The Exchanges

Q Let's talk for a second about what's going on at the company, though, because this is a time when you're starting to raise some capital and forming some new partnerships. So can you say a bit about how you were thinking about the company development, the kind of capital you raised, and the folks you started speaking to, uh, for some partnership opportunities?

A Yeah, I have a fundamental philosophy that small companies like Captura need help to solve really big problems. And That's what I did at Carbon Engineering with Oxy. At Captura, what we wanted to do was attract actually more partners, um, so that we had different partners around the world from different, uh, sectors. So during our fundraising, which was, uh, twenty-twenty-one, twenty-twenty-two, twenty-twenty-three, we looked out to find as many strategic partners who could help us with deployment, with questions that we had about, for example, renewable energy, um, with end use like aeroplanes, like, um, Uh, marine logistics. These are tough to decarbonize sectors, so we wanted people on board who understood those problems. So we, we raised what turned out to be eventually forty seven million dollars in our series A. We did it in a series of increments as more people came to us. Uh, we were able to increase the valuation of the company as we progressed. And we actually now have eight strategic partners who are investors. Um, so we have a couple of energy companies in Equinor and Aramco. We have three renewable energy companies, NE, EDP, and National Grid. Uh, we have what we love to call our team Japan. Japan has a lot of interest in this technology for its decarbonization journey. So Hitachi, Moll, and Japan Airlines. And then we also have Maersk, of course, global logistics …

AI assessment note: “we raised what turned out to be eventually forty seven million dollars in our series A”

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 Very cool. So tell us about the Alta CU organization. What made you decide to place your next big pilot there?

A Yeah, so AlterSea is a really interesting thing, uh, for anybody who's down at the Port of Los Angeles. They are a not-for-profit. They were supported by, I think, the city of LA and the state of California, and their objective is to improve, uh, understanding of the role of the ocean in our everyday lives, and to support companies that are doing things of benefit to the ocean. So there's a dock where you can put a barge, And then you can put your experiment, for want to a better word, on the barge. You obviously have to go through a permitting process to make sure it's okay. Uh, and then you can run. So we've been there, I think, two years now. It's been a really good relationship.

AI assessment note: “there's a dock where you can put a barge, And then you can put your experiment”

Q Very cool. And as you're thinking about financing that first commercial plant, do you anticipate that the first one or two of those will involve a lot of, kind of, venture equity or investment from strategic partners? And, or do you think you can start to attract some non-dilutive project financing to get those built?

A Yeah, I mean, I, I hope non-dilutive project financing. One of the hardest things, and one of the many hard things in a startup, is once you have your technology working at a level that you believe to be adequate, is taking that technology out and building your first commercial plant. Because the perception of risk is there in the eyes of whoever might finance. Plus, you need customers, and those customers Are concerned? Does, is the technology going to work? Um, so pulling those things together and, and producing a fully project financeable first plant, like for example, I don't know, a solar field now can be, can be pretty easily project finance. The technology is fully proven over many years. The market is well understood. The price points of the market are well understood. So yeah, project financiers are happy to come into that deal. But you go to them and say, hey, I have not scaled my technology past a thousand tons. Nobody really knows the price point of the carbon market. I'm working on offtake. Trust me, I'm going to get it. Please lend me a ton of money. That story can be challenging. I think we have all the building blocks in place. Um, so we'll work to see how that plays out. It may end up being a combination of project finance and equity type finance, maybe a partnership. My approach is really simple. Keep all options on the table. And keep progressing, keep tickin…

AI assessment note: “It may end up being a combination of project finance and equity type finance”