In this special bonus episode of Carbon Removal Newsroom, we’re bringing you a panel from this week at Climate Week NYC that covers the state of the carbon removal market, as told by today’s buyers and sellers.
The panel is hosted by CarbonCure technologies and is moderated by Peter Minor, Director of Science and Innovation at Carbon180.
Panelists include:
Robert Niven, CarbonCure Technologies Chair & CEO
Stacy Kauk, Shopify Sustainability Fund Director
Mischa Repmann, Swiss Re Senior Environmental Management Specialist
& Marcius Extavour, XPRIZE Vice President of Energy & Climate
Listen in for a comprehensive assessment of the current state of the carbon removal market, and to hear goals and predictions for the future of the industry. The panelists discuss the pace of innovation, market making, carbon removal as a de-risking mechanism, and the role that government should play in scaling up the market. Then, the panelists answer an assortment of audience questions during the last 30 minutes of the event.
Learn more about each participating organization from this panel at carboncure.com, carbon180.org, shopify.com, swissre.com and xprize.org.
Background details from the Climate Week NYC event page:
"The Intergovernmental Panel on Climate Change (IPCC) 6th Assessment Report reiterated that any serious climate strategy must include a portfolio of aggressive emissions reductions paired with robust carbon removal. While policymakers consider pathways to advance carbon removal development and deployment at the massive scale needed by midcentury, private sector leaders are making their own climate commitments. Increasingly, corporate strategies have centered around carbon removal. These early adopters of carbon removal are critical to catalyzing the field and spurring a large-scale cleanup of legacy emissions. Moderated by Carbon180, this virtual Climate Week NYC conversation will include a range of perspectives on both the opportunities and challenges in buying and selling high quality carbon removal credits on our path to net zero."
#climateweekNYC #climateweekCDR
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.
Unknown speaker: Hi, all. Welcome to Carbon Removal Newsroom. For this week’s show, we’re releasing a special episode with a carbon removal panel from Climate Week New York City. The panel is called The Market for Carbon Removal, As told by today’s buyers and sellers and is moderated by Peter Minor from Carbon 180. Here’s the panel. Enjoy.
Robert Niven: Welcome, everybody. I’m Rob Niven, Chair and CEO of CarbonCure Technologies. It’s a pleasure to be here today. CarbonCure is very happy to be hosting this Climate Week NYC event in collaboration with our good friends at Carbon 180, Shopify, Swiss Re, and the XPRIZE Foundation. After more than a decade of developing and deploying carbon removal technologies to help the concrete industry decarbonize, I’m absolutely thrilled to see so many more organizations and corporations make important investments and put a spotlight on this critical and complementary role that carbon removal plays. And our global effort to reach net zero.
To our audience, thank you for joining and for your interest. After today’s event, I hope that we can all keep this conversation moving forward and find more and more opportunities to engage, collaborate and partner. It’s now my pleasure to introduce our event moderator. Peter Minor leads innovation and business engagement activities at Carbon 180. He launched and operated Carbon 180’s Entrepreneur in Residence Fellowship in 2019, helping entrepreneurs start new carbon removal businesses such as Heirloom. Peter is working to increase the number of entrepreneurs working on CDR solutions, expanding the pool of customers for carbon removal and driving new policies forward in support of early stage startups.
He was previously the co-founder of Citrus Foundry and a partner of Blue Bear Ventures, which supports upstarts in science and engineering. Peter holds a PhD in Mechanical Engineering from UC Berkeley. Over to you, Peter.
Peter Minor: Thank you, Rob. And thank you to all of our attendees. I think we have a really great panel for you here today. Just a quick reminder, this session is being recorded and we will share the video with everyone after the event. I’m also pleased to add that the audio from this event will be released as a bonus episode on the Carbon Removal Newsroom podcast from our great friends, Anori. [Nori promotion cut from the transcript. It’s still in the audio, but it no longer applies.] The audience Q&A segment will come at the very end of the event.
Let’s get started. Rob already introduced me. You know who I am. I’m the Director of Science and Innovation at Carbon 180, but let’s also introduce our panelists. I’ve asked each of them to show up on video now and share their name, title, and organization, talk about what their home base is, and give a brief overview of their carbon removal portfolio. We’re going to go in geographical order from east to west. So let’s start with Mischa, who is very much east from the rest of us.
Mischa Repmann: Am I the only European? Yeah, it looks like. It’s late here. I hope I can persist through the end. So I’m Mischa. I’m from Swiss Re. Swiss Re is one of the world’s leading reinsurance and insurance companies. We have turned net zero three years ago, first in operations and then business-wide. You can imagine our business footprint is a bit larger than our operational footprint. What we do in order to agitate the carbon removal market is first we felt that it needs a high price. So we introduced a triple-digit internal levy.
And then we designed, say, a program that lives under the motto, do our best to reduce our emissions in the first place and then remove the rest. We made news lately by signing the world’s first 10 years off-take agreement with the company Climeworks, where we give them a prospect of a constant revenue stream far into the future, which helps them building basically the next plant and basically advance their roadmap.
Peter Minor: Excellent. Thank you so much, Mischa. Next up, Stacy.
Stacy Kauk: Hi, everyone. Thanks for having me. It’s great to be on this panel with esteemed colleagues like yourselves. So my name is Stacy Kauk, and I’m the director of Shopify’s Sustainability Fund. Shopify is a leading global commerce company providing trusted tools to start, grow, manage, And market a retail business of any size. To date, we have over 1. 7 million merchants across 175 countries. I’m personally based out of Ottawa, Canada. Shopify launched their sustainability fund back in September 2019. And we’re on a mission to support the most promising solutions to fight climate change globally.
Our fund is a $5 million minimum annual commitment that we put towards companies like CarbonCure and Climeworks and other CDR companies. We’ve actually decided to construct two portfolios within our fund. We have our frontier portfolio, which includes solutions that draw down carbon dioxide from the atmosphere and lock it away for extended periods of time, often geological timeframes. And then we have our evergreen portfolio, which includes avoided emissions and reduction solutions and technologies, because we’re taking the approach that we need all of the solutions. Not one thing is going to solve climate change for us.
So we want to make sure that we’re able to support a wide range of solutions. And Shopify is carbon neutral. We’ve been carbon neutral since 2019. And we’ve gone back and estimated and addressed all of our historical emissions Since 2004, when our CEO launched his first online store. So that’s where we’re at with our climate commitments and happy to dive into all the details of how CDR fits into that.
Peter Minor: Thank you, Stacy. Next up, Marcius. Thanks for joining us, Marcius.
Marcius Extavour: Thank you, Peter. Hi, everybody. Great to be here with you. And thanks everyone for joining. I’m Marcius Extivore. I’m the VP of Energy and Climate at XPRIZE Foundation. That’s where I’m standing now. We’re soon to be shifting locations, but I’m in, I guess, soon to be the old XPRIZE office, which is in Los Angeles, California. XPRIZE is a nonprofit. We’re about 25 years old, and we were founded on the belief that Radical breakthroughs can actually create a better future for a broad swath of humanity. Huge, ambitious impact statement. What that means in practice is that we use incentive prizes and other types of convenings and innovation activations to try to, one, drive specific technology innovations in different areas.
But two, really catalyze and increase the level of activity in a community, the level of partnership, discussion, rigor, collaboration, and funding in particular areas. And so we work across a range of areas from healthcare, artificial intelligence, space is how the organization was founded. And I get the job of looking after our energy and climate related work. Now we got started specifically in the carbon management world through the NRG COSEA CarbonX Prize, which was about CO2 conversion. And I’d be remiss if I didn’t say congratulations to Rob Niven and CarbonCure for winning that prize along with CO2 concrete here in UCLA.
But the idea was not just to give a platform to the type of innovation that Rob and his company were developing, try to use the prize to push them further, and then actually really use the prize to try to drive more activity in this space. Now we’ve shifted our focus to carbon removal. So thrilled to be part of a good set of friends here and talk about the ins and outs of that. We’ve just launched the $100 million, what we call XPRIZE Carbon Removal. Thank you, Musk Foundation. Thank you, Elon Musk, as the benefactor of that award.
What I’ll say too, and it’s just funny timing, I just left a talk by a recent PhD graduate from University of Toronto, actually, who studied the effective prizes. In a nutshell, what we’re hoping to achieve with this prize is not only develop specific instances of CDR and help usher in new and more demonstration and scalable projects, but specifically to use a prize as a platform to drive collaboration. And so that means my job at XPRIZE is not just convening judges and thinking about the rules, Thinking really carefully about what will unlock CDR from a policy perspective, from a community perspective, from a science and engineering perspective, even from a legal and business perspective.
And we try to take those learnings and put them into our program designs, but also act on those ideas to really use the prize as a platform. So that’s what we’re about. Happy to be here.
Peter Minor: Awesome. Thanks again, Marcius. And then Rob, back to you.
Robert Niven: Thanks very much. Wonderful to be here. So as I mentioned, I’m the CEO and Chair and Founder of Carbon Cure. Carbon Cure is a creation from my thesis research at McGill University looking at how CO2 can be a value-added product in making concrete. And we’ve gone through a crazy and exciting journey to where we are today, taking those ideas from the laboratory and scaling them up to a point now where we have a little over 400 plants operating with this technology, concrete plants around the world. That have provided well over, I think, 13 million cubic yards of concrete to thousands of different types of projects, construction projects from airports to roads to high rise buildings and Amazon’s HQ2, for instance.
So it’s been a great journey and we’re not done growing by any means. Or are we finished innovating? So there’s all kinds of new technologies that we still have to unlock, one of which was actually propelled forward through the Carbon XPRIZE process, which Marcius had mentioned earlier, which is already now commercial and being deployed in Canada and looking for those next suite of technologies or customers to be installing those systems, as well as other innovations that come down the line. So great to be here. I’m certainly happy to discuss some of these topics Thanks very much, Peter.
Peter Minor: All right, wonderful. Again, thank you all for being here. Let’s talk about carbon removal, huh? So I think for as long as I’ve been aware of the field, the conversation about carbon removal has always been about this frontier field, this lofty promise of bending the curve of climate change. But it’s always been that, this idea of what’s going to happen at some point in the future. And I think luckily for everyone, that’s not really the case anymore. Tangible and real in their actual projects on the ground. So thinking about Climeworks, just launching their ORCA facility, which is going to remove 4,000 tonnes a year.
Charm Industrial has put several thousand tonnes of CO2 into the ground this year alone. CarbonCure installed, I think, more than 100 new plants this year. Is that right, Rob?
Robert Niven: Yeah, 100 and just about 200, actually.
Peter Minor: Almost 200. So incredible, tangible. This is absolutely real, which I think is maybe the most exciting thing for me, of course, though. There are implications to no longer just being a twinkle in someone’s eye. There are now real problems that need to be solved and that we need to talk about. So luckily for all of us, me being the moderator and all of us in the audience, this is a group of people who can credibly talk about the right steps towards creating solutions. So let’s get into it. I have a couple of different topic areas I want to talk about, but first let’s talk about the pace of innovation.
So carbon removal is comprised of several different pathways, which is great because it means there isn’t just one silver bullet. We can invest across a spectrum of different potential solutions. But there are only a few examples of companies in any of those individual pathways. It’s not clear that enough has happened yet in terms of building the innovations and technologies that we will almost certainly need to get down to the cost and scale required to make an impact with carbon removal. So what I want to hear from you all, and I’ll ask you some more questions around this, is what does that look like?
What are we missing? And how do we actually get to the slope of the curve around innovation that we need to see? And Marcius, I’d actually like to start with you. You’re leading the $100 million carbon removal XPRIZE. This really is your bread and butter. And you probably have the opportunity to see the bleeding edge of what’s possible in CDR. So let me first start by asking, what are you most excited about? And what do you want to see more of?
Marcius Extavour: Yeah, great questions. I am most excited about, to use sort of a sports analogy, more shots on goal. I think CDR is moving from an idea or a concept and even the idea has been long debated and appropriately will continue to be. So the idea of removing historical emissions that are still with us today in the biosphere and the atmosphere. But now it’s moving into practical implementation. We have a few implementers, as you mentioned. So I’m excited to see people really try. And I know trying always involves some failure, but then in the failure, there’s learning.
And so I’m excited to sort of see us push through that. Those few stage gates, Rob knows about this, a lot of other practitioners know about this. I think so many CDR concepts have barely been attempted. And that’s not a critique. That’s just, I think, a statement of needing to mature implementations of CDR and see them real. So I’m actually excited about that because I think it leads to faster learning, which leads to faster implementation, deployment, et cetera. You also asked what we need. I think we need a shared understanding of what we mean by carbon removal.
And without picking a fight, I think we need to align a little bit on The relative value of different terms of storage. So what is a 25 year storage or removal worth relative to a thousand year removal? Should we call it 25 years removal? Should we call it something else? I promise I’m not trying to pick a food fight, but I think a conversation about that, I mean, it’s ongoing, we’re all part of it, but I think that’s really important because as more people pile into the tent of interest of carbon removal, so to speak, those are natural questions.
CO2 removal is a concept that’s easy to understand. But CO2 removal in practice is not one thing. It’s many things, many approaches, many paths. So a kind of shared understanding of what is even possible. And then if we can get their relative value or relative paths to implement those things and trade offs that come with each, I think that is going to be that’s going to be something really needed for the next, let’s say, couple of years to really accelerate things.
Peter Minor: OK, but Marcius, we’re all just friends here. Do you have any favorite pathways or is there anything that you’re most concerned about?
Marcius Extavour: Of course, I have favorites. I think, but, you know, I’m going to, yeah, I have favorites. My favorites are, without getting myself fired, I’m really interested in ocean carbon removal because I think the capacity is vast and I think it’s underexplored. This does not mean, you know, Just so it’s clear to everybody, I have no influence on the winners of these competitions. That’s how this works. So I can say things like this. Those are independent set of judges. We’re going to announce who those are soon. OK, disclaimer. I think the oceans thing is really interesting.
The capacity is vast. I think it’s the most underexplored. There are also a lot of interesting, frankly, moral and ethical questions that kind of get us into maybe geoengineering territory. Not really, but maybe could be perceived that way. So I think that’s going to be tricky. I have to say that things that show promise of scaling without consuming all of Earth’s resources are really promising. So I think direct air capture can fit in that bucket. I’m specifically interested in new and more efficient ways of doing direct air capture, not a critique of existing methods.
Those need to scale too. And I will also say too, I’m really, really interested in the durability conversation around nature-based. So I’m trying not to just hedge and say I’m interested in everything. These are, I think, the things I’m most interested in. How durable can natural solutions be? Under what circumstances? How durable do they need to be? Is longer always better? Yes, from a climate context. But what does that mean for, let’s say, regenerating standing biomass on Earth? And how do we think about that? I find it personally confusing, even though I feel like I think about it every day.
And so I think there’s a broader community of people trying to wrestle with these questions. And I think that’s really interesting.
Peter Minor: Stacy. I want to ask you roughly the same question. I mean, you’re one of the few people who have stood up and literally raised your hand and said, I’m ready to write checks to buy tonnes of removal. So you probably see a lot of different companies. You see what’s happening across the board. What are you excited about and what do you want to see more of?
Stacy Kauk: I love this question because it’s the reason why I love my job so much is because I get to learn and to explore, place some bets, see what happens. We’re still going to see what turns up there. But similar to Marcius, I mean, I think ocean based solutions have just such a massive potential, very underexplored. And I think the price point could be really interesting there from a corporate standpoint as a buyer of carbon removal. There’s the potential to do that very cost effectively with low energy and things like that.
So I think ocean is really exciting. When I think about another area that is exciting is it’s really going to be what starts to pick up speed. And, you know, Peter, you already mentioned charm, which when we launched our sustainability fund and set out on our mission to discover companies that we wanted to make purchases from, they were basically an idea. And haven’t really done proof of concept yet. And the lightning speed at which they are moving at is very exciting. And what I think it underscores is it’s about non-traditional thinking.
It’s about looking at something and going, well, bio oil, should that actually be a fuel that we’ve been trying that for 30 years? It’s not working. Is there something else we can do with that? And like being innovative. And that goes to Marcius’s point about innovation. And I think now that we’re seeing more companies coming in to buy, we’re getting more interest, more people are coming in to set up companies and build businesses. We’re starting to see challenges to the status quo of the narrative that’s been ongoing for years. And that’s spurring innovation.
And we’re seeing people pivot very quickly from things that are not working. And it’s that cycle of experimentation. Across all of the verticals actually is what’s really exciting because I get the privilege of following along because, you know, we have 14 companies that we’re buying from. So I get to follow 14 stories and get to learn along the way. And it’s really amazing to see the innovation and the speed that these companies are accelerating with.
Peter Minor: I love it. Going back to something that Marcius said, he brought up a great question of how do we define storage and what is sufficient permanence for any of these solutions? Mischa, you come from a very unique angle where you are in an industry that likes to think about timelines and risk. How should carbon removal be thinking about storage and permanence?
Mischa Repmann: I mean, in July, we published a report that’s called the Insurance Rational for Current Removal Solutions. And it’s a promising title, isn’t it? But we didn’t find too much actually out there in our own company, in the history of our company, in the history of our peers that would tell us how exactly we should tackle the question of long-term liabilities related to storage or storage reversals. So that is really a difficult piece that we have to swallow as an industry and we won’t swallow that alone. We have a couple of models that we can work towards.
Certainly it will involve public underwriting, for example, risk sharing mechanisms. It has to begin with the dialogue between the private insurance market, the regulator and the developers. What’s doable? What is not doable? What do we have to basically ensure? What can insurance do better than just public money? So we are really at the beginning. It’s a super exciting time to just throw these glimpses of a new market to an entire industry and see how this evolves and how it’s boiling all across my company currently. Where underwriters are looking up and saying, hey, I’m familiar with a chemical industry plant that looks familiar to an air capture facility.
What can we do there in property and casualty insurance? And realizing that one can do already a lot, but then we have this big topic about the long-term liabilities. Now, how we deal with that in the operational piece of our company is pretty simple. We just say nothing against short-term storage. As long as we ensure that already today we have the mechanism in place to replace those credits once they expire. So every credit should have an expiration date and that should be science-based. So I will ask science how long, for example, a geological reservoir can be assumed to be a safe store.
I will ask the developer of a forest project how long he can guarantee me a science-backed monitoring program to ensure That, you know, the carbon store in the living biomass is still intact. And even if the forest is still there after, say, a 10-year contracted durability, I ought to replace that credit. And that way I kind of create the legacy for my successor successor to look then into this again. And probably I should also put aside money and we’ll talk to my treasury department to see how we arrange for that and how much that would cost.
And that way we try to kind of Kind of scrutinize the discussion about how safe storage is. And similar to Marcius’s point, it’s exciting. We’re looking now into that. It’s becoming more and more a topic. And I can see, I would love to answer your question about the excitement. I can see to pivoting there. I can see now for the first time that I hire interns, for example, from the local university, the technical university in Surrey, They have carbon removal in their curriculum. They have studied it. They have looked at it out of their own interest first.
They heard it in a lecture or two and they come now with a background knowledge. My latest intern, Tom, is basically the author of an open source educational piece on science, climate science.org on carbon removal, a module where it’s explained to pupils what carbon removal is. And this is fantastic. I think that type of capacity building is what really made my year this year to see that the youngs are coming and are interested and are adding that mental capacity that is so desperately needed for the scale up ahead of us.
Peter Minor: That’s a great answer. Thank you, Mischa. Let’s flip this question around a bit. So Rob, what are the missing ingredients that would allow companies like CarbonCure and others increase Your pace of innovation and supply build out. So how do we get more done and do it faster?
Robert Niven: Yeah, when I hear that question, usually two things come to mind, and I think that they’re transferable to just about all companies in this area. I’ll add a third at the end, but the first two things I think about, of course, are making these net zero commitments and purchasing high quality CDR credits. It really does drive deployment and accelerated commercialization of new technologies. Companies like ours are continuing to build out a stack of complementary technologies that are providing greater and greater CDR impact. So I’ve mentioned the one from Carbon XPRIZE and we’re doing something else now with aggregates and then also finding that digital is an overlapping and very enabling suite of technologies that can complement hardware solutions and also provide, I think, a much needed element of traceability.
For all buyers that are looking for that higher degree of verification if maybe registries or methodology don’t exist today. So one would be purchasing high quality credits. Two would be my other favorite topic, which is procurement. So there’s starting to be discussion now about direct procurement of carbon removal and there’s been for some time now even legislation being passed around procurement of products that are made with carbon removal, carbon utilization or other types of technologies by government or private sector. That really drives the deployment and creates those market signals that give all actors in this space the confidence to invest and push harder.
So I think procurement and CDR credit purchasing can both be very, very powerful. On the third one, it’s a little more intangible, but I think that community really matters. And fortunately, this community and for the longest time has felt very small, but now it’s feeling much, much bigger. There’s so many more entrepreneurs. We need to be helping each other. One thing that we did when we made the, we purchased carbon removal credits to be carbon neutral is that we didn’t just retire our own credits, but we went out and invested in some of the other great companies in this space.
That’s just an example, but I think what I’m seeing right now is a lot of companies helping one another or finding ways to work together, create these solution stacks that are very complementary. I’d like to see a whole lot more of that. I’d like to see us working even more on public policy together. So that we can really come together and bring the right solutions to government so that we can accelerate this even faster.
Peter Minor: Thanks, Rob. One last question on innovation before we move on. Even though we’ve made a lot of progress in the field, we are still in the early days, which means there is still quite a lot of the science that is either difficult to verify or is likely going to be unknowable or unprovable in the short term. We talked a bit about Ocean CDR. That’s one example of an area where there’s still a lot of science that needs to be validated. And so how do we deal with that? How do we deal with moving forward while also recognizing and dealing with the fact that there are questions that we may not be able to answer in the short term?
And I’m going to leave this one open and anyone can pop in and give a response.
Mischa Repmann: We need risk engineers and insurance to look into this now. We have models to quantify risks and we have models to deal with uncertainties. I think an uncertainty should never be a reason not to walk forward, right? Because on the way of walking, we will have a lot of co-benefits and learnings and a positive spillover, a negative, a positive externality, it’s called, right? And if not the final climate benefit, at least we harvest all of these, right? And comparing a 1% leakage rate, for example, from a geologic reservoir to a 100% leakage rate that we have today of CO2 going to the atmosphere, I’d rather go for the 1%, I tell you.
Marcius Extavour: Yeah, I would add, too, that I sort of agree with what Mischa’s saying, that we just have to get started. And if getting to deployment and scale takes a certain number of steps, Some steps just can’t be skipped and some of the things like learning or verification, you just can’t skip them. It’s not a question of being clever. It’s not a question of working harder. They’re just required. And this is, you know, this is a generic statement for all kinds of different solution and technology developments. I perceive personally that there is a growing recognition of the severity of our climate problem.
Okay. And we have this phrase called the climate crisis. I think that’s, you know, overall it’s a good thing. I think. That generates a sense of urgency, and urgency generates a higher bar. And it can quickly get us into a place where, to use this expression, the perfect becomes the enemy of the good. If we’re holding solutions that aren’t even or barely realized to impossibly high standards, they will actually never get off the ground. It’s only by getting them off the ground and accepting the fact that some of them are going to suck.
No one’s going to go into it thinking that’s going to be the case, but some of them are going to be suboptimal, let’s say. We just have to collect that data as quickly as possible and then iterate as quickly as possible. So I think we need to, I’ll summarize by saying, yes, we’re living in a climate and emergency. That doesn’t mean we can’t take on any risk in solving the problem. In fact, perhaps we need to take on a bit more risk to make up for lost time.
Peter Minor: I love it. Thank you guys for that. Let’s move on to the next topic, which So a lot of people like to make the parallel that DDR is where the photovoltaic industry was in maybe the 70s, 80s, 90s. I think it’s relatively a good comparison with one key difference. People who were building solar panels had a market to sell into. People were already consuming power. That is not really the case for carbon removal to date, besides voluntary offsets for the most part. And so there’s this big problem of entrepreneurs having to not just Build the technology, but also build the market at the exact same time.
So let’s talk a bit more about this issue. Stacy, I would love to start with you. Shopify has made part of its mission to expand the number of companies that are investing in CDR. You don’t want to have it just be yourselves. You want to actually grow the pie for everyone. And you’ve done that to the extent that you’ve published all of your internal decision-making tools to make it easier for others to adopt. Kudos, by the way. So the question is, by your estimation, What do you think it’s going to take to increase the number of companies with robust sustainability plans that include carbon removal by 10x?
And then also, what’s it going to take to increase it by 100x?
Stacy Kauk: So I talk a lot about the carrot and the stick when you get into this space because, I mean, for the companies that are out there buying carbon removal right now, It really is about that carrot and wanting to generate market demand where there previously was none. And, you know, Peter, you mentioned that we published that we published a playbook on our website that shares how we built our fund, how we make our decisions, the things we value in a solution and the company where we’re going in terms of evaluating the return on our investment.
And we wanted to put that out there to help other people not start at zero. Other companies can start and build on what we’ve done or edit and adapt it to their circumstances. And it really is about driving down those future prices for us. And that’s the carrot is seeing this market grow and scale. That’s how we’re defining the success of our involvement. Obviously, we also believe that we’re going to need to be buying high quality carbon removal credits in order to maintain our corporate climate commitment. And one thing to recognize is that when we all have net zero commitments and whatnot coming due and those deadlines of 2030 come on, Start to arrive.
It’s not like we’re going to be able to turn on the switch and magically this carbon removal credit market is going to be there for us to just buy what we need at a reasonable price point. So that’s sort of the carrot side of things. But then when you think about the stick in terms of how to build a market and how to move things forward, we need to reduce the fuzziness around what’s an acceptable Carbon Credit. How do we value durability? What’s the price point that’s associated with that? So that when a net zero commitment is made, we’re not having some actors decide, well, I’m going to just buy the cheapest credit out there, has no climate benefit, $2, when other folks are buying Durable credits that perhaps offer thousands of years of storage at a much higher price point.
How does that all work out? We really need to, as a community, decide what the standard is and make sure that is brought forward and is the standard that corporations are held accountable to. So that’s the stick that I would expect is probably coming. So we might want more companies to get on that sort of carrot side and help build what we all know we need.
Peter Minor: That’s a fantastic point, Stacy. And let me flip it over to Rob to get your thoughts on this. So I think right now, one of the most robust avenues for CDR currently is carbon offsets market, which is large but dominated by low quality avoidance offsets. How does the CDR industry grow Beyond a small number of corporate champions like Stacy and compete in the larger offset space.
Robert Niven: Well, I think first off, just with the assumption that you can only extract value from carbon credit sales is not necessarily the case, especially if you combine it with different concepts around circularity. Other waste streams, when married with CO2, become value-added products and feedstocks. So I think that in those cases, then entrepreneurs should really be looking for other ways to extract value, to be able to improve the economics and hopefully scalability of that technology. So that’s one point. We focus on the concrete industry and there’s a lot of waste products there too that are very reactive with CO2 and can be sold.
I would say probably the most pragmatic thing is not everybody is going to be able to afford the kind of prices that are typically achieved with CDR credits. But I think everybody who has these programs around carbon offsets should really be blending them in and taking a percentage of their portfolio. And attributing those to high quality CDR credits, I think it just makes infinite sense. And there’s also not the supply. Even if everyone were to pay that number today, they wouldn’t be able to buy enough. And it’s really a supply constraint market right now.
But just starting to learn and allocate a certain percentage of the portfolio, getting into the game, knowing the different actors, understanding how to evaluate some of these questions like additionality or permanence, verification is really important. So that’s where I would say the first step should be. One other thing is like, I think it also de-risks things. We all read some of those articles in Bloomberg and there’s some real reputational harm if you go the low quality route and a tonne is not a tonne is not a tonne. So I think it is a way of de-risking some of that brand damage which can occur.
Peter Minor: Mischa, I wanted to ask you about So three latest commitment to purchase Climeworks carbon removal. As far as I know, it’s the first of a case of a risk management industry getting involved. And so I was wondering if you could just tell us more about how did Swiss3 get to the realization that buying carbon removal would actually be good for business?
Mischa Repmann: Well, it is a journey. It looks like this was a one-off and a spontaneous decision, but definitely not. It’s been really a journey that starts with a commitment that goes via a 10-year funding scheme and then thinks very carefully how to basically engage in that market to basically fulfill one goal, which is securing high-quality credits to compensate what we cannot reduce yet. The second is that we want to create business leads. So if we believe what we are saying to everybody that we’re going to need 5 to 20 gigatonnes per year throughout the second half of the century of negative emissions, then this will be a huge industry and there will be risk pools, new ones, there will be asset classes, and this is the heart of our business.
So when we go and be active on that market and be there as a buyer, we want to open the door for our underwriters and asset managers to basically grow their business too. And eventually also help them to get to their own net zero target. So we have a net zero target for our underwriting side. We have a net zero target for our investment side and the operational one. So this all basically comes together and we have to be careful with whom we work first. So once we figured basically the strategy how to access the market, We said the first contract that we’re going to sign needs to be rock solid.
And we can’t basically spend the time to discuss the durability question or the lack of standardization question. We just have to go somewhere to say, okay, carbon removal has a future. We need separate targets. We need to consider both. We are well aware of the mitigation deterrence discussion. So in order to get rid of that to begin with let’s put our money where the mouth is and go for the highest possible quality that we find. And in our assessment that was clearly a direct air capture using 100% renewable energy with the direct mineralization the store.
So within two years that stuff turns into rock and we’re basically done with the durability question. That was our main motivator to go to Climeworks and not only engage with them on the vendor-buyer relationship, but announce a partnership, enter a partnership to swim on all three lanes. We discussed their endurance needs in parallel and we discussed investment opportunity into Climeworks.
Peter Minor: Let’s talk a bit more about risk. I feel like before actual plants were in the soil, we didn’t actually have to talk about it because it wasn’t real, but now this is a real part of the carbon removal landscape that needs to be dealt with. So Stacy, if I could ask you first, by all measures, many of the CDR companies that you’re buying from are at best categorized as early stage startups. How are you thinking about risk around whether the companies will be able to deliver and especially on the timeline that you’ve established with them?
And how should the industry as a whole think about it?
Stacy Kauk: That’s a great question, Peter. And maybe I’ll preface it with at Shopify, we have a certain view on failure. And it alludes to sort of what we were talking about earlier on here. You know, failure is the successful identification of something that didn’t work. It’s not a bad thing. So when we’re looking at companies that are still conducting research and development, We still have to do some efforts to prove the environmental safety or the monitoring or the standardization components of their technology and not all the way through that whole proof of concept so you have that robust offering.
We have several companies in that situation and when we think about that, what we want to make sure we’re doing is everything we can to help them be successful. From a buyer’s perspective, what that means is prepaying a portion of the contract value in advance to get that early revenue before the machine or the project is even turned on or started because there’s upfront capital that needs to happen. We also like to do multi-year agreements because that allows these companies to go, hey, look, I’ve got a five-year purchase plan with Shopify, the guaranteed customer.
And that makes the project much more bankable, which is a very important feature because they need also to raise the capital. So equity rounds start improving, but they’re also able to get debt, too. And this is sort of a really important aspect that Mischa was talking about, the Climeworks Agreement, like you could really stand up a project when you have that long term agreement. And so when we think about the risk there, it’s almost that The risk is inverted because if we don’t support these companies now, what solutions are going to be there when we need them?
You know, one from a business perspective and two for all of society worldwide, we’re going to need these solutions. And so we need to take more risk today and to get these solutions from the lab on paper. Out into the real world, tried, tested and proven, stood up, fully commercialized, down the cost curve, because that’s the objective. And we’re going to need many, many, like you said, Marcius, shots on goal. We need a lot of starts. And so Shopify is seeing our sustainability fund as a way to be that demand signal that then can give businesses a bit of the assurance they need to start.
Peter Minor: I love that, Stacy. And I wish every Fortune 500 company thought about this the exact same way as you do. I think we’re not quite there yet. And so I guess part of the question I have is like, how do we help reduce perceived risk for everyone else who is not amazing like Shopify? And so Mischa, question for you, very specific. What’s standing in the way of buying an insurance policy on a carbon removal purchase? How do we get there?
Mischa Repmann: We haven’t the products, actually. That’s the very honest answer. We have the standard insurance, property, casualty, constructional risk, the operational phase, that’s all covered. And I think that’s not the part of the de-risking that is of concern to the Climeworks and Carbon Engineering of this world. But they are much more after, and that’s what they share with the Nature-Based Solutions people, is How do we basically ensure that the buyer gets what he buys and that this claim of the buyer, the claims that they do, remains valid over time? So it’s all hinting towards long tail risks, towards the storage liability or climate liability, as some call it, in the case of a reversal event.
And there still we know that the current buffer pool solution, as it’s applied, especially in the nature-based solution space, Probably increasingly also in the technological removals, as far as we hear the market saying. The buffer pool solution is probably a pretty inefficient thing because some projects would require a larger buffer pool. Those who burn down in the fires in the west of the US, for example, some would probably need a smaller buffer pool. And we get increasingly the tools to better monitor and to better understand the value at risk. And what we have to provide in terms of a payout or in terms of a replacement credit, that is better handled by an insurance model than like three questions that ask you, are you under risk of forest fire or are you under risk of the appropriation?
Then you add one, two or three percent to a buffer pool.
Peter Minor: Thanks for that. One area where I feel like we are struggling with risk is that we still don’t have robust I’m curious, what do you see as the future of M&V for the industry? What should be the expectations around certainty? And are there any technology capabilities that are missing that could maybe make this much more feasible?
Marcius Extavour: Yeah, thanks for the question. First, let me give a plug. The $5 million student award section of the prize includes specifically MRV, measurement reporting verification technologies, proposals for such that can help CDR. So if anyone out there is listening, that deadline’s coming up in 10 days or so, it’s October 1st. We’d love to see proposals from you. But to your question, we thought that was an important area of focus for the reasons you just identified. Again, carbon rule is an interesting concept to understand, but now we’re getting into the world of real projects and a buyer and others, a regulator, anyone, the public will ask, did this actually happen?
How do I secure monitoring over time? So I think there’s a couple of things. One, there’s a need for some shared standards and understanding of protocols and methods, right? How do we want to measure these things? I think it’s clear what to measure. Was the CO2 removed? Was it sequestered? Did it stay sequestered? Was there re-release? What rates? But that’s an easy thing to say and difficult to do. Soil carbon measurement is notoriously difficult, time and labor intensive. That’s a real need. For solutions like direct air capture, there’s sort of an uncontroversial step where you produce a stream of nearly pure CO2 that’s easily measured.
But then there’s the monitoring of long-term sequestration and injection. That’s also well understood from, well, 150 years of oil and gas. We know how to track fluids underground. But the CO2 capability is relatively new. And to first approximation, no one cares about CO2 re-emission. That’s why we’re in this problem. So we need to develop that capability. And then for some of these other techniques, it’s sort of completely unknown. Like what if there’s a new proposal for a mineralization or a biotic ocean related CDR approach? What even is the appropriate way to measure the CO2 sequestration capacity of a biological system or a standing forest or a mangrove stand or something like that?
Nevermind the long-term challenges. So, I mean, I just rattled off a list of problem, problem, problem, problem, problem. I think it is tricky, but My hope, and I believe this, is that as the, similar to our market making conversation, as the interest in, as an understanding of CDR grows, as interest in making CDR purchases grows, as policy grows, these questions naturally pop up. The buyers must ask these questions. And they will. And because they must ask these questions, that forces the rest of us to come up with solutions. And that creates an incentive, hopefully, for the MRV community to flourish.
It’s not as if no one’s thought of these questions. You know, I’m not the first to articulate these. There are many researchers out there that know about these things. But it’s just a question of spotlighting their work, supporting that work, and now providing practical application, hopefully, to help accelerate and grow it.
Robert Niven: If I could just build on that point, like, you know, from my discussions and with different types of partners, I’ve found that the big analytics companies are seeing the opportunity here and are moving into the space. So we certainly are aware and have worked with groups like Amazon, AWS, Microsoft, IBM, all working on this kind of an issue. Like we personally as CarbonCure We built out a very robust system for this traceability, like real-time traceability. We felt like this was going to be very important and it just dovetails into a system that also generates the credits using the very methodology.
So it’s all very much linked and it creates a much more efficient transaction so that we’re not sending consultants out with clipboards or highly inefficient means. So it makes your business immensely more scalable if you can build this into whatever hardware or sort of physical technology that you have is you have this layer of analytics and IoT that allow you to also really Monitor your technology from a performance perspective and making sure that there is any opportunities to gain more CO2 reductions or other kinds of value is that you have all of those systems and sensors are in place that those are immediately flagged or even better yet, they rectify themselves.
So I think this is really, really important area that I think new types of partners are emerging right now that have immense amount of expertise that they can lend to this critical issue. I also wanted to say one other thing that I thought wasn’t mentioned on the risk side. I’m seeing social license to operate is a really big risk. Even if these technologies are funded and you got all your partners and everything is lined up and you’ve got Shopify on the other end saying, I’m going to buy all these credits that generated from this project.
Sometimes there’s a lot of local opposition to projects and Certainly there’s a lot of well-meaning concern and maybe in some cases concern that this might be following the path of other types of You know, climate solutions that have been brought into these communities in the past. So I think we need to be very aware of that because I think this issue is going to become increasingly important and we need to get well ahead of this and start having those conversations now so that we’re not trying to force them when we need to get the project off the ground in a set timeline.
Peter Minor: I appreciate you bringing that up, Rob. It is super important. Let’s move to the last section that we have, which is the role of government. So I want to ask this to all of you. I’d love for you to all answer this question. What do you think is the single most important thing that the U. S. government, but you can put any government in there, what is the most important impactful thing that the U. S. government could accomplish for the CDR field right now? And Rob, do you want to start us off?
Robert Niven: I mentioned it earlier, but we believe that there’s a three-part procurement plan that starts with transparency, requiring the data, very high quality data sets that are required. Removing any regulatory barriers that are prohibiting normal innovation and decarbonization to occur. And then third, most importantly, incentivize procurement of the products that are produced with CDR technology or for that matter, just the lowest carbon technology, which oftentimes will be using CDR technology. But procurement is something that’s critically overlooked and is so, so, so important for companies like ours where We know that 40% of concrete is purchased by government as the single largest buyer that also have climate targets and are willing to be leaders on this issue is they should really be using all tools in the toolbox.
And I know it’s not necessarily always that simple, but we’ve seen some great leadership starting Starting in places like Hawaii that has created this policy model, which then subsequently won them a policy award with C40 cities. And then that was adopted by New York and California and New Jersey and a number of other states and possibly a federal level as well. So we think that there’s a great, great impact and potential in the very near term, just using procurement tools.
Peter Minor: Stacy, what do you think?
Stacy Kauk: I mean, full disclosure, I’m a recovering bureaucrat from the Canadian federal government. So from a buyer’s perspective and from what we’ve seen in the evolving CDR market right now, it’s really about removing those barriers like Rob talked about and making sure that existing tax incentives and policies are inclusive of new solutions that are being developed and explored and if they’re not that they have mechanisms to be updated at a pace that matches the innovation that’s starting to happen in this space because the last thing you want is a viable solution to have the economics not work out because the tax incentives aren’t equal across different solution types.
So I really think that’s a place where we need to rely on government to establish that playing field that is the foundation that these companies need to get that certainty.
Peter Minor: Marcius?
Marcius Extavour: Yeah, can I jump in here? So I was just making a little bit list. Yes to procurement. So it’s a short list. It’s really short. Yes to procurement, supporting what Rob said. Tax credits, thank you 45Q with an asterisk. Most startups have no tax liability. So tax credit is not useful for them per se, or have very little tax liability, but other R&D tax credits or other tax incentives, and every nation is a little bit different how they do this, but in the United States, that’s a fairly popular one. Public-private partnerships in the form of supporting deployment of CDR installations, especially as they get to sort of medium and large size.
Department of Energy has a long history of doing this kind of thing and different kinds of technologies. And through Office of Fossil, through Office of Efficiency and Renewable Energy, other areas, and the equivalent in other places. Can’t forget about basic R&D. This isn’t, we’re not done with, I think, basic R&D in a lot of CDR fields. R&D, and as a former sort of lab researcher, R&D is generally, and time and time again, proven to be one of the highest impact investments of public spending in innovation. It’s not the only one needed, but it pays huge returns because in the grand scheme of things, it’s extremely cheap.
And the last thing I would say, and I don’t have a practical suggestion for this, but I want to just come back to something Rob mentioned before. To the extent that, of course, governments are representations of the people and some segment of the society, getting involved and maybe helping to convene some of the social license conversation, whether that means bringing people together, whether it means regulating or adjusting laws in response to the social justice conversation, setting the rules of engagement for consultation, And just community involvement when it comes to discussing new projects, I think that may be an opportunity.
This is the thing that varies most, I think, from country to country. But in the United States, there is an active environmental justice community, many communities spread around. Carbon removal is starting to come into that conversation, you know, thanks to great work by Carbon 180 and others. So I think that could be a role for the federal government and probably state and local governments too.
Peter Minor: And some final thoughts, Mischa?
Mischa Repmann: Yeah, I mean, I’m a bit angry that Markus took the point, but I think education is definitely something that is often overlooked. And this doesn’t only cater to carbon removal, it caters to anything related to climate action and people’s education on this matter. And once people understand better, they’re also more willing to change behavior, to accept technologies, to see the longer term horizon, to think in the eyes of their kids. So that is, you know, every dollar spent on education is to be hailed. You mentioned PV before. PV had 60 years time, I think, to go from the first commercial operation to low cost.
And we just saw low cost basically the last decade. So one paper mentions 2017. And 2017 was also the first time when direct air capture facility was built close to Zurich, labeled as the first commercial operation. And we don’t have 60 years. To do this massive scale-up that PV has seen. We only have 30 years, essentially. So it needs all hands on deck from governments. And it hasn’t been mentioned, but it needs also money. And I would love to give you the answer that it’s a carbon price that solves the issue.
It’s a universal one and a level playing field for everyone. And we’re not going to see that. So the other option that then the government has is to distribute subsidies. And the tax credit is a bit unfamiliar over here, this side of the pond. But subsidies in order to get PV off the hook is definitely something that we know and probably something that we have to require as well as we require that subsidies are taken off the fossils.
Peter Minor: That’s great. One last question on government. This is for you, Marcius. The CDRX Prize is funded largely by a single wealthy benefactor. Do you have thoughts on the responsibilities of government And then private industry and where the line exists between the two of them.
Marcius Extavour: Say more. Do you mean, do I think that the government and private industry should adopt different roles? Is that why you’re asking me?
Peter Minor: Are there pieces of the solution that should be the responsibility of government? Are there pieces that should be responsibility of private industry and private individuals?
Marcius Extavour: I understand.
Peter Minor: Is there overlap?
Marcius Extavour: Yes. Okay. There is overlap, but I’ll try to not make everything seem like everything. I think it’s hard to argue that the federal government should not have a role in the long-term liability associated with, let’s say, underground sequestration. That’s not a new idea, but I haven’t heard a good argument that is not true. So I think that’s a clear role for government. Basic R&D is still best funded in public. I think we’re in an era where that’s often questioned, but I think the data reveals that is historically true. So I think that’s another, and to Mischa’s point, education.
Sometimes it’s a question of your politics whether you perceive that the private sector is better at innovating than the public sector. That’s a common refrain. A lot of the data shows that historically the public sector So specifically in the United States is the key actor in basic R&D and a major driver of innovation, despite I think a lot of popular cultural myths. And that doesn’t mean the private sector has no role. I think specifically though, now the private sector can play a greater role in some of these areas because the stars are starting to align around the urgency of the topic and the need.
And that will allow us to make things like a roadmap to deliver CDR by mid-century. So just going back to the solar example, Mischa talked about 60 years. So I’m a physicist, so I’m just going to physics for a second. The physical effect that leads to solar PV was discovered by Albert Einstein in 1905, photoelectric effect. The first device that underpinned solar PV was from the 30s and 40s. It was a diode. PV is a diode. It’s like an LED in reverse. So it’s almost a century since A number of scientific breakthroughs have kind of aligned the messy process to now we can talk about commercial devices and we’re still only at a couple percent of global electricity capacity as PV, even though it’s increasing exponentially.
But in 1905, no one was thinking we need an electricity solution. It was just, wow, what happens when you shine light on metals? You know, that’s what Albert Einstein was thinking about. Now that we know where we want to get to and we see where we’re starting, we do have a possibility to shrink that gap. So back to your question. I think the private sector can play more of a role in the basic R&D and certainly in the scale-up and development, but I don’t see it happening without public support and especially public support for the ground rules around storage and long-term liability.
Peter Minor: Fantastic. Okay, final question before we move into audience questions. This is for everyone and please answer in one or two sentences only. Of all the things that could prevent us from reaching gigatonne scale removals in time to materially impact climate change, what’s the one thing that keeps you up at night? And Michel, let’s start with you.
Mischa Repmann: Friends fighting friends instead of the foe.
Peter Minor: That’s perfect. Marcius?
Marcius Extavour: Yeah, I think that’s the number one. But if I pick a number two, I’d say social license.
Peter Minor: Stacy?
Stacy Kauk: Since those two are taken, I will go with the third thing that keeps me up at night, and that’s just not getting enough unit economics and economic certainty to get things across the valley of death from the lab into actualization. That’s what bothers me a lot because we need so much cash.
Peter Minor: And Rob?
Robert Niven: Yeah, I’d have to say definitely time. Our mission as a company is to lower 500 megatonnes per year by 2030. And we’re all working against the clock here. I think we all have pretty good ideas on what steps need to be taken along that path, but just the time, that’s the killer here, is just fitting it all in and figuring out ways that you can cut corners.
Peter Minor: Amazing. Okay, let’s jump into audience questions. The first is from Corey, and the question is, Many of you have mentioned the importance of companies’ carbon neutral commitments. To what extent do we need those companies to have Scope 3 neutrality targets or historic emissions targets such as Shopify? And will CDR demand be sufficient with only Scope 1 and 2 targets among major companies? Anyone can jump in.
Stacy Kauk: I guess I can start because I see Scope 3 as collaboration. And, you know, we’re a software as a service company. We have scope one, scope two. We rely on renewables. The reductions have happened. We’re stuck when we look at scope three. And really, it’s about what we can influence in terms of upstream and downstream supply chains. Which specific levers do we have to pull? Because when it comes to scope three, it’s somebody else’s scope one and scope two. So for me, reductions come first when we talk about that. And that’s going to be critical.
And so the connectivity between that and CDR isn’t necessarily clear from like a corporate responsibility standpoint. So I think what we’re really talking about is how long is it going to take for full electrification and decarbonization of electricity grid? How long is it going to take for clean fuels? And that’s that conversation From my perspective, however, the CDR conversation is really about, you know, if we stopped emitting today, it’s inadequate. We’re beyond the point of no return. So we need CDR to undo 200 years of industrial emissions. And that’s where the CDR really comes in.
And when you match that up with a corporate commitment We have the vehicle for the voluntary market to support the development of carbon removal because we want to buy high quality solutions. CDR is that solution. So it ends up being like a financing vehicle for the piece of the puzzle that we need when reductions are done.
Peter Minor: Really well said. Rob, do you have any thoughts to add?
Robert Niven: Well, definitely plus one to everything that Stacy had mentioned, but I think addressing Scope 3 emissions, you can also double up the motivation. In our case, most of the time we impact Scope 3 emissions. Scope 3 emissions, like with the construction of facilities. So if you’re using your Scope 3 emissions to take different actions to reduce your emissions within your building. So for instance, we do a lot of work with Amazon on a lot of their fulfillment centers, our HQ2 and so on. That side of it, which is driving demand of our business by specifying it into just reduce the embodied CO2 emissions of Construction and buildings.
And then on the other side of things is if you are also having players that are putting down or reducing their scope three emissions through CDR credit purchasing, then you really double up on these types of incentives. So I guess that’s maybe something additional to what Stacy said is you can develop other types of demand signals by focusing on scope three.
Peter Minor: Great. Thanks, Rob. Any other questions, Marcius, Mischa, or any other thoughts?
Mischa Repmann: Maybe I throw something in and it’s a bit provocative, but often sometimes I wonder, and we’re discussing that in a group for the SBT corporate net zero standard too. So how much of scope three is in 90%, is it 95? And we can talk for hours about the scope three. What we did at Swiss 3, we basically ask ourselves, what are we willing to put on the table per tonne? We decided not to go basically very broad in the scope. So we stick to the scope that we already offset since 2003, which is the one and two and most material three flights in our case, particularly.
So we don’t go to the blurry edges basically, but we higher the price so significantly that for those things that we do under this scope, we really have an effect of people rethinking their decisions and do low carbon decision making. The integral beneath is the same, right? If we go for a bit lower scope, higher in price versus we go very broad in scope and have therefore only a small price, it’s the same that we put upfront to grab for the climate. And then therefore the question we should all ask ourselves first is, How much are we willing to spend?
And that goes towards the contributional claim that we don’t necessarily have to do tonne for tonne accounting, which is very hard for me as a big multilateral corporate with the auditors in the back who want to see the proof of what we do. But it’s just a bit, you know, the vision that we first ask ourselves, what are we willing to spend for the climate? And then just go and spend it and stop the discussion on how much and where. And it’s a bit bogging us down from just go there and do things.
Peter Minor: Okay, let’s go to the next question from Richard. This is a wonderful seminar. Thank you, Richard. You all seem to have a collaborative vision for the productive path forward. However, in my view, the elephant in the room is getting China, perhaps India too, to commit to carbon capture and sequestration for what should be a shared effort. Can the seminar participants provide their views on the topic? Marcius, do you have any thoughts by chance?
Marcius Extavour: Yes. So many thoughts. A high ranking minister from India, I forget the person’s name earlier in the year, made the claim that the global north should be responsible for CDR specifically, not just broader environmental cleanup. And I thought that was pretty interesting and wondered. Somebody texted me at the time and said it was just going to kick off like a series of these kinds of things. I think I don’t quite agree with the premise. I’m sensitive to the argument that India, China, and many other developing nations have a fundamental right to develop and supply things like basic energy services to a population.
I’ll just point out that India and China are really different in CO2 profile. That said, Who has a fundamental responsibility? I think the global north clearly has a fundamental responsibility. I don’t think that means India, China, other developing nations don’t have a responsibility, but I think they really do have a dramatically different context. I mean, I live in a country, I was born in another country where electricity access is just not a problem for most people. For many it is, but not compared to other places. Trying to grow an economy while decarbonizing is a pretty unique challenge and probably harder.
So I’m kind of sensitive to that. So I disagree with the premise slightly in the sense that just because China is the largest volume polluter of CO2 doesn’t mean that they necessarily bear the greatest responsibility to do CDR specifically. I think that’s the position I’m trying to say.
Peter Minor: Rob, I’m wondering if you have any thoughts given that concrete is a big Carbon emitter, especially in the developing world where new cities are being built all the time. Do you have any thoughts?
Robert Niven: Yeah, so the stat that I think Bill Gates brought up was that half of the world’s cement is being consumed in China and more cement has been consumed in China the last three years than the US over the last hundred years. So to give some context, it’s very large. Another fact that came out was that if cement was a country, it would be the third largest emitter after China and the US, so there’s a lot of emissions here to work on, so we’ve got our work cut out for us. From my perspective, we get a lot of inbound interest from China.
I think it’s a more complicated model. You need to really rely on the right partners. We, of course, are thinking about this and we don’t have operations in China yet, but we have a lot in the region and it would be a natural future step for us. I think we see it as an opportunity. We look at CDR from a business opportunity perspective and that’s really the crown jewel. If you can make it there with the right partners, it’s pretty exciting. And I just don’t think we can be successful as a company with our mission if we’re not there.
So it’s something where we think that there is demand, but we just want to make sure we’re really careful and methodical and do it right. Because there’s lots of other concrete plants around the world that we can really scale up on right now.
Peter Minor: Great answer. Next question is from Calvin. What about regulatory jurisdictions? Emissions markets are bound by political lines. So emitters move. What might be the risk opportunity in ambient CO2? Mischa, do you have any initial thoughts on this question?
Mischa Repmann: Yeah, I mean, the question of carbon leakage, this is definitely something that is well-known thanks to the old carbon market, right? So if we hadn’t had the old carbon market, we wouldn’t know about that as well. And therefore, I always say the carbon market that we have is the best we have because it’s the only we have and we can take the learnings from that. We are building a part of a new market or maybe a completely new market that can profit from the learnings. We can profit from the risk of leakage.
The EU is discussing very seriously carbon border adjustments unthinkable five years ago. And that makes me hopeful that we get that right. The additionality question of doing carbon removal and if you pay a couple of hundred dollars for that is kind of obsolete. And also it’s obsolete that it’s going to be a power imbalance between the north and the south as we had sometimes in the avoidance carbon market because carbon removal is done as well as especially technological and expensive ones is probably a topic for the developed world much more to begin with than for the developing countries.
Peter Minor: Anyone else want to add something?
Robert Niven: Just a point. With voluntary markets where a lot of this stuff is happening, there’s no geographical boundaries. We really seek out those projects. We haven’t announced our first projects in Africa yet, but in other developing countries, Southeast Asia is a really interesting market for us. To me personally, a great opportunity to have a bit of transfer of resources and to bring technology, new technologies in some of these areas. But I think the voluntary markets overcome some of those limitations.
Marcius Extavour: I would add just too briefly since I’m living in California, I believe the California low carbon fuel standard is not restricted by jurisdiction. To be honest, I was kind of shocked when I first learned that. But yeah, that means a subnational government in one country is offering credits for removal even in another country. So yeah, California. But can that be a model for other jurisdictions? I mean, maybe. But it is large. California is what? Like the seventh largest economy in the world if it were a country. So it’s not an insignificant community that has tried this.
Maybe a model.
Peter Minor: Stacy, one thing that strikes me is that you are a Canadian company who is very active in the U. S. political and carbon removal fear. Maybe not political so much, but certainly the carbon removal fear. So do you have any thoughts given that reality? This is not just a national thing in terms of problems, but seemingly not even from the solution side either.
Stacy Kauk: Definitely. And so Shopify was founded in Canada, here in Ottawa. Now we live on the internet everywhere around the world. So really, it’s kind of analogous to the atmosphere. It’s everywhere. It’s around the world, right? And so we’ve taken that approach with the projects that we select to make purchases from. It doesn’t matter where you’re located. It’s really about the carbon benefit. And we actually prefer to have more diversity in geographic locations for the companies that we support. And I think what will be really important going forward is that jurisdictions create an environment where innovation can happen and these kinds of projects and solutions can flourish.
And that really is about capacity building. And that is a role for global cooperation, I think. And to bring it back to some of the conversations we’ve had about government and how to act together, I had the fortunate opportunity of being involved with the Montreal Protocol to protect the ozone layer. And that is the most successful multilateral environmental agreement. And the reason for that, I personally believe, is because It isn’t just one solution or one size fits all for all jurisdictions. It has an approach that countries that have been benefiting from polluting are funding the pollution recovery in developing countries.
And so there’s a wonderful financial mechanism that underpins phase outs and the cooperation that happens under that agreement. And until we Understand the social justice side of things and the equity questions around carbon removal and decide how to act together as a global community. It’s not going to be a worldwide distribution of solutions, and it should be.
Peter Minor: I think our next question gets a little bit deeper into that. And the question is, in the policy sphere, we often hear that creating restrictions and limitations Makes it hard to get deployment of certain technologies off the ground. Oftentimes, legitimate environmental justice concerns are relegated to that same bucket of limitations make deployment hard. We just need to start and we will figure it out. How can we ensure that marginalized communities that have often been burned by fossil fuel industry and their concerns are genuinely considered in the process of deployment and scale up?
And Marcius, you’re shaking your head. I assume you have some initial thoughts.
Marcius Extavour: Yeah, I mean, my thought is, it’s a rudimentary thought, but my thought is deal with the question early and often. From my vantage point, a lot of environmental justice conversations tend to be sort of after the fact. Maybe not everyone would disagree with that characterization, but we’re trying to correct a poor trajectory in some ways. That’s like a simplistic way to look at it. Whereas what if we could try to You know, what’s that expression? Solve the small ones when they’re small problems before they become big problems. So if we think about social license, if we’re worried about social license now, even when the first initial projects are starting to spread their wings and grow, this may pay huge dividends down the road.
What we don’t want is, you know, the situation with, you know, a lot of sensitivity around this issue, but for instance, pipeline siting pipelines are well-established technologies and the developers sometimes can’t understand why they just can’t develop. And the communities are saying, like, why can’t you understand why we don’t want you to develop here? Pipeline’s not a great example, but if we can have the social justice conversation earlier so that we can maybe eliminate some of the worst social impacts of some of these solutions, or maybe even eliminate some of them altogether, then I think we have a hope of actually getting to deployment in a way that’s actually inclusive and Hopefully can reduce future conflicts.
Also, it has the approach of actually trying to be a little bit more inclusive. So that isn’t just a few technocrats in the global north talking about some interesting solutions and then, you know, hectoring everybody else to deploy them, whether they’re local or whether they’re abroad.
Robert Niven: I think we should really commend Microsoft as well for baking that into their last call for CDR credits where that was part of their criteria. I think this is the second round but I believe the first time they’ve done that where they really laid out a lot of the climate equity considerations and I think getting started As Marcius said earlier, by baking it into the project design. You can also oftentimes find that by doing that you actually have more robust, better projects. An added step that we’re taking is we’re allocating a portion of those proceeds to reinvest at the local level.
And the allocation of those funds are going to be designed by local community members, and of which concrete is inherently a very local business. They can only ship the product about half an hour. So kind of working with all these local stakeholders, I think by doing that, you’re going to have more robust, more resilient projects that are going to lead to jobs and investment in communities locally. I think CDR can create new models for doing this, right? Where other industries or other climate technologies may not have had the privilege of being exposed to some of these issues as pointedly as we see today.
So I think there’s a great opportunity. And these models can be transferred to all companies in this area and maybe even other classes of technologies.
Peter Minor: That’s great. Thanks, Rob. Michel, are you going to say something?
Mischa Repmann: Can I add one thing? Yeah, I think it’s also Maybe I’m just a very, you know, very optimist, but we talked about risk and the reputational risk has been mentioned. I just anecdotally, I can tell you from the meeting that we had in the World Economic Forum summer meeting, there is the alliance of CEO climate leaders. It’s 112 CEOs that met and we presented the case for carbon removal and followed by a call for action. The question about quality and what can go wrong and where you have to look and uncover and you don’t disturb or negatively impact ecology, local communities, etc.
That was undebated and a large, really, everybody was like, yeah, sure, yeah, we need quality, we need a procurement guide, we need all of that. And the second anecdote is in my own company, we had Little resistance to walk through this plan because we took the steps we took and explained a lot. When we faced resistance, these were the people who were in the company since more than 10 years who experienced the carbon trading desk and they said, hey, but this is carbon trading and very bad. It’s 85% hot air and no additionality.
And are you doing the same mistake again? So I think, again, there is a lot of learning from the last 15 years that we can build on now and we don’t have to do the same mistakes again.
Peter Minor: Thanks, Mischa. Let’s go to the next question. It’s a hot one from Chuck. Do you think biochar is a good technology for permanent carbon removal? Stacy, you smiled and that’s enough for me. Do you want to go first?
Stacy Kauk: Sure. I mean, biochar is only as good as the project. And I mean, you can say that for other CDR solutions as well, but biochar specifically, it really is about the lifecycle analysis, where you’re getting your feedstock in terms of biochar. If that wasn’t going to be a decomposing waste, releasing CO2 and methane, not additional. So there’s that question. And then what are you doing with the biochar afterwards? And then, you know, you have to make sure that there’s monitoring and standards for that as well, because you want to make sure that the carbon is actually there for when the length of time it’s supposed to be.
But then how are you running your plant? So it really is for us, it’s really about a detailed project review to make sure that negativity and additionality is in fact the case. So biochar I think it needs an appropriate review when you’re deciding to support a project. But biochar is very interesting because you have to build that local ecosystem. You have to have your feedstock, your plant, and then if you’re shipping your biochar to another continent, then it’s not worthwhile from the emissions standpoint. So you have to have that full ecosystem built, which makes it a very interesting solution because you can have this decentralized approach That likely can be implemented in many jurisdictions.
So I see biochar being quite promising in terms of bringing projects to new places, but they have to be quality projects.
Mischa Repmann: Yeah, let’s not forget the co-benefit of applying biochar to a field, right? Of course, when one’s applied to a field and not a landfill in an inert area, Landfill, it also starts degrading. True, right? And it will degrade differently for different environments, climates, type of charcoal that you produce. All understood. And science can tell us more or less what the decay rate will be. A little shout out to company Carbon Future. They sell you the biochar credit as an integral of that decay rate. So you can then say, I’m going to buy over 50 years or over 100 years.
And you get the integral sold. And again, what the company should have in place, if you have contracted the 100 years durability, you have to be aware that you are creating a legacy for many generations to come. And you have to make sure that you at least try today to enshrine that in the corporate memory that you have purchased a credit that may expire after 100 years, because there is no more monitoring or Or has never been good monitoring.
Peter Minor: All right, we have time for one last question from Blake. What is needed to improve recognition for corporates, the carrot, Stacy’s terms, for the benefit of investing in CDR today at lower volume, higher price versus tomorrow at likely higher volumes and lower prices? In other words, those investing today are helping CDR solutions accelerate up the experiential curve and down the cost curve. How do we recognize and incent them? Rob, do you have any initial thoughts?
Robert Niven: Well, I suppose they become more They’re knowledgeable and expert on the topic, so they’re better equipped to be able to identify the right projects, and they know the actors, they have the relationships, they may be involved in forward contracts. So I think that those are all benefits. I believe the reputational benefits are also there. I don’t know how many people exclaim the virtues of Shopify from the great work that they’re doing, so I think there’s value to that. And also employee retention.
Peter Minor: Stacy, you’re obviously our expert here. Any thoughts?
Stacy Kauk: I think, you know, it is important to become familiar with CDR and I think when it becomes a corporate requirement, that experience is going to be important. But, you know, sometimes CDR can seem very complicated. We’re talking about engineered solutions. We’re talking about chemistry, all sorts of stuff. And I think a piece of advice would be, you know, take advantage of the ecosystem that exists. There’s experts out there. There’s companies that can help you understand. You don’t have to necessarily, you know, stand up your own PhD You know, climate team to go out and participate in buying carbon removal.
There’s a lot of resources available. And, you know, this community is quite collaborative. I mean, we’ve had I’ve had conversations with companies who are, you know, standing up direct air capture facilities and they’re exchanging tips and tricks about which control system to implement. You know, like it’s not a competitive space at this point. It’s really about helping everybody out. Obviously, everybody wants to make money, but there’s a lot of advice out there, and I would encourage people to get involved and to see who they can learn from.
Peter Minor: All right, that’s all the time we have. Thank you, team, for joining for such a great conversation, and thank you all from the audience for joining this Climate Week New York City event hosted by CarbonCure, moderated by Carbon180, and hosted on Nori’s Carbon Removal Newsroom podcast. [Nori promotion cut from the transcript. It’s still in the audio, but it no longer applies.] We’ll also share the video via your registration link. We at Carbon180 invite you also to subscribe to our amazing newsletter at carbon180.org slash subscribe. You will not regret it, I promise that.
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