🌏 The courts vs. climate tech #203

Happy Monday!

After a bleak climate change-denying US presidential debate last week, the US Supreme Court also announced another move with potentially major implications on the climate tech market — the revocation of a precedent known as the Chevron Doctrine, which allowed agencies like the EPA, IRS, and more to issue guidance around key issues.

In other news, Fervo’s biggest power purchase agreements ever; Rivian and Volkswagen’s new $5bn deal; and a sustainable aviation fuel (SAF) partnership between Lanzatech and Lanzajet.

In deals, $375m for silicon anodes; $211m for energy storage; and $120m for efficient AI chips.

And keep an eye on your inbox for our newsletter this Friday — where we’ll have our special report on funding for the first half of 2024.

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The Chevron Doctrine is out

One of the most important pieces of US legal precedent you’ve maybe never heard of was knocked down last week, with potentially major implications for climate tech.

The “Chevron Doctrine,” named after a 1984 court case involving the oil supermajor, essentially gave federal agencies deference to interpret ambiguous laws and decide the best ways to apply them. On Friday, however, the Supreme Court effectively overturned this 40-year-old precedent, which has been cited in tens of thousands of environmental, health, and labor regulations.

This ruling could open the door for more legal challenges against climate-related laws like the Endangered Species Act, the Clean Water Act, and emissions reduction statutes — with little recourse. And it could potentially broader implications on regulations for antitrust, worker’s rights, food and drugs, the banking and financial sector, taxation, and even abortion and trans rights.

supreme court — Photo by Claire Anderson on Unsplash

What happened?

The 6-3 ruling along ideological lines reflects the court’s conservative majority view that the Chevron Doctrine overly expanded the power of the executive branch. Previously, when Congressional legislation was vague, it deferred rule-making to these federal regulatory agencies, where progress on climate change and other issues frequently took place.

While the court stated that no past cases based on this precedent would be immediately overturned, it's a signal that the floodgates are open. Critics argue this is a major win for industrial corporate interests and special interest advocacy groups, who are now likely to sue over regulations, leaving the courts to decide these issues, potentially leading to strikedowns or scalebacks.

John Walke, senior strategic director of the climate and clean energy program at the Natural Resources Defense Council, told the Washington Post that the ruling could prevent agencies from using older environmental laws to tackle newer environmental problems — such as climate change — as they arise.

Already, two years ago, the conservative Supreme Court decided in the court case West Virginia vs. the EPA that the agency didn’t have the power to enact the Clean Power Plan, which directed power plants towards renewables. This decision began to sharply curtail the agency’s authority to regulate climate-warming pollution from power plants.

Key areas to watch

We’ll have to wait and see how the ruling plays out, especially if a Trump administration comes into office in November. But here are three major areas of potential impact in terms of climate tech:

Tax Credit where it’s due. The Treasury and the IRS implemented major parts of the Inflation Reduction Act, including many tax credits and tax code incentives like Clean Electricity Production Credits and Clean Electricity Investment Credits. The IRA enabled a 40% cost decrease on average for climate technologie s, largely thanks to newly transferable tax credits. While some of these IRA tax rules have been written into law for the next 10 years, it’s unclear what will happen if new legal challenges arise against these agencies.
Transmission indecision. The Federal Energy Regulatory Commission (FERC) oversees many facets of grid planning and renewable energy capacity enablement, crucial as AI demands more and more power. Legal experts expect the agency to remain able to issue new regulations, as federal courts often grant FERC deference on technical issues like rates, tariffs, and regional transmission organization rules. However, the Chevron Doctrine still plays a role in some open cases against FERC, including mandates on utilities’ renewable energy procurement and the definition of terms like facilities’ “power production capacity.” So, the fate of some important parts of renewable energy-related laws is still uncertain.
Could the EPA run out of charge? Anticipating a potential overturning of the Chevron Doctrine, the Biden administration already passed legislation in 2022 aimed at safeguarding the EPA’s authority to regulate climate change (amending the 1970 Clean Air Act to explicitly define carbon dioxide as an “air pollutant” produced by fossil fuels via the IRA). This legislative change was designed to strengthen the EPA’s regulatory authority over greenhouse gasses, building a more solid legal foundation to enforce emissions limits from vehicles and industrial sources. Most recent court defenses from the EPA don’t cite Chevron, as a preventative measure for this moment. Despite this, opponents, particularly from the fossil fuel industry, are expected to challenge these regulations now that the Chevron doctrine is overturned. One key area to watch will be the EPA’s incoming fossil fuel plant rules that promote the use of CCS and are expected to be challenged in court.

Deals of the Week (6/23 - 6/30)

Late-Stage

🔋 Sila Nanotechnologies, an Alameda, CA-based silicon anode developer, raised $375m in Growth funding from Sutter Hill Ventures, Bessemer Venture Partners, Coatue, Perry Creek Capital, and T. Rowe Price Associates.

🧱 Neustark, a Bern, Switzerland-based developer of CO2 mineralization in aggregate, raised $69m in Growth funding from Blume Equity, Decarbonization Partners, and UBS.

🌱 Prewave, a Vienna, Austria-based supply chain risk management platform, raised $67m in Series B funding from Hedosophia, Creandum, KOMPAS, Speedinvest, Ventech, and Working Capital.

🛰 LiveEO, a Berlin, Germany-based satellite-based infrastructure monitoring platform, raised $27m in Series B funding from DeepTech & Climate Fonds and NordicNinja.

🔋 Libattion, an Opfikon, Switzerland-based energy storage systems developer, raised $15m from A&G Energy Transition Tech Fund, EBL, HCapital New Ideas II, and Teknia.

Early-Stage

🏠 Etched, a San Francisco, CA-based developer of efficient transformer-specialized AI chips, raised $120m in Series A funding from Earthshot Ventures, Dolik Ventures, Fontinalis Partners, Hummingbird Ventures, Lightscape Partners, and other investors.

⚡ Aether Fuels, a San Francisco, CA-based sustainable aviation fuel developer, raised $34m in Series A funding from AP Ventures, CDP Venture Capital, Chevron Technology Ventures, Doral Energy-Tech Ventures, Foothill Ventures, and other investors.

🔋 e-Zinc, a Toronto, Canada-based zinc-metal long-duration energy storage manufacturer, raised $31m in Series A funding from Anzu Partners, BDC Capital, Eni Next, Evok Innovations, Export Development Canada, and other investors.

☔ Climate X, a London, England-based climate risk analytics platform, raised $18m in Series A funding from GV, A/O PropTech, Blue Wire Capital, CommerzVentures, PT1 and other investors.

⚡ Vertus Energy, an Auckland, New Zealand-based waste-to-X technologies provider, raised $9m in Seed funding from Energy Capital Ventures, Amadeus APEX Technology Fund, Aussie Angels, and Blackbird Ventures.

💨 Sirona Technologies, a Brussels, Belgium-based DAC technology developer, raised $6m in Seed funding from LocalGlobe, Xange, Look Up Ventures, Satgana, Syndicate One, and other investors.

⚡ Zeti, a London, England-based business-critical vehicle fleet management platform, raised $6m in Series A funding from HYCAP Group.

🔋 Feon Energy, a Woburn, MA-based advanced electrolytes for batteries manufacturer, raised $6m in Seed funding from Fine Structure Ventures, EPS Ventures, Eight Roads Ventures, Foothill Ventures, MassVentures, and Valkyrie Fund.

💨 Net Zero Company, a Stockholm, Sweden-based nature-based carbon removal developer, raised $6m in Seed funding from Oilinvest, SilviCarbon, and VARO Energy.

⚡ ThinkLabs AI, a New York, NY-based AI grid planning platform, raised $5m in Seed funding from Powerhouse Ventures, Active Impact Investments, Blackhorn Ventures, Amplify Capital, Mercuria Energy, and other investors.

🔋 VoltR, a Munich, Germany-based reconditioned batteries manufacturer, raised $4m in Seed funding from Anjou Amorcage, C4 Ventures, Exergon, and Pays de la Loire Participations.

🛰 Estuaire, a Paris, France-based AI-driven data monitoring for contrails platform, raised $2m in Seed funding from Satgana, Safran Corporate Ventures, XAnge, and AFI Ventures.

⚡ Giraffe Financial, a Brooklyn, NY-based IRA tax credits platform, raised $2m in Pre-Seed funding from Skyview Ventures.

Other

🚗 Rivian, a Irvine, CA-based electric pickup and vans developer, raised $1bn in Convertible note funding from Volkswagen as part of a $5bn partnership.

🔋 Eos, an Edison, NJ-based energy storage developer, raised $211m in Debt funding from Cerberus Capital Management.

🔋Rondo Energy, an Oakland, CA-based low-carbon industrial heat through thermal radiation developer, raised $80m in Project funding from Breakthrough, The European Commission, and The European Investment Bank.

⚡ Be.EV, a Manchester, England-based EV charging developer, raised $70m in Debt funding from KfW IPEX Bank, NatWest Group, and Octopus Energy.

🏗 AeroShield Materials, a Boston, MA-based energy-efficient windows provider, raised $14m in Grant funding from Advanced Research Projects Agency-Energy.

⚡ LanzaJet, a Chicago, IL-based sustainable aviation fuel developer, raised an undisclosed amount in Corporate Strategic funding from MUFG.

New Funds

Blackhorn Ventures, a Denver, CO-based investment firm, held a final close of their $150m third fund that will invest in early-stage digital infrastructure and energy solutions.

8090 Industries, a New York, NY-based investment firm, raised $100m for their second fund that targets industrial decarbonization.

Ironspring Ventures, an Austin, TX-based investment firm, raised $100m for their second fund that invests in early-stage companies in the construction and manufacturing sectors.

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In the News

Geothermal developer Fervo Energy announced a massive 320MW of power purchase agreements (PPAs) with utility Southern Con Edison. The two PPAs are the world’s largest signed to-date for advanced geothermal, and can provide clean power for the equivalent of 350,000 homes across Southern California. This comes on the heels of Fervo’s recent $244 million funding round in February.

Amidst all the EV gloom, Rivian and Volkswagen Group announced big plans for a joint venture (JV) that included a VW investment of up to $5bn in Rivian. The JV will focus on the development of electrical architecture and software technology for both companies’ future EVs.

Lanzatech and Lanzajet plan to launch CirculAir, a joint offering to produce sustainable aviation fuels (SAFs). The offering combines Lanzatech’s novel gas fermentation technology and Lanzajet’s “Alcohol-to-Jet” technology to produce drop-in SAFs. Lanzajet is currently raising a $100m funding round, with investors including MUFG, Southwest, Microsoft, and Groupe ADP.

In more SAF news, airline Lufthansa introduced an “Environmental Cost Surcharge,” blaming the rising additional costs from environmental regulations in the EU (specifically, the ETS and CORSIA). The passenger surcharge applies to all flights departing EU countries, as well as the UK, Norway, and Switzerland, with increases ranging from about $1-77 depending on the flight and route, showing the roadblocks on the road to flight emissions reductions.

Universal Hydrogen (UH2), a hydrogen-powered aviation company, is reportedly going out of business after it was unable to secure additional funding. UH2 was one of several companies focused on a zero-carbon alternative to SAFs. It’s estimated UH2 had previously raised $100 million in funding, most recently from American Airlines in 2022.

The European Commission approved a $3.2bn German State plan for the construction of a Hydrogen Core Network (HCN). The HCN would enable the construction and repurposing of pipelines for long-distance hydrogen transport in Germany, as part of the EU Hydrogen Strategy and Fit for 55 plans, with operations set for 2025. Meanwhile, the EU also announced it was disbursing $3.2bn from its Modernisation Fund for 39 energy projects across 10 countries, financed through the Emissions Trading System (ETS).

The International Organization for Standardization (ISO) is developing its first international standard for net zero and expects to launch at COP30 in November 2025. The new, independently verifiable standard would build upon the ISOs Net Zero Guidelines (announced at COP27).

In South Korea, a lithium battery factory fire killed 22 workers, the country’s deadliest fire since 2020. The EPA estimates that there were more than 240 fires caused by lithium ion batteries — a critical decarbonization technology — in 64 facilities between 2013 and 2020.

The Federal Energy Regulatory Commission approved Venture Global’s Calcasieu Pass 2 southwestern Louisiana project, the largest liquefied natural gas (LNG) export terminal in the US. The Biden administration announced earlier this year it would pause approvals on LNG exports.

The DOE issued a $2.7bn request for proposal (RFP) for domestic low-enriched uranium as part of Biden’s Investing in America agenda. The DOE plans to award two or more contracts that will last up to ten years, in an effort to bolster the US’ domestic nuclear supply chain and energy sources.

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Opportunities & Events

💡 AFFECT Reviewer: Apply to become an Assisting Federal Facilities with Energy Conservation Technologies (AFFECT) Grant application reviewer by July 1st for energy and water efficiency projects.

📅 Global Energy Transition Congress & Exhibition: Register to attend the Global Energy Transition (GET) Congress and Exhibition from July 1-3rd to connect with leaders, innovators and industry experts in the hard-to-abate sectors, finance, climate tech startup sectors.

📅 Solar Visibility Prize: Apply to the Data-Driven Distributed (3D) Solar Visibility Prize by July 10th for your software solution to win a $50,000 prize and mentorship from the DOE.

💡 Google Climate Accelerator: Apply to the Google for Startups Climate Change Accelerator by July 21st for a 10-week, equity-free hybrid program for Seed to Series A climate startups providing technical support, and workshops focused on product design and business growth.

💡 DOE Methane FOA: Apply to the Methane Emissions Mitigation and Quantification Program under the IRA by August 26th to access $850m in grants for projects that minimize methane emissions from oil and natural gas production, processing and transportation.