CleanTechies

#235 This $100 BILLION Industry Is Hiding in Plain Sight! Big Oil's Bet on Carbon Capture

• Silas & Somil • Season 1 • Episode 235

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This week, we’re joined by Todd Bush, an expert in carbon capture, utilization, and storage (CCUS), with decades of experience supporting oil and gas companies in their decarbonization efforts. Todd has founded and sold multiple companies and is now leading decarbonfuse, a daily newsletter tracking deal activity in carbon capture and industrial decarbonization.

This conversation covers the current state of carbon capture, where the momentum is strongest, the biggest barriers to scaling CCUS, and how policy and investment shifts are shaping the industry. If you’re curious about where the carbon capture market is headed and how it intersects with industries like ethanol, hydrogen, and steel production, this is an episode you don’t want to miss!

🔍 Topics Covered in This Episode

**The first movers in carbon capture: ethanol, ammonia, and natural gas
**The difference between Class 2 vs. Class 6 wells and why it matters
**How carbon capture projects get financed and what returns investors expect
**The role of policy (45Q tax credits, permitting hurdles, and regulatory uncertainty)
**Utilization of CO2—who’s buying it and why
**Why Houston and the Gulf Coast are primed to be the epicenter of CCUS
**What’s needed for carbon capture to reach private equity scale 

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Notes & Links:

Timestamps:
**0:00 Introduction to Carbon Capture 
**3:50 The Journey into Carbon Capture Solutions
**6:55 Decarbonization Trends and Industry Perspectives
**10:01 Carbon Capture Technologies and Their Applications
**12:54 Regulatory Frameworks and Project Development
**15:55 Community Engagement and Project Success Factors
**19:41 Momentum in Carbon Capture and Community Engagement
**22:57 Technological Bottlenecks and Adoption Rates
**27:25 Talent Pool and Industry Transition
**32:03 Regulat

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Silas Mähner (00:01)
Hey, everybody. Welcome back to the Clean Techies podcast. Today we have a recording from our live podcast that we did in Houston last week. I do apologize for the sound quality on this intro note. I'm traveling right now, so I don't have my usual equipment. But I did want to make a big shout out to Digital Wildcatters and the Energy Tech Nexus folks for helping us pull this together. This discussion that we're sharing is actually with a fellow named Todd Bush, who is an expert in carbon capture broadly, especially with tracking projects.

after a long career of supporting oil and gas companies with decarbonization efforts, and then eventually founding a couple of his own companies and selling those. He's currently working on something called Decarbon Fuse, which is a daily newsletter that is tracking deal activity in the carbon capture space. So he has a lot of insight because he's really, really into the weeds of what's going on. again, people live enjoy the conversation, so I'm sure you will too. But without any further delay, let's get into the episode.

Silas Mähner (00:56)
Yeah, it's a party in the next door, it seems.

Todd Bush (00:59)
I have a little background music.

Silas Mähner (01:00)
Yeah, in you get bored.

Somil Aggarwal (01:03)
All right, thank you everyone. Thank you ETN Digital Wild Cutters and most importantly, Todd for agreeing to spill all secrets that he knows that he's ever known. So thank you for being here. To give you guys a quick intro, myself and Silas from the Clean Techies Podcast.

Todd Bush (01:14)
Thank you.

Silas Mähner (01:20)
Yeah, we've been to the Clean Techies podcast for four years. We interview investors and founders in climate space. So we've had a number of people on. We actually recently just did a crossover pod with Jason and Nata. That was really fun. This came out last week, I think. So we're excited to be here and excited to to Todd about carbon capture.

Somil Aggarwal (01:35)
So much more excitingly, Todd if you want to give a quick bio.

Todd Bush (01:38)
Yeah, I'm happy to share a little more about myself, my little journey from the energy background. I spent a handful of years at Chevron doing different types of projects, all of their iField and Lean Six Sigma projects, and then moved into probably more a more entrepreneurial role and started a company called Energent that was all about gathering data from satellite information, public information.

and trying to predict where frac crews and rig crews were going and did that for almost a decade, selling that to a company called Westwood Global Energy out of London and still keep in touch with that. And so as I was at Westwood, a lot of our projects were emissions focused and everything from how much CO2 is being consumed by different pieces of equipment on frac sites, on rig sites, as well as what's happening for

call it industrial decarbonization from different sources. And as I left Westwood, I decided to go kind of all in on looking at what kind of carbon capture solutions, hydrogen potentially, and some other industrial decarbonization technologies were out there and have spent the last probably four, four and a half years solely focused on that.

Somil Aggarwal (02:59)
So let's rewind four years ago. Why did you notice that field in the first place? What drew you there? Out of all the options that were ahead of you.

Todd Bush (03:07)
Yeah, so oddly enough, I had worked at Chevron at a field that bought and sold CO2 for enhanced oil recovery. That was my first kind of, I would say, exposure at all to the fact that, there's CO2 pipelines out there that are taking from natural sources and bringing them to assets. And after kind of thinking about that in the background and then also what was happening with

a lot of these emission sources, most companies that rewind kind of four or five years ago, they knew they were emitting, they knew they wanted to do something, but when they looked around at the options, they just didn't know what steps to take. So many of those kind of early projects were around, what are my decarbonization options? Which ones are practical? What can I do right now? And often, especially for some of those industrial sources,

it became pretty clear that carbon capture would be an enabler for other things. you know, call it, well, we want to do something on the chemical side to create a new product, but we need some CO2 source. So that discussion started happening all the time.

Silas Mähner (04:21)
So it sounds like in general there was an interest to do a little bit of decarbonization, but they also saw the other revenue streams that could come from it.

Todd Bush (04:29)
There was definitely net zero conversations happening at that point that were, I would say, creating the initiative and then also trying to tie to, is there a low carbon product or premium that I can get for, call it steel or low carbon fuels or some other kind of revenue source.

Silas Mähner (04:50)
And was that due to just like the times that like everybody was all about decarbonization or is that something that in the long term that just they're super committed to anyways like decarbonizing everything?

Todd Bush (05:00)
Depending on the company, know, different answers obviously. one thing, I spend a lot of like kind of one foot in the ethanol industry. And one thing I can tell you that they're solely focused on carbon intensity. And it's very unique perspective compared to many other chemical companies, right? And so their CI scores, they know them at the plant level, they know upstream and downstream what that looks like. And so it's a very important piece to their overall operations to be able to say, we're taking CO2.

we're gonna essentially sequester it and that's gonna bring our carbon intensity down from call it 65 to probably 25 or 30, which means they can sell at a premium in California, Canada and probably Washington as well.

Silas Mähner (05:46)
So the biggest thing I'm always curious with people who've come from the oil and gas industry who go into this space is what are the biggest portable skills from oil and gas to carbon capture in general?

Todd Bush (05:56)
Yeah, I'm not an engineer, not a geologist. I'll work on like the commercial side and economics and everything else. But I can tell you for sure, I feel like it's been the revitalization of geologists for carbon capture because you'll see that they can bring over all those skills and actually you end up doing kind of that whole value stream of work for natural gas or even some other kind of gases. But you know, you need

skills on the commercial side to understand CO2 supply agreements. You need understanding of what's going to happen from the subsurface perspective and then everything in between. you know, the facilities, the not only facility engineering, but being able to understand kind of the integration points and transfers of control, which is well, well documented and well done in natural gas, probably more so than a lot of other industries. But that's all required in any

CO2 sequestration or even utilization project.

Somil Aggarwal (07:01)
So, you know, setting the scene a little bit as well, if you look at carbon capture, who may not be an expert, if you're taking a step back, what are the very obvious, sort of most straightforward ways to do carbon capture? And sort of like, are the options on the table right now?

Todd Bush (07:17)
Yeah, options on the table are... think there are lot, right? I think there's a number of companies out there that are still looking at it and evaluating carbon capture for kind of the... I'll take it from like an industry standpoint at first because I think there's a first wave and then I think there's a kind of a tier two and, you know, or a second and third wave. For the first wave, we're going to see mostly ethanol and natural gas companies pursuing projects, implementing them.

and actually getting to operations like. So you look at, they have a premium product and they have high concentration CO2 coming from their facilities. So that means low capture costs. And I get a premium for, know, let's say I'm selling my gallon of ethanol into the California market. I get for every, call it 10 carbon intensity points lower. I think it's nine cents a gallon premium. And so you can see that.

Somil Aggarwal (07:48)
them first, the carbon intensity.

Todd Bush (08:15)
ties directly back to their economics, which is a strong kind of position for carbon capture to be in. Ethanol will also open up the door to sustainable aviation fuel. So you'll see a couple other opportunities, I think, connected to SAF and what that looks like. that SAF side is probably a second wave, most likely. But still in that first category, you have ammonia and natural gas producers.

which there are number of natural gas companies, EOG, BKV, a couple others in the Permian that are actively sequestering now and have approvals for their, at least in Texas, that's more of a class two well consideration because it's coming from natural gas, but you can still get all the credits and kind of we'll say the.

the 45Q tax credits and all that, so get the benefits from the class two well. But after that, you kind of get into this area where you're in steel and cement, the technology, the carbon capture cost itself is much greater. The projects are probably much larger because you're dealing with facilities that have instead of emissions like an ethanol facility that's in the 500 to 800,000 ton range.

dealing with facilities with two million tons of CO2 and what to do with that, which requires so much more infrastructure, sequestration potential, or even if they're looking at CO2 utilization, there's not many off-takers out there right now that are looking at taking off that much CO2.

Silas Mähner (10:02)
Will the interest in carbon capture continue even if large corporate buyers, because there's not that many, if they kind of pull back? Because we're seeing a whole shift in everything right now. They're striking away their DEI teams. will that go with it? If they pull back, there still going be an interest?

Todd Bush (10:20)
So on the carbon capture side, personal opinion, but feel that it's pretty safe, especially thinking of 45Q. And one thing that we were talking about earlier is kind of zooming out, looking at 45Q, agricultural and ag lobbyists and interests are all aligned. Like they expect carbon capture to help prolong, I'll say, the ethanol that's being

produced from the Midwest, right? And you have obviously the oil and gas lobbyists that are pushing for carbon capture. And then kind of third on that would be probably steel and cement. And you look at, I'm trying to remember the name of the organization, I believe it's Carbon Capture Coalition. They have a diverse group of members across probably seven or nine industries and include some of the majors in oil and gas, as well as some of the big names.

on the ag side like Cargill. And so you have this nice mix of companies and people that are pushing for carbon capture to help kind of enable them down the road.

Somil Aggarwal (11:28)
We've established that there's interest and there's some markets in which there's maturity of the technology. you were saying within methane capture, at least there's definitely a case there. You look to SAF, a little bit less, but still there. And then you have the largest go where it's very difficult. How far are we into seeing commercially deployed solutions, especially in terms of, it sounds like there's three segments. So if you could go through each and say, what's the maturity of each industry?

Todd Bush (11:57)
Yeah, definitely for that kind of first wave, you're seeing companies get to operations now. So, for example, Harvestone Low Carbon Partners, have an ethanol producing asset and are sequestering the CO2 in North Dakota. There's Tallgrass that we were just talking about from kind of the project developer side. They're actually assembling 11 different ethanol producers.

in Nebraska and bringing that all the way to sequester in Wyoming. And the pretty unique thing that they're doing is they have a natural gas pipeline that they're kind of retrofitting for CO2. They're repurposing that. So that's an interesting one. In my opinion, that one's probably gonna be the first, I'll call it big project that you see versus then a handful of other ethanol producers in Indiana that are working with companies like Vaults in Lapis.

to sequester CO2 near site. So those projects are all lining up for 25 and 26. And for the first time, you can actually see like, wait a second, they've ordered compression and they're getting compression delivered to their facility. it's becoming, they've already made some investment of call it 30 to 50 million probably on compression. And so they're moving forward. Versus natural gas companies have been

Looking at Texas and New Mexico is kind of a near term to get to operations. So much faster. They don't have to go the big class six well permit process. They can go through kind of a class called a class two. They can move those from kind of, you know, from initial kind of get through FID, let's say announce FID to implementation in

12 to 18 months compared to many of the other processes and projects that are in that kind of larger tier. Some of those phase three where there's class six permits that have been out there for over 24 months now and still probably have a year to go. it's a tough, tough cycle to learn from, especially as you look at these projects and there's so much opportunity for some of the large project developers.

especially as you start thinking about two million tons, three million tons, four million tons of CO2. But they have a tough road to get through the permitting process and make that happen.

Somil Aggarwal (14:28)
So I'm probably a lot less knowledgeable on this than the people in the room, but could you explain the difference between a class 6 and class 2? Like what is the significance?

Todd Bush (14:35)
So the significance is pretty great. You have a class six well that's essentially governed more by the EPA. There are a handful of states that have primacy, meaning they'll kind of govern that process for kind of a class six well. And so those are Louisiana and let's say Louisiana and Wyoming and North Dakota. And then you have a couple other states that are in the application process, probably namely Texas and

West Virginia are probably the next to get primacy for Class 6 wells. And then Class 2 wells are traditional injection wells used for, could be produced water, could be CO2. And these are typically in New Mexico and Texas. And they can take CO2 from a, I believe the classification is a petroleum

like petroleum infrastructure, and then take that CO2 and sequester it, and you still get 45Q in the tax credits. And so a handful of companies are doing that to basically test the ground for, can we make this a viable project? Can we be a solution that we can scale up? And they're doing that pretty regularly now.

Silas Mähner (15:55)
So when somebody's going to build a carbon capture project, what are the things that need to be present to make it successful? What are the core barriers that people need to be aware of? Because there's a lot of startups in this space, though, who have not quite got as far as some of the projects you mentioned.

Todd Bush (16:10)
Yeah, there's many project developers out there doing different things, but I would kind of couch it as you need a CO2 source and you need an agreement in place. So long-term supply agreement for CO2 is as kind of one piece. The second piece is you have to have the land and that land could be negotiated from kind of a state or federal entity, most likely private.

and those individuals are getting more more accustomed at receiving kind of, you know, they're getting more expensive. Let's just say, let's just leave it there. And then from a, I'd say community perspective, then you're going to have to have stakeholder engagement from the very beginning. And it's been, I think, from an industry or from even the project developers and kind of people that are out there, the...

cycle has improved much. It's been much better from the days of kind of Navigator CO2 and Summit Pipeline. think Air Products is another good example where they've learned a lot in the process. And now that the industry knows, okay, we need to engage early, engage often, and make sure we understand kind of all of the community aspects of this. Those are, I would say, probably the top three in my mind from what you need. And then of course,

financing is probably the fourth that is the most difficult sometimes.

Silas Mähner (17:44)
tends to be the biggest objection from a community.

Todd Bush (17:48)
There's, I think Navigator is a good example. They were out in front of some of their right-of-ways and so they were able to get most of their right-of-ways done, but there were a few bottlenecks going into kind of Iowa and Illinois that they just couldn't get, couldn't get past, unfortunately.

And there's a lot of local conversation about why are you implementing kind of a CO2 pipeline? Why do we need to have pipelines in our backyard? And so you definitely have a lot of NIMBYism across the board for creating new infrastructure, creating new, I guess, processes and new organizations that are not necessarily monitoring or

I want to say don't understand kind of the regulatory landscape, but even though CO2 has been kind of transferred and piped in many different areas of the country for a long time, it's still going to be new to most of the country and most of the states.

Somil Aggarwal (19:01)
So, to recap, you need that source of CO2, right? You need land from somewhere. You need the ability to interact with the community and maybe get buy-in, it sounds like, especially with the existence of NIMBYism and, you know, maybe some objections there. And you need the financing. So, we've talked a little about community. I want to ask, especially as you you established that for some industries, there's really key interests.

and those are probably the most relevant right now. So for the ones where you're seeing progress, where do you think the most progress is being made? Is the financing finally there? Is the community finally buying in? Are the CO2 sources finally more mature? So where is that momentum coming from?

Todd Bush (19:47)
So a couple angles on that. I feel like there's definitely momentum on the CO2 supply agreements and in getting adoption of different industries. So that's a huge kind of push for several different industries and understanding kind of what that looks like. There's also a handful of, I would say, learnings coming out of the industry around how to engage at different levels.

across different communities. that has been probably, know, different companies have taken, you know, unique approaches, but engaging at the local level, engaging kind of at the state kind of regulators, as well as kind of state politicians has worked really well for the organizations that are working in Nebraska. And so that would be Tallgrass and others. And they have complete buy-in from not only the state level, but your local level where

where people are going to work in those ethanol facilities, where they're going to work at even not necessarily sequestration sites, but the pipelines. And so you get much more buy-in that way for sure. And that's helped tremendously to see a little bit, I'll say a little bit of movement on those projects.

Silas Mähner (21:04)
Do you think we're pretty close to a place where carbon capture projects go the way of you know, just solar projects, private equity just piles in and just like dumps, know, billions of dollars into it or are we still probably like several years away from that?

Todd Bush (21:16)
probably still several years away. There's a couple of companies on the project developer side that are actively investing. There's companies like Vault and Lapis and Carbonvert and a few others that have already have some success. And so they have a path for private equity and they have a path to attack other industries and go from not only just being kind of the

the sequestration partner for a couple of companies, but for many companies, definitely see that as potential. The financing becomes so difficult on some of these projects where essentially just to get through that initial screening on the engineering side and do the subsurface study and to actually evaluate, I'll say, kind of the stakeholders and what that looks like from a land perspective, you need significant capital.

Typically, they're raising five to 10 million just for that initial feasibility. And if they're going out, and I know a few that have successfully raised capital to buy the land, but then you're talking about making a big bet on the land in order to connect to different CO2 sources. So there's certainly a lot of risk still involved in the whole system.

Silas Mähner (22:41)
I'm just curious because usually you don't get the private equity money to come in like that unless there's quality returns. And if you're somewhat dependent on regulatory concerns or interest in carbon credits, they're not going to be like, OK, we're going to for sure sell power, for example, right?

Todd Bush (22:55)
Right, exactly.

Somil Aggarwal (22:57)
I think one of the most, so I used to invest in lot of early stage climate tech startups. And I think one of the most interesting bottlenecks, especially from when you're looking at, maybe the universe of carbon capture right now is not universally loved, right? Clearly there's some hesitation still. And so there's an obvious question of like, okay, let's build some better technologies that maybe does it cheaper, faster, more efficiently. On the adoption side, depending on how much visibility you have there.

Is the emphasis to try and develop bigger projects or is there a lot of active scoping of sort of the next generation of more efficient technologies? Especially since, like we said, you know, right now there's been a shift in sort of attention in terms of where are people focusing maybe little more on energy and energy efficiency rather than carbon capture technologies.

Todd Bush (23:42)
Yeah, I think there's been a lot of discussion about low carbon natural gas to power data centers. I think that's one that is companies are actively looking at trying to understand what they're doing. You know, in our, I'd say in the Gulf Coast, probably Entergy and Calpine are two that are kind of leading the way from that perspective. And they are evaluating a number of different projects, looking at not only different CO2 capture technologies, but also

different partners that can help deliver on the entire value chain for CCUS. And then taking kind of a step back in thinking about what CO2 capture technology is out there. think one thing that I've been reminded of and has come true for many of the, I guess, the different TRL levels that are out there for CO2 technology is that

The ones that are being actively adopted are moving into seven and eight, started probably 10 or 12 years ago. And so that has been one area where there's been investment, obviously, in a lot of the capture tech, but it still has a long ways to go to move from just here, we've demonstrated this and we can now go full production on a large plant.

Silas Mähner (25:05)
So in your estimation, why is the US and Houston, specifically, is that a good area or a good place to be developing carbon capture specifically?

Todd Bush (25:16)
Yeah, I you have the talent people and... Good answer. Yeah. When you look at kind of the Gulf Coast as well, I wish I could remember my exact numbers, but the majority of the sequestration and storage potential in the US is in the Gulf Coast. And so you have different pockets around the United States and even Canada where you can store CO2, but the majority is...

in Texas, Louisiana, and even offshore as we get into kind of an environment where it's a little more predictable from the financing side, more predictable from revenue side, offshore becomes kind of an interesting option down the road.

Silas Mähner (26:01)
Can you say more about what that looks like though? I'm not sure what that would look like for Offshore.

Todd Bush (26:04)
for offshore. So for example, I believe Chevron today has a BioBind project that was originally developed by Kalos and Carbonvert. It is an offshore sequestration project that can hold, I don't even know, kind of misquote me on the numbers, probably gigatons of CO2 compared to

a let's call it maybe a site that's in the Midwest or even in, you know, local storage opportunity in Indiana where you're talking about, okay, max, maybe it can hold, you know, a million, 1.5 million tons of CO2. So the scale of even onshore Texas and Louisiana and then offshore brings kind of a whole new scale to the solution. So you start thinking of things like

Well, if there is a pipeline, if you took kind of the Princeton study and the famous map that shows CO2 pipelines going everywhere, and if you were able to connect those into the Midwest or even further and bring those down to the Gulf Coast, then now you have a huge storage opportunity and a great use case for that.

Somil Aggarwal (27:25)
One thing you said that stood out to me, so this area has a lot of sort of like the prime players ready to act or I guess ready to provide sources, but you know, maybe this is just a naive question, but hopefully then at least one other person will have thought it. Why? Like there might be a very basic reason, but why is there so much here?

Todd Bush (27:43)
Think stems probably from oil and gas and then that you also have I've heard different statistics on this, but I believe there's more chemical engineers in Houston per capita compared to any other city and so you throw that you have the upstream side and the downstream side of chemicals and Then from a carbon capture perspective your you need both of those pieces to do

the full value chain of CCUS. You need kind of the more the chemical engineer on the CO2, high concentration or low concentration CO2 and then be able to connect that to the sequestration opportunities. So you absolutely still need kind of the geologists, petrochemists, petroleum geologists, petroleum engineers, kind of that whole landscape of engineering and geo kind of talent.

Silas Mähner (28:43)
Does that talent really want to move into clean technology generally, are they one way or the next?

Todd Bush (28:48)
I think it depends. mean, there's definitely people that have been through cycles in oil and gas and are like, I'm ready to try something new. There's that angle, but also a number of people that are looking at operations or maybe have some exposure to facilities within the petrochem side or oil and gas in general and want to be able to take kind of a new process and take and run with something where...

can grab, if I'm able to capture the CO2 and I can take a utilization project and actually create some synthetic fuel or something else, especially those that are a little more entrepreneurial, can grab onto that and kind of make something happen.

Somil Aggarwal (29:33)
A lot of sort of setting these industries, so we have an episode that's coming out pretty soon. If anyone's heard of Edge Cloud Link, the big data center, basically they're building a new type of data center that is more of an off-grid energy source, and hydrogen is the ideal energy source for them. So you think of it as like the first generation hydrogen data center. And in order to get their system set up, they had to build almost an entirely new supply chain to get that to where they are now.

And so that brings up a big question, which is obviously at the very beginning, it's very expensive, but over time, the costs decrease, right, as they connected the certain areas. So I'd love to ask, we're talking about the Houston area and a lot of the resources in this. As people are developing these supply chains and facilities, do you have any line of insight into what is getting cheaper? What is uniquely getting, you know, as the scale of production increases, a lot easier to do?

Todd Bush (30:26)
You know, right now lot of the conversation has been on cost increases. So probably not too much insight into decreases, but I will say that it's becoming clear on both the subsurface work as well as the monitoring after the fact that there's going to be a number of solutions around that. And right now they're still fairly expensive, but

I think just the market competing against different technologies, different kind of methods will be good for the industry so that those monitoring techniques can involve, it could be seismic, could be surface, could be even kind of satellite-based solutions. And so the combination of that I think will help drive cost downs and drive, I don't know the percentage but...

It'll be material when it comes to that. And then I think the big issue right now is the switch over to kind of chrome, is it CR25 steel? So that you need special metallurgy for being able to inject CO2. And so that is going to be one kind of key point that a lot of projects are talking about, not only right now, but coming the next six months.

So if that's already increasing in price and then there's a tariff on top of that, not that it will kill projects, it'll just be a little painful for a bit.

Silas Mähner (32:03)
I it's a good segue is like I'm just very curious. You sort of touched on it that you don't think that the interest in carbon credits is going away per se, but like with the new administration, do you see any other headwinds or tailwinds for carbon capture broadly and maybe hydrogen if you want to talk about that too.

Todd Bush (32:16)
Yeah, yeah. So definitely, obviously the change in the IRA, change in kind of administration has created a whole lot of uncertainty and just kind of questioning kind of the economics for many of these projects, right? But what we've seen from 45Q is a lot of emphasis from other industries and being able to take individual industries and tie that back to, you know, the specific kind of ethanol producers, the other

on the natural gas side and even ammonia, which I haven't talked too much about, but there's a premium there. So 45Q in that sense is probably safe. And then where there's a little more question in my mind is with 45V, which would be hydrogen and 45Z, which would be more on the biofuels and some of the credits that are happening for sustainable aviation fuel. Those feel a little less

likely to go forward in their current form. there's probably, I suppose we'll know in what, 60 to 90 days, whether or not, you know, which ones go forward and which ones are altered or changed. But you have a lot of investment happening across all those individual tax credits. So if the focus is about American jobs and US manufacturing, then those projects

delivered, well, will deliver some of the energy infrastructure that was in the executive order. So there's definitely some ways to spin it. it's still, my personal opinion is 45Q will go forward. 45Z and 45V probably will go forward, but there'll be some nuances there and changes.

Silas Mähner (34:11)
Yeah, I think it's just a grab bag. We don't know what's exactly going to happen. Maybe you don't know this, but do you have any insight on if the LPO will still be active in any, like, do you see there being any involvement with this? mainly, I'm curious about, you mentioned that some of the projects are moving forward in pretty much red states, right? So I'm just kind of curious, like, how many jobs are actually likely to come out of this? I know there's a coalition of Republicans that are trying to keep most of the IRA intact. So I'm just kind of curious if you have seen any of this or if you see most of the benefit going to red states.

Do you see any, any crystal ball there for

Todd Bush (34:43)
Yeah, especially the LPO side of this. Tried to, so we have a carbon management workshop that we're putting on next week for kind of industry practitioners. And so we've been talking to a couple people from the DOE and from the individual states, and everyone is a little reluctant to stand up in front of people and say anything right now, which certainly understand and can appreciate that. But what's

we're seeing kind of from the project level in the companies that are putting money in and capital in is that those projects are not slowing down. And so you have like I gave the example earlier of kind of compression being delivered. That is continuing to happen. know, Tallgrass hasn't pushed back their dates for going into operations, which contractually they have an obligation to do that for the 11 or so kind of ethanol producers that are there.

And then the individual companies and some of the private equity that's financing, they're continuing to look at projects and look at deals. And we're, haven't seen any announcements this year yet, but there are quite a few that are kind of on the table that should get funded, I would say in most likely Q2 this year. So unfortunately, we'll probably have to wait a little bit until there's a little less uncertainty, but.

We're going to see those projects get funded.

Somil Aggarwal (36:11)
So tight lift on new momentum, but at least as current projects go, things are trending. But you actually, you brought something up, so I'm gonna poke you on it a little bit. The carbon management workshop, right? As you're dealing with stakeholders that, you maybe they're not at liberty to say that much. I'm curious what things are you focusing on? Like what is essentially the progress that we can make, especially as you're in the rooms with those kinds of

Todd Bush (36:34)
Yeah, so I think especially from the states that have primacy. So those individual states are going to be able to move probably a little quicker. And those are essentially right now, think of it from Louisiana and Wyoming and North Dakota. And North Dakota went, let's see, with Harvestone went operational. The next one that will go operational is Summit. So you have Summit Carbon Solutions.

that will have their, essentially they need to fix or resolve some of the right away issues that they have in South Dakota, but that's likely coming and they already have the sequestration in place. And then from, I'll say the Louisiana perspective, they've been a little slow to actually have, I'll say approved kind of permits, but they have the organization and setting up the team.

to basically go through all the technical due diligence that they need to have as well as the community side. And so as we're kind of talking to a lot of those more on the state regulatory side, other than the DOE, they are optimistic about moving those projects forward and don't necessarily see a big change happening in this kind of month or quarter, where there's some concern is what happens with the EPA's involvement and how

How much back and forth is there needed from primacy when you start thinking about one permit going through and working with the different EPA regions on those individual permits? So they're trying to understand exactly what's going to happen with that and hopefully influence some of the, we'll call it potential permitting reform that could happen along with the EPAs, any change in the administration.

Somil Aggarwal (38:31)
Got it. So, and just on that last part, in case anyone, I'm not an EPA expert because I'm just not an EPA expert. So their role in this is there's potentially certain changes in the way that permitting for, is it net new projects, current projects? What is the impact of that?

Todd Bush (38:49)
So there's extensive, so just to give you an idea, if you were to go and pull up an approved Class 6 permit, you're gonna open up probably a thousand page document that has everything from the subsurface analysis to the layout of the plant to the concentration of the CO2, all the way to a monitoring plan that is supported by a

plume model that goes from today into 100 years from now. And so there's an immense amount of kind of technical work that goes into that. And some of it is, I would say, probably less important upfront compared to some of the issues that are happening right now with.

anything from a water monitoring standpoint or subsurface monitoring standpoint. I think there's some probably could pull back on some of the detailed engineering work that is done upfront before it needs to happen when you're actually in the project development cycle. But that's some of the upfront engineering that's required from the EPA that you have to abide by to be able to actually take a step in.

in developing one of these sequestration projects.

Silas Mähner (40:18)
Is there pretty good infrastructure for actually carrying these out like the EPC firms that are typically used to building all their projects? they pretty capable of doing these? Like that's not too much of a concern.

Todd Bush (40:29)
Not really. EPC costs have gone up pretty considerably over the last two and a half years, but there's a number of companies that are well known from just the CO2 side themselves that are smaller, I'd say regional EPC firms. And then several of the large ones, the big names from around, even around the Gulf Coast, whether it's Wood or Worley or Acuitt or somebody like that, that is...

more than capable of delivering these projects. Now, probably stay away from some of the smaller ones, but for some of these large CO2 projects, they are definitely in the mix.

Silas Mähner (41:11)
One thing we've reached over a little bit I want to just have you touch back on is the utilization piece. Are there typical demand areas that you're seeing for utilization of carbon?

Todd Bush (41:22)
Yes. So definitely when you start thinking about hydrogen or even like synthetic fuels or e-fuels, there's a number of projects in the Gulf Coasts that I've tried my hardest to say go to the CO2 source and then build your plant next to a CO2 source. But that's not as easily exported from kind of the external markets.

The Gulf Coast has a number of e-fuel projects that are out there that are looking for CO2, looking for hydrogen. And those projects are both kind of on the mega scale project side as well as some smaller ones that are just looking for, I just need 50,000 tons of CO2 and not that much hydrogen to kind of prove out the concept.

Somil Aggarwal (42:14)
You brought up scale and that made me we had a conversation with Trevor at this issue earlier today about scale and You talk about gigascale or sorry mega scale if you think about the agreements if you know and if you have Any insight into what the nature of the corporate agreements are in terms of scale today and where we need to get to Where are we in that journey?

Todd Bush (42:38)
Just from a mission standpoint.

Somil Aggarwal (42:40)
from a technology the size of projects that need to get out the door.

Todd Bush (42:45)
Okay, so I say we are in very early innings when it comes down to it. And just from the projects that I know are operational and maybe even the ones that are in development, we're still only, call it probably 20 to 25 % there from an emission standpoint. And so there are a number of emission sources that are essentially either

there's nowhere to store that CO2 or they don't have any partner on the utilization side. And so I went back and I was looking at kind of over the last couple of years how much CO2 sourced. And so over the last two years, sourced about 6 million tons. And that number could have been so much more if we could have taken a Gulf Coast kind of, I'll say,

a typical Gulf Coast asset and investor and co-located them next to an emission source that was high concentration CO2. And I have feeling that will happen in the coming years as more and more companies actually see some of these projects develop and can say, all right, here's a successful pattern and here's a way that we can stair step on that kind of scale, but we're still not there yet.

Somil Aggarwal (44:12)
So the colocation isn't happening right now because there's no precedent, it's too risky. Like if that's seemingly like an obvious solution, obvious answer, what's the reason not to?

Todd Bush (44:22)
The

reasoning that I've been kind of given is basically the export markets and being near kind of a major hub is more valuable for some of those companies. And often those companies own land and own facilities along the Gulf Coast. So they want to put it on their own land. But then the dilemma becomes where is your CO2 coming from? And if it's not...

you know, a couple thousand tons a year and you need 600,000 or a million tons, then it becomes a much more difficult exercise to figure out, is pipeline gonna work? Probably not. Is rail gonna work? Rail works if you wanna pay 200 to 250 tons or dollars per ton, that will definitely work, but it's not an inexpensive solution.

Silas Mähner (45:17)
I don't have too many more questions. guess should we open it up to everybody else? If anybody else here got some questions?

Todd Bush (45:23)
So when you say Gulf of Mexico assets, are we talking depleted gas fields or are salt dome calories? Both. Most of the companies that I know on the CO2 storage, their project developers, are looking at salt domes or the saline aquifers really because they don't want to deal with the remediation of any old assets or old wells that are nearby. And so that's been...

Let's see, I know there's been a lot of conversation about the Miocene in the Gulf Coast as kind of one of the big kind of storage opportunities.

Somil Aggarwal (45:59)
know

recently on the news there's been some stuff about CO2 leaking out from some of these storage sites. So I'm just wondering what's your take on that?

Todd Bush (46:10)
Yeah, the monitoring well did its job. It's definitely been, I would say, positioned as a leak, but the monitoring well worked. Definitely because it's a DOE-funded project, because it's ADM and they're kind of out front on a lot of the CO2 discussions, definitely with some negative press. But in the end,

looking at, all right, what does that mean for projects? And really what that means is most of the projects are going to have to switch to the 25 chrome steel, which increases the cost a little bit. But it's available and companies know how to do it. And the monitoring will become even more important, both from the subsurface side and surface.

Somil Aggarwal (47:04)
So the issue before was a materials issue.

Todd Bush (47:08)
kind of part material, but there was CO2 that was in the monitoring well itself. And so they want to make sure, especially from the EPA's perspective, the metallurgy on the 25-chrome is so much better for CO2. If you talk to some people that are used to doing class II wells in Texas, let's say, for CO2 injection, they would say that's overkill.

but at least establishes a standard for the industry. And when there's a standard, then at least everyone can move towards that.

Somil Aggarwal (47:45)
Could you touch on the cost for these projects that are at a source of emissions, either on a per ton basis or the cost of the project, and then also what it takes to get to FID on the back end of the finances?

Todd Bush (48:04)
the cost to get the FID and the capture cost as well?

Somil Aggarwal (48:09)
What do you need to see to get to FID in terms of the financials? What type of return?

Todd Bush (48:16)
Yeah. So I'll talk like on the sequestration, I can give you a little more detail. From a capture cost perspective, probably need to be below, I'll say below $40 a ton on the capture side. And then that gives you essentially 20 to 30 to work with on a dollar per ton from the storage.

which means it's easier to get a CO2 project that is near site, meaning I have the facility and then within a mile or within two miles, that facility has their storage potential there. Those are economic and you're going to be able to get a good return on those and you're going to be able to finance those. From a larger project perspective, you're going to have to have

like a bigger balance sheet and probably a very focused pipeline and transportation story because that's been the challenge with Summit Carbon, that's been the challenge with Navigator and to an extent, Tallgrass as well. But those are kind of the dollar per ton range. then moving into post FID, then that's really when you start to spend money.

and the well costs go from, let's call it roughly 15 to 25 million dollar per sequestration well. And then you have to also add in above zone monitoring and you also have to add in all these USDW monitoring wells. So all in, you're probably looking at another 40 to 45 million for kind of the monitoring package itself. And then your variable on your transportation costs. So that's

Pipeline costs are a little less. If you're staying in that kind of half a mile, then you can get there.

Somil Aggarwal (50:24)
Kind of clarifying that a little bit. In order to get financing though, what kind of returns are they expecting, you know?

Todd Bush (50:34)
Depending on if you're going to individual, I'll say energy infrastructure type of investors, you're going to have the typical waterfall structure for the company as well as an expectation of, call it anywhere between probably a minimum of 18%, 20 % return.

and then being able to figure out the right structure with the waterfall to get a return on their money first and then it comes back to the management team or whatever that looks like. We've seen a couple of projects that have moved a little faster due to land developers and landowners, but those aren't as common. But I do know a handful of companies that are out there working with the...

commercial kind real estate developers that are looking to develop either sequestration sites or co-locate kind of for a utilization project and that can accelerate kind of the early stages of the project if you can kind of meet the right partner. So I have a question. it point source? So you guys are collecting, well, majority of the carbon that's collected is that point source collection, right? Correct, yeah.

From there, it moves in the ground. And when it's in the ground, it's just a bed of a curiosity. Has anybody thought of what to do with the carbon that's in the ground yet? No. There are lot of different companies talking about, well, I want to capture the CO2 and then utilize it for different projects. But from the sequestration side, I've heard of a couple of companies that are

doing different insurance products on that, but haven't heard too much, you know, the expectation of what happens after the fact, after it's sequestered. really it's the tax credits that are driving everything? It is the tax credits that will drive the majority of the project. If you have either ammonia or ethanol, then the premiums will drive it and the premiums will kick in and

actually you'll see obviously a base layer of the tax credits, but the premiums help support and really make it financeable. Maybe the following question for Williams is like in terms of finances that like in these ethanol projects, is it like 80 % of the free cash flow comes from the tax credit or from the premium? Like what's that balance when people think about the returns? Probably closer to probably closer to 60 is the premium and then

Yeah, you're still getting quite a bit from, yeah, it still matters for sure. And even some of the producers, the ethanol producers and sequestration partners have structured it where you're getting, one entity is getting the premium and so they're gonna pay for that sequestration and maybe they share in the tax credits in some way, right?

question that I work in philanthropy and global affairs as well. Do you feel that the current warfare going on when comes to bombs and chemical warfare affects like the investments in clean energy and whatnot? I'm not sure if that's even making sense, but does that make sense? Like, am I making sense?

Silas Mähner (54:13)
Do you think you're are you asking if if if if it's going to affect the investment in clean energy?

Somil Aggarwal (54:19)
Yeah!

Todd Bush (54:19)
Yeah,

I'm just trying to figure out how shape that question appropriately because like, you know, when it comes to like stuff going on overseas, the carbon footprint increases when it comes to bombs being dropped in like, I'm gonna say Gaza, Lebanon, not necessarily Jordan, but you know, different countries in the Middle East. And since I work in those regions virtually, I'm just doing a lot of studying on like, how do we take the United States?

funding of these partnerships and whatnot, if that makes sense, and just invest into clean energy because right now clean energy is still kind of new to the world. We have a 2050 checkpoint, a 2030 checkpoint, SDGs, all those good things. And it's just like, I'm 28, so a lot of people my age only care about TikTok and whatnot. I'm here trying to save the world with my Justice Pages and Mayor Turner and whatnot. I'm just like, guys, we have to save the world. Our world is literally falling apart.

A lot of people my age just don't care, you I don't know if making sense.

Silas Mähner (55:21)
It's a broad question. I think it's very difficult to say. It appears that there's going to be definitely a pullback on investing in clean technology broadly, especially in next four years. But there will be things that continue going forward because the cost of building solar is still pretty low. there'll be things that continue to go forward. one thing that is not exactly your question but I think is somewhat related is that the US is trying to make a push for sovereignty and being able to

control our supply chains and the future of warfare is with drones pretty much and we're gonna need batteries to do that. So I don't necessarily see anything from the administration that appears that they're going to invest in battery technology and battery production here, but I think if they genuinely cared about that objective of having that supply chain here, they would do so. there are some things where you could say that because the US is positioning itself in this battle with China basically that...

there could be arguments to be made that you can invest in clean technology because it will advance the natural security interests. But I don't really see that happening. That's my hope, that we can get climate tech investment out of it, kind of by accident, if you will. But I don't know if anybody's making that case to the Trump administration right now.

Todd Bush (56:40)
your

insight on that. I'll just say I'll just have one quick follow up on that. I'm in a cohort called climate base.

With a couple of climate investors in San Francisco also a venture capital cohort in Santa Monica, but it's remote But you know, I'm studying international affairs at Rice University right now and since I'm an independent in terms of policy I look at everything in terms of like, okay What is this going to do to benefit not only domestically but internationally as well and locally since I run a platform that was based off of the deaths of George Floyd and Vanessa Guillen it ended up taking off the NBC and ABC so I had to like really

over time to like make it focus on the world at that extent and then adapt its energy eventually.

Silas Mähner (57:23)
Yeah, I don't exactly know how to answer your question, think it's a lot of tough questions, but I think we're pretty much...

Somil Aggarwal (57:31)
Any other questions from the audience? Amazing.

Todd Bush (57:34)
You've done that one.

Silas Mähner (57:35)
Yeah. That's

all right. Yeah, it's a tough one. Let's give a round of applause for Todd.


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Somil Aggarwal

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