Energy Tech Startups

0:00 Welcome back to the show. I'm here today with CEO and founder of Clean Incentive, Casey Martinez. Casey's working on a really important problem where we're trying to address the status quo of

0:13 overdevelopment in renewable projects and instead say, how can we optimally reallocate capital resources to maximize our carbon impact? Casey, tell us about how we actually need to do that. Great.

0:26 Well, thanks for having me. Yeah, it's a it's a nuanced problem with the energy transition that many people feel you can just throw billions of dollars at the problem, deploy as much generation as

0:39 possible, and we will solve climate change. I think folks in the industry understand that the problem is much more complex, that there is, you know, there's transmission constraints, there are

0:53 storage grid reliability constraints, and there's some There's also the other side, which is these corporate buyers of power and how they think about

1:05 purchasing these PPAs and these other ways of purchasing renewable energy. And the over-development problem is really seen in markets like California and Texas, where there's a large amount of

1:20 penetration of renewables and therefore curtailment And specifically, that's the problem and the harm that I'm trying to solve and work on to help the industry grow in the right directions and make

1:35 at the end of the day the carbon impact that the energy transition needs. Megawatt hours and generation is sort of an intermediate step. Most people don't really care about megawatt hours and about

1:48 delivery of power. They want reliable power and cheap power but really the switch between or the switch from fossil fuels to renewables is all about carbon. So in our business clean incentive,

2:02 we're sort of changing the scope of energy procurement to focus on the avoided emissions of the renewable generation or the battery assets to make sure that a corporate buyer that has induced

2:17 emissions from consuming energy at a certain location at a certain time has avoided the same amount of energy from their contracted power, their PPAs from renewable assets. So that solves the

2:33 overdevelopment issue by creating a premium for projects that are built closer to the cities.

2:42 So right now that curtailment problem exists because wind and west Texas cannot be, that power cannot be delivered effectively to Dallas, Fort Worth, Austin, Houston because of the transmission

2:55 constraints there. So encouraging a. project developer to build a solar facility in Houston, suburbs, or, you know, where the cities are, where the data centers are, and the manufacturing is,

3:07 that project should be worth a lot more and should have a lot more value than a project built way out in the middle of nowhere that has trouble getting to market. So to reiterate, this is a problem

3:19 as old as your car in some ways where we have a lot of wind generation in West Texas and literally the tubes, the transmission line is full and can't get enough If you say, containment, they're

3:29 just turning off the wind turbine or feathering them so they can't produce anymore. And what I'm hearing is the current system is set up where there actually isn't a strong enough market incentive to

3:41 bring these assets closer in. Is that a fundamental function of how the pricing mechanism is set today with your car? Or is it because there's really no carbon measurement or offset measurement in

3:53 the current mechanism? Right of this

3:58 uh, rely or come from sort of the good intentions of wreck markets and tax credit markets where the government tries to incentivize the right thing, but what end up in the, in the, in the pappens

4:12 is that a renewable project will sometimes generate power into negative pricing or be built in a place where a significant part of the time they are curtailed because they're still getting the funding

4:24 and the money from these tax incentives and these other things that aren't really pure market signals. You know, if it was, if you were only paid for the avoided emissions of a project or for the

4:38 amount of generation that actually got to market that actually caused a gas or coal plant to shut down or to reduce, that would, in our minds, fix this sort of market misallocation or this function

4:54 that's not working well. Because then the project would not pencil out if it couldn't make a meaningful carbon impact or take that power to market. Does that make sense? So it's really moving away

5:07 from like rewarding the project and the generation of electricity but more, how is it actually helping us move away from the fossil fuel emissions? And so then how are you solving that problem

5:19 through your solution? Right. And I don't wanna discount how difficult it is to develop a wind and solar farm. It's incredibly hard with the land and the permits and project finance and cost of

5:31 capital. With all those constraints and all those difficulties, it's much easier to develop where the resource is but unfortunately that's not where the cities are, right? So in order to develop

5:44 where these projects closer to where the cities are, that's just gonna be more expensive. The land and the permitting is more complex typically So for the project finance to work out. there needs

5:56 to be a premium somehow for those projects. And right now, a rec or renewable energy certificate, they're all treated the same under the greenhouse gas protocol. So scope two guidance shows that

6:09 every megawatt hour or be rec is the same.

6:14 But in reality, they're not all the same. And so somehow you need to differentiate that. And so the solution that we came up with is to take a megawatt hour of generation at a certain location at a

6:27 certain time and use marginal emissions from data providers like Resurity and Watt Time and others to quantify the avoided emissions of that megawatt hour at that location and that time. Because it

6:41 varies quite a bit. So I already sort of described the locational difference of grid impact, but there's also a time impact as well or a time dimension to them. I think the easiest. illustration

6:55 is the solar duck curve in California generating more solar energy in the middle of the day is not going to make a meaningful impact on the fossil fuel generators that are balancing the grid because

7:08 the grid is fairly saturated with solar at that hour. But if you're somehow able to generate renewables in

7:17 the nighttime or during that dusk window where solar comes offline and there typically is gas thermal plants ramping up, that would be much of a more valuable megawatt hour because of the grid impact.

7:29 So

7:32 time and location is very important for renewable generation. And so

7:38 I can explain marginal emissions and how that

7:42 data is collected and quantified But that's the key missing ingredient that I think needs to be associated with REX or associated with generation. to sort of fix this problem and to tell the whole

7:55 story about renewable generation.

8:01 So what are you really then calculating for that makeup, what hour? Right. Avoidance of emission, like what are you calculating in your analysis? Yeah, so just to back up and talk about

8:15 emissions, grid emissions data a little bit more broadly and then answer your question. Yeah

8:21 The location based scope to guidance uses what's called grid average emissions. So if there's quite a bit of hydro, nuclear, a large base load of carbon free energy, call it, it doesn't have to

8:34 be renewables. That average emissions for that section of the grid is gonna be fairly low. Even if a gas thermal plant is balancing sort of the grid at the time.

8:53 There's this average emissions factor, but then there's also this fairly new different emissions factor called marginal emissions, which is I don't really care what generation is on the base load.

9:07 Tell me what generator is actually on the margin, meaning which one is being ramped up and ramped down by the grid operator every hour, or even every five minutes or whatever it is, to maintain

9:20 that grid stability and that frequency and voltage. And if you can demonstrate that bringing on an additional megawatt hour of renewables causes that marginal generator to decrease, then you've made

9:33 a measurable amount of avoided emissions. And so

9:41 that impact on that marginal generator varies, like I said, across locations and across times So that's the data set that we think is very critical in the appropriate data set. to then merge or

9:53 associate with the wrecks to tell the full story. So just in very concrete terms, we're talking about like there's a marginal producer, it is a coal power plant, and if there's a way to measure,

10:04 I have a battery that provides megawatt of power, and that means I can pull off this coal power plant. There's a substantial marginal to increase in carbon intensity from that trade-off. And if I

10:15 heard you correctly, you already have a firm that you can pull this data from. That's right And here, as you're linking that moment in time to the renewable energy certificate that is cut for the

10:28 generation B to power a solar installation, I don't think there are wrecks for batteries yet, right? Am I? No, but we are working on that. That's exactly right. We are the sort of independent

10:39 data infrastructure platform that merges the wrecks, the meter data from the project and the avoided emissions from these data providers. into a certificate that could then be used in a PPA. So

10:56 we're trying to facilitate these PPA's or these transactions

11:02 for the world or for these corporate offtakers in a convenient way. Because this data problem I was describing, it's somewhat complicated. There's a lot of moving parts. You don't want to have

11:12 these monstrosities of

11:14 PPA's that have all these other intermediaries and data sources. And somebody's got to sort of settle these contracts on a regular basis. We're tackling this problem by saying, let's simplify the

11:27 PPA's, but let's monetize the avoided emissions of those wrecks and of that generation using a certificate and a registry so that that ownership of those avoided emissions can change hands to the off

11:41 taker for carbon accounting, but then the off taker can pay the developer for those avoided emissions So to give you an example might help. sort of understand is that,

11:54 you know, we want to facilitate what we call an impact PPA, meaning the off-taker will pay a carbon price, let's just call it100 a ton, for all the avoided emissions of this project over 10 years

12:07 or so. And so,

12:09 we connect to the meter of that project, all the RECs are then sort of brought into the clean incentive platform, and then we issue new certificates We call Power Emission Certificates that will

12:22 have the REC embedded along with the avoided emissions. And that is the set of certificates during that period of time that are then transferred to the off taker. And that is the amount of avoided

12:34 emissions that we've certified as an independent party in this contract. And the off taker says, Okay, we will honor our deal and we'll pay100 per ton back to the developer or the operator of that

12:47 wind farm So it's a convenient.

12:51 platform for this PPA, it's also sort of provides a lot of security and a lot of immutability and data, you know, integrity for how we're doing this. We have a published methodology for this. And,

13:07 and it's scalable. So now you don't have to have all these bespoke legal contracts with every developer, you know, Amazon has what is it, 400 different PPA's. You wouldn't have to do that 400

13:19 times in a unique way, you would be able to then say, let's just enter into a normal PPA and let's use the clean and set the platform to monetize this. The developer now has additional carbon

13:31 revenue going into that project that wouldn't have been there otherwise.

13:37 That's based on the volume of a board of missions. Now the corporate off taker also has a digital certificate that shows their board of missions. So now they can do what many in the industry are

13:48 advocating. the greenhouse gas protocol to change to which is a impact based scope to framework. So I'm happy to go into some of the details of the greenhouse gas protocol, some of the revisions

14:02 they're trying to make, and a lot of the sort of proposals that they've been entertaining. But really that's what we're trying to facilitate is get beyond this every wreck in every megawatt hour is

14:13 the same to get to enable something that says this corporate off taker has now

14:22 proof of ownership of order of missions that can match all their induced emissions from their operations.

14:30 How do you make money? The important question. Well, I mean, we make money in two ways. One is we have a sort of a standard issuance fee for creating these certificates and for just operating the

14:43 platform connecting to the meters of these facilities.

14:49 But if we can facilitate these impact PPAs, then there would probably be a broker fee involved in a certain amount, um, just to help with facilitating the, the, the PPAs. The, those are two

15:02 different revenue streams from two different.

15:05 You can call it activities on the platform. Um, so Rex have what we call a merchant market for, for buying and selling Rex separate from a PPA. And that's where the issuance fee revenue can come

15:18 in So if you're a mom and pop store or business and you can't afford these multi-million dollar PPAs, you can still reach your goals, your sustainability goals without having to go through like a

15:29 green tariff or something with your utility. You could just buy some Rex or buy our, our PC's on our platform. Also retail customers, you know, like yourselves, if you want to just purchase

15:40 those for enhanced sustainability, you can do that

15:46 the PPAs, which are much more complicated or much more

15:50 large company focused, brokering those would be sort of a separate line of business to help really make sure that those are done correctly and to actually match the producers who are building

16:04 impactful projects with the corporate off-takers who really value going above and beyond the minimum requirements of the greenhouse gas protocol So your primary customer then is the off-taker?

16:18 But is it also dependent on having the developers and other parties on the platform? Yeah, so

16:28 corporate buyers are leading in this area. There's an organization called the Emissions First Partnership which was founded I think two years ago when the greenhouse gas protocol and WRI, That's the

16:41 world resource institute who manages the greenhouse gas protocol. They

16:49 acknowledge that the current SCOP2 framework is lacking, and there's been a lot of discussion about how it's broken, and they signaled they're gonna open up for comment to hear revisions, to hear

17:02 proposals for revisions. And so this industry group formed, it's led by Meta and

17:09 AWS, and I think six or seven other companies And they've all written some policy papers and have advocated for this impact-based scope too, which is it's not enough to buy a wreck. That wreck

17:23 needs to have some data about the avoided emissions. And the beautiful thing about this framework is that the same methodology that quantifies the avoided emissions of generation can quantify the

17:36 induced emissions of consumption. So now you have the same methodology that can be used for both So now, if a data center - is located outside of Houston where it takes a significant amount of

17:50 gas thermal generation to balance the grid that operates 247 every hour of the day, that's going to induce a lot more missions than if that data center was outside of Amarillo or Lubbock or somewhere

18:06 else. So it gives the market signal to locate and operate your loads in a different way to reduce your induced emissions. And it also sends the market signal to your

18:20 renewable PPAs or your selection of PPAs to

18:24 source them with the greatest of water emissions. So it really fixes this market signal problem I described earlier, which is

18:32 let's align everything so that the corporation has carbon matching in their scope too

18:41 This is an alternative to the. the other proposed major proposal, which is a 247 hourly matching framework. And so I'm happy to go into those details because there are some trade-offs or there are

18:54 some interesting comparisons between the two frameworks and why I believe carbon matching is gonna be the successful one.

19:04 But that's the corporate, that's the demand driver for these corporates to use our platform. So that kinda answers the question, like why is the time now, and why didn't this need exist five to 10

19:17 years ago? But you're also using an underlying technology here. Do you wanna get into that at all? Yeah, yeah, I'm happy to. Yeah,

19:26 so the reasons why now is not just greenhouse gas protocol, but overall there's a number of sort of corporate compliance type regulations that are driving the conversation.

19:40 You're probably familiar with the carbon tariffs that are coming up in Europe and elsewhere, the mandatory disclosures in California and SEC, so there's sort of a lot of regulation.

19:52 But also people are acknowledging that the status quo is also open to greenwashing in terms of buying the cheapest REX or the cheapest carbon offsets and making these sort of big claims at the

20:05 corporate level and are no longer acceptable, at least for most parts of society that that's sort of frowned upon. And so a lot of corporates and a lot of folks are looking for something that's

20:18 either more robust on the data side where the claim is stronger or just doing something that's beyond just buying your way out of the problem, which is just what people are afraid of being accused of

20:31 when it comes to these greenwashing or reputational risk type issues, which sort of segues to what you were talking about on the technology side, which is how can you prove the avoidance missions or

20:44 prove the carbon matching or improve the claim? And so that's where we're using

20:53 both traditional technologies and new technologies as it relates to

20:60 connecting to the meters with IoT devices, doing sustainability reports that's all traditional, but tokenizing that on the blockchain, on the public blockchain in a way that facilitates this

21:13 registry and gives every certificate holder traceability and a cryptographic link back to the tokenized audit of the facility. So unlike Rex,

21:29 there's a bit of nuance here, but if you own a wreck, typically you don't know exactly where it came from.

21:35 maybe you know, which balance authority or which grid it came from, maybe you know which wind or solar farm you came from, but it doesn't really know, you don't really know when it was created,

21:44 maybe you know what year it was created, but there's a lot of missing information there. Carbon offsets, somewhat similar in that, you could look up where they came from, but a lot of times

21:55 they're bought through brokers, and so a lot of corporate sustainability reports, they're just listed as we bought Vera certified or something like that, but there's a lot of missing information

22:08 that I think is becoming much more demanded by customers and investors now. So our digital certificates on our platform, you'll be able to see exactly when and where that was created. So now you

22:20 can show that

22:24 your investments, or your PPAs, or your purchases of these certificates all can all be traced back to impactful projects And we're going also above and beyond the normal.

22:37 So the grid emissions impact like I was describing, but also putting more sort of, I guess you call it qualitative information or

22:44 descriptions of the social impact of the project or the wildlife impact of the project or these other soft attributes that a lot of corporates care about, you know, was, and we're not putting an

22:57 opinion out there where we're really just collecting all the information so it can be monetized and valued by the market So if you, if you did a greenfield project and you clear cut a bunch of trees

23:08 to build a solar farm, a lot of people wouldn't be, want to be associated with that. But if you were using a retired coal plant or a landfill or something, yeah, since that would be different.

23:22 If you were to invest in the local community where the project developer, you know, funded a school or built facilities for the community, did job training, those are all things that corporate

23:35 RFPs for PPAs, but they're soft. And they're not beyond the press release. It's on day one. It's not something that can be traced back to the racks or to the holders of certificates. So we're

23:46 trying to quantify all this and we're trying to tokenize it in a way that will remove trust from us and remove trust from maybe the product developer and put it all into a digital certificate that can

23:59 fully be monetized and fully be owned by the corporate off-taker. Because there are nuances to ESG reporting and carbon reporting, which is beyond just scope one, two, and three, but you have

24:12 these sustainable development goals, SDGs, you have TCFD has the task force for climate and financial disclosure or something like that. They have all these nuances about are you being a good

24:24 corporate citizen and they're telling other stories besides just carbon. So we're trying to quantify all that positive attributes into one immutable sort of. form. I want to take us on a little

24:38 journey. I have no idea if this will be good for the air, but I guess when I was growing up, this is a terminology. I would get certificates of achievement all the time, which is like a little

24:48 piece of paper with a little gold foil on it, and I think when I graduated and started learning about Rex and people keep talking about certificates, I'm like, are they handing around little pieces

24:58 of paper that say this is when this was cut for this megawatt hour, and you can imagine that there's kind of a long history where, yeah, there was a time when stock was issued one share at a time,

25:08 it was a piece of paper, and this was something that would physically pass around, and I am so thankful that we have like, blockchain now, so that there's not warehouses of like stacks of paper

25:19 that you have to search through, but this is, I think when we talk about kind of, there's data everywhere, like this is the modern world where certificate encapsulates a ton of information

25:32 where you can actually use it for something. It's literally not locked on a piece of paper sitting in a warehouse, but it gives us this kind of provenance. In many ways, it's much more powerful

25:38 than the original concept of a

25:45 certificate because now it's accessible and useful.

25:51 And it's amazing to me that we've kind of come this far, where this is something that we can kind of throw out there and have this kind of public transparency

26:01 'Cause otherwise, what does a certificate really represent? It really just kind of represents a moment in time where you have a piece of paper. I mean, before blockchain, these certificates,

26:10 whether they're paper or digital, had to live on a proprietary or closed database somewhere that you had to log in and see. And it was hard to, like I said earlier, prove a lot of things. You

26:22 have these auditors, which have their role.

26:26 But blockchain solved this problem of, How do you make something transparent on the. internet without also it being copied a million times or also have these double claims of owning it. So it

26:39 solved a sort of this ownership problem of data. And that's what fascinated me. And that's why I decided to start this business was that this is a data management problem at its heart and it's

26:57 a data ownership problem. And blockchain is uniquely able to solve that problem because it's not, it's very clear who owns this piece of data. So we're, cause I used to work for a company where we

27:04 used to provide certificates and audit and all of that stuff. And this was maybe five, six years ago when we were talking about blockchain and how we need to start shifting from like handing out

27:13 those paper to giving blockchain certificates. So how has that evolved? And how have you seen that take shape in practice are certification bodies actually handing out digital certificates based on

27:29 this technology? or is it still relatively new or not so well used? I would say it's still new. There are startup, there's a big startup ecosystem around tokenizing carbon offsets. There are some

27:44 folks tokenizing REX, breaking them into smaller pieces, so retail customers can buy a kilowatt hour instead of a megawatt hour.

27:54 There's also blockchain applications to payments, like facilitating payments in real time, with various things in the power grid and other places. But I would say that it's still new in that - Is

28:07 it being applied more widely now? Are people accepting it as a certificate? There's still a lot of fear about it still being like the Wild West, or there's still a lot of fear of fraud. So I don't

28:23 know when this was maybe two years ago. Vera sort of shut down an account that was linked to tokenized offsets because they were left untired maybe on the Vera registry and then they were listed for

28:36 sale and it really wasn't clear if this organization was doing things correctly even though I think everything was published online and there was transparency in the way the smart contracts and the

28:46 platform worked. There's still a lot of hesitancy about it. So the legacy players are the players who control like the issuance of these traditional certificates. They haven't fully adopted. I

28:58 don't think they have adopted it all. Blockchain is a way to rebuild their infrastructure. But what you're seeing are these sort of layers on top of the legacy registries that then use blockchain

29:11 technology to either give access to a larger market, like I was saying earlier, or just increase transparency so that the corporates can maybe have better reporting because they can verify on chain

29:24 versus a black box. 'Cause I can imagine like Amazon and Meta who you're talking to in these industry consortiums would be more open to adopting these technologies. What are you seeing when you're

29:37 talking to your customers when you present them your solution and that it's based on a blockchain?

29:45 Yeah, I mean, they like the idea of an independent party making, helping them make the claim instead of being internal, trying to make the claim internally. Like I was saying earlier, there's a

29:56 lot of hesitancy to make claims nowadays or to show innovation in areas where you could just open yourself up to all this liability of saying you're cherry-picking or green-washing. So they liked the

30:10 idea of an independent platform. The blockchain part specifically, we don't highlight it as like a web three or in-your-face blockchain company. It's more of a blockchain-enabled backend thing that

30:24 maybe customers wouldn't even know. about. But it has increased transparency and security. So we're not trying to really hit people over the face with the blockchain side. I'm a data scientist.

30:36 This is just, in my mind, another database or another technology, just like a cloud infrastructure that people, maybe in a number of years ago, highlighting cloud as a competitive advantage could

30:49 have worked. But nowadays, everyone, everyone uses it. So it's no longer a competitive advantage. I think in some ways, blockchain is becoming that. If you use it correctly,

30:59 you really shouldn't have to promote it so much. Yeah, because I think I remember when it was first popularized blockchain, everyone was like, let's create a blockchain solution. But it was like,

31:11 yeah, but what are you going to solve? So the technology is irrelevant. It's really the solution. And so it's good to see that companies are more highlighting what you're doing. And then

31:22 blockchain can really be at the background because it could be any other technology. as long as it's doing what you want it to do. And to be clear, you have to solve a trust problem, I think, to

31:32 apply blockchain. It's not efficient, it's actually inefficient in a lot of other ways. So unless you're solving a trust problem, you should probably be using a different database. Got it. And

31:42 just to be clear, we're not running our own blockchain. We're not issuing tokens. Like we don't have like some of the Defy or Web3 type things. We're using a public blockchain and we're just

31:55 minting NFTs on

31:58 this blockchain that are then traded on our platform.

32:04 Good. So one of the things you mentioned is, I think you said you were at EDPR before this and at some point you saw the future happening and you decided to make the leap kind of walk us through

32:15 that step. Yeah, so

32:20 I was managing a team of at EDPR scientists data

32:24 focused mostly on operational asset performance. So there's a large fleet of solar and wind farms where we were making sure that equipment wasn't breaking down and the performance of the assets was

32:36 good. And then I transitioned, I began to see corporate demand from our, from their customers about new types of enhancements, new types of PPA's. Everybody was sort of thinking about how can we

32:51 go beyond the standard? So I got pulled into doing

32:57 sort of market research and innovation talking with their customers and surveying the landscape of all these ideas on how to enhance these sustainability claims of these PPA's. And that's when I

33:12 learned everything I could, about 247, energy matching. And I came across the Emissions First Partnership and what's called Emissionality, which is,

33:23 which is the avoided emissions of generation. And so I put together a proposal and I began to realize that there wasn't a lot of infrastructure or companies working on the emissionality side. There

33:34 was quite a bit working on the hourly recs or hourly energy matching side of it. And there were pilots ongoing with multiple companies. But when I realized there was a lot of white space in this

33:40 other side and it seemed more scalable and a better solution than energy matching, I thought it was an opportunity to sort of dive in and do it. I was doing a small startup. I was experimenting

33:42 with this idea of

33:55 using blockchain to tokenize

34:10 the environmental attributes of other commodities. And so I thought the power market really needs this solution, and I had been developing this idea for other commodities. let's do it, and so my

34:25 loving life was very supportive and said, let's go, and so that's when I started and have a small team, but we were able to work on it full-time and put it out there. And I think once the

34:44 pros and cons and the value proposition of our platform is known compared to the others, I think it'll come around and we'll be successful But yeah, it was from talking directly to customers while I

34:56 was working with these energy developers and then surveying the market where this gap was sort of identified. Yeah, and how did you have the conviction that you'd be the one who have to do this?

35:12 Well, I recognized it was a data management problem, sort of like what I was said earlier. And I've been a data scientist I'm not sure, seven years now, I was an engineer before that. And so, I

35:28 was surprised this problem, I guess, wasn't solved earlier. Maybe a lot of founders feel this way, is that, you know, am I crazy, and this problem doesn't exist? Or, yeah, people haven't

35:39 realized that there's a solution already out there, it's just not in the market. And so, when I realized that, why aren't these corporates structuring PPAs with this marginal emissions data? Like,

35:52 why is this not happening? The data's available,

35:58 you know, the demand is there, so why isn't this not happening? And I realized that it was just a failure of solid data infrastructure and data ownership. Like, there was no good way of owning

36:09 the Ebola emissions, or there's no good way of monetizing it for the project developers. And so, when I realized that it was a solvable problem and the technology was out there,

36:22 I thought I should go put something in the market and see if it would work. Yeah, and it's that confluence of you at that prior experience with using tokenization and being at the right place of

36:30 seeing the data gaps. No, so that's an interesting confluence, right? Yeah, and I'm

36:40 always curious to hear about that moment when you decided to quit your job and go into like this uncertain start your own company You know, what was going through your mind, how did you make that

36:52 decision? And

36:56 in terms of also like hiring and forming a team around it, were you able to raise some funds earlier on or are you doing it at the back of, you

37:02 know, your own savings for now? Right. Yeah, I mean, first time founder.

37:11 I've always wanted to build a company and my wife has started a company before and she had an entrepreneurial spirit And so her encouragement was really important. this happening.

37:25 You know, there were a few folks that were also very energized by this idea and were able to work for, you know, sweat equity and work part-time because there was no funds. So we have been

37:37 self-funded and bootstrapped. We have a few angels that have helped. But

37:43 yeah, I mean, it's been hard, you know,

37:47 doing everything that a founder has to do. You know, I, it's been an amazing journey just to learn about how many hats a founder has to wear in order to really put together an MVP or something that

38:01 you can get some validation before so you can get funding. You know,

38:08 I had a lot of misunderstandings about the process in terms of like, you know, is it just building a compelling pitch deck and then raising money and then building your product, Which in general

38:20 answer is no unless you're in a. zero interest rate, a hype cycle industry, or have a huge team or have been successful in a prior enterprise or something, maybe that works. But what the hard

38:34 reality for, at least for me, and maybe a lot of your founders that you've talked to is that now you've got to somehow build a very crappy MVP, and you've got to be somewhat ashamed of taking it to

38:45 customers, beginning some customer feedback, ideally revenue or some sort of pilot, to say, you know, I don't like it the way it is, but I like your vision, and we will agree to try it or do it,

38:58 and then use that traction to demonstrate to investors that there is a market for this, and there is demand for this.

39:07 So anyway, that evolution has been interesting, and you know, there's been a number of pivots in there, but I wouldn't give it up for anything really. It's been an amazing growth opportunity for

39:19 me. Good. And now that you're out. in the market for a seed round, how have you found that process in Houston?

39:29 Well, I've

39:33 been in Houston for a long time, so I don't have full context, I haven't lived in Silicon Valley or anywhere else, but I have traveled to different places and meet with investors.

39:47 It seems to me that Houston,

39:51 I think they love hard technologies or hard tech, and they love devices and actual inventions and new manufacturing processes or new equipment. I think software is something that is a little bit

40:03 scary because they feel that if it was

40:08 worth investing, why haven't large firms in Silicon Valley and New York already invested, and so it's like, am I missing something, it was being a Houston, you know, angel or investor, it's

40:17 like it's not.

40:20 being an early investor in a software in the energy space especially in this carbon climate sustainability sector which even though they're renewable energy companies in Houston is not exactly

40:32 Houston's strong suit yet in terms of climate tech investment.

40:38 Maybe it's more on the hydrogen and battery like I said the equipment side and not the software side. So there's a little bit of hesitancy there to think about what's innovative in I guess you call

40:50 it carbon tech or sustainability because carbon accounting and sustainability is

40:58 you know it's nuanced and it's sort of black magic in terms of like you're relying on a lot of emotional or policy or corporate motivations that maybe a lot of energy or Houston folks don't understand

41:14 You know you go to Europe a lot stronger sustainability culture right you go to California or New York. There's a lot more culture there. In Houston, for better or worse, I feel that culture has

41:28 been

41:31 changed because a lot of energy companies are on the defense, maybe, at least, maybe not now, but at least in the past, they were viewed as being attacked by this sustainability culture, so they

41:41 have a bit of a defensiveness about it. When really, hopefully, it could be viewed as more of an opportunity And I think tax credits and IRA and

41:52 other things have maybe changed that because the dollars, I guess, are there now, and so that changes a lot of minds. But

41:60 now you see every corporate VC and these energy companies have a whole portfolio of carbon capture, hydrogen, batteries, whatever. But I guess being innovative and being open-minded to what story

42:12 can be told with sustainability and with carbon claims is something that, at least on a voluntary basis, wasn't part of the Houston culture.

42:20 So anyway, I don't know if that answers your question directly, but that's just my feeling when I talk to Houston Angels, is there more about show me cash flow, show me concrete demand, don't try

42:33 to sell me some vision of enhanced sustainability, because I don't know if anybody's going to pay for that. And I don't know if that's really the trend in the market, because maybe most Houston

42:44 Angels aren't on the trend or in knowledge. I think that's a valid point. I don't think we're so mature in our sort of thinking there, especially compared to California, where they've been doing

42:58 this for a while. There's probably more innovation around this there. I would say New York City is leaving in New York City. Yeah, that's true.

43:07 I would call it the carbon tech side or like

43:12 the sustainability side. Maybe not the hardware of climate tech or the energy transition, but at least on the these new data platforms that are helping. on these carbon claims, it seems like

43:22 there's a lot of VCs at a New York and Europe that are helping. And those conversations are completely different. You know, there's VCs that are doing, you know, regenerative agriculture and,

43:35 you know, wildlife restoration type projects. I mean, they're really into the weeds on all of these sustainability trends, you know, way ahead of the rest of the world. And so they already say,

43:45 oh, I completely see that the energy market is gonna trend in the same trend that the broader industry is going, which is more disclosures, more proof of your claims, more scope through reporting.

43:59 So they see the trends, I think, in a lot more detail, and the Houston folks don't. And I think that's one of the, you kind of touched on a fundamental difference in kind of the investment.

44:08 Philosophy is sometimes with a portfolio, you just got a bet on the vertical. But if you don't see the vertical kind of growing, it's hard to find a portfolio around it And I'm not sure. as much

44:21 as the used in like angel community might see a lot of climate deals. They haven't necessarily picked verticals that they know they want to double down on.

44:31 But you can definitely see if like in place like New York or they're kind of doubling down on the carbon tech, you know, accounting like you described. And you see it all the time in California

44:39 where they're going to bet heavy on AI today because it's the vertical of the day, right? But here it's a lot more measured in terms of wanting to see that market really take off And that doesn't

44:51 necessarily get you pole position as an investor if you're kind of late, right? Well, you need some edge, right? You need some, so there's specialty VCs out there, right? And some that specify

45:04 in a very specific vertical or domain, and they feel like they have an edge in their deal flow. And yeah, if a Houston investor doesn't feel like they have an edge in this space, they're just not

45:16 going to write a check.

45:19 But hopefully what we. what we can do to close the seed round is to take the commitments from those special TVCs to then turn back around to the Houston folks and say, look, these folks have done

45:32 the due diligence. They know the market better than you do and they are gonna write a check. So, you know, join on in and let's fill the round and sort of go crazy and let's build something

45:43 amazing. So it helps, I think, sort of grease the wheels for them

45:55 to say, look, somebody else is vouching for - Yeah, someone else thinks it's a good idea. So maybe we'll follow along. Yeah, so maybe they're not gonna be necessarily follow leaders,

45:60 but they'll follow along until they get to a point where we have more understanding. Because here, when we talk about energy, it's oil and gas, whereas energy is so much more than that.

46:12 But I think they both need to be done together. The energy transition is gonna take, obviously,

46:19 technological breakthroughs and deployment of technology at a huge scale, which Houston can do. But the other side of that is the data, the incentives, the claims, the sustainability reporting,

46:32 the greater market demand for green premium or the attributes of that. That part of it definitely needs to be there. I think that you need both to be successful in the energy transition, in my

46:44 opinion.

46:46 How do you think that's evolving or changing or what needs to be done in Houston so that we're better prepared for this transition and to lead the transition and

46:57 also fund it?

47:01 Yeah, so.

47:03 We're asking hard questions here. Yeah, that's a good one. So I guess the way I would frame this is that there's only so much capital to go around and you can't boil the ocean and just like deploy

47:17 it So I think the question is, is where do you deploy it

47:23 for the highest return? Not return necessarily of money, but the lowest abatement cost, carbon abatement cost, I would call it. And that's just a fancy way of saying that if you could avoid,

47:34 with a million dollars, you can avoid more carbon by building a wind farm in West Virginia, because coal is very heavily used in West Virginia, then that same million dollars or that same wind farm

47:46 is going to have a better abatement cost there, and then if it's another one in West Texas. So like the deployment and the strategic deployment of capital, I think needs to be informed by carbon

47:59 data and just by demand. I mean, there needs to be demand for avoided emissions, and then that will send the market signal to deploy that capital where you can target the coal generation and target,

48:13 get the most avoided emissions, and then Now you can funnel those resources. And just to segue a little bit, or just to have a brief aside, that's in contrast to the framework, I believe, is

48:26 being proposed by this 247 hourly matching, which is let's just deploy tons of batteries where there's already a lot of renewables like in California and Texas, so that we can match every hour, we

48:38 can prove every hour is from renewable generation. I think that's a fine goal. I think that's probably the final step And I know their intentions are good, but that's not in my mind a good

48:49 deployment of capital, because why make California 100 renewables when you still have coal in Montana, West Virginia, India, China, elsewhere?

49:02 It's much more efficient use of capital to take that battery and go put it somewhere else. So that's the market signal that I wanna fix, and I'm trying to provide an alternative to the 247 framework

49:14 that I think is inefficient. capital allocation framework. I think that's been like what I've loved about our conversation today is what's been bothering me is that we, I think we still approach

49:27 the energy transition and solving the climate crisis in a very sort of capitalistic mindset in terms of like profit first, whatever makes us more money instead of looking at it in a more holistic,

49:39 where are we creating the most impact? Right And look at it holistically because then also look at, okay, deploying batteries for all the California water, the externalities of that, right? And

49:46 I'm sure there's, you know, where are

49:56 we getting the batteries from and what's inside the batteries and how are we gonna recycle those batteries? And all of that thing that we look at it more holistically because it's not, we're just

50:06 gonna create other problems if we're not doing that. That's right. So the same way when we, the business analysis we do for a project and look at like how do we maximize profit or reduce our cost,

50:17 I think we need to take into account the environmental impact into all these projects and look at it more holistically in terms of lifetime emissions, but also in terms of, yeah, what's the best

50:30 way for us to deploy this capital? Is it here, or is it in Virginia or Montana or something else? I also think you're pointing to something else. I

50:39 think there are two minds within the carbon accounting or the climate world where you got one group that says, well, we really need carbon to be expensive because we want to disincentivize the

50:50 creation of emissions. But if you think about it from a Texas perspective, and what you're saying is, in some ways, we want to be so efficient with how we deploy capital that carbon should be2 a

51:01 ton, because we're so good at finding that place to abate, that every dollar just as much more, it goes much further than trying to price it at1, 000 a ton. And I think there's a

51:12 challenge there were in some people's minds, you know, you're.

51:18 they're kind of using the credit as a tax. But

51:21 I think what we're talking about here is using it as a mechanism to identify efficiency. And I think Houston has like a big capital projects kind of ecosystem looks at everything of like, how do we

51:31 minimize cost? How do we get that barrel oil out the cheapest? And if that means I have to account for the carbon and I can figure out how to make it a2 a ton for the carbon, we have the same, we

51:41 have the right kind of net neutrality from a carbon accounting perspective Let's develop that project. Let's not develop the other one, where maybe the abatement is1, 000 a ton, but we feel good,

51:52 right? 'Cause that's a classic greenwashing challenge, right? And I think it's hard for different groups to reconcile, but it's almost counterintuitive that efficiency in the carbon market means

52:03 cheap carbon, right? Yeah, it's really fascinating and complicated topic because I read this week that there's a bill the US. Congress to, you know, describe what a carbon could look like

52:17 modeled after the EU carbon tariff in terms of penalties and taxes. I'm sympathetic to some of that. I like disclosures and I like publishing carbon accounting and reporting. In general, sort of

52:32 philosophically, I don't really like tax as a punishment as a way to drive change. I much prefer the carrot and not necessarily tax credits or incentives like cash because

52:47 they work to start a market, like maybe hydrogen, for example. I think they work to start a market but they're maybe not the right way of doing it in a fairly more mature market because they can be

52:57 gamed. And there's a lot of crony capitalism in terms of how these things are done. And at the beginning, I talked about the wreck and tax credit markets somehow like chain, manipulating the

53:09 market to maybe create some malinvestments So, I like this idea of connecting. increasing increased demand or maybe a green premium from customers

53:23 and providing some sort of proof of emission in the supply chain back to the producers as a way to reward the responsible or the lower carbon version of that producer in that market with additional

53:36 revenue. And that positive market signal or that carrot is then going to change the industry and you use capital, capitalism's

53:46 sort of nature to your advantage in that they're going to now take that additional revenue into their projections or project finance or whatever it is and they're going to be smarter about how they

53:60 build their business or operate their business because they see that revenue

54:06 So yeah, it's difficult. I think there's a lot of people in the sustainability world that really want to punish oil and gas. They see it as the enemy. And not just because I live in Houston, but

54:18 I don't really like that framing of it.

54:22 'Cause it ignores reality in terms of how much fossil fuels we need for our quality of life and how it could be depriving other developing nations of quality of life. If we don't

54:35 give them access to certain fossil fuels, I don't like coal. Obviously, you can generate electricity in many other ways. So using coal doesn't make any sense But until there's viable alternatives

54:49 to

54:51 plastics and to lubricants and to gasoline and things that's cost effective and lower carbon to your point, like the entire life cycle is lower carbon, then we need some of those also fuels. And so

55:06 I don't like framing it as oil and gas as the enemy

55:11 and so incentivizing with a positive market signal that they could be more. uh, successful by tapping into this green premium is to me the better way to do it. I appreciate that. We're, we're,

55:24 we're kind of coming up on time. So, um, as we wrap up, um, what's one thing that our audience could do to support you and your journey?

55:32 Yeah. Well, um, you know, I guess just really the main main thing is to understand that, that this sustainability journey and the, the energy transition is a bit more nuanced. And so, you know,

55:47 for the general public, do some research into, you know, the way the power market works or the way supply chains work may not be fun topic to read about, you know, on the weekend, but educate

55:59 yourself on, on how difficult it actually is to, to get our quality of life with a free, renewable resource that comes to us every day in the form of the sun and the wind and how difficult of a

56:13 problem that is, and that you can't just spend hundreds of billions of dollars and think that the problem is going to go away and that if you just voted for one political party over the other, we

56:24 will have a sustainable world. I think you have to just understand that there's some nuances and that,

56:33 you know, specifically for us, you know, come join our community and visit our website and give me some feedback on what we're doing We're publishing our white papers and our methodologies and

56:44 we're launching our platform

56:48 and we also want retail folks to be able to buy our certificates and be a part of the journey too. This isn't just for huge Fortune 500 companies. Yeah. And what is your website? Cleanincentivecom.

57:01 Yeah. Okay. My Twitter handle's Clean_Casey and, you know, I love a good debate.