button topics, freedom and privacy concerns, should they choose to do business in China. GM and BMW, for example, recently became embroiled in a dispute over accusations of forced labor usage in lithium mining in the Xinjiang region. Beijing denied the allegations, characterizing the report as “nothing but ill-intentioned smears against China,” per Foreign Ministry spokesman Zhao Lijian in April. The US has since sanctioned individuals and companies involved in the Xinjiang operation. Lithium mined from the region is used in Tesla battery systems, among others.

Looking ahead, you’ll need to tilt your head back a bit as the Chinese EV market is expected to grow more than 30 percent by 2027. The government’s stringent emissions regulations and growing population are both expected to contribute to the expected demand growth. What’s more, “over the forecast period (2022-2027), the country may also witness growth in the adoption of electric buses,” a recent study from Mordor Intelligence notes. “More than 30 Chinese cities have made plans to achieve 100 percent electrified public transit in the near future.” That’s not even including the nation’s battery production capacity, which currently stands at roughly 59 percent of the global market. It too is expected to balloon 7.5 percent by 2027.

Aly Song / reuters

Given the robust domestic Chinese market, it may not be long before we see BYD or XPeng brands on American roads, much as they are on the streets of Europe. “I’d imagine it’s only a matter of time before we see more Chinese vehicles being sold in North America,” Morningstar analyst Seth Goldstein told Capital in February.

“Given that EVs are a new powertrain, this is an opportunity for Chinese automakers to establish brands in new geographies where, for years, with the internal-combustion engine, Chinese automakers tended to only sell vehicles in China,” he continued.

The question now is whether China can maintain its pole positioning. Just as Tesla was eventually overtaken by BYD despite enjoying a sizeable and lengthy initial lead, Chinese automakers find themselves in much the same position: on top of the heap, but for how long once the likes of GM and Ford come sniffing around with their deep pockets and expansive R&D budgets?

With supply chains still in disarray and the war in Ukraine wreaking havoc on EV battery component commodity prices, many forward-thinking automakers are scrambling to secure not only stocks of the valuable metals like cobalt, lithium and nickel that go into EV batteries, but also the means of of building the batteries themselves. On Thursday, Volkswagen Group held a groundbreaking at the site of its forthcoming EV battery cell plant in Salzgitter Germany and announced the formation of a new company, PowerCo, which will be responsible for handling the VW Group's burgeoning battery business. 

"Today is a good day for the automotive industry in Germany and Europe," German Chancellor Olaf Scholz said during the event. "Volkswagen is showing how the future of sustainable, climate-compatible mobility could look. Together, we are laying the foundation for shaping this future to a significant extent in Salzgitter."

PowerCo will handle the Group's global battery activities, from producing the batteries themselves to conducting R&D on new battery technologies to "products such as major storage systems for the energy grid," per the announcement. Once the Salzgitter plant is operational, PowerCo will begin work on a second factory in Valencia, Spain with an eye on three further cell factories in Europe and potentially North America as well. Each of the European factories will reportedly operate using 100 percent renewable energy. In all, PowerCo aims to open a total of six battery factories in Europe producing a total of 240 GWh capacity every year (~6 million electric vehicles worth).

Stefan Warter

Operations across the various production facilities will be highly standardized. Everything from "equipment, buildings and infrastructure" to "products, processes and IT" will conform so that the entire production process can be more readily adapted to future "product and production innovations," per the release.

(c) Sebastian Dorbrietz

The Salzgitter plant is expected to create 5,000 new jobs when it begins operations in 2025 with an annual capacity of 40 GWh (~500,000 electric vehicles worth). Some 20,000 positions are will need to be filled once the other European factories open, Daniela Cavallo, Chairwoman of the General and Group Works Council of Volkswagen AG, said. 

Toyota is the latest automaker to run out of US federal tax credits and it will join Tesla and GM in losing access to the $7,500 subsidy. The company surpassed the qualifying sales threshold for EVs and hybrids in June, as Bloomberg reports.

The government limited each carmaker to 200,000 EV tax credits, though Toyota and other companies have been lobbying for that cap to be lifted. Toyota says losing the credit will mean its EVs are more expensive for consumers, which will slow the transition away from combustion-engine cars to EVs.

However, Toyota and Tesla have pushed back on a Biden administration plan to grant extra credits to unionized carmakers. GM, Ford and Stellantis (the parent of Fiat and Chrysler) have unionized plants. The Build Back Better Act, which passed through the House but stalled in the Senate, also included extra credits for cars made entirely in the US.

As things stand, Toyota's tax credits will be phased out gradually over a one-year period. Bloomberg notes that the value of the subsidy will be halved twice before it expires. However, Toyota will still be able to take advantage of incentives at the state level.

Russia’s invasion of Ukraine has exacerbated a number of fault lines already present within the global energy supply chain. This is especially true in Europe, where many countries were reliant on the superstate's natural resources, and are now hastily looking to cut ties before the supply is shut off. This has revealed the fragility of Europe’s energy market, and caused it to drive up demand and prices for consumers all over the globe.

In the UK, things are becoming increasingly dire and energy prices are skyrocketing. Bad planning on the infrastructure side and the cancellation of several major domestic energy efficiency programs are exacerbating the problem. It’s clear that real, useful action on the national level isn’t coming any time soon. So, I wondered, what would happen if I, personally, simply tried to break up with natural gas on my own? It’s relatively straightforward but, as it turns out, it comes at a cost that only one percenters will be able to bear. 

Dan Cooper: Energy consumer

I live in a four-bedroom, end-terraced house that’s around 150 years old and I’ve tried, as best as I can, to renovate it in an eco-friendly way. Since we bought it almost a decade ago, my wife and I have insulated most of the rooms, installed a new gas central heating system and hot water cylinder. We are, like nearly 20 million other households in the UK, reliant on natural gas to supply our home heating, hot water and cooking. And in the period between January 8th and April 7th, 2022, I was billed on the following usage:

Essentially, I paid around $1,300 for my natural gas and electricity in the first quarter of 2022. That figure is likely to rise significantly, as the UK’s mandatory price cap on energy rose by more than 50 percent in April. A further price rise is scheduled for October, with the figure set at £2,800 per year, even though wholesale energy prices are no longer increasing. It’s likely that my energy bill for the first quarter of 2023 will be nearly twice what I’ve just paid. In 2020, the UK reported that 3.16 million households were unable to pay for their energy costs; that figure is likely to leap by 2023.

In the US, the EIA says that monthly utility bills rose to a national average of $122 in 2021, with Hawaii ($178 per month) and Utah ($82 per month) the most expensive and cheapest state to buy energy in. The average price per kWh is around 13.7 cents, which is less than half the comparable price in the UK as it currently stands. For natural gas, the average natural gas price for residential customers was $10.84 per thousand cubic feet in 2020.

The gas problem

Xinhua News Agency via Getty Images

Much of Europe is reliant on natural gas, a significant proportion of which was supplied by Russia. Despite a rapid decline in domestic production, Europe sought to make natural gas the bedrock of its energy policy in the medium term. A 2013 policy paper written by Sami Andoura and Clémentine d’Oultremont outlined the reasons why officials were banking on it. “An economically attractive option for investors, a potential backup source for renewables and the cleanest fossil fuel, natural gas is expected to play an important role in the European transition towards a low-carbon economy by 2050.” This is despite the fact that “European energy resources are being depleted, and energy demand is growing.”

In 2007, then EU Energy Commissioner Andris Piebalgs said that the bloc is “dependent on imports for over one half of our energy use.” He added that energy security is a “European security issue,” and that the bloc was vulnerable to disruption. “In 10 years, from 1995 to 2005, natural gas consumption in the EU countries has increased from 369 billion to 510 billion m3 [of gas] year,” he said. He added that the EU’s own production capacity and reserves peaked in the year 2000.

The EU’s plan was to pivot toward Liquified Natural Gas (LNG), methane which has been filtered and cooled to a liquid for easier transportation. It enables energy supplies from further afield to be brought over to Europe to satisfy the continent’s need for natural gas. But the invasion of Ukraine by Russia has meant that this transition has now needed to be accelerated as leaders swear off Russian-sourced gas and oil. And while the plan is to push more investment into renewables, LNG imports are expected to fill much of the gap for now.

Except, and this is crucial, many of the policy decisions made during this period seem to be in the belief that nothing bad would, or could, disrupt supply. Here in the UK, wholesale gas prices have risen five times since the start of 2021 but there’s very little infrastructure available to mitigate price fluctuations. 

The Rough Field is a region in the North Sea situated 18 miles off the coast of Yorkshire, and was previously a source of natural gas for the UK. In 1985, however, it was converted into a natural gas storage facility with a capacity of 3.31 billion cubic meters. This one facility was able to fulfill the country’s energy needs for a little more than a week at a time and was considered a key asset to maintaining the UK’s energy security.

However, Centrica, the private company spun out of the former state-owned British Gas, opted to close the field in 2017. It cited safety fears and the high cost of repair as justification for the move, saying that alternative sources of gas – in the form of LNG – were available. At the time, one gas trader told Bloomberg that the closure would “boost winter prices” and “create seasonal swings in wholesale energy costs.” He added that the UK would now be “competing with Asia for winter gas cargoes,” raising prices and increasing reliance on these shipments. 

And, unsurprisingly, the ramifications of this decision were felt in the summer of 2017 when a pair of LNG tankers from Qatar changed course. The vessels were going to the UK, and when they shifted direction, Bloomberg reported that prices started to shift upward almost instantly. 

Analysis from TransitionZero, reported by The Guardian, says that the costs associated with natural gas are now so high that it’s no longer worth investing in as a “transition fuel.” It says that the cost to switch from coal to gas is around $235 per ton of CO2, compared to just $62 for renewables as well as the necessary battery storage.

Swearing off gas

MarianVejcik via Getty Images

In order to break up with gas in my own home, I’ll need to swap out my stovetop (not so hard) and my whole central heating system (pretty hard). The former I can likely achieve for a few hundred dollars, plus or minus the cost of installation. (Some units just plug in to a standard wall socket, so I may be able to do much of the work myself if I’m feeling up to the task.) Of course, getting a professional to unpick the gas pipeline that connects to my stovetop is going to be harder. 

Unfortunately, replacing a 35kW condensing gas boiler (I have the Worcester Bosch Greenstar 35CDi) is going to be a lot harder. The obvious choice is an Air Source Heat Pump (ASHP), or even a geothermal Ground Source Heat Pump (GSHP), both of which are more environmentally-friendly. After all, both are more energy-efficient than a gas boiler, and both run on electricity which is theoretically cleaner.

More generally, the UK’s Energy Saving Trust, a Government-backed body with a mission to advocate for energy efficiency, says that the average Briton should expect to pay between £7,000 and £13,000 to install an ASHP. Much of that figure is dependent on how much of your home’s existing hardware you’ll need to replace. A GSHP is even more expensive, with the price starting at £14,000 and rising to closer to £20,000 depending on both your home’s existing plumbing and the need to dig a bore hole outside. 

In my case, heat pump specialists told me that, give or take whatever nasties were found during installation, I could expect to pay up to £27,000 ($33,493). This included a new ASHP, radiators, hot water and buffer cylinders, pumps, piping, controllers, parts and labor. Mercifully, the UK is launching a scheme to offer a £5,000 ($6,200) discount on any new heat pump installations. But that still means that I’m paying north of £20,000 (and ripping out a lot of existing materials with plenty of life left in them) to make the switch. 

In the US, there’s plenty of difference on a state level, but at the federal level, you can get a tax credit on the purchase of a qualifying GSHP. A system installed before January 1st, 2023, will earn a 26 percent credit, while a unit running before January 1st, 2024, will be eligible for a 22 percent credit. Purchasers of a qualifying ASHP, meanwhile, were entitled to a $300 tax credit until the end of 2021. 

The contractors also provided me with a calculation of my potential energy savings over the following seven years. It turns out that I’d actually be spending £76 more on fuel per month, and £532 over the whole period. On one hand, if I had the cash to spare, it’s a small price to pay to dramatically reduce my personal carbon emissions. On the other, I was hoping that the initial investment would help me reduce costs overall, but that's not the case while the cost of gas is (ostensibly) cheaper than electricity. (This will, of course, change as energy prices surge in 2023, however, but I can only look at the data as it presently stands.)

An aside: To be honest with you all, I was fully aware that the economic case for installing a heat pump was always going to be a shaky one. When speaking to industry figures last year, they said that the conversation around “payback” isn’t shared when installing standard gas boilers. It doesn’t help that, at present, levies on energy mean that natural gas is subsidized more than energy, disincentivizing people making the switch. The rise of electric cars, too, has meant that demand for power is going to increase sharply as more people switch, forcing greater investment in generation. What’s required just as urgent is a series of measures to promote energy efficiency to reduce overall demand for both gas and electricity. 

Energy efficiency

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The UK has had an on-again, off-again relationship with climate change mitigation measures, which has helped sow the seeds of this latest crisis. The country, with low winter temperatures, relies almost exclusively on natural gas to heat its homes, its largest energy-consuming sector. As I reported last year, around 85 percent of UK homes are heated by burning natural gas in domestic boilers. 

Work to reduce the UK’s extraordinary demand for natural gas was sabotaged by government in 2013. In 2009, under the previous Labour government, a series of levies on energy companies were introduced under the Community Energy Saving Programme. These levies were added to domestic energy bills, with the proceeds funding works to install wall or roof insulation, as well as energy-efficient heating systems and heating controllers for people on low incomes. The idea was to reduce demand for gas by making homes, and the systems that heated them, far more efficient since most of the UK’s housing stock was insufficiently insulated when built. 

But in 2013, then-Conservative-Prime Minister David Cameron was reportedly quoted as saying that he wanted to reduce the cost of domestic energy bills by getting “rid of all the green crap.” At the time, The Guardian reported that while the wording was not corroborated by government officials, the sentiment was. Essentially, that meant scrapping the levies, which at the time GreenBusinessWatch said was around eight percent of the total cost of domestic energy. Cameron’s administration also scrapped a plan to build zero-carbon homes, and effectively banned the construction of onshore windfarms which would have helped reduce the cost of domestic electricity generation. 

In 2021, the UK’s Committee on Climate Change examined the fallout from this decision, saying that Cameron’s decision kneecapped efforts to reduce demand for natural gas. As Carbon Brief highlighted at the start of 2022, in 2012, there were nearly 2.5 million energy efficiency improvements installed. By 2013, that figure had fallen to just 292,593. The drop off, the Committee on Climate Change believes, has caused insulation installations to fall to “only a third of the rate needed by 2021” to meet the national targets for curbing climate emissions. 

Carbon Brief’s report suggests that the financial savings missed by the elimination of these small levies – the “green crap,” – has cost UK households around £2.5 billion. In recent years, a pressure group – Insulate Britain – has undertaken protests at major traffic intersections to help highlight the need for a new retrofit program to be launched. The current government’s response to their pleas has been to call for tougher criminal penalties for protesters including a jail term of up to six months.

Carbon Brief

Making my own power

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Looking back through my energy bills over the last few years, my household’s annual electricity consumption is around 4,500kWh per year. A heat pump would likely add a further 6,000kWh to my energy bill, not to mention any additional cost for switching to all-electric cooking. It would be sensible to see if I could generate some, or all, of my own energy at home using solar panels to help reduce the potential bill costs. 

The Energy Saving Trust says that the average homeowner can expect to pay £6,500 for a 4.2kWp system on the roof of their home. Environmental factors such as the country you live in and orientation of your property mean you can’t be certain how much power you’ll get out of a specific solar panel, but we can make educated guesses. For instance, the UK’s Renewable Energy Hub says you can expect to get around 850kW per year out of a 1kW system. For a theoretical 5kWp system in my location, the Energy Saving Trust thinks I’ll be able to generate around 4,581kWh per year. 

Sadly, I live in an area where, even though my roof is brand new and strong enough to take panels, they aren’t allowed. This is because it is an area of “architectural or historic interest where the character and appearance [of the area] needs to be protected or improved.” Consequently, I needed to explore work to ground-mount solar panels in my back garden, which gets plenty of sunlight. 

While I expected grounded panel installations to be much cheaper, they apparently aren’t. Two contractors I spoke to said that while their average roof-based installation is between £5,000 and £7,000, a 6kWp system on the ground would cost closer to £20,000. It would be, in fact, cheaper to build a sturdy shed in the bit of back yard I had my eye on and install a solar system on top of there, compared to just getting the mounting set up on the ground. That’s likely to spool out the cost even further, and that’s before we get to the point of talking about battery storage. 

The bill

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For this rather nifty thought experiment, the cost for me to be able to walk away from natural gas entirely would be north of £30,000 ($37,000). Given that the average UK salary is roughly £38,000, it’s a sum that is beyond the reach of most people without taking out a hefty loan. This is, fundamentally, why the need for government action is so urgent, since it is certainly beyond the ability of most people to achieve this change on their own. 

In fact, it’s going to require significant movement from central government not just in the UK but elsewhere to really shake our love-hate relationship with natural gas. Unfortunately, given that it’s cheap, cleaner than coal and the energy lobby has plenty of muscle behind it, that’s not likely to happen soon. And so we’re stuck in a trap – it’s too expensive to do it ourselves (although that’ll certainly be an interesting experiment to undertake) and there’s no help coming, despite the energy crisis that’s unfurling around us.