A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance.
The EV Truck Rollout Is Now Officially a Disaster
What happened: American legacy automaker’s greatest margins come from pick-up trucks. The hope was that by offering similar-but-electrified trucks, GM, Ford, and others could keep their profits amidst the transition. Yet that’s not what’s happened.
Why it matters: Very few people want to buy an electrified F-150, known as the Lightning. So few in fact that Ford is cutting shifts at the plant that makes it. Worse, Chevy has pushed out by a year the date at which it was going to begin producing electrified Silverados. Both companies are citing “cooling demand” for EVs. That’s BS. EV demand grows every year. What consumers don’t seem to want are more expensive versions of the trucks they already own that can only be refueled in a few select places that are also unreliable.
What’s next: The Cybertruck — aka the Delorean 3 — finally arrives. Its sales won’t determine the market for electrified trucks, but they’ll certainly be watched closely. (By Matthew Zeitlin, Heatmap)
Stockholm Says Drive Electric Or GTFO
What happened: Stockholm just became the first major capital to completely ban diesel or gas cars. Yes, the ban doesn’t go into effect until 2025. And yes, it’s limited to a 20-block region. But still!
Why it matters: Lots of mayors have gotten good press by making somewhat similar declarations, though often further off (2030 or so) or with big caveats (still legal in parts of London but with a fee attached). Stockholm’s outright ban, even with its own caveats, goes further than all previous announcements. The argument also includes a new cause — noise — to go along with the reduction in emissions.
What’s next: It’s not all politics. But every positive reaction to a call from a political group to create bans like these builds its own kind of momentum (By Jennifer Massalgue, Electric)
Climate Tech Investing Hits New Five-Year Low
What happened: “Private market equity and grant funding for climate tech startups globally totaled $65 billion in the 12 months ending Sept. 30, 2023 according to a new report from PricewaterhouseCoopers LLP. That marks a more than 40% decrease compared to the same period a year earlier.”
Why it matters: Money isn’t nearly free anymore, which means the projects that get funded have to both solve a real-world problem and look like they have a viable path to profitability within a reasonable timeframe. Strangely, the proportion of general startup investment taken up by climate tech is actually higher, which is really a way of saying that funding of all kinds is down.
What’s next: The IRA’s immediate impacts have been felt in a handful of industries. It’s possible that climate tech investing will benefit too, just later on. (By Michelle Ma, Bloomberg)
Building Efficiencies Into the Built Environment Is Hard
What happened: A growing number of cities and countries are starting to offer incentives to improve the energy efficiency of the “built environment”, the buildings and homes we already live and work in.
Why it matters: Classic chicken and egg problem. “To some extent, making homes solely reliant on electricity and then moving the grid to cleaner sources of power would, in theory, solve much of the problem, meaning homes and offices wouldn’t need to make as much progress on energy efficiency in order to decarbonize. Yet reducing consumption from the built environment would itself drastically reduce the cost of decarbonizing the grid.”
What’s next: Retrofitting will continue to suffer from a lack of attention and incentives for one reason: it’s boring. (By Prashant Rao, Semafor)
If Rooftop Solar Can’t Work Here…
What happened: Arizona regulators voted to weigh lowering the rates electric utilities must pay homeowners with rooftop solar for their excess power. Clean energy advocates worry the move will undermine the state’s growing solar footprint and unfairly fatten utilities’ profits. ”The decision follows a deep cut to solar benefits in neighboring California, an indication of how states with high rates of rooftop solar — regardless of their political leanings — are struggling to integrate solar power with the legacy electric grid.”
Why it matters: “The decision in Arizona illustrates how solar power, in spite of its plummeting global price and unprecedented federal backing, is still subject to local political whims and the rehashing of decade-old arguments.” As a result, solar becomes a hard sell to homeowners in one the sunniest U.S. states because it makes it ”impossible to calculate a realistic payback period.”
What’s next: Thousands of potential solar customers who tried but couldn’t make the math work before now won’t even try. (By Tim McDonnell, Semafor)