The Essex GEOS Clean Slate Issue 3

The Essex GEOS Clean Slate

Essex GEOS | Global Environmental Opportunities Strategy

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A bi-weekly synopsis of articles and blogs on new technologies, recent developments and other items of interest in the clean tech and new energy arena. This newsletter is intended to provide food for thought and is not intended in any way as an investment recommendation in any of the companies or technologies mentioned herein. Please see further disclosures at the end of this newsletter. Please visit our website at www.essexinvest.com. By clicking on the links below, you will be redirected to websites maintained by third party provider

 

ISSUE #3:  March 6, 2018

Divestment: From Schools to Countries

While small colleges in the Northeast and Pacific Northwest were the early leaders of fossil fuel divestment, the trend is certainly gaining in scale. In January, New York City Mayor de Blasio announced that New York will divest its city pension funds from the investments in the fossil fuel industry. A few weeks ago, divestment initiatives gained traction with the news Ireland will become the first country to fully divest from fossil fuels. The Irish Parliament passed the legislation for the Ireland Strategic Investment Fund, part of the Republic’s National Treasury Management Agency:

http://www.independent.co.uk/news/world/europe/ireland-votes-divest-fossil-fuels-climate-change-world-first-country-parliament-renewable-energy-a7549121.html

 

Another Day, Another Ban

Germany’s senior-most court recently ruled that cities in Germany have the right to ban diesel cars from roadways.  This is a significant development and is a result of increasing evidence of adverse health and environmental effects from diesel emissions and a backlash against Volkswagen and other auto manufacturers that cheated diesel emissions tests.  Nearly a third of vehicles on the road in Germany are diesel powered and would need to be replaced to meet any bans that are enacted because of this court ruling.  Stuttgart and Dusseldorf are the first major cities to ban diesel vehicles but this ruling could also have spillover effects in other EU cities and countries.  The anti-diesel movement is powerful and we expect this to provide another layer of support for electric vehicle adoption.

https://www.reuters.com/article/us-germany-emissions/diesel-cars-can-be-banned-from-german-cities-court-rules-idUSKCN1GA2XD

 

These Things are BIG

Offshore wind is forecast to be one of the fastest areas of growth in renewable energy over the next decade.  According to a Goldman Sachs research report published in October 2017, offshore wind installed capacity is expected to grow nine-fold through 2017-2030.  Offshore is attractive due to better wind conditions (higher and more consistent wind speeds with less seasonality), limited visual and noise impacts and no constraints on size due to transportation challenges.  The costs of offshore wind installations are expected to decline rapidly in the next decade, mainly due to technological advancements.  Chief among these advancements is an increase in the size of the wind turbines.  GE has just announced its newest offshore wind turbine, the Haliade-X, a 12 MW machine.  To help you understand the size of this behemoth:  each blade is longer than a football field and the tower is taller than two football fields placed end on end.  We expect market leaders MHI Vestas and Siemens Gamesa to announce even larger offshore turbines in the near future:

https://www.greentechmedia.com/articles/read/ge-to-deploy-the-worlds-most-powerful-offshore-wind-turbine-in-2021?utm_source=twitter&utm_medium=social&utm_campaign=gtmsocial#gs.g8SWhy8

 

Why are they still trying?

Fuel cell technology has been around for a number of years and has carved out a respectable business in niche applications such as powering material handling equipment in warehouses.  Fuel cells are appealing since they are powered by a readily abundant fuel source (usually hydrogen) and there are no environmentally harmful outputs.  Like many other emerging technologies, the challenges have been cost and the need for infrastructure.  As we have written about extensively, we believe that electric vehicle adoption is on the cusp of significant acceleration due to a number of factors: appealing new models, declining battery prices, increasing customer demand and meaningful government support.  Of course, with this growth of electric vehicles comes the need for electric charging infrastructure.  Our biggest concern with fuel cells for use in vehicles is the need to build out a third infrastructure (in addition to the existing petrol delivery/distribution network and the growing electric charging network).  For some reason, Toyota and other Japanese auto manufacturers aren’t ready to give up on fuel cell technology just yet.  We aren’t sure if this stubbornness is simply because they have already invested huge amounts of money pursuing fuel cells and don’t want to admit defeat, or if they really believe it is a viable technology for vehicles.  We are doubtful the effort will be successful:

https://www.automotiveworld.com/news-releases/japan-h2-mobility-llc-established-eleven-companies-accelerate-deployment-hydrogen-stations-japan/

 

It Ain’t Coming Back

A key tenet of the Trump Administration’s campaign was a pledge to bring job growth back to coal country.  At the time, we were skeptical that coal would see a resurgence simply due to two key facts:  the majority of Americans are against the burning of coal due to the adverse environmental impact and, more importantly, coal-based power just does not make economic sense anymore.  President Trump has tried to improve the odds of growth in coal jobs:  he appointed a strongly anti-renewables head of the EPA, his Administration signed a repeal of the Clean Power Plan, and he withdrew United States support of the Paris Climate Accord.  Despite these efforts, coal continues to lose market share to natural gas and renewables as a source of power.  We don’t see this trend ending anytime soon.

https://thinkprogress.org/coal-plants-now-shutting-down-faster-under-trump-than-obama-4da9d4554ec0/

 

China Leads the Way

While our current Administration tries to re-kindle coal, they are simultaneously trying to stop clean tech progress such as energy efficiency projects.  Disruptive technology is successful because it is cost effective and improves productivity globally.  Despite the lack of support from Washington, global clean energy investment was over $333 billion in 2017, as referenced in the just-released Sustainable Energy in America Factbook 2018 from Bloomberg New Energy Finance (BNEF).  This is the second greatest amount on record.   In the U.S., 2017 clean tech investments tracked 2016, but the end markets were more focused on wind and the smart-grid, as opposed to solar power. China made the greatest clean tech investment strides last year, with investment increasing 24%:

https://about.bnef.com/blog/sustainable-energy-america-factbook-2018/

 


Important Disclosures:

The opinions and analyses expressed in this newsletter are based on Essex Investment Management Company, LLC’s (“Essex”) research and professional experience, and are expressed as of the date of our mailing.  Certain information expressed represents Essex’s opinion and assessment at a specific point in time and is not intended to be a forecast or guarantee of future results, nor is it intended to speak to any future periods.  Essex makes no warranty or representation, express or implied, nor does Essex accept any liability, with respect to the information and data set forth herein, and Essex specifically disclaims any duty to update any of the information and data contained herein.
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An investment in securities is speculative and involves a high degree of risk and could result in the loss of all or a substantial portion of the amount invested. The reader should not assume that investments in the securities described were or will be profitable. Past performance is not indicative of future results.

The information and data in this newsletter does not constitute legal, tax, accounting, investment or other professional advice.  Certain information contained herein has been obtained from third party sources and such information has not been independently verified by Essex. No representation, warranty, or undertaking, expressed or implied, is given to the accuracy or completeness of such third party information

Any projections, market outlooks or estimates contained herein are forward-looking statements and are based upon certain assumptions. Other events which were not taken into account may occur. Any projections, outlooks or assumptions should not be construed to be indicative of the actual events.