Net Zero

1. Election strategy
2. DAC jobs
3. How to invest $1 billion
4. Nickel price wars
5. Spotlight on carbon credits

A clean energy deal that might actually pass Congress, and Rivian’s Hail Mary.

Quiet on climate

Fossil fuels are a toxic subject for Joe Biden.

In the president’s State of the Union address last night, he said he wanted to “end the tax breaks” for “Big Oil.” But there was no mention of new regulations to curb power plant carbon emissions, or of the fact that U.S. oil and gas production is at an all-time high. It seems there’s no good way to talk about one of the biggest and most powerful sectors of the economy without enraging one important constituency or the other. And although job creation got numerous mentions, the fact that many of those jobs are in clean energy — arguably Biden’s greatest legislative success — barely got a nod.

This is a pattern that seems likely to define the campaign. Bashing fossil fuels could help motivate some young voters to get to the polls, but it’s likely to alienate swing voters. Placing some rhetorical separation between “jobs” and “climate” allows Biden to tout his economic accomplishments without looking like an environmentalist. And it’s a strategy that doesn’t give Trump much to work with; his rebuttal on energy policy amounted to a complaint about weak dishwashers. Climate and energy policy may be one of the areas in which the two competing presidents are most diametrically opposed — but that may actually make it a much less prominent topic in the campaign. What else is there to say?

DAC jobs

Texas could someday employ more people in carbon removal than it does today in oil and gas drilling.

A report Thursday from the Rhodium Group think tank found that under existing policy the U.S. could roll out enough direct air capture infrastructure to pull 84 million metric tons of CO2 from the air annually by 2035, up from close to zero today. Building and operating that infrastructure will likely create hundreds of thousands of jobs, the report concludes — especially in Texas, where the existing oil and gas industry is poised to play a major role in scaling up carbon removal and sequestration.

How to invest $1 billion in the energy transition

One of climate tech’s biggest investors is speeding up his funding efforts — and he isn’t worried that a second Donald Trump presidency could derail the energy transition.

Tom Steyer — a San Francisco billionaire who made his fortune running a hedge fund before becoming a major Democratic fundraiser and a climate-focused 2020 presidential candidate — thinks it’s easier to identify good deals now that climate tech startups valuations have moderated after the ill-fated SPAC craze of 2021. His investment firm, Galvanize Climate Solutions, invests in traditional equities of established companies looking to decarbonize, as well as in startups, and keeps engineering and entrepreneurial experts on staff to spot promising technologies and bring them to commercial scale. Much of what the $1 billion startup division has invested in the last two years was rolled out in just the last two months, he told Semafor, with no plans to slow down.

Steyer is most bullish on a sector that suffered a beating this week: Corporate carbon accounting. When the U.S. Securities and Exchange Commission on Wednesday adopted significantly watered-down carbon emission disclosure requirements for large companies, it effectively kneecapped a lucrative business opportunity for companies selling emissions-tracking software. But Steyer remains convinced this data is going to come out sooner or later. When it does, he thinks it will put enormous pressure on companies to decarbonize, and that the software companies handling it therefore have an opportunity to contribute to massive emissions reductions — and make a handsome return for their investors.

Nickel price wars

Price per ton of nickel, down 20% from this time last year. A flood of low-cost nickel from Indonesia, as the country has poured investment into its domestic nickel refineries, is a good thing for EV battery companies and consumers. But it’s causing consternation among nickel miners in other countries, who argue Indonesia’s heavy reliance on coal and lax pollution regulations put it at an unfair advantage. This week, two of the world’s top nickel miners — BHP and Australian billionaire Andrew Forrest’s Wyloo Metals — asked the London Metal Exchange to allow certified low-carbon nickel to trade at a higher price. But there’s not enough genuinely green nickel in existence to justify a separate market, LME officials argued. Forrest may get a higher price soon anyway: Indonesia’s miners are being held up by slow bureaucracy, and demand in China, which is nearing the end of its nickel stockpiles, looks ready to rise.

Spotlight on carbon credits

New U.S. financial regulations aimed at uncovering companies’ carbon footprints could also yield new details about their use and abuse of carbon offset credits.

The Securities and Exchange Commission’s final rule on corporate climate disclosures was watered down from previous drafts in two key areas — it dropped any ask for Scope 3 emissions (from supply chains and customers), and only asked for Scope 1 and 2 emissions (from a company’s in-house energy use) if a reasonable investor would find those to be “material” to the company’s financial risks. But the rules left in place a requirement for companies to disclose details about their purchase of carbon offsets, albeit also with a “materiality” caveat.

Because this is a new area of securities law, it’s not clear what the SEC might consider a “material” or “non-material” use of carbon credits, said Lucy Hargreaves, vice president of policy at the carbon trading platform Patch. Presumably, she said, it would apply in cases where the purchase of offsets constitutes a significant portion of a company’s decarbonization activity. But the rules leave that determination up to the company.

Any new public detail about corporate carbon credit buying — data on which is far-flung across obscure databases and full of holes — would help investors identify previously undisclosed sources of risk, Hargreaves said. Companies buying a lot of carbon credits relative to their carbon footprint can fairly be understood to be doing little to reduce their emissions, leaving them at higher risk of future costs from carbon taxes or regulations. And details about specific purchases would reveal whether companies are putting themselves at risk of bad press from loading up on junky credits.

“Having this level of transparency will be a push towards integrity,” she said. “If I were a CEO, having to disclose this publicly would make me think twice about wanting to invest in credits that don’t meet a higher integrity standard.”

Lael Brainard, Director of the White House National Economic Council; Julie Sweet, CEO Accenture; and David Zapolsky, SVP, Global Public Policy & General Counsel, Amazon have joined the world-class lineup of global economic leaders for the 2024 World Economy Summit, taking place in Washington, D.C. on April 17-18. See all speakers and sessions, and RSVP here.

New Energy

• The U.S. is sitting on a glut of solar panels as installers race to get ahead of upcoming tariffs on some imports from Asian countries. In the meantime, the oversupply is putting a damper on domestic solar manufacturers.

Fossil Fuels

• ExxonMobil escalated its fight with Chevron over offshore drilling in Guyana. Exxon says it has a right to pre-empt Chevron’s purchase of the project, part of Chevron’s $53 takeover of Hess. Now, Exxon is asking an International Chamber of Commerce arbiter to weigh in, further jeopardizing the deal and putting the hedge funds that backed it on edge.

Finance

• The U.S. Treasury department is giving up on an effort to collect data on how climate risk is sending home insurance premiums skyrocketing. The survey was too expensive to comply with, insurance industry groups argued. Instead, the Treasury will collect data secondhand from state insurance regulators.

Tech

• The risks of geoengineering might outweigh the benefits, the UN’s top environmental official warned. At a UN summit in Nairobi last week, a majority of nations voted against a proposal to launch a research program studying methods to block the sun’s rays. Such an experiment would likely harm ecosystems, the official said.
• Data centers and AI are driving a shortage of electricity across the U.S. Power companies are struggling to keep pace with an unprecedented boom in demand.

EVs

• EV startup Rivian unveiled three new models aimed at lower-budget customers — but hit the brakes on a planned $5 billion factory in Georgia. Rivian’s new crossover SUVs will be $30,000 cheaper than its existing larger SUV, in a push by the company to expand its customer base and thereby plug its gaping profit hole. Rivian lost $5.4 billion last year, and only has about $9 billion in remaining cash on hand. Pausing the factory in Georgia will save Rivian billions, but it’s a setback for the state’s Republican governor, Brian Kemp, who had directed state subsidies to the project and championed it as one of the biggest wins of the Inflation Reduction Act.
• EV ranges are getting longer. The number of models for sale in the U.S. that can go 300 miles or more between charges is now up to 30, a four-fold increase over three years ago.

Sen. Tom Carper (D-Delaware), chairman of the Senate Environment and Public Works Committee

• In private markets, investors still clamor for Elon Musk’s companies.
• Chad is on edge after the killing of a prominent opposition leader.
• Why an adult film site is the latest tech company to sue the European Union.