Tapping into Earth's nearly limitless energy supply

Hi! I’m Liza Rubinstein, Co-Founder & Head of Impact at Carbon Equity, responsible for the change we make in the world. In this newsletter, I discuss arguably the most underrated form of renewable energy. This edition is 1,101 words or a 4.5 minute read.

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What is geothermal?

Looking for an energy source that emits (virtually) no GHGs, is abundantly available 24/7 in any season, is not radioactive and can work (with some digging) anywhere on earth? Geothermal energy can potentially check all of these boxes.

Traditional geothermal is completed in places such as the geysers in Iceland, where hot water is available relatively close to the surface, and producing electricity or heat from this is easy. The basic idea of geothermal is as follows:

However, prime geothermal conditions are found on less than 10 percent of the planet, so the big challenge? How to dig miles deep, very precisely, through extremely hot rock, and how to harvest that energy effectively.

Geothermal 2.0

The next generation of geothermal energy calls for innovative techniques that might seem straight out of a science fiction narrative to expand the scope and scale of production dramatically. Imagine harnessing the power of lasers or sound waves to heat rocks to the point of melting or vaporization.

One ambitious company in the field is Quaise Energy, which digs 20 kilometers or 12 miles deep, approximately twice the depth of the deepest point in the ocean. There are many more innovations to follow: 👇

• New drilling methods such as spallation, electric pulses, and even lasers (GA Drilling)
• Novel reservoir design (Fervo)
• Geothermal resources maps (Project Innerspace)
• Alternative working fluids (Terracoh)
• Tech transfer from oil, gas and coal plants (Transitional Energy)
• Closed loop, radiator-like system (Eavor)

What’s slowing geothermal energy down?

Despite highly innovative ideas for geothermal, the big acceleration is not happening. Here are my insights into why.

Electricity is cheap once the system is installed, but upfront costs associated with drilling deep are considerable. In addition, the high risks of the first drilling not succeeding (because it’s 20 cm off target at 3 km deep) can kill a business case.

However, limited political attention (and lack of lobbying) may be the most significant barrier. In my interview with Torsten Kolind, an impact investor and entrepreneur from Denmark, he uses Denmark's strong affinity for wind energy to explain this issue.

Denmark's wind lobby is influential, and residents are familiar with the technology and its benefits. Consequently, other renewable options can lack necessary policy or planning and face skepticism among the Danish population, a common issue in many countries.

Lastly, the industry suffers from a shortage of human resources — there are more good ideas than people working on them.

Houston, we have a solution

Luckily, numerous techniques from the oil and gas industry are useful in the world of geothermal. Repurposing only 1% of the oil and gas human capital would grow the geothermal industry by 1000%!

That’s why I find it so interesting to see Houston, Texas, developing as the hotspot for geothermal. Given the prominence of oil and gas in Texas, the government permits drilling in nearly all areas. This is the place where many innovations for next-gen geothermal are getting off (or in) the ground.

I believe geothermal energy has gigantic potential, but we must fund the innovations and create more political momentum. Once the technologies reach sufficient maturity, oil and gas companies will run with them. So for now, startups, scaleups and investors are critical to pushing these technologies to maturity.

You can read my full deep dive into the geothermal energy space here.

🚀 News from within our funds

Ceibo developed a novel copper extraction process that makes it more economically and environmentally viable. Energy Impact Partners led its $30m Series B round.

Kelvin created an insulating radiator cover that enhances heating efficiency and lowers cost by 45%, and will now broaden its scope to other HVAC applications. 2150 led its $30m in Series A round.

Boston Metal announced it would build its first production facility in Brazil, expected to run next year, while Form Energy announced an agreement with Georgia Power to deploy its 100-hour energy storage system into Georgia's utility grid.

You can explore more companies within our funds here.

💡 Carbon Equity updates

We hosted our second Climate Investing Drinks, which brought together an inspiring group of individuals to connect and discuss the exciting opportunity of climate tech. Many thanks to all those who attended and made it a success! Click the image below to watch the after-movie.

Jacqueline, our Co-Founder and CEO, joined two podcasts this month, Nxchange’s Doorzetters (listen here) and Belgische Ondernemers (listen here), to discuss her entrepreneurial learnings and our ambitions in Belgium.

On June 14, I helped TNW launch Climate Tech Amsterdam, where 75 people from all across the climate tech stack (founders, investors, corporates, policymakers) came together. The next day, I hosted one roundtable on how governments can support climate tech and one on impact investing.

📚 Interesting reads

The remarkable upsurge in US clean energy manufacturing, in charts

The good news: nearly 100 new clean energy manufacturing facilities or factory expansions were announced in the US since the IRA came to light, totaling more than $70 billion in new investment. Interestingly, U.S.-based companies account for less than half of these announcements.

The Arctic will have ice-free summers as soon as the 2030s

The bad news: scientists say the loss of the region’s summer sea ice is imminent and cannot be stopped, even with emission cuts. That's ~20 years sooner than the IPCC's previous estimate.

How a 10-story wood building survived more than 100 earthquakes

There’s a global rise of cross-laminated timber (CLT) as a low-carbon building material. This week a CLT building survived 100 earthquakes while installed on a “shake table,” a key characteristic for deploying wooden buildings in areas prone to earthquakes. Haven’t heard of CLT before? Check out this video.

Investments in renewables reached record high, but need massive increase and more equitable distribution

Solar and wind power are the cheapest sources of electricity, yet there’s an investment shortage for them in developing countries. In 2020, emerging economies got less than 15% of clean energy investments. Narrowing this gap is one of the biggest challenges for climate finance. As clean energy projects can turn an immediate profit, this should be attractive to private investors.

Big oil’s pullback from clean energy matters less than you might think

You may have seen it in the news (or Jacqueline's LinkedIn), but the new Shell CEO plans to prioritize oil and gas until 2030. Also, oil and gas companies have prioritized returning dividends over making renewable investments. However, Nat Bullard from Bloomberg NEF notes as oil and gas companies account for <1% of all energy transition investments, it's more their loss than ours.