Sustainable Investing weekly blog: 5th Nov 2021 (Issue 14)

This blog does not constitute Investment Research as defined in COBS 12.2.17 of the FCA’s Handbook of Rules and Guidance (“FCA Rules”). See the end of this blog for links to important information and disclaimers.

Our weekly summary of the key news stories, developments, and reports that are impacting investing in the wider transition to net zero carbon and a greener/fairer society.


In a week where there has been considerable focus on high level pledges and promises, we want to look at the practicalities. Our top story examines the surge in EV sales in Europe and the practical issues around building out the charging infrastructure that is increasingly becoming important. We follow with an article from NBER on the falling costs of hybrid solar & storage, and how this can increasingly contribute to grid resilience at higher levels of renewable electricity generation, then we examine the licencing deal between the Ag giant CNH Industrial and Monarch Tractors, the US based agtech company specialising in fully electric autonomous tractors. We finish with a guest story from our human rights expert on the increasing talk of creating a “crime” of ecocide and what it might mean. 

The format is simple, first our summary of the key points of the story (click on the green link to read the original) and then what we think it means for investors. The focus is on news flow that we think should change the markets perception of the investment case of individual stocks and sub sectors. So not the place to come to for news that has already been well covered in say the FT. Our approach is unashamedly long term, so we ignore short term noise.

If you would like to subscribe, please contact Dan at dan@sustainableinvesting.co.uk. For the next few weeks, we will focus on just four key stories, and then we will ramp up coverage. For now, the blog will be freely available but at some point we will shift to a public blog and a more detailed client ie subscription version.

This week’s top story : is the European EV momentum becoming unstoppable ? 




Germany’s plugin EV share above 30% (CleanTechnica)

Main points of the story as published

  • Germany, the world’s 5th largest auto market, and Europe’s largest, saw plugin electric vehicles take 30.4% of new sales in October, up almost 1.75× year-on-year. Full electrics grew mostly strongly, up over 2× YoY, taking 17.1% share. The overall auto market was down some 36% from 2019 levels, at 178,683 units. The cumulative 2021 plugin share now stands at 24.2%, over double the 10.9% at this point in 2020.
  • Diesels had a temporary respite from their years of decline in October, managing just to outdo BEVs in share for one last month, having been overtaken by BEVs for the first time ever in September. Petrol share declined from 42.1%  one year ago, to 36.2% in October 2021.  Although diesel has been taking the brunt of the losses from growing plugins, obviously when diesel falls almost entirely out of the way (sub 10%) in the next year or so, petrol will start to quickly take those hits. We can expect to see petrol’s decline curve become more visible toward the end of 2022.

Our take on this

  • Those who have followed our analysis over recent years will know we have long been supporters of the relevance of the Rogers innovation adaption curve – often referred to as the technology diffusion curve to the EV market. This starts with innovators, builds through early adopters then on to early majority and so on. Each group have very different requirements and motivations, and its not until you get into the early majority (the group that takes market share from c.16% through to 50%) that what we think of as the practical arguments and considerations really start to come into play. Early majority consumers start to worry more about range, cost and charging. But the solutions do not yet need to be “perfect” (you need that for the later majority), just ok.
  • The report above highlights that Germany is now starting to engage this group and other large European EV markets such as the UK (now No 2, just ahead of France), are not far behind (UK plugin EV share at 23%). Its important to note that while the cumulative German plug in share is running at 24%, full electrics are still down below 15%. One issue for this group that is tough to fix is charging. As McKinsey points out in their recent catchy titled “Scaling EV infrastructure to meet net-zero targets” (found here) “downstream, charging infrastructure across multiple vehicle classes (such as passenger cars, trucks, and buses) and use cases (such as home, work, depot, or highway) will have to be ramped up fast”.
  • The World Economic Forum estimated back in September 2020, that it could cost about $500 billion globally, to deliver the estimated 290 million charging points that should be deployed by 2040. That is a serious slug of money. Ignoring for now the technical issues, such as plug types (CCS or Chademo), picking the charging winners from an investment perspective is tough. The recent UK report by Which ((UK charging issues and how to fix them), highlighted that there are more than 30 charging networks just in the UK. And unlike petrol stations, where you just turn up, fill & pay, only 8% of chargers in the UK are both rapid (quick to charge) and accept contactless payments, so you could need a lot of apps!
  • Our biggest concern is the financial model. Smart charging at home or work makes sense and we can see over time how it could work financially, with the auto manufacturer (for at home) or the employer (at work) making it “part of the offer”.  And we get fast charging, for the small number of  journeys, where speed of charging is of the essence (remembering that  long journeys are less common than you might think, with average distance driven per day in Europe only between 6km in Croatia and 20km in Germany – European passenger mobility statistics). Its everything else in between that we struggle with.
  • One way of thinking about it is to roll forward the petrol (or gas) station model – the financials of a pure fuel only station are not great. In many (most) cases, the sites have turned into retail outlets, with fuel fill up as an added feature rather than the main offer. Add in the longer dwell time to refuel an EV, and the financials get worse. Its a topic we plan to come back to (we ran the numbers a few years ago, so the models need updating), but our current thinking is that we either need a lot of public money, or we move toward a model where retailers, business parks etc  etc offer EV charging as “free” service.  The longer natural dwell time at these sites allows “slower & cheaper” charging – suggesting that the successful business model could be the supply of charging stations as a service.

Electricity generation – cost of combined solar & storage still falling



Cost of solar & storage fell across all segments  (PVtech)

Main points of the story as published

  • The PVtech report highlights recent work out from the US National Renewable Energy Laboratory (NREL) annual bench marking exercise for the cost of solar PV and energy storage (found here). Researchers found that the cost of a 100MW utility-scale single-axis solar plant fell by 12.31% (from US$1.02/Wdc to US$0.89/Wdc).  Installed costs for a 60MW / 240MWh standalone battery energy storage system (BESS) fell by 13.14% (from US$437/kWh to US$379/kWh).
  • The cost of a utility-scale PV + BESS system, DC-coupled with 100MW PV and 60MW / 240MWh BESS fell by 11.55% from US$190 million to US$168 million. For an AC-coupled system of the same generation, output and capacity, the cost reduction was slightly greater, at 12.26%, falling from US$190 million to US$167 million. Residential PV-plus-storage’s LCOE fell 13%, as did utility-scale solar-plus-storage. Residential standalone PV’s LCOE fell 9%, as did the LCOE of commercial-scale PV systems. Utility-scale PV system LCOE fell by 12% and commercial solar-plus-storage by 7%.

Our take on this

  • The falling cost of solar, especially utility scale solar, is one of the foundations of our “electrify (nearly) everything” thesis. Regular readers will recall that we highlighted work from the Institute for New Economic Thinking that suggested tis could be a trend for a number of years yet (renewables to keep getting cheaper).
  • As well as the obvious conclusion that renewables will “naturally” replace fossil fuel electricity generation in many markets, if decisions are made on a pure financial basis (as per this IRENA report- majority of new renewables cheaper than fossil fuel), there is also a material read through for electricity grid support spending. Here we are thinking of renewable connectors, interconnectors, grid strengthening, battery storage (both short & long duration) and demand management. The expected growth in renewable electricity generation means many countries will need to invest heavily in these “emerging” segments.
  • Recent studies have suggested spending on these activities in Europe could exceed E400bn in the period to 2030 (European grid connecting the dots) and our own analysis (ask Dan for a copy) suggests that spending in the US over the same period could be as much as $600bn. This report (also from NREL – lowest cost path to 100% renewables) examines some of these issues from the perspective of regional differences across the US.

Agriculture & Natural Capital – CNH & Monarch Tractor licence tie up



CNH & Monarch tractor agree multi year licencing agreement (global news wire )

Main points of the story as published

  • CNH has signed an exclusive, multi-year licensing agreement for electrification technologies with Monarch Tractor, a US-based agtech specialising in fully electric autonomous tractors. (In 2020, Monarch claimed to launch the world’s first “fully-electric, driver optional” tractor.)
  • Described as mutually beneficial, CNH will “enhance its internal electrification capabilities and develop and implement new electrified platforms faster”. Monarch Tractor will be able to leverage CNH’s “deep sector expertise in product, brand, distribution, and supply chain strength”.
  • CNH’s plan focuses on low horsepower tractors which will be developed across multiple product families in the coming years, while continuously gathering feedback from farmers to ensure customer needs are met.

Our take on this

  • Precision ag and ag robotics are two of the most exciting opportunities in the agtech space. Currently worth less than US$1bn, our analysis suggests robotics has the potential to be c. US$30bn p.a. market with a near-term 20-25% CAGR out to 2025. But as CNH’s comments on timing and customer feedback make clear, there are still hurdles to clear before widespread adoption of electric and autonomous tractors. These centre on the technology, given the complexity of the farm operating environment and requirement for long operating periods, and the economics (upfront capex for a farmer).
  • The CNH-Monarch deal also highlights a clear trend we have seen throughout 2021. Ag OEMs have been looking to acquire the technology needed to compete in these new markets while start-ups and the smaller suppliers, who are developing the technologies, need distribution and clear routes to market. In 2021 so far we have seen:
    • Deere follow its 2017 purchase of see-and-spray pioneer Blue River Technology with the acquisition of Bear Flag Robotics in August 2021.
    • CNH took a minority stake in Monarch Tractor in March and followed it up with the acquisition of Raven Industries in June. Raven is a leading supplier of precision ag and autonomy technologies.
    • Kubota bought Agjunction in October. Agjunction describes itself as a global provider of advanced guidance, autosteering, and autonomy solutions for precision agriculture applications.
    • Valmont, a leading producer of irrigation equipment for agriculture acquired Prospera in May. Prospera is an AI company, specialising in the application of machine learning and computer vision in agriculture.

Social and Legal factors


Photo by Mahosadha Ong on Unsplash
  • This week our good friend Kristina Touzenis, who has many years experience in the human rights field (LinkedIn profile here), has kindly guest written the social & legal section of the weekly. Thank you Kristina. Just a reminder, this section is not written and prepared by Sustainable Investing LLP, quite frankly, we are not experts in this field, so we leave the topic to those that are. This week she looks into the increasing interest in expanding international law to cover ecocide.  As the Law Society of Scotland article highlights, this is not a fringe idea, but something that serious lawyers and governments are looking into. As COP26 draws to a close, its another example of how human rights law has become something we all need to consider in our investments.

Ecocide – a crime against the planet (Law Society of Scotland)

Main points of the story as published

  • Members of the Scottish Parliament were recently briefed on a legal concept that is rapidly gaining traction on the international stage: an international crime of “ecocide”. Our briefing of MSPs, one of many political briefings we’ve been requested to provide lately, asserted that international law may have a seminal role to play in transforming our relationship with the natural world, shifting that relationship from one of harm to one of harmony. This is because, despite significant progress, existing laws and treaties are proving inadequate to supply the strong guardrail needed to prevent the root causes of the global climate and ecological crisis.
  • What is required is nothing short of a new taboo, and criminal law is particularly well placed to help create this, since in our dominant (Western) paradigm we use criminal law to draw moral lines. We all know one cannot request a licence to kill people in pursuit of a new infrastructure project. Indeed, it wouldn’t even cross our minds to do so. But we don’t yet recoil in the same (healthy) way from destruction of ecosystems, and it is becoming ever more apparent that we must. We believe an international crime of ecocide has the potential to begin to create this much-needed shift in perspective.

Kristina’s take on this story

  • This June 2021, a panel, convened by the Stop Ecocide Foundation, of top international criminal and environmental lawyers drafted a legal definition of ecocide. “ “Ecocide” means unlawful or wanton acts committed with knowledge that there is a substantial likelihood of severe and either widespread or long-term damage to the environment being caused by those acts”. The work has been inspired by earlier efforts, from 1945 onwards, to forge definitions of new international crimes, including ‘genocide’ and ‘crimes against humanity’. Ecocide draws from both terms, in form and substance.
  • For the purpose of what ecocide encompasses: “Wanton” means with reckless disregard for damage which would be clearly excessive in relation to the social and economic benefits anticipated; b. “Severe” means damage which involves very serious adverse changes, disruption or harm to any element of the environment, including grave impacts on human life or natural, cultural or economic resources; c. “Widespread” means damage which extends beyond a limited geographic area, crosses state boundaries, or is suffered by an entire ecosystem or species or a large number of human beings; d. “Long-term” means damage which is irreversible or which cannot be redressed through natural recovery within a reasonable period of time; e. “Environment” means the earth, its biosphere, cryosphere, lithosphere, hydrosphere and atmosphere, as well as outer space.
  • This echoes – as could be expected – the definition of “genocide”. Genocide was first recognised as a crime under international law in 1946 by the United Nations General Assembly (A/RES/96-I). It was codified as an independent crime in the 1948 Convention on the Prevention and Punishment of the Crime of Genocide (the Genocide Convention)The definition of the crime of genocide as contained in Article II of the Genocide Convention was the result of a negotiating process and reflects the compromise reached among United Nations Member States in 1948 at the time of drafting the Convention. Genocide is defined in the same terms as in the Genocide Convention in the Rome Statute of the International Criminal Court (Article 6), as well as in the statutes of other international and hybrid jurisdictions. Many States have also criminalized genocide in their domestic law.
  • It also echoes the element of when a crime is a crime against humanity. The notion of crimes against humanity has evolved under international customary law and through the jurisdictions of international courts such as the International Criminal Court, the International Criminal Tribunal for the former Yugoslavia and the International Criminal Tribunal for Rwanda. As with genocide, many States have also criminalized crimes against humanity in their domestic law. Crimes against humanity have not yet been codified in a dedicated treaty of international law, unlike genocide and war crimes, although there are efforts to do so. Despite this, the prohibition of crimes against humanity, similar to the prohibition of genocide, has been considered a peremptory norm of international law, from which no derogation is permitted and which is applicable to all States.
  • The proposed definition creates two thresholds for prohibited conduct: First, there must exist a substantial likelihood that the conduct (which includes an act or omission) will cause severe and either widespread or long-term damage to the environment. The Panel proposing it recognised that this threshold may, taken alone, be overly inclusive. There are activities that are legal, socially beneficial and responsibly operated to minimize impacts that nonetheless cause (or are likely to cause) severe and either widespread or long-term damage to the environment. Therefore, the Panel considered it necessary to include a second threshold. The second threshold requires proof that the acts are unlawful or wanton. This additional threshold draws upon environmental law principles, which balance social and economic benefits with environmental harms through the concept of sustainable development. With these two thresholds, the prosecution would need to prove a substantial likelihood of causing severe and either widespread or long-term damage through acts or omissions that are either unlawful or wanton.
  • What is the legal process for making ECOCIDE an international atrocity crime? A Head of State (or more than one) must propose an ecocide amendment to the Rome Statute, the governing document of the International Criminal Court. This amendment must be submitted at least 3 months before a meeting of the States Parties to the Rome Statute (usually the Assembly, held every December in The Hague, Netherlands and sometimes at the UN in New York). A simple majority at that meeting enables the amendment to enter into consideration. A Crime Review Conference may then be convened, or negotiation may progress via formal and informal discussion between representatives of States Parties. With the agreement of at least 2/3 of member states (currently 82 out of 123) the amendment is can be adopted into the Statute and ratification and enforcement can proceed. Any country ratifying must enforce the law in its own domestic legislation after one year.

One last thought

Krill needs whales

Research on whale feeding highlights how the precipitous decline of large marine mammals has negatively impacted the health and productivity of ocean ecosystems. One might assume that from the perspective of krill – the tiny shrimp-like creatures the whales feast on – this would be a boon. But new research published on November 3, 2021, in Nature from a collaboration led by Stanford University’s Goldbogen Lab suggests the opposite: that the decline of baleen whales in the Southern Ocean has led to a decline of krill. It turns out that krill rely on whale excrement … so fewer whales means a lot less krill. And to quote …. “krill are often called the cornerstone of the ocean’s ecosystems. They’re the most abundant crustaceans in the world, and are a part of the basic diet for many animals like whiles, seals, fish, squid, penguins, and sea birds.”

Before we leave you … in last weeks “one last thought” we highlighted the upcoming Maine state vote – with question 1 being a citizen initiative to (effectively) ban the construction of the Central Maine Power corridor. The result went the way of the ban, by  59% to 41%, so its off to the courts then.

Sustainable Investing LLP is an appointed representative of Varramore Partners Limited which is authorised and regulated by the Financial Conduct Authority (“FCA”) in the United Kingdom (“UK”). Sustainable Investing’s FCA Firm Reference Number is 946165.

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