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That Small Green Premium
3 takeaways from my conversation with energy transition expert John Jeffers
…At the end of the day, industries have margins that they need to preserve and protect, and consumers have household budgets they need to meet. So there's probably a small green premium that end users are really willing to pay on an ongoing basis, but it's not much.
Today, I’m breaking down 3 takeaways from my discussion with John Jeffers, an energy exec with 30+ years of experience and the co-founder of REVOLUTION Turbine Technologies.
Check out our full conversation + how to connect with John here.
The Observer Express
Don’t have time to read the entire post right now? No worries, here are today’s 3 takeaways:
Efficiency Improvements Lower the Burden. By improving the efficiency of existing energy sources, less supply is required from green sources.
Do you Understand the Context & Core Problem? Entrepreneurs often fail to fully understand their customer’s context and core problem.
Trend to Watch: Hydrogen as a Fuel. There are two recent developments within this trend: hydrogen from methane and naturally occurring hydrogen.
1. Efficiency Improvements Lower the Burden
John pointed out that by improving the efficiency of existing energy sources, the overall burden on green technologies lessens (assuming steady state demand).
If you can improve the efficiency of things that consume electricity (things like smart buildings and more efficient equipment) then you're also reducing the magnitude of the challenge for energy transition, because you're reducing the amount of legacy power generation sources that need to be replaced with new ones.
2. Do you Understand the Context & Core Problem?
Two critical considerations for new products & technologies in the industrial energy space: context and the core problem.
Context
Energy technology does not exist in isolation - it is always connected to a bigger process.
Question for investors to ask: “Does the entrepreneur really understand this context?”
One of the things is really understanding the totality of the situation from the customer's perspective. What are the issues associated with integration of a new technology into their operations?
Problem
Customers don’t pay for solutions. They pay to solve problems.
Question for investors to ask: “Does the entrepreneur realize the problem they’re actually solving?”
I think what separates the startup that just has a cool technology from the ones that are going to be really successful is how well they understand the problem they're trying to solve on the customer's end and how well do they understand how the way they're trying to solve it stacks up against other ways.
So, while you may think you're solving a problem with industrial emissions from industrial heat production process, what they're really trying to do is solve an overall corporate reduction in carbon footprint. And they're going to look in terms of “okay, where can I get the most decarbonization per dollar invested?” Not “how am I going to reduce the carbon footprint of my industrial heat?”
3. Trend to Watch: Hydrogen as a Fuel
Hydrogen as a fuel has been around for some time, but John introduced two developments I was not familiar with: hydrogen from methane and naturally occurring hydrogen.
Hydrogen from Methane
So, basically it's electrolysis or pyrolysis of methane. If you can do it in the right environment and the right circumstances, rather than producing CO2, you'll produce hydrogen and solid carbon. Solid carbon has a lot of potential uses, and then obviously the hydrogen does. What I really like about it is just the basic physics behind it - it takes significantly less energy to split a methane molecule than to split a water molecule.
Naturally occurring Hydrogen
There’s an emerging pursuit for naturally occurring hydrogen in the subsurface where hydrogen is accumulated in a similar manner to oil and gas.
All of [the current deposits] were found totally by accident. They were found in the course of exploring for something else.
There really has not yet been a deliberate exploration effort for hydrogen. It does not occur in the same kinds of places in general that you'd look for oil and gas. So I think that's a wild frontier right now.
What Do You Think?
What energy transition technologies are you watching most closely?
*I include this section in every post because I’m genuinely curious to hear what you think. I answer every response, so please, don’t be shy!
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3 Lessons Learned
I finally realized why everyone sounds amazing on a podcast.✂️It’s because there’s somebody with a trigger-happy delete button sitting in a dark room editing out all the “ums” and “uhs”. Having now fully produced 5 podcast episodes I’ve realized how easy it is to make a speaker sound so much better by killing those dreaded filler words.
A CEO’s job is to focus the organization.🎯I’m not great at it. I get distracted and excited and want to say yes to all the great ideas that emerge. But I’m learning. Gotta keep putting that magic two-letter word to use...
Underappreciated life skill: the ability to distill.🧪This week I helped a founder cut their 50-slide read-through deck down to 10-ish presentable slides. It was rough. The ability to distill a complex topic down to its essence is hands down one of the most underrated skills in business.
3 Interesting Links
Tune in next week for a breakdown of my conversation with a Dallas-based WealthTech VC with a global footprint.
Until then, thanks for reading - have a great week.
-Andrew
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About Me
I cultivate flourishing.
I'm also the CEO of PitchFact, where our mission is to cultivate flourishing specifically through efficient and collaborative early-stage diligence. I'm a proud husband, grateful father, and honest friend. My love languages include brisket, bourbon, and espresso.