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Some of Silicon Valley's biggest names are investing in startups with aggressive claims that commercial nuclear fusion is only several years away, Katie writes.

Why it matters: A successful nuclear fusion bet could make Silicon Valley's tech investors key players in a clean energy game changer of planetary importance.

Driving the news: Startup Helion Energy announced last month that it's building a 500 MW fusion power plant to provide electricity for Nucor, America's largest steel producer by 2030.

The company is also planning to build a fusion reactor to sell electricity to Microsoft by 2028 in what would be the world's first fusion power purchase agreement.

Helion is working on its seventh fusion prototype, and it expects it to provide the key step of producing electricity sometime next year. Scott Krisiloff, the company's chief business officer, describes the importance of that step as the equivalent to the Wright brothers' first powered flight.

Catch up quick: Helion raised a $500 million Series E round two years ago led by tech entrepreneur and OpenAI CEO Sam Altman. It included Peter Thiel's Mithra Capital and Facebook co-founder Dustin Moskovitz. Altman has invested $375 million into Helion, his largest personal investment.

Helion is one of 43 companies that are developing nuclear fusion technologies.

Another example is Commonwealth Fusion Systems, which has raised $2 billion from Bill Gates, Gates' Breakthrough Energy Ventures, Khosla Ventures, Lowercarbon Capital, Google, John Doerr, and Marc Benioff's Time Ventures, among others.

Venture capitalist Vinod Khosla, whose firm also backed year-old fusion startup Realta Fusion, is so bullish on the technology that he says fusion and geothermal could replace all natural gas and coal plants by the 2040s.

Yes, but: There's considerable skepticism about many fusion startups' commercial claims.

Helion, in particular, is using an entirely new approach to fusion that one engineer not involved with the company described to Katie as "sounds like magic."

Big picture: The nuclear fusion industry is accelerating, with major milestones, new and progressing companies and new pockets of government support.

Over the past year, 13 new fusion companies have been founded or emerged from stealth, according to the Fusion Industry Association.

What was once science fiction and pure R&D is now an actual industry with customers willing to purchase the product.

If Silicon Valley investors have a hand in a breakthrough fusion company, it would provide the rare example of VC backing a brand-new type of clean power generation.

1 big thing: Valley bets on fusion coming soon

Illustration of a road leading to a glowing atom on the horizon

Chevron is buying oil and gas player Hess Corp. for a total deal value of $53 billion, on the heels of Exxon's deal to buy Pioneer Natural Resources earlier this month.

Why it's the BFD: America's oil giants are focused on making big bets on robust and enduring oil and gas demand despite climate policies, writes Ben Geman in Generate.

Big picture: The prize in Hess' portfolio is Guyana's oil assets — the country has vaulted into one of the most important growth areas for non-OPEC oil production.

European-headquartered oil majors have leaned more aggressively into the energy transition, while Exxon and Chevron have trailed.

A large part of the oil players' climate strategy centers on funding carbon capture technologies, methane-leakage reduction, and hydrogen. 

2. The BFD: Chevron fills up with $53B deal

Illustration of an oil rig under a spotlight

Battery materials recycler Li-Cycle announced this morning that it's pausing construction of a giant production plant in Rochester, N.Y., Alan reports.

Why it matters: The plant this year received a $375 million loan commitment from the Department of Energy's Loan Programs Office.

Of note: The full value of the loan is contingent on Li-Cycle hitting certain milestones, and Li-Cycle hasn't yet met the requirements to receive any of the potential $375 million, an Energy Department spokesperson tells Alan.

Driving the news: "Li-Cycle has recently experienced escalating construction costs," the Toronto-based company said in a press release.

"The Board of Directors has decided to pause construction work on the Rochester Hub, pending a review of the project, including an evaluation of the go-forward phasing of its scope and budget, including construction strategy."

State of play: The development adds to the challenges facing Li-Cycle, which had been seen as one of the main players developing battery recycling capacity to supply electric vehicles, energy-storage providers and other markets. 

Even before this morning's announcement, the company's stock price had lost more than half its value from just this summer, after it disclosed shrinking revenue and rising costs in its Q2 earnings.

The latest: Investors further punished the company this morning, with its stock sinking by double digits since trading began.

Context: Li-Cycle has existing production plants in Alabama, Arizona, New York and Ontario. 

The planned Rochester site would be the largest, producing 35,000 metric  tons of the base material black mass — roughly twice as much as the existing Alabama and New York facilities.

What we're watching: How quickly Li-Cycle is able to address the construction challenges — and whether that'll be fast enough for investors.

3. Li-Cycle hits pause on new plant

Illustration of one hand pushing away another hand holding a battery.

🚧 China flexes on the EV market: Beijing will now limit how much battery metal the country exports, potentially casting a cloud over the future of the globe's transition toward electric vehicles, Jael Holzman writes in Axios Pro Energy Policy.

Much remains unclear, including what Chinese regulators will demand in exchange for export permits and how long it will take for permits to be issued.

The White House is "assessing the measure and its potential effects," National Security Council spokeswoman Adrienne Watson said in a statement to Jael.

🪫 The used-EV ecosystem: A fresh crop of startups is racing to reliably test and certify the batteries in pre-owned EVs — and in turn help automakers and dealerships figure out just how much a secondhand EV is worth.

Europe is the hotbed for such battery-testing startups, which include Altelium in the U.K., Aviloo in Austria and Battery Quick Check in Germany.

A battery typically makes up 40% of an EV's price. Reuters has more.

🚘 Electric motherships: Last week's announcement that Foxconn and Nvidia are teaming up to build AI "factories" may hint at the future of EV production, too.

"As the cars are driven, data from the fleet is delivered back to the AI factory and run through a neural network large language model. The model will then build updates to the self-driving software, and send them out to the entire fleet," Maxwell Zeff explains in Gizmodo.

As Reilly Brennan points out in his newsletter Trucks VC, that means the factory "doesn't only build the car, it becomes the mother of the vehicle over the long run."

4. Temperature check

Illustration of a thermometer shaped like a smoke stack with smoke spewing out.

• Daiz, a Japanese plant-based meat developer, raised a ~$47.4m Series C from Mitsubishi UFJ Capital, Roquette, Miyoshi Oil & Fat, and Kagoshima Bank. https://axios.link/46VTOyM

• Zordi, a Boston-based autonomous greenhouse developer, emerged from stealth with $20m, including investment from Khosla Ventures. https://axios.link/3S8J9g8

• Beta Bugs, a Scottish developer of insect protein for animal feed, raised £1.7m led by Tricapital Syndicate, joined by SIS Ventures, Scottish Enterprise, Beeches Group, and Climate.vc. https://axios.link/3Mco3cW

• Fortive, the Everett, Wash.-based industrial-tech developer, entered a definitive agreement to acquire EA Elektro-Automatik Holding, a German supplier of electronic test products for energy storage, mobility, hydrogen and renewable energy applications, for $1.45b cash from Bregal Unternehmerkapital. https://axios.link/3rVVTfA

• German EV developer Next.e.Go Mobile completed its SPAC merger with Athena Consumer Acquisition Corp. and began trading on Nasdaq. https://axios.link/4723s3e

• Damon Motors, a Vancouver-based electric motorcycle developer, signed a definitive agreement with blank-check company Inpixon to complete a reverse merger with proposed spinoff Grafiti Holding. https://axios.link/3Q8uqPR

• Macquarie Capital announced plans to support up to $300m in investments in renewable energy projects for hospitals and hospital systems. https://axios.link/470JE01

• Tetra Tech, an engineering company based in Pasadena, Calif., has been awarded a $450 million contract with the Environmental Protection Agency to clean up contaminated sediment sites in the Great Lakes region. https://axios.link/3QraJ7c

• Spearmint Energy, a Miami-based solar and storage developer, closed a $92m tax equity investment from Greenprint Capital Management in its 150 MW/300 MWh energy-storage project in western Texas. https://axios.link/46DjQqU

• Bushel, a Fargo, N.D.-based ag-software developer, received a $3.5m grant from the North Dakota Industrial Commission to develop carbon-intensity scores for renewable fuels processors. https://axios.link/3Si42W6

• Factorial, a Woburn, Mass.-based solid-state battery developer for EVs, today announced the opening of its new battery factory in nearby Methuen. https://axios.link/48YT5Pr

• SkyDrive, a Japan-based eVTOL developer, received an ~$82.7m grant from the country's Ministry of Economy, Trade and Industry. https://axios.link/3rVJV5E

• Navigator CO2 scrapped plans for a major pipeline to carry carbon dioxide that would have been captured from Midwestern ethanol plants, citing "unpredictable … regulatory and government processes" in states including South Dakota and Iowa. https://axios.link/3QsJsRP

• Candy giant Mars announced plans to halve its emissions by 2030. https://axios.link/3tO299O

• The South Carolina Department of Corrections received approval to build a $1.2m vertical farm and training program at the Camille Griffin Graham women's prison in Columbia. https://axios.link/408KUfl

• Italy's government withdrew draft laws from being considered by the EU that would have banned the production and marketing of cultivated meat and the use of terms like "steak" in plant-based meat labels, per Vegconomist. https://axios.link/3Q6QVo8

5. Hot deals

🤝 Katie is looking forward to attending the VERGE 23 event in San Jose this week.

🎸 Alan finally gave The Replacements a listen — a glaring blind spot in his music knowledge. His quick take: The highs are very high.

Thank you to Michael Flaherty and Phoebe Neidl for today's edits.

And thank you for reading Climate Deals! Please share with your friends, family and fusion watchers.

October 23, 2023

1 big thing: Valley bets on fusion coming soon