Energy policy: unleashing new technologies?

Does policy de-risk new technology?

Does unprecedented policy support inherently de-risk new technology? This 10-page note is a case study. The Synthetic Fuels Corporation was created by the US Government in 1980. It was promised $88bn. But it missed its target to unleash 2Mbpd of next-generation fuels by 1992. There were four challenges. Are they worth remembering in new energies today?

CO2 removals: TIST, Kenya and Uganda?

TIST is the International Small Group and Tree Planting Program. It was founded in 1999. By late-2022, it has planted 23.6M+ living trees, coordinating the efforts of 137,700+ subsistence farmers, of whom c40% are women, sequestering 8M+ tons of CO2 across 40,000+ hectares of “degraded land”, mostly in Kenya and Uganda.

We scored TIST CO2 credits on our usual framework for assessing nature-based CO2 removals, deriving a relatively high score of 84/100.

The project scored highest on the categories of ‘realness’ and ‘additionality’. VERRA certification is a great help in de-risking that a project is real, as there are over 1,000 pages of independently verified documentation to wade through.

On additionality, Kenya has lost 12,000 ha of forest per year from 1990 to 2005, according to FAO. VERRA document clearly concludes that the project is reforesting degraded land, which would not be possible without a well-functioning carbon market.

On biodiversity and co-benefits, over 150 species of trees are found in the project area, and there are areas of high conservation value, including around national parks. For each $1, TIST has cited $8 of co-benefits for low-income farmers.

On permanence, this is possibly the area with most room for improvement on our CO2 assessment framework. Further details on TIST CO2 credits’ strengths and possible risk factors, are outlined in the data-file.

We made a $1,500 donation to the project, with CO2 credits costing $30/ton at the time of writing, to restore nature, provide fair income to subsistence farmer communities, and abate 50 tons of CO2. This is the third nature-based CO2 removal project we have supported this year, and the full list is here.

Global gas: five predictions through 2030?

European gas outlook

Modelling Europe’s gas balances currently feels like grasping at straws. Yet this 10-page note makes five predictions through 2030. We have revised our views on how fast new energies ramp, which gas gets displaced first, which energy sources are no longer ‘in the firing line’, and gas pricing.

Green hydrogen: can electrolysers run off renewables?

Can electrolysers run off renewables?

What degradation rate is expected for a green hydrogen electrolyser, if it is powered by volatile wind and solar inputs? This 15-page note reviews past projects and technical papers. 5-10% pa degradation rates would raise green hydrogen costs by $1/kg. Avoiding degradation justifies higher capex, especially on power-electronics and even batteries?

Solar volatility: tell me lies, tell me sweet little lies?

This 20-page note quantifies the statistical distribution of short-term volatility at solar power plants, using second-by-second data, for an entire year. Solar output typically flickers downwards by over 10%, around 100 times per day. We absolutely want to ramp solar in the energy transition. But how can industrial processes truly be ‘powered by solar’? Buffering the volatility creates opportunities for gas and nuclear back-ups, inter-connectors, supercapacitors, smart energy and power electronics?

Energy units: life, the universe and everything?

Energy units

Energy is the glue of our universe. Literally everything is at some level an energy flow – from viewing this text, to the outcomes of wars, to matter itself – which can all be expressed in Joules and kWh. Hence this 16-page overview is a useful reference, to translate from any energy units to any others; for comparisons; and to understand the units in energy transition.

Scope 4 emissions: avoided CO2 has value?

Scope 4 CO2 emissions

Scope 4 CO2 reflects the CO2 avoided by an activity. This 11-page note argues the metric warrants more attention. It yields an ‘all of the above’ approach to energy transition, shows where each investment dollar achieves most decarbonization and maximizes the impact of renewables.

CO2 removals: Eden Reforestation, Madagascar?

Eden Reforestation CO2 removals

Eden Reforestation is a non-profit, founded in 2004, aiming to counteract deforestation and extreme poverty. Thus, local community members are hired to collect seeds, start nurseries, plant trees, and oversee newly emerged forests.

By summer-2022, Eden states that it has ‘produced, planted and protected’ 977M trees, across 280 sites in 10 countries, while paying fair wages to 14,800+ employees.

Madagascar is its largest country of operation and explains up to 80% of its global footprint. Hence we have appraised Eden’s activities in Madagascar on our ‘framework’ for scoring nature-based CO2 removals.

The overall score is 59 out of 100 in our Eden Reforestation CO2 removals review. We are confident that Eden’s activities are real and incremental, with high scores in these categories. However, Eden is a charity that plants trees in return for donations. It does not issue verified CO2 credits. Thus it is always liable to score poorly on the ‘measurability’ component of our framework. Permanence and biodiversity scores had a mixture of positive attributes, risks and challenges, for reasons noted in the data-file.

Overall, we believe Eden offers a cost-effective model for CO2 removal, with other ESG co-benefits. We estimate the effective CO2 price achieved by donating to Eden’s Madagascar program may be as low as $3/ton, on a risked and discounted basis, using our usual CO2 calculation methodology, although uncertainty is very high. $3/ton also squares with our mangrove model.

We have made a $1,500 donation to Eden’s Madagascar program in August-2022, which we believe should offset 500 tons of future CO2 on a risked and discounted present basis. Although this cannot be guaranteed and our 95% confidence interval is 50 – 1,500 tons. Donations are also open on the Eden Reforestation website.

Solar volatility: interconnectors versus batteries?

Interconnectors cure renewables volatility

The solar energy reaching a given point on Earth’s surface varies by +/- 6% each year. These annual fluctuations are 96% correlated over tens of miles. And no battery can economically smooth them. Solar heavy grids may thus become prone to unbearable volatility. Our 17-page note outlines this important challenge, and finds that the best solutions are to construct high-voltage interconnectors and keep power grids diversified.

Gas diffusion: how will record prices resolve?

Displacing industrial gas demand in Europe

Dispersion in global gas prices has hit new highs in 2022. Hence this 17-page note evaluates two possible solutions. Building more LNG plants achieves 15-20% IRRs. But shuttering some of Europe’s gas-consuming industry then re-locating it in gas-rich countries can achieve 20-40% IRRs, lower net CO2 and lower risk? Both solutions should step up. What implications?

Copyright: Thunder Said Energy, 2022.