(Bloomberg) -- In Episode 4 of the Zero podcast, Bloomberg Green reporter Akshat Rathi interviews entrepreneur Sandeep Nijhawan, whose startup Electra has developed a new way to make zero-emissions steel. Listen to the full episode below, learn more about Electra here, and subscribe on Apple, Spotify, Google or Stitcher to stay on top of new episodes. 

Our transcripts are generated by a combination of software and human editors, and may contain slight differences between the text and audio. Please check against audio before quoting. 

Akshat Rathi  00:00

Welcome to Zero. I’m Akshat Rathi. This week: steel, stealth and flattening the carbon curve.

Akshat Rathi  00:20

This summer I spent three weeks traveling around the US visiting climate startups. Today I'm going to tell you the story of one of them: a secretive company called Electra that operates out of a suburban office park in Colorado.

Electra is taking on a massive, often unrecognized problem – decarbonizing steel. An industry worth nearly $1 trillion and that accounts for 7% of global greenhouse gas emissions. The vast majority of those emissions come from the first step in the process of making steel – converting iron ore to iron.

Sandeep Nijhawan  01:01

What I pitched to him is like, I had four ideas, actually, to be honest with you. The first idea I was explaining to him was around iron and steel, [of] electrification at low temperature, and he said, “let me stop you right there. I'm already sold.”

Akshat Rathi  01:14

That’s Sandeep Nijhawan,  co-founder of Electra describing a conversation with his first investor, who was sold on the radical simplicity of what Sandeep was proposing: zero carbon steel [made] using iron produced at low temperature. Since that initial pitch, Electra has gone on to raise $85 million.

What attracts people to Electra is the fact that not only can zero carbon steel solve a climate problem, but that it also has the potential to make a lot of money. That's one reason why Electra has been in stealth mode for the last two years. It did not want any of its ideas stolen. Now the company is finally talking, because its idea has gone from a PowerPoint presentation to working at lab scale.

What's the innovation?

Coal plays a big part of making steel today. It’s used to melt iron ore in a furnace and also to extract unwanted oxygen atoms [from the iron ore]. Coal provides both the fuel for heat and the carbon for extracting oxygen, in the process, forming huge amounts of carbon dioxide.

Electra’s technology gets rid of both the furnace and the coal. Instead, it uses only renewable electricity and completes the reaction of making iron from iron ore at temperatures cooler than 60 degrees Celsius.

No molten metal, no carbon emissions, and nothing hotter than your coffee. Crazy, huh?

I talked to Sandeep about how he came up with this idea, built a team in the middle of the pandemic, and what the steel town of the future will look like.

Akshat Rathi

Sandeep, welcome to the show.

Sandeep Nijhawan  03:02

Thanks Akshat, pleased to be here.

Akshat Rathi

You're trying to solve a problem that most people don't think about, but is a massive problem for the climate: how to make steel without having emissions. Let's start with the problem though: Why is it that steel is such a big problem for climate change?

Sandeep Nijhawan  03:23

Sure. Steel is the backbone of our modern society [and] steel is one of the hardest to abate sectors, and we produce about 1.9 billion tons of steel each year.

Akshat Rathi  03:36

Why is there a CO2 problem at all? There is no CO2 coming in this process as far as most people would understand it.

Sandeep Nijhawan  03:45

Steel is actually 98 percent iron. And the way the steel is made today is through a pyrometallurgy process that uses coal energy. We first melt the iron ore at about 1600 degrees Celsius, using coal as a source of energy. And that carbon is also used to then refine iron ore into pure iron.

Akshat Rathi  04:17

Iron ore is mostly iron and oxygen combined. Whereas what you want for steelmaking is pure iron, or iron mixed with some small other elements.

Sandeep Nijhawan  04:28

That's correct. So, from a problem statement perspective, what this translates to is 90 percent of steel’s emissions come from refining the iron ore into iron to make steel.

Akshat Rathi  04:44

Now, it's intuitive that if you use coal to remove the oxygen from iron ore and that coal creates CO2 emissions, we don't want to use coal. There are solutions that have been put forward where people use hydrogen instead of coal, because hydrogen can do the same job and the hydrogen and oxygen mixture convert into water, which does not contribute to climate change. So, if we have that solution, why try something else?

Sandeep Nijhawan  05:15

First of all, steel is a 2 billion tonne market, $1 trillion. So I think that the world needs multiple solutions to come to a resolution. One of the challenges with hydrogen is its availability and cost. So to get to zero green premium steel, you need hydrogen at $1 a kilo –

Akshat Rathi 05:40

When you say zero green premium, you're basically saying at the same cost as steel that can be made using coal–

Sandeep Nijhawan  05:47

Correct.  Without any carbon subsidy you need a dollar a kilo hydrogen to do that. But even more importantly [it] comes down to the availability of ores that are needed to make hydrogen-based steel or green steel. And the reason that becomes a problem is that a hydrogen-based process needs the highest grade of iron [ores]. And the world is running out of high grade ores that are available for steelmaking. It's not that the world doesn't have iron ore – our planet is made of iron and there is plenty of iron ore, it's that it has certain grades of ore that cannot be economically processed –

Akshat Rathi

– meaning there are a lot of impurities –

Sandeep Nijhawan

There are a lot of impurities and impurities are like phosphorus impurities or high silica, high alumina. For example, there [are] 8 billion tons of reserves of high phos containing ores in just one country like Australia. [And] worldwide, you will find these kinds of ores.

Akshat Rathi  06:56

You're not using hydrogen, what is your solution that has got investors giving you $80 million dollars to solve it?

Sandeep Nijhawan  07:07

What we have is a clean sheet design process to electrify iron and [use] widely available lower grade ores, shifting the operating temperature of the process from 1600 degrees to 60 degrees Celsius. And thereby displacing the carbon intensive coal energy with renewable energy to make pure iron.

Akshat Rathi  07:41

And your process has no fire attached to it.

Sandeep Nijhawan  07:44

It is low temperature. In fact, you could touch it, and it is as benign from a temperature perspective as you can get.

Akshat Rathi

Your coffee is brewed at high temperature.

Sandeep Nijhawan

Your coffee is brewed at a higher temperature. Absolutely.

Akshat Rathi  07:58

So you go from the process as it exists today, where you take iron, burn coal, heat it to 1600 degrees Celsius, create iron, and in the process, even steel. It's a one place process: iron ore comes into a plant and out comes steel. You're splitting that process into two steps. You're making only iron first, and then somebody else will make the steel. But because ironmaking is 90 percent of emissions, that’s the step you want to attack with your solution.

Sandeep Nijhawan  08:28

That's correct. That's where the problem is: how do we get to pure iron without having emissions?

Akshat Rathi  08:35

Okay, so you're going to use electricity. Where's that electricity coming from? Because most electricity generation has carbon dioxide emissions attached to it.

Sandeep Nijhawan  08:50

Yeah. What we're bringing forward is our ability to use intermittent renewable electricity, which is increasingly available at scale.


Solar and wind?


Correct. Either solar and wind, if hydro is available, we'll use hydro. But the cheapest form of zero carbon electricity is intermittent solar and wind today, period.

Akshat Rathi  09:12

Let's talk about how you arrived at the solution in the first place. You weren't making steel before this, your previous companies had to do with hydrogen production and energy storage. So why go down the route of making steel?

Sandeep Nijhawan  09:31

Yeah, so my background is in electrochemical conversion systems. So one of the battery storage companies that I had was developing iron-based battery storage. Specifically nickel iron. So that's Edison's chemistry – a hundred years old, highly robust chemistry – but iron is the means in which you're storing the energy. So I know a few things about iron.My career of doing energy storage or hydrogen, were all tied towards decarbonisation as a professional goal. And Electra is really a continuation of the journey in terms of picking one of the hardest to abate sectors and then if there is a solution to be had, making a big impact with it.

Akshat Rathi  10:23

And so you come to this point where you're like, “Okay, this is a big problem, I need to solve this.”

Sandeep Nijhawan  10:29

Yeah. So I started thinking about this at the peak of the pandemic in March 2020. So you remember, “flattening the curve”?

Archival Dr. Jerome Adams 10:39

We feel like if we can get America to all pitch in for the next 15 days, we can flatten the curve, which is a term that you've been hearing a lot - not overwhelm our healthcare systems.

Sandeep Nijhawan  10:48

And I was basically thinking okay, that's great. I'm not a biologist, I can’t really impact this thing. What can I do to flatten the global temperature that has been rising and is expected to go to two degrees celsius? And that's where I said, Well, let's pick the problem, like steel, which can have a huge impact.

Akshat Rathi  11:05

I remember in March 2020, I was just worried that we may not be able to find a vaccine. I’m a climate journalist, I was thinking about climate change, but I wasn't thinking about starting a company that would try and solve the climate problem rather than a vaccine problem.

Sandeep Nijhawan  11:18

While the pandemic was not the place I would wish to have a gain ever, I was [going] through a transition [out] of my previous companies. You can’t go on a vacation or sit on a beach and do a whole lot of things. So there was plenty of time to think and refine my thinking of what can be done here? And I don't have a background in steelmaking. But as an entrepreneur, I'm a very fast learner.

Akshat Rathi  11:47

And so you thought about the problem, and you made a PowerPoint presentation.

Sandeep Nijhawan  11:52

That's correct. There were seven slides in it. And it was actually a five minute conversation with our lead investor, which is Bill Gates-founded Breakthrough Energy Ventures. In particular, Dave Danielson. And what a pitched to him is like, I had four ideas, actually, to be honest with you, steel was one of them. And I said, I need 30 minutes to walk you through some of these ideas I have. [The] first idea I was explaining to him was around iron and steel. Of electrification at low temperature. And he said, “let me stop you right there. you don't have to go any further than that. I'm already sold. If you could do this thing. that's what I want to do. I don't want to hear the next three ideas.”  And that was a journey we started on in March 13, 2020. the day before California shutdown. And that was my first and only investor meeting face to face I ever had for the next two years.

Akshat Rathi  12:50

Okay. And so how big a check did you get?

Sandeep Nijhawan  12:53

Our first check at the seed was $2.25 million, not just from Breakthrough, but [a] number of investors. And my pitch to all of them was, “look, I don't know if this can be done. I've thought through the problem. And asked the experts, I think there's a feasibility path. But all I need is less than 10 people, maybe a year, year and a half to run this thing to ground. To prove to myself first, can this be done because if this cannot be done, I have idea number two, three and four, to work on. And they're also big problems to solve.” And we had the money in the bank by the end of June, essentially. That took us three and a half months to close that round.

Akshat Rathi  13:40

And then what did you do next? Because you needed more people, you needed some science brains.

Sandeep Nijhawan  13:44

Absolutely. The success of anything at the end of the day comes to the team. So we need people who can essentially think through a problem, find the fatalities, and solve them in the right sequence. Because you don't have time or the money to boil the ocean. So you have to really think through what needs to happen, what has to be met  to move forward, [to see] that there is a path forward here. Of course, we started in a garage.

Akshat Rathi  14:15

No, it really was a garage? That’s a Silicon Valley stereotype.

Sandeep Nijhawan  14:20

It is not a stereotype, it is the real answer.

Akshat Rathi

Whose garage was it?

Sandeep Nijhawan

It's one of our employees that later joined. He started as a consultant. And of course, some of these folks started without getting paid because we didn't have money to pay them. And the idea was, if we can raise the money, you know, you will have an opportunity to think about if you want to join full time or not, because it's a very high risk project. Some of them had full time jobs, and this is [the] pandemic. People are losing jobs, a lot of instability in the economy, and people are hunkering down in terms of keeping their head above the water. So it was one of the employees that we have today, his garage. And he also has a machine shop there that he makes parts in his free time, he makes drones actually as a hobby. So it was a very convenient garage. We can build parts and we can start making our test equipment and cells. Of course, we cannot do certain things in the garage from a safety perspective. So we had to wait to get to a real laboratory where we [could] run experiments.

Akshat Rathi  15:32

So beyond the PowerPoint, did you really have a plan for how you would solve the problem?

Sandeep Nijhawan  15:37

I did have a starting point. In this case, almost ignorance was bliss. What you don't know, you don't know. But what you're promising to the investor is: we will run this thing to ground, we will figure out every possible plan of attack. I knew exactly when I started, who the best person would be that could do it.

Akshat Rathi  15:59

That person was Quoc Pham, who we met on our tour of the company.

Quoc Pham  16:04

Do I need to introduce myself?

Christine Driscoll

Yeah, say your name for me.

Quoc Pham

I'm Quoc Pham. I'm the Chief Technology Officer and co-founder of Electra. So welcome.

Sandeep Nijhawan  16:13

Quoc was at another company that I actually had a non solicit [with].I actually could not go to Quoc and say Quoc, join me. That would be in violation of my contract. It was actually around early August that Quoc called me and was like, “Okay, I'm done. I want to do something different.” And I said, “Well, your timing is perfect. And here's what I'm thinking.”

Akshat Rathi  16:37

What Sandeep was thinking was, maybe they could make iron the way other metals are made, like zinc, aluminum, and copper. They're all made using electricity. But –

Sandeep Nijhawan  16:47

When you come to iron, this becomes a mess.

Akshat Rathi  16:51

Because iron does not behave like the other metals. Remember, iron ore is made of iron and oxygen. To get the pure iron that you need to make steel, you have to separate iron from oxygen. That can be accomplished with electricity, which is the promise Sandeep made to investors.

But you cannot pass electricity through solid iron ore, you need to dissolve iron ore in a liquid first. An acid, in this case. Figuring out how to dissolve iron ore in acid was Quoc’s first job.

Quoc Pham  17:24

The moment we got the lab space, the very first experiment that I ran in the lab was to verify “can we even dissolve iron ore?” And not too much to my surprise, we could not. I remember going to Sandeep’s office, and I told him, “Hey, I have bad news for you need to sit down. We cannot dissolve iron ore, which means forget about what we planned to do, because that's the very first step it doesn't happen, end of story.” I joke with him that that could have been my shortest startup life ever. But accepting the fact that it doesn’t dissolve, accepting that I may have a short job opportunity here, let's see if I can turn the situation around.

Akshat Rathi  18:08

And he did turn the situation around. In a few months, Electra had the whole process from iron ore to iron made with only electricity working on a lab bench. Now, Electra does not want to share the secret sauce of how they made it happen. But I spoke to experts who reviewed parts of the technology and confirmed that it is feasible. And the proof is in the pudding. When electricity is used for this process, the iron oxide is broken into oxygen, which is released as a gas, and iron, which is plated onto an electrode. I got to see those plates.

Sandeep Nijhawan (in scene)  18:45

There’s not rust on this

Akshat (in scene)

Can I remove it?

Sandeep Nijhawan (in scene)

Go ahead.

Akshat Rathi  18:47

With the silvery green metal on them.

Akshat (in scene)

Yeah, I don't think ever held pure iron this form  before

Akshat Rathi

First, small ones the size of business cards, and then large ones the size of office paper. I even held them in my hands and surprise, surprise —

Akshat (in scene)

This is heavy.

Engineer (in scene)


Akshat Rathi

They were heavy. Before it can be commercial, those plates will have to be much larger, something like three feet by three feet.

After the break, I talked to Sandeep about how all this goes from the lab bench to a factory in a town near you.

Akshat Rathi  19:34

And each of those steps that you had to solve..  those were known science. It’s just that the combination of those steps done in the specific way that you have done is what is the core innovation of Electra.

Sandeep Nijhawan  19:48

That's correct. We are not inventing new science. We are not inventing new catalysts. We are not inventing new unobtainium material. Every aspect of the science, all the material systems that are needed to make this innovation happen is readily available. Parts of it are used in different processes. And the real innovation is bringing this all together to solve the problem,

Akshat Rathi  20:12

Iron and steel, specifically, is a very cheap commodity. It has a climate problem and it's a cheap commodity because we have to use it at such a scale. So every step had to be such a cheap, easy-to-do step that you could replicate the cost of steel as you can buy it from the market today.

Sandeep Nijhawan  20:30

That is absolutely correct. And in addition to that, I had raised only money for a year. So [the] time pressure – do or die in a startup is real. You don't have ten years to develop the science, to create a new catalyst, to create a new material. It had to be solved or we move on, from a fatality perspective. You have to be in that pressure cooker rather than having infinite time available.

Akshat Rathi  21:08

So in 2021 you found a way to try and make these different steps work. What have you been doing for the last 18 months?

Sandeep Nijhawan  21:16

Yeah, so in early 22 Q1 or early 2021, we had on a benchtop the entire process going all the way from ore into pure iron [in place], using that process and showing that it can be economically done at a price point that the world needs. We then went and raised additional capital. And we raised 28 million by June of 2021. And we brought in other investors, co-investors. So now we have in total raised $82 million.

Akshat Rathi  21:51

Since talking to Sandeep in August that  number has gone up to $85 million.

Akshat Rathi

And one of your investors is a mining company called BHP. Why is BHP interested in this?

Sandeep Nijhawan  22:03

Bringing strategic investors very early in the startup is not what [the] typical venture capital community will advise you to do. I overruled that, having a gut reaction that ores are going to be a big part of the story. So the goal of that strategic partnership was to explore what can be done from the ore side. And how expensive is our process in dealing with impurities and what kind of ores can be used to make green steel.

Akshat Rathi  22:35

So if I'm hearing you right your solutions are: you use as much energy or less energy than the conventional process. That energy is electricity that can be intermittent and renewable, so it has no carbon attached to it. And you can use lower grade iron ore, which is cheaper to get. So if you combine that and you scale it up, you'll have presented a carbon free, cheaper way to make iron. But then you have to make steel, right?

Sandeep Nijhawan 

That's correct.

Akshat Rathi

And then the next step is really mixing it in the right order.

Sandeep Nijhawan  23:06

And the next step is to take that on and again smelt it or melt it, and then add other constituents to it to give steel its strength. But melting something is [a] very small amount of energy that is needed to make steel.

Akshat Rathi  23:20

It's counterintuitive to most people, I would think, when you look at a hot piece of metal that's been melted, you go “oh my god, that would have taken a lot of energy.” But when you look at iron ore, and then you look at iron metal, you don't think “energy.”

Sandeep Nijhawan  23:35

That's correct, because what we are not seeing is that the energy is predominantly used to split oxygen that is bonded to iron, and that's where the bulk of the energy goes – to get the oxygen out. Now, if you use carbon it makes CO2. If you use electrons, you do not produce any CO2, and you can get to pure iron, which is again, the goal of all of these processes before you get to steel.

Akshat Rathi  24:06

When will you have your first factory making this carbon free iron, and hopefully steel after that?

Sandeep Nijhawan  24:14

We are working on building a pilot and we should have this pilot working in 2023. This will be an industrial scale pilot. And what I mean by that is that it will have iron plates that are being produced [in] a low temperature process, which are a meter square type of area. And the goal of that pilot is to stress test the design of the commercial plant. So we need a place where we can stress test all the design in terms of what works, what doesn't work, and how do we scale that up to a full commercial scale.

Akshat Rathi  25:00

What you're describing is very different from how people think of steel, because the steel industry, as it exists, has created entire towns that are steel towns, where the only job maker is a steel factory, and it takes up a huge amount of land. And that land is required for making coal to pick up coke, which is carbon, [and] iron ore that has to be cleaned up and put into this big furnace at 1600 degrees Celsius. Then once you get iron out of it, then you do something else to make steel. All of that is a huge amount of investment, are you saying that you can now make iron in a very small plant now?

Sandeep Nijhawan  25:39

It’s more distributed, it is modular in the sense that you don't need to create an integrated plant that has all of these feedstocks coming in, in a plant and then steel goes out. So what this allows you to do is do this in a distributed way, just the way EAF steelmaking is done.

Akshat Rathi  26:00

Can you explain what EAF is?

Sandeep Nijhawan  26:02

Yeah, so EAF is electric arc furnace. It is the electricity-powered arc furnace that is used to melt scrap or pure iron and make steel. 30% of steel is made using EAF steelmaking.

Akshat Rathi  26:18

It's a wild process as well. You'll see sparks flying everywhere, it’s giant and it's very noisy and once the process is done, you see this molten metal being poured down from that unit. It’s a wild, wild thing, it happens everywhere, it’s just that not many people get to see it.

Sandeep Nijhawan  26:39

Yeah, I mean, that's the way steel is made. You also may have seen molten iron getting poured out of blast furnaces. And that's the image we have grown up [with] looking at iron. It's hot, almost the image of fire. And, of course, all of that is coming from carbon intensity and the CO2 that goes along with it.

So in terms of job creation, this is actually still a lot of job creation, because this is manufacturing jobs. That ironmaking plant I'm talking about is going to have 50 years of life. So it is going to create a town around it, where you will have renewable electricity coming. So there are green jobs from that side, your iron ore being supplied. So that is not going away.

Akshat Rathi  27:26

And the Inflation Reduction Act that the US has passed, will that help you in any way?

Sandeep Nijhawan  27:34

Oh, absolutely. I would say that is the most exciting thing I've seen in the climatetech space in 15 years. There’s $7 billion of investment that had been set aside to help decarbonize hard to abate industry like ours. So steel is included, cement is included. And I'm planning to go to DC to start having conversations with policymakers, that there is another way to get to green steel, that doesn't involve all the known things we had, which is hydrogen, which is part of a big tax credit that is already in the Inflation Reduction Act or carbon capture or sequestration that's also part of what's in the Inflation Reduction Act. And the solutions like ours, that from first principle do not produce the CO2 emissions, that you're trying to abate through all of the tax credits, that inflation Reduction Act is offering. So the conversation I want to have with the policymakers is on that front is how can we be part of that equation to also accelerate and promote technologies like ours to get to scale faster.

Akshat Rathi  28:45

That was a great conversation. Thanks for the tour. And good luck with scaling up.

Sandeep Nijhawan  28:50

Thank you. It was a pleasure to host you on site and have this conversation.

Akshat Rathi  29:14

The fact that the US climate bill as it exists today does not even account for the idea that you can make steel without emissions from the get go shows how fast technology is moving.

And coming out of stealth is just the very beginning. Scaling up is hard. I look forward to seeing how Electra matures and how the steel industry responds. If Electra can pull this off, it will be a huge deal.

Thanks for listening to Zero. If you like the show, please rate review and subscribe. Tell a friend or tell my colleague who's under a non solicit. If you've got a suggestion for a guest or topic or something you just want us to look into get in touch at zeropod@bloomberg.net.

Zero senior producer is Christine Driscoll and producer is Oscar Boyd. Our theme song is composed by Wonderly.

Many people helped make this show a success, and each week I'll tell you about one of them. This week, special thanks to Aaron Rutkoff, who is the Executive Editor of Green. Although his cultural references land one out of three times, his editorial suggestions are always on point.

I’m Akshat Rathi. Back next week.

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