1 00:00:02,680 --> 00:00:18,759 Speaker 1: Welcome to zero. I'm Akshatrati. It's an interesting moment in 2 00:00:18,800 --> 00:00:21,560 Speaker 1: the climate fight. Twenty twenty four will be a year 3 00:00:21,760 --> 00:00:25,360 Speaker 1: of many big elections around the world, and the governments 4 00:00:25,400 --> 00:00:28,240 Speaker 1: that end up with power will determine the pace of 5 00:00:28,280 --> 00:00:32,960 Speaker 1: the energy transition no matter what politics prevail. One thing 6 00:00:33,000 --> 00:00:36,000 Speaker 1: that will continue to speed up the transition is technology. 7 00:00:36,680 --> 00:00:39,479 Speaker 1: But even there the picture is a little bit mixed. 8 00:00:39,560 --> 00:00:43,200 Speaker 1: Right now. Last year saw record spending on clean energy, 9 00:00:43,440 --> 00:00:47,720 Speaker 1: reaching one point seven trillion dollars. That's six hundred billion 10 00:00:47,760 --> 00:00:51,360 Speaker 1: dollars more than what was spent on fossil fuels, and 11 00:00:51,440 --> 00:00:54,360 Speaker 1: yet it is still far short of the four point 12 00:00:54,440 --> 00:00:57,960 Speaker 1: five trillion dollars in clean energy investment needed to be 13 00:00:58,000 --> 00:01:01,760 Speaker 1: on track to meet climate goals. And by design, clean 14 00:01:01,880 --> 00:01:05,320 Speaker 1: energy spending is front loaded with the cost of installing, say, 15 00:01:05,319 --> 00:01:10,040 Speaker 1: solar panels or wind turbines or hydrogen electoralizers. That's becoming 16 00:01:10,040 --> 00:01:13,440 Speaker 1: more difficult in an environment with high interest rates, and 17 00:01:13,520 --> 00:01:16,600 Speaker 1: of course those are not the only technologies the world needs. 18 00:01:17,000 --> 00:01:20,680 Speaker 1: Industrial sectors like steel, cement, and plastics also need to 19 00:01:20,720 --> 00:01:26,279 Speaker 1: be decarbonized. Earlier stage technologies need venture capital funding, which 20 00:01:26,400 --> 00:01:30,920 Speaker 1: is also falling, but some emerging companies have found a 21 00:01:30,959 --> 00:01:35,080 Speaker 1: way to successfully take their technology to the market. How 22 00:01:35,120 --> 00:01:39,679 Speaker 1: did they do it? That's the question I ask Claire Curry, 23 00:01:40,120 --> 00:01:44,080 Speaker 1: Global head of Technology, Industry and Innovation at Bloomberg NEF. 24 00:01:44,800 --> 00:01:47,760 Speaker 1: We also talked about investment trends in climate tech and 25 00:01:47,840 --> 00:02:05,840 Speaker 1: how to find the best early stage startups. Claire, Welcome 26 00:02:05,840 --> 00:02:09,000 Speaker 1: to the show. Thanks for having me. Now, one of 27 00:02:09,040 --> 00:02:13,240 Speaker 1: the things that is poorly understood about the energy transition 28 00:02:13,600 --> 00:02:17,799 Speaker 1: is how much climate tech and climate tech investments from 29 00:02:17,840 --> 00:02:20,880 Speaker 1: early stage all the way to scaling them up matters. 30 00:02:21,320 --> 00:02:23,480 Speaker 1: And we're going to talk a lot about how exactly 31 00:02:23,520 --> 00:02:27,160 Speaker 1: that works, how different types of startups have used that 32 00:02:27,919 --> 00:02:32,680 Speaker 1: journey to try and make the commercial case for being around. 33 00:02:33,240 --> 00:02:36,920 Speaker 1: But let's start with a basic understanding of where we 34 00:02:37,040 --> 00:02:41,760 Speaker 1: stand on investments in the energy transition now. Plumageney, I've 35 00:02:41,800 --> 00:02:44,920 Speaker 1: put out a report saying last year was a record 36 00:02:45,280 --> 00:02:48,880 Speaker 1: investment year. One point seven trillion dollars were invested in 37 00:02:49,080 --> 00:02:53,920 Speaker 1: all kinds of clean energy technologies at scale, but that 38 00:02:54,080 --> 00:02:57,440 Speaker 1: is still far from what is needed. We're about a 39 00:02:57,520 --> 00:03:00,640 Speaker 1: third of the way for the energy try to be 40 00:03:00,840 --> 00:03:04,720 Speaker 1: on track from night zero. If you look at that number, 41 00:03:04,800 --> 00:03:07,440 Speaker 1: the one point seven trillion number. How do you think 42 00:03:07,480 --> 00:03:10,400 Speaker 1: about where the energy transition is going and which of 43 00:03:10,440 --> 00:03:13,240 Speaker 1: the sectors are getting that kind of money. 44 00:03:13,520 --> 00:03:16,320 Speaker 2: We'd a really pivotal moment right now in the transition. 45 00:03:16,520 --> 00:03:21,160 Speaker 2: We've spent fifteen years or so scaling solar, wind, lithium, ions, 46 00:03:21,240 --> 00:03:25,600 Speaker 2: so batteries, really those three things actually, and that's been amazing, 47 00:03:25,800 --> 00:03:28,120 Speaker 2: huge effort, and most of that one point seven trillion 48 00:03:28,520 --> 00:03:31,480 Speaker 2: went to those three areas, plus an investment in grade expansion. 49 00:03:32,240 --> 00:03:34,480 Speaker 2: That's great. We need lots more of that, so keep 50 00:03:34,520 --> 00:03:38,960 Speaker 2: on building those projects. And they've really worked towards at 51 00:03:39,040 --> 00:03:41,320 Speaker 2: least a path for us to see how we can 52 00:03:41,560 --> 00:03:45,000 Speaker 2: clean up the power sector and at least passenger vehicle 53 00:03:45,040 --> 00:03:48,880 Speaker 2: transport sector through electrification. So that's almost half of the 54 00:03:48,920 --> 00:03:52,320 Speaker 2: CO two PI. We emitted about thirty seven giga tons 55 00:03:52,320 --> 00:03:54,880 Speaker 2: of CO two last year, almost half of that. We 56 00:03:54,920 --> 00:03:56,880 Speaker 2: have a route to decarbonize. We're far from doing it, 57 00:03:56,920 --> 00:03:58,520 Speaker 2: but we know how we can do it. It's now 58 00:03:58,560 --> 00:04:01,600 Speaker 2: a scaling investment problem. It's not technology problem. I mean, 59 00:04:01,640 --> 00:04:07,200 Speaker 2: in generalizing, we still have commercial transport, industry, materials and 60 00:04:07,240 --> 00:04:11,040 Speaker 2: ag and food to decarbonase, and we are less certain 61 00:04:11,400 --> 00:04:13,760 Speaker 2: how to do that. There are some cool technologies and 62 00:04:13,800 --> 00:04:17,080 Speaker 2: we'll talk about them, but many aren't scaled, and many 63 00:04:17,160 --> 00:04:20,280 Speaker 2: are scalable but aren't gained the financing. Well, really, where 64 00:04:20,320 --> 00:04:23,279 Speaker 2: we are now actually is I said, it's pivotal because 65 00:04:23,400 --> 00:04:26,000 Speaker 2: last year, for the first time, we began to see 66 00:04:26,040 --> 00:04:29,040 Speaker 2: the tens of billions being invested into those technologies to 67 00:04:29,080 --> 00:04:31,640 Speaker 2: scale the other half of the pie. Those technologies include 68 00:04:31,680 --> 00:04:37,240 Speaker 2: carbon capture, hydrogen, drop in biofuels, some nuclear, some geothermal 69 00:04:37,800 --> 00:04:41,640 Speaker 2: heat pumps for electrification of buildings, and we saw I mean, 70 00:04:41,720 --> 00:04:44,800 Speaker 2: for CCS it was about eleven billion was invested in 71 00:04:44,880 --> 00:04:47,320 Speaker 2: projects that are going to get built. Hydrogen was about 72 00:04:47,320 --> 00:04:50,160 Speaker 2: ten billion. So we're seeing small numbers, but obviously it's 73 00:04:50,160 --> 00:04:52,560 Speaker 2: a fraction of that one point seven you mentioned trillion. 74 00:04:53,200 --> 00:04:56,080 Speaker 1: Now that is the total amount of investment going in 75 00:04:56,120 --> 00:04:58,800 Speaker 1: and this is of course, the tens of billions are 76 00:04:59,120 --> 00:05:02,760 Speaker 1: typically to work commercial scale, but most of the technologies 77 00:05:02,760 --> 00:05:06,159 Speaker 1: that will be crucial for reducing emissions from industry and 78 00:05:06,279 --> 00:05:10,720 Speaker 1: from agriculture are still at an early stage. And one 79 00:05:10,720 --> 00:05:13,479 Speaker 1: of the ways in which these early stage technologies get 80 00:05:13,520 --> 00:05:17,839 Speaker 1: to scale is through a model that's been perfected over 81 00:05:17,880 --> 00:05:21,840 Speaker 1: the past three four decades. The venture capital model, where 82 00:05:22,320 --> 00:05:26,000 Speaker 1: you have investors who are taking on a big, risky bet, 83 00:05:26,360 --> 00:05:29,479 Speaker 1: typically one hundred companies and maybe ten of them will 84 00:05:29,520 --> 00:05:33,440 Speaker 1: become commercial, ninety will fail. And that's been a very 85 00:05:33,480 --> 00:05:36,359 Speaker 1: important part of the climate tech story. In recent years, 86 00:05:36,400 --> 00:05:38,640 Speaker 1: we see investments have just been going up and up. 87 00:05:39,480 --> 00:05:42,120 Speaker 1: That's starting to change now. The numbers that you have 88 00:05:42,160 --> 00:05:45,400 Speaker 1: for Bloomberg and If show that things are flattening. 89 00:05:46,200 --> 00:05:49,800 Speaker 2: That's true, and that's actually not it's no reflection of 90 00:05:49,839 --> 00:05:53,279 Speaker 2: the appetite in the market. There's actually more dry powder 91 00:05:53,440 --> 00:05:56,159 Speaker 2: i e. Money that's been raised by climate funds that 92 00:05:56,160 --> 00:05:58,880 Speaker 2: hasn't been spent yet than ever before. I think it's 93 00:05:58,920 --> 00:06:03,280 Speaker 2: about fifty billion dollars. There's lots of appetite to raise 94 00:06:03,320 --> 00:06:07,080 Speaker 2: money in this space. The challenge is just generally macroeconomics. 95 00:06:07,160 --> 00:06:10,440 Speaker 2: As we all know, the economy has not been great 96 00:06:10,440 --> 00:06:13,279 Speaker 2: for venture capital because of interest rates. Last year the 97 00:06:13,279 --> 00:06:16,360 Speaker 2: global VC market fell into has a dollars spent by 98 00:06:16,440 --> 00:06:19,359 Speaker 2: thirty eight percent, Yet before it was as much again, 99 00:06:19,440 --> 00:06:23,200 Speaker 2: so really it's a twenty three one huge peak. We've 100 00:06:23,200 --> 00:06:26,559 Speaker 2: now seen a huge job climate tech. Therefore, you could 101 00:06:26,600 --> 00:06:30,080 Speaker 2: say being steady the last two years is a success 102 00:06:30,080 --> 00:06:33,000 Speaker 2: story because it now comprises a higher percentage of the 103 00:06:33,000 --> 00:06:35,640 Speaker 2: total market that it used to. But there is quite 104 00:06:35,640 --> 00:06:38,320 Speaker 2: a lot of nuance in there, and it means we 105 00:06:38,400 --> 00:06:40,960 Speaker 2: may continue to see it flat, which obviously is not 106 00:06:41,080 --> 00:06:43,559 Speaker 2: good for startups. Don't it raise money? 107 00:06:43,720 --> 00:06:46,880 Speaker 1: And the reason why, even though venture capital itself is 108 00:06:46,960 --> 00:06:51,279 Speaker 1: falling investments in early stage companies has remained flat in 109 00:06:51,400 --> 00:06:53,760 Speaker 1: how you measure it at Bloomberg en EF which is 110 00:06:54,680 --> 00:06:58,400 Speaker 1: venture capital and private equity money. So why is the 111 00:06:58,720 --> 00:07:02,400 Speaker 1: bee part, the private dec DeepArt so important in this story. 112 00:07:03,040 --> 00:07:05,599 Speaker 2: Yeah, So the way we track the VC or startup 113 00:07:05,640 --> 00:07:09,520 Speaker 2: climate tech financing world is to track deals money raised 114 00:07:09,640 --> 00:07:13,240 Speaker 2: by startups. Now we classify as startup in our space, 115 00:07:13,360 --> 00:07:18,559 Speaker 2: is anyone that's privately backed, so not public raising from 116 00:07:18,960 --> 00:07:21,400 Speaker 2: angel and seed stage. They're very small amounts of money 117 00:07:21,680 --> 00:07:25,000 Speaker 2: really right through to the whole alphabet. Right it's Series 118 00:07:25,040 --> 00:07:28,600 Speaker 2: A through to PROBYG. At what point they normally get 119 00:07:28,600 --> 00:07:30,880 Speaker 2: acquired or they go public or they scale up it 120 00:07:30,880 --> 00:07:33,280 Speaker 2: where they need to raise private money anymore, they're profitable. 121 00:07:33,960 --> 00:07:36,360 Speaker 2: That means many of those companies at Series A, great, 122 00:07:36,400 --> 00:07:39,080 Speaker 2: they're just raising VC money. Many of the companies at 123 00:07:39,160 --> 00:07:42,520 Speaker 2: Series C through the g are actually attracting now what 124 00:07:42,520 --> 00:07:45,920 Speaker 2: we would call growth equity. It's not classic pe that 125 00:07:45,960 --> 00:07:48,640 Speaker 2: do a lot MA. It's more companies that have that 126 00:07:48,680 --> 00:07:51,600 Speaker 2: want to write one hundred million dollar check sizes because 127 00:07:51,600 --> 00:07:54,160 Speaker 2: their fund is two billion dollar size. They're diferently not 128 00:07:54,480 --> 00:07:57,080 Speaker 2: the VC size. We think that money is going to 129 00:07:57,080 --> 00:08:00,240 Speaker 2: be increasingly important, so we track it because actually is 130 00:08:00,280 --> 00:08:02,800 Speaker 2: an increasing share of the pie, particularly in Asia. 131 00:08:03,920 --> 00:08:07,360 Speaker 1: And this is a very good place to understand the 132 00:08:07,480 --> 00:08:11,280 Speaker 1: journey of a startup. Right roughly, there are five stages. 133 00:08:11,360 --> 00:08:14,040 Speaker 1: You can slice and dice it different ways. The first 134 00:08:14,120 --> 00:08:18,480 Speaker 1: is you inventor technology, then second is pilot, the third 135 00:08:18,640 --> 00:08:21,720 Speaker 1: is you demo it. You show that it can actually 136 00:08:21,760 --> 00:08:25,480 Speaker 1: work at a reasonable scale, then you build what would 137 00:08:25,480 --> 00:08:27,680 Speaker 1: be a first of a kind commercial plant, and then 138 00:08:27,720 --> 00:08:30,840 Speaker 1: you finally build a scaler plant. In my head, the 139 00:08:30,840 --> 00:08:32,840 Speaker 1: easiest way to understand it is to think about a 140 00:08:32,880 --> 00:08:36,719 Speaker 1: steel startup, for example, and invention is making grams in 141 00:08:36,760 --> 00:08:42,440 Speaker 1: a lab. Pilot is making kilograms in a startup in 142 00:08:42,480 --> 00:08:46,200 Speaker 1: a decent lab, but not a big lab. Demo is 143 00:08:46,240 --> 00:08:51,520 Speaker 1: where you make tons of that material. In your first 144 00:08:51,559 --> 00:08:54,480 Speaker 1: of a kid you're making thousands of tons, and then 145 00:08:54,880 --> 00:08:57,000 Speaker 1: in a commercial scale, you're making millions of tons, so 146 00:08:57,000 --> 00:09:00,320 Speaker 1: that each step is sort of a thousand times more 147 00:09:00,440 --> 00:09:02,559 Speaker 1: than what you've done in the past. And many of 148 00:09:02,600 --> 00:09:06,680 Speaker 1: these startups have struggled at a very particular stage, which 149 00:09:06,720 --> 00:09:10,880 Speaker 1: is going from demo to commercial. There's the first of 150 00:09:10,920 --> 00:09:13,640 Speaker 1: a kind plant that needs to be built. Let us 151 00:09:13,640 --> 00:09:16,280 Speaker 1: talk through a few examples of some of the companies 152 00:09:16,320 --> 00:09:17,480 Speaker 1: that have achieved that. 153 00:09:18,920 --> 00:09:22,200 Speaker 2: Yeah, that it's often called the value of death, which 154 00:09:22,200 --> 00:09:25,040 Speaker 2: sounds very dramatic, but many startups fail at that point. 155 00:09:25,800 --> 00:09:27,520 Speaker 2: It's pretty helpful for me to mention a few reasons 156 00:09:27,520 --> 00:09:30,000 Speaker 2: before you go into the examples. One is the kind 157 00:09:30,000 --> 00:09:33,240 Speaker 2: of capital you need. Changes vcs might fund, as you say, 158 00:09:33,320 --> 00:09:36,760 Speaker 2: your kilograms of production, they aren't big enough check sizes 159 00:09:36,800 --> 00:09:38,760 Speaker 2: to fund the hundreds of millions of dollars you need 160 00:09:38,840 --> 00:09:41,360 Speaker 2: to raise for your commercial so you need to suddenly 161 00:09:41,440 --> 00:09:46,000 Speaker 2: attract project equity from banks or pe firms or other 162 00:09:46,120 --> 00:09:49,959 Speaker 2: investment firms, and maybe debt. Both of those are incredibly 163 00:09:49,960 --> 00:09:53,640 Speaker 2: hard to attract because they don't like technology risk, they 164 00:09:53,679 --> 00:09:55,960 Speaker 2: don't like first of a kind. If they do, they 165 00:09:56,040 --> 00:09:58,600 Speaker 2: charge you lots of money and then your project becomes unprofitable. 166 00:09:59,040 --> 00:10:02,240 Speaker 2: They like margins, and that's quite hard to achieve. A 167 00:10:02,280 --> 00:10:05,079 Speaker 2: lot of climate tech, particularly first of a kind, they 168 00:10:05,280 --> 00:10:09,199 Speaker 2: like secure guaranteed revenues, and that again is tricky if 169 00:10:09,200 --> 00:10:11,160 Speaker 2: your firstive a kind is making a brand new product 170 00:10:11,320 --> 00:10:13,560 Speaker 2: never made before, or if you're making your product with 171 00:10:13,600 --> 00:10:16,640 Speaker 2: a green price premium, among many other things. But this 172 00:10:16,720 --> 00:10:19,839 Speaker 2: are some of the challenging, challenging reasons to get from 173 00:10:19,880 --> 00:10:20,840 Speaker 2: demo to commercial. 174 00:10:21,400 --> 00:10:23,520 Speaker 1: And there are examples that we need to pick, and 175 00:10:23,559 --> 00:10:28,160 Speaker 1: particularly maybe examples that are in these hard, harder sectors 176 00:10:28,200 --> 00:10:33,520 Speaker 1: such as industry or agriculture. One that comes to mind 177 00:10:33,600 --> 00:10:37,160 Speaker 1: that I've followed for some time now is Lancetech. This 178 00:10:37,240 --> 00:10:40,199 Speaker 1: company is now more than ten years old. Came up 179 00:10:40,440 --> 00:10:43,640 Speaker 1: at a time when there was a demand for the 180 00:10:43,679 --> 00:10:45,880 Speaker 1: product it was making, and then it went through a 181 00:10:46,120 --> 00:10:49,840 Speaker 1: very difficult cycle of that product not having that investment. 182 00:10:50,040 --> 00:10:51,360 Speaker 1: Just talk us through its journey. 183 00:10:51,600 --> 00:10:54,319 Speaker 2: Yeah, lanc Tech is a great example, found in two 184 00:10:54,320 --> 00:10:56,719 Speaker 2: thousand and five, so actually, yeah, pretty old. And I 185 00:10:56,760 --> 00:10:59,760 Speaker 2: think it's the first thing. This stuff takes time. It's 186 00:10:59,800 --> 00:11:02,120 Speaker 2: very rare to see a startup founded and then bang, 187 00:11:02,160 --> 00:11:03,760 Speaker 2: bang bang, they get all these five steps in a 188 00:11:03,800 --> 00:11:06,040 Speaker 2: few years. So yeah, it's taking them some time there. 189 00:11:06,080 --> 00:11:08,720 Speaker 2: She went public I think last year, but privately backed 190 00:11:08,760 --> 00:11:11,560 Speaker 2: by vcs up to then. In nutshell, they have a 191 00:11:11,640 --> 00:11:16,640 Speaker 2: microbe or many microbe types that turn nasty kind of 192 00:11:16,679 --> 00:11:21,360 Speaker 2: industrial gases or waste bio mass to ethanol. When they 193 00:11:21,400 --> 00:11:24,600 Speaker 2: were founded, their US market was very keen on ethanol 194 00:11:24,679 --> 00:11:27,240 Speaker 2: as the future of road transportation, so that was their 195 00:11:27,280 --> 00:11:30,280 Speaker 2: target market. As you said, since ethanol still exists, it's 196 00:11:30,280 --> 00:11:32,200 Speaker 2: a huge market, but it's no longer the darling of 197 00:11:32,240 --> 00:11:36,080 Speaker 2: the transport market future. It's pivoted. And they've done two 198 00:11:36,160 --> 00:11:39,600 Speaker 2: things really well. One is most startups have to build, 199 00:11:39,640 --> 00:11:42,560 Speaker 2: own operate. That's the demo to commercial value of death, 200 00:11:42,640 --> 00:11:45,880 Speaker 2: raising hundreds of millions of dollars. Landadech instead found a 201 00:11:46,000 --> 00:11:50,640 Speaker 2: niche of clients willing to actually license its technology from 202 00:11:50,840 --> 00:11:54,440 Speaker 2: day one pre commercial project and then pay to build 203 00:11:54,480 --> 00:11:58,440 Speaker 2: the plants. That's pretty cool. They did this through seeking out. 204 00:11:58,559 --> 00:12:02,440 Speaker 2: Chinese steel company were mandated to stop emitting lots of 205 00:12:02,520 --> 00:12:07,199 Speaker 2: unburnt nasty processes from coal to steal from their plants. 206 00:12:07,480 --> 00:12:09,199 Speaker 2: So the government managed them, you need to do this 207 00:12:09,280 --> 00:12:12,000 Speaker 2: and will shut you down. So they formed a JV 208 00:12:12,520 --> 00:12:16,480 Speaker 2: paid Lancetech to license the technology to eat up their 209 00:12:16,559 --> 00:12:19,600 Speaker 2: nasty off gases tenet ethanol. Lance Tech had the option 210 00:12:19,640 --> 00:12:21,600 Speaker 2: to buy the ethanol and sell it on. So it's 211 00:12:21,600 --> 00:12:24,080 Speaker 2: two revenue streams straight from the bat. It's the licensing 212 00:12:24,120 --> 00:12:27,480 Speaker 2: of the tech and it's the ethanol revenue and de 213 00:12:27,679 --> 00:12:30,480 Speaker 2: risking them need to invest in the projects. 214 00:12:30,000 --> 00:12:33,920 Speaker 1: And the bill to operate model versus a licensing model 215 00:12:34,240 --> 00:12:38,160 Speaker 1: is basically a capital play. If you're building and operating, 216 00:12:38,240 --> 00:12:41,599 Speaker 1: you are going to be spending hundreds of millions of 217 00:12:41,679 --> 00:12:46,559 Speaker 1: dollars doing that. When you're licensing, you're actually generating revenue immediately. 218 00:12:46,600 --> 00:12:50,319 Speaker 1: You're not actually putting in the money yourself, and so 219 00:12:50,480 --> 00:12:54,240 Speaker 1: that allows a startup to be able to continue scaling 220 00:12:54,240 --> 00:12:57,760 Speaker 1: its technology and also learning from somebody else building it 221 00:12:57,800 --> 00:12:58,880 Speaker 1: out completely. 222 00:12:58,920 --> 00:13:00,840 Speaker 2: You're de risking a lot. The reason we will don't 223 00:13:00,880 --> 00:13:04,440 Speaker 2: do it twofold one is it's less money. Overall, licensing 224 00:13:04,480 --> 00:13:06,000 Speaker 2: revenues are going to be much less than if you 225 00:13:06,040 --> 00:13:08,760 Speaker 2: own the plant and sell the output of the plant. Second, 226 00:13:09,160 --> 00:13:11,560 Speaker 2: really hard to persuade a customer to license your tech 227 00:13:11,600 --> 00:13:14,200 Speaker 2: if it's unproven, but lands that don't manage that. The 228 00:13:14,240 --> 00:13:16,559 Speaker 2: second thing that they're doing that's really cool is they've 229 00:13:16,600 --> 00:13:19,840 Speaker 2: been flexible the output product not possible for everyone, but 230 00:13:19,840 --> 00:13:24,440 Speaker 2: for chemicals companies, definitely possible. And they've proven a way 231 00:13:24,480 --> 00:13:26,760 Speaker 2: of also getting companies to pay them to do the 232 00:13:26,880 --> 00:13:29,439 Speaker 2: R and D, which is pretty cool. So they now 233 00:13:29,480 --> 00:13:32,960 Speaker 2: have revenue from projects they've done with Lululemon and H 234 00:13:33,000 --> 00:13:36,200 Speaker 2: and M to make low carbon fibers for clothing. They've 235 00:13:36,240 --> 00:13:39,960 Speaker 2: been paid by Laurel to produce new low carbon plastic packaging, 236 00:13:40,400 --> 00:13:42,520 Speaker 2: so it's really cool to see they're able to get 237 00:13:42,520 --> 00:13:45,199 Speaker 2: that third revenue stream from new R and D. And 238 00:13:45,240 --> 00:13:47,199 Speaker 2: then they're developing as I said, I think I said 239 00:13:47,240 --> 00:13:51,440 Speaker 2: about twenty different high value chemicals from the ethanol, higher 240 00:13:51,480 --> 00:13:54,839 Speaker 2: profit margins and much more diversified which means lower risk. 241 00:14:01,200 --> 00:14:12,280 Speaker 1: More from the conversation after the break, Let's look at 242 00:14:12,320 --> 00:14:17,520 Speaker 1: another recent darling of the investment industry, especially in climate tech. 243 00:14:18,320 --> 00:14:22,480 Speaker 1: H to Green Steel last year raised billions of dollars, 244 00:14:22,520 --> 00:14:26,440 Speaker 1: which is very difficult to raise a because of the 245 00:14:26,560 --> 00:14:29,760 Speaker 1: environment it is in, but also just the sheer number right, 246 00:14:29,920 --> 00:14:34,160 Speaker 1: climate tech companies raising billions of dollars are accountable on fingers, 247 00:14:34,760 --> 00:14:37,840 Speaker 1: and so what was it about h to Green Steel? 248 00:14:37,920 --> 00:14:41,560 Speaker 1: A company that's going to try and make steel without 249 00:14:41,600 --> 00:14:44,960 Speaker 1: the carbon emissions gaining that much money. 250 00:14:45,640 --> 00:14:48,280 Speaker 2: Yeah, and they already found it in twenty twenty, so 251 00:14:48,320 --> 00:14:50,720 Speaker 2: they bucked the trend I mentioned earlier. Part of that 252 00:14:50,880 --> 00:14:55,040 Speaker 2: is we are now saying companies scale faster too commercial 253 00:14:55,480 --> 00:14:58,800 Speaker 2: because suddenly the last three years everyone's worken up to 254 00:14:58,800 --> 00:15:02,480 Speaker 2: the fact climate change is here and we need to 255 00:15:02,520 --> 00:15:06,120 Speaker 2: decarbonize these hardwarebate sectors. So it's right time, right place. 256 00:15:06,600 --> 00:15:10,600 Speaker 2: Great backers. They have very experienced team from industry that 257 00:15:10,680 --> 00:15:13,360 Speaker 2: all helps, I think, reassure investors, and you're right. They 258 00:15:13,480 --> 00:15:16,720 Speaker 2: raised almost about seven billion euros to build their first 259 00:15:16,760 --> 00:15:20,720 Speaker 2: commercial project. They've done two things which is clever and 260 00:15:20,760 --> 00:15:23,520 Speaker 2: I think could be replicable in steel but in other 261 00:15:23,520 --> 00:15:27,480 Speaker 2: industries too. The first is they managed to convince investors 262 00:15:28,040 --> 00:15:31,880 Speaker 2: that they are not technologically risky, which is fascinating because 263 00:15:31,880 --> 00:15:34,640 Speaker 2: they're really a first of a kind in many of 264 00:15:34,640 --> 00:15:38,000 Speaker 2: the technologies they're using, but they license they're not actually 265 00:15:38,000 --> 00:15:41,480 Speaker 2: technology inventors. They are licensing tech from many other players. 266 00:15:41,520 --> 00:15:44,120 Speaker 2: Hence where they can scale so quick. And their secret 267 00:15:44,200 --> 00:15:48,160 Speaker 2: source is enough expert executors who they've hired out of 268 00:15:48,200 --> 00:15:52,120 Speaker 2: the industry, who say we can build a project greenfield. 269 00:15:52,160 --> 00:15:57,040 Speaker 2: So from scratch that is perfectly optimized and digitalized and 270 00:15:57,320 --> 00:16:01,440 Speaker 2: cutting edge equipment, which means we can make the cheapest 271 00:16:01,520 --> 00:16:04,000 Speaker 2: kind of green steel out there compared to other companies 272 00:16:04,000 --> 00:16:07,400 Speaker 2: doing retrofits or other stuff. That's the first thing, and 273 00:16:07,440 --> 00:16:11,320 Speaker 2: that actually attracted debt and project equity that otherwise probably 274 00:16:11,360 --> 00:16:13,320 Speaker 2: wouldn't have been interested in a first of a kind. 275 00:16:13,720 --> 00:16:16,680 Speaker 2: The second thing they did was sign off takes. You 276 00:16:16,720 --> 00:16:18,520 Speaker 2: can de rescue project as much as you want, but 277 00:16:18,560 --> 00:16:22,760 Speaker 2: without customer demand, it's hard to get investors. And ptentially 278 00:16:22,800 --> 00:16:25,040 Speaker 2: because of their network, they manage to sign off takes 279 00:16:25,040 --> 00:16:30,480 Speaker 2: with Mercedes, Benz, Scannier, Ikia, loads of really big brand 280 00:16:30,600 --> 00:16:33,120 Speaker 2: names who are willing to pay up to fifty percent 281 00:16:33,280 --> 00:16:35,840 Speaker 2: premium for the steel because it's low carbon. 282 00:16:36,680 --> 00:16:41,040 Speaker 1: And these customers the steel component is actually a very 283 00:16:41,080 --> 00:16:44,600 Speaker 1: small part of the products they typically sell, Like Mercedes Benz, 284 00:16:44,960 --> 00:16:47,040 Speaker 1: steel is going to be what one two percent of 285 00:16:47,080 --> 00:16:50,160 Speaker 1: the price of the car, But if that one or 286 00:16:50,200 --> 00:16:54,160 Speaker 1: two percent becomes three percent doesn't really matter. But then 287 00:16:54,200 --> 00:16:57,000 Speaker 1: it does matter on their carbon footprint, it doesn't matter 288 00:16:57,040 --> 00:17:00,600 Speaker 1: in their marketing of the goods. And those connections were 289 00:17:00,680 --> 00:17:03,880 Speaker 1: readily available to each to Green Steel because they had 290 00:17:03,920 --> 00:17:07,240 Speaker 1: backers in the battery space. They had backers from this 291 00:17:07,400 --> 00:17:10,639 Speaker 1: and other startup North World, which is making batteries that 292 00:17:10,760 --> 00:17:12,760 Speaker 1: has connections into the auto industry. 293 00:17:13,320 --> 00:17:16,399 Speaker 2: Yeah, exactly. That definitely helped. I think the jury is 294 00:17:16,400 --> 00:17:19,800 Speaker 2: still out on how big the green premium green steel 295 00:17:19,840 --> 00:17:22,800 Speaker 2: market can get. Yes, you can sell. I mean I 296 00:17:22,800 --> 00:17:25,280 Speaker 2: think the Mercedes benz Off take was about fifty thousand tons, 297 00:17:25,359 --> 00:17:27,399 Speaker 2: so it's not huge. So it is a drop in 298 00:17:27,440 --> 00:17:29,399 Speaker 2: the ocean of all the other steel that they're buying. 299 00:17:30,119 --> 00:17:32,359 Speaker 2: You're right, if you made an entire chassis of a 300 00:17:32,400 --> 00:17:34,359 Speaker 2: car with green steel, it would cost about two percent 301 00:17:34,400 --> 00:17:38,159 Speaker 2: more to the consumer. If that's a very high end electric, 302 00:17:38,520 --> 00:17:42,600 Speaker 2: low carbon vehicle sold to a wealthy individual, You're right, 303 00:17:42,600 --> 00:17:45,000 Speaker 2: it doesn't matter. It might matter to the average person. 304 00:17:45,040 --> 00:17:47,920 Speaker 2: And the real question about green materials not as green steel, 305 00:17:48,320 --> 00:17:52,879 Speaker 2: green plastics, green cement. If there is this persistent premium required, 306 00:17:53,440 --> 00:17:56,199 Speaker 2: does it hit a ceiling. The example always used is 307 00:17:56,240 --> 00:17:59,200 Speaker 2: fair trade coffee. Right, people love their idea of fair trade, 308 00:17:59,320 --> 00:18:01,280 Speaker 2: but it hits feeling and it really hasn't grown as 309 00:18:01,320 --> 00:18:03,879 Speaker 2: a market in a decade because those who can afford 310 00:18:03,920 --> 00:18:07,399 Speaker 2: to pay more do, But that percentage of people isn't growing, 311 00:18:07,880 --> 00:18:10,080 Speaker 2: and so will we see the same thing with green steel. 312 00:18:10,119 --> 00:18:13,280 Speaker 2: Will it remained the premium of German auto makers who 313 00:18:13,280 --> 00:18:15,640 Speaker 2: can afford it, or will it actually end up being 314 00:18:15,640 --> 00:18:18,760 Speaker 2: embedded in all of our buildings, our bridges and so forth. 315 00:18:19,600 --> 00:18:21,800 Speaker 2: For a different topic at a different time. There's some 316 00:18:21,840 --> 00:18:23,960 Speaker 2: really cool work governments are doing to try and procure 317 00:18:24,040 --> 00:18:28,360 Speaker 2: green materials and make that reality true for everyone, not 318 00:18:28,480 --> 00:18:31,720 Speaker 2: just rich car buyers. But it may not work well. 319 00:18:31,760 --> 00:18:34,480 Speaker 1: The theory is that, at least initially, if you can 320 00:18:34,520 --> 00:18:37,359 Speaker 1: get to a place where somebody is buying the green premium, 321 00:18:37,720 --> 00:18:40,080 Speaker 1: you make enough of it, you make enough plants that 322 00:18:40,200 --> 00:18:43,080 Speaker 1: make it that green premium actually goes away. Now that's 323 00:18:43,160 --> 00:18:45,560 Speaker 1: just theory, right, because it's fair trade. That's the case 324 00:18:45,600 --> 00:18:49,240 Speaker 1: that hasn't been proven out to be true. But before 325 00:18:49,280 --> 00:18:52,160 Speaker 1: we get into what are some other bets that could 326 00:18:52,160 --> 00:18:55,119 Speaker 1: try and maybe crush this green premium to zero or 327 00:18:55,280 --> 00:18:57,840 Speaker 1: even negative, let's talk through the third example. 328 00:18:58,320 --> 00:19:00,760 Speaker 2: So the third example is interesting area that I think 329 00:19:00,840 --> 00:19:03,640 Speaker 2: people know less about than the other two, and it's 330 00:19:03,680 --> 00:19:06,600 Speaker 2: the area of plastics recycling, which is both a waste 331 00:19:06,600 --> 00:19:10,920 Speaker 2: problem it's also a netzerio problem. Today, plastics about ten 332 00:19:10,960 --> 00:19:13,760 Speaker 2: percent of our plastics is recycle globally, so it's pitiful 333 00:19:14,320 --> 00:19:17,159 Speaker 2: and almost all, basically all of that is mechanical recycling. 334 00:19:17,440 --> 00:19:20,400 Speaker 2: It will only take clear like plastic bottle type things, 335 00:19:20,480 --> 00:19:22,960 Speaker 2: and it will make worse quality plastics from it, like 336 00:19:23,080 --> 00:19:26,359 Speaker 2: throwaway cutlery, so it's not great. There is a whole 337 00:19:26,400 --> 00:19:31,200 Speaker 2: wave of mostly startups developing this thing called chemical recycling. Basically, 338 00:19:31,200 --> 00:19:33,840 Speaker 2: you can take in the stream of dirty colored, mixed 339 00:19:33,840 --> 00:19:37,680 Speaker 2: wavee plastic and turn into a pseudo kind of crude 340 00:19:37,720 --> 00:19:40,840 Speaker 2: oil again really, and that can then be used and 341 00:19:40,920 --> 00:19:45,400 Speaker 2: upgraded into anything, and it's completely circular forever and ever. 342 00:19:45,600 --> 00:19:48,320 Speaker 2: And our company we're going to talk about is Mirror Technologies. 343 00:19:48,800 --> 00:19:52,800 Speaker 2: They commissioned last year their first ever commercial plant in 344 00:19:52,840 --> 00:19:57,480 Speaker 2: the UK doing exactly this process chemical recycling, and it's 345 00:19:57,480 --> 00:19:59,919 Speaker 2: pretty exciting. It's twenty thousand tons per annum then make 346 00:20:00,840 --> 00:20:03,160 Speaker 2: and they've been around it to an eleven so again, it's 347 00:20:03,160 --> 00:20:04,600 Speaker 2: taken them quite a long time to get here. 348 00:20:05,119 --> 00:20:10,760 Speaker 1: Now as a chemist, recycling of plastics is possible. It's 349 00:20:10,760 --> 00:20:14,159 Speaker 1: always been a cost problem, right, So what is it 350 00:20:14,200 --> 00:20:16,199 Speaker 1: that Mirror has been able to do that? They've been 351 00:20:16,200 --> 00:20:18,720 Speaker 1: able to overcome that and actually make a commercial case 352 00:20:18,800 --> 00:20:19,800 Speaker 1: for their product. 353 00:20:20,640 --> 00:20:24,520 Speaker 2: Yes, recycling doesn't make money generally at this moment in time, 354 00:20:24,680 --> 00:20:27,960 Speaker 2: maybe be true forever. But we're seeing low scrap plastics prices, 355 00:20:28,000 --> 00:20:30,720 Speaker 2: particularly for waste plastic that literally otherwise it's going to 356 00:20:30,720 --> 00:20:33,560 Speaker 2: get land filled, and so you are paying very little 357 00:20:33,560 --> 00:20:36,240 Speaker 2: for your feedstock, which is take one of kind of 358 00:20:36,280 --> 00:20:41,000 Speaker 2: business model excellence for climate tech startups. Second, there is 359 00:20:41,119 --> 00:20:43,639 Speaker 2: a lot of policy right now in the UK and 360 00:20:43,680 --> 00:20:47,320 Speaker 2: France and the EU generally that is mandating. In the UK, 361 00:20:47,440 --> 00:20:51,119 Speaker 2: the mandate is thirty percent of plastic made has to 362 00:20:51,240 --> 00:20:55,720 Speaker 2: be recycled or circular economy plastic. Now that just isn't 363 00:20:55,760 --> 00:20:59,399 Speaker 2: available right now to producers. They're really scrambling and that 364 00:20:59,480 --> 00:21:03,400 Speaker 2: is enabled a price premium. It's not a subsidy. It's 365 00:21:03,480 --> 00:21:08,359 Speaker 2: really just the government mandating has meant companies are desperate 366 00:21:08,359 --> 00:21:11,080 Speaker 2: to buy this product that Mira has, which means companies 367 00:21:11,200 --> 00:21:14,720 Speaker 2: like Mira. Our BNF calculations show about a thirteen percent IRA. 368 00:21:15,359 --> 00:21:17,800 Speaker 2: Now normal chemicals plants are about eight percent. So this 369 00:21:17,840 --> 00:21:21,400 Speaker 2: is a better investment just without the green tag than 370 00:21:21,640 --> 00:21:23,159 Speaker 2: investing in other chemicals projects. 371 00:21:23,240 --> 00:21:25,600 Speaker 1: Right, and IRR is just the rate of return, So 372 00:21:25,640 --> 00:21:30,800 Speaker 1: thirteen percent for every million dollars that's invested, exactly. And 373 00:21:31,080 --> 00:21:33,680 Speaker 1: these are companies now that are at that place where 374 00:21:33,720 --> 00:21:36,040 Speaker 1: they have gone over the value of death, build a 375 00:21:36,080 --> 00:21:39,800 Speaker 1: first of fu kind, and are starting to get to 376 00:21:39,840 --> 00:21:44,919 Speaker 1: the commercial stage. But among the many things that BENF does, 377 00:21:45,320 --> 00:21:48,840 Speaker 1: you also go at the very early stage of startups 378 00:21:49,000 --> 00:21:51,760 Speaker 1: and you try and identify, given there are now hundreds 379 00:21:51,760 --> 00:21:55,080 Speaker 1: of these coming up every year, the most promising ones, 380 00:21:55,400 --> 00:21:58,199 Speaker 1: and some of them you give awards to. Which is 381 00:21:58,280 --> 00:22:00,600 Speaker 1: a list that you've announced just this week. Talk us 382 00:22:00,600 --> 00:22:02,680 Speaker 1: through some of those winners. 383 00:22:02,840 --> 00:22:06,480 Speaker 2: Yeah, i'd love to so BNF pioneers this innovation competition. 384 00:22:06,520 --> 00:22:09,520 Speaker 2: It's been running now since twenty ten, and every year 385 00:22:09,520 --> 00:22:12,199 Speaker 2: we have about ten to twelve winners out of one 386 00:22:12,240 --> 00:22:16,320 Speaker 2: hundreds of applicants, and more recently we've been picking themes 387 00:22:16,359 --> 00:22:18,720 Speaker 2: for the year. There are so many interesting companies out there, 388 00:22:19,040 --> 00:22:21,080 Speaker 2: but BENF wants to try and pick companies that are 389 00:22:21,119 --> 00:22:25,200 Speaker 2: relevant for today's problems and really for actually tackling climate 390 00:22:25,880 --> 00:22:29,560 Speaker 2: change or decarbonization before twenty thirty. It's great that there's 391 00:22:29,520 --> 00:22:31,960 Speaker 2: twenty fifty solution, but we can't wait that long. So 392 00:22:32,040 --> 00:22:34,520 Speaker 2: this year we chose three challenge areas we want to 393 00:22:34,520 --> 00:22:37,720 Speaker 2: relieve the bottlenecks on the grid. There's loads of issues 394 00:22:37,720 --> 00:22:39,440 Speaker 2: of permitting right now to get reneaebles on the grid, 395 00:22:39,600 --> 00:22:43,200 Speaker 2: there are some tech solutions. Second is decarbonizing buildings in 396 00:22:43,240 --> 00:22:46,119 Speaker 2: the built environment, huge cause of emissions. We're still not 397 00:22:46,240 --> 00:22:48,879 Speaker 2: entirely sure how to get there economically. And the third 398 00:22:49,119 --> 00:22:52,080 Speaker 2: is let's just try and develop a great next gen 399 00:22:52,440 --> 00:22:54,919 Speaker 2: zero fuel because right now we're really struggling to know 400 00:22:54,960 --> 00:22:57,520 Speaker 2: how to decarbonize aviation, shipping and tracking. 401 00:22:58,680 --> 00:23:01,480 Speaker 1: And just to give the listeners of flavor of the 402 00:23:01,600 --> 00:23:04,960 Speaker 1: kinds of startups that end up winning this award, what 403 00:23:05,080 --> 00:23:08,560 Speaker 1: are your favorite examples from this year's winners. 404 00:23:10,160 --> 00:23:12,720 Speaker 2: Well, yeah, so we have I think eleven winners this year, 405 00:23:12,720 --> 00:23:15,320 Speaker 2: and they're all great obviously, but the ones we could 406 00:23:15,320 --> 00:23:18,680 Speaker 2: talk about I think exemplify some of the themes we've 407 00:23:18,680 --> 00:23:21,480 Speaker 2: already discussed. There's a couple of really great ones in 408 00:23:21,840 --> 00:23:25,119 Speaker 2: the relieving grid bottlenecks challenge. Many people think that's just 409 00:23:25,160 --> 00:23:28,120 Speaker 2: about permitting and policy, but there's some call tech stuff. 410 00:23:28,560 --> 00:23:32,320 Speaker 2: One example that use is a hardware company example called 411 00:23:32,359 --> 00:23:36,880 Speaker 2: ts Conductor, the US based, and they have basically developed 412 00:23:36,880 --> 00:23:41,040 Speaker 2: a technology. It's a carbon fiber core wrap with aluminium 413 00:23:41,040 --> 00:23:45,080 Speaker 2: wrapped around it, which will triple the line capacity how 414 00:23:45,160 --> 00:23:48,119 Speaker 2: much power you can push down in existing above ground 415 00:23:48,160 --> 00:23:50,639 Speaker 2: power line. That's huge because one of the hugest w 416 00:23:50,720 --> 00:23:52,920 Speaker 2: is building out the grid is permitting to build new 417 00:23:52,920 --> 00:23:55,560 Speaker 2: wooden poles in the ground. If you can replace those 418 00:23:55,560 --> 00:23:59,680 Speaker 2: wires and triple the power capacity and have line losses, 419 00:24:00,840 --> 00:24:03,240 Speaker 2: that's amazing and it's a four year payback. The issue 420 00:24:03,280 --> 00:24:06,680 Speaker 2: TS Conductor has is it's expensive. We talked about that before, 421 00:24:07,040 --> 00:24:09,520 Speaker 2: and utilities in the US are regulated to not spend 422 00:24:09,560 --> 00:24:12,520 Speaker 2: lots of money, so they're going to struggle to sell 423 00:24:12,520 --> 00:24:14,080 Speaker 2: this stuff. It's two to three times the cost and 424 00:24:14,480 --> 00:24:18,960 Speaker 2: to an interesting model to do exactly that, basically try 425 00:24:18,960 --> 00:24:19,760 Speaker 2: and get it deployed. 426 00:24:20,000 --> 00:24:23,080 Speaker 1: So you replace the copper cable with a cable that's 427 00:24:23,080 --> 00:24:25,240 Speaker 1: made out of carbon fiber and aluminum. 428 00:24:24,760 --> 00:24:28,240 Speaker 2: So it's currently aluminum. Yeah, in the US, wires wrapped 429 00:24:28,280 --> 00:24:33,800 Speaker 2: around steel core. The steel helps strengthen the aluminium starts sagging. 430 00:24:34,400 --> 00:24:36,359 Speaker 2: You only to push much power of the aluminium before 431 00:24:36,400 --> 00:24:38,560 Speaker 2: all the wires sag. And I'm sure you've seen sagging 432 00:24:38,560 --> 00:24:42,439 Speaker 2: wires in the US very very dangerous. What the composite 433 00:24:42,480 --> 00:24:45,240 Speaker 2: core does it's just ten times stronger than steel, so 434 00:24:45,280 --> 00:24:48,639 Speaker 2: you can actually push plenty more current through the aluminium 435 00:24:48,880 --> 00:24:52,120 Speaker 2: and it won't sag because of the carbon fiber core. 436 00:24:52,600 --> 00:24:54,920 Speaker 2: It is expensive, but yeah. 437 00:24:54,840 --> 00:24:57,720 Speaker 1: Well they're also coming in at a time where copper 438 00:24:57,760 --> 00:25:01,680 Speaker 1: prices are going up. The ability to get copper cables 439 00:25:01,800 --> 00:25:05,000 Speaker 1: has been a real struggle for the grid industry. So 440 00:25:05,400 --> 00:25:07,119 Speaker 1: that's a good example. What's another one. 441 00:25:08,000 --> 00:25:12,399 Speaker 2: So in the buildings challenge, we have some great companies. 442 00:25:12,440 --> 00:25:14,800 Speaker 2: One particularly has been around for a long time, so 443 00:25:14,960 --> 00:25:18,520 Speaker 2: Aero Seal. They were found in nineteen ninety six. They're 444 00:25:18,520 --> 00:25:21,520 Speaker 2: actually bought by Carrier in two thousand and one, I believe, 445 00:25:21,880 --> 00:25:25,480 Speaker 2: and it just went nowhere, and that can happen big companies, buyer, startup, 446 00:25:25,600 --> 00:25:27,840 Speaker 2: don't know what to do with it, let it languish. 447 00:25:28,160 --> 00:25:31,240 Speaker 2: The founder, the initial founder of aero sal rebought the 448 00:25:31,240 --> 00:25:34,679 Speaker 2: company from Carrier in twenty ten because he could just 449 00:25:34,680 --> 00:25:37,080 Speaker 2: see it going nowhere. And since then they've managed to 450 00:25:37,119 --> 00:25:40,080 Speaker 2: scale massively. They are making lots of money. They I 451 00:25:40,119 --> 00:25:43,000 Speaker 2: think have now done about two hundred thousand kind of 452 00:25:43,040 --> 00:25:47,720 Speaker 2: installations of their product. And that product is they basically 453 00:25:47,760 --> 00:25:52,520 Speaker 2: can retrofit commercial or residential buildings or new bills to 454 00:25:52,600 --> 00:25:58,000 Speaker 2: be fully sealed ie airtight almost passive house standard, which 455 00:25:58,000 --> 00:26:02,120 Speaker 2: obviously reduces losses. So is it basically an energy efficiency plan. 456 00:26:02,480 --> 00:26:05,080 Speaker 1: I actually got a chance to go and visit one 457 00:26:05,080 --> 00:26:09,920 Speaker 1: of the aerocal processes in the US in Massachusetts, and yeah, 458 00:26:09,960 --> 00:26:12,280 Speaker 1: we just entered a random person's home and they were 459 00:26:12,359 --> 00:26:14,840 Speaker 1: kind enough to let us in to see how they 460 00:26:14,880 --> 00:26:17,840 Speaker 1: do it. And it's fascinating. Like you, of course have 461 00:26:17,880 --> 00:26:20,119 Speaker 1: to leave the house for that period and you have 462 00:26:20,160 --> 00:26:23,479 Speaker 1: to let it dry and everything, but you don't have 463 00:26:23,520 --> 00:26:26,520 Speaker 1: to deconstruct the house to put it back together to 464 00:26:26,600 --> 00:26:30,160 Speaker 1: try and get this insulation in place. So we do 465 00:26:30,240 --> 00:26:33,160 Speaker 1: need real good solutions for insallation. And it's really nice 466 00:26:33,200 --> 00:26:35,960 Speaker 1: to see a startup that is no longer a startup. 467 00:26:35,960 --> 00:26:39,360 Speaker 1: I guess it's twenty years old, coming back to life now. 468 00:26:39,440 --> 00:26:42,760 Speaker 1: The final example that you have is a steel company, 469 00:26:43,359 --> 00:26:46,000 Speaker 1: and this is where you take h to green steel, 470 00:26:46,040 --> 00:26:50,040 Speaker 1: which is a hydrogen powered steel production, which may not 471 00:26:50,119 --> 00:26:52,720 Speaker 1: go down the green premium path as one would like, 472 00:26:53,040 --> 00:26:55,159 Speaker 1: but there are these other startups that are coming up 473 00:26:55,200 --> 00:26:58,479 Speaker 1: with even cheaper ways of making carbon free steel. 474 00:26:59,560 --> 00:27:02,760 Speaker 2: Yeah, there's only very few ways to decarbono steel. You 475 00:27:03,000 --> 00:27:06,120 Speaker 2: basically make it as you do and add carbon capture 476 00:27:06,280 --> 00:27:09,960 Speaker 2: always be more expensive. You instead reduce your iron ore 477 00:27:09,960 --> 00:27:12,439 Speaker 2: with hydrogen rather than natural gas, which is what Hdgreen 478 00:27:12,480 --> 00:27:15,639 Speaker 2: Steel is doing. Or you could electrify the whole process. 479 00:27:16,160 --> 00:27:19,560 Speaker 2: That's really tricky, not done currently at scale, but actually 480 00:27:19,600 --> 00:27:22,400 Speaker 2: we've now got three BNF pioneers winners who were doing 481 00:27:22,440 --> 00:27:24,640 Speaker 2: that in the past. We gave Boston Metal the award, 482 00:27:25,040 --> 00:27:28,560 Speaker 2: last year, Electra and this year Element zero. All three 483 00:27:28,960 --> 00:27:33,680 Speaker 2: are forms of basically electrolysis. Element zero is interesting, still 484 00:27:33,720 --> 00:27:36,040 Speaker 2: very early stage, but they promise a couple of things. 485 00:27:36,040 --> 00:27:39,359 Speaker 2: It's a bit different. One is they say they're not 486 00:27:39,440 --> 00:27:43,960 Speaker 2: using a membrane and they're not using carbon electrodes, so 487 00:27:44,000 --> 00:27:47,360 Speaker 2: there's no direct process zero two emissions from the carbon electrodes, 488 00:27:47,359 --> 00:27:50,439 Speaker 2: and the membrane is very expensive and technically kind of 489 00:27:50,480 --> 00:27:52,960 Speaker 2: fussy part of the systems. They're cutting out that cost 490 00:27:52,960 --> 00:27:56,399 Speaker 2: and that risk. The second cool thing is they say 491 00:27:56,440 --> 00:27:59,600 Speaker 2: that they can operate with renewable intermittent energy. So obviously 492 00:27:59,600 --> 00:28:01,920 Speaker 2: if you're in a xetrified process to make in a zero, 493 00:28:01,960 --> 00:28:04,640 Speaker 2: it needs to use clean power. The cheapest clean power 494 00:28:04,720 --> 00:28:07,080 Speaker 2: is solar and wind, but it isn't running all the time. 495 00:28:07,920 --> 00:28:12,760 Speaker 2: So unlike other electrification processes for industry that need to 496 00:28:12,800 --> 00:28:16,560 Speaker 2: be twenty four to seven really power liability, what Element 497 00:28:16,680 --> 00:28:19,399 Speaker 2: zero can do is actually be off for up to 498 00:28:19,480 --> 00:28:21,680 Speaker 2: four hours, which is really cool, is to do what 499 00:28:21,720 --> 00:28:23,240 Speaker 2: the heat capacity of the solvent it's using. 500 00:28:24,160 --> 00:28:28,639 Speaker 1: Now, I've been particularly fascinated by these electric options, and 501 00:28:29,080 --> 00:28:32,480 Speaker 1: the electrolysis part is very simply just using electricity to 502 00:28:32,520 --> 00:28:35,040 Speaker 1: do the chemical reaction that was being done either by 503 00:28:35,119 --> 00:28:38,760 Speaker 1: hydrogen or coal, where they basically take the oxygen atom 504 00:28:38,880 --> 00:28:44,200 Speaker 1: out from the iron ore which is iron oxide. Now Electra, 505 00:28:44,320 --> 00:28:48,040 Speaker 1: which is the other pioneer winner, has reached pilot stage. 506 00:28:48,080 --> 00:28:51,360 Speaker 1: They are actually making tons of this material sending it 507 00:28:51,400 --> 00:28:56,120 Speaker 1: out to steel makers. What stages Element zero at they're. 508 00:28:55,920 --> 00:28:58,480 Speaker 2: Still very early stage. I mean more like a lab stage. 509 00:28:58,520 --> 00:29:01,240 Speaker 2: I mean they might say pilot, but definitely behind Elektra. 510 00:29:01,880 --> 00:29:04,000 Speaker 2: They want to build their first commercial vicility in twenty 511 00:29:04,040 --> 00:29:07,200 Speaker 2: twenty nine, So that's there at Series A, if we 512 00:29:07,240 --> 00:29:09,560 Speaker 2: go back to the VC discussion, they're raised about ten 513 00:29:09,600 --> 00:29:11,800 Speaker 2: million dollars in there. At Series A. They have some 514 00:29:11,920 --> 00:29:14,880 Speaker 2: private wealthy individuals that also are helping fund them, but 515 00:29:14,920 --> 00:29:17,960 Speaker 2: really they're a way of building their first commercial project. 516 00:29:18,120 --> 00:29:20,840 Speaker 1: And like you said, many of these startups like Element 517 00:29:20,960 --> 00:29:24,840 Speaker 1: zero are very early stage. With the funding landscape changing 518 00:29:24,920 --> 00:29:27,720 Speaker 1: so much, it'll be interesting to see how they survive 519 00:29:27,960 --> 00:29:32,800 Speaker 1: and perhaps thrive. Thank you, Claire, thanks having me for 520 00:29:32,920 --> 00:29:36,120 Speaker 1: more on decarbonizing steel. You can listen to an episode 521 00:29:36,160 --> 00:29:39,320 Speaker 1: of Zero from twenty twenty two on Elektra, and you 522 00:29:39,360 --> 00:29:42,600 Speaker 1: can hear more on climate investing trends on Bloomberg. Anyf's 523 00:29:42,640 --> 00:29:46,440 Speaker 1: podcast Switched On links to all that in the show notes. 524 00:29:55,800 --> 00:29:58,440 Speaker 1: Thank you for listening to Zero. If you liked this episode, 525 00:29:58,520 --> 00:30:00,520 Speaker 1: please take a moment to rate or view the show 526 00:30:00,560 --> 00:30:03,760 Speaker 1: on Apple Podcasts and Spotify. Share this episode with a 527 00:30:03,800 --> 00:30:06,760 Speaker 1: friend or with a science nerd. You can get in 528 00:30:06,800 --> 00:30:10,360 Speaker 1: touch at zero pod at Bloomberg dot net. Zero's producers 529 00:30:10,400 --> 00:30:14,800 Speaker 1: are Mithyle Rao, Magnus Henriksen and Somarsadi. Our theme music 530 00:30:14,920 --> 00:30:18,400 Speaker 1: is composed by Wonderly Special thanks to Kira Bindrim and 531 00:30:18,560 --> 00:30:21,840 Speaker 1: Jessica Nix. I'm Akshatrati back soon.