In this Bonus episode of Carbon Removal Newsroom, Radhika is joined by Susan Su and Chris Barnard, plus special guest Erin Burns, Executive Director of Carbon180, for a wide-ranging discussion about carbon removal in 2022. The group touched on some of the most pressing news announced this year: Microsoft’s 2022 purchases, Oxy Petroleum’s big foray into DAC, Carbon180’s Soil Carbon Moonshot proposal, and much more in front of a live Zoom audience.
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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: So welcome to the first Carbon Removal Newsroom live, maybe the first Nori podcast live. I’m really excited to have with me today for the first time on the show, Erin Burns, Executive Director at Carbon 180. Erin, thanks so much for joining.
Erin Burns: Thank you for having me. I’m excited to be here.
Radhika Moolgavkar: And then I have with my also Susan Su, who’s a partner at Toba Capital, has a whole bunch of other titles as well, but we’ll stick with that today. Hey, Susan, how are you?
Susan Su: I’m great. Glad to be here.
Radhika Moolgavkar: And then finally, Chris Barnard, Policy Director at ACC. Hi, Chris. How are you?
Chris Barnard: I’m good. Thanks for having me yet again.
Radhika Moolgavkar: We always love to have you, Chris. You’ve been here since the beginning. So, and as always, I’m Radical Bogovkar, Head of Supply and Methodology here at NORI. So the way it’s going to work today is we’re just going to take questions from the audience and, you know, have a nice little panel discussion. I will be moderating and be throwing it out to our three experts here. Susan, as everybody knows, is all about the business world and Chris and Aaron come from the policy world. So I’m excited to hear what they have to say and see what the questions are all about.
So Erin, Carbon 180 has released a proposed plan for a soil carbon moonshot. What can you tell us about this plan?
Erin Burns: Yeah, we’re really excited about this. So I want to start a little bit with the origins, which is that, you know, Carbon 180 several years ago started working with farmers and ranchers in the Mountain West to understand what are their barriers to scaling up soil carbon. And a lot of that informed, we put out, um, We put out a piece of a white paper report at the time that talked about our findings there. In particular, we hit on a couple of gaps, including policy gaps. Out of that, we have developed what we are calling our soil carbon moonshot, which is really foundational investment and a lot of key And I think it’s something where we are extremely excited about the potentials of soil carbon removal, but we want to make sure the science is there.
We want to make sure the MRV is there. And I think especially as we head into a farm bill, so for those of you who aren’t familiar, about every five years or so, not always exactly on that cycle, Congress goes through this effort called the Farm Bill, which is a new Opportunity to sort of this major process. It typically starts and takes several months to sort of update how we think about agricultural policy in the US. And so it’s this major opportunity. And we’re coming into this time where lots of members of Congress, this administration are thinking a lot about soil carbon and what they can do there.
And I think it’s been especially important for us to ensure that as they’re going into this, as they’re thinking about ways that Congress can create policies to incentivize or scale soil carbon that they really make sure that they’re investing in a lot of that foundational science. So the soil carbon moonshot lays out like very specifically where funding should go, how much it should be, all of those pieces and sort of provides this roadmap for Congress.
Radhika Moolgavkar: So I’ll have to ask a little clarifying question. The intent more from only a scientific perspective or their other like business and policy positions that Carbon N80 has put forward in this roadmap?
Erin Burns: Yeah, and I will say, I think many of the folks listening We’ll know Gianna Amador, who is our co-founder and policy director and leads our soil carbon work, all of our soil carbon work. Really, it is focused on a lot of that foundational science. We have seen proposals in Congress that are a little bit more incentive focused or thinking about the business piece, but I think in particular for us getting a lot of that I would just think of it as very foundational. Getting a lot of that moving forward has been a huge priority for us.
So that’s been a big focus for us. And I think a lot of education on this. I mean, something else that I think has been really important is obviously Congress has done ag policy for forever for the existence of Congress. But thinking of soil carbon as a sort of like nexus for that or I think that in a lot of ways is relatively new when we’re talking about ag policy in Congress. And so a lot of this has also been focused, a lot of our work around the soil carbon moonshot and socializing it on the Hill has been educational.
Like, where is it today? Like, how do you, can you measure it and verify it? Like, if so, how, like, what are all of those processes and how do they better understand it? So a lot of this is also, you’ll see it’s a pretty big report, um, is really focused on educating Congress and sort of understanding the state of play as well as they go into the Farm Bill.
Radhika Moolgavkar: So Chris, as my other on the hill kind of guy, have you been hearing anything about this? And have you heard any responses or thoughts from Republican members of Congress to this moonshot? And how does it play with the USDA RFP too that’s been recently announced?
Chris Barnard: Yeah I mean I haven’t heard much specifically about this proposal and that might be my bad it might be that is being talked about that I’ve just not been specifically plugged into that. Like I’ve talked about before here a lot of our work, specifically on kind of carbon removal and carbon markets has been with the growing climate solutions act, I know there’s some stuff. As part of that, that looks at how we can help farmers look at the techniques necessary to implement a lot of those things. And so there’s some research and understanding of what that would look like and how to actually leverage the opportunities that carbon markets provide both for farmers, but also obviously for carbon removal.
One of the interesting things that I’ve seen in terms of kind of the pure science of looking at how this stuff works has been really in the blue carbon space. For example, Senator Murkowski from Alaska has been working on a blue carbon bill that would really kind of take stock of all the blue carbon opportunities and potential in the US and kind of create a national registry of what that would look like and what the opportunities would be to invest in that and how much carbon dioxide removal could actually be achieved with that.
And I think what Aaron was kind of alluding to is that there is still a lot of scientific Uncertainty there and that we need that clarity on how we can go ahead on this. So it’s really more on the blue carbon piece I’ve worked on and seen the Republicans engage on that.
Erin Burns: Yeah, and I’ll add, well, first of all, I’ll say we actually just released it this month, so no worries if you haven’t heard about it yet. But I’ll say in a lot of our conversations, I think one of the exciting things about working on soil carbon is it has been pretty bipartisan. We’ve seen To Chris’s point, this not be a particularly partisan issue. And I think, you know, when we are talking, one of the things we’re thinking about is not just the science piece, but like how this works within the USDA and how it’s set up to like, is it actually helping and reaching farmers and ranchers on the ground?
And like, how should they be thinking about it in the actual implementation piece of this? But I think this is another place where just like things like direct air capture, we’ve seen this be something that is so far pretty bipartisan.
Radhika Moolgavkar: Well, I look forward to seeing how it progresses through Congress. I’m really actually also curious how the USDA, the big RFP plays into this moonshot because I think a lot of the things you are advocating for people within the carbon removal industry are probably RFP gone as well. So it’ll be great to see how this plays out in the next six months, but I’m going to now pivot to Susan and ask her about a recent report that Microsoft released on its most recent round of carbon removal purchases. I think the big takeaway and something we’ve touched on a lot is that there’s just not a lot of supply out there, particularly long term durable supply.
So what did you think of Microsoft’s newest round of purchases and what do you think of the supply out there in general right now, Susan, and how and what’s What’s going to happen in the next year to 18 months around that, do you think?
Susan Su: Can you recap me on the purchases? Because I don’t think I saw this report.
Radhika Moolgavkar: I think Ace is going to have to give us some information on that, unless Chris or Erin know. I don’t know off the top of my head either, though I will say we can generally talk about the fact that the Shopify’s, the Stripes, the Microsoft’s of the world, they’re going after more durable long-term supply like Rising Tide and Kelp. And some of the charm industrial and these DAC solutions like heirloom. I don’t know if any of them have bought those particular ones, but that’s what they’re thinking about. So when you think about the supply like that, that’s very limited, but very sought after.
How does the market grow when there’s not much supply out there and it’s hard to create and it’s years away?
Susan Su: Yeah, I think this is definitely one of those examples where, you know, I love thinking about marketplaces, like of any kind, right? Whether you’re talking about an eBay or whether you’re talking about a used car marketplace or whether you’re talking about, you know, carbon removal credits, like, I was actually just thinking about this last night. It’s such a conundrum because I think there’s somewhat of a fallacy slash trope where people think, well, demand drives the market, demand drives supply. And then on the flip side, I think there’s almost an overcorrection where you have some folks, I’ve been guilty of this for sure, who say supply is what creates demand.
For example, if you look at the plastics industry, And the very beginning of petrochemicals. None of that stuff was a market before the petroleum industry after World War II realized they need to like find a way to monetize their waste products and then created the market, created the demand because they had the supply. I think the truth is that it’s both. And so coming back to carbon credits, I think it’s going to be the fact that this demand is out there and really raising its hand in a very public way.
Again, I didn’t check out that new report from Microsoft, but the fact that they spent money to create a report They released it somewhere. They got their PR team to work on it. That’s just like a lot of resources for a relatively small thing in the grand scope of their business. That is a very sort of like That’s a big hand race on the demand side, which I think is going to signal to a lot of those who create supply, but also those who fund supply, because in this case, supply has even an infrastructure and like many times like a high capex, high lead time component to it.
That’s going to be kind of a safety signal for them. And I think that’s really positive. So it’ll be a nice flywheel. I think that gets going from something like this. Although, I mean, that’s probably pretty obvious from anybody who’s observing it. I think the broader thing is that like we, and I think we need to be cautious about this on a podcast called the Carbon Removal Podcast. Like I think we’re just very optimistic about carbon removal. We like to, we’re all friends here, right? Like we know the founders of many of these Companies, we all sort of like to cheerlead one another.
But the reality is that a lot of this stuff is very hard. Almost all of it is incredibly subscale. All of the nature-based solutions have huge question marks around durability and measurability still to this day. And I’m not trying to, you know, make us feel bad about that. I’m just taking sort of like the tiger dad approach where it’s like a minus is definitely not going to be good enough here. And so what we really need to do is make sure that Really support those enabling technologies, whether that’s measurement, whether that’s tracking, whether that’s, you know, sort of really management of ownership, whether that’s, you know, the covenants that need to be part of these deals.
All of that stuff really needs to be very, very good as well in order to support the scale up of this technology, of these technologies. I can consider, when I say technologies, trees are broadly a technology too. Everything is subscale and everything has huge problems with it on the supply side. And I think we need to be honest with ourselves about that before we can actually get better. It’s awesome that Microsoft, Shopify, et cetera, they’re putting their weight behind these companies, but let’s be honest, Charm is a challenge. Tiny player still in the grand scheme of things, tiny, teeny, teeny, tiny.
So is Carbon Cure. So are like every single big name that we, you know, kind of throw around in these conversations. And I think first, like look in the mirror, see who you really are, and then like work from there. I don’t know. I kind of went on a rant. I don’t know if I answered.
Radhika Moolgavkar: Erin, I think you have something you wanted to add?
Erin Burns: Almost always. It’s just a state I’m always in. I would add two things to what Susan said. I think, you know, one is that I think one of the things that we’ve seen, first of all, I think we’re really excited about these purchases, just in that it’s been so enabling for this. I mean, like where we are today, not to disagree at all with Susan, that this is like we are You know, square zero in a lot of ways with carbon removal and we need to be thinking about this at scale.
But I think thinking about like we’ve partnered with Activate and Stripe making the purchase, you know, like committing to purchasing carbon removal from these companies and entrepreneurs, I think is It really changes the innovation landscape and I think is such a big deal. But I think, and not to be, you know, sort of everything’s a nail to a hammer, but I think this is why we care about policy. I mean, I think, you know, we started in 2015 at a time when I will say we often had to correct people that it was carbon removal and not renewal and then explain what it was.
And I think, you know, we did a bunch of different things. I mentioned our on-the-ground research. We run our Entrepreneur in Residence program. And we really landed on federal policy, I think, because of what Susan said, because of that scale issue in a lot of ways. And I think something that’s been really exciting to see as part of those purchases is more federal investment. We’ve seen this at the time when we’ve got a lot more federal investment in carbon removal. But I think increasing interest in things like And these other bigger mechanisms to scale carbon removal.
And I think, you know, something that I think is true for both Republicans and Democrats in Congress is they prefer if they are not so far ahead of the private sector that the government sort of trailblazing the way. And if we’re able to say companies are interested in this, there are You know, innovators in the US, the US has more carbon removal startups than any other country. And we’ve got this big opportunity and you’ve got these big companies that you have heard of who are making these purchases, who are investing in carbon removal.
That can also help catalyze federal policy. And I think we’ve even seen many of those players start to engage, many of those big companies who are making the purchases start to engage in federal policy. We’re seeing, and I think to the point of scale, To scale these, we also need, you know, you just can’t do this without federal policy. You need permits to store things. You need a bunch of different other pieces. And so we’re also seeing not just those big companies engage in federal policy and talk about the need for, you know, more robust standards and things like that.
But many of those companies, like we’re talking about, like Heirloom and Stripe and others, where I think four years ago, trying to make the case to startups for the most part that they needed to think about policy was I was shouting in the wind a little. It is like they’re on board. They’re like, of course we need federal policy. That is going to help us unlock scale. So again, I think that’s for us, a lot of this comes down to seeing the same problem Susan does, which is that we really, really need to be thinking about this at scale.
And we need to be, you know, we can appreciate the progress that we have made over the past few years, but also understand that like it is, you know, we can’t take a break here.
Radhika Moolgavkar: And that for us, at least federal policy is really Susan and I are both part of the same Carbon Business Council, which is a newly formed policy group for carbon removal. But before I forget, I did get an answer to what Microsoft bought generically 1. 5 million tonnes of forestry, 200,000 tonnes of soil carbon, 11,000 tonnes of biochar, 10,000 tonnes of blue carbon. 2,000 tonnes of bio oil, 100 tonnes from utilization from a total of 26 recipients. So to Susan’s point, forestry, of course, is the dominant one, but other the other ones, fairly small volumes.
Chris, anything you want to add? I want to give you an opportunity to get to jump in on this as well.
Chris Barnard: Well, the hard thing about going after two very smart people is that there’s not that much left to say afterwards. But I will just add- Welcome to my world, Chris.
Radhika Moolgavkar: Welcome to my world.
Chris Barnard: I’ll just add one dimension, which is obviously scaling this means not just in the US, but worldwide. And kind of one of the interesting things that with my background coming from Europe and the UK and attending COP in Glasgow, kind of seeing the conversations there about trying to scale this worldwide, trying to have some More centralized standards for how this would work and getting countries together to try to agree on a global kind of framework for these kind of markets is I think also a crucial part of scaling this because like as we all know it’s not just opportunities here in the US to sequester carbon from these kinds of natural solutions but there’s plenty of opportunities worldwide and really it’s one of the most cost effective and At least politically difficult ways to get countries like Uganda, for example, to be a part of this conversation and to start to be a part of the solution as well.
Radhika Moolgavkar: All right. Well, Aaron, I have another question for you, and it is you sent a letter to Secretary Granholm about how to direct DAC hub dollars. What did it say and who did you partner with?
Erin Burns: We have done a lot on tech hubs. I will say there was a, so just for a very quick background for folks who are not aware, and part of the infrastructure package included $3. 5 billion for direct air capture, for four direct air capture hubs. Each would remove a million tonnes per year, and that’s massive. That’s 400 times the scale of the current DAC industry. That is Congress previously is appropriated, like then sort of the tens of millions of dollars for direct air capture. It was a huge leap in federal policy.
So really big deal. And we are spending a lot of time on this. And so we submitted a lot of comments to this. There was a request for information. I think for us, what I would say is that There are sort of three broad categories that we’re thinking about this and some are just best practices. We have been doing this for a long time. We have worked with scientists and help set up the new carbon economy consortium. We’ve run the Entrepreneur in Residence program. We have a lot of ideas about just practices around the infrastructure and things like that.
The next thing is thinking about this as a way to catalyze innovation. I think it is extremely important that these hubs not just be about Thinking how we’re rewarding that money and making sure that it does help us support and scale many different pathways. I think what we have seen in our experience of how the Department of Energy and the federal government interact with sort of new clean energy technologies and thinking about things like Nuclear or solar or all of these pieces is you should have a lot of shots on goal, and there are a lot of ways that the Department of Energy can do this, they have other money for carbon removal, but thinking about that director capture hubs is something that’s accessible for new innovative companies and so one of the.
Submissions we made was in coordination with many of these startups. The third piece, which is extremely important for us, and I think we’ve been very happy with the Department of Energy prioritizing this as well, is around environmental justice. So when we first started our DC office, really thought about the ways in which we wanted to engage in federal policy. And environmental justice was really a huge piece of this. And so we have done a bunch of work on environmental justice over the past few years. And we have our Environmental Justice Advisory Council and our EJ Policy Team led by our Deputy Director of Policy, Ogbeck Khosar.
And so we wanted to put in some really clear recommendations on things like community engagement and Sort of what regulatory policies they should consider and things like that to ensure that when we’re thinking about scaling this and again talking about scale, this is again 400 times the size of these. Are built and successful in the near term, there are 400 times the size of the entire global DAC industry. And so the way in which these are going to be scaled is not just the towns, but the way in which it’s going to scale.
Will have a huge impact on what the DAC industry in the US looks like. And so it’s important, again, that we think not just about the tonnes removed, but the ways in which these are scaled. And so the third bucket was really focused on the environmental justice front. And you will see we are finalizing a white paper that will come out in the next couple of weeks. I have to check the timeline. By the end of April, I’d imagine, that will add a lot more context, but include a lot of those recommendations as well.
Radhika Moolgavkar: All right, well, I will move on to the next question because we have a few in line here. And I don’t know if this was to anybody in particular, but I’m not sure who will want to take it. What are the thoughts on the emergence of co-benefits discourse in the credit market from an MRV perspective? I see a potential intersection with the larger impact investing space. Maybe this is for you, Susan, because it’s about impact investing.
Susan Su: What is an MRV perspective?
Radhika Moolgavkar: Monitoring, reporting, and verification.
Susan Su: Oh, okay. Got it. Okay. The emergence of co-benefit. I don’t think I fully understand the question. All right.
Radhika Moolgavkar: So the person who sent it in is live right now. So if that person could maybe send a little more clarification, we’ll come back to you. About what your question is. So I will move on to the next one. And this is for everybody. Carbon Engineering and Oxy Petroleum have made two big announcements this week. 400,000 tonnes of over four years sold to Airbus. And the oil company Oxy said yesterday it’s planning to deploy 70 million tonnes per year of DAC plants by 2035. And Oxy said that DAC will be a profit making part of its business.
So Actually, I’ll take this. Susan, do you think this is a new phase for DAC? I’m sure Erin has some opinions too, but I’ll start with you.
Susan Su: I think it’s great. I think it’s, I don’t know about new phase, but it’s definitely like A further continuation of what’s been kind of going for a while. I mean, it’s great that Oxy made this announcement. They’ve been involved in this area for a while though. And they’ve kind of like staked their, you know, they’ve planned their flag in the ground, so to speak, on becoming a company that’s going to at least partially focus on carbon removal. And, you know, the thing that I get a little bit I think we need to, again, be realistic about is that DAC is in many ways defying the laws of nature.
It defies entropy. Therefore, in order to defy the laws of nature, as we do all the time, actually, it’s not impossible, but it costs money and it costs a lot of resources. It costs a lot of money to get a big, heavy hunk of metal into the air to defy gravity, but we do it every day, thousands of times per day. But we pay for it. And so I think that rubric is a generally helpful way that I take to apply to DAC. And I think the question here when we see these petroleum companies getting involved is, again, about scale.
So we know that it’s going to cost them. Do they have some sort of price advantage there? If not, why are they doing this? And really, at what scale are they doing this? You know, they can offer some validation and that’ll get you so far. But I think where the where the goods are really at is when there’s just a lot more volume being committed to and being made to, you know, being pulled online.
Radhika Moolgavkar: Chris, I’m going to turn it actually over to you because you haven’t had a chance to talk in a bit. And I’m curious, both in sort of your reaction to Aaron’s conversation about deck And the funding and also these two big announcements. What are your thoughts? Is this sort of the start of the sweetheart period for DAC between the tonnes of money that government’s putting in, the tonnes of interest, and these big petroleum companies starting to show some movement?
Chris Barnard: Yeah, I think it’s a really interesting discussion because Obviously, when coming from a more kind of conservative market-based perspective, when private companies are starting to get involved in these kinds of things and investing, it means that they do see potential for it and that they have, at least one would hope, a business plan that would kind of set out viability for this kind of thing and Then talking about the potential for this to, or their forecast that this would become a profit making part of their business model is I think very encouraging.
And I think they have kind of skin in the game now because they’re investing in this and they better make it a profit making a thing. Otherwise they’ve kind of wasted their money and it won’t look good for shareholders, et cetera. So I think that’s encouraging. The conversation is always a little trickier when you’re talking about government investment. I do think there is a strong role for the federal government to invest in these kind of early stage technologies and really helping bridge that innovation gap that the private sector is not necessarily able to invest in or interested in yet because it’s just so difficult to see if something will actually pay off.
My kind of one worry is being some of these projects that the government has funded, which have ended up not really working. And I guess I’d like to throw it back to my fellow panelists and kind of see what do you guys make of The millions that have been thrown at these kinds of technological solutions to capturing carbon dioxide from the air and not having a whole lot to show for it. And like, is this just a matter of having us having to triple down on like spending money to really get to the bottom of this?
Or is there just something that’s wrong with the incentives that are being given? Or like, what do you guys make of that?
Radhika Moolgavkar: Erin, take it and then Susan.
Erin Burns: Yeah. I’ll say I definitely have thoughts on the Oxy front, but I’ll say, you know, I think if we’re talking about, it sounds like, I mean, look, we’re not talking about DAC, we’re talking about how much federal money has been thrown at it, right? Like none, basically, no, like very little. But if you want to talk about point source carbon capture, I think there are a couple of things. One is that I think that I’d go back to sometimes the role of the federal government is to place lots of bets.
And some of them are going to go somewhere and some of them aren’t. And they should make decisions about when to move forward and when not to. But you’re really missing out on a lot of opportunities if you don’t. Bet on a lot of these, you know, take a lot of shots on goal. But I actually think there’s been a sort of correction to how if we think about, actually, let me take two carbon capture projects and federal investment in them. And I think this has informed some of the DAC policy and future carbon capture policy.
One is something like FutureGen, where we spent billions of dollars on this on a particular project. And then another might be something like Archer Daniels Midland or looking at Petra Nova, where a lot of these were cost shares. So I would say, first of all, that I think we do have something to show for it. We have tens of millions of tonnes or 10 plus million tonnes stored underground in Illinois. But I think that one of the things that you saw on the infrastructure bill was this shift away and something I think we’ve been talking about for a while is rather than the government picking these sort of like major projects to invest in, Thinking about actually looking at places like Northern Europe and projects that they’ve done or the way that Norway has approached this and saying, maybe the primary way that Congress invests is around things like infrastructure.
One of the challenges to building a carbon capture plant, for example, and that direct air capture is absolutely going to face is you can’t get a permit for saline storage. This is something called a classics permit. It They’re too functional. They are both the ADM, Archer Daniels Midland Plan, that was a DOE joint effort. It took about six years each, and that’s because the EPA office is underfunded. That’s the primary reason. There are some updates that you need to make to those regulations, but really, it’s just super underfunded. It’s like a couple million dollars a year.
I think that there’s been this shift where I’ve been thinking about what is this enabling infrastructure that the government can come in and help finance, help build, to allow these projects to move forward and sort of address some of those issues. And that’s not to say that they don’t have a role in later stage funding. I think we are, again, extremely excited about direct air capture hubs. I think going a little bit back to the Oxy thing, the way in which we scale these up and sort of who has power and who’s making decisions about these is really important and the government has a role in that.
But I do think you’ve seen this sort of shift in how Congress is approaching carbon management and director capture policy as a result of learning some lessons from the past 15 years of point source carbon capture policy.
Radhika Moolgavkar: Susan, anything you want to add?
Susan Su: Yeah, I mean, I think it’s like a really common conservative talking point to say that the federal government is spending so much money on this, that, and the other thing. And especially on things that aren’t like, you know, defense or like small business and whatnot. And I think the reality is, if you look at how, first of all, how much money the federal government spends each year, which is on the order of six plus trillion dollars, a trillion dollars, anything in the millions is like just, it’s a thousandth of a thousandth.
Like it’s really, really, really small. And then I think Aaron’s point is correct. You have to dig into the nuance, which are that these are cost shares. And so the amount that the federal government actually ponied up for these projects is actually, in many cases, less than half of what the total project went on to kind of need for its implementation. And then I think the other thing is, if you look at the diversity and the number of projects that received funding, it is actually sort of like an accelerator that they’re seeding lots of little technologies and the federal government is never going to be in the, you know, if I put it in terms of like my world, which is venture capital.
The federal government is not really at this stage in the business of being a growth, a tiger global, like a growth stage investor dumping large amounts of capital into individual buckets. They’re much more like a playing the role of like a YC. We’ll cut a very, very small early check and then you do the rest. There was a DOE total federal funding award that was announced, I think it was like a year and a half ago. And I think it was like 70 something million, 50 of that went to oil, gas, and coal plants.
And 20 of it went to carbon capture. 20 million. So if you think about 20 million or 21 million across a couple dozen projects, 21 million dollars. I mean, I’m sorry, guys, but that’s like I can I was actually just looking up in Strictly VC, which is one of my favorite newsletters. If you follow venture capital, I wanted to see which companies yesterday raised 21 million dollars for another widget. Let’s just actually see. A data orchestration platform in Cincinnati raised $213 million yesterday. A complete CV stack that will propel advancements in AI raised $50 million yesterday.
A natural food brand named Koro raised 50 million euros yesterday. And so when we think about $20 million for like literally removing carbon dioxide from the atmosphere, it’s so, so, so little when it’s spread out across so many projects. And I actually think that’s the problem is that it’s so little, it’s not enough to actually do much more than fund R&D for a lot of these projects. And That is really the federal government is the best funder for R&D that is out there today. It’s not up to private capital to be funding R&D.
Private capital can fund scale up. And so I think it’s actually quite appropriate and should probably be even more of that six and a half trillion that we’re spending each year.
Radhika Moolgavkar: Chris, anything you want to say in response?
Chris Barnard: Yeah, just to clarify, you’re saying that we’ve only spent millions on carbon capture or we’re only spending millions on direct air capture now?
Susan Su: It’s not specifically for direct air capture. It’s, go ahead, Erin, what you’re going to say.
Erin Burns: Sorry, I can do a quick appropriations, my favorite thing. We have spent about, the carbon capture, we have spent like a ton of, like that’s in the billions for sure. For direct air capture, while we have, we have not spent that 3. 5 billion. So it’s more in the tens of millions for direct air capture. And that’s really been since 2018. And the appropriations have ranged from about $60 million of DOE up to like, I think 95. So for about three years, we’ve had tens of millions to now hundreds and now billions of dollars for director capture.
But that hasn’t been, again, the billions have not anywhere been close to spend.
Chris Barnard: Right. Because I mean, like, like, obviously, again, I’m a fan of federal R&D. I’m a fan of kind of helping this early stage innovation, but also kind of Playing devil’s advocate because I was just looking is apparently do we invested 1. 1 billion between 2010 and 2017 so obviously that’s like significantly more than just millions. So 1. 1 billion over seven years in eight different projects only one of them ended up being completed because seven other ones ended up just being an economical and so. And again, I really don’t come at this from with a particular agenda I’m just wondering at what point are these investments considered.
Worth it or like what’s where’s the line that we draw as to this investment is worth it, this one should no longer receive any money or like how do you guys look at them just really curious about the.
Erin Burns: Yeah, I’ll say, I think it’s a change in how we approach some of these things, because I think we’re looking at this like it’s, I think one thing to know is like, and Chris, I’m sure you know, this is not something where DOE gets a bunch of money and Congress is like, I don’t know, good luck, like you guys are the experts. Like Congress has like a lot of influence and they have like a lot of ideas about what should and shouldn’t be focused on. For example, I would argue that, so in the Department of Energy, there’s what’s now called the Office of Fossil Energy and Carbon Management.
Used to not have the carbon management piece until this administration. That’s where all of the points or CCS money went. And they even under the Obama administration were focused primarily on coal. Now, if you talk to folks in the private sector, do they think that coal CCS has this bright big future? No, but for political reasons, we were investing in projects that work whole CCS projects. And so I think in a lot of ways, it’s taking the politics out of it. I think looking at a lot of the, you know, rather than this being something that is, you know, again, I think that influences a lot of whether or not this is successful or not, because what I’ve seen is often there’s a mismatch between where the politics end up in appropriations or in other processes, you know, the authorization process and Where the private sector, one, like where companies want to build projects and where they’re going to get other investors to the point, you know, a lot of this money to Susan’s point is cost share.
So if you look at the authorizing language for a lot of these programs, they do require at different stages, pretty significant cost shares. And so you’re going to, I think, have, and I think something we’ve been really excited to see if you look at the, um, Last year’s presidential budget is a much bigger focus on things like industrial point source capture, for example, for the carbon capture world. But you see these bigger investments in things like direct air capture. And just like we’ve been talking about, you have big companies who are interested in investing in this.
You have money from the private sector flowing into this. You have investors who are interested. You have this clear long-term market. Opportunity for things like direct air capture. So I think honestly, that alone, that shift to focusing on things and paying attention to where the private sector is and stepping out of the sort of political, do you prefer this fuel source over something else will actually result in a lot of really improved outcomes for federal investment.
Radhika Moolgavkar: All right. Well, this is a great conversation, but we do have a few more questions. So I wanted to make sure we hit those before we wrap at around 1. 30 Pacific time. So, the person who asked the original question that we didn’t quite follow has rewritten it and asks, co-benefits to carbon removal tend to include biodiversity but also environmental justice or community development, for example. Is there a way to bring the climate investors and social impact investors together? Susan, I think this is really a great question for you and probably somewhat in your wheelhouse, if not completely.
Susan Su: Yeah, I think it’s awesome when this happens. I would say humans tend to be very anthropocentric. And so if you can make things, if you can like hide the biodiversity pill in the social justice wrapper, that is awesome. If you can, again, same thing, if you can sort of wrap Climate solutions into social solutions. I actually think that’s a really great way to broaden your market. So like when I say market, I’m talking about the investor market. You know, we often hear this term product market fit, and it’s talking about products that companies produce.
But when a company, when an early stage company goes out to fundraise, they themselves and the deal that they put out onto the table, that becomes the product. And what they are looking for throughout the fundraising process is actually product market fit between the deal that they’re offering and the investor customers that are buying that deal. And there has to be a fit both in terms of, you know, whatever’s the zeitgeist and then also how that product is merchandised, so to speak. I think this is a great question because it’s essentially talking about is there a way to merchandise carbon removal such that it just hits a broader audience by tagging it to environmental social justice, by tagging it to community development, by tagging it to Biodiversity.
I think absolutely. And companies that do that, they just open up who’s available to them a lot more broadly. And they also reach, I think they can reach more generalist investors, which often have This is separate from impact investors, so I wouldn’t even necessarily say it’s about bringing climate investors and social impact investors together. I would say it’s about bringing broadly impact focused investors and generalist investors together. It’s very trendy. Right now for investors to want to have stuff that they can tell a good story about in their portfolio that they’re that kind of like checks the narrative box.
And that’s really important if you understand how the. We have to go out and raise money from LPs. And guess what? Part of that LP fundraising process, there’s a pitch, there’s a deck, there’s a whole narrative, there’s a story that goes into that. And so if companies can do real good and make real change and bring real innovation into the world, but also... And if you want to help their investors to tell a great story about who they are and what they’re doing, then it’s win-win and it’s going to be really, really great for those companies in terms of their financing prospects.
So yeah, I hope that kind of answers the question, but I’d be happy to elaborate more.
Radhika Moolgavkar: Yeah, actually, I’m going to ask Erin a follow-up question as kind of, I think, the person whose group is most focused on equity and social justice, right? Traditionally, carbon removal and equity and social justice have been at odds with one another because they’re right the environmental social groups often feel like it’s allowing polluting to continue. And then when you add a company like you add the petrochemical companies into the mix, who are the number one kind of villain in these narratives often, how do you how do you how do you navigate that and how do you bring those communities together in a meaningful way.
This is my own question. So sorry, audience. I went on a tangent.
Erin Burns: No, I think it’s a really important question. And back in 2019, we first started DC office. We had a blog on what is the role of oil companies and carbon removal. And we’ve really been thinking about this because in a lot of ways, you can see from a sort of financial and technical expertise perspective why A company like Oxy would pivot to being potentially a carbon management company, and I think going back to the point source carbon capture days, there was always this sort of sense that maybe one day that would happen.
And I think for a lot of cases outside of Oxy, what we just saw was more commercials than actual investments in projects and things like that. And I think we don’t have the answer. I think there have been a handful of things. One is that we need to empower EGA groups. It’s not just a narrative that oil companies have done bad things. They have actually done bad things. There are very real, logical, tangible reasons that frontline communities don’t trust fossil fuel industries. And I think we have to, I mean, first of all, I think it’s, you know, say that.
I think the other thing is that You know, carbon removal is something on its own. It’s just this pathway, right? It can be, we care about it because of climate. It can help you meet climate goals. One of the things that we’ve increasingly been clear about is that we also think that this should be about legacy emissions. We already feel the impacts of climate change today. It is a Real crisis impacting people’s lives right now. And we need to have less carbon in the atmosphere than we do today. And for us, it is extremely important that carbon removal is not a reason to continue polluting, both because of the climate impacts, but because of the non-climate impacts, the non-CO2 impacts of fossil fuel extraction and production.
This is not an excuse to delay mitigation or slow mitigation. The entire reason for us to do carbon will is to focus on that legacy, the legacy carbon that we already have in our atmosphere. And so for us, I think it’s been one shifting to be clear that we are focused on legacy carbon when we’re talking about carbon removal. This is in addition to really aggressive mitigation, which if you care about this for climate reasons, you can look at climate models and see that is clearly the case. We need to be investing in both things.
But I think the other thing has been sort of How do we get resources to environmental justice organizations to be the people we care about environmental justice? We are not an EJ organization. And so a lot of what we’ve been trying to do is get resources to these groups, make sure they’re in the conversation, helping decide what these projects will look like if they’ll be in their communities. And if they are, what they’ll look like, who benefits from them? Who’s making money off of them? What are the ways in which they’re deployed?
How is it powered? And I think all of those pieces have just been extremely important. And I think that’s one of the things I would really hit home on is sort of they haven’t been included in a lot of ways in the carbon removal conversations today. And I think it can be very easy in the carbon removal space to feel a little like the sort of David to renewables mitigation sort of climate space Goliath. But in reality, like we are Extremely well-resourced and a lot of capacities and these environmental justice organizations have sort of been intentionally shut out in a lot of ways to bigger climate conversations.
And so I think it’s ensuring that they’re the ones who are sort of making these decisions. And the last thing I’ll say here is that We also have a report called we’re moving forward, it was sort of the later half of last year that was authored by a guy because our I mentioned have been asked us where I was on our team that provides a very clear framework for how to start thinking about this and I will say. We’ve talked to we talked to a bunch of people in the carbon mobile space, but including those startups to think about you know.
Many of them are sort of asking, how can we do good community engagement? How can we think about these issues? So I think it’ll be really interesting to see how they engage. And again, going back to this Department of Energy and having people like Jen Wilcox and Suchi Taladi who have talked about this throughout their careers, like making a lot of the decisions about things like direct air capture hubs, where they’re going to set a lot of standards for the industry. So I think we are hopeful that we can sort of make some serious progress on that.
Radhika Moolgavkar: Yeah. And when I said the word narrative, I did not intend to say it was no real harm. So just to be clear, but Chris, you unmiked. So do you have something you wanted to say?
Chris Barnard: Yeah, I just want to add, I can’t really speak to like the investment world because I’m not really part of that, but I am in the political world. And when you’re talking about co-benefits, it’s interesting because I see also the co-benefits of the political co-benefits of And I think it’s really important for us to be able to do a lot of this kind of stuff and working for a conservative environmental organization that is actively trying to get Republicans to be a part of this conversation and to like break down those partisan barriers so that we can actually move forward on this together, which I think is crucial to solving problems like this, because really, if you don’t, if half the country is not on board with it, you’re really going to struggle to do to do any of this.
Carbon removal in the space of natural solutions, what Susan talked about at the beginning, I think that really is one of the most, and Erin said this as well, one of the most bipartisan areas right now for potential collaboration on climate between Republicans and Democrats. And some of the polling that we released just a few weeks ago showed that 90% of Americans are in favor of planting trees to tackle climate change. And that might seem like a silly solution or whatever, but we all know that It’s in the vein of very important solutions and it’s by far the most popular climate solution to the average American.
And so I think really there’s a political co-benefit there because it allows us to go to Republicans and be like, look, There are ways for you to be a part of this conversation, to not be afraid of this conversation. And when you talk about the fact that planting trees or restoring ecosystems or whatever it might be also helps you conserve your landscape. It helps you be more resilient against weather impacts or whatever it might be. That’s an easier message to sell for us. And so that angle of co-benefits is really interesting to me.
Radhika Moolgavkar: All right. Thank you so unfortunately we won’t get to both love the last questions because we’ve only got three minutes, so I am going to wrap with this question which is 2022 has been a huge year for carbon removal and we’re only three months in we’re not even done with Q1. What are some of the most important developments you’ve seen this year so let’s kind of make this a lightning round and I’ll start with Aaron then Chris then Susan.
Erin Burns: We passed in the FY22 omnibus at the $1 billion federal investment mark for carbon removal, which for context, just looking at director capture before 2018 was about $11 million cumulatively ever. So I think the scale and scope of federal action that we’re already seeing building on last year wasn’t a one off. We’re going to keep seeing it. I think it’s huge.
Radhika Moolgavkar: Chris.
Chris Barnard: I mean it hasn’t happened yet, but I really think if the House passes the growing climate solutions act and we get that across the finish line that would be huge, not only kind of for this space, but also the kind of political bipartisanship on this issue and getting people to work together on something like this so. I’m hoping that will be the big win of this year.
Radhika Moolgavkar: And Susan.
Susan Su: I think policy is incredibly important, and thanks to some of the policy tailwinds that have been building this year and the previous years, we’re seeing in the private sector just like a downpour of new funds that are Either totally dedicated to carbon removal, that is their sole mandate, or they’re creating a very, very meaningful carve out. And I think both the branding is really important because I always think storytelling matters a lot, but also just the mobilization of private capital. And this awakening to the fact that there are potentially some really exciting business models here.
So thank you, federal government, for funding the R&D. Some of it worked, some of it didn’t work. Of that which has worked, now we can go and put some actual growth capital to work. And I’m really excited to see that continue to develop.
Radhika Moolgavkar: All right, well, with that hopeful and optimistic note, I am going to say thank you to my panelists for attending our first ever live carbon removal newsroom. It was really enlightening and fun, and I hope we get to do it again in the future. And to everyone who participated and listened in, thank you so much for attending, and hopefully you’ll keep listening to carbon removal newsroom. And if in the future we have this, attend again and keep sending us questions via Twitter or any other way. We’re happy to answer them whenever the show is on.
So thank you all. Take care. Bye.
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