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Nan Ransohoff

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2022-11-30

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2022-11-30

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1. “For listening to the A16Z podcast. If you like this episode, don't forget to subscribe, leave a review, or tell a friend. We also recently launched on YouTube at youtube.com slash A16Z underscore video, where you'll find exclusive video content. We'll see you next time.”

   2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

2. “Are really compelling option when you have a place that you want to be, but you have hesitant suppliers because they're not sure that anybody is actually going to buy something and therefore they don't do anything at all.”

   2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

3. “I think there's huge potential for AMCs to make a big difference in other areas and specifically within climate. At a very high level, think about, you know, there's a market price for something and the price of something today over time it comes down and the kind of area under the curve is almost what we could call the green premium. I think AMCs can be very accelerative in areas where either there isn't a market price or accelerating the technology down that cost curve. So basically whether that's sustainable aviation fuel or hydrogen or green steel, I think that there are a lot of different areas within climate that this concept could be applied to. I don't think it's the only market mechanism that we can use and the IRA has a huge amount of really important subsidy and other interesting market mechanisms that are going to help accelerate technologies down that cost curve. But AMC is, I think.”

   2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

4. “And then I think the final piece is we've really tried to lean into criteria that lay out a technology agnostic solution here because we are so early. There's a lot of technological distance, so to speak, in figuring out which solutions are actually going to scale. So those are some of the key differences in how we designed it. And about last sent a cold email to Susan Appy and Chris Snyder and Rachel Glenister, who ended up with some of the key economists who designed the initial PVC vaccine who have partnered with us really closely to help us fit the concept for carbon removal specifically. We ended up last fall meeting for a couple of hours every week to talk through all these different details because it really isn't a copy paste. And I think there's a huge amount of value in the concept of an AMC, but it has to be carefully fit to the industry. And we tried our best to do that.”

   2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

5. “As a way to help mitigate that challenge. The offtake piece is really important for small companies, especially in this industry, but for small companies that don't have other things to fall back on, they need to be able to take that to a bank in order to get financing. Whereas that's not as important for pharma companies. Another piece is that with vaccines, we've scaled vaccines before, right? We know how to do it. With carbon removal, We don't even know which solutions we are definitely going to be scaling. And so as a result, we have to help these companies get down the cost curve, build the Tesla roadster, and then keep getting down the cost curve, whereas with vaccines, those intermediary steps aren't as significant.”

   2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

6. “Yes, there are, as you said, a number of different ways that we had to take the core concept of an AMC but apply it to work for the specific dynamics of carbon removal. One of the ways is that, as we just talked about with carbon removal, a billion dollars is not the entire market. For the case of the PVC vaccine, $1.5 billion was enough for the pharma companies to justify their investment in this space and the development of the vaccines. That is one sort of big difference, and it was a bit of an experiment, but like we couldn't go raise a trillion dollars, that wasn't an option for us. So that was one of the ways that this differs. Another is that in the case of big pharma, these are large companies, but other businesses. And they have big balance sheets. So the financing piece isn't as important for them. Whereas in the case of carbon removal, these are upstarts. They don't have another big business that they can use to get financing or as collateral. And so we specifically leaned into the offtake portion of this.”

   2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

7. “Smallest big number that we could reasonably go after. But as we've talked about, a billion dollars is not the entirety of a market for carbon removal. It's a step down the cost curve. But unlike vaccines, there's still a long way to go.”

   2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

8. “To be almost a million lives from doing that. But the sort of interesting thing about an advanced market commitment is that you can send a really loud demand signal before you've picked a solution. You can send a technology agnostic demand signal to say this is the spirit of what we want. Again, it's our criteria. We want permanence. We want path to low cost, et cetera, et cetera. But we don't care if it's direct air capture. We don't care if it's enhanced rock weathering or kelp sinking. We want a diverse set of solutions and you can send that signal now. The other interesting part about an AMC is you can get a lot of benefits without actually transferring the cash now. Like the signal in itself is really powerful. And so I think there's actually a really interesting arbitrage there of like you get many of the benefits before the money actually changes hand, the commitment itself is really impactful. So we picked a billion dollars effectively because it was this.”

   2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

9. “So, this is a concept that we borrowed from vaccine development. And it was invented by some economists at the University of Chicago back in the early 2000s. And the idea here, let's pretend you want, say, a malaria vaccine for the developing world. Big pharma companies may not be excited to make the investment to build that vaccine because they are wondering, is there going to be a customer on the other end that will buy this at a price that will justify my costs? So the idea with this initial AMC per vaccines was for a bunch of governments and philanthropies to pull their money together and say, hey, pharma companies, if you can build a vaccine to this spec, there is, in the case of the PBC vaccine, 1.5 billion dollars for you at the end of it in revenue. And it worked. This accelerated the development of this specific vaccine. And by doing so, saved what is”

   2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

10. “What brought me to Stripe the Carbon Removal piece, I think I've learned that I approach this, I guess, job search, if that's what you'd call it, in more of a top-down way of looking at the climate solution holistically, trying to figure out where is there a gap that I'm positioned to solve and where's the best place to do it from. So that's what led me to strike.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

11. “Carbon removal in large part from reading, I was reading the 2018 IPC report in 2019. And as we've discussed, one of the big takeaways there is in addition to emissions reduction, we now also have to do a lot of carbon removal. And I sort of went on the supply rabbit hole and said maybe I'll work at one of these companies, but I'm not a scientist or an engineer by training. Then I thought to myself, well, maybe I'll go work on the policy piece, but I'm also not a policymaker. So the question I became obsessed with and framed for myself was, how do you build a market for carbon removal in the absence of policy? And at the time, Stripe had just published a blog post about how the sort of theory of change behind this initial million dollars. And I read that and was like, okay, that's not a lot of money, but this is the right way to think about it and had a couple of conversations with the team and we were jamming on a bunch of different ideas and they basically said if we turn this into a real team would you be interested in leading it so that”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

12. “My first foray into climate was back in 2012 at O Power. And I was a management consultant for a couple of years after undergrad. I learned a huge amount. It was great for many reasons, but I personally realized about myself that I am not problem agnostic. I care a lot about what I now call my 2 a.m. test. Will I be excited to be working on this at 2 in the morning? And I thought climate would pass that bar. So I gave it a shot. I was at OPower and kind of validated that hypothesis and met a number of truly wonderful people, many of whom are still in the climate space. I worked at Nest. I went to Uber to focus on Uber pool, the sort of hypothesis was you could get more people and fewer cars. And I honed in on”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

13. “Science that came out of the latest IPCC report, right? In order to make the math work, we're going to have to do both. And so my hope is that while I do understand, and I'm certainly empathetic to the moral hazard risk, we have to figure out how to walk and chew gum at the same time. We have to do both. And that is just the reality that we are in if we had done a better job with emissions reduction 50 years ago, we could be in a different situation. But like we're not. So let's just do the best we can with the information that we have and make sure that our efforts to remove CO2 are not negatively impacting emissions reduction efforts.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

14. “People have often referred to that as the moral hazard problem. And that can exist at the company level or the country level or the individual level. The benefit of the world moving to a net zero frame is that the sort of fundamentals of this are first focus on emissions reduction and get that as far as you possibly can. And then deal with the rest. But the sort of spirit of it is we have to do both. It is a yes and. And this is consistent with the”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

15. “The policy in place to take us past this initial billion dollars. This billion dollars wouldn't have done much, right? Like we need somebody to pass the baton to. So we have to pay attention to the policy side. So this is a long-winded way of saying there are gaps across the supply side, the demand side, and this sort of ecosystem side. And we're going to need different types of talent and resources focused on each of those different components.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

16. “Accelerate the policy piece of the puzzle. So there's a lot of work to be done there on the demand side. And then from a general ecosystem perspective, I think there's a lot of infrastructure that we're going to need around making sure that we even have an infrastructure of MRV to scale, right? When you think about measurement, reporting, verification for something like kelp syncing, right? If somebody's doing help syncing in the Atlantic versus the Pacific, for example, we'll likely need different verifiers to go out and look at those companies. What are the protocols that we accept? How do we get all that information in one place? There are a lot of sort of system-level questions on the MRV side that we're going to need answered. And so this is all sort of part and parcel of building an ecosystem. As a buyer, it would be great if we could just sit back and only focus on buying stuff, but if you do that, you'll get bottlenecked, right? We need MRD in order to scale up as a buyer. And so we have to pay attention to that. If we don't have...”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

17. “Give you a flavor of the kinds of things within the supply side of carbon removal, things like the synthetic biology solutions that we talked about earlier, we would love to see more rigorous measurement reporting and verification for ocean alkalinity enhancement. There's an opportunity to do a lot more, we think, in geochemical CDR. There's a number of things on the supply side that we would love to see. At the ecosystem level, There are a lot of gaps on the demand side as it pertains to getting more money into this field. And I'd love to see more corporates and more governments really focus on how does permanent CDR fit into their strategy today for net zero. As you said, a billion dollars is a good step in the right direction, but it is nowhere near enough and we are going to need more corporate buyers to lead the charge on getting money into the pot while we in parallel figure out how to it.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

18. “We have, and it's early. So I think this is a difference in hard tech, right? It takes time to build your first appointment, figure out what's working, what's not, and then translate those learnings into second, third, fourth plus deployment. So these are very early indicators, but Charm has made some good progress in optimizing their pyrolyzer and the transportation of biomass. Climworks is getting down the cost curve through their orca and then mammoth is going to be next. But these are things that you have to do in the real world and then incorporate the learnings. What in the lab is not the same as what in the real world? And you should talk to Peter about this in your interview and some of the learnings that they've gotten. What do learning curves look like in practice? I think we talk about them in the abstract a lot, but this, I think could be a really interesting thing for you to bring up with the founders that you talk with is what are you actually seeing on the field? How has that changed your next version of the thing and how does that impact your costs?”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

19. “There weren't good ideas grounded in a good hypothesis. It's because we have to test those hypotheses in reality. And I think that bringing this sort of innovation first and compassionate mindset to the field is going to benefit everybody.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

20. “This field inflect, this whole thing might actually work. But we want to shake the tree for the best. Once we get more information on how successful we think that this field might actually be, we can balance that with other tools in the climate toolbox. I think this is a really important decade to shake the tree, trial these promising solutions, weed out the ones that don't work, and really double down and scale up on the ones that do. I'll also say that to your comment on vaporware, there will be some maybe fraudulent activity in the space or bad intentions, but I actually think for the most part all of the founders that are getting into this space are out on a limb trying something that they want to work and scale because they care about the climate. And my hope is that when we discover that solutions won't work, which we absolutely will, we don't skewer the people who started them. It's just this is what early innovation looks like. People are going to try things. Some of them are going to work. Some of them aren't. Some of the things that we try in Frontier won't work. And that is not because.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

21. “A great question, and you've highlighted why it's tricky. Where we are with carbon removal, we're not optimizing for the number of tons right now. We are optimizing for really trying to get carbon removal on its best possible trajectory by 2030. So we think about where we want to be by 2030 is essentially breaking that down. A couple of the things that we want to be true. One, we want demand to no longer be a growth bottleneck for great carbon removal companies. And that is demand a very large number. We can debate the exact specific care, so to speak, but we want that to be true. We want there to be a diverse portfolio of great companies that are pursuing the most promising pathways and scaling really quickly. I'll give an early leading indicator for this past RFP. We had a 120 pre-applications and we saw half of that just six months ago in our spring cycle. So I think we're starting to see”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

22. “Like help sinking. There are less uncertainties with closed systems like direct air capture. But how can we develop robust Measurement and verification without stifling innovation and meet the field where it is rather than pretend that it was this sort of like perfectly measurable world. Like the world is complicated and that is just the reality of the situation. So let's figure out what we can do most effectively within the constraints of the world that we live in and thinking in terms of probabilities, I think is going to be for us a really big concept.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

23. “Well to validate. It was just this obviously doesn't scale, and that's okay at really small scales. This is a couple hundred tons. But just to give you a sense of how early we are, they've since come out with a really well-developed protocol for their own MRV. But just want to give you a sense of like where we're starting from. There's a long way to go. What we are actually working on right now in conjunction with carbon plan is prototyping MRV for our existing portfolio for a few sampled companies in our portfolio to take this kind of gnarly abstract concept and make it more concrete. And I think one of the big themes is that it will be really beneficial for the proverbial us to move away from thinking about carbon removal as a binary thing of, yes, it happened or no, it didn't, and moving towards more of a probabilistic way of thinking about uncertainties. So there are going to be a lot of uncertainties, especially with open systems.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

24. “You have highlighted a very large existing challenge for carbon removal, it's hard for the reasons that you mentioned, right? One, there's so much diversity in the kinds of carbon removal solutions. How you do MRV for bio oil sequestration is very different than kelp sinking, and that's very different than direct air capture. There's just a lot of heterogeneity in process. The second reason it's hard is because a lot of these companies are basically just getting started. They are bench scale or just post bench scale and trying to prove out the core technology. And the third reason, I suppose, is that unlike other parts of climate where we are transitioning existing infrastructure or in an existing industry, carbon removal is a new industry. And so a lot of the surrounding ecosystem infrastructure isn't yet set up. And charm, for example, delivered their first tons for us last year. And we FaceTimed with the injection.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

25. “Today, we have purchased via our Stripe Climate Portfolio and Frontier up to $2,000 a ton and as cheap as $75 a ton. I would say our weighted average is probably somewhere in the maybe $300 to $700 a ton range. In the future, everybody says $100 a ton. I think it's a little finger in the air. Directionally, we know we want it to be a lot cheaper. I don't know whether it's going to be $200 or $50, but roughly in that direction. At the volumes that we're talking at 5 billion tons per year, getting it from $100 to $50 or $100 to $90 makes a big difference. So we want to push it down as much as we can without compromising on quality. And I don't think we know yet exactly where it's going to land. And that's okay. We just know that it needs to be a whole lot cheaper than it is today.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

26. “Look like in the future? What are the key assumptions driving those and trying to figure out how would an offtake from us accelerate them down that cost curve? And so it's like we're backwards evaluating and the forward evaluating on the prices. We're very far. I get worried when people start to talk about carbon removal as a commodity. You can't commoditize something that barely exists. Like we can't be treating these all as having the same price because they don't today. But that doesn't mean just because they're expensive today, they couldn't be cheap in the future. And so what we're trying to balance, and it is a hard balance, and we will get it right. I hope most of the time and get it wrong sometimes, is how do we help support the solution that we think have the best possible chance of achieving our criteria in the future rather than evaluating them on exactly where they are today?”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

27. “You imagine a bunch of cost curves for different kinds of carbon removal solutions. They have different intercepts, starting intercepts, and they have different slopes. So some of them are really expensive at the beginning, but they drop really quickly. Some of them are...”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

28. “Success actually delivering tens in the past, and we don't pay them until they deliver us the 10. So it's de risked for us from that perspective, but it's helpful for the company because banks care a lot about if anybody's going to buy the thing that they're financing. So there's two tracks and we have a more thorough diligence process, as you can imagine, for offtakes. We're just actually in the process of doing that for the first time. We kicked that off actually a couple of weeks ago along with this round of purchases. So stay tuned there, but we'll try to tailor the diligence process to the stage of the company.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

29. “One other thing I'll call out is we have two separate tracks with Frontier to get at the stage question that you raised. So for really early stage companies that are just getting started, we have a pre-purchase track. And these are $500,000 checks that we give to the company before they've given us the tons. So it's like an advance purchase, so to speak. And if they don't deliver, we don't have any recourse and that's okay because they're relatively small numbers, but we're willing to take a fair amount of risk at this stage because of the volume and because we think that there is some nugget of something really interesting that we want the company to really dig into and explore. For later CH companies, we are offering off take agreements. And this is effectively an agreement for a larger amount that a company could take to a bank and use it to help them get financing. And for these companies, we are looking for more mature solution development, right? This isn't their first 10s. They've had some.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

30. “Of wonderful scientific and technical and commercial experts and governance experts that help us evaluate these applications. For every application that we get, we give it to at least a couple of these reviewers, we then take it back, synthesize all of it, and make calls. But I think to your point, we're learning a lot every single round that we do this, and we are continuing to edit our process to best reflect those.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

31. “Have a path to being less than $100 a ton? Does it have a path to being more than half a gigaton per year at scale? And does it make use of storage that's not using a lot of arable land? Let's go back at one. The second is, do we think that the team has the ability to execute on the proposal? And three, how does this fit into our larger portfolio? We want to build Frontier a risk adjusted portfolio of solutions that we think collectively has the best chance of getting to scale. In order to evaluate that, we have written a pretty lengthy application for projects and we rely on a set of internal experts and external experts to help us evaluate those. The tricky thing in evaluating these companies is for one company, you need a biochemist and the other one you need a geologist and for somebody else you need a lot of different kinds of expertise. So we have an in-house team of science experts, but we also have a pretty extensive”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

32. “Is a great question. It's a challenge, and we are reiterating on this. So a little bit of context here. Frontier was an outgrowth of what initially started as a small stripe commitment for a million dollars of carbon removal back in 2019. So we did a round for ourselves. We then launched Stripe Climate, which makes it easy for any business to put their money into carbon removal, which we then collate together and use it to buy even more carbon removal down the cost curve. So we've done two rounds of purchases with our money and biasripe climate. And then we had this most recent round. So we've done this four times. We've evaluated four cohorts of companies. And our general process here is one to get really crisp on the criteria of what it is we're looking for. And we have kind of three buckets of things that we look for. The first is, does it meet our criteria? Or do we think that it has the chance of meeting our criteria, right? That we've laid out. This is a thousand years of permanence.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

33. “That's focused on trees, but they're also interested in how they can engineer recalcitrant biopolymer. So they're basically trying to figure out if they can get algae to create sporopollinin, which is a rather inert form of biomass. And if they can do that at scale, that potentially unlocks a promising quote-unquote nature-based solution that's permanent and doesn't take up a lot of arable land. We could talk about this for hours, but that's at least the flavor of the kind of thing that works at to see more of.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

34. “Synthetic biology. So nature does carbon removal for free, right? Plants do it with photosynthesis, rocks do it, and the nice thing about nature as well is that itself replicates. Machines don't self-replicate for free. Nature does. The challenge with nature is that many solutions aren't permanent and many solutions take up really valuable arable land that we are likely going to need to use for other things. So a company like Running Tide is interesting because it combines or attempts to combine the best of what nature does and mitigate some of the downsides. It is storing carbon on the proverbial desert floor of the ocean and is making it permanent by getting it below the thermocline. And so there are a lot of different possible solutions in this space. I think that we haven't yet seen in our last round of purchases we gave a little bit of R&D money to a company called Living Carbon that has a corporate.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

35. “We have companies like Running Tide that are kelp sinking. So they essentially have 100 foot strings of rope. They seed that rope with kelp spores. They drop into the ocean. It grows over six to nine months. And when it becomes mature, it sinks to the bottom of the ocean because kelp is negatively buoyant and it will stay there forever. There's another company called Undo that is essentially, so rocks are a way that nature captures CO2 naturally. It just does it really slowly. So there's a number of companies that are trying to figure out how do we speed that up. Undo crushes up rock, basalt or olivine, spreads that over land. It absorbs CO2 and then eventually makes its way into the ocean as bicarbonate. And these are just to give you a flavor of the kinds of different approaches that we are seeing. There are lots of gaps and recently frontier issued our fall RFP and we highlighted some of these gaps. I think one area that we are particularly excited about is”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

36. “Could spend four hours on this topic. So I think that on the supply side, as you mentioned, we need a portfolio of solutions. And I'll run through some of the ones that we're seeing right now. And as you said, highlight some of the gaps. So a lot of people are probably familiar with direct air capture. Climbworks is very photogenic. You've probably seen pictures of there. They look like giant fans. They sex you into these boxes. They find the 412 parts per million of CO2. They condense that. And then they mix it with water to make fizzy water and inject it underground into basalt rock in Iceland where it will mineralize. That's an example of a direct air capture company. We also have Charm Industrial, which is taking waste biomass like cornstober, and they're pyrolyzing it, which basically just means heating it up and turning it into oil and then injecting that underground, where it will then stay for thousands of years.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

37. “Other safety implications, but we want to make sure that we're not saying, oh, it has to be DAC or it has to be enhanced rock weathering or it has to be kelp sinking. How do we invite lots of solutions to the table and then double down on the ones that are working as they scale up? Right now, policy accidentally picks a horse, not because it ever intended to, but because we wrote it before a lot of these other potential pathways even existed. So we need to figure out how to thread the needle there.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

38. “Subset of companies. So it's written for companies doing more traditional direct air capture. But if you are doing kelp syncing or an enhanced rock weathering or bio oil injection, you can't get access to 45q. Or even if you're doing injection and mineralizing it underground versus just injecting a CO2 stream, those kinds of solutions are not eligible for 45Q. So a big area of focus for carbon removal policy for us is how do we make sure that one, we get the right macro policies in place to support a healthy ecosystem that will grow over time. And two, how do we make sure that those pieces of legislation and that these benefits are accessible to a really broad set of carbon removal companies? This field is so early. We don't want to pick a horse yet. We just outline the criteria of what it is we want to see, what is great carbon removal look like. It's permanent. It has a path to low cost. It considers environmental justice.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

39. “The IRA is a largely fantastic piece of legislation, and it for the most part focuses on the emissions reduction side of the equation. And that's great. I think that is and should be the focus right now. So there's tons of good stuff to unpack there. On the carbon removal side, the most important thing was changing some of the numbers around 45Q, which is a tax credit that goes to carbon removal. And effectively, what the IRA did was increase the price of the tax credit associated with permanent carbon removal, specifically direct air capture, and lower the threshold for companies that are eligible for that. They also added something like direct pay. So they basically sweetened the 45Q pot for carbon removal companies. That is great. The challenge and one of the things that we are focused on in the next coming years. So the way that 45Q is written right now and not to get too wonky into tax credits, but it's basically written in a way that is only accessible by a really small”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

40. “Trillion dollars. It's just that we're talking very large numbers at this point. And so policy is really going to have to play an important role here. And that could be in the form of direct government procurement. It could also be in the form of the government creating a compliance market effectively by pricing the negative externality of a ton of CO2 and then pushing that on to private companies and emitters. I think there are like a number of different mechanisms for doing that, but you are very right to call out that voluntary markets and altruism alone are not going to get us to the volume that we need. And that's almost systematically true with something as big as climate.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

41. “Of the way there. If we contextualize this in what the market is going to need to be by 2050, right? If we're talking about 5 billion tons per year at $100 a ton or even, let's say best case, we can get this down to $10 a ton. That is $50 billion to $500 billion per year. Frontier is $1 billion over nine years. So there's a huge gap between where we are now and where we need to get to. At the same time, Frontier is both a big step and a small step depending on the lens that you look at it because prior to this, $30 million cumulative had been spent buying permanent CDR. So compared to that, a billion dollars is a massive step, but compared to $50 to $500 billion per year, we still have a long way to go. And to your point, it's very hard to imagine voluntary markets getting us really anywhere close to that. And that's global GDP is like 100%.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

42. “I've either voluntary market. So we would think about Frontier as voluntary, right? These are companies volunteering and saying, hey, we want to help drive this ourselves. I think of the voluntary market as a great way to get us to first base, but to your point, it's not going to get us.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

43. “So, the motivation for a company is really to Make sure in part that both we as companies but also the world has the set of solutions that we need to meet our collective net zero targets. So these are an important part of our corporate programs. They're an important part of government net zero programs. And without early buyers who are willing to buy at inefficient prices and are willing to buy at a premium right now, we aren't going to have the solutions that we need in five, ten, twenty years to meet those goals. So it's in part in line with our existing corporate programs and it's in part a little philanthropic in nature in that we are overpaying for these tons so that there's cheaper tons available later to a larger set of the market that also has nine year commitments.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

44. “You highlight a really important distinction, which is think of the $925 million in Frontier as customer funds, right? We are the customer for carbon removal companies. We are not making an equity investment in them. We are putting money in and we are getting tons out. And Frontier was co-founded with Stripe, but also Alphabet and Shopify, Meta, and McKinsey. And all of these companies have their own net zero programs. Governments and companies are lining around net zero. And the fundamental principles of net zero are, one, measure your emissions. Two, reduce them as much as you possibly can. And three, deal with the rest. And the deal with the rest is a little squishy right now. Everyone's trying to figure out what does that even mean? What do we do with this? And the problem is, as we've talked about, there's really no supply.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

45. “Of how can we create a compelling enough market to pull entrepreneurs into this space and to pull investors into the space such that we can start to build this really exciting portfolio of solutions that we're going to try a bunch of stuff, some of it's going to work, some of it's not, but that collectively has a chance of getting us to that five to six billion tons per year number by 2050. That's the idea.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

46. “Clear in the 2018 IPCC report that in addition to emissions reduction, we're also going to need to do a huge amount of carbon removal. The solutions that exist today on the supply side are basically non-existent and the solutions that do exist are very expensive. And that is in large part because there haven't been customers for carbon removal. Unlike with energy, humans derive value from energy, right? We can use it to do stuff, to build stuff, to make stuff. With carbon removal, you're pulling CO2 out of the air and storing it somewhere permanently, you're like intrinsically not using it. And so there hasn't been a natural market for CDR. And as a result, if you're an entrepreneur, why would you want to start a company if nobody is going to buy the product that you're selling? If you were an investor, why would you want to invest in a company if that company isn't going to have a revenue stream? And so what we are trying to really solve via Frontier is this chicken and egg problem.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

47. “Frontier's an advanced market commitment to buy an initial 925 million dollars worth of carbon removal over the next nine years. And the need for frontier is really grounded in what you just said. Roughly the IPCC says that we're going to need about six billion tons of CDR by 2050. And we have some of the solutions that we need to get there today, but it's very unlikely that planting trees and soil carbon sequestration by themselves are going to scale to that six billion per year number, right? Six billion tons is about what the entire United States emits every single year. It's just a very large number. And we need to develop a portfolio and we basically don't have that yet. The reason that we don't have that is because historically, first of all, we didn't really realize we were going to need as much CDR as we now do. And this became very”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

48. “From the atmosphere and the ocean, and storing it for at least a thousand years. So that is how we have scoped our area of focus. And this is really intended to be, again, a complement to the emissions reduction side of the equation, which again has to be 90% of that. But in order to remove CO2 already in the atmosphere and in order to help offset some of the really hard to decarbonize sectors like cement and steel, which we may be able to fully decarbonize that, but as a hedge, we want to make sure that carbon dioxide removal is another built-out tool in our toolkit.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

49. “Offsets become a very loaded term. And when people use that word, I think they often mean different things. So offsets can be used to refer to both the emissions reduction side of the equation or the carbon removal side of equation or the sort of counterfactual side of the equation of I'm paying for something such that I want to be sure that it doesn't happen in the future, this sort of counterfactual piece. The problem with offsets is that the range of quality is very broad and we have trained ourselves to think that we can solve climate change at $2 a ton or $10 a ton. And if that were true, we would have done it by now. We aren't going to do that at this point in time. And so what we're really focused on, I suppose you could say is like a very specific subset of offsets as canonically defined, but we are really focused on permanently removing carbon dioxide.”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source

50. “Our grid infrastructure. We're going to have a lot more demand, and we're going to have supply that is intermittent. The sun is not always shining, the wind is not always blowing. So we have to figure out how to attach those two things in a way that works for this new world. And that's going to mean a big rewrite. There's plenty of other things like food is another source of energy and how do we decarbonize heavy industry? How do we make our stuff like steel and cement? Those are big components of it too. On the carbon removal side, we can also think about this as supply and demand. Supplier are the companies that are removing CO2 from the air or the ocean and demand is the customers that are buying that CO2 that are essentially paying those companies to take CO2 out of the atmosphere in ocean. And we can get into the problems of why this has been so tricky, but functionally at a very high level, we want to get from 50 gigatons of emissions to net zero by 2050. We need to reduce emissions. We need to remove a bunch of CO2 from the atmosphere and we need to do”

    2022-11-30 · a16z Podcast · The Economics of Carbon Removal with Nan Ransohoff · IDENTIFIED FROM THE TRANSCRIPT · source