WASHINGTON — The headquarters of the United States Energy Department is located in a stocky, sprawling building — technically the architectural style is “brutalist.”
If a structure could embody intransigence, this one would. Inside, the former solar entrepreneur turned sustainable investor, Jigar Shah, is trying to use his perch overseeing the department’s Loan Programs Office to help move the multi-headed behemoth that is the U.S. electricity industry into a decarbonized future.
The Energy Department’s building looks and feels as daunting as that challenge.
Click here to read Cat’s full story about disrupting the norms of the U.S. power sector.
Highlights here:
To hear Shah tell it, successfully navigating this monumental task requires a major shift in how decisions are made by some of the biggest players throughout the energy sector. Evolving decision-making processes is a relatively mushy, amorphous goal compared with, say, installing a new generation of electricity wires — but in coming years, the latter will likely depend on the former.
Thinking about new technological developments is exciting, Shah said.
But he emphasized decarbonizing the power sector can’t be achieved with technological breakthroughs alone. It also requires focusing on what he calls “change management,” or evolving industry standards and processes to keep pace with necessary technical evolutions.
The Edison Electric Institute, a Washington-based trade association representing power delivered to 75% of the U.S. population, said regulators are often driving the behavior of utilities.
“Every capital investment we make has to be approved by a state regulator,” Emily Fisher, the executive vice president of clean energy and general counsel at EEI, told Cipher. Each state has its own regulatory commission that all move at different speeds in permitting new technologies: “This is an ecosystem that has a lot of actors in it.”
Shah is not alone in his view.
“Getting a utility to try something new is a lot like getting a six-year-old to try a new vegetable,” said Abe Silverman, a lawyer who worked at the New Jersey Board of Public Utilities and is now researching energy issues at Columbia University’s Center on Global Energy Policy.
Silverman agreed regulatory reforms can help utilities eat their vegetables by requiring them to consider new technologies and changing their financial incentives.
Such topics are likely to be on the docket in a May 13 meeting on transmission hosted by the Federal Energy Regulatory Commission (FERC), an independent federal agency that regulates the power sector.
Cat’s take: Exowatt is targeting its modular design to serve the power-hungry data center needs of AI. Access to electricity is a priority for AI execs.
Amy’s take: I would offer a third way that avoids a black and white construct: climate realism. We have made a lot of progress, and we still have a lot more to do.
Three NY offshore wind projects unravel after GE scraps turbine plans — Canary Media
Amena’s take: While some may see this as a step back for the offshore wind industry, I see it as a timely course correction especially when an entire project hinges upon a certain turbine size.
Industry bosses to EU: Help us level up in the global green tech race — POLITICO
Anca’s take: Key quote: "turning 'Made in Europe' green tech into a reality won’t be possible without cutting red tape, creating more predictability... and splashing more cash that no one really has."
The world’s electric car fleet continues to grow strongly, with 2024 sales set to reach 17 million — International Energy Agency
Bill’s take: For all the handwringing about a growth slowdown in the industry, EV sales remain on track for another major uptick this year.
Biden marks Earth Day by going after GOP, announcing $7 billion in federal solar power grants — AP News
Amena’s take: As White House Climate Adviser Ali Zaidi noted, "these grants will help 9,000 households tap into solar on roofs and in community gardens." Quite an accomplishment!
Column: Changing our lives is scary. But the climate crisis is way scarier. — Los Angeles Times
Cat’s take: Sammy Roth writes with deep compassion for towns like Colstrip, a city of 2,000 people in Montana, where he says, "Coal is their everything." I appreciate Roth's careful, respectful and urgent voice here.
Xi Thinks China Can Slow Climate Change. What if He’s Right? — The New York Times
Bill’s take: Despite leading the world in emissions and fossil fuel use, China’s astonishing clean energy manufacturing ramp up is slowly turning the country from climate villain to potential savior.
European carbon trading catching less than quarter of airline emissions, data finds — Financial Times (subscription)
Anca’s take: The schemes only apply to flights within the region and do not capture emissions from long-haul flights. Airlines flying in Europe paid €3 billion for their pollution last year.
More of what we're reading:
US sets plan for 12 offshore wind auctions over five years — Reuters
Biden releases $2B in IRA tax credits to boost coal communities — E&E News (subscription)
Carbon price fall deprives Europe’s green funds of billions — Reuters
We denote ‘(subscription)’ when publications don’t provide any complimentary articles, but many others may ultimately allow you to read only a limited number each month before subscribing. We encourage those who can afford it to support the journalism you love most!
Q&A
U.S. energy loan chief on hydrogen, peak power demand, pipelines and his coffee mug
Jigar Shah, director of the U.S. Energy Department's Loan Programs Office, speaking at CERAWeek in Houston in March. Photo credit: S&P Global’s CERAWeek conference in Houston.
The rest of Cat’s conversation with Jigar Shah, director of the U.S. Energy Department’s Loan Programs Office, popcorned all over the energy transition landscape.
Read the full Q&A on Cipher’s website. And check out a few highlights here:
Q: What are your top line thoughts on how we should and should not be using hydrogen?
JS: We already use 10 million metric tons of hydrogen a year in this country. Decarbonizing that 10 million metric tons is a good use of clean hydrogen. Because clearly those processes, whether it's ammonia or desulfurization of fuels or other things, require the use of hydrogen. So, those things, we should figure out how to decarbonize. That's the first piece.
The next piece, though, is harder to answer. I think you're not going to see this expansion of hydrogen for decarbonizing other industries like vehicle transportation, steel production, industrial uses, etcetera until we can get the technology to a point where you get the cost down.
Q: What are you seeing in terms of the demand for pipelines for carbon dioxide and hydrogen? Is the lack of pipelines a barrier for the loan applications the LPO sees?
JS: Pipelines are easier than transmission lines because they're normally underground. There are certainly political issues there. You've seen a lot of the negativity around the pipelines in Iowa. But CO2 is a straightforward thing. People know how to transport CO2; we know how to do pipelines safely.
Hydrogen is uniquely hard. Hydrogen is a very small molecule. If you run it through existing natural gas pipelines or existing pipelines, it would just leak out. There's a lot of technology work being done at DOE on how we upgrade compressors, upgrade materials, upgrade things to be able to transport hydrogen.
Today, I'd say a lot of the hydrogen we're looking at in the Loan Programs Office is being used at the place in which it's being produced. It isn’t being transported anywhere, maybe 1,000 feet, but not miles. I think you're going to see a lot more of that right now, just because it's the safer way to do things today, while the rest of DOE is helping with getting the technology to the point where you can transport hydrogen in a low-cost way.
Q: I read you have a coffee mug that has “deploy, deploy, deploy” written on the side.
JS: It was a gift from a friend. There are so many technologies that are actually already demonstrated that we now can commercialize and get across the bridge to bankability; I'm purely focused on that. It's not that I don't think the rest of the concepts could be successful. It's just not my specific job.
Cat’s questions have been paraphrased and Shah’s answers have been edited for brevity and clarity.
Source: Rystad Energy • The production scenarios range based upon different assumptions on feedstock availability, status of tax credits and rate of technology change.
Clean jet fuel production is expected to surge in the United States in the next 10 years aided by rapid advances in technology, generous federal incentives and growing demand from airlines, according to new projections from Oslo-based consultancy Rystad Energy.
Sustainable aviation fuel (SAF) is a catch-all term for lower-emitting liquid fuels (usually 60 to 70% fewer greenhouse gas emissions compared with traditional jet fuel) made from a range of materials and processes. The primary sources today include waste cooking oil and fat, as well as corn and soybeans. This clean jet fuel can replace or be blended with traditional jet fuels made from kerosene.
With aviation responsible for about 2% of U.S. CO2 emissions, SAF is seen as a “critical near-term solution” for reducing emissions from the sector, according to the U.S. Energy Department.
Last year, at least half a dozen facilities produced about 1,700 barrels of oil equivalent per day of SAF, less than 0.1% of the 195,000 barrels of oil equivalent President Joe Biden wants the country to be producing per year by 2030, according to Rystad.
Meeting that goal will require a massive scale up in demand, advances in technology and policy incentives, including the tax credits in the 2022 Inflation Reduction Act (IRA).
SAF production could increase anywhere between roughly 110,000 and 288,000 barrels a day by 2030, Rystad finds. For comparison, this would represent between roughly 7% and nearly 20% of the 1.5 million barrels of jet fuel the U.S. consumed a day in 2022.
In the above chart, 2016 is the first year any SAF production was recorded in the U.S., but 2022, the year IRA was enacted, marked the first time production started to grow such that the line departs sufficiently from zero.
The ranges of potential growth in the three scenarios vary based on a few key factors, according to Rystad: relative availability of the raw feedstock that goes into making the fuel, continuation of existing tax incentives and technology advancements.
A total of 36 SAF projects have been announced in the U.S. to date, including 28 new, not yet operational ones. The new projects, Rystad said, “offer a glimpse into the ambitious future envisaged for the country’s SAF sector, positioning it as a global frontrunner.”
AND FINALLY... Windy throwback
Cipher reader Craig Wentzel-Siva took this photo at the Wild Horse Renewable Energy Center outside Ellensburg, WA about 10 years ago! Wentzel-Siva and his wife were on the way back from a road trip when they saw the turbines and took a detour: "Our favorite part was being so close to these incredible pieces of equipment and the mesmerizing effect of them turning in synchronization, harnessing the power of wind as has been used for centuries."
Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.
Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.