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Cleantech Outlook 2022: Momentum Shows No Sign of Slowing Down

Click here to read the previous cleantech outlook.For the past few years, the cleantech sector has been gathering interest from investors as the world turns to green energy sources to fight climate change.Cleantech spans several industry verticals, includ

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Click here to read the previous cleantech outlook.

For the past few years, the cleantech sector has been gathering interest from investors as the world turns to green energy sources to fight climate change.

Cleantech spans several industry verticals, including renewable energy generation, energy storage, energy efficiency, transportation, air and environment, clean industry, water and agriculture.

With 2021 now in full swing, the Investing News Network (INN) spoke to experts and market participants in the cleantech field to discuss their outlook for the industry. Continue reading to learn what they had to say.


Cleantech trends 2021: The year in review


Following an uncertain 2020 that saw the cleantech sector gain traction and stocks perform strongly, in 2021 attention from investors was set on the COVID-19 recovery path. At the end of last year, most experts and market watchers were optimistic, expecting another strong year for the cleantech space.

Speaking with INN about whether his forecast for the sector in 2021 was correct, Yuan-Sheng Yu of Lux Research said the momentum is still there and many of the larger themes predicted for 2021 came to fruition.

“Hydrogen was the big winner,” he said. “There were several multi-billion-dollar investments announced in the space from both the private and public sector.”

The UK officially launched its hydrogen strategy, which has the goal of using hydrogen to provide 20–35 percent of the UK's energy by 2050. It has a focus on blue hydrogen production, transportation and downstream use in the commercial and residential sector.

On the companies’ front, Lotte Chemical committed 4.4 trillion won (US$3.8 billion at the time) to boost South Korea's hydrogen economy and Ineos invested 2 billion euros in electrolyzer manufacturing capacity in Europe.

“A pleasant surprise in 2021 was the continued injection of capital in the startup ecosystem,” Yu said. “While we were expecting the total venture capital (VC) funding to continue to rise from the approximately US$1.5 billion in 2020, we did not see it rocketing up to nearly US$6 billion last year.”

Some key VC rounds that stood out to the expert include crop nutrition-focused Pivot Bio’s US$430 million Series D, bioengineering company Genomatica’s US$118 million Series C and carbon capture solutions company Svante’s US$100 million Series C.

“This is just pure VC funding rounds; many startups also IPO’d and continued to raise funding afterwards as well as more traditional forms of capital raises,” Yu said. “The types of companies also highlights the wide range of technologies being aggressively supported too.”

Cleantech outlook 2022: What’s ahead


Commenting on what he is expecting to see in the new year, Yu said all that has happened in 2020–2021 in the cleantech space will just continue to roll forward in 2022.

“There are really no signs that point to any of this momentum slowing down,” he said. “While supply chain issues will continue to be a factor across all industries, it may have an impact on the more “traditional” cleantech that are scale and face the same supply chain issues as all other sectors — but for the innovators in the space, we don’t see this playing too much of a deterrent.”

One of the key developments for the sector in 2021 was what unfolded at the 2021 United Nations Climate Change Conference (COP26), with the Glasgow Climate Pact expected to accelerate the energy transition and bring along for the ride the various cleantech that will be required to enable it.

A key aspect worth noting from COP26, according to Yu, was the increase in discussions and attention around industrial decarbonization and addressing emissions in the agricultural sector.

“This was a dramatic shift from previous COP events, which typically focuses on cleaning up the electricity mix and transportation,” he said. “This will continue as the world attempts to address the multi-faceted challenge of decarbonization and that no sectors in the global economy will be immune to its impact.”

But change is not only taking place at a government and regulation level, the private sector is also experiencing a transformation.

“Corporate sustainability was more of a buzzword and marketing tool without real action, but today many — but of course not all — companies have made firmer commitments to reaching net-zero carbon emissions and are backing those commitments with investments and partnerships to meet those goals,” Yu said.

However, even though in 2021 several emerging technologies saw encouraging progress, these positive trends need to accelerate rapidly over the current decade to achieve deployment levels in line with a net zero by 2050 trajectory.

“Additions of battery storage capacity jumped by 50 percent last year to their highest ever level, while hydrogen saw a record year for policy action and low-carbon production,” the International Energy Agency says in a recent report. “Momentum behind carbon capture, utilisation and storage has increased in recent years, but its deployment remains far below the level required in a pathway to net zero by mid-century.”

In terms of trends expected in 2022, energy storage, electric vehicles, hydrogen solutions and carbon capture are key areas that will continue to have momentum.

“We should not expect anything less than numerous partnerships, announcements and funding in these four areas,” Yu said.

For Zarko Meseldzija, chief technical officer of lithium-ion battery recycling company American Manganese (TSXV:AMY), 2021 saw his expectations materialize — a higher focus on critical minerals and higher commodity prices.

“(In 2022,) I am expecting a better market on the back of increasing demand for electric vehicles coupled with the demand for critical battery materials,” he said.

One area within cleantech that Lux Research expects to rise in popularity in 2022 is decarbonized heat because of the growing attention around decarbonizing the industry. At the root of the emissions is the need for low- to high-temperature heat, which largely comes from fossil fuel combustion.

“We began to see an uptick in interest in this area towards the end of 2021 and expect that to carry over in 2022 and become more prominent in the discussion,” Yu said. “While it may not be headline grabbing like the other technologies, it will be a key piece to the future of cleantech.”

In terms of renewable energy, additions of renewable power capacity are on track to set yet another annual record in 2021, driven by solar photovoltaic (PV).

“Almost 290 gigawatts (GW) of new renewable power will be commissioned this year, which is 3 percent higher than 2020’s already exceptional growth,” according to the IEA. “Solar PV alone accounts for more than half of all renewable power expansion in 2021, followed by wind and hydropower.”

The agency forecasts the growth of renewable capacity to accelerate in the next five years, accounting for almost 95 percent of the increase in global power capacity through 2026.

“Globally, renewable electricity capacity is forecast to increase by over 60 percent between 2020 and 2026, reaching more than 4,800 GW,” the IEA says. “This is equivalent to the current global power capacity of fossil fuels and nuclear combined.”

Even though another bright year is expected, in 2022 the cleantech space will still have to face quite a few challenges, but the main one continues to be the potential of not living up to expectations.

“When the type of capital that is being invested in the space keeps going up, the expectations also go up,” Yu said. “It is one thing to bring a technology into market, but it is pertinent that a viable business model and the economics of it also works out when competing with the incumbents.”

Unfortunately, the patience for the timeline from investors might not be realistic.

“Many of these technologies may require over 10 years of further development, piloting and industry buy-in before becoming a commercially available solution and that will be a key risk,” Yu said. “If investors run out of patience and the initial capital runs dry, many cleantech startups will end up in the infamous valley of death with an unclear path forward.”

A key catalyst investors should watch out for that most likely will impact the cleantech sector is the shifting of numerous decarbonization pledges and commitments to actionable policies.

“A blanket policy is unlikely, but we’ll start to see various forms and bit-by-bit regulations that will enable the transition,” Yu said. “Those policies will be critical in moving the needle on much of the activity we’ve seen over the last two years.”

Commenting on what type of companies he will be paying attention to, Yu said he is following electrolyzer companies closely.

“Whether it be the larger established firms such as ITM Power (LSE:ITM) or Nel (OSE:NEL), or emerging players looking to bring a novel aspect to electrolyzer technologies, such as Ionomr, H2Pro and Sunfire,” he said.

Don’t forget to follow us @INN_Technology or real time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: American Manganese is a client of the Investing News Network. This article is not paid-for content.

The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Economics

Oil Could Be The Haven Stocks Traders Need To Shelter From Fed

Oil Could Be The Haven Stocks Traders Need To Shelter From Fed

By Nour Al Ali, Bloomberg Markets Live commentator and analyst

Oil is starting to look like an unlikely haven from the stocks selloff in the run-up to anticipated Fed tightening.

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Oil Could Be The Haven Stocks Traders Need To Shelter From Fed

By Nour Al Ali, Bloomberg Markets Live commentator and analyst

Oil is starting to look like an unlikely haven from the stocks selloff in the run-up to anticipated Fed tightening.

Traders are pricing lower volatility in the commodity than in the Nasdaq and S&P 500. Barometers of market anxiety for both indexes have shot up recently, suggesting trader sentiment is souring. Meanwhile, the CBOE Crude Oil Volatility Index, which measures the market’s expectation of 30-day volatility of crude oil prices applying the VIX methodology to USO options, shows that oil prices are expected to remain relatively muted in comparison.

With a producer cartel to support prices, the outlook for oil is more sanguine, even if the Fed raises rates. The commodity has ample support, with global oil demand expected to reach pre-pandemic levels by the end of this year. The U.S. administration has been pushing oil-producing nations under the OPEC+ cartel to ramp up output, while the group has stuck to a modest production-increase plan and is expected to rubber-stamp another 400k b/d output hike when they meet next week. This means that oil is likely to stay a lot more stable than in recent years.

The relatively low correlation between the asset classes provide diversification benefits. The relationship between the S&P 500 and the global oil benchmark is weak and lacks conviction; it’s even weaker between the Nasdaq 100 and Brent crude contracts. The divergence in price action this week could indicate that stocks have been tumbling in fear of a hawkish Feb, more so than geopolitical risk alone. That would perhaps offer traders an opportunity to seek shelter amid stock volatility in anticipation of the Fed’s next move.

Oil might have tracked the decline in stocks at the beginning of this week, but the commodity is back to its highs now. It’s up close to 15% this year, while the S&P 500 is struggling to reclaim its footing after plunging as much as 10%.

Tyler Durden Wed, 01/26/2022 - 13:45

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Economics

AT&T down 10% despite topping estimates

AT&T (NYSE: T) has revealed that Q4 results indicated continued users for the HBO MAX, wireless and fiber segments. In addition, the company gained more postpaid phone users for the whole year than the last ten years adding one million fiber subscribe

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AT&T (NYSE: T) has revealed that Q4 results indicated continued users for the HBO MAX, wireless and fiber segments. In addition, the company gained more postpaid phone users for the whole year than the last ten years adding one million fiber subscribers. Similarly, the company beat its high-end outlook for international HBO Max and HBO users with almost 74 million subscribers as of December 31, 2021.

CEO John Stankey said:

We ended 2021 the way we started it – by growing our customer relationships, running our operations more effectively and efficiently, and sharpening our focus. Our momentum is strong and we’re confident there is more opportunity to continue to grow our customer base and drive costs from the business.

Q4 2021 revenue dropped 10% YoY

Consolidated revenue in Q4 2021 was $40.96 billion beating consensus estimates $40.68 but dropping 10% YoY, which reflects the impact of divested segments and low Business Wireline revenues. In the third quarter, the company divested US Videos, and in Q4, it divested Vrio. The drop was partially offset by high Warner Media revenues, recovery from pandemic impacts, and high Consumer Wireline and Mobility revenues. Stankey commented:

We’re at the dawn of a new age of connectivity. Our focus now is to be America’s best connectivity provider and also ensure our media assets are positioned to grow and truly become a global media distribution leader. Once we do this, we’ll unlock the true value of these businesses and provide a great opportunity for shareholders.

AT&T reported Q4 net income (loss) attributable to $5 billion or $0.69 per diluted shared share. On an adjusted basis, including merger-amortization fees, a share of DirecTV intangible amortization, gain on benefit plans, and related items, the company had an EPS of $0.78 topping consensus estimate of $0.76 per share.

AT&T had total revenue of $168.9 billion in 2021

AT&T’s consolidated revenues were $168.9 billion in 2021, compared to $171.8 billion a year ago, reflecting the split of the U.S Video division in Q3 2021, as well as the effects of other divested operations. However, higher revenues in WarnerMedia and Communications somewhat offset these declines.

For the full-year, net income (loss) attributable to commons shares was $19.9 billion or $2.76 p were per diluted share. On an adjusted basis, FY 2021 earnings per share were $3.4.

La notizia AT&T down 10% despite topping estimates era stato segnalata su Invezz.

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Economics

New home sales surge, while house price measures decelerate; expect deceleration or even downturns in each

  – by New Deal democratSince I didn’t post yesterday, let me catch up today with a note on both new home sales and prices.New home sales (blue in the graph below) for December rose sharply to 811,000 on an annualized basis. This is the higher monthly…

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 - by New Deal democrat

Since I didn’t post yesterday, let me catch up today with a note on both new home sales and prices.


New home sales (blue in the graph below) for December rose sharply to 811,000 on an annualized basis. This is the higher monthly number since March, and while it is well above the trend since the Great Recession, it is still well below its levels from late 2020:


The red line is inventory. When it comes to new homes, inventory lags not only sales but also prices, so it is not surprising that inventory has increased sharply to a 10 year+ high.

While new home sales are the most leading of all housing metrics, they are very noisy and heavily revised. So in the below graph I compare them with single family permits (red), which have also increased in the last few months, but also are not at 2020 levels:


Because mortgage rates have increased significantly in the past several months, I do not expect this surge in new home buying to last much longer.

Sales lead prices, and for most of 2021 sales were down. So it should not be a surprise that on a YoY basis, price increases are at last abating, shown both monthly (blue) and quarterly (black) in the graph below:


In December, prices were only up 3.4% from one year prior. Since the data is noisy on a monthly basis, the quarterly number, still high at just under 15%, but well below the sharp gains earlier in the year, is more telling.

The deceleration in YoY price gains, which nevertheless are still very high, was also the story yesterday in both the Case Shiller and FHFA house price indexes (light and dark blue in the graph below, /2 for scale). Also shown are the YoY% gains in rent of primary residence and owner’s equivalent rent (how the CPI measures housing inflation)(light and dark red):


My purpose in the above graph is to show that both house price indexes track one another closely, as do both “official” measures of housing inflation. Additionally, as I’ve previously pointed out, house price increases tend to bleed over into the official inflation measures with about a 12 to 18 month lag. Thus on a YoY basis price increases bottomed in 2019, but did not bottom in the official measures of rent until the beginning of 2021. Since the YoY% increase in house prices peaked in mid year 2021, we can expect the “official” CPI housing measure to continue to increase on a YoY basis through roughly late 2022.

This doesn’t necessarily mean that the *total* inflation measure will continue to increase throughout this year. Below I again show the YoY% change in owners’ equivalent rent as above, but also the total inflation index (gold). Most importantly, note that sometimes they track in tandem, but also that generally during the entire house price boom, bubble, and bust from 1995 to 2015 they tended to move in opposite directions:


Why did this happen? Sometimes, as during 1995-2015, home ownership and apartment renting are alternative goods. When more people decide to leave apartments and move into houses, house prices increase while rents flatten. This is generally what happened during the boom and bubble. Then during the bust people were forced to abandon houses and move back into apartments. This is shown in the below graph of homeownership:


Note the huge upward surge until the housing bubble popped, followed by the equally sharp deflation.

Finally, let’s factor in interest rates set by the Fed, shown in black below:


As CPI increases, the Fed typically increases interest rates. By the time the fully effect in owners’ equivalent rent is felt, Fed rate hikes have typically cooled the economy, meaning that the remaining majority of the overall consumer inflation index declines.

Bringing our discussion back to the present, we see that total inflation has been rising sharply since just after the pandemic hit. Owners’ equivalent rent started to rise about 9 months ago. Part of the delay was the big increase in the homeownership rate during that time, driving rents and house prices in opposite directions. The consensus is that the Fed will raise rates several times this year, perhaps starting as early as this spring. If they indeed do so, they will probably continue to embark on hiking rates until the economy slows or even reverses, enough so that price increases - other than rents - decelerate considerably. But while rent measures will continue to accelerate this year, house price increases themselves are likely to continue to decelerate, or even stall in the months ahead.

 

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