When corn is harvested, the remaining corn stover either gets tilled into the soil or left on top.
But what if we took a portion of that corn stover, converted it into carbon-rich bio-oil, and pumped it deep underground?
Peter Reinhardt is Cofounder and CEO of Charm Industrial, a carbon removal company that is working on a fleet of mobile pyrolyzers that covert ag biomass into bio-oil and sequester it underground.
On this episode of Reversing Climate Change, Peter joins Ross, Siobhan, and Asa to walk us through the process Peter’s team uses to produce bio-oil and weigh in on why he refers to it as ‘BBQ sauce’ in his pitch for Charm.
Peter explains why Charm developed its own measurement, reporting, and verification (MRV) system and explores how much bio-feedstock is available for bio-oil production in the US and around the world.
Listen in to understand the big questions around IP in carbon removal and learn how Charm is turning biomass residue into bio-oil for use in carbon removal and other industrial applications like iron and steel.
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Resources
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Full Transcript
Ross Kenyon: You’re listening to the Reversing Climate Change podcast by the team at Nori, the carbon removal marketplace. This is a show about the innovators and entrepreneurs developing solutions to climate change. Hello and welcome to the Reversing Climate Change podcast with Nori. I’m Ross Kenyon, I’m one of the cofounders of Nori and the creative editor there. With me, Siobhan and Asa.
Siobhan Montoya Lavender: Hello.
Asa Kamer: Hi. Hello, everyone.
Ross Kenyon: Asa Kamer, producer of Carbon Removal Newsroom. Siobhan Montoya Lavender, one of the cofounders of Thanks a Ton — which, by the way, you should check out. Beautiful website redesign. Good job, it looks great.
Siobhan Montoya Lavender: Thank you, thanks. We were really pleased with that.
Ross Kenyon: There’s a beautiful Charm Industrial artwork photo on there you guys can go check out after this podcast. Peter, you thought you were coming on here to talk about Charm, but really it’s all [unclear] Jevons.
Peter Reinhardt: [unclear] Happy to be here.
Ross Kenyon: Yeah, that’s Peter Reinhardt, CEO and cofounder of Charm Industrial. I’m really glad to have you here, Peter, because — here, I’m going to put you on the spot. This is public information, I don’t feel like it’s revealing too much. I noticed on Twitter you only follow a few accounts, one of which is our meme account. How is that possible? How did you choose to follow us, of so many — the bounty of things online you could be following — our memes?
Peter Reinhardt: Well, yeah, I think I have like thirty-something follows, which — yeah, proud of the ratio to followers there. But yeah, I love niche memes, and I think this qualifies. [unclear] our target audience.
Ross Kenyon: We gotta get more niche. And thinking now, we need to just go hardcore into bio-oil and just really write over the plate for you. Would that be something that you’d be interested in? Just pure bio-oil.
Peter Reinhardt: By all means. That’d be great.
Ross Kenyon: I think so. Maybe we can even get to a point during the show of trying to figure out what might be a useful application. If you’re listening, I swear it’s not all memes. We’re going to talk about the meat of what Charm Industrial is doing. I think — are we selling plant meat? The plant meat of what we’re doing? [unclear] Well, Peter, maybe we want to start with the beginning here of what is Charm. How did you get involved in such a unique CDR field? Yeah, tell us.
Peter Reinhardt: Yeah, so Charm — we’re a carbon removal company, first and foremost, and we let plants do the hard work of capturing the CO2, and then we take plant residues, things like corn stover and forestry residues, things like that, waste cellulose, and we cook it into actually the natural smoke flavor that goes into barbecue sauce. So we’ve made the barbecue sauce, and then we inject it deep underground, which is where this takes an odd twist. And so once the barbecue sauce is underground, it’s got a bunch of carbon in it, it solidifies, and so you end up with a permanent carbon removal.
Ross Kenyon: I can’t let you get away with this, though. Is this really the pitch that you give when there are investors or customers on the line? Barbecue-sauce related?
Peter Reinhardt: Yeah, yeah. Just industrial quantities of barbecue sauce.
Ross Kenyon: And when you inject it in Texas, it’s tomato-based bio-oil, but when you do it in the Carolinas it’s a vinegar-based bio-oil. Is that right? And a mustard-based bio-oil.
Peter Reinhardt: Yeah. It’s true, though. If you look at, like, Sweet Baby Ray’s, on the back where it says natural smoke flavor — that’s bio-oil. We don’t make the good stuff, like, we don’t make it out of mesquite or whatever, I’m probably mispronouncing that, but, you know, we make it out of corn stover [unclear].
Ross Kenyon: So many things just happened in my brain, and that was well done. Asa?
Asa Kamer: I can’t even hear the phrase “Sweet Baby Ray’s” without thinking of Mark Zuckerberg trying to appear like a normal human in the backyard barbecuing, and he just keeps saying “Sweet Baby Ray’s,” and there’s a supercut of it over and over. This is why — I mean, we need grown-ups around.
Ross Kenyon: We do. But you guys are serious business. You are one of the big heavy hitters in CDR. I feel like your name is always at the top of the list with, like, you know, the most exciting, the most scalable, getting the most funding, getting the most attention. What do you think of all the attention you’re getting right now? What is something that you wish was getting more attention that isn’t?
Peter Reinhardt: Well, I’ll just correct one thing. We’re definitely not the best funded, by a long ways. And in fact, we never announced our funding, partly because we really wanted to put focus on actual delivery. I think there should be more attention on how much carbon is actually getting removed, and when it’s getting removed, and where, and by what mechanism. And, you know, in terms of permanent carbon removal, like, very, very little actually has been removed in any way. So I get a little worked up about actual delivery and, like, the real grittiness that actually needs to happen there to actually get carbon down. And so I’d love to see more of that. I forgot your question.
Ross Kenyon: Well, you’ve delivered ahead of schedule a few times now, so tell us about that. Are you just playing it cool so people don’t come knocking on your door being like, where’s my carbon sequestered under the ground yet? Or how did you guys end up being early?
Peter Reinhardt: Yeah, so we’re basically delivering — we’re taking an interesting approach to delivery. So we could wait until we have the perfect machine to make bio-oil and the perfect injection well, but that’s not really how learning happens, right? Like, learning happens by starting, by doing. And so we have tried to find ways to just very quickly get out into the field and start getting carbon underground. So in 2021 that meant using a bio-oil-like compound that we could buy off the market, that had a nice life cycle analysis, and inject that. And then in 2022 we’ve actually switched supply chain to bio-oil proper and started injecting that, so we can start learning about the subsurface.
About these things. Exploring, learning about logistics. We can start learning about all the formation geology issues that are actually weird and unique about injecting substances like bio-oil, because people have made bio-oil for a long time, but no one has ever injected it until Charm came along, surprisingly.
Ross Kenyon: I don’t know why no one ever thought of injecting barbecue sauce thousands of feet underground.
Peter Reinhardt: So anyways, that has really accelerated a lot of our subsurface learnings, and of different kinds of wells and geologies, and has let us deliver true carbon removal. And we are now kind of switching into — now we’ve demonstrated that it actually works, and you actually can put the stuff underground and it stays there. Now we’re switching into a mode of, like, okay, well, how do we make a lot more of it? How do we actually scale the production of the bio-oil so that we can put it underground? And that’s leading us on a couple different paths: buying off-the-shelf pyrolyzers that we can practice 24/7 operations on, pull forward capacity, as well as designing our own perfectly fit-for-purpose machine that will eventually really help us come down the cost curve and deliver things at a much lower price point.
So we kind of approach these things in a way that maybe seems a little less obvious, so that we can really start learning in production. I’d say a little bit of this comes from my prior experience at Segment, where, you know, I originally was like, the only thing that matters is engineering and product, and go-to-market is easy, operations is easy, customer service is easy, finance is easy — all the other stuff is easy, but you just get engineering and product right. Now, of course, engineering and product is incredibly important for delivering. But it turns out those other things are hard too. I got my *ss kicked a couple times at Segment learning that one.
And so now the lesson that I’m trying to apply — we’re trying to apply here — is like, pull all of those things forward. Like, start doing the 24/7 operations as soon as you possibly can. Even if the Charm machine is not perfect, start injecting whatever you can get your hands on that has a nice life cycle, so that you can start learning about the subsurface, et cetera.
Siobhan Montoya Lavender: I’d like to hear more about the details of how this works. I think most people listening have probably heard of pyro— is it pyrolysis? — in the context of biochar. Maybe you can unpack how they could apply that learning here, and how is it different? Can you walk us through a little bit of this life cycle that you allude to?
Peter Reinhardt: Yeah. So, I mean, any pyrolysis system works basically similarly. You put in a biomass feedstock, so it could be wood or agricultural residues, and you heat it up to a couple hundred degrees Celsius. And when you do that, you’re going to get two things out. Basically you’re going to get a liquid — a bio-oil component, could be a vapor — and a solid char component, and the proportion of those two depends. If you heat it very quickly, you get more liquid yield. And if you heat it more slowly, you’ll sort of bake off the liquid and get more solid char yield. And so you can play with that yield depending on the heating rate of the biomass.
So in our system, we’re trying to maximize liquid. We heat it very quickly. It’s going from room temperature to 500 degrees C in like two seconds. Whereas if you’re trying to make char and maximize char yield, you’re going to heat it very slowly. You’re going to be moving to 450, 500 degrees C, but you’re going to do that over hours and hours and hours. And so that’s really the only difference: heating rate, and different reactor designs that support that. But that char component can either be called biochar, on the field, or it can be called charcoal if you go burn it in a downstream use.
Siobhan Montoya Lavender: I’ve heard you say before, Peter, that you all choose not to sell the biochar with the carbon credit or use it for carbon removal, and I’m just curious why that is. And if it has to do with concerns about biochar, is there more research you need to see? Or is that, like, a sort of final decision, that that will always be the way you operate?
Peter Reinhardt: I think it probably will always operate, but, you know, I guess we’ll see. The reality is that the permanence of biochar is not nearly as easy to prove. Like, the permanence of biochar depends on temperature. It depends on soil composition. It depends on what microbes are there, particular fungi. It depends on the exact feedstock. It depends on the heating. Like, there’s so many variables that go into, seemingly, the permanence of biochar. Plus you’re leaving it at the surface, where it’s uncertain even what happens at the surface. There’s a lot more processes going on. You have erosion, you have all of these weathering processes that make it hard to really know what will happen a long time in the future.
Whereas bio-oil, being deep, deep in the subsurface, where things change very, very, very slowly and there’s not a lot of fast processes, we can make stronger guarantees about the permanence. And so we only want to sell at the extreme end of permanence, and so that’s why. The char that we produce, we do put back on the field, so it becomes biochar, and it has an ash component. And in terms of our economics, we care more about that ash component in terms of nutrient replacement. That it goes back on the field is very important, actually, from an overall standpoint, and from a farmer economic perspective, that that ash makes its way back onto the field that it came from.
Siobhan Montoya Lavender: So you close that loop back to the farms that you get your feedstock from? Or how do you distribute that?
Peter Reinhardt: Yeah, our anticipation is that eventually the farmers — they have a really good economic value that comes out of it, which is they don’t have to do nutrient replacement. So it has a real cost savings for them to see it go back on. So I think we should see it flow through in terms of cost reduction in our biomass cost.
Ross Kenyon: It’s potassium, right?
Peter Reinhardt: Yeah, potassium. And phosphorus. It’s about a very small percentage of the nitrogen that comes out. From, like, an NPK perspective, a very small percentage of the nitrogen, about 60 to 70 percent of the phosphorus, the P, and then basically 100% of the potassium.
Siobhan Montoya Lavender: Okay. It sounds like, from your answer on biochar, that MRV — ease of MRV, and MRV as a way of actually measuring and being confident in your removals — is pretty high on your priorities. How’s it been proving out your MRV scheme so far? Like, how’s that gone?
Peter Reinhardt: So we looked at kind of the traditional registries first. We were like, great, we’ll just go do the thing with a registry, like Verra or Gold Standard or whatever. And then we discovered that that’s like a two-year process, that they take a thirty percent fee, that most customers who want to buy permanent removals don’t really even believe that that means anything, because the historical offsets ecosystem hasn’t been high enough quality for them to want to buy that stuff. Anyways, so then you’re like, why would we do that?
So we have taken a very different approach so far, which has been: first, we collaborated with the team at Carbon Direct and some others on developing a protocol that documents how we should actually go about measuring all these things, and that protocol is public on the site. And then we also have taken a kind of view of extreme transparency in our life cycle analysis. So I believe that from a permanent carbon removal perspective, we are one of two companies that has delivered anything so far, Climeworks and Charm being the two kind of permanent removal pathways that have delivered something so far. Charm delivered about 5,400 tons last year, out of sort of 6,000 tonnes for the permanent carbon removal ecosystem overall.
So we actually almost became one of the first that actually made a delivery, and we very quickly discovered that actually the customer’s experience of carbon removal is the MRV. Like, they don’t actually see the activity. Right? Sure, you go do the carbon removal activity and you show up and you’re like, we did the thing. Like, I remember being on the phone with Ryan, and I was like, hey, Ryan, it’s done. And he was like, cool. Like, it’s a super underwhelming experience, right? Yeah, we realized the MRV is the experience the customer has. And so we need to really put a lot of effort into that.
So for the 5,400 tons or so that we’ve now delivered, you can see it on the public website: charmindustrial.com/registry. You can see every order that’s been made that we’ve delivered against. You can see the full life cycle analysis for it, and you can kind of see, like, a FedEx-style delivery history of, like, what happened when to get to that. And over time we’ll introduce more and more transparency there.
Ross Kenyon: And for our listeners who are thinking, 5,400 tons, what’s that? That’s actually a really huge amount to have already accomplished, considering how nascent the carbon removal landscape is, and the ecosystem of different CDR startups. Congratulations, because that is a serious achievement, to have already sequestered 5,400 tons.
Siobhan Montoya Lavender: Yeah, I feel like when we talk, we talk so much about, like, millions, gigatons. We talk about scaling the industry so much. And I think there’s a missing component, where we’re not like, but this is where the industry is right now, and 5,400 tons is worth celebrating, you know? That’s a real achievement.
Asa Kamer: And so let’s talk a little bit about scaling. I mean, obviously your feedstock — I think it’s touted oftentimes that bio feedstocks are readily available across the United States and across the world, really. So do you have any feedstock concerns, or is it mostly about, like, shipping and injection well capacity and stuff like that?
Peter Reinhardt: I think feedstock eventually becomes a real limit, but it’s a really big number. It’s like between 5 and 10 billion tons around the world every year. Like, it’s just huge. So, like, yes, it probably becomes the limiter at some point, but I think there’s a very academic perspective on this, which is like, well, how are we going to possibly allocate all of it? There’s all these different people trying to get access to it. How are we going to allocate it? And I’m like, it’s not socialism. Like, capitalism will sort of have it, it will get allocated, the highest value use case will win. But there’s a lot out there and almost none of it is used today.
So, like, just corn, in just the United States, is 100 million acres per year currently, and that is 400 million tons per year of corn stover, which represents 600 million tons of CO2 [unclear].
Ross Kenyon: So it’s a lot of corn, and we are really into corn here.
Peter Reinhardt: Yeah. And we, like, suck that 600 million tons per year out of the atmosphere, and then it rots and returns to the atmosphere quite quickly, like within a couple years. So every year you roughly halve that amount of CO2, kind of just, like, turning over, turning over, turning over. So if we just took that sort of sustainable portion of that corn stover, to prevent erosion and other issues, then you end up with, like, hundreds of millions of tons of CO2 removal capacity just from corn, just in the United States. And then you start spreading across all the other crops and all the other countries and so on, and you pretty rapidly get to some very big numbers in terms of potential size.
Ross Kenyon: And you think that in the future you will be able to pay a price that will be most attractive to sellers?
Peter Reinhardt: That’s right. And there’s two reasons for that. One is, we actually don’t view bio-oil as just being applied to carbon removal. We think of that as the first to market. We think of bio-oil more as an intermediate that allows biomass to be accessible. So people don’t really think about this, but if you actually look at how biomass is distributed, it’s very diffuse. Like, on an entire acre there might be two tons that you can remove from it. Like, that’s like nothing. That’s like pixie dust sprinkled on the field. It’s not much there. So if you build, like, a big central facility and try to, like, vacuum up everything locally and transport it to that big central facility, you pay a fortune in transport costs.
You have to do raking on the field, you have to do baling. You stage the bales to the edge, and then you load the bales onto a truck, and then you truck it, and unload the truck, and it becomes stupid expensive. So basically building large central facilities doesn’t pencil, which is why things like bioenergy became [unclear], like, not widely deployed, as well as cellulosic ethanol. Like, all these costs balloon. There’s been, like, bankruptcy after bankruptcy after bankruptcy as people realize that, like, biomass transport is really f*cking expensive.
So we think that the solution is to do the conversion on-field, from these loose leaves that are pixie-dusted across the farm into a pumpable, dense bio-oil fluid that can be taken by truck. And so then you have, like, a pumpable fluid form of biomass that you can use in a bunch of different places. And the first application of that is pumping it underground, which is [unclear]. But the second application, which we think is even bigger potential impact, is gasifying that bio-oil into something called syngas — carbon dioxide and hydrogen — and using that to reduce iron ore into iron, and out of that you get a CO2 stream that you can still sequester.
So you still end up with all the carbon removal impact, but you end up with the iron reduction along the way, so you, like, double or triple the CO2 impact. So that’s where we want to go eventually, and we imagine, like, the economics playing out of, like, you saved a bunch of the biomass transport, and you get two co-products, carbon removal and iron. That’s why I’m not worried about biomass supply.
Ross Kenyon: Well, first of all, let me just jump in, because you did say truck. You mean truck or rail? Or is it, like, truck to rail, or is it truck? Are you going to be so close to injection wells that rail is not applicable, or what’s the deal with truck versus rail transportation for the actual bio-oil?
Peter Reinhardt: Biomass always goes by truck, never by rail. Rail is best for very heavy loads going long distances. It’s possible that we could have some bio-oil going in by rail to an injection well, but the injection well geology that’s appropriate for bio-oil injection is quite flexible, and so that means we can probably have wells within pretty short, very drivable distances. For an iron-making facility, where you bring it — well, that might be by rail.
Siobhan Montoya Lavender: How close are we to this modular vision of bio-oil production?
Peter Reinhardt: That is probably where most of the engineering challenge for us lies. Is, how do we take a chemical plant and turn it into a reliably operational piece of farm equipment, basically? Which, I don’t know how many people have, like, made farm-equipment-sized chemical plants. It’s definitely a [unclear].
Ross Kenyon: We don’t have a lot of, like, [unclear] looks on our faces, right? We’re all like, this is [unclear], but hopefully we’ll have one in the backyard. So obviously there’s, like, a very early prototype. I imagine it was quite expensive, although farm equipment is also, like, half a million up for many of these units. Anyways, so I don’t know if you’re able to get it within a ballpark of a fine— but is that kind of the goal?
Peter Reinhardt: Yeah, yeah. The current machine — we’re pretty open about this stuff — the current machine is about two million bucks, and, you know, as any prototype, has issues with reliability and so on, and, like, bottlenecks on performance and so on. So as we iterate on that machine, we expect that all those sort of moments, reliability, uptime, will go up, as well as the cost coming down very dramatically. Like, that roughly 2 million is inclusive of labor cost, built by the engineers who designed it in San Francisco. This is, like, you know, if you want to make an expensive piece of machinery, this is how you do it. Do it in the Bay, take a long time. We think it’ll get down to maybe like 250k. There’s nothing crazy inside of it. It’s a bunch of pipes and reactor vessels and stuff like that, but getting that configuration exactly right, that’s the trick.
Siobhan Montoya Lavender: How much space — like, how long will it be able to run for before the bio-oil that’s made within it has to be, like, distributed to a trucker? Like, how many acres can it cover before it has to go, like, unload the bio-oil that it’s made?
Peter Reinhardt: That’s a good question. That’s probably an optimization that’s yet to come. The current one operates, like, field edge, or, like, a pad nearby, and it’s not in the mobile form factor yet. You need a pretty reliable, steady, smooth process before you want to start having it also pumping across the field and picking up biomass in real time. Yeah, sorry, I haven’t done the math on that.
Asa Kamer: Are there people out there trying to make your vision work, but in a centralized paradigm?
Peter Reinhardt: People have been producing bio-oil in a centralized version for a while. The typical deployment is like a 100 to 300 tons per day pyrolyzer at a sawmill, because they have a bunch of sawdust and they don’t know what to do with the sawdust. They convert it into bio-oil, ship it out for, like, burning as industrial heat production, or for things like — not carbon removal.
Yeah, no, I mean, well, Charm also now has a patent on bio-oil-based carbon removal by injecting it. Yeah. I mean, the idea is only two and a half years old. Like, my cofounder Shaun thought of it. We had, like, a couple pints of bio-oil, and he was very studiously trying to figure out how to get rid of it in the right way. And his options were — this is before he had the idea of pumping it underground — and he was trying to figure out, you know, what’s the right way to dispose of this? We could either incinerate it or you can send it to a disposal well. And then he was like, wait a second, if it goes down to a disposal well, doesn’t it count as removed? So that was his big [unclear].
Ross Kenyon: That’s amazing. The intellectual property angle of this — is it now impossible for anyone but Charm to inject bio-oil underground?
Peter Reinhardt: It’s not impossible, it just requires a conversation with us, basically.
Ross Kenyon: Not to be prickly, but why do it that way? Like, why? Like, what’s the good for the world?
Peter Reinhardt: And I — yeah, it’s a good question, but it has a good answer, I think. So if you look at what does it take to scale something very, very quickly — right, scaling something very, very quickly is actually proportional to margin. So if you have a fast payback period on a machine, you can pay off the equipment faster, which means that you can recycle the capital into building and deploying a new one. So from an impact perspective — you have to trust us on it, but from an impact perspective — if you can pay it off faster, you can scale it faster. And so that’s the risk, actually. Is that if margins compress, you actually can’t pay it back faster, and so then you actually draw out the timeline for being able to deploy it and very rapidly scale. That’s the actual risk.
But I don’t know. No one has ever approached us to even, like, talk about, hey, we’d like to deploy this. No one has ever tried to do the things, so we haven’t actually had to think through fully the question of, like, if someone else wanted to do it, could they do it? Would we just license it? Would we give it away for free? I don’t know. We have no real thought to that question.
Siobhan Montoya Lavender: Like, there’s a lot of questions around IP in carbon removal right now. That’s, like, still getting sorted out from a number of different methods, you know? I feel like anybody comes to put in an IP, it’s kind of — how do you, what do you do then, you know? And in other businesses I think it’s very clear you would protect your IP, and I think in CDR and in climate solutions in general it’s a little more murky.
Peter Reinhardt: Yeah. I mean, like, if you just look at what’s happening with direct air capture patents over the last year, it’s like hundreds, hundreds of direct air capture patents were filed just last year, and coming from Silicon— I mean, I didn’t file a single patent in my prior company. I didn’t think this was a thing, like, we were open source with everything. What I found is that there’s significant defensive value in having a patent, giving freedom to operate, and, like, negotiating chips for freedom to operate. So, and that’s unique to the hardware world and the oil and gas world and so on. I think it’s a much more IP-litigious world. And something that, honestly — I’m going to use two words — like, my preference would be to just, like, open source a bunch of stuff and, like, we’re just going to go fast and do well by going fast. Anyways, let’s go.
Ross Kenyon: Well, I have similar instincts to you too. Like, I would much prefer to operate in a world where there’s open source, and it’s competition, and there’s riffing on ideas, and people aren’t blocked in progress and further because of IP. But also, you do have a business to run, and I’m sure you have a fiduciary responsibility to your investors to deliver value. And you think that the scaling will take place at a faster rate were you to protect your IP. There’s also a risk that someone else could patent a similar idea and then block you and the process too. So it is a properly defensive act in some ways as well. Like, your heart is also in the more open source ethos. That’s a hard line to walk, but I try to walk it too. Is it comfortable for you? Do you feel happy with that balance?
Peter Reinhardt: You know, I’m, like, not at peace with the way that part of the world operates at all.
Ross Kenyon: It’s like, yeah, I love that. I find it to be a very respectable attitude, and I also feel discomfort with that. Nice. Let me poke you on that. Has anyone ever asked you such a direct question on that?
Peter Reinhardt: Privately, sure. [unclear] It’s, like, an unanswered question. Like, I don’t know what the right answer is. Like, I feel like the right answer for the world is, like, whatever it is that will get to the maximum amount of carbon removed as fast as humanly possible. Like, I feel like that’s the actual right answer for the world, and the question is one of judgment then, like, what’s the right way?
Siobhan Montoya Lavender: I think it is good to lean into, like, “I don’t know” answers in CDR, you know? Like, a lot of times in CDR we get pressured to say, well, this is the answer, this is the clear — you know, this is the clear measurement, we’d come up with something. And sometimes it’s like, well, the technology readiness level is low, and MRV is just getting started, and you don’t know various, various methodologies. And so I think it’s good to lean into the discomfort sometimes.
Ross Kenyon: I don’t know, debates over IP also end up feeling somewhat arbitrary. Unless you think there’s some abstract deontological right to your ideas, seemingly it should be that you either own your ideas for basically forever, or your lifetime, or not at all, and everything is open source entirely. And the fact that you’re already downstream from there, being like, well, it’s some period of years that should be empirically proven to benefit some sort of outside goal or need, it’s going to feel somewhat arbitrary no matter what you choose. And I think for a lot of people that rubs us the wrong way.
Peter Reinhardt: The biggest thing that I care about for Charm is distributed operations. Like, I don’t actually know how this would play out in actual decisions, but, like, you want to compete with the best, like, game on, we’ll all just out-execute. And that’s, that’s I think where our head is at the most, but we haven’t, we haven’t been tested on that, I guess.
Ross Kenyon: Yeah, you just laid out the dinner map here. Come on, come eat our lunch. What’s going on for you this month? What’s happening in October of 2022? What’s going on? What are your challenges? What do you need help with?
Peter Reinhardt: October ’22. We just opened our new Colorado location in Fort Lupton, and we have a couple people that will be moving into that office. Our leadership team — we do have a head of finance and head of our gasification team. So we’re just spinning up that office. We need to hire field engineers, field operations, and site operations. We’re going to have a lot of activity there pretty soon. We’re going to be basing our biomass engineering teams there, across the biomass picking up off the field as well as gasification. The iron-making work stream is going to be based there as well, as well as a bunch of, like, testing of pyrolysis. So we’re super excited about that. But that’s a big area to go through. It’s like a 30,000-square-foot warehouse with a couple acres outside for testing.
Siobhan Montoya Lavender: I want to circle back to the gasification question, because you laid that all out for us and — you should see all of our faces on this call. Let’s circle back and tell us a little bit more about your plans for this gasification project, and even, like, would you be doing some carbon capture and injection? Like, tell us more.
Peter Reinhardt: Yeah, the — I mean, again, the model here is two co-products, where you could produce iron and carbon removal. We are basically in a phase where we’re doing a bunch of R&D on that core process. We’ve demonstrated it to our own comfort to know that it will work. But, like, dialing in that process such that we can start doing incremental scale-ups is a big education. That’s basically where we’re at from an engineering perspective. Our goal is to get as fast as humanly possible to, like, a million tons per year iron-making facility, but that’s a long ways off.
Like, I mean, a million-ton-per-year iron-making facility is a small one, which is, you know, bananas. U.S. national steel production is like 80 million tons a year. 30 million of that is virgin iron. So, like, iron that is from ore. And that 30 million tons would require 25 million tons of bio-oil to produce, which is like 50 million tons of biomass, which, you know, is like, whatever, 25 percent of the corn stover that’s sustainably sourceable. Yeah. But the 25%. So, like, it’s very doable, like we could just produce all of our iron domestically with corn stalks. But actually getting to deploying that first plant, you kind of work back the Gantt chart, and it’s like, you know, say we want to deploy by the end of the decade as, like, an arbitrary goal, like, sh*t, we’re kind of late, you know? Deploying one of these things is a long, long road that we’re getting started on.
Ross Kenyon: An unparalleled scale-up in bio-oil production capacity. Do you think among the more durable forms of carbon removal, bio-oil is going to be the most favored in either the short, medium, or long term, relative to DAC or mineral solutions or something else?
Peter Reinhardt: We’re going to need them all, and I think that’s very clearly illustrated by just, like, if you look at the natural caps. Direct air capture is unique in that it’s almost arbitrarily scalable, right? Like, sure, it relies on renewable energy, which is somewhat capped. It relies on maybe, like, steel to build some of these things. But in some ways it’s a backstop, in that you can theoretically build arbitrary amounts of it. Most of the others have caps that are in, like, natural systems that just, like, exist at some scale. Like, biomass turnover — there’s just X amount of biomass, and it can be maybe a very meaningful chunk, maybe even the majority, but probably can’t do it all, since we’re probably going to need 20 billion tons and we can do 5 to 10.
And so regardless, you’re going to need all these others. You’re going to need ocean alkalinity enhancement. You’re going to need enhanced weathering. You’re going to need biochar going into soil, even if it’s more temporary. You’re going to need so on and so forth. And if you stack up all those natural solutions, there’s still probably going to be a chunk that needs the backstop of direct air capture. So I don’t know how those dynamics are going to play out in terms of timing, but I think the end is going to involve actually a bunch of different technologies.
Ross Kenyon: Good answer. Was it coincidence that you ended up in bio-oil? It sounds like your cofounder just had, like, a nutty idea. Is there an alternate reality where that didn’t happen and you’re working somewhere else in carbon removal, possibly?
Peter Reinhardt: I think we were really aiming at industrial decarbonization. We’re really aiming at decarbonizing iron-making and ammonia production and all these other chemicals, because there’s, like, very little, very little going on there.
Siobhan Montoya Lavender: Yeah, which is actually quite scary.
Peter Reinhardt: And that’s why we got into that originally. It was like, okay, well, how do we make syngas? Syngas is the basis of a lot of these industrial processes. Like, how do we make syngas — carbon dioxide and hydrogen — from something renewable? And biomass is a pretty compelling source for that. So that was what led us to biomass gasification originally. And with biomass gasification, we eventually, after two years, ran into the problem that, like, it doesn’t work to transport the biomass economically. And then we had our first kind of big “oh sh*t” moment, maybe this doesn’t work. And then my cofounder Shaun had his first insight, because it’s, don’t transport the biomass, transport this bio-oil stuff. And that was the first breakthrough, and we were like, great, this works at scale now, like, economically. This is awesome. But how do we get down the cost curve? Like, how do we get down the cost curve to where it’s cheap enough to compete, where bio-oil was cheap enough to compete with natural gas or coal in iron-making? And then it was a few months later that he had his putting-bio-oil-down-the-hole light bulb moment, where he realized that maybe carbon removal was that introductory market.
Siobhan Montoya Lavender: The feedstock that you’ll be using, especially as you scale — the alternative uses of it. What would change with soil fertility by taking some of the stubble out of the ground in croplands? Or is this currently fed to livestock? What would change if you were successful?
Peter Reinhardt: So the baseline is that the corn gets cut at harvest time and it lies on the field, and for the most part it’s there, and it can be one of two different practices. It could be till, where it gets tilled into the soil, or no-till, where it just gets left on top. Either way, the vast majority of that carbon goes back into the atmosphere. So regardless of the baseline, till or no-till, you should basically, like, within a few years, like 95% plus of that carbon is back in the atmosphere. And whether that carbon lands in the topsoil or subsoil is somewhat modulated by till/no-till, but some of the most recent data that I’ve seen suggests that actually the total net carbon deposited doesn’t really differ that much between the two.
You have a bunch of other effects beyond carbon in terms of NPK nutrients — nitrogen, phosphorus, potassium — other micronutrients, and you also have erosion. So no-till is very important in that it protects the soil from erosion. So that’s kind of the baseline. If we run our mature process through this, where we are picking up a portion of the corn stover, not all of it, but of course, even call it 50 to 70 percent depending on the situation, we are actually leaving enough corn stover there to protect the soil from erosion and, you know, the microbe health and stuff like that. And out the back end of the process is coming the biochar with ash, so all those nutrients and micronutrients, NPK and micronutrients, are going back into the soil via, like, an anhydrous shank, for example. So they get under the soil where they’ll actually be retained. So in that loop, you’re basically — the only thing that’s really leaving is the carbon that would have left anyways, and some nitrogen, which has to be replaced.
Ross Kenyon: Maybe we can get some feedback on some of our — do we have good bio-oil memes locked and loaded that we can get some critique on? It’s got to be — there’s got to be something around barbecue sauce.
Asa Kamer: Well, now there will be. I guarantee you that. Not only — we actually did make a meme specifically for Charm. We’re going to — I’m trying to — did we send that one out? It was one of the Tom Haverford ones. We should do it on the day that this is published.
Ross Kenyon: We should. [unclear] Peter, I don’t think you guys — the way you explained it. Should we preview it or not? Yeah, we’ll stick him in preview.
Asa Kamer: I can pull it up, but basically — did you watch Parks and Recreation back in the day?
Peter Reinhardt: Sure.
Asa Kamer: Tom Haverford is always coming up with design ideas, like [unclear] in your dish soap or whatever, you know. And so, sorry, that was in the [unclear]. It’s one of these. I’m sorry. And so we were like, okay, well, what are some, like, [unclear] carbon dioxide removal [unclear] — but our real ideas start out, which is, like, ridiculous things. But then we’re like, you know, some carbon removal sounds ridiculous. It sounds so far-fetched and magical, and yet it exists. And, like, how can we, you know, kind of create memes around this idea of, like, real companies that do real things, but sound really far-fetched? And hang on, we’ll pull it up here.
Ross Kenyon: Okay. Barbecue sauce underground is a perfect [unclear]. Like, come on. Which, like, CEO coach, fundraising coach, did you have? That’s the pitch, that’s the one, right?
Peter Reinhardt: You know what I found is that a lot of people are like, oh, we pump bio-oil underground — like, why are you pumping oil underground, man? Burn that sh*t. And it’s like, no, no, like — ah, God — the word is just, like, it doesn’t have that much energy in it. But then it’s, like, into this really weird technical discussion. And so I’m just like, it’s barbecue sauce. People like, oh, okay. So it’s like, safe, because I could eat it, and it doesn’t have any energy in it because you can’t burn barbecue sauce. So, like, it’s like just answers all of the — it, like, auto-answers all of these follow-up questions. And I— the term bio-oil is also really indistinct. Ooh, like, what exactly does it mean?
Ross Kenyon: Obviously, you’ve explained it here. Okay, Siobhan has it now. Go ahead, you have it up. Should I read it?
Siobhan Montoya Lavender: Let me go stew on it. But basically [unclear] I think that we suck the CO2 and stick it back in the ground [unclear]. Yeah. Put it back. Nobody likes climate change. We do the work of removing CO2. Good hate work. We let plants capture the CO2, and Charm charges six hundred dollars a ton. Jean-Ralphio [unclear].
Ross Kenyon: I’m sorry, didn’t we publish this? Did we? Did we just do — sometimes the ones we do in series, like this, I think people get, like, all right, we’ve got enough of this, and I think this was one that was deep enough in this series. That is what happened, that’s my memory of it, at least. I think so.
Asa Kamer: Yeah, I haven’t seen anything in this meme format. Okay, Peter only follows, as he said, something like 30 people, and if you didn’t see it, then I think it’s safe to go out.
Peter Reinhardt: And I read — I read everything, everything in my [unclear]. Wow.
Asa Kamer: Yeah. It’s like 37 people. We’ll ship that one out there with this podcast.
Ross Kenyon: That’s — yeah. Well, thanks for being here with us, Peter.
Peter Reinhardt: And thanks for having me.
Ross Kenyon: Yeah. Links to all those things are in the show notes. Super fun having you. What Charm is doing is really impressive and fascinating, and you cracked us up with your vision of all times, which doesn’t always happen when we talk with founders and CEOs. So kudos, truly. Good luck in Colorado. Exciting, exciting new endeavors. Peter, thank you. And if you ever get clarity on the IP thing, let me know.
Peter Reinhardt: Yeah. I’ll solve a long-running, centuries-old debate in philosophy, and, yeah, [unclear]. I’ll let you know.
Ross Kenyon: Yeah. I mean, I do think — yeah. And also in the specific case of CDR.
Hey, thanks for listening. Hope you enjoyed the show. Check out some of the links in the show notes, and check out some of Charm’s material. They published a very nice document revealing how they’re doing their MRV and thinking about it in the future. And thanks so much for listening, and have a lovely day.
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