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JULY 27, 2022

Greetings from Washington, D.C.!

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Our main story is an explainer I've been working on for a couple months about how heat powers our energy system—an ironic focus given much of Earth’s northern hemisphere is baking under climate-fueled heat waves.

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EXPLAINED
How heat powers our world and how to clean it up
BY: AMY HARDER

Heating things up accounts for the single largest share of our energy consumption and greenhouse gas emissions.

By things, we mean a whole laundry list of key ingredients in our lives, including (but not limited to) actual laundry:

It warms and cools our homes.

It cooks our food.

It cleans and dries our clothes, both at home and at the dry cleaners.

But heat goes far beyond our daily routines.

Heat is at the core of so many things most of us probably don’t think of but that we all rely on like cement, steel, glass, greenhouse heating and chemicals.

Oil, natural gas and coal provide nearly 90% of the heat consumed in a range of sectors worldwide, including electricity, buildings and manufacturing, according to the International Energy Agency. This accounts for roughly half of the world’s energy consumption and 40% of global carbon emissions (see below for chart ).

These numbers don’t get the attention that, say, transportation or electricity does, because heat’s impact is spread out across most sectors of the economy—but it should.

What a cruel, ironic feedback loop: We need copious amounts of heat to sustain our livelihoods, yet in the process of generating that heat, we’re emitting greenhouse gases that are, in turn, heating up our planet. That then supercharges the heat waves much of the world is facing right now.

When we talk about heat, we mean anywhere from 20 degrees Celsius—68 in Fahrenheit—that we humble laypeople are most familiar with when heating our homes, to thousands of degrees Celsius, the toasty temperature needed to make things like cement and glass.
Source: The Energy Progress Report 2021 • Report by the International Energy Agency and several other intergovernmental groups.

The big picture of the energy transition is clear: The world must electrify as much of the economy as possible, including cars and buildings.

The center of that electrification will, in turn, likely be wind and solar energy, which are rapidly becoming the cheapest electricity options around the world.

But stubborn and expensive exceptions exist to that paradigm—and many of them are hot.

Let’s look at two big exceptions: 1) the potential of and limits to electrifying building heating, ventilation and cooling systems and 2) the massive amounts of extremely high heat needed for industrial manufacturing processes.

Electricity-powered heat pumps are getting more attention these days as a sustainable way to transition away from direct natural gas heating.

In Europe, heat pumps are considered a key way the Continent can kick its Russian natural gas habit, much of which goes to heating homes and other buildings.

Despite their one-sided names, heat pumps are two-in-one devices that both heat and cool buildings.

They are becoming an increasingly ideal solution for new buildings with prices dropping and subsidies growing.

In the U.S., for example, heat pump sales for new single-family homes top 40%, and sales are nearly 50% for new multi-family buildings, according to the IEA.

But using electricity to heat new buildings is missing the main problem.

Roughly 80% of the predicted buildings needed for 2050 have already been built, according to consultancy McKinsey.

Retrofitting existing buildings, including replacing fossil fuel boilers with heat pumps, is one of the biggest challenges of the clean energy transition, per an IEA expert.

“Many countries face substantial upfront costs when it comes to energy retrofitting of buildings, as well as lack of information and skills to perform retrofits in effective and cost-effective ways,” said Ksenia Petrichenko, an energy efficiency analyst at the IEA. “Most buildings built several decades ago are not up to the standards we need right now to comply with our net-zero goals.”

Buildings account for 47% of heating demand, largely for space and water heating, according to the IEA.

The biggest end-use demand for heat—50%—comes from industrial processes, that is, the making of all of life’s mundane but essential foundations: cement, steel and more.

At a certain point (or, more accurately, by a certain temperature), electricity can’t cut it from a pure physics perspective.

“The higher temperature you go, the harder it is to decarbonize,” said Tony Pan, co-founder and CEO of Modern Electron, a startup whose technology turns wasted energy from home natural gas furnaces and hot water tanks into electricity.

Source: Rhodium Group analysis of U.S. Energy Information Administration data.

Oil, natural gas and coal continue to dominate heat generation for understandable reasons: They’re good at their stated purposes from a physics perspective—and they’re affordable.

“If I’m doing anything that needs temperatures of 1,500 to 2,000 [degrees] Celsius—like steel and glass—it’s really, really hard to try to find anything that’s even close to cost competitive to natural gas,” said Eric Toone, co-leader of the investment team for Breakthrough Energy Ventures. “How else am I going to generate that heat, especially that quality of heat?”

To more cleanly heat buildings, solutions include repurposing existing infrastructure and more aggressively incentivizing heat pumps.

To more cleanly use heat in industrial manufacturing, numerous startups are trying to crack that code. Keep reading for a glimpse.

Editor’s note: Breakthrough Energy Ventures is affiliated with the broader Breakthrough Energy network, which supports Cipher.

LATEST NEWS
A glimpse of startups trying to heat things up a cleaner way
BY: AMY HARDER

Acknowledging the prowess of fossil fuels as well as the need to transition away from them, numerous startups are looking to find cleaner ways to generate heat.

Because heat is either central to or a waste product of so many energy processes, it’s attracting widely different approaches. Here are just a few examples.

  • Modern Electron is pursuing a pair of technologies, including the one we mentioned in the main article that increases the productivity of natural gas in residential heating. The other seeks to make low-carbon hydrogen fuel onsite with commercial customers via a process called methane pyrolysis, which would help clean up natural gas using its existing infrastructure, says Tony Pan, co-founder and CEO of Modern Electron.

  • The Energy Department under President Biden awarded its first loan guarantee to Monolith, which also utilizes methane pyrolysis to produce hydrogen, which can then be adapted for a range of purposes, especially those requiring high heat.

  • Antora stores energy by heating blocks of solid carbon to extremely high temperatures, which in turn provide electricity storage or direct heat for industrial processes.

  • Heliogen uses advanced technologies to produce extra hot heat—hot enough for industrial processes—from concentrated solar power, a known technology.

  • X-energy is developing a new advanced nuclear reactor, which could be applied as electricity and as direct heat for a range of industrial applications.

  • Rondo Energy captures wind and solar electricity and stores it in a process akin to heating a brick in a toaster, which converts the electricity to heat necessary for a range of industrial processes, including cement making.
Lunchtime Reads and Hot Takes
Europe agrees compromise gas curbs as Russia squeezes supplyReuters
Anca’s take: Time to save some gas! The main question is whether these voluntary measures—filled with exemptions—will work.

Carbon Pricing, Clean Electricity Standards, and Clean Electricity Subsidies on the Path to Zero EmissionsNBER
Amy’s take: Wow, a significant finding that suggests carbon pricing might not be the panacea it has been portrayed as for the power sector—and that other policies could do just as well (if not better).

Scholz Opens Door for Extending Nuclear Power in GermanyBloomberg (paywall)
Anca’s take: This would have been unimaginable just weeks ago. It underscores how dire the energy crisis is in Germany, pushing the country toward uncomfortable—but reasonable—directions.

ESG should be boiled down to one simple measure: emissionsThe Economist (paywall)
Amy’s take: Lumping environmental, social and governance all in one score never really made sense. At the same time, social and governance concerns (i.e., Tesla lawsuits, etc.) shouldn’t go out the window, but it shouldn’t be pitted against environmental leadership.

Green Hydrogen Is Cheaper Than LNG in EuropeThe Wall Street Journal (paywall)
Anca’s take: Every crisis is an opportunity. Persistent skyrocketing natural gas prices are causing a lot of damage in the world market right now, but they can also give this nascent technology an unexpected push forward.

Europe is overheating. This climate-friendly AC could help.The Washington Post
Amy’s take: Retrofitting existing buildings is also way more expensive than new builds, an important point not mentioned—but mentioned in our main article today!

Can green hydrogen save a coal town and slow climate change?AP News
Amy’s take: This includes a lot of good nuggets on this particular project, though the story doesn’t answer the headline’s question (which even if rhetorical is also lazy!)

The audacious PR plot that seeded doubt about climate changeBBC News
Anca’s take: An eye-opening and frustrating account about the role fossil fuel companies, public relations firms—and media—played in telling the world climate change is not a problem. The messaging was so persuasive that it led to lost decades of inaction.

Monolith’s mighty ambitionsClimate Tech VC
Amy’s take: A clear interview on one important startup’s journey, with details putting together the right capital stack.


More of what we’re reading:
  • U.S. clean energy installations down 55% on climate bill fail, trade issues- report — Reuters
  • Australia sets sights on clean energy jobs created by 'climate emergency' — Reuters
  • Redwood Materials Plans $3.5 Billion Battery-Materials Plant in Nevada – The Wall Street Journal
  • Shell boss van Beurden: ‘Supply needs to adjust but to less demand’ — Financial Times (paywall)
  • Big Oil’s Influx of Cash Opens Door to Clean-Energy Deals — Bloomberg (paywall)
  • Got questions about EV ownership? These GM tutors have answers — Axios
AND FINALLY...
A good kind of solar hike
Anca snapped this photo while in Canada, during a recent (scorching hot) hike in Gatineau Park, Quebec, not far from Ottawa. The solar panel powers the day shelter next to it.

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.

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