Podcast Summary
Exploring overhyped and underhyped trends in clean energy: Shail and Dave discussed their perspectives on overhyped and underhyped trends in clean energy, emphasizing the importance of considering various viewpoints and encouraging listeners to submit questions for further exploration.
During this Catalyst episode, Shail Khan, the host of Catalyst, and Dave Roberts, the host of Fultz, discussed trends and technologies in the clean energy landscape through the lens of what they believe are overhyped and underhyped. They acknowledged the challenge of determining what is overhyped or underhyped relative to whom and emphasized the importance of considering various perspectives. Despite their different lenses, they shared similar curiosities and think about the same questions. Listeners are encouraged to submit questions for Shail's Ask Me Anything episode by using the hashtag #askcatalyst or leaving a voice mail or email. The conversation touched on various topics, including overhyped trends like green hydrogen and underhyped ones like carbon capture and utilization. The podcasts' audiences can benefit from their insights and discussions on the clean energy landscape.
Onshoring Clean Energy Manufacturing: Unheralded Trend: The Inflation Reduction Act is driving a historic shift towards onshoring clean energy manufacturing in the US, including solar cells, modules, batteries, and EV components, which has the potential to reduce dependence on overseas production.
The trend of onshoring or nearshoring manufacturing in clean energy supply chains is underhyped by the wider world, particularly in relation to the recent domestic manufacturing renaissance in the US driven by the Inflation Reduction Act. This shift, which includes the production of solar cells and modules, as well as batteries and EV components, is unprecedented in the history of clean energy and has the potential to significantly reduce dependence on overseas manufacturing. Despite the massive scale and ambition of this undertaking, it may not be fully appreciated outside of the clean energy community.
Reshoring manufacturing in the US: Geopolitical concerns, economic development, and supply chain resilience: The US aims to build up manufacturing capacity for critical materials to ensure leverage and supply chain resilience, focusing on regions hit hard by globalization. Thermal energy storage, an underfunded and under-researched trend, has potential to play a significant role in the energy transition by providing reliable power from renewable sources.
The ongoing trend towards reshoring manufacturing in the US, particularly in areas hit hard by globalization, is driven by a combination of geopolitical concerns, economic development needs, and the desire for supply chain resilience. While it's unlikely that the US will produce as much of these critical materials as China, the goal is to build up enough manufacturing capacity to have some leverage in the market and ensure a buffer in case of supply disruptions. The administration views this as an important step towards reversing the hollowing out of certain regions and creating jobs. One underhyped trend mentioned in the conversation is thermal energy storage, which has the potential to play a significant role in the energy transition by providing reliable and consistent power from renewable sources. Despite its potential, thermal energy storage is currently underfunded and under-researched, making it an intriguing underhyped trend to watch.
Unlocking the challenge of decarbonizing industrial heating and cooling with thermal batteries: Thermal batteries efficiently store heat from electricity for later use in industrial heating and cooling applications, making them a promising solution for decarbonization.
Thermal storage, specifically thermal batteries, is set to play a significant role in the decarbonization of industrial heating and cooling, a sector that has been considered difficult to decarbonize. Thermal batteries act as a skeleton key to unlock this challenge by converting electricity into heat and storing it for later use. This approach is more efficient than the previous attempts at thermal storage, which focused on electrical-to-electrical storage and used corrosive materials. With thermal batteries, up to 95% of the heat can be retrieved, making them a promising solution for industrial heat applications. The excitement around thermal storage is growing, and it's expected to transition from energy industry circles to mainstream understanding.
Shifting focus from power to heat with thermal storage: Thermal storage enables the use of renewable energy for industrial heat applications, unlocking a new market, leading to cost savings and location flexibility
Thermal batteries, or thermal storage, is not just about converting power to power, but rather power to heat with storage in between. This shift in thinking is crucial as heat is often overlooked when it comes to energy saving and usage. Furthermore, thermal storage enables the use of renewable energy for industrial heat applications without the need for grid interconnection, unlocking a significant new market for renewable energy developers. This concept, known as "direct air-side cooling," can lead to substantial cost savings and location flexibility for renewable energy projects. Despite the excitement surrounding this technology, electric stovetops, specifically induction stovetops, are currently overhyped from a climate perspective, as the choice between electric and gas stoves has minimal impact on overall greenhouse gas emissions.
A cultural battle beyond energy use: The ongoing debate around gas stoves goes beyond just energy use and taps into deeper cultural issues. Understanding and addressing these aspects can help build momentum towards larger climate change solutions.
While the impact of choosing an electric or gas stove on energy consumption and emissions is negligible compared to other factors like car choice and home heating methods, the ongoing debate around gas stoves goes beyond just energy use. It's also a cultural battle that resonates beyond the energy community. Gas stove bans, for instance, may seem insignificant in terms of carbon reduction, but they tap into a deeper issue. The energy world needs to recognize this and engage in these cultural battles, even if the hype around stoves outweighs their real significance in the context of climate change. Ultimately, the climate doesn't care who wins this battle, but understanding and addressing the cultural aspects can help build momentum towards larger, more impactful changes.
Reframing Nuclear as One Option for Balancing Renewable Energy: Instead of focusing solely on SMRs for balancing renewable energy, consider geothermal, longer term storage, and e-fuels as alternative options.
While small modular nuclear reactors (SMRs) are hyped in certain circles for their potential role in balancing renewable energy, the hype may be overblown due to the lack of actual small or modular nuclear plants being built. The speaker believes that people need to reframe nuclear as just one of the options for balancing renewable energy, and that there are other options like geothermal, longer term storage, and e-fuels. However, the vision of reducing costs by building nuclear plants in factories and shipping them to sites has not been fully realized yet. The speaker also mentions that the average person may not even be aware of what SMRs are. Overall, the speaker wants to shift the perspective of nuclear as a unique and special kind of power, to just one of the options for balancing renewable energy.
Bridging the gap between SMR theory and reality: To realize the potential of Small Modular Reactors (SMRs), it's essential to address licensing, construction, and industry inefficiencies through research, demonstration projects, and industry discipline, avoiding past subsidies.
While Small Modular Reactors (SMRs) hold great promise as a nuclear energy solution due to their energy density and potential for being closer to load, the gap between theory and reality is significant. The reasons for this gap are debated – some argue it's due to licensing and construction issues, while others believe SMRs were never intended to be cheap and citable. Regardless, there's consensus that this class of nuclear technology is important in addressing energy needs. However, it's crucial to avoid repeating past mistakes and ensure that any investment in SMRs does not result in more subsidies for an historically inefficient industry. Instead, a focus on research, demonstration projects, and industry discipline is necessary to bridge the gap and realize the potential of SMRs.
The impact of higher interest rates on clean energy: Higher interest rates are negatively affecting clean energy technologies and industries, causing stock declines and reduced expansion plans.
The underappreciated impact of higher interest rates on clean energy technologies and industries is having a significant negative effect. Clean energy technologies, such as solar and wind, have high upfront costs but are cheap to operate. As a result, they are particularly sensitive to the cost of financing, which is tied to interest rates. This has been a concern for years, but with interest rates rising, it's becoming a major issue. The S&P Clean Energy Index is down 35% this year compared to the S&P 500's 8% gain. EV manufacturers are also experiencing weak demand and pulling back on expansion plans, and even oil and gas companies are announcing moderate pullbacks in their clean energy businesses due to shareholder pressure. This is a tougher road for clean energy at the moment, and it's a reminder of the importance of taking advantage of favorable economic conditions when they arise.
Challenges in the clean energy transition: Despite rising short-term costs, the long-term trajectory of renewable energy remains downward. Geothermal district energy is a promising alternative for heating and cooling buildings, potentially utilizing existing natural gas infrastructure.
The clean energy transition is facing challenges due to high interest rates, making clean options potentially more expensive in the short term. Renewable energy prices have been rising, and the delivered cost of clean energy may go up. However, the long-term trajectory of renewable cost continues to be down. Another underhyped yet promising development is geothermal district energy, which uses small boreholes to access heat and provides an efficient, clean, and cost-effective way of heating and cooling buildings. This is particularly exciting because it can potentially piggyback off natural gas infrastructure and provide an alternative future for natural gas utilities facing decline. Despite these challenges, it's important to remember that the clean energy transition is a long-term goal, and short-term bumps are to be expected.
District Energy: Promising but Challenging: District energy holds promise for efficient heating, but faces challenges due to extensive planning and coordination, and voluntary carbon markets may not be the most effective solution for reducing emissions.
While district energy, also known as geothermal or underground thermal heating networks, holds promise as an efficient and potentially clean solution for heating buildings, particularly in new developments and campuses, its implementation faces significant challenges due to the need for extensive planning and coordination among various entities and levels of government. The underhyped nature of this technology is due to these challenges and the lack of discussion about it in the US compared to Northern Europe. Additionally, voluntary carbon markets, which have been subjected to numerous criticisms and exposés, particularly in the forestry sector, are currently experiencing a wave of negative attention and may not be the most effective or reliable solution for reducing carbon emissions.
Concerns about voluntary carbon markets overshadow their small size: Despite concerns, voluntary carbon markets are small compared to other decarbonization efforts, but shifts towards hourly offsets and carbon removal purchases are areas of interest.
While there are valid concerns about the state of the voluntary carbon markets, particularly in relation to forestry projects and the potential value they deliver, it's important to keep in mind that this market is relatively small compared to other areas of decarbonization efforts, such as corporate renewable energy procurement. The hype surrounding voluntary carbon markets may be due to their recent mainstream attention, but they represent a relatively small portion of overall spending. Additionally, the shift towards hourly carbon offsets and the potential of carbon removal purchases are areas of interest, but they should not overshadow the larger context of the market's size. Another overhyped topic is the discussion around the mining of minerals for batteries and electric vehicles. While it's true that mining can have negative environmental impacts, it's crucial to remember that the public's awareness of these issues has grown significantly, and addressing them requires a nuanced understanding of the complexities involved.
Material shortages in clean energy transition: Historically effective markets may struggle to keep up with the rapid pace of the clean energy transition and the long lead times for mining could lead to material shortages, higher costs, and slowed growth.
While the clean energy transition is undeniably an environmental advance, there are concerns about potential material shortages and their impact on the transition's pace. Although markets have historically been effective in finding new sources and substituting materials, the long lead times for mining and the rapid pace of the transition raise the possibility of meaningful crunches that could slow down the adoption of key technologies. These crunches could lead to higher costs, lower demand, and stalled growth for several years. However, both parties agree that the transition is worth pursuing and that the environmental benefits outweigh the challenges. The real question is how to mitigate the risks of material shortages and ensure a smooth transition to a clean energy future.
A game-changer in the fight against climate change: The Inflation Reduction Act brings funding for decarbonization efforts, but rising interest rates pose challenges. Continued innovation and minimizing material use are crucial.
The Inflation Reduction Act (IRA) is a game-changer in the fight against climate change, bringing a massive influx of funding into various sectors to decarbonize and reduce the need for materials. However, there are concerns about the potential impact of rising interest rates on the market. Despite these challenges, the overall trend is towards decarbonization, but it won't be an easy journey. Another important point is that instead of focusing on sectors deemed "hard to decarbonize," we should recognize that energy itself is not easy to abate and continue working towards solutions. The IRA's implementation is leading to a constant stream of funding for innovative projects, and it's crucial to keep track of this money and its impact. Ultimately, minimizing our need for materials through various means, such as walking, biking, and improving building codes, can also help reduce the pressure on these markets.
The complexities of decarbonizing sectors: Despite common belief, the hardest-to-decarbonize sectors might be less challenging than anticipated, while the 'easy' ones could pose unexpected technological hurdles.
Key takeaway from this conversation with Dave Roberts, the writer and host at Voltz, is that the technological challenges of decarbonizing sectors, particularly those considered "easy," may be more complex than anticipated. Contrary to popular belief, the harder-to-decarbonize sectors might turn out to be less challenging than expected. This theme has been consistent in the clean energy transition for decades. Despite feeling envious of some guests and episodes on Catalyst, Shail appreciates the show and may even attempt to replicate it in the future. Voltz is a co-production of Latitude Media and Canary Media, with support from Prelude Ventures, a venture capital firm focusing on climate change solutions. This episode was produced by Daniel Waldorf, mixed by Roy Campanella and Sean Marquand, and features a theme song by Sean Marquand.
