Startup Series: Heirloom

May 20

Today's guests are Shashank Samala, Co-Founder & CEO, and Noah McQueen, Co-Founder & Head of Research, at Heirloom.

Growing up in Southeast India, Shashank saw firsthand how climate change was impacting people. Prior to Heirloom, Shashank was an Entrepreneur in Residence at Carbon 180 and the Co-Founder & VP of Product at Tempo Automation. Before Heirloom, Noah pursued a Ph.D. in chemical engineering and currently serves as a consultant for CarbonDirect.

Heirloom is working towards a more resilient, equitable, and prosperous world for everyone. The company focuses on leveraging carbon mineralization as a climate solution with the hope of removing a billion tons of carbon from the air by 2035. Heirloom's technology enhances a natural process, called carbon mineralization, to help minerals absorb CO2 from the ambient air in days rather than years. By combining the best engineering and nature, Heirloom offers the most cost-effective and scalable Direct Air Capture solution in the world.

In this episode, Noah and Shashank walk me through their respective climate journeys and how they founded Heirloom together. They explain what makes Heirloom technology unique, its mission, and the larger Direct Air Capture landscape. We dive into the barriers holding DAC back, the voluntary market, and why this sector of climate tech is hard to deploy at scale. We also touch on the effect of policy and regulation on climate tech. Noah and Shashank are great guests, and I enjoyed discussing Heirloom with them. This is a must-listen for those interested in learning more about DAC solutions and their importance in addressing climate change.

Enjoy the show!

You can find me on Twitter @jjacobs22 or @mcjpod and email at info@myclimatejourney.co, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.

In Today's episode, we cover:

An overview of Heirloom and how the company was founded
Noah and Shashank’s respective journeys and transitions to working in climate
How the company is leveraging carbon mineralization
What makes Heirloom technology unique, its mission, and the larger Direct Air Capture (DAC) landscape
Barriers holding DAC back and why this sector of climate tech is hard to deploy at scale
Key phases to bringing a company like Heirloom to market
The role of policy and compliance markets in scaling a company like Heirloom

Jason Jacobs: Hey everyone, Jason here. I am the My Climate Journey show host. Before we get going, I wanted to take a minute and tell you about the My Climate Journey or MCJ as we call it membership option. Membership came to be because there were a bunch of people that were listening to the show that weren't just looking for education, but there were longing for a peer group as well. So we set up a Slack community for those people that's now mushroomed into more than 1300 members.
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There's a bunch of great things that have come out of that community, a number of founding teams that have met in there, a number of nonprofits that have been established, a bunch of hiring that's been done, a bunch of companies that have raised capital in there, a bunch of funds that have gotten limited partners or investors for their funds in there, as well as a bunch of events and programming by members and for members, and some open source projects that are getting actively worked on that hatched in there as well.
At any rate, if you wanna learn more, you can go to myclimatejourney.co the website and click the become a member tab at the top. Enjoy the show. Hello everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help. Today's guest is Shashank Samala, CEO of Heirloom.
Heirloom's on a mission to accelerate our planet's transition to a carbon negative society. Their aim is to remove a billion tons of carbon dioxide by 2035 using natural processes to engineer the world's most cost-effective direct air capture solution. Naturally occurring minerals alongside forest, soils and the ocean are one of our planet's most vital carbon sinks and over geological timescales carbon dioxide in the air and water chemically bind to these minerals and permanently turn to stone.
Heirloom's technology enhances this natural process called carbon mineralization to help minerals absorb CO2 from the ambient air in days, rather than years, I was excited to bring Shashank on the show to learn more about Heirloom's approach. Shashank's story of founding a company in an unrelated space and scaling it over many years before transitioning into now working on direct air capture.
And also just a general conversation about where direct air capture is, where it needs to go, some of the barriers holding it back, and what Shashank believes are some changes that could most accelerate direct air capture's widespread deployment. Shashank welcome to the show.
Shashank Samala: Thanks so much for having us, Jason.
Noah: Yeah thank you.
Jason Jacobs: Thanks for coming. Yeah, so excited about what you're doing at Heirloom and excited to learn more about it and to give the listeners a chance to get educated on it as well. So with that, maybe we'll just take it right from the top. What is Heirloom?
Shashank Samala: Heirloom is a direct air capture company and leveraging carbon mineralization. And, you know, we have a goal of removing a billion tons from air by 2035. And we think we have a low cost and highly scalable and lower technical risk approach to get there and we're happy to work with this amazing team we have.
Jason Jacobs: Great. And I have lots of questions about the company, but before we get too far down the path, maybe talk a bit about the origin story, how it came about, when it came about and most importantly, why it came about.
Shashank Samala: Absolutely. So personally I grew up in Southeast India, and growing up saw first hand impact, negative impacts of climate on people, increasing levels of cyclones and droughts and, and so forth. And, you know, we didn't call it climate change back then, but then the increasing frequency of it really impacted lots of livelihoods.
Personally, I got a, you know, big break, moved to the U.S. and went to good schools, eventually started a company called Tempo Automation, which essentially uses software and robotics to make manufacturing of electronics much, much faster to help engineers prototype a hardware and get to production faster. So now we help many reusable rocket companies, satellites, medical devices, consumer electronics.
We built electronics for the Mars rover from NASA that just landed last month. And you know, it was great building Tempo. We hired a great leadership team and few years ago, I started thinking, hey, you know, we're helping build a future, but in some ways, future is already here. Uh, as Kim Stanley Robinson says, "It's, it's, it's already here. It's just unevenly distributed." And I thought, hey, climate change is really one of the biggest threats to that equality of opportunity.
So I started learning a lot about it, and I actually ran into Noah Deich from Carbon180 at Matt Rogers' place. And Matt Rogers was actually one of the early investors at Tempo. He's a co-founder of Nest, and learned a lot about carbon removal.
Jason Jacobs: Those aren't his... I mean his most notable achievement is coming on the My Climate Journey podcast as a guest.
Shashank Samala: Oh, awesome.
Jason Jacobs: [laughs] I'm just joking. But yes, he did come on as a guest. We know Matt well.
Shashank Samala: Matt's awesome. And he's really the one to blame, uh, for me to be here. So started thinking a lot about climate. And when, and Noah was telling about carbon removal, it's like, hey, why are we not already doing this? And you know, a few minutes later, the IPCC report came out and actually, you know, officially sort of talked about the scale at which carbon removal has to happen, you know, billions of tons a year.
And it's not just a nice to have, but it's a must have now, right? It's, if you care about 1.5°C or 2°C, it accelerates our timeline to get there. And I was looking at many other technologies as well. It's like steel decarbonization and concrete, hard to abate sectors, right, agriculture. And along all of these dimensions, I came up with my own criteria about what things I wanna work on. And, you know, the highest potential to the lowest effort from an entrepreneurship angle was carbon removal by far.
And this was a few years ago, we started learning a lot. I read the Negative Emissions textbook and you know, many, many papers got connected to the researchers and scientists behind all these papers. I came up with my own criteria about what does high quality removal look like, things like permanence and additionality and, and all those things we'll get to later.
And I was unconvinced for a long time and, you know, carbon mineralization specifically caught my attention because it was low cost and highly permanent. And so you were getting really good properties of removal for low, lower cost, but had a bunch of drawbacks with land, land use and verifiability and so forth. So we continued to look, I got connected with Peter Kelemen who's amazing.
And he's been working on the concept with [inaudible 00:07:14] about this one approach that marries natural properties of minerals with direct air capture to get to lower costs. But eventually we worked, continued to work on it, helped fund it. And we about a year ago, early last year left full-time Tempo to focus on this Heirloom full-time, built a team. Noah had joined, and now we're sort of off to the races continuing to build out the team and going towards a demonstration plant hopefully next year.
So yeah, that's sort of the backstory, if you will. And yeah, Noah is a big part of the story as well so we'd love to have him cover some of it.
Jason Jacobs: Yeah, Noah it'd be great to hear a little bit about your journey and what led you to Heirloom and what you're doing with the company?
Noah: Absolutely. So a little bit about my background. I actually met [inaudible 00:08:00] at the Colorado School of Mines in my junior year pursuing chemical engineering. So I chose chemical engineering because it felt like it would utilize my skillset, I'm very math and science minded, in a way that could positively impact society. So that's always really been my driving force. And when I, I took a carbon capture class in my junior year at university, and it kind of opened my eyes to this whole world of carbon capture and storage as well as carbon dioxide removal.
So I, in my final year there decided to continue into a PhD program with Jen, fantastic mentor, fantastic person. And I followed her to Worcester Polytechnic Institute. And in my first year of my PhD there, Peter Kelemen at Columbia came to us with this idea for a passive direct air capture process that uses mineralization.
And from there, we kind of work to figure out the details of this process, nearing the direct air capture side with carbon mineralization, with some co-inventors, including Greg Dipple at the University of British Columbia and Phil Renforth at Heriot-Watt university. And we really, it was very interesting cause we iterated over a bunch of different process designs and tried engineering the system and then unengineering the system.
And ultimately the most economic way to do it was the passive way. So we developed this concept for what the process might look like and perform to preliminary technical economic analysis that led us to believe at scale, we could achieve costs under $50 per ton of CO2 removed from the atmosphere, which is a really transformational number in this discussion.
So this really solidified the fact that we thought it could be an impactful technology to combat climate change and contribute positively to climate change mitigation. And that's really when Shashank entered the picture and we started these bigger conversations of what would it look like to commercialize this technology.
And seeing and hearing about that vision for commercialization and how impactful, like having done some of the calculations myself of how impactful this process could be really drove me to believe that it could be one key technology in helping mitigate the harmful effects of climate change and pursuing carbon dioxide removal. So that's kind of how I got involved in, in Heirloom.
Jason Jacobs: And Shashank, one question I have for you before we jump in to the Heirloom bit specifically is just as a long time entrepreneur who was not building a climate focused company and transitioned into putting climate front and center right in the thick of it with direct air capture, which doesn't feel like the bunny slope, how has that transition been? And, and what would your advice be for other entrepreneurs who maybe are climate motivated and looking to follow down a similar path?
Shashank Samala: Yeah, absolutely. I mean, I have so much to say here. I think climate has been in the back of my head I remember when taking nuclear engineering classes at, at school. So I think fundamentally where we are right now are, you know, that we have a bunch of technologies, solar, wind, EVs, and a few of the ones that have gotten to maturity and continue to come down the cost scarves. So we were able to get down a lot of the low-hanging fruit.
And I think what's remaining are these harder to abate sectors that are not easy. And I think we need a lot, lot more entrepreneurs to tackle this, right? Like we we're literally retooling the economy. And, you know, I learned a lot about at Tempo building factories and understanding unit economics and understanding most importantly the costs learning curves. How do you pair the power of markets, leverage the power of markets with technology scaling to come down the cost curve?
And I think fundamentally climate tech companies is all about that. So if you're an entrepreneur in climate tech, everyday you're thinking about, everyday you're thinking about [inaudible 00:11:45], right. Like how can I accelerate the pace at which I can double my production, accelerate this pairing between a supply and demand. And you know, you, we wanna be creating this flywheel effect between supply and demand, where while the costs are high leverage markets that they're able to bring up your scale, help you bring down the costs, which should unleash new markets for you.
And hopefully that will also create the next doubling and so forth strategically coming down that cost curve. And we've done that to some extent at Tempo. So, you know, capture specifically is very interesting because CO2 is so diffused in the air, right, it's, it's 0.04% of the air. So it's very much a chemical engineering problem. Though I think coming from an industrial automation background, I wanted to sort of turn this into chemical engineering problem to more of an industrial automation problem as well.
Because in this role of automation, but there's a lot of great technologies that have been invented in other areas like technologies that are trivial in other industries can be transformational in some new ones, if you can integrate them well. Not that this is not a chemical engineering problem either. Like this is a very big one for us, but I think bringing in things that I've learned in other spaces and leveraging them here was key for me and, and gave me more confidence.
Hey, like I think this is from a technical risk point of view. I can see how all the pieces come together. I can see a path to execution. And when I did that, I was able to say, hey, I don't think this is a massive moonshot. I think, I actually can see a clear path to getting the job done. So I have a lot more to say about that, but yeah, that's sort of my initial perspective on it.
Jason Jacobs: As a newcomer coming in as I was making the rounds and trying to figure out where to anchor it, it seems like there's a contingent of the climate world that are against these kinds of technological solutions, like direct air capture. And it seems like one element is cost and another element is just scale and the amount of dent that it can make relative to other maybe more natural types of solutions. So before we get into the specifics of Heirloom's technology, I guess I'll just put that question for you is why do you think there is this vocal contingent of the climate world that is so opposed to things like direct air capture? And do you think there's any merit to the concerns that they have?
Shashank Samala: Yeah, I think constructive feedback from the community is always good. I think the more transparent the carbon removal companies like us can be, the better we can have that dialogue. And I think more and more so than the last few years, I think almost everyone is in the camp of, hey, we definitely need direct air capture and we definitely need carbon removal. And thanks to folks like Carbon180 and a few other groups that showed the science behind this need.
So, and I think the simple answer is for that debate even is hey, like should be focused our efforts in the things that we know work versus creating new technologies. And I think there's a lot of merit to that argument. It's like, hey, there are a lot of great technologies today that we need to accelerate to deploy and I totally agree with that. Though there are also newer technologies that are just important to the timeline at which we need to accelerate towards a carbon negative society.
So at the end of the day, it's like timeline is sort of the simple answer to that. I wish we weren't in this position, but the reality is there is billions of tons of CO2 that... it's a carbon mass problem, right? Like there's a limited carbon budget and you have to both reduce and remove. The main thing that I think a lot of folks don't realize is a lot of the economy is still just so ingrained into fossil fuels, like harder to abate sectors that like concrete production and steel production.
There's, you know, new plants that are being built today, starting today in China, where the committed carbon is decades into the future. And even if we were to aggressively shift away from... try to decarbonize these technologies, they'll be decades away from actually doing it fully. You know, even in agriculture, when you think about it, right? Like even if alternative meat completely decarbonizes and we will still likely have a billion cows roaming around in 20 years, burping methane.
And so it's fundamentally why we need a stop gap as well as an accelerant that can work across all of these hard to abate technologies. And the nice thing is when, when you think about Wright's Law, for technology to really get down the cost curve, you need as many applications of it as possible. Like when you think about solar and lithium-ion batteries, right? Like lithium-ion batteries started with consumer electronics, then electric vehicles.
Now they're looking at utility storage. So you need those markets to bring down these costs. So for direct air capture, I look at all of these industries that are very, very hard to abate. There all chances for helping direct air capture come down the cost curve.
Noah: Kind of adding onto it, Shashank just said is that it's not kind of an either or, we need to do both. We must both plant trees and do more nature based solutions and also develop and deploy technological approaches like direct air capture. And there are both advantages and drawbacks to both of those approaches. You know, direct air capture is quoted as being very expensive and you know, it uses chemicals, and it's an engineered approach to removing carbon from our atmosphere and planting trees requires a lot of land area, and it's not necessarily permanent in the way that it stores the CO2.
So it's not so much that we should either plant trees or pursue direct air capture, but we really need everything. And more than we have right now to adequately address the carbon problem of our society.
Jason Jacobs: When it comes to deploying direct air capture at scale, what are the biggest barriers holding it back? And what are some of the more promising solutions to address them? And a follow-up that we can come back to is just within that realm how did you go about navigating the different solutions to land on the one that you ended up focusing on with Heirloom?
Shashank Samala: Thanks for that. So I think a couple of things that come to mind that could be accelerants of DAC deployment, I think a lot of folks would say policy, and we certainly agree with that. And even in just the last couple of months, it's amazing to see how much new R&D dollars and infrastructure some of the markets that are going to be created haven't been coming online since the Biden administration had gotten in place.
So, you know, there's a lot more to go, a lot more clarity in some of these regulations like 45Q that we will need as well. The other thing is recruiting and bringing in talent from other industries into DAC and carbon removal. I think recruiting is just a massive industry, and we're right in the cusp of it, and we need a lot more folks to be excited and to be coming in and helping scale. So for me, it's pretty exciting to be catalytic at the beginning of this adoption. Noah, what do you think?
Noah: I completely agree, especially with the aspect of creating carbon markets in society. So we have policies in the U.S. like 45Q and low carbon fuel standard, but it's really creating a universal compliance market that can accelerate the development and deployment of some of these processes. In addition to that, I believe that more federal funding into deploying carbon removal technologies at scale would be a really big accelerant for some of these processes.
There's a lot of grants and money moving into developing [inaudible 00:19:27] sorbents or process improvements on the research scale, but we really need to start rolling out some of these approaches on the industrial scale if we really wanna scale them up and make a difference on climate. So since a lot of these systems are capital intense, funding federal dollars into their deployment could really drastically accelerate the rate of deployment and the installed capacity that we have for these carbon removal approaches specifically with reference to direct air capture.
Jason Jacobs: And what are some of the most promising approaches to direct air capture? And also just if you had to look into the future, do you think that it's gonna be a winner take all, or will it be a portfolio approach? Like how, how will the direct air capture market play out if you had to venture I guess?
Shashank Samala: Yeah, for sure. So, first off, and today we didn't talk about voluntary markets yet, but I think it's pretty amazing. This didn't happen a few years ago when I first got started with this. But, you know, today we are seeing a lot of big companies that are socially responsible paying for carbon removal as to help decarbonize their emissions and their supply chain.
So I think we pretty much have a much higher demand than supply for DAC and that will probably continue, especially as compliance markets like LCFS grow and other compliance markets across the EU and the U.S. come online. So, you know, that's exciting from a market's angle, which has completely changed in the last six months to a year. So what a promising approach for DAC. In many ways, this is the engineering challenge of the century, and this will likely not be winner take all for many reasons.
So I think maybe to think about DAC, I think we should sort of think about where costs come from, right? So DAC, I think a simple framework to think about is it's two by two framework where on the front end you have the capture part where you're capturing CO2 with some sort of sorbent, there's a custom or something natural. So there's CAPEX and OPEX associated with it. So for some companies, there is these fans that are in custom membranes that drive some of that capture.
And then there is the OPEX associated with that, so the energy that drive the front end. And in the backend, again, same thing we have regeneration of that sorbent. So any sponge, if you will, that binds onto the CO2 molecule on the front end, you have to regenerate that sorbent so by pulling out the CO2. And then there is CAPEX associated with it and an OPEX, the energy to regenerate.
So if you're entrepreneurial, if you're a scientist, you're looking at this two by two matrix and you're thinking, hey, what can I really do to make costs low? And when you look at the backend, a lot of this regeneration is limited by thermodynamics. So you sort of kind of fighting with physics to some extent, and there are some other approaches who can really drastically take that to a much lower energy.
But when we look at this two by two matrix, we said, "Hey, on the front end, there's a lot more we can do to make it simplified and be clever about engineering actually binding onto the CO2 molecules." So, you know, first what we did is sort of passive and we started using these naturally occurring minerals, and then we can go deeper into that, but we think that meaningfully coming down on costs on the front end will change the economics of DAC.
So at the end of the day, we were going to have to remove billions of tons of CO2 from air. You know, I think maybe extract oil at the tune of 4 billion tons of oil per year or something like that. And according to IPCC, we need a lot more of, mine a lot more of that CO2 from air. So likely demand is going to outstrip supply for decades to come. So you're likely gonna have many companies doing this, just like there's tens of companies, I think 20 or 30 oil companies that each are worth just tens of billions of dollars are probably gonna see something like this in carbon removal as well.
And, and that's exactly what we need to, I hope every approach works. To some extent you can debate about the merits of costs on each one, and we should have constructive dialogue about which ones we should bet on. But at the end of the day, personally as a climate advocate, I hope every one of these will succeed for climate targets, but also each of them, there's just gonna be enough demand and just mass market for each one of them. So much longer answer than I hope for. But Noah [inaudible 00:23:42] your thoughts.
Noah: I agree with the portfolio, uh, part that. It's not gonna be just one DAC solution. It should be many DAC solutions. And there are a lot of very promising solutions out there in addition to Heirloom's.
Jason Jacobs: You've touched on a little bit, but maybe just speak more directly to the Heirloom approach and what makes it different.
Noah: Heirloom approach marries the natural properties of earth, abundant minerals with a process for direct air capture. So we start with these earth abundant minerals that are specifically either magnesium or calcium carbonates of which there are trillions of tons in the earth's crust, specifically calcium carbonate, which is limestone and a feedstock for cement and concrete production. So while the process works for either magnesium or calcium, I'm gonna kind of illustrate how it works using calcium based minerals.
So the carbonate rock that we have is first sent into a high temperature reactor which is called a calciner. And when the calcium carbonate reaches higher temperatures, which is roughly 900 degrees Celsius, it breaks down into its two component parts, which are CO2 and calcium oxide. The calcium oxide produced from this reaction is essentially a fine white powder. And the powder is highly reactive with CO2 at room temperatures and pressures.
And what this means is that it will naturally react with the CO2 at room temperature, pressure, and atmospheric concentrations to reform those initial carbonate minerals and capture CO2 from the air in the process. So more specifically, we spread this mineral out in a method that reduces land area requirements for the process. And while it occurs naturally, we found ways to accelerate the rate at which these oxides react with CO2 on the order of two weeks to a month, as opposed to longer periods of a year or, or even longer.
Additionally, this approach reduces, as Shashank mentioned, those front end energy requirements associated with director capture systems by eliminating the use of fans and pumps that are used in some of the more engineering, what are called contactors, which facilitate the contact between the CO2 and the sorbent being used. After our materials are carbonated we can recollect them in the form of calcium carbonates.
And this allows us to feed them back into that high temperature calciner and reproduce the CO2 and calcium oxide. We can then continue this process cyclically, and after each of those calcination steps are the steps in the high temperature reactor, the CO2 can be captured and stored underground in sedimentary basins, which are the same types of basins that held carbon for millions of years in the form of oil. So that's essentially, uh, an overview of how our process works from start to looping.
Jason Jacobs: And when you think about staging, so how does a company like this go to market? What are the key phases? What phase are you in today? And, and what are the biggest things that you're trying to solve for?
Shashank Samala: For sure. Yeah. So for us, there are two main trusted technology. So is the passive contactor. And, uh, it's not fully, you know, even though we are leveraging natural properties, there is a bunch of R&D and inventions that take place in ensuring that we can enhance and reduce... enhance the reactions and also reduce land area. And so that's one piece of technology and the other one is obviously calcination.
So the first phase is really, you know, getting to a, a full cycle integrated cycle where we can do looping and that's what we are progressing towards. So we want to build a demonstration plant, some sort of scaled on model of what an industrial plant looks like. And after that it's going and designing and commissioning an industrial plant. And for us, our goal is to make that industrial plant profitable.
And we think that we can be much, much lower scale in the initial size of that plant for it to be profitable. I don't think we need to be in the hundreds of thousands of tons, for example. And I think that's key because as we mentioned earlier, we need to start this flywheel between supply and demand as fast as possible and making that profitable from the get-go allows us to start with, you know, higher costs.
And we think it's gonna be more attractive cost than many other technologies, but it's not going to be $50 per ton to start nowhere close. So we're going to start with some reasonable amount where we're still profitable and come down at over the next 10 years. So demo plant, industrial plant, scaling industrial plants, and throughout the scaling too there's lots of other technologies in our R&D that we'll continue to do or the next 10 years to continue to find the specific process, but also look for ways where we can vertically integrate and further come down some cost that we wouldn't otherwise.
Jason Jacobs: In terms of that cost, what are the biggest drivers of it and what are the biggest levers to bring that cost down over time?
Shashank Samala: I would say the probably bucket them into three. One is the cost of energy, energy that goes into regenerating the sorbents and that's something that we, that we share with, you know, every other DAC company. And I mean, the goal is to try to make it as efficient as possible, as close to thermodynamic limit as possible. And that's sort of the big challenge from the process engineering side. And also we are betting somewhat there, right? Like we're not gonna be using fossil fuels to run this plant.
We were going to use the renewable heat, solar or wind or nuclear or geothermal or that type of thing. So, and we believe that the cost scores for some of those technologies will continue making our technical economics work. And I think that's a bet many people make for DAC. And I think we, I don't think we have to be at the most aggressive of those estimates.
I think even if you were to fall somewhere in the middle, I think our technical economics will still work. So first is energy requirements. Two is just really good engineering and clever engineering to make the systems as low-cost as possible. So I think a lot of that is just building a great team, having a great inventor culture and a creative culture. And number three is scale. A lot of these just as you see from the right slot for many other technologies on solar and automotive and so forth, you just need to deploy a lot, right?
Like how do you come down costs? You just build a lot, and you wanna make sure you build it in a way that is as iterative and as modular as possible. So [inaudible 00:29:55] down to those three.
Jason Jacobs: When you look out over the next 12 months, let's say, what are the key priorities for the company?
Shashank Samala: Main one is continuing to accelerate towards the demonstration plant. So main priority is recruiting. And also we have been in conversations with early customers to help us do some of these small deployments. We've been in great conversations with some early folks that are really bringing this industry to life. So we'd love to have more.
Jason Jacobs: What type of profile of customers? I'm not asking for any names.
Shashank Samala: Oh, sure. Voluntary customers who've pledged to fund carbon negative technologies. And it's exciting to see more and more come online just over the last six months. And we need all of them. There's this concept of carbon purchasing agreement, right? Like I think one thing that we need in this industry is similar to what happened in solar and wind. It's like PPA is power purchasing agreements for renewables really allowed deployments and the cost reductions over the last 10, 15 years.
So basically we need that even more accelerated on the carbon side. And really good folks in their ecosystem are working on something similar with the CPA, we're calling it. And yeah, it's exciting. I think we're gonna have some announcements as an ecosystem over the next, uh, year or so to help early deployments are going to be expensive, but will bring down the costs overall.
Jason Jacobs: And just philosophically, when you look at some of these early voluntary adopters versus the mainstream that will hold out, kicking and screaming until the policy says that they have to come, do you, do you think that compliance will be mandatory in order to get any type of scale or do you think that the voluntary markets can be meaningful on their own?
Shashank Samala: It's sort of a chicken and egg problem and sort of... they kind of work off of each other. I think some voluntary markets will enable some of these costs to be attractive for a compliance market to say, hey, this is not as bad as we thought, let's deploy them. If you're in the compliance market, if you're working in policy and government, you wanna ensure that the cost is at a point where it doesn't disrupt the ecosystem and doesn't disrupt the economy too much.
So we want to make their jobs easier by showing costs that we're confident about. And over time we will clear more and more markets, compliance markets. There'll be some states like California who has already started in Washington and British Columbia. There'll be more on the pioneering side. And as the costs come down more, we'll clear the market and all of these other ones. And there'll be ones that are pioneering this, and we will encourage that, and we will welcome those with open arms.
But I think as compliance markets gets in, you'd reduce scale, sorry, increase scale and reduce cost, you will encourage more voluntary folks to come in as well. And folks who wouldn't pay high price per ton, now they're looking at this as like, hey, I think this is a good chance for us to come in. So I think there's an inner play between them. It's exactly what happened with solar and wind in the last 15 years.
Jason Jacobs: You mentioned that the policy matters and that there's some promising moves coming out of the Biden administration. Is the company fully reliant on policy and whether you are, or you aren't, what are the most impactful things that you hope will happen on the policy front in order to accelerate your efforts?
Shashank Samala: Yeah, so I think we can be very much a big profitable company with just probably voluntary markets, but we are doing this though to get to a billion tons as soon as possible. And I don't think we're gonna get there with just voluntary, compliance will be definitely needed. And it's great to see honestly, the markets that are already coming online. So yeah, at the end of the day, we're in this because we actually wanna make a dent in this.
And I think words only go some way, actions are the ones that actually count. So I think we have some really good folks in the administration now that are creating some of the scaffolding and the infrastructure for that to happen.
Jason Jacobs: And if the compliance markets were to come around, let's say you could wave a magic wand and they were just here either at the federal level or in all the key states. Then at that point, what would be the biggest barriers to fulfilling that on the other side? I know we're a long way from that, but let's just say that it happened, like where, where would the wheels come off the car? What areas of the business or the product?
Shashank Samala: There are a lot of challenges of deployment, right. We just released a blog post this morning about what does high quality carbon removal mean. And, you know, I think we have to be very thoughtful about deployment. I think we were at the cusp of this new industry that we were creating where there's second and third order impacts of what we do.
There's some things with biofuels and solar that didn't happen super well and that we are sort of kind of regretting and for carbon removal it means that, hey, can we ensure we maintain equity and justice throughout this process of deployment? Can we ensure that there's you know, sustainable ways where these plans that stayed around for 20 or 30 years don't affect the community in a negative way.
And a lot of those concerns we were thinking through now, as you're designing the technology and ensuring that these can be deployed as many places as possible. So thinking through the second and third order implications of deployment is one thing. And the other one I could think of is getting help on the monitoring verification side on the, for the carbon storage.
This is something I think again, the federal government is really good at doing. We're creating very clear criteria and infrastructure to help verify the carbon storage for a long, long time to come. So, Noah do you have anything to add there?
Noah: I think one other potential barrier that would occur is the kind of high capital requirements required for a lot of the direct air capture approaches, and securing the funding to deploy it at an appreciable scale. Saying everything that Shashank mentioned was addressed, then you still have the, well, how do we secure the loans for this, making sure that the compliance market is suitable for securing enough capital to deploy these plants that then can take a year to two years to build so you have a lead time on getting up to operation.
But I think as Shashank mentioned the biggest hurdle, one of the biggest hurdles there is deploying safe, monitorable and verifiable carbon storage that can be used for processes like this.
Jason Jacobs: So what is missing specifically in your ability to do that today?
Noah: There are a lot of different methods that have been developed and deployed for monitoring geologic storage. I think the primary aspect of that is not necessarily maybe monitoring and verification was the wrong word to use, but the availability of geologic storage and the entities to monitor and verify it. So today geologic storage is not widely available in all of the places where it could be deployed.
So there's a gap between what will be the demand for CO2 storage via carbon capture and storage and methods like direct air capture and the current storage capacity that has been drilled and is ready to go and has an entity that will monitor and verify that the carbon storage is occurring. So the real disconnect occurs where the deployed capacity of carbon storage meets the deployed capacity of carbon capture and carbon removal.
Jason Jacobs: You mentioned funding. So how are you thinking about funding the company and how should one think about funding this kind of company as it relates to both staging, but also the sources of capital along the way?
Shashank Samala: This is also one thing that I've seen completely transformed over the last 18 months, at least from an entrepreneur's perspective. I'm seeing, you know, initially sort of climate venture capital firms were helping fund early stage. Now we were seeing just technology agnostic venture capital firms coming into climate and funding carbon removal, which is really amazing to see. And we need a lot of that.
So we are so far are funded by both climate VCs and some of these traditional venture capital firms. And I think at this stage to sort of demonstration, we want that type of capital. And as you move from a demonstration scale to industrial, at least in our perspective, we are, we want to rapidly move towards a project financing model. And a lot of that, at least for carbon removal comes from creating predictable revenue contracts, and having clear debt coverage ratios that we are confident about that we can show a lender, hey, like this is the risk of this project.
And this is to ensure that our cost of capital for that is as low as possible. So having gone through that a little bit in my previous company, and we were actually thinking a lot about that from the early onset. And one way to think about building this company is, hey, how can we get highest confidence from a project financing firm as possible and both from a commercialization angle. And also de-risking the process parameters that will get a product financier to be confident about a project like this.
So grants are big part. We've been fortunate to get grants from [inaudible 00:39:17] for example, to help accelerate some of this. And we needed a lot more of that at the initial industrial plants as well. Something we didn't talk about is guaranteed loans. I think we're not anywhere close to this, but some of the guaranteed loans that happen in the late two thousands for solar wind and EVs will help carbon removal as well.
And I'm excited to see what comes from the administration on that essentially to sort of, to help some of the private lenders get used to this type of technology and eventually something that private folks can take from there.
Jason Jacobs: You mentioned the importance of policy. So given that as a young company, is that something that you're resourcing to at all in terms of pushing that policy agenda along? It would be great to understand how you're thinking about that. And also just what your advice would be to other young companies in a similar place, and whether there might be any gaps in the market or any trade groups, for example, that either exist or that you wish existed.
Shashank Samala: Yeah. I think there is, at least for carbon removal, folks like Carbon180. I was an entrepreneur resident at Carbon180 for over a year, and they are very good at soliciting feedback from entrepreneurs. And so we sort of have really good back and forth with folks that are front and center to this discussion on the policy. And so personally, if you're not staffing to this, maybe we will in the future, but we have high trust in folks like Carbon180 to lead the charge on that.
And Noah is really kind of the reason I'm here too. So it's, they've kind of pioneered this before the IPCC report came out and then they were sort of helped 45Q happened and everything. And I'm excited to see some things that will come out of the administration in the next year or two on this.
Jason Jacobs: So if you could wave your magic wand and change one thing outside of the scope of your control that would most accelerate your business, what would it be and how would you change it?
Shashank Samala: Many of these de-carbonization technologies kind of work in concert with each other. So we need renewables and introduce storage to get low cost. Without that we won't get the technical economics except that we need to. And I think that there's one magic wand I would, I would say something that both helps the planet and helps carbon removal, which is low cost renewables and low cost energy storage.
And they're just amazing folks working on that. And it's awesome to see a lot of folks working on that. So I'm optimistic and so are, I think a lot of climate VCs and other, other advocates as well.
Jason Jacobs: Great. And last question is just for anyone that's listening that's inspired, what kinds of people do you wanna hear from, and how do you need help?
Shashank Samala: Yeah. I think you know, we were hiring quickly and in many ways not to be dramatic, but we're building a company sort of like constructing a cathedral. Like you would wanna ensure that the foundations are incredibly solid before building the outside and ensuring the structure can remain for the longterm. So we are hiring important folks over the next year that can each be an important pillar for these cathedral. And so for that reason, you know, we are hiring incredibly slowly, which is actually kind of against a lot of the advice you get, which is sort of hire fast and fire fast type of thing.
So we're being deliberated and we are sort of hiring for many hardware engineers in both experienced and more junior, as well as process engineers and operations folks. And then the four things we look for culturally, you know, number one is sort of climate mission, we're incredibly mission focused. We value radical candor. We wanna be courageous to each other in helping us each other improve and also be transparent and having open dialogue both internally and externally.
We care about persistence and persistence and optimism. And the last thing, but obviously is a lot of curiosity and maximizing your personal growth rate. If you like what you hear about the culture we have, I'd love to talk to you and we need a lot more folks getting into this fight. So looking forward to talking to folks.
Jason Jacobs: And Shashank, anything I didn't ask that I should have, or any parting words for our listeners?
Shashank Samala: I think you've covered everything pretty well. What's so great about this community is the average intention of people in this community is just so altruistic and everyone helps. Uh, personally, I've had the time of my life interacting with folks in this community and excited for that. You... all the job that you're doing to increasing science of this community is amazing to see what you've done in the last 18 months. And thank you so much for having us and, uh, I look forward to working together in the future.
Jason Jacobs: Awesome. Well, I'm so glad to have you come on the show. Thanks for being so generous with your time. And Shashank, Noah, best of luck to you and the whole Heirloom team.
Shashank Samala: Thanks so much, Jason. See you.
Jason Jacobs: Hey everyone, Jason here. Thanks again for joining me on my climate journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note that is .co not that .com. Someday we'll get the .com, but right now .co. You can also find me on Twitter @jayjacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.