These are the Inflation Reduction Act’s big climate tech winners
Hello, and welcome to Protocol Apocalypse. Errr, Climate. Sorry, we got carried away there. Guess there’s just something in the air. Anyway! Today, we’re bringing you news about how to stop the apocalypse by checking in on the tech winners of the Manchin-Schumer agreement and the future of the gas station. Buckle up.
Announcing the winners of the Inflation Reduction Act …
At 725 pages and with $369 billion in climate investments, ranging from direct investments to tax credits to research funding, the Inflation Reduction Act is a doozy.
How it’s broken down and divvied up has massive implications for the startups working on solutions on the ground. This week, fellow newsletter Climate Tech VC published a tracker that breaks down which subsectors stand to benefit the most from the bill. I sat down with the newsletter’s co-founders, Sophie Purdom and Kim Zou, to get to the bottom of who the biggest winners would be should this bill pass.
There are some sectors that could really see transformational investments. That could make them attractive places for tech startups to focus their efforts. And they’re like industries where private climate capital could help unlock even greater carbon savings.
- The built environment is one of these big winners, with about $9 billion earmarked. That money will fund everything from consumer home energy rebate programs (for home electrification and energy-efficient retrofitting) to tax credits for heat pumps.
- Startups already operating in that space, such as BlocPower, Sealed and Dandelion Energy could reap rewards, according to Zou and Purdom.
- Agtech could also see a boost, with $20 billion allocated to incentivize smart agricultural practices and reforestation. While this most directly affects farmers and ranchers who would be participating in voluntary conservation programs that can stash carbon in the soil, it’ll also have a trickle-down effect on startups that support regenerative agriculture practices.
- There’s also a lot of funding earmarked for domestic manufacturing. Surprisingly, a lot of those production investment tax credits target clean tech that hasn’t historically been covered, Zou said.
- Batteries, critical minerals processing and electric vehicles manufacturing are all industries that would get a big boost at a time when the supply chain and national defense priorities are bringing them to the forefront.
- Seeing investment toward building up the domestic battery supply chain is exciting, “given where we are today with the renewables cost curve,” Zou said. Startups that stand to gain include everything from SPAC’d EV companies like Rivian to existing incumbents like GM and LG Chem’s joint venture Ultium, which just nabbed $2.5 billion in conditional approval from the Department of Energy’s Loan Programs Office.
Perhaps the most surprising winner? Environmental justice initiatives. Zou pointed to the problem of the “green premium,” a term coined by Bill Gates to describe the inherent higher costs associated with new climate tech that can leave lower-income households out of the clean energy transition.
- “It seems like the bill is making a real effort to ensure there’s an equitable and just energy transition,” Zou said.
- Among the investments are $5 billion for the Environmental Protection Agency for reducing climate pollution and $6 billion toward community-led environmental health initiatives.
- Tech and environmental justice may not immediately seem to go hand in hand, but it’s clear there’s potential there. Aclima, a startup that monitors air pollution, as well as platforms like Greenwork, which help upskill workers for green jobs, could also stand to gain from this funding.
In short, though, everyone stands to gain from the IRA’s historic investments. What’s surprising about the bill is the breadth and diversity of sectors that would benefit. The bill isn’t just focused on solar and wind, the traditional stalwarts of clean tech. (Though they would surely reap benefits from the clean electricity portion of the bill.) “There’s benefits across the climate capital landscape, and that in and of itself is beneficial because of the intersectional nature of climate tech,” Zou said.
Of course, Congress needs to pass it for those benefits to become a reality.— Michelle Ma (email | twitter)
The gas station of the future might not be a station
Levy is the chief commercial officer at EVgo, one of the biggest electric vehicle charging companies in the U.S. The company and others like it are reimagining how we get around, building out a distributed network of charging infrastructure that isn’t necessarily tied to the gas station model that’s ruled America's roads since the early 1900s.
Charging companies are creating something new. EVgo has struck deals with Whole Foods, Albertsons and Kroger to ensure charging stations exist in the places “that you are going to go to anyway,” Levy said. Competitors like Flo have teamed up with utilities like ConEd to install chargers on city streets.
- The growing charging model relies on accessibility rather than speed — EV charging still takes longer than pumping gas — to make things more convenient for drivers.
- The Biden administration is set to dole out $7.5 billion in funding to states to build out charging infrastructure as part of the bipartisan infrastructure law. That could further spread the decentralized charging model.
- “Unlike the gas station, which has been fixed for essentially 100 years, the charging station emerges even from its earliest days as this kind of flexible, changeable building type,” said Christopher Hawthorne, Los Angeles’ chief design officer and a professor at USC.
… but they’re also borrowing from the gas stations of yore. And, well, the gas stations today, since there are more than 116,000 today. Those 100 years of history have something to offer EV charging companies as they plan for the next 100 years.
- EVgo announced a partnership with General Motors last month to build a network of 2,000 fast chargers at 500 Pilot and Flying J travel centers across the country.
- Earlier this year, Electrify America revealed plans for its own charging stations that look an awful lot like their gas-selling counterparts.
- These stations would be located near places like shopping malls — in case drivers want to run errands — and include lounges in case they just want to relax, reflecting the fact that even fast-charging a battery will take a little longer than filling up a tank.
- Although gas stations have had negative environmental impacts on their neighborhoods, in some places — especially communities of color where other retailers are scarce — gas stations are an important part of the social fabric.
The Biden administration, for its part, has committed to ensuring that 40% of federal climate and energy investments benefit disadvantaged communities. That’s top of mind for Levy as he ensures that EVgo’s charging stations are deployed in a way that is convenient for drivers, but also equitable. “A lot of communities of color have been in food deserts or [been] redlined,” Levy said, referring to a racist lending practice. “If you just follow those places, then you will accidentally repeat those mistakes as well.”— Kwasi Gyamfi Asiedu (email)
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Make it rain
British nuclear fusion company First Light Fusion raised a whopping $486 million in its latest stint of financing, which is among the largest-ever rounds by an energy startup in the country.
Nothing screams “the future” like robo renewables: Terabase Energy got a big vote of confidence in its vision of automating solar panel installations with a $44 million series B funding round co-led by Breakthrough Energy Ventures and Prelude Ventures.
VoltStorage, a German energy storage company, raked in a $24 million investment from the power technology company Cummins.
Aurora Hydrogen, a Canadian startup using a microwave-based technique to produce hydrogen from methane gas sans carbon emissions, raised $10 million in its series A funding round, led by Energy Innovation Capital.
The VC subsidiary of the printing giant Xerox made a $7 million investment in the lithium-ion battery recycling company Li Industries as part of a series A financing round.
Consumer-focused climate fund Regeneration.VC made a $7 million investment in Smarter Sorting, a data company focused on sharing chemical and ingredient information on consumer products in order to promote sustainability.
Puerto Rican startup Raincoat, which aims to offer customizable insurance to protect individuals from climate disasters, raised $4.5 million in its seed funding round, led by Anthemis.
Meanwhile, the private equity firm Actis will acquire a controlling stake in the Dubai solar platform Yellow Door Energy, which has more than 100 megawatts of solar capacity already operating, and 100 megawatts more in development.
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Utility shut-offs during extreme heat are a huge concern in a warming world. Yet many states allow utilities to do just that if bills are past due. The consequences could be deadly.
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