Speaker 1: You're listening to a CNA podcast.
Speaker 1: They say diamonds are a girl's best friend, but they've
Speaker 1: gotten a reputation for being the environment's enemy to combat.
Speaker 1: Not just the reputation of the harm that mining diamonds
Speaker 1: does to people in the earth. Lab grown diamonds have
Speaker 1: become popular over the years. The best part, unless under
Speaker 1: the most trained eye, no one can tell the difference.
Speaker 1: But are they really as environmentally friendly as they claim
Speaker 1: to be
Speaker 1: my guest today is Ryan Sherman, the co-founder and chief
Speaker 1: alchemist at Ether Diamonds in the US to find out
Speaker 1: if lab grown diamonds can help combat climate change. Welcome, Ryan,
Speaker 1: thanks for having me.
Speaker 1: First of all, I will wonder what got you into
Speaker 1: the world of lab grown diamonds. Well, early in my career,
Speaker 1: I had spent some time working in the jewelry industry,
Speaker 1: developing products for an international jewelry brand based in New
Speaker 1: York City, David while I was there and familiarized myself
Speaker 1: with the diamond supply chain.
Speaker 1: And it was at that point when I started to
Speaker 1: feel conflicted about how it was, you know, the industry
Speaker 1: at large was sourcing their gemstones fast forward in about 2018,
Speaker 1: it was, we conceived the idea of making diamonds from
Speaker 1: captured Co2
Speaker 1: and it was gratifying in that this new approach could
Speaker 1: address issues that I struggled with as a professional working
Speaker 1: in the industry. And this was an exciting opportunity to
Speaker 1: step back into an industry that I rather liked and
Speaker 1: appreciated and drive real change. So Ryan give us a
Speaker 1: brief history of lab grown or manmade diamonds. And when
Speaker 1: did lab grown diamonds really take off and why commercially
Speaker 1: lab grown diamonds have really had their
Speaker 1: moment in just the last half a decade. That said
Speaker 1: the first lab grown diamonds were first produced in the
Speaker 1: 19 fifties and it was actually General Electric who had
Speaker 1: a team of engineers who successfully cracked the code for
Speaker 1: replicating the process by which we see diamonds formed deep
Speaker 1: inside the earth through high pressure and high temperature. Today,
Speaker 1: chemical vapor deposition is the leading technological solution for producing diamonds.
Speaker 1: Just tell us what does it take to get the
Speaker 1: carbon out of the air and walk us through what
Speaker 1: it takes to turn the lightest thing on earth air
Speaker 1: into one of the earth's hardest, which is diamonds. The
Speaker 1: first step in the process is to capture the co
Speaker 1: two through direct air capture from there, we convert it
Speaker 1: into a usable material. In our case, methane, we call
Speaker 1: this atmospheric methane. So we combine co two with green
Speaker 1: hydrogen to create CH four which is methane gas that
Speaker 1: methane gas is then injected into the diamond reactor.
Speaker 1: It is hit with a microwave, much like what you
Speaker 1: find in your kitchen just much more powerful and the
Speaker 1: hydrogen excites into a plasma state. So the C four
Speaker 1: that's in the chamber separates the carbon that was in
Speaker 1: the CH four starts to fall to the bottom of
Speaker 1: the chamber, almost like snowfall and it lands on top
Speaker 1: of small pieces of diamond called seeds. And from there,
Speaker 1: it attaches to the diamond crystal and continues to follow
Speaker 1: that pattern.
Speaker 1: And after about a month's time, that piece of crystal
Speaker 1: has now grown to almost a large piece of rough diamond.
Speaker 1: They call it that can be core out to the
Speaker 1: size of a seven millimeters to a side, eight millimeters
Speaker 1: to a side.
Speaker 1: And from there it goes through the traditional cutting and
Speaker 1: polishing process and we're left with beautiful gem diamonds. And
Speaker 1: that entire four step process takes roughly about four months.
Speaker 1: How much energy are we talking about? So, the diamond
Speaker 1: growing process in a chemical vapor deposition reactor requires roughly
Speaker 1: 10 kilowatts of energy. Um perhaps a little bit more,
Speaker 1: we source renewable energy. So although we acknowledge it's a
Speaker 1: significant amount of power, we are sourcing our power responsibly
Speaker 1: and we do this through solar.
Speaker 1: And this gives us the opportunity to use those clean
Speaker 1: electrons to turn something that is warming the planet into
Speaker 1: something that warms the heart. We also have a third
Speaker 1: party certified carbon negative footprint. So that means for every
Speaker 1: diamond we produce, there's less carbon in nature than there
Speaker 1: was before. That's a good thing. And frankly, we have
Speaker 1: strong protocols across the board as a company with respect
Speaker 1: to ESG and it's paramount that everything that we do
Speaker 1: is as responsible as possible. You know, our mission as
Speaker 1: an organization
Speaker 1: is to decarbonise industries that would otherwise be contributing to
Speaker 1: global warming and climate change, but doing it in a
Speaker 1: way that benefits not only the planet but people as well.
Speaker 1: So how much co two from air is being extracted for,
Speaker 1: let's say a carat diamond. So the end to end
Speaker 1: process is fairly efficient. There are not a lot of losses. Ultimately,
Speaker 1: a diamond is 100% carbon. So you can simply map
Speaker 1: that carbon
Speaker 1: to what is coming out of the atmosphere almost on
Speaker 1: a 1 to 1 basis. If we were growing, say
Speaker 1: a five carat gemstone that comes from a larger piece
Speaker 1: of rough material, you can generally multiply that by about
Speaker 1: five to get your rough material amount. Once it's turned
Speaker 1: into solid carbon, it's never going back into the atmosphere.
Speaker 1: And ultimately, that five carat piece of material comes from
Speaker 1: say a
Speaker 1: total of 25 carats of rough material. And uh that's
Speaker 1: about 5 g of CO2. So in each stone, there's
Speaker 1: not a whole lot of carbon, the net impact when
Speaker 1: you compare this to say the need for mining a
Speaker 1: diamond from the ground or growing a lab grown diamond
Speaker 1: using fossil methane, which is the traditional feedstock. The avoidance
Speaker 1: of the negative externalities associated with those products is
Speaker 1: where the impact comes from. So Ryan, how sustainable are
Speaker 1: lab grown diamonds compared to, you know, naturally created or
Speaker 1: mined diamonds? So when we mine a diamond from the ground,
Speaker 1: we have to dig very large holes in the ground.
Speaker 1: Some of these can be as wide as half a
Speaker 1: mile visible from space and those mining sites are never
Speaker 1: really remediated. It's not like they're back filling the mine and,
Speaker 1: and all of the tailings that are dredged up from
Speaker 1: deep inside the earth, they're left on the surface where
Speaker 1: rain falls on them and ultimately heavy metals and other
Speaker 1: contaminants that are in those tailings do leach into the groundwater.
Speaker 1: There obviously is a well documented history of human rights
Speaker 1: abuses associated with the production of mine diamonds
Speaker 1: on the converse. You have lab grown diamonds which avoid
Speaker 1: some of those challenges, especially from an environmental perspective. We
Speaker 1: don't have to dig the big hole in the ground.
Speaker 1: We don't have to deal with, you know, mine tailings
Speaker 1: leaching really bad materials into water that either the local
Speaker 1: flora and fauna rely on or you know, perhaps even
Speaker 1: human beings.
Speaker 1: The kind of sin of omission that occurs in lab
Speaker 1: grown diamonds is people often don't think about where the
Speaker 1: carbon comes from. So although we're growing diamonds above ground,
Speaker 1: the carbon used to make them still comes from inside
Speaker 1: the ground. So largely the industry has just swapped one
Speaker 1: harmful extractive process for another harmful extractive process. So Ryan,
Speaker 1: let's address a common question that many people are asking
Speaker 1: are lab grown diamonds, real diamonds.
Speaker 1: So at the end of the day, a lab grown
Speaker 1: diamond is 100% crystal and carbon. It's at an atomic
Speaker 1: level identical to what comes out of the ground. This
Speaker 1: is not a cubic Circon, this is not a moisten,
Speaker 1: this is in fact a diamond in every conceivable way.
Speaker 1: Even in the United States, the Federal trade Commission has
Speaker 1: changed the rules for what needs to be said as
Speaker 1: we talk about manmade diamonds. These do not even need
Speaker 1: to be called synthetic anymore. Whereas
Speaker 1: the word synthetic was a requirement that rule changed just
Speaker 1: a couple of years ago and we see a general
Speaker 1: acceptance here in the US market and there was a
Speaker 1: recent report that upwards of about a third of engagement
Speaker 1: rings sold in 2022 utilized lab grown diamonds, centers stones.
Speaker 1: When we started this company in 2018, that number was
Speaker 1: less than 1%. So the rate at which consumers are
Speaker 1: adopting lab grown diamonds
Speaker 1: is increasing year over year, what has changed so largely education,
Speaker 1: you know, consumers in the beginning didn't quite know what
Speaker 1: they were dealing with. There was a large education hurdle
Speaker 1: that kind of needed to be crossed. And consumers largely
Speaker 1: understand now that these are man made and they come
Speaker 1: from a laboratory. But they are, in fact, diamonds quality
Speaker 1: lab grown diamonds are indistinguishable by eye. Even the world's
Speaker 1: best gemologist
Speaker 1: can't tell that a high color, high clarity lab grown
Speaker 1: diamond is not a natural stone. It requires expensive equipment
Speaker 1: in order to perform the test. You know, early on
Speaker 1: many retailers anticipated that people would simply spend less money
Speaker 1: and get the same stone that they would have gotten otherwise.
Speaker 1: And in fact, the opposite is happening. We're seeing consumers
Speaker 1: continuing to spend the same amount of money, but to
Speaker 1: go to lab grown and get a bigger diamond.
Speaker 1: So they're getting a bigger diamond from a better, you know, frankly,
Speaker 1: more human friendly and more environmentally friendly supply chain without
Speaker 1: some of those, you know, human rights concerns and environmental concerns.
Speaker 1: And at the end of the day, it's indistinguishable.
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Speaker 1: there's going to be fewer and fewer diamonds available because
Speaker 1: we've already exhausted what half of the world's diamond supply.
Speaker 1: So will natural diamonds continue to hold monetary value better
Speaker 1: than lab grown diamonds? What are your thoughts? So the
Speaker 1: price differential between a lab grown diamond,
Speaker 1: a mine diamond varies greatly depending on who you buy
Speaker 1: it from. Generally speaking, you're going to see a lab
Speaker 1: grown diamond sell for maybe about 30% the cost of
Speaker 1: its mind counterpart. So for the same color, same carrot weight,
Speaker 1: same clarity, you're getting a lot better value for what
Speaker 1: you're spending.
Speaker 1: Peak diamond output happened in 2017. Every year from here
Speaker 1: on out, fewer and fewer stones will be pulled from
Speaker 1: the ground. And I think that's a net positive for
Speaker 1: humanity and for planet earth. But with that reduction in supply,
Speaker 1: the laws of supply and demand dictate that maybe that
Speaker 1: actually helps support pricing. With that said, the rate of
Speaker 1: acceleration of lab grown diamonds is starting to eat into
Speaker 1: the market share of mine diamonds in a way that
Speaker 1: I don't think a lot of people anticipated. And this
Speaker 1: is not driven purely by the fact that it's a
Speaker 1: better value by
Speaker 1: getting a larger stone for the budget, but also driven
Speaker 1: by environmental concerns. These are things that we've learned, speaking
Speaker 1: to consumers and ultimately, we feel that that is going
Speaker 1: to accelerate beyond the rate of decline of mine diamonds.
Speaker 1: I think younger consumers by and large understand that they
Speaker 1: don't need to support these archaic extraction practices anymore. That's
Speaker 1: very interesting. How about, you know, when we say diamonds
Speaker 1: for the longest time, the aspect on scarcity also the
Speaker 1: rarity made people to desire or cray for the,
Speaker 1: what would you say to those that, you know, the
Speaker 1: sense of romanticism shall I say is sort of removed
Speaker 1: in the lab or devoid in the lab? I think
Speaker 1: that's a fair criticism of lab run diamonds. Frankly, it's
Speaker 1: a criticism I've made myself on numerous occasions. I don't
Speaker 1: think that it maps to what we do and I
Speaker 1: think that's where we have some competitive advantage in the market.
Speaker 1: You know, there's no geographic limitation to where we can
Speaker 1: pull our carbon from. There's nothing stopping me from extracting
Speaker 1: co two from the air in Paris and introducing Parisian diamonds.
Speaker 1: You know, mapping this to your personal love story as
Speaker 1: a consumer plays into kind of this trend of hyper
Speaker 1: personalization that we're seeing across a number of consumer markets
Speaker 1: and from their major markets around the world. There are
Speaker 1: areas where we'll be looking to capture CO2 that we
Speaker 1: can use to produce regional diamonds. You know, we don't
Speaker 1: have to go where these diamond deposits underground exist. We're
Speaker 1: not limited to parts of Africa or Russia or Canada,
Speaker 1: we can do this globally. And that really brings an
Speaker 1: interesting
Speaker 1: marketing and merchandizing opportunity into the fray that we think
Speaker 1: people in markets all over the world will appreciate. So,
Speaker 1: what's Ether's goal within the next 5 to 10 years?
Speaker 1: How do you plan to achieve it? So our goal
Speaker 1: goes far beyond diamonds, diamonds, we consider merely our first act. Ultimately,
Speaker 1: if you think
Speaker 1: what we're doing, we're turning air pollution into an upcycled hydrocarbon.
Speaker 1: So we envision a future where we don't need to
Speaker 1: extract hydrocarbons from the ground. Rather, we can develop an
Speaker 1: extractive industry around pollution and turning pollution into climate solutions.
Speaker 1: And
Speaker 1: our goal would be to bring our atmospheric methane to
Speaker 1: a wide range of different industries that utilize methane gas
Speaker 1: as a chemical feedstock as an ingredient, methane can be
Speaker 1: used to make quite a lot of things. So our
Speaker 1: goal is to proliferate the technology across a number of
Speaker 1: different industry, verticals and different sectors and different geographies and
Speaker 1: ultimately decarbonise the world's industries by getting rid of fossil fuels.
Speaker 1: There are those who are quite skeptical about this sequestration,
Speaker 1: removing carbon from the air. What would you say to them?
Speaker 1: There are fair criticisms. Carbon capture technologies, especially direct air capture,
Speaker 1: ambient capture of CO2 is relatively expensive, comparable to other
Speaker 1: climate solutions. And for me, this was the big aha
Speaker 1: moment you can take that carbon and bury it under
Speaker 1: the ground where hopefully it stays for a very long time.
Speaker 1: But then you're losing half the opportunity. Ultimately, if we know,
Speaker 1: products are made with methane and we know we can
Speaker 1: make methane with captured CO2 to not do that is
Speaker 1: tacitly supporting the further continued extraction of hydrocarbons from the ground.
Speaker 1: So if we have this usable material and we fail
Speaker 1: to utilize it, we're making a grave mistake. And that's
Speaker 1: really where we come in. And because diamonds as a
Speaker 1: product have favorable unit economics, it allows us to be
Speaker 1: somewhat cost insensitive to the upfront cost of the direct
Speaker 1: air capture. In the beginning when we were sourcing CO2.
Speaker 1: From our first,
Speaker 1: we were spending over $10,000 per ton of CO2. That's
Speaker 1: a lot. If you compare that to the cost of
Speaker 1: pulling one ton out of the air through, you know,
Speaker 1: planting trees, it pales in comparison, but that was ok
Speaker 1: for us because with one ton of CO2, we can
Speaker 1: make many, many diamonds and then you can take that
Speaker 1: 10,000 plus dollar sum of money
Speaker 1: and advertise it across all of those stones and the
Speaker 1: per carat contribution was less than $10. So even if
Speaker 1: the cost of direct air capture went to zero, it
Speaker 1: really wouldn't fundamentally change our unit economics. And that made
Speaker 1: us especially early on relatively cost insensitive. And those are
Speaker 1: characteristics that you need to see when new technologies are
Speaker 1: being developed. You want to see cost curves come down,
Speaker 1: you want to be able to see those technologies mature
Speaker 1: and we believe that
Speaker 1: we could play a role in helping bring those cost
Speaker 1: curves down starting in diamonds and ultimately across a number
Speaker 1: of industries, Brian. Before I let you go, just looking ahead,
Speaker 1: what do you think the future will hold for lab
Speaker 1: grown diamonds? And what do you think will matter when
Speaker 1: it comes to diamonds in the future? One of the
Speaker 1: things I'm quite excited about is we are probably a
Speaker 1: year or two away from seeing lab grown diamonds make
Speaker 1: up the majority of engagement rings sold here in the
Speaker 1: US market.
Speaker 1: This is no longer, you know, some small esoteric piece
Speaker 1: of the industry. It's going to be the majority and
Speaker 1: that's going to happen soon. And frankly, if you look
Speaker 1: at consumer trends over indexing for sustainability for the supply
Speaker 1: chain transparency, those are things that matter to an increasing
Speaker 1: number of consumers. So we're starting to see that ball
Speaker 1: rolling in the European market,
Speaker 1: whispers of an increasing willingness to buy lab grown in
Speaker 1: parts of Asia as well. So we're very excited to
Speaker 1: continue to see the market mature for lab grown diamonds
Speaker 1: and see consumers the world over start to accept them
Speaker 1: exciting times ahead, Ryan. Best of luck to you. Thank
Speaker 1: you so much for joining us today and shedding light
Speaker 1: on this fascinating world of lab grown diamonds. Thanks so much. Well,
Speaker 1: thanks to my guest
Speaker 1: Brian Sherman and thanks to all of you for tuning in.
Speaker 1: We hope you enjoyed this episode. Do remember to subscribe
Speaker 1: and like this podcast. So, you know, when the new
Speaker 1: episode drops, we, we will be going on a season break.
Speaker 1: We'll be back in August. But in the meantime, you
Speaker 1: can find the CNAs climate and sustainability coverage online at
Speaker 1: CN A dot asia. The team behind this podcast is
Speaker 1: Joan Chen, Jacqueline Chan and Christina Robert and I'm Julie
Speaker 1: Yu signing off.