Hot Rocks in a Box: The Rise of Thermal Batteries

Transcript

Bryony Worthington

Hello, I'm Bryony Worthington, and this is Cleaning Up. My guest this week is Anand Gopal. As we think about moving beyond fossil fuels to provide us with the myriad of services they currently provide. Many like to play up the idea that this transition will either be impossible or certainly very slow, because there are just so many dependencies in the so called 'hard to abate' sectors. Anand is the Executive Director of Research at Energy Innovation, a Californian-based thinktank that, as the name suggests, focuses on winning support for the deployment of clean innovations in the energy sector. I wanted to ask Anand about recent research they've published looking at the use of electricity in industry and manufacturing to replace fossil fuels. As we make progress building clean power generation and shifting to electric vehicles, the use of fossil fuels in these remaining sectors will grow to be a large part of the problem. Fortunately, the same factors that make electricity the best choice in transport also apply in the provision of commercial and industrial heat, namely flexibility, the absence of harmful emissions and inherently greater efficiency, which offers a potential for electrical heat solutions to become far cheaper than the alternatives. Please join me in welcoming Anand to Cleaning Up.

Michael Liebreich

Before we get started, if you're enjoying Cleaning Up, please make sure that you like episodes. Subscribe on YouTube or your favourite podcast platform and leave a review. That really helps other people to find us. Please recommend Cleaning Up to your friends and colleagues and sign up for our free newsletter at cleaninguppod.substack.com. That's cleaninguppod.substack.com. Cleaning Up is brought to you by the Liebreich Foundation, the Gilardini Foundation and EcoPragma Capital.

Anand, it's so good to be with you here in San Francisco. I'm really looking forward to this conversation. Do you want to just kick things off by telling us who you are and what you do?

Anand Gopal

Great, thank you. It's wonderful to be part of the show. I'm Anand Gopal, the executive director at Energy Innovation. Energy Innovation is a research group. We're an energy transition thinktank, and we look at the best solutions available for policy makers to scale clean technology at the speed and scale required to meet the climate crisis.

Awesome. And so what was your path to Climate Innovation... Sorry, Energy Innovation. You were born in India, in Chennai. So tell us a little bit about what brought you here.

Yeah, it's a most unlikely story. So I grew up in Chennai, India, a city of 8 million people, 12 degrees north of the equator, extremely hot and humid. And if someone told me when I was a kid that I would be in a climate policy think tank based in San Francisco, I would not have believed it. And the story is very interesting: I always had a real strong love of nature, I went hiking in the mountains near Chennai, and I've also been on hikes in the Himalayas. And I was studying my undergraduate degree in civil engineering, when I suddenly went on one of these hikes from one year to the next in the Himalayas, and saw a real strong retreat in the snow cover. And that's when I started to learn about climate change and the global impact of this crisis that we're facing. And it completely transformed what I wanted my career to be and what I wanted to do.

Wow. So it was that lived experience of impacts, even then. But you were doing civil engineering, so that was at the Indian Institute Of Technology, Chennai, was it?

That's right, yeah. It's one of the five — at that time — five different major engineering colleges in India, IIT. And I had gotten in, and it was a very competitive process, and I was studying civil engineering. And realising that I wanted to work in the environment field was quite a revelation, and kind of inconvenient, because I then had to figure out what I had to do after I finished my civil engineering degree.

Yeah, but obviously engineers are essential for this transition. But tell us a little bit... because you then decided that food and agriculture might be something that you cared about. So tell us a bit about that.

Yeah, so I went all the way to the most extreme left viewpoints for a while there. I thought that the best way for me to help the world's problems was to go back to the land. And if we sort of went back to the land hippie. And I tried that. I went to Australia, of all places, and I tried this programme that they had called Willing Workers on Organic Farms, which is basically to volunteer your time to work on the farm in return for food and lodging, and they would teach me the ropes of organic agriculture.

Wow. This is from Chennai, right? One of the most industrial parts of India to the outback. Were you on a ranch or something?

I was on like a coastal farm in northern New South Wales? That town had a population of 150 or something.

Wow.

So big transformation for a kid from urban India. And not surprisingly, my hosts were very kind, they tried their best to teach me the ropes of organic agriculture, but I was terrible at it.

It wasn't a natural fit.

It was not so, it was really bad.

So something happened on that visit, though that made you think, 'Oh, actually, I have got some skills.'

Yeah, this is a very interesting story. I was in a phase of my life where I was very reactionary towards engineering, because I was under the impression that engineering was the thing that caused all the problems we have when it comes to externalities and pollution. And so they soon realised that I was not the best farmer, but then they were going to put in a solar PV system on their farm, and they had a contractor who backed out at the last minute. So the person at the farm turned to me and said, 'Hey, you have an engineering degree. Can you help us size this solar PV system?' And I thought, okay, I could probably do that. And once I got into it, I really did a good job. They loved it. They had a solar PV system that I designed, that they then went and got a bid for and started installing. And that turned on a light bulb.

Literally.

That all that engineering knowledge, literally, was not to be wasted, and something that I could actually leverage and use in my career and field. And since then, I've always been into clean energy. And for the perspective of how do you accelerate the transition?

Amazing, but obviously then you thought, I'm going to get some extra educational qualifications. So that's what brought you to California?

That's right, yeah. So once I realised that I wanted to use my engineering skills, I kind of had the wrong skill set in civil engineering. So I came here to California. I did a master's degree in energy systems engineering, and then a PhD at UC Berkeley's Energy and Resources Group. And that has just made me stronger and stronger understanding energy and climate. And this is all several years ago, early 2000s, and since then, I've been working in some form or the other, in research and policy analysis in climate and clean energy.

Amazing, and with a brief period in philanthropy, right? So working for the Hewlett Packard Foundation.

That's right, yeah. So for three years, I was at the Hewlett Foundation, and there I was part of the climate programme, and was one of the main programme grant makers in electrification of the global economy, focusing on how do we get faster deployment of clean electricity into the system, as well as electrifying end-uses like electric vehicles, as well as like buildings and other end uses.

And then next step to Energy Innovation, right?

Yeah.

But recently, the world has moved along, — not fast enough, but it's definitely making progress. And one of the breakthroughs recently has been the US adopting legislation that supports the clean transition. So you played a role in that, right? Did you want to tell us a little bit about that?

Yeah. So the US, for the first time, has major federal climate legislation in 2022. And yes I joined Energy Innovation in 2021 as its executive director. And basically what I do is I lead our team's research and modelling. And the modelling that we did was very, very important and instrumental in the Inflation Reduction Act's design as well as its final enactment. So one thing that is really interesting is that the US, for someone who lives here, and you do now, it's a very dispiriting political environment, sometimes. A lot of it is non-factual in its dialogue and a lot of polarisation. Ironically, the Inflation Reduction Act is what I would say is one of the most analytically grounded legislations that we've ever had. And that's because climate is incredibly measurable. Like if your policy can do something to cut greenhouse gas emissions, it's going to help with climate. And that's not true for medicine or the healthcare law or anything like that, where the outcomes are a little bit more nebulous and how you get there is a little bit more unclear. So the Democrats in the Senate and in the House, to their credit, from the very beginning, were very keen on making sure that the Inflation Reduction Act — and originally it was called the Build Back Better act — was to reduce emissions and also serve other parts of the economy at the same time, to create jobs and to create manufacturing in the US. And every single time this bill got negotiated in the highly politicised process that we saw with with senators Joe Manchin, Kyrsten Sinema and everyone else, they came back to check what the impact would be on climate. So the end result is the original package and build back better was $6.2 trillion of federal investment. The final bill that got passed was $369 billion. And in that whole cutting and culling process, we kept 91% of the emissions impact.

Wow.

And a lot of that is because groups like Energy Innovation and Rhodium group and Princeton's energy research team. All did modelling independently to assess all the provisions that were in there, and that was used in the negotiations to make sure that the emissions impact was not lost.

So what was lost then? If we went from that large sum to a smaller sum, what went by the wayside?

So the original Build Back Better had lots of other provisions in there for expanding healthcare, other aspects of the care economy, and a lot of those things were culled in the end, and there were certain aspects of energy that were taken out but not the most important climate provisions.

And what are the most important climate provisions in that huge piece of legislation? It is enormous. So what would you point to?

I think for the international audience, the one thing that's really important to realise is that the US Senate passed this bill using this weird process called budget reconciliation. So their hands were tied, they were only allowed to really do a bunch of incentives. They were not allowed to do a lot of standards and other things that are important for climate policy. And given that, the biggest provisions were in clean electricity, extending and enhancing the production and investment tax credits for deployment of clean energy, incentives for electric vehicles, incentives for building electrification. An important part of the bill was about having a fee for methane emissions to make sure that easily=captured methane was captured by the oil and gas industry. And a few different provisions for investment in clean industry. So all the major emitting sectors, plus a little bit on some of the non-CO2 gases. And those added up to, in our estimate from Energy Innovation, something like 38 to 40% reductions in greenhouse gas emissions in 2030 relative to 2005 levels for the US.

But as you say, it's all carrot, right? It's all incentives, tax breaks. And I guess there are limits there to how much you can model? The UpTake really depends on... you have to be a) paying taxes in the first place, and then secondly, you've got to then want to do it. So if you don't want to do it, there's no penalty.

Correct, yeah. So all models are wrong and some are useful, this applies to what we've done with the the Inflation Reduction Act. And yes, it really is going to depend on how all of the various private sector players in the US really respond to the incentives put forth by the Inflation Reduction Act.

Yep.

The good news is, we've now had two years to look at what's going on. And recently, Energy Innovation and Rhodium and Princeton joined together to release an update, which compared our model estimates to what has actually been deployed. And the good news is, despite all the bad news you're going to hear on EVs, we're actually on track with regard to EV deployment. And we're on track when it comes to solar. The only area that we're struggling a little bit is wind, and that is something that is of concern. We need to make sure that we have increased deployment of wind over the next four or five years or so. But we're pretty much on track based on what was projected.

Well, that's good to know. And how is that spatially being distributed? Is it on the coasts? Obviously the offshore wind has to be the coast, but then there are the Great Lakes and... Is it spread across the country, would you say?

This is very interesting. A lot of the manufacturing of the clean technologies have ended up going to a lot of the southeastern Republican dominated states, and also the desert west. So Arizona has got a lot of new battery manufacturing, as well as solar and other technologies. So the manufacturing is happening. It's happening in the US, and the deployment is a bit more uniform, a lot of it is going across many different parts of the country. The biggest success stories are two political polar opposites in terms of clean energy deployment: California and Texas. Texas has shown incredible deployment in the last year of grid battery storage as well as solar, and now, increasingly, wind is picking up this year as well.

And how are we doing, though, in relation to inflation reduction? Because honestly, I'm now a California resident, I pay those electricity bills. They're pretty high. I mean, it doesn't feel deflationary at the moment. What's going on there?

Well, I think the story around inflation is always depending on who you interview and how you feel about it in the moment. But if you look at what the provisions in the bill were going to do, based on our modelling, they were going to save every US household a lot of money on energy bills, particularly because people were transitioning from use of fossil fuels and gasoline, to electricity. That shift alone is a primary saver of money for households. Now the issue is inflation is affected by so many things beyond just that one thing that can be affected by the act itself. And so I think there's lots of other factors that come into play. However, I think the latest data from the US Treasury Department shows that inflation has stabilised and is going down. Strictly from an energy and climate modelling standpoint, it's hard to be fully attributional to that particular Act. But in the grand scheme of the outcome, I think mission accomplished on the inflation part. It is not evenly spread out, like you point out with California. And one of the issues with California has almost nothing to do with the Inflation Reduction Act. The high electricity bills have entirely to do with how local utilities are being regulated. And that's a whole separate story.

We won't go there. So interestingly, then, one of the big factors, then, where the savings come is that switch to electric vehicles. Because of just they're just inherently more efficient. And the fact that gasoline is relatively cheap in the US doesn't affect that, it still saves money, right?

Yep, and the listeners of this podcast will know that they're three to four times more efficient. The fact that EVs are that much more efficient than gasoline vehicles is a big factor. And no matter which state you're in, Energy Innovation released a report last year, in all 50 states, switching to an EV saves you money right off the bat, in operational expenses.

In operational. But, okay, so then you've got to buy an EV. And what's going on with the debate about can those EVs be imported? They have to be made in America. Isn't that inflationary? I mean, what's going on there?

So what's happened is that the guidance for which vehicles qualify for EV tax credits was pending for a while from the US Treasury Department. And when they came out, what they allowed for is if you leased an electric vehicle, you would immediately qualify for the full $7,500 incentive for an electric vehicle. And as a result, the share of electric vehicles that are being leased in the US has shot up to well over 50%, from something that was of the order of 10 or 15%. And that alone has made it much more affordable for people to buy EVs right off the lot, or at least lease them. And in the US, leasing is quite popular. Three years you own your car, and then you return it to the dealership for a residual value. And therefore the upfront cost has been dealt with by a lot of increase in leasing. Even ownership, there are many, many models that we've done research on where the ownership costs based on the financing rates available, has been very good. And so it has worked out. I have to say that the premium for many models still exist, and the question around what the US should be doing with regard to trade policy is a completely different beast.

Yeah, well, that's what I was hinting at, really. Do they have to all be GM and Ford, or could they be Chinese brands? Is there going to be this political stance that like Europe has put a tariff on, and I think the US has too, right?

Yeah, well, the tariff is a recent thing, and I think that's just dictated by the fact of the geopolitical tensions right now with China? Would it be better for the US to have cheaper EVs at scale from anywhere in the world? Yes, absolutely. It is unclear, still to be seen, whether the fact that there are some tariffs on Chinese EVs will materially impact adoption in the US in the next four or five year timeframe. Mainly because, unlike Europe, there are no Chinese EVs for sale here in the US. A lot of component parts of EVs are made in China, and the provisions for the incentives in the Inflation Reduction Act are allowing for many of those to continue for another two or three years or so. So we should be okay. It's hard to say, and we'll see. I think the proof will be in the pudding in the next two years.

And within that time period, we've got an election. Trump has had a bit of a pivot recently, hasn't he, on EVs? I mean, he was really vehemently against them. Where is he at now?

Well, predicting what Trump is going to say next is not exactly our forte, but I think he's still pretty much anti EVs. And a lot of the progress that we put forward on climate in general is at risk in the event of a Trump administration. The one silver lining is that the jobs and manufacturing a lot of them have been created in Republican states, and so we think that a fullscale rollback of the Inflation Reduction Act doesn't seem to be a high priority for the Republicans and therefore is unlikely to happen. That does not mean that there will be any real good outcomes on climate. They could really do a bad job in terms of implementing the Act, or neglecting to implement various provisions of the Act, or so on and so forth. So it's highly concerning, of course. The outcome of the election in the US matters a hell of a lot in terms of how the climate law gets implemented. And also, let's not forget that the EPA has rolled out a bunch of standards and regulations. You know, the Inflation Reduction Act was only carrots but benefit cost assessments done by the EPA in order to implement standards were all made better because of the incentives in the Inflation Reduction Act. As a result of which we've got some pretty good regulations on vehicles and power plants and so on for the US.

Yeah. I guess if you throw money at the problem, it gets easier right? I suppose the kind of more centrist, right leaning policy is going to be: How do we get this to go without the subsidy? And there the tension is you would normally import cheaper vehicles. But equally, they're going to try to run a narrative of anti China, so it kind of seems a bit self defeating. Anyway, US politics is complex, we'll know, I guess, soon enough, what happens. But I want to move us on, because within this philosophy of essentially making the whole economy more efficient through electrification — using electricity — there is a component now which is really fascinating, which is industrial heat. Now, you and I have spoken about this before, and actually, listeners of this podcast will be, I think, interested in this topic. So I want to spend a bit of time, because I know this you've looked at... just tell us what are the options when it comes to electricity and industrial heat?

Yeah this is one of my most exciting topics. So let's take a step back on this. A quarter of the world's energy related CO2 emissions comes from burning fossil fuels to provide heat. A lot of us in our everyday lives, what do we see? We see lights, electricity, you know, screens and vehicles. But the big, big chunk of emissions are coming from industrial processes, and primarily that's from heat provision to melt metals drive chemical reactions and all that stuff. And more than 75% of this heat is at temperatures below 1700°C. And I'll explain why that number is important, because that's the higher end of the temperatures that heat batteries can reach, or thermal batteries.

Okay, but first tell us what a thermal battery is.,

Now to get to what a thermal battery is, right? A thermal battery is a very interesting and almost ludicrously simple technology. My nickname for it: hot rocks in a box.

Right, ok.

Basically what it is, is when we think of a battery, we think of electricity in and electricity out. A thermal battery is electricity in — it can be any form of input, renewables, any kind of intermittency — stored as heat and released as heat continuously. Because industry normally needs reliable continuous supply of heat at fairly high temperatures, sometimes at lower temperatures. And a thermal battery basically is the technology that can take intermittent, cheap, renewable power and convert it to 24/7 heat for industry. That's basically what it is.

And it's storage medium, then, is really crucial, right? Because that's essentially the defining characteristic of this group of technologies is you turn electricity into heat using resistance. So heat is then stored, efficiently, in a medium that can take it and then keep topping it up to the right temperature levels. And then it's coming out of steam, or hot air, or these can be defined as you wish, depending on the engineering?

Yeah, because it can reach temperatures up to 1700°C, you can have outputs in whatever form you want. And basically, the interesting thing about thermal batteries is that it's almost 100% efficient. The only loss comes from the material — that's the thermal storage medium — and the insulation. So we're in the high 90s because resistance heating, which is a technology that converts electricity to heat, is almost 100% efficient. And everything else is just losses of heat through the skin of the medium and everything else. And so the key to make this successful is to size the battery correctly and to make sure that you're using cheap and effective storage media for storing the heat. And then you can get whatever you want on the other end. You can get, like, infrared radiation from the thermal medium if it's appropriately done for that. You can get steam. You can get hot water, anything you want, right?

And let's just focus on those media. These are not like rare earths, or anything like that, this is just bits of rock? Or I've seen molten metals, molten salts, being used as a medium, anything that can tolerate high heat, right?

Crushed red brick...

Right.

I mean silicon dioxide, sand.

Yeah.

So the most successful companies are going to be the ones who really tune in on the cheapest and most effective storage medium. So molten salt is something that was very popular for concentrating solar power. You don't need that kind of thermal absorbing capacity for heat batteries at 1700°C, you could do it with crushed red brick, you can do it with silicon dioxide. All these things that are much cheaper, and they don't change phase during the heating process, and they stay chemically stable. That's pretty much what you need. And the good news is there is an Inflation Reduction Act provision which allows for thermal batteries to qualify for a manufacturing tax credit that can also further lower the upfront capital cost. Because ultimately, the problem is not so much whether we can do this. It's really about cost and whether thermal batteries can compete with natural gas.

Well, absolutely. And I want to come on to that. But before I get to that, where are they on the technology readiness curve? Have you got commercial operations? Are we at prototype stage, demo, or we got commercial offers? You could just dial up and order one tomorrow?

So they're very close to being commercial. I mean, for those who are familiar with technology readiness levels, thermal batteries are at a seven or eight. There's nine levels, so they're very close to being fully commercial. So right now, there's commercial companies that are operating. In California, there's two, in fact, in the Bay Area, Antora Energy and Rondo Energy. There's another company called Fourth Element that's based in the US. And now Energy Innovation research, we found companies that are starting up in China and Europe. So all of these will give you a custom-made system if you order one. So they are already operating as a commercial entity, but they haven't reached what I would call the mass commercial scale, that you can see with, say, lithium ion batteries.

But they could get there. Because the components are simple, it's engineering doesn't require big breakthroughs, right? But let's talk about cost, then, for a little bit, because obviously it all depends on the input costs of the electricity and how that compares to current best practice, which is using natural gas. In the US, natural gas is cheap. So how does that work? How do you get the economics to square?

Yeah, so this is a big challenge. So in the US, industrial customers pay, if you take it on a gigajoules equivalent for electricity — and they are able to access cheaper electricity prices than residences — something in the order of $26, per gigajoule. The same the same entity for gas, they pay around $8 a gigajoule. So in just final gigajoule equivalent for delivered energy, electricity is a little bit more than three times more expensive than gas. That is the main problem that we face when it comes to solving industrial heating. It is not, in fact, and this is an important thing to address here, is that a lot of people think industrial heating cannot be reached by direct electrification at the temperatures that are needed, and therefore you need a combustion substitute, like, say, hydrogen. That's not the barrier. It's the cost that's the barrier. And that factor of three difference is something that we need to deal with with policy. And thermal batteries can help a lot, because a thermal battery can be a completely off grid operation. Renewables are really cheap. Marginal cost, almost zero. If you're in a location where you can procure clean renewable power at almost no marginal cost, or very low average cost of operations, and store it and supply your heat, you're then in a very competitive position with regard to natural gas. But if you're buying it off the grid, that's a different story.

So that you need that integration, but there you need geography to be your friend. You need large areas with lots of insulation or lots of wind. But it's buffering, basically. So if you've got curtailed renewables, which are being potentially priced negatively, you can top that up. Can you get a continuous output? Because industries tend to not like intermittency, right? So does the battery have the capacity to give you that continuous flow?

Yes, that's the magic of thermal batteries. If you size it correctly, for most situations of variable renewable input, and you could even size it for certain extreme events like multiple days of cloud cover and so on and so forth, you could get continuous output. In fact, the prerequisite for a thermal battery to work for an industrial application is that it has to meet the existing industrial heat input needs for the current industry, and the battery can be sized accordingly. And given that it's hot rocks in a box with thermal insulation, it's not that much more expensive to have greater sized batteries. All you're going to need is a little bit more land space and volume and stuff like that. And sometimes those are constraints. But the cost barrier is really the sort of setup and installation, and not the additional capacity, additions for more storage. You do still want to probably have some backup if you're entirely off grid in your operations. However, that's unlikely to be used unless in sort of extreme conditions.

And in theory, these batteries also could be sited alongside power generation, right? Because something that we've done episodes on, and I'm interested in, is the repowering of existing thermal assets. And in theory, you could put that thermal battery into an existing thermal power station and run it when it makes sense to run it. And when it doesn't, don't. But it's going to eat away at the emissions of that thermal, and over time, maybe you then start to see the whole thing.

Yes, so this is important. So far we've been talking about one of the biggest climate problems that we haven't addressed, which is industrial heat. But there's another problem, the last bit of cleaning up the power system. Thermal batteries can be useful in that as well. So if you have an existing setup with either a coal or gas combustion turbine facility, you could repower it just with a new heat source, being the thermal battery itself. So obviously you don't want to be making electricity first from renewables, storing it as a heat and then running a combustion turbine. That's an energy efficiency loser if you do it for a large amount of time per year. But in the few hours where you really need that kind of power, it's totally fine. And you can actually then have a way in which you substitute out and repower existing gas and coal facilities with thermal batteries as a heat source.

But the economics then always comes back to electricity versus gas, where you've got this three to one unfortunate ratio, which is worse in some parts the world. Pretty bad here, but I imagine it's equally difficult in certain places — maybe let's take Australia, where the gas is cheap. But then in China, for example, where I know you've done a study. In China, they don't have cheap gas, so does the economics work better there?

Yes. So we just finished a study on China. Thermal battery is basically there, according to our estimate, has a levelized cost of heat production of $45 per megawatt hour. The comparative incumbent technology in China is not a gas boiler, it's a coal boiler, and China has an ETS that applies to most industrial facilities. So when you count in the carbon pricing that they already have, along with the fact that they have to do coal based boilers, the price of that technology comes out to be about $39 per megawatt hour. So we're really in the ballpark. It's only a differential about $6 per megawatt hour, or in kilowatt hour terms, six cents. So we're now starting to realise that in China, actually, the cost competitiveness could be better than in many other regions. We still have a premium, but that can be bridged more realistically, because it's not that big a premium.

And so now I'm interested about Europe as well, because Europe does have a very robust carbon price, but even with that price, it's still not quite closing the gap. And instead of focusing on closing that gap, instead Europe seems to be really focused on a much more expensive system, which is hydrogen, for these industrial processes and for the catching of the balancing of the grid. So why is that? Why have we not got a huge lobby around electrification of heat that's helping close a much smaller gap that's necessary than this pretty large gap on the hydrogen side.

Well, you're right. So the focus on using hydrogen, particularly green hydrogen, for provision of heat for industrial processes, when you compare that efficiency: so you start with the same renewable source for green hydrogen, and you go all the way to the final delivered heat. That full trip is about 16% efficient. Thermal batteries we already discussed is above 90%, so we're talking about a factor of six in terms of efficiency improvements. That's huge. EVs are 3.5 times more efficient than combustion cars, this is six times more efficient. Now, we can speculate as to why the emphasis is on hydrogen, but we think it's misplaced. It really should be that in Europe, if you use direct electrification for industrial heating, and we've just actually released a report, along with Agora Energiewende and Energy Innovation and the Fraunhofer Institute in Germany, 90 plus percent of Europe's Industrial Heat needs can be met with direct electrification. Now you still have cost issues, but your cost issues are going to be six times better than your hydrogen combustion cost issues.

Yeah. And even as a non-economist, I can see how that would be the case. Just basic on the physics and the efficiency.

You know, the important thing is, and we've discussed this before. A lot of people think that efficiency doesn't matter for the economics. That's only true if you can dig up the fuel out of the ground, because the Earth has invested millions of years to make the fuel for you for free. But if you have to make the fuel yourself using input costs that you paid for through renewable energy to make hydrogen, then efficiency is economics. And so people should understand that just because hydrogen is seen as a good solution that can be a drop in, if it is six times less efficient, it will also be six times more expensive.

I'm really interested in the politics of this then, because it's not just Europe that's been captivated by the hydrogen. I think there are 50 plus countries now with hydrogen strategies. I don't know a single one that's got a electric heating strategy. Maybe the US does, but it's not being trumpeted or talked about. So there's a problem here. It seems to be that the fuel narrative, the burn everything narrative, is winning. So how do we switch that around?

Yeah, I mean. I think you and I both know that the people who have current political power in every geography, the oil and gas industry, they're very good at burning things to solve problems. Essentially, that's this technology that they're familiar with. How do you move gases around in pipes or liquid around in pipes for an end use combustion process? You know, the thing that we all should realise, and especially policymakers, should realise in every geography, and that's a lot of the work that we do at Energy Innovation, is that we're on the cusp of a different era. We are no longer going to be looking at basically everything going through the final process of a heat engine being converted to useful energy. With a lot of generation of electricity now being through, done through renewables, or even through nuclear and other sources, we can now do end uses that we care about — moving people around, producing heat for industry and all of that — without combustion. And you know, there's a famous thermodynamic scientist known as Carnot who set an efficiency limit on heat engines, and it's terribly bad. And finally, we're on the cusp of like transcending the Carnot efficiency limits by using electricity for a lot of things that we couldn't use electricity for in the past, And if we embrace that, we're in a completely different future. In fact, we're in a future where we could grow energy demand and meet higher energy demand at lower overall final energy use because of the efficiency improvements, and we could do this by cutting emissions to zero. And what's not to like about that?

Exactly. Well, you and I might love that, and many people might, but the incumbency isn't going to just shut up shop and accept this. We've seen lots of effort, and there are now billions of dollars of subsidy, layer upon layer of subsidies, that are pushing this hydrogen drop ins so that we can keep burning things. Politically, are we going to have to build a much more visible kind of story, which has got big players like the utilities? I mean, where are the electricity bit of this industry, of the industrial sector? Why aren't they more visible? Why aren't they coming together? Is it because they regional or like, where are the equivalents of the Hydrogen Council that pops up anywhere?

This is a great... this is a vexing problem. And I can speak to the US. In the US, the utility industry is simply not as organised in terms of their bringing their political power to the table as the oil and gas industry. And second, where they are organised is mostly about fighting regulation. So they're not coalescing around the fact that their primary product — electricity — can be the fulcrum, the backbone of a future economy that's clean and zero emissions. When they really should be. And we as a technical group, at Energy Innovation, what we do is we engage a lot with utilities and talk to them about various different solution sets. And most of the time on those discussions, they're aligned. Our main job, I think, at this point, for us as a technical group, is to educate the people who make the policy decisions about how this fundamental embrace of electricity as an important fuel is going to make a difference. And it's going to make a positive difference, it's going to make lives better and cheaper for everyone, energy cheaper for people. However, we need a lot more than that. Just a technical group speaking to that is not going to be sufficient. We need a lot of counter lobbying against the oil and gas industry that's keeping on feeding this narrative that the best way to solve this problem is some other new molecule that's going to be burned for your final energy use, and that is driving so much on hydrogen. Our opinion on hydrogen policy is that we think hydrogen is really important for certain end uses, but we don't think it's going to be like a massive, massive final end-use market, because of a lot of the great work that you've looked at and Michael's looked at. It's just not going to be as useful in so many end users as is being portrayed today.

I think we totally agree on that, but I think what we also need now is some successful, high profile projects that show that electricity can do this. It doesn't really matter where in the world, but as long as they are done to time and budget and they work. And then hopefully the commercial confidence and the financial confidence will come. And you'll have then a natural seeking out of these solutions, once we get to that point of everyone accepting. And it needs to be brought together, I think, as a sector so that people understand it. And we also need to decide whether we're calling it heat batteries, thermoelectric storage (TES). There's a sort of narrative piece that needs to be done here as well.

Totally agree. I mean, I wish we could go back in time and rename heat pumps to something that is more relatable for people. This is a critical moment. Because of the time pressures on climate and the fact that we need to act really quickly. Yes, thermal batteries are promising, but they're not everywhere. We need to have lots of successful installations and so on. And at the moment, those are lacking. There's some efforts, I think, in the US and in Europe, but that is critical, absolutely critical to be scale up really quickly.

Yeah, because we haven't really touched on heat pumps, we've done previous episodes. But the delight of a heat pump is even more so than a battery in that that three to one ratio kind of goes away because you're getting the three units from the environment for free, or four if you're using ground source. So that is actually the first frontier of understanding that the electricity is your friend, right?

Yes, we didn't talk about heat pumps, but industrial heat pumps can provide temperatures up to 200°Celsius, which in the US accounts for almost 30% of industrial heat needs. So yes, and because they're three to three to four times more efficient than any other option, including gas combustion, they can automatically bridge that gap with the electricity price.

Great. So just thinking about this layering of support for hydrogen, it's focused on every element, right? There's subsidy for supply, there's subsidy for transportation, there's subsidy on the demand side in some places. But what could we do to sort of open that up, to make perhaps other technologies able to compete with some of those subsidies? Is there a fix here?

Well, the horse may have bolted, but the best way to have done this would not have been to start with just subsidising an energy carrier like hydrogen. What we should be doing is to make sure that we have subsidies for various end users that are emitting to be cleaned up, and to do so in the best technology-neutral, cost effective way. So let's go by some of these one by one, right? So if we are looking at heavy duty trucking. Now, for heavy duty trucking, if you just had a zero emission vehicle required like we might have in the European Union soon, where any form of zero emission technology can meet the standard, then it's very likely that batteries will probably beat out hydrogen even in long-haul trucking. Now, let's take another example: industrial heating. If you had a policy, basically that said, we would like to have some kind of standard for zero emission heat. You could call it a clean-heat standard then, and you can meet it in any way that you want, it is very likely that direct electrification, because it's cheaper and more efficient than hydrogen, it'll win out. We are in a unfortunate situation where we have decided before looking closely at the end uses, that hydrogen has value by itself, and therefore most countries have jumped into producing production subsidies for hydrogen.

Yeah.

And by just doing that and not specifying good end-uses, we've created a situation in the US and Europe, and I'm worried that it's going to happen in China and India as well, where, basically, hydrogen subsidies will make it artificially cheaper than electricity for a certain length of time until that subsidy expires.

Taking us down to cul de sac.

Yeah, and then people will lock in end users on that and then we're in a situation where we're using a less-efficient fuel. Now, efficiency, again, is cost. Remember, once that subsidy expires, remember that hydrogen cannot be cheaper than electricity. Why? Most probably the winning technology is going to be green hydrogen, based on electrolysis. And electrolysis, the input fuel is electricity. So at the end of the day, you're not going to have a situation where hydrogen is going to be cheaper, but it's going to appear so for several years, while subsidies last on the production side.

Yeah. Well, let's hope we can quickly wake out of this little dream that we're in and start to focus in on these technology neutral approaches, as you say, now. Anand, I wanted to talk about another topic that we you and I have talked about, which is: When you think about climate, yes, electrification now is hoving into view as the easiest and perhaps quickest way to do abatement of emissions. But we're starting very late, and there is already a huge problem of the build up of greenhouse gases in the atmosphere. And you and I live now in the Bay Area, and there's an awful lot of focus on, 'Okay, let's not think about the flow of continuing greenhouse gas emissions. Let's just focus on that stock problem, and how do we get that down.' Like how we're going to remove the CO2 or the greenhouse gases from the atmosphere. You have some interesting views on this, and I'd love to just explore those a little.

Yeah, this is very interesting like this. Like, this does require a little bit of a thought exercise, right? So the other variation of the argument that I've heard, which is almost exclusively in our climate world, which is a small world of people who care exclusively about climate. I've frequently heard something like, we are not going to be able to stay under 1.5°C or 2°C thresholds without a lot of carbon removal. Therefore a lot of carbon removal will be deployed. Now this sort of statement just assumes that governments will heed climate scientists and prioritise keeping warming under these thresholds as something that is very politically salient. But you and I have seen this, we've all seen this in the last few years. Climate scientists have been shouting from the rooftops about the importance of these thresholds. But if you look across the world, no one's policy is really taking 1.5°C or 2°C as that much of a priority that they will cut emissions in line for it. In fact, I think climate action tracker shows that not a single NDC (Nationally Determined Contribution) is aligned with that kind of threshold. So we are already, even when the climate impacts are not as bad as they could be, in a world where we're not seeing that much prioritisation of CDR (Carbon Dioxide Removal), or anything that will be about deploying technologies that can be keeping us under a threshold. So I worry a lot in a situation where, if you have a worsening climate, let's say it's 2045, and we exceeded 1.5C in 2030 — 15 years on, we're going to be in a situation where, basically, a government or any politician has to come to a public and say, 'Look, what we need to do now is to draw down the atmospheric concentration of CO2 so you can all have a climate that you can't even remember back in 2030.' And the reason that's important, unlike say EVs, or say solar panels or anything else, is that at all times, for the majority, CDR technologies are going to be bought and paid for by the government. Because ultimately, it's a social good. It's sort of an invisible form of trash disposal. And as long as it remains entirely a social good, it's primarily going to be bought and paid for by the government. And to do that, you need to have the political will in order to be able to pay for it. And I'm just wondering, and I'm questioning whether we're going to be in that world ever because of the way that we, just as a collective society, don't tend to prioritise climate solutions.

So there's a few things in there that I wanted to just tease out. So one is: unlike, say, for example, other social goods, which were where the government has stepped in. Let's think of maybe pollution into rivers or sewage in Victorian England, right? The government did recognise there was a social problem, did invest in infrastructure and started that waste disposal requirement, right? It was a requirement. You think this is different because we can't see the problem? Or because we're going to just be like the boiling frog who's get got used to the problem and therefore can't prioritise getting back to something?

Yeah, it is different, in my opinion. When you get rid of a stinky river's pollution, you have also an immediate, local, private benefit that people can tangibly feel and see. We've known this problem of climate, and like long-lived greenhouse gas pollutant like CO2, has effects on our climate, but it unfolds slowly and it's an imperceptible threat. So people are not going to respond — as we have seen people don't — to climate as a threat that needs to be solved over other pocketbook issues that they're going to face in our mythical 2045, where unfortunately warming is well over 1.5°C. In that environment, people are going to be likely prioritising pocketbook issues around jobs, security, other air quality and water pollutant issues, extreme weather events, but they will be looking at it more along the lines of making sure that they and theirs can survive in that environment. And having support for something that will yield very long term benefits is going to be very difficult. Now, I don't want to sound extremely negative about all forms of CDR. There will be some voluntary markets, we see that already. We see Frontier and other companies that are investing in CDR technology. But it's hard for me to see a voluntary driven market to be at the scale required for some of the projections we see that is required for CDR.

And this is specifically where we're talking about engineered removals, right? You know the machines that we've seen that suck out the 420 parts per million from the air and that require energy. You know, they require resources to build. So that's your scepticism, somebody's got to pick up the bill for that energy, and for that resource allocation, and without an immediate benefit, it's a hard sell for a politician.

Correct. This is primarily talking about direct air capture, the main benefit is removing the carbon from the atmosphere. Now, there are other CDR technologies I've heard of recently, like enhanced rock weathering, for example, that apparently give an immediate benefit to the farmer who spreads the rock across their field. Now that's not entirely a social good anymore. There's a small private good aspect to it. As soon as you get into being able to sell a product based on their private good benefits, then possibly you're going to get more deployment. But if you're primarily in the social good territory, particularly for something that's fairly invisible and very long term, it's hard for me to see long-term support for it.

And it's competing for resources and money and attention. So really what we're saying is, if you're interested in the removal side, you know the sort of sink side, probably you need to just preserve nature's capabilities, right? Because nature's already doing this job for us for free, up to a point, it may stop doing that. So holding on to those natural sinks, and then where there are co-benefits, like the land-based sinks, if that works, then maybe there's a market there. But the pure play human engineering, we're just going to build machines, that's where your sceptical?

Right. So basically, my solution set, with this understanding of how society works is: I think what we're going to have to do is double down even more on energy transitions that are centred around private goods like electric vehicles and solar and wind and thermal batteries, like we discussed earlier, and so on, because people and companies buy those for something that is a service that they need to pay for anyway. That's your best case. We probably need to do a lot more of that and lot quicker than we think, and not rely so much on some kind of future market for DAC (direct air capture). Now the second thing is, there is one technology, which was articulated by your previous guest, that also increases land's ability to sequester carbon. That's alternative proteins. So that is a private good, although you guys discuss many of the barriers for it. But if people take up alternative proteins, then, by just buying their product, the very fact that it has all these upstream impacts on land and eventually leads to some sequestration, it might be the only consumer good that's actually a carbon-negative technology,

Right. Yeah, that's another big wedge of the problem, is the food production system, and how we do that in a way that gives more space for nature? Absolutely. But thinking through this thought experiment, we're in a world where weather extremes are raining down. Everything's got harder. Public budgets are under pressure. Do you think there will emerge an argument in favour of geoengineering, because that does have a more short term impact. You have to keep doing it, and it's not cheap. Well, actually, it's not that expensive, but do you think we go heavy on mitigation and adaptation? Engineered CDR falls by the wayside, and we skip to new engineering. Is there a scenario there?

It might happen. I mean, we're already seeing basically them. There's experiments here in the Bay Area about like cloud brightening and things like that, which are fairly low cost and can actually have a material impact on the local weather as well as the global climate. It's hard for me to know, but if I were to apply the same theory and logic we've been going forward with, there is possibly an increased chance in extreme climate situations where there could be some level of like unilateral deployment of geoengineering, which has its own risks and concerns. But it may be that that would be something that is more likely to happen because of what you point. The immediate benefit to people.

So really, what we're saying is the IPCC scenarios, which people are using to justify this big push into engineered CDR. They're not really thinking about it from a political economy perspective, right? They're taking on trust that society will listen to the science, which we know they haven't done and are not likely to, or at least they'll be selective in the science that they take on.

Yeah, the IPCC's drawdown scenarios really worry me. Especially when they say, here's how we can meet 1.5°C with some overshoot. Because the thing is, these so called overshoot pathways essentially assume that somehow that salient figure of 1.5°C or 2°C matters at as a highest priority over other things. That's just unlikely.

The overshoot scenarios worry me because it leaves open this idea that somehow we're just going to be able to fix that thing that we need to do to draw it down at the end. It does to a point, but it doesn't really in a detailed way factor in the fact that nature, which is currently 50% of the sink that we're relying on, may just say, 'You know what? You've pushed me to a limit. I'm not going to provide that sink anymore.' Then it flips into a source on a net basis, and then you're into all manner of problems, right? And because it's a threshold, time-bound problem. If we push it too far, we get to that point where nature stops being our friend, then really we're in trouble. We may be there already, right, given the sea temperatures that we're seeing right now.

Yeah, and the ocean has been absorbing a huge amount of CO2, and we don't know when that situation will no longer sustain. Correct. So, I mean, I think on the solution-oriented frame of this is: This is what makes the speed and scale of the energy transition and the food and agriculture transition so much more important. If we can do everything we can in the next decade or so to stop emitting new greenhouse gases, we're better off because we're less likely to push nature over the edge, less likely to push oceans over the edge — that's really important — and less likely to need long-term politically doubtful support for carbon dioxide removal.

Yeah, when we'll be paying money for all sorts of other things, including just adapting to the weather that we're currently experiencing. Well, Anand, thank you so much for a wonderful conversation. I'm sure we'll have many more. And thank you for your work, and we'll put links in the show notes for all the reports that we mentioned. So thank you.

Thank you, Bryony. It was wonderful to be here for this.

Thank you.

So that was Anand Gopal. As mentioned, we'll share links in the show notes to the two recent Energy Innovation reports looking at industrial decarbonisation in China and Europe, and also a previous report that looked at thermal electrical batteries as a category of technologies. It seems likely that as electrical heating technologies scale up and become fully commercialised, they could provide an attractive, practical alternative to storing electricity in the form of hydrogen-based fuels or applying carbon capture and storage to fossil fuels. The key issue determining their uptake will, of course, be costs. At present, electricity is more expensive than gas almost everywhere, and so absent a supportive policy environment, uptake may prove very slow. In the US, the Inflation Reduction Act has taken steps to provide this environment, and hopefully other regions will soon follow suit in adopting more technology neutral support measures. And as far as engineered carbon dioxide removal goes Anand's thought experiment definitely resonates with my experience of politics. Just because the science seems strongly to indicate something needs to happen really does not mean it actually will. Thanks to Genie Harrison for her research support and to our producer, Oscar Boyd. And thanks to you for listening.

Cleaning Up is brought to you by the Liebreich Foundation, the Gilardini Foundation and EcoPragma Capital.

Hot Rocks in a Box: The Rise of Thermal Batteries - ep168: Anand Gopal

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Bryony Worthington

Anand Gopal

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