Tarmo Virki 0:07

Welcome to naturebacked talkshow where we are talking with investors and entrepreneurs about the green future. My name is Tarmo Virki. And today my guest is Marta Krupinska from CUR8. Hello, Marta, welcome to the show.

Marta Krupinska 0:22

Hi, thanks so much for having me.

Tarmo Virki 0:24

What is cur8? you're writing it c-u-r-8. So four characters in total, just for all the all the listeners who want to Google.

Marta Krupinska 0:35

Amazing. Well, first of all, thank you so much for getting the spelling out of the way. Now, I don't have to do this. So yes, indeed, CUR8 and you can find us at CUR8 CUR8 to see you are eight dot Earth online. So CUR8 is a market maker for carbon removals. And I suppose the almost more important question is, what are carbon removal if we're making a market for it, so all of you will have heard already about carbon offsets, largely protection credits or reduction credits, say moving to solar incredibly important to work, however, largely based on a counterfactual, and only about 4% of said offsets actually remove carbon from the atmosphere. And now we know according to the IPCC, while we have to radically decarbonize, and it's our first priority to reduce emissions that go into the atmosphere, we have now left it too late. And we also have to remove the carbon that is already up in the atmosphere, there is a multitude of ways in which this can be done. But the whole space is completely nice. And we're probably maximally five years into that journey. So going back to what CUR8s who are a market maker for carbon removals, meaning we work very closely with the suppliers of carbon removal. So companies that actively sequester carbon out of the sky through regenerative agriculture burning biomass in low oxygen environments, spreading bizarre rock on fields or building sky Hoover's that suck carbon out of the sky and put it under the ground for 1000s of years. We work with those guys to help them build a market for their products. So we then work with clients that are on a decarbonisation pathway and wants to also remove their residual emissions to reach true net zero, there is no net zero without removals, because we reduce as much as we can, and then you remove the rest. So our first product is a brokerage of those carbon removals, we built a portfolio of carefully selected carbon removal credits from across the world, some of the removal has already happened sometime in the future.

It's a mix of global north and global south the reason why I personally am so passionate about carbon removals, and obviously fighting climate change, but it's something we have to do as a global community. We cannot solve it Estonia for Estonia, UK, for UK, India, for India, we have to work together. So we carefully select methods and companies and projects from around the world. And we also peg the price of carbon removal to the social cost of carbon, a very interesting piece of research that came out in Nature magazine a couple of years ago that talked about how every time we emit a tonne of carbon into the atmosphere, it does damage to the tune of $185 per tonne now it's damaged to human health migration, displacement, real estate, financial assets. So we're basically saying if this is how much it cost, every time we admitted, we shouldn't be able to get out of jail free for less than that. The next thing that we're working on is also financial products for suppliers of carbon removal. So how do we and I spent my whole career looking at finance and how capital flows? How do we get more capital into the hands of those scientists that are pulling carbon out of the sky? All in the hope that we will manage to get to 10 billion tonnes of carbon removal by 2050, which is what the IPCC is telling us, we need to get to the stable of 1.5 and stop early vertical damage to our planet.

Tarmo Virki 3:59

Yes, the 1.5. You still optimistic about it?

Marta Krupinska 4:06

Well, it's really interesting. My co founder, Dr. Gabriel Walker says that hope is not something that is often felt by people that work in climate. And I think if we didn't have any, we wouldn't be doing the work. So clearly, there is enough hope there. I think I I'd like to be a little bit more intentional than just optimistic. This is actually for me personally, why I went into carbon removals, and started cur8 in the first place, I was actually becoming increasingly defeatist. Because, you know, I looked at the Paris Agreement, and I looked at the IPCC reports, and we are not decarbonizing fast enough. And it's a massive problem. And it's a systemic problem. incentives aren't aligned. You know, regulation isn't kicking in fast enough. It's an incredibly complex issue. But when I first heard of carbon removals in 2020, it genuinely rocked my world, for the reason that for the first time I thought, Okay, hang on a second, well, we have to continue radically decarbonizing, we're doing everything we can, and we should do more. But also, we have a way of, of aiding that process with something that actively also pulls carbon out of the sky. So I think, you know, if we, if we don't get removals going, there's absolutely no chance for 1.5 If we don't continuously focus heavily on divesting from oil and gas on, you know, punitive, you know, activities that that discourage big emitters from a meeting, if we don't put all of our efforts into science and research. We have to mobilise everything that we've got. But we also know that the science is clear, there is no staying below 1.5 without carbon removals, and I put all of my work and effort and hope into that.

Tarmo Virki 5:52

You've been in this field now for a couple of years. How how do you see the kind of cost of carbon removals because that's clearly the elephant in the room?

Marta Krupinska 6:03

Well, I mean, I don't even know if it's an if there's an elephant in the room. It's, it's, it's a challenge, and a lot of the critics of carbon removal, and maybe to put it in context, the market is used to $5 a tonne, $10 a tonne, you know, hop on a plane, plant the tree, and everything's going to be hunky dory. Now, any of us that have spent any time thinking about this know that it's an impossible, it's an impossible effort to try and offset a flight with, you know, planting a couple of trees and doing all of this for $5. So the challenges that the market is used to pricing. That is that is very, very low. When we think about the compliance carbon markets like the ETS, their carbon price got closer to 100. Now, that's an encouraging that's, that's an encouraging direction. But on the carbon removal front, especially when we're thinking about some of the methods that have the highest durability, to things like direct air capture enhanced rock weathering, we can be looking at anything from 500 to $1,000 per tonne. Now, the critics of carbon removal will say that this is why it's not going to scale. And it's not going to help stop climate change. Now, the thing is, we have seen this already and successfully done this in other areas. When we think about solar, the cost of solar has gone down massively over time, because we've created the right environment for that to happen. With discounted capital, we, we put a lot of effort into research and innovation that got the cost of actual production of solar down. And this is exactly what we're having to do. Now. This is why initiatives like the frontier Fund, which is basically a bunch of big tech companies putting together $1.2 billion to invest in early credits of carbon removal at maximum prices, you know, somebody has to absorb that initial cost, because we need to get to economies of scale, we need to get the learning curves up. So yes, it is expensive today. But because of the fact that it's expensive today, if we're doing this right, then there is a radical reduction in costs that we that we shouldn't be experiencing. Part of the reason why we are so wedded to a portfolio approach at curate as because what we're trying to do is offer the closest to the durability and measurability of closed systems like enhanced weathering or Adak with social and environmental co benefits of nature based solutions like trees and soils, all of this pulled into one asset that's priced at something that's actually palatable to clients. And we sold our first line which was the royal family, we sold to the Queen of England, we remove the machines from our funeral, we sold to some multibillion dollar manufacturing, and sort of production companies. And and these guys, you know, have the margins have the interest to do so climate change, do their bit increasingly are getting regulated to do so the UK we're based in London, the UK is the most interesting place to start with climate or especially removals companies today, because we're the first country that has the legal definition of netzero. That requires organisations to reduce emissions by 90%. And then do review remove the rest. Now that's very exciting. But even those organisations that are learning how to buy removals were a they don't necessarily have internal science teams, which is why we exist because we do that for them. But also they need to create an entire new budget. And the interesting thing about you know, the position, which we are today is unfortunately, we're globally we're in a business model where it's easy to make money off destroying nature, and it's near impossible to make money off protecting it. Chief Sustainability officers for the longest time and companies were basically drivers of savings, and now it's starting to look more like a cost like a cost line in the company's p&l. So we need to very carefully although very quickly, work with those organisations to help them create those budgets help them understand the benefit that they will

All of that they will get from purchasing removal credits, and help them build long term meaningful Net Zero pathways. So it's not just about doing something in 2023, it's if I have a net zero goal of 2030, or 2035, how do I get myself access to supply of reliable high quality carbon removal, that will help me claim that I'm in Xero, which I'm increasingly asked to do, but also that's not going to break the bank. So again, going back to your point around cost, it is expensive now, it's what it is, we can get it down as much as possible with blending different methods. And we need to invest in suppliers and in methods that have the best chance of scaling to 10 billion tonnes by 2050. And that's going to require that investment we've seen it work before it's going to work again,

Tarmo Virki 10:47

I know there is a wide field of different methods, which could be counted as carbon, carbon removals. Is biology the cheapest actually going and plant the trees in the place where there were no trees before?

Marta Krupinska 11:03

Yes, so I think it's interesting that you mentioned biology. So we try and increasingly traditionally, or the traditionally, in the very many years the carbon rules have existed, people have referred to different methods as sort of in two buckets, nature based solutions and engineered solutions, we're we're trying to start thinking about more is open systems, and closed systems, because ultimately, it's not about all of the methods and carbon removal require a mix of nature working with nature and human ingenuity, to know knowing knowing which trees to plant and where and you know, some of the suppliers that we work with not only plant trees, they also harvest microbiomes from well performing forests and use it to fertilise new forests, and then turn some of the trees chop down some of the trees and turn it into cross laminated timber, other building materials to increase durability. So all of this can be quite complex. But indeed, planting trees in or regenerative farming, these things have been cheaper.

For obvious reasons, we can imagine what the cost of that would be, we still have to remember that there also is a cost of what's called MRV measurement reporting. My verification is not only about performing the act of, say planting a tree, it's also about verifying that some carbon has been drawn down to what rates over what period in every geography would look a little bit different. The methods that are for instance, Director capture that a lot of people are very excited about right now, you know, you're spinning up a huge, you know, a facility that sucks in air, and uses sorbents to separate co2 from everything else. And it's quite a big, energy intensive process. For every million parts only about 40 are co2. So again, we can imagine that it's quite, it's quite a lot of effort that can be much more expensive, probably everything from 500 to two to 1000 tonnes. Now the thing that we have to consider and this is why it's both fascinating and complex to work in carbon removal is these credits are not fungible in that a tonne of carbon removed through regenerative agriculture and a tonne of carbon removed through enhanced rock weathering. They're going to have different qualities, anything from has there been an opportunity to give some of this money back to the local community that actually did the work to how durably is this carbon stored for and most importantly, perhaps, given that we have 27 years until 2050, is how fast can this scale? For instance, when we think about afforestation, reforestation, there have been many claims made by organisations that they're going to plant, you know, plant plant trees, and therefore against that get themselves in a zero? And then it turns out that they have to plant enough trees, though, do you know that that would be the size of Spain, I believe, in fact, in Spain today, now imagine everything around you is just forests. Again, planting trees are incredibly important, but we need other methods that we will be able to quickly and at industrial scale rollout to get on the exponential to help them brilliant hands.

Tarmo Virki 14:08

How many of the companies similar to yours who are trying to kind of establish this field or establish the connections aggressive across this new nascent field?

Marta Krupinska 14:18

Great question. And I suppose it depends how we would, how we would slice the market. I, I'd say on the tech sort of tech platforms, probably no more than 10,12 It's all relatively new. But also we're not the only ones that are making the market you know, you have your traditional sustainability consultancies that are also looking into or that have been trading offsets and are slowly looking to move into removals. You have your buyers collectives, like frontier fine, I mean, they're very much they're playing a very important part in the in the whole puzzle. So we're unexcelled Ultimately, there's probably about 1000 suppliers of carbon removal. And many, many more are springing up through to thanks to amazing programmes like airliners that help these companies scale up. But say on the sort of mark market making frontwards Yeah, probably significantly under, under 20. And as ever different different organisations focus slightly differently on geographies, or have a slightly different thesis as to what constitutes good, what constitutes good. But we were all playing our part and, and just Astonishingly, and we were all less than five years old. It's such a new space and an emerging trillion dollar market. So you know, and and opportunities to climate change, not not surprised that people are excited about it.

Tarmo Virki 15:46

Absolutely. What's the what are the biggest challenges in this kind of the early early nascent market?

Marta Krupinska 15:53

Excellent question. Love it, because we need to solve all of them. So I hope that whoever is listening is going to jump on the opportunity to to fix it. We the ones that we see or if very much starts with awareness. Even the fact that every time I talk about curate, I have to always start with and this is what a carbon removal it and you would be surprised how people that have done a lot of work in climate change mitigation, still don't exactly understand what constitutes carbon removal. So do people know that carbon removal exists? This the first hurdle? The second one is do people trust that it is a meaningful part of the solution to climate change? And the challenge I personally have is, there is a reason why the Intergovernmental Panel on Climate Change exists. And if in their reports, they say there is no no no stopping climate change. Without carbon removals, I would generally tend to trust that I also have the benefit of having one of the world's best climate scientists as my co founder. But we know that there are from a narrative perspective, there are some challenges. So for instance, some people worry that if we unlock carbon removals as a solution that that's going to distract heavy emitters from decarbonizing and is going to provide an opportunity who's continuing meeting now, for instance, the way that we solve it I curate, we only sell to clients that prove to us that they're already maximally reducing their emissions. So we're saying prove to us that you've done your bit. And we will help you remove your residual. The other thing is also commercially, I spent my whole life in business. It is firstly cheaper to reduce your emissions than to buy removals, there's almost a commercial, a commercial, sort of an encouragement to reducing in the first instance. And then also within the trust bucket. How do we verify and how do we know that this carbon has been removed? Now I'm in the business of taking hundreds of 1000s or millions of pounds of people's money and saying to them, the carbon has been removed. Now, obviously, you need to give them something in return. So how do we tell those stories with data? How do we pull it from suppliers? How do we verify and prove that for every tonne of carbon that we said would be removed, that time has actually been drawn down? Not to mention what happens if it hasn't been, which is why some organisations are starting to work on insurance for carbon removal, a very important part of the solution. But very, very hard to do when you have little data and little understanding of risk. Therefore it's very hard to underwrite, but we know it's going to be a part of the solution. So I talked about awareness. I talked about trust. Now I'd say the third one, structurally and biggest one is access to capital. And it's both capital on the how do we finance the pulling carbon out of the sky? How do we how do we build up these organisations? And where does the revenue come from? So you know, traditionally it's been my whole life is startup, this is my fourth company. Traditionally, you'd probably go and you know, get a grant and non dilutive grant of some sort, then you go and get some angel money. And then you go to VCs. And probably if you're building a software company, you're good for as long as you're delivering a solid products, carbon removal, these are, these are organisations that are structured much more industrially, almost you need its software. And it's hardware. And it's science. So the capex on these projects is infinitely higher. Now, what these often require is something that looks a little bit more like project finance, the challenges that again, with lack of understanding of risk and a nascent buyers market. It's just not very attractive to banking partners yet, which is why the first product hired by a CUR8 was an incredible venture capitalist and former banker who is building financial products. We're basically saying, we're going to de risk as much as we can throw our portfolio approach and work with suppliers and we're going to go and find financing partners that are going to give us access to lots of capital because without it, the suppliers cannot go on. And finally on the revenue side They also need to be able to secure contracts. Again, buyers are very confused. And it's not exactly their fault. Really, it's only been a minute. It's only really this year that we're hearing from CFOs. And General Counsel's of organisations saying, Net Zero is kind of creeping up on our, on our risk agenda. Will do we do? The budgets are non existent. It's all very nascent. So how do we help buyers understand what good looks like, and be able to start meaningfully contributing capital towards towards carbon removals? If through tonight, all of you lovely listeners of this fantastic podcast, if you could please drop whatever you're doing, and start helping Oh, and you know, solving awareness, trust and access to capital and carbon removals? I'd be much obliged.

Tarmo Virki 20:44

Yeah, I mean, then, and I think everybody would be wind from that, whatever you're doing, you know, maybe maybe you're working in a carbon industry already, or something to green. So that would make sense, maybe don't drop that the thing I was thinking about that kind of the challenge of trust is, of course, something which is very, in a way, it's really easy to challenge if you're an old oil company, and have a lot of lobbying money and PR money. And, and, and also, you know, obviously, there are challenges, like some cases of bearer have proven. So if there would be any good solution for this trust building, you know, what I really liked them recently, in the one of the episodes was a startup called Open ESG, which is trying to basically put all this data in the open field and let people to, you know, judge and see everything, which could be a good solution for actually verifying the data. Because as long as as the data is, you know, behind the closed doors, and people are just, you know, trusting on the colour of the paper or something like that, you know, of course, it's for general public is much tougher to go and measure the co2, co2 captured from the air. But, but I think that kind of the openness of the data could be one of the solutions in the data in the kind of the trust building.

Marta Krupinska 22:10

Definitely. And I guess this is also why many people have been very wedded to blockchain solutions. I don't believe everything has been to be able to build on blockchain. But we definitely need to very carefully approach issues like traceability, auditability, double counting, a lot of our software work has gone into building our back end in such a way that we know exactly what we bought to whom we sold, and how that could be traced back throughout the chain. Now, you know, it's it's a, we have so many challenges in carbon removal, the One would almost argue, why don't we just wait for regulation, which, by the way, is coming? This is going to become a compliance mark in the next five to seven years? Like, why don't we just wait until that's regulated? And everybody knows what they're doing? Or why don't we just wait until somebody has figured out exactly the way to certify and you know, the every credit or, you know, prove out every methodology, the challenges, we don't have the time to waste, which is why we're doing all of this in a way where so many of our meetings are about managing risk, what's the what's what's, what's the risk of doing something wrong versus the risk of doing nothing? And how do we best calibrate and I think part of the part of the reason why I'm finding it's so satisfying, and so exciting to be working on this. It is an incredibly collaborative environment. Everyone will take a meeting, everyone will share some insights, and all of us are struggling with similar issues. So I guess for as long as we're openly considering that there are known issues, even when we speak to clients, we say to them, this method of removal is fantastic. For those reasons, these things are pretty tricky. Now we're continuing to monitor and speak to suppliers and figure out how to how to solve for it. But you need to know that this is part of the problem. And you know, what, actually, clients are responding very positively. They're saying, well, at least, you know, we know what we're getting into, we understand those risks. Now, you're not telling us that it's all exactly clear, because because there isn't any won't be for a little longer, although there are very many actors working on big you know, solutions to all of the issues that we've discussed.

Tarmo Virki 24:11

Looking forward a little bit to start wrapping it up. I mean, I know this is an interesting way crystal balls are highly valued. Looking going into your crystal ball, what are the kind of the big things head for the curate and for you in coming months and quarters?

Marta Krupinska 24:27

Yeah, so I think well, or at curate the couple of things that we're really looking to right now is we are in all of these important solutions. One, we know that it's a big challenge for clients to set their net zero targets to try and set their carbon budgets. So we're looking we're looking to building some tools that will make it just a little easier. We're not in the business of carbon accounting and we will not be we actually believe that there is a bit of a perverse incentives to both be counting your carbon and then telling you oh for the remaining bit by my expensive remove All right, so um, so So we're working on making that process just a little easier just seeing how big of a difference it can make for clients. We are, I've already mentioned financial products, I really it goes back to money. And if we, if we can prove at small scale and pilot scale to large financing partners, that putting capital behind carbon removal is going to bring them a potential upside, I think that will be hugely meaningful. So we're looking for, we're looking for a couple of a couple of pilot projects of our finance of our financing products, this side, this side of Christmas, but also a lot of the work that we're doing is on the narrative side. So we actually have a dual structure curate as a startup. And we have a sister NGO called rethinking removals run by my co founder, Dr. Gabriel Walker. And there, there's a bunch of work that we're doing on both coalescing, the buyers, the suppliers, and policymakers around how to best inform regulation is going to come in. So rethinking removals have done work with sbti, the, the with the ICBC, and with the DCMI. And a lot of it is how do we translate insights from real world ecosystem? To okay, how do we set what constitutes a good standard? How do we inform what companies should be able to claim? and on what basis and then how does that translate into policy domestically and internationally. And actually, when I think about my crystal ball, one of the things that I'm genuinely excited about is a signal from policymakers, that this is something that is no longer voluntary. And that's not to say that we're going to have a full on compliance market starting next year. But a signal from policymakers saying to organisations, there is going to be a twin target to your net zero ambition. So you have a net zero plan 2035, you cannot just wait until 2034, and drop a billion quid on this solution, you need to continue reducing your emissions, and start buying removals to show that you're on track. I think as soon as we start seeing more of this from policymakers, a lot of the issues around awareness, trust and access to finance, are going to be solved. So we're super excited about this. Again, I spend my whole life in the private sector. And they've never seen an industry where venture capital talks about policies founders talk about policies, we like we genuinely have an opportunity to collaborate in a meaningful way.

Tarmo Virki 27:33

I often have said in the episodes of nature back that one of the great business ideas would be to set up a fund, buy up carbon credits, and sell them in 2029.

Marta Krupinska 27:45

Well, and the thing is, a that is not a bad idea at all, I guess the thing is, and it would be great, actually, we might be working on something that looks a little bit like this, because part of the part of the thing is if you start buying up credits today, that means that the suppliers get revenues, and with those revenues, they can finance innovation, I suppose there is an argument of especially if you're reselling it at a profit, you know, where, to what extent that is, to what extent that's the right thing to do. So this is something that we've definitely battled with. But, you know, there are people out there that are genuinely looking at this, because it's I've never been in industry before where the question when you're pitching investors is not, oh, how big can this get? The question is, how big does it have to get, or we all go up in flames. And that is that's, that's when you have a certainty of an incoming large compliance market. When you're seeing and be born. A lot of the ideas that I'm sure you're discussing here on the podcast, they, they become particularly exciting.

Tarmo Virki 28:51

Absolutely. And, you know, excitement is part of the game here in this industry. Sometimes a little bit scared excitement, sometimes a bit more positive excitement. Going forward. Definitely. Thanks, Martha, for joining us in this episode, and good luck with your efforts. It sounds amazing stuff what you're building.

Marta Krupinska 29:12

Thank you so much, really appreciate what you're doing to increase awareness and get everybody behind this cause so yeah, massively appreciate. Thank you.

Tarmo Virki 29:21

Thanks. Bye bye.

Transcribed by https://otter.ai

carbon

Pulling the Carbon Out of the Sky with CUR8's Marta Krupinska