A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance.
Where We Pay People to Put Carbon and Where We Don’t
What happened: The U.S. government just began handing out its first grants, totaling more than $1 billion, to two projects promising to take carbon out of the air and stick it into the ground. Now startups promising to do more with that carbon are asking why they’re not on the receiving end of the same federal largesse.
Why it matters: “The move to capture carbon from the atmosphere and industrial point sources — something economists broadly agree is essential to meeting global climate goals — is perhaps the best example of the Inflation Reduction Act’s gargantuan impact on an emerging industry. The IRA is at once buffeting and reshaping the world of carbon capture. But niche sectors within the industry are at odds over whether the two kinds of end-use deserve equal treatment under the law.”
What’s next: Defenders of carbon “utilization” are going to have to prove they’re something more than large oil & gas companies trying to squeeze more fossil fuels out of their wells. (By Tim McDonnell, Semafor)
Solar Panels Meet the Recycling Bin
What happened: Six Chinese government agencies released guidelines to speed up the process of recycling old wind and solar equipment.
Why it matters: The first generation of solar panels and wind turbines are set to expire soon. That means we’ll soon face a “mass decommissioning of equipment,” a movement that aims to both start a new sector of the economy while also providing guidelines for how to build more recyclable renewable materials later on.
What’s next: More pressure to meet China’s new, ambitious net-zero goals, which will necessitate more breakthroughs in recycling much faster. (By Yujie Xiu, South China Morning Post)
When Government Policy Produces More Private Companies
What happened: Private investment in climate tech startups is on the rise, now predicted to come close to matching the $400 billion in subsidies and tax credits allocated by the Inflation Reduction Act.
Why it matters: The IRA was thought to mostly benefit established companies that either needed help meeting clean energy goals or persuasion to start. And while “capital from the IRA will mostly flow towards [them], private investment, like venture capital, is finding its way to startups across all stages. Many startups have cropped up to offer auxiliary services to larger industries, and investors are taking note.”
What’s next: The benefits of the IRA still largely flow towards established, manufacturing-centric companies. Just expect more satellite start-ups willing to serve those companies. (By Rebecca Bellan, TechCrunch)
A Single State, A Single Bill, A Single Year: $11 Billion In Investment
What happened: Someone bothered to add up every piece of new investment sparked by the IRA in the state of Texas. The total: nearly 9,000 new jobs and more than $11 billion in investments, a figure that is most likely an undercount.
Why it matters: The country’s second most-populous state often struggles to keep its grid running. For that reason, ”perhaps the most important boon for Texas from the IRA is the rapid buildout of solar and storage. Texas has created solar and storage resources faster than any other state. Storage is expected to double before next summer, then double again before the summer of 2025, creating approximately 15,000 megawatts (up from its current 3,500) ready to go onto the grid at the flick of a switch.”
What’s next: Those figures don’t even include the recent Direct Air carbon capture grant of nearly half a billion. What’s next is likely more grid resilience (and other domestic manufacturing projects) than any other state. (By Doug Lewin, The Texas Energy and Power Newsletter)
Argument: Use the Military to Beef Up America’s Electrical Grid
What happened: Last year, half of all National Guard members were involved in climate-related catastrophes and their subsequent clean-ups. The argument is: why not take those man hours to do something proactive, declare a national emergency, and use the military to build out needed electrical grid infrastructure.
Why it matters: Demand for electricity by some measures may quadruple in the coming years. Our grid is not only not capable of handling that demand, it is often the cause of some of the natural disasters that threaten its resilience.
What’s next: Sometimes far-flung arguments like this add up to nothing. Sometimes they shift the Overton window enough to make it into the realm of possible. (By Joel Dodge, Heatmap)