Decarbonising Transport: An Interview with Steve Crolius, president of Carbon Neutral Consulting

Since 2019, Carbon Neutal Consulting has been providing business strategy consulting services to companies interested in opportunities and challenges related to the energy transition. One of the focuses of the company has been on hydrogen-rich fuels that can be produced, stored, and transported in an economical manner. Another has been transportation electrification and vehicle-grid integration, where electric vehicle batteries provide support for the electricity system. REM talked to Steve Crolius, president of Carbon Neutral Consulting and a former climate advisor at the Clinton Foundation, to find out more about this growing sector.
Decarbonising Transport: An Interview with Steve Crolius, president of Carbon Neutral Consulting
Courtesy of Carbon Neutral Consulting.

Can you tell me more about Carbon Neutral Consulting and your own background?

Yes, certainly. So I have been working in the field of business strategy for my entire career which at this point is about 35 years in length. I had the opportunity to join the Clinton Climate Initiative in 2006 and was hired specifically because of my business strategy background and at the outset, at the Clinton Climate Initiative, our mission was to find ideas, whether they were inventions or financing schemes or different kinds of partnerships that could, if implemented at sufficient scale, move the needle on greenhouse gas, reducing greenhouse gas emissions. So we looked at a large number of ideas. One of the ones where I took the lead was looking at the idea of hydrogen as an energy commodity, which in 2006 was certainly not in any way, shape, or form a new idea, but it was still an idea that seems still very futuristic. There really was not much happening regarding a product of a practical nature, but we did a lot of exploration of hydrogen, on the theme of maybe hydrogen's time has come.

We also, at the same time, in parallel, looked at electrification of the transportation sector and indeed, I became the head of the Clinton Climate Initiative transportation program, to continue the exploration and actually forming working groups in both the area of hydrogen and what became battery electric vehicles.

I could go into sort of more particulars on some of the work but suffice it to say that for the next five years, those are the areas where we focused the transportation program. I left the Foundation in 2013 to go back to consulting but stayed open to opportunities to carry the work forward with the full blessing of the foundation. So when I, you know, would check back and say, well, party X would like to actually continue the work, they'd say, oh, please, you take it forward because you know, we have our hands full with other things. So that's pretty much the background.

How would you describe the situation at the moment? I mean, for example, how close do you think we are to maybe seeing hydrogen fuel cell vehicles, becoming more prominent and how far are we from them being widely deployed in the mainstream?

So when we started in 2006, we were aware of the efforts by the some of the car companies to put out both electric and fuel cell vehicles, hydrogen fuel cell vehicles. Call it two different ways of having an electric vehicle, but there weren't any vehicles for sale yet. or maybe just the earliest, almost prototypes really, were for sale.

In 2010, the first commercial electric cars were introduced. That would be by Nissan and Renault and a few other companies. We actually formed a working group included, Nissan Renault, BYD and Mitsubishi Motors, and our role was substantially behind the scenes, but we wanted to try to find ways to encourage consumers to buy these electric vehicles. I'd like to think that by sharing our perspectives directly with the automotive OEMs, that we had some small impact, but then the cars have proceeded on their own momentum ever since and now they seemed to be poised to really become, maybe, the mainstream.

Some parties think hydrogen could be a mainstream fuel for light duty vehicles. A number of companies, Toyota prominent among them, and Hyundai being another have been working on fuel cell cars. The state of California has been a great ally to get fuel cell cars on the roads out there. But most people, most experts, looking at the space would express uncertainty at this point as to whether there is a future for the hydrogen fuel cell car, because the concerns about electric cars, have diminished over the last 12 years, questions about range, questions about safety. It’s clear that electric cars meet the needs of a large fraction of consumers.

However, on the heavy-duty side, it looks like the amount of energy that it takes to power a heavy-duty vehicle in the course of its daily duties is actually a factor of 10 more than the typical light duty vehicle. A personal car is driven an hour or two a day, and is parked for the rest of the time. The average heavy-duty vehicle, operate 4-12 hours a day or more. So although there are still companies out there, prominent companies, betting on battery, electric trucks, and buses, it seems like there might be a greater focus for hydrogen fuel cell propulsion. 

Well I was wondering about that actually. So what in essence you're saying is that we'll probably more likely to see hydrogen vehicles in buses and trucks rather than personal cars?

Yes. Picture a Class 8 tractor, that pulls a big 40-foot trailer behind it, or maybe a tandem that’s even longer than that. It operates 8-12 hours per day in the US and is only limited by how many hours it’s legal for the driver to drive in a day. Hydrogen works in this scenario because you can fuel up in approximately the same amount of time it would take to fuel up a conventional vehicle. You can go as far, or further, than you can on a tank of diesel because hydrogen fuel cells have a much higher rate of energy efficiency than internal combustion engines. So it seems like in jurisdictions that are either requiring or incentivising the decarbonisation of transportation, that this will be an economically advantaged option.

What does the viability of hydrogen fuel cell’s look like in relation to issues around the Russian invasion of Ukraine? Which is, as far as I am aware, helping to drive conventional fuel costs up.

Yes, I am also wondering about how hydrogen fuel vehicles could help to mitigate that, alongside electric cars. In both cases, as I alluded earlier, we are talking about the energy source that drives the vehicle being electricity. On the one hand, the electricity is loaded into batteries and on the other, the electricity comes from running hydrogen through an onboard fuel cell to create electricity. Either way, we are talking electricity. That electricity can be, and often is, generated from renewable generating facilities. That’s the future.

Our challenge, of course, is the transition. How do we get there? It’s reasonable to ask what effect the Russian war in Ukraine is having. It shows yet again, as if we need another lesson, of how geopolitics and energy supply can get bound up together to the detriment of everybody who uses energy, which is actually everybody. It’s not like this is a new thing. In my whole lifetime there’s been one sort of crisis to the next caused by this situation. So it’s not like we needed another reminder of why we want to move off fossil energy, why the geopolitics of fossil energy are problematic. We move off it - we can reduce geopolitical challenges. There it is. Another reminder.

Is it changing what everybody’s actually doing to invest in renewable sources of energy? I don’t think it is because there was a lot of investment going into renewable energy already and it continues. Possibly at the margins, maybe it’s happening now more quickly or maybe people are thinking about a larger scale, but by and large the momentum that was building continues and will continue and it isn’t being influenced one way or another by the Russian attack on Ukraine.

So what other issues do you see as being particularly pertinent in affecting the energy transition at the moment?

Well, the first is how long it takes. I feel like over the last five years, most of the relevant parties who need to drive this, being governments and corporations, have become serious and committed to making the energy transition happen. And now they have reached that point, there’s a natural expectation of “why is it taking so long?” If you look at that, the value of the oil on a global basis is somewhere in the middle single digit trillions of dollars, depending on how you count and what day you pick, depending on the price of oil. Obviously, you can’t switch over from such an enormous sector with so many different plant sand facilities and support systems. You can’t just snap your fingers and switch over. But many countries, most countries around the world, are taking steps towards sustainability, towards sustainable energy. So one factor is just the size of the system that needs to be converted. Another is that we don’t have a blueprint for what the new system should look like.

There are really legitimate questions around the role of hydrogen. How big a role should hydrogen play? I see some experts talk in good faith and thinking they are making a positive statement that maybe hydrogen would be, maybe, eight to ten percent of our total energy needs, with electricity having a much larger role. Others say hydrogen could be 30 to 40 percent of energy needs. Buried beneath this is the question of the systems that would need to be put in place and how those systems are designed, all the way down to the level of which exact energy conversion and energy generation devices are deployed.

Right now, the hydrogen fuel cells on board, vehicles are almost all proton exchange membrane fuel cells. They need very pure hydrogen as their fuel, but there are a lot of other different kinds of fuel cells, for example - fuel cells that run directly from pure ammonia, they don’t need the ammonia broken down into hydrogen before it gets fed into the fuel cell. That is a better way to go because hydrogen is expensive to transport and store and ammonia is much less expensive. But hydrogen fuel cells are well entrenched in people’s minds with regard to transportation. I am not saying there’s one right answer. I am saying it’s a legitimate question and we don’t have a top-down system to make all the decisions, and we should not have a top-down system. We have a bottom-up system where lots of parties think about the question, and there are lots of other things that parties are thinking about. We’ve been talking about road transportation, but an even sharper example is maritime where there’s a whole current school of thought that says what we should do first as a sector is switch over from heavy fuel oil to liquified natural gas as a fuel. There’s another contingent that is very keen on methanol as an alternative fuel and another whole contingent think that ammonia would be the best fuel. It’s got to get worked out and when you’re talking about converting enormous numbers of facilities and assets, you don’t know what the exact answer is. It’s going to take time.

The third thing compounding the uncertainty are the carbon accounting pricing regimes. I don’t think I have anything unique to say there, other than a lot of regulatory instruments have been put in place. The parties that have to build the new energy system are saying we want more regulation of carbon and support for transitioning off fossil fuels. But it doesn’t make life any easier, it just makes another dimension of complexity.

So as more and more renewables become available, national and regional grids are having to adapt and some of them seem to be having a few problems. How do you think that will work out over time?

The major challenge inside that transition process is a system that was set up to deliver all the electricity that you and I want as consumers, wherever we want it, whenever we want it in whatever quantity. That’s the way electricity has to work. Given that as a fundamental reality, the electrical generators of the world set up plants that use the energy stockpiles sitting outside their plant, either in the form of coal or the ability to draw on natural gas at whatever volume that they might need. And if you know consumers are pulling a little bit more, drawing a little more electricity, throw a little more coal on the boiler and it's all good. Now, if you're looking at wind or solar, everybody knows they are intermittent. Inevitably, that challenge of having variable demand on the one hand that you're committed to, no matter how much it is and whenever it comes and having a generating base that has a significant amount of intermittency inherent in it, that's the problem. That's the key challenge.

It's not a terribly difficult conceptual problem to solve. You need to implement different ways of storing electricity and there's different ways to do that and different things that are being applied. But it's another one of those questions or problems of which way to go. People like batteries, but at large scale they are expensive. People like hydrogen, but in many instances, if you have to store the hydrogen in something that involves pressure or liquefaction, that’s got some economic and other issues. There are other forms of chemical storage that may have merit that many parties are turning to.

Another thing I’ve noticed is that in the US, there seems to be a rather hostile Supreme Court in position at the moment. How is that affecting the energy transition over there?

If you’re concerned about fossil carbon going up into the atmosphere, you can regulate or incentivise people to get the energy players to change their approach. It seems like recent Supreme Court decisions have made it much more difficult to go the regulation route. However, there are a number of incentive tools that are still available. We have a programme called the 45Q Tax Credit programme that allows companies to take tax credits for projects that sequester carbon dioxide. This is in the process of being updated and the current update, if it goes through [which it did subsequent to this interview],will make it even better and has led to actual investments being made in relevant activities. The next update probably will have a major impact, so I think in the scheme of things, in the US, we will find our way forward, even if the regulatory toolkit has been weakened.

Is there anything else you would like to say, that I haven’t mentioned but you think is particularly important?

I don’t think I’ve said anything yet on Carbon Neutral Consulting. When we were working on the hydrogen angle at the Clinton Climate Initiative, we came upon ammonia as a promising method of putting hydrogen in a chemical package. When I left the Foundation I was asked to join the board of something called the NH3 Fuel Association, which was a group of technology advocates in favour of ammonia as an energy carrier. One thing led to another and a couple of years later we were starting to see some activity in Japan, which looked like it might take the idea of ammonia as an energy carrier and turn it into a much more serious focus that could attract investment. At that time we made the decision to become a formal industry association for ammonia energy. Initially, we were able to recruit a group of seven companies. Shortly thereafter we changed the name to the Ammonia Energy Association. That turned out to be the right idea at the right time because the Association now has, I think, over 160 members. I currently hold the title of Past President after stepping down as president in 2021.

So as we were getting the association running and we were aware of the number of companies that had a lot of interest in business opportunities relating to ammonia energy. It looked like there would be an opportunity to start a consulting firm that would be able to work with companies that had those kind of interests. So that’s where Carbon Neutral Consulting came from.

That’s telling the story from an ammonia-centric perspective. And then there’s another whole story that relates to the extensive work I’ve done in electrification of heavy-duty transportation and battery-electric electrification. Those two sides co-exist together under the Carbon-Neutral Consulting umbrella.

We now work with companies who see business opportunities in those two areas. We help them formulate business strategies, that will allow them to move ahead and meet their goals and increase the value of their companies. So that's what Carbon Neutral Consulting is all about.

For additional information:

Carbon Neutral Consulting

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