Speaker 1: Pushkin.
Speaker 2: Our civilization is built on hydrocarbons. Oil and natural gas
Speaker 2: and coal light up our houses and keep us warm
Speaker 2: in the winter, and propel our cars and our ships
Speaker 2: and our planes. They provide the heat companies need to
Speaker 2: make stuff. Hydrocarbons even provide the hydrogen to make the
Speaker 2: fertilizer to grow our food. The problem with hydrocarbons, of course,
Speaker 2: is the carbon it binds with oxygen, goes into the
Speaker 2: atmosphere and warms the earth. So humanity is in the
Speaker 2: process of trying to very quickly come up with cheap
Speaker 2: ways to power our civilization without hydrocarbons, and as we've
Speaker 2: been discussing on the show for the past few weeks,
Speaker 2: we're actually making progress. Solar energy in particular, has become
Speaker 2: wildly cheap in some parts of the world. In fact,
Speaker 2: it's now free in the middle of sunny days, and
Speaker 2: it's likely that solar energy will be free in the
Speaker 2: middle of the day in much more of the world
Speaker 2: in the next few years. The triumph of solar is
Speaker 2: going to go a long way toward powering our houses
Speaker 2: and factories and cars. But there's a lot that solar
Speaker 2: energy cannot do for reasons of basic physics. It's really
Speaker 2: hard to use solar energy or solar energy combined with
Speaker 2: batteries to power container ships or commercial planes. It's also
Speaker 2: hard to store large amounts of solar energy for long
Speaker 2: periods of time, and it's hard to move it around
Speaker 2: the planet, hard to move it across oceans. So a
Speaker 2: lot of people step back and they look at hydrocarbons,
Speaker 2: at fossil fuels, and they say, you know, most of
Speaker 2: the energy in hydrocarbons comes from the hydropart, the hydrogen.
Speaker 2: What if we could make clean fuel that was like hydrocarbons,
Speaker 2: but without the carbon. What if we could take that
Speaker 2: cheap abundant solar energy and use it to make pure hydrogen.
Speaker 2: That would be a huge step forward in figuring out
Speaker 2: how to live without hydrocarbons. I'm Jacob Goldstein, and this
Speaker 2: is what's your problem. This is the third of three
Speaker 2: shows we're doing about the triumph of solar energy, about
Speaker 2: how solar became so cheap and what cheap abundant solar
Speaker 2: energy is going to mean for the world. My guest
Speaker 2: today is Rafi Garabedian. Rafi was previously the chief technology
Speaker 2: officer at First Solar, a company that makes solar panels.
Speaker 2: Now he is the co founder and CEO of Electric Hydrogen,
Speaker 2: a company that has raised hundreds of millions of dollars
Speaker 2: in its quest to solve a big problem. How do
Speaker 2: you use intermittent solar and wind power to make hydrogen?
Speaker 2: And crucially, how do you do it cheaply enough to
Speaker 2: make that hydrogen economically viable?
Speaker 3: So you can take this free solar and wind that's
Speaker 3: available when no one needs it, you can convert it
Speaker 3: to hydrogen and use that hydrogen to make things like
Speaker 3: steel and fertilizer and fuels.
Speaker 2: And the fuels if I understand correctly, I mean when
Speaker 2: you burn hydrogen, it just makes water, right, Like that's
Speaker 2: part of the genus.
Speaker 3: Yeah, when you burn hydrogen, it just makes water. It's
Speaker 3: super simple, right. It generates heat like any other fuel,
Speaker 3: and you can use that in an engine or a
Speaker 3: turbine or whatever. But it emits water instead of CO
Speaker 3: two and water. So that's the beauty of it. But
Speaker 3: the rub is hydrogen by itself is hard to utilize,
Speaker 3: and that's because it's not a liquid, it's a gas,
Speaker 3: and it's a gas it's hard to handle because the
Speaker 3: molecule so small and so utilizing hydrogen directly as a
Speaker 3: fuel requires a retooling of infrastructure. When I say infrastructure,
Speaker 3: I mean pipelines, shipping, vessels to move the stuff around.
Speaker 3: Even the engines and turbines that would burn it are different.
Speaker 3: And so hydrogen itself is a fuel is the endgame,
Speaker 3: And I would say it's gonna happen, but it's going
Speaker 3: to take a long time to happen because we've spent
Speaker 3: arguably over one hundred years building infrastructure, engines, turbines, pipelines, vessels,
Speaker 3: all that stuff to move and consume hydrocarbons, and we're
Speaker 3: going to have to retool all that stuff to move
Speaker 3: and consume hydrogen as the replacement.
Speaker 2: So if that's the long that's the long game. What's
Speaker 2: the medium game?
Speaker 3: Yeah, that's great quest, So that's the long game. The
Speaker 3: medium game is convert the hydrogen into the molecules we
Speaker 3: already know and love, well kind of love except for
Speaker 3: one use, use, no one use, and in mind bogglingly
Speaker 3: big quantities. And if you if you think about hydrocarbons
Speaker 3: fuels and how much we use globally, I can't even
Speaker 3: express how big an industry that is, and.
Speaker 2: How much oil how many hydrocarbons we are burning right this.
Speaker 3: Minute, right this minute, and and society, as we not
Speaker 3: is entirely dependent on them. Energy is prosperity, energy is
Speaker 3: everything that we do.
Speaker 2: Is material well being. Yeah.
Speaker 3: So so the so the short game, the medium game
Speaker 3: is convert the hydrogen, which we know how to do
Speaker 3: therm mechanically. We know how to convert hydrogen and CO two,
Speaker 3: which we can capture from the atmosphere from other processes.
Speaker 3: We know how to combine those two to make everything
Speaker 3: from methane which is natural gas all the way to
Speaker 3: jet fuel. And so once we do that, we don't
Speaker 3: have to convert or retool all of that industrial infrastructure.
Speaker 2: And why is that version cleaner? Where are you get
Speaker 2: in the CO two from?
Speaker 3: Yeah, that's also a great question. So the source of
Speaker 3: the CO two is super important for the cleanliness the
Speaker 3: carbon profile of these pathways, these intermediate pathways, because CO
Speaker 3: two that is clean and clean would be biogenic. It
Speaker 3: comes from biological sources. Well, that's a shorthanded way of
Speaker 3: saying it's captured from the atmosphere, right, Because biological CO
Speaker 3: two it comes from plants. And where does that come from?
Speaker 3: It comes from the air. So that's a form of
Speaker 3: carbon capture. But there's just not enough of it available
Speaker 3: to make the amounts of fuels that we need, and
Speaker 3: so it is a limited pathway. But geez, I mean,
Speaker 3: we can go down that pathway for ten years and
Speaker 3: not run out FC two sources. And in the meantime,
Speaker 3: we can and are in fact already starting as a
Speaker 3: society to build our hydrogen infrastructure. If you go to Europe,
Speaker 3: there are in Germany, in the Netherlands there are hydrogen pipelines,
Speaker 3: dedicated hydrogen pipelines being built today.
Speaker 2: So good, So we're going in reverse chronological order. We
Speaker 2: started with the long game, and then we did the
Speaker 2: medium game, and now you're getting to the present. Right,
Speaker 2: they're building hydrogen pipelines in Europe. Now people make hydrogen
Speaker 2: today for industrial reasons, but that itself is a dirty process, right,
Speaker 2: the sort of before we can get to the happy
Speaker 2: world of just hydrogen, or even the semi happy world
Speaker 2: of hydrogen plus captured carbon, you have to figure out
Speaker 2: how to make hydrogen without emitting carbon in the first place.
Speaker 2: Right that is, you got is your immediate project.
Speaker 3: You got it, and and you know I came, I
Speaker 3: and my co founders came at this problem actually from
Speaker 3: the opposite direction. We're solar. We're solar people. Yeah, you know,
Speaker 3: it's solar and wind like renewable power people, and and
Speaker 3: and so like we we came at it from Gee,
Speaker 3: this this energy resource is really cheap, it's really scalable,
Speaker 3: but it's limited in how much we can deploy it.
Speaker 3: We got to think of a better way to use it. Hey,
Speaker 3: this hydrogen pathway opens up like a whole nother market
Speaker 3: that's even bigger than the electric power market.
Speaker 1: Let's let's try to do that.
Speaker 2: I mean, there's a way where, like, if you can
Speaker 2: turn intermittent clean energy into hydrogen, it's like fuel, right,
Speaker 2: like hydrogen caption, Like it's kind of a pain in
Speaker 2: the ass to move around, and yeah, yeah yeah, we're
Speaker 2: not set up to use that kind of fuel. But
Speaker 2: it has the qualities of fuel, not the qualities of electricity. Right,
Speaker 2: ther'st portable, storable. So you have this big idea. It's
Speaker 2: a it's an obvious question, right, an interesting, huge question
Speaker 2: right now, Oh my god, solar power is free. How
Speaker 2: do we leverage that? You know, people are trying to
Speaker 2: make weirdo long duration batteries that's another version of it.
Speaker 2: How do you land at hydrogen.
Speaker 3: Yeah, I'm a big fan of long duration batteries because
Speaker 3: the grid, the grid should take should be able to
Speaker 3: take more solar and wind. It still doesn't solve the
Speaker 3: other half of global emissions, which are all these chemical industries.
Speaker 3: You think about. Think about Japan. Japan doesn't have fossil resources.
Speaker 3: It doesn't have the land or the solar and wind
Speaker 3: resource to power its own economy. So you know, the
Speaker 3: choices for Japan are nuclear which is problematic for Japan.
Speaker 2: Or because cushim because they had, like to non man
Speaker 2: a nuclear accident.
Speaker 3: Yeah, it wasn't a good thing. Or which is what
Speaker 3: Japan does importing fuel from other places in the world.
Speaker 3: You can't import batteries that are charged. That's not a thing, right,
Speaker 3: And when you think about Japan, it's an isolated case.
Speaker 3: It's really clear and obvious. But Europe imports most of
Speaker 3: its energy as an example, right, and that's a huge economy.
Speaker 3: So moving energy.
Speaker 2: From Russia awkwardly.
Speaker 3: Awkwardly from Russia, and now more and more LNG from
Speaker 3: the US, which by the.
Speaker 1: Way, natural gas liquid naturally.
Speaker 3: Yeah, So wires work really well in continence places where
Speaker 3: you have strong renewable resource and a lot of people.
Speaker 3: But that is not characteristic of a lot of the world.
Speaker 3: And so when we think globally and energy is a
Speaker 3: global industry, right, it's a global problem. We think globally,
Speaker 3: you've got to be able to move energy in some
Speaker 3: form other than electrons. And that takes us to hydrogen
Speaker 3: or it's it's you know, it's derivative. It's like futiless
Speaker 3: other hydrocarbons as the way we do this, right, that's
Speaker 3: the only way humanity has come up with to move
Speaker 3: vast amounts of energy to where people need it.
Speaker 2: I mean, it's the genius of It's the genius of
Speaker 2: fossil fuel, right Like, fossil fuel is an extraordinary energy
Speaker 2: storage mechanism, right, Like it's incredible. You can move it around,
Speaker 2: you can leave it in a tank, you can put
Speaker 2: it on a ship. It's full of energy, you can
Speaker 2: burn it whenever you want. Like it's tough to beat.
Speaker 1: It is super tough to beat.
Speaker 2: And we have one hundred and fifty years of optimizing
Speaker 2: for it and building a world around it.
Speaker 3: And if it weren't for climate change, I wouldn't be
Speaker 3: doing what I'm doing because because fossil Yeah, because fossil
Speaker 3: fuels are awesome in every other way like you describe, right,
Speaker 3: They're easy to store, they're easy to move, they're super
Speaker 3: cheap to get. Wow, like wow, it's such a gift
Speaker 3: Nature's given us and we've been using it for a
Speaker 3: long time.
Speaker 1: But gift asterisk, Yeah, gift fasters.
Speaker 3: Well, we've got me smarter, right, Yeah, we've gotten smarter
Speaker 3: and we've we've started to realize the unintended consequences of
Speaker 3: this this this resource we have, and now we got
Speaker 3: to we you know, luckily, hopefully maybe we have time
Speaker 3: enough to get out of our own way and start
Speaker 3: to convert. So okay, So so hydrogen lets you do
Speaker 3: all these things. It's harder, but the big problem is
Speaker 3: it's more expensive. It's a lot more expensive today.
Speaker 2: Well, and let's just be clear, there's hydrogen means different things,
Speaker 2: and like there is people do make hydrogen an industrial
Speaker 2: at industrial scale now, but they do it in a
Speaker 2: way that emits carbon dioxide. That is like not at
Speaker 2: all about solving the kinds of problems we're talking, right,
Speaker 2: So the fundamental hard thing is using electricity to make hydrogen,
Speaker 2: which is like technically not hard, but uh, but nobodys
Speaker 2: figured out how to do it in an economical way. Right,
Speaker 2: that's the base.
Speaker 3: Exactly, That's exactly it. People have been doing it since
Speaker 3: I don't know, sixty years ago, sixty five years.
Speaker 2: Ago, right, Like, I mean my high school chemistry teacher
Speaker 2: did it. Right, He like made this jank electoralizer where
Speaker 2: he had a battery and then he ran wires from
Speaker 2: the battery into a thing of water and he put
Speaker 2: like upside down test tubes, you know, in the water,
Speaker 2: and one of the test tubes filled up with oxygen
Speaker 2: and the other one filled up with hydrogen.
Speaker 3: That basic demonstration in high school chem lab or physics
Speaker 3: lab is the core physical phenomena that is being scaled
Speaker 3: up into modern electrolisers. That's the machine that does this
Speaker 3: on an industrial scale today. That equipment is inefficient and
Speaker 3: super expensive, and because it's so expensive, you have to
Speaker 3: run it all the time, and so where Yeah, so
Speaker 3: you know, think about like you own this really expensive thing,
Speaker 3: you want to use it all the time?
Speaker 2: Yeah, right, because the value you get out of it
Speaker 2: is like the amount you pay for it divided by
Speaker 2: how much you use it.
Speaker 1: Right, Exactly, You've tied up all this money in a thing. Yeah,
Speaker 1: and you've got it. That money has to be put
Speaker 1: to work, right, And.
Speaker 2: So if you're if your whole case is like, oh,
Speaker 2: we're gonna have intermittent free energy, that's not going to work.
Speaker 1: Yeah, that's right.
Speaker 3: Where people do electrolysis today is where.
Speaker 1: They have cheap hydropower.
Speaker 3: And you know, you think of like Sweden and Norway
Speaker 3: nor the Norwegians were pioneers in this because they had
Speaker 3: a lot of hydropower in remote places without a lot
Speaker 3: of people. Hey, if we could convert them to hydrogen
Speaker 3: and make fertilizer, wouldn't that be great?
Speaker 1: Right?
Speaker 3: So that's been going on for half a decade and
Speaker 3: interesting that part of the world. Okay, but hydropower isn't
Speaker 3: all that scalable. There's gigawots of it out there, but
Speaker 3: you can't build much more because it has its own
Speaker 3: environmental impacts.
Speaker 1: Right.
Speaker 3: So okay, so that's the core issues. This equipment super expensive,
Speaker 3: it's not efficient, and so that limits our ability to
Speaker 3: use it from with this powered by this cheap, abundant
Speaker 3: but intermittent renewable resource, all this excess solar and wet.
Speaker 2: It's always techno economics, right, like the whole energy transition.
Speaker 2: It's not really a technical problem, clearly at this point.
Speaker 2: It's a it's an economic problem. It's the technoeconomic problem, yep.
Speaker 3: And the solution to the technoeconomic problem is largely technical innovation,
Speaker 3: but with business model and economic innovation wrapped around.
Speaker 2: It, and scale right and scale it seems like.
Speaker 3: Yeah, yeah, scale absolutely, scale as well. So let's talk
Speaker 3: about scale. So most electrializers, big ones are one, maybe
Speaker 3: two or three megalots. Those are the biggest ones out there.
Speaker 3: A megawot is like how to put that in real terms?
Speaker 3: It sounds like a lot of power. It kind of
Speaker 3: is a lot of power, but it's nothing compared to
Speaker 3: the industries we're talking about and the uses.
Speaker 1: We're talking about.
Speaker 3: So if you think about like an ammonia plant, you
Speaker 3: would need a thousand of those to make enough hydrogen
Speaker 3: to run an ammonia chemical.
Speaker 2: One that's one ammonia.
Speaker 1: That's one one of thousands of the world.
Speaker 2: So do you need to go up buy a thousand X?
Speaker 2: Is that about the about them?
Speaker 3: You need to go up by about one hundred X.
Speaker 2: Okay, and then you put you then you send ten
Speaker 2: of them to the plant and it makes.
Speaker 1: That makes sense. That's it. That's it.
Speaker 3: So it is all about technice economics, which, by the way,
Speaker 3: you know, so the company I run as a startup,
Speaker 3: we've been around for a little over four years venture
Speaker 3: financed tech startup. This is an insane thing for a
Speaker 3: startup to try to do.
Speaker 2: Yes, well, you've raised a ton of money, right, Like,
Speaker 2: it's wildly capital intensity. You've raised hundreds of millions of dollars.
Speaker 2: We have an impressive display of venture capital that people
Speaker 2: have invested in you given you that much money on
Speaker 2: a kind of long shot thing, right on a certainly
Speaker 2: hard thing that might not.
Speaker 3: Work, super super intense and I'm super grateful that the
Speaker 3: venture community. You know, if you look at the venture
Speaker 3: capital communities experience with what they call clean tech, right,
Speaker 3: this is like technology companies that are trying to do
Speaker 3: like big hard transformations of industry to make them cleaner.
Speaker 1: You know, there was clean tech one point.
Speaker 3: Oh maybe a decade or more ago, and a lot
Speaker 3: of people lost a lot of money. Yeah, right in
Speaker 3: that in that first foray into clean tech.
Speaker 2: I mean, you happen to work at one of the
Speaker 2: only US companies that really came through that, right, maybe
Speaker 2: that helps raising money this time.
Speaker 3: It certainly doesn't hurt. It certainly doesn't hurt. Yeah, it's
Speaker 3: spent thirteen years at First Solar, and it is literally
Speaker 3: one of the as you said, the old on the
Speaker 3: US companies that's still thriving in these industries. But you know,
Speaker 3: when we started this company, we I think we started
Speaker 3: it at a great time clean dech two point zero,
Speaker 3: if you will. There was a lot of venture capital
Speaker 3: interest for good reason because in political resolve to do
Speaker 3: the things necessary to start to address climate change was strong,
Speaker 3: and that provides like the economic footing the support necessary
Speaker 3: for kind of new technologies to enter the market. When
Speaker 3: something new enters is the market, it's never competitive.
Speaker 2: Yeah, well, it's interesting in the solar story, how at
Speaker 2: least in Jenny Chase's version of the story, which seems
Speaker 2: like the most credible version I've come across. The German
Speaker 2: feed in tariff of two thousand and four is this
Speaker 2: sort of inciting event. It's just this one policy change
Speaker 2: in a medium sized, rich country kicks off this amazing
Speaker 2: run down the experience curve, you know, of solar panels
Speaker 2: getting cheaper and cheaper and cheaper until now without incentives
Speaker 2: like solar is gonna win. It's gonna keep winning. It's
Speaker 2: not subject to these political wins.
Speaker 1: You got it.
Speaker 3: I won't repeat the story though I personally lived through it,
Speaker 3: but it sounds like you and your listeners have already
Speaker 3: heard it and your recounting is accurate. Where not for
Speaker 3: the German feed and tariff for solar probably would not exist,
Speaker 3: nor would the solar industry as we know it. China
Speaker 3: certainly would not have scaled up their industry dramatically, and
Speaker 3: you know they're the dominant supplier of solar panels in
Speaker 3: the world by a large margin. But as a result
Speaker 3: of all that, the industry got to scale, got the
Speaker 3: better and better economics. And it's not just the solar panels,
Speaker 3: the equipment, but it's also, as you said, the experience
Speaker 3: of building solar farms, the learning and the cost reduction,
Speaker 3: the country repetition. Right, you build one house, it's kind
Speaker 3: of spenser. If you build one hundred houses, they get
Speaker 3: cheaper and cheaper. It's the same with solar and wind.
Speaker 2: Houses are a weird example, though. Houses are like that
Speaker 2: terrible productivity gits. Everything else gets cheaper when you build
Speaker 2: more of them houses weirdly refractory the productivity gits.
Speaker 1: That was a really bad example. I agree.
Speaker 2: Still to come on the show, how Rafi and his
Speaker 2: colleagues at Electric Hydrogen plan to cut the cost of
Speaker 2: clean hydrogen in half? So is the Inflation Reduction Act
Speaker 2: this bill, this US law passed a few years ago.
Speaker 2: Is this like the German feed in tariff of two
Speaker 2: thousand and four a moment for hydrogen? Is that what
Speaker 2: you're hoping? Yeah, so the answer is no, Okay, interesting,
Speaker 2: tell me more.
Speaker 1: Yeah.
Speaker 3: Interestingly, the equivalent of the German feeding taraff today is
Speaker 3: not the Inflation Reduction Act and its provisions for hydrogen,
Speaker 3: but it's what's going on in European policy.
Speaker 2: Okay, well, that's heartening for semi obvious reasons. Go on, yeah, yeah,
Speaker 2: So what's happening in Europe?
Speaker 3: So in the European Union there is there are a
Speaker 3: number of policy frameworks, but what's called Red two or
Speaker 3: Red three, which are laws in Europe. These laws in
Speaker 3: Europe provide a framework for carrots and sticks to decarbonize
Speaker 3: certain high emitting industries. It all has to do with
Speaker 3: the utilization of the renewable energy to decarbonize things like steel, concrete, fertilizer,
Speaker 3: chemical industries, energy.
Speaker 2: Those I mean, those heavy industry ones that you mentioned
Speaker 2: are the classic like ones we haven't figured out yet,
Speaker 2: classic like hard to do with electricity, even if you
Speaker 2: got the electricity, like cement famously very hard to decarbonize steel,
Speaker 2: very hard, fertilizer very hard, like we don't know how
Speaker 2: to do it yet.
Speaker 3: Well, interestingly, we do know how to do it.
Speaker 2: I don't have to do it economically yet.
Speaker 1: That's it, you got it, you got it.
Speaker 2: Which ends up being the same thing with commodity businesses like.
Speaker 3: That, one hundred percent. The only value in a commodity
Speaker 3: business is the price, right, There's no other like, you know,
Speaker 3: you can't make it prettier, you can't make it faster,
Speaker 3: you can't make it cooler.
Speaker 1: It's just the only thing you can do. Bro Yeah yeah,
Speaker 1: yeah yeah. Okay.
Speaker 3: So, so the European kind of legal framework, policy framework
Speaker 3: actually is what's driving this industry to produce hydrogen and
Speaker 3: chemicals from hydrogen because it's it's driving consumption demand for
Speaker 3: those moments for those products.
Speaker 2: Because basically they get a subsidy if they consume hydrogen
Speaker 2: and they pay a fee if they don't, and more.
Speaker 3: Last, and it's that last piece, the penalty if you
Speaker 3: don't the stick. The stick is what actually works to
Speaker 3: create demand. That's right, because and in contrast what we
Speaker 3: have in the US with the IRA and we can
Speaker 3: talk later about like what's actually going on with it
Speaker 3: if you care to. But but in the US, we
Speaker 3: just have a production side subsidy visa via tax credit
Speaker 3: that doesn't do anything to cause the demand side to
Speaker 3: buy the stuff.
Speaker 2: Yes, I mean, I guess. If I guess, the hope
Speaker 2: would be that the the production subsidy would lower the
Speaker 2: price at which producers could sell, which would then increased demand.
Speaker 1: That is the that would be the naive hope. Naive, Yeah,
Speaker 1: we've never seen.
Speaker 2: I hope was my first album.
Speaker 3: Go on, We've never seen, We've we've never seen production
Speaker 3: side support alone the new energy industry, it's always taken.
Speaker 2: Yeah, you have to subsidize demand.
Speaker 3: Yeah, you have to somehow have to get the industry
Speaker 3: over that initial hump where the supply side subsidy isn't
Speaker 3: quite sufficient to cause people to change behavior.
Speaker 1: Uh huh.
Speaker 2: Interesting, Well, so does that mean that whatever happens with
Speaker 2: the with the regime change in Washington isn't going to
Speaker 2: be that big of a deal for you. You're like, well,
Speaker 2: we weren't that into the IRA anyway, Yeah.
Speaker 3: Kind of, you know, we were. We were, and frankly
Speaker 3: still are super hopeful that the rules for using the
Speaker 3: IRA tax credit will get clarified and then we'll be
Speaker 3: able to actually use it because we haven't been able
Speaker 3: to use it yet because the current means hasn't set
Speaker 3: the rules. Okay, the law exists, it's kind of a
Speaker 3: walky thing, but it's unclear. It's frankly unclear how the
Speaker 3: new administration is going to deal with this, and I
Speaker 3: think there's, you know, reason to believe it could go
Speaker 3: either way. So we're waiting to see.
Speaker 2: Yeah, I mean, it seems like a lot of the
Speaker 2: IRA might be unchanged, right. I know, there was a
Speaker 2: group of Republican congressmen that recently wrote to the Speaker
Speaker 2: of the House saying don't get the IRA, saying it's
Speaker 2: you know, creating jobs in our industries. It does seem
Speaker 2: like it was written in such a way, or at
Speaker 2: least as being implemented in such a way in other
Speaker 2: sectors at least that it does have some staying power political.
Speaker 3: At the risk of being political and super cynical, which
Speaker 3: I tend to be when I get political. Washington's about
Speaker 3: money and the IRA channel money disproportionately it turns out
Speaker 3: to Republican states, and so like, there is real support,
Speaker 3: not only principal support, because not all Republicans are blind
Speaker 3: to climate change and the need to transform the energy sector. Okay,
Speaker 3: so I think that needs to be said and realized
Speaker 3: that it's not a monolithic Hey we don't care, right, Yeah,
Speaker 3: there's real support for solar and wind in particular, but
Speaker 3: also for other decomponization pathways amongst Republicans. But also, like,
Speaker 3: the money matters, and so you know, Red states are
Speaker 3: getting a lot of money from the high rate potentially,
Speaker 3: and so gutting that would be I think politically challenging.
Speaker 3: But this is a this is a nonlinear time, right,
Speaker 3: this is a this is a time when I think
Speaker 3: it's very hard.
Speaker 1: To predict what's going to go on in Washington.
Speaker 2: So we'll see, yeah, yeah, yeah, So okay, So so
Speaker 2: you're saying you have a pathway in Europe. Anyways, let's
Speaker 2: let's talk more about how you're actually trying to do
Speaker 2: this thing. Right, So, you have in front of you
Speaker 2: a sort of technical problem, which is making green hydrogen
Speaker 2: cheaply enough to make economic sense, right, and you have
Speaker 2: certain tailwinds in the form of regulations that are encouraging this,
Speaker 2: but you're still not there yet, right, even with those tailwinds.
Speaker 2: Is that a fair characterization of where you are now?
Speaker 3: Yeah, that's a totally fair assessment for the whole industry actually,
Speaker 3: so yeah. So if you think about the whole like
Speaker 3: burgeoning hopefully soon burgeoning industry of sourgon.
Speaker 2: Today it's nascent, tomorrow it's burgeoning.
Speaker 1: That's right.
Speaker 3: If you think about like green hydrogen or electrolytic hydrogen,
Speaker 3: whatever you want to call it, as an industry, it's
Speaker 3: gotten a lot of excitement because again, the policy framework
Speaker 3: has matured and there to support it, but not a
Speaker 3: lot of big projects have been built yet. And it's
Speaker 3: because it's too expensive. That is exactly why my company
Speaker 3: Electric Collagen exists like we exist because we actually recognize
Speaker 3: that it's too expensive and have developed and are commercializing
Speaker 3: technical solution to make it much cheaper by a factor
Speaker 3: of two, Like half the cost.
Speaker 2: Does have get you there? Does if you actually do
Speaker 2: cut the price in half? Then does it work under say,
Speaker 2: the European.
Speaker 1: Regime right now?
Speaker 3: Yeah, totally so in Europe. In Europe, the typical project
Speaker 3: using other technology companies, equipment, and you know, I'll name
Speaker 3: I'll name the big ones like Siemens or Tiscent Croup, right,
Speaker 3: big industry.
Speaker 2: Big incumbent industrial companies.
Speaker 3: Yeah, they make these things, they make equipment to do
Speaker 3: this stuff. The cost of producing hydrogen using that gear
Speaker 3: in Europe today is probably the five dollars and fifty
Speaker 3: cents a kilo of hydrogen, so maybe six dollars achilo
Speaker 3: of hydrogen. If you make hydrogen from natural gas in
Speaker 3: Europe today, it probably costs their own.
Speaker 1: Three dollars akuila. Oh okay.
Speaker 3: We think we're already there. We think we're already at
Speaker 3: a place where we can enable economic parody or close
Speaker 3: to economic parity with the fossil incumbent, but in a
Speaker 3: very fundamentally preen way.
Speaker 2: So how do you do it? How do you cut
Speaker 2: the cost in half?
Speaker 1: Yeah?
Speaker 3: It all starts with the realization, which you struck on
Speaker 3: really early in this conversation, that cheap power is plentiful,
Speaker 3: but it's not steady. Yeah, right, So the equipment that
Speaker 3: you use to convert that unsteady, intermittent cheap power to
Speaker 3: hydrogen has to be really, really inexpensive, But it also
Speaker 3: has to be flexible. It has to be able to
Speaker 3: run up and down, up and down quickly without failing,
Speaker 3: damaging it or loss of efficiency. Today's equipment can't do either,
Speaker 3: and so part of the reason that hydrogen is so
Speaker 3: expensive to produce this way today is that not only
Speaker 3: are you using that intermittent, effectively free power, but you're
Speaker 3: also drawing power from the grid to keep the equipment running,
Speaker 3: and that drives up the cost of the power. The
Speaker 3: power costs is about half of the hydrogen production cost,
Speaker 3: so that's half the half. The other half of the
Speaker 3: half is it comes from the equipment actually being a
Speaker 3: lot cheaper.
Speaker 1: And the way we do.
Speaker 3: Both of these things is the fundamental physics of the device.
Speaker 3: So we're a bunch of super nerdy like semiconductor device
Speaker 3: physics and chemist kind of people, and we spent the
Speaker 3: first couple of years of the company in the lab
Speaker 3: basically reinventing this simple, simple device that you saw in
Speaker 3: your high school chem lab. Right the two wires that
Speaker 3: make the bubbles we electualizer.
Speaker 2: We can use this piece of jargon, right, it's the
Speaker 2: electoral yea, yeah.
Speaker 1: Yeah, yeah yeah.
Speaker 3: So we we came up with a way to make
Speaker 3: the electoralizer much much cheaper, not not by using cheaper materials,
Speaker 3: but by actually increasing the through but the amount of
Speaker 3: hydrogen that can be produced from the object. Since then,
Speaker 3: in the subsequent two years and more recently, we commercialized that.
Speaker 3: Our product is it's a big product. It's funny to
Speaker 3: call it a product. It's about an acre in size.
Speaker 3: It's a it's a plant. So if you've ever driven
Speaker 3: around parts of Texas, you've seen like small chemical plants,
Speaker 3: not pap refineries, but small ones. It looks kind of
Speaker 3: like one of those is a bunch of piping and plumbing.
Speaker 3: At the heart of it is this electrilizer, which is
Speaker 3: the thing we manufacture ourselves that does all the work
Speaker 3: and the recip the equipment around it, gathers the hydrogen,
Speaker 3: purifies it, and puts it out in a pipe. So
Speaker 3: we figured out how to make that really cheap. Half
Speaker 3: the cost.
Speaker 2: And the electoralizer itself, Like, what's it look like? How
Speaker 2: big is it?
Speaker 3: It looks about like it's about the size of a refrigerator,
Speaker 3: an American refrigerator.
Speaker 1: Not the little European.
Speaker 3: Yeah, and it looks you know, it doesn't look too
Speaker 3: it's kind of a rectangular box, you know, it's it's
Speaker 3: not very interesting to look at, frankly, And when it's running,
Speaker 3: it just sits there. It doesn't make any noise, it
Speaker 3: doesn't move, there's no robots or anything. There's a bunch
Speaker 3: of water running through it. There's pumps make a bunch
Speaker 3: of noise. There's water running through it and outcomes water
Speaker 3: and gas, water and oxygen in one pipe, water and
Speaker 3: hydrogen in the other pipe. And then there's a bunch
Speaker 3: of vessels and pipes that separate the gases from the
Speaker 3: water and purify them and send them out to be used.
Speaker 3: So it's it's a very you know if if you're
Speaker 3: a geek like me, it's really impressive. If you're just
Speaker 3: walking by one and you see it, you'd go, huh,
Speaker 3: what's that. It's kind of unimpressive, which is how you
Speaker 3: want one of these things to be. For sure, want
Speaker 3: any you know, any drama when you're when you're converting
Speaker 3: power to hydrogen, well.
Speaker 2: And especially with hydrogen, right, like I mean, I don't
Speaker 2: want to yeah, yeah, talking about things blowing up, but
Speaker 2: hydrogen can blow up.
Speaker 3: Right. Actually, let's let me take a moment here, because
Speaker 3: there's a lot of talk about that are in the US.
Speaker 3: Our new president elect even made some comments about that
Speaker 3: hydrogen is no more explosive than gasoline vapor or natural
Speaker 3: gas vapor. So we already know how to handle things
Speaker 3: that blow up when you when you spark them, and
Speaker 3: hydrogen is kind of us like those things.
Speaker 1: Yeah.
Speaker 2: Fair, So, so, how many of these acre sized plants
Speaker 2: exist in the world.
Speaker 3: Well, we are building our first one now and it'll
Speaker 3: be installed next year in an undisclosed location in Texas
Speaker 3: for a customer of ours.
Speaker 1: So we're we're super excited.
Speaker 3: You know, in the life cycle of a startup, this
Speaker 3: is an incredible moment where you know, we've we've gone
Speaker 3: from the laboratory to kind of a pilot scale operation
Speaker 3: and now we're building the first real one and uh
Speaker 3: and you know, all eyes are on it, and uh,
Speaker 3: we're just goes down executing and building it. You know,
Speaker 3: once we get the first one proven and running effectively,
Speaker 3: which will be next year, then you know we expect
Speaker 3: to to be uh, you know, super viable in the
Speaker 3: market because our price point is so compelling.
Speaker 2: What are you going to do with the hydrogen you
Speaker 2: make in Texas?
Speaker 3: So I can't tell you because the deal isn't announced yet,
Speaker 3: but it's exciting. It's a fuel that's going to be
Speaker 3: produced using the hydrogen.
Speaker 2: You can't tell me specifically what this first one's going
Speaker 2: to do, fine, but you know, we talked about this
Speaker 2: whole kind of range of things one might do with hydrogen.
Speaker 2: What are some of the sort of relatively easier applications, Like,
Speaker 2: what's the low hanging fruit for green hydrogen? What's the
Speaker 2: first thing you can do?
Speaker 1: Why can you do it tomorrow?
Speaker 3: Yeah, So everybody in our industry likes to think that ammonia,
Speaker 3: which is fertilizer, is the first thing it uses hydrogen today,
Speaker 3: That hydrogen is made from natural gas usually, so why
Speaker 3: not just replace that that dirty hydrogen with this clean stuff?
Speaker 1: Right?
Speaker 3: The reason ammonia isn't happening super fast right now is
Speaker 3: because they're relatively little incentive to decarganives ammoniah. No one's
Speaker 3: willing to pay extra for clean fertilizer because food, food security,
Speaker 3: food cost is super politically charged, and obviously right that
Speaker 3: that's nowhere that's not a place policy makers want to go. Potentially,
Speaker 3: even in Europe. We'll see. So it turns out the
Speaker 3: low hanging fruit might be economically or politically one of
Speaker 3: the last.
Speaker 1: Things to be done.
Speaker 2: So now we got to do politico techno economics, political economy,
Speaker 2: techno economics. I got to figure that one out.
Speaker 1: But yeah, okay, go on, and when you figure that out,
Speaker 1: tell me, because I need the I need. It's an interest, right.
Speaker 2: Political economy is an underused phrase, but we want to
Speaker 2: get tech political technoic, political techno economy. It's not Yeah, okay,
Speaker 2: so what are you going to do? Not fertilizer, but what.
Speaker 3: Yeah, so, so I'll rattle off the list of things
Speaker 3: that are very active today, ironically decarbonizing. The hydrogen input
Speaker 3: to refineries in Europe is very active.
Speaker 2: Refineries like oil refineries that are making whatever.
Speaker 3: Yeah, that's right, what am I talking about here? So
Speaker 3: a significant part of the of the CO two emissions
Speaker 3: from a refinery itself are from the production of hydrogen,
Speaker 3: which is used to refine oil. So hydrogen is used
Speaker 3: for desulfurization, hydro cracking. It's like it's a big input
Speaker 3: to employ refine. So there are incentives in place to
Speaker 3: gradually decarbonize the refinery itself. Of course, it doesn't do
Speaker 3: much to decarbonize the use of the fuel at the
Speaker 3: other end, but it's a start and it.
Speaker 2: Can help you scale, right, Presumably anything that can get
Speaker 2: you building is good. Now you need a job in policy,
Speaker 2: God forbid.
Speaker 1: But that's exactly right. That's the motivation.
Speaker 3: It seems counterintuitive to try to decarbonize a oil refinery,
Speaker 3: but because they consume hydrogen today, it is an obvious
Speaker 3: place for policy makers to incentivize the scaling up of
Speaker 3: the green hydrogen industry.
Speaker 1: So that's exactly right. You nailed it.
Speaker 3: Green steel, I already mentioned that one. So there's multiple active,
Speaker 3: big projects in the world, predominant in Europe to convert
Speaker 3: steel production from coal super dirty to green hydrogen super
Speaker 3: clean methanol. Methanol is both the chemical input to plastics,
Speaker 3: as I mentioned, but also is the favorite fuel for
Speaker 3: the decarbonization of shipping. So big shippers like Marisk probably
Speaker 3: heard of them, you've seen their name on shipping containers.
Speaker 3: They are building multi fuel ships now which can burn
Speaker 3: both conventional fuel which is super dirty. It's called bunker fuel.
Speaker 3: It's like the sludge that comes at the bottom of
Speaker 3: a refinery called but also can burn methanol and so
Speaker 3: green methanol emethanol some people call it, which is made
Speaker 3: from green hydrogen, is like a favorite pathway for decombanizational shipping.
Speaker 3: Those are the things that are doing. Another another one
Speaker 3: is SAFF sustainable aviation fuel.
Speaker 1: So what is that.
Speaker 3: It's kerosene. Basically it's fancy kerosene. And what is kerosene?
Speaker 3: It's a hydrocarden. It's just it's like gasoline but heavier.
Speaker 3: And so that can also be made from CO two
Speaker 3: biogenic CO two and hydrogen, or it can be made
Speaker 3: as is being done in Europe today from used cooking
Speaker 3: oil and other biological waste and hydrogen in a specialized refinery.
Speaker 2: So what are you worried about right now? Not about
Speaker 2: the world, but about your company? Like you're right at
Speaker 2: this moment, you're building first commercial plant, you have a
Speaker 2: lot of investment. Like what's at the top of your
Speaker 2: list of things to worry about?
Speaker 3: Yeah, So, as a described like this moment for a
Speaker 3: technology company going from lab and concept to actual product
Speaker 3: in the field is probably the riskiest and most delicate
Speaker 3: moment in a company's life cycle. Why is that because
Speaker 3: to do what we're doing and to actually deploy commercially,
Speaker 3: you have to be at a big enough scale to
Speaker 3: do that, and that means you're spending a lot of money.
Speaker 3: And so if you don't get it perfectly right the ramifications,
Speaker 3: it can be painful. So that's kind of a generic answer.
Speaker 3: The bigger worry for me is the stability of policy,
Speaker 3: not just in the US but globally around decargonization. And
Speaker 3: you know why am I concerned about that because we've
Speaker 3: seen it before. We've seen it and you mentioned the
Speaker 3: German feed and tariff, the German feed and tariff experience,
Speaker 3: that's what created the solar industry. But then it also
Speaker 3: got retracted suddenly. Why because of political change within Germany. Wow,
Speaker 3: this is costing the taxpayers a lot. And there was
Speaker 3: a there was a move to the right in Germany
Speaker 3: and like so the you know, the feed and traff
Speaker 3: was was revoked while I'm down, and that was a
Speaker 3: near death experience for the solar industry. The same thing
Speaker 3: can happen to us because we are, we are in
Speaker 3: the early days of this industry extremely policy sensitive or
Speaker 3: policy dependent. Now you know at electric high are like
Speaker 3: literal goal is to be independent of policy. Sure, success
Speaker 3: for us looks like we are economic economically competitive without
Speaker 3: any policy support.
Speaker 2: You want to be where solar power is now, Like
Speaker 2: nobody's going to stop solar now because it's the cheapest.
Speaker 2: Like you don't need to special rules, it's just cheaper.
Speaker 2: You got to just go to the store and buy
Speaker 2: solar panels and get their electricity.
Speaker 1: You got it.
Speaker 3: And that's what success looks like. But we're competing against
Speaker 3: an industry that's gone down its learning curve for the
Speaker 3: last hundred years, and so to compete with that like
Speaker 3: economically naturally right out of the gate, it's too much.
Speaker 2: To ask me the fossil fuel industry.
Speaker 3: Yeah, the fossil fuel industry. Yeah, yeah, so we need
Speaker 3: a little time.
Speaker 2: How much time? What's your guess?
Speaker 1: I think we can get there about twenty thirty. That's
Speaker 1: certainly fast, that's certainly ourgue.
Speaker 3: Yeah, it's fast, but it's a lifetime in terms of
Speaker 3: political wins and in terms of like a startup company.
Speaker 1: Yeah, you know, crossing.
Speaker 2: Capital capital intensive Yeah.
Speaker 3: Yeah, yeah, exactly, yeah exactly. So that's what worries me.
Speaker 2: Yeah, Well, you just got to make it five years. Man,
Speaker 2: if you're right, but five years a long time, especially
Speaker 2: right now.
Speaker 1: It's doubling my life. That's doubling my life.
Speaker 2: Okay, So that's what's to worry about. Give me the
Speaker 2: happy twenty thirty story. If if things, if you don't,
Speaker 2: if you make it to twenty thirty and you and
Speaker 2: it works out like you hope, what's what's it look like?
Speaker 2: What's the company look like? And what's the world look like.
Speaker 3: We're we're selling tens of gigawaps a year of electoralizers,
Speaker 3: but more important, we're ramping up fast, which means where
Speaker 3: you know, ideally doubling capacity every year to meet the
Speaker 3: demand for global projects to produce green hydrogen. The world
Speaker 3: looks like it's it's ramping green hydrogen production at a
Speaker 3: rate at which it will start to become relevant kind
Speaker 3: of relative to the fossil industry in a matter of
Speaker 3: years or a decade.
Speaker 2: Yeah, and tell me in five or ten years, like,
Speaker 2: what are the places where there might be sort of
Speaker 2: meaningfully significant use of green hydrogen in industrial processes?
Speaker 1: Yeah?
Speaker 3: So in five years, certainly in southern Europe, where solar
Speaker 3: and wind are plentiful and available, North Africa, which is
Speaker 3: really well positioned to supply Europe and has incredible solar
Speaker 3: and wind resource. Texas and kind of yeah, Texas, Louisiana,
Speaker 3: Oklahoma again, and the wind belt in the US are
Speaker 3: like ideal places for the production of the molecules. You
Speaker 3: look at places like Chile interesting because the Autocoma Desert
Speaker 3: has both wind and solar and the combination is extremely inexpensive.
Speaker 3: Those in the Middle East. It can't not mention the
Speaker 3: Middle East.
Speaker 2: That's the supply side, that's where you're making all this hydrogen.
Speaker 2: And then what's the demand side look like? In five years,
Speaker 2: who's buying it? What are they doing with it?
Speaker 3: Yeah, in five years, the demand side is largely Europe, Japan.
Speaker 2: Korea, because that's where the incentives are in place.
Speaker 3: Basically, it's that's where the problem is hardest to solve.
Speaker 3: They have the biggest problem. And it's not just incentives.
Speaker 3: Like when I say the problem to solve.
Speaker 2: They're most reliant on imported fossil fuel.
Speaker 1: You got it, you got it.
Speaker 3: So it turns out to not just be a decarbanization problem,
Speaker 3: it's also an energy security problem.
Speaker 2: But that's good for you, that's good for you. On
Speaker 2: the policy side, because there's more like short term self
Speaker 2: interest as a term of localized self interest in figuring
Speaker 2: out how to make hydrogen or.
Speaker 3: One hundred percent. So those places make a lot of
Speaker 3: sense in the five year timeframe. In the ten year
Speaker 3: time frame again, you know, we come close, even come
Speaker 3: close to meeting our goals, and we're going to be
Speaker 3: knocking on the door of parity in cost with fossil resources.
Speaker 1: And so I think the market is truly global.
Speaker 2: And just list off some of the things, not the places,
Speaker 2: but some of the things that people will be using
Speaker 2: your hydrogen four clean hydrogen four in five or ten years.
Speaker 3: Oh yeah, easy, so steal cement, ammonia, fertilizer, shipping fuel,
Speaker 3: aviation fuel, chemicals like methanol. Those are the easy ones.
Speaker 2: And all of those industries, I mean, those industries together
Speaker 2: make up a very large chunk of of carbon emissions.
Speaker 3: Yeah, the ones I rattled off probably thirty to forty percent.
Speaker 2: Yeah, and it's the thirty to that seems really hard
Speaker 2: right now. Right it's not the like, oh, great solar
Speaker 2: power and batteries for people's houses and cars like that
Speaker 2: part we've actually kind of got, which is good. And
Speaker 2: so you're doing the hard part.
Speaker 1: Yep, consider.
Speaker 2: You'll be back in a minute with the lightning round.
Speaker 2: M let's finish with lightning round. What's your second favorite element?
Speaker 3: Ooh, my second favorite element? Yeah, that's a great question.
Speaker 3: I'd say carby.
Speaker 2: Interesting just as a as a human, as an organism
Speaker 2: or why why carbon?
Speaker 3: Well it came to mind because because hydrocarbons are awesome,
Speaker 3: we just need to make them clean.
Speaker 1: Yeah.
Speaker 2: Uh. What do you think is the most underrated power
Speaker 2: tool for home use?
Speaker 1: Yeah?
Speaker 3: So I have a battery powered Makita angle grinder that
Speaker 3: I use all the time, and it's parguing me.
Speaker 1: One of my favorite tools. Yeah.
Speaker 3: Last time I used it, I used it to cut
Speaker 3: off a hard to reach metal bolt.
Speaker 2: Oh I love that. Okay, where there's sparks. Sounds like
Speaker 2: it makes lots of sparks.
Speaker 1: That's good. It's one of the reasons it's one of
Speaker 1: my favorite tools.
Speaker 2: Is it looks cool? What's your favorite song right now
Speaker 2: to listen to very loud?
Speaker 3: Ooh, led Zeppelin, Bronnie or stab Great. Just makes me
Speaker 3: happy every time I listen to it. It just makes
Speaker 3: me happy.
Speaker 2: Make you feel twenty? I think if I put that
Speaker 2: song on it would make me feel twenty, or at
Speaker 2: least make me remember feeling twenty.
Speaker 1: And feeling twenty makes me happy. Yeah, that's nice.
Speaker 2: Probably, probably it would probably make me happier than I
Speaker 2: actually felt when I was.
Speaker 1: Two, which is yeah, I think that. Well, yeah, it's
Speaker 1: definitely last one.
Speaker 2: I read in the Wall Street Journal that your co
Speaker 2: founder keeps quote a secret document of the company's failures
Speaker 2: and fixes that only top engineers can access and that
Speaker 2: you cannot access. Did you know about this? Did you
Speaker 2: learn about it by reading the Wall Street Journal?
Speaker 3: I don't know if that was a misquote or not,
Speaker 3: but yeah, it's actually not true, but it was a
Speaker 3: nice piece of story.
Speaker 1: Are you sure?
Speaker 2: Are you sure or are they just telling you that
Speaker 2: at the company?
Speaker 1: Maybe?
Speaker 2: Like, no, no, the journal got that wrong. There was
Speaker 2: no secret document.
Speaker 1: With my co founder Dave. You never actually know.
Speaker 2: Okay, keeps it interesting? Anything else we should talk about.
Speaker 2: It's been great, Yeah, really is super fun. Rafy Garabedian
Speaker 2: is the co founder and CEO of Electric Hydrogen. Today's
Speaker 2: show was produced by Gabriel Hunter Chang. It was edited
Speaker 2: by Lyddy jeene Kott and engineered by Sarah Bruguer. You
Speaker 2: can email us at problem at Pushkin dot Fm. I'm
Speaker 2: Jacob Goldstein and we'll be back next week with another
Speaker 2: episode of What's Your Problem.