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Another ClimateTech Podcast
Interviews by Ryan Grant Little, a climatetech founder and investor that explore the fight against climate change through with founders, investors, activists, academics, artists, and more.
#Climate #Climatetech #Cleantech #Sustainability #Environment
Another ClimateTech Podcast
We have a CO2...shortage(?!) with Rob Van Straten of Skytree
Rob van Straten is CEO of Skytree, a direct air capture company addressing CO2 shortages while removing greenhouse gases from the atmosphere.
In this episode we talked about:
🌱 How Skytree's direct air capture technology helps greenhouses meet their CO2 needs while contributing to carbon removal
🏗️ The challenge of scaling DAC to gigaton levels - requiring 300 container ships worth of units with current technology
💰 Why carbon removal is already economically viable, but needs a wider cost gap with emissions to drive adoption
🌎 The reality that climate change threatens humanity more than the planet itself, which has survived previous climate disasters
#climatetech #directaircapture #carboncapture
For us. It's very difficult to create a bookkeeping, even in our head, around the cost of emitting a ton of CO2 and the cost of permanently removal the cost of CO2. It's already in the money, it's already cheaper. Right to remove CO2 from the atmosphere, but the gap needs to be bigger and people need to feel more directly the pain of the cost of emitting, which becomes clearer bit by bit. But still the pain is not really directly connected.
Ryan Grant Little:Welcome to another Climate Tech Podcast interviews with the people trying to save us from ourselves. Rob Van Straten is the CEO of Skytree, a direct air capture company working to solve the world's CO2 shortage issues and yes, that's really a thing while removing GHGs from the atmosphere. I reach Rob in Amsterdam. I'm Ryan Grant Little. Thanks for being here, rob. Welcome to the podcast. Well, thanks for having me.
Ryan Grant Little:You're the CEO of Skytree, which is a distributed direct air capture company out of the Netherlands. Talk a bit about its mission and maybe give us some info on what the distributed part about this is. Some of our listeners will be used to hearing about DAC, but not DDAC.
Rob van Straten:You're used to hearing about DAC, but not DDAC yeah, of course. So direct air capture is a technology to take CO2 from the air around us, the ambient air, and then either put it to use or permanently store it. Right, those are the two directions, and most of the well-known projects and initiatives around DAC are around permanent storage. That's where you read about and that it's all about. Who are the buyers of the credits? Can there not be more buyers? Do we involve local communities sufficiently? What about the availability of renewable energy to power these DAC machines? That's what you mostly read about. Power these deck machines. That's what you mostly read about.
Rob van Straten:What is less known is that CO2 is used everywhere in society. We know carbonation of drinks, of course, coca-cola or champagne, but what is less known is that in greenhouses, CO2 is supplemented to boost crop yields by 30%, or that it's used to transport organs or for welding, or for packaging food or stunning animals, and you know, I can go on and on. So currently, all that CO2 that is used everywhere in society is mostly captured in fossil fuel industries. And then you know, toxic gases are taken out, it's liquefied and then it's transported to where it's needed. Now, decentralized direct air capture is the art of putting machines at the location where you need that CO2. So this is a subsegment of DEC that is less well known and helps with the CO2 transition.
Rob van Straten:And, if I may just continue a little bit more, so if you move away from fossil fuels in general, there's no point source to capture the CO2 anymore from right. So, ironically enough, co2 shortages are expected for use. And then there's also an emission lens to put on it, because if I capture CO2 from flue gas in an ammonia plant or refinery and I transport it to where it's needed, then it's used, for instance, to stimulate crop growth. Then people eat the tomato. People eating the tomato and the residual of the tomato plant the CO2 still comes in the atmosphere. The emission is not solved by capturing it in industry and putting it to use. I mean, it's better than pumping it in the air, because at least we do something with the CO2., but it's by no means sustainable or improving the climate.
Ryan Grant Little:Greenhouses are an interesting example because, mean, you're from the Netherlands, you're in Amsterdam right now and I think the Netherlands has more plants under glass than any other country per square meter in the world. Was that? I mean, do you have a connection to the greenhouse industry, or is this kind of where the idea came from?
Rob van Straten:That's a great segue into what are we doing at Skytree, because we built those machines that you can put on site. And then greenhouses, being such a large consumer of CO2, and all the innovation happening in the Netherlands. And, yes, we've got several shareholders from the greenhouse industry actually, a fund that's collectively owned by 280 of these greenhouses is our largest investor. We work closely together with the Wageningen University, who is renowned for its research, and we have a bunch of launching customers here in the Dutch greenhouse industry very close to us and for us a way to quickly scale up production of these machines, as we have an immediate and also immense revenue opportunity right here around us.
Rob van Straten:But going back to what we said, you know the large projects for permanent removal. We also play in these projects, specifically also North America, us and Canada, and what we do is we produce these machines for decentralized direct air capture, but you can use the same machines to build a deck park, as we call it, to any size of volume required. So we are playing in that more well-known market as well. Soon we will send out some press releases around some large projects, specifically in Texas, with the same machines as we use for decentralized direct air capture. But the difference is we can quickly turn to mass production and be a cost leader in this industry.
Ryan Grant Little:Okay, I want to talk about those projects a little bit. But so just to understand, you're building the equipment. You're building the DAC modules which work like on site, for example at a greenhouse, but what you're saying is you can basically link them together and build CO2 parks and larger production facilities for major users of it as well. So it can be DDAC, but it can also be kind of like large DAC as long as there's a user, a large demand for it on-site. Yes, and are you the founder of the company? What got you into the space? Maybe just a little bit kind of about your own background as Rob and what brought you into Skytree.
Rob van Straten:So I was asked to step on board as CEO two and a half years ago, 1st of February 2022. I come from the EV charging industry, which has quite some similarities with what it is that we do in DIC. Before. That was on a global scale. I was leading global businesses before, also software software around ESG teams like compliance and ethical behavior for large companies, educating millions and millions of workers around the globe.
Rob van Straten:So I've been doing that for about 18 years or so and always in a high growth environment, usually in like a segment leading position. So because you know I'm in the autumn of my career and I have a track record of doing that, apparently I was a good candidate to lead Skytree in this very fast developing industry. Skytree itself was a spin-off of the European Space Agency about a decade ago, where it was founded by the scientists who worked on this technology to take CO2 out of the International Space Station as part of the life support systems to keep astronauts alive, and that technology was the foundation of Skytree, and the founder, max Beaumont, worked with a group of scientists for about eight years on the technology and then it was time to scale up to globally manufacture and scale up in volume, and for that they need an experienced CEO like me.
Ryan Grant Little:That's really cool, that it's a spin out of ESA and indeed a lot of very cool terrestrial companies have come out of there and some of the funding from there. I remember, you know, 10 years ago, talking to them and seeing some of the things that were coming out as just ideas that sounded crazy back then and are now, you know, raising big money and being commercialized. Can you just talk a little bit about the economics of it and so what that looks like? I mean, I think you know people are conditioned to think of CO2 mostly as a waste product or an undesirable thing, but of course it is a product with value and for uses as you described. Talk a little bit about. You know what does it cost to install one of these? What's the capacity and what's? You know you choose your metric but cost per kilogram or something like that.
Rob van Straten:Yeah, exactly as you say, CO2 has a bit of a marketing problem because, you know, on the one hand it's pollution and on the other hand it's a beautiful molecule that we increasingly need everywhere in society. But so and it has different economics. So pollution, you know, one needs to pay to make it go away, right? So if you store CO2 permanently underground to reduce the PPM levels in the atmosphere, then somebody has to be willing to pay for it. I call it societal money. So that's either governments or public in general, or companies so public in general who want to contribute, you know in general or companies so public in general, who want to contribute. You know I'll pay $100 a month in a subscription to contribute to CO2 removal. Companies that want to offset want to work on their reputation that they manage to offset their emissions, or maybe even their historic emissions, like Microsoft who's leading that globally, and there is a price set in the market, the voluntary carbon market, or the government. So that's your income, so to speak. Now, when you're an operator, you have to invest in the technology, not only in the direct air capture, you also have to invest in site technology like pumping station, compressor, piping, and then you need to drill. Drill, maybe mineralize or have another downstream technology to permanently store the co2, usually underground, usually deep underground geological formations or in empty oil wells. So those are the costs of deck is not the only part of the cost. There has to be a delta between the cost per ton and the price you get on the voluntary market. As one mechanism In the projects that we participate in, that delta is sufficient to justify the financing of the project. But it's not a general rule. It depends, it depends on the cost of drilling, it depends on the cost of site, depends. It depends on the cost of drilling, it depends on the cost of site preparation, it depends on the cost of energy, not to forget. But if we take our piece, the deck machine and its maintenance, then it's very affordable. We are trending towards the 100 euro per ton in the next couple of years, depending on the length of depreciation.
Rob van Straten:So there's a couple of things that you need to agree in the formula if you compare prices. But if you include energy it becomes more complicated, because what's the price of the energy you include? We are not an energy supplier, so it differs per project, right. So that's on the, let's say, the removal and storage side. On the utilization side, it's all the economy. It's about payback times. I currently have this supply chain. I pay X, so what do I pay if I purchase your machines? And then it's a switch from paying for use to CapEx investment. So what we are introducing quite successfully, I can add is CO2 as a service, whereby we also sell the CO2, but then generate it from the atmosphere around us and not from the fossil fuel industry.
Ryan Grant Little:You mentioned that your backers one of them is an owner of greenhouses your financial backers, a lot of companies or a lot of investors, are struggling with investing in hardware these days, especially with interest rates kind of up, higher than they were a few years ago. I wonder how they're reacting to this, and I mean, what does the financing stack look like? Is this you know? Are they, are your customers, financing this, or is this actually with your financial backers?
Rob van Straten:Great question. So, first of all, the climate for hardware investment is not easy, specifically not if it's all uncharted territory. So you know there's risks involved. In the two and a half years that I've been here, we scaled up from eight to almost 108 people. Now We've invested more than 20 million euro and we are in the middle of a new investment round, series A. But we do have line of sight of cash positive operations in 2026. So we become increasingly investable for, let's say, more regular capital providers.
Rob van Straten:The first generations of capital were really from stakeholders, from, as we said, the Dutch greenhouses. There was also a grant from the European Innovation Council. There were NGO investors that really believe in this idea, people in our own networks, people that work at Skytree, a lot of employees including myself. We are investors. We put cash in the company early stage, but now increasingly we become, like as I said, investable for banks or climate funds or energy companies. So we are lining up companies now that are interested and early next year we hope to close our next funding round, but certainly not easy 108 people is not a small company, and I noticed also that.
Ryan Grant Little:So you're based in Amsterdam but you've just opened an HQ in my hometown of Toronto, a satellite office in Nashville, which I guess maybe if I mean great music for after work, and then you've got a major project going on right now in Alberta. Can you connect the dots on kind of all of that? And you mentioned also that you're looking at major sites in Texas. So how do you choose a site and what's your kind of sandbox? It sounds like it's North America.
Rob van Straten:Yeah, definitely. North America is a very big market and then Canada as a country is very big in this technology, in this market. So we wanted to be in North America for sure. We already have a team in North America and we will produce in America. So we will be America made as a huge market.
Rob van Straten:So the choice to set up camp in America was quickly made. Then we selected a regional head office. We looked at Boston, new York and Toronto as, let's say, big cities, conglomerates a little bit on the east side, where you have sufficient universities, quality of living, a big labor market. When we compared the three, toronto came out on top for the labor market, universities also good, boston of course a little bit more famous, but then the labor costs standard of living toronto is better than New York and Boston. And what also makes a big difference is Skytree. Employees can work in Toronto for Skytree for a year with a simple administrative process, while in the US it's more difficult and not so sure if we can have people there for a couple of months. So that was the final push for Toronto. And then the Netherlands and Canada have deep common roots. A lot of Canadians actually come from the Netherlands and the greenhouse sector in Canada is big and also dominated by Dutch. It's all Dutch.
Ryan Grant Little:The dairy and greenhouse is all Dutch in Canada, that's for sure.
Rob van Straten:Yeah, so it's kind of easy for us, but let's not forget that Canada has ideal circumstances for permanent removal, storage and removal based on the incentives from Canadian government, but also because of your geology and your energy availability. So Canada is ideally positioned to be at least one of the leaders to combat climate change and our partner in Canada that we've published around Deep Sky, a company that I deeply admire for what they're doing and they're people. By the way, they're all excellent people. The government of Quebec is one of their shareholders and they really want to solve the PPM levels in the atmosphere. They are big thinkers. That's the project in Alberta you were referring to. We love to work with them and share their ambition, and that's really because they're in Canada that they can do this.
Ryan Grant Little:One of the few examples of Quebec and Alberta agreeing on something and working together. You mentioned Wageningen University as well, that you work closely with them. I note that you've just completed a six-month trial with them that seems to have gone exactly as planned, which is to say, 1,660 kilograms over 166 days Nice kind of even numbers there. Can you talk a little bit about that, what the purpose was and what you're trying to prove?
Rob van Straten:Yeah, exactly. And then we need to look a little bit in history. So a lot of Dutch greenhouses they operate what we call a cogen system where you burn natural gas, you produce heat electricity and you capture the CO2 from the flue gas which you can then use in your greenhouse. So the first generations of these co-gen systems, they caused issues with the CO2. You know all sorts of traces in that CO2 that were not expected that negatively impacted plant growth. So one of the first things we needed to prove, scientifically prove, was that our CO2 from the SkyTree machines doesn't harm the plants.
Rob van Straten:So the Wageningen University set up an A-B testing with cucumbers. Cucumbers, by the way, I've learned, are very sensitive plants. So it was looking at the growth of the cucumbers in the greenhouse where Skytree was and one where there was CO2 from a more traditional supply chain, fossil fuel supply chain. And then the publications are around. So what was the impact on the plants? A, b and there was hardly any impact and a little bit of visible impact was in favor of us. So we couldn't be more happy. This is what growers need to switch. I mean, these growers are not, like you know, like this little greenhouse behind the farm. These are big companies that invest millions and they have the highest productivity in the world and the most sustainable food production in the world the most innovative so they will not take any risk with their harvest or their reputation.
Ryan Grant Little:So we're super pleased that we ticked that box back in ontario, in leamington, which is, I think, per square meter, like, as a region, probably the most plant-centered class, and I was, you know, talking about cogens with them 20 years ago, and my sense is that these and they're huge players, right, and, as you say, mostly dutch, and my sense is that they're a bit risk averse and slow to move in some ways, but once they make a decision, they're sticking to it pretty much forever, right, and so it's a steep mountain to climb, but once you've climbed it, then you're in there for a long time and making changes to these kinds of operations. It's really hardware, right. It's not something you can just turn off and switch the next day. It's not switching from one SaaS product to another, it's really infrastructure that's built in. So I understand that risk aversion.
Rob van Straten:Yeah, and in Canada there's a great reception of our technology, as you said, in the Leamington area, but also in British Columbia, where the other concentration is of greenhouses. So we work with the associations, the local associations, with there's a government involvement. The pioneer program that we've rolled out in the Netherlands, where we are installing at greenhouses, we are replicating in Canada and the US. There's a lot of interest from first movers there as well Once they see that it works in the Netherlands.
Ryan Grant Little:Yeah, yeah, yeah, that was always, you know, in Canada when we were building our biogas plants, and they'd say, look, here's, you know 30 examples in the Netherlands and in Germany. Yeah, but that's the Netherlands and Germany, and then you'll build it in Canada. And then the US will say, yeah, but actually the US is generally pretty entrepreneurial when it comes to this kind of stuff. But so I mean, here's a question that I probably have to ask every time now from now on what about the change in administration in the US, and do you have any thoughts on how that will affect projects like yours?
Rob van Straten:So, to start with your last question, I think the impact is limited on Skytree, which is not the same as the impact on the climate tech industry, but for Skytree it's neutral, I would say, as we are not depending on IRA type of programs as a company Skytree.
Rob van Straten:So what it will do to the sector of climate tech in general, I don't know, we'll have to see. I think there's maybe I even hope that there's difference in campaign language and policy implementation, as I do think that you know people pretending there's no issue with CO2 in the atmosphere you know is a very small group and the impact from climate change around us is something we can't deny and it's increasing. And I would think that you know the new president in the US should embrace the opportunity to create a new industry. Climate tech, or direct air capture, is sometimes predicted to become as big as automotive, right. So if industrial policy is serious, well then, focus and invest in direct air capture. The world needs it. The US can build a very big next industry. So you know, now, instead of building tariff walls in the future, make sure you embrace the innovations now. I would say.
Ryan Grant Little:I'm sold. That makes sense to me. Make DAC great. Again, make DAC great again, I, love it. Take us out five years, 10 years, however long you want. I'm just curious when you have this kind of package of projects, I mean you've probably anticipated how many you're going to be building. When you have this kind of package of projects, I mean you've probably anticipated how many you're going to be building, what kind of CO2 offset are we looking at attributable to Skytree in the next X number of?
Rob van Straten:years, 10 million tons per annum by 2030. Wow, that's huge.
Ryan Grant Little:It's not enough. Well, it's more than a dent in things, that's quite a bit.
Rob van Straten:We need to get to gigaton scale. If you Google a little bit, it's more than a dent in things. It does quite a bit. We need to get to gigaton scale. If you Google a little bit, you will find IPCC or McKinsey BCG. They're all doing great work. So we need gigatons. But if I project the current state of our technology, which is similar to others, I would say what we would need to remove a gigaton from the atmosphere, then it's 300 big container ships full with Skytree units to be deployed somewhere. That's too much, it's too much steel, it's too much capital. So what we need to do is radically innovate. But there's only one way to innovate and that is to start doing it. So if we wait for the innovation to take place and then roll out DEC, then it will never happen.
Ryan Grant Little:Yeah, yeah, I mean what you're pointing to also is this challenge of, in some cases, the CO2 footprint of building, the capacity to offset is going to push us over too far as well. Right, if you build 300 ships with the steel and the energy that's required I mean, indeed, in a lot of cases, the electrifying transportation or these different going, basically creating the clean energy infrastructure might tip us over the edge, you know, even though the result would make sense. But the infrastructure I'm putting this very badly but the infrastructure lift itself would be so heavy that it would put us over the edge.
Rob van Straten:Well, the balance already is positive. Let me reassure you that we call it the LCA, the Life Cycle Assessment that we've done that. So it is positive, provided you use renewable energy. But it's not good enough. There's too much capital involved For us. It's very difficult to create a bookkeeping, even in our head, around the cost of emitting a ton of CO2 and the cost of permanently removal, the cost of CO2. It's already in the money, it's already cheaper, right, to remove CO2 from the atmosphere. But the gap needs to be bigger and people need to feel more directly the pain of the cost of emitting, which becomes clearer bit by bit. But still the pain is not really directly connected. But we are already in the money with direct air capture from a climate perspective, or, let's say, a broader humanity lens on it, societal, but the gap needs to be widened right.
Ryan Grant Little:Rob, you mentioned that soon you're going to be raising your Series A, but I wonder in what other ways can listeners help you to fulfill your mission?
Rob van Straten:I wonder in what other ways can listeners help you to fulfill your mission? I would say when you discuss the topic with anybody, with your friends or in a business context, then look at it as the CO2 universe, don't look at one element of it. Oh, it costs too much energy. We need the energy to power our cities Okay, of course, nobody said we should be competing for that. Renewable energy, you know, and if there's people that say that, they're wrong, right.
Rob van Straten:So the project that we will soon publish, or we are part of that will soon be published in Texas, makes use of abundant wind energy. So where there's too much wind, we convert it in CO2 molecules that we put on the ground. Great, right. So when you think about CO2, think about the usage, where we started this conversation with the transition from captured CO2 from usage to permanent storage, as a lot of large emitters are currently doing. So widen the scope, I would say Widen the radar, when you think about CO2 or climate change, because only if large emitters and climate tech collaborate, only if we have the right policies in place, only if the capital flows in the right direction, we protect humanity, and often people think the planet is in trouble. The planet is not in trouble. The planet will survive, like it's done with many disasters, climate included. It's the people that not in trouble. The planet will survive, like it's done with many disasters, climate included. It's the people that are in trouble.
Ryan Grant Little:That's a great place to leave it, Rob. Thank you so much. I've really enjoyed talking to you. Likewise.
Rob van Straten:It was a pleasure. Thanks a lot.
Ryan Grant Little:Thanks for listening to another Climate Tech Podcast. It would mean a lot if you would subscribe, rate and share this podcast. Get in touch anytime with tips and guest recommendations at hello at climatetechpodcom. Find me, ryan Grant Little, on LinkedIn. I'll be back with another episode next week. Bye for now.
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