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The operator of the largest gas-fired electricity generation fleet in America believes that renewables will be vital to meet the rise in power demand driven by AI and the reshoring of manufacturing.
NextEra Energy – whose 72 gigawatts (GW) operating portfolio consists of 55% renewables, 36% gas, and 8% nuclear power generation – says that America will need all forms of energy to meet the expected surge in demand. And wind, solar, and battery storage can act as the “bridge” energy source until new natural gas and nuclear capacity comes online.
For years, natural gas was touted as the “bridge fuel” between coal and renewables.
Now, renewables should be viewed as the energy source to help meet demand until new gas and nuclear power plants are commissioned, NextEra’s chairman, president, and CEO, John Ketchum, said on the company’s Q1 earnings call this week.
All forms of power will be needed in the coming years, and the U.S. shouldn’t pick winners and losers among the various sources capable of delivering the necessary power generation increase, the executive noted.
“We should be thinking about renewables and battery storage as a critical bridge” until other technology is ready at scale, like new gas-fired plants, Ketchum said.
NextEra expects more than 450 GW of cumulative demand for new generation between now and 2030 in the United States.
“To meet this demand, we believe it’s important to exercise what I described as energy realism and energy pragmatism. Energy realism is about embracing all forms of energy solutions and understanding the demand for electricity in the United States is here now, and it’s not slowing down,” Ketchum added.
As many as 75 GW of gas-fired capacity is set to come online by 2030, according to NextEra’s estimates. While significant, this increase is nowhere close to meeting the over 450 GW of total generation that NextEra believes is needed.
“Bottom line, don’t take this as picking winners and losers. It’s not nor can it be,” Ketchum said.
NextEra’s top executive stressed the importance of the U.S. Administration’s policy in encouraging all forms of energy in America.
“We cannot isolate ourselves to just a couple of technologies like gas and nuclear, which are much more expensive than they’ve ever been and take far longer to build. We say all this as a company in our space that does it all,” Ketchum told analysts during the earnings call.
As early as in March, Ketchum warned the audience at the CERAWeek event in Houston not to overlook renewables as a vital source of electricity in the United States.
Renewables should be part of the equation, NextEra’s CEO said last month, noting that “There’s not a one-size-fits-all solution. We’re going to need all forms of generation- renewables, gas, and nuclear.”
AI data centers and the reshoring of some manufacturing will drive U.S. electricity demand growth over the coming decade.
The world’s biggest economy will need all energy sources to ensure power demand is met. Natural gas is the biggest near-term winner of AI advancements, but renewables will also play a key role in powering the data centers of next-generation computing, analysts say.
Policy and regulation “will need to reflect the reality that there is a need for all generation technologies,” according to Wood Mackenzie’s analysts, as the natural gas boom alone cannot meet the soaring electricity demand.
AI data centers are set to account for almost half of U.S. power demand growth by the end of the decade, the International Energy Agency (IEA) said in its Energy and AI report earlier this month.
Driven by AI use, America will consume more electricity for data centers than for the production of aluminum, steel, cement, chemicals, and all other energy-intensive goods combined, according to the agency.

Many countries across Europe are investing heavily in the development of green hydrogen projects to help decarbonise hard-to-abate industries in support of a green transition. Europe has been highly competitive with other emerging green hydrogen regions, such as the Middle East and Asia-Pacific. However, while Europe’s green hydrogen capacity expands, the region continues to face a significant implementation gap, which could make it miss decarbonisation targets in the coming decades.
Green hydrogen is produced using renewable electricity to power an electrolyser, which splits water into hydrogen and oxygen. The gas is then burned to produce power, emitting only water vapour and warm air, which makes it carbon-free. This contrasts with the grey hydrogen production process, which is powered using natural gas and produces carbon emissions. Hydrogen is a versatile carrier that can be used for a range of applications and is expected to be used to fuel hard-to-abate industries, such as transport and manufacturing.
In Europe, several countries are developing their green hydrogen capacity in pursuit of a green transition. Germany has some of the most ambitious green hydrogen targets in Europe, introduced in its National Hydrogen Strategy. It sets out a production target of 5 GW by 2030 and an additional 5 GW to be developed between 2035 and 2040. The government also aims to establish 1,800 kilometres of new and refurbished pipelines for a “hydrogen start-up grid” in Germany by 2027/2028.
In February, Finland’s first green hydrogen plant commenced production. Finnish company P2X Solutions is among the first companies in Europe to begin commercial production. The new facility in the west of the country has a production capacity of 20 MW and will also include a methanation facility, which will launch at a later date. The plant uses wind energy to power operations, making for carbon-free hydrogen production. The Finnish Ministry of Economic Affairs and Employment provided a $27.6 million grant for the development of the facility, while the Finnish Climate Fund provided a $10.6 million loan.
The P2X CEO Herkko Plit said that the regulatory restrictions on emissions in air and marine traffic and industrial production that are expected to take effect could drive demand for green hydrogen. “Our company strategy has been to scale up, bearing market and technological risks in mind,” said Plit, adding it was easier to find sufficient customers for a smaller plant and scale up production incrementally as demand shifts. “I also see this as an opportunity for Europe to (…) increase competitiveness, which perhaps was not as strong when the IRA was attracting investments to the United States,” Plit stated.
In February, Spain announced almost $425 million in investment from its post-Covid recovery fund for the European Hydrogen Bank’s Auction-as-a-Service (AaaS) scheme. The funding aims to boost the development and deployment of green hydrogen across the EU and support the decarbonisation of Spain’s industry and transport sectors.
Despite several positive moves by European countries aimed at developing the region’s green energy capacity, a significant implementation gap persists in deploying green hydrogen policies. One 2025 report, which tracked 190 green hydrogen projects over three years, showed that only 7 percent of global capacity announcements were completed on schedule. The announced project pipeline tripled to 422 GW within three years, however, the $1.3 trillion in subsidies expected to be needed to achieve this development greatly exceeds the already announced subsidies for the sector.
The significant implementation gaps of the past and insufficient designated funding make it unlikely that the projected green hydrogen capacity will be developed in the anticipated timeframe. Therefore, policymakers will need to prepare for prolonged green hydrogen scarcity, as well as seek greater funding to achieve their capacity goals.
Several companies have reined in green hydrogen ambitions due to spiralling costs and regulatory hurdles faced during project development. The oil majors British BP and Spanish Repsol, as well as Norway’s aluminium and energy company Norsk Hydro, have all either cancelled or delayed green hydrogen projects.
In October, Repsol announced it would be pausing green hydrogen development projects in Spain due to the country’s unfavourable regulatory regime. Repsol has a project pipeline of 350 MW. However, the firm does not plan to ditch its green hydrogen ambitions altogether, instead stating plans to develop its next electrolyser in neighbouring Portugal.
According to the International Energy Agency (IEA), the uptake of low-carbon hydrogen is slow at present due to “unclear demand signals, financing hurdles, delays to incentives, regulatory uncertainties, licensing and permitting issues and operational challenges.” Therefore, the IEA recommends the introduction of policies that stimulate demand in key sectors such as heavy industry, refining, and long-distance transport to speed up deployment. Meanwhile, the successful launch of early commercial-scale projects, such as the Finnish P2X Solutions facility, will likely encourage more companies to develop green hydrogen projects.

President Donald Trump has been busy reversing the Biden administration’s so-called climate policies from the moment he was sworn in. He declared a national energy emergency, revoked the Biden ban on new LNG export capacity, and suspended some $300 billion in funding for transition projects in the country. With that, he has made one unlikely group angry: Big Oil executives.
The 47th president’s political agenda is nothing if not oil and gas friendly. In fact, oil and gas are among Trump’s top priorities, and he has wasted no time in making life easier for the industry players after four years of extra regulatory and political pressure under Biden. Yet oil executives’ apparent frustration with Trump’s reversal of Biden policies is unlikely and perhaps surprising on the surface.
Below this surface sits all the money that Big Oil invested in its own transition, under pressure, indeed, but quite a lot of money. The projects this money has been invested in may well become stranded assets now, in an ironic twist of environmentalists’ warnings that oil and gas fields are about to become stranded assets in a transitional world.
Reuters reported this week that some in the oil industry were unhappy about Trump’s withdrawal of the United States from the Paris Agreement. This is the second time Trump has done it and, again according to Reuters, it would jeopardize global efforts to reverse global climatic trends. Not only that, but the withdrawal would reduce the availability of cash for transition investment and confuse investors as the paths of the U.S. and Europe diverge.
According to the report, some executives in the energy industry believe that they could have a greater say over the energy transition if the United States is in the Paris Agreement. Yet industry players have more immediate priorities, and these have nothing to do with any climate pacts.
“While we prefer that the U.S. government remain engaged in the UN climate process, the private sector is committed to developing the solutions necessary to meet the energy needs of a growing global economy while addressing the climate challenge,” Marty Durbin, president of the Global Energy Institute at the U.S. Chamber of Commerce told Reuters.
There is a rather practical reason energy executives would prefer the U.S. government to remain engaged in the UN climate process: those transition investments. Every large oil company has been forced to devise a transition strategy in the recent past, and every large oil company has done so. They have been pushed to invest in low-carbon alternatives to their core products and they have invested, often heavily—and they have received subsidies to pursue these alternatives further.
Occidental Petroleum’s direct air capture plans are a case in point. The oil major back in 2023 bought a company developing technology that can suck carbon dioxide straight from the air. Oxy spent $1.1 billion on that purchase, eyeing a market that BloombergNEF said could grow into a segment worth $150 billion annually. And the Biden administration was shouldering part of the costs with subsidies. Now, these are gone, threatening the very survival of direct air capture—and more conventional carbon capture investments. No wonder Occidental’s chief executive approached Trump directly during a campaign event to argue the case for leaving IRA funding for carbon capture untouched. Oxy is far from the only one spending big on the transition and carbon capture. Exxon has also spent heftily on developing a carbon capture business.
“It’s critical that any conversation about addressing climate change must be global in nature, and also recognize that America is the world leader in both energy production and emissions reductions,” the president of the American Exploration and Production Council, Anne Bradbury, told Reuters.
Indeed, after so much money spent on transitioning, even partially, it must be frustrating for oil executives to be thrown back into an industry-friendly environment, positive as it is for their business. This is, in fact, the uncertainty that analysts—and industry executives—have been talking about for years. All industries like certainty, even if this is the kind of certainty that would affect their industry negatively, like Biden’s climate policies. They were harmful to oil and gas, but they were certain, so companies could take steps to mitigate the impact.
Now, with Trump, it’s back to normal, but companies could never know what would happen in four years, so they will be wary of reversing their current priorities too suddenly. The good news is that most of them are already walking back their transition targets after those targets proved quite unrealistic. Even European Big Oil is going back on transition promises after discovering these promises could not be fulfilled—not at a profit, at least.
So, what many hoped would happen during Trump’s presidency may indeed happen: Big Oil protecting its transition investments and pressuring Trump into not completely doing away with Biden’s climate laws, at least until there’s hard proof carbon capture does not make money, but loses money.

Producers in the Permian basin, America’s top oil producing region, have made a lot of progress in reducing methane emissions, a recent report suggests, but the incoming Trump Administration could undo some of that progress, environmentalists warn.
The Biden Administration has enacted rules on reducing emissions from oil and gas operations, including a recently finalized methane fee that has been opposed by the industry.
Last year, emissions from the Permian fell by 26%, according to a recent study by S&P Global and Insight M Inc. Methane intensity declined even more, by over 30%, as absolute emission volumes fell while Permian oil and gas production continued to rise, the study found.
The results are encouraging, but with incoming President Donald Trump some progress could be undone as the President-elect has vowed to roll back Biden-era rules burdening the oil and gas industry, climate advocates say.
Trump’s transition team is said to be preparing radical changes to U.S. policy toward electric vehicles and tailpipe emissions. These could include axing the EV incentives and the government mandate for federal EV fleets, and rolling back the Biden Administration’s rules on tailpipe emissions and fuel economy standards, Reuters reported earlier this month, citing a draft document it has seen.
In a sign of what the energy industry can expect, Trump last month picked a shale boss, Chris Wright, chief executive of Liberty Energy, as his nomination to lead the Department of Energy.
However, analysts say that the companies are now unlikely to swerve from the path of cutting emissions as they continue to promote their efforts in producing more oil and gas with fewer emissions.
“They’ve made commitments to their shareholders, they’ve set a plan in place, they’ve allocated capital,” Kevin Birn, an analyst at S&P, told the Financial Times, commenting on the findings of the study on the Permian methane emissions trends.

The price of carbon dioxide on the European Union’s emissions trading markets, ETS, has taken a bad tumble. On the face of it, this is good news—it means industries covered by the scheme are emitting less. But in this case, fewer emissions mean less money for the transition.
Earlier this year, the price per carbon permit on the ETS dropped to the lowest in over two years, at 55 euro, equal to some $58. The drop came as a surprise to ETS architects and supporters in Brussels, who had plans for much higher emission prices with a view to filling up the funds meant to pay for the transition away from emitting sources of energy.
Reuters reported this week that the continued decline in carbon prices on the ETS has, since the start of this year, erased over 4 billion euro, or $4.36 billion, from that market. This means there is over 4 billion euro capture, and other transition tech. The kicker? There was no other way this could have played out.
When the ETS was being devised, its purpose must have seemed simple enough. Power-generating companies produced emissions of carbon dioxide during the course of their normal operations. Because that carbon dioxide was selected as enemy number-one of modern Europe, they were obliged to pay for their emissions by buying so-called carbon permits at market prices. Market prices meant demand and supply would determine how much emitters pay to continue emitting.
This idea would, on the one hand, secure money for advancing the transition away from carbon dioxide-emitting sources of energy such as coal and gas and towards presumably non-emitting sources such as wind and solar. On the other hand, by making it expensive to emit, the mechanism would also stimulate emitting businesses to invest in alternatives that reduce their emissions. And this is exactly what happened.
Solar and wind installations in Europe have been on a tear, at least they were until last year. As a result, the EU is sourcing a record amount of its electricity from these two. But this means that coal and gas generators are producing less electricity—and fewer emissions. And this, in turn, means they need fewer emission permits, which, in its own turn, means less money available to go into the transition funds. Demand and supply at their finest—only no one in Brussels seems to have thought about it.
This is quite surprising given the simplicity of the idea and, more than that, this idea’s essentially paradoxical nature. The people who devised the ETS believed it would stimulate more wind and solar—which it did—while also encouraging emitters to keep emitting, so the EU could pay for even more wind and solar. And they made that assumption based on the notion that the supply of carbon permits would be gradually squeezed, pushing prices higher.
Another thing that the authors of the ETS believed was that the carbon market would reduce emissions—and it did. Last year, emissions covered by the ETS fell by a substantial 15.5%, which was a record. This was a result of the growing share of wind and solar electricity, which also hit a record and, it bears repeating, led to lower output from gas and coal generators. The fact that carbon permit prices also fell was in no way a coincidence, yet it seems no one thought about it at the time, and now many are concerned about the falling prices. Not only that, but it seems that no lessons have been learned.
The EU’s climate commissioner, Wopke Hoekstra, recently said that he would aim for a 90% reduction in emissions across the bloc by 2040. London Stock Exchange Group researchers calculated that this would mean ETS prices would soar to 400 euro per ton by that year, according to a Euractiv report from October last year. But would they really? Judging by what happened last year, the answer is “Hardly.”
Theoretically, limiting supply for a necessary product or service while essentially mandating demand should have done the trick. But what the mandate-issuers appear to have forgotten is that they can’t really force generators to keep operating on a business-as-usual basis when this business-as-usual costs ever more to keep going. So, they are curbing output because it’s increasingly harder to compete with heavily subsidized wind and solar. And because they are curbing output, they are emitting less and need fewer carbon permits.
Now, the EU is planning to expand the ETS to other industries as well, including transport. The hope is that this would bring in more money for the transition. What it would likely achieve as a side effect would be a repeat of what happened with power generators: higher costs would kill demand, ultimately failing at achieving one of the two primary purposes the EU had assigned them. But the extension would probably succeed at achieving the second primary purpose: demand destruction would definitely lead to lower emissions.

If you’re expecting South Africa will make a quick shift away from coal-fired power in favor of green energy, prepare to be disappointed.
Expecting South Africa to quickly give up on coal-fired power would be “very wrong,” South Africa’s energy minister Gwede Mantashe told Bloomberg this week.
Instead, South Africa will continue to rely on coal and other fossil fuel-generated power, even as richer nations push the country towards greener forms of energy, because it is less intermittent than green energy, Mantashe said, and the country is already grappling with electricity shortages.
“This belief that you can leave coal and move to renewables: there’s a technical mistake, very wrong, it will never work,” Mantashe told Bloomberg.
South Africa’s coal-fired power isn’t without problems, however. It’s state-run electric company, Eskom Holdings SOC Ltd, is already struggling with electricity outages because the country’s coal-fired power stations aren’t all operating 24 hours a day like they could be. Breakdowns and extended impromptu maintenance have put a serious crimp in the country’s power generation thanks to load shedding for as much as 12 hours a day in some cases.
Nevertheless, coal-fired power will have a long life in South Africa, Mantashe has vowed.
Mantashe acknowledged the errors the country has made in its power industry, citing delays in building out new power plans and a critical design flaw in the current plants.
“That is one of those mistakes and we are learning out of it,” Mantashe explained.
South Africa has been reluctant to jump onto the green energy transition train for quite some time, saying last October that the country had no plans to curtail its oil and gas operations in favor of green energy, and even announced plans to boost its oil and gas exploration activity in the future as it tries to shore up energy security and reduce its energy imports.
Coal currently accounts for roughly 80% of the country’s energy mix and is the world’s fifth-largest coal exporter.

Al Gore told the Hankyoreh on Thursday he’s confident that expanding renewable energy is where countries are headed, no matter which government may be currently in power.
The 75-year-old climate crusader and former US vice president acknowledged in a Zoom interview with the Hankyoreh that there may be bumps in the road when a new administration takes power through elections in South Korea or the US.
Gore had been asked to comment on the fact that nuclear power’s share of the Korean energy mix will rise from 23.9% to 32.4% and renewable energy’s share will fall from 30.2% to 21.6% by 2030, in line with Korean President Yoon Suk-yeol’s pledge to roll back his predecessor’s nuclear phase-out. While energy policy varies depending on who’s in office, in other words, all governments will have to make the shift to renewable energy if they want to reach carbon neutrality and overcome the climate crisis.
It was Gore, as a US House representative, who organized the first congressional hearing about climate change. In 2006, he wrote “An Inconvenient Truth: The Crisis of Global Warming,” bringing the climate crisis into the spotlight. The next year, he was awarded the Nobel Peace Prize for his work on responding to climate change.
The former vice president continues that work with the Climate Reality Project, a nonprofit he established to pursue advocacy and education related to climate change.
Gore will be visiting Korea on Aug. 19-20 for Seoul Climate Reality Leadership Training, a free program that’s available to young people who are interested in the climate crisis.
In the interview, Gore emphasized that the transition to renewable energy has gained momentum around the world. The US passed its biggest ever climate change bill (the Inflation Reduction Act) 10 months ago, Australia passed the Climate Change Act under a new government that’s eager to tackle climate change, and Brazilian voters elected Luiz Inácio Lula da Silva to the presidency, where he has promised to take action on climate change. Meanwhile, the EU has accelerated its shift from fossil fuels to renewable energy, standing up to Russia’s energy blackmail, Gore added.
Gore emphasized that among the various kinds of renewable energy, solar power and wind power will become even more important. “Solar and wind will gradually become more attractive because of falling costs,” he said.
The International Energy Agency recently projected that offshore wind and solar (US$65 per megawatt hour) and onshore wind (US$85/MWh) would become the cheapest sources of energy in Europe by 2040, compared to nuclear (US$110/MWh), gas (US$115/MWh), and coal (US$145/MWh).
Gore explained that while he isn’t opposed to nuclear power, which doesn’t produce carbon emissions, many countries, including the US, are ambivalent about nuclear energy because of its high cost. In connection with that, he called on Korea to boost solar and wind generation, which only make up 5.4% of the country’s energy mix — less than half the global average of 12%.
In the interview, Gore was also asked about the decision by the National Human Rights Commission of Korea to ask the Korean Constitutional Court to review the constitutionality of Korea’s Framework Act on Carbon Neutrality and Green Growth.
“While I can’t express a personal opinion about the lawsuit, I would like to express my respect for the National Human Rights Commission for its position,” he said. “I think it was a wise decision.”
Gore also noted that lobbyists for the fossil fuel industry have been attending the UN climate meeting over the past few years and their political sway appears to be growing, adding that it’s unfortunate that the head of an oil company will be chairing this year’s conference.
Sultan Ahmed Al Jaber, CEO of the Abu Dhabi National Oil Company (ADNOC), which is owned by the United Arab Emirates, has been named chair of the 2023 UN Climate Change Conference, also known as COP28, which will be held in Dubai in November.
Gore noted a potential conflict of interest since Al Jaber is the head of a state-run oil company. “I think he ought to step down either as chair of COP28 or as CEO of ADNOC,” he said.
“The CEO’s company has announced plans to crank up crude oil production by 50% over the next seven years. It seems ridiculous for the CEO to boost emissions at his own company by 50% while calling on the world to cut emissions by 50% [as COP28 chairman],” Gore said.
To keep global temperatures from rising by more than 1.5 degrees Celsius by 2050, as set forth in the Paris Agreement, the world must reduce greenhouse emissions to 43% of 2019 levels by 2030 and to 60% of those levels by 2035.

Australia and India on Wednesday pledged to work closer to advance renewable energy, increase cooperation in the critical minerals sector, and study green hydrogen development during a visit of Indian Prime Minister Narendra Modi to Australia.
“Renewable energy was once again a focus and an important topic in our discussions,” Australian Prime Minister Anthony Albanese said.
Australia and India also signed an agreement to create an Australia-India Green Hydrogen Taskforce, which will comprise Australian and Indian experts in renewable hydrogen and report to the Australian-Indian Ministerial Energy Dialogue. The task force will identify opportunities for the countries to cooperate in renewable hydrogen, Albanese added.
“Investments like the taskforce will help power our industries in the future, and ensure that Australia and India meet our energy targets in the interests of both our respective countries, but also in support of reduction of global emissions,” the Australian PM noted.
India’s Modi, for his part, said, “We had constructive discussions on strengthening our strategic cooperation in the sectors of mining and critical minerals. We identified concrete areas for cooperation and in renewable energy sector.”
Australia’s government has recently allocated $1.33 billion (AUS$2 billion) in the 2023- 24 budget to accelerate large-scale renewable hydrogen projects, aiming to become a world leader in green hydrogen production. Australia is also a major producer of lithium, the key mineral in the current leading battery technology globally.
This weekend, Australia signed with the United States a clean energy manufacturing pact with a focus on the energy transition and emissions reduction. Under the agreement, U.S. President Joe Biden will support Congress taking action to treat Australian suppliers and activity as domestic activity in the United States for the purpose of the Defense Production Act and to open tax incentives for green energy in the Inflation Reduction Act (IRA) to Australian companies.

A provisional agreement on the Renewable Energy Directive (REDIII) was reached between the European Council, European Parliament, and the European Commission on 30 March 2023.
REDIII is part of the ‘Fit for 55’ package, bringing EU legislation in line with the 2030 greenhouse gas emission reduction goal.
Biomass currently contributes around 60% of EU renewable energy, across the electricity, heat and transport sectors. There is no doubt biomass will be needed to meet the increased renewable energy target of 42.5% in 2030.
Agreeing on the sustainability criteria for forest biomass was a major sticking point for REDIII negotiators. Mandatory sustainability criteria for biomass used in heat and power were only introduced to the previous version of the directive – REDII – from 2021.
For REDIII, some parties pushed to further strengthen those criteria to ensure sustainable biomass use.
The Parliament position even proposed to exclude primary woody biomass from the EU’s renewable energy targets, arguing that the focus needs to be on regrowing forests as carbon sinks in the face of climate change.
Others wanted to continue implementing the existing sustainability provisions, given they were only introduced less than two years ago.
The final agreed text does not ban the use of forest biomass for energy, but it does include significant updates to strengthen the sustainability requirements.
There are three key updates to be aware of, but the implementation of these updates may be limited by significant exemptions.
Implementing the cascading principle for biomass
A key update is to ensure that Member States implement the so-called ‘cascading principle’.
This principle aims to ensure that “woody biomass is used according to its highest economic and environmental added value”, being prioritised first for wood-based products, before being recycled, burned for energy or disposed of.
The concept was mentioned in REDII, but the updated directive now provides more concrete detail on how this principle should be implemented.
Strengthening sustainability criteria to protect biodiversity and habitats
Secondly, the mandatory sustainability criteria for forest biomass are extended with more detail on what is regarded as sustainable harvesting, such as no conversion of forest land into plantations, minimising large clear cuts, no use of roots or stumps and no degradation of primary or old growth forest.
Furthermore, Member States may not grant direct financial support for the use of saw logs, veneer logs, industrial-grade roundwood, stumps or roots for energy.
These additions, in combination with the link to reporting domestic forest supply and compatibility with LULUCF (land-use, land-use change and forestry) targets, provide at least a strengthening of protections for natural habitats and biodiversity in comparison to REDII.
Lowering the capacity threshold and not supporting electricity-only installations
Thirdly, under REDIII, Member States will not be allowed to grant new or renewed support for electricity-only installations using forest biomass (with certain exceptions).
In addition, the capacity threshold for installations that need to comply with the sustainability criteria for biomass fuels is lowered from 20 MW to 7.5 MW, and a new threshold is added for installations producing gaseous biomass fuels.
Exemptions risk undermining the implementation
While these three key updates generally raise the level of ambition, exemptions could undermine implementation.
Plants already operating in 2020 producing heat and power could be exempted from the minimum GHG saving requirements until 2030, potentially allowing a wider range of globally produced feedstocks to be used and reducing the GHG impact that could be obtained from these plants.
Furthermore, Member States may also count energy from biomass fuels that comply with the previous (less stringent) RED II criteria towards their renewable energy targets until the end of 2030, if support was already granted to that installation before the Member State has transposed the RED III.
This allows room for many existing installations to delay complying with the strengthened criteria.
Conclusion
Overall, negotiators have achieved the impressive feat of agreeing on a compromise position on what has at times seemed like an unagreeable brief.
But the final position is exactly that – a compromise. The criteria are not as strict as they might have been, but they are stricter than they were.
The detail on the cascading principle is surely a strong step towards steering limited forest biomass resources towards their highest value use – both from an economic and a carbon sink perspective.
However, the proof of whether the European industry can deliver a sustainable contribution of biomass fuels will be in the implementation, and whether the strengthened REDIII criteria can be implemented without being undermined by the exemptions.

On September 10, a ship docked at the German port of Hamburg carrying a little-known fuel that’s being billed as a potential clean answer to Europe’s energy woes: blue ammonia. Made from hydrogen, it can also be burned without producing any emissions of planet-warming carbon dioxide and has the advantage of being easier to transport. Europe’s first test cargo is destined for the continent’s largest copper producer, Aurubis AG, under a deal struck with the United Arab Emirates just three weeks after Russia’s invasion of Ukraine upended global energy markets. The second shipment will depart within weeks, Mariam Almheiri, the UAE’s Minister of Climate Change and Environment, said last week.
If all works as planned, blue ammonia could offer a solution to European nations looking to wean themselves off Russian gas without undermining commitments to combat climate change. It could also herald a new era for Gulf Arab nations, which are vying to dominate the nascent but fast-growing market for “future fuels” as the world shifts away from unrestricted burning of oil and gas.So far, blue ammonia has only been shipped in small quantities to countries including Germany, South Korea and Japan, almost all of it from the oil- and gas-rich Middle East. But when German Chancellor Olaf Scholz visited the region this weekend to secure more gas supplies, he also discussed future supplies of hydrogen and ammonia — as part of Germany’s broader transition toward cleaner energy.The trouble is, the blue ammonia that’s been shipped to Europe so far isn’t nearly as clean as it seems, according to multiple insiders who spoke to Bloomberg Green on condition of anonymity. The C02 captured in its production has been used by some of the world’s biggest oil producers to extract fossil fuels that are difficult to reach.
In theory, both hydrogen and ammonia can be considered clean fuels because they burn without releasing carbon dioxide. But much depends on how they’re made in the first place. If these future fuels are derived from water in a process powered by renewable energy, no carbon emissions are generated and the resulting product can be labelled “green.”
Until now, however, ammonia has largely been made using natural gas, an energy-intensive process that releases CO₂ and further heats the planet. When that carbon is captured and permanently prevented from entering the atmosphere, the resulting ammonia is considered “blue” — not the cleanest fuel, but cleaner than burning fossil fuels. For the German shipments, Abu Dhabi National Oil Co. is capturing about 70% of the associated carbon emissions, according to a person familiar with the plan. So far, so good. The captured greenhouse gas will then be transported about 200 kilometers (124 miles) by truck — burning fossil fuels on the way — to a facility where it will be injected into wells in Abu Dhabi to extract more oil, according to the person. That process, known as enhanced oil recovery, isn’t new or unusual in the industry. But it also isn’t considered climate-friendly.
The additional oil yielded from this process will end up emitting more CO₂ when burned. So while using ammonia from the UAE will allow Aurubis and other end users to reduce their own emissions when compared to the natural gas they normally burn, in the atmosphere, where CO₂ lingers for up to a century and heats the planet, it’s not clear what, if any, net gains will have been made.
The world’s very first blue ammonia cargo was produced in a similar way, leaving the industrial city of Jubail on Saudi Arabia’s east coast in 2020. Some of the CO₂ was used to make methanol, which when burned also sends greenhouse gas into the atmosphere. The rest was trucked to the country’s Uthmaniyah field for enhanced oil recovery.
In trying to beat the competition to ship the first ever batch of blue ammonia, Saudi Aramco and its chemicals arm, Saudi Basic Industries Corp., also took some other shortcuts. Sabic and Aramco spokespeople last year confirmed that they didn’t capture CO₂ directly from the ammonia plant. Instead, they subtracted emissions captured in a separate chemical-making process to “offset” the pollution created by the ammonia production. That means no extra greenhouse gases were prevented from entering the atmosphere.
“This is very creative accounting,” said Gniewomir Flis, an independent clean technology analyst. “Ideally, you’d have carbon captured at source, because once you start accounting for carbon captured in a different process you’re getting into the world of carbon offsets and that is a whole new game.”Adnoc declined to comment. Aramco and Sabic previously confirmed the process used to produce their initial ammonia shipment but did not respond to further questions for this story. Germany’s Ministry of Economic Affairs and Climate Action, which negotiated the Adnoc deal, didn’t respond to requests for comment.
While the market is in its infancy, researchers at BloombergNEF predict that, if clean hydrogen plays a major role in limiting global warming and it gets enough support, global sales could be worth up to an annual $700 billion by 2050. The initial German cargoes suggest Middle East gas producers could find ready buyers in Europe, where governments are scrambling to secure energy as Russia cuts off supplies and may be more willing to overlook fuels that are branded as environmentally-friendly, even when they don’t stand up to scrutiny. The blue ammonia deal with Adnoc was finalized in March, when Germany’s Vice Chancellor Robert Habeck visited Abu Dhabi on the hunt for new energy sources in the frantic aftermath of Russia’s invasion. Germany’s said it sees the pilot shipments as the foundation for a medium-term transit route and wants the deliveries to cover demand that the federal government forecasts will reach as much as 110 terrawatt hours — equivalent to about a quarter of Germany’s current annual electricity consumption — by 2030.Germany is already reopening shuttered coal plants and abandoning pollution rules for rubbish incinerators to avoid a spike in winter electricity prices; by comparison, the Middle East’s ammonia looks relatively clean.Saudi Arabia and the UAE didn’t break any rules when they made their blue ammonia — the world is still debating what the standards for these new fuel sources should be. Once those guidelines are set and the Russian energy shock has worn off, the global prospects for blue ammonia begin to look less certain.
The European Commission has proposed that for hydrogen and related products like ammonia to be considered low-carbon, at least 70% of emissions from making and transporting the substance must be captured and permanently stored. Under proposed EU rules, buyers of ammonia made like these early cargoes would have to pay for the carbon emitted during production, making the end product far more expensive.
Read More: Europe’s Green Hydrogen Rules Raises Costs for IndustryTo address those evolving standards, Saudi Aramco and Sabic have already started capturing carbon directly from the ammonia-making process and hired a German company as an independent assessor for the blue hydrogen and ammonia that they produced in 2021. Even with those improvements, however, only a fraction of the output could be classified as “carbon neutral” because around 60% of the emissions were contained in the hydrogen-making process. That’s on top of carbon dioxide emissions from the production and transportation of natural gas needed to start the process.Aramco’s Sasref refinery produced around 50,000 tons of hydrogen last year but only 8,075 tons were classified as blue, Olivier Thorel, Aramco’s vice president of chemicals, said in an interview. Aramco and Sabic also made blue ammonia destined for export, but only a fraction of the output was classified as “blue” for the same reason. The company will be able to produce more blue ammonia once it’s able to permanently bury the C02, Thorel said. It plans to use near-depleted oil and gas fields to store its emissions underground.
Aramco’s first facility will be able to sequester as much as 9 million tons of carbon dioxide per year and begin operating in 2026, according to Thorel. Qatar’s $1 billion blue ammonia plant is scheduled to start up around the same time. The UAE also hopes to use its old fields for carbon storage, and Adnoc is planning more blue ammonia plants that would capture 90% or more of the emissions they produce, a person familiar with the plan said.Adnoc and its partners are also in discussions with the governments and regulators of importing nations in Asia to determine what percentage of the emissions from a separate 1 million-ton-per-year plant that will come online in 2025 need to be captured, whether carbon must be captured at source and if it can be used to extract more oil, a person familiar with the talks said in May. That facility, located in the same Abu Dhabi complex, will produce ammonia from existing industrial activities, including steel-making, to avoid extra emissions.“Japan and Korea are currently behind Europe in terms of defining these kinds of regulations and what is eligible for government support or regulatory obligations,” said Aramco’s Thorel, who sees additional regulations on the horizon in these markets. “Our ambition when we design future facilities will be to meet the most stringent requirement.”One reason that the world has even considered blue ammonia and hydrogen is because making green versions has so far been prohibitively expensive. The cost of producing green hydrogen is currently $2.82 per kilogram at its cheapest and will still be around $1 by 2030, according to BloombergNEF analysis. By contrast, Japan reportedly paid less than 60 cents per kilogram for the world’s first blue ammonia cargo from Saudi Arabia. If standards are tightened, the price of blue ammonia will rise significantly.
Carbon capture and storage has suffered many false starts over several decades — largely because of the enormous costs of building sequestration infrastructure, which sometimes run higher than $100 a ton, according to a 2021 report by management consultancy firm Kearney.That’s even more than the price paid for credits under Europe’s emissions trading scheme. In contrast, support from US and European governments is set to drive down the price of green fuels in the coming years, with the cost of renewable energy, large-scale electrolyzers needed to produce hydrogen and other related technology expected to fall. Even before the US introduced major incentives under a historic climate bill passed in August, researchers at BloombergNEF were predicting green fuels would become cheaper than their blue alternatives after 2030.
Representatives of Aurubis, GETEC and Steag, three of the four German companies that will receive blue ammonia from Adnoc’s test cargoes, said they view it as a stop gap until green fuels are commercially available. The long-term goal “is to produce green hydrogen,” a spokesman for energy firm Steag said. “On the way there, however, it is right and important to start with the emission-reduced options that are already available today.” For now, Steag said, the emissions from Adnoc’s project are in line with other low-carbon ammonia and among the lowest in the world.
Middle Eastern sellers are hedging their bets. Saudi Arabia has already started work on a large green hydrogen facility in Neom, its Red Sea city-in-the-making. The UAE is also planning to build a commercial facility after installing a pilot in Dubai last year.
Yet even the market for green ammonia and hydrogen is far from secure.Read More: Miracle Fuel Hydrogen Can Actually Make Climate Change Worse
While hydrogen is not a greenhouse gas, if it leaks into the atmosphere it can extend the life of methane, which is a potent planet-warming gas. Every ton of hydrogen leaked can have the indirect warming impact of 33 tons of carbon dioxide. Ensuring leaks are minimized would add to the cost of these clean fuels.
Despite the uncertainties over future gas prices and how fast green alternatives will fall in price, claiming a slice of the blue ammonia market will be tempting for countries sitting on vast reserves of gas, said Anne-Sophie Corbeau, a global research scholar at Columbia University’s Center on Global Energy Policy. “There’s a lot of potential competition between would-be exporters of blue ammonia,” she said, “so it’s a good thing to be among the first.”