The Exchanges

Q like, you know, prior to any of these bills, right, Tesla was in Nevada already with the Reno Gigafactory. In solar, first solar has been in Tempe, Arizona forever. Um, you know, is it just that it's like once there's one, it attracts a cluster? Because now you have a trained workforce that you can hire from, and, you know, people have moved there and all that kind of stuff?

A Yeah, I think there's real path dependency and talent in, uh, relationships with state and local governments that are going to provide incentives and where permitting is a kind of known quantity, uh, and, uh, and just familiarity of working, just word of mouth of, Oh, we set up a factory there. It worked relatively well. Um, we were able to navigate these issues. Here's how we did it. As opposed to going to a completely new state where you have no experience, your community within the field has no experience is, is a pretty, uh, is a pretty high bar. And so when we look at over the past year, manufacturing investment is a share of GDP across the country. So the top four states, uh, Are the traditional auto hubs. So it's Tennessee, Kentucky, Michigan, South Carolina. But then ranked fourth and fifth is Arizona and Nevada. And that's mostly EVs, but it's also, um, it's also solar, uh, as well, particularly in Arizona. Uh, and a lot of announced activity in those regions, too, including on the critical mineral side. So Redwood Materials Facility, uh, the Giant lithium mine in Nevada. And so that kind of critical mineral supply base in the U.S. Southwest, I think will be another attractive aspect of the Southwest as a clean energy manufacturing hub.

AI assessment note: “Yeah, I think there's real path dependency and talent in, uh, relationships”

Q Okay, so let's talk about the plant-based meat world then, and just starting with the high level, like what has been the, there's been lots of headlines around, you know, troubles in the category, declining sales, particularly for the, the big players, which is basically impossible and beyond. Give me some numbers to put behind that. Like, what have we actually seen happen in the market?

A Well, if you think you kind of step back prior to COVID, this was a category that was growing mid-single digits, uh, mid-single to high single digits, call it, you know, 2014 through 20 18, um, prior to COVID. Then what you had seen, uh, when Beyond Meat became, went public in 2019, you had seen, you know, all the buzz around the category and the brand. You had seen the volume grow, you know, 15, 20% in 2019, so accelerated. And then in 2020, when you had the big COVID bounce with everybody eating at home, restaurant consumption being down, you know, you had seen the category growing 40%. Um, so, you know, very nice, you know, improvement. And what happened at that point, there was a view among folks in the industry that the biggest impediment for plant-based meat consumption Was household penetration and trial. And the thought process was, hey, you know, we've had this, this huge dislocation in the food environment in the US with this big 40% increase in volume for the category in 2020. We've just accelerated household penetration by a number of years just within 2020. And the thought process was, you know, it lifts, it rebases category consumption higher, and that just further, you know, reinforces the, the optimism and bullishness for consumption of the category. Uh, and what's happened since then is about, I think, 33 consecutive months now of volume declines. Uh, the categ…

AI assessment note: “about, I think, 33 consecutive months now of volume declines.”

Q Right, so ERCOT's doing something right. So what is ERCOT doing? Like, walk us through ERCOT's interconnection process.

A The defining feature of ERCOT's interconnection process is that they don't rely on the interconnection process itself to identify and pay for grid upgrades. And this enables them to interconnect projects much more quickly and at much lower cost. And what allows them to do this is that All generators in ERCOT are energy-only resources subject to economic and security curtailment, which means that ERCOT can turn them off for effectively any reason, um, according to market dispatch protocols. And so, so ERCOT manages its grid constraints by curtailing generators as necessary, uh, with, with that market dispatch. And so, these generators can connect to the grid very quickly at relatively low cost, but with the understanding that they may be curtailed to mitigate any grid overloads, and, you know, this, this doesn't mean that ERCOT doesn't pursue grid upgrades, it's just that they do it via separate transmission planning process, and their market structure enables them to really clearly measure These congestion costs that arise because of the system's inability to deliver lower cost, uh, available electricity to load. And so, you know, a simplified example might be helpful here. So say you have a, a city, it's supplied by two large transmission lines. You know, the first line connects to an aging coal plant, you know, with a high cost of electricity that you don't want to run very m…

AI assessment note: “The defining feature of ERCOT's interconnection process is that they don't rely”

Q California, actually signed a PPA for space-based solar In, I don't know, you could probably tell me in like 2009 or something like that, that obviously never went anywhere, but I remember that PPA. So maybe just walk me through the history of space-based solar power, and then we can get into like why this resurgence in interest now, what's changing and what are the technologies have to look like?

A Sure. So it is a, an old idea. It actually goes back all the way to 1941 when Isaac Asimov, um, Wrote about it in one of his science fiction stories where there was a manned, uh, space station that was beaming power to, uh, planetary bodies with, uh, through the use of radio frequencies. So, uh, collecting energy in space and, and sending it, uh, at a distance away. Uh, but it wasn't until the late sixties when the, uh, idea was really thought about from a technical point of view, how would you go about doing this? And, um, a gentleman called Peter Glaser in the U S working for, Arthur D. Little, um, came up with the first, uh, technical concepts of how, how you would collect energy in space and deliver that down to the ground. And he actually patented it in the early 19 seventies as well. Um, and then it was in the seventies oil crisis that, uh, hit, uh, the world, especially the Western Western world and, um, the U S and, and others were scrambling in those, uh, early years of the seventies to find alternative sources to fossil fuels. That's when the big investment into, uh, Other forms of, of energy, including nuclear fission and, uh, space-based solar power happened. And the Department of Energy in the US and NASA jointly did some substantial studies at that time to, uh, to understand what the, the promise and the challenges of space-based solar power were. And the conclusi…

AI assessment note: “It actually goes back all the way to 1941 when Isaac Asimov”

Q Um, what, what is this type of fungus?

A Well, first of all, it's, it's amazing that you, that somebody says they're excited about A, soil, and B, mycorrhizal fungi, because that doesn't happen a lot, and C, that you read the paper, so well done. Um, but to your question, so mycorrhizal fungi, the word comes from the Greek, so myco means fungus, and rhiza means root, so it literally means fungus root. And so they're fungus root fungi, which sounds odd, but what it means is that hardly a root on the planet is actually just a root. It's, it's very often this association. And, so what it is, is a mutualistic partnership, um, where the plants, where, where the fungi, the threads of the fungi form this really close association with the root cells. They go, they either go into the cells, or they go around them, and then from there, they spread out into the soil. So I don't know if you've ever looked at your bread mold closely, but it would generally radiate out, and that's exactly what These fungi do. And they've got really small thread-like bits of their bodies, so they can go into soil pores where roots can't access.

AI assessment note: “so what it is, is a mutualistic partnership, um, where the plants”

Q so these fungi have been around for at least four hundred fifty million years, ah, having this symbiotic relationship, generally a symbiotic relationship with, with plants. Um, how prevalent are they today? Like, do we have a sense of, is it, is it everywhere? Is it in certain ecosystems? Is it some plants and not others? Is it everywhere? Like how, yeah, how, how ubiquitous is this type of fungus?

A Well, ubiquitous was actually the word I was going to use because there is, they're on all continents of the globe. And then with those plants, they're, they're with 90% of plants on the globe. So it's, it's really prevalent and everywhere. It's, it was a successful partnership in the past and it seems to continue to be a successful one. Um, but you do get different types being more prevalent in different places, so one type of mycorrhizal fungus is called ectomycorrhizal, so ecto meaning outside. They, they don't go into the root, but they tend to sort of sit around the root in a sheath, and that's really prevalent in forests. So if you've got, um, you know, pine and beech and Birch, um, all sorts of conifers, conifers, but also other types of trees. They're really prevalent then in forests, and actually really don't occur with so many species, but they really occur, um, um, In the northern hemisphere, in, in forests really, um, intensively. And then you get other types called arbuscular, which are with almost every other type of plant, including crops. And I don't know how long you want me to go on for, but you get ericoid mycorrhizae. They occur with plants in heathlands, including your blueberries and cranberries and crowberries, and you get orchid mycorrhizae, and they've really evolved quite a A strange relationship with, uh, orchids in that some orchids actually depend o…

AI assessment note: “they're on all continents of the globe. And then with those plants, they're with 90%”

Q Alright, so let's Let's define that then. How much copper, we'll talk more about how much we will need, but how much copper do we produce today, and where does that production generally take place?

A The general number is that the world consumes roughly 28 to twenty-nine million tons of copper a year. Of those, Something like 5,000,006 million come from recycling or scrap, or, uh, there's, there's a recovery of copper around that, that helps you. But in general, what is produced is going to be about twenty-two million tons of copper per year. That's like the rough figure of copper production in the world, all over the world. The main producer of copper is chile. And I'm Chilean, and we're based in Chile as a company. Um, and Chile produces roughly one-third of the copper. Peru produces another 10% of the copper. Um, and the rest of the Americas, that's US, Canada, Mexico, produce roughly another 10% of the copper. So, the, our continent is, by large, the largest producer of copper.

AI assessment note: “what is produced is going to be about twenty-two million tons of copper per year”

Q Low, zero, or negative, then you can create enough of an incentive to get that wind built, and if that, uh, new source of load, in this case a bitcoin mine, is not soaking up 100% of that wind, the rest of that goes into the grid and still provides value in decarbonizing the grid overall. So I think that's the argument. Um, does that hold any water for you?

A Uh, no. Uh, so I think, let's break this apart into different pieces. Uh, so How are mines buying power today? So they are not signing new PPAs with new wind to as off takers to kind of make these plans happen. They're signing PPAs with retailers and utilities, um, mostly conventional types of deals, such as being put on base interruptible rates. So, you know, it provides demand response, but it's basically whatever the supply mix of the, of the utility or of the retailer, that is the power they're consuming. As we mentioned, sometimes they can sell power back. Um, none of the big mines have indicated any sort of offtakes with new renewables. I think there's some fundamental reasons for that. One is a sort of tenor mismatch, where, you know, most PPAs, you know, the tenor used to be well above 10 years, maybe up to 20 years. Today, 10 years can even be fairly long, but it's still, let's say, eight to 10 years is what, you know, a new project would look for. Uh, you know, Bitcoin mines are, I think, to put it lightly, a very volatile type of, in a very volatile business. And so signing very long-term agreements is maybe challenging, if not impossible, or at least costly to do.

AI assessment note: “Uh, no. Uh, so I think, let's break this apart into different pieces.”

Q with maybe some historical context about transmission in the United States. What has our build rate on transmission been like over the years? Like, how has it changed? Obviously, there was a period of an enormous amount of transmission build out as we were first building out the backbone of the network, but, like, you know, walk me through the kind of medium to long arc of transmission history here.

A Yeah, sure. Yeah, let's do 50 years in 50 seconds here. So, um, yeah, in, like, the seventies, uh, there was A big transmission build out. You had remote, uh, big central station coal, mine mouth coal, and other plants, and earlier, prior to that, you had the hydro, connecting hydro to loads, and those were the, really, the long distance transmission, and then the, the rest was sort of connecting utility to utility. So we've got, you know, we, the industry grew up with 3000 or so independent utilities. They were kind of balkanized little fiefdoms, and they would do their own generation transmission distribution, and Then for reliability, they would get some connections between them, and that was our transmission network, um, overlaid with occasional long-distance hydro connections or coal connections, and the occasional random Pacific-DC intertie connecting the northwest to California. Uh, then for years, we did nothing. The seventies, eighties, nineties, beginning of 2000, Barely any transmission built.

AI assessment note: “The seventies, eighties, nineties, beginning of 2000, Barely any transmission built.”

Q I think this is, to me, this is actually fast becoming maybe the most immediate and acute problem that we've got, which is the ability of a new source of generation, or energy storage for that matter, to connect to the grid is, is taking longer and becoming more expensive. So can you put some context or some numbers to what it looks like to try to interconnect These days?

A Sure. A couple of numbers. So, interconnection to the bulk power system used to take one or two years. Now, it's over four years on, on average. So, it's more than doubled in terms of the, the time frame of processing. Uh, and the cost, uh, has more than doubled as well. It used to be in the hundred dollars a kilowatt range. Now, it's probably over 300, sometimes up to, well, it's maybe, you know, two to 300, and sometimes in places up to 800 or a thousand dollars. Uh, a kilowatt. So, uh, and what's happening here is generators are asked to pay, not just for sort of the driveway to connect to the grid, the Gentai generator tie line, but the deeper network upgrades that, that, um, are needed for them to be fully deliverable. And so if you, if you think about, you know, building a, you know, a new house on the current, you know, Road system. You pay for your driveway, but then you're also being asked to pay for, like, a road that might be, you know, four blocks away or five miles away, and you might be the, you know, the straw that broke the camel's back, triggering the need for that upgrade, and so you're, you're asked to pay for that, which, um, you know, has some economic, uh, elegance to it, but, uh, it really makes no sense for the current resource mix, because, um, Which you have to do is study each individual generator for that, and then you assign, you, you send the bill …

AI assessment note: “interconnection to the bulk power system used to take one or two years. Now, it's over four”

Q natural gas, but as we'll talk about, it's, it's a lower price than probably we'll see for some other sources and that are taking account of, uh, of stuff like LCFS. So landfill gas, biggest market today, probably cheapest cost of production today. Um, sort of main challenge that it suffers is the life cycle emissions. What comes behind landfill gas? Like what's next In terms of largest sources today?

A So large, largest sources that are happening today probably would be in the dairy waste side of things. Uh, you've seen the large, uh, animal feeding operations that have digesters that are capturing their, their, their methane, and they're, uh, they're putting that in the market. Because of the existing practices, they can be able to drive a very low carbon intensity. So we see very little of that gas going into the, uh, The utility market and the voluntary side, most of that's going into the LCFS and RIN markets, um, because the economics just makes so much sense when you take the carbon intensity into consideration, and so that space is maturing very, very quickly, um, because it's kind of a mono stream material that people can easily understand, and so there's been a lot of focus on, on driving anaerobic digestion of cattle manure to produce RNG.

AI assessment note: “largest sources that are happening today probably would be in the dairy waste side”

Q And how much of it do we emit? And I mean, you said it's the third most important behind CO two and methane. Just contextualize it. How important is it relative to those two?

A Okay, well, about seven percent of the radiative forcing is, on the hundred-year timescale, is attributed to N to O. Then I should also add, though, in addition to its effect on radiative forcing or on global warming, it's also a ozone-depleting substance. The, the ozone is the protective, the good ozone and up and high in the stratosphere that protects us from Ultraviolet radiation, and N-to-O is one of the reactants that destroys that ozone, and now that we've been successful through the Montreal Protocol in reducing emissions of chlorofluorocarbons and now hydrofluorocarbons, N-to-O remains as the largest currently emitted ozone depleting substance. So it really is kind of a double whammy in terms of its impact on atmospheric processes, both as a heat-trapping gas that contributes to radiative forcing or global warming, and a reactant in destruction of stratospheric ozone.

AI assessment note: “about seven percent of the radiative forcing is, on the hundred-year timescale, is attributed”

Q the trend line been? So it's seven percent of anthropogenic, or of radiative forcing, rather, Today, has that trend line over the course of decades and since the industrial revolution, has that been growing, um, as a share of radio forcing? Is it, is it flat? Is it declining? Just where are we on the trajectory of Of N-to-O emissions relative to the trajectory we're on with CO₂ and CH₄?

A Well, N-to-O emissions are going up at an increasingly rapid rate. So, um, the atmospheric N-to-O prior to the Industrial Revolution was around 270 parts per billion. That's a B as in boy. Um, and it's now up around 335. So it's gone up by about 25%, and it's going up more rapidly in the last decade than the decade before and the decade before that. So it's now increasing at about a rate of one part per billion per year. Uh, whereas if we look at CO₂, uh, yeah, CO₂ is still going up, um, but there's some signs of it starting to, um, the rate of increase Has gone down in certain years. Uh, it blipped back up recently, but, you know, there's, there's some reason to see that the CO two trend could be leveling off and, and we could even, uh, imagine with, with efforts to mitigate CO two that it's going to eventually level off and the rate of increase will start to decrease. Uh, methane is much more complicated because we actually had a period where methane leveled off for a while and we weren't really sure why.

AI assessment note: “N-to-O emissions are going up at an increasingly rapid rate.”

Q move on to what happened in the industrial evolution, cause we're going to talk a lot more about agriculture and agricultural soils as a, as a source of N two emissions. Um, but in that tropical forest soil context, you know, before humans were doing, uh, organized agriculture, what can you just describe the mechanism what's happening in those tropical forest soils that causes N two emissions in the atmosphere?

A Well, the N-IIO is produced by bacteria that live in the soil, and there are two different groups, uh, called nitrifying bacteria and denitrifying bacteria, and actually, if you want to get real technical, there's also a group of organisms we call archaea, nitrifying archaea, but anyway, these are all microorganisms that live in the soil. And the reason that they do so well in tropical soils is, first of all, it's warm and moist, which makes good conditions for these processes of nitrification and denitrification. And the other thing that's kind of unique about most Lowland tropical forests is that nitrogen is, uh, an element that's relatively abundant compared to other limiting factors like phosphorus, and that's because, um, those native tropical forests have a significant amount of this process we called nitrogen fixation, which is another set of, uh, organisms that, uh, Pull nitrogen gas out of the air and turn it into a form that the plants can use. It's usually in a symbiotic association with the microorganism in the plant, and so they take nitrogen out of the air, put it into a form that living things can use, um, and then that cycles through the ecosystem. The, the trees use it to make their leaves, the leaves fall onto the soil, the roots turn over in the soil, and that Adds nitrogen to the soil, and some of these bacteria Nitrifying and denitrifying bacteria can use t…

AI assessment note: “Nitrifying and denitrifying bacteria can use that, and in the process of using it, they convert”

Q Yeah, let's, let's talk about, let's put it in megawatt terms for a minute. Um, so, Small is in reference to, yeah, it's in the eye of the beholder to some extent, right? So you, so like, what, what do you think an SMR, what, what defines small to you? And then like, what are the size of some of the SMRs that are being designed right now?

A Yeah, I mean, what I would think of as small is probably like less than 50 megawatts. You can think about like a megawatt per is like a thousand homes. So if I say 50 megawatts, you can think of, oh, 50,000 homes in America that would power. Um, that's what I would call small, but the industry started with small being like 200 or 300 megawatts, which is only slightly smaller than the original fleet of reactors that we built out, which was 506 hundred megawatts. Um, and now those very models have climbed up to 405 107 hundred megawatts, and they're still calling themselves SMRs. Um, and because some of the companies that have done that We're originally affiliated with SMRs. Uh, it's just, you know, it's, it's hard to use the word SMR for anything that's SMR for anything that's small at this point.

AI assessment note: “what I would think of as small is probably like less than 50 megawatts.”

Q Where do you look at as, like, the bastion of the next-gen nuclear in the world?

A I think the most activity that we've seen anywhere, like, once again, including with our own company, is in Poland. Uh, you know, there's, like, a confluence of circumstances there between, you know, sustained political and social support. Um, their energy security issues, you know, bordering Ukraine are ever-present. The fact that it's mostly coal, but yet still part of the EU, and so they're being, like, penalized for having so much coal. But they also want to shift off coal too. The fact that it is an incredibly productive and growing and industrializing country, uh, I'm, uh, so I'm like, I, I think Poland will probably lead the way in terms of, and they've got like four major projects on your way. Westinghouse building gigawatts of reactors out there, New Scale paired up with KGHM, the copper company, um, uh, GE paired up with Synthos, the chemical company, and then my company, Last Energy. I mean, we've announced almost 20 deals out there now that we've signed and are, are starting development activities on.

AI assessment note: “I think the most activity that we've seen anywhere... is in Poland.”

Q think about this stuff, but just for a frame of reference, let's say we're taking a 20 year global warming potential, so nearer term than the hundred years that, you know, has been sort of de facto standard historically, um, but we're also normalizing hydrogen and methane for their energy content. Just where do they stack up against each other from what we know in terms of global warming potential?

A So, first of all, um, just on a per kilogram of gas comparison, when you look at, um, Hydrogen. On the hundred, as a hundred year equivalence basis, uh, you're looking at a global warming potential of 10. Um, but if you go similar to methane, when you go on a shorter lifetime here, you will, uh, have a higher number. So for natural gas, it goes from 25 to 80, roughly, from a, when you compare a hundred to 25. And for hydrogen, it goes from 10 to 40, so it increases substantially, but it's still half of the global warming impact, global warming potential of Natural gas per kilogram. But then hydrogen has a higher energy content of almost, or roughly, a 120 mega joules per kilogram, and natural gas is around 50. So there is a factor of two and a half again. So the first factor of two and then another factor of two and a half gives you a total factor of five in between.

AI assessment note: “So the first factor of two and then another factor of two and a half”

Q question I have for you today. It is from Patrick, and he had a question on the role of fertilizers and what, what role they'll play in the climate transition. He asks, Is this an area that will never be fully decarbonized because of the scale and need, or are we just going to use methods to reduce its carbon footprint until we produce agriculture with minimum fossil fuel inputs?

A So we did an episode recently on ammonia, um, which is relevant to this. I mean, I think Is, is fertilizer an area that will never be fully decarbonized because of its scale? No, I think it will be fully decarbonized eventually. I think it will be a combination of multiple things that will do it, um, and this is fertilizer production. I want to separate two things importantly, but let's start with fertilizer production. I think we will get a lot of green, quote-unquote green ammonia, um, Which is ammonia produced with zero carbon hydrogen, which is where the majority of the emissions come from in the ammonia production process. We're seeing a lot of movement there already, and it's going to take time, but I think we'll do a lot of that. There's also alternative methods to produce fertilizer, which are not ammonia, um, but also are decarbonized in and of themselves. Uh, and then third, there are things that can reduce the need for fertilizer, for synthetic fertilizer. So there's microbial approaches, for example. Soil amendments, seed coatings, things like that, that mean you just need less fertilizer per unit crop that you produce. So we need less of it. We make it greener in the production. I think we'll do a lot of that. The thing that I think people don't spend enough time talking about is not the emissions from the production of fertilizer, but the emissions from the applic…

AI assessment note: “No, I think it will be fully decarbonized eventually.”

Q way to leverage, sometimes leverage DERs, and sometimes not, right? I mean, I guess just turning off your system, like the original version of demand response was basically going to industrial customers and saying, like, shut down now when we have a system peak. You're not really leveraging DERs to do that, right? It's pretty, pretty manual, but it's a, it's a market mechanism into which DERs can participate sometimes.

A Yeah, I, I certainly agree with that. I think demand response has evolved in itself, or DER monetization has evolved over time, where it started off, you know, historically, um, really with a more manual process, right? Where we had Manual controls, maybe phone banks and things. There's some truth to, to those stories that are probably lodged in many people's heads, but it has since become very automated where really every signal C power sends out is an automated signal. And what I would argue is it's quickly moving towards optimize, uh, optimized or optimization where, where it's not looking, it's looking at what product could make the most value for the grid and for the customer at any, uh, specific time. So that's really where the, the communications and controls have evolved. Um, there's been a, a bunch of other kind of evolutions. I would say on the regulatory side, it used to be, regulators used to be fairly skeptical. Then we got to FERC seven four five, where, where it was, demand response was firmly accepted by FERC as, as a resource. But we've kind of even moved past that to where it's being encouraged with orders like FERC 22 22. The D are types that have participated. You know, classically, they were industrial loads, maybe HVAC. They really expanded to DG, um, things like energy storage, microgrids, even EVs now, certainly thermostats. Um, so we're seeing a lot of …

AI assessment note: “Yeah, I, I certainly agree with that. I think demand response has evolved”

Q as much control over it as they do over, for example, their power bill, but they are paying for it. Um, people would also be paying for mill. Similarly, how do you think about cost in terms of, uh, comparative, but also like, what will people bear? You know, how do you think about what costs you, what can you charge for this better experience of throwing out food waste?

A So the mill membership is going to cost about a dollar a day, uh, which, you know, it's like another kind of Netflix or YouTube subscription. Uh, and I think especially for, uh, Our early customers who are feeling the pain of throwing out food waste or may have tried composting in the past, like they're going to be keen to try something new. But for a city, actually, it's, it's really expensive. And, uh, it's one of the biggest items on a municipal budget. And it's either on your property taxes or you're paying every month. It's like another cell phone bill, frankly, for, for a household. And, I think for, for us in San Francisco and for a lot of the country, we have these things called pay-as-you-throw schemes, which means you pay per month based on the size of the trash cart at the curb. I think our family has a 96 gallon bin, and it's like 70 bucks a month. So what's cool is with Mill, we could downsize our trash bin to maybe a 32 gallon bin and probably save 20 or 30 dollars a month and get the Mill membership for almost nothing. So By pulling the food waste out of the trash stream, individuals could save money, but also cities will save money.

AI assessment note: “the mill membership is going to cost about a dollar a day”

Q ammonia decarbonizing all these sectors from happening, what do you think it's most likely to be? Is it the renewables to produce the hydrogen? Is it the, that we learn a lot more about ammonia, uh, and discover it has a bunch of additional problems and actually we shouldn't be using it? Is it the bunkering infrastructure? Is it just policy? Like, what's the thing that stops this from happening?

A Right, so I wouldn't say that stops it from happening, but I would say that slows it substantially, right? I think that inevitably we will have low-carbon ammonia, if for nothing else, for fertilizer, right? And eventually, like, the next big thing will be maritime shipping, and I think we're, those will happen for real. Um, that said, um, What's likely to slow it down is actually human capital. You need specialty welders to do this for storage tanks. Like, where are they coming from? If we're going to put in a bunch of green hydrogen infrastructure, we need the electricians to do it. Where are they? Right? We, we actually have a human capital problem on everything from making transformers to underwater welders for ports. Like, we just, we don't have a lot of the stuff that we would like to have at the volume that we need. And since we're going to be building in places like Namibia, and Chile, and Nigeria, like, we have a human capital shortage in those places where people will want to be trained, and people will want to make those things carefully and well in those locations. Uh, to avoid sort of the worst colonial excesses, we want wealth to go to those nations, and so that means that they need the jobs, they need the training, they need the expertise, it'll take some time to do that. I am really worried about the infrastructure choke points as well. I really think bunkering …

AI assessment note: “What's likely to slow it down is actually human capital.”

Q net zero by twenty-fifty or, you know, two degrees Celsius of warming or, or whatever it might be. And I think what you're, part of what you're saying is that those in and of themselves don't necessarily reflect the fluctuations over time in emissions, and those fluctuations over time in emissions could actually have a really big impact on what climate change does to people and ecosystems. Is that right?

A That's right, and let me give you, uh, two different sort of examples. Um, so when we talk about temperatures by 2100, let's say 1.5 degrees C, uh, the question here is, what's the path from here to 1.5 by 2100? And what the climate models show is that there are a wide number of trajectories, some of which have what is called high overshoot, and others of which have what is called low overshoot. Uh, this is How much above 1.5 do we go over the next few decades before going back down to 1.5? That trajectory matters. Um, the longer that we spend, uh, higher, the more risk we are of direct human climate impacts, as well as natural system impacts, some of which may not be irreversible, and some of which will further drive warming. The other thing that's important to understand here is that net zero by twenty-fifty is, uh, an important goalpost on the way to being able to maintain lower temperatures. However, it's not the entirety of the story. There are many different gases here that are very important, and some of which have more, uh, more near-term impact. Uh, and so Net zero by 20 50 for CO two is critically important for managing long-term warming, but we cannot forget about the other pieces primarily around short-lived client pollutants that are going to be even stronger levers towards managing that near-term warming, that peak temperature, that overshoot.

AI assessment note: “That's right, and let me give you, uh, two different sort of examples.”

Q to near-term warming. It's a particularly big problem when it comes to near-term warming. Uh, and thus we should be focusing probably more attention than we are collectively on mitigating and removing methane emissions. So let's talk about what that is going to have to look like, starting with where do the methane emissions come from? So can you just kind of give an overview of current methane emissions sources?

A Absolutely. So methane emissions are currently about 60% anthropogenic and 40% natural. Most of those natural emissions were also pre-industrial, and so we really care about the elevated emissions, which right now is primarily anthropogenic. Among the anthropogenic emissions, we have about a third that comes from livestock. Um, there's another quarter that comes from oil and gas, about 10% that comes from coal mining, Um, another 10% that comes from rice, and another about 20% that comes from waste and wastewater. So these are very different sources by and large than CO₂. Methane, uh, usually comes either from a biogenic process or leak or waste. Um, on the natural side, uh, it's mostly, uh, wetlands today, and there is concerning early evidence that these natural emissions are also increasing.

AI assessment note: “methane emissions are currently about 60% anthropogenic and 40% natural.”

Q You sort of made this point, but there are different temperatures needed to run different industrial processes. Some relatively low temperature processes will need a hundred degrees Celsius, for example. And at the other end of the spectrum, you have stuff like steel making, which is well over a thousand degrees Celsius. So how does that pie split out?

A Yeah. Which technologies are going to be applicable where, and you summed it up, and if we go all the way to the high end of the number, um, part of making cement is well over a thousand degrees Celsius. Yeah, pasteurizing milk, we need heated around 80 degrees Celsius. Making baby food all the way through refining petroleum and biofuels, we need heated around 200 C something like 80% of industrial heat is in the low to mid mid range temperatures below about 350 C. And then there's a chunk around 500. Making cement, for example, two thirds of the energy is at about 1100 C, and one third is about 1800. So, and that's really the highest that's in use. Steel making today, making steel with coal in blast furnaces, is at a higher temperature, but as you know, the steel industry is moving to new technologies that don't use coal, that run at different temperatures. They run actually at around a thousand.

AI assessment note: “something like 80% of industrial heat is in the low to mid mid range temperatures”

Q making, but just paint me a picture of typical industrial facility that needs, let's just say something that needs relatively high temperature heat, 500 degrees C or above, or something like that. Um, what does it look like? Where is the heat getting produced? Is it fossil fuels being combusted on site with pipes into the rest of the industrial process? What is the actual physical manifestation of this heat?

A Up to about 600, the vast majority of heat is moved around as steam. Steam is an excellent heat carrier, so when you walk in, you will see giant boilers, sometimes that are the size of a house, that are combusting fuel and making steam, and then start large insulated steam pipes running to the places where heat is used. In a food production facility, you might see six-inch steam lines. In a refinery, you might see steam lines that are two feet or larger in diameter. For higher temperature processes, making cement, for example, heat's used in a different way. You'll see large, giant tubes that are rotary kilns, and combustion of fuel is happening inside the kiln. So there are heat applications where the fuel is combusted in contact with whatever it is that we're making, and then you call those direct heating systems, and then most heat is indirect. That is, there's combustion, and then something that transfers the heat to whatever that you're cooking or melting or, yeah.

AI assessment note: “you will see giant boilers, sometimes that are the size of a house”

Q is sort of just how much is getting installed versus how much is getting produced. To what extent is solar or has Solar been subject to some of the supply chain bottlenecks that have plagued, like, basically every other industry on the planet this year? Or is solar pretty insulated, and what's happening here is just like, You know, we have more demand than we have supply at the moment.

A So I think solar is worse than most industries. First of all, solar is still, um, affected by disruptions. So if your transformers don't arrive on time, then even if you've got all the other components, you can't finish your project, and that affects your solar. If you're trying to make solar modules and you run out of EVA, then you can't make your solar modules. And so all those little things have made it more difficult to build solar this year, but Also, there is in places inventory buildup. You know, there is, we couldn't, I think, have built 500 gigawatts if we had the modules ready to go either, because of, of, there isn't the labour to install them in all markets, there isn't the grid connection ready to take them, there isn't the permitting. So there are multiple bottlenecks, but the polysilicon one is probably the worst. It takes at least 18 months to build a factory for polysilicon, even in China, and a lot, a lot longer anywhere else. And, There has just not really been enough polysilicon to, to keep the prices low. So I don't think that's been the main thing that slowed things down, but it is also a bottleneck.

AI assessment note: “So I think solar is worse than most industries.”

Q involves Turning that cement into concrete. There have been a bunch of different ideas proposed for how we can decarbonize part or all of this, uh, this market. Let's run through a few of them, and then I think we'll, we'll spend a bunch of time talking about Sublime's approach, obviously. But, uh, at the high level, what do you think of as the, like, major categories of decarbonization possibilities?

A Yeah, the, the major categories are, um, post-combustion carbon capture, so you'll see this in all of the major cement companies, their pathways to net zero by twenty-fifty. Um, you'll also see alternative fuels, so burning things other, other than fossil fuel, be that tires or, or biomass. Um, you, you'll also see big cement companies using supplementary cementitious materials, So, like I said before, Portland cement has been used, especially in the US, as a one-size-fits-all cement, but there are a number of things that you can blend into cement that actually improve the performance and durability, um, and so you can tailor the, the percent of Portland cement you use for each application, and this is, this is done increasingly in Europe, where the cement is blended to, to meet specific, you know, performance or, um, CO two goals.

AI assessment note: “the major categories are, um, post-combustion carbon capture”

Q you. So different formulations of rock glue have different characteristics and, um, I'm interested to hear sort of like, what are the ones that you think of as, or maybe not you, what are the ones that, uh, architects and designers and engineers think of as being the most important? Like, if you're going to have a good quality cement, what are the things that you absolutely need to achieve?

A Yeah, of course, uh, all the properties are important, um, but the main ones are compressive strength, so you want, um, you want it to be strong, so cement is, is very strong in compressive strength, not so good in tensile strength, so you, you need about, You know, 30, 30 megapascals after 30 days. Um, there's also early, early, uh, age strength and, and quick set time. So set time is a little bit different from early strength in that you want your cement to gel and harden, and this means that the contractor can go home, uh, you know, and doesn't have to stand around a long shift shooing kids off from, you know, writing their names and in wet concrete. So, um, Um, what's interesting is that 90% of the cost, the total installed cost of concrete, is actually labor from the contractor. It's often unionized labor. And cement, being a commodity material, um, is so cheap. So Portland cement is around a 130 dollars a ton. So basically you're, the most important properties are the ones that minimize labor costs. So having that Early strength, early set time, proper flow out of the truck so that it doesn't require too much water. And then, of course, durability. So you don't want to, um, have cracking or corrosion or expansive reactions with, you know, um, different minerals in the soils. And so that's, that's very important too.

AI assessment note: “the main ones are compressive strength... there's also early, early, uh, age strength”

Q All right. So let's talk through the, the value chain then. Like who, who is doing what today in this massive cement and concrete industry?

A Yeah, it all starts at the Portland cement kiln. So Portland, uh, Portland cement companies are often very large, um, international companies. So there's a handful of, of colossal companies that own the majority of the, the Portland cement kilns all around the world. So They're often located near a limestone quarry, um, because cement's very bulky, and of course, you know, half the weight of the limestone gets lost to CO₂, so they're located next to a quarry, operate these big kilns, and then ship them, ship the final cement powder, um, to buy it by train or, or by boat to, to, uh, a port, and then that's used by ready-mix concrete. So in every city, um, and in every town, there's, there's a ready-mix concrete producer, um, Some of them are vertically integrated with these large cement companies, and some of them are, are mom and pop or, or family operations or independent companies, and they operate these, these spinning trucks that we see, um, and they, they sell to contractors who are told what to, what to buy from a structural engineer who specified, you know, a certain cement for a certain purpose, all designed by an architect, um, and then of course, Ultimately, everything is paid for by the building owner. So there's quite a, quite a long chain of, of, of value all throughout.

AI assessment note: “it all starts at the Portland cement kiln... used by ready-mix concrete”

Q Okay, so then we can fast forward. So Russia invades Ukraine while this stuff is supposed to be getting worked out. Energy markets in Europe enter major crisis mode. What has happened since then?

A Well, there has definitely been an upscaling of ambitions and hopes in the European hydrogen strategies. So we've, we've seen the Repower EU plan by the European Commission, which is the European Commission's plan to reduce European dependency on Russian gas and to accelerate renewable rollout and renewable hydrogen rollout. And particularly what we've seen is the upping of the target from 10 megatons of clean hydrogen by To 20 megatons of hydrogen in 2030, and 10 of that is due to be imported, 10 of that is to be produced domestically. So, hopes are high and ambitions are high, but in terms of actual deployment, we haven't really seen anything. Everything keeps getting delayed by this lack of clarity of regulation.

AI assessment note: “we've seen the Repower EU plan by the European Commission”