The U.S. is transitioning to clean energy much faster than analysts thought five years ago. That’s the conclusion I take from day one of Fortune’s Brainstorm E conference, looking at the nexus of energy, technology and sustainability.
The conference, which assembled several hundred business leaders and energy experts in Austin, Texas, is providing plenty of reason for optimism. Solar and wind energy are expanding faster than expected, thanks to the combination of rapidly falling prices and tax subsidies. Battery technology for energy storage is advancing. Efficiency gains have kept overall energy usage below 2007 levels. And new investments in technology promise more progress in the future. (See this piece on the clean web by Nicholas Eisenberger.) The conference also has highlighted efforts by business to encourage, and profit, from the change – including the creation of a new Energy Transitions Commission to help business gather data and make smart decisions about the rapidly changing energy environment.
The only pessimism came when the conversation turned to Washington, D.C., where increased political polarization has reduced – if not eliminated – the likelihood any kind of energy legislation. “Washington is in the Potomac, and that’s the best we can hope for,” said Christine Todd Whitman, former director of the EPA and governor of New Jersey. When I asked Whitman if the Pope’s advocacy of efforts to address climate change might help relieve the U.S. political stalemate, she responded: “Maybe for a nanosecond.”
More conference coverage here. More news below.
• Energy Transfer to buy Williams
Pipeline giant Energy Transfer Equity is paying $33 billion to buy rival Williams Cos, nearly a third less than the same offer Williams had rejected in June for being too small. This deal is the first major buyout of a midstream company since oil prices crashed, and also creates one of the world’s largest energy infrastructure firms. It is a mostly stock offer, which was panned by investors, as they sent shares of Williams, Energy Transfer and their affiliates lower on Monday. “Right now energy is sort of a toxic environment,” said an industry investor.
• Investors fall out of love with M&A
While we are on the subject of mergers and acquisitions, Wall Street Journal has pointed out that buyers are increasingly getting rebuked by investors when these blockbuster deals are announced. Since July 1, the buyers’ share prices fell 0.6% on average on the first day of trading after an acquisition larger than $1 billion was announced, WSJ notes. It would be the first quarterly decline in three years. The M&A market could be threatened if investors keep chastising acquirers.
WSJ (subscription required)
• Biotech stocks take another dive
Biotech companies found themselves in the crosshairs of another high profile story involving pricing, this time with Democratic leaders asking Valeant Pharmaceuticals why it significantly boosted prices on two critical heart drugs. Shares of Valeant tanked after it was revealed lawmakers are requesting a subpoena forcing Valeant’s chief executive to testify before the House Committee on Oversight and Government Reform regarding the price hikes. The Nasdaq Biotech Index was also dragged lower.
• Yahoo to proceed with Alibaba spinoff
Yahoo is going forward with a plan to spinoff the Internet company’s massive stake in Chinese e-commerce juggernaut Alibaba even after the IRS declined to guarantee it would be tax free. There has been pressure from Wall Street for Yahoo to return money to shareholders, and Yahoo’s plan is to put the shares in an independent public company called Aabaco Holdings, which would control Yahoo’s roughly $22 billion stake in Alibaba. Yahoo is hoping that plan will allow it to avoid a multi-billion dollar tax bill.
• Alcoa to split into two companies
Aloca, formerly a member of the Dow Jones Industrial Average until it was booted in 2013, is planning to split into two publicly-traded firms. The move, expected to be completed by the second half of next year, will almost evenly split Alcoa in terms of current revenue generation. However, the “newer Alcoa” is a little larger and supplies the aerospace and manufacturing industries, potentially a more promising business than the commodities-led Alcoa that will retain the old name.
Around the Water Cooler
• Why Whole Foods is cutting jobs
Whole Foods is cutting 1,500 jobs at a time when the grocery store chain is facing intense competition in the natural and organic food arena, which it helped create. Co-founder John Mackey has told Fortune that Whole Foods has historically focused mostly on quality and service, but in recent years, it’s been working to reduce overhead to better compete on price. And at Fortune’s Brainstorm E, co-CEO Walter Robb said the food industry is going through a “tectonic shift,” as the millennial generation pushes for greater transparency about what they eat.
• Icahn warns of “danger ahead”
Activist investor Carl Icahn on Tuesday posted a video on CarlIcahn.com, calling for taxes to be lowered for corporations and raised for hedge fund managers. “Teddy Roosevelt was great. He stood up to J.P. Morgan. But where do we get a guy like that again,” Icahn asked. He went on to say that Donald Trump – while brash – is willing to say what he believes and thus won praise from Icahn.
• Tesla begins Model X deliveries
Telsa later this evening will hold one of the most important events in the electric carmaker’s 12-year history. At a factory in California, the company will deliver the first of its Model X electric cars, a new crossover SUV, to its first customers. The Model X is important for Tesla: it can help the company attract new customers and will expand production at the company’s California factory. Between the Model S and the Model X, Tesla plans to ship between 50,000 and 55,000 cars this year.