Ukraine

• Russia struck the western Ukrainian city of Lviv, killing seven—the first civilian deaths recorded in Lviv—and severing a corridor that refugees were using to escape to Poland. The attack showed that Russia hasn’t entirely shifted its focus to the east.
• Meanwhile, humanitarian corridors out of Mariupol in the east remained closed. An estimated 100,000 civilians are still trapped there, and the mayor says 10,000 have died.
• Ukraine also estimates that Russia is holding around 27,000 Ukrainians in “filtration camps” near Mariupol, where they’re scrutinized before being deported to Russia (or possibly facing worse fates).
• Closer to Kyiv, the Post says Russian fired thousands of “fléchettes”—potentially lethal tiny (1”) arrows—into the town of Bucha as they shelled the area with 122mm 3Sh1 artillery rounds. Fléchettes were common during WWI but rarely used in modern war: some human rights group called for them to be banned since they rain down indiscriminately over areas as large as a football field.

Geopolitics

• Ukraine completed its questionnaire to be considered for candidacy to join the European Union, and Pres. Zelensky personally delivered the form to European Commission president Ursula von der Leyen on April 8. Ukraine hopes it will officially be named a candidate country in early June.
• Moscow’s mayor estimated the city could lose up to 200,000 jobs due to sanctions and international ostracism, and said the government was setting aside 3.6 billion rubles ($41 million) to support workers. The city’s 12 million residents are also facing soaring inflation, and analysts expect a deep recession.
• The NYT writes that it’s going to be hard for Europe to attract investors to finance the transition from Russian oil and gas to greener energy, given historic stumbles in new energy sectors and rising competition from “fast money” investments. See below.

China

• The Chinese government said three people have died of COVID in Shanghai, where a lengthy and strict lockdown is starting to frustrate residents. They’d be the first three COVID deaths in the 25 million-person city since March.
• China’s unemployment rose to 5.8%—the highest level since early in the pandemic—and consumer spending fell by 3.5% from a year ago.

Libya

• Demonstrators have now forced Libya’s largest oilfield, Sharara, to shut down too. Confusingly, rival PMs Dbeibah and Bashagha blame each other’s supporters for shutting down the Sharara and El Feel fields

Other News

• Israel intercepted a rocket fired from Gaza. No group has claimed responsibility yet, but analysts speculate Islamic Jihad fired the rocket—likely in response to recent clashes between Palestinians and Israeli police at the Al Aqsa Mosque.
• Hamas—the militant group that runs Gaza—condemned Israeli police for the clashes at Al Aqsa, but told mediators it would refrain from militarily escalating the situation (e.g. by firing rockets into Israel): it’s still rebuilding Gaza’s infrastructure after last May’s brief war, and likely can’t afford another military confrontation right now.

The Next Hurdle in Europe’s Energy Transition: Being More Enticing Than NFTs (NYT)

Financing the next generation of green energy technologies means larger investments and getting venture capitalists to turn their attention away from “fast money.”

When Jakob Bitner was 7, he left Russia for Germany with his parents and sister. Twenty-eight years later, he is set on solving a vexing green-energy problem that could help Germany end its dependence on imported energy from Russia, or anywhere.

The problem: how to make wind and solar energy available 24 hours a day, seven days a week, even if the sun is not shining or the wind not blowing.

The company that Mr. Bitner co-founded in Munich in 2016, VoltStorage, found some success selling storage battery packs for solar power to homeowners in Europe. Now the company is developing much larger batteries — each about the size of a shipping container — based on a chemical process that can store and discharge electricity over days, not just hours like today’s most popular battery technology.

These ambitions to overcome the unreliable nature of renewable energy fit perfectly with Europe’s targets to reduce dependence on fossil fuels. But Mr. Bitner’s company is facing a frustrating reality that threatens to undercut Europe’s plans and poses a wider challenge in the global fight against climate change: a lack of money to finish the job.

VoltStorage needs “significantly” more money to develop its new battery technology, Mr. Bitner said. In 2020 and 2021, the company raised 11 million euros, or $12 million. Now, it is trying to raise up to €40 million more by this summer.

“Even though we had great early-stage investors from Germany and Europe that keep supporting us, it becomes very hard to raise the tickets we need right now,” Mr. Bitner said, referring to individual investments.

Europe offers a preview for the rest of the world. The European Union has aggressive targets to reduce greenhouse gas emissions, and there is broad political support for tackling climate change. The bloc has poured public money into grants for developing new technology.

But after getting initial start-up money or grant funding, businesses are struggling to raise funds for the kind of innovative, large-scale projects needed to complete the transition from carbon-spewing sources of energy. The funding gap means Europeans face the prospect of either falling short of ambitious climate targets or facing further energy shortages and rising costs.

Solutions are available if given a financial boost, experts said. Almost half the reductions in emissions to meet net-zero targets by 2050 will come from technologies currently in their infancy, according to the International Energy Agency. There is, in theory, plenty of capital available globally for the multitrillion-dollar task of funding this transition to greener energy.

The war in Ukraine has made Europe’s energy transition even more urgent. The European Union has said it will cut imported Russian natural gas by two-thirds this year and completely by the end of the decade. While some of that supply will be made up by imports from other countries, such as the United States and Qatar, expanding domestic renewable energy capacity is a critical pillar to this plan.

But attracting investors to projects trying to move beyond mature technologies like solar and wind power is tough. Venture capitalists, once cheerleaders of green energy, are more infatuated with cryptocurrencies and start-ups that deliver groceries and beer within minutes. Many investors are put off by capital-intensive investments. And governments have further muddied the water with inconsistent policies that undermine their bold pledges to reduce carbon emissions.

Venture capitalists’ other interests

Tony Fadell, who spent most of his career trying to turn emerging technologies into mainstream products as an executive at Apple and founder of Nest, said that even as the world faced the risks of climate change, money was flooding into less urgent developments in cryptocurrency, the so-called metaverse and the digital art collections sold as NFTs. Last year, venture capitalists invested $11.9 billion in renewable energy globally, compared with $30.1 billion in cryptocurrency and blockchain, according to PitchBook.

Of the $106 billion invested by venture capitalists in European start-ups last year, just 4 percent went into energy investments, according to PitchBook.

“We need to get real,” said Mr. Fadell, who now lives in Paris and has proposed ideas on energy policy to the French government. “Too many people are investing in the things that are not going to fix our existential problems. They are just investing in fast money.”

It has not helped that the industry has been burned before by a green tech boom. About 15 years ago, environmentally conscious start-ups were seen as the next big thing in Silicon Valley. One of the premier venture capital firms, Kleiner Perkins Caufield & Byers, made former Vice President Al Gore a partner and pledged that clean energy would eventually make up at least a third of its total investments. Instead, Kleiner became a cautionary tale about the risks of investing in energy-related companies as the firm missed out on early backing of social media companies like Facebook and Twitter.

There is evidence that these old fears are receding. Two years ago 360 Capital, a venture capital firm based in Paris and Milan dealing in early-stage investment, introduced a dedicated fund investing in clean energy and sustainability companies. The firm is now planning to open up the fund to more investors, expanding it to €150 million from a €30 million fund.

There are a growing number of dedicated funds for energy investments. But even then there is a tendency for the companies in them to be software developers, deemed less risky than builders of larger-scale energy projects. Four of the seven companies backed by 360 Capital’s new fund are artificial intelligence companies and software providers.

Still, the situation has changed completely since the company’s first major green-energy investment in 2008, Fausto Boni, the firm’s founder, said. “We see potentially lots of money coming into the sector, and so many of the issues we had 15 years ago are on their way to being overcome,” he said. But the availability of bigger investments needed to help companies expand in Europe still lags behind, he added.

The funding gap

Breakthrough Energy Catalyst, which is backed by Bill Gates, is trying to fill the gap. It was formed in late 2021 to help move promising technology from development to commercial use. In Europe, it is a $1 billion initiative with the European Commission and European Investment Bank to support four types of technologies — long-duration energy storage, clean hydrogen, sustainable aviation fuels and direct air capture of carbon dioxide — that it believes need to scale quickly.

In Europe, there are “significant difficulties with the scaling-up phase,” said Ann Mettler, the vice president for Europe at Breakthrough Energy and a former director general at the European Commission. There is money for start-ups, but when companies become reasonably successful and a bit larger, they are often acquired by American or Chinese companies, she said. This leaves fewer independent companies in Europe focused on the energy problems they set out to solve.

Companies that build complex — and often expensive — hardware, like Mr. Bitner’s batteries for long-duration energy storage, have an especially hard time finding investors willing to stomach the risks. After a few investment rounds, the companies are too big for early-stage investors but too small to appeal to institutional investors looking for safer places to park large amounts of cash.

“If you look at typical climate technologies, such as wind and solar and even the lithium-ion batteries, they took well over four decades to go from the early R&D to the large-scale commercialization and cost competitiveness,” Ms. Mettler said, referring to research and development. “Four decades — which obviously we don’t have.”

What investors want

There are some signs of improvement, including more funds focused on clean energy or sustainability and more companies securing larger investment rounds. But there is a sense of frustration as investors, companies and European governments agree that innovation and adoption of new technology need to happen much more quickly to reduce carbon emissions sharply by 2030.

“You won’t find a place in the world that is more attuned to what is needed than Europe,” Ms. Mettler said. “It’s not for lack of ambition or vision — it’s difficult.”

But investors say government policy can help them more. Despite climate pledges, the regulations and laws in place haven’t created strong enough incentives for investments in new technologies.

Industries like steel and concrete have to be forced to adopt greener methods of production, Mr. Boni, the 360 Capital founder, said.

For energy storage, hydrogen, nuclear power and other large-scale projects, the government should expedite permitting, cut taxes and provide matching funds, said Mr. Fadell, who has put his personal fortune into Future Shape, which backs start-ups addressing societal challenges.

“There are few investors willing to go all in to put up $200 million or $300 million,” Mr. Fadell said. “We need to know the government is on our side.”