Critical minerals could become a geopolitical weapon

The looming critical mineral confrontation

Renewable energy developers have had more than their fair share of supply chain chaos over the past year. And now, they may have one more woe to add to the list: Critical minerals could become a pawn in geopolitical conflict, Energy Secretary Jennifer Granholm said this week.

The critical mineral supply could be manipulated — or even weaponized. Granholm issued her warning about the minerals crucial for the clean energy transition at the Sydney Energy Forum. The reason for concern? China controls the vast majority of the supply.

• "I think it's healthy and from a national security perspective for both of our nations to diversify supply chains and make sure that these minerals are available to get to the ultimate goal of net zero," Granholm told the Australian audience. She added that the U.S. has the resources to support miners that could help diversify the supply chain.
• If U.S. relations with China worsen, any conflict — hot or cold — could restrict the flow of all manner of goods, including minerals like lithium, cobalt and rare earths.
• Russia’s invasion of Ukraine offers a preview of how escalating tensions could play out. The country has used natural gas as a weapon, including cutting off the flow of natural gas to Poland and Bulgaria earlier this year.

Granholm spoke directly to major mining companies, including Rio Tinto. Others in attendance included Lynas Rare Earths, Iluka Resources, Syrah Resources and Arafura Resources.

• Lynas Rare Earths has already been the subject of a disinformation campaign seeking to upend its plans to build a Department of Defense-supported processing site in Texas. That campaign has been linked to pro-Chinese interests.
• “Any kind of effort by the West to develop their own capabilities comes at a great cost to China's leverage,” said John Hultquist, vice president of cyber threat intelligence for Mandiant, which uncovered the campaign. “So they're going to do whatever they can to impede this.”
• Clearly Granholm also got the memo based on her comments this week.

China, meanwhile, is making moves of its own. Following Russia’s invasion of Ukraine, executives are increasingly spooked about the possibility of China invading Taiwan. Beijing is considering how to shield the country from sanctions like those used against Russia in the wake of its initial assault of Ukraine in the event of a possible invasion of Taiwan, FBI Director Christopher Wray said last week.

• China is looking to “cushion themselves from harm if they do anything to draw the ire of the international community,” Wray said. The country’s attempts to insulate its economy preemptively could hold a “clue,” Wray said, to its plans for a potential invasion.
• If China invades Taiwan, that could put the world’s energy transition in jeopardy.

While Wray did not specifically call out critical mineral supplies as a potential geopolitical weapon in China’s arsenal, Granholm’s comments this week show the topic’s certainly on the Biden administration’s mind.

— Lisa Martine Jenkins (email | twitter)

Microsoft’s big CDR bet

In what feels like it’s becoming a weekly occurrence, a tech giant has announced a major carbon dioxide removal deal. This week’s tech company: Microsoft. This week’s purchase: 10,000 tons of CDR services from Climeworks.

The deal is a long-term commitment. Climeworks won’t be pulling that carbon dioxide out of the sky tomorrow using its direct air-capture technology. Instead, the company and Microsoft inked a deal with a 10-year time frame.

• It’s the most significant and long-term agreement Microsoft has made with a CDR supplier to date. That also makes it a crucial building block as companies working to remove carbon try to gain a toehold.
• “Long-term commitments like this multi-year agreement are crucial for scaling the industry because the guaranteed demand catalyzes financing of our infrastructure and consequently accelerates the development of the required ecosystem for scaling DAC," Climeworks co-founder and co-CEO Christoph Gebald said in a press release.
• In January 2021, Microsoft made a smaller purchase of Climeworks carbon removal services as a part of its broader portfolio.

The move could help Microsoft meet its aggressive climate plan. The company committed to being climate negative by 2030 and remediating all emissions since its inception in the 1970s by 2050.

• To meet the first part of its goals, Microsoft is planning to cut emissions each year this decade while also ramping up CDR purchases.
• Its plan calls for removing millions of tons of carbon dioxide from the atmosphere.
• While the Climeworks deal is significant as one of the biggest CDR purchases ever, it’s also only a drop in the carbon removal bucket for Microsoft (and the world).
• Microsoft also saw emissions rise in 2021, reflecting the challenges it faces in not putting carbon in the atmosphere in the first place.

Tech companies have increasingly been investing in CDR and trying to create a market for the nascent industry.

• The Microsoft deal comes just a few months after the company joined Alphabet and Salesforce in committing $500 million to carbon removal purchases by 2030.
• Earlier this year, Alphabet, McKinsey, Meta, Shopify and Stripe created a $925 million advance market commitment to accelerate the development of carbon removal technologies. That commitment, dubbed Frontier, recently made its first purchases.

These technologies are a “necessary element” for reducing the risks of climate change, according to the Intergovernmental Panel on Climate Change’s recent report. The world will likely need to remove billions of tons of carbon from the atmosphere per year in the coming decades. Just how much depends on how fast we cut emissions in the first place, though.

— Lisa Martine Jenkins

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.

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Make it rain

The energy-as-a-service company Budderfly, which counts major retailers and restaurant chains among its customers, recently raked in a $500 million investment from the private equity firm Partners Group Holding.

Hydrogen startup Monolith, which uses natural gas to create fuel then traps and uses the carbon dioxide it emits, pulled in more than $300 million in its latest funding round. Its investors include big names like BlackRock and NextEra Energy.

Community solar got a leg up this week when private equity firm Apollo Global Management invested $175 million in Summit Ridge Energy, which develops both rooftop and ground solar projects.

The energy storage developer Powinraised $135 million in its latest funding round, led by GIC, Singapore’s sovereign wealth fund.

The battery material company Wildcat Discovery Technologiesraised more than $90 million in a series D funding round led by Koch Strategic Platforms (yes, a subsidiary of Koch Industries that funded climate denial for decades). The company is currently focusing its attention on electric vehicle battery development.

Yet another EV charging startup got a boost: EVCS, which operates across the West Coast, raised $68.8 million in its latest funding round. The total is split between $50 million as debt facility from Spring Lane Capital and $18.8 million in series A investments co-led by Spring Lane Capital as well as Abdo Partners and the Copulos Group.

Circ, a textile recycling startup focused on keeping old clothes out of landfills, raised $30 million in its series B funding round, led by both Breakthrough Energy Ventures and Inditex, the parent company of Spanish fashion giant Zara.

Big news for the alarmed-about-cow-burps among us: Blue Ocean Barns is working on an additive to cattle’s diet that could reduce methane emissions, and the startup raised $20 million in series A funding this week led by Valor Equity Partners.

New climate media site The Cool Down launched this week with $5.7 million in seed funding led by Upfront Ventures. The site is run by a collection of media veterans, including Dave Finocchio, the former CEO of Bleacher Report.

Veckta, an online platform that connects energy customers with suppliers, raised $3.3 million in seed funding, led by VoLo Earth Ventures.

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— Lisa Martine Jenkins and Brian Kahn (email | twitter)

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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