Episode 1 of the Reversing Climate Change podcast. You can listen on Spotify (subscribe there for ad-free), Apple Podcasts, or wherever else you listen. Paid subscribers get the ad-free version right here on the page.
On the inaugural podcast, Ross and Christophe are joined by Nori CEO Paul Gambill to discuss the concept of carbon removal and the scope of the problem presented by climate change. Paul addresses Nori's approach to reversing climate change, explaining the necessity of removing carbon from the atmosphere rather than simply reducing emissions. They also cover the basics of how Nori would use tokens to eliminate the problems presented by the current cap and trade system.
More from the show
Ad-free episodes and other benefits come with a paid subscription.
Carbon Removal Newsroom, the news show that ran alongside this one, is over. Its episodes are still up, on the feed Climate Workers Anonymous now uses.
Carbon Removal Memes is still goofing around.
The books that come up on this show are collected on my Bookshop shelf.
🎧 Apple Podcasts · Spotify · YouTube
Paid subscribers get this episode ad-free. The ads in the free feed are inserted by Spotify when you press play. They are not in the file I make.
Full Transcript
Announcer: You're tuned in to the Reversing Climate Change podcast by Geagora, the world's first blockchain-based carbon removal marketplace. Here's your hosts, Ross Kenyon and Christophe Jospe.
Ross Kenyon: of the codename, Geagora. So we're still working on the name here, but it's all about reversing climate change here. Christophe Jospe here is quite an expert on that.
Christophe Jospe: Awesome to be here. Just getting chills thinking that we're kicking it off.
Ross Kenyon: I love our name. We can't say it yet. We'll keep you posted on what it's actually going to be. But Geagora, it keeps your carbon down.
Christophe Jospe: It keeps your carbon down.
Ross Kenyon: You a little nervy. How are you feeling over there?
Christophe Jospe: I'm feeling good. I'm excited to do this. Ross, I'd like to ask you, why are you here? How do we wrangle you into this? You've got a pretty interesting story that I think our listeners would like to know about.
Ross Kenyon: Yeah, I've known Paul Gambill, one of the co-founders, for a super long time since college. I believe it was like a junior in college, but we parted ways for a long time. Been in the blockchain stuff for a very long time. So then when this came along, I thought it was a very unique approach to it. But yeah, I think using this technology in a way that makes sense to remove carbon is quite a good use of it. And I know there's been some cases of blockchain tech that you're sort of asking like, why does this need to exist? And it's nice to be working on something where it very clearly needs to exist.
Christophe Jospe: Yeah, it not only needs to exist, if it doesn't, we're probably all screwed. I mean, I remember that was an awakening I had in 2012, was trying to figure out what was the next step in my career. Done a pretty good job raising money and doing some marketing for a small nonprofit. Had decided I never want to work in a nonprofit again, but one of the classes I took as I was trying to figure it all out was global climate change. And for me, that was my aha moment. I thought, you know, this is not only an existential problem, but it requires a lot of solutions and engineers who can think about those solutions. And as not an engineer, I thought, well, the best way is to talk like an engineer and pretend to be an engineer and learn from engineers. And so was extremely fortunate to find one when I got my master's degree in environmental science and policy from Columbia University and I met Klaus Lackner, who was one of the first people to talk about pulling carbon dioxide out of the atmosphere at an industrial scale. So we're talking about direct air capture, like maybe a thousand to ten thousand times the effectiveness of a tree.
And that began for me a ridiculously fast learning curve. I was raising money and doing marketing as chief strategist for the Center for Negative Carbon Emissions at Arizona State University. And I'll remember the day, one of the very few times when Twitter was actually useful, that I got a message from Paul, who basically said, "Hey, I'm trying to learn more about what this carbon removal thing is. I'm a software engineer. Let's talk." And being someone who's very action-oriented, I said, "I have time now. Let's talk immediately." And the conversation happened about a year and a half ago. What I realized then, it validated, if you mix science and software, you can really do some dangerous things. And I think it's for those reasons that I'm here today.
Ross Kenyon: Great, the thing that caught my attention on this project was carbon removal. So interesting because you have the possibility for people to make products out of carbon as an input. It's no longer just a waste product, it's an economic input. If you can do that successfully, you will be able to short circuit the entire debate over economic growth versus the environment, which I think by intuition alone, people tend to fall on that. If you're a little bit right of center, you tend to think economic growth is super important and you're skeptical of the government's ability to manage climate change, and if you're on the left, you're kind of like a mirror image of that. And I think the ability to use profit and good incentives through a marketplace for this could actually solve the problem and probably stop a lot of the arguing. So we could talk about how to do this rather than like, do we do this slash does this exist at all, et cetera. The ability to do all of that I think is super exciting and I haven't seen much work on that. I guess that's a big part of why we're here.
But yeah, I came out of blockchain stuff. I work with Tezos, still work with them, work with Blue Frontiers. They're building floating platforms on the ocean. Also a very big environmental project looking to do a lot of things with aquaculture, which is quite interesting. And they're supposed to be a special economic zone, but even more so where they have room to experiment with new legal norms, policies that would give them an ability to be nimble and also do quite a lot for the environment at the same time. So my interest kind of all aligned here perfectly. No thanks to Paul here for putting us all together. It's a very unique Venn diagram of all the interests here.
Christophe Jospe: Totally. And I just want to give a shout out to ConsenSys, which created an awesome forcing mechanism. And probably the reason why we're doing this podcast here today, week four of a hackathon.
Ross Kenyon: What's a hackathon?
Christophe Jospe: Well, it is right out of the startup book. [unclear] a business model and how are you going to execute it and you have four weeks to do that and find a team that might have the competency to do that. And Paul and I had this idea independently. And when we got together we realized, yeah, it's the same idea and let's do this.
But before we jump into it, I'd like to just kind of level set on what is carbon removal? What's this phrase we throw about?
Ross Kenyon: Yeah, we didn't really explain that. So what is it, Mr. Jospe?
Christophe Jospe: Yeah, well, it's taking carbon dioxide out of the atmosphere and, when you do that, you want to make sure it doesn't go back into the atmosphere. When you want to make sure it doesn't go back into the atmosphere, it really comes down to permanence. It's, "Am I taking this out?" and "Is it being stored in something where I can be relatively sure that, indeed, it's out?" Now trees do it quite well. You look at a tree and it's stored as wood.
Ross Kenyon: I looked at some trees, yeah.
Christophe Jospe: Photosynthesis, you learn it in first or second grade. It's one of the most powerful things on Earth where your trees take carbon dioxide and emit oxygen. They use sunlight and they grow. So that's carbon removal, but it gets a little bit more exciting and more complicated than that because when trees burn, not really storing carbon anymore. Now that carbon's back in the atmosphere. So I would call trees actually a carbon pool. You've also got carbon sinks.
Ross Kenyon: So let me try to get that lingo out of the way here. We've got, I confuse these still, so why don't you lay this on me?
Christophe Jospe: Totally. Pool, think about it as something in your backyard where the walls can just fall down and the water falls all over the place. You've got above ground swimming pool. Imagine an above ground swimming pool.
Ross Kenyon: Okay.
Christophe Jospe: As long as the structure's there, the water's there, but it could fall apart, versus a sink where there's no way that water will ever escape. It's there permanently.
Ross Kenyon: Okay.
Christophe Jospe: So think about a rock. [unclear] have been doing this thing, it's called weathering. It happens over a time scale of hundreds of years where very slowly the rocks carbonate and store a certain amount of carbon dioxide.
Ross Kenyon: Does carbonate the, like, Han Solo thing?
Christophe Jospe: Mm-hmm. All right, Ross, this is gonna be a lot of fun.
Ross Kenyon: Glad you like it. That's called banter, ladies and gentlemen, and we're just getting going.
Christophe Jospe: Once it's stored in a carbonate form, it's there permanently.
Ross Kenyon: Did I just derail that really?
Christophe Jospe: No, no, no, no. I mean, I'm not as big of a Star Wars fan. When we store carbon dioxide in a material, you can think of it like a reverse mining operation. You've taken CO2 out of the air and you've put it into something. Think about the biological side. We can also think about the chemical side. And as this podcast evolves, I'm really pumped to just put this in English. Like, let's not make this something that exists in only academia that people can't really understand or they debate about it, but let's find the people who are actually doing it, actually removing carbon and storing it in stuff. So, you know, we can think about a lot of different examples. I come from the field of direct air capture and can go deep on that. You know, there we're talking about machines sucking CO2 out of the atmosphere.
Ross Kenyon: Just literally doing that. Just sucking it out.
Christophe Jospe: Literally sucking it.
Ross Kenyon: Do they actually make that sound?
Christophe Jospe: Well, it depends on the process, but a lot of the machines today are using fans to pull the air through a material.
Ross Kenyon: You're not getting that sound?
Christophe Jospe: No, you are getting that sound.
Ross Kenyon: Oh, you are getting it?
Christophe Jospe: Yeah.
Ross Kenyon: I was going to say, I'm less interested if you don't have it.
Christophe Jospe: It's more of a whirring sound.
Ross Kenyon: You got anything else you could tell us about?
Christophe Jospe: Yeah, so I mean one of my favorites is thinking about mycelium, which is basically a mushroom type fungi, which is, you know, who I'm sitting across from.
Ross Kenyon: Did you just call me a mushroom? What?
Christophe Jospe: Ross, I called you a fungi.
Ross Kenyon: Oh man, that was so dumb that it went right over my head. Wow. Yeah. Right. Did not care for that.
Christophe Jospe: The way that works is you let the fungi do what it does really well, spread and then create a new solid material where the carbon is now stored permanently. So actually a company doing that making drywall. So they're just building houses and they're storing carbon.
Ross Kenyon: Can it compete on cost too? Is it relatively close to normal drywall?
Christophe Jospe: Yeah, better. Fewer chemicals and just as good of a fire retardant.
Ross Kenyon: Wow. What do you say we bring on the first guest, the inaugural podcast here? What do you say we get Paul Gambill out here?
Christophe Jospe: I'd like to, but first I want to call an audible and say something that I had meant to say. And I think it's going to just set up Paul really nicely.
Ross Kenyon: Go ahead. Let's do it.
Christophe Jospe: I mean, it comes down to why do we care? Like why is carbon removal necessary? It
Ross Kenyon: First of all, let's just set the record straight. Climate change is real.
Christophe Jospe: Very real, and it happens from there being too much carbon dioxide in the atmosphere which is driving the greenhouse effect. Now, only way to manage the greenhouse effect is to manage the total amount of atmospheric CO2 and just to throw some numbers around, it's a lot. It keeps going up.
Ross Kenyon: It's all in a number.
Christophe Jospe: No, get ready for it.
Ross Kenyon: Oh, it's coming out.
Christophe Jospe: And I'm not going to use acronyms at all. So I'm going to say parts per million.
Ross Kenyon: You cannot say PPM.
Christophe Jospe: But we have so many parts per million. It is more than 408. We add about two parts per million each year. That exceeds a certain limit. All scientists agree we're completely in deep water. Your seasteading business is going to do really well because everyone's going to want to live on stilts. And what it comes down to is we emit CO2 when we generate energy from human activity, all these things that we're trying to reduce the flow of CO2. And we're trying to figure out ways to replace carbon dioxide to produce energy. People agree this is not enough. So we need to look, now here comes the numbers, to how much are we emitting today, which is around 36 billion tonnes. In order to truly balance the books, I think we need to consider carbon removal as something that not only can allow for 36 billion tonnes a year to be removed, but even more to pay back the past debts. So with that, I think we should bring on Paul and let him introduce himself.
Ross Kenyon: Christophe, so we start with a doomsday scenario now. Yeah, when are we in the danger zone? How far are we from Kenny Loggins territory?
Paul Gambill: Well, to piggyback off what Christophe was talking about, the UN IPCC, International Panel on Climate Change, has come out with recommendations or a paper estimating that around 450 parts per million of CO2 in the air is when things are getting really bad. Now, the problem is there is so much organic matter trapped under ice in Siberia, in northern Canada, that's called permafrost. As that ice melts because of warming, more of that organic matter gets exposed to the air and starts decomposing. And as it decomposes, it releases methane into the atmosphere. And methane is 25 times more potent as far as warming potential compared to carbon dioxide. It doesn't last as long in the atmosphere before the molecules degrade. It has more warming potential. So the problem is, as more warming happens, more of this ice melts, more of the organic matter decomposes, and it gets into the air, which accelerates the warming, which accelerates the melting, and we have this negative runaway feedback loop where things start to get really hot.
Ross Kenyon: So it sounds like you care about this.
Paul Gambill: I do.
Ross Kenyon: We didn't really introduce what the project is exactly here. So why don't you tell us how you're going to stop this, slow it down, fix it entirely. What's the plan?
Paul Gambill: Okay. So should I explain how I got into this, too? Should I start there?
Ross Kenyon: Yeah, I guess that's good.
Paul Gambill: We should probably talk about what we're doing at the company and where our roles are. Because I think we kind of skipped that a little bit.
Ross Kenyon: But we did.
Paul Gambill: So I'll say my background. Christophe told the story of how we met. But my background is I've been working in software consulting for a number of years as a project and product manager. I've built and shipped a number of apps and I was working on a small business of my own a few years ago which was completely unrelated to this.
Ross Kenyon: You don't want to talk about it, do you?
Paul Gambill: Well, it's on my LinkedIn, so you can find out the smoky details there. I was tired of this business and decided to shut it down and sold it off. I wanted to think about what was a really big problem to work on and something that would keep my attention because I get bored easily, and started looking into climate change. I have an engineer's training and I tend to think about things in terms of how do we fix this? How do we solve problems, not just make it less bad? And when I look around at the approaches that people are taking towards climate change, it's all mitigation. It's all just trying to make things less bad than they're going to be. Everyone seems to accept it that this is going to happen and we're just going to have to deal with the effects.
I don't accept that. I don't accept that we have to deal with warming, that we have to deal with sea level rise and people in coastal cities being affected. I don't accept that we have to deal with changing rain patterns that affects growth of agriculture around the world. I don't accept that we have to see social unrest in countries as people aren't able to grow food, as people aren't able to earn a livelihood by making food and selling it to people as these things happen. I started thinking about how do we fix this. Well, it seems like it's pretty straightforward, right? Like over time, since the Industrial Revolution, we've been burning these fuels and emitting gases into the air and we've caused this warming. What if we just reverse the process? What if we just took out all of these gases and put them somewhere?
Ross Kenyon: That's so intuitive, but why do people focus on reduction and replacement? Why is the obsession with that?
Paul Gambill: That's a good question. I don't know the answer to that necessarily.
Ross Kenyon: Is it easier? What is it?
Christophe Jospe: Well, I mean, I think it comes down to low hanging fruit, you can insulate your home and it'll save you substantially on your energy bill, it's a much more cost-effective way to manage your carbon. The problem is, people are lazy and people don't always want to change their behaviors. I like to think about the analogy of what we're trying to do. We're kind of the street sweeper, where if you say, "Hey, today, we're dumping trash into the street and it's legal." No one's [unclear] for it. People wave around an idea of a price on carbon, but it's not really happening. Well, the street sweeper is able to unambiguously say, "I took care of your trash and I put it away." It may be more expensive, it may motivate you to dump less of your trash into the street, it may motivate you to not dump your trash and create ways to replace that trash. But at the end of the day, no one wants to focus on the street sweeper holistically because it's really, really hard. And that gives me solace that no one's going to exactly copy our business idea here. It's going to be a lot of work.
Ross Kenyon: Yeah, I guess so. It does seem easier. I mean, I remember growing up and probably the first time I heard about this was Al Gore's "Inconvenient Truth" and I watched that documentary. I don't know how old I was.
Paul Gambill: I've actually never seen that.
Ross Kenyon: Yeah, you just seen like the hockey stick graph and all that.
Christophe Jospe: Yeah, as a hockey player, I've always been sort of annoyed with [unclear] that term, but yeah.
Ross Kenyon: Yeah, it's raising awareness of the NHL.
Christophe Jospe: Well, I'm okay with that.
Ross Kenyon: Oh, okay.
Christophe Jospe: Yeah.
Ross Kenyon: I don't know, it just seems easier I guess if you can just say, "Oh, we planted some trees to offset this," but it doesn't seem like permanently storing carbon or building stuff with it that has a life cycle much longer than that.
Paul Gambill: Yeah, Christophe mentioned the idea of a carbon pool with trees, but the thing is, there's not even enough arable land on Earth. Like, we have to keep in mind, like, the population of Earth is growing. I think the best estimates I've seen are we'll probably max out around 10 billion or so, although there could be unforeseen things that cause that to go higher, but how are we going to feed 10 billion people? Well, we have to be growing crops. That takes up land. And if we're constantly clearing land out of forests in order to grow crops, then we're taking more trees out of this carbon pool. So if we were to suddenly reverse that process and we're trying to take the approach of let's just plant as many trees as we possibly can to suck that carbon out of the atmosphere.
Ross Kenyon: They can't eat though, right?
Paul Gambill: They can't eat.
Ross Kenyon: Yeah, okay. So that causes the social strife that you're so worried about, that climate change causes--
Paul Gambill: I'm far more worried about social unrest. In fact, you could make a strong argument that the Syrian Civil War and everything that's been happening in there since 2013 or so is caused by climate change.
Ross Kenyon: Were you saying there was droughts that were in the area?
Paul Gambill: Yeah, so back in the mid 2000s, there were severe droughts. These extreme weather patterns, it's really difficult to tell with the data to state conclusively whether or not these are caused by climate change. But let's assume for the moment that this was. So these extreme droughts causing difficulty for farmers to grow crops, people start looking for economic opportunity, they move into more of the cities, they put more of a strain on the infrastructure of the cities. People started demonstrating for the governments to do something about that, to support this. And because Bashar al-Assad is a madman, he started using violent police demonstrations to quell these demonstrations. Well, people didn't like that and there were many people who hadn't liked Assad and so saw this as an opportunity to start some sort of revolution against him. Well that revolution was very quickly co-opted by insane terrorists in Al-Qaeda who ended up forming ISIS and then you have the whole thing blowing up from there.
Ross Kenyon: Wow, yeah, I guess people think about climate change. They mostly think of polar bears and they think of the coastal cities getting flooded. But I guess we don't really think about, yeah, if weather patterns are disrupted and then people can't grow food and they urbanize too quickly then or unnaturally quickly, like violence happens when people can't eat. It's a big problem.
Paul Gambill: Yeah, people kind of forget about that social element of that.
Ross Kenyon: I guess maybe now is a good time to talk about blockchain because you think blockchains have the chance to eliminate a lot of social strife and social problems. So with the connection here, because I'm sure people listening will be like, what is the connection to blockchain?
Paul Gambill: It took me a long time to figure that out. It was something I was really hoping to do.
Ross Kenyon: You just wanted to incorporate these two interests.
Paul Gambill: I have this, I have these two passions. I've been in kind of the blockchain space since about 2011, first time I heard about Bitcoin. I've been enamored and excited about Ethereum since probably early 2016. And I know for myself that the things that I work on, it works best when I'm also really passionate about it. And blockchains I see as a way to decentralize the world. Many social problems appear to be caused by centralization of power and centralization of authority and centralization of information. And the more that we can distribute really the information, whether that's through pricing things or otherwise, the more that we can decentralize that, the more capable people are of making good decisions and ultimately having good society-wide effects.
Ross Kenyon: I see. And maybe I should take it back one step here. What is a blockchain?
Paul Gambill: Oh, we're gonna go there.
Ross Kenyon: I think you should probably just, don't launch too hard, but what's a distributed ledger? Give me just a basic...
Paul Gambill: Okay. So back in the mid 2000s, there were a bunch of people who were interested in finding ways to create a decentralized currency. And Bitcoin was published as a white paper, I think in 2008, as a response to what had happened in 2007 and the global credit crisis. Ultimately, chain is just a record of transactions that are happening. And it's a record that everyone who's participating in the network has access to. So if we're just talking about Bitcoin, and if I were to send you some Bitcoin for some reason, and we--
Ross Kenyon: I could never provide value to you that you would pay me. Bitcoin, this is impossible scenario.
Paul Gambill: I would never pay Ross.
Ross Kenyon: You better pay me.
Paul Gambill: If I were to send that to you, the transaction is a debit from my account and a credit to your account. And that transaction gets recorded and observed by every other node in the network, so that everyone can trust that when you try to spend those bitcoins in the future, everyone knows that I don't also still have those. It's the problem, like if we have physical cash like paper dollar bills and I hold it, we know that you're not holding that same dollar bill, right? So we need a way to do that in a trustless manner in a digital sense. Bitcoin is a blockchain and blockchains are more than just Bitcoin. And so then Ethereum came along, which is a way of these transactions are no longer just debits and credits from accounts, but they're actual execution of computer programs. And it's a computer program that everyone in the world can see. So we can trust that the inputs and outputs of this software is what the users of it say it is.
Ross Kenyon: Pretty concise actually. I feel like people ramble on that question quite a lot. You caught us up on all that history. That's good. I'm sure the listeners here from the hackathon will probably already be familiar.
Paul Gambill: I hope so.
Ross Kenyon: You hope so. Did you finish the hackathon?
Christophe Jospe: Yeah. I had to quickly like learn everything I can on blockchains.
Ross Kenyon: Great. So then where does this fit in with carbon? How do they interact together?
Paul Gambill: Yeah. So I've been really interested since I read this book called "Rethinking Money" back in the spring of this year. And I would highly recommend anyone who's interested in cryptocurrencies and blockchains to read this book. And the funny thing is they don't even mention blockchains. But the idea is that small or localized or purposeful currencies are potential solutions to a lot of different kinds of problems. More currencies is a good thing. And with Ethereum, we've seen this burgeoning effect of applications that are using new currencies that they're called tokens to facilitate the actions of what they're trying to get their users to do.
So we started thinking about how can we manage the tracking of carbon. And actually the sort of impetus for this idea was, about two years ago, I was mentioning that I had this business that I wasn't doing anymore and I wanted to get focused on climate change. So I founded a meetup. I live in Seattle, so it's called Carbon Removal Seattle. And I started it as a way just to bring people together who are interested in figuring out ways with a profit driving mechanism to solve climate change. And so the hope was that bring projects and maybe spin out new businesses from this meetup.
Ross Kenyon: It sounds like something Seattle might raise a sideways glance at, profit and environment. Did you have any haters?
Paul Gambill: Yes, at first. It's just on meetup.com and there were several people who messaged and said, technology caused all these problems so technology can't possibly fix this problem. In my responses, well then what are you going to do? How else are we going to do it?
Ross Kenyon: Just like go back to being a hunter gatherer, just go full primitivist on it.
Paul Gambill: Right, sort of an anti-humanist approach. For me, I'm very inspired by this humanistic ideal of trying to make this a better situation for humans everywhere. I founded this meetup group and it's been great. A lot of people have been coming and we've been doing a lot of self-education. We've been networking with other groups, especially some of the ones that Christophe mentioned. And the members is a consultant or broker of carbon offsets. I started learning a lot from him about the way that carbon offsets are currently transacted and traded in the marketplace.
Ross Kenyon: I got to interrupt here. Christophe, this is a perfect opportunity for this joke you really want to say. What might you call Carbon Broker?
Christophe Jospe: Oh man, Ross, you just set me up for it. One of my passions is to just learn everything that has to do with anything about taking carbon out of the atmosphere and turning it into a product. And I was chatting with someone. He actually runs the New York Tech Meetup. Really smart guy. He immediately got what it is that we're working on. He's like, "You're 10 years too early." I was like, "Respectfully disagree." But he gave me a moniker that I'm not going to let go. He called me Used Carbon Salesman.
Ross Kenyon: Used Carbon Salesman. Why isn't that the name of the podcast? That's kind of a funny joke.
Christophe Jospe: Yeah, we could change it. I mean, look, it comes down to there are things we're not doing today that we can do and how do we realign that incentive structure and how does blockchain fundamentally change that? Paul got into some of the issues around double counting and just making it easier, but one of the things that I've been doing has actually been to supply carbon offsets to interested parties which are looking for novel ways to offset their carbon for a brand. So this was very relevant when Paul learned more from one of the people in his meetup group.
Paul Gambill: Yeah. So I started thinking about, well, how can we just combine blockchains and carbon? And to me, the first most obvious way was when these carbon offsets that are currently being traded. So just for explanation's sake, there are a number of different jurisdictions around the world, California, Ontario, Quebec, and others that have cap and trade schemes in place. Meaning if you are a manufacturer of some good and you emit carbon dioxide in the process of your making whatever it is that you are, you are capped at a maximum number of tonnes of CO2 annually and any more tonnes that you emit beyond that cap, you have to purchase offsets for.
Ross Kenyon: This is legally mandated.
Paul Gambill: Yes, this is a government driven solution. And so you have to buy these offsets and there are providers of offsets and they do all sorts of different things. They could vary from planting trees. They could be building something that's called a biodigester, which is taking organic material and breaking down the methane and burning it so that it at least comes out as carbon dioxide instead of methane. Again, I mentioned that was 25 times more potent. There are things like clean cook stoves that make it burn cleaner when cooking in a more remote or rural area. The thing that bothers me the most about these offsets is that they are often just counting reductions in emissions and they're not actually removing things. So the worst example of this is, say you are a power utility and you had been planning to build a coal power plant. And instead, you decided to build a natural gas plant. Burning natural gas emits less carbon dioxide.
Ross Kenyon: Did you actually want to do this or are you just saying, "I'm going to build this so you can get paid not to?"
Paul Gambill: That is what it is.
Ross Kenyon: It is what it is. I didn't mean to take it right out of the way.
Paul Gambill: We're saying that because we're going to give these developers a credit, it's the amount of CO2 that you would have emitted if you were a coal plant minus the amount that you are emitting from the natural gas. So that difference between them, that amount gets counted as an offset, which is an asset that you can then sell.
Ross Kenyon: Is it valuable to?
Paul Gambill: These range in price from $2 to $20 typically.
Ross Kenyon: Per tonne.
Paul Gambill: Per tonne. Yeah, these are traded in these carbon offset exchange marketplaces. And it's a very convoluted process. It's very clear if you look at the order of operations of how many different middlemen are involved, these different registries that track and trade these things, that this is definitely a process that was set up for regulators. There is very little economic evolving of the process involved.
Ross Kenyon: Well, blockchain is one of the biggest is that you can get rid of middlemen pretty easily and it's a trustless system.
Paul Gambill: Yeah, exactly. And so that was really one of our first thoughts was if people are trading these carbon offsets and there exist middlemen that just have a database that is storing these offsets and tracking who owns them at what period of time and they're getting paid to do that. That's exactly what a blockchain can solve. We don't need to be paying this middleman and driving up the fees of this.
Ross Kenyon: And how much is it? How much are we paying the middleman for offset markets?
Paul Gambill: I've seen estimates that almost half of the overhead of creating these offsets and selling them. So if you are the entrepreneur who's trying to sell the offsets, I've seen estimates that 40 to 60% of this is going into legal compliance and auditing and accounting of these things.
Ross Kenyon: So then we can drop the beloved but deservedly begrudged word at this point. It sounds like it's ripe for disruption.
Paul Gambill: Oh, I hope we went there.
Ross Kenyon: We can also say it's the Airbnb or Uber of X if you'd like, that annoys you as well.
Paul Gambill: So that was the first kind of thought. Well, let's start tracking these. And actually there are other projects that are working on this.
Ross Kenyon: Tracking what exactly?
Paul Gambill: So tracking who owns the carbon offsets and at what time. So someone creates the offset and then they sell it and someone buys it and now whoever buys it, which are usually corporations who are trying to either exist in the compliance markets where they are legally required to do this or in the voluntary markets where for the goodwill because their shareholders are demanding it or for the PR that they'll generate from it are completely offsetting their business operation. And many of the large tech companies are leading the way in doing that.
Ross Kenyon: I see. But it doesn't work very well. And I don't know why. Is it just too hard to sell? Is the market very illiquid for these things? Why is it so--
Paul Gambill: The volume is really low. And some of the problems are that, other than the fact that these are often reductions in emissions and not actual removal. So it's not even doing anything to solve the problem.
Ross Kenyon: On paper it sounds like it is, it looks good.
Paul Gambill: Right, but in the end it's just making it less bad. And so if you...
Ross Kenyon: You're still dumping your trash in the street.
Paul Gambill: Well isn't it better if you dump less trash in the street?
Christophe Jospe: To give my rant, Paul talked about a coal-fired power plant and natural gas-fired power plant. I mean, in the European trading scheme, what you had is people actually building plants to destroy a greenhouse gas and then sell the credit into that, which in the carbon offset world, people are really worried about additionality, like would this have otherwise happened? Well, these markets were fundamentally set up to create some sort of weird additionality that wouldn't have otherwise happened. The biggest thing, and I think what drives both me and Paul is it's very simple. Money needs to go to paying people to remove carbon. And so when you're taking money and putting it to something that does not fundamentally solve the problem, that's an issue. That's why basically we're saying let's only focus on things that take carbon out of the atmosphere. Because at the end of the day, that's the marketplace. It does need to be flourishing and be quite large.
Ross Kenyon: Building a market for these services too. Is there actually a carbon removal marketplace that exists? Is this the first one?
Paul Gambill: I would say mostly no. If you are looking at carbon offsets that were created as offsets because they were planting trees, then yes, that's a carbon removal thing. But that is a small percentage of the overall carbon offsets market and the offsets that are being traded. No, there is no exclusively carbon removal marketplace where people can buy and sell these removal credits. And I was starting to say earlier, one of the issues is if you are creating these offsets, you have to find a counterparty to buy these. It's not like you're just selling these out into some distributor or something like that or a broker. You have to find a specific buyer.
And often the buyers who are currently participating in these are looking for very specific things about these offsets. They might be looking for offset program that is close to them regionally. So if they are a major corporation and they want to say that they took action that impacted their local community, or they might be looking for these things that are called co-benefits. Co-benefits would be, say it's a forestry project in Kenya, and in the course of planting these trees and generating revenue from these offsets, they're also using those funds to set up schools in the area or build new sources of clean water or something like that. These are ostensibly good things. Those things should be happening. When you start focusing on these continually added benefits on top of it, that's less funding and less resources that's going to the heart of the problem, which is we need to remove as much carbon dioxide from the atmosphere as quickly as we possibly can.
Ross Kenyon: So let me make an inference here. So what you're saying is that you would like a fungible commodity market. Like if you're buying 100 pork bellies, you don't get to choose like, I want this guy from Wyoming or I want this guy from Minnesota, right? You're just like, I removed a tonne of carbon. I don't care if it's in Angola or in Burbank.
Paul Gambill: Yes. I want to see people thinking about it as a tonne is a tonne is a tonne. It doesn't matter where it's stored as long as it's stored and in a mostly permanent fashion and removed from the atmosphere. And if that ends up being stored in things like products or plastics or anything like that, I'm fine with that. I would much rather deal with a trash problem than a global warming problem.
Ross Kenyon: I would make that trade myself. Can you walk me through the basics of the mechanics of how this market might work? How does the Geagora, codename Geagora, name to probably be changed, work?
Paul Gambill: So what we're going to do is build a better marketplace that makes it easier for people to pay other people to sequester carbon dioxide. And the way that we're going to do that is we're going to create a new cryptocurrency token that is backed by carbon removal assets.
Ross Kenyon: So it's an asset-based currency or financial instrument?
Paul Gambill: Based on a real physical manifestation of carbon removal. Each token, calling it the ton token. T-O-N. We're claiming that right now.
Ross Kenyon: There's no way to reserve that name, but you heard it here first.
Paul Gambill: So each token is equivalent to, or will always be pegged in price or value to one tonne of CO2. So if you are a buyer and you want to buy 100 tonnes of negative emissions credits, which is what we're calling these, and get that credit to your name, it's going to cost you 100 tokens. And if you are a seller who has generated negative emissions credits and you've sequestered 15 tonnes of CO2 in a tennis shoe that you've been manufacturing, which is a thing that's happened, then you would receive 15 tokens.
Ross Kenyon: They're doing something already and you're paying them to remove the carbon.
Paul Gambill: That's one potential group of these negative emissions credits suppliers, yeah.
Ross Kenyon: Okay.
Paul Gambill: We're making it such that this token is now the medium of exchange between these parties that are trading these things. You don't have to find a counterparty anymore. You can just sell it into our marketplace and then have a buyer buy your negative emissions credits. And the tokens now are the medium of exchange. The tokens are also going to be just out there like every other cryptocurrency token and being traded on third party exchanges or decentralized exchanges or wherever. Those are going to be traded by speculators. And speculators are a good thing for the economy because they reduce the volatility in pricing. And by the speculators who buy these tokens expecting that they'll go up in value, that puts a price on the token. Token represents one tonne of CO2, we're saying that the price of the token is now the price of carbon removal. We will, for the first time, have established a universal carbon price.
Ross Kenyon: Does that exist anywhere?
Paul Gambill: No.
Ross Kenyon: No.
Paul Gambill: No, not at all. Nothing comes even close to that. And the closest thing is there have been many different reports and you can find these with the UN IPCC or with other researchers where they estimate what's called the social cost of carbon.
Ross Kenyon: Yeah, and I just want to call you out for using an acronym that's the Intergovernmental Panel on Climate Change. Boom, Intergovernmental Panel of Man. Christophe Jospe smacking Paul Gambill down.
Christophe Jospe: You know, it's okay. I like when Paul gets going because it's important. But what the social cost of carbon comes down to is it's the additional damage that one tonne of CO2 will cause to the atmosphere. And there's been some really good modeling done around thinking of, okay, well, how much is this going to cost? And it costs different amounts in different places.
Ross Kenyon: I've seen between 50 to $150.
Christophe Jospe: Right. It's definitely north of 50.
Ross Kenyon: That's the social cost of carbon though? Per tonne.
Christophe Jospe: Per tonne.
Ross Kenyon: Okay.
Christophe Jospe: Keep in mind, we've got this feedback loop, which Paul talked about earlier, where there's all sorts of greenhouse gases just escaping into the atmosphere because we live in a warmer climate where previously stored carbon is now released.
Paul Gambill: So there's one other aspect to this that I haven't gone over yet, which is a very important one, which is the validation of these sequestration activities. How do we know, and this is a very important purchasing decision or information for buyers of these credits, how do we know that this carbon dioxide has actually been sequestered? How do we prove that?
Ross Kenyon: Yeah, how do you even know? What do you do with that?
Paul Gambill: Right now the way that it works is there are all sorts of different protocols for these different methodologies of over 200 protocols and methodologies is
Ross Kenyon: Some sexy talk going on right here.
Paul Gambill: There are a lot of these and they're often a very manual process and you have people who are working as auditors and then the auditors actually get audited and it just adds to these layers of complexity that increases the overhead cost for suppliers, which I have to say that. The higher the overhead cost is for these people to supply it, the less sequestration that you're going to have happening because it's going to be more difficult for entrance to the market. What we're trying to do is reduce the barriers of entry to the carbon sequestration industry. So we want to make that auditing and validation a lot easier, and we see a lot of opportunity to do that through the use of Internet of Things devices and automatic sensors.
For example, one of the other participants with me and us on the hackathon is a developer named Jaycen Horton. And Jaycen and I participated in a hackathon back in February that was sponsored by MetaMask and IPFS. And we had a project that was called Carbon Harvest. And that was actually another progenitor of this idea. Carbon Harvest was based around incentivizing farmers to change their farming practices to sequester more carbon dioxide in their soil as a carbon pool. And it's actually a very, very important way. I've seen estimates as high as 25% of the carbon dioxide that we have to remove could be stored in our soil.
Ross Kenyon: Soil that's also growing crops on it. At the same time, it's doing both.
Paul Gambill: Yeah, sure. The soil can also be land that cattle are roaming over and just by moving cattle around differently and having them eat the grass at the height of that grass actually will allow the soil to not only sequester carbon but also retain way more water.
Ross Kenyon: It's exciting. This is big. It's like magic as far as I'm concerned.
Paul Gambill: For the farmers, it's really three things that they have to do. They need to start using cover crops. They need to rotate their crops and they need to stop tilling. Those three activities, which are very simple, have these benefits of storing more carbon in the ground because you're seeing more bacterial growth in the soil. It's healthier for the plants that they're growing and like Christophe said, it retains water a lot better so you're far more drought resistant. Now the catch to this is that in order to make these changes from a single crop farm where you are most often being incentivized to do this because of the large seed companies, you're going to face about two to three years of a lower yield of your crops. So it's definitely an investment that you have to make. But afterwards, it's going to help increase yields and ultimately be better for you. So how do we help get them over that hump? Well, one way is we could pay them to do that.
Ross Kenyon: You're going to pay them to farm.
Paul Gambill: We're going to pay them to do what they're already doing. Just do it in a slightly different way. And that's where the ton token comes in. And so this original idea with this carbon harvest thing was that we would build and develop sensors, carbon soil sensors that you just stick in the ground and they're measuring at various different points around their farm and then aggregating this data, measuring the carbon content of the soil and the change of it over time. So we look at time zero, how much carbon is there? Okay, note that down, that gets entered into the blockchain and it's immutable data. We check at a month later and we see what the carbon content level is then and if it's gone up then we say that you've stored more carbon. Based on how much you've stored, we could automatically issue you tokens and you get credited for the carbon that you've stored. That's an automatic process that doesn't really require someone going to the farm and doing this very manual process.
Ross Kenyon: IoT and smart contracts. One of the things I like, and I've kind of harped on this a lot, is I love the idea of products that are being made that can incorporate this. So the IoT stuff sounds like it's an engineering challenge that will probably be solved in the next couple years, maybe sooner.
Paul Gambill: Yeah, and it's stuff that we want to work on. Like, that's from the engineering side. That's the fun thing. Like, it's your blood pumping.
Ross Kenyon: Yeah. And get that going. Maybe Christophe, I think you can tell us about what is it called? Interspace? Is that what it's called?
Christophe Jospe: Interface.
Ross Kenyon: Interface. OK. And yeah, they're building the carpets that are carbon negative, yes?
Christophe Jospe: Oh yeah, I love this. It's called their Proof Positive prototype. And what they're able to do is to take biological matter, which is photosynthesized, our favorite activity, and then they are refining that material into a carpet that's permanently storing carbon.
Ross Kenyon: That is cool.
Christophe Jospe: It's pretty straightforward. They've proved that it works, but there's no market signal that, "Hey, we'd like you to do this." That's where we come in.
Ross Kenyon: Yeah, I think it's quite important that you're kind of like market making or seed funding these projects too, where I'm sure there's plenty of projects that want to use carbon as an input that are right on the margin of being profitable and having this like quasi subsidy to encourage them to use this marketplace and come into it is a very natural fit.
Paul Gambill: That's exactly what we're doing. We want to subsidize this and like I said earlier, reduce the barriers to entry. And over time, the hope is that as this is providing more value to the world, the value of the token increases, which would the higher this is, the more incentive there is for people to do sequestration and get paid in these tokens.
Ross Kenyon: Yeah right, if I'm making shoes and I can switch over to carbon negative shoes and I can get paid to do it, makes a lot cheaper, removes a lot of the risk.
Paul Gambill: Yeah. And we foresee different ways that third parties could develop around this. So let's say you aren't as familiar with cryptocurrencies and blockchains and you don't want to take on the risk of the price volatility that comes with these. Well, third party lenders could develop where you have a financier who is going to finance or invest in a sequestration project and come to an agreement with the sequester and you say, "Okay, we'll pay you a fixed amount in cash in fiat currency and we'll take the tokens as a hedge." The growth and value of these tokens is our profit model. There are all sorts of different things that could develop around this that make this ecosystem grow.
Ross Kenyon: Yeah, I'm sure there'd be cases where there'd be some farmer, "Yeah, get yourself a Nano S, get yourself a hardware wallet and you'll get the interface with that."
Paul Gambill: Something I've learned doing businesses over the years is that customer education is a difficult problem and you want to reduce the amount that you have to do in order to be successful wherever you can.
Ross Kenyon: Yeah, I'm sure third parties would spring up to do that. It seems like a valuable service. These markets are a little intimidating. We're all kind of a deep into that world. So for us, it's very fun and we read about it and sort of live and breathe it. Customers are necessarily those people. I mean, the customers that are in there, the people who speculate in crypto markets, they're providing liquidity and provide a valuable service, but they aren't necessarily the customer that people we need to reach first.
Paul Gambill: Well, in some ways they are because we need to get these tokens out into the world through some sort of token generation event. In fact, actually, what we're talking about here is not just a two, but a three-sided platform that we're trying to build. So we need the suppliers of these negative emissions credits. We need the buyers of these credits, but we also need the cryptocurrency investment speculators to provide that liquidity, like you just mentioned. So we have to support all these different groups and their needs.
Ross Kenyon: Yeah, that's interesting. People don't really talk about markets in that trilateral kind of way.
Paul Gambill: No, and that's kind of the new novelty of cryptocurrencies and the token economy. It's fun and really exciting. It's maybe cliche to say, but you can tokenize everything.
Ross Kenyon: Yeah, you hamming it up a little bit? You can tokenize everything? Don't say it too loud because Paul will take debate.
Paul Gambill: I do believe that strongly.
Ross Kenyon: We're pretty good level right here, but is there anything else we should update people on before we sign off?
Paul Gambill: Well, I just want to say thank you to the rest of the members of the team. This has been really fun over the last four weeks. So Christophe and I had decided to go all in on this a while ago, but didn't really have plans for we were going to get started and the blockchain for social impact hackathon came along and the timing was perfect. We've got a team of seven people who've been working on this, so in addition to the three of us here we've had our developer Jaycen Horton. We have our product and UX designer Zach Roth. And we have two others, Michael Carver, who has a lot of experience in the financial sector and market making. And then, Alexandra Guerra, who works for a utility in California and is an engineer and has a lot of experience working in these energy markets and thinking about climate change. And in fact, Christophe and Alexandra have a tie through Klaus Lackner. They both worked for him.
Ross Kenyon: Did we talk about Klaus earlier?
Christophe Jospe: Yeah, and we're going to bring Klaus onto this podcast for sure, and I look forward to that because he is one of the very few people who gets it and talks about scale in a way that is not jargony but also coming from a physicist.
Paul Gambill: Yeah, so I just want to say thank you to the team for all the work you've done over the last four weeks and we're really excited to submit all the materials to the hackathon.
Ross Kenyon: Oh yeah, we're really excited to see how that plays out here. Mm-hmm. Mm-hmm. I think we're going full steam ahead either way but hopefully it's a good result. Thanks for listening and I'm Ross Kenyon.
Christophe Jospe: And this is Christophe Jospe.
Ross Kenyon: Catch you next time.
