Driving Market Integrity in Carbon Removal

Jul 24

Giana Amador is Executive Director at Carbon Removal Alliance. Carbon Removal Alliance was announced earlier this year in February 2023 as a trade organization focused on advancing policies that support a diverse set of carbon removal technologies. Its membership consists of 20 plus companies in the carbon removal space, including technology startups like Charm Industrial, Heirloom, and Noya, as well as carbon removal purchasers and investors. Giana has been working on carbon removal since 2015 when she co-founded Carbon 180, a leading NGO focused on carbon removal.

In this episode, we trace Giana’s journey from university at UC Berkeley to founding Carbon 180, her leap to start Carbon Removal Alliance, why carbon removal matters, what Carbon Removal Alliance aims to achieve, and what policy pathways she hopes to see. Lastly, for the policy wonks in the house, we conclude with a conversation on four specific pieces of budding federal legislation and one state level item that Carbon Removal Alliance is engaging on at present.

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Giana Amador Twitter / LinkedIn
Cody Simms Twitter / LinkedIn
MCJ Podcast / Collective

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Episode recorded on Jun 28, 2023 (Published on Jul 20, 2023)

In this episode, we cover:

[02:19]: Giana's climate journey and realization of carbon removal's potential
[05:13]: Her transition from Carbon 180 to Carbon Removal Alliance
[10:01]: Carbon Removal Alliance's focus on US federal policy
[11:00]: Overview of why carbon removal is necessary to reach targets
[13:45]: The current state of carbon capture and how much carbon has been captured to date
[15:10]: Distinction between land-based and engineered solutions
[18:34]: Carbon Removal Alliance’s technology-neutral approach
[20:25]: Membership growth and vetting process for new members
[22:14]: Need for standards and protocols to ensure market integrity and boost confidence for carbon removal purchasers
[24:36]: Decarbonization challenges in hard-to-abate sectors
[25:24]: Cost barrier for traditional industries adopting carbon removal vs. cheaper offsets
[26:15]: The need for internal climate teams to vet carbon removal projects
[26:54]: Incentives and market structures to encourage technology development
[27:28]: The tendency to emphasize tech solutions over regulation in US climate policy
[28:32]: Near-term priorities for federal policy
[30:00]: Challenges in securing first-of-a-kind project finance for carbon removal companies
[34:12]: Ensuring equitable support, standards, and incentives for technologies through federal policies
[49:40]: Important upcoming federal legislation: Create Act, CREST Act, Federal CDR Leadership Act, Farm Bill
[53:27]: How folks can get involved: Open Air Collective and Carbon 180's policy tracker

Cody Simms (00:00):
Today's guest on my Climate journey is Giana Amador, executive director of the Carbon Removal Alliance. Carbon Removal Alliance was announced earlier this year in February 2023 as a trade organization focused on advancing policies that support a diverse set of carbon removal technologies. Its membership consists of 20 plus companies in the carbon removal space, including technology startups like Charm Industrial, Heirloom, and Noya, as well as carbon removal purchasers and investors. Giana has been working on carbon removal since 2015 when she co-founded Carbon 180, a leading NGO focused on carbon removal. We trace her journey from university at UC Berkeley to founding Carbon 180, her leap to start Carbon Removal Alliance, why carbon removal matters, what Carbon Removal Alliance aims to achieve, and what policy pathways she hopes to see. Lastly, for the policy wonks in the house, we conclude with a conversation on four specific pieces of budding federal legislation and one state level item that Carbon Removal Alliance is engaging on at present. But before we start, I'm Cody Simms.
Yin Lu (01:18):
I'm Yin Lu.
Jason Jacobs (01:20):
And I'm Jason Jacobs. And welcome to My Climate Journey.
Yin Lu (01:26):
This show is a growing body of knowledge focused on climate change and potential solutions.
Jason Jacobs (01:31):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
Cody Simms (01:44):
Giana, welcome to the show.
Giana Amador (01:46):
Thanks, Cody. Super excited to be here.
Cody Simms (01:48):
Well, Giana, we have had many people from your past organization, Carbon 180 on the My Climate Journey podcast. You are one of the founders of that organization and you are now running an all together new organization called the Carbon Removal Alliance. And so, I would love to hear your background, how you originally got Carbon 180 going and sort of the opportunity that you saw needing to happen that caused you to create this all together new thing.
Giana Amador (02:19):
Yeah, absolutely. My climate journey started back when I was studying environmental science at UC Berkeley. I had grown up in the Central Valley of California and had a really kind of deep connection to the environment, I think for two reasons. One, because of California's immense natural beauty, but also because I grew up in a very agriculture centered community and experienced, while I was growing up, a number of the worst droughts on record in California that was really threatening my family's livelihood, but much more broadly my community's livelihood. And I think that really instilled in me when I went to UC Berkeley an interest in climate change and just environmental issues more generally. When I was at Cal, we were studying what it's going to take for us to meet our climate goals and to really fight climate change. But the way that we were viewing these issues so far was a very narrow lens on climate change as an energy problem. When the climate models really tell us it's much broader than that.
(03:19):
And when I came across carbon removal alongside my co-founder Noah Deitch, who was also at Berkeley at the same time, we saw this as a really immense potential to expand the scope of what our climate solutions were, put another tool in our toolkit and really help us move faster on climate change. And I think for me it was really exciting for us to see a completely blank space and imagine what was possible. So, a lot of the work that we did in the beginning days of Carbon 180 was really just try to tell the story of why carbon removal was important. At the time, no one knew what carbon removal was.
(03:57):
We were originally branded as the Center for Carbon Removal and oftentimes we were called the Center for Carbon Renewal, which even happened in a misquote in the New York Times, which was a big bummer for us. But really just working with private sector folks, with investors, with climate philanthropists, with policymakers to establish the need for carbon removal as our core part of our climate strategy. And I think we've really seen a lot of that work pay off, not only in part because of Carbon 180's actions, but because of a much broader ecosystem of carbon removal organizations and companies who have sort of since entered this space and really made this very exciting kind of budding industry.
Cody Simms (04:40):
And for those who want to hear more about the whole Carbon 180 story, we have had your co-founder Noah on the pod in the past. We've had Aaron Burns on the pod in the past. We've had Peter Miner on the pod in the past, so there have been quite a few representatives from Carbon 180, but we've never had you Giana, so happy to hear from you now.
Giana Amador (04:58):
Yeah, absolutely. Yeah, love that the Carbon 180 family has been on the pod and everyone who works there or has worked there has their own sort of incredible story around coming to carbon removal. So, definitely second having folks give those a listen.
Cody Simms (05:13):
So, paint the picture for us it's, I don't know, late 2022, moving into 2023, you now have decided, "Hey, I'm going to go do something different, but in the same space." What prompted the move, and what was the opportunity set that you saw needing to be solved?
Giana Amador (05:30):
Yeah, and I guess taking a step back, in 2018, Carbon 180 transitioned to a federal policy focused organization. So, our goal was really to leverage federal policy as a way to scale private sector action and to develop and commercialize these technologies, honestly using a playbook that we've seen for many other industries. I feel like the example that gets referenced here a lot is solar and wind, but really we can even think about it, those kinds of technologies that the US commercialized that help support GPS in our iPhones to date. So, we're using this sort of technology commercialization playbook and we were able, alongside the work of partners, to usher in a lot of the foundational carbon removal policies that exist today, like the research and development program at the Department of Energy, the $3.5 billion for the Direct Air Capture Hubs Program, as well as the updates to the 45 Q tax credit.
(06:24):
And I think what we saw with the passage and implementation of those policies was a number of new entrants into the carbon removal field and really the benefits that public investment can have on private sector action. And I think I was really excited about that theory of change. One thing that was really exciting to me when we first started Carbon 180 was just the connections to the solutions to the entrepreneurs who are working on these solutions. I love to hear about new technologies and I love to be a translator of that science. So, for me, going to the Carbon Removal Alliance was really an opportunity for me to go back to those sort of roots and be really in close connection with those entrepreneurs just on a personal kind of fulfillment level. I think in addition to that, having that direct connection to entrepreneurs and to folks in the private sector is what ultimately creates really high quality effective policy.
(07:20):
And I think we saw with some of the early carbon removal policies that they weren't quite right sized for the carbon removal industry. A good example of this is that the 45 Q tax credit originally had a capture threshold of 25,000 tons of CO2 to be captured for a direct air capture company to be able to access that incentive. And that was so much higher than the number of tons that any direct air capture facility was capturing. And so, we had to sort of go back and amend that piece of legislation to bring that capture threshold down to 1,000. So, having the opportunity to work so closely with these entrepreneurs means that we're able to kind of bridge the gap between those commercialization challenges and federal policymakers to make sure that whatever we're passing actually works for the industry and really it helps propel us forward faster.
Cody Simms (08:10):
So, what I'm hearing you say is kind of a key difference, and I want to go all into the nuances of the policy around 45 Q expansion and whatnot for sure. But at a highest level, what I'm hearing you say in terms of some of the differences between Carbon 180 and what you're now doing with Carbon Removal Alliance, correct me if I'm wrong, is that Carbon 180 is more of a think tank policy shop that is creating ideas and creating potential policies, recommending them on the hill, et cetera, lobbying in general for the industry at large. Whereas Carbon Removal Alliance is more of a trade organization representing individual company interests and trying to bring those into the policy conversation? Is that a good way to think about the difference between the two groups?
Giana Amador (08:56):
Yeah, I think that's a good summary. Really our goal is to unite the private sector perspective on carbon removal. That both means bringing in the folks who are actually building these technologies and trying to deploy them at scale, but also the carbon removal purchasers who are making carbon removal commitments as part of their sustainability or climate goals. And again, I think you put it nicely, we're trying to sort of bridge that gap between the folks who are actually developing these technologies in the real world and the policy that gets passed.
Cody Simms (09:28):
And so, do you all fund yourselves largely through member dues of the member organization? Like a trade organization would typically be constructed?
Giana Amador (09:37):
So, part of our revenue does come from membership dues, but we're also philanthropically funded. So, we're set up as a C3 and associated C4 organization.
Cody Simms (09:48):
Got it. Okay. Makes sense. So, given all of that and the focus is largely on policy change, is that correct? Or are there other areas that you're looking to sort of provide value into this nascent but rapidly growing industry?
Giana Amador (10:01):
Yeah, we're very focused on US federal policy in particular. We think that policy can really catalyze this industry. I think what makes carbon removal unique is that there's no real robust existing market for these technologies to sell into. And so, we really need public sector support to really drive that change and commercialize these technologies.
Cody Simms (10:23):
So, let's take a minute to take just a step back and set the carbon removal landscape for listeners who want to hear the big picture, why story. Maybe just do the quick overview of the global carbon budget, what the pathway is to 1.5 look like, and why carbon removal as an area to invest in and grow is more than a hedge, I would guess. It's more than a, Hey, if we don't decarbonize everything, we may need this carbon removal stuff, but it's actually maybe a bit more of an imperative is what I'm guessing you're going to tell us. But why don't you kind of rattle out the numbers for us just so we're all on the same page?
Giana Amador (11:00):
Yeah, absolutely. So, I'll start by saying that carbon removal is absolutely imperative for us meeting our climate goals, both the 1.5 degree target and the two degree target. So when we look at integrated assessment models, which are the models that sort of give us the scenarios towards success, the numbers are pretty shocking. We need to drastically and dramatically and very rapidly reduce emissions across all sectors, but we also need to use carbon removal in two ways. The first is to compensate for really difficult to decarbonize sectors. So, this might be heavy industry or agriculture emissions that we just don't have cost-effective technologies, or the emissions problem is very distributed in a way that makes it difficult for us to reduce those emissions.
(11:47):
And secondly, to clean up our historic emissions. So, to actually clean up the emissions that are already in the atmosphere, the numbers sort of vary widely dependent on how quickly we decarbonize, but estimates range that we're going to need to remove on the scale of 10 billion tons of carbon dioxide by 2050, every year. And that's a pretty significant number to put that in perspective, total global emissions right now are around 40 billion tons, so that's about a quarter of our total global emissions. So, this is a pretty significant sector that is a core part of our climate goals, but isn't really removing tons at a meaningful scale today.
Cody Simms (12:27):
Looking at the overarching sort of remaining carbon budget, we look at pathways of what reductions are likely to be over the next 15, 20 years in terms of, I guess this bakes in existing investments in fossil fuel that have a certain lifespan, it bakes into what the pathway toward decarbonizing might look like. And is that where you get to how this sort of 10 billion tons becomes the number to focus on?
Giana Amador (12:54):
Yeah, I would say it takes a number of different things into account. So, it takes into account how quickly it thinks that we can transition our energy system, the cost of other de-carbonization technologies, and it also takes into account our earth systems and how our earth systems respond to changes in emissions. And so, where that 10 gigaton number comes from is a combination of piecing all of these things together and modeling what we think will happen to the world if we both reduce emissions and also clean up carbon from the atmosphere. There's a number of different scenarios that in our governmental panel on climate change runs when they're making these assessments and publishing reports about the need for carbon removal. So, those numbers can vary really broadly from anywhere from two gigatons per year to 10 gigatons per year.
(13:45):
I think what's important here is not the specific number, but instead the order of magnitude that we need to be capturing carbon on the scales of billions of tons. And to put that in perspective of where we are with the industry right now, if we're talking about permanent carbon removal, so carbon removal that doesn't specifically come from land sector solutions and actually stays stored on timescales that's equivalent for how long fossil fuel emissions stay in the atmosphere, we've captured about 10,000 tons of CO2 per date. So, we're order of magnitude lower than we need to be. And so, that's why it's so important that we invest in a full portfolio of these solutions.
Cody Simms (14:21):
And I think other than maybe Biochar, which is starting to see some degree of scaled purchasing, most of those 10,000 tons have come from one company so far. They've come from Charm Industrial, if I'm not mistaken.
Giana Amador (14:34):
Yeah, that's right. So, the number I quoted is from the 2021 state of CDR, reports. So I think just in the past year and a half or so, those numbers have become slightly more optimistic. And of course we've seen private sector companies and coalitions like Frontier make advanced market commitments to purchase tens of thousands of tons of carbon removal. We know the Direct Air Capture Hubs Program will result in 4 million tons of carbon dioxide removed. So, we're taking these steps to getting towards scale. So, I don't want to be too harsh on where the industry is, but of course we do have a long way to go.
Cody Simms (15:10):
And you compared it to land use solutions saying that they maybe have decades or century-ish sort of storage potential. I presume this is mostly referring to forestry, is that a correct assumption?
Giana Amador (15:24):
Yeah, I put three sort of solutions in the land-based carbon removal solutions, so forestry, soil carbon sequestration, and the agriculture sector and then blue carbon, which is often mangroves or wetlands that we can manage to store carbon as well.
Cody Simms (15:40):
And the challenge with these is the removals are less permanent in that human interventions are likely to undo the work that happens, or they're less permanent from a technology perspective, or both?
Giana Amador (15:53):
I would say both. So, what these land-based solutions rely upon is utilizing our natural earth systems. And so, that often means that carbon is stored and then released through either natural occurrences or through human land management. So, we know for example, that because of climate change, more and more forests are moving from a carbon sink, where they store carbon, to a source of carbon. And the same is true with our agricultural soils, which are even more vulnerable to reversal because essentially carbon gets stored in soils when there's not a lot of disturbance. But of course when we farm, we till up a lot of the soil and oftentimes release that back into the atmosphere.
(16:35):
So, making sure that carbon actually stays in these natural systems is pretty difficult to account for and requires a lot of long-term monitoring that just isn't honestly in sync with the way that natural systems cycle carbon. It doesn't mean that they don't have value. I think more temporary removals have value for meeting our climate goals and they come with a host of other ecosystem benefits that we should absolutely care about, like biodiversity and water filtration and air quality improvements. But ultimately if we care about the climate math, we need to be removing carbon in a way that matches the length of time that our historic emissions stay in the atmosphere.
Cody Simms (17:17):
So, timescale seems like a big factor for you in considering what types of solutions, maybe a fit for Carbon Removal Alliance or maybe the kinds of solutions that you want to go advocate for new policies around. Looking at the solutions represented in your membership today and sort of listed on your website, it is a mix of some that I would call engineered solutions like direct air capture, which is truly using technology to remove carbon dioxide, and then a mix of some things that are sort of still natural solutions like enhanced rock weathering or biomass sinking. Is there something about these natural solutions or, I don't know if you wouldn't call them land use solutions, I don't know that makes them more permanent potentially than some of the categories we just talked about?
Giana Amador (18:03):
Yeah, it really comes down to the way that the carbon is stored and the timescales in which the carbon is stored. So, Carbon Removal Alliance's approach is really technology neutral. We know that this is a very new industry. I'll say when I started at Carbon 180, if you had showed me all of these companies logos, I would've been like, "There's no way. There's no way all of these solutions exist." And that, I think, just goes to show that in the last eight years, the field has really matured dramatically and there have been a number of new entrants into this space.
(18:34):
And so, really what we're trying to do with the Carbon Removal Alliance is push forward technology neutral policy to say, "We're not picking any winners today. We just want technologies that can meet a set of criteria." And so in particular, we're looking for carbon removal solutions that again, are permanent on timescales of over 1,000 years, are additional, are net negative, they're verifiable and they minimize any risk to communities, and maximize co-benefits for the locations in which they're deployed.
(19:04):
And that is really sort of the criteria that we're looking for when we're looking for membership. And that's also the sort of criteria that we're going to use when we're thinking about designing policies. When we're talking about solutions like enhanced rock weathering or bikers approaches, so biomass carbon removal and storage that have these intersections. With the land sector, it really comes down to the permanence and the verifiability of the carbon.
(19:29):
With enhanced rock weathering, for example, this is where you essentially crush up naturally reactive minerals into kind of a fine dust and oftentimes spread them over agricultural lands. What's different is the form in which the carbon is stored. So, in enhanced rock weathering, the carbon is stored in an inorganic form, which is often much more durable on longtime scales than organic carbon, which lives in the soils and has an opportunity to be released. So, it's really about that kind of form of carbon and our ability to measure it over time.
Cody Simms (20:02):
That's a super helpful distinction and makes sense. There's still innovations that are needed around how to measure this and be able to attribute exactly how much carbon is stored, but I guess the differentiating factor that it is essentially a full born chemical reaction as opposed to just relying on organic matter.
Giana Amador (20:23):
Yeah, exactly.
Cody Simms (20:25):
How do you see membership growing for folks who are interested in participating with Carbon Removal Alliance, what's the process look like to get involved?
Giana Amador (20:34):
Yeah, it's a great question. We would love to bring in new members and new leaders in the carbon removal space. Really what we're looking for with all of our members is, again, an adherence to those principles that we have listed on our website that I just went through. And we sort of go through a vetting process with each of our members to understand their technology, their business model, their policy goals, and sort of make sure that we're aligned, I think both from a mission perspective and also a principles perspective so that we feel like they're a good fit and going to be a good partner moving forward.
Cody Simms (21:08):
Well, it looks like you have roughly 20 organizations as part of it today. We've had 12 of them on the My Climate Journey Podcast in various ways, shapes, and forms. So, anyone who wants to really dive into carbon removal, jump into the archives, go look at the Carbon Removal Alliance website, look at the member organizations, and then Google those organizations plus My Climate Journey, if you want to dive into many of them and you'll be able to learn a lot. And so, it's fun to see us operating in very similar circles.
(21:35):
So Giana, what I would love to understand is you've got obviously suppliers in the alliance, companies that are actively developing technology for carbon removal. You have some buyers in the alliance, so groups that are looking to transact and purchase carbon removal like Frontier. I saw Nan from Stripe is the president of the organization with you. And then where else is innovation needed and is it in measurement reporting and verification? Is it on the registry side? Where do you see sort of continued growth in this industry needed on the business side? We'll get into the policy side here in a minute, and I want to spend the bulk of the rest of the episode on policy, but I just want to help set the stage on the business side first.
Giana Amador (22:14):
Yeah, it's a good question. I would say on the business side, one of the reasons why we felt strongly about bringing in these carbon removal purchasers is because they can provide a really unique lens in terms of where the market is today, and what confidence they need in the market in order to be able to purchase more carbon removal. I think obviously Frontier has been an incredible leader in this space and their story and their communications around carbon removal have inspired so many others, but the truth is that many corporates who have climate commitments and are interested in carbon removal that I talk to are still waiting on the sidelines because they don't feel like the market has enough integrity for them to enter this space.
(22:58):
So, I think ultimately what's needed on the business side is for us to develop standards and protocols that ensure that when a company purchases carbon removal, that they know what they're purchasing and they have faith that it's actually real. I know Peter Miner, formerly of Carbon 180, when he was on this podcast, talked a lot about this. But we really need to make sure that there is market integrity and that we don't experience some of the same challenges that the traditional carbon offset market faced when we're thinking about commercializing these technologies.
Yin Lu (23:35):
Hey everyone. I'm Yin a partner at MCJ Collective here to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have grown to thousands of members globally. Each week we're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change.
(24:02):
Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early stage investments have been made as well as ongoing events and programming like monthly women in climate meetups, idea jam sessions for early stage founders, climate book club, our workshops and more. Whether you've been in the climate space for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks, and enjoy the rest of the show.
Cody Simms (24:36):
You said up front, one of the big imperatives for scaling carbon removal was solving for hard to abate sectors. So, whether that's heavy industry, cement, steel, et cetera, air travel being another one. To date, most of the buyers of these technologies, I wouldn't probably put in that category. Airbus has I think made a very large carbon removal purchase, but other than them, it's mostly been these sort of technology companies that are kind of looking very forward-thinking at the future like Stripe, like Shopify, like Microsoft, and not traditional cement companies or steel companies. Where are the gaps there, you think, that will unlock these traditional industries that do have real de-carbonization challenges from jumping into this space?
Giana Amador (25:24):
Yeah, honestly for me it comes down to cost. A lot of these carbon removal solutions are relatively expensive compared to traditional carbon offsets. They obviously are providing... Carbon removal provides a much different value than a traditional carbon offset, which is typically for emissions abatement, emissions avoidance, emission reduction. So, I think it's important to say that people are providing two different services when we're thinking about traditional carbon offsets and carbon removal. But ultimately for a company who has a net-zero commitment, it's very easy to go out and purchase carbon removal offsets for prices of two to $10 per ton of CO2. If you're purchasing a carbon removal project that's much more in the scales of 100 to even 1,000 dollars per ton of CO2, depending on what company you're purchasing from.
(26:15):
And in addition to that high cost, any of the companies who are purchasing carbon removal today have basically built out their own climate teams who have expertise and are able to vet these projects. You can't just go and purchase carbon removal in the way that you would go and purchase something off a grocery store shelf. It's not simple for these companies to make these kinds of decisions and often it requires a lot of expertise. So, I think in order to get to those kinds of heavy admitters, we need to make it as easy as possible for them, which means bringing down technology costs and again, creating some sort of standard that allows people to understand what they're purchasing.
Cody Simms (26:54):
Hence I guess the focus on the policy frameworks, which is trying to create some degree of accountability around purchasing. Though it seems like most of the technology advancements today is less on the accountability and standardization front and is more on the incentives for technology development front. I'm curious how you view those two different policy leavers for you. It's sort of the carrot or the stick approach, and it feels like right now the industry is aligned toward carrots, right? Let's build incentive structures to get more of these technologies blooming, than it is let's punish the buyers to make them buy the right stuff.
Giana Amador (27:28):
I think part of that is just the sort of US frame on climate. The way that we do climate policy in the US is very technology development forward. It's about creating technology solutions as opposed to climate regulation. But I think those things can actually work very well in tandem. If you develop a new technology, you can develop an industry around it and you're essentially creating winners. When the solar industry was developed, those became basically a constituency that then was in favor of climate regulation.
(28:00):
So, I think there is sort of a missed opportunity here to think about how do we develop the carbon removal industry as a way to create more climate winners. That being said, from a policy perspective, I think there are sort of three near term priorities. One is increasing federal innovation funding. And I think in particular really focusing on getting first of a kind demonstration scale carbon removal projects on the ground to really understand how these technologies function at scale and to validate the technologies and to bring down costs.
(28:32):
Two is really what we were just talking about is market creation. Again, these solutions don't have a preexisting market in which they can enter, which means they have a really hard time fundraising or getting capital to develop projects because they can't prove long-term revenue. So, actually things like tax incentives or federal procurement of carbon removal can really help these companies in the short term create those sort of early proof of concepts.
(28:58):
And then finally around the standards piece, I think the federal government can do a lot to give these companies essentially measuring sticks of what are the qualifications that we need to see in a carbon removal project. A lot of that, I think, initially will be embedded in government solicitations of here are the requirements that we have for you to get government funding. But I think that sends a really important signal to the private sector to then build their infrastructure around that.
Cody Simms (29:27):
Super helpful. I was jotting down these notes because, I want to double click into each of these. So starting with the first one that you mentioned, increasing federal innovation funding, and you mentioned in particular funding to help a lot of these solutions build their first of a kind plant or facility or factories are the wrong word for what most of these companies are doing, but that's the equivalent thing I think of in my mind when I think of project finance. What are you seeing many of these companies need and where are you seeing this funding come from today?
(30:00):
I think we at MCJ would probably agree with you that this first of a kind project finance is frankly the single biggest gap in the capital markets today. There always could be more early stage seed money and venture money, but frankly it feels like we're at a decent place in the industry with that. There could always be more growth stage capital, but it exists. But boy, this first of a kind funding seems like it is incredibly hard to find for a lot of these companies. And it's even harder to find than potentially securing an initial advanced market commitment sale of product to someone like Frontier. So, does there need to be a Frontier like org in project finance? I guess that's the question I would ask.
Giana Amador (30:44):
Yeah, it's a good question. I would definitely agree with your sort of point of view on the space. I think we're hearing from a lot of Carbon Removal Alliance members that building their first 1,000 to 10,000 to 100,000 ton facility. And again, to your point, this looks very different across all of the carbon removal solutions is extremely capital intensive. And because they have a difficult time, again proving long-term revenue, it's extremely difficult to get that from the private sector. So, I think there's a big role that the Department of Energy can play in funding some of these demonstration projects and providing pretty generous cost shares, I would say, to help get some of these projects on the ground, and get some of those early lessons in. Where a lot of this funding is coming from today is from the Department of Energy's Fossil Energy and Carbon Management Program, which is referred to as DOE's FECM, little Alphabet Soup.
Cody Simms (31:39):
We just booked Dr. Jen Wilcox to come on the show.
Giana Amador (31:42):
Oh, awesome.
Cody Simms (31:42):
We haven't recorded with her yet, but she is coming on the show.
Giana Amador (31:45):
That's awesome. Yeah, definitely have appreciated Jen's leadership and the DOE as well as the work of many other people there as they're thinking about how they scale these technologies. This program was funded through the annual appropriations process and so far has focused really heavily on direct air capture. So, I think a big goal will to be expand this kind of research funding for other carbon removal solutions as well.
Cody Simms (32:11):
And so, would you envision this being something like a specialized version of what the loan programs office does in the DOE where it actually is able to identify projects that need financing that can't necessarily go get a bank loan because they don't have recurring revenue to be able to show, or they can get it, but they can't get it at maybe at great terms and the government is able to step in and offer better terms. What do you think that looks like in particular for carbon removal where in many cases there still is quite a bit of tech risk? My understanding is DOE, for the most part, assumes the tech risk is solved for and they're trying to solve for scale risk. I'm curious how you view carbon removal being different.
Giana Amador (32:53):
Yeah, it's a good question. I think for me it's about how do we link together all of the tools that the Department of Energy has in its toolkit to create a robust kind of tech to market pipeline for carbon removal. So, in some cases it might mean that the Department of Energy funds more up upfront applied research at the National Laboratories. It might mean that in the near term, the Department of Energy provides grants to help get 10 1,000 ton facilities on the ground. And in the long run, it might mean that the loan programs office creates a vertical around carbon removal that helps these companies scale more and more. So, for me, it's about creating that continuous connection because if not, any one of these companies could be stranded along that pipeline facing the challenges of the sort of traditional investment in fundraising markets.
Cody Simms (33:46):
And so, then let's look at the second category you mentioned, which is market creations. Many of these solutions don't have a preexisting market. Right now the business model for almost all of them is selling carbon removal credits, which is wholly voluntary. And as we talked about today, most of these buyers are what I would call forward-thinking tech companies that are kind of trying to help establish a market. What could the federal government do here?
Giana Amador (34:12):
Yeah, I think there are two big kind of market creating levers that I think about. One is a technology neutral tax incentive. So, we have seen that 45 Q has been extremely beneficial to direct air capture companies, especially with the updates that were implemented in the Inflation Reduction Act that increased the credit price to $180 per ton of CO2 for direct air capture plus sequestration. And so, we really need a tax credit that not only works for direct air capture, but again can apply to all carbon removal solutions. And the original 45 Q tax credit just honestly isn't designed to take into account some of the lifecycle assessment challenges that we see with other technologies.
(34:55):
So, I think we need to create a technology neutral tax credit that is more principles oriented that allows the market to sort of solve for high quality carbon removal but doesn't pre pick winners, essentially. I think the second lever that's really exciting is federal procurement of carbon removal. So, the government has a very big wallet and it's very used to purchasing products both to just implement its own activities, but also as a first market creator for things like low embodied emission concrete. And so, there's a long history of using federal procurement as a first market, and I think there's an opportunity for the federal government to do that here as well.
Cody Simms (35:37):
This would be the equivalent of them buying a bunch of EVs to power post office vehicles. Or procuring a bunch of solar power to run government office buildings, but using carbon removal credit purchasing as a way for the government to achieve federal government net-zero goals.
Giana Amador (35:54):
Exactly.
Cody Simms (35:55):
And on the former, you mentioned sort of tax credit, tax incentive structures, let's talk for a minute about 45 Q expansion. I want to come back to your third thing, which is around standards, but before we do that, so 45 Q expansion provided that $180 a ton purchasing benefit from the government, where they'll provide $180 per any ton that's sold is my understanding, or ton that's delivered I think is probably more accurate. But it's only for direct air capture specifically, is that true?
Giana Amador (36:25):
That's correct.
Cody Simms (36:27):
How did that happen? How did DAC emerge as the sort of the technology choice for carbon removal in federal legislation?
Giana Amador (36:37):
Yeah, well, I think it's important to recognize that the history of 45 Q was very focused on point source carbon capture. So, the original tax credit was focused on capture from industrial facilities and from electricity generation facilities. And the goal was to support energy de-carbonization. And because of that, there's a really easy framework for direct air capture to fit into, which is you capture carbon from one point and you store carbon from one point. And I think especially in the early days of the carbon removal field, direct air capture technology is one that's really intuitive for people. And it's also one where a lot of NGOs have historic expertise.
(37:20):
And so, throughout these conversations with staffers as they're thinking about broader updates to 45 Q, I think it was easy for direct air capture to fit into that policy framework. And it was also a technology where there was just a greater level of fluency on the hill, which made it sort of easy to fit into the first and second updates to the 45 Q tax credit. And that's sort of why we see direct air capture fitting in. I think there's a lot of work we can do to support broader education on the hill around carbon removal that can sort of expand the suite of solutions that policy supports.
Cody Simms (37:55):
And this is because direct air capture is essentially storing the CO2 in the same facilities that underground geologic storage facilities or whatever they may be, that heavy industry is using for its own point source capture, which is like if I run a steel mill and I'm trying to capture the emissions off of it and inject it in the ground. Or I run a natural gas operation and I'm trying to capture emissions off it and inject it into the ground, direct air capture basically is trying to piggyback on those same storage facilities. So, it was an easier sort of expansion, and I'm guessing,, you hold me accountable to this, that heavy industry has a very substantial lobbying presence on the hill as well. And so you already had oil and gas, you had steel, you had concrete, trade organizations also pushing for this because they saw this expansion as potentially being helpful to their customers. Is that an accurate assumption to make?
Giana Amador (38:50):
I think that's right. I would say there was a general push from larger industrial sources for the 45 Q tax credit, which created a lot of political will to sort of open up that policy. And because of that, it created a window of opportunity for the carbon removal field.
Cody Simms (39:08):
But what we're also saying, and I think it's important for people to understand this, is the Charm Industrials of the world who are doing bio-oil sequestration, the Running Tides of the world who are doing biomass sinking in the ocean, the Lithos Carbons and Eon Carbons of the world who are doing enhanced rock weathering, none of those solutions currently qualify for any federal incentives around carbon removal, is that correct?
Giana Amador (39:31):
Correct. And I think that's what the Carbon Removal Alliance is trying to shift.
Cody Simms (39:35):
Yeah, okay. Super important point that in many of our minds we kind of lump together all these solutions as one, but right now the access to funding from a federal government perspective is actually quite distinct based on the type of technology being deployed.
Giana Amador (39:50):
Yeah, absolutely.
Cody Simms (39:51):
Okay. One other big DAC benefit that came out of recent federal legislation is this three and a half billion dollars of financing for DAC Hubs, which again is also DAC specific, direct air capture specific. Could you maybe explain that a little bit and also maybe how that came to be and is it a similar kind of phenomenon there where it was some kind of expansion of existing sort of known capabilities on behalf of federal policymakers?
Giana Amador (40:20):
Yeah, so the Direct Air Capture Hubs Program is a program that was passed in the bipartisan infrastructure law, I believe at the end of 2021. And what it essentially does is creates four regional Direct Air Capture Hubs that each would capture a million tons of carbon dioxide per year, which is pretty significant. If you think back to the numbers that we were talking about in terms of the current scale of carbon removal, we're capturing tens of thousands of tons. This would increase global DAC capacity by over 400 times, which is extremely significant and really would help us test these technologies at scale.
(40:57):
In terms of where this came, from a policy perspective, I would say again, just the level of fluency that policymakers have on carbon removal is really focused on direct air capture. And because of that, we saw sort of a bipartisan group of policymakers, especially on the Senate side, really push for funding for direct air capture within this broader package. There is, within the bipartisan infrastructure law, another kind of hubs program that's focused on hydrogen, and this is kind of a model that the Department of Energy is used to. They have, for example, the Carb Safe Program. They're very used to sort of creating these regional contingencies for research, development, and deployment. And so I think they were really building upon that model and trying to extend it to direct air capture.
Cody Simms (41:45):
And so, my takeaway from all of this is, this is all wonderful, this is all good stuff, and it's a matter of we need a yes and right. It's "Hey, great, we need more funding to help support carbon removal around direct air capture. And we need federal support on some of these other solutions as well." Is that the right attitude to have from your perspective?
Giana Amador (42:06):
Yeah, 100%. I would say the levels of funding that we're seeing are so small compared to other technologies, for example, like solar and wind. And so, I think there doesn't need to be any competitiveness within the carbon removal field. We need to think about how do we grow this pie together?
Cody Simms (42:22):
You mentioned hydrogen, and to me, hydrogen is the other sort of big, it feels like government anointed winner out of the latest round of federal legislation. How do you see hydrogen as a presence on Capitol Hill, and how do you think carbon removal needs to grow its presence in similar or different ways?
Giana Amador (42:44):
I will give the disclaimer that I am not a hydrogen expert, but I think what's really important as we're thinking about growing political will for these technologies and getting to the next generation of carbon removal policies is to really think about how do we cultivate champions on the hill and with the administration. And honestly, I think a lot of that is done through storytelling and education in a way that the carbon removal field hasn't really tapped into. So much of our narrative on carbon removal is about climate math, it's about integrated assessment models, it's about our climate goals, which is really compelling to climate wonks.
(43:21):
But for members of Congress who are worried about their constituencies, they're worried about the economic wellbeing, the jobs, the air quality of the people who live in the districts that they represent, we need to tell a much more robust story about what the carbon removal industry can bring in addition to climate impact and what these projects actually look like on the ground. Which is another reason why I was so excited to go to the Carbon Removal Alliance, is to bring that real human element to the carbon removal conversation and say, "Look at this really incredible project in Arizona, for example. Look at the jobs it's created and here's the value that it's bringing to communities."
(44:01):
And I think that is how we get to that sort of next generation of political will. And I think it also makes these solutions feel more real. I think ultimately it's really difficult, even for me to say, "What does charms technology where we're taking corn stove and we're turning it into bio-oil and injecting it underground," actually look like much less for my grandparents to imagine that. And so, we really need for these technologies to feel more real and for us to prove them at scale, and again, to create these kinds of winners from technology deployment.
Cody Simms (44:38):
Well, to the extent these Capitol Hill staffers listen to podcasts, we have a dozen plus episodes, Giana, we'll make sure you have at the ready to share with folks. But I hear your point, which is oftentimes it's going and seeing the pilot facility-
Giana Amador (44:49):
Absolutely.
Cody Simms (44:50):
... And understanding what it looks like and seeing the product because it can feel kind of intangible otherwise, right?
Giana Amador (44:57):
Yeah, absolutely. I think it's about having that tactical feeling of what carbon removal is.
Cody Simms (45:04):
All right, so then your third bucket of priorities that you mentioned was around federal governments giving measuring sticks. So, understanding, you said starting with maybe federal solicitation. Maybe share a little bit more about what you're hoping to see here.
Giana Amador (45:20):
Yeah, it's absolutely imperative for the federal government to set standards for what high quality carbon removal looks like. I would say even after working in this field for almost a decade, there's no agreed upon standard of what good carbon removal looks like. And we see companies who are making advanced market commitments, design their solicitations in very different ways and emphasizing different qualities of the carbon removal that are important to them. We see that with federal government policies as well.
(45:49):
For example, there are two procurement bills that are currently introduced in Congress. One is the CREST Act, and then one was previously introduced in the last Congress called the Federal CDR Leadership Act. Both of them are asking for very different things in terms of monitoring, reporting, and verification and what qualifies or constitutes good carbon removal. So, for an industry that's trying to deploy these solutions and build robust monitoring, reporting, and verification protocols, they're basically getting 100 messages from 100 different people.
(46:21):
So ,I think there's a role for the federal government to come in and say, "Here's standards, here's what we care about. Here's how you compare all of these very different solutions in an apples to apple's way," and to provide that guidance to the private sector. And then also essentially, again, to use their purse or their wallet as a way to move people towards that quality. I think there's a real risk in the sort of next five years that we deploy projects that are unsuccessful or lack integrity in a way that sort of poisons the well for the rest of the field. So, it's really important that we get carbon removal right in this sort of inflection point for the field.
Cody Simms (47:04):
To some extent, it makes me wonder if, today it's obviously a fully voluntary field, if something like registration should be regulated. Or there should be compliance requirements around registries. I don't know. We haven't seen that happen in voluntary carbon markets historically. I'm curious, that's just a totally random thought from Cody. I'm curious to hear your reaction to that.
Giana Amador (47:30):
Yeah, I think the idea of registration, it could be implemented in a lot of different ways. I think what we are seeing is groups like the Federal Trade Commission or the SEC begin to think about how they might either provide guidance or provide regulation on how carbon removal is incorporated into corporate climate commitments. So, I think that's sort of one avenue in which we could think about the federal government sort of providing more credibility to some of the voluntary commitments. So, that's sort of one avenue I would share. There is other precedents in offset markets, for example, with the Growing Climate Solutions Act.
(48:09):
This is focused mostly on agriculture and forestry and goes much broader beyond carbon removal, but would essentially have the USDA create kind of like a third party certification or kind of a stamp of approval for these types of credits. And so, I think there's a lot of different avenues that the federal government could take in terms of providing these standards. I'm not going to proclaim to have all of the answers right now, but I think there's work that we need to do as a field to understand what is most going to support the private sector in accomplishing that. And I do think that we would want to be careful about creating undue administrative burdens for a lot of very kind of small, nascent companies at this point.
Cody Simms (48:54):
Yep, yep. Definitely. There's been so much energy in the last year or two, frankly, unpacking everything that did get passed over the last couple years from the Bipartisan Infrastructure Law to the Inflation Reduction Act and whatnot, and so many different provisions in those pieces of legislation. You mentioned growing Climate Solutions Act as one that's still being kicked around on Capitol Hill right now. What are the, going forward, pieces of legislation or bodies of discussion that are happening that you think listeners... This is going to go stale very fast, I'm sure, but still good to hear for this moment in time, what are the pieces of discussion that you think listeners should be aware of as it relates to carbon removal?
Giana Amador (49:40):
Yeah, there are four big things that come to mind. One is just recently in the Senate, the Create Act was reintroduced, which essentially creates a cross agency working group for carbon removal research to make sure that the research that's happening across all the different agencies in the federal government is effective. I think that would be a really important step forward to just consolidating a lot of the work and making sure that the federal government has a robust strategy in terms of research and development on carbon removal.
(50:10):
I think two and three are the two procurement bills that I mentioned earlier, the CREST Act and the Federal CDR Leadership Act. I think those are two really important signals in terms of what the federal government could do for procurement of carbon removal. And we actually are seeing the Department of Energy begin to design a pilot purchasing program. This is basically an authorization that was created in fiscal year 2023 appropriations to give DOE the authority to explore a pilot purchasing program. So, I think there's an opportunity here to see how DOE begins to implement that program and to build on that through legislation like the Federal CDR Leadership Act and the CREST Act.
(50:52):
I think finally one interesting opportunity is the Farm Bill. The Farm Bill is a piece of legislation that is passed every four years that authorizes a number of programs, but does focus on our agriculture and forestry. And so, I think there might be some interesting interconnections with solutions like enhanced rock weathering and bikers based approaches where they have these sort of interconnections with our natural systems and to use that as a potential legislative vehicle to move these things forward. So, those are the big things I would watch. I think our goal with the Carbon Removal Alliance is to sort of continue to push for more and more policies. So, I'm hoping in the next six months we'll see a greater number of carbon removal policies introduced.
Cody Simms (51:37):
And I know you're federally focused, oftentimes you do see state governments kind of coming out in front and leading the charge. Do you see anything happening at the state level in any states right now that's particularly compelling or interesting that folks should keep their eye on?
Giana Amador (51:52):
Yeah, there are a number of states that have carbon removal policies introduced, Washington, Colorado, Massachusetts, New York as well, and a lot of them actually follow some of these similar themes around carbon removal procurement or carbon removal grant programs. The one that I think is really interesting right now is in California, it's called SB 308, and it's very focused on alongside the California cap and trade system, essentially creating one of the first compliance markets for carbon removal that would require entities that are capped under the cap and trade. So, industrial facilities, electricity generators, to purchase a small amount of carbon removal as part of their climate commitment, essentially. And it's a small amount that would sort of ramp up over time, but I think that's a really interesting model for us to think about, especially because it is so compliance oriented as opposed to some of the incentives that we were talking about earlier.
Cody Simms (52:50):
What should people do who are listening who want to double click into the... You've mentioned five particular pieces of legislation, the Create Act, the CREST Act, the Federal CDR Leadership Act, and the Farm Bill at the federal level. You mentioned California SB 308 at the state level, and you said there's other stuff happening in Washington, Colorado, New York, Massachusetts as well, outside of California. For folks who are listening, if you're a company in CDR or in carbon removal who's listening, I'm sure your answer is probably, "Come talk to us at Carbon Removal Alliance." If you're a concerned citizen who's listening, who wants to get involved, what should people do?
Giana Amador (53:27):
Yeah, it's a good question. I would point folks to a couple different resources. I would say one, the Open Air Collective has been leading the charge on a lot of state policy, and they do a lot of engagement with citizens to help build political will for passing these policies. So, I would definitely say get engaged with the Open Air Collective folks. In addition to that, Carbon 180 has a policy tracker that's on their website where you can essentially go through every piece of legislation that has been introduced or passed on carbon removal, and it's an opportunity to sort of learn about what's included in these policies and kind of get a sense of what Carbon 180's take is on them. So, definitely encourage that as a resource as well.
Cody Simms (54:11):
And then my assumption is for you at the Carbon Removal Alliance in terms of engaging around these policies, part of what you do is listen to your member constituents, understand as startups, as buyers, what do they want to see happen, and then get in front of the policymakers and groups who are trying to push these agendas through or maybe trying to block these agendas and helping them understand the stories of your constituent members so they understand why these policies matter or why certain provisions that are being requested matter. Am I painting the right picture of your role in working on these things?
Giana Amador (54:45):
That's right. I think we're trying to be a bridge or sort of a translator between the carbon removal private sector and the policy space. I think in the near term, a lot of that is just going to be education around what are these other carbon removal solutions and why is a portfolio approach important? But of course, I think we also want to be pushing policies that really solve the challenges of our members. So, if folks are interested in membership or just collaborating on policy more generally, definitely encourage folks to shoot us a note. We have info emails on our website and are always happy to collaborate. I think one of the things I learned from Carbon 180 is just how much of a robust NGO ecosystem there is pushing for carbon removal policy and we could always use more.
Cody Simms (55:30):
Giana, I really appreciate you joining us today. You all are in the first inning of building this new organization, so thanks for coming on and painting a picture of what you're hoping to accomplish. And presumably you have a very exciting decade ahead of us in this space. So, we all wish you luck in trying to accomplish your goals, and we're here, I think collectively to figure out how to help you do so.
Giana Amador (55:51):
Yeah, thanks so much, Cody. Appreciate it. Definitely in the early days, but very excited to see what's to come for the carbon removal fields.
Jason Jacobs (55:59):
Thanks again for joining us on the My Climate Journey podcast.
Cody Simms (56:03):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity.
Jason Jacobs (56:12):
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Yin Lu (56:25):
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Cody Simms (56:35):
Thanks and see you next episode.