This month, we’re highlighting some of the energy and climate provisions in the infrastructure bill, touching on what the international climate conference COP26 was and wasn’t, highlighting the potential impact of corporate buyers coalitions, giving a round of applause to the progress the company NET Power has made, and more!
Infrastructure Month!
The bipartisan infrastructure bill was signed into law. Here’s a summary from Canary Media. Here’s another summary from the AP. Here’s a chart for what it means for the utilities sector from Accenture:
While the bill is only indirectly related to climate and energy, there are still many relevant provisions. This includes about $50 billion for resilience, $7.5 billion for EV charging infrastructure, and billions more for transitioning school buses and transit vehicles to electric. There’s also $25 billion for energy technology demonstration projects and funding to support the development and growth of a domestic supply chain for energy storage. Lots of money for lots of things. That said, infrastructure is also expensive. For example, $7.5 billion for bus electrification sounds like a lot, but if you are buying buses at $900,000 a pop, your money doesn’t go that far (back of the envelope math suggests that it might cost the Chicago Transit Authority $1.5 billion or so to electrify their entire bus fleet). So, it is not the major climate legislation that is in the potential reconciliation bill, but a sizable set of investments in its own right.
COP Out?
The COP 26 climate conference took place! How do people feel about the outcomes? I think David Roberts captured the zeitgeist well in his post, “Don’t get too bummed out about COP26.” Paraphrasing, there was an insufficient amount of government action and commitment to address climate change, but things are happening. And, importantly, there is an acceleration of activity taking place that seems like it will continue. As Julia Pyper put it in her wrap up of the conference, “It can be true that we’re both still losing the climate fight post-Glasgow and better off than we’ve ever been before.”
Time will tell, but it seems like there were some tangible steps of progress: a good deal was reached on carbon offset markets which should help add credibility to carbon trading schemes and avoid double counting between governments and private actors. In short, the world has a long way to go, and not much time to do it; however, the framework for action is in place.
Corporate Movers and Shakers
Speaking of things that were announced at COP26, the U.S. State Department announced the First Movers Coalition, which is a group of corporations who have committed to using their buying power to help impactful climate solutions scale up and work their way down the cost curve.
Corporate buying commitments are an area where a lot of opportunity exists in the absence of comprehensive climate policy. We’ve talked about the action Stripe and Microsoft have taken to help jumpstart the market for verifiable carbon offsets.
The First Movers Coalition is committing to buying volumes of climate friendly solutions in steel, trucking, shipping, and aviation. While the coalition was facilitated by government and non-profit stakeholders, the actors making the commitments are for-profit companies. This is one way in which this wave of climate tech is different from cleantech 1.0 – certain large corporations are more willing to make purchase commitments of emerging technology – we’ve probably seen this the most in sustainable aviation fuels so far.
Just as a developer of a wind farm can sell off a project profitably once they have secured an offtake agreement with a buyer of the energy, these corporate commitments and offtake agreements help make the broader market function (the companies innovating in these spaces, while they still may be quite early, suddenly have less market risk.
And the First Movers Coalition is by no means the only such actor here. Breakthrough Energy’s Catalyst program is a thematically similar initiative involving corporates (as well as other philanthropy and governments) that is focused on reducing the costs of sustainable aviation fuel, long-duration storage, green hydrogen, and direct air carbon capture.
Credit: NET Power
NET Positive
NET Power, (which we talked about in one of the early editions of the Cleantech Roundup), took a big step forward last month when it connected its demonstration plant to the grid in Texas (hat tip to Jesse Jenkins for drawing my attention to this on Twitter).
NET Power is building a new type of natural gas power plant that uses oxy combustion (burning natural gas with pure oxygen) and supercritical CO2 instead of steam in its turbine. This leaves them with a pure stream of CO2 that can be captured and stored. While the plant they’ve built does not permanently sequester the stream of CO2 today, the technology makes it much easier to do so (or alternatively utilize the CO2 stream). The idea is that this can be a much more efficient way to capture CO2, since it is part of the process already (as opposed to cleaning and capturing the emissions of a traditional thermal power plant).
While it still needs to show it can scale and bring down cost, I think it can be a big deal – this technology could chip away at and then eventually replace industry standard combined cycle natural gas plants. This could help make it a real transition solution as we work to fully decarbonize the grid, since flexible low carbon generation will be an important piece of the puzzle.
Other News
Credit: Robert F. Bukaty/AP
A bad omen for the future: fossil fuel plant owners bankrolled a referendum in Maine to try and pass a ballot measure to kill a transmission line that would bring in zero-carbon hydropower from Canada. We need a bunch more transmission to cost-effectively decarbonize, but it’s hard to build, due to complex and overlapping regulation, jurisdictional issues, and NIMBYs (Not In My Backyard) who oppose these development projects. Link
With supply chain constraints and growing demand for electric vehicle batteries, Benchmark Market Intelligence projected lithium ion EV batteries would increase in price after years of steady declines (chart shown here courtesy of Bloomberg Hyperdrive):
Terrapower announced plans to replace a coal plant closing in Wyoming with a $4 billion advanced nuclear reactor demonstration project (half funded by the federal government). Link
Bloomberg’s Nat Bullard shared some interesting data points on power generation:
- In 2020, all new power generation growth was renewable
- Between 2010 and 2020, globally, gas increased 28%, wind 364%, and solar increased 2,549%
Ford ended plans to leverage Rivian’s electric vehicle skateboard base in new Ford vehicles. Ford remains a major investor in Rivian; this is just a sign that Ford is confident in its own technology approach for EVs. Link
Starting in 2022, all new and renovated homes and buildings in the United Kingdom will be required to include electric vehicle chargers. Link
Canary Media is the new home for the popular climate tech podcasters that used to be affiliated with Greentech Media (including Stephen Lacey and Shayle Kann). Link
Lazard is out with their annual levelized cost of energy (and storage, and now also hydrogen). Link
Spring Lane Capital, led by Evergreen Climate Innovations Investment Committee Member Rob Day, announced the first close of their second fund for catalytic project capital. Link
My pals Brandon Hurlbut (former Department of Energy Chief of Staff), Shomik Dutta, Liz Ramsay Dalton, and Mike O’Neill started a new fund, Overture, focused on providing investment capital and government strategy support to climate tech companies. Link
Energy Impact Partners announced the close of their billion dollar flagship fund EIP flagship fund. Link
