Puro's carbon removal marketplace in Finland has launched with its first auctions taking place. Antti Vihavainen, Business Development at Puro, comes on the show to discuss their progress, how biochar and the other methodologies within their marketplace work, and what they're looking to do moving forward. https://puro.earth
Full Transcript
Ross Kenyon: Hello and welcome to Carbon Removal Newsroom. I’m Ross Kenyon, lead strategist with the Nori Carbon Removal Marketplace. Today I have with us Antti Vihavainen, business development at Puro. It’s a Finnish carbon removal marketplace that has transactions changing hands, which is very exciting. And today our guest host is Alexsandra Guerra of Nori.
Alexsandra Guerra: Hello.
Ross Kenyon: Thanks for being here, Alexsandra.
Alexsandra Guerra: Thank you.
Ross Kenyon: Why don’t you take it away?
Alexsandra Guerra: All right. Great. Hello, everybody. Antti, why don’t you tell our listeners what exactly is Puro?
Antti Vihavainen: Yeah, thank you very much also for the invitation to join your podcast. I’ve learned so much by listening to basically all of your podcasts so far. So it’s great that you’ve taken the time and effort to share your knowledge, what you’ve learned. So Puro is basically a fairly straightforward marketplace where the ones that run a net negative operation, you know, businesses, organizations that actually sequester CO2 out from the atmosphere can, you know, have this activity basically certified and then the certificates can be traded on the marketplace.
Alexsandra Guerra: Okay. And so what brought you to create Puro? Like what was the need that you wanted to fill?
Antti Vihavainen: Well, the basic reason for starting a marketplace was not that we wanted to make a marketplace and then figure out what to do with the marketplace. But it was actually the fact that we knew that and we know And although there are lots of very good efforts and programs to reduce the emissions, and that’s obviously vital for us all. The results don’t really look that good. The CO2 concentration in the atmosphere still keeps on rising. So therefore, the logic was that let’s figure out a way to accelerate removal of CO2 from the atmosphere.
We had something like 20 different methods for sequestering CO2. Many of them were not, let’s say, easy to measure or easy to verify or their volume potential is not. Great.
Alexsandra Guerra: So then why don’t you tell us what are those three methods of carbon removal that you guys are focusing on?
Antti Vihavainen: Well, at the moment, we have sort of documented three different methods or methodologies. One of them is biochar, which is a very useful ingredient or product in itself, but it is net negative and it’s Fairly easy to create then, well, let’s say the additional certification around that. Then there’s the other one, say carbonated building elements, which is basically a concrete-like building element that... Its production consumes or sequesters more CO2 than the production emits. So it’s actually CO2 negative. And then the third one is wooden building elements, which is basically, you know, in its simplest form, it can be a log house where we know that the CO2 has been taken away from the circulation for a, let’s say, semi-permanent or, let’s say, a very long period of time.
Alexsandra Guerra: Okay. So why don’t you, let’s dig a little deeper into biochar. So we at Nori too are very interested in biochar and exploring a methodology for that. And we are finding it a little bit tricky to see, you know, the additionality, the permanence and the net negative removal depending on the source. So tell us a little bit more about your biochar methodology and how you’re addressing some of these issues.
Antti Vihavainen: Yeah, it’s a good point. And biochar can be made for different purposes and in very different ways. We are relying on the EBC, which is the European Biochar Certificate. It gives the basis for the quality, let’s say the permanence of the And then there separately needs to be a LCA or life cycle assessment documentation that basically shows the evidence that the pyrolysis gases and the oil are treated in a way that it is carbon net negative. So you can do it in a way that it is not, but we make sure that ours is.
Alexsandra Guerra: And I’m guessing it goes back to the source, looking at where’s the source of this carbon or the biomass all the way through in this LCA.
Antti Vihavainen: Yes, indeed. That is one part of the methodology. Also, there are some restrictions of, you know, you can’t transport the biomass from, you know, from a large distance or so forth. So there are lots of requirements around that.
Alexsandra Guerra: So then with some of your biochar CORCs, which are your carbon dioxide removal certificates, right?
Antti Vihavainen: Correct.
Alexsandra Guerra: Where’s the supply of biochar coming for some of these CORCs that are coming from your biochar?
Antti Vihavainen: At the moment, there’s one Finnish company that is very active and actually is running the largest biochar operation in Europe that is certified with the EBC. But now we are actually getting a lot of attention from various biochar producers from around Europe and also from other continents. So we hope to be able to Certify also at least one Italian producer and perhaps some German ones in the near future.
Alexsandra Guerra: Are these like forest based? Like where’s the actual carbon coming from?
Antti Vihavainen: The char? Preferably they are waste streams from, let’s say, forest industry of some sort. That’s obviously the best case scenario. Yeah, that’s what we aim for.
Ross Kenyon: Okay. We ask because a lot of biochar people find us and we always have to dig into those nuts and bolts. And it sounds like you are busy doing so yourself or relying on this other standard. But yeah, biochar people definitely want to be a part of carbon removal marketplaces. And it seems like your experience mirrors our own.
Alexsandra Guerra: And so if you’re focused on the waste streams of forestry or even agricultural waste, that could be a net negative CO2 sequestration, which is great. So why don’t you tell us a little bit about verification and how that works with PUDO?
Antti Vihavainen: Well, the basic concept starts from the claim that is made by the producer or the supplier, as we call these net negative operator, operation owners. They make a claim that they say that they are net negative and that they would be eligible for, say, a hundred or a thousand corks, as we like to call them, their certificates.
Alexsandra Guerra: Oh, corks. I was saying C-O-R-C. It’s like a corks.
Antti Vihavainen: Corks, yes, indeed. And then we, in Puro, we make the first assessment that does it look okay? We obviously need to have sufficient documentation related to the processes that are being used. Also, we need to have the accounting of production and also sales. Especially in the question of biochar, it would be possible to use it for, let’s say, steel production. But in that case, it would be obviously returning to the atmosphere very quickly. So we also require that the producer can show us that it has not been burned. Once we make this...
Primary assessment, then we hand it over to our partner, DNV, which is a trusted third party that has been doing all kinds of verifications for hundreds of years. So we are not the ones doing the verification.
Alexsandra Guerra: Right. A third party DNV GL. They’re a consultant company.
Antti Vihavainen: Exactly.
Alexsandra Guerra: Yeah. Okay. So how does one buy a cork?
Antti Vihavainen: Yeah, the mechanism is for the moment. It is a periodic auction where the supplier can place some certificates that are in his or her account in the registry into the auction. And then they need to tell the floor price with which they are willing to part from the certificates. And then on the other side, there are Buyers that are giving a cap price, basically a bid with a cap price and the quantity, how many they would like to buy. And we are collecting these sales bids and purchase bids for 48 hours and then the auction closes.
It’s double blind and so nobody knows anything about the quantities or the prices that have been quoted so far and the auction closes and then the matchmaking happens.
Ross Kenyon: And you’ve just done your first auction that was completed a week or two ago, you were saying?
Antti Vihavainen: Yes, yes, a week ago.
Alexsandra Guerra: So how often is this periodic auction going to happen?
Antti Vihavainen: Well, now we are running it every two weeks. It’s a very tight schedule, but we want to learn as much as possible, as quickly as possible. You know, Europe is going to go on summer vacation and we want to complete three auctions before that.
Alexsandra Guerra: So how many corks were auctioned off in the first one that happened a couple weeks ago?
Antti Vihavainen: We haven’t really shared that information because everything would affect the next offers, both on the seller and the buyer side. We want to get as pure data as possible in the auctions so that... That’s why it’s double blind. And yeah, it’s not optimal. We acknowledge that. But the liquidity is not high enough for us to run an exchange where everybody would have the same visibility to the offer levels.
Ross Kenyon: At some point, will this information be released or will it be kept private for the foreseeable future?
Antti Vihavainen: The quantity information is likely to remain hidden from public for at least in the foreseeable future. But let’s see. Obviously, we want to make sure that it is a marketplace that everybody feels comfortable with. At the moment, I can say that there were Bids that were placed, you know, somebody wanted to buy one cork at price intervals of 0. 1 euro, and then 1 euro, and then 5 euros, and 10 euros, all the way to several tens of euros. And, you know, testing the waters, making sure that they know where...
The price goes and what sort of bids are accepted and what not. And then there were bids that were actually very significant volumes that some of them actually were matched, some of them weren’t. So there was some, you know, we actually encountered all the variations of the different possible outcomes in the matchmaking. So it was quite eventful, let’s put it this way.
Ross Kenyon: Are you, is your organization making money off of these transactions somehow? Is it a transaction fee?
Antti Vihavainen: Yes, yes, there is a transaction fee. Of 1. 5% from both parties, so altogether 3% at this point of time. Although this is in the case of, say, mixed cork auction. If there’s a sort of a pick and choose type of a customer that wants to have specifically biochar or some other specific method, then the transaction fee is actually higher. We want to discourage that in order to maintain as high liquidity as possible.
Ross Kenyon: So you’re discouraging over-the-counter transactions, wanting people to go into the auction that way?
Antti Vihavainen: No, no. These corks are not available outside of the marketplace at all. So the transaction always has to take place in the marketplace. However, it is possible we are actually running four consecutive transactions. Or simultaneous auctions within this 48 hours so that it is possible to select either the one that is sort of mixed or then a specific one of the three methodologies that are available.
Alexsandra Guerra: Okay. So with marketplaces, you have to have inventory and you have to get it from some, it has to be created at some point. So Nori, for example, we are grandfathering in CRCs for carbon removal in soil carbon sequestration. How far back are you guys doing any grandfathering? Where are you getting your supply for corks?
Antti Vihavainen: I’m not sure if I understand that correctly, but we accept sequestration that has taken place maximum of 12 months before the issuance of the certificates.
Alexsandra Guerra: I think you understood the question correctly, is how far back are you going to be creating the supply?
Ross Kenyon: Sorry, that was an American idiom for you, but you hung in there, auntie, you got it. Okay.
Alexsandra Guerra: So what are your future plans for PUDO?
Antti Vihavainen: Well, this is actually an experiment. And so we wanted to find out if companies are willing to pay for, you know, actually removing CO2 from the atmosphere. That was the first, that was the biggest question that we had. And now that has been sort of proven that yes, there are companies that are willing to part from their money. And with that, be able to, you know, either balance their carbon footprint or, you In some cases, also bundle the certificates with their main core business, which is, I think, a very exciting business proposition.
Obviously, we have some other questions as well, whether we are, for example, able to attract investors. And whether we get inbound traffic into our platform, people that want to join it, if that’s happening, then we believe that it indicates that it’s a viable marketplace so that we don’t have it. We don’t have to go and sell it every time separately as we have done so far. So it is an experiment and in the autumn we are going to basically make a decision of the continuation. At the moment everything looks very good.
And we hope to be able to enter a scale up phase where we are basically getting rid of many of the manual steps that we have at the moment and create a more, let’s say, elegant user experience and more elegant way of transacting with the system.
Alexsandra Guerra: I think that’s a great idea. You guys are smart. You’re starting, proving the need, and you’re doing it manually, and then you’ll learn from there and provide a more elegant solution, as you said. I love that you were testing this assumption. I have one last question to wrap up. The assumption that buyers are willing to pay for this. Can you speak to some of the motivations that you’ve seen speaking to some of these potential customers? Why exactly are they driven to pay for carbon removal?
Antti Vihavainen: I think many of these companies are there to learn. They want to understand how it goes, how it works, and what is the price. Obviously, this is a voluntary system, so most of these companies The other thing is that I think companies over here are also very... Viewing this as a possibility for competitive advantage. If they can say that if they bundle these certificates to certain products or processes or services, and then they can say that particular service is carbon neutral. I think that’s a key motivation factor in some cases as well.
Alexsandra Guerra: All right. Well, congratulations to you and the team. I think this is a great step forward for all people working in climate action, and we’d love to see more of this happening, getting more carbon removal done.
Ross Kenyon: Yeah, we’d love to have you back on when there’s newsworthy elements to update. We also admire how quickly you moved and the lean approach that you took to building a new solution. We like that. Things tend to not always move as fast or with that software mentality. So kudos to you, Antti, for doing all of that.
Antti Vihavainen: Thank you.
Ross Kenyon: My pleasure. If someone wanted to learn more about what y’all are doing, what’s the best way for them to do so?
Antti Vihavainen: Well, we have a website, puro. earth, P-U-R-O dot earth. So from there, you’ll be able to find out more information about the process and also download the methodologies if you’re interested and the rules for the marketplace as well.
Ross Kenyon: Great. Well, thank you so much for being here, Alexsandra. Thank you for running the show. If you like the show, please give us a great review in Apple Podcasts or iTunes. Tell your friends, get the word out about carbon removal. That’s what we’re doing here. We’re trying to make the conversation more about carbon removal. And Antti, thank you again so much for being here with us.
Antti Vihavainen: Thank you.
