--:-- Host: When it comes to the abundance of the rock itself, that's not a limiting factor. In fact, we've done some just back-of-the-envelope calculations, and we understand that the amount of peridotite that exists in Oman and the UAE alone could mineralize trillions of tons of CO2, making basically all the emissions that humans have ever emitted since the pre-industrial age. We're able to snap our fingers and convert all that peridotite into carbonate minerals through the mineralization process. We could reverse climate change.
--:-- Host: Welcome to part three of our carbon removal series. If you're just catching up, in part one, we chatted with Nan Ransohoff about what it might take to build a thriving ecosystem of carbon removal solutions, and how Frontier, the initiative that Nan's leading out of Stripe, might support that through an advanced market commitment. And in part two, we discussed the opportunity and the challenge of building a marketplace around the growing number of these solutions, and what Patch, Brennan Spellacy's company, is doing to help develop this nascent industry.
--:-- Host: Now, in both of these episodes, Nan and Brennan spoke to just how early we are. Here's Brennan.
--:-- Brennan Spellacy: It does feel like maybe the starting gun has gone off, if you will, but with this 100-meter race, I don't know if we're even out of the blocks yet. People haven't even stood up straight.
--:-- Host: And here's Nan.
--:-- Nan Ransohoff: This field is so early, we don't want to pick a horse yet.
--:-- Host: So today in part three, we wanted to introduce you to a few of these solutions, each with their own story, but also significant variation in chemical pathway, business model, and operational challenges. The purpose of this episode is not to be exhaustive. There are many other exciting solutions on the market today and new ones being introduced as we speak. But we did want to give you a sampling of what's out there and get you up close and personal with three solutions. In this case, removal through biomass pyrolysis, an electrochemical process, and a naturally occurring rock mineralization process.
--:-- Host: We cover these companies through the lens of their founders: Peter Reinhardt, CEO of Charm Industrial; Laura Lammers, CEO of Travertine; and Karan Khimji, COO of 44.01. By the way, for my fellow chemical engineers out there, I hope you got 44.01's carbon dioxide reference. 44.01 is the molecular mass of carbon dioxide.
--:-- Host: And finally, please do let us know if you enjoyed this episode. We'd be open to covering more solutions like direct air capture or kelp sinking. And you'll probably notice that this is a more narrative style episode with multiple voices. So if you like this format, please let us know. The content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any a16z fund. For more details, please see a16z.com slash disclosures.
--:-- Host: All right, let's start by introducing Peter, co-founder and CEO of Charm Industrial. You might also recognize him as the founder of several other companies, including Segment, which was acquired by Twilio for $3.2 billion. I started by asking Peter why, of all the spaces he could operate in, he's now chosen carbon removal.
--:-- Peter Reinhardt: At Segment in 2015, I was trying to figure out how we should offset our emissions. I was working with some folks on the team to figure out what our emissions were and what was available to offset those emissions and how we could reduce them. We implemented a lot of the reductions first, like swapping out beef for chicken in lunches and trying to encourage commuting by train and bus. But ultimately, we had some emissions from flying salespeople around that we couldn't get rid of. So we went out and bought some offsets of Indonesian rainforest and Brazilian rainforest, the stuff that was available.
--:-- Peter Reinhardt: We did that. A year later, I was like, wait a second, what happened when we made these purchases? The deeper I dug into what was going on there, I thought, oh no, this is bad. I'm not convinced that anything good happened here. I'm not convinced that any carbon impact happened at all. As we continued to dig in, I became pretty convinced that a good product didn't exist for carbon offsets and carbon removals. I think that's been borne out over the last few years in research from UC Berkeley and the Carbon Trading Project and others, where basically 90% plus of the offsets out there are garbage. They really don't have any carbon impact. They do other wonderful things for ecosystems and humans who live in other places, but in terms of carbon impact, pretty minimal.
--:-- Peter Reinhardt: So in 2017, that inspired me to spend Saturdays working with some friends trying to figure out if there was a carbon removal pathway that would be higher quality and profitable. Then in 2018, we started Charm focused on doing that.
--:-- Host: Now, the idea that carbon offsets can vary in efficacy is not new. It's actually a theme we heard from both Nan and Brennan. But I wanted to get a deeper sense of what Peter meant here.
--:-- Host: When you are referring to these offsets not really doing anything, can you speak a little more to that? Is it that they're selling forests multiple times over? Is it that they're not really executing on any plan that they're articulating to customers? What's really happening?
--:-- Peter Reinhardt: For the most part, it's not straightforward fraud. It's not like people just claiming stuff that isn't happening. It's usually aggressive baselining or additionality questions. For example, if you purchase offsets in Indonesia and you set aside some rainforest there, does that just mean that the one next door gets logged instead of the one that you protected? That's an additionality question. When there are fires that rage through the Indonesian rainforest, huge fires, is this forest protected from fire? How?
--:-- Peter Reinhardt: From a political perspective, you need to set aside this forest to match the fossil fuel we've taken out of geological storage and burned and put in the atmosphere. We need to match the permanence by putting something back into super long time storage. We need to set aside this forest for like a thousand years. No regime has survived a thousand years. How are you going to know that ownership rights will remain for a thousand years? These are the sorts of issues that pop up. It's very unclear that any of them are well accounted for or well handled.
--:-- Host: Peter went on to share a few more examples with me, even some rare cases of borderline fraud. But even for well-meaning providers, an important question has surfaced: What solutions are there that we can be relatively confident in the permanence of? Which reminded me of the definition that Nan shared.
--:-- Nan Ransohoff: We are really focused on permanently removing carbon dioxide from the atmosphere and the ocean and storing it for at least a thousand years.
--:-- Host: The three solutions that we'll be introducing you to check that box. That brings us to Charm Industrial, Travertine, and 44.01. Let's start by hearing what each of them do. Here's Peter again from Charm Industrial.
--:-- Peter Reinhardt: You have a bunch of plants that are capturing CO2 out of the atmosphere. They're using it to make sugars and cellulose, and that's how they build themselves. They've already done the hard work for us. But the question is, now we need to store it deep underground where we can't mess with it anymore. What we do is we cook it into this liquid called bio oil. You should really think of it as barbecue sauce. Bio oil is the natural smoke flavor in barbecue sauce. Literally industrial quantities of natural smoke flavor. It's very carbon rich. Then we inject that thousands of feet down into old oil and gas wells. Plants take CO2 out of the atmosphere, we turn it into barbecue sauce, and it goes down the forever hole.
--:-- Host: So the biomass that you're converting to bio oil, what would happen to that otherwise? I could see an argument where you could say, well, actually, a lot of that bio oil could just sit on top of the ground, or maybe the biomass, which is the precursor to the bio oil, could just exist. As long as it's not being burnt and that CO2 is not being released, it's not really any different. Can you explain that dynamic and how actually injecting it underground is changing that whole cycle?
--:-- Peter Reinhardt: Every year, about 110 billion tons of CO2 comes out of the atmosphere into the biosphere, and 110 billion tons of CO2 comes out of the biosphere back into the atmosphere. The particular crops we're interested in are not purpose-grown to produce biomass. We're interested in the residues of other crops that are already grown. For example, corn. We grow 100 million acres of corn every year in the U.S. That produces tens of millions of tons of kernels. It also produces about 400 million tons of corn stover.
--:-- Peter Reinhardt: The stalks, the leaves, the cobs. 400 million tons just in the U.S., just of that one crop. We can't take it all. We need to leave some on the field to protect the soil from erosion. But the other 200 to 300 million tons is totally safe for us to process and extract the bio oil barbecue sauce from it. We actually put solid char back on the field. We actually improve the soil carbon content relative to baseline, and we put most of the nutrients, potassium and phosphorus, back. But we extract some of the carbon and put it deep underground.
--:-- Peter Reinhardt: If we were to do no-till, which is best practice, almost all of the biomass rots. It doesn't just burn, it also rots. Something like 95% of the corn stover in the U.S. goes unused. It just rots on the field. Even with no-till, huge, like 98%, I think, of the carbon goes back into the atmosphere via rotting in short order. That's the baseline. It would rot. It would slightly improve the carbon content. But if we come through and process it more quickly, we put the char in the soil and increase the carbon relative to baseline. If you look at the soils in the Midwest, in the Great Plains, the carbon content there is partly the reason it's so rich is because there used to be brush fires that would roll across the plains that would effectively create char and increase the soil carbon content. We're effectively doing a super good version of that with pyrolysis that should over time increase the amount of topsoil and increase soil health.
--:-- Host: Fascinating. So you're basically, and I know I'm dumbing this down, but you're basically taking a bunch of this biomass that's already going to exist. If nothing is done to it, it's going to rot or burn, and a lot of that carbon is going to go back into the atmosphere. What you're doing is you're taking that, you're charring it, you're bringing back the important ingredients, you're adding that back to the soil, and then you're taking the carbon, which we don't want to be released, and you're injecting that underground. Is that a very simple way to put it?
--:-- Peter Reinhardt: That's right. The stuff that we inject, what's cool is it's very dense. After injection, it actually sinks inside the rock formations that it's injected into. Then because it has this chemical compound called phenols in it, the phenols react and it actually solidifies. It locks itself into the rock structure like glue.
--:-- Host: Wow. Fascinating. Now let's hear another equally fascinating, yet wildly different solution. This is Karan from 44.01.
--:-- Karan Khimji: 44.01 takes carbon dioxide from companies that capture the CO2 in the first place. Either a direct air capture company or a company that captures CO2 from the flue stack of an industrial facility, and then eliminates it permanently for that capture company. We effectively sit as the company that off-takes the CO2 and then eliminates it from existence. The way we do that is by mixing the CO2 with water and then injecting it in specific geological formations where the rock in that formation reacts with the fluid mixture of CO2 and H2O and turns that CO2 within the water into an inert carbonate mineral, a different rock, thereby immobilizing it permanently in solid form with no risk of re-release into the future.
--:-- Host: I assume this doesn't work with any old rock.
--:-- Karan Khimji: That's right. The rock that we use is called peridotite. The rock itself is high in olivine, which is a mineral that reacts with CO2. It's an oceanic mantle rock that's normally found several kilometers below the Earth's surface. In particular parts of the world, that rock has been thrust up onto the surface through past tectonic activity, such that it's available on the surface to work with. One of those locations is particularly in Oman and the UAE, the two countries that we're currently operating in. That rock is found in abundance. It's actually the largest form of this rock on the planet at the moment, which gives us unparalleled access to be able to test our process in those specific locations.
--:-- Host: A lot of these processes where people are trying to remove carbon dioxide from the atmosphere require a catalyst or some additional energy. Is that the case here? Or does this rock just naturally react?
--:-- Karan Khimji: The rock is naturally reacting with CO2 constantly. Because the rock is in an unnatural state, being on the surface rather than below the oceans, it has been for thousands of years naturally reacting with the CO2 in the air and absorbing CO2 through a process called mineralization. What we're effectively doing is accelerating that process by creating the physical and chemical characteristics in the geological reservoir itself to speed that up. Things like pressure, temperature, and differences in alkalinity between the CO2-H2O fluid mixture and the rock itself enable us to speed that up significantly, to mineralize meaningful amounts of CO2 rather than the glacial pace that we've been observing, which is the natural phenomenon.
--:-- Host: What is the difference between that glacial pace that naturally happens on Earth and the pace that you've managed to accelerate it to so far? Are we talking 10x, 100x, 1,000x? How much faster is the process today relative to what naturally happens?
--:-- Karan Khimji: It's around 100,000x. We're able to mineralize every unit of CO2 within a year. That rate is something that we're currently testing in our pilot experiments in the field. But we estimate that it's going to be able to accelerate it around 100,000 times.
--:-- Host: Perhaps you could hear the surprise in my voice. It's pretty incredible when you think about it. There's a naturally occurring rock, peridotite, that naturally reacts with CO2 through a mineralization process that removes it from the atmosphere. And 44.01 is testing methods of speeding this process up to 100,000 times the speed. We'll come back to Karan, but for now let's hear from Laura about how Travertine is also using geological materials to remove carbon from the atmosphere, but this time through an electrochemical process.
--:-- Laura Lammers: Travertine's process really takes advantage of the acid neutralizing power of geological materials to turn carbon dioxide from the air, which is actually called an acid gas, into carbonate rocks. In simplified terms, we're combining water electrolysis, which makes acid and base, with a precipitation process that takes the base we make and turns it into carbonate rock with CO2 from air.
--:-- Host: Let's just outline what goes in and what goes out. You have carbon dioxide, sulfate waste. Those go in. There's some energy that also goes in. And then what comes out?
--:-- Laura Lammers: It's sulfuric acid, green hydrogen, oxygen, and then a mineral. This process really is a way to miniaturize Earth's natural process for sequestering carbon dioxide from the air over geologic timescales. What the earth does is basically the carbon dioxide reacts with water to form carbonic acid. That acid then reacts with rocks, and that rock reaction then generates carbonate minerals. What we're doing is trying to speed that up dramatically.
--:-- Laura Lammers: This process is not new. People have been thinking about the rock weathering process for a very long time. I've also been thinking about this idea of making acid and base chemicals using water electrolysis for many years. Specifically, the idea of generating sulfuric acid for critical aluminum extraction in tandem with carbon dioxide removal came out of some conversations I was having with mining companies in the context of lithium extraction in the U.S.
--:-- Host: You might have noticed Travertine's process has parallels to 44.01's. Both are inspired by Earth's natural process of converting carbon dioxide into carbonate minerals over long timescales. But in Travertine's reaction, renewable energy is used to react CO2 specifically with sulfate waste to generate several byproducts. Let's put a pin in one that we'll come back to: sulfuric acid.
--:-- Host: Now, as we go through these examples, you're probably already picking up on the fact that this chemistry is not new. So naturally, I had to probe into the question of, why now? Here's what Karan had to say.
--:-- Host: Why has this not been done before? Because so far we've discussed that it's something that naturally occurs in nature. It doesn't require a lot of energy or an additional catalyst. So why is this something that people have not pursued before? Because it seems, at least so far, like a no-brainer.
--:-- Karan Khimji: It's a great question. The natural science was really worked on by two leading professors in the field amongst a group of others. Their names are Professor Peter Kelemen and Professor Jörg Matter. They effectively worked on observing this natural reaction in the field for the last 10 to 15 years in Oman and the UAE in particular. What helped us as 44.01 come in and help accelerate that reaction to form this permanent process of carbon removal was that it was really about having the key players in place at the right time.
--:-- Karan Khimji: We were able to engage with the local regulatory authorities to get the required permits to test this in the field, not just observe the natural phenomenon, but then test how it could be accelerated. It was also about bringing these premier scientists onto our team of local experts, including engineers familiar with reservoir modeling processes, site characterization processes, and injection technologies. Putting together the right team as well as the right local regulatory players helped set up our first pilot tests.
--:-- Host: So for 44.01, it was the intersection of the right team and the right regulatory players. Now here's Laura expanding on the confluence of factors making some of these solutions viable today, including the increasing availability of renewable electricity.
--:-- Laura Lammers: This specific idea of upcycling sulfate waste to produce sulfuric acid to accelerate these kinds of processes has been thought of before. This is not a completely new idea. The key issue is that in the past there hasn't been access to clean renewable electricity in abundance. There hasn't been visibility to a market for carbon dioxide sequestration credits. And there also hasn't been a lot of attention paid to waste production in our extractive industries. All of those things are changing now. So now is really the time to implement this kind of process.
--:-- Host: Having a promising chemical pathway is not enough. These solutions are only really solutions if they can be performed at a reasonable cost and at scale. Let's first examine the question of scale. How big can these businesses really get? And what are the limiting factors on the way to the billions of tons scale that the industry needs to make a true dent? Let's start with Peter on how Charm Industrial is thinking about scale.
--:-- Peter Reinhardt: Our number one constraint right now is the amount of bio oil production capacity. That's something we're working very hard on expanding so that we can grow faster than currently forecast. Once we're able to mass manufacture pyrolyzers, we think the bottleneck will pretty quickly, not quickly, but at meaningful scale, shift to biomass. There's probably about a billion tons a year of biomass residues available in North America, Mexico, Canada, and the U.S., between all various crops. A billion tons per year is like 10% of the carbon removal that's needed. You can see expansion then into other biomass regions, India, Brazil, Nigeria, places like that. Those are the sorts of places where we'll expand, and we expect that we'll be eventually biomass limited to the scale of several billion tons per year.
--:-- Host: To summarize, Peter thinks the biomass in North America alone could make a meaningful dent in the carbon equation. Now, what about Travertine? Could it hit the gigaton scale?
--:-- Laura Lammers: Absolutely. Those scales that we're talking about are the aim of gigaton scale, gigaton per year, which is an incredibly staggering scale to do any kind of chemistry. That's the world's largest chemical industry working at that scale, and a totally new process that's never been done before. The exciting thing is that our feedstocks for our process are already produced at magnitudes that are relevant to carbon dioxide removal at the hundreds of megatons per year scale. For example, fertilizer production generates hundreds of million tons every year of sulfate waste called phosphogypsum waste that could be upcycled again to form calcium carbonate minerals, taking CO2 out of the air and turning it into that solid phase.
--:-- Host: Laura went on to describe how she expects the volume of feedstocks to also increase dramatically in coming years.
--:-- Laura Lammers: What's changing over the next couple of decades is a critical element extraction industry. Another big use of sulfuric acid today is in mining and materials processing. Between now and 2040, it's projected that another several hundred million tons of sulfuric acid will be needed per year because we'll be producing so much nickel, so much more lithium, and other critical elements for the renewable energy transition. Many of the byproduct materials of that increased mining are going to be great feedstocks for our process. There's been an estimate that we're going to need maybe six times as much nickel production by 2040. If we produce as much tailings as we do today in that production process, then that would generate sufficient tailings to do about a billion tons of carbon dioxide removal and sequestration with our process every year. We really think the scales of the industries are going to be there. It's just a matter of making the process economical.
--:-- Host: What's specifically happening with this waste currently, as in the waste from these tailings, from these mining companies? Are they selling them? Are they sequestering them somewhere? Are they just sitting there? What actually happens to these tailings if you were not to work with them?
--:-- Laura Lammers: We can talk about two different things. The first is mine tailings. The second is fertilizer waste byproducts. The mine tailings and mine sulfate wastes are really just left. The tailings would be left residual on site. It would really just look like it might be backfilled or it might just look like a big pile. That would simply be left behind as something that we could beneficially reuse. Sulfate wastes, which are generated in extractive processes through sulfuric acid extraction, are often held on site and then discharged when possible. The mining company will wait for a rainstorm so they can discharge a little bit more sulfate waste to be below their threshold discharge limit.
--:-- Laura Lammers: In terms of fertilizer sulfate waste production, all of those sulfate wastes are called phosphogypsums, and they are generally left behind in a big pile. You can see these piles from space, they are so enormous. For example, in Florida, we have about a billion tons estimated of these sulfate wastes just piled up. It can't really be beneficially reused for several reasons, at least as a gypsum replacement in something like drywall.
--:-- Host: Let me just repeat that statistic. In Florida, there is an estimated billion tons of sulfate waste piled up. And while Travertine is not the first company looking to do something with that waste, the question is whether it can be done profitably. We'll get to answering that question shortly. But first, let's hear from Karan on how he's thinking about scale.
--:-- Karan Khimji: When it comes to the abundance of the rock itself, that's not a limiting factor. We've done some back-of-the-envelope calculations, and we understand that the amount of peridotite that exists in Oman and the UAE alone could mineralize trillions of tons of CO2, making basically all the emissions that humans have ever emitted since the pre-industrial age. If we were able to snap our fingers and convert all that peridotite into carbonate minerals through the mineralization process, we could reverse climate change.
--:-- Karan Khimji: The actual access that we can gain to that rock is the limiting factor. That depends on several variables. Firstly, where the CO2 source is and how we get that CO2 to our site. That involves capture and transportation. Secondly, we require water for our process. We need an existing water source next to our site in order to dissolve the CO2 into it and then create the fluid mixture that we inject into the subsurface. Those are the two major limiting factors. Those two factors will determine what sites are most optimal for our process. Those two limiting factors will also determine at what cost we can do that injection. Then it becomes an economics game. Can we do it in a feasible way that will be relevant for not just us on a cost level, but then eventually buyers of this high quality form of carbon removal such that they can afford it?
--:-- Host: As we dig into these solutions, I hope it's becoming increasingly clear that we're not looking for a scientific miracle. These are operators on the ground figuring out how to connect the right dots, like planning their sites strategically so they have access to the right inputs from sulfate waste piles that can be seen from space to water sources to renewable electricity. Perhaps Laura says it best here.
--:-- Laura Lammers: Implementation of large-scale carbon dioxide removal is not a question of technological feasibility. It's a question of economic viability.
--:-- Host: So in addition to meaningful scale, these solutions need to be facilitated at a reasonable price. But what's reasonable here? You might remember from prior episodes that most carbon removal solutions today cost in the upper hundreds to thousands of dollars per ton. But eventually, people are eyeballing solutions closer to $50 a ton. Here's how Charm Industrial is thinking about bringing down cost.
--:-- Peter Reinhardt: Today, we sell and deliver right around $600 a ton CO2 removed. That compares to other really high-quality carbon removal. Direct air capture in Iceland, for example, is like $900 to $1,000 a ton. So it compares somewhat favorably to that. Compared to cheap, low-quality offsets that don't have much impact, those are probably in the $20 a ton range right now, although they've increased over the last year or two as corporate demand has gone up. In terms of our long-term cost, we are targeting, I think we can get under $50 a ton.
--:-- Peter Reinhardt: We are also designing our own totally fit-for-purpose pyrolyzer, designed to come down the cost curve, that we'll start deploying in the next few years. That's how we deliver today. We do pay the farmers for biomass, and how much you pay them really depends on how far you move the biomass. You really want to avoid moving biomass. It's really fluffy, diffuse, very complicated to move, and expensive. Today, we get biomass delivered, which costs about $150 a ton. In the long run, when we have our machines operating on field like combine harvesters, that cost should drop to about $15.
--:-- Host: Another fascinating way that some of these companies are moving down the cost curve is through the sale of their byproducts. Remember when I told you to put a pin in sulfuric acid?
--:-- Host: Well, here's Laura from Travertine exploring the potential sale of it, in addition to their other byproducts: green hydrogen, oxygen, and carbonate products.
--:-- Laura Lammers: For us, there is a world in which the sales of our co-products — commodity sulfuric acid, commodity green hydrogen, potentially even commodity oxygen, and then the carbonate products — can actually subsidize entirely the cost of carbon dioxide removal. By that I mean we could maybe be doing carbon dioxide removal for free, although we'd want to take advantage of any tax credits available to us.
--:-- The cost of our process is driven in large part by the water electrolysis process, which is highly energy intensive. The cost of the overall products we generate is very sensitive to the price of renewable electricity available to us. So we're trying to be strategic about siting our plants. We want to be using excess renewable energy that's not otherwise going to a grid that needs it — a place where there's an imbalance between renewable electricity supply and what the grid can actually take away.
--:-- Sulfuric acid in particular seems to be going through an interesting supply-demand inflection point. Some people forecast its supply is waning due to the shift away from fossil fuels, which generate over 80% of global sulfur. Meanwhile, demand is expected to increase, particularly for green technologies like EV batteries or solar panels.
--:-- Host: Laura even shared with me an academic paper from Mark Maslow's group at University College London that cites this confluence of factors and predicts we're heading toward a sulfur shortage. Although Laura does note that not everyone agrees. But shortage or not, Travertine is strategically selecting where they operate to take advantage of this lucrative revenue stream — again, a byproduct of their process.
--:-- Laura Lammers: The question of whether peak sulfur will happen in the next century — it's not a question of whether there's sulfur somewhere in Saudi Arabia. It's a question of whether there's sulfur at a port that I can put on a train and bring to my plant in the desert. So we need to be strategic about mapping demand for sulfuric acid. We want to sit somewhere where the sulfuric acid would be used. It doesn't make sense to be transporting it. This is typically how the sulfuric acid commodity market works — it's produced where it's used.
--:-- Number two: that place also has to have an abundant, relatively affordable source of renewable electricity. Number three: ideally, we'd be able to sell our carbonate products and our hydrogen into a local market. Being close to markets for green cements or green hydrogen would be ideal. Scaling up to commercial plants with good return on investment for the folks helping subsidize the capital cost is going to depend on strategic siting, at least in the early days.
--:-- Host: You can start to get a sense of just how complex some of these business models become — balancing the technical challenge of running the reaction while operationalizing the inputs and outputs. In Travertine's case, that includes accessing renewable electricity, sourcing inputs like sulfate waste, selling byproducts like sulfuric acid, and factoring in location for all of the above.
--:-- But perhaps that itself is part of the opportunity. I think one really fascinating part of Travertine's process is that the byproducts are not useless. They're very useful in the supply-demand market for sulfuric acid. So how do you think about building the business model or economic model, given that the process takes a certain amount of energy, could use clean energy, and has these byproducts? How are you thinking about all those inputs and outputs and developing this product effectively?
--:-- Laura Lammers: This business development side is really one of the most exciting parts for me. I come from an academic background, so I'm not used to thinking about this, but it's a really fun strategic puzzle to address. For us, as you alluded to, there are a number of commodity products we're producing in our process. That means we have quite a bit of flexibility in terms of business model development and how we approach it.
--:-- We will, to the maximum extent possible, try to use every product we produce. It would be much better to have our carbonate products used as green cement feedstocks rather than just have them as backfill. Backfill is fine — it's fine to have a pile of limestone or carbonates sitting around — but it's much better to take advantage of the fact that could lower the carbon intensity of concrete production.
--:-- From a business model perspective, our approach is to figure out the logistics and markets associated with each individual product. That's challenging because some products are difficult to handle. For example, hydrogen in some contexts might make more sense for us to use on site and recover electricity with a fuel cell rather than compress it, just because it's costly to compress and transport. If we're not sitting at a port where hydrogen is traded, it might make more sense to use the green hydrogen ourselves.
--:-- Host: Travertine is not alone in these complex operations. This was a theme Peter covered earlier and is shared by Karan at 44.01. Here's Karan as he explores the cost curve.
--:-- Karan Khimji: Our cost on pilot level is probably over $1,000 per ton. And that's only the mineralization cost itself — it doesn't include the cost of capture. But that's really a pilot R&D value. When we get to commercial scale, we're estimating our costs will be around $170 a ton to start. We've sold approximately 6,000 tons of mineralization capacity already to the voluntary market at that cost.
--:-- We expect we'll be able to get at scale to around $15 a ton. That's over a 10x decrease as we scale up our sites. That scale is based on two factors: how much CO2 we can get into each borehole, spreading our capex across multiple tons we can inject, and how many boreholes we can build. We'll be determining that starting middle of next year, Q2 2023, when we build our first commercial wells.
--:-- Host: 44.01 has already sold thousands of tons at $170, with expectations of a 10x decrease — the exact kind of exponential decline you'd want to see. But this is just for their mineralization process, which they expect to be a minority of the cost, as they can borrow many learnings from the already established oil and gas industry in the region. They still need to account for the CO2 stream feeding into the reaction. For this side, they're exploring two options.
--:-- Karan Khimji: The first is direct air capture — CO2 captured directly from the atmosphere. A decentralized capture unit can be placed directly on the carbon sink itself, on our sites where we inject. The advantage is we don't require any transportation of CO2 over long distances, eliminating a massive cost element in the carbon capture and removal value chain. With direct air capture, there is no transport, but it is a nascent technology. The direct air capture partners we're working with are working as hard as us to scale down their costs.
--:-- The other model is point source capture — capturing CO2 from an existing industrial facility, a hard-to-decarbonize facility like cement production or steel production. These are carbon-heavy products that need a fossil fuel source, at the moment, to power the high heat required. Point source capture happens where that facility exists, which might not be where our sinks or rock are available. That requires a transportation element — trucking, piping, or if it's cross-continent, shipping. That's a whole other cost element.
--:-- The advantage of point source capture is it's a more mature technology. It can capture more CO2 per dollar of CapEx invested because the concentration of CO2 in a flue stack is much higher than in the atmosphere. In the atmosphere, it's 0.04%. In a flue stack, depending on the process, it can be between 4% and 100%. The cost of capture drops significantly, but then you add in the transportation component, which balances that out. We're working with both models and trying to figure out how to make the economics work on both ends.
--:-- Host: Once again, we're noticing the importance of proximity in operationalizing these solutions. Anytime there's transportation, carbon removal companies need to factor those emissions in. There's no use injecting carbon into the ground if you're releasing an equivalent amount in the process. Here, Karan shares how 44.01 is getting creative with their transportation infrastructure.
--:-- Karan Khimji: Our objective is to make the entire process as net negative as possible. When building out a life cycle carbon analysis, we're trying to maximize the amount of carbon actually removed through mineralization compared to the point of capture. Transportation is a huge emissions component that reduces net negativity. Most options, like trucking, use fossil fuels to power the vehicle. Piping is a much more environmentally friendly option in terms of emissions, but you need massive scale to warrant building out a huge pipeline.
--:-- At the moment at 44.01, in our nascent stage, we are trucking. But envisioning that petrodiesel would be a problem, we set up a biofuel plant under a separate subsidiary called WACUD, in which 44.01 has a minority shareholding. WACUD refines used cooking oil collected locally in Oman from restaurants and food kitchens into biodiesel. That biodiesel burns with 90% less CO2 than petrodiesel. It's a drop-in fuel — no infrastructure changes required for a diesel truck. We can just drop in the biodiesel instead of petrodiesel, reducing CO2 emissions from transport by 90%. In that way, we increase the amount of CO2 that is eventually sequestered after the point of capture.
--:-- Host: I love that you brought that up. It's very common within companies to have multiple product lines or to create something for their own company. Sometimes that project ends up becoming the winner within their spectrum of projects. Is there potential for that to become a much larger project — one that doesn't just service 44.01 but also services other companies or produces this fuel that produces 90% less carbon?
--:-- Karan Khimji: Absolutely. The company operates entirely as a separate entity. 44.01 has a representative on the board, but effectively it has its own management team and sells biodiesel to the local market for other players as well. It's definitely operating and will scale on its own merit to different countries within the GCC to start. It has its own objectives and could scale in its own way.
--:-- But the limiting factor is there's only a certain amount of used cooking oil available for collection to be refined. 44.01's ambitions are to get to a billion tons a year by 2040. We would far outstrip all the demand for used cooking oil in Oman that would be refined into biodiesel. So we need to figure out a different solution to get to these low carbon levels that is not constrained by available used cooking oil.
--:-- Piping is one option. We'll need to eventually reach a scale of CO2 being transported across the country that warrants building out large infrastructure like piping. The second is renewables — using solar and wind to power our operations at night. We currently use biodiesel not just for transportation but also to power operations at night, since the sun doesn't shine all the time. We need to figure out how to build an optimal renewable load to power our operations 24 hours in the most net negative way.
--:-- Host: As I spoke with these founders, I was really impressed with the ingenuity in putting each piece of their respective puzzle together to develop a solution that was economical at scale. Charm Industrial, for example, is exploring running their bio-oil through an iron-making process to enhance reduction.
--:-- Peter Reinhardt: The pyrolyzer produces two co-products: bio-oil and char. The char we don't expect to sell, but we'll put it back on the field. Hopefully it reduces the cost of biomass because it's putting nutrients back in that the farmer needs and improving their soil health. Ideally it reduces the cost of the biomass for us, but we don't intend to sell it per se.
--:-- In the long run, we'd like to take bio-oil and not just inject it, but also run it through an iron-making process where we replace the natural gas or coal used in iron making with bio-oil. Out of that iron-making process, you get a pure CO2 stream which can still be sequestered. We end up with the same carbon removal capacity in addition to one to two tons of reduction along the way. That gives us two to three times the leverage in terms of climate impact on the same amount of biomass and bio-oil. We're excited about that. The co-products there are iron and carbon removal, and doubling down on the economics gives significant leverage.
--:-- Host: As we close out this episode, I wanted to take a step back and have each of these founders share why they're drawn to this industry. Let's start again with Peter, who shares an anecdote on product-market fit — a phenomenon he's not a stranger to. Remember, he sold Segment for billions.
--:-- Peter Reinhardt: My co-founder Sean had a really key breakthrough. He realized that the bio-oil we were producing could be injected underground as a way of disposing of it, and that would actually be a carbon removal pathway. Within 72 hours of him having that idea, we built a techno-economic model and sent it to the folks at Stripe Climate. Within 72 hours, they said, "We'll buy $250,000 of it." That is product-market fit.
--:-- A few months later, Shopify made a big purchase. A few months after that, Microsoft made a big purchase. Then we were able to start delivering in 2021. Carbon dioxide removal is a heavily supply-constrained market. We are actually sold out now on carbon removal for our capacity through 2025. That is product-market fit. The question is how we deliver the physical capacity fast enough given the demand. If we had more capacity, we could sell a lot more.
--:-- Host: Peter was also the first of this group to found a carbon removal company. He goes on to share what keeps him hopeful about this industry, even four years in.
--:-- Peter Reinhardt: The thing that makes me most hopeful is that in the last couple of years, we've seen an explosion of techniques. Prior to that, there was really one approach: direct air capture, the brute force backstop. We're going to need it. It's awesome that people have been working on it for as long as they have. It's awesome that Climeworks' Orca is actually deployed. We need more deployment — let's not announce fundraising and renderings and offtakes, let's announce more actual deliveries. I'm super excited about Climeworks' Orca as well as Charm's progress last year in delivering tonnage.
--:-- But there are now a lot of companies on deck that will be actually deploying over the next few years with a whole bunch of interesting technologies. That's what gives me a feeling of hope — seeing a dozen new interesting technologies, all with pretty promising economics, coming into the field.
--:-- Host: I asked Laura the same thing. What signals or things are you paying attention to that make you really hopeful about the future of CDR, or our collective fight against climate change?
--:-- Laura Lammers: I love that question. I think it's a really important question. I personally am extremely hopeful because the basic chemistry we need to make carbon dioxide removal work at very large scale is pretty straightforward, and we have the technologies. If there's a technological breakthrough to make it much more energy efficient, so much the better. But what we need are markets and willingness from consumers to pay for carbon credits. We need the raw materials for decarbonization and widespread adoption of renewable or low-carbon energy technologies. This is all starting to emerge at the same time. You can just feel the energy in the air.
--:-- I'm feeling hopeful that by the time I'm a grandparent, we will be well on the path to solving the climate crisis. But it's going to take a lot of work, and we need to roll up our sleeves and get to work.
--:-- Host: And finally, here's Karan sharing the inspiration behind 44.01 — discovering the world's largest dead zone right in his backyard, together with his co-founder Talal.
--:-- Karan Khimji: Talal and I both grew up in the beautiful nature of Oman. It's a very picturesque, gorgeous landscape with mountains and oceans and beautiful scenery all around. We spent our childhood in that. Over time, we started to see the effects of climate change as well as general environmental problems, like plastic pollution.
--:-- One day Talal woke up and saw an article in the news describing how one of the largest oceanic dead zones in the world is actually just off the coast of Oman. It's about the size of Florida. That means an area in the ocean where life cannot thrive because of its concentration of CO2. When we looked into why that was happening to our oceans, we realized it's because of CO2-induced warming preventing life from existing in that area. We wanted to do something about it because it was affecting the nature we grew up in and loved.
--:-- Host: Quite amazingly, a potential solution was also right next to the problem — with Oman possessing hundreds of miles of that crucial peridotite rock right above the Earth's surface.
--:-- With that said, this closes out our carbon removal miniseries. I hope you found this journey as fascinating as I did, and I hope this episode gives you enough of a sampling to encourage you to go learn more. If you're like me, permanent carbon removal was not on my radar until recently. But I'm excited to see the convergence of attention, capital, policy, and creativity being applied to this industry. With that combination, it's rare that humans don't surprise one another in progress. Thank you.
