Last week Octavia Carbon announced they are planning to build a DAC plant in the Great Rift Valley in Kenya, the first such plant in the Southern Hemisphere.
The Valley formed as a result of three tectonic plates meeting in one place. This phenomenon has created unique geology, which the entrepreneurs at Octavia feel could be an ideal place to capture and store CO2 underground.
An hour away in Nairobi, they are building commercial-scale DAC machines and planning to deploy their technology with plans to begin storing CO2 underground in 2024.
They want to leverage advantageous local renewable energy, geology, and personnel to attract global customers.
Today we’ll be talking with Octavia’s CEO, Martin Freimüller, about why Kenya is right for DAC, what they are working on now, and why the price of a DAC credit in Kenya will differ from one from the U.S.
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Full Transcript
Announcer: You’re listening to Carbon Removal Newsroom, a weekly show about current events in the world of carbon removal, from technology and innovation to policymaking and job growth. Brought to you by Nori, the carbon removal marketplace.
Radhika Moolgavkar: Texas, Wyoming, Iceland. These are a few of the locales that followers of the direct air capture industry have become accustomed to hearing about. Today we will hear about another area that could join the list of regions soon to become a hub for DAC, the Great Rift Valley in Kenya. The valley formed as a result of three tectonic plates meeting in one place. This phenomenon has created unique geology, which some entrepreneurs feel could be an ideal place to capture and store CO2 underground. Just an hour away in Nairobi, the team at Octavia Carbon is building commercial-scale DAC machines and is working on deploying their technology with plans to begin storing CO2 underground in 2024.
They are also leveraging advantageous local renewable energy, geology, and a wealth of talent in Kenya to attract global customers. So today we’ll be talking to you with Octavia CEO Martin Freimüller about why Kenya is right for DAC. What they’re working on now and why the price of DAC of a DAC credit in Kenya will differ from one in the US. So obviously, let’s just start with your big announcement. So tell us all about that and how long that took to come together.
Martin Freimüller: Yeah, thanks. And it’s an absolute pleasure to be on. Really, my journey to Zidara very much started with Comremoval Newsroom. So always great to go full circle. And the big announcement is that we’ve just announced a big partnership with Puro alongside our storage partners at Seller. And we’re truly excited to likely become the first DAG company to get fully validated under the Puro. Earth geologically stored carbon standard next year when we bring online our pilot project, Project Hummingbird.
Radhika Moolgavkar: So how long was that deal in the making? And can you maybe walk us through some of the high level steps on how you all got there? I mean, you’re a very new company and so you’ve made a huge amount of progress in a really quick amount of time.
Martin Freimüller: Honestly, the first step is reach out to Puro and they’ll take care of the rest. They are an absolutely amazing team of very friendly, most Finnish people and they will get you over the Finnish line amazingly quickly. Um, for all the, um, work that’s gone into it has been a relatively quick process. We really started with them three, four months ago and, um, literally the entire team has been extremely supportive in getting us over the lines. So big shout out to Antti and the folks at Pura Day.
Radhika Moolgavkar: So why don’t we, um, take a step back now that you got told us about your big announcement, which is fantastic. And maybe you can tell us a little bit about the origins of Octavia. And how you identified it as a place, Kenya, as a place that would support so much DAC?
Martin Freimüller: Yeah, of course. And as you said, we are quite young companies. So we’ve been going at full speed for only about 15 months. But our origins really date back to 2020 when James Wangini of TED Talk fame and I at Dalberg both independently landed on calm removal as a section that could really drive massive job growth globally, but also in particular in Africa as one region that could support it. And I then soon realized that DAC especially has a huge amount of potential and that Kenya is mainly the world’s best place to it.
For it, and that is really down to Kenya’s energy, geology, and talent, as you’ve said before. So I did the sensible thing and moved my life to start a company there. And now, again, just about 15 months later, Octavius World’s fifth largest stack company. There’s about 34 of us. And we’ve also got a superstar storage partner in Seller Mineral Storage, who’s also been really close friends from our earliest hours. So that’s been fantastic.
Radhika Moolgavkar: Can you provide a little more detail around both the type of energy you all are using, because it is pretty unique to Kenya, and also why there’s so much talent in the country? I had a great conversation with one of the people at your company in New York, but I think you should describe what makes Kenya so unique from that perspective as well.
Martin Freimüller: 100%. So I think to start with, Kenya is just a fantastic place for renewables just across the stack. It has about like 40% of its electricity grid as hydro and 40% as geothermal. With wind and solar being more native, but also having amazing potential. So Kenya is right on the equator, so you can have solar with very low seasonality and very high performance factors. And in northern Kenya, along the East African Rift Valley, you have some of the highest wind speeds in the world, meaning that it’s really just the perfect place to build a green industry, especially one like that needs a good amount of electricity.
And in that, especially the geothermal really helps you. And that’s both because, well, the energy that needs doesn’t have to be electricity, like, you know, the folks that come up separately shown, like, if you look at places that have, like, abundant heat, specifically, Kenya has very abundant waste heat or geothermal heat to use directly. And it has almost the gigawatt of installed geothermal capacity, the six largest geothermal power produced in the world. A lot of that is being curtailed, those ways that because Kenya hasn’t managed to attract that depth of industrial off-takers for that electricity.
And in that sense, about 1,000 megawatt hours or so a day just are curtailed. And that itself would be enough to get DAC in Kenya to million tonne scale. Again, just to factor this, just the waste to thermal electricity today Can get us to that scale, if used alongside the geothermal heat and the waste heat, that is abundantly available. And so that’s essentially what we’re doing, where we’re starting. And the great thing is that alongside all that, you also have great good benefits from doing the same, because by using that, well, essentially turning that waste into revenue for the Kenyon Power Company, you are lowering the cost of that electricity for everyone else.
And that just means that, you know, start with a cycle of industrialization, you make electricity more affordable for urban consumers, and you can subsidize the extension of the grid to rural areas that would otherwise afford that economically. So that is really like the key core benefits that we have from that energy too. And there’s a lot like on the energy half of this and for the geology is all the great, as you’ve mentioned. But then the talent is the thing that really makes the difference. We plainly know That if we want to make clean tech cheap, we need global south talent.
We need innovators. We need people who, you know, like hands and brains who build this hardware and fix the machine if smoke comes out of it. That happens very often. And essentially, like, the point is that Kenya has a very well-educated population, and one that is also like relatively cost-effective compared to some of the other places where we have a lot of that talent today. And that really means that we can massively scale Earth Day Capture in Kenya, and especially like given it is going to be quite manufacturing and infrastructure-heavy sector, that is really something that Kenya can absolutely excel at and that this talent can really make a massive difference for us.
Radhika Moolgavkar: So Martin, one thing I’m curious about, and we’ve kind of chatted about it, but within the US, there’s definitely mixed feelings about DAC. Let’s just put it like that. And many rural communities are not feeling confident, particularly about pipelines and the like. And I’m wondering what the reception is within the Kenyan general population and rural communities to DAC facilities and pipelines, or if there’s any reception yet, because it’s just too new for them to even know Yeah, it’s a great point.
Martin Freimüller: And I think trust plainly just takes time and work to build. And I think one thing we can say is that the Kenyan government has absolutely clocked on to the massive potential of DAC for the country. And to give you a sense of what that looks like, Kenya’s climate change envoy, Dr. Al-Muhammad, it’s literally an advisor to Octavia. They really want to get their hands dirty on this one. And the Kenyan president is excited about DAC as his wife, and they really are dedicated to Working with the industry on sort of a fit for purpose regulation and they really are aware that while they might not be able to say compete with countries like the earth on subsidies, you can absolutely compete on speed and really working with the industry and being approachable and they absolutely have been so far that’s really been very, very great.
Usually your question was about like underground communities and I think that’s something that I think is really worth touching on it and some of that basically. Because I think it’s perhaps just too much to ask that people will welcome us with open arms, just like rock up there one time and we’re all outsiders and we don’t have any connection in our community, right? For us, it takes time to build. I think if you think that you can sort of like get everyone to cheer for you and like roll out the red carpet, if you just like come to the community once and like sort of put some strange looking machines on a PowerPoint slide, then yeah, I think you’re in for disappointment.
We really think that In the sites around where we want to deploy, this is going to take full-time staff who really are part of that community and can drive that engagement continuously for a really long time. It’s like community engagement really shouldn’t be a one-off. It should be like a continued thing. And in some ways, like it shouldn’t be like the community engagement sort of like suppose that the community is separate from your innocence. And I don’t think it should be. And I think that it’s just something really important. And we have like from the community engagement we’ve done a great shout out to Salahe who really organized that.
We’ve just tagged along really. I think people really are receptive to the fact that the Kenyan company is developing this technology. The Kenyan company is taking the leadership and responsibility here. And I think that is something that local communities are both really proud of and that also like makes them see themselves in the people that they are talking to. And I think that is just something that is really important. And again, that’s true for Kenya. I think it’s also true from elsewhere. I think if you sort of form the U.
S. East and West Coast and you just rock up in like Rural North Dakota and then yeah you will be in a different context, and you should be aware of that, and I think it’s really important that you build trust over time, and I think again that. Really needs people on the ground, it needs people who actually worked in if there and really like tell their friends about this in a bar right that’s that’s ultimately what it takes.
Radhika Moolgavkar: So. I’m wondering kind of about the economics too of a carbon removal credit for Kenya. As you mentioned, right, the cost of labor is probably lower in Kenya than it is in other parts of the world. Additionally, the cost of energy might be lower because it’s waste. However, you don’t have the same subsidies that are being provided within the U. S. at least. So when you all are thinking about Your costing mechanism, how does it compare to how they’re thinking about it here in the US?
Martin Freimüller: Yeah, that’s such a great question. And I think it’s a really important topic that we understandably think a lot about. Because as you say, DAC in Kenya can absolutely compete at bringing this down the cost curve, but we cannot easily compete with just throwing the both subsidies at this. Where there definitely seems to be a race going on between the U. S. and Canada and the U. K. and the Norway sort of all trying to one-up each other in that space. But I think it’s really important to stress here that, of course, you know, these early-stage subsidies are good if they sort of address towards incentivizing early-stage innovation.
And you could argue that all of that is an early-stage play. I think part of the issue here is that the rhetoric is somewhat less around sort of early-stage innovation but really about sort of Capturing that emerging industry. And I think that just had some worrisome echoes with sort of clean tech boom 1. 0, where we’ve seen that like similar attempts to sort of capture that industry ultimately just ended up wasting a lot of taxpayer dollars. Like, you know, the Cylindra type example is often mentioned where, you know, the $500 million that the US government threw at that company ultimately could not save it from not like building where the fundamentals are right.
And if we are talking about hardware, right? This is a lot of, you know, manufacturing. It is a lot of infrastructure and it’s understandable that people want to capture these jobs. But I think it’s also like food that it might be, you know, climate optimal countries to think about what their competitive advantage areas. And it wouldn’t be like, yes, it might not necessarily be in those things, especially those manufacturing and infrastructure sectors, especially, um, And something as location independent as carbon removal, where, you know, other countries might just have much, much better resources for it.
And that’s ultimately like how we think about that in Kenya. Again, we have massive excess geothermal electricity, waste heat, best-in-class storage sites, all in the same place. And at the same time, we also have a highly educated, cost-effective talent pool. And so Kenya can and will bring down the cost, boom, sorry, again, Kenyon can and will 100% compete in bringing back down the cost curve. And that’s something that we already see. And in some ways, it might well be inevitable. I think it’s just the question of like, how quickly are we actually going this point is we’re making this point all the time in industry.
We don’t have time. We really don’t have time. We really need to bring this down the cost curve right now, especially for something that is relatively cost prohibitive like that today. And so I think that’s really something that we should think about and that maybe, like, I think should be, like, poked about it more in the industry. And that’s really the point here. Like, I think when we say bringing that down the cost curve, we should really focus on unsubsidized costs. Because nobody’s under the illusion that at 10 billion point a year scale, the US government will spend, I don’t know, $180 per tonne of CO2 on that sector.
The point is that we really have to think about like, where is it actually the cheapest? And I think really like we should look to like especially sort of our sectors more catalytic buyers to really like tease that out and sort of ask for an economic assessment to really understand what’s going on here. It looks like driving the assumptions that are sort of like in a certain set of numbers. And it’s great that those subsidies that we’re talking about can unlock DAC as a category for a different type of customer, right?
Like a more cost-conscious type, for example, where there might be a genuine benefit from unlocking an artificially cheap credit for a certain type of consumer. It gets a wider set of people exposed to durable carbon removal, not just DAC, but also out of forms of durable TR. And that is key. That is super important.
Radhika Moolgavkar: But we also shouldn’t confuse it with making genuine progress in Yeah, when you talk about the manufacturing sector in the U. S. , it’s like a third rail of U. S. politics, right? I mean, it’s a joke, but manufacturing always has to be thought about. And then you have like the renewable energy and now the solar panels coming from China, which have been cut off and that causes all sorts of anxiety.
Martin Freimüller: So I like your vision, but I have a feeling it’s not going to be quite accepted within the U. S. , And Rodic, can we just make a point there very quickly because it is a really good point, but I would say that the sort of climate transition, that’s enough manufacturing to go around already, basically, right? And there’s genuinely a lot of things that you would probably want to do domestically, right? Like, I don’t know, the electric heat pumps, the electric cars, and so on. And in some ways, if you want people getting their hands to you, that’s great.
You should go for it. But frankly, the US is already busy enough ripping out fossil fuel infrastructure from 100 million US households. And frankly, that talent pool is also shrinking. The number of electricians, the number of welders, and so on. It’s going down every year. And so I think if you don’t want to throw fuel on the fire of just competing that labor pool and just making it more costly for everyone, In that transition, I think, again, thinking around focusing on your competitive strengths. And some of that could still be manufacturing, right?
It could be a sort of really high-end manufacturing of air contactors for DAC, for example. And that could be a whole bunch of great livelihoods. But if you’re looking at building a bunch of steel boxes and deploying them in great locations, other countries might have to compare to the advantage. And I think it is something that, again, In the context of US trade politics, you might not want to like this to happen in places that it’s pretty mildly you don’t agree with. But there is plenty of places in the world that are like 20 to the yes, very much so.
Kenya is 100% a place like that, a big close close affinity with the yes, and that could really like be a mutually beneficial relationship.
Radhika Moolgavkar: I actually completely agree with you. I just think it’s, yeah, I just find it amusing sometimes the US’s approach to some of this stuff. I actually want to ask you a question about the type of support you would like to see brought to Kenya monetarily or other to help scale the industry. I mean, you are kind of At least as far as I’m aware, like the loan company out of Kenya doing this right now. And so curious how you imagine that it’s scaling both across Kenya and across the global south generally, and what needs to be done to do that?
Martin Freimüller: Yeah, so Sela, importantly, important to mention, Sela and us, we are somewhat like the lone voices in the wilderness, if you like, being like, I think the birds that are only sizable, they capture company and storage company that goes up. And yeah, we do think that has to change because a lot of the narrative that I’ve just given you is true across the world, not just for us, not just for Kenya. And I think the support that we need to see that I think the one that’s already already important to acknowledge that there is a lot of custom appetite for these credits from the global south.
I think there’s a lot of people even like end customers who might not have the full certification of their front day climate fund that, you know, care about getting a good story here, basically, because at the end of the day, like that is in many ways what you pay for it, like you pay for Not just the climate benefits, but also like alongside that. And that’s just like the way that spending has been categorized for a long time. Like you care about reputational benefits of it. You care about the, you know, retention benefits that might have on your staff and so on.
You care about the story. That’s the end of it. And the point is that there is a lot of customers who are really willing to demand. The demand is absolutely there. And I think in some ways, That should also unlock other sources of capital, right? Because really, like, if we’re being, like, you know, logical about this, then, you know, VC capital, that capital, other types of capital should follow that demand, really. But that is something where we think that more needs to happen. It is, frankly, hard to find seed-stage investment from clean tech investors who are based in the global north, in, say, the US and Europe and so on.
And I think that’s really something that is worth being thought about more. If we really think about sort of other cataloging forms of capital, like grants and so on, there might be opportunities here to really like look at places where you can really unlock a lot of opportunity locally, you know, in development impact terms, but also like commercially through some relatively small investments and then really like bringing in partners in the sort of venture capital side and the debt investment side and the project financing side and then really Basically bundling that together, de-risking it for people.
And I think in some ways it just needs examples of it working. And we really hope to provide that to really unlock the wider wave of clean tech innovation in Kenya and the global south. But yeah, we hope to be an example of that. But you really want to sort of bring a few folks along, basically. And I think to the extent that DOE, for example, is already looking for partnerships abroad and developing that hub internationally, we think There is absolutely the right steps being taken here. And I think really those partnerships can then sort of anchor on some of these initiatives.
But more is definitely needed. And I think it really is key to stress that we don’t have the time to waste on this, basically. And I think if there’s huge efficiencies to be unlocked from deploying internationally, that’s exactly what we should look to do as well.
Radhika Moolgavkar: I’m going to ask you maybe a tough question and curious what you, how you think about it. I think a lot of people within the DAC industry, CDR generally, have very mixed feelings about oil and gas, right? In some ways, they have a depth of expertise that’s needed for pieces of storage around DAC, pipeline management, things like that. Flip side is they’re obviously oil and gas and maybe the, and definitely the creator of many of the issues you’re trying to solve. So do you think working with them is inevitable or do you think, particularly in a country like Kenya, you may not have to?
Martin Freimüller: And that last point you made might give me a bit more liberty to speak. So I would say that I do not think that working with oil and gas is inevitable. And I think in some ways there’s a sense of inevitability around this in the U. S. specifically that I think is potentially slightly misconceived. People used to say that it is really inevitable that we have to work with oil and gas in offshore wind, but you want to build anything offshore, that needs oil and gas, right? Or say with solar, interestingly, you want to build large scale infrastructure, just look to oil and gas, they’ll make it work for you.
Point is, if you look at where oil and gas is in solar and wind today, they are nowhere near the top 100 players in that industry. Some of the talent moved, and yes, you will need some of the talent to sort of like jump in and really like help build out this with the expertise that they are questioning behalf. But the point is that we should not like concede a certain ability there, which is just to be clear, does not mean that oil and gas does not have a role. I think it’s just really important to stress that we should Be careful around sort of the credo of carbon removal, that sort of like, you know, carbon removal is not a replacement to decarbonization.
The thing that we say, like, at the start of every, this is DDR episode, right? It’s important, right? But the point is, if we work with people who evidently are not aligned to 1. 5 degree target, and frankly, no oil and gas company is, then that really risks undermining our credibility as an industry. And that is something that I guess, yeah, we do worry about, basically. And then all the like really risks and the cuttings sort of like, you know, our ability to work in certain communities and so on. And really like also just to really make this have a wide audience, right?
I think if you want, you know, municipalities and like county governments and states to buy from you, You have to be able to really make a compelling case for the common impact of what you’re doing. But again, if that is very closely linked to an industry in oil and gas that has a very negative reputation around anything called carbon capture or something, that really risks derailing our progress. And I think I don’t doubt that there’s good people working in oil and gas. And again, The slight theory we have is that like, you know, those people will do that, but they might not necessarily do that with oil and gas in the long run, because, you know, the charitable version of putting this is that this is really an innovative dilemma, right?
And there is a certain neatness for oil and gas for getting carbon management, right, and sort of putting it under the same umbrella. But probably it is a very different type of thesis to build that, and especially modular deck, which, again, we, and that’s our bias view, see as having a lot of advantages here. And so, yeah, I think, It’s something that we should sort of be sort of clear-eyed about and that we, you know, I think we wouldn’t go as far as saying it’s a categorical no. Um, and we understand that like some companies, especially folks who want to store CO2 in the US, but at the same time, I think it’s worth listening to our critics on this one.
And if that is going to go mainstream, um, then We think that it is a commercially sound decision to distance ourselves from that industry. That’s sort of what I think it is.
Radhika Moolgavkar: Well, I thank you for your candid response about it, because it is a tough subject for sure. And my final question for you is, it feels like DAC is having an amazing moment just in the last few weeks, right? You have Avnos, $80 million funding, your great announcement about your partnership between Puro and Sella, so where, like if you were to put on your fortune teller hat in five years, where do you imagine DAC will be and what would be the perfect scenario by 2030, let’s say, which is a little over five years away?
Martin Freimüller: Mm-hmm. But my perfect scenario is that it will be in Kenya in a major, major way. And that is, in fact, what people will think of when they hear the word DAC. But I do see that there’s a lot of progress we can drive over the next seven-ish years. And those seven years really matter. They matter especially for DAC. Because the whole promise of that really is anchored around the idea that, you know, an engineered solution can come down the cost curve fast and other types of solutions. And the ability to iterate that really, like, produces something special for that.
And frankly, I would say the burden is on us to actually prove that to be true. And we, and Octavia, are certainly, like, trying very, very hard at this and seeing some initial success. So where do we want to be? We want to be at millions on scale. That much is unquestionable. Potentially, like, it’s older than that still. And from there, we think a lot is possible. Again, we think that, again, there is likely going to be a portfolio approach to this, but DAC has a very strong appeal for a good Segment of emissions that essentially take carbon out of that, you know, the reservoirs and put it into the atmosphere.
And I think for us, the idea of reversing that flow and ultimately putting carbon back where it came from, but it’s still a common fragrance industry. That is the target. And it’s something where we see that as well, to operate alongside, you know, a portfolio of other approaches that all have their own advantages to survive.
Radhika Moolgavkar: Well, Martin, it’s been lovely to have you on the show and I am very excited to watch your progress. You know, it’s hard to be the leader and so wishing you the best of growing this industry in Kenya and really showcasing all the talents the country has so the rest the world can learn to appreciate it. So thank you so much and look forward to hearing more announcements as they come out from you all.
Martin Freimüller: Thank you, it’s been an absolute pleasure. And if we can just very quickly plug that there’s a big African climate summit coming up in Nairobi in early September. That a lot of direct aid capture and CDR stakeholders will be at. And if you sort of like the things that you just heard, then I can highly recommend that you come along. And there’ll be a lot of excitement and enthusiasm, some big announcements, including from us, coming up at that summit. And we are really looking forward to showcasing Kenya as a place, if not D place, to do common mobile and that.
Radhika Moolgavkar: I have to ask, what’s the weather like at that time of year in Nairobi?
Martin Freimüller: Beautiful ads every day of the year. Being on the equator at 2,000 meters altitude gives you the perfect bit of perfect every day.
Radhika Moolgavkar: Well, if you ever, if your DAC doesn’t succeed, you definitely could be a Kenyan influencer and get people down there.
Martin Freimüller: Well, I’m excited for people to meet the real influencers, which frankly aren’t me, but the fantastic Kenyan team that we have. And if you profile, you’ll see them and we look forward to having you.
Radhika Moolgavkar: Great. Take care, Martin.
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