Border taxes: a carbon curtain has descended?

As Europe advances its decarbonization agenda, a ‘border adjustment mechanism’ has now been proposed to mitigate carbon leakage. Its initial formulation is modest. But it will snowball. And ultimately divide the global economy in two. Hence this 15-page report lays out our top five predictions for CO2 border taxes to reshape energy markets and the world.

Lithium: reactive?

Lithium demand is likely to rise 30x in the energy transition. So this 15-page note reviews the mined lithium supply chain, finding prices will rise too, by 10-50%. The main reason is moving into lower-grade ores. Second is energy intensity, as each ton of lithium emits 50 tons of CO2, c50% due to refining spodumene at 1,100◦C, mostly using coal in China. Low-cost lithium brine producers and battery recyclers may benefit from steepening cost curves.

Reforestation: a real-life roadmap?

This 12-page note sets out an early-stage ambition for Thunder Said Energy to reforest former farmland in Estonia, producing high-quality CO2 credits in a biodiverse forest. The primary purpose would be to stress-test nature-based carbon removals in our roadmap to net zero, and understand the bottlenecks. IRRs can also surpass 10% at $35-50/ton CO2.

Energy transition: the top ten controversies?

This 11-page note summarizes the ‘top ten’ controversies in the energy transition, based on 2,000 pages of our research to-date, and resultant discussions. Our outlook is increasingly despairing. And inflationary. Yet opportunities do exist to unlock value amidst bizarre and market-distorting policies.

Gas turbines: what market size in energy transition?

Combined heat and power systems are 20-30% lower-carbon than today’s gas turbines, as they capture waste heat. They are also increasingly economical to backstop renewable-heavy grids. Amidst uncertain policies, the ultimate market size for US CHPs could vary by a factor of 100x. We nevertheless find 30 companies well-placed in a $9trn global market.

Blockchain: why so energy intensive?

A single Bitcoin transaction currently uses c1,000kWh of electricity, which is 1 million times more than a traditional payment. Hence this 8-page note aims to explain how blockchain works, why it has been so energy intensive in the past, and how the energy multiplier could be reduced to maybe 100 – 1,000 x in a best case future scenario. Thus there could be a role for blockchain in some use cases in the energy transition.

Power grids: hell is a hot, still summer’s day?

Ramping renewables to 50% of power grids is a growing aspiration in the energy transition. But in some markets, it may result in devastating blackouts during summer heatwaves, as power demand doubles exactly when wind, solar, gas, transmission losses and disruptions all deteriorate. This 15-page note assesses the causes, implications and mitigation opportunities.

Moore’s law: causes and new energies conclusions?

Moore’s law entails that computing performance will double every 18-months. It was proposed in 1965. And since then, chips have consistently sustained this pace. We argue such exponential progress has been driven by three positive feedback loops. Can these same feedback loops unlock a similar trajectory for new energies costs? We find mixed evidence in this short, six-page note.

Landfill gas: rags to riches?

Methane emissions from landfills account for 2% of global CO2e. c70% of these emissions could easily be abated for c$5/ton, simply by capturing and flaring the methane. Going further, low cost uses of landfill gas in heat and power can also make good sense. But vast subsidies for landfill gas upgrading, RNG vehicles and biogas-to-jet may not be cost-effective.

Solar costs: four horsemen?

Solar costs have deflated by an incredible 90% in the past decade to 4-7c/kWh. Some commentators now hope for 2c/kWh by 2050. Further innovations are doubtless. But there are four challenges, which could stifle future deflation or even re-inflate solar. Most debilitating would be a re-doubling of CO2-intensive PV-silicon. Our 15-page report explores re-inflation risks for solar developers.