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MIXED SIGNALS ON FATE OF GERMANY’S THREE REACTORS: The German government is still reviewing the potential impact to energy markets if retirements of any of its three remaining nuclear reactors were to be delayed beyond December, but one thing is sure: Vice-Chancellor Robert Habeck is not keen on reversing the country’s energy policy in favor of nuclear energy.

Habeck, a member of the anti-nuclear Greens, got out in front of the results of the “stress test” being performed on the nation’s grid, which is meant to figure whether keeping Germany’s reactors switched on rather than retiring them in December would ease the strain that energy markets face due to the natural gas supply crisis.

He said over the weekend that extending the life of the three plants is “wrong decision given how little [gas] we would save,” according to German outlet Deutsche Welle.

Habeck, who did say he would be more open to extending the life of one plant in Bavaria, said extending the plants as proposed would save 2% of gas use. Another estimate from BloombergNEF was in the same ballpark — 3%.

Who speaks for the government? There have been conflicting reports about where the government stands (perhaps that’s par for the course for a coalition government).

The Wall Street Journal reported last week Germany had settled on “plans to postpone the closure” of the reactors, a report that Habeck rejected as without any factual basis.

Chancellor Olaf Scholz, a member of the Social Democrats, has been somewhat cautious to avoid making strong pronouncements one way or the other as to what course of action the government will take, saying it must wait for the results of the test.

At the same time, he noted yesterday that nuclear power doesn’t solve the larger problem of a shortage of gas as a feedstock for industry.

“If we were to make the decision to keep them running so that we make sure we don’t have a problem this winter, then it will only make a small contribution to solving our challenge, because it is only about electricity production,” he said.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

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U.S. CLIMATE SPENDING TO SURPASS $500 BILLION OVER NEXT DECADE: Three newly passed laws have put the U.S. government on track to spend more than $500 billion on climate and clean energy efforts over the next decade, according to a new analysis from the nonprofit group RMI.

The newly passed Inflation Reduction and CHIPS acts, taken with last year’s bipartisan infrastructure bill, will inject a total of $514 billion into climate and clean energy spending over the next 10 years, the study found. In total, annual federal spending on these priorities will be roughly 15 times the amount spent in the 1990s and early 2000s, and triple the amount in recent years—underscoring the heightened importance lawmakers are placing on renewable energy production.

Together, the laws “form a coherent green industrial policy, in the sense that there are strategic industries that they focus on and a set of tools designed to accelerate production up and down the supply chain," RMI senior analyst and co-author of the report, Lachlan Carey, told Reuters. Read the full study here.

RHINE WATER LEVELS DEEPEN, EASING CHOKEHOLD ALONG KEY WAYPOINTS: Levels at Germany’s Rhine River are forecasted to rise to roughly 158 centimeters, or 60 inches this week, allowing Western Europe a reprieve from weeks of drought that have hampered delivery of key commodities such as diesel and coal along the waterway.

Water levels increased this weekend by as much as 30 inches in some areas on the Rhine, according to government data.

There were reports last week of ships unloading their cargo to navigate through the depleted waters—and by Friday, one shipping cooperative told Reuters that certain areas had become impassable for even completely empty ships. (Most barges will not ship cargo along the waterway when levels drop below 40 cm.)

But the relief could be short-lived: Water levels along the Rhine are expected to peak early next week before falling again, according to a statement from the Rhine Waterways and Shipping Authority. And levels could deplete even further in the months ahead. According to more than 20 years of government data collected by the German Federal Waterways and Shipping Administration, levels along the Rhine traditionally fall to their lowest point in October—posing a potential long-term threat to demand and prices for commodities ahead of the winter season.

“The continuing very low water levels on the Rhine and its tributaries are increasing the demand for additional tonnage and driving prices up to critical levels,” container transport company Contargo GmbH & Co. KG said, according to Bloomberg. “Substantial bottlenecks continue to affect our services in the rail network and inland navigation.”

CHINA INTENSIFIES POWER RATIONING AMID EXTREME HEAT AND DROUGHT: Crippling heat and drought conditions in southwest China continued to deplete water levels along the Yangtze River, forcing leaders in the manufacturing hub of Chengdu to order power cuts and mandatory rolling blackouts for residents and businesses.

Leaders in Chengdu’s Sichuan province declared a “level 1” emergency, the highest possible, due to the combination of triple-digit temperatures and drought conditions, which has wreaked havoc in a city that receives roughly 80% of its power from hydroelectric dams.

Water levels at the Yangtze River have fallen in some areas to their lowest-ever points on record, according to China’s Ministry of Water Resources, with rainfall feeding the basin down 40% last month compared to the same period in 2021.

Morgan Stanley analysts said in a research note yesterday that hydropower is estimated to be down roughly 51% in Sichuan, the worst drought period in roughly six decades. Conditions are expected to persist at least through the end of August.

UKRAINE AGRICULTURAL EXPORTS COULD RISE TO 4 MILLION TONS IN AUGUST: Ukrainian officials said today that their country’s agricultural exports are expected to rise to 4 million tons in August following last month’s passage of a U.N.-brokered shipping deal that allowed it to reopen its shipping ports in the Black Sea for the first time since Russia’s invasion early this year.

Still, Ukraine’s agricultural exports remain significantly below pre-war levels, when it shipped a monthly average of roughly 6 million tons of grain alone. Agriculture officials said last week that its grain exports remain down by nearly 52% compared to the same point last year.

The agreement has helped drive down a global surge in food prices, which prompted fears of food shortages in Africa and the Middle East.

“We believe food prices reached their highest level in the second quarter of 2022,” World Bank Senior Agriculture Economist John Baffes said last week in an interview with The Japan Times, noting that the World Bank’s Food Price Index has dropped by roughly 12% since its high in April.

HOT GAS MARKETS AROUND THE WORLD: Natural gas prices are going bananas around the world due to fallout from Gazprom planning what is officially to be a 3-day, maintenance-related shutdown of Nord Stream 1 at the end of the month.

European benchmark futures at one point reached 295 euros per megawatt hour today, trading 20% higher than the new record of 245 euros per megawatt-hour that was just notched on Friday when Gazprom made the announcement. As of this writing, prices have since settled a bit to around 270 euros per mwh.

Benchmark spot prices in Asia surpassed $60 per MMBtu this morning after weeks of consistent gains.

Analysts with Energi Danmark said in a note this morning that the overall market “remains highly concerned about the supply situation,” with concern that already-diminished flows via Nord Stream will not start again.

U.S. natural gas remains far below those prices but is not wholly insulated from the price pressure. Prompt-month futures traded as high as $9.81 per MMBtu this morning before taming slightly. Analysts have largely blamed high demand within the power sector, which reached a record in July, and lower storage levels rather than deficient production levels.

The Rundown

E&E News Transformer shortage hits utilities in storm season

Financial Times Europe risks losing green hydrogen funding to US, industry leader says

Wall Street Journal Europe’s natural gas crunch sparks global battle for tankers

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Calendar

TUESDAY | AUGUST 23

1 p.m. The National Institute of Standards and Technology holds a virtual meeting to review activities of the National Earthquake Hazards Reduction Program. Learn more here.

4 p.m. The Senate Indian Affairs Committee will hold a field hearing in Unalaska, Alaska, on contaminated land conveyances, the Alaska Native Claims Settlement Act, and the effects of contamination on native communities.