Marco Alverà Co-founder, Zhero; Co-founder and CEO, TES-H2
David Crane, Under Secretary for Infrastructure, U.S. Department of Energy
Dr. Christina Lampe-Onnerud, Founder and CEO, Cadenza Innovation
Moderator: Matt Heimer, Fortune

CEO Initiative 2023: The Energy Transition

Conferences

Marco Alverà Co-founder, Zhero;  TES-H2
David Crane, U.S. Department of Energy
Dr. Christina Lampe-Onnerud, Cadenza Innovation
Moderator: Matt Heimer, Fortune

So as we all know, at this point, the transition to clean energy is well underway and in fact, it's got a momentum that hasn't really been seen before. According to the International Energy Agency, for every dollar invested in fossil fuels in 2023 there's going to be $1.70 going towards clean energy. And five years ago, that ratio was still 1 to 1. So the math is going in the right direction. Uh The IAA also says that global investment in clean energy is going to total 1.7 trillion with a T $1.7 trillion this year. So this next panel, we're going to talk about ways that corporate leaders can seize and continue to fuel that momentum and how they can kind of keep their commitments to combating climate change while still best serving their business interests. Uh Joining us for this conversation are three really terrific panelists. Uh Marco Alvera is the co-founder of X and the co-founder and CEO of TESH two. with both of these companies, Marco has been working to drive innovation in the clean energy sector. Uh and also driving the development of cutting edge hydrogen technologies. David Crane is the undersecretary for infrastructure at the US. Department of Energy. David plays a crucial role in overseeing and implementing clean energy and sustainability initiatives for the Biden administration. He also has extensive experience on the corporate side of the energy sector. He was the CEO of energy for quite a while. And Christina lamp on Rod is the founder and CEO of Cadenza Innovation. Christina is a scientist. She's an entrepreneur and an authority on energy transformation. She's also considered one of the pre eminent experts on battery technology. So please welcome them all to the stage and we're so glad to have them. Thank you. All right. So, so glad to see you. Thank you so much for your time. Uh It you up with some uh optimistic statistics about the speed of the energy transition. There are other numbers that do not tell as happy a story and suggest things are not moving as quickly as they could. Fossil fuels, of course, still dominate our energy supply co two emissions globally hit a record last year. They're on pace to do it again this year. So I kind of want to walk down the line and say, you know, what's one thing that you could each suggest that would be a way of flooring the accel and really speeding up this transition to the pace that we want. We'll start with, you know, small versions and kind of expand. But Christina. I want to start with you. What sort of your one great accelerator? Thank you. I think it's stability in policy and a commitment to change. That's stability in policy. That's interesting because as people have been observing all, all day, we've had a pretty unstable week here. Uh, and, uh, Senator, I just got my news alert about, uh, about, uh, speaker mccarthy being voted out, um question for the whole group. Uh Do you worry about there being a sort of a backsliding on uh ESG commitments when it comes to energy? Do you, do you worry that uh that you political pressures, uh social pressures might uh might slow down the adoption of some of the green tech anyone can win on this one. David. What's your take? You're right in the thick of it. No, II, I don't think actually uh this strange coming from a government first, but I don't think any of the political divide we have here could slow down the transition to the clean energy economy. I mean, the, I heard Secretary Ramon backstage talking about chips were more involved with the bipartisan Infrastructure law and the Inflation Reduction Act. But the investment that that's gonna make um in, in, in America across all 50 states, red states, blue states uh I think is uh is, is going to be a real game changer and particularly, you know, one of the aspects of renewable based power is, it's, it's, you know, it's us resources, the wind and sun and, you know, in the unstable global environment we live in, you know, national security, national energy security is a huge plus with what we're doing. So that bipartisanship that, that uh that new legislative commitment, that's sort of an accelerator for now. It is safe to say. Yeah, and I don't want to overstate the amount of bipartisanship there is. But we, I mean, the bipartisan infrastructure law did get votes from both sides of the aisle. That's sure that's encouraging. I want to come back to some of the things you mentioned about geopolitical tension, but I also want to come to Marco. So Marco, you, you know, you and you have great expertise in hydrogen energy often that's stated as sort of something in the far distance that will be a great source decades from now, but not yet. Where do you see movement on that? That's that could be happening faster. No, I I think this this race to the top between the Ira and China both really stepping down on the etcetera is really good. What we need is simply to bring down the cost of the electrolyzer. The electrolyzer is this magic machine that turns cheap and much cheaper than fossil fuel. By the way, solar and wind in very sunny places, we can make solar energy at $10 when oil is at $60 per megawatt hour. So you can get sunny, clean energy at 1/6 of the price of oil today. But to turn that into a molecule that you can store and use like a fuel you need this electrolyzer which today in China costs about 200 outside of China costs about 1000 1000 per $1000 per kilowatt. So so policies focused on manufacturing, on creating jobs, on having this kind of pro industrial approach are the best way to have a multiplier effect. Because if we do what we did with solar, we waited 15 years Europe. Really Italy, Germany, Spain, UK these four countries put €1000 billion on solar subsidies. Over 15 years, China built six factories, the cost of one factory, half a billion, so 1000 billion, 3 billion of manufacturing. But the price of solar went from 1000 to 10 to the benefit of the whole world. So the Ira is going to contribute to doing that. China is continuing to race. The Middle East is racing where a lot of us have been and will be in Abu Dhabi soon. There's cop. So this race is really good but having a European perspective, there is climate fatigue and so all these the world went from being very rich with negative interest rates to being a lot poorer and and and we heard about some of the challenges uh from, from Ian Bremmer. But if we don't address the climate fatigue, dealing with solutions that are cost effective, I think it will become polarizing, at least in some countries. It's interesting that you bring up the cost efficiency in connection with sort of the global outlook. We heard from Secretary Yellen earlier about this tension between the desire to compete with China and the fact that the supply chains including in clean energy are global supply chains. So it can't be sort of a zero seems like it can't be sort of a zero sum where uh where all American energy is solely coming from America, that's just maybe not a not a realistic goal. Um You know, Christina, I know you've worked in, in battery technology where China was dominant for a very long time. Um Do we have to kind of keep the trade lines open for a for a green transition to, to work? Yeah. So I've been around for long enough to be a kind of a back end contributor to portable power. I was a pioneer in the electric vehicle. My previous company had to exit to China because the US and Europe did not commit. Now, I have a company that solves the white elephant in the room, no explosions at lower cost in mass production. However, it relies on standing on the shoulders of where the industry is today. So if we cut off our nose and say we're not gonna trade and we're gonna grow everything inside, it's gonna be really expensive and really slow and we need to be very mindful of the fact that the United States and Europe were very early on solar and wind, but we did not commit to the manufacturing. Today. I also serve as the, the chair for us, competitiveness in lithium Mayan under does initiative bridge and the commitment there. And the consensus was if the United States can commit to getting 30% of this market, we have harmony, we stimulate the innovators where you have new ideas, mine and others where we say ha but for our markets, this is really cool. Like I would like to put batteries in every home. I would like to democratize energy. I would like everybody to engage. You can do that because we have the framework if we decide to do it. But if we're hesitant or if we think that we can collaborate with others, we won't do it. My next question has to do with whether we have been uh beyond hesitant enough. But speaking of questions, I just want to remind the room that your questions are so welcome. For this group. There's so much brain power in these three seats and you shouldn't let me hog at all. So wave and a and a microphone person will come to you. Um So back to the Ira, back to this and to the and to the infrastructure bill as well. You know, this big new commitment. If you know, if 10 on a scale of 1 to 10, if 10 is the ideal amount of commitment. How, where are we on that scale? You mean, in terms of, uh, how much, uh, the potential of the two acts or where we are right now in the process? Well, uh, do, do those two acts together represent a sufficient enough commitment or as a kind of first? Well, I mean, I think if you look at the total financial commitment of those two acts, I mean, it's unprecedented in human history. It's the largest amount ever committed to fighting climate change. And, and you know, if we're, you know, if you want to look at it in historical terms, I think it may be humanity's last great opportunity to bend the curve on, on climate emissions. It has to be implemented, you know, and, and you know, that's one of the reasons as you said, and that's why I've come from the private sector to be in, in the government. And I think uh the early where we are right now, I'm more confident than the day I joined the, the uh government 15 months ago, the the doe is is responding everything we're doing, you know, energy is an infrastructure, a form of infrastructure that has always been private sector led that's not changing under uh these two acts, a lot of it's public private partnership, uh private sector leads, we enable, we also accelerate. I mean, one simple way of looking at it and people talk about costing down, we talk about costing down about 15 times a day. But look at the success of the solar industry, I mean, 90% cost down in the last 15 years. Uh solar industry is on track to add 56 gigawatts of new power in the United States this year. You know, 10 years ago, people were saying it's a fringe technology that will never right now it's not fringe coal is becoming fringe in the in in the United States. So, so it's uh we're right uh where we're going, we just need to make this happen with hydrogen with long duration energy storage. Uh with other carbon capture. We talk a lot about these great new technologies in energy production. But I think you all know there's also challenges in transmission, you know, you have these 21st century technologies connecting to a Carter era grid and that can be a real obstacle. What can the public, how can the public and private sector be cooperating to make the grid work better? And are there shortcuts there that will, you know, make this whole, the whole network, the whole ecosystem a little more efficient. So we live in this cool time where it's hardware and software together, right? So developing cloud technology that puts the data in your pocket, so you have feedback, you have direct feedback of how you use your energy and what it is and the fact that you can have solar on your roof and a battery in your garage means you actually not only get the data or when to use or when to deploy your energy, but you become a generator and of course, there is a chance when you put your battery next to your panel and one yard away the losses and efficiency of that transmission is almost zero. That's a big deal. Yes. And that's storage. Catching up with production is a big deal. You've thought about this a lot too, Marco. I know. Well, I've had the luxury of working in a big uh utility and then in a big oil and gas companies and these worlds are completely separate. It's true PG and E is different from Chevron Xterra is different from Exxon, the Petro China is different from state grid everywhere in the world. The molecules people and the electrons, people are separate. We will only win if we combine these two worlds. And that's what hydrogen does. Uh We need to get solutions where the complexity is dealt with by the energy companies. We were able to get solar to 56 gigawatts and to turn coal into fringe because the consumer didn't noticed we were doing the hard work for them. We were swapping electrons with electrons if we, if we think of having asking everyone to change their habits, their homes, their infrastructure, not only the trillions that you mentioned before, about the IA go up five or 10 fold, but it will just not happen. There's a lot of nimbyism. So our job in test is to turn green hirogen into green e electric natural gas, green methane. So you do a magic molecule which is based on an 18th century technology called Sabatier, which is a methane reaction. I don't want to get technical, but what we're doing is we're turning solar and wind in Texas into natural gas. Exactly like Russian gas, but it's completely renewable. That way you bypass you bridge, you jump all the complexities of transport, of storage, of distribution, of banking, of ensuring because let's face it. A lot of these big projects aren't being financed. So the F I Ds aren't happening. So we need to bridge the infrastructure gap by kind of taking care of the complexity in the energy world and leaving the consumer to get on with his life. So you're converting the newer energy sources in a way that's compatible with the infrastructure. You've already got 100% because converting that infrastructure will take forever and ever. And Elon Musk is beginning to say this, by the way, he's saying I can no longer sell cars because of the chargers. And I can't put chargers because of the grid constraints. And, and the way to get around the power grid constraints is by transforming those electrons into molecules that you can use and move around seamlessly in a very cost effective way using exactly the same storage power and transmission distribution infrastructure, David, I know that your portfolio spans not only working on the, on the, the big company issues and the, and the sort of the big picture of energy strategy, but also supporting startups and some and entrepreneurs with some grants and things. Are you seeing trends in that world that are kind of uh that, that have some novelty to them that have, that are, that seem like they've got a lot of potential to leap closer to the front. Well, I'll tell you, I'll tell you one trend that I see that's enormously encouraging is this actually uh confluence between big companies and, and uh tech innovators. And we announced uh uh $1.2 billion awards for two big direct air capture projects. Uh Both technologies were basically startup technology providers. One of them was backed by Occidental Petroleum, who a week after we announced the award for this big project. Occidental Petroleum bought the whole company for a couple of billion dollars and we welcome that involvement. Not only because everything we do is public, private partnership where the private sector has to provide at least half the money. But you know, one of the traditional skills that innovative new technology companies lacks is the project management capability to do these projects at scale. And what anyone would say is a difficult environment to pull off big. Uh So we appreciate the skill sets that the big traditional companies bring to project management as well as the the capital, they can provide great point. Yeah, they can scale like nobody else. Yeah. Well, that, that, that, that's our model. We partner with total 50 50 we partner with the world's second biggest oil company, we partner with Mitsubishi. So we bring the nimbleness agility, uh acceleration and ambition of a startup, let's say. But combining it with that project management capability and access to capital that that is very much in need. I was teasing a little bit at the beginning of the story, at the beginning of the conversation, uh wanting to talk about uh novelty and and sort of the next breakthrough. Uh I've been covering energy issues and uh and clean tech at fortune for a while. So I'm always curious about geeky about the next thing in batteries. Uh So what is the next thing in batteries? I think we are uh this is always so interesting. So they will be more opportunities to do different combinations of cathodes and anodes. Lithium ion will be the dominant technology for a long time. We have some ideas of long storage which in my mind because climate change is so urgent, we have to use solutions right now. So for example, Nr national labs published a wonderful study. If you combine lithium ion batteries with ice storage, you improve the efficiency with 30%. So if we accept that we are at a catastrophic junction, we must use the resources, we have right now and we must get out of in 30 years, we commercialize, we have to use what works today. The government can help us collaborate more fruitfully establish more confidence from capital markets. The United States wants decide to do this. We can not only be a leader, but we could basically pave the way for how collaborations can work. Win. Win is our secret sauce and we have the opportunity. Our infrastructure is really old. We need to do something. Why not leapfrog? Sure. On the subject of win, win. This is a room where most of the business leaders are in sectors other than energy briefly in two sentences or less. If you could make an appeal to them to help hasten the energy transition. What would be your appeal to a non energy business leader? I think it is to be optimistic and the system we're building because the marginal cost of sun and wind is zero will be a much more resilient, cheaper geopolitically, more our democratic system. So hang in there. Uh Don't worry because we can do a lot of the hard work for you. We need, we need optimism and we need companies to volunteer and start paying for uh green energy and to be proud of it, David, you mentioned something about building that kind of demand. Well, I mean, most of the most world is energy buyers but even energy buyers split into companies for which energy is a huge portion of their cost of goods sold like the data center companies and then the heavy industry companies. I mean, the leadership from the data center companies is unparalleled and heavy industries coming along in a way I never thought for the more casual energy consumer, my two senses would be in terms of your energy procurement, be true to what your company's value statement is. Like I'm not saying everyone can do this, but like five years ago, when Unilever said and, and put the energy industry on notice by the year 2030 you know, we won't buy electricity anywhere in the world if it has, you know, carbon in it here, energy industry, you have 15 years to respond to that. The energy industry historically has responded to market signals as long as they have enough time to respond to. So send those signals is the is the takeaway. I mean, if it, if it's, if it's consistent with your core values as a company, David, I apologize and Christina too, I have to, I have to cut us off every end of our time. I wish we had more, but thank you so much for your time and uh thanks so much for coming. Thank you. Thank you.