Mark Herrema is the Co-Founder and CEO of Newlight Technologies, an advanced biotechnology company using carbon capture to produce high-performance polymers that replace oil-based materials. Newlight was founded on the idea that carbon could be used as a resource, and today it operates the world’s first commercial-scale greenhouse gas-to-AirCarbon manufacturing facilities, producing bioplastics used in furniture, electronics, packaging and a range of other products.
Full Transcript
Alexsandra Guerra: You’re listening to the Reversing Climate Change Podcast by Nori, the world’s first carbon removal marketplace. Here are your hosts, Ross Kenyon and Christophe Jospe.
Ross Kenyon: Hello, welcome to the Reversing Climate Change podcast with Nori. I’m Ross Kenyon here with Christophe Jaspé and producer Paul. Today we are here in Huntington Beach in sunny Southern California, though it’s been a little bit cold lately. Today we have a special guest because it’s the first time that we’ve been to an industrial facility as far as I can remember. There wasn’t another one, was there? Yeah, no, I don’t think so. This is our first.
Paul Gambill: Actually, there was, but you hit your head because you weren’t wearing your hard hat. So you totally forgot.
Ross Kenyon: I got to wear a hard hat today. So already it’s a win in my book. And well, to kick us off here, I want to quote the graduate here and just give one One piece of advice, one word, plastics. So we’re here talking about plastics today. Christophe, why don’t you introduce our guest?
Christophe Jospe: I kind of feel like the conversation we got in between dirt and soil and plastics and polymers, there’s probably a difference. Our listeners probably want to know, but... I would like to know. Yeah, we don’t know. Well, we do, but we’ll fake that we don’t know. Well, sitting across from us is CEO Mark Harama. This is his company, his new facility. Mark, what got you here today? How did you get involved with all this?
Unknown speaker: Yeah, what is New Light Technologies?
Mark Herrema: Ooh, a couple of nice questions. By the way, half of my friends don’t know how to pronounce my name correctly, so it’s actually Mark Harrima. That’s okay.
Ross Kenyon: Thank you. Okay. Kristoff is bright red, flushing.
Mark Herrema: Mistake number one. I’m going to make sure everybody listens to this. All my buddies, they’ll all know. So how did it start? My junior year of college, I got really sick. At the time, I was planning to go to med school and something just started happening to my body. I didn’t know what it was. And I was going... Seeing various doctors for about a year and finally I just got so frustrated that I said, all right, I’m going to take this summer between my junior and senior year and just lay it all out and just do everything I could to figure it out.
So I was in just heavy science research mode and during that summer I came across a newspaper article about methane emissions from cows. And, you know, everybody knows about methane emissions from cows, right? This is not new. But there was a specific number in this article that talked about 600 liters of methane per cow per day. And in the same way that you guys are, you know, trying to quantify, you know, carbon reduction. And for me, that was this quantifiable moment where you could say, okay, so that farm down the road with a thousand cows, I can calculate precisely how much methane is emitted from that farm.
And then all of a sudden, for me, this light bulb went off where this intangible thing of climate change became very real. Because it’s not just about what’s happening with the warming. It’s also just the sheer amount of carbon, the mass of carbon going into the air. And the thought was, very naively, there has got to be something we can do with that carbon. And that is what started the entire thing. That was about 14 years ago. So that’s where it started.
Ross Kenyon: Thinking about cows and getting tripped out on all that methane.
Mark Herrema: That was the origin. I think the idea was nobody was doing anything about it. I mean, everybody was talking about taxing carbon or trying to bury it underground. But when you look at it in that context, when you run the numbers, so 600 liters per cow per day, 1,000 cow farms, 600,000 liters per day, you can do the math. Divided by millions of BTUs and there’s a market price for methane, you can do the math for what the price going into the air is. And so it started this chain of thinking of why can’t we do something with that carbon that is not just good for the environment, but also good for the economy?
We can use it as a resource. And so this started this whole, for us, our paradigm was how can we harness the market? To reduce the amount of carbon in the air. I know this is a theme that’s near and dear to you guys’ hearts. And it was the founding principle of New Light. Not forcing people or asking them to do good. But make it so that you’re giving them a better product. They’re saving money. And in the process, they’re making the world cleaner and healthier.
Ross Kenyon: Do you want to say the line so I don’t have to? My most repeated line on the podcast?
Unknown speaker: No, go for it, Ross.
Ross Kenyon: No, I don’t want to do it. Can you just do it?
Paul Gambill: Ross and the rest of us don’t believe that people are motivated by altruistic things. They’re motivated by incentives that exist for them. And if we can find a way to align the incentives so that the behaviors that we want to see, like removing carbon dioxide and other greenhouse gases from the atmosphere, aligns up with people’s motivations to earn a living and create goods and services that are valuable to people, that’s the way to success. Yeah.
Mark Herrema: I think there’s maybe a hybrid. I think there are some people who are truly motivated and just want to do good. And there’s other people who – and it’s no fault of theirs. They’ve got kids to feed and a life to live. And I think if you really want to do something at scale though, you have to harness forces that are big. And, you know, the world world history shows that if you can harness the force of the market, that invisible hand, you can really move at speed and at scale.
And so climate change has to be solved that way.
Ross Kenyon: Oh, for sure. I think it’s just kind of a hard to sustain a good hearted altruistic approach in the long term. I think, you know, appealing to people’s if you’re making a really good plastics product and it helps the world and the economy, like who wouldn’t support that? That just seems like an easy decision.
Mark Herrema: So that was the founding challenge. When we started down this path, what we very quickly discovered was that a number of groups had tried to turn greenhouse gas emissions into useful materials, including polymers and bioplastics. So we weren’t the first to have the idea. And so then we asked, why hasn’t this been successful? And what we discovered was that it was basically two things, price and performance. So the material that groups were making was very expensive. And it also wasn’t very functional. So even if you’re an extremely altruistic company, there’s a limit to that, right?
Let’s say you consume a billion pounds per year. You can imagine if you’re doubling the cost of that, let’s say the plastic is costing you a dollar a pound for easy math. And you’re consuming a billion pounds per year, a billion dollars in cost. You double that cost. You try going to your boss and saying, hey, I want to add another billion dollars. It’s just not going to happen. And then performance is just a non-starter, right? You have to at least provide the same performance. Again, even if you want to use it, you can’t.
So that was our founding mission. How can we develop a material from carbon emissions that can match or out-compete on price and performance? And that was a long journey.
Christophe Jospe: And so a mission like that is awesome. We’re so happy to be here. And we sit across from you and definitely feel like we are at a company that is changing an entire industry. You’re taking an industry which traditionally has used petroleum to make plastics. And now you’re saying, hey, we don’t actually need to use, we don’t need to extract oil to make this product that everyone uses. There’s a better way. It can be more durable. Actually, it can biodegrade. There’s no petroleum in this at all?
Mark Herrema: So we don’t use any oil. There’s no need for that. So our ingredients, so we have two pathways. We’ve spent many years commercializing our methane pathway, and we’re also ramping up our CO2 pathway. Neither of them are oil-based. So we’re either taking methane emissions or carbon dioxide emissions.
Ross Kenyon: Did I cut you off, man? I’m sorry. You were like driving at something.
Christophe Jospe: You did, Ross. But this is why we keep you in the dark because we really like your curiosity.
Ross Kenyon: Sorry about that.
Christophe Jospe: No, it’s fine. I just wanted to talk a little bit about the industry. You’re changing an industry and I’m kind of interested. You’ve got these incumbents who might look at you a little bit funny. Maybe they’re trying to fight you and push back against, but they can’t necessarily do that because you have found a way forward. And maybe you could speak a little bit to how you see New Light and its role in transforming the, and maybe you can get into, is it plastics or are we talking about something different?
What sort of products? And where do you fit?
Mark Herrema: Okay, so first we’re trying to get plastics out of the world. Plastics are made from fossil fuels and they don’t degrade. Now, plastics have done a lot of good for the world and we can’t forget that, right? I mean, it’s made things lighter to reduce transportation costs and the carbon emissions that go with that. On a certain level when you compare it to, you know, paper bags versus plastic bags. I mean, there’s an open debate as far as the impact, positive and negative of plastic. So while they’re not all bad, we also have to recognize that the current situation doesn’t work, right?
It’s bad and getting worse. So we have to develop a new material. So air carbon, the product that we make is what we call bioplastic. And so the difference is it’s not made from a fossil fuel. It’s made from carbon capture. And it is a biodegradable product. So now there’s lots of different forms of that. And how long it takes depends on where you put it. And you can put additives into it that change the pace of that. But fundamentally, this is a molecule that is made by living things. And so when you put it into an ocean or a wastewater treatment plant, it will go away eventually.
So it’s a little bit different than plastic. We’re trying to replace plastics with bioplastics. With regard to kind of how we fit, You know, I think if you go back to this concept of, you know, I think at the end of the day, everybody’s actually a pretty good person. And so if you look at oil and gas, as an example, they’re within the climate world, you know, they’re often kind of thought as the bad guy. But they’re just trying to make a living too. And they’re trying to provide the world with a service, right?
We’re driving cars, so thank God for them, right?
Ross Kenyon: Way worse off without them ever having existed.
Mark Herrema: We’d be much poorer. Absolutely, right? So I think it’s really important to recognize the good and bad. There is that in kind of probably pretty much everything. So when we look at oil and gas, we want to get to a turning point where when Exxon is going to build its next They say, why would I build a polypropylene or a polyethylene plant if I can build an air carbon plant and make a whole lot more money and get better market share? It just makes financial sense for me to do that.
So our goal is to get to that tipping point when Exxon and Chevron, all these guys become the solution and not what’s perceived to be the problem.
Ross Kenyon: I think it’s better than yelling at them and trying to crush them out of oblivion. Seems like you might be more persuasive if they just switch sides, so to speak.
Mark Herrema: Yeah, and that’s a function of the strength of your technology, right? I mean, you see a lot of big energy production companies today building solar. That’s because solar has advanced to a point where profitability is starting to get on par. That’s what we need to do. If you are a hardcore environmentalist, be a hardcore industrialist. Figure out technology that can out-compete the things that are making the environment bad, and then you can move at scale.
Ross Kenyon: And that was the most quotable thing I think we’ve ever had.
Christophe Jospe: That’s probably going to go in the show description.
Ross Kenyon: I love it. That was an interesting line.
Christophe Jospe: So we’re talking about using carbon dioxide, using methane. You’ve got an input, which is traditionally used as a waste. Where are you getting it today? How does that work?
Mark Herrema: So if you look at the methane side, there are a number of sources where methane emissions are produced. One of the sources is from farms. Farms have what are called digesters. So you basically take whatever form of waste you’ve got that’s organic, everything from manure through crop residues and everything in between. It’s basically like a mini landfill on a farm. And so as that material sits around, it starts to decompose and starts to produce methane and CO2. Just like on a landfill. So that’s been one of our sources to date.
Ross Kenyon: Is that like a big container?
Mark Herrema: Yeah. Think of a big tank where they’re just putting a bunch of stuff and the microorganisms in there chew it up and burp out essentially methane and CO2.
Ross Kenyon: And then it’s captured right at the source there. It’s like a valve or something you plug into.
Mark Herrema: In some cases, yeah. So in some cases, it’s just a big open pit or a covered pit and it’s producing all this gas and it’s just being emitted. There are a number of farms, a growing number around the world that are capturing that methane and using it to make power. In our case, we’ve gone to places where nothing was being done with it. It was just being vented. And then we would take that and run that into our system.
Ross Kenyon: Are you paying them for it?
Mark Herrema: Oh, so they’re winning out of it too. We just don’t think that’s a sustainable model to ask people to give it to you for free. You share in that value. So in 100% of the cases, we are paying for our carbon feedstock. And we intend to do that going forward. It’s just that for me makes more sense because now you incentivize everybody along the supply chain. So digesters is one. The next one is a big one for methane is landfill gas. So in the US, you have a very, very large number of landfills, all of which are emitting methane and carbon dioxide.
A little over half, I think it’s 60% now of those landfills are taking that and turning it into power. Some are starting to go into pipeline. But then there’s also a number of sites that just the dynamics don’t line up, whether it’s distance from a transmission grid or power purchase agreements challenging or permitting or whatever it is. So there’s still a lot of methane that’s just being flared. Those are great sources for us. Then that gets into the next category, which is all the flares. If you look at the United States from space, which I often do at night, and you look at the lights, you’ll see all the big cities.
Then you’ll see these places in North Dakota and Texas that they look like big cities. It looks like a Chicago or New York, but all they are is flares. Yeah.
Ross Kenyon: You mean like they’re venting methane and then they’re lighting it on fire?
Mark Herrema: So what I like about our process is that, you know, it’s not a process that, you know, makes power and then still emits. We’re capturing it. We’re turning it into this biopolymer molecule. And that is a solid product now that you can do things with.
Christophe Jospe: Air carbon sink.
Mark Herrema: Yeah. Yeah. Now, sorry, just to finish that. So that’s on the methane side. The CO2 side is, you know, there’s all the classical sources. But the biggest, of course, are the power plants, right? And just you also have ethanol plants in places that do fermentations. So that’s sort of your bio-based sources of carbon dioxide. So whether it’s coming from a fossil fuel or CO2, those are much bigger point sources than methane. And it’s part of what our impetus has been to add CO2 to our overall production platform to be able to do both.
Ross Kenyon: And when you’re taking CO2 and you have to add hydrogen to it to make it a hydrocarbon, and that’s where the energy comes from, right? Yeah. Look at that chemistry, right?
Christophe Jospe: So that’s where you’re tapping the water with electricity and pulling the H out of the H2O?
Mark Herrema: Yeah. So our molecule is carbon, hydrogen, and oxygen. Those are the three things in air carbon. So you need a hydrogen source. And so that’s absolutely one of the big costs of that process. Is getting the hydrogen and mixing it in? That’s definitely a big part of the process. Yeah.
Ross Kenyon: Yeah.
Christophe Jospe: So I’m interested, we’re talking about reducing carbon or using it for a valuable process. We’re on the Reversing Climate Change podcast. So obviously we need to think in terms of, okay, what’s the decarbonization process here? Can you talk us through a little bit of how all that works, how it checks out? I mean, what do you say to the people who say, oh, well, new light’s just using a whole lot of energy here. This might increase the carbon footprint in some case. Convince us you have a great life cycle.
Mark Herrema: Well, first, yeah, it’s a very, very common thing to say, well, I understand you’re using carbon emissions to make products, but what about all the power? Have you thought about that?
Ross Kenyon: Well, have you? Gotcha journalism right here.
Mark Herrema: Yes, we’ve thought about that. So the challenge with carbon accounting is it’s, as you guys know, I mean, there’s so many different places where you could draw the box. Is it cradle to gate? Is it cradle to grave? But when we’ve done our analyses, we go cradle to grave. That means... From the moment you start, you know, having your inputs and the carbon footprint associated with those inputs from the power to the materials, you know, everything right through all the steps in between. And then finally, what happens? What happens to the product end of life, right?
Where does it go? What happens to it when it’s disposed? So that’s the cradle to grave process. And then, so when we run our LCAs, our life cycle analyses, we do cradle to grave and that gives you a complete picture of what’s happening. So we’ve done two third party analyses and those are important because In the world of carbon accounting, I think you can reasonably ask the question, how do you know? Somebody tells you a number, how do you really know? One of the tools, of course, is this third-party LCA where someone else comes in and it’s their credibility on the line to do an audit according to international standards.
That’s how you create a certain currency, if it were or not. Can’t wait to talk about what you guys are doing with the blockchain and all that, but something that is verifiable and trustable and all that. So to our product, so if you look at the carbon footprint for methane versus CO2, Those are different. Methane is about 23 times more potent as a greenhouse gas than CO2. In the carbon accounting world, if you capture one ton of methane, it’s considered to be like capturing 23 tonnes of CO2. The methane math is actually really easy.
Let’s just say as an example that for every pound of air carbon that we produce, let’s say we take two pounds of methane. That’s 46 pounds of CO2 prevented from going into the air. Now, you 100% have carbon emissions on your behalf, right? The energy that you use to run your processes, all of that stuff. So when all that balances out, you have a small amount of carbon that you’re putting into the air and a whole lot that you’re preventing from going into the air. And those balance out pretty cleanly.
When you look at CO2-based capture, it becomes a little bit tighter, right? Because you don’t have that 23x advantage. To make carbon capture carbon neutral or carbon negative from CO2 capture, at least in our case, you need to use renewable power. And that becomes obvious on a certain level, right? I always think it’s funny when people say, well, just thermodynamically, how is that possible? Look at a leaf. When a leaf grows, it’s pulling carbon dioxide directly out of the air. And it’s certainly not putting out more CO2 into the air, right?
So solar-driven carbon capture is happening around us all the time. That is a carbon capture process. So in New Light’s case, when we use CO2, it’s important that we use renewable power to do that.
Christophe Jospe: I really like that you kind of pointed at a nature-inspired design. We were touring the lab earlier and we saw some polymers which were human-inspired. Could you speak about some of the different polymers and their uses and how, what new light is doing?
Ross Kenyon: Also, what is a polymer?
Christophe Jospe: Oh yeah, we didn’t, we like defining things. What’s a polymer, Mark?
Mark Herrema: So the word polymer, if you break it down to Latin, so you have poly and you have myrrh, you know, are, are.
Ross Kenyon: Thank you, right?
Mark Herrema: I mean, so anyway, I’m done. Drop the mic. So poly means many. And I don’t know what myrrh means. No, I’m just kidding. So myrrh is basically a unit, right? So when you have polymer, it’s basically a string of units. And in the case of our molecule, you have these repeating units. And essentially, that’s what a polymer refers to as a repeating unit structure. So this is not just plastics. There’s lots and lots of things that are polymers. But plastics are certainly a polymer. You have a repeating unit. And so, this particular polymer that we make happens to be produced in almost all known living things on earth, which is pretty cool in my book.
So, the human body also makes this material. So, what I think is really cool. Not only do you have a material made from carbon capture that has cost advantages, but you also have a healthier material, right? So you have a few problems with plastics, right? Made from fossil fuels, emits about three times its weight on average in CO2. They’re non-degradable. You’re choking the ocean. But you also have the actual physical contact issue. I don’t want to blow this out of proportion because for most plastic materials, they’re relatively inert and not that big of a deal.
But you are seeing more articles coming out for oceans, for instance, where it’s not just choking on plastics. It’s also the things that are leaching out and bioaccumulating and causing problems. So what I really like about this molecule that we make is it is a natural molecule made in natural things. And it’s biocompatible with the human body. So there’s a certain safety element to it too that I really like.
Christophe Jospe: Awesome. So I first heard about New Light about four years ago, I was at a conference, someone was showing me a cell phone case made out of air carbon. I was like, wow, isn’t that cool? I got to find this company. And it seems on the consumer side, you’ve got a real easy sell and companies such as IKEA and others have committed to buying a fair amount of air carbon. Could you talk kind of about the product lines and how this will move into the sort of consciousness of everyday people?
Mark Herrema: Yeah, absolutely. So I think in order to do that, the best way is to kind of talk about what our big vision is and how we’re planning to get there. So we want to create a world where we’ve switched from the choice being plastics and going over to bioplastics. We want to get to that place where Exxon chooses its next plant to be an air carbon plant or something like it for both environmental and financial reasons. So How do you get to that scale where companies like that are making those decisions?
Those are big, big plants and they can’t all be built by New Light. In fact, if we want to have a global scale impact, the only path is ultimately through licensing, right? If New Light builds a plant and then another plant, another plant. So now we’re a decade and we have three plants. We’re still a drop in the bucket. So ultimately, we have to get to a licensing model. But to do that, you have to kind of be the first guy to build those plants. So our next decade is building those reference plants, getting those up.
Progressively bigger and bigger and bigger and showing what’s possible and then licensing around that. We’ve already signed to date about 55 billion pounds of total air carbon in licensed production. So we’ve started the process. IKEA is one of our licensees. There’s a company called Pac in Holland. That’s another one of our licensees. So that’s one side of the equation. The other side of the equation, to your question, is the products. So we try to look strategically at which products can really sort of light up the imagination. And show people what’s possible.
Cell phone cases was for us one of those kinds of products that you can hold and touch and feel and it’s very real versus the back of a refrigerator. Great product back of the refrigerator but might not inspire the imagination quite the same way. Our launch with Dell was a very, very important moment for us because here you have this thing that’s perceived to be just all bad, right? Packaging. But what if you could harness that part of the global supply chain and packaging and make it part of a solution, right?
Like what if all packaging was capturing carbon as well? So those are the kinds of things that we wanted to do to kind of show what’s possible. And set the foundation for growth, both on the product side and also on the actual production side.
Christophe Jospe: Great answer. And I’m glad you got to the big vision. And yeah, after I touched that cell phone case, because I’m a used carbon salesman, I thought, all right, I got to chase this guy down. Somehow I ended up, you responded to me. There’s another one right there. If you would like to make that a twice take. And you responded to me when I was working at the Center for Negative Carbon Emissions, and you made this comment, which always stuck with me, because here we are on, or I was working for a development effort that was on the very early stage of pulling carbon dioxide directly from the atmosphere.
Air carbon sounded cool. Oh, okay. But you made this comment, which you basically said, well, okay, we use methane, but we’d like to use carbon dioxide, which you clearly are now too. And you said, we’re limited by where we can get that. And if we can get it out of the air, we can go anywhere. And so I found that interesting because then we’re looking at actually creating negative emissions while also you’re taking a waste product. So can you talk a little bit about some of the dynamics of how you think about scale, how you think about location, how you see getting CO2 out of the atmosphere or getting it from power plants?
How does it all add up?
Mark Herrema: Well, I’m a huge fan of DAC. I think it’s, um, DAC is, sorry.
Christophe Jospe: Direct Air Capture. We’ve trained you well.
Mark Herrema: Yeah, thank you for that.
Christophe Jospe: That’s the worst acronym of all time, too. It’s like, I hate it.
Mark Herrema: Who knows? Maybe a few years from now, it’ll be this beautiful, like, oh, DAC. Um, So I think direct air capture is a beautiful thing and I’d like to see more of it. I’m inspired by what the guys in Germany are doing with Climeworks. I haven’t been over there yet to see it, but I know the founders and I’m really excited and proud of what they’ve done. To show that the air itself can be a resource is such a cool thing. I think that has the potential to Be one of those major historical shifts, you know, because right now we’re getting all of our materials from, you know, under the ground.
If you can put a, you know, tap into the air. For me, that’s just really good. It reminds me of that old Tropicana ad where it was basically the orange and you had the straw in the orange and now you have the straw in the air.
Ross Kenyon: Spend less time at the dump too.
Mark Herrema: A little bit less time at the dump. Yeah. So I really like that. And from New Light’s perspective, particularly now that we’re doing carbon dioxide as well, it’s inspiring to think about the opportunity to kind of run that process anywhere on the globe. And to your question about scale and how we think about all that, supply chain is a big deal. So landfills are all over the U. S. , And on one level, that’s really nice because you have distributed production capabilities. Our technology, because it’s biologically based, doesn’t require nearly the CapEx that a metallic-based process, how plastics are currently made, that requires It requires such massive infrastructure that you can really only kind of be profitable at very, very big scales.
Because we’re biological, we can build at much, much smaller scales, like 10x less, and still be profitable. So that gives us the opportunity to be scattered throughout, reduce shipping costs, still have good economics. With that said, you do also want to grow quickly. So having a little bit here and a little bit there. While that’s great, we want to see this thing move at big scale in a short timeframe for lots of reasons. So that’s why, in part, why we added CO2 to our portfolio was to be able to harness not just the methane side, but also the CO2 side.
Sorry for tapping on the table there.
Ross Kenyon: Yeah, when I first got into Nori and we were talking about the different methodologies that were available for removing carbon, the industrial products were the one that first caught my eye where I was like, this is great. You’re taking something that no one wants and you’re monetizing it and turning it into a product that’s either better or it appeals to people’s altruism and they can say like, oh, for a similar price, I can get something that actually is not damaging to the environment. And that’s the beautiful thing about what you’re trying to do, yes?
Yeah.
Mark Herrema: Yeah, I think there’s another element to it also, which is, you know, you guys get much more exposure to the general fuels. So I’d love to get your thoughts on this. But my sense of it is that at least in the US, there’s, I think the science of climate change is relatively easy. You know, CO2 and methane are heat trapping gases. You put more heat trapping gas into the air, air heats up. Right. So that’s relatively simple. And then it’s the greenhouse effect. Right. And thank God for it. Right. It’s why we’re why we have the temperature that we have to live.
And we’re just enhancing the greenhouse effect. So and you can do your own experiment, right? Fill a balloon with CO2, fill one with air and see what the temperature is over the next few days. Like one will get hotter. So these are empirical things that you can actually look at. And then you have data, right? Like all these years, it just keeps getting hotter and hotter and hotter. So anyway, so leaving that as it is, I think there’s a sense that the problem is so big that even if you quote unquote believe it, and I hate saying believe science, you don’t believe science, you look at the data and you – but anyway, assuming you accept that climate change is something that’s happening and even if you want to do something about it, I think there is this sense that – It’s just so big.
How are we ever going to stop this thing? And so one of the things that I really like about the product is to the criticism, well, you’re just a drop in the bucket. That’s fine. Even if we are just a drop in the bucket, we’re still showing people that, hey, You can do something with this material, right? Like it doesn’t have to go into the air. It doesn’t have to be waste. Like you can actually turn it into something useful. And even if we are only a slice of the pie, which hopefully I don’t think we are just going to be a tiny slice of the pie, but even if we were, I really just want to – Not to sound cheesy, but I kind of want to inspire people and say, look, if we can do this, what can you do, right?
Like there’s probably so many ways that we can address this problem. And it’s not that the fight is not lost. We can do this.
Ross Kenyon: We’re also looking forward to the second generation of people who are going to copy you and try and improve upon it. Also, for all of our methodologies, we’re hoping that once people realize they can monetize carbon removal, there’s a gold rush for this. We’re all kind of depending on it for our collective happiness and well-being.
Mark Herrema: I kind of want to do a podcast on you guys because I really want to find out more about All right, we can turn the table soon.
Christophe Jospe: Paul, you look like you’re about to chime in there.
Paul Gambill: I’m sorry, go ahead. Ross, you kind of took the words out of my mouth a little bit, but I completely agree with you, Mark, that we, on our business cards, and the name of this podcast is Reversing Climate Change. We know that like that’s what we’re trying to do, but we know that’s not just us. Like we’re just one small piece in this giant puzzle of doing that. And it is all about inspiring the next actions to take because these industries have to grow and scale. And it’s it’s a global problem that’s going to require the efforts of many, many different people and organizations together.
So, yeah, completely agree with what you said.
Mark Herrema: Yeah, 100%. I think sometimes just when you see something is possible, it gives you the courage to kind of take the next step. Exactly, yeah.
Christophe Jospe: So let me try in a minute or less to tell you what we’re doing and then relate it to each other.
Unknown speaker: Yeah, absolutely.
Christophe Jospe: Use that data to improve the methodology over time and have that open for anyone to come in and make suggestions on how to make it better. So where current methodologies are treated as intellectual property, we’re taking a software approach and saying, let’s build these where they’re open out in the open and the data that goes through them improves them. So at the end of the day, we say a lot of things are happening right now, which makes this a seminal moment. The blockchain industry has erupted. There is a whole creation of value based on a technology that enables digital trust.
And so using that digital trust, we say, well, there are today a lot of middlemen, which kind of become obsolete. If we can prove that carbon has been removed, if we can find people who are willing to pay for that removal and we can match that up with people who can supply that removal, we can create a whole new voluntary marketplace and we don’t need to wait for the UN, any state or national government to come and say there’s a price on carbon. We can go out and find volunteers such as large Fortune 500 companies, which have a mandate increasingly to prove that they’re Now removing carbon.
So we are generating a new digital asset class called a carbon removal credit. Every time one ton of carbon dioxide is removed from the atmosphere, a supplier will have that carbon removal credit and it’s paid for with a token, which is backed by a cryptocurrency and that token will immediately retire the carbon removal credit. All of this happens out in the open and can be built in a way such that verifiers and auditors, the same types of people who come in and do an LCA can come and check and say, yes, indeed, this is true.
And we have a process that people can trust. You want to add anything to that?
Ross Kenyon: Yeah. And the token is freely floating on secondary markets. So it’s actually for the first time a universal price of carbon removal. So that’s that’s ultimately the goal and the purpose of the token that exists.
Mark Herrema: Now, is that online? Is it there or is it still in sort of conceptual phase?
Christophe Jospe: It’s on. So right now we have, it’s built on a test net. And that’s really important because we need to get the mechanics right and we need to understand how this token trades and how it’ll all work. We anticipate that we can launch a platform this year sometime, and once that goes into circulation, things will start happening. We realize that we can’t do everything all at once, and it’s kind of bit by bit, and we don’t expect this to be all that large right off the bat. We took a look at the market and the various ways to remove carbon, and we identified removing carbon in soils as the most readily available place to begin to do this.
So let’s bring this back to New Light. So here’s how we can work together, Mark. I mean, we can pull, we can say, hey, there are people who want to pay you this additional price when you’re removing carbon dioxide from the atmosphere. Every time you do that, in addition to whatever you’re selling your product for, as long as you’re proving that carbon has been removed, you get paid. Simple as that.
Mark Herrema: Well, look, I mean, I think it’s a beautiful thing. I think for many years, the concept of quantifying environmental improvements in dollar terms has been like one of the big missing pieces, like saving an estuary, for instance. I think that what you’re trying to do has the potential to be really, really momentous. And to the extent that our products could be part of things that are capturing carbon, I think that element that you’re talking about, the monetization element, part of what’s nice about it is it makes it that much more real.
Like if someone can hold – forget what dollar amount it is, even if it’s a fraction of a penny, but if it’s real and verifiable and tradable or whatever. I think it – because climate change right now is I think so abstract for so many people. Not to anybody’s fault. Even for me, I’m in it every day. It’s still an abstract thing. But when you can hold it in your hand and when you have a monetary value, I think it could start to change the terms of the debate, right? How we think about these things.
So, yeah, I mean, to the extent that would be something that we could participate in, obviously we’d love it. And I think you’ve pointed out that the verification process is, like, I would love to know what are your biggest challenges. And maybe you want to say maybe you don’t. But if I had to guess, I would think getting that the verification standards smooth and easy and set up is probably one of the harder ones. I know when we did our LCAs, these are multi-month efforts. They’re very expensive efforts. And so I don’t know, have you guys, what are your thoughts on that?
Ross Kenyon: Get Marcus out of steak knives.
Paul Gambill: I think he won the contest. The real challenge there is that every different method of removing carbon dioxide requires a totally... And so we see our role as helping to get the first few or more methodologies kind of up and running and working with the open community and getting feedback from participants in this on what is effective to measure. But eventually we want to have that sort of being driven by people who show up and say like, I’m removing carbon dioxide. Here’s my unique method. Here are the ways that I propose that we measure this and let’s work on this together.
But that is unique to every single one. So time has to be spent figuring out what is the way to do that can prove to the buyers that they know that carbon dioxide was removed somehow.
Mark Herrema: Yeah, we have a little bit of experience with that because we’ve looked into sort of are there methodologies that would apply to us and how we could go about doing that. So somewhat familiar with that space, but you’re right. There’s a lot of customization, but hopefully once you get a critical mass, Things can start to flow into those methodologies that are already in place.
Paul Gambill: Yeah. And our hope or hypothesis is that what makes us different from, say, the existing carbon registries for the existing carbon markets is that those registries are companies that And so that is how they’re charging revenue is they’re charging you on listing fees and consulting fees to create these methodologies. And we believe that if we were to get rid of most or all of those costs, that it would be a lot easier for new entrants to come in and say that, like, hey, we want to try this. So by reducing that barrier to entry, we want to encourage more people attempting to figure out ways to do that.
Christophe Jospe: And to kind of put it in the very simple terms that you did when we’re talking about climate change, which we agree, right? It’s a function of too many greenhouse gases in the atmosphere. So the most important thing is the accounting of those greenhouse gases. Now, there might be additional benefits. There might be all sorts of criteria based on whatever methodologies. But when you look at the voluntary offset markets, they need to prove additionality. And we’re Doing away with that. We’re saying you don’t actually need to prove that this product wouldn’t or process wouldn’t have otherwise been profitable.
We want people to compete. We just want to create a new way to get paid. So a lot of the challenges that go into these very long reports and these expensive consulting fees for LCAs, etc. will go down because we’re just kind of getting to the bare bones of the carbon accounting.
Ross Kenyon: Why would you only want to encourage marginal products that wouldn’t already exist or marginal projects? I feel like if they’re doing it, that’s good enough, right? You want to encourage more of that. If they’re more profitable, other companies will see that and then they’ll race to compete with them. That’s good. That is a good thing. That’s how we scale. That’s the whole point of market competition.
Paul Gambill: Yeah, we talk internally about the way that these current markets are set up. And it’s not about the intentions of the people who set these up. Like it’s for the most part, the best of intentions, like trying to solve the same problem that we’re approaching. It’s just that it doesn’t seem like it’s working. So let’s try something different.
Mark Herrema: I mean, I think the high level sort of my takeaway is you’re basically removing a lot of barriers that currently exist. And if you could open up that space, just let it flow. Exactly.
Ross Kenyon: Are you guys monetizing in any way carbon credits or avoided emissions or anything like that?
Mark Herrema: No, we’ve always sort of had the approach that subsidies come and go and government type stuff comes and goes and we never wanted to rely on that.
Ross Kenyon: Where do you find these guys? Is there... You’re like on the same page with a lot of us values wise.
Mark Herrema: So that was always our approach. And so we never built that into our economics or fascinating. I’m sure you guys have seen 45Q, which is fascinating.
Paul Gambill: Real quick, Christophe, do you want to summarize that?
Christophe Jospe: 45Q is part of the Futures Act, the recent budget that went through, and it’s a tax credit that goes to utilizing carbon or that you can capture from a power plant or directly from the atmosphere. And I believe it’s $35 dollars.
Mark Herrema: $35 a ton. $35 a ton. I think the recycling beneficial use and then $50 a ton for sequestration.
Christophe Jospe: And if you get it out of the atmosphere, I think it goes up to $75 a ton. Yeah, it’s an extra $35.
Paul Gambill: This is a subsidy?
Unknown speaker: This is a federal tax credit.
Ross Kenyon: Oh, wow. So that’s interesting, like price discovery for us to maybe think about. Oh, totally. Yeah. That’s valuable information.
Paul Gambill: This is really good for us because this helps. This is just yet another source of revenue for potential suppliers for us.
Ross Kenyon: Would they get it on top of they get the credit and get paid by us?
Paul Gambill: Yeah, there’s no reason not to do that. It’s a totally different thing because it’s a tax credit instead of like some sort of.
Ross Kenyon: Do you need to leave right now? It’s bad. It’s kind of corrupt. I’m like, this would help. But it feels weird, too, because we would be paying them for this anyways. Yeah.
Paul Gambill: Yeah, but it’s just a complimentary subsidy.
Christophe Jospe: So Mark, to put it back to you, how do you think about 45Q?
Mark Herrema: Um, I guess I’m a little torn. I mean, anything to incentivize, um, carbon capture, I think is, gosh, so, so far overdue. And so that’s, that’s great. Um, for the past 14 years, I’ve, I’ve, you know, tattooed on my back, you know, don’t rely on subsidies, make this thing compete on its own two feet. And, um, that’s been a really important part of our, of our whole development.
Christophe Jospe: Maybe that should be your inspirational quote.
Mark Herrema: Maybe in slightly, slightly more poetic terms. Yeah.
Ross Kenyon: No, we’ll just write that out verbatim on the wall. Find a Jack London quote about subsidies.
Mark Herrema: Right. So, you know, to the extent it can move the industry forward, I think that’s just, like I said, so far overdue. And I love that part and I’m surprised it’s happening now, but it is. So, great. But on the other hand, you always have to be a little bit skeptical about And if your whole business is based on that and knowing it could be pulled out from under you at any time, I think that’s a, you know, you just, I think to build a really strong foundation, you have to be able to survive without it.
So we would always continue to take that approach.
Unknown speaker: I respect that. Smart, like conservative approach too. You never know. That’s good business. Yeah. Yeah.
Christophe Jospe: Yeah, well, this has been a great podcast. Really grateful for your time, Mark. I think we covered a lot of ground.
Ross Kenyon: That’s been a pleasure. Yeah, thank you for being here. Had some laughs. It was good. Thanks for letting me wear a hard hat.
Mark Herrema: Yeah, you’re welcome. Very welcome.
