Episode 38: Steve Oldham, Carbon Engineering
Today’s guest is Steve Oldham, CEO of Carbon Engineering.
Founded in 2009, CE is a Canadian-based clean energy company leading the commercialization of groundbreaking technology that captures CO₂ directly from the atmosphere, and a second technology that synthesizes it into clean, affordable transportation fuels. From a pilot plant in Squamish, B.C., CE has been removing CO₂ from the atmosphere since 2015 and converting it into fuels since 2017.
Steve brings more than 20 years of executive experience to CE’s team, stemming from previous roles in technology, robotics, and aerospace sectors. Steve served as Senior Vice President, Strategic Business Development for MDA, a leading Canadian technology firm. At MDA, Steve held a variety of senior executive positions across Canada and the US, covering General Management, Business Development, and Strategy. He has secured financing from Government and commercial sources for a variety of complex technologies, including several large satellite programs. Steve holds a bachelor of science degree in Mathematics and Computer Science from the University of Birmingham in England.
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:
Overview of direct air capture and how it works
Progress to date, long vision, and what is coming next
Cost drivers, and go to market strategy
Discussion about carbon math and why carbon removal is so important
Discussion on 45Q tax credits, LCFS credits, what they are and why they matter
Discussion around price on carbon, whether it is essential, and why it may make sense to distinguish legacy carbon removal from removal at point of emission and also why incentives may make sense based on carbon intensity
Discussion about enhanced oil recovery vs pure CO2 removal services, and Carbon Engineerings short and longterm plans
Discussion around historic role of big hydrocarbon companies, role going forward, and how important they are to the equation
Discussion around CE and how they are working with some of the big hydrocarbon companies, and the nature of those relationships
CE’s licensing model, profile of partners to take into other parts of the world
What policy initiatives Steve finds to be most impactful
Steve’s advice for others trying to find their lane in the climate fight
-
Jason Jacobs: Hello, everyone, this is Jason Jacobs and welcome to my climate journey.
Jason Jacobs: 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.
Jason Jacobs: Today's guest is Steve Oldham, the CEO of Carbon Engineering, founded in 2009. Carbon Engineering is a Canadian based clean energy company leading the commercialization of groundbreaking technology that captures CO2 directly from the atmosphere, and a second technology that synthesizes it into clean, affordable transportation fuels. From a pilot plant in Squamish BC. Carbon engineering has been removing CO2 from the atmosphere since 2015, and converting it into fuels since 2017.
Jason Jacobs: They're funded by several government and sustainability focus agencies, as well as by private investors, including Bill Gates and Oil Sands Financier and Marie Edwards. In 2019, the company received 68 million in funding from a number of investors, including Fossil Fuel Companies, Chevron, Occidental and BHP. I was excited for this one because what Carbon Engineering is doing is interesting, important, and a bit controversial as well. But we have a great discussion about the company, what it does, why it exists, direct air capture and how it works, why it's important, where they are in their progress to date, what's coming next, the long vision for the company. We talk about the big oil and gas companies and how they fit into the picture and policies and the roles there.
Jason Jacobs: We also talked about enhanced oil recovery versus pure CO2 removal and why Steve believes that enhanced oil recovery is a great entry point for the company. Overall, it's a great discussion. I learned a lot about this important area, and I think you will as well. Steve Oldham, welcome to the show.
Steve Oldham: Thank you very much, pleasure to be here.
Jason Jacobs: Psyched to have you, as I mentioned to you before we hit record I, I feel like I should disclose I'm a tiny Carbon Engineering investor. But my admission is that, you know, other than knowing that this was an important area, and that you guys were the leaders, and that Jim McDermott who have already done an episode with his on the board, you know, is someone that I trust and respect, and he had wonderful things to say, I didn't know a whole lot coming in, it was more like a marker just to get a lot closer to the action, which has been great. I'm proud to be involved, but I'm... I still come with tons of questions. So I feel really fortunate to have this opportunity to spend 45 minutes or an hour with you today.
Steve Oldham: No problem. I look forward to your questions, and thanks for your interest.
Jason Jacobs: So maybe for starters, Steve, just tell me a bit about Carbon Engineering. Take it from the top. What is it?
Steve Oldham: Well, I'll start with the company mission because I always think the mission is the most important thing. So Carbon Engineering was founded on the principle that large scale CO2 capture directly from the atmosphere was going to become important. So the company was founded nine years by Dr. David Keith he is a professor at Harvard right now.
Jason Jacobs: Down the street from me, by the way, I'm in Boston.
Steve Oldham: Oh, perfect.
Jason Jacobs: Oh, that was another thing I forgot to mention is that I had met David several times before getting involved in and he's great.
Steve Oldham: Yeah, David's vision in identifying large scale carbon capture as a problem and founding the company to deal with it. It's been tremendous. So what we do, we capture CO2 directly from the air. So we're not a carbon capture company in terms of a point source of emissions, think of a flu stack or a car or a cement plant, all those things. We capture CO2 directly from the air 400 parts per million in the air, we pull it out and produce 100% CO2.
Steve Oldham: So why is that important? So I'll give you two reasons why it's important then we can get into a more detailed discussion. So the first is one of the things that a lot of people forget about the challenge of CO2 and climate change is the legacy CO2 emissions. So there is a lot of focus on eliminating emissions, you know, the UK just announced net zero, we're building electric cars, we're converting to renewable energy.
Steve Oldham: All of that stuff is chipping away at the 40 data turns that we emit per year right now from the planet. But today, we emitted a lot, yesterday we emitted a lot. And if you look at the volume of CO2 that causes a problem, you know, the scientists state that the safe level of CO2 in the atmosphere is 350 parts per million. We're over 400 and rising continuously. To get back to 350. We have to remove about 800 gigatons of existence CO2, as well as stopping emissions.
Steve Oldham: So that's the first reason why carbon engineering is important. We are dealing with yesterday's emissions and the day before, all the way back to 1750 or whenever the industrial revolution started. Second reason why it's important, when you look at emmission Control, there is, you know, the low hanging fruit, the stuff that's relatively easy to do, you know, behavioral changes, low cost process fixes, and we can reduce the emissions that way. Then there is the challenging emissions. And here I would put in switching to renewable energy, everybody getting an electric car, those things are doable, but hard. Then there is the last lot of emissions. Those are the ones that we don't have solutions for right now. Things like aviation is a great example, you know, are we going to invent electric plane, can make enough synthetic fuel for the power plane?
Steve Oldham: We're a long ways off that. So for those emissions, maybe the right answer is don't decarbonize them at source, instead, clean up afterwards. And that's what CO2 collection from the atmosphere does feel. It gives you a way to decarbonize any emission anywhere in the world, no matter how hard it is to address it at source.
Jason Jacobs: And this is, I think, one misconception that I had coming in and I feel like a lot of people have is that there's so much talk about emissions reduction, but like you said, there's so much carbon that's already up in the atmosphere already, and it takes hundreds of years to leave. So it's basically going to be there for, I mean, well beyond our lifetimes. And as a percentage of that denominator, net new emissions is pretty small. So it is important to reduce, but we have to find a way to remove at this point, because the hole that we found ourselves in is just too steep. And as you said, it's getting steeper every day. So that is a fundamentally important point that I just didn't get seven months ago when I was first starting to learn about this area.
Steve Oldham: No, it's absolutely critical, just on pure numbers basis. If we need to remove 800 gigatons, and we're adding five gigatons, sorry, 40 gigatons per year. That means when we deal with emissions, we're actually only dealing with 5% of the problem. So if we globally eliminate all our emissions tomorrow, we've solved 5% of the problem.
Steve Oldham: So we have to be thinking of the 95%. And that's what David Keith's vision was focused on when he founded the company. And that's our mission as a company and why I always start when introducing the company to people, I always talk about the mission. We're focused on the 95% because it's critical.
Jason Jacobs: If you can maybe talk a bit about the how and when I say that, I guess I mean that two ways, both the how in terms of what you ultimately aspire to do. And also the how in terms of what you've chosen to bite off as your entry point.
Steve Oldham: Sure, so fundamentally for us, the key question is scalability. Because the size of the problem is so large, as we just discussed, hundreds of gigatons is the size of the problem. So from day one, the company's been focused on scalability. So I'll talk about the technical scalability and then I'll talk about the business scalability. So firstly, technical scalability. So our process uses equipment that is used at scale in other industries today. So we don't have to invent or mass produce a new piece of equipment. We are buying equipment that comes from the pulp and paper industry, the water treatment industry, the I&R industry, the cooling tower industry. So we've built a system based upon readily available, proven at large quantities, equipment. And that's key for scalability.
Steve Oldham: Secondly, our process that we have, it's a chemical process, and it's self contained. So as we go take our CO2 from 400 parts per million into a 100% CO2 gas, each step of the process, we regenerate the chemical used in the prior step. So what that means is our system is essentially a closed loop system. So the only input we need is obviously air, water and power, no other chemicals as part of the system. Again what that means is we can locate in many, many locations around the world.
Steve Oldham: So one of the challenges with point source capture where you capture the CO2 at the point of emission, is the distributed nature of emitters. There's a billion cars in the world. I don't know how many aeroplanes, but many. So trying to put together a system that captures from each of these widely distributed points of submissions is difficult. Without technology, you can locate a plant wherever you have water, and power and you can [inaudible 00:10:17] CO2.
Steve Oldham: Then in terms of business scalability, we're a strong believer that it's not feasible for one company to bring this technology into the world on its own, if we insisted on building, owning operating every one of our plants, we would never be able to build enough to address the problem. So our business model is to license our technology. So we will demonstrate and prove our technology here in North America. And then we will license the countries, governments, companies around the world that wish to build these plants to address their climate change problem, and their [inaudible 00:10:56] code obligations.
Steve Oldham: And that way, if successful, we would see our plants operating and working across the globe, continuously working like the garbage guys in collecting the CO2 from the atmosphere, that we have been unable to eliminate emissions for and also shipping away at all that CO2 that we've put into the air for many previous years.
Jason Jacobs: So what was the state of the Direct Air Capture Technology before Carbon Engineering? And then what is the... what's different about your solution that moves the ball forward relative to what existed already?
Steve Oldham: So, the concept of chemical reactions to capture CO2 has been around for many, many years. It's not new, you know, 50, 60 years. What's different and fundamental to our approaches this point about scalability in large scale. So the use of existing equipment, the use of chemicals that are readily available, that have no, and no consumables. The use of a large PVC filter as the front end of the system that drives the costs down.
Steve Oldham: So fundamentally, if you look through the Direct Air Capture history, you'll find cost estimates from various bodies that estimated Direct Air Capture's, you know, 600 to 1000 tons, dollars per ton, I'm sorry. And at that price point, it's simply not affordable as a widespread solution for climate change. So with our approach, existing equipment, now consumables, you get the price point much lower down, we are very confident in $100 price point.
Steve Oldham: And when you consider the range of abatement mechanisms to address CO2, inventing electric plane, that's going to cost a lot more than $100 per ton. Widespread adoption of electric trucks or shipping, trying to address emissions from the agriculture sphere. This is going to cost a lot more than $100 a ton. So we see that our technology, combined with capture technology for a good segment of the point source field is a real enabler. So it's those things that drives the price down, and when the price is affordable, $100 a ton Direct Air Capture becomes feasible at scale, which hasn't been before.
Jason Jacobs: And when you say $100 a ton, can you put some context around? Can you set $100 a ton, and you said, affordable at $100 a ton. How should me or the general public that isn't up to speed on this price and who buys it, and what the prices used to be, and where [prices on carboninaudible 00:13:47] or 45Q or that stuff kicks in versus just market base? Could you maybe just give kind of a quick primer on how to think about that price per ton and what it means?
Steve Oldham: Yeah, it's a complex question, of course. So, one of the policy thoughts is that there should be a single dollar tax penalty incentive, however you choose to implement it, but a cost of carbon that is consistent. So let's say that cost for carbon is $50 per time, with a $50 per ton price point, what happens? So, for the, what I call the low hanging fruit, the relatively straightforward emission control mechanisms that can be implemented by just changing processes, not venting CO2, collecting it instead. Those types of application at $50 a ton, the companies doing those will make profit. So capital will flow to those areas, and we will be able to declare success because we are capturing CO2.
Steve Oldham: But, at $50 a ton, the more difficult and challenging areas of CO2 capture and reduction will not attract funding. So our challenge at $100 per ton, we would not attract any funding if the carbon price was $50 a ton. So the risk of a single carbon price is that you overly incentivize and reward the low hanging fruit, and you fail to advance the challenging parts of CO2.
Steve Oldham: So, Carbon Engineering, our view is that it's too simplistic to have a single price on CO2. And let me give you an example. If you have a cement plant, and your cement plant vents CO2 as part of your process today, it is very easy to capture that CO2 and you've eliminated a ton of emissions. It's very necessary and very good, but it's relatively straightforward. CO2 in the atmosphere 400 parts per million, so let me try and put that into context people understand.
Steve Oldham: If you take a drop of ink and drop it into a swimming pool, come back a week later and try and extract the drop of ink. That drop of ink is 400 parts per million in a swimming pool. So inherently dealing with legacy CO2 is a lot harder than capturing emissions from a flue stack. So there should be a differentiated pricing for that. And things like 45Q, and do not get me wrong, I'm very supportive of any price for carbon because it drives behavioral changes and we start dealing with the low hanging fruit. But it isn't high enough to deal with things like atmospheric CO2.
Jason Jacobs: What price does 45Q put on carbon?
Steve Oldham: So 45Q is $50 per ton of CO2 permanently sequestered, and it's a tax credit. So it's no payment from government, you have to be a profitable entity, so that you can cut your taxes by doing this, so it's a great system do not get me wrong. It's a great system, it incentivizes the large companies that have emissions and make profits to address those emissions and cut their taxes as a reward and incentive for doing so. But what it doesn't do is it doesn't enable new companies like ours dealing with the complex end of CO2 capture, which is the atmospheric CO2 as we discussed earlier, which is utterly essential.
Jason Jacobs: And when you say you're confident in the $100 number in what time scale are you talking about?
Steve Oldham: So when you have a process that uses equipment that is in mass use today, it's actually relatively straightforward for us to produce the cost estimate. Because we've thrown up the suppliers and we talked to them about buying quantities of their equipment. We go to the professional engineering companies that understand how to build our plants, we go to a one consumable, which is energy. And we ask the energy business, what prices they're prepared to pay at different locations. And together, we can put together a cost.
Steve Oldham: So the short answer to your question is we expect to be there around our fourth or fifth plant. And our costs for the first plant are not dramatically higher, they're tenfold higher or anything similar. They're higher, but well within the context of affordability of the big picture level.
Jason Jacobs: What are the biggest levels that are going to drive that cost down over time as you build more plants?
Steve Oldham: So frankly, cost of financing is one, when you first implementing the plant, the commercial finance sector will assign a higher risk premium. So the cost for us of borrowing money and attracting equity for the first plants is inherently higher. The second one is the cost of renewal electricity, our plan for our plants is they will run 100% on renewable electricity. And we've seen a drop in price for renewable energy on a consistent basis, we actually get better than market pricing because what we do is we buy power behind the grid.
Steve Oldham: So we set up a dedicated renewable energy facility at a location where there isn't one today, put our plant right next door, and then take the power right off that plant. And what that allows us to do, you avoid the transmission costs, you avoid storage costs. So you get the price down lower. So our one consumable is electricity and the lower the price of that, the lower our cost, and then capital reduction through finance and just the process of learning. Any large plant, the more you build of them and they become built to print, it becomes very efficient to integrate, test and Commission them.
Jason Jacobs: Where do the LCFS credits fit in, and what are the LCFS credits?
Steve Oldham: So the LCFS your I think speaking about the California Low Carbon Fuel Standard.
Jason Jacobs: Yeah, I think I read an article that talked about how... and I think you were quoted talking about how both 45Q and the LCFS credits are crucial at least for plant number one.
Steve Oldham: Yeah. So the LCFS in California, the people in California have identified and recognized that there are these different types of emission and different types of CO2. So, they have done what I described earlier on, they have differentiated between carbon capture from the atmosphere and point source emissions. So in the LCFS, there is a mechanism where if you capture CO2 directly from the atmosphere, and buried underground, that qualifies as the highest credit that the LCFS has available. Today, those credits are trading at about I think it's $180.
Steve Oldham: So they recognize this differentiation and that allows us to close the business case for first plant. And that's why in May, we announced our first plant in Texas, it will capture on an annual basis 500,000 tons of atmospheric CO2. It's a half size plant, for us a full size plant for us is a megaton of atmospheric CO2 capture per year. And just to begin to put that in simple terms, a megaton plant is the equivalent of 14 million trees. So building out those one megaton plants in multiple different locations, that's where we'll go. That's what we intend to do. And we now have our first plans underway in Texas.
Jason Jacobs: And if you just take a point in time snapshot of where we are today, is it a fair assessment that the tech is there, but the math is not in terms of being able to do this Direct Air Capture profitably at scale?
Steve Oldham: No, I mean, look, we wouldn't have announced the plants, neither ourselves nor Roxy would have announced the first plant, if we didn't fully expect it to be profitable. But what I will say is the geographical reach of what we can do is limited because there are limited jurisdictions around the world that have implemented the 45Q, the LCFS type policies that allow the business case to close.
Steve Oldham: So we're focused on Texas and America right now, because that has been the visionaries in place that have put those mechanisms on the box. And that will allow us to get our technology into market, it will allow us to drive down our costs. And obviously, what we hope and what we lobby for and what we communicate for is that more jurisdictions around the world begin to adopt that type of legislation, because it allows us to deal with those benefits I talked about earlier on of hard to capture emissions, and legacy CO2
Jason Jacobs: And is a bet on Carbon Engineering also a bet that there will be a higher price on carbon across all geographies, or I guess another way, do you think that you'll be able to get to multi billion tons scale of carbon removal ever without a price on carbon?
Steve Oldham: That's a great question. So let me start by answering it this way, if we believe that there is a cost to carbon, and when I say we I mean, the economy. If we believe there is a cost to climate change and a cost of carbon, then inherently there is a value in removing it. If we don't believe that, and we don't believe that we're heading towards a carbon conscious economy, then we don't have a business.
Steve Oldham: And that's a moral dilemma for me, because, obviously, I want Carbon Engineering to succeed for our shareholders. Equally, if we didn't have a business for that reason, then maybe we don't have a climate change problem anymore. It's been solved another way-
Jason Jacobs: Oh we don't have a planet that's viable for human life, one way or the other.
Steve Oldham: That's not a good scenario either. So for me, if you're heading into a carbon conscious economy, there will be a cost and hence the value for climate change. And the way that I look at it, it's hard to describe, perhaps over a podcast. But if you consider very simple graph with the cost of a pavement being the y-axis, and the percentage of CO2 eliminated being the x-axis. I think that's a exponential curve going up to the top right. In other words, the first 20% is relatively straightforward, and easy to do.
Steve Oldham: The next 50% is challenging, and will cost more and more electric cars for every person on the planet, renewable energy replacing fossil fuel everywhere. This is difficult and expensive. But over time, it's doable. The last 30% becomes really, really hard. So over time, I expect that the cost of carbon and the value in removing it will increase because it will get harder and harder on a marginal basis to eliminate the next time. Just straightforward economics. So Meanwhile, we'll come down the cost curve. So that as we draw a line across my graph that I just described, more and more of those emissions are ones that we can deal with after emission, rather than trying to eliminate them at point source.
Jason Jacobs: So Steve, if the policies need to come around, I guess my question for you is, what policies would be most relevant to accelerate this transition?
Steve Oldham: I think these two. The first one is the one that I mentioned, a recognition that dealing with legacy CO2 is inherently different than dealing with point source emissions and has a different value proposition, a different cost point and is equally essential. One could even argue using my 95% argument from earlier on. One could even argue that it's more essential. So we'd like to see a policy that says if you eliminate an emission at point source then you receive X dollars. If you deal with legacy CO2, then you receive multiple on X. That's the first one. And then the second area we haven't yet talked about using the CO2 that you capture to produce products with a very low carbon intensity.
Jason Jacobs: Some prior perspectives on the part I think, and I started out this discussion with some of that was around the difference between the new emissions, and the carbon that's already up there. And I had never in this price on carbon discussion heard anyone to date, distinguish, or use the term legacy emission versus or legacy removal versus removal at the point source when it's emitted, but to me, and I guess to [inaudible 00:26:58] is that I'm a newbie and what do I know? But that makes a ton of sense, and it's also in line with this kind of evolving worldview that I've been having around taking the carbon that's already in the atmosphere out is one of the most fundamental things that we can do to solve climate change.
Steve Oldham: Yeah, and it's what the IPCC Report, the UN Report, the Royal Academy Report, the National Academy Report, I could go on. All of those have identified this fundamental point that emission control is not enough. So we have to start thinking about that bigger picture. Again, don't get me wrong, all of us should be actively working to eliminate emissions. And I talked about how Direct Air Capture can play into that by dealing with the hard to eliminate emissions. But the great thing about Direct Air Capture is, if we introduced Direct Air Capture and deal with those harder emissions using Direct Air Capture, you've developed and proven the technology to deal with legacy. So electric cars, renewable energy, fantastic. Absolutely essential, but then the value of those from an emission perspective will run out. We will get to net zero. But we'll still have the legacy problem. So we have to be thinking of both things.
Jason Jacobs: And was there a second policy changes that would be fundamentally important as well?
Steve Oldham: Yeah, I wanted to talk about... so we capture CO2, so fantastic. We have this large quantity of CO2 that's been captured. So what do we do with it? So our plant in Texas will put the CO2 back on the ground. In the Permian Basin in Texas, there's enough room to put 100 years of the planet's emissions back on the ground. So storage isn't the problem, and it's safe. There has, to my knowledge, never been an incident with a man-made CO2 sequestration, where the CO2 was leaked. So it's an established business and that's why we partner with Occidental, one of the world's leaders in putting CO2 back on the ground. So that whole area of putting CO2 back on the ground again that makes a lot of sense.
Jason Jacobs: Does it have a name, that area?
Steve Oldham: Permian Basin-
Jason Jacobs: No does the... the name like the category of putting CO2 back in the ground, Does that have a name?
Steve Oldham: We call it sequestration. I think that's widely used but maybe others have different names we call it sequestration. So I want to talk about the other usages CO2 has. So instead of putting it underground CO2 is widely used in many different products, an example is fuel. So what we do at Carbon Engineering, and we've been doing this since 2017, we combine the CO2 we take from the atmosphere with hydrogen made from renewable electricity, put it through gas to liquids process, and then you produce a hydrocarbon and that hydrocarbon can be diesel can be gasoline can be jet fuel.
Steve Oldham: Now because you took CO2 from the atmosphere in the first place, you've created a chemically identical fuel that is compatible with any vehicle you see. So you look out the window, all those cars, trucks, buses, ships, planes, they can all use a synthetic fuel made this way. But when they burn the CO2 in the fuel, you're replacing the CO2 that we took out of the atmosphere in the first place. So you've created essentially a carbon neutral synthetic fuel.
Steve Oldham: So regions like California, here in Canada, we have the same in British Columbia and other regions across Canada, incentivize people and provide us a fuel to reduce the carbon intensity of that fuel the quantity of CO2 in the fuel. That is also a very good way to incentivize emission control. So if governments set up a policy that the lower the carbon intensity of a product that has carbon, be it fuel, be it fertilizer, be it beverages, whatever it may be, the lower the carbon intensity, then there is an incentive in place to reward that, again, because there's a cost to carbon, there has to be a value in removing it. That's the second policy area, which would greatly incentivize companies like ours.
Jason Jacobs: This is our 38th episode and these are two points that nobody's brought up before. So kudos for that [crosstalk 00:31:30]. One question, Steve. So for those two policy initiatives that you mentioned, are there advocacy groups that are working on those areas, and the reason I ask is that if that resonates with viewers, I want to know if there's any groups that they should look into supporting?
Steve Oldham: Yeah, it's always a double edged sword, because, generally speaking, individuals, politicians don't want to advocate for policies that are not feasible. So, a politician who brings in a policy that there is no way to implement, is not going to be a successful politician.
Steve Oldham: Similarly, people don't want to waste their time and energy advocating for policy change that's not effective or doable. So, for us, it's been very important to publicize, make real, the fact that we can... this technology that we have developed exists, it works, it's credible, it's affordable, because when that's the case, you can put policy in place that promotes this technology, without the risk that you've put in place a lame duck policy. So increasingly, we are seeing just in the last year, we are seeing policy groups and governments more and more interested in Direct Air Capture and the types of policies that I've talked about.
Steve Oldham: I actually, you can look it up online. I testified to the US Senate I think in April, about this type of technology and the importance of it, I was in the UK last week talking to the UK government about why Direct Air Capture needs to be part of that solution. So it's building momentum. But in my view, it has to be linked to the feasibility of the solution.
Jason Jacobs: Yeah, it almost seems like there's an initiative that the people are advocating for prices on carbon. There's an education campaign to educate them on this angle, so they factored into their consideration. I do want to keep things moving, because I know we're short on time, and there's some key topics that we haven't dug into that, but I'd love to one is, I've read that with some of the work that you're doing with Oxy to prove out the model, and the tech that you're doing [ER inaudible 00:33:49] versus carbon removal, and some critics have kind of pointed to that as a knock. It'd be great if you... I'm not, I don't know much about enhanced oil recovery and the pros and the cons and how it works. But if you could just kind of speak to that and how people should think about that and what your plans are initially and directionally, that'd be super helpful.
Steve Oldham: Sure, happy to do so. Enhanced oil recovery is a mechanism used extensively in the Permian Basin where you push CO2 underground, and the pressure created, forces crude up, and obviously that crude can then be sold into the energy market. So enhanced oil recovery has been around for many years, it's an established process. So what is different about our approach, so instead of CO2 from the ground, which is the way that enhanced oil recoveries work so far, you pull CO2 from one location and you bury it in another. When you use atmospheric CO2 and push that down into a well, the crude that comes up contains less CO2, post combustion, then you took out of the atmosphere in the first place.
Steve Oldham: So think about that for one second. If that's the case, then your fossil fuel produce this way, is carbon neutral. And we have an ongoing challenge that the world continues to demand energy. You know, there are many people who paints the oil and gas companies as the bad guys. But they aren't, they are providing a need, that you and I, and everybody else on the planet demands, we want energy. So if that energy production can be tied into carbon neutrality, then you have a way forward to give us time to convert to all electric vehicles, or renewable energy, that middle 50% that I talked about. That is not going to happen overnight. A billion cars in the world. Everybody wants energy, renewables will take a long time to be fully implemented across the planet.
Steve Oldham: So we see enhanced oil recovery using atmospheric CO2, I emphasize that very strongly, you only get to carbon neutrality if you took the CO2 out of the atmosphere before you started. So the plan that we're doing in Texas, part of the economics that closes, is the fact that we make crude, but its carbon neutral, crude. And then resell that into the market with Oxy and everything they do. The second part of the equation, and we do get this criticism as well, you're enabling the oil and gas companies, you're enabling the continuity of fossil fuels. So point one, if its carbon neutral fossil fuel, is that really a bad thing?
Steve Oldham: Point two, we are developing the technology that will solve these major problems for climate change. This challenge of the legacy CO2 the hard to abate emissions, so by doing enhanced oil recovery in the short term, carbon neutral, and you get to develop the technology to solve a much larger problem later. So I'm, I will defend that to the hilt as long as anybody asked me.
Jason Jacobs: Got it, so it's not a bridge to be doing more pure CO2 removal over time, it's more defending the approach that you're taking and that that's the approach that you envision for as far as the eye can see?
Steve Oldham: Now, so, doing enhanced oil recovery with atmospheric CO2 is a market to produce carbon neutral fossil fuel. So put that to one side. But by doing that, you develop the technology to do those large scale negative emissions that cleanup the CO2 from the atmosphere. So when those government policies come in, that allow that and reward that our technology will be proven at scale will have driven the costs down low. The taxpayer will have benefited from all that work that's been funded that way. And the feasibility of large scale legacy CO2 clear up will have been proven. So we do both.
Jason Jacobs: Got it. Thank you for clarifying that. Another topic and you just touched on it briefly, but I'd be remiss if we didn't hit on it more directly is just that, you work with Oxy, you work with Chevron, as you said, you're working with the the fossil fuel producers and you're enabling them to do so in a carbon neutral way. The optimist says, that's great. And what's wrong with that? And why wouldn't we if we can do it? The pessimist says that it's just going to give them a free pass to keep to keep right on admitting. So I mean, you've sort of addressed it already. It'd be great if we could just spend a little bit of time on that topic directly because I think it's an important one.
Steve Oldham: And again, I'm very happy to talk about it. I'm delighted with the partners we have. And when you talk about the challengeS of CO2 removal, this is a massive global enterprise, with a lot of chemical, a lot of plant, a lot of engineering. Then you have to deal with all the CO2 you have to put it back underground, you have to permanently and safely get rid of it. So what is the industrial sector that has been doing that type of activity for many, many years?
Steve Oldham: And the answer is the oil and gas industry, the energy industry, they have been taking things out of the ground and know exactly how to do that they understand the geology, they understand the engineering, the feasibility, the chemistry, they're the perfect guys to put stuff back on the ground again, which is what we need to do. So from a partner perspective, we think the oil and gas industry is ideal, because they have the skill set. So then the question, the second part of your question is the motivation. So, what if they're only doing this to enable their businesses to keep producing fossil fuel or address the critics, how do you want to portray that negatively as many people do?
Steve Oldham: So what I see in my dealings with the oil and gas industry, we only partner with Oxy after I met with their CEO. And she described to me her vision for Oxy, which is to become a carbon neutral energy company. And she said that publicly many, many times. So I see the smart oil and gas companies recognizing that there is a change of foot. And small companies through history have always been the ones that react first and quickest. So that's what I'm seeing in our relationship with the oil and gas industries highly motivated, highly capable partners. So I have no qualms, no issues with the relationships we have with the partners we have, obviously, I can't speak to every oil and gas company, and or a resource company. I'm only working with our current investors. But they've been tremendous partners. And I see them as highly motivated to be addressing this challenge because that businesses they want to continue to succeed, and the world is changing, so get ahead of the change.
Jason Jacobs: I mean, this is a tricky question to ask given that some of them are your partners. But I guess one thing that I just personally wrestle with, or that I'm trying to understand better is historically, do you believe that there have been misleads from the big hydrocarbon companies? And if so, should there be any type of accountability for those or should we just be looking forwards?
Steve Oldham: So, my job in the world is not to decide policy or justice or any of those things. My job in the world is to produce tools that can make a material impact to climate change, and get those into the market. So I will continue to be totally focused on that. If the best way to do that is to work with energy companies for the reasons that I've said, then so be it. I'm more than happy to do so. This is all about looking forward and not about looking backwards. We have a crisis, an emergency in many people's words, so I'm focused on bringing the tools to market that can address that crisis. Whatever happened yesterday, happened yesterday.
Jason Jacobs: And I appreciate that work, and I think that one thing we can definitely agree on is that we are in crisis, and that the best way out of the crisis is what we should be doing to minimize suffering, looking forwards. And that does need to be a top priority. So I think that point is well taken. So what is next for Carbon Engineering?
Steve Oldham: It's an exciting time for us. We've announced that first plant, as I mentioned, will be building that over the next two to three years. We would like to build at least one of the plants in parallel, and we're working on several opportunities for that, which include bringing our synthetic fuel to the market, and then with two or three plants underway, we would then concentrate on getting those fielded and deployed at scale, while we also concentrate on finding more partners worldwide.
Steve Oldham: So to your listeners, and I know you have an influential list of listeners, our technology is available for anybody who wants to license it, and bring it to their country. Our priority once we have those plants financed and we're underway with them we'll build worldwide partnerships. Let's start building these plants in Europe, in Asia and in South America and across the globe, because this is a global problem, and it requires a global solution.
Jason Jacobs: And what type of profile is the sweet spot for those partners today?
Steve Oldham: Good question. There's, I think there's a variety actually, clearly, as I mentioned earlier on the oil and gas and energy sector, understands how to fill chemical plants worldwide, and bring energy to the market, put things on the ground, so that an obvious candidate equally, companies that have established presence in country engineering companies that have good relationships in country recognize the government policies that are in place, they're good candidates too, I think if chemical companies and large industrial companies. But equally we're prepared to partner with new companies that bring financing and knowledge of local conditions. So we have a lot of incoming interest, which is great covering all of those three broad categories that I just described.
Jason Jacobs: And I guess taking a step back from Carbon Engineering directly if you were just looking overall to the decarbonization problem or a carbon problem, I should say, and you had a big pot of money, let's say 100 billion dollars, you could allocate it towards anything to have the biggest impact on that problem. Where would it go how you allocate it?
Steve Oldham: Great question. I've never had that question before. So, I'll... I guess I can't help going back to my point, I took a step back from us, and say, if 5% of the problem is emissions and 95% of the problems is removal, then we should spend more money on removal. Again, I'm a believer that people want to see hope and solutions for climate change. So, I greatly endorse and applaud all the companies that are working on emission control. But they didn't... the lion's share more than the lion's share of funding, policy and interest.
Steve Oldham: So now, I will go back to my fundamental point, which is, if you shut down emissions tomorrow, completely worldwide, we've got to deal with legacy too. So let's stop spending some more money on that. One of the points that I made when I talked to Congress is, you have a need, which the IPCC, the UN, Royal Academy, National Academy, all these guys said was critical CO2 removal, and the number of people working on Direct Air Capture on the entire planet is about 100.
Steve Oldham: For a technology that is deemed critical by climate scientists to protect the future of our species and our planet, to have about 100 people working on it, to me that's a real problem. We need more brilliant minds into this problem, we need to continue to optimize the process, we need to look at other solutions. Carbon Engineering has one, but there'll be others and bring the solutions to the table.
Jason Jacobs: And if you can't that's fine, but you think we can take that one step more gradually. You've talked about what outcome you want to achieve with the money, but where would it actually go to maximize its impact, which to help facilitate that outcome?
Steve Oldham: Yeah, so if I had... I would do what California is doing. I would establish a market based mechanism, which would recognize that legacy CO2 is more valuable, because it's harder than point source CO2. And when you are establish a market based mechanism just like is happening with us in California, good companies, innovators and smart people will come to the table and fix the problem. So if we had a global incentive based mechanism, saying, if you produce a ton of atmospheric CO2 will give you two or three X the credit compared to point source CO2, you would ignite an industry, our company would succeed, other good companies would come in with brilliant ideas, and we would start to deal with this problem. So that would be my implementation mechanism. I'm a great believer in market based incentives.
Jason Jacobs: I've had some carbon pricing experts on the pod already. I'm tempted after this episode to run back to them and tell them what we talked about and see what ideas they have for how to make that a reality.
Steve Oldham: Yeah, and again, I think the carbon pricing policy people to date haven't regarded negative emissions and Direct Air Capture seriously enough, because the perception has been the price point is unaffordable. So my messages, it's not, we have the technology, it's proven we're building the first plants will be at $100 or less. So start working the policy that can support bringing that to market.
Jason Jacobs: In closing, I've never done this before. But I feel like this is an opportunity just to extend a public invite because one perspective that we don't yet have represented on the [inaudible 00:48:32] is from the big hydrocarbon companies. And I've talked to Jim McDermott now who's on your board. And now I've had a great conversation with you, I understand the perspective that the people that are angry at the hydrocarbon companies, but at the same time to your point, we demand all this energy and other than carbon, they've done a lot of good for the world and for humanity and looking forward there in a central piece of the equation and you have, companies like Oxy that are on the front lines really innovating and pushing the envelope in this area. So it would be great if we could get someone like Vicky or like Richard from RZ Ventures to come on the show.
Steve Oldham: Yeah, I think it's a viewpoint that you do want to hear. It my view, obviously, it's up to those companies to decide if that's something they want to do. But, like I said, I would not fault the ambition, the determination and the capability of the partners that we have from the energy sector. They're a tremendous help for us bringing our technology to market ever should be at-
Jason Jacobs: Our last question for you Steve is just for all the listeners out there that are inspired, both worried and also inspired to help, but unsure exactly how to figure out their lane with their time or with their capital or both what advice you have for them?
Steve Oldham: So twofold. Every single one of us should work to eliminate or reduce our personal emissions. Whether that's fine, reducing our energy use where we can, things that we haven't talked about recycling, I'm obviously focused on CO2. So, first thing focus on your at home and your personal self and your emissions because that at scale makes a huge difference. Secondly, lobby for climate change and real mitigation to be central to government policy. What I... every time I do the math, to use just our technology to address the entire planet's emissions would cost one and a half to 2% of GDP.
Steve Oldham: I am not suggesting for one second that that's the right answer. Because there are many better ways of reducing emissions, we're a part of the equation not the whole part. But if you can eliminate the entire planets emissions for one to 2% of GDP, and that's what the scientists come up with the same number. You know, it's that really hard thing for us collectively to choose to do, I think not I would do anything for my kids. And most people say the same thing, but we're not willing to divert one to 2% of GDP to solve the problem.
Steve Oldham: So continuous lobbying of representatives to demand that this is an emergency and put it on top of the list for the sake of our kids and their kids. That to me, combined with your own emissions is critical. My message is there are solutions, we can fix this problem, but we have to make choices.
Jason Jacobs: I've really enjoyed this discussion. And I'm also very thankful for the work that you do and one thing I think that's been very clear, even though we're remote and we can't see each other, I can feel the mission driven aspects of your work and what drives you just kind of oozing out of you. So I know you're coming from the right place and I really wish you best of luck with everything that you're doing and I'm proud to be a small part of it as well.
Steve Oldham: Great, well listen, thank you for your interest. People like yourself getting more and more interest in climate change, asking the tough questions doing the research is invaluable. So thank you for your work, and we'll keep doing what we're doing here at Carbon Engineering.
Jason Jacobs: Okay, Steve, thanks again for coming on the show. Best of luck to you.
Steve Oldham: Thank you very much.
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, no that's .co not .com, someday we'll get the .com but right now, .co. You can also find me on Twitter at @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 words made me say that. Thank you.
