Gas is on the move — edging down year-on-year — while renewable energy takes center stage around the world once and for all.
Politicians blowing the winds of trade wars are not the only impediment to climate solutions. Times are tough out there for entrepreneurs not selling something that pays back in two years or less.
Whether inflation is still going to go up or not, the price of debt has already led to an increase in the levelized cost of wind and solar in 2022. This was the first time in a long time that financial and investment company Lazard has recorded this increase in renewable energy cost against the macro trend of declining electricity prices.
And for early stage startups who are yet to ship a product or build a project, the prospects of venture capital are a long way from their highs in 2021. While the “climate tech VC” scene dipped less — just -3%, compared to the broader venture capital market, which plummeted a shocking -53% in 2022 — it is still hard to get funded.
Credit: Climate Tech VC
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Nothing can stop us now, except geopolitics done badly
Don’t believe the fossil fuel hype
That is why it’s good to remind ourselves of the game changing project we’re undertaking and that it won’t be smooth sailing displacing something as big as the fossil fool industrial complex! We’re making history by shifting electricity to clean sources and then electrifying everything. Historically speaking, such profound change is hard won.
Ember in the ashes of 2022
The apparently Sisyphean task of meeting new electricity demand with clean generation may actually happen this year or next. According to energy thinktank Ember‘s excellent electricity review of 2022, an incredible 80% of all new demand growth for electricity (694TWh) was met by new wind and solar generation (557TWh).
The juice we use now has the lowest carbon emissions ever
We’re using a record amount of electricity here on Earth but while emissions are up, the energy mix is changing significantly. Indeed, wind and solar were up 19% year-on-year from 2021, whereas coal was up just 1.1% and gas use actually plateaued (thanks, Putin). As a result, the juice we use now has the lowest carbon emissions ever — 436 gCO2 per kilowatt-hour. In other words, we are up in volume but a whole lot cleaner per unit.
The apparently Sisyphean task of meeting new electricity demand with clean generation may actually happen this year or next.
Right now, we are pushing the energy transition boulder to the very top and soon will let it roll on down the other side! If renewables deployment continues at the rates of recent years, clean power growth will exceed electricity demand growth in 2023. This is a big turning point that we should celebrate.
Goodbye gas?
But our work is far from done. And relying on gravity to do the work on the downslope may not be fast enough especially with the countervailing forces from vested interest. You may have noticed me writing that “gas plateaued” in 2022 by which I mean to say it fell so marginally as to make it look flat (-0.2% in 2022).
That is a global view — and in some markets gas generation actually hit highs. So far this century in the U.S. during Republican and Democratic administrations, we’ve been boosting gas exploration and production. This bipartisan boondoggle even had the support of misguided environmentalists thinking gas is a bridge to somewhere. And world number one LNG exporter Australia has seen similar gas increases, largely for export, despite promises at election time to voters demanding climate action.
U.S. President Biden recently approved the Alaska LNG project, which relies on growing gas markets in Asia and exporting even more of this climate-changing product. The carbon footprint of this project, according to the DOE, is equal to one-quarter of the carbon pollution savings from the EPA’s new tailpipe emission standards. Not surprisingly, Papa Joe’s EPA told us their good news the evening before he dropped the bad news on Alaska.
Similarly, Australia has just seen the approval of a highly controversial $3.8 billion gas fracking project in the Northern Territory, the Beetaloo Basin, that could see as much as 500 trillion cubic feet of gas extracted. Key developer Santos and American investors are overjoyed; climate activists, traditional owners and farmers are not.
Now that it has hit the “no growth” zone globally, we must continue to pressure gas supply — and demand — to decline.
Subsidizing fossil foolery
Such support for new projects means that gas will hang around in the global power mix longer than it should. Certainly in America, gas is a growing dependency we cannot afford. There are some valiant efforts to kick the habit, with companies like PlusPower adding serious storage to the grid. But we cannot sustain our gas addiction, neither economically, as prices continue to go up, nor for the climate. Now that it has hit the “no growth” zone globally, we must continue to pressure gas supply — and demand — to decline.
Yet even though the U.S. has committed to subsidize this one last binge of fossil foolery, since fracking became its innovation darling, the fate of gas is still clear. It’s a dead man walking. I wrote in Medium that 2017 was the “beginning of the end for gas” due to changes at institutions like GE and the California PUC. With the data in from Ember, we can see that end is nigh at the aggregate level. There will be skirmishes and setbacks, like the ruling from a Federal Court overturning Berkeley’s gas ban in new buildings. So it’s not yet “bye bye” but if we stay the course we’ll be able to say that soon. With New York passing a ban on natural gas in new buildings in May, the momentum to bid gas farewell is well and truly underway. I’ll take Manhattan, you can have Berkeley.
Startups of the month
Entrepreneurs all over the world are expending remarkable ingenuity and grit into gas replacement efforts. The work of European companies to replace gas boilers and heating systems with heat pumps since Russia’s invasion of Ukraine is now well known. But did you know about the induction stoves, industrial heat and coffee roasting solutions startups are pioneering too!? Here are just a few goodies to check out:
The clever Channing Street Copper is putting batteries under home ovens for energy storage equipped cooking. It makes the product more useful for demand response and more responsive for wok cooking. And inventiveness like this, mainly for high-end customers, may make such solutions more accessible and ubiquitous in years to come. Similarly, Antora, a groundbreaking company that I mentioned last year when Bill Gates backed it, is changing the way heat is brought into factories. Check out our Antora video (I am proud to say that New Energy Nexus backed this company early on). Finally, I love this startup — Bellweather Coffee — displacing propane often used to roast the beans for your cafe latte and innovating the entire supply chain and independent cafe store owners’ business.
Shine on!
