James Lawler: [00:00:00] Welcome to Climate News Weekly. I’m here today with the one and only Julio Friedman. Julio, good to see you as always.
Julio Friedmann: Pleasure as always, James.
James Lawler: We have a good lineup of stories this week. We are going to start with some positive news, an article in the New York Times announces that the last coal fired power plants in New England are set to close now by 2025 and 2028, ending the use, and I’m quoting here, of a fossil fuel that supplied electricity to the region for more than 50 years. The decision is to close the Merrimack and Schiller stations, which are in New Hampshire, and it makes New England the second region in the country after the Pacific Northwest to stop burning coal.
These plants, once shut down, will be converted to solar farms and battery units that’ll store electricity from offshore wind turbines along the Atlantic coast. Thoughts, Julio. What do you, what do you think of this story?
Julio Friedmann: So for starters, if we’re serious about climate, we have to be serious about de-coalification, period.
And people often just [00:01:00] wave that aside, like, oh, it’s eventually going to happen or it’s inevitable. We got to be clear eyed and persistent in reducing the use of coal, shutting down these plants is a good example. I will say that we have seen a few cases where coal retirements have been announced and then reversed.
And part of the reason why actually is because we have this growth of energy demand. We have growing electricity demand for data centers, for vehicle fleets, uh, in the future for industrial electrification and heat pumps and all these other kinds of things, green hydrogen, it can go on and on. The challenge here is if we are getting more electricity demand then we actually need to keep the electricity going.
Still, I think this is good news and I think it’s likely to stick. These two plants have reached kind of the end of their vintage and their useful life, it makes sense to retire them. New England has other energy options, which are coming online soon so I expect these will go forward and we should celebrate these events.
If you can turn off a coal [00:02:00] plant and not hurt people along the way, you should do that.
James Lawler: Yeah. Tracking the precipitous drop in coal fired power generation is sort of interesting.
Julio Friedmann: It’s important for the audience to understand that the precipitous drop in coal was enabled by two things. First and foremost, availability of cheap natural gas, but also the growth of cheap available variable renewables; that solar and wind together with gas have delivered the knockout punch.
Reasonable people disagree whether it’s two thirds to gas or two thirds to renewables or whatever, I’m happy to call it 50 50 but the whole point is, you need an alternative and if the alternative is cleaner and cheaper, you’re in business. We expect that in the future, more fossil will be pushed off the grid by low cost, renewable and wind backed up by batteries, and in point of fact, that’s what the new England replacement plants were going to do.
James Lawler: So transitioning to another [00:03:00] topic, the energy secretary, uh, Jennifer Granholm said on Monday that the Department of Energy will partially fund 33 different projects in 20 states that seek to curb emissions from a large variety of factories and industrial facilities.
The Biden administration is spearheading this 6 billion initiative to cut carbon dioxide emissions from heavy industry. So this is steel, cement, chemicals, aluminum which are, as we, as we’ve discussed before, major contributors to our emissions and global warming, but are very, very difficult to clean up.
So these projects are, in many cases, kind of like first of a kind or, you know, initial efforts to change the way that we produce these critical materials and the DOE is taking a leadership, you know, taking a leadership role to see these projects happen. What are some of the technologies that will be enabled by this money?[00:04:00] Julio, anything that you’re particularly excited about?
Julio Friedmann: There’s so much that I’m excited about here, holy cats! It was a great day Monday, we were very happy to see this. First of all, you got to take industrial emissions seriously. It’s 25 percent of US emissions, but it’s about 37 percent of global emissions. So not only do we need to get our own thing in order, we have to get our emissions down. We have to have solutions that can be deployed elsewhere around the world. So this is an investment in innovation as well as a counter strike against climate, so it’s very good news.
It also takes seriously the challenge of decarbonization of industry. It’s really hard to do. And industry is not one thing, industry is many things, as you already pointed to. I love the basket of technologies they’re doing here, it’s cool. Some of it is just straight up electrification. We’re going to use electricity to generate steam and not have fossil fuel boilers. Great. Like that is a good thing to do. [00:05:00] Those technologies are actually pretty hard to field and expensive, so the DOE money goes a long way. Also things like novel technologies to make steel, molten oxide electrolysis, where you’re basically not using a DRI plant or a blast furnace. You’re just making iron ore directly with electricity. Super hard to do, looks promising. We got to get that in the field.
I’ve been pleased to see some carbon management. Out of the 33 projects that were announced, 7 of those have carbon management, a mixture of carbon capture, just capturing CO2 from a point source like a steel mill or a refinery or cement plant, or seeing conversion of CO2 into fuels where those fuels can then become a decarbonization option. And so there’s, there’s all of these things in the mix, there’s other ones too. There’s nuclear, there’s novel aluminum smelting technologies. There’s new recycling technologies. They’re really giving it the full Monty, which is exactly the kind of thing you need.
Last point, they’re doing big projects [00:06:00] and small projects, which is also right. Some of these projects are only 10 or 20 million dollars or only a few tens of thousands of tons. That’s okay, we still need to start. We still need to get these things in the field. So I love the broad brush, full pipeline sensibility behind these announcements.
James Lawler: Yeah and it’s interesting to explore the logic of this decision to support these industries and the way that they’re doing it.
It’s very, I think it’s very smart because if you’re a project developer and you’re out there in the world trying to, let’s say, you know, set up a facility that’s going to produce steel in a new way, you know, it might be the case even that it’s not so new, like, you know, these technologies may have been proven separately, they may have been proven on sort of a pilot basis, but you’re still going to have an enormous challenge raising the hundreds of millions of dollars or billions of dollars that’s required.
And, you know, being that first of a kind to actually build a facility, get it working properly, get the cost of production to a level that [00:07:00] the market can support is absolutely critical. This is smart investment to encourage follow on by the private sector in those things that work.
Julio Friedmann: Yes, absolutely. Going from zero to one is the hardest step and that’s a good use of taxpayer dollars, that’s a good role for government. In some cases, even if it’s not exactly a new technology, you still might need to overcome some capital hurdle or some risk that is in the market. An example of this is the Cleveland Cliffs plant, which is a big steel mill in Indiana. That plant is going to migrate to a combination of electric arc furnace and direct reduction of iron using hydrogen.
The electric arc furnace is fully de risked, but you still have to get there. The DRI, it’s interesting, that has been done in other places, but they need to pilot it here first. And those pilot dollars, again, just demonstrating that you can do it at this place, is necessary to get the corporate investment that you need to make it happen. Also, that’s important to sustain the jobs at that facility, which are a lot of good union jobs.
James Lawler: [00:08:00] Indeed. So that’s a story about the role of the federal government and tax dollars in driving the energy transition. Another topic is the role of AI in this transition and the value that it can bring to the table in decarbonization. There have been a number of articles about this. There was a piece this past week in the Financial Times about the ways in which AI may enable the energy transition. What do you make of this story? Is this more AI hyperventilation or what are the real ways in which AI is actually helpful in this area?
Julio Friedmann: Wow, now I need to get a t shirt that says AI hyperventilation, that’s awesome. It’s nice to see this story because most stories about AI and energy are just about how much energy it will consume and how hard it is and how it’s a climate threat, right? I think that’s something we need to keep our eye on, but in fact, NVIDIA is making more efficient chips. All of the companies that are doing the AI fielding are buying renewable power like, it’s [00:09:00] not clear how big a story that is, you need to watch it.
What people are largely missing, though, is what this story represents. The opportunity the AI has, not just in the future, but what it has already done. It has already delivered big impact for climate already. It has helped with weather forecasting, it has helped with grid operations already. Um, it can do much more though. We talked in a prior episode about the fact that AI has discovered materials that are going to make better batteries in partnership between Microsoft and Pacific Northwest National Lab. Not only identified those materials, but showed how they could be fabricated and those, those are going to the, to the market soon. But we also see things like better grid integration for renewable power loading, discovery of all kinds of new materials like for carbon capture or for electrolysis or catalysts, which will reduce energy demand.
We’ve seen [00:10:00] opportunities to manage traffic. Traffic is a huge problem for climate and for emissions, AI is very well positioned for that. Per the last story, AI can actually really help reduce the emissions for manufacturing. It can help bring efficiencies into things like steel making or automobile making so that they consume less energy and materials, so we’re just starting to see this.
James Lawler: Maybe it’d be helpful to talk about AI and kind of the applications for which it’s well suited.
Julio Friedmann: Right. So there’s a couple of places where AI can help with electricity and reducing emissions from it. Stuff like making power flow models so that they can get approved by regulators, like AI can help with all that too.
In order to do this though, there is something that is serious and needs to be managed, you need to get the data. A lot of that data is not available and there’s good reasons that data is not available. You don’t want somebody be able to go in and understand an individual person’s power use. You don’t want to necessarily be able to [00:11:00] reveal grid vulnerabilities that create cyber-attack risks.
So, there are questions about, you know, privacy, about security, that lie entangled with these data access challenges. So I believe we’re going to go farther. I believe we’re going to make versions of this data available that are anonymized or cleansed or protected, but in point of fact, the data issues are very real, and people have concerns about doing that.
The upside though, is very large. You can save hundreds of millions or billions of dollars. You can really grind down the emissions faster, all of that’s worth tackling those challenges.
James Lawler: Yeah. So we want to talk about one more story today. This story appeared in Bloomberg and the headline here, Electric Cars Pass the Tipping Point to Mass Adoption in 31 Countries.
So the tipping point that’s defined [00:12:00] here is the 5 percent tipping point. So once 5 percent of new car sales go fully electric, everything changes, according to this analysis by Bloomberg Green, of these transitions happening in all of these countries. Can we talk about the logic here, Julio, 5 percent sounds like a pretty small number, why does that represent a tipping point in the adoption of a new technology, and in this case, EV technology.
Julio Friedmann: Sure, so let me explain first 5 percent and then tipping point. 5%, eh, I don’t know if that’s the exact percent, that’s what the Bloomberg analysts estimate. That’s a reasonable estimate, but it could be 7%, it could be 9%, but there is, out there, some tipping point and it’s reasonably small. It’s not 80%, it’s like, it is something like five to 10 percent in that range and basically two things happen. One, you [00:13:00] begin to shift the manufacturing base to meet that customer demand. So, you start decreasing the number of internal combustion engines that are made and increasing the number of EVs. Related to that also is the charging infrastructure. To have that much purchasing of EVs, you also need to have that much charging. So once you build out the infrastructure for charging, that also makes it faster and easier to make that adoption.
Last, but not least, is actually the vintage question. A car that you buy today lasts for 15 years on the road, sometimes longer, right? So 5 percent buying rate means within 10 years, 50 percent of the cars on the road are then EVs, you know, something like that. So it represents a sort of sectoral shift that has long term consequences and we’re seeing that reflected in factory floors, we’re seeing that reflected in announcements by companies and so forth. I want to [00:14:00] be super clear about this, this is something that I have to, you know, push against regularly. Nothing about the energy transition is fast, cheap or inevitable. The fact that we’ve passed a tipping point does not mean our work is done, many people draw that conclusion. That’s wrong. Just today, Ford announced that they were going to decrease the number of people working at the F150 lightning factories because there’s less demand than expected.
We’re going to see those stories too, we’re going to see supply chain challenges, we’re going to see all the other problems with EV deployment. As we were saying at the top, we got to celebrate the good news. This is good news. Also, as we were saying at the top, sometimes these things get reversed so suddenly there’s not enough electricity, then suddenly people are like, oh, I got a problem with my car. And like, so we’re going to have pushbacks and forth, but I believe the essence of this story is true. We are in a [00:15:00] period of secular change towards a new horizon. We got to keep working, we got to keep investing, we got to keep building. But this is a good note to end the story on like at the end of the day, we will have a lot more adoption in a lot of countries.
James Lawler: Well, that was great. Very interesting week of stories, Julio. Thanks for joining us.
Julio Friedmann: A pleasure as always.
James Lawler: We’ll see you next week. That’s it for this week on Climate News Weekly. See you next week. Bye.
