Episode 168: Pat Sapinsley, Urban Future Lab at NYU Tandon
Today's guest is Pat Sapinsley, Managing Director of Cleantech Initiatives at the Urban Future Lab at NYU Tandon School of Engineering.
Urban Future Lab is a non-profit center focused on cleantech innovation in New York that runs several programs focused on market-ready climate solutions. In 2014, Pat assumed the role of Managing Director of Cleantech Initiatives at Urban Future Lab, bringing over 15 years of expertise in the industry, connecting startups to funding sources, customers, and business mentors. Pat started her career as a LEED AP architect with a degree from Harvard's design school before shifting her focus to cleantech innovation. Since then, she has worked in venture capital at Good Energies and as a consultant and advisor to startups focused on building energy-efficient spaces. She also served as CEO of Watt Not, an LED lighting consultancy, and as President of Build Efficiently LLC, a firm deploying energy-efficient technologies.
In this episode, Pat and I cover her career leading up to Urban Future Lab, an overview of UFL's programs, and the criteria UFL looks for when determining which startups to back. We also dive into how policy affects UFL's work, UFL's success rate, and how the programs are funded. Pat is a fantastic guest, especially for founders and entrepreneurs in the cleantech space.
Enjoy the show!
You can find me on twitter @jjacobs22 or @mcjpod and email at info@mcjcollective.com, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded July 2nd, 2021
In Today's episode we cover:
An overview of Urban Future Lab and the gap it's filling in the climatetech startup space
NYSERDA's involvement in The Urban Future Lab and some of their shared initiatives
Pat's climate journey and what prompted her to start focusing on climatetech and startups
Urban Future Lab's selection progress, how they allocate funds, and how the lab shapes its various programs
The structure of Urban Future Lab's programs and what role Pat plays
How Urban Future Lab's measures its performance and success rate
What startups can expect by participating in Urban Future Lab's programs
Policy's effect on Urban Future Lab and the role policy plays in addressing climate change on a global scale
Urban Future Lab's work to advocate for their policies that would positively affect their programs and portfolio companies
How Urban Future Lab's supports portfolio companies and the 88% success rate of their startups
Why a company might not be a good fit for Urban Future Lab
Links to topics discussed in this episode:
Urban Future Lab: http://ufl.nyc/
Urban Future Lab Programs: http://ufl.nyc/programs
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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 they 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 1,300 members.
There is an application to become a member. It's not an exclusive thing. There's four criteria we screen for: determination to tackle the problem of climate change, ambition to work on the most impactful solution areas, optimism that we can make a dent and we're not wasting our time for trying, and a collaborative spirit. Beyond that, the more diversity, the better. 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 want to 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 Pat Sapinsley, Managing Director of Clean Tech Initiatives at the Urban Future Lab ACRE at NYU Tandon School of Engineering. The NYU Tandon Future Labs are the first public-private partnership with New York City, tasked with creating a sustainable incubation program focused on increasing the success rate of new ventures and generating positive economic impact. A unique public-private academic partnership, the Future Labs are shortening the time from idea to real world impact and helping make New York City one of the fastest growing hubs of technology entrepreneurship in the country.
We have a great discussion in this episode about Pat's transition from working as an architect for many years to putting climate front and center, when she went about it, why she went about it, how she went about it, and, of course, how that's manifested in what she's doing now with the Urban Future Lab. We also talk about the Urban Future Lab's approach, their model, their selection criteria, some of the companies they work with, as well as how they can be helpful to these companies. And I have to say, it sounds like an incredible program and one that many of our listeners might be able to benefit from.
At any rate, it's a great discussion, and I hope you enjoy it. Pat, welcome to the show.
Pat Sapinsley: Thank you, Jason. It's lovely to be here. I enjoy listening to your podcast on my morning walks.
Jason Jacobs: That's amazing. Yeah. We always like finding out that people know about the show. And in fact, before I was doing MCJ, I founded a fitness app company, and that was the first thing I had done that was consumer-facing. Other than that, it was all enterprise software. And so it was such a thrill then to be building something that people just out in the world can use. And that's one of the side benefits of having a podcast, is you get kind of a similar thing.
Pat Sapinsley: [Laughs]. Yeah. I don't count my steps, but I can tell how many minutes I've been walking based on your podcast.
Jason Jacobs: [Laughs]. Oh, that's too funny. So, so maybe there is kind of a fitness angle to what I'm doing here. I c-, I, uh, I couldn't let it go.
Pat Sapinsley: [Laughs].
Jason Jacobs: So maybe we'll just take things from the top, Pat. What is Urban Future Lab?
Pat Sapinsley: Okay. I'm happy to tell you about the Urban Future Lab since I run it. [Laughs]. The Urban Future Lab is the center of all things climate tech in New York. We are the longest running and most successful incubator on New York State. We're funded by NYSERDA, and your listeners might not know what that is. NYSERDA's a New York State agency that promotes energy efficiency in the use of renewable energy. They do that with something called the system benefit charge on everybody's utility bill. These bills are never transparent. Nobody knows what they're paying for, which is a bugaboo of mine.
But one of the things is to fund NYSERDA. So they have about five billion to spend on clean energy on New York State, and they use it very well. It's a brilliant and productive state energy. Agency. Sorry. [Laughs].
And of course, NYU, we're part of NYU, so they provide our space and benefits and lots of administrative support to us. So our mission is that we help companies with market-ready solutions to climate change to scale up. Our goal is to deploy these things widely. We don't have a lot of time, so we focus on those that have solutions. Ideation is for someone else. That takes more time than we have. We're a tiny little staff, and we want to be able to see the impact of what we do. So we ask that companies only come to us with top line revenue, some kind of market-ready ... It can be very small. It can be one or two pilots. But we just want to measure their seriousness. We want to be able to pick up the phone and call one of their customers and say, "Did they show up? Did it work? And if they didn't work, what did they do about it?," because that tells us a lot about the entrepreneur.
So we, we work with companies all through the climate value chain, data, software, business model innovation, built environment, mobility, storage, distribution, controls, DER strategies, community solar, even community fuel cells. And we do less hard tech than some of our colleagues, like the wonderful Greentown Labs in Boston that you know well, because we are in New York and because the real estate cost of providing hard tech support is huge and there is something called Newlab in the Navy Yard that does that. So we don't want to reproduce what others are doing.
We take no equity. We're a not-for-profit. And we have a fabulous success rate.
Jason Jacobs: Nice. Well, I do know NYSERDA to some degree, because I did a couple episodes, one with Alicia Barton, but after she had left NYSERDA, and also with John Lochner more recently. So where does John and his team fit in with your group, if at all?
Pat Sapinsley: So we talk to them all the time. We actually toss about ideas with them about where they might want to go next and how we might be involved. They're very open to our suggestions. They help our companies in many ways. And you know, you often think that government is impenetrable. That's not the case with them. They've been wonderful to us. They gave us the first grant, long before John Lochner's time, in, I think, 2019 to start the ACRE incubator. It was before I was there.
The ACRE incubator, totally NYSERDA funded, is for companies that stay for two years. And we help them with introductions to channel-to-market partners, to customers. We have legal help for them that comes in once a month. We have a graphic designer on staff. We give them office space and community. We have events. So that's what we do for the ACRE incubator companies. And I didn't tell you about all the programs, most of which NYSERDA funds. ACRE is the oldest one. And that one, by the way, for every dollar NYSERDA has given us since 2009, every single dollar, our companies have generated 200 dollars in investment, private investment. So a return of 200 dollars for every one dollar of state funding is phenomenal. I think it should be the front page of their web page. It's pretty remarkable. Our companies have now raised about 900 million dollars. But that's in the ACRE incubator.
The other things we do are we have a Clean Start Program that was also originally funded by NYSERDA, but is now self-supporting. That's a program using NYU professors, where career changers, people like you, Jason, who want to come ... Well, like you two years ago. [Laughs]. Now, you know a lot. But people who are [crosstalk 00:08:28].
Jason Jacobs: Not really. I'm still very much a learner.
Pat Sapinsley: These are architects, lawyers, accountants who are mid-career and they want to shine their talents on the clean energy sector and know they need some background information. They come to the Clean Start Program, and in one semester we teach them evenings and weekends, so they can stay on their jobs. We teach them about, you know, building energy efficiency, about policy, about how energy is traded, about project finance, all the th-, little things they're going to need to know in order to put a career together. Then, they do a Capstone project with one of the ACRE companies, and they graduate with a certificate from NYU.
So we also just yesterday did a showcase for our, our program called Innovate UK. That's another one that we run. This one is funded by the UK government. This is for companies in the UK that have climate tech startups and they want to enter the US market. So they work with us for six months, and we help them to enter the US market. That's a three-year program. We just finished the first year. That'll be up on our website in a couple of weeks. There'll be a recording of that.
We have the Carbon to Value Initiative, which was actually initially suggested by NYSERDA. This is what I say when they're very collaborative with us. The governor in his State of the State message in 2019 said that he wanted New York to get involved in removing carbon, you know, as the IPCC report said we have to do. [inaudible 00:09:53] tons of carbon by 2050. And he pledged that New York State would get involved in this and said to NYSERDA, "Make that happen."
So NYSERDA came to us, and we invented something called the Carbon to Value Initiative that we're doing with our partners at Greentown Labs in Boston on the Fraunhofer Institute. We've also added 12 corporate supporters to that program. NYSERDA gave us the seed funding. We're getting additional funding from these corporates, and we have five big not-for-profits working on carbon removal also in the mix. So in a six-month program, these 10 companies get the talents of the corporates and the not-for-profits wrapped around them to help them in any way we can. And we're hoping actually to kickstart the carbon tech industry through this program. So that's another one.
Let's see. We have two more of those small programs in the work, smaller than the ACRE incubator, not small. I can't tell you about them yet, 'cause they're not signed and sealed. And then we also run an annual competition. This year, we had, I think, 160 entrants to the competition. We will pick two companies. It's funded by New York Community Trust, by Carrier, by MUFG Bank, and of course by NYSERDA, as everything is. And we will find two companies that will enter the incubator and $50,000 non-dilutive prizes.
And in addition, this year, as part of the competition, we've added a climate justice track. You know, it's become apparent to everyone in the last year or two or three that certain communities have been impacted more than others and will continue to be more impacted than others. These are the low to moderate income communities. And we want to do something to reach out to them and help.
And our first idea was to simply add the community justice track to the competition, where startups would say, "Here's what we're going to do. We're going to put a big, you know, carbon sucking machine in their neighborhood or a big bank of batteries." And as I talked to the community groups, they said, "No, you won't. We don't want you deciding what comes into our neighborhood."
So we changed the model so that we're reaching out to the community groups and saying to them, "How would you like to engage with us? How can we help you? How can our startups help you?" And in the process, we're hoping that we will then have an ear to the ground for what the community needs are, and we might get more BIPOC founders into the incubator, 'cause right now it's fairly lily white. Although BlocPower, who was on your show, is one of our companies. We do okay in this sector, but we would like to improve our metrics for helping women and BIPOC founders.
So we're hoping that by working with one or two of these community groups and giving them a $50,000 prize to execute on a project with us that we can sort of kickstart the community justice program that we have. We have a ways to go on that.
Jason Jacobs: And what are the roots of the organization? How and when and why did it come about?
Pat Sapinsley: So that was before I started. It was 2009.
Jason Jacobs: Uh-huh. And I heard a little bit because I did some research before the show, but maybe talk a little bit about what you were doing before and then what made you make the switch to focusing more on climate tech.
Pat Sapinsley: Sure, I'd love to. So my, my climate journey was not as odd as yours, but it was a little odd. I was an architect, um, for many years. I s-, graduated from Harvard Architecture School and had, you know, the three-year apprenticeship that is still required in architecture, and then ran my own firm for 11 years.
And at some point, I had the feeling that I was mostly focusing on residences for the wealthy, restaurants for the wealthy, and it began to clash a bit with my values. And I've had one child and I was pregnant with a second child and said, "What am I doing? I'm ignoring my babies to, um, make the HVAC units for, to clean up the closets of somebody who has bought a brownstone or a huge apartment and make their HVAC go down to 65 degrees, which I think is wrong. That's what they're asking for. I don't really want to do this." I started being kind of impatient with my clients and decided it was time for me to be at home with the kids.
So I was able to give my employees, you know, at least five or six months notice. And I went home to be a mom for 10 years. And during the time that I was at home, I wanted to keep my brain alive. So I got very involved in some environmental not-for-profits. I also ... You know, this was 1993 when I started. The internet was new. I was fascinated by the fact that I had a library right there on my desk. And without leaving the house, I could study. And I learned about climate change, and I got much more involved in environmental issues and causes.
And I was across the street from Columbia University, which is where we lived then. And I had taught architecture in the graduate school at Columbia, so I was able to just attend classes there. So I sat in occasionally if the kids were in school and the, and the timing worked on some courses there. And I attended, I remember there was a solar conference that came to town and a WEO, the wind energy organization came to the town. I went to their events, their conferences.
And through a friend of a friend, I was introduced to Richard Kauffman, which was just very lucky. Richard, as you know and maybe some of your listeners know, was the CEO of Good Energies, one of the early venture capital funds, and then went to the Department of Energy to work with Steven Chu. And then Cuomo hired him to become the energy czar for the state of New York. He's also chairman of the board of NYSERDA.
And in 2005, when he was putting together Good Energies, which was the venture capital fund that was investing in solar and wind, he was the Isaiah Berlin fox, not the hedgehog. He knows a lot, a lot of things. And two of the things he knew in addition to the thousands of other things he knew were that if he was investing in solar and wind and not investing in energy efficiency for buildings, then lots of the electrons that were going to be sending, so clean electrons that were sending to buildings were going to be wasted out the windows and walls through bad building management. So he knew he needed an architect.
He also knew that those women who had dropped out of the workforce who were professionals, who had dropped out of the workforce to take care of their children and wanted to come back into the workforce were a wonderful talent pool and that these women wanted to prove themselves. You know, we were raring to go. So he hired me, and I worked harder and faster and every night. And I was definitely trying to prove myself because I was also an architect who had gone to a venture capital fund. And I, I didn't know the first thing about venture capital. So I worked really hard. I had a lot of relationships in the world of architecture, which served them well. I looked at things like electrochromic windows and building management systems and insulation and LED lighting. And it, it was very exciting. I loved that.
Unfortunately, after the downturn in 2009 and 2010, things began to slow down. They decided to close the fund. And I was lucky enough to be able to go off to the Harvard Wyss Institute and help them to commercialize their biomimetic technologies. And at the same time, I had two startups that I was running out of my home that were very small. One was LED lighting as a service, way ahead of its time, between, you know, 2011 and 2014. And the other was a consultancy called Build Efficiently where I helped young companies that weren't quite investible from the VC point of view that I had researched and generally that I had found. I had found them to be really good, well run, have great technologies, and they needed help scaling up. And I worked for them as a consultant helping them to scale up.
And then I went to NYU to run the ACRE incubator. In those days, it was just the ACRE incubator. I guess it had just changed its name to UFL. But now, all those other programs are under the UFL umbrella.
Jason Jacobs: Uh-huh. And so how does it work? Is there a single budget that you get from the state, and then you, you determine how to allocate it across those programs and how many programs to have, what new programs to launch, et cetera? Or what's the process? 'Cause you're doing so many great and disparate initiatives. What's the selection process and what's the prioritization look like to determine what that portfolio looks like on an ongoing basis?
Pat Sapinsley: So they're two different questions, actually. The, the portfolio is how we choose the companies. I can go into that. But how we choose which programs to do is pretty opportunistic.
Jason Jacobs: I said portfolio, but I really meant programs.
Pat Sapinsley: Okay. So, you know, when the governor says something like, "We have to do a carbon program," our ears perk up and we figure out how to do a carbon program. When NYSERDA says, "We want to do a transportation program," we sit down with the people at C2SMART at NYU and say, uh, "Maybe we should do a transportation program with you."
So we're fairly opportunistic, and then we also do get money from outside corporates and we'll work on programs that are of interest to them. So, you know, we have, for instance, NYPA came to us. Gil Quiniones is on our board, and he asked us to help them to source innovative technologies that they could pilot on their grid. So we worked with them, and we always work with the entity. You know, if it's a wind developer who wants to fund a wind incubator or NYPA, we sit down with them and say, "Okay. So what is it you want us to find for you? What is it you want us to do?," and then we write up the program. So we don't go to them with something already canned.
And for NYPA, we said, "Okay. So we will put out the call to source for these two things you're looking for," and they were looking for ... Do I even remember? [Laughs]. They were looking for EV technologies to pilot on their grid and long duration storage to pilot on their grid. So we put the call out for entries and, you know, we know how to do that because we do the competition every year, because we do these others. And NYPA nec-, doesn't necessarily have access to all those startups.
So I think we got over 100 for that one as well. We down selected with their R&D team, and they're doing pilots with two of these companies now. And, and we're not doing it again for another, I think it's going to be every alternate year, and then COVID kind of came along. So we'll be talking to them again. But we're, we're fairly opportunistic about that. So those are the programs we're running now. And we do have, as I said, we have two in the works that I can't tell you about because we haven't signed the contracts.
Jason Jacobs: Uh-huh. And if you look across the array of programs, I won't use the word portfolio again, even though it's different domains and problems, does it tend to be the same format of program, and do you play a similar role from program to program, or, or does it vary across the board?
Pat Sapinsley: Varies a little. The smaller programs that are the six-month accelerators that we're doing with Greentown Launch, and we hope to continue working with them. By the way, the incubators who are in this field are all very collaborative with each other. There is room for all of us, right? So we're very happy to work with Greentown. They are terrific. And they've developed a process called Greentown Launch, where they invite in these corporates to support the program financially.
And then together with them, we have designed a curriculum for Carbon to Value and for our hydrogen program where we design a curriculum. This is comprised of workshops that help these young companies to learn about things like IP, customer acquisition, making sure you've done enough work getting to know your customers and what they really want. So we go through a lot of workshops in a lot of these things. For the UK one, of course, we've added, you know, the additional complexity of doing things in America.
So there are workshops that happen over the six months. And then in addition, we help them to work together with the corporates to figure out what's the best use of the corporate time. In the hydrogen one, for example, I can give you the example of a company called Celadyne that worked with Shell in order to test their thesis, because just doing the testing is extremely expensive. And unless you're part of a national lab, it's very hard for you to do this, very expensive for you to do this.
So Celadyne was able to do this. This was from proved electrolyzer membranes for making hydrogen. They were able to test it in Shell's labs with two different testing protocols, and Shell liked it so much that they went with them to a national lab to help sponsor them to do work in the national lab. And then that ended. It's now a year later, and Shell just invested in them.
So those are the kinds of things we can do through our programs that will help speed up scale for these companies. So most of the short duration accelerators are designed that way. The longer duration ones, the two-year ACRE incubator doesn't have any curriculum, because they don't want to spend their time on that. We spend all their time on customer acquisition and on getting funding. And a lot of that funding is non-dilutive. Some of it is VC. A lot of it is corporate strategic funders. That's how we do it.
Jason Jacobs: And how do you measure your own performance as an organization over time? What are the key criteria or KPIs with which you evaluate performance and success?
Pat Sapinsley: So it's pretty simple. We have reporting, metric reporting that we have to do to NYSERDA, and there are lots and lots of things that they ask, you know, how many introductions did you make, how many sales invoices does that company have. It's very granular.
But the big things, I think, are that in the startup world in America, something like 90% of the businesses fail. Coming out of our incubator, 90% of the businesses are still up and running since 2009. That's crazy. [Laughs]. And the other one is that our companies have now raised, I'm waiting for that one billion mark. We're at 900 million. And of course, the other metric that I mentioned to you is that ... And this keeps changing as companies raise money. For every one dollar that NYSERDA has given us, our companies have raised 200 in the private market. So those are the metrics that I look at for success.
Jason Jacobs: And can you talk a little bit about ... You talked a little bit up front about the criteria for companies that you admit to the programs, but what about the, the value proposition for the companies on the way that you engage with them while they're part of the programs? Can you share some color. And, and really, I'm after, you know, like, the programs are around X many weeks and they're this hands on, or they're in person or they're not, or just, like, kind of how does it work? 'Cause I, I would imagine a lot of people listening are founders or employees of companies that could be potential fits for the program. So what should they know?
Pat Sapinsley: Okay. So for the ACRE incubator, the companies, as I said, have to have top line revenue. They go through an application process, which is on our website, which is UFL.nyc. When they come in, as I mentioned, we ... And this is just not me. I have a spectacular team, by the way, who helps with all this. It's a tiny team, which is why a lot of people haven't heard of us. We're only six people at the moment. And we don't do much public relations. I've completely given up on Twitter and other things like that, 'cause I just want to put my head down and do the work.
But let's see. You asked what we do with these companies. So we bring them. And the process for bringing them in is that we have ourselves and a domain expert for whatever it is they're trying to do on a kind of an investment committee. But there's no investment. It's an evaluation committee. And during that process, we kind of figure out w-, what their value is, what they need to work on. And if we accept them into the incubator, we start something called a milestone meeting process with them, where milestone meeting is every six months. In the milestone meeting form, there are categories, you know, such as, "Where are you in the roadmap for your product development? Where are you in revenues? Where do you want to be? Where are you on building your team? Where do you want to be? Where are you on fundraising? Where do you want to be?," or, "What's your client pipeline, you customer pipeline look like? Where do you want to be?"
And then we can figure out together by sitting down with them for an hour or maybe a little more every six months what should we be doing to help you. So the last category in this survey is, "Okay, we've heard all that. So where are the places that UFL can help you?" And by the way, that's a big part of whether we bring them into the incubator or not. If somebody's doing, you know, fission or fusion, I can't help them with that. So I would say no, even if they're a great company. But if they're doing something where we feel we have the contacts to help them, we can bring in a domain expert, we have a mentor who can help them, we have a graduate who can help them, we have relationships that can help them, those introductions are extremely important.
And as I said, getting customers is far more important than investors. They all come in focusing on a, what big around they want to raise and what their valuation is. And I counsel them to kind of forget that for now. The more you build that customer pipeline, the more you build your customer relationships, the more your minimal viable product is now exactly what the market needs, that's what makes you investible. Then, we talk to VCs, not before then, 'cause you'll get a bad deal if you do it before then.
So I'm not sure that exactly answers your question. That, that's for the people in the ACRE incubator. And I think I kind of answered it for the, the accelerator programs. We have the, the workshops and, and the corporates.
Jason Jacobs: And these are, these are for companies that are headquartered in, uh, New York State?
Pat Sapinsley: No. We've helped companies all over the world who want to do business in New York, who are, who want to come from, very often, their landing pad from Europe to America needs to be necessarily New York. We have, uh, New York State government that's very receptive, has lots of interesting incentive programs and NYSERDA programs, good relationships with utilities who know they have to meet some of the metrics that they promised NYSERDA they're going to meet. So a very wise place to enter America from Europe is New York.
Jason Jacobs: Well, I'm going to have to make a little note, 'cause one of the companies in our portfolio is trying to do more business with New York. So I'm going to talk to you after the show. I need to make a little note. And maybe they're a good fit for the program.
Pat Sapinsley: Yeah. Maybe they applied to our competition. We haven't announced the finalists yet.
Jason Jacobs: So that makes sense. And then how much interaction do the portfolio companies have with each other?
Pat Sapinsley: Oh, well, before COVID, it was great. I mean, it's a very energetic place. They're all sitting together, elbow to elbow.
Jason Jacobs: Oh, so they come ... So let's say it's a European company. Do they need to relocate to New York, or do they just send a representative? Does it need to be the CEO?
Pat Sapinsley: Right. We like to have them have one desk at the incubator, because the relationships that happen there, the help they give each other is really important.
Jason Jacobs: Uh-huh. But it could be anyone on the team?
Pat Sapinsley: Yeah. It's usually a salesperson or a business development person. We have companies from Israel, from Germany, from the UK, of course, Amsterdam. EVBox came to us. They're now a publicly held company.
Jason Jacobs: It almost sounds like a, like a lobbyist, but instead of you paying them, they pay you in non-dilutive funding, and then they help you b-, do better business with the state.
Pat Sapinsley: Well, th- ... [Laughs]. They actually, they pay a very cheap desk rent. I mean, under market desk rent. And they do help us because we look better to NYSERDA, obviously, if we've created this great new green economy in New York. And you know, we do need a new green economy in New York. It's going to be a new driver for New York City. You're going to see. It, it's happening now.
I think Urban Green did a study, and we will talk in a minute when you want, Jason, about local policy being a driver for all of this. But Urban Green did a study that said that the Local Law 97 here is going to create over 200,000 jobs in the next 10 years. So maybe that's time for me to jump into local policy and policy as a market pull, if you want, or we could [crosstalk 00:30:44].
Jason Jacobs: Sure.
Pat Sapinsley: ... something else.
Jason Jacobs: Yeah. Go for it.
Pat Sapinsley: Okay. So we all know that federal policy in America moves very slowly and on a kind of a jerking one step forward, two steps backward kind of way, and that given what the makeup of our Congress is now, you know, it's iffy. We have a terrific administration that's very much behind these things. But who knows what's going to happen?
In the EU yesterday or the day before, they passed a law that said greenhouse gas emissions economy wide, we're not just talking about tailpipe emissions, we're not just talking about energy generation, economy wide, greenhouse gas emissions have to drop 55% from the 2009 benchmark by 2030 and I think it's net zero economy by 2050. That's hard, but it's a great goal. We don't have anything like that on the federal level. We're back and forth on the café standards. We're back and forth on renewable portfolio standards. We're hoping all that'll happen.
The one thing we do have on the federal level is this 45Q, which is helping our companies that are in the Carbon to Value Initiative. These companies are drawing down carbon and making something out of it. So 45Q is a federal tax credit that gives companies, I think it's 35 to 50 dollars a ton, depending on how it's being used, to capture carbon and either bury it underground or make a useful end product out of it.
So much of what's being buried underground is for something called enhanced oil recovery, and that is this phenomenon that happens when you push CO2 underground. It can help to release oil that's underground and also get entrained by the rocks under there so it doesn't come back up again. It's called EOR, en-, enhanced oil recovery.
Our companies in the Carbon to Value Initiative are not taking advantage of 45Q for that. Rather, they're taking advantage of 45Q for the fact that they're making next generation plastics or other things, or they're putting CO2 underground to have it entrained in the rocks to en-, encourage mineralization to happen. And they get paid to do that. So that works, 'cause the business model for capturing carbon is difficult. And that's an example of a tax credit that works for the oil industry. It works for the senators from West Virginia and Montana and the Dakotas, but it also works for us.
So as a tax credit instead of a tax, we can make that work for us. I'm okay with that, because it helps us find a business model that works for capturing carbon. A tax as opposed to a tax credit is just not going to happen. I don't see a carbon tax happening with this Congress. So we have to work with those that are focused on tax credits, like the ones for wind and solar, like this one 45Q, and I don't think we should pin our hopes on a carbon tax coming anytime soon.
However, locally ... So that's federal. Locally, we have some really great stuff happening in New York. New York is a real leader in this. We have this Local Law 97 that I just mentioned, and we also have what's called LECCLA, which is a long and crazy acronym for Low Embodied Carbon Concrete Leadership Act. And this is a procurement law that has passed in the state of New York. And I see it, it's also now been proposed in California. And these procurement acts are really terrific.
This one, we have in New York State, that applies ... It's a five percent discount to concrete that is made with the lowest global warming potential of all the concrete bidders. So what this does is it encourages concrete manufacturers who have state contracts to figure out how to lower their global warming potential and how to calculate it. And they're actually given a tax credit for the time it takes them to calculate it.
So what will happen now is that the purchasing of concrete by states and cities in New York will now go to the bidders who are using these technologies, such as CarbonCure and the others, and it will inspire the other manufacturers of concrete to learn how to do this. So it's kind of got a twofold market pull for us.
And then the other thing is this Local Law 97 that I mentioned, which is only in New York City, but New York City is pretty huge. Buildings worldwide, as you probably know, emit, you know, 40% of our greenhouse gases, because they burn fossil fuels in their basements. In New York City, that's 73% of our greenhouse gas emissions, because we're so built up. There are lots of fossil fuels in the basement. We have to figure out how to get rid of them.
So over the years, we've had laws in New York that are saying to people, "You have to benchmark your greenhouse gas emissions. You have to benchmark your energy use intensity." And that was getting people ... You know, you can't monitor and change what you can't measure. So it was teaching people that they have to measure and requiring that they measure and upload that information to a city website so the city would have some data. That was all well and good. There were no penalties at all.
Now, as of 2024, instituted this past year, there's a new law called Local Law 97 that says, "Every building over 25,000 square feet will have to meet sort of a greenhouse gas cap." They're being put on a diet. And that diet changes depending on their building type. So a university will have a different greenhouse gap than an office building than a manufacturing building. But they have a greenhouse gas cap, and they have to meet that greenhouse gas cap. And if they exceed it, they have to pay fines to the city. And the fines are quite steep starting in 2024, and then the greenhouse gas budget is coming down over time. So by 2030, those greenhouse gas fines are going to be very severe.
So a company like CarbonQuest that's in our Carbon to Value program, they're capturing carbon from flue stack emissions at buildings, at urban buildings. So these could be big apartment buildings or big office buildings over 25,000 square feet. They put some equipment in your building that's about the size of two parking spaces, they pull the CO2 out of your flue stack, and turn it into very clean 99% CO2 that they can sell to the soda companies. And the cost of doing that is less than one year's fine if you didn't do it and if you're exceeding your cap.
So in this way, policy is creating a local market pull, as is 45Q on the federal level, as is LECCLA on the local level. So we're getting market pull from local policy, which is really meaningful and really does drive the market.
Jason Jacobs: So in that local policy regard, for the companies that you work with, oftentimes they might have needs or requirements where if the policy is written a certain way, it can benefit them more if the benefit was written a different way. Do you do any type of advocacy for the companies that are part of the program?
Pat Sapinsley: Yeah. That's part of what we do. It's sort of an unofficial part of what we do. I'm sort of a community activist at heart, so I'm on a lot of boards and a lot of committees. And I work on these issues. I encourage my employees to do the same. And we talk to a lot of the organizations that are doing advocacy. You know, I've testified at city council. I've edited the LECCLA bill. You know, we ... Yes, we do that. [Laughs].
We also have companies that are doing it to such an extent that they've helped the other companies. So we have, we have one company that's now called 9dot Energy. You know, you've heard of Community Solar. They [inaudible 00:39:08] community fuel cells and they have helped the other companies in the incubator to understand some of the really turgent policies and figure out how to work with those policies to create a business model that works to bring down greenhouse gas emissions by finding a market pull in the policy. So they're very clever. They've helped a lot of our companies.
Jason Jacobs: You mentioned that the survival rate of the companies that have gone through your programs is over 90% since 2009. What are some examples of some of the types of things that you do as an organization that you think enables that, since that, that's a remarkable percentage and batting average, if you will?
Pat Sapinsley: Yeah. Well, just, just to be clear, it's ... I said close to 90%. It's actually 88%. [Laughs]. I have a very sharp pencil accountant on my team, and he would kill me if he heard this. [Laughs]. But 88%.
Let's see. What do we do to help them? You know, I think the most important thing that we do is that we make introductions for them that are trusted, and that comes from the fact that we curate these introductions very carefully. Uh, you know, I get, I get a little annoyed when people just throw introductions into my inbox, which is groaning already, without having really vetted who it is they're introducing me to. So we do a double upton.
If I have a company that is producing that I think one of the real estate owners really could use, I'll send a description of that company to the real estate owner. And because I've been on all these boards and because my staff, too, are very active, you know, networking out in the world, they know these people, too. We will send introductions to the real estate owner or the person who's on the facility's team at that real estate entity and say, "So here's someone who's doing something with building management systems. We think it would be really useful in your buildings. Look it over. Look at their website. Call me and ask me questions. And if you want, I'll make the introduction."
And then they trust our introductions, because it's not just something that's been launched into their email. They have the chance to look at it, to talk to us, to talk to others. And then the introductions are more successful. And we also kind of know which door to knock on. You know, if a utility has a thousand different customer-facing employees, or, not a thousand. Let's say they have 30. We know which one does what, who's working with clean gas, who's working with non-wire solution, who's working with the REV program. And it's just a more successful introduction, because they trust us, because we curate these introductions.
So as I said, the most important thing we can do is help them get customers, and this is how we help them get customers. And then the other thing, we've, we've had some of our companies say that Meg, our brilliant graphic designer, is our secret weapon. She helps them with their pitches. She helps them with their websites. We use pitch coaches from NYSERDA. NYSERDA has an EIR program, and we joke that there's one pitch coach here whose companies always win our competition. We're not quite sure how that happens. And I'm not quite sure I should say his name. [Laughs].
But we offer services that are quite valuable. The pitching is important, and you have to do it differently for customers than you would for VCs, than you would for non-dilutive grant providers. The introductions to customers have to be curated. The way your website and your deck looks is very important. You know, we also have an accountant who comes in once a month if they want. We have a lawyer who comes in once a month to work with them. It's what we do.
Jason Jacobs: Well, it sounds amazing. It, and it sounds almost too good to be true. If, if I were to talk to some of the companies that have been through these programs and asked them what the downsides are or, or why someone might not want to do it, what do you think they would say?
Pat Sapinsley: That's a good question. [Laughs].
Jason Jacobs: It's like a podcast reference-
Pat Sapinsley: Yeah.
Jason Jacobs: ... call.
Pat Sapinsley: So we do have ... We give a survey to them to ask them what they'd like to see done differently, how we could change our offering, what they don't like, what they do like. I'm trying to remember. And, and then we have ... we do have staff meetings afterwards to say, "Okay. Here's what people didn't like. Here's what we should do differently."
Jason Jacobs: Let me ask you a, a slightly different question. Do you ever counsel a company that's evaluating whether to be part of the program that you don't think it's the, it's the right fit for them?
Pat Sapinsley: Yes.
Jason Jacobs: N-, not based on the criteria that you select, but based on their own needs?
Pat Sapinsley: Yes, absolutely.
Jason Jacobs: And what, what might be some reasons why it might not be the right fit?
Pat Sapinsley: So if I don't think our contacts are good in the area, you know, I did mention fission and fusion. That's sort of obvious. But there are others. We've, we've had people come to us with community gardening stuff, where I say, "You know, I just don't think I can help you. I don't know enough people in that space. I don't know how to help you monetize that." And, you know, some of them have done very well. But nobody out in all our team is an expert at that. And also, we don't know domain experts at that.
We did have a company who was doing urban agriculture. We did pretty well for her, but not great. It's not our forte. You know, I, I know that we have to cultivate more contacts in that business.
Jason Jacobs: So for anyone listening that is intrigued by what you're doing, what kinds of people do you want to hear from and where do you need help, if any?
Pat Sapinsley: Oh, thank you. You're so sweet. Certainly would always want more corporate funders to sponsor programs. And as I said, we can custom design programs to fit your need. If you're looking for a certain kind of company, we can do a call for entries for that certain kind of company.
Jason Jacobs: Just one question there. So the budget is for more the operating team, and then the programs require sponsors. Do the sponsors end up footing the whole bill, or is it a blend?
Pat Sapinsley: No, it's a blend. We'll find matching funds from NYSERDA or from a foundation, usually NYSERDA. And NY-, NYSERDA loves us to have matching funds, by the way. They're trying to seed the market of corporates that are interested in this. And they're succeeding. I mean, it, it's working. We have more corporate funders now than we used to.
But the other things we need help with, you know, I'd say that there's some segments of the market, like we had Dandelion in here. I'm sure you've heard about Dandelion. They've had great [crosstalk 00:46:22].
Jason Jacobs: Oh yeah. I had, I had Kathy on the show, and Dan Yates came on the show separately as well.
Pat Sapinsley: Yeah. So they're wonderful and they're sort of the darlings of the investment world, and people are adopting them and it's working. We have another company from Canada called Diverso that is doing this for commercial scale buildings. They've done 50 very large buildings, over 25,000 square feet, in Canada. And their business model is similar to Kathy's, but not the same. And we love business model innovation. They put in the ground source loops under a new building, but they can also do retrofit, but it's harder. They'll own those loops and they'll sell BTUs to the building after it's built, and they'll maintain those loops. So they work like a geothermal utility.
It is very hard for me to find a real estate owner who wants to do that in America. And as we get these gas moratoriums, as we get things like Local Law 97, this is such an important piece of the solution that I'm ... You know, I see, I see what's happening. Real estate owners are very risk averse, they like business as usual. The biggest barrier to our company's success is business as usual, fears of liability, the fact that big companies don't know how to work with little companies and they're always afraid of what's going to happen if you disappear in five years.
But we've got to overcome that, maybe with some interesting insurance products. There are ways to do that. And I want to bring down these barriers that are business as usual that are keeping some of our really great companies from going ahead. I think Canada is less liability focused than we are in America. So one of the reasons that Diverso has so much business in Canada and very little in America is that.
So, you know, if we can get people's eyes and ears on this issue, that would be good. If we can get people's eyes and ears on the fact that we do have to draw down the existing carbon in addition to not emitting more, that would be good. And our Carbon to Value program is doing that.
But we need engagement from everyone, and, you know, I think at the end of most of my talks, I try to say to everyone, "You should come into this sector. It is so much more gratifying to work in climate change than in anything else you could do." If you're an architect and drawing for these wealthy clients, what do you have at the end of your life? If you're a lawyer and you're doing tax law, what do you have at the end of your life? If you've helped turn the ship on climate change, oh my God. You can be very proud of yourself. And you did, I did it.
The other day, I had an interview with an administrative person who I of, offered the job to. She's going to come be our, our office manager. I said to her, "So why do you want to come into climate change from what you've been doing?" And she said, "Because I'm human." [Laughs]. And I thought it was a great answer. [Laughs].
But I think we need everyone from every sector to join us in this journey, right? It, I'm speechless. We've got to do this.
Jason Jacobs: I think that's a, a great point to end on, Pat. But this was a, a great discussion. You're doing awesome work with the Urban Future Lab. And yeah, I'll talk to you offline about that one company, but it sounds like there will be a bunch of companies that we'll send your way over time, because unless we figure out something we couldn't uncover on this show, it seems like everyone that wants to do business with the state of New York should go through this program. That fits your criteria, of course.
Pat Sapinsley: Absolutely. And that's how they can scale up and do the rest of America and the rest of the world after that.
Jason Jacobs: Well, thanks, Pat. Thanks for all the work you do, and best of luck to you and the team.
Pat Sapinsley: Thank you. Same to you, and have a good holiday.
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 dot co, not dot com. Some day, we'll get the dot com, but right now, dot 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.
