From Carbon Capture to ESG: The Seven Deadly Sins of Clean Energy – CleanTechnica

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Recently I sat down virtually with Laurent Segalen and Gerard Reid, investors, bon vivants, and hosts of Redefining Energy, the main channel to my nerdcast side channel Redefining Energy—Tech. The reason? A fun episode of their podcast where we talked about sin, energy, and investment.

Laurent Segalen [LS]: Today on Redefining Energy. This is a super special show for the end of the summer. Gerard. What are we going to talk about?

Gerard Reid [GR]: We’re going to talk about the seven deadly sins of the energy world.

[LS]: And in order to do so, we need to bring our blue flame thinker, our friend, colleague from Canada, Michael Barnard.

Michael Barnard [MB]: Welcome, welcome. I’m so glad to be here, as always.

[LS]: I don’t know who coined the term “seven sins.” It was Pope Gregory or someone in the sixth century. We decided—I don’t know exactly who, because we were exchanging ideas during the summer and it just popped up—to call it the seven sins of the energy transition.

[GR]: It must have been me, because I’m the creative one. Just so you know, it must have been me.

[LS]: That’s for sure. It was not me.

[MB]: I certainly remember it being Gerard who was pushing for it.

[GR]: It was somebody else that came up with the idea, but it was very good.

[LS]: The seven sins are, Michael?

[MB]: I’d just like to say that assertions I have personal and extensive experience with all of them are completely true. The list is greed, gluttony, sloth, pride, lust, wrath, anger, and envy.

[LS]: Okay, I know you were educated in the seminar, but how does it translate for investment?

[MB]: For investment, what we have to think about is that sins are the things we’re really subject to, which aren’t good for us or for others around us. In the energy world, as we consider the exemplars of sloth or greed, we have to say that if the analogy fits, then it’s going to hobble your investments.

[LS]: So what are they, please? Number one, number two. Number three.

[MB]: As we go through these: for greed, we have carbon capture and sequestration and direct air capture. Avarice and pipelines.

For gluttony, nothing fits better than hydrogen—the calorie-bomb energy carrier.

For sloth, it’s nuclear and small modular reactors.

Then there’s pride: fusion, hubris with a torus. It’s very interesting research, but it has nothing to do with the energy transition or decarbonization.

For lust, biofuels everywhere—the drop-in siren song. It’s a nice idea that we don’t have to replace the engines or the vehicles, but while we need biofuels for the really hard-to-decarbonize segments, we’re just going to electrify everything else.

Then there’s wrath. This one leans into the United States right now, canceling offshore wind. It’s a reprise of rage against the turbines.

And finally envy: the greenwashing cosplay of the past five years of ESG reporting. As somebody said, “I’ve got a guy in the sub-basement who fills in those forms for us.”

So that’s the list.

[GR]: Well, why don’t we start with greed, which I’d describe as subsidy mining in a lab coat. You might call it carbon capture and direct air capture, but for me, it’s subsidy mining.

[LS]: No, no, it’s regulatory capture, not carbon. Because they capture more subsidies than CO2.

[MB]: I have to say, the entire Climeworks scandal—where they can’t actually get it to work and the expected targets are such a tiny amount—shows that they’re going to be capturing and sequestering less CO₂ than it costs to capture and sequester it. In terms of emissions, it’s just a dead end. While 420 parts per million is really problematic from a global warming perspective, it’s also an engineering problem. It’s like trying to strain a drop of urine out of an Olympic-sized swimming pool. You just have to accept that’s going to be hard.

[GR]: Michael, what I’ll add to this—and I’d like to hear your thoughts on it—is that here we are during this podcast, and Germany is bringing in carbon capture regulations.

[MB]: We will need some carbon capture. It will pencil out in some places—for example, where there’s an industrial source of fairly pure CO₂ at reasonable pressures that can be put into a sequestration site directly underneath. That’s probably going to be a cheap way to do it.

If we think of electrified cement, or the Sublime process—the electrochemical process that produces a fairly pure stream of CO₂—located beside the ocean with a pipeline leading to offshore sequestration, that actually pencils out as fairly low-cost, low-carbon cement.

But unless you have a sequestration site directly under the facility, or you’re on the seashore with a pipeline offshore, it just gets more and more expensive and less likely.

[LS]: At the end of the day, it’s just cost—except when you do enhanced soil recovery, which has been going pretty well. Oxy is the big specialist in that. But otherwise, it’s basically asking the taxpayer to capture the carbon, and that’s pretty much it.

[GR]: Well, I love that. But on that note, it brings us to the next one: gluttony. I just love it—three kilowatt hours to make one kilowatt hour. And I know you two guys love this topic.

[LS]: It’s hydrogen. There’s a lot of technical conversation around it, and I’m not a technical guy—I’m a trader. What I do know, and I’ve checked on ChatGPT and elsewhere, is that $1 per kilo of hydrogen equals about $50 per barrel of oil in terms of energy content. You can say, no, it’s 48.9, but I round it to 50 because it’s easier.

So you’ve got these guys saying, “Oh, that’s great, we’ve got hydrogen at $8 per kilo.” I say, okay, fine—$8 per kilo means you’re trying to sell a barrel of oil at $400 per barrel. The market price is 60. Just tell me who’s going to pay the $340 difference? It’s just too expensive, period. It is, once again, regulatory capture.

[MB]: The nice thing about hydrogen is that while many people invested in its narrative, it was based on the false assumption that green hydrogen would be cheap. If hydrogen could be delivered at a dollar per kilogram, that would work. But in the 2010s, people asked, “How cheap does hydrogen have to be in order to be used?” and then invented a bunch of ways to make it seem like it could get there.

They were invested in the idea of $1 per kilogram hydrogen. Instead of saying, “Well, we can’t get there, it’s never going to get there,” they kept pushing it. I did the math and figured it out back then. If they had done the same, they wouldn’t have spent the last five or ten years trying to make hydrogen into something it’s not—an energy carrier.

[LS]: I’ve got some funny numbers. In Australia, two years ago they booked 5 gigawatts for electrolyzers—out of which they’ll get zero. Now those 5 gigawatts have been shifted to AI and data centers.

They had projects in Australia, Gladstone, Fortescue. In Germany, ArcelorMittal canceled, E.ON canceled. In the US, BP and Exxon canceled their projects. Air Products canceled, and the CEO had to be fired. ThyssenKrupp, Nucera—projects abandoned. Repsol too. It goes on and on.

Whatever money you throw at it, people just won’t do it. So for me, it’s dead.

[MB]: We can see this with the major industrial players that were supposed to drive demand. Stellantis walked away from its hydrogen Sprinter vans and is now saying battery electric for the entire range. Airbus walked away from its hydrogen aviation efforts.

What we’re seeing is that everyone trying to make hydrogen work as an energy carrier on the demand side is discovering it doesn’t. There are probably as many hydrogen bus fleets sitting idle as there are in use.

Another case in point: Lower Saxony’s passenger train organization famously ignored the neighboring province’s assessment that hydrogen trains would cost three times as much as battery-plus-overhead hybrid systems. They bought 14 hydrogen trains from Alstom—only four are in operation now. Alstom can’t get new fuel cells from Cummins, which took over the hydrogen fuel cell manufacturer.

[GR]: Great, guys. I want to talk about sloth, and it’s one of my favorite topics because it’s always on time and always on budget—and that, of course, is nuclear. So where do we start? I want to start with 2029. The first SMR is meant to be online. What do you think—will it actually be on in 2029? Or will it be 2039, or 2049? And will it be on budget or not?

[MB]: Well, pick the project you’re referring to. Which one—the one in Ontario?

[GR]: The one in Ontario.

[MB]: Yeah, the one in Ontario. SMRs are interesting. The premise of small modular reactors was that the problem with nuclear was big reactors—that’s why they went over budget. Instead, the idea was to build small modular reactors in factory-like settings and churn them out like Cracker Jack boxes.

But it’s been funny to watch. SMRs were originally posited to be 20 to 70 megawatts in capacity. All of those have fallen by the wayside. Now a “small” modular reactor is 300 megawatts. And 300 megawatts isn’t particularly small. It’s a third the size of a typical gigawatt-scale reactor. At 300 megawatts, it’s still a multibillion-dollar construction project. It’s not something you manufacture and deliver.

A big part of the SMR theory was Wright’s law: every time you double production of a manufactured object, costs go down. For more complex objects like fuel cells, it might be 10%; for solar panels and batteries, it’s about 20%. But with a 300-megawatt nuclear reactor, you’re just not going to build that many. It’s more of a custom engineering project, so you don’t get the economies of scale or the experience curve. Without the doublings, it loses out time and time again.

[GR]: Still didn’t answer the question though. 2029—will they do it? It’s a Canadian project. Are you going to back your fellow countrymen?

[MB]: It’s true. I’ve been to that site—Bruce Nuclear—and I will say it’s a wonderful jobs program for the 12,000 people there. But it’s not going to benefit Ontario’s electrical generation. If it’s up and running by 2035, I’ll be surprised. They haven’t started construction.

[GR]: I love it. I love it. Laurent, give me a number. Give me a year.

[LS]: They will put it out. I really wonder about the cost, because the all-in cost of new nuclear is already $200 per megawatt-hour, and those guys might be even more expensive—$300, $400. If somebody’s willing to pay five times the market price, that’s fine.

What fascinates me is not Hitachi or Rolls-Royce—and by the way, those are mostly submarine designs that have been reshuffled—it’s all the startups: NuScale, Kairos, X-energy, Terrestrial, LeadCold, Oklo, Ultra Safe Nuclear. And then I see Breakthrough, OpenAI, Amazon throwing a lot of money at them. That’s fascinating.

[MB]: The US venture capital industry has become a great way for people to get rich without delivering anything. If you can get funding, the Wall Street guys make money, the venture capitalists make money—maybe. It doesn’t seem to matter much. If you can get a big VC like Breakthrough to put $500 million into your fund, you can coast for years without delivering anything.

[GR]: That leads us to pride. And the way I would describe pride is: we will bottle the sun, we will go back to the source of all energy. What’s that?

[LS]: Fusion.

[MB]: I agree with that premise. We are going to bottle the sun—we’re going to work off fusion energy—but we’re going to position it at a safe distance, about 93 million miles away. We’ll rely on its gravitational pull to keep us in the Goldilocks zone, where enough energy reaches us to warm us out of glaciation but not bake us like Mercury. We’re going to capture that fusion energy. I think that’s what we’ll do. But yes, we are going to depend on fusion energy.

[LS]: If I look at the startups: Helion Energy, $500 million raise backed by Sam Altman; Commonwealth Fusion, $2 billion; General Fusion in Vancouver, $20 million; Tokamak Energy in Oxfordshire, $172 million; Zap Energy, $330 million; Renaissance Fusion; Microfusion; TAE Technologies, $1.2 billion. This is absolutely phenomenal.

And then there’s the disgrace—the ITER project in France, which is what, 30 years late and 20 times over budget?

[MB]: The budget is up to about $80 billion now. I looked into it a couple of years ago because its target for success—set for 2040—is to maintain fusion for five minutes with thermal net energy delivery. But thermal net energy delivery means that if you actually bolted a generation device onto it, the amount of energy required to run the process would be equivalent to the electricity you’d get back.

So their target for sustained fusion is five minutes with no net electricity delivered. All these breakthroughs you hear about in fusion—when you look closely, nobody’s actually doing fusion yet. We’ve just reached the point where really hard, weird engineering problems are being exposed. We are so far from making it work.

I always say there is a place for fusion energy—we’ll need it in spaceships past the orbit of Jupiter sometime in the next 200 years. I’m glad research departments are investigating it and that money is being spent, but it has nothing to do with the energy transition.

[GR]: Well, that brings us to lust—and what we really want to talk about here are the drop-in fantasies for every engine: biofuels. So where do we start, guys?

[LS]: All biofuels started about 25 years ago. First, you have two big ones: sugar-based ethanol, which is in Brazil and relatively cheap; and corn-based ethanol, which is an absolute disaster. Half of the corn acreage in the US goes into biofuels.

Of course, this was designed at a time when the US was importing a lot of oil, peak oil fears were strong, and people thought oil would hit $300 a barrel. Big Agro was there, and corn-based ethanol became the “solution.” That created a constituency. Plus, as you know, the first round of the US election is in Iowa—and Iowa is big on biofuels. So the system fossilized itself.

In Europe, I think at some point they said, okay, stop the blending. But even today it’s still designed for a barrel of oil at $150. Since oil is much cheaper, they have to force it into the system through blending mandates.

[MB]: Michael, I’m actually a strong advocate of biofuels for SAF and maritime fuels—without going too deep into that subject. But I have to say, some of the first-generation biofuel stuff led to a lot of negative press that doesn’t hold up once we start looking at second- and third-generation biofuels.

We’re now at a point where we can dual-crop. We can take the corn husks and stalks, feed them into biofuel processing, and get ethanol or methanol, while the corn itself goes into the food system. That turns agricultural waste into a valuable product. Similarly, we can put corn stalks through biodigesters and create biomethane for manufacturing methanol, long-duration energy storage, and other uses.

I think the demonization of biofuels as agricultural food displacers doesn’t stand up to scrutiny. Europe is far too precious on the subject. It’s just calories—whether consumed by animals, humans, or motors. We need calories of some sort, and we need liquid fuels of some sort in the future. But imagining we’re going to run trains, trucks, or cars on them—that’s nonsense. All ground transportation will electrify directly with batteries.

[GR]: So Michael, I certainly agree with you, and I’m not going to add anything to that—but I will. What I really want to talk about is wrath, and in particular the wrath of Mr. Trump. What’s he got to do with our space? It’s what we call the culture war at sea.

[LS]: Offshore wind. We just had a series of bad news for Ørsted, the biggest European developer in the US. They took on 5 out of the 30 gigawatts of projects, and their cancellation in New Jersey cost them a lot. Now their Revolution project, which is 80% completed, has been stopped. They’re trying to raise money, but the dilution is going to be phenomenal. So I’m just going to say one thing: Equinørsted.

[GR]: Very good, Laurent. Could happen, could happen.

[MB]: I’m going to lean into something else—I’m going to blame golfers. A lot of the rage against wind turbines comes down to golfers being pissed off at missing a putt, or something about golfers.

A lot of Trump’s anger about wind turbines comes from when he was building another golf course in Scotland. At the same time, far offshore, a wind farm was planned. Some golfers on the tee would see a turbine blade or two on the horizon. That turned into 14 years of Trump thinking wind turbines are the devil’s pitchforks and fighting them constantly.

Trump doesn’t care if what he says is true. He cares if it lands like a wedge shot—communicating something for votes or gain at the moment. So when he attacks wind energy, he’s feeding the anti-wind ragtag band of zealots in the US, telling them what they want to hear. He’s also telling fossil fuel industry folks worried about displacement by renewables what they’d like to hear.

Except the fossil fuel industry doesn’t want wind and solar to go away either. In many cases they’re invested in them. They need electricity to run their facilities, and they want cheap electricity—and wind and solar provide that. So Trump is irrational on the subject, but he’s feeding into the irrational in the United States.

[GR]: There’s another view I’d like to talk about on offshore wind—the economics. If I look at the United States, I wonder: why do you even need it? North America already has so much low-cost electricity, whether from gas, wind, or solar. So why do it? That’s my thinking on that.

And by the way, sorry if I sound like Trump as well, but offshore wind is the easiest fight to pick because all the players are foreign. So it’s a win for him in every way.

[MB]: It’s not true though. GE Vernova has an offshore wind farm in operation.

Second, you’re forgetting that the United States is finding it impossible to build transmission. They’ve got all that lovely wind in the prairies, but they can’t get it to the coastlines. It’s much easier to put a submarine HVDC cable from 30 kilometers offshore into New York than it is to run one from Iowa to New York.

[GR]: And that’s a fair point. You could also say, well, let’s just put undersea cables along the East Coast and move electricity that way. But the US—you know as well as I do—it’s very difficult to get anything done because it’s all state-level policies. You’ve got state interests that aren’t aligned with neighboring states, and it’s just really complex.

[MB]: After talking to Jigar Shah a couple of years ago, early in his role with the Department of Energy’s Loan Programs Office, my takeaway was that the United States has devolved the ability to say “no” down to the county level—and often to the individual. Transmission is a victim of that.

[LS]: If I compare it to the North Sea—where you have shallow waters, an existing oil supply chain, and an established energy region—people didn’t hesitate.

In the US, as Gerard says, they’ve got so many options that any push becomes extremely political, and the moment politics shift, everything changes. I think the European developers who went from the North Sea didn’t grasp the difference in mindset. They assumed that because people spoke English, they thought the same way. But they didn’t.

So offshore wind in the US—our heart is bleeding for Ørsted, but it’s lost for our generation.

[GR]: Let’s move to the last one: envy. This is really my pet hate—ESG box-ticking.

What we’ve seen in the last few years is companies chasing ratings and labels, telling the world they’re better than their competitors and peers. But is that real-world decarbonization? I don’t think so. Has it really improved the way businesses are governed? No. Has it really had a positive impact on society? Questionable.

[MB]: My exemplar for this was when ExxonMobil scored high on ESG rankings and Tesla didn’t. There’s a lot to say about where Tesla and Musk have gone—labor practices weren’t great—but this is the leading driver of electrification of transportation in the world. Tesla created the industry as much as anything else.

Tesla also does battery storage and solar at residential, commercial, and utility scale. By most standards, it’s a very virtuous company. So when it fails the ESG ranking, there’s probably something wrong with the ESG ranking.

[LS]: Well, as you reminded us at the beginning, the guy who said that was the CEO of Glencore—you know, ESG, the guy ticking boxes in the sub-basement—yet it created such a bureaucracy. It’s absolutely insane, the bureaucracy ESG has created. Of course, the European Commission has piled on laws, and it’s totally out of control.

But anyway, I’d say it should be EWP. We need electricians, welders, and plumbers—not ESG specialists. EWP: electricians, welders, and plumbers.

[GR]: I like it.

[MB]: I will say that right now there are a lot of indicators that, now that we’re past the ESG bubble, real consideration for doing the right things is still proceeding—because ESG was well-intentioned.

One example is that despite Trump being in office and saying “drill, baby, drill,” Wall Street has cut funding for fossil fuel investments by 25%. Many billions less are flowing into the fossil fuel industry from investors than a year ago. That’s a very good sign.

I’d also say there’s a lot of green hushing going on. Many corporations are decarbonizing their operations, but it’s not being touted right now—it’s not the time to tout it. They know the needle will swing on this. They know they need to do it, and they know they’re at risk globally, regardless of what the US does.
Big corporations have to operate around the world. If the US becomes a retrograde pool of polluted smoke and carbon dioxide emissions, that doesn’t mean much when they also have to operate in China, Indonesia, Australia, and Europe.

[GR]: Michael, what I’d like to add—just putting my economist hat on—is: what is ESG? What was it about? The E is environmental and the S is societal. And there’s no doubt we have what are called externalities—economic life as we know it can have negative impacts on societies and the environment. So being able to measure that and show it to investors makes a lot of sense to me.

What governments tend to do is tax—tax pollution, for example. That’s how we generally deal with it. But giving that visibility is very important.

The G, though, is very interesting for me. You gave the example of Tesla and Exxon. Tesla scored badly on the G. Why? Because you could argue the corporate governance is not good, based on the way they’re rated. But I’d ask: why would you invest in a badly governed business in the first place? Governance is also about management and leadership. Why wouldn’t you make that a key task of a fund manager—investing in good businesses?

Somehow the G got completely mixed up—not just governance, but diversity and a whole pile of other areas that aren’t actually about good governance and business leadership. I think the G is the piece disappearing. The E and the S—most people across the world will say, yes, we do have to address those.

[LS]: Take care of the E and the S, yes. But the G has been totally trampled by Silicon Valley. Now there are the “god founders” with 10 votes per share, and they’ve had so much success over the past 15 years in terms of wealth creation that nobody cares about governance anymore—as long as the stock’s going up.

[MB]: What I will say is that in the United States there was a shareholder-only governance model for a couple of decades—from the ’80s through the 2010s—and that is starting to shift. They’ve got B Corps and other types of corporations that allow fiduciary responsibility not just to shareholders but to multiple stakeholders, including employees and the societies they operate in.

So we are seeing a broadening of that model, and shareholder-only rights in the US are fading. There’s a revolution happening, and the US is moving more toward what Europe is doing. I think that’s positive.

[LS]: Okay, Gerard, can you summarize the seven sins of the energy transition before we wrap up?

[GR]: I can indeed. To summarize:

• Greed: questionable carbon capture technologies.
• Gluttony: hydrogen.
• Sloth: particularly small modular reactors, but really nuclear in general, since they haven’t delivered on time or on budget for the last 20 years.
• Pride: taking energy from the sun—best done with solar panels, not fusion. Fusion is fine for science, but don’t budget on miracles.
• Lust: biofuels everywhere. They’re important, but let’s keep them for the hard-to-electrify edges, not as a universal fix.
• Wrath: what’s happening with offshore wind.
• Envy: ESG box-ticking, which we all hope will change in the next few years—and as you said, Michael, governance already seems to be undergoing a revolution.

[LS]: Okay, guys, it was a pleasure talking to you. Have a good evening.

[GR]: Enjoy the rest of summer.

[MB]: Thank you. Take care.