Ransomware and the Pipeline

May 2021

In the last week, one of the largest fuel pipelines in the United States has been shut down as it deals with a ransomware attack.  This is the highest-profile infrastructure cyber-attack on the energy system in the US, and a reminder that this “new” problem is getting much worse – and will continue to do so.  Today we’ll take a look at some implications of this latest attack, and of cyber-risk trends for infrastructure.

The Colonial Pipeline System

Infrastructure Ideas has been writing about infrastructure cyber-risks for some time, and one of our Ten Infrastructure Predictions for 2021 was that these risks would grow for utilities.  Unfortunately, we were right.  The attack on the Colonial Pipeline, which operates the largest fuel pipeline between Texas and New York, has disrupted availability of gasoline and jet fuel for a week – with long lines at gas stations in some areas, and a state of emergency declared by the Governor of Virginia.  The 5,500 mile pipeline carries nearly one-half of the motor and aviation fuels consumed in the Northeast and much of the South (see “What We Know about the Colonial Pipeline Attack,” from the New York Times).  Colonial, the pipeline operator, reported that hackers had infiltrated corporate data, not control of the pipeline itself, but that Colonial had shut down operation of the pipeline to prevent further damage and contain risks.  The FBI has attributed the hack to a Russia-based criminal group known as “Darkside,” which specializes in ransomware attacks against English-language targets.  As of this writing pipeline operations have yet to return to normal.

A customer help pumping gas at Costco, as other wait in line, on Tuesday, May 11, 2021, in Charlotte, N.C. Colonial Pipeline, which delivers about 45% of the fuel consumed on the East Coast, halted operations last week after revealing a cyberattack that it said had affected some of its systems. (AP Photo/Chris Carlson)

The Colonial Pipeline ransomware attack is far from the only headline regarding cyber-attacks on infrastructure in the first months of 2021.  A report in February from the industrial cybersecurity firm Dragos named four separate hacker groups with ties to Russian intelligence services as having targeted industrial control systems in the United States.  One group, named “Kamacite,” reportedly works in cooperation with the GRU, Russia’s largest foreign intelligence agency and has targeted US electricity and oil and gas firms, and is said to have gained network access to firms on several occasions.  Another February report, this one from IBM, found the energy sector to be the third most frequently targeted in 2020 (after finance and manufacturing), up six places from 2019.  Aside from energy, other attacks have targeted the water sector.  An as-yet-unknown hacker gained access to the controls of a water treatment facility in Oldmar, Florida, and attempted (unsuccessfully) to introduce large amounts of lye into the city’s water.  In February, an ex-employee of a water company near Little Rock, Arkansas, was indicted for accessing and attempting to disrupt the company’s systems after being let go.  In 2020, a likely Iranian hacker was found offering to sell network access to a water treatment plant in Florida over the messaging app Telegram.  A recent study profiled in Wired (Water Supply Hacks Are a Serious Threat – and Only Getting Worse) found dozens of hacking incidents at US water installations, with a continued rise over the last decade.  Water utilities turn out to be far more vulnerable to cyber-risks, in spite of the focus of most headlines on electric utilities, as so many water utilities are small and lack the administrative capacity and resources to protect themselves against rapidly evolving attack risks.

The underlying dynamics indicate that infrastructure cyber-risks are, unfortunately, getting much worse.  For one, the growing use of digital controls to manage electricity and other energy installations opens new entry points for hackers to exploit.  Second,  the sheer number of actors involved or with the potential to be involved cyber-attacks is growing rapidly: barriers to entry are low, and the trend towards ransomware attracts criminal groups across the  board.  As one cyber-expert cited in the Dragos report puts it, “A lot of groups are appearing, and there are not a lot going away.”  One element of this week’s Colonial Pipeline attack highlights the issue: the group apparently responsible, dubbed “Darkside”, operates on a business model whereby it develops hacking tools and then sells, rents or leases them to other parties.  It does not require much imagination to see how this will accelerate the availability of hacking tools.  Third, with the multiplication of actors comes a multiplication of targets.  One group Dragos has dubbed “Stibnite” has targeted Azerbaijani electric utilities and wind farms using phishing websites and malicious email attachments: if firms in Azerbaijan are becoming targets, firms in places such as Jordan, Indonesia, Mexico and elsewhere cannot be far behind.  Utilities in lower-income countries, lacking in managerial and financial resources to adequately defend themselves, utilities in areas of internal or external conflict, attractive targets for political or ideological reasons, and utilities in high-crime countries with already diversified and sophisticated criminal groups, are all going to be at particularly high risk in coming years.  Fourth, the types of infrastructure cyber-risks are also expanding.  Ransomware attacks are the flavor of the day, and with the proliferation of hacking tools among criminal networks will doubtlessly expand.  These are expensive and disruptive, but the damage to date from these attacks has been limited in scope and in time.  Yet more aggressive and destructive attacks are unlikely to be far away.  As an alarming new book by Nicole Perloth, This is How They Tell Me the World Ends: the Cyberweapons Arms Race (for a short version, see the excellent review by Sue Halpern in the New York Review of Books, “Weaponizing the Web”) points out, an important feature of cyber-weapons is that they are very cheap compared to traditional “hard” weaponry.  Perloth tells the story of seeing a young Iranian at a hacking conference in Miami demonstrate how to break into the power grid in five seconds: “With his access to the grid, he told us, he could do just about anything he wanted: sabotage data, turn off the lights, blow up a pipeline or chemical plant by manipulating its pressure and temperature gauges.  He casually described each step as if he were telling us how to install a spare tire, instead of a world-ending cyberkinetic attack that officials feared imminent.”  Hacking tools can give intruders access to even critical infrastructure such as nuclear facilities, the power grid, and air traffic control.  But they are relatively cheap compared with other weapons of mass destruction, and for sale in a market that is robust, largely out of sight, and welcoming to anyone with piles of cash at their disposal, whatever their motivation. 

Disruptive technologies continue to change the face of infrastructure.  In many cases, this is bringing lower costs, better services, more convenience and reduced emissions.  Technology, though, is agnostic: the Colonial Pipeline cyberattack is a reminder that disruption can be negative as well as positive.  For infrastructure operators and investors today, there is a clear message from these attacks.  Cyber-risks are not going away, and are going to get worse.  Investments in cyber-security (the FBI, after the Colonial Pipeline breach, has issued a useful “tip sheet” to key US infrastructure providers), insurance, and the ability to re-launch systems after an attack are all going to be increasingly important.  The worst situation will be to be unprepared. 

Previous Infrastructure Ideas columns on Disruptive technologies

Ten Infrastructure Predictions for 2021

January 2021

As for the past several years, we start the new year by looking into our crystal ball and seeing what these twelve months are likely to bring for infrastructure operators, investors and policy-makers (see here for Infrastructure Ideas2018, 2019 and 2020 predictions, and here for how well the predictions tracked for 2018, 2019 and 2020).  Here are ten infrastructure predictions for 2021.

  1. A post-COVID boom for new renewable capacity.  The ongoing COVID pandemic and its ensuing disruptions was the obvious big infrastructure story for 2020, but there were a few segments of outperformance.  Renewable energy managed to hold its own, and now after a few years of generally flat levels of activity globally, is poised to return to significant growth.  Global investment in new renewable energy capacity inched up 2% in 2020 to $304B, according to Bloomberg New Energy Finance, but this level has been essentially flat since 2015.  Underneath the aggregate numbers, patterns are more positive than they’ve been in some time for growth: 2020 was underpinned by new renewables investments in Europe, which is likely to continue to be the case under the EC’s “green recovery” plans; meanwhile investment fell in the two largest individual markets, China and the US, to $84B and $49B respectively.  In both China and the US, we can expect the combination of a return of demand growth (China’s economic growth rate is forecast to be the highest in years), the cost advantages of renewables, and the return of pro-renewable policy under the Biden administration, to underpin a jump in new wind and solar investments in both these markets.  In China in particular, we expect prices of new solar capacity to drop significantly, as the country continues its transition away from its older Feed-in-Tariff procurement mechanism for domestic solar generation towards competitive auctions.  Look for a record-breaking year in total investment and in Gigawatts of new solar capacity added worldwide, and another record for renewables as a share of net new generating capacity added worldwide, at over 70%.
  2. The energy storage market gets back on track.  Prices of energy storage have been tumbling, while the size of utility-installed batteries has been soaring.  The cost of a four-hour storage addition to new generation capacity has fallen from over $80/megawatt-hour in 2010 to less than $10 today.  Nonetheless new installed energy storage capacity has fallen by 15-20% each of the last two years, down to $3.6 billion in 2020, largely due to regulatory uncertainties.  2021 will see a completely different story.  With solar-plus-storage costs for new generation capacity beginning to match the costs of new gas-fired plants, more and more utilities are switching new projects from gas to renewables plus storage.  And with the Biden administration in the US focused on getting a favorable regulatory environment in place, we can expect a surge in new capacity additions in the US.  The last few months have already seen this emerging: according to the Energy Storage Association, fourth-quarter 2020 deployments of energy storage in the US more than doubled those of any previous quarter on record.  The EIA expects a record 4.3 GW of new battery power to be added worldwide in 2021, and we agree – that should imply about $5 billion in investment — and we also expect grid-scale capacity to exceed not only 2 GW for the first time, but to reach between 2.5 and 3 GW.
  3. More airline bankruptcies.  The Fallout of COVID for all sorts of transport infrastructure for moving people has already been horrendous – whether airlines, mass transit, or taxis.  The flow of red ink is far from over.  Infrastructure Ideas reviewed the situation of airlines back in mid-2020 (The Airline Shakeout Starts Up), and by year-end over 40 carriers had declared bankruptcy.  Today many others have fragile Balance Sheets from hemorrhaging cash all year, and there is little sign of any turn around in air traffic demand in the next few months.  IATA says airlines lost over $80 billion in 2020, and projects the industry to lose $5-6 billion a month in the coming year.  Watch for more carriers to fall by the wayside in 2021 (for more see Over 40 airlines have failed in 2020 so far and more are set to come).
  4. Rethinking mass transit.  COVID has also been a disaster for mass transit infrastructure everywhere.  Ridership across US metropolitan systems fell by 65-90%.  Revenue shortfalls have forced transit authorities to cut routes and frequencies, and delay expansion and maintenance.  These measures will unfortunately create a negative feedback loop: transit systems which run fewer, slower routes, less reliably, will attract fewer riders, even when pandemic concerns eventually recede.  The $20 billion for mass transit in the Biden Administration’s “Rescue America” plan will reduce the damage to an extent, but we can expect the financial wreckage to last several years.  Infrastructure Ideas expects several consequences: (a) further reductions and delays in planned expansions of mass transit systems worldwide; (b) a sharp falloff in interest in new subway plans, including across Emerging Markets, and their replacement by cheaper Bus Rapid-Transit plan; (c) new partnerships between municipal mass transit systems and “shared mobility” players (bicycle, scooter, and car-sharing companies). 
  5. Cyber risks grow for Utilities.  Regrettably, this has become a “safe” annual prediction.  2020 saw a worldwide increase in the frequency and scope of cyberattacks on a wide range of targets, including infrastructure.  Aside from the much-publicized Solar Winds hack which, along with breaching several parts of the US government, exposed several infrastructure systems in the US, 2020 also saw several other known, and no doubt more unknown, attacks.  In February, a US natural gas compressor unit was closed for two days after dealing with one incident.  In April, a pair of cyberattacks were reported on electric utilities in Brazil.  In June, Ethiopia reported it had thwarted a cyberattack from an Egyptian group aimed at creating pressure against the filling of the Grand Ethiopian Renaissance Dam on the Nile.  Concerns run across geographies, including Africa.  A recent McKinsey analysis found three characteristics that make the energy sector especially vulnerable to contemporary cyberthreats:  an increased number of threats and actors targeting utilities, including nation-state actors and cybercriminals; utilities’ expansive and increasing attack surface; the electric-power and gas sector’s unique interdependencies between physical and cyber infrastructure.  Look for the headlines to get worse in 2021.
  6. Joint action on climate… finally.  With the exit of the Trump administration, the stage is reset for multilateral progress on climate change.  2020 was either tied or in second place for the hottest year on record, and that’s with the pandemic-induced slowdown in economic activity and emissions.  Most analysis now show the world on track for at least 3 degrees if not significantly more of warming (see McKinsey’s analysis of the world being on a 3.5 degree track), and the damage from heat waves, storms and flooding continues to increase.  Joe Biden already on his first day in office committed the US to return to the Paris Climate Accords, and China has become more aggressive in its emission reduction undertakings.  Look for new substance at the November climate summit in Glasgow, COP26.  In particular, look for (a) announcements of further reductions beyond those undertaken by countries in the Paris Accords, and (b) the emergence of a clearer tracking system to “grade” countries on how their actions are matching their commitments – a key missing element in the global frameworks to date.  The first baby steps beyond “voluntary” action.
  7. Cash for clunkers makes headway.  Coal-fired plant closures have brought constant positive emissions-related headlines over the past few years.  Last week came the announcement of the upcoming closure of a large Florida coal plant – 18 years early.  As a good piece by Justin Guay in Green Tech Media put it “Nearly every day, articles appear announcing new record lows in coal generationcoal retirements and the generalized economic train wreck that is the coal industry.”  Yet these headlines are not yet enough to bring the world back to a 2-degree warming scenario – and probably not enough to keep it even to a 3-degree scenario.  To be on track to meet the Paris Agreement goals, every coal fired-plant in the OECD would have to be offline by 2030, and every coal-fired plant in the rest of the world would have to be by 2040.  In OECD countries, almost half the existing coal-fired generation plants are not earmarked for retirement before 2030, so a lot of work will be needed there.  The biggest rich-country coal users – Japan, the US, Germany and Australia – are in the best of cases a decade off schedule.  Yet this dwarfs the complications of the rest of the world, especially Asia.  China has 1,000 gigawatts of young coal plants – almost half the world’s total coal-generation capacity, and is still building new ones.  India and the rest of Asia have about 400 gigawatts of coal-fired generation, need much more electricity, and are still locked in internal debates as to how much of their future energy needs are to be with coal (see Infrastructure Ideas’ series on Asia’s Energy Transformation: Pakistan, Bangladesh, India, and Indonesia).  The technical lives of many of these plants will stretch long past when they would need to be shuttered to meet the Paris accords, and many of them are insulated from the declining economics of coal by quasi-monopolies and/or long-term contracts.  According to Carbon Tracker, the US and the EU will, by next year, be paying coal plants over $5 billion to stay in operation, through contracted capacity payments.  It would be much better to use these funds to buy the plants out and close them, in effect a “cash-for-clunkers” program as Justin Guay labels it.  As an earlier Infrastructure Ideas piece puts it, “Money is Coming for Coal.”  The funds would be needed to buy out legacy operators, and to support affected workers and communities.  This will be controversial, and complex to design and implement.  But with emissions likely rebounding again and a more favorable political environment, look for paying coal to go away to get on the table in 2021.
  8. The US gets its trillion-dollar infrastructure plan.  There were plenty of promises in 2016 about a trillion-dollar infrastructure plan for the US to fix many of its problems, but this never materialized.  Now with a new administration, and democratic control of both houses of Congress, there will surely be such a plan put in place in 2021, with roll-out getting underway.  The nomination of Pete Buttigieg as Secretary of Transport indicates that urban infrastructure will be a priority, and that municipal authorities will get much more say going forward on how funding helps address cities’ infrastructure needs.  Buttigieg had his own trillion-dollar plan as a candidate (see “Inside Buttigieg’s $1 Trillion Infrastructure Plan”) in the primaries, and stated “as a former mayor, I know that priority-based budgets made locally are better than budget-based priorities set in Washington.”  This will be in sharp contrast to the previous four years, when whatever federal funding trickled out was aimed almost entirely at the rural areas which were the base of Donald Trump’s support.  Climate adaptation and road rebuilding were high on both Buttigieg and Joe Biden’s campaign pronouncements, so look for major spending in these areas in 2021.  President Biden apparently also plans to re-create a version of the depression-era Civilian Conservation Corps to work on climate adaptation projects.
  9. The BRI gets a facelift.  In September, Chinese President Xi Jinping pledged to make China carbon neutral by 2060, and to “bring forward” an earlier pledge to start reducing GHG emissions by 2030.  The announcement was widely welcomed, but it will be a hard slog to turn into reality: with economic pressures, 2020 saw a sharp increase in the number of permits for new coal-fired plants issued in China.  China’s emissions progress will likely stay in the limelight as international climate discussions get more serious in 2021, thanks to the re-engagement of the US (see above).  At the same time, China’s flagship international initiative, the Belt and Road Initiative (BRI), is seeing increased criticism of its environmental and climate impacts.  Coal-fired generation plants have been big recipients of support under the BRI, particularly in South Asia.  Announcing some sort of “greening” of the BRI going forward would be low hanging fruit for Xi Jinping to avoid focus on the BRI’s environmental negatives at a time China wants to be seen as a leader of the international agenda.  Look for this to come to pass later in 2021.
  10. This is (not) the time for the Emerging Markets infrastructure boom.  There is one coming – really!  For years policy-makers, analysts and investors have looked at Emerging Markets as the great future of infrastructure.  Large infrastructure deficits, growing wealth and demand for services among the population, higher returns than in wealthy markets, coupled with a “wall of money” from institutional investors looking to get some yield on their excess liquidity.  In 2021 it … will not happen.  The demand pull will stay largely theoretical.  Of the ten or so larger economies that make up 80% of collective GDP of Emerging Markets, four of the biggest – Brazil, Mexico, South Africa and Turkey – will at best remain hamstrung from a combination of COVID and internal politics, and at worse turn their back on private investment.  The “push” from investors will be going elsewhere.  Between a big push for new infrastructure in the US, and the European “Green Recovery” plan, investors and infrastructure companies will be looking for their opportunities in developed markets.  And between the Trump tax cuts and forthcoming public spending increases, look for interest rates to start inching up, further reducing the push from institutional investors.  At some point continued internal pressures, and limited public spending options, will lead to a wave of Emerging Market reforms.  Just don’t look for it in 2021.

Infrastructure in 2020: Ten Predictions

Infrastructure in 2020: ten predictions
January 2020

1. Wind and solar keep growing.

Growth in global renewable energy investment in 2018 and 2019 has been akin to the Sherlock Holmes tale of the curious incident of the dog that didn’t bark – there hasn’t been any. After a down year in 2018, global renewable energy investment stayed essentially flat at $282B in 2019, according to Bloomberg New Energy Finance (though still more than double BNEF’s estimate of investment in fossil fuel-based generation). Look for numbers to head back up in 2020, on the back of renewables’ cost advantages. In the US, the EIA forecast last week that wind and solar will make up three-quarters of new capacity additions in 2020, breaking previous records of annual capacity additions. The big variable for the coming year will be the largest renewable market in the world, China. The missing global renewable growth would have been there in 2018 and 2019 were it not for declines in China, whose $83B 2019 investment level was down for a second straight year, primarily in solar which is down 2/3 since its 2017 peak. As China transitions away from its Feed-in-Tariff mechanism for domestic solar generation towards competitive auctions, Infrastructure Ideas expects prices for new capacity to tumble, as they have everywhere else that auctions have taken hold, and growth in solar installations to resume in response. For Emerging Markets other than China and India, wind and solar investment rose 22% to a record $47.5 billion. In 2020, look for $300B in investment, a record 200 GW in new wind and solar capacity, and renewables as a share of net new generating capacity added worldwide to cross 70% for this first time.

2. Offshore wind is the new big thing

It looked like a curiosity for many years, but offshore wind is now breaking into the mainstream of electricity generation. Only five years ago, offered prices for offshore tended around $0.15-0.20 a kilowatt-hour, well-above the price for competing sources. But larger and more efficient turbines, bigger projects, access to better offshore wind resources, and more developed supply chains have been driving prices down. In September 2019, the UK saw bids for offshore generation at under $0.05/KwH, and now offshore is able to compete without subsidies in many markets. Bloomberg reports offshore wind financings in 2019 came close to a whopping $30 billion. Tenders are planned in many countries, and are spreading beyond initial markets of Europe, the US and China. Vietnam is looking at what could become the world’s largest offshore wind farm with a capacity of 3,400 MW. Look for many offshore wind headlines in 2020.

3. Challenges mount for power grids and utilities

Grid operators will continue to see a ramp-up of challenges associated with the energy transition in 2020. In developed markets, these challenges include continued switching to lower-cost generation sources, transmission, integrating storage, and integrating growing numbers of electric vehicles. The average EV traveling 100 miles uses as much power as the average US home does daily. California projects that EV’s will use over 5% of the state’s generation capacity by 2030. In developing markets with technically weaker grids, dealing with intermittency will be a bigger challenge, as well as integrating distributed generation and storage. Emerging Market cities may also create new demands as they start adopting electric buses in large volumes, the way we’ve seen in China. Large EV bus fleets will put significant pressure on charging infrastructure resources, while also offering potential storage solutions for urban utilities, especially as Vehicle-to-grid technology, or V2G, becomes more available. Look in 2020 for larger transmission investments in developed markets, and increasing concern in Emerging Markets – particularly those with state-owned grids – about how to modernize grids.

4. Non-lithium batteries get serious

As recently headlined in the Economist, Generating clean power is now relatively straightforward. Storing it is far trickier. Total investment in storage in 2019 came to around $5B, 99% in lithium-ion batteries. While this has been a major success, grids will need complements to lithium-ion technology soon. Though the cost of lithium-ion batteries is falling quickly, longer-term storage is likely beyond its practical capacity. Capacity to keep growing with solar and wind is also a question: the Institute for Sustainable Futures states that a world run fully on renewables would require 280% of the world’s lithium reserves, while concerns over sustainable sourcing of cobalt remain. Companies focused on longer-duration storage alternatives saw a major influx of investment in 2019, led by Energy Vault $110 million funding round, the single largest equity investment in a stationary storage company, according to Wood Mackenzie. Highview Power signed the first liquid air storage offtake deal, for 50MW in Vermont in December 2019. While 2020 project announcements with non-lithium batteries will remain small, look for them to make big headlines. And look for them to spread faster into smaller, low-income developing countries. The economics are more favorable in remote or island grids, where imported diesel creates a much-easier benchmark for storage to beat on price. Canada’s e-Zn targets remote communities that stand to benefit by offsetting diesel generator usage. NantEnergy, using zinc-air batteries has installed some 3,000 microgrids.

5. Green House Gas emissions: alarm keeps climbing, but no global agreements yet

One of our safest predictions. New studies and projections will continue to show climate change having a larger impact sooner than their predecessors. And politics, centered but not limited to the US, will again prevent significant concerted action to reduce emissions. The 2019 Madrid Summit was a glaring display of the stand-off. The only possible change for even 2021 here is the November election in the US.

6. Emissions-free city zones multiply

Though no global climate agreements are on the horizon, there is much climate policy activity at the local and national level: one big example is emissions-free city zones. This month, Barcelona opened southern Europe’s biggest low-emissions zone, covering the entire metropolitan area. Petrol-driven cars bought before 2000 and diesels older than 2006 are banned and face fines of up to €500 each time they enter the zone, which is monitored by 150 cameras. The new Spanish government is said to be planning low emission zones for all towns with over 50,000 residents. Whether driven by national or municipal authorities, we can expect to see such initiatives multiply rapidly, driven both by concerns over global climate inaction and over local air quality. Such zones now create opportunities for carmakers, though one can also expect to see EVs increasingly favored by such mandates, tilting the new opportunities towards EVs – and providers of EV infrastructure.

7. Unilateral “100% renewables” commitments multiply

Between frustration at the lack of global progress on reducing emissions, and the prospect of increasingly cost-competitive renewables and storage resources, a growing number of US states and utilities are setting targets for reliance on 100% clean energy. Thirteen US states, along with Puerto Rico and the District of Columbia, have now set 100% clean energy targets. Another four large states have announced plans to do so. Half-a-dozen large private-sector utilities have also committed to 100% clean energy targets, including famously coal-intensive Duke Energy. These mandates will continue to open new opportunities for renewable energy and storage providers, and importantly will likely offer less price-sensitive demand for longer-duration storage providers. The mandates will also start to impinge increasingly on natural gas demand for generation, and risk beginning to strand fossil-fuel generation capacity ahead of technical end-of-life timetables.

8. Financing premiums appear for climate risks

A big piece of news in the finance world last week was Blackrock’s announcement it would put in place a coal-exclusion policy. But even with Blackrock’s heft — it is the world’s largest investor in coal – this by itself is not a huge game-changer: not much new coal is going up in Blackrock’s geographies. Expect the bigger news in 2020 for infrastructure financing to instead be the appearance of the higher financial costs related to climate risks. In many ways it is shocking this has not happened yet, though a good piece of reporting from the New York Times last September pointed a finger at a big reason for the US. The Times reported that US banks are shielding themselves from climate change at taxpayers’ expense by shifting riskier mortgages — such as those in coastal areas — off their books and over to the federal government. Regulations governing Fannie Mae and Freddie Mac do not let them factor the added risk from natural disasters into their pricing, which means banks can offload mortgages in vulnerable areas without financial penalty. That cannot last without soon bankrupting the two biggest pieces of the US mortgage system (although it would be consistent for the Trump administration to prefer that option). The broader insurance industry is also suffering. According to Swiss Re, 2017 and 2018 were for insurers the most-expensive two-year period of natural catastrophes on record, most of them related to global warming. 2018’s most expensive insurance payout anywhere in the world was for the California Camp Fire. Fortune noted that new research shows that the wildfires of 2017 and 2018 alone wiped out a full quarter-century of the insurance industry’s profits. Unlike Fannie Mae and Freddie Mac, private insurance companies can react, and they will have to charge more to stay afloat. Expect 2020 to be the year that insurance prices begin to factor in climate-related catastrophe risks in a big way, and for that to begin flowing through to financing costs.

9. Delivery vehicles become the new EV focus

Electric car and bus sales volumes continue to grow, but expect electric vans to get a lot of the attention in 2020. Already in September 2019, Amazon placed a massive order for over 100,000 electric delivery vans – worth about $6B. The continued rocketing growth of the e-commerce delivery business, and the frequent use of diesel vehicles for delivery, make for an attractive and fast-growing market for electric vans. As noted by Wired, urban deliveries don’t require all that much range. Routes are predictable and plannable, and because the vehicles return at the end of every shift to a depot, recharging them is a breeze. Add the concerns of many cities about transport emissions, as noted above, and the attraction of the new market segment is easy to see. Now 2020 has started with a $110 million investment for Arrival, a UK start-up making electric delivery vans, from the combination of Hyundai and Kia. Arrival promises that its vehicles will be cheaper than their traditional, diesel-powered competitors, even without further declines in battery prices. Interestingly Arrival’s business model will also facilitate more rapid expansion to Emerging Markets than for makers of other EVs. Rather than building a huge new production plant, Arrival will work from “microfactories” that make only 10,000 or so vehicles a year, but sit closer to where their customers are, and making geographic expansion simple. Look for major changes in the logistics business in emerging country cities to flow from this soon.

10. More alarms over hacking of infrastructure

Many new opportunities are opening for infrastructure investment. Yet risks are growing as well. The hacking of Ukrainian energy company Burisma late in 2019 by the Russian military was clearly politically motivated. Hacking capabilities continue to grow far faster than defenses. Look for more widely-publicized attacks on infrastructure assets in 2020.