WSJ What’s News - How Clean-Fuel Startups Went From the Next Big Thing to Money Pits

Episode Date: August 27, 2024

A.M. Edition for Aug. 27. Hydrogen and biofuel projects promising to wean large parts of the economy off oil and gas have sputtered. Journal Climate Finance Reporter Amrith Ramkumar says that’s threatening global climate goals. Plus, how Chinese AI developers are skirting U.S. restrictions to access Nvidia’s advanced chips. And, Mark Zuckerberg says the Biden administration was wrong to pressure Facebook to censor Covid-related content during the pandemic. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Introducing TD Insurance for Business with customized coverage options for your business. Because at TD Insurance, we understand that your business is unique, so your business insurance should be too. Contact a licensed TD Insurance advisor to learn more. Mark Zuckerberg criticizes the Biden administration for pressuring it to censor COVID related content. Plus, China finds a way to access banned Nvidia chips and what a string of failures among clean fuel startups could mean for the world's climate goals. Zooming out, that's really bad news for a lot of sectors of the economy that need hydrogen and biofuels to reduce emissions.

It's Tuesday, August 27th. I'm Luke Vargas for the Wall Street Journal and here is the AM edition of What's News, the top headlines and business stories moving your world today. Meta CEO Mark Zuckerberg has criticized what he says was improper White House pressure to censor coronavirus-related content and said that he doesn't plan to repeat 2020 efforts to fund local elections, a practice that had drawn rebuke from Republicans. In a letter to House Judiciary Committee Chairman Jim Jordan, a Republican, Zuckerberg said it was wrong to bow to Biden administration pressure in 2021 to restrict certain COVID-19-related content on Facebook,

including humor and satire, and vowed to reject any such future efforts. Jordan has been targeting big tech companies in general, and Zuckerberg in particular, over what he alleges is censorship of conservative views. A White House spokeswoman didn't immediately respond to a request for comment. The White House had previously said its discussions with social media companies aimed to promote vaccine adoption, given fears at the time that vaccine hesitancy was being driven by false information seen on Facebook. Special Counsel Jack Smith is pushing to revive his prosecution of Donald Trump over the former president's retention of classified documents after leaving the White House, telling an

appeals court that the federal judge in Florida who tossed the case in July made a series of errors and ignored decades of precedent in doing so. Judge Aileen Cannon dismissed the forty-count indictment against Trump on the grounds that Smith's appointment by Attorney General Merrick Garland was unconstitutional, saying such officials typically must be confirmed by the Senate. If upheld, her decision could jeopardize the future of a mechanism long relied on by the Justice Department to avoid conflicts of interest in investigations of politically powerful people.

Even if Smith's appeal is successful, the documents case wouldn't go to trial soon. Chinese AI developers have found a new way around U.S. export controls that are meant to keep advanced chips made by Nvidia out of their hands. Journal tech reporter Rafael Huang told us how. So they work with middlemen who help find AI servers and oversee data centers. It is actually not too different from using traditional cloud computing services like AWS and Google Cloud. You run AI algorithms in a remote data center. The key difference is that

they are using smart contracts on blockchain and transacting with cryptocurrencies. These technologies help max the user's identity and make such activities less traceable. NVIDIA declined to comment for Rafael's story, though it's previously said it complies with U.S. export controls and expects its partners to do the same. Edgar Bronfman Jr. has dropped his bid for Paramount's media empire, paving the way for it to be sold to David Ellison's Skydance. In a statement, Bronfman said he still sees Paramount as, quote, an extraordinary company. Shares in Paramount slipped in off-hours trading.

Canada is planning to slap a 100% tariff on imports of Chinese-made electric vehicles, matching US tariffs introduced earlier this year. Canadian Prime Minister Justin Trudeau said his government was acting to protect domestic manufacturing. See, because of our government's choices and the hard work of hundreds of thousands of Canadian autoworkers, we are transforming Canada's automotive sector to be a global

leader in building the vehicles of tomorrow. But actors like China have chosen to give themselves an unfair advantage in the global marketplace, compromising the security of our critical industries and displacing dedicated Canadian autos and metal workers." Canada will also impose a 25% surtax on imports of steel and aluminum products from China, which the country's finance minister said will protect Canadian workers and prevent Chinese goods from being diverted through Canada to other trading partners. Apple will soon be getting a new CFO.

Finance chief Luca Maestri is stepping down next year and will be succeeded by Kevin Parek, currently VP of Financial Planning and Analysis at the company. Separately, Apple has scheduled an event for September 9th where it's expected to unveil the iPhone 16, which will include new AI features. Well, if you thought the NFL was flush with cash before, just wait. According to our reporting, NFL owners today are expected to pass a policy letting them sell up to 10% of their teams to a select group of private equity firms.

To invest, firms have agreed to leak parameters, which include no governance rights, no preferred equity investments, and will have to hold their stakes for a minimum of six years. Unlike the European soccer model, however, sovereign wealth funds are blocked from direct investment. And Market Watchers today will be on the lookout for house price and consumer confidence data due out this morning, as well as earnings from Nordstrom this afternoon. Coming up after the passage of a U.S. climate law two years ago, hydrogen and biofuel projects looked like the next big thing.

But now, many of them look like money pits. We've got that story after the break. So what's it like to buy your first cryptocurrency on Kraken? Well, let's say I'm at a food truck I've never tried before. Am I gonna go all in on the loaded taco? No, sir. I'm keeping it simple. Starting small.

That's trading on Kraken. Pick from over 190 assets and start with the 10 bucks in your pocket. Easy. Go to kraken.com and see what crypto can be. Not investment advice. Crypto trading involves risk of loss. See kraken.com slash legal slash ca dash pru dash disclaimer for info on Kraken's undertaking to register in Canada. Clean fuel startups that promise to power planes, ships and trucks are sputtering before they can even get off the ground. Big names including Chevron, BP and Shell are all scaling back projects to make biofuel,

while a company that was backed by Airbus, JetBlue, and GE Aerospace working on hydrogen to power planes has gone bust. Our Kate Bulevent spoke to journal climate finance reporter Amrith Ramkumar, who says it's a sign of how hard it will be to wean many industries off oil and gas. Clean fuel startups have really been through the wringer in the last few years. Two years ago, when the climate law known as the Inflation Reduction Act passed in the Fuel startups have really been through the wringer already collapsed. A lot of share prices of these companies that were soaring two years ago have fallen 80, 90 percent and people are wondering and worrying that a lot of other startups could join this sort of graveyard that's beginning to grow.

Okay, so quite a dramatic turnaround. What's behind this shift? The biggest driver, surprise, surprise, as usual with clean energy sources is cost. A lot of these fuel startups are offering solutions that cost a lot more than fossil fuel and surprise, surprise, as usual with clean energy sources is cost. sense anymore. credit rules on hydrogen still haven't been finalized and the rules that have been proposed aren't sufficient to really get the industry going. So startups like Plug Power and Electric Hydrogen that were supposed to be these huge winners in the US, they're actually now expanding overseas which is a huge shift from what we were hearing one to two years ago when everyone globally seemed to want to invest in the US in hydrogen.

And I imagine that's also bad news for climate efforts more broadly. How big of a setback are we facing? The turbulence in hydrogen and biofuels is a major issue for meeting the world's climate goals. It's something like 30 to 40% of the economy globally that needs solutions beyond wind, solar, batteries, the traditional renewable sectors, and hydrogen biofuels are a huge part of that. Hydrogen especially has been held up by big companies globally across sectors as a key to unlocking the next phase of decarbonization.

And right now we're just seeing not a lot of hydrogen be produced and not a lot of projects move forward to final investment decision. not a lot of hydrogen be produced, saying that they might have to do the unusual step of producing their own clean power to make hydrogen because of what they're seeing in the power markets. And that sort of shows how difficult this all will be and is for that industry and the economy's climate targets broadly. These issues facing clean fuel startups, could they be seen as normal growing pains for a relatively new sector or are these more deep-rooted problems we're talking about here?

Analysts say the turbulence is a normal bump in the road for a long-term clean energy industry story. So as usual, there was a lot of hype and investors got a bit over their skis and very excited a few years ago. And now we've seen this retrenchment. Over time, they expect a lot of these challenges to be worked out, like tax credits and policy and now we've seen this retrenchment. Over time they expect a lot of these challenges to be worked out, like tax credits and policies should eventually come through.

And some of the investment decisions that have been on hold, they'll likely eventually progress. what's needed to put the world on track for its climate targets. So definitely an example where there's this short-term pain and we will likely see big companies and investors find opportunities because valuations have fallen a lot. There are a lot of companies and interesting technologies that are no longer overvalued. So it'll definitely be an interesting space to watch long-term. That was the Journal's climate finance reporter, Amrit Ramkumar. Amrit, thanks so much for your time. Thanks so much for having me. And finally, as students head back to school, a new poll by the think tank RAND shows many of

their teachers are dreading it, with just 42% of educators saying the stress and disappointment of the job are worth it, compared to 70% as recently as 2018. Student behavior and low pay are partly to blame, as are cell phones in classrooms, something that many school districts are banning this year. And we want to know what you think. If you're a teacher, do those bans make your job easier or harder, and what questions do you have about the new policies? To weigh in, send a voice memo to wnpod at wsj.com, or leave a voicemail with your name

and location at 212-416-4328, and we just might use it on the show. And that's it for What's News for Tuesday morning. Today's show was produced by Kate Bulevent and Daniel Bach with supervising producer Christina Rocca. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.