About this episode
In our discussion with Julian Turecek, Executive Director of Corporate Carbon, former Investment Manager at Cleantech Ventures and previously in leadership roles at Energy Australia and Origin Energy, we hear about some of his experiences and reflections on the importance of technology, teams and markets in assessing venture investments.
This podcast is timely with increasing demands on capital markets for investment in innovative and emerging technologies. Julian shares his thoughts on what matters most in assessing the numerous opportunities that are brought before investors and the challenges of anticipating ‘where the puck is going to be’ to paraphrase Wayne Gretzky. He reflects on his experiences in venture capital and the learnings that translate across the boundaries of innovative startups and corporate operating environments.
CB: Hello everyone, and welcome to Tech Transfer Talk. My name is Cameron Begley. Joining me today from Gippsland in Victoria is Julian Turecek. Julian and I have had a long-standing friendship starting all the way back at our undergraduate days back in, heaven forbid, late eighties and early 90s. But Julian has found a path for himself through the resources sector and energy sector and then into venture capital. And now, with a strong focus on Carbon, we’re looking forward to hearing from him today about his perspectives around technology transfer and the opportunities and challenges that it presents. Julian. Welcome to Tech transfer talk.
JT: Thanks Cameron. It’s great to be with you.
CB: Great. It, it has as I indicated, Julian, it’s 32 years, I think, since we bumped into each other in second year.
JT: Chemical engineering yeah, in the late 80s, early 90’s. And it’s interesting how your career can take you in a whole range of different directions, but the things that you learn at university never leave you. And its amazing how many times that things come up and you think, oh yeah, I remember the second law of thermodynamics. This is how it works.
CB: And how interesting you’re because you of course, would be one of the few people that still remembers the second law of thermodynamics. But also, we might revisit the theme of how the laws of thermodynamics continue to get in the way of innovation and tech transfer.
JT: They can be quite infuriating to certain people that want to create things like perpetual energy machines and those laws to thermodynamics and physics just keep on getting the way frustrating.
CB: They do. There’s this substance that another podcaster who I follow on LinkedIn called Paul Martin, and Paul refers to this lovely thing called hopium. And I suspect that hopium sits in some sort of antimaterial equilibrium with the laws of thermodynamics. And the one is the matter, and one is the antimatter. I suspect, Julian.
JT: I think scientists are still to this day trying to isolate the chemical symbol or the molecular makeup of hopium. We’d always say in venture capital land, hope is not a strategy. But it’s amazing how many people would substitute hope for strategy, even though it’s not a substitution. That’s a very poor substitute for strategy,
CB: which presents an excellent sort of bouncing off point in its way. Julian, as one of the earlier venture capitalists, I suggest, certainly in this country when you were involved with the clean tech fund that was established by the Victorian government, I think it was back then, Julian.
JT: That’s correct, yeah.
CB: You will have seen not only lashes of hope for strategy, but in amongst all of that you would have come into the early days of people pitching and people trying to get technologies out to market. What were your early impressions and thoughts from those times? And perhaps
equally importantly, what did you learn then that still matters now with a world full of venture capitalists?
JT: That’s a fascinating area, I think. Well, for me, my foray into venture capital started in 2008, and so obviously, while I was new to VC, it had obviously been around for quite a while in a whole range of different ways of funding, a whole range of different things from medical research. Obviously, it in clean tech. It was relatively new. And so that was interesting. And I think timing, they say timing is everything, and it was, in some senses, one of the first real waves of interest in clean tech from a VC perspective. And there’s been probably a few other waves since then. But thinking back to 2007, this was Kevin ‘07. Kevin Rudd had just won the 2007 election. I was at the Bali conference of the parties. The COP we just had COP 26 in Glasgow, this was COP 13 in Bali in 2007. And the first acts of the government was of the new government was to ratify the Kyoto Protocol and remember being at a, you know, a cocktail party in Bali with a whole range of government people. And that was sort of was a boom time. But it all ended pretty quickly, pretty quickly with the GFC, obviously, a few years later. And once the money disappeared, then I think the whole sector kind of had to sort of. Start from scratch and then we have the second wave kind of around sort of the Paris and getting towards the end of the Obama administration and culminating in the Paris Accord. But then that kind of all fell apart pretty quickly, I would say, now we’re kind of in almost a third wave of clean tech interest, but this one feels like it’s going to stick because is not only is the technology to fund, but also there’s a huge amount of global capital now really interested in this space and obviously communities now sort of all through that time, community interest in tackling climate change and getting serious about net zero has been building that whole time. So now we’ve kind of got the ingredients going back to 2007. Not all those ingredients were there as you could imagine.
CB: So that’s really fascinating. It’s fascinating, those waves that you describe. And now we’re in a third wave around clean tech finance. And then you’re right to sort of more correctly describe you were in the early stages of clean tech venture capital, not venture capital per se, but in that moment 708 where there was certainly a lot of excitement and enthusiasm. From a policy perspective, maybe business, maybe from a commercial perspective, the needle wasn’t moving yet, but the policy needle was starting to move. And then the GFC hit. So it wasn’t that the ideas necessarily went away, but I have inferred from what you said there, Julian, that it was that the money went away and the first thought I had as you were describing that was, well, that’s going to force some discipline, isn’t it?
JT: That’s right. And look, I was with a company that had two funds. Yes, there was a Victorian government fund, but then there was another fund with federal government money and super money in there. So, we’re investing two funds. Obviously, we had capital to deploy, but we had to be very disciplined about it because obviously with the GFC then happening capital and follow on investment was quite tricky. One of the early learnings that we started to grapple with was the capital intensity of a lot of clean energy solutions and things like, well, there’s a whole range of new renewable energy from solar to wind to well, there was ocean, solar thermal, whole range of different things. And from a venture capital perspective, that becomes challenging because venture capital is all about seeding small investments to then see it grow to five x, ten x, ideally. When you’re dealing with capital intensity like big projects, you’re then starting to play more into the infrastructure space rather than venture capital. So, we started to get to a point where we had to really focus hard on finding those investments that didn’t tie up a whole lot of VC money, that’s trying to get sort of short, sharp, spiky returns into kind of infrastructure style investments. But you’re right. Cameron what’s exciting? What never stops? I think in any kind of tech transfer area, whether it’s clean tech or bio that have been covered in the other tech transfer talks, people all around the world, every single day are innovating on a whole range of different problems. Whether they’re in a university or in a tech lab or in a company or a research department of a big conglomerate or just tinkering in their backyard shed. People are trying to find ways, new ways, innovative ways to solve either old problems or new problems. And that’s essentially why VC exists, is to try to fund that, fund those idea or fund the ones that they best think are going to actually make it.
CB: And I think what’s interesting with that idea of capital intensity. Is that if venture capital is trying to get the inflection, or perhaps just paraphrasing you more than generalizing, if we’re looking for those points that don’t tie up capital that aren’t necessarily capital intensive, and yet we think about clean tech, which one could contend is notionally, intuitively very capital intensive, where does one head then, to find those returns? It strikes me you’re in a services model or a licensing model, perhaps more than a build own, operate type of model, which is what, I guess, you and I, our traditional engineering minds might turn towards.
JT: Yeah, and there’s probably a few different business models that can work. Obviously, if you’re finding the quintessential piece of something that really refines a new wave of a technology, whether it’s a new efficiency leaping solar that then you know is going to be deployed or a new technique of managing, smart devices in the home or those kinds of things. Really groundbreaking innovations that aren’t really capital intensive but can find their way into market through other means and even get then deployed into those projects down the track. Yeah, that can work. I think now, when there are now billions of dollars flowing into this space, it’s less of a problem. People are more readily keen to fund pieces of kit, even if they ultimately are infrastructure because so take for example, we’ll probably come back to this, but I’m working direct air capture at the moment. One of the leading companies, Climeworks, has just raised 600 million Swiss francs in equity and a lot of that is going to go into future projects. It’s just by way of example, that would have never happened in 2007. But it’s happening now.
CB: Yes, for probably a combination of the reasons that we’ve already touched on. So just to sort of revisit those early days again. We think about venture capital now, I think we think about venture capital around entrepreneurs who have pieces of intellectual property or ideas. And there is a certain, I’ll call it sophistication around people who are pitching for that money. And there are a sort of there’s a bit of a playbook, but there’s also an understanding, I think, that the technology is a necessary but insufficient condition for success. When you go back to 2007 to 2010, where those things may not have been quite so evident, what were some of those tech transfer moments that you saw where ideas were coming out the academic community or out of the commercial community and they were trying to find their way through the processes out towards new markets or new products?
JT: Yeah, well, I think whether it’s 2007 or now, I think venture capital has essentially the same kind of formula in that you’re really looking for three things. You’re looking for a disruptive technology, whether that’s an IP or a patent or some innovation that’s groundbreaking, but that in itself is not sufficient. You’re looking for a really good team, someone, a set of people that can actually take it and then and build it into a business. And with that comes things like people not just knowing about, here’s my piece of kit. It’s also what’s the business model to actually to get that somewhere? And then you need a market. So, there’s no point investing something, having a business model, if there’s no market to then, I think was an example on your previous tech transfer talk about trying innovate the product and the market at the same time, the degree of difficulty. So, you need the disruptive tech, a stellar team, and the market to be in that 100 and certainly to be in that one that you invest in.
CB: I think the three areas that you’ve mentioned there, we’ve certainly heard in our podcast participants, or from our podcast participants, we’ve heard that narrative of team. I think the notion of market is really interesting, and what flashed through my mind, as you said, that was, well, yeah, imagine trying to do clean tech in 2010 and put the word market into that conversation. That’s a pretty challenging notion. When we look back 10, 12 years, certainly when we compare it to now where there are very active markets for these products, that would have been a really shallow pool that you were diving into, and therefore you may have hit your head a few times. What then struck me relatedly was the disruptive technology. And no matter how we define that or how we choose to view that all of a sudden, it struck me that you, as a venture fund were then sitting in the midst of the equilibrium between Tech push and market pull and you were actually trying to find the tech that was getting pushed on you and match it to the markets that you could potentially see or the team could potentially see, or the team that could partially see that you would color in the other pieces of. So, there’s equilibrium and it’s that movement through that equilibrium and sometimes back. The other way that I think is the constant challenge in this tech transfer space is how to run across that shuttle, across the tech transfer to the market, to the tech transfer to the market. Because ultimately you need signals. I would contend you ultimately need signals going both ways. To identify and solve valuable problems.
JT: You absolutely do. That’s a really good way of describing it. And then to add to the challenge, everything’s moving at the same time, so nothing stays still. And your competitors are all innovating, and the markets are changing, and the policy environment is changing, especially in carbon all the time. So, you almost have to take a future facing view of where do you think all of those forces are going to end up? And so that takes a little bit of insight and vision. So, we looked at a whole range of different renewable energy technologies. There was and still is a market for renewable energy. So even though carbon markets are evolving and are quite emerging and quite strong at the moment, to be honest, around the world, renewable energy has been a market, at least in Australia since, since 2000. And there were also energy efficiency markets and a whole range of other things as well. But going back to the renewable energy scenario, one thing that we often needed to look at was, do you think this is going to be able to compete with the other technologies to actually see its light of day? So, something that you could argue has been left behind a little bit is, say, solar thermal relative to solar photovoltaic, because back in the day, they were all sort of in the $2,300 a megawatt hour range, but solar was on this trajectory. You could see it where solar was back then, $350 a megawatt hour. Now it’s, say, 35. It’s come down by a factor of ten over two decades. So, you could see that, you could see that progression. Someone would come and pitch to you a solar thermal. And here’s the pilot plant. Once we get the pilot plant up, then there’s this project and this project. And if we get to scale, when we get to scale, that will actually bring the cost down. And there’s two things that get worrying about that. One is, well, how much capital we talked about capital intensity, how much capital do you have to deploy to get to that cost down, and is that an eye watering amount of money? And typically, maybe several multiples of the fund you’ve actually got to deploy. And then, secondly, even if they achieve all of that. Is it actually going to be cheaper than solar because its photovoltaic. And as it turns out, it hasn’t. So, what you see globally being deployed is solar photovoltaic technology that everywhere. But when was the last time you heard about a solar thermal technology that’s they’re fewer and far between.
CB: Yes, there is part of a challenge that’s almost the soothsaying part of all of this, isn’t it? It’s to be able to see the trend and pick the right horse. I do remember the solar thermal efforts from my time at CSIRO. I was I was a long way from them organizationally, but I do remember them. And it’s interesting that from your perspective, you were sitting there and looking at it. If I could simplify it to a two-horse race for Solar. And you’ve got to try and anticipate where the puck is going to be in 5, 10, 15 years. And looking through that capital intensity lens, the position you found yourself with your venture funding in cleantech comes back again, where now you have to solve the simultaneous equations. You’ve got carbon to focus on, which will come to but if you’re investing in that space, you’ve got those simultaneous equations around cost and policy and markets and all the rest of it. And I’ll bet all those years ago you thought partial differential equations were designed to solve heat transfer problems, but it turns out it’s just a venture capital problem.
JT: It’s amazing what you can throw a PD out.
CB: It is right for all the mathematicians listening. From your VC days, though you did take an interesting turn back into the energy sector quite deeply for a while before coming out to your current carbon interests. How did that come about and why did you decide to head back to carbon?
JT: Head back to energy or
CB: Yeah, head back to energy. The venture fund may have run its time, but you would have had many choices in front of you.
JT: Yeah, most of my career has been in energy, probably well, since university. Well, even during university I was working in the energy industry, whether that’s sort of power generation, power trading, or oil and gas upstream. And in a sense, DA venture capital was a little bit of a sojourn of four years to not be in energy. And that came about because like many engineers, I sort of got to the point where I thought I want to know more about all of the other things that are driving economies and other things in the world. So, a lot of people do MBAs. After uni, I ended up doing a Master of Applied Finance because I really wanted to dive deep into, as my grandmother said, honey makes the world go round and understand how all those mechanisms work. So, I dive really deep into the world of finance and as one of the subjects I did was venture capital, I was just absolutely fascinated, and it opened up a whole new world. And at the same time, I was in conversation with this fund that was emerging. That I sort of had my eye on as a potential future employer, which ended up coming to pass. But obviously once that had run its course, then I did go back into the energy industry. And I think that’s kind of what’s shaped my career since then is that I’ve been exposed, like you and others, to, to be corporate. So, I know the big corporate world work for relatively large and some small energy companies, but venture capital opens you up to a whole new world of startups and entrepreneurship and innovation and nimble decision making and agility, which I absolutely loved. I really enjoyed that style of work and style of industry. So, I did go back into the energy industry, but on my way through I sort of picked up, let’s just call it a side gig, which is a side interest in what was back then a startup called Corporate Carbon, which is now just in the last twelve months, become my full-time employer. So, I’ve been a director and shareholder on the way through. Really just having 2 feet, a foot in each campus, just say is just still working in the in the big corporate environment, but having an interest in everything that was happening in the carbon space. And I’ve, I’ve always been interested in in carbon, even through my energy career, sort of going back from the mid 90s onwards when Kyoto was ratified, when the Kyoto Protocol first happened, and the first renewable energy certificate started getting trading in Australia. I was involved in that in the first wind farm offtake agreements and the first carbon credits that were traded in Australia. I was sort of in and around that and I’ve been fascinated by carbon. Just that sort of mix of a global problem, the science of the global problem. But then all of the economics and the new tech.
CB: What I would define as the big pool of tech transfer, where you’re trying to get technologies off the bench, get them scaling, get them solving problems, getting people rewarding you for solving those problems by paying you money.
JT: And that’s where actually having a foot from a career in both camps has really helped. Because what having that big company expertise and experience gives you is when you say that the customers that are going to pay for these things, they’re invariably very big companies. So, the companies that I’m talking to, our customers end up being in quite big corporates. And I noticed this back in the VC days, that there were some really good teams, knew how to engage with their customers, knew how to engage with their finances. Then there are others that didn’t really have much of an idea. They were just so wedded into this. I’ve got just this best thing and people just have to get it that this is just the most incredible thing. And that kind of vision doesn’t really help you communicate the broader how we’re going to actually make this deployable. I really enjoying this space of where the startup world meets the big company world because that’s where the magic happens. That’s where you get your customers, that’s what charges your growth. That’s what gets you to that success for each innovating company.
CB: It’s a really interesting comment as it happens today, I was chatting, chatting with a former colleague of mine and we were talking about that tech transfer interface and we talked about the researchers and the scientists and their good deeds and efforts. And then we talked about what I’ll politely they call the governance or management around those scientists. And what we stumbled upon in that conversation was the lack of industrialists. And in my mind, what you’ve just done there, Julian, is you’ve highlighted the need for that industrial experience to be able to convert the idea into something that is industrially relevant and having that big corporate experience. They speak a different language to SMAs, they speak a different language to startups because most I’m going to gross generalization alert here, Julian. But larger corporates are turning the handle by and large on operational efficiency, asset utilization, servicing the needs of their consumers. They are machine set up for that. So, you come in with this great idea and it disrupts the smooth flowing of the machinery. You have to understand how that works and how to navigate that conversation and know that that is not a sale inside 18 days. That’s going to be at best to sail inside 18 months.
JT: That’s absolutely right. That’s exactly how we’re seeing it working. And the exciting thing about carbon and clean technologies today is that a lot of the changes being led by business and communities I think a long time ago, there was a lot, lot of discussion about, oh, the government needs to do this, and the government needs to do that, and we just need this policy or that policy. And look, government are supporting governments around the world, helping fund a lot of this innovation. So, we shouldn’t ignore that. But what’s driving the market demand, the market pool, are these big companies and not just in clean tech, but across the board I think some of the successful companies are able to have that dialogue and understand how big companies work and understand how to tap into that ecosystem.
CB: Yeah, I think it’s really interesting how you’ve identified that experience from your corporate days as being a really strong enabler for getting the innovations and the technologies that you’re now working on and getting them into the hands of B-to-B customers. I think we’re both B-to-B guys, Julian, I don’t think there’s a consumer marketing bone in either of our bodies. No shake of the head. But yeah, it’s really interesting. Just through happenstance, talking about it earlier in the day, two data points is one more than we normally use. So that’s terrific.
JT: Consultants called it triangulation. You can get two data points of it and…
CB: And use the origin as the third, as you do. So, you mentioned a little earlier, you did mention you’re getting more into carbon and you mentioned in passing the direct air capture part of carbon and I’d be really interested to unpick that a little bit. You and I have chatted previously and at some length we’ve had our chats over these carbon technologies, me coming from a more bio perspective and there’s this terrific photosynthesis process that does a great job at capturing carbon. What’s the role of direct air capture? I’m really interested not only from markets perspective and sort of the overarching logic that you’ve explained to me, as much as you want to share it with the listeners, but also the tech transfer challenges you’re seeing inside this emerging direct air capture segment.
JT: Such a big field Cameron. Now, where to start? Okay.
CB: Yeah, all good.
JT: That’s funny. When I first started getting into direct air capture, someone told me something must have gone really wrong with climate change policy for us to be looking at such expensive technology. And I said, well, yeah, we’ve kind of used up most of our carbon budget. And the thing is, yes, something has gone wrong with climate policy because what we didn’t do is look at the early signals as a world and say, right, okay, we need to start limiting and again solving another parcel differentiated equation. I think most people realize you can’t get to 2049 and then say, oh, we need to be net zero next year. How do we do that? We obviously need to be starting now. And it’s not just direct air capture, but let’s just call it carbon removal more broadly, because we’ve used so much of our carbon budget, when you leave anything to the last minute, it requires a lot more of a step change in your emission trajectory. And so, what that means is that by definition, you’re using more and more expensive technologies to reach the outcome you’re trying to reach. So, if you think about the objective of net zero by 2050, effectively we can’t reduce fast enough our existing emissions to achieve that. The only way to achieve that is actually starting to remove emissions out of the atmosphere, removing CO2 out of the atmosphere. And the broad numbers that we need to be removing about ten gigatons, 10 billion tons of CO2 out of the atmosphere by 2050. So, yes, per annum
CB: Just to clarify.
JT: So, there’s a whole range of reasons you can do it, planting trees, growing trees, or not cutting down the trees that are currently there. Yeah, absolutely, we need to be doing that. The problem is the just the sheer amount of land to plant, the number of trees that we need to make 20 gigatons, ten gigatons is huge. And at the moment, we’re still cutting down trees. So, we need to kind of stop the cutting down and actually start replanting. So what direct air capture does is effectively an industrialization of the mechanism of literally pulling CO2 of the atmosphere and then storing it permanently in a whole range of different mechanisms that we can get into. So, this is very early stage technology development. It’s kind of like solar. About 20 years ago. In a way, it feels to me a lot like solar 20 years ago.
CB: That’s how it feels.
JT: Yeah. And I remember people I remember 20 years ago, people were saying of solar, why would we bother with this? We got all the coal we need. We’ve got all the power we need. It’s ten times expensive as normal power. Why would you bother? The same things are being said about carbon. It’s very expensive, which it is. Why would we bother and just plant ease? Well, we’ve talked about that at the time. Yeah. So, technology has a way of way from, and this is the whole thing about tech transfer, right? So, I had the privilege, when I started looking at direct air capture, of doing and I call it a privilege because I hadn’t done something like this for 15 years back in the ten years, the clean tech days of looking around the globe and seeing, what are people doing in direct air capture? And I wrote a 30-page report on every innovation that I could find that people were looking at globally. And there was this really exciting this is pure tech transfer of lab to bench, then bench to pilot, pilot to demo, demo to plant, plant to bigger plant, and so on. And this is what we’re living through at the moment. And we talk about markets. So, ten gigatons, that’s 10 billion tons. Even if you take what many would say is a modest carbon price, by 2050 of $100 US a ton, there’s a trillion dollar market, US. Market. So, there’s the market right now. Yeah. In in an ideal world, we wouldn’t need to do this because we would have started abating to when? Two decades ago. But that that’s gone. So now we need to find these ways. This is what I find really exciting about tech transfer. It’s just seeing, okay, what are the mechanisms? What’s pulling this through? What are all of the different ideas from amine solvents to working with metal organic frameworks to alkaline oxides, to sort of do you do high temperature Aqueous, or do you do modulative scale up or do you scale out? So, it’s a whole range of different ideas of doing this. And then, of course, going back to the top of the conversation, you’ve got our good old friend, the second law of thermodynamics, which effectively means there’s no such thing as a free lunch lurking,
CB Lurking in the background.
JT: You don’t get anything for free. So, if you want to do something crazy like try to pick out a CO2 molecule from when it’s as dilute as 0.4% 400 well…
CB: It’s actually 420,000,000, I think we’re at now.
JT: Yeah, something like that. But who’s counting? Well, everyone’s counting. When you’re trying to do something like that, you need energy, whether it’s fans or heating or cooling or any process. Needs power. And obviously now the challenge, or maybe it’s not obvious, the challenge is how do you get that energy? Energy is just one of the costs of direct air capture the capital. Then we talk about capital intensity. Again, all of those are ingredients in what’s the cost per ton of capturing one ton of CO2, we suppose from our point of view, we’re looking at it from the perspective of what’s the business model and let the business model guide what we then need to do. We’re choosing, and others are choosing to use the business model of utility scale solar photovoltaic that we talked about earlier. So, to get the solar project up, you need the land, obviously. You need to choose technology. You need your regulatory approval, you need an offtake contract, typically to get it to get it financed. And then you need your debt and equity layers of finance to make the whole to make any given project work and for direct air capture to get to scale. And to get down to the cost. So direct air capture at the moment costs anywhere between sort of 500 to above $1,000 a ton. So call it 500 to 500. I’m deliberately using a big range so in in US dollars. And the objective of the whole industry, the whole industry is trying to get to $100 a ton for captured and stored CO2 because that’s where we see that the marginal cost of carbon or the social cost of carbon, what price would the globe put on Trying to abate is around sort of $100 done. Just say in 2030
CB: The number the industry has come up with based on-
CB: Yeah, and I saw an article in the FinRev today sort of saying they could see the market us $100 a ton within a few years. So that’s kind of where it’s heading. So, where those two curves intersect is the cost of direct data capture coming down to 100 and the demand for its product coming up towards $100. Then you’ve got an intersection that gives you basically global deployment. So that’s kind of economic framework and I typically try to start with the economics because there’s no point working on something if it’s not going to be pulled through by market, as we talked about with renewable energy a little bit earlier. So. Given that sort of economic framework, then the question is how do you get down to $100 ton? And there’s kind of two approaches to doing it. One is, I suppose the traditional one in the, in the refinery world and maybe the Agritech world, is you just you just build a big one. And there is one, there is a company going for that big scale going straight from a three ton a day pilot to pretty much a half, half a million or a million tons a year of captured carbon. And that’s actually been funded by the USDOE. And I think they’re doing the front-end engineering design as we speak. So that’s one approach. So that’s the scale up the economy is a scale approach. The other approach is to go small and modular. And this is the way the solar PV industry got to cost reductions, or the way the automotive sector drives down the cost to get sort of repeatable lots of volume and drive down the cost that way. So that’s the other approach to cost reduction. And I hadn’t come across this phraseology before. It might be us or something, but that’s called scaling out rather than scaling up. So that was new to me, but I found the nomenclature quite interesting. You scale up to get economies of scale to get bigger or you scale out by making lots of modules of the same thing and getting the cost of manufacture down. So then back to your original question of what’s this ecosystem? Then you go around that model of the business to get a project up, thinking that, well, first we’ve got to get this first project, and then we can scale up and get so, for example, our first project will be 1000 tons a year, then the next one will be 5000 and then 20,000 and so on to a million tons. Your ex-employer CSIRO wrote a roadmap for CO2 utilization last year or the year before and talked about the role for offtake contracts in underpinning carbon removal. And there’s nothing like a customer paying you for the carbon removal that you’re achieving, even if you’re a small scale to help encourage that technology deployment. And we’re seeing that there’s companies like Microsoft, Stripe, Shopify and many others are actually getting into this space of helping to underwrite early technology to pull through this new innovation.
CB: They’re not actually buying the CO2 that you recover, they’re actually buying offsets and requesting for you to pull the CO2 out and make sure it doesn’t get away anywhere.
JT: That’s exactly right. They’re not buying the physical molecule; they’re buying the fact that it is permanently removed from the atmosphere. It’s an important distinction.
CB: Yeah, it’s an important distinction. So, they don’t actually want to see that CO2 or hold that CO2, they just want you to guarantee that CO2 isnt out lurking in the atmosphere as one of the 420 Ppm and rising.
JT: That’s it. So, you’ve got the carbon removal offtake emerging industry for want a better word, and only a few weeks ago there’s a new fund called Frontier Fund that was launched us $925,000,000 of purchasing in that space.
CB: You’ve been looking around the world, you’re assembling technologies. How are you finding those engagements around the licensing of the elements? How are you finding those engagements with people who have got things that they are trying to sell you or technologies they are trying to have you take on board?
JT: I think what I’ve seen is that there’s a healthy amount of competition between all of the this is like a global competition in that everyone’s trying to get to this US $100 a ton or below objective. But at the same time, the market is so huge that success doesn’t come, doesn’t need to come from having your competitors not succeed. So in a sense, we all want each other to succeed because it’s the whole ecosystem. Maybe no one really knows which technology is going to be the one that really stands out. Or maybe there’s a whole combination of different technologies that gets up and the market is so big, like we said, the US trillion dollar a year, that there’s probably an opportunity for a range of a whole different types of technologies in different applications or different locations. It all comes down to where’s the availability of storage, where’s the availability of energy supply, and where do those two things come together and what’s the best technology under a whole range of different circumstances?
CB: So, you’ve raised some very interesting points there, Julian, and the one I particularly want to pick up on is that notion of integration and the multiplicity of almost like a set of Lego bricks. You’ll combine different Lego bricks to make slightly different solutions to whatever geography, energy mix you’re dealing with in a particular location. But one of the things we’ve heard a few times through the podcast is that as much as it’s about the bit of IP or I guess the bit of engineering you could call it, in our conversation, there’s a lot to be said for the importance of the integration and the importance of the scale up, particularly as you move from bench to pilot and pilot to demo. I think the way you described it earlier, your experiences around the integration. So, I suspect the number of bits of IP that are out there, the number of patents, the number of engineering drawings are probably a bit overwhelming in terms of the number of things that are out there. It’s the integration piece I’m particularly curious about and how you see that playing out, perhaps broadly rather than specifically.
JT: This is a bit that I’m really interested in, Cameron, because I think, again, going back to the VC model, if you might have the best technology for separating CO2 molecules from all of the other nitrogen and oxygen and all the other stuff. But if you haven’t thought through the complete integration, then it’s going to be very hard, hard to get the projects up, and then it’s going to be hard to kind of get the scale. So, we’ve spent a lot of time thinking about it’s not just about the capture, it’s about what’s the energy supply that powers the capture and what’s the storage solution that does that back end. And how do you, like you say, integrate across that whole layer energy supply, capture, permanent storage. Because a project is there’s no point just capturing CO2 because you end up just benching it if not doing anything with it. When you think about it, this is what when you’ve got a whole huge wave of new global capital coming into helping to solve climate change, which is what we’re seeing since around COP 26 or the IPC Six Assessment Report last year, there’s a bit of a groundswell. And so, what that represents is not just more cash, but actually more people looking to deploy capital into these different funds. And also, don’t forget the role of government. They’re also helping to support innovation. So, then you’ve got a whole range of that scenario where an entrepreneur can choose between there’s this venture fund offering me this, but there’s this venture fund offering me that and they can connect me with this customer and that customer, or they can then help me with this technology innovation because they’ve done it before in this other industry. That’s what global capital does. It’s not just the money, it’s the expertise that comes with it. And
CB: What an interesting point to sort of land on because where we started the journey at the end of the noughties with a constrained capital market and a world where clean tech was seen as a very expensive indulgence and novelty in notionally the space of ten to 15 years. We now have a market, awash with capital, awash with customers, with governments really driving towards trying to make things happen. And those entrepreneurs that have maybe survived that period or entering now have a veritable smorgasbord of choice in contrast to the really hard yards they might have had to go through in those early days that you were a party to.
JT: It’s been quite the voyage. Almost a roller. We talk about it as the carbon roller coaster. You have different policy settings coming and going. You’ve got these waves of capital coming and going, this wave of community interest. But right now, it does feel that we’ve reached a bit of an inflection point. I don’t have to eat these words, but it’s hard to see this moment going back from here, I think.
CB: Not only do I hope that Julian, but I suspect a lot of the listeners would share that sentiment. Mate. Julian, thank you very much for joining us on the podcast today. It’s been an absolute pleasure chatting with you and reliving the intersection of chemical engineering with modern technology transfer and venture capital. So, thank you again for your time and I look forward to chatting with you again soon. See you, mate.
JT: Thanks. Cameron been heaps of fun.
CB: That was Julian Turecek, who joined us from Gippsland and shared with us not only his experiences from the energy and the venture capital sector, but also shared with us, surprisingly, how chemical engineering has a lot to say in the way we approach innovation and technology transfer. We’ll look forward to seeing you all next time on our next Tech Transfer Talk podcast.