Excellent article!!! You hit all the right points.
I gave a talk in ... 2009, explaining why additionality, in particular financial additionality, should not be applied to a carbon removal solution such as biochar. Given the paltry amount of money available from carbon credits, the requirement that a carbon removal project would not occur without carbon credit revenue is just insane. As an example, our large scale biochar production plant costs USD 3.5 million for the kiln alone, probably closer to 4.2 million + with land, building, utilities installed, and peripheral equipment. It costs 1.8 million a year to operate. At $100 a ton CO2e, annual revenue from carbon credits would be about 650k at full production capacity, which might take years to build up to. If that carbon credit revenue would be the difference between a profitable venture and bankruptcy, nobody would ever invest in such a project.
Investors are shopping around for the best opportunities they can find, and that means they want to minimize risk and maximize profit. If they have to rely on the voluntary carbon market and its current price points just to keep from losing all the money they have put into a project, forget it. The chance to find one investor willing to take on this risk is very low, I've talked to to many of them to believe otherwise. Finding 10's of thousands of them to scale our project meaningfully while relying on carbon credits to make the difference is completely divorced from reality.
We designed our technology to scale without any need for carbon revenue. Rather it relies on a co-product, pyroligneous acid, which is a potent biostimulant and also helps build soil carbon. So it is in your value-generating category. What we still need to get this off the ground is funding that is willing to shoulder the risk of developing new markets for products that remove and sequester carbon, rather than emit carbon to the atmosphere.
Hi Paul, this article resonates with my experience and frustration with using carbon markets to assist investment in projects to reduce gigatons of emissions.
You call out the collection of norms, adopted by umpires in the field, that have an insubstantial relationship with common sense. Its recommendations, with another from your piece with Nick van Osdol, could forcefully achieve success by defanging the sillier barriers. Notably, the silliest must be additionality, set up to reward inability and punish capability.
My path to climate impact is based on a scientific and engineering discovery of deep-water-based carbon emissions reduction solutions. This family of solutions is developed, tested, and designed for scaled-up risk mitigation. It can pay its way. The IP is already proven in a Great Lake. It's now in Series-A funding, and raising funds needs carbon credits to drive the attractiveness and pace of investment.
Other far less effective, less productive solutions were built with poor technology and design, failing to earn even operating profits. Political/financial support got them on their way but never helped them develop a capable solution that could claim credits.
By contrast, after decades of R&D, we can spend $3 Billion on staged capex over a decade, achieving 7x the energy output, and potentially earning hundreds of billions from energy sales and carbon credits. Our core aim is to fully de-risk the lake's threat of gas eruption, and power up two countries. We can replace charcoal with biogas as the cooking fuel for millions of homes.
The solution is novel, both in the environment that one can operate, and in the IP through which gigatons of methane and CO2 gas can be removed, used, or safely stored for millennia. While millions of gigatons of such gases are present in the oceans and lakes, we first focus on those at risk of slow or sudden, but inevitable emissions.
With a better mindset, and less ill-informed bureaucratic control, scale-up and success can happen.
Excellent article!!! You hit all the right points.
I gave a talk in ... 2009, explaining why additionality, in particular financial additionality, should not be applied to a carbon removal solution such as biochar. Given the paltry amount of money available from carbon credits, the requirement that a carbon removal project would not occur without carbon credit revenue is just insane. As an example, our large scale biochar production plant costs USD 3.5 million for the kiln alone, probably closer to 4.2 million + with land, building, utilities installed, and peripheral equipment. It costs 1.8 million a year to operate. At $100 a ton CO2e, annual revenue from carbon credits would be about 650k at full production capacity, which might take years to build up to. If that carbon credit revenue would be the difference between a profitable venture and bankruptcy, nobody would ever invest in such a project.
Investors are shopping around for the best opportunities they can find, and that means they want to minimize risk and maximize profit. If they have to rely on the voluntary carbon market and its current price points just to keep from losing all the money they have put into a project, forget it. The chance to find one investor willing to take on this risk is very low, I've talked to to many of them to believe otherwise. Finding 10's of thousands of them to scale our project meaningfully while relying on carbon credits to make the difference is completely divorced from reality.
We designed our technology to scale without any need for carbon revenue. Rather it relies on a co-product, pyroligneous acid, which is a potent biostimulant and also helps build soil carbon. So it is in your value-generating category. What we still need to get this off the ground is funding that is willing to shoulder the risk of developing new markets for products that remove and sequester carbon, rather than emit carbon to the atmosphere.
Hi Paul, this article resonates with my experience and frustration with using carbon markets to assist investment in projects to reduce gigatons of emissions.
You call out the collection of norms, adopted by umpires in the field, that have an insubstantial relationship with common sense. Its recommendations, with another from your piece with Nick van Osdol, could forcefully achieve success by defanging the sillier barriers. Notably, the silliest must be additionality, set up to reward inability and punish capability.
My path to climate impact is based on a scientific and engineering discovery of deep-water-based carbon emissions reduction solutions. This family of solutions is developed, tested, and designed for scaled-up risk mitigation. It can pay its way. The IP is already proven in a Great Lake. It's now in Series-A funding, and raising funds needs carbon credits to drive the attractiveness and pace of investment.
Other far less effective, less productive solutions were built with poor technology and design, failing to earn even operating profits. Political/financial support got them on their way but never helped them develop a capable solution that could claim credits.
By contrast, after decades of R&D, we can spend $3 Billion on staged capex over a decade, achieving 7x the energy output, and potentially earning hundreds of billions from energy sales and carbon credits. Our core aim is to fully de-risk the lake's threat of gas eruption, and power up two countries. We can replace charcoal with biogas as the cooking fuel for millions of homes.
The solution is novel, both in the environment that one can operate, and in the IP through which gigatons of methane and CO2 gas can be removed, used, or safely stored for millennia. While millions of gigatons of such gases are present in the oceans and lakes, we first focus on those at risk of slow or sudden, but inevitable emissions.
With a better mindset, and less ill-informed bureaucratic control, scale-up and success can happen.
Great piece thanks