Today's guest is Mike Kelland, CEO of Planetary. Planetary has an accelerated carbon transition platform that creates effective carbon removal at gigaton scale and reduces emissions through a clean alternative to fossil fuels. Their platform results in permanently sequestered carbon through ocean air capture, ocean deacidification, and clean hydrogen. They also recently won the XPRIZE Milestone Prize.

Mike was actually one of the earliest listeners of this podcast, one of the earliest members of the My Climate Journey member community, and he also has a similar story to mine, coming from the traditional software startup world and finding his way into climate tech. In this episode, we talk about Mike's journey, why it came about, how it came about, the different phases and stages that he went through between becoming determined to work in climate and anchoring where he did. We also talk about the Planetary origin story and Mike's evaluation process, what he learned about determining commercial viability and commercial readiness, the Planetary approach, where they're at today, the different risks, the business model, and building pilot plants and how those will be financed.

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Jason Jacobs: Mike, welcome to the show!

Mike Kelland: Thanks, Jason. Thanks for having me.

Jason Jacobs: Thanks for coming. And it's funny, you have no idea how you found us, but I feel like you were one of our earliest podcast listeners and, and community members.

Mike Kelland: Yeah. You, you and I, it's interesting, I think started our transition from technology to climate around the same time. And you've got this amazing community that you built up in the meantime and a, and a pod. I went with the sort of startup on the chemistry side of all things, which was a big shift from technology.

But yeah, we've been doing it, I almost feel like we're doing it together, Jason.

Jason Jacobs: I've had a sense that you were out there. And from a distance, I've known about Planetary. But we've never actually had the chance to, to just, like, sit down and have some dedicated, focused time to double click on that and see what's actually going on there. So I'm so grateful for the opportunity, and maybe we should jump in.

So what, what's Planetary?

Mike Kelland: So Planetary is, I think, a really innovative approach to what's called CDR, or carbon dioxide removal from the atmosphere. And what we do is, in a way, super simple, but it's complicated by, you know, the fact that we're living in a real world and we're trying to make this scale to, to gigaton scale.

So what we do is we take the largest store of carbon on the earth's surface, which is the ocean, and we enhance its ability by speeding up a natural process for it to take carbon dioxide out of the air and store it safely and permanently for sort of 100,000 years at a time.

And then as side benefits to that, we get a lot of sort of decarbonization benefits. So we produce hydrogen and we produce battery metals at the same time that have a big decarbonization benefit on top of the carbon removal benefit, 'cause we know we need to do both of those things.

Jason Jacobs: And how did all this come about. And, and I mean that two ways, the origin story of the company, but also just how, how you found yourself doing this work.

Mike Kelland: Yeah. So I'm a software entrepreneur by background, 20 years of working in software space, starting companies. I will say I learned as I went, because the later ones were more successful [laughs] than the early ones, I think, as you, as you go through that journey.

And when I sold my last company to a Silicon Valley startup, I was looking for something to do that was a little bit more impactful. I was looking for something bigger. And I've always been an environmentalist. I, I will say I grew up in canoe. My friends all worked for NGOs. And we were really looking for something else, you know, going out there, trying to find something that I could do in that space and, really, I think something that I could learn about the space with.

For me, I'm a really curious person, but I have a hard time sitting down, just reading a book or, you know, just sort of like learning from that way. I like to engage with people. And the way that I give myself license to do that is to work in the space. I like to get in there and have a platform where I'm like, "Oh, we're trying to do something. You know, help me learn about it in that context."

And so we were looking for a startup. We were like, "Okay. Let's do something in climate." And I met my co-founder Brock, and he was a student at the time. He was super passionate about this stuff. Talked about IPCC Report. I was mentoring him, and we were, like, figuring what we wanted to do together. And we said, "Okay. Let's go do a climate thing. Let's go try to make a really big impact."

And we ended up calling researchers around the world. And it was super fun. I spent, like, a year just calling researchers and, like, talking about, like, 3D printing life and, like, space mining, and, you know, all of these sort of things that were, were happening out there in research labs that hadn't been brought out into the world.

And eventually, we ran into Dr. Greg Rau, who's our, our co-founder. And Greg, I think, had been working in the global carbon cycle related to marine carbon cycle for about 40 years. So he'd been working for a really long time in the space, really had established himself as an expert in this field called ocean alkalinity enhancement.

And I always say I think I hit him right at the right time, because at the time, there just wasn't a lot of attention on this. It was sort of something that wasn't getting a lot of research funding, it wasn't really progressing. There was some hints that it was interesting, but it was, you know, two and half years ago, three years ago. There just wasn't a lot of funding for CDR in general, and ocean alkalinity enhancement in particular.

And so when I approached him and said, "Hey, listen. Like, maybe we can accelerate this by making it into a business instead of trying to keep it inside academia," he was super receptive to that and was saying like, "Hey, we've really got to take this and make it a part of the portfolio of climate solutions that we have at our disposal, because it really has to be properly explored and brought out as a potential solution."

And so we started the company with that idea.

Jason Jacobs: Just a pause for one minute, and then we'll go back to this important Planetary origin story. But more of a, a general question about taking technology out of the lab. So as someone whose prior background was in software, when you started talking to people in academia about the research that was happening in the lab, how did you know how ripe the fr-, the fruit was per se and which technologies were worthy of coming out of the lab and which ones were more still in the purely academic phase?

Mike Kelland: I think it's super hard. And, and you don't really know. I mean, the lab scale and the academic lab scale experimentation and the jump to industry is a big jump. I think there was a couple of indications that were interesting to us. I'd like to say we have three trillion dollar ideas, right? That we were evaluating. We had three different things that we were looking at.

One of them was the ability to upgrade desert sand into construction sand using the sun, so essentially sintering sand into the right shape so that it could be used in concrete. Another one was basically making roads out of fungus, which is kind of cool, too. And then finally, it was this ocean alkalinity enhancement, carbon removal thing.

And there was a lot of things that appealed to us about the final one. One was the size of the markets. You know, we're looking at markets that could grow into trillion dollar scale for every one of the products that we're selling as part of this process. One of them was the massive direct impact on climate change, you know, the fact that the oceans take up so much of our carbon already and can take so much more as a logical place to put that carbon.

And it was also sort of just looking at feasibility in terms of, you know, when you look at very simple things, like how long does this take to do, and how much existing technology is out there that is equivalent to this that could be repurposed to scale it up, and how many analogs are there to scale, when we looked at these different solutions, this one had a lot of those analogs that were in place. You know, what we're doing is similar to the mining industry. We, we're heavily relying on the mining industry for what we're doing. We're heavily relying on a kind of electrolysis that's in high scale use within an industry called chloralkali.

And so there's sort of these analogs that were out there that gave us a little bit of indication. But honestly, it's a gut call. Like, it wasn't something where we could really say for sure, "Okay. This is ready to go and get out of the lab." In a way, I think we got pretty lucky that we were able to take it so quickly from kind of the academic lab into something that looks, you know, pretty scalable and, and able to work in industry.

Jason Jacobs: Okay. And then next question, and then we can get back to the regular, regularly scheduled origin story here, and that's when it comes to taking technology out of the lab, to the extent that you can share, what type of commercial arrangement is there between the lab or the institution and the company? And are there many different options there? And what are some of the lessons learned in terms of how one should evaluate how to think about that, eh, if they're looking to take some technology out of a lab?

Mike Kelland: Yeah. So it's a really, really good question. So most labs, most academic labs, want their technology to be used and they, they have a fundamental desire to see it go out into the world.

And so, especially with the technology like what we were looking at, that was, I think at the time, underappreciated, there weren't, like, a whole bunch of people who were, like, competing with us to be able to take this out of the lab and move it forward. So we actually had a pretty easy time of it.

We have agreements with Lawrence Livermore around licensing the patents that Greg had originally authored there. And so that's part of our deal with them, is, is licensing these patents.

But beyond that, it's been, it's been really smooth. And honestly, they've been incredibly supportive at helping us to do that. They want to see this used. There's nobody else who wanted to do it, and off they went.

I've heard a lot of different s, horror stories about people who end up in competitive situations with larger companies and startups, trying to take technology out of the lab. And it's never, it's sometimes people don't have as easy of an experience with it as we did. But I think it depends on the technology, how in demand it is within a particular industry, and things like that.

And one of the things, you know, you always hear about startups is, like, at the start, if nobody thinks you're crazy, then you're probably not onto something interesting, right? So you got to, you... Maybe to put it more positively, if people think you're crazy, then you know you're on to something.

And so when we started this thing and we were talking about, like, "We're going to store carbon in the ocean at gigaton scale," everybody's like, "You're insane." And I was like, "Okay, good. Like, that's, that's probably a good thing if nobody else is seeing what we're seeing in the space as a, as a fledgling startup." It gives you a certain moat, right, around what you're trying to do.

Jason Jacobs: Okay. So, and you came in, it sounds like with a purely commercial lens and, and experience. And there's this technology and research that had been, sounds like, parked in a lab for a long time.

When you went to take it out of the lab, was there a murky period where it still felt like an academic pursuit for some period of time, or what did that transition look like, over what period of time, and what were the steps?

Mike Kelland: Yeah, for sure. I, I think over the last two and a half years, we've gone through, I think, three major technology pivots, like, major technology pivots, where the fundamentals are the same, the ultimate chemistry at either end of the process, you know, we're going from rocks to antacid to sea water and carbon and sea water. That's kind of our process. And that process has remained at a high level, but how it's implemented in the details has radically changed throughout the last two and half years as we've developed this.

And it's really been that process of discovery, from going from, "Okay. In the lab, we know this works and we know pieces of it work and all of that kind of stuff," to taking the right kinds of industrial experience that will scale up the components in the right kinds of ways.

And that really has been a process of discovery. We've invested on a lot in processes where we're like, "Oh, you know..." You know, if you talk to our first investors, we were telling them, I think, right out of the gate like, "Oh, we're going to have a pilot plant built in like six months." And then, and we got to that point where we had the plans and we've got the engineering diagrams, we've got our first level of studies, and we looked at it and we're like, "Wait a second. This is too complicated. This won't quite work the way we want it to. You know, it's going to end up being really expensive. Like, let's start over."

And so I think we've done that three times. We've sort of done a, a restart three times. And now, we're in a place where it's really solid, it's really simple, radically simplified from where we were when we started, and looks like it'll, you know, scale to that gigaton scale.

Jason Jacobs: And when you were going through this process of experimentation and discovery, as a CEO who came in with a commercial, software oriented background, how did you find you were spending your time during that phase and how would you describe your job during that period as CEO?

Mike Kelland: So it's, it's a ton of learning, right? So as, as any CEO, there's some fundamental things you have to do, right? You've got to do your recruiting, and you got to do that as well as you possibly can. You have to do your outreach in terms of, of investment. And this is my first time raising money, so this is... For me, it's been a really interesting education arou-, around running a venture backed startup versus a bootstrap startup, which is a lot, my previous experience.

So you have to do those things. But layered on to that with this was a ton of learning and just a, a lot of, you know, just listening really carefully to what the scientists and what the engineers were saying in terms of how all the chemistry comes together. And my way of approaching it has always been I'll make a statement. I'll be like, "Okay. Well, we're going to do this," and then I'll wait for somebody to yell at me. And if they yell at me, then that's great. Then I get to learn something, and we sort of, you know, progress, and we can have a conversation. If nobody yells at me, then we're good to move on and we're, we're kind of like in a, in a good place.

So I've really trusted the people around me for the technical perspective, and I think that over the last two and a nic-, half years, I've really achieved the objective that I had when I started, which was to learn as much as I could about this environment and this process.

Jason Jacobs: And it, it sounds like when you talked about learning, you talked about really listening to the scientists and engineers. Where does learning from the market fit into all of this? Does any of that matter when you're in the phase that you're coming from?

So I guess I'll ask two questions. One, where did you spend your time? And the, and then the other is, with the benefit of hindsight, would you have spent it the same way?

Mike Kelland: Oh, I mean, the benefit of hindsight, we wouldn't do three more iterations, right? We would've started with what we have today, of course. But I think that y, you know, so far, the learning process has been the right one. And definitely learning from the market is part of it. You know, you show up at, you know, we started just before COVID. So we managed to get in like three major conferences in that period.

And I got to talk to a bunch of people. We recruited some am-, eh, just incredible advisors to the company who have been through these kinds of processes before, worked in the carbon markets, all those kinds of things.

And definitely, learning from the market is a big deal. Learning from the market in the software is all about testing market, right? You get out there, you put a product, you, you know, your MVP out there, and you see if people are willing to put a credit card against it. Whereas in this space, of course, we don't have that opportunity, 'cause we have to build this huge plant before we can really sell a lot of anything.

And so the learning process flipped a little bit, where you had to co-, sort of... I had to trust a little bit more what people said instead of what they did. But in this space, because it's big commodity markets, it's a little bit simpler in terms of, you know, "Do I want hydrogen or not?" It's a little bit easier than, "Am I, you know, responding to the placement of this button?," or whatever. There's an easier time to just ask those questions. And we got a really good opportunity to talk to, I think, a really wide range of people within the industries and spaces that we were looking at. And we still do.

Nowadays, in the funding round that we're doing, I'm getting just a huge amount of feedback from these really smart investors who have seen a lot of things. And we just get just a lot of learning. Every time I sit down and do a pitch, I get a lot of really interesting questions that make me think like, "Oh, maybe I should go figure that out or find out what's going on there." And that helps with the learning as well.

Jason Jacobs: Uh-huh. So what approach did you land on, and how does it work?

Mike Kelland: In terms of the whole technology approach?

Jason Jacobs: Yeah.

Mike Kelland: Yeah. So the way that it works is that we start with mine tailings, and mine tailings are a waste product. You know, just basically piles of gravel almost is what they look like. We melt those down using an acidic process. That then gives us a feed into an electrolyzer.

And that electrolyzer is kind of a neat system that splits that feed into four different products. It gives us hydrogen, which we can sell. It gives us oxygen, which is used in our metallurgical cleanup process, so cleaning up the tailings, essentially getting all the impurities out of them. It gives us acid, which helps us to do the acid melting process at the start of the rock process. And finally, it gives us this really mild antacid, essentially. And so this mild antacid that we get comes out of the cell at the mine site, and we ship that with ships and trains and whatever is the most cost effective way out to the coast.

And on the coast, we take our antacid and we go to permitted outfall. So we go to, like, waste water facilities or power plants with cooling loops. And we add our antacid into sea water under their permits. So what's kind of interesting about waste water is waste water tends to be pretty acidic. They have a permit limit that allows them to make it a lot more basic than they do. So we essentially just max out their permits, and this stuff goes out into the ocean.

And then we have a process to measure, what's called MVR, the impact of carbon from that antacid going out. So the actual mechanism, which is really kind of cool, is that this antacid reacts with dissolved CO2 and sea water. And CO2 is always in balance in terms of concentration balance. If you increase the concentration of CO2 in the air, you'll increase the C, the concentration of CO2 in the ocean, sort of dissolved in the ocean. And that's the process that causes ocean acidification. It's why our oceans are about 30% too acidic and all that kind of stuff.

So we put this antacid in. It reacts with that CO2 that's dissolved in sea water. And it turns it into a bicarbonate, which is kind of like baking soda. And that bicarbonate ion is a basic form of carbon, and it's a natural part of sea water. So about 88% of the carbon on the earth's surface is an ocean bicarbonate. It's the biggest store of carbon on the earth's surface.

And the residence time of that bicarbonate is about 100,000 years. So you can kind of think of it like this antacid is taking CO2 out of the air, because as we convert it into bicarbonate, it reduces the concentration and more CO2 can come out of the atmosphere. And then it sequesters it into this bicarbonate pool for 100,000 years. So it's a one step, you know, capture and store process and turning the ocean into, like, the world's biggest air contactor for CO2.

Jason Jacobs: And where is the carbon getting stored?

Mike Kelland: So it stays in sea water. Think of it like salt in s, in sea water. So it's just a, an ion that's dissolved in sea water. And because of the way that ocean chemistry works, it stays in that form for, like, 100,000 years. It really has permanent sequestration in the ocean's chemistry itself, which is a really cool facet of this.

I think when we look at carbon removal in general, dealing with the carbon is one of the biggest challenges. Like, where do I put this stuff once I have it in, uh, CO2 form? You know, do I have to bury it underground? Do I have to use it for products or whatever? With the ocean, we have this built in. This, this storage system is the ocean's chemistry, and it'll stay there for pretty much forever.

Jason Jacobs: And when you talk about the split and, you know, the hydrogen and the oxygen, the acid, the, the antacid, from a commercial focus, how do you break down those percentages? Is it 25, 25, 25, 25? And then same question on the impact side?

Mike Kelland: Yeah, for sure. So, so that's actually the really cool part of this process, is that we have the impact of removing CO2, but also reducing CO2. So we produce enough hydrogen. For every net ton of CO2 we remove, we produce enough hydrogen to displace another ton of emissions. So we get sort of a doubling.

And then we also produce nickel and cobalt through the tailings, purification of the tailings. We get nickel and cobalt out. And that nickel and cobalt, if you put it in a battery, the amount of nickel and cobalt that we create could avoid 23,000 tons of CO2 over the lifetime of that battery. So we get this major impact on emissions reduction out of this process.

But then as you say, on the financial side, it's a really cool system, because the value of those products, right, the hydrogen, the battery metals, reduce the total cost of carbon removal. And what that means is that, for our pilot facility, we're expecting to be able to do carbon removal, including the storage, right, 'cause the sequestration's built in, for under $75 per ton of CO2, while providing a return to investors.

Jason Jacobs: What would it be without those other three lines of business, if you will?

Mike Kelland: Yeah. So I think that if you weren't to sell, if you ... Say you don't sell anything. You don't have any hydrogen. You don't sell any battery metals, all that kind of stuff. Our cost in order to return a really strong return to an investor in a project, which is like over 30% IRR, you would probably end up being around $300 a ton of CO2.

So those offsetting products are really great. With the offsetting products, you know, we can go down on a breakeven basis. We don't do any return on, on investment. We just return the capital. We can go all the way down to a dollar a ton. And so one of the values of this is that we end up with a risk mitigation, right? So if carbon prices don't evolve as we'd like them to, that hydrogen's still there and battery metals are still there. Then we have these other products in the portfolio that allow us to be more, sort of mitigate the risk on the investment in the plant.

Jason Jacobs: And was this a case where, like, had the process been done, but only applied to different things, or is it the process that's new itself? Like, what's, what's new here?

Mike Kelland: So the process itself's new. Our electrolyzer is new. So we actually, as a business, our core business is to sell this electrolyzer and license the IP for the process of distributing out into the ocean and all that kind of stuff. And that sort of package, it's called a process package, is what we would sell to, like, a mine for them to deploy this process and, and build out a project around it.

So that's, that's what we're doing.

Jason Jacobs: Licensing?

Mike Kelland: Yeah, licensing and selling the electrolyzer is kind of what we do. So we've got a custom electrolyzer, and then we've got the process as a whole as a license.

Jason Jacobs: And is, is it a bundle, where you can license and, as part of that, the cost of the electrolyzer gets baked in, so it's like one line item on the expense? Or I guess that's a question [laughs] in the weeds. I'm just curious.

Mike Kelland: It's early to say exactly how that's going to pan out. I, I think, I think that the best way for us to actually do this is to, is to essentially take a, a percentage of the profits off the project. And if we can actually do it that way, I think that that ends up being a win-win for everybody, where we have some skin in the game for each of these major projects that get built. We're still able to be capital efficient in terms of how we do things and this de-risking the project for, you know, the mine owner or the project finance company that ends up financing it. That's my expectation.

Jason Jacobs: And why are the mining companies the logical customer? And are there any others that either you plan to target as well or that you evaluated before you got to working with mining companies?

Mike Kelland: Yeah. So when we're talking about a process like this, the reason for the mining customer is because they have the mine tailings, right? So they have the pile that we have to work off of. And when you're thinking about it, like, a project like this is really, in a way, we're moving the mountain. So it has to be resonant at the mine used, between two and four tons of tailings for every ton of CO2 we capture, depending on the quality of those tailings.

And so as you go through that process, the logical conclusion is that, when you deploy this at scale, it ends up sitting on the mine site and, in some cases, with operating mines, integrating into the mining sort of process as a whole. And so that, the logical client or the logical partner to deploy this is the mine itself.

And then the distribution of this stuff from the mine to the ocean is something that's sort of added into the project, if you will. And that, that's sort of been the logical way we've thought about it. The other reason is because mining right now is going through, I would say almost a revolution. It's a really fascinating space, and especially things like nickel mining, where we know that we're going to need significant quantities of nickel. I think I saw a tweet like a couple of days ago that was saying that the amount of nickel required for all of the BEVs, or battery electric vehicles, that are being delivered or being committed to by all the auto manufacturers next year is roughly double the total amount of nickel that's produced every year.

So you've got sort of commitments to deliver BEVs, but we just don't have enough metals right now to do it. And that is driving a huge, I think, increase in investment in people, like, building nickel mines and going out and doing nickel mining. But it's also driving, because everybody wants their nickel to be low carbon, so that it fits within the, sort of the narrative of the LCA of a battery electric vehicle. It's driving a huge amount of interest and innovation in decarbonizing that mining at the same time.

So it's a really cool space to be in. There's a ton of interest in this. We've got, I think, more mines knocking on our door than we could possib-... We're a small team, right? Like, we, we've got three mines we're working with right now. We can't work with any more. And I think that growth in that space is just going to continue for, for s, many years to come.

Jason Jacobs: Now, when you license and sell the electrolyzer to the mine, if you look at these four... And I, I don't know if you call them lines of business, but I'm, I've been calling them lines of business here. Is it just one that the mine is taking on, and then you're responsible for driving the other three, or is the mine driving all of them, or is it a collaborative approach? How does that work?

Mike Kelland: Yeah. So mines are very, very used to dealing with commodities, right? Which is essentially what these things are, right? Hydrogen's a commodity. And nickel and cobalt, these things are commodities. And largely, CDR is becoming a commodity. So from a trading perspective, definitely the project will, you know, report up to a commodity's trading desk, which is a very standard thing in mining, and then they'll end up trading those commodities as they see fit with, you know, long-term and short-term contracts and stock prices on markets and all those wonderful things.

So that'll be, I think, managed in that context really, really easily. When you think about the actual management of the project, I think we'll be involved in ... You know, emerging technology's always this way. We're going to be more heavily involved in the early projects, less heavily involved in the later projects.

And I think that we will play a couple of different roles, and we'll play a role early on helping to manage the technology and making sure it's working properly, all that good stuff. But we'll also play a role in linking up the outfalls with the mines and the projects and all of that kind of logistics to help them to, to put that together.

But fundamentally, when you think about miners, they're the ideal client for this kind of project, because they're so used to dealing with, you know, heavy logistics and with commodities trading and with partnerships with external entities and putting together large scale, high capital projects, that they really fit our mold really, really well as to what we're trying to do.

Jason Jacobs: And you said you're working with three mines. When you look at the mining landscape, are there certain kinds of mines that make better prospects than others? And if so, what are the criteria to make a good prospect? And then is the pitch and value proposition consistent across at least the three that you've been working with so far, or is it more custom on a mine by mine basis?

Mike Kelland: Yeah. There's definitely some customization. So, like, w, the mines we look at, I put them into two major categories. And those are sort of operating mines and disused mines. And so for pilot facilities, because we want a high measure of control as we, you know, prove out this technology and scale it up ourselves, those are basically big piles of rock. So there's no active mining going on there. We're just taking the rock, and then we're proceeding forward. And those are our mines in Canada that we're working with at the moment, is the two of them.

The other mine we're working with is very different. And so with those mines, like, we have to be end to end. We do everything. We start with a pile of rock, and then we end up in the ocean.

With the mines that are operating, and we're working with a nickel mine in Brazil right now, Brazilian Nickel, and they're a client of ours. They're actually paying us to sort of the deploy this technology and sort of do feasibility right now, but, but sort of scale up to deploying the technology in their mine. It's much more a process integration, where our electrolysis system, you know, they're already doing a lot of the metallurgical work, they're doing a lot of the, obviously, extraction of the nickel, all that kind of stuff. And it's more that we then just integrate our piece into their waste management process and take away that responsibility from them, that they have to manage that waste, 'cause we're actually, you know, ingesting that waste into our electrolyzer. And we sort of handle that, that piece of it.

So it's going to depend on the particular mine, how the technology actually gets deployed, and what the process is for, for ultimately building out those projects.

Jason Jacobs: Uh-huh. And about how much capital does it take to build out a project. And in terms of that capital outlay, is there a different capital outlay from Planetary for an operating mine versus a disused mine?

Mike Kelland: Yeah. So we don't expect to have any project on our balance sheet at Planetary, right? 'Cause, like, I mean, it's just going [crosstalk 00:32:16]/

Jason Jacobs: So even the disused, the, they still have big bank accounts?

Mike Kelland: [Laughs]. Well, how it works is, like, really ... You know, and this is digging into a lot of these sort of, again, an, an area that I've been learning, right? Coming out software, it's not something that I've had to know before. But essentially how it works is you build a company that owns the project, and you have partners in that company. So it, it's just like building a startup. You end up having, like, what's called an SPV, or a special purpose vehicle, which is the project company.

And that project company then gets funded by project finance companies. And so you might have, like, Brookfield, for example, who's used to, you know, building out massive infrastructure. And they'll put in, you know, 30% of the capital. And then based on their 30% of the capital, then you can get a loan to that company for the other 70% of the capital. And then you go off and use an EPC for more, uh, an engineering firm, to build the thing. And then you, you essentially, that company, that now it's a little bit of company itself, ends up recruiting its staff and all that kind of stuff to operate.

And so even though there's no entity there, essentially what we do is we catalyze the creation at that entity within, within the context of that disused mine.

Jason Jacobs: And then how is that different from an operating mine?

Mike Kelland: So an operating mine, I think it's, it may be the same, actually. It may work the same way that the mining company wants to keep that project as a separate entity. But it does allow the possibility for the mine to actually just take what they're already doing, in terms of all their process and the big capital that they're building to do their extraction, and just insert ours as a process element.

And so it ends up being sort of more constrained within the context of, of that mine.

Jason Jacobs: And did you or have you had to build out pilots on your own before getting these mines to sign on and fund the project? And how big and expensive do these early projects need to be? Are they small and modular, where you can get a few under your belt for fairly capital efficiently, or is it a big, honking expense?

Mike Kelland: It's an incremental growth strategy, for sure. So with our pilot facilities, you know, we started with little barrels of rock, and then we go through simulated, you know, leeching and simulated things in the lab and, you know, prove out the whole thing. And then you scale up, and you scale up, and you scale up.

So what we're doing right now is that we're building out a, a facility of about, like, 500 kilograms a year roundabout of carbon removal. We'll have that done in sort of six to eight months kind of thing as a pilot facility at one of our disused mines. And then we'll scale that up from there into sort of 1,000 tons a year. You know, and that's in the kind of tens of millions of dollars to get you to that thousand tons a year scale.

Then, we will incrementally scale up the million ton a year project at that pilot facility. And that's where we're going to go with that. But that, again, you're going to be spending very derisked money in sort of 50 to 200 million dollars chunks as you add sort of modular capacity of electrolysis within that sort of mine system and that metallurgical system.

And we've got a pretty well-established plan for first of a kind, incremental scale up. In the operating mine, we start, again, in the lab. So they ship us, you know, "Here's our, what we're getting out in terms of tailings." And we go through from test tubes all the way up.

And so the process is really interesting. Every mine will start with a test tube, basically. Whenever we start with a mine, you start with a test tube, really small. You do what's called the amenability testing. You try out your process against their rock and all that kind of stuff. And then you scale up, scale up, scale up, scale up.

What doesn't change in every one of them is this electrolyzer sort of we'll call it process package that we deploy in each one. So there's a good scale up strategy. To really directly answer your question, Jason, 'cause I know you want to know the big number, we expect a million ton a year plant to, once you've totally scaled it up, to cost anywhere between, you know, sort of 750 and 900 million dollars.

So these are really big projects. It's similar to what you're seeing in terms of dock deployments at the million ton scale, where it's sort of billion dollar projects for a million tons of CO2 captured from direct air. And that's just the scale of these projects in, in, you know, when they get up to that size.

Jason Jacobs: So if you look at, like, a carbon engineering, for example, and their Oxy relationship, you would presumably find a big mining partner to be the equivalent?

Mike Kelland: Yeah, that's right. Exactly. Yeah. There are ... A big mining company would be our Oxy, absolutely.

Jason Jacobs: Uh-huh. And stepping outside of Planetary for a moment, if you just look at the carbon removal landscape, I mean, it's getting a lot of air time these days. It's pretty controversial. There's people that say it's a distraction that takes our eye off the ball from doing the hard work of emissions reduction. There's people that say, "Well, yeah, we did it, but it's never going to be viable at the scales that matter. Or if it is, it's going to be prohibitively expensive, and who the heck's going to pay for it?"

And then there's all these different approaches that all seem hugely scientific and hard to differentiate, especially for someone like me who, like, built a fitness app company for, for a decade. So Planetary aside, when you look at the carbon removal landscape, how do you think about it in terms of where it fits into decarbonization importance? How do you think about it when it relates to viability? And then how do you think about differentiating between all the different approaches and all the noise in the space?

Mike Kelland: Yeah. So I love this question. And, you know, the, you had Stacy from Shopify on recently. That was an awesome episode. You guys were talking about [crosstalk 00:37:59].

Jason Jacobs: She's great.

Mike Kelland: ... this issue.

Jason Jacobs: [Laughs].

Mike Kelland: Oh, she's amazing. She's amazing. And, you know, when you guys were talking about it, Stacy takes the controversial approach, which is that like, "Hey, we might make this cheap enough that, you know, maybe it does end up impacting some of the decarbonization."

And I could see that, right? Like if you look at it, it could cost upwards of sort of $300 a ton of CO2 to decarbonize a steel mill, right? And if you are able to remove carbon from the atmosphere permanently for less than $100 a ton, you know, the question mark is going to come up like, "Why would I decarbonize that steel mill?"

Where I think you run into a, a challenge is actually not cost. We talk about cost a lot in here. What's the dollars per ton? Where do we go to? All that. But there's a scale challenge as well. And we're talking right now. I think the minimum we need for carbon removal, and I think people start to understand this as time goes on, is roughly, like, 10 gigatons per year by 2050. And that's sort of in the IPCC Report. That's in all of this climate modeling, all this kind of stuff.

No matter how fast we decarbonize, we need that 10 gigatons a year. And that may actually be bigger, right? We, we may need more, because we just have not made the progress on climate that we were supposed to. And the conversation where you sort of, "Well, we can just reduce emissions," like, that was a great conversation 30 years ago. But I think today, it's naïve to think that that's going to be enough to sort of avoid the worst impacts of climate change.

So the bottom line is we absolutely need removals as part of the portfolio. And I believe that without a doubt, that that's going to have be part of it, 'cause we just can't decarbonize fast enough.

I think on the flip side, the scalability of CDR, like, we have to be investing a lot more than we are if we want to get to 10 gigatons per year by 2050. Those technologies, like you say, some of them are pretty new, some of them are pretty nascent. We're trying our best to scale as fast as we can. But we have to go a lot faster with it to get to where we want to be.

And what that means is decarbonization is still job one, in my opinion. We have to get decarbonization on a proper track. We have to do a lot better than we've been doing with renewable energy deployment, with [inaudible 00:40:04] capture and storage, with all of the things in order to get down to a point where CDR can make a really major impact, just because of scalability, right?

So you m, you might come to s, 2070 and you might say, "Hey, we really nailed CDR." But I don't think by 2050, that we're going to come in at 2050 and go, "Oh, look. We've got 20 gigatons a year of CDR capacity here." I just don't think we'll get there. It's just too much. The scales are just too high.

And then I would say on all of the different pathways and technologies and all those kinds of things, like, 10 gigatons a year is a massive amount, just a massive amount. And I think that the world is starting, just starting now, to understand how much that new technology is going to be required in that 10 gigatons, right?

So, you know, we're starting to get away from the idea that we're okay with an oil company claiming that their fuel is carbon neutral just because they planted a bunch of trees, right? So we're starting to understand that that's a false equivalency fundamentally in what we're doing. And we're starting to get the point where this permanent CDR is entering sort of the public consciousness and going, "Okay. Well, if we actually want to make a real impact on climate, one that matters, that is a real true removal, we're going to have to really scale these technologies quickly."

And to me, what that means is we need all of them. Like, it, we're too early in the process to sort of pick winners and losers. We're too early in the process to sort of, "Oh, well, that's never going to work. Like, just don't fund it anymore," because we're still in a really innovative space. If you talk to the entrepreneurs in this space who are working on everything from, you know, like bio oil, like Charm Industrial, mineralization looping like Heirloom and Shenk and all the great that they're doing, you know, the ocean folks like us and Ebb and Captura and all these kinds of folks. Like, we've all got a different pathway. We've, we've all got a different focus.

And I think until you start to progress it a lot further than we have, we're really going to have to keep investing in all of them. And the indication for that for me, Jason, is really that, right now, your company name is synonymous with your pathway. What that means is there's only one, pretty much across the board, there's only one major company or exciting startup that is working on each individual pathway. That means there is no competitor that is directly competing with Planetary. There's no competitor that's directly competing with Charm. There's no competitor that's directly competing with, with Heirloom on those same pathways.

And until that happens, we haven't really seen a proliferation or a real growth in this market. And the, and to me, that'll be the indicator, when we have direct competition in specific pathways for some of these technologies.

Jason Jacobs: Uh-huh. And I have, I have three bullets written down for notes that came to mind as you were talking. One is who should the customers for CDR be? One is who should the funding sources for CDR be? And then the last is what's the role of the government versus the private sector?

Mike Kelland: Yeah, for sure. So I think what we're seeing right now is there's definitely leadership in the private sector around permanent CDR. You know, the frontier thing was just this amazing announcement, you know, 925 billion dollars of advanced market commitments by 2030. Super cool. Amazing leadership. And I, I would say a lot of that leadership is coming from, from people like Stacy and Nan, who are, who are doing awesome stuff at, at Shopify and Stripe respectively in this space.

But it's got to scale beyond that. We're starting to see things like the Science-Based Targets Initiative come out on the voluntary side, SBTI. Really cool program. Lot of big companies signing up for it right now. And what SBTI says that I think is unique and awesome and where we need to be is that the, you only have two levers, right? And in eliminating your footprint. One is reduce, and the other one is permanent remove. You don't get to play around with offsets. You don't get to play around with, you know, impermanent removals if you're really sort of signed up to the core principles of the SBTI.

And we've seen about, I think it was 1600 companies are members of that, including some big ones like Walmart and stuff like that. So it's, those kinds of initiatives starting to drive on the voluntary side are really critical.

I think what we'll see over the next couple of decades is that things like low carbon fuel standards are really driving some interesting stuff, especially for people like us who are producing a fuel alongside carbon removal. I think we'll see more and more sort of, of the sort of big three regulatory levers, you know, taxing incentives and, and market, you know, generation through regulation, which is what I, a low carbon standard is, coming out of governments to try to push some of these technologies forward and drive forward what, what's going on.

And I think that we've already seen that the compliance markets for carbon are orders of magnitude larger than the voluntary markets. So I think those things and sort of regulatory markets that are driven by regulation are going to be really big levers for this, for this industry moving forward as well.

Jason Jacobs: Uh-huh. So you hit everything in my questions, which was amazing, except one, which is sources of capital.

Mike Kelland: Sources of capital. Oh, yes. So right now, there's a mix and there's got to continue to be a mix. And then as we get to scale up, there's got to be different sources. So, so to dig into that, companies like ours need solid VC sort of based funding models, because we're trying to move quickly, we're trying to be ... You know, we can't wait around for... And we have to be flexible in what we're doing.

And VC, while VC money can be expensive from an equity perspective, it is very fast and it is unrestricted in terms of the direction that you take your technology, which is really critical as we explore the space and get ourself to market as quickly as we can.

I think a lot of fundamental societal questions that come around CDR have to be funded by governments. And so when we think about those kinds of questions, they're things like MRV, like monitoring, recording, verification questions, and safety, ecological impacts, you know, all those kinds of things. So we've been really lucky that we've gotten... And, you know, Canada's super great about this stuff, but we've gotten almost one and a quarter times our VC funding in non-dilutive funding through those kinds of grants.

And a lot of that's going into those topics of, like, you know, how do we make sure that this is safe, that it's effective, that it's going out there and, and that, that everybody's going to be able to support it? And that fundamental research or that fundamental sort of applied research on platforms like ours help to build a platform for other entrepreneurs to be able to enter that field. And I think that's really, really critical as well.

So those are the two big sources of funding. I mean, obviously as well, we're seeing some interesting stuff in the intersection of sort of large industry and VCs. So it's sort of strategics, a strategic venture capital. I think that's also going to be really interesting as time goes on.

And there's a couple of different angles for that. One of the big ones is that we're seeing that advanced market commitments like the, like the frontier stuff, purchases for a company like ours are so critical. They're early validation in a space that it's going to be a while before we get to sort of true market impact. And they allow us to have a customer that we can talk to about what's a viable thing that they would buy from us. And that, that's amazing on top of the funding.

But I, I figure, I actually think that the validation of a purchase in that early purchase state is more important than the capital. So I don't kind of consider it a source of capital, but it, it kind of is. But it's, it's actually like, uh, a bigger lever than that. But I, I think those are the big sources for us.

Jason Jacobs: And given that, it sounds like, while this will be very capital intensive to scale, that, that a lot or all of that is coming from customers or, or partners. Will it be expensive to scale from a Planetary specific standpoint? And if so, what source of capital do you envision will fund that growth? Or will it be equity? Will it be grants? Where, where, where will that come from?

Mike Kelland: I think a lot of the growth will come from equity. I think it'll look like a standard VC play, or at least early on. And of course, when you get to manufacturing and things like that, the other sources of capital, things like loans and advanced sort of purchases and stuff like that, I think will be really critical in terms of building things out at, at scale when there comes to capital side of things.

But when we're talking about growing the company, I think it's going to be VC is going to be the primary source for us.

Jason Jacobs: Uh-huh. And that, I don't know if I'm allowed to ask this. So if not, just don't answer it. But how much capital has the company raised to date and what sources?

Mike Kelland: So we've raised, and these are Canadian dollars, so you got to put your little discount on that, like 25% off or whatever, we've raised 4.2 million in VC funding and we've raised, uh, about that same amount directly to the company in grants and non-dilutive, and then we've motivated another about two and half million in grants to research institutions that we work with that work on our projects. So that's, that's kind of our, our funding model.

So far, right now, we're doing a funding round right now to, to get ourself to the next pilot and to accelerate forward from there.

Jason Jacobs: And to the extent that you can talk about it, about how much capital are you thinking about and what are the key milestones that you hope to achieve in this next phase of the company?

Mike Kelland: Yeah. So it's going to take us roughly 65 million dollars to get to 1,000 tons a year, scale, and run it for a while. So that, that'll get us to the end of 2025. That capital splits up into a couple of different tranches and goes in a couple of different ways. So the size of the round we're closing right now, you know, I'd love to raise it all, it'd be, be awesome, but I, I mean, we're not counting on that. We're counting on, on raising, you know, a little less than half right, and then, and then looking at how things progress to do the next round after that.

And then we'll probably top that up with a significant amount of non-dilutive as well. So that's the rounds we're looking for. Going quick right now, but yeah, that's where we're going to probably end up by now.

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