What Big Tech can do following SCOTUS’ big climate ruling
Happy Thursday to all who enjoy curtailing the administrative state. The Supreme Court has issued a major ruling on the government’s ability to regulate greenhouse gases. We’ll be looking at what tech can do to fill the void as well as Frontier’s big carbon removal purchase. Join us as we try to make climate lemonade.
Tech companies’ need to use their climate clout
Striking down the right to abortion may be the Supreme Court's highest-profile decision this term. But on Thursday, the court handed down an equally massive verdict on the federal government's ability to regulate greenhouse gas emissions.
In the case of West Virginia v. EPA, the court curtailed the agency's ability to regulate greenhouse gases from power plants under the Clean Air Act. While the tech industry alone isn’t going to suddenly fill the role of the regulatory state, the case will force the industry to focus on just how serious it is about saving the planet.
The tech industry has some decisions to make. The industry has made a big to-do about its climate plans. But the best way to meet lofty net-zero goals in the coming decades are strong regulations that curtail carbon pollution at the source.
- Some major companies such as Apple, Microsoft and Amazon have purchased clean energy in an effort to make their operations carbon-free.
- A number of companies have also told suppliers to go clean or scram.
A piecemeal approach to reducing carbon emissions simply won’t work, especially for the tech industry’s biggest source of emissions.
- Scope 3 emissions tied to end users doing things like charging devices make up the vast majority of most companies’ emissions.
- Tech companies may make ultimatums to their suppliers, but they’re not going to tell users to install solar panels or else send back their phones and smart TVs.
But the tech industry has an important tool to fix things: its clout in Washington, D.C. And the industry could use that leverage to force lawmakers to act, now that regulators’ hands are tied.
- The fossil fuel industry has worked in lockstep to kill climate legislation, including courting Sen. Joe Manchin as a pivotal vote that put the Build Back Better Act on ice.
- David Pomerantz, executive director of the Energy and Policy Institute, said that while campaign finance reform and other fixes needed to shore up democracy are absolutely vital, as are everyday people staying engaged, "Working within the system that we have, if tech companies are concerned about climate change as they purport to be, then they need to flex their own political power."
- Legislation that includes items such as a clean energy standard — something that was in the Build Back Better Act — could provide an avenue and money to clean up the power sector. That would help the tech sector meet its climate goals, too.
- Salesforce notably came out in support of the act, but it was a lonely voice in the tech industry. Some major tech companies worked behind the scenes to get the Business Roundtable to drop its opposition to Build Back Better, though the change came too late and is far short of getting the group to support the legislation.
Tech can also put pressure on states and utilities. Those are places where the decarbonization, uh, hits the power line. (OK, it doesn’t roll off the tongue quite like “rubber meets the road,” but we’re working with what we got.) And tech titans could throw their weight around as big power purchasers.
- Pomerantz said a number of large utilities have used their power as monopolies to capture regulators, basically letting utilities pollute as they please.
- “An area Google has led on and, to a lesser degree, other large data center operators like Facebook, Apple and Microsoft,” Pomerantz said, is the push to create wholesale electricity markets that break monopolies down. That can drive innovation, push more renewables onto the grid and lower prices.
- Reforming existing markets to “more accurately capture the benefits of clean energy and the cost of fossil fuels” is another area where tech giants could make some inroads.
There’s no doubt the Supreme Court’s decision is a huge blow to cleaning up the grid now, let alone getting it to President Joe Biden’s 2035 target of 100% carbon-free electricity. But tech companies, for better or worse, can still be major players in cleaning up the grid for their own and the climate’s sake.
— Brian Kahn
Frontier goes shopping
Big Tech’s big carbon dioxide removal fund made its first, uh, big purchase. On Wednesday, Frontier — which works on behalf of Alphabet, McKinsey, Meta, Shopify and Stripe — announced it had contracts with five companies that will suck nearly 2,000 tons of carbon out of thin air.
The purchases show Frontier is seeking a range of solutions. The five companies it’s buying services from remove carbon dioxide from the atmosphere using a handful of techniques.
- Of the five, Calcite-Origen, AspiraDAC and RepAir use direct air capture (AspiraDAC does it modularly with solar power, which wow), while Lithos Carbon and Travertine Tech rely on improving rock weathering to snatch carbon dioxide out of the sky.
- Frontier said it received 26 applications for this round of funding and that there was an even more diverse array of approaches and a deeper focus on verifying that the technologies deliver what they promise.
- The group also handed out an R&D grant to Living Carbon, a startup using algae and biopolymers to sequester carbon. The solution isn’t ready for prime time — yet.
- Bigger purchases are coming soon, Joanna Klitzke, who leads Strategy and Operations for Frontier, said in an email. That means we could see still more companies with unique technologies.
The price point is currently high. Very high. This tranche of CDR services is costing Frontier anywhere from $500 to $1,800 per ton.
- That's well above the holy grail of $100 per ton price point that would make CDR (relatively) affordable, given that the world could potentially need to remove billions of tons of carbon dioxide a year.
- But today’s price doesn’t represent tomorrow’s, and Frontier is looking long-term since this is a multidecade process.
- “We purchase from projects that are expensive today, but have a viable path to coming down the cost curve and achieving our target criteria of sub $100 [per] ton,” Klitzke said.
Frontier has $925 million to play with between now and 2030. The current purchase — on behalf of Stripe — is just $2.4 million in services. Another $5.4 million is on the table for these companies if they also reach technical milestones. If you’re the proprietor of a burgeoning carbon removal startup and missed this round, worry not. Frontier’s next RFP will go up in August.
Read more about the purchases here.
— Brian Kahn
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Make it rain
Intersect Power, a company that develops renewable power plants, received a $750 million growth equity investment led by TPG Rise Climate. The influx of cash will help more than triple the company’s current renewable portfolio.
Electric Hydrogen, a startup that does exactly what its name indicates, secured $198 million in its latest series B equity and venture debt funding round, led by Fifth Wall Climate Tech.
The nuclear fusion startup Zap Energy raised $160 million in series C funding led by Lowercarbon Capital. The company made headlines recently when it said that it is closing in on testing a system that could ultimately generate more electricity than it consumes. (That’s the fusion dream!)
The climate tech company Amogy, which is focused on converting ammonia to fuel for heavy industries like shipping, raised $46 million in its latest funding round, led by South Korea’s SK Innovation.
The U.K.-based green supply chain startup Circulor raised $25 million in its series B funding round to fund its expansion, especially into the U.S. The Westly Group — an early investor in Tesla — led the round.
The startup Tenet, which offers loans to offset the upfront cost of EVs, raked in $18 million in seed funding led by Human Capital and Giant Ventures.
Vibrant Planet, a public-benefit startup developing what is essentially an operating system for forest management, raised $17 million in its seed funding round led by both the Ecosystem Integrity Fund and the Jeremy and Hannelore Grantham Environmental Trust.
The startup Epoch Biodesign is developing enzymes to devour plastic waste, and it raised $11 million in seed funding led by Lowercarbon Capital.
Synop, which is trying to revolutionize how commercial EV fleets are managed, raised $10 million in a seed funding round led by Obvious Ventures.
The car company Stellantis invested $52 million in the mining company Vulcan Energy Resources, which is testing more sustainable forms of direct lithium extraction. This makes the carmaker Vulcan’s second-largest shareholder, with an 8% stake.
— Lisa Martine Jenkins
A European deal to phase out the combustion engine inches toward the finish line. Members of the European Union endorsed the move this week, though still more talks on the 2035 phase-out remain.
The original carbon-free transport gets some cargo capacity. Using bikes to transport goods and passengers isn’t a new phenomenon, but the “humble little boxes on wheels” are increasing in popularity.
Even Big Oil wants to get on TikTok. Shell is hiring a channel manager. Does this mean TikTok is officially over?
Shooting rockets of tourists into space is bad for the climate. That’s the finding of a new study, which looked at soot and its impact on the planet. Who would’ve thunk it?
Stockholm is getting tricked-out electric ferries. The new boats can whisk passengers along at nearly 35 mph and have a range of 50 miles.
But, seriously. Sweden gets it. The Scandinavian country is undergoing a “green revolution” as it builds out renewables and cleans up notoriously hard-to-decarbonize heavy industry. It’s not all puppies and rainbows, though.— Lisa Martine Jenkins and Brian Kahn
SPONSORED CONTENT FROM SAP
The competitive edge of digital solutions: When companies invest in maintaining their “green ledger” with the same commitment they have to their financial ledgers, they will be able to connect their environmental, social, and financial data holistically so they can steer their business towards sustainability. At the end of the day, what gets measured, gets managed.
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