The Energy Transition Will Be Messy. So What?
Plus advancements in monitoring IUU fishing, green hydrogen, and activist investing.
*Not investment advice etc, etc, yadda, yadda.
The folks over at Engine No. 1 have been an inspiration of this whole project from the beginning. I’ve written a few times on their activities, investment products, and activist investing philosophy.
They were instrumental on moving me away from a pure divestment mindset to a more nuanced view of what ESG investing really entails.
Therefore, I wanted to point out that they just launched another ETF with the goal of using their equity ownership to actively engage in the companies they own.
‘NETZ is an actively managed fund that aims to invest in companies that will drive and benefit from the energy transition. NETZ holds companies that have a strategy to create value on their path to net zero across multiple industries, including transportation, energy, and agriculture.’
Do your research, but I just wanted to point it out. Engine No.1 is making it easier than ever to bring activist investing into your portfolio.
+Engine No.1 transform climate ETF - Engine No. 1
+The Engine No.1 Transform 500 ETF - OceanESG
Energy Transition
In our race towards the electrification of everything, it is important to remember that transition is a constant, not rare, state of existence in our world.
‘The transition will be messy. But this is *not* some shift from order to disorder.’
Internalizing the ‘Externalities’
Whether it is calculating carbon credits or sustainable fishing yields, it all starts with accurate data and doing the math. In the case of approving oil and gas drilling projects, carbon was just never entered into the equation.
Until now.
‘I just started to scratch at their modeling assumptions. I looked to the appendix of the report and the main number you need was sitting right there in their own model — it’s how much global oil consumption would change, as a result of this decision of leasing all this new area with all this new oil in it. And all you have to do to turn that number into carbon is multiply it by two other numbers that the U.S. Department of Energy and U.S. EPA have already — and then it is out there for you to take.’
-Peter Erickson, US climate policy director of the Stockholm Environment Institute
+The US just took a step closer to a legal climate standard - gCaptain
Green Hydrogen is Everywhere
I wrote about ‘A New Hydrogen Economy’ just a couple of weeks ago.
Included was a brief look at green vs blue hydrogen and how this fuel will change the geopolitical energy map.
Beyond being a viable alternative to current transportation fuels, the ability to produce it almost anywhere (especially in places with abundant renewable energy) means many countries can experience a previously-unknown level of energy security.
‘Australia is clearly showing the world’s electricity market the future. On sunny days — 10am to 3.30pm daily — electricity prices are now negative. EVs, batteries and pumped hydro can absorb some of this negative cost electricity, but low–capacity factor GH2 facilities will profiteer on spilled electricity as electrification of everything drives decarbonisation.’
+Finance pivots to green hydrogen - CleanTechnica
‘…one of its main applications would be transportation, a sector that accounts for 65% of Costa Rica’s energy consumption and uses mostly fossil fuels, which are imported in their entirety for 2,000 million dollars a year, according to the government. ‘
+Green hydrogen technology could change Costa Rica’s future - TicoTimes
And adoption is taking off…
+Electric cars fend off supply challenges to more than double global sales - IEA
Offshore Renewable Energy
The offshore wind market is a bit confounding. There are clear policy drives to boost investment, and the US, a huge market, is just starting to get in on the game.
There are some clear advantages to offshore wind over other renewable platforms from the perspectives of both a cost and scale.
However, investors in pure-play offshore wind players have not been rewarded.
+Offshore wind powerhouse Siemens Gamesa sees its value nearly half in a year - CNBC
It begs the question, when, if ever, will there be a huge value play investing in offshore wind?
+The offshore wind boom is just getting started - OilPrice
+Wind power supply chain disruption not a short-term affair - Siemens Gamesa CEO - Reuters
Shipping & Ports
Like most other industry and infrastructure, while switching to new fuels is the gold standard, there is so much to be achieved in the near term with efficiency.
+Cargill, Mitsui and Maersk tankers land first customers for new green tech solution - gCaptain
Our global supply chains are still bound by paperwork which is part of why they were ripe for disruption during the pandemic. This is starting to change.
+There’s a $50 trillion industry making a huge bet on blockchain - Bloomberg
Seafood
The Power of the Crowd
Advancements in oceanic monitoring are moving fast.
While there are plenty of people out there with the skills and desire to tackle problems related to IUU fishing, the platform for using these digital tools just didn’t exist until Global Fishing Watch created it.
Now that open-source data is available, the enforcement community can finally move beyond chasing boats with other boats.
It’s a fascinating space to watch.
‘During the three-month competition, 1,900 registrants from 67 countries created machine learning (ML) models to identify and differentiate between fixed infrastructure, fishing vessels, and non-fishing vessels in one of the largest open-source imagery datasets of all-weather, day-and-night maritime imagery.’
+Winners announced for xView3 Challenge to fight illegal fishing - Global Fishing Watch
More Data Please
If you listen in on blue economy webinars as much as I do, you hear a familiar call for more data from pretty much every sector. This contrasts with terrestrial businesses where data is so abundant the challenge is what to do with it all.
Issuing verified carbon credits requires accurate knowledge of how much carbon is actually being sequestered, and what happens to it throughout the lifecycle of the plant.
‘The big question they seek to answer is just how much kelp sloughs off, like dead skin, and falls to the ocean floor for permanent storage in the sediment. In other words: just how good is kelp at locking up carbon and helping to fight climate change?’
+Kelp gets on the carbon-credit bandwagon - Hakai Magazine
+Ethical carbon offsetting has a role to play in tackling the climate crisis - TheGuardian
If you’re interested in seaweed, the Phyconomy newsletter is definitely one to sign up for. I greatly enjoy the insight.
+9 seaweed trends for 2022 - Phyconomy
Plus, a little video to remind us that, among other things, kelp is beautiful.
+A sustainable future filled with kelp - NOEMA
Tourism
We all know where I stand on the cruise industry.
In the spirit of open mindedness and the recognition of the importance of tourism industry on economies around the globe, I went looking for some good news and found this.
If every cruise ship was a beautiful sailing vessel that carried 64 passengers, maybe the industry wouldn’t be so… well, you know. I get it, it is super expensive. But amazing.
+Sea Cloud cruises acquired by The Yacht Portfolio - CruiseIndustryNews
I know there is more to marine and coastal tourism than cruising. I’ll get there…
Web 3
This podcast episode is an education on carbon markets and where crypto funds and DAOs are colliding with them. Like most things, the devil is in the details.
+Aldyen Donnelly on climate-crypto, COP26, and carbon accounting rules - Reversing Climate Change podcast
Cool things you can do with a carbon token, just read the thread. Of course, if you actually listen to the podcast above, you’ll learn that perhaps things aren’t all rosey in tokenized carbon credit land.
That does it for this week!
I learned a lot putting this together and hope you get a little something out of reading it.
-Doug