AI transcript
0:00:01 This is an iHeart podcast.
0:00:39 Sometime around 2018, it became clear that transitioning away from fossil fuels was not going to be enough to manage climate change.
0:00:53 On top of moving away from fossil fuels, on top of ceasing to emit carbon dioxide into the air, the world would also need to figure out how to take some of the carbon dioxide we’d already put into the atmosphere out of the atmosphere.
0:00:58 And it was also clear that just planting more trees wasn’t going to do it.
0:01:02 It was too much carbon dioxide and not enough land to plant trees on.
0:01:18 A few years after those things became clear, a company called Stripe, that helps online businesses do things like process payments, decided to dedicate a relatively small amount of money, a million dollars, to pay to have carbon dioxide removed from the atmosphere.
0:01:23 In May 2020, we made our first purchases from four carbon removal companies.
0:01:26 This is Nan Rantsoff, the head of climate at Stripe.
0:01:32 And at the time, you know, two sort of interesting things happened.
0:01:38 The first is that the field had this sort of almost weirdly positive reaction to a pretty small amount of money.
0:01:40 A million dollars is ultimately not that much.
0:01:43 It’s in a way quite a bad sign if people get excited.
0:01:44 Yes.
0:01:46 For a whole field about a million dollars.
0:01:47 No, that’s exactly right.
0:01:48 And it’s concerning.
0:01:51 Like, why are people getting so excited about this million dollars?
0:01:52 Yeah.
0:02:01 So that was an interesting signal, which to us just said, well, this field has been starved for a market and such that a million dollars could, you know, make anybody pay attention.
0:02:08 The second thing that happened, Nan said, was Stripe started hearing from the companies that used Stripe’s services.
0:02:12 And a lot of those companies also wanted to start paying for carbon removal.
0:02:16 So Stripe set up a way for those companies to purchase carbon removal.
0:02:19 And tens of millions of dollars flowed in.
0:02:21 It’s a good step, but it’s still quite small.
0:02:24 So then, you know, we’ve been doing this for about a year and a half.
0:02:29 And our team got in room and we said, well, you know, on the one hand, this is 10x progress.
0:02:31 You know, we are making progress.
0:02:35 But this number is still so short of what the field needs.
0:02:39 And we came up with a bunch of ideas and we killed a bunch of ideas.
0:02:43 And one of the ideas that we couldn’t kill was this concept of an advanced market commitment.
0:02:53 That is ultimately what has since become Frontier, which is we’ve launched a now over $1 billion advanced market commitment to buy permanent carbon removal between 2022 and 2030.
0:02:59 And there are still many more steps on the journey, but that’s one of the big ones that we’ve been working on recently.
0:03:11 I’m Jacob Goldstein, and this is What’s Your Problem, the show where I talk to people who are trying to make technological progress.
0:03:17 In addition to being head of climate at Stripe, Nan Ranselhoff is also head of climate at Frontier.
0:03:19 That’s the organization she mentioned a minute ago.
0:03:31 Frontier is a wholly owned subsidiary of Stripe, and it is the vehicle through which Stripe and a bunch of other companies have pledged to pay $1 billion to have carbon permanently removed from the atmosphere.
0:03:34 I wanted to talk to Nan for a couple reasons.
0:03:41 One, her job gives her a great overview of what is going on in carbon removal as a field.
0:03:53 And two, the specific mechanism that Frontier is using, that advanced market commitment that Nan mentioned, is this really powerful, relatively recent economic innovation.
0:03:55 So what’s an advanced market commitment?
0:04:05 An advanced market commitment is basically a way to guarantee future demand for a product that you want to exist, but that doesn’t exist yet.
0:04:14 And advanced market commitments are basically a kind of way of collecting revenue and demonstrating that there is a market for a product.
0:04:21 And we borrowed this concept, actually, from the vaccine space.
0:04:29 So the first AMC was started in the mid-2000s for the world wanted a pneumococcal vaccine for low- and middle-income countries.
0:04:42 And because the end customers are from less wealthy countries, pharma companies are not incented to actually develop that vaccine because the end demand is uncertain or small.
0:04:46 Right. It’s not going to be a profitable enterprise, probably, right?
0:04:50 They’re going to spend hundreds of millions of dollars, a billion dollars to develop a vaccine.
0:04:55 And the price at which they could sell it is not enough to recoup their investment.
0:05:01 And we should say, I feel like the pneumococcal vaccine is underrated in part just because of the name.
0:05:06 Like, I think that, you know, this is a terrible infection that killed huge numbers of children.
0:05:09 And it was clearly vaccine preventable.
0:05:14 And there was this, frankly, economic problem was the vaccine didn’t exist.
0:05:24 And how could people with money in the rich world create the incentive structure for it to be worth it for a private company to develop the vaccine?
0:05:25 Very well said. Yes.
0:05:36 And that is a generalizable concept of AMCs is that they’re trying to there’s a there’s a public good or something that is of real value, societal value that should happen.
0:05:39 But there’s an incentive problem that is preventing that from happening.
0:05:52 And AMCs are one of a broader set of what economists would call market shaping tools that we can utilize to help fix those incentive problems and make it more likely that these these public goods,
0:05:58 these societal goods actually exist and scale up to the numbers that we want them to.
0:06:04 Well, and AMCs are a little bit like clever, subtle, non-obvious, right?
0:06:13 Like, the more obvious thing is like, well, the government could just spend money to develop a vaccine or even could just subsidize one vaccine maker to do the research.
0:06:19 But but like, why is an AMC better in some settings than those options?
0:06:22 Yeah, it’s a really good question.
0:06:29 So when we think about the types of financial interventions here, we can think about them like push.
0:06:32 People often talk about push mechanisms are like grant funding.
0:06:37 You typically pay for folks to up front for an input.
0:06:39 An input in this case is research, vaccine development.
0:06:41 Yep. You’re giving someone a grant.
0:06:42 Here’s a billion dollars.
0:06:43 Go make the vaccine.
0:06:46 Or you’re giving somebody a grant to figure out if it’s even possible.
0:06:47 Yeah.
0:06:49 And you’re giving them up front before you get the end outcome.
0:06:56 Pull funding are mechanisms that you’re paying for something when it’s delivered.
0:06:57 You’re paying for the output.
0:07:00 And a prize is sort of an example of that.
0:07:01 It’s like a one time.
0:07:03 If somebody can develop this, we’ll give you a prize.
0:07:06 And there are famous examples of that, right?
0:07:06 There certainly are.
0:07:10 Like longitude, the British in, was it the 18th century?
0:07:13 They needed to, they needed a clock that worked on a ship, basically, right?
0:07:17 Or the DARPA prize for self-driving cars, right?
0:07:19 Which sort of kicked off the self-driving car revolution.
0:07:22 Prizes can be very effective mechanisms.
0:07:26 And AMCs are not always a good fit for a problem.
0:07:30 They tend to be a good fit for the problem when a couple of things are true.
0:07:35 If you think about the thing you want to exist and why the organizations or the people that
0:07:40 could have invented and scaled those things aren’t doing it, if the problem in their mind is
0:07:44 there’s no end revenue for it, that’s criteria one.
0:07:50 Criteria two is that you can actually define the thing that you want to exist.
0:07:57 So, you know, can we in this case define the target product profile of the pneumococcal vaccine that we want?
0:08:02 Or in our case, can we outline the criteria for the kinds of carbon removal that we want to exist?
0:08:08 And then a third criteria is essentially like once the thing is actually invented,
0:08:13 will market forces take over to actually make it scale on its own?
0:08:19 So basically, once a thing invented that is true, you should do a prize because you don’t need a long-term market.
0:08:20 You’re just trying to get the initial invention.
0:08:21 Oh, interesting.
0:08:24 But in the case of, you know, the pneumococcal vaccine, for example,
0:08:27 you want the pharma companies to invent the solution,
0:08:31 but you ultimately care about is that the people who need it are getting the vaccine.
0:08:31 Yeah.
0:08:38 So in that case, the incentive design there is you’re taking all of the R&D and development costs
0:08:45 associated with that, but you are giving it back to the pharma companies by amortizing it over all of the doses.
0:08:49 So just to be clear, the advanced market commitment for the vaccine was not,
0:08:51 we’ll give you the money when you invent the vaccine.
0:08:57 It’s we’ll pay an extra couple bucks per vaccine delivered in the field in this part of the world.
0:08:57 Exactly.
0:08:59 And there are genuinely different ways.
0:09:05 AMCs are a pretty broad term that, you know, can encompass a lot of different mechanism designs.
0:09:06 But you’ve described that well.
0:09:11 It’s like you want to, you’re paying for the outcome of somebody actually getting the vaccine.
0:09:12 The marginal use case.
0:09:12 That’s right.
0:09:13 Yeah.
0:09:13 Okay.
0:09:17 By the way, are there more criteria or do we have the criteria now in place?
0:09:20 Those are sort of rough criteria that, and they’re not perfect,
0:09:23 but they’re sort of rough criteria that will help you know,
0:09:25 are we even in poll funding territory?
0:09:30 And within poll funding, should we consider an AMC versus a prize versus something else?
0:09:31 Those are sort of loose guiding criteria.
0:09:40 So now we have our framework, apply it to carbon removal as you were thinking about it in 2021, 2022.
0:09:44 Why did it seem like a good fit for that problem at that time?
0:09:44 Yeah.
0:09:48 I mean, I think the fundamental problem with carbon removal.
0:09:52 So carbon removal is in, for all intents and purposes, it is a public good.
0:09:56 Unlike with energy, you know, humans derive value from energy.
0:09:58 That is, we get value from that.
0:10:01 When you are sucking CO2 out of the atmosphere and storing it somewhere permanently,
0:10:04 you know, there are small markets where people can benefit from them.
0:10:08 You’re using the CO2, you know, in an end product.
0:10:10 But at the scale we’re talking, this is mostly a public good.
0:10:14 And as a result, it is a very reasonable question for
0:10:18 entrepreneurs and investors to basically ask,
0:10:22 if I start a company in this space, who’s going to buy the end product that I am selling?
0:10:26 It is fundamentally an open question about the market.
0:10:30 And I would say it’s even more of an open question if I’m building a really early stage
0:10:32 technology that is expensive at the beginning.
0:10:36 Because there are, there’s some voluntary market that exists, but that’s a $20 a ton.
0:10:42 And if you’re building, you know, a new technology at the beginning, your price is going to be high.
0:10:48 And so that fundamentally, that first criteria is extremely applicable to carbon removal because
0:10:50 it has created this chicken and egg problem that we’re trying to solve.
0:10:55 You use the term public good, which people use in a kind of vernacular sense,
0:10:59 but there’s a technical economic sense in which you are using it and which applies here, right?
0:11:02 It’s non-rivalrous and non-excludable, right?
0:11:07 Which means basically, even if only one person pays for it, everybody benefits.
0:11:11 And you can’t even exclude somebody from benefiting if you want to.
0:11:11 That’s right.
0:11:14 A lighthouse is the classic, right?
0:11:18 It doesn’t make sense for any one shipping company to pay for a lighthouse because all
0:11:23 those other cheap assholes who didn’t pay for the lighthouse are also not going to crash into
0:11:23 the box, right?
0:11:28 And it’s a classic case of market failure for that reason, right?
0:11:33 Because the person paying for it only captures a tiny, and in the case of carbon removal, truly
0:11:35 tiny, tiny part of the benefit.
0:11:40 And so no one’s going to pay for it except in like weird edge cases.
0:11:40 Well said.
0:11:42 Like stripes $1 million.
0:11:44 Precisely.
0:11:44 Precisely.
0:11:45 Yes.
0:11:46 OK, so that’s good.
0:11:47 That’s one.
0:11:47 What else?
0:11:48 That’s a very important one.
0:11:52 The second one is, can we define the shape of the thing that we want to exist?
0:11:59 And in our case, when we’re thinking about carbon removal, we have a set of criteria that
0:12:07 we are, that sort of try to characterize the gap in solutions that exist that would essentially
0:12:11 get the world to the 10 gigatons plus per year needed by 2050.
0:12:16 And so the kinds of things that we care about on this list are things like, does this technology
0:12:20 have the potential to be under $100 in the future?
0:12:23 And that is a, you know, we can come back to the specifics, but does it have the potential
0:12:23 to be cheap?
0:12:26 Does it have the potential to be very huge?
0:12:31 We’re looking at solutions that have the potential to be more than half a gigaton per year in carbon
0:12:31 removal.
0:12:33 We also care a lot about permanence.
0:12:39 So when you emit a ton of CO2 into the atmosphere, that is permanently up there.
0:12:41 And so we want to take it out permanently as well.
0:12:45 And then, you know, there’s a whole host of other criteria that we care about.
0:12:52 But when we sat down to do our initial million dollar spend for Stripes, that first blog post,
0:12:58 we spent a lot of time thinking about, you know, how do we characterize the kinds of solutions
0:12:59 that we want to exist?
0:13:05 And an important part of that characterization is, can we be specific enough that people understand
0:13:06 what it is that we want?
0:13:14 But can we be broad enough to invite a whole host of creative solutions to the starting
0:13:15 line?
0:13:19 Because this entire field is basically, you know, six years old.
0:13:23 This started, you know, carbon removal, the starting gun for carbon removal was the 2018
0:13:24 IPCC report.
0:13:25 And that was not very long ago.
0:13:28 And so maybe it’s direct air capture.
0:13:29 Maybe it’s enhanced rock weathering.
0:13:31 Maybe it’s ocean alkalinity enhancement.
0:13:33 Maybe, you know, there’s all these different solutions.
0:13:35 It’s too early to pick a horse.
0:13:39 Let’s get a bunch of the best ideas to the starting line, see how they do.
0:13:41 And then some of them won’t work.
0:13:43 But the ones that do, let’s really double down.
0:13:48 So that’s a long-winded way of saying we were trying to define this target criteria in
0:13:54 a way that sort of balanced the specificity needed to guarantee this for suppliers, but also
0:13:58 was broad enough to invite the innovation that we think is necessary.
0:13:59 Yeah.
0:14:01 I mean, well, that’s the market force part, right?
0:14:02 That’s why it’s a poll.
0:14:07 Well, if it’s too specific, then it’s like, well, just give a grant to one company.
0:14:09 But that’s what you’re trying to avoid, right?
0:14:10 You’re trying to avoid picking a winner.
0:14:11 Precisely.
0:14:12 Is there one more criterion?
0:14:18 And there’s one more criteria, which is essentially once the thing is invented, if you have the recipe
0:14:22 for the thing, our market force is going to scale it up on its own.
0:14:27 And in the case of carbon removal, somebody could come up with the best possible solution.
0:14:31 And the long-term market for this isn’t quite there yet.
0:14:33 It’s the public good problem again.
0:14:33 Exactly.
0:14:35 So, yes.
0:14:40 So it’s yes, yes, and yes to your three criteria for advanced market commitment.
0:14:40 Yes.
0:14:46 And I will say that, like, there’s a few differences in this, in the Frontier AMC and the initial
0:14:48 AMC for pneumococcal.
0:14:48 Yeah.
0:14:53 I think one of the things that is challenging in carbon removal is that lack of long-term
0:14:54 market.
0:14:56 So, like, Frontier is a billion dollars.
0:14:57 It’s going to run out eventually.
0:15:00 So we’re sort of building the plane while we’re flying it.
0:15:06 We have to make sure that once these initial funds are out, that long-term market does exist.
0:15:08 So we can talk about what that looks like.
0:15:13 But I think that, you know, in the case of the pneumococcal vaccine for low- and middle-income
0:15:18 countries, there was a point at which it made sense, financial sense, once for pharma companies
0:15:21 to continue distributing the vaccine on their own.
0:15:26 In our case, you know, that is only true if we can also put a sort of steady state market
0:15:27 in place, if that makes sense.
0:15:28 Yeah.
0:15:33 I mean, is it because for the vaccine, most of the cost is up front?
0:15:39 And in fact, there is marginal benefit for people who can pay a very small amount or for
0:15:40 countries that can pay a very small amount.
0:15:46 So there is, once the vaccine companies have recouped the R&D cost, the marginal cost actually
0:15:52 works in a market-based way, which will never be true for a carbon capture because it’s a
0:15:52 public good.
0:15:53 That’s right.
0:15:56 So, I was thinking we’d get to this later, but whatever.
0:16:05 Fundamentally, there is a policy problem that somebody has to solve before too long because
0:16:06 this isn’t going to work forever.
0:16:11 You wrote, without government action, Frontier is building a bridge to nowhere.
0:16:11 Yes.
0:16:17 These private sector voluntary commitments are a great way to help this field get to first
0:16:20 base, but they are not going to get us all the way there.
0:16:26 So, you know, if we zoom all the way out and think about sort of quick demand math, how big
0:16:28 does this market need to be and for how long?
0:16:33 So carbon removal roughly needs to scale to, and this is, you know, rough numbers, 10 billion
0:16:35 tons per year by 2050.
0:16:43 And if we say that, you know, for example, we think we can do it at $100 a ton, that is
0:16:47 a trillion dollars per year in demand that is needed.
0:16:50 And of course, if we end up needing less carbon removal, that number goes down.
0:16:52 And if we can do it for cheaper, that numbers go down.
0:16:56 But just back of the envelope, it’s a trillion dollars a year, which is a big number.
0:16:57 Right.
0:16:58 Global GDP is about $100 trillion.
0:17:03 So 1% of global GDP is a tremendous, a tremendously large number.
0:17:06 It is dauntingly large, in fact.
0:17:07 It’s dauntingly large.
0:17:09 Can you get another order of magnitude out of the price?
0:17:11 It’s the first question I have for you.
0:17:17 So I think that that is why it really matters that we are so hunting for solutions that can
0:17:23 be much cheaper because, you know, being able to get down to $70 or $50 or $30 a ton
0:17:24 does make a really big difference.
0:17:30 I would call out, though, that like, is half a percent or a percent of global GDP a lot?
0:17:32 I mean, of course, the answer is in one sense, yes.
0:17:37 But of course, as a current moment, a tough time to be getting countries to coordinate on
0:17:38 global public goods.
0:17:44 But it’s not totally out of the realm of possibility, especially, you know, if and as
0:17:47 the world gets richer, that percentage goes down.
0:17:49 Well, so, OK, fine.
0:17:50 We’re saying all these numbers, it’s a lot of money.
0:17:53 But what does it mean in terms of policy, right?
0:17:55 It’s fundamentally a public good.
0:17:59 Public goods, we know the most basic economic way, are not provided by the market.
0:18:04 So, like, what do governments have to do to sort of take the baton from frontier?
0:18:15 I think that probably in practice, the collection of policies that get to these hundreds of billions
0:18:20 of dollars per year ends up looking like a patchwork quilt of demand policies.
0:18:26 I think it is unlikely that there is sort of one thing that ultimately gets us there.
0:18:28 We can talk about what the shape of those things could look like.
0:18:31 But at a high level, you can kind of imagine a couple of different worlds.
0:18:35 One world is that governments treat carbon removal like sanitation.
0:18:41 And they say, you know, we’re going to we’re going to do this cleanup on behalf of our citizens
0:18:44 and we’re going to coordinate with other countries to do that.
0:18:48 We can put that in the kind of category of like direct government procurement.
0:18:50 Governments are the ones that are doing it themselves.
0:18:58 There’s another worldview, which is that governments are essentially trying to quantify the negative
0:19:04 externality of a ton of emissions and then push that onto the players that are emitting, private companies.
0:19:08 This is some kind of carbon tax, basically, that is funding carbon removal.
0:19:08 Yes.
0:19:09 Among other things.
0:19:10 Yes.
0:19:10 The dream.
0:19:11 The dream.
0:19:14 Let’s dream about a carbon tax for one moment because it makes so much sense.
0:19:21 And there are different sort of ways of implementing that that I think are sort of further or closer to a traditional carbon tax.
0:19:28 So that’s a long winded way of saying there are a whole host of bets I think that the world needs to make.
0:19:31 And some of them will pan out and some of them won’t.
0:19:37 But it is very important to start planting those seeds now so that the market is where it needs to be when it needs to be there.
0:19:42 We’ll be back in just a minute.
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0:20:25 I’m CNN tech reporter Claire Duffy.
0:20:26 Claire Duffy was one of the best.
0:20:30 I cover artificial intelligence and other new technologies for a living.
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0:20:50 Follow CNN’s Terms of Service wherever you get your podcasts.
0:20:55 Let’s go back to the recent past.
0:21:02 So you have this idea for big advanced market commitment for carbon capture and removal.
0:21:04 What do you do?
0:21:12 You know, at the time, AMCs, they’re only really been sort of one or one and a half AMCs, and they were all in the context of health.
0:21:18 So it was this initial pneumococcal vaccine, AMC, GAVI, and then Operation Warp Speed incorporated some components of this as well.
0:21:21 For developing the coronavirus vaccine.
0:21:21 That’s right.
0:21:22 To great success.
0:21:22 To great success.
0:21:24 Underrated.
0:21:26 So underrated operation.
0:21:29 Like, nobody wants to own it politically, which is so sad.
0:21:30 Like, it was great.
0:21:31 It worked.
0:21:32 It was amazing.
0:21:32 It was amazing.
0:21:37 So what is Frontier at launch in 2022?
0:21:44 What we wanted to do with Frontier, the spirit of what we wanted to do was say, there is a big market for carbon removal.
0:21:45 And what does that mean, a big market?
0:22:01 A billion dollars was an imperfect number that we came up with that both met the criteria that we thought it would be big enough to get people’s attention and send a strong signal to entrepreneurs and investors that there is a market.
0:22:04 But it was still something we felt was in the realm of possibility.
0:22:07 Like, we can’t go raise a trillion dollars.
0:22:09 That is not something we were able to do.
0:22:11 So a billion dollars was the number that we settled on.
0:22:18 And I will sort of want to asterisk and call out the fact that, like, it is a sort of imperfect number because it does not solve the whole problem.
0:22:22 Kind of the minimum viable product of numbers in this context, right?
0:22:23 That’s exactly right.
0:22:23 Yeah.
0:22:25 And that’s different than the pneumococcal vaccine.
0:22:34 Like, you know, initially when they put together a billion and a half dollars from countries and the Gates Foundation, they thought it was enough to get the vaccine to the point that they wanted to get to.
0:22:36 So I’ll sort of call out the flaw in that.
0:22:39 But we said, OK, a billion dollars.
0:22:40 Stripe can put in some of that.
0:22:46 We have now tens of thousands of Stripe climate users that are giving money for carbon removal.
0:22:53 So in the context of Stripe, we were actually able to underwrite a huge amount of that initial billion dollars ourselves.
0:22:55 But we weren’t able to get to that full billion.
0:23:06 So we said, OK, how can we find other like-minded organizations that would be interested in sort of this kind of wonky experiment that we want to try and run?
0:23:20 And so we ended up in the spring of 2022 launching with Google and Shopify and McKinsey and since then have added other folks like, you know, JP Morgan and H&M and Autodesk and Workday.
0:23:46 And so what everybody who puts money into that pot is promising is we will buy this amount of money, this number of millions or hundreds of millions of dollars worth of carbon removal.
0:23:57 So if it meets some set of specifications sometime between now and 2030, that is that is what everybody is promising, like contractually promising to do.
0:23:59 Yes, that is the spirit of what it is.
0:24:07 And in practice, most of those dollars get spent and contracted through something called an offtake agreement.
0:24:19 And an offtake agreement is a legally binding contract between a buyer and a supplier that the buyer is going to buy a certain number of, in our case, tons at a certain price if the supplier can deliver.
0:24:32 So when companies initially signed up to Frontier, they basically said, you know, we’re going to put in $200 million and this is how we are sort of able to budget that each year from 2022 to 2030.
0:24:34 And at that point, it’s an intention.
0:24:37 It’s an intention to spend, but it’s not a legally binding contract.
0:24:45 It becomes a legally binding contract in these offtake agreements where buyers are promising to buy a certain number of tons at a certain price.
0:24:55 And the reason that offtake contracts are really important for carbon removal companies is because if you are a carbon removal company and you want to build a big new, say, DAC facility.
0:24:56 That’s direct air capture.
0:24:57 Direct air capture.
0:25:01 And you go to a bank and you’re like, I want a loan to actually finance the build.
0:25:06 The first question they’re going to ask you is, who’s going to buy the thing that comes off of this plant?
0:25:15 Right. If they take the time to talk to you at all, they’re going to say, you want to build this thing that nobody’s ever built before and you don’t know who’s going to pay you for it.
0:25:18 And it’s a public good. So why should anybody even bother to pay you for it?
0:25:25 So basically a company gets an offtake agreement and then they can take that literally to the bank and use it as collateral for a loan.
0:25:32 Exactly. And there’s a lot of other things, as you’ve called out, that have to go right in order for that loan to actually happen.
0:25:37 But but one of the things that this helps de-risk is is the demand side.
0:25:39 It’s do is there a customer to buy the end thing that we’re doing?
0:25:43 That’s the genius of the advanced market commitment fundamentally. Right.
0:25:48 That’s right. So how’s it going? You’re three years in out of eight. Right.
0:25:52 So like things are happening. You’re kind of in the middle now of the project.
0:26:00 Yes. The goal, our goal at Frontier at a very high level is to get carbon removal on its best possible trajectory.
0:26:06 We are sort of working on behalf of the ecosystem largely through these offtake agreements.
0:26:09 But our goal, you know, is sort of is very world first.
0:26:19 And by the numbers. So we’re, as you said, about three years in, we have contracted now over five hundred million dollars with several dozen carbon removal companies.
0:26:30 And so much of our time at Frontier is spent sourcing, getting to know and diligencing and ultimately writing contracts with the best carbon removal companies out there.
0:26:36 And we’re, you know, we obsess over how to spend and how to how to contract each of these dollars.
0:26:38 You’ve committed half of the pot so far.
0:26:42 We’ve committed half of the pot across several dozen companies.
0:26:46 And these companies cover lots of different pathways, some of which we’ve talked about.
0:26:54 And in in some sense, it’s too early to tell if things are, quote unquote, like definitely working.
0:26:59 But we look at some leading indicators to tell us what to help us triangulate.
0:27:02 Like, is this doing the thing that we wanted it to be doing?
0:27:08 And one of those leading indicators is, like, what is the number of companies for whom sort of Frontier was the first customer?
0:27:13 And the reason we hear about that metric is we’re trying to pull this field forward.
0:27:20 So, like, going early versus following on is a good indicator that we’re like, yeah, we’re pulling companies forward.
0:27:23 And I mean, you want you want to be the marginal buyer, right?
0:27:25 You want to be the buyer that they need.
0:27:28 If somebody else was going to buy it anyways, that’s not as useful, right, at some level.
0:27:31 Exactly. And we because, you know, we’re not hunting for the cheapest 10s.
0:27:38 We’re looking long term at, you know, our we’re looking for technologies that have the potential to be really low cost and high volume in the future.
0:27:43 We are typically buying more expensive 10s earlier on as the first buyer.
0:27:46 And we are the first ever customer for 78 percent of companies.
0:27:51 And we’re the first off taker for as of, you know, as of now, 82 percent of them.
0:27:53 So, like, we’re coming in early.
0:27:54 Yes.
0:28:07 Another leading indicator that we look at is is basically like are are we picking companies that are actually starting to deliver the tons like vaulted, for example, delivered 12,000 tons of carbon removal last year.
0:28:12 This is the most of any company working on carbon removal, permanent carbon removal by a significant margin.
0:28:17 You know, charm has injected a number of several thousand tons last year.
0:28:25 Litho supplied 300,000 tons of rock this year, which is positioning them to put in some pretty significant numbers in the coming couple of years.
0:28:31 So these numbers are still small, but they are much larger than we’ve seen in previous years.
0:28:32 And I think that that is really promising.
0:28:35 I think we feel those are good early indicators.
0:28:40 But, you know, it’s going to take a decade or so, I think, to know if this really had the effect that we wanted it to.
0:28:43 Let’s talk a little bit about kind of the state of the industry itself.
0:28:46 Right. Because you are kind of at the center of it.
0:28:48 You have a nice perspective.
0:28:53 Yeah. I mean, let’s just step through like a few companies doing a few with a few different kinds of technologies.
0:28:58 Right. I feel like the people the one the most people have heard of is direct air capture.
0:29:01 Right. Is just fans and filters and whatever.
0:29:03 Like, should we start there?
0:29:04 What’s happening with direct air capture?
0:29:06 Sure. So direct air capture.
0:29:09 Yeah. You’ve probably seen these big fans.
0:29:10 Kind of looks like a vacuum cleaner or something.
0:29:12 You’re like you’re pulling in air.
0:29:16 You’re finding the CO2 particles from the other million air particles.
0:29:20 You’re compressing those and then injecting that usually underground somewhere.
0:29:24 And there are a number of direct air capture companies out there.
0:29:35 I think direct air capture is a technology that has high long term potential, but it’s very capital intensive and it’s very energy intensive, especially early stage.
0:29:41 And there’s a number of, in our opinion, really promising approaches that have the potential to be super low cost.
0:29:51 And that is both because of sort of cheap off the shelf CapEx and because of their ability to to do that process for really low energy.
0:29:53 But it’s basically a game of CapEx and energy for DAC.
0:29:55 That’s that’s really important.
0:29:57 It’s technically infinitely scalable.
0:29:59 Right. But cost is the challenge for DAC.
0:30:01 It’s permanent. It’s scalable.
0:30:04 The question is cost, which is a function of CapEx and energy.
0:30:07 OK, what do you want to do next?
0:30:09 Should we talk about plants next?
0:30:10 What do you want to talk about next?
0:30:11 Let’s talk about plants. Then we’re going to talk about rocks.
0:30:14 OK. Plants go.
0:30:17 So plants, of course, as we know, naturally.
0:30:27 Suck CO2 out of the air and they do this sort of in a quote for for free because they’re using they’re using solar from from the leaves.
0:30:28 They’re using leaves.
0:30:29 Yes.
0:30:30 Photosynthesis. Yes.
0:30:34 The challenge with plants is when you in the context of carbon removal is two things.
0:30:36 One, they take up a lot of space.
0:30:40 And so at the scale that we’re talking, there are sort of limits.
0:30:43 The second thing that is challenging about plants is they’re not permanent.
0:30:45 Trees can burn down or just die even.
0:30:48 Right. At the timescales we’re talking about, even if there is not a fire.
0:30:49 That’s right.
0:30:51 They will die and decompose. Right.
0:30:52 Plants are very important for many reasons.
0:31:05 But in the context of carbon removal, that the types of solutions that we are looking at, because we care about the permanence piece a lot, is how do you take what nature does for free and make that sort of permanent?
0:31:15 So Charm Industrial is an example of a company that takes waste biomass, so sort of leftover corn stover, for example, that farmers would, you know, have from from growing corn.
0:31:24 They take that, they pyrolyze it, which basically just means they heat it up without oxygen and they turn it into an oil that they can then direct back underground.
0:31:27 I talked to Sean Kinetic, who used to be there on this show a couple of years ago.
0:31:28 Oh, fabulous.
0:31:32 So why is that one promising and why is that one? What are the limits?
0:31:36 It’s promising because you get the capture part for free from plants.
0:31:42 It’s challenging because there is a limited amount of, quote unquote, waste biomass.
0:31:50 So like there is a sort of cap on probably how big that can be because there is only so much waste biomass.
0:31:56 And then there’s a question of like, what is the best thing to do with that waste in a given scenario based on where it is?
0:32:01 And so just to be clear, like in the case of Charm, they go out to cornfields where after the corn has been harvested,
0:32:04 there’s all this just like the corn plant is just sitting there on the ground.
0:32:08 Right. And that is essentially carbon that has been captured that’s about to go back into the atmosphere.
0:32:12 But if they can pyrolyze it and stick it in the ground for 10,000 years, that’s great.
0:32:18 But it doesn’t scale that much because there’s not that many corn stalks sitting on the ground in various forms around the world.
0:32:26 It gets you to probably collectively and, you know, there are different estimates for this, probably in the order of like a gigaton plus per year by 2050.
0:32:27 So that’s not nothing.
0:32:27 OK.
0:32:31 But it’s probably not going to get you to 10 gigatons a year.
0:32:34 So it’s by itself, it’s not going to get you all the way there.
0:32:37 But it’s a non-trivial chunk if it works, if it becomes cost effective.
0:32:43 I mean, presumably for all these, cost is still, they’re still quite expensive and you have to get the cost out.
0:32:52 Exactly. And in the case of, you know, some of their different bikers approaches, but there’s, there’s case of the capex, there’s a case, there’s the cost of sometimes transporting the biomass.
0:32:55 But again, it’s very sort of case by case specific.
0:33:00 I would just call it that the waste biomass problem, there’s a real limit to how big it can be.
0:33:02 And so that’s why we can’t put all of our chips in that basket.
0:33:03 Yeah.
0:33:05 Now we can talk about rocks.
0:33:09 Most of the world’s carbon actually is in rocks in the lithosphere.
0:33:13 And it just takes a really long time to get there.
0:33:17 Reactive rocks, if it’s an alkaline rock, will absorb carbon roughly proportional to a surface area.
0:33:21 It also cares about other things like, you know, it doesn’t have access to water and temperature, et cetera.
0:33:24 But you can kind of think about reactive rocks.
0:33:26 Some rocks are like sponges for carbon.
0:33:34 So the question is, how do you find or make alkaline rock, which is very reactive rock that is kind of in its most squeezed sponge form.
0:33:43 And what do you do with that to turn that into carbon removal, to sort of get it to do this sponge activity?
0:33:50 And there are a number of different ways that we are looking at.
0:33:52 One of them is called enhanced rock weathering.
0:34:01 And this is taking sort of taking that reactive rock, spreading it on fields where it has, you know, access to air and it has access to sort of rain and water.
0:34:05 And eventually that makes its way into the ocean and is stored as bicarbonate.
0:34:09 But that is sort of one use of a rock.
0:34:13 There’s another category called, it doesn’t really have a good name yet.
0:34:23 We talk about it as like superficial mineralization, but essentially, yeah, taking this rock, grinding it up, exposing it to air and some water, it mineralizes, it turns into a carbonate.
0:34:28 And then you essentially put it in these giant piles that are piles of carbon removal.
0:34:33 And, you know, it sounds it sounds a little wild, but it’s quite interesting because.
0:34:35 I like how simple it is.
0:34:37 If it works, it sounds really simple, which seems good.
0:34:38 Yes.
0:34:41 And, you know, we know how to do things like grind up rocks.
0:34:46 We have an existing big mining industry that in this case, the carbon removal actually stays in place.
0:34:48 So the monitoring and verification is quite easy.
0:34:52 You just go and look at the big rock and you say, yeah, it’s still there.
0:34:53 Basically.
0:34:53 Yeah.
0:34:56 You know, we’re we’re very excited about rocks in general.
0:35:00 And I think that this is this is a thing that nature already knows how to do.
0:35:11 And if we can find or make enough alkaline rock and that those are, you know, very scalable and sort of infinitely scalable sponges that we can use to suck out a lot of CO2 from the atmosphere and oceans.
0:35:17 So it sounds like of direct air capture plants and rocks, you seem particularly bullish on rocks.
0:35:23 I think that rocks are under under explored relative to their potential is why I’m quite excited about it.
0:35:26 You know, I think that, you know, people ask us a lot like, well, what’s your favorite one?
0:35:34 And I am always hesitant to answer that question because I wasn’t planning to ask you that, but it feels like rocks are your favorite.
0:35:38 I’m excited about rocks currently because I think they are under explored.
0:35:50 And I think the combination of the scale potential, which is functionally unlimited, the permanence and the simplicity of rocks could be interesting.
0:35:55 Obviously, in terms of the whole field of carbon removal, it’s super early, right?
0:35:58 But in terms of the life of Frontier, it’s not that early.
0:36:02 And so I’m curious, what has been different than you expected?
0:36:03 Like what has gone better?
0:36:04 What has gone worse?
0:36:06 What what have you learned?
0:36:19 You know, I’ve been surprised by how at the time when we launched Frontier, I wasn’t sure for the reason that we discussed that a billion dollars was going to send an appropriately loud signal.
0:36:23 And I don’t think that it didn’t convince everyone, and that’s fine.
0:36:34 But I think it convinced enough startups and entrepreneurs and investors that this was a big enough market for them to try.
0:36:38 And so, you know, the numbers that we talked about earlier, that surprised me.
0:36:41 I think in that sense, it worked better than expected.
0:36:47 I think that a thing that is also I don’t know if we should be surprised by this, but, you know,
0:36:51 carbon removal is still really early.
0:37:00 And when companies start and not all approaches work, and that’s not because they weren’t good ideas, it’s because you got to test your idea in the real world.
0:37:03 And sometimes those don’t pan out as you expect.
0:37:15 I’ve been also a little bit surprised by, like, how quick people can be to sort of catastrophize what I think in any other field would just, like, look like early innovation.
0:37:16 Like, there’s a bajillion AI startups.
0:37:19 Not all of them are going to make it, but, like, some of them will.
0:37:23 And that is sort of normal dynamics for an early ecosystem.
0:37:27 I feel like with carbon removal, there’s haters on both sides, right?
0:37:32 Because, like, people who don’t care about climate change, of course, hate it.
0:37:37 But the surprising one is that some of the people who do care about climate change hate it, right?
0:37:37 Yes.
0:37:42 It’s just going to distract us from the energy transition argument, right?
0:37:45 So I do feel like you’re up against a lot of haters.
0:37:47 Yes, I think that’s right.
0:37:55 And on that point, I think that, you know, the moral hazard piece is an argument that people have been talking about in the context of carbon removal for a long time.
0:38:05 And just to be clear, moral hazard, our second fun econ term of the conversation after public goods is basically the idea that, like, oh, carbon removal will just let people keep emitting.
0:38:09 It’s a signal that, oh, I don’t have to worry about it because they’ll just suck all the carbon out of these.
0:38:10 Yes.
0:38:21 And, you know, I think that, you know, our perspective is, like, if we had done, as a world, a better job with emissions reduction earlier, we wouldn’t have to do the carbon removal that we had.
0:38:23 It’s a great world where we don’t have to do this.
0:38:23 Totally.
0:38:25 It’s a dumb thing to have to spend money on.
0:38:27 If we’d have been smarter, we wouldn’t have to spend money on it.
0:38:27 Totally.
0:38:36 And, like, 90 percent plus of the world’s efforts should stay focused on emissions reduction because without that, there is no path to solving climate change, full stop.
0:38:41 But the math also, unfortunately for all of us, doesn’t work without carbon removal.
0:38:43 So, like, we have to learn to walk and chew gum at the same time.
0:38:44 So fun.
0:38:45 You were surprised by the haters.
0:38:46 I’m sorry.
0:38:47 What else?
0:38:59 I think that I’m generally an impatient person, and I have to, you know, my team is already reminding me that to build real things in the real world takes time.
0:39:01 Yeah, this is physical hard tech, right?
0:39:02 It’s not software.
0:39:05 You can’t just iterate every day and ship every day.
0:39:06 It’s like physical things.
0:39:07 It’s rocks, right?
0:39:11 It’s rocks in the world that take time to do the things that they do.
0:39:11 Exactly.
0:39:18 And so we are sort of, we as a team talk a lot about sort of inhabiting different mindsets.
0:39:25 It’s like we are rushed and we’re sort of, we are running to get, you know, our fund contracted as robustly as possible.
0:39:28 And at the same time, we’re playing the long game.
0:39:30 Like, this is going to take decades.
0:39:35 This industry is going to take decades to really materialize and form.
0:39:41 And we are still, you know, we are closer to the starting line than any other place.
0:39:43 We’re five, six years into this.
0:39:53 So I think that trying to sort of both have that short-term urgency but also really realize that, like, you know, climate and carbon removal is more than one administration.
0:39:54 It is more than one country.
0:40:06 The timeframes that we’re talking about just requires a sort of steadfastness that I should have appreciated at the beginning but that I don’t think I really internalized until probably like the last year or two.
0:40:12 We’ll be back in a minute with the lightning round.
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0:40:52 I’m CNN tech reporter Claire Duffy.
0:40:53 Claire Duffy was one of the best.
0:40:58 I cover artificial intelligence and other new technologies for a living.
0:41:02 And even I sometimes get overwhelmed trying to keep up with it all.
0:41:09 So I’m starting a new show where, together, we can explore how to experiment with these new tools without getting played by them.
0:41:11 It’s called Terms of Service.
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0:41:18 Follow CNN’s Terms of Service wherever you get your podcasts.
0:41:23 Let’s finish with the lightning round.
0:41:23 Great.
0:41:26 Is romanticism making a comeback in San Francisco?
0:41:36 You know, I’m sort of, I wrote that piece in part because I think the answer is yes, in part because I’m trying to manifest it.
0:41:37 I love that.
0:41:39 I do see tells.
0:41:40 I’ve lived in San Francisco for a long time.
0:41:49 And I think that there are tells that San Francisco is rediscovering its humanism.
0:41:51 We are rediscovering enjoyment.
0:42:02 We are rediscovering our sort of soul in a way that I think, to me, feels very exciting and a little bit different and sort of zaggy from the past 10 years in SF.
0:42:04 So I hope so.
0:42:10 I mean, you talk about it as this sort of, you know, reaction to the Enlightenment as it was the first time, right?
0:42:12 Which is fun.
0:42:14 Who’s the Byron?
0:42:17 Is there like a Byron of San Francisco 2025?
0:42:18 That’s a really good question.
0:42:21 I don’t know, but I will think about that.
0:42:23 I mean, I also like the piece of it.
0:42:23 Who do you think is the Byron?
0:42:27 I don’t know, you live there and like I’m not in the mix.
0:42:32 I would love you to tell me somebody I should listen to or read or watch or whatever.
0:42:33 I will think about that.
0:42:43 I do think, I mean, there’s another piece of it that you write about, right, which is particularly interesting right now, which is a reaction to AI, reductively, right?
0:42:49 And more specifically, like this idea that if AI commodifies intelligence, what does that mean, right?
0:43:01 Like that’s a super, there’s like all the sad AI things, which fair enough, but there’s a kind of interesting, maybe happy version of like, you know, embodied.
0:43:07 I was talking to a guy at Anthropic the other week and I said, if you weren’t working there, what would you be doing?
0:43:09 And he said, I’d be a massage therapist.
0:43:10 And he meant it.
0:43:17 And he’s like, I’m really into embodied stuff, which is super romantic in the capital R sense, right?
0:43:28 Yeah, I think that, yeah, there’s sort of like this reemergent interest in the physical world and in tactile things and in beautiful things and a beautiful built environment.
0:43:34 I think that, and it’s just sort of aesthetic, aesthetics generally, I think are on the rise.
0:43:41 And those all, they’re not all, you know, definitionally, I guess, physical or sort of analog, non-digital.
0:43:45 But I think a lot of them, I think a lot of them, a lot of them are.
0:43:47 That feels true to me.
0:43:49 What was the hardest thing about building a coffee table?
0:43:55 Well, you know, I didn’t know how to use a drill.
0:43:56 I didn’t know how to use a drill.
0:43:57 Drills are awesome.
0:43:59 Art drills are amazing.
0:44:01 I didn’t know how to use a drill.
0:44:03 I didn’t know how to use a sander.
0:44:05 And I, I’d really never built anything before.
0:44:09 I tweeted, I tweeted, did anybody have these things?
0:44:12 And a neighbor had, had all the tools taught me to use them.
0:44:15 And essentially, you know, this coffee, this coffee I’m looking at right now.
0:44:20 This coffee table is, I love how it looks.
0:44:22 And I had a very specific thing that I wanted it to look like.
0:44:26 But I am pretty sure that it is going to decompose if I ever try to move it.
0:44:28 It is not built very well.
0:44:32 But it, it does serve its purpose, at least at this, at this moment.
0:44:35 I mean, maybe its purpose was building it, right?
0:44:36 Oh, I love that.
0:44:36 Yeah.
0:44:38 No, you’re probably right.
0:44:47 Man Rantzhoff is head of climate at Stripe and Frontier.
0:44:51 Please email us at problematpushkin.fm.
0:44:54 We are always looking for new guests for the show.
0:44:58 Today’s show was produced by Trina Menino and Gabriel Hunter-Chang.
0:45:03 It was edited by Alexandra Gerriton and engineered by Sarah Brugger.
0:45:07 I’m Jacob Goldstein, and we’ll be back next week with another episode of What’s Your Problem?
0:45:17 This is an iHeart Podcast.
0:00:39 Sometime around 2018, it became clear that transitioning away from fossil fuels was not going to be enough to manage climate change.
0:00:53 On top of moving away from fossil fuels, on top of ceasing to emit carbon dioxide into the air, the world would also need to figure out how to take some of the carbon dioxide we’d already put into the atmosphere out of the atmosphere.
0:00:58 And it was also clear that just planting more trees wasn’t going to do it.
0:01:02 It was too much carbon dioxide and not enough land to plant trees on.
0:01:18 A few years after those things became clear, a company called Stripe, that helps online businesses do things like process payments, decided to dedicate a relatively small amount of money, a million dollars, to pay to have carbon dioxide removed from the atmosphere.
0:01:23 In May 2020, we made our first purchases from four carbon removal companies.
0:01:26 This is Nan Rantsoff, the head of climate at Stripe.
0:01:32 And at the time, you know, two sort of interesting things happened.
0:01:38 The first is that the field had this sort of almost weirdly positive reaction to a pretty small amount of money.
0:01:40 A million dollars is ultimately not that much.
0:01:43 It’s in a way quite a bad sign if people get excited.
0:01:44 Yes.
0:01:46 For a whole field about a million dollars.
0:01:47 No, that’s exactly right.
0:01:48 And it’s concerning.
0:01:51 Like, why are people getting so excited about this million dollars?
0:01:52 Yeah.
0:02:01 So that was an interesting signal, which to us just said, well, this field has been starved for a market and such that a million dollars could, you know, make anybody pay attention.
0:02:08 The second thing that happened, Nan said, was Stripe started hearing from the companies that used Stripe’s services.
0:02:12 And a lot of those companies also wanted to start paying for carbon removal.
0:02:16 So Stripe set up a way for those companies to purchase carbon removal.
0:02:19 And tens of millions of dollars flowed in.
0:02:21 It’s a good step, but it’s still quite small.
0:02:24 So then, you know, we’ve been doing this for about a year and a half.
0:02:29 And our team got in room and we said, well, you know, on the one hand, this is 10x progress.
0:02:31 You know, we are making progress.
0:02:35 But this number is still so short of what the field needs.
0:02:39 And we came up with a bunch of ideas and we killed a bunch of ideas.
0:02:43 And one of the ideas that we couldn’t kill was this concept of an advanced market commitment.
0:02:53 That is ultimately what has since become Frontier, which is we’ve launched a now over $1 billion advanced market commitment to buy permanent carbon removal between 2022 and 2030.
0:02:59 And there are still many more steps on the journey, but that’s one of the big ones that we’ve been working on recently.
0:03:11 I’m Jacob Goldstein, and this is What’s Your Problem, the show where I talk to people who are trying to make technological progress.
0:03:17 In addition to being head of climate at Stripe, Nan Ranselhoff is also head of climate at Frontier.
0:03:19 That’s the organization she mentioned a minute ago.
0:03:31 Frontier is a wholly owned subsidiary of Stripe, and it is the vehicle through which Stripe and a bunch of other companies have pledged to pay $1 billion to have carbon permanently removed from the atmosphere.
0:03:34 I wanted to talk to Nan for a couple reasons.
0:03:41 One, her job gives her a great overview of what is going on in carbon removal as a field.
0:03:53 And two, the specific mechanism that Frontier is using, that advanced market commitment that Nan mentioned, is this really powerful, relatively recent economic innovation.
0:03:55 So what’s an advanced market commitment?
0:04:05 An advanced market commitment is basically a way to guarantee future demand for a product that you want to exist, but that doesn’t exist yet.
0:04:14 And advanced market commitments are basically a kind of way of collecting revenue and demonstrating that there is a market for a product.
0:04:21 And we borrowed this concept, actually, from the vaccine space.
0:04:29 So the first AMC was started in the mid-2000s for the world wanted a pneumococcal vaccine for low- and middle-income countries.
0:04:42 And because the end customers are from less wealthy countries, pharma companies are not incented to actually develop that vaccine because the end demand is uncertain or small.
0:04:46 Right. It’s not going to be a profitable enterprise, probably, right?
0:04:50 They’re going to spend hundreds of millions of dollars, a billion dollars to develop a vaccine.
0:04:55 And the price at which they could sell it is not enough to recoup their investment.
0:05:01 And we should say, I feel like the pneumococcal vaccine is underrated in part just because of the name.
0:05:06 Like, I think that, you know, this is a terrible infection that killed huge numbers of children.
0:05:09 And it was clearly vaccine preventable.
0:05:14 And there was this, frankly, economic problem was the vaccine didn’t exist.
0:05:24 And how could people with money in the rich world create the incentive structure for it to be worth it for a private company to develop the vaccine?
0:05:25 Very well said. Yes.
0:05:36 And that is a generalizable concept of AMCs is that they’re trying to there’s a there’s a public good or something that is of real value, societal value that should happen.
0:05:39 But there’s an incentive problem that is preventing that from happening.
0:05:52 And AMCs are one of a broader set of what economists would call market shaping tools that we can utilize to help fix those incentive problems and make it more likely that these these public goods,
0:05:58 these societal goods actually exist and scale up to the numbers that we want them to.
0:06:04 Well, and AMCs are a little bit like clever, subtle, non-obvious, right?
0:06:13 Like, the more obvious thing is like, well, the government could just spend money to develop a vaccine or even could just subsidize one vaccine maker to do the research.
0:06:19 But but like, why is an AMC better in some settings than those options?
0:06:22 Yeah, it’s a really good question.
0:06:29 So when we think about the types of financial interventions here, we can think about them like push.
0:06:32 People often talk about push mechanisms are like grant funding.
0:06:37 You typically pay for folks to up front for an input.
0:06:39 An input in this case is research, vaccine development.
0:06:41 Yep. You’re giving someone a grant.
0:06:42 Here’s a billion dollars.
0:06:43 Go make the vaccine.
0:06:46 Or you’re giving somebody a grant to figure out if it’s even possible.
0:06:47 Yeah.
0:06:49 And you’re giving them up front before you get the end outcome.
0:06:56 Pull funding are mechanisms that you’re paying for something when it’s delivered.
0:06:57 You’re paying for the output.
0:07:00 And a prize is sort of an example of that.
0:07:01 It’s like a one time.
0:07:03 If somebody can develop this, we’ll give you a prize.
0:07:06 And there are famous examples of that, right?
0:07:06 There certainly are.
0:07:10 Like longitude, the British in, was it the 18th century?
0:07:13 They needed to, they needed a clock that worked on a ship, basically, right?
0:07:17 Or the DARPA prize for self-driving cars, right?
0:07:19 Which sort of kicked off the self-driving car revolution.
0:07:22 Prizes can be very effective mechanisms.
0:07:26 And AMCs are not always a good fit for a problem.
0:07:30 They tend to be a good fit for the problem when a couple of things are true.
0:07:35 If you think about the thing you want to exist and why the organizations or the people that
0:07:40 could have invented and scaled those things aren’t doing it, if the problem in their mind is
0:07:44 there’s no end revenue for it, that’s criteria one.
0:07:50 Criteria two is that you can actually define the thing that you want to exist.
0:07:57 So, you know, can we in this case define the target product profile of the pneumococcal vaccine that we want?
0:08:02 Or in our case, can we outline the criteria for the kinds of carbon removal that we want to exist?
0:08:08 And then a third criteria is essentially like once the thing is actually invented,
0:08:13 will market forces take over to actually make it scale on its own?
0:08:19 So basically, once a thing invented that is true, you should do a prize because you don’t need a long-term market.
0:08:20 You’re just trying to get the initial invention.
0:08:21 Oh, interesting.
0:08:24 But in the case of, you know, the pneumococcal vaccine, for example,
0:08:27 you want the pharma companies to invent the solution,
0:08:31 but you ultimately care about is that the people who need it are getting the vaccine.
0:08:31 Yeah.
0:08:38 So in that case, the incentive design there is you’re taking all of the R&D and development costs
0:08:45 associated with that, but you are giving it back to the pharma companies by amortizing it over all of the doses.
0:08:49 So just to be clear, the advanced market commitment for the vaccine was not,
0:08:51 we’ll give you the money when you invent the vaccine.
0:08:57 It’s we’ll pay an extra couple bucks per vaccine delivered in the field in this part of the world.
0:08:57 Exactly.
0:08:59 And there are genuinely different ways.
0:09:05 AMCs are a pretty broad term that, you know, can encompass a lot of different mechanism designs.
0:09:06 But you’ve described that well.
0:09:11 It’s like you want to, you’re paying for the outcome of somebody actually getting the vaccine.
0:09:12 The marginal use case.
0:09:12 That’s right.
0:09:13 Yeah.
0:09:13 Okay.
0:09:17 By the way, are there more criteria or do we have the criteria now in place?
0:09:20 Those are sort of rough criteria that, and they’re not perfect,
0:09:23 but they’re sort of rough criteria that will help you know,
0:09:25 are we even in poll funding territory?
0:09:30 And within poll funding, should we consider an AMC versus a prize versus something else?
0:09:31 Those are sort of loose guiding criteria.
0:09:40 So now we have our framework, apply it to carbon removal as you were thinking about it in 2021, 2022.
0:09:44 Why did it seem like a good fit for that problem at that time?
0:09:44 Yeah.
0:09:48 I mean, I think the fundamental problem with carbon removal.
0:09:52 So carbon removal is in, for all intents and purposes, it is a public good.
0:09:56 Unlike with energy, you know, humans derive value from energy.
0:09:58 That is, we get value from that.
0:10:01 When you are sucking CO2 out of the atmosphere and storing it somewhere permanently,
0:10:04 you know, there are small markets where people can benefit from them.
0:10:08 You’re using the CO2, you know, in an end product.
0:10:10 But at the scale we’re talking, this is mostly a public good.
0:10:14 And as a result, it is a very reasonable question for
0:10:18 entrepreneurs and investors to basically ask,
0:10:22 if I start a company in this space, who’s going to buy the end product that I am selling?
0:10:26 It is fundamentally an open question about the market.
0:10:30 And I would say it’s even more of an open question if I’m building a really early stage
0:10:32 technology that is expensive at the beginning.
0:10:36 Because there are, there’s some voluntary market that exists, but that’s a $20 a ton.
0:10:42 And if you’re building, you know, a new technology at the beginning, your price is going to be high.
0:10:48 And so that fundamentally, that first criteria is extremely applicable to carbon removal because
0:10:50 it has created this chicken and egg problem that we’re trying to solve.
0:10:55 You use the term public good, which people use in a kind of vernacular sense,
0:10:59 but there’s a technical economic sense in which you are using it and which applies here, right?
0:11:02 It’s non-rivalrous and non-excludable, right?
0:11:07 Which means basically, even if only one person pays for it, everybody benefits.
0:11:11 And you can’t even exclude somebody from benefiting if you want to.
0:11:11 That’s right.
0:11:14 A lighthouse is the classic, right?
0:11:18 It doesn’t make sense for any one shipping company to pay for a lighthouse because all
0:11:23 those other cheap assholes who didn’t pay for the lighthouse are also not going to crash into
0:11:23 the box, right?
0:11:28 And it’s a classic case of market failure for that reason, right?
0:11:33 Because the person paying for it only captures a tiny, and in the case of carbon removal, truly
0:11:35 tiny, tiny part of the benefit.
0:11:40 And so no one’s going to pay for it except in like weird edge cases.
0:11:40 Well said.
0:11:42 Like stripes $1 million.
0:11:44 Precisely.
0:11:44 Precisely.
0:11:45 Yes.
0:11:46 OK, so that’s good.
0:11:47 That’s one.
0:11:47 What else?
0:11:48 That’s a very important one.
0:11:52 The second one is, can we define the shape of the thing that we want to exist?
0:11:59 And in our case, when we’re thinking about carbon removal, we have a set of criteria that
0:12:07 we are, that sort of try to characterize the gap in solutions that exist that would essentially
0:12:11 get the world to the 10 gigatons plus per year needed by 2050.
0:12:16 And so the kinds of things that we care about on this list are things like, does this technology
0:12:20 have the potential to be under $100 in the future?
0:12:23 And that is a, you know, we can come back to the specifics, but does it have the potential
0:12:23 to be cheap?
0:12:26 Does it have the potential to be very huge?
0:12:31 We’re looking at solutions that have the potential to be more than half a gigaton per year in carbon
0:12:31 removal.
0:12:33 We also care a lot about permanence.
0:12:39 So when you emit a ton of CO2 into the atmosphere, that is permanently up there.
0:12:41 And so we want to take it out permanently as well.
0:12:45 And then, you know, there’s a whole host of other criteria that we care about.
0:12:52 But when we sat down to do our initial million dollar spend for Stripes, that first blog post,
0:12:58 we spent a lot of time thinking about, you know, how do we characterize the kinds of solutions
0:12:59 that we want to exist?
0:13:05 And an important part of that characterization is, can we be specific enough that people understand
0:13:06 what it is that we want?
0:13:14 But can we be broad enough to invite a whole host of creative solutions to the starting
0:13:15 line?
0:13:19 Because this entire field is basically, you know, six years old.
0:13:23 This started, you know, carbon removal, the starting gun for carbon removal was the 2018
0:13:24 IPCC report.
0:13:25 And that was not very long ago.
0:13:28 And so maybe it’s direct air capture.
0:13:29 Maybe it’s enhanced rock weathering.
0:13:31 Maybe it’s ocean alkalinity enhancement.
0:13:33 Maybe, you know, there’s all these different solutions.
0:13:35 It’s too early to pick a horse.
0:13:39 Let’s get a bunch of the best ideas to the starting line, see how they do.
0:13:41 And then some of them won’t work.
0:13:43 But the ones that do, let’s really double down.
0:13:48 So that’s a long-winded way of saying we were trying to define this target criteria in
0:13:54 a way that sort of balanced the specificity needed to guarantee this for suppliers, but also
0:13:58 was broad enough to invite the innovation that we think is necessary.
0:13:59 Yeah.
0:14:01 I mean, well, that’s the market force part, right?
0:14:02 That’s why it’s a poll.
0:14:07 Well, if it’s too specific, then it’s like, well, just give a grant to one company.
0:14:09 But that’s what you’re trying to avoid, right?
0:14:10 You’re trying to avoid picking a winner.
0:14:11 Precisely.
0:14:12 Is there one more criterion?
0:14:18 And there’s one more criteria, which is essentially once the thing is invented, if you have the recipe
0:14:22 for the thing, our market force is going to scale it up on its own.
0:14:27 And in the case of carbon removal, somebody could come up with the best possible solution.
0:14:31 And the long-term market for this isn’t quite there yet.
0:14:33 It’s the public good problem again.
0:14:33 Exactly.
0:14:35 So, yes.
0:14:40 So it’s yes, yes, and yes to your three criteria for advanced market commitment.
0:14:40 Yes.
0:14:46 And I will say that, like, there’s a few differences in this, in the Frontier AMC and the initial
0:14:48 AMC for pneumococcal.
0:14:48 Yeah.
0:14:53 I think one of the things that is challenging in carbon removal is that lack of long-term
0:14:54 market.
0:14:56 So, like, Frontier is a billion dollars.
0:14:57 It’s going to run out eventually.
0:15:00 So we’re sort of building the plane while we’re flying it.
0:15:06 We have to make sure that once these initial funds are out, that long-term market does exist.
0:15:08 So we can talk about what that looks like.
0:15:13 But I think that, you know, in the case of the pneumococcal vaccine for low- and middle-income
0:15:18 countries, there was a point at which it made sense, financial sense, once for pharma companies
0:15:21 to continue distributing the vaccine on their own.
0:15:26 In our case, you know, that is only true if we can also put a sort of steady state market
0:15:27 in place, if that makes sense.
0:15:28 Yeah.
0:15:33 I mean, is it because for the vaccine, most of the cost is up front?
0:15:39 And in fact, there is marginal benefit for people who can pay a very small amount or for
0:15:40 countries that can pay a very small amount.
0:15:46 So there is, once the vaccine companies have recouped the R&D cost, the marginal cost actually
0:15:52 works in a market-based way, which will never be true for a carbon capture because it’s a
0:15:52 public good.
0:15:53 That’s right.
0:15:56 So, I was thinking we’d get to this later, but whatever.
0:16:05 Fundamentally, there is a policy problem that somebody has to solve before too long because
0:16:06 this isn’t going to work forever.
0:16:11 You wrote, without government action, Frontier is building a bridge to nowhere.
0:16:11 Yes.
0:16:17 These private sector voluntary commitments are a great way to help this field get to first
0:16:20 base, but they are not going to get us all the way there.
0:16:26 So, you know, if we zoom all the way out and think about sort of quick demand math, how big
0:16:28 does this market need to be and for how long?
0:16:33 So carbon removal roughly needs to scale to, and this is, you know, rough numbers, 10 billion
0:16:35 tons per year by 2050.
0:16:43 And if we say that, you know, for example, we think we can do it at $100 a ton, that is
0:16:47 a trillion dollars per year in demand that is needed.
0:16:50 And of course, if we end up needing less carbon removal, that number goes down.
0:16:52 And if we can do it for cheaper, that numbers go down.
0:16:56 But just back of the envelope, it’s a trillion dollars a year, which is a big number.
0:16:57 Right.
0:16:58 Global GDP is about $100 trillion.
0:17:03 So 1% of global GDP is a tremendous, a tremendously large number.
0:17:06 It is dauntingly large, in fact.
0:17:07 It’s dauntingly large.
0:17:09 Can you get another order of magnitude out of the price?
0:17:11 It’s the first question I have for you.
0:17:17 So I think that that is why it really matters that we are so hunting for solutions that can
0:17:23 be much cheaper because, you know, being able to get down to $70 or $50 or $30 a ton
0:17:24 does make a really big difference.
0:17:30 I would call out, though, that like, is half a percent or a percent of global GDP a lot?
0:17:32 I mean, of course, the answer is in one sense, yes.
0:17:37 But of course, as a current moment, a tough time to be getting countries to coordinate on
0:17:38 global public goods.
0:17:44 But it’s not totally out of the realm of possibility, especially, you know, if and as
0:17:47 the world gets richer, that percentage goes down.
0:17:49 Well, so, OK, fine.
0:17:50 We’re saying all these numbers, it’s a lot of money.
0:17:53 But what does it mean in terms of policy, right?
0:17:55 It’s fundamentally a public good.
0:17:59 Public goods, we know the most basic economic way, are not provided by the market.
0:18:04 So, like, what do governments have to do to sort of take the baton from frontier?
0:18:15 I think that probably in practice, the collection of policies that get to these hundreds of billions
0:18:20 of dollars per year ends up looking like a patchwork quilt of demand policies.
0:18:26 I think it is unlikely that there is sort of one thing that ultimately gets us there.
0:18:28 We can talk about what the shape of those things could look like.
0:18:31 But at a high level, you can kind of imagine a couple of different worlds.
0:18:35 One world is that governments treat carbon removal like sanitation.
0:18:41 And they say, you know, we’re going to we’re going to do this cleanup on behalf of our citizens
0:18:44 and we’re going to coordinate with other countries to do that.
0:18:48 We can put that in the kind of category of like direct government procurement.
0:18:50 Governments are the ones that are doing it themselves.
0:18:58 There’s another worldview, which is that governments are essentially trying to quantify the negative
0:19:04 externality of a ton of emissions and then push that onto the players that are emitting, private companies.
0:19:08 This is some kind of carbon tax, basically, that is funding carbon removal.
0:19:08 Yes.
0:19:09 Among other things.
0:19:10 Yes.
0:19:10 The dream.
0:19:11 The dream.
0:19:14 Let’s dream about a carbon tax for one moment because it makes so much sense.
0:19:21 And there are different sort of ways of implementing that that I think are sort of further or closer to a traditional carbon tax.
0:19:28 So that’s a long winded way of saying there are a whole host of bets I think that the world needs to make.
0:19:31 And some of them will pan out and some of them won’t.
0:19:37 But it is very important to start planting those seeds now so that the market is where it needs to be when it needs to be there.
0:19:42 We’ll be back in just a minute.
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0:20:25 I’m CNN tech reporter Claire Duffy.
0:20:26 Claire Duffy was one of the best.
0:20:30 I cover artificial intelligence and other new technologies for a living.
0:20:34 And even I sometimes get overwhelmed trying to keep up with it all.
0:20:42 So I’m starting a new show where, together, we can explore how to experiment with these new tools without getting played by them.
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0:20:50 Follow CNN’s Terms of Service wherever you get your podcasts.
0:20:55 Let’s go back to the recent past.
0:21:02 So you have this idea for big advanced market commitment for carbon capture and removal.
0:21:04 What do you do?
0:21:12 You know, at the time, AMCs, they’re only really been sort of one or one and a half AMCs, and they were all in the context of health.
0:21:18 So it was this initial pneumococcal vaccine, AMC, GAVI, and then Operation Warp Speed incorporated some components of this as well.
0:21:21 For developing the coronavirus vaccine.
0:21:21 That’s right.
0:21:22 To great success.
0:21:22 To great success.
0:21:24 Underrated.
0:21:26 So underrated operation.
0:21:29 Like, nobody wants to own it politically, which is so sad.
0:21:30 Like, it was great.
0:21:31 It worked.
0:21:32 It was amazing.
0:21:32 It was amazing.
0:21:37 So what is Frontier at launch in 2022?
0:21:44 What we wanted to do with Frontier, the spirit of what we wanted to do was say, there is a big market for carbon removal.
0:21:45 And what does that mean, a big market?
0:22:01 A billion dollars was an imperfect number that we came up with that both met the criteria that we thought it would be big enough to get people’s attention and send a strong signal to entrepreneurs and investors that there is a market.
0:22:04 But it was still something we felt was in the realm of possibility.
0:22:07 Like, we can’t go raise a trillion dollars.
0:22:09 That is not something we were able to do.
0:22:11 So a billion dollars was the number that we settled on.
0:22:18 And I will sort of want to asterisk and call out the fact that, like, it is a sort of imperfect number because it does not solve the whole problem.
0:22:22 Kind of the minimum viable product of numbers in this context, right?
0:22:23 That’s exactly right.
0:22:23 Yeah.
0:22:25 And that’s different than the pneumococcal vaccine.
0:22:34 Like, you know, initially when they put together a billion and a half dollars from countries and the Gates Foundation, they thought it was enough to get the vaccine to the point that they wanted to get to.
0:22:36 So I’ll sort of call out the flaw in that.
0:22:39 But we said, OK, a billion dollars.
0:22:40 Stripe can put in some of that.
0:22:46 We have now tens of thousands of Stripe climate users that are giving money for carbon removal.
0:22:53 So in the context of Stripe, we were actually able to underwrite a huge amount of that initial billion dollars ourselves.
0:22:55 But we weren’t able to get to that full billion.
0:23:06 So we said, OK, how can we find other like-minded organizations that would be interested in sort of this kind of wonky experiment that we want to try and run?
0:23:20 And so we ended up in the spring of 2022 launching with Google and Shopify and McKinsey and since then have added other folks like, you know, JP Morgan and H&M and Autodesk and Workday.
0:23:46 And so what everybody who puts money into that pot is promising is we will buy this amount of money, this number of millions or hundreds of millions of dollars worth of carbon removal.
0:23:57 So if it meets some set of specifications sometime between now and 2030, that is that is what everybody is promising, like contractually promising to do.
0:23:59 Yes, that is the spirit of what it is.
0:24:07 And in practice, most of those dollars get spent and contracted through something called an offtake agreement.
0:24:19 And an offtake agreement is a legally binding contract between a buyer and a supplier that the buyer is going to buy a certain number of, in our case, tons at a certain price if the supplier can deliver.
0:24:32 So when companies initially signed up to Frontier, they basically said, you know, we’re going to put in $200 million and this is how we are sort of able to budget that each year from 2022 to 2030.
0:24:34 And at that point, it’s an intention.
0:24:37 It’s an intention to spend, but it’s not a legally binding contract.
0:24:45 It becomes a legally binding contract in these offtake agreements where buyers are promising to buy a certain number of tons at a certain price.
0:24:55 And the reason that offtake contracts are really important for carbon removal companies is because if you are a carbon removal company and you want to build a big new, say, DAC facility.
0:24:56 That’s direct air capture.
0:24:57 Direct air capture.
0:25:01 And you go to a bank and you’re like, I want a loan to actually finance the build.
0:25:06 The first question they’re going to ask you is, who’s going to buy the thing that comes off of this plant?
0:25:15 Right. If they take the time to talk to you at all, they’re going to say, you want to build this thing that nobody’s ever built before and you don’t know who’s going to pay you for it.
0:25:18 And it’s a public good. So why should anybody even bother to pay you for it?
0:25:25 So basically a company gets an offtake agreement and then they can take that literally to the bank and use it as collateral for a loan.
0:25:32 Exactly. And there’s a lot of other things, as you’ve called out, that have to go right in order for that loan to actually happen.
0:25:37 But but one of the things that this helps de-risk is is the demand side.
0:25:39 It’s do is there a customer to buy the end thing that we’re doing?
0:25:43 That’s the genius of the advanced market commitment fundamentally. Right.
0:25:48 That’s right. So how’s it going? You’re three years in out of eight. Right.
0:25:52 So like things are happening. You’re kind of in the middle now of the project.
0:26:00 Yes. The goal, our goal at Frontier at a very high level is to get carbon removal on its best possible trajectory.
0:26:06 We are sort of working on behalf of the ecosystem largely through these offtake agreements.
0:26:09 But our goal, you know, is sort of is very world first.
0:26:19 And by the numbers. So we’re, as you said, about three years in, we have contracted now over five hundred million dollars with several dozen carbon removal companies.
0:26:30 And so much of our time at Frontier is spent sourcing, getting to know and diligencing and ultimately writing contracts with the best carbon removal companies out there.
0:26:36 And we’re, you know, we obsess over how to spend and how to how to contract each of these dollars.
0:26:38 You’ve committed half of the pot so far.
0:26:42 We’ve committed half of the pot across several dozen companies.
0:26:46 And these companies cover lots of different pathways, some of which we’ve talked about.
0:26:54 And in in some sense, it’s too early to tell if things are, quote unquote, like definitely working.
0:26:59 But we look at some leading indicators to tell us what to help us triangulate.
0:27:02 Like, is this doing the thing that we wanted it to be doing?
0:27:08 And one of those leading indicators is, like, what is the number of companies for whom sort of Frontier was the first customer?
0:27:13 And the reason we hear about that metric is we’re trying to pull this field forward.
0:27:20 So, like, going early versus following on is a good indicator that we’re like, yeah, we’re pulling companies forward.
0:27:23 And I mean, you want you want to be the marginal buyer, right?
0:27:25 You want to be the buyer that they need.
0:27:28 If somebody else was going to buy it anyways, that’s not as useful, right, at some level.
0:27:31 Exactly. And we because, you know, we’re not hunting for the cheapest 10s.
0:27:38 We’re looking long term at, you know, our we’re looking for technologies that have the potential to be really low cost and high volume in the future.
0:27:43 We are typically buying more expensive 10s earlier on as the first buyer.
0:27:46 And we are the first ever customer for 78 percent of companies.
0:27:51 And we’re the first off taker for as of, you know, as of now, 82 percent of them.
0:27:53 So, like, we’re coming in early.
0:27:54 Yes.
0:28:07 Another leading indicator that we look at is is basically like are are we picking companies that are actually starting to deliver the tons like vaulted, for example, delivered 12,000 tons of carbon removal last year.
0:28:12 This is the most of any company working on carbon removal, permanent carbon removal by a significant margin.
0:28:17 You know, charm has injected a number of several thousand tons last year.
0:28:25 Litho supplied 300,000 tons of rock this year, which is positioning them to put in some pretty significant numbers in the coming couple of years.
0:28:31 So these numbers are still small, but they are much larger than we’ve seen in previous years.
0:28:32 And I think that that is really promising.
0:28:35 I think we feel those are good early indicators.
0:28:40 But, you know, it’s going to take a decade or so, I think, to know if this really had the effect that we wanted it to.
0:28:43 Let’s talk a little bit about kind of the state of the industry itself.
0:28:46 Right. Because you are kind of at the center of it.
0:28:48 You have a nice perspective.
0:28:53 Yeah. I mean, let’s just step through like a few companies doing a few with a few different kinds of technologies.
0:28:58 Right. I feel like the people the one the most people have heard of is direct air capture.
0:29:01 Right. Is just fans and filters and whatever.
0:29:03 Like, should we start there?
0:29:04 What’s happening with direct air capture?
0:29:06 Sure. So direct air capture.
0:29:09 Yeah. You’ve probably seen these big fans.
0:29:10 Kind of looks like a vacuum cleaner or something.
0:29:12 You’re like you’re pulling in air.
0:29:16 You’re finding the CO2 particles from the other million air particles.
0:29:20 You’re compressing those and then injecting that usually underground somewhere.
0:29:24 And there are a number of direct air capture companies out there.
0:29:35 I think direct air capture is a technology that has high long term potential, but it’s very capital intensive and it’s very energy intensive, especially early stage.
0:29:41 And there’s a number of, in our opinion, really promising approaches that have the potential to be super low cost.
0:29:51 And that is both because of sort of cheap off the shelf CapEx and because of their ability to to do that process for really low energy.
0:29:53 But it’s basically a game of CapEx and energy for DAC.
0:29:55 That’s that’s really important.
0:29:57 It’s technically infinitely scalable.
0:29:59 Right. But cost is the challenge for DAC.
0:30:01 It’s permanent. It’s scalable.
0:30:04 The question is cost, which is a function of CapEx and energy.
0:30:07 OK, what do you want to do next?
0:30:09 Should we talk about plants next?
0:30:10 What do you want to talk about next?
0:30:11 Let’s talk about plants. Then we’re going to talk about rocks.
0:30:14 OK. Plants go.
0:30:17 So plants, of course, as we know, naturally.
0:30:27 Suck CO2 out of the air and they do this sort of in a quote for for free because they’re using they’re using solar from from the leaves.
0:30:28 They’re using leaves.
0:30:29 Yes.
0:30:30 Photosynthesis. Yes.
0:30:34 The challenge with plants is when you in the context of carbon removal is two things.
0:30:36 One, they take up a lot of space.
0:30:40 And so at the scale that we’re talking, there are sort of limits.
0:30:43 The second thing that is challenging about plants is they’re not permanent.
0:30:45 Trees can burn down or just die even.
0:30:48 Right. At the timescales we’re talking about, even if there is not a fire.
0:30:49 That’s right.
0:30:51 They will die and decompose. Right.
0:30:52 Plants are very important for many reasons.
0:31:05 But in the context of carbon removal, that the types of solutions that we are looking at, because we care about the permanence piece a lot, is how do you take what nature does for free and make that sort of permanent?
0:31:15 So Charm Industrial is an example of a company that takes waste biomass, so sort of leftover corn stover, for example, that farmers would, you know, have from from growing corn.
0:31:24 They take that, they pyrolyze it, which basically just means they heat it up without oxygen and they turn it into an oil that they can then direct back underground.
0:31:27 I talked to Sean Kinetic, who used to be there on this show a couple of years ago.
0:31:28 Oh, fabulous.
0:31:32 So why is that one promising and why is that one? What are the limits?
0:31:36 It’s promising because you get the capture part for free from plants.
0:31:42 It’s challenging because there is a limited amount of, quote unquote, waste biomass.
0:31:50 So like there is a sort of cap on probably how big that can be because there is only so much waste biomass.
0:31:56 And then there’s a question of like, what is the best thing to do with that waste in a given scenario based on where it is?
0:32:01 And so just to be clear, like in the case of Charm, they go out to cornfields where after the corn has been harvested,
0:32:04 there’s all this just like the corn plant is just sitting there on the ground.
0:32:08 Right. And that is essentially carbon that has been captured that’s about to go back into the atmosphere.
0:32:12 But if they can pyrolyze it and stick it in the ground for 10,000 years, that’s great.
0:32:18 But it doesn’t scale that much because there’s not that many corn stalks sitting on the ground in various forms around the world.
0:32:26 It gets you to probably collectively and, you know, there are different estimates for this, probably in the order of like a gigaton plus per year by 2050.
0:32:27 So that’s not nothing.
0:32:27 OK.
0:32:31 But it’s probably not going to get you to 10 gigatons a year.
0:32:34 So it’s by itself, it’s not going to get you all the way there.
0:32:37 But it’s a non-trivial chunk if it works, if it becomes cost effective.
0:32:43 I mean, presumably for all these, cost is still, they’re still quite expensive and you have to get the cost out.
0:32:52 Exactly. And in the case of, you know, some of their different bikers approaches, but there’s, there’s case of the capex, there’s a case, there’s the cost of sometimes transporting the biomass.
0:32:55 But again, it’s very sort of case by case specific.
0:33:00 I would just call it that the waste biomass problem, there’s a real limit to how big it can be.
0:33:02 And so that’s why we can’t put all of our chips in that basket.
0:33:03 Yeah.
0:33:05 Now we can talk about rocks.
0:33:09 Most of the world’s carbon actually is in rocks in the lithosphere.
0:33:13 And it just takes a really long time to get there.
0:33:17 Reactive rocks, if it’s an alkaline rock, will absorb carbon roughly proportional to a surface area.
0:33:21 It also cares about other things like, you know, it doesn’t have access to water and temperature, et cetera.
0:33:24 But you can kind of think about reactive rocks.
0:33:26 Some rocks are like sponges for carbon.
0:33:34 So the question is, how do you find or make alkaline rock, which is very reactive rock that is kind of in its most squeezed sponge form.
0:33:43 And what do you do with that to turn that into carbon removal, to sort of get it to do this sponge activity?
0:33:50 And there are a number of different ways that we are looking at.
0:33:52 One of them is called enhanced rock weathering.
0:34:01 And this is taking sort of taking that reactive rock, spreading it on fields where it has, you know, access to air and it has access to sort of rain and water.
0:34:05 And eventually that makes its way into the ocean and is stored as bicarbonate.
0:34:09 But that is sort of one use of a rock.
0:34:13 There’s another category called, it doesn’t really have a good name yet.
0:34:23 We talk about it as like superficial mineralization, but essentially, yeah, taking this rock, grinding it up, exposing it to air and some water, it mineralizes, it turns into a carbonate.
0:34:28 And then you essentially put it in these giant piles that are piles of carbon removal.
0:34:33 And, you know, it sounds it sounds a little wild, but it’s quite interesting because.
0:34:35 I like how simple it is.
0:34:37 If it works, it sounds really simple, which seems good.
0:34:38 Yes.
0:34:41 And, you know, we know how to do things like grind up rocks.
0:34:46 We have an existing big mining industry that in this case, the carbon removal actually stays in place.
0:34:48 So the monitoring and verification is quite easy.
0:34:52 You just go and look at the big rock and you say, yeah, it’s still there.
0:34:53 Basically.
0:34:53 Yeah.
0:34:56 You know, we’re we’re very excited about rocks in general.
0:35:00 And I think that this is this is a thing that nature already knows how to do.
0:35:11 And if we can find or make enough alkaline rock and that those are, you know, very scalable and sort of infinitely scalable sponges that we can use to suck out a lot of CO2 from the atmosphere and oceans.
0:35:17 So it sounds like of direct air capture plants and rocks, you seem particularly bullish on rocks.
0:35:23 I think that rocks are under under explored relative to their potential is why I’m quite excited about it.
0:35:26 You know, I think that, you know, people ask us a lot like, well, what’s your favorite one?
0:35:34 And I am always hesitant to answer that question because I wasn’t planning to ask you that, but it feels like rocks are your favorite.
0:35:38 I’m excited about rocks currently because I think they are under explored.
0:35:50 And I think the combination of the scale potential, which is functionally unlimited, the permanence and the simplicity of rocks could be interesting.
0:35:55 Obviously, in terms of the whole field of carbon removal, it’s super early, right?
0:35:58 But in terms of the life of Frontier, it’s not that early.
0:36:02 And so I’m curious, what has been different than you expected?
0:36:03 Like what has gone better?
0:36:04 What has gone worse?
0:36:06 What what have you learned?
0:36:19 You know, I’ve been surprised by how at the time when we launched Frontier, I wasn’t sure for the reason that we discussed that a billion dollars was going to send an appropriately loud signal.
0:36:23 And I don’t think that it didn’t convince everyone, and that’s fine.
0:36:34 But I think it convinced enough startups and entrepreneurs and investors that this was a big enough market for them to try.
0:36:38 And so, you know, the numbers that we talked about earlier, that surprised me.
0:36:41 I think in that sense, it worked better than expected.
0:36:47 I think that a thing that is also I don’t know if we should be surprised by this, but, you know,
0:36:51 carbon removal is still really early.
0:37:00 And when companies start and not all approaches work, and that’s not because they weren’t good ideas, it’s because you got to test your idea in the real world.
0:37:03 And sometimes those don’t pan out as you expect.
0:37:15 I’ve been also a little bit surprised by, like, how quick people can be to sort of catastrophize what I think in any other field would just, like, look like early innovation.
0:37:16 Like, there’s a bajillion AI startups.
0:37:19 Not all of them are going to make it, but, like, some of them will.
0:37:23 And that is sort of normal dynamics for an early ecosystem.
0:37:27 I feel like with carbon removal, there’s haters on both sides, right?
0:37:32 Because, like, people who don’t care about climate change, of course, hate it.
0:37:37 But the surprising one is that some of the people who do care about climate change hate it, right?
0:37:37 Yes.
0:37:42 It’s just going to distract us from the energy transition argument, right?
0:37:45 So I do feel like you’re up against a lot of haters.
0:37:47 Yes, I think that’s right.
0:37:55 And on that point, I think that, you know, the moral hazard piece is an argument that people have been talking about in the context of carbon removal for a long time.
0:38:05 And just to be clear, moral hazard, our second fun econ term of the conversation after public goods is basically the idea that, like, oh, carbon removal will just let people keep emitting.
0:38:09 It’s a signal that, oh, I don’t have to worry about it because they’ll just suck all the carbon out of these.
0:38:10 Yes.
0:38:21 And, you know, I think that, you know, our perspective is, like, if we had done, as a world, a better job with emissions reduction earlier, we wouldn’t have to do the carbon removal that we had.
0:38:23 It’s a great world where we don’t have to do this.
0:38:23 Totally.
0:38:25 It’s a dumb thing to have to spend money on.
0:38:27 If we’d have been smarter, we wouldn’t have to spend money on it.
0:38:27 Totally.
0:38:36 And, like, 90 percent plus of the world’s efforts should stay focused on emissions reduction because without that, there is no path to solving climate change, full stop.
0:38:41 But the math also, unfortunately for all of us, doesn’t work without carbon removal.
0:38:43 So, like, we have to learn to walk and chew gum at the same time.
0:38:44 So fun.
0:38:45 You were surprised by the haters.
0:38:46 I’m sorry.
0:38:47 What else?
0:38:59 I think that I’m generally an impatient person, and I have to, you know, my team is already reminding me that to build real things in the real world takes time.
0:39:01 Yeah, this is physical hard tech, right?
0:39:02 It’s not software.
0:39:05 You can’t just iterate every day and ship every day.
0:39:06 It’s like physical things.
0:39:07 It’s rocks, right?
0:39:11 It’s rocks in the world that take time to do the things that they do.
0:39:11 Exactly.
0:39:18 And so we are sort of, we as a team talk a lot about sort of inhabiting different mindsets.
0:39:25 It’s like we are rushed and we’re sort of, we are running to get, you know, our fund contracted as robustly as possible.
0:39:28 And at the same time, we’re playing the long game.
0:39:30 Like, this is going to take decades.
0:39:35 This industry is going to take decades to really materialize and form.
0:39:41 And we are still, you know, we are closer to the starting line than any other place.
0:39:43 We’re five, six years into this.
0:39:53 So I think that trying to sort of both have that short-term urgency but also really realize that, like, you know, climate and carbon removal is more than one administration.
0:39:54 It is more than one country.
0:40:06 The timeframes that we’re talking about just requires a sort of steadfastness that I should have appreciated at the beginning but that I don’t think I really internalized until probably like the last year or two.
0:40:12 We’ll be back in a minute with the lightning round.
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0:40:52 I’m CNN tech reporter Claire Duffy.
0:40:53 Claire Duffy was one of the best.
0:40:58 I cover artificial intelligence and other new technologies for a living.
0:41:02 And even I sometimes get overwhelmed trying to keep up with it all.
0:41:09 So I’m starting a new show where, together, we can explore how to experiment with these new tools without getting played by them.
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0:41:23 Let’s finish with the lightning round.
0:41:23 Great.
0:41:26 Is romanticism making a comeback in San Francisco?
0:41:36 You know, I’m sort of, I wrote that piece in part because I think the answer is yes, in part because I’m trying to manifest it.
0:41:37 I love that.
0:41:39 I do see tells.
0:41:40 I’ve lived in San Francisco for a long time.
0:41:49 And I think that there are tells that San Francisco is rediscovering its humanism.
0:41:51 We are rediscovering enjoyment.
0:42:02 We are rediscovering our sort of soul in a way that I think, to me, feels very exciting and a little bit different and sort of zaggy from the past 10 years in SF.
0:42:04 So I hope so.
0:42:10 I mean, you talk about it as this sort of, you know, reaction to the Enlightenment as it was the first time, right?
0:42:12 Which is fun.
0:42:14 Who’s the Byron?
0:42:17 Is there like a Byron of San Francisco 2025?
0:42:18 That’s a really good question.
0:42:21 I don’t know, but I will think about that.
0:42:23 I mean, I also like the piece of it.
0:42:23 Who do you think is the Byron?
0:42:27 I don’t know, you live there and like I’m not in the mix.
0:42:32 I would love you to tell me somebody I should listen to or read or watch or whatever.
0:42:33 I will think about that.
0:42:43 I do think, I mean, there’s another piece of it that you write about, right, which is particularly interesting right now, which is a reaction to AI, reductively, right?
0:42:49 And more specifically, like this idea that if AI commodifies intelligence, what does that mean, right?
0:43:01 Like that’s a super, there’s like all the sad AI things, which fair enough, but there’s a kind of interesting, maybe happy version of like, you know, embodied.
0:43:07 I was talking to a guy at Anthropic the other week and I said, if you weren’t working there, what would you be doing?
0:43:09 And he said, I’d be a massage therapist.
0:43:10 And he meant it.
0:43:17 And he’s like, I’m really into embodied stuff, which is super romantic in the capital R sense, right?
0:43:28 Yeah, I think that, yeah, there’s sort of like this reemergent interest in the physical world and in tactile things and in beautiful things and a beautiful built environment.
0:43:34 I think that, and it’s just sort of aesthetic, aesthetics generally, I think are on the rise.
0:43:41 And those all, they’re not all, you know, definitionally, I guess, physical or sort of analog, non-digital.
0:43:45 But I think a lot of them, I think a lot of them, a lot of them are.
0:43:47 That feels true to me.
0:43:49 What was the hardest thing about building a coffee table?
0:43:55 Well, you know, I didn’t know how to use a drill.
0:43:56 I didn’t know how to use a drill.
0:43:57 Drills are awesome.
0:43:59 Art drills are amazing.
0:44:01 I didn’t know how to use a drill.
0:44:03 I didn’t know how to use a sander.
0:44:05 And I, I’d really never built anything before.
0:44:09 I tweeted, I tweeted, did anybody have these things?
0:44:12 And a neighbor had, had all the tools taught me to use them.
0:44:15 And essentially, you know, this coffee, this coffee I’m looking at right now.
0:44:20 This coffee table is, I love how it looks.
0:44:22 And I had a very specific thing that I wanted it to look like.
0:44:26 But I am pretty sure that it is going to decompose if I ever try to move it.
0:44:28 It is not built very well.
0:44:32 But it, it does serve its purpose, at least at this, at this moment.
0:44:35 I mean, maybe its purpose was building it, right?
0:44:36 Oh, I love that.
0:44:36 Yeah.
0:44:38 No, you’re probably right.
0:44:47 Man Rantzhoff is head of climate at Stripe and Frontier.
0:44:51 Please email us at problematpushkin.fm.
0:44:54 We are always looking for new guests for the show.
0:44:58 Today’s show was produced by Trina Menino and Gabriel Hunter-Chang.
0:45:03 It was edited by Alexandra Gerriton and engineered by Sarah Brugger.
0:45:07 I’m Jacob Goldstein, and we’ll be back next week with another episode of What’s Your Problem?
0:45:17 This is an iHeart Podcast.
Nan Ransohoff is the head of climate at Stripe. The company is known mainly for facilitating online payments, but it’s become a key driver of the nascent carbon-removal industry.
On today’s show, Nan explains how she used a clever economic idea to get companies to spend $1 billion on carbon removal. And she talks about the different approaches startups are pursuing to pull carbon dioxide out of the atmosphere.
See omnystudio.com/listener for privacy information.
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