Sep 10, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Welcome back! Today's Smart Brevity count: 1,103 words, 4 minutes.

And today marks the 2012 release date of Bob Dylan's album "Tempest," so a brilliant slice of ferocity will open today's edition...

1 big thing: A clean energy VC rebound and a warning
Reproduced from IEA's Energy Technology Perspectives 2020; Chart: Axios Visuals

Venture capital funding for energy technology startups has recovered from its mid-2010s trough but is seeing a fresh drop-off this year, new International Energy Agency data show.

Electric vehicles, hydrogen and storage technologies have generally been growth areas in recent years.

Where it stands: "The first-half 2020 saw half as much energy-related venture capital activity (early and late stage) as in the same period in 2018-19," IEA said in data reflected in the chart above.

  • Early-stage deals fell 20% in the first six months of this year 2020 compared to 2019.
  • But the overall early-stage deal value in 2018 and 2019 was "well above" the decade's average.

Threat level: "Global declines are expected in the second-half of 2020 as a result of financial risks, travel, and other restrictions and policy uncertainty," the report finds.

Of note: The chart above excludes "outlier deals" above $1 billion that distort the overall trend, IEA said.

Why it matters: The data is part of a much wider analysis — called Energy Technology Perspectives 2020 — calling for an all-hands-on-deck approach to greatly scaling up low-carbon energy sources and industrial practices.

While VC is important, IEA is calling on governments to greatly expand support via COVID-19 economic recovery packages.

The big picture: The report explores hundreds of technologies that could help enable the world to reach net-zero emissions by 2050.

  • One takeaway from the roadmap is that clean electricity technologies can only bring one-third of the needed emissions cuts.
  • "Completing the journey will require devoting far more attention to the transport, industry and buildings sectors," IEA said.
2. BP's billion-dollar offshore wind play

BP is making its first move into offshore wind via a new deal and partnership with Norway-based Equinor, which is developing big U.S. projects.

Driving the news: BP is paying Equinor $1.1 billion for a 50% stake in wind farms Equinor is developing off the coasts of New York and Massachusetts.

The oil-and-gas companies — which are both making more moves into renewables — also announced a "strategic partnership" to jointly pursue other U.S. offshore projects.

Why it matters: It's a sign of BP's pledge to speed up its diversification into low-carbon technologies and shrink its fossil fuel business — which currently dominates its portfolio — over the long term.

  • As part of the climate plans rolled out last month, BP said it hopes to develop 50 gigawatts of renewable generating capacity by 2030, which is 20 times its 2019 level.
  • The projects Equinor is developing in the regions off Massachusetts and New York will have a potential combined generating capacity of 4.4 GW, enough to power over 2 million homes, the companies said.

The big picture: The move also shows interest in the fledgling U.S. offshore wind market, which has been very slow to develop (there's just one small project in operation) but is now attracting lots of capital.

3. Lucid makes its move in the luxury EV race

Lucid Air sedan. Image courtesy of Lucid Motors.

OK! After weeks of dribbling out information, Lucid Motors last night took the wraps off the production-ready version of its Air luxury sedan and revealed pricing for the first time.

What's next: Production begins in the "coming months" at its Arizona factory, with North American deliveries starting next spring, Lucid said.

By the numbers: The cheapest version is around $80,000, or $72,500 with federal EV tax credits, but won't be available until 2022. More souped-up versions run from $95,000 to $169,000 before tax credits.

The intrigue: No EV startup should be called a Tesla "rival" until they actually start delivering vehicles (as Axios' Dan Primack points out).

But that said, there's reason to take the Air seriously as a potential challenger to Tesla's Model S and other luxury EVs.

  • Lucid has plenty of money in the form of backing from Saudi Arabia's sovereign wealth fund.
  • CEO and chief tech officer Peter Rawlinson was formerly a senior engineer at Tesla.
  • The company is boasting specs including up to 517-miles of range on a single charge and a quarter-mile speed under 10 seconds.

Why it matters: "[T]here is a sense in the automotive world that Lucid has the internal knowledge and technical chops to tease Tesla’s grip as maker of the ultimate electric luxury sedan," The Verge reports.

What they're saying: "The real opportunity for Lucid will be the base model of the Air that is expected to come in under $100K, which will make the vehicle more accessible to a broader group of consumers," said Edmunds analyst Jessica Caldwell.

"Until that becomes more readily available Tesla will likely continue to sit on its throne," she said.

Go deeper: 2021 Lucid Air vs. Tesla Model S and Porsche Taycan: Performance EVs compared (CNET)

4. Oil's downturn claims a pipeline project

Enterprise Products Partners is scrapping a project to add 450,000 barrels per day of oil pipeline capacity from the Texas shale patch to the Gulf Coast.

Why it matters: "The cancellation of the Midland to ECHO 4 pipeline is in line with other delayed energy projects, including export terminals and pipeline builds, hurt by lower demand after U.S. oil producers chopped output to cope with oil prices below $40 a barrel," Reuters reports on yesterday's announcement.

What they're saying: "This cancellation would be the first for a large crude pipe as a direct response to demand destruction from the pandemic," Elisabeth Murphy, an analyst with ESAI Energy, tells Bloomberg.

5. Clean energy's copper conundrum

Illustration: Aïda Amer/Axios

The world's transition to renewable energy and electric vehicles will require unprecedented amounts of copper from potentially new mining operations that may harm vulnerable species and ecosystems, Axios' Jacob Knutson reports.

Why it matters: The global need for copper could increase by an estimated 350% by 2050, with current reserves depleting sometime between 2035 and 2045, as wind and solar deployment grow and more people use EVs.

By the numbers: Worldwide copper usage jumped 38% over the last decade, from 17.8 million metric tonnes in 2009 to 24.5 million in 2019, largely driven by demand for renewable energy and cleaner vehicles.

  • Wind energy requires on average 2,000 tons of copper per gigawatt, while solar needs about 5,000 tons per gigawatt — several times higher than fossil fuels and nuclear energy, says Seaver Wang, an analyst for the Breakthrough Institute, a California-based environmental think tank.
  • Electric vehicles can contain between 40 kg and 83 kg of copper, while an internal combustion engine needs an average of 23 kg, according to research commissioned by the International Copper Association.

Threat level: Wang argues the benefits of renewable forms of energy outweigh the costs of obtaining the materials to produce them, as long as the best mining practices are followed and recycling rates are improved.

Read the whole story

6. Quote of the day
“If he goes down in a Democratic primary, immediately the story that gets spun out of that is, 'The Green New Deal is a losing political proposition.'"

Who said it: Sunrise Movement executive director Varshini Prakash, speaking to the New York Times about Sen. Ed Markey, the Massachusetts Democrat who won his closely watched primary against Joe Kennedy last week.

Why it matters: Sunrise poured organizing resources into the race to bolster Markey, who co-authored the Green New Deal resolution along with Rep. Alexandria Ocasio-Cortez.

  • The outcome is a win for Sunrise and other activists calling for sweeping steps to combat global warming.
Ben GemanAmy Harder