“The cheapest, most effective, lowest-energy way of doing carbon removal is not putting carbon dioxide in the atmosphere in the first place.” – Dr. Alex Gagnon IST Chief Trust Officer Steve Kelly speaks with Dr. Alex Gagnon, co-founder and CEO of Banyu Carbon and an associate professor at the University of Washington School of Oceanology. They discuss the transformative potential of direct ocean capture in carbon dioxide removal and explore the ecosystem of partnerships needed to scale cleantech solutions.
In the fourth episode of TechnologIST Talks, host Steve Kelly sits down with Banyu Carbon co-founder and CEO Dr. Alex Gagnon to explore the emerging field of carbon dioxide removal and its role in decarbonizing the economy. Banyu Carbon uses a process that relies on sunlight and seawater to remove carbon dioxide from water.
An associate professor at the University of Washington School of Oceanography, Alex takes a deep dive into innovative solutions and the ecosystem required to combat climate change. Drawing lessons from cleantech 1.0, he emphasizes planning for future global competition, highlighting the role of federal initiatives in fostering innovation, and supporting commercialization.
How can the U.S. prevent repeating the mistakes of cleantech 1.0 in the carbon dioxide removal industry? What steps should universities take to support commercialization while maintaining their commitment to research? And what role should government and private industry play in sustaining demand for cleantech solutions?
Join us for this and more on this episode of TechnologIST Talks.
Learn more about IST: https://securityandtechnology.org/
00:00 Introduction to Technologist Talks
01:15 Meet Dr. Alex Gagnon of Banyu Carbon
01:26 Innovative Carbon Removal Techniques
01:45 Challenges and Opportunities in Clean Energy
02:33 The Importance of Retaining Tech Talent
03:58 The Evolution of Cleantech
05:29 Banyu Carbon's Mission and Vision
18:20 The Role of Government and Venture Capital
44:29 Future Outlook for U.S. Clean Energy
47:05 Conclusion and Final Thoughts
Steve: Welcome to TechnologIST Talks. I'm Steve Kelly, your host. Today, I am thrilled to be joined by Dr. Alex Gagnon. Dr. Gagnon is the founder and CEO of Banyu Carbon, a company dedicated to innovative solutions for carbon dioxide removal.
“So, at Banyu Carbon, we're really sort of tackling this carbon removal problem. We've been developing a simple and low energy process to remove carbon dioxide from the environment. We do this through direct ocean capture. We remove carbon dioxide from seawater using sunlight or artificial light as the major source of energy.”
We unpack the funding environment for clean energy solutions and the types of public- and private-sector partnerships that have influenced his company’s trajectory.
“NSF is the U.S. government's science seed fund. But it's not really enough on its own to support commercialization. And so I'm incredibly proud when we got a National Science Foundation Award. But there's a lot of other pieces that need to come together. And so that's where the venture world, you know, there's some important signals that those send. But I think that really the venture dollars have come in mostly based on commercial signals and the deep diligence of these more specialized venture companies that understand this space.”
And we discuss how crucial it is to keep tech talent right here in the U.S.
“Pathways to help retain this incredible talent, the people who are at the top of their game and keep them in the U.S. They want to stay in the U.S. They want to start companies here. They want to be contributing to innovation. Finding ways to continue to train them and keep that talent in the U.S. I think is actually a really easy structural change.”
What motivated Alex to pursue a career in climate technology? How has Banyu Carbon engaged with potential investors? And what is his outlook for clean energy tech? Join us for this and more.
Steve: I'm thrilled to be here today with Dr. Alex Gagnon from Banyu Carbon and Alex, welcome to TechnologIST Talks.
Alex: Thrilled to be here. Thanks for the invitation.
Steve: Let's begin by looking back at the first generation of cleantech. I've heard that it is referred to as cleantech 1.0. So, how did things work out for the US and Western innovators?
Alex: There's this phrase that generals always fight the last war in the cleantech sector. I think where this refers to is the boom and bust of solar and biofuels and some other clean technologies that really characterized the mid 2000s to mid-teens that we sometimes call cleantech 1.0.
As a Co-Founder and CEO of a cleantech company, Banyu Carbon, that's working on carbon dioxide removal and as someone who's really engaged in the climate space as faculty in earth sciences and oceanography here at the university of Washington, I've been watching this and participating in this and we're at this time where we're in this exciting, promising, really active regeneration of the cleantech space.
And so it could be characterized as a boom. And so people really think back about the experiences of cleantech 1.0 and that informs the investment discussions and business discussions and where resources are being allocated. And I think there's some important places where those discussions influence the opportunity space for companies like ours, where we're thinking about what's same, what's different, and how we really, ultimately, I think what everyone's thinking about is how do we sustainably support the development of the important technologies in the cleantech and energy space.
Steve: Since we started to go down that path, why don't you tell me a little bit about Banyu Carbon. How did it start and what motivated you to start research in this field?
Alex: So at Banyu Carbon, we're really focused on addressing this problem of how we decarbonize the economy in ways that essential processes and activities like manufacturing, transport, long haul flight can continue, but be done in ways that are compatible with a sustainable climate future.
And so this really comes down to the problem of how we reduce the amount of carbon dioxide that's going into the atmosphere and how we clean up the effects of past legacy carbon dioxide emissions because every viable plan to keep global temperatures below dangerous levels, it involves not just steep emission reductions, but part of those plans now are also for us to hit our milestones now, our actual removal of carbon dioxide from the atmosphere at a really massive scale.
So there's this technical challenge of how we get to billions of tons of carbon dioxide removal by the 2030s and that's a massive technical challenge, but it's also potentially, it's a totally new market. And so there's a lot of interest in the technologies and companies and new markets that this will create.
So, at Banyu Carbon, we're really tackling this carbon removal problem. We've been developing a simple and low energy process to remove carbon dioxide from the environment. We do this through direct ocean capture. We remove carbon dioxide from seawater using sunlight or artificial light as the major source of energy.
So really I won't nerd out too much on the technical details. We can talk mostly about technological development, but I think it'll help frame things to give a little bit of insight about what we're doing. So you can, in simplest terms, think of seawater going into a process like ours, and then we use a photochemical reaction.
We're able to directly use the photons and light to suck carbon dioxide out of that seawater from the surface ocean, create a relatively easy way to measure stream of carbon dioxide that is then either permanently stored in geologic formations, away from having a climate impact, or that CO2 can be used as a feedstock for important industrial processes like synthetic fuels or sustainable jet fuel.
And then we return decarbonated water, partially decarbonated water, back to the ocean, where it sucks more carbon dioxide out of the atmosphere. So we're able to take advantage of the fact that the ocean naturally concentrates carbon dioxide from the atmosphere to do this real low energy. Processing low energy is incredibly important for scale, right?
Because there's so many technologies as we green the economy that are going to be fighting for renewable energy. If we need to get to climate relevant scales, we really need to have a low energy process, so that's what it is. In a nutshell, what we're doing, and I can talk a little bit about where that came from and the background that me and my Co-Founder had that informs that.
Steve: So let me just ask a little follow up question that is absolutely fascinating. And I think your point about this needs to be a low energy or low energy input process. I know that there's a risk, with some renewable energy concepts and projects that actually takes as much or more energy going in as, as what you get, coming out.
And so if you look at the process, the big picture without tax credits, actually, it's a little bit upside down in the model. So it is fascinating that you can do that and capture more carbon than the process creates, and then deploy that carbon into other uses, and be very fascinated as to where you could mention depositing it within geographic formations or using that in other ways in industrial processes.
So would love to hear more about that and what you were describing as well about you and your founders’ business approach.
Alex: We have this extra carbon dioxide in the environment and we're rapidly adding more and maybe that the energy is super crucial, like you say, and maybe stepping back a little bit, probably the thing that we should all align on is that the cheapest, most effective, lowest energy way of doing carbon removal is not putting carbon dioxide in the atmosphere in the first place.
And so all the things we can do to reduce CO2 emissions are really important. There's a really important contribution that new technologies and cleantech are making, and there's lots of ways where processes can be more efficient, more cost effective and also reduce carbon emissions, right? And so there's lots of opportunities there and lots of innovation in this space.
But we have gotten to this point where we have to also remove carbon dioxide. And it's also certain sectors that are hard to decarbonize. Long haul flights are really, really important. And so that's where a technology like ours, I think really comes into play is we can balance those two carbon dioxide removal.
And the utilization and storage is really cool and a key part of this, right? And so ultimately at climate relevant scales, there's nothing we really do at the same scale as carbon emissions. And so some forms of storage, geologic storage and mineral formations and old oil and gas wells and other geologic reservoirs is ultimately what you have to do when you get to a massive scale.
But there are industries that use CO2 and especially some of the new visions for industry, like synthetic fuels. Synthetic fuels are made out of energy, hydrogen, and carbon. And so that carbon has to come from somewhere and it can't come from fossil fuels, otherwise it's not sustainable fuel. So you need some source of CO2.
And so one of our investors that we're really proud to have as part of our team is United Airline Ventures. And that's because they're putting together this ecosystem of like, what are the pieces that have to come together to make sustainable fuels? And so we're really excited to be thinking about how we can contribute.
There's big steps to do. We’re at a relatively early stage. We've done demonstrations in the lab. We've taken some pieces of it out in the field, but by no means at the types of scales that will help support your next flight across the country yet. But we're really interested in how we fit in this ecosystem, how we might be able to be that supplier of CO2, that really important feedstock for some of these new green industries.
Steve: That is fascinating. But there's probably some of our listeners that have never heard about this concept of capturing carbon and then turning that into an ingredient for renewable jet fuel. Absolutely fascinating.
Alex: One place that it comes up occasionally that your listeners may think about is in a national security and supply chain.
And some of this is sci-fi and our role certainly is just speculative or aspirational at this point. But if you have an ability to make CO2 and synthetic jet fuel where your main ingredients are light, sunlight, and seawater, or pull CO2 from the air like other processes, and you can make synthetic fuel on demand, then maybe you can shorten the tyranny of distance.
Maybe you can produce. You can produce other fuels that are important for fueling operations much closer to where they're needed on islands or maybe even underway at sea.
[00:13:09] Steve: You mentioned briefly, obviously you're not doing this alone. You're part of a founding team coming up with these ideas, finding funding, finding partners, and we're interested in that and the broader topic of what's needed in a founding team to be successful.
And perhaps you could talk a little bit about your experiences, but both on the technology substance. business savvy human chemistry, between yourself, and those that are on that team, to be successful, because I think there's so many startups that don't work out for many reasons.
And so I'm interested in hearing more about your experience and what you think are the right ingredients.
Alex: The chemistry or recipe is a really important part of this puzzle. Maybe I can share a little bit about my experience as a background to frame things. So this is the first company that both my Co-Founder and I have founded.
And we were both previously and continue to be faculty and oceanography at the University of Washington. So come at this from an academic background and my previous research was on the ways of the ocean and the climate is connected. I think a lot about how carbon moves in and out of the ocean in the past and future.
And this really helped us, my Co-Founder and I recognize this opportunity. There's this opportunity to take advantage of some of the natural processes that carbon dioxide is concentrated in the surface ocean. We brought that together with some advances in chemistry and material science to come up with our process that we're trying to commercialize.
But it's a pretty big step to go from a tenured faculty position. It's not that common to step back from that role and we've been able to do that. I think we had a calling to do it because we could have continued to develop the research in our labs. There's absolutely a path where we could incrementally develop this research through the typical grants, basic research grants that we get as faculty.
But those are relatively slow paced, and it felt like there was this real opportunity in this convergence of a pressing need for the planet and for national interest, as well as the opportunity in the venture markets and elsewhere, and appetite to support the development of some of these new technologies.
And that there was a pull from potential buyers, there is starting to be a real commercial case for carbon removal in a way that I don't think there had been before. That said, Oh, this is the time where we do this. And so I don't lightly step into the business world. It really takes a really important idea, a good team.
And so that is really what the draw was and why both Michael Federer and I took that deep breath and that step up into the unknown. We couldn't have gotten to where we're going and we have, boy, do we have a lot of challenges still ahead. Companies are putting out fires, but we couldn't have done that with a bunch of support that we both got from the university.
I think the University of Washington has been really key in embracing this and I think we see and they're aligned on this as commercialization taking these fundamental discoveries out of the lab and bringing them into the world is fundamentally aligned with the missions of the university.
The mission of the university is to innovate, to teach and support the community and to have a positive impact on communities on the planet. And commercialization actually translating the discoveries out into the real world is really right in the targets. It's been great to have support from the university.
They've given us leave of absence and said, like, go for it. We are able to work from a startup space in a lab or on campus that helps with recruiting that helps with us being able to spool up quickly. We have access to a bunch of the instrumentation on campus which would be really hard for other companies to be able to access.
So there's a lot of things there. We're also really lucky. Both my Co-Founder and I were Active Fellows. So Activate is a program supported by the National Science Foundation, a number of major industrials and philanthropy to take scientists and help train them to be scientist entrepreneurs. And so it's a two year program that really invests in learning those skills of how you make sure that there's product market fit.
How do you think about getting over the gaps of commercialization? How do you deal with fundraising? What is the different language and worldviews that venture capitalists versus philanthropy versus the National Science Foundation that I was more used to, how did they all talk different languages?
How do you translate those? So I'm a firm believer that scientists and entrepreneurs or faculty entrepreneurs can be something bigger and better than the sum of their parts. I'm super excited about that as a vision moving forward to help there with these really sticky, tough hardware type issues.
Technologies in Activate Fellowship that we're a part of are specifically focused on hardware development in the material science defense and energy spaces. And so this really tough problem places where it's hard to get a sustained capital, where patient capital is really necessary and where you have to do things really well.
Otherwise it all falls apart. So. I think there's a lot of inspiration that wraps up here that it's a hard journey. This is right now, it's the end of one for me and my Co-Founder. And so, I'm learning a lot of lessons on the job, but it takes everything coming together for sure.
But I'm super inspired by people who are way ahead of me. I don't know if you or your listeners follow this, but I'm David Baker's colleague faculty here at the University of Washington where he just got the Nobel prize for protein folding. But what a lot of people don't know is he's helped co-found or start more than 20 spinoff companies.
And so people like him and Steve Quake and others, I've held up as real heroes of these faculty who've been able to really transform fields, not just through the basic research, but also building companies and bringing it out to the world.
Steve: The average person might not be thinking of university professors and researchers as being incubators of new business startups or that universities are a breeding ground, an incubator for that, that's fantastic.
That's quite a successful element of the U.S. ecosystem that is existing at major universities like yours and elsewhere. And you had mentioned the National Science Foundation. Actually, IST just put out a report recently titled Why Venture Capital is Indispensable for U.S. Industrial Strategy authored by Mike Brown and Pav Singh and actually it touched on founding teams, making a suggestion that the National Science Foundation's new Technology Innovation Partnerships Directorate, which was established by the Chips and Science Act, could help to cultivate this culture of entrepreneurship.
That sounds like you're a recipient of a beneficiary or these types of ideas of having these government programs, research institutions, turning these discoveries into business opportunities and getting them into the lifeblood of the U.S. economy.
Alex: Yeah, I'm incredibly excited about the movements that have happened here in the developments.
You And the National Science Foundation, TIP, the Technology Innovation Partnerships Directorate is a really big deal. I don't think there's been a new major branch of efforts in the National Science Foundation. I guess that's what you think about this is that it's like a real new vertical within the National Science Foundation to really focus on innovation and translation and commercialization.
Nothing like that's happened in the last several decades, and it's relatively early days, but I've had real engagement already with program officers there at TIP. And where it's really come into play is helping me where it's tangibly come into play so far as it's really helped.
They've helped connect me to other faculty entrepreneurs because we're all navigating a little bit complex or a unique space, right? How do you keep an ability to contribute to fundamental research and all the advantages of the connections with the university that that brings for this innovation journey, but also keep this bright red line and make sure that you have this company that can succeed independently on its own?
And so some of the staff at TIP has really helped me help build a network of other faculty around the country that are doing these things and helped give me lessons and helped me, and our university developed a path for how my Co-Founder and I would have the time and space to do this.
So that is like a direct tangible example I can give that this is already having a positive impact. And then there's also these really innovative, either regionally focused or nationally focused efforts that are coalescing around major themes, major challenges that don't just focus on the foundational basic research, which is what National Science Foundation does exceptionally well and is incredibly important for our success, right?
All these commercialization stories start with that foundational research. It is the engine of innovation that makes the U.S. such an amazing place. But think about the translation, too. It really goes above and beyond the already existing, really influential, but somewhat limited in resources and scope programs like SBIRs and, and some of the other programs.
Steve: Perfect, time to pivot into exactly this journey of raising funds. Let's talk about money. You've definitely got the science down, but how to access capital to make these ideas come to life. Can you tell me a little bit about the current funding environment for this industry?
I know that timing's everything, and maybe if you'd reverse taped 20 years ago, these ideas would have never gotten traction. So talk, talk a little bit about that. And then what are the different places that you go looking for funding? Other government money, you mentioned SBIR, perhaps DOE grants, and certainly within the venture capital environment looking for private investment.
So tell me about that.
Alex: It takes a lot of resources and at the right resources at the right time to go from an idea in the lab to something that's at the scales that we're talking about in climate tech, like things that can make a positive difference for the planet that can support the greening of our economy.
And so I'll start, maybe I can give a quick summary of our specific funding experience and then maybe expand that to the industry and maybe we can jump off from there. So we started our company about two and a half years ago. We're lucky to get pre-seed funding of about 2 million right away.
And then since about this time last year, we closed a six and a half million dollar seed round. And in all those cases, we've been really lucky, that our seed round was oversubscribed. So we were able to, likely to pick a really good match of investors, have an excellent team that brings a lot more than just the financial power.
Essential, but they bring a lot of others. These are, so we have a mix of corporate ventures, like I mentioned, United Airline Ventures, more financial, but financials that are really thinking about the environment and climate space, like Regen. We have some ocean focused venture companies that are really focused and have specialty in understanding the unique challenges and opportunities of maritime, like Propeller, and then our investor from both pre-seed and seed is Grantham.
They're a really patient capital, very thoughtful, very technical team that has been supporting a lot of the climate tech space. And then a few specialists like carbon removal partners that are focused on, on carbon removal or specialists. So I did that to say that there's, there's a mix of financials.
But in the venture space, financial and corporate and really patient capital, that is, I think, important to be able to do these hardware challenges. We've also been able to secure some DOE support, NSF SBIR, as well as some DOE support for some in kind support to help improve our pilots.
So it's an exciting time. Funding and carbon dioxide removal is pretty dynamic and exciting. And there have been, I'd say a bunch of resources going into this space, major investments by a lot of venture capital. There's been some important purchase agreements. But I think there's, even with all this activity, here's still an important question about is it all going to come together and is it all going to be enough to really match the magnitude of the problem, right?
Like when we think about the scales of what decarbonization looks like, It is rebuilding the economy in a decade like timescale. So it's like the Apollo program, the moonshot, at the same time as the level of infrastructure building of the U.S. highway system all in a shorter period of time, and this time, compared to the U.S. highway system, we have to do this in a way where the communities that are most impacted by climate change can receive the benefits of this growth instead of being marginalized by them, right? And so that's a lot to ask, and the scales are really big, and so we need all hands on deck so the funding environment really has to come together in just the right way.
Steve: Well, before we move off the funding, let me poke a little bit more on the U.S. government programs you'd mentioned too. I'm not sure if there was money involved, but then you mentioned IRA and then the NSF SBIR program. Is the U.S. government's efforts in this space hitting in the way that's needed?
Are they a good partner? Is the scale sufficient? Are they nimble enough? Like, how's that working out for you? And do you think that is injecting enough into this environment?
Alex: I'd say that I've been really impressed by, and there's some really progressive work and a lot of momentum in the federal investments in this space.
It's going to be important to sustain those and grow those both through the IRA, the Inflation Reduction Act. Other federal investments in this space have made real big differences. And they've started the ball rolling in a lot of places. So maybe I'll start with us and then talk about our industry and then maybe touch a little bit on where I think it needs to go to be able to keep that momentum going and really realize the benefits of the current investments.
So for us right now, we're really lucky recipients of a SBIR that grows through multiple phases and grows up to 1.25 million dollars. And it's really influential, especially when there's commercialization focused on R and D that's necessary, so it fills an important gap and it seeds a bunch of different technologies.
NSF is the U.S. government's science seed fund, but it's not really enough on its own to support commercialization. And so I'm incredibly proud when we get a National Science Foundation Award. For other programs, I've been a reviewer and panelist, so I know how many eyes have to see an NSF award before it gets funded.
And so I'm incredibly proud whenever that works. But there's a lot of other pieces that need to come together. And so that's where the venture world, there's some important signals that those send. But I think that really the venture dollars have come in mostly based on commercial signals and the deep diligence of these more specialized venture companies that understand this space.
Our stakeholders, our customers, and our investors are really sophisticated and great thought partners, but they need that to be able to dig down and to understand the technical aspects of where we are right now. But even with that technical knowledge, they wouldn't invest without the pull of a commercial draw.
And I think there's been a few places where, and a way to solve the capital needed to really build out lots of things. And I think there's been some important movements in our industry and some important signals by federal investments and some places where this can go, and the Foundation Reduction Act led to the carbon removal hubs.
So this was several billion dollars of DOE funding that went into carbon removal. And that has really seeded like real capital growth, so that's a major pull and a big deal that's led to a bunch of growth and a bunch of interest and a bunch of VC and other money.
The first exit in our field of carbon dioxide, carbon engineering, the first one, the first unicorn exit, 1 billion plus exit when it was acquired by Oxy Petroleum, was in part related to the really groundbreaking work they do, the technical work, the real great commercialization, but also being a recipient of one of these hub awards. The DOE is also putting its toe in the water and potential purchases and drawing that demand.
They have a carbon dioxide removal prize, which I think is mostly relatively small amounts of funds, but it's to give them the learning and the machinery and help them understand what a larger purchase is for federal purchases of carbon removal to help the country meet their climate goals, what that would look like.
Doing direct purchases with everyone I've ever worked with at federal agencies takes the responsibility of being a steward of taxpayer dollars incredibly seriously to heart, right? I really feel that responsibility. And so being a purchaser of carbon removal, I think the federal government is going to be held to the highest standard that the accurate amounts of carbon dioxide is removed, that the environmental benefits are net positive, that the impacts on communities is appropriate and beneficial.
And so it makes sense that they're winding up their purchase program very deliberatively, but I think there's room where they can do that. So we've got a lot of momentum. There's been some important Pulses of capital. There's been some beginnings of commercial draw, but most of the commercial draw has really come from the commercial sector.
So we're lucky beneficiaries of a pre-purchase from Stripe, Shopify, and H&M for carbon dioxide removal, relatively modest half million dollar pre-purchase, but it's part of a billion dollar commitment by a bunch of major, largely tech companies, Meta, Stripe, and others that have committed to carbon dioxide removal.
And that's been where the real draw in the industry has come from these large purchasers in the corporate sector.
Steve: Yeah, I'm glad you mentioned Stripe and gets into my next question, which we can cover very briefly, but in terms of where different sources of capital might be more available and more relevant to different phases of your business from the early startup through now, you've got your minimum viable product and it's time to start to move in and scaling at some point.
So I guess it's a great signal that you're getting. opportunities to partner with major organizations and that they're seeing value in what you're doing and that maybe that's showing that you're going to keep moving and you're going to be able to hit the scale that you mentioned to be relevant to the problem that's at hand.
Is that the case where, for this next phase, you're looking more to those types of sources or are there certain government opportunities that hit in this phase as well that can help you to scale?
Alex: Yeah, I think you do a really good job of identifying where we are now in the challenge of companies that are in this gap that they've got a lot of the technical derisking is underway or done and they're doing the engineering scale up and then that will get them to a point where maybe they can start tapping into if they can get across this chasm of going from a demonstration to something that is really like a commercially viable pilot. If you can do that and show operational cycles, then you can tap into that lower cost capital of project and infrastructure finance.
And there's some federal opportunities there. And I think those could absolutely grow, but there's also private money there, but you have to get across this gap. And a key part for that project financing too, is that there's these offtakes or that there's a real commercial case. And so companies like Stripe and the Consortium Frontier and other companies that are doing these offtakes like Microsoft and Boeing and Amazon and others are really laying the groundwork for that commercial case.
And so there are important signals like the fact that we have this pre-purchase agreement is an incredible signal and being able to now link that into as we grow, hopefully link that to larger offtakes is a real essential part of our success. But I want to give a little even more credit to the Frontier, and similar groups to them because they're putting real money into these offtakes, like they paid us for this pre-purchase, right?
So it's not just with partners, this is not just a future commitment that someone can back out of, like, this is real money that's changed hands. We have a real customer, so that's quite thoughtful of them when thinking about the ecosystem.
But they're also building out the ecosystem in a lot of other ways. Like they're thinking about how we expand this commercial draw far beyond just this consortium of companies. What is that next ring of buyers for carbon removal? How do we help with our diligence to be able to make that possible?
How do we transfer the diligence that these companies have done? They've invested in pretty big science teams to be able to do this and understand if these purchases are appropriate. How do we transfer that to federal partners? How do we transfer that, how do we lobby for some of these important things that we know will help companies get across the gap?
So that ecosystem thinking, It's been really great to see in the corporate sector. And I think it's, it's being matched by a lot of this thinking on the federal side too, but the next steps are going to be, how do we continue to realize that? How do we connect these companies to those opportunities?
Steve: You had mentioned just something, you mentioned the term hub, and I know that there's research triangles and corridors and hubs where there's a critical mass of organizations. I know that I'm coming to you today from Indianapolis, Indiana. And for a number of years, this has been a biosciences focus of the state.
And so there's lots of universities doing research and there's regional corridors and hubs in New York and elsewhere. How much does that matter? Are those models where perhaps governments, a state government, a city is trying to bring in a critical mass of folks within a particular industry, create opportunity where it was not before, or to build off of some early successes in scale?
Does that matter? Does that work, and are you finding in your area of clean energy and decarbonization that there's some places where special things are happening and it's good to be there?
Alex: Yeah, you're spot on. That's an excellent question, and I think you talked about a bunch of the key players.
So there's the innovators, universities, and other innovators. There's corporations, there's economic development at a regional scale, and all of these can foster the right environment. And I think that ecosystems are really important, especially when we're trying to think about greening the economy and these important energy technologies, because they often require connections with a lot of other pieces to really realize their full potential.
And then also there's these system benefits that when you start getting things working, that it can really help build the next step. So let me give you a little more tangible example here in the Pacific Northwest. I'm calling in from Seattle. We have some of the cheapest and greenest energy in the country because of the legacy of hydropower and the existing resources of hydropower.
And that means that green tech companies are coming from all over the country to do their pilots here in the Pacific Northwest, so those who take CO2 and hydrogen and upgrade it to synthetic fuels are out in Moses Lake. We're at the real center for marine carbon dioxide removal. Some of the key pilots that are going on in this area are happening as a consortium between private industry, the Department of Energy, and universities.
And so I think that recognizing where there are natural advantages and benefits and where these ecosystems are seeding and, and taking advantage of those is really essential for success. And like, if you start having some of these things work. Let's just think about how this propagates through a supply chain.
I think about if you start having greener, low carbon feedstocks in the supply chain, and that means that if you locate near those or locate with access to those, then you can get your scope three and other emissions requirements. You can hit those targets even easier. And so now you've got a competitive advantage for being located near those.
And then everyone starts coming together. And so there's this real opportunity, I think, about where are going to be the hubs for the green economy. And I think a number of states have recognized this, but also the Department of Energy through the hubs program and National Science Foundation through some of the new programs that are coming together to make regional centers of excellence are really going to have the chance to take an opportunity to do this.
And I'll put one last plug in a really lucky bond, new carbons, really lucky to be part of a Department of Energy, epic new labs partnership with Greater New Orleans Regional Development. So, I've been part of a program down there in Louisiana to really get introduced to all the incredible industrial infrastructure, incredible talent that's associated with that, and the real drive there to be part of this new energy economy.
What does the newer energy economy look like that's been matched by a lot of federal and state dollars? And places where there's this real appetite for innovation, this appetite for growth, as well as matched by these resources can really take off. I'm excited to see Louisiana hopefully continue along that trajectory.
And I think it's a lesson for how these federal and other interventions can really positively influence that economic growth.
Steve: So let's, let's, quickly pivot to cleantech and China. I know that in cleantech 1.0 featuring photovoltaics and solar generation, a lot of innovation was happening in the United States and then something happened.
And I know that, over the course of a couple of decades, there was a lot of intellectual property theft and, and other concerning behavior, but that ended up leading us down a particular path to where most of that manufacturing is happening now in China. What are your thoughts about the dynamic with China, both perhaps on the research side, on the manufacturing side, and how do you avoid the photovoltaic trap and what interactions are you having and what's the level of interest across the pond?
Alex: This is a conversation and a story that's told a lot as we try to think about the lessons of Climate Tech 1.0. Even though I was on an academic track there, so I wasn't directly involved, it's something that we talk a lot about and that informs the business and technical development roadmaps that our company and others are navigating.
Some of the lessons of that story goes that there was a lot of innovation, especially in solar, concentrated solar. in different types of foldable tags and really high efficiency foldable tags and all that. It's just a real dynamic innovation landscape in the United States. A lot of the innovations that led to successes now often start, globally often start in the U.S. And so a lot of that was going on, but then at the end of the day, most of those companies and ideas were undercut by really cheap solar photovoltaics from China.
Although I'm not as up on all the details of the interventions, I think it's pretty clear that there were large government interventions in China to subsidize getting to a massive scale and to help undercut the price and pull the oxygen out of the room for the US and other innovators in this space, and so that led to global, really cheap solar photovoltaics, which is the promise of where we all want to get to.
But it led to a centralization, a consolidation of the photovoltaic industry away from the U.S., like we are not the owners of that destiny. And it also meant that a lot of those innovations disappeared, and so that was potentially replaying with electric vehicles.
Now, it's a real part of how we think about and others think about charting the way forward. And one key, the lesson I think is not to be when you're thinking about the technical and competitive advantages of technology like ours.
You can't compare to where everyone is today. You have to compare to where you think they will be when you're at commercial scale. So if you see someone really coming down a steep learning curve and cost curve, you have to make sure that your approach is actually going to intersect better than them when you're both at commercial scale.
So the lesson there is in cleantech 1.0. Don't compete against your current competitors, compete against where China will be in five years, right? And also, I think it says to be wary of the distorting factors of the major interventions that can be done by competing nations, right? And so the benefit that they get from those innovations is that they've consolidated the supply chains.
They control the technical destiny of a field. And we should think deeply about when we innovate all these technologies in U.S. universities, what we can do to be masters of our destiny. And part of that is investing in technology. Something I feel really passionate about being in education, having mentored postdocs, graduate students, and being lucky to be at a university where we train some of the best people in the world. A lot of the students and people that we work with, a lot of them can be foreign nationals that come here and are the best and brightest in the field, we harvest the best and brightest around the world.
And then because of the visa structure, we say, you can only stay here for a little bit. And then we send all that talent we've invested in elsewhere. Right? And so pathways to help retain this incredible talent, the people who are at the top of their game and keep them in the U.S. They want to stay in the U.S. They want to start companies here. They want to be contributing to innovation. Finding ways to continue to entrain them and keep that talent in the U.S. I think it is actually a really easy structural change.
Steve: So you're mentioning shoring talent, making sure we're not losing that. But as well as you think about manufacturing capacity, a lot of the partnerships with Chinese entities, companies, entering into partnerships or outsourcing manufacturing also put some of this stuff at risk and built the capacity to scale elsewhere.
Is there a thought that as you were looking to grow and scale this decarbonizing technology that really an idea would be looking domestically or looking within other markets to build manufacturing capacity, so that just removes or lowers, not removed entirely, but lowers risk and controls more of the supply chain?
Is that something that is in the thought process now, or is there still a lot of appetite for partnering and cooperating with Chinese companies in manufacturing?
Alex: It's an important question, and, well, I just had a quarterly investing meeting yesterday and this came up like, which things are we going to submit patents to for China?
And by even submitting that, are we raising the flag that if the prosecution landscape in China is questionable, then by even submitting patents there, are we, is there potential for IP leakage? Right? So these sorts of conversations definitely come up and think about our supply chain.
We do have global partners, so we have a great partnership with a UK chemical company that has some manufacturing capabilities in India, and so some of these global partnerships are important. The European market has both a compliance and volunteer or growing compliance market, and being able to have access, making sure that our innovations can reach and have impact and reach customer bases and solve problems and under markets. Thinking about supply chain is really important as well, too. So we have not made major partnerships or connections or manufacturing agreements in China and considerations that you bring up are major reasons why we've made those decisions in our important considerations.
Steve: So, as we come to close out our time together, Alex, let's look to the future. How do you characterize the outlook for U.S. clean energy technology? Is there a sufficient market for this in order that it can scale to the levels needed to be relevant in the nation achieving its climate goals?
Alex: It's the most important question, right? We are at this point where there's been a bunch of activity and interest in both venture capital money and federal money and corporate purchasing has come in and the real question is going to be, is this going to be sustained moving forward? Right? Because I think one of the big lessons from cleantech 1.0 was that there has to be real market demand.
You can't count on altruism and they really should discount it voluntarily purchasing and commitments. What is the structure that's going to continue to pull cleantech forward? And I think the U.S. has done a really great job in the ways that we think about reporting the ways that we think about corporate responsibility, the purchases that have happened and laying the groundwork for the federal support that's needed for this and partners in Europe and elsewhere are also thinking about this and making some real moves.
But we're at this point, this lever point where if we're going to realize the goals that we need in cleantech, we've got to sustain this and increase these investments and increase these efforts. And I think everyone in the venture capital world, I've seen new companies having a little bit harder time raising money because everyone's holding their breath and being like, okay, this was really exciting. We can all see a path forward. This is a path where financial incentives and helping the world align. We're all on this right track. But are we going to be able to keep the momentum going?
And I think that's the real question.
Steve: Since you're a Co-Founder of a company that's in this space, I presume you're an optimist. Do you think that the future is there and the path is there?
Alex: Absolutely. Right now, we could find demand and people would purchase as much carbon dioxide as we could remove our process. I promise it's really high quality carbon removal that's easy to track and verify, and is net carbon removal in really clear, simple ways. I think that we're in a really good spot, and we have the important challenge of scaling this up and meeting that demand.
But right now, the demand's there. And I think they're really important, and I am an optimist about that, and I think we can continue this momentum, and I think, the continuing headlines of purchases of carbon removal in this space are incredibly promising. I think there's really thoughtful people there, but it's going to take the continued engagement by both corporate America and the federal government to sustain them.
Steve: Alex Gagnev, Co-Founder at Banyu Carbon. Thank you for joining me today at Technologist Talks.
Alex: It was a real pleasure. Thanks for the conversation.