🔥RTN21: open-source geo-engineering & climate complexity
+ Rivian Q2 earnings, climate chaos, France's Nuclear strategy
No commentary this week, what we’re covering:
Rivian Q2 earnings
France’s nuclear strategy
Geoengineering clouds
New Nvidia hardware
“Entire factories will be software-defined and robotic, and the cars they’ll be building will themselves be robotic. So it’s robotically designed robots building robots” Jensen Huang
⚡️Energy, Materials and Climate
Cutting shipping emissions, climate complexity and geoengineering weather
Shipping contributes to 3% of global GHG emissions. Many ships burn heavy fuel oil, which has high sulfur content (up to 3% by weight)
The UN IMO limited the amount of sulfur in heavy fuels in 2020. In January 2021, the IMO reported a 70% reduction in sulfur oxide emissions from shipping
A NASA study in October 2022 corroborated this, showing a significant reduction in the density of "ship tracks", the linear clouds that form around ship exhaust
Some researchers proposed the sulfur drop could be behind the recent spike in sea surface temperature increase:
Modelling suggests IMO regulations will increase warming around 0.05C by 2050, equal to ~2 years of emissions at current rates
This speaks to the immense complexities of climate - a multi-factorial, non-linear and chaotic system. Where inputs do not always achieve the desired output
Recent advances in compute and modelling have been behind advances in weather prediction
Better resolution modelling should improve the prediction of cloud formation relevant to the climate impacts of say, ship emissions. But chaos limits could make precise quantification of those effects difficult
Enter Geoengineering
Geoengineering refers to large-scale interventions in the Earth's natural systems and processes, usually with the aim of countering or reversing global warming
There are two main forms of this:
Carbon dioxide removal (CDR): involves removing CO2 from the atmosphere
Solar radiation management (SRM): aims to reflect sunlight back to space to cool the planet
Geoengineering is controversial given the risks of unintended consequences
An oft discussed and largely feasible method, involves weather management like Stratoshperic Aerosol injection designed to create clouds and reflect sunlight
It involves injecting reflective particles like sulfur dioxide or calcium carbonate into the atmosphere, similar to the natural effects of a volcano:
Source: NASA
Studies suggest this method could cost as little as $2.25bn a year, for material global coverage
This week, Google announced it used AI to reduce the comtrails of 70 United Airlines flights by 54% using an open-source contrail data
Whilst perceived solutions are available to us - it can be difficult to enact them in a complex system. The lack of understanding around the systems that govern our climate, contributed to our inability to predict climate damage in the first place
Interesting Companies: Atmo AI (AI weather prediction), Make Sunsets (stratospheric aerosol injection),
🤯
France’s Nuclear strategy is not everyone's Nuclear
France has been a leader in Nuclear energy usage since the 1980s - 70% of its energy generation comes from 58 Nuclear reactors
France this week, passed a vote to further expand its use of Nuclear
France has succeeded in low-carbon energy for a few reasons;
using a science-based approach to nuclear risks
standardising reactor design (PWR & EPR), with centralised control by EDF
use of reactors as peaker plants (v just base load)
controlling the full nuclear fuel cycle, uranium enrichment to waste disposal (though this is currently under threat by Russia)
France’s use of nuclear, largely gives it energy independence and further ability to expand its industrial base using cheap baseload generation
Regardless of France’s success in low carbon energy, there are still few countries that come close to France’s energy mix, apart from Ukraine, Slovakia and Sweden (China is increasingly building Nuclear capacity as both a source of energy and a military deterrent)
Is Nuclear back?
After decades of scare-mongering by climate activists of all people, it looks like forecasts for net Nuclear additions are increasing;
The International Energy Agency (IEA) reported that 7.9 GW of new nuclear power capacity was brought online in 2022, marking a 40% increase from the previous year
Nuclear hasn’t only suffered from bad branding, deployment of reactors is expensive and slow (largely the raison d’etre for Small Modular Reactors)
This week the US announced its first new Nuclear reactor in 30 years 🤯, though likely it’s last for a while
Whilst Nuclear usage in France has proven, on the whole, to be a success. Political and social conceptions on Nuclear prevent its widespread usage
🚖 Moving things
Rivian Q2 ‘23 Earnings - continued growth and cash bleed
Rivian beat analysts’ estimates for a fourth consecutive quarter, with higher deliveries, revenues and increasing investments in product and integrating production
Whilst sales are growing sequentially, gross margins are deeply negative (-37%) - Rivian is investing in product and manufacturing integration, sustained pricing and higher volumes to drive profits
This speaks to the difficult transition to BEVs - growing demand from consumers against a backdrop of legacy automakers struggling to deliver vehicles and newer companies straining for profitability (Tesla excluded)
Financials:
Rivian delivered 209% year-over-year revenue growth and 60% quarterly increase in vehicle deliveries
Gross margins at -37%, though improved from -81% last quarter as volumes gains scale
Capex declined 29% from last year to $255 million for the quarter as major plant investments are completed
Products and Production
In-sourcing Enduro motors and LFP batteries to reduce reliance on suppliers and lower material costs
Upgrading network architecture to cut electrical complexity by reducing ECUs by 60% and wiring length 25%
Expanding charging network partnerships (Tesla) and route planning (ABRP acquisition) to improve charging access and trip planning
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