NextEra, Shell, LanzaTech CEOs Talk Energy Transformation

HOUSTON—Earlier this year, the Intergovernmental Panel on Climate Change (IPCC) issued a stark warning: the transition to renewable energy sources was moving too slowly.

Despite costs of solar and wind energy falling up to 85% since 2010, getting to net-zero emissions by 2050 remains a challenge for the energy sector.

“We’re not moving fast enough,” said LanzaTech CEO Jennifer Holmgren, noting many are committed to the transformation and doing what they can.

“When the IPCC says we’ve got to reduce our carbon emissions by 50% by 2030 and you look at economies showing if we really could we’d drop it by 3%, we aren’t working fast enough. … We need to be much more aggressive, much more committed to a transition,” she added.

The U.N. climate science agency said that limiting global warming to 1.5 C is beyond reach without immediate and deep emissions cuts across all sectors. This week, similar messages have emerged from the COP27 climate summit in Egypt.

“We need to be much more aggressive, much more committed to a transition.”—Jennifer Holmgren, LanzaTech

So, how can the energy industry move faster?

Creative financing came to Holmgren’s mind. It was one of many topics that surfaced on a CEO panel at KMPG’s Energy Transformation Conference.

Transforming faster

As a startup, LanzaTech is familiar with the trek across the “valley of death” as Holmgren put it, attracting capital to complete a pilot project and reach the commercial stage. The cost of capital can make some projects unaffordable.

“Do you insure the first-of-its-kind process plant and add another $30 million to that capital, or do you have investors that insure their funds so they can put money into first-of-a-kinds?” she asked. “To me, the way to go faster is for the finance community and the insurance community to sit in a room and figure out how they’re going to finance the transition.”

Such steps are needed to scale certain technologies crucial to lowering emissions.

“It starts with understanding where you are today and making a plan for what you can do, what you expect to do over time, and then start executing on it.”—Rebecca Kujawa, NextEra Energy Resources

Making sure financial support exists for clean energy investments is critical, added Rebecca Kujawa, president and CEO of NextEra Energy Resources.

“I think it starts with understanding where you are today and making a plan for what you can do, what you expect to do over time, and then start executing on it,” Kujawa said. Having partners that make a big difference and the right talent—equipped with support—on the team can also help ensure success, she added.

Collaboration is also key, according to Shell USA President Gretchen Watkins.

“It cannot be one company, one industry, one country,” she said. “We need to bring everyone to the table, which is why we are working super close with our customers,” aiming to increase demand for low- and no-carbon fuel.

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Incentivizing supply, demand

The panelists, like others in the industry, see moves like the passage of the clean energy incentive-loaded Inflation Reduction Act (IRA) and any bipartisan support as positives.

“I’m optimistic that we’ve seen some green shoots recently that we weren’t seeing before,” Watkins said.

The IRA, signed into law by President Joe Biden in August, provides incentives for battery and electric vehicle manufacturing as well as hydrogen production, carbon capture and other clean energy technologies.

More work, however, is needed when it comes to incentivizing demand, panelists seemed to agree.

“Climate stability is very important. Incentivizing the supply is good. We’re missing a little bit on demand,” Watkins said. “Some demand we don’t need to incentivize sometimes. I think there’s a strong demand for renewable energy right now. But for things like hydrogen. It would be good to see some demand policy as we move through the next two years.”

That, too, could lead to less emissions.

“Having the right policies, infrastructure and technology in place to enable changes to our lifestyles and behavior can result in a 40%-70% reduction in greenhouse-gas emissions by 2050. This offers significant untapped potential,” IPCC Working Group III Co-Chair Priyadarshi Shukla said in April. “The evidence also shows that these lifestyle changes can improve our health and wellbeing.”

‘Massive’ opportunity

While policy is improving the economics of clean energy projects and incentivizing development, more opportunities exist.

LanzaTech coverts waste carbon resources into useable products.

“It cannot be one company, one industry, one country. We need to bring everyone to the table, which is why we are working super close with our customers.”—Gretchen Watkins, Shell USA

The biotech developer worked with fashion retailer Zara to produce textiles—including a little black cocktail dress—partly made using carbon emissions. Captured emissions are turned into ethanol, then into low-carbon monoethylene glycol (MEG). That, in turn, is converted into a low-carbon polyester yarn that is used along with purified terephthalic acid to make form the fabric.

Holmgren also sees opportunity in municipal solid waste.

“A quarter of the world’s municipal solid waste is actually not collected and when you think about the Btu value of trash …  trillions of dollars are being left on the table there,” she said. “There’s a massive opportunity to leapfrog over what we do and how we do it and use these carbon resources to make other things. Collecting them becomes part of the economy. I think transforming developing economies is going to be an important part here.”