The Sustainability Reinvention of the Movement Economy Has Begun
Much of the economic activity in our world moves atoms or electrons — this ranges from transporting across oceans the computer (e.g. atoms) that you are viewing this very moment to powering (e.g. electrons) the Internet server farm presenting this article. Other sectors include commercial trucking, air transportation, heavy industries, mining, agriculture, construction machinery, iron-ore reduction, energy-intensive industries, and on and on. In short, half or more of the world’s energy usage is for moving atoms and electrons — the Movement Economy.
The Energy Density Gap
Alas despite exponential advancements in renewable energy, the fundamental gap in energy density between fossil fuels and renewable energy storage (in the form of batteries), has held back the Movement Economy from being reinvented as an environmentally sustainable one. Hydrogen held out hope for filling this gap, but producing hydrogen was neither cheap nor clean, as 95% of hydrogen is produced by burning other fuels.
This changed in 2019
During 2019 Hydrogen became cheap and clean, and this, in turn, unleashes the entire stack of renewable energy technology for the wide-scale reinvention of the Movement Economy.
Hydrogen became cheap and clean — so-called Green Hydrogen — because the cost of renewable energy became cheaper than fossil fuel energy, and the supply of it expanded outpaced the ability to store it to the point where states such as California, enforces curtailments of its generation.
Sources: Large battery systems are often paired with renewable energy power plants. May 18, 2020, by the U.S. Energy Information Administration. Renewable Power Generation Costs in 2019 (page 13) dated 2020 by the International Renewable Energy Agency.
Below is a plot of the curtailments regularly going on in California — literally megawatt-hours of energy being tossed for want of long-term storage such as hydrogen.
Sustainability Impact
The two charts below project the impact on the world’s sustainability of just the green hydrogen part of the renewable energy stack on the Movement Economy. Notably, the first chart predicts that green hydrogen’s potential impact on reducing the environmentally harmful effects of aviation is not just in the reduction of CO2 emissions, but also environmentally harmful contrails.
Moreover, the benefits to the world go beyond even sustainability. The decoupling of countries and economies from the few centralized sources of fossil fuels to locally generated and stored energy reduces global conflict. It also spells employment not just for millions of people, which is good unto itself, but these new jobs are inherently distributed around the world, taking a swing at income inequality as well as boosting economies.
Business Drivers
While governmental and societal pressures to change are good unto themselves, business drivers make things happen quickly, and already, business drivers are manifesting. Case in point is fork trucks — the machines that move stuff in the millions of warehouses and factories around the world. Companies are already replacing the (zero-emission) batteries in fork trucks with hydrogen fuel cells. Since both are zero-carbon, companies are doing this because hydrogen has business advantages. There’s actually a long list of advantages, but one that makes the point is there’s essentially negligible energy-replenishment time with hydrogen storage, and hence, in turn, the much more utilization of a given fork truck. In 2020, According to the CEO of Hydrogen technology company Plug Power, 30% of the food that goes on the table in the U.S. every day, has been touched by a hydrogen-powered fork truck.
Already things are happening
Major ocean carriers have recently announced plans to switch their terribly atmospherically dirty diesel freighters with hydrogen-powered ones. Similarly, where green energy (i.e. just using batteries) previously lacked the range for commercial trucking, companies such as Nikola have been launched in partnership with major companies to provide trucking using renewable energy and in particular, hydrogen; the first zero-energy beer shipment was completed this past November by Anheuser-Busch. Zero-emission beer delivery is in our future!
According to a study by Wood Mackenzie done earlier this year (i.e. the numbers have only increased since then), businesses have already committed to projects aggregating to a twelvefold increase in hydrogen generation capacity in just the next five years.
Within the past few months, governments and companies have put real commitments behind reinventing the Movement Economy:
- In June, the California Air Resources Board adopted a first-in-the-world rule requiring truck manufacturers to transition from diesel trucks and vans to zero-emission vehicles beginning in 2024.
- In June, Germany announced a National Hydrogen Strategy that sees reformulating entire value chains and international trade with Green Hydrogen. This strategy includes €7 billion to support German Hydrogen companies and €2 billion to support international partnerships and a 200-fold increase in Hydrogen Electrolyzer capacity by 2030.
- In June, Europe’s largest utility, Enel announced it will be installing Green Hydrogen electrolyzers as part of its plans to become carbon-free by 2050.
- In June, a joint venture of Engie, Michelin, Credit Agricole, and Banque de Territoires announced that it will finance, build and operate Zero Emission Valley (ZEV) including the deployment of 1,200 fuel-cell vehicles and 20 hydrogen stations by the end of 2023.
- In the past three months, major companies around the globe announced that they are switching all future business developments to green-energy based ones.
Similarly, capital is suddenly available to back hydrogen-based startups. Major companies have started acquiring or investing in hydrogen businesses, and the market value of eight publicly-traded hydrogen companies doubled in the first six months of 2020.
Calling All Entrepreneurs
The transformation of the fossil fuel automobile industry into the electrical one that it is racing to become today was caused by an industry outsider with ideas outside comfortable norms, and who got a footing for his innovation in a market that was too small and different to be considered by the existing industry players. Moreover, Tesla didn’t just disrupt the industry with an innovative product, but effectively blew-up the very structure of the industry, changing the century-old dealer network with direct sales, and similarly obviating the entire practice and industry structure of tiered component suppliers, with a completely inhouse stack.
A similar opportunity exists for entrepreneurs in the Movement Economy and the thousands of industries in it.
For example, the reinvention of the aviation industry isn’t going to occur by the incumbent air transportation industry replacing its airplanes which will take decades even to get off the drawing board, but rather start with short-hop services using new VTOL (vertical landing and take-off) aircraft, and then expand from there…. much as Tesla got it footing in a niche market for high-end sports enthusiasts and then progressed to the general consumer market. To be clear, just this one different path implies opportunities for startups providing the actual air service, producing the VTOL aircraft, maintaining the hydrogen power supplies, and fuel cells specifically optimized for aviation needs.
Ditto for the power industry. Currently, the power industry including infrastructure, pricing, regulation, employment, and so-on, is set-up around a highly centralized generation, whereas renewable energy power is inherently better (i.e. more reliable, safer, and less expensive) with distributed or even localized generation. Once again, this poses opportunities for entrepreneurs unconstrained by industry norms to create a business with inherently superior product offerings, pricing models, and service operations.
The entire massive Movement Economy is at the forefront of orders-of-magnitude innovation and self-enforcing demand drivers, as for example, as with each new application or innovation in base technologies, the capital costs for a given output goes down, which in turn opens up more applications and fuels more innovation — likely for decades to come.
In short, the starting gun has just gone off for thousands of entrepreneurial opportunities, but in this case, one that actually saves our planet.
Update
After publishing this story….
- The EU Approved €500 billion for climate-change programs.
- The UK announced £350 million to address greenhouse gas emissions in Heavy Industry, Construction and Transport.
- The largest renewable energy generator in the United States, NextEra Energy, announced that it plans to build its first green hydrogen plant; committing $65 million to do so.
- Power Innovations announced successfully powering a full Internet data center with Hydrogen Fuel Cells.
J. Neil Weintraut is a partner at Motus Ventures, a venture capital firm focused on reinventing the Movement Economy. Neil can be emailed via neil@motusventures.com
