It’s been a few months since our business panel has gathered to break down the many headlines coming from the world of CDR.
On this episode we’ll talk about some of the biggest news from September: new funds, new deployments, new corporate purchases, and a gathering of the who’s who in carbon removal in New York City. You’ll hear news about
Climate Weeks NYC
& more…
Joining us on this episode is our business panel: Susan Su, a partner focused on climate investing at TOBA capital, a board member at the Carbon Business Council, and a board advisor to the Environmental Voter Project and Na'im Merchant the Executive Director of Carbon Removal Canada, an Elemental Excelerator policy fellow and the author of the The Carbon Curve, a newsletter about the policies and technologies needed to grow the carbon removal market.
On This Episode
Radhika Moolgavkar
Resources
Microsoft’s deal with Heirloom
Microsoft’s deal with Carbon Streaming
Our interviews with Octavia’s CEO
Carbon Removal Canada’s launch event
Subscribe to Climate Workers Anonymous
My other show, Reversing Climate Change
Books referenced in the podcasts, at Bookshop
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: All right. Welcome, everybody, to the Tuesday, October, hard to believe, third episode of Carbon Removal Newsroom. It’s been a few months, but since our business panel has gathered to break down the many headlines coming from the world of CDR, today we’ll talk about some of the biggest news from September, new funds, new deployments, new corporate purchases, and a gathering of who’s who in the carbon removal world in New York City. Joining me, as always, is Susan Hsu, a partner focused on climate investing at Toba Capital, a board member at the Carbon Business Council, and a board advisor to the Environmental Voter Project.
Hi, Susan. Good to see you after a while.
Susan Su: It’s great to be back.
Radhika Moolgavkar: And Na’im Merchant, the Executive Director of Carbon Removal Canada, an Elemental Accelerator Policy Fellow, and the author of The Carbon Curve, a newsletter about the policies and technologies needed to grow the carbon removal market. Naeem, welcome back.
Na’im Merchant: Good to be with you all.
Radhika Moolgavkar: And then I’m Radhika Moolgavkar, Head of Supply and Methodology here at Nori. So let’s just dive right into it. Fresh on the heels of buying DAC company carbon engineering, the oil company Occidental has made a deal with Amazon to sell them carbon credits. If they paid what past carbon engineering customers have paid, which is $600 per tonne, Then this purchase was worth $150 million if I’m getting all my zeros right here. So Naeem, let’s start with you. You know, Oxy is now in the CDR game and selling credits from their DAC business.
What do you think of that from both the turning point for DAC and the, you know, investment of big oil in this space?
Na’im Merchant: Yeah, it was a big development for sure. And I think it’s important to remember that You know, Oxy was essentially a project developer before this, their, their, their purchase of carbon engineering. So they essentially just kind of brought the technology development piece around direct air capture in house, but it doesn’t really change very much for, you know, their, their, their model. It maybe allows them to move faster or, or move more aggressively around direct air capture. But, but this is something Oxy was already very much in the DAC game before, before that purchase.
I don’t really think this means that direct air capture companies are competing necessarily with big oil on deploying direct air capture, but a lot of direct air capture companies are going to need to think about as they scale, how do they get good at the things that oil companies, oil and gas companies tend to be good at, which is deploying large projects and building out infrastructure. And I think that’s something that companies are going to need to figure out and build competencies around or Do what carbon engineering did and essentially, you know, become kind of part of that business.
So it’s a big deal. There’s a lot of movement happening right now. I think it has significant implications for direct air capture companies in the carbon removal space in terms of how they need to think about, you know, how they build the competencies in deploying large scale projects or do they outsource that effectively to large industrial players? And sometimes that’s going to be We’re going to be thinking about really big projects and who has the expertise to build that out. One answer to that is the oil and gas sector. But there are other answers to that question.
And I think that’s a competency that companies are going to need to build. And I think that’s ultimately the implication that it has for direct air capture in this space is who are they going to be partnering with in order to deploy their technologies at the scale that we know we need them to.
Radhika Moolgavkar: So Susan, you know, Amazon’s obviously investing in carbon removal. What do you think of their approach here and also the Potentially very large amount of capital that they have deployed towards carbon removal and DAP particularly.
Susan Su: I have a couple of reactions to the 150 million number. On the one hand, it really shows because actually the amount that they’re offsetting is just actually a tiny, tiny drop in the bucket compared to what they’re emitting. It shows how much CO2 we are actually emitting as these companies and as a society. It’s like mind boggling. That $150 million, okay, at market rates, and let’s assume maybe they won’t be buying it at market rate, but just that’s the information we have. So that’s the best math that we can do.
I mean, $150 million is a lot of money in some regards, and it barely makes a dent in barely tiny, not even a dent, it would be like a tiny, tiny scratch that you wouldn’t take your car to the repair shop for in terms of the total amount that A company like Amazon, granted, which is a very large company, which has a deep emissions profile, but probably not the biggest in the world, is putting out there on a yearly basis. So that’s like one kind of way of reading the number.
The other piece, though, is that $150 million both feels like a lot, because if you’re any company that’s looking at a cost line of $150 million, that’s sort of like What exactly am I getting for this? I’m getting some goodwill. I’m getting maybe some compliance, but not really even. If I’m Amazon or any corporate, I want to be thinking about $150 million as an investment as opposed to simply an expenditure. So that’s another reaction to it, another way of thinking about it. And then in other ways, I think too, it’s good to compare the $150 million because throughout the Months and years we’ve been doing this podcast, we toss a lot of numbers around.
And I remember a few months ago, maybe at the point last year, we talked about how the CZI, Chan Zuckerberg Initiative, was putting $44 million towards climate tech, some of that going towards carbon removal. They got a lot of headline value for $44 million. $44 million is, for folks who need the math done for them, one-third of the $150 million that Amazon’s putting into this as a purchaser. Again, assuming that they’re going to be paying More or less market prices. We’ve also talked a lot on this podcast in the past about other funds that are deploying 500 million or even billion dollar funds.
For example, Morgan Stanley has their target $1 billion 1GT fund, which just had its first $500 million close. So, you know, I think it’s really just good to keep track of the numbers we’re throwing around and really have them in relative scale to one another. In some senses, $150 million is a lot, and in other senses, $150 million really isn’t that much. But I think being a purchaser is extremely powerful because it starts to create the market pull. The last part that I want to just comment on with regards to Amazon’s approach with Occidental actually relates back to something Naeem was talking about, the word scale.
And it’s not what you think. So if you read a little bit behind the headline, you’ll find that another part of this deal is that Amazon is going to be selling AWS services into Occidental. I think it’s very notable and maybe not, again, not part of the headline. It’s notable that Amazon has chosen OxyContin. As their DAC provider, as opposed to some little tiny company in Kenya, which we may talk about later, or even Climeworks or one of the other kind of like smaller, less at scale infrastructure providers. And I think it has to do with the fact that this is going to be their supplier, but it’s also going to be their customer.
And if I’m Amazon and Amazon is quite a clever company. I want to pick a supplier that has the greatest customer potential for my business as possible. And I think that’s a little bit of what’s going on here as well. And I don’t think there’s anything wrong with it, but I do think that we should notice that’s going on.
Radhika Moolgavkar: It’s funny you say that Susan, because I remember about three years ago, Microsoft and Frutera entered into a soil carbon deal. And what often got lost in the headline was Microsoft became their Azure platform, which, you know, it makes sense, right? They don’t want to leave capital just stranded. They have to get a benefit. So they have to do what they have to do. All right, I’m going to move on to another local company since, you know, I’m super proud to say Amazon and Microsoft are both from the Seattle area, but Microsoft too, as most anyone in this space knows, has been pouring a ton of money into CDR and they are pouring some money into DAC as part of it.
They’ll be paying Heirloom $200 million over the course of a 10-year deal. And Heirloom says this order comes from Two new facilities, one of which is the DLE funded DAC hub in Louisiana. So Susan, I’ll start with you. You know, Microsoft is obviously trying to set, I think, a standard here, right? They’re going beyond just carbon, traditional carbon offsets. They’re investing in new technologies to help them grow and as part of their climate plan. What do you think of this strategy? Do you think it’s enough in terms of public perception or do you think there are other things behind the scenes that we can’t see that are driving Microsoft’s motivation?
Susan Su: I’ll say for the headline value that they’re getting from this. By supporting a company like Heirloom, they are joining the ranks of some of the, I guess, for lack of a better way to say it, premier buyer brands out there from Shopify to Stripe To some of these other folks that are kind of like really the ones that you think of as being the really climate forward companies and the climate for founders that have done an enormous amount of work to build their brands in the kind of like. Climate mitigation space that don’t have to, right?
Obviously Shopify doesn’t have to, Stripe doesn’t have to, but they’re doing it because they realize that it has an impact with their audience, whether that’s directly their customer audience or their talent audience, which increasingly cares about this. I think it’s interesting that Microsoft as a fang and as kind of a legacy company has really figured out that this is one way for them to vault themselves into the cool kids clubs. For just like a really simple way of saying it, because Microsoft is kind of by default, not that cool, but they have been coming up.
I have to say over the last few years, they have been coming up and I’ve been hearing, of course, this is just anecdotal data, but I’ve been hearing more and more really sought after talent say, oh, you know, I’m going to give Microsoft a second look. It’s not just Google. It’s not just Meta. Meta has really fallen out of favor. It’s not just Amazon. It’s not Apple. I’m going to give Microsoft a second look. And I think that’s actually really, really interesting because something that these companies know very well and have expended a lot of historical resources towards is talent acquisition in a way that is kind of a zero-sum game between all of them.
I mean, Microsoft is famous for hiring and all of the other things as well are famous for hiring engineers to just simply get them away from other companies. Even if they don’t have something really relevant for them to work on. I mean, there’s always stuff for them to work on. But that sort of war of attrition on the talent side is something that I think I suspect might be playing a role in this. I don’t know for sure, but that’s one thing that stands out to me.
Radhika Moolgavkar: We talked about this last week in the policy show or two weeks ago on the policy show too, how Will, I think, was making the comment that The purchase by oil companies is part of their recruitment effort, right? They’re trying to get that Generation Z to be interested in working for them. And if they look like they’re climate forward and friendly, it helps. And I guess it’s a good thing because then these companies maybe compete and put more money into CDR, which we all, I think, want. Naeem, so this level of funding, while maybe a steal from Susan’s perspective is a huge amount of money for Heirloom, right?
And dwarfs what they’ve raised previously. Their CEO says it will grow their technology exponentially. Do you believe that? And what impact do you think that will have outside of Heirloom within the larger DAC and CDR industry?
Na’im Merchant: Well, first of all, I’m happy for Shashank and the rest of the team at Heirloom around making this happen. This is great for them. I do think it helps them, you know, Advance their technology. I 100% buy that. You know, Shashank’s a smart guy and you know, he knows what he’s talking about. And you know, there’s a, when it comes to kind of what it takes to advance your technology, there’s a quote from a carbon removal entrepreneur that I spoke to recently that, that I won’t forget. And he says, you know, R and D grants are great, but customers are better.
And I think this is one of those examples where, you know, heirloom is going to benefit from a lot of great RD and D funding. You know, through a number of different policies that are out there, but ultimately, you know, their ability to deliver for customers and build out their business model this way is going to do a lot more for their company. And so I think the impact of this is ultimately going to really push You know, companies like heirloom and others to figure out what it’s going to take to get to real commercial scale of their technologies and really, really grow their business.
And that’s where a lot of the innovation needs to happen at the business level, at the commercial level, not just around the technology side of things. And what this allows heirloom to do is continue to develop the technology, but within the context of Delivering for a customer. And I think that’s going to be really important. So, you know, I think the impact of this is going to be huge. And I think the message here to a lot of other companies should be there’s a window that’s still open where you can get some kind of brand lift, I guess you can call it, for supporting the carbon removal industry in this way that Microsoft has and other companies have.
But that window is not going to be open forever. And so there’s an opportunity here to support the carbon removal sector in a way that helps you attract more talent or send a certain message to your customers and do so in a way that is not with buying cheap offsets, but in supporting carbon removal innovations that we know are going to be better quality than some of what’s been done in the kind of the traditional offset market. And that window is not going to be open forever and that companies need to get on board with supporting this sector.
Otherwise, the price tag for getting the brand lift for supporting carbon removal is just going to keep getting higher and higher at a point where maybe it doesn’t really make a ton of sense anymore. And so if there’s any companies that are out there that are sitting on the fence, I hope they’re looking at this and saying, we need to make a move quickly or we’re going to get left behind.
Radhika Moolgavkar: So Susan, one more question under this topic. I’m curious, do you agree with Naeem that you think there’s a limited window where we can see this brand lift? And is there a like equivalent that we’ve seen in other industries? So do we have a sense of how long this sorts of brand lifts exist in a nascent business like CDR?
Susan Su: I think it can last for longer than we think, but I think the way that it evolves is that there start to be more and more nuances. So for example, one of our other news items is that Microsoft is doing a deal with carbon streaming for Biochar. And I think the new cool, the new brand lift surface area comes from really exploring the So like, okay, planting a trillion trees, like the Republicans have co-opted that. So that’s not cool anymore. So what’s next? Okay, DAC. Well, DAC used to be really cool, but now like Oxy’s doing it.
Okay, so DAC is slightly less cool now. And so I think there’s always going to be a frontier really here where the companies that are really trying to capture the brand lift are going to be the ones that are towing the line at the very edge of the frontier and demonstrating confidence Their credentials in terms of technological understanding, in terms of relationships within the industry, because you can’t just go and become a purchaser of the most cutting edge technology without having a lot of implied relationships within carbon removal. So it really shows that you’re an insider.
And I think that’s That’s the way that it will manifest in the future. I think there’s still some time yet, but I still do think that Naeem is right, that overall there’s sort of an expiration on different types, but more and more what we’re going to see is, and this happens to your question, Radhika, I think this does happen across industries. You know, first it’s like, let’s take something totally different, organics. Okay, organics were very niche in the beginning and then it’s just like, okay, to be organic was a brand lift and now it’s become super The massive middle, it’s become very mainstream.
And so not only are you organic, but you’re regenerative. Okay, so once regenerative becomes mainstream, then not only are you regenerative, but you’re, you know, whatever the next thing is. And so we start to get more and more nuanced, which I think is really great because it pushes a sophistication of the consumer, whoever the consumer is, whether that’s like somebody buying something at a grocery store or whether that consumer is a Microsoft or an Amazon. It drives that sort of increased sophistication of the consumer, which hopefully will actually create better results overall.
I would say that it’s probably a lot better for the world that we have not only more organic agriculture, but also more regenerative agriculture. So like all of those things are a really good thing. And you could argue, okay, there’s this leak in the system or that leak in the system, but overall that versus pure industrial is a better outcome. And so I think hopefully Some of this, like the brand wars that we see in CDR will lead to a similar thing happening here.
Radhika Moolgavkar: Cool. Well, I’m going to pivot to another part of the Microsoft CDR portfolio, which is Biochar, as Susan alluded to. But Naeem, I’m going to start with you on this because this is another Canadian CDR company. Really exciting, I imagine, from your vantage, particularly. So can you give us... Insight into anything about carbon streaming and any thoughts on why Microsoft chose them? Because biochar actually within Washington state is also being heavily hyped. And so it’s interesting they went with a Canadian company.
Na’im Merchant: Yeah, that is a good question. I will say carbon streaming’s portfolio does include a lot of things, including biochar in different parts of different geographies. And it’s typically very happy to boost a Canadian company that’s getting investment. But I actually think this news probably says a bit more about biochar than it says about the particular company. And that, you know, I think as many, I think as many of us know, you know, biochar is just a little further along than a number of other CDR pathways and that, you know, buyers are hungry for carbon credits that can deliver in a shorter time period.
And, and biochar is relatively more scalable, more affordable CDR pathway that I think companies are seriously considering. I think what it says to me is that in the face of new approaches around ocean CDR, around enhanced weathering or whatever the case is, there’s still an appetite for You know, tried and tested biochar as something that companies would want to pay for is as part of their carbon removal portfolio. And it’s going to come down to companies that are able to make that, you know, as appealing and clear to buyers as possible.
And that’s perhaps what carbon streaming has done here. So. This is great news. Glad another Canadian company got funding. But the big takeaway for me was that as we keep developing the frontier of these new carbon removal pathways, we can’t forget that there’s still biochar on the scene that company is going to be looking for when it comes to thinking about how do we get tonnes delivered?
Radhika Moolgavkar: So as Naeem alluded to, Susan, biochar is technologically ready to scale, but, you know, in I think what we’ve been seeing across the CDR industry is that the suppliers are waiting for more demand, right, across all types of technology. So is this a sign that you think more corporate purchasers of carbon credits will look at Biochar for the reasons Naeem said? It’s ready, it’s scalable, it’s relatively inexpensive, or it’s just something else happening, just Microsoft being Microsoft?
Susan Su: I think a lot of buyers are looking towards thought leaders to help them, to signal to them what is the next thing that they should be trying to understand and trying to look into. So, yeah, I mean, it’s a huge boost for Biochar to have the Microsoft kind of brand on there. And then also it’s a boost for Microsoft because it shows how cutting edge they are. I mean, it implies all sorts of things about resource abundance within that company that they have. The team to be able to research and understand what’s really going on in the kind of like lesser explored corners of CDR.
So for sure, I think it will be good for biochar. And I think it’s also an important opportunity for us to contemplate the second and third order effects of all the different types of CDR that are out there right now. I read an article earlier today that referenced carbon removal technology, Singular, As like one technology, like carbon removal is the technology. And I know that folks on this podcast and of course listeners to this podcast might not even, that might be like so below where you’re thinking that you can’t understand it.
But what that points to is that for the general public, for the vast majority of folks out there that are even thinking about climate change, CDR is kind of just like one mask. And most people are not aware of the diverse members of this family and how they’re actually kind of like almost different species from one another. So having a big name like Microsoft on there to try to forward that differentiation, those distinctions, I think is really positive for the space. But it also hopefully will, as I said before, continue to elevate the conversation for us to be asking people A little bit more pointed questions about every flavor of CDR that there is out there and what they really mean for our world if they’re to be wildly successful.
Radhika Moolgavkar: All right. Well, moving on to another type of CDR that we’ve already talked about in this episode, but DAC, again. So Climeworks is on the cusp of expanding into yet another country, Kenya. You know, the East, East Africa has all sorts of great resources for it to be truly a DAC hub. So It’s interesting that Climeworks has recognized that because just a few months ago, we talked to the CEO of Octavia, who was the first DAC company in both the Southern Hemisphere and in Africa. And so what do you think of this, Susan?
Is this a good thing for DAC in general? How do you view this kind of move into Africa and some maybe competition for a smaller company like Octavia?
Susan Su: I’m really excited about this. I think it’s definitely a very, very big tent. And the more companies that are helping to build out the East African climate ecosystem, the better. I think everybody’s welcome here. I’m super bullish personally on Kenya and East Africa as a climate hub for the 21st century. I think their government understands the opportunity and has been really taking a lot of very progressive steps ahead of lots of other governments with a lot more resources and people. And I’m impressed and I’m super excited about it. There’s a lot of reasons for it.
I think the cost basis, the unit economics around carbon capture, but also just like the energy transition in Kenya and throughout East Africa are just really appealing. Kenya has, depending on who you talk to, anywhere between 85% and 95% renewables on their grid. Very low cost renewables during certain times of the day and year, which is extremely appealing. There’s a lot of government support. As I mentioned, in the Rift Valley, there’s storage essentially built right in. So you have minimum transportation and transportation costs associated with that. And I think the last thing that we should not neglect to call out is that there’s a lot of talent.
Kenya has an incredibly young population. It’s a very technologically savvy population. It’s a hungry population that’s looking to do a lot of really great things. That’s not just like technological in terms of consumption as consumers, but actually as builders and makers and thinkers. And I think that’s extremely exciting. And it’s a lot less expensive to build a company, to build a tech company in Kenya today than it is in other competitive markets. So I think that There’s plenty of space for Climeworks. There’s plenty of space for Octavia. There’s plenty of space for even more companies.
And I think all of them, and I hope all of them will be successful.
Radhika Moolgavkar: So Naeem, can you just tell us what you know and what maybe our audience should know about Great Carbon Valley and this partnership with Climeworks?
Na’im Merchant: Yeah. And just to echo Susan’s point, I’m also really excited about the potential in East Africa. And not only because that’s a part of the world where my parents are from, and I’ve spent a lot of time in Kenya and Tanzania and other parts of Southern and Eastern Africa. And that energy that Susan is talking about and that hunger to be a climate superpower, I think is real. And I’m excited to see that realized. And I think it’s interesting to have Climeworks involved here in exploring this potential project, primarily because in many ways, Kenya’s, the conditions that you would see in Kenya are kind of like Iceland, but better.
As far as I’m concerned, right? Like, you know, for all of the reasons that Susan mentioned, including the geologic formations and the renewable energy profile and all of these sorts of things that kind of come together to make Kenya a very exciting place to do direct air capture and for Climeworks to kind of look at Kenya and East Africa more broadly and see these conditions that are kind of similar. It all kind of clicks. But it’s important to remember that, you know, we’re talking about exploring the development of a very large scale project in an emerging economy where the potential policy supports may not be as far along as they are in the United States or potentially in Europe.
And so there’s still like Questions about how far this ultimately goes. And I think Climeworks is clear in talking about the fact that they’re exploring the development of large scale DAC in Kenya. I just for one hope it happens. And I hope that Kenya becomes a global hub for this. And I think it makes a lot of sense to think about where Climeworks has succeeded around deploying direct air capture in Iceland. Many of the same Factors are in place in Kenya, if not are more favorable in Kenya. And so it kind of all makes sense that they would look at Kenya as a potential place for them to build out DAC going forward.
So Susan’s already said a lot about the potential here, and I’m just excited about it potentially being realized.
Radhika Moolgavkar: Well, we’re going to move on because we have a couple more topics to get through. It’s been, like we said, a few weeks and a lot has happened. Just in the last probably week or so, several CDR companies and related NGOs came together and signed and some of them wrote the Reiki event protocol, which I think is quite a catchy name. It’s a set of principles that companies, particularly suppliers, agree to as guardrails to their operations. So, you know, I’d like to get both of your perspectives on this, what you think of the principles laid out there, if anything stands out.
And I will start with you, Naeem, and then move over to Susan.
Na’im Merchant: Yeah, I had a chance to take a look at this and the folks that were putting it together as well kind of talked to us at Carbon Removal Canada about signing on and we’re likely to do so. I mean, I think stuff like this, to your point, Radhika, there’s a risk that it creates more confusion, but it’s helpful that different groups have come together and this kind of list of signatories includes companies as well as kind of ecosystem actors and some people who are thinking about the bigger picture of carbon removal and particularly in open systems.
That are excited about this. And I think it really just provides a great foundation for how we think about building out standards and protocols going forward. You know, we’re not going to see a lot of rapid movement from governments around this. They’re going to take a bit more time around what this needs to look like. We know that we have some weaknesses in how protocols are developed. In other parts of the voluntary carbon market. And so groups coming together like this to lay out these sorts of principles specific to carbon removal and open systems where we know that there are potentially more uncertainties around that.
I think is a good first step, but I don’t think it’s the end goal that we should be striving for. It should serve as a platform or a blueprint for how we think about developing standards and protocols in the future. And so, you know, we’re excited that this exists and I think it does set the groundwork for how we need to think about standards and protocols in the carbon removal space going forward. But I do take your point, Radhika. I think that’s something we need to be careful about is just as more and more of these kind of And what can be perceived as industry-led initiatives or non-governmental-led kind of activities around standards and protocols are developed, it risks creating more fragmentation in the space.
And so we’re going to need to make sure that we are clear on what this is trying to do and what it’s not trying to do and how it fits within the broader landscape in order to kind of address those challenges that could come up around creating just more confusion around all of this kind of stuff.
Radhika Moolgavkar: Susan, what do you think?
Susan Su: I just come back to this, that thing that I mentioned earlier about this article that was like the carbon removal technology, singular.
Unknown speaker: And I, my goodness, we have a lot of work to do on the PR front, don’t we?
Susan Su: There’s so much going on in carbon removal. And I think, you know, if I’m looking at, I look at these companies and if I’m thinking, put myself in their shoes, I’m thinking, oh my goodness, none of these existing protocols are Work for me. There’s a lot of like novel nature-based solutions that are part of the signatory set that if I’m a yardstick or a lithose or crew carbon, I don’t want to get mixed in actually with the old guard that has a lot of baggage around it that, you The standards have not really been updated wholesale, but they’ve been more kind of like Frankensteined to the point where they are today.
So I completely understand where the desire comes from to create a clean slate. And as an investor mentor of mine used to always say, be the inviter, don’t be invited. It’s so powerful to create your own Conversation, essentially, as opposed to try to adhere to something existing and change it from within. And I think that’s a little bit of what’s going on here. And in addition, I think a lot of these signatories and whether they’re private companies coming from industry or their NGOs, really trying to create differentiation between what came before and what’s coming in the future.
And I think that’s very positive because things are changing and they are different. And we need to sort of Clean up some of the reputational damage around nature-based solutions that’s happened from Again, we’ve talked about this on this podcast, but people not intentionally doing anything bad, but just sort of like things have evolved and we’ve gotten more information, we’ve gotten better and smarter at this as we’ve come along over the past decade plus. And so I think that’s a lot of what’s driving this. And I think it’s a really great way for a lot of the signatories to get visibility because a lot of them are exceptionally early stage companies.
And to be able to say, That they were early members or they were kind of early crafters of something that they believe is going to be a standard for everybody going forward is really powerful and creates a lot of leverage.
Radhika Moolgavkar: So as a follow on to that, and I love both of your perspectives, Naeem, you kind of alluded to it, but from a person who works in a marketplace, all the standards also cause change. A ton of confusion, right? Like, and a ton of friction. And we’ve talked a lot about in this podcast how you reduce friction to grow the industry. And some of them are kind of repetitive and overlapping, so that causes even more confusion because people don’t know how and where to apply them. So how do you address that question?
How do you think our industry needs to address that question of creating a single standard or a couple of meaningful standards that allow buyers to really understand what they’re doing or suppliers to part be, you know, do it correctly, if you will, in this world of confusion. I mean, even I’m confused half the time and I work in it every single day. So now.
Na’im Merchant: Yeah, I mean, that’s a it’s a good question. I think it does lead to a lot of confusion. And I think luckily right now, it seems like. That’s not stopping the Microsofts of the world and the Amazons of the world, but it is going to be a big impediment for everybody else. And that’s why I think I come back to the need for standards around carbon removal really being led by governments or quasi-governmental efforts or collections of research institutes and academic institutions and nonprofits that can come together and are really, really thinking about how do we How do we reduce that fragmentation?
How do we make sure that the incentives are properly aligned here and that we are building out something that can create a pretty standard framework for how we think about this? Because I think the current situation is fine, like something that the Reykjavik protocol I think is helpful and I think advances the conversation and I think can serve as a blueprint for how standards are done down the line because we know that governments and some of the kind of proposals that I’m talking about in terms of who should do this We’ll take time to develop and this is much better than kind of leaving the vacuum as it is, but that’s where we need to get to.
We need to get to a place where ultimately we have the Food and Drug Administration equivalent for carbon removal. And that sets the standards and it’s not a perfect institution, but the current kind of status quo of a lot of different companies coming together and setting out a new set of standards or protocols Or frameworks around quality and then someone else tries to do the same thing and then someone else tries to do the same thing is just not at some point it’s going to just create a lot more confusion and stop and stop adding any real value.
I don’t think we’re there yet, but I think we’re not too far off. And so, so I think we, I think we need to, I think that’s where we need to get to. I think I’m supportive of things like the Reykjavik protocol. I’m supportive of efforts and industry trying to do the right thing and set out a clear set of standards and frameworks around how the carbon removal process should work. You know, don’t get me wrong. But it just doesn’t seem like the end game on this. And I think there needs to be a centralized body that is not incentivized in any way to support one set of technologies or one company over another that is able to look at the scientific evidence around different carbon removal processes and practices and methods and call balls and strikes as it makes sense.
And we don’t live in that world right now. And I think that’s where we need to get to while recognizing that there needs to be efforts like this right now to keep the field more dynamic until we ultimately get to that kind of, I think, appropriate end state. So I’ll stop there. I’ll get off my high horse because I know Susan wants to chime in here.
Radhika Moolgavkar: Yeah, Susan.
Susan Su: I just want to make one comment since name brings up the FDA and reminds me of something that I was been recently thinking about. So two weeks ago, there was a big VC summit at which legendary venture capitalist Bill Gurley did an incredible talk on regulatory capture. And it’s available free on YouTube. It’s about a 30, 35 minute talk. I highly recommend it for anybody in particular, people that are working in climate tech. Because of the industries that our world touches, it’s one of the best things that I’ve ever listened to, especially recently.
And it really drives home this idea that regulatory capture is an inevitable act that incumbents perpetuate as a competitive strategy. I think that having regulation or governing standards tends to benefit incumbents. And at the same time is used as a competitive strategy. So when I think about the signatories to something like the Reykjavik Protocol, it tells me a couple of things. It tells me firstly that CDR has incumbents now, which like, whoa, hey, that’s cool. That’s great. It has incumbents now to the point where emerging players, rivals, new entrants feel the need to band together.
And create market leverage for themselves. So just as a macro comment, that’s a really big deal. And then incumbents, you might think of them as might be Climeworks, it might be Charm, companies that we’ve talked about a lot already throughout the lifespan of this podcast. So that’s one part of it. The other part of it though, is that while I think it’s something we should strive for that a third party or a kind of a government backed regulatory body would be Objective and would be this sort of fair arbiter of what happens in the industry.
That is never ever how it actually happens. And that is what regulatory capture is. It is the capture of that regulation by the deepest pocketed players in an industry. And so I think that’s what And it’s not good or bad. It’s just the reality. As you get money as a company, as a set of companies, as a cabal of companies, you are going to go after regulation such that it prevents new entrants. Environmental regulation is a really good example where new startups or small players have a much harder time fulfilling the obligations required by regulation versus really large companies.
And so Even though that regulation is an important part of creating social good, it does in the second and third order effects of it, it does tend to favor incumbents. And so I think that’s a little bit what is happening here as well. And that’s impressive to me that we’re already kind of at that point in CDR, not just climate tech more broadly, not just energy transition more broadly, but in CDR specifically. And I do think that it’s important to create or be thoughtful about the way we’re building an ecosystem that fosters fair competition so that we don’t create barriers that are so high that new entrants can’t come in and do better, faster, cheaper, and more.
We desperately need that. We need the price of Tonnes to come way, way, way down. We need CDR to become extremely commonplace. And the only way that we’re gonna get there is through massive amounts of innovation and massive amounts of competition, quite frankly. And so anything that we can do that makes it easier for new competitors to win, I think is actually really, really positive.
Na’im Merchant: I think that’s a good point. I think the only thing I would change about that is that right now, That world that you’re describing, Susan, makes a lot of sense. We are just seeing the formation of incumbents in the carbon removal world. And I think it’s necessary for groups like Running Tide and others to get together and put together and band together around a new protocol or a new standard or a new approach to these things. That’s necessary right now with the emerging of new carbon removal technologies. And I hope that continues to happen and that then those become integrated into more incumbent institutions or other types of groups that have that government backing or have that appropriate kind of third party status.
Like, I think that’s appropriate for incumbent technologies and for them to continue to foster an environment where there’s a pathway in for Emerging technologies, just like there’s a pathway in for new pharmaceuticals and new biotech and new innovations in the healthcare system to eventually find their way into getting commercialized FDA approved drugs on the market. There’s a pathway here. It’s important that we continue to have efforts like Reykjavik Protocol happening. My point is it shouldn’t be the end state and that we hope that some of these carbon removal companies and technologies and methods that are proving to be more effective over time fall into incumbency status and then are able to Then do need to be regulated at a large scale.
And I think while that does have its downsides around regulatory capture, we also have to recognize that in the absence of that, we’re not going to see the investment in carbon removal we need to see, right? If we didn’t have the FDA, which has, I’m sure, a lot of problems around regulatory capture, I don’t think that pharmaceutical companies or biotech companies would be seeing the level of investment that they get because Because there isn’t that regulatory mechanism for them to go through. So I just think that there’s a benefit to having a regulatory body like this when we think about the scale of carbon removal that we’re going to need.
And right now, when our big buyers are Microsoft and Shopify and folks that can hire Carbon Direct and others to help them make the right decisions around carbon removal, maybe that doesn’t matter as much, but eventually it is. And what Reykjavik Protocol can do is bring more emerging technologies and methods to carbon removal to the surface that are, I think, going to eventually be ready for more kind of established third-party standards that maybe aren’t there yet, but there’s a pathway. And I think that’s what we need to be looking for when we think about what does the broader kind of regulatory ecosystem need to look like for carbon removal.
Susan Su: Regulation can definitely foster... Increased investment. But look at who is getting the investment. It’s Moderna. It’s Pfizer. It’s not XYZ biotech company you never heard of. So I think that is also going to happen here. And we need to be cautious because there’s so many more technologies that we don’t know about. And while we definitely need to have standards and protect society, we also need to protect competition and make sure that we create space For little tiny baby CDR companies out there to be successful and try different new things that could really push the envelope and prevent stagnation in this space.
I know it’s weird because we view ourselves as so nascent that we’re even talking about stagnation or incumbency and all this stuff, but it’s moving really fast. You know, we have a lot of big players coming into this space and I want to make sure that we’re still constantly towing the frontier.
Radhika Moolgavkar: All right, well, That was a great conversation. Unfortunately, I have to bring the podcast to a close, though maybe we need to come back and revisit regulatory capture and have a deeper conversation about it in future episodes. I found what you both said super compelling and interesting, and so thank you for answering my question. Final question of the day is, you know, there are a whole bunch of industry events happening. We had Climate Week in New York City. We have Carbon Unbound in London next week. Then following that, we have the DAC coalition meetings in New York City as well.
But I know, Susan and Naeem, you had a couple more you wanted to highlight. So, Susan, if you want to let us know the event you want everyone to hear about, and then Naeem will finish off with you.
Susan Su: Naeem’s is definitely way cooler. I just wanted to say that Climate Week in New York was incredible. It was, everybody had their own different experience. I had a lot of friends that work in climate that aren’t in venture or startups and they had a great time, but we didn’t cross paths at all. And then I had, you know, my whole world of venture and venture backed startups and felt like that was a whole universe that happened. And now this week, we’re actually having the very first Pacific Northwest Climate Week across Seattle, Portland and Vancouver.
And so that’s been really cool, right on the heels of, I think, the biggest New York Climate Week that has ever happened. And then separately in, I guess it’s mid-November, I’m going to be speaking on a carbon removal panel today. And I believe it’s the first time that Web Summit, which is the largest tech conference franchise in the world, I think they bring like 70 or 100,000 people together for the conference. They’re starting to have a climate track and they’re starting to talk about CDR on their climate track for the very first time.
So I think that’s really, really exciting. Incredible. Like we’re at that point and I’m super excited about that. So that’s going to be the Lisbon Web Summit in November. But Naeem got a really cool announcement that’s even better.
Na’im Merchant: Oh, wow. Well, thanks for setting that up. I’m really glad that there’s more of a regional focus around climate in the Pacific Northwest and That’s really cool. I’m glad that’s happening. I, yeah, well, I, I, I guess the, you know, as, as some of your listeners know, I’m, I’m working on a new policy initiative called Carbon Removal Canada and, and we are, you know, our hypothesis is that Canada Canada has all of the ingredients to be a global carbon removal leader. And we are finally in a position to actually share what we’re learning and help kind of frame the size of the problem and the opportunity in Canada.
And so we are hosting our launch event in Ottawa, November 8th, to kind of talk about what the potential for scaling carbon removal in Canada is. And I talked to companies in Canada, as well as companies in Europe and the United States that are really curious about What’s going on in Canada? What’s the policy landscape like? There seems to be a lot of strengths and assets that Canada has in order to kind of scale carbon removal, but we don’t have a lot of clarity in what the opportunity is. And so I hope that we get an opportunity to do that.
In November, that’s November 8th in Ottawa. And so if there are Canadian listeners or if there are any listeners that are keen to make a trip up to Canada’s national capital, we’d love to see you. We’re going to have David Keith, who’s the founder of Carbon Engineering and a professor at the University of Chicago, as well as Stacey Kauk from Shopify, Mike Kellan, the CEO of Planetary, and a few others joining onto a panel to talk about the potential of So I hope folks get a chance to check that out.
You can go to our LinkedIn page. If you’re not following us already on LinkedIn, just look up carbon removal Canada and you’ll see A link to the event pinned to our page there if you’re interested in registering. So thanks for letting me make that shameless plug at the end of the show here. But I wanted to make sure that your listeners knew about a carbon removal event happening north of the border.
Radhika Moolgavkar: Well, thank you both for your time and the great conversation. I would just make a plug that I hope someday we start an oceans-based Pacific Northwest carbon removal summit of some sort. I think we’re very well positioned, but nobody’s done it yet. Anyway, thank you both. Like I said, and I look forward to our next conversation in November.
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