Catalyst with Shayle Kann - Which tech is overhyped, underhyped and just right?

Episode Date: June 23, 2022

Within the climate tech world, technology hype is all over the map. In this episode, Lara Pierpoint, director of climate at Actuate, and Stephen Lacey, host of The Carbon Copy and executive producer of Catalyst, join Shayle for a game of “buy sell hold.” They take bets on which technologies are either overhyped, underhyped or just right. They cover a range of topics, including: Advanced nuclear, including the Nuclear Regulatory Commission’s rejection of Oklo’s reactor designs and shifting opinions around nuclear Whether the concern around hydrogen leakage and its greenhouse effect is overblown Heat pumps, including the Biden administration’s efforts to boost production with the National Defense Production Act and a new report on how a proposed federal program to incentivize heat pumps could save Americans over $27 billion Non-lithium-ion batteries for stationary storage, which may see an opening in the market as lithium-ion batteries become expensive due to rising commodity prices and backedup supply chains. The state of vehicle-to-grid (V2G) technologies and fleet electrification Battery recycling, which is picking up speed due to concerns about the environmental impact of production and a shortage of materials Whether web3- and crypto-climate startups are solving the right problem Catalyst is brought to you by Arcadia. Arcadia allows innovators, businesses and communities to break the fossil fuel monopoly through its technology platform, Arc. Join Arcadia’s mission and find out how you or your business can help turn a fully decarbonized grid into a reality at arca​dia​.com/​c​a​t​alyst. Catalyst is supported by Advanced Energy Economy. AEE is on the front lines of transforming policy that accelerates the move to 100 percent clean energy and electrified transportation in America. To learn how your business can play a key role in transforming policy and expanding markets, visit aee​.net/join.

from the studios of PostScript Media and Canary Media. I'm Shale Khan, and this is Catalyst. I'm a cell on the intersection of Web 3 and carbon markets. Oh, yeah. And we got to do a whole episode on this at another time. Yeah, you do. Oh, my goodness. It takes nerves of steel to trade in today's actual market.

But not so if you're trading in Catalyst's imaginary market for climate tech futures. This is buy-cell hold. When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million devices to manage 3.4 gigawatts of flexibility, built for the moments when utilities can't afford uncertainty. Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, batteries, thermostats, and more through a single platform built for utilities. scale. Predictive, verifiable, and designed to perform when it counts. Learn more at energyhub.com. Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the

institutions that connect them. I'm Alfred Johnson, CEO of Crux, and host of a brand new podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy and building the clean economy. Tune in as we unpack how progress is actually made. Listen to critical capital on Spotify, Apple, or wherever you get your podcasts. I'm Shell Khan. I'm a partner at the venture capital firm, energy impact partners. Welcome. So I'm a betting man by nature, but I'm on the sidelines these days in the stock market. Things are just a little too hairy for me at the moment. So I need another way to quench my gambling thirst. And what better way than to make some imaginary bets that are

virtually impossible to adjudicate. The hype cycle has been working overtime in climate tech the past couple of years, so let's check in on which areas, sectors, technologies we think are overhyped, worth the squeeze, or need more love. We're going to play a game of buy, sell, hold. And with me, our two friends who should be familiar to this audience. First is Lara Pierpoint of Actuate, a nonprofit that is focused on accelerating climate solutions. You may also have heard her as the guest host of this show back when I was on paternity leave earlier this year. And second is Stephen Lacey, who's the host of Carbon Copy, another podcast partnership between Canary Media and PostScript Media and the executive editor of this show. So let's get into it. Lara, welcome. Thanks,

Jail. It's great to be back with you here. It's nice to have you back and to actually be recording together instead of me just listening to you all. I'm in a fugue state of parental bliss, I suppose. Something like that, yeah. Steven. I'm still holding on to my AMC stock and my GameStop stock. Oh, yeah, you're a mean lord. You're deep in the Reddit like Wall Street Betts channel.

That's how I got all my ideas for this episode. Yeah, I bet there's some, there probably, I actually haven't been in there, but I bet there was some like periods when some of those SPACs, some of the EV SPACs were probably pretty hot in Wall Street Betts, I suspect. probably not so any longer. Anyway. Well, I actually think Tesla, Tesla was kind of a piece of that. I mean, the Tesla's rise during the pandemic had a lot to do with the Reddit community

and a lot of those new armchair investors. Yeah, that's true. I also think I do think a couple of the specs, like Lucid, I think, was one of the ones that they glommed onto. And at some point, Lucid went up to, you know, every spec, IPO is at $10. And it went up to like 40 or 50, something like that. Well, we're going to start the next one today, right? Yeah, no, we're going to stay well away from actual public market equities.

But here's what we're going to do. So the game is buy, sell, hold. Let's talk a little bit about what that's going to mean. So each of us has come equipped with one technology or thing that we want to buy, one thing we want to hold, and one thing we want to sell. Now, I think it's important that we clarify what we're actually betting on. here. So this is not like the success or failure of one of these technologies directly. What we're trying to do is say whether something is basically overhyped, underhyped, or hyped just right

in a Goldilocks sense. So we're saying buying against the current level of hype, which is admittedly subjective, and we can discuss for any given topic, as opposed to sort of overall likelihood of success of a given technology. Make sense to you guys? Yep. I'm in. Okay. So we'll start with all of our buys, and then we will, well, we're going to start positive here, and then we're going to become increasingly negative as time goes on. So we'll start with buys, then we'll do holds, and then we will do cells. So let's start with a buy.

Lara, I'm going to go to you first. My buy is advanced nuclear. And I want to take a step back before I explain why and say that there are people who will look at my background and say, oh, obviously, she's got a nuclear background. She's all for advanced nuclear. But I just want to preface this by saying, I'm actually known for giving a lot of tough love to this industry.

And in fact, in graduate school, a bunch of my friends used to say I was the least pro-nuclear nuclear engineer they'd ever met in their lives. So I'm not just a nuclear shell, but I'm actually getting really excited about this arena for a couple of reasons. So when you think about troughs of disillusionment, the nuclear world in general, I think, has been in one roughly since the mid-1980s. But what's interesting is that while nuclear in general has sort of been in these doldrums, advanced nuclear has kind of had its own little sort of hype cycle set of transitions. And right now, I think it's at a really, really interesting position where the companies that are left as a result of some of the kind of rise of companies and a lot of excitement in the mid-2000s and then some things falling apart, the folks who are out there right now, they're really serious.

They really understand markets and business models. and they're really starting to garner the kind of government support they really need to move forward. So we're seeing things like the Advanced Reactor Demonstration Program from the federal government, which is exactly what these companies need to really start growing and getting where they need to be on this roadmap. You're seeing a lot of really positive engagement with the Nuclear Regulatory Commission. And then really interestingly, some of the conditions that we've been mentioning or that we're going to be talking about throughout the show today around the economy and some of the challenges around the world, I think are actually making the conditions even a little bit better for nuclear.

So Europe is the classic example here. We're having a source of carbon-free electricity that you can put anywhere is actually something that's starting to look even more attractive. And then finally, you know, we're actually seeing some real differences in public opinion. So if you look at California, which historically has been one of the most anti-nuclear bastions in the world, we're starting to see some change in public opinion, specifically around Diablo Canyon, which is the last nuclear plant. And so for the first time in decades, you actually see more people wanting to keep the Diablo Canyon plant open than wanting to close it. So if California is starting to change, and if the governor of California is starting to consider keeping a nuclear plant open, this might be a really different sort of phase that nuclear is about to get into here. All right, Stephen, thoughts, buy sell or hold on advanced nuclear? I'm going to hold advanced nuclear.

I feel like the public perception and acceptance of nuclear is clearly in favor of the technology, both conventional nuclear and next generation nuclear. It feels to me, though, that the technology cycles are still quite long, and as a real meaningful decarbonization solution, it's still a ways out. But definitely think that there's a lot of momentum and definitely feel like public perception is shifting. So I am a hold. That's fair enough.

Definitely got to have a strong stomach for this one. I agree. I also am a hold. I think there's a lot of super interesting stuff going on in advanced nuclear. But I would separate, first of all, I do think public perception is changing pretty quickly around the extension of life of operating nuclear, which is your example of Diablo Canyon in California. You could see that.

I think people have spoken up to how crazy it is for us to do early retirement of operating nuclear and how every time we do that, we replace it with fossil fuels, at least partially today. So I'm totally bought in on that. I don't see public perception changing all that quickly on new build nuclear yet. Second of all, I guess I'm curious, you're more expert in this than me, but you said a lot of positive engagement with the Nuclear Regulatory Commission. What do you make of the NRC rejected Oklo, which is one of these like next-gen nuclear companies that I think was viewed as sort of a forerunner for maybe getting one of the

first SMRs built. They rejected their petition like straight up out of hand earlier this year. Is that a significant indicator of NRC engagement or was it kind of a one-off thing? I mean, we talked about this a little bit on my nuclear episode with Jacob Oaklow, but, you know, I think that actually what that was was, in the first. some ways, this is going to sound kind of crazy. I wouldn't call it necessarily a good thing, but I think part of what you're seeing is that there's actually like a real positive tension right now between companies and the Nuclear Regulatory Commission. They're really deeply engaged. They're really trying to figure out how to move forward. And there are fits and starts. And that

was a fit. But part of what that is is kind of a symptom of the fact that the Nuclear Regulatory Commission realizes it needs to get this right. The companies realize they need to be in front of the NRC as early and as often as possible. And there are a lot of things that are happening behind the scenes that don't make headlines that sound like that. So a lot of engagement with some of the NGOs and the folks out there who are really trying to make sure that the rules are in place to move these things forward. So basically my response to that is not quite as bad as it sounds. All right. Laura's a buy. Stephen and I are holds. Stephen, your turn to get into the hot seat. What is your buy? I am buying heat pumps.

Now, I know what you're thinking, heat pumps. Everybody's talking about heat pumps. There's already a lot of hype around this particular technology. So why do you think that there's a lot more upside potential to heat pumps, given the amount of attention already on this space? I have many reasons, but I'll point to a couple. One is, I think, just pure user experience. So having moved into a new home with a central gas steam system

and some heat pumps, some mini-splits, the gas steam system is terrible. I hate it, and we've used the mini-splits to heat certain rooms. And the experience of the mini-split is so good. We had an extremely cold winter, and it was so quiet, and it was heating the room so perfectly, even at sub-zero temperatures. And there's this perception,

and there has been this perception, and in the past, rightly so, that heat pumps are not sufficient in really cold temperatures. And the technology has gotten a lot better. And I am a use case that I can tell you that these heat pumps now today work exceptionally well in very cold temperatures. So I think the user experience is getting better. And at the same time, there's a very clear economic case for expanding heat pump production.

So we sell 4 million heat pumps a year in this country, and we sell 6 million residential air conditioning units. And according to an analysis from Alexander Gard Murray, who's a political economist, and Nate Adams, who is a home comfort, professional energy efficiency expert, if you just work with manufacturers to encourage them to switch those AC units, into hybrid heating and cooling units, it would cost them about $300 to do that. And we could be using all of those residential systems. People could get their cooling systems. And for just a few hundred dollars more, all the AC units in this country could be hybrid units. So I think there's a lot of upside potential to deploying heat pumps, a lot more heat pumps than we do today.

And of course, as you've discussed on this show, and we've discussed over the years, electrification is the backbone of decarbonization, and heat pumps are a major piece of that electrification strategy. So I'm a buy on heat pumps. All right. So you're a buy, despite admitting that heat pumps are fairly hyped. I would say hyped within the nerdy energy person community, but that's the community that we all inhabit, so we'll count it anyway. Yeah, I think they're not hyped out, like outside of energy circles. A lot of people still don't know about them, and the people who do hear confusing language from their contractors, they say they're too expensive or they're too costly to maintain,

and there's still a lot of friction in the contractor process. So people have insufficient information, and a lot of people hear that they're not as good at heating as conventional furnaces, and that is not true, and I can tell you by experience that it is not true. All right, Laura, buy sell, hold on heat pumps? Well, first and foremost, I'm quite literally a buy in the sense that I also just moved into a new home and in the process of converting our natural gas system over to a heat pump. So I'll say that much. I think overall, I agree pretty much. I'm somewhere probably

between a hold and a buy. I think it's true that it's fairly well hyped. I agree much more so in energy nerd circles than outside them. But this is definitely an active conversation in California, particularly around policy. But there is one challenge. I haven't actually run the numbers yet for our system. I'm supposed to get an estimate just this week. But what I'm hearing a lot of times from my friends is that natural gas is so cheap here in California

that it actually doesn't necessarily always pencil out, which is kind of a bummer. So I think there are a few headwinds there. But I will say one other thing, which is that heat pumps aren't just for residential electrification. There are some really interesting applications in industrial contexts and things like that. And I don't think we're talking nearly enough about those.

So if you incorporate kind of all of those other potential use cases, then I'd be a pretty solid buy also. That was actually going to be my reaction too, which is, I think heat pumps for residential. It's hard to sell. Like, I'm bullish on them, but also they're getting a lot of attention and hype. So I'm, I don't know, somewhere between a hold and the buy. But exactly what Laura said, no one's talking about heat pumps for industrial applications. There's some really cool activity going on there. More on that relatively soon.

But there I'm definitely a buy relative to the level of lack of hype, I would say. Yeah, I saw in the Twitter thread when we put out the call for subjects, there were some people who mentioned that as well. I would be remiss if I didn't talk about a couple news hooks here. Actually, the Biden administration just announced that they're going to use the Defense Production Act to encourage production of heat pumps for residential and commercial applications. And there was a bill introduced in the Senate that would encourage manufacturers to switch from AC-only units to hybrid. units, and that was partially informed by the work of Alexander and Nate, who I referenced earlier. So there's some interesting policy momentum as well. Yeah, I mean, there's definitely going to be tailwinds for heat pumps in the U.S. for sure, but in Europe, even more so, I think,

for the next two years. All right, so we're all pretty bullish on heat pumps. My turn for my buy. I was trying to think of something that's sort of non-obvious. So my buy, relative to the current level of hype, is non-Lithium ion battery chemistries for stationary energy. storage. So the case here is basically, so my assumption has been for years that if there is an application that lithium ion is well suited toward, it is probably going to win in that application. I saw a relatively similar story play out in solar with crystal and silicon photovoltaics, which is like there are other technologies that look better on paper. Theoretically could have higher efficiency or lower cost. But once the high volume, low cost,

manufacturing machine really kicked in, and we just started scaling production of the incumbent technology, which in that case was crystal and silicon PV, it was just impossible for anything to compete with it. And I've always generally believed the same thing would be true in batteries, certainly for EVs, but also for grid scale storage, which is if lithium ion can do it, because there's going to be this massive supply chain and huge volume of production, costs are going to continue to decline. In fact, in the stationary storage context, cost will be more benefit from the decline of EV battery focus and R&D, that just nothing will compete unless it is playing a game lithium ion is never suited to play. So that has led me down the like, well, the only battery

chemistries that are interesting outside of lithium ion are the ones that can deliver hundreds of hours of energy storage, for example. But we're in an interesting time right now where it turns out that when you have, you know, rise in commodity prices, which we have for lithium ion batteries right now, lithium itself, but also cathode battery materials, in combination with a global supply chain crunch, you end up with the, and in addition to that, the fact that battery OEMs, all things equal, will pick EVs over stationary storage because they're going to sell way more batteries into electric vehicles than they are into the grid. So if they have to pick and choose and they're limited in supply, stationary storage is going to lose. So all those things happening right now has led to a moment in time, which may last a little while, wherein it's actually quite a crunch if you're trying to buy lithium ion batteries for the grid. And we've seen a bunch of examples of this playing out, like publicly, prices are getting rebid, like substantially higher, projects are getting delayed, all this kind of stuff.

And I think this is creating an opening for a bunch of alternative chemistry. industries, flow batteries, sodium batteries, zinc-based batteries, metal air batteries, bunch of other technologies that do look really interesting on paper and have specs that lithium ion won't necessarily be able to meet that may actually have a window now because there's so much desperation for supply that a few of these may actually squeak through despite the fact that lithium ion has this like massive scale up behind it. So I'm buying a sweet of non-Lithium ion battery technologies. Laura, I want your reaction.

Man, I love it. Those are some fascinating arguments, and I was following you the entire way with how my emotions have also gone around all of this and sort of my understanding of the situation. I'm probably somewhere between a hold and a buy on this. I think the question really comes down to two things. One is how long is this commodity crunch going to last

and how many commodities is it actually affecting? So certainly it'll affect lithium-ion, but to what extent is it going to affect some of these other chemistries, you know, a little bit also? But then the other question just keeps coming down to, like, when are the markets really going to be there for these technologies, right? And so they're there to some extent, and there are a couple of projects out there.

Some of them are getting, you know, met with lithium-ion technologies, some of them with others. But really what we need to see for this kind of market to take off is for there to be a lot of opportunities. and whole manufacturing facilities built for some of these alternative tax, if that's really what it's going to take. So that I'm a little bit less sure is close at hand because I think we really need to figure out exactly how we're going to just make the market incentives work for these technologies

and make sure that we're actually converting to renewables at a pace that's quick enough that you're going to create enough opportunities for them to really make money. I should say, though, it is both a commodity price issue and a supply chain. issue. Like the supply chain crunch that is plaguing various industries is particularly strong in lithium ion battery world as well. So it's like the combination of both there is a bottleneck in the supply chain and commodity prices are like way higher than they've ever been. And I would, but I would think that some of those bottlenecks would still hinder other companies with different chemistries or storage tech, not having specific expertise in a lot of the other

chemistry or technologies, you know, there are a lot of technologies that I haven't followed for years. I'm going to put a hold on this one. I think you made a really compelling case, but I think there are a lot of, even when lithium ion batteries were a lot more expensive, there were still technologies that couldn't compete, you know, vanadium flow batteries and compressed air storage. There were a lot of reasons why those companies weren't scaling in the first place, and I wonder how much of those cost or performance dynamics actually change. So those technologies may get a second look, but I think that, you know, they need to stand on their own absent of these commodity price spikes. All right. We're done being purely bullish. Let's talk

about hold. The places where we think a technology is hyped just right. We'll go, we'll switch the order. Stephen, you go first. What's your hold? Well, this feeds it directly into your comments on lithium ion batteries and, you know, what other storage technologies are going to win out. And I may hold on battery recycling. We have, for many years, been focused on battery recycling. I mean, recycling solar panels, the components of wind turbines and batteries. And there are a couple different ways that we recycle batteries. There's pyro metallurgy.

There's actually burning them and taking the residue after that burning process. And there's hydrometallurgy using chemistry to reclaim materials after batteries are shredded. And these processes have historically been fairly expensive and time-consuming. And you don't capture all the material inside the batteries. But there are a ton of new companies, some many Americans, companies actually that are deploying new processes, borrowing from some of these existing processes to reclaim more materials inside lithium ion batteries. And so there have been, you know, there's been hundreds of millions of dollars raised by these companies in the last couple of years.

And so I think that the technologies that they're playing with are interesting on their own. And we have seen, you know, some veterans coming out of Tesla who are starting founding a couple of these companies. But beyond the technology itself, I think there's some really important factors here that are playing into the investor interest and the need for more battery recycling. And historically, it's been an environmental question, a barely necessary environmental question. But now, with commodity prices going through the roof, with continued supply constraints because of Russia's invasion in Ukraine, you have this national security imperative. And so a lot of these companies are thinking about how do you create an American supply chain

for metals and minerals that go into batteries. And I think now you have a really clear economic, national security, and environmental case for battery recycling. So there's a lot of activity right now, and it's pretty compelling. and the market forces are definitely in favor of this push for more battery recycling. Laura, battery recycling? Steve, and I am 100% with you on battery recycling as a whole. I think this has sort of been the kind of, yeah, maybe later sort of, you know,

relegated to how we think about this compared to all the other things that we need to do around getting batteries to be more relevant. And I think, honestly, it's just coming up in importance and in people's minds. for all the reasons that you mentioned. In addition to the humanitarian consequences of actually getting some of the materials that we need for batteries. So I'm really with you.

I think people are becoming more and more conscious about the environmental consequences, about all of the supply chain impacts of the things that we're doing for climate tech and for a lot of other reasons, in addition to the economic pressures pushing in the right direction. So this is a great hold.

I would love to disagree with you guys, but I can't. So I'm going to skip ahead of this one because I agree. I mean, actually, I don't know, it's hard to measure the level of hype here. I would consider being a buy on better recycling and actually being a little more bullish than you, but let's just, let's just all agree we think it's interesting. Can I give a little shout out to Julian Spector, who's been writing about this a bunch at Canary? I think actually this week timed up with they're doing a whole recycling series on renewables and batteries, and he and I had a long conversation

about this, and it was really fresh on my mind, and he walked me through all the investments and the different technologies. So I think that there's a major there there. Virtual power plants are becoming a reliable way for utilities to manage capacity. But enrolling devices is just the start. What really matters is confidence, knowing those resources will perform when dispatched and being able to prove it from the control room to the living room. Energy Hub's platform handles the full picture, from near real-time forecasting, locational dispatch, and the kind of rigorous verification that holds up when regulators, grid operators, or leadership ask, did it deliver?

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I'm Alfred Johnson, CEO of Crux, the capital platform for the clean economy. Join me for my brand new show, Critical Capital, as I talk with people deploying capital, shaping policy and building projects. Together, we unpack how risk is priced, how in incentives are structured and how progress is actually made. Listen to critical capital on Spotify, Apple, or wherever you get your podcasts. My hold is one that when we put out a call on Twitter, we got unsurprisingly, strong opinions ranging from extreme buy to extreme cells. So I figured we had to talk about it. So my hold is hydrogen. This one, I think depending on where you are,

you could say it's extremely hyped, predominantly in Europe, less so in North America, though it's getting there. But I also think that that hype is probably worth it. You know, hydrogen, the problem with hydrogen in my mind is that in theory it can do everything, and so people have sort of decided to apply it to everything. So I would be very much a cell if we're talking about hydrogen for passenger vehicles. But in the sectors where, first of all, we already use hydrogen, things like ammonia and chemicals production, And then potentially in a few other really difficult to abate industrial sectors, including to some extent in the power sector,

I think hydrogen is going to play a significant role in decarbonization. I also think that it is going to be cheaper, clean hydrogen, zero C hydrogen, is going to be cheaper sooner than people generally appreciate. And as a result, it's going to look more competitive with natural gas sooner, and we're going to discover that we can move faster. than generally people are thinking. So I would make it a buy except that it is super hyped.

So I'm holding clean hydrogen. Laura, I know, I think you are considering this one as a cell, so tell me why I'm wrong. Well, no, I mean, I think everything that you said is actually really spot on. I think the thing that sort of tips me into selling territory,

it's a couple things. One is that I think it is pretty hyped. And I think you're right that there's going to be a little bit of a reckoning around what exactly are the market where hydrogen really does make sense. And I think the ones that you mentioned are spot on. I think we're all sort of an agreement that passenger vehicle transportation is probably not in

the offing for hydrogen. But there's one other point to add to the mixer, which is that the Environmental Defense Fund put out a paper in February that looks at the direct greenhouse gas impacts of hydrogen, and it was not pretty. It basically is suggesting that, in fact, the global warming potential of hydrogen itself might be a lot higher than we have thought. And if that's true, then in particular, hydrogen leakage is going to be a massive problem. And that made me really sad because one of the things that in my pipe dream of a future world,

we would do is actually reuse all of our natural gas infrastructure for hydrogen. So that, you know, that's such a nice solution, right? Because then you have a use for a whole bunch of otherwise stranded assets. And with some coatings to make the steel more hydrogen resistant, you could have a pretty strongly clean hydrogen-based future. And that's looking like it might be less of a point. possibility now. But I'll admit that all these things, there's still a lot of work to be done around this. And also, this is, you know, the use of gas infrastructure as kind of a weighted

transport hydrogen is also far in the future. So these may not be super relevant in the near term. I want to put a placeholder on that topic. We're going to talk about that more at some future episode. I have strong opinions about those two studies that come out, one from the UK government, one from EDF, talking about this hydrogen leakage issue. I think they're, I think it's really misleading actually how they're presenting it. They're using five year, the EDF one in particular, they're using five year global warming potential versus the 100 year standard. Hydrogen is very short-lived gas. Even in a worst-case scenario, like worst-case leakage, 10% hydrogen leak, which is crazy. Nobody expects that to happen. Even then over the course of 100 years, hydrogen is like an 80%

reduction in greenhouse gases. And again, it's clean when you burn it. So you're only talking about the upstream emissions. That's in a worst. case scenario, it's in a realistic scenario where we do for hydrogen, what we do for, you know, sort of best in class natural gas today, and we monitor it and mitigate leakage, it's, like, dramatically better. So there's a bunch of things about it that I have, like, find concerning about the way that those studies are being presented because it's not apples to apples. With that said, I do think that, like, they're raising a good point, which is we need to, we need to mitigate leak as we build out hydrogen infrastructure, and it probably does make some cases around, like,

how we should build that infrastructure or how distributed it should be and stuff like that. But I worry that there's going to be some scary headlines that if you actually read the studies are not as scary as the headlines make about to be. That's fair, although I do think we need to dramatically reduce the uncertainties around leakage rates, because the thing is they might be even worse than we think they are in the natural gas world, and if we start applying that within hydrogen, too, this is not great. Got to get a handle on leakage, I think. Yeah, agreed there.

Stephen, reactions on hydrogen? I'm a hold. I think that there's a lot of potential to decarbonize my partially hydrogenated soybean oil for my buttered popcorn. It's important. No, I think that there's their high value applications for fertilizer production, industrial chemicals, and clearly we need green hydrogen or lower carbon hydrogen to decarbonize those. spaces, obviously, definitely a cell for downstream applications. So I'm mostly in agreement with both of you. All right. Moving along quickly here. Final hold, Lara, what is yours?

My hold is vehicle to grid, although I'm actually cheating because the reason I'm saying that is because I'm also a hold on fleet electrification, which I think is going gangbusters. And part of, I think, what we're seeing is even more economic incentive to electrify fleets, given the cost of gas. And this is hitting companies, you know, to an even greater degree in some cases than it's hitting consumer pocketbooks. And I think if you electrify fleets, that's really the sweet spot for vehicle to grid applications. You start to see some actual real repositories of grid resources around both managed charging and potentially even kind of serving as a battery of sorts. So I'm a hold on V to G. Stephen, V to G. Yeah, someone on Twitter said, like, they're a cell for DERs and a buy for

DERs and I think I put V to G right in there. Like the potential is enormous. The potential has yet to be realized and I think it will be some time. But of course, the potential is fast and I believe in it and a lot of others who will integrate with electric vehicle charge and believe in it. So I'm a hold. I'm a sell. I'm not a buyer on vehicle to grid.

Now, I am, I mean, I'm all for fleet electrification. I'm bullish there. I'm all for managed charging, bullish there. I'm actually bullish on V to H using your vehicle to power your home. I think what the Ford is doing with the F-150 and you being able to use that as backup power for your home, super clever. I do not think we'll ever see vehicles discharging into the grid at scale. I think the economics don't support it to be, you know, valuable enough. to lose charge in your battery and your vehicle.

As a result of it, I think the sort of questions around the battery, warranty and degradation, I think all of that is just going to make it such that the juice is not worth the squeeze, generally speaking. And so we'll get lots of managed charging, some vehicles being used for reliability purposes and very little discharge into the grid. But, Shell, where are you on V to H2? Vehicles to hydrogen. Vehicles to hydrogen?

Oh, that's interesting. that you like use your battery in your car to power an electrolyzer. Oh God. Flam dunk, right? That's a terrible idea. Yeah, I've seen a couple things for like really, really localized hydrogen production. And that's not the direction I would go in. I would say, okay, we're short on time.

So I want to get to our cells real quick. Okay, I guess it's my turn to go first on a cell. It's too bad we don't have much time because this is the one that like the second you start talking about it, you need to spend 10 hours talking about it. I'm a sell on the intersection of Web 3 and Carbon Markets. Oh, yeah. And we got to do a whole episode on this at another time. Yeah, you do.

Oh, my goodness. Here's the short version of what I think is happening. I think that there's a bunch of folks looking at carbon markets and saying, we can use Web 3, crypto, blockchain, whatever, to solve the problems of a lack of transparency in the market, to solve the problem. of liquidity and price discovery in the market. Those are the terms that they use constantly when they talk about why do we need to use crypto

for carbon markets, for voluntary carbon markets. And I think that they are, and though it is possible that Web3 could be good to help improve those things, I do not think those things are the problem in the voluntary carbon market. So I think that they're attacking a problem that is not actually the challenge.

The actual challenge is a very limited supply of high-quality carbon credits or carbon removals and a huge supply of really low-quality, really bad carbon credits or offsets. That is the actual problem, and Web3 is not really a solution to that. There are other solutions to that, increasing the supply among them,

and better crediting and better verification and all that kind of stuff. I don't see how you need Web3 to do that. So relative to the current level of hype, I'm a seller. Anybody want to disagree with me? No. And when we works, Adam Newman comes in and raises a bunch of money in this space, it makes it even more of a sell to me. Yeah, I mean, I think despite Matt Damon telling us all to get into this market, I'm,

I mean, I'm generally a sell on Web 3, let's be honest. I will say one thing is that if you're going to be making crypto, do it cleanly. And if you do it cleanly, that actually starts to become sort of interesting as a grid resource because there's a way to shift load into making crypto and you can make money when there's really high amounts of renewables available. If that were the only way we ever made blockchain, then I would support that. Okay. Well, I'm sure I'm going to get some reactions to this one. So this will tee up a future episode where we get into a little more detail. Laura, what's your cell? My cell is actually carbon of value. I think, you know, you already mentioned, basically that there are some big challenges, obviously, in the carbon markets right now. And this has just always been a really tough space because the places where you have a lot of volume, like, you know, making cement, you have really low commodity prices.

So it's hard to get a good price for the carbon that you're capturing. And in places where, you know, commodity prices are higher, where people might be willing to pay a little bit more for carbon. There's just not a lot of volume. So I think that's always been a challenge. I think what's really going to drive some of the carbon markets in the near term are a lot of the companies that are actually interested in buying credits. And when they do that, they want to see, I think they're increasingly going to want to see some level of permanence and clarity

around what it is they're actually getting. So I'm hoping that that's an arena that starts driving more towards things like sequestration rather than things like carbon to fuels where you wind up actually getting a lot of carbon at the end of the life cycle anyway. I would say I'm a hold on this one. I think those are all good points. I think there will be demand for carbon negative products. Now, you're making a fair point that, like, the high value applications are not the big carbon sinks. So if it's like buy-sell hold on, will this result in the sequestration of 10 gigatons of CO2 via products? I would also sell. Do I think, though, that there is going to be sort of a new market emerging for carbon-negative products and materials? I think so. So there,

I guess I would put myself as a hold, though I think the point, but I think the points you're making fair. All right. Final one, Stephen, what is your cell? My cell is renewable natural gas. Not because I think that renewable natural gas isn't a viable alternative for decarbonizing bits of the natural gas system, but because we don't have enough of it. And if you actually look at a lot of the studies that have come out showing how much, well, let me just talk about what renewable natural gas is. Renewable natural gas is like pipeline quality gas that can be interchange with conventional fossil gas, and it's created by decomposing organic matter from wastewater or agricultural waste or food waste. And so it is very much a viable technology, but pretty much

every state study and government study shows that it can only be, you know, that we're looking at between 5 and 20% of the total gas supply. That's the amount of renewable gas that we could supply. And the natural gas industry or the fossil gas industry is saying, don't worry about electrification. They're really worried about this movement toward electrification, and they're pumping up renewable natural gas as an alternative. SoCal gas, in particular, is pushing back on electrification

or bands on gas connections in California and saying, we're going to have the renewable gas to decarbonize the system. And the reality is that we just don't have enough of it. So I am a cell on renewable natural gas. All right. Stephen is a cell on renewable natural gas topic again for another time. But I want to spend some time on a lightning round. We solicited a bunch.

We asked Twitter, as one does, what things are overhyped, underhyped, or just right in climate tech. So we have a bunch of these. We're going to do a lightning round where. I'm just going to name something that somebody suggested on Twitter. You guys tell me buy cell or hold, but you don't get your two minutes of explanation. I just want your reaction. So we're going to start with, Laura, you said advanced nuclear, which is advanced nuclear fission. A bunch of people said nuclear fusion, buy cell hold on fusion.

Hold. Stephen, buy cell hold. Sell. Sell. I'm a hold. Okay, carbon accounting systems. So let's say carbon management software. Stephen, buy sell hold.

I'm a hold. I think there's something there. Even though, Shail, you were like an expert on this back 15 years ago when everyone thought that carbon accounting was going to be a big thing. I do think that there's enough happening in the regulatory world and in the corporate world that it makes it a real trend. So I'm a hold. Laura.

I'm a hold, too. But we've got to get our act together. We've got to start doing it better. That's all I got to say. Yeah. Okay. I'm also a hold. I mean, you know, I would be a sell on some of the valuations of some of the companies in that space, but it's going to happen. Every big company is going to have to do it one way or another. Okay. A bunch of folks also suggested geothermal. So we're going to do buy-sell hold on current level of hype around geothermal. Stephen, you go first. I'm a buy on geothermal. The resource potential is enormous. And I think the drilling technology. is getting better, and we know it's there. We know the resources there. I'm a bye. And I don't think it's actually getting that much hype outside of the Twitter circles, by the way. So that's why I'm

definitely a bye. I'm with Stephen on this. I'm a buy. I think it's underhyped in particularly the real world, and I think we're going to see more places where it gets possible, thanks to some of the new techs out there. I'm a hold because I think it's more hyped than you guys do. I agree that it's like this small community of enthusiasts, but I see what's happening in my mind and geothermal right now is what happened in nuclear a few years ago, where like a bunch of people who were kind of new to the space started looking at like, how do we decarbonize power? And they find this magical resource that is, you know, zero carbon and baseload and could be abundant. And so obviously, the solution is, and it used to be nuclear, and now it's geothermal, maybe it's geothermal and

nuclear. And so it, as a result, has become very hyped. I'm all for it. I'm very bullish on nuclear, or on geothermal, rather, I just, I'm a whole relative to the current level of hype that I see. Okay, another one that a bunch of folks suggested transmission. Buy sell, hold on transmission. That's a trickier one to think about. I'm a cell on transmission because everybody's talking about it. It is, I mean, we know how much more transmission we need to build. But it's so damn hard in this country.

The hype relative to the reality of building out transmission lines, they don't match up, and I have to, unfortunately, have to be a cell, even though, you know, I generally support lots more transmission build out in this country. I think it's super difficult to get built. Thanks, Steven's spot on. I'm a hold. I think if the technologies can start addressing some of the siting challenges head on and actually meaningfully making transmission lines smaller and easier to build and ultimately

easier to cite, it could get interesting, but I think it's going to be a slog. It's hard to measure the current level of hype around transmission. That's what I'm struggling with. It's not really hype. I'm going to buy because you said everybody's talking about it. I don't think anybody's really talking about it, except for when some state rejects a new transmission line or something like that. We're going to need a ton more of it. It's really tough to build.

I'll buy. Okay. Two more, and then we're done. E micromobility. Buy cell hold. Laura, you go first. Sell. Sell.

I think. I mean, man, this is a really tough one. I think, you know, a lot of hype, obviously, a couple years ago, the pandemic really sort of made things real rough for those companies. Man, I don't know. I guess there's really not a lot of hype right now, but I still think that it's just, I don't know, we're not in a place to see that recover as quickly as we might hope. Stephen? Are we talking about scooters? Could be talking about scooters, could be talking about e-bikes.

Yeah. Yeah. I'm a hold. I mean, sadly, people went to their automobiles in pretty big numbers during COVID, and they haven't gotten out of their automobiles yet. And so clearly a lot of people are using e-micromobility solutions, but a lot of people are going to their cars, and I haven't seen an enormous impact. But, I mean, people love them.

They're great options, and they're certainly an important mix in, transit and mobility options. So I'm a whole. I'm a buy. And it might just be because I live in Berkeley and e-bikes have like taken over Berkeley. But they're great. And I think some people are starting to use them to replace car trips. I think the model of shared scooters that was the thing that was really hyped a few years ago.

I mean, I wouldn't necessarily be a buy on that today. You see a lot less of that. But I think ownership of e-bikes, e- scooters, stuff like that is starting to pick up here. in some places in Europe, it's huge already. So I think that it's coming back, e-micromobility. Okay, and the final one suggested also by a bunch of people, and as you said, Stephen, somebody suggested it's both overhyped and under-hyped, DERs and demand flexibility.

Relative to the current level of hype, where would you vote? I don't know, where are we on the hype cycle with DERs? I mean, we've gone up and down. and up and down. I don't know where exactly we are. I'm a hold. I'm, you know, right in the middle. I mean, obviously, this is where the world is headed because of cost, consumer demand, regulation, environmental reasons, and utilities do see some benefit in it. So, I mean, I don't know how fast it's going to move relative to where people thought we would 10 years ago, but absolutely that that's the direction we're headed in. So a distributed system is inevitable. How distributed it is,

I don't think anybody knows, but I'm definitely a hold. Yeah, I'm pretty with Stephen. I think I'm between a hold and a buy. I work a lot in this area, and I think everything he said is totally spot on, and particularly that question about how fast I think is the biggest question. Otherwise, I'd be more in the bi territory. I agree. It's kind of tough to figure out where we are in the cycle on DERs. I sort of think we're past past the big hype, the original big hype, but it's always remained at a reasonably high level of hype despite all the challenges. So I think I'm with you guys. I'm a hold here. Okay, we've gotten through everything that I wanted to get through. I'll be it very quickly. Lots of threads we need to tug on in feature episodes,

but this was fun. Thank you, Stephen. It was great to have you back. Thank you. The Web 3-1. We've got to hang on that a little bit longer. Yeah, we got to talk. I have like a bunch of, yeah, we got to come back to Web 3 and carbon. I got to talk more about this hydrogen leakage stuff. We got to spend more time on geothermal and carbon accounting, a bunch of these areas. But this was a good teaser anyway. So, Laura, thank you again.

Great to have you back and to actually be able to talk to you instead of just listen to you. This was super fun. Thanks, guys. Thank you. This was so much fun. Laura Pierpoint is the director of climate at Actuate, a nonprofit that is focused on accelerating climate solutions. Stephen Lacey is the host of our sister podcast, the carbon copy, and the executive producer of Catalyst.

Okay, I suspect we'll have some reactions to this one, so we welcome them, as always. Let us know what you think. Send us a note on Twitter at At CatalystPod or directly to me or Stephen or Laura, who's more on LinkedIn than a Twitter person, Laura, get on Twitter. If you like to show today, as always, go over to Spotify or Apple Podcasts, leave us a rating and review.

This show is a co-production of PostScript Media and Canary Media. You can head over to Canary Media.com for links and more info on today's topics. As always, PostScript is supported by Prelude Ventures, a venture capital firm that partners with entrepreneurs to address climate change across a range of sectors. They would buy on advanced energy, food and agriculture, transportation, logistics, advanced materials, manufacturing and advanced computing. Big buyers over there at Prelude Ventures. This episode was produced by Daniel Waldorf,

mixing by Greg Vilfrank and Sean Marquand, theme song by Sean Marquand. Our managing producer is Cecily Mesa Martinez. I'm Shell Khan, and this is Catalyst.