Economy

These climate startups are still raising money despite Putin, inflation, markets

24/7 Wall St. Staff

Published: June 3, 2022 12:58 pm

By David Callaway, Callaway Climate Insights

Some days, the sheer weight of bad news around global markets and economies since the Ukraine invasion is enough to sink any climate hopes, so we reached out to Chris Lustrino and his private market data startup KingsCrowd to see which, if any, environmental startups were on his radar.

Turns out not every entrepreneur is hiding under a rock this spring. KingsCrowd turned up 11 startups in the space who raised money in April, during the worst of the downturn, with interesting climate tech stories. The companies, at the small end of the spectrum, raised on average about $275,000 at valuations of about $27 million.

One that caught our attention was Neighborhood Sun, a Maryland-based residential solar company that has more than 300 investors, focusing on community solar farms for low-income neighborhoods. KingsCrowd analyst Lea Bouhelier-Gautreau termed this company a deal to watch in her recent impact startup report and interview with its founder. Solar companies have been hit hard in recent weeks by markets and a U.S. probe into Asian dumping of panels, so it’s good to see some movement here.

Another company is Hydro Wind Energy, based in San Francisco, which recently raised a capital commitment of $50 million, and which has a unique water desalination product that combines in part with deep-water offshore wind.

They say the best time to start a company is during a downturn. What we’ve seen so far this year certainly qualifies. With all the global headwinds against environmental, social and governance strategies these days, it might also be a good time to look for bargains.

More insights below . . . .

Sustainability Stars: Value Reporting Foundation’s Janine Guillot on the coming new ESG disclosure standards in both Europe and the U.S.

. . . . Janine Guillot jumped into the sustainability disclosure world a decade ago while chief operating investment officer at CalPERS, the massive California public pension fund. Now as CEO of the Value Reporting Foundation, she’s a key player in the adoption of new disclosure standards in both Europe and the U.S. In an exclusive interview with Callaway Climate Insights, Guillot tells Marsha Vande Berg what to expect as new rules and standards are released in the second half of this year. . . .

Read the full interview

Greenhouse-gas polluters party like it’s 1999

. . . . The shift by Republicans toward more populism, and farther from the party’s traditional corporate donor base, makes it less and less likely the U.S. government can be relied upon to tackle climate change through legislation in the near term, writes Bill Sternberg from Washington DC. That places the onus on technology firms to develop better ways to suck carbon from the atmosphere, making investment in these firms and their technologies one of the only ways climate advocates can expect to escape the worst of the changes brought on by fossil fuels. . . .

Read the full column

EU notebook: Oil-buyers cartel scheme revived in Europe

. . . . Once again politicians in the European Union are considering banding together to bid for pricey imports, in this case oil from OPEC. Italy’s Mario Draghi, in consultation with U.S. President Joe Biden, has revived the idea of collective bargaining to force oil prices lower, despite the fact that several key EU nations remain against it. Alisha Houlihan in Dublin looks at the chances. . . .

Read the full EU notebook

Thursday’s subscriber insights: Islands show the way on renewable adaptation trends

. . . . Islands such as Puerto Rico and Hawaii, both very reliant on oil for power generation, prove that energy costs will eventually lead to renewables adoption. On both islands, rooftop solar is booming as householders face large electricity bills and, in Puerto Rico’s case, unreliable service. And in Hawaii, which tried to reduce net metering years ago and saw that it failed, the residential numbers are even better. A signal for investors on the mainland. Read more here. . . .

. . . . Work from home? Great, say tech companies. We won’t have to pay for offices and employees will pollute less by commuting. But not Tesla titan Elon Musk, who just emailed employees that they must be at their office desks for a minimum of 40 hours a week. Well, we’re guessing most of them drive Teslas, so there goes the worry about greenhouse gases spewed by trips to the workplace. Read more here. . . .

. . . . It was a news release that pretty much fell with a thud — only a couple of local TV stations and the sharp-eyed New York Times picked it up — that Interior Secretary Deb Haaland announced in Nevada that her department would be halving the amount it charges to build solar and wind projects on federal lands. Given the size and location of these lands — mainly in the West — this is a big development. Read more here. . . .

. . . . Remember the VHS vs. Betamax videotape wars of the late ‘70s and ‘80s? A similar showdown is now shaping up over the ideal size for wafers, the key component for making solar modules: Which is better, Longi’s 182-millimeter version, or Trina’s 210-millimeter? Read more here. . . .

Editor’s picks: Pain at the gas pump, stormy weather for Florida homeowners

Our climate and ocean are intricately connected, with rising atmospheric CO₂ and global warming causing sea-level rise, ocean acidification, warming ocean waters, and more. Learn about a few of these at our "vital signs" dashboard: https://t.co/f8Cpqopsft #NationalOceanMonth pic.twitter.com/CKNq0Uh5l7

— NASA Climate (@NASAClimate) June 1, 2022

Higher gas prices loom as summer drive season starts

AAA says a slight decrease in gasoline demand has provided U.S. drivers a little stability — although not a break — in gas prices. The national average for a gallon rose less than three cents last week to reach $4.62. But any respite could be brief, as crude oil futures are rising just as AAA forecast nearly 35 million travelers hit the road for Memorial Day. It’s the highest number since 2019, despite record prices at the gas pump. The front-month futures contract for West Texas Intermediate Crude touched $120 a barrel this week. Today, the national average for a gallon of gas was almost $4.72, according to AAA’s Gas Prices report. “So far, the pent-up urge to travel caused by the pandemic outweighs high pump prices for many consumers,” said Andrew Gross, AAA spokesperson. “But 67% of drivers recently surveyed told us they would change their driving habits if gas hit $4.50 a gallon. That number rises to 75% at $5 a gallon. If pump prices keep rising, will people alter their summer travel plans? That remains to be seen.” 

Florida homeowners face hurricane and insurance risks

Florida homeowners may be facing more risks than just an above-average 2022 hurricane season. According to a blog post from S&P Global Market Intelligence, Florida’s primary insurance carriers are struggling with social inflation, shrinking capacity and “are in the grip of a reinsurance crisis.” A storm or hurricane that causes major damage “and shrinking reinsurance capacity could further disrupt Florida’s already unstable property insurance market.” According to S&P, many states in hurricane-prone regions have some catastrophic exposure that is largely underwritten by leading carriers. Florida is “very much a unique situation,” said Keefe Bruyette & Woods analyst Meyer Shields. According to the report, Shields said small companies control much of the market, and “the fragmentation itself is fine because it means that you don’t have companies that have enormous proportionate risk. The burden is being carried by a lot of companies, but those companies are small and they don’t necessarily have the wherewithal to absorb the worst that Mother Nature could throw at them.”

Do hotter temperatures increase poverty?

Despite a vast amount of literature documenting the negative effects of climate change on various socio-economic outcomes, little, if any, evidence exists on the global impacts of hotter temperature on poverty, say the authors of Does Hotter Temperature Increase Poverty? Global Evidence from Subnational Data Analysis. Analyzing a new global dataset of subnational poverty in 166 countries, the authors find higher temperatures increase poverty. This finding is robust to various model specifications, data samples, and measures of temperature. “Our preferred specification shows that a 1°C. increase leads to a 2.1% increase in the headcount poverty rate, using the $1.90 daily poverty threshold. Regional heterogeneity exists, with Sub-Saharan African countries being most vulnerable to higher temperature. We find suggestive evidence that reduction in crop yields could be a key channel that explains the effects of rising temperature. Further simulation indicates that global warming can significantly increase poverty, with more pronounced effects occurring in poorer regions and under scenarios of higher greenhouse gas emissions without mitigation policies.” Authors: ​​Hai-Anh Dang, World Bank – Development Data Group; IZA Institute of Labor Economics; Indiana University Bloomington – School of Public & Environmental Affairs; Global Labor Organization; Vietnam National University Ha Noi; Vietnam Academy of Social Sciences – Centre for Analysis and Forecasting; and Trong-Anh Trinh, World Bank.

Words to live by . . . .

“If  you don’t have water, it makes no sense to plant seeds because they will just die.” — Althea Spencer, treasurer of the Mount Airy Farmers group in central Jamaica, speaking with the UN Environment Programme.

Callaway Climate Insights Newsletter