Harley jumps thru closing SPAC window; plus soccer's troubling footprint
Welcome to Callaway Climate Insights. Give your favorite climate investor a gift subscription this holiday season. Details below.
Callaway Climate Insights publishes Tuesdays and Thursdays for everybody. To get our insights and analysis every day, please subscribe.
Will the last electric vehicle SPAC out the door please shut off the lights? That’s the reaction prompted by Harley-Davidson’s (HOG) announcement this week that it will spin off its new electric motorcycle division in a special purpose acquisition company.
Harley’s LiveWire unit, whose $30,000 electric bike was re-launched at a lower price of $22,000 just six months ago, will go public on the NYSE in a $1.77 billion deal with a blank-check firm, under the ticker LVW. Harley will retain a 74% stake and CEO Jochen Zeitz will be chairman of the company, according to the announcement.
My former colleague, business writer Herb Greenberg, tweeted out the question yesterday why Harley didn’t just keep the unit, especially if it has the promise that the company has predicted, with 100,000 of the bikes sold in the next five years. Shareholders, who pushed HOG’s price up 11% after the announcement Monday, also seem to have reconsidered, as the shares came back down Tuesday.
The answer probably lies in the general outlook for SPACs in 2022. SEC chief Gary Gensler will almost certainly shut the loophole allowing them to use forward-looking information to pitch to investors, which isn’t now allowed for conventional IPOs. And the gaming of the deals in favor of SPAC investors over the companies will also be scrutinized.
The SPAC window is closing quickly, and there are hundreds of deals still out there desperately looking for a target company before it is too late. Harley’s move says as much about that as it does about the company’s expectations for LiveWire.
Calling all sustainability executives: Winmark, John Jeffcock’s company, which runs the Chief Sustainability Officer network, is surveying members and other ESG executives about how confident companies are about meeting their climate pledge targets. The survey takes less than five minutes and we’ll report the results here on Callaway Climate Insights in January. Check it out. Here’s the link to the survey.
More insights below. . . .
Don’t forget to contact me directly if you have suggestions or ideas at email@example.com.
An investor's guide to Build Back Better
. . . . Senate Majority Leader Charles Schumer, D-N.Y., has said repeatedly said he wants President Joe Biden’s ‘Build Back Better’ bill passed before Christmas, but he never said which Christmas, goes the joke on Capitol Hill about the president’s signature domestic legislation. As the debate threatens to move into 2022, Bill Sternberg, our Washington insider, reveals what’s at stake for investors in several renewable sectors in the legislation, which promises more than $555 billion in climate spending and tax credits. . . .
Flight shaming and football: European soccer’s carbon footprint problem
. . . . When it comes to the world’s most popular sport, leaders of Europe’s professional football leagues are increasingly showing feet of clay when it comes to reducing harmful carbon emissions from flying to events, writes Justin Sharon from New York. Despite shallow feints from such publicly traded teams as Manchester United and Juventus, airline travel is soaring as new tournaments demand more travel from teams around Europe, and the Middle East. Meanwhile, more than 23 British stadiums face annual flooding in 30 years. And then there’s the location of next year’s World Cup. . . .
Tuesday’s subscriber insights: One word: plastics (not)
. . . . Good news for new college graduates; the renewables field is hiring. Last year saw the largest jump yet in new grads going into the cleantech and environmental fields, and a corresponding drop in those joining oil and gas, according to LinkedIn. Bad news for companies without an ESG story to tell, however. Without a de-carb plan, the kids want nothing to do with you. Read more here. . . .
. . . . Wild swings in fossil fuel and renewable prices this past year have led to a surge in power price agreements (PPAs), which allow customers to lock in prices on cleantech deals such as wind and solar to avoid price swings when nature slows them down. As renewable prices fall and fossil fuels rise, expect more of these financial deals, especially in Europe. Read more here. . . .
. . . . Good to see Vice President Kamala Harris wheeled out to promote the White House electric vehicle charger effort this week with a photo opp, but the real news was that the energy and transportation departments are planning a joint office to roll the charger network out across the lower 48. How the states divvy up an estimated $5 billion in federal funds will be a key early decision. Read more here. . . .
. . . . The difference between Royal Dutch Shell's approach to renewables and ExxonMobil grows wider every day, with Shell shifting profits from high oil prices to fund a renewable future while Exxon sits on its hands. It can also be seen at the shareholder level, portending a wild 2022 for one of them. Read more here. . . .
To read all our insights, news and in-depth interviews, please subscribe and support our great climate finance journalism.
Editor’s picks: Deadly tornado outbreak; Biden to end funding for international fossil fuel projects
Was the deadly tornado outbreak related to climate change?
The strength and length of Friday’s deadly tornado outbreak, the time of year and the shifting of tornado alley farther east makes it “remarkable; unbelievable” the Associated Press quotes Northern Illinois University meteorology professor Victor Gensini. “It was really a late spring type of setup in the middle of December.” The AP report notes that scientists are still working to understand how climate change is affecting the frequency, strength and location of tornadoes, but they do know atmospheric conditions that give rise to such outbreaks are intensifying in the winter as the planet warms.
Biden to end federal funding for international fossil fuel projects
The White House plans to immediately stop federal funding for international fossil fuel projects as part of its effort to transition to carbon-neutral and promote financing to support emissions reductions, according to published reports. The policy was transmitted in a cable to U.S. embassies and agencies and first reported by Bloomberg. E&E News says the Biden Administration’s move would exclude coal projects, but also could affect future natural gas terminals in Eastern Europe and the Caribbean that would have received U.S. liquefied natural gas shipments. The E&E report cites a State Department spokesperson as saying the decision also contains exemptions if the project is necessary to protect national security interests or advance development goals in places where no viable low-carbon alternative exists.
Data driven: We’re in hot water
. . . . The planet’s average surface temperature has risen about 2.12°F. (1.18°C.) since the late 19th century, a change driven largely by increased CO₂ emissions into the atmosphere and other human activities, according to NASA’s Global Climate Change: Vital Signs of the Planet report. The ocean has absorbed much of this increased heat, NASA says, with the top 100 meters (about 328 feet) of ocean showing warming of more than 0.6°F. (0.33°C.) since 1969. Earth stores 90% of the extra energy in the ocean. . . .