#9 - Marian Krüger - Carbon Capture: Technologies, Competitiveness, and the Importance of Demand-side Policy
Introduction
In this interview, I talked with Marion Kruger, co-founder of Remove. He explains how carbon removal technologies are essential for achieving net zero targets by compensating for emissions that are impossible or extremely expensive to eliminate. Carbon removal is what puts the “net” in net zero, and by 2050, we’ll need to remove 5-10 gigatons of CO2 annually—creating an industry comparable in size to today’s oil and gas sector.
He also has a new book out called “Race to Zero, How Companies Can Lead the Way to Climate Neutrality” , which I highly recommend.
Topics of our conversation:
• Why carbon capture puts the “Net” in “Net-Zero”
• Three main types of carbon removal technologies: nature-based, hybrid, and engineered solutions
• Nature-based solutions like afforestation cost around $50/ton but face durability challenges
• Hybrid solutions like biochar offer middle-ground approaches at roughly $150/ton
• Engineered solutions like direct air capture provide the most permanent storage but currently cost $1000+/ton
• The “like-for-like principle” matches emission types with appropriate removal technologies
• Market development requires policy support, particularly integration into compliance systems like the EU ETS
• Geographic flexibility is needed to deploy removal solutions where they’re most cost-effective
• Carbon removal startups face a “valley of death” in financing that threatens industry development
• Public procurement programs and early innovation funding are critical to bridge the gap until markets mature
• Carbon removal complements rather than replaces emissions reduction efforts
For questions, comments or suggestions, you can contact me at arvid.viaene.ce@gmail.com
Transcript
Arvid Viaene: So first of all, today with me, I have a really special guest, which is Marian Krüger. He’s the co-founder and director of Remove, an organisation that supports European, Indian and African carbon removal startups. Previously, he headed the sustainability in business lab at ETH Zurich, advised industrial companies and public institutions on decarbonization and founded a successful solar startup. So Marian, welcome to the podcast.
Marian Krüger: Thanks for having me. Excited for the conversation.
Arvid Viaene: So I should mention, I had the pleasure recently of interviewing Ben Probst, a person who also works at ETH Zurich on carbon offsets. And it was an amazing interview, that was episode four. And in that episode we discussed carbon offsets. And because of that, I learned about you because you two have written a book together called Race to Zero, how companies can lead the way to climate neutrality. And I can really recommend the book. I learned a lot. And in it, you discuss carbon removal technologies at depth. And it’s something I didn’t know nothing about. And of course, I recommend people go check out the book.
Carbon Capture is What Put’s the Net in Net-Zero
Arvid Viaene: But today I’m really excited to talk about that topic with you. And I was wondering, just to start off with like, maybe a takeaway for people who don’t know about this, what would be one or what would be one or two things you would want them to take away about carbon removal technologies?
Marian Krüger: Yeah, I think at the highest level, we are all talking about net zero. Companies make net-zero goals. We as a globe, a global society, need to reach net zero. What puts the net in net zero? That is carbon removal. Otherwise, we would be talking about absolute zero, right? So if there’s one thing that listeners want to take away, carbon removal is what puts the net in that zero. What that implies is that we have some subtraction and addition of emissions at some point. As much as we want to try to avoid emissions and reduce them, there will be some emissions that we cannot eliminate or that are extremely expensive to eliminate. And for these emissions to compensate for these, so that at a net level, we have zero emissions or even negative emissions, that is what carbon removal does. It takes carbon out of the atmosphere that’s already there and stores it away for as long as possible.
And this is no small feat. If we look at the IPCC scenarios, we actually need a lot of it: we need between five and 10 gigatons. Just to put that in perspective, if we say five to 10 gigatons, that is maybe between 5 to 10% of the emissions. And if you say, let’s assume 100 US dollars per ton, we can talk prices or whether those are realistic later, that is, from an economic perspective about the size of today’s oil and gas industry.
Arvid Viaene: That’s about the size of the oil and gas industry. Could you elaborate on that?
Marian Krüger: So if we think about per year 2050, in twenty fifty, of course, all the way leading up to that, also after that, we need to remove five to 10 gigatons, so that’s billion tons of CO2 from the atmosphere. And if we assume every ton costs us about 100 US dollars to remove, that puts us from a revenue perspective or economic value perspective in the same ballpark of revenue of the current oil gas industry. So, at the highest level, I’m putting it very bluntly, we are building the reversal of the oil and gas industry. And that is no small feat, of course.
An overview of the three types of Cabon Capture Technologies
Arvid Viaene: Of course. Well, thanks for that. And I will even say that this topic is so fascinating that we already had a challenge in our first conversation, like, how do I approach this? Where do we start? Could you just then give a broad overview of the different types of technologies? Because I think people might not be aware of the full range here.
Marian Krüger: Yeah, absolutely. So there are a multitude of ways to take carbon of the atmosphere, right? And I think the first one that a lot of people think about, also often you see in the comments on LinkedIn or on their articles is, well, we already have the best solution. It’s trees, right? Why should we do anything else?
And trees here stand for a range of solutions that just rely on the best mechanism that it essentially nature has developed for this, photothensis. So during the growth of plants, these plants take up CO2 from the atmosphere and store it in their trunks, in their roots, in their biomass, right? And a lot of these solutions, such as afforestation, growing new trees, planting new trees, and mangrove restoration, increasing the soil stock in agricultural fields, all these solutions are subsumed as nature-based solutions. I don’t necessarily like the term, but that is one way to classify them. So it’s the first bucket. They are typically rather easy to implement, also at scale.
The problem is this carbon is not stored as durably as you want to. Why? Imagine a forest. Imagine a forest in the Amazon. And then imagine all the dangers that this forest is under, especially as the impacts of climate change increase, wildfires, deforestation, right? And as soon as there’s a fire, the carbon is re-emitted. So that is the reality for a lot of these nature-based solutions. We should be doing them for a lot of reasons, including carbon storage, but also because they’re great for ecosystems.
The second category, if you will, are what we also in our book called hybrid solutions. They take processes that nature already has in place to take carbon out of the atmosphere in one way or another, enhance them, or make them work better, more efficiently, and quicker. An example that some listeners may have heard about is biochar. You take biomass that a lot of the times doesn’t have any other use.
You put it in a oven called a pyrolyzer where you heat it up at high temperatures without the presence of oxygen. And that creates this charcoal at the end. Essentially, it looks very much like the charcoal you would be using for a barbecue. And that stores the carbon quite permanently. And then it could be used as fertilizer, for instance, on agriculture fields. So that’s an example where the carbon storage has happened through nature. We’re still using biomass, but we’re enhancing it. That’s the second category, just to give you one feeling. There are a lot of other options in this category as well.
And in the third one is what we really call engineered solutions. So here we’re really relying on technology to do the job for us. One of them would be direct air capture. As the name suggests, we have a technology that takes air out of the atmosphere, strips the carbon away, then at the end of this machine, you can imagine like a big fan, the air out the air comes out without CO2. And the CO2 we then, for instance, store underground in empty gas fields.
So that’s at the highest level an idea about what the options we have at our disposal in card removal. And within each, there’s a market of diverse options to use them and to develop these.
Arvid Viaene: Yeah, thanks so much for that overview. So the first solution is nature, the second is the hybrid and three the engineered solutions. Because the first thing I would think of is like the direct air capture. Exactly like trees have a cycle, because of the conversation with Ben, are there differences in uncertainty in the measurement? For example, did you actually grow the trees you want to grow. It is easier to implement versus the engineering solutions I would imagine. But the engineering can be more credibly monitored in some sense, but they are more expensive. Is that the trade-off that we’re looking at?
Durability of Carbon Capture Technologies and the Like-for-Like Principle
Marian Krüger: I think so, yeah. At the highest level, I think that’s a distinction or a statement that you can make, right? And I think that’s also something to very important to take away with. Carbon removal is not created equal, right? It’s not one uniform thing. Actually there is a wide variety of things that depending on the method have certain benefits, certain qualities, certain advantages and certain disadvantages.
And what comes with that is different carbon removal methods and thus the credits that are being generated. So that’s essentially the verification that a ton of carbon removal has been taken out of the atmosphere. Ben has talked about this in the last episode with you.
They can be used for and should be used for different things. So there’s a thing, and this might already go in regulation and policy a bit. There’s a thing called the “like-for-like” principle. So if we think about reaching at zero, that’s what we want to do as a globe, right? We will have,
A variety of emissions at net zero, be that in 2040, be that in 2045, be that in 2050. We will continue to have some fossil emissions, say, for instance, from flying, right, or for some industrial processes. They are just very, very hard to get rid of. These fossil emissions will stay in the atmosphere for extended periods of time. So the like-for-like principle then suggests we need to take carbon out of the atmosphere for an equally long amount of time.
For these, for instance, a direct air capture credit would be good, there we can credibly monitor and make sure that ton of CO2 we have taken out of the atmosphere is going to stay away from the atmosphere for millennia. There are other ways to do this as well. Enhanced weathering, for instance, would be another one. Now, we will also have some emissions from agriculture, such as Nitrous oxide and methane. So these are short-lived emissions that do not are not as long in the atmosphere as a fossil emission. For these, we can think about the like-for-like principle, with more or less durable carbon removal solutions, such as afforestation, and solid carbon regeneration. So there’s not just a difference in the solutions, there’s also a difference in what we do with the solutions to compensate in the end.
Arvid Viaene: If I recap that it’s whenever CO2 is emitted in the atmosphere, it’s there for a very long time. So you need a very long, almost permanent solution. Whereas for methane, they’re just there like much shorter. So you can actually look at these shorter cycles because you capture it, the methane goes away and then if you remove the forest, then it just balances out.
Marian Krüger: Exactly, exactly. It’s obviously not as easy as that because methane is very potent. So there are there’s factors that you need to assume and there are very smart people working on how to best do this. But at the highest level, think of like-for-like. Long emissions, long fossil emissions need long permanent carbon removal. Short-term emissions can also do with others.
Arvid Viaene: Just as a side question, but in your book, you said you focus mostly on CO2. Has there been research on methane, too, to remove it? Like to remove some methane from the atmosphere? Because it’s as you say, methane and nitrous oxide are very potent. Is there something happening on that front?
Marian Krüger: There is a bit of work happening, luckily. If we think of where carbon removal is right now, the work on super pollutants is probably five, six, seven a years behind. I think the main takeaway from the super pollutants is that our main job there is to reduce and to avoid them reaching the atmosphere in the first place. And especially with methane, there are so many methane leaks from pipelines, for instance. And then, of course, there’s enteric methane emissions from livestock. These are the big, big emitters that we should be thinking about.
For removal, we’ve seen the occasional methane removal startup that has applied to our program. Particularly, it’s really very, very early days. And if we think the carbon removal policy landscape is in its infancy, let’s not even go talk about super pollutants, right? Because they’re really there’s absolutely nothing.
Cost ranges for the different Carbon-capture Technologies
Arvid Viaene: Okay. Sounds good. Thanks for that, I was curious about that. And we’ll talk about the landscape in more detail. So then maybe as a bridge from that, the podcast is called Climate Economics. So we have to talk some numbers about the cost per ton. So could you give us maybe some ranges of estimates of like how costly these types of solutions are to remove tons of CO2?
Marian Krüger: Yeah, sure. And you’ll realize also with the numbers that I’ll be giving you that the range is massive, right? And I think this, again, reflects the diversity of carbon removal methods that we have, both in how mature they are, how much they’ve been deployed, whether at scale or really in their infancy, with the potential of cost reductions that are still ahead. I think one parameter that we need to take into account again, and it will come up again, is this durability or permanence of carbon storage. Because that really differentiates one carbon removal solution from the other, and thus also is and bit of a proxy for the price.
So if we start with the nature-based solutions, right? There you can get high quality nature restoration so credits. So a ton of carbon removed through soil carbon sequestration or afforestation for 50 US dollars, for instance.
Now it depends on the contract, but those then maybe have a durability of 20 years, 30 years, 40 years, 50 years, but typically around that range. But that means if you have an emission today, typically 20, 30, 40 years down the road, if you want to continue to compensate for that, you need to buy another credit. So that is something to keep in mind here. Might be cheaper at first sight, but if you want to continuously compensate for the emission today, you would need to vertical stack and horizontal stack.
But there are ways that you need to deal with that. On the other end of that spectrum, a direct air capture credit easily, especially from the novel technologies, can cost you four digits, like a thousand US per ton. You could say, well, it’s the same tunnel that we take out of the atmosphere. What the difference is, is how sure are we that it will remain out of the atmosphere? And what’s the risk of reversal, right? In between, you have quite established solutions such as biochar, which I’ve mentioned, where you can get like a high quality, industrially created biochar credit for let’s say 150 US, right?
That is the smallest range, yes. And then you have some others, for instance, ocean capture solutions or enhanced weathering solutions, which are more than between, let’s say, $200 -$700, even also ranging to the thousands [of dollars]. And what’s interesting here is also if we look, think cost projections and where could this head? When I did this crude calculation of how much economic value this industry could have in 2050, at a 100 US.
This 100 US dollars is this ominous number that actually people have tried tracing it back and no one really exactly knows where it comes from. I don’t think that [The $100/ton] is the right target to have in mind because it’s quite unrealistic to get there. If we say we need carbon removal to come down to $100 US per ton. For a lot of the solutions, that’s just very, very hard, if not impossible. And on the other end, think what’s the basis for this, right? If we think social cost of carbon, it’s definitely higher than a hundred US dollars. Maybe a better proxy is what the marginal abatement costs are in hard to abate sectors. And at some point carbon removal will be cheaper than abating a ton at 250 US in the steel industry, for instance. That of course is not as nice of a number as to say we need to go down to 100, but probably more realistic. Because those are going to be the decisions being made on the corporate side of whether they need to buy carbon removal or whether they can reduce internally.
The Importance of Policy driven-demand for Carbon Capture Start-ups
Arvid Viaene: Yeah, then we also exact get into policy because, for example, in the ede EU with the EU ETS, they also have the option to buy it, so to say, from a different company. Because, if we have a future where the caps just get tighter and tighter, which they would have to, , given the goals, the prices would start to rise. And then you, like, if you say, like, the biochar was like 150 dollars. So how long is biochar?
Marian Krüger: It depends on how it’s produced. But there is high-quality biochar. There’s still research ongoing. It’s a bit of a debate. But the most recent science indicates that it can be permanent for up to a thousand years.
Arvid Viaene: Okay so pretty much infinity for any discount rate. Because that would be from an economic perspective, if you’ve got an EU ETS, and you’ve got some established technology for a thousand years, then that’s like an upper cap on the EU ETS. If it were to be like credibly integrated. I think that to me is another very promising thing, as these prices were to go up, at some point you could hit it if it’s well integrated.
Marian Krüger: Indeed, yeah. And that’s that’s why lot of work and also to be fair, hope is being placed into ETS integration, whatever that integration may look like. I think there is, again, smart people working on it. There are a variety of ways that this could happen there’s no way we will reach the five to 10 gigatons if this remains a voluntary market as it is right now. There’s just absolutely no way right now. Now we rely on a selected number of companies that can afford to buy carbon removal at these high prices because they have made public net zero claims and pledges and want to one to live up to them. But in essence, this is voluntary. And if push comes to shove, and we have seen this with a bit of an economic downturn, that tides have shifted a bit.
Marian Krüger: And the startups that we work with, they see this day in and day out. In a very crude analogy, right now, carbon removal is a vitamin. And unless it becomes a painkiller, we will have a very, very hard time ramping up supply. And the ETS is one main, if not the main way that we can really get to scale.
Arvid Viaene: There are a few follow-up questions I have for that. One is that the current regime in the US isn’t the most favourable for these types of things, but that might change with the next president. But the research needs to keep happening. I feel in the book, I also got the sense that if there’s not enough demand, well, then the startups will fail because they need their funding, they need their promise. There have been some companies that’ve done individual purchases, but they need to get there. I think in the book, you also talk about there being funding for the initial research. But then scaling it up is intensive. So in these times of lower demand and more uncertainty, I can imagine it’s very hard to keep the research going to get it down to these more affordable numbers. I think that just seems like a big challenge.
Marian Krüger: Absolutely. You hit the nail on the head. This is essentially the work that we do day in and day out supporting these startups, right? Is not really helping them scale right now. Right now, it’s about helping them to survive.
Right now, there’s not enough demand. The problem with that is it’s not only that there’s not enough revenue coming in, but the volumes that they will be selling are not enough to really hold them afloat anyway. But what that means is that investors stay on the sidelines because they perceive the market risk to be too high. And without investment, you cannot continue to develop your technology, come down the cost curve, and become more attractive for demand down the line. So it’s a bit of a vicious circle, actually.
So that’s why, well, there’s a variety of ways that you can alleviate this a bit. One needs to come from the policy side. And indeed, what we have seen in the US is they, in the Biden administration, under the Biden administration, started out with significant incentive schemes for carbon removal startups, so albeit a bit focused on some technologies, still, that was strong and great.
And now some, luckily not all, some have been pulled back. And we see the immediate effects of that. Luckily, individual member countries in the EU and the EU in itself seem to be moving to jump in and take that position a bit. We still need to see the actual results of this, but there are promising signs which need to happen. Otherwise the problem is, that I won’t get tired of being on stage and saying this, we cannot afford to lose just this generation of carbon removal startups. Because if we need to start from zero in 2030, 2031, when from one day to the next EU ETS integration comes, we won’t just be there with millions of tons of core removal. This generation is the one that will be delivering those removals in 2030, 2031.
Arvid Viaene: So then we’re bouncing all over the place, which I love. Is it so I always have like these so many questions. How do you maybe see the integration, the EU ETS?
If maybe if it’s, let me start it again. How From what you’re you’re saying, it sounds that the potential integration in the EETS might be a credible sign. Also to investors, if you can get connection to this scheme in a credible way, that’s like, if your future revenues are more guaranteed rather than these one-offs, I think any even when you report the tailwinds of policy versus the which I loved.
Arvid Viaene: How is that going? Is there some sign there or like what is happening there?
Marian Krüger: I completely agree, I think. So the earliest that the integration would be happening and in operation is 2030, 2031. That’s of course, in especially startup land, that’s an eternity, right? But what would already happen massively if there was the integration on the horizon? Because if we knew that happened if we knew that market existed, investors, as well as the companies that are compliant under the or need to be compliant under the ETS, we need to start moving.
Because if I’m a cement company and I’m regulated by the ETS, if I start looking at this in 2029, it’s too late. I need to establish internal capacity. I need to establish relationships to suppliers now rather than in 2029. Same with investors. If I know that market will be there, I’m very happy to take up the market risk until that time. That is and essentially what venture capital is for, to take up that risk and to make those bets. By summer 2026 is when the Commission needs to come up with a proposal for the Parliament and the Council to how negative emissions, so carbon removal, are going to be integrated into the ETS. So everyone is looking, waiting for that.
There’s good people working on the policy side, like Carbon Gap and other organizations to argue and inform about the need and how to do this in the best way. We are seeing on the UK side, for instance, which has just come out with a strong statement from the government to say, yes, carbon removal and their lingwoods called greenhouse gas removal is going to be integrated come 2028. We already have some integration in the Japanese ETS. So there’s some good signs. But of course, the big one is the European ETS because it’s by far the biggest compliance regime in the world.
Competitiveness of carbon capture in a cap-and-trade scheme
Arvid Viaene: And then how do you see it for like the direct air capture? Because I think you said there, maybe it will come down to 250 dollars per ton. It’d be hard to get it lower. At that point, it would still be more or less something voluntary by firms to do. But at least then you could get it into the market. Because at the price it would be trading, say it goes 100, 150, it still wouldn’t be competitive, so to say, in the market unless it really goes high.
Marian Krüger: Yeah, I think that’s a very good question in terms of how this play will play out. I think it’s going to be obviously a question of how much to supply will there be of other carbon removal all carbon removal is essentially limited by one or another parameter or input, right?
Marian Krüger: If we talk biochar, it’s great that we can do it at 150 today. Biomass at some point will be limited because also there’s other use cases for that biomass. Think bioplastics, right, which also helps us mitigate. On the direct air capture side, for instance, there’s only so much. It’s quite energy intensive. So we need to think about whether there is enough energy. Do we need to put extra energy on the grid? There are land use problems with some of the other solutions. So in the end, we will have a mixed bag of carbon removal. At various point price points. It’s going to be very interesting to see how direct agriculture fits into something like the EU ETS. Maybe just going to be a limited supply of biochar in the EUTS at some point, once that is used up, more higher-priced removals will come in to remain compliant.
It’s also going to be very interesting to see how far their architecture companies can get their prices down, right? Obviously, because there’s this ominous goal, if you look in investor presentations, they’ll tell you they can come down to 100. Well, if you give me an Excel, I can model everything to come down to 100. I understand that right? With certain assumptions, you can do that. I think that’s also a very interesting thing to think about, how do we think about cost curves and scaling down, right? Again, carbon removal is very, very diverse and we cannot assume learning rates across the board. They’re going to be different. I think for some solutions where CapEx dominates, then massive cost reductions are possible, right?
We’re going to be building better, cheaper and bigger. And there we can massively come down. If OPEX dominates energy demand, of course, we can come down, but there’s going to be limits to that. So I think we cannot be, luckily, know, the startups that we work with, they are not blind and just assume solar type of cost reductions or battery type of cost reductions for all of carbon removal. That’s just not going to be realistic.
International Dimension of Carbon Removal
Arvid Viaene: Yeah, because that’s like the interesting tension that you’ve mentioned this in your book, that energy is cheaper in the US. So it’s actually cheaper to do some of these things in the US than in the EU where energy prices are just higher. So in some sense, you would want them to develop in the US, bring down the costs and then we can do them in the EU, which is why the Biden incentives probably were so helpful. Because then you get the low energy, which is one of the main focus points with the current administration. Like we want to keep energy prices low, versus Europe when then they’re just higher.
Marian Krüger: I think you’re hitting on a very interesting point. What’s special about carbon removal is that wherever this is produced doesn’t matter. The atmosphere doesn’t care. Of course, the economic value resides wherever the carbon removal solution is supplied, but the benefits is for all of us. So if we think about where which carbon removal method is going to be deployed, there is going to be there are going to be geographies where a certain carbon removal solution is optimal where others are not. Now, how does this pan out with the EU, for instance, saying in their carbon removal, carbon farming framework, which is going to be the guardrails of what makes up carbon removal. Credits need to be generated in the EU, on EU soil.
I don’t know how credibly we can get to the volumes that we need to at prices that we need them to come if we restrict ourselves to say biochar credit. And say a high-quality biochar credit cannot come from the global south. GHowever, in the global South, it would be significantly cheaper, would have more co-benefits, and make more sense. That is going to be a very, very interesting thing to see how that pans out because there are so many varying parameters and interests coming into it. Like in the US, as you say, energy prices are likely going to be cheaper. Access to storage likely is going to be cheaper. So, shouldn’t we deploy more DAC in the US or in the EMEA region as opposed to putting it in land-constrained and energy-constrained Europe?
Arvid Viaene: Yeah, because then it’s generally like, oh, we also want to stimulate jobs and all these other concerns. But it’s like you say, from a cost effectiveness global perspective, it doesn’t need to be in Europe. Now, of course, there’s probably some lobbying there. And then because they say Europe were constrained on the landmass compared to other places. And would you recommend some more flexibility on that front?
Because then I think there’s there’s two counters that I would think of. It’s like, well, one is you want to stimulate the economy, and the general politician’s concern. The other concern, because I asked some friends also for feedback, is that, well, will it be credible? If you go to the global south and monitoring gets trickier, Now, the EU is already talking about carbon offsets. So, in some sense, they can also do a part of this, which can be abroad. This doesn’t have to be a 100-0 thing.
Importance of an International Carbon Capture Approach
Arvid Viaene: But I think that the credibility comes up then. We talked this with Ben, but like, how is it in terms of the verification of these things?
Marian Krüger: Very good point I think we have the cautionary tale of CDM credits in the past what they did to compliance regimes so that’s something that I think is informing the cautionary nature or approach stance on the EU side. I do not see a scenario where we can hit the volumes we need if EU wants to remain competitive. And that is one of the main goals of the current commission, right? Competitiveness. And that competitiveness for me includes remaining competitive in light of increasing climate regulation around the globe and staying true to the climate commitments that you have made. Then the ETS needs to be able to sustain ambition while maintaining competitiveness at volumes that I don’t see coming purely out of Europe. Probably in the ramp up, that is not going to be a problem, but we are just constrained in really almost all carbon removal methods. I don’t think that, don’t know whether that study or research has been done to actually model this of whether we could deliver all the removals we would need in Europe, from Europe. That would be very interesting paper to do. I’d love to see that.
Arvid Viaene: Yeah, to all the researchers listening in. Because like you said, there’s probably physical constraints, like the biomass, the things, you’ve got to store it, which we haven’t talked about much.
Marian Krüger: And then again, from a CDR, global CDR perspective, cost effectiveness, it makes so much more sense to deploy some of these solutions outside of the EU, right? For a variety of reasons, one of them being cost. That’s why we’re also very active in the global South, in India and Africa or soon in Latin America. There’s just so much potential for carbon removal that is untapped in regions, that by the way are being hit the hardest by climate change and have had the least to do with it. So this also allows these regions to take up a position that is more than adaptation, but actually a more active role in mitigation.
Arvid Viaene: I think it’s a very good point. How is that going? Because in your startup, you mentioned, or I saw online, you focused on Europe, India, and Africa. Is it suddenly growing there? Because often, they’re doing a podcast like that, which is coming out very soon, about air pollution in India. Like, that’s where the main focus is because it’s just so costly in terms of current lives lost. So I was surprised. There also seems to be a growing trend there to already focus on these carbon removal options or not.
Marian Krüger: Yeah, it’s a good point also that you mentioned air pollution. The carbon removal narrative is a very different one in a place like India or sub-Saharan Africa than it is in Europe. Europe has demand. India has zero demand for carbon removal. They have other things to think about. That is reflected in their net zero goal by 2070.
They have immediate issues on air pollution, health concerns, economic resilience, food security. So the narrative there really is what we in Europe consider co-benefits of certain carbon removal solutions. [For those areas], those are actually the main benefits and carbon comes as a secondary consideration. Right, which to one end is good because it facilitates deployment, also at scale, in these geographies. And sometimes it even generates other revenue streams.
If, for instance, you can sell biochar as fertilizer, it reduces your reliance on carbon removal revenues from the voluntary carbon markets. At the other end, the challenge for startups in the global south is, how do I find a buyer for my credits? And that is, one of the main reasons why we entered those regions. By the way, we always work with local partners, we don’t think we understand India or Sub-Saharan Africa. Quite the contrary, but that’s why we have local partners. But because there’s so much potential for the deployment of these removal solutions, not only for carbon reasons, but also for other reasons. But carbon revenue will always need to play a role in these business models. And it’s just a big struggle for them to access the market. And you asked why we did that and how it’s going. Well, that really is our main task there to help them connect to the global carbon removal ecosystem. Because these entrepreneurs, they’re doing a hell of a job in ecosystems that are very immature and nascent.
Arvid Viaene: Maybe one thing that I was wondering about. So we’ve talked about the integration, the EU ETS. If you were to be, if you were to have like a budget of like two to 5 million a year, how would you best use it to support the industry or the development?
Marian Krüger: Probably three things. And we’ve talked about the importance of demand, right? There’s no way we can scale this industry without demand. And in the absence of there being compliance demand, I think it would be up on either philanthropy or governments to come in to provide these demand signals. So one thing would be to do a public procurement program or philanthropic procurement program at significant size, right? To just stimulate the market, to allow companies to show the traction vis-a-vis investors. And then certainly you’re in a virtuous cycle, not in a vicious cycle. And think this, so that’s more on the demand side.
I think the other two options that I would do are on the supply side. One is early innovation grants in the EU. We have the EU Innovation Fund, which is great, but which tackles projects that are 100 million plus. Barely any carbon removal project is at that level. So it would need to have a lot earlier stage support because while there are already quite number of car removal methods out there and startups out there. And we have 160 have gone through our program, right?
Marian Krüger: And there are so many more. I do believe that potentially the most relevant and most efficient car removal methods are yet to be discovered. So I do not think right now is the moment to just say, okay, we don’t need to invest into early R&D, into early innovation anymore. I think quite the contrary, let’s double down on that.
The second one would be the generation that has now evolved over the last couple of years, a lot of them are now at a point where, because of the problems on the economic side, they struggle to finance their first projects. They are not in a stage yet where they can go to a bank and just say, I need a loan. But financing everything through equity from investors would be way too expensive and equity investors are also on the sidelines. So there’s this valley of death for all these startups where, again, public or philanthropic money could come in say, hey, we are willing to take a bit of a higher risk in a, say, loan guarantee program. Which in my mind would have a massively positive effect on the current generation, the current cohort of startups, to bring them, to allow them to leapfrog survive until say 2028, 2029, 2030. And with two to 5 million billion, I could do a lot. So I wouldn’t mind have that cash lying around.
Arvid Viaene: Yeah, I was actually saying, yeah, because even maybe the even amount is too high, it’s almost if the 2026 commission decides like even to say 500 million guaranteed even just for the EU guaranteed things or for things that have some hyper verified things. Because, that, based on what I get, that would be massive because it’s like there’s some things that are happening. It’s just the market just isn’t there. And especially now, with the recent development..
Marian Krüger: Absolutely. I think it’s, and this would have two elements of this. One, of course, the cache itself, but also the signal. But The U.S. In the last months or half year of the Biden administration, they announced a public procurement program. It was 35 million. So it’s nothing. Right. It’s nothing. But the signal it sent was what mattered.
Arvid Viaene: Exactly. Because that’s what the Venture capitalists are also probably looking at. Like, are these procurements, is there anything happening?
Arvid Viaene: Because I think sometimes the revenue of the EU ETS is now earmarked for green developments, like the social just transition. Like Governments cannot spend on anything, like it has to be related to climate. But I saw some things that’s often used for innovation projects for houses and then like electric cars.
Arvid Viaene: But if you look at the emissions that are the abatement costs for like electric cars versus so gasoline, they’re also not always the highest. So in some sense, I’m just, I’m really brainstorming here. I never had this thought, but like, if you could just earmark 2% of the EU ETS revenue in terms of like guaranteed commitment for carbon removal projects, Like you say, you probably don’t need much, just a guaranteed size thing. And then now of course the direct air capture still would probably be the least competitive. Like it would still probably be first like biochar, some, some of these other things first, but at least you’re already like starting up the, the, the process.
Marian Krüger: Absolutely. And then it depends also on the mandate that you have. Is the mandate to buy the highest volume at the lowest price, given a certain standard, or is the mandate to really buy and develop the market? The market as we have it right now wouldn’t exist if it wasn’t for some big tech companies in the US who essentially said, okay, we in the future will rely on this market. And in order for it to exist, we will take up this catalytic role. In the book, we write about this advanced market commitment that it’s called Frontier it’s a combination of, think, , McKinsey, Metastripe, all of these companies come together and said, we will rely on this market, so let’s make sure it exists.
Marian Krüger: So they buy catalytically and they buy at prices that economically don’t make any sense. They buy at a direct-to-capture credit at 1,500 right? Right. But why do they buy? Because they know without this, we will never get to cost that 2030 and 2035. When their pledges they to rely on it.
Marian Krüger (cont.): And their pledges it they need to rely on
Arvid Viaene: Great. Is there anything we haven’t talked about or that you wish I could have asked you, you’re like, oh this would still be good to know for the people listening?
Marian Krüger: I think we covered really a lot, to be honest. I think the main messages that are relevant for me, I got across. It was very good that you started out with the front loading.
Arvid Viaene: Sounds good, maybe as a final question, what about mitigation deterrence?
Marian Krüger: Yeah, I think that’s a question or concern that many people have asked. So mitigation returns essentially means that because we have carbon removal, does that mean we do less on the reduction and avoidance side? And I think it would be blind to say mitigation returns doesn’t exist or the risk doesn’t exist. It does exist. Right, we have carbon removal as a solution that can stand in for the avoidance of reduction. I think there are several ways that we can mitigate that risk, though. One is, if we have targets, that ideally, those should be separate targets. So should we start to have an avoidance reduction target and we should have a removal target. By that nature, we already distinguish between the two and don’t allow for a combination or a mingling of them.
Then I mentioned earlier the like-for-like principle, also a way to strengthen this. And what is connected to like-for-like is of the higher prices for fossil emissions and removals that can compensate for them, carbon removal will often not be the cheapest option. If we go the marginal abatement curve, if we go it up, there’s probably a large chunk of emissions that are a lot cheaper to abate than to use high quality, durable carbon removal. Only at some point, there will be an inflexion point. And at this inflection point, that is where potential mitigation turns can come in.
Now, then the argument is, well, maybe carbon removal is the Better quote unquote or at least economically better option because it’s cheaper to use that than to mitigate other ways. There are, for instance, with sustainable aviation fuel, some analyses suggest that maybe using fossil jet fuel carbon removal is economically, it does make more sense economically than to use. Now, there are other reasons why you might not want to do that, it prolongs the use of fossil fuels and creates a lock-in effect with legacy fossil players. So I totally buy those arguments. But solely from a economic perspective, there are arguments where carbon removal is the optimal solution rather than continuing to go down the avoidance reduction in marginal abatement curve.
Arvid Viaene: Awesome. Then I would say, Marian, thank you so much for your time today. It’s been really interesting. I think I also got away a lot in terms of like the landscape and, , maybe with the upcoming EU developments, we’ll have to talk again about then how we can how we can get this into the EU stuff. So But thanks so much for taking the time. I really appreciate it. And I think I got a lot of it. I’m sure people get a lot of it. So thank you so much.
Marian Krüger: Thanks for having me. This was fun.