In this episode of Hardware to Save a Planet, Dylan is joined by Peter Reinhardt, CEO and Co-Founder of Charm Industrial. Peter talks about his company, its evolution, and approaches to championing the call to save the planet by converting biomass into a liquid, which can then be pumped back underground for permanent storage. Charm Industrial calls this “putting oil back where it belongs.”
In this episode of Hardware to Save a Planet, Dylan is joined by Peter Reinhardt, CEO and Co-Founder of Charm Industrial. Peter talks about his company, its evolution, and approaches to championing the call to save the planet by converting biomass into a liquid, which can then be pumped back underground for permanent storage. Charm Industrial calls this “putting oil back where it belongs.”
Charm Industrial is off to a good start, removing over 5,400 tons of carbon dioxide from the atmosphere in 2021 out of a total of 6000 tons of carbon removal deliveries. Peter acknowledges that there is still a lot of work to be done in the race against time to remove billions of tons of carbon dioxide per year in order to stay below 1.5 to 2 degrees Celsius of global warming.
Charm Industrial’s main source of motivation has been the support of well-known companies, starting with Stripe as its first customer and expanding to include Shopify, Zendesk, Facebook, and Microsoft, who have all bought into this approach with Charm Industrial to purchase carbon removals and scale up the effort to save the environment.
Joining us this week to explore this topic is Peter Reinhardt, CEO and Founder of Charm Industrial. Prior to Charm Industrial, Peter was the CEO and Co-Founder of Segment, a SaaS customer data platform that was acquired by Twilio for $3.2 billion in 2020. Peter is also a member of the Arcadia board of directors, and he is excited to help democratize access to clean energy and data.
If you want to learn more about Putting Oil Back Where It Belongs, check out the key takeaways of this episode or the transcript below.
Key takeaways
- 08:40- 09:30 – The Problem with Carbon Offsetting: According to Peter, approximately 97% of the offsets purchased by businesses are ineffective. As a result of this increased awareness, companies such as Stripe, Microsoft, Zendesk, and others are focusing on developing real carbon dioxide removal (CDR) solutions, pulling together almost a billion-dollar commitment to the cause.
- 09:52 – 10;56 – Scaling the entire process for long-term economics: While the understanding and awareness of carbon removal is expanding. Voluntary purchases will only go so far, and not far enough. Policymakers will eventually need to step in and build markets to accommodate the huge scale of carbon removal efforts.
- 15:24 – 17:09 – Logistical challenges with the first biomass conversion procedure: However, because the resulting biomass was “too fluffy,” the firm discovered that gathering up the biomass and delivering it to a centralized gasification facility was simply too costly. It’s large, heavy, and cumbersome, raising the expense of handling and transporting it.
- 08:55 – 09:17 – The impact of Charm Industrial within the sector: Charm now costs $600 for each ton of CO2 averted. This is substantially more than the majority of standard offsets and removals. By creating and deploying additional mobile pyrolysis units, Charm Industrial aspires to ultimately mass-manufacture pyrolysis units to lower unit prices, leverage on internal supply chain efficiencies, and minimize biomass transportation costs.
Transcript
Dylan Garrett: Hardware to Save a Planet explores the technical innovations that are giving us hope in the fight against climate change. Each episode focuses on a specific climate challenge, and explores an emerging physical technology solution with the person bringing it into reality. I’m your host, Dylan Garrett.
Dylan: Hello, and welcome to Hardware to Save a Planet. I’m very excited to be talking to Peter Reinhardt today, the CEO and co-founder of Charm Industrial. Peter and Charm are focused on carbon dioxide removal, or CDR. CDR is, of course, a big part of the climate change puzzle. In order to stay below 1.5 to 2 degrees global warming, we have to get to where we’re removing something like 10 to 20 billion tons of CO2 from the atmosphere every year. That’s on top of really aggressive emissions reductions. It’s a huge undertaking. Charm Industrial and Peter have a really innovative approach that I’m excited to learn more about. Welcome, Peter. Thank you for joining.
Peter Reinhardt: Yes, thanks for having me.
Dylan: I’m excited to learn more about what Charm Industrial is doing, the technology you’re developing. Maybe before we get into that though, I’d love to learn more about you and your background, and your path to climate change. Go back to childhood, if it’s relevant. What’s influenced you to get to this point?
Peter: If you go all the way back, I grew up in the rolling wheat fields of the Palouse in eastern Washington, in Pullman, and then moved to Seattle when I was five, grew up in the rain there. Really, I think, developed an appreciation for nature. My mom was always pushing on me to do good in the world. Got really into math, went off to MIT, studied aerospace engineering. Dropped out with my roommates and started a software company called Segment. A bit of a rough start to that company, a year and a half flowing around, but eventually found product-market fit and grew the company to about 600 people.
Then we sold the company in 2020 to Twilio for a little over $3 billion. In 2016 I had started getting interested in offsetting our emissions at Segment. We were emitting CO2 from power for our offices and food that we were catering, and people driving in, commuting to the office, and flying salespeople and so forth around to meet with customers. All of that emits CO2. We were trying to figure out how to reduce that, first, but there’s also a lot that you can’t reduce, like the flying, so we were trying to figure out how to remove CO2 from the atmosphere.
Ended up realizing that a lot of the offsets that we were buying were not doing anything, which is becoming more and more common knowledge, unfortunately. That sent me down the path of eventually starting Charm in 2018 with some friends from the aerospace industry, Sean and Kelly, and Kevin. It’s been a super fun ride over the last four years, especially the last two.
Dylan: That’s pretty incredible. You didn’t like the carbon offsets available, so you decided to go make ones that would do the trick.
Peter: Yes. It took a couple years. We spent a long time looking for good offsets, good removals, and it just didn’t exist. Eventually, January 2018 I was looking at it, and I was like, we have an interesting idea by that point of biomass gasification, producing an industrial chemical, and syngas, and also sequestering some carbon along the way. I was like, “This is an interesting idea.” There’s not a lot going on in this area, there’s not a lot of people working here, it’s a very thin frontier. I was like, “I’m running Segment, this is a bad idea, I should just set it aside.” I couldn’t let it go. I was just like, “I will feel terrible for the rest of my life if I don’t chase this down.”
We decided to give it a shot. Two years later, my co-founder, Sean, had a really key breakthrough, which was that we could convert biomass into this liquid bio-oil, and inject that bio-oil deep underground as a form of carbon removal. Putting oil back where it came from, if you will. This turns out to be a great idea. It’s a pretty cheap way to put carbon back underground.
It’s extremely permanent, it has low leakage, et cetera. In the last two years, that’s really taken off. We’ve booked something like 15,000 tons of removal now, from companies like Stripe and Shopify, Microsoft. Last year we delivered a little over 5,000 tons of removals, which, to put that in context, last year, global permanent carbon deliveries were 6,000 tons. We delivered 5,400 of them.
Dylan: That’s incredible. I do want to get into the details of Charm. I just think this story is really interesting, of getting there in the first place. Segment was a customer data platform software company. No specific sustainability mission. Do you think you would have gotten to climate change and climate tech had it not been for wanting to offset Segment’s emissions? If there had been a good solution there for offsets, would that have been it, and you would’ve stayed in the software world, or was this always your calling, you think?
Peter: I think something in hardware was always my calling. If we had found great carbon removals, we would’ve just bought those, and it would have been some other kind of hardware. Maybe back to space, since aerospace was originally my passion. I really love being able to build things that you can hold and see, and show. Software never really scratched that itch. Climate happens to be a great place to do it, since there wasn’t a great solution.
Dylan: How did you get hooked up with your co-founders?
Peter: They actually all worked with my wife at Planet Labs. My wife, Erica, was employee number 12 or something at Planet Labs, way back in the day right after college. I met all of them during that period at Planet Labs where they worked on the mechanical engineering team or electrical engineering, or so on. We stayed in touch and eventually got together as a team.
Dylan: I see. They were doing the space hardware that was your destiny, potentially. Got you. A quick tangent, Planet Labs makes small satellites that they use to image–
Peter: fleet of nanosatellites, these small cubesats that take a complete picture of the earth everyday at, I forget what resolution, a few meters resolution. Really amazing for changing the analysis of the world around us.
Dylan: Yes, cool. Actually you all have this aerospace background, other founders. Interesting.
Peter: A huge part of the company, actually, is also aerospace.
Dylan: Is there a connection there, or is that more coincidence? Is there something that translates well from aerospace to what you’re doing?
Peter: I think aerospace engineering is a combination of thermal structures, electronics, control systems, all of the components of building complex thermomechanical systems. A pyrolyzer, our process is a thermomechanical process. A lot of the fundamentals that you study in aerospace engineering or that you have to deal with in an aerospace company have a lot of overlap, in terms of a lot of the fundamentals.
Dylan: Charm Industrial and your solution, you’ve talked about it a little bit already. Can you give the high-level description? Go ahead, what’s a good high-level description?
Peter: At Charm, our mission is to return the atmosphere to 280 parts per million CO2. We’re currently at 420 or so. The way we’re doing that is by putting oil back underground. We take waste biomass residue, stuff like corn straw or sugarcane bagasse, or wheat straw, or forest operation, tree thinning, all this waste biomass that’s all over the world. We cook it down into this liquid called bio-oil, and then we inject that bio-oil deep underground.
That is a carbon removal pathway, because the plants absorb the CO2 out of the atmosphere, we capture that CO2 in the form of the bio-oil, and then once it’s underground it actually sinks in the formation, because it’s very dense, and then it actually solidifies, it has a lot of phenol content, and the phenol is polymerized into this phenolic resin and becomes super hard.
“Voluntary purchases will only go so far, and not far enough. Policymakers will eventually need to step in and build markets to accommodate the huge scale of carbon removal efforts.”
—Peter
Dylan: As opposed to CO2 gas, which would find an escape, I guess, essentially.
Peter: Yes. If you inject CO2, you compress it into a supercritical fluid and then you inject it into these permeable formations. There are great formations, you just need cap rocks and other impermeable layers that the CO2 doesn’t rise to the surface, but yes, the CO2 is buoyant, so physics is not totally on your side there. You then have to be pretty careful about the geology of where you’re injecting. Whereas with bio-oil, because it’s so dense, you don’t need the same kind of protections and cap rocks, and so on, because you’re going to solidify it.
Dylan: Your customers are people like Segment, looking to offset their emissions. That’s the business model.
Peter: The business model, to begin, is selling to companies that want to offset their emissions. It happens to be really well aligned, I think, with software or technology companies. First customers are Stripe, the payments company, Shopify, the e-commerce platform, Microsoft, Zendesk, the help desk support service, Figma, the design product, Square, also known as Block, the payments company. Lots of software and tech. Part of the reason for that is that, obviously, tech companies like to believe in technological solutions, but also tend to have pretty small footprints of emissions relative to their total revenue and profit margin, if you will, as compared to industrials.
If you’re a steel manufacturer or you’re drilling fossil fuel out of the ground, or something like that, you’re emitting a lot of tonnage of CO2, and it is not cost effective to remove. There is no world in which you are going to pay $600 a ton to put CO2 back underground if you are a steel manufacturer. That’s just too expensive. It’s not a great fit there. That’s who we sell to today. We have about 40, 50 different customers. There’s been some exciting things happening in the world of buyers.
Stripe Climate has evolved to be Frontier Climate, which is an advanced market commitment. They pulled together a $925 million, almost $1 billion commitment from Stripe, Shopify, Google, Facebook, and McKinsey to purchase carbon removals and help scale up the ecosystem. From three years ago, two years ago, there were zero buyers of permanent carbon removals and now there’s over $1 billion committed maybe, and probably accelerating pretty quickly beyond that. The demand side of the equation has really shifted a lot over the last two years.
Dylan: Did you see that coming when you started getting into this?
Peter: Certainly not in this shape, but in structure, sort of. I was trying to buy something like this and it didn’t exist, and it seemed it was necessary. Out of confusion, I guess, we were like, “Shouldn’t this thing exist?” Turns out, yes, it should, and it turns out, yes, other people are realizing the same thing, and yes, they will buy it. I think voluntary purchases will only go so far, maybe tens of billions. Beyond that, we will need policymakers to step in and create markets, things like the low-carbon fuel standard in California which effectively creates a– It’s a cap and trade system on refineries in the state. Carbon credits in that system trade at $100 to $200 a ton. We’ll need more markets like that to be created through policy action.
Dylan: What was wrong with the other offsets? Is it mostly natural sinks or can you talk about that?
Peter: Natural actually is awesome. It’s great if there’s a natural way to do it. The problem is that most of the existing offsets, nature-based or cookstoves, or destruction, or what have you, soil carbon etcetera have very low permanence. The carbon doesn’t actually stay out of the atmosphere for very long. Low additionality, which means that whether you pay the money or not the thing is probably going to happen anyways. High leakage, which is even if you prevent carbon emissions in this area, it will probably just pop up somewhere else.
Examples are, let’s say you set aside some rainforest in the Amazon or in Indonesia, which is what we did the first year at the Segment. It’s not very permanent because even if you protect that section of forest, eventually it’s going to burn down in a forest fire, or you could have like a change in regime in Indonesia and ownership doesn’t matter anymore, or you could have a change like we have seen in Brazil where actually there’s a president now in Brazil who’s really encouraging deforestation. These are exogenous risks that you can’t really control just by buying the rainforest.
You also have leakage in that, you protected this section of forest but deforestation pressures still exist, and so they may just cut down the forest next to it instead of that forest. These things are really hard to measure. Even though it’s a beautiful concept we set aside rainforest, and it’s super important for ecosystem protection, and we should do it just for the ecosystem protection, the actual carbon impact is much, much less clear.
That was the feeling that I had. Now more recently the scientific literature has, I would say, validated that. Some of the most recent analyses from Stanford, Berkeley, and Oxford, like the Berkeley Carbon Trading Project found that something like 97% of the carbon offsets that are bought do nothing. That 3% that remains is good, I guess, but it means you have to multiply the real price by a factor of 30 to understand what you’re really buying.
Dylan: Wow. Do you see that these buyers you talked about, these tech companies are savvy to that and willing to pay for the permanence?
Peter: That’s exactly right. People have become very savvy about it over the last few years. All of these buyers, the reason they’re looking is because they’re like, “Wait a second. When I buy this stuff, this is greenwashing. I’m not actually having the carbon impact that I’m claiming. Therefore we need to go develop real carbon removal solutions.” That means paying a really high premium for technologies that are just starting to come down the cost curve. What’s motivating the Stripes of the world, the Shopifys of the world, the Microsofts of the world, et cetera.
Dylan: When you say permanent, is there a time scale on this or it’s permanent?
Peter: Usually the standard is 1,000-plus years. I think most of the analyses of Charm are 10,000-plus, probably millions of years. It’s a little hard to say, a very long time.
Dylan: That’s a lot of years.
Peter: Whereas a lot of nature-based stuff or forestry-based stuff is often more like 10 years, 20 years of permanence which might help with shaving the peak warming that happens over the next few decades, but it means we’re going to be paying a constant ongoing tax for emissions because when you admit a ton of CO2 in the air, it doesn’t come out. It’s up there permanently. If you’re going to actually truly undo that action, you need to go remove it permanently.
Dylan: Maybe this is a stupid question but could somebody drill– You’re putting oil under bio-oil underground so could somebody go extract it again and use it?
Peter: That’s a good question. Actually, one of the funniest tweets to me was when we announced our first delivery, someone tweeted back, “Shell announces new discovery in Oklahoma.”
Dylan: [laughs] Exactly.
Peter: I thought that was hilarious. The short answer is no. The reason is that the bio-oil solidifies. Even if you pump it out, it’s a frigging nightmare. Bio-oil has very low energy content. It’s about one-third the energy content of crude oil. Maybe if we let it cook down there for a few million years, then it might turn into a nice high-quality crude but not in our lifetimes.
Dylan: Not worth drilling out, extracting. Can you talk a little more about where the idea came from? It’s clear you identified a need and problem and went out to find it. Can you talk about the evolution of that to where you are now?
Peter: The fundamental insight came about two to two and a half years ago from my co-founder, Sean. We were trying to do biomass gasification. There’s a bunch of industrial processes that rely on hydrogen or syngas, which is hydrogen plus carbon monoxide, things like ammonia production which is fertilizer, methanol production which is plastics. Hydrocracking in a refinery. Hydrotreating in a refinery. Steel manufacturing can be done with syngas. All of those things I just mentioned are probably pushing 15%, 20% of global emissions.
All of these heavy industrial processes depend on hydrogen and syngas. You can make hydrogen and syngas from biomass gasification where you take biomass and you heat it up to really high temperatures, and it just decomposes into syngas. That was the original idea, we were just going to centralize a bunch of biomass to a facility. Gasify it, and boom, feed that facility. The challenge that we ran into is that the transport costs of the biomass were very high because when you bring that biomass to the central facility, it’s really fluffy. Biomass is just fluffy. It’s very diffused.
Dylan: We’re talking corn husks and almond shells, and stuff.
Peter: Yes, exactly. Bale and straw basically.
Dylan: Straw.
Peter: Bales of corn straw is maybe the most voluminous example in the US. It’s just not very dense. You just can’t transport it very cost-effectively. It’s solid, it’s blocky so you have to have forklifts moving around to unload it. It’s a pain. Every time you touch biomass, it explodes in cost. That was where we were stuck. Then my co-founder, Sean, had this really interesting idea. He’s like, “What if we split the gasifier into two machines? The first machine is out at the field and converts the biomass on the field into a liquid bio-oil.” We do half-arsed gasification where you only go halfway to this liquid.
Now we have a pumpable fluid that’s 10 times as dense. This is really easy to transport. Now we transport it either by truck, by rail, by barge, whatever. Then we bring it to the central facility. Then at the central facility we steam reform or gasify the bio-oil into the syngas. The same thing, we just introduce this intermediate pumpable fluid. It turns out this is a huge win for economics, and everything works. That was the fundamental insight. That was the long-term model. Then we were trying to figure out how to get to scale?
You could see that in the long-term economics, it works. The question was in the short-term, how do we get started? What’s the premium market that people will pay for when this stuff is initially expensive to produce? Weren’t clear on how to do that. We produced some bio-oil and I started to feel Sean was getting distracted. We’d made some bio-oil and he was trying to figure out how to dispose of it. I was pretty frustrated with that, to be honest. I tried not to show it but I was like, “Dude, who cares?” Whatever. Proper disposal of bio-oil was like, sure, we should solve that eventually, but this is not a top priority.
He found a couple of different disposal methods. One of which was incineration. The other was to inject it down a well. Then I think, I don’t know, a few days later or something, he was like, “Wait a second. If we inject it down a well, isn’t that permanent carbon removal?” We chatted and I was like, “Interesting.” We built a financial model and we’re like, “Wow, it’s cheaper than direct air capture. That’s interesting.” We went to Stripe and we were like, “What do you think? Should we apply this? Your deadline for your first carbon removal RFP is in 48 hours. What do you think?” They were like, “Yes, please apply.” We’re like, “Okay.” We applied, they gave us an award for $10,000 or $50,000 to go do it, and off to the races.
Dylan: Wow, that’s amazing, because that’s a technique I’ve heard other people talking about now, but at the time that was a new insight.
Peter: Pumping bio-oil underground was Sean’s original insight. We got a patent pending on it now.
Dylan: That’s awesome. It would be awesome to get a physical visual for what kinds of things we’re talking about here. I guess bio-oil, can you talk a little bit more about what that is exactly? You’re taking corn straw, heating it up. Maybe just walk through the process. You take corn straw, you heat it up. What happens?
Peter: We take corn straw, corn stover, that’s the proper word. We grind it into tiny little dust. Then we vaporize it. When we vaporize it, we get a vapor train that has a couple of things in it that we separate out. First, we separate out the char, which is carbon and ash. That goes back to the field, improves soil nutrients, water retention, microbial, little hook towels, et cetera. Then we condense out the bio-oil. That is the liquid carbon, basically carbon, hydrogen, and oxygen, but 50% carbon or so.
Then we are left with these non-condensable gasses, which is like some stuff that we burn for emissions control and eventually we’ll provide power to run the whole system. Those are the three things we get out. The bio-oil itself. You should think of it as the consistency of molasses. Pretty thick, little viscous, and has the overwhelming odor of barbecue. Actually, bio-oil is the smoke flavoring in barbecue sauce. Just imagine only the smoke flavoring, super pungent. That’s a bio-oil.
Dylan: I guess selling it to the smoke flavoring industry is not a massive market for you.
Peter: Correct. It’s also a saturated market. People already do it today. You just add hickory smoke flavor.
Dylan: Got you. I guess the trade-off of bringing these pyrolyzers to the source of the biomass is that you need a lot of pyrolyzers at all of these different agricultural sites, right?
Peter: Yes, a huge fleet of pyrolyzers. We, today, have one research and development pyrolyzer. We also are buying– We’re just all about speed and trying to learn as quickly as possible. Currently, we are purchasing waste bio-oil and injecting it so that we can learn as much as possible about the injection, because the injection is a really weird new thing. We’re also buying third party pyrolyzers. Soon we’ll be operating those. That’s so that we can learn 24/7 operation. All the things that you need to answer for operations.
Like how do you hire people on augmented work schedules to work 24/7 shifts? What happens if someone doesn’t show up for their shift? How do you do maintenance? How do you do training? How do you do insurance? All of those questions that need to be answered. Then we are building our own pyrolyzers as well that are fit for purpose, optimized for operating in the field, maximal process intensity and tonnage, etcetera. We’re doing all of those things in parallel. The pyrolyzers that we produce will eventually operate as a huge fleet. Thousands, tens of thousands, maybe hundreds of thousands of them.
They’ll be deployed much like custom harvester units. At harvest time in the Midwest, you have combines that are operated by these groups of mostly young guys who they say have 10 combines and they started a field in Texas. For a farmer, they go and harvest the whole field. Then they jump 100 miles north, drive all their equipment 100 miles north and do it again for another farmer, maybe in Texas, maybe north in Oklahoma.
Then they jump another 100 miles north all the way up to North Dakota for the wheat harvest. Then they come back for the corn harvest, and do the whole thing again. Instead of one farmer, every farmer owning $1 million combines have those combines amortized over a whole bunch of farms in a much longer period of the year where they’re getting used. It’s much more capital-effective or cost-effective. We’ll operate the pyrolyzers in a similar model. Roving band of carbon-removing nomads, I guess, moving around to wherever the currently available biomass is, and converting it into bio-oil.
Dylan: Those will be operated by term industrial employees.
Peter: For the foreseeable future.
Dylan: Do you buy biomass?
Peter: We do. This is actually what’s so important when I said biomass was fluffy. Maybe I should have given you some numbers of the cost, because that’s really how you can see how fluffy it is. If you want biomass delivered down the road, even a few miles, it’s $125 a ton. If you just want the biomass at the edge of the field, it’s $65 a ton. Half the cost just by eliminating a few miles of truck transport. Then let’s say that you actually don’t even need it at the edge of the field. Let’s say you pick it up on the field, so you get to skip the windrowing and the baling, and the transport to the edge of the field.
Now it’s 0 to $15, or maybe 10 to $20 a ton. Then let’s say that the main cost left to the farmer is nutrient replacement, putting potash back on the field because you took some potash off in the biomass. Remember, the char and the ash comes out of our process when we put it back on the field. What’s that value to the farmer? Probably $5 to $10 bucks a ton. Now you’re talking about $0 to $15 a ton for the biomass as it’s sitting on the field if you’re going to do nutrient replacement. Literally have a 10 to a 100x reduction in cost of the biomass by operating in this fashion. At scale, it becomes the dominant part of the cost structure.
Dylan: I guess even putting that ash back, if you weren’t doing it on-site, you’d have to be transporting that back, paying the– That’s interesting. You get a lot of knock- on benefits from it. That cost reduction of the biomass itself is a big part of what’s enabling your– Maybe we should talk about this. What does it cost to buy a ton of emission reduction or offset from Charm Industrial?
Peter: I’ll create some of the market contexts too. You can buy the really low-quality offsets that have low permanence and additionality, and leakage, and so on today are available for anywhere from 50 cents to $20 a ton. Maybe even higher than that now because there’s a lot of competition, maybe $30 a ton, but for the most part it’s not doing anything. If you want to buy high-quality stuff, the price for things delivered today varies from, call it $300 a ton where the permanence is maybe still a little questionable, up to $2,000 a ton for some really new methods like mineralization capture. Charm is in the lower middle of that, around $600 a ton. The only other–
Dylan: Today.
Peter: Today. The only other operating thing today is direct air capture from Climeworks. That’s about $750 to $1,000 a ton. Then in the long run, direct air capture is expected to get down to about $100 a ton. Bio-oil sequestration from charm is expected to get down to maybe $50 a ton.
Dylan: Just what economies of scale. Is that the main opportunity?
Peter: Economies of scale and shifting the biomass from being delivered to being on the field with nutrient replacement.
Dylan: You said that the injection is novel, or the injection process is novel. Can you tell me what about that novel, and have there been hardware challenges associated with that?
Peter: What’s novel about it is prior to us, no one had ever injected bio-oil before. What’s odd about it is it solidifies, it’s acidic, things like that that mean that you have to spend some time thinking about what’s going to go on in the subsurface in terms of target formations. Are you going to inject into a carbonate-type formation or are you going to inject into a sandstone-type formation, or it obviously needs to be permeable, but so on and so forth. There’s a bunch of considerations about what’s your target formation?
There’s considerations around the construction of the well bore, because it’s acidic. You need steel that is designed to be corrosion resistant. You want to make sure that your injection into your bio-oil is not leaking out through the edges of the well or something, and to make sure it’s not leaking into any areas that have underground sources of drinking water. Super important for EPA compliance and permitting. To do that, if this is standard, you need an outer sheath or casing, an inner casing as well. Then you pressurize the long doughnut in-between with brine. Then you measure that pressure so that you never have a leak in-between the two casings.
Anyway, all of those kinds of things go into things like the well design, the formation selection. Then of course the well operation, dealing with things like a solidification of the bio-oil and so on. Injection is definitely the weirdest part of what we’re doing. It’s also a huge engineering challenge to build a 10-ton-per-day mobile pyrolyzer that can operate on the field and so on. We have these dual things of like a little more research-y to some extent on the injectional side, and trying to get field data as fast as possible. Then of course a long-term engineering challenge on a building like cost-effective bio-oil production.
Dylan: What would you say is then the biggest hardware challenge so far.
Peter: Maybe an example of a hardware challenge. One of the reasons why we test in the field is, for our own pyrolyzers, we started designing our first 10-ton-per-day machine at this time last year. Started construction in August. Finished construction, and started deployment in December to Kansas, and started learning in the field early this year. Learned pretty quickly that corn stover has cobs in it. Cobs don’t like to go through augers, at least small augers.
They get jammed there. The team did an amazing job of redesigning biomass conveyance systems to work with cobs. It’s the sort of thing that you can’t learn, you wouldn’t forecast until you get out in the field and you’re like, “Yes, it does have cobs in it, it turns out.” We were testing with wheat straw in San Francisco, and so you get to Kansas and you test for corn stover, that’s just the reality. Anyway, those are the things that we’re learning. That’s just one funny example of that.
Dylan: What do you see on the horizon? I guess from a hardware standpoint, you said building your version of a pyrolyzer is a big challenge. In the injection side as well. Any specific challenges looming that have risk yet to retire?
Peter: There’s always a risk everywhere to retire. Probably 75% of our engineering team is focused on– 90% of the company is engineering. Of those, probably 75% of the engineering team is focused on our own pyrolyzers that are fit for purpose to maximize appropriate yield and production, and cost-effectiveness. Then another 25% of our engineering team is focused on gasification.
Once we have the bio-oil centralized, can we make it into the industrial syngas that we mentioned before? In particular, for steel manufacturing, because then we could make fossil-free steel, which would be very exciting because then you would go from– Every ton of steel that’s produced currently emits about two tons of CO2? If you could flip that around and we could sequester a ton of CO2 for every ton of steel produced, that would be pretty game-changing. You’d go from 8% of global emissions from steel to whatever, minus 48% of emissions. A huge swing.
Dylan: Interesting. This would be a totally parallel revenue stream to the injection and offsets.
Peter: Yes. We could either apply the bio-oil. If you think of bio-oil production as the horizontal platform underneath, we can then either apply the bio-oil to direct bio-oil injection or, we could apply it first to iron-making, followed by injection of the CO2 off the back of that process underground. Either way, the CO2 ends up underground, but in one it’s a little more direct, and then the other way indirect, but we get iron out to the side as well, fossil-free iron.
Dylan: I said at the beginning of the show, and I’d be curious if you think this is the right number. I’ve read that we should be removing 10 billion tons of CO2 from the atmosphere every year in order to reach this goal of limiting global warming. That’s a pretty big number. What was the number we globally removed last year, you said?
Peter: Last year was 6,000 tons.
Dylan: 6,000.
Peter: You’re right. We need to get to about 10 billion tons by 2050 to stay under 2 degrees. The industry needs to grow by a factor of 1.5 million, almost 2 million X by 2050. It’s about 65% compound growth for 28 years, twice as fast as software.
Dylan: [laughs] That puts it in perspective. I don’t know, how does that make you feel?
Peter: It means that once there’s a system that works, we need to be deploying it at wartime mobilization levels. I don’t think that the urgency for that from the public exists yet. The bet is that by 2030, we’ll probably be seeing enough of the effects in our daily lives that we might get there. That’s 2030 and beyond is when really the scaling efforts start.
Dylan: That’s when the scaling efforts are needed, or that’s just when it’s possible to get it.
Peter: That’s both when it’s possible. Also, that’s also when the total amount of dollars necessary to deploy that much steel, and because you got to build this stuff. Just direct air capture on its own, if it was the sole provider of that 10 billion tons, would require something like 5% or 10% of global steel production in 2050. It’s like you’re talking about deploying a lot of hardware. Maybe by 2030, 2035, 2040, when we’re really starting to be on the absolute dollar amount, when we’re starting to be on the steep part of that curve, I think the public support to do it will be that much stronger. It’s just going to get stronger every year as we keep admitting more and as we keep seeing more and more warming effects. That’s the bet.
Dylan: What do you hope Charm Industrial will look like in that time, I guess in 10 years?
Peter: I think Charm’s impact probably maxes out around a couple billion, maybe 5 billion, 10 billion tons of removal for the current product set. Call it 5 billion, maybe 10 billion tons a year of removal, plus a similar impact on steel production of, call it 3 billion tons a year. I think we max out with the current products at around 8 billion to 12 billion tons a year of potential impact. That’s a lot.
Dylan: That’s it, right? That’s a big-
Peter: Sorry, that’s not just covering removal. That’s 12 out of the 50, because that includes both reductions on the steel side and carbon removal stuff going on.
Dylan: Got you.
Peter: Call it 12 out of the 50 is maybe the best that we could hope for, but that would be super exciting. That would be incredibly thrilling.
Dylan: That’s an insane amount of growth from where we are today. That’s exciting.
Peter: 5% per year. It’s hard.
[laughter]
Dylan: That’s cool. I guess thinking about those numbers and knowing what it takes to get there, on a scale of we’re totally doomed to we’re good to go, what’s your perspective on the future of the planet?
Peter: We’re not in a good spot. We’re in a tough spot. You draw the Gantt charts back from 2050, like we’re doing with the 65% growth rate that’s necessary, it doesn’t look great, it’s very tight on timeline. You can do the same in the steel industry. You’re like steel is 1.8 billion tons a year of steel production. Only 100 tons has ever been made fossil-free. That was last year, a one-time delivery. This year, zero tons will be made fossil-free. That’s an even steeper curve. You just do that again and again, what about ammonia? What about methanol?
Let’s just go down the whole list of all the industrial stuff. Even on solar, even on renewing the grid and electric vehicles, these are steep curves, and they get steeper every year because we generally have been missing. On the flip side, the conviction in the public gets stronger every year. At some point, those two curves will cross. I’m hopeful in that sense that if the demand side was fixed, then we’re screwed, but the demand side is not fixed. The demand side response to what we see in the world around us. I think there’s hope in the sense that over the last five years, we’ve for sure seen a massive shift in the demand side.
If that trend continues, then I think we have a shot. It’s not like all humans are going to die or anything like that, it’s just going to be what climate change will actually probably look like is a bunch of economic shocks. Economy is doing more poorly than they should and people are getting put– massive refugee crises as people need to move out of low-line places like Bangladesh. It just looks like an unhappy, somewhat miserable world, and a lot of death in ecosystems. I think it’s probably a long way. I wouldn’t call it civilizational collapse or things like– It’s just a lot of costs and a lower quality of living for all of our children, which is not what we want.
Dylan: We see a little bit of that today and those effects, or maybe a lot of that today, but it would just be that amplified dramatically. A couple more questions. Who is one other person or company doing something to address climate change that’s inspiring you right now?
Peter: Maybe I’ll call out two. One is just really inspired by–
Dylan: Even better.
Peter: I’ll try to name some that aren’t normally named. Monolith materials. Rob Hanson and team there. Still an amazing job of building a really interesting business. They’re doing methane pyrolysis where they produce carbon black for car tires and simultaneously fossil– They produce clean hydrogen, hydrogen that has no fossil CO2 emissions. That hydrogen could be used for ammonia production, it could be used for a whole bunch of other things.
That’s really promising from decarbonizing or getting to zero emissions for ammonia and other products. That’s an amazing innovation. They’ve been at it for a long time and they’ve nailed it now. Really scaling up. Another is Sila-nano Gene Berdichevsky there. They make a new Silicon-based anode material for batteries. They’ve raised over $1 billion and are starting to scale up production. It’ll effectively expand battery capacity by 20%, 30%, which is pretty meaningful if you think about car batteries and so on, just having 20% or 30% more more capacity and range, and so on. Both of those companies are.
Dylan: How do you spell the second one, Sila?
Peter: S-I-L-A, nano.
Dylan: Cool. I’ll look them up. What advice do you have for someone who isn’t working in climate tech today, but wants to do something to help?
Peter: I guess very tactically if you want to go work at a climate focused company, there are great resources like Climate Base, Climate Draft, My Climate Journey, Air Miners. A bunch of these communities are forming around, helping people get careers launched in climate. There’s a lot of hiring happening in the industry. Those are great places to start. I think also though, there’s not enough companies, there’s not enough products being built. It’s a very thin frontier. I don’t think people fully appreciate that. If you look at the entire size of the software industry today, the entire software industry is 500 billion a year in revenue.
The profit margin, the EBITDA associated with the climate transformation is 10 trillion. The transformation that’s underway in climate is on the order of 10, 20 times larger, maybe 100 times larger because we’re comparing revenue to profit, maybe 100 times larger than the transformation in software. It doesn’t have to be just concessionary do-gooderism. There is a huge economic transformation underway and a lot of successful companies are going to be generated out of that. The field of companies competing in each of these new areas is very slim.
Like in carbon removal, for example, in terms of real companies taking a stab at things now, it can’t be more than two dozen that are really taking a serious stab at it. That’s like a long dinner table. I mean, that was the experience last September, Climeworks had their conferences in Switzerland. The whole industry basically showed up and we sat around two tables.
There were several representatives from each company, the whole industry. Just when you think about that, there are many, many unexplored avenues for carbon removal. No one is really working commercially on methane removal as one example. There are so many areas that are just deeply under-explored in climate, and it is the biggest economic transformation of probably a century. I just think there’s a huge amount of opportunity there that people should be excited to go take on either by working at an existing company or starting their own.
Dylan: I love it. It’s a huge opportunity to go get it.
Peter: Exactly.
Dylan: That is a very nice call to action to end on. I appreciate that. Thank you, Peter, for all your time. I learned a lot today. It’s really inspiring to hear about your mission and where you’re heading. Thank you.
Peter: Thanks so much for having me.
Dylan: Hardware to Save a Planet is brought to you by Synapse. To find out more about us and how we develop hardware solutions for the world’s most ambitious companies, head to synapse.com, and then make sure to search for Hardware to Save a Planet in Apple Podcasts, Spotify, and Google Podcasts, or anywhere you like to listen. Make sure to click subscribe so you don’t miss any future episodes. On behalf of the team here at Synapse, thanks for listening.
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