Net Zero

1. The customer is always right
2. Our Climate Week highlights
3. Cloud seeding expansion
4. Not enough cash
5. Hydrogen hope

How to make Climate Week NYC less of a logistical nightmare.

OK, that’s it, I’m taking a break from happy hours for the next month. We rounded off Climate Week last night with a very fun reception for Net Zero readers; I loved learning about your far-flung mining adventures, hyperlocal climate politics calculations, green banking and urban development solutions, and more. We have an incredible audience that I’m so proud of and humbled to contribute to.

Climate Week is impossible to condense into a single narrative, but there are a few points that stand out. No one is interested in vague corporate climate commitments anymore; prove you’re making tangible progress toward decarbonization or hit the road. The urgent need for vast quantities of green electrons is bigger than most people appreciate and will be a defining storyline for the foreseeable future. Hard tech climate solutions are getting easier to scale as demand explodes and we get over the first-of-a-kind hump.

Does all of this add up to staying with the 1.5 C boundary? I think that’s very much still in doubt. But if the unprecedented hoards that descended on Manhattan this week are any indication, it’s definitely getting closer. Now, I need to take a nap. I’ll be on vacation next week — see you in October!

Climate finance crunch eases

It’s getting easier to invest in the energy transition, according to some of the top leaders in climate finance. At Semafor’s Nights of Net Zero event at Climate Week NYC, Heather Zichal, the global head of sustainability at JPMorgan Chase, Kara Mangone, who holds a similar position at Goldman Sachs, and the billionaire climate tech investor Tom Steyer all pointed to familiar headwinds for climate tech: Inflation, high interest rates, bureaucratic obstacles, and the persistent demand for fossil fuels. But the tailwinds are gaining speed. Wall Street is beginning to recognize it can turn a profit on climate solutions, and is putting real money into the sector. The biggest driver, all agreed, is the accelerating pace of climate change itself: “At the end of the day, it is in our commercial interest to avoid the worst consequences of climate change,” Zichal said.

One persistent problem is that many climate solutions still operate under untenable economics: They are more expensive than the high-carbon alternative, and deliver lower profits to investors. That makes them unscalable. The solution is for investors and entrepreneurs to get back to business-school basics and do a better job listening to what their customers want. “We have an absolute responsibility to get market or better-than-market returns,” Steyer said. “You can tell me how great your product is, but if no one’s buying it, I don’t care.”

Talk of the Town

All week, we’ve been criss-crossing New York City to meet with government leaders, senior executives, and climate experts. Here’s some of the most interesting things we heard.

Saudi readies cloud-seeding expansion

Saudi Arabia will soon expand its cloud-seeding program, a controversial effort to boost rainfall over its parched territory, the country’s deputy environment minister said in an interview.

Riyadh began attempting cloud seeding in the early 2000s but recent developments in artificial intelligence, meteorology, and remote sensing have helped accelerate progress. The country now aims to roll it out elsewhere and to lead broader regional research into the practice. Faced with rising global temperatures as a result of climate change, a growing number of places, including the United States, are experimenting with cloud seeding. The process is hugely divisive, with critics arguing that the consequences of such programs are insufficiently understood.

“We are a hyper arid country,” Osama Ibrahim Faqeeha said. “We have to try everything possible.”

US falling behind climate goals

Amount by which the US is on pace to reduce its greenhouse gas emissions by 2030, relative to 2000 levels. That’s far slower than the 50% reduction needed to achieve the country’s Paris Agreement climate goals, according to a BloombergNEF study this week. To close the gap, annual investment in clean energy and other solutions in the US needs to increase from an average of $1.2 trillion now to at least $1.5 trillion every year until 2050.

BMW’s H2 bet

BMW isn’t ready to give up on passenger vehicles powered by hydrogen. The company is developing several hydrogen fuel-cell powered models and plans to make its first available in 2028, Juergen Guldner, the company’s general program manager for hydrogen technology, told Semafor. Some prototypes were on display at Climate Week; I didn’t have a chance to drive them, but I peeked inside and can report that they pretty much look like cars.

Hydrogen has plenty of challenges when it comes to passenger transport. Geoff Tuff, head of US hydrogen practice at Deloitte, said in an interview that it is unlikely to be more popular than battery electric vehicles; the fuel is expensive and energy-intensive to produce, not very energy-dense (meaning a lot of it is needed), and would require a new network of distribution and pumping infrastructure.

But Guldner is betting that drivers will like the fact that hydrogen cars can be refueled faster than an EV battery takes to charge, and that they can eventually be cost-competitive: “We do think we need fuel cells, because there are too many users and too many situations worldwide where the battery electric vehicles will hit limits.”

New Energy

• Rolls Royce is among the four companies selected by the UK government to proceed to the next stage of a contest to build the country’s first small modular reactor nuclear plant. It’s expected that two companies will ultimately get the go-ahead, although no timeline has been provided.

Fossil Fuels

• BASF, the world’s largest chemicals company, will cut its dividend by as much as 33%. The company is enduring its worst crisis in years caused by the sharp increase in energy prices since Russia’s invasion of Ukraine, as well as a gloomy outlook for German manufacturing firms.

Finance

• The insurance firms of State Farm and Berkshire Hathaway made multi billion dollar bets on major oil companies even as the majority of its peers significantly cut back exposure to the oil and gas industry. The buying was so big that “it helped offset a decline in the rest of the industry,” The Wall Street Journal reported.
• Colombia will next week announce a $40 billion investment aimed at replacing the country’s oil and gas exports. Once one of South America’s biggest oil producers, output from Colombia is expected to drop after the country banned exploration two years ago. “All of this is a huge economic transformation,” the country’s environment minister said.

Politics and Policy

• Barbados released the third draft of its ambitious plan to free up lending at lower cost for developing countries in climate crises. The estimated financial need for countries in the global south to address the climate crisis is $1.8 trillion per year, Axios reported.
• The UK sanctioned five Russian tankers and two companies involved in the transportation of LNG. According to London, Moscow is looking to increase its global LNG market share from 8% to 20%. “LNG is an important source of funding for Putin’s illegal war in Ukraine,” the UK government statement said.

Personnel

• Climate protesters interrupted Occidental Petroleum CEO Vicki Hollub at a conference. Demonstrators told Hollub they charged her with “ecocide.” The executive said climate change is “the greatest crisis our world has ever faced and we have to come together to work on solutions for that.”

Daniel Firger, founder and managing partner of Great Circle Capital Advisors and co-founder of the Venture Capital Alliance.

• Mike Pence quietly lays the groundwork for a post-Trump future.
• Harris escalates her courtship of crypto.
• Nvidia-backed robotic manufacturing startup taps new CEO with an eye to AI.