You're listening to Redefining Energy. Your co hosts from Berlin Girard Reid and from
London Lawrence Sagalem, episode one on one, and today we're going to talk
about high run, We're going to talk about carbon, we talk about emission
innovation and guess what, back to the beginning right one on one, So
number one again we have a special partner today, these our friends from Pixa
Park. Pexa Park is a Swiss fintech starter that provides software and adversary services
for vulnerable energy sales. The company's platform simplifies the process of PPAs for wind
and solar power and picks up our tool enable portfolio management, lobal transaction,
cost and risk control measures. Back to the show, solo arm, where
do we start? While I think we're going to start by the basic when
we talk about steeler First, every industrial sector uses steel still has a bit
of a problem. It emits one point eight ton of CU two a ton
of steel. And right now there's a lot of stick and carrot policies all
over the place in the US, in the EU to decarbonize steel. But
what we hear a lot is that, oh it's hard to decarbonize, so
we wanted to see if somebody was not writing reports about it, but doing
something about it well around. Actually the best thing to always get involved is
the guys are at the cold face and somebody like us a towel the second
biggest steel producer in the world. They are the guys that are at the
cold face. So I think it's really good to get someone from somebody like
them in and we managed to do it. Yeah, And what's quite interesting
inside arsl Or is that their own venture capital fund called the x carb Innovation
Fund, and through that fund, the invest tens of millions in the three
major route of the carbonization of steel, which are clean electrification, direct reduction
of iron, and smart carbon. So we're going to talk about all the
future technologies like advanced nuclear, long duration storage, hydrogen, carbon capture utilization,
and a lot of others long term intivation in the making. Who were
bringing on, Maybe you can talk about who we're going to bring on.
Yeah, our guest is the very talented Irina gobu Nova. She's vice president
M and A at Arcelo Metal and she's the head of the x CAP Fund.
And it's really key to have an investor with that dual background, so
both VC industrial at the time where VC funding is down seventy five percent.
Y're on there, Yeah, you're right, So let's have a listen.
Irena, welcome back for the first time on our show. Hi. Hello,
Hi, good to have you, to have you, good to have
you, Thank you for having me. Let's jump right in here. Look,
what we want to talk about is steel, the steel industry and how
to decarbonize, because you look at it from a big picture, we all
need steel, but you also need to burn energy to create that steel.
I look at it as one of these hard to decarbonized sectors. You work
for the second biggest steel producer in the world, so I'd love to hear
your view on how the industry decarbonizers and what the future versions. Indeed,
speaking of big pictures, steel is going to be so fundamental for the energy
transition. And I don't know if you know that eighty percent of the components
of the wind turbine and related infrastructure is made of steel. And of course
you also need it for the solar panels, for electrical vehicles, for the
lower carbon infrastructure buildings, etc. So as such, it's absolutely critical and
absolutely fundamental to the energy transition. But then, of course there are challenges
to your point about burning energy because most of the steel, the way it's
currently produced results in a very significant carbon footprint. According to the World's Steel
Association, I think it's close to one point eight tons of S two is
currently emitted from the steel production per ton of steel. And you know,
whenever I speak at the conferences, I always ask for two numbers. One
is the global steel production annually, and again according to the World Steal Association,
it's one point nine billion last year, so just below it to billion.
And I just gave you the number of seal two immediate per ton of
steel, so you can do the mass. And this translates into anyway between
seven to eight percent of global seal two emissions, and that's quite a significant
carbon footprint, which is a challenge, but I view it as an opportunity.
It's an opportunity for us to really make an impact and find the way
how we're going to decarbonize steel and how we're going to ensure that we get
to the net zero in the most optimal pace. So then the question I
ask is how do we tcabanized stal production as a group group, we pledge
to become a carbon neutral by twenty fifty. We also have intermediate objective to
reduce our emissions by thirty five percent in Europe by twenty thirty, which is
again quite an ambitious target given the numbers I just quoted, and we have
developed a very robust, very comprehensive roadmap how to get there. When I
think about this big picture, it's like it's not just one solution, rights,
It's like a giant puzzle where you need to put all these pieces of
the puzzle together in order to get to this complete at zero picture. And
I think on one axcess, it's really the whole value chain around still making
and data access is all the its technology, it's economics, standards, its
partnerships. So there are a number of things that need to come together in
order to get there in a most efficient manner. So as a group,
we are developing a number of technology pathways. There are three ways how you
can produce low carbon steel. One and it's really, you know, one
of the great credential of steel. It's infinitely recyclable. So if you recycle
steel and then use renewable energies the energy source you can get to pretty much
minimum covered footprint in the steel production. The second route that we're developing is
innovative DRI. DRI stands for direct reduced iron so we use green hydrogen to
reduce iron ore in the production, so we use green hydrogen instead of natural
gas, and that's where innovative part comes. And the third way is what
we call smart carbon, where we'll leverage where we utilize ccus in order to
produce low carbon steel. There is of course also a fourth wave, which
is direct electrolysis, and we also developing a project called cider vin where we're
going to use electricity to reduce iron ore in the process. What I like
about your approach are now you see those three ways and it's full of academic
paper and research, but again these are just reports. And here you're putting
money where your mouth is, which means you have this innovation fund at Arcelometer
and you're in charge of it, and you are making investment in all those
various options and sources. So rather than talk in a very general way,
can we dive directly into the type of solution you're investing into and try to
see what's in the short term, the medium term, the long term,
So what do you want to start with before I start. I a couple
of days ago, I was speaking to one of the venture capital fund managers
when I told him that, you know, I have a strategic focus and
his response was like, oh, well, then you are limited because you're
only focus on still And I thought about it, and I thought, well,
it's not that it limited is not the word you will use here because
you really don't need to look at the whole value chain. And then,
regardless of the technology pathway that you take in all these technology pathways that we
talked about, you need clean energy. You need clean electricity, and that's
the reason one of the domains of focus for us is renewable energy. So
you know, from the fund perspective, Laurn, you're asking me about some
specific examples. For instance, we made an investment in terror Power, which
is an advanced nuclear company really working on developing this advanced nuclear reactors to produce
energy. And I think nuclear energy has to be part of the renewable energy
mixed. So that's one of the investments we made last year. And then
I think the issue with the renewable energy is its intermittent nature, and that's
the reason I remember in one of your episodes you made the statement saying that
storage is the name of the game, and I couldn't agree more. Our
still facilities required twenty four seven power supply, and we can't just rely on
energy when the sunshines and the wind blows, and therefore we need this consistent
supply and storage is so paramountly important. So one of our investment is in
a company called Form Energy. Form is developing a very interesting energy solution.
It's an iron air battery and if you look at the liberalized cost of storage
is one hundred times cheaper than lithium based solutions, just because you know,
iron is one of the most abundant and durable materials and like I said,
it's infinitely recyclable. So therefore Forms solution is really based on something which is
low cost, abundant and potentially offers a great solution for the greed. When
it comes to Form, it's not just plants, it's you know, you're
getting industrial now, So you're soon going to have a factory in the US.
Absolutely. In May Form Energy broke ground on their first manufacturing facility in
Birdon in West Virginia. So the construction is going to begin this year and
the plan for them to start manufacturing actually as early as next year. So
it's pretty impressive given the challenge around the energy storage, the low cost long
duration energy storage. So you absolutely right, it's happening quite fun. So
it's four day storage hundred hours, because of course Leja Mayon is very good
within say two four five at probably eight hours, but here we're talking about
hundred hours, so that changes everything. And even if the roundtree proficiency is
not as good as Likamyon, I mean, the cost are solo. It's
it's a totally different vision of energy storage. Absolutely everyone's saying, now we
need long duration energy storage, a multiday seasonal storage, and Form offers exactly
that. And again specifically it also partnered with Excel Energy already and Progrounds and
the first manufacturing facility. I'll send you the link to the life recording of
this groundbreak and ceremonial, which is quite impressive. I really the one thing
I'm really enjoying the conversation because I have a very clear view, which is
that we can sort out this climate dilemma and we'll do a true innovation.
And when I hear of Form and other businesses like this. It's just it's
the story that we need to get out to the world as well, that
it's a positive story that this isn't it's not just about deca it really is.
There is technologies here which are also going to enable you to I think,
to be able to do things at lower costs going forward or how do
you see this? Absolutely and this is something I'm so passionate about. It's
really to identify some of those cutting edge technologies that can support our energy transition.
And you're absolutely right. I think for Manage is one of those.
And I think generally, you know, as we look at our decorbanization during
innovation is going to be key. So maybe before I continue speaking about our
investments and knowledge is one of the point I wanted to makes. Since we
launched the funds, more and more we appreciate the uniqueness of our approach because
we had the company with the largest global footprints present in North America and South
America and Europe and India. We have joint ventures in China, so it's
truly global footprints. We have integrated operations, we have operations across the whole
value chain of stillmaking, and then the excitement comes from the complexity of the
challenge. But then looking at this innovation and really meeting some of the most
brilliant and bright innovators and startup companies, it's actually quite exciting. And I've
seen this excitement translating the whole company and how everyone is now focused on working
with some of those technologies and some of them startups. So I think this
is just something that makes us unique in the sense that we also have a
platform to try and test those technologists, to publish the technical viability and most
importantly the industrial scalability. But now let's pivot to one of ja than I
favorite subject, the h word hydrogen. And so first explain how does the
hydrogen in thescal process works in terms of the carbonization a type of technology you're
implementing, and how does it work hydrogen. One of the technology pathways that
we are focused on is DRI based on hydrogen, and we call it innovative
DRI. And the word innovative comes from the fact that DRI is actually known
process. Right you can reduce irono directly by blowing natural gas, and there
are facilities existed in the world that in the process of doing that. But
then the innovative comes from the point that you bring hydrogen, so you replace
the cooking call. Is that correct? To clarify, In blast furnace you
use coke and call to reduce iron ore. In DRI, you use natural
gas to blow and reduce iron ore. And the intention with hydrogen based DRI
is that you will eventually use hydrogen instead of natural gas to reduce your iron
ore in the process. But of course for that you need hydrogen infrastructure,
you need the valuability of green hydrogen. So that's something that is quite challenging
now. But I know that we are working on that and a lot of
other companies working on that as well, and we are looking at some of
the most interesting technologies that can we can use to produce green hydrogen. The
issue of the challenge rather is really around economics, and that's the reason.
One of the companies that got us excited was company called Age supprou It's an
Israeli startup developing a novel technology to produce hydrogen without using the membrane, and
membrane is one of the most costly components in the production of green hydrogen.
So instead it's a two step process to produce green hydrogen, which effectively increases
the efficiency to above nine. And it's also going to reduce the cost of
green hydrogen production to below two dollars or even eventually close to one dollar per
kilograph. Wow. So we have hydrogen and it's a process that you understand.
But here, as you said, the economics, and of course,
if you reach the one dollar pekilo or pakilo, now when I look at
the Platts assessment, where are more at nine dollar perko? So do you
think it's up to you to decrease the price of hydrogen or you're just telling
to all those suppliers guys, I take as much at rogen as you can
deliver me at two pekilo, but eight or nine perkilo go us for subsidies.
Absolutely right. So I think if you look at the price or the
cost to produce green hydrogen now is far from where each would be for us
to make economic sense. And I don't think it's just one factor that will
get us there. I think it's a number of things that need to put
together. I think initially I was referring to a puzzle where you need a
lot of pieces put together. I think that's exactly the same. Here.
You still have the gap which Bill Gates calls green premium, So that's really
difference between your fossil equivalent and your green equivalent. And since I start looking
at hydrogen, I can see the gap to an extent was reduced. And
given the technology advancements, given a policy the carbon tax, you know in
the future. Of course, you know once you scale some of those projects,
the cost will also go down. But nevertheless, the gap is still
huge and more efforts are required to really bridge it and get it to where
it should be. Can I ask you, because you know, if I
understand when you recycle seal, you use these electrics right to use electricity.
Do you see any possibility I've been able to use electricity for raw seal going
forward, or do you have to go the route of hydrogen. I suppose
that's a question I'm asking. Sure, this is a great question about electrification.
And I think we are, as I mentioned, working on a direct
electrolysis of iron ore process called sidering within our cellomtal and we also actually made
an investment. One of our latest investment was in the company called Boston Metal.
Boston is working on the molten oxite electrolysis process to produce low carbon steel.
And this is the process wherein the cell you have the nodes which is
immersed in an electrolyte containing iron ore and then it's electrified and then when the
cell heats to one thousand and six hundred degrees, the electron split the bones
in the iron ore and this results in the clean and really high purity liquid
metal that can be used directly to produce steel. Can I also go also
that there's another alternative. And the other alternative is you keep tuing what you're
doing, but you just take the carbon and storage. So how do you
see that as an alternative going forward? If you take some of our existing
facilities And actually I will give an example in a second, but we are
developing a smart carbon roots and this is the route that utilizes the usage of
CCUS. And the example I wanted to give is our pilot plant in Belgium
called still Anoll, where first of all we also use biomass, so we
take wood waste and then through the refection we produce biocoll which will then replace
the fossil call in the blast furnace. And we captured the off gases from
the blast furnace and using the bio fermentation technology of another portfolio company of ours
called Plants Attack, we produced bio ethanol and we have actually recently inaugurated it.
So it was December last year when the integration and of still an all
took place. And this is really an exciting technology where it's a great example
of circularity where you start with waste and you produce by a fuel for transportation.
You pronounced the name Lanzettack, which is for everyone working in the combanization
extraordinary and promising, but a bit of a black box. I think they
are listed now. They raised billions of dollar with great investors, so I'm
sure they've done due diligence. Do I understand that they're like bacteria or microbes,
I don't know what, and they just goggle the CU two and transform
it into flow sustainable eleviation fuel. Can you explain a bit what this whole
thing is? Did you explain it pretty well? Well? First of all,
they didn't raise billions, just to clarify, but they indeed listed recently
on NASDAG and it's a very interesting company with a great technology. But you're
right in a way that you know you have the microbes gobble, like you
said, some of those we recycled gases to produce biofuels. And you know,
they actually already have a number of commercial plants. They have a commercial
scale plants in China to convert waste gas from steel mills into ethanol for transportation
fuel blending. And then of course you know I just mentioned our project in
Belgium, but that's exactly the technology. So you have the bio fermentations.
It's like I think the company itself comparing it to brewery, where you'd say
the gasses from the steel militerations and then through this bio fermentation process you can
produce biofuel. Well, thank you for this Panohama of the different technology.
So that's a tough question. But which one you see like in the short
term, the medium term, the long term, because I guess they have
different horizons. You're right, they do have different horizons. I think,
you know, we're working on all of those solutions and parallel some will be
radio for commercial deployment and commercial productions sooner rather than later. I think.
On the technology pathways for steal, obviously you can and we are readio recycling
this steal and if you use renewable energy. For this, you will get
to pretty much the minimum carbon foodprint now, and I think direct electrolysis is
a little bit further ahead, so you need to get the technology to the
necessary maturity before you will get to the commercialization. Boston Metal intends to produce
still using day technology by twenty twenty six. Just to give your perspective on
the timeframe. Obviously, in case of form energy we discussed, they just
proground in their first manufacturing facility, which will be readied then for commercial scale
production by the end of the first production by the end of twenty twenty four,
so they just you know, you have different time horizon, but we
are working on all of those solutions in parallel as we go. Going back
to the way you work, So you've got this innovation fund called XCARB in
which we invest, but also you are looking at everything that's going on so
even earlier stage, and you have put this thing called the accelerator. So
can you explain a bit how it works in relation to the innovation fund.
Since we launched the funds, I was actually quite impressed by how many companies
have approached us with different solutions. We got bombarded by various proposals and various
initiatives, and lots of startup and early face companies reached out to us seeing
if they can work and if we can test their technology. And at some
points I said, okay, let's let us just take a step back and
think what are we ask you know, what sort of challenges we are facing,
what are the most present challenges? How we can find a solution.
So what we did, together with our research and development and our technical team,
really brainstormed about the key areas of focus. So we have identified seven
technology domains and we decided to launch an accelerator to attract the companies to provide
those solutions in those technology domains. We've received more than hundred applications within the
first week of launching the accelerator. It's quite impressive again, you know,
to the point how innovative, how many innovative solutions are there, and how
much excitement is there. And then we've met a lot of interesting companies.
And I hope that by the time this episode is out, we have announced
the winner of the accelerator and we going to launch a new one. But
it's indeed, you know, we're looking at some of the early stage companies
more like serious A or even sed level, which offer some of the interesting
solutions for our challenges, some of the challenges. I'll give you an example.
For instance, Gerard was speaking about electrical art furnace. By product of
the electrical rt fhernace production is electrical r furnace slack, and we're trying to
see if there is a solution a technology to process the slack to use it
as something valuable like an alternative cement material. So solutions like that we're always
on the lookouts for. So I really then, as was last question,
really, how are you going to succeed in decarbonizing still going forward? I
mean that's the real, real question. I'm an optimistic person by nature,
so that answer that this question will always be yes again. You know,
in the beginning of the podcast, I was thinking about the complex challenge we
are facing and how it's really giant puzzle that we need to resolve. Having
said that, we are so open for innovation, we are so open to
partner with various stakeholders, I think there is clear determination from all the stakeholders
in the process. I think our company is pretty much leading the industry during
its at zero, So I'm positive we will succeed. I don't want to
undermine the efforts to do so, but the answer is definitely yes. It's
just still the mass. There is no other way. Well, you're in
now. It was great to have you on the show for this message of
optimism. It's not just buying the sky. It's really hard work, a
lot of engineering and testing and the fact that you are putting the group's facilities
at the service of this innovation to implement and understand the technological issues but also
the economics around it. It's really great to see some silver lining around the
steel sector and not just always reports who are complaining and you are doing your
part. Thank you very much. Thank you, Larn, thank you Jan,
thank you for having it. Thank you very much. So John,
what's your take? Oh my god, Well, listen, it's tough to
take up and I steal the industry. It is the toughest thing of all.
I think it's going to take decades, I think to do it unless
there is significant innovation, which is where they actually come in, which is
they're actually going and investing in this innovation, And that gives me quite a
lot of hope. Yeah, but I believe that it's going to advance at
the time that the old technology goes obsolete. So that transition is, let's
face it, it's not going to be as fast as in the transportation sector
or in delictricy sector. It's going to take a lot of time. But
the technologies out there, which is good. The economics they're still trying.
They don't know if those technologies is going to be really economics or if there
is this famous green premium that gets talk a lot about. And the question
is if there's a premium, who's going to put the bill for that decobanization.
Well, lets and I go back and say another thing, which is
I think it is all about innovation in those areas because the reality and you
also said another thing which I agree totally on, which is it's going to
just take time. And the real and it's going to take time is because
you know, if you want to go and get green hydrogen in there or
pink hydrogen, you're going to have to build a huge amount of generation capacity
to actually get that hydroene in the first place. And you could say that
there's a there's other priorities for that, renewables and nuclear in the next years
because it's much I think it's much easier to decarbonize the automobile and heat it
is. And what worries me a bit about hydrogen is the fact that it's
very clear to Aslo on the steel industry that they can absorb a huge amount
of green hydrogen at say two dollar pokilo. But when I saw the other
day the price of hydrogen in California, it's thirty dollar pokilo. So we
have a real pricing problem around hydrogen. Yeah, we do, we do,
we do. Decarbonizing hydrogen is incredibly tough, let alone actually building up
new green hydrogen or pink hydrogen capacity, right, it's very tough. So
we have a pathway to decarbonize the steel industry. We have an old palette
of possible short, medium term, and long term solutions. But let's not
fool ourselves. We are going at a snail pace, and I don't see
what really can we do to make it faster. So it's a bit of
a bitter sweet conclusion. I suppose the only thing that you can do to
speed it up really is to put in carbon taxes. And I mean,
sorry, what I mean about this is you need to move to carbon adjustment,
border taxes. I think we have to go that way. That's the
only thing you can do, right because otherwise, you know what ends up
happening is your industry just leaves. It's not easy, no, it's it's
hard to decarbonize that simple as a right to decarbonize, expensive to decarbonize along
to decarbonize, but we can becabonized. So some people like you are in
charge and it's good to know. Yeah, and again I do I hope
if you want to speed it up. The other thing you have to do
is just hope that there's going to be technological innovation and breakthroughs. And the
one thing that we've seen laur On the last ten years, it's massive innovation.
Rice. That's what gets me positive or keeps you positive. Right,
good, good good. So we want to thank our partner picks A Park
John. Do you want to say something about our new media pack? Yeah,
So what myself in Lauron would like to do is just we're looking to
expand the podcast and partner up with companies. If you're interested to do that.
We have a new email address that you can reach out to AUSUS.
The new email address is info at Redefining dash energy dot com very simple and
I try to create on the website, but my website is hard to decarbanize.
It takes a bit of time. Yeah okay Jah. Always a pleasure
and talk to you in two weeks time. Look forward to it. Thank
you for listening to Redefining Energy. Don't forget to rate the show and subscribe
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