1 00:00:00,080 --> 00:00:02,320 Hey everyone, thank you for listening. 2 00:00:02,320 --> 00:00:04,240 This is Ross Kenny, and I'm your host. 3 00:00:04,520 --> 00:00:07,200 I have two sponsors that I'd like to tell you about today. 4 00:00:07,360 --> 00:00:09,960 They're both organizations doing valuable work within Carbon 5 00:00:09,960 --> 00:00:12,080 Removal. One of them is a new sponsor of 6 00:00:12,080 --> 00:00:14,440 the show and the other one has been with us from the start, so 7 00:00:14,600 --> 00:00:15,600 I'm going to start with a new one. 8 00:00:15,600 --> 00:00:17,120 I'm going to give them a chance to go first. 9 00:00:17,440 --> 00:00:20,360 It's Climify. Personally, I think they produce 10 00:00:20,360 --> 00:00:22,800 some of the best content within Carbon Removal. 11 00:00:23,200 --> 00:00:26,480 Their reports are top tier. I always look forward to reading 12 00:00:26,480 --> 00:00:28,400 them. I've learned a lot from them. 13 00:00:28,520 --> 00:00:30,640 There's one in particular that I like that I referenced in a blog 14 00:00:30,640 --> 00:00:33,760 post I wrote a while back called Bridging the Cdr Financing Gap. 15 00:00:33,920 --> 00:00:38,040 The comprehensive guide. Just really powerful, great 16 00:00:38,120 --> 00:00:40,960 work. If you're looking for good Intel 17 00:00:41,080 --> 00:00:43,680 on carbon removal, check out the Clima Fire reports. 18 00:00:43,680 --> 00:00:46,120 They're really good. There are lots of intermediaries 19 00:00:46,120 --> 00:00:48,720 within carbon removal. If someone wants to buy carbon 20 00:00:48,720 --> 00:00:52,160 removals, many people will heed the call and try to sell them 21 00:00:52,160 --> 00:00:54,360 some. Climify is a group that I see 22 00:00:54,360 --> 00:00:57,160 almost more as a white glove service. 23 00:00:57,400 --> 00:01:00,520 They're quite selective in what they choose to do. 24 00:01:01,160 --> 00:01:03,240 The way that they put it is that they empower companies to 25 00:01:03,240 --> 00:01:07,800 develop and manage robust, high quality, durable Cdr portfolios 26 00:01:08,080 --> 00:01:09,880 that's built upon market intelligence. 27 00:01:10,120 --> 00:01:11,920 They have a proprietary rating system. 28 00:01:11,920 --> 00:01:14,720 You may have heard that they just gave Deep Sky in Canada a 29 00:01:14,720 --> 00:01:16,840 very high rating. They're involved in the 30 00:01:16,840 --> 00:01:19,200 procurement themselves of facilitating, sourcing and 31 00:01:19,200 --> 00:01:22,840 managing RFPs for companies. So if you're looking to run a 32 00:01:22,880 --> 00:01:26,960 carbon removal RFPA, request for proposal, so you could have 33 00:01:27,040 --> 00:01:30,240 carbon removal companies coming to you with proposals for what 34 00:01:30,240 --> 00:01:33,040 they might be able to do. Climify as a group that can very 35 00:01:33,040 --> 00:01:35,920 much help you with that, perform the due diligence, structure the 36 00:01:35,920 --> 00:01:40,120 portfolios, negotiating, executing transactions, that's 37 00:01:40,120 --> 00:01:41,480 all something that they can help you with. 38 00:01:41,480 --> 00:01:44,720 And then also just managing the portfolio of making sure that 39 00:01:44,720 --> 00:01:47,800 the projects are monitored, warehoused appropriately, and 40 00:01:47,800 --> 00:01:49,760 then when the time comes, retired. 41 00:01:49,880 --> 00:01:53,360 Climify's project database covers about 95% of all the 42 00:01:53,360 --> 00:01:57,320 durable Cdr projects globally, but out of the 500 plus projects 43 00:01:57,320 --> 00:02:01,120 reviewed by Climify, only 15% meet their standards for 44 00:02:01,120 --> 00:02:03,200 delivery and integrity that they look for. 45 00:02:03,480 --> 00:02:07,720 And eventually only 5% of those projects are included in client 46 00:02:07,720 --> 00:02:09,800 portfolios. If you're looking to buy some 47 00:02:09,800 --> 00:02:13,800 carbon removals, if you want to run an RFP, follow the link in 48 00:02:13,800 --> 00:02:16,120 the show notes to learn more about Climify. 49 00:02:16,720 --> 00:02:19,840 And of course, I'm also very happy that Arbonics is 50 00:02:19,840 --> 00:02:23,320 sponsoring the show again. Arbonics connects European land 51 00:02:23,320 --> 00:02:26,560 owners to corporate credit buyers in order to remove CO2 52 00:02:26,600 --> 00:02:30,360 and protect biodiversity. They're very data-driven. 53 00:02:30,640 --> 00:02:33,760 They're trying to turn degraded and abandoned land in Europe, in 54 00:02:33,760 --> 00:02:36,640 the Baltic States back into biodiverse force. 55 00:02:36,680 --> 00:02:40,600 That's a really impactful good thing to be doing for its own 56 00:02:40,600 --> 00:02:42,680 sake. Outside of carbon removal, it's 57 00:02:42,680 --> 00:02:45,880 a good thing to do but is also very much focused on how much 58 00:02:45,880 --> 00:02:49,480 carbon can be sequestered while also pointing us towards the 59 00:02:49,480 --> 00:02:52,120 importance of Co benefits and ecosystem services. 60 00:02:52,160 --> 00:02:54,600 I think sometimes carbon removed people forget about. 61 00:02:54,720 --> 00:02:57,280 We're pretty focused on the PPM, but the other stuff is really 62 00:02:57,280 --> 00:02:59,960 important too. They're doing fascinating work 63 00:02:59,960 --> 00:03:02,960 on the data layer side. I'm not sure if you've seen the 64 00:03:02,960 --> 00:03:07,800 digital twinning of forestry, but they're making it. 65 00:03:07,800 --> 00:03:09,360 It's exactly what it sounds like. 66 00:03:09,760 --> 00:03:14,400 Our Bonics is on the cutting edge, trying to make forestry 67 00:03:14,480 --> 00:03:18,520 work for carbon removals and turn your back into that 68 00:03:18,520 --> 00:03:21,520 beautifully forested continent that it once was. 69 00:03:22,000 --> 00:03:24,800 So if that interests you, the link is in the show notes to go 70 00:03:24,800 --> 00:03:27,760 check out Our Bionics. Also, Lizette Louie, one of the 71 00:03:27,760 --> 00:03:31,920 founders and COO of our Bionics, was on the podcast earlier this 72 00:03:31,920 --> 00:03:34,400 year. Go check that out because we dig 73 00:03:34,400 --> 00:03:38,080 into a lot of the role of temporary removals within carbon 74 00:03:38,080 --> 00:03:40,840 removal. It's a fascinating big topic and 75 00:03:40,840 --> 00:03:44,800 Lizette brings her a game to it, so I hope you enjoy. 76 00:03:45,200 --> 00:03:48,080 Link to both sponsors are in the show notes. 77 00:03:48,440 --> 00:03:51,040 If you'd like to be a sponsor of the show too and hear more about 78 00:03:51,040 --> 00:03:53,400 what that might look like, you can e-mail me. 79 00:03:53,400 --> 00:03:55,840 The e-mail is in the show notes. And then also if you're 80 00:03:55,840 --> 00:03:58,560 podcasting and you want to use Riverside for recording or D 81 00:03:58,560 --> 00:04:01,160 Script for editing and transcription services, I have 82 00:04:01,160 --> 00:04:02,680 affiliate links in the notes too. 83 00:04:02,960 --> 00:04:06,000 And that also helps drive the show's financial solvency. 84 00:04:06,320 --> 00:04:09,520 So thanks so much for listening. Here is the intro to your show. 85 00:04:17,220 --> 00:04:20,100 Hello and welcome to the Reversing Climate Change 86 00:04:20,100 --> 00:04:22,860 podcast. I'm Ross Kenyon, I'm an 87 00:04:22,860 --> 00:04:26,700 entrepreneur working in carbon removal and climate tech and 88 00:04:26,700 --> 00:04:28,620 I've been here for about 8 years now. 89 00:04:29,420 --> 00:04:31,060 Thanks for listening. I'm, I'm really glad you're 90 00:04:31,060 --> 00:04:32,780 here. I have so much fun with this 91 00:04:32,780 --> 00:04:35,660 show. It's a lot of work to make, but 92 00:04:35,660 --> 00:04:38,100 I love it and I really don't want it to end. 93 00:04:38,760 --> 00:04:41,120 I've been trying to get more subscribers to the show. 94 00:04:41,320 --> 00:04:43,520 It's $5 a month. It's in Spotify. 95 00:04:43,880 --> 00:04:46,280 You can also subscribe elsewhere, but Spotify is the 96 00:04:46,280 --> 00:04:48,720 easiest. It comes with ad free listening 97 00:04:48,720 --> 00:04:51,320 from the programmatic ads, bonus content. 98 00:04:51,440 --> 00:04:54,760 In fact, a good chunk of today's episode is going to go into 99 00:04:54,760 --> 00:04:56,720 bonus content because it's good stuff. 100 00:04:56,720 --> 00:04:59,840 It deserves to be published, but just doesn't fit into the rest 101 00:04:59,840 --> 00:05:02,640 of the show, doesn't get a chance to be fully expressed. 102 00:05:02,640 --> 00:05:05,520 And I know people like to have shows that are consumable that 103 00:05:05,520 --> 00:05:08,640 are not these epic shows. So for shows that just don't fit 104 00:05:08,640 --> 00:05:11,160 the theme as nicely, I'm trying to move a lot of that content 105 00:05:11,160 --> 00:05:13,240 into bonus content. So if you want it, it's there. 106 00:05:13,520 --> 00:05:17,600 If not, you get your learnings, you get your intellectual 107 00:05:17,600 --> 00:05:19,240 stimulation for the day, and it can move on. 108 00:05:19,520 --> 00:05:21,920 So anyways, link is in the show notes, $5 a month. 109 00:05:21,920 --> 00:05:24,400 Thanks so much. Great rating and review in Apple 110 00:05:24,400 --> 00:05:26,600 Podcast. Spotify also appreciated. 111 00:05:26,920 --> 00:05:30,480 And now I'm going to tell you about the return of Mike Aslan. 112 00:05:30,760 --> 00:05:33,680 Mike has been on the show once, maybe twice. 113 00:05:34,040 --> 00:05:38,520 And Mike is the CEO and CIO of Carbon Cap Management LLP. 114 00:05:39,160 --> 00:05:43,760 Mike is a trader of carbon assets within the compliance 115 00:05:43,760 --> 00:05:45,840 markets. And my understanding he trades 116 00:05:45,840 --> 00:05:48,160 within five of them. And we spend most of the day 117 00:05:48,160 --> 00:05:51,280 talking about what he's learned from years working in these 118 00:05:51,280 --> 00:05:55,560 markets, how he's thinking about how compliance markets will work 119 00:05:55,800 --> 00:05:58,480 to drive parts per million of greenhouse gases in the 120 00:05:58,480 --> 00:06:02,080 atmosphere down, why he thinks that's the correct way to go, 121 00:06:02,480 --> 00:06:05,520 why he's been disappointed in the voluntary carbon market 122 00:06:05,520 --> 00:06:07,280 space. I actually share a fair amount 123 00:06:07,280 --> 00:06:09,600 about my experience. The first company I founded 124 00:06:09,600 --> 00:06:11,560 within climate tech is called Nori. 125 00:06:12,000 --> 00:06:17,120 Nori was a carbon removal marketplace, and I used to be a 126 00:06:17,120 --> 00:06:20,360 much stronger believer in voluntary climate action. 127 00:06:20,840 --> 00:06:24,680 I thought that there would be sufficient motivation outside of 128 00:06:24,960 --> 00:06:27,320 compliance, the need to do something just because it's 129 00:06:27,320 --> 00:06:31,920 required in order to make a dent in climate change and at least 130 00:06:31,920 --> 00:06:36,520 start to get us towards a future where the technology was 131 00:06:36,520 --> 00:06:39,600 sufficiently developed. Or maybe we did such a good job 132 00:06:39,960 --> 00:06:44,200 that government was not necessary for managing climate 133 00:06:44,200 --> 00:06:46,280 policy. I'm realizing as I say these 134 00:06:46,280 --> 00:06:50,080 words out loud, that it it sounds, it's a dream. 135 00:06:50,280 --> 00:06:54,080 It may even be ideology and not necessarily merely a dream. 136 00:06:54,480 --> 00:06:58,640 The idea that we would be able to manage the climate from a 137 00:06:58,640 --> 00:07:01,440 purely market driven perspective. 138 00:07:02,080 --> 00:07:08,880 We would not be where we are now without some very generous and 139 00:07:08,880 --> 00:07:14,240 far seeing employees and founders at companies that made 140 00:07:14,240 --> 00:07:17,160 big bets on carbon removal, that wanted to be there to support 141 00:07:17,160 --> 00:07:20,760 this industry when it was really just a twinkle in a bunch of 142 00:07:20,760 --> 00:07:23,240 founders eyes. It was not what it is now. 143 00:07:23,760 --> 00:07:26,000 I think that's a a beautiful thing and I'm really grateful 144 00:07:26,000 --> 00:07:29,720 for all of that, but it's hard to imagine that we're going to 145 00:07:29,720 --> 00:07:34,240 get to the scale of carbon removal without having some sort 146 00:07:34,240 --> 00:07:38,840 of compliance regime in place. The numbers are just too big. 147 00:07:39,680 --> 00:07:43,320 We need government to de risk a lot of this tack, and it's 148 00:07:43,320 --> 00:07:46,440 probably just inappropriate to expect unilateral or mostly 149 00:07:46,440 --> 00:07:50,360 unilateral action from private citizens and corporations to do 150 00:07:50,360 --> 00:07:54,120 the amount of work necessary to drive the carbon removal 151 00:07:54,120 --> 00:07:57,080 industry. If you're listening and this 152 00:07:57,080 --> 00:07:59,960 sounds obvious, sorry. Yeah, that I suppose that is 153 00:07:59,960 --> 00:08:02,880 pretty obvious, but for a long time I was resistant to the 154 00:08:02,880 --> 00:08:05,480 idea. I've mostly experienced policy, 155 00:08:05,480 --> 00:08:07,560 and I've spoken about this elsewhere, especially with Grant 156 00:08:07,560 --> 00:08:12,240 Faber, as being a a sort of difficult, clunky process 157 00:08:12,760 --> 00:08:15,360 policy. You can often feel boring. 158 00:08:15,360 --> 00:08:19,360 It requires reading and the reading that it requires you to 159 00:08:19,360 --> 00:08:20,080 read. Is. 160 00:08:20,120 --> 00:08:23,560 Often times legalistic, hard to understand. 161 00:08:24,240 --> 00:08:27,560 A lot of the mechanics of deal making within politics don't 162 00:08:27,560 --> 00:08:30,960 happen in the open. You're reliant upon journalists. 163 00:08:30,960 --> 00:08:33,799 Those journalists have different perspectives and political 164 00:08:33,799 --> 00:08:37,039 orientations and they may not have all of the facts. 165 00:08:37,640 --> 00:08:42,559 And I found that to be a field that I I avoided because I 166 00:08:42,559 --> 00:08:44,800 thought that was an inefficient way of making decisions and 167 00:08:44,800 --> 00:08:48,200 allocating resources and just determining policy in general. 168 00:08:48,760 --> 00:08:51,280 And then going through this process of trying to, I don't 169 00:08:52,120 --> 00:09:01,680 know, make into a commercial activity, a line of work that 170 00:09:01,680 --> 00:09:04,400 should properly be a government function. 171 00:09:04,880 --> 00:09:08,800 I think one just runs up into barriers all the time. 172 00:09:08,960 --> 00:09:11,640 I don't think I've told this story, but I had a meeting, 173 00:09:11,640 --> 00:09:16,080 though, that cracked me up with one of the companies that is 174 00:09:16,080 --> 00:09:20,960 involved in tax credit trading. And what's interesting about tax 175 00:09:20,960 --> 00:09:23,480 credit trading, especially for something like clean energy 176 00:09:23,480 --> 00:09:28,400 development, is that there's a customer who wants what the 177 00:09:28,400 --> 00:09:32,560 seller is selling and they have a a need for it that is not 178 00:09:32,560 --> 00:09:36,160 abstract in any way. The clean energy producer is 179 00:09:36,160 --> 00:09:39,040 producing more tax credits than they can consume against the 180 00:09:39,040 --> 00:09:42,000 profits that they're generating. So they have a surplus of tax 181 00:09:42,000 --> 00:09:44,640 credits. They are selling them on the 182 00:09:44,640 --> 00:09:48,760 market to someone that would like tax credits and could 183 00:09:48,760 --> 00:09:53,040 consume more of them, and the generator of those credits sell 184 00:09:53,040 --> 00:09:57,920 those credits at a discounted rate relative to what is on the 185 00:09:57,920 --> 00:10:01,400 tax credit. So if it's a dollar's worth of 186 00:10:01,520 --> 00:10:05,920 tax credit, they might sell it for $0.90, for example, and the 187 00:10:05,920 --> 00:10:10,480 person buying it receives a discount on their tax bill. 188 00:10:11,320 --> 00:10:15,120 That's pretty efficient. That drives more money to clean 189 00:10:15,120 --> 00:10:20,040 energy development. And that sounds so nice to me. 190 00:10:20,320 --> 00:10:23,040 You know, there's no sort of, well, this is going to help you 191 00:10:23,040 --> 00:10:26,960 with talent retention and going to give you access to a future 192 00:10:27,040 --> 00:10:29,640 where the supply of carbon removals is extremely limited 193 00:10:29,640 --> 00:10:31,200 and you already have a relationship here. 194 00:10:31,200 --> 00:10:33,640 You'll know how to do it. The marketing value that this 195 00:10:33,640 --> 00:10:36,920 purchase represents is great. It'll drive more customer 196 00:10:36,920 --> 00:10:39,320 acquisition, blah, blah, blah, stuff that you've all heard a 197 00:10:39,320 --> 00:10:41,960 million times about the benefits of carbon removal and voluntary 198 00:10:42,160 --> 00:10:46,360 purchasing of carbon removal. And over time, they no longer 199 00:10:46,360 --> 00:10:50,840 felt as true in my mouth. I have seen some data recently 200 00:10:50,840 --> 00:10:53,160 about the types of carbon credits that are being purchased 201 00:10:53,320 --> 00:10:56,000 in the voluntary market and how that's changing and how we're 202 00:10:56,000 --> 00:10:58,800 shifting to higher quality. And within that type of very 203 00:10:58,800 --> 00:11:01,240 high quality credits, there is more of a supply crunch. 204 00:11:01,240 --> 00:11:03,760 And I'm, I'm glad to see it though. 205 00:11:04,080 --> 00:11:07,800 I just no longer really believe a lot of that rationale that I'm 206 00:11:07,800 --> 00:11:11,320 I'm hearing. I would be very welcome to being 207 00:11:11,320 --> 00:11:14,760 proven wrong on that. I want to believe people will do 208 00:11:14,760 --> 00:11:17,480 so many of these activities for their own sake and because they 209 00:11:17,480 --> 00:11:21,120 care about why we're here for climate action and to make sure 210 00:11:21,120 --> 00:11:24,160 we restore a livable climate. I I share that vision. 211 00:11:24,600 --> 00:11:28,760 I would want that independently if my salary depended upon it or 212 00:11:28,760 --> 00:11:31,080 not. But that's not true of all 213 00:11:31,080 --> 00:11:33,280 companies and maybe we shouldn't just assume for that. 214 00:11:33,760 --> 00:11:37,240 I've even been in job interviews on the demand side recently 215 00:11:37,240 --> 00:11:39,960 where I know I shouldn't have said this but also just been 216 00:11:39,960 --> 00:11:44,240 like I don't really understand why anyone would be buying this 217 00:11:44,240 --> 00:11:46,720 right now. They don't need to. 218 00:11:47,360 --> 00:11:50,400 That's bad. If they are prominent enough, 219 00:11:50,600 --> 00:11:54,720 being a very vocal financial supporter of carbon removal and 220 00:11:54,720 --> 00:11:58,520 climate action could conceivably make them a political target in 221 00:11:58,520 --> 00:12:01,600 the US. It's just not obvious to me that 222 00:12:01,600 --> 00:12:05,080 this represents good value for companies to be involved with 223 00:12:05,680 --> 00:12:07,800 right now. And that was not the right 224 00:12:07,800 --> 00:12:10,840 answer for why you should hire me to generate demand for your 225 00:12:10,840 --> 00:12:13,400 carbon removal company. Which is one of the reasons why 226 00:12:13,400 --> 00:12:16,440 I like doing this show because right now I feel like I can 227 00:12:16,440 --> 00:12:19,120 maintain a lot of independence. And it even previously when this 228 00:12:19,120 --> 00:12:23,080 was a Nori podcast, I never felt muzzled in any way. 229 00:12:23,080 --> 00:12:26,160 I always spoke my mind. But it is nice to just be able 230 00:12:26,160 --> 00:12:31,000 to zoom out a little bit and say something like, why are people 231 00:12:31,000 --> 00:12:34,640 buying carbon removal? It's a sort of a wild way to 232 00:12:34,640 --> 00:12:41,680 spend money in a time of erratic policy, trade war, geopolitics. 233 00:12:42,400 --> 00:12:47,200 I like being able to just, you know, wonder those things aloud. 234 00:12:47,400 --> 00:12:51,360 And that's why it's important to me that, hey, become a 235 00:12:51,360 --> 00:12:55,240 subscriber, become a sponsor. I'm going to tell you what I 236 00:12:55,240 --> 00:12:59,160 really think about this, about the world that we live in and 237 00:12:59,160 --> 00:13:01,040 carbon removal and climate change. 238 00:13:01,680 --> 00:13:04,640 And I'm a learner. I'm trying to be too ideological 239 00:13:04,640 --> 00:13:07,280 or hold my position so strongly that I can't learn anything or 240 00:13:07,280 --> 00:13:09,800 change my mind. In fact, this this podcast I 241 00:13:09,800 --> 00:13:13,400 really like because Mike's helped me change my mind. 242 00:13:13,760 --> 00:13:17,120 Mike's been very persistent in showing how effective compliance 243 00:13:17,120 --> 00:13:20,600 markets have been. That being said, I've also read 244 00:13:20,720 --> 00:13:26,000 criticisms of market policy just in general for both compliance 245 00:13:26,000 --> 00:13:29,760 markets and for VCM. One book that made me think and 246 00:13:29,760 --> 00:13:32,480 I'm still thinking about it years after I initially read it 247 00:13:32,480 --> 00:13:36,360 as Danny Colin Word and David G Victor's making Climate policy 248 00:13:36,360 --> 00:13:42,040 work, which is a quite critical of the political economy of 249 00:13:42,200 --> 00:13:45,080 carbon markets for many of the reasons that we even talked 250 00:13:45,080 --> 00:13:48,080 about in this show that the cops are often set, you know, pretty 251 00:13:48,080 --> 00:13:50,320 high. They are subject to political 252 00:13:50,320 --> 00:13:52,480 influence. The regulated entities that fall 253 00:13:52,480 --> 00:13:57,360 under compliance regimes are often times powerful industrial 254 00:13:57,360 --> 00:14:00,600 combinations that can make their will known. 255 00:14:01,080 --> 00:14:04,800 There are also just alternatives outside of markets for thinking 256 00:14:04,800 --> 00:14:06,920 through what climate policy means. 257 00:14:07,760 --> 00:14:11,280 And look, I'm someone that I remember being in high school 258 00:14:11,280 --> 00:14:14,120 economics class and seeing a demand curve. 259 00:14:14,200 --> 00:14:17,200 And I remember asking about Say's Law about how prices clear 260 00:14:17,200 --> 00:14:21,720 markets and feel like I don't understand how anyone could see 261 00:14:21,720 --> 00:14:25,800 a demand curve and just not want the intersection of supply and 262 00:14:25,800 --> 00:14:28,560 demand and to have prices clear the market. 263 00:14:28,560 --> 00:14:31,520 That seems to me so intuitively obvious that you would want that 264 00:14:31,720 --> 00:14:35,520 for so much within society. And I remember my professor just 265 00:14:35,520 --> 00:14:38,840 sort of chuckled at the, he's just like, well, that's a very, 266 00:14:39,200 --> 00:14:43,920 you know, sort of orthodox free market position in it. 267 00:14:44,320 --> 00:14:45,880 And I, I've never forgot the moment. 268 00:14:45,920 --> 00:14:49,360 And I also remember someone in the class was looking at me and 269 00:14:49,360 --> 00:14:52,680 staring with mouth agape, like, how could you, how could you 270 00:14:52,680 --> 00:14:55,480 think that? I've never I, I remember exactly 271 00:14:55,480 --> 00:14:58,480 where I was sitting and how it was, but it was such a light 272 00:14:58,480 --> 00:15:00,880 switch kind of moment for me. It just always made really 273 00:15:00,880 --> 00:15:02,920 intuitive sense. And there's a number of 274 00:15:03,000 --> 00:15:05,600 interesting psychological reasons why that way of seeing 275 00:15:05,600 --> 00:15:07,640 things is important. I think there are good reasons 276 00:15:07,640 --> 00:15:10,640 for caring about markets and markets can do a lot of really 277 00:15:10,880 --> 00:15:14,120 important work both in climate and outside of climate. 278 00:15:14,560 --> 00:15:19,200 One thing for sure though, is that I'm no longer a purely VCM 279 00:15:19,400 --> 00:15:21,800 booster. That's had me concerned for a 280 00:15:21,800 --> 00:15:25,320 while now and you probably caught glimpses of it 281 00:15:25,320 --> 00:15:27,920 previously, but here I am declaring it. 282 00:15:28,280 --> 00:15:29,960 So I hope you enjoyed today's show. 283 00:15:29,960 --> 00:15:33,200 Bonus content, by the way, for paid subscribers from this show. 284 00:15:33,200 --> 00:15:35,520 So if you want to listen to Mike and I talk about some of the 285 00:15:35,520 --> 00:15:38,960 problems he's noticed in BCM, you can subscribe and check that 286 00:15:38,960 --> 00:15:40,760 out. Thanks so much for listening. 287 00:15:40,760 --> 00:15:42,680 And here is your show with Mike Aslan. 288 00:15:48,560 --> 00:15:51,120 Mike, welcome back to the show. Thanks for being back on 289 00:15:51,120 --> 00:15:53,960 reversing climate change. Hey, Ross, great to be back. 290 00:15:54,520 --> 00:15:57,680 I'm glad you want to do this again, because every so often I 291 00:15:57,680 --> 00:16:01,520 loop back around to thinking very seriously about compliance 292 00:16:01,520 --> 00:16:04,400 markets. I come from a very strong BCM 293 00:16:04,400 --> 00:16:07,040 voluntary carbon market background. 294 00:16:07,640 --> 00:16:11,760 I used to think that voluntary carbon markets were going to do 295 00:16:11,960 --> 00:16:16,040 the bulk of the heavy lifting, and I'm feeling a bit delusional 296 00:16:16,040 --> 00:16:19,520 about some of my past ideological stances on this. 297 00:16:20,000 --> 00:16:23,640 And you've been a nice little thorn in my side for a long time 298 00:16:23,640 --> 00:16:25,160 talking about compliance markets. 299 00:16:25,160 --> 00:16:28,560 So I thought it was time to come back on the show, reintroduce 300 00:16:28,560 --> 00:16:30,920 the topics to listeners. Why should they be caring about 301 00:16:30,920 --> 00:16:33,160 compliance markets? And tell them a little bit about 302 00:16:33,160 --> 00:16:35,360 your work. So why don't you reintroduce the 303 00:16:35,360 --> 00:16:37,480 topic for everyone? Sure. 304 00:16:38,280 --> 00:16:40,560 Just just a little bit, a little bit of background, Ross, for 305 00:16:40,560 --> 00:16:44,200 those who haven't heard about me before, I'm I'm a Canadian who's 306 00:16:44,200 --> 00:16:46,680 been living in London for 30 years now. 307 00:16:46,680 --> 00:16:48,800 I did my graduate degree at London Business School and 308 00:16:49,440 --> 00:16:51,960 worked in the financial services industry and mainly in the fund 309 00:16:51,960 --> 00:16:54,600 management industry. And I was fortunate to build and 310 00:16:54,600 --> 00:16:56,480 sell a business to a public company. 311 00:16:56,480 --> 00:16:59,440 And that's when I took some time out to think about the next 312 00:16:59,440 --> 00:17:02,040 chapter in my career. And that climate change was 313 00:17:02,040 --> 00:17:04,480 always something on my list. And this was about one year 314 00:17:04,480 --> 00:17:07,400 before Greta Thunberg really broke onto the scene. 315 00:17:08,119 --> 00:17:11,280 And because I'm an empirical person, I started reading the 316 00:17:11,280 --> 00:17:14,640 peer reviewed academic research on the science of climate 317 00:17:14,640 --> 00:17:16,560 change. And I was in a fortunate place. 318 00:17:16,560 --> 00:17:19,000 I didn't have to work at that time so I could spend full time. 319 00:17:19,000 --> 00:17:22,720 And I'm a bit geeky that way. I after about 3 or 4 months of 320 00:17:22,720 --> 00:17:26,200 wading through learning the terminology, climate forcing, 321 00:17:26,200 --> 00:17:29,440 etcetera, I spoke to a lot of climate scientists around the 322 00:17:29,440 --> 00:17:32,600 world, in particular scientific skeptics. 323 00:17:32,600 --> 00:17:35,640 I wanted to understand scientists who were skeptics, 324 00:17:35,640 --> 00:17:38,720 their point of view, but I really came to the conclusion 325 00:17:38,720 --> 00:17:42,160 that that we're in a terrible place, that that climate change 326 00:17:42,280 --> 00:17:45,160 was much worse than than even many people who work in the 327 00:17:45,160 --> 00:17:48,680 industry and and that it was definitely had a human 328 00:17:48,680 --> 00:17:50,600 fingerprint. I was aware that, you know, the 329 00:17:50,800 --> 00:17:54,480 the paleo climate records about the changes, but there's no 330 00:17:54,480 --> 00:17:56,440 question it is a human fingerprint. 331 00:17:56,440 --> 00:18:00,160 So I then enrolled at the LSE in their economics of climate 332 00:18:00,160 --> 00:18:03,880 Change program and that is where I was first exposed to these 333 00:18:03,880 --> 00:18:07,320 carbon markets. And you know, once I learned how 334 00:18:07,320 --> 00:18:10,400 the mechanism worked, which took a took a little while and a 335 00:18:10,400 --> 00:18:14,160 focus, but, but, but I, I found it to be a fabulously 336 00:18:14,160 --> 00:18:17,640 interesting and elegant mechanism to deal with carbon 337 00:18:17,640 --> 00:18:20,400 emissions. The externality and the, and the 338 00:18:20,400 --> 00:18:25,000 carbon markets were trading back then in around 2018, about 10 339 00:18:25,000 --> 00:18:28,960 billion a month liquidity. So I hired APHD student at that 340 00:18:28,960 --> 00:18:33,160 time, brought him in. We then collected data on all 341 00:18:33,160 --> 00:18:36,400 these carbon markets, wrote a full academic paper. 342 00:18:36,600 --> 00:18:41,640 It has now become the Seminole academic paper on carbon as a 343 00:18:41,760 --> 00:18:43,720 liquid and investable asset class. 344 00:18:43,720 --> 00:18:46,240 It took three years in the peer review process, but it was 345 00:18:46,240 --> 00:18:49,560 published in 2022. And the basis of that paper 346 00:18:49,560 --> 00:18:52,840 allowed me to form my second business, which is an 347 00:18:52,840 --> 00:18:55,840 environmental asset management company. 348 00:18:56,200 --> 00:18:59,520 And our objectives are obviously generating returns for our 349 00:18:59,520 --> 00:19:03,720 investors, but also direct impact on climate change, which 350 00:19:03,720 --> 00:19:05,480 is something I'm very passionate about. 351 00:19:05,680 --> 00:19:08,520 And so we we launched the company five years ago. 352 00:19:09,400 --> 00:19:12,360 We're now the biggest in the world at what we do in 353 00:19:12,360 --> 00:19:17,000 environmental asset management. And we're a small team, but a a 354 00:19:17,000 --> 00:19:20,720 very successful five year, five years are behind us. 355 00:19:20,720 --> 00:19:23,760 We, we manage over half a billion in assets under 356 00:19:23,760 --> 00:19:27,120 management and the way we have achieved the impact on climate 357 00:19:27,120 --> 00:19:32,200 change is we, we charge a performance related fee and 20% 358 00:19:32,200 --> 00:19:36,160 of that fee each year. If indeed we perform, we use 359 00:19:36,160 --> 00:19:40,320 that to buy compliance carbon, not voluntary. 360 00:19:40,440 --> 00:19:43,880 We purchase compliance carbon permits much higher price of 361 00:19:43,880 --> 00:19:47,800 course, as as we'll find out in a moment and we cancel those And 362 00:19:47,800 --> 00:19:52,160 I'm very pleased to say that because we've had positive 363 00:19:52,680 --> 00:19:57,880 contributions there that 1.7 million U.S. dollars thus far 364 00:19:57,880 --> 00:20:01,600 has been used to to buy and cancel compliance carbon about 365 00:20:01,600 --> 00:20:07,400 33,000 metric tons. So there's a nice alignment and 366 00:20:07,400 --> 00:20:10,760 creating we believe real impact by by doing that in in the 367 00:20:10,760 --> 00:20:14,080 compliance markets. And yeah, that's, that's quick 368 00:20:14,080 --> 00:20:16,920 background. So I, you know, hopefully on 369 00:20:16,920 --> 00:20:19,640 this, you know, I'm sure you're going to take through questions 370 00:20:19,640 --> 00:20:21,920 on, you know, how do these carbon, how do these compliance 371 00:20:21,920 --> 00:20:24,080 markets work and the history and success of them. 372 00:20:24,080 --> 00:20:26,040 And and I think it's a really interesting topic. 373 00:20:28,280 --> 00:20:30,560 I have questions for you. I have loads of questions. 374 00:20:30,920 --> 00:20:34,160 Let's just pick one. I imagine the the European ETS 375 00:20:34,160 --> 00:20:37,400 is the place to start to have a conversation about this, but 376 00:20:37,720 --> 00:20:39,680 maybe speak in general terms about what the goals of 377 00:20:39,680 --> 00:20:44,080 compliance markets are and then how does the European ETS work 378 00:20:44,080 --> 00:20:45,680 in layman's terms? Yeah. 379 00:20:46,040 --> 00:20:51,640 So the the key there are two key objectives to an emission 380 00:20:51,640 --> 00:20:55,160 trading system. The 1st is to cap and lower 381 00:20:55,160 --> 00:21:00,000 emissions and the second is to achieve that reduction at the 382 00:21:00,000 --> 00:21:03,560 lowest cost to society. Very important. 383 00:21:03,560 --> 00:21:07,040 The second objective, we want to address climate change, but we 384 00:21:07,040 --> 00:21:10,920 want to do it at the lowest possible cost and that is that 385 00:21:10,920 --> 00:21:13,840 those are the two overarching elements of how an emission 386 00:21:13,840 --> 00:21:17,560 trading system works. The background was originally 387 00:21:17,560 --> 00:21:20,960 the Republican Party in the United States in the 80s under 388 00:21:20,960 --> 00:21:24,840 the Bush administration launched the Sulfur Dioxide Emission 389 00:21:24,840 --> 00:21:29,360 trading System to cover acid rain issues with sulfur dioxide. 390 00:21:29,840 --> 00:21:34,760 It was fabulously successful. There are multiple papers on our 391 00:21:34,760 --> 00:21:37,360 website if people are interested in that, in tracking that 392 00:21:37,360 --> 00:21:40,600 success independently. It was really successful and the 393 00:21:40,600 --> 00:21:46,000 Europeans, Ross saw that and in 2005 they decided to adopt an 394 00:21:46,000 --> 00:21:49,000 emission trading system, a cap and trade for Europe. 395 00:21:49,240 --> 00:21:52,960 They launched the emission trading system in Europe in 2005 396 00:21:53,240 --> 00:21:59,520 and since then emissions in Europe have declined by 1.1 397 00:21:59,600 --> 00:22:04,240 billion tons per year. That's, that's a, an annual run 398 00:22:04,240 --> 00:22:10,560 rate decline of that 1.1 billion, 900 million tons of 399 00:22:10,560 --> 00:22:14,720 that has come directly from the entities that are covered under 400 00:22:14,720 --> 00:22:17,680 the ETS. So it has been fabulously 401 00:22:17,680 --> 00:22:20,840 successful both in sulfur dioxide as a Canadian, I 402 00:22:20,840 --> 00:22:24,080 remember the acid rain issues we had in in Canada. 403 00:22:24,440 --> 00:22:27,400 And so it, it has been a very successful mechanism. 404 00:22:27,400 --> 00:22:29,880 And I think because of that, we're now seeing it. 405 00:22:29,880 --> 00:22:33,720 It's spreading around the world. When people conceptualize 406 00:22:33,720 --> 00:22:37,760 compliance markets, they imagine I'm going to put myself in their 407 00:22:37,760 --> 00:22:39,720 shoes. I think that they imagine 408 00:22:40,120 --> 00:22:44,160 legislators and the regulated entities, the companies that 409 00:22:44,160 --> 00:22:45,800 have to comply with the compliance regime. 410 00:22:46,120 --> 00:22:47,720 But they aren't thinking about you, Mike. 411 00:22:47,720 --> 00:22:50,240 Everyone should be thinking more about Mike Aslan here. 412 00:22:50,720 --> 00:22:52,640 Where, where do? Private traders fit into this. 413 00:22:52,680 --> 00:22:55,280 Why do we need your involvement here to make this successful? 414 00:22:55,640 --> 00:22:57,480 Yeah. So it's really interesting. 415 00:22:57,640 --> 00:23:01,120 So let's just go through the the the key steps of how the how 416 00:23:01,120 --> 00:23:03,440 these markets work. The first thing is it's called a 417 00:23:03,440 --> 00:23:05,600 compliance market because you must comply. 418 00:23:05,600 --> 00:23:09,800 So any entity in let's say the state of California or in Europe 419 00:23:09,800 --> 00:23:13,160 or the UKUK now has its own emission trading system. 420 00:23:13,480 --> 00:23:18,120 Any entity above 25,000 tons per year, you are mandated. 421 00:23:18,120 --> 00:23:20,000 You're in the market. You don't have a choice. 422 00:23:20,000 --> 00:23:22,440 You're in. That means annually, Ross, 423 00:23:22,440 --> 00:23:24,080 you're audited by the government. 424 00:23:24,200 --> 00:23:28,520 So if you have a factory that emits 1.2 million tons by April 425 00:23:28,520 --> 00:23:32,520 of the year following that year you must give the government 1.2 426 00:23:32,520 --> 00:23:34,320 million permits. Where do you get them? 427 00:23:34,840 --> 00:23:39,040 The government issues these permits, so they set a cap on 428 00:23:39,040 --> 00:23:42,800 the total amount of permits. And normally these are sold in 429 00:23:42,800 --> 00:23:45,400 auctions. So in the case of Europe, they 430 00:23:45,400 --> 00:23:47,120 have an auction every single day. 431 00:23:47,760 --> 00:23:51,120 In the UK it's twice per month and in California, it's four 432 00:23:51,120 --> 00:23:54,040 times per year. They auction 50 million tons of 433 00:23:54,040 --> 00:23:55,760 permits, 4 * a year in California. 434 00:23:55,760 --> 00:23:57,360 So that's how the supply comes in. 435 00:23:57,680 --> 00:24:01,760 But it's interesting that means that the total supply is capped 436 00:24:01,920 --> 00:24:06,320 among those underlying entities. So let's go through a compliance 437 00:24:06,320 --> 00:24:08,880 cycle. The supply 200 million, let's 438 00:24:08,880 --> 00:24:12,160 say is issued the underlying companies, let's say their total 439 00:24:12,160 --> 00:24:13,920 emissions, there's thousands of companies. 440 00:24:14,080 --> 00:24:18,040 Their total emissions are also 200 million tons in in the state 441 00:24:18,040 --> 00:24:21,400 of California and let's say so they they they're pretty smart. 442 00:24:21,400 --> 00:24:24,480 These are big public companies that who are the sectors that's 443 00:24:24,480 --> 00:24:28,960 the power sector, steel, cement, chemicals, glass, oil 444 00:24:28,960 --> 00:24:31,200 refineries. It's these big, big companies, 445 00:24:31,200 --> 00:24:33,520 right? So they, they forecast their 446 00:24:33,520 --> 00:24:35,080 emissions. They know they have to comply. 447 00:24:35,080 --> 00:24:38,240 If they don't hand in the permits, the penalties are 448 00:24:38,240 --> 00:24:40,440 extremely severe. They're far higher than the 449 00:24:40,440 --> 00:24:44,120 price of a permit. So we get 99.9% compliance. 450 00:24:44,120 --> 00:24:47,400 That's very, very important. Now when the government, so 451 00:24:47,400 --> 00:24:50,280 these companies hand the 200 million permits that were issued 452 00:24:50,280 --> 00:24:52,800 by the government, they bought them at the auctions or they 453 00:24:52,800 --> 00:24:54,360 bought them in the secondary market. 454 00:24:54,560 --> 00:24:56,520 Now the companies have the permits, they give them to the 455 00:24:56,520 --> 00:24:58,160 government. Government says OK, you 456 00:24:58,160 --> 00:25:01,280 complied, no penalty. Second company, you complied. 457 00:25:01,520 --> 00:25:03,600 The government has received all the permits back. 458 00:25:03,600 --> 00:25:07,000 What do they do? They destroy those permits, they 459 00:25:07,000 --> 00:25:10,040 tear them up. And that compliance period has 460 00:25:10,040 --> 00:25:13,400 now completed. We go to the next year and 461 00:25:13,400 --> 00:25:17,120 instead of 200 million, the government only sells 190. 462 00:25:17,640 --> 00:25:23,560 Oh, the next year 180, then 170. So the total supply of these 463 00:25:23,560 --> 00:25:28,760 permits become scarce. That means that each CEO is is 464 00:25:28,760 --> 00:25:32,880 looking at not one carbon price, the permit price, they look at 2 465 00:25:32,880 --> 00:25:36,200 prices. This is the beauty of the carbon 466 00:25:36,200 --> 00:25:40,320 compliance markets. It forces the emitter to look at 467 00:25:40,360 --> 00:25:42,720 the compliance price. Let's say in California it's 468 00:25:42,720 --> 00:25:46,480 $30.00 US per ton. Or he calls in the head of 469 00:25:46,480 --> 00:25:49,800 engineering and he says, Jim, we're emitting 4 million tons a 470 00:25:49,800 --> 00:25:52,560 year. It's costing the company $120 471 00:25:52,560 --> 00:25:54,520 million a year. I'm giving to the state. 472 00:25:54,520 --> 00:25:57,560 I don't want to do that right? We're running a business here to 473 00:25:57,560 --> 00:26:01,600 make a profit. Can you on the factory floor get 474 00:26:01,600 --> 00:26:03,800 some new machines in and get my emissions down? 475 00:26:04,080 --> 00:26:06,360 And the key question is the cost. 476 00:26:06,760 --> 00:26:09,200 What's the cost of reducing my emissions? 477 00:26:09,440 --> 00:26:13,320 So every CEO, you can bet your bottom dollar knows 2 carbon 478 00:26:13,320 --> 00:26:15,400 prices. They know the permit price and 479 00:26:15,400 --> 00:26:19,800 they know their internal abatement cost and when the 480 00:26:19,800 --> 00:26:22,840 permit price is above their internal cost. 481 00:26:23,480 --> 00:26:26,680 What would you do, Ross? If, if, if, if you could, if you 482 00:26:26,680 --> 00:26:30,480 could cut your emissions for $20 and the permits are 30, would 483 00:26:30,480 --> 00:26:32,240 you pay 30 or would you cut for 20? 484 00:26:33,400 --> 00:26:35,280 Yeah, obviously 20. Why? 485 00:26:35,280 --> 00:26:39,160 Why would you do that? Because the cost of just 486 00:26:39,400 --> 00:26:41,960 complying is better than having to go out on the market and. 487 00:26:42,080 --> 00:26:44,880 Buy the credit. Yeah, because you're, you're 488 00:26:44,880 --> 00:26:48,520 after profit, you're you've got your eyeball as a as a CEO of 489 00:26:48,520 --> 00:26:51,280 profit. And here is the the the key 490 00:26:51,280 --> 00:26:54,280 power of this mechanism. It takes the most powerful 491 00:26:54,280 --> 00:26:57,160 motivating force in Business Today profit. 492 00:26:57,160 --> 00:27:01,360 Let's we might not like it, but that is what short termism A 493 00:27:01,360 --> 00:27:05,080 quarterly earnings and it focuses that profit motive to 494 00:27:05,080 --> 00:27:10,600 achieve what to achieve. The three magic words least cost 495 00:27:10,720 --> 00:27:13,440 abatement. These are the magic words we 496 00:27:13,440 --> 00:27:16,000 want to achieve. Never forget those 3 words, not 497 00:27:16,000 --> 00:27:20,040 abatement at any cost, least cost abatement O amongst those 498 00:27:20,040 --> 00:27:24,400 thousands of, of, of, of CEOs when the California rice is 30, 499 00:27:24,720 --> 00:27:27,920 some of those engineers come back to the success CEO and they 500 00:27:27,920 --> 00:27:31,880 say, John, our cost is 90. And the CEO says, OK, well I'm 501 00:27:31,880 --> 00:27:34,920 not going to invest and, and pay 90, I'll just buy the permit. 502 00:27:35,080 --> 00:27:38,560 But there are some companies where the cost is 20 or 25 and 503 00:27:38,560 --> 00:27:42,200 indeed those companies abate, they cut now the next year 504 00:27:42,200 --> 00:27:46,200 there's even less permits. So if you picture a merit order, 505 00:27:46,200 --> 00:27:48,640 and this is called the marginal abatement cost curve. 506 00:27:48,640 --> 00:27:54,400 And this really unlocks Ross A a visual image of how a carbon 507 00:27:54,400 --> 00:27:57,800 market achieves the least cost abatement every year when the 508 00:27:57,800 --> 00:28:02,280 supply gets lower and lower of these permits, it stimulates 509 00:28:02,520 --> 00:28:05,280 some companies abate. And the only way we can get the 510 00:28:05,280 --> 00:28:09,280 next rung on the ladder, if we lined up all the mitigation or 511 00:28:09,280 --> 00:28:13,560 abatement methods from lowest price of, of abatement to high, 512 00:28:14,800 --> 00:28:18,160 you have to climb that marginal abatement cost curve over time. 513 00:28:18,600 --> 00:28:22,880 And, and so the expectation in carbon markets is supply is 514 00:28:22,880 --> 00:28:26,360 reduced. And you, you let the invisible 515 00:28:26,360 --> 00:28:31,640 hand of the market with the profit motive seeking the least 516 00:28:31,640 --> 00:28:34,000 cost abatement. So every year when there is 517 00:28:34,000 --> 00:28:36,400 abatement, because there must be, we're playing musical chairs 518 00:28:36,400 --> 00:28:38,760 and we pull out a chair, there must be abatement. 519 00:28:38,960 --> 00:28:42,960 We can be pretty confident that that it is the company with the 520 00:28:42,960 --> 00:28:45,520 lowest internal abatement costs. They're the ones who choose 521 00:28:45,520 --> 00:28:46,640 because they're profit motivated. 522 00:28:46,640 --> 00:28:50,800 Now here's where the role we come in, Ross, you can only make 523 00:28:50,800 --> 00:28:56,200 that assumption that the that the the the least cost company 524 00:28:56,360 --> 00:28:59,640 will abate if there's two things that hold very important 525 00:29:00,320 --> 00:29:04,560 liquidity and price discovery. Now this goes back to 526 00:29:04,560 --> 00:29:08,560 fundamental economics, lots of empirical evidence and academic 527 00:29:08,560 --> 00:29:11,360 literature, particularly in commodity markets. 528 00:29:11,640 --> 00:29:15,720 In order for them to function, you need liquidity and price 529 00:29:15,720 --> 00:29:17,880 discovery. If no one knows what the price 530 00:29:17,880 --> 00:29:20,360 is in California, no one will know what the gap is and who, 531 00:29:20,360 --> 00:29:24,000 who should should I cut or so you want wide dissemination of 532 00:29:24,000 --> 00:29:27,360 that price signal. The price signal is all and 533 00:29:27,360 --> 00:29:32,680 therefore this is well studied. Now when you bring in a full, 534 00:29:32,680 --> 00:29:34,600 how do you achieve liquidity and price discovery? 535 00:29:34,600 --> 00:29:37,120 Very simple. You bring in a full ecosystem of 536 00:29:37,120 --> 00:29:39,360 participants. So you have the compliance 537 00:29:39,360 --> 00:29:42,960 entities and they're very active in most carbon markets. 538 00:29:43,040 --> 00:29:45,960 It's the compliance entities have sophisticated hedging, but 539 00:29:45,960 --> 00:29:49,280 you also need financial investors like ourselves, short 540 00:29:49,280 --> 00:29:52,520 term speculators, arbitragers who will arbitrage between the 541 00:29:52,520 --> 00:29:55,760 futures price and the physical permit price. 542 00:29:55,960 --> 00:29:59,000 And this all brings liquidity and price discovery, which in 543 00:29:59,000 --> 00:30:03,240 the end results in, in the magic words of least, cost abatement. 544 00:30:03,400 --> 00:30:05,400 And as I said, the proof is in the pudding. 545 00:30:06,000 --> 00:30:09,320 Both in California and Europe now there's been quite dramatic 546 00:30:09,320 --> 00:30:13,160 decreases in emissions while at the same time seeing very solid 547 00:30:13,160 --> 00:30:14,080 economic. Growth. 548 00:30:16,360 --> 00:30:20,120 Do the regulated entities see you as a beneficial force? 549 00:30:20,120 --> 00:30:24,280 I could also see them seeing you as someone who's pulling profit 550 00:30:24,280 --> 00:30:27,320 out for yourself but also raising prices for their 551 00:30:27,320 --> 00:30:29,840 compliance costs. Like is that a thing or or maybe 552 00:30:29,840 --> 00:30:32,200 not? So I, I think what's very, very 553 00:30:32,200 --> 00:30:35,600 important with the primary objective of these markets is 554 00:30:35,600 --> 00:30:38,560 abatement and to, to achieve the environmental objectives, right. 555 00:30:38,720 --> 00:30:41,640 So it's very important that financial actors like in like in 556 00:30:41,640 --> 00:30:45,400 all things have limits. So there are position limits, 557 00:30:45,400 --> 00:30:48,960 there's maximum holding limits for the physical permits. 558 00:30:49,080 --> 00:30:53,080 There are most of the liquidity in carbon is is futures, like 559 00:30:53,080 --> 00:30:55,680 most commodities, gold or oil, it's the futures market. 560 00:30:55,840 --> 00:30:59,200 There are also limits on the size of futures positions that 561 00:30:59,240 --> 00:31:02,240 financial traders can take in these carbon markets. 562 00:31:02,240 --> 00:31:05,880 So, you know, I think the regulator's been quite, you 563 00:31:05,880 --> 00:31:10,160 know, quite good about sort of finding a nice mix between 564 00:31:10,320 --> 00:31:13,040 allowing financial participants to bring liquidity and price 565 00:31:13,040 --> 00:31:15,840 discovery, not allowing to like gain the market. 566 00:31:15,840 --> 00:31:18,320 Perhaps you'll remember that when the Hunt brothers tried to 567 00:31:18,320 --> 00:31:20,840 corner it, you know, the silver market and prices spiked. 568 00:31:21,000 --> 00:31:23,120 We, we, we definitely don't want that. 569 00:31:23,400 --> 00:31:25,560 At the other end of the spectrum, Very interesting. 570 00:31:25,560 --> 00:31:28,480 In, in South Korea, they launched the carbon market over 571 00:31:28,480 --> 00:31:30,920 five years ago and they took a different tack. 572 00:31:31,240 --> 00:31:35,560 They said no financials, only the compliance entities can 573 00:31:35,560 --> 00:31:38,560 trade the carbon. It was a disaster. 574 00:31:38,600 --> 00:31:41,960 What happened is the day before the compliance deadline, they 575 00:31:41,960 --> 00:31:43,800 went into the market and the price spiked. 576 00:31:44,280 --> 00:31:46,680 And then the day after the compliance deadline when they 577 00:31:46,680 --> 00:31:50,000 had had the price collapse and this happened every single year. 578 00:31:50,120 --> 00:31:53,320 So they finally, these huge companies, Korean Kibo 579 00:31:53,320 --> 00:31:55,400 companies, went to the government and said, look, can 580 00:31:55,400 --> 00:31:57,040 you please bring some liquidity in? 581 00:31:57,200 --> 00:32:00,560 So they brought in two rounds of allowing financial actors, 582 00:32:00,840 --> 00:32:03,520 domestic Korean actors into the Korean market. 583 00:32:03,640 --> 00:32:06,240 Liquidity is picked up and things are stabilizing. 584 00:32:06,240 --> 00:32:09,040 And next year, we believe they will open to international 585 00:32:09,040 --> 00:32:12,920 investors like ourselves. That is so fascinating, thanks 586 00:32:12,920 --> 00:32:16,400 for sharing that. I've seen various pitches before 587 00:32:16,400 --> 00:32:19,120 and I've never fully understood how this would work for 588 00:32:19,120 --> 00:32:22,560 political reasons. The case is that someone could 589 00:32:22,560 --> 00:32:26,080 raise enough money to buy up all of the available compliance 590 00:32:26,080 --> 00:32:28,800 assets. Retire them the musical chairs. 591 00:32:28,800 --> 00:32:31,280 More chairs be pulled out. Then companies really need to 592 00:32:31,280 --> 00:32:34,360 actually do business and not fail to meet their obligations 593 00:32:34,360 --> 00:32:36,120 and be fine in some horrible way. 594 00:32:36,560 --> 00:32:39,080 It sounds like that cannot happen, and it sounds like you 595 00:32:39,080 --> 00:32:41,560 probably wouldn't even want that to happen either, because these 596 00:32:41,560 --> 00:32:44,480 companies need a glide path down to net zero. 597 00:32:44,640 --> 00:32:46,600 That's like the best case of this, too. 598 00:32:46,800 --> 00:32:48,880 I've also seen cynical interpretations of compliance 599 00:32:48,880 --> 00:32:52,000 markets as well, which is that the regulators are subject to 600 00:32:52,000 --> 00:32:55,280 political influence and that the rate never comes down nearly as 601 00:32:55,280 --> 00:32:58,240 fast as we needed to, and that there's lobbying happening that 602 00:32:58,240 --> 00:33:00,200 we don't know as much about as the truth. 603 00:33:00,200 --> 00:33:01,680 Somewhere in between these perspectives. 604 00:33:01,680 --> 00:33:06,640 What do you think? So one nice thing we, we invest 605 00:33:06,640 --> 00:33:09,200 in five different compliance carbon markets around the world. 606 00:33:09,400 --> 00:33:12,520 They all have very similar structural design. 607 00:33:12,520 --> 00:33:16,640 What do I mean the two key components they have a cap and 608 00:33:16,640 --> 00:33:21,200 it and it declines each year. Typically it's between 3 and 5% 609 00:33:21,200 --> 00:33:23,960 per annum. So we're this is a graduated 610 00:33:24,080 --> 00:33:27,240 lowering of emissions. And the second thing that most 611 00:33:27,240 --> 00:33:31,800 markets have in common is that a significant or all of the supply 612 00:33:31,800 --> 00:33:35,080 of the permits comes to the market through the government 613 00:33:35,080 --> 00:33:37,240 auctions. And here's where the politics is 614 00:33:37,240 --> 00:33:39,000 very interesting with the mechanism. 615 00:33:39,680 --> 00:33:44,200 If you look at California, California auctions, about 200 616 00:33:44,200 --> 00:33:47,160 million tons a year at at at $30.00. 617 00:33:47,320 --> 00:33:52,200 So there's $6 billion a year of revenue into the California 618 00:33:52,200 --> 00:33:56,640 coffers. Now in most carbon markets, 100% 619 00:33:57,160 --> 00:34:02,400 of this polluters paying revenue, 100% is segregated and 620 00:34:02,400 --> 00:34:06,360 it's used to reinvest in energy efficiency and low carbon 621 00:34:06,360 --> 00:34:09,560 initiatives. But what do politicians love? 622 00:34:09,760 --> 00:34:13,320 They love pork, they love that revenue stream, they get hooked 623 00:34:13,320 --> 00:34:17,120 on that revenue stream. So it makes this policy, unlike 624 00:34:17,120 --> 00:34:20,880 other regular regulatory policies, hard to cancel once 625 00:34:20,880 --> 00:34:23,679 it's in place, right? Because they love being able to 626 00:34:23,679 --> 00:34:26,239 go to the local community and say we're building this is the 627 00:34:26,239 --> 00:34:28,719 new energy efficiency on the on the shopping mall. 628 00:34:28,719 --> 00:34:32,199 Look at the solar panels we put on the roof, $50 million, right? 629 00:34:32,440 --> 00:34:35,800 So there's some nice political elements and and when you study, 630 00:34:36,080 --> 00:34:41,280 as I did at LSE, all of the climate policy mechanisms that 631 00:34:41,280 --> 00:34:43,560 have been tried to pull be pulled by governments. 632 00:34:43,920 --> 00:34:47,480 This not only has been, you know, by far the most successful 633 00:34:47,480 --> 00:34:51,719 in raw emissions reductions, but it's been the most sustainable. 634 00:34:51,719 --> 00:34:55,719 You know, the EUETS now has been around for 25 years, California 635 00:34:55,719 --> 00:34:58,480 since 2012. So and there's some good 636 00:34:58,480 --> 00:34:59,800 reasons. There's some good political 637 00:34:59,800 --> 00:35:03,480 design into the mechanism. I think that that make it good. 638 00:35:03,600 --> 00:35:07,000 The, the other final point, which no one talks about, but I 639 00:35:07,000 --> 00:35:10,720 think it's very relevant. If you're in California and you 640 00:35:10,960 --> 00:35:15,120 are a, a university professor, you're a tinkerer and you come 641 00:35:15,120 --> 00:35:19,040 up with a new way to extract carbon dioxide at, at flue gas 642 00:35:19,040 --> 00:35:21,200 at point, point of emissions, point sourced. 643 00:35:22,160 --> 00:35:25,360 You go to AVC in California and you say, I, I look at this great 644 00:35:25,360 --> 00:35:28,400 technology, I can extract flue gas emissions and very cheaply. 645 00:35:28,400 --> 00:35:32,600 It's completely new technology that VC is going to back you, 646 00:35:32,600 --> 00:35:36,240 you will raise capital Y because in the state of California, you 647 00:35:36,240 --> 00:35:38,960 know, you have a pathway to monetize. 648 00:35:39,520 --> 00:35:43,400 So a carbon market, a liquid market that trades in the case 649 00:35:43,400 --> 00:35:47,040 of, you know, these markets are now trading $70 billion per 650 00:35:47,040 --> 00:35:50,320 month, means there's an ability to monetize. 651 00:35:50,600 --> 00:35:53,560 And it promotes intellectual property development, 652 00:35:53,880 --> 00:35:56,360 specifically targeting reduction in emissions. 653 00:35:56,680 --> 00:35:59,680 And that's what we need, right? We need breakthroughs. 654 00:35:59,840 --> 00:36:03,840 So there's a primary benefit cap and lower emissions. 655 00:36:03,960 --> 00:36:06,240 Secondary, we do it at the lowest cost. 656 00:36:06,440 --> 00:36:10,760 Tertiary, we reinvest the proceeds into reduction. 657 00:36:11,120 --> 00:36:14,760 And 4th, we stimulate intellectual property 658 00:36:14,760 --> 00:36:17,280 development. It's just a smart, smart 659 00:36:17,280 --> 00:36:21,200 mechanism. When you're at whatever industry 660 00:36:21,200 --> 00:36:24,000 gatherings, cocktail parties that happen with people who are 661 00:36:24,000 --> 00:36:26,280 regulated under schemes like this, are they contented? 662 00:36:26,480 --> 00:36:28,720 Do they like? Being a part of this regime, do 663 00:36:28,720 --> 00:36:30,120 they wish it were some other way? 664 00:36:30,120 --> 00:36:33,520 Or are they glad for the transparency, the regularity, 665 00:36:33,520 --> 00:36:36,080 the predictability of it? How do they feel? 666 00:36:36,440 --> 00:36:41,080 So you get, you get the entire gamut of, you know, profit 667 00:36:41,080 --> 00:36:47,040 motivated companies and boards of directors, you know, who have 668 00:36:47,040 --> 00:36:52,320 put climate change and and any social commitment to one side. 669 00:36:52,600 --> 00:36:55,400 They don't like it because they see it as an additional cost of 670 00:36:55,400 --> 00:36:56,800 doing business. So they don't like it. 671 00:36:57,120 --> 00:36:59,560 But but then on the completely on the other side, you have 672 00:36:59,560 --> 00:37:04,080 major CEOs of companies, perhaps more, more so in Europe today, 673 00:37:04,080 --> 00:37:09,040 it's fair to say who are very aware of, of what we're looking 674 00:37:09,040 --> 00:37:11,960 down the pipe at in terms of our children's future and climate 675 00:37:11,960 --> 00:37:13,920 change. And they recognize that there 676 00:37:13,920 --> 00:37:16,200 has to be a mitigation mechanism. 677 00:37:16,400 --> 00:37:19,760 And so they, you know, they, they, they may not 100% like it, 678 00:37:19,760 --> 00:37:23,680 but they recognized we need to have some means of stepping 679 00:37:23,680 --> 00:37:27,280 down. In the, in the EU, it's 4.3% per 680 00:37:27,280 --> 00:37:30,680 year that, that cap comes down. And as I mentioned, it's been 681 00:37:30,840 --> 00:37:33,840 over 25 years. All of a sudden you're down 1.1 682 00:37:33,840 --> 00:37:37,440 billion tons a year. Not bad in a world of 4040 giga 683 00:37:37,440 --> 00:37:40,880 tons. One phrase that is continuously 684 00:37:40,880 --> 00:37:44,960 repeated within carbon removal is pre compliance and that 685 00:37:44,960 --> 00:37:48,280 carbon removal is generally in a pre compliance period. 686 00:37:48,920 --> 00:37:51,600 I think there's been a lot of concern about monopsonistic 687 00:37:51,600 --> 00:37:54,480 effects within carbon removal. The demand is quite concentrated 688 00:37:54,480 --> 00:37:57,880 with a small number of buyers, people that you could name off 689 00:37:57,880 --> 00:38:00,040 of your hand. And everyone in carbon removal 690 00:38:00,040 --> 00:38:03,520 is looking forward to being able to rely upon that steady demand 691 00:38:03,520 --> 00:38:06,520 signal that you're talking about with regard to California. 692 00:38:07,240 --> 00:38:09,680 And we just do not have that yet. 693 00:38:09,800 --> 00:38:13,480 There are various changes to law, coming primarily in Europe 694 00:38:13,480 --> 00:38:17,840 but not exclusively, that may allow carbon removal to fit into 695 00:38:18,080 --> 00:38:20,560 various types of compliance markets or other types of 696 00:38:20,560 --> 00:38:22,320 compliance regimes. How do you? 697 00:38:22,320 --> 00:38:25,400 See that impacting your work, either as a trader or as someone 698 00:38:25,400 --> 00:38:27,560 who's just observing compliance from afar. 699 00:38:28,440 --> 00:38:30,720 Yeah. So the the the first thing just 700 00:38:30,720 --> 00:38:34,840 for coming to that is, you know, when we started our our research 701 00:38:34,840 --> 00:38:38,640 on compliance markets, they were trading in 10 billion a month. 702 00:38:39,040 --> 00:38:41,080 Now they're trading 70 billion a month. 703 00:38:41,520 --> 00:38:44,280 China of course, in the interim has launched a car compliance 704 00:38:44,280 --> 00:38:47,400 carbon market. South Korea's launched Mexico's 705 00:38:47,400 --> 00:38:48,840 in the second year of their pilot. 706 00:38:49,360 --> 00:38:53,840 Japan, the fifth biggest emitter, a western, a liberal 707 00:38:53,840 --> 00:38:56,440 democracy, good financial infrastructure. 708 00:38:56,440 --> 00:38:59,600 They are launching A compliance market next year. 709 00:38:59,600 --> 00:39:02,880 They're they're morphing their GX league, which is in between a 710 00:39:02,880 --> 00:39:06,360 compliance and a voluntary into full compliance next year. 711 00:39:06,560 --> 00:39:08,480 We're really optimistic about that. 712 00:39:09,400 --> 00:39:12,320 And then the big ones, Brazil and India are both moving 713 00:39:12,320 --> 00:39:15,800 legislation through. So all the Asian tigers, 714 00:39:15,800 --> 00:39:18,640 Indonesia, Philippines, Malaysia, Thailand, Vietnam are 715 00:39:18,640 --> 00:39:21,880 all at some stage of launching A compliance carbon market. 716 00:39:21,880 --> 00:39:27,160 So today we have about 18% of global emissions that are in 717 00:39:27,160 --> 00:39:30,640 compliance markets, but that is likely to rise significantly in 718 00:39:30,640 --> 00:39:32,920 the coming five years. And, and this is good news for 719 00:39:32,920 --> 00:39:36,040 climate change, right? The the Chinese carbon market, 720 00:39:36,040 --> 00:39:39,160 to put some numbers on this, they've just added steel, 721 00:39:39,160 --> 00:39:41,040 aluminum and cement to the market. 722 00:39:41,200 --> 00:39:47,000 It's now 7 billion tons, 7 gigatons is the cap, Europe's 723 00:39:47,000 --> 00:39:50,480 1.3 billion and California's 300 million. 724 00:39:50,480 --> 00:39:52,000 So just put that in perspective, right? 725 00:39:52,120 --> 00:39:56,320 That is enormous. Now if you bring a 7 billion cap 726 00:39:56,480 --> 00:40:01,240 down by 5%, that's 350 million tons in one year. 727 00:40:01,320 --> 00:40:04,040 That's the entire emissions of the UK taken out. 728 00:40:04,200 --> 00:40:08,400 So when people say to me. What's the quickest way we could 729 00:40:08,400 --> 00:40:12,920 address and I have have a hope of a bending the curve anywhere 730 00:40:12,920 --> 00:40:17,400 near what we need at the scale we need in the very limited 731 00:40:17,400 --> 00:40:19,280 carbon budget time we have remaining. 732 00:40:19,920 --> 00:40:23,000 ETS is one of the only mechanisms because it's so 733 00:40:23,000 --> 00:40:26,640 scalable if Brazil caps and starts bringing that cap down, 734 00:40:26,640 --> 00:40:30,440 these are big numbers. So I just wanted to reiterate, 735 00:40:30,440 --> 00:40:34,800 you know, hopefully the growth of these markets and in my view, 736 00:40:34,960 --> 00:40:40,200 if one would say, OK, let's look at all the resources that are 737 00:40:40,200 --> 00:40:44,920 being spent around the promotion and education of compliance 738 00:40:44,920 --> 00:40:48,200 carbon markets to mid level bureaucrats in emerging market 739 00:40:48,200 --> 00:40:51,320 countries. Here's the number tiny. 740 00:40:51,640 --> 00:40:58,440 How much money is being spent on Lidar for forestry Red Plus and 741 00:40:59,160 --> 00:41:05,360 other, excuse my language, weird carbon abatement avoidance 742 00:41:05,480 --> 00:41:08,920 schemes and cryptocurrencies linked to VCM. 743 00:41:09,840 --> 00:41:14,080 This is a huge, in my view, misallocation of resources. 744 00:41:14,240 --> 00:41:16,760 And one of our missions is simply to educate more people. 745 00:41:16,960 --> 00:41:19,840 I'm sure most people on your show probably don't know 746 00:41:19,840 --> 00:41:22,000 anything about these carbon markets yet they're the most 747 00:41:22,000 --> 00:41:25,440 successful policy mechanism. I mean, it's crazy. 748 00:41:25,600 --> 00:41:29,080 So, so anyway, I'm sorry, went off on a bit of a tangent there, 749 00:41:29,080 --> 00:41:33,000 Ross, but the, the beauty, the beauty is coming back to your 750 00:41:33,000 --> 00:41:36,320 question in, in any economy, we talked about the marginal 751 00:41:36,320 --> 00:41:38,360 abatement cost curve. If you've got an industrial 752 00:41:38,360 --> 00:41:42,160 process, you can probably get 7080% of the emissions out at 753 00:41:42,160 --> 00:41:45,000 some reasonable cost, right? Maybe it goes up to 100, a 754 00:41:45,240 --> 00:41:49,200 $150.00 a ton, right. But that last 10 or 20% of 755 00:41:49,200 --> 00:41:52,520 emissions and I think this is what's dawning on European 756 00:41:52,600 --> 00:41:57,520 policy makers that last 10 or 20% of emissions, maybe $1000 a 757 00:41:57,520 --> 00:42:00,480 ton. Now, if I can prove to you, as 758 00:42:00,480 --> 00:42:04,400 you know, when your listeners know that we could provide high 759 00:42:04,400 --> 00:42:10,840 quality, durable carbon dioxide removal for 200 or $300.00 a 760 00:42:10,840 --> 00:42:13,200 ton. What why would we force a 761 00:42:13,200 --> 00:42:17,360 company to abate and pay 1000 and potentially bankrupt that 762 00:42:17,360 --> 00:42:21,520 business when you could actually remove the carbon injected deep 763 00:42:21,520 --> 00:42:25,560 underground for long term storage for let's say 300 now? 764 00:42:25,680 --> 00:42:28,160 So there's a dead weight loss to society. 765 00:42:28,360 --> 00:42:31,360 And I think this is the is the main again, we come back to 766 00:42:31,360 --> 00:42:34,320 economics, don't we? As the, as the driver for these 767 00:42:34,320 --> 00:42:36,960 decisions. This is why Europe and the UK is 768 00:42:36,960 --> 00:42:43,720 even the front runner here are looking at integrating only high 769 00:42:43,720 --> 00:42:49,320 quality Cdr very important the quality metric here into the 770 00:42:49,320 --> 00:42:52,040 emission trading system. And and that would happen in 771 00:42:52,040 --> 00:42:54,520 stages. So you know, instead of having 772 00:42:54,520 --> 00:42:58,200 to submit 100% of permits to match your emissions, they would 773 00:42:58,200 --> 00:43:03,040 allow you perhaps 5% could come from Cdr sources, but only 774 00:43:03,040 --> 00:43:06,600 government approved sources and then the next year might be 7% 775 00:43:06,600 --> 00:43:11,400 and then 10%. And we see this act of we call 776 00:43:11,400 --> 00:43:15,680 this convergence whereby compliance carbon markets 777 00:43:15,840 --> 00:43:20,120 instead of the permit being a permit that allows one ton to be 778 00:43:20,120 --> 00:43:24,840 emitted, they will morph into markets where the actually what 779 00:43:24,840 --> 00:43:30,040 gets traded represents the removal and permanent storage of 780 00:43:30,040 --> 00:43:33,080 one ton. And this probably extends the 781 00:43:33,080 --> 00:43:37,800 life of these markets by perhaps 25 to 50 years because as you 782 00:43:37,800 --> 00:43:40,880 know, we're going into massive overshoot and we're going to 783 00:43:40,880 --> 00:43:44,000 have to be removing carbon for, for decades. 784 00:43:44,160 --> 00:43:47,360 So I think, I think that that this is the, the what we call 785 00:43:47,360 --> 00:43:50,040 convergence between compliance and Cdr. 786 00:43:50,240 --> 00:43:53,080 It's very exciting. I think the issue is time 787 00:43:53,080 --> 00:43:56,200 horizon and happy to tell you what the UK is doing and what 788 00:43:56,200 --> 00:43:58,720 Europe is doing. Oh yeah. 789 00:43:58,720 --> 00:44:01,200 I'd love to hear more about some of the specifics, although I do 790 00:44:01,200 --> 00:44:05,080 feel honor bound to defend carbon removal people a tiny 791 00:44:05,080 --> 00:44:06,560 bit. I think the way that you came 792 00:44:06,560 --> 00:44:09,440 into carbon was a very interesting mix of first 793 00:44:09,440 --> 00:44:11,400 principles thinking and empiricism. 794 00:44:11,400 --> 00:44:13,720 Where you reviewed the literature, you saw that this 795 00:44:13,720 --> 00:44:16,240 was the lever that you wanted to spend time pulling that had the 796 00:44:16,240 --> 00:44:19,160 greatest potential impact, and you found your way there. 797 00:44:19,200 --> 00:44:21,920 I think a lot of people come into carbon removal knowing that 798 00:44:21,920 --> 00:44:24,600 carbon removal will be necessary, if for nothing else 799 00:44:24,600 --> 00:44:26,560 for residual emissions. We just need to have this 800 00:44:26,560 --> 00:44:27,760 technology. Ready to go? 801 00:44:28,320 --> 00:44:31,080 And they come in from it that way and go from there. 802 00:44:31,080 --> 00:44:32,760 You guys are looking at different ends of the telescope 803 00:44:32,800 --> 00:44:35,040 I think is what happened. Yeah. 804 00:44:35,040 --> 00:44:39,000 You know, as you know, Ross, I'm, I'm, I've done a very, very 805 00:44:39,000 --> 00:44:42,600 deep dive on the voluntary market and I've I've, you know, 806 00:44:42,600 --> 00:44:45,960 we came to a very strong conclusion that you just simply, 807 00:44:46,240 --> 00:44:48,240 you know, should not be placing capital there. 808 00:44:48,800 --> 00:44:51,400 We've got I can anyway, that's a different podcast, but many, 809 00:44:51,400 --> 00:44:53,040 many no, no. No, it's, I think it's this 810 00:44:53,040 --> 00:44:56,040 podcast too, but. But, but there's many, many 811 00:44:56,040 --> 00:45:00,880 clients of ours that you know many have, have invested in very 812 00:45:00,880 --> 00:45:04,320 large VCM projects had lost very large amounts of money. 813 00:45:04,320 --> 00:45:09,040 We estimate last year between 3 and 600 million U.S. dollars was 814 00:45:09,040 --> 00:45:14,280 lost in voluntary investments. But but within the voluntary, of 815 00:45:14,280 --> 00:45:18,880 course, carbon dioxide removal is a very tiny subset we know 816 00:45:19,040 --> 00:45:21,560 and I love Cdr. Why? 817 00:45:21,560 --> 00:45:23,840 Why do I love Cdr? Very simple. 818 00:45:24,120 --> 00:45:27,600 I'm an empiricist. If I can feel it, touch it, 819 00:45:27,640 --> 00:45:32,280 weigh it, liquefy it, transport it, inject it and cap that well, 820 00:45:32,520 --> 00:45:35,760 I know that is long term durable storage. 821 00:45:35,920 --> 00:45:39,600 And that is a simple, yes, it's it's 300, it's 400, it's 500. 822 00:45:40,640 --> 00:45:43,440 But if that makes sense to me, it has to be more expensive 823 00:45:43,440 --> 00:45:45,720 because you're getting what it is on the tin, right? 824 00:45:46,040 --> 00:45:51,040 I mean, and, and when you understand as I do the, the, I 825 00:45:51,040 --> 00:45:55,040 mean, let's not even go into it. You should get Elias Airy on on 826 00:45:55,040 --> 00:45:59,200 on your podcast to talk about, you know, the multiple methods 827 00:45:59,600 --> 00:46:02,560 that you know, a lot of VCM, both methodologies and then 828 00:46:02,560 --> 00:46:05,720 projects are are games, unfortunately, but but high 829 00:46:05,720 --> 00:46:10,640 quality Cdr absolutely love it and it and there's no question. 830 00:46:10,640 --> 00:46:13,840 I mean, just to give you what's happening in the space. 831 00:46:14,520 --> 00:46:17,960 So the EU has now issued their carbon removal and carbon 832 00:46:17,960 --> 00:46:24,240 farming regulation and they've broken down Cdr into really 3 833 00:46:24,240 --> 00:46:26,920 categories. Carbon farming, which covers 834 00:46:26,920 --> 00:46:29,560 farms and forests, a permanent removal. 835 00:46:29,560 --> 00:46:33,680 That's of course DAC Beck's and bio CCS, right. 836 00:46:34,640 --> 00:46:40,360 And then a third source just like sort of everything else 837 00:46:40,360 --> 00:46:43,120 that you know sort of outside of those those categories. 838 00:46:44,200 --> 00:46:48,840 So they they are looking very care very seriously. 839 00:46:48,960 --> 00:46:51,240 This is going to move through legislation in the next probably 840 00:46:51,240 --> 00:46:54,280 20-4 months with probably an implementation, earliest 841 00:46:54,280 --> 00:46:58,160 implementation date when Cdr permits and and these would be 842 00:46:58,160 --> 00:47:04,200 EU approved permits would become fungible for a portion of those 843 00:47:04,200 --> 00:47:07,000 compliance companies for a portion of their annual 844 00:47:07,000 --> 00:47:09,840 obligation. And let's let's put a number on 845 00:47:09,840 --> 00:47:12,160 it 3% in year one or something small. 846 00:47:13,280 --> 00:47:16,040 Now the history of this is very interesting. 847 00:47:16,920 --> 00:47:21,280 Back in the days of the CDM, the clean development mechanism in 848 00:47:21,280 --> 00:47:31,200 2000 and and 5 to 2008, the EU allowed international CDM 849 00:47:31,200 --> 00:47:37,600 credits from global projects to become fungible for a large 850 00:47:37,600 --> 00:47:40,520 portion of obligations. And Ross, I can tell you have, 851 00:47:40,520 --> 00:47:43,200 again, having studied that and knowing people have worked very, 852 00:47:43,200 --> 00:47:47,400 who worked very closely in it, it, it, it really was a disaster 853 00:47:47,400 --> 00:47:50,440 because you had very low quality credits being used. 854 00:47:50,600 --> 00:47:54,240 It collapsed the price. And remember what stimulates 855 00:47:54,240 --> 00:47:55,920 abatement? Does a low price stimulate 856 00:47:55,920 --> 00:47:58,760 abatement? No, at low price doesn't 857 00:47:58,760 --> 00:48:01,360 stimulate. When the price of, of, of carbon 858 00:48:01,360 --> 00:48:04,120 removal is high, then people abate. 859 00:48:05,040 --> 00:48:08,320 So they there was a very bad experience with that in the EU 860 00:48:08,320 --> 00:48:11,360 and it left a lot of scars. And I think that's a good thing 861 00:48:11,360 --> 00:48:16,640 because I think when they bring Cdr in now it will only my hope 862 00:48:16,640 --> 00:48:21,040 certainly be very high quality methodologies that will be 863 00:48:21,040 --> 00:48:23,520 allowed durable long term storage. 864 00:48:23,520 --> 00:48:28,000 The EU even mentions A-1000 year time horizon reason for storage. 865 00:48:28,240 --> 00:48:33,960 So you know, biochar and DAC are, you know, are definitely in 866 00:48:33,960 --> 00:48:36,080 the frame, but you know, wonderful too. 867 00:48:36,080 --> 00:48:38,360 I wish they would accelerate this a little bit, a little bit 868 00:48:38,360 --> 00:48:41,920 further because we know, as you just mentioned, like Cdr needs a 869 00:48:41,920 --> 00:48:43,560 kickstart. We need, you know, and we had 870 00:48:43,560 --> 00:48:47,760 today we had the, the news of climb works, you know, you know, 871 00:48:47,760 --> 00:48:51,440 going to be doing major layoffs, You know, unfortunately I, I 872 00:48:51,440 --> 00:48:55,560 don't know all the details, but you know, Cdr is a tough game 873 00:48:55,560 --> 00:48:58,040 and we need, but we need Cdr desperately. 874 00:48:58,040 --> 00:49:02,400 So I'm, I, I think this is great news that the integration of Cdr 875 00:49:02,400 --> 00:49:06,240 Int will bring liquidity and demand to the Cdr market do. 876 00:49:08,720 --> 00:49:12,160 You think the price of allowances in the EU will become 877 00:49:12,160 --> 00:49:15,800 high enough that carbon removal can compete with it or even be 878 00:49:15,800 --> 00:49:20,600 lower cost than allowances? So I, I think it's possible to 879 00:49:20,600 --> 00:49:22,520 be lower cost. So, you know, again, you get 880 00:49:22,520 --> 00:49:25,960 into methodologies here. Now there are some methodologies 881 00:49:25,960 --> 00:49:30,800 I like that are pretty low, low cost biomass, biomass burial for 882 00:49:30,800 --> 00:49:34,120 for instance, is something that, you know, I like the simplicity 883 00:49:34,120 --> 00:49:36,400 of it. Again, the devil's always in the 884 00:49:36,400 --> 00:49:40,960 detail with these methodologies, but certainly it, it, it ticks a 885 00:49:40,960 --> 00:49:43,640 lot of boxes depending on again and all, it's always about your 886 00:49:43,640 --> 00:49:46,760 feedstock when you have a, you know, a bi, a biomass. 887 00:49:47,160 --> 00:49:48,920 So it's very important to track that feedstock. 888 00:49:48,920 --> 00:49:51,960 But that could certainly be a lot lower cost than where the 889 00:49:51,960 --> 00:49:55,000 ETS price is going. Our forecasts are that 890 00:49:55,000 --> 00:50:00,040 EUETS&UKETS prices are, are going to be well over 100 USA 891 00:50:00,040 --> 00:50:04,280 ton probably in, in, in 24 months based on the supply 892 00:50:04,280 --> 00:50:07,040 demand relationship that is that is occurring now. 893 00:50:07,400 --> 00:50:10,920 So, you know, I think it's very possible that you could have 894 00:50:10,920 --> 00:50:13,800 very competitive Cdr methodologies, high quality 895 00:50:13,800 --> 00:50:16,520 methodologies that could be, you know, around that level. 896 00:50:17,800 --> 00:50:20,720 It seems that we're entering a period of increased 897 00:50:20,920 --> 00:50:23,720 protectionism. I hope not. 898 00:50:23,800 --> 00:50:26,120 It might just be that the World Trade system is going to 899 00:50:26,120 --> 00:50:29,760 reorient and maybe move around the US, which has become 900 00:50:29,760 --> 00:50:33,760 increasingly erratic in terms of what trade goals it even has. 901 00:50:33,760 --> 00:50:35,880 It's hard to even know. I'm wondering if that's going to 902 00:50:35,880 --> 00:50:39,040 stick, if it will jolt back. I'm an American, I have 903 00:50:39,840 --> 00:50:42,560 predictability returns and trade continues to improve. 904 00:50:42,960 --> 00:50:47,200 But even before the second Trump administration, there have been 905 00:50:47,600 --> 00:50:50,960 various indicators that protectionism would play a role 906 00:50:51,080 --> 00:50:53,920 in carbon markets. I know that there have been 907 00:50:53,920 --> 00:50:57,000 carbon removal companies, project developers who have 908 00:50:57,000 --> 00:50:59,360 received strategic investment from Japan, so they would be 909 00:50:59,360 --> 00:51:02,040 eligible to participate in the Japanese compliance market. 910 00:51:02,520 --> 00:51:06,640 I know the EU is exploring whether or not global S credits 911 00:51:06,640 --> 00:51:10,040 will be eligible for the ETS and or even just carbon compliance. 912 00:51:10,040 --> 00:51:12,760 They have various policies that all interact with regard to 913 00:51:12,760 --> 00:51:15,720 carbon there, but it's unclear. Yeah, those are all up for 914 00:51:15,720 --> 00:51:18,240 debate. Is the world going to a new 915 00:51:18,240 --> 00:51:20,520 commitment to free trade? Is it going in a more 916 00:51:20,520 --> 00:51:22,480 mercantilist or protectionist direction? 917 00:51:22,480 --> 00:51:23,640 What do you think is going to happen? 918 00:51:24,440 --> 00:51:27,000 I think, you know, I think the signs are very clear that we're, 919 00:51:27,000 --> 00:51:32,400 we're moving towards a more, more insular national, national 920 00:51:32,440 --> 00:51:36,040 interests, which is a shame, right? 921 00:51:36,040 --> 00:51:41,040 That's, that's not good. It's also, you know, someone 922 00:51:41,040 --> 00:51:42,560 who, who's saying this last night. 923 00:51:42,560 --> 00:51:46,600 If someone who grew up, you know, in a small town very close 924 00:51:46,600 --> 00:51:50,000 to the US border, of course you know, almost everything I 925 00:51:50,000 --> 00:51:54,760 consumed in in TV and stuff was, you know, from the USA and don't 926 00:51:54,760 --> 00:51:55,880 feel. Too bad it's because all your 927 00:51:55,880 --> 00:51:57,920 comedians come down and it's all Canadian anywhere. 928 00:51:58,880 --> 00:52:04,000 But but you know, when I hear the US national anthem, that's a 929 00:52:04,000 --> 00:52:05,920 moving experience for me as a Canadian. 930 00:52:05,920 --> 00:52:08,240 Now, of course, I love my country, Canada, and the 931 00:52:08,240 --> 00:52:10,560 Canadian anthem is the anthem for me. 932 00:52:10,840 --> 00:52:16,640 But there's no question that what the US anthem evokes and 933 00:52:16,640 --> 00:52:23,040 what the US stands for and stood for, you know, to see it crumble 934 00:52:23,040 --> 00:52:28,480 now internationally somewhat is, you know, it isn't, isn't great. 935 00:52:28,480 --> 00:52:31,360 So, you know, and and then it's being repeated by other 936 00:52:31,480 --> 00:52:33,520 countries. You see, they're turning more 937 00:52:33,520 --> 00:52:34,960 inwards. They're saying, well, if the US 938 00:52:34,960 --> 00:52:37,400 is, you know, turning inwards, then, you know, why should we 939 00:52:37,400 --> 00:52:39,920 engage? So let's hope Ross, but you 940 00:52:39,920 --> 00:52:43,000 know, let's hope that this is a temporary, a temporary thing and 941 00:52:43,000 --> 00:52:47,280 not a permanent thing. With regard to Cdr specifically, 942 00:52:47,440 --> 00:52:52,160 the EU certainly has made it very clear right now in the CRCF 943 00:52:52,160 --> 00:52:57,240 framework that it will only be European based projects and the 944 00:52:57,240 --> 00:53:00,480 credits that come from that, the Cdr that comes from that, that 945 00:53:00,480 --> 00:53:04,520 will initially be considered for fungibility into the EUETS. 946 00:53:04,520 --> 00:53:07,360 And, and again, you know, I think with, because of what 947 00:53:07,360 --> 00:53:10,960 happened in the past, I think a cautious, slowly, slowly 948 00:53:11,040 --> 00:53:15,840 approach really makes sense. The UK is slightly ahead of the 949 00:53:15,840 --> 00:53:18,400 EU in this regard. And of course, being the UK, 950 00:53:18,400 --> 00:53:20,080 they have, they can't use the term Cdr. 951 00:53:20,080 --> 00:53:23,440 That would be too, too. They, they use the term GGR. 952 00:53:23,560 --> 00:53:27,040 So it's called grief gas removals, but it's the same 953 00:53:27,040 --> 00:53:29,320 thing. And, but they're on a quicker 954 00:53:29,320 --> 00:53:35,280 timeline and could see integration of, of GGRS into the 955 00:53:35,280 --> 00:53:40,120 UK emission trading system as soon, as, as soon as 2, two 956 00:53:40,120 --> 00:53:42,480 years from now. Again, it'll be a small, 957 00:53:42,480 --> 00:53:45,360 probably a small integration. They've also made it in their 958 00:53:45,360 --> 00:53:48,800 consultation document, they've made it clear that the, the 959 00:53:48,800 --> 00:53:51,560 addition will not affect the overall cap. 960 00:53:51,560 --> 00:53:53,680 So they won't increase the cap on emissions. 961 00:53:53,880 --> 00:53:58,960 These, these credits will have to be part of the existing cap. 962 00:53:59,120 --> 00:54:01,680 And I think, again, that that's the right way of going about it. 963 00:54:02,720 --> 00:54:05,000 Interesting. I'm actually really curious 964 00:54:05,000 --> 00:54:08,120 about the privileging, especially of Becks within the 965 00:54:08,120 --> 00:54:10,160 EU. And it should come as no 966 00:54:10,160 --> 00:54:13,560 surprise that Europe is quite good at Becks. 967 00:54:14,200 --> 00:54:16,360 I think that should make you wonder which of those came 968 00:54:16,360 --> 00:54:17,960 first. That's a very cynical way of 969 00:54:17,960 --> 00:54:20,840 framing the question. Is there anything to that, or is 970 00:54:20,840 --> 00:54:26,200 that a conspiratorial mindset? I think, I think, you know, to 971 00:54:26,200 --> 00:54:32,120 summarize that, you know, you get cynical when you get old 972 00:54:32,120 --> 00:54:35,040 like me and you've been in business for so many years. 973 00:54:35,080 --> 00:54:39,840 And it's just very apparent to me now that if you don't have a 974 00:54:39,840 --> 00:54:45,840 policy that interacts with supply, demand, price or profit, 975 00:54:46,320 --> 00:54:49,400 you are not on a winner, you are going nowhere. 976 00:54:49,480 --> 00:54:54,080 You are not scaling unless you're interacting with these 4 977 00:54:54,320 --> 00:54:58,040 capitalistic levers. And it's sad to say that right? 978 00:54:58,200 --> 00:55:00,840 But that is the ultimate realization. 979 00:55:01,080 --> 00:55:04,960 It's all about the money. So you know what the the 980 00:55:04,960 --> 00:55:07,360 financial incentives and the long term financial 981 00:55:07,360 --> 00:55:11,080 sustainability of Cdr. And this is I think what 982 00:55:11,080 --> 00:55:13,400 Climbworks has to get to grips with, right? 983 00:55:13,600 --> 00:55:18,120 Can they find the funding to sustain the drop down that 984 00:55:18,120 --> 00:55:23,440 technology learning curve to get DAC down to that hundred kind of 985 00:55:23,720 --> 00:55:27,760 $150.00 a ton? And I certainly hope they they 986 00:55:27,760 --> 00:55:30,920 can sustain that. But it really does come back to 987 00:55:30,920 --> 00:55:34,120 the, the financial economics. So when we talk about Europe and 988 00:55:34,120 --> 00:55:38,120 the and the it's a combination of regular regulatory stimulus 989 00:55:38,120 --> 00:55:41,760 or lack thereof, and then the financial incentives, you know, 990 00:55:42,720 --> 00:55:45,480 and there's been some real successes on the bio CCS as you 991 00:55:45,480 --> 00:55:49,240 know that Microsoft, I think did a big deal with the the the 992 00:55:49,560 --> 00:55:51,880 Norwegian or not Norwegian. Are they Finnish? 993 00:55:52,080 --> 00:55:53,880 Can't. I can't remember but but when 994 00:55:53,880 --> 00:55:56,160 you take. This They're all over the. 995 00:55:56,280 --> 00:56:00,000 Yeah, that you take that project apart it, it they receive debt 996 00:56:00,000 --> 00:56:02,920 funding for the European Development Bank funding like 997 00:56:03,120 --> 00:56:06,640 like it was a multi faceted funding source to put that whole 998 00:56:06,640 --> 00:56:08,720 thing together. And it again, it's early days, 999 00:56:08,720 --> 00:56:11,080 but it certainly looks like they're going to have a very big 1000 00:56:11,080 --> 00:56:14,720 successful CCS facility capturing hopefully a lot of 1001 00:56:14,720 --> 00:56:19,200 carbon. You're in the UKI hear more bad 1002 00:56:19,200 --> 00:56:22,840 things about Drax and Becks in the UK than pretty much anything 1003 00:56:22,840 --> 00:56:25,200 else about Becks. I mean some of the big Nordic 1004 00:56:25,200 --> 00:56:28,680 deals look nicer, but I know it caused a lot of controversy 1005 00:56:28,680 --> 00:56:32,360 where you are too. Yeah, I have to say I'm not a, 1006 00:56:32,360 --> 00:56:36,800 I'm not a fan of the Drax conversion to backs. 1007 00:56:37,120 --> 00:56:40,160 You know, I don't know how close you've been following it, but 1008 00:56:40,280 --> 00:56:42,920 there's been multiple investigative journalistic 1009 00:56:42,920 --> 00:56:46,200 reports now that, that have sourced the fact that the 1010 00:56:46,200 --> 00:56:49,960 pellets, the wood pellets that come from Canada, some of them 1011 00:56:49,960 --> 00:56:52,880 have come from Canadian old growth forest. 1012 00:56:52,880 --> 00:56:54,920 And you know, that's just wrong, right? 1013 00:56:54,920 --> 00:56:58,080 And then and then to, to claim that, that, that you burn that 1014 00:56:58,080 --> 00:57:01,040 and the emissions go in the atmosphere and it's it, it 1015 00:57:01,040 --> 00:57:03,320 doesn't count under the emission trading system. 1016 00:57:03,600 --> 00:57:06,200 So since those reports have come out, there's even been a 1017 00:57:06,200 --> 00:57:08,640 television documentary here in the UK on that. 1018 00:57:09,680 --> 00:57:12,040 You know, Drax has been hit pretty hard. 1019 00:57:12,520 --> 00:57:14,600 There's an investigation ongoing, I think with the 1020 00:57:14,600 --> 00:57:18,080 government. And separate from that, they're 1021 00:57:18,320 --> 00:57:23,160 in a consultation in the UK about whether should bioenergy 1022 00:57:23,160 --> 00:57:27,400 with carbon capture and storage or so, sorry, should burning of 1023 00:57:27,400 --> 00:57:32,280 biomass and releasing the emissions really be exempt from 1024 00:57:32,280 --> 00:57:34,760 the emission trading system? Because the, the, the, the 1025 00:57:34,760 --> 00:57:37,920 argument is the trees grow back, they suck, sequester the carbon 1026 00:57:37,920 --> 00:57:40,080 and then it's, it's like a closed loop cycle, right? 1027 00:57:40,080 --> 00:57:44,120 It's a neutral, but, you know, I think they're on weak ground 1028 00:57:44,120 --> 00:57:45,280 there. And I certainly hope the 1029 00:57:45,280 --> 00:57:48,320 government does the right thing and tightens that up. 1030 00:57:49,520 --> 00:57:51,960 Mike, that was fascinating. I always appreciate you being 1031 00:57:51,960 --> 00:57:54,840 here and teaching me so much about this to feel like I slept 1032 00:57:54,840 --> 00:57:58,520 on this for a long time. And I'm now starting to nerd out 1033 00:57:58,520 --> 00:58:00,480 on it much more heavily. So I basically just need to go 1034 00:58:00,480 --> 00:58:02,760 through all of the resources that you've gathered on your 1035 00:58:02,760 --> 00:58:04,400 website. I'll put the link in the show 1036 00:58:04,400 --> 00:58:06,280 notes to that too. If people are inspired listen to 1037 00:58:06,280 --> 00:58:08,360 this conversation. That's a great place to start. 1038 00:58:08,960 --> 00:58:11,520 Thanks for being here, Mike. Yeah, I know great or great Ross 1039 00:58:11,520 --> 00:58:15,040 and I know I, I blab on and on, but you know, I'm just, I'm, I'm 1040 00:58:15,040 --> 00:58:18,560 very passionate about it and but I'd loved, I would love to get 1041 00:58:18,560 --> 00:58:22,440 into these more like I, I know these other topics when it's 1042 00:58:22,440 --> 00:58:25,480 less empirical, perhaps not saying you're not an empirical 1043 00:58:25,480 --> 00:58:29,040 person, but what I like about the way your brain works that's 1044 00:58:29,040 --> 00:58:30,280 that's different than a lot of other. 1045 00:58:30,360 --> 00:58:34,320 It's like you have this great way of bringing in, you know, 1046 00:58:34,640 --> 00:58:40,160 emotion and empathy and into conversations rather than just 1047 00:58:40,160 --> 00:58:42,960 like this one we had was pretty empirical, right? 1048 00:58:43,120 --> 00:58:45,560 And, and so, you know, when we talk about the social cost of 1049 00:58:45,560 --> 00:58:48,760 carbon and, and, you know, some of these other things, I'm, I 1050 00:58:48,760 --> 00:58:53,320 know you'll bring in, you know, a lot of these other aspects and 1051 00:58:53,320 --> 00:58:56,520 it'll be a much more like, I don't know, emotional 1052 00:58:56,600 --> 00:58:59,240 conversation. I would love to be to do 1053 00:58:59,240 --> 00:59:02,800 something like that too. No, we could definitely do that. 1054 00:59:02,800 --> 00:59:04,440 I tried to bring it there a little bit too. 1055 00:59:04,440 --> 00:59:06,240 Being like what happened in my own. 1056 00:59:06,240 --> 00:59:10,600 Mind that made me so skeptical towards compliance markets and 1057 00:59:10,600 --> 00:59:12,840 so supportive of VCM for so long. 1058 00:59:13,120 --> 00:59:17,360 I think part of it is also just a base level American nest where 1059 00:59:17,360 --> 00:59:19,480 the scariest words in the English language are I'm from 1060 00:59:19,480 --> 00:59:21,600 the government and I'm here to help as Ronald Reagan. 1061 00:59:21,600 --> 00:59:23,800 One question that's. Part of our. 1062 00:59:23,800 --> 00:59:27,400 National psyche, whether you like Ronald Reagan or not, with 1063 00:59:27,400 --> 00:59:31,200 their culture. And I think I think that can 1064 00:59:31,400 --> 00:59:33,880 drive Americans in a very specific kind of way that may. 1065 00:59:33,880 --> 00:59:35,680 Leave them to be. More supportive and more 1066 00:59:35,680 --> 00:59:38,880 skeptical in ways that are contrary to the truth and 1067 00:59:38,880 --> 00:59:40,760 understanding yourself and knowing when am I making 1068 00:59:40,760 --> 00:59:44,920 decisions for poor reasons or and motivated in some on ideal 1069 00:59:44,920 --> 00:59:46,200 way. I think it's really important. 1070 00:59:46,720 --> 00:59:49,480 I'm always trying to check that in myself because you can know 1071 00:59:49,480 --> 00:59:52,840 that is true and still fail to point it in yourself. 1072 00:59:52,840 --> 00:59:56,240 But I appreciate you giving me a chance to explore those ideas 1073 00:59:56,520 --> 00:59:57,520 and we should just do more there. 1074 00:59:57,520 --> 01:00:00,760 We clearly didn't exhaust your subject matter expertise of this 1075 01:00:00,760 --> 01:00:02,200 topic, and it's really fascinating. 1076 01:00:02,440 --> 01:00:04,720 So more to come, listeners, if you want to hear more about 1077 01:00:04,920 --> 01:00:08,240 compliance markets and difficulties with VCM, you drop 1078 01:00:08,240 --> 01:00:11,240 that money lost on supporting VCM projects. 1079 01:00:11,800 --> 01:00:14,680 God needs to be unpacked. Let's do another episode, Mike. 1080 01:00:14,920 --> 01:00:16,760 OK, great. Excellent, Ross. 1081 01:00:16,760 --> 01:00:19,680 Well, listen, have a great weekend and thanks. 1082 01:00:19,680 --> 01:00:20,880 Thanks very much for having me on.