Joe Manchin surprises everyone
A very happy Thursday, friends. Your Protocol Climate team learned a valuable lesson yesterday: Don’t finish your newsletter before 5 p.m. EDT. Today, we’re taking a deep dive into — what else — Senate Democrats’ big climate deal. We’re also looking at battery swapping’s future in the EV landscape. Saddle up your horse, and let’s hit the trail!
A very Joe Manchin surprise
Sen. Joe Manchin said he couldn’t vote to pass the Build Back Better Act’s climate provisions because they could inflame inflation. Well, well, well. What a difference 186 years makes. Sorry, what’s that? It’s only been two weeks?
Ah. Well, anyway, turns out Manchin is OK voting for some of those provisions. He and Senate Majority Leader Chuck Schumer announced late Wednesday they’d reached an agreement on a bill that includes $369 billion for climate and energy programs — just please don’t call it Build Back Better.
The Inflation Reduction Act of 2022 is a clean tech Swiss Army knife. The legislation may have less overall cash for climate provisions than previous iterations of the Build Back Better Act (and that’s too bad, to be sure!). But it does spread the money that is there around to multiple facets of the clean tech industry. Let’s consider our Swiss Army knife components.
- The screwdriver? Well, that would be the $60 billion for manufacturing clean tech on U.S. soil, from processing minerals to building batteries, solar panels, wind turbines and electric cars. Oh, and there’s $500 million for heat pumps. Be still my heart.
- The scissors? That, of course, would be the tax credits for clean energy and storage deployment at the utility scale. There are also tax credits for individuals to install solar panels and heat pumps (My heart! Again!) as well as to buy new and used electric vehicles.
- The knife? The most important part is the more than $60 billion for environmental justice initiatives, which will help reduce pollution in front-line communities and ensure the clean energy transition doesn’t exclude anyone.
- “We’re not just talking about deploying it, we’re talking about making it in America across the board,” Leah Stokes, a political scientist at the University of California, Santa Barbara, said of the way the legislation is structured.
All that makes the act “transformative,” Stokes said. After Manchin effectively killed Build Back Better, many environmental groups advocated for President Joe Biden to declare a climate emergency and use the weight of the executive branch to decarbonize the country. But we’re in a whole different world now.
- “It’s much harder to build an industry through regulations rather than investments,” Stokes said. “If we really want to build those technologies here in the U.S., we have to invest in those manufacturing industries. That’s a very new thing about this deal.”
- Doing so could set the U.S. up for long-term competitiveness with China, which admittedly already has a massive lead in the clean energy industry. But hey, better late than never.
- The incentives in the bill for deployment could get more clean tech on the ground and on the road faster, too. How fast is TBD pending the full text, but faster is better for the climate.
- The bill’s summary says it will slash U.S. carbon emissions 40% by 2030. Jesse Jenkins, a Princeton clean energy researcher who has modeled the Build Back Better Act’s emissions reductions, said on Twitter that’s probably a good ballpark.
- None of this is to say Biden couldn’t — or shouldn’t — also declare a climate emergency, given that he committed to cut U.S. carbon pollution at least 50% by 2030 as part of the Paris Agreement. In fact, climate policy shop Evergreen Action and a number of advocates said Biden should still wield his executive powers. But hey, getting four-fifths of the way there isn’t a bad start.
The tech industry could benefit from the act. We’ve talked a lot about the clean tech industry, but this is a huge boon to the industry writ large. Tech companies have made some pretty ambitious promises in their climate plans, and the act will make it that much easier to deliver on them.
- Google, Microsoft, Salesforce: You name a major tech company, it has a climate plan. Those plans often call for getting their operations to 100% clean energy. The more clean energy that’s on the grid, the easier that goal is to achieve.
- So, too, are goals to reduce Scope 3 emissions — that is, emissions tied to the use of their products.
- Microsoft, for example, has a pretty dang progressive climate plan. But its emissions went up by 21% last year, in part due to people playing games on their Xboxes, watching movies on their Surfaces and so on. Again, more clean energy will help cut those users’ emissions without Microsoft having to lift a finger. (Well, it could make its products even more energy efficient, but you get the drift.)
- “They need these investments,” Stokes said of tech companies. Corporate giants, they’re just like us.
All this comes with the caveats that the recently released full text is 725 pages, so it will take a while to digest in full, and there are definitely a few fossil fuel giveaways. Billy Fleming, the director of Penn's McHarg Center, aIS that the bill's fossil fuel and renewable leasing provisions "all but ensures a growth in carbon emissions." Democrats also need the Senate parliamentarian to declare it reconciliation-ready (which seems likely) and then, you know, actually pass it.
Will battery swapping ever go mainstream?
The Biden administration is gearing up to dole out funds for electric vehicle charging stations around the U.S. But there’s an alternative option: Instead of plugging in an EV to charge a battery, drivers could just toss a fresh one in.
Battery swapping has gained a toehold in China thanks to the car company Nio, and a few startups in the U.S. are vying to take it mainstream. But there are a few, uh, roadblocks on the battery-swap highway.
There’s the battery-swapping dream … A recent report from Straits Research painted a fairly optimistic picture of the potential U.S. market. The researchers’ evaluation found that the U.S. market was valued at $15 million in 2021, but could grow to as much as $138 million by 2030. Not bad!
- The analysis shows that two- and three-wheeler passenger vehicles dominate the battery-swapping ecosystem, making up 55% of all swappers.
- Micromobility is made for battery-swapping because the batteries are so much smaller and easier to lug around without robot assistance, said Gil Tal, a researcher at the University of California, Davis’ Institute of Transportation Studies.
- You can swap batteries in a car, too. And Ample — the most prominent battery-swap startup in the U.S. — is doing just that by prioritizing commercial fleets.
- The company has created an adaptor plate that slots into the space where an EV battery resides, which is then fitted with multiple battery modules that are both smaller and lighter than a full battery. It’s deployed the tech in roughly 100 cars, most of them Ubers.
… and then there’s the battery-swapping reality. Not to slow the battery-swap roll, but about those roadblocks.
- Swapping out a battery can be quick, but it’s hardly as seamless as swapping the AAA batteries on a television remote. EV batteries are huge and heavy, requiring expensive robotic arms to switch them out. And American cars aren’t exactly tiny, adding another wrinkle.
- The practice by definition requires more than one battery per vehicle, which further adds to a car’s cost, especially at a time when battery materials come at a premium and the U.S. battery supply chain is still being built.
- “If saving 20 minutes is so important for you that you would be willing to pay hundreds of dollars more — or even thousands of dollars more — then battery swapping will do it for you,” Tal said. He added that anyone who says that practice could viably overtake fast charging is “trolling us.”
Still, battery-swapping could have a place in the electrified transit future. Both Tal and Dave Mullaney, a principal on the carbon-free mobility team at the think tank RMI, said there are a few specific uses where battery swapping makes sense.
- “In the near term, I think where these companies could find success is in particular, discreet business models where they make sense,” said Mullaney, citing urban micro-mobility, final-miles urban delivery and certain trucking contexts as examples.
- Ample has raised more than $275 million over four funding rounds, so clearly at least a few VCs with serious cash are also bullish on the technology’s prospects.
A MESSAGE FROM PEPSICO
The emissions that make up a full greenhouse gas footprint can emanate from outside the four walls of your own manufacturing operations, like in the case of PepsiCo, where 93% of emissions come from its value chain.
Make it rain
Energy Exploration Technologies, aka EnergyX, is working on ways to improve lithium extraction through a process it dubs “brine-to-battery.” This week, it nabbed a $450 million investment from Global Emerging Markets.
Arable, a platform for sustainable agriculture data and intelligence, raised $40 million in series C financing, led by Galvanize Climate Solutions. Galvanize is Tom Steyer and Katie Hall’s new platform, and Arable marks its first investment.
Air conditioning is a huge problem for the climate. Startup Blue Frontier is looking to change that, and it just raked in $20 million in funding, led by Breakthrough Energy Ventures.
Sustainability software company Altruistiq raised nearly $18 million in seed funding, led by Molten.
Sodium-ion battery maker Natron Energy received a $7 million investment from the energy technology company Nabors. The startup promises that its tech will pack more power into a smaller and longer-lasting battery.
Tech workers are quitting their jobs to save the climate. Comp packages increasingly aren’t as important as finding meaningful work (along with the whole preserving-a-habitable-planet-for-future-generations thing).
Net zero air travel isn’t so, well, net zero. New research shows that jets’ carbon pollution is only a small portion of how air travel warms the planet. Someone show this research to policymakers or, failing that, Kylie Jenner at least.
The EV supplier deals just keep coming. In an echo of Ford’s announcement last week, GM said it has all the raw materials required to build 1 million EVs by the end of 2025.
Clean energy installation is trending in the wrong direction. Wind and solar projects are down 55% year-over-year due to Sen. Joe Manchin blocking the Build Back Better Act’s climate incentives and other policy uncertainties. Will the Inflation Reduction Act change the trend? We’ll see!
Florida’s biggest utility paid for good press — and it got it. Documents revealed in a major investigation by the Orlando Sentinel and Floodlight and a follow-up investigation by the Miami Herald show how Florida Power & Light allied with a right-wing outlet to influence policy and go after perceived enemies.
You can get insured for heat stroke. The new policies being offered in Japan show how climate change is spurring unexpected innovations in markets. Now to apply that same level of energy and innovation to decarbonization.
A MESSAGE FROM PEPSICO
Asking suppliers and associated companies to overhaul the way they work is no small feat, but PepsiCo is taking a three-pronged approach centered around the principles of educating, enabling and incentivizing. The Sustainability Action Center aims to engage and equip value chain partners with tools to undergo their own sustainability journey.
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