WEBVTT - A Billion-Dollar Bet on Carbon Removal 0:00:15.356 --> 0:00:24.196 Pushkin. Sometime around twenty eighteen, it became clear that transitioning 0:00:24.276 --> 0:00:27.276 away from fossil fuels was not going to be enough 0:00:27.316 --> 0:00:30.756 to manage climate change. On top of moving away from 0:00:30.756 --> 0:00:34.396 fossil fuels, on top of ceasing to emit carbon dioxide 0:00:34.436 --> 0:00:37.116 into the air, the world would also need to figure 0:00:37.116 --> 0:00:39.996 out how to take some of the carbon dioxide we'd 0:00:39.996 --> 0:00:43.516 already put into the atmosphere out of the atmosphere. And 0:00:44.036 --> 0:00:46.916 it was also clear that just planting more trees wasn't 0:00:46.916 --> 0:00:49.476 going to do it. It was too much carbon dioxide 0:00:49.516 --> 0:00:52.276 and not enough land to plant trees on. A few 0:00:52.316 --> 0:00:55.676 years after those things became clear, a company called Stripe, 0:00:55.956 --> 0:01:00.196 that helps online businesses do things like process payments, decided 0:01:00.236 --> 0:01:04.036 to dedicate a relatively small amount of money, a million dollars, 0:01:04.396 --> 0:01:07.756 to pay to have carbon dioxide removed from the atmosphere. 0:01:08.956 --> 0:01:11.876 Twenty twenty, we made our first purchases from four carbon 0:01:11.876 --> 0:01:12.596 removal companies. 0:01:12.676 --> 0:01:15.356 This is Nan rants Off, the head of climate at. 0:01:15.236 --> 0:01:19.596 Stripe, and at the time, you know, two sort of 0:01:20.516 --> 0:01:23.476 interesting things happened. The first is that the field had 0:01:23.476 --> 0:01:27.356 this sort of almost weirdly positive reaction to a pretty. 0:01:26.996 --> 0:01:29.036 Small amount of money a million dollars is ultimately not 0:01:29.076 --> 0:01:29.556 that much. 0:01:29.916 --> 0:01:32.356 It's in a way quite a bad sign if people 0:01:32.396 --> 0:01:35.476 get excited, yes for a whole field about a million. 0:01:35.716 --> 0:01:38.716 No, that's exactly right, and it's concerning, like why are 0:01:38.716 --> 0:01:41.836 people getting so excited about this million dollars? So that 0:01:41.916 --> 0:01:44.036 was an interesting signal, which to us just said, well, 0:01:44.076 --> 0:01:47.436 this field has been starved for a market, and that 0:01:47.636 --> 0:01:50.396 such that a million dollars could you know, make anybody 0:01:50.396 --> 0:01:50.956 pay attention. 0:01:51.436 --> 0:01:54.876 The second thing that happened, Nan said, was Stripe started 0:01:54.916 --> 0:01:58.396 hearing from the companies that used Stripe services, and a 0:01:58.396 --> 0:02:01.356 lot of those companies also wanted to start paying for 0:02:01.436 --> 0:02:04.556 carbon removal. So Stripe set up away for those companies 0:02:04.556 --> 0:02:07.876 to purchase carbon removal and tens of millions of dollars 0:02:07.956 --> 0:02:08.396 flowed in. 0:02:08.956 --> 0:02:12.036 Good step, but it's still quite small. So then, you know, 0:02:12.196 --> 0:02:13.716 we've been doing this for about a year and a 0:02:13.756 --> 0:02:16.676 half and our team gotten room. We said, well, you know, 0:02:16.716 --> 0:02:19.516 on the one hand, this is ten x progress. You know, 0:02:19.556 --> 0:02:22.756 we are making progress, but this number is still so 0:02:23.116 --> 0:02:26.316 short of what the field needs. And we came up 0:02:26.316 --> 0:02:28.116 with a bunch of ideas and we killed a bunch 0:02:28.116 --> 0:02:30.076 of ideas and one of the ideas that we couldn't 0:02:30.156 --> 0:02:33.276 kill was this concept of an advanced market commitment. That 0:02:33.396 --> 0:02:36.676 is ultimately what has since become Frontier, which is we've 0:02:36.716 --> 0:02:39.636 launched a now over one billion dollar advanced market commitment 0:02:39.716 --> 0:02:42.756 to buy permanent carbon removal between twenty twenty two and 0:02:42.796 --> 0:02:45.676 twenty thirty and there are still many more steps on 0:02:45.676 --> 0:02:47.676 the journey, but that's one of the big ones that 0:02:47.676 --> 0:02:48.796 we've been working on recently. 0:02:55.236 --> 0:02:57.476 I'm Jacob Goldstein and this is What's Your Problem, the 0:02:57.516 --> 0:02:59.356 show where I talk to people who are trying to 0:02:59.396 --> 0:03:02.636 make technological progress. In addition to being a head of 0:03:02.636 --> 0:03:06.116 Climate at Stripe, Nan Ransohoff is also head of Climate 0:03:06.156 --> 0:03:09.076 at Frontier. That's the organization she mentioned a minute ago. 0:03:09.756 --> 0:03:12.476 Frontier is a wholly owned subsidiary of Stripe, and it 0:03:12.596 --> 0:03:14.796 is the vehicle through which Stripe and a bunch of 0:03:14.876 --> 0:03:18.716 other companies have pledged to pay one billion dollars to 0:03:18.796 --> 0:03:22.556 have carbon permanently removed from the atmosphere. I wanted to 0:03:22.556 --> 0:03:25.556 talk to Nan for a couple reasons. One, her job 0:03:25.596 --> 0:03:28.116 gives her a great overview of what is going on 0:03:28.356 --> 0:03:32.996 in carbon removal as a field, and two, the specific 0:03:33.116 --> 0:03:37.076 mechanism that Frontier is using that advanced market commitment that 0:03:37.156 --> 0:03:42.756 Nan mentioned. Is this really powerful, relatively recent economic innovation. 0:03:43.196 --> 0:03:44.836 So what's an advanced market commitment? 0:03:44.996 --> 0:03:49.196 An advanced market commitment is basically a way to guarantee 0:03:49.396 --> 0:03:53.196 future demand for a product that you want to exist 0:03:53.476 --> 0:03:57.076 but that doesn't exist yet. And advanced market commitments are 0:03:57.276 --> 0:04:01.956 a basically a kind of way of collecting revenue and 0:04:01.996 --> 0:04:04.876 demonstrating that there is a market for a product. And 0:04:06.436 --> 0:04:11.036 we borrow this concept actually from the vaccine space. So 0:04:11.076 --> 0:04:15.036 the first AMC was started in the mid two thousands 0:04:15.036 --> 0:04:18.116 for the world wanted a new macco vaccine for low 0:04:18.116 --> 0:04:22.396 and middle income countries and because the end customers are 0:04:22.476 --> 0:04:26.316 from less wealthy countries, if pharma companies are not incented 0:04:26.476 --> 0:04:30.316 to actually develop that vaccine because the end demand is 0:04:30.596 --> 0:04:32.756 uncertain or small. 0:04:32.436 --> 0:04:35.516 Right, it's not going to be a profitable enterprise probably, Right. 0:04:35.516 --> 0:04:38.636 They're going to spend hundreds of millions of dollars a 0:04:38.636 --> 0:04:41.196 billion dollars to develop a vaccine and the price at 0:04:41.196 --> 0:04:44.036 which they could sell it is not enough to recoup 0:04:44.076 --> 0:04:47.196 their investment. And we should say I feel like the 0:04:47.276 --> 0:04:50.436 new macacco vaccine is underrated in part just because of 0:04:50.516 --> 0:04:52.836 the name. Like I think that you know, this is 0:04:52.876 --> 0:04:56.596 a terrible infection that killed huge numbers of children, and 0:04:56.996 --> 0:05:01.196 it was clearly vaccine preventable. And there was this frankly 0:05:01.276 --> 0:05:06.236 economic problem was the vaccine didn't exist, and how could 0:05:06.556 --> 0:05:10.036 people with money in the rich world create the incentive 0:05:10.036 --> 0:05:12.116 structure for it to be worth it for a private 0:05:12.196 --> 0:05:13.636 company to develop the vaccine? 0:05:13.716 --> 0:05:17.756 Very well said yes, And that is a generalizable concept 0:05:17.756 --> 0:05:20.956 of AMC's is that they're trying to there's a public 0:05:20.996 --> 0:05:24.476 good or something that is of real value, societal value 0:05:24.516 --> 0:05:27.596 that should happen, but there's an incentive problem that is 0:05:27.636 --> 0:05:31.156 preventing that from happening. And AMCs are one of a 0:05:31.236 --> 0:05:35.156 broader set of what economists would call market shaping tools 0:05:35.916 --> 0:05:39.036 that we can utilize to help fix those incentive problems 0:05:39.076 --> 0:05:42.396 and make it more likely that these public goods these 0:05:42.396 --> 0:05:47.516 societal goods actually exist and scale up to the numbers 0:05:47.556 --> 0:05:48.356 that we want them to. 0:05:48.636 --> 0:05:52.236 Well, And AMCs are a little bit like clever, subtle, 0:05:52.516 --> 0:05:56.196 non obvious, right, Like the more obvious thing is like, well, 0:05:56.236 --> 0:05:59.076 the government could just spend money to develop a vaccine, 0:05:59.196 --> 0:06:02.436 or even could just subsidize one vaccine maker to do 0:06:02.476 --> 0:06:06.396 the research it, but like why is an AMC better 0:06:06.636 --> 0:06:09.116 in some settings than those options. 0:06:09.556 --> 0:06:12.676 Yeah, it's a really good question. So when we think 0:06:12.716 --> 0:06:17.436 about the types of financial interventions here, we can think 0:06:17.436 --> 0:06:20.836 about them like push. People often talk about push mechanisms 0:06:20.876 --> 0:06:24.036 are like grant funding. You typically pay for folks to 0:06:25.156 --> 0:06:26.556 upfront for an input. 0:06:26.676 --> 0:06:29.116 An input in this case is research vaccine development. 0:06:29.196 --> 0:06:30.676 Yep, you're giving someone a grand. 0:06:30.476 --> 0:06:32.556 Here's a billion dollars go make the vaccine. 0:06:32.916 --> 0:06:35.196 Or you're giving somebody a grant to figure out if 0:06:35.196 --> 0:06:38.436 it's even possible, and you're giving them upfront before you 0:06:38.476 --> 0:06:42.756 get the end outcome. Pull funding are mechanisms that you're 0:06:43.196 --> 0:06:46.556 paying for something when it's delivered, you're paying. 0:06:46.356 --> 0:06:46.996 For the output. 0:06:47.116 --> 0:06:49.556 And a prize an is sort of an example of that. 0:06:49.596 --> 0:06:51.996 It's like a one time if somebody can develop this, 0:06:52.076 --> 0:06:53.196 we'll give you a prize. 0:06:53.596 --> 0:06:57.076 And there are famous examples of this. I think Longitude 0:06:57.116 --> 0:06:59.996 the British and was it the eighteenth century they needed 0:06:59.996 --> 0:07:02.116 to they needed a clock that worked on a ship 0:07:02.156 --> 0:07:06.276 that's basically right. Or the DARPA Prize for self driving 0:07:06.276 --> 0:07:08.516 cars right, which sort of kicked off the self driving 0:07:08.516 --> 0:07:09.076 car revolution. 0:07:09.756 --> 0:07:14.116 Prizes can be very effective mechanisms, and AMCs are not 0:07:14.236 --> 0:07:17.036 always a good fit for a problem. They tend to 0:07:17.076 --> 0:07:19.196 be a good fit for the problem when a couple 0:07:19.276 --> 0:07:21.796 of things are true. If you think about the thing 0:07:21.796 --> 0:07:24.076 you want to exist, and why the organizations are the 0:07:24.116 --> 0:07:26.796 people that could have invented and scaled those things aren't 0:07:26.796 --> 0:07:30.356 doing it. The problem in their mind is there's no 0:07:30.636 --> 0:07:36.076 end revenue for it. That's criteria one. Criteria two is 0:07:36.556 --> 0:07:38.636 that you can actually define the thing that you want 0:07:38.756 --> 0:07:42.436 to exist. So you can we, in this case, define 0:07:42.796 --> 0:07:46.236 the target product profile of the new macagual vaccine that 0:07:46.236 --> 0:07:48.716 we want, or in our case, can we outline the 0:07:48.756 --> 0:07:51.196 criteria for the kinds of carbon removal that we want 0:07:51.236 --> 0:07:55.436 to exist. And then a third criteria is essentially like, 0:07:55.636 --> 0:07:59.636 once the thing is actually invented, will market forces take 0:07:59.676 --> 0:08:03.996 over to actually make it scale on its own. So basically, 0:08:04.076 --> 0:08:06.436 if once a thing invented that is true, you should 0:08:06.436 --> 0:08:08.596 do a prize because you don't need a long term market. 0:08:08.636 --> 0:08:10.836 You're just trying to get the initial invention interesting. 0:08:10.876 --> 0:08:13.516 But in the case of you know, the new macaco vaccine, 0:08:13.556 --> 0:08:17.236 for example, you want the pharma companies to invent the solution, 0:08:17.316 --> 0:08:19.516 but you ultimately care about is that the people who 0:08:19.556 --> 0:08:22.916 needed are getting the vaccine. So in that case, the 0:08:23.156 --> 0:08:26.156 incentive design there is you're taking all of the R 0:08:26.196 --> 0:08:29.356 and D and development costs associated with that, but you 0:08:29.396 --> 0:08:32.676 are giving it back to the pharma companies by amortizing 0:08:32.676 --> 0:08:34.596 it over all of the doses. 0:08:34.876 --> 0:08:37.596 So, just to be clear, the advanced market commitment for 0:08:37.676 --> 0:08:40.316 the vaccine was not will give you the money when 0:08:40.316 --> 0:08:42.956 you invent the vaccine. It's will pay an extra couple 0:08:42.996 --> 0:08:46.356 bucks per vaccine delivered in the field in this part 0:08:46.396 --> 0:08:47.036 of the world exactly. 0:08:47.116 --> 0:08:50.076 And there are genuinely different ways. AMCs are a pretty 0:08:50.116 --> 0:08:53.116 broad term that you know, can encompass a lot of 0:08:53.116 --> 0:08:56.116 different sure mechanism designs. But you described that well, it's 0:08:56.156 --> 0:08:58.276 like you want to you're paying for the outcome of 0:08:58.356 --> 0:09:01.396 somebody actually getting the vaccine. 0:09:00.996 --> 0:09:03.876 The marginal use cast. Yeah, okay, By the way, are 0:09:03.876 --> 0:09:06.076 there more criteria or do we have the criteria now 0:09:06.116 --> 0:09:06.596 in place? 0:09:06.796 --> 0:09:09.956 Those are sort of rough criteria that and they're not perfect, 0:09:09.996 --> 0:09:12.676 but there's sort of rough criteria that will help you know. 0:09:12.956 --> 0:09:15.356 Are we even in pull funding territory and within pull 0:09:15.396 --> 0:09:18.956 funding should be considered an AMC versus a prize versus 0:09:18.956 --> 0:09:21.916 something else. Those are sort of loose guiding criteria. 0:09:21.876 --> 0:09:27.036 So now we have our framework, apply it to carbon removal. 0:09:27.316 --> 0:09:29.236 As you were thinking about it in twenty twenty one, 0:09:29.356 --> 0:09:31.676 twenty twenty two, why did it seem like a good 0:09:31.716 --> 0:09:33.516 fit for that problem at that time? 0:09:33.796 --> 0:09:37.476 Yeah, I mean, I think a fundamental problem with carbon removal. 0:09:37.516 --> 0:09:40.876 So carbon removal is, for all intents and purposes, it 0:09:40.916 --> 0:09:44.356 is a public good. Unlike with energy. You know, humans 0:09:44.516 --> 0:09:47.596 derive value from energy. That is, we get value from that. 0:09:47.716 --> 0:09:49.716 When you are secking CO two out of the atmosphere 0:09:49.756 --> 0:09:52.556 and storing it somewhere permanently. You know, there are small 0:09:52.596 --> 0:09:55.076 markets where people can benefit from them. You're using the 0:09:55.076 --> 0:09:57.956 CO twos, you know, an end product, But at the 0:09:57.996 --> 0:10:00.836 scale we're talking this is mostly a public good. And 0:10:00.916 --> 0:10:03.956 as a result, it is a very reasonable question for 0:10:05.356 --> 0:10:09.596 entrepreneurs and investors to basically ask, if I start company 0:10:09.636 --> 0:10:11.756 in this space, who's going to buy the end product 0:10:11.756 --> 0:10:14.836 that I am selling? It is fundamentally a open question 0:10:14.916 --> 0:10:17.076 about the market. And I would say it's even more 0:10:17.116 --> 0:10:19.556 of an open question if I'm building a really early 0:10:19.596 --> 0:10:22.196 stage technology that is expensive at the beginning, because there 0:10:22.196 --> 0:10:25.076 are now there's some voluntary market that exists, but that's 0:10:25.076 --> 0:10:27.636 a twenty dollars a ton, and if you're building, you know, 0:10:28.236 --> 0:10:31.276 a new technology at the beginning, your price is going 0:10:31.316 --> 0:10:34.876 to be high. And so that fundamentally that first criteria 0:10:34.996 --> 0:10:38.116 is extremely applicable to carbon removal because it is created 0:10:38.116 --> 0:10:40.116 as chicken and egg problem that we're trying to solve. 0:10:40.756 --> 0:10:43.516 You use the term public good, which people use in 0:10:43.556 --> 0:10:46.116 a kind of vernacular sense, but there's a technical economic 0:10:46.196 --> 0:10:48.516 sense in which you are using it and which applies here, 0:10:48.636 --> 0:10:52.036 right MLL. It's non rivalrous and non excludable, right, which 0:10:52.116 --> 0:10:56.116 means basically, even if only one person pays for it, 0:10:56.236 --> 0:10:59.756 everybody benefits, and you can't even exclude somebody from benefiting 0:10:59.836 --> 0:11:02.476 if you want to, that's right, right. A lighthouse is 0:11:02.516 --> 0:11:04.756 the classes, that's right. Right. It doesn't make sense for 0:11:04.796 --> 0:11:07.996 any one shipping company to pay for a lighthouse because 0:11:08.036 --> 0:11:10.476 all those other cheap assholes who didn't pay for the 0:11:10.516 --> 0:11:13.276 lighthouse are also not going to crash into the boxes, right. 0:11:13.716 --> 0:11:17.996 And it's a classic case of market failure for that reason, right, 0:11:18.036 --> 0:11:21.116 because the person paying for it only captures a tiny 0:11:21.396 --> 0:11:24.276 and in the case of carbon removal, truly tiny, tiny 0:11:24.356 --> 0:11:27.116 part of the benefit, and so no one's going to 0:11:27.156 --> 0:11:30.036 pay for it, except in like weird edge cases, well 0:11:30.116 --> 0:11:31.996 said like stripes one million. 0:11:31.796 --> 0:11:34.756 Dollars precisely, precisely. 0:11:34.396 --> 0:11:36.596 Yes, okay, so that's good. That's one. 0:11:36.716 --> 0:11:38.076 What else that's very important one? 0:11:38.116 --> 0:11:40.236 The second one is can we define the shape of 0:11:40.276 --> 0:11:43.316 the thing that we want to exist? And in our case, 0:11:44.076 --> 0:11:47.436 when we're thinking about carbon removal, we have a set 0:11:47.436 --> 0:11:51.716 of criteria that we are that sort of try to 0:11:51.876 --> 0:11:56.836 characterize the gap in solutions that exist that would essentially 0:11:56.916 --> 0:12:00.236 get the world to the ten gigatons plus career needed 0:12:00.236 --> 0:12:02.796 by twenty fifty. Okay, So the kinds of things that 0:12:02.836 --> 0:12:05.396 we care about on this list are things like does 0:12:05.436 --> 0:12:08.996 this technology have the potential to be under one hundred 0:12:08.996 --> 0:12:10.396 dollar in the future, And that is a you know, 0:12:10.476 --> 0:12:12.156 we can come back to the specifics, but does it 0:12:12.196 --> 0:12:14.196 have the potential to be cheap? Does it have the 0:12:14.196 --> 0:12:17.116 potential to be very huge? We're looking at solutions that 0:12:17.156 --> 0:12:18.756 have the potential to be more than half a gig 0:12:18.756 --> 0:12:21.036 aten per year in carbon removal. 0:12:21.236 --> 0:12:23.116 We also care a lot about permanence. 0:12:23.196 --> 0:12:26.836 So when you emit a ton of CO two into 0:12:26.876 --> 0:12:29.436 the atmosphere, that is permanently up there, and so we 0:12:29.516 --> 0:12:31.716 want to take it out permanently as well. And then 0:12:31.796 --> 0:12:34.396 you know, there's a whole host of other criteria that 0:12:34.396 --> 0:12:37.276 we care about. But when we sat down to do 0:12:37.316 --> 0:12:42.316 our initial million dollar spend for stripes that first blog post, 0:12:42.556 --> 0:12:45.116 we spend a lot of time thinking about, you know, 0:12:45.236 --> 0:12:47.796 how do we characterize the kinds of solutions that we 0:12:47.836 --> 0:12:51.116 want to exist? And an important part of that characterization 0:12:51.356 --> 0:12:55.356 is can we be specific enough that people understand what 0:12:55.396 --> 0:12:58.436 it is that we want, but can we be broad 0:12:58.556 --> 0:13:03.476 enough to invite a whole host of creative solutions to 0:13:03.596 --> 0:13:07.836 the starting line, Because this entire field is basically, you know, 0:13:08.316 --> 0:13:10.916 six years old. This started, you know, carbon removal. The 0:13:10.956 --> 0:13:13.356 starting gun for carbon removal was a twenty eighteen ACCC 0:13:13.516 --> 0:13:15.716 report and that was not very long ago. And so 0:13:16.396 --> 0:13:18.876 maybe it's direct air capture. Maybe it's enhance rock weathering, 0:13:18.916 --> 0:13:22.236 maybe it's ocean alkalinity enhancement. Maybe you know, there's all 0:13:22.276 --> 0:13:25.156 these different solutions. Let it's too early to pick a horse. 0:13:25.236 --> 0:13:27.076 Let's get a bunch of the best ideas to the 0:13:27.116 --> 0:13:30.036 starting line, see how they do, and then some of 0:13:30.076 --> 0:13:31.956 them won't work, but the ones that do, let's really 0:13:31.956 --> 0:13:34.356 double down. So that's a long wooded way of saying 0:13:34.556 --> 0:13:37.596 we were trying to define that this target criteria in 0:13:37.636 --> 0:13:40.916 a way that sort of balanced the specificity needed to 0:13:40.956 --> 0:13:44.636 guarantee this for suppliers, but also was broad enough to 0:13:45.116 --> 0:13:48.316 invite the innovation that we think is necessary. 0:13:48.716 --> 0:13:50.956 Yeah. I mean, well that's the market force part, right, 0:13:50.956 --> 0:13:53.236 That's why it's a poll. If it's too specific, then 0:13:53.316 --> 0:13:56.676 it's like, well, just give a grant to one company. 0:13:56.716 --> 0:13:58.676 But that's what you're trying to avoid, right, You're trying 0:13:58.676 --> 0:14:02.356 to avoid picking a winner, precisely. Is there one more criterion? 0:14:02.436 --> 0:14:05.356 And there's one more criteria, which is essentially, once the 0:14:05.396 --> 0:14:08.756 thing is invented, if you have the recipe for the thing, 0:14:09.236 --> 0:14:11.036 our market force is going to scale it up on 0:14:11.076 --> 0:14:14.636 its own. And in the case of carbon removal, somebody 0:14:14.636 --> 0:14:17.196 could come up with the best possible solution and the 0:14:17.356 --> 0:14:20.676 long term market for this isn't quite there yet. 0:14:21.116 --> 0:14:24.876 It's the public good problem again, exactly. So yes, So 0:14:24.916 --> 0:14:28.236 it's yes, yes, and yes to your three criteria for 0:14:28.476 --> 0:14:29.556 advanced market commitment. 0:14:29.836 --> 0:14:32.036 Yes, And I will say that, like, there's a few 0:14:32.036 --> 0:14:35.316 differences in this in the frontier AMC and the initial 0:14:35.956 --> 0:14:39.276 AMC for New maccacle. I think one of the things 0:14:39.356 --> 0:14:42.756 that is challenging in carbon removal is that lack of 0:14:42.796 --> 0:14:45.836 long term market. So like frontiers a billion dollars, it's 0:14:45.836 --> 0:14:48.116 going to run out eventually, so we're sort of building 0:14:48.116 --> 0:14:49.916 the plane while we're flying it. We have to make 0:14:49.956 --> 0:14:54.556 sure that once these initial funds are out, that long 0:14:54.676 --> 0:14:55.996 term market does exist. 0:14:56.076 --> 0:14:57.956 So we can talk about what that looks like. 0:14:58.116 --> 0:15:00.476 But I think that you know, in the case of 0:15:00.476 --> 0:15:03.116 the new Maccacle vaccine for low middle income countries, there 0:15:03.196 --> 0:15:06.276 was a point at which it made sense financial sense 0:15:06.356 --> 0:15:09.436 once for pharma companies to continue to st reading the 0:15:09.516 --> 0:15:12.596 vaccine on their own. In our case, you know, that 0:15:12.916 --> 0:15:14.916 is only true if we can also put a sort 0:15:14.916 --> 0:15:16.316 of semi state market in place. 0:15:16.316 --> 0:15:19.356 If that makes sense, Yeah, I mean is it? Because 0:15:19.916 --> 0:15:22.476 for the for the vaccine, most of the cost is 0:15:22.556 --> 0:15:25.676 upfront exactly, and in fact there is marginal benefit for 0:15:25.796 --> 0:15:28.436 people who can pay a very small amount or for 0:15:28.476 --> 0:15:30.596 countries that can pay a very small amount, so there 0:15:30.716 --> 0:15:33.636 is once the vaccine companies have recouped the R and 0:15:33.716 --> 0:15:36.876 D cost, the marginal cost actually works in a market 0:15:36.916 --> 0:15:40.676 based way, which will never be true for a carbon 0:15:40.716 --> 0:15:44.276 capture because it's a public good, that's right. So I 0:15:44.316 --> 0:15:47.156 was thinking, we get to this later. But whatever fundamentally, 0:15:47.996 --> 0:15:51.996 there is a policy problem that somebody has to solve 0:15:52.196 --> 0:15:55.596 before too long, because this isn't going to work forever, 0:15:55.676 --> 0:16:00.036 you wrote, without government action. Frontier is building a bridge 0:16:00.076 --> 0:16:00.596 to nowhere. 0:16:00.876 --> 0:16:05.436 Yes, these private sector of voluntary commitments are a great 0:16:05.436 --> 0:16:07.676 way to help this field get to first base, but 0:16:07.756 --> 0:16:09.636 they are not going to get us all way there. 0:16:09.716 --> 0:16:12.196 So you know, if we if we zoom all the 0:16:12.236 --> 0:16:15.636 way out and think about to quick demand mouth, how 0:16:15.676 --> 0:16:17.756 big does this market need to be in for how long? 0:16:18.276 --> 0:16:20.836 So carbon removal roughly needs to scale to and this 0:16:20.956 --> 0:16:25.236 is rough numbers ten billion tons per year by twenty fifty. 0:16:25.756 --> 0:16:28.796 And if we say that, you know, for example, we 0:16:28.836 --> 0:16:30.196 think we can do it at one hundred. 0:16:29.916 --> 0:16:30.556 Dollars a time. 0:16:30.996 --> 0:16:35.036 Okay, that is a trillion dollars per year okay, in 0:16:35.756 --> 0:16:37.956 demand that is needed. And of course if we end 0:16:38.036 --> 0:16:39.996 up needing less carbon removal, that numbers goes down, and 0:16:40.076 --> 0:16:41.676 if we can do it for cheaper, that numbers go down. 0:16:41.796 --> 0:16:44.156 But just back of the envelope, it's a trillion dollars 0:16:44.196 --> 0:16:46.556 a year, which is a big number. Right. 0:16:46.556 --> 0:16:48.436 Global GDP is about one hundred trillion. 0:16:48.236 --> 0:16:51.196 Dollars, So one percent of global GDP is a tremendous, 0:16:51.596 --> 0:16:55.116 a tremendously large number that it is dauntingly large. 0:16:55.156 --> 0:16:56.676 In fact, it's dauntingly large. 0:16:56.796 --> 0:16:59.156 Can you get another order of magnitude out of the price? 0:16:59.276 --> 0:17:00.916 It's the first question I have for you. 0:17:01.236 --> 0:17:03.476 So I think that that is why it really matters 0:17:03.516 --> 0:17:06.796 that we are so hunting for a solution that can 0:17:06.876 --> 0:17:09.916 be much cheaper, because you know, being able to get 0:17:09.956 --> 0:17:12.756 down to seventy or fifty or thirty dollars a ton 0:17:12.956 --> 0:17:15.516 does make a really big difference. Yeah, I would call 0:17:15.596 --> 0:17:18.356 out though that like, is half a percent or a 0:17:18.396 --> 0:17:20.316 percent of global GDP a lot? I mean, of course 0:17:20.356 --> 0:17:23.196 the answer is in one sense yes, But of course 0:17:23.516 --> 0:17:25.196 as a current moment a tough. 0:17:25.036 --> 0:17:28.196 Time to be getting countries to coordinate on global public goods. 0:17:28.236 --> 0:17:31.636 But it's not totally out of the realm of possibility, 0:17:31.796 --> 0:17:36.156 especially if and as the world gets richer that percentage 0:17:36.156 --> 0:17:36.636 goes down. 0:17:37.196 --> 0:17:39.676 Well, So, okay, fine, we're saying all these numbers. It's 0:17:39.716 --> 0:17:41.276 a lot of money, but what does it mean in 0:17:41.356 --> 0:17:44.716 terms of policy? Right, it's fundamentally a public good. Public 0:17:44.756 --> 0:17:47.996 goods we know the most basic economic way are not 0:17:48.116 --> 0:17:51.116 provided by the market, So like, what do governments have 0:17:51.156 --> 0:17:54.356 to do to sort of take the baton from Frontier. 0:17:54.996 --> 0:18:01.636 I think that probably in practice, the collection of policies 0:18:01.676 --> 0:18:05.516 that get to these hundreds of billions of dollars per 0:18:05.596 --> 0:18:10.076 year ends up looking like a patchwork quilt of demand policies. 0:18:10.116 --> 0:18:12.836 I think it is unlikely that there is sort of 0:18:13.076 --> 0:18:15.556 one thing that ultimately gets us there. 0:18:15.596 --> 0:18:16.996 We can talk about what the shape of. 0:18:16.956 --> 0:18:19.156 Those things could look like, but at a high level 0:18:19.196 --> 0:18:21.156 you can kind of imagine a couple of different worlds. 0:18:21.476 --> 0:18:25.196 One world is that governments treat carbon removal like sanitation, 0:18:25.756 --> 0:18:27.796 and they say, you know, going to We're going to 0:18:27.996 --> 0:18:31.716 do this clean up on behalf of our citizens, and 0:18:31.956 --> 0:18:33.796 we're going to coordinate with other countries to do that. 0:18:34.036 --> 0:18:36.036 We could put that in the kind of category of 0:18:36.116 --> 0:18:39.076 like direct government procurement. Governments are the ones that are 0:18:39.076 --> 0:18:43.556 doing it themselves. There's another worldview, which is that governments 0:18:43.596 --> 0:18:48.476 are essentially trying to quantify the negative externality of a 0:18:48.516 --> 0:18:52.156 ton of emissions and then push that onto the players 0:18:52.156 --> 0:18:54.396 that are emitting, private companies. 0:18:54.476 --> 0:18:57.796 Some kind of carbon tax. Basically that is funding carbon removal. 0:18:58.036 --> 0:19:00.556 Yes about the other thing, Yes, the dream, the dream. 0:19:00.636 --> 0:19:03.076 Let's dream about a carbon tax for one moment, because 0:19:03.076 --> 0:19:03.756 it makes so much. 0:19:03.596 --> 0:19:05.396 Sense, and they are different, and there are different sort 0:19:05.396 --> 0:19:07.556 of ways of implementing that that I think are sort 0:19:07.556 --> 0:19:11.476 of further or closer to a traditional carbon taxing. So 0:19:11.876 --> 0:19:14.596 that's a long winded way of saying there are a 0:19:14.636 --> 0:19:17.596 whole host of bets I think that the world needs 0:19:17.596 --> 0:19:19.956 to make, and some of them will pan out and 0:19:19.996 --> 0:19:22.116 some of them won't. But it is very important to 0:19:22.276 --> 0:19:24.796 start planning those seeds now so that the market is 0:19:24.796 --> 0:19:26.396 where it needs to be when it needs to be there. 0:19:30.196 --> 0:19:43.796 We'll be back in just a bit. Let's go back 0:19:43.796 --> 0:19:47.596 to the recent past. So you have this idea for 0:19:47.756 --> 0:19:51.796 big advanced market commitment for carbon capture and removal. 0:19:53.076 --> 0:19:56.356 What do you do you know at the time AMC's there, 0:19:56.716 --> 0:19:59.076 there only really been sort of one or one and 0:19:59.076 --> 0:20:00.796 a half AMC's and they were all in the context 0:20:00.796 --> 0:20:04.036 of health. So is this Initially mccaggo vaccine AMC GAVY 0:20:04.156 --> 0:20:06.996 and then Operation Warp Speed incorporated some components of this 0:20:07.396 --> 0:20:08.716 as well, for to. 0:20:08.676 --> 0:20:13.676 Develop the coronavirus fix to great success, to great success, underrated, 0:20:14.156 --> 0:20:17.116 so underrated operation like nobody wants to own it politically, 0:20:17.156 --> 0:20:20.156 which is so sad. Like it was great, it worked, 0:20:20.236 --> 0:20:21.036 it was amazing. 0:20:21.156 --> 0:20:21.836 It was amazing. 0:20:22.116 --> 0:20:26.396 So what is Frontier at launch in twenty twenty two. 0:20:26.876 --> 0:20:28.836 What we wanted to do with Frontier, the spirit of 0:20:28.836 --> 0:20:31.516 what we wanted to do was say, there is a 0:20:31.516 --> 0:20:34.236 big market for carbon removal and what does that mean? 0:20:34.276 --> 0:20:37.556 A big market? A billion dollars. 0:20:37.236 --> 0:20:40.156