Net Zero

1. Oil letdown
2. Rural electrification boost
3. Drying up data centers
4. Cash for carbon
5. Volvo hits the brakes

A new hyper-local climate newsletter, and a new Exxon-Adnoc collab.

Oil letdown

OPEC countries pushed off plans to raise their oil production quotas, amid a slump in oil prices.

US crude prices fell to $69 per barrel, the lowest level since March 2023, as the summer driving season winds down, consumption in China remains muted, and US refineries prepare to shut down for seasonal maintenance. For OPEC, sticking with its production cuts is a reversal from plans to increase drilling the group hinted at in June. While the group is united in wanting to see higher prices — at least $85 is needed to balance budgets, analysts say — the extended period of low quotas is starting to raise tensions between Saudi Arabia, which is happy to stomach them, and other members that can’t afford not to drill.

Rural electrification boost

President Biden unveiled $7.3 billion in grants for the clean energy transition in rural America during a trip to Wisconsin on Thursday, in what administration officials called the largest investment in rural electrification since Franklin D. Roosevelt’s New Deal. The money from the 2022 Inflation Reduction Act will go to 16 non-urban electric cooperatives across 23 states, Secretary of Agriculture Tom Vilsack told reporters on a call previewing the announcement. The funding represents the first round of grants in USDA’s Empowering Rural America — or “New ERA” — program, and will lower annual greenhouse gas emissions by 43.7 million tons, Vilsack said. The Biden administration is pushing to get Inflation Reduction Act dollars out the door as the November election looms and Republicans debate whether and how to roll back the signature climate law.

VCs see gold in drying out Big Data

Alex Rappaport thinks he can turn a big profit expanding his business from industrial-scale hog poop ponds to hyperscale AI data centers.

As CEO of the water filtration startup ZwitterCo, Rappaport’s typical customers are ethanol refineries, mines, commercial farms and food processors, or any other industrial facility that needs to clean and recycle a lot of water. The company has raised about $100 million in the last few years to build out filters made of a proprietary material that sloughs off contaminants and waste — pig poop, for example — so that it can filter large amounts of water without needing to be replaced.

Water has always been a niche and undervalued corner of climate tech, Rappaport says — in 2023, water-related startups globally raised about $1.5 billion, compared to $43 billion for climate tech at large. But that’s beginning to change, as the increasing frequency and severity of droughts due to climate change makes it plain to commercial water users that reducing their water footprint is an operational necessity. And a new class of customers is particularly drawing Rappaport’s attention: Data centers, which last year used about as much water globally — mostly to keep AI-crunching chips cool — as the city of London uses in a typical four-month stretch.

ZwitterCo hasn’t yet locked in any data center clients, but Rappaport is keen to. With data centers on the rise, he said, “market forces might have finally reached a threshold where there is enough buying power and enough pervasiveness of this problem that [water sustainability solutions] could become a new trillion-dollar industry that venture capital can get really healthy returns from.”

Data centers are usually under scrutiny for their massive hunger for energy. But their thirst may prove to be a bigger problem — with a juicy payoff for companies able to serve up solutions.

Cash for carbon

The amount Bank of America will invest in a major carbon-capture project in North Dakota — one of the biggest deals so far to tap new tax provisions in the Inflation Reduction Act. Under the deal, BofA will essentially pocket the value of the IRA tax credits generated by the project, an ethanol refinery equipped with carbon capture and sequestration technology. The IRA made it easier for banks to arrange these kinds of tax credit swaps for projects that don’t yet earn enough profit to take full advantage of the tax credits, and need cash upfront. The North Dakota deal is the largest of its kind so far.

Volvo hits the brakes

Volvo is reversing out of a plan to sell only EVs by 2030, the latest sign that automakers are getting cold feet about the pace of the electrification revolution.

The pivot follows similar pullbacks in the last few weeks by Ford, GM, and Mercedes-Benz. Volvo was the first major auto brand to promise a full switch to EVs, but that seems to have been ahead of what customers were willing to buy, CEO Jim Rowan said. Instead, the company will aim to produce 90-100% of its vehicles as either EVs or hybrids by 2030, the latest indication that the later part of this decade will feature a prolonged interregnum dominated by hybrids, rather than abrupt switch from gas to EVs. But in some corners, EV sales continue to gather pace: some electric models from Toyota and Subaru are seeing explosive sales growth, as Tesla loses market share in China to rival EV startups whose vehicles are both more affordable and more advanced.

New Energy

• The UK is rolling back an offshore wind target that was probably never very realistic to begin with.
• Japan has incredible geothermal energy resources, but owners of traditional onsen spas are pushing back against developing them.

Fossil Fuels

• Abu Dhabi’s state-owned oil company Adnoc and ExxonMobil concluded a multi-billion-dollar deal to collaborate on a massive hydrogen project in Texas.
• The booming carbon capture industry in Louisiana could be America’s “new climate delusion,” Zoë Schlanger writes in the Atlantic.
• Federal energy policy still overlooks economic impacts to oil and gas-producing small towns.
• 140 years after it first started using coal, the UK is closing its last coal-fired power plant.

Finance

• Some business leaders in Texas are starting to realize that the backlash against ESG investing there just doesn’t make sense.

Minerals & Mining

• African countries could profit handsomely from global demand for critical minerals — but only if they can seize more of the processing and manufacturing steps, rather than simply exporting raw materials.

EVs

• Workers at a major electric vehicle battery factory in Tennessee agreed to join the United Auto Workers union, following another victory for organized labor among carmakers outside Detroit when Volkswagen workers in the same state agreed to unionize in April.

Personnel

• Sasha Mackler, who led the energy program at the Bipartisan Policy Center, is leaving the think tank for a senior vice president role at ExxonMobil’s low carbon division.

Jael Holzman, senior reporter at Heatmap. Holzman will anchor a new climate newsletter focused on local fights over renewables and decarbonization projects.

• US reveals scope of Russian scheme to influence right-wing media figures.
• In Congress? Don’t count on a promotion if your presidential candidate wins.
• Netanyahu’s border stance emerges as key obstacle in ceasefire deal.