Note: The views expressed here are the author’s own and do not reflect the views of Energy Impact Partners.
RECs
Welcome to the first ever collaboration here on Adapting. Today, I’m pleased to introduce Dr. Emily Yedinak, a materials scientist and former ARPA-E Fellow who now works for a stealth startup. She convinced me that using RECs for hydrogen is likely to cause some trouble for the climate, so we wrote this piece together. Hope you enjoy!
Let’s say you run a bakery in Louisville and you would like to power it with zero-carbon electricity. You’re going to have some problems to solve. First, as a customer of Louisville Gas & Electric, you have among the most carbon-intense electricity in the country: around 1,000 grams per kilowatt-hour. So you start to think about alternatives. You might put solar panels on your roof, but you don’t own the building and your landlord isn’t thrilled about the idea. That’s out. For a moment, you entertain the idea of developing a small renewable energy project elsewhere, but the economics don’t make a ton of sense at such a small size. That’s out. What else can you do?
Well, you might consider buying renewable energy credits, or RECs. A REC is a tradable certificate that says that renewable energy was generated and fed into the grid somewhere in the US. Each REC represents one clean megawatt-hour.
With RECs, a wind farm actually makes two products:
Electricity, which is sold into the grid just like it would be from any other source.
The “cleanliness” of the electricity. In other words, RECs. If you want to claim that your bakery is wind-powered, when in fact your bakery is plugged into the Louisville grid, you can buy RECs from a wind farm.
When you buy a REC, no electricity flows anywhere different than it otherwise would; you just pay extra for a claim on the clean part of the electricity mix. This is convenient, since it allows customers to buy clean electricity when they don’t have direct access to it. And because RECs are a second source of revenue, they incentivize the development of more renewable energy in the longer term. This is working: in recent years, RECs have become popular. As of 2021, the REC market was estimated to be $11.5B. By 2030, it’s expected to be $26B.1
That being said, there has been some drama:
There are double-counting issues. For example, a wind farm owner could claim to be using renewable electricity for their operations, while the buyer of that plant’s RECs claims the same thing.
RECs typically don’t take into account the carbon intensity of the power they replace. For example, electricity generated from natural gas (440 g CO₂ / kWh) is treated the same as electricity generated from coal (1,025 g CO₂ / kWh), despite emitting only 43% as much carbon.
RECs without appropriate bounds aren’t time- and region-matched to the electricity they replace. For example, a wind plant owner might sell power and RECs produced overnight when power is cheap and abundant, only to have the electricity sent to ground. On the flip side, that same REC may be used to account for power generated by a gas peaker plant during the middle of the day. No decarbonization has happened, and energy storage (a time-matching technology) has been disincentivized.
Rapid electrification increases the demand on the grid and will likely outpace the clean electricity supplied to the grid. This means that as technologies like EVs and electrolyzers are deployed, grid emissions will increase2 – unless an additionality requirement is enforced. Under an additionality requirement, an equivalent capacity of clean electricity must be added to the grid as new electricity demand capacity is introduced.
TL;DR: RECs are a good start but far from perfect. They help bring green electrons onto the grid, but they’re not likely to deliver a fully decarbonized electricity system.
Let's look at another example of how the availability of RECs without reasonable bounds may result in worse outcomes for the climate. Hydrogen has been touted as a key enabler for deep decarbonization, particularly in sectors that have few options for decarbonizing. Additionally, the US Inflation Reduction Act has a $3 per kilogram credit for clean hydrogen, signaling a wave of new production to come.3
But just as some electrons are cleaner than others, some ways to produce hydrogen are cleaner than others. There are now lots of “colors” of hydrogen, but we’ll keep our discussion to two: gray and green.
Gray hydrogen comes from steam reformation of methane (SMR), which produces 8-12 kilograms of carbon dioxide per kilogram of hydrogen.4 Nearly all hydrogen today is gray. That’s our baseline.
Green hydrogen comes from electrolysis of water. This has no direct carbon dioxide emissions, but it uses a lot of electricity: approximately 40-80 kilowatt-hours per kilogram of hydrogen. Because of this, it’s only as green as the electrons coming from the grid, and most US grid electrons are not very green. With a bit of math, it becomes clear that hydrogen-related emissions are almost always higher (up to 3x) with electrolysis than SMR without carbon capture.
So, for electrolysis to play any positive role in combating climate change, you have two options:
Draw power only from very low-carbon grid electricity (e.g. Seattle)
Draw power from purpose-built clean energy sources
And really, option #2 is what you want. For one, there’s only so much hydrogen you’d want to produce in Seattle. Hydrogen is expensive and challenging to transport, so you probably wouldn’t want to pipe or truck it all the way to, say, Louisville. But option #2 is hard. Renewable-connected electrolyzers are great, but in order to keep costs low and production consistent,5 electrolyzers must be “on” over 90% of the time. Wind is only “on” ~35% of the time, solar ~25% of the time, and batteries are too expensive. So today, you're left with option #1: the grid.
Enter RECs: in theory, they could enable lots of clean hydrogen production by incentivizing a greener grid, but in practice, how clean will it be?
A lot comes down to how the Inflation Reduction Act handles the issue, and it hasn’t been settled yet. From CNBC:
Not all RECs are the same, however. Some are measured annually, while others are measured in much smaller increments of time.
The divide over the hydrogen tax credit comes down to which kind of RECs should be permitted.
BP America, for example, wants annual RECs to be allowed, according to its public comment to the IRS. The annual RECs are a more flexible way of implementing the tax law, which would help spur investment necessary to get the industry off the ground. That’s important for BP, which plans to spend between $27.5 billion and $32.5 billion on a combination of what the energy company deems its transition growth engines, including hydrogen production and renewables, between 2023 and 2030. …
On the other side of the debate, climate-focused organizations, including Electric Hydrogen6 and the Clean Air Task Force, argue that adopting more flexible guidance would undermine the climate goals of the Inflation Reduction Act.
The environmental groups say that using fossil fuels to power an electrolyzer to make hydrogen is actually much worse for the climate than today’s method of using natural gas in a steam methane reformer process.
These climate-focused groups are advocating hourly REC standards, and what’s called “additionality and deliverability,″ which would serve to ensure that the energy used to power an electrolyzer to generate hydrogen is in fact clean energy.
First and foremost, hourly accounting would allow hydrogen producers to claim renewable energy credits only if clean energy is being generated at the same hour when they are consuming it — when the wind is blowing, the sun is shining, or a nuclear power plant is generating energy on the relevant transmission system.
Reasonably, electrolyzer operators want it to be easy to build lots of electrolyzers and operate them 100% of the time. Sure, they want to make money, but they also argue that electrolyzer manufacturing needs to be scaled up in parallel with grid decarbonization. Short-term increases in emissions will enable long-term emissions reductions. But how long is long-term? And how much damage will be done in the meantime?
So while the US settles the law’s interpretation, the EU is in the midst of a similar definition phase. Regionality, additionality, and time matching are in the EU plan. It’s not all bad, just early. Let’s hope we get it right.
IP theft
A good chunk of climate tech comes out of research in US universities, so it’s important to keep tabs on the health of the ecosystem. An important but under-the-radar development over the past few years has been how the US treats IP theft.
Imagine you’re a professor running a research group at a university. Let’s say you take money from an oil company to do a research project related to the company’s oil-producing interests. You might get some questions from colleagues. Doesn’t it come with strings? Do you want to be complicit in the oil industry’s continued existence? Aren’t you setting up your students to go work at oil companies? It’s reasonable to debate these things. There are tradeoffs to taking oil money to do research.
Now imagine that the money comes from the US Department of Energy, the world’s largest funder of basic research. Nobody asks you those questions, but there are certainly still strings attached. US taxpayers fund federal agencies so that federal agencies can benefit US taxpayers.
I used to work at ARPA-E, a part of the DOE that funds applied research, and our incentives were pretty clear (emphasis mine):
(c) GOALS.—(1) IN GENERAL.—The goals of ARPA-E shall be—(A) to enhance the economic and energy security of the United States through the development of energy technologies that—
(i) reduce imports of energy from foreign sources;
(ii) reduce energy-related emissions, including greenhouse gases;
(iii) improve the energy efficiency of all economic sectors;
(iv) provide transformative solutions to improve the management, clean-up, and disposal of radioactive waste and spent nuclear fuel; and
(v) improve the resilience, reliability, and security of infrastructure to produce, deliver, and store energy; and
(B) to ensure that the United States maintains a technological lead in developing and deploying advanced energy technologies.
To ensure that researchers are advancing the national interest, the agency requires things like IP disclosure to the DOE and US manufacturing of new technologies. That being said, there are also unique opportunities like funds for patent work and scale-up funding to enable said domestic manufacturing. But again, trade-offs.
This is not how lots of academics view working with the government. I’ve noticed that many believe the following two things:
Academic research is a valuable thing for the federal government to fund – look at all the innovations in pharma, space, computing, semiconductors, energy, and so on, that have come from academia. Very little of it would have come out of the free market, because industries’ time horizons are not long enough to support it.
Academic research absolutely must be an open and international enterprise – that’s how academic freedom works, how the best ideas and collaborations take shape, and how the best research gets done.
These are noble, and I think mostly correct, but they’re not fully compatible. While new technology is valuable to global superpowers like the US, it’s much more valuable to up-and-coming nations.
Because of this, there’s a rich history of countries stealing IP from each other. The US stole lots of textile technology from the British in the 18th and 19th centuries. The Soviets stole various technologies from the US during the Cold War (look no further than S5E3 of The Americans). And in recent years, China has stolen lots of IP from universities and companies. Today, the FBI estimates that IP theft represents $200B per year of losses to the US.7
Because of this, the US has stepped up efforts to combat Chinese IP theft in the past few years. Two high-profile examples were the arrests of two scientists – Charlie Lieber at Harvard (convicted) and Gang Chen at MIT (charges dropped). Both were accused of having improper ties to the Chinese government. This is fairly unprecedented in American universities.
As you might expect, the academic community is not thrilled about this:
Campus administrators at MIT are following new national security guidelines first announced under Trump and enacted by the Biden administration that are supposed to protect research labs from spying and international espionage. At MIT, that has meant not only on-campus briefings by the FBI, but a new requirement asking professors who receive federal funding to sign a disclosure form certifying that their students are not participating in suspicious activities.
And while many MIT faculty aren’t happy about it, experts say it's a sign of what’s to come at other U.S. research universities.
“It will absolutely be coming to you soon — if it's not there already,” said Kristin West, director of the Research Ethics and Compliance Committee at the Council on Governmental Relations, an association representing more than 200 top research institutions.
Authorities have previously estimated intellectual property theft costs the U.S. $200 billion a year. But the steps have raised criticism that the government is going too far and will alienate talented researchers or discourage them from working in the U.S. West said concerns about xenophobia and the loss of global talent are legitimate.
“I think you have to be afraid that somebody's going to throw the baby out with the bath water, because professors are just going to say, ‘This is too much trouble – puts me at too much risk. I'm just not going to bother with international collaborations anymore,’” she said. “And that hurts science.”
Look, I get it. I would have hated this when I was a grad student. Nobody wants FBI agents meddling in their research. They’re a distraction, they ask dumb and annoying questions, they require paperwork, and the experience can be downright scary. But I can’t shake the feeling that those were the stakes in the first place! If you’re doing taxpayer-funded research that really is valuable to US interests, it had better not end up in China. If it starts ending up in China, you shouldn’t be surprised when law enforcement shows up.
I could speculate about why there seems to be this gap in expectations: globalized communications, extended peace between major powers, the international makeup of US PhD programs – but I doubt there’s a single reason.
But here’s the thing I don’t see anyone grappling with. When it comes to research operations, academics are not dispassionate parties arguing for what’s best for the world. Like oil companies and federal agencies, academics have their own vested interests: ample research funding, tenure, and the freedom to pursue research interests unfettered by bureaucratic red tape. These don’t always align with the government’s interests.
Bringing it back to climate tech, IP transfer from the US to China (legal or otherwise) has been a major driver of climate tech trends over the past few decades. Solar PV and lithium-ion battery costs have plummeted not because the US innovated so well, but because technologies developed in the US were scaled up dramatically in China. That’s fine to an extent – everybody gets cheaper solar and batteries. But there’s risk in relying on China, and there are measurable rewards to domestic scale-up.
As climate tech becomes the next battle in the US-China trade war, it looks like some enforcement is the cost of doing business.
Mutant seeds
Okay, one more. So this is happening:
Seeds of sorghum and cress launched into orbit by the International Atomic Energy Agency are tethered to the capsule via a thin metal box. That’s exposing them to more-intense solar radiation in a trial to induce genetic mutations so they can survive hotter temperatures, drier soils, spreading pestilence and rising sea levels.
“Most astrobotany until now has been to test how plants can be grown to feed astronauts for eventual space colonies,” Shoba Sivasankar, the IAEA’s head of genetics and plant breeding, said at her lab outside Vienna. “This experiment is different because it is designed to help people on Earth adapt to climate change.”
Absolutely wild. And it’s been working… for decades?!
Enter China, with almost a fifth of the world’s population but just 7% of its arable land. For decades, the second-biggest economy has been sending seeds into space aboard rockets and high-altitude balloons.
Scientists said the space seeds produce higher-yielding harvests of wheat, barley, corn, cucumber and tomato. The country is still testing samples from a 2006 mission carrying 130-plus species, and a joint mission with Pakistan last year returned medicinal-plant seeds to the University of Karachi.
Let’s take a step back. One of the reasons life has flourished on Earth is that the upper atmosphere does a good job absorbing most of the harmful ionizing radiation (X-rays and gamma rays) before it reaches earth. But a little bit of ionizing radiation does manage to slip through. When ionizing radiation interacts with a material, it plucks out some of the material’s most tightly held electrons, leaving behind “holes” where the electrons used to be. These holes cause a flurry of activity, with electrons racing around to fill the holes left behind by their departed neighbors. Most of the time, everything falls back into place.
But sometimes, a few electrons end up making or breaking chemical bonds, and if that happens inside a living cell, things start to get interesting. When ionizing radiation causes chemical changes in DNA, now you’ve changed the codebase of a living organism. Even so, this is still fine most of the time! Large stretches of DNA aren’t very important, and cells have DNA repair machinery. But occasionally, you get important mutations that aren’t fixable, and suddenly the cell can’t produce a protein it needs, or it starts producing a new and improved protein, or it figures out how to reproduce more quickly and drive faster germination. By stringing together several low-probability events in a row, cosmic rays actually generate biodiversity.
Back to space seeds. The thinking behind the enterprise is roughly: more cosmic rays mean more mutations, faster breeding, and better chances at developing crops resistant to climate threats. There are more cosmic rays in space than on earth, and we can go to space relatively cheaply, so why not?
But it begs the question: why stop at space? We have radiation at home. Put seeds in front of gamma rays! You’d obviously want to calibrate your efforts, but it seems like a faster and cheaper way to get the job done. Alas, a spot-check of the research shows mixed results. Seems like an opportunity to me.
Anyway, surely this is regulated?
Unlike newer techniques that genetically engineer DNA with tools like CRISPR, inducing mutations with radiation is considered natural. Therefore, the seeds aren’t subject to the same market restrictions as genetically modified organisms, or GMOs.
What a rollercoaster. I’m surprised the nuclear crowd isn’t all over this.
Elsewhere:
“The decisions that govern our fate are made not in Washington D.C., but in Beijing.”
Phosphorus saved our way of life – and now threatens to end it
Thanks for reading!
Please share your thoughts and let me know where I mess up:
95% of the market is compliance-based, where states require utilities to purchase RECs consistent with the state’s renewable energy targets. The remainder is voluntary, where households and companies can purchase RECs if they choose to.
There’s more nuance here. 1) It’s a bit arbitrary to draw the box around the grid. Emissions are emissions, whether they come from a power plant or a tailpipe. 2) EVs are much more energy-efficient than ICE vehicles, so even EVs powered by fossil electricity will lead to overall emissions reductions. 3) Electrolyzers are not like EVs; electrolyzer-produced hydrogen can be much more polluting than fossil-produced hydrogen.
If you make gray hydrogen and then capture the carbon, you get blue hydrogen. I don’t make the rules.
Consistent supply is a key requirement for many of the high-impact hydrogen uses and hydrogen infrastructure (for example, liquefaction facilities).
Disclosure: Electric Hydrogen is an Energy Impact Partners portfolio company.
I’m skeptical about the $200B figure; seems high.