It’s the first year of what we hope is an annual event: Nat Bullard has released his first climate trends report. He was the chief content officer at BloombergNEF until last year, and now is a senior contributor at BNEF and Bloomberg Green. He’s also a venture partner at Voyager Ventures.
There’s so much in this 141-slide deck that we’ve split the conversation into two episodes. In this first part, Shayle and Nat dig into topics like:
- Land use. For example: we grow 40% of the U.S. corn to offset 10% of U.S. motor gas demand. Also, despite a growing world population, land used for agriculture globally has been shrinking. What do these trends mean for alternative proteins and sustainable aviation fuels?
- ESG. In 2022, there were more anti-ESG than pro-ESG regulatory developments. And while ESG fund flows were positive last year, they’re still only a fraction of their peak in 2021. Where is ESG investment heading and should we even be putting environmental, social and governance criteria in the same bucket?
- Batteries. Battery costs rose in 2022, but battery system costs rose faster. And yet there’s still rising demand for utility-scale batteries. Meanwhile, the top ten battery manufacturers of 2022 were in Asia. What do these trends mean for the battery market and manufacturing supply chains?
Full Transcript:
SPEAKERS
Shayle Kann, Nat Bullard
Shayle Kann
Listen, you know me, I’m here for 400-slide deck, if you can get to four figures, that’s where I’m really gonna start to get impressed.
Nat Bullard
You start to run into the limits of time and space, and also of your family being like, what are you doing all of the time? Like, what are you doing at six in the morning? And what are you doing at 11 pm?
Shayle Kann
This week, my friend Nat Bullard delivers me a heaping portion of climate friendly red meat in the form of his first annual Decarbonisation Trends Report. I’m Shayle Kann. I’m a partner at Energy Impact partners where I invest in revolutionary climate technologies. Welcome. So if you’re in software tech world, or tech world in general, you’ll be more than familiar with Mary Meeker’s annual Internet Trends deck. Or if you’re an even cooler kid, maybe you’re familiar with Benedict Evan’s is own version. There are these mega annual compendiums of everything happening in tech distilled into a series of charts. It has long occurred to me that there is no equivalent really in climate tech. In fact, long ago, after we sold GTM, which was my previous company, and before I switched over to the dark side of investing at EIP, I had the idea to create one myself. I actually got through the first two slides, and then right at that time, EIP came calling and life got in the way and I never did it. Fortunately it only took another five years or so for my friend Nat Bullard to pick up the torch. You’ve heard him here before. But Nat has been around the climate tech, clean tech, whatever you want to call it sector for as long as maybe even a little longer than me. And today he’s a columnist at Bloomberg and he works with Voyager Ventures which is an early stage venture fund focused on decarbonization. He’s done it! Nat delivered 140-plus slides focused on decarbonization trends. So as you can imagine, I want to dig into it. Actually, there’s enough in there that we couldn’t fit this into one episode. So we’re going to do this as a two-parter. So what you’re hearing right now is part one out of two of my conversations with Nat Bullard about trends in decarbonization. Here’s Nat.
Nat, welcome back.
Nat Bullard
Shayle. Good to be back.
Shayle Kann
Great to have you. Very excited that you’ve finally done what you and I have talked about for years, which is created the first annual I’m calling it the first annual because I’m going to force you to keep doing it every year. First annual massive compendium of trends and decarbonisation deck. So kudos
Nat Bullard
Thank you. And I managed to keep it to a modest 140 or so slides at the moment. The challenge, of course, was that if I hadn’t cut it off at about the time that we’re recording this in early February, it would be 200 slides or than 300 or then 500. And I figure, you know, if you want to follow in the footsteps of Mary Meeker’s amazing old Internet Trends that deck that she used to do, you have to start with some modesty. You can’t start at 400 slides, you can only get there over time.
Shayle Kann
Listen, you know me, I’m here for 400-slide deck, if you can get to four fingers, that’s where I’m really going to start to get impressed.
Nat Bullard
You start to run into the limits of time and space, and also of your family being like, what are you doing all of the time? Like, what are you doing at six in the morning? And what are you doing at 11pm? And didn’t I see that slide two weeks ago? And then me coming back and being like, yes, but wait, but like, you know, they’ve been they’ve revised this data set from 1973 to 1975. And I have to therefore go back and redo all of the calculations that go with it.
Shayle Kann
Anybody who’s currently revising a dataset from 1973 to 1975 has has other problems, but let’s get into it. So I’ve of your 140-ish slides, I’ve picked a bunch that are my favorites, at least that I think present some interesting insight that either I wasn’t aware of, or that I think is worth talking through. So I’m just going to cherry pick a bunch of them, and we can talk about them. So I’ll give the slide numbers, just for the sake of anybody who wants to go read 140-slide deck themselves later. So let’s start with slide 14, which is on Agriculture and Land Use. Takeaway here is that we use I think people probably know this, but the numbers are sort of striking. We use an incredible amount of our land in the United States to grow corn that does not go toward food. So what’s the takeaway here?
Nat Bullard
That’s true. So we grow in the range of about 14 billion bushels of corn every year in the United States. Of that, last year 38% of it went to ethanol that’s being used for fuels. Which means that about 40% of the US corn crop meets about 10% of our motor gasoline fuel equivalent demand, which is pretty extraordinary. I think on a land area basis, it’s an area of land about the size of England that we’re using for this purpose, just to grow corn, just for ethanol, just to offset about 10% of our motor gasoline demand.
Shayle Kann
Yeah, that 40% number is the one or 30% is the one that’s really striking to me. That two-fifths of our corn crop goes to gasoline. I mean, you know, it’s a big number, I think, I don’t think I appreciated how big a portion of our corn crop it is. And the reason that I think it’s important, or at least interesting to talk about is that, you know, is not the ethanol thing necessarily in and of itself, because I think that’s been known for a long time. But it’s on my mind a lot, because I as I’m sure it’s true review as well, I see a real proliferation right now of new approaches to do biomass to X for decarbonization purposes. And it’s a really wide range, there’s biomass to, obviously, to biogas and renewable natural gas, there’s using biomass to produce sustainable aviation fuel. There’s just biomass carbon removal approaches, there’s a variety of different kinds. There’s biomass to biochar, which can be carbon removal, and or soil amendment or something else. And there’s others, you know, biomass to materials, all sorts of things. And the premise of all these companies and all these approaches is that we’re going to use waste biomass, which there is admittedly a lot. But the historical thing that happened is this ethanol thing with corn, where we sort of subsidized it sufficiently that it made sense to grow corn for ethanol, and then it turns out that we use a ton of land, and a ton of our corn crop for the purpose of ethanol. And so like, the fear with all this biomass to X stuff is that at some point, you start to run out of the waste. And meanwhile, these markets have taken off, you start shifting toward dedicated crop and you end up in a situation just like this. Do you think that’s like a warranted fear?
Nat Bullard
I do. Absolutely. I mean, this reminds me way back when of two things One was the food versus fuel debate that was very prevalent in the run up to very, very high oil in general commodity prices, including foodstuffs in the 2007-2008 era. So there was a big debate about about use of land, and then use essentially, secondarily of calories derived from that land, and for what purpose they were going. You know, you might offset inflation in transport fuels, at the expense of creating more inflation for human food calories. That’s one thing. The other is that you and I will also remember the time when cellulosic ethanol was supposed to be the thing that was going to dominate the liquid fuels market in the United States, if we could only bridge our way there by doing a little bit of corn ethanol first. But look, the science on this, and I’m not a deep scientist, when it comes to this is that it’s way easier to synthesize something with simple sugars than with things that are hard to digest by their nature, like lignin and cellulose. And so it’s proven to be very, very difficult to do. I think, too, when it comes to making sustainable fuels, we’re gonna find that starting with easy to work with hydrocarbons to make more complex hydrocarbons is probably, you know, just energetically easier than going for things that are very, very hard to break down and then synthesize and get into get into shape. And it will be very interesting to see what takes precedence. I guess one thing we could imagine is the competing energy input for motive power for that ethanol is an electron. And now like the thing that shouldn’t be eroding, road transport fuel demand isn’t more ethanol, but is more electrons. And that’s definitely already happening. But then the question is, does that land get converted to making sustainable aviation fuel instead? Do we simply have shift in the the kind of abstraction layer of our food versus fuel debate to all of aviation fuel demand instead of 10% of us road fuel demand? And I do think, though, that there is interesting stuff happening with every other aspect of agriculture, such as using the soil as a resource. So, you know, there are definitely ways to think of large even probably monoculture plots like would grow corn in the US as another other kind of climate resource besides just marginal substitution for a barrel of oil.
Shayle Kann
And there’s there’s lots of nuance to this, the definition of what’s waste and what’s not waste. You know, you can add multi-cropping to a place that’s currently doing mono crops. And then, you know, consider that second crop not using additional land. There’s lots of different nuances to this. And to be clear, I think, from everything that I can tell, there is an enormous volume of waste biomass. And that waste biomass is a useful resource to decarbonize either directly via just sequestering the CO2, or by turning into something useful, that displaces some other emissions. So like, we should be doing that. It’s just striking, where we’ve landed on ethanol, and it’s obviously a lesson we need to be learning as we’re considering, you know, using biomass for any new significant market, which obviously things like aviation fuel are.
Nat Bullard
I think in the American discourse, this comes up every four years in presidential primaries. It has a very sticky constituency, particularly at the Senate, not so much the House of Representatives level, because, you know, a lot of states grow corn, and they all have two senators, and it becomes a difficult thing to get away from. But I just think that it’s important, and this will be kind of a running theme throughout all of us guys that I put together, is to just collate a clear, statistically grounded picture of where we are with so many of the things that are happening in energy.
Shayle Kann
Not to get too deep into politics. But one thing that I think is is a sort of interesting little trend here is the Democrats in the US are trying to change the order of their primaries now. There’s a proposal, and it would put South Carolina first it, wouldn’t it basically it would move Iowa from first to third, I believe, something like that. And you know, I always had this like outsized influence on on politics, the United States as a direct result of that first place spot and so and that plays into politics around ethanol, actually. Yeah. 100%. All right. I don’t want to spend too much more time on agriculture but you have another slide in here a little bit later, slide 25, which I think is a more global perspective. I think it’s one that is sort of underappreciated as well, which is that actually, despite a growing global population, land use for agriculture globally has been declining for a while, which implies increased productivity, basically.
Nat Bullard
Absolutely. I mean, look, that feels like the kind of thing… I’m actually, this is a slight aside, but I’m being tasked today with writing a little bit of climate sci fi for a workshop I’m doing coming up. And this is exactly the sort of thing that if you cast forward like 10 years, it turns out that a huge amount of US energy related policy change because they moved the primaries from Iowa to South Carolina. That’s right. So we had a peak in the total percentage of global land area used for agriculture, right around the turn of the millennium, a little bit more than 37%. And let’s be clear, it hasn’t come down massively, it’s come down, maybe 1% of total global land area, but multiple billion extra people have been added to the global population in those two decades. And we’re somehow reducing the total amount of land that’s used for agriculture. It is very interesting. There are some nuances again, underneath that a lot of it has to do with changes in grazing land. But it is in general, a factor of much greater efficiency. There’s another aspect within that too, which is a huge amount of aquaculture to shifting a whole lot of food production into the ocean, where necessarily it does not take up any of the land area that we have available. But again, it’s not sort of a narrative that I think people would expect, because you have to unpack a little bit what that means what that implies, it implies greater efficiency, it implies some changes in the way that we produce certain products. It implies making sure to be aware of everything that’s happening in the ocean. But yes, there’s less land that’s being used for agriculture. And that’s more land for something else. That’s more land for urbanization as it continues and expands. It’s more room for renewable energy production. We could also argue about how much of that land that’s available for agriculture being used, could not be multi crops with wind and solar or with some other kind of productive asset over time. But yeah, we hit our peak a couple of decades ago, and that trend does not seem to be changing.
Shayle Kann
Yeah, a piece of good news. There’s also been some related reporting recently specifically, about how we’ve been doing a little bit better of late at less deforestation for the purpose of production of palm oil, which has been historically a big problem.
Nat Bullard
And we’ve also had a huge amount of reforestation take place. But you know, reforestation takes decades to obviously have much climate impact or effect. But Europe has been reforesting, large parts of northern China have been reforesting. It’s just that the effort of reforesting begins with planting seedlings and the big the big carbon uptake of it takes decades before it kicks in. But yes, we’re definitely getting greener. And again, to sort of dig even further into the whole matter. The fact that there are higher atmospheric CO2 levels means that things tend to grow a little better.
Shayle Kann
Yeah, right. One of those weird side effects we don’t love to just talk about necessarily. All right, let’s move on, actually, from agriculture to you mentioned northern China. So that’ll be my segue to China. We’ll pick a slide here, just in order to have a jumping off point for discussion. But really, I just want to get your take on what’s going on in the energy transition in China, because I know you spent a lot more time focused on it than I have. So let’s pick slide 19, which points out something that probably is somewhat intuitive, but still striking, which is that renewable energy generation in China has now surpassed all of Europe put together it has also surpassed US renewable energy generation is growing across all places, but it is growing by far the fastest in China. One of the things you hear when often if you say something like that is well, yeah, but they’re also building a ton of coal. So like what is happening in the power sector in China now?
Nat Bullard
So the power sector in China had a very complex year in 2022, which is, as ever renewable energy at the five year plan level being built out – lots of wind, lots of solar – in both cases, they’ve historically had some lag times on interconnection, high degrees of curtailment. And I think that in general, China’s assets, largely because of geography, and thus, they’re far in the west or the high altitude desert, tend to have lower capacity factors than you would have in say, Texas, or New Mexico in the United States. So there’s been a lot of build, there’s a little bit of catch-up always being played, I think, to do integration, but it does get done. It’s not as smooth to build transmission, needless to say, as oh, anywhere that we’re familiar with in the Western Hemisphere. But then last year, and again, somewhat unremarked upon when we could see footages of drought in Europe, but an extraordinary and profound drought happening in China last summer, which meant that hydro production, which is obviously huge percentage of China’s power was really imperiled. And that meant more coal. And to, I think, some extent, a little bit more gas. The thing is that the power fleet in China, the coal fleet is so big that next small marginal changes in terms of utilization rate have global CO2 implications. And China’s little moves in coal consumption are like the size of top 10 country electricity consumption in any given year. So it is a complex picture. I think, the big challenge is going to be that price stability is always important, reliability is always important. A lot of the a lot of economic output relies upon reliable electricity. If hydro is going to be impaired in any particular time, then that probably means more coal. And there’s always more coal build happening. But there’s also sometimes things being decommissioned. And the utilization rates, they’re not being built with the utilization rates in mind that we would have. It’s been a while since I’ve looked at this, but in the end of the past decade, it was routine in years for the coal plant utilization to be below 50%, which is extremely low compared to what you would want to do in say, the Mid Atlantic US or the Ohio Valley, if you still had a coal plant, if you were running it 50% of the time, you probably wouldn’t be running it. Right, something’s gone wrong for you. To put it in perspective, China’s electrical generation from renewables last year, at that scale, is not only bigger than Europe, it’s like about the size of Japan, in terms of total demand for electricity. Like it’s really, really big. And this is that was 2021 figures. It’s going to be bigger again after last year’s additions.
Shayle Kann
Yeah, I’ve always been struck by the the actual capacity factor numbers. What’s crazy is all the numbers are so big, the amount of renewable energy capacity they’re building is insane. Such that even with really, really low overall capacity factors because they’re curtailing a ton of it or it’s not connected or whatever. The generation figures are still way bigger than anywhere else. It’s just law of large numbers basically.
Nat Bullard
It is and we don’t really have other markets that are of that scope at the moment. So you kind of have to cast them in an exceptional or standalone lens, so that you can kind of look closely at those numbers. But about generally, interconnection catches up. It’s also just not not not the most amazing resource place, except in the far west. So there’s always going to be a China story that’s like China does more of this than everybody else. It passed Europe, passed the United States and now it’s standalone. It’s unlikely that we would see another single market become that big at any point, you know, maybe ever.
Shayle Kann
Okay, so let’s move on from China to another topic that I do want to get your thoughts on, which is the backlash against ESG. So you actually have two different slides that are sort of related that I’ll just combine together. One is slide 33, which points out that there were more anti-ESG regulatory developments in 2022, then pro-ESG, new regulatory developments. And then the second is slide 65, which is about fund flows, and basically shows that ESG fund flows were still positive in 2022, but a small fraction of their peak a couple of years earlier. So both speaking to sort of the like, turn in general sentiment about ESG. You talk to a lot of big institutional investors, like what is your sense of what’s really happening here, set aside all the news and the like, political posturing that you see a lot in the US?
Nat Bullard
Well, the tricky part is setting aside the news and the political posturing in the US. I would say that the anti-ESG sentiment is at the political level, almost uniquely US. It’s something that happens really only here, it’s not nearly as big of a topic in Europe at a polity level or definitely not like a local politics level. The as far as the investment flows, goes, that’s just very clearly hitting a peak. That’s one element of it. That’s the that’s the ETF side. So think about that is largely the retail flows into ESG coming off the boil, not necessarily all of the other managed institutional funds, in particular in Europe that are still doing more and more ESG. But it’s it is a distraction, I think if you’re a fund manager, and you’re trying to meet for legitimate reasons, a lot of your goals around ESG. I think it’s casting some scrutiny and we have seen this in Europe that there are funds that are essentially not holding up well to scrutiny in terms of like the actual ESG componentry of their indices or their metrics. We also have to say that a lot of noise is coming from relatively small fiduciaries. Meanwhile, you find your institutions, they’re in California, or the institutions in New York State that say, do not pull back on any of your ESG goals because we devote $200 billion to you as fund managers and we expected to maintain those. It is something that you can’t really ignore. I think if you’re an executive, you do have to pay attention to it. You do have to traipse in front of like a local regulatory bodies and courts in Texas, and stick up for your ESG policies. I think that the two big questions that have surfaced that really needs to be explored over time or the first, what’s the actual portfolio implication for retail investors? And in particular, for people saving for the long term? Like is anti ESG bias actually going to make them more money? Like a you know, is a performative attack on the wokeness of big fiduciaries going to actually end up with more money in people’s pockets? I think that’s very debatable. I think the other issue is what actually does constitute ESG over time? You and I have been doing this a long time. And I think that when we started and ESG was a sort of the first sort of offshoot coming from the old socially responsible investing, meant to be more metrical, meant to be more granular and quantitative, it was I wouldn’t say an improvement, but it gave us more things to measure. I think the challenge is that there’s not necessarily a high correlation between each of these individual factors. So a tech company could be a classic example of having fantastic environmental things because it’s basically only consumes electricity, which is made almost entirely renewable and recycles all its wastewater, but it could have horrendous governance. You know, it could have a board that’s comprised mostly of of insiders, or it could have supermajority shares for one of the executives. So I think that I think that there’s probably an opportunity to break this out into new sets of very specific risk screens, whether or not they would be grouped together is another real question.
Shayle Kann
ESG, is to the extent that there has been a central failing of the ESG movement, it is the idea to group E, S, and G together as one thing. And even each one of those individually has a million sub components. But the result of that mishmash is you get this kind of Frankenstein, you get these Frankenstein-y scores, where you see situations where like Tesla scores really low on ESG. And people Look at that, and they’re like, well, Tesla’s better than anybody on E. But it is also true Tesla’s pretty bad on G. And so, you know, just how do you like, how do you reconcile all that? I think that just leaves the whole concept, more open to scrutiny, which makes it a challenge,
Nat Bullard
it leaves it open to legitimate scrutiny as it should and to political football-ism, which is not necessarily deserved in every case.
Shayle Kann
So what do you make of the fund flows component?
Nat Bullard
Well, I mean retail fund flows are always impacted by retail sentiment in general. That’s, that’s one element of it. But I do think I do think that retail investors in particular can respond to things that are very distinct. I mean, look, the the lowest month of ESG ETF inflows was the first time that Elon Musk said that ESG is a scam. And was in May, in May of last year. So it’s highly exposed. But again, retail flows are not a huge component of ESG flows in general, and definitely not a big flow. ESG retail funds are not a big part of all funds in general in terms of flow, but they’re highly visible when they measure a bit of sentiment. I think what’s more important to see is where can we find continued smarter, distinctly measured, investing strategies that incorporate those elements, but maybe analyze them separately, they don’t fall under the same bucket anymore. You know, Bob Eccles, the business school professor, wrote something very useful. But as nastier as these should just be risk screens. Like, you know, they shouldn’t necessarily be ESG, they should be a risk screen, the kind of thing that smart managers are constantly querying and refining.
Shayle Kann
Okay, so last topic for us to cover in part one here, is talking about batteries. And you have a couple of interesting sets of data on batteries that I think are worth talking about. One is with regard to battery costs. I think a lot of folks know that battery costs actually rose in 2022. You know, lots of costs rose, we had inflation in general, we had supply chain issues, all this kind of stuff. So folks probably know battery costs rose just as solar costs rose and things like that. One thing that I think people don’t often appreciate is the data that you put in here on the difference between how battery costs rose and how system costs battery system costs rose. So can you just compare those two?
Nat Bullard
Absolutely. So yes, so for the first time, at least since my dear friends at Bloomberg NEF have been tracking the data, the weighted average pack price for good the mind batteries went up year on year last year. So 2021 actually came very, very close to going up. If you hadn’t used full year data, it would have been close. But last year, the weighted average pack price was up about 7% year on year. That means it’s still down close to 90%, but not quite 90% anymore. But then the 4-hour system costs for an energy storage system went up 25% last year. And I think that the important thing to note there is that like the battery is manufacturing. Now that’s the cost to manufacture, to put together or assemble high-volume for almost every application. Building a system is still pretty bespoke, and you’re going to be exposed to every other kind of value chain along the way: the cost of trucking, the cost of fuel, the cost of employees, uptime. All of these things have gone up significantly over the time. So you’re basically you’re aggregating in other inflationary pressures to get the full system cost. But what’s really interesting about this is that in the survey that BNEF ran on getting these costs and getting a sort of sense of the market is almost no developer said that they’re actually pulling back at these price levels. Because actually the grid benefit and the ROI that they can still earn is good enough that even with these price increases, they’re able to be viable, like and they’re and they’re able to still be, like, valid and like a market contributor. So it’s an interesting split. I mean, it’s sort of not what I was expecting. The intuitive outcome of pack prices went up and system prices went up more that I sort of get, but the fact that like this still such demand at the grid level, for batteries to be integrated and be useful and valuable, that even a 25% increase is not actually putting them out of the money. I think that’s very important.
Shayle Kann
Yeah, it raises an interesting question as to where battery prices and system prices go, right. Even if costs fall, maybe there’s more margin in it for the integrators and developers and the battery companies themselves. And maybe prices don’t crash necessarily at some point.
Nat Bullard
Right. I mean, Look, there’s always we’ve we’ve dealt with EPC long enough in our varied careers like there’s, there’s always a margin there that cannot be abstracted away in the same way that manufacturing margins can be by just like brute force or massive competition, for a very like-for-like kind of product.
Shayle Kann
I mean, we’ve seen this happen in solar where like, as time has gone on, again, 2022 aside, like solar module prices have continued to decline, solar system prices have declined much more slowly, because a lot of this other stuff is more intractable. I think that is inherently going to be the same thing in battery world. And the reason I wanted to talk about is it’s just like my periodic reminder to people that if you hear prices quoted for batteries, remember, particularly for stationary storage, remember that’s not the cost of the system. The cost of the system is that plus a bunch of other things and those other things may end up being a bigger deal and maybe more inflationary, potentially, than the battery itself.
Nat Bullard
Absolutely. And even the cost that you do see at the pack level is weighted average, which is skewing heavily towards cars that use a gigantic battery. And not what the question I get asked very often is, why does my ebike battery costs so much, then? I’m like, well, to be honest, your eBike battery is not exactly at like, the top of the merit order of priority for for who you want to sell batteries in volume to. So it always needs a little bit of of decomposition in order for it to be applicable at any given level. But the trend is important. The trend has been pretty durable over time. And there’s exciting stuff potentially happening along the way. I mean, the the fact that the LFP the lithium ion phosphate battery is steadily making itself felt and known in in Motive Power applications is completely fascinating to me, and probably to you too, because a couple of years ago, this was like, “nah, they don’t work very well.”
Shayle Kann
Well, it was like energy density is the thing, this is what we need, right? All we care about is range, we need to pack as much battery as we can. Obviously LFP is never going to succeed except for in these like low end applications and in China and places like that and that’s obviously not true. Speaking of which, final piece on batteries. The other slides slide 47 on batteries that I thought was interesting, points out that the top 10 manufacturers of lithium ion batteries are all based in Asia, which is pretty interesting. So not all based in China. So this is the interesting dynamic about battery manufacturing at the moment. It is yes CATL which is a Chinese company is the biggest, but the big Korean battery manufacturers are still way up there. So it’s an interesting dynamic in that market.
Nat Bullard
CATL was in 2022 to 199 gigawatt hours capacity. But LG was not far behind. LG was 138 and ahead of BYD in China, which had 120 and then Japan Panasonic comes in fourth with like half of what BYD does. There’s still a kind of a pretty steep drop off in terms of total capacity, but like yes, this has been an Asian game within that it’s been largely a Chinese game. But yeah, the European and US battery makers are really nowhere to be seen at this moment. And this is going to be very important to watch. Again like you and I probably have to fight having our spidey sense tingle too much every time we see a chart like this and think about the solar market. But it is it’s not repeating history it’s at least rhyming at the moment. The rhyming question for me is how durable are those Japanese and Korean precedents going to be because we had we saw that certainly in PV two decades ago, at least for Japan.
Shayle Kann
So Panasonic, by the way, same company, and LG, yeah.
Nat Bullard
But also Sharp and Kyocera, who are no longer really as big players in the PV business from Japan. So, you know, it’s always challenging to sort of expect that this is going to continue forever. But at the moment, it looks pretty durable. And these are the companies that are expanding as well. The question is are there going to be other products that get manufactured at enough scale to change that top 10 ranking in other markets for other applications? With other priorities embedded in them, you know. Is the battery manufacturing in Europe that sort of has a strong, I would say, domestic, industrial and to some extent security policy element to it going to prevail? Is battery making in the US going to come back in a major way, regardless of who the ultimate sponsor of that is?
Shayle Kann
Yes. I mean, the answer to that question is yes, right.
Nat Bullard
It’s clear, right. And we have like tens of billions of dollars worth of capacity announcements happening in the US. And then the other question is if things get set up in the US, or all of the other supporting necessities going to come along to make them go is lithium processing and rare earths processing going to be brought back domestically so that you can not exactly close the loop, but you can, you can friend to shore or near shore as much stuff as you want for the purposes of maintaining some security in all of these things?
Shayle Kann
Alright, that we got through, I don’t know, five or six out of roughly a million topics that we can talk about, and thankfully, we’re gonna do it again.
Nat Bullard
Awesome.
Shayle Kann
Thanks for coming on. We’ll we’ll see you on the next one for part two.
Nat Bullard
Thanks, Shayle. And looking forward. Nat Bullard is a venture partner at Voyager Ventures and a senior contributor at Bloomberg Green. So what else should we cover? As always, you can leave us a voicemail, the number is 919-808-5832. That’s 919-808-5832. Or you can email us at catalyst at postscriptaudio.com. You can also tag us on Twitter, or LinkedIn if you feel like it.
Recommended resources:
- Nathaniel Bullard: Decarbonization: The long view, trends and transience, net zero
- Catalyst: Climatetech’s surprising bottleneck: Land access
Catalyst is a co-production of Post Script Media and Canary Media.
Catalyst is supported by Antenna Group. For 25 years, Antenna has partnered with leading clean-economy innovators to build their brands and accelerate business growth. If you’re a startup, investor, enterprise, or innovation ecosystem that’s creating positive change, Antenna is ready to power your impact. Visit antennagroup.com to learn more.
Catalyst is supported by EnergyHub. The company’s platform lets consumers turn their smart thermostats, EVs, batteries, water heaters, and other products into virtual power plants that keep the grid stable and enable higher penetration of solar and wind power. And they are hiring! Learn more and see open roles at energyhub.com/catalyst
Catalyst is brought to you by Sealed: The experts in home weatherization and electrification upgrades. Sealed is leading the way, with over a decade of experience being accountable to homeowners because they only get paid based on actual energy reductions. Visit Sealed.com/measuredsavings to learn more.