Is the fight against climate change fueling future trade wars?

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Hello readers,

Many countries are throwing resources into supporting manufacturers of electric vehicles, solar panels, and other important pieces to build an electrified future. However, trade wars seem to be brewing as a result.

Let’s take a look at the big headlines this month and, as always, we’d like to know what you think.

Happy reading!

— Nicole

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THE BIG STORY

Trash, cargo, security: a profitable robot firm’s many interests

Clearbot, a Hong Kong-headquartered startup, is on a mission to clean up trash in the oceans and rivers with autonomous electric boats. The firm offers these solar-powered vehicles under a robot-as-a-service model.

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DEEP READS

Climate change may bring new era of trade wars, as EU and US spar
Over the past few months, the US and the European Union (EU) have proposed or introduced subsidies, tariffs, and other policies aimed at expediting the clean energy transition.

Some proponents of these trade initiatives argue that imposing restrictions on foreign products and those with a big carbon footprint is exactly what needs to be done to build clean energy industries and address climate change.

However, critics observe that these climate-focused policies are pitting countries against one another.

For example, the Biden Administration recently sent a proposal to the EU to form an international consortium. The purpose is to bolster steel and aluminum companies and mitigate climate change at the same time through tariffs on environmentally harmful metals. But this arrangement is said to put non-member countries like China in a disadvantaged position.

Similarly, the EU has come up with a carbon border levy aimed at leveling the playing field for industries in the bloc. European producers importing carbon-intensive products have to buy permits to account for the difference between the price they pay and the domestic carbon price.

China, on the other hand, recently pitched an export restriction on advanced solar technology to maintain dominance in the sector – a move that came after the US limited China’s access to advanced semiconductor tech. The export ban could thwart Chinese firms’ expansion plans in Southeast Asia and their ability to develop wafer capacity in the US.

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TRENDING NEWS

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1️⃣ Clean energy, fossil fuel investment tied for first time in 2022
In 2022, the investments poured into fossil fuels and power generation without emissions reduction technology reached US$1.1 trillion – on par with the amount of money that flowed into clean energy and decarbonization projects, data shows.

Why it matters:
Investment in energy transition has accelerated in the past two decades, with emerging areas such as carbon capture and hydrogen seeing exponential growth over the past year.

2️⃣ Revealed: more than 90% of rainforest carbon offsets by biggest provider are worthless, analysis shows
Most rainforest carbon offset projects approved by Verra, the world’s leading certifier, have no benefit to the climate, a new investigation found.

Why it matters:
Corporations including Disney, Shell, and Gucci have spent millions on buying rainforest offsets.

3️⃣ VC momentum slows for mobility startups
Funding may have begun to shift away from previously dominant segments like mobility to emerging technologies, according to Climate Tech VC. Later-stage deals saw the most significant slowdown last year. The decrease in deal value could be because companies in the transportation sector are more mature than those of other climate tech verticals.

Why it matters:
The slowdown in funding resulted in an overall decline in capital deployed for climate tech in 2022.

4️⃣ Australia deepens investment in green hydrogen industry
Australia will invest nearly US$50 million in the development of a green hydrogen hub in Queensland.

Why it matters:
The country, which is a major fossil fuel supplier, has allocated more than US$300 million for cleaner energy sources in traditional mining and coal areas.

5️⃣ Amazon, Meta and Google buy more clean energy than any other companies
Silicon Valley behemoths Amazon, Meta, and Google are the top three buyers of wind and solar energy, an industry report shows.

Why it matters:
While the tech sector is outpacing other industries in purchasing clean power, the increase in demand has been observed all across the board.

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STARTUP WATCH

1️⃣ Green steel startup Boston Metal raises $120M for its fossil-free tech
Massachusetts-based Boston Metal has secured US$120 million in a series C round led by steelmaker ArcelorMittal. The fresh funds will be used to expand production at a pilot plant and launch commercial production in Brazil.

**2️⃣ European smart thermostat startup Tado raises $46.9M after IPO plans falter
Tado, a German smart home energy company, has bagged nearly US$47 million in a round led by Trill Impact Ventures. The funding came just months after the firm’s public listing plans fell through.

3️⃣ Sollum Technologies nabs $30M
This Canada-based smart LED lighting company has netted US$30 million from Idealist Capital and Fondaction in a private equity round.

4️⃣ Noon Energy raises $28M to develop carbon-based long term energy storage
The California-based battery maker has closed US$28 million in a series A round led by Clean Energy Ventures and Aramco Ventures’ Sustainability Fund. Other investors included Emerson Collective, At One Ventures, Mistletoe, and Doral Energy-Tech Ventures.

5️⃣ Ecozen closes $25M series C round
Indian agritech startup Ecozen has taken home US$25 million in a mix of debt and equity round backed by Nuveen, Dare Ventures, Hivos-Triodos Fonds, Northern Arc, and the Export-Import Bank of India, among others.

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That’s it for this edition – we hope you liked it! Do subscribe to continue receiving The Offset.

See you next month!

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