Greetings from DC, where I begin a nearly two-week, three-city trip along the Eastern Seaboard for a mix of reporting and team meetings.
In today’s newsy edition: Bill has the first in our new series on the climate finance stakes of COP28, Amena has exclusive news on sustainable aviation fuels and distills numbers from a massive new cleantech database released today.
Also, check out this Voices article on maritime shipping published earlier this week.
And ICYMI, check out our new website launched last week! Many of you remark on how much you like our Lunchtime Reads, which we’ve adapted to scroll along the lefthand column as Top Reads + Hot Takes multiple times a day.
Clean energy investment is ramping up fast, but most of it is still not reaching beyond the world’s richest countries.
Investment into renewable energy infrastructure will reach $1.7 trillion this year compared to just $1 trillion for fossil fuels, according to the International Energy Agency. Last year, the two were competing dollar for dollar. More than $1 billion per day is flowing into solar power alone, leading the way among all energy sources. Solar investments will likely surpass investment in oil production for the first time ever in 2023.
Very little of that investment, just three dollars out of ten, is going to low- and middle-income countries, where most of the new demand for energy will occur in the coming decades. These countries need about $1.7 trillion annually in clean energy investment — equal to the total amount of global investment in renewables this year — but received only $544 billion last year, according to the United Nations.
“The vast amount of investment is occurring in the economically developed democracies and China — something like 70%. Meanwhile, all of Africa gets at most 3%,” says Ajay Mathur, an India energy expert who heads the International Solar Alliance, a consortium of countries dedicated to expanding solar energy, especially in low- and middle-income countries. “That’s led to global solar energy capacity of more than 1,000 gigawatts. All of Africa is about 11 gigawatts, about 1% of the total.”
Source:International Energy Agency • Includes estimates for 2023.
Rapidly accelerating investment in poorer countries alongside wealthier countries is essential to reach the world’s decarbonization goal of net zero emissions by 2050. Jump starting the flow of investment from high income to low- and middle-income countries is arguably the single most important task slated for discussion at the United Nations climate summit (known as COP28) in Dubai at the end of this year.
In the coming weeks, Cipher will publish a series of stories examining the following basic channels through which money has begun to flow from wealthy countries and deep-pocketed investors to poorer countries:
Reforming multilateral lending institutions;
Transition partnerships;
Direct government aid;
Voluntary offset markets;
Private investment.
Each of the above channels is growing as the larger torrent of investment into clean energy expands. Yet the total investment remains a small fraction of what consultant McKinsey & Co. has estimated is the $9 trillion needed annually until 2050.
More troubling — and already stirring controversy and criticism as COP28 approaches — are the political and financial logjams blocking dramatic breakthroughs.
Read more about each topic in the full article on our website.
Lunchtime Reads and Hot Takes
Sweltering Dubai stays cool with indoor skiing and snow cinemas — The Washington Post Amy’s take: Aw, an ironic feedback loop: Cooling off the outdoors with air conditioners that contribute to the global warming heating up the outdoors.
UK scientists call on Sunak to back deep-sea mining ‘moratorium’ — Financial Times (paywall) Anca’s take: The race for critical minerals should not come at any cost — and worries about this nascent industry are growing.
How Big Oil’s wastewater could fuel the EV revolution — E&E News (paywall) Amena’s take: At the risk of sounding cliched, no stone should be left unturned to find domestic sources of lithium. The U.S. also needs more facilities to refine the mineral for use.
COP28: A chance to course-correct on the global clean energy transition — POLITICO Anca’s take: This is the first time the leaders from the EU, Africa and the Caribbean have made these demands collectively. The pressure is up ahead of COP28!
As Federal Money Flows to Carbon Capture and Storage, Texas Bets on an Undersea Bonanza — Inside Climate News Amena’s take: The question is whether CO2 can be safely sequestered without leakage into an underground seabed already dotted with older offshore oil and gas wells.
Djibouti Unveils $122 Million Wind Farm in Green Grid Push — Bloomberg Bill’s take: Djibouti is the most recent example of an African country pursuing the most obvious thing to pursue: renewable energy, even as many also hope for a gas and oil windfall.
More of what we're reading:
Von der Leyen outlines ‘next phase of European Green Deal’, with heavy industry focus — Euractiv
Amazon follows Microsoft, investing big in carbon capture — CNBC
G20 ‘missing in action’ on fossil fuels even as it boosts green energy goals — Financial Times (paywall)
LATEST NEWS
Exclusive: United inks largest deal for clean jet fuel with novel method
United Airlines will buy clean jet fuel made from recycled carbon dioxide under a deal inked today with the Houston, Texas-based startup Cemvita.
Before the decade ends, the company will start supplying United with one billion gallons of clean jet fuel over a 20-year period, or 50 million gallons a year, said Cemvita CEO Moji Karimi.
Sustainable aviation fuel (SAF) is a catch-all term for lower-emitting liquid fuels (usually 60 to 70% fewer greenhouse gas emissions) that can replace or be blended with traditional and dirtier jet fuels made from kerosene in jet engines.
The United-Cemvita agreement is the largest deal to date between an airline and a SAF producer that uses this novel method. The company uses engineered microbes to convert carbon dioxide captured either directly from the air or from industrial plants and a mix of wastes into jet fuel, according to Cemvita.
Currently, most SAF is made with a mixture of water- and land-intensive vegetable oils, waste fats and cooking oils that are in limited supply. The microbes method could offer a more reliable and sustainable feedstock for clean jet fuel, said Karimi.
Analysts at RMI say the United deal sends a clear signal of support for Cemvita that can draw investors that would have otherwise been scared to take the risk on a newer approach.
The aviation sector is responsible for about 10% of greenhouse gas emissions in the U.S. and 2 to 3% of global emissions.
Despite numerous airlines committing to use SAF, it’s currently supplying a miniscule amount: less than 0.1% of global jet fuel consumption, according to the International Energy Agency.
U.S. cleantech investment soars, new database finds
Source:The Clean Investment Monitor, Rhodium Group and MIT CEEPR. • Fiscal years run from June 30 to July 1. Energy & Industry includes utility-scale solar, batteries and carbon capture. Retail includes consumer-facing technologies like heat pumps and EVs.
Investments in clean energy technologies in the United States have nearly tripled over the past five years, according to a new database unveiled today by former White House economic advisor Brian Deese and research firm Rhodium Group.
President Joe Biden made reviving domestic manufacturing a cornerstone of his climate agenda. The enactment of three key pieces of legislation — the Infrastructure Investment Act, the CHIPS Act and the Inflation Reduction Act — infused generous amounts of cash into the cleantech economy, which U.S. Energy Secretary Jennifer Granholm said is starting to bear fruit.
“Money is flowing, shovels are breaking ground… The clean energy economy is changing before our eyes,” said Granholm when announcing the release of IRA funds to boost electrical vehicle and battery manufacturing last month.
Since July 2018, annual investments in developing and installing renewables, electric vehicles, batteries and other technologies have soared 165%, reaching $213 billion in June 2023.
“At $213 billion, clean investment nationwide is larger than the annual GDP of 18 of the 50 states in the U.S.,” Rhodium wrote in a report accompanying the new database.
Compiled from third-party data sources, company announcements, financial filings and news reports among other sources, the Clean Investment Monitor compiles information about U.S. cleantech investments in real time.
It tracks investments by manufacturing of clean energy technologies, their deployment to produce clean energy in industry and their end use in electric vehicles and other technologies.
The monitor is a brainchild of Deese, Biden’s National Economic Council Director for two years who is now at MIT as its Innovation Fellow.
When quantifying IRA benefits, the U.S. Treasury Department said $200 billion of announced investments are in clean energy, electric vehicles and batteries. And most of these investments have taken place in communities that were economically disadvantaged.
The manufacturing sector has particularly reaped the benefits of this funding surge, with yearly investments rising 125% from relatively modest pre-pandemic levels. The monitor shows the lion’s share of this sector’s investment has gone into building up the EV supply chain, and battery manufacturing in particular.
Beyond EVs, solar manufacturing is drawing considerable investor interest. Since July 2022, utility-scale solar has pulled the most investment ($30 billion) among mature clean energy technologies, followed by grid-related storage ($14 billion) and then wind ($11 billion), according to the monitor.
Although emerging technologies such as carbon capture, sustainable aviation fuel and hydrogen continue to draw investor interest as well, their numbers are dwarfed by their more mature counterparts.
The monitor also indicates how these technologies are being adopted by end users, namely American households and businesses who have spent $70 billion in the past year on zero-emission vehicles featuring batteries as well as hydrogen fuel cells.
“Based on recent announcement activity, we fully expect clean investment to increase in the years ahead,” said Trevor Houser, a partner in Rhodium’s energy and climate practice. “The Inflation Reduction Act and Infrastructure Investment and Jobs Act are clearly accelerating the pace of clean investment in the U.S.”
Cipher reader Noa R. shared this photo from a recent road trip via electric car to Whidbey Island, WA. At Greenbank Farm, Noa spotted these free EV chargers in front of a field of solar panels.
Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.
Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.
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