This week we talk about recent developments in local, state, federal, and international policymaking that aim to help scale up CDR.
Joining the conversation is Greg Nemet. His 2019 book “How Solar Energy Became Cheap” traced the history of PV technology and the government policies that helped it become the cheapest form of electricity in history.
At the book’s conclusion Greg examined how the lessons from solar’s rise could inform the effort to scale up DAC and other newer climate technologies. Greg was also an author of the IPCC’s AR6 mitigation report, released in April.
Radhika, Chris, and Greg discuss-
LOCAL: Last month Boulder, Colorado, and Flagstaff, Arizona, announced a partnership to pool $300,000 to purchase carbon removals to help them meet their climate commitments.
STATE: California’s Governor Newsom proposed that the state spend $100 million in this year’s budget to match funding for CDR projects that have received federal grants, specifically mentioning the recent federal infrastructure bill.
FEDERAL: In April the Federal Carbon Dioxide Removal Leadership Act was introduced by two Democratic members of congress, and in May, two Senators introduced a version of the bill. If passed, this legislation would compel the federal government to directly procure carbon removal from various technological methods.
INTERNATIONAL: Carbon removal found its way into two intranational agreements recently. In May, President Biden announced the Indo-Pacific Economic Framework with Australia, Japan, and South Korea. According to Brian Dees, the White House Director of the National Economic Council, this plan will promote “carbon removal purchasing agreements.”
That same week the US Special Climate Envoy John Kerry at the Davos Conference announced an expansion of the “First Movers Coalition,” a group of corporations committing to supporting six hard-to-decarbonize sectors, including carbon removal. At this announcement, Alphabet, Salesforce, and Microsoft agreed to spend $500 million on carbon removal purchasing by 2030.
Full Transcript
Announcer: You’re listening to Carbon Removal Newsroom, a weekly show about current events in the world of carbon removal, from technology and innovation to policymaking and job growth. Brought to you by Nori, the carbon removal marketplace.
Radhika Moolgavkar: Hello, everybody, and welcome to the Wednesday, June 8th edition of Carbon Removal Newsroom. This week, we’re talking about policy, and I am here with Greg Nemet.
Greg Nemet: Yes, no, you got it.
Radhika Moolgavkar: Okay, Greg Nemet, professor at the University of Wisconsin-Madison in the La Follette School of Public Affairs. Greg, thank you for joining me. Apologize if I butchered your name.
Greg Nemet: It’s good to be here. Thanks.
Radhika Moolgavkar: And then, as always, Chris Barnard, Policy Director at the American Conservation Coalition. Chris, thanks for being here.
Chris Barnard: Good to be back.
Radhika Moolgavkar: And I mean, congrats on the big conference that you guys are having this weekend, or maybe it starts tomorrow?
Chris Barnard: Starts Friday.
Radhika Moolgavkar: Friday. Cool. Well, congrats on pulling that all together. That’s super exciting. And if anybody is interested in learning more, I’m sure you can go out to the American Conservation Coalition website and learn about it. And as always, I’m Radhika Moolgavkar, Head of Supply and Methodology at NORI. So today we’re going to be speaking with Greg and Chris about all of the new and interesting policy work that’s happening at many different levels of state and local government. Greg wrote a book in 2019 called How Solar Energy Became Cheap and traced the history of PV technology and the government policies that helped it become the cheapest form of electricity in history.
At the conclusion of the book, Greg examined how the lessons from solar’s rides could inform the effort to scale up DAC and other new or climate technologies. He is also one of the authors of the IPC-ARC6 mitigation report released in April. So what I love actually about Greg is a very positive perspective is that climate change is getting worse, but the solutions are getting better. And I like that message. It’s another message the ACC has been putting out as well. We need positivity in this world. So today let’s just dive into it because there’s so much happening and I wanna start at the local level.
Greg in Boulder, Colorado and Flagstaff, Arizona, they announced a partnership to pull 300,000 Dollars to purchase carbon removals to help them meet their climate commitments. You know, what are you thinking about seeing small cities get into the game? And what do you think of their approach?
Greg Nemet: Yeah, well, on one hand, it’s really surprising, like this is a truly global problem. And for carbon removal to play a role in addressed in the climate change problem, It needs to scale up to gigatonnes in the next 30 years. So that just is tremendous in terms of scale and acceleration. So how can a small city do anything meaningful on that? So that’s the first observation on it. But second, on the other hand, if you look at what’s happened in other technologies, Small places like cities and states have been tremendously influential.
And it’s really not gilding a lily. It’s real. I mean, that’s what I saw in solar. And that’s now the playbook where Japan was the first country to create a subsidy program for consumers to actually use solar. And they did at the national level in the 1990s. But what really actually set the stage for a much bigger set of national policies and just this explosive growth of the solar industry was small cities in Germany subsidizing solar in the early 1990s. And that was the time when solar was very expensive. Germany is not the most sunny place in the world.
And this was not... Rich cities like Hamburg or Frankfurt or Berlin. This was small cities that were trying to do something with it. And they did something really important is they worked out how policies could be designed. They worked out policies that would create Strong enough incentives for people to actually take it up and install solar and they started to get an industry moving in the right direction. And so that’s something that we could see happening with carbon removal as well. So I wouldn’t dismiss these efforts because they’re small and because they’re municipal level, because we’ve seen that can create some really important benefits that allow things to go bigger later.
And I think the most important thing is they showed that a policy can work That it might not be ruinously expensive, that there’s ways to make the policy better, and it provides this kind of testing ground at small scale, which I think is exactly what we need to do. So I’m really positively impressed by seeing Boulder and Flagstaff move forward on this.
Radhika Moolgavkar: So Chris, I’m sure seeing cities experiment is kind of music to your ears. And so I’m kind of curious what your perspective is on the municipal governments entering this arena and whether you think there is or whether you’ve heard about additional cities that might be interested in jumping in along with Boulder or counties or whatever. Into the carbon removal fray. King County just did a huge purchase of carbon removal credits just last week, I think. So what are you hearing, Chris?
Chris Barnard: Yeah, I’ll say two main things. The first one is, obviously, when we look at the federal level, one of the risks of centralizing all the power to, for example, invest in carbon dioxide removal or Solar energy or whatever it might be in just the central government is that if it doesn’t act on it, then there’s no real other alternative to doing it right. And one of the cool things that we like to highlight at ACC is that sometimes in the absence of strong federal leadership, it’s actually really valuable that states or local governments or cities in this case can invest in cool climate solutions anyway.
And one of the things we did in 2020 was we did an electric election road trip around the country. We drove around the country in a Tesla for 45 days, highlighting exactly all these innovations happening across the country in the absence of federal leadership. And as we’ve seen, even in the last year or so, Biden’s flagship climate plan, Build Back Better, has failed even at the hands of his members of his own party. And so what do you do when you don’t have comprehensive federal policy on an issue as important as climate change?
That’s where local governments come into play. And so I think it’s really positive that cities and states are experimenting with this. And that brings me to my second point, which is that this experimentation is actually a really valuable thing as well, because it allows the best policies and the best strategies to emerge, right? If everyone’s just doing the same thing, if they go down the wrong path, it might be very expensive, it might not work, it might set us back. But if different cities in different states are doing different things with the same goal of, for example, Having more carbon dioxide removal technology, but if they do it in slightly different ways, the most effective ways can rise to the top.
You can learn what works, what doesn’t work. It might be different in different areas. And so I think it’s a really cool thing that states are experimenting with this. In terms of specific examples, I think like you’ve mentioned some of the examples, I’m not too sure of other specific cities doing this kind of stuff, but I do know that local governments across the country and across the world really are starting to get interested in this.
Radhika Moolgavkar: So Greg I’m curious when you mentioned the Germany example and driving solar panels kind of the opposite top right bottom up. Do you see that within the US in our polarized government in our polarized you know in the States even are so polarized blue and red. That same approach being as effective, because do you think that we can break through the barrier of. You know, this was a blue state solution and this was a red state solution or a blue county solution and a red county solution, whatever, and actually embrace the best ideas as a country.
Greg Nemet: Yeah, well, first of all, I mean, it does play the role. This low lower bottom up effort plays the role that Chris described is it fills a void that’s not happening with federal. So that’s important on its own. And then whether those policy ideas get scaled up later. I think it’s something where what they really do is they prove that a policy actually works. When a policy is proposed, there’s a lot of concern about cost. There’ll be a lot of concern about unintended consequences. There’ll be a lot of concern about effectiveness.
With the benefit of hindsight and of city level policies that have been attempted, you can find policies and say, look, this worked. We actually got a million tonnes of CO2 removed over the last five years. We paid $300,000 for it, and it was this many dollars a tonne, and also that it created these local jobs. This isn’t just a model or some prediction. It’s, look, there’s companies in our community now that are hiring people to build some of these facilities and to operate them. Yeah, I mean, there’s still going to be political polarization, at least as far as the eye can see for me, but the way you deal with that is by reducing the risk of the policies and you de-risk policies by trying them and you can upscale the ones that show that they work pretty well and they don’t have adverse consequences.
If it does become a political game and becomes attacked because it’s something that’s brought up by one party and the other party opposed it just on those grounds, if you have the evidence that it works and that there are benefits, and especially benefits that might appeal to the other policy, whether it’s job creation or environmental benefits, I think that goes a long way. So documenting what happens is, to me, one of the most important ways to overcome, as you say, the political polarization that makes a lot of starting from scratch at the federal level in a big way really hard to do these days.
Radhika Moolgavkar: Chris, I’m wondering from, again, your perspective and also kind of being an advocate, have you heard from people Maybe on the opposite side of the table, the more leftist and advocates around equity and social justice on what they think of these policies. And I think we’ve seen some environmental policies that have been railroaded for various reasons, and sometimes around equity. Anything about that you’ve been hearing percolate up? Or is it still kind of flying under the radar and discussion’s not yet happening?
Chris Barnard: Specifically on carbon dioxide removal or?
Radhika Moolgavkar: Yeah, and mainly at the local level, right? Some projects have been killed for various reasons because of equity concerns. They might be environmentally beneficial. Just wondering, because your ear is closer to the ground than mine, if you’ve been hearing any concerns like that from the policy, you know, at the local level policies that are being proposed.
Chris Barnard: Yeah, I’ll first start by saying, obviously, the left tends to also emphasize the importance of communities and kind of also indigenous communities and kind of at the local level and that we need to always keep them at the at the center of our policy decisions which I mean, I would agree with. But then interestingly, they do tend to kind of favor solutions more at the central level, like the federal level, rather than kind of decentralized solutions. And that’s not always the case, but broadly speaking. But one of the interesting trends that I’ve He also been surprised by it’s kind of the nimby not in my backyard kind of groundswell from a lot of communities and actually in some some very interesting examples of how, for example, the Sierra Club has lobbied to shut down.
We have a lot of potential solar projects or other clean energy projects in particular areas, because it would have impacted the local community in a way that they didn’t like. But then at the national level, the Sierra Club is saying we need more solar everywhere we need the federal government to invest in solar. Or clean energy or whatever it might be all over the country, but then their local chapters will actually be going against a particular project because there was a kind of a very strong NIMBY attitude in a lot of this country.
And so I do think that is one issue that local governments do have to contend with. What are the benefits and impacts on communities of potential energy projects? But I think a lot of that is also convincing people that this is the right thing to do, both for the planet, but also economically. The job opportunities that come from this are pretty substantial. So that’s kind of what I’ve been hearing from the ground.
Radhika Moolgavkar: All right. Well, speaking of solar, we’ll go to the study state of California and talk a little bit about Governor Newsom, who just proposed that the state spend $100 million in this year’s budget, which is now that’s not insignificant, right? That’s a decent amount of money to match funding for CDR projects that have received federal grants. You know, and it’s specifically mentioning the recent infrastructure bill. So Greg, in your book, you have talked about policy windows that support technological progress, bipartisan federal legislation combined with aggressive state action. Do you think California, this move by California, is evidence that a policy window is opening up for CDR?
Greg Nemet: Yeah, there’s seeds of that happening. One way to think about the policy window idea is, and I find this useful because there’s like a natural metaphor from political science. It’s called the three streams theory. And you can think of these kind of braided streams that eventually have come together. And if they come together, you can get policy change. And the three streams are, The politics, so somehow interest groups and coalitions emerge that are supportive of doing something on CDR. The problems, so the problem, whether it’s climate change or misintroductions or something along those lines, is salient enough that parties want to do something about it or there’s public sentiment that we do need to do something about it.
That certainly seems to be the case if you look at polling data. And third, that the solutions are emerging. It might be policies that have been worked out at low level that could be scaled up to high level, or it could be technological solutions that are starting to emerge as we’re talking about with CDR. And so when these streams connect, the politics, the problems and the solutions, you can get policy change and that’s a policy window. And yeah, it looks like There’s a lot happening. And what we’re doing is setting the stage for a policy window.
And when the policy window opens, then I think we can go big on CDR at the federal level. That’s ultimately what we need to do. And the most clear comparison I use is in the late 1990s. In Germany, there was an election in 1998 where the Green Party and the Social Democrats were elected together. They had a short time period in which there were a majority in the government. And what was crucial is that they were ready with legislation. There was two policy entrepreneurs, one that was a designer of the policy that scaled up what they’d learned at municipal levels with solar, and then also a person on the more moderate part of the coalition that knew a lot of the people that would have to vote in favor of it and could get on board and then wrangle people. For votes and they started easy, they started with wind, which was much closer to grid parity on cost. And then later they went more ambitiously on solar and I think that’s kind of what what we can look for here is for the politics of pollution, the problem and the solution stream to come together.
Have these technological solutions ready have some policy. That have been worked out at the municipal level, whether it’s Flagstaff or Boulder or state level, California, and keep working those, keep working the municipal level, keep working the state level until the federal policy window opens. And, you know, to me, it’s just a matter of time because the problem is not going away. These solutions are actually developing stronger and the politics changes as you get Coalitions that are in favor of doing something with CDR. And that emerges as you have more and more companies, you have more and more investment, you have more and more people that are interested in having this be part of the response to climate change.
When I say interested, it’s not just that they would vote or say so on a poll, but that they’re actually committing funds and investments to this area. And so they’d be important mobilized constituencies to support it. And so I think, yeah, we’re in the Sewing the ground for that policy window to open and doing things at the city level and doing things at the state level, as Chris talks about, is like exactly what we need to do in order to set the stage for a bigger federal initiative on CDR at some point.
And I don’t know when that is, but at some point we’ll need that to have a market that’s big enough to support gigatonnes of removal a year. But doing things at the lower levels until that policy window opens is exactly what we need to be doing.
Radhika Moolgavkar: So Chris, do you see this California legislation as maybe a model around how bipartisan climate progress could work? And do you think from what you are hearing, is there continued support for CDR on both sides of the aisle?
Chris Barnard: Yeah, I think I’ll answer the second part first. Partly because I was looking into the whole California proposal to invest this 100 million into CDR, and there seems to be some relatively significant pushback from more center left environmental groups who continue to call CDR a fake climate And so I do think there is still a little bit of a battle that is waging more on the left about CDR, whether it is a real solution or not, people on the more progressive side. Just want renewables and get rid of fossil fuels as soon as possible.
People that are probably closer to the center want to engage more on CDR as a technology and its capacity for removing CO2 from the air. And I think that is more in line with the scientific consensus and what the UN calls for in terms of We need to actually take carbon out of the air, not just stop putting it into the air. So that’s just like an interesting side note there. In terms of the bipartisanship there, I do think this is a model because Interestingly, there’s a study recently published over all the climate policies that have been passed at the state level since 2015, and one third of those have been passed in Republican controlled legislatures, and they were either co-sponsored by Republicans or introduced by Republicans and passed on a bipartisan level with the support of Democrats.
And the interesting thing is if you look at the specific policies and their nature, It wasn’t mandates. It wasn’t restricting energy choices. It wasn’t that kind of stuff. It was expanding consumer choice. It was investing in technologies. And it was kind of in a way more forward looking optimistic policy that actually sought to increase the opportunities and the options available to consumers and businesses, including technologies like CDR. And I think that is where bipartisan Policy will happen, not in mandates to restrict how much energy can be produced from this energy source or that, but in leveraging innovation and in expanding consumer and business choice to invest in more clean energy.
So I really do think that is a potential opportunity for greater bipartisan action on climate.
Radhika Moolgavkar: Greg, I’m curious. I am also perplexed by what Chris was just mentioning about the center-left environmental groups kind of calling CDR a fake Environmental, I don’t, I don’t want to use the word fake necessary, but the, you know, not more the moral hazard argument, let’s say. And how do you respond to that as an author within the IPCC, you know, it’s more of a scientific consensus that we have to actively remove carbon. So how do you address that with people who don’t think CDR is necessary?
Greg Nemet: Yeah, I mean, it sure looks necessary to me. I mean, I think it’s necessary, and 195 countries, including the U. S. , agreed that it’s necessary to keep warming to below two degrees and make efforts to 1. 5 degrees. That’s what we signed the Paris Agreement. And then All the modeling that’s shown since then means that for 1. 5, we need to get to zero net zero emissions by 2050 and a little bit later for two degrees. So to get to zero means either we completely eliminate fossil fuels or we do as much as we possibly can, except for the places where it’s really hard to avoid fossil fuels, which might be in long distance aviation areas.
In some industrial processes and in the agricultural sector, but everything else we do as much as we can to clean it up. And even if we do that, we need CDR to remove and offset and get to zero. So that’s the argument for why we need it. And then how much we will need it, that’s open, but to get to a gigatonne by 2050, Is going to mean scaling up these technologies by like 40% a year, which is faster than the solar industry has grown. So that’s ambitious. If we were to get to 10 gigatonnes a year, that would be a lot as well.
And so that’s kind of the upper range of what the IPCC scenarios see for mid-century, 10 gigatonnes, 10 billion tonnes a year. To put that in perspective, we put 60 gigatonnes of greenhouse gases into the atmosphere every year now, and we have to get that from 60 to zero. And so if 10 of that, 10 of the 60, so like 16% comes from CDR, I think it’s pretty hard to say that is going to be a reason why we don’t do the other 80%, 85% of the emissions reduction. So I can see the moral hazard argument, but I think if you Look at the climate math, it’s like saying you’ve got an insurance policy on your house and your house is worth a million dollars and your insurance policy says you’re going to get $100,000 if your house burns down.
And so then you say, well, let’s just have an indoor campfire party because it doesn’t matter if our house burns down, we’ll still get our insurance payout. But your house burns down instead of a million dollar house, you have $100,000 insurance payout. I mean, that’s kind of the What we’re seeing with CDR, it solves part of the problem. It’s like 10 to 20% of the problem, but there’s no way that having access to 10 to 20% of the solution means that we shouldn’t do the other part. It’s part of the set of tools that we need, and it’s a really important part.
And to get to net zero, the IPC shows, it’s essential, but it doesn’t take away from the need to reduce emissions. So I think there’s some Misconception that there’s a choice that we can either do CDR or do the emissions reductions, whereas it’s really clear from the IPCC work that we need to do full speed ahead on both to really get where we need to go.
Radhika Moolgavkar: Yeah, I like that insurance analogy. That’s a good one. So let’s move to the federal level. So in April, the Federal Carbon Dioxide Removal Leadership Act, that’s a mouthful, was introduced by two Democratic members of Congress. And in May, two senators introduced their own version of the bill. So if passed, this legislation would compel the federal government to directly procure carbon removal from various technological methods, obviously sending a very strong demand signal to the industry. And so, Greg, you talk about this as it relates to the solar energy in the 1970s and how federal investment in PV technology helped develop the solar energy.
So do you think that this kind of procurement mechanism, which has, I think, been used throughout the history of the federal government, will help accelerate development? And do we think it’s likely that Congress is going to pass it?
Greg Nemet: Well, on the first part, I do think it’s really helpful. The 1970s is a long time ago, but that was really important for solar. And it was a small but transformative program. I might even call it tiny but transformative program. You know, we’re talking about millions of dollars. And these were, it was called block buys in the late seventies and early 1980s. And it created an industry and the federal government agreed to buy certain numbers of solar panels from industry. And they had, they said how much they would buy, how much they would pay for them.
They had a few criteria, like they had to be a certain efficiency and they had to last a certain number of years. And there were five rounds. And then the second round, they bought more panels. The price was lower. The efficiency requirements were higher and the longevity requirements were higher. And they did that in five rounds. And it really created an industry because all of a sudden you had industry creating solar panels, not just to show them off in a laboratory or for a scientific paper, but for people to actually use for the federal government to install them on buildings.
And it led to mass production and developing Production technologies and that kind of thing and scaling up the industry. So it doesn’t take that much in terms of resources to make a big boost here. So I think that really could play a role. And we’ve seen it in other ways, too, where the federal government is the early purchaser of microprocessors, especially for the military and That made a huge boost to where Silicon Valley became a gigantic global center for the computer industry, in part because they had an early customer. And the key thing about that early customer, the federal government, they had a high willingness to pay, higher than normal grid electricity prices.
Solar was not going to compete anytime soon with grid electricity in the 1970s. So the federal government was paying higher. But the idea was that it wasn’t just that they were paying this to have some solar installed. It was paying for innovation. It was paying for the industry to scale up, for the technology to get So far, we’ve actually seen more effort from the private sector on that. But interestingly, like really using the playbook that solar and other technologies have used where you Think about awarding projects not on what’s the least cost way to do it, but you award projects on what has the biggest opportunity for innovation, the biggest potential for cost reduction so that some early purchasers can catalyze a learning curve and learning by doing.
And that I think is really what we need to be. So I’m optimistic about that. I won’t say too much about the political feasibility of it passing, but for some of the things we’ve talked about and what Chris has mentioned, it’s a highly politicized environment right now, but this is an area where I think you can actually get support on both sides for a variety of reasons.
Radhika Moolgavkar: Okay, Chris, I’ll pass that question to you too. What do you think is the likelihood of this act passing We’ve had another act whose name I will not mention that has been stalled in the House for a long time around soil and ag and it seems so optimistic when it started. So wondering what your thoughts are, your instinct is around this federal carbon dioxide removal leadership act.
Chris Barnard: Yeah, I mean, obviously we’re in an election year, which always complicates things. And so there’s like a dual political calculus. It’s not just what Congress is willing to do and wanting to do, but it’s also with an eye on the elections. So I can’t really speak to how likely it is to pass with the midterms in mind. But I do broadly think that something like this is not unlikely to pass and to get some bipartisan support. It could be rolled into a broader Innovation, climate investment package. But I do broadly think that there is appetite to invest in carbon dioxide removal and kind of innovation and technologies there.
In terms of kind of some of the challenges and pitfalls of policies like this, I think we do have to recognize that this isn’t the first time the government would be investing in CDR technology. I mean, the government has spent billions on this technology in the past. There’s arguments over whether that money has been well spent or not well spent, and I think the most valuable thing like what you mentioned is that. With procurement, the government can actually help foster a market right and one of the key features of a market which allows for innovation to rapidly accelerate his competition.
And so I think a really cool analysis here like a parallel is with the UK, where they hosted offshore wind auctions, where they said we’re going to commit to buying a certain amount of wind energy that we’re going to have you guys the wind developers And so what that created was the market for wind energy to develop, but ever decreasing costs for it as well. And so I think having competition at the core of a procurement policy like this is really important and making sure that there’s a lot of different companies that are kind of bidding Be a part of this.
And if for some reason the price doesn’t continue going down, then also being able to reconsider and be like, well, maybe this is not something that’s working right now and we need to change it rather than just continually pumping money into it. So that’s one big thing that needs to happen. One other is kind of on the less sexy side of things, which is the regulatory side of things where there are actually still a lot of regulatory pitfalls around specifically CO2 removal. In terms of wells, geological storage, property rights. There’s a lot of different regulatory hurdles that need to be crossed before a company can even do this.
And so I think clarifying those before investing a ton of money is also really important because there’s no point investing money if it’ll take years and years and additional costs and delays for those companies to actually implement those projects. So I think we need to think about this holistically.
Radhika Moolgavkar: Not to mention the fact that the less clear the law is, the more open for litigation you make these projects, right? I mean, I think that also doesn’t get discussed much, but what’s your risk tolerance for potential litigation needs to be considered as well. All right, well, in the interest of time, I am going to move on to the international level. So we’ve gone from hyperlocal cities all the way up to the whole world. And so Carbon removal has found its way into two intranational agreements recently. In May, President Biden announced the Indo-Pacific Economic Framework with Australia, Japan, and South Korea.
According to Brian Dees, the White House Director of the National Economic Council, this plan will promote carbon removal purchasing agreements. The same week, the US Special Climate Envoy John Kerry at the Davos Conference announced the expansion of the First Movers Coalition, a group of corporations committing to support six hard to decarbonize sectors, including carbon removal. At this announcement, Alphabet, Salesforce, and Microsoft agreed to spend $500 million on carbon removal purchasing by 2030, amongst many, many other commitments that have been made to carbon removal purchasing in the last month or so.
So Greg, back to your book, you discuss how niche markets help solar grow and how international competition helped it get cheap. Do you think these new types of corporate purchasing agreements are creating the right type of niche for carbon removal that will help it scale? And, you know, is it making you feel more optimistic as you see these international agreements being brought forth?
Greg Nemet: Yes, I do. I think these are these Private commitments. I mean, they’re coordinated by governments and they’re agreed upon internationally, but the money is not coming from taxpayers. It’s coming from private companies. I think those are really important and they create a niche market is a market where there’s higher willingness And often it’s small, but when costs are high, initially, the niche market is crucially important. And with solar, you know, it was these funny things like off-grid independent people that wanted off-grid power, they were willing to pay a lot for solar panels because that was their way to be free of the grid.
Oil rigs used solar panels for lighting in the 1970s, 1980s. They were expensive, but it was way better than lead acid batteries that were their other backup watches and calculators in the 1980s. So none of these are important markets and none of them do anything for the Energy issues or any energy problems, but they did scale up the technology. And so I think when people see $500 million being spent by the First Movers Coalition or 600 million or so being spent by the Frontier Coalition and then private sector raising money to invest in CDR, those are important.
Those are substantial investments. I kind of would have expected if you asked me 10 years ago, That this would be a public sector because the private sector would never move on their own to kind of support this public good, which is creating these innovation spillovers and international networks that other people will have access to. But I was wrong. There’s not a lot of Public effort going into this, but there’s a lot of private sector money. And I think the motivations there are, you know, one, they’ve learned from the past. They’ve seen what’s happened in the past and they realize that public or procurement, public or private, but procurement can play a role in getting the cost down.
That their customers, whether it’s, you know, people that are running transactions through Stripe or customers of Microsoft or People that want to have a green image or these companies and maybe commitments to net zero, that there’s a lot of demand for ways to get to net zero when their operations may be hard to decarbonize, at least in the near term. And so, yeah, some of this is niche market work. It’s early support. But on the other hand, there’s people that are really willing to pay a lot for getting to net zero.
And so, That’s helpful. And this is really, really helpful. And I think if we, one of the things, the last thing I’ll say that I found really helpful on solar is that it was crucial when it wasn’t just one policy that was stimulating the market. Because a policy can always be changed. There can be an election. There can be a change of mind. There can be another competing social priority. We always have those things. Business cycles. All those things are threats to the durability of policy. But if you’ve got policies in multiple places or multiple levels, like we’ve talked about with cities, states, and federal, and now international, and you have that happening in multiple jurisdictions in different countries, and you’ve got companies doing it, All of that creates an expectation that there’ll be a market for CDR.
So if you are an investor looking at where people are actually going to pay for CDR, you feel a lot better with all the stuff that’s going on right now. And as you’ve mentioned, it’s emerged in the last couple Then if the US federal government said, we’re going to have our own $1 billion fund to purchase CDR, that’s too fickle. It’s too easy to change. And so I think there’s a lot of robustness because of all the different directions that this kind of source of demand is coming from. So I do find it encouraging the way that it’s working out.
Radhika Moolgavkar: Chris, one more question for you. So kind of if carbon removal becomes sort of part of climate diplomacy, What do you see the US needs to do to be a leader in the field?
Chris Barnard: Yeah, I think what Greg was talking about how a lot of the demand is from the private sector and people are willing to pay a lot of money for this, I think. There is a kind of a direct, it’s in the US’s direct economic and national security interest that when companies around the world are spending money on carbon dioxide removal projects, that they would be doing that with US companies, right? That US companies and US innovation technology would be providing that And so I think there is there’s definitely an economic and national security argument to be made for the US having to become a leader on this, but also if other countries like for example, many of the Gulf countries in the Middle East have a very vested interest in being We’re not able to offset their emissions by investing in this.
I’d rather they invest in American companies and in Middle Eastern companies. And I think that’s a role that we can play. Also, with regards to our competition with China, we’re seeing how And especially in many ways we’re being trounced by China on clean energy issues. Over a decade ago we were the world leaders in wind and solar and EVs and all that stuff that China’s rapidly overtaking us. They’re actually cornering the market for clean energy, including critical minerals that you need to create all these technologies. And I think that’s an unacceptable risk to America’s energy and economic and national security, as we’re kind of seeing with the whole Russia situation, right?
We don’t want to rely on dictatorships for our energy needs. And so I think this is an opportunity for A nascent technology that no one country has monopolized yet. And in fact, the US is probably the closest to kind of starting the road towards becoming the dominant leader on carbon capture and CDR. So I really do think that it is important for us to invest in this, not only from a climate perspective, but also from an economic perspective and a diplomatic perspective that we can tell other countries we’re serious about this, we’re doing this.
And the final thing I’ll add is There’s a concept that I’ve been talking a lot about in kind of like conservative DC circles about the clean energy arms race that we need to invest in clean energy because that is how we get the rest of the world to decarbonize as well, because clean energy is the energy of the future. And as the world is experiencing right now, the countries that dominate energy are the ones that have geopolitical leverage. And so if we can do something similar with carbon capture, With CDR, then we will directly encourage and incentivize other countries to also invest in it because they don’t want to fall behind.
And that is how the technology rapidly emerges across the world in the way that solar and wind have done.
Radhika Moolgavkar: All right. Final question for you, Greg. So obviously tonnes of demand, but is there enough supply? You know, do you think we can ramp fast enough?
Greg Nemet: Yeah, not right now. So, and I, with some colleagues, wrote some papers three or four years ago talking about how the real issue with car removal is on the demand side, that we’ve got, you know, companies starting to do it. It’s just not clear who’s ever going to buy that removed CO2. And interestingly enough, now three or four years later, we’re in a different situation, at least in the near term, where we’ve got Plenty of demand, you know, more than a billion dollars of demand. And we don’t have, and we’ve got lots of announcements about projects to do things with the ocean to absorb and keep CO2 in soil and do direct air capture and By oils and lots of things, but very limited in terms of actually starting to do that removal within a verifiable way that’s durable.
And so, yeah, right now the problem is on the supply side and we need to scale up. And, you know, I’ve done the calculations and compared it to solar to say if we needed to say One of these CDR technologies like Bex or Biochar Direct Air Capture to get to a gigatonne scale by 2050. So below gigatonne scale, it’s not really doing a big deal for the climate. It might be helpful. It might have a niche market. It might make companies rich, but it’s not big enough to help solve the problem.
To get to gigatonne scale by 2050, we need 40% growth a year. That’s tremendous growth. We’ve seen that in other places, though. We’ve seen that in other technologies. We’ve seen it in solar almost. We’ve been growing solar at 30% a year for 30 years. So we have to do a little bit faster for some of these CDR technologies and do it over the same amount of time. So we’ve got a playbook. We know how to do it. We’ve got to do it a little bit more. But we really have to get started in terms of building stuff and delivering removed CO2 and working out the monitoring The measurement, the verification and showing how durable these are and making sure the cost of doing that are not also extortionate because that needs to also be worked out.
But things like sensors and satellites can be really helpful with that as well. So I think we’ve gone from not enough demands and some supply to now not enough supply, plenty of demand. And eventually, though, we are going to get to the point where we need Federal policy and bigger actors to be creating really large markets to get us to gigatonnes. And so eventually the demand side is going to become an issue again as long as we really are scaling up the supply of removed CO2.
Radhika Moolgavkar: All right. Well, thank you, Greg. I certainly think about that all the time, and that was really helpful for me personally. To end the day, Chris, it’s for you. Good news, some good news for the week. We could always use it.
Chris Barnard: Yeah, well, I have two bits of good news, actually. The first one is that recently the International Energy Agency forecasted that in 2022 will be historic rising growth of renewable and clean energy across the world, which is just a trend that has been going up for years now. And I think it’s A similar thing that we hope to eventually achieve for CDR technology as well, right? That every year it increases and vastly outpaces any fossil fuel investment in the world. So that’s one piece of good news around the world. The second one, just kind of a more DC-focused thing, is that last week the House GOP officially unveiled their kind of climate plan ahead of the midterms, and they’re rolling out six different pillars for that.
I think it’s just very cool that ahead of the midterms, we have an official GoP Climate Plan and that ACC has been helping shape a lot of those conversations and obviously it’s not necessarily perfect and those things tend to never be perfect, but we’re proud to be part of that conversation and to keep pushing in the right direction to hopefully achieve some of this bipartisan stuff that we just talked about in the next Congress.
Radhika Moolgavkar: Well, Chris, thanks for all your work on that, because it’s going to take us all. So I’m happy if we can overcome some of these bitter political divides. Greg, thank you so much for joining us this week. It was really nice to have you and hear your perspective, which was fantastic and very interesting and upbeat and positive, which I really appreciate. Chris, as always, really nice to have you. I’ll see you in a month. So to both of you, have a wonderful rest of the week. And to our listeners, thanks a lot for listening.
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