Monday: Does the world need more hydrocarbons?

Morning Change Makers,

Slightly change of schedule from us. We are going to move to once a week. 

We want to bring you the stories of people and ideas changing the world. We want to explain why it matters and tell you stories you won't hear elsewhere. 

That takes work and time. Enough house keeping, this week is all about energy and how we can get more of it. 

Read on,
Jack

Does the world need more or less hydrocarbons?

In 1857, a businessman called Edwin Drake was hired by Pennsylvania Rock Oil Company to come up with a way to extract oil. There were oil seeps on the surface but no one could quite understand how to extract the black gold from the ground.

Drake pioneered a technique from salt wells and used a steam engine to power the drilling of a metal pipe into the ground. In 1859, Drake’s machine struck a crevice and oil began to rise through the pipe. The first commercial oil well. The oil was collected in a bathtub. From that point on, every great discovery and invention was predicated upon oil.

So does the world need more or less hydrocarbons? In 1859, the answer was obviously more. I assume most people today would say no to this question. I disagree.

Today I want to filter through the noise, explain why hydrocarbons are useful, why we need more of them, and how one change maker is going to help us do it without destroying the planet.

If you are curious about ideas that challenge your current beliefs, read on. 

Why does the world need more hydrocarbons?

Before 1700, everything that was ever built, moved, or grown was downstream of us or other animals eating food. 

The energy equation is humans consume food, turn it into glucose, use that glucose for energy, and then build things around us. 

Animal + Food → Energy

The Roman Empire was built by humans (and a few thousand horses) who were in turn powered by olives and mozzarella.

This was true of all of biological existence until the Industrial Revolution. The Industrial Revolution is the most significant step change in human history because it was the first-ever energy transition.

During the Industrial Revolution, humans realised that you could burn coal to heat water into steam, you could then use that steam to drive a turbine that would produce energy. 

Coal + Oxygen —> Energy

Coal is a much better store of energy than plants and meat (food). Another way of thinking about it is how many horses would it take to pull the Titanic?

Drake then used a coal-powered steam engine to extract the first barrels of oil out of the ground. The genie was out of the bottle. The next 150 years saw an explosion of human flourishing. 

Everything wonderful about the world is a result of cheap and abundant energy. 

The MRI machine, vaccines, space travel, air travel, safe contraception, safe abortions, and much more all exist because of a cheap and abundant energy supply. 

The problem is that burning hydrocarbons comes with a compoundingly increasing cost for our planet. We are rapidly approaching a point of a potentially disastrous future. 

The alternative is even worse. 

To rapidly decarbonize Western nations or deny emerging nations the benefits of hydrocarbons is paramount to turning back the clock 100 years. Needless to say, this is also a horrible idea. 

Hydrocarbons are critical to today’s global infrastructure. That is changing; the world is transitioning away from fossil fuels. Can we do it fast enough? If at all?

The future of energy

Fossil fuels are problematic because it is a net contributor to global warming and there is an ever decreasing supply of them.

Through R&D, powerful profit incentives, and effective government intervention, photovoltaic solar power has ridden the cost curve down from $101 to 0.6$ per watt.

This graph is proof that capitalism is the most important and powerful system for incentivizing positive change.

If solar power is so cheap, why do need hydrocarbons?

The problem is twofold: a) connecting it to the grid is hard which means it is unevenly distributed. b) The other solutions aren’t good or cheap enough.

Nevada in the US is a desert with a lot of sunshine which isn’t much help to Massachusettes. Getting that surplus electricity across the country is complicated and expensive.

Solar energy is also not much use to the plastic, travel, or space industries, where hydrocarbons are central. You are not yet powering a plane to take you between Nevada and Massachusetts using electricity. 

This means there is a market dislocation. Capitalism will not incentivize the move away from fossil fuels as the alternatives are not yet convenient or cheap enough.

Hydrocarbons are here to stay. The proof is that global fossil fuel consumption is still increasing.

Enter Terrafrom Industries 

How is Terraform Industries changing the world?

Terraform Industries produces methane and carbon dioxide from water. The company was founded by Casey Handmer around three critical realisations that we have explained above:

1. The world cannot continue to burn fossil fuels

2. The world still needs hydrocarbons

3. Solar is cheap and getting even cheaper

This is how it works. The main source of power across the US is Liquified Natural Gas also known as methane. You can burn Methane to heat water, which spins a turbine that creates electricity.

Historically Methane has come from fossil fuels. But there is a new way.

Hydrocarbons are molecules that just contain hydrogen and carbon atoms. This is the molecular structure of methane:

In the most simple terms, to make methane you need to combine carbon and hydrogen. There is a lot of hydrogen contained in water (H₂O) and a lot of carbon in the atmosphere as carbon dioxide (CO₂).

The process of making methane is then as follows

1. Electrolyse water to produce Hydrogen
   This is where you pass electricity through water to split the hydrogen from the oxygen. This step is crucial and is only possible now because of cheap solar power.

   

   
   

2. Use direct air capture to remove CO₂ from the atmosphere

   The most core part of this is being able to do it cheaply. Casey in a docuseries called S3 said they try and get most of their parts from Home Depo (a DIY store). Their air suction pumps are from kids bouncy castles.

   

3. Combine CO2 and Hydrogen to form Methane (CH4)

   When two molecules don’t react well with each other you usually need to do three things: increase temperature, increase pressure, and add a catalyst which is like a chemical helper. That’s what the reactor does.

   

   
   

4. Purify

   Finally, you need to purify it do just pulling out the methane. A full version of Terraform’s product will look something like the diagram below.

This would be the first carbon-neutral way of producing hydrocarbons and methane.

What can we learn from Terraform Industries?

Casey is a brilliant founder because he asked questions other people didn’t

Sometimes when the world is telling you one thing, the hardest decision to make is to ask why. The world still needs hydrocarbons, and now we have a carbon-neutral way of producing them.

As Casey said in the docuseries “If there is something that must exist in the world and it will not occur without you, you have to go a build it.”.

What I read: