Hydrogen-powered flight inches closer to reality as Amazon and Gates' cleantech fund back fuel-cell startup ZeroAvia
Happy Friday, and welcome to Insider Energy, a weekly energy newsletter brought to you by Business Insider.
Here's what you need to know:
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- You can reach me at bjones@businessinsider.com. I welcome feedback and story tips.
- Save the date! We're hosting a virtual roundtable about building a clean energy economy on the morning of March 8. More on that below.
It snowed a lot this week. My dog lost his mind. Now, like all good things, the snow has turned to brown slush.
Also this week, several top oil companies reported earnings, giving us a more complete picture of the financial fallout from the pandemic. There were no major surprises, but the negative numbers are big.
We'll get to that, but first: A look at an early winner of the hydrogen boom.
Hydrogen planes inch closer to reality with funding from Amazon, Shell, and Bill Gates' cleantech fund
When hydrogen gas inside the Hindenburg exploded in 1937, the era of airship travel came to an end. Now the very same gas is reentering the aviation industry. And this time it's kicking off a new era - one of zero-carbon travel.
This week: I profiled ZeroAvia, an ambitious startup working on hydrogen-powered aircraft. It recently raised money from huge names including Amazon, Shell Ventures, and Bill Gates' climate tech venture fund, Breakthrough Energy Ventures.
- It's the first bet Amazon and BEV have made on the promise of hydrogen gas.
- We chatted with ZeroAvia's founder about how he convinced investors to bet on a risky tech, and why hydrogen is the aviation fuel to beat. Some experts say they agree.
Hydrogen's moment: Is right now. The gas is quickly building a reputation as a linchpin in the transition to cleaner energy, and investors are now looking for where to place their bets. Some aren't having much luck.
- "We look aggressively," Vinod Khosla, founder of Khosla Ventures, told me last fall. "We haven't found somebody with breakthrough technology. There's a lot of incremental technologies there, but nobody has a real breakthrough. If you find one, have them call me."
- Investors we spoke to say hydrogen used for aviation, heavy-duty vehicles, and industrial processes, such as steelmaking, is most promising.
Big losses for Big Oil
The results are in: Major oil companies, surprising no one, suffered steep financial losses in 2020.
One big number: $56 billion
- That's the combined full-year loss of five of the top companies including Exxon, Chevron, BP, Shell, and ConocoPhillips. Exxon and Shell topped the list.
- Last year, these firms earned about that same amount, combined.
Only up to go? Probably, at least until demand for oil and gas begins a more permanent decline.
- The price of oil is rising fast as demand notches up. Brent is trading at close to $60 a barrel, erasing year-over-year losses.
- Companies spent 2020 lowering the cost of production, so they're positioned to succeed even if oil prices don't go much higher.
- That's made some investors extremely bullish on the traditional energy sector. Bank of America's chief oil researcher told us why he thinks oil and gas will have a good year and shared 15 of his top picks.
But: We have a new president who's pushing clean energy and major companies are setting targets to reduce their reliance on fossil fuels.
- The "decarbonization newsflow," as Goldman Sachs put it in a recent note, is souring investor sentiment in oil and gas companies.
- Among the news that investors see as downside risk is litigation surrounding pipelines and GM's announcement that it will phase out gas-powered cars.
- That's "widened the gap in sentiment between clean energy and traditional energy," Goldman Sachs analysts wrote. Residential solar is most in favor, they said.
Read more: Meet the 11 top execs helping CEO Mary Barra make General Motors all-electric by 2035
Exxon doubles down on carbon capture but activist investors remain unsatisfied
Exxon this week announced it was launching a new business unit focused on low-carbon technologies. (We've now updated our org chart to include the new division.)
What to know: The unit, which Exxon launched after investors pressed the company to move faster to address climate change, will initially focus on carbon capture and storage.
- No surprises here: Exxon has been developing carbon capture projects for a while now.
- The technology is attractive to oil companies in part because it doesn't require that they rewrite their business models and pump less crude from the ground.
How investors responded: They were nonplussed.
- A coalition of investors with over $2.2 trillion in assets said Exxon's plan to build out carbon capture capabilities isn't credible, pointing to a carbon-capture project that the company delayed.
- Activist investor Engine No. 1 had a similar reaction: It's "poor long-term planning to rely almost exclusively on the idea that carbon capture will become scalable and affordable soon enough to allow for continued oil and gas production growth for decades to come under a Paris-compliant trajectory," the group said.
- But investors aren't jumping ship: The company's stock is up 10% this week and 20% since the start of the year.
What's more: Exxon also announced a new board member this week - Tan Sri Wan Zulkiflee Wan Ariffin, former CEO of the Malaysian state energy company Petronas.
- A board shake-up is another demand from activist investors.
- Hedge fund DE Shaw had been in talks with Exxon about making changes to its board, Bloomberg reported ahead of the announcement. Engine No. 1 has also launched a campaign to elect four new directors.
- On Thursday Bloomberg reported that the company is considering also appointing Jeff Ubben, who runs Inclusive Capital Partners, to the board.
5 things in energy politics
- Jennifer Granholm's nomination as Energy Secretary cleared a key Senate committee and now advances to the full Senate, where she is expected to be confirmed.
- A new report by left-leaning groups Evergreen Action and Data for Progress reveals how Senate Democrats can clean up the electric grid by 2035, even with a razor-thin majority.
- Senate Democrats reintroduced legislation for a $100 billion national "green bank." It would make loans and investments in technologies aligned with Biden's climate agenda, Greentech Media reported.
- Agriculture Secretary nominee Tom Vilsack said that he plans to prioritize efforts to address climate change and food insecurity, during his confirmation hearing on Tuesday, Insider's Ayelet Sheffey reports.
- Senator Gary Peters, a Michigan Democrat who advocates for strong climate change policy, recently invested up to $15,000 in a power company that primarily burns fossil fuels, according to a stock purchase disclosure, Insider's Dave Levinthal reports.
Save the date: Building a clean-energy economy
We're hosting a virtual roundtable, as part of our Transformers series, on how to build a clean energy economy. Save the date!
When: March 8, at 10:00 am (NYC time)
Where: Online, of course. We'll send out more information next week.
Who: The roundtable will feature Shell's head of new energies, the founder of Form Energy, Facebook's renewable energy lead, and Oliver Wyman's head of energy.
That's it! Have a great weekend.
- Benji
Ps. This was a serious storm. Here's what it looked like in Park Slope.
