SPEAKER_00 0:09

Welcome to the Future Ventures podcast. Today's conversation tackles one of the hardest problems in the energy transition. Not how we generate electricity, but how we replace coal in the heavy industry. I'm joined today by Ivar Scarcett from NERNE, a company focused on renewable fluids and next generation fuel alternatives designed to displace fossil inputs in industrial systems. This isn't about theory or long-term climate targets. It's about what actually works inside boilers, kilns, and industrial processes today, and how you transition without shutting down these systems. In this episode, we're going to unpack what it really takes to replace coal at scale and why most people underestimate how hard that is. Welcome to the stage you are. I'm super excited to uh connect with you today and talk about N Energy and what you guys are building.

SPEAKER_02 1:16

Thank you very much for having me.

SPEAKER_00 1:18

It is my absolute pleasure. Why don't you tell us kind of like your origin story and how did you how did you come to find to uh to found uh n energy?

SPEAKER_02 1:31

Yeah, that's actually uh we actually founded the company about 20 years ago. So we we have um we have uh worked on this for uh quite a while now and uh it was a guy that uh I was working together with excuse me uh at that time it was uh around the time when it really got um obvious that uh the fossil mules uh were um uh letting out a lot of CO2 and that remained in the atmosphere and started to alter the climate. So we started to uh talk a little around that topic. Uh both of us coming from the oil business. So uh with we were we were thinking what we can uh try and do to uh to um uh replace these uh fossil fuels with uh similar renewables one once because we thought that would be the the most efficient way to uh to cope with uh with the emittance of uh CO2 and other greenhouse gases. So uh then we started to develop from there, and we found that uh producing fluids like uh uh gasoline replacement and diesel replacement, and not at least uh SAF could be done in uh large scale. And uh so we thought we would uh take on that uh task and see what we could do about that. And we found also that um uh it would be possible to produce uh stuff called lignin, which is uh actually the material that keeps uh trees and uh bushes and whatever other plants uh standing up and not uh not falling falling apart, so it's it's quite uh strong material. Uh and it it has um uh uh sort of uh uh energy content like coal, so it's uh a good replacement for coal, in as you said, in your introduction in in industrial uh uh use. So, yeah.

SPEAKER_00 3:59

Well, what I was gonna say, I mean, uh a lot of those systems are built in, so how easy is to replace what currently exists with what you are working on?

SPEAKER_02 4:09

You mean, for instance, in uh in engines and uh cars and stuff like that? Uh if you take um uh an ordinary gasoline motor or an auto motor as its uh original name is, uh the the first ones were actually built for uh uh alcohol as the uh uh energy. Yeah, so so it's not the problem to to run an ordinary gasoline motor on uh on uh alcohol on 96%, so to say. But uh the way the things you need to uh to do differently when uh constructing the engine is uh uh some gaskets and uh and small pipes uh uh need to be in um uh material that uh that can uh tolerate the alcohol because alcohol has a tendency to dry out uh materials that it's in contact with. So uh and and that will mean minor changes actually to the to the engines, so that you could uh rebuild uh an existing engine to uh to use hundred percent or or ninety percent uh uh alcohol and and ten percent uh gasoline, for instance, or just gone on alcohol, uh, with relatively small um uh costs instead of buying a whole new vehicle like an electric car, for instance.

SPEAKER_00 5:53

Understood, understood. And what is the best primary use for uh the fuels that you're developing using this renewable um biomass source, uh as well as does it pack the same energy density as the traditional fossil fuels?

SPEAKER_02 6:10

Does it I didn't hear the question?

SPEAKER_00 6:12

Yeah, does it pack the same energy density as traditional fossil fuels?

SPEAKER_02 6:17

No, it's a little lower on the on the energy density. Okay, so so uh you're uh spending the the alcohol or the renewable uh fuel a little faster, um but uh you actually also get uh more horsepower out of it, okay. Uh and that's a strange uh situation. So you you can actually compensate um the lack of or or the um the less uh energy density with uh using uh a smaller engine and and still get the same horsepower out of it without losing any energy density, so to say.

SPEAKER_00 7:03

What uh what are the critics saying? Like, why like in terms of adopting this as a solution? Like, what what are their biggest objections?

SPEAKER_02 7:12

Uh what I have um sort of thought uh in my mind, I think when they started out about 20 years ago, uh uh producing these renewable uh fluids were quite popular for a while, but people started to use uh agricultural land areas and also uh actually agricultural products to uh instead of feeding it to people, started to produce uh sustainable fuel went out, yeah. Yeah, and and uh that was uh obviously uh not a very good idea, and I think that has uh actually given uh renewable fluids uh from biomass uh a bad reputation. And uh then came this uh electricity uh and electrification uh plants instead, and uh they have actually uh uh done a lot of erections uh of uh you know um wind turbines and sun power plants and and the whole uh renewable business to cope with uh the emissions have been turned to electricity.

SPEAKER_00 8:40

Kim um, I mean, Ivar, you and I have had uh yours conversations, uh but can we step back and just kind of explain what NNG is and how it works? And so maybe maybe give us the pitch as a like from a to to non-technical people kind of like what does it mean? How does it work? We're talking about like uh using semi-arid or um arid uh land to to grow the biomass. Just let's step back and just gonna provide an overview of an energy and the solution.

SPEAKER_02 9:16

Sure. Yeah, the company name is EN Energy, but uh uh it is of course about producing um renewable fluids and renewable uh coal replacement. That's the that's the whole business. And um as you say, we uh we are we are planning to do this on arid land, barren land, uh and it's a lot of that in Australia where our uh primary uh which is our primary primary uh area or country for um especially the northern part of the continent. The northern part, what they call the top end of Australia, is very well suited for this because um the land areas there are either barren or it's uh large. Um there are a lot of large uh cattle stations and um the cattle sort of I think suffers a little from grass that uh doesn't get enough water and stuff like that. So um it would be actually a win-win situation, we have found because we can irrigate. We plan to irrigate, it's part of the process.

SPEAKER_00 10:39

Can you tell us how you plan to irrigate because that's an important distinction?

SPEAKER_02 10:43

Yeah, yeah, it is. Um we are we're planning to irrigate with uh saline water and uh desalinate it somewhat, not to full extent, but uh the plants we are planning to use, they will they will be able to thrive on on um saline water, partly saline water. Um and um and uh we will also then uh be able to uh provide water for the um areas for where the cows can be fed. And uh these areas will then be smaller because the the grass will be uh of better quality and they don't need to be that large, so we can use then the rest of the land for um for our purposes and grow uh energy rich plants, fast-growing energy, energy rich uh plants without sort of um making any problems for the for the um uh food production. Since the food production there is uh milk from the cows until they are slaughtered and provide meat instead.

SPEAKER_00 12:03

So, what happens with the partially desalinated water once it enters uh in the soil?

SPEAKER_02 12:11

Um the salt will sort of uh at least partly be uh uh a nutrient for the for the soil, but um so we don't think that will be a big problem actually.

SPEAKER_00 12:27

Okay, and then so if it is we can of course uh desalinate total yeah, and so from a cost perspective, how does this compare to a traditional fossil fuel that's been minor extracted from the ground and then converted into its uh finished products?

SPEAKER_02 12:49

Yeah, we can do this um much cheaper than an ordinary uh fossil oil production or oil field. Uh maybe not uh those who exist now on land, like in uh in Iran, Saudi Arabia, and some of these places, but I think very many of the new uh new found uh oil fields they are below the sea bottom, and then it gets uh much more complicated, of course, and uh much more expensive to to extract. So uh we will be able to compete with uh the oil products, absolutely, and we will also be um uh we can also receive uh CO2 uh certificates, of course.

SPEAKER_00 13:47

In terms of sequestering carbon, yeah, yeah.

SPEAKER_02 13:51

Okay, we can maybe we'll go come into that later. I don't know.

SPEAKER_00 13:58

I mean, this is a good point to explore. So um how um tell us a little bit more about uh the the carbon sequestration, how you're planning to to market the the the carbon credits, um what what does this mean from an economics perspective as well?

SPEAKER_02 14:23

Yeah, you know the uh these when the plants uh grow they need CO2 actually to uh that's their uh nutrition. And uh so the plants uh all plants on earth they extract CO2 from the atmosphere and um and use that for uh for their own growing purposes, and they emit um uh oxygen as a sort of a waste product from the plants. That's the uh photosynthesis in very short. And uh and um uh together with uh our products replacing fossil fuels, so uh so that um they will be uh hindered in in uh entering the atmosphere. Uh this uh will actually make us CO2 negative so that we we are actually our products are emitting less CO2 to the atmosphere than we extract from it. Yeah. So and this will give us to say uh carbon credits. And uh if we add on carbon credits as at today's price levels, I know there's uh several different prices existing, but if we go on the even if we go on the lower side of this uh uh costs, we can actually go price negative if we like.

SPEAKER_00 16:05

And is Australia still the best candidate in terms of or the the the best beachhead market for you to uh enter and build this?

SPEAKER_02 16:16

If uh again, I didn't hear exactly what you said, I'm sorry.

SPEAKER_00 16:21

Is is Australia still the best market for you to enter?

SPEAKER_02 16:26

Uh the market I think will be uh uh to begin with. Of course, we will not produce uh very large quantities of this, but uh after uh when we have expanded uh this business because we of course we we plan to expand it so that it will be great uh maybe replacing all fossil fuels uh when we come to the end of it, but um that will probably be after my time. Uh it'll take some years, but um but uh that is our uh uh plan actually is to be able to replace all fossil fuels with renewables, and then of course the market will be as the market is today, so uh so uh we will be um reliant on on uh tankers to uh to transport it and like it's transported and distributed uh today, actually. So it's the same chains.

SPEAKER_00 17:38

So if we're thinking about the different uh fossil fuels, kind of like what is the best um what fuel does it is it best positioned to replace? Is it coal, is it sustainable aviation fuel? Uh you talked about Linknin, kind of like where is it best suited?

SPEAKER_02 18:00

Yeah, that's uh that's an interesting question. Um I think the products that uh we uh most easily can produce uh those are the gasoline replacement in terms of yeah, handling in those two. But I think what uh will be the or at least as is today, I think uh the most uh wanted product is the SAF because uh uh since since one focus a lot of uh electricity on the on the automotive uh part still uh yes. But uh so so SAF and lignin, I think uh and and um uh gasoline will be the products that uh because we can produce SAF from uh uh alcohol as a starting point, but it needs to be uh uh processed further.

SPEAKER_00 19:09

So if you are to jax the pose um and energy and the solution that it has versus renewable energy because the the transition, the energy transition has has started long ago, and we're very much in the process. So are you able to compare the renewable biomass fuel sources you're creating versus let's say um a renewable energy being used to electrify the grid or generate electricity, which this electricity is then converted into like I don't know, in the case let's say let's say uh an EV electrical vehicle versus a traditional ice engine car uh using the renewable fuel that you're producing versus um an EV car using uh renewable energy.

SPEAKER_02 20:01

How I would see that or how I would compare those two. Yes, yeah, I would I would say that it's uh much uh easier to uh um convert a uh uh a car with a you know combustion engine, it's much easier to convert that to be able to run on uh uh hundred percent renewable uh uh fluids than it is to you know construct a whole new application like an electric vehicle. And um I think that's also sort of that's natural, and you can in a way you can see that it's uh we have had the electrical vehicles for about uh 20 years now, I think, as well. And um quite a few of the vehicles on Earth has been replaced with electrical vehicles over those 20 years. I think it's uh about a million or two, maybe uh electric vehicles and a billion, no, two and a half, and maybe three billion vehicles in total. So it's quite a small part of all the vehicles uh being electrified so far. And you know, we we are perhaps uh running late on uh doing the conversion to uh renewable energy sources, so and and I think electrification will take time, not just to hope uh so to say uh renew all the cars from uh from um combustion engines to electrical, because that will take a long time, but also to to do all the Grid work that needs to be done, it's it's uh tremendous task. I mean, today electricity is about 20% of the total energy consumption in the world, and you want to uh sort of five doubling that to get all the energy uh uh uh yeah, electric. Um I think that's uh an impossible task, and another thing is that today about um sixty to seventy percent at least of the um uh energy carriers used are fossil, also into the electricity production, so it's uh uh because it's coal and gas, yeah, they are producing a lot of uh the the electricity that we use.

SPEAKER_00 23:03

Understood. Um, I mean, given the the natural advantage of not having to build new infrastructure and just using the existing infrastructure, maybe with minor modification, what else gives you an edge over incumbents or alternative solutions?

SPEAKER_02 23:24

Yeah, I think well, I think that are two strong uh reasons. Value props, yeah. Yeah, but uh but it's also I think uh of course uh the fact that we are CO2 negative in in our process from from we start growing the raw material until it's uh combusted and back back in the air again, so to say, we are CO2 negative, and that's uh that's needed since I think it's quite a few years ago since the uh scientists in in FPCC they they said that uh it's uh the saturation is uh reached. So uh so to get some of that back and down in the earth again would be would be a good would be a good thing, I think.

SPEAKER_00 24:18

How quickly does industry need to adopt this solution before to drive a meaningful impact or contribution in terms of like decarbonization?

SPEAKER_02 24:34

Yeah, I think it'll take you know from the um we have done uh maybe uh maybe a little optimistic uh calculation on that, but uh I don't think that we will be able to uh get really into the decarbonation in terms of uh uh extracting more than we emit on the globe as such. It'll take 15-20 years, I think.

SPEAKER_00 25:09

So electrification gets all of the headlines at the moment, but is it realistic for heavy industry in the near term to uh to to to electrify heavy industries versus like using the kind of the traditional the renewable sources that that you're building?

SPEAKER_02 25:39

Uh in uh I think if you take for instance um steel production, yes, they're they are totally um uh uh they cannot uh do their job without coal because coal is a part of of the steel. Uh the steel is uh sort of a combination of of coal and and iron. So you need the the the carbon to uh from from the coal to actually be able to produce uh steel. And um that you also can do with lignin, but lignin is uh it consists also of other uh stuffs than than carbon, it's uh also uh hydrogen in uh in uh lignin you have to take out, but um it uh it can be done, it can be uh uh used in the coal production instead of uh uh sorry in the steel production instead of coal. So uh uh but you know when it comes to other heating uh uh purposes like uh if you if you have um a coal uh electricity plant, a coal-based electricity plant, you can you can uh modify that the coal burner to uh to Lingnin quite easily. And uh then you would have a coal-fired uh electricity plant that is renewable instead of uh using the worst of the fossil fuels to produce electricity.

SPEAKER_00 27:37

So many coal-fired power plants in the developed countries have been shut down or mockballed. Um the the two obvious questions come to mind for me would be like, what would it take to to restart them? And can you produce um a stable um stable supply of uh of fuel source for for those plants to operate?

SPEAKER_02 28:06

Yeah, you you can okay. Of course, you need to you need to produce a lot of it, and you need to need to build a lot of uh sites uh for for producing uh or for our production uh uh system and concept uh to uh to replace um to replace coal in all the coal-fired electricity plants that that exist on earth. That will be uh yeah, I think uh you need to think long term to to do that. And but as you say, they are they are shut down, uh a lot of them now are shut down. And uh uh I'm not an expert on this exactly, but uh I don't think they can be shut down for too long uh uh before you start trying to uh to um restart them. And at least they need to be uh you know maintained to a certain degree during this time to be able to do that without actually uh risking uh some you know accidents and stuff like that, which you want to avoid.

SPEAKER_00 29:32

So a lot of coal-fired power plants are located close to naturally close to coal sources uh to reduce the cost of transportation or getting the the coal to the power plants. Um if the best location for um for your solution uh is arid or semi-arid places, barren land, um how does this fit in into into the grid?

SPEAKER_02 30:03

Um could be uh tempting to say not at all because because we're right, we're we're uh going to be uh placed in in remote areas where uh there is not a lot of infrastructure. But um one thing that we uh require is to uh to stay close to a port and pipe we will pipe uh our products to uh uh to be stored on on land on or on site in uh port and so that it can be shipped out from there. And um when it comes to coal, at least in Australia, a lot of it goes on railway. So it would also we would of course be able to uh to to pipe uh the lignin to uh to an area or a site where it can be loaded on on uh uh a rail a railway. So but uh again when when we start to really when when the amount of products that we can deliver will uh increase and we will uh probably also be other places than in Australia, and it will not be EN Energy doing all of this, of course, it could be many many uh companies involved in this the way we see it. We we think we we will uh have to um try and build uh uh a series of of plants um and with plantations uh around the world and having uh many companies involved in this, like like there are many oil companies that produce uh oil from different oil fields. We will have these oil fields on land instead, more accessible, it's we it'll be on top of the land too, everyone can see it, and uh much easier to operate in that sense.

SPEAKER_00 32:21

Understood what um what are the industries that the most ready to for the transition um and which are the hardest?

SPEAKER_02 32:38

Uh yeah. Um I think that um at least what we have been thinking uh will be the um easy not the easiest, but uh maybe more efficient, most efficient way for us to start is to produce uh gasoline replacement. And as I said, Ling Nin because uh these can go directly into existing uh uh yeah, cars and also existing industry.

SPEAKER_00 33:21

And and the gasoline would be uh um the same? Uh would there be any um any modification required to the engines? You you mentioned that uh alcohol has the tendency to dry out certain parts or you you're mentioning gaskets. Um is it like is the product you're producing closer to uh LPG, like liquid liquid liquidified petroleum, uh, or is it like the same in in essence as traditional gasoline?

SPEAKER_02 34:00

Yeah, I would say it's more like uh like uh traditional gasoline. Okay. So it's um it works at uh uh ordinary temperatures, for instance. Okay, yeah, so it it's more like uh gasoline. Okay. One of the problems is that it sort of if you can produce hundred percent uh alcohol, but uh when you expose it to the air, it automatically it's uh it's reduced to 96% because uh it extracts water. It uh yeah, it's uh that that's uh one of the problems, and that's also it it takes out water from these gaskets and from you know uh rubber pipes and things like that in in the engines. So you have to but uh uh it's relatively small operations, I think, to uh modify. I haven't been I'm not an expert on that, but um what I've what I've heard is that it's not a very big uh uh operation to do it. It uh it's not as big as uh building a whole new car with a whole completely different set of um energy carrier system.

SPEAKER_00 35:34

So this is capital intensive to start an operationally complex canal. Is this the biggest challenge standing in your way? What um the the capital required to uh to build out the the initial plants and plantations?

SPEAKER_02 35:55

The capital, the capital required you say. Uh what has been our biggest um uh effort actually over the last years is to find the the money that we need to uh uh prepare all the uh evidence that this is possible to do, do all the documentation uh that we need to uh have others helping us out to do. Um that capital uh requirement is very hard to uh to fulfill. But we have a lot of uh interest in constructing the uh the plant and doing that part of the work and also uh the financing of it. But to get to where we can start um planning for the construction, that's uh that's the hard part to get uh financed.

SPEAKER_00 37:00

I mean, if are you you're based out of Norway and Norway is uh highly regarded as one of the wealthiest countries in the world because they created the sovereign wealth fund uh using the proceeds from uh from uh fossil fuels. What uh what has been the reaction within Norway when um uh when you're pitching them in energy?

SPEAKER_02 37:30

It's uh sad to say, but uh the interest is very low. Interesting, yeah, it is, but uh yeah, I think it's uh I think it's connected to uh the oil business uh is very uh you know it's uh profitable and uh and it's still uh it's still uh a need for these fossil fuels. Uh we cannot live without them. Uh I think you can see that uh especially now when things are going on in the Hormous uh Strait of Hormuz, and I think it's 20% or something of the oil that comes through there and comes out through the strait, yeah. And uh and um the panic is uh on a certain level due to um these hundred these 20 percent of it all. So uh we really need the fossil industry still. Yeah, uh we cannot replace it with uh electricity, that that's going too slow, and uh other sources does not yet exist, but hopefully we will be able to uh do something about that soon. But uh yeah, I think uh I I think uh the oil company in Norway, you know, like um both Shell and British Petroleum. So I tried they're into um their interest in renewables is uh uh wind turbines and wind turbines at sea. That's what um that's what they're interested in. It's very expensive and it's uh uh I think quite difficult to uh uh to deploy and uh uh it's it's not like an old oil platform, it's very different from that. So uh, but that's what uh they're focusing on when it comes to renewables, so they're not interested in renewables to replace their uh main products.

SPEAKER_00 39:57

But many of the majors and super majors have uh um they have sustainability reports, they have ESG functions, they have stated targets around drive to net zero. Um renewable uh like wind power by itself is not going to drive uh that much of a significant reduction in uh in uh carbon emissions. Or um uh so I'm surprised that Equino or or BP or uh Shell uh is not jumping on this and saying, hey, can we evaluate it? And so um I've worked for many energy companies, and so um the the typical process is like you have an idea, you develop to a point where you present to like some form of an investment committee to decide what it's worth allocating capital to this idea, and obviously the capital flows to the opportunities with the highest uh expected uh rate of return. Um so um what would a s like like from if you're putting yourself in the shoes of an executive within an energy company, uh what would the development of a solution using your methodology and framework uh cost or compare or what is the rate of return vis-a-vis pursuing other sources? And and I mean every every oil and gas company or energy company has pledged uh like a multitude of of different solutions from like obviously we started with the easy to extract uh conventional, um like the situation, there's the mining, there's like this the power generation using different sources kind of how would it compare? Where would it where would it stack or rank and what is the expected rate of return along with the risk? Because risk is obviously a key key component to this.

SPEAKER_02 41:59

Yeah, the it is, of course, we are uh aware of that. There are risks involved, but when it comes to oil companies, it's it is very interesting, as you said uh a couple of minutes ago, because uh we haven't been in contact with uh some of them. Uh but um uh uh at first it's very difficult to get in contact with them. They're uh they're uh hard to hard to find, so to say, hard to get to. But when we have managed uh a couple of times, uh we have been able to uh uh get in contact with uh the um uh upstream people doing the upstream part of the oil business, yeah. And and they're embracing it, they're saying, yes, this is this is what we need to do, this is uh future sort of the uh this this is really the thing, okay. Yeah, and then they say, but you need to go to our uh renewable department because they're they're the ones who deal with the renewables with the fossil and then it's uh the lead is put on. What about working with more than once?

SPEAKER_00 43:21

Understood. Um, what about working with uh global acceler accelerators like Techstars? Techstars is partnered with Equinoir, um, and then they run this cohort-based programming. Um, obviously, uh, from an Equinoir, from a corporate uh VC sponsor perspective, um, their goal is to supply produce and supply energy. And so um there's the traditional fossil fuels, but they're also looking for alternative solutions. So um, have you have you tried that way?

SPEAKER_02 43:56

Um I didn't know much about that uh

SPEAKER_00 44:00

uh cooperation they had with tech techstar was that would just tech stars is the second largest accelerator in the world after yc why combinator and so uh a lot of companies would uh um i think tech stars equino is based out of oslo uh i'm not i'm not sure it absolutely absolutely so even a lot of canadian companies would would go there prove out solution uh a lot of the european companies a lot more supportive of experimenting with with different decent solutions and then prove the solution there bring it back to north america uh one example is a company called cracks ocm that did exactly this canadian company uh two founders came from uh um tc energy in enbridge piloted the company with techstars equinour um built it out and then came back to canada and in the us so just just an idea um david cohen is the um the CEO of Techstars um and they run global accelerators uh all over the world i think the most recent two are Sarajevo and Istanbul but uh like the one in Norway is is sponsored by Ecuador.

SPEAKER_02 45:19

Okay. Yeah I will um follow that lead thanks a lot for sure for sure and any any parting thoughts I know we're coming on uh at a time ivar any parting thoughts uh um how should people get in touch with you if if people if this has piqued people's interest um what should they do to get in contact with me they can uh write to me in an email that's uh the easiest way I think and uh that that is uh you want uh yeah you have you have my address it's uh is and uh at en energy dot net that's uh that's my address amazing amazing well thank you so much for your time thank you so much for sharing your insights and uh in terms of what you're building and how you're thinking about replacement of uh traditional fossil fuels and how this could lead to the energy transition thank you very much for having me again my pleasure