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“Get the money, always remember to get the money, and never forget to always remember to get the money.”
-Shep Gordon, Supermensh
In this case, the lesson may be ‘never forget to follow the money.’
Subsidies and taxes (or lack thereof) drive investment and consumer behavior.
Tracking the economics often clarifies what a government’s or investment’s true intention is despite the headlines, ratings or labels.
Last week, the opening theme of the newsletter took a step back from the trenches to explore ‘what is ESG’. This week greenwashing rears its ugly head and some important taxonomies lose their bite.
These stories further underscore the need for an understanding of products and technologies behind the labels and ratings.
Subsidies are nothing new, and can encourage getting new industries off the ground, but when talk is about making change, keep an eye on the entrenched interests.
+Fossil fuel and agriculture handouts climb to $1.8tn a year - FT
+Biden’s petrol problem: president eyes gas tax cut as pump prices soar - FT
+EUs proposed green labels have lost their link to science - Bloomberg
But it works both ways, greenwashing erodes confidence in sustainability linked products and initiatives.
+In a booming ESG market, the SEC has some questions - RMI
What is Green Then?
“The simplest solution is almost always the best.”
-Occam’s Razor
As I’ve continued to gain a better understanding of the hydrogen economy, it is important to remember that ‘green hydrogen’ requires natural gas in its production, while (whilst?) ‘blue hydrogen’ uses renewable energy in hydrogen production.
When a company like Southern Gas Co. announces a play for ‘green hydrogen’ (read: new outlet for our natural gas), well, see above on taxonomy.
+US utility unveils plan to supply Los Angeles with green hydrogen - Reuters
Keep it Simple, Stupid
Complexity vs. straight line. I love the chart in this article.
What ESG Can Be
Forget the scores, grades, and methodologies. What is measured can also be gamed. But also don’t lose heart. This is what ESG can be.
“How a sustainable toothbrush enterprise based in South Korea is reducing environmental waste and poverty, providing social services, building a healthy organizational culture, and making a profit, with the hope that other companies will follow suit.”
+The path to sustainable ESG management - Stanford Social Innovation Review
And now on to the key blue economy industries…
Marine and Coastal Tourism
Over 80% of all tourism takes place in coastal areas. In some places, tourism supports over a third of all jobs in the local workforce.
The Caribbean certainly is no exception to this dynamic. On top of being crushed by the pandemic, it is choking on Sargassum.
Sargassum is more commonly known as ‘the shit that’s ruining my beach vacation’.
It has become a massive problem over the last few years as it piles up on beaches from Mexico to (insert your favorite island here).
Sargassum doesn’t make a good salad, but it does have plenty of other uses.
There are companies working on solutions in this space beyond just bulldozing it into piles and burying it where the tourists can’t see it.
Cool companies making useful products out of a plant that they get paid to gather.
Love it.
You may be asking your self, “What if they run out?”
Fear not, my fellow blue economy capitalists.
+Millions of tons of sargassum blossoming in Atlantic - Cayman Compass
+Say hello to CarbonWave - CarbonWave.com
Seafood and Aquaculture
Commercial fishing and artisanal fishing, while playing in the same pond, aren’t really playing the same game.
Large commercial interests soak up the vast majority of subsidies, often for fuel (I feel like this has come up somewhere before). They bring in a lot of food, but they impose an outsized environmental cost while providing relatively few jobs.
There are still groups out there catching fish one at a time, and following the International Pole and Line Foundation has been one of the interesting finds of this project.
I can even get their tuna at my local Whole Foods. Look for it!
+Sustainable fisheries - Int’l Pole and Line Foundation
IUU Fishing
Be prepared to hear more about illegal, unreported, and unregulated fishing this year. This obscure corner of food security is making headlines more often in mainstream news.
The issue is also becoming a larger part of regional geopolitics and has the power to complicate and reshape alliances.
+US Coast Guard to hand over Protector-class boats to Uruguay - NavalNews
+US Coast Guard partners with South America to battle illegal fishing - ShareAmerica
+High-tech operation on Sydney Harbour steps up hunt for illegal fishers - ABC
Aquaculture Needs to Diversify
Total fish production is made up of two components, fisheries (catching fish) and aquaculture (farming fish).
Aquaculture, despite its challenges, is becoming a larger part of this important protein source and is the fastest growing segment in the food industry.
+Investors are finally discovering the real opportunity in aquaculture, AquaSpark says - IntraFish
But, it is important to do it right. Ensuring that we don’t just transport our land-based tendency for monoculture to seafood production is important.
“Researchers and industry insiders have warned that the sector needs to diversify its target species, lest it fall victim to genetic impoverishment, decreased resilience to disease and threats from climate change.”
+Why the seaweed sector should move beyond red and brown and start thinking green - The Fish Site
Offshore Renewable Energy
Offshore wind. Ah, how I want to love thee.
We’ve discussed that while offshore wind is sure to be an important part of the energy pie going forward it isn’t exactly rewarding investors in the space right now.
The large US market is lagging in this space and growth is all-but guaranteed. Projects are crawling forward, if they could just keep the supply chain open!
“There are now enough projects in the pipeline to meet [Biden’s] goal of 30GW of capacity by 2030, although hitting that target in time remains a stretch.”
+US faces a time crunch to reach Biden’s offshore wind target - FT
“Located offshore Rhode Island and New York, the South Fork project will have a capacity of 130 megawatts of wind energy, enough to power over 70,000 homes and businesses, via 12 Siemens-Gamesa 11 MW turbines.”
+First offshore wind project in New York breaks ground - gCaptain
Stay tuned…
Shipping and Ports
Pandemic logistics aren’t all smooth sailing just yet. With trucker strikes on land and Covid lockdowns in major Asian cities like Hong Kong, supply bottlenecks will continue into 2022.
+China port delays slow shipments from iron ore to electronics - gCaptain
Energy Transition
The energy transition will continue despite entrenched interests pulling government pursestrings and influencing the fine print as highlighted at the top of the newsletter.
ESG investors can take two approaches when it comes to this - pushing ‘brown’ companies towards the new economy and unlocking the value they are under-appreciating as well as being involved in new technologies.
+Divesting fossil fuel stocks? That’s so last year - FT
+GMs all-electric plan can shrink its emissions by 78 percent by 2035 - EngineNo1
The commodity play continues.
Last week, headlines in the commodity world were all focused on the shortage of everything. This is one example of why.
+Electra forecasts 30% rise in cobalt demand by 2025 - SPGlobal
+Scientists accidentally stumble on ‘holy grail’ of batteries for electric vehicles - Independent
Web3 and Carbon
Toucan Protocol and Klima are two players in the web3 climate space working to address carbon markets. Klima uses Toucan Protocol’s tokenized carbon credits (or something like that), so they are related to a degree.
Of course, not every climate group in crypto agrees this is the best solution (see section on Nori), but it’s a fascinating space to keep an eye on.
+A crypto company thinks it can help fight climate change - Wired
+A new face for KlimaDAO - KlimaDAO
Still learning about web3?
Me too.
Good News and Cool Jobs
Hanging out in the world of climate can beat you down. It’s good to remember that while we talk a lot about capital flows, the money is really just following the talent.
Nunchuck Skills
Shark skills? Getting my resume together for this job.
+Intro to shark research skills - Field School
Surf’s Up!
Never underestimate the ocean’s capacity to surprise you.
+The most extreme ‘Rogue Wave’ on record was just confirmed in North Pacific - Science Alert
Have a great weekend everyone. Thanks for reading!
Doug