Views on the $1.8 trillion clean energy economy

Some optimistic and cautionary takes on the investment trends guiding the energy transition

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Can a couple trillion dollars feel small?

Global investments in the energy transition – from the buildout of factories and power projects to project finance and government debt – hit nearly $1.8 trillion last year. 

That’s almost as big as the GDP of South Korea. It’s nearly 20% more than the year before, and nearly eight times more than a decade ago. But even with those record levels of spending, we are astonishingly far behind what’s needed to stay on a net-zero trajectory this decade. 

This week, we’ll talk about what’s growing, what’s lagging, and what the trillion-dollar scale means at the ground level.

Then, geoengineering is nudging closer to the mainstream of scientific and environmental discourse. Are we giving up, or just being realistic?

Katherine Hamilton of 38 North and Shalini Ramanathan of Quinbrook Infrastructure Partners join us this week to sift through these trends.

Recommended resources

  • BNEF: 5 lessons from the $1.8 trillion race to net-zero
  • CNBC: Aramco halts oil capacity expansion
  • E&E News: Inside EDF's private meeting on geoengineering
  • WSJ: Scientists resort to once-unthinkable solutions to cool the planet
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Stephen Lacey: Bloomberg New Energy Finance is out with its annual Energy Transition Trends report and it's a mixed bag.

I can remember back in 2007 when I first interviewed Michael Liebreich, who started New Energy Finance, and he later sold it to Bloomberg. It was at the Renewable Energy Finance Forum on Wall Street. He had tracked at that time around $100 billion going into clean energy investment globally, which was a really impressive figure. It was enough money that a lot of Wall Street banks were taking notice and it clearly showed that renewables were on this upward trajectory in broader clean energy as well. But I remember him telling me that it needed to be $1 trillion a year, all the way back then. It took us another 14 years for us to reach $1 trillion in global investment in 2021. But in 2022 it jumped to $1.5 trillion, and then last year we were at nearly $1.8 trillion. So we're picking up the pace here, but it's still not fast enough as we will discuss a little bit later.

So quick highlights here. Electrified transport surpassed renewables for the first time. Frontier tech like carbon removal and hydrogen are definitely seeing much stronger increases in investment flows and nearly every region in the world saw a surge, so yay for that. But according to BNEF, we need to be at 4.8 trillion every year between now and 2030. So that's a lot of trillions. Let's put these big numbers into context. I want to start with some initial reactions to some of these figures and then we'll drill down what it means for different sectors. Shalini, optimistic take first. What kind of optimism do you draw from the report?

Shalini Ramanathan: Trillion just has a good ring to it, 1.8 trillion. You could round up to 2 trillion. It's not quite enough, but I think we should take a moment, it's a big number, and included in that number is the fact that investment and energy transition is edging out investment in fossil fuel generation. That is the optimistic way to look at it, is we're investing, we're beginning to invest in the right things.

Katherine Hamilton: They tracked four different categories. They looked at the energy transition investment, the clean energy supply chain investment, climate tech equity raising, and then debt issuance. So one thing that really stuck out for me was the clean energy supply chain. This is including equipment factories, metals production, it hit a new record and is set to surge even further. To me that says the underpinnings of the transition are coming along and I thought that was really great.

Stephen Lacey: Yeah, I drew that number out as well. Not only are we seeing a massive increase in investment, but that that's the only piece of the clean energy transition that's on track for a net-zero scenario. So we're actually ahead of schedule in supply chain investments, particularly in solar batteries and EVs. So that is definitely a good piece of news. When I first saw this report, and propose we talk about the numbers in here, I was really excited like, oh, we're almost at $2 trillion. Then a day later, news broke that Sam Altman from OpenAI is out trying to raise $7 trillion to expand chip manufacturing. I was like, oh, okay well, that deflated the number a little bit, but still $1.8 trillion is a big deal.

So we see in the figures here that total investment flows continue to outpace investments in fossil fuel extraction, and we're definitely starting to see the impact. In fact, earlier this month, the Saudi controlled oil company, Aramco said it would halt capacity expansions because of its view, its long-term view on the energy transition. The Saudi prince said, "Transitioning means that even our oil company, which used to be an oil company, now is just becoming an energy company." We hear that talk from oil executives sometimes they live up to it, a lot of the times they make some big proclamation and then slowly shift back to extraction exclusively. Shalini, is this something we should take seriously?

Shalini Ramanathan: Yes, because this is about actual spending to develop capacity to meet future markets. This is their business plan. This is not a press release, they're not announcing a laughably small investment in a solar company or something like that. They're actually talking about their core business and saying that they believe that their core business needs to transition to meet the needs of a different world. I think it's a big milestone.

Katherine Hamilton: Yeah, a couple things. I agree with Shalini, but I also, just keep in mind that their expansion was going to be to 13 million barrels a day and now it's just going to be 12 million barrels a day. So it's not like it's going away anytime soon. Remember, they've used oil as a euphemism, I would say, diplomatic tool over the decades. Now they are shifting to something, they're definitely investing in renewables, but also materials and mines. Remember mines are also extractive. So when we think about what are they good at, what are they going to do? There's still some extraction that's going to be taking place. The issue is, what is that going to be going to? As Shalini says, what's the business model for that? So I think we take them seriously, but we also need to be a little skeptical.

Stephen Lacey: Yeah, absolutely. I mean, it's the same caveat from our discussion around peak fossil fuel investment that was outlined by IEA last year. It doesn't mean that fossil fuel extraction or consumption is going to decline precipitously. It just means that we've reached the peak and that we hopefully will see a steep decline, but we're more likely going to see a gradual decline past 2030.

I mean, I see this announcement very cynically personally. I mean, you look at the announcement from Shell and BP in recent years talking about how they're becoming energy transition companies. Then when oil earnings were high enough, they scaled back all those ambitions and investors put a lot of pressure on them and they just go back to the same thing. I just don't really see any evidence that most of these companies are going to change no matter what they claim in the press, no matter what kind of big presentation they make on stage. They just keep going back to the same thing. So I mean, I'm very cynical about it. Certainly, when the Saudi prince comes out and says something like that, we should take notice, but we're not seeing a divestment in fossil fuels. We are seeing them halt new capacity. So I think that's very important. Still, it is a big piece of news.

Shalini Ramanathan: It's worth noting that the returns are very good for oil and gas right now. They are generally speaking, and obviously energy transition covers a lot of different kinds of businesses, but there are businesses in the world of energy transition like solar and wind that are becoming commodities, right? Wind and solar are becoming commodities where the returns are not anything like what you get in oil and gas. So I think this is the dilemma for oil and gas companies. It's the dilemma for our economies in a lot of ways, is how if you're running an oil and gas company, you have an obligation to your shareholder to maximize value. I think we would all agree you have an obligation to the planet to not do harm. I think all of these large oil majors would be happy to shift to energy transition investments if the returns were similar. That's one of the key challenges and unlocking capital, frankly, it doesn't just have to do with oil and gas.

Katherine Hamilton: I would say Aramco is certainly structurally different than a Shell or a BP, because they have the state behind them. So the state can take political and economic decisions that are quite different than a corporation could take.

Stephen Lacey: Well, let's talk about some of the numbers, the other numbers from the report. So I want each of you to pick a number that illustrates a trend that you're seeing play out on the ground right now. We're going to be throwing around some big, big numbers, so let's try to make it a little bit more real for folks. Katherine, what do you have? Any numbers jump out at you that reflect what you were actually seeing play out?

Katherine Hamilton: Yeah, so I have two numbers. One that someone gave me. So I reached out to Albert Chung who is an analyst, a long time analyst at Bloomberg, he's brilliant. I said, "What do you care the most about in this report?" He said he was struck by the global offshore wind investment reaching a record $76.7 billion, which was an almost 80% increase in offshore wind. Now, there was a bit of a decline from the onshore segment, but the offshore went up pretty quickly. That's remarkable because as we have talked about on the show, offshore has had some issues. Good to see that there is still major investment in that sector.

Stephen Lacey: I wonder how much of that money comes from companies preparing projects and then canceling them.

Katherine Hamilton: Oh yeah. China's still the biggest market there, but yeah, there's still some issues, some policy issues in the US but there are some projects going forward too. So it's good to know that they're in strong position.

The number that I was really interested in, because as you all know on this show as well, that I've been obsessed with interconnection and with the grid investment, and this links back to the Inflation Reduction Act, which is that distribution grid investment was greater than transmission investment. So distribution investment was about 173 billion in 2023, whereas transmission was 137 billion. Certainly transmission is so important and in the US has been linked to, and US is a huge market for all of these investments. $87 billion undergrounding, storm resilience, upgrading for renewable energy, and all this increased demand through EV charging and data centers. Yet if you look on the ground with the Inflation Reduction Act and how much more we need to do. The investment tax credit for transmission fell out of that piece of legislation. At some point we're going to need additional investment in this country if we really expect to do the transition as quickly as we want to, and with as many renewable energy projects out there in the queue.

Stephen Lacey: Yeah, and on the power grid side, I mean, what you see is a radical increase in investments in the power grid from about 2020 onward. Obviously we need to probably double that to accommodate the amount of clean energy that we're putting on grids around the world, but definitely a noticeable shift. Shalini?

Shalini Ramanathan: So my number from that report is on electrified transport, which the report said is 634 billion of the total 1.8 trillion, so about a third. It feels like electrified transport is happening. It is a trend that it's well on its way. There's been so much discussion including on this show, the last time we talked about slow EV sales in the US. Sometimes I think we forget about the rest of the world. For example, electric scooters and two-wheelers as they call them, are very popular in China and India. So that's also electrify transportation.

I think this is interesting because one of the big success stories in my eyes in terms of companies is a company that most Americans probably haven't heard of. It's BYD, which stands for Build Your Dream. They're now, they became at the end of last year, the leading seller of EVs. They edged out Tesla last year for that title. Elon Musk has called for trade barriers to protect Tesla from BYD because they're coming on strong. I read on a car blog that by BYD's seal model is, it's more like a food truck than a gourmet meal, but for a lot of people, a meal from a food truck is just fine. I think that BYD and its success is really part of this, of that number, that 1.8 trillion number.

BYD gets a ton of state subsidies. They're one of the big beneficiaries of China state spending, but there's just a lot to admire in their business. They couldn't get room on container ships to get their cars to Europe, so they just chartered their own vessel. They seem to not take no for an answer. Books have been written about Toyota Manufacturing and how great it is. Toyota is partnering with BYD on electric vehicles and that's how much respect BYD has in the industry for what they've been able to accomplish. So we will see what happens. Obviously there's a lot of issues around having more on-shoring of battery manufacturing here in the US and concerns about the internet of things and cars and the data gathering and having that at a company like BYD that does come from China. So there's a lot of complexity here, but I think the fact that electrified transport is one third of the amount invested in energy transition is astounding.

Katherine Hamilton: Yeah, and you know who really invested in their grid a decade ago and made it really big and really strong? That would be China. So they've already done a lot of that and now can just become this massive market for renewables and electrification.

Shalini Ramanathan: But it really points out that the grid is the gift that keeps giving, right? You build it out, it's hard, and then you can electrify other sectors.

Stephen Lacey: This is another one where you don't see electric vehicles on, really reflected in the numbers until about 2014. Then it starts gaining an increasing share of the total investment. Then in 2022 and 2023, it expands rapidly and we saw an almost 40% increase in investments in electrified transport last year. So I think that there's no turning back now, if you think about how big the battery and EV market is, it certainly will be the dominant force in the energy transition. So that has been a decade long trend, and it was really the last two years when we saw the most momentum.

I'll mention just one other number that jumped out to me, and that was that the US was second in overall funding, government debt, total project finance, et cetera, when you bring everything together. But we were a leader in venture capital and private equity. I think it shows that although we saw a significant dip in the last year because of financial headwinds, America is still very much a leader in supporting the front edge of the energy transition, particularly through venture capital. We just have a really rich tapestry of companies and entrepreneurs and investors in this country that sets us apart. The big question is, how do we compete on a commercial level when China's throwing far more money at scaling than we are even with record IRA spending? But that number definitely jumped out at me, that there's one area that the US is still beating China and others at, and that is venture capital and private equity.

Katherine Hamilton: Yeah, it was interesting to me that it's been harder to do IPOs, so those were down 65%, and that's largely because of interest rates, but that's starting to switch around and you can see that as you see more deals happening. Also, utilities are the largest sector raising debt right now, and that also makes a huge amount of sense if you think about who has to transition and all those utilities raising debt to try to invest in their own transition.

Shalini Ramanathan: Yeah, and we talked about investment in the clean energy supply chains. I was surprised by the numbers, but also by the Bloomberg prediction that the supply chain investment is projected to increase 66% from 2023 to this year. I think that really just shows the impact of the IRA and the power of strong incentives. Is it enough to compete with what China has built? We'll see, but we do, Stephen, you're absolutely right, we do have the advantage here of a strong entrepreneurial culture and a lot of new development. We'll see if the IRA, with the incentives in the IRA, if we can keep some of that technology and really develop supply chains here.

Stephen Lacey: So let's go on to some other numbers that jumped out. Anything surprising, a trend that you didn't expect or that accelerated faster than you thought? Shalini?

Shalini Ramanathan: The market for IPOs and reverse mergers had cooled off even more than I thought. I knew it wasn't a great year for that, but equity financing down 34% and down also the year before that. I think we're really seeing what increased interest rates, the effect that has on businesses and the ability to exit.

Stephen Lacey: There really haven't been that many great exits in climate tech recently. I mean, there's no huge exits to speak of in the last few years.

Shalini Ramanathan: Yeah, I think the SPAC market especially, I think a lot of companies that use that pathway to IPO-ing, they really had massive growth stories and that wasn't underpinned by actual performance or by the technology curve and where they were on it. So I think it just shows the mismatch of really early, essentially what are early stage clean tech companies IPO-ing because they're predicting that it's going to be easy, and it turns out it isn't.

Katherine Hamilton: But there are more strategic investments. So I think it was important for that to settle down, that seemed like it wasn't great to have companies that were not ready to be public, and instead we're seeing much more corporate investment, much more strategics coming in and saying, this is something we want to put funding toward and grow it the way it should be grown.

Stephen Lacey: So what's bringing you pessimism out of these numbers? Any cautious takeaways? Katherine, what about you?

Katherine Hamilton: So we need three times more than the almost 2 trillion a year to make it to net-zero. We need to be at almost 5 trillion a year of investment. I think we're on track, honestly. There's some sectors that are doing better than others, but there's a lot more to do. So it seems that some of these investments need to come back up. Some of the maybe onshore wind needs to come back up. We need to increase things like geothermal and hydropower investments. We have to do much more of it in order to get to net-zero and to keep us down below 1.5 degrees centigrade.

Stephen Lacey: We need to be at 5 trillion this year through 2030 in order to keep us on a net-zero trajectory. I mean, I know that you're a very optimistic person and I think that the nearly $2 trillion number is a big deal, but I think we're way off here. I definitely took a lot of pessimism from that.

Shalini Ramanathan: You guys have both convinced me that rooting for the 1.8 trillion when it really needs to be 5 trillion. My optimism may not be very useful here. Really, the capital is there. I think the issue is, how do we get their policy incentives? What's missing? Why isn't more capital rushing in? I think it's some of these underlying factors that we've talked about before, like transmission, like permitting. I think you certainly, you can't get more, for example, big EV charging stations in places where the grid isn't strong. So we need to fix some of these underlying things to unlock more capital.

Stephen Lacey: Let's turn to geoengineering now. This is a topic that is suddenly getting way more serious consideration and funding. We're in this weird spot right now. We have, as we just talked about, huge amounts of money going into the energy transition from all angles. It's been enough to narrow the range of possibilities for warming. We've actually shaved off some of the more catastrophic scenarios in the last few years, but as we heard, it's not nearly enough and more than doubling our investments every year starting now is probably not going to happen. That's why geoengineering is on the table for many serious people.

The field of geoengineering features a very wide category of approaches to removing carbon dioxide from the atmosphere or oceans or blocking the sun with aerosols or cloud brightening or even placing a giant object in front of the sun. Up until the last couple of years, it was limited to the edges of academic discourse, but suddenly governments are considering guidelines and budgets for studies. Research labs are doing real world testing, venture capitalists are throwing dollars in and environmental groups are starting to take it seriously.

Corbin Hiar at E&E News reported that the Environmental Defense Fund, which has supported the idea of geoengineering research since 2011, convened dozens of scientists and funders to talk seriously about responsible guidelines. He quoted John Holdren, who is Obama's science advisor who said, "It's a recognition by one of the country's most important environmental organizations that geoengineering is something that can't be ignored. We just can't hide our heads in the sand and pretend it will go away. It's something that needs serious attention by smart people inside and outside of government."

In that same week, the Wall Street Journal had a big feature on all the testing that's happening around the world, including an experiment partially funded by the US government. I thought this quote from the piece was telling, from Daniele Visioni from Cornell University who said, "Now we're at the point where the choice isn't between a yes or no about doing geoengineering, but between making an informed decision versus making an uninformed decision." So let's react. Where are we in the discourse around geoengineering? Katherine, why is this being taken seriously all of a sudden?

Katherine Hamilton: Yeah. So first I want to let you know when I mentioned this to my husband, I said, "Do you know anything about geoengineering?" Because you sent me the topic and he said, "All I can think of is space billboards." I said, "What are you talking about?" He said that he and Senator Markey combated a plan decades ago to try to keep space billboards from being in the air. So that if you went outside on Valentine's Day with your honey to look at Orion, you didn't see a swoosh with just do it in the sky. That that would be somehow protected, that space would be protected, but I did reach out to Dan Visioni and he is right now at a conference to discuss this very topic. I tried to dive in and figure out, what does this mean? He sent me a primer to basically give an example of what this issue is of solar geoengineering.

So in 1991, Mount Pinatubo in the Philippines erupted in the largest volcanic eruption of the 20th century. It sent 17 million tons of sulfur dioxide into the stratosphere, and what it did is it oxidized into aerosols, which then reflected the sunlight. For the next two years, global temperatures were reduced by approximately half a degree Celsius. That was huge. So what does that mean? That means, well, that is called stratospheric aerosol. So you could look at this as stratospheric aerosol injection. Are there things that you can put into the air that would cool the planet?

There's something else called marine cloud brightening, which is spraying sea salt aerosols into clouds to increase the reflectivity or brightness. There's something called cirrus cloud thinning, which would thin or removes cirrus clouds, which have a net warming impact on the planet. But all of these things, while it's really important to think about, what do they mean? They carry enormous risks politically and scientifically.

So the question is, how do we think about this in a way that moves the science forward and our understanding of the science, our understanding of the benefits of the science, of the timing of when would you do something like this? But then also, what are the risks? What are the risks to local areas? What are the risks to farmers? There are just a number of things that this kind of technology could change and you have to understand the risks. Then also, you have to set up a structure because if you have a bunch of people out there doing this, you could start changing our planet without any controls. So there's a couple different levels. One is the scientific level of both benefits and risk, and then there's also the political level of, how do we have some sort of agreement? Almost like an arms agreement to figure out, how do we manage something like this?

Stephen Lacey: Yeah, for sure. I want to talk more about some of those risks. I have my own list of things that potentially worry me. Those two solutions that you talked about, the stratospheric aerosol injection, which again is using sulfur dioxide or something else to reflect sunlight away from earth or the marine cloud brightening to improve the reflectivity of clouds. Those are being considered by the White House. The White House recently issued a report, I think it was last summer, saying that we need to consider studying those two methods. That at least the questions around the research are important enough that the government should embark on a much bigger research effort. How big of a deal is that, Katherine, that the White House weighed in on this? I know it was congressionally mandated, but they did have a positive reaction to doing more research.

Katherine Hamilton: Yeah, I think a couple of things. One is that they want to understand what the climate and environmental impacts are. They have huge climate goals, so they want to understand what are the impacts of the solar radiation modification, basically? Then, what are the potential societal outcomes and ecological consequences? So they are also one of their big thrusts is equity and making sure that whatever we do to forward the climate transition, that we're not impacting negatively on some communities. So looking at societal outcomes and it's pretty much across economic sectors anyway. Then finally, how do we do this? As I mentioned before, how do we do it in cooperation among international partners? Because that's going to be crucial, whether it's through the Intergovernmental Panel on Climate Change, whether you... That's the large organization, but maybe you set up something like the Montreal Protocol that takes one issue. You have an issue-based international group that can create some kind of boundaries to what we do when we find out what is possible with this technology.

Stephen Lacey: Shalini, what do you make of the conversation shift around these methods of changing the atmosphere?

Shalini Ramanathan: I think there's widespread recognition that we're not on track. Let's just call it, we're not on track to keep average temperature 1.5 degrees Celsius below pre-industrial levels. That's the threshold that we'd been talking about for a long time, and we're very likely to exceed it perhaps by a lot. I think that there's now a sense that even among those of us like me, I'll put my hand up, who absolutely believe in deployment of the technologies we have. We have no choice, we have to do that, but we also may need something else. I think that the geoengineering is perhaps along with things like carbon sequestration, that's something else, that just switching to green alternatives isn't happening quickly enough.

Stephen Lacey: Katherine, what's your personal take on this? Do you have any reflexive reaction to geoengineering?

Katherine Hamilton: A reflective reaction. No, this is terrifying to me. When I started reading more about it and I was really quite ignorant about it, I just heard it about it in broad brushes. I thought, what does this mean? What will it mean if this is what we resort to? So we can't stop doing what we're already doing and deploying as quickly as we can with all these technologies we already have that we know will work. We have to stop the bad stuff that we know is bad. But then at what point do you say, all right, when do we know that we have to deploy something like this? Is it when we've gone past the 1.5 degrees? Is there a tipping point? Well, guess what? You don't know if there's a tipping point unless you're in it or it's in the rearview mirror, and at that point... This stuff can't refreeze glaciers. This is not the answer to that.

So part of this is, this sort of ends up being one of those things you would do in just the end, and yet we have to know that it's there and that you can deploy it safely and you're not just having people desperately doing it when they're being impacted severely by climate issues have people in desperation because it's not very expensive to do something like this, it's cheaper. If you start having people deploying stuff like this without knowing what the repercussions are to the ecology and to humans, I don't know what will happen. So I agree that we really have to study it, and I think there are serious bodies to wit. This gentleman that I reached out to was going to a conference in Europe and couldn't speak with me personally because they're trying to wrestle with this. So I think it's right to wrestle with it, but it's also terrifying to think of having to use it.

Shalini Ramanathan: This reminds me, the whole discussion reminds me of the ongoing parallel debate about AI, artificial intelligence. I think we can all agree it has huge potential to make human life better, it also has potential to be used for really terrible ends. The discussions around AI are around who has the right to regulate it? Is it just do companies self-police or do we need third party regulation? How do you enforce that? How do you stop the rogue actors in AI and geoengineering from doing something that isn't necessarily as much in the public interest as their own? I think these are big issues that we have to grapple with, but it feels like it's here to stay though, right? We might just be talking about it, but I don't think we're going to be in a position to take it off the table anytime soon.

Stephen Lacey: I think that's a great parallel. There are a few things that worry me. One is that this is just a big distraction. As you both said, we need to deploy and we need to deploy fast. Almost nobody would disagree that we have about 80% of the technologies today across the electricity sector, industry, and transportation to decarbonize and decarbonize fast if we were really putting our shoulders into it. So whatever conversation that we have about geoengineering has to recognize that we have most of the technologies and solutions here right now that are deployable and being deployed to fix this problem.

I also worry that this is a distraction because you have high profile billionaires who like to throw around money and get press coverage who are interested in some of these solutions. They can start to back startups that are moving way too quickly. Also, there's a big question of, what happens if you're just masking warming? If you stop the geoengineering experiment and suddenly warming comes roaring back, what happens then? We're also creating a new atmosphere, right? We are already playing with one of the most consequential science experiments in history, and now we're just adding new elements to it. So you could potentially damage the ozone layer, you could shift weather patterns in other unexpected ways. There could be drastic negative consequences. You create same jumbled up mess that climate change is already creating without a lot of predictability.

Katherine, I think you alluded to geopolitical risk. I mean, what happens if countries are in conflict over how to use these techniques? That is a very real potential consequence and once this is out in the real world, the scientists can't really control it. So there are a lot of worries here, which isn't to say that we shouldn't put research dollars in place and talk on an international scale about how we do this responsibly, but it is a last ditch effort. We cannot ignore that We have most of the technologies today to solve the problem, and we can't rely on billionaires and venture capitalists to push this forward.

Katherine Hamilton: Yeah, and as we do research and development, we have to figure out, what does that look like? How do we do ethical R&D? Do we do larger scale experiments? Because those could have a bigger impact. You know the people who are already the most impacted and the least able to combat global warming, they're the ones that will suffer the most no matter what. Folks who want to put a lot of money into things like putting out vaccines or getting rid of malaria, should also be thinking about what are some real climate solutions that don't involve changing our atmosphere, but that those people who are the most impacted by climate change and have the least resources to do so can actually make their lives better.

Shalini Ramanathan: This technology can't refreeze glaciers, it can't bring back extinct species, and it can't deal with receding shorelines. So there is no magic bullet for climate change, and this is also not a magic bullet for climate change.

Stephen Lacey: All right, that brings us to the end of the show. To the forecast, and this is where we pick a story, something out in the news, something happening in our work lives, some observation that tells us something about the near or far future. Shalini, what's your forecast this week?

Shalini Ramanathan: So Shell announced that it's permanently closing six of its seven hydrogen refueling stations for passenger cars in California. My forecast is that maybe this is, I hope, the end of trying to make hydrogen powered passenger cars happen because EVs are simply a better technology for that solution. It just shows how judicious the use of public dollars has to be. I think the state of California has really tried to push hydrogen for passenger cars, and if something is just unlikely to ever work, then public dollars don't change that.

Stephen Lacey: Does it say something bigger about their investments in hydrogen or is it purely about these fueling stations and the use of hydrogen in cars?

Shalini Ramanathan: It's just about hydrogen use in cars. There aren't enough hydrogen powered cars around and because there aren't enough charging stations, but fundamentally hydrogen powered cars just feel like a niche offering.

Stephen Lacey: Yeah, we saw this play out with Toyota as well, which was all-in on hydrogen vehicles and then made a switch into electric models behind some of its competitors.

Shalini Ramanathan: Yeah, the Toyota Mirai, which is their hydrogen powered passenger car, is not taking over the streets. I haven't seen one in real life, and I bet very few people outside of pockets in California have. So there are some technologies that don't deserve to scale, and I think hydrogen, green hydrogen has all sorts of really promising applications like making ammonia, green ammonia with green hydrogen and using that to decrease emissions from the fertilizer industry. So there's a role for these fuels, but everything doesn't work everywhere.

Stephen Lacey: Yeah, 56,000 fuel cell vehicles sold to date globally, so.

Katherine Hamilton: It's 56,000 stranded assets. Got to feel bad for those people.

Shalini Ramanathan: Fuel cells are really expensive. This is a tough technology. I think it might work for heavy duty trucks. We'll see if advanced battery technology overtakes it, but certainly for passenger vehicles, we have a good solution. It's called an electric vehicle.

Stephen Lacey: Katherine, what's your forecast?

Katherine Hamilton: Yeah, you had to know that I was going to talk about interconnection again because I'm really, really focused on it right now. So there was a new report that came out that RMI did, and it's about grid enhancing technologies. So these are technologies that you put on the transmission grid for the most part, that give you more visibility and more of an ability to see what's going on and react, dynamic line ratings are one of those. They found three things, this was just studying PJM.

There was a report earlier that BRATTLE did studying Kansas and Oklahoma that came up with similar findings, but this isn't PJM, which has a huge interconnection queue problem. What they found was that GETS, which is what you call grid enhancing technologies, Gets could enable 6.6 gigawatts of new solar wind and storage projects to interconnect by 2027. They found that they're significantly cheaper than other network upgrades, and that those combined with the new generation could enable approximately $ 1billion annually in production cost savings across PJM. It is a huge thing. I've been working on GETS for a while. There's some really good companies out there. I work with Line Vision to try to get policies that will say, yes, we understand you have to build transmission, but install GETS, get an idea of where your congestion is. Where do you need the lines the most? Can you manage it with what you have so far? Get the most amount of electrons out as you squeeze through the grid as you possibly can. This report really highlights that. So hopefully FERC will start moving on some of those rulemakings and really make this part of the way of doing business.

Stephen Lacey: Also, great acronym, by the way, GETS. I love that.

Katherine Hamilton: Get it?

Stephen Lacey: Yeah, I mean, this is a really central piece of how we're thinking about electric infrastructure in this country. We had Jen Downing from the Department of Energy on the show last week, talking about how to make better use of the grid through virtual power plants. She made the point that we've invested over $1 trillion dollars into the grid. Wouldn't we want to, instead of just building more stuff, make better use of that machine? GETS are a really crucial piece of that equation.

Well, my story is about a trend that we discussed at the end of last year and we're seeing more activity pick up around, and that is white hydrogen, that is geologic hydrogen. We're seeing a lot of new developments in extraction, extraction of lithium, extraction of heat for geothermal using horizontal drilling techniques, and now, extraction of geologic hydrogen.

Maria Gallucci mentioned this at the end of last year as a story to watch, and she was definitely right, activity is picking up. Some estimates put 10 trillion tons of white hydrogen underground around the world, and if that's right, and it could be economically tapped, that would account for all the world's hydrogen use for hundreds of years. Just this month, a 30-person startup called Koloma, just raised $245 million. The company was actually founded in 2019, so they've been working on this for a while. They're backed by Coastal Ventures and Breakthrough Energy Ventures, and actually our investor, Prelude Ventures, invested them in them last year.

The DOE meanwhile just recently said, it's worth, it's investing $20 million in research into this field. So activity is definitely picking up, both government investment and venture capital. Obviously, the big limitation here is finding the deposits, but also the hydrogen is the smallest element in the universe, it's very leaky. The International Energy Agency says that these stores of hydrogen might be too scattered to be captured in a way that's economically viable. So the big question is, how do you transport it and is there enough and concentrated enough areas to make it viable? So I'm going to keep my eyes on this sector, but keep in mind it took 20 years for us to revitalize the geothermal industry where we know a lot more about where the hot rocks are and the hydrothermal resources are. So if this is something that's feasible, it's probably decades out, but worth paying attention to.

Shalini Ramanathan: Yeah, hydrogen is hard to utilize. So maybe you have a pocket of geologically available hydrogen right near an industrial user, right near a refinery, and they're happy to switch over from the polluting hydrogen they're using today. That's great, but if you don't have something like that, then you have to compress hydrogen. You have to liquefy it, you have to truck it, or build a pipeline to move it. All of that is expensive. So making it and finding it is part of the challenge, but then how do you actually deliver it in a cost effective way to a customer?

Stephen Lacey: Shalini Ramanathan is the Director of Origination at Quinbrook Infrastructure Partners. A pleasure, good to see you.

Shalini Ramanathan: Good seeing you. Thank you.

Stephen Lacey: Katherine Hamilton is the Chair of 38 North Solutions. Always a pleasure.

Katherine Hamilton: Absolutely.

Stephen Lacey: That's it for the show. The Carbon Copy is a production of Latitude Media. It's produced and written by me. Sean Marquand is our technical director. He also mixes the show and he wrote our theme song there. You can get all our stories, our show notes, and the transcripts of this show Be sure to check out our cousin podcast, Catalyst with Shale Khan. We also have another show called The Latitude, where we read some of our best pieces, our feature pieces. So if you want to take some of our journalism with you on your podcast app, you can subscribe to the Latitude as well. Latitude Media is supported by Prelude Ventures, Prelude backs visionaries accelerating climate innovation that will reshape the global economy. Learn about their portfolio and investment strategy at If you like what we're talking about here, spread the word on LinkedIn or X or wherever you're active on these issues. Shoot a note over to a colleague if you think they should listen to this show. We'll catch you next week. Thanks so much for being here. I'm Stephen Lacey. This is the Carbon Copy.

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