🌎 Inflation Reduction Act’s climate tech impact #111

A breakdown of the IRA’s spending by climate vertical and likelihood of moving innovation

Happy Monday!

In a late July surprise action by senators (and the activists tirelessly nudging them), the Inflation Reduction Act claws the US back from being way off track from the Paris Accords. We published the definitive tl;dr on Friday in a Q&A with the Rhodium Group. In this issue, we zoom in on how the bill shapes climate tech innovation with a line-by-line breakdown into CTVC’s 7 climate verticals. While it doesn’t get us to Paris targets, it does give a pretty meaningful accelerant, particularly at the bookends of venture capital’s involvement via innovation funding and customers’ tax incentives.

In funding this week, EnergyX raised $450m for sustainable lithium extraction, Octopus Energy raised $225m for large-scale renewables, and Enko Chem raised $70m for crop health; in addition to a small spate of acquisitions and joint ventures primarily across EVs and Europe.

In more money news this week, the Senate approved a vast spending package for economic competitiveness including research into domestic semiconductor manufacturing, quantum computing and AI; a midwest transmission expansion breaks records; and the Biden administration commits to planting a billion trees.

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InspIRAtion for climate

Waiting around for Manchin’s fickleness may have finally paid off. In a surprising turn of events, Senators Chuck Schumer and Joe Manchin announced a $370B climate and health bill: the “Inflation Reduction Act of 2022” (turns out reducing inflation is more enticing than building back better).

The $370B surprise bill dropped a goodie bag of climate tech provisions across a mix of direct investment, tax credits, and research funding - putting the US back on track to ~80% of the way to meeting our Paris obligations. [Make sure to check out our Friday interview with Rhodium Group who peg the IRA’s impact at a 31-44% net US GHG cut below 2005 levels by 2030.]

This accelerates everything - and makes it cheaper too. Shayle Kann sums up the impact of the 725 pages best:

We’ve scoured the bill to highlight specific accelerants for climate funders and founders by our seven key climate verticals, and which sub-sectors most stand to benefit. We’ll continue to update the line-by-line financial breakdown as new announcements come in.

See our tracker below:

Key highlights include:

⚡ Energy

  • $30B in production tax credits for solar panels, wind turbines, batteries, and critical minerals processing
  • $10B investment tax credit to build clean technology manufacturing for electric vehicles, wind turbines, and solar panels
  • $27B greenhouse gas reduction fund to accelerate climate technologies
  • $500M in the Defense Production Act for heat pumps and critical minerals processing
  • $900/ ton methane fee on oil and gas methane leaks ramping to $1,500/ ton by 2026 and $850m for funding methane monitoring and reduction
Who stands to benefit: nuclear (Commonwealth Fusion Systems), clean hydrogen (Electric Hydrogen), carbon capture and storage (Svante), wind and solar power, methane monitoring (Project Canary)

🚗 Transportation

  • $7,500 tax credit for new EVs and $4,000 for used EVs, plus tax credits for commercial EVs, EV charging, biodiesel and renewable diesel, and aviation fuel
  • $20B to build new clean vehicle manufacturing facilities and $2B to retool existing auto plants to manufacture clean vehicles
  • $3B for electrifying USPS delivery fleet
  • $3B for zero-emission equipment and technology at ports
  • $1B for zero-emission trucks and buses
Who stands to benefit: US-based EVs (Rivian), EV charging cos (Chargepoint), battery manufacturing (6K), critical minerals extraction (Lilac Solutions), low-carbon fuels and SAFs (Infinium, Lanzajet)

🏠 Built Environment

  • $9B in consumer home energy rebate programs for home electrification and energy efficient retrofits
  • 10 years of consumer residential energy tax credits for heat pumps, rooftop solar, HVAC, and water heaters (dive deeper in this thread)
  • $1B grant program to improve energy efficiency and climate resiliency in affordable housing
Who stands to benefit: Residential electrification (Blocpower), Heat pumps (Dandelion Energy), Insulation (Sealed), Building efficiency (75F)

💨 Carbon

  • Extension and modification of the Carbon Capture tax credit (dive deeper in this thread here)
Who stands to benefit: Direct air capture (Climeworks), point-source CCS (Carbon America), carbon storage

🏭 Industry

  • $5.8B for the Advanced Industrial Facilities Deployment Program to reduce emissions from chemical, steel and cement plants
  • $5.7B of federal procurement for low-carbon material investments
Who stands to benefit: industrial heat (Rondo Energy), point-source CCS, other low-carbon alternatives for producing industrial goods (Boston Metal, Brimstone Energy)

🌾 Ag & Land Use

  • $20B to support climate-smart agriculture practices and conservation
  • $5B to support reforestation, conservation, and wildfire prevention
  • $2.6B in grants to conserve and restore coastal habitats
Who stands to benefit: Regenerative ag (Indigo Ag), wildfire prevention (Gridware), reforestation (DroneSeed), ecosystem restoration (Vibrant Planet)

👊 Environmental Justice

  • $5B EPA funding to reduce climate pollution
  • $6B to invest in community led environmental health projects and support neighborhood equity, safety, and transportation access
Who stands to benefit: air pollution monitoring (Aclima)

Deals of the Week (7/25-7/31)

⛏️ EnergyX, a Fort Lauderdale, TX-based company developing technology for sustainable lithium extraction, raised $450m from The Global Emerging Markets Group.

Octopus Energy, an England-based large-scale renewable energy platform raised an additional $225m Canada Pension Plan Investment Board.

🌾 Enko Chem, a Mystic, CT-based crop health company, raised $70m in Series C funding from Nufarm, TO Ventures Food, Rabobank Food & Agri Innovation Fund, Novalis Life Sciences Germin8 Ventures, Finistere Ventures, Endeavor8, Eight Roads Ventures, and the Bill & Melinda Gates Foundation.

🚗 Onto, a U.K.-based EV subscription startup, raised $60m in Series C funding from Legal & General, Cerebrum Tech, Campden Hill Advisers, Alfvén & Didrikson, and ADV.

🌱 Arable, a San Francisca, CA-based sustainable farming company developing field intelligence for agriculture raised $40m Series C funding from Galvanize Climate Solutions, Tridon, S2G Ventures, Qualcomm Ventures, Prelude Ventures, Middleland capital, M2O, iSelect, and Ajax Strategies.

☀️ VoltStorage, a Germany-based company providing solar energy storage systems, raised $24.5m in Series C funding from Cummins Inc.

❄️ Blue Frontier, a Fort Lauderdale, FL-based sustainable air conditioning company, raised $20m in Series A funding from Breakthrough Energy Ventures, 2150 Urban Tech Sustainability Fund and VoLo Earth Ventures.

🌎 Altruistiq, a U.K.-based sustainable data management platform, raised $15.3m in Seed Funding from Molten Ventures, and Norrsken VC.

⛓️ Topl, a Houston, TX-based blockchain platform enabling businesses to build sustainable supply-chain applications, raised a $15M Series A round led by Mercury and Cryptology Asset Group.

👖 Huue, a San Francisco, CA-based bio-based dyes company reducing chemical usage in the denim supply chain, raised $14.6m in Series A funding from Material Impact, HSBC Asset Management’s Climate Tech VC, SOSV’s IndieBio, and iGlobe Partners.

🏘️ BrainBox AI, a Canada-based autonomous building startup optimizing energy consumption, raised $6m from Export Development Canada.

🏭 Clarke Valve, a North Kingstown, RI- based developer of energy-saving shutter valves raised $5m in Series D funding from Saudi Aramco Energy Ventures, OGCI Climate Investments, New World Angels, Flowserve, Chevron Technology Ventures.

🔋 Enzinc Inc, a Richmond, CA-based zinc battery developer, raised $4.5m in Seed funding from 3×5 Partners.

Hgen, a Los Angeles, CA-based startup providing green hydrogen for decarbonization efforts, raised $2m from Founders Fund, Fontinalis Partners, and Climate Capital.

🌾 Crop Biome, an Ireland-based agritech startup developing resilient crops through formulating microbes into biological products, raised $1.33m in Seed funding from Halo Business Angel Network, Enterprise Ireland HPSU, and DeepIE Ventures Management Co.

🌽 Akorn Technology, a Berkeley, CA-based company developing edible coatings for produce through upcycle corn by-products, raised money from UM6P in a private venture round.

Exits & New Funds:

Connecticut Innovations, is launching a $50m climate tech fund aimed at investing across numerous verticals including energy, mobility, food and ag, water, circular economy, nature-based solutions and more.

Ardian, Groupe Casino, Bpifrance and Tikehau Capital, agreed to jointly acquire a majority stake in GreenYellow, a French decentralized energy company, valuing the company at $1.43b.

Next.e.Go, a Germany-based EV company, agreed to merge with Athena Consumer Acquisition Corp at a $900m valuation.

Forza X1, a Fort Pierce, FL.-based electric boat developer, is raising $15m, finalizing a market value of $50m.

Agreena, a Denmark-based carbon certificate trading platform acquired Hummingbird Technologies, a UK-based firm developing remote sensing to scale sustainable agriculture.


In the News

A big week for Congress, the Senate approved a sprawling innovation and economic competitiveness research package for the Department of Energy and National Science Foundation. This includes $52B in direct spending aimed at bolstering domestic semiconductor manufacturing, along with more than $200B in research authorizations like quantum computing and AI.

The House Appropriations Committee released their spending for the next fiscal year, with billions of dollars proposed for carbon management, agriculture and forestry, and technological solutions. Carbon180’s Twitter thread breaks down the line items, noting that the spending package will continue to shift once the Senate releases their proposal.

The DOE Loan Programs Office has been busy. LPO announced the closure of its first loan from the Advanced Technology Vehicles Manufacturing Loan Program since 2011, with $102.1M to Syrah Technologies for expanding graphite anode production. LPO also announced a conditional $2.5B loan to Ultium Cells, a GM and LG Energy JV, to finance 3 battery gigafactories.

The Midwest Independent System Operator (MISO) approved a $10.3B transmission plan to support 18 new transmission lines, enabling 53 GW of wind, solar, hybrid and stand-alone battery projects. A big milestone, as it's the single largest clean energy transmission expansion in US history.

The Biden administration reaffirmed executive actions to protect communities from extreme heat and dangerous climate impacts including the launch of heat.gov, a website with forecasts and tips meant to help municipalities prepare for extreme heat.

Biden’s administration also stated the government will plant more than one billion trees across millions of acres of burned and dead woodlands in the U.S. West over the next decade.

The Treasury Department is launching a program to help financial regulators understand how climate change can pose risks to financial stability. The new Climate Data and Analytics Hub will boost access to climate and financial data, as well as computing tools and analytics.

The Nuclear Regulatory Commission certified NuScale’s small modular nuclear reactor design for use in the United States, capable of producing up to ~600 MW of electricity.

Buoyed by high oil and gas prices, the O&G sector is expected to have swelled earnings by more than 250% in the second quarter. Exxon Mobil and Chevron reported record profits, while Shell and TotalEnergies also reported a combined $21B in profits. Meanwhile, coal is also on the uptick, with IEA’s new coal consumption forecast slated to rise this year.


Pop-up

Seaweed CDR needs kelp. A new study from the University of Maine shows that seaweed aquaculture is still many times more expensive than the DoE’s $100/ton target.

Making vegains: a new analysis by BCG suggests that investments in alternative proteins may drive a higher ‘impact on capital employed’ than spending on decarbonizing transportation and buildings.

And more from BCG: the consulting firm released a report on the role AI can play fighting climate change.

One for the wishing well: Lowercarbon’s carbon removal wishlist has us searching for a climate genie.

“Vital but limited” - the Energy Transitions Commission details the role carbon capture must play in the road to net-zero by 2050.

The Huffington Post outlines how shutting down nuclear and coal plans has made blackouts and brownouts more likely. How do we fix that while keeping coal offline?

So many cattle died of heat exposure in last week’s heatwave in Kansas that the infrastructure to deal with their bodies was completely overwhelmed.

Is putting a price on carbon the most effective way to decarbonize power? New research suggests that other policies like a clean energy standard could do just as well.

ESG isn’t as easy as ABC. The Economist (paywalled) writes that lumping environmental, social and governance issues all in one score sets conflicting goals for companies.

Web 3 decentralization takes on science.

A new book by Henry Sanderson captures the different faces of the resource revolution.

Watt it takes with Andrew from Antora.

How green hydrogen might save a coal town in Utah.

Raise the roof for Upward Labs’ first cohort of companies participating in the Net Zero Lab, a program designed to identify innovative solutions to decarbonize real estate.

The Carbon To Value year 2 cohort has been announced: congrats to Carbon Upcycling, Lydian, and all the startups selected!

“New generation of data scientists could be our best weapon against climate change”.

Window-shopping for energy:  the researchers and start-ups developing solar windows.


Opportunities & Events:

💡 American-Made Solar Prize: Apply for a share of the $4.1M prize pool, designed to energize US solar innovation. Open to individuals and entrepreneurs ready to advance conceptual solar solutions toward product realities.

🗓️ Connecticut Innovations VentureClash: Apply by August 20 for a chance to win $5,000 to travel to New Haven and pitch at VentureClash in front of climate tech investors, policymakers, and other startups.

💡LA CleanTech Incubator - Clean Transportation Pilot: Apply by August 5 to LACI’s procurement of innovative mobility solutions for e-bikes and EV car sharing in LA, to join the ranks of companies like Envoy, Zoomo, Automotus, and Pedal Movement.

💡Dalberg Advisor’s Climate Innovation Hub 2022: Apply by August 1 for a chance to work with the Dalberg team in a 2 hour workshop to collaboratively test and analyze your emerging climate solution.

💡2022 For ClimateTech Global Innovation Challenge: The most impactful and equitable solutions in climate tech should apply by August 15 for a chance to win $10,000 and consultation from climate tech experts. This year, they are offering three different prize categories: Women in ClimateTech, Future of Buildings, and Web3 and Climate.


Jobs

Head of Productization @Loam Bio

Director of People @Remora

Senior Investment Professional, Climate Tech @Princeville Capital

Lead Mechanical Engineer @Carbon Ridge

Climate Growth Equity - Analyst/Associate @Blue Earth Capital

Strategy Lead, Carbon Removal; Project Development Lead @Origen

Senior Membrane Chemist @Captura

Associate @ArcTern Ventures

Founder, Natural Capital Markets Operating System @Deep Science Ventures


Feel free to 📩 send us new ideas, recent fundings, events & opportunities, or general curiosities. Have a great week ahead!

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