Catalyst with Shayle Kann - The complex path to market for low-carbon cement

Episode Date: October 17, 2024

Getting the construction industry to try a novel form of cement is like turning a giant ship. It’s hard to redirect the immense momentum behind existing ways of doing business, especially involving cement, the most energy-intensive ingredient in concrete. Industry insiders point to tight margins, concerns about messing with the ingredients that literally hold up buildings, and the long list of stakeholders will agree to try a new material.  So how do you get a risk-averse construction supply chain to try decarbonized cement? In this episode, Shayle talks to Leah Ellis, CEO and co-founder of Sublime Systems, a company that recently landed its first commercial deployment of decarbonized cement. (Shayle is an investor in Sublime). Shayle and Leah cover topics like: The long list of parties involved in a single pour of concrete Why the green premium is a burden for margin-squeezed contractors but “budget dust” for the building buyer How to align stakeholders, once there's buy-in from financers How a book-and-claim system could work for decarbonized cement How major concrete consumers, like governments, can create demand  Why the boom in data center construction creates a window of opportunity for decarbonized construction materials Recommended resources Catalyst: Pathways to decarbonizing steel Catalyst: Fixing cement’s carbon problem Latitude Media: With climate venture capital down, industrial investments had a ‘breakout year’ in 2023 Catalyst is brought to you by EnergyHub. EnergyHub is working with more than 70 utilities across North America to help scale VPP programs to manage load growth, maximize the value of renewables, and deliver flexibility at every level of the grid. To learn more about their Edge DERMS platform and services, go to energyhub.com. On December 3 in Washington, DC, Latitude Media is bringing together a range of experts for Transition-AI 2024, a one-day, in-person event addressing both sides of the AI-energy nexus: the challenges AI poses to the grid, and the opportunities. Our podcast listeners get a 10% discount on this year’s conference using the code LMPODS10. Register today here!

Latitude Media, podcast at the frontier of climate technology. I'm Shale Khan, and this is Catalyst. We sell cement to concrete ready-mix producers. The ready-mix then sells to a concrete subcontractor. That is, you know, passed on to the general contractor, and then, you know, the general contractor is sponsored by the developer, which may then sell to a building owner. This week, running through the long list of people you have to convince to get on board

if you want to sell low-carbon cement. When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million devices to manage 3.4 gigawatts of flexibility built for the moments when utilities can't afford uncertainty. Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform built for utility scale.

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Tune in as we unpack how progress is actually made. Listen to critical capital on Spotify, Apple, or wherever you get your podcasts. Catalyst is supported by Fish Tank PR, an award-winning PR firm focused on climate and energy tech, renewables, and sustainability. Fish Tank is known for generating prominent and effective media coverage for the brands they work with. If you want a PR partner that's thoughtful, shoots straight, and gets results, you'll like fish tank PR. To learn more about fish tanks approach, visit fish tankpr.com. That's f-i-s-c-h-fish-tankpr.com.

I'm Shale Khan. I invest in revolutionary climate technologies at energy impact partners. Welcome. All right. So a couple weeks ago at New York Climate Week, which I'm sure many of our listeners attended, I was asked to give a talk at a dinner about the state of climate tech. And I was thinking about how I think there are three waves of climate technologies at the highest level. The first wave is the stuff that is already fairly advanced and commercial and mature and it's proven.

It's reached escape velocity, right? And this is the obvious things like solar and wind and lithium ion batteries, maybe electric vehicles. There's a third wave, which is the stuff still in the lab. that still needs R&D, you've got to figure out how to solve a big problem, and we don't really have solutions yet. The second wave is the one that I find most interesting right now, and that's the wave of technologies that is just entering the market today. They're solving big climate problems, and they're commercializing, they are scaling, but they haven't really proven themselves yet, at least on the scale of the industries that they're trying to attack. We talked about this

kind of recently when we talked to Andreas Apley from Climborks about direct air capture, because I think direct air capture is another one that's in this category. And we talked about some of the challenges that they've faced as they've gone from the lab to the market. I think another one that fits that bucket very well is cement and low-carbon cement, new ways to produce cement without producing all the emissions that come with it traditionally. Cement is especially complex getting these new products into the market, because, as you'll hear, it's a very large multi-party value chain from the cement production itself to the actual building that the cement is going to go into.

So Sublime Systems, where I'm an investor, is so far, I think, pulling off this really complex value chain integration as well as anybody. They're building a large commercial demonstration plant in Holyoke, Massachusetts, and they've announced a bunch of off-take agreements for that plant. as well as big investments from two of the largest non-Chinese cement companies in the world, wholesome in CRH. But underlying the big announcements, there's always a lot more going on. This is true across the board.

And I find this one particularly interesting because of how you have to fit together this complex puzzle of actors in order to bring these new products to market in cement. So I brought on Leah Ellis, who is Sublime CEO and co-founder, to talk through what she's learning, as she pioneers a new cement blend to decarbonize one of the largest sources of industrial emissions in the world. So here's Leah. Leah, welcome back. Thanks, Shail. I'm delighted to be here. Let's start with your state of the market view.

Where do you think we are in terms of cement decarbonization today? What's happening out there in the industry? Oh, loaded question. It is an interesting time in cement making. You know, it's one of the world's largest industries by mass, one of the most carbon-intensive at the same time. Just like, you know, oil, it's a material that we can't do without right now. So we can't, you know, necessarily pump the brakes, but we can turn the direction.

And, you know, just the size and the momentum of this industry, it's often been described as a stoic industry. It doesn't turn on a dime. It's like the Titanic. And so I think we're seeing now is decisive, slow, but decisive movements in the cement industry when it comes to decarbonization. So this is not something that is, you know, on the trajectory. It was even six years ago when I started things, things are moving on the regulatory side. We're seeing investments in startups. We're seeing deployment. We're seeing tremendous branding,

but also people putting their money where their mouth is. really, really interesting time in cement. And what about just briefly talking geographically? I mean, I know a lot of cement making, a lot of the growth, a lot of the economic growth in the world is in the global south, and thus a lot of the new cement demand is in the global south, and thus a lot of the cement production, new cement production, is in the global south? Is there any difference in terms of the approach to, or I guess seriousness about decarbonization between what's happening in the developed,

world versus the developing world? Yeah, there's very interesting dynamics at play all over the world. I guess it'll start in Europe where, you know, they have this cap and treat system, the ETS, so there's carbon pricing being implemented and there's free allocations of credits that are disappearing over the coming years. So many of the largest cement producers, Holsom, Heidelberg, CRH and others are based in Europe. And so they're moving quite quickly. they realize this is going to, these regulations are going to double the price of cement in Europe, whether you're going to be paying for post-combustion carbon capture or you're simply going to be paying the carbon price. They're finally getting hit in their pocketbooks when they don't want this.

And they also, I think, recognize that post-combustion carbon capture is, you know, a temporary but not an ultimate solution. So that's Europe. Here in the U.S., there's a lot of demand for cement. So we are building here in the states. We're also importing about 20% of the cement we use, so shipping it from overseas. Here in the Boston area, we get our cement from Quebec, and we get it from Europe as well. Spain and Turkey and Greece, if you ever fly into Logan, you'll see these big cement terminals and massive barges where, you know, the flaps open and you look into the bowels of this big barge with, you know, a bunch of powdered mountain in there. So we're importing a lot of cement. Also, the average age of cement kilns in the U.S. is about 50 to 60 years old.

And we're starting to see some turnover in the capacity that's built here. So, for example, in the past year, here in New England, two out of the three cement plants have closed down. So the Dragon's cement plant in Maine, as well as Heidelberg plant in New York, leaving just the ravina plant left. So, and this is often not because the equipment is bust, it's because, you know, it's a function of your quarry. A cement plant is co-located with a limestone quarry. Limestone is 50% by weight CO2, so it makes sense to have those right next to each other. So there's an interesting opportunity here for Sublime to move into some of these brownfield sites, leverage some of the operational permits and also some of the crushing and grinding equipment that exists. And then, of course, going into the developing world, growing and urbanizing populations, that is sublime's focus. That's where greenfield cement plants will be built in the future. We want to make sure that these greenfield cement plants are built with sublime's true zero technology for the future so that we can avoid 50 to 100 years of cement emissions with each greenfield cement plant. And then there's also very interesting dynamics

in China, which as you may know is the biggest cement consuming nation on the plant. interesting things going on there with, you know, the collapse of Evergrown, and there's, you know, the fetish for building large skyscrapers and maybe diminishing demand for all of these construction products that they've been building. So a lot of cheap, perhaps low-quality cement may be flooding into the Southeast Asian market. And that's, you know, perhaps where new climate regulations may be put in place to sort of, promote domestic production of low-carbon cement in these regions. So very interesting times globally for cement. Interesting. Okay, here's what I really wanted to talk to you about. You and I have been chatting about this as Sublime has been entering the commercial phase and exiting the R&D phase, but I think it's indicative of a broader thing that is true certainly across the cement industry, but also across some other sort of industrial decarbonization sectors as well, which is that it's more complicated than you might think on the outside that it is to sell a new low-carbon

product. And that's a function of a bunch of things, including the value chain of the industry. So let's start here. Walk me through the value chain of cement. For a given cement pour, when there's going to end up being concrete placed somewhere in a building or sidewalk, whatever it is, who are all the players involved? Gosh, there's a lot of players. We sell cement to concrete ready-mix producers. These are the people that mix the cement with sand aggregate and water in these spinning trucks that you see. So one million-ton-per-year cement plant feeds about 100 ready-mixed concrete plants. And the way the industry is set up today is those two are vertically integrated.

So cement companies, LaFarge, Wholesome, CRH, etc., are, you know, they also own the ready-mix plants. The ready-mix then sells to a concrete subcontract. It's the folks that pour in place the cement, which is an art and science in itself. That is, you know, passed on to the general contractor. And then, you know, the general contractor is sponsored by the developer, which may then sell to a building owner. So there's quite a chain of custody here. And it's interesting because, you know, margins are very thin in the construction industry, especially for contractors and labor matters a lot, the cost of labor.

So getting things done quickly and with as least the time of possible. So it's very difficult to use an analogy that my colleague, the chief commercial officer, Zublime says it's very difficult to push a rope, which means to push a new product, which may have a green premium at first through all of these middle people. who, you know, they're just a pass-through for the cement, and they don't have, they're not celebrated for the low-carbon embodiment of their products, their craftspeople. Ultimately, it's the building owner that gets, you know, that the embodied carbon is within their hands. So they're able to pay the premium, but it's difficult to push the rope and to get that premium or that material all the way up to them. So we, you know, work with Microsoft.

That's one of, you know, the announcements that Sublime made recently is an MOU signed with Microsoft. And to buy the environmental attributes of some of our cement, I know from our schedule, we're going to talk about that later. But it's, you know, Microsoft has never bought cement. As many building owners, they don't buy cement. They buy buildings. And the people who build the buildings, they don't buy cement either. They buy concrete. And then the people who buy concrete, they don't buy cement, they buy the wet concrete mix and so on.

And so it's very difficult to sell low-carbon cement to the people for who have the purse strings of the project and for whom a premium is really budget dust at the end of the day because cement is very inexpensive. The total installed cost of concrete is 80% labor. And so even if there's a premium on the cement part, once you roll that into concrete and then concrete is a very small part of the building. But it is a big part of the carbon footprint. So if you're looking at it holistically, it's a small price to pay for a big impact, but then talking to a developer about that, they're sort of at a loss because they don't buy concrete. They're not really in control of it. So there's a massive challenge of lining up all of the stakeholders and getting their buy-in.

and that's some of the work that Sublime has been doing over the past years to generate that alignment, to generate that pull, and to push the rope, and to get everybody, you know, unstuck and to create that frictionless marketplace for low-carbon cement. Virtual power plants are becoming a reliable way for utilities to manage capacity, but enrolling devices is just the start. What really matters is confidence, knowing those resources will perform when dispatched and being able to prove it from the control room to the living room.

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or translate complex ideas and technologies into tangible, compelling stories that resonate with the media, fish tank can help. Check out fish tankpr.com. That's f-i-s-c-h-h-fish-tankpr.com. Okay, so you hit a couple things there that I wanted to talk about. And again, I think this is, it's not true of every industrial decarbonization sector, but it is true of multiple. Like another example where I've seen the same dynamic at play is a lot of stuff if you're

talking about chemicals, right? Ultimately, the question is, if you're going to sell some new, you're going to produce some new process to produce some chemical and it's decarbonized or it's environmentally friendly or whatever, and especially if it has a green premium in the early days, you've got to find the buyer of the green premium. The buyer of the green premium probably exists, but they're probably down at the end of the value chain. In the case of chemicals, maybe it's like going into plastics, it's going into a consumer product. And so whoever is the consumer-facing brand is the one who's willing to pay. But of course, in between your little precursor and that

shoe or pair of sunglasses or whatever it is, there's a long value chain and you have to get everybody aligned. So I think it's kind of similar to what you're describing, which is the end of your value chain is somebody like Microsoft who owns a building and has really serious decarbonization goals, but there are whatever you said, three or four parties in the mix in between. The other thing that you said that I think is a really key point is where is that green premium really, where does it seem really big and where does it seem de minimis in the context of any given buyer? So if it's a ready mix company and you're giving them a premium price, cement, that's a huge deal to them. As you said, super low margins, and that's all they buy,

basically. But if it's a building owner, it might be pretty small. And so it makes sense that you go to the end of the value chain. But then I guess this is the rub. You go to the end of the value chain, you get somebody to pay the green premium. That doesn't mean you're done. Right. Now you have to align everybody else, which means you have to get all the other parties that are somewhere along the way bought in on a different product. That's the key point, right? This is, you're, introducing something new. Now, they don't have to pay any extra for it along the way necessarily, but they have to sign off on it. So what does that actually look like? It looks very complicated. Yeah, so you can, you know, agree to build a Microsoft campus, but then another part of the

complexity is that Microsoft may build a campus. I mean, I know they're, they're, they're hyperscaling data centers, but, you know, your average building owner only builds a building once in a while. And if it's a developer, they often need to look for a tenant before they build that building. So there's some timeline flow of when this, when this happens. And it's a, it's a massive project that's run by the general contractor. There's structural engineers that need to be involved. Thankfully, sublime, you know, has this regulatory path through the performance-based standard for Portland cement, which is gaining adoption, especially with all these other low-carbon cement materials that are also falling under the standard. So you need structural engineers,

you need, you know, the developers, the general contractors. And most importantly, I think, is the concrete subcontractors. So the folks that literally spend all day finishing in place in concrete. And I've had the distinct privilege of going to a job site and spending hours watching people place concrete. There are men whose jobs it is to rake wet concrete, spread it, vibrate it, take out all the bubbles and, you know, go through varying phases of polishing. You will not believe how many versions of a trowel exist to get the right finish. And if, you know, these performance-based standards, the ASDM, the ACI, all of these things are necessary, but not sufficient in the

eyes of the concrete subcontractor because they have to make sure it finishes in a way where it doesn't hurt that man's elbow. Because if you get a group of like 20 contractors complaining because this concrete is too stiff or not behaving in a way that's not encapsulated by any of these regulations, you end up having sort of a mutiny on the job site where you have 20 dudes complaining to that one guy who's driving the cement truck. So that's the type of friction that you don't want to have in the job place, especially where labor is so important. So everybody has to be bought in. This material has to be qualified by everybody. It has to be blessed by everybody. Then it has to be done an incredible third-party way where there's case studies and white papers to really show. And there has to be a lot

of listening on the part of the product developers, like Sublime and others, to make sure that this material is performing in the way people expect. Otherwise, you know, you'll have, you know, you'll have a hold up in the middle. So is what you're learning that you need to embark on this education campaign at basically every step in the value chain individually, such that the friction is gone? Or is there a way to, does anybody in this ecosystem, like the biggest players are the big cement companies,

as you said, Holsom and CRH and Heidelberg and others? Like, can they push new products through? Do they have a history of doing that? Maybe not for any environmental, reason, but for other reasons? Or is it really just you got to go to every step individually for every single deployment or project? You need the pull and the push. So the person that really can make this unstuck is the owner of the purse strings where this premium is small in the grand scheme of things, especially if they're counting carbon. So that pull from the building owner,

which we've seen at sublime through WS development, who's developing the seaport area on Boston, And as soon as they say, we want this, we'll pay for it. Get it done. We'll pay you. Just, you know, get it done. That makes everything go smoothly. Now, the ready mix is willing to stock it. The developers, the contractors place it, etc. But it also, the cement folks, the CRH and wholesoms and the concrete contractors that they're vertically integrated with, they, concrete plants, you know, concrete. as a perishable product when as soon as you mix water with it, it has 90 minutes until it sets and hardens and you do not want it to harden in that truck, which is about a half million dollar truck. So they occupy some of the most central and desired plots of real estate in the hearts of cities so that they can get concrete through traffic to where it needs to be poured. So they're very space

constrained and every square foot of land is important to them. So if they have to dedicate a $50,000 silo to a new product, they want to make sure there's enough demand for that product, that that silo is constantly being filled up and depleted all throughout the day, and that customers are using that entire silo, because you just don't want to have a silo of material that only gets called upon, you know, once in a blue moon when there's like a Microsoft project, for example. So they are also looking for the demand signal. They're wholesome CRHs at the bottom of the rope where it's difficult to push. they're looking for buy-in from that pulling of the rope. And that's when you get this whole thing

moving. You mentioned it before, but I guess I want to talk about the book and claim concept in this market. Book and claim, of course, being you talked about, so Microsoft, the announcement that you guys made with Microsoft is Microsoft buying environmental attributes, right? So, because one of the complexities here is, okay, you're ultimately, you're going to produce cement. That means you're going to be producing, you know, you're going to have large centralized cement production just as cement production exists today. And it's difficult to ensure that all of that physical cement that you produce goes through exactly the right radio mix providers to exactly the right projects on exactly the right schedule, such that that demand is all filled up perfectly

exclusively with your cement. That would be the physical delivery version. That's like monumentally difficult to pull off. So the other version is you sell the environmental attributes. Somebody buys the green premium. They take credit for that on a project elsewhere, and you sell commodity cement, effectively, absent that into the normal value chain, which we do in other sectors. This is renewable energy credits in energy, which people are familiar with. And lots of other booking claims systems have been discussed. People are talking about it with sustainable aviation fuel, for example, where you're not always going to take physical delivery of the SAF. that you're buying. Do you think that book and claim is like the, is that the answer here? Is that what

needs to happen? And if so, what is the ecosystem that needs to be built around that? Yeah, it is one of the things that need to happen. Of course, there's no silver bullet that makes this easier. But book and claim is one of the things that solve a lot of logistical problems. It's very similar to renewable energy credits. You know, cement is like electrons, in the way that electrons can't be generated in Boston and then sold to a software company on the West Coast. You know, electrons enter the grid and are transmitted locally. So divorcing the physical electron from the environmental attribute and letting those get paid separately allows all of the electrons to be used locally. So cement very heavy, very cheap, it doesn't travel well unless you're shipping it by barge.

It allows all that cement to be used locally for all the local silos to get filled, for all of the GCs to be accustomed to it, for that to be local, because not everybody is going to have the appetite for that premium at first as these large software companies that have big profits, low scope one and two emissions that are not burning fossil fuels themselves, large scope three emissions. And so they have, you know, they're taking a leadership role, which I think is very admirable. And in paying the green premium at first to allow this material to flow in the natural ways that it does flow so that the ready mix producer doesn't have to wait for when Amazon does a project and get that literal cement to that thing in a date that will float. It really, it really simplifies the scale up and deployment story. And then it allows Microsoft to understand that that material is. qualified and to lock up future demand and to future proof their own supply chain when we start to develop increasingly large projects over time.

So presumably if you're going to introduce a larger book and claim system, like you need a central repository, you need a database, you need crediting and certification and so on. Are those things being developed in cement world yet, or is it still too early? They are. And so this MOU we have with Microsoft, we're going to do this between Sublime and Microsoft often agree on the measurement and the verification and the benchmarks by which we measure the carbon avoidance that sublime product is attributable to. But there's also movement in the industry broadly, which I think is very important, mirroring what has been done with renewable energy credits and

with a SAF, a sustainable aviation fuel book and claim system. So RMI, Rocky Mountain Institute, and GMA, the Green Materials Association. I know they're working close. and they announced this at a White House event for low carbon cement and concrete earlier this year. It's very interesting, very complex. And this type of thing isn't something that a startup could do. So I'm delighted that someone, some incredible third parties are taking the torch and developing the systems and measurement verification and rules by which, you know, we can all participate so that they can raise a large fund from Microsoft, and others and have multiple startups participate. It will be a lot of effort to create consensus from all of that.

Because there's a lot of moving pieces. And it's different from, it's very similar to electrons in some ways, very different in others because cement is, you know, electrons and SAF, like you use them and they're gone. But cement, you use it and it exists. It's like a monument. It's like, and it also takes a lot of artisanal. work. There's a lot of trades that go into making this and addressing that, those, the middle people in the value chain that we discussed earlier who don't get credit for using low carbon cement.

That's an interesting question of like, you know, with double counting. You absolutely don't want double counting of the credit, but I think you'd be remiss not to acknowledge the physical thing that was created and to point to it and to show the public, this was made. with low carbon cement. And so people can walk by it and tell their children, like, I made that out of low carbon cement. That is one of the coolest things in my experience is to see things that you've built and to feel responsibility and pride over that. But to also have, have it say in a book and claim system, this was enabled by Microsoft. You know, this person gets the low carbon sidewalk, but, you know, the credits in the accounting systems is being, you know, Microsoft is, is

subtracting that from their thing. Because not every, if you're using flooding a local market with cement, like, you know, mom and pop is not doing their carbon accounting, right? So there's only a certain number of companies that are going to do that. Right. And just to get a little further into the weeds of it, the thing with Renewable Energy credits, I think they served a pretty valuable purpose for a long time. Ultimately, though, there was also a fair bit of not quite abuse, but just like what people would end up doing is you'd be a corporation, you'd want to say that you're running entirely a renewable energy, so you'd buy a bunch of really cheap Texas wind wrecks, right? You'd pay like $3 a megawatt hour for them, and it wasn't clear that you're actually decarbonizing anything.

Like your purchase of those things was not additional. It wasn't enabling anything that wouldn't have happened otherwise. You were just like slightly further subsidizing some existing Texas wind projects. And so I don't think there's quite as much risk of that in cement decarbonization. The main thing it seems like you need to do is have really good accounting of emissions avoidance. So for any given ton of cement that you are producing, how much are you actually avoiding? What is the alternative source of that cement? And as long as you have that clear, it feels like that risk is perhaps lower. But I'm sure there are other areas of complexity that will be introduced in this version of book and claim. Maybe it's exactly.

what you said. There's like more parties that could theoretically double count. So you have to be even more careful about that. Right. And I think it will evolve. I mean, we're really in the early stages of technology development and even like operationalizing post-combustion carbon capture. I mean, there's an interesting question for me of, you know, we create carbon avoidance credits. And carbon avoidance has historically been perhaps a dirty word in the voluntary carbon markets where, you know, you avoid carbon, it's like, I'll pay me and I won't cut down this forest and that's sort of shady, but what Sublime is doing is technology-enabled carbon avoidance. Our competitor is post-combustion carbon capture. There is a 45Q tax credit for, you know,

it's like $80 a ton for removing CO2 from a flu stack, and we don't have that. So if you are getting that tax subsidy, like, but also someone is paying for that environmental action, attribute, like, are you really being catalytic in that sense if some, if you're already getting paid for that? So I don't, I don't know the answer. I'm a nerd, right? Like, you know, I'm just developing this technology, but I know there's a lot of complexity. And the beautiful thing about working in climate, I think, is that we're all very mission aligned. And, you know, a lot of people are very smart in doing this because they care. And I think we're going to figure it out, but it's going to be hard, right? So the other thing I wanted to ask about is the other thing that's a little

different I think about the cement industry versus many others, is that there is one, or I guess an amalgamation of very, very large dominant buyers, which is the government, right? Whether it's federal government or state government for roads and sidewalks and whatever. So what's happening there? It's true in other sectors, the government is a big buyer of other stuff too, but I think they are disproportionately large buyers of cement relative to many other products. That's right. So the staggering fact is that a U.S. government buys half of the cement that's produced in the United States. And that's through the General Services Administration, which has 300 million square feet of floor space. So they're the biggest real estate portfolio in the nation.

It's the Federal Highway Administration. It's the state DOTs. It's all of the public infrastructure as well as the Army. So I don't think there is an industry where, you know, or perhaps maybe the defense industry where you're defense yeah where like you know the government has this really big role and so that you know where there's a chicken and egg problem or a stalemate between supply and demand this is where government can play a massive role in creating the demand signals that unstick this problem of green premium versus versus volume because as the volumes get bigger the premium goes down um so they have a

huge role to play. And this is recognized. So, you know, the GSA has this green proving grounds initiative to qualify low carbon building materials. Sublime is part of that. There are also grants that are being administered through the DOT for state DOTs to qualify low carbon building materials. It is working. And there's also two states, two bills, one passing through the House, one through the Senate, I believe the one passed through the House recently. And these are bipartisan bills. So they have a Republican sponsor, a Democrat sponsor, all about low carbon cement and asphalt. And I find that so interesting and important. And these bills are about, you know, address, you know, acknowledging the importance of low carbon building materials, making sure that

government agencies are creating the right demand signals for them, implementing performance, space standards, which allow you to change the composition of the cement without changing the performance. All of these things are so important, and I think are a big part of that turning of the Titanic that is happening slowly, but faster than ever before. Okay, so just to wrap up on the demand side where you see this market heading, I mean, you've talked to on Microsoft. You mentioned Amazon. So obviously, as in some other sector, You know, we've got early leaders in procurement of low-carbon cement here who are large tech companies with serious decarbonization goals.

That's true in other sectors, too. What do you see happening after that? If they're the tip of the spear, what comes next? Yeah. You know, this is a challenge for every startup to identify your early adopters, but then also to address the bulk of the market, which, as we spoke about before, is largely, in the developing world. So, you know, Sublime's mission, why I'm doing this, why all of my colleagues do this, is to have a swift and massive impact on global CO2 emissions. So what that

means to me is doing this swift part here in the U.S. where, you know, we've got our HQ, you know, we've got this grant from OSED. It's $87 million for our industrial demonstration program. So this is where we move swiftly. This is where we deploy. with the massive step two being massive, this is where we have to take that made in America innovation and move it to where it's needed most because of course like, you know, CO2 has no, doesn't recognize country boundaries. And so we take this technology and move it to India and Africa as fast as possible so that we can avoid those 50 to 100 years of emissions that come from greenfield cement plants. And that's sort of the one-two punch that,

sublime, we're hoping to set ourselves up to execute so that we have that swift and massive impact. It is a race against time. You know, the hyperscalers are building data centers now in the next two to five years. There's a window of opportunity here where we want to move very quickly with these whale consumers, the Amazon, the Microsoft. And there's also a window of opportunity in the developing world. So we want to, you know, take advantage of these two things that are moving. And, and get that speed and scale. All right, Leah, this was fun as always. Thanks for coming back.

Thanks, Shale, and thanks so much for walking out on cement with me. It's more interesting than anybody ever imagined, and I'm always delighted when someone shares my interest in this. Leah Ellis is the CEO and co-founder of Sublime Systems. This show is a production of Latitude Media. You can head over to Latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. Prelude Backs Visionaries, Accelerating Climate Innovation

that will reshape the global economy for the betterment of people and planet. Learn more at Preludeventures.com. This episode was produced by Daniel Waldorf, mixing by Roy Campanella and Sean Markwan, theme song by Sean Markwan. I'm Shao Khan, and this is Catalyst.