Speaker 1: Welcome to zero. I'm Akshatrati. It's an interesting moment in
Speaker 1: the climate fight. Twenty twenty four will be a year
Speaker 1: of many big elections around the world, and the governments
Speaker 1: that end up with power will determine the pace of
Speaker 1: the energy transition no matter what politics prevail. One thing
Speaker 1: that will continue to speed up the transition is technology.
Speaker 1: But even there the picture is a little bit mixed.
Speaker 1: Right now. Last year saw record spending on clean energy,
Speaker 1: reaching one point seven trillion dollars. That's six hundred billion
Speaker 1: dollars more than what was spent on fossil fuels, and
Speaker 1: yet it is still far short of the four point
Speaker 1: five trillion dollars in clean energy investment needed to be
Speaker 1: on track to meet climate goals. And by design, clean
Speaker 1: energy spending is front loaded with the cost of installing, say,
Speaker 1: solar panels or wind turbines or hydrogen electoralizers. That's becoming
Speaker 1: more difficult in an environment with high interest rates, and
Speaker 1: of course those are not the only technologies the world needs.
Speaker 1: Industrial sectors like steel, cement, and plastics also need to
Speaker 1: be decarbonized. Earlier stage technologies need venture capital funding, which
Speaker 1: is also falling, but some emerging companies have found a
Speaker 1: way to successfully take their technology to the market. How
Speaker 1: did they do it? That's the question I ask Claire Curry,
Speaker 1: Global head of Technology, Industry and Innovation at Bloomberg NEF.
Speaker 1: We also talked about investment trends in climate tech and
Speaker 1: how to find the best early stage startups. Claire, Welcome
Speaker 1: to the show. Thanks for having me. Now, one of
Speaker 1: the things that is poorly understood about the energy transition
Speaker 1: is how much climate tech and climate tech investments from
Speaker 1: early stage all the way to scaling them up matters.
Speaker 1: And we're going to talk a lot about how exactly
Speaker 1: that works, how different types of startups have used that
Speaker 1: journey to try and make the commercial case for being around.
Speaker 1: But let's start with a basic understanding of where we
Speaker 1: stand on investments in the energy transition now. Plumageney, I've
Speaker 1: put out a report saying last year was a record
Speaker 1: investment year. One point seven trillion dollars were invested in
Speaker 1: all kinds of clean energy technologies at scale, but that
Speaker 1: is still far from what is needed. We're about a
Speaker 1: third of the way for the energy try to be
Speaker 1: on track from night zero. If you look at that number,
Speaker 1: the one point seven trillion number. How do you think
Speaker 1: about where the energy transition is going and which of
Speaker 1: the sectors are getting that kind of money.
Speaker 2: We'd a really pivotal moment right now in the transition.
Speaker 2: We've spent fifteen years or so scaling solar, wind, lithium, ions,
Speaker 2: so batteries, really those three things actually, and that's been amazing,
Speaker 2: huge effort, and most of that one point seven trillion
Speaker 2: went to those three areas, plus an investment in grade expansion.
Speaker 2: That's great. We need lots more of that, so keep
Speaker 2: on building those projects. And they've really worked towards at
Speaker 2: least a path for us to see how we can
Speaker 2: clean up the power sector and at least passenger vehicle
Speaker 2: transport sector through electrification. So that's almost half of the
Speaker 2: CO two PI. We emitted about thirty seven giga tons
Speaker 2: of CO two last year, almost half of that. We
Speaker 2: have a route to decarbonize. We're far from doing it,
Speaker 2: but we know how we can do it. It's now
Speaker 2: a scaling investment problem. It's not technology problem. I mean,
Speaker 2: in generalizing, we still have commercial transport, industry, materials and
Speaker 2: ag and food to decarbonase, and we are less certain
Speaker 2: how to do that. There are some cool technologies and
Speaker 2: we'll talk about them, but many aren't scaled, and many
Speaker 2: are scalable but aren't gained the financing. Well, really, where
Speaker 2: we are now actually is I said, it's pivotal because
Speaker 2: last year, for the first time, we began to see
Speaker 2: the tens of billions being invested into those technologies to
Speaker 2: scale the other half of the pie. Those technologies include
Speaker 2: carbon capture, hydrogen, drop in biofuels, some nuclear, some geothermal
Speaker 2: heat pumps for electrification of buildings, and we saw I mean,
Speaker 2: for CCS it was about eleven billion was invested in
Speaker 2: projects that are going to get built. Hydrogen was about
Speaker 2: ten billion. So we're seeing small numbers, but obviously it's
Speaker 2: a fraction of that one point seven you mentioned trillion.
Speaker 1: Now that is the total amount of investment going in
Speaker 1: and this is of course, the tens of billions are
Speaker 1: typically to work commercial scale, but most of the technologies
Speaker 1: that will be crucial for reducing emissions from industry and
Speaker 1: from agriculture are still at an early stage. And one
Speaker 1: of the ways in which these early stage technologies get
Speaker 1: to scale is through a model that's been perfected over
Speaker 1: the past three four decades. The venture capital model, where
Speaker 1: you have investors who are taking on a big, risky bet,
Speaker 1: typically one hundred companies and maybe ten of them will
Speaker 1: become commercial, ninety will fail. And that's been a very
Speaker 1: important part of the climate tech story. In recent years,
Speaker 1: we see investments have just been going up and up.
Speaker 1: That's starting to change now. The numbers that you have
Speaker 1: for Bloomberg and If show that things are flattening.
Speaker 2: That's true, and that's actually not it's no reflection of
Speaker 2: the appetite in the market. There's actually more dry powder
Speaker 2: i e. Money that's been raised by climate funds that
Speaker 2: hasn't been spent yet than ever before. I think it's
Speaker 2: about fifty billion dollars. There's lots of appetite to raise
Speaker 2: money in this space. The challenge is just generally macroeconomics.
Speaker 2: As we all know, the economy has not been great
Speaker 2: for venture capital because of interest rates. Last year the
Speaker 2: global VC market fell into has a dollars spent by
Speaker 2: thirty eight percent, Yet before it was as much again,
Speaker 2: so really it's a twenty three one huge peak. We've
Speaker 2: now seen a huge job climate tech. Therefore, you could
Speaker 2: say being steady the last two years is a success
Speaker 2: story because it now comprises a higher percentage of the
Speaker 2: total market that it used to. But there is quite
Speaker 2: a lot of nuance in there, and it means we
Speaker 2: may continue to see it flat, which obviously is not
Speaker 2: good for startups. Don't it raise money?
Speaker 1: And the reason why, even though venture capital itself is
Speaker 1: falling investments in early stage companies has remained flat in
Speaker 1: how you measure it at Bloomberg en EF which is
Speaker 1: venture capital and private equity money. So why is the
Speaker 1: bee part, the private dec DeepArt so important in this story.
Speaker 2: Yeah, So the way we track the VC or startup
Speaker 2: climate tech financing world is to track deals money raised
Speaker 2: by startups. Now we classify as startup in our space,
Speaker 2: is anyone that's privately backed, so not public raising from
Speaker 2: angel and seed stage. They're very small amounts of money
Speaker 2: really right through to the whole alphabet. Right it's Series
Speaker 2: A through to PROBYG. At what point they normally get
Speaker 2: acquired or they go public or they scale up it
Speaker 2: where they need to raise private money anymore, they're profitable.
Speaker 2: That means many of those companies at Series A, great,
Speaker 2: they're just raising VC money. Many of the companies at
Speaker 2: Series C through the g are actually attracting now what
Speaker 2: we would call growth equity. It's not classic pe that
Speaker 2: do a lot MA. It's more companies that have that
Speaker 2: want to write one hundred million dollar check sizes because
Speaker 2: their fund is two billion dollar size. They're diferently not
Speaker 2: the VC size. We think that money is going to
Speaker 2: be increasingly important, so we track it because actually is
Speaker 2: an increasing share of the pie, particularly in Asia.
Speaker 1: And this is a very good place to understand the
Speaker 1: journey of a startup. Right roughly, there are five stages.
Speaker 1: You can slice and dice it different ways. The first
Speaker 1: is you inventor technology, then second is pilot, the third
Speaker 1: is you demo it. You show that it can actually
Speaker 1: work at a reasonable scale, then you build what would
Speaker 1: be a first of a kind commercial plant, and then
Speaker 1: you finally build a scaler plant. In my head, the
Speaker 1: easiest way to understand it is to think about a
Speaker 1: steel startup, for example, and invention is making grams in
Speaker 1: a lab. Pilot is making kilograms in a startup in
Speaker 1: a decent lab, but not a big lab. Demo is
Speaker 1: where you make tons of that material. In your first
Speaker 1: of a kid you're making thousands of tons, and then
Speaker 1: in a commercial scale, you're making millions of tons, so
Speaker 1: that each step is sort of a thousand times more
Speaker 1: than what you've done in the past. And many of
Speaker 1: these startups have struggled at a very particular stage, which
Speaker 1: is going from demo to commercial. There's the first of
Speaker 1: a kind plant that needs to be built. Let us
Speaker 1: talk through a few examples of some of the companies
Speaker 1: that have achieved that.
Speaker 2: Yeah, that it's often called the value of death, which
Speaker 2: sounds very dramatic, but many startups fail at that point.
Speaker 2: It's pretty helpful for me to mention a few reasons
Speaker 2: before you go into the examples. One is the kind
Speaker 2: of capital you need. Changes vcs might fund, as you say,
Speaker 2: your kilograms of production, they aren't big enough check sizes
Speaker 2: to fund the hundreds of millions of dollars you need
Speaker 2: to raise for your commercial so you need to suddenly
Speaker 2: attract project equity from banks or pe firms or other
Speaker 2: investment firms, and maybe debt. Both of those are incredibly
Speaker 2: hard to attract because they don't like technology risk, they
Speaker 2: don't like first of a kind. If they do, they
Speaker 2: charge you lots of money and then your project becomes unprofitable.
Speaker 2: They like margins, and that's quite hard to achieve. A
Speaker 2: lot of climate tech, particularly first of a kind, they
Speaker 2: like secure guaranteed revenues, and that again is tricky if
Speaker 2: your firstive a kind is making a brand new product
Speaker 2: never made before, or if you're making your product with
Speaker 2: a green price premium, among many other things. But this
Speaker 2: are some of the challenging, challenging reasons to get from
Speaker 2: demo to commercial.
Speaker 1: And there are examples that we need to pick, and
Speaker 1: particularly maybe examples that are in these hard, harder sectors
Speaker 1: such as industry or agriculture. One that comes to mind
Speaker 1: that I've followed for some time now is Lancetech. This
Speaker 1: company is now more than ten years old. Came up
Speaker 1: at a time when there was a demand for the
Speaker 1: product it was making, and then it went through a
Speaker 1: very difficult cycle of that product not having that investment.
Speaker 1: Just talk us through its journey.
Speaker 2: Yeah, lanc Tech is a great example, found in two
Speaker 2: thousand and five, so actually, yeah, pretty old. And I
Speaker 2: think it's the first thing. This stuff takes time. It's
Speaker 2: very rare to see a startup founded and then bang,
Speaker 2: bang bang, they get all these five steps in a
Speaker 2: few years. So yeah, it's taking them some time there.
Speaker 2: She went public I think last year, but privately backed
Speaker 2: by vcs up to then. In nutshell, they have a
Speaker 2: microbe or many microbe types that turn nasty kind of
Speaker 2: industrial gases or waste bio mass to ethanol. When they
Speaker 2: were founded, their US market was very keen on ethanol
Speaker 2: as the future of road transportation, so that was their
Speaker 2: target market. As you said, since ethanol still exists, it's
Speaker 2: a huge market, but it's no longer the darling of
Speaker 2: the transport market future. It's pivoted. And they've done two
Speaker 2: things really well. One is most startups have to build,
Speaker 2: own operate. That's the demo to commercial value of death,
Speaker 2: raising hundreds of millions of dollars. Landadech instead found a
Speaker 2: niche of clients willing to actually license its technology from
Speaker 2: day one pre commercial project and then pay to build
Speaker 2: the plants. That's pretty cool. They did this through seeking out.
Speaker 2: Chinese steel company were mandated to stop emitting lots of
Speaker 2: unburnt nasty processes from coal to steal from their plants.
Speaker 2: So the government managed them, you need to do this
Speaker 2: and will shut you down. So they formed a JV
Speaker 2: paid Lancetech to license the technology to eat up their
Speaker 2: nasty off gases tenet ethanol. Lance Tech had the option
Speaker 2: to buy the ethanol and sell it on. So it's
Speaker 2: two revenue streams straight from the bat. It's the licensing
Speaker 2: of the tech and it's the ethanol revenue and de
Speaker 2: risking them need to invest in the projects.
Speaker 1: And the bill to operate model versus a licensing model
Speaker 1: is basically a capital play. If you're building and operating,
Speaker 1: you are going to be spending hundreds of millions of
Speaker 1: dollars doing that. When you're licensing, you're actually generating revenue immediately.
Speaker 1: You're not actually putting in the money yourself, and so
Speaker 1: that allows a startup to be able to continue scaling
Speaker 1: its technology and also learning from somebody else building it
Speaker 1: out completely.
Speaker 2: You're de risking a lot. The reason we will don't
Speaker 2: do it twofold one is it's less money. Overall, licensing
Speaker 2: revenues are going to be much less than if you
Speaker 2: own the plant and sell the output of the plant. Second,
Speaker 2: really hard to persuade a customer to license your tech
Speaker 2: if it's unproven, but lands that don't manage that. The
Speaker 2: second thing that they're doing that's really cool is they've
Speaker 2: been flexible the output product not possible for everyone, but
Speaker 2: for chemicals companies, definitely possible. And they've proven a way
Speaker 2: of also getting companies to pay them to do the
Speaker 2: R and D, which is pretty cool. So they now
Speaker 2: have revenue from projects they've done with Lululemon and H
Speaker 2: and M to make low carbon fibers for clothing. They've
Speaker 2: been paid by Laurel to produce new low carbon plastic packaging,
Speaker 2: so it's really cool to see they're able to get
Speaker 2: that third revenue stream from new R and D. And
Speaker 2: then they're developing as I said, I think I said
Speaker 2: about twenty different high value chemicals from the ethanol, higher
Speaker 2: profit margins and much more diversified which means lower risk.
Speaker 1: More from the conversation after the break, Let's look at
Speaker 1: another recent darling of the investment industry, especially in climate tech.
Speaker 1: H to Green Steel last year raised billions of dollars,
Speaker 1: which is very difficult to raise a because of the
Speaker 1: environment it is in, but also just the sheer number right,
Speaker 1: climate tech companies raising billions of dollars are accountable on fingers,
Speaker 1: and so what was it about h to Green Steel?
Speaker 1: A company that's going to try and make steel without
Speaker 1: the carbon emissions gaining that much money.
Speaker 2: Yeah, and they already found it in twenty twenty, so
Speaker 2: they bucked the trend I mentioned earlier. Part of that
Speaker 2: is we are now saying companies scale faster too commercial
Speaker 2: because suddenly the last three years everyone's worken up to
Speaker 2: the fact climate change is here and we need to
Speaker 2: decarbonize these hardwarebate sectors. So it's right time, right place.
Speaker 2: Great backers. They have very experienced team from industry that
Speaker 2: all helps, I think, reassure investors, and you're right. They
Speaker 2: raised almost about seven billion euros to build their first
Speaker 2: commercial project. They've done two things which is clever and
Speaker 2: I think could be replicable in steel but in other
Speaker 2: industries too. The first is they managed to convince investors
Speaker 2: that they are not technologically risky, which is fascinating because
Speaker 2: they're really a first of a kind in many of
Speaker 2: the technologies they're using, but they license they're not actually
Speaker 2: technology inventors. They are licensing tech from many other players.
Speaker 2: Hence where they can scale so quick. And their secret
Speaker 2: source is enough expert executors who they've hired out of
Speaker 2: the industry, who say we can build a project greenfield.
Speaker 2: So from scratch that is perfectly optimized and digitalized and
Speaker 2: cutting edge equipment, which means we can make the cheapest
Speaker 2: kind of green steel out there compared to other companies
Speaker 2: doing retrofits or other stuff. That's the first thing, and
Speaker 2: that actually attracted debt and project equity that otherwise probably
Speaker 2: wouldn't have been interested in a first of a kind.
Speaker 2: The second thing they did was sign off takes. You
Speaker 2: can de rescue project as much as you want, but
Speaker 2: without customer demand, it's hard to get investors. And ptentially
Speaker 2: because of their network, they manage to sign off takes
Speaker 2: with Mercedes, Benz, Scannier, Ikia, loads of really big brand
Speaker 2: names who are willing to pay up to fifty percent
Speaker 2: premium for the steel because it's low carbon.
Speaker 1: And these customers the steel component is actually a very
Speaker 1: small part of the products they typically sell, Like Mercedes Benz,
Speaker 1: steel is going to be what one two percent of
Speaker 1: the price of the car, But if that one or
Speaker 1: two percent becomes three percent doesn't really matter. But then
Speaker 1: it does matter on their carbon footprint, it doesn't matter
Speaker 1: in their marketing of the goods. And those connections were
Speaker 1: readily available to each to Green Steel because they had
Speaker 1: backers in the battery space. They had backers from this
Speaker 1: and other startup North World, which is making batteries that
Speaker 1: has connections into the auto industry.
Speaker 2: Yeah, exactly. That definitely helped. I think the jury is
Speaker 2: still out on how big the green premium green steel
Speaker 2: market can get. Yes, you can sell. I mean I
Speaker 2: think the Mercedes benz Off take was about fifty thousand tons,
Speaker 2: so it's not huge. So it is a drop in
Speaker 2: the ocean of all the other steel that they're buying.
Speaker 2: You're right, if you made an entire chassis of a
Speaker 2: car with green steel, it would cost about two percent
Speaker 2: more to the consumer. If that's a very high end electric,
Speaker 2: low carbon vehicle sold to a wealthy individual, You're right,
Speaker 2: it doesn't matter. It might matter to the average person.
Speaker 2: And the real question about green materials not as green steel,
Speaker 2: green plastics, green cement. If there is this persistent premium required,
Speaker 2: does it hit a ceiling. The example always used is
Speaker 2: fair trade coffee. Right, people love their idea of fair trade,
Speaker 2: but it hits feeling and it really hasn't grown as
Speaker 2: a market in a decade because those who can afford
Speaker 2: to pay more do, But that percentage of people isn't growing,
Speaker 2: and so will we see the same thing with green steel.
Speaker 2: Will it remained the premium of German auto makers who
Speaker 2: can afford it, or will it actually end up being
Speaker 2: embedded in all of our buildings, our bridges and so forth.
Speaker 2: For a different topic at a different time. There's some
Speaker 2: really cool work governments are doing to try and procure
Speaker 2: green materials and make that reality true for everyone, not
Speaker 2: just rich car buyers. But it may not work well.
Speaker 1: The theory is that, at least initially, if you can
Speaker 1: get to a place where somebody is buying the green premium,
Speaker 1: you make enough of it, you make enough plants that
Speaker 1: make it that green premium actually goes away. Now that's
Speaker 1: just theory, right, because it's fair trade. That's the case
Speaker 1: that hasn't been proven out to be true. But before
Speaker 1: we get into what are some other bets that could
Speaker 1: try and maybe crush this green premium to zero or
Speaker 1: even negative, let's talk through the third example.
Speaker 2: So the third example is interesting area that I think
Speaker 2: people know less about than the other two, and it's
Speaker 2: the area of plastics recycling, which is both a waste
Speaker 2: problem it's also a netzerio problem. Today, plastics about ten
Speaker 2: percent of our plastics is recycle globally, so it's pitiful
Speaker 2: and almost all, basically all of that is mechanical recycling.
Speaker 2: It will only take clear like plastic bottle type things,
Speaker 2: and it will make worse quality plastics from it, like
Speaker 2: throwaway cutlery, so it's not great. There is a whole
Speaker 2: wave of mostly startups developing this thing called chemical recycling. Basically,
Speaker 2: you can take in the stream of dirty colored, mixed
Speaker 2: wavee plastic and turn into a pseudo kind of crude
Speaker 2: oil again really, and that can then be used and
Speaker 2: upgraded into anything, and it's completely circular forever and ever.
Speaker 2: And our company we're going to talk about is Mirror Technologies.
Speaker 2: They commissioned last year their first ever commercial plant in
Speaker 2: the UK doing exactly this process chemical recycling, and it's
Speaker 2: pretty exciting. It's twenty thousand tons per annum then make
Speaker 2: and they've been around it to an eleven so again, it's
Speaker 2: taken them quite a long time to get here.
Speaker 1: Now as a chemist, recycling of plastics is possible. It's
Speaker 1: always been a cost problem, right, So what is it
Speaker 1: that Mirror has been able to do that? They've been
Speaker 1: able to overcome that and actually make a commercial case
Speaker 1: for their product.
Speaker 2: Yes, recycling doesn't make money generally at this moment in time,
Speaker 2: maybe be true forever. But we're seeing low scrap plastics prices,
Speaker 2: particularly for waste plastic that literally otherwise it's going to
Speaker 2: get land filled, and so you are paying very little
Speaker 2: for your feedstock, which is take one of kind of
Speaker 2: business model excellence for climate tech startups. Second, there is
Speaker 2: a lot of policy right now in the UK and
Speaker 2: France and the EU generally that is mandating. In the UK,
Speaker 2: the mandate is thirty percent of plastic made has to
Speaker 2: be recycled or circular economy plastic. Now that just isn't
Speaker 2: available right now to producers. They're really scrambling and that
Speaker 2: is enabled a price premium. It's not a subsidy. It's
Speaker 2: really just the government mandating has meant companies are desperate
Speaker 2: to buy this product that Mira has, which means companies
Speaker 2: like Mira. Our BNF calculations show about a thirteen percent IRA.
Speaker 2: Now normal chemicals plants are about eight percent. So this
Speaker 2: is a better investment just without the green tag than
Speaker 2: investing in other chemicals projects.
Speaker 1: Right, and IRR is just the rate of return, So
Speaker 1: thirteen percent for every million dollars that's invested, exactly. And
Speaker 1: these are companies now that are at that place where
Speaker 1: they have gone over the value of death, build a
Speaker 1: first of fu kind, and are starting to get to
Speaker 1: the commercial stage. But among the many things that BENF does,
Speaker 1: you also go at the very early stage of startups
Speaker 1: and you try and identify, given there are now hundreds
Speaker 1: of these coming up every year, the most promising ones,
Speaker 1: and some of them you give awards to. Which is
Speaker 1: a list that you've announced just this week. Talk us
Speaker 1: through some of those winners.
Speaker 2: Yeah, i'd love to so BNF pioneers this innovation competition.
Speaker 2: It's been running now since twenty ten, and every year
Speaker 2: we have about ten to twelve winners out of one
Speaker 2: hundreds of applicants, and more recently we've been picking themes
Speaker 2: for the year. There are so many interesting companies out there,
Speaker 2: but BENF wants to try and pick companies that are
Speaker 2: relevant for today's problems and really for actually tackling climate
Speaker 2: change or decarbonization before twenty thirty. It's great that there's
Speaker 2: twenty fifty solution, but we can't wait that long. So
Speaker 2: this year we chose three challenge areas we want to
Speaker 2: relieve the bottlenecks on the grid. There's loads of issues
Speaker 2: of permitting right now to get reneaebles on the grid,
Speaker 2: there are some tech solutions. Second is decarbonizing buildings in
Speaker 2: the built environment, huge cause of emissions. We're still not
Speaker 2: entirely sure how to get there economically. And the third
Speaker 2: is let's just try and develop a great next gen
Speaker 2: zero fuel because right now we're really struggling to know
Speaker 2: how to decarbonize aviation, shipping and tracking.
Speaker 1: And just to give the listeners of flavor of the
Speaker 1: kinds of startups that end up winning this award, what
Speaker 1: are your favorite examples from this year's winners.
Speaker 2: Well, yeah, so we have I think eleven winners this year,
Speaker 2: and they're all great obviously, but the ones we could
Speaker 2: talk about I think exemplify some of the themes we've
Speaker 2: already discussed. There's a couple of really great ones in
Speaker 2: the relieving grid bottlenecks challenge. Many people think that's just
Speaker 2: about permitting and policy, but there's some call tech stuff.
Speaker 2: One example that use is a hardware company example called
Speaker 2: ts Conductor, the US based, and they have basically developed
Speaker 2: a technology. It's a carbon fiber core wrap with aluminium
Speaker 2: wrapped around it, which will triple the line capacity how
Speaker 2: much power you can push down in existing above ground
Speaker 2: power line. That's huge because one of the hugest w
Speaker 2: is building out the grid is permitting to build new
Speaker 2: wooden poles in the ground. If you can replace those
Speaker 2: wires and triple the power capacity and have line losses,
Speaker 2: that's amazing and it's a four year payback. The issue
Speaker 2: TS Conductor has is it's expensive. We talked about that before,
Speaker 2: and utilities in the US are regulated to not spend
Speaker 2: lots of money, so they're going to struggle to sell
Speaker 2: this stuff. It's two to three times the cost and
Speaker 2: to an interesting model to do exactly that, basically try
Speaker 2: and get it deployed.
Speaker 1: So you replace the copper cable with a cable that's
Speaker 1: made out of carbon fiber and aluminum.
Speaker 2: So it's currently aluminum. Yeah, in the US, wires wrapped
Speaker 2: around steel core. The steel helps strengthen the aluminium starts sagging.
Speaker 2: You only to push much power of the aluminium before
Speaker 2: all the wires sag. And I'm sure you've seen sagging
Speaker 2: wires in the US very very dangerous. What the composite
Speaker 2: core does it's just ten times stronger than steel, so
Speaker 2: you can actually push plenty more current through the aluminium
Speaker 2: and it won't sag because of the carbon fiber core.
Speaker 2: It is expensive, but yeah.
Speaker 1: Well they're also coming in at a time where copper
Speaker 1: prices are going up. The ability to get copper cables
Speaker 1: has been a real struggle for the grid industry. So
Speaker 1: that's a good example. What's another one.
Speaker 2: So in the buildings challenge, we have some great companies.
Speaker 2: One particularly has been around for a long time, so
Speaker 2: Aero Seal. They were found in nineteen ninety six. They're
Speaker 2: actually bought by Carrier in two thousand and one, I believe,
Speaker 2: and it just went nowhere, and that can happen big companies, buyer, startup,
Speaker 2: don't know what to do with it, let it languish.
Speaker 2: The founder, the initial founder of aero sal rebought the
Speaker 2: company from Carrier in twenty ten because he could just
Speaker 2: see it going nowhere. And since then they've managed to
Speaker 2: scale massively. They are making lots of money. They I
Speaker 2: think have now done about two hundred thousand kind of
Speaker 2: installations of their product. And that product is they basically
Speaker 2: can retrofit commercial or residential buildings or new bills to
Speaker 2: be fully sealed ie airtight almost passive house standard, which
Speaker 2: obviously reduces losses. So is it basically an energy efficiency plan.
Speaker 1: I actually got a chance to go and visit one
Speaker 1: of the aerocal processes in the US in Massachusetts, and yeah,
Speaker 1: we just entered a random person's home and they were
Speaker 1: kind enough to let us in to see how they
Speaker 1: do it. And it's fascinating. Like you, of course have
Speaker 1: to leave the house for that period and you have
Speaker 1: to let it dry and everything, but you don't have
Speaker 1: to deconstruct the house to put it back together to
Speaker 1: try and get this insulation in place. So we do
Speaker 1: need real good solutions for insallation. And it's really nice
Speaker 1: to see a startup that is no longer a startup.
Speaker 1: I guess it's twenty years old, coming back to life now.
Speaker 1: The final example that you have is a steel company,
Speaker 1: and this is where you take h to green steel,
Speaker 1: which is a hydrogen powered steel production, which may not
Speaker 1: go down the green premium path as one would like,
Speaker 1: but there are these other startups that are coming up
Speaker 1: with even cheaper ways of making carbon free steel.
Speaker 2: Yeah, there's only very few ways to decarbono steel. You
Speaker 2: basically make it as you do and add carbon capture
Speaker 2: always be more expensive. You instead reduce your iron ore
Speaker 2: with hydrogen rather than natural gas, which is what Hdgreen
Speaker 2: Steel is doing. Or you could electrify the whole process.
Speaker 2: That's really tricky, not done currently at scale, but actually
Speaker 2: we've now got three BNF pioneers winners who were doing
Speaker 2: that in the past. We gave Boston Metal the award,
Speaker 2: last year, Electra and this year Element zero. All three
Speaker 2: are forms of basically electrolysis. Element zero is interesting, still
Speaker 2: very early stage, but they promise a couple of things.
Speaker 2: It's a bit different. One is they say they're not
Speaker 2: using a membrane and they're not using carbon electrodes, so
Speaker 2: there's no direct process zero two emissions from the carbon electrodes,
Speaker 2: and the membrane is very expensive and technically kind of
Speaker 2: fussy part of the systems. They're cutting out that cost
Speaker 2: and that risk. The second cool thing is they say
Speaker 2: that they can operate with renewable intermittent energy. So obviously
Speaker 2: if you're in a xetrified process to make in a zero,
Speaker 2: it needs to use clean power. The cheapest clean power
Speaker 2: is solar and wind, but it isn't running all the time.
Speaker 2: So unlike other electrification processes for industry that need to
Speaker 2: be twenty four to seven really power liability, what Element
Speaker 2: zero can do is actually be off for up to
Speaker 2: four hours, which is really cool, is to do what
Speaker 2: the heat capacity of the solvent it's using.
Speaker 1: Now, I've been particularly fascinated by these electric options, and
Speaker 1: the electrolysis part is very simply just using electricity to
Speaker 1: do the chemical reaction that was being done either by
Speaker 1: hydrogen or coal, where they basically take the oxygen atom
Speaker 1: out from the iron ore which is iron oxide. Now Electra,
Speaker 1: which is the other pioneer winner, has reached pilot stage.
Speaker 1: They are actually making tons of this material sending it
Speaker 1: out to steel makers. What stages Element zero at they're.
Speaker 2: Still very early stage. I mean more like a lab stage.
Speaker 2: I mean they might say pilot, but definitely behind Elektra.
Speaker 2: They want to build their first commercial vicility in twenty
Speaker 2: twenty nine, So that's there at Series A, if we
Speaker 2: go back to the VC discussion, they're raised about ten
Speaker 2: million dollars in there. At Series A. They have some
Speaker 2: private wealthy individuals that also are helping fund them, but
Speaker 2: really they're a way of building their first commercial project.
Speaker 1: And like you said, many of these startups like Element
Speaker 1: zero are very early stage. With the funding landscape changing
Speaker 1: so much, it'll be interesting to see how they survive
Speaker 1: and perhaps thrive. Thank you, Claire, thanks having me for
Speaker 1: more on decarbonizing steel. You can listen to an episode
Speaker 1: of Zero from twenty twenty two on Elektra, and you
Speaker 1: can hear more on climate investing trends on Bloomberg. Anyf's
Speaker 1: podcast Switched On links to all that in the show notes.
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Speaker 1: are Mithyle Rao, Magnus Henriksen and Somarsadi. Our theme music
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Speaker 1: Jessica Nix. I'm Akshatrati back soon.