It’s been a big month in carbon removal funding news.
Climeworks announced $650 million in new fundraising from an extensive group of private equity and investment management firms.
Then, Stripe made public a nearly $1 billion plan to take their CDR purchasing program to a new level by partnering with Alphabet, Meta, McKinsey, Shopify, and more to pool their carbon credit dollars and buy removals from companies and facilities that don’t even exist yet. This plan was inspired by programs that have developed vaccines with Advanced Market Commitments.
Rounding out the month’s big funding news was an announcement from climate-focused VC firm Lowercarbon Capital that they’ve raised $350 million to invest in carbon removal companies.
Add that to the 15 $1 million milestone grants given in the first round of the carbon Xprize and the extensive public conversation around carbon removal that’s taken place since early April’s IPCC mitigation report. There’s a lot of news to talk about in the world of carbon removal.
Joining Susan and Radhika to talk about all this is Josh Santos, CEO, and Co-Founder of Noya. Josh also gives some updates about Noya's recent progress.
Resources: A Revamped Cost Curve for Reaching Net Zero Emissions- EDF https://www.edf.org/revamped-cost-curve-reaching-net-zero-emissions
Full Transcript
Announcer: You’re listening to Carbon Removal Newsroom, a weekly show about current events in the world of carbon removal, from technology and innovation to policymaking and job growth. Brought to you by Nori, the carbon removal marketplace.
Radhika Moolgavkar: Hello, everybody, and welcome to the April 28th episode of Carbon Removal Newsroom. Today, we will be focusing on business. And so, as always, I have Susan Hsu, who is a partner focused on climate investing at Toba Capital. She also serves as a board member at the Carbon Business Council and a board advisor to the Environmental Voter Project. Hello, Susan. How are you today?
Susan Su: Hi, Radhika. I’m great.
Radhika Moolgavkar: Good and very exciting. We have Josh Santos, co-founder and CEO of Noya. We’ve talked about the company before, so really happy to have you on board today, Josh. Thanks for joining.
Josh Santos: Thanks for having me. Super psyched to be here.
Radhika Moolgavkar: And then I am Radhika Moolgavkar, Head of Supply and Methodology at Nori. So it’s been a big month for carbon removal funding news. Climeworks announced $650 million in new fundraising from a large group of private equity investment management firms. Stripe made public a close to a billion dollar plan to take their CDR purchasing program to an all new level by partnering with Alphabet, Meta, McKinsey, Shopify, and many more to pull carbon credit dollars and buy removals. From companies and facilities that sometimes don’t even exist yet. We also are rounding out the month with the big funding news that was announced from the climate-focused BC firm Lower Carbon Capital that raised $350 million to invest in carbon removal companies.
And then finally, the Carbon XPRIZE, $15 $1 million milestones in grants given in the first round. So there’s a lot happening in the world, and I’m going to just jump in with Josh because we want to hear all about how Noya is doing and basically, yeah, what’s up in your world. So how are things at Noya and what are you working on right now?
Josh Santos: Yeah, thanks, Radhika, and thanks for really excited to jam here with y’all. Things at NOIA, to put it short, are going incredibly well. For those of you who may not know what NOIA is, we are essentially designing a process that radically reduces the upfront capital costs and the installation time required to perform direct air capture. In our approach, we retrofit existing pieces of industrial equipment, like cooling towers, and turn them into CO2 capture machines. For the past few months, we have been working hard on getting over some of the big design decisions and design risks that have been in our process since we started, namely around this question of if you retrofit this cooling tower that’s moving lots of air, how do you guarantee that the cooling tower is still going to work?
That’s been the single biggest question from the From the companies we’ve spoken to and I’m really excited to say that we’ve been able to get around that problem. We’ve focused on building it and we have a big yard level prototype here at our office in San Francisco that we can demonstrate both high cooling tower performance with carbon capture. So the next step that we’re working on now is developing the pilot of our technology and that’s happening here in SF as well. That’s going to be essentially a representatively sized cooling tower that we’re going to plop down in the yard and run as if we were cooling some industrial process.
So we’re excited to see that come to life. That’s going to happen by the end of Q3 of this year. And testing will start before the end of the year. So we’re moving fast. We’re rocking and rolling. We’re growing the team to help support that really ambitious timeline. But I’ve been so, so proud of what our mighty team has been able to accomplish so far and can’t wait to see what we do later on this year.
Radhika Moolgavkar: Wow. Yeah, that’s amazing. So I’m kind of curious, is the question that you’re getting from people, the question you expected, was the cooling tower the thing you thought would be the limiting step when you launched the company?
Josh Santos: 100%, yeah. If you look at, What these cooling towers are doing and why they are available in such high numbers, right? The US is home to 2 million of them. And so we must have bought a lot of them because they do something really well. Well, it turns out the thing they do really well is keep something cool. And that something is usually an incredibly important aspect of some company’s operation, be it the piece of equipment that pasteurizes milk for dairy creamers and dairy farmers, like our first build was at, or Some central component of an HVAC system for a bunch of people living or working inside of a building, or on an industrial scale, the thing that is providing electricity as you burn trash to prevent methane from getting into the atmosphere and create electricity from that.
Whatever the thing is that you’re trying to keep cool, the cooling tower is incredibly important to ensuring you can actually do that. So you can imagine that if the cooling tower is damaged or somehow compromised, The main thing that the people are using it for is also compromised. So we expected a lot of pushback and questions around it. And we’re at the early stages of showing people the updated concepts that we have and some of the data we’ve been able to collect with our model. And the response has been really excited.
So that is exactly what we knew was going to happen when we started. And we’re really excited to now be able to back up our claims with some actual numbers and data.
Radhika Moolgavkar: That’s great. High risk, high reward. I get, you know, that’s amazing. So obviously, CDR is fast changing in the world. And we were just talking before the show even started how you were like, when we first started, which was only like two years ago, but it feels like much longer, I’m sure. Have you seen a real difference in the type of attention you’re receiving? Has it been what you expected, greater, less, something completely different?
Josh Santos: Yeah, definitely, it’s been greater and I think that’s great because when we started, our business plan was actually to capture CO2 from the air and sell it to people that were going to use it. People like small businesses in food and beverage, every bar you’ve ever been to or restaurant you’ve ever been to has a tiny tank of CO2 sitting behind it. And so we thought, well, nobody’s really paying for carbon. We didn’t even call it carbon removal at that time, two years ago. It was like, nobody’s paying us to pull CO2 out of the air yet.
And so let’s do this other thing that can make us money now so that when there becomes a market for that, we can switch and do that. And the whole thing has appeared much faster than we thought it was going to. So we just skipped that first step of bottling up CO2 and reselling it. And we just are now focused solely on removing carbon and have been gaining a lot of attention through that. I think there’s all of the public stuff that people have seen and that you mentioned at the beginning, right?
Some of the frontier climate and the Shopify and all these things that people know. And then there are so many other conversations happening behind the scenes with companies that have Not said anything publicly about wanting to get involved with purchasing carbon removal. So all of, you know, all of these things are happening at a much faster rate than at least I thought that they were maybe, maybe smarter people think, you know, saw it coming and that’s great if they did, but I didn’t. And so I’m happily proven wrong here and am able to kind of react accordingly.
And I think Noya is all the better for it.
Radhika Moolgavkar: Yeah. All right, Susan, kind of curious, you know, you just heard what Josh had to say about this acceleration and interest in carbon removal. Did you see that coming? And what do you think? I mean, we’ve talked about it a bit, but like explicitly, what do you think driving this explosion of interest that feels like it’s happened in the last five, six months?
Susan Su: You know, I think it’s hard to claim that anybody saw it coming specifically. But I will speak to what I think is driving it. I think there’s a number of different things. I mean, yeah, so it’s a confluence. Number one, I know we’re going to talk about this a little bit later in the show, but for example, the Frontier announcement and just the amount of what I call headline equity that carbon removal is starting to get, not just from Frontier, but from some of the other things that we will also discuss later in the show.
Creates a sense of kind of irrational omnipresence. Like this is becoming a thing with a capital T, which mobilizes a lot of resources, both on the supply side. So like amazing entrepreneurs like Josh putting down Whatever they were doing before and applying themselves here, but also capital. And so, you know, I think a billion dollars via Frontier, the Advance Committee, that’s like a really big deal, but it’s also all of the investment capital that’s coming in. And I think if, you know, if I put my investor hat on, the reason why I think CDR, carbon removal overall, is...
Kind of seemingly surprising us right now is because it’s possibly just following a J curve where you see a little bit of a slowdown, you see some initial, you know, something that looks like a loss at first. And then it really doesn’t look like a loss after that. Um, we have to remember that a lot of carbon removal, not all of it, there’s always like nature based as well, but like on the non nature based side, it’s so technology driven. And if there is one thing we know about technology, it’s that once it starts moving, it starts moving really fast.
It snowballs. And that’s the promise of Silicon Valley. And I think that’s why a lot of venture capitalists are really interested in Carbon removal, specifically technology-driven carbon removal, because sure, it’s like really hard and expensive and all that stuff today, but it’s all about that learning curve. And there is this promise of a steeper learning curve there. Steeper, I mean, in a good way, like where you sort of get more return faster than with some other alternative technologies for mitigating The climate crisis that may already sort of be a little bit more mature and a little bit more in their later adoption slash plateau phase.
So I think all of that has come together and created this just I’ll say it again, but it really feels like it’s a snowball effect and things are really starting to take off for carbon removal, which I think is really, really exciting. Now it’s still early. There will still definitely be some troughs up ahead, but I have no doubt that will also be followed by just as a J curve demonstrates to us will no doubt be followed by more peaks.
Radhika Moolgavkar: So Josh, Susan was just sort of alluding to the fact that the technology is accelerating, but it’s still Very early technology right in and there are other maybe nature based solutions that are. More clear in the carbon remove or more clear, they can immediately remove carbon right, so how do you go about pitching to investors or do you even need to pitch at this point because they’re so eager. About investing in your company and but waiting for the carbon removal credits to come through, what do they want to hear.
Josh Santos: I always like to start these conversations just by setting the global framework on this, which is that if you believe that there will be a happy world in the future that has successfully kept warming above or excuse me below 1. 5 degrees Celsius, then you must also believe that there has to be an incredibly large carbon removal market of at least one gigatonne per year in size, but potentially up to 10. And, and the two can’t exist without the other, as we know, because of what the IPCC has been telling us recently, one has to Come with the other.
And so I always like to set that framework. And so then the next question is, okay, well, how do you sort of fit into that? And how do you scale up to achieve those sizes, those amounts? And I always like to say that we started out by, you know, there are many ways I think you can approach building something that is large and successful at taking large amounts of CO2 out of the air. You can go for building big things that have lower cognitive scale. You can go for building many small things that capture a lot of things at high cost.
And what we’re trying to think about is how we can get the best of scaling something that is cheap to build at the very beginning to de-risk the scaling of something large down the line when the market is ready to sort of absorb that large capex spend. And so our approach at the very beginning, where we’re retrofitting pieces of equipment to keep our capex low and our time to deploy low was done to Essentially mitigate the fact that the market for carbon removal is both unpredictable and small, relatively speaking. If I were to start a company and say, I have this billion-dollar CapEx investment that I’m going to build to sell into what is today a billion-dollar market, that’s a hard thing, I think, to get investors to wrap their heads around.
But if I say I have a $1 million unit to sell into this billion dollar and I can build 10 more of them in the next year, then that becomes a much easier thing to actually start to understand. And so when I think about how we scale, we’re actually kind of hacking the lending side of it right now a bit because of our low capital spend requirements to actually get our process out into the world. And so we are By no means writing off the future where we are building these huge hundreds of million dollar, billion dollar mega plants that will get us incredibly low costs.
We’re just going about it in a way that is capitally light right now while all of these things are starting to be built up. So that we can scale, learn, remove, and continue growth. And so it tends to follow that pathway in terms of how we pitch investors on carbon removal generally and what we’re doing specifically within that. Because there are, you know, if what Susan says is true, right? And there’s a trough and then a big peak and then troughs and then big peaks. And there will always be these periods where Investors get excited and money flows and then they don’t and money doesn’t.
And so I think having a solution that can serve in those hard parts will help us survive to the point where we have solutions that will be able to serve in the big parts.
Radhika Moolgavkar: Yeah, I definitely think about capital costs a lot in my job and your approach is Makes a ton of sense, right? Like you lower the risk piece around the capital that makes more people interested because we all know it needs to happen. And I think another indication about why around the durability of carbon removal is like the level of excitement from the generations that are at least younger than me that are coming in and applying for these jobs. I think Susan, you recently tweeted about their fielding thousands of job applicants So I’m wondering, Josh, are you seeing that same thing?
Are you getting overwhelmed with applications? And what’s kind of the range of people? Does it tend to be the younger folks or is it all over the board? Who’s interested in this field?
Josh Santos: Yeah, the amount of people trying to get into climate is so exciting and into carbon removal specifically, super exciting to see. I think we posted a few open jobs a few weeks ago and within the first week had something like, you know, Hundreds of applications across six different positions that we had to field and manage. And it was incredibly challenging. It’s really hard to get through those resumes and then have to do it. It’s exciting because a lot of these people are so passionate about the problem that we’re solving. And I draw parallels to, I mean, even my time, I was at Tesla before starting Noya, and everybody there is passionate.
You have to be, I think, to work there. But there are some people that aren’t, and the level of passion of applicants we see is just so, so large. And I think that the headline equity, I love that term, Susan, I’m going to use it. The headline equity of carbon removal, I think, is definitely helping with that. But I also think that people are just, and especially younger people, are realizing that We have to be active in this solution. If we want the problem to be solved, we have to go out and solve it.
And that’s what I told myself before starting NOI and ultimately what got me into it. I was looking for jobs in car removal and I was like, oh, this actually doesn’t exist. Why not? And then here I am with the company. But It is so, so exciting to see it. And I think as it continues to get more and more popular, we see the average age creep up and up as well in terms of people that are interested in taking positions, right? So I definitely agree that the people that are most excited are people coming Out of college or maybe have been working in some job for a year or two, but that age is starting to grow up and we see founders of other tech companies coming and looking to work in operations or we see incredibly experienced engineers coming and looking to lead big teams.
And so there’s a lot of excitement and a lot of passion and a lot of vigor around the people that are applying at least to positions with us and others as well across climate tech that I know about. And it is inspirational for me to see. I had somebody on my team tell me that they get a lot of pride and love telling other people about what they do here at Noya when they’re at cocktail parties or whatever. And for me, that’s the best feeling I could ever ask for. You know, the feeling of somebody that’s on this team here getting the most amount of pride out of everything they’ve done in their life is awesome.
And so I think that climate specifically has that unique impact. And because of it, people want to work in it.
Radhika Moolgavkar: Yeah, I feel pretty fortunate that I got a job, honestly. So thank you, Nori, for hiring me. But now I’m going to pivot a little bit, but Susan already touched on it, but about Frontier and that huge announcement. So Susan, I want to kind of get more of your opinion on what did you think of that Frontier announcement? I mean, a billion dollars is a lot. And how do you feel that? How big of a step is it really towards scaling CDR?
Susan Su: Yeah, I mean, I think this actually ties right into what Josh was saying about the flood of talent. Look, a billion dollars is a lot and it kind of isn’t. I don’t know. It buys you a lot less these days. Maybe we’re all just like numb to the billions now. But from the standpoint of impressions value, I always think like, okay, if you are a brand marketer, let me just give me a moment to take you on a different path. But, you know, big brands like Coca-Cola, Capital One, whoever, they’re paying money to advertise on Facebook.
They’re losing money on all the advertising platforms. They don’t care about getting a click through or ROI or any of that stuff. All they care about is just getting their name signed. Um, getting those words, you know, COCA, COLA, like getting that in front of your eyes a few more times because they realize how valuable simply a brand impression is, um, in our world. And I think this is an incredible amount of free brand value impressions value that’s coming into CDR. And a lot of that is what’s driving, um, This flood of interest that we’re seeing, there’s also, it’s not just the volume, right?
There’s also a sense of prestige. If you look at Frontier, the companies that are associated with it are companies that have been building their own brand equity across decades, actually. Stripe is one of the coolest companies in tech. And some people think that it’s because of the climate commitments, but I would actually say it’s because it solves a huge problem. And Patrick and John Collison are just awesome entrepreneurs that Have been really smart about a lot of things before they turned their attention to climate change. They’re lending their brand, all of those companies that are part of the announcement are lending their brand value to what could otherwise have been a quite nerdy niche corner of the climate mitigation space and making it this thing that like, wait, Eight months ago, nobody even knew what this was.
Eight months ago, nobody could understand Josh when he was trying to explain how Noya was going to work and scale up. And now everybody is suddenly becoming an expert and it’s a status symbol. I mean, it just... It just is. And I think that’s wonderful, actually. The prestige value of working at a climate company, especially the harder and more technologically challenging ones, the prestige value of investing in those companies, I think is driving a lot of the momentum that we’re seeing. And that to me, just to take a step back from the actual dollar amount, is one of the most important things that something like Frontier brings to the table.
Because it, you know, garners all that attention but it also catalyzes a lot more than a billion dollars down the road. It’s not about the billion dollars today, it’s about the billions and potentially trillions of dollars That are going to flow from this because of all of the other people that are going to get their, you know, get those words in their feed, so to speak, you know, get that brand in front of their eyes. So, yeah, I think it’s really, really great. I think it’s very smart as well. I would say, I’m sure these companies have thought about this and have thought about the way that this...
Type of announcement, the way that they shape it, the exact way that they structure it is really meant to be, again, a catalyst as opposed to a solution in itself. And I think that’s the right way to go because ultimately it’s extremely early. And I’ll say it again, a billion dollars is a drop in the bucket. I mean, if you look at the, if you map where we are against a traditional technology adoption curve, We’re what, like maybe between innovators and early adopters? We have barely even crossed the chasm yet.
I mean, you know, we could debate where exactly, but it’s definitely, we’re not in early majority, right? We’re not in like the green zone or anything. And so the more that we can essentially leverage, I don’t mean this in a bad way, if the more that we can leverage hype and energy towards something, dollars are a form of that. But so is human resources, knowledge resources, all of those resources. The more that we can leverage that, the sooner and more likely we will be to get to everybody else, bring them on board.
So I think it’s really, really positive. And I’m excited to see this as a beginning and then what kind of follows from this over the next 12 to 18 months.
Radhika Moolgavkar: So I’m curious to hear from both of you. You just talked a lot, Susan, about the brand, but who is it reaching? Is this sort of only within, like you said, a niche, a certain subset of people? Everybody knows Coca-Cola, right? But is this reaching countries like in Africa, in India? Is this reaching people in their 60s and 70s? Or is this really about what Josh and I were talking about a little bit earlier, like The younger generation and kind of Western focused. Do other countries see it in the same way outside of our European, North American kind of lens?
Josh, I’ll start with you. Curious what you think.
Josh Santos: Yeah, I think that it is absolutely visible to Every single group we just mentioned, though not in the amount that we need it to be yet. There is a lot of space for us to continue to tell the stories of why these types of technologies actually matter, why they’re important. And I think especially about how we can bring in different types of frontline or underserved communities is a big piece of this sort of like work of helping people understand the importance of Carbon removal, I think that there can sometimes be understandably this feeling that carbon removal and post-combustion carbon capture are the same.
And that second one has understandably gotten a lot of pushback from a lot of these groups as I’ve been able to understand because it allows for the continued usage of the things that have gotten us to this collective problem in the first place. Until we’re able to, I think, effectively differentiate between those two things generally and sort of tell some of the values and praises of why carbon removal is needed and important, then I think we still have work to do. And we’re thinking about this from the very beginning at Neuer, right?
Our technology can go into these communities where the problems are being created and help to fix them, help to address them, and bring the people along that have been most impacted and affected by that. But by the way in which we’ve been running things for for quite some time, I think that we have been doing a lot and that a lot of the things that have been announced, especially over the past month, have been getting to new eyes and audiences that have not otherwise really understood anything about pulling CO2 out of the air.
And so it’s been great to be able to be understood for the first time in eight months about the pitch of what NOI is doing. That’s amazing. But I think we still have A long way to go until it gets to be to that level of understanding that the solar panels are at and that wind turbines are at, right? I think everybody understands that if solar panel, then no fossil. And that is a great, simple relationship to have in your mind. So like, amazing. Let’s also get carbon removal to that same sort of directional understanding and shared understanding so that we can give it the resources, attention, caliber of people and At the end of the day, capital that it’s going to need to get to the point where it needs to get.
So what the early stages seem to be some really exciting things in the space of getting CDR in front of people in Facebook ads and on LinkedIn and on Twitter. And we need to keep that going for us to, I think, be successful.
Radhika Moolgavkar: Susan, anything you want to add to that or other thoughts?
Susan Su: Yeah, I would just say in terms of like, you know, who it’s reaching, I think it’s reaching the right people. It’s reaching people that can afford it. You know, if you think about the Tesla Roadster, it wasn’t meant to be marketed towards, you know, auto rickshaw drivers in India because Well, it’s obvious, right? And it wasn’t meant to be marketed towards, you know, somebody like me or any other, you know, more or less regular person, even in the United States, because how many of us really buy a car that is over $80,000 or $100,000?
But that’s okay.
Unknown speaker: Like a lot here for a wheeler.
Susan Su: Yeah. I know. Seattle, we need to have a special podcast just about these certain coastal cities that have just gone crazy. Anyway, back to this though. I mean, I don’t know if you guys saw, but I’m sure you both did, but EDF came out with their updated marginal abatement cost curve, which everybody who’s listening to this podcast should definitely go check out. It’s just, I think it’s on their blog. I’m sure you can Google it and just Google, you know, EDF marginal abatement cost. I mean, it’s just so eye-opening to think about it in terms of that, right?
There are so many cheaper things that most people and most other, especially when you talk about it on a global scale, most other countries can do. So no, did they really need to be like hearing about front, like, like, does it need to reach them right now? No. And that’s totally fine. It’s, it’s not an inclusion exclusion thing. Even in my mind, it’s about merchandising the right products to those customers who can most afford to pay the high prices in order to drive further innovation such that the prices come down.
And I think it’s quite simple in that sense. And like, you know, kind of looking at, okay, well, we’re going to have to do this really at large scale. Eventually, it’ll be the only thing that really gets us to where we really want to go. But reverse engineering what it takes to get there, sort of like what Josh was saying at the beginning, you know, we’re going to want to have these like massive industrial scale Noya implementations all over the world. But today, how do we chop that up into chunks that fit into the market as it stands right now?
And so I think that’s what’s really going on here. I think it’s reaching certain investors, it’s reaching certain corporates, it’s reaching certain corporates as both buyers and signatories, and it’s reaching innovators and giving them something to be hopeful and excited about. And then it’s also reaching the audiences of those innovators so that they get hundreds of job applications for like really obscure, no offense Josh, but like very niche jobs that require a lot of expertise. And so I think it’s doing all the work that it needs to right now and a lot more than even I would have expected for where we are in 2022.
Radhika Moolgavkar: Well, I want to pivot a little bit because we are talking about supply as if it is our carbon credits as if there’s so much, but really there’s very, very little of these high quality carbon removal credits. And this fund is for over 10 years, and my question really to both of you is, Can supply catch up to the demand? I mean, Josh, I’ll start with you and Susan, I’ll pivot to you too, but you were even alluding to conversations with companies that are not even public about it. So will supply catch up to demand in even over the 10-year horizon or what do you see the curve looking like for that?
Josh Santos: Supplies is going to catch up. If we start with, Let’s say we start with there being a thousand tonnes removed next year. If we 3x that year over year for the next eight years, we’re at a billion tonnes. And I think that as we continue to see these new entrants into the purchasing side of the market, And we continue to see how that impacts policy, which is really the thing that we haven’t talked about yet here because of the frontier announcements and everything else that’s happened in the private sector. But the public sector is really what’s going to be needed, I think, to get to that level reliably over time.
And so as we see more and more of these growth curves that we’re talking about now, We’ll see the ability for companies to be confident in the creation of additional supply and the investment required to reach additional supply happen and and that rapid growth curve I just talked about of at least three x in year over year for the next eight years to get us to a billion tonnes like that it that is going to happen now. It’s very likely that the growth is actually going to happen much faster than that.
We know that there are a few plants that are in place or in process right now that will be installed at some date in 2024 or 2025, where there’s something like 400,000 to a million new tonnes enter the supply side of the market. Not a fell swoop because it’s been built for a while, but becomes available. And I think as time goes on and we see more of these things start to happen, then the supply curve is actually going to ramp up much quicker than that. And so is it possible to get the supply there?
Absolutely. And the new entrants that are coming into the market due to a lot of the names that are sort of at the leading edge of the spear here with the frontier announcement and other big announcements that we talked about already, Those will drive the demand that’s going to be needed to incentivize the supply and the supply that’s going to be needed to meet that and all of that’s going to push forward the policy that’s going to be needed to make that more long standing in perpetuity.
Radhika Moolgavkar: Susan, what are your thoughts?
Susan Su: I think I’m kind of to the point personally where I take it for granted that the demand will both be there. I don’t think that’s a conversation that a lot of folks are, or maybe they are, but in my mind, it’s kind of like, okay, we know that already. I also have a lot of confidence that the supply will step up. I mean, if you have like a big clump of hungry people hanging out, Together in one location, it’s only a matter of time before a taco truck comes along, and then it’s only a matter of time before the second one comes along and realizes that there’s something going on there, right?
So I think that is less what’s the question in my mind. In my mind, it’s more like, okay, what we really know is it’s not just a matter of You know, production, it’s actually in like that simplistic sense, it’s actually that any producer of supply really requires an ecosystem around them. They need their suppliers, they need vendors, they need a whole... You know, kind of universe around them of other types of services in order to enable them to be successful. And so I think what’s still an open question in my mind and probably like one of the most interesting things about this space is What is that going to look like?
How are things going to co-develop? What is going to be the order of operations? What’s going to come first? What’s going to come next? Some of those things need to happen in tandem. How do you make that possible? And then, of course, the big question is, which areas of the supply side ecosystem are going to Generate the most value, but also enable the most value capture. I don’t have any doubt that supply will, you know, blossom. It’s just a matter of like, you know, what comes first and are you, because I was thinking about this a lot as I was, you know, just preparing for today, I was thinking a lot about the way that hydraulic fracking became such a big thing in the 2000s here in the U.
S. , And how we had folks like George Mitchell, who’s like considered, he didn’t invent it, but he was really the first guy to commercialize it, like the father of modern hydraulic fracking. And he doggedly pursued this vision for decades. You know, everybody thought he was crazy. I don’t know if he had mortgaged his own personal house, but probably something close to that. And eventually he was successful in proving out That this technology could work. It could work in the right places. It could work at the right price. And he made a bunch of money doing it.
He made a few billion dollars, which is a really large sum. But if you look around the ecosystem, there are others, for example, Harold Hamm, who further commercialized that same technology, who made five times how much George Mitchell ultimately made with his business. He’s got like a $19 billion empire today. And interestingly, he’s just made a big commitment to invest a quarter of a billion dollars into carbon capture and removal. So that’s just like a whole separate story. That’s really awesome. But if you look at those two entrepreneurs and you think about like, okay, you know, both did really well, right?
Anybody here, any of us would be so grateful for To have been a part of either of those stories if we were like really into oil and gas and just thinking about it from a technology adoption standpoint. But as an investor, would you rather have backed Mitchell and had a slice of that $3 billion outcome or Ham and had a slice of that $19 billion outcome? And so I think that’s actually the question that’s more on my mind, less so like Oh, well, is there going to be, there will be supply, people will come.
It’s just a matter of, are you as a founder in the right spot? And are you as an investor backing the right founder?
Radhika Moolgavkar: Interesting, Susan. That’s a take I haven’t really thought about a ton. The dreaded supply chain from the supplier perspective, it’s going to be really Very interesting to see how the next few years play out for sure. But speaking of that, I want to end on a little bit, another piece of news, which is Climeworks raised $650 million, which is probably the most ever for a single CDR company. And so you were talking about on a recent show, Susan, how traditional lenders would have to get involved to scale CDR. Is this like the level you are thinking of or are you thinking bigger?
And what do you think of the structure and size of the deal generally?
Susan Su: So I don’t, I’m not privy to the, all of the inner details of the deal, but I do believe that the 650 million was all or mostly equity as opposed to debt, which is actually really crazy. Cause I saw that number initially. I was like, oh, okay. That’s like A hundred million of equity and then the rest must be debt or something, right? It must be because it’s so much money. And I actually think that it’s all equity. Like it’s hard to know what the docs say, but that’s what it seems to be implied.
And so I think that’s, again, it’s going to be, it gives a lot And I think that we’re going to start seeing infrastructure players getting involved. Climeworks is the perfect company for that type of capital provider. And I’ll say, actually, I want to just highlight something that Josh brought up earlier, which is, you know, Breaking down these big projects into something very modular that doesn’t require as high of capex, that doesn’t require as much capital risk. I think that’s really smart. I also think that not every company has to be Noya.
Also, not every company has to be Climeworks. It’s actually, I think there’s going to be a really rich ecosystem where There are going to be companies that are super modular and slot in and from a capital perspective, right? Like Noya, that’s able to like make all of these steps with relatively very low infusions of capital, which I think is really great. But if you think about it from a like on the buy side, Of that equity or on the debt provider side, there are folks that maybe can’t invest in Anoya right now because they want to put $650 million to work.
GIC is not going to invest in Anoya, not because Josh isn’t amazing and his company isn’t amazing, but because they have so much money that they need to put to work. So actually, I think there’s kind of like a flavor for everybody, which is what’s really cool about how rich carbon removal is starting to become, that there are Climeworks coexisting alongside earlier stage startups. And what I would just say for founders is really be thinking about how you want to merchandise yourself in that landscape, because there’s a buyer out there or buyer slash lender out there for you.
But it’s really just about... You know, kind of putting yourself at the right spot on the shelf. And I think that Climeworks, you know, they’re quite unparalleled. Like there aren’t a lot of other companies at their current scale and readiness. And so they’re going to be a really good fit for a certain type of debt soon. But I don’t think that’s going to be super common for a lot of other companies for a while. But, you know, let’s put a pin in that and check back in five years or maybe even three years.
Who knows? Yeah, I hope it’s three years.
Radhika Moolgavkar: So, Josh, I want to end with you and just to ask you, are there any other takeaways you have from this funding craziness as a founder, you know, as a recipient? Anything else we should be thinking about or our audience should be thinking about?
Josh Santos: I mean, we’ve touched on the surge in Demand. We’ve touched on how supply is going to get there. We’ve talked about some of the pieces of the supply chain and how those are going to be really fun to watch evolve from the outside and from the inside, depending on depending on what you’re up to these days. And I think the only thing I really want to end it with is that if if you’re listening to this and haven’t yet thought that your skills may be some way applicable to Working on climate generally or in carbon removal specifically, then I would behoove that you that you reconsider this because there’s so many ways for people to get involved with climate and carbon removal that.
That everybody is going to be able to contribute in some way and so that’s I think my big takeaway for folks here is that this market is not going anywhere, if anything it’s just going to continue growing and so. It’s a great time to get in early to the industry and watch it be built. There aren’t many other examples that can think of where you’re truly watching a new industry be built from the inside. There are many examples of watching new companies within existing industries be built, and that’s great and super exciting.
There are so many fundamental questions left to answer about how this industry will exist in the future at its huge scale that it’s really worth getting into it and getting in the trenches instead of kind of sitting on the sidelines and waiting to see how it goes. It’s a ton of fun. It’s a lot of hard work. And it’s some of the most fulfilling things that I think anybody could be doing. So I think if you’re listening and are not yet in the space, Get in. And one of the things I always try to help folks with is if we can’t find a good fit with what we need now in NOIA, then I’m always looking to help people however I can find a good fit for them in whatever way that means.
So you can get in touch with me directly if you want to learn more about that. But get into it, man. There’s so much stuff going on that it’s too much to wait even one more day before getting in the middle of.
Radhika Moolgavkar: Oh, I love your enthusiasm, Josh. I often tell people that I work with and around like, We’re building something and we have no model for it. We’re really just like creating it. And it’s so fun and interesting to be solving problems like this on a daily basis. And thank you for joining. So we always end with a bit of good news. Josh almost did it for us or he did do it for us. That was such a nice positive thing. But I’m going to add one little thing. Susan knows this well.
Last week, Joe Biden was in our neck of the woods. For Earth Day, it was great to have the president here also a little distressing because traffic was terrible and I got caught in it more than once. But the thing I wanted to announce was or talk about was just that he announced the protection of old growth forests within the US. The US Forest Service is going to be mandated to do work around that while also trying to preserve forest, you know, economics and jobs. But it was particularly meaningful to me being from the Pacific Northwest, loving the old growth forest that I hike in and have been hiking in.
And so I’m just really pleased to hear the federal government take a more upfront interest in this and really push forward hopefully some good policies to maintain our forests and let everybody enjoy them because I think Susan and I are very fortunate to live in a county that has done a pretty good job of maintaining All growth forest and second growth forest and I hope that the rest of the country, you know, gets the benefit of those things as well. So with that, thanks both of you for joining and I look forward, Josh, to seeing how the company grows and keeping in touch and Susan, I will see you in about a month.
So thank you both.
Josh Santos: Thanks, Radhika.
Radhika Moolgavkar: Thanks guys.
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