When did you found Heirloom, and what is the story behind it? What was your initial inspiration?
I grew up in South-East India, and I saw first-hand the impacts of climate change on very vulnerable people. They don’t call it climate change, but the increasing levels of cyclones and droughts are impacting lots of these people. And just last year, there was a big once-in-a-century flood that took over my home town, and additionally crazy torrential rain that completely flooded the city. It’s a city of ten million people, and we don’t hear that on the airwaves here in the US, but this is happening and impacting people now.
Personally, I got a big break, moved to the US in my teens, went to good schools, and had the fortune of briefly working with Square, the mobile payments company. They were releasing their credit card readers, and the hardware for those readers really did not iterate very quickly — they really sucked at the beginning!
I realized that the speed of hardware development was very slow, and long story short, I started a company called Tempo, which builds electronics and helps hardware companies prototype faster with hardware, taking something that would take weeks or months and turning that into days. We help to build satellites, robots, rockets, any advanced hardware project out there, we probably have a hand in. We helped build the Mars rover that NASA just landed a couple of months ago.
So I’ve been doing that for a long time, and at some point I realized that I’m just building gadgets, while there are billions of people being affected by climate change. The worst impacts of climate change are faced by the world’s most vulnerable people — people who had the least to do with it — and I thought that was just deeply unfair.
I always wanted to work in climate. Matt Rogers, who was one of our investors at Tempo, introduced me to Noah Deich, who is a founder of Carbon180. Noah talked to me about carbon removal and the importance of it. That was when he was just getting started with Carbon180, and it just made sense. I was like — of course we should be removing carbon, like why are there not more people working on it?
Later, the 2018 IPCC report came out and basically made things official — this is not a “nice to have” but is a “must-have.” I had the chance to read the report; it was sort of breathtaking, it’s like you go down a highway, and then you see solar panels and wind farms everywhere, at least in California, and you think, oh, the future is exciting. But then you realize, actually, we are nowhere close to where we need to be. Even if you were to decarbonize everything, we need lots and lots of carbon removal, and the scale at which we need it is just massive, like billions of tons of CO2 need to be removed from the atmosphere. It’s hard to wrap your mind around.
The oil industry extracts about four billion tons of fluid out of the ground every year, and it took them 150 years to build that industry. We need to remove five to ten billion tons of CO2 out of the air per year within 20 to 30 years. So it’s just a fraction of the time and an industry that’s two or three times the size of the oil industry that we need to build. And not many people are working on it. There’s Climeworks, there are others, they’re paving some of the road, but the scale of the problem is just so massive.
That started my journey — how do you capture carbon out of the air? Just fundamentally, from first principles. I’m an engineer, so I read the National Academies report on negative emissions. I just didn’t go home over Christmas one year, and read that book and learned about coastal blue carbon, reforestation, soil carbon, mineralization, direct air capture, etc. — all sorts of ways to capture carbon.
Mineralization was the most interesting thing. I built a complex model for myself, basically on one side it’s additionality, permanence, verification, land use, cost, etc. And the other dimension is different ways of capturing carbon. So I made that model and then realized, oh wow, mineralization fundamentally ticks a lot of these boxes. Direct air capture does too, but it’s just highly engineered and so expensive.
I went down the rabbit hole of mineralization. I talked to lots of professors in that field, and eventually landed on Peter Keleman, who had a few great ideas on mineralization. Mineralization just means using rocks to capture CO2 out of the air. Many people are not aware that carbonates in the earth’s crust is the largest carbon sink we have. Period. More than biomass, more than trees, more than the ocean. Rocks have the most CO2 sequestered. How? Over geological time frames, these carbonates captured CO2 out of the air, and it was important to maintain the carbon balance of our atmosphere, just like how biomass helps maintain the carbon balance.
But these rocks are very slow at capturing that carbon. Very slow. So the question was, okay, how do you accelerate it, how do you bring it to an industrial deployment scale, and how do you solve this problem on a human timescale? So we went through several iterations of the technology.
The specific approach that we are now using gets us permanence, additionality, verification, low land use, minimal mineral extraction, everything. We call it the no-compromises approach. And it also gets you low cost, which for a traditional direct air capture was one of the main questions — okay, can you actually get to low cost and scalability?
So it essentially became a combination of mineralization using nature’s properties for capturing CO2 and adding just enough engineering from Direct Air Capture to create the best of both worlds.
That was very interesting. It was also the longest answer I’ve ever received to this question!
You mentioned the oil industry, and if you just visualize the scale of the carbon removal industry, do you think in terms of infrastructure, it’s going to look sort of the same? If you add all the facilities of oil and compare it to all the removal facilities, is that something you have an image of in your head?
I think infrastructure-wise, we could now build it a lot simpler. I think that’s where good, elegant engineering comes in. Land-use wise, it might be similar. But the oil industry is hard to compare to, because you are basically drilling and taking advantage of a 3D space that’s underground, extracting something — fossil — that’s been the product of millions of years.
I think the infrastructure could be a lot simpler for carbon removal, and just direct air capture in general. I think financially, it could also be a lot cheaper. I heard a stat that there are a few hundred million dollars of capex that the oil industry spends every day. I don’t think we need to be anywhere close to that for gigaton scale removal.
That’s good news! And if you could go back to the founding, which I understand was in 2019, is there anything you would do differently today, and what is your suggestion looking at it from now to other carbon tech founders?
So, a couple of suggestions I have, and I share this with other investors and entrepreneurs, is to really build a solid techno-economic model for any idea / approach you want to pursue. Understand what levers you have to reduce cost, especially in climate tech. In climate tech, you are competing with traditional fossil-based ways of doing things. So you have to understand what drives your cost, and how that cost changes by scale, and what are the technical parameters and process parameters that dictate those costs, which of those parameters are sensitive, what trade-offs do you have between different techno parameters – all of this will help you gauge where exactly risk lives in your approach. And then that can drive your technical strategy and your business strategy. So, build a very solid techno-economic model. That’s number one. And I was fortunate to partner with Jen Wilcox and Noah McQueen, who are very good at building these techno-economic models.
And if you’re an investor in this space, look at that techno-economic model and what assumptions are being made. See if the model is comprehensive. Are those key assumptions appropriate? 90% of the ideas you can filter out just by building a good model. You don’t know everything, but you know some things, you can assume some ranges, and from that, you can extrapolate.
If you’re Climeworks, for example, you would know pretty quickly that the cost of the sorbent is one of the most sensitive cost variables for the system, and if that is the case, what are my levers to reduce that?
And the second thing is not being married to a technical approach, and just having a very third party, approach agnostic view into a business model. You want to be having hypotheses and invalidating those hypotheses as fast as possible to get to the truth. We don’t do evaluation nearly enough. And a thousand other things, but we’ll stop there!
And how would you say Heirloom is different from other negative emission technology, and who is the customer?
So fundamentally, we’re using the power of natural rocks to capture carbon. Direct air capture needs to be fundamentally highly scalable — in the gigatons of CO2 per year. You don’t material inputs to a DAC process to be constrained in supply. So that’s why using abundant minerals as your sponge for CO2 is key to our approach. Fundamentally, we’re just putting a bunch of rocks on trays and exposing those trays to the air. It’s an engineering challenge to scale it, but fundamentally it’s pretty simple. Second, we use electricity. We don’t need fossil fuels to regenerate the minerals — we just plug into renewables. And because we are using a passive approach for the capture, we need much less energy to power the system.
Number three, it’s highly modular. We’re not building chemical plants. I tell our engineers, we need to build our contactors like we build iPhones. Just crank them out in a factory. So it’s simplified, low-cost, uses earth abundant minerals, and is modular.
And the customer is the person that buys credits off you, or is that a person that buys your technology and builds the removal plan, so to speak, or both?
We will be selling carbon removals — that’s the only model we have.
And anyone who tells you, we are going to turn CO2 into things?
Sure you can probably do that for some applications. But >95% of what we capture from the air is going to go underground.
And in terms of permanence of removal, how do you think about it, and how do you compare this to other tech? Which tech is your favorite to deploy for anything around permanence?
There are not that many so far, the newer ones at least. We are fans of Carbfix, we are fans of 4401, we are fans of other solutions with good monitoring and verification. And I think being able to turn CO2 into stone immediately is interesting. And also, utilization applications that have permanence, like concrete, is also interesting. So for us, anything that keeps this stuff permanently locked away underground is interesting.
And if you look into the future, where do you hope the company is in three to five years? I think that goes a little bit back to the scale and low cost that you hope to achieve with the process. Where do you see Heirloom, if things go well, or even better than well?
I think we would have multiple deployments where we’ve massively reduced technical, economic, and cost risk. And so that this can be emulated anywhere in the world cost-feasibly. And I think we can do that.
You’ve talked about some of the present inspiration. If you weren’t the CEO of Heirloom, what would you now set out to do if anything goes?
I would be somewhere trying to tackle the hard-to-abate sectors in climate, and make them not hard-to-abate. Before going for Heirloom, one of the main takeaways I got from the IPCC report was that solar, wind, EVs, etc., get you maybe 40, 50% percent of the way [to decarbonization], but the other parts – agriculture, concrete, steel, glass making, aluminum, aviation, shipping, etc. etc. – these are all industries that are notoriously hard to decarbonize, because most of the capex is already paid out, so any new technology you want to bring, you are competing with only the opex of traditional production sources.
And so, it’s incredibly hard economically to make a good case. In many ways, electric sedans are a low hanging fruit, because opex wise, energy per mile driven is cheaper using electric cars than combustion cars. Thermal efficiency for combustion engines is abysmal. It worked so far despite the inefficiency because oil is so cheap and carbon cost was not priced in.
When you think about cement, for example, hundreds of millions of dollars go into building a plant, and once that’s paid out, they really just have to pay for energy to produce cement. So it would be hard to build a new plant with expensive new technology to decarbonize that industry.
I actually looked into all of them. I just talked to a founder right before this meeting who is trying to do something in cement. I think it’s great. Cement itself, for example, is the single largest emitter of CO2. Agriculture is the same, and shipping, so yes, in climate tech still. Direct air capture is interesting though because it could be applied to help address / mitigate all those industries.
And along those lines, what are the most overlooked opportunities, in your opinion, in clean tech and climate, maybe a little bit broader than avoiding emissions?
We are architecturally retooling the economy from a fossil based one into a renewable, sustainable one. Every single thing — I’m looking at my laptop, the plastic keys, the screen, everything is built using fossils. The entire economy is built using fossil. So decarbonizing the built world is likely the largest challenge we have to ensure we have a liveable planet.
So we have the opportunities; you look anywhere, and you can say okay, how did that come into the world, and what was its supply chain like, and how do I decarbonize it? And most likely, 99% of the time, it’s something that is not being paid enough attention to. If you look at glass, for example, glass making is still incredibly fossil driven, and production of glass is increasing exponentially.
So a lot of things with a physical footprint, which is a lot of things.
And if you could enact some policy — I think there’s currently a bill in discussion and of course policy is a driver of carbon prices — what bill or law would you enact if you could?
I think policies that encourage carbon removal deployment. In general, policies that create markets around carbon are interesting. The cap and trade market in California is great — is something that could be emulated in a lot of other countries.
Government procurement of initial carbon removals is also good. The same way Germany supported renewables. In the beginning, the cost will inevitably be expensive, so good policy will create an easy transition and make the landing a bit smoother for the rest of the world to deploy carbon removal.
Which country or political system at the moment do you regard as most likely to engage in buying actual CDR certificates as a first country?
I cannot speculate on that, but I do know that at first, it definitely needs to be the developed countries. Carbon removal addresses the legacy emissions. What about the two trillion tons of CO2 that we already put out there — who is it mostly emitted by? The developed countries. So who needs to procure this carbon first? The developed countries.
I think we have a lot of work to do in the US and the EU. Noah Deich from Carbon180 has a great, simple quote I just read this morning, DAC is “like a time machine in many ways.” We can’t go back to low carbon, but we do have these machines that set back carbon.
If you look at it like that, it’s a very good price for a time machine! And do you have a simple cost curve for Heirloom in mind, where you say okay, if we can have a hundred times the facility, we have a fifth of the price? Is anything like this realistic? I remember in battery technology, people said we can get 3% better per year. And then over ten years that really adds up. Or maybe we outperform 3%. Is there anything you see like this for Heirloom?
I hope it’s a lot higher than three percent. Because 3% is not going to get us there. It’s interesting, I was just looking at the renewable energy deployment for the last 50/60 years and at the beginning it was kind of slow, less than 10% year over year growth. And even in the peak, early 2010s, it was only growing by 10 to 15% a year. That’s why we have renewables as cheap as they are now. I think about carbon renewal, and we cannot be in the 10 to 15% growth every year, we need to be literally doubling every year. If we want to get to a few billion tons per year in the next couple of decades, just go on a spreadsheet and draw a curve and you realize we need to be deploying incredibly fast.
It sounds like speed of deployment and everything attached to it is one of the important challenges. What are the top important challenges in your mind to drive Heirloom?
I think it’s three categories. The speed of engineering is one – whether that’s hiring or just development, R&D, etc.. Then it’s carbon markets, whether that’s through voluntary or policy. These markets could really create a powerful flywheel. And three, long term Purchasing Agreements. Solar and wind provide a playbook for how Power Purchase Agreements (PPAs). Many corporates like Google have signed these over the last 15 years, and these allow for predictable revenues from projects, which enabled a lot more projects and debt financing to come into the space, which allowed more deployment, which reduced costs, which encouraged more people to deploy, which introduced more financing. So it’s just a powerful flywheel. I think that like Power Purchasing Agreements, we need to create Carbon Purchasing Agreements, or “CPAs.”
A nice acronym.
So it’s not complicated. I think CPAs in the realm of carbon markets — voluntary and compliance — could create that type of flywheel in carbon removals.
And if somebody came to you now and asked what CPA would you draft yourself, how would that look?
Simply, it’s some dollar commitment per year from a customer over ten, twenty years. Initially, they will help build and deploy some modules. And those modules will have some capacity per year. And if you were to borrow money to pay for that, the loan term would be over ten years. So if we go to the bank with that CPA from a customer who says I’m going to buy carbon removals at this fixed price from this Capex for the next ten years, and that customer has good credit, the bank will say “great, I’ll trust that the customers will pay you if you deploy these, here’s some money, go buy that capex.”
And the investors with whom you are already working, how do you currently see the funding environment of clean tech or carbon removal tech companies and how did it change, how do you think the funding environment is currently?
I think it’s gotten a lot better over the last few years. I think early stage financing is good as it has ever been from grants, from philanthropy, from early stage VCs. That’s great but that’s not going to get us to billions of tons of CO2 removed from air. There is a big valley of death between R&D and deployment, and those dollars have to come from project/debt financing, which is very hard to get for newer technologies. There’s a lot of opportunity there. I think the Breakthrough catalyst program is addressing this, the guaranteed loan program from the DOE is helpful – we need a lot more of that.
And Breakthrough catalyst is from Breakthrough Energy, it’s a deployment financing program?
And would you say, maybe we shouldn’t think of it as the traditional Venture tech financing, that it might be a little bit different because a lot of the dollars has to come from another form of equity probably — purchasing, pre-purchasing credits?
Yes. Capital will have to come from various sources to finance the capex — equity capital for projects, debt financing, some capital paid upfront by customers, etc..
It does remind me too of what happened in batteries, that some of the people who needed the batteries invested in the tech but also signed off purchase agreements, and the combination made the big Capex investments a lot easier.
And finally, is there any clean tech climate person from policy that inspires you?
I think Carbon180 as an organization, I wouldn’t be here without them. I think they’re just doing amazing work on carbon removals. And they’re great people too. Noah, Giana, Peter, and all those folks who are part of that organization are doing really good work with advocacy for policy.
Images courtesy Heirloom, Stocksy
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