Energy
Monday, August 29th, 2022 8:30 am EDT
When did you create Terraform, and what’s the story behind it? What was your initial inspiration?
Terraform Industries was founded in late 2021, as a vehicle to bring gigascale atmospheric hydrocarbon synthesis to the world. Regardless of technical approach, ever-cheapening renewable power means that, in any given market, it’s only a matter of time before it’s cheaper to synthesize hydrocarbons from atmospheric CO2 than to suck them out of the ground. We think that time is practically upon us, so we’re moving with some urgency to address a rapidly expanding market need. When we make atmospheric CO2 the default source of industrial carbon, we can finally quench the net flux of carbon. That is, no more carbon moving from the crust into the atmosphere.
If you could go back to the founding, is there anything you’d do differently today, and any suggestions to other carbon tech founders?
The only thing I would change is that I would have started sooner. The pieces were in place in 2020 and if I’d been willing to take the plunge back then, we’d be much further along now. In this business, months and scaling rate really count. For example, at current rates of solar power production growth and cost reduction, we should be done displacing all existing fossil fuel sources by the late 2040s. If we can increase the solar panel production growth rate by just 10 or 15% today, we could complete displacement by the late 2030s. Not only would this save trillions of dollars, it would also likely save 10s or even 100s of millions of lives that would otherwise be harmed or ended by the effects of climate change.
Could you explain the Terraform service to our readers, and how it’s different from other negative emission tech?
Terraform Industries seeks to build a compelling technology platform that combines the financial properties of a cheap fracking well with the value and scale of consumer electronics. We’re trying to avoid 50-year development capital EROI because ultimately it will limit our capacity to grow. We are optimizing around short innovation cycles and rapid return on investment. Our machines take cheap solar power and use it to capture CO2 from the air and generate hydrogen from water. Both hydrogen and CO2 are hard to transport, so we combine them in a Sabatier reactor to form natural gas, which can be readily transported through existing distribution pipelines.
In terms of permanence of removal, how does Terraform compare to other popular methods, and how should people think about permanence, leakage, and optimal location of Terraform operations?
Terraform Industries is converting captured CO2 back into CH4, commonly known as methane or natural gas. Natural gas can readily be converted into durable forms, such as various plastics, but it can also be sold directly into existing markets. A salable product is super useful because it funds the growth of the business until it reaches meaningful scale. While Terraform is not in the business of durably storing captured CO2, the key insight is that by sourcing carbon from the air, we are displacing existing fossil production. The overarching goal is to drive the net flux of carbon from the crust to the atmosphere down to zero as quickly as possible. This can be done any number of ways, including through direct carbon capture and sequestration, but it can also be done by displacing fossil production, and we believe that displacement is the most profitable, and thus the most scalable, approach.
Where do you hope Terraform is in 3 years and in 5 years?
How do we measure success? Ultimately we will succeed if our idea is compelling and can be used to productively organize the labor of millions of humans around the world to solve energy scarcity and CO2 overabundance simultaneously. In three years, we would be gratified to have a dozen serious competitors and multiple factories producing our systems. In five years, we should be seeing a wide-ranging migration of development capital away from oil and gas exploration towards solar and wind production. Since all of our industry, including future hydrocarbon synthesis, is downstream of cheap energy, we would like to see the current trends in renewable energy production accelerating.
What would you aspire to do personally, if you weren’t the CEO of Terraform?
For the humans alive today, I think advancing the energy abundance agenda is the most transformative and important problem. Terraform is a piece of the puzzle that happens to align with my capabilities, but there are thousands of puzzle pieces and they all need to be solved. Once we’ve hit peak production rate growth, hopefully by 2030, I look forward to working on some related problems including radical compactification of the industrial stack. I think it’s very important for the long term resiliency of our civilization that we be able to make arbitrarily sophisticated devices at scale with a relatively small labor pool. The measure of success there would be if a country the size of Iceland was able to maintain, for example, a robust domestic full stack computer manufacturing industry. And, in my “copious” free time, I like to think about airships.
Speaking of costs, what room does Terraform have to reduce costs, and what does this depend on? How important are certificate sales compared to other potential end product sales in this calculation?
At Terraform Industries, we are deliberately avoiding making our business model contingent on certificate sales, clean energy tariffs, or any other kind of subsidy. They’re nice to have and we’ll take them if they’re available without a significant technical detour, but they’re not sustainable at meaningful scale. For example, at our desired growth rate, it will be a couple of years before we’re eligible for California LCFS credits due to the length of the application process and the minimum scale threshold. If we stay on our growth curve, by the time we’re able to sell the credits we’ll be at a large enough scale to swamp the market completely, so they’ll have limited utility. This seems preposterous, but California consumes about 2.5 trillion cubic feet of natural gas per year, so earning a credit of ~$50/kcf would require counterparties to clear $125b/year, which is about half the overall state budget. LCFS and other credits are super important for helping the nascent clean energy industry scale, but I don’t think anyone believes paying 10x the price for fuel forever is sustainable. It might still be cheaper than durable carbon capture and sequestration (CCS), though.
This touches on the broader problem, which is that cheap energy is a moral and political imperative. We cannot solve climate change by cutting energy consumption by a factor of 10, unless we think we have the means to forcibly regress 7 billion people to a pre-industrial standard of living, in which 80% or so will starve more or less immediately. We would struggle to publicly fund a 10x fuel price subsidy forever, without cutting other vital public services and/or enduring hyperinflation. So it remains that the easiest option is to dump the externality of CO2 emissions from cheap fuels on future generations by destroying the climate, since those future generations do not have any political voice or power and are unable to fight back. Terraform Industries is breaking this paradigm by finding a way to make clean energy cheaper and more compelling. Cheaper energy means more prosperity for everyone in the short and the long term. Terraform Industries facilities all over the world is a cost-effective way to deploy meaningful quantities of carbon capture machinery, at which point dialing back from 420 ppm to 350 ppm or so is a question of policy and, perhaps, a very small fuel excise to ensure a minimum fraction of the fuel stream is diverted into durable forms.
We do this by making the machinery irresistibly cheap. By making it manufacturable anywhere on Earth, without super specialized knowledge and tooling. We believe that solar electricity will continue to rapidly get cheaper. We capture the upside of cheaper energy in the future by allocating resources away from electrical efficiency and towards labor and capital efficiency. Our factors of production include energy, materials, and labor. Only energy is getting cheaper over time, so it makes sense to optimize around using more energy to save costs on other factors.
What are the most overlooked opportunities in cleantech and climate, in your opinion?
Bringing new technology to the masses requires the largely invisible but seething, incessant labor of tens of thousands of very smart process engineers. Like magic, they show up when the profit motive matures enough. Solar was the first piece of this new industry to reach this threshold, once that positive reinforcement loop snapped into place in about 2012. Cheap solar power during the day creates load shifting arbitrage opportunities, which then drove staggering sums of investment into battery manufacturing, which is approaching maturity today. What is the next major application of cheap power that will cross the profit threshold and accrue serious expertise and giant factories? For us, we’re working on synthetic hydrocarbons, but there are numerous other opportunities out there. Vehicle electrification. Mining. Material processing. Automated manufacturing. Desalination of water. Space development. Recycling. All of these industries and more are just barely on the cusp of major transformation. We’re about 10 years into a 30-40 year industrial revolution when it comes to applications of cheap renewable power. 99.9% of the industry’s growth is still ahead of us. It is hard to imagine a sector that won’t be transformed, and in my opinion it will be hard to lose money in an industry that is growing this quickly.
If you could enact some policy, what would it be?
There are definitely policy tweaks that can help this process along. If I get one wish, though, I would have to choose to make it easier to develop new solar generation. Today, it takes about 4 years to develop a new solar farm in California and that is way too long. Ideally, the EPA and related agencies can map out a broadly inclusive development process that, like traditional land uses including farming and forestry, determines that solar farm development is legal and approved by default provided it is compliant with a concise set of common sense standards. Solar farms are much lower impact than grazing or row crops and are generally developed on much lower value land, and yet we treat each one with exacting scrutiny as though no-one has ever built one before. To complete Terraform’s mission worldwide, we’ll need about 350,000 GW of solar production, which means we’re going to have to get very serious about paving large swaths of the world’s deserts with solar panels. In total, it’ll be less than 25% of the area currently used for agriculture, and unlike agriculture it doesn’t have to be arable land. In total the impact is relatively low. But we can’t be running three million separate solar plant applications through the gauntlet of a dozen different regulatory agencies for the next five centuries, as though each solar plant is some kind of new thing that no-one has ever seen before. Ideally, we would draw a box on a Google Earth (or ArcGIS) map, check a few boxes, and trucks can start offloading shipping containers full of panels that same day. Nailing inert slabs of glass to the ground is not only not rocket science, it’s also what stands between us and our civilization drowning like our coastal cities from sea level rise, during our lifetime.
What person or organization provides you with motivation?
Within living memory most humans on Earth lived subsistence lifestyles dependent on energy derived from solar power by photosynthesis and digestion. Starvation was not unusual. The industrial revolution provided us with seed capital to separate our civilization’s capacity for mechanical work from our own muscles and sweat, and we’ve made good use of Earth’s fossil fuel resources to spread wealth and prosperity. But now it’s time to take the next step and go back to using solar power, only this time with silicon and wires in a way that is a thousand times more efficient than growing plants and eating them. It is time to step away from the scarcity of toxic fuels hidden deep underground in random locations around the world, and step toward a future of unconditional abundance. Every day that we waste costs us another 100 million tonnes of CO2 into the atmosphere. Every year that we save is worth millions of lives.
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