U.N. Math Problem, Solyndra PTSD, Greener Beer (Energy Transitions | Week in Review)

A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance. 

Climate Goals Get Muddied By What Happens Over International Waters

What happened: As absurd as this might sound, the U.N. only counts emissions that are generated within a country’s borders. That’s a math problem given that the emissions created by ships and planes often, in the case of ships always, occur beyond those borders.  

Why it matters: “CO2 emissions from shipping and aviation accounted for roughly 5% of the global total in 2021. Both are expected to grow under business-as-usual scenarios, with aviation expected to at least double in its absolute contribution to the warming problem. That means there’s no way to meet global climate goals without including these sectors under the net zero framework.”

What’s next: The U.N. isn’t dumb. Germany’s environment minister has already offered a potential solution for mapping emissions even when they happen “abroad”. Expect a better accounting soon. (By Akshat Rathi and Petra Sorge, Bloomberg Green)

“Greener Beer” is Real, Delicious, and Points to a Decarbonized Industrial Future

What happened: Fort Collins, Colorado-based New Belgium Brewing just unveiled a new, intoxicating wrinkle in the future of industrial decarbonization: a 650-kilowatt heat pump boiler that replaces the previous gas boiler that made the company’s famous Fat Tire beer. 

Why it matters: “It’s a novel application of a technology that’s rarely been used for industrial process heat. Most people think of heat pumps as tools for warming air and water inside buildings, not generating steam at 150 degrees Celsius and at pressures needed for industrial applications, as AtmosZero’s systems are designed to do. But ​’the only reason heat pumps have not delivered boiled water before is that no one has built heat pumps to boil water before.’”

What’s next: It’s hard to know. The IRA incentives that have made heat pump adoption in households soar exist for industrials as well, but the cost to implement may still make it prohibitive, beyond the whims of brands that already skew green. (By Jeff St. John, Canary Media)

The Giant Trucks that Make the Electric Future Possible Are Also Being Electrified

What happened: The CEO of Australian mining giant BHP says he wants to electrify his entire fleet of diesel-powered trucks. That means the vehicles responsible for gathering the components used to make the batteries that power electrification will now be electrified themselves. 

Why it matters: Demand from companies like BHP reverberates upstream to the truck manufacturers, like Caterpillar and Komatsu, whose vehicles the miner has already contracted to buy. Cost efficiency is better for electric, but only if manufactured at scale.

What’s next: Every industry is a copycat industry to some degree. If a large miner in Australia can reduce costs with massive EVs, expect more to do the same. (By Daniel Bleakley, The Driven)

Toyota Makes Another Technological Breakthrough, On Paper at Least

What happened: The world has waited and waited and waited for the world’s largest automaker to make a major move in electric vehicles. Instead investors have been on the receiving end of nearly a decade’s worth of broken promises. Now comes a new one: Toyota says it has crack the code on a major breakthrough in the production of solid-state batteries, which it says will make its promised EVs cheaper, lighter, and easier to build.

Why it matters: Japan lost its long-dominant position as the world’s biggest automaking exporter earlier this year to China, in what was mostly a referendum on Toyota’s inability to make good on EV promises. Investors have cautiously rewarded the company since it made a new set earlier last month. But now there’s a set date–the company says it’ll have solid-state EVs on the road by 2027–that represents a put up or shut up moment for the automaker.

What’s next: More waiting. More hoping that Toyota will get it right. And a widespread belief that they have to come up with a better name than the one and only Toyota EV that exists right now, the mouthful of “bz4x”. (By Kana Inagaki, The Financial Times)

The Man Who Holds the Keys to America’s Energy Transition

What happened: Jigar Shah is quickly becoming one of the most well-known names in a city full of relatively obscure bureaucrats with control over vast budgets. As head of the Department of Energy’s Loan Programs Office, he’s the tip of the spear for the Biden administration’s green energy incentives-laden Inflation Reduction Act.

Why it matters: There’s so much money to be had, some $400 billion in available loans. And so much potential controversy, known internally as “Solyndra PTSD”. What’s more, Shah has to convince business of all sizes that they’ll be able to repay his loans and that each won’t come with an excess of red tape, an argument that gets easier with each and every headline, like the recent record $10 billion loan to Ford to build three battery plants.

What’s next: A tightrope of doling out cash while trying to avoid companies that could go bust and become the next generation’s example of government excess. (By Scott Patterson, The Wall Street Journal)