Mind the climate tech gap
Happy Thursday, Protopals. (We’re still workshopping it.) It’s a lovely day for a newsletter, isn’t it? Today, we’re exploring the yawning climate tech chasm the world will need to bridge to limit heating to 1.5 degrees Celsius. But it’s not all bad news. We’re also looking at how the electric school bus is coming into its prime. Hop aboard!
The world’s climate tech gap
The world is gathering in Egypt next month for the United Nations’ annual climate summit. And negotiators will have their work cut out for them, especially when it comes to figuring out how to deploy key climate technology.
Progress is being made, but nowhere near fast enough. The World Resources Institute’s Systems Change Lab broke down the climate action gap sector by sector in a new report published Wednesday. Among the biggest laggards are sectors that the tech industry — and policymakers — are heavily invested in.
- If we want to get on track to a 1.5-degree-Celsius climate, green hydrogen capacity needs to increase to 81 million tons by 2030. The hyped-up fuel can be used to power everything from vehicles to buildings and is critical to decarbonizing hard-to-abate sectors like manufacturing. As of 2020, global green hydrogen capacity stood at a puny 23,000 tons.
- Carbon dioxide removal is another sector critical to reaching net zero. To get on track, the industry needs to increase capacity to 75 million tons per year by 2030. It’s currently just 540,000 tons annually.
- The electric vehicle revolution will also need to pick up steam, particularly for delivery fleets like Amazon’s. The report shows EVs need to make up anywhere from 20% to 40% of total long-distance vehicle fleets globally. The latest estimates put that percentage at 1.3%.
Sure, it seems grim. But there are ways to get these industries on track. Getting a strategic alignment of policy action and private investment is a tall task. But then, the world’s future is at stake.
- For manufacturers to scale up nascent tech like green hydrogen, demand has to be there. Companies and governments are committing to buying green hydrogen, which can help the industry.
- Policies like the Inflation Reduction Act’s 45V tax credit for green hydrogen can also help bring down costs.
- CDR faces similar challenges to green hydrogen, which are seemingly as plentiful as the amount of interest and investment it’s received. That interest includes early financial commitments from the tech industry and even individuals, which could help bring CDR costs down.
- Policies are also coming into form, including the IRA’s enhanced 45Q tax credit and funding for direct air capture hubs.
- EVs are more mature than the other two industries, but they could still use a little (OK, big) bump when it comes to fleet vehicles. Amazon and other logistics companies with major fleets of vehicles have made large-scale investments in electrifying them.
- The IRA is also once again a boon for incentivizing fleet owners to go electric; turning vehicle fleets electric with tax credits could be a “game changer,” though there’s still more work to be done on financing charging infrastructure.
Climate talks are likely to focus heavily on rich countries paying for climate damage in poor countries. But negotiators and companies attending will also have to be busy on the sidelines figuring out how to get more money and policy lined up to support these nascent but needed technologies.
— Michelle Ma
A lot needs to change between now and 2030.
Image: World Resource Institute
It’s electric: School bus edition
Cars and trucks get all the electric love. But electrifying the humble school bus as well could provide myriad benefits, from clean air to grid resilience. The Biden administration just devoted $1 billion to turbocharging school districts’ efforts to electrify their fleets. Now, it’s on the administration and states to get the incentive structure right so the e-bus industry innovates and brings costs down.
Clean buses are coming up in the rearview. Fast. On Wednesday, the administration rolled out a new federal program to fund clean school buses in what could be an inflection point for their adoption.
- The first wave of grants, administered by the Environmental Protection Agency, will provide funds for districts to buy roughly 2,500 buses nationwide.
- The program, which was funded by the bipartisan infrastructure law, will dole out $5 billion over five years for electric or otherwise “clean” buses that don’t run on dirty diesel.
- The U.S. had just 767 electric school buses on the road as of June, according to a World Resources Institute analysis. The new funding could put the pedal to the metal for clean-bus adoption.
Rapidly electrifying school buses will be a delicate balancing act. Getting the country’s remaining half-million school buses cleaned up will require carefully designed incentives that give the industry a boost while ensuring it will be able to stand on its own.
- Duncan McIntyre, CEO of the electric school bus fleet operator Highland Electric Fleets, said he hopes the per-bus incentives shrinks over time. He said that would stretch the next $1 billion in grants and “force the industry to stand on its own two feet.”
- “In five years, our goal should be that the industry reaches a point where all new vehicles acquired are electric without grants,” McIntyre added, referencing the infrastructure law funding timeline.
- Sue Gander, director of WRI’s Electric School Bus Initiative, concurred that the industry should eventually have fewer incentives down the road.
- But she also said there’s more the federal government could be doing now to incentivize adoption, including funding charging infrastructure specifically for school buses.
Clean buses aren’t just good for the climate. Electrification would come with the added benefit of reducing air pollution from dirty diesel buses, too.
- Diesel school buses belch more than 5 million tons of carbon per year.
- Low-income communities have much higher than average asthma rates, and reducing the number of diesel buses on the roads there will clear the air.
- The White House said that school districts with low-income, rural, or tribal students represented 99% of the grant winners in this latest round.
- Though it’s not clear how future rounds of funding will be structured, ensuring those communities continue to be at the forefront of electrifying school buses could help address a grave injustice.
A MESSAGE FROM SLB
The world is rapidly changing; the scales are imbalanced, and many are feeling the effects. SLB is committed to helping deliver the world’s greatest balancing act—enabling secure, accessible, sustainable energy to meet growing demand.
Make it rain
Chinese lithium-ion battery maker Hithium raised a $278 million series B round led by ABC International.
Green steelmaker H2 Green Steel announced $70 million in new investments to close its series B round at $260 million. The funds will go towards developing the company's plant in northern Sweden.
Indian electric scooter company Ather Energy raised a $50 million series E, led by Caladium investment.
U.K.-based Orbex Space raised $45.8 million in a series C round led by the Scottish National Investment Bank. The company is developing a low-carbon small launch vehicle.
AM Batteries scored a $25 million series A raise led by Anzu Partners.
In yet more battery news, Ionblox (previously known as Zenlabs Energy) just announced a $24 million series B investment to scale its battery business.
AgroSphere, which develops environmentally friendly crop health products, raised $22 million in series B funding, co-led by Lewis & Clark AgriFood and Ospraie Ag Science.
Spanish startup Heura just announced a roughly $20 million bridging funding round ahead of its series B. The funding will go toward helping the alternative meat company scale in more European markets.
Agtech startup Nitricity announced a $20 million series A, co-led by Khosla Ventures and Fine Structure Ventures.
Syso Technologies, which manages renewable energy and storage project operations for companies, raised a $10 million series A round, led by Lacuna Sustainable Investments.
Saudi Arabia is getting into carbon offsets. The kingdom offered 1 million tons of credits that adhere to the oft-criticized standards created by the aviation industry. What could possibly go wrong?
The EU and the U.S. are trying to play nice about EVs. The IRA’s tax credit requirements for North American-made battery components ticked off the EU. The bloc and the U.S. are hoping a task force can somehow solve the problem.
LG ♥️ USA. The electric vehicle battery giant is upping its 2022 sales outlook, and its CFO said its growth plans hinge upon battery demand in the U.S.
Georgia Power may have made a $1.9 billion error in its favor. The solar industry claims that since 2011, the utility has made a “massive over-collection of revenue” rather than kicking money back to customers.
OK, it’s not tech, but if you needed another reason for climate action, “avoid the rise of a brain-eating amoeba” is a pretty good one.
A MESSAGE FROM SLB
Our planet needs balance to thrive; for the climate, for people, and for nature. Together, we will pave the way to a balanced planet through better practices, innovative technology, and the commitment to help others on their journey across the globe.
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