Scaling Climate Tech Solutions for Real-World Applications in an Evolving Regulatory Environment

00:14Welcome to NASDAQ Trad Talks,

00:16where we meet with the top thought leaders and strategist in emerging technologies,

00:19digital assets, regulatory landscape and capital markets.

00:22I'm your host, Jill Malangrino and joining me on the desk

00:24at the NASDAQ Market Site is Martin Caylee.

00:26He's CEO of carbon free,

00:28Bill Lease managing partner at Bremer Energy Ventures and Fred Clark,

00:32Director of the Carbon to Value Initiative Program,

00:35and interim managing director at

00:37Urban Future Lab by New York University Tanden School of Engineering.

00:41We are here to discuss scaling climate tech solutions for

00:44real world applications in an evolving regulatory and technical environment.

00:49It is great to have all of you with us.

00:51Welcome to TraTalks Martin such a fascinating topic when you think about the economics,

00:55the technology, the policy, the skill sets.

00:58Let's go around quickly starting with you, Mart,

01:00and tell us about the work you're doing at carbon free.

01:02Yeah, great, great to be here, Jill.

01:04Yeah, so we're based down in Texas in San Antonio,

01:08and we developed what we believe is a game changing decarbonization technology.

01:13So we focus on the reduction of CO two from industrial sources.

01:20So we're working very closely with US steel,

01:22we announced earlier this year, a big project with them.

01:25And we make very low carbon, in fact,

01:28the world's first zero carbon mineral that can be used in making paints and plastics.

01:34So real world applications and uses.

01:37So the beauty of decarbonization is we're working on both reduction from smokestacks,

01:43and we're also working on creating lower carbon products, as well.

01:47Which is so interesting about the space because

01:48there is more than one solution which we're going to get into.

01:50Absolutely. Bill, tell us about the role that Bremer has in climate tech.

01:54Sure, we are a 22-year-old venture capital firm,

01:58which I co founded for the purpose of focusing on climate tech,

02:01sustainability, and environmental solutions that are market driven.

02:05We invest across four sectors.

02:07One is transportation. The second is power.

02:10The third is resources, which is fuels,

02:12chemicals, materials, and carbon capture and utilization.

02:15And the last area is the built environment.

02:17Some people call it infratech,

02:18but the built environment what goes on in buildings and houses and factories.

02:21Which is so interesting because you think of climate tech as something newer,

02:24but it really has been around for multiple decades to your point.

02:27Tell us about the work you're doing at NYU,

02:28one of our local schools here in New York City.

02:31For the invite, yeah,

02:33we are Urban future lab.

02:34We've been around since 15 years to your point.

02:37We're not really new here.

02:39We help young companies that have solution to climate change to scale and commercialize,

02:44typically from pre C to series A,

02:47and they stay with us at our incubator in downtown Brooklyn,

02:51two to three years on average.

02:52We also have programs where we help companies through

02:55an accelerator for six months about to help them scale.

02:59And and we have worked with

03:01about 170 companies so far have raised 2.5 billion dollar in proble capital,

03:06and, you know, with survival rate about 80%,

03:09which is kind of the opposite than the national average.

03:13So there is definitely value in getting support from incubators like us.

03:17It's so interesting, Bill. I want to talk more about this because,

03:19again, I think climate tech is viewed as something that's newer.

03:23Tell us about the industry at a high level.

03:25What are some of the challenges that it's facing?

03:27And is this a one size fits all solution?

03:30No. I mean, there are many solutions and many approaches that need to be developed.

03:36And this is not something new.

03:37This is something that's been happening over half a century or

03:39more since the first Mideast oil embargo, really,

03:42when this is being addressed from a security perspective,

03:44as well as from an environmental and more recent years climate issue.

03:50And the approaches to different industry sectors have varied quite a bit,

03:55depending upon what's, you know,

03:57based around capital efficiency,

03:59based upon the um the ability to something we're going to talk more about,

04:04but scaling and what time it takes.

04:06And I'd probably say, lastly,

04:08the ability to deliver a pragmatic solution that's doable in a time frame that matters.

04:14You know, so if something's out 20 years,

04:16I'm suggesting you don't do it,

04:18but it's not going to, you know,

04:20the economics get tough if you're market driven.

04:22Yeah, well, I mean, it certainly does.

04:23And Martin, at the end of the day, these are capital intensive,

04:26R and D focused projects that take time.

04:28They're not just going to turn this ship

04:30around overnight because the products simply exist.

04:33Absolutely. I think it's one of the things that we tend

04:35to forget with both the energy transition and,

04:39you know, the whole decarbonization spaces.

04:41To do any of these things, you need real manufacturing plant.

04:44You're either creating plant, which is going to capture the CO

04:47two and then use it and recycle it to make real products.

04:51And we've had 30 or 40 years of really a dearth of manufacturing.

04:56You know, I've been in chemical manufacturing for 35 years,

05:00and all the mantra from our investors was,

05:02we don't want to invest in real steel and real plant and real concrete.

05:06Now we need to build real plants.

05:09So there's a sort of manufacturing renaissance going on,

05:13which I think is a challenge for

05:15both the capital markets because they're not used to investing in big capital plants.

05:20They like software solutions. They like digital apps.

05:23And then there's a whole question about the skill set who do that,

05:27you know, who's going to actually, you know,

05:29do we have enough raw materials?

05:30Do we have enough supply chain lines?

05:32Do we have enough, you know,

05:33fitters and boilermakers and carpenters to actually build the plants out?

05:39So it's a whole sort of brave new world, really.

05:42And it certainly is like the work that you're doing at MYU, right?

05:45You're helping to build up those skill sets,

05:47and we spoke about this offline before,

05:48but this really does lend to that public private partnership and skilling from,

05:53you know, the academic level all the way through

05:55the trades and the engineers and focusing on the right skill sets.

05:59Another big difference is the time to market,

06:02you know, compared to software solutions, you know,

06:04two to three years versus here,

06:06we're talking about potentially up to ten years

06:08before you've been able to de risk and scale your technology.

06:11So that's why we need a lot of support.

06:13Di solution needs a lot of support,

06:15but also industry partnerships.

06:16So, you know, a lot of the solution,

06:18they don't grow in a vacuum.

06:19They need to be integrated in existing value chain.

06:22You need to retrofit the solution.

06:24You need to adapt the existing industry.

06:26So we believe that a lot of these solutions won't scale without industry partnerships.

06:31That's why a lot of our programs are tailored towards pairing startups with

06:35large corporates and facitating that uncomfortable.

06:40Naturally, there is no fit between,

06:42a very young disruptive startup and a large corporate.

06:45So we helped make that partnership.

06:47Like, carbon free now is doing with UST,

06:50and we have other large corporates on our partner like

06:54BSF and Shell and others that help the company scale and integrate.

06:58So that's a really important point,

07:01I think, for scaling climate solutions.

07:02Yeah. And, Bill, part of this is, too,

07:05there has to be that public aspect in it,

07:07energy, climate tech, they're heavily regulated spaces, right?

07:10So with the changing of the administration here in the US,

07:15how can that potentially impact this space?

07:18Because, you know, there could be

07:20a recalculation of how policy looks and how the projects can get online.

07:25No, I think it's inevitable that this recalculation is going to occur.

07:29That said, there's an awful lot of forces already

07:31driving what's been done in the last few years.

07:35I would say that there's a move towards more pragmatism towards

07:39more that are less developmental and not necessarily not development,

07:45but less early early stage and moving towards more middle stage than it was before.

07:50That doesn't forego, though any of the earlier stage opportunities for say,

07:55but people want things to get to market.

07:57And for example, carbon free is one of our portfolio companies,

08:00and that's the position they are.

08:02Now they've taken first generation to market,

08:04and now moving into second generation.

08:06So that's, quite quite exciting.

08:08Yeah, I think building on what Bill was saying, I think, you know,

08:10it's very interesting in just the last six months,

08:13the whole language has started to change.

08:15You know, I find myself going to a lot of conferences and things.

08:17But we've started moving from

08:19early stage technology development and

08:22the sort of incubation stage and building out technology,

08:24the language is now much more about building out

08:26businesses and changing that to a very actually,

08:31we need to build businesses which make money and self support themselves.

08:35Now we've been a strong advocate of that for a long time because we are

08:39going to get different waves of support from government,

08:44from different forms of regulation.

08:45We don't have a common approach globally to that.

08:48We're never going to have that. So businesses need to stand on their own two feet.

08:53You know, this isn't we solve the problem once.

08:57If we're going to get to NetZero by 2050,

08:59we still have to continue capturing and doing something with CO

09:02two beyond 2050. It's a here forever.

09:05The only way that's going to survive is if we have true business cases.

09:08Which is interesting. I think that's reflective of the capital markets overall.

09:11And I know we're talking about climate tech here,

09:13but the valuation resets that we saw in 2021 and 2022,

09:16operational efficiency is certainly going to be

09:18valued more highly than a great story, right?

09:22Or, you know, governance is a requirement now and

09:25being able to commercialize this and not just create solutions,

09:29but have an identifiable problem and have a solution to execute on that.

09:34I mean, there has to be some sort of market impact here because

09:36the dollars are just not going to come in the story sounds.

09:39I think we see a lot of the successful companies.

09:42Climate impact is secondary in the proposition, right?

09:46So we just on board a new company called Helix Technologies.

09:51They cut the energy use for AC by a factor of two.

09:55So, you know, you cut the bills by two.

09:57You cut the whole energy demand by two,

09:59the stress on the grid by two,

10:00and by the way, you emit less CO two. But that's kind of the

10:05You know, undervalue or under on the whole value proposition.

10:10And I think this is the kind of solution that we will

10:12see get into the field more rapidly.

10:15And that's why we saw the EVs and just superior products that are entering the market.

10:20That's how we can have an impact.

10:22It's the old green dollar story,

10:24you know, the Green dollar, sort of,

10:26actually, and that sustainability drives real progress.

10:31I think it's interesting.

10:32You touch on it in terms of, obviously the case very top of mind at the moment,

10:35is the change of administration, what's going to mean for these technologies.

10:38And it doesn't have to be a wholesale, bad thing.

10:41It can actually be a good thing to shake things out a little bit,

10:44get us focused on real business focus.

10:47You know, the good support from government is great at the incubation, the early stage.

10:53We know the old adage that, you know,

10:55it's not government's place to pick winners. And I think we've seen that.

10:57We've seen support of a lot of technology,

10:59but it is it's business' role to pick winners. Right.

11:03And we're going to see that shift now to a much more of a business and market focus.

11:08That may not be a bad thing. Yeah.

11:11Especially when the thought is that

11:14the benchmarks are going to be very economic and market driven and leadership driven,

11:18especially when it comes to national security.

11:20Yep. You're going to want, you know,

11:21to have a substantial role in this.

11:23I don't think it takes away from innovation.

11:25I think what you're looking at now is the realization that we

11:28have to implement things in a way that's truly getting you to scale,

11:31do everything we can to work between the private sector,

11:35obviously, entrepreneurs that are very savvy about how to manage resources.

11:39Where the government can really play a role to really saying, Hey, you know what?

11:43What we started at university level or what we started,

11:47somebody's garage kind of thing is now at the point where we can catalyze it to a point

11:52where we're really going to open markets up and create more of a circular economy.

11:58Right. And that's the great point because these types of skills, right?

12:02And the opportunity that it creates the jobs, the salaries.

12:06It only goes back into the economy.

12:08I think it has to be more deliberate when it comes to the strategy, though, Bill.

12:11Perhaps that leapfrogging over.

12:12We were talking about EVs and comparing that to ships earlier in the green room,

12:17going from combustion straight to EV,

12:19perhaps that hybrid in between,

12:21or having redundancy, having a backup might be a little bit more digestible.

12:24So having things affordable at scale and

12:26the user experience at the end of the day, which counts for everything.

12:29I think the strategy has to be really deliberate.

12:31Agree. I think the customers always right.

12:33And if the customer can be eased into a change of technology,

12:39that doesn't mean that EVs are negative or anything like that,

12:43but you're just creating a window for people to begin to understand and adjust to

12:48an electrically driven vehicle that is different than an internal combustion engine.

12:53So I think I honestly believe that hybridization and laying

12:58the groundwork for incremental application is a very good thing. Right.

13:02Yeah.

13:02One thing I would just compliment on the change administration,

13:06let's not forget that the US is an assembly of states, right?

13:10And a lot of energy decisions are made at the state level.

13:13So I think we're going to see,

13:15like we saw in 2016,

13:16coalition of states and energy policy driven by states.

13:20New York is a great example.

13:22They are one of the most aggressive net zero targets,

13:25100% reduction by 2040.

13:27Massachusetts just just passed a bill,

13:29$1,000,000,000 over ten years.

13:31It's an economic development bill. It's nothing.

13:33It's climate. They want to use climate as the next industry for growth.

13:38Clean energy in the US grows two times faster than

13:42the US economy has created 250,000 jobs over the last year.

13:49So there is an economic development,

13:51growth opportunity story here that I

13:54think will resonate with any administration to be quite honest.

13:56That's a great point that you bring up. You have to

13:58know your audience and who you're speaking to.

14:00You know, speaking to climate tech practitioners is different than when you're trying

14:03to get policy or, you know, funding through.

14:06You have to be able to understand your audience and make sure that

14:08you're focused on the customer and user experience,

14:11because at the end of day, we want to get from point A to point B.

14:13You know, I would take the example you made of sort of EVs and hybrid,

14:18and we sort of jumped maybe over that,

14:19and maybe we shouldn't have done.

14:21On the industrial emissions,

14:22exactly the same. I'll take the example of steel.

14:24We're working with US steel. There are some great technology changes for steel out there.

14:28You know, I to something on the radio this morning about

14:31a great project up near the Arctic Circle in Northern Europe.

14:34Fantastic. But that cannot be transferred to all places where you need to make steel.

14:40And we have trillions of dollars of invested assets.

14:42So we can't do that hybrid ly.

14:44We're not going to solve the decarbonization of

14:47steel by going to a new technology bit on hydrogen or different place.

14:50We do need to decarbonize the steel assets we have today.

14:53If nothing because there are millions of jobs linked to those manufacturing facilities.

14:59So it's incumbent on us.

15:00I love what the head of sustainability at US Steel says.

15:03The way she positions this is,

15:05they're all about supporting progress, not perfection.

15:08We're not going to get right to the endpoint answer.

15:10What we need to do is collectively make some progress.

15:13And certainly, at carbon free, that's what we're all about doing.

15:16Let's take those first incremental steps.

15:18Let's make major changes in terms of decarbonization,

15:21and let's build out real profitable businesses that can reinvest in themselves.

15:24That's a great point, too, if you want to bring it to a personal level.

15:26Oh, I won't bother recycling this.

15:28Is one can go to make a difference? Well, it does.

15:30Once you start multiplying those cans by millions and billions,

15:34that's part of that snowball effect.

15:37And I also think just because when you think about climate holistically,

15:41every region, every area of the world is different, isn't it, Bill?

15:44So that just implies that there is not a one size fits all solution,

15:48just because the climate is dynamic.

15:50Absolutely. I mean, if you look at different countries,

15:54smaller, easier to form a policy,

15:57there are some countries like certain Sandiegan countries that

15:59are when it comes to something like EVs are 80 or 90% EV,

16:02you know, which is extraordinary.

16:04And that is because based on circumstances and the

16:08ability for those particular societies to be able to endorse that quickly,

16:13but not everybody is going to be in that situation.

16:18Tbody who lives in a developing country where electricity isn't readily available,

16:23but you can still have transportation through

16:25using hydrocarbons, that's going to work for well.

16:27If you can then can figure out ways to,

16:29you know, hybridize the vehicle,

16:30so then you can still have some electric,

16:32but then, you know, that's more practical.

16:35In the case of carbon free, you know,

16:37the ability to take this massive amount of assets and not just the steel industry,

16:42steel being one of them and being able to convert it into

16:45valuable products and be flexible on working with different types of industries,

16:49that's really, you know,

16:51high value because it means you're an adapting solution as

16:54opposed to forcing a huge change in the you make a great point,

16:57too, and that's why we've seen areas of the world that are able to

17:00leapfrog physical infrastructure as well as software and banking infrastructure.

17:03I mean digital assets we have the same argument in this space as well.

17:07We can't just plug and play frameworks

17:10like you can in the EU when it comes to AI or digital assets,

17:13or we've seen in Southeast Asia,

17:14where they're able to implement some of you know policy around these solutions,

17:17legislating in the US is a very different animal.

17:20You have to build on top of that legislation.

17:22So it's not that's part of why it takes time, as well.

17:25And I think we have to recognize that Fred,

17:28there is a process that we have to go through in the US,

17:30just because we do have these legacy assets in its.

17:32Sure, and I think to Bill's point around sort of the export opportunities, right?

17:38Like, what is the other positive impact of climate tech?

17:42The economic opportunity is going

17:46there with US technology and export to the global market.

17:50So you have incredible innovation in the US on geothermal,

17:54for instance, you know, we have a profit company called Dandelion Energy.

17:58There are others out there that are developing the next generation of geothermal.

18:02This is a type of technology that can be replicated everywhere around the world,

18:07and it doesn't have to be necessarily in the US.

18:09Um, and so that can be also great driver of economic progress and growth.

18:14So I think that's a good story about climate tech,

18:17right, why it's investible.

18:18Yeah, it certainly is and I think as

18:21these become more scalable and we learn more about them,

18:24that roadblock in terms of bill, you know,

18:28capital intensity and the amount of time,

18:29particularly when we think about private investments and

18:31partnerships going into these types of technologies that have to be developed,

18:35you know, data begets data,

18:37product begets product, it'll be more accessible.

18:39And I think that's really the key, like what we were talking

18:41about before being deliberate around strategy.

18:43Yeah. I mean, I think having an understanding

18:46of what it takes to go into a project and not be blindsided by

18:51just the technology and the exciting and all that and understanding and having

18:56the right experience and brain trust around to build that ecosystem early is really,

19:01really important so that you can get to a scalable solution,

19:06and that's what companies like Carbon free are doing.

19:10And, you know, I think that's where it's headed and

19:13a lot of things that Fred's involved with, as well.

19:15We need to figure out how to build that ecosystem and

19:19that knowledge base so that scale is not such a daunting problem.

19:24There's another good area of why, you know,

19:26working with existing industries is you can move faster.

19:29You know, this sort of, you know, progress,

19:31not you know, sort of affection.

19:32Sort of a good example of, we're going to be building our plant

19:34on the site at US Steel in Gary, Indiana,

19:37you know, so you challenging environment for

19:40jobs and for sort of wealth and things like that.

19:44So we're building on that.

19:45You know, we'll be creating three or 400 jobs,

19:48both directly and indirectly there.

19:49We're building on existing Brownfield site.

19:52So all of those issues are long term permitting,

19:54if we look like pipelines and underground wells for sequestration of CO two,

19:58they may be sort of six, seven year sort of permitting pipelines.

20:01You know, our permitting will be five or six months it's an existing umbrella.

20:05We also have the existing skill set there of operators from the union labor,

20:10from the construction capability to be able to build the plants out.

20:13So I think building on what we have rather than trying to invent something

20:17completely new much more powerful and we can move I would agree with you.

20:21You know, having that nimbleness of a smaller company.

20:23And then the scalability of something like

20:25a US Steel mix why reinvent the wheel organically,

20:29when you can just acquire the technology and the intellectual property?

20:32Have to wrap it up there. 20 minutes goes by fast.

20:34Thanks for joining us on trade talks and thanks for

20:36joining me from Marketsite I'm Joe Malanrino,

20:38global market reporter at NASDAQ.