Episode 120: Nan Ransohoff and Ryan Orbuch, Stripe Climate Team

Financial Services

Sep 4

Today's guests are Nan Ransohoff and Ryan Orbuch, members of Stripe’s Climate team.

Nan and Ryan work on the Climate team at Stripe, and I was very excited for the opportunity to interview them. While it’s not a climate company, Stripe recognizes that climate change poses a long term risk to its mission of growing the GDP of the Internet. As a result, Stripe is doing a number of things that I think are fascinating. For one, it’s treating the climate team like a product team. The company embraces a culture of experimentation and, as part of that, it’s leaning into negative emissions. The company has been transparent in its efforts, open sourcing much of its work. Second, Stripe is figuring out how to include merchants in its efforts to decarbonize. I can't wait to see what Stripe does in climate over time. It's a fascinating company, and a great discussion.

Enjoy the show!

You can find me on Twitter @jjacobs22 (me), @mcjpod (podcast) or @mcjcollective (company). You can reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.

In today's episode, we cover:

Nan’s and Ryan’s respective backgrounds and how it lead them to climate.
What is Stripe and its mission?
Stripe’s negative emissions commitment.
How did Stripe go about learning about climate?
The Stripe Climate team and how it operates.
Purchasing an offset vs. a negative emission.
Stripe’s project purchases and its selection process.
How Stripe thinks of the policy landscape and its role in it.
How much focus is spent on helping other businesses with negative emissions and reducing its own emissions.

Links to topics discussed in this episode:

Jason Jacobs: 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 guests are Nan Ransohoff and Ryan Orbuch from the climate team at Stripe. I was very excited for this one, as Stripe is not a climate company, but they do recognize that their mission to grow the GDP of the internet is in jeopardy in the longterm if they don't take steps to help mitigate climate risk, they're doing a number of things that I think are fascinating. They're treating the climate team like a product team. They've embraced a culture of experimentation, they're leaning into negative emissions. They are being very transparent and showing their work and open sourcing their work.
And they're also going out and not only doing things to help identify how they can get leveraged, but figuring out how to open that up to the merchants and the ecosystem that powered by Stripe, as well as educating other companies and trying to build coalitions and mobilize them to follow suit. I can't wait to see what Stripe does in climate and in general. It's a fascinating company, and I really enjoy this discussion with Nan and Ryan. Nan and Ryan, welcome to the show.
Nan Ransohoff: Thank you for having us.
Ryan Orbuch: Thanks Jason.
Jason Jacobs: Well, this has been a long time coming, both because personally I met you both when I was pretty early on in my climate journey and you were both entering from different places in similar phases, but also just Stripe has really stepped out and been a pioneer in terms of companies playing a broader role in ways that don't involve mandates. And I think that's really interesting and exciting. So I've been dying to have this discussion.
Nan Ransohoff: We're excited to be here.
Ryan Orbuch: Yeah, thank you for having us.
Jason Jacobs: For anyone that's been a long time listener to the show, you know, that typically it's, one-on-one, we're gonna try this two on one. We've done it a few other times this way, so we'll see how it goes. But if it's a little bumpier or choppy, it's all part of the experience, but maybe for starters, it'd be good to get into Stripe and stuff, but why don't you each just take me through your story and how you ended up working on the climate team at Stripe and why?
Nan Ransohoff: So I've been in and out of climate for the last 10 years, always in a product and business capacity. So after undergrad, I did a couple years consulting quickly learned about myself that I care a lot about the problem space that I'm in. And climate change is something that I started focusing on in college. And after consulting made the jump to Opower to Nest, which are some of the VC backed clean tech companies in the first wave of clean tech back in the mid late 2000s. I worked at Uber focused on Uber pool. More people, fewer cars. And most recently was at Neuro focused on electric transportation. The question that really brought me to Stripe, so it's a little bit roundabout, but last fall I was rereading the 2018 ITCC report.
Jason Jacobs: Just for fun, that's your pleasure reading [laughs].
Nan Ransohoff: Acts like my life reading, but I do on the weekend, as one does. And one of the things that really stuck out to me, I candidly, even though I'd been in the climate space for a while, I hadn't really reeducated myself on the core problem, the core math in a long time. And one of the things that really stuck out to me in that report was, geez, we are going to need to do a lot of the second lever of carbon removal. In addition to reducing emissions, we're also now going to, we're in a position as a world where we are also gonna have to take a lot of carbon out of the sky and store it somewhere ideally permanently. And the question that I kinda became obsessed with was how do we do this at a really large scale in the absence of policy? And when you start thinking about, okay, well, who can volunteer to pay for a carbon removal in the absence of larger global policy, it's individuals and businesses who have margin.
And there aren't that many companies, but they, a lot of businesses who are rather high margin businesses, Stripe tends to have a lot of them. And at the same time in August, Stripe had made this negative emissions commitment and it was starting to think about something similar. And so Ryan and I had a couple conversations back in the fall they were pretty casual there're sort of casual jams around the same time that we met Jason and Ryan pinged me in December saying, “Hey, we're actually gonna make a real team out of this thing. Are you interested?” And I was like, definitely. I think that there are actually very few companies that both have the ability and the sort of motivation and leadership to do something big here. And Stripe is one of the few companies in my opinion, that can really take a shot on goal here. And that got me really, really excited.
Jason Jacobs: Great. Well, we're gonna come back around to talk about Stripe and how that came about and what is the big bet that you guys are taking. But before we do that, Ryan, your turn, what's your story in terms of how you came to working on the climate team at Stripe?
Ryan Orbuch: I guess for context, I was at Stripe for about a year before we made our negative emissions commitment. I was working as a product manager in a connect product. To zoom out a little bit, I grew up in Colorado around Noah and Nest and a lot of government climate work. My dad worked for the forest service. I was always interested in climate, environmental stuff when I was way younger and then sort of got bit by the startup bug or done a education software company, software design and engineering product stuff, sort of got swept into the startup thing for a while. Joined Stripe 'cause I wanted to sort of see an example of how kind of a well run company works. And then suddenly we had made this climate commitment.
And that was like an opportunity to sort of get back into all the areas I was interested in and particularly sort of with a thesis and lens around negative emissions. That to me is just like immediately made a lot of sense from just a basic understanding of sort of when Nan mentioned about those two levers, but last fall I sort of was fortunate enough to get the opportunity to kind of start working on our negative emissions commitment, kind of as a side sort of 10% thing. And immediately got just very excited about it. Started reading a lot, started chatting with some scientists, started getting a sense of how we might be able to kind of actually make an impact here.
And as I started meeting projects and meeting some of the scientists in the field, it was very clear that one, even with a million dollars, we could actually do something really material on negative emissions. I sort of had internalized our thesis around holy crap, there's actually no purchasers here and this is like not gonna move and it's not gonna get cheaper without some sort of commercial purchaser. So sort of stepping into, being able to be one of the first purchasers is really exciting. And yeah, just talking to these projects and scientists, I got sufficiently excited about it, that we worked with other folks at Stripe to turn it into a real team as Nan mentioned.
Jason Jacobs: So now that we have that kind of intro from each of you, why don't we put Ryan aside for a moment and put Nan aside for a moment and now let's talk about Stripe. So what is Stripe for a- anyone that doesn't know uh, I'm sure most people know. And also how did Stripe come to have a climate team.
Nan Ransohoff: So Stripe builds economic infrastructure for the internet. You have a million plus businesses around the world that use Stripe to do things like power payments. So as a consumer, when you buy something online, that experience is often powered by Stripe. So why is a payments company doing something in the climate space? And in the first place is a question that we get asked a lot. Our mission is to increase the GDP of the internet. And when we think about what this means, Stripe is very much in the business of economic growth and prosperity. And when we take the long view on what are the biggest medium term risks to economic growth, climate change is a huge one. And so in that sense, we don't view climate change as this orthogonal thing to our business. We actually think that in the long run, it is quite core to what we do.
That's a little bit of kind of a high level, mission and context. What is the Genesis of this team and how did it come to be in the first place? Stripe has had a corporate climate program since 2017 and last August, as we've just discussed Stripe made this negative emissions commitment. And the idea was we are going to spend a million dollars and we are going to spend that purchasing tons of carbon removal. We are not making an investment in these companies. We're not taking an equity stake. We are literally paying somebody to take carbon out of the sky and store it somewhere. Two things happened, the first is we got a lot of positive feedback, kind of a surprising amount of feedback from the carbon removal community, which is mostly a testament to the fact, this field is so starved for capital, that like a million dollars would sort of raise anybody's eyebrows.
And the second thing that happened is we got a lot of users, strike users, again we serve million plus businesses around the world reaching out saying, "Hey, we wanted to do something in climate for a long time, but we haven't because it's hard to figure out what to do. We have a business to run. If we give you some money, could you go figure out what to do with it for us, 'cause we don't wanna become experts in carbon removal." And that is really what sort of got us thinking, there might be an opportunity to do something far beyond what we're doing at the corporate level, and really try to, as Ryan said, think about how we might make a huge impact on climate change by making this market for carbon removal. We can talk more about what that actually means and do that by making it really easy for any business to roll out a high impact climate program. So hopefully that could be a little bit of sense of the Genesis of this team and an idea of what we're trying to do and where we're headed.
Jason Jacobs: So Stripe wants to increase the GDP of the internet, Stripe views, climate change as a longterm threat to increasing the GDP of the internet, Stripe has a climate focus team since 2017. And then the company decides on leaning into negative emissions, how did that come about? Why negative emissions and what did you or the company do to get yourselves up the learning curve on negative emissions? And I guess maybe just some color on you talked about what has transpired, but it'd be great to talk about kind of why and how.
Ryan Orbuch: I guess maybe just going in order, Stripe made a carbon neutral commitment back in 2017, that was one person working part-time on that. And at that point, sort of the point we wanted to make with that original commitment was not that necessarily sort of carbon neutral is the best possible thing a company can do for climate, but more than sort of doing something for climate is tractable for even like a relatively small company. At the time, Stripe was a lot smaller. And I think back then I didn't work on that original commitment, but we were sort of one of the smaller tech companies to do really anything on climate. And sort of the idea was to go to the startups who use us to sort of recognize that's potentially in scope of them to do even before they get huge.
So that's sort of the original carbon neutral commitment. Since then a handful of folks at Stripe, including Patrick and John have been quite interested in climate. And our learning has kind of led us to carbon neutral is a great first step, but we wanted to see sort of how we could really have unique impact. And as we were learning more and more about negative emissions and sort of a gap there, it just sort of became pretty obvious that that was something where a small amount of money could really do some learning in the industry. And as soon as we made the negative emissions announcement, we were sort of very satisfied to see that, that seemed like it resonated.
Jason Jacobs: And how does a payments company and its team go about getting up the learning curve on how to think about and lean into operationalizing a negative emissions commitment?
Ryan Orbuch: Well, I think part of it as you know, as well as Jason is if you ask the right kinda questions on Twitter, you can just find things out.
Jason Jacobs: Or in a podcast, podcast is a secret hack where you just get an hour with the smartest people, you know, and ask them whatever you want and they'll share way more with you than they would if it was just a coffee meeting.
Ryan Orbuch: I can speak from my own learning experience and then definitely would be curious for if you're to jump in with yours. But I started off with, for me, it was like a couple of weeks of kinda weird squinting at the problem where this was, I wanna say back in like August, September of last year, I think climate is really easy to just it's often described in such like overwhelming and apocalyptic terms, that is hard to wrap your head around. It is something that's like actually tractable that you can actually understand, or at least it was for me. And after squinting at it for a couple of weeks, it's like, okay, cool, what we're actually talking about here at the end of the day is a relatively straightforward physics problem, where we have too much of a certain [inaudible 00:12:02] atmosphere and we need to take it out and put it somewhere.
And that gas materially affects the temperature. And there's like a handful of mechanisms you can use to take it out of the air and a handful of places you can put it, but it's not a hundred of each. There's like maybe a few dozen ways. And just starting to like wrap your head around the bounds of that was comforting for me. And then I think where it gets really interesting is there's a huge diversity of fields and different sort of areas of expertise that are sort of required here. So I think one of the first things I read was the National Academy's 2019 negative admissions research agenda report, which is quite good. It's very [crosstalk 00:12:34].
Jason Jacobs: [crosstalk 00:12:35]. Sounds more engaging than the one and a half degree IPCC report.
Ryan Orbuch: [laughs] It has more pictures in the summary. Anyhow, if you skim through that, you read like the first 10, 20 pages of that. It's clear that, oh man, there's a lot of different stuff implicated there's biology, there's geology and mining, there's chemical engineering to do direct air capture store bins, there's policy to like figure out the landscape in which all this can get developed. There's land and mineral rights, there's agriculture and soil sequestration. And there's just like a huge range of topic areas and subjects. And to me, that was just uh, super exciting. I love learning about this sort of different breadth and there's something about negative emissions that is sort of unique and really anything I've worked on previously where you really get that breadth and you have a good excuse to talk to like both an oceanographer and like a policy person in the same day.
Jason Jacobs: Now, did you look at any other areas before you got to negative emissions? I don't know if I should give a leading question, but maybe it's something that starts with an O.
Nan Ransohoff: Offset.
Jason Jacobs: Offset.
Ryan Orbuch: Oh, offsets.
Jason Jacobs: [laughs].
Nan Ransohoff: Come on Ryan.
Jason Jacobs: I've never whispered before on the pod. This was the very first time that, that's ever happened. I don't know if that's a good thing or a bad thing or what, but you guys had me feeling really comfortable all of a sudden.
Ryan Orbuch: Stripe did have an offsets program previously. We did, I think it was nine or $10 a ton landfill methane offsets. I think they were pretty s- solid, but I think it was clear that we wanted to do more than that and sort of with a similar amount of money that there were areas other than offsets where a company could have sort of dramatically higher impact on the field.
Jason Jacobs: And do you feel like that is because of where offsets are today, as it relates to things like certification and transparency and quality and additionality that are addressable, where that can be more impactful as a vehicle over time, if it cleans up its house as a category, or do you feel like it has structural flaws that are irreconcilable?
Ryan Orbuch: I think it depends how you draw the box of what you're talking about with offsets. I think it's important to remember that offset is not a physical traits of these technologies. Offset like an aspect of the transaction where you say it's an offset when you sort of buy it proportional to how much you emit and generally make some sort of neutral claim. A thing can take a ton of carbon out of the air and put it in the ground, whether or not you would like call it an offset. But what we sort of were looking for were gaps and sort of particularly high leverage areas where we under our negative emissions commitment aren't necessarily purchasing as many tons, but because we aren't seeing it as sort of an offset, it's not about the number of tons we can purchase.
It's about how much that money even potentially the same amount of money as one could spend on offsets can sort of do for the field and do for the learning in the field. Perhaps in the future, this will be different, but from our learning and our understanding right now, we think that trying to push these technology down the cost curve for our unit money is just gonna do more for the field than sort of purchasing kind of pre-approved the existing credits.
Jason Jacobs: One question I forgot to ask before we get right back into the lane we're in, because I think it's a good one, but how big is the climate team and how do you break down responsibilities on the team, who's doing what?
Nan Ransohoff: There are four of us currently. So interestingly, we run this as a product team rather than uh, maybe a more traditional CSR initiative within Stripe. So we are what we would call an emerging business. And that means there's product and engineering and ops resources that are dedicated to this effort and to this charter. And we basically have the time and space and resources to go after that mission and see how far we can get. So that's sort of the spirit of how this is run, which I think candidly is a little different than how many other companies would do this. And part of, for me personally, what made this so exciting. The two other folks on our team are engineers and there's sort of two parts of what we're working on. One is how do we spend money effectively on carbon removal? And that is what Ryan and I spent a lot of time on at the beginning of this year, how do we spend our own money really well and effectively in this space.
And as Ryan alluded to, there's a lot to consider and a lot of expertise that we needed to find and seek out and wrap our arms around since it is such a complicated field. The other piece is really thinking users first at how do we make it really easy and compelling for straight businesses to make similar commitments to what Stripe has done. And that is more of like a product problem and a product and engineering problem of how do we build something that our users love. And so really what we're focused on right now is we've turned our attention a bit to that question. And we're having lots of conversations with users.
We're having lots of conversations with folks who've had carbon problem the past and they haven't in figuring out why they haven't and how can you lower those barriers and make it really compelling and interesting for them to do that going forward. So that's a little bit of a roundabout way of saying that right now, we're really focused on the product piece of things. And that is sort of what we work on, on a day to day basis with our engineering and ops partners.
Jason Jacobs: How is purchasing a negative emission different than purchasing an offset? Is it just a higher priced offset that's higher quality or is there some other fundamental differences?
Ryan Orbuch: It depends what you mean by offset. If you mean a thing that is on say the U.S. voluntary market approved by one of these sort of third party offset verifier entities and, you know, has that stamp, and that ton is what you're talking about, that's one thing. If you're talking about something on the compliance market that's another thing. If you're talking about something that you're using to make a carbon neutral claim, that's sort of a different thing. Do you mean sort of, how are our purchases different than sort of these, sort of technical approaches that sort of those traditional offsets may use or like how is the verification different?
Jason Jacobs: Well, I mean, there's a bunch of big companies, for example, that know that they need to get to net zero and a part of that is cleaning up their own house, but then they offset the rest and that offset might go towards planting trees. It might go towards any number of initiatives that help counteract the things that they're doing with their core business. And so I guess what I'm asking is philosophically and structurally, is that how these negative emissions purchases work as well? Or should I, and should we think of them differently?
Ryan Orbuch: At some level, you could wrap all of these into offsets and that is things companies can buy proportionally to their emissions if they would like to. On different parts of the market, there's someone who will sell you a ton of carbon for $3 all the way up to $700. Are they really the same thing? No, it really comes down to what the company's purchasing criteria is and what they're trying to do with their money. So if you have hundreds of thousands of tons of historical emissions, you may sort of have a certain price ceiling on how much you can pay for an offset that puts you in sort of a different category than what we're looking at. For us, I think it's maybe worth sort of zooming in on independently of like the verification and sort of the market for these things. Actually, what we're talking about when we're talking about a ton of carbon in any of these cases is like you are paying someone to like physically do a thing that physically changes the amount of carbon in the atmosphere.
And one, does it do that? And two, sort of in the cases where it does that, there are sort of lots of ways it can do that. The carbon can be stored more or less permanently. You could be doing an avoided emissions offset saying this thing, which brings in the different sorts of additionality concerns, this thing would have been emitted if I hadn't paid this money and therefore that's what I'm paying for as you [inaudible 00:19:44] this thing, which is very important and make sense in sort of the emissions reduction bucket. Nan sort of mentioned these two levers there's emissions reduction and there's negative emissions and sort of proportional to how good we are at emissions reduction we'll need to do more or less negative emissions. There are lots of companies and lots of sort of offset shaped things that are in the emissions reduction bucket.
Some companies have significant emissions just as a company and they should work on reducing their own emissions. Once you get into negative emissions, like you mentioned, there's forestry, there's soil, there's the projects we purchased from they are more permanent and many are more expensive, but I think at a high level, there's sort of a variety of permanence of the tons that we're talking about here. There's a variety of costs. There's sort of different amounts of leverage and learning that the field can do around those. And sort of like every ton of carbon isn't really created equal even if you call them all the same thing.
Jason Jacobs: And you fairly recently made your first slate of negative emissions project purchases. Can you talk about both the process of making those purchases and also a bit about the projects that you selected and why?
Ryan Orbuch: So we purchased four companies in our initial set of purchases, CarbonCure, Charm Industrial, Project Vesta and Climeworks. These all are sort of dramatically different companies in the US, Canada and Europe, but they all have certain things in common, that sort of mapped to our criteria. So first many of them, they all have very permanent thousand-year plus sort of functionally geologic storage. That means that the carbon from both sort of a physical and thermodynamic perspective is very unlikely to come back out into the system, which is not necessarily true, it's sort of biological in living systems where you could potentially put carbon. That's one piece.
Another piece is that they may be expensive today. Some are up to six, $700 a tons today, but we sort of have reason to think that they have the potential to get significantly cheaper over the coming decades, potentially down to a $100 a ton or lower. And then from there, we think they have the potential to scale to many gigatons of this permanent sequestration at that less than a $100 a ton price, which is what we think sort of characterizes some of the gap in what the field has right now. I'm happy to go into sort of more about what each of these specific projects do. That was sort of a little on kinda like our overall thesis in what we were looking for out of them.
Nan Ransohoff: One thing to add there, what we've tried to do is kind of zoom all the way out and look at what is the world gonna need to do by 2050 by 2100. And so if we need to get from 50 gigatons a year down to net zero by 2050, that's ish the goal and ish, we need to be removing 10 gigaton every year by 2050, there are error bars around that, depending on which source you're looking at, but for simplicity sake, let's call it 10. We don't have the volume of solutions that we need at the cost that we need in order to reliably with high confidence hit that target. Where we've really tried to focus our spend is on where are the gaps in that portfolio and how do we help accelerate the filling of those gaps so that by 2050, we can hit the targets that we need to do.
As Ryan's talking about what are our criteria, the spirit of the criteria is to try to characterize that gap of saying like, okay, treasons will, super important, but like we will run out of arable land eventually. We're not gonna be able to remove and store 10 gigatons in the biosphere every single year in perpetuity, the biosphere can't absorb that much. And so what are the gaps and how can we focus on accelerating, how quickly we can fill those gaps. That's really why many of the purchases that Ryan will talk about are early purchases from earlier technologies that even if they're not cheap today, and even if they're not high volume today, they have the potential to be in the future. And that's really what we're hunting for.
Jason Jacobs: And do you find as you look across these wildly different areas that the criteria to lower the costs over time, is it the same playbook from project to project or is there great disparity?
Ryan Orbuch: It's a great question. I think there's similar principles in the- the principle of volunteer is sort of like industrial learning curves. It's sometimes referred to as wrightslaw, it's the thing that happens to solar and semiconductors and gene sequencing, and a number of these sort of technologies that are commonplace today, but they used to be extremely expensive. Solar has come down you've had guests come on to talk about this, but 10,000 or so acts in costs since the 70s, 80s. And that was due to a number of factors, that was due to significant federal investment, particularly significant commercial demand, which is a piece that's missing in negative emissions and just sort of industrial learning. And it is sort of an open question, how cheap can these technologies get? But the process by which they get cheap is lots of smart people working on them, research and venture funding coming in.
And then sort of the piece that we think is really important and that we can help with is this sort of commercial purchases and the demonstrated demand for these technologies, because that's the only way we're gonna actually scale these things up and know how she can get. That's sort of why we're taking a portfolio approach and look like, as we continue to add more projects, we don't expect all of them to succeed at massive scale. Like some might not, they are early, but the point is that the worlds we're so far from actually having 10 gigatons a year or so of stable negative emissions, that we need a lot more shots on goal and sort of iterate these technologies down their cost curve. So five, 10 years from now, the world can like, know what our options even are as we try to put together kind of an overall negative emissions portfolio.
Jason Jacobs: When you think about, so you do the million dollar spend and you pick some projects and you get some learning there. And then in parallel you mentioned, and then you were talking about how the product and figuring out how to enable your customers to lean in this direction as well. Can you talk a bit about how you're thinking on the product side and how that work ties in, if it ties in to the work that you have s- started down the path of in terms of these negative emissions purchases?
Nan Ransohoff: Absolutely, it's harmful think about carbon fuels in the ecosystem and there's supply and there's demand. And supply are the companies that are actually removing carbon and storing it somewhere. And there's lots of different ways to do that. And Ryan's talked about a bunch of them. There's trees, there's soil, there's direct air capture, enhanced weathering, et cetera, et cetera, et cetera. The demand side is who pays to purchase those tons of carbon removal. And that could be companies. It could be individuals, it could be government subsidies. There's sort of lots of different possible parties on the demand side. Part of the reason that this ecosystem is so stuck in the mud is that the demand side is very, very small today. And so Jason as you're thinking about investing in a company. One of the questions that you ask yourself is, are there going to be a lot of customers to buy the thing that this company is selling?
And right now in the carbon removal space, the answer is no. Or sort of, that was certainly true last year and fortunately is starting to change much, much more quickly. And so the thesis or is kind of the theory of change here is if we can build out or help build out the amount of demand side capital that is literally paying to purchase those tons, if we can build out the customer side with a large, reliable amount of money that is kind of consistently serving as that customer, then more investment dollars will be attracted to the supplies. I'd want entrepreneurs will want to start companies on the supply side, but our theory of change is really around you asked about what's the product we're building, we're hoping to try and make some of that market on the demand side for negative emissions.
Tactically, how are we doing that? We'll share a little bit, but in spirit, our hypothesis is that if we can make it much easier for businesses to make carbon removal commitments and make it more compelling for them to make carbon removal commitments, then there are actually a lot of businesses out there who want to do something to help fight, kinda change they don't today because the friction is high and the barriers to entry are hot. So that's kinda this sort of theory behind what we're trying to do. And a little bit about how we're thinking about solving the problem.
Jason Jacobs: And given certainly if you look at main street businesses, for example, given the pandemic and the loss of jobs and the loss of foot traffic, et cetera, I mean, they're just thinking about how to keep the lights on, what is the pitch to these customers and what kind of customers around why they should look at making these purchases, what's in it for them?
Nan Ransohoff: It's a great question and one that we are very much in the process of sort of defining. You can think about this in a couple of different ways, the first is that overall, I do think that as we are all starting to see the effects of climate change on our own personal lives, there is this macro trend of businesses starting to care more and more about like, oh my gosh. And it's actually true for consumers too. Everybody is sort of waking up to the fact that, “Oh, geez, this is gonna happen in my lifetime. How can I accelerate the likelihood that we can even solve this thing for myself and my children?” So I think that, that's kind of one overall trend that we're seeing in a lot of businesses that sort of like even without incremental 'motivation' that is motivation enough for a lot of businesses to wanna do something.
There's like another segment here, which is for companies that maybe on the fence or this isn't the top priority for them. One is reducing friction and making it really easy to do something that's kind of one of the big levers. I think the second lever is really starting to think through how can we help drive top line or bottom line business benefit to them, whether it's through brand and marketing, whether it's through increasing checkout conversion, whether it's, I mean, there's all these different levers that I think we're gonna experiment with and explore, but that's kind of our mental model for how we think about tackling this.
Jason Jacobs: And how do you think about the policy landscape, if at all, how important is it and what is Stripe's role and what is Corporate America's role in general in helping drive the right policy initiatives to happen?
Ryan Orbuch: So I think a couple things here at a high level, it's sort of what we're talking about here is there's policy on the emissions reduction side. How do we create incentives for businesses such that it's more expensive to emit it's more difficult to emit they take on more responsibility by emitting, sort of all of those of like emission target settings genre of policies. And then sort of somewhat separately of that or at least you could treat it separately of that is we all agree that we need to take carbon out of the air. I have a big machine that I built that sucks carbon out of the air and sticks it into the ground. It is a 100 million in CapEx to build it and 10 million a month to run it. And like, who's gonna pay me for the CapEx. Who's gonna pay me to run it.
And in some lens it could be corporate customers potentially like Stripe paying you to run it, but at some scale and at a scale that we're very likely gonna need to see, it's likely that the governments are gonna need to come in and pay you to run that. Otherwise, it's just like, I'm not sure that the dollar amounts can be big enough among corporate customers with the scale of this is likely to be necessary at, and we're starting to see sort of pieces of this in different areas. I mean, 45Q is a pretty sort of direct air capture and sequestration specific example, but it's a federal tax credit for carbon sequestration, which in practice sort of just like functions to subsidize down the cost of some of these approaches.
But in the absence of that large scale policy to promote carbon removal, what we think is really important is even if that policy comes into place, these technologies are not cheap enough today. It seems very sort of unreasonable for that policy to exist at six or $700 a ton. And we need to get these technologies down to like some $100 a ton. And we think that Corporate America sort of making early purchases and sort of pushing these technologies down the innovation curve when the policy is there, these technologies actually need to be ready and they're not yet.
Jason Jacobs: And bouncing around a bit, but I know that there was also an open source component where you have some of the documentation from your work published on GitHub, can you talk a bit just about where that fits into your broader strategy?
Ryan Orbuch: Yes. Oh man, this is one of my favorite parts. The idea here is basically that first off, we want to sort of document what doing a carbon removal program looks like so that other companies can understand and could either be inspired by it and see it as jumping off point, they can answer questions they have about their own program, anything like that. We also recognize that sort of, not every company that we could ever sort of possibly influence or possibly support here is a Stripe user could be interested in our product or something like that. So sort of putting us out of the ecosystem and building that transparency, we think is sure, it's more work on our end. It's not that much more work and this sort of ecosystem impacts. We wanna see, we hope are gonna be really significant. So we worked with a new nonprofit called Carbon Plan to help do some data analytics on our project applications.
We published all of our project applications. There's 24 of them in GitHub, you can go take a look. We published all of our criteria, the names of our expert panels, even sort of the mini, we ran like a sort of mini expert review process. We even published the forms that experts filled out sort of those templates. But the idea here is sort of provide as much visibility into our process as we can one so that people trust us to allocate money towards carbon removal in a way that's impactful, which as soon as we start thinking about how can we build a market becomes really important, but then secondly, just kinda show our work to the community and to the academic community so that we can get feedback. Because we're gonna do, this is a recurring purchase. Even just speaking about Stripe's corporate money that's occurring purchase, we're gonna use it again next year. We would like to do it better. And we wanna help people understand what companies are even out there.
Jason Jacobs: And when you look at the two sides of that marketplace. I know you mentioned that the demand hasn't historically been there, although that's starting to change and that on the supply side, the prices are still largely prohibitive. What do you think needs to happen structurally? Like if you could make one change or a handful of changes that would help unclog the arteries of the system to get that marketplace feeding itself, what would those be?
Nan Ransohoff: I caught a couple of things. One is we need to make a large, reliable, predictable demand side market. We need more purchasers who are committed to every single year paying to remove carbon out of the air. I think that, that really does give the whole ecosystem more competence to make a huge CapEx investment, make a career investment that is important for pulling the supply side forward. I would love to see more businesses and individuals committing to sort of, I'm gonna be there every single year paying to take carbon out of the air. I'm not going anywhere. There's sort of that confidence that we need to build on the demand side.
On the supply side as we talked about earlier, we are gonna need a portfolio of solutions to meet the likely scale of this problem. And I think we would love to see more shots on goal, more at bats to try and fill some of the gaps that exist today. We tried to characterize that gap with our criteria. We're looking for largely non biospheric forms of carbon removal, but we need more solutions that have the potential to be low cost and high volume by 2050. And we'd love to see more research there. We'd love to see more entrepreneurs there. I would love to see more investors there, but we need sort of all of these dynamics on both the demand side and the supply side, I think to come into place in order to really unstuck this ecosystem.
Jason Jacobs: If I am a company who wants to do a better job in cleaning up my act. I guess this is a two part question. One part is just, what is the mix at Stripe between this negative emissions work and just like cleaning up your own house as it relates to the net zero commitments. And then what counsel would you have for other companies that are maybe starting from ground zero to try to figure out how to help with climate change in terms of how they should think about that balance?
Nan Ransohoff: So at Stripe we think about cleaning up our own house in terms of addressing both flappers. It's both, how can we reduce our own emissions in addition to how can we remove carbon as well? And so we are trying to do both of those things. I think in an ideal world, every company is trying to do both emissions reduction and do carbon removal. If I'm totally honest, it's hard for individuals and for companies to become an expert in this and to like figure out what are all the things I can do, what should I be doing? And like that requires time and resources that a lot of whether it's businesses or individuals, like I am also guilty of this. And I work on this everyday.
It takes a lot of mental energy and bandwidth. I would love to see companies doing something, even if it's not everything, but like starting to take some of those steps, whether it's giving a portion of your margin to carbon removal or to another part of the climate problem, that is important. I think like it's probably unrealistic to expect everybody to get themselves all the way there by themselves, but starting to move in the right direction and taking those steps, I think is a big thing.
I think traditionally companies have thought about climate change as somewhat orthogonal to the core business and like a bit separate to like how we think about our product, or how we think about our users. Solving climate change impacts every single industry, it's transportation, it is buildings, it is energy production, it is like all the things that we touch every day, climate spam them all. And so I think that one of the things that made me excited about this opportunity is that Stripe was thinking about climate, not as a separate program, but as how can we apply a climate focus lens to our core users. I think that there are actually a lot of opportunities for similar thinking at tons of other companies that may not be 'doing climate' as their core business.
How can we bring this kind of thinking into how we think about hotels and buildings and transportation? I mean, there's a lot of really interesting ways of taking a product focus lens to climate within existing big companies who have amazing customers already amazing users already. I sneaky think there's a ton of opportunity there for exciting new features and products.
Ryan Orbuch: One other thing to add onto this, to your point about just it being core to the business, there's also a perspective where we're taking this really seriously and we're investing significant resources onto it. As a sector of the economy, Stripe businesses are not the biggest emitters. We don't have a lot of heavy industry. We don't have a lot of physical goods. I don't think we have much like oil and gas on Stripe. It's generally not sort of the massive committers or the massive sort of physical manufacturing that runs on Stripe.
But what does run on Stripe is like the internet economy. They're often high margin businesses, they're often software businesses, they're businesses who are potentially open, or we hope they might be open sort of stepping up going above and beyond kind of independently of their own emissions. And if we can find something that allows businesses who are not necessarily the biggest emitting sectors to have an impact, I think there's even more room for businesses with high emissions to do their own reduction.
Jason Jacobs: And for anyone listening, that's feeling inspired, where do you need help if at all and what kinds of people or organizations or expertise might it be helpful for you to hear from?
Nan Ransohoff: Well, very selfishly we're hiring for a designer and a strategy and ops manager. So if you're out there, send us a note at climate@stripe.com. In addition to that, I think that there's a ton of opportunity on if you're an entrepreneur that's interested in this space or you're a researcher that's thinking about taking the plunge, we need so many smart, motivated people working on this problem. We would love to partner with you and be supported if we can please reach out.
Ryan Orbuch: To really drive that point home though, we had 24 projects in our initial sort of round of consideration. Only a portion of that met all of our criteria. Very few actually met all, all, but only a portion met some. And particularly the gaps we've been seeing are in high permanence storage solutions, non biospheric storage. So that generally means geologic storage, mineral storage, especially ocean storage. I think an interesting area that's generally been sort of under researched, but like the number of companies that actually are doing permanent carbon removal and storage, there's gotta be less than a hundred in the world.
I think we've seen a portion of them. I certainly don't think we've seen all of them, but there aren't thousands. I think there needs to be thousands just from like basic portfolio economics of who's gonna pull this off, and this is a hard problem, but there are not nearly enough founders working on this stuff. And in some cases it's not always the skills that apply to software founders. I mean, these are a hard physics and chemical engineering or mechanical engineering or ocean science or agricultural problems. And I think people from those fields with the expertise, sort of in the physical systems that we're talking about here, we'd love to see more of them consider starting negative emissions companies. And we would love to purchase from them to the extent that they meet our criteria. But I just like there aren't enough projects.
Jason Jacobs: And if you were an investor, I mean, would you invest in these products? Do you think that they're good companies? I mean, I know they're good companies in terms of being important for the world and that you could be a customer if they meet your criteria, but are they good businesses?
Nan Ransohoff: If we can build a big market of customers, I think that there is a potential for these to be huge businesses.
Jason Jacobs: Well is there anything I didn't ask you that I should have, or any parting words for our listeners?
Ryan Orbuch: What do you think Nan?
Nan Ransohoff: You asked a lot of great questions Jason, I'm trying to think if there's anything meaningful to add. I don't think I can think of anything
Jason Jacobs: Should we do negative emissions project that each of you is most excited about or one of your favorites that you wanna spotlight?
Ryan Orbuch: I could talk about maybe it has weathering for a second. Enhanced weathering is really fascinating. One of the companies we purchased from called project Vesta is sort of acutely working on it, but zoomed out a little bit. Enhanced weather, I think it's sort of a good example of sort of the gap that we've been seeing that we're trying to fill with our purchases and that like enhanced weathering at a high level is basically like the vast majority of carbon on the planet is stored in rocks, calcium carbonate, limestone, for example, and other rocks in the mantle. And a handful of percent of it is stored in biomass and trees and plants and soils and stuff. And the vast majority is in rocks. And plausibly rocks are a great place to put it because it's thermodynamically favorable carbonates is the sort of base case of carbon. And it's not gonna sort of move out of that state unless you heat it up extremely, extremely hot, like in your score.
And people have known about this in literature for decades. No one has ever tried to do actual enhanced weathering in the field until essentially now. And as far as we know, we were the first purchaser of a project that's working on it. And my point is not that, oh, we found this thing that like nobody else found this is cool. It's like, this is a reaction we know works. There are huge questions around it. How much can we speed up the reaction that's doing the weathering and store more carbon more quickly? What are the ecosystem impacts? Are there heavy metals released? Is it possible to speed it up quickly enough to matter? Very genuine open questions, but like almost no one has tried this in the fields in the 40 years that has been in the literature and we just think that's crazy.
And we wanna serve as the demand side for those sorts of things that might make sense in theory, weirdly very few folks have tried them. And there's other examples, particularly around ocean capturing stories that we think are potentially really high impact director of capsules and other that's gotten relatively little resourcing, but just like there's so much that might work that just, no one's tried because no one's tried it. And when we look at the range of projects we're gonna need, we just need more people trying some.
Jason Jacobs: Great. Well, I just wanna thank you both so much for coming on the show. And also, I mean, I know it's early and there's a lot unknown, not just in the Stripe initiative, but I mean, it's just such an immense complicated nuance interrelated problem that I don't think there's anyone on the planet that has all the answers here. And it's really inspiring to see a company like Stripe taking the stand. And I'm also really intrigued as well by the product centric approach and ecosystem centric approach of trying to not only take your learnings and then productize them, but then involve this wide web of customers that Stripe serves around the globe. Because I mean, that's how, when you find things that work, you can get serious leverage while behind if a company was starting from zero. So I think it's awesome that you're heading down this path. I'm really excited to see how it evolves and would love to keep the dialogue going. And maybe at some point, have you back on the show to give us an update of the progress that you've made and what you've learned in the interim.
Nan Ransohoff: We would love that. Thank you so much for having us. This is a really fun conversation.
Ryan Orbuch: Yeah. This is a lot of fun. Thank you and thank you for doing all this in public. I think it's important for the field. We're trying to do it as much as we can and we need to be easier to spin up on climate. So I think things like this hopefully can help people with that.
Jason Jacobs: Well, there's so much to learn and I gained so much selfishly by learning in public because then a bunch of experts from all different angles, chime in and tell me how I'm not thinking about it right. So [crosstalk 00:43:53].
Nan Ransohoff: [inaudible 00:43:54].
Jason Jacobs: Well, this was awesome. Thanks again.
Nan Ransohoff: Thanks Jason.
Ryan Orbuch: Thanks Jason.
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 .com. Someday we'll get the .com, but right now .co. You can also find me on Twitter @jjacobs22, 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.