Net Zero

1. Exxon’s drilling spree
2. Battery price plunge
3. Geothermal lease letdown
4. Private markets beat public
5. VC flight to quality

Finding the biggest tree in the Amazon, and Russia’s shadow fleet expands.

Exxon’s new drilling spree

ExxonMobil plans to boost its oil production between now and 2030 to among the highest levels in the company’s history, despite signs of a glut in the global oil market. The company plans to spend $27-29 billion in cash in 2025, about the same as it spent this year, as it pushes toward producing the equivalent of 5.4 million barrels of oil per day in 2030, up from 3.7 million in 2023. The company’s bullish new strategy is at odds with what most of its peers are doing as oil supply overtakes demand globally: Chevron said last week it plans to cut capital spending next year, and the OPEC+ group chose to extend production cuts in the interest of keeping prices buoyed.

Darren Woods, Exxon’s CEO, said in a call with reporters that the company has been tightly focused on driving down its production costs to remain profitable even with extremely low oil prices, a goal that got a big boost from operating efficiencies the company gained through its $60 billion acquisition of Pioneer Natural Resources this year. Production targets could get adjusted if the market changes significantly over the next few years, Woods said, but “it’s much better to make a plans to make something happen, and then choose later and try to pull back, rather than not planning and then scrambling later.”

Battery price plunge

The price of lithium-ion batteries fell 20% from last year, the biggest annual drop since 2017. The fall, according to BloombergNEF, was partially due to an oversupply in the market as more battery manufacturing factories open shop but EV demand cools down. In some markets battery pack prices slipped below $100 for the first time, a threshold at which many EV models should reach price parity with gas-engine vehicles.

The price slowdown may level off next year, as mineral costs rise and the EU and US kick more tariffs onto Chinese suppliers. But technology improvements will keep driving reductions for the foreseeable future. That’s all well and good for EV drivers, but it will make it harder for European battery startups to compete: Northvolt’s bankruptcy was the latest example of an EU battery project that failed. The latest effort, a new plant in Spain, is a partnership between Stellantis and China’s CATL.

Geothermal hits a cold spell

The latest auction for leases to drill geothermal energy wells on federal land in the US was a bust, bucking the trend of more successful recent sales and showing the nascent technology still faces hurdles to becoming a clean energy powerhouse.

Geothermal energy, which uses subterranean heat to generate electricity with drilling hardware adapted from the oil and gas industry, is a rising star in the energy transition. In the last few weeks, a string of lease auctions in southwestern US states have been entirely or nearly sold out, with some drilling rights selling for more than $200 per acre, around 10 times the typical figure a few years ago.

Tuesday’s auction, for three plots in southern Utah, was a dive: Only one plot triggered bids, with Ormat Technologies sealing a win for just $2 per acre. The Nevada-based energy project developer has already been building a portfolio of geothermal projects in the surrounding area. The company didn’t immediately reply to a request for comment about its bid. But analysts for Project InnerSpace, a geothermal research and advocacy group, told Semafor the tepid auction was likely the result of the plots’ isolated, mountainous location and relatively low geothermal temperatures.

Jeanine Vany, executive vice president of corporate affairs at geothermal startup Eavor Technologies, said that despite the hype, lease auctions for the technology are still held back by grid bottlenecks, and because most geothermal projects are only economically viable with very high subsurface temperatures. That means auctions for cooler and more remote plots often go quiet.

“As costs come down, you’ll start to see more regions that are not hot get grabbed quicker at auction,” Vany said. “But today, geologists are just looking for hotter rocks.”

Private markets beat public

Five-year returns since 2019 on a representative sample of private-market investments in the energy transition, according to the ratings agency MSCI. The returns beat out, by far, a similar portfolio of public stocks, which returned only 57% in the same period. The takeaway from this data, MSCI analysts said, is that the flailing stock market performance of renewable energy companies in the last few years doesn’t mean the energy transition overall is a bad investment — it just seems to be one better suited to private markets that are more insulated from the vicissitudes of quarterly earnings.

VC flight to quality

Climate tech startups globally had their worst year for fundraising since 2017, but there are some silver linings.

Climate tech investment from venture capital and private equity firms fell to about $40 billion in 2024, according to a new analysis from the consulting firm PWC, a drop of almost 50% from last year. Some of that was due to a broader dip in startup funding across sectors, but climate’s share of total VC funding also declined, to less than 8%. The funding that remained was heavily skewed, as it has been in previous years, toward mobility and energy startups, even though they account for a relatively small share of emissions compared to factories and the food system, which tend to get bypassed by startup funders.

On the other hand, the share of funding targeting climate adaptation solutions increased, and funding in North America remained fairly flat from last year, which PWC attributed to the Inflation Reduction Act. Funders were also more keen than in previous years to invest in startups making use of AI. And, for the first time, the investment arms of large corporations closed more deals for mid-stage startups than brand-new ones, a sign they may be moving closer to high-dollar acquisitions. The overall takeaway, PWC concludes, is that there’s a flight to quality over quantity in the climate tech market.

New Energy

• Europe is reaching the limits of its wind power expansion, as low electricity prices sap the interest of developers like Orsted to build out new projects.
• HSBC stock analysts downgraded the European energy company EDP from “buy” to “hold” because of its high reliance on renewables; more diversified utilities like NextEra and National Grid remain a “buy.”
• The flood of government funding for renewable energy projects in Ukraine has created new risks of corruption, the CEO of the country’s largest private energy company warned.
• Trump’s return to office is a bad sign for the Chinese solar companies that have invested heavily in new US factories.

Fossil Fuels

• The “shadow fleet” of oil tankers assembled by Russia to avoid Western energy sanctions now comprises at least 17% of all oil tankers.

Finance

• Goldman Sachs quit the Net-Zero Banking Alliance, the latest financial firm to drop out of climate groups that many Republican lawmakers view as anticompetitive.
• Private equity firm EQT is launching a new $500 million energy transition fund, starting with the acquisition of German battery storage company ju:niz Energy.

Minerals & Mining

• At the heart of the long-awaited, sprawling new trade pact between Europe and South America announced last week is one critical mineral: lithium.
• Critical mineral shortages will likely drive up their prices in the years to come. But retail investors looking for a piece of the action should be wary of getting burned by mining companies’ dubious human rights records, the Financial Times reported.

EVs

• Rivian’s share price jumped to its highest point since September after getting an upgrade to “buy” from the investment bank Benchmark, which sees a lot of promise in the company’s domestic EV manufacturing prospects.
• Trump’s transition team is exploring how it might cancel contracts for the US Postal Service’s new fleet of electric delivery vans.

Personnel

• Rep. Brett Guthrie (R-KY) will take over as chairman of the powerful House Energy and Commerce Committee, a key position for advancing the new administration’s energy agenda.

Fabien Wagner, tropical forest biologist and data scientist at CTrees, a nonprofit in California whose mission is to measure carbon in every tree on Earth. Wagner will present research this week at the annual American Geophysical Union conference in DC about how AI allowed him to identify what could be the largest tree in the Amazon.

Somaliland, a self-governing region within Somalia, could move closer to gaining recognition as an independent nation when Donald Trump returns to the White House in January, Semafor’s Yinka Adegoke scooped. The potential recognition is not only about building relationships, but also “about strategic military and shipping interests in the region, as well as countering China,” Adegoke wrote.