 I'm really delighted to be here. And thank you, John, for inviting me. I just love coming back to Stanford. It's always a treat to be here and see a lot of friendly faces. And like John said, or here, Dr. Professor Wyant, this is actually serious business. And I have good days and bad days. I was saying this earlier to people over at the Hoover Institute. There's days when I'm like, we're going to make it. We're going to figure this all out. And then there's other days where I'm just despondent. You don't know what to do and how we're going to make this work. But for me, I wake up every morning thinking about tons in the air, tons in the ocean. How do we avoid emissions? How do we undo emissions? And that's the gift that keeps on giving. There's no shortage of work in that space. So in that context, when I have a bad day, I think about stuff like this. This is from the Mercator Institute, the Mercator Climate Center. This is their climate budget for a two-degree scenario. And they basically say, in 17 years, we're done. We've blown the two-degree budget, which is pretty daunting. Raise your hands if you think we're going to zero out global emissions in 17 years. Right. Seems unlikely, right? But more to the point, if you look at the one and a half-degree scenario, they say that we passed a one and a half-degree budget a month ago. Not everybody agrees with that. There's different ways to estimate the carbon budget. The IPCC's report came out recently. They have a slightly different calculus. But it ain't pretty. Under all these circumstances, we have very limited emissions overhead. And we have very limited time in which to accomplish it. And this is basically a 1.7-degree scenario. And let's start by saying that we have to decarbonize more quickly than we carbonized. Nobody knows exactly how we're going to do that. And if we want to even get close to that, if we emit anything, we have to have a lot of negative emissions as well. And in fact, this is a big punch line from this special report that the IPCC put out just a couple of weeks ago. I'm sorry. Two weeks ago, Monday. All pathways to one and a half-degree require 100 gigatons of removal to a trillion tons of removal before the end of the century. Now, again, most people don't have a feeling for what a gigaton is. We don't go to the store and buy a gigaton of carrots, typically. So a gigaton is twice the weight of all the human beings on Earth. So it's a big number. So we have to pull somewhere between 200 times the weight of humanity to 2,000 times the weight of humanity. It's just an enormous amount of work. Again, there's no shortage of stuff to do. And let's be clear. A one and a half-degree world or 1.7-degree world is pretty awful. In one and a half-degree report, we lose 70% to 90% of corals just as one number. Whereas, I'm sorry, that's what a 2-degree world looks like. I apologize. A 2-degree world is we lose 70% to 90% of corals. A one and a half-degree world is 70% to 90% of corals. And if we overshoot to a 2-degree world, we lose 99% of the corals. So you don't have to think very hard to understand that's bad. But as good as I am at talking about how bad this is, the good people of South Park are even better. And I would even get this to work. Here we go. This graph shows everything from normal to bad. Right now, South Park is here. It's a little softer than I thought. Yeah, I just have to run that again because it's a fun little clip in case you didn't hear it. So let's go back. Graph shows everything from normal to bad. Right now, South Park is here. Well, thank you. You can lower it a bit, Darius. Thank you. The good news here is that it's actually really awful, but in fact, there's a lot we can do. And when I have better days, I think about innovation. I think about policy. I think about ways that we can play our hand and end up cleaning our sandbox and cleaning our rooms as we need to. And part of what's going to be required is large-scale carbon management. This is the unloved corner of the abatement curve. A lot of people like efficiency, like solar, they're like wind. A lot of people like building forests and stuff like that. This work ends up being required. As a matter of fact, it ends up being one of the most essential things. If you like the intergovernmental panel on climate change, if you can do climate math, if you embrace climate science, you should do climate math. And the arithmetic basically says that you do not reach a two-degree world in almost all the models without carbon management. In fact, if you don't have carbon capture in storage, seven of the 11 models fail. You just don't solve. You'd think that if that was really the case, this would be a bigger priority than it is. But it's not. You can debate that in a minute. But for now, we know that we need a whole lot more of this. For the four models that do solve for climate change in a two-degree world without carbon management, the cost increases 138%. It more than doubles the cost of hitting the same climate target if you don't have CCS. And if you want to go to a one and a half degree world, that blue bar is CCS. A third of what the remaining budget is is carbon management. And that doesn't include the carbon removal parts as well. So this is an important part of the thing. It's a key component to deep decarbonization. And part of the reason why is actually not in the power sector at all. A lot of this is in the industrial sector, which we don't really have good pathways to decarbonize. I'll say more about that in a minute. The good news is we've done quite a lot about this. We now have 18 operating commercial facilities in the world. And all the green dots are things that are working, the stars are power plants, the circles are industrial projects. And in fact, we've got a lot going on. And in fact, I'm a little bit late on this slide. There's now a green dot right here, the Gileen Project North of North Korea, in which China has begun its first large scale CCS project. So we've got 18 operating plants. They're storing about 30 million tons of carbon dioxide a year. That's one one hundredth of the work they need to do. But you start somewhere and it's nice to have this going. We also know that we can do plenty of it. The net estimate for how much CO2 we think we can store is about 10 trillion tons, which is enough for a while. Let's assume that that estimate's wrong comfortably. Let's say that we're off by a factor of 10 and we can only store a trillion tons. Let's say that it's not distributed evenly because it's not. Still, there's good things we can do here. We know that some of the work can be done. And how you wanna parcel that, how you wanna think about optimizing, it's another story, but there's plenty of places to store CO2 and we need to get about the business of doing it. That's what this looks like. This is a coal-fired power plant in Texas. It was emitting, now it's not. Or more specifically, one of the units was emitting, now it's not. The other three units are still emitting. But it's capturing 1.4 million tons of carbon dioxide a year and the cost for doing that, all in cost, is $100 a ton. It is also true that the guys who operate this plant say they can build the exact same plant again for 20% less, so 80 bucks a ton. It is also true that they believe that you can get to something like 30% less by the fourth plant. So $70 a ton is roughly what it costs to do this. That's from a substantial coal-fired power plant. From a natural gas plant, it's more per ton, but it's less per kilowatt hour, so there's things you can do. For industrial facilities, I could have shown a lot of different ones. I wanted to show this one. This is a project up in Alberta at Quest. They're basically taking the CO2 from a steam methane reforming unit here. They've already captured and stored more than 2 million tons a year. It's all gone into saline formations. It's all working just Jim Dandy. They're monitoring it. They validated it. Among other things, this is also making about the cheapest decarbonized hydrogen in the world. This is coming in at about $1.6 per kilogram for hydrogen. It's only 60% decarbonized. There's still emissions from the balance of plant stuff. To do the full 90% decarbonization to get almost all the CO2 from making hydrogen at this site, it's $2.20 per kilogram, which is currently a factor of two to four cheaper than renewable hydrogen. So if you like hydrogen, this is a way to make hydrogen without the emissions. So that's good. We like all these things. It's a place to take some comfort. As you also just want to say, let's look just at the power sector. Let's not think about the industrial sector. What's the competition space out here? The good news is we've made a lot of progress in a lot of years. So let's take a cursory number of $0.10 per kilowatt hour or $100 per megawatt hour as a good dividing line. Stuff over here is expensive. Stuff over here is cheap. It is true that things like wind and utility scale solar have gotten pretty cheap lately. There was a paper today in the utility dive that said that it's cheaper now to replace existing coal plants with solar and wind in Indiana than it is to let the coal plants keep running. I hope that's true. That would be nice. But it's not going to be true everywhere. Even so, there's some places where solar plus storage or just solar or just wind is the better in the market. The red bars are what happens if you capture in storage from this stuff. It turns out natural gas with capture in storage is competitive with a bunch of stuff. It flat out beats community solar and rooftop solar almost everywhere. That's worth knowing just on price. This is just levelized cost of electricity. If you're a student of this stuff, you know that levelized cost of electricity is a pretty bad metric for all kinds of stuff. But it's a useful thing that people kick around. And so it's worth knowing what the actual costs are. And in that context, some coal with CCS, and these are both a mixture of retrofits and new builds, some of that stuff is worth thinking about. In my humble estimate, maybe 10% of the plants that are in the US, this is a good idea. For a lot of the plants in the developing world in China and India where they're building more efficient plants, this is perhaps a good idea as well. But the idea is that it's not bonkers expensive. On a cost basis, it's competitive today with a bunch of stuff and a bunch of markets. On a cost basis, it is. So it's worth asking why there hasn't been more of this, which is a fair question. And the answer is it's not supported by policy. You can't finance it. There's a difference between the cost of something and the ability to finance something. But people here in the business school already understand this. But we in the United States have investment tax credits, production tax credits, renewable portfolio standards, loading orders in Europe. They have feed-in tariffs, contract for differences, government mandates. There's all these policies that support a lot of this other stuff. But they don't actually allow carbon capture and storage to have access to those. Until very recently, watch this space. We've actually had some good news on the policy front, and that's one of the things I wanted to talk to you about in terms of what is potential policy and what is active policy. Another thing that's important is that there's new technology in this space. This isn't all your grandfather's IG Farben big solvent tower way of thinking about the world. This is one of the more interesting companies out there, Net Power, and what they have is they basically have a new kind of a power cycle. It's a super critical power cycle. It's an oxy fired turbine. The guys who are the heads of this company have been to Stanford a couple of times. I'm sure some of you have heard about this. It's a physics and chemistry work. What we don't know is if the engineering works, which is why these guys are building their plant right now. They're qualifying the plant. We should know in a couple of months whether it works or not. If it does, it basically has no emissions, 100% pure stream of CO2, and it comes off of it at 3,300 PSI. It comes off at injection pressure because they've already paid for the compression in some other part of the system. It also is net water positive. It actually produces fresh water because when you burn a hydrocarbon, the hydrogen oxidizes to the water and you have a fresh water stream that comes out the back end. The nth plant price is exactly the same as a combined cycle plant today. This means if this plant works, nobody builds conventional natural gas turbines anymore. They just build these things with the expectation that someday they're gonna have to capture and store the CO2. It's born 80% efficient. In order to make the whole system run, they have to de-rate it a lot to get it down to about 60% or 55%. But it's in the ballpark of natural gas combined cycle plants today. It can ramp up and down, which makes it a good partner for renewables. It allows you to firm up contracts and help manage issues of intermittency. And there's also additional potential revenues that come from the air separation unit. This is possible because the entire turbine runs at the supercritical CO2 pressures and temperatures. The entire thing has no phase changes in it at all. And that's interesting and that's new. That's new on the earth and we hope these guys succeed because it means that you can actually decarbonize the gas power sector for real and for cheap. There's other technologies out there that are equally interesting. One of them is a retrofit technology. This is a Sorbent technology from a company called Inventus. These guys just got a bunch of money from the Oil and Gas Climate Initiative. These guys are basically doing a dot matrix printer on top of carbonized hemp. It's like the cheapest, most bizarre technology you could think of. They're taking a solid hindered amine and they're just printing it out on this porous substrate. And they basically run it off like a newspaper and a robot mounts it to make a filter. And they just put a filter pack into this little rotating heat exchanger thing and it works tickety-boo. The thing that's nice about this is the, because it's an amine solution, the efficiency cost, the energy penalty, if you will, is kind of the same. It's a substantial energy penalty. But the capital costs are 85% lower. It is much lower capital costs, which means the nth plant cost looks like 30 bucks a ton. You got it from 100 bucks a ton to 30 bucks a ton in one step. And these guys are building their plant right now. They're testing it. We should know if it works within a year. If it works, that's great. It gives us more options to think about how to capture and store this stuff. And this also can ramp up and down to help facilitate more renewables penetration. Completely different technology. I love these guys, fuel cell energy. They came up with a wacky business model. People have known about molten carbonate fuel cells for a long time. These guys said, I got an idea. Let's use a fuel cell like an afterburner on a natural gas plant. And they take the exhaust from a natural gas plant and they run it through the fuel cell. And then they add methane to the fuel cell to make more power. So these guys have an interesting process. They can scrub your emissions and generate extra power for you. That's a useful thing to do in the market. It's not clear what the nth plant costs look like. They say it's competitive. I have doubts. These guys are partnered with Exxon Mobile now and they're building a pilot project at a Southern company power plant. It can also ramp up and down. We'll see whether or not this works pretty well. But it's interesting. It's interesting because these are two really radically different pathways. With that power, it's three radically different pathways to think about decarbonizing the power sector. And in some cases, just also the industrial sector. You can imagine using the inventist technology, for example, to go after the emissions from cement plants or from catalytic crackers or these other things that are hard to scrub. So that's interesting. And if you can get these prices in a reasonable place, then it makes it easier for the policy mechanisms to follow. This gets me into the policy discussion. And I want to start with this premise. Take it on faith that you can do this and take it on faith that the costs are reasonable. For the rest of this discussion, we're going to assume that. If that's the case, we're not actually quibbling any more about whether or not this is a good thing to do. We're actually haggling over price and we're thinking about what policies are necessary to create a market. It's a completely different thing. Thankfully, the one and a half degree report has pushed a lot more people into that bin. We don't have time. We're on the clock. We have to move fast and we have to move big fast. And so that's a question where you say, well, in terms of policy, what is possible? And my answer is lots. And I don't care which of these you choose. Really, I don't. You can provide incentives. You can provide tax credits or feed-in tariffs. You can, like China, you can just mandate these things under the five-year plan and say, it's a strategic project. We're going to build 10 of them. If you want to, you can change renewable portfolio standards to clean energy portfolio standards. We'll talk more about that in a minute. You can change the renewable fuel standard to a low-carbon fuel standard. That allows you higher ambition and a wider aperture of technologies and market competitions. All these sorts of things are good, right? You can do it all by handing out lollipops. Politicians generally like that answer more. Or you can crack the whip. You can hit people with a stick and create disincentives. Norway has one of the highest carbon taxes in the world. Not surprisingly, they're the international global leader in this stuff because they've had to deploy it. If you want to, you can just cap emissions. The clean power plan was kicking around with that as an idea. We're not doing that right now, but that was one. In California, they created something called SB 1368. You cannot sell power into California anywhere that emits more than 1,100 pounds per megawatt hour. It doesn't matter if it comes in by wire or not. If it exceeds the standard, you're not tall enough to go on this ride. If we wanted to, we could just do that. We could say 800 pounds per megawatt hour for everything starting in 2030, and we'll ratchet it down an extra 100 pounds every couple of years. That would provide a clear market signal. It would allow things to compete. That is an option. Things like border adjusted tariffs is another thing. We can just say, hey, all imports from China, we're going to give you a $30 carbon tax. That would stimulate something interesting. I don't think that's going to happen right now, and I'm not suggesting this is a good idea, but it's another way to get things done. As far as I'm concerned, though, no low carbon megawatt left behind. Let's open up the aperture. Let's make more policy more interesting to more people because the bottom line is we need to take more shots on goal. We need more. I recently heard economists from the International Energy Agency say it this way. He said, we need to use the Nike principle when talking about carbon capture and carbon management. Just do it. There's not a reason not to do this anymore. Now, we're literally just haggling over nickels and dimes at this point. So what has happened recently is actually quite a lot. And I want to start with this. The Future Act is law. This happened spontaneously in February, and everybody went, oh my god, this Congress and this president signed this thing? How is that possible? And it was possible because a dedicated political coalition was built over six years and worked it for a long time and brought together environmentalists, and academicians, and industry, and labor, and all these other groups to make it politically sensible. They found champions in Congress. They made it happen. And so the first thing they did is they took this existing tax credit, and they modified it so they didn't have to create a new law, a law that already existed. They said, well, let's make it uncapped. We're gonna do as much of this as the market will take. We're gonna pay people 50 bucks a ton to capture and store a CO2, 35 bucks a ton if they use it, or if we do enhanced oil recovery. That's interesting, actually. Among other things, this is essentially now a social cost of carbon calculus. This Congress has said the cost of emitting is 50 bucks a ton. I'll show you the numbers on that in a minute. They said we're gonna do this as a nonrefundable tax credit, but it'll be transferable. So if you're a small ethanol company and you don't have the tax appetite to do this to yourself, you can partner with an oil company or partner with the bank, and you guys can use those tax credits. That creates a market immediately. A lot of solar deals in this country were done through tax equity exchanges. A lot of wind projects were done through lease agreements. This policy framework allows you to do those things. It allows, it creates a market in which this works. They also said let's make them big, and they also said you get paid for 12 years. That's a good provision. I like that provision a lot. If you get paid for 12 years and you have a big ass power plant in Minnesota or in Montana, and your big power plant emits 10 million tons of CO2 a year, if you capture that and store it, you can get paid $500 million a year for 12 years, which is $6 billion. That makes all this interesting. That did not exist 10 months ago, but it exists now. And not surprisingly, a lot of people are out there looking for projects, looking for financing, trying to figure out how to take advantage of this market opportunity that is emergent. These are the numbers. I'm sure you guys will have my presentation. I just wanted them to be out there. If you wanna know more about this, I encourage you to take a look at this website, which is a report that Energy Futures Initiative wrote on this exact tax credit, trying to lay out the opportunity space, how big it is, what are issues that still need to be resolved that are technical or legal or regulatory. But the idea is there's an opportunity in here that's substantial. And this is the social cost of carbon numbers. This is the Bush administration social cost carbon number. This is the Obama administration social cost carbon number and $50 a ton is getting close. That is by no means the only policy option that one has. I'm glad that's there. We absolutely need to do more. And among other things, the federal R&D programs now have unprecedented levels of funding to get this work done. In the 2017, I'm sorry, 2018 omnibus, there was about a $70 million plus up for the Office of Fossil Energy. There was a $300 million plus up for the Office of Energy Efficiency and Renewable Energy. And a bunch of that is going into carbon management of various kinds. The DOE loan program office that was under threat of execution was not only sustained, but it was expanded. One of the things they said is, hey, we're gonna add $2 billion of authorities for rural power generators, which is great because these guys usually don't have the capital to get this stuff done. That is by no means the only thing that's done or the only place to do it. We live in California, we love our state because we do crazy things all the time in the policy arena. One of the things we did, this was signed into law just a few months ago by Governor Brown, is he said, we're not gonna have a renewable portfolio standard anymore. We're gonna have a clean energy portfolio standard. And this guy, Kevin De Leon, was very much one of the guys who put that over the top, the Senator Pro Tem for the State Assembly. What that did is it basically allowed you to set a target of 100%. It's still 60% renewables in 2045, but it's 100% clean. So that opens the aperture for all kinds of technologies, for natural gas with carbon capture, for small hydro and large hydro perhaps, for nuclear by wire into the state. There's all kinds of things now that can fall into this. What is clean energy mean? No one knows. It has not yet been defined. The legislature left that vague, which is great. They generally leave these things vague. I look forward to the Public Utilities Commission and the California Energy Commission and the California Air Resources Board working together over the next couple of years to define this better. So we'll see what that means. But it's a good thing to have. Even beyond that, Governor Brown said we're gonna have 100% clean economy by 2045, all of it. We're gonna set an executive order which has no force of law whatsoever, but it is almost always how these things start in California. AB 32 started an executive order, signed by Governor Schwarzenegger. So you set these crazy targets out there and people work. Even more interesting, he said after 2045, we want California to be a new carbon economy. By a new carbon economy, it will emit less than it takes up. We're gonna be net carbon restorative. And that is interesting because so far, the only countries that have done that are Lichtenstein and I think Iceland have said they're gonna be net carbon negative economies. It's nice that California, which is the world's fifth largest economy, has decided that they're gonna volunteer to be the tip of the spear on this. I plan to be in Katowice of Poland at COP 24 in a couple of months. It's gonna be super ugly because everyone's gonna have to step on the scale and no one's gonna look pretty when they do. Having higher ambition doesn't really help if you don't get there, but it's a start. Hopefully people will recognize that following the IPCC report that carbon negative is gonna be part of the circumstance and solution. I wanted to take a minute on this for these policy options to give people a sense of what's out there because most people don't really know what the policy landscape looks like. A lot of people are betting on carbon trading systems. These suck. I cannot be charitable. These are terrible. The prices are low almost everywhere. In Europe, it's quintupled over the last couple of years so it's up to 20 bucks. That doesn't change anybody's behavior. That doesn't deploy capital that doesn't move investments. It doesn't. It doesn't. You need to get, as Professor Wyatt will tell you, much higher prices to get a substantive impact on the economy. In contrast though, carbon taxes look interesting around the world now. Sweden's got 167 bucks. Switzerland's gonna be 200 bucks a ton in a couple of years. Norway's almost 100 bucks a ton. A lot of the things I've talked about are already cheaper than that. So it is within the realm of policy concern to say, well hey, is there a compliance mechanism for the carbon tax in Sweden that allows you to decarbonize somewhere else? Because if you have that compliance mechanism, you can get these things to market and you can start decarbonizing. Also things like the low carbon fuel standard in California are awesome. Right now that's trading at about 180 bucks a ton. And just last month, September 27th, they amended the rules to allow carbon capture and storage to be part of that. I'll come back to that again at the end of my talk, but that's interesting. They said you can decarbonize refineries and power systems as long as it's going back into the fuel system in California, that's an option you have. They also said, you'll have to be this tall to go on this ride. They said there's a whole bunch of things you have to do to get that money. But it's a pretty big prize out there. If you can capture 80 bucks a ton and you can get paid 180 bucks a ton, you got a business, right? And so people are looking at this for serious. I also wanna compare this for stuff that other people don't think about necessarily. The energy vendor on a go forward basis, this is not past cost, this is future cost, go forward basis is $300 a ton. That's roughly four or five times the cost of carbon capture. The wind production tax credit in the United States came in depending on when you looked at it and where you looked at it at between 60 and 120 bucks a ton. So already more than the cost of this. The EV subsidy in California is 1,000 bucks a ton. That's what we're paying. And that's okay. I'm not throwing rocks at that. People like EVs. People want batteries. They want an industrial economy. They wanna de-pollute. The freeways, there's all the reasons why you wanna do these things. Hey, that's great. But in terms of just cost, in terms of just price, we're already paying a bunch of money for stuff that is well above the cost of doing this, okay? And by the way, the cost of complying with the renewable portfolio standard is between 400 and 1200 bucks a ton. Because the higher penetration you get of renewables, the harder and harder it is to squeeze those last bits of carbon out and the cost goes up. So if you had CCS as an option for these things, what the state does now, now we have an expanded aperture, we have more political support, and we have an opportunity to reduce. Still, I have bad days. There's plenty of times when I'm like, this is all great, but we're not gonna make it. I get sad. And when I get sad, there's a very simple thing that I do. I have coffee because coffee's good. Because coffee makes me happy and people who know me know that coffee's my second favorite thing in the world. And one of the things that you might not know about coffee though is that when you roast beans, you emit carbon dioxide. When you pyrolyze coffee, for every bag of coffee you make, it emits two bags of CO2. So I get sad all over again. What am I gonna do? But the thing that's nice is that people innovate. And this is, again, the thing that gets me excited and the thing that gets me happy. Because you couldn't do this a couple of years ago, but you can do this now. If you wanted to now, you can take that carbon dioxide, you can turn it into a plastic, you can put it in a 3D printer, and you can print a mug with a caffeine molecule on it to drink your coffee. And for real, you couldn't do that three years ago, but for real, you can do that now. People are looking at carbon and they say, God, isn't there something we can do with this carbon dioxide that's not just burying it? This is where recycling was 40 years ago. 40 years ago where people were like, do we have to just throw away trash? Can't we turn some of it into something useful? And people are thinking now about CO2 recycling as a proper business. And that's good because if you're selling plastic or if you're selling mugs, you have a revenue stream. So people like revenue streams. People want to create a business that uses carbon dioxide. Today, the volumes you can get in this stuff, not so big, the potential for climate abatement, not big enough, but it's a way to get people excited about this stuff. And I'll tell you, if you have to talk to politicians about carbon capture and storage versus carbon use, they're like, oh, God, where do we build the printer? Can I have it in my district? That's the conversation that you have. And there's good reasons for that. Oh, can we get the volume back up here? I'm the movie. Sorry about that. Steve McQueen had figured this out in the movie The Blob years ago. That's where we are now. Literally, the guys who are running these companies are like, where can I get carbon dioxide? Because I've got a business. Thank you if you could lower it again. I've got a business I'd love to be able to use it. So if you're thinking just about climate, there's not that many places you can go to get a big climate bang in your buck. Aggregates, fuels, concrete, that's basically it. And if you don't have policy without strategic actions, the volumes you can get are okay, but they're not great. Maybe you can get a gigaton, maybe. Maybe you can get a few hundred million tons. And again, this is published by the International, I'm sorry, the Innovation for a Cool Earth Forum. I encourage you to go look at the R&D roadmaps. This one's from the 2016 roadmap. And they looked at this and said, well, what's the real opportunity here? But if you actually put some policies in place and I'll talk about those policies in a minute, you get much more abatement. You can actually get into a gigaton for sure and maybe a couple of gigatons. Fuels, cement and concrete, that's the big play. By the way, those are also the big markets. If you think about this from a revenue perspective, cement and concrete is a trillion dollar market. We move 55 billion tons of cement and concrete every year. So without strategic actions, you can make a lot of money with strategic actions, you can make more. The opportunities in fuels are small, but they're real. And you can get some stuff going. People like to start down here in polymers and methanol because that sells at a higher price and it gets in value. It's hard to get a lot of climate abatement down here but you really can get climate abatement in these other things. And again, this makes me happy because a lot of companies are doing this. If you have not heard of this company here, Solidia, you should. These guys have an awesome value proposition. They use CO2 to cure their cement. So a bunch of CO2 goes into the cement and that means they don't use water. So they have 85% water reduction to make the cement and to use it. They get about 12% to 30% embedded CO2 in the cement and in order to make the stuff that they make, they use less energy in the first place so they avoid 40% emissions. So this stuff comes in at somewhere between 52 and 70% reduction. It's not quite carbon negative yet but that's a huge emissions reduction for a big market. These guys have a similar kind of play. They're called carbon cure. They have lower embedded cement. They don't get the same water thing but in both cases because of the savings they get, the nth plant has market parity. It doesn't cost more. The reason why it doesn't cost more is the second law of thermodynamics. The reason it doesn't cost more is you don't have to put energy into this system to make it work. You're making carbonates from CO2. It rolls downhill. You go from minus 400 kilojoules per mole to minus 1,000 kilojoules per mole. That's nice. That helps you out. But the fact is this works. That's a big market and I think about something like the Belt and Road Initiative in China that's gonna pour trillions of tons of concrete and maybe they can use some of this stuff, right? And if they use a little bit of this stuff they'll get some substantial abatement in the process. I think about the state of California. The state of California buys half of the concrete the state uses. Caltrans buys 52% of the concrete in the state. Okay, well maybe some of that could be low carbon concrete. That's policy action. There's other things you can make with CO2. These guys are all Stanford graduates. They look like the Mod Squad, honestly. They were the cover of Rolling Stone magazine not that long ago. This is literally Dr. Cave and Dr. Kool. I am not exaggerating this. Kendra Kool and Atasha Cave and they basically have a reverse fuel cell technology. They came out of Tom Haramio's lab and they use electric catalysis to turn CO2 into stuff. Carbon monoxide, methane, methanol, ethylene. They use electric catalysis to do that which is good because the cost of clean power is dropping. So if you can use clean power to make stuff, that's good. They have also modular production so you don't have to build a big massive IG carbon plant to make this work. You don't have to spend a billion dollars up front to see if it works. You can spend a little bit of money, make it small and work it up. It's interesting, I wanted to point this out to you. Carbon monoxide is an interesting product. First of all, we know a lot about carbon monoxide chemistry. Hydrogen and carbon monoxide, you can build anything. Chemical engineers raise your hand. Give a shout out for that economy, right? But the other thing is that it's a small boutique market in and of itself. You probably don't know this, but CO carbon monoxide is used to make semiconductors. Really pure carbon monoxide sells for $10,000 a ton. So this is a good market entry. Think about this like video camcorders for batteries, like it's the market entry that allows you to scale up and do some stuff. These guys completely different processes. This is a modified Fisher-Tropsch process. It's basically a thermal process but these guys also turned CO2 into gasoline and diesel. They developed a catalyst that has very high selectivity, which means instead of a typical Fisher-Tropsch plant, which makes a pile of wax, these guys are making 85% diesel or 85% gasoline straight up. So that's good. What does the ant plant cost look? Not exactly clear. Right now these are basically making CO2 from the air. They're turning it into fuel and they're doing it at about two bucks a liter, okay, which is too expensive for the United States but not nuts. So then there's questions to ask about how much you can cheap that. What is important, also born modular. It's fully containerized. You can build it on skids, you can ship it out on a rail car or a truck and send it anywhere you want. That's good because remote places can sometimes use fuel. And so this is an opportunity that is waiting to happen. Let's say that you wanna go, say I like cement and not aggregates, but they have a small margin. I like fuels, fuels are hard, I have a small margin. There's just something else I can make and the answer is yes. There's a lovely city company over in Redwood City just north of you guys called Monolith where they take CO2 plus methane and a little bit of heat and they make carbon black. Carbon black is by the way what's in these chairs in front of you. It's what's in my shirt, my jacket. It's what's in your inkjet printer. It's what's in the tires of your car. Low grade carbon black sells between one to 2,000 bucks a ton. That's the stuff that's in the tire. The stuff that's in your inkjet printer sells between 2,000 and 3,000 bucks a ton. So the idea of taking CO2 and arbitraging that low chemical energy into a product is not crazy for things that have a high marginal value, okay? They're building a big plant out in Lincoln, Nebraska right now that's the big groundbreaking thing. We'll know if this works real soon. There's another company over here using thermal catalysis company called Solid Carbon Products. They make carbon black and carbon nanotubes. That's interesting because carbon nanotubes, the good carbon nanotubes, they sell for $100,000 a ton. So if you can make a little bit of that, you can make a lot of money. They also have a pretty deep IP bench. They've got 35 patents and they make carbon composites and they make, you know, armors and they make all kinds of stuff out of the carbon stuff. It's not yet commercial. They're still working in a high bay but there's interesting things to do out there and these are by no means the only companies. These six companies I've pointed to are really the tip of the spear. There are hundreds of companies now all around the world that turn carbon dioxide into stuff and that's helpful because we need to get people thinking about how to manage carbon dioxide and if this puts it in their brain, I say that's a good idea. Still, it's an important question to ask yourself where do you get the CO2 from? One place it turns out you can get the CO2 from is the air. There's elevated CO2 in this room now because we're all in it. It's gone from about 400 parts per million to about 600 parts per million in this room. That is way, way more dilute than a power plant, right? So anyone again who's a chemical engineer or a mechanical engineer knows that there's work in separating those gases and you're gonna pay more if you separate it from the air. That's true, I don't care. We still need to do it. We have to get 100 gigatons to a trillion tons of CO2 out of the air and oceans. We need to try stuff and this is one of the things you can try. This is a device in Switzerland that pulls CO2 out of the air and they sell it to a greenhouse that you can just barely see behind there and they're doing this for fun and profit. The costs for doing this all in cost is about 600 bucks a ton. You'll recall that that's already less than the EV subsidy that we have in California. It's about the price of the energy vendor in Germany and already these guys are competitive and they basically built this in their bathtub. They were graduate students at ETH Zurich and they said I wanna start a company that does this crazy ass thing and they did. The thing that's interesting about this, it's the world's first commercial plant, meaning they're making money and it does the work of 36,000 trees with the footprint of a tree. This is not a knock on trees. Trees are great. I love trees and we need them. Trees provide clean water, they provide biodiversity, they're fun to look at, birds nest in them, like there's reasons to like trees but if you wanna get a lot of CO2 out of the air, this is a plus because it has a small footprint and it does a lot of work. This kind of technology is also not new. You might remember the scene from Apollo 13 where they had to improvise a CO2 scrubber on the fly, right? This has been used in aerospace and submarine applications for a very long time. It just has never been close to commercial. It's been a couple of thousand bucks a ton. Well, we're all on the clock now, carbon management's an issue, so CO2 out of the air is now a thing that you can do for much lower cost than it used to be. They are by no means the only one who does this. This is another excellent company. This one is among other things created by the super genius David Keith and backed by Bill Gates, another super genius. When it's working, these guys are pulling CO2 out of the air in British Columbia and they're upgrading it into fuel. They're making that fuel that the gray rock guys were making before and they're the ones who are selling this fuel like again, two bucks a liter right now. So that's a generation engine. They're taking CO2 out of the air and they're turning it into stuff. Excellent, is it expensive? Yes, so what? We know we have to do it. Let's put some money in the innovation. Let's get some policy growing and get markets and products rolling forward from this. These guys are not the only people doing this. There's another company doing this, Global Thermostat. These guys are, this has just been built. The paint's not even dry on this picture. This plant is being qualified as we speak. It's the world's biggest plant. This is 4,000 tons a year. That's small compared to 100 trillion but it's a good number. You start somewhere from small acorns do mighty oaks grow and these guys are basically selling it to a beverage company and they're gonna unveil all this stuff soon and start giving tours of the place and kick the tires. All these things are coming in at about the same cost today. It is also worth knowing that all these companies are on a glide path to get to below 200 bucks a ton by 2025 and I really believe that number. That ICEF report that I talked about and I'm gonna show you links for in a minute, lays out some of that. The National Academies is putting out a report on Wednesday that talks about this too. They'll all agree with that basic number, less than 200 bucks a ton and not that long. If you recall, some of the policy options are already 200 bucks a ton. Low carbon fuel standard is about 200 bucks a ton and one of the things that happened on September 27th this year, the state of California said if you do direct air capture anywhere on earth and store that CO2, we'll pay you. We'll give you a credit that you can trade on the market and the reason why is it's decarbonizing the fuel post combustion. You can also take the CO2 to put it into a fuel like the guys up in Squamish, British Columbia are doing. That also qualifies as a pathway into the low carbon fuel standard. And if you remember, that's like 180 bucks a ton. So you're getting close. This looks like where solar and batteries were sort of 20 years ago. The prices were too high and everyone was saying this is crazy and they'll never scale and how do you get utility scale stuff? That's where direct air capture is now. That's where carbon to products are now. So it's good to think about what kind of agenda can support them. It's important to say that I love these engineered solutions there by no means the only thing to do. If we're gonna get serious about reducing CO2 in the air and oceans, we gotta use everything we have at our disposal. That includes ecosystem restoration, putting in new forests, biochar, bioenergy with CCS, weathering of rocks. There's all kinds of things that pull CO2 out of the air and ocean. Which of these is gonna win? Nobody knows. If we're gonna get 10 gigatons a year of this stuff, we just need lots of options. We need to try stuff. We need a big federal R&D agenda to support it. Thankfully the National Academies on Wednesday will tell you what that looks like. They have a draft model for what the research program to be and roughly what they think it will cost. If you wanna know more about this, take a look at this roadmap, which was again just published by the Innovation for a Cool Earth Forum. This figure also came from the Center for Carbon Removal. They've just rebranded as Carbon 180. They're based in Oakland. If you wanna learn more about this, go talk to those guys, they're around. But the fact is we need to use the biological pathways and the engineered pathways. And they all have pluses and they all have minuses. In some cases, like reef forests, the cost looks great. The land water use, not so good. Risk of reversal, not so good. But there's a whole bunch of things to like here. For direct air capture, there's a bunch of things to like here on the land use, the water use, blah, blah, blah. The costs are ridiculous right now. They have a problem. I just look at this as the matrix of this is the work we need to do. Anywhere where it's green, we put less energy. Anywhere where it's orange or red, we put more money and energy because we need to solve all this stuff. There's no excuse to not do it. So we have to get busy and figure out what can be done in terms of an innovation agenda. So this takes us to what can we do for policy, for carbon use and for carbon dioxide removal. First thing we should do, just a lot more innovation. Thankfully, this Congress has been good about supporting the research and innovation agenda. The 2018 numbers that I talked about are added to again this year in the omnibus for the 2019 budget. So the budgets for the R&D piece keep going up and that's good. That helps because it means that investors look at that and say there's a possibility of getting government match. The government's more serious about this. It's a signal that matters. Another thing you can do, tax incentives. We already talked about 45Q. Turns out 45Q has tax incentives for use, $35 a ton. It has tax incentives for direct air capture. If you can use direct air capture in CO2 use, you can actually get a tax credit today if we're doing it. Other countries around the world are thinking about similar things. It's also worth thinking about this, not just from the production tax credit side of things, but also thinking about this as an investment tax credit. Can you get some kind of capital treatment in there as well? Tax incentives are not the only way to go about it. A lot of people like a carbon price. I would have thought that this was absolutely not possible anywhere on earth for real two years ago. I don't think that anymore. We'll see whether or not the state of Washington does this themselves in a couple of weeks. If they don't, there's two Republican proposals for a carbon tax. One of them is the CLC proposal, which Secretary Schultz, Stanford professor, alumni, and fellow, and superstar has backed for a long time, among others. Also, Congressman Rubello from Florida, which is drowning. And he takes this stuff seriously. He wants a district to represent, and that means some climate abatement. So if anybody had told me we'd have two Republican proposals being debated in Congress now, two years ago I would have said, what are you smoking? That's bonkers. But in fact, we have things going forward that look interesting on this front. We have the low carbon fuel standard, which I already talked substantively about. It is worth asking on a federal level, can we make the renewable fuel standard a low carbon fuel standard? Politically, that is a super heavy lift. I give that very, very long odds, but it's a question worth asking. What else can you do? Mandates. We're just going to tell people to do this. The state of California could just declare that they're going to do a bunch of stuff. So could the federal government. They just said, we're going to build 20 plants, and we're going to put the money on the table to do it. That would work. It's a policy option. We've done that before. What else have we got? This is my favorite, procurement authorities. Procurement authorities. How much cement and concrete do you think the Army Corps of Engineers uses every year? What happened if somebody in Congress or a future president said, you know what? We're going to say 5% of that has to be low carbon concrete. And 1% of that has to be carbon negative concrete. Go at it, market. That would be nice. It would create options for companies that would create market pull that would get more private investment moving into it that would make things move forward. You might think this is crazy, except like always, California has just done this. Back in November of 2017, we passed a by clean California Act, which allows the Department of General Services to pay extra money for structural steel, rebar, glass, and micro wood particle board as a function of its carbon footprint. Can we expand that to cement, plastics, fuels? Can we get other states to do the same thing? Can we get cities to do the same thing? City of Los Angeles buys a lot of plastic and concrete. Maybe they can tuck in. Maybe they can create an economic development zone in the city of Los Angeles to give those companies a leg up. There's a lot that can be done on the policy front that doesn't look like a carbon price. Life cycle standards are going to be central to all this. If you want any climate benefit, you have to make sure that you're not just smoking your own hype. And that means rigorous analysis of what the real abatement is. Large system life cycle accounting. There are methodologies to do this. NIST has not been tasked to do this. The Department of Energy has not been tasked to do this. There is no federal or state agency that is busy making life cycles for this stuff. The low carbon fuel standard has a pathway to do such things, but it doesn't exist yet. Another thing you can do is standards, like Energy Star. That's a good way to go about this. You're going to have low carbon standards. So there's lots of policy options, but this much is true. We can get the sound back up again one more time, one more film clip. Thank you. We're going to need a bigger boat. Thank you, Darius. As much as I love all this stuff, I get despondent about thinking about the fact that there aren't enough people to do this. We actually have the capital to do it. We haven't spent it yet, but we have the capital to do it. We have policy levers we can pull, but who are the people going to be? Even if everybody in this room loved my talk and said, I'm doing that in the future, we would be totally hysterically hilariously outgunned and outmanned. There's just not enough. If you want to get a 10 billion ton a year economy that's pulling CO2 out of the air and oceans, you just need more. We've sculpted that a little bit. Arizona State Center for Carbon Removal, Energy Futures Initiative, which I've worked with, a new not-for-profit company created by former Secretary Moniz. We put together a roadmap for a new carbon economy. That's the link to it on Carbon 180's website. And the roadmap covers biological pathways, engineered pathways, hybrid pathways, provides recommendations for action. It is an innovation plan for a new carbon economy and we're not the only ones. We've got a dozen friends, national labs, other universities that have said we want to help develop the engineers and scientists and scholars to do this. We want to create the companies. We want to create the professional societies. We want to create all these things that we know we need because this is an inevitable transition and we want to be part of it to make it happen because inevitable is a bad business model. We're on the clock. We have to be faster than inevitable. And that means putting in some square equity, getting things going. And when I see stuff like this, and when I am part of stuff like this, I end on a good day, not a bad one. Thank you very much. Great, we have a little time for questions. Actually, since you used a Nike slogan, I would say, would it be fair to say the theme of your talk is another Nike slogan, Carpe diem? No, carbon diem. Carbon diem, okay. Never the innovator. Okay, let's go with some students first. We have a few minutes for questions. We'll do one, two, three, starting back, and then you. You were real good during your speech of explaining the cost per ton to do a certain thing or this and that. And I know you're not just in renewable energies. You're knowledgeable in the energy sector in general. If you were to say what the cost of a downed gas energy, if we actually charged the consumer the spillover effects of that gas, or energy in general, how much would the quality of life have to go down? Right, so those are two really different questions. So let's separate those two. One of them is what's the embedded cost of gasoline? That's a social cost of carbon question. That's a hard question to answer. There's a lot of scholars who think that the current estimate of about 50 bucks a ton is too low. They have some good arguments. People go back and forth about that. It is worth knowing that if you had a hundred dollar a ton carbon tax, it would make your gasoline go up a dollar a gallon. So that's kind of the kick and around number that people generally talk about. The question you talked about is what would be the impact in terms of quality of life? Almost every serious study that's been done on that is not big. The quality of life impacts are not big. You're usually talking about somewhere between a half a percent or a percent of GDP. A lot of it is a function of how the money is used. So how a carbon tax is reinvested actually matters a great deal. How much of it goes in invasion? How much of it goes to serving underserved communities? Or giving the money back to people? How much of it goes into a green bank that gets used? That actually affects the quality of life aspects. But it ends up being a pretty small number. Most scholarship reveals that the impact on solving this problem is smallish. I did, however, learn one really important thing working in Washington, D.C. for those years, which is the politicians are super good at their jobs. Never pretend that they're not. You might not agree with Lindsey Graham, but he is surely good at his job. And so they look at the politics about this, not just the cost. And you have to give them a solution where the politics also work. And that is not a trivial undertaking. That's a serious piece of work. Up here. Do you have an idea or experience about what clean energy will mean or what you think it should mean? Right, so the question is what's clean energy mean? I think it really has to start with two fundamentals. One is near zero criterion pollutants. So particulates, sulfur, NOx, like we just can't have that. It has to start with that. If it has that, then it can't be clean fundamentally because it impacts human health and the natural world in a bad way. Second thing is you have to have near zero carbon. I consider 90% to carbonized to be near zero. And if we have to get 80% of the energy system clean and start with 90% as a target is kind of a decent place to start. I am prepared to put nuclear in that bin, current and advanced. I am prepared to put all the things I talked about in that bin. I'm prepared to talk about novel emerging technologies like high altitude wind and space based solar and other stuff. That's all in that bin. But really it has to be no low carbon mega watt left behind and anything that can credibly deliver a terawatt hour of clean energy then you want to focus on it and think about how to make that real. Let's do John and then John. All right, two very quick ones. One for the 45Q credits. To the extent that you are using CO2 that is already economic, pre tax credit. How do you ensure that the subsidy doesn't or that the credit doesn't just end up subsidizing activity that was already incurred and becoming subsidy for real production? Second question is just, where does that $1,000 per time marginal savings cost for you to go from? Okay, so the two questions. First one is how do you make sure that 45Q isn't abused by people who are already doing it? That's easy, it was written into the law. They said projects prior to enactment cannot claim this credit. The guys at PetroNova would love to claim that credit, but they can't. Okay, the guys at Port Arthur would love to claim that credit, they can't by law. Okay, it also says that you have to put something into construction by 2024. January 1st, 2024, if you're not building it you can't claim the credit. So they've also put something in there to incent people to get it going and put something forward. In terms of the $1,000 per ton EV standard that's actually a function of the rebate that the state of California provides back and how much tonnage of avoidance is actually given by that. And I feel very comfortable with that number because it has to do with the rate of stock turnover and other kinds of estimates. But that's where the number comes from. It has to do with the fact that the state of California pays a lot of money for what is not actually that much ton of abatement. Okay, last word from John. So basically your numbers are very, very interesting. I'm just curious, where do you put the ratio between efficiency investments? What's it cost to offset a megaton of carbon on efficiency investment compared to removing a megaton using your air capture? So this is a two pronged answer. The good news is Stanford of course has incredible scholarship on this topic and they actually did some interesting work on this specific thing. Let's see if they may take a while for this to come up. But there was actually a report that was put out a year ago by the Steyer-Taylor Center looking at the investment that's required in this field. And one of the problems is that efficiency investments are undercapitalized. To hit a two degree world, you need to increase renewable investments by like a factor of 1.8 but efficiency investments by a factor of 6.6. You didn't put a lot more money into them. On a pure power basis, this is the efficiency number here. And of course you get some negative numbers, right? And so I like to start always with efficiency. I like to start always with conservation. There are market failures around efficiency and conservation and there's good policy measures to think about fixing that. And that is across the board. That's end-use efficiency, that's vehicle efficiency, that's heavy industry efficiency and in fact you want to start with that all the time. It turns out that you can't get to zero through efficiency. So even then, you know that you still need this other stuff. And so I always look at this as, you're not really, one of the other things I learned in Washington, it's sort of a corollary to the big thing, nobody in Washington, nobody is trying to do a thermodynamic or an economic optimum. That's not their day job ever. And so a lot of the stuff that I talked about in terms of turning CO2 into fuels, it's sort of born crazy. And from a thermodynamic basis, it's nuts. You're putting in more energy than you got out of the fuel in the first place. And you know that, it kind of doesn't matter. We are nowhere close to a one degree world. We're nowhere close to a 1.5 degree world. We're gonna overshoot two degrees. If we work like hell, we might get three degrees, which will be awful. But so the thing is, yeah, you wanna do all that stuff but you just need more. You might implement the efficiency measures, especially if you don't undo things like fuel economy standards and you don't undo things like the power plant, might be way faster than the timescale for this capitalization and development of this R&D technology. So if you're a business man and you're saying I wanna make money, isn't it a better model to make money on efficiency? Some companies are doing that. The ESCOs have been doing that for a long time. I met an interesting company just a couple of days ago actually over at Verge which is trying to do that at a small scale to get the markets that the big ESCOs can't get to, right? And so yeah, you wanna do some of that up front. Guess what though? The timescale for real, getting overcoming those market barriers is just as long as this stuff. It's just as long. It's just as long. I wanna say that again. It's just as long. And part of the reason why is because of all the Dilbert stuff. There's a reason Dilbert's funny. It's because human beings interact that way and it's terrible, right? So yeah, like President Obama signed the CAFE standards. It was the single most important Climate Mitigation Act he did while he was in office. He signed the CAFE standards and it was undone. I can't be cavalier about any of this. I can't be cavalier about any of this. We are way past the point where anybody can say I like what I'm doing but not what you're doing. We now have to be at the point where we say I like what I'm doing. I'm gonna do what I'm doing but we gotta figure out how to get you fed too. Cause that's what we need to have a just verdant world is we need that. And to summarize it, last word, the person who put this best into perspective is a legendary oceanographer, a guy named Walter Munk. I don't know if you know Walter Munk or not. Legendary oceanographer, just hugely great. Legendary enough that he was invited to the Vatican for the first papal encyclical on this stuff for the first Laodate sea meeting. And afterwards at the end of this meeting everybody was loving shaking their head going God, how are we gonna do this? And Andy Revkin, the journalist asked Walter, he said, Walter, what do you think it takes to do this? And he said, an unprecedented act of love and generosity. That's actually what we need to fix the world. Nothing short of it's gonna do it. Okay, on that appropriate note, let's thank Dr. Friedman for all his time. Thank you.