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Mixing Oil and Wind; the Debt Ceiling; and More (Energy Transition | 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.
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.

Poor Country Offering Carbon Offsets Would Like to Be Less Poor, Now

What happened: Zimbabwe is the 12th largest creator of carbon offsets, a still-new industry that projects to grow as large as $1 trillion per year in the next 15 years. It’s also a relatively poor country whose government just shocked the market by ripping up all its contracts and deciding to take half of all the value of the offsets from now on.

Why it’s important: “There’s now risk that other countries might follow suit, creating new uncertainties for businesses that develop and sell offsets, corporations that purchase offsets as a way to counterbalance their greenhouse gas pollution and the cohort of traders who invest in this emerging asset class.”

What’s next: Everything in Zimbabwe freezes, for the moment. Projects financed by carbon offset purchases are now in limbo. The large corporations that make up the buyers may look elsewhere. Either Zimbabwe has wrecked its own future in the market, or permanently altered the market itself. (By Alastair Marsh and Natasha White, Bloomberg)

The Wind Energy Employment Boom Deep In Oil Country

What happened: The first-of-their-kind sale of offshore wind leases in the Gulf of Mexico earlier this year has been just one of a few catalysts turning traditional oil-and-gas workers into clean energy pioneers.

Why it’s important: Because it shows that arguments that renewables will hurt energy jobs may be hollow. The number of active projects show that the Gulf’s offshore expertise, earned through decades of oil and gas operations, translates well to supporting wind farms currently under construction. Out of about 1,200 contracts signed by US companies for offshore needs like survey work, electric substations and cables, companies in the Gulf and the South have scored 23% of the total, according to a tally kept by the industry group Business Network for Offshore Wind.”

What’s next: Unlike in Europe, which is by contrast a mature industry, wind energy in America is just getting started. Expect a lot more production in the Gulf, too, which besides a knowledgeable, experienced employee base, also has the scale and infrastructure from oil and gas to make this new form of energy just as profitable. (By Josh Saul, Bloomberg)

Does a Debt-Ceiling Default Doom the Clean Energy Sector?

What happened: The IRA was a massive boon to American clean energy investments. A debt-ceiling default, or even enough of a panic to cause recession, could undermine the transition.

Why it’s important: “The U.S. teetering on the brink of default means that more power goes to countries like China that have a somewhat more stable outlook. In a zero-sum view of the global clean energy race, other countries are smiling about what’s happening in D.C. This is a self-inflicted wound, and goes counter to the drive for green industrial policy that emphasizes domestic investment.”

What’s next: It’s complicated. There’s even a world where a recession reduces the amount of uptake of IRA subsidies, which are one of the main arguments Republicans have used in an attempt to gut the bill. Paradoxically, bad economic times could make a polarizing piece of legislation more bipartisan friendly. (By Tim McDonnell, Semafor)

World’s Biggest Battery Company Makes World’s Densest Battery

What happened: By sales figures, CATL is the world’s biggest battery manufacturer, and it’s not particularly close. Now it’s announced it will soon be mass-producing a long-promised, never-delivered battery innovation: solid state.

Why it’s important: The promise of solid state is greater energy density, meaning EVs can go longer with less charge, and battery packs can be smaller. So small, in fact, that CATL says its new design may even soon power electric planes. 

What’s next: It’s unclear, in part because CATL is using a term, “semi-solid state”, that no experts can figure out. Is it truly solid state? Is it actually just good marketing? Some EVs in China are just now rolling off factory floors with these batteries, though, so the ultimate measure–range and density tests–won’t be far behind. (By Dan Gearino, Inside Climate News)

An Oil Giant Is Quietly Trying to Become an EV Player

What happened: Exxon paid $100 million for a 120,000 acres in southern Arkansas that could produce up to four million tons of lithium, one of the primary bottleneck materials for electric vehicle production.

Why it’s important: Although Exxon has reiterated many times that demand for oil and gas will continue well into the century, it’s small, quiet push into lithium mining is an acknowledgment that the petro giant would like to be a part of the auto industry that’s expanding the fastest.

What’s next: We’re in uncharted territory. Unlike its rivals like BP and Shell, Exxon has never publicly stated it had any interest in any clean-energy investment that didn’t help prop up its primary business. Lithium production means breaking new ground, literally. (By Benoit Morenne and Collin Eaton, The Wall Street Journal)

A weekly five-point roundup of critical events in fintech, the future of finance and the next wave of banking industry transformation.