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Nest Launches Mill, India’s IRA Problem, and More (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.
energy transition

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

The World’s Biggest Climate Deal Is In Trouble

What happened: Indonesia was supposed to undergo a record $20 billion energy overhaul with the help of some of its neighbors. Now 10 months after the deal was announced, the most ambitious of the Just Energy Transition Partnerships (JETPs) is faltering.

Why it matters: Indonesia is Southeast Asia’s biggest emitter by far. Its ability to transition beyond coal was meant to be a harbinger for other nearby countries with their own JETPs, like Vietnam. But what’s being discovered is that the official tally of Indonesia’s coal dependence is lower than its actual, a surprise which could play out in future agreements.

What’s next: Ambitious emissions targets will quietly be shifted to something much less ambitious. (By Jennifer Dlouhy, Bloomberg)

India Can’t Compete In the Green Energy Subsidy Space

What happened: The IRA has further exacerbated what has long been a problem for India, the world’s third-largest emitter: it cannot offer the same sort of government subsidies as other developed countries.

Why it matters: “The world’s most populous country and third-largest generator of carbon dioxide behind China and the U.S., India already faced significant hurdles in its energy transition. India’s economy could jump from fifth to rank second or third by 2050. To meet electricity demand over the next two decades, India will have to add a power system the equivalent of the European Union’s in size, the International Energy Agency estimates.”

What’s next: A country that takes its cues from its industrial leaders may have to change its tune when those industrial leaders, Toyota among them, start falling behind globally. (By Phred Dvorak, Wall Street Journal)

The World’s Fastest Growing Automaker Expands

What happened: BYD announced its first major factory outside of China, taking over an old Ford plant in Brazil.

Why it matters: BYD has long had ambitions of being the world’s largest automaker. Brazil is South America’s largest economy, but EV penetration is a blip compared to the rest of the world. BYD offering its signature low-cost EVs could mean a giant change in buyer behavior there and beyond in South America.

What’s next: Where BYD goes, other Chinese EV companies follow. (By Diego Lesarte, Quartz)

The Key to New Climate Consumer Tech: Government Buy-In

What happened: “When Silicon Valley startups like Uber and Airbnb were battling local governments, smart thermostat-maker Nest turned them into customers. Now as watchdogs look to crack down on the latest tech hype around artificial intelligence, Nest co-founder Matt Rogers is relying on the same, unusual playbook with his new startup Mill, which makes high-tech trash cans that convert household food waste into chicken feed.”

Why it matters: Half of Nest’s revenue came from governments doing bulk purchases to incentivize utility customers to switch and reduce costs. First adopters and do-gooder consumers are great for building a small business. Truly transformational changes, however, are helped along tremendously when paired with local governments trying to offer those further down the adoption curve a chance to make a behavioral change.

What’s next: Maybe more unsexy climate start-ups that rely on government subsidies to succeed…just like the rest. (By Reed Albergotti, Semafor)

Would Cheap Chinese Climate Tech Be Good for the Planet?

What happened: China’s in the midst of an economic slowdown at the same time that it’s dominating the production and export of most of the world’s clean tech, like batteries and solar panels.  

Why it matters: “A sudden global export glut of Chinese clean tech could be catastrophic for the [promise of new climate jobs], especially in Europe and North America, where inflation is higher and interest rates are tighter. When Chinese firms flooded the world with cheap solar panels in the early 2010s, they inadvertently killed a crop of companies abroad working on advanced or experimental solar technology — including Solyndra, the American startup whose failure became synonymous with President Barack Obama’s aborted green industrial policy.”

What’s next: The possibility that the U.S., but not Europe, may be somewhat protected, given that the IRA is as much a domestic manufacturing bill as it is a climate bill. (By Robinson Meyer, Heatmap)

The saying that there is no such thing as a free lunch is very much true for Robinhood.