September Cleantech Roundup: The Changing Face of Oil Supermajor Investments, How Electric Vehicles Will Grow, Youth Climate Strike, and More
Clean Energy Trust’s cleantech roundup highlights interesting cleantech news and perspective, across industry, technology, policy, and investing.
An equity research firm recently removed all of its “buy” ratings from all oil and gas supermajors. The firm, Redburn, believes the sector is underestimating the potential for climate-focused regulations to cut into future demand. Link ($ — Financial Times)
75F raised $18 million in a Series A financing round co-led by billion-dollar energy funds Breakthrough Energy Ventures and Oil and Gas Climate Initiative Climate Investments. 75F is a CET portfolio company that sells an IoT-powered commercial building management solution. Link
Speaking of investments from large oil companies, Bloomberg analysis shows European supermajors like Shell, Total, and BP are outpacing American supermajors in new clean energy investments. While investments in clean energy are still a small portion of the new investments supermajors are making (even the leaders), it is still significant for the clean energy industry because oil and gas supermajors are emerging as some of the most active acquirers in the space. Link
Amazon has ordered 100,00 electric vans from Michigan-based Rivian. These vehicles would be built in the company’s Normal, Illinois facility, to be delivered starting in 2021, with 10,000 by 2022 and all 100,000 by 2030 at the latest. This is a lot of vehicles — as a16z’ Ben Evans notes, the vehicle fleets of UPS and the postal service sit at 123,000 and 140,000 today, respectively.
It is not surprising that a commercial fleet is an early mover towards electric vehicles (EVs) — the decision is more about the economics than the complex consumer psychology around buying a new personal vehicle, and the higher utilization and turnover rates of commercial fleet vehicles means quick paybacks and more frequent new vehicle purchases.
This is GREAT news for Rivian, and a feat to get a large corporate to make such a substantive commitment without having a product available today. That said, it is not as simple as signing on the dotted line; Rivian has received more than a billion in private investment (including from Amazon) but still needs to finalize the design of their vehicles, conduct safety testing, and scale-up production of the vehicles from 0 today. As we saw from Tesla’s “production hell,” ramping large manufacturing operations for innovative products is not a trivial matter.Link
EVs are a small percent of the overall passenger vehicle market in the US, but their sales are growing quickly, especially in leading markets like California. Check out this chart below — my inference from it is that beyond a core set of very committed EV buyers, consumers will buy EVs when affordable model options exist that people want. I think folks who bought Chevy Bolts and Nissan Leafs did so specifically because they wanted an EV and were willing to buy a subcompact car. The buyers of the Tesla Model III bought because they wanted a cool car that happens to be an EV.
At the end of the day, people seem to care more about the form factor and style of their car than its innards — as new EV models come to market, particularly SUVs (which make up the largest segment of passenger vehicles), expect huge growth here as well. This won’t be because people have finally “seen the light” or because their economics have abruptly changed (although they continue to improve every year) — it will be because automakers are selling EVs that people want to buy. Put simply - It’s the models, stupid. Link
Canoo is developing an EV available starting in 2021 by subscription only. Vehicle subscription services like ZipCar exist today; while Canoo may innovate a bit on pricing, its more notable innovation is in re-imagining how a minivan could look and function. Beyond price and sustainability, EVs should also usher in many more form factors of vehicles, because the components are smaller and sit lower to the ground, freeing up space for things like sectional couches. The shift to electric may also usher in changes to the business environment, where small startups like this one can launch new vehicle models in the marketplace to compete with legacy incumbents. Electrical vehicle components are simpler and less numerous than their internal combustion counterparts, although scaling up a manufacturing operation and meeting required safety and regulatory hurdles is capital intensive and still a tall order, so it remains to be seen whether new vehicle companies contribute to expanding EV sales or just to expanding our imaginations on what cars could look like. Link
Millions of young people took part in a global climate strike on September 20 to protest a lack of action on climate change by adults. Swedish high schooler and climate activist Greta Thunberg spoke at a rally in New York and subsequently addressed world leaders at the U.N. Climate Action Summit a few days later.
At the office, we have long had a wager that Thunberg would be named Time’s person of the year for her role in youth climate activism; one interesting item that we discussed recently was the broad and strong reaction of Thunberg generates. Some reaction is extremely supportive, some extremely negative and conspiratorial, and some is concerned that she is receiving too much attention while other activists, particularly young people of color, have not received as much attention. While Thunberg is the face of the youth climate movement (even the Onion has covered her), she is of course not alone — this twitter thread touches on her efforts in a positive frame while also highlighting some of the other youth who have been very active in the climate movement. Link
Michael Greenstone at the University of Chicago’s Energy Policy Institute (EPIC) shares an interesting and counterintuitive analysis of how electricity access can be undercut by trying to make sure everyone has it. As the research highlights, one fundamental problem for utilities in developing countries is that many take in much less in revenues than it costs to supply power (this is why these areas have limited power and frequent blackouts — it’s not that they cannot build new infrastructure, it is that they are not collecting the money to pay for their power system). This is an economic and humanitarian quandary: if you forced everyone to pay market rates for power, you would take access away from many people, but you would correctly align the incentives to better develop power systems overall and help to grow the economy. Link
Other News
Cass Sunstein explains why numerous corporations are opposed to the Trump administration’s rollbacks on regulations on those very corporations. Link
The IPCC shares some news — our oceans are having a bad time with climate change. Link
Global renewable energy capacity additions are expected to grow again this year after capacity additions flat between 2017 and 2018. Link
Research: When Women Are on Boards, Male CEOs Are Less Overconfident. Link
