Greenify #75: The DAC momentum
August 18, 2023
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📌 Fact of the week
Energy research company Wood Mackenzie estimates investments in Oil & Gas exploration will average around $22 billion per year through 2027, a higher figure compared to the 2022-2023 period.
Hottest news of the week…
Regulation 🗃 – Setting up a recycling shop
What happened: China’s National Development and Reform Commission is getting serious about increasing recycling… renewables. Indeed, the state planner said the country targets to set up, by the end of the decade, a fully operational recycling systems for both wind turbines and solar panels. With an average lifespan of about 25 years, many of China’s installed photovoltaic panels are already showing deterioration signs.🙄
Zoom out: A win win situation: recycling on renewable sources, particularly important considering the significant waste generated by the clean industry… According to the International Renewable Energy Agency (IRENA), total waste from solar projects alone could reach 212 million tons a year by 2050. Ultimately, an ecosystem which favours both the development of clean energy sources and means to recycle the associated waste is what we should aim for. 🌎
Business 💰 – Vietnamese EV maker
What happened: Vinfast, a Vietnamese EV manufacturer you might have never heard about, listed on the Nasdaq earlier this week and quickly surpassed some of the most established automaker such as Ford, GM and Stellantis. Its share quickly surged to ~$37, giving it an $86 billion valuation, surpassing and almost doubling numerous renowned automaker. The stock has now fallen back to ~$20 per share as of Thursday evening, still giving Vinfast a valuation close to Ford and GM, yet higher than Stellantis. 😳
Zoom out: Despite the trust received by investors, Vinfast is not doing great yet. The company has yet to turn a profit and in 2022 it lost $2.1 billion. However, Vinfast has ambitious plans, especially in the US, where it wants to take on industry leader Tesla. The plan is to invest $4 billion into a factory in North-Carolina and to shift away from a direct-to-consumer model towards a hybrid model involving car dealers. The plan is not working yet, with less than 200 vehicles sold in the country, according to S&P Global Mobility.👍
Innovation 💡 - DAC - Great minds think alike
What happened: Last week, the Biden administration awarded $1.2 billion in grants to support a series of Direct Air Capture (DAC) projects initiated by Climeworks AG and Occidental Petroleum Corp. These grants are part of a wider pool of money ($3.5 billion) available to the U.S. government to be allocated towards DAC projects. Smaller grants were awarded to 19 different projects carried out on a smaller scale by several companies partnering out. 💸
Zoom out: When funding (particularly free money) meets innovation, it means serious intentions for the technology. In this case, direct air capture is still a nascent technology in most regards, with few operational plants worldwide; the largest is operated out of Iceland by Climeworks AG and is able to capture 4,000 tons of CO2 annually. Despite we tend to prefer technologies which tackle process emissions, rather than directly sucking CO2 from the atmosphere, we do acknowledge this technology will be crucial towards achieving net-zero, particularly considering those hard to abate industries which will keep emitting carbon dioxide for a while. 👍
Deep dives of the week…
Chart of the week - Some DAC numbers 🔢
In our Innovation news we spoke about funding efforts in Direct Air Capture technologies. The below chart should help better understand the DAC capacity’s exponential growth over the last 10 years. Most of the DAC facilities are currently located in the U.S./Canada, despite the largest one sits in Iceland, as discussed above. In the same vein as start-ups explore the space, investors are looking at it with increased interest. Companies such as Shopify and Swiss Re are buying the captured CO2 to offset their own emissions. 🥬
Source: IEA
Deals of the week - Acquisitions of DAC technolgies and Wind Farms
Occidental Petroleum, the Oil & Gas company most active in the Direct Air Capture (DAC) space, is acquiring DAC technology supplier Carbon Engineering Ltd for $1.1billion. Occidental Petroleum aims to build more than 100 plants in the US! Some of these will be funded with the $1.2 billion grant discussed in the innovation news above. It’s common for Oil&Gas companies to invest in DAC, as it is seen as a great opportunity to reduce their emissions while continuing to invest in fossil fuels as usual. 😤
Sandbrook Capital, in partnership with other investors, has entered an agreement to purchase NextWind Capital Ltd, a German renewable energy firm focused on acquiring and repowering wind farms. Repowering consists in moderinizing wind farms by substituting old turbines with new and more efficient ones. The practice can reduce the amount of turbines needed while almost doubling the energy generation. Repowering is very important in Europe, as the oldest farms are often located in the most suitable areas. The deal's objective is to acquire NextWind's current collection of operational wind assets and provide capital for future expansion, with a potential equity commitment of up to ~€690 million.💰
👋 See you next Friday, for the best sum up of this coming week!
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