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Rob talks “tough tech” with Engine Ventures’ Katie Rae.
Rob talks “tough tech” with Engine Ventures’ Katie Rae.
Rob talks with two senior Democrats about the future of energy in the U.S.
Rob talks with two senior Democrats about the future of energy in the U.S.
Rob talks with Daniel Palken, the director of infrastructure for energy and permitting at Arnold Ventures, about the policies that would probably make up a grand bargain.
Rob talks with Daniel Palken, the director of infrastructure for energy and permitting at Arnold Ventures, about the policies that would probably make up a grand bargain.
Rob talks with Charm Industrial cofounder Peter Reinhardt about “liquid smoke” and how it can store greenhouse gas at gigaton scale.
Charm Industrial is a climate tech company that takes biomass and converts it into a heavy, carbon-rich oil that can be injected underground, transmuting and storing the greenhouse gas far from the atmosphere. They’re scaling up fast and recently announced a new $20 million debt facility with JP Morgan; the bank also agreed to buy more than 60,000 tons worth of removals from them.
On this episode of Shift Key, Rob is joined by Peter Reinhardt, the CEO and cofounder of Charm. (He’s also the CEO of the trucking company Revoy, a founder of the autoimmune therapeutics company Antipode, and a board member at the electricity data company Arcadia.) They talk about what makes Charm different, how it is scaling operations as a carbon removal company, and the changing politics of climate change.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap News.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from their conversation:
Robinson Meyer: You’ve had a very interesting career of starting in software, exiting a software company, and now working in the world of molecules. And I think there are two ... frankly, I’m gonna simplify things, but I feel like there’s two pathways that bring people into, let’s say, venture-backed climate startups. No. 1 is people worked at SpaceX or Tesla, or No. 2, people worked at a software company and then cared about climate change and got into the molecule space. And so as someone who was at a software company, exited, and now works with CO2 — works with physical things — what has surprised you most about working in molecules, and what have you brought from the land of bits to the land of molecules?
Peter Reinhardt: I think the main thing that i’ve brought is an expectation of pace, and that the pace can be faster, and the main thing that I have encountered that is new is the regulatory and policy environment. It doesn’t really exist in software — like it’s not a surprise that AI is the fastest growing sector in the economy right now. Everything else is regulated to stasis. And so you have an unregulated thing, relatively speaking; it’s growing super fast and creating all kinds of all kinds of good for people. We all use it every day because we get some value out of it. And so that has been hugely eye-opening. And the politics of deployment in hardware — politics of deployment don’t really exist. I mean, maybe they do around AI, but they don’t really exist in the software world. You deploy at your own pace and that’s it.
The politics of deployment in hard tech and climate are very complicated. And I think I went in with a very naive viewpoint, which is that in theory, Democrats are super aligned to climate and super aligned to deployment. In practice, I don’t know. If you look at like — I mean, I wrote a blog post about this, which is like, regulation is doubling the cost. It is impossible for us to get started in California. This is nominally the state that’s the champion of climate today. It’s not leading on renewable energy development. I tried to go there first in terms of deploying carbon removal. God knows the forests in California could use it, right? For the same reason that we’re here in Colorado, we were told it would be like 10 years to get the first injection while permitted.
That’s not what leadership in climate looks like, no matter how you slice it or dice it. It can’t take 10 years to try to deploy a novel technology. I would love to deploy in California. It’s my home state. I live there, and I come out to Colorado once every two weeks to be with most of the team here. But that’s not what leadership looks like. And so again, in theory, there’s a lot of talk. But particularly on the Democrat side, the gap between talk about climate and climate action versus the reality on the ground of actually trying to deploy stuff is massive, and like, deeply, deeply challenging, I would say, to my identity over the last few years. And like very, very discombobulating.
You can find a full transcript of the episode here.
Mentioned:
Charm’s new deal with JP Morgan
The ProPublica story Peter criticized
“Over-Regulation is Doubling the Cost,” by Peter
The Cantwell-Sheehy bipartisan carbon removal bill
Previously on Heatmap: Charm Is Working With the U.S. Forest Service on a Carbon Removal Pilot
This episode of Shift Key is sponsored by ...
Tandem PV is the leader in perovskite solar technology. We’re building the most efficient and durable perovskite solar panels on the market at our factory in Freemont, California. Learn how we're restoring U.S. leadership for the next era of solar manufacturing at tandempv.com.
Music for Shift Key is by Adam Kromelow
This transcript has been automatically generated.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Robinson Meyer:
Shift Key is brought to you by Tandem PV, the leader in perovskite solar technology. Heatmap Labs recently sat down with Scott Wharton, the CEO of Tandem PV. Let’s listen in.
Scott Wharton:
Part of what we’re doing right now is going through the process of the bankability testing and certification. And for many of our customers, they’re not going to start with 100% of their deployment being on Tandems. But once we show that it works, many of them have said, well, I don’t want to just do 5% or 10%. I want to go all in to 100%. And I think that mirrors in the solar industry, what they did with PERC, and Topcon, and other technologies that usually start with a small amount once it’s bankable. And then once it’s really proven, then you go all in because economics are so compelling. So I think that’s the opportunity for us to take that $1 billion and 10x it because customers will start wanting to shift over all of their products to tandems.
Robinson Meyer:
Now stick around to the end of this week’s Shift Key for a special conversation with Scott Wharton about how Tandem PV is manufacturing perovskite solar modules right here in the U.S. Hello, it’s Friday, July 24, and by one estimate, 1.6 million acres of forest are currently burning across the continental United States. That doesn’t include the large wildfires in Canada, of course, whose smoke just drifted down to the Lower 48. Now, wildfires are going to burn. They’re going to burn in the summer, and large swaths of the North American environment evolved to burn. And we know, too, that climate change is going to make wildfires in a lot of regions more likely. But we also know that forests across the United States are now filled with dead fuel, and that dead fuel also makes wildfires more likely. So that’s where today’s company comes in. Charm Industrial is a carbon removal company that takes biomass, including from forests and fuel clearing operations, and turns it into a liquid that they call bio-oil. Then they inject that oil underground, and that removes carbon from the climate system.
Robinson Meyer:
Charm recently signed a deal with J.P. Morgan, where the bank promised to buy more than 60,000 tons of carbon removal. It also extended a new $20 million debt facility to the company. Our guest today to talk about all that stuff is Charm’s CEO, Peter Reinhart. Peter, I should say, is all over the place in climate tech. He’s the CEO and co-founder of Charm. He’s the CEO of Revoi, an autonomous long-haul freight trucking company. He came out of software. He was previously CEO and co-founder at the customer data company segment. And he’s on the board of the electricity data company, Arcadia. So as I said, he’s done everything. We have a big conversation on this episode. We talk about Charm itself, where its business stands, the future of carbon removal. We talk about 45Q, which is the name of the tax credit for carbon removal for those non-nerds out there. We even get into talking about politics. It’s a very interesting conversation. I’m Robinson Meyer the founding executive editor of Heatmap News and it’s all coming up on Shift Key.
Robinson Meyer:
Peter Reinhardt, welcome to Shift Key.
Peter Reinhardt:
Thanks for having me.
Robinson Meyer:
So I want to start at the very beginning. We’ve covered Charm a lot on Heatmap. It’s a really cool company. Could you just give us the intro on what Charm does and what bio-oil is? Because it’s a form of carbon removal that I think is unique to Charm, or at least is not like the giant coolers with fans, industrial operations that people may have in their head when they think about carbon removal.
Peter Reinhardt:
That’s right. But yeah, bio-oil sequestration is the Charm special sauce. And we convert plants, waste plant material, invasive species, fuel and reduction material, stuff like that into barbecue sauce, literally the liquid smoke flavor in barbecue sauce. And we then take that liquid smoke and we inject it into old conventional oil and gas wells for permanent removal. So the carbon’s coming out of the air into the plants. It’s ending up in this liquid carrier and then being stored permanently deep deep deep underground.
Robinson Meyer:
So I want to have a few different conversations I want to talk about kind of what’s happening financially recently announced to deal with JPMC I want to talk about the whole system and what scaling that up looks like, but first I have to dive into this potential metaphor that you’re using liquid smoke does it smell like liquid smoke is it literally liquid smoke or is it just that you’ve combusted it and then not release the emissions so it has a kind of smoky atmosphere.
Peter Reinhardt:
Liquid smoke is literally the watery fraction of bio-oil. So there’s an oily fraction and a watery fraction, and it is produced the same way. So the way that you make liquid smoke that we eat is you take wood, you pyrolyze it, usually use like mesquite or something, not the stuff that we use, which is junk. You pyrolyze it, you heat it up to 500 degrees C, and you literally get smoke out of it, right? And in a fire, those pyrolysis vapors, the smoke, in a fire get burned. Like when you see it coming out of the end of a log, the little flame coming out of the log, you’re burning the pyrolysis vapors. In a pyrolysis system, you don’t burn that and you condense it. And when you condense it, you get this liquid. And if you take off the watery fraction, you get liquid smoke that you put in food.
Robinson Meyer:
Have you eaten it?
Peter Reinhardt:
I have not eaten ours. Ours is not food quality.
Robinson Meyer:
Okay, okay. I was going to say, this sounds like an amazing revenue line.
Peter Reinhardt:
Yes, but very subscale, unfortunately. with me.
Robinson Meyer:
Charm Industrial recently announced a deal with JPMorgan Chase that included removals, a kind of further set of corporate agreements for you to remove carbon on their behalf. But I think more interestingly, perhaps for our purposes, this venture debt agreement. And one big theme we’ve been talking about on Shift Key for the past year is the in-between space that climate startups find themselves in, and I think that especially carbon removal startups find themselves in at the moment. Just first of all, just describe what this debt facility means and what it means for Charm.
Peter Reinhardt:
Yeah. I mean, to be clear, the offtake and the debt are somewhat unrelated. I mean, they’re great partners, and so they’re connected that way. J.P. Morgan first became a customer several years ago with an initial purchase of carbon removal, which we started delivery on. We’ve been on time and delivering. And so they were excited to expand that pretty materially, and they’re obviously, an amazing banking partner. And so the key around this debt deal, it sort of has two components. It has a venture debt component, as well as a revolver component, like a giant credit card. And both of those things are helpful, you know, cash access capacity to have on hand. And so it’s augmentative on top of equity financing. I think there’s a lot of other debt structures surrounding like project financing or equipment financing that we will also use at the right time. But, you know, this has been a great partnership from our perspective to have both a customer and a banking partner supporting us.
Robinson Meyer:
You started to get into the system, and I think it would be good to describe it more precisely. So you inject bio-oil that’s liquid smokes, water component and oil component into old oil wells. That’s a very nice bespoke little system you have going. But obviously we’d like it to be gigaton scale. So what does a gigaton scale Charm carbon removal system look like? And where is your biomass coming from? How much land, how much space, how much energy does it take to pyrolyze it? And then how fast you go through wells such that you then need another one.
Peter Reinhardt:
Yeah. I mean, people vastly underestimate the scale of how much biomass is out there in the U.S. or North America broadly. If you just look at wildfire fuel load reduction and thinning operations, there’s tens of millions of acres needing treatment and maybe 100 million tons of material out there. That’s just in the U.S. West, fire fuel load reduction. And that doesn’t get into Canada, which has huge wildfire problems. And we’re starting to see wildfires in other areas as well. But like, that’s just in those two areas. Then you start getting into something like corn stover.
Peter Reinhardt:
Corn stover is like 300 million, 400 million tons a year, just in the United States. And you can’t take all of that, but you can take half to three quarters of it, depending on the ecological situation. That’s the stalks, leaves, cobs. Yeah. You know, there’s a hundred million acres of it. It’s a huge amount of biomass that it just lies on the field and rots. And to be clear, a certain proportion of it has a very important soil ecological effect. So you can’t, again, you can’t take all of it, but like that’s hundreds of millions of tons a year. So we’re already at like quite large numbers in part of one continent, looking at two different feedstock sources. And then you can get into sugar cane bagasse, you can get into rice straw, you can get into cotton gin trash, you can like, there’s a long laundry list, all the timber and forestry operations, like all the branches and, and leaves and stuff. There’s a long list of these things. So with DOE, has done this research in depth. They’ve got the billion ton report, which is like a roadmap to a billion tons a year in the United States by 2040, I think.
Robinson Meyer:
Of removals.
Peter Reinhardt:
No, a billion tons a year of biomass availability. Got it. That’s one country, in a big world. So I think people underestimate the scale of biomass. People also vastly underestimate the scale of oil wells. Abandoned wells in the U.S., there’s millions of abandoned oil wells, literally. Somewhere between two and four million abandoned oil wells, conventional in the United States. And what we do is we try to go to states and say like, hey, look, you’ve got a bunch of orphaned wells, things that were drilled and operated by companies that are no longer around and they sit as liabilities on the state balance sheet now. Let’s take some of those. Let’s find ones that still have good quality casings and so on. And let’s convert those into wells that we can inject into, turn them back into assets, remove the liability for the taxpayer, and the landowner starts getting revenue again. So people vastly underestimate the scale of both those systems.
Robinson Meyer:
So you’re collecting the biomass. Does it need to be collected by hand? Is it already collected by hand as part of, say, a forest removal process? And then instead of getting sent to a landfill, it’s getting sent to your facility in Colorado?
Peter Reinhardt:
Today’s operations are all wildfire fuel lead reduction material. And that material is already collected. And typically it’s destined for pile burning. There are some specific subsets of it. For example, hot logs are beetle kill. And they have beetle larvae in them. So that’s something that we’re kind of expanding into now and starting to do some testing on.
Robinson Meyer:
What, Canada and the Pacific Northwest?
Peter Reinhardt:
Here in Colorado. And a huge problem. Hundreds of thousands of acres of beetle kill, which is a problem. So those are the materials that we’re working with, and they would be destined for pile burning with all of the problems of fire risk and CO2 emissions and NOx emissions and PM 2.5, nasty smoke, and so on and so forth. So we do have to pay for the additional transport, right? We have to get it from there to wherever we’re going to pyrolize it, which is like tens of miles today, but it’s already there.
Robinson Meyer:
And then you process it, you pyrolize it, you get the oil, you put the oil in tankers, you drive it to the well and you pump? Yeah.
Peter Reinhardt:
That’s right.
Robinson Meyer:
It sounds like all these inputs are kind of low cost, I guess, other than what you have to pyrolyze it probably with some kind of zero carbon electricity or some kind of zero carbon heat source.
Peter Reinhardt:
Well, critically for our systems, our systems are all autothermal. So they use the biomass as the source of energy to create the heat, which is pretty important. If you start using electricity to create the heat, that’s like a very inefficient way of getting heat because you’re burning something else somewhere else, have a huge losses to convert into electricity and then convert something back into heat. You know at 500C is very inefficient so yeah we do autothermal fluidized bed reactors which is basically we partially burn the wood so it’s like a super fuel rich, fire so we get enough energy basically just to sustain the the target temperature at 500C and that’s that’s what provides the thermal hammer if you will, and then there’s some electricity consumption to to drive the condensation and blowers and motors and stuff like the grinding etc which is a relatively small proportion of the energy who’s paying, so today in terms of scale actually the, systems that we own and operate here are are pretty small and we’ve been really focused on getting the systems aligned to a design and an operation etc that we love.
Peter Reinhardt:
So we have a mix today where the majority of our bio-oil today comes from third party suppliers, a mix of people doing it for different reasons. Some of them are literally barbecue sauce makers who have fractions that they would otherwise just burn as waste. But our own production today is quite small. It’s a few tons a week, but that is dramatically expanding. So we’ve now sort of got the architecture nailed that we love. We’ve done a six X per machine scale up in the last nine months. So we have a machine that happily does about five tons per day. We’re going to put multiple of those into production here in the next couple months, and then we’ll continue scaling up from there. So it’ll be, we’ll be about 50-50 in terms of our supply chain internally produced versus external by next year. And then it’ll pretty quickly become Charm dominated production.
Robinson Meyer:
What’s the timeline on scale here? So you’re doing a few tons a week right now, like a year or two years from now. What do you think your throughput is on processing and storage?
Peter Reinhardt:
We’ll be doing hundreds of tons a week at this site in about 18 to 24 months.
Robinson Meyer:
And how far out do you think we are from, let’s say, gigaton scale removals using this technique or others?
Peter Reinhardt:
Yeah, gigaton scale, I would say, is not going to be bottlenecked on the technology per se. It could be indirectly bottlenecked on cost curve, like how cheap can we make it, which is where a lot of interesting engineering and development work goes, which we could dig into. But I think no matter what, by the time you get to gigaton scale, even if you’re down at $100 a ton, it’s a question of who’s paying for that and why. And I think it’s important probably that we get into co-benefits when we talk about that scale, because depending on the biomass source, there can be huge, huge co-benefits. And at some point, the value of those co-benefits may actually outweigh the value of the carbon removal happening.
Robinson Meyer:
What are the co-benefits?
Peter Reinhardt:
Well, take wildfire fuel load reduction material, right? That’s work that would already happen to remove that biomass to some extent, but we can accelerate a lot more of it because not enough of it is happening. So very concretely, Colorado has 24 million acres of forest. 2.4 million acres of that needs treatment today.
Robinson Meyer:
And it recurs.
Peter Reinhardt:
Of those 2.4 million acres, if you actually go treat it all, you prevent an enormous amount of PM 2.5. If you prevent like one ton of PM 2.5, you save hundreds of thousands of dollars of health costs, first of all. Second of all, the water impacts are crazy. So you’re restoring an ecosystem, right? What’s different about the forests in the U.S. West is when people think forest, they think tropical rainforest. Like no amount of stuff should be removed from a tropical rainforest. It should be dense. It should be wet. Like deforestation is the biggest problem, say, in Brazil or Indonesia. And that’s not true in the U.S. West. In the U.S. West, actually, you have massively over-dense forests from decades of fire suppression because we moved buildings and infrastructure into wild and urban interface. And so there you have over-dense forests full of ladder fuels. And those ladder fuels have a bunch of problematic. One, because they make the wildfires super destructive.
Peter Reinhardt:
Two, it’s not a native configuration. And so for all the native species, it’s actually hugely problematic. Like mule deer, turkeys, these species expect to be able to see through the forest. so that they can stay away from predators. So by restoring that ecosystem, you enable a whole bunch of better outcomes for the native species. And it turns out that you also have an immense impact on water. It’s like water is a huge topic right now for AI data centers, right? And more broadly, just as water scarcity kind of becomes a thing with the Colorado River or aquifers that are being depleted for irrigated farming, et cetera. If you take those 2.4 million acres that I was talking about in Colorado, and if you properly fuel treat those, you will add, roughly speaking, more than 500,000 acre feet of water per year in Colorado. That’s 1.5x all of Denver’s water consumption.
Robinson Meyer:
And that’s because the trees aren’t drinking it.
Peter Reinhardt:
The latter fuels aren’t drinking it.
Robinson Meyer:
Yeah.
Peter Reinhardt:
The problematic latter fuels aren’t drinking it exactly. And that’s the equivalent of roughly 100 next gen data centers just by doing fuel treatment. Okay, so now you’re starting to look at all the co-benefits. You’re like, wait a second, I get less destructive wildfire, less wildfire. I get better ecosystems for all the native species. I get more water. The water quality goes up because I don’t get erosion. There’s an insane number of co-benefits of just properly doing fuel treatment. And so if we can accelerate that by having a product, carbon removal, tied on the back end or any of the other things that we can do with bio-oil, that is hugely accelerated. So I think that is the path to a billion tons a year of removal.
Robinson Meyer:
That’s a very good case for why the state of Colorado should maybe spend money on some of these.
Peter Reinhardt:
It’s the same story in Utah, New Mexico, Arizona, California, Washington, Oregon, Idaho, Montana.
Robinson Meyer:
But is the bottleneck on biomass availability or on actually processing the biomass? There’s lots of reasons to fuel treat Western forests right now, but evidently we’re not doing it at the amount we should. So is part of the idea that by being able to pay for getting carbon removal, that that ultimately could facilitate fuel treatment that wouldn’t happen otherwise?
Peter Reinhardt:
That’s exactly right. Dealing with the biomass is a huge bottleneck. If you are a forestry contractor today, you have this biomass, you don’t really have anything to do with it. You have to pile burn it and you have to deal with it before you can get paid. But to pile burn it, there’s many, many red flag days. Like you can’t just go out. That’s like fire risk days. You can’t just light something on fire in the forest anytime you want, right? There’s like specific seasons, specific weather conditions. You have to get a permit for all the air quality problems you’re going to create with it, which is harder and harder in the front range of the Colorado Rockies. And you can’t get paid until you deal with it. So it is a big bottleneck. And the amount of biomass that needs to be dealt with, like, I wish we could scale faster. I’m like, I want to scale as fast as possible, because the volume of biomass that has no home today is immense. I mean, years ago, we were getting calls from the CAL FIRE. They’re like, hey, I’ve got like a six mile long pile of logs. Can you please help? Once we start working with one forestry contractor here in Colorado, we get calls from three more. There’s just an immense amount of kept up demand for biomass.
Robinson Meyer:
And why is that? Because like the federal government’s willing to pay for fuel treatment, is willing to pay for the labor of fuel treatment, but doesn’t have a plan. Like you have to deal with the biomass on yourself. These companies are bidding for contracts and then just sitting on the biomass waiting for the right weather conditions to burn it.
Peter Reinhardt:
Yeah. And to be clear, out of any fuel treatment, you get some merchantable timber and you get a larger amount of unmerchantable timber because it’s most of the latter fuels being removed. And those are small, crooked, not good timber types, etc. And so the hope is that the merchantable timber covers it, but it just doesn’t. And so in effect, it drives up the cost of a project, right? Cause they have to deal with it somehow. And so by driving up the cost of the project, it drives down the number of acres that can be treated with the budget that goes into it from federal or state or local projects. So our hope is that by injecting a revenue source, well, an easier way to deal with it and a revenue source, it may be indirect revenue, like just faster project completion, which gets paid faster, that those things, you know, to significantly increase the pace at which we can treat all these acres and sort of catch up on the backlog.
Robinson Meyer:
Two years ago, you guys did a pilot project with the U.S. Forest Service in California that we covered here at Heatmap, basically to explore removing waste fuels and other products from forest management. I was going to ask you how that was going, but it sounds like at this point, this is where you’re planning on getting your biomass from.
Peter Reinhardt:
Yeah, for now, I think it’s the, it’s the biomass source that has the highest co-benefits, and it is also convenient to where our headquarters basically is here in Colorado. And that’s not to say, though, that there isn’t huge potential in many other regions, right? So when you look at sugarcane bagasse in Louisiana or timber residues in that same area that otherwise rot, a really crazy example, actually very close to our headquarters here just outside of Denver is invasive species in the Great Plains. I don’t even know about this, but they call it the Green Glacier. It’s basically all these invasive species trees, Eastern Red Cedar, Russian Olive, a number of these. They’re not massive trees, but they are trees that are invading the Great Plains. And they’re also massive water hogs and very, very hard to deal with. So there’s 2 million acres of invasive tree species across the Great Plains, like nebraska kansas colorado and that nexus huge problem and again like there’s no revenue source to deal with it because it’s just waste biomass, but I think it’s a huge opportunity not only for us to produce products from it but also to, help refill for example the Ogalala Aquifer which is fast being depleted for irrigation and again if you get rid of all this like water consuming, plants up top you can put back roughly like hundreds of gigawatt data centers equivalent of water into the aquifer.
Robinson Meyer:
I like that as a unit of water consumption. If it was golf courses, it would be dozens of golf courses. But I think hundreds of AI data centers is a little more evocative.
Robinson Meyer:
Who ultimately is the customer here? In your mind, and I can see lots of reasons why it would make sense for governments or other entities to decide that they should help facilitate the removal of this biomass and that you’ve given them something good to do with it. But ultimately, your customer is going to be companies, I would imagine, or eventually governments, paying for removal. So can you tell us about the state of that market right now as you’re experiencing it and how you are thinking about corporates as customers for carbon removal versus ultimately governments?
Peter Reinhardt:
Yeah, our customers are corporate voluntary buyers. And I think broadly speaking, the media would have you believe the sky is falling there. But that has not been my experience on the ground. So our buyers, for example, are the Frontier Coalition, which is a bunch of initially the sort of AI hyperscalers and Silicon Valley tech companies, Stripe, Shopify, Google, Facebook, etc. We have since started working with a number of large banks. I believe the ones that are announced at this point are JPMorgan, Chase, which we talked about before, as well as TD Bank on the Canadian side, and a number of advanced manufacturing companies, major consulting companies, etc. I think the best way to think about it is companies that have relatively small footprints for their revenue scale, but really care about the problem, partly because of their talent base. And want to have a good impact and maybe in the long run sort of view the regulatory environment as probably requiring it out of them and they can take a long strategic view like that. But I think broadly speaking, they just want to have a good impact.
Robinson Meyer:
And what scale of carbon, I mean, are they offsetting their entire emissions at this point? Are they engaging you as more of a trial or a small amount of emissions, but not their entire footprint?
Peter Reinhardt:
I would say that these are material offtakes, and usually they’re signing material offtakes with a number of different suppliers, us being one of them. And then they’re anticipating hitting net zero sometime between 2030 and 2040. And they want to make sure that the capacity exists, and they want to try out three to 10 suppliers and see who actually delivers, which technologies are hitting steeper cost curves, and then be ready to ramp into their net zero target.
Robinson Meyer:
I think there’s obviously at Heatmap, we now spend an enormous amount of time covering the AI boom, both because it’s completely changing the energy system and the electricity system, but also because data centers are themselves probably the largest change to American land use at an industrial scale that we’ve seen in the past, I don’t know, 10 years, and much smaller than the change that would need to happen for decarbonization. Then I think one tension that’s come into place is that both there have been announcements or reporting, including from us, that companies like Microsoft, who are stalwarts of carbon removal, have backed off as they try to free up cash flow, presumably for AI. At the same time, AI has made some of these companies enormously profitable. AI firms, hyperscalers, as well as the frontier labs have the same talent constraints and interests as every other large affluent company that employs coastal college-educated urban professionals. And we hear that, you know, like internal corporate carbon prices and carbon spending budgets are larger than ever. And so just what have you observed from the AI boom? Like how has it affected your work?
Peter Reinhardt:
It’s not clear to me that Microsoft is walking away from carbon removal. They may or may not. They’re certainly in a pause, but that is distinctly different than a clear-cut decision that they’re dramatically changing the program, right? I think that for all of the AI hyperscalers, it has become more challenging to hit net zero, right? If you are growing your electricity consumption or generation.
Peter Reinhardt:
Largely speaking, in the near term, that’s going to come from gas.
Peter Reinhardt:
Gas is the available energy source that’s cheap. There’s bottlenecks in turbine construction and so on. Permitting and regulatory and land acquisition and all those things. But that’s where the energy is available. And so if you’re trying to meet the demand for AI, that’s the supply chain you’re going to opt into, which makes it more challenging to hit the net zero goals. I think, though, that you see Google’s actively buying carbon removal. Microsoft, even since the pause, has announced a couple of contracts that have completed. Anthropic joined the most recent announcement with Frontier climate. So, you know, it’s like a, it’s a mixed bag. It’s not clear to me that there’s a directionality one way or another. We certainly had a very distorted carbon removal market where Microsoft was like, you know, the majority of the demand. Sands, Microsoft, pull Microsoft out of all the charts. Carbon removal demand is growing. That’s what it has felt like to me. And, you know, you have some carbon removal companies that have like one bank shot with a Microsoft contract and that’s it. I think we have taken a very different route. We have a highly diversified customer base, like dozens of material customers and hundreds of thousands of tons under contract at this point for long-term offtakes. So it’d be great. I’d love to work with Microsoft. And we have in the past, like they’ve been a small customer of ours, but sans Microsoft, I think it’s actually like, it’s a growing market and the AI impacts are simultaneously accelerative for the companies that really do care and are going to continue committing to it because they need more in order in order to deal with their net zero commitments in the long run.
Robinson Meyer:
Are you bottlenecked by demand right now? Like if there were more demand for carbon removal, could you scale faster? Or are you basically scaling as fast as you can go?
Peter Reinhardt:
We’re basically sold out through 2028 and we’re signing longer term, you know, we’re partially sold out in years beyond that. And so contracts that we’re selling are generally like out there and trying to build a book of business that maybe allows us to raise capital to like, you know, invest in that loop of coming down the cost curve, which generates this sort of nice feedback cycle. Right now we’re capacity constrained of like how fast can we build really great pyrolyzers that are, you know, efficiently producing buy well.
Robinson Meyer:
And what aspects of your technology are coming in-house? Like, where does the engineering go?
Peter Reinhardt:
Yeah, the engineering, I’d say probably 75% goes into pyrolysis. We have an amazing team. And, you know, one anchor on that team is Dr. Joe Pollan, who actually invented our pyrolysis approach while he was a doctoral student at Iowa State University. So, you know, grateful to have him and others from ISU on the team. So that’s where the bulk of it goes is like scaling up that equipment. So nine months ago, we demonstrated that particular technology at a little less than two tons a day. And we pushed it to three tons a day in December. And we’re now at five tons a day on the same piece of equipment, which we’ll put into a production setting here shortly. And then we’ll go to an even larger scale next year. But that’ll be our commercial scale. So next year will be the commercial scale where we say this is roughly 20 tons a day. That’s the scale that we want to start mass producing. And the really key thing about the technology path that we’ve chosen there and all the engineering work going into that, is compared to other large pyrolysis plants that are you know 100 to 200 tons a day, our capex per ton per day is like one-fifth to one-tenth it’s like that’s the fundamental engineering innovation that is going to drive our competitiveness is just we’ll be able to paralyze much cheaper, and so that’s sort of part one in the engineering roadmap the other piece, which is farther out on the roadmap, is how do we make those machines capable of mobility? How do we get them closer to the source of biomass? Because basically, once you bring down the cost of the actual pyrolysis, just moving mass around is really, it becomes expensive, right?
Robinson Meyer:
And carbon intensive.
Peter Reinhardt:
Yeah. It’s why you don’t have like a single world scale cement plant in Texas. And then you’re like, you don’t ship cement all over the country. That’d be an insane, insanely expensive. You have, you know, in every city you have a different cement plant. For us, the transport is dominated by the distance from the biomass to the well. And so you want to minimize that. And then you want to, within that short distance, you want to put the paralysis as close to the biomass as possible because the biomass is light, it’s fluffy, you cube out before you weigh out on your trucks. And so you want to move the pyrolysis to this, you know, fluffy, highly spread out material.
Robinson Meyer:
And so what would that entail? Is that like building a cement plant or is that like building a truck that basically can do this on a bed?
Peter Reinhardt:
Yeah, I think of it more like probably more aligned to like forestry or agricultural equipment. Custom harvesters are probably the most close analogy where you have teams that operate seasonally, operate combine harvesters, and they move from farm to farm and provide the service of harvesting. You know, there’ll be a similar harvesting the residues in various formats that we’ll get to eventually. That’s a little further out on the roadmap. Right now, we get a lot of cost efficiency by just going from 1 to 5 to 20 tons a day. We’ll get a lot more efficiency out of some other improvements that are a little more nuanced. And then when we get the mobility piece, that’ll be squeezing out, you know, another 30% or something.
Robinson Meyer:
I haven’t asked at this point about anything related to measurement and verification, in part because I’m not a carbon accountant. I don’t work for a large company procuring its carbon removals. There will come a time where we can talk about that, but we’re not going to get into it on this call. However, what I’m curious about is how do you prevent a race to the bottom on carbon offsets or carbon removals generally? Because it seems to me like carbon removals, if this market eventually goes to the scale that we want it to go, it’s going to be a commodity product and commodities we like to make as cheap as possible. And generally, commodity producers are always looking to cut a corner to produce their commodity more cheaply. Now, maybe we solve it by the government ultimately being the buyer, and the government’s going to have certain rules about what it has to look like. And if you follow those rules, we’re going to say that’s good enough. But on an economy or planetary-wide scale, or just at the U.S. scale, how do you prevent carbon removal from becoming an increasingly debased product as suppliers try to out-compete each other on cost.
Peter Reinhardt:
I don’t know that you actually have very many good examples of places where things just fundamentally get sort of debased in that way. Like if you look at, say, what’s the negative environmental repercussions of oil and gas production over the last 150 years? Has that trended to worse or better? I’d say it’s like way better, right? Like we used to take oil out of the ground. We used to take out the kerosene by distillation and we used to literally dump the rest of it in pits or rivers, that’s why like the ohio river could light on fire for example so like that was the state of the sort of environmental, impact right which was outside of the product and like various regulations were brought in over time many like constant new regulations actually if you read the history of refining like and, is it perfect no but it’s way orders of magnitude cleaner than it was back then I think you could pick just about anything like GAAP accounting maybe is an interesting comparable for measurement reporting and verification. It’s not like people have a race to the bottom on gap accounting. It’s like if you step outside of gap accounting and you have adjusted margin or something like that, you get pilloried. And so it works pretty well. I mean, there’s regulation around it for sure, whether that’s the SEC or anyone else in public reporting requirements and blah, blah, blah, blah. And we will eventually need something similar, right?
Robinson Meyer:
I was going to say, I mean, I think the answer on any of these things is they were pretty dirty. They got worse. And then there was regulate. I mean, I think on, for instance, on food, it got worse. And then we imposed regulation.
Peter Reinhardt:
Yeah. But even if you look at it in the voluntary carbon markets, maybe it started with good intentions on offsets, right? And then a lot of the low quality offsets resulted in journalistics. You know, it wasn’t regulation. It was journalism driven, revealing of scandals in like the 2018 to 2022 kind of era. And I’d say there’s not a lot of demand for the low quality offsets right now. I mean, it’s not zero, but it’s way down, right? So I guess I’m a little bit more trusting in some of these countervailing effects that I think historically have been quite powerful, whether they’re regulatory or journalism. But those are the two mechanisms that have been shown to exist.
Robinson Meyer:
I’m charmed by your faith in journalism. I’m not convinced we found everything, but I’m very charmed by it. I mean, do you think this is ultimately a waste product that is supplied by the government in the same way the government supplies trash pickup and recycling and sewers and many other forms of waste management. Like what scale is this going to require the government as a customer and how far can you get on the voluntary corporate market?
Peter Reinhardt:
I think in the end, it probably looks something more like accounting requirements that are regulated and ultimately things that are more like cap and trade or other market-making activities than offering a service that’s like directly government procured. And part of the reason is that the objective is clear. But there’s a lot of ways of delivering that objective, and very few of them can actually get to the scale necessary. So that means you’re going to need several of them. And you’re probably going to need some mix of enhanced rock weathering and bio-oil sequestration and other just straight biomass injection and maybe some DAC to make up the difference, right? And if you need a blend like that, that’s really hard to like, that’s where like central control does really poorly, right? And so if you can instead market make and say, we’re going to have a cap system and we’re going to migrate down the cap over time, we’re going to let the market figure out which of these is most efficient in each geography, I think that’s going to be a much cheaper and more successful policy. So that’s what I’d expect to see in the long run. I don’t know if that’s going to be five years or 30 years. I think it will depend on just how bad the effects get. It remains to be seen. But I think a more successful policy is going to be one that is more market making than dictatorial.
Robinson Meyer:
Is this a world where the government says that companies have to take responsibility for their own emissions or just one where the government says we’re going to buy this amount of emissions removals every year and so therefore it’s going to be an auction and you have to prove that you measure and validate on this and this and this scale?
Peter Reinhardt:
I think it’ll be more of the latter. I think eventually it’ll be more of the latter. Yeah, measure, report, and deal with it however you want to deal with it. Again, because some of these things have also co-benefits. Someone might be willing to pay more for the co-benefit that generates a bunch of water, even if it’s not technically priced into the commodity, right?
Robinson Meyer:
Let’s talk about policy for a second. Does Charm currently qualify for any of the carbon removal tax credits that exist?
Peter Reinhardt:
We do not, although very excited that a bill was introduced for the first time in January, I believe, by Senator Tim Sheehy and Senator Maria Cantwell. So GOP Senator from Montana and Democratic Senator from Washington State, primarily focused on basically wildfire mitigation and prevention, which is what do we do with all these fuels and how do we get them out of the forest faster? Happens to be through the mechanism of 45Q and carbon removal tax credit expansion. But yeah, so it’s been introduced, but it hasn’t been passed.
Robinson Meyer:
And just say exactly what it would do it would basically give companies like Charm that do bio-oil removal.
Peter Reinhardt:
And not just bio-oil but yeah broadly speaking taking biomass related materials and converting it into permanent storage today 45Q only allows you to store carbon in the form of the molecule CO2, it’s not very technology neutral which means that we’re leaving a whole bunch of impact on the table because, we made a dictatorial choice about the technology instead instead of saying, well, look, we don’t really care as long as the carbon is gone forever. That should count. It enables solid or liquid form of carbon storage, which is, again, very targeted at wildfires and like, how do we deal with all the wildfire related biomass?
Robinson Meyer:
I’m surprised to hear, by the way, that you have been such confidence in us as journalists to sniff out illegitimate carbon credit schemes, because you’ve been quite critical of a recent journalism story, a recent story in ProPublica about CCS and CDR, basically a story ran in took a historical example of citing this wedges paper written by a princeton professor in 2008 and then from that leapt and made a much broader argument that carbon removal could never work you were very critical of it on your linkedin we can talk about the what the actual infographics said and various claims that it made and how they didn’t pan out but what did you make of the whole experience I think
Peter Reinhardt:
Journalism follows a power law in other words a small proportion of it is exceptional, and a huge proportion of it is useless, and a large proportion of it maybe is even negative. But it’s still possible for journalism to play a very good role at the exceptional high end of the power law in revealing things that really are scandals. So that’s how that actually makes sense, right? I think, unfortunately, a huge proportion of journalism has become more grandstanding for political means than necessarily like information delivery and true like investigative journalism and getting to the bottom of something.
Peter Reinhardt:
I think that ProPublica piece was like an example of that.
Robinson Meyer:
I want to push to the kind of deeper criticism of that article though, or the kind of argument that I think is embedded in that article and why a lot of people who feel maybe cross-pressured in carbon removal, which is that an argument that you’ll hear is that Carbon removal has been used over the past 30 to 40 years, let’s say, to avoid decarbonizing the energy economy. And that oil companies, specifically oil and gas companies, use the promise of carbon removal to avoid making changes to their energy systems today. And kind of use it as this delaying tactic to get another five years or 10 years of operation and... While that may strike policymakers as reasonable at the time, what actually happens is that 20 years pass, 30 years pass, and they’re still using these tactics and the energy system hasn’t changed as dramatically as we might expect. I’m someone who thinks that carbon removal is like a crappy but essential tool to eventually manage our climate change problem. And it’s very hard for me to see anyone but the government eventually being a key buyer of it. But that really cross-pressures me, or at least I feel quite torn because on the one hand, I’m like, well, eventually the government’s going to have to buy this thing like it buys all forms of waste. And on the other hand, I think it’s real that companies, critics of climate action point to the future promise of carbon removal as a reason not to invest now. And I wonder how you walk that line as a carbon removal provider.
Peter Reinhardt:
Yeah, I guess I would challenge something here, which is people say is a really, dangerous line of reasoning because people say a lot of stuff, but does it matter at all, first of all? And second, like who exactly is actually saying that? Like oil and gas, there’s a lot of people who work in oil and gas. Are they actual decision makers? Are there specific examples of people saying it where they use it as a justification for investing?
Robinson Meyer:
No, but I would say that- were investing. I would say that.
Peter Reinhardt:
No, but yeah, this is actually important. This is important because it is primarily, I will say that that is primarily a thing that I hear from opponents of CDR as opposed to from oil and gas. I can’t think of a single person who actually was like, well, should we invest in carbon removal or not? And then an oil and gas person was like, you know, oh, it’s, it’s important. Like I’ve just literally never seen that in an actual decision maker’s And so I think there’s something important here, which is, When it is presented in the abstract, it sort of sounds reasonable, but it’s like in theory versus in practice. And it sounds good in theory, but it’s like, I’ve never seen it in practice. So I think it’s in.
Robinson Meyer:
Politics versus policy. I think in policy, very few decision makers are like, should we invest in this? Yes or no. I think in policy, actually, what we see are that the politicians who care the most, the policymakers who care the most about climate change are most willing to invest in carbon removal because they see it as an essential tool to deal with carbon in the atmosphere. But I do think that you like we know companies like Exxon, for instance, spent more on marketing to tell us that they were, say, investing in algae fuels than they spent on the algae fuels themselves. Like there have been these charismatic projects that oil companies have held up to demonstrate to the public, to suggest to the public that they
Robinson Meyer:
Care about climate change that don’t actually align to like what their investments are, if you were to look at their balance sheet. And I think the divide that emerges is that critics of CDR believe that those technologies create a political appetite in the public to not do anything. Like they create a political sense in the public that action isn’t as important. And then they use that argument to try to get policymakers not to invest in CDR, even though those policymakers are the people who care the most about climate change and really want to invest in it because they want to invest in basically everything. That’s where the divide seems to me. In other words, it’s not between theory and practice. It’s between critics of CDR are making a kind of macro political argument and supporters of CDR are making an engineering and policy argument.
Robinson Meyer:
And if there’s a failure to communicate, it’s across those lines. But really, I think it’s people trying to use one of those arguments against the other domain.
Peter Reinhardt:
Could be. I’d say at this point, it’s clear we’re going to overshoot. We’re going to overshoot on all the temperature targets that we keep setting. So if not CDR, like what’s your plan? Is it solar radiation management? All those same people are even more allergic to solar radiation management than they are to CDR. So like, again, what’s the plan? There’s no realistic scenario at all where we don’t overshoot at this point. So it’s like a bad faith argument that just doesn’t even close rationally to me, which is, which, yeah, sure. I mean, even if all that’s true, right? Like even if oil and gas is trying to do that, like it doesn’t really matter. Like we’re going to have to have carbon removal and we’re going to have to have a like shocking, a large scale. I wish it wasn’t. So we also are going to try to put bio-oil. We have pathways to, you know, figure out how to make jet fuel and replace crude oil in a bunch of different places as we scale up. And that’s a, that’s a reduction. I’m not ideologically or business-wise wedded to carbon removal, but we’re going to need it. And so what else you know what until someone walks along and it’s like oh this carbon removal thing is just to slow it down but you know and here’s the other
Peter Reinhardt:
way that we can avoid doing this that is actually realistic that’s kind of a null argument.
Robinson Meyer:
You’ve had a very interesting career of like starting in software exiting a software company and now working in the world of molecules and I think there are like two, frankly, I’m gonna simplify things but I feel like there’s two pathways that bring people into, let’s say, venture-backed climate startups. Number one is people worked at SpaceX or Tesla, or number two, people worked at a software company and then cared about climate change and got to the molecule space. And so as someone who was a software company exited and now works with CO2, works with physical things, what has surprised you most about working in molecules and what have you brought from the land of bits to the land of molecules?
Peter Reinhardt:
I think the main thing that i’ve brought is an expectation of pace and that the pace can be faster, and the main thing that I have encountered that is new is the regulatory and policy environment, it doesn’t really exist in software like it’s not a surprise that ai is the fastest growing sector in the economy right now everything else is regulated to stasis and so you have an unregulated thing relatively speaking it’s growing super fast and creating all kinds of all kinds of good for people. We all use it every day because we get some value out of it. And so that has been hugely eye-opening. And the politics of deployment in hardware, politics of deployment don’t really exist. I mean, maybe they do around AI, but they don’t really exist in the software world. You deploy at your own pace and that’s it.
Peter Reinhardt:
The politics of deployment in hard tech and climate are very complicated. And I think I went in with a very naive viewpoint, which is that in theory, Democrats are super aligned to climate and super aligned to deployment.
Peter Reinhardt:
In practice, I don’t know. If you look at like, I mean, I wrote a blog post about this, which is like regulation is doubling the cost. It is impossible for us to get started in California. You know, this is nominally like the state that’s the champion of climate today. It’s not leading on renewable energy development. I tried to go there first in terms of deploying carbon removal. God knows the forests in California could use it, right? For the same reason that we’re here in Colorado, we were told it would be like 10 years to get the first injection while permitted. That’s not what leadership in climate looks like, no matter how you slice it or dice it. It can’t take 10 years to try to deploy a novel technology. I would love to deploy in California. It’s my home state. I live there and I come out to Colorado once every two weeks to be with most of the team here. But that’s not what leadership looks like. And so again, in theory, there’s a lot of talk, but particularly on the Democrat side, the gap between talk about climate and climate action versus like the reality on the ground of actually trying to deploy stuff is massive and like deeply, deeply challenging, I would say to my identity over the last few years and like very, very discombobulating.
Robinson Meyer:
I want to laud you for putting this in partisan terms because so often people put it in ideological terms. They say, oh, you know, progressive struggle with this and you’ve been nice and direct and said that it’s an issue with democratic run states. Can I ask though, is it an issue with state-level Democrats, the Democratic Party, Democratic policymaking, or is it an issue in California where in California it seems to me that the issue is the voters. The voters want stasis. CEQA, the law that says you can’t build anything in California without doing a big study on it at the state level, was passed under Ronald Reagan as governor. A lot of really negative property tax laws were passed under Reagan or led by state-level Republicans. Is it an ideological problem? Is it the public, does it want this stuff issue, or is it specifically an issue of Democratic states?
Peter Reinhardt:
It is not yet clear to me. That the Democratic Party as a whole is fully committed to solving the climate crisis versus using it as a talking point. And that is like, maybe like a shot fired across the bow here, but like, that is not clear to me. And that’s true also at the federal level. Like I spent four years during the last administration, marching up and down Capitol Hill, talking to all kinds of people trying to extend 45Q to do anything, but just go to oil and gas injecting CO2 and this is when the whole thing was controlled by the Democratic Party and I couldn’t get anything done I couldn’t get anything done why is that.
Robinson Meyer:
You’re shrugging. It’s a good question.
Peter Reinhardt:
There’s no video. Yeah. Yeah, I’m shrugging. It’s a good question. It’s not clear to me. Now that Congress has shifted on balance towards its control and right, which means that the policymaking has shifted, we actually can get things done. We have a bipartisan proposal. So it’s not that there’s fundamental disagreement about it. And I’ll say I’m putting a lot at risk here by talking about this openly. These are policymakers and politicians who I need their support. It, but it’s not clear to me that the party in bulk really wants it solved. And so there are some folks like Senator Maria Cantwell, for example, or on the other side of the aisle, like Tim Sheehy, who care about it for different reasons, right? In this case, wildfires. And so that’s an issue across the entire West and elsewhere. But it’s not clear to me that the bulk of the party actually really wants to solve it. And I think if you look at like the DSA or sort of the left-wing part of the party, I’m actually not sure they care at all.
Robinson Meyer:
And why do you say that quickly?
Peter Reinhardt:
I think for them, it’s just, at best, a talking point towards socialism and communism and degrowth, which is an extreme wing of the party, but that’s the way it gets used. There doesn’t seem to be any actual interest in deployment for that portion.
Robinson Meyer:
Obviously, Charm, questions of bio-oil, questions of CDR, questions of around 45Q, or questions of wildfire management are what you know best because of Charm. Can you give an example of a policy that you have in mind here where you think Democrats have erred at the state or federal level that doesn’t directly touch Charm?
Peter Reinhardt:
Sure. I also run an electric long-haul freight company called Revoi. We reduce the diesel consumption of a standard diesel rig. We attach a battery, electric powertrain in between the truck and the tractor. We cut the diesel emissions by 96%. You’d think this would be an easy thing to deploy in California. California wants to eliminate diesel emissions. So much effort goes into reducing diesel emissions there. It is functionally impossible to deploy in California for sort of two reasons. One, the California Air Resources Board insisted for a year that we need to test 250 different configurations, each at a cost of $100,000 in order to prove that we didn’t increase the emissions of the diesel truck. That is more capital than Revoi had raised entirely to date to prove something that is like, obviously like absurd, but that’s a crazy ask. I have no idea in what way that furthers climate deployment. And then functionally, the cost of power is so high in California that because of all the power policy that, you know, there’s, there’s renewable power that’s much cheaper elsewhere, but because of the power policies that are in place, it’s, it’s really expensive. So it’s not a great place to deploy EVs. And so therefore the only way that California remains a leader in EV deployment is by subsidizing demand even more, which we’re constantly doing more of. So I don’t know, that’s another example.
Robinson Meyer:
Is there a Democratic run state that you think is doing this well?
Peter Reinhardt:
I think Colorado has some promise. It’s part of why we’re operating here. I think the governor Polis has been incredibly helpful. He’s been a supporter since we opened the office here. And I think there’s good support for the forest operations and wildfire thinning, I hope we’ll have their support also in figuring out how to get injection capacity going in the state. So I’m optimistic about that.
Robinson Meyer:
Can you diagnose the issue more specifically than CARB made you do this or Democrats weren’t interested in doing this? What do you think is the actual policy instinct that is driving up costs here? That is the issue.
Peter Reinhardt:
Well, I think on the one hand, you have sort of Republicans writ large, maybe don’t, or at least a key portion of them don’t believe that climate is a significant issue. And then on the left, I think there’s not a strong agreement that we should have market-based mechanisms to like push forward deployment and actually do the things that are required for that deployment those are the two challenges right is how to navigate that balance how do we find the people in the center who can be incredible leaders who, understand that this is going to be a challenge that we need to start dealing with on climate side and that capitalism is highly functional and that if we can put in place the right mechanisms then we can and we should deploy very quickly without undue regulatory burden.
Robinson Meyer:
And just to walk through on CARB, the issue there specifically was that they weren’t willing to deploy technology or help deploy technology or subsidize the technology before what kind of a precautionary principle was satisfied that you had to demonstrate that something that was not going to happen.
Peter Reinhardt:
Specifically, they wanted us to do $25 million worth of testing to show that a product that reduces emissions by 96% wasn’t increasing those emissions, which was twice as much capital as we had raised to date.
Robinson Meyer:
Do you think the failure there was one of trust, that they didn’t trust your studies, or do you think the issue there was one of bureaucracy?
Peter Reinhardt:
Bureaucracy. I mean, obviously, anybody in a political capacity would have been like, oh, that’s silly. We should do this.
Robinson Meyer:
Okay. Well, we’re going to have to talk about this more, but I need to let you go. Peter Reinhart, thank you so much for joining us. This was great.
Peter Reinhardt:
Cheers.
Robinson Meyer:
And that will do it for us this week. It better do it for us this week because it is Friday. We are recording so many episodes. Like, we are so, we have so much good stuff coming up. So stick around. We’re going to be back in your feeds next week, of course. Stick around, too, after this conversation. We have a message from our sponsor, Tandem PV. Very excited about that. Until then, let’s see if I can do it from memory. Shift Key is a production of Heatmap News. Our editors are Jillian Goodman and Nico Lauricella. Multimedia editing and audio production is by Jacob Lambert and by Nick Woodbury, who’s on vacation. Hello, Nick. Our music, our theme is by Adam Kromelow. Thank you so much for listening. Have a great weekend. We’ll see you next week.
Scott Wharton:
There’s so little perovskite in the panel that it basically is adding five grams to a whole panel one by two meters. So it can fit inside the blueberry, just to give you an idea how small what we’re adding is. So that’s part of why we’re able to basically complement the primarily, outside the U.S., the Chinese supply chain and build on top of it rather than compete directly with it.
Mike Munsell:
That was Scott Wharton, CEO of Tandem PV, a California-based manufacturer of perovskite silicon tandem solar panels. And I’m Mike Munsell, Heatmap’s Vice President of Partnerships. In today’s conversation, we dive deep into Tandem PV’s go-to-market strategy and talk about its growing pipeline of customers.
Scott Wharton:
Hey, I’m Scott Wharton. I am the CEO of Tandem PV. We are making a next-generation solar panel that is better and cheaper than what’s out there.
Mike Munsell:
You mentioned your customers. Can you talk more about who are your customers, what market segments you’re going after within the solar space?
Scott Wharton:
Yeah, we’re focused on utility scale applications. And more specifically, our customers are independent power producers. So they’re the ones basically selling to the utilities. They’re kind of a who’s who of the people in this space. And we’ve already signed up about a billion dollars of deals of LOIs with customers. So that’s a nice, meaningful number, showing that there’s a lot of interest for what we’re doing in this space.
Mike Munsell:
What does the demand look like today? Are people approaching you? And maybe related, are you seeing changes due to the rollback of the IRA credits?
Scott Wharton:
We’re really not for a couple of reasons. I think another thing that people don’t understand is that most of the big IPPs have basically safe harbored until at least the summer of 29 or 2030. So yes, the tax credits are expiring, but with safe harboring, you have up with four years to deploy. So a little bit of a misunderstanding of how that works. I think there’s a discussion about whether they’ll be extended or not, but at least for most of our customers, they have the financial wherewithal to be able to do that.
Scott Wharton:
The second thing is, as they’re making some decisions now for ’28, a lot of them are looking at the potential of having a 30% panel that is lowering their costs made in the U.S. So simplifying their supply chain, they’re like, why wouldn’t I do it? So part of what we’re doing right now is going through the process of the bankability testing and certification. And for many of our customers, they’re not going to start with 100% of their deployment being on tandems. But once we show that it works, many of them have said, well, I don’t want to just do five or 10 percent. I want to go all in to 100%. And I think that mirrors in the solar industry what they did with PERC and TopCon and other technologies that usually start with a small amount once it’s bankable. And then once it’s really proven, then you go all in because the economics are so compelling. So I think that’s the opportunity for us to take that $1 billion and 10x it because customers will start wanting to shift over all of their products to tandems.
Mike Munsell:
And I know we’re talking about customer types, but what about geographies? It sounds like we’re talking about the United States with the tax credits, but are you looking at other markets as well?
Scott Wharton:
So we’re primarily focused right now in the United States and selling this full tandem product where we take all the components, the perovskites, the glass, the silicon cells, and then we integrate it into a single tandem panel that we deliver to customers. What we’re looking at internationally is primarily this idea of taking a submodule. So the perovskite and the top glass, coating it, and then we will ship that to some of the silicon makers where they already have silicon cells and glass and other things. And then they handle the go-to-market, the support. So it allows us basically to scale much faster where we don’t need to do all that local manufacturing support and development. There are many, many, many silicon providers out there that are basically selling on a commodity basis with low margins. And this allows them to kind of be able to get higher margins at lower prices for their customers. So I think that’s a great opportunity to scale. And the economics are such that when we can add the perovskite to glass, there’s so little perovskite in the panel that it basically is adding five grams to a whole panel one by two meters. So it can fit inside the blueberry, just to give you an idea how small what we’re adding is. So that’s part of why we’re able to basically complement the primarily, you know, outside the U.S., the Chinese supply chain and build on top of it rather than compete directly with it.
Mike Munsell:
Is repowering something that you’re thinking about as these large-scale solar plants age and might be looking at new, more efficient panels? Having a perovskite product seems like something that might be interesting. Is that a market that you’re eyeing?
Scott Wharton:
I think that’s an interesting opportunity. I will say that probably there’s so much new demand out there in the early days that probably most of our demand will be for new deployments, just for keeping it simple. But if you can imagine, there are a lot of deployments out there that are 11, 10, 12, 13%, especially some of them have degraded now a little bit. So the ability to jump up to 30% is a is a big deal from an economics point of view. One of the nice things about it is that because we basically fit into the same standard racking, you don’t have to replace everything. You basically can fit into the racking, maybe update some of your electronics and inverters. But you can keep a lot of the same infrastructure and put a new panel in. Our goal is really to be a drop-in replacement so companies can follow their same processes and not really have to change too much of behavior, just basically making a better mousetrap.
Mike Munsell:
So the utility scale segment, obviously huge, but are there any other markets that you’re looking at?
Scott Wharton:
Yes. One market we’re really excited about is the space market. Obviously, most of the listeners are reading about space data centers and satellites, and there’s a lot of great news happening there. But one of the things that we found is there’s kind of this problem in the space market and that you either have this very, very expensive and hard to get gallium arsenide or 3.5, super expensive, or you use silicon, which is commonly available, but degrades really quickly under radiation. Perovskites and tandems are actually a sweet spot in that they are very high efficiency. You can make them a lot lower weight, partly because I talked about the weight of the perovskite itself, but you can put it on thin earth glass and substrates. And then perovskites, as I learned from an expert from NREL, actually a thousand times better in terms of how they handle radiation. So it’s kind of a really Goldilocks sweet spot between this very high end, hard to get solar and lower end available, but kind of lower performance. And as the market explodes, I think a lot of what we’ve already done by basically hardening our manufacturing and durability will apply into the space market. So I think it’s something that we’re pretty excited about. And if anybody out there is in the space market is listening and you’re building a satellite or data center, I think we got your back. You should come talk to us.
Mike Munsell:
And where do you see Tandem PV in the next five years and the next 10 years?
Scott Wharton:
Well, I think we’re on a path to basically go from where we are on the demo scale to gigawatt scale with our first factory and then multi-gigawatt scale. I mean, obviously, that would put us to be a multi-billion dollar company and hopefully a champion of American technology and leadership. But even with that, there’s so much more to do. We’re living in a world where we’re nearing terawatt scale. So I think our ambition is to do that, but really go beyond that to make a dent in the universe and start complementing all the silicon that’s out there, lead the world to shift the tandems. And ultimately, I think we’re trying to both lower the cost of solar and power to make it more affordable, but also, you know, there’s still that global climate change thing out there. It’s a little hot in some parts of the country, the world, and we want to make a difference there.
Mike Munsell:
Anything else you want Shift Key listeners to know about Tandem PV and your story?
Scott Wharton:
I know that there’s probably that skepticism around perovskites as we started at the beginning because of where we are. I would just say we’ve proven a lot of these things through having the factory, through having our data. I mean, one thing I’m going to talk about is we have panels now, the newest ones are out for a year and counting with no degradation. We’ve had panels before out for 18 months. So I think we have a lot of the data to prove the claims on the durability side in addition to the efficiency. We’re just very excited about being able to start taking this very promising technology and start making it a commercial reality.
Mike Munsell:
And I saw you had some news about a new board member. Can you tell me a little bit about that?
Scott Wharton:
Yeah, that’s right. So we announced recently that Jennifer Granholm, the former Secretary of Energy, joined our board and really excited about having her join for a variety of reasons. One is obviously her stature. I’ve been joking that she’s like the Steph Curry of energy. Yeah. And then what I found with her is that she’s not only incredibly smart and experienced, but just so down to earth. Like when she showed up at our factory first to do a tour, a lot of the other people who come in like her come in with an entourage. They come in with pre-knowing everything. And she came in by herself, you know, asking great questions. And she did her homework. And I’ve just really enjoyed working with her. I like her even more now than before I got to know her. She’s a great addition and validation of us as a leader in this market.
Mike Munsell:
Well, I’m excited to chat with her next about why she joined Tandem PV’s boards and hear directly from her. So if you are listening, stay tuned for the next episode on that. Thank you so much, Scott.
Scott Wharton:
This was fun. Yeah, it was fun. Thank you.
Mike Munsell:
That was Scott Wharton, CEO of Tandem PV. In our next conversation, we’re joined by Tandem PV’s newest board member, former Secretary of Energy Jennifer Granholm. Stay tuned for that conversation after the next episode of Shift Key. Thanks for listening.
