Catalyst with Shayle Kann

Latest Episodes:

Climate tech’s tough year in the public markets Mar 14, 2024

Show notes

Two major indicators of climate tech stocks – the S&P Clean Energy Index and the MAC Global Solar Index – are significantly trailing the overall market. They’ve been declining for months, down from their mid-pandemic highs when they performed far better than the rest of the economy.

So what happened to climate tech investments in the public markets? And what do these investments tell us about the coming year for climate tech?

In this episode, Shayle talks to Shanu Mathew, portfolio manager and research analyst at Lazard. They cover topics like:

The macroeconomic factors behind this underperforming sector, like higher interest rates, election uncertainty, and the Russian invasion of Ukraine
Trends in specific industries, like EVs, solar, and lithium
Investors moving funds into (and paying more for) climate tech stocks with consistently higher performance
Analysts’ expectations for climate tech stocks in the the near- and long-term

Recommended Resources:

Shanu Mathew: Cleantech FY23 Recap And FY24 Outlook

Catalyst: How has US industrial policy impacted climatetech investment?

Catalyst is supported by Antenna Group. For 25 years, Antenna has partnered with leading clean-economy innovators to build their brands and accelerate business growth. If you’re a startup, investor, enterprise or innovation ecosystem that’s creating positive change, Antenna is ready to power your impact. Visit antennagroup.com to learn more.

Catalyst is brought to you by Atmos Financial. Atmos is revolutionizing finance by leveraging your deposits to exclusively fund decarbonization solutions, like solar and electrification. Join in under 2 minutes at joinatmos.com/catalyst.

The early days of AI on the grid Mar 08, 2024

Show notes

The first wave of digital grid infrastructure in the U.S. didn’t quite deliver on its promises. More than 100 million smart meters have rolled out across the country, buoyed initially by billions in federal funding. But instead of using them for exciting things like time-of-use pricing and automated demand response, utilities used them for more mundane things like automated billing, according to a whitepaper from Guidehouse.

Could the new wave of AI-based grid tech be different?

In this episode, Shayle talks to David Groarke, managing director at the energy consultancy Indigo Advisory Group, who co-authored a forthcoming Latitude Intelligence report on utilities and AI.

David says that AI is showing promise so far. Unlike the first wave of hardware-focused advanced-metering infrastructure, AI leans heavily on relatively cheap software and data. He also says that AI’s capabilities are advancing quickly (“doing pressups” as the Irish say) by improving algorithms, handling more tasks, and improving efficiency.

David and Shayle cover use-cases and other topics like:

Wildfire management, using data from cameras, lidar, and satellites
Customer propensity modeling, including detecting EVs to aid with infrastructure planning
Automated and personalized communication with customers
Predictive maintenance of substations and other grid infrastructure, using data from, for example, computer vision to detect corrosion and reduce downtime
Optimizing transmission capacity by moving from static ratings of transmission lines to real-time ratings
Whether incumbents or startups are leading the development of these AI-based solutions
David’s take on whether AI’s impact on utilities will be revolutionary or incremental

Recommended Resources:

Latitude: Welcome to the smart meter’s second act

Latitude: AI is simplifying complex decisions for utilities

Latitude: Seven ways utilities are exploring AI for the grid

Latitude: Could AI-fueled weather forecasts boost renewable energy production?

Catalyst is brought to you by Atmos Financial. Atmos is revolutionizing finance by leveraging your deposits to exclusively fund decarbonization solutions, like residential solar and electrification. FDIC-insured with market-leading savings rates, cash-back checking, and zero fees. Get an account in minutes at joinatmos.com.

The challenges of building a carbon removal portfolio Feb 29, 2024

Show notes

The carbon removal market could reach $400 billion to $1.6 trillion by 2050, according to McKinsey. But it’s got a long way to go. Right now the market is wild, unexplored territory filled with unproven technologies, murky cost curves, and a motley mix of price points and standards. The hope is that one day it becomes a standardized commodity market of high-quality, durable removals.

But for now, brave buyers have to wade into the wilds and see what works. So what does that look like – and what have they learned so far?

In this episode, Shayle talks to Stacy Kauk, head of sustainability at Shopify, which paid $55 million for 85,000 tons of removal in 2023. Kauk says that very few of those credits have been delivered yet, but the company, along with a few other early entrants like Stripe, H&M, and Microsoft, are investing in a varied field of technologies to develop the market.

Stacy thinks of Shopify’s approach like a venture capitalist’s portfolio, with some companies succeeding and others failing. Stacy and Shayle walk through the practical realities of building that portfolio, covering topics like:

Using forward purchases, flexible contracts, and Shopify’s internal credit standards
The challenges that slow down ambitious startups, like permitting delays and the complicated work of measuring, reporting, and verifying credits
Which technologies are hot and which are not, ranging from biomass burial and wastewater treatment to enhanced weathering and ocean alkalinity enhancement
Comparing the lower energy requirements of enhancing natural systems with the potentially clearer cost curves of engineered systems
Building a diverse portfolio across technologies and maturities
What determines the prices Shopify pays for different credits

Recommended Resources:

Bloomberg: Stripe, Alphabet and Others to Spend Nearly $1 Billion on Carbon Removal

Carbon Dioxide Removal Primer

Latitude: Fixing the messy voluntary carbon markets

The electric transformer shortage Feb 22, 2024

Show notes

The list of things that depend on transformers is long: new housing, EV chargers, renewable projects, and more. That’s why skyrocketing lead times and prices for grid equipment that raises or lowers voltage is a real problem.

The wait for a new transformer has jumped to over two years, according to WoodMackenzie. Back in 2020 it took just a few months, according to Tim Mills, CEO at transformer manufacturer ERMCO. WoodMackenzie found that prices, meanwhile, have risen over 60% since 2020.

So what’s causing the shortage?

In this episode, Shayle talks to Tim about how rising demand for transformers has pushed manufacturers to capacity – and why it’s been so hard for manufacturers to expand that capacity.

They also cover topics like:

The state of the shortage, including prices, lead times and types of transformers that are in especially short supply.
The major drivers of demand growth, including renewables, storms, federal investment, and EV chargers.
How the housing boom and bust of the 2000s left transformer manufacturers wary of bubbles in demand.
Why the tight labor market makes it hard to expand manufacturing capacity.
How new rules proposed by the Department of Energy are throwing uncertainty into what type of equipment manufacturers should invest in.

Recommended resources:

WoodMackenzie: Supply shortages and an inflexible market give rise to high power transformer lead times
T&D World: No Easy Answers: Transformer Supply Crisis Deepens

Frontier Forum: Diving into the booming transferable tax credit market Feb 20, 2024

Show notes

It's been a year and a half since the Inflation Reduction Act was passed. In that time, we've seen $110 billion in planned investments for factories that are pumping out electric cars, batteries, solar modules, and wind towers.

The upper end of 2030 forecasts show nearly twice as much zero-carbon generation getting built compared with scenarios without the law in place.

Much of this activity is the result of a new shift in the US tax code that allows wind, solar, storage, hydrogen, carbon capture, and manufacturing tax incentives to be sold for cash. It’s creating a lot more deal volume as many more companies can now buy those credits to support new development.

“This very rarely happens that a new market forms basically overnight. The private estimates on how big the market gets get it to something like $80 or $100 billion dollars by the back half of the decade,” said Alfred Johnson, co-founder and CEO of Crux, speaking at Latitude Media’s Frontier Forum.

In January, Crux closed an $18 million Series A round led by Andreesen Horowitz – bringing the company’s total funding to $27 million to scale its sustainable finance platform.

It’s been about a year since credits started trading, with activity really picking up in the last six months. Much of our understanding of how the market is performing comes from new research from Crux, which recently surveyed 150 buyers, sellers, and intermediaries – and found a mix of eagerness, hesitance, surprises, and lots and lots of questions.

Stephen Lacey spoke with Alfred Johnson live during Latitude's Frontier Forum to address many of those questions – and riff on how this new market is taking shape. You can watch the full conversation, including questions from the audience, here.

More 2024 trends: ESG, carbon certifications, curtailment, and AI Feb 15, 2024

Show notes

There was so much to talk about in Nat Bullard’s 200-page slide deck on 2024’s biggest decarbonization trends that we broke the conversation into two parts. For the first half of our conversation with Nat, listen here.

Nat has worked as an analyst and writer in climate tech for two decades and was BloombergNEF’s chief content officer until 2022.

In this second part of the conversation, Shayle and Nat cover topics like:

How ESG has become the new third rail of finance, falling out of the spotlight of corporate reports and the annual Larry letter
The vexing problem of what to do with curtailed power and why we need to design around the intermittency
Whether you can have too many carbon certification standards
How biodiesel is eating up Europe’s biofuel supply
First Solar’s underappreciated success in surviving the decline of U.S. solar manufacturing
Plus: Declining hydropower, slowing coal growth, and the rising hype around AI

Recommended resources:

Nathaniel Bullard: Decarbonization: Stocks and flows, abundance and scarcity, net zero

Washington Post: ‘Greenhushing’: Why some companies quietly hide their climate pledges

World Economic Forum: Hydropower: How droughts are affecting the world's biggest renewable energy source

2024 trends: batteries, transferable tax credits, and the cost of capital Feb 08, 2024

Show notes

We’re back for round two, with even more slides than last year. This year’s annual slide deck from Nat Bullard has 200 pages on the key trends shaping decarbonization in 2024. Nat has worked as an analyst and writer in climate tech for two decades and was BloombergNEF’s chief content officer until 2022.

We’ve split the conversation into two parts. In this first part, Shayle and Nat cover topics like:

The state of batteries, including the rapid growth of LFP chemistries, the concentration of manufacturing capacity, and the wild ride of lithium prices.
The rapid growth of transferable tax credits and how that unlocks capital for renewables.
How the rising cost of capital has reshaped climate tech.

Recommended resources:

Nathaniel Bullard: Decarbonization: Stocks and flows, abundance and scarcity, net zero

Latitude Media: Clean energy capital is getting pricier

WSJ: Companies Are Snapping Up New Clean-Energy Tax Credits

What’s really happening in the U.S. EV market? Feb 01, 2024

Show notes

A recent slew negative headlines about U.S. EVs makes it feel like the sky is falling on the market. Yet the data show robust growth. Combined battery electric and plug-in hybrid sales in 2023 were up 50% from 2022. Meanwhile, EV market share reached 9.5% in 2023, up from 7.5% in 2022, according to BloombergNEF.

Still, there have been real signs of changing expectations. GM and Ford have downsized their EV ambitions. Hertz sold off 20,000 Teslas. And Elon Musk tried to temper expectations in last week’s disappointing Tesla earnings call.

So why all the conflicting indicators?

In this episode, Shayle talks to BloombergNEF analyst Corey Cantor. They talk about the changing outlook on the speed of EV adoption as the focus shifts from early adopters to the mass market. They talk through the persistent challenges EVs face, like slow charger rollout and lack of affordable price points. They also cover topics like:

Whether sales challenges are more of an overall market problem or a legacy automaker problem
Tesla’s dominant but falling share of the market and what was behind the Hertz sell-off
Momentum behind insurgent Korean automakers Kia and Hyundai
Whether the Chinese EV giant BYD will enter the U.S. market

Recommended Resources:

Inside EVs: Hyundai's Electric Vehicle Push Is Absolutely Working

Bloomberg: EV-Charging Firms to Struggle With Finances, Investment in 2024

Solving the cow burp problem Jan 26, 2024

Show notes

Agriculture in the U.S. produces more methane than the American oil and gas industry, and the biggest share of that agricultural methane is from enteric fermentation – essentially cow burps. Cows and other ruminant animals release methane because of the way they digest food. And as animal protein consumption rises, so will enteric emissions.

It’s a problem for climate change, but also for farmers. Methane is wasted energy that could have been used for beef or dairy production – and so enteric methane production is a challenge that researchers have been trying to solve for years. Some promising solutions are starting to make it into practice.

In this episode, Shayle talks to Charles Brooke, program manager for enteric methane at Spark Climate Solutions. Shayle and Charles cover topics like:

Why most enteric methane comes from small-holder pasture-raised animals, instead of feed-lot-raised animals.
The different solutions in the pipeline, such as better livestock management, feed additives, vaccines, and breeding.
The challenges with feed additives that animals must eat everyday, like bromoform, Bovaer, and 3-NOP.
How vaccines and breeding could shift global populations more permanently.
The barriers to adoption, such as regulatory hurdles and public skepticism.

Recommended Resources:

Federation of American Scientists: Climate-Smart Cattle: US Research and Development Will Improve Animal Productivity, Address Greenhouse Gases, and Hasten Additional Market Solutions

USAID: Endline Methane Assessment of KCDMS Dairy and Fodder Value Chain Activities in Kenya

Food Climate Research Network: Grazed and Confused

American Society for Microbiology: The Role of microbes in Mediating Climate Change

Environmental Defense Fund: Tackling Enteric Methane

Sourcing biomass for carbon removal Jan 19, 2024

Show notes

Plants capture hundreds of gigatons of carbon every year in timber, crops, and other forms of biomass. Much of that carbon gets released back into the atmosphere through natural processes and human intervention. But there are a few ways that we can lock it away for good, like biochar, bio-oil, and bioenergy with carbon capture and storage, or BECCS — all processes that fall under the umbrella of biomass carbon removal.

The International Panel on Climate Change calls carbon removal “unavoidable” — and biomass is a leading carbon removal contender. But everyone wants a slice of the biomass pie. Airlines want it for jet fuel. Midwestern legislators want it for ethanol. Homebuilders want it for construction. Oh, and humans want it for food. By 2050 potential demand for biomass could far outstrip supply.

So what kinds of biomass should we use for carbon removal — and where should we get that biomass from?

In this episode, Shayle talks with Dr. Bodie Cabiyo, senior forest scientist at climate science consultancy Carbon Direct and lead author of A Buyer’s Guide to Sustainable Biomass Sourcing for Carbon Dioxide Removal.

They talk about topics like:

How carbon removal is already competing with other uses for biomass.
The complicated question of what counts as “waste,” which some BECCS companies are using to claim carbon reductions.
Principles for sustainably sourcing biomass for carbon removal, like tracing chain of custody and avoiding market distortions.
The environmental and carbon math tradeoffs involved in different sources of biomass.
What Shayle would do with biomass if he were an omnipotent global leader.

Recommended Resources:

Carbon Direct: A Buyer’s Guide to Sustainable Biomass Sourcing for Carbon Dioxide Removal
Catalyst: From biowaste to ‘biogold’
Energy Transitions Commission: Bioresources within a Net-Zero Emissions Economy: Making a Sustainable Approach Possible

Sign up for Latitude Media’s Frontier Forum on January 31, featuring Crux CEO Alfred Johnson, who will break down the budding market for clean energy tax credits. We’ll dissect current transactions and pricing, compare buyer and seller expectations, and look at where the market is headed in 2024.

Catalyst is brought to you by Atmos Financial. Atmos is revolutionizing finance by leveraging your deposits to exclusively fund decarbonization solutions, like residential solar and electrification. Market-leading savings rates, cash-back checking, and zero fees. Get an account in minutes at joinatmos.com.

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