a16z Podcast - Carbon Solutions Now and Next: From Biomass to Mineralization

Episode Date: December 13, 2022

In this episode, we tackle three carbon removal projects of varying scale, business models, and technical challenges.Biomass pyrolysis via Charm IndustrialAn electrochemical process via TravertineMineralization via 44.01We 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) – who share the fascinating stories of how they stumbled into this industry, how their processes work, whether they can economically scale, and ultimately why each of them is dedicating their time and energy to this field.This episode also closes out our carbon removal mini series, where we’ve seen a unique convergence of attention, capital, policy, and creativity being applied. With that combination, it's rare that humans don't surprise one another in progress. Resources: Charm Industrial:Charm Industrial’s website: https://charmindustrial.com/Charm Industrial on Twitter: https://twitter.com/CharmIndustrialPeter on Twitter:  https://twitter.com/reinpkTravertine:Travertine’s website: https://www.travertinetech.com/Laura on Twitter: https://twitter.com/limestonedr44.01:44.01’s website: https://4401.earth/44.01 on Twitter: https://twitter.com/4401earthKaran on Twitter: https://twitter.com/kdkhimji Stay Updated: Find us on Twitter: https://twitter.com/a16zFind us on LinkedIn: https://www.linkedin.com/company/a16zSubscribe on your favorite podcast app: https://a16z.simplecast.com/Follow our host: https://twitter.com/stephsmithioPlease note that 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/disclosures. 

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 amounts of peridotide that exists in Almount in the UAE alone could mineralize trillions of tons of CO2, making it 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 peridotide into carbonate minerals through the mineralization process. We could reverse climate change. Welcome to part three of a carbon removal series. If you're just Catching up, in part one, we chatted with Nan Ransahoff 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's Svelace's company, is doing to help develop this nascent industry. Now, in both of these episodes, Nan and Brennan spoke to just how early we are. Here's Brennan. It does feel like maybe the starting gun has gone off, if you will,

but this is a 100-meter race. I don't know if we're even out of the blocks yet. People have even stood up straight. And here's Nan. This field is so early, we don't want to pick a horse yet. 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.

And 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. We cover these companies through the lens of their founders. Peter Reinhardt, CEO of Charm Industrial, Laura Lamers, CEO of Travertine, and Karin Kimji, C.O.O. 4401. By the way, for my fellow chemical engineers out there, I hope you got 4401's carbon dioxide reference.44.01 is the molecular mass of carbon dioxide. And finally, please do let us know

if you enjoy this episode. We'd be open to covering more solutions like direct air capture or kelpsyncing. 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. 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. At Segment in 2015, I was trying to figure out how we should offset our emissions and 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. And we implemented a lot of the reductions first, like swapping out beef for chicken and

lunches and trying to encourage a commuting by a train bus and so on. But ultimately, we had some emissions from flying salespeople around and so on that we couldn't get rid of. And so we went out and we bought some offsets of Indonesian rainforest and Brazilian rainforests, like the stuff that was available. And we did that a year later, I was like, wait a second, what happened when we made these purchases? And the deeper that I dug into what was going on there, I was like, oh, no, this is bad. I'm not convinced that anything good happened here. Like, I'm not convinced that any carbon impact happened at all. And so as we continued to dig in there, I became pretty convinced that just 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 that's come out of UC Berkeley and Carbon Trading Project and others where basically like 90% plus of the offsets that are out there are garbage. Like 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. So in 2017, that inspired me to spend Saturdays working with some friends trying to figure out if there was a carbon removal pathway would be higher quality and profitable. And then in 2018, we started Charm focused on doing that. 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. 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 or what's really happening? 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 sort of additionality question. So, for example, if you purchase offsets in Indonesia and you set aside some rainforests there, does that just mean that the one next door gets logged? Instead, of the one that you protected.

So that's an additionality question. When there's fires that raged through the Indonesian rainforests, huge fires there, is this forest protected from fire? How? From political perspective, you need to set aside this forest to sort of match the fossil fuel that 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 a super long-time storage, right? So we need to set aside this forest then for like a thousand years. Like, no regime has survived a thousand years. So, like, how are you going to know that ownership rights are going to remain for a thousand years? These are the sorts of issues that pop up, and it's very unclear that any of them are well accounted for or well-handled. 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 is surfaced. What solutions are there that we can be relatively confident in the permanence of?

Which reminded me of the definition that Nan shared. We are really focused on permanently removing carbon dioxide from the atmosphere and the ocean and storing it for at least 1,000 years. The three solutions that will be introducing you to check that box. That brings us to charm industrial, travertine, and 4401. Let's start by hearing what each of them do. Here's Peter again from charm industrial. Yeah, so 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, right? So they've already done honestly the hard work for us, but the question is now we need to store it deep underground where we can't mess with that anymore. And so what we do is we cook it into this liquid. It's called bio oil. You should really think of it as barbecue sauce. Bio oil is the natural smoke flavor in barbecue sauce. So literally industrial quantities of natural smoke flavor. It's very carbon rich.

And 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. So the biomass that you're converting to bio oil, what would happen to that otherwise? Because 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. And as long as it's not being burnt and that CO2 is not being released, it's not really any different. But can you explain that dynamic and how actually injecting it underground is changing that whole cycle? Yeah. So 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. And the particular crops that we're interested in are not purpose grown to produce biomass. We're interested in the residues of other crops that are already grown. So 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. Wow. The stocks, the leaves, the clubs, 400 million tons just in the U.S., just of that one crop. Now, we can't take it all.

We need to leave some on the field to protect the soil from erosion, et cetera. But the other 2 to 300 million tons is totally safe for us to process and extract the sort of bio-oil barbecue sauce from it. We actually put solid char back on the field. So we actually will approve the soil carbon content relative to baseline, and we'll put most of the nutrients, potassium and phosphorus back in, but we'll extract basically some of the carbon and put it deep underground. And if we were to do no-till, if the baseline was no-till, which is like best practice, almost all of the biomass rots, right? It doesn't just burn. It also

rots. So something like 95% of the cornstover in the U.S. goes unused. It just rots on the field. And even with no-till, huge, like 98% I think of the carbon goes back into the atmosphere to be rotting in short order. So that's the baseline. It would rot. It would slightly improve the carbon content, but if we come through and kind of process it more quickly, we actually put the char in the soil, increase the carbon relative to baseline. And if you look at the soils in the Midwest, in the Great Plains, the carbon content there is partly the reason that'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. So we're effectively doing like a super good

version of that with pyrolysis that should over time increase the amount of topsoil, increase the soil health. 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 charing 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 like a very, very simple way to put it? That's right. Yeah, and the stuff that we inject, what's cool is it's very dense.

So after injection, it actually sinks inside the rock formations that it's injected into. And then because it has this chemical compound called phenols in it, the phenols react, and it actually solidifies. So it like locks itself into the rock structure like glue. Wow. Fascinating. Now let's hear another equally fascinating, yet wildly different solution. This is Karin from 4401. So 4401 takes carbon dioxide from companies that capture the CO2 in the first place. So either a direct-air capture company or a company that captures CO2 from the flu stack of an industrial facility

and then eliminates it permanently for that capture company. So we effectively sit as the company that off-takes the CO2 and then eliminates it from existence. The way that 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. to an H2O and turns that CO2 within the water into an inert carbonate mineral, a different rock, thereby immobilizing it permanently in solid form and having no risk of re-release into the future. I assume this doesn't work with any old rock. That's right. The rock that we use is called peritite. The rock itself is high in

oliveine, 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. And one of those locations is particularly in Oman and the UAE, the two countries that we're currently operating in. So 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. 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? The rock is naturally reacting with CO2 constantly. So it's actually, 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,

that things like pressure, temperature, and differences in alkalinity between the CO2-H-2-fluid mixture and the rock itself enable us to be able to speed that up significantly to be able to mineralize meaningful amounts of CO2 rather than the glacial pace that we've been observing, which is the natural phenomenon.

What is the difference between that glacial pace that naturally happens on Earth and then the pace that you've managed to accelerate it to so far? Like, are we talking 10x, 100x,000x, how much faster is the process today relative to what naturally happens? So it's around 100,000x. We're able to mineralize every unit of CO2 within a year. And actually, 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. Perhaps you could hear the surprise in my voice. It's pretty incredible when you think about it. There is a naturally occurring rock prototype that naturally reacts with CO2 through a mineralization process that removes it from the atmosphere. And 4401 is testing methods of speeding this process up to 100,000 times the speed. We'll come back to Karn, 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. 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. And so 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. Let's just outline what goes in and what goes out. So you have carbon dioxide, sulfate waste. Those go in. There's some energy that also goes in. And then what comes out? It's sulfuric acid, green hydrogen, oxygen, and then a mineral. Yeah. So this process really is

kind of a way to miniatrise Earth's natural process for sequestering carbon dioxide from the air over geologic timescales. So what the Earth does is basically the carbon dioxide reacts with water to form carbonic acid. And that acid then reacts with rocks. And that rock reaction then generates carbonate minerals. And so what we're doing is trying to speed that up dramatically. And so this process is not new. People have been thinking about the rock weathering process for a very long time. And I've also been thinking about this idea of making acid and based chemicals using water electrolysis, which is what we're doing. For many, many years. And specifically, the idea of generating sulfuric acid for critical almond extract

kind of 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. You might have noticed Travertine's process has parallels to 4401s. Both are inspired by Earth's natural process of converting carbon dioxide into carbonate minerals over long time scales. But in Travertine's reaction, renewable energy is used to react CO2 specifically with sulfur, fate waste to generate several byproducts. Let's put a pin in one that we'll come back to. Sulfuric acid. 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 Karin had to say. 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, it seems like a no-brainer. Yeah, 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 Kellerman and Professors York Matzer. And they effectively worked on observing this reaction, this natural reaction in the field for the last 10 to 15 years in Oman and the UAE in particular. What helped us, as 44-1, 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. So 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 that are familiar with, of our modeling processes, with side characterization processes, with injection technologies, putting together the right team, as well as the right local regulatory players to basically help set up our first pilot tests. So for 4401, 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. This kind of 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. I think the key issue is that in the past, there hasn't been access to clean renewable electricity in abundance. There hasn't been kind of 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.

And so now is really the time to implement this kind of process. 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 ton scale that the industry needs to make a true dent? Let's start with Peter on how Charm Industrial is thinking about scale. Our number one constraint right now is the amount of bio oil production capacity, and so that's something we're working very hard on expanding so that we can grow faster than currently forecast.

And once we're able to mass manufacture paralyzers, we think that the bottleneck will pretty quickly, not quickly, but at meaningful scale, shift to biomass. So there's probably about a billion tons a year of biomass residues available in North America, Mexico, Canada, US, between all of various crops. A billion tons per year is like 10% of the carbon removal that's needed. So you can see expansion then into other biomass regions, India, Brazil, maybe Nigeria, places like that. So 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. 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? Yeah, absolutely. I think those scales that we're talking about are, you know,

know, aim of gigatone scale, right? And gigatone, potentially per year, which is an incredibly staggering scale to do any kind of chemistry, right? We're talking now the world's largest chemical industry is working at that scales. And a totally new process has never been done before, right? So 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. So, for example, fertilizer production generates hundreds of million tons every year of sulfate waste called phospho gypsum waste that could be upcycled again to form calcium carbonate minerals, so taking CO2 out of the air and turning into that solid phase. Laura went on to describe how she expects the volume of feedstocks to also increase dramatically in coming years. What's changing over the next couple of decades is a critical almond extraction industry.

And so another big use of sulfuric acid today is in mining and materials processing. And so 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. And many of the byproduct materials of that increased mining are going to be great feedstocks for our process. And so 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. And so we really think that the scales of the industries are going to be there.

It's just a matter of making the process economical. 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? Yeah. So we can talk about two different things. So the first is mine tailings. The second is fertilizer waste byproducts. Mine tailings and kind of mine sulfate wastes are really just left. So 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. And that would simply be left behind

is something that we could beneficially reuse. Sulfate waste, which are generated in extractive processes through sulfuric acid extractions, are often held on site and then discharged when possible. And so basically, 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 and how much they can put in the water. Now, in terms of fertilizer sulfate waste production, all of those sulfate waste are called phospho gypsums, and they're generally left behind in a big pile. And so you can see these piles from space. They're so enormous. For example, in Florida, we have about a billion tons. It's estimated of these sulfate waste

just piled up. And yeah, it can't really be beneficially reused for several reasons, at least as a gypsum replacement in something like drywall. 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 Karin on how he's thinking about scale. When it comes to the abundance of the rock itself, that's not a limiting factor. In fact, we've done some just back at the envelope calculations and we understand that the amounts

of peridotide that exists in Almount in 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 peridotide into carbonate minerals through the mineralization process, we could reverse climate change. The actual access that we can gain to that rock is the limiting factor. And that depends on several variables. Firstly, where the CO2 source is and how we get that CO2 to our site, so that involves capture and transportation.

And secondly, we require water for our process. So we need an existing water source next to our site in order to be able to dissolve. the CO2 into it and then create the fluid mixture that we then inject into the subsurface. So those are the really two major limiting factors. Those two factors will determine what sites are most optimal for our process. And those two limiting factors will also determine at what cost we can do that injection at. And 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 rule such that they can afford it. As we dig in

to 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 thoughts, 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 Loras says it best here. Implementation of large-scale carbon dioxide removal is not a question of technological feasibility. It's a question of economic viability. 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 year. But eventually, people are eyeballing solutions closer to $50 a ton. Here's how charm industrial is thinking about bringing down cost. Today, we sell and deliver

right around $600 a ton, CO2 removed. And that compares to other really high-quality carbon removal direct our capture in Iceland, for example, is like $900 to $1,000 a ton. So it compares somewhat favorably to that. As 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,

and I think we can get under $50 a ton. We are also designing our own totally fit for purpose, designed to come down the cost curve, pyrolyzer that will start deploying in the next few years. So that's how we delivered 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.

It's diffuse, very complicated to move and expensive. Today we get biomass delivered to, 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. 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? Well, here's Laura from Travertine exploring the potential sale of it, in addition to their other byproducts, green hydrogen, oxygen, and carbonate products. So for us, there is a world in which the sales of our co-products, so commodity sulfuric acid,

commodity, hydrogen, potentially even commodity oxygen, and then the carbonate products can actually subsidize entirely the cost of carbon dioxide removal, which by that I mean, you know, we could maybe be doing carbon acts or removal for free, although we'd want to take advantage of any tax credits that's available, for example, to us. Now, the cost of our process is driven in large part by the water electrolysis process, which is highly energy intensive. And so the cost of the overall products that we generate are very sensitive to the price of renewable electricity that's available to us. And so we're trying to be strategic about the siting of our plants in the sense that we want to be using excess renewable energy that's not otherwise going to be going

to a grid that needs it. So a place where there's an imbalance between renewable electricity supply and then 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. While the demand for it is expected to increase, particularly for the use of green technologies like EV batteries or solar panels. Laura even shared with me an academic paper from Mark Maslow's group at the University of 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 in order to take advantage of this lucrative revenue stream, which again is a byproduct of their process. The question of whether or not peak sulfur will have to. in the next century. It's not a question of, like, is there sulfur somewhere in Saudi Arabia, for example? It's a question of, is there sulfur at a port that I can put on a train and bring to my plant in the desert, for example? And so in this case, we need to be strategic about mapping demand for sulfuric acid. We want to be sitting somewhere where the sulfuric acid would be used. It doesn't make a lot of sense to be transporting it. And this is typically how the

sulfuric acid commodity market works is it's produced where it's used. So that's number one. Number two, that place where it's being used also has to have some abundant, relatively affordable source of renewable electricity, right? And then number three, ideally we'd be able to sell our carbonate products and our hydrogen into a local market. And so being relatively close to markets for green cements, for example, or for green hydrogen would be ideal for us. And so in terms of scaling up to commercial building plants that have good return on

investment for the folks helping subsidize that the capital cost is going to depend on kind of strategic siting, at least in the early days. You can start to get a sense of just how complex some of these business models become, trying to balance 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 specifically that the byproducts are not useless. In fact, they're very useful in the arc of the supply demand market out there for sulfuric acid. And so how do you think about building the business or really the business model or economic model, given that the process takes a certain amount of energy, potentially could use clean energy, but then it also has these byproducts. So how are you thinking about maybe all of those different inputs and outputs and how to develop this product effectively? Yeah, I think this is this business development side is really one of the most exciting parts for me because I come from an academic background and I'm not used to thinking about this, but I think it's a really kind of fun strategic puzzle

to address. For us, you know, as you alluded to, there are a number of products that can be considered or are technically commodity products that we're producing in our process. which means that we have quite a bit of flexibility in terms of business model development, the way that we can approach that. What I will say is that we will, to the maximum extent possible, try to use every product that we produce, right? You know, it would be much better, for example, to have our carbonate products be used as green cement feedstocks rather than just have them as backfill, which is fine. You know, it's fine to have a pile of limestones sitting around or carbonates, but it's much better to take advantage of the fact that that could lower the carbon intensity of concrete production, for example.

And so from a business model perspective, our approach is to try and figure out, you know, the logistics and markets associated with each of in the individual products. That's challenging in some ways because some of the products are difficult to handle. So, for example, hydrogen in some context, might make more sense for us to use on site and recover some electricity with a fuel cell rather than to compress it just because it's costly to compress it. it's costly to transport it. And so if we're not sitting at a port where hydrogen is traded, it might make more sense for us to just use the green hydrogen. Tarverteen is not alone in these complex operations. This was the theme that Peter covered earlier

and is shared by Karin at 440101. Here's Karin as he explores the cost curve. So our current cost on pilot level is probably over $1,000 per tonne. And that's only the mineralization cost itself. So that doesn't include the cost of capture. But that is really a pilot R&D value. When we get to commercial scale, we're estimating that our costs are going to be around $170 a ton to start. And actually, we've sold approximately 6,000 tons of mineralization capacity already to the voluntary market at that cost.

We expect that we're going to be able to get at scale to around $15 a ton. So that's at over 10x decrease as we are able to scale up our sites. And that scale is really based on two factors. how much CO2 can we get into each borehole, therefore spreading our CAP-X across multiple tons that we can inject, and then how many boreholes can we build? That's what we're going to be determining, starting middle of next year, Q2, 20203,

where we're going to be building our first commercial wells. 4401 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 in a space like this. 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. And for this side of the reaction, they're exploring two options. So first is direct air capture. So this is where CO2 is captured directly from the atmosphere and basically a decentralized capture unit can be placed directly on the carbon sink itself,

literally on our sites where we inject. The advantage of that is that we don't require any transportation of the CO2 for over long distances, so that's able to eliminate a massive cost element within the carbon capture and removal value chain. So with direct air capture, there is no transport, but it is a nascent technology.

And the direct air capture partners that we're working with at the moment are working as hard as us to scale down their costs as well. The other model is the point source capture model, which is capturing CO2 from an existing industrial facility, a hard-to-decarbonize facility, things like cement production, steel production that are really carbon-heavy products and really need a fossil fuel, at the moment at least, a fossil fuel source

to power that high heat that's required for that process. The point source capture happens where that facility exists, and that might not necessarily be where our sinks or our rock is available. And that requires a transportation element. That can be done in a variety of ways, trucking, piping. If it's cross-continent, it can be shipped as well. But that is a whole other cost element in the pie. The advantage of point source capture is that it's a more mature technology at the moment so it can capture more CO2 per dollar

of CAPEX invested in that capture technology. The reason it can do that as well is because the concentration of CO2 in a flu stack is much higher than in the atmosphere. So in the atmosphere, it's 0.04%. In a flu stack, it can be, depending on the process, between 4% and 100%. So that cost of capture drops significantly, but then you have to add in the transportation component,

which balances that out. So we're working with both types of models, and we're trying to now figure out how to make the economics work on both ends. Once again, we're noticing the importance of proximity in operationalizing these solutions, because anytime there's transportation, carbon removal companies need to factor those emissions in. There's just no use in injecting carbon into the ground if you're releasing an equivalent amount in the process. So here, Carrons shares how 4401 is getting creative with their transportation infrastructure.

Our objective is to make the entire process as net negative as possible. Or when it comes to building out, let's say, a lifecycle carbon analysis, we're trying to maximize the amount of carbon that's actually removed through mineralization compared to the point of capture. Transportation is a huge emissions component of that, that reduces the amount of net negativity. You know, most options, let's say, trucking, use some form of fossil fuels to power that vehicle. Piping is, of course, a much more environmentally friendly option in terms of emissions, but you need massive amounts of scale or massive amounts of CO2 transportation to warrant

building out a huge pipeline. So at the moment at 4401 in our nascent stage, we are trucking. But what we did is envisioning that the petrol diesel element would be a problem. We actually set up a biofuel plant under a separate subsidiary called Wakud, which 441 has a minority shareholding in. Wakud refines use. cooking oil collected locally in Oman from restaurants, from food kitchens, and refines it into biodiesel. That biodiesel burns with 90% less CO2 than petro diesel does. And it's a drop in fuel. So there's no infrastructure changes that are required for a truck that would need to be powered by diesel. So we can just drop in the biodiesel instead of petro diesel, and that reduces

the amount of CO2 emissions from transport by 90%. And in that way, we can increase the amount of CO2 that is eventually after the point of capture. I love that you brought that up because it's very common within companies to have multiple product lines or to create something for their own company and then sometimes that project actually ends up becoming the winner within their spectrum of projects. Is there potential for that to become a much larger project, a project that does not just service 4401 but also services other companies or produces its fuel that produces is 90% and less carbon? Absolutely. The company, so it operates entirely as separate entity.

44-1 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. So it's definitely operating and will scale in its own merit to different countries within the GCC to start. So yes, it has its own objectives and could scale in its own way. But the limiting factor here is that there's only a certain amount of used cooking oil that's actually available for collection to be refined. 4401's ambitions are to get to a billion tons a year by 2040. So we would by far outstrip all the demand for at least the use cooking oil in Oman that would be refined into biodiesel. So we need to now figure out a different solution to get to these low carbon levels that is not

constrained by the use cooking oil that's available in the country. So piping is one of those options. We will need to eventually get to a point of the amount of scale of CO2 that's being transported across the country that warrants building out large infrastructure. which is piping. And the second is, of course, renewables. So using solar and wind and other forms of renewables to power our operations at night. So we currently use the biodiesel, not just for transportation, but also to power our operations at night, since the sun doesn't shine all the time. So we need to figure out how to build an optimal renewable load to be able to power our operations 24 hours in the most net negative way. As I spoke with these founders, I was really impressed

with the ingenuity that they had in putting each piece of their respective puzzles together in order 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. The pyrolyzer produces two co-products of bio-oil and char. The char we don't expect to sell, but we'll put it back on the field and hopefully it reduces the cost of biomass because it's putting nutrients back in that the farmer needs and improving their soil health and so on.

So ideally, it reduces the cost of the biomass for us. but we don't tend to sell it, per se. In the long run, we also think that we would 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. And out of that iron making process, you get a pure CO2 stream, which can still be sequestered. And so we end up with the same carbon removal capacity

in addition to one to two tons of reduction along the way. and so basically getting 2 to 3x the leverage in terms of climate impact on the same amount of biomass and the same amount of biovolve. So I think we're excited about that. And then the co-products there are, of course, iron and carbon removal. And getting to double down on the economics there also gives significant leverage in terms of the economics. 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. My co-founder, Sean, had a really key breakthrough where he realized that this bio-oil that we were producing, we could inject underground as a way of disposing of it, and that would actually be a carbon removal pathway. And within 72 hours of him having that idea, we built a techno-economic model, we sent it over to the folks at Stripe Climate, and within 72 hours, they were like, we'll buy 250K of it. And so, like, that is this product market fit, right? And from there, a few months later, Shopify made a big purchase, a few months later, Microsoft made a big purchase,

and then we were able to start delivering in 2021. But that was product market fit for us. I would say we are in a carbon dioxide removal is a heavily supply-constrained market. We actually are sold out now on carbon removal for our capacity through 2025. That is product market fit, and the question is like, how do we actually deliver the physical capacity fast enough, given the like demand? If we had more capacity, we could sell a lot more. Peter was also the first of this group to found a carbon removal company. And he goes on to share what keeps him hopeful about this industry, even four years in. The thing that makes me most hopeful is, I think, in the last couple of years, we've seen just an

explosion of techniques, right? There was really, prior to that, there was this one approach, direct our capture, which is the brute force backstop. We're going to need it. And it's awesome that people are working on it for as long as they have. It's awesome that Climworks Orca is actually deployed. Like, we need more deployment. Let's not announce fundraising and renderings and off-takes.

let's announce more things like actual deliveries. So I was super excited about Climark's Circa as well as Charms Progress last year in delivering tonnage. But I think 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. And so that, I think, is what gives me a feeling of hope is just seeing a dozen new interesting technologies

all with pretty promising economics coming into the field. I asked Laura the same thing. What signals or what things are you, paying attention to that make you really hopeful about the future of CDR or, I guess, our collective fight against climate change. Yeah, I love that question. I think it's a really important question. I personally am extremely hopeful because the basic chemistry that we need to make carbon dioxide

and mobile work at very large scales pretty straightforward, and we have the technologies. If there's a technological breakthrough to make it much more energy efficient, so much the better, right? But what we need is markets for and also willingness consumers to pay for carbon credits. We need the raw materials for decarbonization and widespread adoption of renewable or low-carbon energy technologies. And this all is starting to emerge, right? At the same time, like you just feel the energy in the air. And so 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 kind of roll up our sleeves and get to work.

And finally, here's Karin sharing the inspiration behind 4401, discovering the world's largest dead zone right in his backyard, together with his co-founder, Talal. Talal and I both grew up in the beautiful nature of Vermont. It's a very picturesque, very just gorgeous landscape country with mountains and oceans and just beautiful, beautiful scenery all around, beautiful nature. And we spent our childhood in that. Over time, we started to see the effects of climate change as well as just generally problems in the environment, things like plastic pollution, and actually one day Talal woke up

and saw an article in the news that described how one of the largest oceanic dead zones in the world is actually just off the coast of Vermont. It's about the size of Florida. What that means is basically an area in the ocean in which life cannot thrive because of its concentration of CO2. So when we looked into why that was happening to our oceans, we realized that it is because of CO2-induced warming of the oceans that were preventing life from existing in that area. And we wanted to do something about it because it was affecting the nature that we grew up in and in which we loved. Quite amazingly, in this case, a potential solution was also right next to the problem, with a mound possessing hundreds of miles of that crucial prototype 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 in particular, 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. And with that combination, it's rare that humans don't surprise one another in progress. Thanks for listening to the A16Z podcast.

If you like this episode, don't forget to subscribe, leave a review, or tell a friend. We also recently launched on YouTube at YouTube.com slash A16Z underscore video, where you'll find exclusive video content. We'll see you next time.