WEBVTT - Pulling Carbon From the Sky: A Pricey Climate Solution 0:00:00.160 --> 0:00:02.840 This is Dana Perkins, and you're listening to Switched on 0:00:03.000 --> 0:00:06.040 the B andF podcast. Today we're going to talk about 0:00:06.080 --> 0:00:09.240 direct air capture, which we're going to refer to often 0:00:09.280 --> 0:00:12.399 in today's show, just as dak and quite simply put, 0:00:12.480 --> 0:00:15.520 it is sucking carbon out of the air. You know 0:00:15.640 --> 0:00:19.079 that thing that plants do during photosynthesis where they breathe 0:00:19.120 --> 0:00:22.120 in carbon, but this time with a machine. It's a 0:00:22.120 --> 0:00:25.439 fairly new concept, first theorized in nineteen ninety nine, but 0:00:25.560 --> 0:00:30.200 increasingly becoming reality. They're clean tech companies out there pioneering 0:00:30.200 --> 0:00:33.479 this technology and other technical solutions which we'll actually get 0:00:33.520 --> 0:00:35.440 to talk about in the show today. And then there 0:00:35.440 --> 0:00:38.440 are larger companies that are investing in this and looking 0:00:38.520 --> 0:00:40.680 at how to reach their net zero targets in the 0:00:40.720 --> 0:00:43.680 long term. Let me just emphasize that really quickly, the 0:00:43.800 --> 0:00:46.559 net part of net zero. They're thinking about how to 0:00:46.600 --> 0:00:49.920 reduce their greenhouse gas emissions and then find ways to 0:00:49.960 --> 0:00:53.400 subtract carbon from the atmosphere. So who are the companies 0:00:53.440 --> 0:00:55.840 that are giving this a closer look, both on the 0:00:55.840 --> 0:00:59.000 technology side and as investors, and what does it cost? 0:00:59.280 --> 0:01:00.520 I'm going to give you a bit of a hint 0:01:00.600 --> 0:01:03.640 here it is not currently inexpensive when you compare it 0:01:03.680 --> 0:01:07.440 with other forms of voluntary carbon credits. But then how 0:01:07.480 --> 0:01:09.880 long will it take to get closer to cost parity 0:01:10.160 --> 0:01:12.440 and what is the learning rate we'll need to see? 0:01:12.600 --> 0:01:15.200 I think it might surprise you. Also, what do we 0:01:15.280 --> 0:01:17.680 do with the carbon once it's been removed from the air, 0:01:17.959 --> 0:01:20.319 and what do we need to consider when it comes 0:01:20.319 --> 0:01:23.000 to the chemicals that are found in these machines. To 0:01:23.040 --> 0:01:26.120 talk about this and more, I speak with two members 0:01:26.120 --> 0:01:28.960 of our sustainable materials team that are based in New York, 0:01:29.160 --> 0:01:31.800 Sharon Moustri and Brenna Casey. They are going to go 0:01:31.840 --> 0:01:33.720 through some of the highlights that are found in the 0:01:33.840 --> 0:01:38.640 recent research note titled direct air Capture Market and cost outlook. 0:01:38.840 --> 0:01:41.320 As always, if you like this podcast, make sure to 0:01:41.360 --> 0:01:44.680 subscribe and you'll receive an update when we publish future episodes. 0:01:44.760 --> 0:01:46.840 And if you give us a review on Apple Podcasts 0:01:46.880 --> 0:01:50.240 or Spotify, that's going to make us more discoverable by others. 0:01:50.600 --> 0:01:52.960 But right now we're going to jump into my conversation 0:01:53.200 --> 0:02:06.680 with Sharon and Brenna about direct air capture. Brenna, thank 0:02:06.680 --> 0:02:08.000 you very much for joining today. 0:02:08.120 --> 0:02:08.800 Thanks for having us. 0:02:08.840 --> 0:02:11.080 Dana and Sharon, thank you for joining as. 0:02:11.000 --> 0:02:12.160 Well, thank you Dana. 0:02:12.639 --> 0:02:15.000 So we've got you both here to talk about direct 0:02:15.000 --> 0:02:17.560 air capture today, and I promise we will get into that. 0:02:17.639 --> 0:02:19.920 But there's a few things I would really like us 0:02:19.960 --> 0:02:22.639 to talk about in order to give it some context. 0:02:22.880 --> 0:02:27.440 So the first one is carbon markets, So the difference 0:02:27.520 --> 0:02:31.960 between voluntary and compliance carbon markets and its most basic sense, 0:02:32.080 --> 0:02:36.000 because I see direct air capture as intrinsically linked with 0:02:36.440 --> 0:02:37.600 voluntary carbon. 0:02:37.680 --> 0:02:42.240 The short explanation is, there are compliance markets where usually 0:02:42.480 --> 0:02:46.079 a government sets up a whole system where different companies 0:02:46.120 --> 0:02:48.360 have to pay in and their emissions are cupped and 0:02:48.400 --> 0:02:51.280 they have to pay to admit above that cup, or 0:02:51.320 --> 0:02:54.640 there are other types of systems. For voluntary there's no 0:02:54.680 --> 0:02:59.000 one regulating these emissions except the companies themselves internally, so 0:02:59.240 --> 0:03:02.320 they will say we've committed to net zero in order 0:03:02.400 --> 0:03:05.040 to get there. Part of our strategy is to buy 0:03:05.200 --> 0:03:08.960 carbon offsets out of this voluntary market, and that's where 0:03:09.040 --> 0:03:11.880 direct air capture fits in as its kind of main 0:03:11.960 --> 0:03:13.239 business model at the moment. 0:03:13.800 --> 0:03:16.960 So direct air capture in its simplest sense, are for 0:03:17.040 --> 0:03:20.080 the companies that really care an awful lot about carbon 0:03:20.120 --> 0:03:25.000 math and we have had entire shows dedicated to voluntary 0:03:25.040 --> 0:03:27.320 carbon with Kyle in the past, so we will go 0:03:27.400 --> 0:03:29.560 too far down the road on that, although we will 0:03:29.639 --> 0:03:33.520 talk about some prices today for direct air capture. Another show, 0:03:33.520 --> 0:03:35.760 though that we did in the past, was one on 0:03:36.120 --> 0:03:39.320 this technology. It's a couple of years back, and we 0:03:39.520 --> 0:03:43.320 have decided to revisit the topic from a research standpoint 0:03:43.480 --> 0:03:45.480 as well as revisit the topic here on the show, 0:03:45.760 --> 0:03:48.480 And the question for you and for the listeners is 0:03:48.760 --> 0:03:52.080 why is now the right time for us to revisit 0:03:52.200 --> 0:03:54.960 direct air capture and essentially what was that catalyst for 0:03:55.040 --> 0:03:57.080 us to go in a little bit deeper this time. 0:03:57.320 --> 0:04:00.640 Yeah, So there are two things that we found interesting 0:04:00.920 --> 0:04:03.520 that are changing in the market. The first is on 0:04:03.560 --> 0:04:06.680 the technology side, there's a lot more information about new 0:04:06.720 --> 0:04:09.560 technologies and a lot more companies that are trying to 0:04:09.600 --> 0:04:13.680 bring those technologies from lab scale onto commercial scale today, 0:04:13.800 --> 0:04:16.600 so we're learning much more what the benefits of these 0:04:16.640 --> 0:04:20.120 technologies are at a large scale. The second is that 0:04:20.360 --> 0:04:22.880 we also needed to know more about the market. So 0:04:23.200 --> 0:04:27.640 the prices we thought that we're expected for director captured 0:04:27.680 --> 0:04:30.160 today they are now much higher, and we're trying to 0:04:30.279 --> 0:04:34.480 understand why and revising our whole projections for prices and 0:04:34.520 --> 0:04:36.520 for supply and demounts based off of that. 0:04:36.880 --> 0:04:40.279 So in its simplest sense, can you explain what these 0:04:40.400 --> 0:04:44.000 machines look like, and if there are different competing technologies, 0:04:44.040 --> 0:04:46.240 maybe kind of try and paint a picture in our 0:04:46.279 --> 0:04:49.359 minds of what we're looking at. If we're looking at 0:04:49.720 --> 0:04:53.560 essentially a machine that is sucking carbon out of the air. 0:04:53.960 --> 0:04:57.760 Really simply what DAK is, it's these massive fans that 0:04:57.839 --> 0:05:01.080 blow ambient air in through this content where a sorbent 0:05:01.279 --> 0:05:03.320 or solvent solution sits, so it can be either be 0:05:03.520 --> 0:05:05.520 liquid or solid DAC and we'll get into that in 0:05:05.520 --> 0:05:09.160 a second. That CO two, once it comes into contact 0:05:09.240 --> 0:05:12.880 with the sorbent or solvent, is then absorbed or absorbed 0:05:12.960 --> 0:05:16.120 onto that medium, and then it requires because that solution 0:05:16.279 --> 0:05:19.680 only has a finite capacity for the CO two, the 0:05:19.680 --> 0:05:23.160 cutwo has to be stripped from that and then regenerated, 0:05:23.200 --> 0:05:25.880 which can take large thermal requirements anywhere up to nine 0:05:25.960 --> 0:05:28.680 hundred degrees celsius depending on the type of technology that 0:05:28.720 --> 0:05:31.599 you're using. The ambient air that is now free of 0:05:31.640 --> 0:05:33.760 CO two is just blown out, and then the CO 0:05:33.960 --> 0:05:36.400 two is either stored underground or it can be utilized. 0:05:36.640 --> 0:05:39.320 So there's a couple major companies that are doing this 0:05:39.640 --> 0:05:43.719 climb works which we've all heard of carbon engineering. There's Remover, 0:05:44.040 --> 0:05:47.799 which is using a zeolite, and then Airloom carbon capture 0:05:47.880 --> 0:05:50.200 is doing it's like a passive DEACK, so it doesn't 0:05:50.200 --> 0:05:54.560 require these massive fans. The key difference between liquid DAC 0:05:54.680 --> 0:05:59.080 SO absorption and solid DAC absorption is really the energy requirements. 0:05:59.120 --> 0:06:04.600 So liquid DACK requires these covalent bonds. There'sus high affinity 0:06:05.040 --> 0:06:08.760 for it's like this aqueous alkaline sorment, so high affinity 0:06:08.800 --> 0:06:11.040 for that to the CO two. So it requires these 0:06:11.040 --> 0:06:13.119 extremely high temperatures, like I said, up to nine hundred 0:06:13.120 --> 0:06:15.480 degrees celsius, and then there's also a lot of waste heat, 0:06:15.560 --> 0:06:19.559 so it's not terribly energy efficient. SOLIDDAC on the other hand, 0:06:19.640 --> 0:06:23.359 you can use low grade heat sources because the zeolites, 0:06:23.400 --> 0:06:25.800 the membranes, things like that, they bind to the CU 0:06:25.880 --> 0:06:29.680 two with weaker physical interactions, and so you can use 0:06:29.800 --> 0:06:34.640 PV or wind, geothermal or even hydro to kind of 0:06:34.800 --> 0:06:37.400 move these to capture and regenerate the CO two. And 0:06:37.480 --> 0:06:40.039 so generally it's a bit cheaper because of those lower 0:06:40.080 --> 0:06:41.000 thermal requirements. 0:06:41.279 --> 0:06:44.120 I'm going to need a quick definition. What is zeolite? 0:06:45.000 --> 0:06:48.320 Zeolites there? You can actually find them on Amazon, which 0:06:48.360 --> 0:06:51.080 is which is really interesting. They're kind of little there 0:06:51.120 --> 0:06:55.240 balls almost. They are these highly porous structures, like crystalline 0:06:55.279 --> 0:06:59.839 structures that absorb CO two basically through those tiny pores, 0:06:59.839 --> 0:07:03.080 and you can manipulate the pores to different sizes to 0:07:03.400 --> 0:07:06.960 either accept CO two or kind of select against other 0:07:07.000 --> 0:07:10.160 molecules like nitrogen or things like that that are also 0:07:10.240 --> 0:07:11.000 in the atmosphere. 0:07:11.240 --> 0:07:14.600 Have you ever seen Orbi's no, So these are these 0:07:14.640 --> 0:07:17.120 things that my kids play with, and they're essentially these 0:07:17.160 --> 0:07:19.520 little balls colorful I'm guessing the ones in a direct 0:07:19.520 --> 0:07:23.120 air capture machine are not colorful. But they're these colorful 0:07:23.280 --> 0:07:27.320 balls that if you submerse them in water, they absorb 0:07:27.800 --> 0:07:30.560 all of this water and expand to a much bigger 0:07:30.600 --> 0:07:32.440 size and then the kids just play with them. They 0:07:32.480 --> 0:07:35.680 actually don't do anything particularly useful other than that they're 0:07:35.720 --> 0:07:37.560 fun by for the kids to play with. But I'm 0:07:37.600 --> 0:07:41.240 picturing these balls that you're explaining these zeo lights for 0:07:41.320 --> 0:07:44.760 them to be what roughly the size of a dime 0:07:45.040 --> 0:07:48.280 or a ten cent piece and pence much smaller. 0:07:48.320 --> 0:07:52.480 They're almost like the size of bebes from a BB gun. 0:07:52.640 --> 0:07:54.920 That's kind of how they look. One of the developers 0:07:55.040 --> 0:07:57.120 let us hold onto a couple of them, and yeah, 0:07:57.160 --> 0:07:58.600 they're really really tiny. 0:07:58.760 --> 0:08:02.520 They're pretty close to what an ORB sizes. Then there 0:08:02.520 --> 0:08:06.240 are orb's but filled with carbon instead instead of water. Well, okay, 0:08:06.400 --> 0:08:09.880 so you have these solid and liquid technologies. It does 0:08:09.920 --> 0:08:13.000 seem well, you've explained that on the solid side, the 0:08:13.160 --> 0:08:15.800 energy requirements are lower and you're able to use a 0:08:15.800 --> 0:08:19.680 wider range of clean energy in order to actually make 0:08:19.720 --> 0:08:22.920 these machines work. On the liquid side, Does that therefore 0:08:23.080 --> 0:08:25.920 mean that these machines are actually being powered by what 0:08:25.960 --> 0:08:29.440 we'd consider more traditional base load power sources like Dare 0:08:29.480 --> 0:08:32.880 I say coal in this circumstance or nuclear coal? 0:08:32.960 --> 0:08:35.439 I think is too far out of the question, because 0:08:35.920 --> 0:08:38.920 the carbon intensity of just running that process negates the 0:08:38.920 --> 0:08:42.280 benefit of DAK completely. So the levelized cost of avoidance 0:08:42.480 --> 0:08:44.800 is going to be you're going to basically break even 0:08:45.040 --> 0:08:47.680 essentially if you're using coal to power one of these facilities. 0:08:47.760 --> 0:08:50.080 What we're seeing right now is that carbon engineering is 0:08:50.120 --> 0:08:54.160 actually using natural gas to power DAK. There's a lot 0:08:54.200 --> 0:08:57.640 of contention around the topic of using something like that 0:08:57.840 --> 0:09:00.640 when it comes down to like the opportunity cost of 0:09:00.800 --> 0:09:04.960 using a dirty grid or even nuclear or even natural 0:09:05.000 --> 0:09:07.640 gas to power dack. When you could place a dack 0:09:07.760 --> 0:09:10.319 plant somewhere with a clean grid or where there's hydro 0:09:10.440 --> 0:09:13.000 or geothermal and just run this on clean energy, But 0:09:13.080 --> 0:09:15.640 the cost to run something on natural gas are really high, 0:09:15.720 --> 0:09:18.880 and then your bottom line dollar per ton cost is 0:09:18.920 --> 0:09:21.600 always going to be contingent on a natural gas price, 0:09:21.760 --> 0:09:24.680 and so it'll be easier to reduce the cost and 0:09:24.720 --> 0:09:27.480 scale these technologies if you're not reliant on something using 0:09:27.559 --> 0:09:28.640 coal using. 0:09:28.440 --> 0:09:31.800 Gas, and presumably then also from a natural gas standpoint, 0:09:31.880 --> 0:09:35.440 the net carbon or greenhouse gas emissions benefit is lower, 0:09:35.600 --> 0:09:38.800 So there's an inclination to want to co locate these 0:09:39.120 --> 0:09:42.240 with clean energy exactly. So let's talk a little bit 0:09:42.240 --> 0:09:44.880 about actually some of the companies that are operating in 0:09:44.920 --> 0:09:47.040 this space. I want to know a little bit about 0:09:47.080 --> 0:09:50.480 how big these companies are. Are they small largely what 0:09:50.520 --> 0:09:54.200 you would consider to be technology startups that are funded 0:09:54.320 --> 0:09:58.520 by VC community, or are they big sophisticated, publicly listed 0:09:58.520 --> 0:10:01.520 companies that are you know, in a very different lead. 0:10:01.760 --> 0:10:04.240 Tell me how big these companies are and really then 0:10:04.360 --> 0:10:06.440 who is funding and investing in them? 0:10:06.920 --> 0:10:11.040 Yeah, the whole DUC universe has dozens of companies, most 0:10:11.080 --> 0:10:14.200 of which will be really small startups that are still 0:10:14.240 --> 0:10:16.920 trying to prove their technology in the lab. But they're 0:10:17.000 --> 0:10:20.600 really important because, as Brenna mentioned, we need the second 0:10:20.640 --> 0:10:24.400 generation technologies for Duck in order to bring costs down 0:10:24.520 --> 0:10:28.400 and also make sure we're capturing as much carbon net 0:10:28.640 --> 0:10:31.720 in the process. So those are important, but really the 0:10:31.760 --> 0:10:34.840 ones we focus on in our note are the ones 0:10:34.880 --> 0:10:39.280 that are bringing the capture capacity online by twenty thirty 0:10:39.559 --> 0:10:43.120 and those are just four companies. So this space is 0:10:43.200 --> 0:10:47.760 quite dominated by a few players, and the top ones 0:10:47.840 --> 0:10:51.840 are Carbon Engineering that's from the US and Carbon Capture, 0:10:51.880 --> 0:10:55.360 also based in the US, and then climb Works that's 0:10:55.400 --> 0:10:58.920 originally from Switzerland, although they're building one of their new 0:10:58.960 --> 0:11:01.840 plants is going to be in the and Remover that's 0:11:01.880 --> 0:11:03.080 originally from Norway. 0:11:03.520 --> 0:11:06.040 So you mentioned the cost, What is the cost per 0:11:06.120 --> 0:11:09.480 ton right now? On this voluntary you know, anybody can 0:11:09.559 --> 0:11:12.040 set the price and you buy the carbon out there 0:11:12.280 --> 0:11:13.520 on that sort of a market. 0:11:13.800 --> 0:11:16.360 Yeah, so this is kind of what was shocking and 0:11:16.400 --> 0:11:19.280 what brought us back to doing more and more research 0:11:19.360 --> 0:11:22.920 on this. Originally we thought the price was around six 0:11:23.000 --> 0:11:26.840 hundred dollars per ton. This was, let's say, before COVID times. 0:11:26.880 --> 0:11:29.640 Were during COVID times, we had had an update and 0:11:29.679 --> 0:11:33.920 then we saw that a lot of the contracts in 0:11:33.960 --> 0:11:37.720 the market were selling much higher, and after conversations with 0:11:37.920 --> 0:11:41.400 companies in this space, the average price right now seems 0:11:41.400 --> 0:11:44.680 to be a little bit above one thousand dollars per ton, 0:11:44.920 --> 0:11:48.360 which is really it was really amazing to us because 0:11:48.400 --> 0:11:51.040 it's almost double what we were expecting and that was 0:11:51.080 --> 0:11:53.600 already quite high. So this is going to be one 0:11:53.600 --> 0:11:56.240 of the biggest challenges for the market is bringing this 0:11:56.400 --> 0:11:58.240 price down as a scale up. 0:11:58.280 --> 0:12:00.280 Because one of the things we're thinking about when it 0:12:00.280 --> 0:12:03.600 comes to other forms of voluntary carbon is that those 0:12:03.640 --> 0:12:07.160 prices really want to get closer to one hundred a ton, 0:12:07.600 --> 0:12:09.679 which makes them a bit more competitive with some of 0:12:09.720 --> 0:12:12.760 the compliance markets. Now, I know it ranges widely, and 0:12:12.840 --> 0:12:14.960 we're seeing things all the way up to three hundred 0:12:15.040 --> 0:12:17.559 and sometimes five hundred a ton, but in the thousands 0:12:17.720 --> 0:12:20.960 is really shocking for me, which then makes me think, 0:12:21.040 --> 0:12:24.680 you know, what sort of companies are looking at well, 0:12:24.679 --> 0:12:27.480 And essentially willing to pay this price because they believe 0:12:27.559 --> 0:12:29.439 so strongly in this technology. 0:12:30.000 --> 0:12:32.800 There are a ton of companies actually, and part of 0:12:32.840 --> 0:12:35.160 what we did in our research is try to figure 0:12:35.160 --> 0:12:38.280 out what is the size of this demand for removals, 0:12:38.480 --> 0:12:41.520 and what we found is that the total demand for 0:12:41.600 --> 0:12:45.559 removals is much much higher, like an order of magnitude 0:12:45.640 --> 0:12:48.600 or more higher in the next couple of decades than 0:12:48.640 --> 0:12:52.240 what director capture can supply. So we think there's an 0:12:52.320 --> 0:12:57.080 appetite for this technology out there, but the problem is 0:12:57.120 --> 0:12:59.760 that the prices. As I mentioned, so at the moment, 0:13:00.120 --> 0:13:03.319 the companies that have been historically interested in this are 0:13:03.400 --> 0:13:07.720 companies that have pretty high revenues and pretty low emissions 0:13:07.880 --> 0:13:11.720 relative to these revenues. So it's been tech companies or 0:13:11.920 --> 0:13:16.200 financial companies, and they've done a lot of deals in 0:13:16.240 --> 0:13:19.480 the past that were relatively small to get to these 0:13:19.640 --> 0:13:23.080 pilot scales. But the market is changing, so we saw 0:13:23.120 --> 0:13:26.600 in the last year or so really big deals. The 0:13:26.640 --> 0:13:29.840 first one came from Airbus that was for four one 0:13:29.920 --> 0:13:33.120 hundred thousand tons of CO two captured, and it was 0:13:33.160 --> 0:13:35.880 also important because it was an airline coming in and 0:13:35.960 --> 0:13:40.520 demanding deck and exploring that as one of the decarbonization 0:13:40.600 --> 0:13:43.720 technologies that industry can use. And then we saw also 0:13:43.800 --> 0:13:47.600 recently Amazon coming in to do another really big deal 0:13:47.800 --> 0:13:51.720 of two hundred and fifty thousand tons over ten years, 0:13:51.760 --> 0:13:55.240 as well as Microsoft a bit above three hundred thousand tons, 0:13:55.280 --> 0:13:58.440 and those deals are important also because of their scale. 0:13:58.440 --> 0:14:01.240 They're starting to compete with this very big air Bus deal, 0:14:01.400 --> 0:14:04.000 but because of the length of them, So ten years 0:14:04.080 --> 0:14:07.440 is enough for these companies to have a very secure 0:14:07.520 --> 0:14:10.120 off take and then go and get the financing they 0:14:10.160 --> 0:14:11.960 need for these projects. 0:14:12.200 --> 0:14:15.480 So what sort of learning rate would we need with 0:14:15.600 --> 0:14:19.160 this technology in order for it to well essentially for 0:14:19.280 --> 0:14:22.400 it to reach close to one hundred or thereabouts by 0:14:22.520 --> 0:14:24.840 let's say twenty fifty, when we need net zero to 0:14:24.880 --> 0:14:28.320 actually be a reality, and when this importance of carbon 0:14:28.360 --> 0:14:31.040 accounting and for us to be able to balance out 0:14:31.080 --> 0:14:33.480 the net part of net zero to be a reality. 0:14:33.600 --> 0:14:35.640 What sort of learning rate are we looking at here? 0:14:35.880 --> 0:14:38.240 When we were trying to find out whether or not 0:14:38.280 --> 0:14:41.080 the market can actually get to one hundred dollars per ton, 0:14:41.480 --> 0:14:45.880 we assumed for the learning rate about seventeen percent, which 0:14:45.960 --> 0:14:49.800 is not unreasonable for a lot of technologies that scale 0:14:49.880 --> 0:14:53.000 and our modular Obviously, there are some questions on whether 0:14:53.200 --> 0:14:56.440 DAK will be as easy to scale as things like 0:14:56.520 --> 0:15:00.680 solar batteries, but we think it's not unreasonable, especially as 0:15:00.840 --> 0:15:05.320 newer technologies come online. But we have other assumptions that 0:15:05.400 --> 0:15:08.160 we also took into account in order to get these 0:15:08.200 --> 0:15:11.240 costs down. So one was that the supply of the 0:15:11.280 --> 0:15:16.400 market would increase twenty five percent calgar, so y're on 0:15:16.480 --> 0:15:20.800 your and that's a pretty high kind of rate of increase, 0:15:21.040 --> 0:15:23.320 especially in a market that has had quite a lot 0:15:23.320 --> 0:15:26.360 of delays recently. And then the other one is that 0:15:26.600 --> 0:15:31.120 they reach about four hundred dollars per ton by twenty thirty, 0:15:31.160 --> 0:15:34.040 which is what we've heard on average from the players 0:15:34.080 --> 0:15:37.520 in this space. If they scaled to the one million 0:15:37.640 --> 0:15:39.080 tons scale by then. 0:15:39.120 --> 0:15:41.160 I mean, that's a pretty dramatic drop off in a 0:15:41.280 --> 0:15:42.640 fairly short period of time. 0:15:43.120 --> 0:15:46.880 Yeah, I mean, they're kind of in a complicated moment today, 0:15:46.880 --> 0:15:49.920 which is why prices are so high, because the first 0:15:49.960 --> 0:15:52.760 of a kind of anything, you're usually going to have 0:15:52.920 --> 0:15:56.840 higher costs than you expected, and that kind of unsettled 0:15:56.840 --> 0:16:00.240 the market. But they seem to be confident that they 0:16:00.280 --> 0:16:02.760 can bring those down rapidly as they get to these 0:16:02.800 --> 0:16:03.800 really big scales. 0:16:04.080 --> 0:16:07.760 On the technology side, another assumption that we're using to 0:16:07.840 --> 0:16:10.600 understand this market more is kind of how DAK is 0:16:10.640 --> 0:16:12.800 a little bit parallel to what we saw with batteries. 0:16:12.840 --> 0:16:15.880 So there were so many different battery chemistries that were 0:16:16.120 --> 0:16:19.280 being designed at the nacency of that industry, and then 0:16:19.320 --> 0:16:21.960 over time we saw the industry coalesce around one. So 0:16:22.000 --> 0:16:25.480 this lithium ion chemistry, obviously there's variance within that, but 0:16:25.800 --> 0:16:27.760 that helped bring it to scale, and that helped bring 0:16:27.840 --> 0:16:31.320 costs down pretty substantially, and so we're expecting to see 0:16:31.640 --> 0:16:34.560 some sort of market change like that. So rather than 0:16:34.600 --> 0:16:37.120 focusing on all of these different types of dacks, so 0:16:37.200 --> 0:16:42.360 liquid solvent, zeolite or solids heoltes, molecular organic frameworks, we're 0:16:42.360 --> 0:16:45.520 expecting to see maybe one or two of these technologies 0:16:45.760 --> 0:16:48.240 really take the forefront for the market to just take 0:16:48.280 --> 0:16:51.280 those two or three, develop them, build out the supply chains, 0:16:51.480 --> 0:16:54.040 and then bring those to scale. There are a couple 0:16:54.280 --> 0:16:58.440 different things that developers really are looking to achieve to 0:16:58.520 --> 0:17:02.040 bring these learning rates down. It's one optimizing the contactor itself. 0:17:02.080 --> 0:17:04.960 Because these fans are massive, they take up a lot 0:17:04.960 --> 0:17:08.640 of space, and if you optimize the solvent. With the contactor, 0:17:08.840 --> 0:17:13.080 you can maximize the surface area while also minimizing this 0:17:13.240 --> 0:17:16.520 pressure drop, which keeps costs low but also reduces the 0:17:16.520 --> 0:17:19.280 amount of steel you need. And with inflationary pressure, the 0:17:19.280 --> 0:17:21.560 cost of steel right now is extremely high, so this 0:17:21.600 --> 0:17:24.320 helps keep capex costs for these sorts of plants low. 0:17:24.520 --> 0:17:26.840 Can you explain what you mean by take up a 0:17:26.840 --> 0:17:29.520 lot of space? Because land use is something that I 0:17:29.560 --> 0:17:32.160 think we're all looking a little bit more closely at 0:17:32.200 --> 0:17:34.920 than we ever have before when it comes to various 0:17:35.040 --> 0:17:38.719 parts of carbon intensive technologies and then increasingly also with 0:17:38.800 --> 0:17:41.560 competition with agriculture. So what does take up a lot 0:17:41.600 --> 0:17:43.639 of space look like? Are these units the size of, 0:17:43.760 --> 0:17:46.320 let's say, an air conditioning unit or are they size 0:17:46.320 --> 0:17:46.879 of a boeing. 0:17:47.480 --> 0:17:52.240 They're basically the cargo containers, yeah, exactly that you see 0:17:52.240 --> 0:17:55.879 on a ship or on a train. But they're modular, 0:17:55.960 --> 0:17:57.679 so you stack them on top of each other and 0:17:57.680 --> 0:18:00.960 then you can build them outwards to the megaton scale. 0:18:00.960 --> 0:18:02.920 So when we're thinking about a scale like this, it 0:18:02.960 --> 0:18:05.639 obviously depends on the type of renewable energy that you're using, 0:18:05.680 --> 0:18:08.760 whether it be PV or wind or geothermal, but we 0:18:08.840 --> 0:18:11.680 see the land area DAC ticks up at around two 0:18:12.000 --> 0:18:16.000 kilometers squared for solid DAC. When we compare this to 0:18:16.200 --> 0:18:20.200 other forms of removals, so BES, for example, it's around 0:18:20.200 --> 0:18:24.000 three hundred kilometer squared, and then reforestation or a forestation 0:18:24.359 --> 0:18:26.920 to deliver the exact same amount of removals, it actually 0:18:26.960 --> 0:18:30.600 is around eight hundred kilometer squared. So while DAC does 0:18:30.960 --> 0:18:33.640 require a little bit of land, it is far less 0:18:33.680 --> 0:18:35.560 than some of the other removal types that we're seeing. 0:18:35.800 --> 0:18:39.480 So you mentioned some competitor technologies, BEX being bio energy 0:18:39.560 --> 0:18:42.800 with CCS, let's talk a little bit about, well, essentially, 0:18:42.880 --> 0:18:44.520 what else is going to be out there from a 0:18:44.560 --> 0:18:48.359 supply standpoint and competing with that you've already established is 0:18:48.560 --> 0:18:51.720 very high demand for carbon removal technology. Give us a 0:18:51.800 --> 0:18:55.600 quick definition of what this Bech's bio energy with CCS is. 0:18:55.880 --> 0:19:00.440 BEX. Basically, you take biomass, which, once burned, is technically 0:19:00.520 --> 0:19:03.480 a biogenic form of CO two because it's already drawn 0:19:03.600 --> 0:19:05.960 carbon down from the atmosphere. So when you burn it 0:19:06.000 --> 0:19:09.080 and capture that biogenic COO two, you can actually claim 0:19:09.119 --> 0:19:12.040 a negative emission. What's really interesting about BES is that 0:19:12.200 --> 0:19:16.240 because DAC, it's just a waste management technique. Essentially, bex 0:19:16.320 --> 0:19:18.960 can also produce and sell power to the market while 0:19:18.960 --> 0:19:21.919 also delivering removals, so you have this double revenue stream. 0:19:22.200 --> 0:19:24.440 So that's why it's really compelling right now. 0:19:24.720 --> 0:19:27.480 And is this bio energy essentially is it coming from 0:19:27.560 --> 0:19:31.520 things that have been farmed specifically for this technology or 0:19:31.760 --> 0:19:32.760 is it waste product? 0:19:33.000 --> 0:19:35.200 So it's a little bit of both. In the EU, 0:19:35.320 --> 0:19:38.399 they have a landfill directive which incentivizes the use of 0:19:39.000 --> 0:19:42.760 municipal waste for use to be burned. This it's a 0:19:42.920 --> 0:19:48.320 very contentious topic because there are regulations that define what 0:19:48.359 --> 0:19:53.240 sustainable biomass is which exclude old growth forests large trees 0:19:53.680 --> 0:19:57.280 like areas with large primary forests. I guess, however, what 0:19:57.320 --> 0:20:01.639 we're seeing is that companies are actually going in and 0:20:01.920 --> 0:20:05.679 cutting down those trees, procuring the biomass from the primary forest, 0:20:05.800 --> 0:20:08.440 or this unsustainable biomass. When you look at the life 0:20:08.440 --> 0:20:12.240 cycle assessment of the process, you can actually instead emit 0:20:12.359 --> 0:20:15.600 COO two rather than produce COO two from the atmosphere. 0:20:15.640 --> 0:20:17.880 So there needs to be more stringent frameworks in place 0:20:17.920 --> 0:20:19.680 to make sure we're doing this right. 0:20:20.040 --> 0:20:23.280 Let's next go into reforestation, which you brought up. I'm 0:20:23.320 --> 0:20:26.400 sure that some people listening are thinking about, well, why 0:20:26.400 --> 0:20:29.919 not trees. They certainly do a very similar job when 0:20:29.960 --> 0:20:33.200 it comes to removing carbon from the air as these machines, 0:20:33.320 --> 0:20:36.399 and I know a lot of the tension around talking 0:20:36.440 --> 0:20:39.399 about some of these technologies does then link back to 0:20:39.640 --> 0:20:43.479 voluntary carbon markets and this need to prove additionality and 0:20:43.560 --> 0:20:46.679 to show what it is that you're removing over what 0:20:46.840 --> 0:20:49.840 period of time, and to basically properly account for how 0:20:49.920 --> 0:20:52.520 much carbon is being removed. So let's talk a little 0:20:52.560 --> 0:20:57.240 bit first of all about what reforestation the term specifically addresses, 0:20:57.480 --> 0:21:01.240 and then under the circumstances that one I prefer dax 0:21:01.320 --> 0:21:06.040 technology to trees are first and best known form of 0:21:06.080 --> 0:21:06.920 carbon removal. 0:21:07.160 --> 0:21:11.040 With reforestation, I think it's important to say is it 0:21:11.080 --> 0:21:13.360 is a technology we will need as well, and it 0:21:13.400 --> 0:21:17.160 has a lot of added benefits like bringing in biodiversity. 0:21:17.320 --> 0:21:20.639 So reforestation is one of a suite of what we 0:21:20.720 --> 0:21:24.399