Podcast Summary
Assessing the hype cycle in climate tech: The panelists discussed the hype cycle in climate tech and played a game to identify overhyped, underhyped, or optimally hyped technologies. Shail bought advanced nuclear, believing it's emerging from a trough of disillusionment.
The panel on Catalyst discussed the hype cycle in climate tech and played a game of "buy, sell, hold" to identify areas that are overhyped, worth the squeeze, or need more love. The group consisted of Shail Khan, a partner at Energy Impact Partners, Laura Pierpoint of Actuate, and Steven Lacey, the host of Carbon Copy. They stayed away from actual public market equities and instead focused on whether technologies are overhyped, underhyped, or hyped just right. Shail's buy was advanced nuclear, which she believes is finally coming out of a trough of disillusionment and is poised for a comeback. They discussed various climate tech sectors and technologies, with the goal of assessing the current level of hype and making informed bets.
Nuclear technology's resurgence with challenges: Government support and positive public perception are driving the advancement of nuclear technology, but public acceptance for new build lags behind. The NRC's engagement with companies is progress, but setbacks like Oklo's petition rejection are common in the complex nuclear industry decarbonization process.
Advanced nuclear technology is experiencing a resurgence, with serious companies gaining government support and positive public perception, particularly in regards to extending the life of existing nuclear plants. However, public acceptance for new nuclear build is not yet shifting at the same pace. The Nuclear Regulatory Commission's engagement with companies is a sign of progress, but it's important to note that there are challenges and setbacks along the way. For example, the rejection of Oklo's petition was a significant setback but also a symptom of the deep engagement between the NRC and companies. Overall, the nuclear industry is making strides towards decarbonization, but it's a long-term process with many complexities.
Heat pumps' potential growth: Heat pumps offer improved user experience and strong economic incentives for expansion, making them a crucial part of decarbonization strategies, despite challenges like high cost perception and insufficient information.
Heat pumps, despite being hyped within energy circles, still have significant upside potential due to improving user experience and a strong economic case for expansion. The user experience is getting better as heat pumps now perform exceptionally well in cold temperatures, and the economic case includes encouraging manufacturers to switch residential cooling systems into hybrid heating and cooling units at a low cost. Heat pumps are a crucial part of the electrification strategy for decarbonization. However, there are challenges such as the perception of high cost and maintenance, insufficient information, and the affordability of natural gas in certain areas. Additionally, there are promising applications for heat pumps in industrial contexts that are not being discussed enough.
Heat Pumps in Industrial Applications: An Investment Opportunity: The Biden administration's policy push and global renewable energy shift create tailwinds for heat pumps in industrial applications, but non-lithium ion battery chemistries for stationary energy storage could also be a profitable investment due to commodity price increases, supply chain issues, and OEM priorities.
While heat pumps are gaining attention and hype for residential and commercial applications, there's less discussion about their potential in industrial applications, which presents an opportunity for investment. Additionally, the Biden administration's policy momentum and the global shift towards renewable energy are expected to create tailwinds for heat pumps. However, the speaker argues that non-lithium ion battery chemistries for stationary energy storage could also be a worthwhile investment due to rising commodity prices, global supply chain issues, and battery OEMs prioritizing EVs over stationary storage. This creates an opportunity for alternative battery technologies like flow batteries, sodium batteries, and zinc-based batteries to gain ground despite lithium ion's massive scale-up.
Commodity crunch's impact on battery industry: The commodity crunch is driving interest in battery recycling for its environmental, economic, and national security benefits, as new technologies and companies emerge to address this need.
The current commodity crunch, affecting industries like lithium-ion batteries, is a complex issue involving both supply chain bottlenecks and high commodity prices. This situation raises questions about the longevity and extent of the impact on various technologies, including those that may have struggled to compete even when lithium-ion batteries were more expensive. However, there is growing interest in battery recycling due to its potential environmental, economic, and national security benefits. With commodity prices and supply constraints continuing to shape the market, there is a strong push for more battery recycling, and new technologies and companies are emerging to address this need.
The complexities and ongoing debates in transitioning to clean energy technologies: Despite consensus on battery recycling and clean hydrogen's role, there's uncertainty about hydrogen for passenger vehicles due to environmental concerns and hype, with ongoing debates about its potential impacts.
The discussion revolved around the importance and hype surrounding various aspects of the transition to clean energy technologies, specifically focusing on battery recycling, hydrogen, and clean hydrogen. While there was agreement on the significance of battery recycling and clean hydrogen, opinions differed on hydrogen for passenger vehicles and the potential environmental consequences. The consensus was that hydrogen will play a role in decarbonizing industries like ammonia and chemicals production, as well as some industrial sectors and the power sector. However, there are concerns about the hype and potential environmental impacts, particularly regarding hydrogen leakage. The Environmental Defense Fund's paper suggesting higher greenhouse gas impacts of hydrogen added to the debate, making the future of hydrogen as a clean energy solution less certain. Overall, the conversation highlighted the complexities and ongoing debates in the transition to clean energy technologies.
Hydrogen's Impact on Greenhouse Gas Emissions: Despite concerns about hydrogen leakage and its impact on greenhouse gas emissions, hydrogen still results in an 80% reduction in emissions over 100 years, but it's crucial to mitigate leakage as we build out infrastructure. Hydrogen's potential lies in decarbonizing industries and downstream applications, with V2H being an exception for electric vehicles.
While there are concerns about hydrogen leakage and its impact on greenhouse gas emissions, it's important to note that the studies raising these concerns use a 5-year global warming potential instead of the standard 100-year one. Hydrogen is a short-lived gas, and even in a worst-case scenario with a 10% leakage rate, it still results in an 80% reduction in greenhouse gas emissions over 100 years. However, it's crucial to mitigate hydrogen leakage as we build out hydrogen infrastructure. Regarding hydrogen itself, there's potential for its use in decarbonizing industries and downstream applications. In the context of electric vehicles, fleet electrification is a hold, and vehicle-to-grid (V2G) is a sell, except for using vehicles to power homes (V2H). The potential of V2G is enormous but may take time to realize, and the economics don't currently support vehicles discharging into the grid at scale.
Evaluating the Role of Technology in Addressing Energy and Environmental Challenges: While technology like Web 3 and batteries have potential in addressing energy and environmental challenges, it's crucial to critically evaluate the actual problems and potential solutions, such as the limited supply of high-quality carbon credits and the oversupply of low-quality offsets in carbon markets.
While there are ongoing discussions about the potential role of batteries, hydrogen, Web 3, and carbon markets in addressing energy and environmental challenges, it's crucial to critically evaluate the actual problems and potential solutions. For instance, while some believe that Web 3 can improve transparency, liquidity, and price discovery in carbon markets, others argue that the real challenge lies in the limited supply of high-quality carbon credits and the oversupply of low-quality offsets. Additionally, producing crypto cleanly could potentially contribute to the grid as a resource. Regarding carbon markets, Lara suggests that companies' increasing demand for permanent and clear carbon credits may drive the market towards sequestration rather than carbon-to-fuels. Overall, it's essential to approach these topics with a clear understanding of the underlying issues and the potential implications of various solutions.
Discussion on underhyped and overhyped climate tech solutions: While renewable natural gas and carbon accounting systems are debated, advanced nuclear and geothermal have great potential for large-scale carbon sequestration. Hold on carbon accounting systems, sell on renewable natural gas and nuclear fusion, and buy on advanced nuclear and geothermal.
There is growing demand for carbon negative products, but the potential for large-scale carbon sequestration through these products may be limited. Renewable natural gas, while a viable alternative for decarbonizing certain sectors, is not expected to meet the entire gas supply due to limited availability. In the climate tech industry, some technologies like advanced nuclear and geothermal are underhyped and have great potential, while others like carbon accounting systems and nuclear fusion are more debated. The consensus during the discussion was to hold on carbon accounting systems, sell on renewable natural gas and nuclear fusion, and buy on advanced nuclear and geothermal. Overall, there is a need for improvement and more investment in various climate tech solutions to decarbonize industries and mitigate the effects of climate change.
Skepticism about building new transmission lines and e-mobility's lingering pandemic effects: Despite hype in geothermal, nuclear, and DERs, challenges persist in transmission and e-mobility. Building new transmission lines is a sell or hold, while e-mobility is a hold due to pandemic and personal automobile preference. DERs remain optimistic but the pace of transition is uncertain.
While some sectors like geothermal energy and distributed energy resources (DERs) are experiencing varying levels of hype, others like transmission and e-mobility face significant challenges in meeting the current level of excitement. For instance, despite the hype around geothermal and nuclear energy, the panelists expressed skepticism about the ease of building out new transmission lines, making them a sell or hold. E-mobility, which saw a surge in hype a few years ago, is now a hold due to the lingering effects of the pandemic and the continued preference for personal automobiles. However, the panelists remain optimistic about the future of DERs and the shift towards a distributed energy system, even if the pace of this transition is uncertain. Overall, the panelists emphasized the importance of addressing the practical challenges in these sectors to turn hype into reality.
Exploring the Future of Web 3 and Climate Solutions: Despite challenges, there's optimism for web 3 and climate initiatives, with potential areas for further exploration including hydrogen leakage, geothermal energy, and carbon counting.
Despite the challenges faced in the transition to web 3 and the decarbonization of various industries, the hype surrounding these topics remains high. Lara Pierpoint, the director of climate at Actuate, expressed her optimism about the future of these initiatives and identified several areas for further exploration, including hydrogen leakage, geothermal energy, and carbon counting. Steven Lacy, the host of The Carbon Copy podcast, shared similar sentiments and emphasized the importance of continued conversation and exploration in these areas. Overall, the conversation highlighted the importance of staying informed and engaged in the ongoing efforts to address climate change and accelerate climate solutions. The episode was produced by Catalyst, a co-production of Postscript Media and Canary Media, with support from Prelude Ventures, a venture capital firm focused on addressing climate change across various sectors.
