AUGUST 14, 2024

Good morning!

In this week’s edition:

• Amena travels to California to take a look inside electrolyzers, the machines that make renewable hydrogen.
• A Voices article looks at how investors can help tackle AI’s energy problem.
• In our latest Data Dive, Amena finds most Inflation Reduction Act funding — two years on — goes to GOP states.

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Send your energy photos, story tips and more to news@ciphernews.com.

Ohmium's tabletop demonstration of how an electrolyzer works: Electricity causes water streaming through two metal plates (left) to split into oxygen and hydrogen, with the latter captured in the bottle (right). Photo by Amena H. Saiyid. Illustration by Nadya Nickels.

Demand is growing for hydrogen-making electrolyzers. What exactly are they?

BY: AMENA H. SAIYID

We’re at the dawn of a likely boom in zany-sounding machines called electrolyzers to help transform clean hydrogen into a bounty of useful energy.

Electrolyzers sound like a sequel to Transformers (but they’re not). So, what exactly are they?

Electrolyzers are devices carrying out electrolysis, a process that harnesses electricity to split water molecules into hydrogen and oxygen. When these machines are paired with renewable energy, they produce carbon-free hydrogen that can be used as an alternative to fossil fuels in a range of sectors where direct electricity is not an option like shipping, cement or steel manufacturing.

Cipher’s Amena H. Saiyid traveled to the San Francisco Bay Area to visit two companies making electrolyzers, Bloom Energy and Ohmium.

Read her full article explaining these machines here, and a Q&A with executives at five electrolyzer companies here.

Highlights here:

Coined by scientist Michael Faraday in the late 19th century, electrolysis combines “electro,’ meaning electricity and “lysis” from Greek, meaning to “split, loosen or set free.”

“Electrolyzers are the heart of the green hydrogen ecosystem, pieces of the same puzzle really. Without the former, you can’t have the latter,” Rasool Aghatehrani, Ohmium’s chief marketing and strategy officer, explained during Amena’s visit in July.

Electrolyzers can be as big as a shipping container and as small as a cabinet. Four main different types of electrolyzer are being pursued as part of the race to meet the ambitious United States goal of making 10 million metric tons of clean hydrogen annually by 2030, buoyed by IRA tax credits.

Currently, the U.S. makes less than 1% of its hydrogen from electrolysis, while most comes from natural gas.

Executives at electrolyzer manufacturers Ohmium, Bloom Energy, Electric Hydrogen, Nel Hydrogen and Topsoe told Cipher about the need to scale production to lower costs of materials to meet the growing demand for renewable-sourced hydrogen.

Their companies have found ways around supply chain disruptions and aren’t fazed by the prospect of a Republican presidential administration.

They do worry about the lack of infrastructure to support the growing demand for hydrogen, though.

Read the full explainer here, and check out Amena’s Q&A with electrolyzer company executives here.

Lunchtime Reads and Hot Takes

World Cement: ‘There has to be a financial benefit for doing the right thing’ — Energy Monitor
Amy’s take: Important line about how incentives are needed to do the “right thing,” even though it is the right thing. I would have liked to see a section on other clean cement technologies.

After Nike Leaders Promised Climate Action, Their Corporate Jets Kept Flying — and Polluting — ProPublica
Bill’s take: More evidence of corporate executives seeking the benefits of announcing decarbonization plans without the follow through. This will be harder and harder to pull off.

Delays hit 40% of Biden’s major IRA manufacturing projects — Financial Times (subscription)
Amena’s take: Governments don't control market conditions, including demand. I agree with Johns Hopkins University associate professor Jonas Nahm who noted on X that it isn’t unusual for delays to affect a new industry.

Teresa Ribera faces nuclear hurdle to running EU green policy — POLITICO
Anca’s take: Countries like France don’t want the EU’s potential next green chief to thwart an atomic revival. Yet Ribera has a shining reputation and decades of experience at a critical time for the Green Deal.

South Korea recycles 98% of its food waste. What can it teach the world? — The Washington Post
Cat’s take: Some wild stats from the story: An average person generates 265 pounds of food waste per year. A typical American produces 304 pounds of food waste per year.

How Close Are the Planet’s Climate Tipping Points? — The New York Times
Bill’s take: These irreversible changes have long been a concern. What’s new, and given less attention, is the worry that the tipping points could accelerate in a cascade as one or more is breached.

Pakistan Sees Solar Boom as Chinese Imports Surge, BNEF Says — Bloomberg
Amena’s take: Power price hikes make cheap solar energy an attractive option for Pakistan, a country overwhelmed by climate-fueled heat waves.

‘Massive disinformation campaign’ is slowing global transition to green energy — The Guardian
Anca’s take: Key quote from this strong message: "There is this prevailing narrative ... that climate action is too difficult, it’s too expensive. It is critical that leaders, and all of us, push back."

How China Built Tech Prowess: Chemistry Classes and Research Labs — The New York Times
Bill’s take: As is so often the case with technological achievements, it all began in a U.S. laboratory many decades ago.

Americans tapped $8 billion in tax credits on home energy upgrades — The Washington Post
Amena’s take: People realize it's the little things that make a sizable difference, especially when the government is rewarding them for their actions. Who can say no to lower energy bills?

More of what we're reading:

• Rising Prices Are Deepening the Electricity Divide In South Africa — Bloomberg
• How Dalton, Georgia, went from Carpet Capital to Solartown, USA — Canary Media
• Carbon ‘insets’ tackle emissions by unleashing the power of capitalism — Financial Times (subscription)

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!

How investors can help solve AI’s energy problem

Illustration by Nadya Nickels.

BY: BEN HEMANI

Hemani is a co-founder of Bison Ventures, an early-stage venture capital firm investing in technology companies that use science and technology to address the world’s most pressing challenges. You can reach Ben at inquiries@bison.vc or on LinkedIn.

Investors need to think outside the box when it comes to addressing artificial intelligence’s energy problem.

The latest generative AI technologies, like OpenAI’s conversational tool ChatGPT, is creating a seismic shift in how most industries generate, process and disseminate information. From powering customer service solutions to streamlining content creation and enabling data interpretation, the impacts of generative AI are far-reaching.

As generative AI companies train larger and more sophisticated models, those models demand more powerful and more capable computational resources that run on more and more energy. The technology providers who rise to the occasion will be richly rewarded.

Our nation’s data centers already account for over 4% of the country’s electricity use and that figure is forecasted to rise by another 50% by 2026. But ubiquitous AI cannot require us to start terraforming the earth to build endless data centers that consume insatiable amounts of energy.

The road forward for AI hinges on solving these climate challenges, so it is imperative investors back the entrepreneurs hard at work building sustainable solutions.

Check out the three investment opportunities Hemani sees at the intersection of AI and energy here.

At two years, GOP states benefit the most from climate law

Source: Clean Investment Monitor, Rhodium Group and MIT CEEPR. • Rhodium uses the gross domestic product (GDP) as a measure of a state's economic growth, where GDP refers to the total value of goods and services produced in the state. Time period from Q3 2022 to Q2 2024.

BY: AMENA H. SAIYID

The nation’s fledgling climate law is boosting the economies of mostly Republican-led states two years after it was passed, according to a new Clean Investment Monitor analysis.

Tallying the cleantech benefits of the 2022 Inflation Reduction Act (IRA), the analysis finds Nevada, Wyoming, Arizona, Tennessee and Montana are the largest recipients of clean energy and cleantech dollars relative to the size of their economies.

While the overall amount invested may be higher in other states — $94 billion in California and $69 billion in Texas — cleantech dollars make up a larger share of the overall economy in states like Nevada and Wyoming.

The Clean Investment Monitor is a joint database developed by research firm Rhodium group and Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research.

Nevada has seen an upsurge in utility scale solar and storage installations and clean aviation fuel manufacturing. It also is developing mines to extract and process lithium, a mineral essential for electric vehicle batteries, according to Hannah Hess, associate director for research at the Rhodium Group’s Energy & Climate division.

Likewise, Wyoming is seeing a lot of investment in wind farms and carbon capture and management projects, she added.

Since the enactment of the IRA, the analysis finds actual government- and private-sector investments in manufacturing and deploying these clean technologies have surged to nearly half a trillion dollars ($493 billion), compared with $288 billion in the two years preceding the law.

“The law provides 10 plus years of certainty through expanded and enhanced clean energy tax credits, signaling to the business community that they can think big and make long term decisions,” John Podesta, climate advisor to the Biden administration, said in a recent press briefing.

Republican lawmakers from Nevada, Arizona, Georgia and Utah are supporting the IRA’s benefits to their states and calling on House Speaker Mike Johnson to refrain from axing the law’s clean energy tax credits even though none supported the bill’s passage. Those first three states in particular are considered battlegrounds in this presidential election cycle.

Despite the billions pouring in, cleantech manufacturing has faced hurdles from high inflation and interest rates, supply chain constraints and other economic factors.

Two in five clean manufacturing projects announced during the first year after the IRA’s passage now face delays, according to a recent Financial Times analysis. Delays are not unusual for projects of this scale, however, noted Johns Hopkins University professor Jonas Nahm.

AND FINALLY...
Turbines near Petra

Toronto-based Cipher reader Shawn Compton took this photo of wind turbines during a family vacation on the way to the town Wadi Musa in southern Jordan, about 2.5 miles (4 kilometers) from the famous archeological site of Petra, which dates to around 300 B.C.

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.