February 2022 Cleantech Roundup: War | Offshore Wind | Buying Power

This month, we’re talking about the energy implications of Russia’s invasion of Ukraine, offshore wind, moves to reduce the cost of low carbon steel and cement, and some interesting research findings on ethanol and tax credits.

Big Geopolitical, Humanitarian, Moral, and Economic Disaster: Russia’s Invasion of Ukraine

What are these implications? With oil above $100 a barrel, relatively high gas prices have moved higher. This puts a heavy burden on the poor and those on fixed incomes; on the other hand, higher gas prices do tend to create a short-term incentive towards more efficient vehicles (although this fades when prices decline). That said, if gas prices remain elevated for a period and this corresponds with additional affordable EV models being released, this could end up giving a significant boost to vehicle electrification as it may nudge people towards more efficient vehicles just as these vehicles are being incentivized by our government.

In the near term, the conflict may push climate to the back burner of news and policy focus; however, it has the potential to speed the transition over the longer term, especially for Europe, which is now grappling with its dependence on Russian gas.

I like the way economist Jason Furman described Russia’s trade and economic connections with the west — that Russia is basically a big gas station. That said, they also export commodities like nickel and copper.

Speaking of, the International Energy Agency is just out with a report on the role of critical materials for the energy transition. It highlights that producing an electric vehicle currently requires 6 times the amount of mineral commodities as an internal combustion engine, including significant amounts of nickel and copper.

Credit: International Energy Agency

Big Money for Big Wind Turbines

The Bureau of Ocean Energy Management conducted an auction for offshore wind leases, resulting in a total of $4.37 billion for 488,000 acres (10 times the bids from the last auction), which could support the development of over 7,000 megawatts of wind.

Credit: Dominion Energy

The US currently has just 42 megawatts of offshore wind in operation, although there are more than 30,000 megawatt under development. What you might call a growth industry — it’s also an area where oil and gas companies are fairly well positioned to engage in, given their expertise operating offshore oil rigs.

Big Spender

In the absence of more comprehensive policy, this is a valuable step to take. This is in a similar vein as the corporate buyers coalitions we discussed in the Roundup in November.

Credit: Electrify America

Elsewhere in federal policy moves, the Biden administration laid out their EV charging infrastructure plan, leveraging $5 billion from the infrastructure bill. The focus will be on fast chargers primarily along interstate highways (to help address range anxiety).

Although the level 3 fast chargers are many times more expensive than other chargers, this is definitely the right strategy — fast charging during long trips is the main gap that needs to be solved in the nation’s charging infrastructure.

Big Ethanol Issues

Big Benefits for Tax Credits

“I will confess I was always a little skeptical of the tax incentives. I was concerned that they were expensive on a cost-per-ton-abated basis,” Michael Greenstone, a co-author of the study and the Milton Friedman Distinguished Service Professor in Economics at the University of Chicago, told me. “I came away from this quite surprised at how beneficial this was.”

“It’s very rare that we get opportunities to have policies with a benefit-to-cost ratio of 3 or 4 to 1. Normally it’s, like, 1.3 to 1, and we economists get very excited,” he said.

Other Big News

Credit: LanzaJet

Chicago area-based LanzaJet (a spinoff of Lanzatech) announced it was partnering with Marquis Sustainable Aviation Fuel to open a large sustainable fuel plant in central Illinois. Speaking of Lanzatech, the company recently announced it would be going public via SPAC.

Rivian announced the cost of its vehicles would rise by more than $10,000 (although it later backtracked for customers who had already put down deposits). Volume production is hard. Link

The Intercalation Station has a good February roundup of battery and EV news tidbits if you’re interested in that sort of thing. Link

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I work at Evergreen Climate Innovations in Chicago. I’m passionate about clean energy, innovation, and market driven solutions.

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Ian Adams

I work at Evergreen Climate Innovations in Chicago. I’m passionate about clean energy, innovation, and market driven solutions.