The Exchanges

Q you can say a bit, really, about what's been going on from a federal policy perspective, and which pieces of this you're tracking, and whether there have been any elements of what's happening, particularly with respect to tariffs and some of the things that, um, that, you know, kind of go into the tax credits. Anything that has been a particularly strong headwind or tailwind that you've had to overcome?

A Um, you know, now that it's kind of Settled and behind us, I would say for us, it was majority noise, but in the moment, it created a lot of stress, and so first, like on the tariffs, you know, there was a lot of tariffs, and then there was no tariffs, and then there were a lot of tariffs again, and then ultimately we saw that we actually can get our equipment through an exemption because we were, it was semiconductor equipment, so that was great. Um, on the tax credits, um, There's a couple different tax credits that impact us. The key one for us is 45 X. That's the advanced clean manufacturing tax credit. Um, that stayed wholly intact and arguably is even stronger now because initially it was not bipartisan support and it was basically reconfirmed and, you know, retained in OB three. Um, and so 45 X, um, is still here. Um, and then the solar investment tax credit, that was the one that, You know, was shortened. Um, but all of our customers, uh, utility-scale customers were able to successfully safe harbor, like, gigawatts worth of project pipeline, and so the investment tax credit for all of our customers is still intact through mid- twenty-thirty. Um, and now there's lots of talk about extending the ITC, and depending on who you ask and on what day, people think that will be extended, so, so who knows? Either way, I think we are pretty Um, I don't know, future proof in terms…

AI assessment note: “The key one for us is 45 X. That's the advanced clean manufacturing”

Q So can you say a bit about where that stands and what you know about degradation of tandem PV's panels?

A Yeah. So, you know, so back in, you know, 2009 through, you know, early 20 tens, when scientists first kind of got perovskites to convert to sunlight, um, I think they degraded within minutes. And you've got some folks that saw that and were like, perovskites will never work. And others that were like, this is amazing. This is going to be the future, and it will be incredible when scientists figure this out, right? And so we've been incredibly focused on durability since day one. Um, for the last few years, we've been making 10,000 panels a year, testing those in our indoor accelerated labs and also external testing, um, And, you know, we're there on our kind of R&D, uh, format where we're able to, you know, we had a module outdoors for 18 months with no perceptible degradation, and that was several technology generations ago, and our durability has now improved 10 X since then. Um, and that's really why, you know, the foundation of the Series A and building this demonstration factory was because we've kind of gotten where we needed to Go with R&D in terms of efficiency and durability, and the next step now is to make it bigger and do outdoor, you know, get that outdoor field trials on that, and then we get to commercial scale. So, you know, there's, though, there's only so much you can say, trust me, and the accelerated testing points to that. You got to get the panels outside…

AI assessment note: “we had a module outdoors for 18 months with no perceptible degradation”

Q into our, your and my favorite subject in a second here, which is how you have financed this work. Um, but before we get there, one other question, which is, did you all entertain, was it even possible to consider something where you would do contract manufacturing effectively for the sort of full quarter size panel, or was it always really clear that you needed to manufacture on your own?

A Well, we're doing a little bit of a hybrid. So we're doing the thin film on our own in-house, right? So if you look at our factory, it's all, you know, off the shelf thin film equipment. And contract manufacturing, like, first of all, at these volumes, it's not terribly interesting for a contract manufacturer. And also, you know, we do quite literally have a secret sauce that is our perovskite ink. But more than that, it's, there's so much IP and trade secrets in how we turn that perovskite ink into Into a solar panel. There's so many steps. There's like, 15 to 18 steps that are very, very specific, um, in terms of thickness and temperature and, and whatnot. And so by the time you teach a contract manufacturer all of that, you've now just kind of shared that IP. So we're doing the thin film in-house, and then we're driving the panels down the street a few miles, uh, to a contract manufacturer for the final kind of stringing and assembly with the silicon bottom cell.

AI assessment note: “Well, we're doing a little bit of a hybrid.”

Q Okay, so you secured funding for, from your Series A, you've got your first manufacturing facility. How did it go, building this manufacturing facility, and what kinds of lessons learned do you have around what it takes to build this, even once you've secured the financing?

A Yeah, I think, gosh, um, a really, really experienced and level-headed team, I'd say, is the first one, right? Because there's going to be so many ups and downs. Um, you know, our CEO Has, you know, decades of experience here. This is his fifth scale-up startup. When he left Logitech, he was, you know, he, he was running a two billion dollar global manufacturing business, right, and had launched a hundred or 200 products, and, um, and then our head of manufacturing has decades of solar manufacturing experience in thin film and, and silicon, um, and then also our co-founders, you know, Chris and Colin, decades of solar manufacturing experience, and so that's, Super important. Um, our head of ops also had, um, you know, turned up many, you know, many factories, and the team just worked really well together. There's just a lot of expertise, a lot of trust, um, and then just moving really quickly. I mean, even just, um, you know, how we even got this factory was, was kind of a, uh, an anecdote there where, you You know, Silicon Valley startups, or any startups, have to move quickly because we just, we just have to. Um, we heard about this facility, which is a former EnerVenue facility, and we heard that it came online, and we knew it would be perfect for us, and we showed up, like, that afternoon, made an offer before it even went on the market, right? So I think having, you know, …

AI assessment note: “a really, really experienced and level-headed team, I'd say, is the first one”

Q All right, so let's say a bit more about your first demonstration, if you could call it that, where you're working with a snowmaking expert in Wisconsin. How did you find this person, and what ultimately did you do in the context of that demonstration?

A Yeah, I'll tell you. So I knew no one in the ski industry before we started Supercool. I knew a lot of skiers, including myself. I love to ski, but I'm kind of bad at it, and so I started by What anyone would do, emailing people, and that got me absolutely nowhere, and so no one was writing back to my emails, and so then I explored other ways to, to reach people, and one of those was Facebook, so Brandon and I, my boy Brandon, we met on Facebook, and there's a, there's a really active community of snowmakers on Facebook, and so I called Facebook, messaged him, and bless his heart, he wrote me back, and the two of us really just vibed on How amazing it is to make snow, and new technology around snowmaking is obviously needed today, and he's the one who did our trial in Wisconsin. He did it in his backyard, and we sent him a, you can buy backyard snowmaking guns to, you know, if you want to winter wonderland, you can have that if you buy some backyard snowmaking guns online and hook them up to your water hose, and so that's what we got him, was a backyard snowmaking gun that are less pressure than the ones on ski resorts, but still Do the same function, and he did a test where at first he was running the gun with just air and water, and that was making rain, and then he added our product, which would then allow for, for snow to be made under those same conditions, and, um, he too…

AI assessment note: “we met on Facebook... he did a test where at first he was running the gun”

Q This is great. Okay, so we mentioned at the top of the show that ski resorts and making snow for skiing is a solid, high-margin beachhead market for you all, but you have your sights on something much bigger, so what else do you think is possible with this technology?

A The amazing thing about cloud seeding is that it can be applied anywhere that needs water, so there are lots of different markets that we can go into. The main A thing that we have to think about for us, though, is to be focused. So that, that's, that's the most important part, and to be able to align the development of the technology with the markets that we're going after. And so, yes, of course, ski resorts is a great beachhead market. We're also targeting water districts and hydropower, because that makes a lot of sense. That's where a lot of cloud seeding is done in, in the U.S. today, that is silver iodide based. So we would, there's already existing customers in that space. And then our expansion is truly into ag. So our biological can target warmer clouds, which are, are where the ag fields are, so that we can, we can access ag versus any silver iodide-based cloud seeding. So ag is, um, our, our sort of big expansion market that we're going after, and there's lots of demand. As you would imagine, like, you can connect the dots, right? Growers want rain. We can deliver rain. And so it's more about us finding What that wedge is in ag. I used to work in ag, and so I'm very familiar with growers and, and them as customers, and what's important for us is to be able to find a partner and a wedge for us to be able to deploy an ag where it makes a lot of sense, and we're doing,…

AI assessment note: “We're also targeting water districts and hydropower... And then our expansion is truly into ag.”

Q Okay, well, so let's move into talking about environmental impacts. This is a good segue. So what is different about proteins compared to silver iodide and how they ultimately survive or not in the environment?

A Yeah, proteins are great because they, so, you know, one distinction, too, is that our formulation is protein only. It doesn't contain any bacteria or anything or fungal cells in it, and so proteins are made by microbes, and they, in order to persist in the environment, the proteins need the microbes around to be able to, like, continue making them, but because our formulation is protein only, it gets delivered into clouds, and once it falls, there's precipitation, it decomposes in the soil because other microbes eat it, or there's Chemical processes that occur in the, in the soil that degrade the proteins. Whereas silver iodide is a metal, and it does not degrade in the environment. So it, ah, it sticks around, and it's bad for humans, for microbes, and for fish. And it's not something that will, that will go away once you release it down into the environment.

AI assessment note: “Whereas silver iodide is a metal, and it does not degrade in the environment.”

Q are relatively high margins. So can you say a bit about your journey to get there? Maybe talk a little bit about what happens now, like, what goes on in a Ski gun at a ski resort. Like, are there other additives that go in that try to make this snow, and what is the specific thing that you're changing about this process, and how's this all gonna play out?

A Yeah, so there's one main product that exists that's called Snowmax, and that product has existed since the eighties, and it, our, the main differentiator between our product and Snowmax is that our product contains no bacterial cells in it, so Snowmax is the mixture of bacterial cells that are dead, and also these isonucleating proteins, and our product is only pure protein, and that allows us to have a better formulation than Snowmax, which is something that the ski resort operators really care about. We did a fair amount of Customer interviews and discovery as we were developing this product because we wanted to make something that people would buy, and so check formulation was one of those, and so we're able to deliver on a better formulation, and then the other piece is cost, so the ski resort operators were very much miffed about how expensive Snowmax is, and because of our application rate, we can sell it for 20% cheaper than Snowmax to drive adoption. So we're, you know, essentially we're eating their lunch, and we're able to make this product that's protein only, and that is also more compatible with the environment where you're not putting all other dead cells, you're not putting cells out there, and it's just this protein that when it gets sprayed onto the snow, it freezes and makes ice, and then it gets decomposed. It goes away very quickly within minutes or days in…

AI assessment note: “the main differentiator between our product and Snowmax is that our product contains no bacterial cells”

Q one question about the formulation. So you said it was really important to them that you had a formulation that was probably as good or better as what Snowmax offered. So what does that mean? Like, were they looking for snow fluffiness, or how easy it is to disperse, or the temperature at which it can disperse? What are the sort of dimensions on which you're improving over existing products?

A They were looking for two main things. One is the no smell. Snowmax is a little stinky. Yeah, we got it in the lab. We have it in the lab. In the lab, we have it in small volumes, and at some ski resorts, they have a lot of it, liters upon liters upon liters of it, and it gets, it gets stinky, and I have smelled it in the pump houses at some of these ski resorts that I've been at. So smell was one, that our product has no smell, and the other one was temperature storage. So Snowmaxing needs to be stored cold, and that's a pain in the butt for them, because they don't want to have to keep freezers around and store it cold, and also Snowmax doesn't last very much. You usually have to buy batches for that season, and it doesn't last season to season, whereas our protein, it's a dried protein formulation, and it can, it's stable at room temperature, and it can last season to season.

AI assessment note: “They were looking for two main things. One is the no smell.”

Q That makes sense. And so what's the regulatory environment like for this? Maybe we can start with the snowpack side of things. Like, are there already regulations that govern the use of, say, proteins in snowpack formation? Are there certain permits that you need in order to operate?

A Yeah, so our main regulatory body is through the EPA, and because of, there's two reasons why we decided to not engineer the proteins as much as Michelle and I are engineers, and we would have loved to. Regulatory and speed are two of the main reasons we decided to just go with natural proteins and not do any type of engineering. So because our proteins are not engineered, we can go through EPA, TSCA regulation, and that is relatively quick over several months. Approval process. If we were to engineer them, and they would be GMOs, it's a different conversation entirely. Plus, it takes a long, long time to engineer protein. So for us, the regulatory landscape is quite simple, because it is just a natural protein that we are making, and we're, we're going through regulatory process right now in New Zealand, and my understanding is very, very straightforward there. And then in terms of the weather modification, that's the other piece of it, is that There are nine states in the US that already have weather modification infrastructure, and so we are able to essentially plug in, plug it, plug into that, and the other piece is the FAA regulations as well. So we have, we will be using drones for our cloud seeding, and there are some waivers that we will need through the FAA, but those we can get, and we've got some consultants in that space that are helping us navigate The FAA. We don'…

AI assessment note: “our main regulatory body is through the EPA... we can go through EPA, TSCA regulation”

Q Can you explain to us really quickly what force majeure is, just like in a really basic sense?

A So, force majeure is a clause in contract law that lets a party pause, or in some cases, completely get out of contractual obligations in the face of extraordinary events, so-called acts of God. Um, invoking force majeure in sovereign investment agreements would be without modern precedent. So, that's why it's a really big deal, even though for some reason, not that many people are talking about it. Uh, I do want to note that over the decades, Gulf sovereign wealth funds have seen Massive oil price collapses, various regional conflicts, the 2008 financial crisis, COVID, and none of those things prompted anyone to talk about force majeure reviews on any of their investment commitments. So the fact that they're seemingly seriously exploring this and then also letting the world know that they're exploring this is extremely meaningful. And so we're not talking about Um, our, like, factory got bombed, so we can't make widgets anymore. We're talking about, uh, we committed all this capital, and we actually think that we may not be able to make any of those commitments, at least during the time that this is, uh, this conflict is happening. Um, so that is a pretty huge deal, because, um, Gulf capital is huge, right? Like, we talked about before how capital has Become increasingly global. Well, the Gulf economies have been, um, amongst the most forward thinking in that kind of global di…

AI assessment note: “force majeure is a clause in contract law that lets a party pause”

Q a lot of growth stage and equity funding. We've also talked about how Exits are not exactly a thing to be had highly lucratively within the climate sector right now. So this is all putting pressure on these same GPs, right? And they're thinking about this in that broader context. Is there anything else you can think of that we should be thinking about and tracking that's affecting this picture?

A I mean, I think the biggest thing, and everybody knows this too, everybody's felt this, down to, like, you know, individual consumers, is just interest rates. But it affects climate tech and energy transition in a unique way because of our capital intensity. Um, so it makes us a little bit even more exposed to changes in the interest rate regime than other sectors. Um, and I think it's important to keep in mind that interest rates are kind of also now a function of geopolitical risk, not just central bank policy or kind of like Uh, domestic economics. So a war in the Gulf, or some kind of escalation in Taiwan, or a European energy crisis caused by another war, um, all of those feed into the discount rate applied to a ten-year climate project. So back to your question about, um, what else is affecting things, I really do think it comes down to those rates. When the risk-free rate went from zero to five whole percent, Every long duration asset gets repriced, and climate tech is the ultimate, unfortunately, the ultimate long duration category. A company that needs 10 or even, um, you know, 20 years to reach meaningful revenue is worth a lot less in a five percent rate environment than a zero percent one. And it also just drives up capital, so I, I don't know if other folks are aware of this, And I can't tell you, like, as a fact, how many LPs and other funders are financing off of…

AI assessment note: “I think the biggest thing, and everybody knows this too... is just interest rates.”

Q how this is going to affect Europe in particular, because a lot of the, the US-based companies that I know of are really looking to Europe now as a place to deploy because they're being seen as more committed to sustainability, more committed to emissions reductions, Do you think Europe will be able to sustain its commitments if fossil fuels are meaningfully more expensive for an extended period of time?

A Yeah, I think it's really easy to say, well, we'll just go to Europe as if, you know, the world were not just like one place anymore. And I think the reality is, so, um, the emissions trading system in Europe has been probably the single most important Carbon pricing mechanism globally that's driven a lot of, um, transition investment. And I cannot talk, tell you how many companies I've heard say that exact thing would, well, you know, things may be bad for climate and energy transition in Trump's America, but, um, you know, we can just go sell across the Atlantic. And the reality is that Europe, just like we are here, um, Europe is dealing with its own political pressures. Um, Italy, Poland, and Germany have all seen, as we know, nationalists or populist parties challenge the ETS framework, in some cases directly as a response to the war in Iran. So that's like a very recent thing. Um, and, and, and to the closure of the strait. So what all that means for investors is that those carbon pricing assumptions in Europe, um, and, uh, which underpin a lot of Project finance for energy transition. Those are now suddenly also a lot less certain than they were two years ago. Um, you know, if you're building, I don't know if you're a crazy person, and you're unfortunately building a DAC company right now, or Green Steel, and your revenue model assumed a 100 euro, uh, per ton carbon pric…

AI assessment note: “Europe is dealing with its own political pressures... challenge the ETS framework”

Q plant in a wildly fast amount of time. You basically, you mentioned that you essentially went from funding the project to completing the project in 12 months. So can you say a bit about that journey and what it was like? Did you have a thousand people working around the clock to make this construction happen in that time frame, or what was your secret to making it all work?

A We were actually able to build and commission that facility in 13 months. That's from funding to actually being ready to store power. We're now just waiting on the grid interconnection to actually operate that facility. We were very focused. We wanted, um, of course, to get, you know, as a startup company, you know, what you want to do is move as quickly as you can to building that first commercial facility. So we knew the, you know, first commercial facility would be very important for us. Um, and, and so, uh, You know, we had already thought about and worked what the, you know, basically the pre-feed engineering, so designing the well, designing the power plant, designing the equipment. So once we got funding, we were able to, um, basically finalize that design, work with an EPC to make sure that, you know, all the details were worked out, and then, of course, we needed to order the longlead equipment. And so, some of the long lead equipment that we were kind of worried about were kind of transformers, not really Equipment special to what we were doing, but still equipment that, you know, had a long, a longer lead. One of the, one of the pieces of equipment that we had to re-engineer was actually the Pelton turbine. The Pelton turbines that are out there in the industry for pump storage hydropower are not rated to the same pressure as our Pelton turbine, so our Pelton turbine…

AI assessment note: “we had already thought about and worked what the, you know, basically the pre-feed engineering”

Q And then in terms of the duration of the energy storage that you're getting, can you essentially put a lid on this and wait almost as long as you want? Like, would this work for seasonal storage in the United States, or is there kind of like a decay time to how much you're able to use the storage when it's under pressure like that?

A Laura, that's a great question. So we're, we're targeting a low permeability rock So there, the permeability measure is millidarces, so we want 50 millidarces or less. Um, we can definitely store the water for a long time, as you said, for seasonal storage, if there's a market for that. Um, the, the lower the permeability is, the lower the kind of leak off is in the subsurface. So, um, We have seen some rock that lose, like, actually, you'll see the pressure start to increase because you're shut in, and what's happening is that water gets heated and starts to expand, um, but you, you, if you, say you, you're in a 40 to 50 millidarcy rock, you may have some leakage into the rock, uh, matrix, which means that you would have, um, a pump system at the surface monitoring the pressure, um, Where you could add water as that pump, as that pressure declines. So yes, we can literally store the water for weeks, if not months, um, you know, and we would just monitor the pressure depending on the formation permeability. We may have to have, uh, water added occasionally to keep the pressure up, but in some formations, like I said, we've seen, we have seen, um, Like, literally no leak off. Um, so, so yes, we can definitely do the, the longer, uh, storage, um, durations, um, with this technology.

AI assessment note: “we can definitely store the water for a long time, as you said, for seasonal storage”

Q Afterwards. Sounds good. And conversely, are there a couple of things that are sort of baseline unless you have this, don't bother applying? It sounds like maybe site selection is one of those things. Are there other sort of bright line things you're looking for?

A I think you have to have a good sense of their unit economic model. So you have to know, what are my revenues going to look like? How many credits do I want to sell into the market? What are my other revenue streams? And what are my key cost items? And how can I Then be sure, and, and your buyers as well be sure, that there is additionality from the carbon credit purchase. So, thinking through an economic model to, uh, understand what your returns are going to be and have those inputs sort of firmed up a little bit. You know, if you don't have a picture of what your sourcing is going to look like, you don't have a picture of what your land cost is going to look like, it's probably pretty hard to submit to our, our application, right? The carbon equivalent is the carbon accounting math. So you've got to have a view of what are your You know, how many credits are you going to be able to produce? Which, working backwards, requires you to have a sense of, you know, how much carbon are you going to sequester? Are there any process emissions in the, in the course of generating that credit that you're going to need to deduct? And what's your plan to get those, those verified? So it sort of comes down to numbers, I'd say, is the starting point. You know, what's your financial model look like? What's your carbon accounting model look like? And having those sketched out is essential. You…

AI assessment note: “I think you have to have a good sense of their unit economic model.”

Q Tell us, Maury, what are your other favorite deals that you've done, and how are they structured?

A Yeah, BTG is a really exciting one. You know, this is the world's largest carbon removal deal out there. Uh, they're, uh, planning to purchase I think more than eight million tons. You know, they're planning to plant a hundred million trees, and they're converting degraded cattle pasture in the Brazilian Cerrado, which is the second largest biome in Brazil after the Amazon. So they're planting trees in, in this place that's been deforested and, uh, with, with a mix of native species and eucalyptus plantations, and, and while they're doing that, they're restoring native ecosystems. Um, and so the eucalyptus is used as, as sustainable timber production on land that does not have good alternate uses. The native tree planting is sort of restoring those ecosystems. You know, they're, We're in a pay-go relationship with them where we'll buy the credits as they sell them to us, and they're, they've raised, you know, well over half of their billion dollar fund, and on the timber side, they're working with best-in-class FSE standards. So that gives us a lot of credibility in where they're going and that the quality of the project is at the top.

AI assessment note: “BTG is a really exciting one... We're in a pay-go relationship with them”

Q So what do you think the future holds for these potentially 500 plus CDR companies out there? Do you think they'll, they'll all be around, you know, sort of eventually, or do you think that we're going to see a winnowing of companies that are operating in this space?

A I sincerely hope they'll all be around, but I think history shows that there will, there will certainly be a winnowing. What we're focused on is ensuring that high quality car removal has funding today and has offtake today. And so we see about 250 applications per year, and mostly from, it is probably from 200 plus suppliers, and we're seriously considering over a hundred projects right now in our pipeline. Not all of those will make it through. I, I would guess fewer than half do, uh, but a lot of the other half we, we will, the half that will reject or more than half that will reject will provide feedback on, okay, this is what it takes for you to improve. This is what we need to see for you to come back. So for many companies, that will be enough guidance for them to work on some things, work on a pilot, uh, advance an LCA, make some key hires, help them shore up their application. For, for others, they won't have enough time to do that. And then, you know, we'll see, I think with any emerging, emerging marketplace that the suppliers will sort of regravitate to what are the tech pathways that, that are going to, going to work out. So I don't have a crystal ball of, uh, of the types of car removal that we buy today, you know, which of those will actually be still there in 2040, but, I couldn't tell you right now that which ones are not going to make it. And so our approach i…

AI assessment note: “I think history shows that there will, there will certainly be a winnowing.”

Q the sort of revenue side of the equation for a business. It makes it easier for you to do more innovative things. There's kind of more headroom. There's more need, frankly, too, for doing some things that might be a little bit outside the box. Is that something that you're seeing right now, or are you generally still sticking to kind of the most proven CDR technologies you can find?

A Yeah, I think our CDR The procurement strategy breaks down in sort of two general buckets. They're the pathways that we think can deliver scale by twenty-thirty, and in that case, I think it's more the example that you give, that you need to focus on the proven tech because scale can only be achieved so quickly, and, you know, a hockey stick can only be so, so steep. Uh, we're also focused on innovation in the CDR market and focused on advancing the broader CDR market so that it could be a vibrant part of net-zero economy and a vibrant part that, that other companies And maybe governments in the future can buy from. And, uh, it can definitely play a role in, you know, what is the next generation of direct air capture look like? What is the next generation of, uh, marine CDR look like? Those are pathways that aren't going to be so big on our 20 30 timescale, but really important in 2035 by 20 40. So there's certainly opportunity to play there. I guess the other thing that comes to mind here is our carbon free energy procurement. That is tailored to where we're going to have, uh, energy or have data centers around the world. You know, they're thinking, and that team sits right next to us, and they're thinking increasingly creatively on how you structure contracts so that you can match your scope to emissions in the markets where, where those emissions are happening. And we're cer…

AI assessment note: “our CDR The procurement strategy breaks down in sort of two general buckets.”

Q And so when you say no to a project, what are the most common reasons that you're saying no?

A The most common way we say no to a project is because it's too early. You know, they haven't yet thought through all the elements that are in the application, so we don't yet know, they may not have a site selected. So you don't know what the impacted communities are going to be. They may not have Fully identify what a life cycle analysis looks like for the project. Where are the system boundaries? And so where are they going to get their, their carbon, uh, the, the sort of source material, the inputs, and how are they going to sort of turn it into a carbon credit? Um, you know, companies can be at various stages. They don't have to have an LCA before they apply. They don't have to have sourcing contracts, but, uh, some of those pieces need to be filled in. So we have a good sense of where, where they're going to be.

AI assessment note: “The most common way we say no to a project is because it's too early.”

Q So you've got a really important proof point, a really important innovation coming out of Newport Beach, and now you're deciding what to do next. So talk a little bit about your decision to scale up from one ton to a hundred tons. Was that an easy decision or is that something that you had to really think about the sort of scope of the scaling you'd do?

A Physical sizing of the scale up was decided by the physical area inside that roll up garage. We hired a wonderful pilot engineer from Caltech. And I remember the first time I went into that garage after she joined, she had marked out on the floor where all the equipment was going to go. So there was very small areas to walk through. And so the, the equipment essentially filled that garage. There was kind of no more space and it turned out to be roughly a hundred tons. So as much as anything, I mean, there's obviously the sort of the headline of scaling up 100 times rather than 70 times or something like that. But as much as anything, it was decided by the physical land area that we had.

AI assessment note: “Physical sizing of the scale up was decided by the physical area inside that roll up garage.”

Q to build this. You have your location, your garage, as it were, stuffed to the gills, getting ready for all this equipment that you're going to bring in. Talk about how it went. Scaling from a one ton system to a hundred ton system. Did everything work as you expected as you were making that pretty big leap and scale up, or were there some challenges you had to confront?

A Yeah, I think it's fair to say there was some challenges with that leap up. That was our first end to end system. So we were doing more than just the electrodialysis step, which is what we were doing at, um, at Newport Beach. We were also doing the degassing where you physically stripped the CO two out. That Gave us some challenges. Uh, the technology that we were using at the time, membrane contactors, it was difficult to operate and the supply chain was challenging for us. So we actually went through two suppliers, which delayed everything there in setting up the barge and getting to the end-to-end system. So I can't remember how long it took, but it took several months for that first system to operate successfully end-to-end. We also had a design goal That we wanted the system to work in batch mode, by which I mean we could test each individual system, subsystem, sorry, or we could test the whole system. So that meant, you know, for example, we had intermediate tanks for the various intermediate states of things inside the system. So the, the design of the system was complicated. So that was quite a significant time of development, but ultimately really, really pleased with the progress the system worked. Worked fine at the end of the day.

AI assessment note: “Yeah, I think it's fair to say there was some challenges with that leap up.”

Q environment, and specifically on the marine environment. So can you say a bit about how you thought about that? Because obviously we know that there are some benefits from deacidifying the ocean, but also some big questions about what technologies like this might do to the marine environment. So how do you think about that, and how did that pop up in your permitting process for the Alta Sea project?

A Yeah, good question. Um, so ocean health is integral to, to what we do at Captura. It's, it's always been a fundamental thing. We, we hired an oceanographer very early on in our company's history to ensure that we were doing the best possible things with respect to ocean health. So our process adds nothing to the ocean. We do not put any new material into the ocean whatsoever. The only thing we do is take out The CO two. So quite correctly, there is a lot of regulation around what can you put into the ocean. California has some of the most, ah, tough wastewater standards in the world. They define things like what's the pH level, the alkalinity, the oxygen levels, the soluble solids within the outflow, within anything you put into the ocean. Our process is consistent with those standards. Which means that we fall within the existing permitting regimes. So then we also wanted to test that our ocean water, as it comes out of the back of the plant, does not have any negative impact. So we work with local aquaculture companies. We look at marine life. We grow marine life in our outflow at various concentrations to confirm that we are having no detrimental effect. We model how our Outflow plume of water rapidly disseminates into the wider ocean and validate that within a very small distance from the outflow, the ocean water is all returned to its natural state because of mixing. So w…

AI assessment note: “Our process is consistent with those standards. Which means that we fall within the existing permitting regimes.”

Q add complexity, and it's going to add time. So did you have, were you grappling with a lot of those tensions? Like, were those hard decisions around whether you sort of move as quickly as possible to something that looks as close to a commercial system, or were you, was it always obvious, I guess, how you really scope the things that you're doing as you're getting through these demonstrations?

A That's a, that's a great question. The way that we approached it was start at the end. And, and what I mean by that was we had a techno-economic analysis of what we wanted a full-scale system to look like in terms of cost. But also critically, when you do a techno-economic analysis, you need to know what the performance of your various subsystems is going to be. So I'll give you an example. As water moves through the system, the amount of CO₂ you extract Is a critical performance parameter. If it's 10%, you're moving a lot of water for very little CO₂. If it's 95%, your economics are much better. And so the pilot was designed to demonstrate the KPIs of each individual piece of equipment. That goes back to the philosophy of, of wherever you can test in the small.

AI assessment note: “The way that we approached it was start at the end.”

Q So can you say a bit more then about the structure of the project in Brazil? So you're taking in waste as input. Are you building the plant entirely on your own, or do you have a partnership for the construction of that plant? And then say a bit about your offtake agreements and who's buying the metals you're producing.

A Yeah. We are doing by ourselves. So the, the, uh, the plant in Brazil is a wholly owned subsidiary of Boston Metal. We, we built by ourselves. Uh, in a, in a record time. So we, so it's going to be one year to get the first module in operation, and another nine to 10 months to get full capacity running. Uh, so very, very successful, uh, plan to, to, to build, uh, the capacity that, that we have, we will have there pretty soon. And, uh, uh, so now, In order to answer the, the second part of your question on, on the offtakes, ah, if we wanted, we would have a hundred percent of the production signed in offtakes today, because this critical metals, ah, the tier one trading, trading companies in the world, they're all interested in them, and we are very well connected to them. So we, we know these markets very well, and the metals we are producing are very critical everywhere. So, tin, ah, for electronic applications and soldering, niobium for the steel and super alloys, and, and very special, other special applications, and tantalum for, ah, super alloys in aircraft engines, and also in, in, in, especially in, in, in capacitors, electrolytic capacitors. With all these, ah, data centers that Everyone wants to have all over the place without tantalum. Forget about it. You know, it's people sometimes don't realize that you need a lot of mining to deploy what's going to be the best fo…

AI assessment note: “We are doing by ourselves. So the, the, uh, the plant in Brazil is a wholly owned subsidiary”

Q sort of previous changes of administration and changes of party, we go back and forth within the climate sector. You know, when it's a Democratic administration, you talk about climate, you talk about justice. When it's a Republican administration, you talk about energy and you talk about security. Is it that simple today, or is there a different message that startups need to be holding in their conversations in D.C.?

A You know, my co-founder, Brandon, sometimes jokes that it is the same language in a different dialect, and I think that's, I've seen some of our best companies fluidly be able to make the same arguments that had the same outcomes in the Biden administration with the Trump administration, and I think the sort of big bipartisan consensus is that we need to build again in this country at scale, and we need to rebuild our supply chains and have control over them. We need to be able to provide ourselves with Our own sources of energy. We need to be able to provide ourselves with our own, um, critical minerals and metals that fuel the supply chains. We have to learn how to remanufacture and re-industrialize in ways that we have kind of forgotten. And so our, some of our best companies like Antora today, um, have built their first of a kind project in the backyard of the Senate Majority Leader's district. We have a mid-duty EV truck startup called Harbinger. That is building from the Panasonic cell up a fully, fully vertically integrated powertrain and strip chassis for the class four to six delivery trucks. These are the trucks from Amazon, UPS, FedEx, EC idling outside all of our homes, dropping off ship we don't need. Those trucks, no one's built an electric alternative, and 70% of them go 70 miles or less per day. And Harbinger by next year will be at cost parity with ICE trucks w…

AI assessment note: “it is the same language in a different dialect, and I think that's”

Q folks working together, so it sounds like it's great when it works well, but you also have moments that are challenging, right? Like, you had an issue with a reactor vessel at one point during a particular test. Can you talk about how you overcome some of the things that are maybe not going the way you had hoped or, you know, posing some challenges that you didn't quite expect?

A Yeah, so, um, there, There, there are always challenges, and, and, you know, they range from minor setbacks to really good head scratchers. For the engineering test unit, one, we sourced the vessel from a shop, um, in Southern California. Very reputable shop. The costing was very reasonable. Our team was integrated in the design. Like, we had a, we had a very good relationship with them. It's a, it's an ASME certified pressure vessel, so it needs to go through a series of testing, hydrostatic pressure testing, to make sure that It can actually remain intact, uh, within the design basis. Um, so they did this testing, um, they happened to do it horizontally. The vessel was laid down on its side, which was not a great thing, so talking about, like, the learnings, we have a database that gets filled with all of these lessons, so don't do pressure testing on, you know, with the vessel on its side.

AI assessment note: “we have a database that gets filled with all of these lessons”

Q I love this. Okay, you mentioned that at first it was the engineering test unit, and then it became ETU one of three. So can you tell me when and what happened with the first engineering test unit? Like, when did you know that this was actually instead not going to be your only engineering test unit?

A Yeah, so I think this is like, 2019, 20 20. Um, there's always been kind of this question, well, the, the iterative process is like, start small and then go big. What would be the merits of doing a smaller reactor first? And so now Kairos is building the Hermes reactor in Oak Ridge, Tennessee. The Hermes scale is actually derived off of the scale that we chose for the engineering test unit. And part of that was, hey, if we want to move fast on a small reactor, we should leverage the engineering at the scale that we're already working with. So that's going to make it easier, going to make it faster. The other thing, which was I say a lot of things about what Kairos has done with, with great pride and what we're going to do with a lot of confidence, but, you know, doing nuclear power is, is challenging. And the, the requirements that go into a nuclear vessel, I don't think there's any other system quite like it in terms of the chemical environment, the temperature, the radiation, and all the hardware that just needs to be packed into a really tight space. And we basically said, we're not sure that we can go straight from this smaller scale Non-nuclear system to the full-scale commercial nuclear reactor design. So, um, we're going to do a smaller reactor, and the goal of that one is going to be, let's be as prototypic as we possibly can for the reactor system. A lot of other thing…

AI assessment note: “Yeah, so I think this is like, 2019, 20 20.”

Q any, are there any moments, though, where you find yourself asking the question, you know, for this particular component, or for this particular system, Should we outsource it, or should we build it ourselves? Is that a constant tension that you're facing, or do you almost always in those cases just default to building things yourselves, or how do you think about, think about those questions as they come up?

A We have more confidence now, certainly, than we did years ago. The team understands the benefits of taking ownership over not just the design, but the build. Uh, there's always a, there's always a decision, and, um, as the needs evolve, Like, I think the same principles still apply. And one of the key, key things is try not to stretch too far. Uh, and so if there's something that's new or dramatically different, it's usually beneficial to start off at least with a partnership, um, with, with someone who has, you know, some part of the key knowledge. And so on the pump, we, we started off, you know, we have a partnership with Barbara Nichols. Kairos has absorbed more capability ourselves, but it was a really productive partnership. We have found partners along the way that are, have been great, great to work with, and if that works out, that's great. Like, we want to, we, we don't want to do everything ourselves because it adds to the list of things that need to be done. Right now, we're, we're pushing the boundaries on the civil construction site, which is, um, this is much bigger scale than, than all the other things that we've been setting up to build, and so right now, one of the exciting things that is emerging is, um, Um, the opportunity around, uh, precast concrete, which is really just, like, potentially completely transformational in terms of how we build these building…

AI assessment note: “if there's something that's new or dramatically different, it's usually beneficial to start off”

Q Okay, so, but let's go back to the beginning, where you were trying to convince these turbine manufacturers to effectively work with you and to build this thing for which you had defined the conditions. So, how did those conversations go? What was the proposition that you were bringing to them, and what was the initial response you were getting?

A The proposition was that these AFC systems were going to be the lowest cost systems that produced Reliable, twenty-four-seven electricity. And that there were other operational characteristics That would make them more competitive than any other type of generation on the market. The other characteristics is, is complex, and we don't need to get in, get into it too much, but like ancillary grid services like spinning reserves and peaking capacity and energy storage capacity and frequency regulation, those are all things that AFCs are uniquely capable of in addition to just Producing power. Um, and I think they can provide those ancillary grid services in ways that other systems can't or might only be able to provide one or two of those services where we, we, we see a path where we can provide all four and where in other gas turbines or steam turbines you would have to make some modifications or run the plant outside of its Ordinary course of operations where we can run within the ordinary course and still provide those services. So, so the reason I go into that, that was the value is the value proposition that we were saying, listen, these systems are the next generation of turbine. And there was also a very strong argument on the environmental side and, and the elimination of emissions and that this was better than using adsorbents on turbines. And so that was the argument. And…

AI assessment note: “The proposition was that these AFC systems were going to be the lowest cost systems”