Live from SF Climate Week with Senator Scott Wiener and Shashank Samala

Cody Sims
Today on my climate journey, we are recording live at SF Climate Week.

We are in the beautiful new 90 climate tech hub in downtown San Francisco. I'm your host, Cody Sims, and we are thrilled to welcome two accomplished guests for a conversation about climate policy and carbon removal. With us today are California Senator Scott Weiner.

He is the author of the recent landmark climate legislation known as California's SB 253 or the Climate Corporate Data Accountability act.

Yin Liu
We're going to talk all about that. We also have Shashank Samala, the CEO and co founder of carbon removal company Heirloom.

Cody Sims
And we're doing all of this in front of a live audience of over 250 people as part of what has been a wall to wall week of events here in late April in San Francisco. We'll get to know each of our guests, their backgrounds, and what they're each working on. My goal for today is to foster dialogue and communication about how policy and innovation come together and to learn from Senator Weiner and from Shashank about the experiences each one has navigating this nexus. So the less talking I do and the more dialogue that emerges between the two of you, the better. I hope that we'll pack a lot into this conversation.

But before we start, I'm Cody Sims. I'm Yin Liu. And I'm Jason Jacobs. And welcome to my climate journey. This show is a growing body of knowledge focused on climate change and potential solutions.

In this podcast, we traverse disciplines, industries and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.

Senator Weiner Sachon, welcome to the show. Let's dive right in. Senator Weiner, as I understand, you represent California State District eleven, which includes San Francisco and some of the immediate surrounding areas. And you've been in that seat since 2016. You grew up in New Jersey and you've lived in San Francisco since 1997.

You've authored 75 bills that have passed into law across a range of policy areas, including housing affordability, expanded public transportation, affordable access to healthcare, and many other areas. But of course, today we want to focus on the work you've done in climate policy. So maybe let's start with understanding more about when climate change became something you started to think about personally. And how did you develop your own legislative agenda with respect to the issue. First of all, thank you for having me.

Scott Weiner
And this space is amazing and I'm so happy to be downtown, which is coming back. And we're doing a bunch of work to try to accelerate that. I'm optimistic about the future of downtown San Francisco. Sometimes you need to reinvent yourself and have a second act, and downtown is going to do that. For me.

I grew up in a era where I think there was just an emerging understanding that we were starting to poison and strangle the planet Earth, and that we needed to do more. When I was younger, we weren't talking about climate change in those words, but I think we knew that there was a problem. As a policymaker, at least, I was always committed to doing what it took to try to move away from fossil fuels, to decarbonize, and to move in a much more sustainable direction. But when we started to see these just unbelievable wildfires and the flooding and the mega storms, and with increased frequency in a way that just was not normal, that really drove it home to me that the work that we had been doing, as committed as we had always been to it, was not just an academic exercise about what's going to happen in 50 years, not just out of the goodness of our heart, because we wanted to have a sustainable planet for ourselves, grandchildren and great grandchildren. It was also about what's happening now in communities that are being upended now because of our absolute negligence in addressing this crisis.

Cody Sims
I can't tell you how many people I know who first started working in climate because of 2020 Orange Day here in San Francisco. I don't know how much that day in particular influenced you diving in and doing work. I assume you were already doing work in this area since then, but I'm curious if you have any stories about that day. Oh, I remember that day very much. I remember I went to the Senate at the end of 2016, and I remember in 2017, being up in Napa to support my colleague who represents that part of the North Bay during those horrific fires, and being at the command center with all the Napa county local elected officials and the first responders, and just seeing the absolute devastation that was happening there and in Sonoma County, Mendocino county, etcetera, my first policy entrez into climate action was around housing policy and around public transportation funding, because we have allowed our public transportation systems not to thrive for lack of funding, because we prioritize highways and roads over actual sustainable transportation.

Scott Weiner
And we knew, even going back in the seventies, when San Francisco, like other cities, started down zoning and making it progressively harder and harder to build new homes in places like San Francisco. There was already talk back then. I was just a kid then. I'm not that old, but I had read about it. These predictions, like, if San Francisco chokes off housing production here, that's just going to mean more sprawl and more.

At the time, we would call it pollution. Now we call it carbon emissions. And so we've known for a long time, and that was actually my first entree. Thanks for sharing that. Shashank, you co founded Heirloom in 2020 while serving as an entrepreneur in residence with carbon 180, an ngo focused on advancing carbon removal.

Cody Sims
Prior to that, you co founded a startup in the circuit board space tempo automation. How did you go from that to carbon removal? So I grew up in southeast India, and similar to Scott, I saw impacts of climate change pretty early on. If we didn't call it climate change, then just increasing levels of droughts and heat waves and monsoons, that would just get worse and worse year by year. And I think growing up, that was one of the things that you just assumed that things would just get worse and worse every year, because that's what always happened.

Yin Liu
There was this realization that there's probably a bigger problem that we just don't know about. I got a big break. I moved to the US in my early teens, was very fortunate to go to the schools, and worked at square, a fintech company, in the early days, and then started a circuit board manufacturing company, which is essentially enabling developers, engineers to build electronics for satellites and robots. I was fascinated by using advanced manufacturing, advanced software to make things that push the future of humanity. We were building ports that went into rockets.

I did that for 78 years, and we founded the company here. The manufacturing routes were based in San Francisco. And many years in, it was very clear that I wasn't sure if I was going to do that for the rest of my life, building electronics. And I wanted to do something more positive. Back in school, I would take classes in nuclear engineering.

There was a phase. I thought maybe I should become a nuclear physicist. For me, I wanted to work on something positive, but I wasn't sure exactly what that was. And heirloom came many years after that. So a friend of mine sent me the IPCC report, talking about just the need for not just reducing emissions, but also removing emissions.

Cody Sims
It's the 2018 report. That's exactly right. So that was two years before the Orange Day. Honestly, the 2020 Orange Day and the 2018 IPCC report are the two most common triggers I hear from people who said that's what caused me to want to work on climate solutions. The 2018 report was probably one of the most significant ones, because that was the first report that talked about not only we need to reduce emissions, every part of the economy, aviation, shipping, concrete, steel.

Yin Liu
We need to reduce as fast as possible, but we also need to remove billions of tons of carbon dioxide from the air. And for me, that was the trigger. It's like, hey, look at how much impact we could be having and look at technologies that are solving it, and there's really not that many. And this is really a role I could play. And what is heirloom?

So, heirloom, founded in the wake of the UN report, is really a carbon removal company. And our goal is to help accelerate the transition to a carbon negative society. We use a technology based on limestone, which is a mineral that is naturally thirsty for removing carbon from the air. The problem is that these rocks are kind of slow. So we built proprietary technology to give superpowers to these rocks to pull carbon from the air much faster.

We were proud to just actually, four or five months ago in Tracy, California, Central Valley, we opened America's first direct capture facility commercial that is permanently removing carbon from the air. So we're a California born and grown company, and we're excited to put the first DAQ commercial deployment here in Central Valley. So if you're ever driving by Tracy, you should go see it. Any other notes you can tell us so we can set the stage here on traction you have, commercially traction you have. In terms of deployments, anything else you want to share about heirloom specifically?

We were proud to also, just a month before we deployed that facility, we've signed the largest deal in directory capture with Microsoft to remove 315,000 tons of CO2 from the air. In addition to that, as the bipartisan infrastructure lab that you just referred to, we were awarded a directory capture hub to build a facility that can capture up to million tons a year down in Louisiana with a couple of our partners. So that happened, and we were in the initial stages of design and development for that one. And this next question is then going to dovetail into starting to talk with the senator about some of his legislation. You mentioned Microsoft.

Cody Sims
Are you seeing increased buying interest in carbon removal for any specific use cases, sectors of the economy? Is it companies anticipating their own inability to decarbonize their operations? Is it them afraid of their supply chains and how that's going to play out? What are you seeing from the market? This is a great question that should dovetail into SB 253, because the main motivation that we see from customers is the fact that once they've quantified their emissions and looked at their scope, emissions across scope one, two, and three, what they're understanding and realizing is that there is a bunch of emissions that are very difficult to decarbonize.

Yin Liu
So especially the hardest parts of concrete and steel aviation, those emissions need to be removed from the air to account for them. What we see is that across scope one and two, both the operations in scope one and also in the scope two and three, it aggregates to about ten to 30% of all emissions that need to be accounted by carbon removal. It really depends on the sector. If you're in industry, if you're manufacturing, it's a bit different. The emissions profile versus if you're a Microsoft, where most of your emissions are from the data centers.

Cody Sims
Would one of you want to quickly do the whole scope one, two, three definition for our audience, for those who aren't fully aware of it? So scope one are the direct emissions. So these are the emissions that say you are a fleet company and you're driving around delivering food. Those are the emissions from your facilities. Those are direct emissions.

Yin Liu
Scope two and three are what's called indirect emissions. And scope two really addresses the emissions from the energy that is powering your facilities, for example. So you're not directly emitting CO2 from the lights that are turned on here, but rather upstream. There is a natural gas or whoever provider that is sending those electrons. The emissions from those are under scope two.

Scope three is everything else. So think about the second and third order. Supply chains and value chains. Say you're building an iPhone. The emissions from the consumption of that iPhone would be under scope three.

Scott Weiner
Also, employee commutes. It's a whole range of things. And it's important to understand this was. I know, we'll talk about SB 253. Why the big fight was that a lot of the corporations didn't want scope three in the bill because it was quote unquote too hard, which is totally made up, is that scope three, for many companies can be 90% or more of their carbon emissions.

So corporations are effectively contracting out their carbon emissions, which is fine as long as they are not pretending like that doesn't pertain to their company, which they try to do. Or some of them. There are plenty that understand that it does pertain to their company. Why don't you continue on and tell us what SB 253 is? So, SB 253, Senate Bill 253, was a three year journey.

I still remember this is right in the fall of 2020. So right in the middle of the pandemic, I was asked for a meeting with this lobbyist who represents environmental organizations who said, hey, I have client who wants to talk about carbon data disclosure, and I was like, sure. So we had a Zoom. They said, we have this bill idea to require large corporations with gross annual revenue of a billion dollars or more to disclose their carbon emissions. I said, that sounds pretty common sense.

Of course they should be doing that. And I've done data bills before. Data bills are usually really boring and really not very controversial. And so I'm like, yeah, it'll be another data bill that we'll do. And so I agreed to do it.

And it was three years of trench warfare, just to the point where even though this is California, the United States Chamber of Commerce and the American Petroleum association, the National oil Industry Group and national bankers and so forth were fighting this bill from Washington, DC, not just their affiliates in California. And the reason was that they knew that this would apply to any company doing business in California. If you're a billion dollar or more revenue doing business in California, whether you're publicly traded or privately held, you will have to disclose your scope one, two, and three emissions. And they knew that that would have a national impact, because who's not doing business in California on some level? And they were terrified.

And they came up with all sorts of reasons why it was impossible, even though we had a whole coalition of corporations, including like Google and Microsoft and Apple and amalgamated bank and Ikea and Patagonia and dignity, health and so on and so forth, that were already doing it, even though PepsiCo was already doing it. They just didn't want people to know. It was a three year journey. The bill, it died on its last step on the floor of the assembly. You need 41 votes.

We were stuck at 40 votes. We could not get that 41st votes because of the intense lobbying that was at the end of 2022. So we reintroduced it in 2023 and we just powered it through. They thought they had us beat at the very end on the assembly floor, and we managed to not get stuck at 40 this time and to push it over the top and pass it. I'm so glad that we did, because the SEC for years, has been working on its own rule.

The SEC's rule was more limited than ours in a number of ways, and they can only really address publicly traded companies. But tragically, in the end, it just kept getting shrunk down and shrunk down and shrunk down. And then they got rid of scope three entirely, which is 80 90% of emissions, and even that is being challenged in court. So that's why it is a reminder why it is so important for California to lead, because these federal agencies that are trying really hard and want to do the right thing are just being hamstrung by radical Republicans in Congress, by the republican attorneys general and governors in states that are suing. And we have a lot more latitude here in California.

Cody Sims
It strikes me as being similar to early legislation from 20 plus years ago that mandated smog checks in cars that California pushed through and required a lot of auto manufacturers to have to start to comply and then shift their manufacturing processes overall. Is that a decent parallel? Somewhat. But this is even more in a lot of ways, because what we know is that there are corporations. Well, I'll name one name, but think of BP with all of its commercials.

Scott Weiner
BP's color is all green. We have corporations that are advertising themselves as green. PG and E does this, too, even though it's a fossil fuel company still. But they're not green. Or maybe they're green.

Maybe they're partially green. Maybe they're trending in the right direction. Maybe they're not trending in the right direction. We don't know. But they can just say whatever they want and market themselves.

And this will allow consumers, investors, regulators, everyone to see who is walking the walk and who's just talking the talk. And that's why they fought it in the end so hard with all the bogus claims that this is too hard or too expensive, which is just completely false. It's because they didn't want to lift up the hood and have people see what's really going on. As one other just bit of background for me to understand. I know California has had a compliance carbon market with the cap and trade system for some time.

Cody Sims
Does SB 253 relate to that in any way, shape or form? It broadens out what that does. So cap and trade applies to basically stationary emitters, if you're a refinery, or certain kinds of agricultural uses there, and they have to effectively disclose scope one and two, they really don't have to do scope three. I don't think. It's not exactly the same, but it's just being very approximate for those companies.

Scott Weiner
They were already doing a portion of what SP 253 requires, but not the rest, which is why the oil companies, along with the banks, were really leading the charge against this. I want to say the reason that the banks were fighting so hard against it, if you don't think about it much, you think, a bank doesn't seem like it's really polluting much, but banks, of course, are funding the polluting activities and making investments. I should have mentioned this is all, as you know, highly established protocols, international protocols, and so there's protocols for banks about what they have to disclose, and the banks do not want to have that on their carbon books that they are funding. I don't know, the Dakota pipeline or whatever else. So that's why they were fighting it so hard.

Cody Sims
How should companies think about this if their own suppliers don't have good emissions data? I'm sure you were getting that pushback. I am of the school of legislation that I want my legislation to be super implementable, and I don't want to create unnecessary barriers. So even if you have opposition, that's fighting you really hard. Like certain segments of the business community work, when they would also say, but there's this problem, that problem, we would take a serious look at it.

Scott Weiner
I'm not looking to just make it impossible for them to comply. I want it to be as seamless as possible. When we first introduced the bill, the first version, it required exact, precise carbon data for the entire supply chain. And they came to us and they said, hey, by the way, there's no way some micro supplier in Azerbaijan or in Poland or wherever, we're not going to necessarily be able to collect it from them. And you're sweeping in small businesses.

You claim this is for billion dollar plus corporations. This is going to force small, sometimes mom and pop suppliers to have to calculate their carbon emissions. And we said, you know what, you're right. And so we allow them, they can do that. And some corporations are very hardcore about forcing their suppliers to calculate their carbon emissions.

But we gave them an option of using well established formulas to estimate what each supplier's carbon contribution is. And there is software that allows you to do that. It's very well established. And so we provided that flexibility so that we were not creating a requirement that could potentially be hard or impossible to keep. How do you see this whole notion.

Cody Sims
Of accounting and compliance is sort of, in my mind, the broad category of assurance. How do you think the climate assurance space will evolve? Who defines the standards? Is this the purview of the large accounting firms overall? Do you see an opportunity for startups emerging, whether that's on the accounting side or on the measurement, reporting and verification side, at the event of a removal or an emissions event happening?

Yin Liu
So I can talk through the lens of carbon removals, because at the end of the day, what we sell is assurance. When a customer buys a ton of CO2 at credit, what we say is, hey, a ton has been removed and they want to know that it is actually removed, whether it's emitters, customers, buyers, citizens, of the planet. When we claim that 100 tons is removed, you actually need to do it. And there's a set of standards that are important. And what we actually saw recently is that there's a huge flight in the carbon markets to what's called high quality carbon removals.

And that's probably the biggest trend in carbon markets we've seen in the last decade or so. That enables companies like us to thrive. And Shashank, that's because in particular, forestry credits have gone through a rough time where the assurance around them was questionable. In all honesty, we should restore nature, we should have forests, we should plant every tree as possible, because there's a lot more benefits to forestry than just carbon. There's livelihoods, there's ecotourism, there's biodiversity.

When you quantify the value of a forest through purely a lens of carbon, you're not only undervaluing the full holistic value of a forest, but rather you're actually introducing these problems around credibility, around permanence of that carbon, and durability of it, and measurability of it. So, going back to your point about what are these standards for us, at least in carbon removals, there's three clear standards. One is permanence and durability. If you're going to remove a ton of CO2 from the air, you better sequester it for at least 1000 years so it doesn't come back out. The life of CO2 molecule in the air is 1000 years.

Second one is, it has to be additional. Additional means that this project wouldn't have happened if it wasn't for these carbon credits. That's where, by the way, most of the forestry credits, 80 85% of them, won't qualify. And number three is measurement and verification. This is something that more and more customers and compliance markets are putting forward.

And it's incredibly important because you have to measure exactly the lifecycle emissions of all the CO2 you put in the air. And your move to get to a net carbon removal. And that analysis, how you do it, what sort of verification mechanisms, what is a third party audits you're going to have, all of that will turn into an extensive mrv that makes the customer confident that you actually remove that ton of carbon. Mrv meaning measurement, reporting and verification. Exactly.

Scott Weiner
In terms of carbon accounting, there are firms that help businesses do that. Watershed is one, persephone is another, and there are others. SB 253 requires auditing, can't just submit whatever it has to be audited, and the California Air Resources Board will certify a list of qualified auditing firms that are able to do that. What are penalties for non compliance? I can't remember off the top of my head.

The attorney general can sue. There are penalties automatically for not complying, but of course we don't want to ever get there, which is one thing that comply. And I will also add that because the SEC is in limbo, but the EU has some carbon accounting requirements. There are individual countries in Europe that have their own, there are other states that are looking at it. We also don't want to force companies to have to recreate the wheel over and over again.

So we have a provision in SP 253, whatever you're already disclosing in another jurisdiction, you can literally like staple it basically and then just supplement it with whatever we require that's additional. Or if everything that we require has been already, say, disclosed in an EU report, then you could literally just submit that. And presumably it's going to be the same auditing firms that are doing all these jurisdictions. So we try to make it as seamless as possible. Hey everyone, I'm Yin, a partner at MCJ Collective, here to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer to peer learning and doing that goes beyond just listening to the podcast we started in 2019 and have grown to thousands of members globally each week.

Jason Jacobs
We're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change. Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early stage investments have been made, as well as ongoing events and programming like monthly women in climate meetups, idea jam sessions for early stage founders, climate book club, art workshops, and more.

Whether youve been in the climate space for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks and enjoy the rest of the show. You mentioned watershed and Persephone and there are multiple other carbon accounting companies that are emerging. Those are both startups.

Cody Sims
Both of them have been on the pod by the way. Go check out the archives. How did your office work with companies like that to understand whats actually doable so that you can make sure what you are proposing can actually be implemented? Persephone and watershed got involved late in the latter part. And I say that only because some people were like, oh, this is just companies that want to generate business.

Scott Weiner
For the large majority of this process, they weren't involved. This was about sunrise and California environmental voters and coalition of sustainable businesses called series. So it was a wonderful coalition. Watershed and persephone were extremely helpful in helping us debunk the arguments by some corporate actors that this was somehow impossible or it was going to be hugely expensive, where for a lot of companies, it might cost into tens of thousands of dollars to do it. Between that and companies like Salesforce and other companies that came forward and supported the bill, we were able to go to my colleagues, when you hear companies coming to you and saying, this is going to be so expensive, this is going to be impossible to comply with, this is going to force us to divert resources from other things, you have no way of knowing.

And so sometimes people will just accept that when you have other corporations coming in and saying, hey, wait, we're doing it. The thing that they said is impossible, we're doing it. And it's not expensive. Other firms coming in and saying, this is how much it costs, and this is the process that was extremely helpful. Shashank, for you, carbon accounting is one thing big corporations have to do accounting on their books on all sorts of things, so this is yet another area they have to account for.

Cody Sims
But measurement, reporting and verification of CO2 molecules moving through a process somewhere that's new tech that needs to get invented. How are you leaning in on the ability to do the reporting and verification of your own technologies? And who do you work with to help bring confidence to the buyers of your removals that this is happening? One point I actually want to make on 253 before jumping into the MRV question, as a climate technology company, what 253 does? It lifts all boats in climate tech that is working on reducing and removing emissions, because for the first time, you're able to diagnose and measure the full emissions problem.

Yin Liu
And what that does is pretty simply gives climate technology companies a customer database they can look at to see where they can target those efforts, and also policymakers to be very surgical in where to intervene and depending on where these emissions are coming from. At the end of the day, without the data, it's really hard to know. You can't fix what you can't measure. Right? Exactly.

So that's why I think this is such a foundational legislation that can unlock so many more surgical small interventions all across the emission spectrum. That's what makes me so excited about it. Back to the MRV point. For us, we call it an MRV stack. There is the third party components to it.

There's technologies that measure exactly how much CO2 is passing through our flow meter for direct recapture. It's fairly straightforward because it's a closed loop process. You can literally go to our facilities and look at the flow meter, see how much CO2 is flowing through it to see how much CO2 we're capturing and sequestering. Having said that, we're going to make some announcements soon around how to use new technology to actually scale MRV in a way that is low cost, but also gives this credibility. On the other side, there is a third party verifier perspective as well.

We need to ensure that there is assurance and confidence by working with third party audits. I don't think this is going to look like gap standards and the consulting big four doing financial audits. I think there is going to be an ecosystem to some extent with registry, with MRV technologies, with some standards, by NGO's and governments all working together. We're at the beginning stages of it. But there are technologies where MRV is much more straightforward.

Cody Sims
It strikes me that the work that both of you are doing is creating accountability for measuring and valuing the externalities that these big companies have been involved in for many years. Primarily the emissions externalities. There's a price of carbon today in both the voluntary and compliance carbon markets. But today, public companies for the most part, don't assign value to these externalities. Shareholders don't assign values to these externalities today.

Do either of you see a world where financial markets influences the value of a company by something like tons of emissions per dollars of profit or something like that. That's because we allow polluters to just dump the costs onto society at large and onto the planet. There's the idea of polluter pay, and we've done that in some context, like around superfund sites or whatever, but we've not done it enough. And yet, the idea of a carbon tax and requiring companies that are generating emissions to have some sort of financial impact and that will cause their valuation to be impacted by it, that's a policy stick. I'm just wondering if you think the markets themselves are going to start to react to this in any way.

I mean, who knows? None of us can predict the markets. I think if the market starts to think that companies, because of transparency and disclosure, that companies are going to be poorly thought of, if they are polluting, then maybe it will I mean, maybe at some point I'm just going to make this up. There's no basis to what I'm saying. But just as an example, if it turns out that Pepsi is doing a lot better than coke in controlling emissions, and someone will calculate what's the carbon emissions per each can of coke versus each can of Pepsi, and if the can of coke reflects like half the amount of carbon, you're going to have a bunch of consumers who are going to be like, I'm going to prefer that at some point you could end up with the markets saying, you better get your emissions under control or you, you're going to not have a bright future.

And Shashank, do you see buyers coming to you today motivated by fear? Are there ways that they're coming to you trying to be on the offensive about how this is good for their. Business in the future? This answer is not super exciting, but it's all of those three things. So it's really three buckets of customers for us.

Yin Liu
It's really led by number one category, which are customers who already have aggressive net zero targets by say 2030, these are really the technology companies, financial services companies who already measured, who understand where their emissions come from and are progressive about it, and they realize there's a certain portion of their emissions that cannot be decarbonized. They have to buy. We've sold to customers like Microsoft, Meta, Shopify, Stripe, JPMorgan, et cetera. And the second category we are actually just starting to see now is actually government purchasing, government procurement of removals. And you probably saw announcements around Department of Energy doing a procurement around high quality carbon removal.

And what's exciting about it is that not just the market signal that the government is buying it, but rather we've seen many companies in general not really get into buying carbon removals because you normally need a bunch of technical experts to figure out what carbon removals to even buy. So now you will have a government validated, DoE validated set of portfolio of companies of Codr pathways that they can buy without needing a whole bunch of technical experts. And the number three category, and this is really very new. This is in the last six months you're seeing this demand from industrials. Six, seven years ago, when we first started this, I would never have thought this would come so fast.

So this has really been driven by aviation, shipping and a couple other industries that are exposed to compliance markets in the EU with ETS. So DAC director capture and Bex have just been added to the ETS scheme. And there is discussions around that. Just on Monday, the Japan GT ETS tech compliance program has added carbon removals. These customers are seeing these removals coming down the pike that they have to buy, and they're coming to us now to start building up that portfolio, which is really exciting.

It's happening faster than I would imagine. But, I mean, the scale we need to go to, the 200 million tons by 2030, is just a massive number that we need to start today. So I'm hearing in your bucket one, or companies that are trying to be on the side of good in that they want to put their brand forward and say, we are sustainable, we are doing things the right way. That helps them attract talent, it helps them attract customers, all that good stuff, because in your Coke versus Pepsi example, they're the ones who have lower emissions and can do the right thing. The last category I heard from you are companies who are feeling the stick.

Cody Sims
They're getting exposed to the carbon markets and the compliance markets and are realizing they need to do stuff. So it's a good example of very different motivations. As you said, it's a little bit of all the above, but it sounds like it really is. It's exactly right. Actually, I will use this opportunity to talk about SB 308 for a second.

Yin Liu
Now that we talk, these numbers, you don't have to remember, but the two numbers you should remember is 253 and 308 and the 308. Actually, Senator Weiner's colleague, Senator Josh Becker, authored this. It's called carbon market Development act here in California. It starts with a simple premise. It's a first principles premise that for California to reach its net zero target by 2045, whatever the emissions that are still being emitted in 2045 have to be removed.

It contemplates starting in 2030 and incrementally requiring polluters to pay for those emissions and then incrementally increasing them to 100% by 2045. What's exciting about this is two reasons. One is it actually puts policy teeth to a net zero target. It's very detailed, it's incredibly comprehensive, and it is an example of a legislation that is in partnership with private sector and public sector, and which we've been fortunate to be part of. The second reason that I'm excited about it is that it shows a massive market signal that polluters are going to have to pay for removals in the 2030s, which allows for funding to come into the sector and increase invest into carbon removal facilities that need to scale to meet that demand.

Cody Sims
Senator, any comments you have on that legislation? California legislature is not always the most hospitable place for aggressive climate policy. And when we have 75% Democrat majorities in both houses. But there's a split between more moderate folks and more lefty folks. And on the climate front, you have battles with industry frequently.

Scott Weiner
And so we have a great little cadre of climate forward looking senators and assembly members, and we try to stick together and support each other. And Senator Becker, who authored that bill, is a really great climate champion. I want to shift gears a little bit and talk about geography and how geography factors into the work that you each do. Climate change, obviously is a global problem. Emissions are produced locally.

Cody Sims
Climate impacts like floods and wildfires and things we talked about obviously are felt locally. But the phenomenon of emissions are global. It's a global thing. It doesn't really matter from a global warming or sea level rise perspective or whatever, where the emissions are produced. It doesn't matter if they're produced in California or Mumbai or wherever.

Shashank, from your perspective, are you seeing CDR buyers care about where the removals are based? This can get very complicated very quickly. But the thing about carbon dioxide is that there's actually not a lot of good things with carbon dioxide, but there's actually one good thing, which is it's well mixed into the atmosphere. Removing carbon as a public good, as a climate benefit in Tracy, California, is not very different than removing that ton of carbon in New Zealand or in India. That benefit is shared across humanity.

Yin Liu
So a ton of carbon emitted anywhere is a ton of carbon emitted everywhere. There are some customers who are actually looking into their own supply chains and to see whether they can leverage their own internal folks in the value chain to see how they can use, say, soil carbon to inset some of their emissions. But most companies, almost all companies, really view this as a portfolio of carbon removals, where they have to buy directory capture, enhanced weathering, and becks, any customer, any big customer you pick out in our customer list, they need millions of tons of removals. And they see these removals coming from a portfolio of technologies across geography, across the world at some point. Article six.

And there is a few other things around how some of these removals account against a state or a national, nationwide emissions bucket that comes into play. But right now, geography is the same. And senator, similarly for you, I'm wondering how you think about the geographic impacts of your work and your legacy. Does it matter to you, for example, if a company is reporting emissions in California, but doing power purchase agreements in Montana, for example, to offset their scope. Too, they have to report everything.

Scott Weiner
As long as they're doing business, they don't just report their California emissions, say, report all of that. But as long as they're doing it, that's what matters. And it absolutely is global. Some of the pushback we get towards aggressive climate policy in California is that people will say, well, California is 1% of the world's carbon emissions, why even bother? And of course, 1%.

And then you get 2% and 3%. And then China comes in and it's a whole much bigger percent in India and the rest of the US, Europe. But it's also about leadership. SB 253, again, when I had that zoom back in the fall of 2020, I thought it was just going to be some little data bill. And little did I know that we weren't sure.

We thought the governor was going to sign up, but he announced it on the opening stage of climate Week in New York City. It just became this global thing. When California acts and acts aggressively just because of the role that we occupy on the planet, other people see, and all of a sudden, other people want to do what we're doing. We're actually seeing copycat legislation from both the LLC low carbon fuel standard that started in California, emulating in Washington and other states. And we're seeing that with SB 308, California creates a template that you can work off of for other states and countries.

That's actually one of the great things about being a state legislator, is we are constantly, with permission, stealing bills and cutting and pasting. There's a state senator in New York City, Brad Hoyleman, who I went to law school with, and we are constantly sharing ideas with each other, and it's really a great thing. And the West Coast, Washington, Oregon, and California, we are constantly sharing ideas. The last topic I want to hit on is the topic of public and private collaboration within climate tech. It strikes me that most startups are too small and too underfunded to be able to effectively lobby and influence policy.

Cody Sims
Potentially, startups can band together and lobby as a group in some way or influence policy. I'd love to hear from each of you examples of things that have worked well. Shashank, maybe things you can share that heirloom has done, senator. Things you can share in terms of working with startups to get more informed on policy decisions and any advice you have for startups as well on how to engage with their local policymakers. We started engaging policymakers about four years ago.

Yin Liu
Now, at this point, we've gone from Gulf coast to the west coast to the White House to create policy that cleans up carbon in the atmosphere. At the beginning, the questions were, what is carbon removal? Does this ever work? As we've secured deals and showed that there's a huge economy building around this. We build facilities, we build technology, you can come see carbon being removed.

Now the questions jobs. Yeah, exactly. That's something we all can like. Now the questions we get are, how can we scale this, how can we help? The answers so far we've seen, obviously, with the bipartisan infrastructure law and the IRA playing a pretty big role.

We are in the process of building a million ton dock facility in Louisiana, and that's really supported by both the IRA and the infrastructure law, with both public funding for infrastructure and the tax credits from the IRA. So, working hand in hand, one of the things I learned pretty early on, and that could be helpful for other startups, is that these companies that we're trying to build, especially we're not a software company, we're an infrastructure company. We build infrastructure, we build assets that remove carbon. There's three big levers and pillars in our companies. It's technology, policy and capital.

All three of them have to work hand in hand and in a flywheel. Even if one of those pieces are not there, you really cannot scale these companies. And I think that's really the big lesson we've learned from Cleantech 1.0. We need a concept of all those three things coming together. What I would say to other climate companies, my fellow ones, is that we are all on the same team.

We are all on team net zero. What we found is that there is limited political windows, limited political capital to move things along. We really have to band together to come up with a unified voice about what's important and sees that opportunity when it opens up. And that's actually one of the things I love about CDR industry, specifically, the amount of collaboration between all of us for market creation and policy design. It's really amazing and I'm super proud of being part of that.

And I think that principle can be stretched across other companies as well. One last thing I would say is that it's not just climate tech companies coming together, but it's also empowering voices around the state, around the country, community groups, environmental justice groups, labor groups. This is not something you think about when you start a climate tech company, but these are the voices you need to bring along. You need to knock on doors, understand, raise awareness, so that when you do go to a policymaker, you're going there with a single voice of not just climate tech companies, but rather the entire state and all the groups coming together and very different than building technology. But it is a crucial component of getting to Giga.

Ten scale impact. I think the startup voice is incredibly important because I think policymakers do really have a lot of respect for startups. It's the classic. This is literally entrepreneurship and basic level innovation and risk taking. And so people appreciate that.

Scott Weiner
Of course, startups are not as organized as the big companies are and don't have the same resources and don't have the same really muscular trade associations that have a lot of money to bring to bear. And startups tend to be you're working 10,000 hours a week and just trying to keep the company afloat and move forward and you don't have in house government relations person. Most likely it takes someone who's willing to organize those startups. And I've had in the non climate context, when I authored California's net neutrality law, we had all the big telecom cable companies were saying this is going to be end of the world. And we had a whole bunch of startups saying no, this is really important because they're going to strangle our ability to reach customers, are going to favor the big corporations.

If you don't have net neutrality or right now I'm authoring an AI safety bill and some of the bigger corporate interests are saying this is going to choke off innovation. And we have a whole list of startups who are formally supporting the bill and saying no, this is essential for innovation. And that completely just debunks the contrary argument. And so it's a really important voice. Do you see NgO's and trade organizations forming around topics that pull startups together?

I've not seen that. So for example, for carbon removal, we just started a carbon removal alliance between all startups. We have a lot of things to do as a small under resourced startup for building technology. We are going against massive, massive corporate lobbies. How do you have your voice heard?

Yin Liu
What you really have is just the coalition, the unified voice of all these startups coming together. And it strikes me too, senator, you have an advantage of living and being here in San Francisco where these startups are on your front door. A senator in a different part of the state or a different part of the country may not get as much exposure to innovation and technology. Do you view that as a role of yours to bring that to the floor? Well, it's a great resource and not just the center.

Scott Weiner
I mean just if I'm out at a bar somewhere, I'll have like a bunch of founders who are there and talking to me and coming up to me. So it's like you're just living and breathing it, which is great. And it keeps me fresh and always knowing what's going on. And I also can get up in committee hearings when the chamber of Commerce gets up and says, this is going to hurt startups and innovation, and I remind them where I represent. Not only is the last thing I'd want to do, but I would be just in a lot of trouble if I was doing something that somehow choke off innovation.

So it's amazing to represent San Francisco for a thousand reasons, and that is definitely one of them. Well, listen, I know we're coming along on the recording here. I have one other question for each of you, which is just, is there anything on either of your climate policy wish lists, whether it's state, whether it's local, whether it's federal, whether it's some other body elsewhere in the world? Are there things you're hoping to see happen? And if you don't like that question, just any final remarks you have for joining us today.

Oh, my God, definitely. I want a ton of really amazing, dense housing in all of our communities so people don't have to drive everywhere and can like, walk around. And I want world class public transportation, not just in the Bay Area, but throughout the state, which means actually having a statewide rail system, which we do not have right now. And we are working really hard to make sure that BART and Muni and AC transit and Caltrain and so on and so forth don't have to make service cuts in a few years because we need more public transportation service, not less. So that's on my wish list.

Yin Liu
Tashank, SB 253 and SB 308. I know we haven't talked too much about 308 today, but it is what could be 510 15 years from now. We look back and say, hey, we have this massive industry removing carbon from the air, and this could be that legislation. And unfortunately, it is stuck in the committee in assembly right now. It is past the state senate, California state Senate last year.

So we are hoping to reintroduce it this year and pass it. That could be really game changing for carbon removal. Well, we're obviously in the midst of a federal election year. None of us can escape that. But hopefully today is a good reminder of how important policy work outside of the federal environment also is and how monumental it can be to changing trajectories and making progress happen.

Cody Sims
Senator, thank you for the work you do. Thanks for joining us today. Shashank, thank you so much for all the work you're doing and pushing the innovation ball forward with the work you're doing at heirloom. For all of you joining us today, thanks for joining us here live at SF Climate Week. We're out.

Thanks again for joining us on the my Climate Journey podcast at MCJ Collective. We're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity. If you'd like to learn more about MCJ Collective, visit us@mcjcollective.com and if you have a guest suggestion, let us know that via Twitter mcjpod. For weekly climate op eds, job community events, and investment announcements from our MCJ venture funds, be sure to subscribe to our newsletter on our website. Thanks and see you next episode.

Jason Jacobs
Thanks and see you next episode.

Cody Sims
Thanks and see you next episode.

Live from SF Climate Week with Senator Scott Wiener and Shashank Samala

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1: Introduction

2: Legislative Efforts in Climate Policy

3: Technological Innovations in Carbon Removal

4: The Convergence of Policy and Technology

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