59. Why Fusion, SMRs, and CCS Won’t Save Us (and other Seven Sins of the Energy Transition)
Wed Oct 08 2025
In this episode, Gerard Reid, Laurent Segalen and Michael Barnard dug into the technologies and narratives that keep surfacing in discussions about the energy transition, but which continue to underdeliver when you scrutinize the economics and engineering realities.
Carbon capture and direct air capture remain heavily subsidy-driven, often costing more to operate than the value of the CO₂ they sequester. The dilution of carbon in the atmosphere makes the whole proposition profoundly inefficient, and while there are niche opportunities where high-purity CO₂ streams are adjacent to storage infrastructure, those remain exceptions. Enhanced oil recovery is the only space where the numbers truly add up, which means the public ends up footing the bill for most other applications. Even regulatory pushes, such as Germany’s, can’t overcome the fundamental cost and scalability barriers.
Hydrogen suffers from a parallel set of problems. The sector’s viability as a broad energy carrier depends on hitting a production cost of around $1 per kilogram, but real-world projects are stuck closer to $8 per kilogram. That gap has led to a string of cancellations from heavy hitters like BP, Exxon, and Air Products. Despite the hype around green hydrogen, the underlying assumptions never matched the physics or the economics. Battery electrification has emerged as the far more effective pathway for most transport, leaving hydrogen to fight for narrow industrial niches while its infrastructure and fuel cell supply chains lag behind.
Nuclear energy is facing its own reckoning. The pivot toward small modular reactors was meant to revive the industry with faster, cheaper, more scalable deployment, but the reality looks different. Project sizes have crept upward, wiping out the “modular” advantage, and costs are trending well above $200 per megawatt-hour—hardly competitive. Ontario’s flagship SMR project is already slipping years past its promised delivery, and there’s little to suggest Wright’s Law cost declines will appear in a sector defined by bespoke builds and long lead times. Investors may find opportunities in the extended development cycles, but the contribution to near-term decarbonization remains negligible.
Fusion is another seductive technology that continues to consume enormous sums of capital without altering the climate trajectory. ITER alone is 30 years behind schedule and twenty times over budget, aiming only for a five-minute sustained reaction by 2040—without generating electricity. Private startups are raising capital but remain decades away from surmounting fundamental engineering barriers. I’ve said before that fusion may eventually matter for space exploration, but it’s irrelevant for terrestrial energy in this century. Still, as a scientific project, it’s worth continuing—but policymakers must not confuse it with a climate solution.
Biofuels offer a more mixed picture. First-generation projects like corn ethanol were both environmentally and economically flawed, but second- and third-generation fuels derived from waste streams are showing promise. These have a real role to play in hard-to-electrify domains like aviation and maritime shipping. However, they’re not a replacement for direct electrification on the ground. European policy still reflects caution due to food-versus-fuel concerns, but as technologies improve, biofuels can carve out a targeted and pragmatic role.
We also touched on the politics and market dynamics of offshore wind and ESG. Offshore wind in the U.S. continues to face transmission bottlenecks, fragmented policy, and outright political hostility, leading to cancelled and delayed projects. Meanwhile, Europe’s integrated approach in the North Sea demonstrates what’s possible with coordinated policy. On ESG, we acknowledged the criticisms around greenwashing and governance metrics that often make little sense. Yet, even through the noise, investment flows tell a real story: fossil fuel funding is down 25%, and corporate decarbonization continues, even if much of it is “green hushed.” Governance frameworks are evolving, with multi-stakeholder models like B Corps pointing toward a fundamental redefinition of fiduciary responsibility.
Taken together, these discussions reinforce a central theme: the energy transition isn’t about wishful thinking or fashionable narratives. It’s about hard economics, engineering constraints, and political realities. Technologies like carbon capture, hydrogen, SMRs, and fusion may attract attention and capital, but their roles are narrow at best and distractions at worst. The real work is in scaling what actually delivers—electrification, renewables, smarter grids, and targeted complementary solutions like advanced biofuels.
More
In this episode, Gerard Reid, Laurent Segalen and Michael Barnard dug into the technologies and narratives that keep surfacing in discussions about the energy transition, but which continue to underdeliver when you scrutinize the economics and engineering realities. Carbon capture and direct air capture remain heavily subsidy-driven, often costing more to operate than the value of the CO₂ they sequester. The dilution of carbon in the atmosphere makes the whole proposition profoundly inefficient, and while there are niche opportunities where high-purity CO₂ streams are adjacent to storage infrastructure, those remain exceptions. Enhanced oil recovery is the only space where the numbers truly add up, which means the public ends up footing the bill for most other applications. Even regulatory pushes, such as Germany’s, can’t overcome the fundamental cost and scalability barriers. Hydrogen suffers from a parallel set of problems. The sector’s viability as a broad energy carrier depends on hitting a production cost of around $1 per kilogram, but real-world projects are stuck closer to $8 per kilogram. That gap has led to a string of cancellations from heavy hitters like BP, Exxon, and Air Products. Despite the hype around green hydrogen, the underlying assumptions never matched the physics or the economics. Battery electrification has emerged as the far more effective pathway for most transport, leaving hydrogen to fight for narrow industrial niches while its infrastructure and fuel cell supply chains lag behind. Nuclear energy is facing its own reckoning. The pivot toward small modular reactors was meant to revive the industry with faster, cheaper, more scalable deployment, but the reality looks different. Project sizes have crept upward, wiping out the “modular” advantage, and costs are trending well above $200 per megawatt-hour—hardly competitive. Ontario’s flagship SMR project is already slipping years past its promised delivery, and there’s little to suggest Wright’s Law cost declines will appear in a sector defined by bespoke builds and long lead times. Investors may find opportunities in the extended development cycles, but the contribution to near-term decarbonization remains negligible. Fusion is another seductive technology that continues to consume enormous sums of capital without altering the climate trajectory. ITER alone is 30 years behind schedule and twenty times over budget, aiming only for a five-minute sustained reaction by 2040—without generating electricity. Private startups are raising capital but remain decades away from surmounting fundamental engineering barriers. I’ve said before that fusion may eventually matter for space exploration, but it’s irrelevant for terrestrial energy in this century. Still, as a scientific project, it’s worth continuing—but policymakers must not confuse it with a climate solution. Biofuels offer a more mixed picture. First-generation projects like corn ethanol were both environmentally and economically flawed, but second- and third-generation fuels derived from waste streams are showing promise. These have a real role to play in hard-to-electrify domains like aviation and maritime shipping. However, they’re not a replacement for direct electrification on the ground. European policy still reflects caution due to food-versus-fuel concerns, but as technologies improve, biofuels can carve out a targeted and pragmatic role. We also touched on the politics and market dynamics of offshore wind and ESG. Offshore wind in the U.S. continues to face transmission bottlenecks, fragmented policy, and outright political hostility, leading to cancelled and delayed projects. Meanwhile, Europe’s integrated approach in the North Sea demonstrates what’s possible with coordinated policy. On ESG, we acknowledged the criticisms around greenwashing and governance metrics that often make little sense. Yet, even through the noise, investment flows tell a real story: fossil fuel funding is down 25%, and corporate decarbonization continues, even if much of it is “green hushed.” Governance frameworks are evolving, with multi-stakeholder models like B Corps pointing toward a fundamental redefinition of fiduciary responsibility. Taken together, these discussions reinforce a central theme: the energy transition isn’t about wishful thinking or fashionable narratives. It’s about hard economics, engineering constraints, and political realities. Technologies like carbon capture, hydrogen, SMRs, and fusion may attract attention and capital, but their roles are narrow at best and distractions at worst. The real work is in scaling what actually delivers—electrification, renewables, smarter grids, and targeted complementary solutions like advanced biofuels.