Pushkin.
Our civilization is built on hydrocarbons. Oil and natural gas and coal light up our houses and keep us warm in the winter, and propel our cars and our ships and our planes. They provide the heat companies need to make stuff. Hydrocarbons even provide the hydrogen to make the fertilizer to grow our food. The problem with hydrocarbons, of course, is the carbon it binds with oxygen, goes into the
atmosphere and warms the earth. So humanity is in the process of trying to very quickly come up with cheap ways to power our civilization without hydrocarbons, and as we've been discussing on the show for the past few weeks, we're actually making progress. Solar energy in particular, has become wildly cheap in some parts of the world. In fact, it's now free in the middle of sunny days, and it's likely that solar energy will be free in the middle of the day in much more of the world
in the next few years. The triumph of solar is going to go a long way toward powering our houses and factories and cars. But there's a lot that solar energy cannot do for reasons of basic physics. It's really hard to use solar energy or solar energy combined with batteries to power container ships or commercial planes. It's also hard to store large amounts of solar energy for long periods of time, and it's hard to move it around
the planet, hard to move it across oceans. So a lot of people step back and they look at hydrocarbons, at fossil fuels, and they say, you know, most of the energy in hydrocarbons comes from the hydropart, the hydrogen. What if we could make clean fuel that was like hydrocarbons, but without the carbon. What if we could take that cheap abundant solar energy and use it to make pure hydrogen. That would be a huge step forward in figuring out
how to live without hydrocarbons. I'm Jacob Goldstein, and this is what's your problem. This is the third of three shows we're doing about the triumph of solar energy, about how solar became so cheap and what cheap abundant solar energy is going to mean for the world. My guest today is Rafi Garabedian. Rafi was previously the chief technology officer at First Solar, a company that makes solar panels.
Now he is the co founder and CEO of Electric Hydrogen, a company that has raised hundreds of millions of dollars in its quest to solve a big problem. How do you use intermittent solar and wind power to make hydrogen? And crucially, how do you do it cheaply enough to make that hydrogen economically viable?
So you can take this free solar and wind that's available when no one needs it, you can convert it to hydrogen and use that hydrogen to make things like steel and fertilizer and fuels.
And the fuels if I understand correctly, I mean when you burn hydrogen, it just makes water, right, Like that's part of the genus.
Yeah, when you burn hydrogen, it just makes water. It's super simple, right. It generates heat like any other fuel, and you can use that in an engine or a turbine or whatever. But it emits water instead of CO two and water. So that's the beauty of it. But the rub is hydrogen by itself is hard to utilize, and that's because it's not a liquid, it's a gas, and it's a gas it's hard to handle because the molecule so small and so utilizing hydrogen directly as a
fuel requires a retooling of infrastructure. When I say infrastructure, I mean pipelines, shipping, vessels to move the stuff around. Even the engines and turbines that would burn it are different.
And so hydrogen itself is a fuel is the endgame, And I would say it's gonna happen, but it's going to take a long time to happen because we've spent arguably over one hundred years building infrastructure, engines, turbines, pipelines, vessels, all that stuff to move and consume hydrocarbons, and we're going to have to retool all that stuff to move and consume hydrogen as the replacement.
So if that's the long that's the long game. What's the medium game?
Yeah, that's great quest, So that's the long game. The medium game is convert the hydrogen into the molecules we already know and love, well kind of love except for one use, use, no one use, and in mind bogglingly big quantities. And if you if you think about hydrocarbons fuels and how much we use globally, I can't even express how big an industry that is, and.
How much oil how many hydrocarbons we are burning right this.
Minute, right this minute, and and society, as we not is entirely dependent on them. Energy is prosperity, energy is everything that we do.
Is material well being. Yeah.
So so the so the short game, the medium game is convert the hydrogen, which we know how to do therm mechanically. We know how to convert hydrogen and CO two, which we can capture from the atmosphere from other processes. We know how to combine those two to make everything from methane which is natural gas all the way to jet fuel. And so once we do that, we don't have to convert or retool all of that industrial infrastructure.
And why is that version cleaner? Where are you get in the CO two from?
Yeah, that's also a great question. So the source of the CO two is super important for the cleanliness the carbon profile of these pathways, these intermediate pathways, because CO two that is clean and clean would be biogenic. It comes from biological sources. Well, that's a shorthanded way of saying it's captured from the atmosphere, right, Because biological CO two it comes from plants. And where does that come from? It comes from the air. So that's a form of
carbon capture. But there's just not enough of it available to make the amounts of fuels that we need, and so it is a limited pathway. But geez, I mean, we can go down that pathway for ten years and not run out FC two sources. And in the meantime, we can and are in fact already starting as a society to build our hydrogen infrastructure. If you go to Europe, there are in Germany, in the Netherlands there are hydrogen pipelines, dedicated hydrogen pipelines being built today.
So good, So we're going in reverse chronological order. We started with the long game, and then we did the medium game, and now you're getting to the present. Right,
they're building hydrogen pipelines in Europe. Now people make hydrogen today for industrial reasons, but that itself is a dirty process, right, the sort of before we can get to the happy world of just hydrogen, or even the semi happy world of hydrogen plus captured carbon, you have to figure out how to make hydrogen without emitting carbon in the first place. Right that is, you got is your immediate project.
You got it, and and you know I came, I and my co founders came at this problem actually from the opposite direction. We're solar. We're solar people. Yeah, you know, it's solar and wind like renewable power people, and and and so like we we came at it from Gee, this this energy resource is really cheap, it's really scalable, but it's limited in how much we can deploy it.
We got to think of a better way to use it. Hey, this hydrogen pathway opens up like a whole nother market that's even bigger than the electric power market.
Let's let's try to do that.
I mean, there's a way where, like, if you can turn intermittent clean energy into hydrogen, it's like fuel, right, like hydrogen caption, Like it's kind of a pain in the ass to move around, and yeah, yeah yeah, we're not set up to use that kind of fuel. But it has the qualities of fuel, not the qualities of electricity. Right, ther'st portable, storable. So you have this big idea. It's a it's an obvious question, right, an interesting, huge question right now, Oh my god, solar power is free. How
do we leverage that? You know, people are trying to make weirdo long duration batteries that's another version of it. How do you land at hydrogen.
Yeah, I'm a big fan of long duration batteries because the grid, the grid should take should be able to take more solar and wind. It still doesn't solve the other half of global emissions, which are all these chemical industries. You think about. Think about Japan. Japan doesn't have fossil resources. It doesn't have the land or the solar and wind resource to power its own economy. So you know, the choices for Japan are nuclear which is problematic for Japan.
Or because cushim because they had, like to non man a nuclear accident.
Yeah, it wasn't a good thing. Or which is what Japan does importing fuel from other places in the world. You can't import batteries that are charged. That's not a thing, right, And when you think about Japan, it's an isolated case. It's really clear and obvious. But Europe imports most of its energy as an example, right, and that's a huge economy. So moving energy.
From Russia awkwardly.
Awkwardly from Russia, and now more and more LNG from the US, which by the.
Way, natural gas liquid naturally.
Yeah, So wires work really well in continence places where you have strong renewable resource and a lot of people. But that is not characteristic of a lot of the world. And so when we think globally and energy is a global industry, right, it's a global problem. We think globally, you've got to be able to move energy in some form other than electrons. And that takes us to hydrogen
or it's it's you know, it's derivative. It's like futiless other hydrocarbons as the way we do this, right, that's the only way humanity has come up with to move vast amounts of energy to where people need it.
I mean, it's the genius of It's the genius of fossil fuel, right Like, fossil fuel is an extraordinary energy storage mechanism, right, Like it's incredible. You can move it around, you can leave it in a tank, you can put it on a ship. It's full of energy, you can burn it whenever you want. Like it's tough to beat.
It is super tough to beat.
And we have one hundred and fifty years of optimizing for it and building a world around it.
And if it weren't for climate change, I wouldn't be doing what I'm doing because because fossil Yeah, because fossil fuels are awesome in every other way like you describe, right, They're easy to store, they're easy to move, they're super cheap to get. Wow, like wow, it's such a gift Nature's given us and we've been using it for a long time.
But gift asterisk, Yeah, gift fasters.
Well, we've got me smarter, right, Yeah, we've gotten smarter and we've we've started to realize the unintended consequences of this this this resource we have, and now we got to we you know, luckily, hopefully maybe we have time enough to get out of our own way and start to convert. So okay, So so hydrogen lets you do all these things. It's harder, but the big problem is it's more expensive. It's a lot more expensive today.
Well, and let's just be clear, there's hydrogen means different things, and like there is people do make hydrogen an industrial at industrial scale now, but they do it in a way that emits carbon dioxide. That is like not at all about solving the kinds of problems we're talking, right, So the fundamental hard thing is using electricity to make hydrogen, which is like technically not hard, but uh, but nobodys figured out how to do it in an economical way. Right, that's the base.
Exactly, That's exactly it. People have been doing it since I don't know, sixty years ago, sixty five years.
Ago, right, Like, I mean my high school chemistry teacher did it. Right, He like made this jank electoralizer where he had a battery and then he ran wires from the battery into a thing of water and he put like upside down test tubes, you know, in the water, and one of the test tubes filled up with oxygen and the other one filled up with hydrogen.
That basic demonstration in high school chem lab or physics lab is the core physical phenomena that is being scaled up into modern electrolisers. That's the machine that does this on an industrial scale today. That equipment is inefficient and super expensive, and because it's so expensive, you have to run it all the time, and so where Yeah, so you know, think about like you own this really expensive thing, you want to use it all the time?
Yeah, right, because the value you get out of it is like the amount you pay for it divided by how much you use it.
Right, Exactly, You've tied up all this money in a thing. Yeah, and you've got it. That money has to be put to work, right, And.
So if you're if your whole case is like, oh, we're gonna have intermittent free energy, that's not going to work.
Yeah, that's right.
Where people do electrolysis today is where.
They have cheap hydropower.
And you know, you think of like Sweden and Norway nor the Norwegians were pioneers in this because they had a lot of hydropower in remote places without a lot of people. Hey, if we could convert them to hydrogen and make fertilizer, wouldn't that be great?
Right?
So that's been going on for half a decade and interesting that part of the world. Okay, but hydropower isn't all that scalable. There's gigawots of it out there, but you can't build much more because it has its own environmental impacts.
Right.
So okay, so that's the core issues. This equipment super expensive, it's not efficient, and so that limits our ability to use it from with this powered by this cheap, abundant but intermittent renewable resource, all this excess solar and wet.
It's always techno economics, right, like the whole energy transition. It's not really a technical problem, clearly at this point. It's a it's an economic problem. It's the technoeconomic problem, yep.
And the solution to the technoeconomic problem is largely technical innovation, but with business model and economic innovation wrapped around.
It, and scale right and scale it seems like.
Yeah, yeah, scale absolutely, scale as well. So let's talk about scale. So most electrializers, big ones are one, maybe two or three megalots. Those are the biggest ones out there. A megawot is like how to put that in real terms? It sounds like a lot of power. It kind of is a lot of power, but it's nothing compared to the industries we're talking about and the uses.
We're talking about.
So if you think about like an ammonia plant, you would need a thousand of those to make enough hydrogen to run an ammonia chemical.
One that's one ammonia.
That's one one of thousands of the world.
So do you need to go up buy a thousand X? Is that about the about them?
You need to go up by about one hundred X.
Okay, and then you put you then you send ten of them to the plant and it makes.
That makes sense. That's it. That's it.
So it is all about technice economics, which, by the way, you know, so the company I run as a startup, we've been around for a little over four years venture financed tech startup. This is an insane thing for a startup to try to do.
Yes, well, you've raised a ton of money, right, Like, it's wildly capital intensity. You've raised hundreds of millions of dollars. We have an impressive display of venture capital that people have invested in you given you that much money on a kind of long shot thing, right on a certainly hard thing that might not.
Work, super super intense and I'm super grateful that the venture community. You know, if you look at the venture capital communities experience with what they call clean tech, right, this is like technology companies that are trying to do like big hard transformations of industry to make them cleaner.
You know, there was clean tech one point.
Oh maybe a decade or more ago, and a lot of people lost a lot of money. Yeah, right in that in that first foray into clean tech.
I mean, you happen to work at one of the only US companies that really came through that, right, maybe that helps raising money this time.
It certainly doesn't hurt. It certainly doesn't hurt. Yeah, it's spent thirteen years at First Solar, and it is literally one of the as you said, the old on the US companies that's still thriving in these industries. But you know, when we started this company, we I think we started it at a great time clean dech two point zero,
if you will. There was a lot of venture capital interest for good reason because in political resolve to do the things necessary to start to address climate change was strong, and that provides like the economic footing the support necessary for kind of new technologies to enter the market. When something new enters is the market, it's never competitive.
Yeah, well, it's interesting in the solar story, how at least in Jenny Chase's version of the story, which seems like the most credible version I've come across. The German feed in tariff of two thousand and four is this sort of inciting event. It's just this one policy change in a medium sized, rich country kicks off this amazing run down the experience curve, you know, of solar panels getting cheaper and cheaper and cheaper until now without incentives
like solar is gonna win. It's gonna keep winning. It's not subject to these political wins.
You got it.
I won't repeat the story though I personally lived through it, but it sounds like you and your listeners have already heard it and your recounting is accurate. Where not for the German feed and tariff for solar probably would not exist, nor would the solar industry as we know it. China certainly would not have scaled up their industry dramatically, and you know they're the dominant supplier of solar panels in
the world by a large margin. But as a result of all that, the industry got to scale, got the better and better economics. And it's not just the solar panels, the equipment, but it's also, as you said, the experience of building solar farms, the learning and the cost reduction, the country repetition. Right, you build one house, it's kind of spenser. If you build one hundred houses, they get cheaper and cheaper. It's the same with solar and wind.
Houses are a weird example, though. Houses are like that terrible productivity gits. Everything else gets cheaper when you build more of them houses weirdly refractory the productivity gits.
That was a really bad example. I agree.
Still to come on the show, how Rafi and his colleagues at Electric Hydrogen plan to cut the cost of clean hydrogen in half? So is the Inflation Reduction Act this bill, this US law passed a few years ago. Is this like the German feed in tariff of two thousand and four a moment for hydrogen? Is that what you're hoping? Yeah, so the answer is no, Okay, interesting, tell me more.
Yeah.
Interestingly, the equivalent of the German feeding taraff today is not the Inflation Reduction Act and its provisions for hydrogen, but it's what's going on in European policy.
Okay, well, that's heartening for semi obvious reasons. Go on, yeah, yeah, So what's happening in Europe?
So in the European Union there is there are a number of policy frameworks, but what's called Red two or Red three, which are laws in Europe. These laws in Europe provide a framework for carrots and sticks to decarbonize certain high emitting industries. It all has to do with the utilization of the renewable energy to decarbonize things like steel, concrete, fertilizer, chemical industries, energy.
Those I mean, those heavy industry ones that you mentioned are the classic like ones we haven't figured out yet, classic like hard to do with electricity, even if you got the electricity, like cement famously very hard to decarbonize steel, very hard, fertilizer very hard, like we don't know how to do it yet.
Well, interestingly, we do know how to do it.
I don't have to do it economically yet.
That's it, you got it, you got it.
Which ends up being the same thing with commodity businesses like.
That, one hundred percent. The only value in a commodity business is the price, right, There's no other like, you know, you can't make it prettier, you can't make it faster, you can't make it cooler.
It's just the only thing you can do. Bro Yeah yeah, yeah yeah. Okay.
So, so the European kind of legal framework, policy framework actually is what's driving this industry to produce hydrogen and chemicals from hydrogen because it's it's driving consumption demand for those moments for those products.
Because basically they get a subsidy if they consume hydrogen and they pay a fee if they don't, and more.
Last, and it's that last piece, the penalty if you don't the stick. The stick is what actually works to create demand. That's right, because and in contrast what we have in the US with the IRA and we can talk later about like what's actually going on with it if you care to. But but in the US, we just have a production side subsidy visa via tax credit that doesn't do anything to cause the demand side to buy the stuff.
Yes, I mean, I guess. If I guess, the hope would be that the the production subsidy would lower the price at which producers could sell, which would then increased demand.
That is the that would be the naive hope. Naive, Yeah, we've never seen.
I hope was my first album.
Go on, We've never seen, We've we've never seen production side support alone the new energy industry, it's always taken.
Yeah, you have to subsidize demand.
Yeah, you have to somehow have to get the industry over that initial hump where the supply side subsidy isn't quite sufficient to cause people to change behavior.
Uh huh.
Interesting, Well, so does that mean that whatever happens with the with the regime change in Washington isn't going to be that big of a deal for you. You're like, well, we weren't that into the IRA anyway, Yeah.
Kind of, you know, we were. We were, and frankly still are super hopeful that the rules for using the IRA tax credit will get clarified and then we'll be able to actually use it because we haven't been able to use it yet because the current means hasn't set the rules. Okay, the law exists, it's kind of a walky thing, but it's unclear. It's frankly unclear how the new administration is going to deal with this, and I think there's, you know, reason to believe it could go
either way. So we're waiting to see.
Yeah, I mean, it seems like a lot of the IRA might be unchanged, right. I know, there was a group of Republican congressmen that recently wrote to the Speaker of the House saying don't get the IRA, saying it's you know, creating jobs in our industries. It does seem like it was written in such a way, or at least as being implemented in such a way in other sectors at least that it does have some staying power political.
At the risk of being political and super cynical, which I tend to be when I get political. Washington's about money and the IRA channel money disproportionately it turns out to Republican states, and so like, there is real support, not only principal support, because not all Republicans are blind
to climate change and the need to transform the energy sector. Okay, so I think that needs to be said and realized that it's not a monolithic Hey we don't care, right, Yeah, there's real support for solar and wind in particular, but also for other decomponization pathways amongst Republicans. But also, like, the money matters, and so you know, Red states are getting a lot of money from the high rate potentially, and so gutting that would be I think politically challenging.
But this is a this is a nonlinear time, right, this is a this is a time when I think it's very hard.
To predict what's going to go on in Washington.
So we'll see, yeah, yeah, yeah, So okay, So so you're saying you have a pathway in Europe. Anyways, let's let's talk more about how you're actually trying to do this thing. Right, So, you have in front of you a sort of technical problem, which is making green hydrogen cheaply enough to make economic sense, right, and you have certain tailwinds in the form of regulations that are encouraging this, but you're still not there yet, right, even with those tailwinds.
Is that a fair characterization of where you are now?
Yeah, that's a totally fair assessment for the whole industry actually, so yeah. So if you think about the whole like burgeoning hopefully soon burgeoning industry of sourgon.
Today it's nascent, tomorrow it's burgeoning.
That's right.
If you think about like green hydrogen or electrolytic hydrogen, whatever you want to call it, as an industry, it's gotten a lot of excitement because again, the policy framework has matured and there to support it, but not a lot of big projects have been built yet. And it's
because it's too expensive. That is exactly why my company Electric Collagen exists like we exist because we actually recognize that it's too expensive and have developed and are commercializing technical solution to make it much cheaper by a factor of two, Like half the cost.
Does have get you there? Does if you actually do cut the price in half? Then does it work under say, the European.
Regime right now?
Yeah, totally so in Europe. In Europe, the typical project using other technology companies, equipment, and you know, I'll name I'll name the big ones like Siemens or Tiscent Croup, right, big industry.
Big incumbent industrial companies.
Yeah, they make these things, they make equipment to do this stuff. The cost of producing hydrogen using that gear in Europe today is probably the five dollars and fifty cents a kilo of hydrogen, so maybe six dollars achilo of hydrogen. If you make hydrogen from natural gas in Europe today, it probably costs their own.
Three dollars akuila. Oh okay.
We think we're already there. We think we're already at a place where we can enable economic parody or close to economic parity with the fossil incumbent, but in a very fundamentally preen way.
So how do you do it? How do you cut the cost in half?
Yeah?
It all starts with the realization, which you struck on really early in this conversation, that cheap power is plentiful, but it's not steady. Yeah, right, So the equipment that you use to convert that unsteady, intermittent cheap power to hydrogen has to be really, really inexpensive, But it also has to be flexible. It has to be able to run up and down, up and down quickly without failing,
damaging it or loss of efficiency. Today's equipment can't do either, and so part of the reason that hydrogen is so expensive to produce this way today is that not only are you using that intermittent, effectively free power, but you're also drawing power from the grid to keep the equipment running, and that drives up the cost of the power. The power costs is about half of the hydrogen production cost,
so that's half the half. The other half of the half is it comes from the equipment actually being a lot cheaper.
And the way we do.
Both of these things is the fundamental physics of the device. So we're a bunch of super nerdy like semiconductor device physics and chemist kind of people, and we spent the first couple of years of the company in the lab basically reinventing this simple, simple device that you saw in your high school chem lab. Right the two wires that make the bubbles we electualizer.
We can use this piece of jargon, right, it's the electoral yea, yeah.
Yeah, yeah yeah.
So we we came up with a way to make the electoralizer much much cheaper, not not by using cheaper materials, but by actually increasing the through but the amount of hydrogen that can be produced from the object. Since then, in the subsequent two years and more recently, we commercialized that. Our product is it's a big product. It's funny to call it a product. It's about an acre in size. It's a it's a plant. So if you've ever driven around parts of Texas, you've seen like small chemical plants,
not pap refineries, but small ones. It looks kind of like one of those is a bunch of piping and plumbing. At the heart of it is this electrilizer, which is the thing we manufacture ourselves that does all the work and the recip the equipment around it, gathers the hydrogen, purifies it, and puts it out in a pipe. So we figured out how to make that really cheap. Half the cost.
And the electoralizer itself, Like, what's it look like? How big is it?
It looks about like it's about the size of a refrigerator, an American refrigerator.
Not the little European.
Yeah, and it looks you know, it doesn't look too it's kind of a rectangular box, you know, it's it's not very interesting to look at, frankly, And when it's running, it just sits there. It doesn't make any noise, it doesn't move, there's no robots or anything. There's a bunch of water running through it. There's pumps make a bunch of noise. There's water running through it and outcomes water and gas, water and oxygen in one pipe, water and
hydrogen in the other pipe. And then there's a bunch of vessels and pipes that separate the gases from the water and purify them and send them out to be used. So it's it's a very you know if if you're a geek like me, it's really impressive. If you're just walking by one and you see it, you'd go, huh, what's that. It's kind of unimpressive, which is how you want one of these things to be. For sure, want any you know, any drama when you're when you're converting power to hydrogen, well.
And especially with hydrogen, right, like I mean, I don't want to yeah, yeah, talking about things blowing up, but hydrogen can blow up.
Right. Actually, let's let me take a moment here, because there's a lot of talk about that are in the US. Our new president elect even made some comments about that hydrogen is no more explosive than gasoline vapor or natural gas vapor. So we already know how to handle things that blow up when you when you spark them, and hydrogen is kind of us like those things.
Yeah.
Fair, So, so, how many of these acre sized plants exist in the world.
Well, we are building our first one now and it'll be installed next year in an undisclosed location in Texas for a customer of ours.
So we're we're super excited.
You know, in the life cycle of a startup, this is an incredible moment where you know, we've we've gone from the laboratory to kind of a pilot scale operation and now we're building the first real one and uh and you know, all eyes are on it, and uh,
we're just goes down executing and building it. You know, once we get the first one proven and running effectively, which will be next year, then you know we expect to to be uh, you know, super viable in the market because our price point is so compelling.
What are you going to do with the hydrogen you make in Texas?
So I can't tell you because the deal isn't announced yet, but it's exciting. It's a fuel that's going to be produced using the hydrogen.
You can't tell me specifically what this first one's going to do, fine, but you know, we talked about this whole kind of range of things one might do with hydrogen. What are some of the sort of relatively easier applications, Like, what's the low hanging fruit for green hydrogen? What's the first thing you can do?
Why can you do it tomorrow?
Yeah, So everybody in our industry likes to think that ammonia, which is fertilizer, is the first thing it uses hydrogen today, That hydrogen is made from natural gas usually, so why not just replace that that dirty hydrogen with this clean stuff?
Right?
The reason ammonia isn't happening super fast right now is because they're relatively little incentive to decarganives ammoniah. No one's willing to pay extra for clean fertilizer because food, food security, food cost is super politically charged, and obviously right that that's nowhere that's not a place policy makers want to go. Potentially, even in Europe. We'll see. So it turns out the low hanging fruit might be economically or politically one of the last.
Things to be done.
So now we got to do politico techno economics, political economy, techno economics. I got to figure that one out.
But yeah, okay, go on, and when you figure that out, tell me, because I need the I need. It's an interest, right.
Political economy is an underused phrase, but we want to get tech political technoic, political techno economy. It's not Yeah, okay, so what are you going to do? Not fertilizer, but what.
Yeah, so, so I'll rattle off the list of things that are very active today, ironically decarbonizing. The hydrogen input to refineries in Europe is very active.
Refineries like oil refineries that are making whatever.
Yeah, that's right, what am I talking about here? So a significant part of the of the CO two emissions from a refinery itself are from the production of hydrogen, which is used to refine oil. So hydrogen is used for desulfurization, hydro cracking. It's like it's a big input to employ refine. So there are incentives in place to gradually decarbonize the refinery itself. Of course, it doesn't do much to decarbonize the use of the fuel at the other end, but it's a start and it.
Can help you scale, right, Presumably anything that can get you building is good. Now you need a job in policy, God forbid.
But that's exactly right. That's the motivation.
It seems counterintuitive to try to decarbonize a oil refinery, but because they consume hydrogen today, it is an obvious place for policy makers to incentivize the scaling up of the green hydrogen industry.
So that's exactly right. You nailed it.
Green steel, I already mentioned that one. So there's multiple active, big projects in the world, predominant in Europe to convert steel production from coal super dirty to green hydrogen super clean methanol. Methanol is both the chemical input to plastics, as I mentioned, but also is the favorite fuel for the decarbonization of shipping. So big shippers like Marisk probably heard of them, you've seen their name on shipping containers. They are building multi fuel ships now which can burn
both conventional fuel which is super dirty. It's called bunker fuel. It's like the sludge that comes at the bottom of a refinery called but also can burn methanol and so green methanol emethanol some people call it, which is made from green hydrogen, is like a favorite pathway for decombanizational shipping. Those are the things that are doing. Another another one is SAFF sustainable aviation fuel.
So what is that.
It's kerosene. Basically it's fancy kerosene. And what is kerosene? It's a hydrocarden. It's just it's like gasoline but heavier. And so that can also be made from CO two biogenic CO two and hydrogen, or it can be made as is being done in Europe today from used cooking oil and other biological waste and hydrogen in a specialized refinery.
So what are you worried about right now? Not about the world, but about your company? Like you're right at this moment, you're building first commercial plant, you have a lot of investment. Like what's at the top of your list of things to worry about?
Yeah, So, as a described like this moment for a technology company going from lab and concept to actual product in the field is probably the riskiest and most delicate moment in a company's life cycle. Why is that because to do what we're doing and to actually deploy commercially, you have to be at a big enough scale to do that, and that means you're spending a lot of money. And so if you don't get it perfectly right the ramifications, it can be painful. So that's kind of a generic answer.
The bigger worry for me is the stability of policy, not just in the US but globally around decargonization. And you know why am I concerned about that because we've seen it before. We've seen it and you mentioned the German feed and tariff, the German feed and tariff experience, that's what created the solar industry. But then it also got retracted suddenly. Why because of political change within Germany. Wow,
this is costing the taxpayers a lot. And there was a there was a move to the right in Germany and like so the you know, the feed and traff was was revoked while I'm down, and that was a near death experience for the solar industry. The same thing can happen to us because we are, we are in the early days of this industry extremely policy sensitive or policy dependent. Now you know at electric high are like
literal goal is to be independent of policy. Sure, success for us looks like we are economic economically competitive without any policy support.
You want to be where solar power is now, Like nobody's going to stop solar now because it's the cheapest. Like you don't need to special rules, it's just cheaper. You got to just go to the store and buy solar panels and get their electricity.
You got it.
And that's what success looks like. But we're competing against an industry that's gone down its learning curve for the last hundred years, and so to compete with that like economically naturally right out of the gate, it's too much.
To ask me the fossil fuel industry.
Yeah, the fossil fuel industry. Yeah, yeah, so we need a little time.
How much time? What's your guess?
I think we can get there about twenty thirty. That's certainly fast, that's certainly ourgue.
Yeah, it's fast, but it's a lifetime in terms of political wins and in terms of like a startup company.
Yeah, you know, crossing.
Capital capital intensive Yeah.
Yeah, yeah, exactly, yeah exactly. So that's what worries me.
Yeah, Well, you just got to make it five years. Man, if you're right, but five years a long time, especially right now.
It's doubling my life. That's doubling my life.
Okay, So that's what's to worry about. Give me the happy twenty thirty story. If if things, if you don't, if you make it to twenty thirty and you and it works out like you hope, what's what's it look like? What's the company look like? And what's the world look like.
We're we're selling tens of gigawaps a year of electoralizers, but more important, we're ramping up fast, which means where you know, ideally doubling capacity every year to meet the demand for global projects to produce green hydrogen. The world looks like it's it's ramping green hydrogen production at a rate at which it will start to become relevant kind of relative to the fossil industry in a matter of years or a decade.
Yeah, and tell me in five or ten years, like, what are the places where there might be sort of meaningfully significant use of green hydrogen in industrial processes?
Yeah?
So in five years, certainly in southern Europe, where solar and wind are plentiful and available, North Africa, which is really well positioned to supply Europe and has incredible solar and wind resource. Texas and kind of yeah, Texas, Louisiana, Oklahoma again, and the wind belt in the US are like ideal places for the production of the molecules. You look at places like Chile interesting because the Autocoma Desert has both wind and solar and the combination is extremely inexpensive.
Those in the Middle East. It can't not mention the Middle East.
That's the supply side, that's where you're making all this hydrogen. And then what's the demand side look like? In five years, who's buying it? What are they doing with it?
Yeah, in five years, the demand side is largely Europe, Japan.
Korea, because that's where the incentives are in place.
Basically, it's that's where the problem is hardest to solve. They have the biggest problem. And it's not just incentives. Like when I say the problem to solve.
They're most reliant on imported fossil fuel.
You got it, you got it.
So it turns out to not just be a decarbanization problem, it's also an energy security problem.
But that's good for you, that's good for you. On the policy side, because there's more like short term self interest as a term of localized self interest in figuring out how to make hydrogen or.
One hundred percent. So those places make a lot of sense in the five year timeframe. In the ten year time frame again, you know, we come close, even come close to meeting our goals, and we're going to be knocking on the door of parity in cost with fossil resources.
And so I think the market is truly global.
And just list off some of the things, not the places, but some of the things that people will be using your hydrogen four clean hydrogen four in five or ten years.
Oh yeah, easy, so steal cement, ammonia, fertilizer, shipping fuel, aviation fuel, chemicals like methanol. Those are the easy ones.
And all of those industries, I mean, those industries together make up a very large chunk of of carbon emissions.
Yeah, the ones I rattled off probably thirty to forty percent.
Yeah, and it's the thirty to that seems really hard right now. Right it's not the like, oh, great solar power and batteries for people's houses and cars like that part we've actually kind of got, which is good. And so you're doing the hard part.
Yep, consider.
You'll be back in a minute with the lightning round. M let's finish with lightning round. What's your second favorite element?
Ooh, my second favorite element? Yeah, that's a great question. I'd say carby.
Interesting just as a as a human, as an organism or why why carbon?
Well it came to mind because because hydrocarbons are awesome, we just need to make them clean.
Yeah.
Uh. What do you think is the most underrated power tool for home use?
Yeah?
So I have a battery powered Makita angle grinder that I use all the time, and it's parguing me.
One of my favorite tools. Yeah.
Last time I used it, I used it to cut off a hard to reach metal bolt.
Oh I love that. Okay, where there's sparks. Sounds like it makes lots of sparks.
That's good. It's one of the reasons it's one of my favorite tools.
Is it looks cool? What's your favorite song right now to listen to very loud?
Ooh, led Zeppelin, Bronnie or stab Great. Just makes me happy every time I listen to it. It just makes me happy.
Make you feel twenty? I think if I put that song on it would make me feel twenty, or at least make me remember feeling twenty.
And feeling twenty makes me happy. Yeah, that's nice.
Probably, probably it would probably make me happier than I actually felt when I was.
Two, which is yeah, I think that. Well, yeah, it's definitely last one.
I read in the Wall Street Journal that your co founder keeps quote a secret document of the company's failures and fixes that only top engineers can access and that you cannot access. Did you know about this? Did you learn about it by reading the Wall Street Journal?
I don't know if that was a misquote or not, but yeah, it's actually not true, but it was a nice piece of story.
Are you sure?
Are you sure or are they just telling you that at the company?
Maybe?
Like, no, no, the journal got that wrong. There was no secret document.
With my co founder Dave. You never actually know.
Okay, keeps it interesting? Anything else we should talk about. It's been great, Yeah, really is super fun. Rafy Garabedian is the co founder and CEO of Electric Hydrogen. Today's show was produced by Gabriel Hunter Chang. It was edited by Lyddy jeene Kott and engineered by Sarah Bruguer. You can email us at problem at Pushkin dot Fm. I'm Jacob Goldstein and we'll be back next week with another episode of What's Your Problem.