Greenify #87: Cheaper Carbon Capture and Germany's Clunky Government
November 17, 2023
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📌 Fact of the week
Toyota has just signed a deal with recycling leader Redwood materials to source recycled battery materials for their new EVs, becoming the first car-maker to do so!
Hottest news of the week…
Regulation 🗃 – Unconstitutional green funds
What happened: Germany’s top court has blocked the government plans to invest €60 billion in climate initiatives. This €60 billion, which the government planned to invest in areas such as energy renovation of buildings, were originally given to the country by the EU as part of a wider package to support the country throughout the COVID-19 pandemic. Despite these €60 billion had remained unused, the government’s intention to reallocate the money to other spending initiatives violated the so-called debt brake, a constitutional provision that caps government borrowing except during emergencies and recessions. 🚫
Zoom out: Over the past three years, European governments have been throwing money at climate related initiatives under the form of subsidies to both consumers and businesses. Italy, for example, has launched its “Superbonus 110” scheme, which essentially paid home owners to renovate their homes; other initiatives across other countries were taken in fields such as heat pumps or electric vehicles. Germany, however, has been recently struggling, as it seems the current government cannot agree on anything when it comes to investing in the green transition. 👀
Business 💰 – Heads rolling in the wind industry
What happened: Two weeks ago, we spoke about Orsted’s issues with wind projects in the US, as the company had to announce the closure of two projects and take a higher write down on its portfolio than what it originally expected. Well, a couple of weeks later, it looks like part of the management team is facing the consequences: the company’s CFO and COO have both stepped down and will be leaving the company with immediate effect. 👋🏻
Zoom out: Despite imminent management change, Orsted had been citing a tough macro environment as one of the main consequences for the company’s underperformance, with high inflation and high interest rates hindering its ability to deliver a good return on its projects. Since the last profit warning, Orsted had decided to cancel some of the projects it had in the U.S., and will soon take a decision on the Hornsea project, a large offshore wind farm the company is building off the coast of the UK. 🇬🇧
Innovation 💡 - A cheap carbon removal option might exist…
What happened: A startup funded by Bill Gates' Breakthrough Energy Ventures, Graphyte, has developed a technology combining engineering and natural photosynthesis to sequestrate carbon dioxide underground, and it has just announced they will remove 5,000 tons of CO2 by year end!
Graphyte lets trees and plants “capture” the CO2 through photosynthesis and intervenes just before the plant is about to decompose to prevent the release of CO2. The process, known as "carbon casting", dries and sterilizes plants wastes to prevent decomposition, then forms dense carbon blocks wrapped in a proprietary polymer barrier and stores them underground.🥇
Zoom out: The coolest thing about Graphyte is that it seems to be cheap and durable at the same time! In fact, current carbon removal technologies such as direct air capture, are expensive, costing up to thousands of dollars per ton of CO2 removed, while nature-based options like tree planting have durability and measurement challenges as they release CO2 back in the atmosphere when they decompose. Graphyte claims a levelized cost of production under ~€80 per ton, and carbon blocks are expected to last over a thousand years due to the protective polymer barrier! Bingo! 🏆
Deep dives of the week…
Chart of the week - EU Free Money
As discussed in our regulation news of the week, the amount of money invested in green transition initiatives by several European countries has been massive over the past couple of years, and it is expected to remain strong.
Some of this money is coming in the form of grants from the European Union, as shown in the chart below. Italy, for example is expected to receive a total of €69 billion in grants between 2020-2026, equivalent to about 4% of the country’s GDP in 2021.💲
Deal of the week - Decarbonizing industry in a forward looking way!
This week we fly to the US to talk about a huge deal for industrial decarbonization. The company is Infinitum, a manufacturer of sustainable air-core motors for industry. Industrial motors are all those electrical machines that convert energy into motion, i.e. those that run conveyors, pumps, etc.
To contextualize the importance of this start-up we need to look at some numbers first: 1) the industrial sector is expected to contribute to about 30% of global electricity demand growth by 2040, 2) motors consume nearly 70% of electricity in the US industrial sector. Basically industrial motors will be one of the biggest consumers of electricity from now to 2040. Hence, making them more efficient has a huge impact.
Infinitum develops motors with a built-in variable frequency drive (VFD) that lowers energy usage by running the motor at lower speeds when possible, offering benefits such as being 50% smaller and lighter, using 66% less copper, and consuming 10% less energy than traditional motors. Infinitum has secured an additional $185 million in Series E funding led by Just Climate, bringing total funding to $350 million. Maybe we should stop calling it a start-up..? ⌛️
👋 See you next Friday, for the best sum up of this coming week!
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