Net Zero

1. Happy birthday IRA
2. 🟡 Few female founders
3. 🟡 The IRA upends trade
4. China’s carbon price record
5. A canal traffic jam
6. 🟡 Next steps from Montana
7. Worsening water shortages
8. Another mega carbon deal
9. 🟡 Maui’s rising prices
10. 🟡 Greener lithium

Happy birthday IRA

U.S. President Joe Biden marked the anniversary of the Inflation Reduction Act coming into effect with a tour of a Wisconsin wind turbine facility that is doubling production because of the law. “Instead of exporting American jobs, we’re creating American jobs, and we’re exporting American products,” Biden said. Nearly $100 billion in private investment for U.S. clean energy manufacturing projects have been announced since Biden signed the law, although that’s still not enough to put the U.S. on track for its climate goals. And it’s not clear how much the IRA will help Biden and the Democratic party in next year’s elections: Most of the investments have happened in Republican districts, and very few Americans have heard of the law or approve of Biden’s handling of the climate crisis.

Climate tech’s gender problem

Climate tech has a gender balance problem. Just 14% of nearly 4,000 proposals submitted to the San Francisco venture capital firm At One Ventures since 2020 came from startups with at least one female founder: That’s according to the firm’s own gender demographics data, which it shared exclusively with Semafor. Those that did have a female founder were disproportionately concentrated in the fashion and food sectors. Energy and transportation, which typically draw the highest volume of investment, had the lowest share of female founders. Ana Yoerg, a spokesperson for the firm, blamed the fact that women still lag men in attaining degrees in STEM fields, and said the gap is self-perpetuating: Without many women-led energy startups that reached a high-dollar exit, few are inspired to join. That may change as a growing number of climate VCs set aside specific funds for women-led startups.

The US’s climate law is remaking trade

THE FACTS

A year after the U.S. Inflation Reduction Act was signed into law, its global repercussions are coming into focus. Foreign leaders who decried its unapologetic protectionism as unfair have since crafted big-spending policy responses of their own. The U.S. has itself softened the harder edges of its groundbreaking program.

But while the IRA has undoubtedly lowered the U.S.’s emissions trajectory and bolstered domestic manufacturing, its effects on global decarbonization and on reducing American dependence on its adversaries are less uniformly positive.

TIM’S VIEW

For the U.S. to catch up on the global clean-energy transition, it needed the IRA. And that meant challenging Western norms that frown on heavy-handed government interventions to prop up one country’s private markets.

In some ways, the IRA has actually drawn the global clean energy economy more tightly together and propelled it forward. But it also launched an expensive global subsidy war that many of the middle-income countries that benefited from globalization in prior decades can’t afford to compete in.

In fueling one of the world’s fastest-growing markets for electric vehicles, solar power, and other clean energy hardware, the IRA has proven to be a massive investment opportunity for non-U.S. companies. Out of around $110 billion in U.S. clean energy projects announced since it passed, at least 60% of that investment came from foreign firms, according to a Wall Street Journal analysis, mostly battery makers in Asia. The law has also spurred India, Japan, EU countries, Canada, and others to roll out their own versions of the IRA.

But certain IRA tax incentives are still limited to goods from a relatively small number of trading partners. In particular, this has left the U.S.’s critical mineral supply chain vulnerable, as the law leaves out many large producers of raw materials in South America, Southeast Asia, and Africa. That’s a problem not just because those materials are needed for the U.S. to meet its climate goals, but because Chinese firms are standing by to take more market share.

The IRA will make U.S. demand for lithium, cobalt, and nickel about 14% higher in 2035 than without the law, an S&P report this week concluded. The IRA is first and foremost a domestic industrial policy, but it has sharply illustrated how reliant the U.S. energy transition will continue to be on trade. And unless the U.S. moves more swiftly to shore up its global supply chain of critical minerals within the confines of the law, it risks taking a permanent backseat to China.

To read The View from the EU, The View from China, The View from Indonesia, and Room for Disagreement, click here.

Carbon price record

Price per ton of CO2 in China’s cap-and-trade system, a record high reached on Friday. Carbon pollution credits are still one-tenth the price in China that they are in Europe, indicating that the market does little to drive down emissions. But that value is 40% higher than a record low hit in April, so the market is finally starting to tighten after a year of record-high coal consumption.

Canal traffic

Shipping traffic is backing up at the Panama Canal because of drought. Last Friday, 264 ships were waiting to pass through the canal, according to the Financial Times, 16% more than this time last year, because less water is available to allow ships that are heavily laden or have deep drafts to pass through the canal’s locks. Shipping costs on Germany’s Rhine river, another major commercial artery, are also rising because of drought.

One Good Text

Michael Gerrard, director of the Sabin Center for Climate Change Law at Columbia University. On Monday, a judge in Montana ruled in favor of a group of youth climate activists who argued that unchecked fossil fuel pollution infringed on their right under the state’s constitution to “a clean and healthful environment.”

Worsening water shortages

One-quarter of the global population lives on the brink of running out of water, according to a new World Resources Institute analysis. Those vulnerable populations are spread between 25 countries, mostly in North Africa and South Asia, that routinely use all of their available water, putting them one drought away from a “day zero” event in which taps begin to run dry. The analysis projects that because of population growth and economic development, water scarcity will grow most quickly in sub-Saharan Africa, which will require four times as much water in 2080 as it does today.

Another billion-dollar carbon deal

Occidental Petroleum agreed to pay $1.1 billion to acquire Canadian carbon removal startup Carbon Engineering. The startup, which was founded more than a decade ago by Harvard physicist David Keith, was one of the first companies to begin actively sucking ambient CO2 from the atmosphere, from a small plant in British Columbia. Now, its technology will be deployed at a site in west Texas that Occidental, which was last week awarded a major federal grant to support its carbon removal enterprises, says will be the largest carbon removal facility in the world by 2025. The acquisition comes a few weeks after ExxonMobil’s $5 billion purchase of the largest CO2 pipeline company in the U.S., signaling that Big Oil is getting more serious about its pivot into “carbon management.”

Maui’s insurance fallout

The devastating wildfires in Maui — the state’s worst natural disaster and the deadliest one in the U.S. in a century — razed more than 3,400 structures valued at $3.3 billion.

We’ve collected insights and analysis on how the blazes could send housing and insurance prices soaring.

• Hawaii wasn’t considered very risky by underwriters. Residents paid the lowest home insurance rates in the country partly because of how rare natural disasters are in the state. The wildfires will likely make insurers reconsider policy rates and coverages. “I think insurers are going to start factoring in the increased frequency and severity of wildfires,” a professor of risk management at Appalachian State University said. “You’ve already seen that in California.” — The New York Times
• Rebuilding costs will likely be higher, especially in old towns such as Lahaina, where most infrastructure isn’t designed to withstand such high temperatures. “The bottom line is the reconstruction is going to have to account for wildfire risk that it hasn’t in past,” said Jesse Keenan, a professor of sustainable real estate at Tulane University. “It will require new building materials and techniques that’s going to add to the overall cost of the already inflated housing construction market.” — Bloomberg
• Hawaii Gov. Josh Green had recently declared a housing emergency to combat the housing shortage by making it easier to build. The wildfires are now likely to drive Hawaii’s housing prices — one of the most expensive markets in the U.S. — even higher. Partly because 40% of Maui’s housing stock is vacation rentals, the median house price there had surpassed $1 million before the fires. “Many of the displaced families are now going to be looking for local housing, raising demand for what little housing is available,” said Justin Tyndall, an economics professor at the University of Hawaii. — Fast Company

— Jeronimo

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Green Shoots

As demand for the critical battery mineral lithium skyrockets, entrepreneurs are hitting on new ways to produce it with a lower environmental impact.

Last week, Sigma Lithium, which operates a mine and processing facility in eastern Brazil, announced that it is on track to produce 130,000 tons of “triple zero” lithium — with no carbon footprint, chemical use, or mine tailings — by the end of 2023. The company sent its first shipment in July, six years after founder Ana Cabral Gardner, a São Paulo investment banker who had been dismayed by the environmental impact of mining deals she was involved in, decided to find a way to serve what she sees as inevitable demand from the cleantech industry for greener raw materials. “If this industry is going to become as big as everyone thinks, this will become a competitive advantage, and we will sell every gram,” she said in an interview.

She started by buying 100% renewable electricity for the mine and plant, which was fairly easy and low-cost with Brazil’s abundance of hydropower and renewables. Between that and other carbon-cutting measures, Cabral Gardner says her carbon footprint per ton of lithium is less than one-tenth the average from typical brine-pool lithium facilities. Diesel from trucks is still an obstacle, which she offsets with Brazilian reforestation carbon credits.

Meanwhile, on Wednesday, San Francisco biotech startup Aether said it raised $50 million in venture capital to support its development of synthetic proteins that bind to lithium in extremely low concentrations. The technology aims to unlock reserves of lithium in groundwater in the U.S. that are currently uneconomic to tap, with much less water use, founder Pavle Jeremic said: “We could transform oil derricks into lithium derricks.”

Friday’s story about the bankruptcy of electric bus manufacturer Proterra incorrectly stated that Proterra is slowing battery production as a result of the bankruptcy. In fact it is consolidating battery production across its facilities, a decision that was taken before the bankruptcy. We regret the error.

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