Jul 1, 2019
June Cleantech Roundup: Beyond Carbon, Beyond Tariffs, Beyond Plastics, Beyond Fission?
Clean Energy Trust’s cleantech roundup highlights interesting cleantech news and perspective, from policy changes to technology updates and investment news.
Cleantech News
Michael Bloomberg announced he was donating $500 million as part of the “Beyond Carbon” campaign, with a goal of eliminating all fossil fuel power plants in the United States. This effort will be focused on lobbying and electoral efforts designed to shut down the remaining coal plants. It will also be putting pressure on natural gas power — notable since Bloomberg was supporting natural gas as an alternative to coal earlier this decade. It builds on the Sierra Club’s “Beyond Coal” campaign, also supported by Bloomberg, which found some of its initial success in pressuring coal plants to shut down by picking off low-hanging fruit such as plants that were not up to date on filing for permits and other paperwork, leveraging the existing regulatory framework.
While climate enthusiasts should cheer the additional resources brought to bear, I also wonder whether lobbying efforts represent the best bang for the buck for a half billion dollars on climate — I’m biased, but I wish that technological, business model, and financial innovation were recipients of some of that funding as well. Link
Despite the tariffs on overseas solar panels, Wood Mackenzie expects the solar market to grow this year by 25%, up from a prior estimate of just 14%. What’s driving this? It looks like a bit of supply and a bit of demand. On the supply side, changes to Chinese deployment incentives mean there is now an oversupply of solar panels, driving down prices. At the same time, utilities are buying more solar because it is cheap, especially while they can still qualify for tax credits that start to ramp down next year. Link
As the plastic recycling trade has ground to a halt following China’s implementation of higher standards, there has been a spike in interest in bioplastics and new forms of recycling. These industry perturbations lead CET to be optimistic about the timing for our portfolio company mobius, which is making biodegradable plastics from lignin (the sturdiest part of agriculture waste). There is a lot of activity around bioplastics (such as mobius) as well as around improved plastics recycling (such as AMP Robotics, which can create high-quality recycling stream). Link
Also, here’s an explainer on the policy changes in China which helped create this ripple effect. Link
Commonwealth Fusion Systems recently raised $50 million as part of a broader $115 million funding round. The Massachusetts based company is attempting to build a commercial nuclear fusion reactor based on research conducted at MIT and now has a number of big-name backers including Breakthrough Energy Ventures, Eni, and Khosla Ventures. This is really a story of material science and technology development — the innovation is in high-temperature superconducting magnets that are an important piece of the puzzle for fusion reactors.
It is an interesting note and a signal that funding for cleantech is not totally dead. That said, it is also a reminder that physical technology commercialization can be a very long and painful process. Fusion is still many, many years away from commercial deployment. While different research efforts have made progress, there does not yet exist a reactor that produces more energy than it consumes, much less one that does so cost competitively. In Commonwealth Fusion’s case, they are aiming to have a functioning reactor in about 6 years, in 2025.
It is never too early to think about the policy questions on this front. Even if we had a functional fusion reactor ready to be built, it is unlikely that these systems could be deployed at scale in the near term without extremely robust incentives or policy drivers which could defray the high costs of the systems. A harder question to address is how to weigh the tradeoffs between supporting the development of expensive but promising technology that may be valuable in the future, with the deployment of existing proven technology that can be leveraged to rapidly decarbonize. It will be important to focus on speedy and scalable solutions, but we also don’t want to be eating our seed corn in the process. Link
Not Cleantech
Steve Kaplan, a Booth professor best known for his course on entrepreneurial finance and research on the venture capital industry, lays out his framework for evaluating startup business ideas. Link
Facebook announced Libra, their new blockchain and cryptocurrency project. Facebook obviously has the user base and platform to leverage Libra, although may not be the best messenger for it given their public perception issues related to trust.
One factoid that is not touched on in much of the coverage on the announcement is that Facebook will only have one of the twenty votes in the governance structure of the project (the Libra Association); they may stand to benefit the most from it, but they will not completely control its destiny.
It is also interesting how this announcement has split the blockchain enthusiast community — some see this as a corporate behemoth crashing the party and crushing other similar types of projects; others see Libra as an opportunity to bring cryptocurrency into the mainstream and increase the relevance of other cryptocurrency and blockchain projects (I’m in the latter camp myself)
I think an interesting perspective is Fred Wilson’s — one of my favorite writers in the VC space; Fred’s firm Union Square Ventures is one of the founding members of the Libra Association and will be a financial backer of Libra as well. Union Square Ventures made a number of early investments in cryptocurrency; while some of these are in companies themselves (such as Coinbase), venture capital has gotten creative about the ways they are investing in cryptocurrency projects such as Libra. In this case, they aren’t investing in a company, they are supplying funds to back the currency reserves of the yet-to-be-created cryptocurrency. Link
