Turning Solar Energy Into Fuel (The Solar Era, Part 3)
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Oil and natural gas and coal light up our houses and keep us warm in the winter and propel our cars and our ships and our planes. They provide the heat companies need to make stuff. Hydrocarbons even provide the hydrogen to make the fertilizer to grow our food. The problem with hydrocarbons, of course, is the carbon. It binds with oxygen, goes into the atmosphere, and warms the Earth.

So humanity is in the process of trying to very quickly come up with cheap ways to power our civilization without hydrocarbons. And as we've been discussing on the show for the past few weeks, we're actually making progress.

Solar energy, in particular, has become wildly cheap. In some parts of the world, in fact, it's now free in the middle of sunny days. And it's likely that solar energy will be free in the middle of the day in much more of the world in the next few years. The triumph of solar is going to go a long way toward powering our houses and factories and cars. But there's a lot that solar energy cannot do.

For reasons of basic physics, it's really hard to use solar energy or solar energy combined with batteries to power container ships or commercial planes. It's also hard to store large amounts of solar energy for long periods of time. And it's hard to move it around the planet, hard to move it across oceans.

So, a lot of people step back and they look at hydrocarbons, at fossil fuels, and they say, you know, most of the energy in hydrocarbons comes from the hydro part, the hydrogen. What if we could make clean fuel that was like hydrocarbons but without the carbon? What if we could take that cheap, abundant solar energy and use it to make pure hydrogen?

That would be a huge step forward in figuring out how to live without hydrocarbons. I'm Jacob Goldstein, and this is What's Your Problem? This is the third of three shows we're doing about the triumph of solar energy, about how solar became so cheap, and what cheap, abundant solar energy is going to mean for the world. My guest today is Rafi Garabedian.

Rafi was previously the chief technology officer at First Solar, a company that makes solar panels. Now he is the co-founder and CEO of Electric Hydrogen, a company that has raised hundreds of millions of dollars in its quest to solve a big problem. How do you use intermittent solar and wind power to make hydrogen? And crucially, how do you do it cheaply enough to make that hydrogen economically viable?

So you can take this free solar and wind that's available when no one needs it, you can convert it to hydrogen and use that hydrogen to make things like steel and fertilizer and fuels. And the fuels, if I understand correctly, I mean, when you burn hydrogen...

It just makes water, right? Like that's part of the genius? Yeah. When you burn hydrogen, it just makes water. It's super simple, right? It generates heat like any other fuel, and you can use that in an engine or a turbine or whatever, but it emits water instead of CO2 and water. So that's the beauty of it. But the rub is hydrogen by itself is hard to utilize, and that's because it's not a liquid.

It's a gas, and it's a gas that's hard to handle because the molecule is so small. And so utilizing hydrogen directly as a fuel requires a retooling of infrastructure. When I say infrastructure, I mean pipelines, shipping vessels to move the stuff around. Even the engines and turbines that would burn it are different.

Yeah. And so hydrogen itself as a fuel is the end game. And I would say it's going to happen, but it's going to take a long time to happen because we've spent arguably over 100 years building infrastructure, engines, turbines, pipelines, vessels, all that stuff.

to move and consume hydrocarbons. Yeah. And we're going to have to retool all that stuff to move and consume hydrogen.

As the replacement. So if that's the long game, what's the medium game? Yeah, that's a great question. So that's the long game. The medium game is convert the hydrogen into the molecules we already know and love. Well, kind of love, except for their... Know and use. Know and use in mind-bogglingly big quantities. And if you think about hydrocarbons, fuels...

and how much we use globally, I can't even express how big an industry that is. Just how much oil, how many hydrocarbons we are burning right this minute. Right this minute. And society, as we know it, is entirely dependent on them. Energy is prosperity. Energy is...

everything that we do. Is material well-being, yeah. So the short game, the medium game is convert the hydrogen, which we know how to do. Thermo-mechanically, we know how to convert hydrogen and CO2, which we can capture from the atmosphere or from other processes. We know how to combine those two to make everything from methane, which is natural gas, all the way to jet fuel.

And so once we do that, we don't have to convert or retool all of that industrial infrastructure. And why is that version cleaner? Where are you getting the CO2 from?

Yeah, that's also a great question. So, the source of the CO2 is super important for the cleanliness, the carbon profile of these pathways, these intermediate pathways, because CO2 that is clean, and clean would be biogenic, it comes from biological sources, well, that's a shorthanded way of saying it's captured from the atmosphere.

Yeah. Right. Because biological CO2, it comes from plants. And where does that come from? It comes from the air. So that's a form of carbon capture, but there's just not enough of it available to make the amounts of fuels that we need.

And so it is a limited pathway, but geez, I mean, we can go down that pathway for 10 years and not run out of CO2 sources. And in the meantime, we can and are, in fact, already starting as a society to build our hydrogen infrastructure. If you go to Europe, there are, in Germany, in the Netherlands, there are hydrogen pipelines, dedicated hydrogen pipelines being built today. So good. So we're going in...

reverse chronological order. We started with the long game and then we did the medium game. And now you're getting to the present, right? They're building hydrogen pipelines in Europe. Now, people make hydrogen today for industrial reasons, but

But that itself is a dirty process, right? The sort of, before we can get to the happy world of just hydrogen or even the semi-happy world of hydrogen plus captured carbon, you have to figure out how to make hydrogen without emitting carbon in the first place, right? You got it. That is your immediate project. You got it. And, you know, I came, I and my co-founders came at this problem actually from the opposite direction. We're solar scientists.

We're solar people, you know, solar and wind, like renewable power people. And so like we came at it from, gee, this energy resource is really cheap. It's really scalable, but it's limited in how much we can deploy it. We got to think of a better way to use it. Hey, this hydrogen pathway opens up like a whole nother market that's even bigger than the electric power market. Let's try to do that.

I mean, there's a way where, like, if you can turn intermittent clean energy into hydrogen, it's like fuel, right? Yeah, that's 100%. Like, hydrogen gas, like, it's kind of a pain in the ass to move around. Yeah, yeah, yeah. We're not set up to use that kind of fuel, but it has the qualities of fuel, not the qualities of electricity.

It's transportable, storable. So you have this big idea. It's an obvious question, right? An interesting, huge question right now. Oh my God, solar power is free. How do we leverage that? You know, people are trying to make weirdo long-duration batteries. That's another version of it. How do you land at hydrogen?

Yeah, I'm a big fan of long-duration batteries because the grid should be able to take more solar and wind. It still doesn't solve the other half of global emissions, which are all these chemical industries. Think about Japan. Japan doesn't have fossil resources. It doesn't have the land or the solar and wind resource to power its own economy. So, you know, the choices for Japan are nuclear,

which is problematic for Japan. Because of Fukushima, because they had a tsunami and a nuclear accident. Yeah, it wasn't a good thing. Or, which is what Japan does, importing fuel from other places in the world. You can't import batteries that are charged. That's not a thing, right? And when you think about Japan, it's an isolated case. It's really clear and obvious. But Europe imports most of its energy.

as an example, right? And that's a huge economy. So moving energy from Russia, awkwardly, awkwardly from Russia, and now more and more LNG from the US, which by the way, liquid natural gas, liquid natural gas. Yeah. So wires work really well in continents, places where you have strong renewable resource and a lot of people.

but that is not characteristic of a lot of the world. And so when we think globally, and energy is a global industry, right? It's a global problem. We think globally, you've got to be able to move energy in some form other than electrons. And that takes us to hydrogen or its derivatives like fuels, other hydrocarbons, as the way we do this, right? That's the only way humanity has come up with

to move vast amounts of energy to where people need it. I mean, it's the genius of fossil fuel, right? Like, fossil fuel is an extraordinary...

energy storage mechanism, right? Like, it's incredible. You can move it around. You can leave it in a tank. You can put it on a ship. It's full of energy. You can burn it whenever you want. Like, it's tough to beat. It is super tough to beat. And we have 150 years of optimizing for it and building a world around it. And if it weren't for climate change...

I wouldn't be doing what I'm doing because... Yeah, right. Burn it forever. Yeah, because fossil fuels are awesome in every other way, like you described, right? They're easy to store. They're easy to move. They're super cheap to get.

Wow. Like, it's such a gift nature's given us. And we've been using it for a long time. Gift. Gift asterisk. Yeah, gift asterisk. Well, we've gotten smarter, right? We've gotten smarter and we've started to realize the unintended consequences of this resource we have. And now we've got to, you know, luckily, hopefully, maybe we have time enough to get out of our own way and start to convert. Yeah.

So, okay, so hydrogen lets you do all these things. It's harder. But the big problem is it's more expensive. It's a lot more expensive today. Well, and let's just be clear. Hydrogen means different things. And, like, people do make hydrogen at industrial scale now, but they do it in a way that emits carbon dioxide that is, like, not at all about solving the kinds of problems we're talking, right? So the fundamental hard thing is using electricity to make hydrogen, which is, like,

technically not hard, but nobody's figured out how to do it in an economical way, right? That's the basic. Exactly. That's exactly it. People have been doing it since, I don't know, 60 years ago, 65 years ago. Right. Like, I mean, my high school chemistry teacher did it, right? He, like, made this janky electrolyzer where he had a battery and then he ran wires from the battery into a thing of water and he put, like,

upside down test tubes, you know, in the water, and one of the test tubes filled up with oxygen and the other one filled up with hydrogen. That basic demonstration in high school chem lab or physics lab

is the core physical phenomena that is being scaled up into modern electrolyzers. That's the machine that does this on an industrial scale. Today, that equipment is inefficient and super expensive. And because it's so expensive, you have to run it all the time. And so where, yeah. So, you know, think about like you own this really expensive thing. You want to use it all the time.

Yeah, right. Because the value you get out of it is like the amount you pay for it divided by how much you use it, right? Exactly. You've tied up all this money in a thing. Yeah. And you've got to, the money has to be put to work, right? And so if your whole case is like, oh, we're going to have intermittent free energy, that's not going to work. Yeah. That's right. Where people do electrolysis today is where they have cheap hydropower and, you

And, you know, you think of like Sweden and Norway. The Norwegians were pioneers in this because they had a lot of hydropower in remote places without a lot of people. Hey, if we could convert that to hydrogen and make fertilizer, wouldn't that be great? So that's been going on for half a decade in that part of the world. Okay, but hydropower isn't all that scalable. There's gigawatts of it out there, but you can't build much more because it has its own environmental impact.

impacts, right? Right. So, okay. So that's the core issue is this equipment's super expensive. It's not very efficient.

And so that limits our ability to use it from with this powered by this cheap, abundant, but intermittent renewable resource, all this excess solar and wind. It's always techno-economics, right? Like the whole energy transition, it's not really a technical problem, clearly, at this point. It's an economic problem. It's the techno-economic problem. Yep. And the solution to the techno-economic problem is largely technical innovation.

But with business model and economic innovation wrapped around it. And scale, right? Scale as well. Yeah, yeah, yeah. Absolutely. Scale as well. So let's talk about scale. So most electrolyzers, big ones, are one, maybe two or three megawatts. Those are the biggest ones out there.

A megawatt is like how to put that in real terms. It sounds like a lot of power. It kind of is a lot of power, but it's nothing compared to the industries we're talking about and the uses we're talking about. So if you think about like an ammonia plant, you would need a thousand of those.

to make enough hydrogen to run an ammonia chemical plant. One. That's one ammonia plant. One. That's one. One of thousands in the world. Yeah. So do you need to go up by a thousand X? Is that about the way? You need to go up by about a hundred X. Okay.

And then you send 10 of them to the plant and it makes economic sense? That's it. That's it. So it is all about technical economics, which, by the way, you know, so the company I run is a startup. We've been around for a little over four years, venture-financed tech startup. This is an insane thing for a startup to try to do. Yes. Well, you've raised a ton of money, right? Like, it's wildly capital-intensive. You've raised hundreds of millions of dollars. We have. It's an impressive display of venture capital that people have...

invested in you, given you that much money on a kind of long shot thing, right? On a certainly hard thing that might not work. Super, super intense. And I'm super grateful that the venture community is

If you look at the venture capital community's experience with what they call clean tech, this is like technology companies that are trying to do big, hard transformations of industry to make them cleaner. There was Clean Tech 1.0 maybe a decade or more ago, and a lot of people lost a lot of money.

Yeah. Right? In that first foray into cleantech. I mean, you happen to work at one of the only U.S. companies that really came through that, right? Maybe that helps raising money this time. It certainly doesn't hurt. Absolutely. It certainly doesn't hurt. Yeah, I spent 13 years at First Solar, and it is literally one of the, as you said, the only U.S. companies that's still thriving in these industries. Yeah.

But, you know, when we started this company, I think we started it at a great time, cleantech 2.0, if you will. There was a lot of venture capital interest for good reason, because political resolve to do the things necessary to start to address climate change was strong. And that provides like the economic footing, the support necessary to build

for kind of new technologies to enter the market. When something new enters the market, it's never competitive. Yeah. What's interesting in the solar story, how, at least in Jenny Chase's version of the story, which seems like the most credible version I've come across, the German feed-in tariff of 2004 is this sort of inciting event. It's just this one policy change in a medium-sized rich country kicks off this amazing...

run down the experience curve, you know, of solar panels getting cheaper and cheaper and cheaper until now without incentives like solar is going to win. It's going to keep winning. It's not subject to these political wins. You got it. I won't repeat the story, though. I personally lived through it. But it sounds like you and your listeners have already heard it and your recounting is accurate. Yeah.

Were it not for the German feed-in tariff, first solar probably would not exist, nor would the solar industry, as we know it. China certainly would not have scaled up their industry dramatically. They're the dominant supplier of solar panels in the world by a large margin.

But as a result of all that, the industry got to scale, got to better and better economics. And it's not just the solar panels, the equipment, but it's also, as you said, the experience of building solar farms.

The learning and the cost reduction that comes from repetition, right? You build one house, it's kind of expensive. You build 100 houses, they get cheaper and cheaper. It's the same with solar and wind. Houses are a weird example, though. Houses are like the one thing where there have been terrible productivity gains. Everything else gets cheaper when you build more of them. Houses weirdly refractory to productivity gains. That was a really bad example. I agree.

Still to come on the show, how Rafi and his colleagues at Electric Hydrogen plan to cut the cost of clean hydrogen in half. Hey, it's Jacob. I'm here with Rachel Botsman. Rachel lectures on trust at Oxford University, and she is the author of a new Pushkin audiobook called How to Trust and Be Trusted.

Hi, Rachel. Hi, Jacob. Rachel Botsman, tell me three things I need to know about trust. Number one, do not mistake confidence for competence. Big trust mistake. So when people are making trust decisions, they often look for confidence versus competence. Number two, transparency doesn't equal more trust.

Big myth and misconception and a real problem actually in the tech world. The reason why is because trust is a confident relationship with the unknown. So what are you doing? If you make things more transparent, you're reducing the need for trust. And number three, become a stellar expectation setter. Inconsistency with expectations really damages trust.

I love it. Say the name of the book again and why everybody should listen to it. So it's called How to Trust and Be Trusted. Intentionally, it's a two-way title because we have to give trust and we have to earn trust.

And the reason why I wrote it is because we often hear about how trust is in a state of crisis or how it's in a state of decline. But there's lots of things that you can do to improve trust in your own lives, to improve trust in your teams, trusting yourself to take more risks, or even making smarter trust decisions. Rachel Botsman, the new audio book is called How to Trust and Be Trusted. Great to talk with you.

It's so good to talk with you. And I really hope listeners listen to it because it can change people's lives. So is the Inflation Reduction Act, this bill, this U.S. law passed a few years ago, is this like the German feed-in tariff of 2004 moment for hydrogen? Is that what you're hoping? Yeah. So the answer is no.

Okay, interesting. Tell me more. Yeah, interestingly, the equivalent of the German feeding tariff today is not the Inflation Reduction Act and its provisions for hydrogen, but it's what's going on in European policy. Okay. Well, that's heartening for semi-obvious reasons. Go on. Yeah, yeah. So what's happening in Europe?

So in the European Union, there are a number of policy frameworks, but what's called Red 2 or Red 3, which are laws in Europe. These laws in Europe provide a framework for carrots and sticks to decarbonize certain high-emitting industries. It all has to do with the utilization of renewable energy.

to decarbonize things like steel, concrete, fertilizer, chemical industries, energy. And those, I mean, those heavy industry ones that you mentioned are the classic, like, ones we haven't figured out yet. Classic, like, hard to do with electricity. Even if you got the electricity, like cement, famously very hard to decarbonize. Steel, very hard. Fertilizer, very hard. Like, we don't know how to do it yet.

Well, interestingly, we do know how to do it. We don't know how to do it economically yet. That's it. You got it. You got it. Which ends up being the same thing with commodity businesses like that. 100%. The only value in a commodity business is the price.

There's no other like, you know, you can't make it prettier, you can't make it faster, you can't make it cooler. It's just the only thing you can do is make it cheaper. It's just fertilizer, bro. Yeah. Yeah, yeah, yeah. Okay, so the European kind of legal framework, policy framework actually is what's driving this industry to produce hydrogen and chemicals from hydrogen because it's driving consumption.

demand for those molecules, for those products. Because basically they get a subsidy if they consume hydrogen and they pay a fee if they don't. And it's that last piece, the penalty if you don't. The stick! The stick is what actually works to create demand.

Okay. That's right. And in contrast, what we have in the U.S. with the IRA, and we can talk later about what's actually going on with it if you care to, but in the U.S. we just have a production-side subsidy vis-a-vis a tax credit. That doesn't do anything to cause the demand side to buy the stuff. Yes. I mean, I guess the hope would be that the...

The production subsidy would lower the price at which producers could sell, which would then increase demand. That is the, that would be the naive hope. Naive fare. Yeah. Yeah. We've never seen. Naive hope was my first album.

Go on. We've never seen... We've never seen production-side support alone kick off a new energy industry. Uh-huh. It's always taken... You have to subsidize demand. Yeah, you somehow have to get the industry over that initial hump where the supply-side subsidy isn't quite sufficient to cause people to change behavior. Uh-huh.

Interesting. Well, so does that mean that whatever happens with the regime change in Washington isn't going to be that big of a deal for you? You're like, oh, we weren't that into the IRA anyway?

Yeah, kind of. You know, we were and frankly still are super hopeful that the rules for using the IRA tax credit will get clarified and then we'll be able to actually use it. Because we haven't been able to use it yet because the current administration hasn't set the rules. Okay. The law exists. It's kind of a wonky thing. Yeah.

It's unclear. It's frankly unclear how the new administration is going to deal with this. And I think there's, you know, reason to believe it could go either way. So we're waiting to see. Yeah. I mean, it seems like a lot of the IRA...

Might be unchanged. Right. I know there was a group of Republican congressmen that recently wrote to the speaker of the House saying, don't cut the IRA, saying it's, you know, creating jobs in our industries. It does seem like it was written in such a way or at least is being implemented in such a way in other sectors, at least that it does have some staying power politically. Yeah.

The risk of being political and super cynical, which I tend to be when I get political. Washington's about money and the IRA channels money disproportionately, it turns out, to Republican states. And so there is real support, not only politically.

principled support because not all republicans are blind to climate change and the need to transform the energy sector okay so i think that needs to be said and realized that that it's not a monolithic hey we don't care right yeah there's real support for solar and wind in particular but also for other decarbonization pathways amongst republicans um

But also, like, the money matters. And so, you know, red states are getting a lot of money from the IRA potentially. And so gutting that would be, I think, politically challenging. But this is a nonlinear time, right? This is a time when...

I think it's very hard to predict what's going to go on in Washington. So we'll see. Yeah, yeah, yeah. So, OK, so you're saying you have a pathway in Europe anyways. Let's talk more about how you're actually trying to do this thing, right? So you have in front of you a sort of technical problem, which is...

making green hydrogen cheaply enough to make economic sense, right? That's right. And you have certain tailwinds in the form of regulations that are encouraging this, but you're still not there yet, right? Even with those tailwinds. Is that a fair characterization of where you are now? Yeah.

Yeah, that's a totally fair assessment for the whole industry, actually. So if you think about the whole burgeoning, hopefully soon burgeoning industry of electrolytic... Soon to be burgeoning. It's nascent. Today it's nascent, tomorrow it's burgeoning. That's right. If you think about green hydrogen or electrolytic hydrogen, whatever you want to call it as an industry...

It's gotten a lot of excitement because, again, the policy framework has matured and is there to support it. But not a lot of big projects have been built yet. And it's because it's too expensive. That is exactly why...

My company, Electric Hydrogen, exists. We exist because we actually recognize that it's too expensive and have developed and are commercializing a technical solution to make it much cheaper by a factor of two, like half the cost.

Does half get you there? If you actually do cut the price in half, then does it work under, say, the European regime right now? Yeah, totally. So in Europe, the typical project using other technology companies' equipment, and I'll name the big ones like Siemens or ThyssenKrupp, right? Big industrial companies. Big incumbent industrial companies. Yeah, they make these things. They make equipment to do this stuff.

The cost of producing hydrogen using that gear in Europe today is probably $5.50 a kilo of hydrogen, so maybe $6 a kilo of hydrogen. If you make hydrogen from natural gas in Europe today, it probably costs around $3 a kilo. Oh, okay. We think we're already there. We think we're already at a place where we can enable economic parity or close to economic parity with the fossil incumbent.

Okay. But in a very fundamentally clean way. So how do you do it? How do you cut the cost in half? Yeah. It all starts with the realization, which you struck on really early in this conversation, that cheap power is plentiful, but it's not steady.

Yeah. Right? So the equipment that you use to convert that unsteady intermittent cheap power to hydrogen has to be really, really inexpensive, but it also has to be flexible. It has to be able to run up and down, up and down quickly without failing, damaging it or loss of efficiency.

Today's equipment can't do either. And so part of the reason that hydrogen is so expensive to produce this way today is that not only are you using that intermittent, effectively free power, but you're also drawing power from the grid to keep the equipment running. And that drives up the cost of the power. The power cost is about half of the hydrogen production cost. So it's a double whammy. So there's your half.

There's your half. That's half the half. The other half of the half is it comes from the equipment actually being a lot cheaper. And the way we do both of these things is the fundamental like physics of the device. So we're a bunch of super nerdy, like semiconductor device physics and chemist kind of people. And we spent the first couple of years of the company in the lab, basically reinventing this technology.

simple, simple device that you saw in your high school chem lab, right? The two wires that make the bubbles. The electrolyzer. We can use this piece of jargon, right? It's an electrolyzer. That's the term, right? Yeah. Yeah, yeah, yeah. So we came up with a way to make the electrolyzer much, much cheaper. Not by using cheaper materials, but by actually increasing the throughput, the amount of hydrogen that can be produced from the object.

And we've since then, in the subsequent two years, and more recently, we've commercialized that. Our product is, it's a big product. It's funny to call it a product. It's about an acre in size. It's a plant. So if you've ever driven around parts of Texas, you've seen like small chemical plants, not big refineries, but small ones. It looks kind of like one of those, a bunch of piping and plumbing at the heart of it.

is this electrolyzer, which is the thing we manufacture ourselves that does all the work and the recipe equipment around it gathers the hydrogen, purifies it, and puts it out in a pipe. So we figured out how to make that really cheap, half the cost. And the electrolyzer itself, like,

What's it look like? How big is it? It looks about like... It's about the size of a refrigerator. Okay. An American refrigerator, not the little European ones. Bad. Yeah. And it looks, you know, it doesn't look too... It's kind of a rectangular box. You know, it's not very interesting to look at, frankly. And when it's running...

It just sits there. It doesn't make any noise. It doesn't move. There are no robots or anything. There's a bunch of water running through it. There's pumps, right? Make a bunch of noise. There's water running through it. And out comes water and gas. Water and oxygen in one pipe. Water and hydrogen in the other pipe. And then there's a bunch of vessels and pipes that separate the gases from the water and purify them and send them out to be used.

So it's a very, you know, if you're a geek like me, it's really impressive. If you're just walking by one and you see it, you'd go, oh, what's that? It's kind of unimpressive. Which is how you want one of these things to be. For sure. You don't want any, you know, any drama.

when you're converting power to hydrogen. Well, and especially with hydrogen, right? Like, I mean, I don't want to talk about things blowing up, but hydrogen can blow up, right? Actually, let me take a moment here because there's a lot of talk about that in the U.S. Our new president-elect even made some comments about that. Hydrogen is no more explosive than gasoline vapor or natural gas vapor.

So we already know how to handle things that blow up when you spark them. And hydrogen is kind of just like those things. Yeah, fair. So how many of these acre-sized plants exist in the world?

Well, we are building our first one now, and it'll be installed next year in an undisclosed location in Texas for our customer. So we're super excited. In the lifecycle of a startup, this is an incredible moment where we've gone from the laboratory to kind of a pilot scale operation, and now we're building the first real one.

And, you know, all eyes are on it. And we're just nose down executing and building it. You know, once we get the first one proven and running effectively, which will be next year, then we expect to be, you know, super viable in the market because our price point is so compelling. What are you going to do with the hydrogen you make in Texas? So I can't tell you because the deal isn't announced yet. Okay.

But but it's exciting. It's it's a it's a fuel that's going to be produced using the hydrogen. You can't tell me specifically what this first one's going to do. Fine. But, you know, we talked about this whole kind of range of things one might do with hydrogen. What are some of the sort of relatively easier applications? Like what's the low hanging fruit for green hydrogen? What's the first thing you can do? What can you do tomorrow?

Yeah, so everybody in our industry likes to think that ammonia, which is fertilizer, is the first thing. It uses hydrogen today. That hydrogen is made from natural gas usually. So why not just replace that dirty hydrogen with this clean stuff, right? Yeah.

The reason ammonia isn't happening super fast right now is because there's relatively little incentive to decarbonize ammonia. No one's willing to pay extra for clean fertilizer because food, food security, food cost is super politically charged. And obviously, that's not a place policymakers want to go. Potentially, even in Europe, we'll see.

So it turns out the low-hanging fruit might be economically or politically one of the last things to be done. Uh-huh.

So now we got to do politico-techno-economics. Political economy techno-economics. Got to figure that one out. But yeah, okay, go on. Yeah, when you figure that out, tell me, because I need the way to describe it. It's interesting, right? Political economy is an underused phrase, but we want to get tech, political techno, political techno-economy? No, it's not. Yeah. Okay, so what are you going to do? Not fertilizer, but what?

Yeah. So I'll rattle off the list of things that are very active today. Okay. Ironically, decarbonizing the hydrogen input to refineries in Europe is very active. Refineries like oil refineries that are making gasoline and whatever? Yeah, yeah, yeah. What am I talking about? That's right. What am I talking about here? So a significant part of the CO2 emissions from a refinery itself are...

are from the production of hydrogen, which is used to refine oil. So hydrogen is used for desulfurization, hydrocracking. It's a big input to oil refining. So there are incentives in place to gradually decarbonize the refinery itself

Of course, it doesn't do much to decarbonize the use of the fuel at the other end, but it's a start. And it can help you scale, right? Presumably anything that can get you building is good now. You need a job in policy.

God forbid. But that's exactly right. That's the motivation. It seems counterintuitive to try to decarbonize a oil refinery. But because they consume hydrogen today, it is an obvious place for policymakers to incentivize the scaling up of the green hydrogen industry. So that's exactly right. You nailed it. Green steel. Yeah.

i already mentioned that one uh so there's multiple active big projects in the world predominantly in europe to convert steel production from coal super dirty to green hydrogen super clean um methanol methanol is uh both the chemical input to plastics as i mentioned but also is um the favorite fuel for the decarbonization of shipping and so

Big shippers like Maersk, you've probably heard of them, you've seen their name on shipping containers. They are building multi-fuel ships now, which can burn both conventional fuel, which is super dirty, it's called bunker fuel. It's like the sludge that comes out the bottom of a refinery column, but also can burn methanol.

So green methanol, e-methanol, some people call it, which is made from green hydrogen, is like a favorite pathway for decarbonization of shipping. Those are the things that are... Oh, another one is SAF, sustainable aviation fuel. So what is that? It's kerosene, basically it's fancy kerosene. And what is kerosene? It's a hydrocarbon. It's like gasoline, but heavier.

And so that can also be made from CO2, biogenic CO2 and hydrogen. Or it can be made, as is being done in Europe today, from used cooking oil and other biological waste and hydrogen in a specialized refinery. So what are you worried about right now? Not about the world, but about your company.

Like, you're right at this moment. You're building first commercial plant. You have a lot of investment. Like, what's at the top of your list of things to worry about? Yeah, so as I described, like, this moment for a technology company going from lab and concept to actual product in the field is probably the riskiest and most delicate moment in a company's life cycle.

Why is that? Because to do what we're doing and to actually deploy commercially, you have to be at a big enough scale to do that. And that means you're spending a lot of money. And so if you don't get it perfectly right, the ramifications can be painful. So that's kind of a generic answer. The bigger worry for me is the stability of policy, not just in the U.S., but globally.

around decarbonization. And, you know, why am I concerned about that? Because we've seen it before. We've seen it in... You mentioned the German feed-in tariff. The German feed-in tariff experience, that's what created the solar industry. But then it also got retracted suddenly. Why? Because of political change within Germany. Wow, this is costing the taxpayers a lot. And there was a move to the right in Germany. And, like,

So the feed-in tariff was revoked, wound down. And that was a near-death experience for the solar industry. The same thing can happen to us because we are, in the early days of this industry, extremely policy-sensitive or policy-dependent. Now,

you know, at Electric Hydrogen, our like literal goal is to be independent of policy. Sure. Success for us looks like we are economic,

economically competitive without any policy support. You want to be where solar power is now. Like, nobody's going to stop solar now because it's the cheapest. Like, you don't need any special rules. It's just cheaper. People just go to the store and buy solar panels and get their electricity. You got it. And that's what success looks like. But we're competing against an industry that's gone down its learning curve for the last hundred years.

And so to compete with that, like economically, naturally right out of the gate, it's too much to ask. Meaning the fossil fuel industry. Yeah, the fossil fuel industry. Yeah. So we need a little time. How much time? What's your guess? I think we can get there by 2030. That's fast. That's certainly our goal.

Yeah, it's fast, but it's a lifetime in terms of political wins and in terms of like a startup company, you know, crossing the... Capital intensive. Yeah. Yeah. Yeah. Exactly. Yeah. Exactly. So that's what worries me. Yeah. Well, you just got to make it five years, man, if you're right. But five years is a long time, especially right now. It's doubling my life. That's doubling my life. Yeah.

Okay, so that's what's to worry about. Give me the happy 2030 story. If you make it to 2030 and it works out like you hope, what's it look like? What's the company look like and what's the world look like?

We're selling tens of gigawatts a year of electrolyzers, but more importantly, we're ramping up fast, which means we're ideally doubling capacity every year to meet the demand for global projects to produce green hydrogen. The world looks like it's ramping up green hydrogen production at a rate...

at which it will start to become relevant, kind of relative to the fossil industry in a matter of years or a decade. Yeah.

And tell me in five or 10 years, like what are the places where there might be sort of meaningfully significant use of green hydrogen in industrial processes? Yeah. So in five years, certainly in Southern Europe, where solar and wind are plentiful and available, North Africa, which is really well positioned to supply Europe, North

and has incredible solar and wind resource. Texas and kind of, yeah, Texas, Louisiana, Oklahoma, again, and the wind belt in the U.S. are like ideal places for the production of the molecules. You look at places like Chile, interesting because the Atacama Desert has both wind and solar and the combination is extremely inexpensive. Yeah.

And the Middle East. I cannot mention the Middle East. That's the supply side. That's where you're making all this hydrogen. And then what's the demand side look like in five years? Who's buying it? What are they doing with it? Yeah, in five years, the demand side is largely Europe, Japan, Korea. Because that's where the incentives are in place, basically? It's...

That's where the problem is hardest to solve. They have the biggest problem. And it's not just incentives. Like when I say the problem to solve. They're most reliant on imported fossil fuel. You got it. You got it. So it turns out to not just be a decarbonization problem. It's also an energy security problem. But that's good for you. That's good for you on the policy side because there's more like short-term self-interest, short-term localized self-interest in figuring out how to make hydrogen work.

100%. So those places make a lot of sense in the five-year time frame. In the 10-year time frame, again, you know, we come close, even come close to meeting our goals, and we're going to be knocking on the door of parity in cost with fossil resources. And so I think the market is truly global. And just list off some of the things, not the places, but some of the things that people will be using your hydrogen for, clean hydrogen for, in five or 10 years. Oh.

Yeah, easy. So steel, cement, ammonia fertilizer, shipping fuel, aviation fuel, chemicals like methanol. Those are the easy ones.

And all of those industries, I mean, those industries together make up a very large chunk of carbon emissions. Yeah. The ones I rattled off, probably 30 to 40 percent. Yeah. And it's the 30 to 40 percent that seems really hard right now, right? It's not the like, oh, great, solar power and batteries for people's houses and cars. Like that part we've actually kind of got, which is good. And so you're doing the hard part. Yep. That's it.

We'll be back in a minute with The Lightning Round. Hey, it's Jacob. I'm here with Rachel Botsman. Rachel lectures on trust at Oxford University, and she is the author of a new Pushkin audiobook called How to Trust and Be Trusted. Hi, Rachel. Hi, Jacob. Rachel Botsman, tell me three things I need to know about trust. Number one, do not mistake trust for trust.

Confidence for competence. Big trust mistake. So when people are making trust decisions, they often look for confidence versus competence. Number two, transparency doesn't equal more trust. Big myth and misconception. And a real problem actually in the tech world. The reason why is because trust is a confident relationship with the unknown. So what are you doing if you make things more transparent?

You're reducing the need for trust. And number three, become a stellar expectation setter. Inconsistency with expectations really damages trust. I love it. Say the name of the book again and why everybody should listen to it. So it's called How to Trust and Be Trusted. Intentionally, it's a two-way title because we have to give trust and we have to earn trust.

And the reason why I wrote it is because we often hear about how trust is in a state of crisis or how it's in a state of decline. But there's lots of things that you can do to improve trust in your own lives, to improve trust in your teams, trusting yourself to take more risks, or even making smarter trust decisions. Rachel Botsman, the new audiobook is called How to Trust and Be Trusted. Great to talk with you.

It's so good to talk with you, and I really hope listeners listen to it because it can change people's lives. Let's finish with lightning round. What's your second favorite element? Ooh, my second favorite element. That's a great question. I'd say carbon.

Interesting. Just as a human, as an organism, or why? Why carbon? Well, it came to mind because hydrocarbons are awesome. We just need to make them clean. Yeah. What do you think is the most underrated power tool for home use? Yeah, so I have a battery-powered Makita angle grinder that I use all the time, and it's arguably one of my favorite tools.

Yeah, last time I used it, I used it to cut off a hard-to-reach metal bolt. Oh, I love that. Okay. Were there sparks? Yeah, it makes lots of sparks. That's good. It's one of the reasons it's one of my favorite tools. Because it looks cool. What's your favorite song right now to listen to very loud? Oh, Led Zeppelin, Brawny Orsthomb.

Just makes me happy. Every time I listen to it, it just makes me happy. Make you feel 20? I think if I put that song on, it would make me feel 20. Or at least make me remember feeling 20. And feeling 20 makes me happy. Yeah, that's nice. It would probably make me happier than I actually felt when I was 20. Yeah, I think that's true as well. Last one. I read in the Wall Street Journal that your co-founder keeps...

quote, a secret document of the company's failures and fixes that only top engineers can access and that you cannot access. Did you know about this? Did you learn about it by reading The Wall Street Journal?

I don't know if that was a misquote or not, but yeah, it's actually not true. But it was a nice piece of story. Are you sure? Are you sure? Or are they just telling you that at the company? Maybe like, no, no, the journal got that wrong. There's no secret document. With my co-founder, Dave, you never actually know. Okay. Keeps it interesting. Anything else we should talk about?

It's been great. Yeah, really. Super, super fun. Rafi Garabedian is the co-founder and CEO of Electric Hydrogen. Today's show was produced by Gabriel Hunter Chang. It was edited by Lydia Jean Cott and engineered by Sarah Brugge. You can email us at problem at pushkin.fm. I'm Jacob Goldstein, and we'll be back next week with another episode of What's Your Problem?

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Hey, it's Jacob. I'm here with Rachel Botsman. Rachel lectures on trust at Oxford University, and she is the author of a new Pushkin audiobook called How to Trust and Be Trusted. Hi, Rachel. Hi, Jacob. Rachel Botsman, tell me three things I need to know about trust. Number one, do not mistake trust.

Confidence for competence. Big trust mistake. So when people are making trust decisions, they often look for confidence versus competence. Number two, transparency doesn't equal more trust. Big myth and misconception. And a real problem actually in the tech world. The reason why is because trust is a confident relationship with the unknown. So what are you doing if you make things more transparent?

You're reducing the need for trust. And number three, become a stellar expectation setter. Inconsistency with expectations really damages trust. I love it. Say the name of the book again and why everybody should listen to it. So it's called How to Trust and Be Trusted. Intentionally, it's a two-way title because we have to give trust and we have to earn trust.

And the reason why I wrote it is because we often hear about how trust is in a state of crisis or how it's in a state of decline. But there's lots of things that you can do to improve trust in your own lives, to improve trust in your teams, trusting yourself to take more risks, or even making smarter trust decisions. Rachel Botsman, the new audiobook is called How to Trust and Be Trusted. Great to talk with you.

It's so good to talk with you and I really hope listeners listen to it because it can change people's lives.