The Exchanges

Q get your CO₂ input for, I don't know, 50 dollars a ton or something like that. Or on the other end of the spectrum, you can imagine you're doing direct air capture at today's direct air capture costs and you're paying a thousand dollars a ton or at least high hundreds of dollars a ton. Like, do those move the needle as much as the hydrogen or not as much?

A Not as much, but like you say, there's a wide array of sources that you could get this CO₂ from, and of course, from a carbon accounting, uh, perspective, where you get your CO₂ matters, right? Um, but, but, you know, back to the kind of economic picture here, the, the, again, sort of best case from the chemistry is something like 2.75 kilograms of CO₂ per kilogram of methane. So thinking back on a, on an MMBTU basis, you know, if you want to Get the, the, the good sort of CO₂ from the air, and, and we hit all our, all our hopes and, and, and targets of getting to that magic 100 dollar per ton of CO₂ number. Uh, best case scenario, perfect yields, a hundred dollar a ton CO₂. That's six bucks in MMBTU, right? So again, even the CO₂ by itself is, is blowing your budget. So it's tough.

AI assessment note: “Not as much, but like you say, there's a wide array of sources”

Q separation unit, then you get the hydrogen, generally from natural gas, today using steam methane reforming. You combine those to an ammonia synthesis reactor, that gets you your, your ammonia at the end of the day. Ok, so maybe Greg I'll hand it to you, in a, in a world where we want to decarbonize ammonia production, but not fundamentally change The process. What does, quote, green ammonia look like?

A Yeah, well, I think, you know, Mel alluded to it pretty clearly in the last, in the last few minutes here. The, the, the basic thing you have to do is replace that hydrogen input that goes into your ammonia synthesis from something that, um, is carbon intensive to something that really doesn't use or create any carbon emissions. And so, um, you know, green ammonia is, is, Typically refers to ammonia where the hydrogen comes from green hydrogen or electrolysis. You can imagine other ways of, of, of getting hydrogen without CO two emissions as, as well, including if you sequestered the CO two from, from, from the, uh, from, from the sea methane reforming process, in which case sometimes that's called blue ammonia.

AI assessment note: “green ammonia is, is, Typically refers to ammonia where the hydrogen comes from green hydrogen”

Q Yeah, so super attractive, and if you could do it economically, of course, and actually from a technical standpoint, my understanding is the synthesis process is known and commercial already, basically, right?

A Yeah, that's right. I mean, you get pretty good conversion, which is to say you can Convert all of, pretty much all of your CO₂ into methane. You get great selectivity, which is to say all of your carbon from your CO₂ goes to methane, not to some other thing that you don't necessarily want. And the reactor conditions are pretty mild, you know, hundreds of, of C and, and, and, and reasonable pressures, right? And, and in fact, this, this kind of machination, uh, process, as you said, is, is used today, albeit with slightly different feedstocks in coal to gas process, in, in, In coal to gas processes where you, you know, maybe in areas of the world that don't have natural gas but needed but have large coal supplies.

AI assessment note: “Yeah, that's right. I mean, you get pretty good conversion”

Q somehow, which you're about to tell me how, and we get our methane. So feels really attractive. And indeed there's a bunch of folks working on it. Um, I think our question is like, what would that production process really have to look like? And, and this is where the TEA comes into play in a significant fashion. So first, Greg, walk me through how do you get synthetic methane?

A Right. So, you know, kind of like Haber-Bosch, the reactions here, the core reaction, the core chemistry has been known for over a century. Um, and, and the basic way that it works is you, if you want to make it from CO two, at least, um, you start with CO two and you add about four Uh, four molecules of hydrogen per one molecule of CO two, and you make one molecule of methane, a bunch of water, which is, say, two molecules of water, and a bunch of heat. Um, and so, from a kind of whole, whole of process perspective here, right, you need to get a source of CO two, which, um, which might come from, from some industrial source, it might come from a biogenic source, it might come from the air, and you have to go through some CO two capture process to get that to, to be pure CO two. Um, and then you want to get your hydrogen, which, um, uh, you know, in this e-methane case would be coming from electrolysis, and so you'd take water and split that into hydrogen and oxygen. Again, combine those two in that kind of four to one ratio, and you get your methane, your water, and a lot of heat. And, you know, I mean, like you said, the upside is just, is, is really attractive if you could get all this to work out, because you've got that huge transportation infrastructure, Distribution network and storage, too, right? I mean, the largest source by far of energy storage that we have today is…

AI assessment note: “you start with CO two and you add about four Uh, four molecules of hydrogen”

Q a market for synthetic methane in that price range, but obviously the promised land of, like, making a big difference on a global basis I think requires something substantially better, and so the question is, what, if anything, can you do to drive better economics for synthetic methane production? Is it, and again, does it come down to, like, in this case, Super duper cheap hydrogen, super duper cheap CO₂.

A Yeah. Well, I think, you know, one thing we haven't talked about a little bit here is, is, is the efficiency of this process. I mentioned that, you know, the, the, the, the core reaction produces a lot of heat, right? And so if you were to, um, you know, make one of these plants today with a, with a, with a good electrolyzer, you know, we mentioned this kind of 50 dollar, excuse me, 50 kilowatt hours per kilogram of, of hydrogen type, type, uh, energy consumption for the electrolyzer. If you used something like that, um, and did this kind of fairly standard methanation process, the total efficiency of the process kind of comes in around 50% ballpark, right? And about half of those losses of the 50% of the energy that you lose are in the electrolysis, and about half is in the methanation step, because that methanation reaction, like I said, makes a lot of heat, right? And so, you know, there's, there's, um, There's a hint in that thermodynamics that tells you, well, maybe, you know, maybe there's something we can do here, right? And so, you know, to, to get back to your question, how do you get around this? Yeah, the, the, the first thing, first and foremost, is truly, truly low cost CO₂ and hydrogen, you know, slash electricity. Maybe, maybe that's geologic hydrogen. Maybe it's high purity point source biogenic CO₂. Maybe it's, um, doing biogas upgrading where you have the CO₂ …

AI assessment note: “the first thing, first and foremost, is truly, truly low cost CO₂ and hydrogen”

Q much, much cheaper. Greg, I know Uh, you've thought a lot about this in, in today's context as it pertains to batteries, because there's all these new battery chemistries that are being introduced to the market or hope to be introduced to the market to compete with lithium ion. How do you think about, like, how cheap do they need to be to beat tomorrow's lithium ion prices, not today?

A Yeah, it's, it's, it's a great point because, you know, energy storage, as we all know, is, is, Critical to decarbonizing the, the power grid and, and, um, and grid storage systems still aren't as cheap as we would like them to be. But the question that comes up almost every time we see a new grid energy storage technology, be it a new battery chemistry or, or pumped heat or, or some sort of compressed gas or variation on compressed air, any of those kinds of things is from a total installed cost perspective, um, can you beat something like lithium iron phosphate batteries, not just today, but But in 2035, given that you're probably gonna have, you know, a substantial development horizon in front of you, and like you say, the thing to beat won't be LFP 10 years ago at that point, it'll be LFP then, right? So I think that the numbers that we've landed on in, in our work are sort of in the hundred to 150 dollars per kilowatt hour total installed system cost. If you can, if you can see a path, a pretty clear path to those numbers, With your system, then you probably have a pretty good shot of, of being competitive with future battery chemistries in the twenty-thirties.

AI assessment note: “hundred to 150 dollars per kilowatt hour total installed system cost”

Q Can you give, like, a real world example of this one in action?

A Yeah, I mean, I think one that comes to mind is, is, is green methanol synthesis, and this isn't, An efficiency story, but it's a performance metric story. Um, there's a ton of work in the literature, and I know, Mel, you've been digging into this, too, on making better catalysts for converting CO₂ and hydrogen into ethanol. And again, I don't think I'm, I'm not trying to knock on that. I think there's, there's, there's, there's room for improvement, and that's good. But from a venture perspective, if you think about that from a process level, if you get A better conversion of CO two and hydrogen to methanol on a single pass. It just really doesn't move the overall economics in a huge way because again, back to a previous point, CO two and hydrogen are the big cost drivers in that system. And so, um, you know, do it great, but it's, but it's a hard venture story.

AI assessment note: “I think one that comes to mind is, is, is green methanol synthesis”

Q Every single one of these TEAs in that space has a combination of, like, assumptions around their technology, specifically getting higher yield or lower cost or CapEx or whatever it might be, but also assuming some measure of decline in the delivered cost of CO₂ and hydrogen. How do you think about that portion of it? And like, what, what, how, what's reasonable for those input assumptions and what's not?

A That's a hard one. And I think, you know, it's one that varies depending on, as you say, the timeframe that you're looking at, the geography that you're looking at, uh, and so forth and so on. So, you know, I think if you want, if you're going to needle me here to, to put a number on it, um, you know, I would say, I think about it more, not in terms of what's achievable today, but what you have to do in order to hit competitiveness, right? To go back to the kind of spirit of the TEA and defining targets. And you, and you know that, you know, for a fuel, if you want, if you want to get anywhere close to economically competitive, you know, subsidies decide, you have to have hydrogen that's going to be on the order of a dollar per kilogram, and you have to have CO₂ that's in that 100 to 200 dollar per ton range, and that CO₂ has to be CO₂ that's coming, as you say, from the atmosphere or from a biogenic source. Otherwise, the fuel won't be truly carbon neutral.

AI assessment note: “you have to have hydrogen that's going to be on the order of a dollar”

Q Can you give, like, a real-world example of this one in action?

A Yeah, I mean, I think one that comes to mind is, is, is green methanol synthesis, and this isn't, An efficiency story, but it's a performance metric story. Um, there's a ton of work in the literature, and I know, Mel, you've been digging into this, too, on making better catalysts for converting CO₂ and hydrogen into ethanol. And again, I don't think I'm, I'm not trying to knock on that. I think there's, there's, there's, there's room for improvement, and that's good. But from a venture perspective, if you think about that from a process level, if you get A better conversion of CO two and hydrogen to methanol on a single pass. It just really doesn't move the overall economics in a huge way because, again, back to a previous point, CO two and hydrogen are the big cost drivers in that system. And so, um, you know, Do it, great, but it's, but it's a hard venture story.

AI assessment note: “I think one that comes to mind is, is, is green methanol synthesis”

Q fallen much, much cheaper. Greg, I know, uh, you've thought a lot about this in, in today's context as it pertains to batteries, because there's all these new battery chemistries that are being introduced to the market or hope to be introduced to the market to compete with lithium ion. How do you think about like, How cheap do they need to be to beat tomorrow's lithium-ion prices, not today?

A Yeah, it's, it's, it's a great point, because, you know, energy storage, as we all know, is, is critical to decarbonizing the, the power grid, and, and, um, and grid storage systems still aren't as cheap as we would like them to be, but the question that comes up almost every time we see a new grid energy storage technology, be it a new battery chemistry, or Or pumped heat, or, or some sort of compressed gas, or variation on compressed air, any of those kind of things, is from a total installed cost perspective, um, can you beat something like lithium iron phosphate batteries, not just today, but in 2035, given that you're probably gonna have, you know, a substantial development horizon in front of you, and, and like you say, the, the thing to beat won't be LFP 10 years ago at that point, it'll be LFP then, right? So I think that the numbers that we've landed on in, in our work are sort of in the hundred to 150 dollars per kilowatt hour total installed system cost. If you can, if you can see a path, I mean, a pretty clear path to those numbers with your system, then you probably have a pretty good shot of, of being competitive with future battery chemistries in the 20 thirties.

AI assessment note: “sort of in the hundred to 150 dollars per kilowatt hour total installed system cost.”

Q probably understand what techno-economic analysis is. But, like, from your perspective, why is it important enough that we should dedicate an hour of conversation now in front of a lot of people to it? Like, what, what is the importance of it, and what purpose do you think of it as really serving beyond just, like, having a model that climate tech startups can show investors in the data room?

A You know, I think it's something that is a useful tool at every stage of, of technology development. You know, from the get-go, when you're kind of mulling around ideas, it's helpful for you to be able to, it's a way for you to be able to say, can this, can this technology that I'm thinking about, this idea that I'm mulling over, can it even compete, um, in the marketplace today? And I think as, you know, you start with a back of the envelope analysis and kind of refine it over time and figure out, Um, you know, what numbers, where the sensitivities are, where the limits are, and, and refine your estimates over time. Um, it helps you develop a sort of roadmap to, to techno-economic success, so it can help you to find targets. You know, if, if the thing that I'm working on isn't economic today, what does it have to do? What metrics does it have to meet in order to be competitive in the marketplace? And I think by exploring, you know, maybe A level further in terms of sensitivities and limits in the model, it helps you figure out what matters, what design decisions matter to affordability and hitting the customer value prop and, and which don't. And when you're a small company and you've got limited engineering and scientific resources, it helps you prioritize.

AI assessment note: “it's something that is a useful tool at every stage of, of technology development.”

Q Right. Greg, I feel like one more that we've talked about a lot is when people are building a TEA, like, what are the metrics that they're focused on versus what are the metrics that really matter? Well, how do you think about that?

A Yeah, so the last one, in some ways, kind of relates back to the system versus componentry story, but it's, it's, Focusing on the wrong metric, or maybe solving the wrong problem. I think there's, there's a translational issue specifically that, that, that arises when companies are coming out of, of R&D heavy environments, and they're trying to make a venture backable startup, and it was something that Mel, I think, alluded to nicely earlier. I think in, in R&D, there can be, you know, a tendency to focus on core performance metrics, be it efficiency, or power density, or Or, uh, conversion in a chemical catalysis or chemical reaction sense, something like that. And I'm not here to knock on a focus on any of those. I think they're great goals, and they can, they can, they can move the needle. But from a venture perspective, you know, we're always looking for things that can move the needle in a big way, um, to justify an event, an investment for us. And so, if you, if you end up, you know, there are certain systems that you might look at where You know, there's been a relentless focus on something like efficiency, but if you go back to the techno-economic model, and you think about the sensitivities in terms of energy costs as it contributes to total system production costs, or, or, or what have you, you might see that it, it may not move the needle a whole lot, when it may not…

AI assessment note: “a focus on efficiency just might not be the right prioritization”

Q real or not, but it, it relaxes the cost constraint a little bit. So the idea is make these things small. Um, but, but the question is, can you make them small in any reasonable economic fashion? So, so Greg, as we talk about the different components of the ammonia synthesis process, what do you think has the potential to scale down and what is really challenging to scale down?

A So, The classic chemical engineering way to think about this is, is something called the six-tenths rule. And the six-tenths rule is, is essentially, ah, a, a rule that reflects economies of scale in, that are inherent to, to many different types of chemical processes and related. And basically what it says is the bigger you make your plant, the bigger the capacity of the plant or piece of equipment is, the cheaper, ah, it becomes on a unit basis. Mathematically, the rule is stated something like this. The ratio of, of, of the cost of some equipment or process at two different scales or two different capacities is equal to the ratio of those capacities, some measure of capacity raised to the .6 power. The, uh, size of your equipment, the capacity of your equipment, uh, uh, doubles or 10 X's. The cost doesn't double or 10 X. It goes up By two to the .6 or 10 to the .6, right? And sometimes that value is in .6, sometimes it's a little bit less, sometimes it's a little bit more, um, but this is, uh, uh, an effect that is, uh, that is seen across many, many types of, of, of, of processes and pieces of equipment for various reasons, and there's really just an enormous amount of, of historical data and examples showing this, this type of relationship again, again, and again. And so, If you're trying to scale down, um, you're working against this, uh, this six-tenths rule, right? You'…

AI assessment note: “a lot of people will point to something like electrolysis that's a little bit more modular”