⏰ Mandatory Emissions Disclosure Just Arrived
Vol 65
This newsletter aims to separate the signal from the noise for investment in all things sustainable transportation: Electrification, mode shift, active and public transit, and mobility aggregation, across both people and goods movement.
This week I’ll be at Move America in Austin, Texas (Sept 26-27) and in Los Angeles for the Greentech Festival (Sept 28). Let me know if you’ll be there.
🌱STARTUP WATCH: Sustainable mobility startups (pre-seed or seed) to keep an eye on
Cardino (Germany): Digital platform for buying and selling used EVs
Charge Gully (United Kingdom): Curbside charging solution for buildings
DutchX (New York, USA): Sustainable delivery fleet operations
Electro-Active Technologies (Tennessee, USA): Clean hydrogen generation from organic waste
Fingreen AI (France): ESG reporting for private markets
Liquid Charge (Texas, USA): Carbon-neutral, liquid-fueled range extenders for battery electric vehicles
New Frontier Aerospace (Washington, USA): Renewably fueled, hypersonic VTOL aircraft to deliver cargo and passengers
Scalvy (California, USA): Modular e-powertrain platform for medium and heavy-duty trucks
ToZero (Germany): Lithium-ion battery recycling
ZeroMission (California, USA): Analytics software for EV fleets
💰FUNDING: Capital raises from startups previously featured in Startup Watch
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📰QUICK HITS: Notable news from the last week
👩🏽⚖️Government, Policies & Cities
🅿️ New York City Mayor Adams proposed putting an end to parking minimums. That’s one to celebrate! For a reminder on parking minimums, see the deep dive here.
🇧🇪 Brussels launched a new micromobility tender. Vendors not selected will have only three weeks to remove their vehicles from the city.
⚓️ The Ports of Los Angeles, Long Beach, and Shanghai unveiled their green shipping corridor plan. A good reminder that lots of maritime and aviation falls outside national borders and can leverage city-to-city relationships.
🛢️ California is suing five oil majors for their misleading statements on climate risks. The compliance cost of being in the oil & gas business rises ever higher.
🇺🇸 US President Joe Biden will join the United Auto Workers (UAW) picket line next week. This is a historic first. See Vol 63 deep dive for more context.
🇬🇧 UK Prime Minister slashed part of the country’s high-speed rail program and pushed back a commitment to phase out sales of internal combustion engine cars from 2030 to 2035. Automakers are frustrated with the changing goalposts, but the original 2030 guidance was confusing and poorly worded.
🔬Markets & Research
🛬 The US National Renewable Energy Lab (NREL) shared an assessment on the electrification of regional air. Regional airports will need on-site solar to power the planes, but in all cases modeled, the amount of solar needed never exceeded 1% of available land.
🧑🏽💻Do remote or hybrid workers have a lower carbon footprint? Cornell and Microsoft teamed up to analyze real-world results and found some surprising results, including a negligible carbon benefit from one day work from home, but a significant benefit at two or three days from home.
⛴️ A new study from DNV looks at pathways for maritime decarbonization by 2050. Onboard carbon capture and nuclear propulsion make the consideration list.
⛽️ The US DOE launched a Request for Information (RFI) on how the nation’s supply chains can meet future demand for sustainable aviation fuel (SAF). A good opportunity for startup founders to speak up.
🏭 Corporates & Later Stage
📲 Chinese EV maker Nio just launched a smartphone. If the “Chinese Tesla” succeeds in the smartphone business, a Tesla-Apple combination becomes a bit more likely.
🥊 The UAW expanded strikes against GM and Stellantis, but spared Ford. Factory strikes mean automakers miss out on potential customers; expanding the strikes to parts warehouses means that current GM and Stellantis customers will start feeling the pinch once they head to a dealer for repairs.
📉 Volvo Cars announced it will phase out diesel engine production next year. Credit to Volvo Cars for being one of the most forward-looking legacy carmakers.
🚛 Volvo Trucks announced a 24-hour per day electric heavy-duty truck deployment with Danfoss. Key is that the duty cycle allows for 15-minute recharges during deliveries.
🚄 Brightline launched one of the most ambitious high-speed rail experiments in America, linking Miami to Orlando. The two cities currently have 401 direct flights per week. Keep an eye out for that number to drop if Brightline gets traction.
🚕 Uber threatened to pull out of hundreds of cities over the upcoming EU vote on worker classification. After more than a decade of the gig economy, we still need a third type of worker classification which is neither employee nor independent contractor.
🛴 Micromobility operator Bird acquired rival Spin from Tier, potentially to prevent Bird getting delisted from the NYSE and to help the German-based Tier wrap up its own sale to Bolt or Voi. It’s consolidation musical chairs!
🐣 Startups & Early Stage
♻️ Redwood Materials expanded to Europe by acquiring Redux Recycling. In the battery recycling startup space, there’s Redwood and then there’s everybody else.
💧To survive, French hydrogen car startup Hopium booted its founder and is dramatically slashing costs (article in French). The global market for hydrogen-powered passenger cars is a rounding error.
🤖 Estonian startup Clevon has delivered over a thousand packages with DHL Express via its autonomous robot in Tallinn. For last-mile delivery, the traditional van has a lot of competition these days, whether by e-cargo bike or autonomous robot.
DEEP DIVE: Mandatory Scope 3 Disclosure Just Arrived
When all climate eyes were on New York last week, California’s Governor gleefully confirmed that he would sign a bill (SB 253) to force emissions disclosure for large companies doing business in California.
Coupled with similar efforts in the EU, the net impact is that any company of any meaningful scale will very soon be forced to annually disclose its entire emissions portfolio, irrespective of what ends up being decided in Washington, DC.
Given how complex the calculations are, California has astutely required different hurdles for scopes 1 and 2 vs. 3. There won’t be penalties for inaccurate scope 3 data if the disclosures were made in good faith and with a reasonable basis; the accuracy hurdles are much higher for scopes 1 and 2.
So what happens next?
An “oh whoops” moment for a lot of businesses as they start tabulating their scope 1, 2, and 3 across standardized methodologies and compare that to their long-term climate promises. Expect some modifications to previously shared PR-heavy commitments; those lofty goals now need to meet real numbers each year.
An “oh wow” moment for a lot of publicly traded businesses as equity analysts start incorporating climate risk and carbon efficiency in their stock price targets.
A “that’s unfair” moment for manufacturers (think GM, Airbus, Hyundai Heavy Industry) versus the services companies (Uber, Lufthansa, Maersk) as the manufacturers grapple with their significantly higher scope 3 realities.
An “oh crap” moment for many businesses below the $1B California threshold who find out they still have to rigorously track their emissions to stay on the procurement list of their larger downstream customers.
A “who me?” moment as many employees are asked to start tracking their business travel and commute behavior in more rigorous ways. Cash out parking anyone?
A “new mode” moment as supply chains make a marginal shift away from aviation to less emissions-intensive rail and maritime. Expect more SVPs of supply chain to learn how to simultaneously balance budgets on both cost and carbon.
A “not that too” moment as insurers and rating agencies start incorporating the now-standardized data into their evaluation methodologies.
This is truly a watershed moment. We can’t improve what we can’t accurately measure. Like it or not, the combined efforts of the EU and California just kick started the measurement era.
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Hi Alex, thanks for the wonderful deep dive. I am really amazed and excited with steps taken by California Govt. Indeed, this is a need of an hour. As a consultant in one of the Big 4, I believe there is tremendous opportunity out there providing assurance services to investors/businesses on the emission performance. Further, there would be requirement of tools which makes effort towards estimating emission footprint standardized, consistent and transparent. Consultants will also have a role to play here. At the end, I just wonder how much difficult it will become for consultanting firms disclosing their emissions since majority of it can be contributed to scope 2 and scope 3 activities - Business Travel, Lease and Commutes.