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Thanks to maturing technology and overwhelming customer demand, Wall Street is ready to bet big on s͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
 
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October 30, 2024
semafor

Net Zero

net zero
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Hotspots
  1. Oil overload
  2. The climate health threat
  3. SAF takes flight
  4. Ford’s profit gap
  5. Energy talks resume

A top renewable energy attorney isn’t worried about the US election.

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1

Oil overload

Oil companies are expected to report a sharp dip in profits for the third quarter as oil prices fall. BP earned $2.3 billion in the quarter, down $1 billion from a year ago. Shell, ExxonMobil, Chevron, and Total are also likely to report a downturn when they report earnings this week — which, according to Bloomberg, will leave most of them without the cash flow to keep up with their ambitious share buyback programs. The root of the problem is that there’s too much oil washing around: the World Bank warned this week that the glut next year could be the largest since 1998, not counting the first year of the pandemic, which will likely temper the price-raising effects of escalating conflict in the Middle East.

Still, as some analysts see the pace of the global energy transition slowing, BP and its peers are walking back earlier plans to shift more of their portfolio out of fossil fuels; the company is being “pragmatic” about the energy transition, CEO Murray Auchincloss said on Monday, and “moving with society.”

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2

The climate health threat

Deaths and illnesses attributable to extreme heat and other climate change impacts hit record levels in 2023, a report by global health experts concluded. The report, published in the medical journal The Lancet, found that global heat-related deaths in people over age 65 were 167% higher last year than they were on average during the 1990s, and that the number of hours during the year in which temperatures were high enough to pose a risk of heat stress hit a record of 1,512. Other climate-linked public health effects identified in the report include the spread of mosquito-borne infectious diseases, widening food insecurity due to crop failures, and elevated exposure to particulate matter because of drought and dust storms. “No individual or economy on the planet is immune [to] the health threats of climate change,” warned Dr. Marina Romanello, executive director of the Lancet Countdown at University College London.

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3

SAF gets ready for takeoff

An airplane takes off from an airport.
Marco Bello/Reuters

Sustainable aviation fuel is finally having its moment, a success story that shows the challenges that promising climate technologies have to overcome to scale up enough to make a real dent in emissions.

Pat Gruber learned the hard way how difficult it can be to raise money for novel climate tech. When he went to apply for a US federal loan to build a big new SAF factory, he thought the money would be easy to lock in. It wasn’t. It took three years of planning and negotiations, and more than $200 million, for Gruber to prove that his company, Gevo, was ready to start producing large volumes of advanced corn-based jet fuel, and wouldn’t fumble a high-dollar taxpayer investment. Although most of Gevo’s method is based on well-established chemistry and industrial processes, the particular way they’re put together is new — the sort of innovative, capex-intensive climate tech factory that Wall Street remains largely averse to funding, and that the Department of Energy wanted reams of proof to show it could work.

Getting a federal loan “is not for the faint-hearted,” Gruber told Semafor. But at the same time Gruber and other SAF entrepreneurs have been nailing down their production plans, airlines have become increasingly desperate to get their hands on as much of it as they can, creating a confluence of conditions that has made now a better time than ever to be raising money for SAF.

The US Department of Energy this month conditionally agreed to lend Gevo $1.46 billion for the construction of a South Dakota factory that will be the first of its kind in the US and which will more than double US production of SAF. The announcement was the latest in a recent flurry of SAF fundraising. Montana Renewables, which makes SAF from vegetable oils, locked in a $1.44 billion DOE loan on the same day. Twelve, which makes it from captured CO2, secured $645 million in a round led by private equity firm TPG. And another CO2-based SAF startup, Infinium, raised $1.1 billion from Brookfield.

Read on for more on why big investors think SAF is ready for commercial liftoff. â†’

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4

Ford’s profit gap

Losses by Ford from its EV division in the third quarter. Ford had a strong start in the EV race among major automakers, and models like the F-150 Lightning continue to sell well. But the company’s early push to expand its EV manufacturing infrastructure left it with high costs and a gap to profitability that has become harder to close as EV demand has slowed and Ford, like its peers, has walked back some EV production targets. Volkswagen, too, is struggling with EV losses, which are partly to blame for a decision this week to shutter three plants in Germany and cut tens of thousands of jobs. GM, meanwhile, believes its EVs will be profitable by the end of this year.

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5

Energy talks resume

Vyacheslav Madiyevskyy/Reuters

Ukraine and Russia have resumed secretive negotiations to halt reciprocal strikes on energy infrastructure, the Financial Times reported. Anxiety about winter blackouts is mounting in Ukraine as temperatures fall. Since 2022, Russia has captured or destroyed more than half of Ukraine’s power generating capacity, and experts fear the transformers near the country’s remaining nuclear power plants will be Russia’s next target, which would virtually guarantee extended daily blackouts and risk a catastrophic nuclear meltdown. Ukraine’s counterstrikes on Russian oil refineries have been a headache for the Kremlin, but so far had relatively little effect on vital export revenue. Still, a hiatus on energy attacks is seen by both sides as a prerequisite for more extensive peace negotiations. In the meantime, European grid regulators agreed to increase power exports into Ukraine.

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Power Plays

New Energy

  • An auction for offshore wind leases in Maine drew bids on only half the leases on offer, a sign that the industry is still struggling to make new projects pencil out. But some investors are still bullish on offshore wind: Brookfield bought a $2.3 billion stake in a group of existing farms in the UK, giving it a much larger foothold in the industry.
  • New York City selected the California startup Copper to supply 10,000 electric stoves to replace gas ones in the city’s public housing units.
  • China’s Goldwind, the world’s largest wind turbine manufacturer, reported booming profits as it cuts back its production costs and responds to growing demand for wind farms in its home country.

Fossil Fuels

A train carrying coal.
David W Cerny/Reuters

Finance

Tech

Minerals & Mining

Personnel

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One Good Text

Becky Diffen, energy attorney and partner at Norton Rose Fulbright.

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Semafor Spotlight
A graphic saying “A great read from Semafor Americana”Kamala Harris speaking at a rally
Shannon Stapleton/Reuters

You might not know it reading the news or following X, but Kamala Harris has firmed up her closing message. So has Donald Trump. And they are hammering swing state voters with simple, direct arguments even as the media cycle spins out of control, Semafor’s David Weigel wrote. But the topics they’re focused on most might not be what you think they are.

For more on the leadup to the US election next week, subscribe to Semafor Americana. â†’

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