Bill Gates wrote about this ground-breaking in Kemmerer, Wyoming on his GatesNotes blog and he provided further background on his interest in advanced nuclear, which started as far back as 2008. It just so happened that when he fell in love with the density, inherent safety and superior performance of advanced nuclear power, he was able to afford to hire a team and launch TerraPower on his own. It also didn't hurt that he happened to be buddies with Warren Buffet, the CEO of Berkshire Hathaway, the company that owns PacifiCorp, which owns a lot of struggling coal plants, so he was able to score a site on the property of a retiring coal plant, on which to plan to build his demonstration reactor.
In fact, advanced nuclear holds tremendous prospects for resurrecting the value of these ill-fated plants and the economic vitality of those regions suffering from the closures of coal, most of which are closing as a result of competition form cheap natural gas that is also better suited for being "dispatched," at a minute's notice, if, let's say, the wind stops blowing. As many as 80% of these plants could, according to a study done by the DOE, be converted to advanced nuclear plants cost-effectively, because they are reuse turbines, generators and even transmission lines that are already there. Taking what are currently brownfield sites with very little value because of the toxicity, health and carbon-impacts of coal and converting them to clean power plants that use advanced fission to generate both power and heat, is starting to look like a very lucrative endeavor.
No wonder Bill Gates has already invested over a billion dollars and has committed to putting billions more of his own funds into this venture. Being the sixth wealthiest person in the world gives him this option. And, if you think that, because you read a lot and you've had exeptional success with a software company, that you have what it takes to create the best advanced nuclear technology and believe that it will be rapidly adopted and deployed around the world and possibly put the remainder of the world's coal plants out of business, investing your billions into that makes total sense.
For the rest of us, however, investing into a venture fund like Nucleation Capital, which is dedicated to building a diversified pool of advanced nuclear ventures with various alternative designs, more than a few of which could find real traction within differing niches of the energy markets which also need power but may prefer a different configuration or set of features, may make more sense and pose considerably less risk. Especially when the fund provides low-cost participation, so that those of us not in the top ten wealthiest humans list, can access that fund without breaking the bank but nevertheless have a meaningful chance of participating in the growth of nuclear around the world.
According to numerous analyses, the Biden Administration is taking decisive steps to support the construction of large-scale nuclear reactors, crucial for meeting our clean energy goals, as well as supporting the licensing and development of next-generation nuclear power plants. The White House has formed an expert group whose focus and mission will be to work on solving the problems that are cause delays to new projects and thus eliminate, reduce or mitigate industry risks to ensure timely completion of projects and bolster progress towards a carbon-free power sector by 2035 and a net-zero emissions economy by 2050. The text of the White House Fact Sheet is so perfect, it is better to reprint it than attempt to summarize it. See the first few paragraphs below, but click the links to go directly to the sources.
For decades, nuclear power has been the largest source of clean energy in the United States, accounting for 19% of total energy produced last year. The industry directly employs nearly 60,000 workers in good paying jobs, maintains these jobs for decades, and supports hundreds of thousands of other workers. In the midst of transformational changes taking place throughout the U.S. energy system, the Biden-Harris Administration is continuing to build on President Biden’s unprecedented goal of a carbon free electricity sector by 2035 while also ensuring that consumers across the country have access to affordable, reliable electric power, and creating good-paying clean energy jobs. Alongside renewable power sources like wind and solar, a new generation of nuclear reactors is now capturing the attention of a wide range of stakeholders for nuclear energy’s ability to produce clean, reliable energy and meet the needs of a fast-growing economy, driven by President Biden’s Investing in America agenda and manufacturing boom. The Administration recognizes that decarbonizing our power system, which accounts for a quarter of all the nation’s greenhouse gas emissions, represents a pivotal challenge requiring all the expertise and ingenuity our nation can deliver.
The Biden-Harris Administration is today hosting a White House Summit on Domestic Nuclear Deployment, highlighting the collective progress being made from across the public and private sectors. Under President Biden’s leadership, the Administration has taken a number of actions to strengthen our nation’s energy and economic security by reducing – and putting us on the path to eliminating – our reliance on Russian uranium for civil nuclear power and building a new supply chain for nuclear fuel, including: signing on to last year’s multi-country declaration at COP28 to triple nuclear energy capacity globally by 2050; developing new reactor designs; extending the service lives of existing nuclear reactors; and growing the momentum behind new deployments. Recognizing the importance of both the existing U.S. nuclear fleet and continued build out of large nuclear power plants, the U.S. is also taking steps to mitigate project risks associated with large nuclear builds and position U.S. industry to support an aggressive deployment target.
To help drive reactor deployment while ensuring ratepayers and project stakeholders are better protected, theAdministration is announcing today the creation of a Nuclear Power Project Management and Delivery working group that will draw on leading experts from across the nuclear and megaproject construction industry to help identify opportunities to proactively mitigate sources of cost and schedule overrun risk. Working group members will be made up of federal government entities, including the White House Office of Domestic Climate Policy, the White House Office of Clean Energy Innovation & Implementation, the White House Office of Science and Technology Policy, and the Department of Energy. The working group will engage a range of stakeholders, including project developers, engineering, procurement and construction firms, utilities, investors, labor organizations, academics, and NGOs, which will each offer individual views on how to help further the Administration’s goal of delivering an efficient and cost-effective deployment of clean, reliable nuclear energy and ensuring that learnings translate to cost savings for future construction and deployment.
The United States Army is also announcing that it will soon release a Request for Information to inform a deployment program for advanced reactors to power multiple Army sites in the United States. Small modular nuclear reactors and microreactors can provide defense installations resilient energy for several years amid the threat of physical or cyberattacks, extreme weather, pandemic biothreats, and other emerging challenges that can all disrupt commercial energy networks. Alongside the current defense programs through the Department of the Air Force microreactor pathfinder at Eielson AFB and the Office of the Secretary of Defense (OSD) Strategic Capabilities Office (SCO) Project Pele prototype transportable microreactor protype, the Army is taking a key role in exploring the deployment of advanced reactors that help meet their energy needs. These efforts will help inform the regulatory and supply chain pathways that will pave the path for additional deployments of advanced nuclear technology to provide clean, reliable energy for federal installations and other critical infrastructure.
Sheffield's new technology is geared for faster and better fabrication of the pressure vessels that hold the nuclear fuel and where the nuclear reaction takes place. These thick steel containers provide the first level barrier of containment for the nuclear process and radioactive fuel materials and transuranics. Traditionally, creating such vessels required a time-consuming and expensive forging and welding process.
Sheffield Forgemasters' innovative local electron beam welding technique dramatically improves both the process and the quality of the weld by utilizing a particle gun to shoot a very precise beam of high-energy electrons that joins materials at the atomic level without needing to add material, resulting in a faster, stronger and more perfect welds in vessels up to 8 inches thick, that may not even require inspections. This can greatly reduce both the cost and time that it takes to fabricate nuclear pressure vessels while simultaneously producing vessels that are more reliable and longer-lasting.
Sheffield isn't the only group that has been working to improve nuclear technology and capabilities. There are probably hundreds of groups around the world working on the myriad aspects of the nuclear energy industry's challenges, improving communications and even educating the broader community. Nuclear power is just starting to benefit from the advancements provided by the digital age, starting with far more powerful software capabilities that can help with design, testing, modeling, analyses, rendering and reporting. In the future, virtual twinning, remote monitoring, and the use of artificial intelligence, such as that being developed by NuclearN to optimize operations, update procedures, reduce risks through predictive maintenance, conduct AI-based training and many other operations, will increase capabilities and reduce costs both for designing new reactors and for their long-term operations.
Additionally, even as the Congress is working to better rationalize nuclear regulation and reduce its costs by passing a reconciled version of the Senate's bipartisan ADVANCE Act with the version passed by the House, the Atomic Energy Advancement Act, developers are already looking at deploying and utilizing a plethora of advanced capabilities to accelerate development times and reduce build and operational costs. These include:
Utilizing nano technolologies, miniaturization, automation, and robotics in manufacturing and handling radioactive materials.
Using 3-D printing and other advanced fabrication technologies to enable rapid design iteration, fast fabrication of unique components
Deploying advanced materials that improve performance while reducing size, weight, production steps and/or production costs
Use of more sophisticated test equipment and faster data analysis
Leveraging technological improvements developed by other industries, such as how Deep Isolation utilizes geologic analysis, horizontal drilling, borehole stabilization and capping technologies developed by the oil and gas industry
Improving community engagement processes to design and deliver more thoughtful, inclusive, socially just and hence successful engagement processes that build trust and two-way communication.
Nucleation Capital believes that the pressure to decarbonize energy presents one of the largest economic opportunities humanity has ever seen. Nucleation will also invest in a wide range of these vertical supply and support ventures, such as NuclearN and Deep Isolation.
The plan is to deploy four Westinghouse AP300 small modular reactors on a site on the north bank of the River Tees, in Teesside, U.K. The local authorities are backing the company's plan to locate the new plant on a site was previously home to a chemical plant and adjacent to the renowned Saltholme bird reserve. The new facility may be welcomed, in fact, as a way to help clean up both the air and the water in the area, since nuclear power emits no toxic chemical or carbon dioxide emissions.
Community Nuclear Power evaluated options from a number of SMR developers, most likely including Rolls-Royce and EDF, which is developing an SMR based largely on reactors already being built and used for nuclear-powered submarines. The company, however, is reported as having inked a deal with Westinghouse, although the formal announcement has to be made.
According to a company representative, the plan will be fully privately financed and will not be seeking government or taxpayer support. Nevertheless, it is a step along the path that was recently set out by the U.K. government's recently issued Civil Nuclear Roadmap, originally championed by former prime minister, Boris Johnson, which references SMRs and their advantages for expediting deployment because they are smaller and can be made in factories and shipped in modules to the construction site, making construction faster and less expensive.
According to Jonathan Leake, writing in The Telegraph (and reposted by Yahoo Finance), there is a definite chance that the Community Nuclear Power project, if successful, could be in operation ahead of both Hinkley Point C, already in construction in Somerset but delayed, and Sizewell C, already being planned for the Suffolk coast and putting 1.5 Gigawatts of power onto the grid by the early 2030s. It would likely benefit from the government's commitment to accelerate the deployment process towards achieving a quadrupling of U.K. nuclear power.
This is an exciting development for those working to commercialize SMRs and will most certainly be a boost to others looking to accelerate the deployment of clean energy around the world with privately financed SMR projects.
Dr. James Hansen's year-end update contains an admonishment right in the title, "A Miracle Will Occur" Is Not Sensible Climate Policy." Those who have followed his work and his typically well-tempered writing will recognize this as a very strong indictment of what we've not done to date to address climate change. This is, for this mild-mannered scientist, the equivalent of "Hey Guys, Get your S _ _ T together!"
Dr. Hansen proceeds to call "bunk" on the assertions from both the COP 28 Chairman and the UN Secretary General who imply that the goal of keeping temperature rise to below 1.5°C is still feasible. According to Dr. Hansen, the already banked warming will take us beyond 2.0°C "if policy is limited to emission reductions and plausible CO2 removal." In other words, he makes it clear that this is now merely wishful thinking and does not reflect a realistic understanding of the way that emissions released create future warming, which he calls "Global Warming in the Pipeline"and describes in the linked paper.
The only realistic approach is to take true climate analysis that is informed by knowledge of the warming "forcing" effects and to use that to drive decisions about policy options. If we can possibly use the next several years to define and commence more effective policies and courses of action, then there is a modicum of a chance that we can still save the future for our young people. If this isn't a bomb of an alarm, it would be hard to say what else would be, especially because the IPCC has made it very clear that major ecosystems, starting with coral reefs and then, therefore, all marine life, will be threatened with substantial (90%) collapse by 1.5°C and with 100% by 2°C.
Unfortunately, climate science is complicated and most people don't have a good understanding of the "human-made forcings that are driving Earth's climate away from the relatively stable climate of the Holocene (approximately the past 10,000 years.)" Even if they could grasp the implications about climate science from the graphs that Dr. Hansen and his team provide, very few are even reading Hansen's work. These graphs are very scary but clearly they are not being used as the basis for policy discussions by either politicians, government agencies (like the EPA), or by leading environmental groups and that is likely the primary reason why many people are still arguing about renewables versus nuclear power, thinking they have a certain luxury of time, rather than saying "Renewables and nuclear, YES!"
For his part, Dr. Hansen doesn't make it as easy as he could for those with less expertise in climate science. He spends a lot of effort discussing two major climate forcings: greenhouse gases (GHGs) and aerosols (fine airborne particles), which in fact have opposing forcings. But then goes into detail on many other related forcings. This level of detail may provide a more scientifically accurate picture of what is going on but it makes for much sparser readership. Clearly, there are many different kinds of feedback loops, including how the aerosols impact cloud formation, albedo effects and also the way the ocean absorbs a considerable amount of the warming that is happening to our climate. It's important that he understands these effects but it takes considerable sifting work to get to the point that what it all adds up to is that there is much more warming that has occurred than what we are actually now experiencing, so in fact, the effect of warming will be accelerate and we're now seeing this.
Even for those of us who finding climate science fascinating, this 14-page paper is incredibly dense and gets relatively badly bogged down with details on things like cloud forcings, albedo changes, reviewing differences between expected temperatures and real world measurements, catching up with a 40-year old mystery having to do with the last glacial maximum and describing the impacts of an "experiment" that occurred when the International Maritime Organization limited sulfur content in ship fuel and the variability introduced by El Nino and La Nina events. The bottom line of quite extensive discussion that few will wade through, is that global warming is now accelerating. This is very important but definitely buried. The key graphic of the whole paper depicts this acceleration.
On page 7, we finally get to the implications of global warming acceleration. As shown in the above graph, were the warming happening at a steady rate, we'd be on the green dotted line. Instead, we are veering off into the yellow zone of accelerated warming, which means that we'll "exceed the 1.5°C mark within the next few months and reach a level far above 1.5C by May 2024."
Hansen, while recognizing that there could be some up and down based upon El Nino and La Nina effects, believes that the baked in energy imbalance already "in the pipeline" means that it does not serve anybody's interests to "wait a decade to declare that the 1.5°C limit has been breached." In summary, Hansen argues that, "unless purposeful actions are taken to reduce our present extraordinary planetary energy imbalance," the 2°C global warming limit will also be breached.
By its very nature of having a delayed, baked-in response, human-made climate change makes this an intergenerational issue. What we have done in the past is already having consequences but what we do today and going forward will mostly impact the next generation for better or worse.
To his credit, Hansen dives yet again into Climate Policy, unlike most other scientists. This has been long been a huge source of frustration for him and you can almost see him stomping on his own hat, in his anger and impatience with the political processes that have thwarted action. First he reviews just what makes solving cilmate extra hard, starting with the fact that the principal source of GHGs is fossil fuels, which are in his words "extremely beneficial to humanity." They have raised starndards of living worldwide and still provide 80% of the world's energy. "Fossil fuels are readily available, so the world will not give up their benefits without equal or better alternatives."Because of this conundrum, we are near a point of no return, where extreme consequences can spiral out of humanity's control.
Dr. Hansen has been a first-hand witness to humanity's failure to act over the last 35 years or so and his exasperation with that and his desperation to communicate to those in power about our increasingly limited options is abundantly clear. He's been advising governments around the world on possible approaches with little of the urgent response that is warranted. He delves into some of these details but then finally hones on in the three actions that are required to successfully address climate and achieve the bright future we desire for our children.
The first is a near-global carbon tax or fee. It is the sine qua non required to address the "tragedy of the commons" problem" wherein fossil fuels waste products can be dumpted in the atmosphere for free. There can be a range of approaches, yet something that penalizes those dumping GHGs is required to be enacted globally. A corollary to a carbon fee is a "clean energy portfolio standard," with government policies that are far more supportive of nuclear power.
The second major policy requirement, is the need for the West to cooperate with and support the clean energy needs of emerging and developing nations. There are economic imbalances with developed nations having caused the past emissions but emerging nations increasingly being the driver of future emissions:
The clear need is to replace the world’s huge fossil fuel energy system with clean energies,
which likely would include a combination of “renewables” and nuclear power. Even if the
renewables provide most of the energy, engineering and economic analyses indicate that
global nuclear power probably needs to increase by a factor of 2-4 to provide baseload power
to complement intermittent renewable energy, especially given growing demands of China,
India and other emerging economies. The scale of China’s energy needs makes it feasible to drive down the costs of renewables and nuclear power below the cost of fossil fuels.
Lastly, Dr. Hansen proposes that "a multitude of actions are required within less than a decade to reduce and even reverse Earth’s energy imbalance for the sake of minimizing the enormous ongoing geoengineering of the planet; specifically, we will need to cool the planet to avoid consequences for young people that all people would find unconscionable."
By Rod Adams, Nov. 10, 2023 Cross-posted from our related blog, Atomic Insights
I’ll start with a disclosure. I’m still long on NuScale in my personal portfolio and have no intention of changing that position in the near future. I believe that the company has a good product and excellent potential for growth. The image above with Jose Reyes and me is from a visit I paid to the NuScale test loop in October 2014.
Yesterday (Nov 8, 2023), an expected shoe dropped. NuScale and UAMPS (Utah Association of Municipal Power Systems) announced that they had decided to abandon their Carbon Free Power Project. The press release stated, “Despite significant efforts by both parties to advance the CFPP, it appears unlikely that the project will have enough subscription to continue toward deployment.”
A chorus of commentary has erupted on social media. Some are cheers from the usual suspects who have never met a nuclear reactor that they like. Others are from people who ardently support different designs that range from different water reactors to gas-cooled, molten salt or liquid metal reactors that don’t use water cooling and moderation.
Some believe that the decision proves that NuScale Power Modules are hopelessly uneconomic and that the CFPP cancellation proves that NuScale is on shaky grounds as a company. Self-admitted short sellers are doing everything they can to undermine investor confidence so that the company stock price falls quickly and profitably for those betting on that behavior.
My conclusions from the project cancellation are different. There is no doubt that a smooth first-of-a-kind demonstration of a 6-12 unit NuScale power plant would have been better for the company’s prospects in the short term. That result would have also helped to increase interest in new nuclear power projects and would have increased investor FOMO (fear of missing out.)
As a venture capitalist helping to manage a fund that is focused on advanced nuclear energy as a major, undervalued tool for the energy transition from high carbon fossil fuel combustion to ultra low carbon energy sources, that result would have been a welcome reinforcement of our investment thesis.
Competitive headwinds fighting Carbon Free Power Project
During the past few years, however, the prospects for success for the CFPP have repeatedly dimmed to the point where its cancellation was readily foreseeable. The initial 12-unit power plant was scaled down to a 6-unit facility. Individual members of the UAMPS association pulled out as it became ever clearer that a new, first of a kind nuclear plant built in the remote Idaho desert would produce power that was measurably more expensive than the low priced mix of coal, natural gas, hydro and wind they were used to.
That cost disadvantage only grew as it became less and less likely that there would ever be a price on carbon in the states UAMPS serves. Rising interest rates also reduced the economic viability of capital-intensive power plants compared to established, depreciated plants burning cheap local coal, low capital cost plants burning natural gas from nearby places like North Dakota or onshore wind located in sparsely-populated windy plains near mountain ranges.
As coal demand falls throughout the US as a result of changing air pollution regulations, increased production from natural gas, solar and wind and continued excellent performance by existing nuclear plants, coal prices soften. The long term prospect is that they will remain affordable and perhaps decline considerably, especially in places that are close to established mines. UAMPS member power systems have ready access to local coal sources.
The UAMPS-served areas are close to productive oil shale formations that contain substantial quantities of associated natural gas. Sometimes North Dakota gas is almost given away – even in the dead of winter – because it is an annoying byproduct of oil production. Associated gas is still flared – burned without serving any customers – for safety reasons. Regulators are increasingly enacting rules that discourage the practice. There are also financial incentive programs that encourage operators to find customers that will pay something.
UAMPS members also benefit from their favorable wind locations. They have wide open spaces and good wind associated with nearby mountains. On-shore wind turbines are well proven and numerous developers have cost effective processes and experienced installation teams. The Inflation Reduction Act provides long term certainty for clean energy subsidies, ensuring that the power prices are consumer friendly. It also opens new avenues for non profit utilities to directly benefit from tax credit programs. A nuclear power project like the CFPP would be eligible for the same subsidy level as other clean energy sources but the tax credit programs in the IRA start paying real money only after projects are completed. A wind project can be finished in just a year or two in places where there isn’t much opposition. Earlier monetary flows are more valuable than later flows.
Even if they are led by people who would like to decarbonize, municipal power systems have a mandate to provide the most cost-effective power possible within the given constraints. They have access to relatively low cost, tax exempt debt, but bond issues needed to access that debt capability are often tenaciously debated, political choices. The interest rates paid may be lower than commercial rates, but rates for new debt are still linked to those paid in the rest of the borrowing market. Rising rates affect all borrowers.
Munis have no access to capital markets where investors have more understanding and appetite for a certain amount of financial risk. It is highly unlikely that they could convince their customers to pay catalytic prices for power from new technology with significant room for growth.
in summary, economic conditions for the Carbon Free Power Project have been deteriorating for several years. The total expenditures associated with that project have not been publicly released, but the amount spent is nowhere near the amount of money that was earmarked. UAMPS only submitted an application for “Limited Work Authorization” to the NRC in August of 2023 and it has only been a few weeks since the NRC accepted that application for review. No dirt has been moved at the site, other than that needed to conduct environmental impact studies.
Where does NuScale go from here?
This commentary is not supported by any direct communication with NuScale. It is based on publicly available news and announcements.
The CFPP was an important project for NuScale, but it is not the only sale that the company is working on. UAMPS is not the only customer attracted by a passively cooled, light water reactor using established fuel forms, materials and chemistry refined through many decades of operation in large fleets of nuclear power plants.
NuScale’s power modules have been issued a design certification at a time when none of the alternative choices have submitted an application for review. Submission is needed to start a regulatory calendar that moves at an excruciatingly slow pace. Though we hope the next review will be quicker, it took more than six years from the time NuScale submitted its Design Certification Application until the 5-member commission issued the final document. (Dec 31, 2016 – Feb 21, 2023)
According to Fluor, which still holds its large stake in NuScale, 18 active and signed Memorandums of Understanding from 11 different countries were in effect at the end of 2021.
Though none have yet achieved the status of a signed contract, there have been public announcements of serious interest in Romania and other Eastern European countries. NuScale is one of the six finalists selected for the Great Britain Nuclear light water reactor SMR program. Standard Power announced its interest in using NuScale power plants for two data centers, one in Ohio and one in Pennsylvania.
In March, 2023, an early stage start up company named Blue Energy visited Houston, TX – arguably the energy capital of the United States – for CERAWeek. The founders gave a presentation on their concept for offshore power plants that combine NuScale power modules with proven technology from offshore oil and offshore wind. They shared some startling numbers about the cost reduction potential available for NuScale power modules when using the ocean for the ultimate heat sink instead of a giant man-made pool that must be protected from aircraft impact.
Blue Energy is “productizing” nuclear fission by manufacturing pre-certified light water small modular reactors in shipyards as fully-completed, transportable nuclear power plants that are leased to industrial facilities and countries seeking energy security, price stability, and turnkey decarbonization. We leverage existing oil & gas platform manufacturing infrastructure and a simplified plant design to shrink the construction schedule from 10 years to 24 months and the overnight capital cost from greater than $6,000/kW to less than $2,500/kW while putting nuclear on a learning curve down to $1/W.
The news of the demise of the CFPP should not discourage nuclear energy advocates for very long. It’s not good news, but no one should expect 100% good news with new nuclear development. CFPP’s demise should not – but certainly will – provide PR fodder for those who have never met a nuclear project that they like. It should not – but certainly will – provide a reason for “I told you so” commentary among nuclear energy cheerleaders who are rooting for a different kind of nuclear power system.
I am neither a registered investment advisor nor a broker-dealer and I do not provide stock market recommendations. As a managing partner of Nucleation Capital, I invest solely in private equity. My personal public market portfolio, however, includes some SMR (NuScale’s NYSE ticker symbol) stock that I have no intention of selling.
Additional References
Nov. 22, 2023: The Clean Air Task Force published Lessons learned from the recently cancelled NuScale-UAMPS project, with yet another very powerful argument against reading too much into the cancellation of NuScale's demonstration project as a reflection of the prospects of the broader SMR and advanced reactor market in the United States or globally.
Brad Plumer, writing in the New York Times, provides the details of this very small demonstration plant built in Tracy, California. It's an open air structure, with 40-foot racks holding hundreds of trays, each sprinkled with calcium oxide powder that turns into limestone when it binds with airborne carbon dioxide. This is a natural process that Heirloom is working to speed up.
Once the carbon dioxide is "captured" through the creation of the limestone, the company expects to heat up the limestone in a kiln at 1,650 degrees Fahrenheit, which then releases the carbon dioxide, where it then gets pumpted in a storage tank, leaving the calcium oxide to be returned and reused on another set of trays.
The carbon dioxide (called CO2) is expected to be transferred again to be permanently stored. For now, Heirloom is looking at the large concrete marketplace and working with CarbonCure, a company that was launched to mix CO2 into concrete to make concrete stronger by having it turn into limestone again where it will be permanently stored and reduce the carbon footprint of concrete (which ordinarily releases a lot of carbon emissions through its normal creation and use throughout the building industry).
Providing CO2 to CarbonCure has a value for sure but for now, that value is far below the costs of capturing the carbon. Let's look at what these economics are now. The Tracy facility will be able to absorb 1,000 tons of CO2 per year. At the estimated $50/tonne "social cost" of carbon, the Heirloom facility would earn $50,000 per year. Although Heirloom hasn't released info on its specific costs, those funding breakthrough carbon capture activity, such as Frontier (which includes Stripe, Alphabet, Shopify, Meta and McKinsey Sustainability), are typically paying between $500 and $2,500 per ton to accelerate innovation and market development. These high prices are intended to generate sufficient revenue for these early-stage ventures to actually cover their costs. At $1000/ton, Heirloom could earn $1,000,000 per year. However, Plumer estimates that Heirloom's actually costs may be in the range of $600 per ton or higher.
Fortunately for Heirloom and other ventures working in this space, there are a lot of large corporations willing to spend millions to pay for "carbon removal credits" in what has been a voluntary carbon market to effectively be able to claim that they are reducing their carbon footprints. These corporations see reputational benefits from those outlays, even if they do not result in even meaningful actual carbon reductions at this stage. The Biden Administration is also getting into the act and awarded $1.2 billion to help Heirloom
The Heirloom carbon capture plant in Tracy, California
Many people still don't know much about carbon capture and storage, or what has been called "Carbon Capture, Utilization and Sequestration" (CCUS). There are a multitude of approaches being taken to capture carbon and, as a result, a plethora of acronyms have emerged. The approach used by Heirloom is now called Direct Air Capture (DAC) and specifically involve capturing CO2 out of the air but other approaches are simply called Carbon Dioxide Removal (CDR) and utilize a range of methods to bind that CO2 in a semi-permanent or permanent way, such as through marine-based CDR or natural processes such increasing the CO2 content in soils or accelerating the use of CO2 by plants, such as by growing crops or trees with the intention of having them capture the CO2.
Utilization of CO2 involves finding valuable ways to use that CO2 or just the carbon (C) from captured CO2. Ventures working on the utilization part of this process pose the prospects of having profitable business models. Nucleation Capital, as a climate-focused venture fund, recognizes that CCUS is a growth industry that is anticipated to become a large consumer of energy. We are following the activity in this nascent space and we are investing in some of the most promising approaches, especially where that approach has strong profit and growth prospects or where it intersects with the need for abundant clean energy. While knowing all the acronyms isn't critical, there are a few key things to know about CCUS in general.
Key Facts to Know about CO2 and Carbon Capture, Utilization & Sequestration
While CO2 itself is natural and not toxic (except in high doses), the enormous amount that we have polluted our atmosphere with by burning fossil fuels for energy is causing our climate to warm up at a very fast rate. We need CCUS in order to lessen and possibly reverse the rate of warming, so we can restore a healthy climate.
All technological approaches to capturing carbon back out of the air or water are expensive and early stage. So are the approaches to carbon utilization and sequestration (i.e. methods to utilize and/or store the carbon so it doesn't get released back into the atmosphere).
To stop making our climate crisis worse, we have to stop burning fossil fuels, as our highest priority mitigation effort. While some might think that capturing the carbon emitted from burning fossil fuels right at the point source may warrant continuing to burn fossil fuels, that will not enable us to use carbon capture to restore the damage already done, which is the primary rationale for CCUS.
Even if we stopped burning fossil fuels today, the amount of damage the long-lived CO2 pollution is causing the world will continue to heat the planet for decades or centuries. The only way to prevent that is by removing this excess CO2 pollution.
Today, there are only a handful of dedicated carbon capture plants in existence globally but, to prevent serious damage to earth ecosystems, we will need to scale up these plants in record time to be able to reverse most of the emissions produced by the fossil fuel industry in its entire history. We will also need to scale utilization and sequestration capabilities.
The cost of cleaning up all of the emissions caused by our past use of fossil fuels will be enormous and we haven't come to any agreement as to who bears that burden. Some of that cost can be mitigated with valuable commercial utilization technologies.
Powering CCUS plants will require massive amounts of low-carbon clean energy because it makes no sense to emit carbon in the process of capturing carbon. The best and least-cost approach will likely involve using the coming generation of small modular reactors to generate 24x7 power in remote areas.
The cost of clean energy used to capture and sequester carbon will be a significant factor in the total cost of that activity but powering CCUS can help SMRs scale up, which will help reduce the manufacturing costs.
There is no scenario in which the cost of burning fossil fuels and capturing all the CO2 from that activity and permanently storing it will cost less than replacing the fossil fuels with renewables or nuclear and avoiding the release of new emissions in the first place.
Fossil fuel companies are already lobbying to earn carbon credits by pairing carbon capture with the extraction and burning of fossil fuels. This is why some environmentalists, like Al Gore, oppose providing funding for CCUS to oil and gas companies, even though the most cost-effective CO2 capture is done at or close to the fossil fuel smokestack source point.
Learn more about Frontier a consortium that is providing advance market commitments (AMC) that aim to accelerate the development of carbon removal technologies, without picking winning technologies at the start of the innovation cycle. The goal is to send a strong demand signal to researchers, entrepreneurs, and investors that there is a growing market for these technologies.
The 2021 Bipartisan Infrastructure Law included $3.5 billion to fund the construction of four commercial-scale direct air capture plants. In August, the Biden Adminstration announced $1.2 billion in awards for the first two, one to be built by Battelle in Louisiana and the other to be built by Occidental Petroleum, in Texas, through a 50-50 cost share.
In a September 7, 2023 announcement issued by the State Department we learn about progress that has been made in a State Department program called Foundational Infrastructure for the Responsible Use of Small Modular Reactor Technology (FIRST).
Building on his announcement of Project Phoenix at the United Nations Climate Change Conference in Sharm El Sheikh (COP27), Secretary Kerry announced that project proposals from Czechia, Slovakia, and Poland were competitively selected to participate in Project Phoenix and will receive support for coal-to-SMR feasibility studies.
So, while at the Three Seas Iniative Summit in Bucharest, Special Presidential Envoy for Climate John Kerry announced the Project Phoenix winners and a new initiative for the U.S. to accelerate the transition to clean energy which furthers the role of "new, secure, and safe nuclear technologies."
This is the NEXT program, short for Nuclear Expediting the Energy Transition, with One Stop Shop for SMR Support. The NEXT effort will provide countries in Europe and Eurasia that are approaching SMR deployment decisions at the NEXT virtual center where they can apply for a suite of advanced project preparation tools and services. These services may include in-person technical, financial, and regulatory consultancies and advisory services; expert study tours to visit U.S. nuclear facilities, national laboratories, and universities; competitively selected provision of an SMR simulator to support workforce development.
Project Phoenix and NEXT One Stop Shop are subprograms of the U.S. Department of State’s Foundational Infrastructure for the Responsible Use of Small Modular Reactor Technology (FIRST) Program. The United States is committed to supporting the use of innovative, safe, and secure clean energy technologies to power global decarbonization efforts, advance energy security worldwide, and provide options to achieve net zero transition in hard-to-abate energy sectors.
We've had a resurgence of interest in and conversation about nuclear energy since the release at the end of April of Oliver Stone's exceptional documentary, Nuclear Now. But Stone's historic film, much like Robert Stone's Pandora's Promise and Dave Schumacher's The New Fire, before it, suffers from the endemic unpopularity of documentaries. People don't flock to theaters to see them. Which made (what was called) "Barbenheimer," the culturally clashing concurrence of opening nights for Greta Gerwig's very pink Barbie movie and Christopher Nolan's explosive Oppenheimer so different. Theaters were packed. People went to see them as double-features. The press had a field day for a week and both films exceeded box-office expectations, providing welcome relief for movie theaters everywhere.
The public is, as a result, reacquainted with J. Robert Oppenheimer (JRO to those who knew him) and his tortured if heroic role in leading the U.S.'s war time emergency program, dubbed "The Manhattan Project," to a successful conclusion: creation of the first atomic bomb. Whether or not this crowning achievement by the secretive project—that recruited the world's top physicists, engineers and scientific minds to Los Alamos, a remote area in New Mexico—and let the atomic genie out of bottle was a net positive or a net negative, may still be debated. But now that it has, we must rely on our ability to self-regulate the use of this technology for good, as JRO understood so well.
We are now in the throes of sorting out how best to limit nuclear bombs but expand the beneficial uses of atomic tech for energy, industry, agriculture and medicine. Which is why we were so pleased to have been connected with Charles Oppenheimer some weeks ago and to have been invited to participate in the Oppenheimer Exchanges, a day long event bringing together leadership from within the DOE's National Labs and a few business groups, orchestrated to coincide with opening night for the Oppenheimer film. Fortunately, this included tickets to the San Francisco premiere at the Metreon iMax Theatre and a brief pre-screening conversation between younger members of the Oppenheimer family, who provided some perspective on the family's legacy and ongoing initiatives.
For many of us, this was an eye-opening discussion. It was just in December of 2022, that the DOE finally restored Oppenheimer’s long lost—but still widely lauded reputation—with an order vacating the Atomic Energy Commission's 1954 decision to revoke JRO's security clearance. While largely symbollic, since JRO died in 1967, the DOE's order, and Secretary Granholm's Statement about it, addressed and began to reverse the damage that had been done to the Oppenheimer name, through what the DOE called a "flawed" process.
In 1954, the Atomic Energy Commission revoked Dr. Oppenheimer’s security clearance through a flawed process that violated the Commission’s own regulations. As time has passed, more evidence has come to light of the bias and unfairness of the process that Dr. Oppenheimer was subjected to while the evidence of his loyalty and love of country have only been further affirmed. The Atomic Energy Commission even selected Dr. Oppenheimer in 1963 for its prestigious Enrico Fermi Award citing his “scientific and administrative leadership not only in the development of the atomic bomb, but also in establishing the groundwork for the many peaceful applications of atomic energy.”
Among scientists and those who knew Oppenheimer's legacy, vindication had already begun as far back as 1963, when the Atomic Energy Commission selected Oppenheimer for the prestigious Enrico Fermi Award for his "scientific and administrative leadership not only in the development of the atomic bomb, but also in establishing the groundwork fo rthe many peaceful applications of atomic energy."
Then, in 2017, the DOE recognized JRO with the creation of the Oppenheimer Science and Energy Leadership Program, which was designed to support early and mid-career scientists and engineers to "carry on [RJO's] legacy of science serving society."
This DOE program has now graduated multiple cohorts. Many of these alumni gathered in San Francisco to discuss the Oppenheimer legacy and explore relevant topics, in particular the need for science and scientists to rise to the challenge of solving global crises with technology. Oppenheimer's leadership example is a model by which the scientific community can organize itself to tackle problems, such as climate change. Given how badly we are doing responding to the threat posed by climate change, this is a very welcome concept.
The Oppenheimer Science and Energy Leadership Program (OSELP) run by the DOE is “the premier leadership development program of the national Laboratory Directors’ Council, which comprises the leadership of all 17 National Labs. The program exposes emerging leaders to the singular breadth, diversity and complexity of the National Labs and their partners in government, industry, and academia. OSELP represents a collective commitment from all 17 DOE labs to cultivate the leaders needed to sustain long-term impacts throughout the complex. Out of the OSELP has grown an alumni group now called the Oppenheimer Leadership Network, who are those who have been through the OSELP program. The OLN is the formal network of ESELP alumni to collaboratively engage on strategic issues and produce deliverables that address major organizational, policy, scientific or other challenges within the National Labs’ mission space. We were pleased to meet many members of the OLN at the event. Now the Oppenheimer family has a new vision. They are aiming to develop several initiatives, under the banner of The Oppenheimer Project, whose mission is to promote and advocate for solutions to mitigate the risks posed by technological development. 1) Promote JRO’s legacy and encourage scientific leaders to discuss and address today’s existential threats.2) Advocate and educate about nuclear energy, for increased cooperation on energy and decreased threats of weapons.3) Invest in the energy transition to carbon-free energy sources including nuclear energy. Already, Charles Oppenheimer, JRO's grandson, has come out strongly for nuclear power in a Time Magazine Ideas article, entitled Nuclear Energy's Moment Has Come, published May 11, 2023. In it, Charles calls for a "Manhattan Project" for carbon-free energy production.
In addition to having the support of the younger members of the Oppenheimer family, The Oppenheimer Project has received the support of Lynn Orr, a former Under Secretary for Science and Energy at the DOE and now at Stanford University, and Dr. Larry Brilliant, a physician, epidemiologist and senior counselor at the Skoll Foundation, as advisers. There are now some dozens of graduates of the OSELP and OLN members who could also participate. Given how poorly we are doing mounting the appropriate response to the threat from continued emissions, extending Oppenheimer's inimitable complex project management legacy to tackling this new global challenge has the potential to be significant development in the fight against climate change.
Dow Chemical CEO, Jim Fitterling appeared in a CEO interview segment with Sara Eisen on CNBC on May 12 and proceeded to discuss Dow's plan to build X-energy's advanced nuclear power plant at a Dow site in Texas. In what can only be described as a perfect 4-minute "New Nuclear 101” class geared for Wall Street, he produced possibly the best infomercial one could imagine for choosing advanced nuclear. Even if he didn't answer Sara's questions.
CNBC hosts CEO Interviews live on air and posts them almost immediately to their website. This one can be found here.
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No wonder Bill Gates has already invested over a billion dollars and has committed to putting billions more of his own funds into this venture. Being the sixth wealthiest person in the world gives him this option. And, if you think that, because you read a lot and you've had exeptional success with a software company, that you have what it takes to create the best advanced nuclear technology and believe that it will be rapidly adopted and deployed around the world and possibly put the remainder of the world's coal plants out of business, investing your billions into that makes total sense.
We are now in the throes of sorting out how best to limit nuclear bombs but expand the beneficial uses of atomic tech for energy, industry, agriculture and medicine. Which is why we were so pleased to have been connected with Charles Oppenheimer some weeks ago and to have been invited to participate in the Oppenheimer Exchanges, a day long event bringing together leadership from within the DOE's National Labs and a few business groups, orchestrated to coincide with opening night for the Oppenheimer film. Fortunately, this included tickets to the San Francisco premiere at the Metreon iMax Theatre and a brief pre-screening conversation between younger members of the Oppenheimer family, who provided some perspective on the family's legacy and ongoing initiatives. 
