Energy sustainability and independence
The Ukraine-Russia War is shining a spotlight on the vulnerabilities of relying on potential adversaries for vital national imports, with energy security at the forefront of the conversation. While Europe continues to conduct import substitution and energy conservation, energy innovation is the longer-term imperative for both economic, environmental, and national security reasons. Alternative sources of energy and, more specifically, renewable technologies, will continue to play an increasing role in empowering the U.S. and international allies’ needs. To put this in context, in 2021, energy from non-fossil fuel sources accounted for almost 40% of the world’s electricity and demand is expected to continue to grow and double by 2050. IQT has been investing across the energy ecosystem for the past 20 years and is focusing on a variety of technologies, including:
- Developing a robust, U.S.-based ecosystem for battery production
- Addressing vulnerabilities in critical minerals for energy production, and
- Looking at public and private efforts to achieve fusion.
As an example, the battery supply chain is highly dependent on China, with many of the raw materials required for batteries either mined in China or mined elsewhere and sent to China for processing. There are some historical reasons for this. First, China chose to accept the high environmental costs of processing these materials and creating batteries. China also has a national strategy to corner the market wherever possible on critical minerals overseas. And finally, China’s government has invested heavily in the infrastructure to process and build all of this. It’s worth noting the economic incentives for manufacturing large battery packs destined for electric vehicle or grid applications are not in favor of exporting such heavy cargo from China to the rest of the world.
What are the prospects for America creating its own independent battery ecosystem?
It is time for the United States to become more forward-leaning and look to different processing tools and infrastructure, as well as adopt energy storage solutions that use friendlier supply chains. For example, most everyone is familiar with lithium-ion batteries that power our phones and today’s electric vehicles, but it has been made clear by recent events that the U.S does not have enough battery materials and production capacity to keep up with the growing demand witnessed in the electric vehicle market. The U.S. must start to leverage new processing technologies that are both scalable to variable market demand and support environmentally sound business practices if we want to on-shore and compete against incumbents.
Supporting the U.S. battery ecosystem with tooling innovation is one thing, but the U.S. must also confront the challenges associated with limited access to the raw materials that are required to make lithium-ion batteries. To do this we must fortify our development of future alternative energy storing chemistries. For example, sodium-ion batteries, though not fully proven today, could provide a route to a more independent battery ecosystem, as sodium can be mined and is more abundant within the U.S. We should also promote a circular economy for battery production. Most people might not realize that when a battery stops working, the materials inside the battery retain value and can be extracted for reuse and reprocessing.
Is mineral supply a vulnerability to the U.S. energy sector’s transformation?
Looking more broadly at renewable technologies poised to transform the energy sector, it’s a bit shocking how dependent a greener economy will be on minerals. For example, an electric vehicle requires six times more minerals than a conventional car, and an onshore wind plant requires nearly 10 times the minerals of a gas-fired plant.
The minerals used for energy production are now referred to as critical minerals, and some critical minerals are known as rare earth elements, as illustrated in Figure 1 below. These minerals are essential to making the magnets used in wind turbines and electric vehicle motors, but they are not actually rare. The challenge is efficiently accessing and processing them.
China, which must import so much of its energy today, has made huge efforts in dominating these supply chains, which are often in authoritarian or unstable countries. The good news is there are efforts underway to address this for the U.S. For example, there is increasing government awareness with a new executive order intended to restart domestic critical mineral mining.
Do we really want to be mining in the United States, and is it going to be sufficient?
Onshoring legacy mining and processing methods would undoubtedly have a measurable effect on the environment, and the U.S. needs to look to next-generation technologies to access these minerals in ways that will be less environmentally harmful. Fortunately, there are several technological advances from other fields that can be applied to this challenge. Starting with mining, companies can use geospatial intelligence and artificial intelligence to get smarter about where to extract these minerals. Companies are now also looking to extract critical minerals from raw ore and mine waste, investigating new ways to leverage chemistry to separate out the rare earth elements.
We need to think outside of the box and look beyond terrestrial mining to environmentally respectful ways of deep sea mining and extracting minerals out of the ocean and its water. And even further outside of the box, we need to look for new processes and materials for energy production. Domains such as synthetic biology hold great promise to create more efficient pathways for producing materials, and we see promising innovation in these technologies that can help improve our energy posture in the coming years. But incremental innovation around existing technologies is not the solution for energy independence.
Are Fusion energy technologies ready to be scaled?
There are many challenges to harnessing fusion energy. Fusion requires extreme heat and pressure over long periods of time, and reactors must be capable of withstanding those conditions. And if that’s not hard enough, it must be done economically for it to become a practical reality. This is a daunting undertaking, but the world keeps trying because fusion holds the promise of a cleaner source of massive amounts of energy. Compared to today’s nuclear fission reactors, it is a much safer option with the potential for producing less nuclear waste and physics that precludes catastrophic meltdowns.
It’s important to think about fusion now because real technical progress is on the horizon. The U.S. and partners around the globe are collaborating to spend tens of billions of dollars on fusion reactor research. 2021 was the first year we witnessed venture capital investments into fusion energy startups outpacing U.S. government annual funding expenditures. Not surprisingly, China is also investing in fusion research and talent maturation, and we are now seeing startup activity there as well. The fusion startups across the world will need to continue to raise substantial sums of funding; most appear to need at least one to two billion dollars before being able to demonstrate net energy gain. It has also been made clear that their declared cost efficiencies and timelines for demonstrating net energy gain remain on shaky ground. Supply chains for materials and sub-systems are not at appreciable production scales to satisfy the construction of 50+ startups’ reactors and subsequent deployment of their reactor design once net energy gain has been demonstrated.
This highlights the need for further conversations around the supply chain and whether the private sector can make a net gain fusion energy plant on its own, given the capital requirements, or how the private sector efforts can be paired with national or international efforts.
What other technologies does IQT see on the horizon that could help us shape a better world?
Biotechnology will be essential to crafting solutions to some of the biggest challenges facing humanity, including improving human health, ensuring food security, and restoring planetary health. IQT began ringing the alarm bell around biosecurity over six years ago. We established an investing architecture that accurately identified technologies that would be vital to managing pandemics, and we invested in a number of these capabilities, which proved important during COVID and will be helpful for future health crises. The field of biotechnology continues to progress rapidly. IQT is watching advances in foundational areas, such as biological big data, engineered biology, genomics, and engineered healthcare.
All this stems from one of the most important scientific insights of the 20th century: life is written in code. Biology is programmable, and we are learning how to read, write, and edit the code of life. With that comes enormous possibilities, and the impact of this revolution is going to be profound.
Everyone hears quantum and thinks, “We’re going to break encryption,” which is exciting, but there are opportunities that expand far beyond code-breaking. Quantum computers have the potential to revolutionize computing and enable breakthroughs to problems that are currently intractable, but quantum will also redefine how we communicate and how we sense the world around us. Advances in quantum will be a marathon and not a sprint.
IQT has been making investments in quantum for the past decade. As quantum continues its path, both intertwined with classical compute and then finding its own way, it’s going to be important that our government not only anticipate the impact on defense and national security, but also think about what it can mean in a positive, opportunistic way in the coming years.
We’ve unpacked high orbit, moved down through the layers, and we’re now coming closer to Earth with V-LEO, or very low Earth orbit. This is where satellites are within the Earth’s atmosphere, which gives us advantages in higher resolution imaging with a faster path to enable more real-time communication. There’s no space debris, which is a challenge that is wreaking havoc across other parts of the ecosystem. Some technologies, including quantum communications, will benefit significantly from the ability to manufacture components in cold, weightless space. This cislunar space between Earth and the moon is becoming its own economic ecosystem.
Underwater Maritime Domain
In the coming years, the depths of the oceans may become as transparent as the Earth’s surface. Today, only a small portion of the ocean is mapped. We’re at an inflection point where technology advances around lower-cost maritime platforms are combining with autonomy and AI, and they’re creating a viable path to map the world’s oceans. Learning more about ocean terrain is going to open up entirely new uses, not just deep seabed mining, but things we can’t even imagine today. And with that new terrain is going to come great power competition.
At a high level, the metaverse is a 3D, digitized, physical world where people will live, work, and play. While everyone is talking about its potential from a national security and an operational perspective, the nation should be thinking about the metaverse as:
- A new attack surface
- An alternative ecosystem to exchange value and evade sanctions
- A new platform to collect and transmit data
- A new identity management challenge, and
- A massive opportunity for social engineering.
The reality is that as our virtual world increasingly intersects with our human, physical environment, it’s going to provide new ways for improvement, but also new ways for nations to affect that very personal environment.
IQT is here to anticipate the threats and possibilities over the horizon so that our government partners, the nation, and our allies can better innovate for the future. To learn more, tune into the podcast on this topic on the IQT Podcast.