Greenify #9 - Don't mention a Gas Embargo!
29 April, 2022
Welcome to 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 the IPCC, lockdown policies in response to COVID-19 led to an estimated global drop of 5.8% in CO2 emissions in 2020 relative to 2019…. an important data for policymakers to set realistic emissions reduction targets!
Hottest news of the week….
Regulation 🗃 – German companies queueing for gas?
What Happened: On Monday, Germany’s cabinet approved a law amendment that would allow the nationalization of energy companies in case of emergency. The move is the first step of a plan that could also result in energy rationing in case of shortages, to ensure supplies would be reserved for systematic infrastructure. Rumours on the plan triggered companies’ managers to prove the government how much their business is “systematically relevant”, with government officials reporting of being inundated by boards’ letters trying to book a place on the potential gas queue…😱
Zoom out: The continued war crimes are putting pressure on EU countries to stop paying-in large sums to the Kremlin everyday, but talking about a gas embargo is causing panic in Germany, which imports 55% of its total gas consumption from Russia. This percentage has increased under Angela Merkel, particularly when Germany decided to phase out nuclear power in 2011, and was supposed to rise even more with the construction of North Stream2 (currently on hold). However, according to the German ministry for economic affairs, this percentage was reduced to 40% since Russia’s invasion in Ukraine… Let’s see if they can continue with a gradual phase out without causing further disruptions 🍀
Business 💰 - Exxon called into court for lying…♻️
What happened: California’s general attorney issued a subpoena to Exxon Mobil asking it to provide information regarding its role in the global plastic waste crisis. The invitation is part of a broader investigation into major companies' role in "causing and exacerbating the global plastics pollution crisis”. Particularly, the aim is to find out if petrochemical companies have spread misinformation regarding the potential to recycle plastic, which in the US has never gone above 9% of total plastic waste, according to the EPA. Exxon is the first company to receive a subpoena, but Californian officials said they will target other companies in the sector👩⚖️
Zoom out: This happens only weeks ahead of the proxy season (the period when most companies hold annual shareholders meetings). It will not be a fun time for “brown” companies, as shareholders are increasingly active when it comes to global warming. Particularly, Exxon and Chevron are among the Oil&Gas Majors facing activist shareholders' proposals to reduce their emissions, and these are likely to get through. Their three major owners: Vanguard, BlackRock and State Street are all backing more environmental and social proposals than ever before. I guess Exxon’s invitation to court just won’t help…😬
Innovation 💡 - Size always matters…
What Happened: The U.S. is backing a massive project to create the largest hydrogen hub in the world. Located in Utah, the Department of Energy has issued a conditional commitment of around $500m to develop the green hydrogen hub. The project, which should be operational by 2025, will use 220 megawatts of electrolysers, powered by solar and wind energy, to provide more than 300 gigawatt-hours of green-hydrogen energy to the region each year👍
Zoom out: Listening to industry experts, we always hear about the importance of investing in green molecules like hydrogen in order to decarbonize the energy sector. Companies are also investing massively in the sector, with examples such as Australian giant Fortescue who is already planning to produce green hydrogen and ship it all the way to Germany. However, building these hubs remains expensive and paybacks remain long: public support will remain crucial to incentivize scalability!💰
Deep dives of the week…
Graph of the week – Time to buy your EV⌚
Whether you like it or not, sooner or later you will probably have to trash your current Internal Combustion Engine (ICE) vehicle to replace it with a more sustainable one. With current regulations pushing hard on electrifying transports, costs will eventually go down and electric vehicles will become increasingly more affordable. It's not a matter of if, but a matter of when!🔋
Source: IEA
Company of the week – Crusoe Energy System
Crusoe Energy, a company that uses methane, which would otherwise be released into the atmosphere, to power data centres and cryptocurrency mining, just raised a total of $505m following a Series C round!🚀
Wonder why investors pledged so much money? Methane heats the planet 84x more than CO2 (although it stays in the atmosphere only for c. 20 yrs) but when methane is combusted for energy, the warming potential falls by 98%, while also making real money… Well done Crusoe👍
You may want to keep an eye on the company as this could be their last round before moving to the public markets😉
Analysis of the week – Heat Pumps 101
1. What are heat pumps? 🤔
Heat pumps are a renewable heating technology which run on electricity. The cool thing about them is the way they extract heat: from the ground, air or water. Thus, as these three are infinite, then this heating technology is way better than burning gas or oil. There are two main types: ground sourced (geothermal) and air-sourced; the first extracts heat from below ground through a piping system, whereas the second extracts heat from the outside air. Given its cost and ease of instalment, air-sourced heat pumps tend to be more popular in Europe.
2. How many are out there already and who are the main players?🔍
According to the European Heat Pump Association, by the end of 2020 there were a total of 14.84 million heat pumps installed across Europe. Standalone, the number does not mean much; however, looking at the growth trends shows how this technology has embarked in “exponential growth” mode in recent years, especially in countries such as the Netherlands. In terms of penetration, Nordic countries lead the way. Among the main companies manufacturing heat pumps we find Nibe, Mitsubishi and Daikin.
3. How can they increase in popularity? 🤞
The majority of Europe’s households still use gas boilers as their main source of heating. Indeed, in most countries, although heat pumps are more efficient and less polluting, electricity is more expensive than gas. On top of that, upfront installation cost can be quite high, disincentivizing people to actually install one in the house. Therefore, we need some form of government support covering part of the costs if we want to see a higher adoption rate: this measure is already being implemented in countries like Italy and looks to be working! Also, the EU’s recent document “RePowerEU” has emphasized the importance of heat pumps adoption in order to diversify from Russian gas.