August 11, 2025 • 36 mins
A $50M Series A?! In this economy?
Aircapture recently raised a big round at a time when big raises in climatetech are hard to come by. Their secret? Producing a valuable product better for their customers than what currently exists, and not being dependent upon policy or carbon credits.
They're doing modular direct air capture in places that otherwise need to buy merchant carbon dioxide from companies that sell gases. Shipping merchant CO2 to the Canary Islands isn't cheap. If modular DAC can provide cheaper and less carbon-intensive CO2, that's surely a win for the climate, the economy, and the learnings that allow us to scale along the way.
Matt brought his insights about how he built a successful business in carbontech. Folks would be wise to listen up!
N.B. The photos aren't of actual Aircapture facilities.
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Aircapture's Series A announcement
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hey, thanks for listening to Reversing Climate Change.
I'm your host, Ross Kenyon. Before we get going, I'd love to
tell you a little bit about our sponsors.
They make the show possible. I would love it if you could
listen for just a minute while Itell you about Phillip Lee LLP
and our bionics. If you work in carbon removal,
you very well may have come across Phillip Lee LL PS work.
I originally saw Phillip Lee give a presentation about some
(00:22):
of the common provisions within off Take agreements, and I was
impressed by the quality of their scholarship and their
work, and I'm happy that we're able to stay in touch and
finally do this together. I think the law is an
underrepresented part of what happens within carbon removal.
We assume it's the background, we assume it's the mechanics.
It actually takes a very smart and creative person to be a good
(00:43):
lawyer. I think if you've ever had a bad
lawyer, you know that there's quite a big difference between a
good and a bad lawyer. And what's good about Philip
Lee, beyond the good experience that I've had personally, is
that they're also just the largest legal team dedicated to
the financing and development ofcarbon projects globally.
They actually were awarded Environmental Finances, VCM Law
Firm of the Year for each of thelast two previous years.
(01:04):
They have offices in the US, Europe and the UK.
If you have business law needs around nature based carbon
projects or engineered ones if you're working with sustainable
aviation fuels and the integration with Corcia,
anything to do with the VCM generally, Article 6 of the
Paris Agreement, the CRCF that'scoming out of the EU now.
(01:25):
Get in touch with Phillip Lee. If you're working in this space,
you really do need a good eye tothe law.
These projects need legal care. There's a lot of structuring
that takes place. It's really not turnkey at this
point still. And there's a lot more
innovation and creativity that'sgoing to be needed to make sure
that the legal infrastructure that supports carbon removal is
there. So link is in the show notes, go
(01:47):
check out Phillip Lee, our othersponsors, our Bionics.
Our Bionics is great. They've been on the podcast
before. I did a show with Lizette Week,
which I'll link to in the show notes too if you want to go
listen to that show I did with Lizette.
Our bionics is working on forestry in the Baltic states of
Europe. Europe used to be much more
heavily forced it. The great majority of forestry
projects take place in the global S, which is generally a
(02:10):
good thing. But we also do need forestry to
take place in the EU and in Europe as well.
Our bionics has put out some great research recently about
the state of afore station projects, about the bottlenecks
in the industry, why the high quality credits are selling out
far ahead of issuance, what thatmeans for people who want to be
buying carbon removal credits for forestry but cannot.
(02:32):
It's a really important set of questions that our Bionics
addresses with Grace. I would recommend you checking
out their work and also just checking out our box in general.
If you want to support forestry,give our bionics a look.
Link is in the show notes there.Thanks for listening and now I
will go into the show itself. Thanks for your time.
Here it is. Hello and welcome to the
(02:59):
Reversing Climate Change podcast.
I'm Ross Kenyon. I'm a carbon removal
entrepreneur. I have a great show today.
I really like that. Lately, almost by accident, I've
been getting more and more stories from very seasoned
climate tech entrepreneurs who have actually deployed a lot.
And I've had great amounts of success in moving from a pitch
(03:19):
deck to steel on the ground, youmight say.
Before I introduce our guest, ifyou could please rate and review
the podcast in your podcast app choice.
Give it a full rating, ready to review.
If you love the show, I help getthe show out to more people.
I would be so appreciative if you could do that.
There's also a paid subscriber option on Spotify where if you
would like to get rid of the programmatic ads, if you want
(03:41):
bonus content that is available to you for $5 a month.
And it really helps the show remain financially viable.
In any case, today my guest is Matt Atwood, who is the founder
and CEO of Air Capture. Matt's had a fascinating career
and also just took a route into direct air capture that is
unusual. We talked about it in the show.
(04:03):
I used to hear so much about turning captured carbon into
products, finding a way to make direct air capture and carbon
removal generally work without an over reliance on policy or an
over reliance on voluntary carbon market credits.
And air capture has done just that.
They just raised a $50 million Series A.
(04:25):
They're working with modular direct air capture that among
other things is providing beverage grade CO2.
There's some markets that just they need CO2 and that direct
air capture miraculously is the most cost effective way,
logistically least complex way of getting the carbon dioxide to
the place that it needs to be. And while not all of these
(04:46):
mechanisms produce negative emissions, any amount of
separation of carbon dioxide or other greenhouse gases from
ambient air is helping us learn how to do that better in other
applications. It brings the cost curves down.
It increases the talent pool whoknow how to work with this
technology. This is a really important
thing, and Matt's out there leading the charge, actually
(05:10):
getting projects like this built.
I'm amazed you kept the faith doing it this way, because I
feel like it went out of fashiona long time ago.
But that's the thing about fashion.
There's a line in what is is it from a mighty wind?
What is that the guys from Spinal Tap in a Mighty Wind say?
It's, you know, they've been retro so long that fashion has
(05:32):
caught back up to them and it's no longer retro.
It's Nitro. And air capture is a good
example of it being Nitro. Did not expect to be talking
about A Mighty Wind on this podcast introduction, but I just
love that utilization has been quietly chugging along.
Or this could be my bias just because I'm working primarily in
carbon removal, but it's been chugging along.
(05:54):
And it's just nice to see the people who really believed in
their vision proven right that this is actually a really
powerful commercial strategy andgo to market that others should
be looking at too. It isn't all about carbon
credits. It isn't all about immediate
negative emissions. There are other things that we
can do that make companies commercially successful, that
allow us to develop technology, build the skills, but the talent
(06:16):
that will provide for a carbon negative future.
If you like the sound of that, you're going to enjoy the show
because Matt and I talked about this at length.
So without further ado, here is the show with Matt.
Thanks for listening. Thanks for being here, Matt.
Thanks for having me, Ross. How could you possibly raise $50
(06:39):
million right now? Just about, well, it's, you
know, it's, it's a longer story and it's a longer time, but you
know, it is a very challenging fundraising environment to
model. But you know, at the end of the
day, I think what we're doing is, is, is pretty specific
relative to carbon dioxide removals and, and direct air
(06:59):
capture in general. I mean, I think our, you know,
our approach to commercializing the technology is to go after
kind of smaller on site markets where people are purchasing the
CO2, you know, customers, companies that need CO2 And you
know, that's a very mature market.
And we're able to, you know, provide a service to our
customers CO2 that they need, where they need it at cost
(07:21):
competitive prices from where they're getting it.
And I think that, you know, kindof really sets us apart in the
market against, you know, our ability to raise money compared
to all these other dat companiesand things like that.
So you know, I think that's beena long term strategy of ours and
it it you know, independent of the timing and the challenge of
the market worked out for us. Probably close to a decade ago,
(07:43):
carbon devalue was a much biggerconversation.
There's a moment where carbon tech was even a term that was
being thrown around that impliedsome sort of material or other
value being created beyond just atmospheric benefit.
Carbon credits. It used to be a thing.
We used to think about it as being the forking path and maybe
there's some overlap, but you pretty much chose if you want to
(08:03):
go for carbon market revenue andalso maybe policy support or if
you just want to produce something of value out of
carbon. And I think almost everyone
seemingly has chosen to go the route of the carbon credit and A
focusing on things like 45 Q andpolicy support.
And I almost never hear of anyone doing anything
(08:23):
interesting with carbon dioxide that could be personal failure.
There are things like I did a show recently with Makoto from
Homeostasis and they're making graphite.
So there is stuff like that thatis afloat, but for whatever
reason, maybe it's just the environment that I'm in, but I
don't really hear that much about it.
But clearly you've kept the faith and it has led to a
(08:44):
successful commercial strategy that is starting to bear fruit.
Do you think people got in source old or something by
carbon credits? Like why?
Why don't don't more people copyyou?
Why did we go down a different path?
Well, I, I think it's, you know,I think there's a couple things
there. I think 1 is, is it's technology
pathway dependent. So certain technologies really
only work at larger scales, right?
(09:04):
And so you, you have to have larger demand for CO2 and the
only large scale demand for CO2 right now is sort of
sequestration. Synthetic fuels aren't quite
there. And in the merchant market of
CO2 or people that are buying CO2 to put into beverages or,
you know, the built environment,whatever it might be, that's a
transportation logistics issue. But you know, I came to this,
(09:24):
I've been working in the carbon,carbon tech space since the
early 2000s, first generation biofuels and then I ran a second
generation biofuel company, an LG technology company.
We're doing kind of wastewater treatment and fuel production
and I needed ACO 2 supply. So I came kind of at it direct
air capture from the perspectiveof I'm a buyer.
I, you know, I need this material.
(09:45):
And you know, over time, I, I was looking at different deck
technologies and, and finally the light bulb went off that it
made more sense for me to build a larger number of smaller
machines than kind of a smaller number of larger machines.
And that'll get us in the learning curve quick, more
quickly we can commercialize into the mature markets.
And I think that's the right kind of long term strategy to
(10:05):
being the lowest cost technologyprovider, you know, at scale for
things like sequestration, synthetic build, etcetera.
You focus at least to start withbeverage carbonation, is that
correct? We're working in beverage
carbonation. We, we're also you know, we have
a sequestration project that we developed in UAE, We're
developing other large scale sequestration projects in the US
(10:28):
We're also working on CO2 to like concrete applications in
Asia. So we focus on not just the deck
technology, but also what's required to get the CO2 market
in the quality, quality purity that our customers need.
So that could be CO2 gas for applications like concrete,
cement and it could be ultra high, you know, purity liquid
(10:52):
CO2 for beverage and food producers.
I thought you'd started the showoff by saying that the the
forking path kept you out of this sequestration market
because it favors economies of scale.
Did I misunderstand or is there just more nuanced to that story
then maybe we set out with? I think it's more nuanced to
this story. So we set out with the intention
(11:13):
that our go to market strategy would be focusing on kind of
beverage applications in the existing kind of mature market
of CO2. But we did develop a project in
the UAE and got some X Prize support for that doing a
sequestration project. And we're also doing like GOE
funded engineering studies for large scale deployments of
(11:34):
sequestration. But the reality for
sequestration is, you know it's a challenge to commercially
develop these projects because you kind of have a Meg issue and
that kind of comes back to projects.
How are you going to get a long term credit with the off take
agreement at this scales required for sequestration?
How are you going to make these bankable and the infrastructure
(11:55):
required at these scales to inject the CO2 is very
expensive. So you know, I think our view is
we'll get there eventually. We're going to focus on the near
term on these mature markets. We're going to do the
engineering work in the scale upwork for the sequestration
projects. But our commercial strategy and
focus is is on site selling of CO2 to customers that demand it.
(12:20):
My understanding of how beverages work is that there's
typically syrup is sent around the world essentially, and then
it gets carbonated in place because transporting liquids is
not a very efficient way to movematter around.
It's heavy. And so having it on site at some
point makes financial sense, especially in markets for which
transport are expensive. Like I saw that the Canary
Islands is a market that you're working in beverage carbonation.
(12:43):
I imagine shipping CO2 there is expensive.
Yes, exactly. I mean you know, beverage grade
CO2 is liquid CO2. So you know, we have customers
that are paying 2000 plus dollars a ton for CO2 and then
we have customers that are paying $400.00 a ton for that
kind of same CO2. And what drives the cost is, is
(13:03):
the infrastructure, the logistics, the transportation
and all that that's associated with all.
Do you think being a more modular system allows you to
compete on different frontiers in the more centralized direct
air capture providers? How do you go up against
something that is centralized and lots of steel in the ground
(13:24):
and be able to deliver a better unit cost product?
I mean, we, we, we believe that modular, you know, our modular
approach to DAC will be a lower,lower overall cost even at these
larger sequestration kind of scale projects.
You know what you, you sort of, you have the question of capital
efficiency, how efficient is thecapital that you put in the
(13:45):
ground and then obviously energyefficiency.
And so in a lot of these, in a lot of these larger projects,
you do get some more energy efficiency by by sharing certain
resources we call balance of plants, so compressors, boilers,
pipeline, stuff like that. But from the DAC core process,
you don't get more energy efficiency and you get less
capital efficiency by building larger and larger machines the
(14:08):
way that we do it. And again, this is the way
technology dependent high temperature deck works
differently. But we think that this approach,
you know, is the most efficient approach kind of both for
smaller scale embodiments and for larger scale embodiments.
Kind of want to put on a white hat hacker and a hat here and be
(14:30):
like how do I break that? What's, where is it fragile?
What, what assumptions do you have built into modularity that
may or may not hold as the yearscome out?
And there are various trends inside of, of carbon removal
that looks like something is going really well.
And then oops, turns out the hydrology of enhanced weathering
is really confusing and we don'tactually know if this is
(14:53):
removing carbon on net in some cases, right?
What, what is that for modular DAC?
Like, is there something like that that looms that you're just
like, oh, I really hope this goes our way as we scale.
I mean, I, I don't, it's a greatquestion.
So you can't answer that in terms of like DAC in general,
you're kind of have to divide itinto DAC pathways, right.
So for the way that we do it, which is going to ultra low
(15:15):
pressure drop, you know, a mean based contactors having smaller
scale modular machines is it's kind of it comes down to what's
your capital efficiency. You know, modular scale
production decreases our capitalcosts, you know, decreases of
supply chain issues and significantly decreases our
(15:36):
logistics costs because we buildthese in the shipping container
so we can just deliver them to site, drop them, plug them in,
they turn on. And with the project we did in
the UAE, we had all of our infrastructure, which was, you
know, CO2 capture from the air all the way to supercritical CO2
injection into the wellhead, delivered from the port to the
site and fully operational in just over 2 weeks.
(15:57):
So we were able to take our machines, drop them, plug them
in, turn them on and inject CO2 in that time frame.
So, you know, from a, from a speed to deployment logistics
costs of, you know, everything that's associated with that
modular DAC has a lot of advantages, but you know, it may
have higher labor costs, for example, than a large purpose
(16:17):
built machine you may have over,you know, you may have to look
at some of these other things, but we don't, you know, we
don't, you don't see that as being a primary driver.
Why would there be higher labor costs for more modular
production of captured carbon? I think I would imagine a
facility that was enormous wouldprobably have more people in
(16:37):
hard hats running around than a couple of shipping containers.
Well, I mean, if you think abouttotal capacity, so like it, we
have shipping containers that are 1000 tons, right?
And we have 100,000 tons. So we're going to have 100
shipping containers. Whereas, you know, another
approach might have one or two large machines doing this.
So if we have 100 different machines, it, it, it may involve
(16:59):
more kind of O&M costs, but O&M costs are very small percentage
of the overall cost to do this. So you know, I, I really think
it's, it, it really is technology department.
I mean it really it more comes down to what is going to be the
most energy efficient and capital cost efficient, you
know, technology deployment at scale when this infrastructure
(17:22):
is mature and ready to go. And any of the reality today in
removal, especially for DAC and geologic frustration and
minimalization, is you know, it's going to take a long time
for some of this infrastructure to get told.
We've used this term a few times, capital efficiency.
I wonder if you can explain to someone who is not a super savvy
MBA what that is and why that's important.
(17:43):
I don't think a lot of people come in the carbon removal
curling around terms like that and thinking about it at that
scale. I think it's one of those things
that gets beat into you that you're like, oh, actually, turns
out we need to think very carefully about this as we grow.
Yeah, it's it's, it's, it's an interesting point because it
actually has a fundamental kind of value proposition in DAC that
most people don't understand. So capital efficiency is what's
(18:04):
your levelized capital cost per ton of it, you know, for
example. So the two cap for so that could
be $5 a ton, $50 a ton, $100 a ton depends on what it, you
know, what it costs you to buildthe machine, build the
infrastructure, balance a plant,get it operational.
And then you, you know, separatethat from energy if you know
energy kind of OpEx. So what's the energy cost of
(18:26):
that? And then non energy outputs,
which labor insurance that. But the interesting thing about
DAC as it comes to, you know, our capital cost efficiency is
most people in the, you know, kind of chemical process, oil
and gas, you know, world think you build their bigger plant, it
becomes more capital efficient. But that's not true with direct
air capture and with, with pulling CO2 out of the air,
(18:47):
we're CO2 is very dilute. It's not the case that if you
build a bigger machine, your, your capital efficiency
increases. And that's counterintuitive to
most people that think about these kinds of processes.
Are there some processes within direct air capture that actually
do become more capital efficientwith scale?
Yeah, the high temperature dock processes, So you know you have
(19:08):
your like the processes that like companies carbon
engineering Oxy are doing where you have to achieve very high
temperatures in order to get this new 2 off the capture
substrate. And when you're looking at these
very high temperature applications, in order to make
it capital efficient and energy efficient, you need a bigger
machine. And it's just not going to make
(19:30):
sense at these like smaller machines just because the cost
of building, you know, a smallerone, this is a larger 1, you
know, it's not lingual. Segment this out for us a little
bit. Are you imagining a future where
the high temp solid sorbent dockproject developers are going to
be serving 1 market or set of markets and you're going to be
doing something parallel, maybe not even crossing paths as much
(19:53):
as we might imagine It's a separate thing entirely.
It's a little bit of both. So the high temperature Jack,
you know kind of process these, these are kind of large kind of
stick built projects that are going to have to produce a large
volume of CO2, you know per capital planes.
And so if you think about those applications, they're going to
(20:14):
be sequestration the future, that might be fuel synthesis.
Or they might be able to put, you know, put these projects
next to CO2 pipelines where other people are pulling CO2 off
the pipeline in the future. But they're not going to make
sense for smaller scale applications like beverage,
carbonation customers, food applications, you know, anything
in the merchant market. But you know, we believe that
our, you know, our approach to DAC at even at losing very large
(20:37):
scales will be lower cost in thehigh temperature DAC approaches
ultimately. What about direct air capture?
That's even more modular or evensmaller.
Thinking about HVAC, where does that fit in?
Is that is that the only way to become more modular than what
you're doing? We build a, we build a variety
(20:57):
of machine like machines at different scales.
So we actually kind of build machines that sort of are
applicable in the HVAC space. But you know, the problem with
sort of HVAC, the application iswhat do you do with the CFD?
Who's going to buy it? What, you know, how do you
valorize that? So you know, that's a sort of
service application where you can remove CO2 from the building
(21:18):
and you can reduce the building's energy envelope.
But then the the other side of the equation is how do you sell
the CO2 and what does that look like?
So, you know, we have customers that are using 30 to 50 tons of
CO2 per year at a given site. We have customers that are using
thousands and then you know we're building projects in the
(21:39):
millions of tons scale engineering these projects.
The press release about the Series A focused on being policy
independent and carbon credit independent to some degree.
But you've also mentioned numberof sequestration projects that
go beyond this sort of a more immediate valoration
(22:00):
valorization of capture carbon. What I mean, how does that work
because you're more independent of of the policy spookiness, I
guess you can say and who knows what's going to happen with VCM
for for carbon removal, but you also have access to it.
So I guess you seem like someonewho is extremely commercially
(22:22):
minded. I'm sure you have this all
forecast out with about 100 different contingencies built
into it. But what actually does the
future look like? Or are you just trying to make
sure that no matter what comes, you are solvent?
So what, what, what we believe is it, it comes down to rights
law. So rights law states that for
(22:42):
every doubling of technology production, you get a certain
percentage decrease in cost. So the example everybody likes
is kind of gives us solar, right.
Solar has had what's called a now 21% learning curve rate
since it sets, it was developed in the 70s and now it's just a
cheapest form of energy. And when you think about
learning curve rates and, and you think about like how do you
(23:03):
accelerate learning curve rates it, you know, from from a
climate change perspective, we want to, we want fastest
learning curve rates as possibleand we want these projects to be
financeable. And so to accelerate your
learning curve rates, you want to deploy your technology
rapidly, you want to do it in commercial applications and you
(23:23):
want to do it at a relatively lower costs and shorter times
for each technology doubling. So if you're building like a
much larger capital plant, you're doubling rate is going to
be a lot more expensive and takea lot more time than if you're
commercializing in the near terminto the beverage market, the
food market, things like this. So we can, we can be on that
learning curve, cost reduction curve while generating good
(23:47):
income and good revenues and building a strong business And
that work is required. And that cost reduction curve is
required in order to finance these largest scale
sequestration projects because the reality is in order to get
make these projects bankable, you have to be able to get.
You know. Project financing, the banks
have to have to see that you've been operating these in the real
world. That's a reliable who's going to
(24:10):
take the technology risk. And when we think about, you
know, what are the steps that are required to build these
larger scale projects? And what we're doing right now,
we're, you know, it's like an EPC style project engineering,
the tonic construction. So we're assuming the and the
feed engineering work, the frontengineering design ward for
these larger scale projects so that we have a very high degree
(24:31):
of confidence in what it's goingto cost to build these large
projects. So what's the capital cost going
to be? What's the energy cost going to
be? And the engineering required to
get to that point. So you can actually make an
investment decision on these like large scale sequestration
projects is a real effort that takes often times years to do.
And so we're kind of doing both of those things in parallel, but
(24:52):
we're commercializing immediately into the merchant
market CO2 where our customers are already buying CO2 to put
into the products that they're, you know, that they're selling
to customers today. Perhaps just to refine my
question a little bit more, if you only have the merchant
market for CO2, but Microsoft turns off the faucet, Frontier
(25:14):
turns off the faucet, Japan's GXleak never takes off, the ETS
integration doesn't happen. Is can air capture a viable
business? Are you, are you OK just on the
markets that you're already serving right now?
Yeah, absolutely we are. I mean the, the merchant market
of CO2 is a little opaque, but you know call it a 25 to $30
billion for your business and growing substantially.
(25:36):
There's, there's more demand forCO2 new technologies are coming
out that need CO2 to make into fuels or plastics or diamonds or
whatever, you know, and the beverage industry is growing.
The food industry is growing. So there's, there's a demand for
more and more CO2 and CO2 production sources are dwindling
in the US and Europe and there'scommon supply disruptions.
(25:59):
So the merchant market for CO2 is a large market.
And if it was the only thing we focused on, it would be a great
business for us. But you know, we, we have all
those things that we're doing atthe same time.
I love it. You're very robust and often
times I'm talking to companies that are not robust and I'm
encouraging them to become more robust.
But then when I talk to robust companies, I now have to ask
(26:20):
about focus. Is it not hard to go to market
with all of these different applications all around the
world? It seems very operationally
complex. Well, that's nice thing about
having a modular system is, you know, it's like a it's an A la
carte menu for our customers. You know, we could choose one of
these or two of these or three of these and one or two of these
and then that's what you get. So it's a modular machines.
(26:41):
The same machine is going to ourcustomers.
If they need gas, they get the DAC machine.
If they need liquid, they get the DAC machine, our
liquefaction machine. That's it.
So while it increases the complexity to be in different
markets, on some level, our business providing CO2 as a
service to our customers looks the same.
You know, they're buying the CO2, whether they're buying gas,
(27:03):
whether they're buying liquid. And there's some complexities
always and how we integrate because our machines are our
customer site. So sometimes our customers can
provide a steam, sometimes we have to provide this.
So you get into those kinds of those kinds of, you know,
purpose design options with withour customers, but but it's a
(27:24):
pretty kind of, you know, cookiecutter model.
Which policy environments are you most optimistic about right
now for your specific business? Well, we're, I mean for, for the
merchant applications, we're really policy agnostic because
(27:45):
as long as we can produce CO2 that meets the required like
beverage grade or food grade standards, which we do, there's,
there's no, there's no policy requirements for us to be a
commercial viable. Oh, yeah.
I mean, I mean for your sequestration projects or the
desire to maybe grow in some of those areas?
Yeah. I mean, I think, you know, what
we're seeing in certain Asian markets like in Japan and in
(28:09):
Europe and some in the least is,is a lot of interest in
supporting the scale up of the infrastructure for sequestration
and for removals. You know, TBD what happens in
the US and we still have 45 Q, You know, and at some point it
comes down to what's your cost to do this?
(28:30):
So, you know, if we're at a reasonably low cost of CO2
capture and injection, it's, youknow, as long as we still have
45 Q we're, we think it's an attractive opportunity here in
the US, but you know, it comes down to cost and it comes down
to bankability. I think, you know, things that
(28:54):
SPTI are doing, what's going to happen with some of the UN stuff
under article, you know, 6.4, you know, I, I think there's
still, you know, there's a lot to be done to build market kind
of, you know, pull signals from the corporate side and from the
(29:14):
buyers of removal side that thatneeds to be a lot more robust
for this industry to scale to become bankable.
I mean, you know, I, I don't know of any, you know, corporate
off taker that's going to give me a 10 or 20 year guaranteed
fixed price off take agreement unless, you know, the, unless
the off take price was CO2 is, is very low.
(29:36):
And that's really what you need to get the financing to scale
these things. So that's kind of the chicken
and egg issue I was talking about earlier.
And you know, I think policy is going, you know, has a huge
impact on on all the viability of that market.
The fact that you are robust might make supporting air
capture a less catalytic purchase than someone who
(29:57):
doesn't have the merchant marketfor CO2.
Have you run into any buyer reticence just on the fact that
you don't need our money as muchas someone who's only credit
oriented? That's a very interesting
question. Not really.
I mean I think that the, I mean from an investor standpoint, the
investors that are interested inwhat we're doing are interested,
you know, in our technology approach and in our commercial
(30:20):
approach. You know, from we, we, we just
haven't spent a lot of time in, you know, in trying to create,
you know, off take agreements for removal credits or avoidance
credits or anything like that. We can compete on price alone
(30:41):
for our customers for CO2 versuswhat they're currently buying
CO2 for. Of course, you know, over time,
well, we will delve into those markets and work on developing
those methodologies if they're required, But it we don't see
that as a critical path to making the business worked and
getting to scale. And as I was talking about kind
of getting on that learning here, right, that's that's the
(31:02):
name of the game. I think from our perspective
with our team, might I say, you know, our job is to fall for
scale. How do we do that?
How do you do that from a technology standpoint?
How do we do that from an investor standpoint?
How do we do that from a go to market standpoint?
For your tech stack, do you havesomething equivalent to Oxys
(31:23):
acquisitions? If you were setting yourself up
for acquisition, are you a viable candidate or large scale
beverage production? Something else like where?
Where does your tech stack fit and compliment conglomerate
nicely? Yeah.
I mean, so one way to think about what we do, especially on
the merchant market side, you know, with beverage and food and
things like this, is we're competing with industrial gas
(31:44):
company. So there are industrial gas
companies, you know, that are producing or buying CO2 and
delivering that to their customers.
You know, every Coca-Cola in theworld, every Pepsi, every so
many businesses, they don't haveCO2, they're not producing the
product. It food packaging, animal
process, the cold chain CO2 really kind of runs the global
(32:07):
economy in a lot of ways. And, and it's a robust market.
But you know, on the sequestration side, you know,
it's, it's, it's, it's, it's a different analysis and it's, you
know, a different approach. So, you know, there are
industrial gas companies I thinkthat are very interested in more
(32:28):
reliable CO2 supplies. They have customers that they
have a hard time getting CO2 to.It's very expensive.
There's supply disruptions in Europe, There's often supply
disruptions this time of year because the the price of CO2,
the availability of CO2 is a by product from ammonia production,
so fertilizer production, and that comes from natural gas.
(32:48):
So if natural gas pricing is toohigh, they just stop making
fertilizer and then all the CO2 goes away.
And then all the companies that are buying CO2 can't make their
beer, can't make their Coca-Cola.
So I think there's a, there's a lot of interest there, but you
know, I think from a larger scale, you know, sometime in the
future sequestration, no larger scale uses CO2.
I think this sort of, you know, there may be, there may be
(33:12):
partners that, that are similar to the kind of Oxys of the world
that will make sense. But you know, we're really
focused on commercial traction, decreasing cost, getting to
scale, driving our cost down, demonstrating to our customers
that were reliable and taking anaccount on us for a critical
input commodity to their business.
(33:36):
Are these gas manufacturers, arethey paying attention to direct
air capture and modular production of gases?
Or is this still sort of a like,pat you on the head, like, oh,
that's cute, come back in a decade.
We've been doing this for decades and what you do is not
impressive yet. Yes, OK.
I mean, it's, you know, they, are they paying attention?
Yes, you know, but the reality is most of these companies have
(34:02):
a lot of capital assets in moving CO2 around, right.
So if they no longer need to move CO2 around, what do they do
with all that stuff? So that, you know, we believe
there will come a time when theycan't ignore us anymore.
But you know, it's going to takesome time for us to get there.
I mean, we're going to have to demonstrate that we can, you
(34:23):
know, we can at scale produce C2at a lower cost, delivered at a
higher quality and a reliabilityto anybody that needs it.
And then I think you know that there, you know it'll become
then a very credible and near term threat to their no current
PNL. Probably too late at this point
(34:45):
since you designed this businessto be robust in this exact kind
of way, but what advice might you give to other carbon removal
companies that might be finding themselves in the valley of the
shadow of death right now and looking forward to a couple
years of uncertainty, to put it lightly?
I, I think I kind of, I, I have somewhat of a unique approach
(35:07):
because I've been working in, you know, engineering and
technology development of project financing of CO2 removal
technologies for over 20 years. And, and I think I come from the
perspective of how do we make these bankable?
How do we make these projects mansible?
Because getting from the valley of death means you, are you, you
have the commercial traction. And to get the commercial
(35:27):
traction, you can't just continuously raise money and
sell equity where I mean, certain companies can and
they're lucky and the market conditions are just right.
And but I, you know, I think that that's a very low
probability for success. So I think what one has to do is
one has to demonstrate commercial traction, customer
(35:48):
reliability and a clear path to get to scale.
And what does that actually looklike?
It's I don't think it's enough to say.
We think we'll add, we will be at X dollars per ton in 2030 or
2035. I think it's much more
complicated than that. And I think really thinking
through about the process of what does it take to get there
(36:08):
at each technology iteration step and it's kind of commercial
scale and what does that look like is, is will help set your
strategy early on. And I think that's really
important. Thanks for being here, Matt.
Really grateful that you're ableto share your experience and
congratulations on all of your success.
Thanks, I really appreciate it. Good to chat with you and look
(36:29):
forward to the next time.
Hey, thanks for listening to Reversing Climate Change.
I'm your host, Ross Kenyon. Before we get going, I'd love to
tell you a little bit about our sponsors.
They make the show possible. I would love it if you could
listen for just a minute while Itell you about Phillip Lee LLP
and our bionics. If you work in carbon removal,
you very well may have come across Phillip Lee LL PS work.
I originally saw Phillip Lee give a presentation about some
(00:22):
of the common provisions within off Take agreements, and I was
impressed by the quality of their scholarship and their
work, and I'm happy that we're able to stay in touch and
finally do this together. I think the law is an
underrepresented part of what happens within carbon removal.
We assume it's the background, we assume it's the mechanics.
It actually takes a very smart and creative person to be a good
(00:43):
lawyer. I think if you've ever had a bad
lawyer, you know that there's quite a big difference between a
good and a bad lawyer. And what's good about Philip
Lee, beyond the good experience that I've had personally, is
that they're also just the largest legal team dedicated to
the financing and development ofcarbon projects globally.
They actually were awarded Environmental Finances, VCM Law
Firm of the Year for each of thelast two previous years.
(01:04):
They have offices in the US, Europe and the UK.
If you have business law needs around nature based carbon
projects or engineered ones if you're working with sustainable
aviation fuels and the integration with Corcia,
anything to do with the VCM generally, Article 6 of the
Paris Agreement, the CRCF that'scoming out of the EU now.
(01:25):
Get in touch with Phillip Lee. If you're working in this space,
you really do need a good eye tothe law.
These projects need legal care. There's a lot of structuring
that takes place. It's really not turnkey at this
point still. And there's a lot more
innovation and creativity that'sgoing to be needed to make sure
that the legal infrastructure that supports carbon removal is
there. So link is in the show notes, go
(01:47):
check out Phillip Lee, our othersponsors, our Bionics.
Our Bionics is great. They've been on the podcast
before. I did a show with Lizette Week,
which I'll link to in the show notes too if you want to go
listen to that show I did with Lizette.
Our bionics is working on forestry in the Baltic states of
Europe. Europe used to be much more
heavily forced it. The great majority of forestry
projects take place in the global S, which is generally a
(02:10):
good thing. But we also do need forestry to
take place in the EU and in Europe as well.
Our bionics has put out some great research recently about
the state of afore station projects, about the bottlenecks
in the industry, why the high quality credits are selling out
far ahead of issuance, what thatmeans for people who want to be
buying carbon removal credits for forestry but cannot.
(02:32):
It's a really important set of questions that our Bionics
addresses with Grace. I would recommend you checking
out their work and also just checking out our box in general.
If you want to support forestry,give our bionics a look.
Link is in the show notes there.Thanks for listening and now I
will go into the show itself. Thanks for your time.
Here it is. Hello and welcome to the
(02:59):
Reversing Climate Change podcast.
I'm Ross Kenyon. I'm a carbon removal
entrepreneur. I have a great show today.
I really like that. Lately, almost by accident, I've
been getting more and more stories from very seasoned
climate tech entrepreneurs who have actually deployed a lot.
And I've had great amounts of success in moving from a pitch
(03:19):
deck to steel on the ground, youmight say.
Before I introduce our guest, ifyou could please rate and review
the podcast in your podcast app choice.
Give it a full rating, ready to review.
If you love the show, I help getthe show out to more people.
I would be so appreciative if you could do that.
There's also a paid subscriber option on Spotify where if you
would like to get rid of the programmatic ads, if you want
(03:41):
bonus content that is available to you for $5 a month.
And it really helps the show remain financially viable.
In any case, today my guest is Matt Atwood, who is the founder
and CEO of Air Capture. Matt's had a fascinating career
and also just took a route into direct air capture that is
unusual. We talked about it in the show.
(04:03):
I used to hear so much about turning captured carbon into
products, finding a way to make direct air capture and carbon
removal generally work without an over reliance on policy or an
over reliance on voluntary carbon market credits.
And air capture has done just that.
They just raised a $50 million Series A.
(04:25):
They're working with modular direct air capture that among
other things is providing beverage grade CO2.
There's some markets that just they need CO2 and that direct
air capture miraculously is the most cost effective way,
logistically least complex way of getting the carbon dioxide to
the place that it needs to be. And while not all of these
(04:46):
mechanisms produce negative emissions, any amount of
separation of carbon dioxide or other greenhouse gases from
ambient air is helping us learn how to do that better in other
applications. It brings the cost curves down.
It increases the talent pool whoknow how to work with this
technology. This is a really important
thing, and Matt's out there leading the charge, actually
(05:10):
getting projects like this built.
I'm amazed you kept the faith doing it this way, because I
feel like it went out of fashiona long time ago.
But that's the thing about fashion.
There's a line in what is is it from a mighty wind?
What is that the guys from Spinal Tap in a Mighty Wind say?
It's, you know, they've been retro so long that fashion has
(05:32):
caught back up to them and it's no longer retro.
It's Nitro. And air capture is a good
example of it being Nitro. Did not expect to be talking
about A Mighty Wind on this podcast introduction, but I just
love that utilization has been quietly chugging along.
Or this could be my bias just because I'm working primarily in
carbon removal, but it's been chugging along.
(05:54):
And it's just nice to see the people who really believed in
their vision proven right that this is actually a really
powerful commercial strategy andgo to market that others should
be looking at too. It isn't all about carbon
credits. It isn't all about immediate
negative emissions. There are other things that we
can do that make companies commercially successful, that
allow us to develop technology, build the skills, but the talent
(06:16):
that will provide for a carbon negative future.
If you like the sound of that, you're going to enjoy the show
because Matt and I talked about this at length.
So without further ado, here is the show with Matt.
Thanks for listening. Thanks for being here, Matt.
Thanks for having me, Ross. How could you possibly raise $50
(06:39):
million right now? Just about, well, it's, you
know, it's, it's a longer story and it's a longer time, but you
know, it is a very challenging fundraising environment to
model. But you know, at the end of the
day, I think what we're doing is, is, is pretty specific
relative to carbon dioxide removals and, and direct air
(06:59):
capture in general. I mean, I think our, you know,
our approach to commercializing the technology is to go after
kind of smaller on site markets where people are purchasing the
CO2, you know, customers, companies that need CO2 And you
know, that's a very mature market.
And we're able to, you know, provide a service to our
customers CO2 that they need, where they need it at cost
(07:21):
competitive prices from where they're getting it.
And I think that, you know, kindof really sets us apart in the
market against, you know, our ability to raise money compared
to all these other dat companiesand things like that.
So you know, I think that's beena long term strategy of ours and
it it you know, independent of the timing and the challenge of
the market worked out for us. Probably close to a decade ago,
(07:43):
carbon devalue was a much biggerconversation.
There's a moment where carbon tech was even a term that was
being thrown around that impliedsome sort of material or other
value being created beyond just atmospheric benefit.
Carbon credits. It used to be a thing.
We used to think about it as being the forking path and maybe
there's some overlap, but you pretty much chose if you want to
(08:03):
go for carbon market revenue andalso maybe policy support or if
you just want to produce something of value out of
carbon. And I think almost everyone
seemingly has chosen to go the route of the carbon credit and A
focusing on things like 45 Q andpolicy support.
And I almost never hear of anyone doing anything
(08:23):
interesting with carbon dioxide that could be personal failure.
There are things like I did a show recently with Makoto from
Homeostasis and they're making graphite.
So there is stuff like that thatis afloat, but for whatever
reason, maybe it's just the environment that I'm in, but I
don't really hear that much about it.
But clearly you've kept the faith and it has led to a
(08:44):
successful commercial strategy that is starting to bear fruit.
Do you think people got in source old or something by
carbon credits? Like why?
Why don't don't more people copyyou?
Why did we go down a different path?
Well, I, I think it's, you know,I think there's a couple things
there. I think 1 is, is it's technology
pathway dependent. So certain technologies really
only work at larger scales, right?
(09:04):
And so you, you have to have larger demand for CO2 and the
only large scale demand for CO2 right now is sort of
sequestration. Synthetic fuels aren't quite
there. And in the merchant market of
CO2 or people that are buying CO2 to put into beverages or,
you know, the built environment,whatever it might be, that's a
transportation logistics issue. But you know, I came to this,
(09:24):
I've been working in the carbon,carbon tech space since the
early 2000s, first generation biofuels and then I ran a second
generation biofuel company, an LG technology company.
We're doing kind of wastewater treatment and fuel production
and I needed ACO 2 supply. So I came kind of at it direct
air capture from the perspectiveof I'm a buyer.
I, you know, I need this material.
(09:45):
And you know, over time, I, I was looking at different deck
technologies and, and finally the light bulb went off that it
made more sense for me to build a larger number of smaller
machines than kind of a smaller number of larger machines.
And that'll get us in the learning curve quick, more
quickly we can commercialize into the mature markets.
And I think that's the right kind of long term strategy to
(10:05):
being the lowest cost technologyprovider, you know, at scale for
things like sequestration, synthetic build, etcetera.
You focus at least to start withbeverage carbonation, is that
correct? We're working in beverage
carbonation. We, we're also you know, we have
a sequestration project that we developed in UAE, We're
developing other large scale sequestration projects in the US
(10:28):
We're also working on CO2 to like concrete applications in
Asia. So we focus on not just the deck
technology, but also what's required to get the CO2 market
in the quality, quality purity that our customers need.
So that could be CO2 gas for applications like concrete,
cement and it could be ultra high, you know, purity liquid
(10:52):
CO2 for beverage and food producers.
I thought you'd started the showoff by saying that the the
forking path kept you out of this sequestration market
because it favors economies of scale.
Did I misunderstand or is there just more nuanced to that story
then maybe we set out with? I think it's more nuanced to
this story. So we set out with the intention
(11:13):
that our go to market strategy would be focusing on kind of
beverage applications in the existing kind of mature market
of CO2. But we did develop a project in
the UAE and got some X Prize support for that doing a
sequestration project. And we're also doing like GOE
funded engineering studies for large scale deployments of
(11:34):
sequestration. But the reality for
sequestration is, you know it's a challenge to commercially
develop these projects because you kind of have a Meg issue and
that kind of comes back to projects.
How are you going to get a long term credit with the off take
agreement at this scales required for sequestration?
How are you going to make these bankable and the infrastructure
(11:55):
required at these scales to inject the CO2 is very
expensive. So you know, I think our view is
we'll get there eventually. We're going to focus on the near
term on these mature markets. We're going to do the
engineering work in the scale upwork for the sequestration
projects. But our commercial strategy and
focus is is on site selling of CO2 to customers that demand it.
(12:20):
My understanding of how beverages work is that there's
typically syrup is sent around the world essentially, and then
it gets carbonated in place because transporting liquids is
not a very efficient way to movematter around.
It's heavy. And so having it on site at some
point makes financial sense, especially in markets for which
transport are expensive. Like I saw that the Canary
Islands is a market that you're working in beverage carbonation.
(12:43):
I imagine shipping CO2 there is expensive.
Yes, exactly. I mean you know, beverage grade
CO2 is liquid CO2. So you know, we have customers
that are paying 2000 plus dollars a ton for CO2 and then
we have customers that are paying $400.00 a ton for that
kind of same CO2. And what drives the cost is, is
(13:03):
the infrastructure, the logistics, the transportation
and all that that's associated with all.
Do you think being a more modular system allows you to
compete on different frontiers in the more centralized direct
air capture providers? How do you go up against
something that is centralized and lots of steel in the ground
(13:24):
and be able to deliver a better unit cost product?
I mean, we, we, we believe that modular, you know, our modular
approach to DAC will be a lower,lower overall cost even at these
larger sequestration kind of scale projects.
You know what you, you sort of, you have the question of capital
efficiency, how efficient is thecapital that you put in the
(13:45):
ground and then obviously energyefficiency.
And so in a lot of these, in a lot of these larger projects,
you do get some more energy efficiency by by sharing certain
resources we call balance of plants, so compressors, boilers,
pipeline, stuff like that. But from the DAC core process,
you don't get more energy efficiency and you get less
capital efficiency by building larger and larger machines the
(14:08):
way that we do it. And again, this is the way
technology dependent high temperature deck works
differently. But we think that this approach,
you know, is the most efficient approach kind of both for
smaller scale embodiments and for larger scale embodiments.
Kind of want to put on a white hat hacker and a hat here and be
(14:30):
like how do I break that? What's, where is it fragile?
What, what assumptions do you have built into modularity that
may or may not hold as the yearscome out?
And there are various trends inside of, of carbon removal
that looks like something is going really well.
And then oops, turns out the hydrology of enhanced weathering
is really confusing and we don'tactually know if this is
(14:53):
removing carbon on net in some cases, right?
What, what is that for modular DAC?
Like, is there something like that that looms that you're just
like, oh, I really hope this goes our way as we scale.
I mean, I, I don't, it's a greatquestion.
So you can't answer that in terms of like DAC in general,
you're kind of have to divide itinto DAC pathways, right.
So for the way that we do it, which is going to ultra low
(15:15):
pressure drop, you know, a mean based contactors having smaller
scale modular machines is it's kind of it comes down to what's
your capital efficiency. You know, modular scale
production decreases our capitalcosts, you know, decreases of
supply chain issues and significantly decreases our
(15:36):
logistics costs because we buildthese in the shipping container
so we can just deliver them to site, drop them, plug them in,
they turn on. And with the project we did in
the UAE, we had all of our infrastructure, which was, you
know, CO2 capture from the air all the way to supercritical CO2
injection into the wellhead, delivered from the port to the
site and fully operational in just over 2 weeks.
(15:57):
So we were able to take our machines, drop them, plug them
in, turn them on and inject CO2 in that time frame.
So, you know, from a, from a speed to deployment logistics
costs of, you know, everything that's associated with that
modular DAC has a lot of advantages, but you know, it may
have higher labor costs, for example, than a large purpose
(16:17):
built machine you may have over,you know, you may have to look
at some of these other things, but we don't, you know, we
don't, you don't see that as being a primary driver.
Why would there be higher labor costs for more modular
production of captured carbon? I think I would imagine a
facility that was enormous wouldprobably have more people in
(16:37):
hard hats running around than a couple of shipping containers.
Well, I mean, if you think abouttotal capacity, so like it, we
have shipping containers that are 1000 tons, right?
And we have 100,000 tons. So we're going to have 100
shipping containers. Whereas, you know, another
approach might have one or two large machines doing this.
So if we have 100 different machines, it, it, it may involve
(16:59):
more kind of O&M costs, but O&M costs are very small percentage
of the overall cost to do this. So you know, I, I really think
it's, it, it really is technology department.
I mean it really it more comes down to what is going to be the
most energy efficient and capital cost efficient, you
know, technology deployment at scale when this infrastructure
(17:22):
is mature and ready to go. And any of the reality today in
removal, especially for DAC and geologic frustration and
minimalization, is you know, it's going to take a long time
for some of this infrastructure to get told.
We've used this term a few times, capital efficiency.
I wonder if you can explain to someone who is not a super savvy
MBA what that is and why that's important.
(17:43):
I don't think a lot of people come in the carbon removal
curling around terms like that and thinking about it at that
scale. I think it's one of those things
that gets beat into you that you're like, oh, actually, turns
out we need to think very carefully about this as we grow.
Yeah, it's it's, it's, it's an interesting point because it
actually has a fundamental kind of value proposition in DAC that
most people don't understand. So capital efficiency is what's
(18:04):
your levelized capital cost per ton of it, you know, for
example. So the two cap for so that could
be $5 a ton, $50 a ton, $100 a ton depends on what it, you
know, what it costs you to buildthe machine, build the
infrastructure, balance a plant,get it operational.
And then you, you know, separatethat from energy if you know
energy kind of OpEx. So what's the energy cost of
(18:26):
that? And then non energy outputs,
which labor insurance that. But the interesting thing about
DAC as it comes to, you know, our capital cost efficiency is
most people in the, you know, kind of chemical process, oil
and gas, you know, world think you build their bigger plant, it
becomes more capital efficient. But that's not true with direct
air capture and with, with pulling CO2 out of the air,
(18:47):
we're CO2 is very dilute. It's not the case that if you
build a bigger machine, your, your capital efficiency
increases. And that's counterintuitive to
most people that think about these kinds of processes.
Are there some processes within direct air capture that actually
do become more capital efficientwith scale?
Yeah, the high temperature dock processes, So you know you have
(19:08):
your like the processes that like companies carbon
engineering Oxy are doing where you have to achieve very high
temperatures in order to get this new 2 off the capture
substrate. And when you're looking at these
very high temperature applications, in order to make
it capital efficient and energy efficient, you need a bigger
machine. And it's just not going to make
(19:30):
sense at these like smaller machines just because the cost
of building, you know, a smallerone, this is a larger 1, you
know, it's not lingual. Segment this out for us a little
bit. Are you imagining a future where
the high temp solid sorbent dockproject developers are going to
be serving 1 market or set of markets and you're going to be
doing something parallel, maybe not even crossing paths as much
(19:53):
as we might imagine It's a separate thing entirely.
It's a little bit of both. So the high temperature Jack,
you know kind of process these, these are kind of large kind of
stick built projects that are going to have to produce a large
volume of CO2, you know per capital planes.
And so if you think about those applications, they're going to
(20:14):
be sequestration the future, that might be fuel synthesis.
Or they might be able to put, you know, put these projects
next to CO2 pipelines where other people are pulling CO2 off
the pipeline in the future. But they're not going to make
sense for smaller scale applications like beverage,
carbonation customers, food applications, you know, anything
in the merchant market. But you know, we believe that
our, you know, our approach to DAC at even at losing very large
(20:37):
scales will be lower cost in thehigh temperature DAC approaches
ultimately. What about direct air capture?
That's even more modular or evensmaller.
Thinking about HVAC, where does that fit in?
Is that is that the only way to become more modular than what
you're doing? We build a, we build a variety
(20:57):
of machine like machines at different scales.
So we actually kind of build machines that sort of are
applicable in the HVAC space. But you know, the problem with
sort of HVAC, the application iswhat do you do with the CFD?
Who's going to buy it? What, you know, how do you
valorize that? So you know, that's a sort of
service application where you can remove CO2 from the building
(21:18):
and you can reduce the building's energy envelope.
But then the the other side of the equation is how do you sell
the CO2 and what does that look like?
So, you know, we have customers that are using 30 to 50 tons of
CO2 per year at a given site. We have customers that are using
thousands and then you know we're building projects in the
(21:39):
millions of tons scale engineering these projects.
The press release about the Series A focused on being policy
independent and carbon credit independent to some degree.
But you've also mentioned numberof sequestration projects that
go beyond this sort of a more immediate valoration
(22:00):
valorization of capture carbon. What I mean, how does that work
because you're more independent of of the policy spookiness, I
guess you can say and who knows what's going to happen with VCM
for for carbon removal, but you also have access to it.
So I guess you seem like someonewho is extremely commercially
(22:22):
minded. I'm sure you have this all
forecast out with about 100 different contingencies built
into it. But what actually does the
future look like? Or are you just trying to make
sure that no matter what comes, you are solvent?
So what, what, what we believe is it, it comes down to rights
law. So rights law states that for
(22:42):
every doubling of technology production, you get a certain
percentage decrease in cost. So the example everybody likes
is kind of gives us solar, right.
Solar has had what's called a now 21% learning curve rate
since it sets, it was developed in the 70s and now it's just a
cheapest form of energy. And when you think about
learning curve rates and, and you think about like how do you
(23:03):
accelerate learning curve rates it, you know, from from a
climate change perspective, we want to, we want fastest
learning curve rates as possibleand we want these projects to be
financeable. And so to accelerate your
learning curve rates, you want to deploy your technology
rapidly, you want to do it in commercial applications and you
(23:23):
want to do it at a relatively lower costs and shorter times
for each technology doubling. So if you're building like a
much larger capital plant, you're doubling rate is going to
be a lot more expensive and takea lot more time than if you're
commercializing in the near terminto the beverage market, the
food market, things like this. So we can, we can be on that
learning curve, cost reduction curve while generating good
(23:47):
income and good revenues and building a strong business And
that work is required. And that cost reduction curve is
required in order to finance these largest scale
sequestration projects because the reality is in order to get
make these projects bankable, you have to be able to get.
You know. Project financing, the banks
have to have to see that you've been operating these in the real
world. That's a reliable who's going to
(24:10):
take the technology risk. And when we think about, you
know, what are the steps that are required to build these
larger scale projects? And what we're doing right now,
we're, you know, it's like an EPC style project engineering,
the tonic construction. So we're assuming the and the
feed engineering work, the frontengineering design ward for
these larger scale projects so that we have a very high degree
(24:31):
of confidence in what it's goingto cost to build these large
projects. So what's the capital cost going
to be? What's the energy cost going to
be? And the engineering required to
get to that point. So you can actually make an
investment decision on these like large scale sequestration
projects is a real effort that takes often times years to do.
And so we're kind of doing both of those things in parallel, but
(24:52):
we're commercializing immediately into the merchant
market CO2 where our customers are already buying CO2 to put
into the products that they're, you know, that they're selling
to customers today. Perhaps just to refine my
question a little bit more, if you only have the merchant
market for CO2, but Microsoft turns off the faucet, Frontier
(25:14):
turns off the faucet, Japan's GXleak never takes off, the ETS
integration doesn't happen. Is can air capture a viable
business? Are you, are you OK just on the
markets that you're already serving right now?
Yeah, absolutely we are. I mean the, the merchant market
of CO2 is a little opaque, but you know call it a 25 to $30
billion for your business and growing substantially.
(25:36):
There's, there's more demand forCO2 new technologies are coming
out that need CO2 to make into fuels or plastics or diamonds or
whatever, you know, and the beverage industry is growing.
The food industry is growing. So there's, there's a demand for
more and more CO2 and CO2 production sources are dwindling
in the US and Europe and there'scommon supply disruptions.
(25:59):
So the merchant market for CO2 is a large market.
And if it was the only thing we focused on, it would be a great
business for us. But you know, we, we have all
those things that we're doing atthe same time.
I love it. You're very robust and often
times I'm talking to companies that are not robust and I'm
encouraging them to become more robust.
But then when I talk to robust companies, I now have to ask
(26:20):
about focus. Is it not hard to go to market
with all of these different applications all around the
world? It seems very operationally
complex. Well, that's nice thing about
having a modular system is, you know, it's like a it's an A la
carte menu for our customers. You know, we could choose one of
these or two of these or three of these and one or two of these
and then that's what you get. So it's a modular machines.
(26:41):
The same machine is going to ourcustomers.
If they need gas, they get the DAC machine.
If they need liquid, they get the DAC machine, our
liquefaction machine. That's it.
So while it increases the complexity to be in different
markets, on some level, our business providing CO2 as a
service to our customers looks the same.
You know, they're buying the CO2, whether they're buying gas,
(27:03):
whether they're buying liquid. And there's some complexities
always and how we integrate because our machines are our
customer site. So sometimes our customers can
provide a steam, sometimes we have to provide this.
So you get into those kinds of those kinds of, you know,
purpose design options with withour customers, but but it's a
(27:24):
pretty kind of, you know, cookiecutter model.
Which policy environments are you most optimistic about right
now for your specific business? Well, we're, I mean for, for the
merchant applications, we're really policy agnostic because
(27:45):
as long as we can produce CO2 that meets the required like
beverage grade or food grade standards, which we do, there's,
there's no, there's no policy requirements for us to be a
commercial viable. Oh, yeah.
I mean, I mean for your sequestration projects or the
desire to maybe grow in some of those areas?
Yeah. I mean, I think, you know, what
we're seeing in certain Asian markets like in Japan and in
(28:09):
Europe and some in the least is,is a lot of interest in
supporting the scale up of the infrastructure for sequestration
and for removals. You know, TBD what happens in
the US and we still have 45 Q, You know, and at some point it
comes down to what's your cost to do this?
(28:30):
So, you know, if we're at a reasonably low cost of CO2
capture and injection, it's, youknow, as long as we still have
45 Q we're, we think it's an attractive opportunity here in
the US, but you know, it comes down to cost and it comes down
to bankability. I think, you know, things that
(28:54):
SPTI are doing, what's going to happen with some of the UN stuff
under article, you know, 6.4, you know, I, I think there's
still, you know, there's a lot to be done to build market kind
of, you know, pull signals from the corporate side and from the
(29:14):
buyers of removal side that thatneeds to be a lot more robust
for this industry to scale to become bankable.
I mean, you know, I, I don't know of any, you know, corporate
off taker that's going to give me a 10 or 20 year guaranteed
fixed price off take agreement unless, you know, the, unless
the off take price was CO2 is, is very low.
(29:36):
And that's really what you need to get the financing to scale
these things. So that's kind of the chicken
and egg issue I was talking about earlier.
And you know, I think policy is going, you know, has a huge
impact on on all the viability of that market.
The fact that you are robust might make supporting air
capture a less catalytic purchase than someone who
(29:57):
doesn't have the merchant marketfor CO2.
Have you run into any buyer reticence just on the fact that
you don't need our money as muchas someone who's only credit
oriented? That's a very interesting
question. Not really.
I mean I think that the, I mean from an investor standpoint, the
investors that are interested inwhat we're doing are interested,
you know, in our technology approach and in our commercial
(30:20):
approach. You know, from we, we, we just
haven't spent a lot of time in, you know, in trying to create,
you know, off take agreements for removal credits or avoidance
credits or anything like that. We can compete on price alone
(30:41):
for our customers for CO2 versuswhat they're currently buying
CO2 for. Of course, you know, over time,
well, we will delve into those markets and work on developing
those methodologies if they're required, But it we don't see
that as a critical path to making the business worked and
getting to scale. And as I was talking about kind
of getting on that learning here, right, that's that's the
(31:02):
name of the game. I think from our perspective
with our team, might I say, you know, our job is to fall for
scale. How do we do that?
How do you do that from a technology standpoint?
How do we do that from an investor standpoint?
How do we do that from a go to market standpoint?
For your tech stack, do you havesomething equivalent to Oxys
(31:23):
acquisitions? If you were setting yourself up
for acquisition, are you a viable candidate or large scale
beverage production? Something else like where?
Where does your tech stack fit and compliment conglomerate
nicely? Yeah.
I mean, so one way to think about what we do, especially on
the merchant market side, you know, with beverage and food and
things like this, is we're competing with industrial gas
(31:44):
company. So there are industrial gas
companies, you know, that are producing or buying CO2 and
delivering that to their customers.
You know, every Coca-Cola in theworld, every Pepsi, every so
many businesses, they don't haveCO2, they're not producing the
product. It food packaging, animal
process, the cold chain CO2 really kind of runs the global
(32:07):
economy in a lot of ways. And, and it's a robust market.
But you know, on the sequestration side, you know,
it's, it's, it's, it's, it's a different analysis and it's, you
know, a different approach. So, you know, there are
industrial gas companies I thinkthat are very interested in more
(32:28):
reliable CO2 supplies. They have customers that they
have a hard time getting CO2 to.It's very expensive.
There's supply disruptions in Europe, There's often supply
disruptions this time of year because the the price of CO2,
the availability of CO2 is a by product from ammonia production,
so fertilizer production, and that comes from natural gas.
(32:48):
So if natural gas pricing is toohigh, they just stop making
fertilizer and then all the CO2 goes away.
And then all the companies that are buying CO2 can't make their
beer, can't make their Coca-Cola.
So I think there's a, there's a lot of interest there, but you
know, I think from a larger scale, you know, sometime in the
future sequestration, no larger scale uses CO2.
I think this sort of, you know, there may be, there may be
(33:12):
partners that, that are similar to the kind of Oxys of the world
that will make sense. But you know, we're really
focused on commercial traction, decreasing cost, getting to
scale, driving our cost down, demonstrating to our customers
that were reliable and taking anaccount on us for a critical
input commodity to their business.
(33:36):
Are these gas manufacturers, arethey paying attention to direct
air capture and modular production of gases?
Or is this still sort of a like,pat you on the head, like, oh,
that's cute, come back in a decade.
We've been doing this for decades and what you do is not
impressive yet. Yes, OK.
I mean, it's, you know, they, are they paying attention?
Yes, you know, but the reality is most of these companies have
(34:02):
a lot of capital assets in moving CO2 around, right.
So if they no longer need to move CO2 around, what do they do
with all that stuff? So that, you know, we believe
there will come a time when theycan't ignore us anymore.
But you know, it's going to takesome time for us to get there.
I mean, we're going to have to demonstrate that we can, you
(34:23):
know, we can at scale produce C2at a lower cost, delivered at a
higher quality and a reliabilityto anybody that needs it.
And then I think you know that there, you know it'll become
then a very credible and near term threat to their no current
PNL. Probably too late at this point
(34:45):
since you designed this businessto be robust in this exact kind
of way, but what advice might you give to other carbon removal
companies that might be finding themselves in the valley of the
shadow of death right now and looking forward to a couple
years of uncertainty, to put it lightly?
I, I think I kind of, I, I have somewhat of a unique approach
(35:07):
because I've been working in, you know, engineering and
technology development of project financing of CO2 removal
technologies for over 20 years. And, and I think I come from the
perspective of how do we make these bankable?
How do we make these projects mansible?
Because getting from the valley of death means you, are you, you
have the commercial traction. And to get the commercial
(35:27):
traction, you can't just continuously raise money and
sell equity where I mean, certain companies can and
they're lucky and the market conditions are just right.
And but I, you know, I think that that's a very low
probability for success. So I think what one has to do is
one has to demonstrate commercial traction, customer
(35:48):
reliability and a clear path to get to scale.
And what does that actually looklike?
It's I don't think it's enough to say.
We think we'll add, we will be at X dollars per ton in 2030 or
2035. I think it's much more
complicated than that. And I think really thinking
through about the process of what does it take to get there
(36:08):
at each technology iteration step and it's kind of commercial
scale and what does that look like is, is will help set your
strategy early on. And I think that's really
important. Thanks for being here, Matt.
Really grateful that you're ableto share your experience and
congratulations on all of your success.
Thanks, I really appreciate it. Good to chat with you and look
(36:29):
forward to the next time.
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