Description: Nick and John Skrinar, Partner at Cresta Fund Management, explore the intersection of infrastructure investment, private equity, and the energy transition in the U.S. in 2024. Specifically, Nick and John discuss the merits of technologies ranging from carbon capture to hydrogen and renewable natural gas while also casting an eye to the political landscape and how sustainable infrastructure investing has changed over the past five years in the U.S. In addition, Nick and John dove deep on the following topics:

• Other technologies like thermal energy storage, which is commercializing as we speak and offer a cost-effective solution to store and utilize excess renewable energy
• The importance and state of stable policy: Nick and John discuss the IRA, the need for further clarification on its components, and other stable policies like the Renewable Fuel Standard (RFS) and Low Carbon Fuel Standard (LCFS).
• The importance of "boring capital" in climate tech and energy investment: As more large private equity firms enter the market, it signals a maturation of the industry.

Timestamps:

00:01:52 - Climate Tech Investment Landscape

00:04:48 - Molecule-focused Energy Infrastructure

00:05:09 - The Role of Private Equity in Energy Transition

00:06:13 - Types of Projects and Technologies for 2024

00:07:17 - The Mainstreaming of Carbon Capture

00:11:27 - The Role of Stable Policy in Infrastructure Investment

00:15:22 - Specific Projects Supported by Cresta

00:21:07 - The Potential of Renewable Natural Gas

00:24:06 - The Process of Creating Sustainable Aviation Fuel

00:29:57 - Cresta's Investment Strategy for 2024

00:31:24 - The Practical Applications of Green Hydrogen

00:34:24 - The Need for Stable Policy in Energy Investments

00:35:16 - Policy Tailwinds and Headwinds in the US

00:37:25 - The Impact of State-Level Policies on Energy Transition

00:40:37 - The Importance of Boring Investments in Energy Transition

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Nick:

Welcome to the Keep Cool Show, the podcast in which we cover how cutting-edge climate technologies connect to the world in which we live. I'm your host, Nick Van Osdahl. For my edification, because I'm not even that familiar with how it works from a tech perspective, but how is the manure actually taken and how is the methane actually captured from that source? What does that infrastructure look like?

John:

It's actually pretty funny. I mean, it's an old tech. I think it goes back as far as ancient Egypt, that they were collecting manure or waste and generating biogas from it. It's thousands of years old. It's not really high tech stuff. I think where what you've seen is sort of the adoption of gas processing technologies into this biogas world where, you know, generally off of a dairy, really, you're taking dairy manure, you're putting it in a big swimming pool with a cover. And that's the easy part.

Nick:

Probably not a pool I'd want to swim in.

John:

I don't think so. But then you're taking that gas that's generated during the decomposition, you introduce some enzyme, and you speed up that process a little bit. But taking that biogas that's generated from that waste, and then you put it through really conventional gas handling and gas treating technologies that have been used for decades, right around natural gas industry to turn it into really pure methane. And then that goes into, like I said, into the interstate pipeline, or it gets put into trucks or, or used, you know, in LDCs for thermal uses.

Nick:

All right, John, welcome to the keep cool podcast. It's great to have you.

John:

Thanks for having me, Nick. Pleasure to be here.

Nick:

John:

Well, I think like from our perspective, the most important and this is probably pretty redundant for you is the IRA. I mean, I think it's a huge piece of legislation that has so many impacts, so many parts of this energy transition. So continued clarification and guidelines from Treasury on what various components of that IRA are going to look like. I think that is that is going to shape a lot of the next five plus ten plus years. And so really understanding how that's, you know, that's legislation that's now almost 18 months old. And we're still waiting for a lot of it to be. Yeah, right. We're still waiting for a lot of it to be clarified. And so to me, that's really the most important part. Sweet. On the other side, you know, I think And you'll probably hear this from me a lot is sort of the hype around hydrogen as a molecule that's going to power our whole economy. To me, that's just not something that's going to happen anytime soon. Not to say it can never happen, but we're just decades away from even sort of having that be an option. And so talking about hydrogen, unless you're talking about it in a really practical on-site application, is not worth our time.

Nick:

Fair enough. Cool. I'm excited to dig into that a little bit more. You know, for our listeners edification, we can also start with a little bit of, you know, would love a quick 90, 120 seconds on how you got into this work. And we can talk a little bit about Crest as the firm to what the mandate is, how long it's been around, that type of stuff.

John:

Nick:

Yeah, makes sense. And for our listeners who might not be as familiar, I really appreciate sort of the distinction between molecules and electrons. I think it's a pretty clean way to sort of segment some of the different things that one could look at in terms of energy transition infrastructure, just to give folks kind of like a sense of what falls underneath both buckets? How would you lay that out to crystallize it for folks?

John:

Yeah, I mean, look, molecules for us is chemicals, fuels, gases, right? So methane, CO2, diesel, jet fuel, gasoline, you know, and thousands of chemicals. And obviously electrons is power, right? So whether you're power generation or transmission or distribution, you know, that's how that market is sort of allocated, and we're just not that involved. I'll say, though, that the lines are starting to blur. I think with the emergence of things like e-fuels, where you're taking green power, making green hydrogen, and combining that with CO2 to make methanol or ammonia or jet fuel, that's starting to blur the lines of, can you say you don't touch electrons? Well, today, no, but over the next three, five, ten years, that's likely to change.

Nick:

John:

Nick:

Yeah, folks have been talking about the technology as early as the 70s, I think.

John:

It's not new stuff. In fact, Cresta in previous iterations or the team at Cresta in previous iterations has been doing carbon capture since the mid-aughts, not for any incentive or even to capture and sequester carbon, but really to use that as a vehicle to capture and sequester H2S. And so it's not something that's new, but I think the idea of using it as a decarbonization tool is really, you know, where we've evolved. And I think, you know, the market's been in a holding pattern for a number of years as we wait for the class six permit process to sort of catch its cadence under the EPA. And then the willingness for the EPA to grant primacy to Louisiana. So now we've got Louisiana, Wyoming, North Dakota, they've all got primacy. They've all got control over the permitting of carbon sequestration, and that really frees up a lot of resources. I think something like two-thirds of the permit applications with the EPA were in the state of Louisiana, so you can imagine the ability to de-bottleneck that process by shifting it from the EPA's desk to the state of, you know, DNR Louisiana.

Nick:

Yeah, makes sense. And for folks who might not be as familiar, you know, just a quick point that class six wells are wells in which carbon dioxide can be injected back into for sequestration. Yeah. And I mean, obviously also the incentive component of, you know, now there is a price that the government will pay for captured or removed carbon.

John:

Nick:

Yeah, I hope you're right on that front. I think for a lot of folks that kind of track climate and climate technologies broadly, they have some skepticism around carbon capture, in part because, as we've talked about, it's been discussed the same way that hydrogen's been discussed for a long time. And so it really does need to have this rubber-meets-the-road moment where it starts to actually deliver. But I do think it is worth noting that, like, it's not like none of these projects exist, as you've pointed out. Whether it's in Europe or the U.S., like, there are active carbon capture projects that have captured and sequestered millions of tons of CO2. So, you know, this is something that's ripe for additional scale.

John:

Yeah, I agree. I agree 100%. And look, I think that's a great part of the story is that we didn't rush into it and just immediately start sticking CO2 underground and hope for the best, right? I think the ability by the regulators to, you know, keep their foot on the break and allow this market to develop to really get a firm understanding of what the ramifications of this are. I think you've seen in sort of the fracking world that the quick adoption of that technology has led to some, in certain places, some less than desirable outcomes. Totally. And I don't think anybody in this value chain wants to see something like that happen with CO2 sequestration, where you're investing billions of dollars to build and install infrastructure, and then to have it need to be unwound or wound back is for the worst outcome. So I think that's a feature, not a bug.

Nick:

Yeah. And the last point I'll make is it's always interesting to me. I mean, I think it's great that there's so much proverbial energy beyond or behind carbon removal at this point of like removing CO2 from the ambient atmosphere. But I always come back to the point where it's like, gee, that's, you know, 0.04% CO2 in the ambient air. Whereas with a flu stack from a power plant, maybe you get eight to 12% CO2 ethanol plant, you can get up to like almost pure CO2. So from a pure physics and like amount of work, like literal work required to capture CO2, it's a lot easier when you're working with kind of that more pure CO2 stream. So I'm optimistic about it as well. And yeah, we can check in at the end of the year. Are you that prediction of this being the year of CCS?

John:

Yeah, we'll see.

Nick:

John:

Nick:

Yeah, it's super important as well. You know, as you said,

John:

Listen, at this stage of the energy transition, it's what we think is needed. I don't know, again, if there was lots of platforms of carbon solutions, we wouldn't have a carbon problem, right? We would have an economic opportunity for those large firms to do financial optimization and rightsizing companies and work in staffs. But today, we need to build things. And that's where we come in. And so we like to find projects where we can be really hands on. I think that's a big part of our strategy, is that, you know, providing our teams with shared services through our shared services platform. So, you know, if you're a startup that's trying to build a single project, it doesn't make a lot of sense to have a CFO full time or a GC full time, or a chief commercial officer. And so be, you know, being able to provide that support is part of the unique offering in our space that we provide for our portfolio companies.

Nick:

And if you're able to, I'd love to speak to, you know, a couple specific types of projects that you all have worked with and supported. I think that, for listeners, will give them kind of a good illustration of what this looks like on the ground. And we can also speak to, you know, what the climate or energy transition impact of those projects are.

John:

Yeah, absolutely. So I think the first investment we made out of our sustainable fund one was a company called LF Bioenergy, their dairy waste to renewable natural gas platform. You know, they're building facilities at operating dairies to capture the waste and the manure and the methane effectively from those facilities. Really, you're decarbonizing milk is what you're doing, right? You're using dairies and milk. And then turning that into a usable commodity that is part of the interstate pipelines, you know, is injected to the interstate pipeline system and can be used for thermal needs or transportation needs or chemical feedstock needs. You know, for us, that's a long trajectory of growth where they've got a number of projects. We've got one project operating and a number of projects in construction and and even more in their pipeline to continue to develop. We partnered with Marathon Petroleum and that endeavor last March. And they have an interest in RNG because I think they want to think about decarbonizing the hydrogen production at their refineries. And so we've worked with them to continue to grow that business and we're excited about what the future holds.

Nick:

Yeah, it makes sense. You know, I think for many folks, the idea that cow burps are bad for the environment is familiar. And yeah, in the US, like agriculture and specific enteric fermentation to cows is close to if not the number one source of human caused methane emissions. But yeah, it's worth noting that it isn't just the burps. It's also like a lot of methane emissions from manure management and stuff like that. Yeah, and I think sometimes folks can get, it's important to crystallize like that there is that layer of climate impact when you're creating natural gas from a source of methane emissions and methane is, you know, 90% of natural gas or 70 to 90%. So if you're creating it from a source of emissions that would have gone into the atmosphere anyways, then there's significant climate impact. And, you know, folks obviously over the long arc of the energy transition would like to see less natural gas get burned too, but as an intermediary step when Demand for natural gas isn't going anywhere. Creating it from that emission source is an impactful way to do it.

John:

Of course, and I think, you know, I mean, I don't think natural gas is going anywhere anytime soon. I don't think cheese and milk are going anywhere anytime soon. So it's a waste of that industry, and we're trying to help, again, trying to help decarbonize the dairy industry. It's really what the key goal is here. And then, of course, it gets used in interesting ways, and it displaces other fuels, which can be really impactful.

Nick:

Yeah, and for my edification, because I'm not even that familiar with how it works from a tech perspective, but how is the manure actually taken and how is the methane actually captured from that source? What does that infrastructure look like?

John:

It's actually pretty funny. I mean, it's an old tech. I think it goes back as far as ancient Egypt that they were collecting manure or waste and generating biogas from it. So it's thousands of years old. It's not really high tech stuff. I think where what you've seen is sort of the adoption of gas processing technologies into this biogas world where generally off of a dairy, really you're taking dairy manure, you're putting it in a big swimming pool with a cover, and that's the easy part.

Nick:

Probably not a pool I'd want to swim in.

John:

Yeah, I don't think so. But then you're taking that gas that's generated during the decomposition, you introduce some enzyme, right, and you speed up that process a little bit. But taking that biogas that's generated from that waste, and then you put it through really conventional gas handling and gas treating technologies that have been used for decades around the natural gas industry to turn it into really pure methane. And then that goes into, like I said, into the interstate pipeline, or it gets put into trucks, or used in LDCs for thermal uses. it's really not that sophisticated. It's capex intensive, right? So that's really a big part of the cost. It's not, the scale of it isn't, you know, if you think about all of the potential sources of, and this number is debatable, but I think directionally, if you think about all the sources of potential RNG, it could be from landfills, it could be from dairies, it could be from food processors, organic waste, even agricultural waste. If you add all that up, it might represent six to eight percent of the gas demand in North America today, right? So it's not impactful from a volume perspective. But when you think about the carbon intensity of it, it's really impactful. And so it may represent 20 plus percent of the CO2 sort of impact of natural gas. And being able to take that to zero, even negative, that can really make a big dent.

Nick:

Yeah, that's a big beat for me this year. I think the conversation around methane as a major global greenhouse or a global warming driver is maturing. More folks are talking about that again, and it's not like it was some revelation. People have long known that methane has driven something like a third of global warming globally to date. But yeah, pound for pound, preventing the emission of one molecule of methane into the atmosphere especially on shorter timeframes, equates to like, you know, depending on the timeframe you choose, preventing the emission of 30 to 80 molecules of carbon dioxide. So there's a lot of reduced global warming impact that can be had just purely by keeping methane on earth and out of the atmosphere.

John:

Super impactful. Yeah. I guess another project that we've, you know, really dove in on headfirst was, you know, we acquired control of a former oil refinery. In Newfoundland, it was formerly known as the Come-by-Chance Refinery. It's now BREA, and that is a construction project to convert it from an oil refinery to a renewable diesel and sustainable aviation fuel project. really kind of an example of an asset that we identified that had really unique characteristics that we thought were, were really best in class, or, you know, sort of top decile across a number of different perspectives. And then we built a team around it, we brought in experienced operators from the refining sector from, you know, the ag and biofuel sectors, and have really built this, you know, a world scale asset with a world class team. It's a big, big project. It's taken longer and cost more than we expected, but we're excited about it. And hopefully, it's a really big contributor to that market that we think we're really excited about renewable diesel and sustainable aviation fuel. It's a practical way to decarbonize. It's not net zero, but it's a great way forward. I think there's a lot of other things that can get done in that sector broadly, whether it's at our refinery or at others, where you can continually drive down the carbon intensity of the fuels you're producing. You can incorporate carbon capture. You can incorporate green hydrogen. You can incorporate newer, lower carbon intensity feedstocks with lower land use change impacts. over time, as you've seen with wind and solar over the last 30 years, right, we've just become more cost effective and more impactful. And our expectation is you're going to see that in this space. And so, and I think the energy density of liquid fuels is really hard to beat. And that's something that I think, practically speaking, is really important as you evaluate this energy transition. You know, we talked briefly about hydrogen before, but The energy density of hydrogen is just not great, and so transporting it is hard, it's leaky. When you think about batteries, I think the idea of electrifying everything, electrifying an 18-wheeler that's moving across the country, that's moving cargo across the country, the energy density of batteries is 40 times less than the energy density of diesel fuel. And even in a lab, it may only be 25 times less, but that means that you're spending a lot of your cargo space to house batteries to move that cargo, which then reduces your payload and starts to change the economics in a way that we just don't think works yet. And so, again, for us, liquid fuels is a really important part of this energy transition for now. 50 years from now, who knows? We may have a different set of technologies that allows us to do things we can't do today.

Nick:

Yeah, it's even harder if you think, kind of turn to aviation or shipping, like a giant ship that's moving 20,000 containers across the ocean.

John:

Yeah, look, I mean, planes are a great example. And I just, let's assume that you can get there on the energy density that allows you to, I mean, it's really hard for an airplane to be full of fuel and full of passengers today. That's just one of those things that they have a hard time doing. So let's assume you've got a lot heavier fuel and batteries or in fuel cells or whatever it is that you contemplate there. And let's assume you can economically load it with passengers and get it off the ground. Well, the infrastructure that nobody's talking about is the runways at the airports. They're going to have to be three times longer and made of materials that are five times harder, right? The knock-on effects of some of these things that are proposed are just really, really challenging. And so I think, again, liquid fuels for us are really a great place to be today.

Nick:

Yeah. Sustainable aviation fuel is definitely getting a decent amount of attention this year. For my and listeners' edification, in the actual composition of creating those fuels, what are some of the main levers that you can pull to reduce the carbon intensity of them while keeping, to my understanding, you have to control for a lot of things, right? You still have to get a similar energy density, ideally. Even some of the molecular structure, it's ideal to keep it pretty similar to what a jet fuel would normally be in terms of the length of the hydrocarbon chains, stuff like that. So, the most basic level, how does that actually work? creating a sustainable aviation?

John:

Well, look, I think there's a bunch of different pathways, right? I mean, the HEFA process, which is what we use and what, you know, Darling and Valero use at their refinery in the Gulf Coast and Phillips 66 is going to use at their Rodeo refinery and Marathon uses and Total and ENI and SD, right? That's the HEFA process. And that's you know, taking fatty acids and turning them into fuels. That could be from vegetable oils, it could be from used cooking oil, it could be from animal tallow, right? That's the most common way today. which is, again, a really small market. The incentives around SAF are just emerging, and so most of it's being produced as renewable diesel today. Then, of course, you've got e-fuels, where you're taking green hydrogen and CO2 and combining them to create a syngas that then can be transformed into a number of different things, SAF being one of them. I think the other pathway that's emerging is alcohol to jet, right? We just saw Lanza Jet turn on their Freedom Fuels plant in Georgia, taking alcohol and turning that into jet fuel. And so, and there's other pathways, but I think those are the three leading pathways today, I'd say. In our process, these types of facilities make jet fuel. It's embedded in the diesel that you have, and so you've got to be able to strip that out. The way that you can get your carbon intensity down is you've got to find low indirect land use impact feedstocks. So that could be, you know, animal tallows. It could be used cooking oil. It could be energy type crops that are really sort of in development. Maybe it's cannellina, right? Maybe it's macauba, like there's all kinds of different sort of things that people are trying to advance that are used on less desirable lands, less fertile lands, that are really more an uplift to the agronomy than sort of a tractor to it. So if you've got a low ILOC feedstock, and you've got an efficient process that is fueled by low carbon intensity inputs like green hydrogen, and you've got the ability to do some CO2 capture around the ports of your process that do produce CO2, you can think about sustainable aviation fuel that's in the single digits, maybe net zero, maybe even slightly negative. And that isn't, you know, it's not like we want to put something on Mars far away, it's kind of like, within a couple of years, there should be some plants that are doing that. And so it'll depend on, you know, the scalability is hard. The feedstock availability that meets that requirement to get down to that low of a carbon intensity score It's not there today, but it's in development. And it's not, you know, again, it's not rocket science. It's how do we make something and then get broad adoption? You know, farmers want to plant things that make the money. And so you've got to be able to provide them with the incentives to take the risk to switch to something new that potentially can lead us down these paths to lower carbon intensity fuels. But it's a process.

Nick:

Yeah, sometimes it's kind of feels from the outside looking in like it's a bunch of different chicken and egg problems of, you know, for the farmer to switch, the market has to be there for the market to be there, the farmer has to switch. But I'm glad to hear that from your perspective, at least it feels like Some of it's moving ahead.

John:

Nick:

John:

Nick:

Yeah, maybe we can dig a tiny bit deeper on that because I was going to circle back to it because at the beginning it sounded like, you know, the hydrogen kind of ecosystem and complex is one that you think is perhaps at least a little bit overhyped, but what is like the perfect situation for producing green hydrogen look like in your mind? Just, you know, can be a theoretical or a practical example.

John:

I'll just use our refinery in Newfoundland as an example. I mean, Newfoundland has some of the best wind in the Western Hemisphere. It's like 60% capacity factor. They haven't had any onshore wind development. There was a moratorium on onshore wind development in Newfoundland. You can even build it if you wanted to write and that law changed. Fifteen months ago and so now there's a lot of projects that are announced in newfoundland were part of a of a project with a bo it's publicly announced it's out there just been articles written about it. and ABO has won an award of land from the Crown in Canada, or Newfoundland, and they're proposing to build a massive wind farm. Again, that's a unique set of circumstances in a unique location with great capacity factor. We also need hydrogen to make fuels at our refinery. Today, we make it through a steam methane reformer through gray sources, and that's what most people do because that's what's been established over the last number of decades around refining is steam methane reforming to make hydrogen to make fuels. If you can then displace your gray hydrogen production with green hydrogen production and make a fuel that's lower carbon intensity and delivered into markets that A, want the fuel, but B, incentivize that fuel having a lower CI. Again, that's really impactful. I don't think there's a lot of refineries in the world that could incorporate this type of technology. because of where they're situated, or because of the scale, or because of a bunch of different aspects. But for us, that's an example of a project that just seems really obvious because of how we have to make hydrogen today. We think we can make green hydrogen at a lower cost than our gray hydrogen production, and also generate a fuel with a lower carbon intensity. If I can find 50 projects like that, then we'll continually fund them. I doubt that I can, but it's what we look for.

Nick:

Yeah, it starts with one and then hopefully that model crystallizes for other folks like this is, you know, how it can work today. And then they go out and as you said, maybe there aren't 50, but maybe there are five others. And so hopefully like the learning can metastasize a little bit. Zooming out a little bit to kind of the policy side, you know, we've obviously hit on the IRA, and that's something that's on a lot of folks minds, other kind of policy tailwinds, or even headwinds in the US that you think folks aren't as familiar with that dovetail with the work that y'all are doing. I mean, for me, just as an example, might not be as relevant to projects that y'all would invest in, but something I'm keeping a close on is like, EPA's new proposed fines for oil and gas companies, methane emissions for companies that are over a certain size or have over a certain quantity of fugitive methane emissions. So that's something that's particularly interesting to me that I don't see as discussed as much. But what does that kind of remind you of?

John:

Yeah, look, I think those are going to be really impactful, especially around methane. It's not something that we focus so much on today, but I do see the value there. I think there's really two things that I'm focused on today. One is the components of the IRA that are less secure, less Well, maybe there's, they've got proponents and opponents and there's, you know, we'll see what treasury comes out with on a bunch of different pieces that are still sort of undecided. And I think that there's just a lot of quote unquote legislating that's going to happen around them. And, you know, when you look at something like Reggie, like that's been legislated, it's been in place, it's just a known commodity.

Nick:

Sure. What is Reggie? I'm not even familiar.

John:

I think it's the Regional Greenhouse Gas Initiative. It's, you know, the REC markets. And maybe that's a better, maybe the REC markets is a better sort of proxy for that. Well established, you know, been around a long time, kind of, everybody knows what it is and what it represents. The RFS on the transportation fuel market, it's challenged. It has lots of challenges, but it's been legislated. And I think a lot of the opponents of it over time were the strategic, you know, oil companies. They've all got renewable diesel and sustainable aviation fuel projects, so they're not fighting it any longer. Again, it's a well-established policy. I think when we look at policy, we're not looking for necessarily favorable policy. We just want stable policy, and that's what we underwrite to is stable policy. I think we think of the RFS as a stable policy. We think of Rex as having a stable policy behind him. We think of the LCFS in California as a stable policy. I know there's a lot of projects that were underwritten to much higher LCFS prices than we have today, right? I think we're in the sort of 60s and a lot of folks had counted on north of 100 as sort of a baseline. When we underwrite projects, we don't think of it that way. We just think that that policy is going to be there. There's going to be some volatility around pricing that's inherent, but the policy in itself is not going anywhere. I think some of the things that we're looking at, waiting for guidance from on treasury out of the IRA, I think there's going to be some big fights around them for years. And so it's hard for us to underwrite projects, incorporating that into it. Maybe it's an upside scenario where It's a windfall, but it's hard for us to underwrite something and say, we're going to count on the 45V for this specific process, and we're going to get this X dollars per kilogram credit around green hydrogen. It's just harder for us to contemplate it that way. I think the other side of it is state-level policies. We're really continuously, on the molecule side, we're seeing more and more states pick up. I mean, we just had New Jersey pick up an LCFS bill that I don't think it was on anybody's radar. Who knows where it goes? New York has proposed an LCFS bill three years in a row, and it hasn't gone anywhere. It may not, but it's traction. New Mexico They just passed, the first time they passed an LCFS bill through their house. They had already passed it in the Senate in previous sessions. So I think there's some optimism that New Mexico may have an LCFS here shortly. And then you can look at the map and look at where all of these different LCFS bills are. You know, Canada's got one now, California, Washington, Oregon, British Columbia, you know, maybe New Mexico, maybe New Jersey, maybe Massachusetts and New York follow along. And so again, that proliferation of state level policies especially if you see a big shift in, you know, after this election, right? There may be a big shift in sort of the politics of our country. I think the states are likely to step up and continue to provide the tailwinds needed to see this energy transition through.

Nick:

Yeah, what you said about stable policy makes a ton of sense to me, especially as you said, as we look ahead to we're in election year, I think a lot of folks are still kind of ostrich mode on that front. But you know, six months less away from like things getting really intense and probably dominating the news cycle on that front. And so benchmarking to stuff that probably isn't going to shift massively regardless of the political administration, especially when you're investing at kind of the size and scale that you all are. If you're a venture investor, then you can make some distributed smaller bets on stuff that is more speculative, but

John:

Yeah, no, that to me is what that pool of capital is for, right, is to take those chances and to see the types of returns. I mean, we're looking to invest in really pretty boring things, right? We're not going to, there's no home runs in our portfolio. It's steady, you know, slow going and we can't take those types of risks. It's not what our LPs are looking for. They want us to make really stable investments in infrastructure. And it's not, you know, the market has sort of evolved in a way where infrastructure is, is almost no risk yield type, yield code type returns. And, and unfortunately, we don't see those opportunities because there is risk in our projects, right? There are execution risks and risks around construction delays and cost increases. And so it's not that same pool of capital that's in all the infrafunds that people are hearing about, but it's the infrastructure that we need for energy transition. And so I think that's really, again, what we're pointed towards.

Nick:

You know, that point almost makes me more optimistic. Once you've shifted to a state where a lot of the work that needs to get done for something like the energy transition is a little bit more boring, as opposed to like all needing to be completely like cutting edge, sexy innovation, like that's actually like a pretty encouraging soundbite to me, you know.

John:

Nick:

Yeah, makes a lot of sense.

John:

Makes my job harder, but it's encouraging. A little more competition, but I guess it's welcome at some level.

Nick:

John:

Nick:

Yeah, it's a good compliment to, there's a lot of buzz, rightfully so, about battery energy storage being deployed on grids to help solve some of the day and night cycle, which is essential. But yeah, there's so many different types of energy storage. Batteries are cool. Right, totally.

John:

they're really expensive, right? And I think that's the challenge around them is, is a the the resources that go into building a battery, right? I mean, it's a finite resource, you got a mine for it, you got to extract it from the ground, you got to build these batteries, and then they're really expensive. Thermal energy storage is, again, it's relatively cheap, it's a different dynamic.

Nick:

Yeah. And so, yeah, as you said, whether it's different chemistries for power sector applications, who knows? Sodium ion forms doing cool stuff with iron air with their plan in West Virginia. But again, yeah, thermal opens up a whole new suite of applications where we're not necessarily talking about solving wind and solar intermittency, really talking about industrial processes produce a lot of emissions. But where, yeah, again, solution is old, exists, needs to scale. Hopefully the time is right.

John:

Yeah, totally agree.

Nick:

Well, I could probably keep going for another hour, but we've already covered 45 plus minutes. It's been a great conversation, John. For folks who are listening in and want to follow along with your work or Crest as a firm, where are the right places for them to look and learn more?

John:

Yeah, Cresta is relatively active on LinkedIn. We post a lot of updates about what we're doing. Certainly our website, crestafunds.com. And then, you know, look for us in the news as we make new investments and build new cool projects.

Nick:

Excellent. Well, I'll make sure to talk about it anytime I see it. Any other calls to action you'd leave folks with?

John:

Oh, I don't know. Tell your policymakers we need more stability. I think that's the great as I've talked to a couple of times. I think that's the most important places is coordinated policy, you know, durable policy. Really, that's what's going to make a big difference here.

Nick:

All right. Thanks so much, John. It's been a pleasure. Thanks, Nick. Thanks for tuning in. So you don't miss the next episode on another cutting edge climate tech, make sure to subscribe on Spotify, Apple, Google, or wherever it is that you get your podcasts. We'll see you soon.