You may think of water scarcity as an “over there” problem, but this April, the Natural Resources Defense Council published a study showing that nearly a quarter of U.S. households served by community water authorities received water from systems with dangerous levels of lead.

Geopolitical tensions are also exacerbated by water scarcity, as a review of headlines from North America, South Asia, and the Middle East will affirm. The UN projects that by 2030, the world could face a 40% shortfall in freshwater supply—exacerbating cross-border tensions and likely creating more climate refugees.

As we move deeper into the post-Climate world, changing precipitation patterns caused by global warming will further amplify water availability crises, according to research published this August in the journal Nature.

Desalination can aid the critical issue of water scarcity

Desalination is a technology with the potential to increase water supply, especially in the oceanfront cities growing so quickly in the developing world. This column examined several approaches to desalination in previous articles (here and here) and found that, while the environmental and economic costs of desalination have fallen dramatically over the past 25 years—mainly due to the introduction and improvement of reverse osmosis technology—costs must come down even further to close current and projected gaps between supply and demand.

There is no better way to bring down technology costs than by providing market-based incentives, and one organization is renowned for incentivizing technological innovations.

The XPRIZE Water Scarcity competition

XPRIZE is a nonprofit that, since launching its first contest in 1996, has run competitions in which international teams of innovators develop real-world solutions to some of the world’s most difficult problems. XPRIZE raises money from philanthropic and corporate organizations; the money it raises becomes the prize purse used to spur entrepreneurs to solve these problems.

Over the last 30 years, XPRIZE has run 30 competitions, co-branded with a named sponsor, whose teams have filed nearly 10,000 patents and generated more than 20,000 jobs. Competitions have focused on fields as diverse as space flight to ocean floor mapping to adult literacy. Each competition has its own set of measurable success criteria which the prize’s named sponsor helps to set.

In March 2024, the Mohamed bin Zayed Water Initiative—an organization founded by the president of the United Arab Emirates and ruler of Abu Dhabi, Sheikh Mohamed bin Zayed Al Nahyan—funded a five-year, $119 million XPRIZE competition to enable widespread access to clean water through desalination.

During New York Climate Week in September, XPRIZE announced that 143 global teams have qualified to compete in one of two tracks in the XPRIZE Water Scarcity contest: desalination systems and novel materials and methods.

The desalination systems track challenges teams to “…sustainably generate at least one million liters of potable water daily (1,000 m³/day) from seawater at the lowest cost over the course of 1 year, demonstrating scalability for global impact.” Included in the competitors for this track are some familiar names from my desalination industry research, including Flocean, the Norwegian deep-sea desalination pioneer which I particularly like.

The novel materials and methods track challenges teams to develop components for full desalination systems—especially membranes or membrane-like technology—that “…can sustainably and cost-effectively treat seawater to potable water quality, using any salt-water separation technique, with an operational lifetime of 10 years or more.”

Specific and measurable challenge goals are a hallmark of the XPRIZE contests, guaranteeing that winning teams are able to translate their entries into scalable, commercializable products and services. The grand prize winners of the systems and novel materials tracks will receive $40 million and $8 million, respectively; teams meeting intermediary milestones will be awarded smaller but still substantial monetary prizes.

The impact of such prizes, which provide start-up funding that does not dilute equity investors and which does not have to be repaid, is so valuable—especially for hard asset-heavy start-ups. Cash flows for a company offering a first-of-a-kind industrial or infrastructure product can be very slow as buyers are often hesitant to write checks and the systems themselves may take time to build. The air pocket between development of a product and reliable, recurring sales is so unsettling that this period has come to be known as the “Valley of Death.” A prize as generous as the XPRIZE Water Scarcity goes a long way to helping companies over that frightening valley.

The MBZWI’s and XPRIZE’s decisions to focus on water scarcity gives me hope that our civilization will someday be able to transform our planet’s vast reservoirs of saltwater into a sustainable, ecologically balanced, and inexpensive source of potable water. Intelligent investors take note.

The Earth Prize (Image of Tomas by Image by Jana Plavec, Czech Academy of Sciences)

Earlier this month, the World Health Organization published a sobering report on antibiotic-resistant bacteria that found that one out of six bacterial species causing common infections in humans is resistant to antibiotics.

Resistance varied by region, with fully one in three bacterial infections showing resistance to antibiotics in Southeast Asia and the eastern Mediterranean, and one in five in Africa.

To make matters worse, bacteria causing some of the most severe infections—those causing organ failure and death—were resistant to first-choice antibiotic treatments. The report showed that over 40% of E. coli and over 55% of K. pneumoniae are resistant globally.

This report reminded me of my coverage of two teenage scientists in Eastern Europe who collaborated to engineer a novel process for removing chemicals from antibiotic-laden wastewater, reducing the likelihood that antibiotic-resistant species will evolve.

These young scientists, Tomáš Čermák (18) from Czechia and Anna Podmanická (19) from Slovakia, won The Earth Prize regional competition for Europe and went on to capture the top spot for The Earth Prize 2025. (You can find my coverage of the winners and runners up for The Earth Prize 2024 here.)

My colleague David Corzo Sanchez, an emergent entrepreneur completing his undergraduate degree in Mexico City, spoke to Tomáš and Anna about their invention to help combat what the team calls “The Silent Epidemic of Antibiotic Resistance”. The video of David’s interview with Tomáš and Anna discusses the importance of water treatment and why we can and should think about water quality as a climate issue as well as an ecological one.

The Earth Foundation is just opening up registration for the 2026 competition. Young changemakers can register—individually or in teams—and submit their project through January 31, 2026. Upon registration, The Earth Foundation matches entrants with mentors for one-on-one support in developing all aspects of their project, including educational resources covering various subjects and expert workshops on topics like communications and public relations.

Teachers, community leaders, and parents should encourage budding scientists to apply for The Earth Prize 2026. Competition at a global level might seem intimidating, but participation offers young people wonderful benefits: research, engineering, and entrepreneurial skills, valuable interaction with other like-minded youth, a deeper understanding of climate change and environmental issues, and the confidence that comes from hard work.

Rebalancing the planet’s carbon cycle and drawing down atmospheric carbon dioxide are vitally important to human civilization, but loss of biodiversity is so inextricably linked to climate change that we cannot solve one problem without solving the other.

One of the biggest drivers of climate change is land-use change. Industrial ranchers cut a road deep into the Amazon, bring in logging and earth-moving equipment, and reduce a complex forest ecosystem into a pasture in which to raise grass-fed beef for buyers in the U.S., Europe, or China.

The forest organisms that survived this mechanical onslaught must now find new homes, and many cannot adapt quickly enough. Habitat loss also brings wild animals in closer contact with humans, leading to the spread of zoonotic diseases such as COVID-19, avian flu and Ebola.

Individuals often feel incapable of addressing a crisis as enormous as biodiversity loss, so I have been encouraged to see businesses offering customers opportunities to pay a little more for a product or service to support ecosystem restoration projects. Research shows that such programs build customer loyalty and help recruit young people to work at sponsoring companies.

The clothing company tentree was founded in Canada in 2012 with the express purpose of planting ten trees for every item of clothing sold. It’s a noble idea, but the founders—brothers Kalen and Derrick Emsley and their friend David Luba—soon realized that realizing their restoration vision would be more challenging than they had imagined.

First, they had to find and vet organizations that provided ecosystem restoration services. Once they had decided on an organization and a project, they would start sending money to the group, only to find that very little information came back to them about the impact their money was having.

They could not tell if the trees they had paid to be planted had actually been planted, how many of the trees survived the first year, or whether the replanting efforts were bringing birds and animals back to restored areas.

According to Derrick Emsley, “Visibility into what was actually happening on the ground was incredibly limited.” He started thinking about what he would want to know as a sponsor of restoration services, and decided that if such reporting wasn’t available, he would build a system himself.

This process led tentree in 2019 to found veritree, a company that provides ecosystem restoration “verification-as-a-service,” receiving fees from corporate sponsors of ecosystem restoration projects to handle the myriad logistics of performing such a service.

veritree establishes relationships with organizations doing reforestation and other ecosystem restoration work and vets planned and ongoing projects. Once a corporate client decides to move ahead with a restoration project, veritree configures a suite of digital monitoring and verification technology enabling clients to observe and measure the impact of their project funding through an online dashboard.

GPS-based survey data, soil quality data, time-stamped photographs of newly replanted areas, and wildlife-tracking trail cameras and acoustic monitors give clients a multifaceted view of restoration projects they are funding. veritree accounts for all a project’s inputs and provides data to ensure that, for instance, trees haven’t been planted on behalf of two separate sponsored projects.

Companies investing in ecosystem restoration projects monitored by veritree have a full chain-of-custody view of how their money is being used and the results of their projects over time.

Businesses like hard numbers, but people take action and develop a connection with projects when they are personally moved by a narrative. The data veritree collects forms the basis for a compelling narrative their clients can share with customers and employees. veritree’s marketing team provides media kits to help their clients tell their stories by embedding maps and tree and animal counters on their websites.

I was particularly impressed by the restoration work in which veritree is involved. The company is verifying the restoration of kelp forests—an important near-shore ecosystem—in British Columbia and developing innovative ways to track progress. The company has also worked to verify a mangrove restoration project in Southeast Asia that sponsors the establishment of beehive operations offering local people a livelihood that preserves carbon-critical mangrove forests that might otherwise be converted into shrimp farms. (Read my review of the fabulous book The Blue Plate to understand the disproportionate carbon footprint of a shrimp cocktail.)

Emsley told me that planting and restoration groups seek to partner with veritree, knowing that the company’s approach to project transparency will enhance the credibility of their work. This industry credibility helped veritree raise $6.5 million earlier this year to scale its operations to be able to hit a goal of 100 million trees verified.

The inexorable destruction of earth’s precious ecosystems makes these dark days for environmentalists. Rather than throw up our hands, we must seek out and support companies that are doing the right thing. High-quality verification-as-a-service enables ecosystem restoration sponsors to confidently fund companies that will maximize the impact of their donations. Intelligent investors take note.

Studies suggest that nearly half a million people died in the U.S. alone from complications related to pollution from coal-fired electrical plants in the 21 years from 1999 to 2020, yet nobody seems frightened by coal. Contrast that with the total global victims of nuclear power accidents in the 74 years since 1951, likely only in the hundreds, or, at most, thousands. Nearly everyone seems inordinately scared of nukes despite coal’s far more widespread and imminent lethality.

The recent spike in demand for carbon-free energy to power AI data centers seems to have mitigated this fear, and 2024 Pew polling suggests that a majority of Americans now support more nuclear power in the country (though this support is not as strong as that for wind and solar).

The last ten years have seen dozens of startups propose plans for everything from small modular reactors to molten salt reactors to fusion reactors, each offering safety advances over older reactors like those that infamously malfunctioned at Chernobyl, Fukushima, and Three Mile Island.

This is a large and complex field, so we will first examine the safety advantages conferred by SMRs using TRISO (TRi-structural ISOtropic particle; pronounced /try-so/) fuel. Conventional nuclear generation plants use uranium dioxide enriched to contain around 5% uranium-235, an isotope of uranium that splits relatively easily. The uranium dioxide fuel is shaped into pencil-eraser-size pellets and sealed in 4-meter-long zirconium tubes called fuel rods. Fuel rods are submerged in a pool of circulating water. When a U-235 atom is hit with a neutron moving at just the right speed, it splits apart (“undergoes fission”) and the resulting smaller atoms move violently, creating heat that is transmitted through the rods to the water.

The water surrounding the rods simultaneously cools the rods and absorbs the heat generated by fission, creating steam that turns an electricity-generating turbine.

Plant managers can halt the fission reaction by inserting neutron-absorbing control rods among the fuel rods. The control rods absorb the neutrons emitted by the fuel rods and stop the nuclear reaction, but cannot stop the heat generated by radioactive decay in the fuel rods.

If the water is not constantly circulated in the containment vessel after a reactor has been shut down, it can boil off, leaving the fuel rods exposed, even with the control rods in place. Steam is a much less efficient coolant than water, so the fuel is at risk of overheating and melting through the exposed fuel rods; steam also reacts with zirconium to create hydrogen, which is explosive.

When the Fukushima plant in Japan lost power due to a tidal wave, it could not pump cooling water into the reactor, so its fuel rods were exposed and damaged as the fuel melted, releasing hydrogen gas that caused an explosion.

To minimize risk to the public, conventional reactors have been built with very thick concrete and steel walls and floors to contain a meltdown in an accident, but all this concrete, steel and advanced containment engineering is very expensive. Two reactors were just completed in Georgia at a cost of around $35 billion.

Building a safe reactor with TRISO nuclear fuel

The small modular reactors featured in recent news are engineered to be “walk-away safe,” meaning that operators can leave the plant completely unattended once the reactor has been shut down without risking a meltdown.

One way to achieve this safety standard is by using TRISO fuel forms. TRISO fuel uses uranium dioxide like conventional nuclear fuels, but with a higher (up to 19.75%) concentration of U-235. This raw fuel material is called high-assay low-enrichment uranium (HALEU).

HALEU’s higher U-235 concentration doesn’t make the fuel more radiologically dangerous; it simply means that the same amount of fuel can be concentrated in a smaller package and more U-235 can be consumed before the fuel pellets are depleted.

The HALEU-bearing particles used in reactors fueled with TRISO are much smaller than conventional reactor fuel pellets—around the size of a poppyseed.

Each TRISO particle is coated with three layers of special ceramics (the “tri-structural” aspect of TRISO) and other materials with two essential qualities: porosity to trap gases and high heat tolerance to ensure that the HALEU core of a TRISO pellet never gets hot enough to damage its ceramic coating. In other words, TRISO fuel doesn’t melt.

Another safety feature of TRISO fuel reactors is the replacement of water as a thermal transfer fluid with either helium (which is inert and non-reactive) or molten salt (which has a boiling point much higher than the temperatures generated in the reactor). The use of these alternative transfer fluids eliminates the risks associated with steam generating excessive pressures and interacting with a substance in the reactor to create explosive hydrogen.

Rather than building huge, expensive buildings to contain meltdowns, each TRISO pellet functions as its own tiny containment vessel. Although TRISO is more expensive than conventional nuclear fuels, it can be safely contained in substantially lighter and less expensive reactors.

Standard Nuclear stands at the heart of the TRISO nuclear fuel supply chain

The promise of safe, carbon-free nuclear energy generation has pulled in many smart entrepreneurs and investors. Around a dozen firms are working on safe reactor designs in the U.S. and Europe; around one-third of these are using TRISO fuel.

One of nuclear’s biggest challenges is a nascent supply chain. The only commercial-scale producer of TRISO fuels is Chinese (China National Nuclear Corporation). The only commercial-scale supplier of HALEU is TENEX, a Russian company. All European SMR start-ups have designed away from TRISO fuel due to geopolitical concerns about the fuel supply chain.

The Department of Energy is working to bootstrap domestic HALEU supply by “downblending” weapons-grade uranium (also known as highly enriched uranium or HEU) and making fuel from research reactors available to private companies. It has also provided funding to Centrus Energy of Ohio, which develops and deploys centrifuges to enrich fuel to HALEU levels.

Most advanced reactor startups using TRISO fuels plan to vertically integrate fuel production with reactor design and operation. One such firm—Ultra-Safe Nuclear Corporation—designed micro-reactors to generate electricity (around 5 megawatts) for mini-grids, military bases, and data centers. or provide process heat (around 15 MW) for industrial facilities. (See our previous article about Kraftblock, a thermal battery supplier that provides process heat to industrial users.)

USNC declared bankruptcy about a year ago, but a consortium of venture capital funds led by Decisive Point bought USNC’s TRISO fuel assets and formed a new company, Standard Nuclear, wholly focused on manufacturing “reactor-agnostic” TRISO fuels using HALEU supplied by the DOE, at least at first.

I spoke with Kurt Terrani, Standard Nuclear’s CEO, and its chairman, Thomas “Tommy” Hendrix, who is also a founding partner of Decisive Point, about Standard Nuclear’s strategy.

Terrani and Hendrix both see the focus on fuel as a strategic advantage as the industry begins delivering reactors to customers.

The process of manufacturing TRISO is enormously complex and when older technologies are used, it generates waste that is expensive to dispose, so developing a comparative advantage in the production process allows Standard Nuclear to provide a high-quality commodity product at low cost. In a commodity market, the low-cost manufacturer wins the game.

Terrani also expects utilities—the ultimate purchasers of TRISO fuels—to be price sensitive as the market expands. Vertically integrated advanced nuclear suppliers will want customers to buy their own proprietary fuel, but just as a laser printer works with generic ink cartridges at one-third the cost of branded cartridges, it is hard to see why a utility would want to pay a premium for branded TRISO pellets.

Terrani is one of the world’s leading experts on TRISO, having served as a research fellow for 10 years at Oak Ridge National Laboratory, America’s flagship lab for nuclear and energy research, after receiving a PhD in Nuclear Engineering from UC Berkeley, then serving as a USNC vice president and interim CEO during USNC’s bankruptcy proceedings.

Building on Terrani’s background and connections with scientists and engineers at Oak Ridge, Standard Nuclear announced a joint venture with Framatome, France’s flagship nuclear-engineering and fuel-manufacturing company, at the end of September. Framatome, which is roughly 75% owned by French utility giant Électricité de France, plans to establish a U.S.-based HALEU TRISO production line with Standard Nuclear, likely sited at or near Framatome’s existing NRC-licensed fuel fabrication facility in Richland, Washington.

The joint venture plans to produce TRISO at commercial scale by 2027, targeting an annual capacity of 2 metric tons.

TRISO nuclear fuel is not the only answer but it is a good answer

TRISO nuclear fuel is not the only way to make nuclear reactors walk-away safe, and I will discuss other companies’ fuel and reactor approaches in future articles. However, TRISO does look like a promising way to supply safe and clean electricity to a power-hungry world. As someone who swam at a beach near Fukushima in his youth, I am certainly sympathetic to concerns regarding the potential dangers of nuclear power. That said, civilization’s increasing reliance on electric power demands that we impose the least possible impact on our ecosystem while generating that power. Intelligent investors take note.

The current administration seems determined to kill solar and wind power, but renewable energy refuses to die for one very good reason: it makes good economic sense.

One area in which renewables bring indisputable economic value to the U.S. is employment. According to a September 2025 report, nearly 3.6 million Americans work in clean energy businesses, with over 500,000 jobs added over the last five years. In 2024, seven percent of new U.S. jobs and 82% of new energy sector jobs were in clean energy.

Trump’s characterizations of solar and wind as unreliable and expensive haven’t held up to scrutiny. A February 2025 analysis by institutional energy data service BloombergNEF of the levelized cost of electricity—the long-term investment required by a power plant to break even—found that onshore wind and solar are competitive with natural gas generation plants, and offshore solar is cost-competitive with coal and cheaper than nuclear.

The administration can affect the economics of renewable energy—tariffs on foreign-made solar panels and lithium-ion batteries raise input prices, and cancelling renewable energy generation subsidies prolong project payback periods—but renewable energy still rewards purchasers with energy that predictably costs less than that generated by fossil fuel facilities.

Cost predictability is an especially important benefit to municipalities, who are under pressure from taxpayers to provide services consistently and efficiently, immune to interference by the drama of trade wars or commodity price volatility. I spoke with several companies that are creating value for public energy consumers by helping them transition to renewable power generation.

Solar farms help municipal water districts cut costs

REC Solar is a California-based solar project developer that evolved into an independent power producer. I spoke with Sage McLaughlin, who oversees a team that helps municipalities, utilities, and other non-commercial facilities save money through renewable power generation and, in some cases, battery back-up.

Those unfamiliar with the vital role of project developers can refer to my September 2025 article about project development in the thermal energy storage industry.

Whereas project developers plan, help arrange financing for and supervise construction of facilities, IPPs take possession of the energy generation assets they build and enter into long-term service agreements to provide energy at a flat rate to customers on whose property the generation and storage assets are usually located.

McLaughlin told me that her main clients are facilities with significant energy loads, such as wastewater treatment plants, schools, and the like. These facilities typically find that the cost savings from supplying their own on-site energy needs is incentive enough to switch to solar power, and selling excess power back to the grid through “net metering” arrangements is an additional economic incentive.

When I asked if climate resiliency influenced customers’ decisions to go with solar, McLaughlin replied that cost-saving discussions typically lead the implementation process, but as clients acclimate themselves to the new equipment, they begin to ask questions about resiliency and the benefits of implementing more sophisticated systems such as battery storage.

McLaughlin’s California customers are particularly interested in resilience benefits after having suffered climate-change-related brownouts caused by increasingly severe wildfires. She believes that as municipalities become more comfortable with renewable generation and battery backups, they may choose to implement “mini-grids” (self-sustaining, synchronized electrical supply networks) for related critical infrastructure.

Solar farms help public housing authorities cut costs and improve services

Solar is an irresistible option even for municipalities far from sunny California. Nine separate public housing authorities in Rhode Island just entered into the first multi-housing authority solar energy generation collaboration in the U.S., in what may become a national model for public housing.

This project, a collaboration between the French environmental services giant Veolia, Chicago-based community solar developer Nautilus Solar Energy, and the Public Housing Association of Rhode Island, is powered by three solar installations in Exeter and Smithfield with a total generation capacity of over 13 megawatts and an annual generation capacity of around 20 million kilowatt-hours.

The energy generated at these facilities is sold onto the grid. A consortium of public housing authorities buys this power at a low fixed price set by a long-term contract, and any excess power is sold to others at market rate through a net metering plan.

This arrangement is projected to save participating municipalities more than $35 million over 20 years and reduce greenhouse gas emissions by 4,800 metric tons per year. Energy credits generated by this project will lower housing operating costs, making additional funds available for facility maintenance, improvements, and resident services. One organization in the consortium, the Cranston Housing Authority, projects $160,000 in savings next year alone.

Veolia’s president and CEO for Sustainable Industries and Buildings, Karin Hamel, says the project “harnesses the power of renewable energy” while supporting thousands of low-income Rhode Island families.

The Rhode Island public housing consortium generates another benefit even more precious than cheap renewable energy: hope. Even as the Trump administration implements its retrograde climate policies, I am reassured to see that the arc of history is still bending towards solar farms and other renewables. Intelligent investors take note.

The economics of renewable energy remain attractive despite tariffs on Chinese equipment and various Trump administration policies intended to kill solar and wind. Our ageing grid is straining to satisfy the abrupt jump in power demand from AI data centers, hiking electric prices for everyone in the process. Reuters reports that wholesale electric prices have increased over 1,000% at the last two annual energy auctions held by the PJM Interconnect, the country’s largest electrical grid operator.

Consumers in Virginia—home to the highest concentration of data centers in the world—are especially hurting. Virginia’s governor, Glenn Youngkin, joined a bipartisan coalition of ten other state governors in threatening to leave the PJM if their states are not given a say in how it is run.

In the midst of this dour news, I found an exemplary project in which renewable energy, a visionary developer, strong technical partners, and constructive communication between local leaders and utility operators solve critical supply-demand issues such as those faced by states in the PJM.

The project is Veridian at County Farm, an innovative all-electric community of apartments, townhomes, and single-family houses in Ann Arbor, Michigan. Veridian was designed with 1.3 megawatts of solar capacity across homes equipped with sonnen batteries with a total of 2.4 megawatt-hours energy storage capacity; the batteries are networked together to form the first planned virtual power plant in the state. sonnen batteries form the heart of a VPP in the outskirts of Salt Lake City covered in this column several years ago; check out that article to learn more about sonnen and VPPs.

Of the 120 units planned at Veridian, just over a quarter have been sold and occupied, with over a dozen more, including two multi-family buildings, under construction.

The Thrive Collaborative—Veridian’s designer and developer—intended to provide sufficient electrical generation and storage capacity to create an all-electric, fossil-fuel-free community that would draw no net energy from the grid. There isn’t a single natural gas line in the entire community, but there’s an EV charger in every garage.

Climate control is handled by a subsurface infrastructure of geothermal heat pumps shared by the entire community to make the system cost-effective. Walls and windows are well-insulated, reducing pressure on the heat pumps to maintain comfortable indoor temperatures.
Speaking with Matt Grocoff, Thrive’s founder, and Blake Richetta, sonnen USA’s CEO, I realized that the Veridian community functioned in precisely the opposite way as a data center.

While a data center draws an enormous amount of power from the grid, potentially compromising grid stability, Veridian enhances local grid resilience by “shedding load” (refraining from requesting power from the grid) and providing demand response (offering extra capacity to the grid) during peak periods, and leveraging its solar generation capacity and networked battery VPP to balance supply and demand on the grid in general.

Grocoff tells me that the community is welcoming newcomers from all over the U.S., attracted by the idea of living in a net-zero energy community. Some are climate refugees, having chosen to leave their homes in fire-prone areas out West.

Developing a complex project that requires substantial upgrades to local utilities is not easy; discussions between the utility and the Michigan Public Service Commission have been ongoing since before the COVID pandemic.

Because Veridian is an all-electric subdivision, the utility had to draft a plan to install new equipment and upgrades to local substations and power lines, then formally present the plan to regulators at the PSC in a process known as a “rate case.” A rate case shows the costs and benefits of a capital expenditure planned by a utility, and the regulatory commission decides whether to allow the utility to spend the money on the project.

The City of Ann Arbor testified to the Commission in favor of Veridian’s rate case—expressing the belief that Veridian was valuable for the future of the energy system as a pilot project—and the Commission signed off on Detroit Energy’s proposed investment to connect Veridian to the grid.

While it is somewhat disheartening that Grocoff and Richetta had to work so hard to get this project over the line, I am encouraged that a solar-powered net-zero energy community storing energy in on-site batteries could be approved and built in the upper Midwest. Veridian gives me hope that we can create a clean, resilient electrical grid for the 21^st century rather than dead-ending on the electrical grid of the past century. Intelligent investors take note.

Even the seemingly benign pastime known as “Netflix and chill” generates a carbon footprint. The servers powering Netflix’s popular streaming service run on electricity, casts and crews must travel to shooting locations, and office buildings must be air-conditioned. Netfilx’s 2024 ESG report reveals that the company generated around 75,000 metric tons of CO₂ equivalent greenhouse gas emissions that year. This is low compared to a coal-fired power plant, but it is sobering to think that the CO₂ Netflix released into the atmosphere in 2024 had the mass of a 965-foot-long Panamax freighter.

Netflix’s Chief Sustainability Officer, Emma Stewart, PhD, stated in a 2024 message that the company committed in 2021 to cut its carbon footprint by half and offset the remainder by investing in “natural climate solutions.”

Funga, a public benefit corporation previously featured in this column, has just announced that it signed a deal with Netflix whereby the streaming service giant has committed to buy carbon credits generated through Funga’s innovative fungal restoration technology for the next 11 years.

This is a big milestone for Funga and its founder and CEO, Colin Averill, PhD. Netflix’s purchase represents the first commercial sales of Funga’s carbon credits and serves as a catalytic investment in the startup. Averill described the transaction as “a vote of confidence in a new class of nature-based climate solutions.”

Biodiversity boosts growth

Funga has made enormous progress since it kicked off its initial 500-acre pilot program in 2023, now enrolling more than 28,000 acres—roughly twice the size of Manhattan—in its innovative carbon credit program.

We typically think of forests as only the trees that are visible aboveground, but in a healthy forest, trees are just the tip of an enormous ecological iceberg composed of fungi that form “mycorrhizal networks” with tree roots, and helpful bacteria and other microorganisms that store carbon in a thriving subterranean ecosystem.

Funga transplants fungi from healthy forests into commercial groves whose fungi are MIA and whose soil is nutrient-depleted from clear-cutting. The transplanted fungi help trees grow faster by revitalizing the soil ecosystem. The 28,000 acres in 12 states using Funga inoculation represents one of the largest fungal restoration projects in the world.

Funga’s transplants enable trees to grow substantially faster, so that it is appreciably larger by the time it is harvested 25 years later. A tree’s accelerated growth correlates with accelerated carbon sequestration, so that a tree with 30% more biomass has sequestered 30% more aboveground carbon dioxide and accumulated yet more underground in its symbiont mycelial network.

Funga credits are particularly high-quality because of their measurability.

A key problem with nature-based solutions (actions that use natural systems like forests to address societal challenges like climate change) is consistent and accurate measurement. Landowners can generate carbon credits by promising not to harvest trees on their properties, but there is no way to know whether they had ever planned to harvest trees in the first place, so the credits issued might not represent an “addition” to the earth’s carbon bank. A landowner might agree not to harvest a particular stand of trees, but instead buy other forested land and harvest the timber there; this is known as a “leakage” of carbon credits.

Funga provides services to owners of commercial forests with long operating histories and plenty of data on the size of harvested timber.

Given voluminous historical data about the height of trees harvested from a particular stand and a system of planting “control plots” that do not receive inoculation alongside the inoculated stands, Funga can make a strong claim that extra tree growth in inoculated areas was generated by the soil ecosystem restoration. This clearly measureable improvement leaves no question as to a project’s additionality or leakage.

At least 40% of the wood eventually harvested from a commercial forest will be used in the production of construction materials with a useful life of over 100 years, qualified to generate carbon credits under the aegis of “improved forest management.”

Why Funga’s biodiversity enhancement is so effective

Several companies are trying to leverage the natural power of mycorrhizal networks to boost the growth of food crops. According to academic studies and our interviews with farmers, these efforts have been largely unsuccessful. Funga’s resounding success where others have failed is worth examining.

First, fungal inoculation of row crops is carried out in the same way as conventional fertilization. Fungal spores are encased in a protective covering to preserve them until they are applied to fields.

From the standpoint of yeast—a fungus we know and love—this approach makes sense. Bakers store yeast in small shelf-stable packets. When they want to make bread, they add the contents of a packet to some water, flour, and a bit of sugar, and voila!

The mycorrhizal fungi that form beneficial symbiotic relationships with plants are much more complex than yeast and must maintain contact with living roots to remain viable. Rendering such fungi shelf-stable is nearly impossible.

Funga harvests the entire, biodiverse soil microbiome, including fungal spores, from a healthy forest and transplants all of the organisms to a commercial tree nursery. There, the microbiota from the healthy forest soil are mixed with water, then applied directly to saplings in an aqueous solution within a single day or two of harvest. The fungi and other organisms then soak into the soil and immediately start forming symbiotic bonds with the saplings, which are later transplanted, biodiverse soil ecosystem and all, to the land on which they will grow to maturity. Once transplanted, the mycorrhizal networks strengthen, passing on nutrients to the trees with which they were paired.

The species of fungi that form symbiotic relationships with row crops are known as arbuscular mycorrhizae. They form very fine filaments that, over time, move deeper and deeper into the soil, where they release phosphorus—a vital macronutrient for plants—transporting it to the roots of their plant symbionts growing overhead.

However, when row crops are harvested, their delicate symbiotic connections to the fungi are lost. The fungi die and must be replenished with new spores when new seeds are planted.

In commercial forestry, plant-to-harvest cycles are much slower—25 to 30 years—allowing fungi to form healthy, productive and durable symbiotic relationships with trees. The fungi in the forests Funga are focused on are a different species (ectomycorrhizae or ECM); ECM are much more robust and tend to propagate through shallower soil layers. They are very good at freeing up nitrogen—another essential macronutrient—and transporting it to tree roots. Because the trees are in the ground longer and the ECM fungi are more robust and travel further, they can convey more nutrients to the trees.

A win for biodiversity

Most people visualize “biodiversity” as represented by large, charismatic mammals—elephants, lions, gorillas, polar bears—but biodiversity at the bottom of the food chain is vitally important. Funga demonstrates this with its restoration of soil ecosystems.

Bravo to Netflix for their ringing endorsement of biodiversity with its commitment to purchase Funga’s carbon credits. Netflix’s mission is to entertain the people of the world, but their managers know that they can only fulfill their mission on a livable planet. Intelligent investors take note.

Virgin Atlantic

I am booked on a round-trip flight between Seattle and Chicago this weekend. According to a popular AI chatbot, my carbon footprint for this trip will equal about 1.5 tons, 1.1 tons more than the average Kenyan’s carbon footprint for an entire year.

While most air travelers would be as surprised as I was to learn this, the airlines already know the score. A few years ago, 65 countries agreed to participate in the CORSIA framework, which aims to limit the carbon emissions of international flights.

Sustainable Aviation Fuel

The primary way for airlines to directly reduce emissions is by using sustainable aviation fuel, and the industry has committed to using SAF for one-tenth of its total fuel consumption by 2030. Unfortunately, there isn’t enough SAF for airlines to meet this target.

The main production pathway for SAF is converting fats and oils into fuel—around 80% is derived from vegetable oils, some of it recovered from restaurants. SAF made from this feedstock is known as FOG-based (a lovely acronym for “waste fats, oils, and greases). While FOG-based SAF is sustainable from the standpoint that ancient fossil carbon is not being dug up out of the earth, it’s not sustainable if one considers that manufacturing SAF with this feedstock has the potential to crowd out production of food for human consumption.

European regulations mandate that only 7% of food crops can be converted into transportation fuels, and U.S. regulations impose a similar cap of 15 billion gallons of corn-based ethanol per year. According to a 2024 National Renewable Energy Laboratory survey of SAF market participants, “All industrial stakeholders identified feedstock supply as a major barrier to scale up production of SAF.”

In addition to FOG-based methods, a chemical engineering-intensive process known as Fischer-Tropsch is approved and sometimes used to create SAF.

This process was invented in 1926 and used by Nazi Germany during WWII to manufacture diesel fuel from coal. I won’t go into all the gory details, but suffice it to say that manufacturing fuels using the FT process is phenomenally complex.

In addition to the many technical hoops one must jump through to carry out this process, the only FT pathway for SAF production uses a feedstock of organic waste. This biomass-to-fuel process has proven to be nearly impossible, and every company I know of that has attempted to commercialize it has declared bankruptcy.

Because the supply of FOG-based SAF is capped and the biomass-to-fuels pathway is so challenging, airlines are stuck between a rock and a hard place, having committed to use a commodity for which they cannot secure a sufficient supply.

Producing Sustainable Aviation Fuel from Alcohol

The good news for airlines (and for our planet’s carbon cycle) is that Chicago-based LanzaTech, a company we have featured in this column, has an innovative, highly effective process to produce a feedstock for SAF that is already operating at commercial scale on three continents.

LanzaTech’s process routes industrial gases into special bioreactors containing anaerobic bacteria which consume carbon monoxide, carbon dioxide, and hydrogen and produce ethanol, using a fermentation process similar to that of yeast. This ethanol is then converted into jet fuel using the alcohol-to-jet process developed by LanzaTech and the Pacific Northwest National Laboratory.

LanzaTech uses a myriad of feedstocks in its bioreactors, from raw municipal solid waste to agricultural and forestry residues to waste gases from steel, ferroalloy, and chemical refineries.

Manufacturing jet fuel with bacteria sounds like utopian science fiction, but steel, ferroalloy and petrochemical plants in China, Europe and India are producing hundreds of thousands of tons of ethanol through LanzaTech’s process. Pilots are underway in Japan to do the same thing with municipal solid waste, with very promising results.

This ethanol can be passed on to one of LanzaTech’s spin-offs, LanzaJet, for conversion into SAF using the ATJ process.

According to a press release on September 2, LanzaTech has been working with partners to develop a follow-up fermentation process to convert ethanol into fatty oils from which SAF can also be manufactured.

Investors in LanzaTech’s stock know how painful the past few years have been for the company. I visited the company’s headquarters a few weeks ago to speak with CEO Jennifer Holmgren, PhD, who was clearly feeling the weight of having to let go of nearly two-thirds of the company’s research staff.

Following the personnel cuts—which are painful for any company, but especially one with such a tightly-knit team as LanzaTech—Holmgren reduced the company’s cash burn and is now focused on executing the company’s SAF business. Several promising R&D lines and other commercial lines are being temporarily shelved to focus on sustainable fuels.

While the U.S. market has become trickier to navigate, the European Union has finally—in a process that began nearly 10 years ago—built a regulatory framework that will classify LanzaTech/LanzaJet’s ATJ products as a new category of sustainable fuels called Recycled Carbon Fuels.

The E.U. (and the U.K., which is tagging along from across the Channel) has established a certification body that will issue credits to companies manufacturing these fuels through certified processes, and auditors are already gearing up to submit RCF credit claims to the certifying body.

An experienced venture capitalist once told me that climate tech was especially difficult because, to succeed, a project must get its technical, funding, and regulatory ducks in a row, with the regulatory piece being especially tricky. With the E.U./U.K. regulatory framework now in place and LanzaTech already working on several European ATJ plants, we believe that Holmgren and her team can realize economic success equal to their technical accomplishments.

The market demand clearly exists: airlines need a lot more sustainable aviation fuel to meet their CORSIA commitments. I do not see how SAF demand can be satisfied in the present supply environment without LanzaTech, and possessing a proprietary technology that addresses customer pain points in a supply-constrained market is a strong competitive advantage for any business. Intelligent investors take note.

Project developers—specialist matchmakers who introduce cutting-edge technological solutions to prospective industrial users, create analyses to explain the costs and benefits of implementation, and help arrange project financing—are the unsung heroes on the forefront of any new industrial technology. Knowing the importance of project developers in bootstrapping new industries, I was pleasantly surprised to find one specializing in thermal energy storage.

I have often witnessed in my consulting work the vital role played by project developers in building sophisticated economic ecosystems for such diverse fields as carbon capture and storage and wind and solar farm construction.

The emergence of a developer specializing in TES is a good sign, as it indicates that the economic benefits of storing energy as heat are sufficiently compelling to attract smart intermediaries into the TES space.

I spoke with Ted Kniesche, the CEO and co-founder of South Carolina-based TES project developer startup Zero Industrial, about his company’s role in bootstrapping a new technology and what he is seeing in the TES market right now.

He started by telling me that if an industrial consumer of heat is located in a region with abundant renewable energy resources, it is a sure bet that at certain times of day, electrons are in such abundance that electricity is nearly free.

So much solar energy is generated during midday in sunny California, for example, that electricity prices sometimes turn negative and renewable generation plants are asked not to send energy to the grid. This process is termed “curtailment” in the parlance of grid operators.

If these low- or zero-cost electrons can be converted into heat for later industrial use, manufacturers stand to save a lot of money on fuel. Reduced fuel cost was one main driver in PepsiCo’s decision to use Kraftblock’s batteries in its snack foods plants in the Netherlands, scheduled to go live in just a few weeks.

Zero Industrial identifies markets which offer such energy arbitrage opportunities by analyzing inputs such as facility locations, electricity pricing, available incentives, substation capacities and nearby process heat users that could benefit from TES.

Many operating managers are too focused on day-to-day concerns to keep up with engineering innovations outside their field, so project developers walk clients through a cost-benefit analysis of implementing a new technology.

Kniesche and his team meet with a prospective customer’s management to explain how TES systems operate. Depending on the manufacturer’s interest after reviewing the initial technical and economic analysis, Kniesche and his team then conduct detailed engineering studies, pull building permits, and help arrange project financing.

Kniesche believes that cost reduction, rather than decarbonization, is the primary driver for TES adoption in the North American market. He points out that while most industrial customers are not regulated to reduce CO_2, all customers want to cut costs. Another selling point is the reduction of combustion emissions (e.g., nitrogen and sulfur oxides and small particulate matter) that often burden industrial operations in dense urban settings.

I asked Kniesche how recent changes in the regulatory environment have affected the TES market. He told me that some of the rules passed to placate manufacturers after the virtual repeal of the Inflation Reduction Act have been extraordinarily positive for TES projects. In addition to maintaining investment and manufacturing tax credits, the Trump administration’s recent regulation changes have reinstated 100% first-year depreciation—allowing companies to access tax equity financing for capital projects. Tax equity financing is one of the drivers that led to the boom in renewable energy installations, so it isn’t a stretch to imagine it will benefit the TES market as well.

Kniesche and his team’s emergence in this space has reaffirmed my recent interest in thermal energy storage by confirming the wealth of opportunities that exist to use TES to improve industrial efficiency while reducing carbon emissions. Intelligent investors take note.

Over the last month, my team has been examining thermal energy storage systems’ potential to save manufacturers money and reduce industrial carbon footprints by facilitating the electrification of industrial facilities.

We learned that TES systems have substantial advantages over chemical batteries: The raw materials used to store thermal energy are cheap and plentiful, the storage media do not degrade over time like those of lithium-ion and other chemical batteries, and round-trip efficiency—the amount of energy that can be retrieved from storage—is higher than lithium-ion, in the mid-90% range.

As we explained in an earlier TES overview article, most systems use “sensible” heat storage—based on the simple principle that if you heat something and insulate it well, you can recover that heat for later use. Sensible storage systems have been used for 200 years in the steel industry in the form of Cowper stoves.

A Cowper stove holds hot air coming off a furnace full of molten steel, then uses it to pre-heat the air blown into the furnace to process the next batch of steel; this is known as a heat-to-heat storage system.

Heat-to-heat systems’ waste heat recovery already represents big savings in lowering fuel costs by as much as 20%, but is only available to manufacturers using high-heat processes alongside lower-heat ones.

To bring these savings to manufacturers without their own waste heat resources, off-peak renewable energy can be used to superheat coils, the energy of which is stored in an insulated heat storage battery; the heat can then be released by pushing air or some other thermal transfer fluid through the storage media to a heat exchanger. This type of configuration—called power-to-heat in the industry—enables companies to replace expensive natural gas with low-cost renewable energy.

One particularly impressive company, a German TES startup called Kraftblock, uses a unique heat storage medium comprised of steel slag—a waste product from blast furnaces—held together by a proprietary phosphate binder. Kraftblock has been installing heat-to-heat systems in Europe for several years and is within weeks of launching a power-to-heat system for a PepsiCo snack food plant in the Netherlands.

The PepsiCo battery, which will be the largest high-temperature TES system in Europe, converts renewable electricity from the grid into heat, which it slowly releases to boil the oil in which PepsiCo’s crunchy snacks are fried. This system will save PepsiCo substantial energy costs and slash the plant’s carbon footprint by replacing a 25MW natural gas boiler.

Kraftblock says that it can supply heat up to 1,300°C, hot enough for use in many industries, including food and beverage manufacturing, chemicals production, and materials manufacturing.

A key feature of Kraftblock’s technology is its proprietary heat storage media, which are spherical pellets. The pellets’ small size (compared to the size of their container) and spherical shape create a large surface area per volume of storage material, making it easier to extract heat from the battery than if heat were stored in legacy refractory blocks.

Kraftblock pellets are manufactured in various sizes and binder compositions according to clients’ needs. The binder conducts heat, so more binder in a pellet enables it to accept and release heat faster for applications that require rapid charging and discharging, such as preheating a steel sintering furnace. If an application requires more gradual heat discharge over time, such as heating an apartment block, pellets can be made larger and with less binder.

The pellets’ steel slag and phosphate binder composition gives them a very high energy density, meaning that they can store a large amount of energy in a relatively small volume. This results in smaller and lighter batteries ideal for retrofitting TES systems into crowded industrial facilities or transporting batteries by truck between charging and use sites.

As we explained in a detailed industry report, there are numerous competitors in the TES space, each with a subtly different value proposition. One listed company, Brenmiller Energy (NASDAQ: BNRG) stores heat in crushed rock held in thin metal conductive cells stacked in an insulated container. Brenmiller has commissioned several TES systems in Israel, Europe, and the Americas.

U.S.-based Rondo Energy, a private company that has received investment money from Breakthrough Energy Ventures and several other high-profile investors, stores heat in refractory blocks and focuses on creating value through its industrial control systems. It has announced several projects in the U.S. and overseas.

Thermal energy storage systems’ pairing of energy cost savings and carbon emissions reduction effectively guarantee widespread implementation in industry. Initial TES installations have shown great promise, and clients are already reaping rewards from the technology. Intelligent investors take note.

This is another early Forbes article regarding the effects of climate change and weather-related disasters on bond prices. My contention remains that climate change is an inherently stagflationary factor that will raise the most important prices in financial markets: the price of future cash flows as reflected by the bond markets.

The Washington Post story entitled Survivors of Hurricane Michael in the Florida Panhandle fear they have been forgotten stood out when I was looking through my news feed the other day.

One of my first climate change articles, Two Tales of One City detailed the effects of a changing climate on a specific company, The St. Joe Corporation JOE, whose main assets are properties in the Florida panhandle.

I wrote Two Tales of One City back in October, after Michael bulldozed straight through St Joe Corporation’s home base of Port St. Joe, but didn’t think much about the situation again until I received a phone call from a resident of the city asking for help.

The caller was at wit’s end. The beachside resort with the charming small-town feel that she calls home is still in tatters, six months after the storm. The St. Joe Corporation doesn’t seem motivated to help with rebuilding, she said, if rebuilding were even possible. She explained that, right now, construction work was close to impossible on account of a lack of housing for victims, let alone workers.

The Post article fleshes out the caller’s plight and the plight of her neighbors:

Many residents are living in damaged homes or trailers unfit for human habitation. Some live in tents. Homeowners are frustrated by stingy insurance companies and bewildering government paperwork, and they’re wary of shady contractors.

To add insult to injury, FEMA housing vouchers for Hurricane Michael survivors are expiring this month.

Donations to victims of Hurricane Michael have been much lighter than to those of other Atlantic and Gulf Coast storms, but while the depth of people’s suffering on Florida’s forgotten coast is unusual, the fact of it is not.

Houston, my hometown and one of the wealthiest cities in the nation, still has large swaths of housing that remains unlivable and unlived more than a year after Hurricane Harvey dumped millions of gallons of rain. This situation persists despite the importance of the Texas electorate to national politics and half a billion dollars of charitable contributions flowing into Houston after Harvey.

Do I even need to bring up Puerto Rico? American citizens living there have been offered proof, if further proof were needed, that they are – by any sensible definition of the term – second-class citizens.

These examples offer a grim look at what I believe to be an underappreciated effect of climate change: economic stagnation.

A flurry of economic activity has occurred, to a greater or lesser extent, at each of these sites of not-quite natural disasters (Natural disasters are no longer purely natural says the EDF). While that economic activity might be counted as “growth” when GDP statistics are compiled, in a very real sense, it is not.

The money, time, and energy flowing into areas affected by climate-related disasters (which include Midwestern flooding, California wildfires, and the hurricanes mentioned here) are applied to restoring a region to its original condition rather than to expanding capacity.

To paraphrase Bono, climate change is forcing us to run to stand still.

Stagnation and the increasing risk of loss due to climate-related disasters will, I believe, start to negatively affect the market for financial instruments traditionally thought of as “safe” – government and corporate bonds.

Government’s ability to issue bonds rests on their power to tax its citizens. Municipal, state, and federal governments have a partial claim on all economic activity within their jurisdictions, and if the value of that claim falls, bonds backed by the claims will become riskier. Investors demand higher yields from riskier investments, suggesting that the price of current on-the-run bonds will fall (bond prices move opposite to yield).

For a case study of this – albeit not one related to climate change – one has only to look at how Detroit’s bonds fared as its economy sputtered.

On the corporate side, the PG&E bankruptcy shows us that economic risk is rising for companies as well. While the effects of climate change are still fairly diffuse, the bond market impact due to the failure of a single regional utility provider is slight. But as these types of events cluster and become more notable, the impact on corporate yields is likely to become more obvious as well.

And now for a few questions to my gentle readers:

1. How much of you and your family’s investment portfolios are allocated to “safe” government and corporate bonds?

2. Do you have a sense when you invest in bonds that the asset you hold is another party’s liability? (Thanks to Real Vision’s interview with Anthony Deden for underscoring this point to me)

3. Have you attempted to increase the yield on your bond portfolio by investing in riskier assets or in longer-tenor bonds? (Both of which strategies expose an investor to increased sensitivity in changes in yields…)

Investing during paradigm shifts is perilous. Beneath every crisis lies an opportunity. These are facts that anyone seeking to build and maintain intergenerational wealth must consider. Intelligent investors take note!

This article was one of my first on Forbes covering the topic of climate change. I relate the saga of the St. Joe Company, owned by Bruce Berkowitz and shorted by David Einhorn, both value-based hedge fund giants. The greatest portion of a stock’s value is made up of investors’ assumptions that the company will continue to create increasing value in perpetuity. My simple question for the hedge fund titans: How can a property that will be underwater in a few generations’ time create increasing value for perpetuity?

It would be the best of times, it would be the worst of times…

This line – paraphrased from Dicken’s classic tale of the French Revolution – summed up the opinions of two investing giants early in 2011 regarding the real estate developer, The St. Joe Company JOE.

Bruce Berkowitz, the founder and portfolio manager of the value-oriented Fairholme Capital Management, had built up an enormous stake in St. Joe – over 25% of outstanding shares at the time (now he owns over 40%). In his mind, St. Joe was sitting on a veritable goldmine – literally an irreplaceable asset – bought years before at ridiculously low prices. Berkowitz surely believed that the best of times was in store for St. Joe.

David Einhorn, the youthful founder and portfolio manager of long-short hedge fund Greenlight Capital, had probably sold Berkowitz at least some of the latter’s stake; Einhorn had started “shorting” St. Joe’s shares five years before, in 2006. In Einhorn’s opinion, the assessed value of St. Joe’s property holdings was hugely inflated; he surely thought that the company was set for the worst of times when market participants learned the true value of the land.

A friend and colleague who covered St. Joe for Morningstar had assessed the company’s situation and had come down in the “best of times” camp. My desk was adjacent to his, so I had a front row seat during his combative call with Mr. Einhorn and several of Greenlight’s analysts.

After the call, my friend, exasperated, asked me what I thought.

“The crux of your valuation is that even though demand for St. Joe’s land is slack right now, the environment will normalize over time. Because the company’s balance sheet is clean and the operations lean, if the company sits on the land long enough, it will generate the value.”

“That’s right,” he said.

“What if the value of that land actually decreases over time? After all, most of its developments are on Florida’s Gulf Coast. As sea levels rise, many of those plots may have to be abandoned or costly protective measures will have to be implemented.”

My friend, an insightful and intelligent analyst, considered the idea seriously, but people sitting nearby howled with laughter that I would bring up such a pie-in-the-sky, impractical topic as climate change.

To be honest, this old exchange had been completely wiped from my conscious memory until Hurricane Michael struck the Florida panhandle as a powerful Category 4 storm last week. Michael clocked in as the third most intense storm ever to hit the United States as measured by central atmospheric pressure.

The destruction shown in the photos of Mexico Beach, Florida – which received a full-on blast from the eyewall of the storm – remind me of those taken of Hiroshima after the atomic bomb blast. Indeed, they should: the energy generated by Michael was more than 200 times greater than the total electrical generation capacity of the entire world.

Mexico Beach, it so happens, is just 11 minutes by car from the sales headquarters of St. Joe’s jewel in the rough – WindMark – according to Bing Maps. The residents of Port St. Joe, just a bit further south down the coast, were not in for a picnic either, by the looks of the aerial footage.

So far, the market has proven Mr. Einhorn correct. He reportedly closed his short position in 2016, booking a tidy profit for his investors.

Since then, the stock has fallen a bit further, though not monotonically.

If the recent assessment of the IPCC proves correct, it is likely that a (possibly very patient) investor has about another $15 per share of profits to be earned from a short position in St. Joe.

About the time that Einhorn was building his short position in St. Joe, two climate scientists specializing in the dynamics of sea level rise, Weiss and Overpeck, published a paper forecasting that all of St. Joe’s beachfront properties would be 10-15 feet below water at high tide by the year 2100. Surely, they will have lost all of their economic value well before that.

It is the age of wisdom, it is the age of foolishness. Be a wise steward of your capital and invest in reality.

“Water, water, every where,
Nor any drop to drink.”

This line from Samuel Taylor Coleridge’s Rime of the Ancient Mariner expresses my frustration at the enormous wealth of above-ground carbon that goes to waste even while we dig up ancient fossil carbon to use for fuel.

“Mining” this above-ground carbon to manufacture biofuels would help mitigate the massive imbalance in the earth’s carbon cycle, and this column has highlighted a few startups doing just this. Kore Infrastructure is converting vegetation cleared from electrical transmission lines in California into hydrogen, and W2E Renewables is converting manure from Colorado dairy farms into natural gas.

Biofuel manufacturing technologies

Pyrolysis heats organic waste at or above 500°C in the absence of oxygen, breaking down waste molecules and concentrating the resulting compounds into fuel. The products of pyrolysis are biochar, the carbon skeleton of the organic matter, gases such as carbon monoxide, hydrogen, and methane, and liquids that, if not condensed into a biofuel, form a sticky tar that can foul equipment.

Thermal gasification is a more involved process that heats organic waste to even higher temperatures, completely splitting molecules apart and creating just gaseous fuel and biochar.

The Viking, a pilot biomass gasifier at the Technical University of Denmark, sets the global benchmark for thermal gasification. The Viking is very efficient at converting biomass to fuel, requiring only about one-tenth of the energy it creates to run—compared to around one-third for other gasifiers—and produces very little tar.

A biofuel Viking in India

MASH Makes is an Indian and Danish startup working on commercializing the intellectual property underlying the Viking’s exceptional efficiency. MASH is an acronym composed of the founders’ initials, and Makes reflects the expansion of their product line beyond biofuels.

MASH Makes operates a facility in India equipped with four pyrolysis reactors based on the Viking design. The reactors convert agricultural residues—sourced from a nearby biomass collection hub—into biofuels and high-quality carbon credits for sale on international markets. The resulting biochar is distributed to local farmers as a soil amendment. While the current setup is centralized, the ambition is to scale into a broader network of facilities in the future.

I spoke with co-founder and CEO, Jakob Andersen, PhD, about MASH Makes’ commercial strategy. Andersen says that only about 5% of revenues come from biochar sales, but that these sales are the secret sauce powering the enterprise.

Adding porous biochar to soil helps fields retain water, enhancing crops’ resiliency to drought. The char also provides a structure for a complex ecosystem of helpful bacteria and other organisms that boost crop yields and can act as a catalyst that makes essential nutrients like nitrogen and potassium more available to plants. “By adding char to fields, we are increasing the amount of feedstock to go into our pyrolysis units. The ‘return on [agricultural] residues’ is amazing.” says Andersen.

The remainder of the startup’s revenue is evenly split between biofuels, which are shipped in tanks to local ports where they enter the global fuel market, and carbon credits purchased by prestigious buyers such as Microsoft and Shopify.

Funding biofuel production sites

Like other bioreactor businesses such as LanzaTech, MASH Makes relies on the strategy of “numbering up” rather than “scaling up”—coordinating a network of small producers rather than centralizing production in one massive plant.

Mash Makes has funded its first two sites through the Nordic Environment Finance Corporation and several other investors and is currently working on a scalable financing solution for future sites through large international players.

At present, the company’s reactors create a “rainbow” of gaseous and liquid fuels through pyrolysis. When I asked how the company was handling the tar created in the process, Andersen said the company had worked on converting this usually unwanted byproduct into a carbon-negative marine fuel, and announced in April that a global shipping firm had combined MASH Makes biofuel with conventional marine fuels to power the auxiliary engines of a ship on its Brazil to Singapore route.

The company is in the process of raising a second round of venture capital to build out its Viking-based gasification units, using its first gasifier, housed in a 20-foot container, as a pilot. Andersen says that a 40-foot container unit will be ready to roll out commercially in the next few years, enabling the company to accept a wider range of organic feedstock and create even higher-quality fuel.

Refined cashew shells are an unlikely fuel source for a cargo ship, but MASH Makes has proven that it can be done. Out-of-the-box biofuel solutions like this one can help correct our planet’s massive carbon cycle imbalance before it’s too late. Intelligent investors take note.

About half of all global energy use is for generating heat; this proportion rises to between two-thirds and 70% in the industrial sector. Industrial firms seeking to switch to renewables to electrify operations must find efficient storage mechanisms that eliminate intermittency issues. Some entrepreneurs are looking beyond chemical batteries to store thermal energy directly—a new field called thermal energy storage.

TES systems have substantial advantages over chemical batteries: The raw materials used to store energy—dirt, concrete, salt—are cheap and plentiful. Thermal batteries tend to have very long lifespans—measured in decades rather than years. Also, converting power to heat, or simply storing heat to be used later, is very efficient—in the 95% range.

There are three approaches to TES: sensible, latent, and chemical systems.

American start-up Rondo, co-founded by the founder of a company I covered in this column, GlassPoint Solar (RIP), has announced projects totaling over 200MWh of energy storage and 3GWh of total partnerships. Rondo uses the legacy technology of refractory bricks to store energy at temperatures up to 1,500°C and offers two standard battery configurations—one with 100MWh of capacity, the other with 300MWh.

Kraftblock, a German startup founded in 2014 by chemist Martin Schichtel and economist Susanne König, has developed a proprietary storage medium comprised of recycled steel slag—a waste product from blast furnaces—and a phosphate binder. This storage medium has a very high energy density, allowing its batteries to be transported from a charging facility (e.g., a biofuel power plant) to a discharging facility (e.g., water boilers in an apartment block) and at high temperatures--up to 1,300°C. The company is just completing the largest thermal battery in Europe, which will supply heat to a PepsiCo snack food manufacturing facility in the Netherlands. Kraftblock’s battery replaces a 25MW natural gas boiler and will be charged by grid-supplied renewable energy when grid use is low.

Latent and Thermochemical Energy Storage

Latent storage systems store energy when a substance is in one state and releases energy when the substance changes into another state. The most familiar example of latent heat devices are rechargeable hand warmers, which contain a super-concentrated solution of sodium acetate in water. When the hand warmer is activated, the liquid crystallizes, releasing heat; it is recharged by boiling it in water.

A disadvantage of latent heat systems is that most materials used in this application release only low-intensity heat. One company, a U.K.-based firm called Sunamp, uses a modified version of the sodium acetate trihydrate solution found in hand warmers. Sunamp’s focus is wholly on residential use in water heaters and the like with maximum storage temperatures of around 130°C.

MGA Thermal, an Australian startup, is developing another example of a latent heat system for industrial use, a hybrid system in which metal alloy “chips” are suspended in a graphite block “cookie”. The alloy undergoes a phase change from solid to liquid upon charging, then releases heat as it cools and solidifies. The chips release latent heat, while the graphite blocks release sensible heat. The graphite blocks fully encapsulate the chips to prevent the liquid metal from leaking when the systems reach a maximum temperature of around 700°C.

Chemical storage methods use energy to break chemical bonds to form two chemicals. An example reaction is slaked lime transforming into quicklime and steam when heated to around 500°C. The resultant chemicals can be stored separately then combined later to release some of the heat that was used to trigger the initial reaction. The chemicals in these reactions have very high energy densities and are easily transported; however, chemical engineering challenges have prevented this form of storage from being used outside the laboratory.

The Climate Impact of Thermal Energy Storage

According to a 2021 IEA report, industrial heat alone emits approximately 9.4 Gt CO₂ per year, equivalent to around one-fifth of global CO₂ emissions. Although some of this heat cannot be efficiently generated and stored through renewable energy and TES batteries, we don’t see why a significant proportion of this carbon footprint could not be eliminated (CCS and/or hydrogen technology will have to be improved to address the remainder).

While thermal energy storage is still a nascent technology, we consider it essential and expect it to grow in importance as we move deeper into the post-Climate age. Intelligent investors take note.

While I usually like to name the companies that I have been researching, for this article, I’m anonymizing my comments.

Recently, I have been researching several companies in the same climate tech field. One—the younger of the two by several years—is based in the U.S. and the other is based overseas. The U.S.-based company has a charismatic CEO who was a co-founder of another climate tech startup back in the day and who has great connections in the U.S. VC and corporate VC world. He has even given a TED Talk.

The overseas company is led by its low-key technical expert founder with no prior startup experience but 15 years of increasing professional responsibilities in a technical discipline.

The two companies manufacture products whose technical specifications are nearly identical. My research leads me to believe that the overseas company’s product is technically superior, but the race is pretty close on paper.

Here is the kicker: The U.S.-based company has raised five times the amount of its overseas competitor—a total nine-figures of capital injected over several funding rounds.

Because of this additional funding, the U.S. company has announced high-profile projects in many different locations worldwide. The customer and partner logos on its pitch deck look like a Who’s Who of the Forbes Global 2000 list.

Its competitor, on the other hand, has been constrained in its marketing efforts, so has focused on customers in its domestic market and kept costs low by running sequential pilots before embarking a few years ago on its first high-profile commercial project.

One of the big biases in the VC world is that the speed at which a startup scales up is thought to be a proxy for its ultimate success. So a young startup that has raised nine figures early on, announced a lot of flashy partnerships and projects, and has a photogenic TED Talker at its helm looks like it will be a lot more successful than an older startup led by a technical guy that has raised less money and announced fewer projects more methodically.

But, just as it’s not a good idea to judge a book by its cover, it’s dangerous to judge a startup based on announced deals and money raised.

The U.S. company got over its skis and overpromised on its technical capabilities. As engineering work started on the projects, it became obvious that a lot more work would have to be done to get the systems integrated with customer facilities—and a lot more work means a lot higher cost. To make matters worse, several of its marquee projects were funded through U.S. government grants and those projects were cut off almost immediately after the Trump administration came into office.

The foreign startup worked more methodically with its prospective clients and made sure they could under-promise and over-deliver. They also made sure that the systems they designed made good economic sense even without subsidies.

This is not to say that everything went smoothly with the foreign startup. Anyone working on a first-of-a-kind, FOAK, project runs into issues—infrastructure improvements need to be made, permit frameworks don’t cover the new technology so the company needed to apply for exceptions, et cetera. But two years after its last modest fundraise, the company says its financial position is still strong and that the revenues from the commercial project help attenuate its cash burn.

It may sound counterintuitive to founders worrying about where the next payroll check is coming from but figuring out how to work within constraints helps most startups more than it harms them. When a startup’s bank account is sloshing with easy money, founders get antsy to spend it. Headcount balloons and impossible promises are made to clients. Sooner or later, the bug of fantasy splats against the windscreen of reality.

The morale of the story: sometimes having too much capital can be as dangerous to a startup as having too little. If you have the funds to design a product or service that meets and exceeds the expectations of customers that are willing and able to pay for them, you have enough capital. Intelligent investors take note.

This article was originally published on Forbes.com in April 2021. That month, I featured research from a standout graduate student at Princeton University detailing how increasingly rising temperatures will affect human survivability in the tropics and discuss why this research matters to people living in temperate countries.

Executive Summary

• A recently published study has quantified the increased stress to humans living in tropical regions from rising temperatures.

• Scientists find that the combined effects of heat and humidity stand to make the tropics unlivable for around 3 billion people for weeks every year.

• The aggregate GDP for countries in the tropics is on par with that of the US and the EU, and worsening conditions in the tropics will certainly prompt waves of migration into more temperate regions.

• The combined effect of slower economic growth in tropical nations and increased governmental expenditures in temperate ones threatens to squeeze the world’s economy from both sides.

The Research

Academic work as early as the 1930s forecasted a rise in global average temperatures due to rising amounts of carbon dioxide in the atmosphere (The American Institute of Physics has a great summary of the history of this modeling work). Recently, I am finding more studies that go one step further to investigate the likely effects on plants and animals as atmospheric temperatures climb.

My February Climate Catalyst article covers academic work on the effects of rising heat on plants. This month, we look at a shocking new study written by Princeton University graduate student, Yi Zhang, and colleagues that looks at the likely effects of a warming atmosphere on human physiology.

Zhang’s study, published in the prestigious journal Nature Geosciences, focuses on the effect of heat and humidity on human health in four tropical regions by studying a measure called extreme wet-bulb temperature.

Wet-bulb temperature represents the “feels like” temperature related to the evaporation of water. When air is dry, a given temperature feels cooler than when it is humid because sweat can evaporate quicker in an arid environment.

Zhang and her team modeled how extreme wet-bulb temperature increases with increases in mean temperature. Their model suggests that wet-bulb temperature rises 1-for-1 with average temperature, meaning that a 1°C rise in mean temperature would result in a corresponding 1°C increase in wet bulb temperature.

Zhang’s model is very stable and shows good agreement with actual historical measurements. In a word, it’s righteous.

To see the importance of Zhang’s team’s findings, you need two other bits of information:

• The annual maximum of average daily wet-bulb temperatures in the tropical region over the past 40 years has been 33°C.

• After a few hours spent in wet-bulb temperatures at or above 35°C (95°F) humans are physically unable to lose enough heat through sweating to survive.

A wet-bulb temperature of 35°C or above is unsurvivable, but anyone who has spent time in a hot and humid environment (like my hometown of Houston) knows that hanging out in an area with wet-bulb temperatures of 34.5°C is no picnic either.

For those of you not keeping careful score, humanity is well on its way to forcing the climate to rise in excess of 2°C and we may exceed 1.5°C by 2040 at the rate we’re going. If Zhang’s work is correct, by the time a child born today is a freshman in college, the swath of land spanning from 20 degrees north to 20 degrees south of the equator will become practically inhabitable for parts of the year.

My friend, Dave Borlace, who runs a terrific YouTube Channel and associated site called Just Have A Think (JHAT) did a wonderful, engaging video that dissects this paper’s findings in detail:

Why This Research Matters

Those of you like me living in the upper Midwest might be tempted to think that the transformation of the tropics into a seasonably unsurvivable hellscape is somebody else’s problem.

Think again.

Aside from the human suffering caused by 40% of the world’s population (roughly 3 billion people) living in that region now, I can think of two very good reasons why an unlivable increase in tropical temperatures represents an enormous problem to people living in cushy, temperate climes.

First, the tropics represent an economic bloc that rivals the size of the US and the EU. Here are the top five countries situated mostly or wholly within the tropics and their 2019 GDP:

• India $2,870,504

• Brazil $1,877,114

• Australia $1,391,536

• Mexico $1,268,868

• Indonesia $1,120,042

Your correspondent added up the GDP of all the tropical or partly tropical countries and found that the 2019 GDP for the 94 nations was 70% of 2019 GDP for the US.

If the tropics are unsurvivable for part of the year, a trading block on par with the largest economies in the world will be hobbled.

Considering that the growth strategy of a lot of Western consumer products companies boils down to some variant of “Sell more in emerging markets,” the living conditions of consumers in that part of the world should be of intense interest to investors and businesspeople alike.

The second reason those of us sitting in air-conditioned comfort right now should be concerned by Zhang’s findings has been underscored by the horror shows that have been taking place at the US southern border and in the Mediterranean basin over the last decade.

I wrote an article in 2019 entitled Agriculture, Climate Change, and the Border Crisis that explained how climate change was affecting the situation at the southern border. Other researchers and writers have drawn connections between climate change, the Syrian Civil War, and the wave of immigrants into Europe.

Immigration – as I make clear in my article – is a complex topic with manifold causes, but one thing is clear: If an area is unlivable, people there are not going to simply chose to die in place. They are going to pack whatever they can into bags and backpacks and role the dice on a trip to somewhere more hospitable.

Mass immigration causes enormous stress on societies – from the public money needed to manage refugees to effects on culture to impacts on educational and health systems. In the simplest terms, resources redirected to managing a large influx of refugees and immigrants are resources that cannot be used to improve the lives of citizens of the countries into which the migrants are flowing.

In investing terms, worsening environmental conditions in the tropics ends up affecting temperate countries on both the top line and the bottom line. The global economy is stunted (slowing top line growth) and the costs of dealing with migration crises increase (reducing money flowing to the bottom line).

Whether looking at Zhang’s research from a humanitarian perspective or from a cold, calculating economic perspective, you wind up with the same conclusion: Civilization cannot afford to continue on its business-as-usual course.

Intelligent investors take note.

Elai Kobayashi-Solomon contributed to this report.

This column has previously featured companies storing energy in innovative ways with lithium-ion, nickel-hydrogen, iron redox flow, and even gravity batteries, so my ears perked up when I heard about a company marketing an innovative thermal battery and providing “Heat-as-a-Service” to industrial clients.

Around half of all energy use is spent on heating something, from melting steel to providing warm showers to drying agricultural crops, and the industrial sector is a particularly heavy spender. The concept of HaaS seemed so novel, but I could only imagine it applied to industrial processes.

Imagine my surprise upon discovering that I can buy and install a high-efficiency thermal battery for my home in the form of a heat pump water heater.

Residential HPWHs have been sold on the U.S. market for about fifteen years by large, well-known distributors through nationwide hardware store chains.

HPWHs works like your kitchen refrigerator but in reverse. Instead of pulling heat out of a cold space and releasing it outside, it pulls heat from the surrounding air and transfers it into the water in the tank.

Ambient warm air is drawn into the heat pump, where the warmth turns a refrigerant from a liquid to a gas. The refrigerant gas is then compressed, which heats it further, then pumped through condenser coils inside an insulated tank filled with water. The hot condenser coils warm the water, and the insulation keeps it warm until it’s needed.

In a legacy electric resistance water heater, 1 kW of electricity generates 1 kW of heat. In a HPWH, 1 kW of electricity generates around 2-4 kW of heat, significantly lowering household energy use while washing clothes, dishwashing, and showering.

Another great feature of HPWHs and thermal batteries in general is their ability to release the energy put into them with very little loss. Lithium-ion battery installations—which convert electrical energy into chemical energy and back again—have round-trip efficiencies around 90%, a few percentage points above most other battery chemistries.

Thermal batteries, in contrast, convert electrical energy into heat. If thermal energy can be used directly, as in the case of a water heater, their efficiency is 98-99%.

HPWHs are so efficient that local utilities offer rebates to homeowners who install them. Paying people to use HPWHs makes financial sense to grid operators because grid congestion can be so costly during peak use periods.

Leave it to an entrepreneur familiar with the costs of grid congestion to devise an innovation that materially improves upon the already very efficient HPWHs.

Massachusetts-based Cala Systems, cofounded and led by a seasoned grid modernization executive, Michael Rigney, has developed intelligent HPWH controllers that coordinate with the grid via Wi-Fi to schedule water heating when electricity prices are lowest.

Cala’s systems, which will hit the market later this summer, are designed to superheat water in the tank when electricity is cheap, then store it until needed. When someone turns on the hot water in the shower or starts the dishwasher, a mixing valve adds cool water to the superheated store to provide the appropriate temperature for the application.

These smart water heaters also communicate with other devices behind the homeowner’s meter (such as solar panels and battery systems) to heat water most efficiently given the home’s energy mix.

Unlike conventional water heaters, Cala’s system monitors a household’s hot water usage patterns and feeds these data into a predictive control algorithm licensed to Cala by the National Renewable Energy Laboratory. This algorithm lowers energy usage by determining the best time and speed to heat water, only heating as much as is needed. Users can increase heating through the Cala app if guests are visiting or the household otherwise exceeds its typical usage.

These innovations allow for a very efficient product--a heat pump water heater--to become even more efficient.

Rigney knows, as I know, the importance of increasing energy efficiency, decreasing carbon footprints, and decongesting our groaning legacy electrical grid. Intelligent investors take note.

Power grids from the Midwest to the Southeast have taken emergency action this week as an early-season heat dome brought an extended period of hot and humid weather to America’s most populous region.

The science team at nonprofit news organization Climate Central found that climate change made the present spell of hot weather four to five times more likely.

The largest grid operator in the U.S., the Pennsylvania-New Jersey-Maryland (PJM) Interconnection, which coordinates the transmission of electricity to roughly 20% of the U.S. population in 13 states and the District of Columbia, issued an alert that power usage is likely to hit a 14-year high this week.

The alert advises electrical generation facilities to delay maintenance and repair outages due to the heavy load and informs clients that it will undertake “demand response” initiatives through VPPs like Sonnen and Renew Home—companies which we have covered in this column.

The Interconnection, which maintains approximately 179 gigawatts of total generation capacity and nearly 8 GW of demand response capacity, anticipated a load of 160 GW—around 86% of its total capacity.

On Tuesday, the Department of Energy issued an emergency declaration for the Carolinas allowing Duke Energy to exceed pollution limits at its power plants to meet the load brought about by the heatwave.

While summer heatwaves are not unusual, this one came early in the season and is severe enough to prompt action by grid operators and the U.S. government.

The scientists at Climate Central have developed an online climate shift index application that calculates the increased likelihood of temperature extremes due to climate change. According to Climate Central’s explanation, “The Climate Shift Index (CSI) reveals how much climate change influences the temperature on a particular day. The index ranges from -5 to +5 with positive levels indicating temperatures that are becoming more likely due to climate change (negative scores indicate conditions that are becoming less likely). For levels at 2 or above, the Index is a multiple of how frequently a particular temperature will occur due to climate change.”

The CSI estimates the current Midwest and East Coast heatwave has been roughly four to five times more likely due to the effects of human-induced carbon cycle imbalances.

This analysis highlights the extent to which climate change is already affecting our daily lives. I often hear people speculate as to climate change’s effects on their children or grandchildren while overlooking the radical imbalance of the planet’s carbon cycle already incurred by 150 years of burning fossil fuels.

Climate change’s impacts on civilization are no longer abstract projections to be suffered by future generations; if we take the trouble to look for them, we find that those impacts have already arrived. We are living in a “post-climate” world.

This week’s early-season heatwave illustrates the vicious cycle in which we are now trapped. People crank up their air conditioning in rising temperatures. Utilities, straining to accommodate the additional power demand, crank up coal- and natural gas-burning facilities, releasing carbon dioxide into the atmosphere, making the atmosphere more insulating, and further raising temperatures.

Now consider that this vicious cycle is playing out across the globe.

Everyone living in the dark rust-colored parts of the map above is experiencing unseasonably hot weather made four to five times more likely due to climate change.

Outside of the U.S., many in those dark rust-colored areas live in developing countries. Those folks are no less desperate for the relief of air conditioning than people on the East Coast of the U.S. and are increasingly able to afford this luxury.

There are ways to break out of this vicious cycle, but they are not simple. One featured earlier this month in this column is Dr. Lorenzo Kristov’s proposal to shift power generation and distribution to regionally distributed self-reliant mini-grids. Another is reducing fossil fuel generation demand through energy efficiency improvements in homes and commercial buildings. Yet another is increasing the livability of underserved neighborhoods through tree planting and the establishment of energy-efficient community cooling centers.

One point that bears stating: Cutting funding to federal agencies like NOAA and the National Weather Service risks lives during extreme weather events and threatens the stability of our electrical grid.

The emergency measures taken by PJM and the Department of Energy this week were made possible by forecasts born from the hard work done daily at these agencies. Maintaining our government’s capacity to understand how a changing climate will manifest itself through extreme weather events like heat domes and predicting these events before they occur is essential in this post-climate world.

Like most Americans, with the exception of a soccer match every now and then, I could give a flying handshake about what’s happening day-to-day on the Iberian Peninsula. However, the recent blackout, which shut off power to over 55 million people in three countries within five seconds, caught my attention for its implications for the future of renewable energy in the U.S.

Renewables promise ample electricity with a low carbon footprint and a low price point, especially compared to coal, so it is no wonder that wind and solar have seen such a huge growth in capacity over the last generation.

Critics of renewables will rightly point out that renewables are cheap as long as battery storage is not included in their price, and the sudden collapse of an entire electric grid for 12 hours incurs a staggering economic burden that should be priced into cost calculations.

Supporters of renewables argue that the problem is not renewables themselves, but insufficient or outdated control, distribution and storage equipment on the grid. If we spend more money on storage and transmission, everything will be hunky-dory.

My intuition was that both arguments held water. Critics are right to include the cost of storage to the low cost of renewables because electricity is an on-demand commodity--it must be there even when the sun is not shining and the wind is not blowing. That said, supporters are right that including the long-term cost of further unbalancing the planet’s natural carbon cycle, the “low” cost of continued fossil fuel consumption is an illusion.

Since the blackout, which occurred at the end of April, I’ve been speaking with Dr. Lorenzo Kristov, one of the world’s top experts on grid architecture, and combing through reams of articles on power engineering.

I concluded that both critics and supporters of renewable energy are wrong.

Both sides are trying to fix current problems with the same mindset that created the problems in the first place: Industrial Revolution thinking.

The Industrial Revolution paradigm centralizes production and relies upon long and ultimately fragile supply and distribution chains that are vulnerable to changes in environmental factors. As we head deeper into the post-Climate era, long supply and distribution chains will inevitably face accelerating disruption.

Nearly 90% of natural gas processing, fractionation, and storage is concentrated in four regions in the U.S., each subject to various environmental hazards that will incur greater complications and costs as climate change exacerbates natural disasters’ frequency and severity. Although concentrating gas production in these areas is efficient (the ultimate goal of the Industrial Revolution paradigm), it results in long, fragile supply and distribution chains.

Similarly, building enormous solar and wind farms deep in flyover country necessitates enormous expenditures on fancy new storage equipment and mechanical devices to manage voltage and grid frequency, and new high-voltage DC transmission lines. All this spending creates exactly the same sort of fragile supply and distribution chains we see in natural gas. Indeed, the root cause of the Iberian grid’s failure on a clear, windy day when 70% of Spain’s generation capacity was coming from renewables was the Spanish grid’s inability to gracefully handle such a surplus of renewables generation.

Modern-day grids are trying to cram the power train for a Tesla Roadster alongside the internal combustion drivetrain of a 1959 Edsel, then take this hybrid Frankencar off-roading.

It is time for a new paradigm.

Kristov and his colleagues have developed a paradigm that envisions individual towns and regions forming self-reliant mini-grids that can attach and detach from the larger grid network as needed. While this architecture would not have prevented the equipment failure that triggered the Iberian Blackout, it would have isolated the problem from the rest of the system, keeping the outage local rather than allowing it to proliferate nationwide.

This model upsets the way incumbents competing in electrical generation, transmission, and distribution have been doing business for the last 120 years. Challenging a network of longtime monopolies and their corresponding political structures is tough, even though it’s the right thing to do. Intelligent investors take note.

After decades of flat to declining electrical utility demand, customers are suddenly clamoring for more power. AI data centers have driven that demand, but home electrification and EVs have also boosted the electric load on our aging grid.

Utilities’ present infrastructures are based on 10-year-old plans that didn’t foresee this surge in demand. Building new power plants or stringing miles of new transmission lines doesn’t happen overnight, so utilities are scrambling to do more with less.

Boston start-up LineVision and several European competitors are leveraging a new technology called dynamic line ratings to help utilities do more with less. DLR systems allow grid operators to increase the current flowing through high-voltage transmission lines like the ones pictured below.

The difference between current and voltage can be visualized by a conveyor belt carrying boxes of a uniform size. The fixed box size represents voltage, while the speed of the conveyor belt represents current. To deliver more boxes in the same amount of time, you increase the speed of the conveyor belt.

The same is true for electrical generation. Generation facilities respond to increased demand by producing more power and sending it through transmission wires at a constant voltage, but higher current.

If electrical grids were conveyor belts, it would be easy to just boost the amperage (another word for current, which is measured in amperes) flowing through the lines. However, as current increases, transmission lines heat up and sag due to thermal expansion. Sagging places a strain on transmission towers and, if severe enough, might cause lines to brush against vegetation, sparking fires (read my article PG&E: The First S&P 500 Climate Change Casualty). The sun’s heat causes lines to sag more on sunny days, while increased airflow on windy days cools the lines, which sag less.

Industry conservatism and the threat of wildfire-related lawsuits prompt grid operators to keep transmission currents low to prevent excessive line sagging. This conservatism is warranted on hot, still summer days when everyone is cranking up their air conditioning, but such caution often restricts the amount of electricity available to customers.

DLR systems signal grid operators to throttle back on the current on sunny, still days and crank up the current when demand spikes on cool, cloudy, windy days.

Such slight adjustments might seem trivial, but DLR systems enable amazing capacity increases. A brisk wind allows 50-100%+ amperage increases over static assumptions on a case-by-case basis, leading to average grid-wide capacity increases of around 40%. Replicating such increases over the entire 700,000-mile grid network could result in enormous economic benefits.

Increased “ampacity” (i.e., current capacity) reduces the demand for new generation facilities and transmission lines, clears transmission bottlenecks, increases the grid’s capacity for cheap renewable energy, and helps grids re-energize faster after equipment failures.

DLR companies working on modernizing our aging grid

The pioneer of DLR systems is Ampacimon, a Belgian company spun out of a university in 2010. Its devices are installed directly onto transmission lines, deriving power from the lines’ electromagnetic field. The devices sense determinants such as wind vibrations and the lines’ temperature, then use theoretical models to infer from measured inputs and local weather reports how much sagging is likely to occur, which they report to the grid operator in real-time via cellular links.

Heimdall Power, a Norwegian company founded in 2016, applied a twist to Ampacimon’s model. Heimdall’s devices are installed onto transmission lines via drone and operate on harvested electric power. However, rather than using theoretical models, Heimdall’s devices are equipped with MEMS chips and accelerometers, the sensors in your phone which measure movement and relative position to the earth. The devices infer from this location data the sag across the span to which they are attached. You can learn more about Heimdall’s solution here.

Ampacimon’s devices originally required that power to the lines be shut off for installation, but now both they and Heimdall’s devices can be installed on live transmission wires, making installation less disruptive.

LineVision is the only DLR company to combine hyperlocal wind predictions powered by AI with direct sensor validation of wind speeds and conductor position. LineVision sensors attach to towers rather than the lines themselves and are powered by solar cells and batteries, enabling the system to estimate line capacity when a grid goes down and is attempting to restart. Sensor installation is quicker and easier on towers than on lines, cutting capital costs.

LineVision’s software uses AI to monitor line conditions and integrates local weather forecasts to predict future line conditions, then conveys capacity recommendations to grid operators.

National Grid, a U.K.-based utility with operations in the U.K. and New York State, is using LineVision’s DLR to reduce grid congestion and defer equipment upgrades.

We are putting an enormous burden on our aging grid, which is comprised in many regions of lines older than 30 years on average. I believe that power generation and distribution in the post-Climate world will require a complete rethink of the Industrial Revolution paradigm by which we built our present grid, but even a modern, distributed grid will need a strong, efficient transmission network. Dynamic line ratings, powered by modern sensors, AI and an occasional stiff breeze, are a critical advantage. Intelligent investors take note.