1 00:00:00,240 --> 00:00:04,040 Speaker 1: Welcome to Zero. I am Ukha Trati this week kickstarting 2 00:00:04,120 --> 00:00:05,000 Speaker 1: carbon removal. 3 00:00:18,040 --> 00:00:20,320 Speaker 2: Actually, when I started at zero, one of the first 4 00:00:20,320 --> 00:00:24,520 Speaker 2: things that I remember having no idea about was carbon removal, 5 00:00:25,680 --> 00:00:28,520 Speaker 2: because in my mind it seemed to be this very futuristic, 6 00:00:28,960 --> 00:00:33,519 Speaker 2: far fetched, kind of fever dream of a technology and 7 00:00:33,560 --> 00:00:36,720 Speaker 2: maybe even a way to avoid thinking about very hard, 8 00:00:36,760 --> 00:00:41,199 Speaker 2: real questions about how to actually reduce emissions in the 9 00:00:41,240 --> 00:00:41,880 Speaker 2: first place. 10 00:00:42,920 --> 00:00:46,480 Speaker 1: I mightily I can see why you think it's sci fi, 11 00:00:46,520 --> 00:00:50,239 Speaker 1: because it's like undoing climate change, and you know that 12 00:00:50,320 --> 00:00:54,000 Speaker 1: seems like a big thing. Honestly, I don't think carbon 13 00:00:54,080 --> 00:00:57,200 Speaker 1: removal is that sci fi. At the end of the day, 14 00:00:57,600 --> 00:01:00,920 Speaker 1: it's carbon dioxide, a gas that we have studied for 15 00:01:01,000 --> 00:01:06,000 Speaker 1: hundreds of years, that the industry has captured for decades. 16 00:01:06,680 --> 00:01:09,640 Speaker 1: I became a climate journalist writing about a technology called 17 00:01:09,640 --> 00:01:13,040 Speaker 1: carbon capture that does exactly that. It takes CO two 18 00:01:13,480 --> 00:01:18,640 Speaker 1: from smokestacks and compresses it and puts it deep underground. 19 00:01:19,080 --> 00:01:21,959 Speaker 2: But if it's so simple, why are we not already harnessing. 20 00:01:21,480 --> 00:01:26,280 Speaker 1: This Because it's really expensive, And it's expensive because you 21 00:01:26,360 --> 00:01:30,640 Speaker 1: have to think about carbon removal differently from carbon capture 22 00:01:30,840 --> 00:01:33,880 Speaker 1: in a smokestack. There's about ten percent of all gases 23 00:01:33,920 --> 00:01:37,800 Speaker 1: is carbon dioxide. So say one red minem in ten 24 00:01:38,160 --> 00:01:42,479 Speaker 1: blue minems, but in the atmosphere it's at four hundred 25 00:01:42,480 --> 00:01:46,720 Speaker 1: parts per million, which is roughly four red minems in 26 00:01:46,880 --> 00:01:51,160 Speaker 1: ten thousand blue minms. Separating just those four out of 27 00:01:51,160 --> 00:01:54,640 Speaker 1: that mixture of ten thousand blue is a very energy 28 00:01:54,680 --> 00:01:58,280 Speaker 1: intensive and thus expensive process. 29 00:01:58,560 --> 00:02:01,680 Speaker 2: Is that also why some of the solutions when people 30 00:02:01,680 --> 00:02:06,680 Speaker 2: talk about carbon removal seem so creative. 31 00:02:07,800 --> 00:02:10,600 Speaker 1: Yeah, now that this has been worked on for a 32 00:02:10,600 --> 00:02:14,080 Speaker 1: few years, they're all kinds of crazy ideas from things 33 00:02:14,120 --> 00:02:18,320 Speaker 1: that are sophisticated, like big fans that push air over 34 00:02:18,960 --> 00:02:23,760 Speaker 1: very expensive chemicals to capture carbon dioxide, to people who 35 00:02:23,840 --> 00:02:27,920 Speaker 1: are taking agricultural waste and shrink wrapping it in plastic 36 00:02:28,000 --> 00:02:29,400 Speaker 1: and then burying it underground. 37 00:02:30,200 --> 00:02:31,640 Speaker 2: Great, who's going to pay for it? 38 00:02:32,040 --> 00:02:35,760 Speaker 1: That's what today's episode is about. I speak with Nan Ransohoff, 39 00:02:35,840 --> 00:02:38,600 Speaker 1: who is the head of climate at Stripe. 40 00:02:39,520 --> 00:02:42,280 Speaker 2: Wait, but Stripe is a payments company. 41 00:02:42,639 --> 00:02:46,520 Speaker 1: Yes, you know, they have these machines that people take 42 00:02:46,560 --> 00:02:49,720 Speaker 1: payments with. So at the end of book events I've done, 43 00:02:49,919 --> 00:02:53,399 Speaker 1: there've been booksellers with this white box that takes a payment. 44 00:02:53,200 --> 00:02:54,600 Speaker 2: The little box that goes beep. 45 00:02:54,720 --> 00:02:57,280 Speaker 1: I mean all payments go beep. 46 00:02:57,680 --> 00:03:00,920 Speaker 2: Okay, but how do the makers of a box that 47 00:03:00,960 --> 00:03:03,840 Speaker 2: goes beep get involved in carbon removal? Yeah? 48 00:03:03,840 --> 00:03:07,400 Speaker 1: That's what is weird about the carbon removal industry. It 49 00:03:07,480 --> 00:03:10,600 Speaker 1: did not get started with government support, which is the 50 00:03:10,639 --> 00:03:14,200 Speaker 1: story of all other climate technologies. Patrick Collison, one of 51 00:03:14,200 --> 00:03:17,720 Speaker 1: the founders of Stripe, read a report from the Intergovernmental 52 00:03:17,760 --> 00:03:21,640 Speaker 1: Panel on Climate Change and thought, well, scientists are saying 53 00:03:21,800 --> 00:03:25,160 Speaker 1: we need carbon removal, and there is no company doing 54 00:03:25,200 --> 00:03:28,480 Speaker 1: carbon removal, So how about refund it? 55 00:03:28,760 --> 00:03:30,960 Speaker 2: And that's what Nan is working on now at Stripe, 56 00:03:31,160 --> 00:03:33,160 Speaker 2: and we will get into that conversation. 57 00:03:33,720 --> 00:03:36,120 Speaker 1: But before we do that, don't we want to tell 58 00:03:36,240 --> 00:03:37,360 Speaker 1: listeners about a new thing? 59 00:03:38,080 --> 00:03:39,600 Speaker 2: Do we have to tell them? Can we just do it? 60 00:03:40,360 --> 00:03:43,880 Speaker 1: I don't like surprises, so okay, let me tell them. 61 00:03:44,440 --> 00:03:47,560 Speaker 1: From this episode on, you'll hear a new sound at 62 00:03:47,560 --> 00:03:50,040 Speaker 1: the end of the episode, and it's going to be 63 00:03:50,640 --> 00:03:51,920 Speaker 1: something energy related. 64 00:03:53,000 --> 00:03:54,840 Speaker 2: I've been thinking of it, kind of like the novelty 65 00:03:54,920 --> 00:03:57,960 Speaker 2: card in a brand of snacks. My kids like Yo 66 00:03:58,040 --> 00:04:01,680 Speaker 2: Yo bears a little souvenir car that has a factoid 67 00:04:02,080 --> 00:04:05,000 Speaker 2: that they enjoy with their snack. So listen to the 68 00:04:05,080 --> 00:04:08,160 Speaker 2: end of each episode to hear a new sound that 69 00:04:08,320 --> 00:04:10,480 Speaker 2: is in some way connected to energy. 70 00:04:10,760 --> 00:04:13,880 Speaker 1: That's right, a little energy factorid butt in sound. 71 00:04:14,400 --> 00:04:16,240 Speaker 2: But first, here's Nan Ransohoff. 72 00:04:31,440 --> 00:04:32,159 Speaker 1: Welcome to the show. 73 00:04:32,240 --> 00:04:33,880 Speaker 3: Nan, thanks for having me. 74 00:04:34,440 --> 00:04:37,679 Speaker 1: Now let's start with a little bit of history, because 75 00:04:38,520 --> 00:04:42,799 Speaker 1: if you pick almost any climate technology, from solar to batteries, 76 00:04:42,960 --> 00:04:46,080 Speaker 1: you'll find that governments have been crucial to creating a 77 00:04:46,120 --> 00:04:50,040 Speaker 1: market for those technologies. It's not just about supporting the 78 00:04:50,080 --> 00:04:54,479 Speaker 1: science that leads to the invention, but also creating the 79 00:04:54,640 --> 00:04:59,479 Speaker 1: market through subsidies, through mandates for deployment at the very 80 00:04:59,520 --> 00:05:04,320 Speaker 1: early st age, which eventually leads to wider adoption. Market 81 00:05:04,320 --> 00:05:08,520 Speaker 1: players coming in, governments going out. You've been working on 82 00:05:08,560 --> 00:05:14,080 Speaker 1: a climate technology, carbon removal, which in ways direct or 83 00:05:14,480 --> 00:05:20,240 Speaker 1: indirect draws carbon duc set down from the atmosphere, but 84 00:05:20,480 --> 00:05:25,960 Speaker 1: it got its commercial footing despite the involvement of governments. 85 00:05:27,120 --> 00:05:29,680 Speaker 1: So the work you've done for Stripe is what kick 86 00:05:29,720 --> 00:05:30,679 Speaker 1: started it, right. 87 00:05:31,240 --> 00:05:33,640 Speaker 3: The work we've done for Stripe helped kickstart the market. 88 00:05:33,640 --> 00:05:36,599 Speaker 3: We're not the only players in this space, but that 89 00:05:36,880 --> 00:05:37,800 Speaker 3: certainly was the intention. 90 00:05:38,839 --> 00:05:42,960 Speaker 1: And what were the major steps that you took at 91 00:05:42,960 --> 00:05:46,920 Speaker 1: Stripe that now we can call this thing a carbon 92 00:05:47,000 --> 00:05:47,960 Speaker 1: removal market. 93 00:05:48,400 --> 00:05:52,520 Speaker 3: You're highlighting really the fundamental challenge that has faced carbon 94 00:05:52,600 --> 00:05:56,400 Speaker 3: removal until rather recently when the twenty eighteen ie PCC 95 00:05:56,520 --> 00:05:59,440 Speaker 3: report came out. One of the big takeaways is that 96 00:05:59,480 --> 00:06:02,000 Speaker 3: we are, in addition to a huge amount of emissions reduction, 97 00:06:02,040 --> 00:06:04,160 Speaker 3: are also going to need a lot of carbon removal. 98 00:06:04,560 --> 00:06:07,600 Speaker 3: And the challenge with carbon removal has historically been, you know, 99 00:06:07,720 --> 00:06:11,599 Speaker 3: because humans don't derive value from it like we do 100 00:06:11,720 --> 00:06:15,200 Speaker 3: with something like energy, there have been no natural customers 101 00:06:15,240 --> 00:06:18,159 Speaker 3: for it, and as a result of that, you have 102 00:06:18,320 --> 00:06:21,720 Speaker 3: this chicken and egg problem where entrepreneurs don't want to 103 00:06:21,720 --> 00:06:24,400 Speaker 3: start a company in the carbon removal space. Investors don't 104 00:06:24,440 --> 00:06:28,320 Speaker 3: want to invest in carbon removal if there's uncertainty about 105 00:06:28,320 --> 00:06:31,159 Speaker 3: whether there is really going to be revenue for those 106 00:06:31,160 --> 00:06:35,279 Speaker 3: companies and demand for those products. So our work at 107 00:06:35,440 --> 00:06:39,000 Speaker 3: Strape began in twenty nineteen with what was ultimately a 108 00:06:39,000 --> 00:06:43,120 Speaker 3: pretty modest carbon removal commitment. It was one million dollars 109 00:06:43,160 --> 00:06:46,520 Speaker 3: to buy permanent carbon removal at any available price. And 110 00:06:46,560 --> 00:06:49,120 Speaker 3: the idea here was really to say, okay, we're not 111 00:06:49,160 --> 00:06:51,080 Speaker 3: going to look for the cheapest technologies. We're going to 112 00:06:51,080 --> 00:06:53,400 Speaker 3: look for technologies that have the potential to be low 113 00:06:53,480 --> 00:06:55,760 Speaker 3: cost and high volume in the future. I'll also mention 114 00:06:55,880 --> 00:06:58,520 Speaker 3: that you know, the world had and has some of 115 00:06:58,560 --> 00:07:02,200 Speaker 3: the technologies needed to do carbon removal at this five 116 00:07:02,320 --> 00:07:06,200 Speaker 3: gigaton per year scale. The challenge is one those solutions 117 00:07:06,240 --> 00:07:10,600 Speaker 3: are often not permanent, and two, they take up a 118 00:07:10,640 --> 00:07:12,560 Speaker 3: lot of arable land, which the world needs to do 119 00:07:12,600 --> 00:07:14,760 Speaker 3: other things. So there's this big gap in solutions that 120 00:07:14,800 --> 00:07:17,920 Speaker 3: exist today that haven't. The idea with this million dollars 121 00:07:18,000 --> 00:07:21,200 Speaker 3: was how do we provide initial demand signal that there's 122 00:07:21,200 --> 00:07:23,360 Speaker 3: going to be at least a million dollars in customers. 123 00:07:23,760 --> 00:07:27,200 Speaker 3: When we made that announcement, two things happened. The first 124 00:07:27,440 --> 00:07:31,480 Speaker 3: was the carbon removal community almost had a weirdly positive reaction, 125 00:07:31,600 --> 00:07:33,520 Speaker 3: which to us just said that this field has been 126 00:07:33,560 --> 00:07:36,400 Speaker 3: starved for customers such that anybody cared about the initial 127 00:07:36,400 --> 00:07:38,400 Speaker 3: million dollars. And the second thing that happened was we 128 00:07:38,440 --> 00:07:41,040 Speaker 3: got a lot of outreach from Stripe users who said, hey, 129 00:07:41,200 --> 00:07:43,160 Speaker 3: we've wanted to do something in climate for a while, 130 00:07:43,200 --> 00:07:44,960 Speaker 3: but we haven't because it's hard to figure out what 131 00:07:45,040 --> 00:07:46,720 Speaker 3: to do. Could we send you some money and you 132 00:07:46,760 --> 00:07:48,680 Speaker 3: figure out what to do with it. That led to 133 00:07:48,720 --> 00:07:50,239 Speaker 3: phase two, right, which. 134 00:07:51,120 --> 00:07:54,200 Speaker 1: That Stripe in this case, because it's a payments company, 135 00:07:54,360 --> 00:07:57,880 Speaker 1: has people who are using the Stripe product to take 136 00:07:58,080 --> 00:08:02,160 Speaker 1: customers money, obviously for themselves, but then Stripe gets a cut. 137 00:08:02,320 --> 00:08:05,800 Speaker 1: So there was an automatic way in which if these 138 00:08:05,880 --> 00:08:10,240 Speaker 1: customers wanted to contribute to carbon removal to Stripes goal, 139 00:08:10,640 --> 00:08:13,160 Speaker 1: they could just do it through the Stripe system itself. 140 00:08:13,680 --> 00:08:16,800 Speaker 3: Exactly. Stripe has you know, works with millions of businesses 141 00:08:16,840 --> 00:08:20,040 Speaker 3: all over the world. Many of these are SaaS, businesses 142 00:08:20,200 --> 00:08:23,080 Speaker 3: with decent margins, and many of them want to do 143 00:08:23,160 --> 00:08:26,920 Speaker 3: something for climate but haven't. And because Stripe has you know, 144 00:08:26,960 --> 00:08:30,920 Speaker 3: such broad distribution, if we can offer this product to 145 00:08:31,960 --> 00:08:35,000 Speaker 3: Stripe businesses and give them the option to direct a 146 00:08:35,040 --> 00:08:37,520 Speaker 3: fraction of their revenue to carbon removal, we can potentially 147 00:08:37,559 --> 00:08:41,600 Speaker 3: actually pull much more demand for carbon removal, aggregate that 148 00:08:41,720 --> 00:08:44,120 Speaker 3: and then use it to buy even more carbon removal 149 00:08:44,120 --> 00:08:45,400 Speaker 3: down the costcript and right. 150 00:08:45,480 --> 00:08:49,440 Speaker 1: So that's so Phase one is when Stripe put some 151 00:08:49,520 --> 00:08:52,400 Speaker 1: million dollars and buys whatever is available in the market 152 00:08:52,640 --> 00:08:55,960 Speaker 1: exactly regardless of price. Phase two. 153 00:08:57,120 --> 00:09:00,800 Speaker 3: Phase two is Stripe Climate and it's that software product 154 00:09:00,880 --> 00:09:04,960 Speaker 3: that now tens of thousands of Stripe businesses have opted into, 155 00:09:05,080 --> 00:09:07,760 Speaker 3: and I was surprised initially. You know, most of them 156 00:09:07,760 --> 00:09:11,720 Speaker 3: are giving one percent of their revenue to carbon removal, 157 00:09:11,880 --> 00:09:16,520 Speaker 3: which is pretty meaningful commitment. And then we Stripe have 158 00:09:16,760 --> 00:09:20,400 Speaker 3: had historically aggregated those funds and then use that to 159 00:09:20,440 --> 00:09:24,000 Speaker 3: pool with our own corporate funds to buy more carbon removal. 160 00:09:24,000 --> 00:09:26,200 Speaker 3: So that got us from a million to call it 161 00:09:26,320 --> 00:09:29,760 Speaker 3: tens of millions of dollars. By the end of twenty 162 00:09:29,800 --> 00:09:33,320 Speaker 3: twenty one, the entire field of carbon removal had roughly 163 00:09:33,360 --> 00:09:38,120 Speaker 3: spent about thirty million dollars cumulative buying permanent carbon removal, 164 00:09:38,120 --> 00:09:41,200 Speaker 3: which is sort of crazy that that was the total number. 165 00:09:41,400 --> 00:09:43,160 Speaker 3: So in that sense, you know, a million and tens 166 00:09:43,200 --> 00:09:46,000 Speaker 3: of millions starts to feel big, even though it's actually 167 00:09:46,040 --> 00:09:46,600 Speaker 3: quite small. 168 00:09:46,640 --> 00:09:50,560 Speaker 1: And so by that time Stripe is making majority of 169 00:09:50,600 --> 00:09:54,040 Speaker 1: the investments through businesses, but through your own corporate. 170 00:09:53,679 --> 00:09:59,040 Speaker 3: Giving exactly, we're a significant portion of the purchases. Shopify 171 00:09:59,160 --> 00:10:01,960 Speaker 3: was also really early in this as well, but it 172 00:10:02,000 --> 00:10:04,120 Speaker 3: was a small number of companies that were really thinking 173 00:10:04,160 --> 00:10:07,040 Speaker 3: about how do we help create the demand the market 174 00:10:07,200 --> 00:10:09,240 Speaker 3: for carbon removal technologies? 175 00:10:10,920 --> 00:10:13,839 Speaker 1: And then that still was not enough, because then you 176 00:10:13,920 --> 00:10:17,360 Speaker 1: went on to step three and now Stripe manages a 177 00:10:17,400 --> 00:10:20,480 Speaker 1: billion dollar fund that has commitments from many other big 178 00:10:20,520 --> 00:10:26,480 Speaker 1: companies like Alphabet, Meta McKinsey. Is the idea that once 179 00:10:26,520 --> 00:10:29,760 Speaker 1: you've done it at the tens of millions, you realized 180 00:10:29,800 --> 00:10:33,480 Speaker 1: all you just needed to do was multiply that manifold, 181 00:10:33,960 --> 00:10:36,880 Speaker 1: and carbon removal as a market would take off. 182 00:10:38,440 --> 00:10:41,800 Speaker 3: We really thought about it from almost a top down 183 00:10:41,840 --> 00:10:44,360 Speaker 3: perspective of what does it look like to get carbon 184 00:10:44,400 --> 00:10:47,839 Speaker 3: removal on its best possible trajectory. And you can think 185 00:10:47,880 --> 00:10:50,559 Speaker 3: about this both in terms of supply. How many tons 186 00:10:50,920 --> 00:10:53,720 Speaker 3: do scientists say that we are going to need, and 187 00:10:53,760 --> 00:10:56,600 Speaker 3: then what is the implied demand that that is going 188 00:10:56,640 --> 00:11:00,240 Speaker 3: to require. So if you just contextualize this, and of 189 00:11:00,240 --> 00:11:04,160 Speaker 3: course these numbers are estimates, but roughly by twenty fifty, 190 00:11:04,280 --> 00:11:07,360 Speaker 3: if the world needs about five billion tons per year 191 00:11:07,640 --> 00:11:10,880 Speaker 3: of carbon removal as part of the broader net zero strategy, 192 00:11:11,360 --> 00:11:13,400 Speaker 3: and say that we get carbon removal to one hundred 193 00:11:13,400 --> 00:11:17,160 Speaker 3: dollars a ton, that's five hundred billion dollars per year 194 00:11:17,360 --> 00:11:20,559 Speaker 3: in demand. If you then pull that back and look 195 00:11:20,600 --> 00:11:22,920 Speaker 3: at what has to be true in twenty thirty at 196 00:11:23,000 --> 00:11:26,319 Speaker 3: fifty to one hundred million tons within the year of 197 00:11:26,320 --> 00:11:28,480 Speaker 3: twenty thirty. At call it two hundred dollars a ton. 198 00:11:28,600 --> 00:11:32,839 Speaker 3: That is a twenty billion dollar need for demand in 199 00:11:33,440 --> 00:11:36,320 Speaker 3: twenty thirty. So you know, a billion dollars is a 200 00:11:36,360 --> 00:11:38,360 Speaker 3: good step in the right direction. It is, on the 201 00:11:38,400 --> 00:11:41,760 Speaker 3: one hand, a big number compared to the thirty million 202 00:11:41,800 --> 00:11:43,520 Speaker 3: dollars that had been spent to day, but on the 203 00:11:43,559 --> 00:11:47,199 Speaker 3: other hand, it's still sort of falls very short of 204 00:11:47,720 --> 00:11:50,000 Speaker 3: what the world actually needs. So we had tens of 205 00:11:50,000 --> 00:11:52,800 Speaker 3: millions of dollars in the context of stripe climate, and 206 00:11:52,880 --> 00:11:55,480 Speaker 3: as we've discussed, this market really still needs to grow 207 00:11:55,840 --> 00:11:58,480 Speaker 3: extremely quickly much beyond that. So we came up with 208 00:11:58,480 --> 00:12:00,000 Speaker 3: a bunch of ideas. We killed a bunch of idea 209 00:12:00,280 --> 00:12:01,959 Speaker 3: and one of the ideas that we couldn't kill was 210 00:12:02,000 --> 00:12:05,640 Speaker 3: this concept of an advanced market commitment, and in twenty 211 00:12:05,679 --> 00:12:09,559 Speaker 3: twenty two, this is what we launched with Frontier. AMCs 212 00:12:09,600 --> 00:12:14,199 Speaker 3: are a way to signal to potential suppliers and entrepreneurs 213 00:12:14,320 --> 00:12:16,800 Speaker 3: and investors that there is going to be a market 214 00:12:16,800 --> 00:12:19,440 Speaker 3: for the product that they are developing. We borrow this 215 00:12:19,520 --> 00:12:22,720 Speaker 3: concept from vaccine development in the mid two thousands and 216 00:12:22,880 --> 00:12:27,800 Speaker 3: ultimately launched with nine hundred and twenty five million dollars 217 00:12:27,840 --> 00:12:32,800 Speaker 3: from Stripe. Stripe Climate users shopify Alphabet, McKinsey, et cetera 218 00:12:33,400 --> 00:12:35,560 Speaker 3: in order to send that signal. And so, you know, 219 00:12:35,600 --> 00:12:37,560 Speaker 3: for the past few years, our work has really been 220 00:12:37,600 --> 00:12:41,120 Speaker 3: focused on both how do we spend those dollars as 221 00:12:41,240 --> 00:12:44,319 Speaker 3: catalytically as possible, as well as how do we continue 222 00:12:44,360 --> 00:12:47,360 Speaker 3: to grow the market for carbon removal and continue to 223 00:12:47,360 --> 00:12:48,520 Speaker 3: build frontier. 224 00:12:48,800 --> 00:12:51,760 Speaker 1: And it's worth looking at the technology because the og 225 00:12:51,920 --> 00:12:55,760 Speaker 1: technology for carbon removal is really trees. But trees have 226 00:12:55,800 --> 00:12:59,360 Speaker 1: a problem because you know, you can put trees, but 227 00:12:59,440 --> 00:13:01,520 Speaker 1: putting the wrong trees in the wrong place can be 228 00:13:01,679 --> 00:13:06,080 Speaker 1: actually bad for the climate. And trees are not permanent. 229 00:13:06,160 --> 00:13:08,040 Speaker 1: You know, some trees, yes, they can live up to 230 00:13:08,120 --> 00:13:11,920 Speaker 1: a thousand years, but most trees really don't. And now, 231 00:13:11,960 --> 00:13:15,439 Speaker 1: with increased wildfires all around the world, there's a big 232 00:13:15,559 --> 00:13:19,000 Speaker 1: risk of forests going up in flames, and then the 233 00:13:19,040 --> 00:13:22,319 Speaker 1: carbon removal so to speak, has gone up in flames. 234 00:13:22,800 --> 00:13:27,000 Speaker 1: So the reason you've been looking at technology approaches is 235 00:13:27,040 --> 00:13:33,000 Speaker 1: that there are advantages to turning mostly clean energy into 236 00:13:33,040 --> 00:13:37,160 Speaker 1: a carbon removal solution. So if you take the broad 237 00:13:37,360 --> 00:13:41,800 Speaker 1: Church of different carbon removal technologies, how would you class them? 238 00:13:41,920 --> 00:13:44,640 Speaker 3: So, I think that I think it's worth mentioning that 239 00:13:44,800 --> 00:13:47,960 Speaker 3: trees are an important part of the climate portfolio. There's 240 00:13:47,960 --> 00:13:52,120 Speaker 3: many benefits to nature based solutions beyond just carbon removal. 241 00:13:52,440 --> 00:13:55,400 Speaker 3: The challenge is, as you said, they're not permanent, they 242 00:13:55,440 --> 00:13:57,959 Speaker 3: can burn down, and also that they know we can 243 00:13:58,000 --> 00:14:00,640 Speaker 3: only plant so many of them. Volumes that we have 244 00:14:00,679 --> 00:14:03,600 Speaker 3: to get to with carbon removal are just so so huge. 245 00:14:03,640 --> 00:14:06,599 Speaker 3: So we're looking for solutions that can fill out the 246 00:14:06,679 --> 00:14:10,320 Speaker 3: entirety of the portfolio. We don't love the classification of 247 00:14:10,400 --> 00:14:13,880 Speaker 3: nature based versus not nature based, because in many cases 248 00:14:14,000 --> 00:14:17,560 Speaker 3: we're looking at quote unquote technologies that are harnessing the 249 00:14:17,559 --> 00:14:20,400 Speaker 3: best of what nature already does for free, but trying 250 00:14:20,480 --> 00:14:22,800 Speaker 3: to mitigate some of its downsides. I'll give you a 251 00:14:22,800 --> 00:14:27,960 Speaker 3: couple examples here. Charm Industrial takes waste biomass. So, as 252 00:14:28,000 --> 00:14:30,320 Speaker 3: you said, trees already do the work of the capture 253 00:14:30,320 --> 00:14:35,280 Speaker 3: through photosynthesis, and what CHARM does is piralize that waste biomass. 254 00:14:35,280 --> 00:14:38,320 Speaker 3: It heats it up, turns it into biooil, which is 255 00:14:38,640 --> 00:14:41,640 Speaker 3: carbon rich, and then it can inject that back underground 256 00:14:41,680 --> 00:14:44,520 Speaker 3: for permanent storage. It is not taking up arable land, 257 00:14:45,000 --> 00:14:47,680 Speaker 3: and it is also making it permanent, and we call 258 00:14:47,760 --> 00:14:51,000 Speaker 3: that in the category of biomass carbon removal and storage. 259 00:14:51,000 --> 00:14:54,320 Speaker 3: People abbreviate that and call it bikers. There's another pathway 260 00:14:54,400 --> 00:14:57,680 Speaker 3: called enhanced rock weathering. And most of the world's carbon 261 00:14:57,760 --> 00:15:00,720 Speaker 3: is actually stored in the lithosphere in rocks, just takes 262 00:15:00,720 --> 00:15:03,440 Speaker 3: a really long time to get there. So this category 263 00:15:03,520 --> 00:15:07,840 Speaker 3: of approaches called enhanced rock weathering essentially takes rocks, and 264 00:15:08,440 --> 00:15:11,280 Speaker 3: rocks typically they will absorb carbon proportional to their surface 265 00:15:11,320 --> 00:15:14,040 Speaker 3: area and water and temperature exposure. So you're taking rocks, 266 00:15:14,040 --> 00:15:16,960 Speaker 3: you're grinding them up, or the world's grinding them up somehow, 267 00:15:17,120 --> 00:15:19,600 Speaker 3: and they absorb CO two ultimately and of and you know, 268 00:15:19,640 --> 00:15:22,520 Speaker 3: as bicarbonate in the ocean. But it's essentially accelerating the 269 00:15:22,560 --> 00:15:25,760 Speaker 3: process that rocks already do naturally on their own. And 270 00:15:25,840 --> 00:15:27,880 Speaker 3: then you know, of course, you have direct air capture, 271 00:15:27,920 --> 00:15:31,080 Speaker 3: which is the most photogenic amongst many of these solutions 272 00:15:31,080 --> 00:15:33,520 Speaker 3: that look like these giant boxes that suck CO two in, 273 00:15:33,960 --> 00:15:36,520 Speaker 3: find the particles of CO two, compress them, and then 274 00:15:36,520 --> 00:15:40,440 Speaker 3: inject them underground for permanent storage. Increasingly, there are also 275 00:15:40,480 --> 00:15:44,040 Speaker 3: a number of solutions within ocean so ocean alkalinity enhancement, 276 00:15:44,640 --> 00:15:48,440 Speaker 3: direct ocean capture. And I think the sort of interesting 277 00:15:48,480 --> 00:15:51,600 Speaker 3: thing about all of this from a supply standpoint is 278 00:15:51,960 --> 00:15:55,920 Speaker 3: that most of these approaches have gotten started in the 279 00:15:56,000 --> 00:15:58,640 Speaker 3: last few years. I think we're still quite early in 280 00:15:58,680 --> 00:16:01,680 Speaker 3: shaking the tree for really promising ideas and trying to 281 00:16:01,720 --> 00:16:03,920 Speaker 3: do what we can to get them to the starting line, 282 00:16:04,160 --> 00:16:05,600 Speaker 3: and then do what we can to help the most 283 00:16:05,600 --> 00:16:06,720 Speaker 3: promising ones scale up. 284 00:16:07,000 --> 00:16:09,720 Speaker 1: Well, you can tell your carbon removal NORD when you 285 00:16:09,760 --> 00:16:15,240 Speaker 1: say direct air capture plants are photogetic, because anybody driving 286 00:16:15,280 --> 00:16:17,680 Speaker 1: past a direct air capture plant is going to think, 287 00:16:17,720 --> 00:16:19,680 Speaker 1: what are these boxes of fans doing? 288 00:16:20,200 --> 00:16:23,600 Speaker 3: That is a fair a fair critique. 289 00:16:23,920 --> 00:16:28,160 Speaker 1: So in doing this there are now by one count 290 00:16:28,600 --> 00:16:33,080 Speaker 1: eight hundred carbon removal startups. The way I've been looking 291 00:16:33,080 --> 00:16:36,120 Speaker 1: at those technologies has been a little bit simpler than 292 00:16:36,320 --> 00:16:40,960 Speaker 1: the broad classification and smart classification that you made, and 293 00:16:41,040 --> 00:16:45,000 Speaker 1: to me, it's been basically the dumber the idea, the 294 00:16:45,040 --> 00:16:47,720 Speaker 1: better it is. Because the dumber the idea, the cheaper 295 00:16:47,760 --> 00:16:50,880 Speaker 1: it is to capture carbon and get rid of it. 296 00:16:51,760 --> 00:16:54,240 Speaker 1: I think I don't know if it's the dumbest idea. 297 00:16:54,240 --> 00:16:56,800 Speaker 1: But one of the dumb ideas that exists right now 298 00:16:56,920 --> 00:16:59,720 Speaker 1: is a company called Graphite, And all it does is 299 00:16:59,760 --> 00:17:03,560 Speaker 1: it shrink crafts bio waste and then buries it underground 300 00:17:03,840 --> 00:17:07,520 Speaker 1: and hopefully that works. But it is a real company, 301 00:17:07,560 --> 00:17:12,639 Speaker 1: funded by real people in the millions of dollars. Now, 302 00:17:13,359 --> 00:17:16,720 Speaker 1: that's all fun. It's good to have ideas out there. 303 00:17:16,960 --> 00:17:19,920 Speaker 1: We do need carbon removal as a solution to try 304 00:17:19,960 --> 00:17:24,880 Speaker 1: and tackle the climate problem. But have you been too 305 00:17:24,920 --> 00:17:29,159 Speaker 1: successful in seeding that many startups? You know? 306 00:17:30,040 --> 00:17:33,280 Speaker 3: I think that this is not in some sense dissimilar 307 00:17:33,359 --> 00:17:39,200 Speaker 3: to the startup ecosystem. More broadly, when a market appears, 308 00:17:39,200 --> 00:17:42,960 Speaker 3: when there is a market for a new technology or 309 00:17:43,000 --> 00:17:48,119 Speaker 3: a new product, there are usually many more companies that 310 00:17:48,200 --> 00:17:51,399 Speaker 3: get started then end up scaling or successful. So I 311 00:17:51,480 --> 00:17:53,840 Speaker 3: think a bit of what we're seeing here, you know, 312 00:17:53,880 --> 00:17:57,520 Speaker 3: can be pretty easily contextualized in the context of sort 313 00:17:57,560 --> 00:18:00,959 Speaker 3: of startup ecosystem dynamics. More broad Do I think eight 314 00:18:01,080 --> 00:18:04,080 Speaker 3: hundred companies are likely to scale? No? Do I think 315 00:18:04,119 --> 00:18:07,520 Speaker 3: eight hundred companies and anyone specific space or more product 316 00:18:07,520 --> 00:18:08,719 Speaker 3: area is likely to scale. 317 00:18:08,720 --> 00:18:08,800 Speaker 1: No. 318 00:18:09,080 --> 00:18:13,040 Speaker 3: I think there's an element of healthy ecosystems that is 319 00:18:13,080 --> 00:18:15,959 Speaker 3: sort of represented here in my opinion. 320 00:18:18,600 --> 00:18:21,000 Speaker 1: After the break, we take a closer look at one 321 00:18:21,040 --> 00:18:25,119 Speaker 1: of the carbon removal startups called Running Tide that went bust. 322 00:18:25,880 --> 00:18:28,359 Speaker 1: By the way, if you've been enjoying this episode, please 323 00:18:28,400 --> 00:18:30,199 Speaker 1: take a moment to rate and review the show on 324 00:18:30,240 --> 00:18:34,239 Speaker 1: Apple Podcasts or Spotify. It helps other listeners find it. 325 00:18:44,160 --> 00:18:48,440 Speaker 1: So let's talk through one failure, the failure of Running Tide, 326 00:18:48,600 --> 00:18:53,040 Speaker 1: which raised about fifty million dollars and just recently went bankrupt. 327 00:18:54,080 --> 00:18:57,679 Speaker 1: Tell us about Running Tide and how do you analyze 328 00:18:57,760 --> 00:19:01,520 Speaker 1: its failure in the context of of the carbon removal 329 00:19:01,720 --> 00:19:02,800 Speaker 1: stotup ecosystem. 330 00:19:03,720 --> 00:19:06,639 Speaker 3: Yeah, I mean Running Tide was doing kelp sicking, so 331 00:19:06,680 --> 00:19:09,399 Speaker 3: they were growing. Initially, they were growing kelp in the 332 00:19:09,440 --> 00:19:12,679 Speaker 3: open ocean, and then once that kelp was mature, it 333 00:19:12,680 --> 00:19:15,040 Speaker 3: would sink to the bottom of the ocean. It sort 334 00:19:15,040 --> 00:19:18,359 Speaker 3: of gets stored quote unquote on the perverbial desert floor 335 00:19:18,440 --> 00:19:19,080 Speaker 3: of the ocean. 336 00:19:19,119 --> 00:19:22,720 Speaker 1: And kelp forests are fascinating. I mean, if you've never 337 00:19:22,720 --> 00:19:25,920 Speaker 1: seen the calp forest, which I've not actually been inside one, 338 00:19:25,960 --> 00:19:29,440 Speaker 1: but I've seen footage of it, they are just basically 339 00:19:29,600 --> 00:19:30,840 Speaker 1: underwater forests. 340 00:19:30,880 --> 00:19:34,320 Speaker 3: It's amazing though the difference with Running Tide was that 341 00:19:34,359 --> 00:19:37,080 Speaker 3: they weren't growing the kelp from the floor up. They 342 00:19:37,080 --> 00:19:39,280 Speaker 3: were growing it from the top down. So they were 343 00:19:39,280 --> 00:19:42,679 Speaker 3: having almost like picture, you know, booize with kelp hanging 344 00:19:42,720 --> 00:19:45,639 Speaker 3: from the bottom, and then once the kelp matured, because 345 00:19:45,640 --> 00:19:48,400 Speaker 3: it is negatively buoyant, it would sink to the bottom 346 00:19:48,400 --> 00:19:50,840 Speaker 3: and get stored sort of on the quote unquote desert 347 00:19:50,840 --> 00:19:53,440 Speaker 3: floor below the thermal client, which is really really far down. 348 00:19:54,280 --> 00:19:58,399 Speaker 3: And so we Stripe bought six hundred tons from Running 349 00:19:58,440 --> 00:20:02,080 Speaker 3: Tide back in twenty twenty one. This was before Frontier launched, 350 00:20:02,520 --> 00:20:05,119 Speaker 3: and this was part of We now have two tracks 351 00:20:05,119 --> 00:20:07,919 Speaker 3: for companies. A pre purchase track for really early stage 352 00:20:07,960 --> 00:20:10,240 Speaker 3: companies that are just getting started. These are five hundred 353 00:20:10,280 --> 00:20:13,800 Speaker 3: thousand dollars commitments where we are buying tons, often at 354 00:20:13,880 --> 00:20:16,680 Speaker 3: very high prices, and whether or not the company delivers, 355 00:20:16,960 --> 00:20:19,439 Speaker 3: we don't take the money back. That's okay, sort of 356 00:20:19,480 --> 00:20:22,720 Speaker 3: the cost of doing business for early stage companies. We 357 00:20:22,800 --> 00:20:25,440 Speaker 3: now also have a off take track, which is for 358 00:20:25,800 --> 00:20:28,320 Speaker 3: tens of millions of dollars, and these are contracts that 359 00:20:28,440 --> 00:20:30,520 Speaker 3: essentially are a legally binding agreement to pay for a 360 00:20:30,520 --> 00:20:33,040 Speaker 3: certain number of tons at a certain price, and they 361 00:20:33,040 --> 00:20:34,800 Speaker 3: are pay on delivery, so we as a buyer are 362 00:20:34,840 --> 00:20:37,240 Speaker 3: not on the hook to pay unless the company actually delivers. 363 00:20:37,760 --> 00:20:40,520 Speaker 3: Running Tide fell into the first category in the context 364 00:20:40,560 --> 00:20:42,520 Speaker 3: of stripe, so it was a one hundred and fifty 365 00:20:42,520 --> 00:20:45,399 Speaker 3: thousand dollars for six hundred tons, and then also an 366 00:20:45,480 --> 00:20:47,560 Speaker 3: R and D grant was part of that five hundred 367 00:20:47,600 --> 00:20:50,679 Speaker 3: thousand tons because Running Tide was really early. So I 368 00:20:50,680 --> 00:20:54,679 Speaker 3: guess from our perspective this again is you know, billing 369 00:20:54,720 --> 00:20:57,679 Speaker 3: companies is hard. Building curb and removal companies is really hard. 370 00:20:58,080 --> 00:21:00,520 Speaker 3: And we expect more of this to happen in the 371 00:21:00,560 --> 00:21:02,760 Speaker 3: coming months and years as well. And I think that 372 00:21:02,760 --> 00:21:04,840 Speaker 3: that's just a sign of what an early EGOSYSM looks like. 373 00:21:04,960 --> 00:21:08,720 Speaker 1: Yeah, and this happens in industry after industry. There were 374 00:21:08,880 --> 00:21:12,359 Speaker 1: by one count eleven hundred auto companies in the US 375 00:21:12,480 --> 00:21:14,960 Speaker 1: in the early twentieth century, and of course now you 376 00:21:15,040 --> 00:21:16,120 Speaker 1: have three giant ones. 377 00:21:16,240 --> 00:21:17,200 Speaker 3: That's a great example. 378 00:21:17,760 --> 00:21:21,760 Speaker 1: There were at one point four hundred and fifty electric 379 00:21:22,119 --> 00:21:25,159 Speaker 1: vehicle companies in China. There are now a few dozen, 380 00:21:26,000 --> 00:21:28,320 Speaker 1: and so the fact that they're eight hundred carbon removal 381 00:21:28,359 --> 00:21:30,720 Speaker 1: companies and many of them are not going to survive. 382 00:21:31,280 --> 00:21:37,680 Speaker 1: Isn't a surprise, but it is a different kind of market. 383 00:21:37,840 --> 00:21:42,160 Speaker 1: In the case of electric cars or even gasoline cars, 384 00:21:42,280 --> 00:21:46,960 Speaker 1: or solar or batteries, it's a commodity that people eventually 385 00:21:47,000 --> 00:21:51,199 Speaker 1: wanted because it made their life better in some form, 386 00:21:51,600 --> 00:21:55,400 Speaker 1: and that's not the case with carbon removal. Carbon removal 387 00:21:55,440 --> 00:22:00,320 Speaker 1: isn't something that people want. It is something that society needs. 388 00:22:00,640 --> 00:22:01,520 Speaker 3: It's a public good. 389 00:22:01,600 --> 00:22:03,760 Speaker 1: It is a public good, and that means the only 390 00:22:03,800 --> 00:22:08,359 Speaker 1: way to really have a huge, scaled up market for 391 00:22:08,480 --> 00:22:13,200 Speaker 1: it is if governments mandate the purchase of carbon removal 392 00:22:13,280 --> 00:22:16,880 Speaker 1: in some form, either through government purchase directly or through 393 00:22:16,920 --> 00:22:20,520 Speaker 1: corporates being required to buy these tons. 394 00:22:21,000 --> 00:22:23,320 Speaker 3: You're absolutely right, and I think it's really important to 395 00:22:23,480 --> 00:22:26,560 Speaker 3: sort of pull the demand thread that you're getting at here. 396 00:22:26,720 --> 00:22:29,119 Speaker 3: This has always been the challenge in carbon removal has 397 00:22:29,160 --> 00:22:31,959 Speaker 3: been the lack of demand and the lack of natural 398 00:22:32,000 --> 00:22:36,920 Speaker 3: customers and the DOO. We launched a procurement program. Canada 399 00:22:36,960 --> 00:22:41,840 Speaker 3: and Denmark have launched procurement programs. Government involvement and policy 400 00:22:41,840 --> 00:22:45,119 Speaker 3: intervention and compliance markets of some sort are going to 401 00:22:45,160 --> 00:22:48,280 Speaker 3: be critical there. It is very unlikely that the voluntary 402 00:22:48,320 --> 00:22:51,800 Speaker 3: markets by themselves are going to get anywhere close to 403 00:22:51,840 --> 00:22:56,040 Speaker 3: the numbers required. We often talk about the need for 404 00:22:56,160 --> 00:22:59,560 Speaker 3: a portfolio approach on the supply side, but we also 405 00:22:59,640 --> 00:23:03,000 Speaker 3: need a portfolio approach on the demand side as well. 406 00:23:03,320 --> 00:23:07,720 Speaker 3: These are different countries. Each country has different political contexts. 407 00:23:07,760 --> 00:23:10,320 Speaker 3: In the US we like to pass everything through tax credits. 408 00:23:10,880 --> 00:23:13,520 Speaker 3: US tends to be more carot Europe tends to be 409 00:23:13,600 --> 00:23:17,440 Speaker 3: more stick. There are you know, there's pay for practice, 410 00:23:17,480 --> 00:23:20,520 Speaker 3: there are pay for tons. There are potentially policies that 411 00:23:20,920 --> 00:23:25,520 Speaker 3: are technology neutral and policies that are technology specific, Like 412 00:23:25,600 --> 00:23:28,480 Speaker 3: what is the relationship between agriculture and enhanced weathering? There's 413 00:23:28,480 --> 00:23:31,600 Speaker 3: some sort of a happy marriage there. But the point 414 00:23:31,640 --> 00:23:33,840 Speaker 3: is that probably what the world is going to look 415 00:23:33,920 --> 00:23:37,040 Speaker 3: like on the demand side is a patchwork quilt of 416 00:23:37,160 --> 00:23:40,399 Speaker 3: different kinds of policies in different places, And if we 417 00:23:40,480 --> 00:23:43,200 Speaker 3: want those to scale to that twenty billion a year 418 00:23:43,200 --> 00:23:45,720 Speaker 3: and twenty thirty, we have to start planting more of 419 00:23:45,760 --> 00:23:46,200 Speaker 3: those now. 420 00:23:47,520 --> 00:23:50,160 Speaker 1: It's worth recognizing that as much as carbon normal will 421 00:23:50,280 --> 00:23:54,119 Speaker 1: maybe needed by twenty fifty at five billion tons per 422 00:23:54,280 --> 00:23:58,960 Speaker 1: year scale, the vast majority of the work between now 423 00:23:59,000 --> 00:24:02,320 Speaker 1: and twenty fifty actually reducing the emissions that we are 424 00:24:02,320 --> 00:24:05,320 Speaker 1: putting out, and that's going to be through technologies that 425 00:24:05,440 --> 00:24:07,879 Speaker 1: avoid the consumption of fossil fuelds in the first place, 426 00:24:08,359 --> 00:24:11,000 Speaker 1: or some of it may come from technologies that capture 427 00:24:11,000 --> 00:24:14,440 Speaker 1: the emissions of fossil fuels being burned before they even 428 00:24:14,600 --> 00:24:17,000 Speaker 1: enter the atmosphere, so carbon capture at point source, as 429 00:24:17,040 --> 00:24:23,560 Speaker 1: it's called. There has been a different market, which at 430 00:24:23,560 --> 00:24:25,719 Speaker 1: one point was the only real market that we were 431 00:24:25,800 --> 00:24:30,159 Speaker 1: talking about when it came to what corporations were voluntarily doing, 432 00:24:30,400 --> 00:24:33,680 Speaker 1: and that's the carbon offset market. Now I'm just going 433 00:24:33,720 --> 00:24:37,480 Speaker 1: to categorize that market as a market that is trying 434 00:24:37,520 --> 00:24:40,440 Speaker 1: to avoid emissions in the first place, because ninety five 435 00:24:40,480 --> 00:24:42,399 Speaker 1: percent of the credits that are being sold on that 436 00:24:42,440 --> 00:24:46,440 Speaker 1: market are about avoiding emissions, and mostly that's done through 437 00:24:47,760 --> 00:24:50,160 Speaker 1: trying to protect forests, which is a good thing needs 438 00:24:50,200 --> 00:24:54,359 Speaker 1: to be done. But we at Bloomberg Green have looked 439 00:24:54,359 --> 00:24:56,879 Speaker 1: at that market and have found a huge number of 440 00:24:56,880 --> 00:25:01,320 Speaker 1: flaws even in the morally right, science backed idea of 441 00:25:01,320 --> 00:25:04,600 Speaker 1: trying to protect forests. The ways in which the counting 442 00:25:04,680 --> 00:25:07,560 Speaker 1: of protection of forests has been done and offset credits 443 00:25:07,560 --> 00:25:10,640 Speaker 1: have been created and then sold to companies, there are 444 00:25:10,760 --> 00:25:14,879 Speaker 1: a number of frauds that have happened. That market is 445 00:25:14,920 --> 00:25:19,360 Speaker 1: still around. It has grown and then shrunk, but there 446 00:25:19,400 --> 00:25:22,000 Speaker 1: are a huge number of actors who want to have 447 00:25:22,320 --> 00:25:26,040 Speaker 1: the carbon offset market as it exists, become better and 448 00:25:26,119 --> 00:25:30,040 Speaker 1: become bigger. How do you see that playing out with 449 00:25:30,119 --> 00:25:33,560 Speaker 1: the carbon removal market, which is a lot more expensive 450 00:25:33,640 --> 00:25:38,479 Speaker 1: but has much more verified carbon removal as a result 451 00:25:38,520 --> 00:25:42,360 Speaker 1: of the way it's being approached, compete on the demand 452 00:25:42,440 --> 00:25:48,160 Speaker 1: side for what companies purchase, because currently that demand could 453 00:25:48,200 --> 00:25:51,959 Speaker 1: be met either through carbon offsets that are avoiding emissions 454 00:25:52,080 --> 00:25:54,240 Speaker 1: or through carbon removal, which are a lot more expensive 455 00:25:54,520 --> 00:25:56,200 Speaker 1: but count for real tons. 456 00:25:57,000 --> 00:26:01,280 Speaker 3: You know, I don't exactly know how the voluntary markets 457 00:26:01,320 --> 00:26:04,240 Speaker 3: are going to play out at scale. I think in 458 00:26:04,280 --> 00:26:08,919 Speaker 3: practice right now they're quite different, primarily because of the 459 00:26:08,920 --> 00:26:12,080 Speaker 3: price point. So the offsets that you're mentioning are usually 460 00:26:12,080 --> 00:26:15,119 Speaker 3: in the tens of dollars. The weighted average cost for 461 00:26:15,200 --> 00:26:18,440 Speaker 3: frontier is in the mid hundreds of dollars, And so 462 00:26:18,640 --> 00:26:21,320 Speaker 3: the buyers that are considering carbon revle tend to be 463 00:26:21,760 --> 00:26:25,160 Speaker 3: a sort of very small subset of the broader set 464 00:26:25,200 --> 00:26:27,959 Speaker 3: of organizations that are engaged in the voluntary market overall. 465 00:26:28,119 --> 00:26:30,879 Speaker 1: Yeah, and we can just say these are organizations that 466 00:26:31,080 --> 00:26:35,560 Speaker 1: are typically tech companies that have huge profits, and our 467 00:26:35,600 --> 00:26:37,639 Speaker 1: tech companies that understand the science and want to do 468 00:26:37,680 --> 00:26:40,879 Speaker 1: the right thing. Yeah, the companies that are buying the 469 00:26:40,920 --> 00:26:42,960 Speaker 1: cheap offsets, many of them have been doing it for 470 00:26:42,960 --> 00:26:46,280 Speaker 1: a lot longer, but also haven't really taught through the 471 00:26:46,320 --> 00:26:49,280 Speaker 1: science as much. And after they've been called out, some 472 00:26:49,359 --> 00:26:53,960 Speaker 1: of them have stopped. Others still continue because carbon accounting 473 00:26:54,040 --> 00:26:55,280 Speaker 1: rules allow them to. 474 00:26:56,160 --> 00:26:56,800 Speaker 2: I think that. 475 00:26:59,000 --> 00:27:02,600 Speaker 3: The biggest challenge from a buyer standpoint in the voluntary 476 00:27:02,640 --> 00:27:07,159 Speaker 3: markets right now is that there aren't really mechanisms that 477 00:27:07,280 --> 00:27:12,680 Speaker 3: reward early buyers for paying higher prices for early stage 478 00:27:12,720 --> 00:27:16,919 Speaker 3: carbon removal companies, and as a result, the total market 479 00:27:17,119 --> 00:27:21,080 Speaker 3: for these early stage carbon removal technologies has just been 480 00:27:21,080 --> 00:27:21,760 Speaker 3: really small. 481 00:27:22,040 --> 00:27:24,840 Speaker 1: But are you heading for a fight here? Right the 482 00:27:24,880 --> 00:27:28,760 Speaker 1: carbon removal market which currently exists, there's some compliance coming 483 00:27:28,800 --> 00:27:31,640 Speaker 1: through by government purchaes, but it's quite a small amount. 484 00:27:31,800 --> 00:27:33,840 Speaker 1: And then you have the carbon offset market, which is 485 00:27:33,880 --> 00:27:36,879 Speaker 1: also voluntary at about a billion dollar scale, so you 486 00:27:36,920 --> 00:27:41,600 Speaker 1: know roughly the similar size, if not same size. Are 487 00:27:41,640 --> 00:27:45,520 Speaker 1: you in competition with that market? Because both markets want 488 00:27:45,520 --> 00:27:48,320 Speaker 1: to grow and there is only so much demand for 489 00:27:50,040 --> 00:27:52,080 Speaker 1: carbon from companies. 490 00:27:53,320 --> 00:27:56,080 Speaker 3: Again, I think in practice, like because the price points 491 00:27:56,119 --> 00:27:58,439 Speaker 3: are so different, it does tend to be a different 492 00:27:58,480 --> 00:28:02,040 Speaker 3: set of like buyer on either side. But the main 493 00:28:02,119 --> 00:28:05,200 Speaker 3: point that I think is worth highlighting is like, sure, 494 00:28:05,240 --> 00:28:07,719 Speaker 3: we can compete with each other over a billion dollars 495 00:28:07,760 --> 00:28:09,879 Speaker 3: here and there, but the end of the day, this 496 00:28:09,960 --> 00:28:12,160 Speaker 3: has to get so much bigger that I think most 497 00:28:12,160 --> 00:28:15,680 Speaker 3: of the conversation really should be focused around market growth 498 00:28:15,760 --> 00:28:16,840 Speaker 3: versus market capture. 499 00:28:16,840 --> 00:28:19,959 Speaker 1: Here when I first started thinking about carbon removal, and 500 00:28:20,240 --> 00:28:22,320 Speaker 1: I've had a chance to talk to lots and lots 501 00:28:22,359 --> 00:28:26,919 Speaker 1: of expert in this area, one conclusion that can be 502 00:28:27,000 --> 00:28:31,440 Speaker 1: drawn from this is kind of stunning. Right, if there 503 00:28:31,600 --> 00:28:36,600 Speaker 1: is ae hundred dollars a ton carbon removal credit available, 504 00:28:37,480 --> 00:28:41,680 Speaker 1: that is actually a pretty cheap price point to try 505 00:28:41,760 --> 00:28:47,520 Speaker 1: and avoid emissions or capture emissions that have been emitted, which, 506 00:28:47,800 --> 00:28:51,680 Speaker 1: if it is true and available at scale, could stop 507 00:28:51,760 --> 00:28:57,960 Speaker 1: us from deploying other solutions that may be much more expensive, 508 00:28:59,600 --> 00:29:04,440 Speaker 1: such as green hydrogen, say, which if you count dollar 509 00:29:04,520 --> 00:29:08,840 Speaker 1: for dollars based on the tons avoided, is actually quite expensive. 510 00:29:09,120 --> 00:29:11,280 Speaker 1: Even solar in its initial days was you know, a 511 00:29:11,400 --> 00:29:14,360 Speaker 1: thousand dollars a ton of carbon avoided. Yes, it's become 512 00:29:14,400 --> 00:29:18,960 Speaker 1: cheaper since then, but there is a real advantage in 513 00:29:19,000 --> 00:29:22,239 Speaker 1: carbon removal that it could set a price cap on 514 00:29:22,400 --> 00:29:26,640 Speaker 1: what a solution to tackle climate change needs to cost, 515 00:29:26,680 --> 00:29:31,280 Speaker 1: because carbon removal is the most expensive option and it 516 00:29:31,320 --> 00:29:33,719 Speaker 1: is only at one hundred dollars a ton, but that 517 00:29:33,760 --> 00:29:37,400 Speaker 1: could risk a bunch of other solutions never scaling. Have 518 00:29:37,480 --> 00:29:38,400 Speaker 1: you thought about that. 519 00:29:38,680 --> 00:29:41,880 Speaker 3: I think when people talk about this sort of the 520 00:29:42,600 --> 00:29:46,840 Speaker 3: marginal abatement cost curve, it is assumes this world that 521 00:29:46,960 --> 00:29:50,160 Speaker 3: you know, everybody is making perfectly rational decisions based on 522 00:29:50,760 --> 00:29:53,440 Speaker 3: the price of a specific ton, and that's just, you know, 523 00:29:53,600 --> 00:29:55,640 Speaker 3: as I've observed, it not really how the world works. 524 00:29:55,760 --> 00:29:59,120 Speaker 3: And there's also other ways to intervene that are not 525 00:29:59,320 --> 00:30:03,320 Speaker 3: just around price. So like governments can make requirements around 526 00:30:03,760 --> 00:30:08,400 Speaker 3: how much emissions reduction has to happen before companies attempt 527 00:30:08,440 --> 00:30:12,960 Speaker 3: to carbon removal. They could put in place specific rules 528 00:30:12,960 --> 00:30:16,400 Speaker 3: for specific technologies and evs or with hydrogen, et cetera. 529 00:30:16,520 --> 00:30:19,480 Speaker 3: So I think there are ways to solve that problem 530 00:30:19,600 --> 00:30:23,080 Speaker 3: outside of just assuming that there's this perfectly liquid market 531 00:30:23,160 --> 00:30:25,880 Speaker 3: for tons, and maybe we should do that. But the 532 00:30:25,920 --> 00:30:28,280 Speaker 3: point is that you know, right now the big area 533 00:30:28,320 --> 00:30:30,480 Speaker 3: of focus is how do we make sure that across 534 00:30:30,560 --> 00:30:33,160 Speaker 3: all of these various climate solutions we can get them 535 00:30:33,160 --> 00:30:35,240 Speaker 3: to be as cheap and scalable as possible, so that 536 00:30:35,280 --> 00:30:37,960 Speaker 3: at least we have those choices to make when we're 537 00:30:38,080 --> 00:30:41,320 Speaker 3: considering the entire toolkit for climate change. 538 00:30:41,440 --> 00:30:43,240 Speaker 2: Thank you, Ann, thanks for having me. 539 00:30:43,280 --> 00:30:44,200 Speaker 3: It's a fun conversation. 540 00:30:48,080 --> 00:30:52,240 Speaker 1: Now for those who waited the land our debut sound 541 00:30:52,280 --> 00:30:56,400 Speaker 1: of the week, that was the beat of a payment 542 00:30:57,760 --> 00:31:01,520 Speaker 1: not to Stripe but to TfL Transport for London that 543 00:31:01,680 --> 00:31:08,920 Speaker 1: runs the Tube, public transport that takes me home every day, 544 00:31:11,040 --> 00:31:16,080 Speaker 1: Howard by Electricity. Thank you for listening to Zero. If 545 00:31:16,080 --> 00:31:18,280 Speaker 1: you liked this episode, please take a moment to rate 546 00:31:18,480 --> 00:31:21,960 Speaker 1: or review the show on Apple Podcasts and Spotify, Share 547 00:31:22,000 --> 00:31:24,840 Speaker 1: this episode with a friend or with a KELP fund. 548 00:31:25,920 --> 00:31:28,200 Speaker 1: You can get in touch at zero pod at bloomberg 549 00:31:28,200 --> 00:31:32,480 Speaker 1: dot net. Zero's producer is Mighty Lerau. Bloomberg's head of 550 00:31:32,520 --> 00:31:36,320 Speaker 1: Podcasts is Sage Bowman, and head of Talk is Brendan Nunan. 551 00:31:36,960 --> 00:31:40,360 Speaker 1: Our theme music is composed by Wonder Lead special thanks 552 00:31:40,360 --> 00:31:45,520 Speaker 1: to Kidra, bindram Anamazarakis and Alicia Klanton. I am actual 553 00:31:45,560 --> 00:31:46,880 Speaker 1: Trati backups.