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BFD Expert Voices - Climate Deals

BFD Expert Voices

Climate data companies say the Securities and Exchange Commission's final climate disclosure rule will offer much-needed certainty and will accelerate demand for their products, Katie writes.

Why it matters: The expected ruling tomorrow will be the latest global mandate requiring companies to disclose greenhouse gas emissions.

Catch up quick: The SEC first put out its climate disclosure draft almost two years ago.

All publicly traded companies in the U.S. will be subject to the required emissions disclosures that the SEC finalizes.

Zoom in: One group of companies that welcomes the ruling are climate data firms such as Persefoni, whose software helps track emissions data.

Yes, but: A key global emissions metric is expected to be removed from the final draft.

Reuters reported in February that the SEC would scrap a requirement to disclose Scope 3 data, a metric that includes a wide range of indirect emissions, from a company's supply chains to users of their products.

Between the lines: Even if Scope 3 does end up on the cutting floor, data firms say companies are already using it to track emissions on their own.

"The train has left the station," says Matt Fisher, head of policy for Watershed, a climate data startup.

Executives from two other climate data firms, Optera and Pulsora, told Axios that companies will continue to track Scope 3 data for competitive reasons and for their investors.

Big picture: Climate tech executives also say the ruling will bring much-needed certainty to the market.

What's next: The SEC is expected to issue the final ruling tomorrow and the commissioners will vote on it.

1 big thing: All eyes on SEC

HData, a startup developing software that combs through energy regulatory filings, raised a $10 million Series A, the company tells Alan exclusively.

Why it's the BFD: The reams of documents that public utility commissions produce contain key info for grid operators and can take weeks to read through entire batches.

Zoom in: HData's software crawls regulatory filings nationwide, alerts users to developments and generates insights. It can also submit forms on behalf of energy companies.

The startup closed its Series A in January, led by Buoyant Ventures.

Victorum Capital, Hyde Park Venture Partners, and Firebrand Ventures participated.

Buoyant general partner Allison Myers joined HData's five-member board. The all-equity raise took about six months to close.

Big picture: America's power plants, transmission wires, and pipelines are overseen by a sprawling network of utility commissions and regulatory bodies, which have enormous sway over the pace and scale of the clean energy transition.

Each commission produces mountains of documents that can take weeks to read through.

State of play: HData is not alone in its mission. But the company says its software uniquely translates both "structured" data such as spreadsheets and "unstructured" data like a hearing transcript.

The approach can produce near-real-time intelligence to grid operators, consultants or regulators that once wasn't available.

"California utilities — you can see their operation and maintenance expenses jump during wildfire seasons," CEO Hudson Hollister tells Axios. "You see real-world events happening in the metrics."

What's next: HData, based in Birmingham, Ala., has over 30 enterprise customers in the regulated energy sector, including electric utilities and pipelines, as well as utility commissions and consulting firms.

It's looking to provide insights beyond grid regulation. "The regulatory and compliance piece is very small," Myers, of Buoyant Ventures, says. "I think of this as energy transition intelligence."

2. The BFD: Filing finder 

Illustration of a lightbulb with a glowing filament in the shape of a bar chart.

Green hydrogen unicorn Electric Hydrogen has raised $50 million in equipment financing, the company tells Katie exclusively.

Why it matters: The company is preparing to make electrolyzers that can produce green hydrogen at its first large factory in Devens, Mass.

Zoom in: The non-dilutive financing was provided by investment group Trinity Capital, which has also provided equipment financing for climate companies like alt meat firm Impossible Foods, zinc battery maker Eos Energy, and geothermal heat pump startup Dandelion Energy.

While Electric Hydrogen previously raised over $600 million from investors, the company can get a lower cost of capital for equipment financing.

The funding from Trinity Capital shows that Electric Hydrogen is getting closer to bankability, says Electric Hydrogen's SVP of Global Sales Jason Mortimer. "Project finance is what is going to make this industry happen."

Catch up quick: Electric Hydrogen closed a Series C round of a whopping $380 million last year from investors including BP, United Airlines, Microsoft and Fortescue Metals, among others, valuing the company at over $1 billion.

Previous investors include Amazon's Climate Pledge Fund, Breakthrough Energy Ventures and metal and mining giant Rio Tinto.

The company says its electrolyzers can help producers make hydrogen for a lower cost compared with competitors.

Certain sectors that are tricky to decarbonize are looking at clean energy-fueled hydrogen production as a potential solution, including steel makers, airlines, and heavy-duty trucking.

Big picture: The Inflation Reduction Act is offering major subsidies for green hydrogen through tax credits and other types of support.

While the green hydrogen market has a bulging pipeline of projects, it's got very few deployments actually operating.

According to Wood Mackenzie, there are 6.59 million tons per annum worth of green hydrogen projects in the pre-development phase in the U.S., but only 0.01 million tons operating.

Electric Hydrogen's electrolyzers could play a key role in kicking off the emerging market.

What's next: Electric Hydrogen needs to begin producing electrolyzers in large volumes at the Devens factory to be able to reach its target low-cost price point, and a lot can go awry during manufacturing scale-up.

3. Exclusive: Green hydrogen gear

A photo of a masked researcher in white lab coat, goggles, and blue gloves, working on electrical equipment on a lab bench.

A researcher works on equipment that makes up an electrolyzer for Electric Hydrogen. Photo: Courtesy of Electric Hydrogen

🇨🇳 Biden's EV conundrum: Surging EV exports from China are forcing the White House to weigh climate goals against industrial policy — and the latter has the upper hand for now, Ben Geman writes in Generate.

The White House last week announced a Commerce Department probe of security risks from "connected" vehicles from China.

"The probe will inject uncertainty into Chinese plans to site EV manufacturing facilities south of the border, increasing investment risks and reducing the probability of [final investment decisions]," Joseph Webster of the Atlantic Council's Global Energy Center, tells Ben.

👮 Feds accuse California man of smuggling GHGs: A San Diego resident pleaded not guilty yesterday after being arrested and charged with allegedly smuggling greenhouse gases from Mexico into the U.S. and selling them for profit, our colleague Rebecca Falconer reports.

Michael Hart, 58, faces the first-ever prosecution in the U.S. to include charges related to the American Innovation and Manufacturing Act of 2020 for allegedly smuggling hydrofluorocarbons, a potent greenhouse gas used in refrigeration and air conditioning.

🛰️ Greens in space: A methane-tracking satellite launched yesterday via a SpaceX Falcon 9 rocket, making it the first satellite to be put into orbit by an environmental nonprofit, Andrew Freedman writes in Generate.

MethaneSAT is being operated by a subsidiary of the Environmental Defense Fund and will be providing data to companies, regulators and ordinary citizens free of charge.

🏦 Bank budges: JPMorgan Chase will disclose its ratio of "clean" energy to fossil fuel finance in a deal with NYC Comptroller Brad Lander on behalf of three city pension funds, Ben also writes in Generate.

The agreement will open a window into the energy-related activities of one of the world's largest banks. It also wards off a shareholder resolution on the topic, which the three NYC funds involved in this deal have also filed with other banking giants.

4. Temperature check

Illustration of three emojis: a thermometer, a hot face, and a cold face.

• German electrolyzer manufacturer Sunfire raised a €215m Series E from LGT Private Banking, GIC, Ahren Innovation Capital, and Carbon Equity, and insiders Lightrock, Planet First Partners, Carbon Direct Capital, the Amazon Climate Pledge Fund, and Blue Earth Capital. https://axios.link/4a2Lkrv

Sunfire also secured an up to €100m term loan from the European Investment Bank, and disclosed that it has access to ~€200m in grant funding.

• Cyclize, a German startup developing plastic-waste-to-syngas tech, raised a €5m seed round led by UVC Partners, joined by High-Tech Gründerfonds, Aurum Impact, and UnternehmerTUM Funding for Innovators. https://axios.link/3P570uI

• Atmio, a German leak-detection developer for oil and gas infrastructure, raised a €1.3m pre-seed from HCVC, Robin Capital, and Nucleus Capital. https://axios.link/3wHXozZ

• Van Heron Labs, a Houston-based biotech focused on cell growth for food, materials, and other sectors, raised a $1.1m seed round led by FoodLabs. https://axios.link/49DGfpE

• Esper, an Australian satellite imaging startup for ag, mining, and environmental monitoring, raised $1m in pre-seed funding from Stellar Ventures, Day One Ventures, and Dolby Family Ventures, per TC.  https://axios.link/3T21CK8

• EQT raised ~$3.3b in the final close of its long-hold impact fund, EQT Future. https://axios.link/3TosC7S

• The Southern African Power Pool and investment advisers Climate Fund Managers are raising a targeted $1.3b fund to build high-voltage transmission lines in the region, per Reuters. The fund is aiming for a $500m first close next year. https://axios.link/49Ka4VK

• D.C.-based Capitol Meridian Partners raised $900m for its first fund focused on govtech, aerospace, defense, and government services. https://axios.link/3wz8nLS

• Amazon Web Services acquired a 960 MW data center at the Susquehanna Steam Electric Station nuclear plant in Pennsylvania, from Houston-based independent power producer Talen Energy for ~$650m, per Data Center Dynamics. https://axios.link/432arIC

• Toyota announced an agreement with Panasonic to make their Primearth EV Energy battery joint venture a wholly owned subsidiary of Toyota. https://axios.link/3V6waNG

• Our Next Energy, the Novi, Mich.-based LFP battery maker, laid off another 37 workers, mostly those in administrative roles. The company laid off 128 workers, or 25% of its workforce, in November. https://axios.link/48EXjdx

• Good Meat, the cultivated meat division of the SF-based Eat Just, temporarily paused production at its Singapore plant and reportedly canceled construction of another plant as the company reconsiders its Asia strategy, per Vegconomist. https://axios.link/4ahrEAj

• Toronto-based Rock Tech Lithium selected a site in Red Rock, Ontario, for what the company says will be the province's first lithium refinery. https://axios.link/3SU4tVi

• The EU approved a ban on imports made with forced labor, including solar components. https://axios.link/4a0Ugh4

• The UAE plans to convene a climate finance meeting in June, ahead of the COP29 summit in Azerbaijan, per Bloomberg. https://axios.link/49OK1wg

• Tesla halted production at its European Gigafactory near Berlin after a suspected arson attack. https://axios.link/3V3wpZO

• Burger King Germany has made its plant-based burgers cheaper than its meat options. https://axios.link/3uPdrLQ

• Plant-based sunny-side-up eggs from LA-based Yo Egg are hitting the freezer aisle in California. https://axios.link/3T4V51b

5. Hot deals

• Jacob Homiller was named CEO of CarbiCrete, succeeding outgoing CEO Chris Stern, who will remain a strategic advisor. https://axios.link/3Twz11f

• Talal Butt, previously global VP of enterprise transformation and architecture at Rockwell Automation, was named CIO of Generac Power Systems (NYSE: GNRC). https://axios.link/4c1Xi6d

• Todd Smith was named chief communications officer at WastAway. https://axios.link/3V2SA2g

• Talos Energy completed its acquisition of QuarterNorth Energy. QuarterNorth's designee Joseph A. Mills was appointed to Talos' board of directors. https://axios.link/431f5X6

6. It's personnel

⚡️ Join Axios tomorrow at 9:30am ET to hear from Energy Secretary Jennifer Granholm, Rep. Mike Levin and the White House's John Podesta on clean energy industry growth. Register here to attend in person.

And don't miss Pro Energy Policy's exclusive conversation Thursday with Rep. Cathy McMorris Rodgers. Register here.

👋🏻 Katie plans to be at the Plug and Play sustainability demo day in Sunnyvale, Calif., today. Come say hi.

📎 Alan wishes Clippy all the best on his reported comeback.

Thank you to Michael Flaherty and Chris Speckhard for today's edits.

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

March 05, 2024

1 big thing: All eyes on SEC