Recently, the American Gas Association (AGA) published a report titled “Net-Zero Emissions Opportunities for Gas Utilities”, highlighting potential pathways for natural gas utilities to achieve net zero emissions. The report is an excellent starting point for policymakers and utility executives alike to begin executing towards a deep decarbonization strategy. Deep decarbonization involves everything from the procurement of green molecules, to the operations that prevent molecules from escaping into the atmosphere, to the diligent management of those green molecules. To be successful, utilities must ensure customer end-uses are met with the least disruption and the least amount of those molecules possible. At ECV, we are green molecules champions and believe that the future of the natural gas industry is the future of hydrogen, renewable natural gas, syngas, carbon capture and utilization, and the digital tools and platforms that will enable the transition to net zero.
We are still far from getting 100% green electrons and 100% green molecules. Green electron technologies are getting more and more mature, and the combination of solar, wind and energy storage looks to be the clear winner for most of the electron decarbonization. Green molecule technologies are still earlier in their stages of development and deployment, leaving a blue ocean of opportunities for entrepreneurs, researchers and innovators to meet the sector's deep decarbonization needs. Our goal is to find enabling technologies for net zero emission gas networks. The goal is net zero, not just a reduction. Similar to the early stages of green electrons, we are playing the long game. Successful green molecule investing requires long-term commitment, focus, discipline, insight and strong industry partnership.
Recent news and developments of green molecules are incredibly exciting and encouraging: Denmark is meeting 25% of national gas demand with green molecules (that is, Renewable Natural Gas or RNG generated in anaerobic digesters) and has a path to get to 100% RNG by 2034. British Columbia has increased its target from 5% to 15% green molecules by 2030 (again mostly with RNG). The EU released guidelines for deep decarbonization of the gas sector by 2050, expecting two thirds of gas to come from renewable sources (RNG, hydrogen, synthetic fuels) and the remaining third to come from abated fossil fuels (i.e. with carbon sequestration / utilization). Personally, I feel that repurposing gas infrastructure for hydrogen transportation and consumption is the winning strategy in the long-term (probably coupled with pyrolysis of RNG to produce carbon-negative hydrogen, and by extension, a net-negative gas network), with hydrogen blends and RNG as intermediate fuels that lower the Carbon Intensity of the gas flowing in the pipes in the short / medium term.
Every week we talk to startups that project Hydrogen costs below $1/kg (~$7.4/MMBtu), and our own portfolio company Cemvita Factory is projecting $0.80/kg (or less! or about $6/MMBtu) for their Gold Hydrogen initiative. Green molecules could quickly become cost competitive with fossil based natural gas ($4.73/MMBtu Henry Hub price at the time of this writing, though it typically hovers around $3/MMbtu). Every week we talk to startups that help gas consumers to cost-effectively, more efficiently use the molecules delivered by gas utilities companies with better technologies, better control strategies and novel approaches. Every week we talk to startups that help gas utilities better detect and keep the molecules inside their pipes and track and improve upon their emission profiles. Every week we talk to startups that are helping to size, optimize and maximize the production of RNG, a type of green molecules that are already injected in the pipes today.
In just 8 months since our launch, week after week of talking to amazing founders working hard to change the world, we amassed a proprietary database of more than 1,100 startups focused on making green molecules a reality. And every week we meet more amazing founders. We can and we will get to 100% green molecules. And a lot of people will make a lot of money doing that. We are there to support those people with capital, expertise and network. But who are these people? And what can gas utilities do today to get to 100% green molecules? Starting from the AGA strategy above, here is how we bridge the gap between the long term strategic imperatives and the innovation landscape of today, between 100% fossil and 100% green molecules.
It’s impossible to put 1,100+ companies in a graph, but the image above is a taste of the innovation landscape and below are a few examples of how we will get to 100% green molecules.
Fugitive methane, or methane that leaks from the gas systems into the atmosphere, is a powerful greenhouse gas and a lot of effort is underway to minimize and quickly resolve those leaks. Companies like Project Canary and Validere are offering solutions for “differentiated natural gas” by installing and monitoring sensors on gas production sites and transmission pipelines to measure (as best as possible) actual fugitive methane emissions. Those measured emissions enable the creation of a “green premium” for the cleanest sources of natural gas, which provides an important incentive to lead us towards a lower carbon gas system. Companies like Kayrros, Bridger Photonics, SeekOps, Kuva Systems and TerraSound represent different modalities (respectively: satellite, aerospace, drones, cameras and fiber optics) to detect, locate, quantify and, in some cases, predict fugitive methane emissions so that systems can be maintained with minimal methane emissions. Moreover, companies like Onboard Dynamics eliminate flaring or venting of natural gas during O&M activities and pipeline replacement projects, reducing the emission profiles of gas utilities operations. And companies like Akselos enable the reconstruction of a digital twin of gas assets and networks, for condition-based, predictive maintenance activities so that potential leaks are spotted before they even occur.
One of the key pillars of decarbonization is load reduction: how do we save natural gas while meeting customer energy needs? Companies like Anesi and Thermolift will soon offer a step-change in performance for space and water heating applications in residential and small commercial buildings, using their thermal heat pump offerings to slash heating costs by 30-40%. Companies like Sealed offer homeowners comprehensive building envelope upgrades that reduce their space heating and cooling needs, packaged in a clever performance-based fintech solution that makes it easy for homeowners to start saving energy and money with no upfront payments. AeroSeal “nebulizes” sealant in the air, filling every crack and gap in existing homes in just a day of work, helping residential and commercial customers do away with drafts and saving both heating gas and cooling electricity. Companies like AeroShield and View introduce “smart glass” and fix the “holes” in the building thermal envelope (the windows!) reducing heat loss to the outside in winter and heat gains from the sun in the summer. Companies like Enerbrain and Cohesion make entire commercial buildings “smart” with sensors and AI, allowing unprecedented levels of control and comfort while saving energy and money in the process.
A great way to decarbonize natural gas systems is to increase the penetration of low / negative Carbon Intensity (CI) Renewable Natural Gas (RNG). Our own portfolio company Cemvita Factory is developing microbes that can further process the carbon dioxide in biogas, a mixture of biomethane and carbon dioxide that comes from decomposing organic waste, into additional RNG, increasing the capacity of existing anaerobic digesters and potentially almost doubling their productivity. Electrochaea has already developed and extensively tested a similar process to upgrade the carbon dioxide in biogas into RNG, demonstrating a 96% conversion rate of carbon dioxide into biomethane and an excellent ability of the microbes to withstand changes in operating conditions. Companies like Cetogenix are developing systems to process “digestate”, a byproduct of anaerobic digestion (the process used to produce RNG), to further refine it into RNG, green ammonia and phosphates (used as fertilizers), increasing the capacity of existing anaerobic digesters by up to 40%. Boson Energy is taking value from urban waste, using a high temperature process to turn waste into a “syngas” that can be further processed into carbon neutral or even carbon negative synthetic natural gas or hydrogen.
But RNG is not the only supply of green molecules. In fact, gas networks will likely become largely hydrogen networks in the long term. Companies like Ionomr Innovations, Versogen and H2PRO enable major step reductions in the cost of “green hydrogen” by creating innovative membranes and materials that more easily allow water splitting into hydrogen and oxygen. Our own Cemvita Factory (once again!) just announced a new initiative to extract carbon-free “gold hydrogen” which uses their synthetic biology platform to “chew” through complex hydrocarbons and extract hydrogen while leveraging existing O&G infrastructure to keep costs low and hydrogen production high. Meanwhile, companies like Monolith, Ekona Power and C-Zero perform “pre-combustion carbon capture” by cracking natural gas molecules into hydrogen and solid carbon in a process called “methane pyrolysis”. This carbon neutral or ultra low carbon “turquoise hydrogen” comes directly from natural gas and produces a form of carbon much easier to dispose of than carbon dioxide, carbon that can sometimes be sold into existing markets as a building block for green tires and green building materials. As we wrote in our post on the Future of Hydrogen, this is a fast evolving sector with a constant infusion of new players, government incentives and new regulation that resembles the early days of solar and wind, and it’s a space with a constantly evolving landscape of innovations.
We can also decarbonize gas supply by abating carbon emissions coming from the combustion of natural gas (and that includes RNG, which would lead to potentially highly carbon negative gas networks). Companies like Carbon Clean and CarbonQuest are developing point source carbon capture systems that can be used for industrial point source carbon dioxide abatement, for Blue Hydrogen production (that is, traditional Steam Methane Reforming with carbon capture), and even for multifamily residential carbon dioxide abatement (CarbonQuest has a first-of-a-kind full size CO2 capture plant operating in a building in Manhattan, selling the captured CO2 to local concrete manufacturers for long term sequestration). In terms of offsets, companies like Noya, Carbon Engineering, Climeworks and many more are working to remove carbon dioxide from the atmosphere, using contactors and solvents to absorb carbon dioxide and partnering with companies such as CarbFix and 44.01 to geologically sequester it in rocks or underground. Other kinds of offsets come from companies like Pachama and Carbon Future, which are looking at forest preservation and biochar carbon sinks to cost-effectively prevent carbon emissions.
The companies in the 4 sections above are just a snapshot of the myriad of brave founding teams that are choosing to leave or forego safe, high paying jobs in technology, consulting, financial services and so on to take a chance at building something bigger, at making a tangible contribution to the world. We are incredibly lucky and proud to spend time every day with these brave souls. If you are, or know someone who is, interested in making a difference and getting us to net zero green molecules, drop us a line here.
At ECV, our thesis is that the incredible scale and magnitude of carbon reduction necessary to combat climate change can be efficiently achieved only by leveraging the scale and magnitude of the entire existing energy infrastructure. Electric utilities are increasingly leveraging renewable solar and wind energy to deliver green electrons and allow their customers to tap into a clean energy source. In a similar way, by using the same renewable energy sources and other renewable organic feedstocks, gas utilities can deliver green molecules and allow their customers, communities and broader environment to benefit from a clean, safe, reliable and cost-effective energy source. Electric and gas utility customers can benefit from green energy without suffering from unreasonable costs, unreliable power, or completely overhauling how they meet their energy needs. Deep decarbonization–that is, net zero energy–can be achieved at the system level with customers quite possibly being unaware that anything has changed at all.
At ECV, we see green molecules as an underinvested space ripe with enormous opportunities for sector-wide decarbonization and digitization. This is where we play.
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