Welcome to Zero.
I am Akshatrati. This week climate tech Hype or note.
Breakthrough Energy Ventures is one of the biggest funders of early stage climate technologies, spending billions of dollars so far with investments in more than one hundred and twenty startups. Since Zero launched two years ago, we've featured a number of companies that break Through Energy has invested in. You can find some of those episodes in the show notes. But there's a brain trust behind Breakthrough Energy Ventures that makes the decisions of what kinds of technologies they invested.
One of those people is Eric Toon. In his former life, he was a professor of chemistry, which, as someone who's studied chemistry, is something that always gets my attention. Over the years, I've talked to him plenty of times trying to understand where exactly he sees the technology landscape going.
So for this episode, I wanted to bring you into some of our chats to get his take on what set of climate technologies he's hyped about, and what technologies he thinks the world shouldn't be hyped about, and why he thinks his set of technologies will not just work but also make money, because no longer is he just a professor. He doesn't just assess the feasibility of a technology, but also the company's potential profitability. We touched on carbon removal,
grit technologies, nuclear fission, nuclear fusion, and hydrogen. We also talked about some of the companies he's most excited about. Eric, Welcome to the show.
It's great to be here. Thanks for having me.
Now.
You were a tenured professor of chemistry and biochemistry at DECU University. A tenured position is a ticket for life to do what you want. But you gave it up to join Breakthrough Energy Ventures, and you joined as the science lead. So Breakthrough Energy Ventures has been investing for seven years. It has one hundred and twenty companies that it has invested in so far. A few of them have gone public. But you are still very much at the frontier of trying to seed ideas that are there
in labs that need to be commercialized. How has your thinking changed as a result of doing this for the past seven years.
So I think that I knew sort of intellectually how different this space was than tech investing, how difficult it was to scale things. Things in this space don't scale the way that apps or computers scale. Right, this is steel in the ground stuff, and it's in industries where margins are razor thin, where there are existing interests that are enormous. I knew all of those sorts of things intellectually,
but I understand them in a much more visceral way. Now, you take an idea that you think could have legs, and you spend seven or eight or ten years and invest three hundred million, four hundred million dollars and get it to the point where it really looks like this could scale. And now I have to turn around and raise a billion dollars to do a first of a
kind plant and the marketplace. Of course, since these are commodities, right, electrons are the most undifferentiated commodities on the face of the earth. And so the reaction is not, oh, that's unbelievably cool. The reaction is, we'll see if you can make it five percent cheaper than the way we make it. Now, give me a call. I knew those things that will actually but to be in the middle of it and to really feel it viscerally, that changes you.
Now, over the years, we've talked about a number of scientific areas or trying to invest in climate solutions. I wanted to pick five areas, and I wanted to play a game with you this time. Let's call it hype or not, and I'll define it because I think hype or not can be very broadly assumed, whether it's in conversation or dollars, or in sheer number of startups that exist.
So let's be specific about whether you think in these five areas of technologies, which we will take sequentially, there is either too much investment or too little investment going. So let's start with carbon removal. Now, the scientific case for carbon removal is strong, and it's strong because we've
really not acted on climate change. And that means if we want to keep to our climate goals as agreed in the Paris Agreement or not have a planet as hot as it already is, we're going to have to draw down some of the greenhouse gas emissions that are already sitting in the atmosphere. But we don't need to do it now. We just need to have the technologies ready to be able to do it over the next few decades. This industry has been unlike any other industry.
Most climate technologies start in labs, they get government support, then they are commercialized through government regulations that create a market for that technology, and then they produce something that people want. Solar panels are a good example. Electric cars another good example. Carbon removal was not really supported as much by government. It was private industry, mostly the tech industry, that was interested in pursuing carbon removal as a path
to try and meet its climate goals. And yes, now it has government support, but at the end of the day, what it's producing is not a commodity that people want. It's a commodity that the world needs. And we are at this moment where there are by one count eight hundred undred carbon removal startups in the world. And again, if we look at HiPE cycles, there can be HiPE cycles where lots and lots of companies exist, hundreds of them. Many of them will fail at the end of the day,
some will survive and scale up the solution. But do you think at this moment we're investing too much in carbon removal.
I think that we need to be a lot smarter
about how we invest in carbon removal. The first thing that I would do is to bifurcate the market and the way I would bifurcate the market is there is certainly going to be a significant amount of carbon capture for just sequestration, for simple removal, however you end up doing that, But there's also going to be a large market for carbon as a reagent as a resource as we start to make liquid fuels that are zero carbon, as we start to think about making plastics and materials
that are zero carbon. So I think that the first thing you need to do is to kind of bifurcate this market into a market for sequest and a market for carbon as a reagent. And I think there's very different requirements on the material there, and I think that there's very different price points, So that that is the first thing that I would do if we think about the carbon market for sequestration, and you know this is
narrated that we've invested in. The challenge that I have here is there are fundamental questions about what you're doing that are questions that society needs to answer, and society hasn't really thought about those questions. So let me be a little bit. You know, clear, people pay for certainty. If you pay me one hundred dollars to capture a ton of carbon. And after I do that, you come back and say, prove to me that you captured a ton of carbon. I paid you for a ton of carbon.
Proved to me that you actually captured a ton of carbon. Well, if I'm running climb works or if I'm running carbon engineering, I can show you all the log data. I can show you the machine worked. I can show you how those machines were qualified. I can show you all those things, and I can convince you to a very high degree of certainty that I captured a ton of carbon that
you paid me for. And if you come back to me in five years time and you say I paid you to keep that carbon, can you tell me where that carbon is? Well, I can show you where that carbon is. Perhaps I've done underground storage. I can tell you what the volume that I've stored it in is. I can show you the pressures and I can say that it's there, or perhaps I mineralized it, and I can show you exactly where I did, and I can show you the well logs. I can do all of
those things. I can convince you to a very high degree of certainty. But that costs a lot of money right now. That costs somewhere between five hundred and one thousand dollars a ton. We hope someday we can get it down below that, but that's where we are today. On the other hand, I can put all of mine on beaches and I can watch it disappear. And now if you come to me and say I paid you for a ton of carbon, can you show me that
you actually captured a ton of carbon? Well, I can show you the certificate of analysis of the olivine that I put on the beach, so you know what the calcium magnesium concentration was, And I can say, you know, it's gone. It's in the ocean. It reacted. So that's my proof is I you know, I can tell you how much calcium magnesium there was and it's gone. Maybe
you're good with that, maybe you're not. And when you come back to me in five years time and you say, well, tell me where that ton of carbon that I paid for is, you can say, well, the solubility product of calcium carbonate is, you know, And so Licia Telia's principle says it must be at the bottom of the ocean. And you can decide for yourself whether or not you think that that's proof. But that costs ten dollars a ton. And now I can do ocean fertilization. I can go
dump iron in the ocean. And now when you come back to me and you say, prove to me you captured a ton of carbon, I can say I have no idea, but it must have been a lot, because you could see the algel bloom from space, right, So it must the bit a lot, but I don't really know how much. And if you come back to me in five years time and say, well, where's that ton of carbon that I paid you for, you sort of say I don't really have any idea, but that costs
pennies a ton. And so society has to make decisions not about whether or not we have to do carbon capture. I don't think there's any real discussion about that, But what do you actually mean by carbon capture? What constitutes certainty with regards to what I was able to capture
and with regards to where it is? And does society want to pay five hundred dollars a ton to climb works to be absolutely certain I captured and to know exactly where it is, or does society want to pay ten cents a ton and hope for the best, and we'll check again in thirty years and see where we are.
And so I think the problem is without an understanding of what that market looks like, there is no evidence anywhere at all that society is willing to pay anywhere close to even one hundred dollars a ton.
Right, So there are two dimensions. One is certainty, but the other is demand, and on both that is uncertainty.
Tremendous uncertainty. So how do I invest in a company if I don't know what the relevant cost point is? Right? You know, I'm pretty sure that if you can do carbon capture at one hundred dollars a ton and it is pure approximately CO two, there is going to be a market for that. And the CO two is a reagent game to make electro fuels and things like that.
So I feel confident about that. But you know, carbon capture from the perspective of sequestration and just taking it out of the atmosphere, I don't know if the price points one hundred dollars a ton or ten cents a ton. So how do I build a company? How do I invest in a company? It is literally a race to the bottom. I mean, if you've got a technology that works at eighty dollars a ton, If I look at the supply and demand curves and where they cross, there's
some market at eighty dollars a ton. But if somebody comes up with something at fifty dollars a ton, and so I think you're just necessarily running down that cost curve. This is such a big area. The need is so enormous that the idea that there is going to be a single, monolithic technology that will rule them all as almost certainly not the case.
Now let's turn to the grid. We know that one of the ways in which we are going to decarbonize is to electrify as much as possible and make that electricity from zero carbon sources, and that's going to require a bigger grid. Investments around the world on the grid just to build it have not quite got to the place where they need to be on trajectory for net zero. But within the grid there are technologies that could make
that job easier. So within the grid, where do you think the technologies are hyped and where do you think they are under hyped that there is potential for more investments.
I think there's two areas that at least we at Breakthrough are especially interested in, and I think one is fairly widely recognized, in the other perhaps not so much. The first is reconductoring existing right aways. You mentioned that we're going to have to mass electrify everything implies massively expanding the grid, so you're just understand what that means. That means something like four x the existing grid. It's extraordinary,
and that energy has to be moved. And you know in the United States today it takes on the order of sixteen years to permit a new transmission right away, and so that really means that reconductoring existing right aways is going to be a big, big deal. Right that'll allow them to carry more power on those existing right away. So new technologies that allow you to move much more
power down existing right aways are very interesting. DC transmission and lines that can be placed along other public right aways, rail lines and things like that. That's also an area of interest, although as you know, there's challenges to ACDC inter conversion and things like that. But I think there's fairly broad recognition that as we electrify everything and the grid grows, that we're going to have to find better
ways of moving more energy down existing right aways. The one that I think think there's perhaps less recognition of are the challenges of operating the grid. If you think about how we operate the grid today, we model the grid supply and demand typically a day in advance, and in the old way that we did things that was relatively straightforward. Right supply was mostly dispatchable and it could be scheduled. There's not very much storage in the grid.
I could model the distribution grid just as a load. There's no two way flows of energy. Variation in demand from day to day is relatively modest, and it's related to things that are easy to model, the weather, the season, things like that. As you simultaneously grow and decarbonize the grid, all of that stuff goes out the window. As you start using more intermittent wind and solar and not using rotating machinery for the generation of electricity, inertia and the
grid goes down. It makes it hard to keep it stable. Generation resources are play where the resource is not necessarily where the load is, and transmission pathways change from day to day depending on the weather. There's a lot more storage. There's people doing distributed generations, so there's two way flows of electricity. I can't think about the distribution grid just
as all of that stuff goes out the window. And we saw in the LA one hundred study, the study where Enrail partnered with the city of Los Angeles to think about how we could decarbonize the Los Angeles grid, just how hard that is to do. People, I think sometimes think about the grid as an afterthought. Its wires hung on poles and so, yeah, sure we got to build that, but it's really more appropriate to think of the grid as a machine. It's the largest and most
complex machine that humankind has ever built. And so before we can expand the grid, really at the outset, we have to think about not only how are we going to build a grid, but how are we going to operate the grid? And so this is a new area of interest and emphasis for us. A significant part of that is going to be done on the philanthropic side, a pretty grid modeling effort that we're standing up now.
But this is an area that I think has received not nearly enough investment, not nearly enough attention, and it's really treated more as an afterthought. So that's an area of the grid that I think needs an enormous amount of attention and effort.
The biggest machine that humans have ever built, but also the oldest machine in that sense. The grid has been continuously being built since the late nineteenth century, and many of the things that it uses even today are things that were set up back then. Of course there have been changes, but fundamentally it's doing the same thing that I was doing four hundred years ago. So now trying to power the grid with clean energy, we don't want
to talk about renewables. They're sort of on their own doing their thing, but because of their variability, there is desire to have more dispatchable clean energy on the grid. You could do that in a few ways. You could have hydropower, but there are physical limitations on the hoimuch hydropower there will be. You can do geothermal, and previously it was thought there are limits to geothermal because of the geography of where geothermal is found. But newer technologies
are opening up more areas. But there's an old technology that keeps coming back up into the conversation, and that's nuclear. And let's split that conversation into two. One that exists, which is nuclear fission, and one that could exist, which is nuclear fusion. So let's start with splitting the atoms
within nuclear fission. We've gone from having first generation, second generation, and third generation nuclear reactors that all use water as a coolant, that all became safer and safer as a result of accidents but also public desire for more safety around nuclear fission. But as a result, they became more and more expensive and they are no longer able to compete with the way the grid prices electricity, and thus outside of China, no is really building nuclear fission reactors
at scale anymore. And yet there are a number of ideas being floated. Do you think those ideas have any legs?
I really do. First of all, I think you have to compare apples to apples. You're one hundred percent right. Electrons are the most undifferentiated product on the face of the earth. People are not going to pay extra for them as we think about the developing an emerging world, and that is absolutely the most important part of this thing. You know, I'm sure your listeners know, but it's always worth remembering per dollar of GDP energy consumption in the
West is going down through efficiency. If you just left the Western world, if that was all we were talking about this isn't that big a problem. Where this really blows up is when the non OECD world seeks OECD prosperity and the demand for energy that comes with it. People are just not going to pay a green premium. So you do have to offer whatever zero carbon technology
you want to use without a green premium. But it's important to compare apples to apples, intermittent wind and solar and even hydro, which is also just you know, remember hydro is just solar energy with some storage. That's all it is. And if you look at the challenges that Brazil is having with hydro today even Canada, even Canada, for God's sake, is rethinking it's commitment to hydro because so much of the country is in drought. So you
can't compare intermittent resources to baseload power. So if you're gonna say, what is the cost that I have to offer nuclear at, you really need to compare it to things like coal. Coal is sort of the ultimate base load electricity. Coal is broadly distributed around the world, it's easy to move around, and coal is about one hundred dollars a megawa hour, so that's definitely got to be
your cost target if you're going to do that. After Three Mile Island in nineteen seventy nine, the cost of nuclear rose roughly fivefold, and that has to do with concerns around safety broadly, which is waste safety and proliferation. There are certainly third and now fourth generation reactors that address many of those issues, but those haven't been built at scale and enough of them to really understand what
their ultimate cost entitlement is. And so one thing that we need to do is to drive those costs down, get those things on a learning curve, and figure out what their ultimate cost entitlement is. The other very real issue that we have is we stopped building nuclear reactors in this country and so we've lost that muscle memory.
We don't know how to do it now. If you look at the Votel plant in Georgia and the number of problems that there were with that, so many of those problems were just because we forgot how to build reactors. They were mistakes that were made in the planning and construction. And so we need to learn how to make reactors again, and we need to build these new generation reactors that needs to get built out so that we can understand
what the ultimate cost entitlement is. If I'm going to say, okay, col's our baseline hundred dollars a bay, where can we get to can we get to one hundred and thirty dollars? We need to understand that, and so I think that's something that absolutely has to be done. There's about sixty reactors nuclear reactors globally under construction now, largely in China, but not only in China, right, and so there are about sixty and then about another one hundred that are
in various stages of planning. But I think that the number of sources that we have for base load power are so small that it's really hard to see how we do this without at least some amount of fission. So there's an enormous demand for new electricity here in the United States, and it would be great to see some of that met with new nuclear.
Would there be a point at which you would say that other clean electricity, dispatchable electricity technologies have come to a place where we don't really need to pursue nuclear fission.
It's a very very very interesting question. So you mentioned geothermal. You know, historically to do geothermal you've needed three things need heat, permeability, and water, and so that's why places like Iceland look so good. And in the Western United States around Geyser's new technologies like that developed by one of our portfolio companies have relieved the limitation for permeability and water. Taking advantage of advances in drilling technology that
came from the conventional oil and gas business. There have been tremendous opportunities to expand geothermal. So there is definitely new technology, new learning that needs to happen, but there's nothing inherent that limits the scalability of geothermal, and I think it can with new technologies, it can be very widely distributed. You know another one that's very very interesting and you have to promise not to laugh at me here now? Actually is is space based solar?
Right?
I told Look, I just said no laugh at me. You're laughing at.
Look it is. It is not to say it is a laughable idea in that it couldn't work, and I'm sure there are ways to make it work. But do we need to make it work is the laughable question. It's not so much the feasibility.
Of it space based solar. You're absolutely right, even year thirty years ago, space based solar was tinfoil hat level lunacy. But what has changed, and what's changed a lot of things, is the incredibly rapidly dropping cost of space launch. If we go back to the mid nineteen eighties and the Space Shuttle days, it costs fifty thousand dollars to put a kilogram something in space. That number now is five hundred down two orders of magnitude, and it's headed towards
one hundred dollars a kilogram. When it costs you one hundred dollars a kilogram to put something into space, then all sorts of stuff that was crazy is not crazy anymore. And both the European Space Agency and NASA are working on space based solar. There's a large effort at Caltech to do power beaming, so you know, yeah, it's no longer tinfoil hat lunacy.
Well, talking of tinfoil hat lunacy, the next one is nuclear fusion, which you know is not tinfoil hat in the sense that we know it works because we've been able to turn fusion reactions and create energy even those small amounts from it. However, it's one thing to know you can do it and another to commercialize it. And nuclear fusion for the longest time has been a government supported enterprise, rightly so, because of the risk in actually
commercializing it. That's changed over the past ten years. BB is invested in five nuclear fusion companies. There are something like twenty fusion companies out there. Why do you think investors are interested at this moment in time for fusion.
There's been a lot of advances in fusion and a lot of advances in the technologies that are necessary to enable fusion that I think makes this a different moment in time if we think about just magnetic confinement fusion and plasma based fusions. The big change there has been in the development of high temperature superconducting materials REVCO and others. That's really what changed everything, right, and so now all of a sudden, you don't need tokemax the size of eater.
Now you can build tokemacs that are even smaller than what a commercial nuclear reactor would look like. So there have been technical advances that enable fusion. Fundamentally, always the attraction of fusion has been you know, we talked a little bit ago about the fundamental challenges of waste safety and proliferation with nuclear fission. None of those things are
true with nuclear fusion. The products of the reaction are radioactive for decades rather than millennia, they're not fissile and can't be weaponized, and it's not a chain reaction, so runaway reactions they are so called walk away safe. That doesn't mean fusion will be cheap, but it does mean you're not stuck in a box where there's no way
to get away from those fundamental safety constraints. And so I think that's always been the sort of carrot that was hanging out there with the fusion, and I think that, coupled with recent advances in things like high TC superconducting magnetic materials, make this perhaps a very interesting time for fusion.
More from my conversation with ericton after the break and if you've been enjoying this episode, please take a moment to rate and review the show on Apple Podcasts and Spotify. It helps other listeners find the show. I'm a big fan of science fiction, and I feel like nuclear fusion is a technology if you were to give it to a civilization to advance quickly, you would want to give
them nuclear fusion. And so as much as we care about the climate problem and we need to address it, it's nice to be able to dream big and think about not just the century, but the centuries to come. But we also have to come back to earth and talk about technologies that do exist. But I have certainly got too much hype, and one of them is hydrogen. Now, hydrogen as a molecule is very useful. We know we use it today. We use it for refining oil, making
fuel actually usable in a car. But despite there being so much support from governments in the US in Europe to try and build an industry to produce green hydrogen, which is splitting water using renewable power, there still has not been enough actual commercialization of green hydrogen production. Why is that the case?
So? Look, hydrogen is the Swiss Army knife of energy, right. Hydrogen is pure reactive chemical energy. If you have enough hydrogen and it's cheap enough, you can do anything, and that's literally anything. You can make materials, you can make steel, you can make liquid fuels, you can make food. You could make starch learning with hydrogen and CO two and you could make it cost competitive, you know, if the
hydrogen is cheap enough. Okay, So As you come down the cost curve and what hydrogen is going to cost, you enter a new sort of realm of what you can do with it. If we talk about electrolytic hydrogen, what has really changed is the availability of very large quantities of very low cost electricity. Remember it takes on the order of fifty kilowod hours to make a kilogram of hydrogen. Depends a little bit on exactly how you
make it. If you're paying ten cents a kilowot hour for your electricity, then it costs you five dollars a kilogram for hydrogen just in the cost of electricity, which means inevitably you're using it for specialty application, super high value, and so there's no real motivation to do things like beat Capex out of the electrolyzer because you don't really care if you're hydrogen's ten dollars a kilogram or fifteen
dollars a kilogram, because it's a special application. What changed the game was, all of a sudden, I can have purpose built solar energy for less than two cents of kilo what hour, for probably less than one and a half cent a kilo loot hour. If I can have electricity for a penny a kilo whatot hour. Well, now all of a sudden, I'm at fifty cents a kilogram
for my hydrogen. And now all of a sudden, I say, okay, Well, the long poll in the tenth is the thousand or fifteen hundred dollars a kill a WoT I'm paying for my electrilyizer. If I could cut that number down to two hundred or two hundred and fifty dollars a kill a WoT, that would allow me to make hydrogen at two dollars and fifty cents a kilogram or three dollars a kilogram or something like that. Now that's still too expensive to do a lot of different things. But now
it's cheap enough to do a lot of things. And so all of a sudden there was a very powerful motivation to work on electrilizers and all manner of electrilizers. And so that, I think is where that big push came from. So drop hydrogen from ten or fifteen dollars at kilogram down to three dollars a kilogram. That opens a whole new array of things that I can do with it. It's still too expensive to make fuels and do things like that, and so there's where we come
to the next big opportunity. There is hydrogen coming out of the ground at the bottom of the ocean. There's millions of tons of hydrogen that are released, especially along the mid Atlantic rift in the ocean, and in lots of places on dry land too, Mount Olympus and Turkey, in Las Fuegos, Eturnos in the Philippines. But what really started the current sort of excitement I think around natural hydrogen happened in Mali, in southwestern Africa. There people drilling
for water in nineteen eighty three drilled the well. It was about one hundred meters deep. Well exploded. They assumed they drilled into natural gas. They plugged the well and went back in twenty fourteen opened the well and discovered that it was in fact pure hydrogen, pure hydrogen.
Since that time at one hundred meters depth.
At one hundred meters depth, at one hundred and ten meters, well blew up to two hundred and ten meters. And so they have drilled now about twenty five additional wells in the region, and a number of them are producing hydrogen and they're actually generating electricity. And so you know, we have known for a long time that there is a lot of hydrogen that comes out of the ground naturally, but it was this event in Mollie that really spurred
the current excitement. And so now, as you know, Coloma is one of our companies and we believe that they're the leader in the field, but there are a very large number of companies that are now starting to work in this space.
But in both cases, even if we say figure out really cheap electricity and really cheap electoralizers, or we discover all this natural hydrogen and we can easily tap it, there still is a big, big problem around transport and storage. And at that level, hydrogen is just a fundamentally different gas than any other gas that large gas companies know how to handle. It's so small that it enters the seams of the cracks of steel pipes and embrittles them.
That is not to say technologically you can't find a storage and transport solution, but it's just going to be inherently a lot more expensive than we transport gas today.
Right, No, I don't think so. What it does probably mean is building out a new infrastructure. So you're one hundred percent right, So there's about seventeen hundred miles of hydrogen pipeline in the United States right now. That is just steel pipe. The way that other oil and gas pipe is they just don't operate it at high pressure. So you can put hydrogen through steel pipe, but not
at high pressure. You can transport hydrogen at high pressure through fiber reinforced polymer and things like that, and fiber reinforced polymer is actually cheaper lay than steel. But there's two and a half million miles of oil and gas pipeline in the United States right and so either somebody's going to have to come up with some very clever approach to coating existing pipelines to make resistant to embriddlement and failure. And there are companies that are absolutely working
on that. But I think the opportunity is so huge, right Remember, Jeff Ellis and the people at the United States Geological Survey have estimated that the extractable resource may be as large as a trillion tons, and that is enough to power all of humanity for thousands of years. I tell people all the time, this will be the most important discovery in energy in our lifetimes and may be in our children's lifetime. This is a complete and total game changer.
This was such a fun chat, Eric, Thank you, Yeah, no, I've enjoyed it. Actually, thank you for listening to Zero. And now for the sound of the week. That's the sound of hydrogen powering a rocket, one place where hydrogen continues to be an important fuel. If you liked this episode, please take a moment to rate and review the show on Apple Podcasts and Spotify. Share this episode with a friend or with a rocket enthusiast. You can get in touch at Zero pod at Bloomberg dot net. Zero's producer
is might Lee Rau. Bloomberg's head of podcast is Sage Bauman, and head of Talk is Brendan nunu Ar. Theme music is composed by Wonderly Special. Thanks to break Through Energy Ventures for the space to record this episode, and to Shavone Wagner, Ethan Steinberg, Black Maples, and Jessica beck I am Akshatrati Back soon.