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Rocket maker has lent the executive money on several occasions over the past few years

Elon Musk tapped SpaceX, the rocket maker he oversees as chief executive, for a $1 billion loan around the time he was acquiring the social-media company formerly known as Twitter.

The unusual loan is the latest example of how the world’s richest man has drummed up cash from his empire of companies without having to permanently part with shares, enabling him to raise funds for his wide array of endeavors.

SpaceX approved the loan, which was backed by some of his SpaceX stock, in October, and Musk drew all of it down the same month, according to documents reviewed by The Wall Street Journal.

It couldn’t be determined why he took on the debt. He paid the loan back shortly after he borrowed the money, returning $1 billion with interest to SpaceX in November. Musk and SpaceX didn’t respond to requests for comment.

For years, Musk has had arrangements with banks to borrow against his shares in his companies, including Tesla TSLA 4.69%increase; green up pointing triangle, the electric-car maker where he is CEO. At privately held SpaceX, the company itself has served as his lender.

Musk is by far SpaceX’s largest shareholder, controlling a 42% stake and almost 79% of its voting power as of March, according to a SpaceX filing with the Federal Communications Commission. If he wants to take out a loan from SpaceX, he almost certainly can.

The borrowing last year occurred as SpaceX made big investments in its Starship rocket program and in Starlink, a satellite-internet business. The company has raised large sums from investors to help pay for both, and Musk has urged employees to mind their spending. In late 2021, he warned that SpaceX could face bankruptcy as it plowed cash into the huge rocket and Starlink.

The $1 billion loan temporarily shifted a significant chunk of capital for SpaceX, which is intertwined with many of the most important space missions at the National Aeronautics and Space Administration and the Pentagon, to its top leader. SpaceX had $4.7 billion in cash and securities on hand at the end of last year, the documents showed. The loan represented 11% of the $9 billion in equity the company reported selling since 2009, according to regulatory filings.

In November, when Musk paid back the money, he also sold almost $4 billion worth of Tesla stock, and he sold a similar amount the following month, bringing the total amount of the automaker’s stock he sold over a stretch of more than a year to around $39 billion.

Musk has said he would be paying more than $11 billion in taxes for 2021 and he put up roughly $25 billion in cash as part of his $44 billion deal to acquire Twitter, now known as X, in late October.

From the early days of SpaceX, Musk has turned to the company to help back up his other ventures. Musk has said he borrowed $20 million from SpaceX years ago to help a then-struggling Tesla, which narrowly averted collapse in late 2008.

SpaceX tried to help a different Musk company during a period of financial difficulty: SolarCity. In 2015 and 2016, SpaceX invested $330 million in bonds issued by the solar company where Musk was chairman and the largest shareholder. The company later was acquired by Tesla.

A couple of years later, some SpaceX investors questioned why the rocket maker was diverting resources to another Musk enterprise, the Boring Co., which was experimenting with tunneling at the rocket maker’s complex. SpaceX later said Boring compensated it with some equity in the startup. Musk didn’t comment on the matter.

Tesla didn’t become consistently profitable until the second half of 2019. The success was further rewarded by Wall Street, fueling the company’s already high market value.

Still, for many years, Musk has been a cash-poor billionaire with much of his wealth tied up in shares in Tesla, SpaceX and other startups. His liquidity isn’t known.

As of December 2020, he had accumulated loans from Bank of America, Goldman Sachs and Morgan Stanley, totaling more than $500 million tied to his Tesla shares, according to a filing disclosing his relationships with the automaker’s lenders. The current status of those loans couldn’t be learned.

The mixing of Musk’s personal and business activities dates back to the early days of the companies, when he was writing checks from his own account to cover bills to help a then-struggling Tesla.

More recently, activities at Tesla have drawn scrutiny, with the U.S. Attorney’s Office for the Southern District of New York and the Securities and Exchange Commission opening investigations into its use of company funds for a project that had been described internally as a house for Musk, the Journal has reported.

The documents viewed by the Journal show that SpaceX has a loan agreement with Musk that has been modified over the years.

In early 2017, SpaceX struck an agreement with Musk that permitted him to borrow up to $120 million from the company, with principal and interest due either a decade later or 90 days after a demand from SpaceX. Musk tapped into that deal about a year later, when he took out $100 million, according to the documents.

The total amount SpaceX could lend him was increased in May 2019, and Musk borrowed another $100 million the same month. A similar scenario played out the following year: The lending capacity was boosted in December 2020 to a maximum of $500 million, and Musk took out another $300 million.

In 2021, Musk began unlocking some of his paper wealth at Tesla. At the end of that year, he repaid SpaceX the $500 million in borrowing plus interest.

Last fall, SpaceX boosted borrowing capacity to as much as $1 billion, permitting Musk to take out the loan of that size.

At the beginning of last year, with Tesla flourishing, Musk began making moves toward a new venture: Twitter.

An early plan called for Musk to borrow $12.5 billion through loans backed by Tesla shares he owned that at the time were valued at more than $62.5 billion, and represented about 40% of his stake.

The idea worried some investors. Tesla’s board and several banks had put in place rules that required him to put up more collateral were Tesla’s share price to fall. And it was falling in those days, meaning more shares were needed as collateral. Ultimately, he abandoned using Tesla shares as collateral to buy Twitter.

In April 2023, Tesla disclosed that it had further tightened rules around Musk’s using his stake in the car company to borrow money.

Paying for the late October acquisition of Twitter further complicated Musk’s financial situation.

The social-media company traditionally generated most of its revenue by selling ads, but saw a pullback from advertisers worried in part about the drama around Musk’s takeover. Musk said he was forced to cut spending at the social-media company to avoid bankruptcy.

The situation at Twitter, along with increased competition and rising interest rates, weighed on Tesla shares last year, when the stock fell 65%. Tesla’s share-price decline complicated Musk’s ability to use stock in the electric-vehicle company to raise money.

Siemens and Alstom vie to supply planned Los Angeles to Las Vegas link

WASHINGTON—In the halls of Congress and the expense-account lunch haunts nearby, two European conglomerates are waging rival campaigns for a $12 billion train to Las Vegas, hoping to finally make a big business out of high-speed rail in America.

Siemens and Alstom are lobbying lawmakers and the Biden administration as they vie to supply high-speed power cars and passenger coaches for the trains of Brightline West, a privately owned venture that aims to connect the Los Angeles exurbs with Las Vegas. The companies are relying on powerful allies to boost their chances, including Senate Majority Leader Chuck Schumer (D., N.Y.), a public champion of Alstom, which has a factory in his home state’s Southern Tier.

Brightline in turn is counting on nearly $4 billion in funding from the $1 trillion infrastructure law to wrap up its financing plan and begin construction of the route by the end of this year—in time for completion by the 2028 Summer Olympics in L.A.

In doing so, the private company would become the first modern high-speed rail service in the U.S., which has long lagged behind other advanced economies in running passenger trains at speeds of at least 186 miles an hour. And it could kick off a boom in rail investment that companies such as Siemens and Alstom have been seeking for decades.

“This to me is the one that kind of gets the U.S. off the ground,” said Marc Buncher, chief executive officer of Siemens Mobility Inc. North America.

Michael Keroullé, Alstom’s CEO for the Americas, said: “I think this is the start of something. It’s really a sign that this is going to become a new way of transporting people.”

Siemens and Alstom are already fierce competitors in high-speed rail, an industry that has grown steadily for decades in Western Europe, Japan and China, as countries linked cities with trains topping 200 miles an hour. The fastest passenger train in the U.S., Amtrak’s Acela express service, reaches a top speed of 150 miles an hour in just a few sections of the Northeast Corridor linking Washington and Boston.

Siemens, Alstom and other train makers long ago established American manufacturing hubs to produce and overhaul intercity, commuter and transit rail vehicles, but the promise of true high-speed rail service in the U.S. has remained elusive despite government efforts to spur its growth.

The heat of the current competition reflects the scale of the opportunity for the train makers, who are hopeful that the infrastructure law—along with projects such as Brightline West and California’s high-speed rail line under construction—will finally build a critical mass for true high-speed rail investment in the U.S. Other proposed routes are much further behind in planning, including a proposal to link Houston and Dallas, in which the private developer Texas Central said in August that it would seek to work with Amtrak.

For Brightline, the Biden administration’s expected release of a first installment of rail infrastructure funding is a critical hurdle.

The company, backed by Fortress Investment Group, said it can privately raise 70% of the financing to build the high-speed line from Rancho Cucamonga, Calif., roughly 40 miles east of downtown Los Angeles, to the Las Vegas Strip.

The train would largely run along existing highway medians to hold down land acquisition costs. The company said it needs $3.75 billion in federal funds from the bipartisan infrastructure law to break ground later this year.

For Siemens and Alstom, the potential grant award represents the opening at last of a mostly untapped market for high-speed trains in the U.S.

The chance to begin booking orders for new train sets has triggered a high-stakes lobbying fight in Washington.

Schumer is a longtime booster of Alstom, which makes trains for mass-transit systems and Amtrak—including the next generation of Amtrak’s Acela express fleet—at a complex in Hornell, N.Y.

Schumer’s aides have pressed Alstom’s case to the Biden administration and Brightline, saying the company’s work developing the Acela fleet gives it a more robust U.S. supply chain that won’t require significant exemptions to comply with the administration’s Buy America rules for infrastructure projects, according to people familiar with the discussions.

Siemens executives have pushed back on those claims, saying both companies will need waivers from the administration to import some elements of their high-speed rail technologies from overseas, where other nations are generations ahead in building out fast rail networks.

“We’re all for Buy America and we’re going to get there, and if the market develops in a certain way it happens naturally anyways,” Armin Kick, Siemens Mobility’s vice president for locomotives and high-speed train sets, said in May at an industry conference in Washington. “But to start it off there should be some concessions made.”

Brightline expects that either vendor would need a waiver to comply with the Buy America provisions until the industry is more firmly established, according to a person familiar with Brightline’s thinking.

Labor is another issue. Alstom’s New York state factory workers are represented by the International Association of Machinists and Aerospace Workers, while Siemens’s largest plant in Sacramento, Calif., isn’t unionized.

President Biden has said that supporting unions is a priority for his administration.

Siemens executives said that the company has unionized facilities in some 30 states and wouldn’t be building Brightline West equipment in Sacramento because that factory is at capacity with other orders.

“Schumer’s a bulldog,” one person familiar with the lobbying effort said. “Given that Alstom is located in New York, and is organized by labor, if he had influence on rolling stock, it’s not a surprise where he would land.”

A spokeswoman for Schumer said he hasn’t advocated for any specific applicant, including Brightline, to win funds from the Federal Railroad Administration, but the senator “has insisted that whatever company gets the funding, the cars be made by Alstom, and most importantly, be American-made with union labor.”

A Federal Railroad Administration spokesman, Daniel Griffin, declined to comment on specific grant applications, but noted that the agency has said it would favor projects that “demonstrate strong labor standards and the free and fair choice to join a union, support workforce development programs and promote inclusive hiring practices.”

Alstom executives have pressed their case in part on their experience building the replacement for the first-generation Acela. That $2 billion program would be the fastest passenger rail fleet in use in the U.S., though at periodic top speeds of about 160 miles an hour, it wouldn’t be a true high-speed system.

“We have the production line, we have trained labor, we have the supply chain—all of that is extremely positive to be able to really deliver on something which is going to be challenging in Brightline: deliver trains by the Olympics,” Alstom’s Keroullé said.

The Acela program has been plagued with delays and development issues. The trains are years behind their original deadline to enter service and still waiting to meet federal regulatory standards to resume testing above 90 miles an hour on the Northeast Corridor.

Siemens’s Buncher said neither company had a true incumbent advantage, since none of the companies that build high-speed rail equipment for Europe and Asia has deployed it in the U.S.

All those designs are “on paper too,” he said, “because no one has made a true high-speed train here.”

The shifting mix of cars means growing pains for travelers unaccustomed to operating electric vehicles

The electric-vehicle revolution is coming to rental-car counters, ready or not. Plenty of travelers fall into the “Or not” category.

Some report picking up EVs that aren’t properly charged, lack accessories or come with little to no operating instructions. Charging availability is also an issue on the road and at hotels.

The cars have fans who adore their designs and appreciate their energy efficiency. And if you really don’t want an EV, you can usually avoid one, at least for now. Still, some newbies are swearing off them after one rental or passing them over in the rental lot.

Anne-Marie Angelo reserved an intermediate car from Budget Rent A Car for a one-way drive from Virginia Beach, Va., to Dulles International Airport with her 79-year-old mother in January. The rental agency didn’t have her car or much else, so it assigned her a “specialty” Kia.

The Kia Niro she got is an EV, which no one at the counter mentioned, the history professor says. Despite getting charged overnight, the battery drained quickly. With at least 70 miles to go on the drive, the range flashed 30 miles. She had to hunt for a charging station so it didn’t die on I-95 in cold weather.

The first location, a gas station listed in a crowdsourced app, didn’t have one. Budget roadside assistance said they couldn’t help because they don’t have mobile charging units, she says. By the time she found one at a car dealership, she had to move their late flight to London and pay for a hotel.

“Normally I can get from home to Dulles on one tank of gas,” she says. “I don’t plan for random stops in weird places.”

Budget refunded her rental and gave her two free rental days for future use, but didn’t reimburse for expenses. A Budget spokesperson says the agency “takes every customer experience seriously and has addressed the issue raised with our employees and the location involved.”

Hertz, Avis Budget Group and other car-rental agencies acknowledge the steep learning curve for drivers in these early days of EV rentals. All have educational efforts under way on their websites and in emails to renters and loyalty-program members. Hertz hosted a free test drive at Los Angeles International Airport in July and offered one free rental day with a two-day EV rental this summer.

Hertz has made the biggest EV bet among rental agencies. It has deals to buy more than 300,000 cars from Tesla, Polestar and General Motors and a partnership with Uber to rent EVs to ride-share drivers. More than one in 10 cars in its fleet are electric, a figure the company says will jump to 25% by the end of 2024.

Failed experiment

Trey Johnson, a winery sales director from West Chicago, Ill., drives a 2011 Nissan Sentra. He booked a Tesla for a one-day February business trip to Louisville, Ky., instead of his usual midsize sedan because of its cheaper last-minute rate. Plus, he wanted to see what the hype was about.

He says he asked the Hertz agent about the refueling rules and got only vague answers. He found operating the car a struggle.

“Just getting out of the garage, it felt like I was learning to drive all over again,” he says.

He pulled over to watch a Hertz video on how to operate it. Finding a Tesla charging station was easy, he says, but he didn’t like the 20 minutes it took to charge the car before he returned it.

“There are a lot of Tesla evangelists out there,” he says. “Once you get used to it, I think it’s probably quite fun to drive. I don’t want to get used to it.”

Mark Nielson, an infrastructure development consultant in Foster City, Calif., is in the top tier of Hertz’s loyalty program. When he landed in Chicago in May, he says he found several Ford Mustang Mach-Es. He passed because he was driving to Cincinnati and logging hundreds of miles after that and didn’t want any charging hassles.

“You could see people liked the Mustang and as soon as they saw it was electric, they moved on to something else,” he says.

A Hertz spokeswoman says the agency’s policy is to make “every reasonable effort” to get customers where they need to be if their reserved vehicle class isn’t available at the confirmed time.

Change is coming

The Hertz spokeswoman says demand is strong from leisure and business travelers and ride-share drivers, but declined to provide specifics. “We believe adoption will continue to take hold,” she says.

Hertz CEO Stephen Scherr told Wall Street analysts in August that corporate demand for the rentals has picked up in the past couple of months since he pitched them to fellow CEOs as a “very real way” to meet new sustainability disclosure rules from the Securities and Exchange Commission and others.

Nicholas Cicio, a part-time Uber driver in Philadelphia, rented a Tesla from Hertz for a week this summer under the companies’ partnership. It was cheaper than other rentals and Uber pays more per ride for EVs, he says.

The car was only 50% charged when he rented it, he says. That didn’t worry him initially. But the battery drained more quickly than he expected. On the second day of the rental, the car died on a busy street when he was half a mile from a charging station.

Hertz sent a tow truck, but it couldn’t get into the garage at the first charging station. Two more stops were a bust. They drove 20 minutes outside the city to find a Tesla supercharging station, he says. The 25-year-old hasn’t rented an EV since.

Retiree Marc Froemelt, who lives in Atlanta, rented a Tesla Model 3 at New York’s LaGuardia Airport from Hertz in May to visit his mother-in-law on Long Island. They zipped down the Long Island Expressway in record time in the HOV lane without issue.

Their one issue wasn’t the EV’s fault: Model 3s have trunks in the front. Froemelt opened his and discovered a previous user’s Costco haul, including a 10-pound slab of meat emitting an overwhelming stench, he says. Hertz told him roadside assistance couldn’t help, so they traded the car for another Tesla at a local Hertz location.

Froemelt wasn’t happy with Hertz’s offer of a $50 credit, so he took it up with his credit card and got the rental refunded.

Hertz didn’t respond to requests for comment on Cicio’s or Froemelt’s experiences.

Froemelt isn’t soured on EVs, though.

STC move on Spanish company marks latest venture by state-owned Gulf groups into Europe

Saudi Arabian telecoms group STC is acquiring close to a 10 per cent stake in Spain’s Telefónica valued at €2.1bn, a move that marks the latest foray by state-owned Gulf telecoms companies into Europe.

STC, which is majority-owned by the Saudi sovereign wealth fund, said in a press release that it had acquired 4.9 per cent of Telefónica’s shares and was using other financial instruments that would lift its stake to 9.9 per cent if approved by regulators.

Telefónica is one of Spain’s biggest companies. STC’s plan would catapult it past CaixaBank and BBVA — two pillars of corporate Spain with large stakes in the group — to become its largest shareholder. But STC said it was not seeking a controlling stake.

The transaction requires approval from the Spanish government because Telefónica has businesses related to national security and cyberdefence.

STC chief executive Olayan Alwetaid said in the statement that the company viewed the purchase as a “compelling investment opportunity to use our strong balance sheet whilst maintaining our dividend policy”.

Telefónica, which had a market capitalisation of €22bn before the announcement, said it had learnt of STC’s move on Tuesday. It took note of “STC’s friendly approach and its support [of] the management team, Telefónica’s strategy and ability to create value”.

Spain is still Telefónica’s biggest market, accounting for 27 per cent of revenue in the past quarter, followed by Brazil, with 20 per cent, Germany on 18 per cent and the UK — where it part owns Virgin Media O2 — with 13 per cent.

STC said the Madrid-based company had “a unique portfolio of best-in-class infrastructure assets” and was developing cutting-edge technology in areas such as cognitive intelligence and the internet of things.

The Saudi group said that in addition to the acquisition of 4.9 per cent of Telefónica’s shares it had acquired “financial instruments giving economic exposure to a further 5 per cent of Telefónica’s share capital”. It said it would “obtain the voting rights corresponding to this 5 per cent through the . . . settlement of these financial instruments after obtaining the necessary regulatory approvals”.

Under Spanish law, the authorities must approve the acquisition by a foreign investor of any stake of 5 per cent or more in certain “strategic” defence companies, including Telefónica.

The deal comes months after STC unit Tawal bought tower infrastructure from United Group for €1.2bn, and at the same time as Gulf countries use their wealth — boosted by rising oil prices — to search for deals amid a slump in valuation. Last year the Saudi sovereign Public Investment Fund backed a successful bid for Vodafone’s towers business. 

The neighbouring United Arab Emirates investment group e& increased its stake in Vodafone to 14.6 per cent in April, up from 9.8 per cent in 2022.

In Saudi Arabia, state-backed national champions have sought to extend their global reach alongside the PIF, which has invested in everything from video gaming companies and sports to electric vehicles and technology.

The country’s largest bank, SNB, acquired a 9.9 per cent stake in Credit Suisse late last year and inadvertently helped precipitate the bank’s downfall when the SNB chair ruled out increasing its stake, sending its shares plummeting.

STC is Saudi Arabia’s largest communications company, with more than 80 per cent of market share. It earned $17bn in revenues last year.

Enbridge in $14bn deal for Dominion gas utilities as US energy mix shifts

Canadian pipeline group to become largest natural gas distribution company in North America

Dominion Energy, one of the US’s biggest utilities, has agreed to sell its natural gas distribution business to Canadian pipeline giant Enbridge in a $14bn deal that highlights momentous shifts taking place in North America’s fuels sector.

Enbridge will purchase Dominion’s three natural gas distribution companies for about $9.4bn plus debt in an all-cash deal, making it the biggest gas utility group in North America.

The transaction is significant because it underlines two distinct investment approaches as the rush to decarbonise the US economy gains steam. 

Enbridge is best known for shipping oil, operating the world’s longest crude and liquids pipeline system. After buying Dominion’s gas utilities, Enbridge’s asset mix will be evenly split between gas and renewables and liquids, the company said.

Dominion will be left to focus on its state-regulated electric utilities at a time when US power consumption is growing, sparked by factors including the shift to battery vehicles.

“Data centre expansion, bolstered by artificial intelligence . . . along with electrification, and general economic activity are driving the most significant demand growth in our company’s history and shows no signs of abating,” said Robert Blue, Dominion chief executive.

Enbridge chief Greg Ebel said natural gas utilities had become “must-have infrastructure for providing safe, reliable and affordable energy”.

“Adding natural gas utilities of this scale and quality, at a historically attractive multiple, is a once in a generation opportunity,” he said. 

Enbridge shares fell 5.8 per cent in after-hours trading on Tuesday, while Dominion declined 0.2 per cent.

The persistence of gas in the fuel mix has become a theme in recent transactions. Oil-focused pipeline group Magellan Midstream Partners has explicitly pointed to gas’s “more powerful growth engine” as it pursues a sale to the gas-heavy Oneok.

TC Energy, the Canadian pipeline operator behind the aborted plan to build the controversial Keystone XL crude pipeline, said in July it was spinning off its oil transportation business to concentrate on shipping gas.

Enbridge transports about 30 per cent of the oil produced in North America and 20 per cent of the gas consumed on the continent. It operates the third-biggest gas utility by customer numbers, all based in Canada.

After absorbing the companies involved in the deal — the East Ohio Gas Company, Public Service Company of North Carolina and Questar Gas Company — and their 3mn customers across Ohio, North Carolina, Utah, Wyoming and Idaho, it will become the largest.

Dominion’s decision to sell comes as part of an ongoing business review that it launched last year after its stock price was hit in part due to rising inflation. 

The Virginia-based utility has sought to free up capital by offloading “non-core” assets in a bid to boost its credit rating. Dominion recently sold its 50 per cent stake in a Maryland liquefied natural gas terminal, Cove Point, to Warren Buffett’s Berkshire Hathaway for $3.3bn as it refined its focus on regulated electricity sales.

Berkshire previously took ownership of the company’s long-haul gas transmission and storage business in 2020.

Universal Music strikes deal to reshape streaming economics

Agreement with Deezer aims to boost royalties for artists and labels and reduce payouts for ‘noise’

Universal Music has struck a deal to reshape the economics of music streaming, with changes aimed at directing more money to professional musicians and away from a “sea of noise” that chief executive Lucian Grainge has criticised this year.

The world’s largest record company and the French streaming service Deezer have agreed an arrangement they expect will lift payouts to professional artists by 10 per cent, in the first big shift in the music streaming business model since the launch of Spotify in 2008.

As part of the new model, streams of songs from professional artists — defined as those who generate at least 1,000 listens a month — will be given double the weight of streams from non-professionals when calculating royalty payments. 

“This is a massive change in the way the music industry will work”, said Deezer chief executive Jeronimo Folgueira. “We have 90mn tracks and many of them are just noise, like literally noise, the sound of a washing machine and rain. It is fundamentally wrong that 30 seconds of the recording of a washing machine gets paid the same as the latest single by Harry Styles,” he said.

If a listener actively seeks out a song or musician, the weight of those streams will be doubled again. For example, if a user searches “Taylor Swift” on the Deezer app and listens to one of her songs, it will be counted as four streams for royalty calculations.

The goal is to reduce the money flowing towards amateurs, bots and white noise soundtracks. Goldman Sachs estimates that the “long tail” of such content generated about $900mn in royalties last year.

Universal chief digital officer Michael Nash told the Financial Times that the changes would be “revenue positive” for the company, which is home to stars including Swift, Elton John and Drake.

The changes, if replicated more widely across other streaming services, would have significant implications for the music business. Services such as Spotify, Apple Music and Deezer have revived the industry, growing sales for nearly a decade. But the way streaming money is paid out has remained the same, a source of frustration among music companies and musicians that feel short-changed.

In the current structure, listeners’ monthly subscription fees are pooled together into one royalty pot which is divided among copyrights-holders based on their share of listening. Royalties are paid the same regardless of who created the song or whether the song was listened to passively via an algorithm or actively by searching for it. As long as someone listens for more than 30 seconds, the stream counts.

Goldman Sachs projected the total music streaming market would make $38bn in revenue this year. The streaming services pay music rights holders such as Universal about two-thirds of every dollar they collect. On average, streamers pay about $0.005 per stream, or $5 for 1,000 streams. “Listening to a 31-second song by an independent artist, a full three-minute song by a popular artist, and five minutes of the sound of rain is all treated equally,” the Goldman analysts noted.

Music executives have expressed concern that fraud and clutter have proliferated on streaming services, taking royalty money away from record labels and artists. More than 120,000 tracks are being uploaded to Spotify daily in 2023, compared with only 20,000 in 2018.

Deezer will roll out the new payment model in October in France, with plans to expand globally from January. Folgueira said the 1,000 stream threshold was “pretty low”, adding that only “human artists”, not AI-generated songs, would qualify to have their royalty share weighted more. Songs that are detected as “noise” will not receive any royalty payments. 

The move would “ensure we are better supporting and rewarding artists at all stages of their careers, whether they have 1,000 fans or 100,000 or 100mn”, Nash said.

Universal is also in talks with other streaming platforms including Spotify, Tidal and SoundCloud about changing the way they pay royalties.

Sceptics say that the push to change the streaming business is a defensive move by the big labels who fear the streaming boom is slowing. “Universal Music, Sony and Warner need to maintain revenue growth in order to keep investors happy. So you start looking for non-organic growth,” said Midia analyst Mark Mulligan. 

Deezer’s Folgueira said the changes are meant to help artists who want to make a living from music. “We are taking away incentives for people to upload a ton of crap that has very little value for the actual listeners.”

EU must curb Russian gas supply to avoid being ‘held hostage’

Belgian energy minister warns that bloc should wean itself off fossil fuel imports from Moscow by 2027

Belgium’s energy minister has urged the EU to curb imports of Russian gas by weaning itself off fossil fuels after a report showed that her country was among the world’s biggest recipients of liquefied natural gas thanks to its status as a transit hub.

Tinne Van der Straeten told the Financial Times it was “absolutely necessary” that the bloc met its goal of weaning itself off Russian fossil fuels by 2027 to prevent it “being held hostage” by Moscow.

According to figures analysed by Global Witness, the NGO, the EU is set to import record volumes of liquefied natural gas from Russia this year as part of its effort to diversify away from piped supplies, which have been steadily cut by Moscow following its full-scale invasion of Ukraine last February.

Belgium is the third-biggest importer of Russian LNG globally, taking 17 per cent of the country’s exports of the fuel, behind only China and Spain, Global Witness said.

Russia has become the bloc’s second-biggest supplier of LNG after the US, with its exports accounting for 16 per cent of the EU’s supplies between January and July, figures from industry data company Kpler showed.

Van der Straeten said she was “not happy with the fact that Russian LNG is still flowing into the EU and through Belgium”. She noted that only 2.8 per cent of the imports went to Belgian consumers while the rest transited to other countries.

The Belgian port of Zeebrugge is a major hub for the transshipment of LNG. Germany and the Netherlands were among those importing the fuel from Belgium, Van der Straeten said.

The level of Russian LNG imports has raised questions over whether Brussels should impose sanctions on the fuel, as it has for Russian crude oil and certain petroleum products. EU officials have said discussions on this could be held in future but that more work needs to be done to find alternative energy sources.

Kadri Simson, the EU’s energy commissioner, said in March that the bloc “should get rid of Russian gas completely as soon as possible, still keeping in mind our security of supply”.

Belgium supported imposing sanctions on the fuel, Van der Straeten said. But such a move was unlikely as it required the support of all EU countries, she added.

“The most effective thing that we can do . . . is to wean ourselves off fossil fuels in general and make sure . . . that we can control energy ourselves,” she said.

The Green politician was speaking ahead of the opening in Belgium of the EU’s first major thermal battery installation, a means of capturing heat from solar power and storing it for use on demand rather than relying on the weather.

The project at adhesive manufacturer Avery Dennison’s plant in the Belgian city of Turnhout is part funded by the Flemish regional government and Brussels. It will allow the company to cut annual gas use at the factory by 9 per cent on average, the company said. It could totally replace gas during the hottest months.

The technology is seen as a way for heavy industrial users to cut their fossil fuel use without relying on more expensive systems such as renewable hydrogen or carbon capture that require much larger infrastructure networks.

“Depending on where you are in the world, this can already be [cost] competitive with gas ,” said Christian Thiel, chief executive of Norwegian company Energynest, which designed the project.

Thermal battery projects are also being established in the US. The mining company Rio Tinto and petroleum producer Saudi Aramco are among those that recently invested in a $60mn funding round for Californian start-up Rondo Energy, which is piloting its own thermal battery technology.

Avery Dennison and Energynest did not disclose the overall investment for the Belgian project but said the EU had given €1.43mn in funding to support 70 per cent of the thermal battery component.

Governments join race for commercial fusion power

Goal of abundant, zero-carbon electricity from fusing atoms brings together private and public sector

From the US to the UK and Japan, governments are launching initiatives to help public and private sector scientists work in tandem — in some cases for the first time — on the tantalising goal of fusing atoms to produce safe, zero-emissions power.

Countries have taken different approaches to supporting the nascent sector but there is growing hope that public-private collaboration can overcome the immense technical and funding barriers to turning recent scientific achievements into a global clean energy source.

“There’s been a paradigm shift,” said Richard Pearson, a co-founder of Japan’s Kyoto Fusioneering, set up in 2019.

For decades fusion research was driven by large, public sector programmes working methodically towards scientific goals, but over the past 20 years commercial companies have moved in to shake things up.

The progress made by some of those businesses has forced governments to take notice and seek to support private enterprise, Pearson added. “That’s why things are very different in 2023 than even in 2018.”

The increased government attention follows two years of unprecedented private investment in fusion companies and two breakthroughs by US scientists at a federal laboratory in the past eight months.

Total private investment into fusion has now surpassed $6bn, with most of the funding coming since 2021, according to the Fusion Industry Association (FIA), which represents the global industry.

Fusion energy, which is created when two hydrogen isotopes are fused to produce helium and neutrons, is still a long way from proving it can generate commercially viable power.

In the breakthrough experiments in December and July, US government scientists produced only slightly more energy than was in the laser used to trigger the reactions. Physicists estimate that commercial fusion will require reactions that generate between 30 and 100 times the energy going in.

But the achievement of the long-sought goal of net energy gain has elevated fusion power from science fiction to something with genuine potential.

Fusion reactions create no long-lived radioactive waste, the hydrogen isotopes used can be sourced in large quantities and a small cup of the fuel has the potential to power a house for hundreds of years.

Enthused by this promise, the US government launched a “milestone” cost-sharing programme in May that selected eight companies, including Massachusetts-based Commonwealth Fusion Systems, to receive a combined $50mn of initial public funding to support the development of commercial fusion power. Under current plans, the programme can allocate up to $415mn before the end of 2027.

The UK, Canada, France, Germany, Italy, Sweden, Israel, Australia, New Zealand, Japan and China are among the countries with at least one fusion start-up. But the private fusion industry has grown fastest in the US. Of the 43 fusion companies worldwide, 25 are headquartered in the US, according to the FIA, with 80 per cent of private investment raised by the sector going to US-based groups.

Fusion companies have proliferated in the US due to a relative lack of public-sector research opportunities and a fundraising environment that makes it comparatively easier for scientists to raise private investment for ambitious goals, said Andrew Holland, executive director of the FIA. Many of the companies have set aggressive timelines to deliver fusion power to the grid in the 2030s.

“I don’t think it’s necessarily true that there’s more ideas for fusion commercialisation in the United States, it’s just that there’s easier access to capital,” he added.

The UK has been at the forefront of fusion science since the Joint European Torus, which remains the world’s most powerful fusion machine, began operations at Culham in Oxfordshire in 1984.

The ageing device is due to be turned off next year, but three fusion companies, including UK-based groups Tokamak Energy and First Light Fusion, have plans to build prototype devices at Culham to benefit from collaborating with the facility’s publicly-funded scientists.

“We want to make use of our heritage and expertise in the UK to be at the centre of a growing fusion industry,” said Tim Bestwick, chief development officer at the UK Atomic Energy Authority (UKAEA), which runs the Culham site.

The UKAEA is both advancing plans for a new national fusion demonstration plant to be built by 2040 and supporting the development of a wider fusion industry through an initial £42.1mn in funding for private companies.

Japan is taking a different approach, said Pearson at Kyoto Fusioneering. The country published its first national fusion strategy in April and intends to use its existing manufacturing capabilities to play a prominent role in developing the supply chains needed for a global fusion industry.

“Japan is outward looking when it comes to fusion and it is positioning itself to support those global players,” Pearson added.

In contrast, the EU is lagging behind its peers in supporting commercial initiatives. Instead, the bloc has focused its efforts on the flagship Iter project, becoming the biggest funder of the multilateral fusion experiment, which is under construction in France at a cost of more than $23bn.

“The EU has been very slow in getting going on the private sector side,” said Melanie Windridge, chief executive of advisory group Fusion Energy Insights. “How the research and the expertise from the national laboratories is transferred into the private sector and into the commercial realm is very important.”

The “sleeping giant” of the fusion industry is Germany, according to the FIA’s Holland.

Publicly funded German scientists have been quietly working on an experimental fusion machine, known as a stellarator, since the 1990s. But until this year the government had shown little open support for the nascent private sector.

Germany’s ministry of education and research published its first fusion paper in May. On Tuesday it announced plans to provide an additional €370mn in funding to the fusion industry by 2028, bringing total state funding for the sector to €1bn over the next few years.

“The idea that you could have a large centralised source of zero carbon power that’s not nuclear fission is attractive to them,” said Holland. “Nowhere in the world has felt the energy security fallout of Russia’s invasion of Ukraine more than Germany.”

Despite the promising signs of increased public-private collaboration, there is still a huge gap between the funding available — either from government or investors — and what would be required to achieve fusion energy at scale.

Each fusion company is likely to need between $300mn and $1bn to build a prototype machine and even more to develop demonstration plants, said the UKAEA’s Bestwick.

“There remains an unanswered question about how the whole global fusion community is going to get the investment into fusion that’s needed to make the rate of technical progress we all aspire to.”

Bloc countries divided on upgrading climate change targets

The EU’s new climate chief has been given a mandate to explore carbon capture in an effort to limit global warming, as the bloc countries debate whether to make allowances for the controversial technology in upcoming UN negotiations to end the use of fossil fuels.

In a letter to Wopke Hoekstra, the Dutch nominee to be EU climate commissioner, European Commission president Ursula von der Leyen said he should “intensify efforts” to present “an ambitious, forward looking strategy” for the technology when he takes up his role.

Hoekstra, the former Dutch foreign minister, is due to take over in October from the EU’s previous climate tsar, Frans Timmermans, who left the commission to run in the Dutch elections. The 47-year-old who was previously a partner at the McKinsey consulting group, also once worked for the oil company Shell.

In his new role, he will oversee discussions for the EU’s 2040 emissions reduction target. The European scientific advisory board on climate change has recommended EU emission reductions of 90-95 per cent by 2040, relative to 1990.

EU countries were already “deeply divided”, one diplomat said, over whether to update the bloc commitment to cut emissions from 55 per cent to 57 per cent by 2030.

The Intergovernmental Panel on Climate Change has said that to keep global warming within the 1.5C level at which irreversible changes are expected to the planet, emissions must be cut by 45 per cent by 2030.

Carbon capture, use and storage technology is unproven at scale. However, as global carbon emissions continue to rise to dangerous levels, countries and industries are looking towards it as a means of curbing climate change.

The EU first laid out a framework for the use of carbon emissions removal technology in November last year and has said it will publish a road map for how it can be used in heavy industry, such as steel and cement making, before the end of this year.

But some policymakers and climate scientists fear that it could be a way for heavy polluters to avoid having to cut their greenhouse gas output.

Von der Leyen has also been pushing heavily for a global carbon price, ahead of the EU’s own carbon border tax coming into force in October, which will affect the import of goods from the heavy polluting sectors including steel and cement.

A senior EU official said that carbon capture should only be an option for those heavy industries that were difficult to decarbonise. “Don’t use it where you have other cheap mitigation alternatives,” they said.

The issue has been raised as part of negotiations over the EU’s position for the UN COP28 summit in Dubai starting at the end of November. The bloc’s 27 member states are still debating whether to call for a phaseout of “unabated” fossil fuels, or those burnt without capturing the emissions, according to diplomats and a draft document on the EU’s negotiation position.

Countries including Poland and Italy were among those pushing to include the word “unabated”, according to one EU diplomat, as it would limit the pressure to end the consumption of fossil fuels completely.

Maria Pastukhova, senior policy adviser at the E3G think-tank, warned that “countries negotiating international language on ‘unabated’ fossil fuel phaseout need to push for rigorous, high-ambition standards” to ensure that commitments to reduce fossil fuel use were genuine.

Global leaders were gathered in Nairobi on Tuesday for the first-ever Africa Climate Summit to debate how to finance environmental initiatives in a resource-rich continent that has been at the forefront of damaging changing climate patterns.

The summit is part of a series of international talks in the lead-up to COP28, which climate campaigners hope will result in a global agreement to cut fossil fuel use.

Kenya’s president William Ruto told the Financial Times that Nairobi would support a fossil fuel phaseout by 2050 at COP28, even as some of its neighbours — notably Uganda and the Democratic Republic of Congo — were pushing for oil projects around environmentally sensitive areas.

“We have absolutely no problem with any country pushing the assets they have, just the same way we have chosen our country to go renewable, because renewable gives us an opportunity to access energy, but in a way that is responsible,” Ruto said.