The Return of Decarbon Weekly: Elon Musk's Texas and the Oil Age Sunset, US Grid Bottleneck, EV Graphite Supply Crunch and the Rise of Nuclear Giants

Hello. Is this thing on?

Wow, it sure feels good to be back. Crazy that this marks the 71st edition of the Decarbon Weekly newsletter and I write this with some special personal news that will explain my hiatus for a few months.

My beautiful wife Chelsea and I are now officially a family of 4. Ariyah Abigail graced us with her presence on Jan. 27th, 2023 and she’s brought a world of joy to us already. We’re incredibly grateful for our girl and in awe of the goodness of God that was evident throughout my incredible wife’s pregnancy and delivery. Our hearts are full. And thank you to so many of you who have been well wishers and supporters along our journey. We appreciate you.

As a new father of two?(both still in diapers), I took some time to get adjusted to a new chapter in my life, managing a growing family at home, a growing team at 8090 Industries , a growing portfolio and supporting our pioneering founders across the board.

Not to say I’ve gotten the hang of it, but I’ve missed writing and the process of synthesizing the latest in all things decarbonization with each of you. And with this new milestone on the personal front, one thing is clear. There’s nothing quite like your own children gazing back at you as a consistent reminder of the WHY - creating and leaving a healthier, more sustainable, more abundant planet for them. With that said, let’s get back to?Decarbon Weekly.

WHAT CAUGHT OUR EYE:

-?Elon Musk Came to Texas to End the Oil Age

-?Why Nuclear Giant Constellation Energy is Primed for Power Futurity

-?The U.S. Has Billions for Wind and Solar Projects But a Challenge Remains: Plugging Them Into the Grid

-?How this Texas Company Plans to Use Earth’s Heat to Cool the Planet

-?How Anti-Green Texas Built the World’s Juggernaut for Clean Energy

-?The Synthetic Graphite Shortage Raises Serious Risk for EVs

-?Small Oil Producer Stands to Win Big From Biden’s Climate Bill

-?The Most Valuable U.S. Power Company Is Making a Huge Bet on Hydrogen

-?How the United States Made Electricity Over the Last 20 Years

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WHAT CAUGHT OUR EYE:

Elon Musk Came to Texas to End the Oil Age

Given his immense appetite for reimagining entire industries—automobiles, energy, space, and even social media (with his acquisition of Twitter )—it seems natural that Musk found his way to Texas. In our state, the wildcatters who discovered?Spindletop?ushered in the oil age. The engineers at?Texas Instruments?developed the silicon transistor and the integrated circuit, fast-tracking the computer age. NASA’s Houston-based astronauts punched their way through the stratosphere into the space age. So where better than Texas for Musk to make good on his aim to bring forth an age of sustainable energy? In fact, Texas is already tilting toward sustainable energy, even if some of its leaders are loath to admit it. Texas tops the nation in producing cheap electricity from wind turbines and has passed California as the nation’s top solar powerhouse. Furthermore, the majority of Texans favor further shifts to reliance on solar, wind, and geothermal power sources. Welcome to a new era - where Texas stands as the epicenter for the energy transition, led by Elon Musk himself. Penned by one of my favorite writers,?Russel Gold, from the Texas Monthly - this is a?must read.

“In Texas, we love our energy business but rarely our energy magnates. To seek national fame or some sense of validation, they look outside the industry. Musk certainly has. Which is a shame. Finding a way to provide more energy than ever, while tackling climate change, is a global-scale, generational challenge. Musk—and Texas—could lead the effort.”

Why Nuclear Giant Constellation Energy Is Primed for Power Futurity

Spun out of Exelon Corporation a year ago, Constellation Energy’s competitive generation and customer-facing energy businesses represent a new power company paradigm that conforms to decarbonization. But the company that today holds the largest nuclear fleet in the U.S. will still face a unique array of challenges.

“Looking ahead, I have never been more optimistic about the future of our industry and our company,” he said. “A majority of Fortune 500 companies have set climate and clean energy goals, as have 25 states and 600 local governments. Our federal government has a plan to procure 100% carbon pollution-free electricity by 2030. And there is growing consensus among leading climate scientists and policymakers that nuclear energy is critical to meeting the climate challenge. The call for meaningful change is undeniable and growing louder.” - Constellation President and CEO, Joseph Dominguez .

The U.S. Has Billions for Wind and Solar Projects But a Challenge Remains: Plugging Them Into the Grid

Plans to install 3,000 acres of solar panels in Kentucky and Virginia are delayed for years. Wind farms in Minnesota and North Dakota have been abruptly canceled and programs to encourage Massachusetts and Maine residents to adopt solar power are faltering. The energy transition poised for takeoff in America based on record investments in wind, solar and other low-carbon technologies is facing a serious obstacle:?interconnectivity.?The sheer volume of projects has overwhelmed the nation’s antiquated systems to connect new sources of electricity to homes and businesses. So many projects are trying to squeeze through the approval process that delays can drag on for years, leaving some developers to throw up their hands and walk away. This is a deep dive into one of the most challenging issues plaguing the renewables industry today.

“More than?8,100?energy projects?— the vast majority of them wind, solar and batteries — were waiting for permission to connect to electric grids at the end of 2021, up from 5,600 the year before, jamming the system known as interconnection.That’s the process by which electricity generated by wind turbines or solar arrays is added to the grid — the network of power lines and transformers that moves electricity from the spot where it is created to cities and factories. There is no single grid; the United States has?dozens of electric networks, each overseen by a different authority. Today,?it takes roughly four years for developers to get approval, double the time it took a decade ago.”

How this Texas Company Plans to Use Earth’s Heat to Cool the Planet

?Despite it’s promise to curb emissions, sucking carbon dioxide out of the sky — or “direct air capture,” has a problem: it takes energy — a lot of energy. Carbon dioxide only makes up 0.04 percent of ambient air, making the process of its extraction chemically and energy intensive. According to the?U.N. IPCC, by 2100?the world needs to remove between 100 and 1,000 billion?tons of CO2 from the air?to meet its most ambitious climate goals?—?or between 10 and 100 times China’s?annual emissions.?However, a company is working to combine direct air capture with a relatively untapped source of energy: Heat from Earth’s crust.?Fervo Energy, a?geothermal?company headquartered in Houston led by friend Tim Latimer , announced that it will design and engineer the first purpose-built geothermal and direct air capture plant online in 3 to 5 years.

“What we have here is a really compelling way to produce round-the-clock carbon-free electricity and heat,” Latimer said. “The question is what society prioritizes and what policy incentives are put in place.”

Texas: How the Anti-Green State Built the World’s Juggernaut for Clean Energy

You might think that?California, which talks a good game about climate change and green energy, is on the forefront of renewables development. But Texas is far, far ahead. According to a study commissioned by Mr Welch’s organization, in the second quarter of 2022 his home state had three times more wind, solar and battery storage under construction than California. The Energy Information Administration, a federal agency, predicts that this year the share of renewables in Texan power generation will exceed that of natural gas for the first time.Texas families typically don’t support the IRA, but they hope its expanded federal tax credits will entice more wind and solar to rural Texas. The state also expects to attract big hydrogen and carbon-sequestration projects. Other Republican states like Alabama, Georgia, South Carolina and Tennessee are welcoming billions of dollars of clean-energy investments spurred by the IRA. Even conservative businesses that lobby strongly for fossil fuels hope to benefit from the energy transition such as Koch Industries, an energy conglomerate, supported a big investment by Freyr, a Norwegian firm, in a battery factory in Georgia that will benefit from the legislation.

When someone says we are embracing green energy, it’s like shoving an ice pick through our ears,” says @Matt Welch , head of Conservative Texans for Energy Innovation, another pro-renewables group. “We just say clean energy.” The upshot is that there are ways to promote clean energy that do not rely on convincing climate sceptics that they are bonkers. A better sales pitch may be to play up the cost advantages of renewables rather than the climate benefits, emphasise their contribution to cutting air pollution rather than carbon emissions, and acknowledge that, owing to intermittency factors, natural gas may have a role to play in power generation for years to come.

The Synthetic Graphite Shortage Raises Serious Risk for EVs

Mining companies?are ramping up supplies?of critical minerals for rechargeable batteries such as lithium, cobalt and nickel. Graphite, a key battery component, has largely been overlooked.?That is about to change. Some of the world’s biggest auto and battery makers and the U.S. government are racing to secure graphite supplies amid looming signs of shortages of the mineral suitable for batteries. So far graphite prices haven’t reflected the tight supply.?Here at?8090 Industries, we’re excited to be incubating and partnering with a bold new company and co-founded by the former Tesla leader responsible for all anode procurement and manufacturing for Gigafactory 1. Still in stealth, this company will close the graphite supply gap in the US and produce anodes at a fifth of the cost. To make things more interesting, it will actually make use of CO2 as feedstock. Stay tuned. More to come soon!

“Graphite always seems to be the forgotten battery material, yet it’s in half the battery,” said Brent Nykoliation , executive vice president of NextSource Materials Inc., which is developing a graphite project in Madagascar. “It’s the largest raw material in the battery.”

Small Oil Producer Stands to Win Big From Biden’s Climate Bill

Beno?t Morenne at the WSJ?pens an interesting look into the inner workings of an incumbent innovator in the wild west of carbon capture and sequestration. Denbury, a fledgling oil producer emerged from bankruptcy in September 2020 with a collection of aging wells, pipelines to move around carbon dioxide and uncertain prospects. Today, the Dallas-based company is one of the biggest winners of the Biden administration’s signature climate bill. Denbury took on significant amounts of debt over the past decade acquiring oil properties and building out the pipelines, which ferry CO2 to depleted oil fields and coax out more crude. The company has since expanded into waste management, with plans to carry emitters’ CO2 through hundreds of miles of pipelines and bury it in rocky reservoirs—for a fee. Its stock is trading around $88—more than four times its price when Denbury re-listed in late 2020. Behind Denbury’s renaissance is billions of dollars of?public money juicing carbon capture. Tax credits in the Inflation Reduction Act, reward companies that store CO2 underground. Denbury won’t receive public funding directly in most cases—it will go to customers who capture the carbon—but the company will charge customers for handling their emissions.

Denbury had used CO2 almost entirely for enhanced oil recovery. Now, it says it wants to build something like a highway for CO2 on the Gulf Coast. It says it expects to find enough customers to ship and store between 50 million and 70 million metric tons of CO2 produced at industrial sites by 2030—roughly what it handled in 2021 in its enhanced oil recovery business—and deposit it in storage sites and oil fields, from Alabama to Houston. The company has secured seven underground storage sites with the potential to trap 2 billion metric tons of the gas.

The Most Valuable U.S. Power Company Is Making a Huge Bet on Hydrogen

NextEra grew into a clean-energy powerhouse and America’s most valuable power company by investing early in wind and solar farms. Over the past two decades, NextEra’s market capitalization has soared to more than $150 billion from roughly $11 billion. Now, it is staking its growth on hydrogen NextEra now sees the potential to invest more than $20 billion in green hydrogen after the passage of the?Inflation Reduction Act, which provides significant tax credits for such projects. There is a?limited market for green hydrogen?currently, and NextEra is hoping the new law, coupled with an increasing push to cut carbon emissions, will simultaneously create supply and demand, and the company’s next source of growth. The $20 billion the company has said it is prepared to spend on hydrogen would represent roughly its combined net income from the past five years.

“Despite the risks, it is a familiar playbook for NextEra, which grew from a regional utility by capitalizing on tax credits that spurred the build-out of wind and solar farms.”

How the United States Made Electricity over the last 20 Years

For those that missed it, Washington Post columnist,?Harry Stevens, published a phenomenal analysis that illustrates how each state in America has generated electricity for the past twenty years. The results are staggering - specifically for the states with the lowest carbon intensity?(Vermont, Washington, Oregon, New Hampshire, South Dakota and South Carolina). All of them had something interesting in common. The vast majority of their power was generated by hydro power or nuclear energy. Despite all the interest and momentum on wind and solar, it was hydro and nuclear that’s enabled these states to possess a robust and resilient lowest carbon power mix in America. If we want more of our states to have reliable base-load power, nuclear must be a part of the equation.

About Rayyan

Rayyan is a serial entrepreneur, investor and advisor focused on industrial technology and the low-carbon economy. The companies he’s invested in, sourced and advised have grown to over $8B in private market value. He is the co-founder and General Partner of?8090 Industries, the leading partner and investor for industrial breakthrough technologies focused on decarbonization and national security. Rayyan has led investments in groundbreaking companies like EquipmentShare, Astranis, Cemvita, Circ, Oklo, Infinium, Orbit Fab, Quaise, Addionics, Living Carbon, Liberation Labs, and more. Rayyan is also the co-founder of Gold Hydrogen, which produces abundant clean hydrogen from microbes and old oil wells for less than $1/kg.?Rayyan was recognized by?Business Insider’s SEED 100, as one of the top 100 early-stage investors of 2023, alongside Peter Thiel and Vinod Khosla?and?one of the most important VCs in Texas. As a frequent speaker on venture capital and climate technologies, Rayyan has spoken at NYU, Stanford, UT Austin and the United Nations and his work has been featured on Bloomberg, Wall Street Journal, Forbes, Wired, Yahoo Finance and more.

Influenced by his family upbringing in Bangladesh, he personally witnessed the ramifications of energy insecurity and climate change at a young age and its impact on communities around the world. Determined to make a serious dent on the issue, Rayyan has supported a cadre of climate technology solutions, drafted policy recommendations to President Joe Biden’s climate transition team and founded the decarbonization focused newsletter Decarbon Weekly, which counts leading climate scientists, members of state and local governments, founders, investors and foundations amongst its thousands of subscribers.

Rayyan lives in Dallas, Texas with his wife, son and daughter.