The future of transportation fuels will be shaped by a mix of innovation, government policies, and what consumers want. Photo by Engin Akyurt/Pexels

Gasoline, diesel, bunker fuel, and jet fuel. Four liquid hydrocarbons that have been powering transportation for the last 100-plus years.

Gas stations, truck stops, ports, and airport fuel terminals have been built up over the last century to make transportation easy and reliable.

These conventional fuels release Greenhouse Gases (GHG) when they are used, and governments all over the world are working on plans to shift towards cleaner fuels in an effort to lower emissions and minimize the effects of climate change.

For passenger cars, it’s clear that electricity will be the cleaner fuel type, with most countries adopting electric vehicles (EVs), and in some cases, providing their citizens with incentives to make the switch.

While many articles have been written about EVs and the benefits that come along with them, they fail to look at the transportation system as a whole.

Trucks, cargo ships, and airplanes are modes of transportation that are used every day, but they don’t often get the spotlight like EVs do.

For governments to be effective in curbing transportation-related greenhouse emissions, they must consider all forms of transportation and cleaner fuel options for them as well.

43 percent of GHG emissions comes from these modes of transportation. Therefore, using electricity to reduce GHG emissions in light duty vehicles only accounts for part of the total transportation emissions equation.

The path to cleaner fuels for these transportation modes has its challenges.

According to Ed Emmett, Fellow in Energy and Transportation Policy at the Baker Institute Center for Energy Studies (CES);

  • "Airplanes cannot be realistically powered by electricity, at least not currently, and handle the same requisite freight and passenger loads"
  • "The long-haul trucking industry [...] pushed back against electrification as being impractical due to the size and weight of batteries, their limited range, and the cost of adoption"
  • "Shipowners have expressed reluctance to scrap existing bunker fueled ships for newer, more expensive ships, especially when other fueling options, e.g. biofuels and hydrocarbon derivatives-for fleets can be made available"

Finding low-cost, reliable, and environmentally sound fuels for the various segments of transportation is complex. As Emmett suggests in his latest article;

"Hovering over the transition to other fuels for almost every transportation mode is the question of dependability of supply. For the trucking industry, the truck stop industry must be able to adapt to new fuel requirements. For ocean shipping, ports must be able to meet the fuel needs of new ships. Airlines, air cargo carriers and airports need to be on the same page when it comes to aviation fuels. In other words, the adoption equation in transitions in transportation is not only a function of the availability and cost of the new technology but also a function of the cost of the full supply chain needed to support fuel production and delivery to the point of use. Going forward, the transportation industry is facing a dilemma: How are environmental concerns addressed while simultaneously maintaining operational efficiency and avoiding unnecessary upward cost shifts for moving goods and people? In answering that question, for the first time in history, modes of transportation may end up going in multiple different directions when it comes to the fuels each mode ultimately chooses."

This is why many forecasts predict that hydrocarbon demand will continue through 2050, despite ambitious aspirations of achieving net zero emissions by that year. The McKinsey "slow evolution" scenario has global liquid hydrocarbon demand in 2050 at 92mmb/d versus 103 mmb/d in 2023. With their "continued momentum" scenario, oil demand is 75 mmb/d. Proportionally, global oil demand related to GHG emissions from transportation would decline 11-27 percent. The global uptake of EVs is the primary driver of uncertainty around future oil demand. In all the McKinsey scenarios, the share of EVs in passenger cars sales is expected to be above 90 percent by 2050.

The Good News

Despite the relatively slow progress expected for reducing GHG emissions in the global transportation sector, there are solutions emerging that lower the carbon footprint tied to traditional petroleum-based fuels. Emmett highlights some of the methods under study, noting that "sustainable biofuels sourced from cooking oils, animal fats, and agriculture products, as well as hydrogen, methanol, ammonia, and various e-fuels are among the options being tested. Some ocean carriers are already ordering ships powered by liquified natural gas, bio-e-methanol, bio/e-methane, ammonia, and hydrogen. Airlines are already using sustainable aviation fuel as a supplement to basic aviation fuel. Railroads are testing hydrogen locomotives. The trucking industry is decarbonizing local delivery by using vehicles powered by electricity, compressed natural gas, and sustainable diesel. Long-haul trucking companies are considering sustainable diesel as a drop-in fuel for existing equipment, and fuel suppliers are researching new engines fueled by hydrogen and other alternative fuels."

Most of these options will require a combination of increased government incentives, along with advancements in technology and cost reductions.

McKinsey's "sustainable transformation" scenario, which considers potential shifts in government regulations as well as advancements in technology and cost, suggests there is moderate growth in alternative fuels alongside growth in EVs. Mckinsey projects;

  • EV demand could grow to over 90 percent of total passenger car sales by 2050
  • EVs to make up around 80 percent of commercial truck sales by 2050
  • In aviation, low carbon fuels such as biofuels, synfuels, hydrogen and electricity are projected to grow to 49 percent by 2050.

According to McKinsey, the combination of these alternatives along with demand changes in power and chemicals could reduce global oil demand to 60 mmb/d in 2050. The shift to cleaner fuels, for modes of transportation other than EVs, is underway but the progress and adoption will take decades to achieve according to McKinsey’s forecasts.

Looking more closely at EVs, the story may not be as dire globally as it seems to be in the West. While the U.S. appears to be losing momentum on electric vehicle adoption, China is roaring ahead. New electric car registrations in China reached 8.1 million in 2023, increasing by 35 percent relative to 2022. McKinsey’s forecasts have underestimated global EV sales in the past, with China surpassing their estimates, while the U.S. lags behind. It’s clear that China is the winner in EV adoption; could they also lead the way to adopt cleaner fuels for other modes of transport? That is something governments and the transportation industry will be watching in the years ahead.

Conclusion

While we are not on a trajectory to meet the aspirations to reduce global GHG emissions in the transportation sector, there are emerging solutions that could be adopted should governments around the world decide to put in place the incentives to get there. Moving forward, the future of transportation fuels will be shaped by a mix of innovation, government policies, and what consumers want. The focus will be on ensuring that the transportation sector remains reliable, secure, and economically robust, while also reducing GHG emissions. But, decarbonizing the transportation sector is much more than just EV's – it's a broader effort that will require continued global progress in each of the multiple transportation segments.

------------

Scott Nyquist is a senior advisor at McKinsey & Company and vice chairman, Houston Energy Transition Initiative of the Greater Houston Partnership. The views expressed herein are Nyquist's own and not those of McKinsey & Company or of the Greater Houston Partnership. This article originally ran on LinkedIn on October 9, 2024.

While our grid may be showing its age, this is the perfect time to shift from reacting to problems to getting ahead of them.

Reshaping the Texas grid: The impact of EVs, AI, renewables, and extreme weather

guest column

Did you catch those images of idle generators that CenterPoint had on standby during Hurricane Beryl? With over 2 million people in the Houston area left in the dark, many were wondering, "if the generators are ready, why didn’t they get used?" It seems like power outages are becoming just as common as the severe storms themselves.

But as Ken Medlock, Senior Director of the Baker Institute Center for Energy Studies (CES) explains, it's not a simple fix. The outages during Hurricane Beryl were different from what we saw during Winter Storm Uri. This time, with so many poles and wires down, those generators couldn’t be put to use. It’s a reminder that each storm brings its own set of challenges, and there’s no one-size-fits-all solution when it comes to keeping the lights on. While extreme weather is one of the leading threats to our electric grid, it's certainly not the only one adding strain on our power infrastructure.

The rapid rise of artificial intelligence (AI) and electric vehicles (EVs) is transforming the way we live, work, and move. Beneath the surface of these technological marvels lies a challenge that could define the future of our energy infrastructure: they all depend on our electrical grid. As AI-powered data centers and a growing fleet of EVs demand more power than ever before, our grid—already under pressure from extreme weather events and an increasing reliance on renewable energy—faces a critical test. The question goes beyond whether our grid can keep up, but rather focuses on how we can ensure it evolves to support the innovations of tomorrow without compromising reliability today. The intersection of these emerging technologies with our aging energy infrastructure poses a dilemma that policymakers, industry leaders, and consumers must address.

Julie Cohn, Nonresident Fellow at the Center for Energy Studies at the Baker Institute for Public Policy, presents several key findings and recommendations to address concerns about the reliability of the Texas energy grid in her Energy Insight. She suggests there’s at least six developments unfolding that will affect the reliability of the Texas Interconnected System, operated by the Electric Reliability Council of Texas (ERCOT) and the regional distribution networks operated by regulated utilities.

Let’s dig deeper into some of these issues:

AI

AI requires substantial computational power, particularly in data centers that house servers processing vast amounts of data. These data centers consume large amounts of electricity, putting additional strain on the grid.

According to McKinsey & Company, a single hyperscale data center can consume as much electricity as 80,000 homes combined. In 2022, data centers consumed about 200 terawatt-hours (TWh), close to 4 percent, of the total electricity used in the United States and approximately 460 TWh globally. That’s nearly the consumption of the entire State of Texas, which consumed approximately 475.4 TWh of electricity in the same year. However, this percentage is expected to increase significantly as demand for data processing and storage continues to grow. In 2026, data centers are expected to account for 6 percent, almost 260 TWh, of total electricity demand in the U.S.

EVs

According to the Texas Department of Motor Vehicles, approximately 170,000 EVs have been registered across the state of Texas as of 2023, with Texas receiving $408 million in funding to expand its EV charging network. As Cohn suggests, a central question remains: Where will these emerging economic drivers for Texas, such as EVs and AI, obtain their electric power?

EVs draw power from the grid every time they’re plugged in to charge. This may come as a shock to some, but “the thing that’s recharging EV batteries in ERCOT right now, is natural gas,” says Medlock. And as McKinsey & Company explains, the impact of switching to EVs on reducing greenhouse gas (GHG) emissions will largely depend on how much GHG is produced by the electricity used to charge them. This adds a layer of complexity as regulators look to decarbonize the power sector.

Depending on the charger, a single EV fast charger can pull anywhere from 50 kW to 350 kW of electricity per hour. Now, factor in the constant energy drain from data centers, our growing population using power for homes and businesses, and then account for the sudden impact of severe environmental events—which have increased in frequency and intensity—and it’s clear: Houston… we have a problem.

The Weather Wildcard

Texas is gearing up for its 2025 legislative session on January 14. The state's electricity grid once again stands at the forefront of political discussions. The question is not just whether our power will stay on during the next winter storm or scorching summer heatwave, but whether our approach to grid management is sustainable in the face of mounting challenges. The events of recent years, from Winter Storm Uri to unprecedented heatwaves, have exposed significant vulnerabilities in the Texas electricity grid, and while legislative measures have been taken, they have been largely patchwork solutions.

Winter Storm Uri in 2021 was a wake-up call, but it wasn’t the first or last extreme weather event to test the Texas grid. With deep freezes, scorching summers, and unpredictable storms becoming the norm rather than the exception, it is clear that the grid’s current state is not capable of withstanding these extremes. The measures passed in 2021 and 2023 were steps in the right direction, but they were reactive, not proactive. They focused on strengthening the grid against cold weather, yet extreme heat, a more consistent challenge in Texas, remains a less-addressed threat. The upcoming legislative session must prioritize comprehensive climate resilience strategies that go beyond cold weather prep.

“The planners for the Texas grid have important questions to address regarding anticipated weather extremes: Will there be enough energy? Will power be available when and where it is needed? Is the state prepared for extreme weather events? Are regional distribution utilities prepared for extreme weather events? Texas is not alone in facing these challenges as other states have likewise experienced extremely hot and dry summers, wildfires, polar vortexes, and other weather conditions that have tested their regional power systems,” writes Cohn.

Renewable Energy and Transmission

Texas leads the nation in wind and solar capacity (Map: Energy, Environment, and Policy in the US), however the complexity lies in getting that energy from where it’s produced to where it’s needed. Transmission lines are feeling the pressure, and the grid is struggling to keep pace with the rapid expansion of renewables. In 2005, the Competitive Renewable Energy Zones (CREZ) initiative showed that state intervention could significantly accelerate grid expansion. With renewables continuing to grow, the big question now is whether the state will step up again, or risk allowing progress to stall due to the inadequacy of the infrastructure in place. The legislature has a choice to make: take the lead in this energy transition or face the consequences of not keeping up with the pace of change.

Conclusion

The electrical grid continues to face serious challenges, especially as demand is expected to rise. There is hope, however, as regulators are fully aware of the strain. While our grid may be showing its age, this is the perfect time to shift from reacting to problems to getting ahead of them.

As Cohn puts it, “In the end, successful resolution of the various issues will carry significant benefits for existing Texas industrial, commercial, and residential consumers and have implications for the longer-term economic attractiveness of Texas. Suffice it to say, eyes will be, and should be, on the Texas legislature in the coming session.”

------------

Scott Nyquist is a senior advisor at McKinsey & Company and vice chairman, Houston Energy Transition Initiative of the Greater Houston Partnership. The views expressed herein are Nyquist's own and not those of McKinsey & Company or of the Greater Houston Partnership. This article originally ran on LinkedIn on September 11, 2024.

Zeta Energy's batteries are targeted to power Stellantis electric vehicles by 2030. Image via Zeta Energy

Houston company to develop game-changing lithium-sulfur EV batteries for automaker

team work

Houston-based Zeta Energy Corp. has teamed up with an automaker to develop new battery technology.

Zeta Energy and Stellantis N.V. announced a joint development deal to advance battery cell technology for electric vehicle applications that will develop lithium-sulfur EV batteries with gravimetric energy density that can achieve a volumetric energy density comparable to today’s lithium-ion technology. The batteries are targeted to power Stellantis electric vehicles by 2030.

“The combination of Zeta Energy’s lithium-sulfur battery technology with Stellantis’ unrivaled expertise in innovation, global manufacturing and distribution can dramatically improve the performance and cost profile of electric vehicles while increasing the supply chain resiliency for batteries and EVs,” Tom Pilette, CEO of Zeta Energy, says in a news release.

The batteries will be produced using waste materials and methane that boasts lower CO2 emissions than any existing battery technology. Zeta Energy battery technology is intended to be manufacturable within existing gigafactory technology and would leverage an entire domestic supply chain in Europe or North America.

The technology can lead to a significantly lighter battery pack with the same usable energy as contemporary lithium-ion batteries. The companies believe this will enable greater range, improved handling and enhanced performance. The technology has the potential to improve fast-charging speed by up to 50 percent, which can make EV ownership easier.

Lithium-sulfur batteries are expected to cost less than half the price per kilowatt of current lithium-ion batteries according to a news release. Zeta has more than 60 patents on its proprietary lithium-sulfur anode and cathode technologies.

Lighter and more compact EV batteries have become an important design goal for vehicle designers and manufacturers. This objective is similar to what General Motors is doing with prismatic cell technology with LG Energy Solution.

“Our collaboration with Zeta Energy is another step in helping advance our electrification strategy as we work to deliver clean, safe and affordable vehicles,” Ned Curic, Stellantis chief engineering and technology officer, says in the release. “Groundbreaking battery technologies like lithium-sulfur can support Stellantis’ commitment to carbon neutrality by 2038 while ensuring our customers enjoy optimal range, performance and affordability.”

Last year, Zeta Energy announced that it was selected to receive $4 million in federal funding for the development of efficient electric vehicle batteries from the U.S. Department of Energy's ARPA-E Electric Vehicles for American Low-Carbon Living, or EVs4ALL, program.

LG Chem’s Tennessee cathode plant, which began construction in December 2023, is designed for an annual production capacity of 60,000 tons and provides strategic geographic access for customer deliveries and raw material imports. Rendering via ExxonMobil

ExxonMobil names new partner to bolster US lithium supply chain with offtake agreement

ev supplies en route

Spring-headquartered ExxonMobil Corp. has announced a new MOU for an offtake agreement for up to 100,000 metric tons of lithium carbonate.

The agreement is with LG Chem, which is building its cathode plant in Tennessee and expects it to be the largest of its kind in the country. The project broke ground a year ago and expects an annual production capacity of 60,000 tons. The lithium will be supplied by ExxonMobil.

“America needs secure domestic supply of critical minerals like lithium,” Dan Ammann, president of ExxonMobil Low Carbon Solutions, says in a news release. “ExxonMobil is proud to lead the way in establishing domestic lithium production, creating jobs, driving economic growth, and enhancing energy security here in the United States.”

The industry currently has a lithium supply shortage due to the material's use in electric vehicle batteries and the fact that most of production happens overseas.

“Building a lithium supply chain with ExxonMobil, one of the world’s largest energy companies, holds great significance,” Shin Hak-cheol, CEO of LG Chem, adds. “We will continue to strengthen LG Chem’s competitiveness in the global supply chain for critical minerals.”

Per the release, the final investment decision is still pending.

Earlier this year, Exxon entered into another energy transition partnership, teaming up with Japan’s Mitsubishi to potentially produce low-carbon ammonia and nearly carbon-free hydrogen at ExxonMobil’s facility in Baytown.

Last month, the company announced it had signed the biggest offshore carbon dioxide storage lease in the U.S. ExxonMobil says the more than 271,000-acre site, being leased from the Texas General Land Office, complements the onshore CO2 storage portfolio that it’s assembling.

Reliant and GM Energy will be offering free nighttime charging for Chevrolet electric vehicle drivers that enroll in the new Reliant FreeCharge Nights. Photo via reliant.com

Reliant, GM Energy team up on free renewable energy EV charging

plugging in

Reliant Energy and GM Energy are advancing a new renewable energy electricity plan that will “accelerate the clean energy journey for the two companies and their customers,” according to a news release.

Houston-based Reliant and GM Energy will be offering free nighttime charging for Chevrolet electric vehicle drivers that enroll in the new Reliant FreeCharge Nights.

The Reliant FreeCharge Nights plan will be available to existing and new Reliant electricity customers, and provides a monthly bill credit that offsets the energy charges incurred from charging the qualifying EV between 11 pm and 6 am. Customers must first designate one EV to receive the charging credit in their GM Energy Smart Charging Portal before signing up for the plan.

“As we continue to shape the future of EV charging and energy management for our customers, our work alongside Reliant in Texas is a sign of our commitment to working with industry leaders to facilitate more solutions that make EV adoption an easy decision,” Aseem Kapur, chief revenue officer, GM Energy, says in a news release. “The Reliant Free Charge Nights plan is a great example of how an automaker and an energy company can work together to build the ecosystem to support the all-electric future.”

Over 150 Chevrolet dealerships can now offer the plan to EV drivers upon vehicle purchase across Texas. The plan will be powered by 100 percent renewable energy through the purchase of renewable energy certificates (RECs) equal to the customer’s electricity usage.

“We’re excited to help Chevrolet EV drivers offset the cost of charging their vehicle all while having access to a renewable electricity plan,” Rasesh Patel, president, NRG Consumer, said in a news release.

Chris George, United States co-lead at Octopus Electric Vehicles, joins the Houston Innovators Podcast. Photo courtesy of Octopus

Houston innovator drives EV adoption with unique approach to car leasing, smart tech

listen in

Switching from a gas-powered car to an electric one can be a big change, but a Houston-based company has made things a lot easier for its customers.

Octopus Electric Vehicles US, a spinout of United Kingdom-based retail energy provider Octopus Energy, matches its users with their perfect EV lease and sets them up with smart electricity technology for at-home charging.

"We do a couple of really unique things that are not only first of its kind but really innovative," Octopus EV's US Co-Lead Chris George says on the Houston Innovators Podcast, pointing out specifically Octopus Energy's Intelligent Octopus, a smart feature for customers that automates energy usage to lower cost.

"We launched an Intelligent Octopus for EVs service. Instead of operating in a very narrow window — overnight — it operates dynamically," he continues.

Pulling from the success of its British EV leasing business, Octopus EV helps Texans find their ideal car to lease from the available pre-owned EVs in the state. The process is hands on, George says, and he and his team are constantly working directly with customers to find them their right make, model, mileage, and more, then setting them up for free home charging with Octopus. All this for as low as $200 a month — perfect for both EV veterans and newbies alike.

"We serve a lot of people. What we're aiming to do is to drive adoption, and we're finding that for most people this is their first EV," George says, explaining that accessibility has been an issue for aspiring EV owners.

The company is rolling out a new process this week. In addition to providing its service in a match-making capacity, now Octopus EV will be showcasing EVs so that customers can browse, test drive, and really get to see what all they like before deciding on a car. George says this new process will be a bit of an experiment.

"We're gong to be showcasing inventory around Houston so customers can see the physical car, the lease price, test drive, and get the car you want," George says. "It's going to look and feel a little different from our current product, but it's going to serve customers just the same."

On the show, George, who previously led EV adoption-focused nonprofit Evolve Houston, shares a bit about the EV industry and what he's closely watching, including growth of charging stations, multifamily charging opportunities, battery technology for EVs and resilience, and perfecting messaging for new and returning customers.

"I'm always trying to think about where are the other things where we can unlock innovation, unlock ideas that help our industry and help Houstonians," George says.

———

This article originally ran on InnovationMap.

Ad Placement 300x100
Ad Placement 300x600

CultureMap Emails are Awesome

ExxonMobil invests over $200M in Texas advanced recycling sites

doubling down

ExxonMobil announced that it plans to invest more than $200 million to expand its advanced recycling operations at its Baytown and Beaumont sites that are expected to start in 2026. The new operations can help increase advanced recycling rates and divert plastic from landfills, according to ExxonMobil.

“We are solutions providers, and this multi-million-dollar investment will enhance our ability to convert hard-to-recycle plastics into raw materials that produce valuable new products,” says Karen McKee, president of ExxonMobil Product Solutions, in a news release.

The investment plans to add 350 million pounds per year of advanced recycling capacity at Baytown and Beaumont, which will bring ExxonMobil’s total capacity to 500 million pounds annually. The first Baytown facility started in 2022 and represents one of the largest advanced recycling facilities in North America by having processed more than 70 million pounds of plastic waste.

“At our Baytown site, we’ve proven advanced recycling works at scale, which gives us confidence in our ambition to provide the capacity to process more than 1 billion pounds of plastic per year around the world,” McKee said in a news release. “We’re proud of this proprietary technology and the role it can play in helping establish a circular economy for plastics and reducing plastic waste.”

Advanced recycling works by transforming plastic waste into raw materials that can be used to make products from fuels to lubricants to high-performance chemicals and plastics. Advanced recycling allows for a broader range of plastic waste that won't be mechanically recycled and may otherwise be buried or burned.

ExxonMobil will continue development of additional advanced recycling projects at manufacturing sites in North America, Europe and Asia with the goal of reaching 1 billion pounds per year of recycling capacity by 2027.

Houston-based Fervo Energy collects $255M in additional funding

cha-ching

A Houston company that's responding to rising energy demand by harnessing geothermal energy through its technology has again secured millions in funding. The deal brings Fervo's total funding secured this year to around $600 million.

Fervo Energy announced that it has raised $255 million in new funding and capital availability. The $135 million corporate equity round was led by Capricorn’s Technology Impact Fund II with participating investors including Breakthrough Energy Ventures, CalSTRS, Congruent Ventures, CPP Investments, DCVC, Devon Energy, Galvanize Climate Solutions, Liberty Mutual Investments, Mercuria, and Sabanci Climate Ventures.

The funding will go toward supporting Fervo's ongoing and future geothermal projects.

“The demand for 24/7 carbon-free energy is at an all-time high, and Fervo is one of the only companies building large projects that will come online before the end of the decade,” Fervo CEO and Co-Founder Tim Latimer says in a news release. “Investors recognize that Fervo’s ability to get to scale quickly is vital in an evolving market that is seeing unprecedented energy demand from AI and other sources.”

Additionally, Fervo secured a $120 million letter of credit and term loan facility from Mercuria, an independent energy and commodity group that previously invested in the company.

“In surveying power markets across the U.S. today, the need for next-generation geothermal is undeniable,” Brian Falik, group chief investment officer of Mercuria, adds. “We believe in Fervo not just because their EGS approach is cost-effective, commercially viable, and already being deployed at scale, but because they set ambitious targets and consistently deliver.”

In February, Fervo secured $244 million in a financing round led by Devon Energy, and in September, the company received a $100 million bridge loan for the first phase of its ongoing project in Utah. This project, known as Project Cape, represents a 100x growth opportunity for Fervo, as Latimer explained to InnovationMap earlier this year. As of now, Project Cape is fully permitted up to 2 GW and will begin generating electricity in 2026, per the company.

Other wins for Fervo this year include moving into its new headquarters in downtown Houston, securing a power purchase agreement with California, growing its partnership with Google, and being named amongst the year's top inventions by Time magazine.


———

This article originally ran on InnovationMap.