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Hi friends,
We’re back to our regular Sunday morning cadence this week. Hope everyone is having a great weekend so far.
Let’s get to it.
The biggest story in energy this week was obviously Joe Biden announcing his climate plan. The plan is surprisingly aggressive for a centrist candidate who many progressives feared would not do enough on the issue.
I’m not in a position to evaluate the plan as a whole given that I don’t have a policy background, or know anything about some of the sectors covered in the plan. However, the outline of the electricity sector could be a potential game-changer for investors and startups in the industry.
Here are the 5 policy cornerstones that could make it happen:
Move ambitiously to generate clean, American-made electricity to achieve a carbon pollution-free power sector by 2035.
Create a new Advanced Research Projects Agency on Climate, a new, cross-agency ARPA-C to target affordable, game-changing technologies to help America achieve our 100% clean energy target
Drive dramatic cost reductions in critical clean energy technologies, including battery storage, negative emissions technologies, the next generation of building materials, renewable hydrogen, and advanced nuclear – and rapidly commercialize them, ensuring that those new technologies are made in America.
Create 1 million jobs upgrading 4 million buildings and weatherizing 2 million homes over 4 years. Biden will make a historic investment in energy upgrades of homes, offices, warehouses, and public buildings including schools.
Biden’s plan will include direct cash rebates and low-cost financing to upgrade and electrify home appliances, install more efficient windows, and cut residential energy bills.
This clean energy plan is a step in the right direction, especially in an industry that has traditionally been passed over due to regulatory capture.
The largest glaring omission in the proposal is a plan to incentivize utilities and asset owners to pursue clean energy and efficient operations. There are some mentions of new infrastructure projects to enhance the adoption of clean electricity and electric vehicles, but something concrete that rewards utilities for better serving their consumers and producing cleaner energy would have been welcomed.
For too long, regulators have prevented utilities from innovating, or at the very least not encouraged it. This plan would be a chance to flip that dynamic upside down.
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Links:
— Working from home can save energy and reduce emissions. But how much?
— Automotive’s new reality: Fewer trips, fewer miles, fewer cars
— An EV bubble? Startups ride Tesla hype to 'staggering' money
Go deeper:
1.
By analyzing commuter trends and labor market data, we found that if everybody able to work from home worldwide were to do so for just one day a week, it would save around 1% of global oil consumption for road passenger transport per year.
Based on an analysis done by Jonathan Dingel and Brent Neiman at the University of Chicago as well as work by the International Labour Organization and others2, we estimate that around 20% of jobs globally could potentially be done from home.
— Working from home can save energy and reduce emissions. But how much?
2.
Our research suggests that the trends we focus on here—more home-based work and more e-commerce—are powerful and enduring. That leads to the ultimate question: what happens when Americans cut their driving by 270 billion miles per year (or up to about 9.2 percent)?
Before COVID-19, about 3.4 percent of U.S. workers worked from home full-time. By the beginning of April, that number had jumped to 62 percent.
— Automotive’s new reality: Fewer trips, fewer miles, fewer cars
3.
Despite struggling to produce 90,000 vehicles a quarter, nowhere close to the millions of units made a year by many major automakers, Tesla's market capitalization now far exceeds the combined value of GM, Ford Motor Co., and Fiat Chrysler Automobiles NV, the major U.S. automakers.
"The EV uprising is real, but the scale of investment into what I would view as fledgling companies is staggering."
— An EV bubble? Startups ride Tesla hype to 'staggering' money
What I’m thinking about
Being comfortable with perceived inaction - going slow to go fast.
See you next weekend,
Kevin
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