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Houston expert: When it comes to the future of energy and climate, think 'all of the above'

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There's no silver bullet for clean energy. We need an all-hands-on-deck approach, writes Scott Nyquist. Photo via Getty Images

People in the energy industry don’t have the Oscars. For us, the big event of the year is CERAWeek — a conference stuffed with CEOs, top policymakers, and environmental and energy wonks held annually in March.

CERAWeek 2022, with the theme“Pace of Change: Energy, Climate, and Innovation," meant the return of in-person activations, panels, and networking. Walking and talking between sessions and around the coffee table, it occurred to me that the unofficial theme of the event was “Maybe now we can find middle ground on energy.” This idea came up time and time again, from all kinds of people.

As with too many other issues, the discussion of the future of US energy has become polarized. On one end of the spectrum are those who want everything renewable and/or electrified by ….. last week, whatever the cost. Their mantra for fossil fuels: “Keep them in the ground.”

On the other end, are those who dismiss climate change, saying we can always adapt and that it doesn’t much matter, anyway. Just keep digging and drilling and mining as we have always done. And in the middle are the great majority of Americans who are not passionate either way, but want to be responsible consumers, and also to be able to visit grandma without breaking the bank.

I believe that the transition toward an energy system that is cleaner and less reliant on fossil fuels is realand will ultimately bring substantial benefits. At the same time, I believe that energy security and economics also matter. At a time when inflation was already running high, paying an average of $4.25 a gallon at the pump is piling pain on tens of millions of US households. Ultimately, over decades, the use of electric vehicles will reduce the need for oil and that lower-emissions sources, including renewables, will provide a larger share of the power supply, which today depends largely on gas and coal. But that moment is not now, or next week. Indeed, fossil fuels continue to account for almost 80 percent of US primary energy consumption, and a similar figure globally.

Here is one way to think about the interplay between the energy transition and energy security: “We need an energy strategy for the future—an all-of-the-above strategy for the 21st century that develops every source of American-made energy.” No, that isn’t some apologist for Big Oil; it was President Obama. In 2014, the Obama White House also noted the role of US domestic oil and gas production in enhancing economic resilience and reducing vulnerability to oil shocks. In short, the White House argued, US oil and gas production can bring real benefits for the country. I think that is still true.

Does that mean throwing in the towel on the energy transition and climate change? Absolutely not. There are a variety of ways to pursue the goal of reducing emissions and eventually getting to net-zero emissions. I’ve touched on many of them in previous posts—including reducing methane emissions,pricing carbon, hydrogen, renewables, electric vehicles, urban planning, carbon capture, and negative emissions technologies. In other words, an “all of the above strategy” makes sense in this regard, too.

I don’t know how, or if, a middle ground can be captured. But from what I heard at CERAWeek last year, from people of otherwise widely divergent views, there just may be momentum to get there. A middle-ground consensus rests on three premises. First, we need fossil fuels for energy security and reliability now and until the time when technologies are in place to secure the energy transition. Second, at the same time, we need to be investing in the energy transition because climate change is real and matters. And third, for sustained and systematic progress, government and industry need to work together.

Or, in a phrase, “all of the above.”

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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.

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Houston American Energy shares details on Baytown recycling facility, new innovation center

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Houston American Energy Corp. (NYSE: HUSA) plans to break ground on its new advanced recycling facility in the Cedar Port Industrial Park in Q4, the company shared in an announcement this week.

The company acquired a 25-acre, $8.5 million site for development in July from TGS Cedar Port Partners, which handles approximately 5 billion pounds of plastic resin annually. HUSA also plans to build the Abundia Innovation Center on the site.

HUSA named Houston-based Corvus Construction Company the design and construction partner on both projects.

“The site at Cedar Port is in the largest master-planned rail and barge served industrial park in the United States with direct access to the Houston Ship Channel and the Port of Houston,” Ed Gillespie, CEO of HUSA, said in a news release. “It provides robust logistical advantages for the transportation of both feedstock and our low-carbon drop-in fuels and chemical products. Critically, the region has a deep pool of engineering and operations talent. HUSA looks forward to working with local communities and adding economic growth in the Gulf Coast region.”

The new advanced recycling facility will convert plastic waste into pyrolysis oil and will serve as a hub for a five-year development plan designed to scale production capacity.

The facility will be built around New York-based Abundia Global Impact Group LLC’s technologies and proprietary pyrolysis process, which converts plastic and certified biomass waste into high-quality renewable fuels.

HUSA acquired AGIG this summer. At the time, the combined company shared that it planned to serve a multi-billion-dollar global demand for renewable fuels, Sustainable Aviation Fuel (SAF) and recycled chemical feedstocks.

The Abundia Innovation Center is planned to serve as a state-of-the-art research and development facility for the renewable energy sector, aiding in the commercial and technical validation of new technologies. HUSA previously announced that Nexus PMG, also based in Houston, will provide strategic support and guidance in the development of the innovation hub.

According to HUSA, the recycling facility and innovation center will “create the foundation for HUSA’s long-term vision to be a leader in the low-carbon fuels sector by driving collaborative innovation.”

UH researchers make breakthrough in cutting carbon capture costs

Carbon breakthrough

A team of researchers at the University of Houston has made two breakthroughs in addressing climate change and potentially reducing the cost of capturing harmful emissions from power plants.

Led by Professor Mim Rahimi at UH’s Cullen College of Engineering, the team released two significant publications that made significant strides relating to carbon capture processes. The first, published in Nature Communications, introduced a membraneless electrochemical process that cuts energy requirements and costs for amine-based carbon dioxide capture during the acid gas sweetening process. Another, featured on the cover of ES&T Engineering, demonstrated a vanadium redox flow system capable of both capturing carbon and storing renewable energy.

“These publications reflect our group’s commitment to fundamental electrochemical innovation and real-world applicability,” Rahimi said in a news release. “From membraneless systems to scalable flow systems, we’re charting pathways to decarbonize hard-to-abate sectors and support the transition to a low-carbon economy.”

According to the researchers, the “A Membraneless Electrochemically Mediated Amine Regeneration for Carbon Capture” research paper marked the beginning of the team’s first focus. The research examined the replacement of costly ion-exchange membranes with gas diffusion electrodes. They found that the membranes were the most expensive part of the system, and they were also a major cause of performance issues and high maintenance costs.

The researchers achieved more than 90 percent CO2 removal (nearly 50 percent more than traditional approaches) by engineering the gas diffusion electrodes. According to PhD student and co-author of the paper Ahmad Hassan, the capture costs approximately $70 per metric ton of CO2, which is competitive with other innovative scrubbing techniques.

“By removing the membrane and the associated hardware, we’ve streamlined the EMAR workflow and dramatically cut energy use,” Hassan said in the news release. “This opens the door to retrofitting existing industrial exhaust systems with a compact, low-cost carbon capture module.”

The second breakthrough, published by PhD student Mohsen Afshari, displayed a reversible flow battery architecture that absorbs CO2 during charging and releases it upon discharge. The results suggested that the technology could potentially provide carbon removal and grid balancing when used with intermittent renewables, such as solar or wind power.

“Integrating carbon capture directly into a redox flow battery lets us tackle two challenges in one device,” Afshari said in the release. “Our front-cover feature highlights its potential to smooth out renewable generation while sequestering CO2.”

As electric bills rise, evidence mounts that data centers share blame

Data Talk

Amid rising electric bills, states are under pressure to insulate regular household and business ratepayers from the costs of feeding Big Tech's energy-hungry data centers.

It's not clear that any state has a solution and the actual effect of data centers on electricity bills is difficult to pin down. Some critics question whether states have the spine to take a hard line against tech behemoths like Microsoft, Google, Amazon and Meta.

But more than a dozen states have begun taking steps as data centers drive a rapid build-out of power plants and transmission lines.

That has meant pressuring the nation's biggest power grid operator to clamp down on price increases, studying the effect of data centers on electricity bills or pushing data center owners to pay a larger share of local transmission costs.

Rising power bills are “something legislators have been hearing a lot about. It’s something we’ve been hearing a lot about. More people are speaking out at the public utility commission in the past year than I’ve ever seen before,” said Charlotte Shuff of the Oregon Citizens’ Utility Board, a consumer advocacy group. “There’s a massive outcry.”

Not the typical electric customer

Some data centers could require more electricity than cities the size of Pittsburgh, Cleveland or New Orleans, and make huge factories look tiny by comparison. That's pushing policymakers to rethink a system that, historically, has spread transmission costs among classes of consumers that are proportional to electricity use.

“A lot of this infrastructure, billions of dollars of it, is being built just for a few customers and a few facilities and these happen to be the wealthiest companies in the world,” said Ari Peskoe, who directs the Electricity Law Initiative at Harvard University. “I think some of the fundamental assumptions behind all this just kind of breaks down.”

A fix, Peskoe said, is a “can of worms" that pits ratepayer classes against one another.

Some officials downplay the role of data centers in pushing up electric bills.

Tricia Pridemore, who sits on Georgia’s Public Service Commission and is president of the National Association of Regulatory Utility Commissioners, pointed to an already tightened electricity supply and increasing costs for power lines, utility poles, transformers and generators as utilities replace aging equipment or harden it against extreme weather.

The data centers needed to accommodate the artificial intelligence boom are still in the regulatory planning stages, Pridemore said, and the Data Center Coalition, which represents Big Tech firms and data center developers, has said its members are committed to paying their fair share.

But growing evidence suggests that the electricity bills of some Americans are rising to subsidize the massive energy needs of Big Tech as the U.S. competes in a race against China for artificial intelligence superiority.

Data and analytics firm Wood Mackenzie published a report in recent weeks that suggested 20 proposed or effective specialized rates for data centers in 16 states it studied aren’t nearly enough to cover the cost of a new natural gas power plant.

In other words, unless utilities negotiate higher specialized rates, other ratepayer classes — residential, commercial and industrial — are likely paying for data center power needs.

Meanwhile, Monitoring Analytics, the independent market watchdog for the mid-Atlantic grid, produced research in June showing that 70% — or $9.3 billion — of last year's increased electricity cost was the result of data center demand.

States are responding

Last year, five governors led by Pennsylvania's Josh Shapiro began pushing back against power prices set by the mid-Atlantic grid operator, PJM Interconnection, after that amount spiked nearly sevenfold. They warned of customers “paying billions more than is necessary.”

PJM has yet to propose ways to guarantee that data centers pay their freight, but Monitoring Analytics is floating the idea that data centers should be required to procure their own power.

In a filing last month, it said that would avoid a "massive wealth transfer” from average people to tech companies.

At least a dozen states are eyeing ways to make data centers pay higher local transmission costs.

In Oregon, a data center hot spot, lawmakers passed legislation in June ordering state utility regulators to develop new — presumably higher — power rates for data centers.

The Oregon Citizens’ Utility Board says there is clear evidence that costs to serve data centers are being spread across all customers — at a time when some electric bills there are up 50% over the past four years and utilities are disconnecting more people than ever.

New Jersey’s governor signed legislation last month commissioning state utility regulators to study whether ratepayers are being hit with “unreasonable rate increases” to connect data centers and to develop a specialized rate to charge data centers.

In some other states, like Texas and Utah, governors and lawmakers are trying to avoid a supply-and-demand crisis that leaves ratepayers on the hook — or in the dark.

Doubts about states protecting ratepayers

In Indiana, state utility regulators approved a settlement between Indiana Michigan Power Co., Amazon, Google, Microsoft and consumer advocates that set parameters for data center payments for service.

Kerwin Olsen, of the Citizens Action Council of Indiana, a consumer advocacy group, signed the settlement and called it a “pretty good deal” that contained more consumer protections than what state lawmakers passed.

But, he said, state law doesn't force large power users like data centers to publicly reveal their electric usage, so pinning down whether they're paying their fair share of transmission costs "will be a challenge.”

In a March report, the Environmental and Energy Law Program at Harvard University questioned the motivation of utilities and regulators to shield ratepayers from footing the cost of electricity for data centers.

Both utilities and states have incentives to attract big customers like data centers, it said.

To do it, utilities — which must get their rates approved by regulators — can offer “special deals to favored customers” like a data center and effectively shift the costs of those discounts to regular ratepayers, the authors wrote. Many state laws can shield disclosure of those rates, they said.

In Pennsylvania, an emerging data center hot spot, the state utility commission is drafting a model rate structure for utilities to consider adopting. An overarching goal is to get data center developers to put their money where their mouth is.

“We’re talking about real transmission upgrades, potentially hundreds of millions of dollars,” commission chairman Stephen DeFrank said. “And that’s what you don’t want the ratepayer to get stuck paying for."

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