This is an audio transcript of the FT News Briefing podcast episode: ‘Trump halts $300bn in clean energy loans’
Sonja Hutson
Good morning from the Financial Times. Today is Thursday, January 23rd. And this is your FT News Briefing.
European banks are on the up and up. And President Donald Trump has thrown spikes on the road for US climate policy. Plus, mining companies in Africa’s Sahel region are being targeted.
Aanu Adeoye
We’ve seen arrests. We’ve seen gold seized from companies. And we’ve just seen what industry insiders have described to us as a terrifying campaign.
Sonja Hutson
I’m Sonja Hutson, and here’s the news you need to start your day.
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European bank returns have made a comeback. Thanks to bumper profits, dividends are at their highest levels since 2007 and buybacks have soared. Lenders are on track to return almost €123bn to shareholders for the second consecutive year. It is a major turnaround for European banks. Handouts were pretty skimpy for a while after the 2008 financial crisis, and in 2020, regulators ordered lenders to freeze most investor returns because of the pandemic. But the outlook is much better these days. Shares in Eurozone banks just had their highest end of the year in more than a decade.
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Just hours after his inauguration, President Trump was already signing dozens of executive orders. And one of those involves freezing billions of dollars in federal funding to green infrastructure projects. The FT’s Amanda Chu has been looking into what Trump’s agenda means for clean energy in the US. Hi, Amanda.
Amanda Chu
Hello.
Sonja Hutson
So of all of Trump’s initial executive orders, you’ve been watching one of them really closely. Can you walk me through exactly what it says?
Amanda Chu
So the executive order I’ve been paying the most attention to is the one called “Unleashing American Energy”. And there’s a section there called “Terminating the Green New Deal” where he orders the pause of all funds from the Inflation Reduction Act and the bipartisan infrastructure law. And these two policies are two of the key pillars to Biden’s economic agenda. They promise that through the use of federal sweeteners, you know, grants, loans, tax credits to companies, that the US is going to incentivise private investment into manufacturing and renewable energy projects.
Sonja Hutson
What does halting these funds mean exactly? Like, which industries or projects are affected and just how much money is frozen?
Amanda Chu
So basically, any money from these two laws that, you know, either haven’t been finalised in a contract or haven’t hit a bank account, is in danger from getting paused under this new order. And we found that there are about $50bn in conditional loans or loans that have yet to be finalised to companies that are in danger of being paused. And then there are also another $280bn worth of loan requests. And these loans are for companies who are building renewable energy projects, transmission projects, electric vehicle factories, as well as solar factories. And so it really is pretty sweeping and could affect a lot of the US clean tech buildout.
Sonja Hutson
And how has the clean energy sector responded to this? Like, how does this affect their plans?
Amanda Chu
Yeah. I mean, so something that’s worth highlighting is the fact that the executive order does not mention tax credits. And tax credits are really the primary support mechanism for clean energy companies in the US under the Inflation Reduction Act. But it still made a lot of renewable energy companies and other clean tech folks very nervous. And so we saw that this week. An Italian cable manufacturer paused their factory for offshore wind cables. Other investors have already scaled back some of their projects ahead of Trump entering into office. And so we’re starting to see the renewable energy buildout sort of chill and slow down.
Sonja Hutson
OK. So there is this silver lining when it comes to tax incentives for some of these projects. But it still seems like an uphill battle. So I guess I’m wondering, where does that leave the sector for the next four years?
Amanda Chu
I think we’ll have to watch out for, you know, future decisions in the coming weeks, especially tariffs are a major issue when it comes to the cost competitiveness of renewable energy. The Inflation Reduction Act, it catalysed a lot of private investment from some of the largest corporations into the US. So any uncertainty there and what might happen to it could send a bad signal about the US environment for business investment, as well as the US as a leader in renewable energy projects.
Sonja Hutson
Amanda Chu covers US energy for the FT. Thanks, Amanda.
Amanda Chu
Thanks.
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Sonja Hutson
Trump is trying to strong-arm President Vladimir Putin into ending Russia’s war in Ukraine. He said yesterday that the US would impose a bunch of new sanctions on Moscow if an agreement isn’t reached soon. The thing is, Joe Biden’s administration already imposed a ton of them after Russia launched its full-scale invasion of Ukraine nearly three years ago. US trade with the country has plummeted since then, so additional sanctions would probably have a limited impact. But Trump administration officials think they could make things more difficult for Moscow by targeting oil and gas exports more aggressively.
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Military regimes in Africa’s Sahel region are cracking down on international mining companies. They’ve been using pressure tactics to take greater control of crucial minerals like gold and uranium. The regime say the contracts the companies hold are unfair. My colleague Aanu Adeoye has been looking into the matter and he joins me now. Hi, Aanu.
Aanu Adeoye
Hi.
Sonja Hutson
So tell me more about these governments and how exactly they’ve been pressuring mining companies.
Aanu Adeoye
Sure. We have these three countries, Mali, Burkina Faso and Niger. They are ruled by military regimes. They came to power via coups. And over the past year and a half, they have brought in new mining codes to try and extract more value from the mining companies. In Mali, for example, they have raised the government ownership participation from what was previously 20 per cent to 35 per cent. And they are trying to retrospectively apply that new law to existing contracts, which has been the main bone of contention for a lot of mining companies. And so we’ve seen arrests. We’ve seen gold seized from companies. And we’ve just seen what industry insiders have described to us as a terrifying campaign.
Sonja Hutson
And so what is the end goal of these regimes? What are they hoping to achieve?
Aanu Adeoye
Yeah, if you believe what they’re saying, what they’re saying is that, you know, they want to have greater share of the profits and of the revenue coming from the mining industry to develop their countries. For a long time, these countries, which are all former French colonies, have argued that they are not getting their fair share of revenue and of profits. And the idea is that they have been under the thumb of western mining companies and so they also want to assert greater nationalism of their own resources.
Sonja Hutson
Yeah. It sounds like there’s a lot of complicated dynamics going on here because on the one hand, resource mining in Africa has historically been pretty damaging and extractive. But on the other hand, you know, these are fairly violent regimes and they’re resorting to some pretty extreme tactics. So how are western mining companies responding?
Aanu Adeoye
You know, it’s been a mixture. We’ve seen arrests of chief executives. There are people working for Barrick Gold, which is the second-biggest gold miner in the world, who are still in detention in Mali as we speak. And there’s been a difference of approach with how the companies are dealing with it. Typically, we’ve seen that the smaller companies have tended to quickly reach a deal and try to, you know, head this off and prevent anything serious. But I think, for the specific minerals we’re talking about here, these countries are fairly important. If you look at Niger, for example, it has one of the world’s largest reserves of uranium, which is essential in nuclear energy production. So, you know, they’re also very important to the bottom line and to the production figures of the companies involved.
Sonja Hutson
So what kind of impact then do you think all these disputes will have on the global mining industry?
Aanu Adeoye
Yeah. I mean, I think when we talk to people in the global mining industry, they tell us that this is one of the biggest challenges they’ve faced in recent years. The mining industry has always had this push and pull factors between government and mining companies. But I think what kind of makes this the most terrifying for a lot of companies is the risk of personal danger. It’s likely to have an impact on investment decisions. You know, if investors do not think these countries are safe for their investments, they could have a rethink.
Sonja Hutson
Aanu Adeoye is the FT’s West Africa Correspondent. Thanks Aanu.
Aanu Adeoye
Thanks for having me.
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Sonja Hutson
Before we go, it won’t be long before robots are the ones designing our medications. At least that’s what the founder of Google’s Isomorphic Labs is working towards.
Demis Hassabis voice clip
In general, they can apply to any type of disease area, but we’re looking at oncology, cardiovascular, neurodegeneration, you know, all the big disease areas.
Sonja Hutson
Demis Hassabis is a Nobel laureate in chemistry, and he predicts he’ll have a drug designed by artificial intelligence in clinical trials as soon as the end of the year. During an interview with the FT, Hassabis said that relying on AI could help speed things up a lot.
Demis Hassabis voice clip
And then you could revolutionise the whole drug discovery process, which usually takes an average of like, you know, five to 10 years. And maybe we could accelerate that by 10x, which would be an incredible revolution in human health.
Sonja Hutson
Isomorphic Labs has attracted a lot of attention in the four years it’s been around. The start-up is partnering with major companies like Eli Lilly and Novartis.
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You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.
