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White House policy might not even be the biggest issue.
If you look at the polls, the presidential election — now exactly two weeks away — is very close. If you listen to the prognosticators, Trump has a slight edge. And if you look at the markets, whether prediction markets or Wall Street, Trump’s chances are looking pretty good, with a sweep of the White House and both houses of Congress now firmly on the table.
“Politics prediction market data have tilted toward a win by former President Trump, and markets have responded in line with this development,” Morgan Stanley analyst Michael Wilson wrote in a note to clients Monday. “Such an outcome should now be taken seriously,” wrote Jefferies global head of equity strategy Christopher Wood in a separate note last week.
And seriously is exactly how the market appears to be taking it, with a range of assets now seeming to be pricing in a Trump victory. Yields on Treasury bonds are also rising, which may be because traders see fewer interest rate cuts coming in a more inflationary Trump economy fueled by tax cuts, spending, and an icing of tariffs on top. Gold and Bitcoin prices have risen in the past month as well.
But what about the clean energy economy? Trump often speaks critically of the Inflation Reduction Act, clean energy in general, and wind energy in particular. With Republicans in control of Congress, those sentiments are more likely to be be turned into policy ... of some kind.
For investors in clean energy companies, Trump's improving odds make for nervous times. In the initial days after a Trump victory, as the reality solidifies, you’ll likely see some big price swings. Eight years ago, on Wednesday, November 9, 2016, an exchange traded fund that tracks around 100 clean energy stock called iShares Global Clean Energy, which is used as a benchmark for the industry as a whole, fell almost 5%, even as stocks overall jumped. In 2020, the fund rose more than 6.5% percent between close on election day and the following Monday, after networks had called the race for Joe Biden.
“I think stocks will trade on sentiment” following a win in either direction, Maheep Mandloi, an analyst at Mizuho, told me. “We’ll probably see that knee-jerk reaction.”
The iShares fund has been falling recently, dropping from $14.77 on September 27, when Kamala Harris peaked at 58.1% in Nate Silver’s polling models, to 47% on Monday, when Trump’s probability to win reached 52.7%.
“Renewables underperformed last week,” Mandloi wrote in a note to clients on Tuesday, with the iShares ETF down compared to the S&P 500 index. That sluggishness mostly came from solar stocks, particularly residential companies like Sunnova, Sunrun, Enphase, and Solaredge — “likely due to election, concerns” Mandloi added.
The fall has been even more dramatic for companies more exposed to Trump’s particular (dis)taste in energy, namely wind. U.S.-traded shares in Vestas, the Danish wind turbine manufacturer, have fallen over 16% since Harris peaked in the forecasts last month through Monday.
But a number of analysts are more sanguine about the fate of the IRA and the clean energy economy it has fostered. For one, the politics of repeal might not hold up in a Trumpified Washington. In August, 18 House Republicans in competitive districts wrote a letter to House Speaker Mike Johnson asking him not to target the clean energy tax credits at the core of the law. These same House Republicans have supported Johnson’s speakership where he’s taken flack from the body’s most conservative members, so this is hardly a constituency he can afford to ignore.
Even if a reconciliation bill passed next year were to scrap some or all of the IRA’s clean energy tax credits, the Internal Revenue Service could — as it has in the past when tax credits were about to expire — write rules that allow projects to claim the credits for years to come, Mandloi told me.
In any case, people in the tax credit market don’t seem to think the IRA tax credits are particularly at risk. “Political uncertainty has slowed the development of some industries,” analysts at LevelTen, a clean energy financial infrastructure company, wrote in a report last week. “It it hasn’t stopped the tax credit market from growing.” They assigned a low likelihood to a complete gutting of the IRA, noting that “there is bipartisan support for the investments catalyzed by the IRA across the nation.”
While it's possible that the bipartisan enthusiasm for investments stemming from the Inflation Reduction Act could protect much of the bill, the parts of the bill that directly support manufacturers may be the safest, namely the advanced manufacturing tax credit that has been especially popular in the solar industry.
These credits have been complemented by aggressive trade policy as well. Some of Trump’s earliest tariffs were on solar panels, and the Biden administration has also tried to protect the domestic solar manufacturing industry from “overproduction” in China and Southeast Asia. First Solar has thrown itself into domestic manufacturing with the wind of the Inflation Reduction Act’s manufacturing tax credits at its back. Bonuses for solar developers whose systems are made up of “domestic content” have helped, as well.
Morningstar analyst Brett Castelli wrote to investors a note last month acknowledging the risk to solar stocks from a change in White House party control. First Solar specifically, however, “would likely benefit from proposed trade policies, such as higher tariffs, under a Republican administration.”
The company’s stock is up 14% so far this year through Monday, although it has dipped as Harris has dipped in election forecast. The Invesco Solar ETF, which tracks the broad solar industry, is down 13% on the year.
“First Solar is unique in our view in the fact that it is relatively indifferent regardless of outcome,” Castelli told me this week. It’s helped by sheer size. “They have the largest U.S. presence for manufacturing solar panels here, domestically,” he said. “The biggest competitive threat to those factories would be cheap imports from China or Southeast Asia.”
But while the renewable energy industry is always at the risk of public policy shifts, for good and for ill, there’s another, harder to predict and harder to tame factor: interest rates.
Despite the spigot from Washington due to the IRA, many renewables companies have not been doing great in the stock market in recent years, and high interest rates are likely the reason why.
For renewables, most of the cost comes from simply building the thing. The “fuel,” whether it be photons or wind, is free. This means that renewables projects are highly sensitive to the price of the borrowed money they need for construction. While the Federal Reserve has finally begun to cut rates and anticipates continuing doing so through the end of next year, it’s by no means something it’s mandated to do, especially if there's a major change in fiscal policy going forward.
Predicting the path of interest rates is something people get paid far, far more than journalists’ salaries to do, and they’re often wrong. That being said, it’s not hard to see a world where a sizable Trump win keeps rates elevated.
As president, he showed zero appetite for fiscal restraint, and going into round two has indicated a desire for sizable tax cuts and almost nothing specific for any large scale cuts in spending, policy preferences that may be more likely to be indulged in a Washington under unified Republican control. “Interest Rates Will Be Higher in the Future, Especially if Trump Is President,” the Wall Street Journal declared earlier this month.
The “downside scenario” for stocks envisioned by Jonathan Golub, chief U.S. equity strategist at UBS investment bank, largely follows this scenario. “A combination of fiscal and monetary stimulus causes a reacceleration in inflation, forcing the Fed to abandon their rate cut plans,” he wrote to clients earlier this month. Clean energy could be hardest hit, no matter what happens to the IRA.
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On critical minerals, climate voters, and EV battery recycling
Current conditions: Tropical Storm Trami is taking aim at the Philippines • Heavy downpours triggered severe flooding in South Africa’s Eastern Cape • The southern Alaskan mainland is bracing for a major storm system that is expected to bring high winds and flooding.
There could be between 5 million and 19 million tons of lithium underground in southwest Arkansas, according to a new study from the United States Geological Survey. Researchers said that even the low-end of this estimate “would meet projected 2030 world demand for lithium in car batteries nine times over.” Lithium, of course, is a critical mineral for the energy transition, and demand is expected to grow in coming years. Most lithium is produced in Australia and South America, and then processed in China. “The potential for increased U.S. production to replace imports has implications for employment, manufacturing, and supply-chain resilience,” said USGS director David Applegate.
The Smackover Formation in Arkansas could hold vast lithium reserves.USGS
The Supreme Court yesterday agreed to take on a handful of cases that could determine which federal courts can hear challenges to Environmental Protection Agency rules. The move “could undercut the nation’s top environmental regulator by opening the door to industry groups and Republican-led states seeking to challenge certain EPA rules in more favorable courts,” explainedE&E News. The Clean Air Act stipulates that legal challenges to national EPA rules must go through the D.C. Court of Appeals, which leans liberal. But if lawsuits go through regional courts, they may have more favorable outcomes for groups challenging things like pollution laws. The Supreme Court decision is expected by next summer.
Nearly 50,000 first-time climate voters have already cast ballots in the 2024 U.S. presidential election, according to the nonpartisan nonprofit Environmental Voter Project. By examining early voting data, the group determined that climate voters are turning out at higher rates than the general electorate in key swing states like Pennsylvania, North Carolina, and Nevada. The one exception EVP found is Georgia, where climate voters are underperforming in early voting. “Early voting is not predictive of overall turnout, and so I never get too excited or too despondent from the data,” EVP founder and executive director Nathaniel Stinnett told Heatmap. “But what we can see is that in 18 of our 19 states, people who list climate as their number-one priority are early voting at a higher rate than the overall electorate, so I feel really good about that.”
EVP
Sarah Kapnick, previously the National Oceanic and Atmospheric Administration’s chief scientist, is rejoining the JPMorgan Chase as global head of climate advisory, where she will “advise its corporate and investment banking clients on how to navigate the impacts of climate change,” Bloombergreported. Kapnick has worked for JPMorgan Chase before as a senior climate scientist and sustainability strategist for the company’s asset and wealth management business.
Mercedes-Benz yesterday announced the opening of Europe’s first battery recycling plant. The facility, located in Kuppenheim, southern Germany, uses an “integrated mechanical-hydrometallurgical process” that the automaker says can recover 96% of used battery materials, such as critical minerals, for recycling into new EV batteries. With this development, Mercedes-Benz is “the first car manufacturer worldwide to close the battery recycling loop with its own in-house facility.”
Alcon Entertainment, the production company behind Blade Runner 2049, is suing Tesla CEO Elon Musk for using AI to create images that look similar to scenes from the film to promote the Cybercab.
Instead of rocket fuel, they’re burning biomass.
Arbor Energy might have the flashiest origin story in cleantech.
After the company’s CEO, Brad Hartwig, left SpaceX in 2018, he attempted to craft the ideal resume for a future astronaut, his dream career. He joined the California Air National Guard, worked as a test pilot at the now-defunct electric aviation startup Kitty Hawk, and participated in volunteer search and rescue missions in the Bay Area, which gave him a front row seat to the devastating effects of wildfires in Northern California.
That experience changed everything. “I decided I actually really like planet Earth,” Hartwig told me, “and I wanted to focus my career instead on preserving it, rather than trying to leave it.” So he rallied a bunch of his former rocket engineer colleagues to repurpose technology they pioneered at SpaceX to build a biomass-fueled, carbon negative power source that’s supposedly about ten times smaller, twice as efficient, and eventually, one-third the cost of the industry standard for this type of plant.
Take that, all you founders humble-bragging about starting in a dingy garage.
“It’s not new science, per se,” Hartwig told me. The goal of this type of tech, called bioenergy with carbon capture and storage, is to combine biomass-based energy generation with carbon dioxide removal to achieve net negative emissions. Sounds like a dream, but actually producing power or heat from this process has so far proven too expensive to really make sense. There are only a few so-called BECCS facilities operating in the U.S. today, and they’re all just ethanol fuel refineries with carbon capture and storage technology tacked on.
But the advances in 3D printing and computer modeling that allowed the SpaceX team to build an increasingly simple and cheap rocket engine have allowed Arbor to move quickly into this new market, Hartwig explained. “A lot of the technology that we had really pioneered over the last decade — in reactor design, combustion devices, turbo machinery, all for rocket propulsion — all that technology has really quite immediate application in this space of biomass conversion and power generation.”
Arbor’s method is poised to be a whole lot sleeker and cheaper than the BECCS plants of today, enabling both more carbon sequestration and actual electricity production, all by utilizing what Hartwig fondly refers to as a “vegetarian rocket engine.” Because there’s no air in space, astronauts have to bring pure oxygen onboard, which the rocket engines use to burn fuel and propel themselves into the stratosphere and beyond. Arbor simply subs out the rocket fuel for biomass. When that biomass is combusted with pure oxygen, the resulting exhaust consists of just CO2 and water. As the exhaust cools, the water condenses out, and what’s left is a stream of pure carbon dioxide that’s ready to be injected deep underground for permanent storage. All of the energy required to operate Arbor’s system is generated by the biomass combustion itself.
“Arbor is the first to bring forward a technology that can provide clean baseload energy in a very compact form,” Clea Kolster, a partner and Head of Science at Lowercarbon Capital told me. Lowercarbon is an investor in Arbor, alongside other climate tech-focused venture capital firms including Gigascale Capital and Voyager Ventures, but the company has not yet disclosed how much it’s raised.
Last month, Arbor signed a deal with Microsoft to deliver 25,000 tons of permanent carbon dioxide removal to the tech giant starting in 2027, when the startup’s first commercial project is expected to come online. As a part of the deal, Arbor will also generate 5 megawatts of clean electricity per year, enough to power about 4,000 U.S. homes. And just a few days ago, the Department of Energy announced that Arbor is one of 11 projects to receive a combined total of $58.5 million to help develop the domestic carbon removal industry.
Arbor’s current plan is to source biomass from forestry waste, much of which is generated by forest thinning operations intended to prevent destructive wildfires. Hartwig told me that for every ton of organic waste, Arbor can produce about one megawatt hour of electricity, which is in line with current efficiency standards, plus about 1.8 tons of carbon removal. “We look at being as efficient, if not a little more efficient than a traditional bioenergy power plant that does not have carbon capture on it,” he explained.
The company’s carbon removal price targets are also extremely competitive — in the $50 to $100 per ton range, Hartwig said. Compare that to something like direct air capture, which today exceeds $600 per ton, or enhanced rock weathering, which is usually upwards of $300 per ton. “The power and carbon removal they can offer comes at prices that meet nearly unlimited demand,”Mike Schroepfer, the founder of Gigascale Capital and former CTO of Meta, told me via email. Arbor benefits from the fact that the electricity it produces and sells can help offset the cost of the carbon removal, and vice versa. So if the company succeeds in hitting its cost and efficiency targets, Hartwig said, this “quickly becomes a case for, why wouldn’t you just deploy these everywhere?”
Initial customers will likely be (no surprise here) the Microsofts, Googles and Metas of the world — hyperscalers with growing data center needs and ambitious emissions targets. “What Arbor unlocks is basically the ability for hyperscalers to stop needing to sacrifice their net zero goals for AI,” Kolster told me. And instead of languishing in the interminable grid interconnection queue, Hartwig said that providing power directly to customers could ensure rapid, early deployment. “We see it as being quicker to power behind-the-meter applications, because you don’t have to go through the process of connecting to the grid,” he told me. Long-term though, he said grid connection will be vital, since Arbor can provide baseload power whereas intermittent renewables cannot.
All of this could serve as a much cheaper alternative, to say, re-opening shuttered nuclear facilities, as Microsoft also recently committed to doing at Three Mile Island. “It’s great, we should be doing that,” Kolster said of this nuclear deal, “but there’s actually a limited pool of options to do that, and unfortunately, there is still community pushback.”
Currently, Arbor is working to build out its pilot plant in San Bernardino, California, which Hartwig told me will turn on this December. And by 2030, the company plans to have its first commercial plant operating at scale, generating 100 megawatts of electricity while removing nearly 2 megatons of CO2 every year. “To put it in perspective: In 2023, the U.S. added roughly 9 gigawatts of gas power to the grid, which generates 18 to 23 megatons of CO2 a year,” Schroepfer wrote to me. So having just one Arbor facility removing 2 megatons would make a real dent. The first plant will be located in Louisiana, where Arbor will also be working with an as-yet-unnamed partner to do the carbon storage.
The company’s carbon credits will be verified with the credit certification platform Isometric, which is also backed by Lowercarbon and thought to have the most stringent standards in the industry. Hartwig told me that Arbor worked hand-in-hand with Isometric to develop the protocol for “biogenic carbon capture and storage,” as the company is the first Isometric-approved supplier to use this standard.
But Hartwig also said that government support hasn’t yet caught up to the tech’s potential. While the Inflation Reduction Act provides direct air capture companies with $180 per ton of carbon dioxide removed, technology such as Arbor’s only qualifies for $85 per ton. It’s not nothing — more than the zero dollars enhanced rock weathering companies such as Lithos or bio-oil sequestration companies such as Charm are getting. “But at the same time, we’re treated the same as if we’re sequestering CO2 emissions from a natural gas plant or a coal plant,” Hartwig told me, as opposed to getting paid for actual CO2 removal.
“I think we are definitely going to need government procurement or involvement to actually hit one, five, 10 gigatons per year of carbon removal,” Hartwig said. Globally, scientists estimate that we’ll need up to 10 gigatons of annual CO2 removal by 2050 in order to limit global warming to 1.5 degrees Celsius. “Even at $100 per ton, 10 gigatons of carbon removal is still a pretty hefty price tag,” Hartwig told me. A $1 trillion price tag, to be exact. “We definitely need more players than just Microsoft.”
New research out today shows a 10-fold increase in smoke mortality related to climate change from the 1960s to the 2010.
If you are one of the more than 2 billion people on Earth who have inhaled wildfire smoke, then you know firsthand that it is nasty stuff. It makes your eyes sting and your throat sore and raw; breathe in smoke for long enough, and you might get a headache or start to wheeze. Maybe you’ll have an asthma attack and end up in the emergency room. Or maybe, in the days or weeks afterward, you’ll suffer from a stroke or heart attack that you wouldn’t have had otherwise.
Researchers are increasingly convinced that the tiny, inhalable particulate matter in wildfire smoke, known as PM2.5, contributes to thousands of excess deaths annually in the United States alone. But is it fair to link those deaths directly to climate change?
A new study published Monday in Nature Climate Change suggests that for a growing number of cases, the answer should be yes. Chae Yeon Park, a climate risk modeling researcher at Japan’s National Institute for Environmental Studies, looked with her colleagues at three fire-vegetation models to understand how hazardous emissions changed from 1960 to 2019, compared to a hypothetical control model that excluded historical climate change data. They found that while fewer than 669 deaths in the 1960s could be attributed to climate change globally, that number ballooned to 12,566 in the 2010s — roughly a 20-fold increase. The proportion of all global PM2.5 deaths attributable to climate change jumped 10-fold over the same period, from 1.2% in the 1960s to 12.8% in the 2010s.
“It’s a timely and meaningful study that informs the public and the government about the dangers of wildfire smoke and how climate change is contributing to that,” Yiqun Ma, who researches the intersection of climate change, air pollution, and human health at the Yale School of Medicine, and who was not involved in the Nature study, told me.
The study found the highest climate change-attributable fire mortality values in South America, Australia, and Europe, where increases in heat and decreases in humidity were also the greatest. In the southern hemisphere of South America, for example, the authors wrote that fire mortalities attributable to climate change increased from a model average of 35% to 71% between the 1960s and 2010s, “coinciding with decreased relative humidity,” which dries out fire fuels. For the same reason, an increase in relative humidity lowered fire mortality in other regions, such as South Asia. North America exhibited a less dramatic leap in climate-related smoke mortalities, with climate change’s contribution around 3.6% in the 1960s, “with a notable rise in the 2010s” to 18.8%, Park told me in an email.
While that’s alarming all on its own, Ma told me there was a possibility that Park’s findings might actually be too conservative. “They assume PM2.5 from wildfire sources and from other sources” — like from cars or power plants — “have the same toxicity,” she explained. “But in fact, in recent studies, people have found PM2.5 from fire sources can be more toxic than those from an urban background.” Another reason Ma suspected the study’s numbers might be an underestimate was because the researchers focused on only six diseases that have known links to PM2.5 exposure: chronic obstructive pulmonary disease, lung cancer, coronary heart disease, type 2 diabetes, stroke, and lower respiratory infection. “According to our previous findings [at the Yale School of Medicine], other diseases can also be influenced by wildfire smoke, such as mental disorders, depression, and anxiety, and they did not consider that part,” she told me.
Minghao Qiu, an assistant professor at Stony Brook University and one of the country’s leading researchers on wildfire smoke exposure and climate change, generally agreed with Park’s findings, but cautioned that there is “a lot of uncertainty in the underlying numbers” in part because, intrinsically, wildfire smoke exposure is such a complicated thing to try to put firm numbers to. “It’s so difficult to model how climate influences wildfire because wildfire is such an idiosyncratic process and it’s so random, ” he told me, adding, “In general, models are not great in terms of capturing wildfire.”
Despite their few reservations, both Qiu and Ma emphasized the importance of studies like Park’s. “There are no really good solutions” to reduce wildfire PM2.5 exposure. You can’t just “put a filter on a stack” as you (sort of) can with power plant emissions, Qiu pointed out.
Even prescribed fires, often touted as an important wildfire mitigation technique, still produce smoke. Park’s team acknowledged that a whole suite of options would be needed to minimize future wildfire deaths, ranging from fire-resilient forest and urban planning to PM2.5 treatment advances in hospitals. And, of course, there is addressing the root cause of the increased mortality to begin with: our warming climate.
“To respond to these long-term changes,” Park told me, “it is crucial to gradually modify our system.”