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This weekly report covers all aspects of the major changes facing industry, from climate change initiatives through ESG investing, and includes regular work on recycling, renewables, energy transition and hydrogen, and carbon capture and use.  It is included as part of our comprehensive research/consulting subscription, but can also be purchased separately. 

  

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Let’s Get Together: Aligning Climate and Business Economics

“The math doesn’t work” is a regular retort when discussing many things related to ESG, energy transition, and climate – everything costs more. Governments and associated regulators should focus on mechanisms that create alignment.
This would have a greater impact on behavior and on iterating towards an acceptable finish line than guessing what a 2050/2060 solution might look like. In Bill Gates’ book, he states that we know the challenges, but not all the solutions yet.
If it becomes both economically and socially bad to emit greenhouse gas and to create plastic waste – environmental and economic goals are aligned. Nothing will be achieved without some economic alignment and possible economic sacrifice.

Public Image: Driving Capital Investment and M&A

We will cover the power issues in Texas – and which have delayed this report – next week – once the dust settles. There are lots of strong opinions on what went wrong at the moment, and not much analysis – we will provide some ideas
We focus on valuation this week and what it may do for the mountains of available capital looking for an ESG home – many are looking to shine a bright (socially conscious) light on their image and investment, regardless of cost.
We also take a look at both hydrogen and CCS as they both figure meaningfully in the objectives of both Shell and Bill Gates’ investments – this is also likely to be part of the Texas power solution (but more on that later).

“Ça Plane Pour Moi!” Or does it? It is not at all clear how polymer demand will be met by 2050

The announcement from Coke this week, targeting recycled PET content in bottles is timely. Still, it begs the question as to whether its targets are reasonable, given that everyone else is looking to use the same recycled product – we think the math does not work – not at the Coke level, but the industry level – we explain why.
The most recent EIA energy use and source forecast for the US was just released. While none of the expectations are aligned with a more climate-friendly administration or investor base – there is still valuable and helpful content.
We focus on the difference between the marginal cost of power and its value.

Help! Corporate Options for a Climate Centric World

Despite ever louder calls for uniform metrics and consistent reporting, large elements of the ESG investing process remain clouded in inaccuracy and inconsistency – and consequently ripe for abuse or misuse.
The flow of money into ESG focused investment vehicles continues unabated, driving the increase in challenging valuations and increasing the incentive to “greenwash” for both companies and investors looking to deploy cash. The need for better structure and clearer definitions becomes more imperative each day.
We take a look at the battery/hydrogen debate and conclude that hydrogen in passenger transport applications will be a side show without blue hydrogen now.

Planet Claire – Where The Idealists and Extremists Live

It is imperative that regulators and investors recognize the need for “bridges” to a lower or net-zero carbon world. These bridges are not lifejackets for the oil and gas industry, they are job creators and will limit energy price inflation. CCS is one of them – continued growth in US LNG is likely another.
Plastic recycling is constrained by economics – it is too expensive relative to virgin polymer and a different purchaser mindset is needed. Even if recycled polymer pricing was based on costs, it would likely still not create enough supply to meet potential demand.
We note some meeting of the minds – or at least the potential, both on controlling or pricing emissions and on ESG measurement standardization. Both are good steps in the right direction in early 2021.