Welcome to the fourth edition of Greenify! A weekly newsletter providing you with 3 of the most important news and some crucial deep dives on matters such as #energytransition #decarbonisation #climatetech! We believe that a clear understanding of these topics is essential to thrive in the world of… TODAY!
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📌 Fact of the week
According to Bloomberg, corporations brought 31 gigawatts of renewable energy in 2021: that equates to a 24% increase vs. 2020. Prize for the biggest absolute purchaser of the year? Amazon, buying 20% of total capacity😲
Hottest news of the week…
Business 💰 – It’s a Total escape from Russia!
What happened: TotalEnergies will stop buying Russian Oil by the end of the year, in a move to start cutting down every relationship with the country. Total was the last among its main competitors to take this decision, probably due to its larger exposure to the country… but this excuse was not good enough to save them from heavy criticism by NGOs, French politicians and activist investors. However, this move addresses only part of the problem, as the company is not taking any moves to stop its gas imports after its CEO justified the move saying he has “no way to replace it”…🥶
Zoom out: Although an European embargo on Russian Oil has never actually happened, companies seem to be creating one themselves, showing that shareholders' punishments could be more detrimental than leaving some money on the table in Russia… In fact, since Putin’s invasion, British Petroleum, Shell, Equinor, Eni and now TotalEnergies have all committed to end oil purchases at the end of their contracts and withdraw their stakes in Russian ventures. Still, the majority of these companies mention “gradual” exit… therefore we need to wait and check the real outcomes in a few months…🤨
Innovation 💡 - United Nations Warning!
What happened: The United Nations have rolled out a plan to have the whole world covered with systems for early warning of weather hazards within 5 years. The estimated $1.5B investments will focus on making sure information about upcoming hazards and how to protect from these reaches the most rural areas of the planet🌍! Although developed economies may take for granted weather forecasting and warnings received everyday, 1/3 of the world’s population, living mainly in least developed countries (LDC), are still not covered by early warning systems, leaving them unprepared.
Zoom Out: Weather related disasters have increased by 5 times since 1970s, killing more than 2 million people and causing $3.64 trillion in losses worldwide since then. The positive news is that early warning systems have proven efficient in saving lives, improving food security and creating huge economic benefits. According to the Global commission on Adaptation, an investment of $800m in these systems can result in avoided losses of as much as $16bn (20x!) 🚀
Regulation 🗃 – The SEC is Setting the Climate Agenda
What Happened: The U.S. Securities and Exchange Commission (SEC), which regulates the U.S. securities industry, has released a proposal by which public companies will have to disclose in their reports a big chunk of information relating to their green credentials💚. Under the proposal, they’d need to explain how climate risks would affect their operations and strategies, what are their climate objectives and how they intend to get there as well as actual data on current emissions (bear in mind some companies already do disclose this information).
Zoom Out: As explained by SEC chair Gary Gensler, climate data disclosure is just a natural consequence of the evolving investing world, where investors want to know who and what they are financing with their money. About 100 years ago, companies had to first report financials, later on they had to disclose information about executives and their compensation; now, it’s climate’s turn. As investing mandates are becoming increasingly non-tolerant towards environmentally dirty companies, with the potential passing of this proposal greenwashers might find it hard to hide this time🥳.
Deep dives of the week…
Picture of the Week - China is leading in renewables!
According to the IEA, China will remain the leader in new renewable energy capacity additions, followed by Europe and the United States. Solar and wind, known to be cheapest and most scalable among renewable options, are expected to lead the way.
Source: IEA
Company of the Week: Ørsted – The Sea’s Wind King 🌬
This week we will dedicate this section to Ørsted, a Danish renewable energy company. About 60% of its revenues come from offshore wind, 29% from bioenergy and 1% from onshore wind. Simply put, it is the global leader in offshore wind with 28 wind farms in operation across the world’s oceans. Ørsted constructs, owns and operates all its wind farms in Europe, the U.S. and Asia, rendering it a highly vertically integrated player and, in our opinion, a structural winner on the long-term decarbonization thematic.
Analysis of the Week – AgriTech, looking beyond a single acronym
Briefly, what is it 🤔?
AgriTech, part of the wider field FoodTech, refers to the use of technology to increase environmental sustainability, security and efficiency across the agricultural sector. Two examples of AgriTech applications are: 1) the use of data analytics and robotics to manage crops 2) the implementation of solutions such as vertical farming.
Why is it important? 🧐
Problem #1: Food sustainability: How we grow things takes up ~20% of yearly GHG emissions, with growing animals for food as the highest contributor, followed by chemicals utilisation in crops.
Solution: AgriTech developments can optimise the resources consumed by animals as well as reduce water waste and chemicals usage in crop cultivations.
Problem #2: Food security and efficiency: Russia and Ukraine combined export more than 25% of the world’s wheat. The current conflict is causing higher prices and shortages, especially in developing economies, revamping the importance of food security.
Solution: AgriTech, by increasing efficiency of existing farms and generating new output through techniques such as indoor and vertical farming, decreases food dependency on other countries and reduces the risk of food shortages.
What’s the current situation?📌
In terms of investments💰, VC firms pledged $10.5B across 751 deals in AgriTech start-ups in 2021, representing a 58% year-on-year growth. Some of the largest agricultural companies are also investing in the field, such as John Deere who recently acquired start-up Bear Flag Robotics for $250 million.
In terms of regulations🗃, the sector is heavily supported. For example the EU’s Farm to Fork strategy includes various subsidies to green farming. However, the current war in Ukraine pushed countries’ leaders to call for a revision of the plan in order to set European food production free from any green constraints throughout the emergency.
Thank you for the interesting insight! Mad me want to invest in AgriTech. Keep up with the good work!