Greenify #3
Welcome to the third edition of Greenify, a weekly newsletter aimed at simplifying your digestion of current and crucial matters such as #energytransition #decarbonisation #climatetech. We believe that a clear understanding of these topics is essential to thrive in the world of… TODAY! Please help us improve by leaving a comment or feedback, and if you like what you are learning… share it with your network 😁!
📌 Fact of the week
A recent paper published by Nature found that G20 countries spent $14tn on economic stimulus measures post-pandemic, but only 6% was allocated to areas aimed at cutting emissions.
Hottest news of the week….
Business 💰 – Ford betting big bucks on EV
What Happened: Ford has been all over the news recently due to its efforts to conquer the EV market. Two weeks ago, the US car maker announced it will reorganize its company by splitting the electric vehicles business from the legacy combustion engine business, as well as invest $50B into EV in the next 5 years. Big plan is to build more than 2B EVs in 2026. On Monday, they then announced the launch of 7 new electric models in Europe by 2024 and an agreement to build one of the largest battery plants in the world, with capacity to build up to 600,000 units per year 🔋!
Zoom Out: Although the commodity market is now in full crisis, with severe disruptions in the supply of precious materials such as Lithium and Nickel, regulators don’t seem intentioned to slow down the electrification race. In fact, Germany just announced it will support and comply to the EU plan to only sell “carbon-neutral” vehicles by 2035. Therefore, electrification remains at the top of automakers’ agenda, including Ford, which is signalling a clear intention to bridge the gap with industry leader Tesla… some may say they are at two completely different levels… but remember Ford vs. Ferrari?
Innovation 💡 - Grab your Ticket on Mitsubishi’s Ship 🛳
What happened: Mitsubishi Heavy Industries has announced it will build the world’s first ship designed to transport captured CO2 from carbon capture plants. Ready by late 2023, the ship will be able to transport 1,450 cubic metres of CO2. Essentially, as heavy-emitting companies such as cement producers develop carbon capture technologies, they face the problem of “What now?” once CO2 from production is captured🤔….Well, Mitsubishi will be one of the solutions, as it will take ownership of this CO2, liquefy it, and transport it where it is either needed or can be permanently stored.
Zoom Out: Currently, only 27 commercial CCUS (Carbon Capture Usage and Storage) projects are operational worldwide, but 108 further projects in the pipeline is an encouraging number🤞 Despite CCUS’ en-vogue moment, we highlight three major problems: 1) scalability – carbon capture “machines” cost a lot at the moment; 2) expertise – industries who really need this don’t have massive expertise and struggle to integrate this industrial technology; 3) once captured, what? – industrial plants in some areas have an advantage when it comes to transport and/or storage… others just don’t. Mitsubishi helps us with point 3, point 1 and 2 we’re sure will come with time and…money🙄!
Regulation 🗃 –Don’t mess with Xi
What happened: On Monday, China’s environment ministry got really angry with four national data verification firms, accusing them, among other things, of “writing distorted and inaccurate conclusions”. These companies are third-party firms responsible for providing data on carbon emissions for different companies: the ultimate aim is for them to provide reliable data so that China’s recently launched carbon trading scheme (CTS) can function smoothly. Although no economic fines have been imposed yet, the environment ministry has said it will urge local environment bureaus to further investigate the four firms and strengthen supervision on their work 🧐!
Zoom out: China is looking to achieve carbon neutrality by 2060. Among a wide range of policies, it decided to crash EU’s party (pretty late!), putting a price on CO2 emissions just as Europe did in 2005 with the emission trading scheme (ETS). Essentially, this scheme allows companies in specific heavy CO2 industry to emit a given amount of CO2 tonnes. Above that limit, they are required to pay an extra cost for each extra ton emitted 💸. Launched in July, China’s ETS currently includes companies responsible for c.40% of the country’s total CO2 emissions.
Graph of the week – What do we use Oil for?
To reduce Oil consumptions we first have to understand in which industries we use it the most…and then hopefully disrupt these with revolutionary technologies. It seems like the great efforts on electrifying transportation is worth something!
Source: IEA
Company of the week – Lanzatech
LanzaTech is Carbon Capture Technology (CCT) company that traps CO2 and uses bacteria to convert the waste into materials such as sustainable fuels, fabrics and other products. The company’s end goal is to create a carbon circular economy, where CO2 is being reused rather than wasted, helping to solve the carbon problem.
What’s particularly hot about this company is that it will soon be available on the Nasdaq, with the ticker symbol “LNZA”. The company is listing through a Special Purpose Acquisition Company (SPAC), in an estimated $2.2B deal. The transaction is likely to close in the 3rd quarter of 2022 and would make LanzaTech among the first CCT companies to access public markets.
Analysis of the week – What the hell is ETS?
1. What is it and where is it🔍?
Introduced in 2005, the emissions trading scheme (ETS) is a scheme operating in the EU by which companies pay a price for carbon dioxide emissions. Although the ETS operates specifically in Europe, other regions across the world also have adopted carbon pricing mechanisms, incentivizing decarbonisation across industries.
2. How does it work in practice🧐?
Essentially, the EU wanted industries and companies responsible for a big chunk of CO2 emissions to pay a price for the carbon dioxide released. However, at the same time, they didn’t want these companies to run out of business, so they came out with a cool formula… Companies operating in “hard to abate” industries such as cement or steel were granted a specific level of free allocations, meaning they were given permission to emit a specific amount of CO2 tonnes without paying. However, above that threshold, for every extra ton of CO2 they emit they need to pay a price.
3. How is carbon priced 💲 ?
Economics 101 will teach you the laws of supply and demand. In this case, it is exactly the same. The price of carbon depends on the amount of demand out there. In recent months, as decarbonization has been at the forefront of countries’ and companies’ agendas, we have witnessed a massive rise in ETS prices. Also, companies are allowed to trade allocations between them, rendering them a potential alternative revenue source by profiting on price fluctuations. However, the way the ETS works will change drastically in the years to come as the CBAM (carbon border adjustment mechanism) will be introduced. Honestly, it took the European Commission loads of pages to explain this, so we will just leave the link for those of you who are more interested!