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It’s potentially one of the most important — but least understood — provisions in the Inflation Reduction Act, and it’s finally out in the world. Last month, the Environmental Protection Agency spent $27 billion to set up new green banks across the country.
These new lending institutions could direct billions of dollars to supercharging decarbonization nationwide, financing new solar farms, geothermal projects, EV chargers, and more. They’ll also recycle their funding indefinitely, meaning they will likely last longer than any other provision in the law.
On this week’s show, Rob and Jesse bring you a user’s guide to these new green banks and what they might mean for decarbonization. The episode features two conversations: First, Rob speaks with Jahi Wise, the former director for the Greenhouse Gas Reduction Fund program at the Environmental Protection Agency. Second, Rob and Jesse chat with Dawn Lippert, the founder and CEO of Elemental Impact, a climate tech investment and nonprofit organization. Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Jesse Jenkins: We’ve talked for a long time about this “valley of death” that companies face as they reach that scale-up phase where they’re coming out of the phase where they’re trying to just prove the technology works and de-risk it and into the phase where they have to deploy at scale and need project financing for that, or they need to build factories to get to economies of scale to produce their product at a competitive cost. And that burns a lot of capital, both, direct equity investment in the company and project finance and loans to get projects built and online. Is that the real gap that you’re seeing right now?
It seems like we’ve had such a big wave of venture capital coming into this space over the last few years that there are a lot of really well capitalized companies through series A or B, but now they’re … you know, if they were stood up two, three, four years ago, now they’re coming into this new phase. Is that where you’re trying to position your fund? And maybe more broadly, the green banks that were supported by GGRF?
Dawn Lippert: Yes — I think, overall, yes. And it’s nuanced. So what we’re seeing is, we published a report earlier this year that there’s essentially this financing gap, if you can think of it that way, or the valley is at least $150 billion, where companies are going from exactly what you said of venture capital-backed and then need other kinds of financing.
And then on the other side of the gap, there’s actually a lot more financing than ever.
Jenkins: Yeah, tons. Infrastructure funds and others, right?
Lippert: Yes, absolutely. And so it’s really about building this bridge and being really smart about that. So I would say there’s a couple of things. One is that we see three main issues to crossing the bridge. One is capital. We’ve talked about that, and I’ll talk about a little bit more. The second is project expertise — companies going from technology companies to project companies. I would say that’s one of the key things that we see as being a real challenge and also a huge opportunity.
And Rob, you talked about talent coming into this space. That tidal wave really changed in 2018 when the skies turned orange over San Francisco. We just saw so much talent coming in from tech, and it just hasn’t stopped. It really kept flowing. But this project expertise of operational expertise — how you develop, how you permit and get entitlements, how you structure the financing, but also just do the actual construction of projects — we need to build so many things. That’s where we see a huge need. And we did a recent analysis with our partners at Vibrant Data Labs and found that only about less than 30% of companies in climate right now have project expertise or deep project expertise on their team to build stuff.
So that’s a place where Elemental has leaned in a ton where we were dropping CFOs and fractional CFOs and developers and residents and all kinds of folks to help fill that gap. But there’s a huge amount of work that needs to be done there.
This episode of Shift Key is sponsored by …
Watershed’s climate data engine helps companies measure and reduce their emissions, turning the data they already have into an audit-ready carbon footprint backed by the latest climate science. Get the sustainability data you need in weeks, not months. Learn more at watershed.com.
As a global leader in PV and ESS solutions, Sungrow invests heavily in research and development, constantly pushing the boundaries of solar and battery inverter technology. Discover why Sungrow is the essential component of the clean energy transition by visiting sungrowpower.com.
Antenna Group helps you connect with customers, policymakers, investors, and strategic partners to influence markets and accelerate adoption. Visit antennagroup.com to learn more.
Music for Shift Key is by Adam Kromelow.
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On weather warnings, Climate Corps news, and resilient trees
Current conditions: Torrential rain in Mumbai brought flooding that killed at least four people • Tornado warnings are in effect for parts of Florida as Hurricane Helene nears • Tropical Storm John is expected to become a hurricane again and slam into Mexico for a second time.
Hurricane Helene is strengthening into a major storm as it moves toward Florida’s Big Bend region and is expected to strike this evening, bringing catastrophic winds up to 156 miles per hour and “unsurvivable” storm surge. “You cannot survive 20 feet or even 15 feet of storm surge,” said Tampa Bay meteorologist Jeff Berardelli. “If you’re near the water and you know you’re going to flood, especially if you're in a mobile home, too. You’ve got to go. You cannot take your chances. This is not survivable.”
NOAA/NWS
The storm will likely weaken after it makes landfall but will continue to bring strong winds and heavy rain to southeastern states. Some areas could see up to 18 inches. “This rainfall will likely result in catastrophic and potentially life-threatening flash and urban flooding, along with significant river flooding,” the National Hurricane Center said. “Numerous landslides are expected in steep terrain across the southern Appalachians.” The storm is being fed by exceptionally warm waters in the Gulf of Mexico.
The Biden administration yesterday announced the creation of an Environmental Justice Climate Corps, which “aims to recruit participants from communities disproportionately impacted by environmental justice challenges and seeks to recruit individuals with an interest in environmental justice careers.” The corps is a partnership between the Environmental Protection Agency and AmeriCorps’ anti-poverty program. Corps members will receive a living allowance and expenses reimbursement equivalent to earning $25 per hour. The program will recruit 250 members over three years, and applications will open early next year.
“Low-income communities and communities of color are disproportionately impacted by the most severe harms of climate change – whether that’s air pollution, extreme temperatures, or flooding,” said Michael D. Smith, CEO of AmeriCorps. “Through this groundbreaking partnership with EPA, we will target resources to underserved communities where they are needed most, while putting hundreds of young people from those communities on a path to environmental justice careers.”
The host country of this year’s COP29 climate summit, Azerbaijan, will pay for negotiators from small island nations to attend in November, according toReuters. A senior COP29 official told the outlet that Baku will foot the bill for four delegates from every small island developing state (SIDS), including travel and hotel fees. Roughly 40 SIDS are expected to participate in the negotiations. Reuters reported that some delegates have complained in recent years about exorbitant accomodation costs around COPs.
Meanwhile, the independent scientific group Climate Action Tracker said Azerbaijan’s own climate progress remains “critically insufficient.” The country is an oil and gas producer and was among a handful of nations that weakened emissions targets last year. “Azerbaijan’s emissions are projected to continue rising by about 20% through to 2030, and it has no commitment to a net zero target,” the CAT report said. The group recommended that Azerbaijan set stronger targets, prioritize renewables over emissions mitigation from oil and gas, and develop a plan for ditching fossil fuels.
A major carbon capture and storage project will be inaugurated today in Norway. The Northern Lights Project, a joint venture between oil giants Equinor Shell, and TotalEnergies will take liquified CO2 that has been captured from European industrial activities and store it “in geological layers buried at approximately 2,600 meters below the seabed in the Northern North Sea.” The goal is to store 1.5 million tons of CO2 per year starting in 2024, scaling up to 10 million tons by 2030. The International Energy Agency estimates global CCS operations would need to scale up to 1 billion metric tons by 2030 to limit global warming to 1.5 degrees Celsius. Current capacity sits at about 50 million metric tons.
The results of a new study may provide some good news for forests across America’s Northeast. The research, published in the journal Nature Ecology & Evolution, suggests the trees’ carbon storage capabilities remain stable even while temperatures are rising and the soil becomes more acidic due to nitrogen enrichment from burning fossil fuels. Previous studies have indicated that carbon storage declines in these conditions. But what makes this research different is that it looked at the effects of both conditions together, rather than separately. “What is most exciting about this study is that it’s one of the longest-running experiments to look at two global change pressures instead of just focusing on one,” said Melissa Knorr, a lab research supervisor in the University of New Hampshire’s College of Life Sciences and Agriculture and one of the study’s authors. The researchers say that these combined conditions seem to increase root turnover for the trees, helping maintain soil carbon levels. “The study offers insights that could inform conservation strategies to enhance carbon sequestration and preserve forest health across the Northeast,” Knorr said.
It can take as little as three seconds for playground equipment heated in direct sunlight on a hot day to burn a child’s skin.
If you’re selling clean firm power, data centers are “the best news ever.”
There’s a simple and well-supported story to tell about the projected growth in electricity demand coming from data centers, population growth, and new factories, i.e. that it will boost the fossil fuel industry. When faced with the need for more electricity generation, utilities will simply build more natural gas power plants, and market overseers will act to ensure that aging gas and coal plants don’t get shut down. Some version of this story is already playing out in Arizona, the Southeast, and the Mid-Atlantic.
Many green activists are understandably wary of the data center boom, seeing it as a “unique opportunity for fossil fuel interests to get in while the getting is still good and turn a digital and industrial boom into yet another gas boom,” as the Natural Resources Defense Council said of Georgia, where a 15-times increase in projected electricity demand has Georgia Power scrambling for more fossil fuels.
However this is not the story I’ve been hearing this week in New York City, where thousands of government officials, climate activists, celebrities, investors, and executives have descended for the annual meeting-and-panel extravaganza that is Climate Week. For the Biden Administration officials, clean energy executives, and technological visionaries flitting between sponsored events, data center load growth is,as John F. Kennedy might have put it in one of his frequent flights of amateur Chinese linguistics, a danger and opportunity mixed into one.
“This can be a good-news story. The sky doesn’t necessarily need to be falling,” Kelly Sanders, assistant director for energy systems innovation at the White House Office of Science and Technology Policy, said during a panel discussion hosted by the think tank Third Way, referring to load growth from manufacturing and data centers. “This could actually be good for clean energy.”
And very good for anyone who can promise to deliver said clean energy, even if it’s years in the future. During a “fireside chat” at Geothermal House, a day-long summit on geothermal energy sponsored by Project InnerSpace, a geothermal nonprofit, Mike Schroepfer, the former CTO of Meta who is now a climate venture investor, said the demand for power from AI was “the best news ever.” He argued that having companies with big power needs and deep pockets was much better for clean energy development than having a stagnant grid that’s just trying to replace dirty power plants.
Among those in the same rah-rah camp, the general idea is that energy-hungry data centers can help get new clean energy sources like advanced geothermal through the project finance "valley of death" so they can eventually deliver affordable, clean power to the rest of us. “For the first time in history, demand for clean energy outstrips supply,” said Ally Yost, a senior vice president at Commonwealth Fusion Systems, during a panel discussion in New York City. “Those that have access to that clean power will be in a very profitable situation.”
“AI is a gift for fusion,” added Clay Dumas, a partner at Lowercarbon Capital, a Commonwealth investor. He even conceded that the skyrocketing demand was a “gift for fission,” from which fusion advocates are typically at pains to distinguish themselves. “There’s an intense interest and demand for clean electrons,” he said, referencing the recent deal to bring back ashuttered reactor at Three Mile Island, alongside a power purchase agreement with Microsoft.
That investors and executives at fusion companies were talking about meeting projected load growth is a good sign of how heady the financial and technology prospects have gotten for anyone who has a good story to tell (and some capital). Fusion’s claim to be the holy grail of energy has passed over time from aspiration to irony and back again,thanks to billions piled into the industry in the past few years.
This combination of dreaminess and realism prevailed at Commonwealth’s event, where Dumas said that when he first invested in the company, “there was an exciting story of how fusion or a company like CFS could provide 5, 10, 20% of the world’s primary energy and could become the biggest company in the history of capitalism,” Dumas said. (Perhaps not surprisingly, several former SpaceX employees work at Commonwealth.) Now the focus is on getting a power plant developed with technology that the industry insists will be ready to go online on a reasonable timeframe — something more like a decade than the standard 20 or 30 years.
But whether you’re splitting atoms or fusing them, the demand for clean power from data centers is coming in months and years, not decades. OpenAI chief executive Sam Altman reportedlytold the White House he wants to build 5-gigawatt data centers, which would take the equivalent of five large nuclear reactors to power. Even restarting an existing fission plant takes at least three years, while building a new one using existing typically takes around … well no one knows because there are no plans currently to do so.
“People are not going to be patient” if new clean power can’t be developed quickly, Juliann Edwards, the founder and chief executive of The Nuclear Company, told me this week. “They're going to go build more gas plants.”
Kathleen Barrón, the chief strategy officer at Constellation, the country’s leading nuclear energy providers, said during the panel hosted by Third Way that conversations about new nuclear are “starting to happen,” and that the most important part of that process is coming up with a reasonable cost estimate. “Once you know what it costs, you can figure out what contributions will be,” she said, referring to the nasty problem of how to split up the expense among various stakeholders, including the government. Barrón pointed out that the second reactor at Vogtle was almost a third cheaper than the first — meaning that maybe the nuclear industry has a chance of getting a handle on costs. In the meantime, owners of existing plants will be happy to reopen and expand what they can, picking up generous incentives all along the way.
Edwards told me she’s been speaking with potential offtakers like Amazon and Meta, utilities, independent power producers, and investors in pursuit of having “binding contracts” for new plants by late 2026. But the hyperscalers committed to using clean power will need more than that.
Lucia Tian, a former official at the Department of Energy’s Loan Program Office who now heads of clean energy and decarbonization technologies at Google, estimated that Google’s clean energy needs would be largely served from existing renewable technologies “that we can deploy at scale,” which, paired with storage, would get the company to around 80% of its needs. “But in order to get that last 20%, we need a suite of technologies including nuclear, long-duration energy storage, fossil generation with carbon capture and storage.”
Behind each of these promising technologies is a unique deployment issue. Geothermal might work in the western United States only, for instance, and even then not before the late 2020s. As for nuclear, outside of reopening shuttered plants and uprating existing ones, Tian said, “the reality that everyone recognizes” is that if “I sign a deal today” for a small modular reactor or the existing AP1000 design, “it’s not going to come online before 2030.” This leaves “a strong role for CCS,” she added, referring to using natural gas with carbon capture and storage, an approach strongly encouraged by new Environmental Protection Agency rules for gas plants, but one that is by no means widespread today.
Making progress on a technology that’s been in development for decades and still involves extracting and burning a fossil fuel doesn’t quite meet the futuristic moment the data center and artificial intelligence boom has created in the present.
“Every day someone asks, can’t you foot the billion dollar risk of a nuclear reactor?” Tian said. The future will have to wait a bit longer, but the data centers are coming now.
It will get better, but until then, the dongles are killing me.
Last year, a great streamlining of electric vehicle charging infrastructure looked imminent. One by one, the major automakers committed to using the North American Charging Standard, or NACS, which was formerly Tesla’s proprietary plug. The moves would allow EV drivers of all stripes to use Tesla’s Supercharger network and would move the industry toward a single standard where things worked seamlessly. Earlier this month, GM joined the ranks of Ford and Rivian in having its vehicles officially able to visit nearly 18,000 Supercharger stations.
All of the GM vehicles built up to this point, however, carry the previous charging standard for non-Tesla EVs. You know what that means: dongles.
Drivers in combustion cars choose between regular, plus, and premium gas, but they don’t worry that they’ll pull into a station and the pump won’t fit their car. EVs, meanwhile, still have to deal with a mess of competing plug standards and confusing customer interfaces at charging stations. This situation is the inescapable result of a fast-moving, fledgling industry, yes. But the complexity is an annoyingly sticky barrier to EV adoption.
The adapter necessary to make a GM EV work with a Tesla plug, for instance, is available. But there’s a waiting list, and the piece costs $225 — effectively a $225 early adopter penalty for buying your EV back before everyone agreed on how to cooperate. When Ford transitioned to NACS earlier this year, it had difficulty extracting enough adapters from Tesla to meet the demand, dragging out the process for months for some of its EV drivers. GM had been slated to join the Supercharger network months earlier and could not because of the dongle delays.
Not all the eligible cars just work, either. After GM electric vehicles were welcomed to Tesla Superchargers, it turned out that lots of Chevrolet Bolts made in 2019 and 2020 (when they were the best-selling non-Tesla EVs) needed to visit the dealership for a software update before they could link up with a Tesla plug.
Software patches and dongles may be an annoyance, a kind of Band-Aid to make two systems that weren’t meant to work together play nice, but at least a quick fix is possible. A bigger issue for streamlining charging stations is that the locations of charging ports on EVs themselves are far from standardized.
All Tesla models have ports in the rear on the driver’s side; Supercharging stations are typically built for drivers to back in and then find the appropriate cord right next to their charging port. A Chevy Bolt’s port, however, is found on the driver’s side but on the front. A Hyundai Ioniq 5’s is in the back, but on the passenger side. When Rivian revealed the R2 and R3 designs, their ports were on the passenger side rear because the brand thought that location would fit into its existing network of chargers and make it easier to plug into street-side plugs. Then came an outcry from fans distraught at how difficult it would be to use a Tesla Supercharger if the port were on the wrong side and the cable had to wrap all the way around the back of the vehicle. Rivian changed its mind.
Thank goodness for that, because the situation at Superchargers is poised to get messy. I’ve been to ones where Tesla plugs were available, but I could not park my Model 3 within reach of one because other EVs parked incorrectly in order to plug in. Tesla’s lead engineer for the Cybertruck had to warn people not to use extension cords at Superchargers since that might lead to electrical shorts.
Some relief is on the way. In the coming years, most car companies will build the NACS standard into their electric vehicles, negating the need for expensive adapters and dongles. With so much emphasis on using the Supercharger network, it’s likely the brands will feel pressure to follow Rivian’s lead and just put the port where Tesla puts it.
But then there’s the last piece of the puzzle: the interface. Tesla beat the competition at charging not only by building a bigger and far more reliable network, but also by inventing a seamless way to pay for electricity: When you plug in, the system knows it’s your car and charges the credit card on file. Non-Tesla drivers are beginning to experience this convenience when they stop at the Supercharger.
Competing systems, though, rely on a variety of phone apps that may or may not work, especially in places with spotty cell coverage. Tech companies are trying to solve this problem with, you guessed it, AI. Revel, which used to offer rentable mopeds around New York City, has tried to reposition itself as an EV charging company. It just partnered with a computer vision company to announce a kind of facial recognition system for your car so that the charging station knows it’s you.
Of course, one could just copy Tesla’s idea and have the charging cord auto-identify each vehicle, or even simply install a camera to read the car’s license plate instead of overcomplicating the basic task of IDing a car. But those solutions don’t use the magic technology of the moment.