The Path to Drawdown: Batteries for Electric Vehicles
The first electric vehicle (EV) prototype was built in the early 1800s, but internal combustion engines dominated the automotive and transport landscape ever since because of EVs’ inability to overcome the challenge of building a lightweight, durable battery with adequate range.
Today, that picture is changing. Thanks to supportive policies and declining costs, there are millions of EVs on the road. The difference in their climate impact is remarkable. Compared to internal combustion engine vehicles, emissions drop by 50% if an EV’s power comes from the conventional power grid. If powered by solar energy, emissions are cut by 95%. Once households purchase EVs, costs to operate and maintain those cars are often cheaper than gas-based cars, too.
What used to be an obstacle for EVs -- the question of how far the car can travel on a single charge -- is now much less of a concern. The average range of an EV produced in 2020 is about 217.5 miles, up from 124 miles in 2015.
What’s making this increase in mileage possible is the progress in battery technology and growth in battery production capacity. The cost of batteries is falling fast as a result. The cost of lithium-ion batteries in particular -- the key technology for electrifying transport -- has declined sharply in recent years after having been developed for widespread use in consumer electronics.
But battery production needs to continue scaling massively to keep up with the electrification of transport. According to the IEA:
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Global manufacturing operations produced 170 GWh of batteries in 2020
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~3,000 GWh battery production capacity is needed by 2030 to achieve long-term sustainability goals
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That’s CAGR of 33.25%
About
EnerSys (stock ticker: ENS) is a stored energy systems and technology provider for industrial applications. They make and distribute reserve power and motive power batteries, battery chargers, power equipment, battery accessories and outdoor equipment enclosure systems to customers worldwide. Headquartered in Reading, Pennsylvania, they provide aftermarket and customer support services to customers from over 100 countries.
ENS's Role in Drawdown
Almost half of EnerSys’ revenue comes from selling energy solutions to transport industries, particularly to industrial forklift, mining and other commercial utility vehicle companies. These solutions include lithium-ion batteries, chargers, monitoring and data analysis systems to enhance productivity.
Beyond energy storage products for these commercial utility vehicles, EnerSys also offers energy storage solutions for grid-interactive systems, off-grid systems, and industrial power and utilities. All of these are important Drawdown solutions that help electrify both the transportation and utility industries. In total, EnerSys’ sales revenue has been growing steadily, increasing by 5.22% annually between 2016 and 2020.
ENS: What We Like
EnerSys has a very diverse customer base (p. 7), with over 10,000 customers in over 100 countries. So they're not overly dependent on any particular end market. No single customer accounts for more than 10% of its revenues. The markets EnerSys serves include telecommunications, UPS, electric utilities, security systems, emergency lighting, services to broadband, renewable and industrial, thermally managed cabinets and enclosures for electronic equipment and batteries. This diversity means that EnerSys’s revenue base is resilient against business cycles and decarbonization.
We also love that EnerSys has a complete battery recycling program. EnerSys personnel pick up spent lead-acid batteries regardless of their size, quantity or manufacturer. This kind of programs ensure that used batteries are not mishandled or improperly disposed of so that they don’t harm the environment. This is the kind of circular economy business model that we want to see other companies adopt.
What We Want to See Improve
Focus More on Drawdown Solutions
A substantial minority of EnerSys’s revenue comes from non-Drawdown solutions, such as sales of products to the telecommunications industry and UPS. While these are important segments, supporting the electrification of transportation and enhancing the power grid are more pressing issues. We would like to see EnerSys massively increase its energy storage products for the EV market and utilities to make it easier to integrate renewable energy.
Set Clear Targets
EnerSys has a climate change policy that was updated in July 2021, in which the company expresses its commitment to reducing its own energy intensity and GHG emissions in its operations. But it stops short of revealing precise emissions metrics or setting concrete emissions reduction targets. EnerSys is in the process (p. 21) of establishing measurements & improvement targets in ESG areas. We urge them to include emissions metrics and targets to reduce them within a specific timeframe.
Enhance Supply Chain Transparency
EnerSys purchases the primary raw materials it uses from a number of suppliers around the world (p. 8). We commend EnerSys for holding its suppliers to the same environmental and climate change policy that it itself adheres to. That said, there is no information on who these suppliers are, what EnerSys’s scope 3 emissions are, and whether they are persuading suppliers to reduce emissions. We urge EnerSys to be explicit about emissions metrics in its supply chain and to push its partners to cut their carbon footprint within the near future.
Arcosa services wind farms and utilities to improve grid flexibility. It however makes more revenue from its storage, transportation, and construction products that serve the fossil fuel industry.
AECOM helps clients achieve net zero emissions in their buildings among other pro-climate projects, but it also works with many oil and gas companies. It is unclear what makes up a majority of its revenue.
Albemarle produces lithium compounds promoting energy storage, a Drawdown solution. It however makes more of its revenue from other compounds like bromine that have end-markets in the fossil fuel industry due to applications, such as oil and gas well drilling and completion fluids.
Avista produces 55% of its power from renewables, 43% from fossil fuels, and 2% from non fossil fuel combustion. While it passes the generation mix criteria of > 50% non fossil fuel sources, 9% of its power comes from coal and it has no plans to shut down its coal plants within the next 3 years.
Bloom Energy's Energy Servers can operate using both hydrogen and biogas, both climate solutions, but a majority of its Energy Server's use natural gas. This use of natural gas is considered fossil fuel revenue, particularly because we don’t want to lock in natural gas emissions by a commitment to weak transitionary infrastructure.
Babcock & Wilcox produces waste to energy and biomass solutions, both Drawdown solutions. It also works on carbon capture technologies, but not storage which we would define as fossil fuel revenue. A revenue breakdown is not present
BWX performs fabrication activities for missile launch tubes for US submarines, which fails the defense filter as this would be classified as weapons related.
Capstone Green Energy produces microgrids and microturbines with renewable applications, both of which are Drawdown solutions, but receives the majority of its revenue from application of its microturbines to fossil fuel industries.
Euro Tech Holdings does not produce any not leak detection or water conservation technologies and therefore fails our water distribution efficiency filter.
Cummins derives a very small part of its revenue from hydrogen production solutions and electrified power systems, but a much larger portion of its revenue is from ICE parts and oil & gas markets, both of which would be categorized as fossil fuel revenue.
CMS produces 62.73% of its power from fossil fuels, 19.92% from nuclear, 7.67% from mixed sources, and 6.65% from renewables. Even if all of the mixed sources were renewable, CMS would still not have >50% power from non fossil fuel sources.
Cooper sells healthcare products like contact lenses, fertility products, and contraceptives, but makes less than 50% of its revenue from contraceptives
Capstone Turbine produces microgrids and microturbines with renewable applications, both of which are Drawdown solutions, but receives the majority of its revenue from application of its microturbines to fossil fuel industries.
Cree sells materials products and RF devices used in military communications, which fails the defense filter because it sells something to the defense industry that is not a Drawdown solution.
China Recycling Energy conducts waste to energy operations, but also utilizes gas from coal mining, which is considered as fossil fuel revenue. A revenue breakdown is not present.
BioCorteva's products help maximize crop yield, not reduce food waste, leaving them without a Drawdown solutionceres' products help maximize crop yield, not reduce food waste, leaving them without a Drawdown solution
DuPont de Nemours has some end-markets in solar energy and LEDs, both Drawdown solutions, but derives a larger portion of its revenue from various products that have end-markets in the fossil fuel industry.
Centrais Elétricas Brasileiras - Eletrobrás produces 92.45% of its power from renewables, 3.89% from nuclear, and 3.66% from fossil fuels. While it passes the generation mix criteria of > 50% non fossil fuel sources, 0.68% of its power comes from coal and it has no plans to shut down its coal plants within the next 3 years.
Ecolab offers products that can help businesses conserve water, a Drawdown solution, but also sells products built specifically for the fossil fuel industry. It is unclear which it makes more revenue from
Consolidated Edison produces 52.5% of its power from fossil fuels, 37.5% from nuclear, 8.6% from renewables, and 1.3% from unknown sources. Even if all of the unknown sources were renewable, CE would still not have >50% power from non fossil fuel sources.
Empresa Distribuidora y Comercializadora Norte Sociedad Anónima did not provide complete enough power generation info to determine if they pass or fail the utility filter
Emerson Electric Co. produces smart thermostats, a Drawdown solution, but also sells certain products to the oil and gas industry. It is unclear which segment it makes more revenue from.
Enbridge derives some of its revenue from solar and wind energy, both Drawdown solutions, but receives the majority of its revenue from pipeline work for the natural gas industry, which is categorized as fossil fuel revenue.
Enel Américas produces 62% of its power from renewables and 38% from fossil fuels. While it passes the generation mix criteria of > 50% non fossil fuel sources, 3% of its power comes from coal and it has no plans to shut down its coal plants within the next 3 years.
Energizer Holdings, makes only batteries for household products and lighting products for flashlights and headlamps, neither of which are Drawdown solutions.
Eversource Energy produces 62.28% of its power from fossil fuels, 19.64% from renewables, 13.83% from non fossil fuel combustion, 4.24% from nuclear, and 0.01% from energy storage.
ESCO derives its revenue in part from promoting grid flexibility, a Drawdown solution, by enabling electric power grid operators to assess the integrity of high-voltage power delivery equipment. It however receives a larger portion of its revenue from products that have an end-market in commercial aerospace applications.
Ford Motor produces some EVs, a Drawdown solution, but receives the majority of its revenue from traditional ICE vehicles, which are categorized as fossil fuel revenue.
FuelCell energy makes hydrogen fuel cells, a Drawdown solution. They also sell carbon capture services (but not storage) to the oil and gas industry, which we categorize as fossil fuel revenue. A revenue breakdown between the two is not present
Franklin Electric does not produce any not leak detection or water conservation technologies and therefore fails our water distribution efficiency filter.
Whole Earth Brands makes plant-based consumer packaged goods, but it also makes flavored products used by the tobacco industry, thus failing the tobacco filter
Flexible Solutions International produces nitrogen conservation products, a Drawdown solution, but also produces products for the oil and gas industries. A revenue breakdown is not present
General Electric derived 19.4% of its revenue from wind energy, a Drawdown solution, but received 21.8% of its revenue from various products dependent on oil and gas, which is categorized as fossil fuel revenue.
General Motors produces some EVs, a Drawdown solution, but receives the majority of its revenue from traditional ICE vehicles, which are categorized as fossil fuel revenue.
Generac Holdings derives part of its revenue from the Drawdown solution of energy storage. It however has fossil fuel profucts and a large natural gas customer base that is not quantified and no revenue breakdown for that segment is present.
Genuine Parts sells auto parts and while it does seem to service the EV industry in part, its business is mostly oriented towards ICE vehicles. It even lists EV adoption as a risk to its business.
Granite Construction does not produce any not leak detection or water conservation technologies and therefore fails our water distribution efficiency filter.
Helios Technologies does not produce any not leak detection or water conservation technologies and therefore fails our water distribution efficiency filter.
Honda Motor produces some EVs, a Drawdown solution, but receives the majority of its revenue from traditional ICE vehicles, which are categorized as fossil fuel revenue.
Honeywell has an aerospace segment which is categorized as fossil fuel revenue that comprises a greater portion of its net sales than its production of smart thermostats, a Drawdown solution. They also fail the defense filter.
Hubbell derives a large part of its revenue from producing solutions that enhance Grid Flexibility, but also has customers in the gas industry whose portion of the revenue is not specified.
Hyliion Holdings derives its revenue by selling electrified and hybrid powertrain solutions, a Drawdown solution, but also sells powertrain systems that can be fueled with CNG, which is considered fossil fuel revenue. The revenue breakdown between these products is not provided.
IDACORP produces 59.8% of its power from renewables, 32.8% from fossil fuels, and 7.4% from mixed sources. While it passes the generation mix criteria of > 50% non fossil fuel sources even if the entirety of the mixed source power generation was from fossil fuels, 20.9% of its power comes from coal and it has no plans to shut down its coal plants within the next 3 years.
IES Holdings services both wind energy projects and solar projects, both Drawdown solutions. It also services refineries, which are categorized as fossil fuel revenue. It is unclear which takes up a greater portion of the revenue.
Littelfuse, sells products used in EVs and related infrastructure, but also has end markets in the traditional auto industry, as well as the oil and gas industry. A revenue breakdown is not present.
Limoneira 's Drawdown revenue comes from growing avocados, a perennial staple crop. It however derives the vast majority of its total revenue from other non-perennial crops.
Lindsay sells different irrigation systems and offers repair services for those systems. It also sells moveable barrier systems that help in many applications such as highway reconstruction.
Lyft theoretically enables rideshareing, a Drawdown solution, but in practice likely increases emissions due to drivers going further from their homes daily to service higher paying regions.
MDU produces 55.5% of its power from renewables, 25.6% from mixed sources, and 18.87% from renewables. Even if all of the mixed sources were renewable, MDU would still not have >50% power from non fossil fuel sources.
Montrose helps clients deal with water distribution issues among other pro-climate projects, but it also works with many oil and gas companies. It is unclear what makes up a majority of its revenue.
Mueller Industries does not produce any not leak detection or water conservation technologies and therefore fails our water distribution efficiency filter.
Mueller Water Products, sells water leak detection systems, a Drawdown solution, but also has an infrastructure segment that has some customers in the natural gas industry. A breakdown of that segment is not present.
NV5 helps clients achieve net zero emissions in their buildings and deal with water distribution issues among other pro-climate projects, but it also works with many oil and gas companies. It is unclear what makes up a majority of its revenue.
Northwestern produces 61% of its power from renewables and 29% from fossil fuels. While it passes the generation mix criteria of > 50% non fossil fuel sources, 20% of its power comes from coal and it has no plans to shut down its coal plants within the next 3 years.
Corning produces LED products and also emissions control products for the fossil fuel industry. It is unclear which is a greater percentage of the revenue.
Ocean Power Technologies utilizes ocean power to provide electricity, a Drawdown solution. But 87% of its revenue comes from servicing the fossil fuel industry.
Public produces 54.91% of its power from fossil fuels, 40.41% from nuclear, 3.84% from renewables, 0.81% from non fossil fuel combustion, and 0.02% from fossil fuels.
Pentair offers products that can help businesses conserve water, a Drawdown solution, but also sells products built specifically for the fossil fuel industry such as fracking fluids. It is unclear which it makes more revenue from.
Polar Power, manufactures DC power systems that help with grid flexibility, a Drawdown solution, but diesel, natural gas, and propane appear to the predominant formats. A revenue breakdown is not present.
Portland GE produces 50.19% of its power from fossil fuels, 27.81% from nuclear, 14% from mixed sources, and 8% from renewables. Even if all of the power produced from mixed sources was from renewables, Portland still would not produce > 50% of its power from non fossil fuel sources.
Perma-Pipe International does not produce any not leak detection or water conservation technologies and therefore fails our water distribution efficiency filter.
Roper Technologies does not produce any not leak detection or water conservation technologies and therefore fails our water distribution efficiency filter.
Republic derives its revenue in part from recycling, a Drawdown solution, but captures landfill gas at fewer than 50% of its landfills, thus failing the landfill gas filter.
Electrameccanica Vehicles has no sales of electric vehicles to date. It has some sales in its custom build segment, which we categorize as fossil fuel revenue.
Spark produces 59.65% of its power from fossil fuels, 34.47% from nuclear, 4.82% from renewables, 1.03% from non fossil fuel combustion, and 0.03% from fuel cells.
Steel Partners Holdings L.P. produces LEDs, a Drawdown solution, but also produces tubing for the oil and gas industry, which is considered fossil fuel revenue. It also produces blades for meat/fish processing plants.
Sociedad Química y Minera de Chile sells fertilizer but not in a way that promotes nutrient management, meaning they do not produce a Drawdown solution.
Stellantis N.V. produces some EVs, a Drawdown solution, but receives the majority of its revenue from traditional ICE vehicles, which we categorize as fossil fuel revenue.
Sterling Construction does not produce any not leak detection or water conservation technologies and therefore fails our water distribution efficiency filter.
Toyota Motor produces some EVs, a Drawdown solution, but receives the majority of its revenue from traditional ICE vehicles, which we categorize as fossil fuel revenue.
Tutor Perini builds military defense facilities, which fails the defense filter because it sells a product/service to the military that is not a Drawdown solution.
Tattooed Chef, sells vegetarian/vegan products, but in order to count towards the Drawdown solution of promoting a plant-based diet, a must not make products that include animal products.
Tetra Tech helps clients achieve net zero emissions in their buildings among other pro-climate projects, but it also works with many oil and gas companies. It is unclear what makes up a majority of its revenue.
Tata Motors Limited produces some EVs, a Drawdown solution, but receives 99.8% of its revenue from traditional ICE vehicles, which are categorized as fossil fuel revenue.
Uber theoretically enables rideshareing, a Drawdown solution, but in practice likely increases emissions due to drivers going further from their homes daily to service higher paying regions.
Ultralife derives the majority of its revenue from the promotion of electric vehicles and energy storage, both Drawdown solutions, through the sale of lithium batteries and electric vehicle charging solutions. It also makes scopes for rifles and SATCOM communications for the defense industry, leading it to fail the defense filter
WEC produces 62.2% of its power from fossil fuels, 19.6% from nuclear, 8.4% from mixed sources, and 7.4% from renewables. Even if all power produced from mixed sources was from renewables, WEC would still not have >50% power from non fossil fuel sources.
Williams Industrial Services Group maintains nuclear projects and some renewable projects, but also works on fossil fuel plants. It is unclear which is a majority of their revenue.
Advanced Drainage Systems does not produce any not leak detection or water conservation technologies and therefore fails our water distribution efficiency filter.
Xcel produces 53% of its power from fossil fuels, 30% from renewables, 13% from nuclear, and 4% from mixed sources. Even if all of the power produced from mixed sources was from renewables, Xcel still would not produce > 50% of its power from non fossil fuel sources.
Zymergen biofacturing and bio-based products like adhesives largely for electronics, but not creation of bioplastics. They IPO'd in April 2021, lack an annual report/investor presentation/description of their products & services
Cement is a major emitter of CO2e. CRH is leading the push towards carbon-neutral cement (commitment by 2050), having already reduced their emissions by 26%.
Covanta Holding operates facilities that burn waste to produce electricity and recycle industrial waste. Waste-to-energy is an important bridge solution
Belden sells basic connectiviting solutions for energy and telecom, but not products specifically designed to strengthen and expand the grid, and therefore does not produce a Drawdown solution
Lydall creates insulation for things like car interiors to reduce noise, not to help buildings stay temperate, meaning they produce no Drawdown solution
Lucid makes luxury electric sedans in the United States. Its IPO date was less than six months before the 2022 Climate Index update, leading it to be excluded from this years index.
Li-Cycle recycles old lithium-ion batteries to create new ones. Its IPO date was less than six months before the 2022 Climate Index update, leading it to be excluded from this years index.
Rivian makes electric pickup trucks, SUVs, and delivery vehicles. Its IPO date was less than six months before the 2022 Climate Index update, leading it to be excluded from this years index.
The Metals Company mines deep sea metals that are rare and critical for batteries. Its IPO date was less than six months before the 2022 Climate Index update, leading it to be excluded from this years index.
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