Why I love Poppy Russell's carbon dioxide removal research
Counteract VC's Research Manager delivers some high-quality industry analysis
This is episode 411 of the Reversing Climate Change podcast. You can listen to the full conversation between Poppy and I (Ross Kenyon, the host) on Apple Podcasts, Spotify, YouTube, or pretty much wherever you enjoy your podcasts. You can also listen to the full audio or watch the full video right below this paragraph.
Sending your aggressive rebuttals to Poppy…
Toward the end of this episode, Poppy Russell said she hoped people wouldn’t come at her once it aired. I assured her they would. This was her first podcast ever, and it really is hard to say anything of interest to which no one would object.
In fact, one of the short films I made so long ago it feels like a different life entirely (it was), was about a local guy running for public office in Arizona who thinks that we’d all get along a lot better if we stopped talking about religion and politics. His platform is full of the neighborly banalities that make the world go round, like the incredibly regional Arizona gag of, “well, at least it’s a dry heat.” pause for all Arizonans to nod and politely smile
But Poppy has takes, and having a take means some amount of judgment. Some amount of judgment means some are judged wanting.
Being bearish on some things is part of the gig
Let’s consider what she actually said:
She’s skeptical of ocean CDR due to the concentration of CO2 in seawater. The mass concentration is far lower than in air, so you have to move enormous quantities of water to capture anything. Her back-of-envelope number is that if you partnered with every piece of water-moving infrastructure that already exists, you’d get seven to ten million tonnes of removal potential.
She’s bearish on policy in the near term, because the EU’s 250 million tonne allocation for removals in its emissions trading scheme over the next decade sits on top of a price gap between removals and the carbon price, and the ETS spent recent weeks adjusting to slow the pace of its own decarbonization targets—a “smart political move,” she said, which I take to be the diplomatic rendering of a less diplomatic thought. None of this is mean.
All in-bounds. All debatable. All things which people do debate the bounds on quite frequently!
Taxonomies serve the taxonomist
If you truly can’t get enough of the following question, you’ll want to read this piece…
The impossible taxonomy of carbon dioxide removal
If we created an objectively correct and exhaustive categorization of carbon credits, would it solve everything? Would it solve anything?
Poppy’s job at Counteract, a venture fund specializing in carbon removal, is to look at more companies than nearly anyone else gets to see and then sort them into groups. The sorting is where the trouble starts.
Companies open the report, find themselves boxed with four others they consider nothing like themselves, and write in. Her defense is disarmingly modest: “it’s just a way that we’re grouping companies for the sake of it, that’s helpful for us.” Which is the honest answer. A taxonomy is worth the most to whoever built it, and she built this one to make investment decisions with. From inside a company, the differences between you and your box-mates are your entire reason to exist, so of course the box looks deranged. From her chair, you have to group or you can’t think at all. On the show I resorted to Life of Brian’s legendary, “You’re all individuals.” “Yes, we’re all individuals,” in unison—which is roughly what a portfolio category sounds like from the inside.
I wrote a whole piece a couple of months ago about how the taxonomy of this field refuses to hold still, so I won’t relitigate it here (and it is linked to above), except to say that Poppy is the person that problem happens to professionally.
When you start writing that rebuttal email
One thing I’ve learned from working with so many companies in this space is that if someone does miscategorize your company, it may be that the story you’re telling is not working. The nuance you hoped would read does not. And what I often find is that if the story is confusing, the fundamental business strategy often is as well.
This is information you need though. It’s honest feedback, and that can be a true gift. And if being misunderstood feels bad, being understood sometimes feels worse.
There’s an old adage I brought up on the show: the fastest way to get good information is to say something wrong on the internet. Poppy has run the experiment, though she insists the wrongness was unintentional. A couple of years ago Counteract published its skepticism about enhanced rock weathering unit costs, and the analysis was simple in the way good analysis often is. You move a tonne of rock, you can only sell credits against a fraction of it, you realize that fraction slowly, and in the meantime you’re paying to source the material, move it, spread it, measure it, and service the capital you raised to do all of that. Companies wrote back to tell her where she’d gone wrong and what they were building to solve the crunch points she’d named.
A year and a half later, Counteract invested in a company that had reached the same conclusions independently, saw the research, and figured here at last was a fund that would understand the pitch. Even if it didn't lead to this entrepreneur solving the problems Poppy laid out, she definitely put a candle in the window hoping someone would show up with it figured out in the future.
Investing in toxicity
There are some places I’m tracking, and of course Poppy is too. As everyone knows, venture money is going right now to electrification services and data centers, chasing energy demand. What Poppy is watching is toxicity. We put an enormous volume of toxic chemicals into our food and water systems, and the research tying specific chemicals to cancer and to hormonal and fertility problems keeps growing. Her angle is that many of the chemicals that are bad for humans are also bad for the climate, but the value proposition sits on the human health side—pesticides, agricultural inputs, microplastics, compounds that resist breaking down—with climate riding along as the secondary benefit. She was clear this isn’t hard climate tech, isn’t carbon removal at all, and that the open question, as ever, is who pays, and can we ever overcome the discount rate of such long-term problems?
I like the thesis for a bunch of reasons, partly because Deep Science Ventures is pointed the same direction, and partly because toxicity might be the rare concern that crosses political lines. The second Trump administration’s marriage of convenience with RFK Jr. never looked durable to me—I don’t suspect Trump enjoys much in the way of organ meats. And after the glyphosate case played out, RFK clearly lost the intra-administration battle over what to do about toxicity. But parents of every political stripe want less toxic environments for their kids, and we all know by now how much behavioral and social damage turned out to have lead underneath it. Get upstream of a poison and you solve problems that would otherwise take decades to surface. If there are climate benefits in the bargain, that’s just upside.
Where Poppy is bullish
Her bullish case is industrial integration, and her favorite example right now is Vateris. Their feedstock is gypsum, a nuisance waste with genuinely painful disposal costs. They carbonate it with point-source CO2 into a material cement companies can blend into concrete, improving its strength and durability, and they also produce a potassium sulfate fertilizer, which turns out to be where the core revenue lives. Set that beside portfolio-mates CREW Carbon, which sells wastewater treatment plants a more efficient way to run, and CarbonRun, which doses acidified rivers with limestone and gets restored salmon habitat out of the bargain.
She did hand me the best one-sentence compression of this field I’ve heard in a while: “Climate change is an acidity problem, and carbon removal is finding loads of sources of alkalinity to counteract that acidity.” I’d been toying on recent episodes with sorting companies into The Alkalinity GangTM and everyone else—because what else is there at the end of the day except taxonomy?
The plan for when we don’t know what to do
Which returns us to the flinch. Poppy noted that pre-seed carbon removal deal flow has dropped off significantly, and that most of the pre-seed founders still working on removal have stopped calling it carbon removal. I suggested somebody in this industry is running the Shaun of the Dead plan—go to the Winchester, have a pint, wait for this whole thing to blow over—and asked whether it’s funnier if that’s the founders or the investors. She allowed it’s probably the investors. Then, quickly: not that that’s what Counteract is doing.
Whenever I say bearish things on this show, that’s when the complaints arrive. What use is pessimism? My honest answer stands: me saying a thing has no bearing on whether it’s so. But the aversion isn’t stupid, either. This is a small industry running on fragile capital through a hostile political moment, and every public doubt may be a quotable line for someone who’d prefer the whole enterprise dead (which doesn’t mean we don’t say it…) See below for proof:
I understand wanting to keep the doubts in the group chat. I just don’t know how a field that only permits good news is supposed to learn anything or do work that has a halfway decent shot at feeling joyful.
Poppy’s version of hope, if that’s the word, is that pragmatism about policy pushes effort toward business models that don’t depend on future carbon prices, and that’s the durable stuff anyway. Whether that counts as optimism I honestly can’t tell.
She survived. She said so twice. Godspeed to you and your inbox, Poppy!
Links to several of Poppy’s research pieces are below this paragraph, and the full corrected transcript follows below.
Full Transcript
Ross Kenyon: Hello, welcome to Reversing Climate Change. This is Ross Kenyon, the host of the show. I work in climate tech and carbon dioxide removal.
While I have you here, could you please open up your podcast app right now and give this show a great rating and review in Spotify or Apple Podcasts? A lot is taking place on Substack.
The other podcast I’m working on, Climate Workers Anonymous, has a publication that’s very active over there right now, and the podcast itself is being published through there. So you should follow Climate Workers Anonymous in whichever podcast app you use, or on Substack. There’s a lot of extra content on Substack if you like Reversing Climate Change.
The full transcript of episodes is being published on Substack, as well as extra commentary from me that didn’t fit into the show. I’m just trying to use that platform a lot more. Of course, a lot takes place on LinkedIn as well, because this is a, quote-unquote, professional carbon removal podcast.
But a lot’s happening on Substack as well.
Now to get down to it, today’s guest is Poppy Russell. If you work in carbon dioxide removal, you have probably seen Poppy’s research. She is the research manager at Counteract.
Counteract is a venture capital investor in carbon removal. If you haven’t pitched to them previously, you certainly have worked with or spoken with companies that have, or are part of their portfolio. Poppy puts out great research. I think her analysis often points to trends that other people will soon be talking about, but haven’t realized just yet.
I respect Poppy’s takes. They’re often ahead of the curve and interesting. They’re data-driven, and they’re often done with a very nice visual style that makes it easy to absorb the synthesis of quite a lot of information. I’ll put links to several of her articles in the show notes. You should go and check out her work, as well as Counteract generally.
And I’ll just get right to the show with Poppy. Thanks for listening. Here it is.
Episode
Ross Kenyon: Poppy, this is your first podcast ever.
Poppy Russell: It is. What an honor. Yeah.
Ross Kenyon: No honor. Right to the top. You just cut the entire line. Thanks for being here. I’ve enjoyed your research and chatting with you for a long time now, and we had to do it.
Poppy Russell: Yeah, we did. We did. It’s cool to be on it, because I think when I started, or before I started working in the space, I did listen to some of the Reversing Climate Change podcasts. So yeah, it’s fun to actually be talking on one.
I think it was Jennifer Wilcox’s episode, which was probably a long time ago now, but it was a really—
Ross Kenyon: It was a very long time ago. I think it was when the CDR Primer came out. When even was that? I don’t know. In the long, long ago.
Poppy, when your writing comes out, I always make sure to read it, because it’s often pretty. I like that there’s graphs involved, it’s visual. There’s also a lot of very serious analysis and data crunching that’s happening in there. And I often find that you covered maybe trends that are not super visible to others. It’s hard for you to acknowledge this without it seeming like you’re patting yourself on the back, but this is an accurate summation of how you do your work, no?
Poppy Russell: Yeah, I guess we have just an interesting lens on the carbon removal landscape based on the number of companies that we speak to. So we’ve got a bit of a privilege in the type of access we have to different data, different models, different ideas. And so part of our job is obviously filtering through a lot of that data and trying to understand trends that exist there within pathways, but also across the carbon removal landscape as well.
So definitely part of what we do at Counteract is trying to put back into the ecosystem and explain some of those trends that we see. And it’s always nice to know that people are actually reading it. And often people come back to me and tell me why the analysis is wrong or what I’ve missed, which is also equally useful.
So it’s definitely a unique sort of lens that we have on the market, and it’s a fun lens as well.
Ross Kenyon: Do you ever get to say something very British like, “It disappoints me to contradict you in this way, but I’m afraid it is you who are wrong”? Something very dour like that? Do you ever get to say that, or do you just go, “Hmm, interesting”?
Poppy Russell: Hmm, interesting. Or, I understand your point of view. Yeah, I mean, it’s always difficult when you put out content with names attached to it, with company names, because everyone who’s within a company has their very specific positioning. And so when they see themselves grouped with some other companies which they might themselves feel that they’re very different to, you can get some pushback.
And I always like receiving that pushback, but at the end of the day, it’s a category. And I’m not making this huge judgment that one category’s bad and one category’s good. It’s just a way that we’re grouping companies for the sake of it, that’s helpful for us.
So I find that can be a bit of a tension when you’re naming, and so you have to be a bit careful about it as well. And I’m sure I’ve made mistakes, as always.
Ross Kenyon: “You’re all individuals.” “Yes, we’re all individuals”—in unison. Yeah, but obviously categories compress information in order to note commonalities and divergences that are useful for some purpose, usually useful to the person who created the taxonomy. That’s probably the person to whom it’s most valuable.
But I think if you’re zoomed in enough to be one of those companies, maybe those distances start looking wider and wider to you, because you’re only in that one quadrant rather than you evaluating, judging everyone. What is worthy of investment from your distant ivory tower, Poppy? Hmm.
Poppy Russell: Yeah, but if you can explain why you’re better than all of the other companies in that category, then that’s a good thing, right?
Ross Kenyon: That is a good thing. Yeah, I think if you’re able to do that. I imagine it feels bad if you can’t.
Poppy Russell: Yeah.
Ross Kenyon: I mean, that’s information too though, right? Like, you should know that. If you aren’t that different from your rivals, then it’s not insulting to know that. If someone points it out and it’s true, it’s your job, I think, to find a way to hear that productively.
Poppy Russell: Sure, sure, sure. And if it’s my understanding that’s wrong of you, then it’s also a positioning thing—maybe a way that you’re positioning yourself is not cutting through in the right way.
Ross Kenyon: I work so much on strategic communications issues and positioning and branding, and how do you tell a story that shows asymmetry in a positive way that makes you stand out in a way that might look good for your company? I think I’ve just had hard lessons learned of some of the really fine-tooth ways of communicating.
As a company, often people just do not internalize those differences. There’s just so many companies to keep track of that they’re only gonna remember a couple details about you unless they diligenced you for some reason, or they got really interested in what you’re doing specifically. Most of the time it’d be like, “Oh, but you do soil carbon.”
And then you have to be like, “Well, we do this, but we also pair it with this and it works like this.” And they’re like, “Yeah, so it’s just like soil carbon, right?” I’m like, “Okay, fine. Sure, if that’s the way that you need to understand it.” I think people do get a little frustrated if you don’t use their particular verbiage sometimes, or maybe they think that they’re communicating successfully but the listener is not wanting that much information and so they aren’t hearing it.
Being misunderstood is not a good feeling.
Poppy Russell: No, it’s not. And I can resonate with it, in that I will often, if I put out something to get attention on LinkedIn, if it’s a nice picture that grabs someone’s attention, but actually it’s pointing to an article where all of that nuance is unpacked within it, then a lot of the time it’s…
And people are time constrained. They haven’t read the detail within the accompanying analysis. So yeah, I resonate with that feeling as well.
Ross Kenyon: Do you know the old adage that the fastest way to get good information is to intentionally say something wrong on the internet?
Poppy Russell: Ooh. Yeah, yeah, probably, as people will come back at you telling you why you’re wrong straight away. Is that what you do? Is that your special approach?
Ross Kenyon: Oh, I’m wrong all the time, but it’s always unintentional, I think. No, I think that that’s actually resultant. So maybe, given that your job is researching and this research is meant to filter into diligence work and creating a useful map of the ecosystem and where the world’s going, you might be getting better information just by occasionally having a provocative taxonomy that pisses someone off.
Maybe it’ll work somehow. It is attention too.
Poppy Russell: Yeah. Yeah, definitely. We had done some research on the enhanced rock weathering space a couple of years ago. And the analysis is quite simple, in the scheme of things, for an approach which is really complicated. But it was just sort of demonstrating to people where we saw some of the challenges in the enhanced rock weathering space, which mainly was tied to: it’s really difficult to get unit costs down, because you have a ton of material of which a fraction of that you can charge carbon credits for.
And you realize that portion over quite a long space of time. And you have all of these costs associated with actually being able to get money for that removal, whether it’s getting the material, whether it’s moving it to the area of land, whether it’s measuring all of this, and whether it’s also paying back your interest against the amount of capital that you’ve taken out for that project as well.
So we’d put out this analysis just to show, these are some of the things that we’re concerned about in this space. And a whole series of companies come back to me and explain, one, areas in which I’ve been wrong in the analysis, but two, all of these different innovations that are actually happening to solve some of the key crunch points that we had identified.
And so you’re always slightly ignorant to the whole sphere of things that are going on. And getting the pushback from some of the stuff that you’re putting out is always beneficial to understanding the space better. So I don’t think we were intentionally being wrong, but I think we were being a bit provocative with saying that we think that the unit costs of enhanced rock weathering are really difficult to get right.
And now, a year and a half later, we’ve actually invested in a company in the space, someone who’d come and had answered what we thought some of the key problems were in this really clever way. So that was a really cool example of how putting out some research from our understanding has led to a company that’s satisfying some of this stuff coming towards us and saying, “Hey, I think I’ve got a solution that you might be interested in.”
Ross Kenyon: I love when entrepreneurs do things like that, assuming that they read this research and they did something that they wouldn’t have otherwise have done, unless they were just doing it in isolation and then realized, “Oh, Counteract is looking for this, and I saw this.” Oh, go ahead. Yeah.
Poppy Russell: I think it was literally that they had come to the same conclusions, and so they saw what we’d put out. I don’t think we made them do anything that they weren’t doing before. But I think they saw us and were like, “Okay, at least they understand why our solution is interesting.”
Ross Kenyon: What’s it like having your research not be additional?
Poppy Russell: Hey.
Ross Kenyon: That’s mean. No, I’m just kidding. It’s nice to have that. I feel like independent confirmation of ideas like that is trustworthy. When I see people come to similar conclusions like that from different ways of getting there, I think that’s really useful. I also love when entrepreneurs do engineer based upon criteria like that.
I think one of the mistakes a lot of entrepreneurs make is that they want to be first at something. You know, as the old Navy line goes, “Get there first with the most.” And I think once companies make bets and they’ve already decided on what the future’s gonna look like, and if they have to go first, they are deployed, and they’ve made staffing decisions, and told their board what they’re going to do with their money and stuff like that, it becomes pretty hard to change.
And then the companies that just wait and watch for a while, and they see, oh, there’s an RFP that we can just engineer something specifically for, or these companies are all stuck into the wrong type of measurement and they’ve invested all this money in this—what if we did something else? I like it when companies are able to do that kind of go-to-market, or just build a company around a demonstrated “these are the criteria.”
I like that.
Poppy Russell: Yeah, and I think we’ve definitely seen that trend over time in the carbon removal space, right, over the last few years, where there was initially so much white space and new carbon removal pathways and new technologies that weren’t really being commercialized.
And then we saw lots of companies arise filling a lot of those, and then the next stage of companies have been like, “Okay, how are we gonna create a compelling business case where removals are a part of that?”
Ross Kenyon: Yeah, I think whatever the next thing is that I found or co-found, if I do that again, I think I’m gonna be looking for opportunities to be part of that second wave who watches where all the first wave companies got stuck, and you’re like, “Okay, we’re gonna do something that builds on that, but goes in a different direction.”
‘Cause I watched those companies with a little bit of envy from Nori, where I’m like, “If only we still had that kind of optionality to redo everything in this kind of way.”
Poppy Russell: Yeah. What do you think the next space will be?
Ross Kenyon: I don’t know. I really don’t. I don’t know. That’s your job. Aren’t you supposed to—you’re the pattern matcher. You’re supposed to be telling me what the thing is to invest in with my career, with my time, with your money. What is gon—
Poppy Russell: With my money.
Ross Kenyon: Yeah, with—
Poppy Russell: My money.
Ross Kenyon: —with the money that you’re closer to than I am. You’re supposed to be making decisions, kind of.
I don’t know. What do you think is going to be the next thing, either in climate or carbon removal or things adjacent to it? What are you watching closely?
Poppy Russell: Mm-hmm. This isn’t the best time to ask me this question, but—
Ross Kenyon: Why? Is there ever a good time to ask this question? It’s hard anytime you ask, I think.
Poppy Russell: It’s hard any time I ask, but yeah, I’m not doing so well at this question right now. This is a side take to the podcast.
Ross Kenyon: This is why you asked me about it. You had to buy yourself time so you could think while I was rambling. Great.
Poppy Russell: Yeah. Okay.
Ross Kenyon: It seems like it’s gonna be juicy, Poppy.
Poppy Russell: It’s not—no, it’s not gonna be juicy.
Ross Kenyon: Sounds sad. Okay.
Poppy Russell: Well, yeah. I’m really rambling here, so feel free to chop a bunch of this out. But I think—so in the venture capital space, obviously it’s quite clear where the trends of investment are going right now, which is electrification services, data centers for the growing energy demand, ‘cause there is a serious growing market there right now.
Whether that’s a purely pre-seed space—obviously it’s not a purely pre-seed space at the moment. But there’s probably scope for a fair amount of innovation there. Then I think one of the new trends that we’re seeing is on this conversation of toxicity, and detoxification.
So this might be kind of interesting to you from your Nori background, which is, we have a huge amount of toxic chemicals that we release into our food and water systems, and there’s growing understanding of how those chemicals are impacting our human health.
And you’re seeing these links between cancer and toxic chemicals, as well as hormonal regulation, fertility issues. And there’s growing research there which is tying particular chemicals to these serious human health problems. I’m kind of interested in it for the reason that a lot of these chemicals that are harmful for humans are also harmful for climate.
But the value proposition is more on the human health side, and then the climate side would be a secondary benefit. And so we’re seeing innovations there on pesticides and some of those agricultural inputs, but also you’re seeing stuff in the plastics, like the microplastics space as well.
And being able to break them down or eliminate some of the chemicals that are difficult to break down there. So that’s kind of an emerging space that I’m curious about, but it’s not a hard climate tech space. It’s just something where you’ll see significant benefits to climate and ecosystem. But the driving force behind it is the public health conversation.
Ross Kenyon: I like that angle for various reasons, and I’ve also seen others working in climate focus that direction too. I saw that Deep Science Ventures is focused on toxicity, and I’m not surprised that they are. It’s a cool angle for them to pursue. I also like that maybe it crosses political boundaries more, in the same way this comes up on the show, like one in three episodes at this point.
But one of the big marriages of convenience, seemingly, from the second Trump administration was RFK Jr. and Trump, and seeing how the glyphosate lawsuit and Supreme Court case played out. So RFK clearly lost the battle of what to do with toxicity. And it never seemed like the guy who prides himself on eating McDonald’s all the time was going to be aligned with the guy who has much stranger health proclivities, one might say.
But it was seeming like maybe one of those things that parents especially, of all political stripes, care about—making sure that their kids have less toxic environments. We all know at this point how bad things like lead have been for seemingly all behavioral criminality issues, sociological issues. So much of it is toxicity related.
And if you’re able to get upstream of that and eliminate some of these things, you might be solving problems that may take decades to truly show up. But of course, we’re also living with—I mean, I’ve known so many people who have had fertility issues at this point. Maybe it’s just people are talking about it more.
Maybe I’m just in that age demographic where people do talk about it more, where when you’re in your 20s, you don’t really hear about it at all, or you just don’t know. But I feel like at this stage a lot of people are much more open and culturally it’s maybe more—so there’s like some confounding variables that are happening in there, but toxicity is very much on the menu across the board.
And I don’t think it depends a ton on politics. And if there’s climate benefits, I hadn’t even thought about that, but just gravy.
Poppy Russell: Yeah. The climate benefits would be secondary. Obviously, who’s gonna pay, that would be the question to answer. But that’s not a carbon removal related space, but it’s something that’s interesting. On the carbon removal side, we have seen a significant drop-off in the pre-seed CDR companies.
So I think we’re maybe in a phase at the moment where, just as you said, you’ve got people who are maybe stopping and waiting to see how the next year or so is gonna play out, and where there are new opportunities. And most of the pre-seed companies that we see that are looking at carbon removal will not be saying that they are looking at carbon removal. So that’s definitely a positioning thing at the moment.
Ross Kenyon: Ugh. I’m only laughing because, one, ADHD brain active, and then two, knowing that you’re British, I was just thinking of—is it funnier if it’s carbon removal project and tech developers, or funnier if it’s investors? Go to the Winchester, have a pint, wait for this whole thing to blow over. Do Shaun of the Dead.
Poppy Russell: Yeah, yeah, yeah. That’s a fair point.
Ross Kenyon: So if you were talking while I was thinking about that, it’s just a point I’m gonna have to relearn when I listen back to this show.
Poppy Russell: Yeah. I mean, it’s probably the latter, right?
Ross Kenyon: Oh, of investors just waiting? Is that what you’re saying?
Poppy Russell: Yeah. Not that that’s what we’re doing.
Ross Kenyon: Yeah. How does that work with investors where you have duty of care requirements legally, of making sure companies—especially if you’re on the board of and have liability—of making sure that you’re stewarding them in a way that is appropriate? But also there’s a lot of companies within similar categories of carbon removal that I imagine you’d like to invest in, and maybe sometimes their interests overlap in ways that might be conflicting. How do you think about that? Is it good to invest in 10 different biochar companies or something like that, or do you just get one bite at the apple and then have to move on?
Poppy Russell: Maybe it’s more helpful to just discuss our broader approach when we’re looking at companies, and what our investment mandates are. But we look for—as a very, very focused fund, which is specializing in carbon removal, we try and introduce as much diversity as possible in the types of companies that we’re supporting.
So yes, that of course means the carbon removal mechanism, but it also means the geographies, it also means business models as well. And it might be where they’re an input provider or whether they’re a market enabler. We try and cover as much diversity as we can.
And then we also look for companies that we’d call catalytic, and for us that means either some foundational IP that’s really moving the needle on some specific problem in a technology space. So in direct air capture, that might be on the energetic side, significantly lowering the energy costs.
And then we also look at new pathway enablers, so something that we think is new in the space and might unlock a whole different mechanism for carbon removal. So companies in our portfolio like CREW Carbon or CarbonRun—CarbonRun are looking at dosing rivers with limestone and doing this river restoration that also removes carbon at the same time.
And CREW Carbon are doing a similar thing in wastewater treatment. Actually, CREW Carbon and CarbonRun, their fundamental mechanism is quite similar. They’re ultimately introducing limestone into an acidic water source and removing CO2 in that way. And from an MRV and a data perspective and an efficiency perspective, they will have some similar findings from the technology space.
But how they’re going to go to market and the way they’re gonna position themselves is completely different. CREW Carbon are looking at the wastewater industry and they’re looking at how can they improve the efficiency that wastewater treatment plants run at, and where can we reduce costs to wastewater treatment plants. CarbonRun are looking at—it’s actually a bit more of a nature-based solution in its philosophy. It’s like, how can we restore acidic rivers that will boost salmon populations, provide a nicer space to live? And they’ve actually got a lot more of a lean in from a resilience and ecosystem protection perspective.
So they’re two companies where the fundamentals of what they’re doing are very similar, but the way that they scale will be completely different. And they’re both in our portfolio, and we’ll make sure that we market everyone to other investors and to the broader carbon removal ecosystem in the way that it most makes sense for them.
So the type of investor who might be interested in CREW Carbon will probably not be interested in someone like CarbonRun, because one’s very industrial and one’s more on the nature restoration side. Did that answer the question? I think it did.
Ross Kenyon: Yeah, I think so. That’s one way to split it, but one thing that’s come up on this show recently has been, I’ve been thinking about how you could categorize companies as being in the alkalinity gang or not. And maybe we don’t ever talk about, well, we do alkalinity-based carbon removal, because then people would be like, “Well, so does almost everyone?”
Or like half of everyone—if you take biochar out, it’s mostly alkalinity based.
Poppy Russell: Yeah. Climate change is an acidity problem, and carbon removal is finding loads of sources of alkalinity to counteract that acidity. And everyone is leveraging alkalinity in one way or another in the space. So it’s probably not the easiest separation there.
Anyone could argue they’re an alkalinity company. Yeah. Source massive sources of alkalinity—that’s also been a space that we’ve been interested in investing in. So we have a couple of companies in our portfolio that are really not carbon removal companies, but they generate alkaline byproducts that could be really useful for CDR.
So there’s a company called Magrathea, and they’re producing magnesium from brines. They have a magnesium hydroxide byproduct that could be a feedstock to be leveraged in the CDR space. But their business model’s around making metal, or extracting metal.
Ross Kenyon: I think this ties in really nicely with your work on industrial tie-in. That’s something that I think you’re fairly bullish on, yeah?
Poppy Russell: Yeah. Yeah, I think it’s been an interesting conversation over the last couple of years on how carbon removal is going to be scaled in industry, and where is there strategic value to be had by industries within the carbon removal landscape. So industrial integration kind of means quite a lot of things. I think there’s lots of ways to do it. And some of the neatest companies that we see are the ones that are able to explain their value to an industrial, or provide real value to an industrial company.
And we see it in a few different ways. So you have companies that are leveraging and valorizing true waste, materials that are costly to dispose of, and tapping into those. Then you have companies that are providing useful products to industry that have material value, but also might have carbon sequestered in them.
And then you also have companies that might improve some process efficiency in one way or another. I mentioned CREW Carbon earlier, but they’re an example of that, where they’re doing carbon removal, but the buy-in from industry is because they’re improving the wastewater treatment process.
But companies who can integrate and explain their value to industry really well, we’re seeing have some quite interesting progress. And happy to go into more detail there. I think my favorite example at the moment is a company called Vateris. Their main product is a carbonated cement alternative. And the process is they take CO2 from point source, so it might be from a bio-CCS, but it also could be from a cement flue stream.
And they create this carbonated material that a cement company can displace some of their cement with, integrate it, and that material releases CO2 slowly over time, and it improves the strength and durability of the concrete. That’s the angle of why they’re providing an interesting product. But they also have some other neat things in their business model, where the feedstock that they’re using is gypsum.
So gypsum’s this really annoying nuisance waste material, which has got very high disposal costs associated with it. And they’re taking that, valorizing it. And then they also produce a potassium sulfate fertilizer. And so actually their core revenues are driven from the fertilizer sale, but they’ve got this really valuable material that’s interesting to cement companies.
And I think that that’s a really nice example of a company that’s fitting into industry and also able to use another revenue stream to reduce their costs on the carbon side. The cement company can decide how they use that embedded carbon, whether they use it for their compliance reasons, or else just claim it’s a carbon benefit.
Ross Kenyon: They seem like they have probably better than average odds of survival. That’s pretty neat.
Poppy Russell: So I think the industrial integration side is gonna be helpful for companies in the near term, if they can show that value.
Ross Kenyon: What’s an example of something that you’re feeling bearish on right now?
Poppy Russell: Um.
Ross Kenyon: You can be as mean as you want.
Poppy Russell: I don’t like to be mean.
Ross Kenyon: You don’t disappoint anyone.
Poppy Russell: Um—
Ross Kenyon: Well, people are just gonna infer from what you just said that if they don’t have an industrial integration possible to them, that you’re being mean to them. So there’s really no way out of this.
Poppy Russell: It’s definitely easier, if you’re going down the venture capital route of raising money, it’s easier to have that industrial partner. It’s definitely not the only way that you can survive. Biochar companies, for instance, you have other financing routes available to you.
If you have your project and can get your offtake agreements and you sell your biochar, you can start to finance your projects in other ways. So it’s definitely not the only way to survive. But if you’re trying to raise it on the venture side, you definitely want to show that industrial buy-in.
I guess I’m bearish on some of the ocean CDR stuff. I know it’s early days of that.
Ross Kenyon: You’re in trouble. Early days? Yeah. Sorry, continue. Yeah.
Poppy Russell: Too early, so it’s a bit of a cop-out anyway to say that. But I’ve always been quite skeptical of the ocean CDR stuff.
Ross Kenyon: Hmm. All of it? Or just alkalinity focus, dosing approaches, something else?
Poppy Russell: Yeah, I think also I’ve been skeptical on the direct ocean capture side as well. You often hear this phrase around the concentration of CO2 in water, that it’s so much higher than in air. But it’s also like your mass concentration of CO2 in water is significantly lower than it is in air.
So you have to move a lot more mass to capture the same amount of CO2. So that I’ve always found an interesting challenge. And you can find ways around it, like you can partner with companies that are already moving and pumping water, infrastructure that’s already there.
But the scale of that, in the scheme of things when we’re talking about the amount that we want carbon removal to scale to, is quite small. I think I did some maths a while ago that it was like seven to 10 million tons total potential if you partner with all of the existing water moving infrastructure.
Ross Kenyon: Okay. What’s another thing that you’re bullish about, Poppy? I’m like unpacking all of your research in rapid fire way now.
Poppy Russell: I think one of my sarcastic answers for what my favorite carbon removal approach is, is planting trees. But I have been quite interested in some of the synergies that these large nature-based project developers might have with more novel carbon removal approaches.
And one of the dynamics that we think about when we’re looking at carbon removal projects is what we call the carbon curve. So the sequestration profile of which a project removes carbon over its lifetime. So you have a project which is maybe a forestry project where you have this slow buildup of carbon over time.
And that’s quite difficult to finance, because you have this period at the start where you don’t have anything to buy or sell. And I think that these large project developers have quite an interesting opportunity for integrating some different carbon removal pathways that might also need land that have a different carbon sequestration curve.
That means that some of these project developers will be able to tap into revenues sooner than their initial project expected. So that’s something that I’ve been mulling over recently. And I think that there’s an opportunity in some of the mineralization approaches here, particularly in enhanced rock weathering, where you have your front-loaded carbon removal sequestration profile—most of your removal happens in the first couple of years.
So that could be an interesting opportunity for integration there.
Ross Kenyon: Enhanced weathering would have to issue some credits in order to see that happen. But—
Poppy Russell: Yeah. I mean, there’s a suite of other challenges in the enhanced rock weathering space, but I think that that’s an opportunity. And I think particularly enhanced rock weathering companies that are leveraging approaches that mean the minerals are reactive and actually weather very quickly and have a higher signal, they might have an opportunity there.
Ross Kenyon: I do like seeing more project developers focus on having multiple different pathways to carbon removal, or just other types of environmental attribute crediting available to them.
Varaha has been really interesting to me. It’s cool seeing Residual do stuff like this. It’s also cool if you can see the same or nearby project sites sort of cycling into each other to level out the revenue curve that they have accessible to them. I think companies that have not yet figured out that issuance speed is very, very important, for a myriad reasons—
Poppy Russell: Of course. Yeah, there’s stuff that we don’t really know yet. And for example, I’ve just said quite a diplomatic answer about the enhanced rock weathering space, which I have traditionally been really bearish on. But we’ve just invested in a company that I think’s quite cool.
Ross Kenyon: You could say you’re bearish on policy. You kind of started off with that a little bit too. You’re like, a decade away might as well be on the moon, basically.
Poppy Russell: Oh, it’s just such—it’s also not diplomatic right now. I don’t know why I’m trying to be diplomatic. But—
Ross Kenyon: I say deflating things about policy on a regular basis on here. I’m like the voice of, I don’t know if the political trends are gonna be that good. I don’t know, you’re in the UK. I’m sure you’re watching Reform and being like, “Hmm.” Like UK ETS stuff. What’s gonna—is Farage gonna touch this thing?
I don’t—
Poppy Russell: Yeah. Okay, okay. Okay, I am slightly bearish on policy at the moment. And I think we’ve been interested in the evolving compliance case for removals and how and when that’s gonna come in. And we’ve had some really exciting news in Europe around the integration of removals into the EU emissions trading scheme, where they’ve allocated this 250 million tons of removals in the next decade. But I think there is a huge caveat in that announcement, which is just around the price gap between removals and the carbon price. And I think where we sit, it’s really, really difficult to project the future of the ETS carbon price right now, because there is so much political uncertainty around it.
And we’ve seen the ETS also make some adjustments in the last couple of weeks that are delaying the speed at which they’re targeting decarbonization. And that’s obviously a smart political move. But it does mean that the future of that carbon price is really uncertain.
So whereas they’re showing that there’s going to be this use case for removals in the compliance carbon market in the future, in the near term I’m a bit bearish on the degree to which that actually supports removals. So there we go.
That’s another thing I’m a bit bearish on.
Ross Kenyon: Whenever I’ve said bearish things about carbon removal, I think those are the times when people complain to me the most. I’ve heard, “Why are you—what use does it serve to be pessimistic in this way?” Or, “Why do you…” Don’t you need to know if that’s a possibility or a reality?
And I don’t want it to be that way, but me saying something doesn’t impact whether or not it’s real.
Poppy Russell: Well, you need to be pragmatic as well. And I think being pragmatic around that side of things will mean that some of this stuff on the business model innovation that we spoke about already, there’ll be more of a push for that side of innovation.
And that’s the stuff that’s gonna be really scalable and sustainable, because it’s not going to be reliant on some of these future prices, and that will just be a nice additional option to tap into.
Ross Kenyon: I see where your head’s at. The investment thesis according to Poppy Russell is very obvious to me. Thanks for being here, Poppy. Was it an okay first podcast experience for you? You survived.
Poppy Russell: I survived. I survived. I hope that people don’t come at me after this.
Ross Kenyon: They’re gonna come at you, I’m sure.
Poppy Russell: Yeah, I don’t like answering the bullish and bearish questions, particularly on a carbon removal podcast that’s been around for all of this time and has all of this carbon removal following. So…
Ross Kenyon: You could have just said you’re bearish on Reversing Climate Change, and then I would’ve been like—and the stop button is here. Okay.